Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
The Securities Act of 1933
TELSCAPE INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Texas
(State or other jurisdiction of incorporation or organization)
75-2433637
(I.R.S. Employer Identification No.)
2700 Post Oak Boulevard, Suite 1000,Houston, Texas 77056
(Address of principal executive offices) (Zip Code)
1993 Stock Option Plan
1994 Outside Directors Stock Option Plan
1995 Stock Option and Appreciation Rights Plan
1996 Stock Option and Appreciation Rights Plan
1998 Stock Option and Appreciation Rights Plan
1998 MSN Stock Option and Appreciation Rights Plan
(Full titles of the plans)
Todd M. Binet
Chief Financial Officer
Telscape International, Inc.
2700 Post Oak Boulevard, Suite 1000
Houston, Texas 77056
(Name and address of agent for service)
(713) 968-0968
(Telephone number, including area code, of agent for service)
The Commission is requested to send copies of all communications to:
Morris F. DeFeo, Jr., Esq.
Swidler Berlin Shereff Friedman, LLP
3000 K Street, N.W., Suite 300
Washington, D.C. 20007-5116
(202) 424-7500
CALCULATION OF REGISTRATION FEE
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Title of Number of Proposed Proposed Amount
Securities Shares to Maximum Maximum of
to be be Offering Price Aggregate Registration
Registered Registered Per Share (1) Offering Price Fee
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Shares issuable 516,051 $9.00 $ 4,644,459 $1,291
under options
for grant under
the Plans
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Shares subject 1,896,593 $5.80 $11,000,239 $3,058
to outstanding
stock options
granted under
the Plans
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(1) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to rule 457. The price per share and aggregate
offering price are based upon (a) the actual exercise price for shares subject
to options previously granted under the Plans; and (b) the average of the bid
and ask prices of the registrant's Common Stock on October 27, 1998, as
reported on the Nasdaq National Market.
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PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information
Information required by Part I to be contained in the Section 10(a)
prospectus is omitted from the registration statement in accordance with Rule
428 under the Securities Act of 1933 and the Note to Part I of Form S-8. The
documents containing the information specified in Item 1 will be sent or given
to participants in the registrant's 1993 Stock Option Plan, 1994 Outside
Directors Stock Option Plan, 1995 Stock Option and Appreciation Rights Plan,
1996 Stock Option and Appreciation Rights Plan, 1998 Stock Option and
Appreciation Rights Plan, and 1998 MSN Stock Option and Appreciation Rights
Plan.
Item 2. Registrant Information and Employee Plan Annual Information
The registrant shall provide to participants, without charge, upon their
written or oral request, the documents incorporated by reference in Item 3 of
Part II of this registration statement. These documents are incorporated by
reference in the Section 10(a) prospectus. The registrant shall also provide
the participants without charge, upon their written or oral request, with all
other documents required to be delivered to the participants pursuant to Rule
428(b) under the Act. Any and all such requests shall be directed to the
registrant at 2700 Post Oak Boulevard, Suite 1000, Houston, Texas 77056 or at
(713) 968-0968.
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PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference
The following documents filed by the registrant with the Securities and
Exchange Commission (the "Commission) are hereby incorporated by reference in
this Registration Statement:
1. Registrant's annual report on Form 10-K, as filed with the
Commission on March 31, 1998, as amended on Form 10-K/A on April 8,
1998 and May 21, 1998.
2. Registrant's quarterly report on Form 10-Q, as filed with the
Commission on May 15, 1998.
3. Registrant's quarterly report on Form 10-Q, as filed with the
Commission on August 14, 1998.
4. Registrant's current report on Form 8-K, as filed with the
Commission on January 7, 1998.
5. Registrant's current report on Form 8-K, as filed with the
Commission on February 6, 1998, as amended on Form 8-K/A on April 7,
1998.
6. Registrant's current report on Form 8-K, as filed with the
Commission on June 9, 1998.
7. Registrant's registration of securities pursuant to Section 12 of
the Securities Exchange Act of 1934, as amended, on Form 8-A, as
filed with the Commission on July 31, 1994 and August 11, 1994.
In addition, all documents subsequently filed by the registrant pursuant
to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934,
as amended, prior to the filing of a post-effective amendment which indicates
that all securities offered hereby have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be incorporated by
reference in this registration statement and to be a part hereof from the date
of filing of such documents.
Item 4. Description of Securities
Not applicable.
Item 5. Interests of Named Experts and Counsel
Not applicable.
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Item 6. Indemnification of Directors and Officers
The registrant's By-Laws provide that the registrant shall indemnify and
advance expenses to the directors, officers, employees, and agents of the
registrant or any other persons serving at the request of the registrant in
such capacities in a manner and to the maximum extent permitted by applicable
state or federal law.
The registrant's Articles of Incorporation provide that registrant shall
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative, arbitrative, or investigative, any appeal in
such an action, suit, or proceeding and any inquiry or investigation that
could lead to such an action, suit, or proceeding (whether or not by or in the
right of the registrant), by reason of the fact that he is or was a director
or officer of the registrant, or is or was serving at the request of the
registrant as a director or officer, against all judgments, penalties
(including excise and similar taxes), fines, settlements, and reasonable
expenses (including attorneys' fees and court costs) actually and reasonably
incurred by him in connection with such action, suit or proceeding to the
fullest extent permitted by any applicable law, and such indemnity shall inure
to the benefit of the heirs, executors and administrators of any such person
so indemnified. The right to indemnification under the registrant's Articles
of Incorporation is a contract right and shall include, with respect to
directors and officers, the right to be paid by the registrant the expenses
incurred in defending any such proceeding in advance of its disposition;
PROVIDED, HOWEVER, that, the payment of such expenses incurred by a director
or officer in advance of the final disposition of a proceeding shall be made
only upon delivery to the registrant of (i) a written affirmation by such
director or officer of his good faith belief that he has met the standard of
conduct necessary for indemnification under the registrant's Articles of
Incorporation or otherwise and (ii) a written undertaking by or on behalf of
such director or officer to repay all amounts so advanced if it shall
ultimately be determined that such director or officer is not entitled to be
indemnified under the registrant's Articles of Incorporation or otherwise.
The indemnification and advancement of expenses provided by, or granted
pursuant to, the registrant's Articles of Incorporation shall not be deemed
exclusive of any right to which those seeking indemnification or advancement
of expenses may be entitled under any law, by-law, agreement, vote of
shareholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
Persons who are not directors or officers of the registrant may be
similarly indemnified in respect of such service to the extent authorized at
any time by the Board of Directors of the registrant. The registrant may
purchase and maintain liability insurance or make other arrangements for such
obligations to the extent permitted by the Texas Business Corporation Act.
Item 7. Exemption from Registration Claimed
Not applicable.
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Item 8. Exhibits
See Exhibit Index on page 8.
Item 9. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in this registration statement shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities Act of 1933
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered,
the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act of 1933
and will be governed by the final adjudication of such issue.
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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 a Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in Houston, Texas on the 28th day of October, 1998.
TELSCAPE INTERNATIONAL, INC.
By: /s/ E. Scott Christ
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E. Scott Crist
Chief Executive Officer
Know all these persons by these presents, each person whose signature
appears below constitutes and appoints E. Scott Crist and Todd M. Binet, and
each of them severally, his or her true and lawful attorney-in-fact and agent,
acting alone, with full power of substitution and resubstitution, for him or
her and in his or her name place and stead, in any and all capacities, to sign
any or all Amendments (including post-effective Amendments) to this
Registration Statement. and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, full power and
authority to do and perform each and every act and thing, requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, acting alone, or his
substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
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.
Signature Title Date
- --------- ------ -----
/s/ E. Scott Crist
- ----------------------- Chief Executive Officer October 28, 1998
E. Scott Crist (Principal Executive Officer) and
Director
/s/ Manuel Landa
- ------------------------ Director October 28, 1998
Manuel Landa
/s/ Todd M. Binet
- ------------------------ Director, Treasurer, Secretary October 28, 1998
Todd M. Binet Chief Financial Officer
(Principal Financial and
Accounting Officer)
/s/ Oscar Garcia
- ------------------------ Director October 29, 1998
Oscar Garcia
/s/ Ricardo Orea
- ------------------------- Director October 30, 1998
Ricardo Orea
/s/ Darrel O. Kirkland
- ------------------------- Director October 28, 1998
Darrel O. Kirkland
/s/ Enrique Orihuela
- ------------------------- Director October 28, 1998
Enrique Orihuela
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Exhibit Index
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Exhibit Number Description
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3.1 Articles of Incorporation, as amended (Incorporated
herein by reference to Exhibit 3.1 to the
registrant's Registration Statement
No. 33-80542-D).
4.1 1993 Stock Option Plan
4.2 1994 Outside Directors Stock Option Plan
4.3 1995 Stock Option and Appreciation Rights Plan
4.4 1996 Stock Option and Appreciation Rights Plan
4.5 1998 Stock Option and Appreciation Rights Plan
4.6 1998 MSN Stock Option and Appreciation Rights Plan
4.7 Form of Certificate evidencing Common Stock
(Incorporated herein by reference to Exhibit 4.1 to
the registrant's Registration Statement No.
33-80542-D).
5.1 Opinion of Gardere Wynne Sewell & Riggs, LLP
23.1 Consent of Gardere Wynne Sewell & Riggs, LLP
(included in its opinion filed as Exhibit 5.1)
23.2 Auditor Consent of BDO Seidman, LLP
23.3 Auditor Consent of Hoffman, McBryde & Co., P.C.
23.4 Auditor Consent of De Las Fuentes, De La Mora Y
Valdivia, S.C.
24.1 Power of Attorney (included on signature page)
EXHIBIT 4.1
POLISH TELEPHONES AND MICROWAVE CORPORATION
1993 STOCK OPTION PLAN
Adopted Effective as of January l, 1993
1. PURPOSES.
(a) The purpose of the Plan is to provide a means by which selected
Employees and Directors of and Consultants to the Company, and its Affiliates,
may be given an opportunity to purchase stock of the Company.
(b) The Company, by means of the Plan, seeks to retain the services
of persons who are now Employees or Directors of or Consultants to the Company
and its Affiliates, to secure and retain the services of new Employees,
Directors and Consultants, and to provide incentives for such persons to exert
maximum efforts for the success of the Company and its Affiliates.
(c) The Company intends that the Options issued under the Plan shall,
in the discretion of the Board of any Committee to which responsibility for
administration of the Plan has been delegated pursuant to subsection 3(c), be
either Incentive Stock Options or Nonstatutory Stock Options. All Options
shall be separately designated Incentive Stock Options or Nonstatutory Stock
Options at the time of grant, and in such form as issued pursuant to section
6, and a separate certificate of certificates will be issued for shares
purchased on exercise of each type of Option.
2. DEFINITIONS.
(a) "Affiliate" means any parent corporation or subsidiary
corporation, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f) respectively, of the Code.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Committee" means a Committee appointed by the Board in
accordance with subsection 3(c) of the Plan.
(e) "Company" means Polish Telephones and Microwave Corporation, a
Texas corporation.
(f) "Consultant" means any person, including an advisor, engaged by
the Company or an Affiliate to render services and who is compensated for such
services, provided that the term "consultant" shall not include Directors who
are paid only a director's fee by the Company or who are not compensated by
the Company for their services as Directors.
(g) "Continuous Status as an Employee, Director or Consultant" means
the employment or relationship as a Director or Consultant is not interrupted
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or terminated by the Company or any Affiliate. The Board, in its sole
discretion, may determine whether Continuous Status as an Employee, Director
or Consultant shall be considered interrupted in the case of: (i) any leave
of absence approved by the Board, including sick leave, military leave, or any
other personal leave; or (ii) transfers between locations of the Company or
between the Company, Affiliates or their successors.
(h) "Director" means a member of the Board.
(i) "Disability" means total and permanent disability as defined in
Section 22(e)(3) of the Code.
(j) "Disinterested Person" means a Director: (i) who was not during
the one (1) year prior to service as an administrator of the Plan granted or
awarded equity securities pursuant to the Plan or any other plan of the
Company or any of its affiliates entitling the participants therein to acquire
equity securities of the Company or any of its affiliates except as permitted
by Rule 16b-3(c)(2)(i); or (ii) who is otherwise considered to be a
"disinterested person" in accordance with Rule 16b-3(c)(2)(i), or any other
applicable rules, regulations or interpretations of the Securities and
Exchange Commission.
(k) "Employee" means any person, including Officers and Directors,
employed by the Company or any Affiliate of the Company. Neither service as a
Director nor payment of a director's fee by the Company shall be sufficient to
constitute "employment" by the Company.
(l) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(m) "Fair Market Value" means the value of the common stock as
determined in good faith by the Board.
(n) "Incentive Stock Option" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code and
the regulations promulgated thereunder.
(o) "Nonstatutory Stock Option" means an Option not intended to
qualify as an Incentive Stock Option.
(p) "Officer" means a person who is an officer of the company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(q) "Option" means a stock option granted pursuant to the Plan.
(r) "Option Agreement" means a written agreement between the Company
and an Optionee evidencing the terms and conditions of an individual Option
grant. Each Option Agreement shall be subject to the terms and conditions of
the Plan.
(s) "Optioned Stock" means the common stock of the Company subject to
the Option.<PAGE>
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(t) "Optionee" means an Employee, Director or Consultant who holds an
outstanding Option.
(u) "Plan" means this 1993 Stock Option Plan of Polish Telephones and
Microwave Corporation.
(v) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.
3. ADMINISTRATION.
(a) The Plan shall be administered by the Board unless and until the
Board delegates administration to a Committee, as provided in subsection 3(c).
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(1) To determine from time to time which of the persons
eligible under the Plan shall be granted Options, when and how each Option
shall be granted; whether an Option will be an Incentive Stock Option or a
Nonstatutory Stock Option; the provisions of each Option granted (which need
not be identical), including the time or times such Option may be exercised in
whole or in part; and the number of shares for which an Option shall be
granted to each such person.
(2) To construe and interpret the Plan and Options granted under
it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Option Agreement, in a
manner and to the extent it shall deem necessary or expedient to make the Plan
fully effective.
(3) To amend the Plan as provided in Section 11.
(4) Generally, to exercise such power and to perform such acts
as the Board deems necessary or expedient to promote the best interests of the
Company.
(c) The Board may delegate administration of the Plan to a committee
composed of not fewer than two (2) members (the "Committee"), all of the
members of which Committee shall be Disinterested Persons, if required under
subsection 3(d). If administration is delegated to a Committee, the Committee
shall have, in connection with the administration of the Plan, the powers
theretofore possessed by the Board (and references in this P1an to the Board
shall thereafter be to the Committee), subject, however, to such resolutions,
not inconsistent with the provisions of the Plan, as may be adopted from time
to time by the Board. The Board may abolish the Committee at any time and
revest in the Board the administration of the Plan. Additionally, prior to
the date of the first registration of any equity security of the Company under
Section 12 of the Exchange Act, and notwithstanding anything to the contrary
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contained herein, the Board may delegate administration of the Plan to any
person or persons and the term "Committee" shall apply to any person or
persons to whom such authority has been delegated.
(d) Any requirement that an administrator of the Plan be a
Disinterested Person shall not apply (i) prior to the date of the first
registration of an equity security of the Company under Section 12 of the
Exchange Act, or (ii) if the Board or the Committee expressly declares that
such requirement shall not apply. Any Disinterested Person shall otherwise
comply with the requirements of Rule 16b-3.
4. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of Section 10 relating to adjustments
upon changes in stock, the stock that may be sold pursuant to Options shall
not exceed in the aggregate seven hundred thousand (700,000) shares of the
Company's common stock. If any Option shall for any reason expire or
otherwise terminate without having been exercised in full, the stock not
purchased under such Option shall revert to and again become available for
issuance under the Plan.
(b) The stock subject to the Plan may be unissued shares or
reacquired shares, bought on the market or otherwise.
5. ELIGIBILITY.
(a) Incentive Stock Options may be granted only to Employees.
Nonstatutory Stock Options may be granted only to Employees, Directors or
Consultants.
(b) A Director shall in no event be eligible for the benefits of the
Plan unless at the time discretion is exercised in the selection of the
Director as a person to whom Options may be granted, or in the determination
of the number of shares which may be covered by Options granted to the
Director: (i) the Board has delegated its discretionary authority over the
Plan to a Committee which consists solely of Disinterested Persons; or
(ii) the Plan otherwise complies with the requirements of Rule 16b-3. The
Board shall otherwise comply with the requirements of Rule 16b-3. This
subsection 5(b) shall not apply (i) prior to the date of the first
registration of an equity security of the Company under Section 12 of the
Exchange Act, or (ii) if the Board or Committee expressly declares that it
shall not apply.
(c) No person shall be eligible for the grant of an Option if, at
the time of grant, such person owns (or is deemed to own pursuant to 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 or of any of its
Affi1iates unless the exercise price of such Option is at least one hundred
ten percent (110%) of the Fair Market Value of such stock at the date of grant
and the Option is not exercisable after the expiration of five (5) years from
the date of grant.<PAGE>
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6. OPTION PROVISIONS.
Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The provisions of separate
Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise)
the substance of each of the following provisions:
(a) Term. No Option shall be exercisable after the expiration of
ten (10) years from the date it was granted.
(b) Price. The exercise price of each Incentive Stock Option shall
be not less than one hundred percent (100%) of the Fair Market Value of the
stock subject to the Option on the date the Option is granted. The exercise
price of each Nonstatutory Stock Option shall be not less than eighty-five
percent (85%) of the Fair Market Value of the stock subject to the Option on
the date the Option is granted.
(c) Consideration. The purchase price of stock acquired pursuant to
an Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised, or
(ii) at the discretion of the Board or the Committee, either at the time of
the grant or exercise of the Option, (A) by delivery to the Company of other
common stock of the Company, (B) according to a deferred payment or other
arrangement (which may include, without limiting the generality of the
foregoing, the use of other common stock of the Company) with the person to
whom the Option is granted or to whom the Option is transferred pursuant to
subsection 6(d), or (C) in any other form of legal consideration that may be
acceptable to the Board.
In the case of any deferred payment arrangement, interest shall be
payable at least annually and shall be charged at the minimum rate of interest
necessary to avoid the treatment as interest, under any applicable provisions
of the Code, of any amounts other than amounts stated to be interest under the
deferred payment arrangement.
(d) Transferability. An Incentive Stock Option shall not be
transferrable except by will or by the laws of descent and distribution and
shall be exercisable during the lifetime of the person to whom the Incentive
Stock Option is granted only by such person. A Nonstatutory Stock Option
shall not be transferrable except by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order, as defined
by the Code or Title I of the Employee Retirement Income Security Act, or the
rules thereunder (a "QDRO''), and shall be exercisable during the lifetime of
the person to whom the Option is granted only by such person or any transferee
pursuant to a QDRO.
(e) Vesting. The total number of shares of stock subject to an
Option may, but need not, be allotted in periodic installments (which may, but
need not, be equal). The Option Agreement may provide that from time to time
during each of such installment periods, the Option may become exercisable
("vest") with respect to some or all of the shares allotted to that period,
and may be exercised with respect to some or all of the shares allotted to
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such period and/or any prior period as to which the Option became vested but
was not fully exercised. During the remainder of the term of the Option (if
its term extends beyond the end of the installment periods), the Option may be
exercised from time to time with respect to any shares then remaining subject
to the Option. The provisions of this subsection 6(e) are subject to any
Option provisions governing the minimum number of shares as to which an Option
may be exercised.
(f) Securities Law Compliance. The Company may require any Optionee,
or any person to whom an Option is transferred under subsection 6(d), as a
condition of exercising any such Option, (1) to give written assurances
satisfactory to the Company as to the Optionee's knowledge and experience in
financial and business matters and/or to employ a purchaser representative
reasonably satisfactory to the Company who is knowledgeable and experienced in
financial and business matters, and that he or she is capable of evaluating,
alone or together with the purchaser representative, the merits and risks of
exercising the Option; and (2) to give written assurances satisfactory to the
Company stating that such person is acquiring the stock subject to the Option
for such person's own account and not with any present intention of selling or
otherwise distributing the stock. These requirements, and any assurances
given pursuant to such requirements, shall be inoperative if (i) the issuance
of the shares upon the exercise of the Option has been registered under a then
currently effective registration statement under the Securities Act of 1933,
as amended (the "Securities Act"), or (ii) as to any particular requirement, a
determination is made by counsel for the Company that such requirement need
not be met in the circumstances under the then applicable securities laws.
The Company may, upon advice of counsel to the Company, place legends on stock
certificates issued under the Program as such counsel deems necessary or
appropriate in order to comply with applicable securities laws, including, but
not limited to, legends restricting the transfer of the stock.
(g) Termination of Employment or Relationship as a Director or
Consultant. In the event an Optionee's Continuous Status as an Employee,
Director or Consultant terminates (other than upon the Optionee's death or
Disability), the Optionee may exercise his or her Option but only with such
period of time as in determined by the Board and only to the extent that the
Optionee was entitled to exercise it at the date of termination (but in no
event later than the expiration of the term of such Option as set forth in the
Option Agreement). If, at the date of termination, the Optionee is not
entitled to exercise his or her entire Option, the shares covered by the
unexercisable portion of the Option shall revert to and again become available
for issuance under the Plan. If, after termination, the Optionee does not
exercise his or her Option within the time specified in the Option Agreement,
the Option shall terminate, and the shares covered by such Option shall revert
to and again become available for issuance under the Plan.
(h) Disability of Optionee. In the event an Optionee's Continuous
Status as an Employee, Director or Consultant terminates as a result of the
Optionee's Disability, the Optionee may exercise his or her Option, but only
within twelve (12) months from the date of such termination (or such longer or
shorter period specified in the Option Agreement), and only to the extent that
the Optionee was entitled to exercise it at the date of such termination (but
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in no event later than the expiration of the term of such Option as set forth
in the Option Agreement). If, at the date of termination, the Optionee is not
entitled to exercise his or her entire Option, the shares covered by the
unexercisable portion of the Option shall revert to and again become available
for issuance under the Plan. If, after termination, the Optionee does not
exercise his or her Option within the time specified herein, the Option shall
terminate, and the shares covered by such Option shall revert to and again
become available for issuance under the Plan
(i) Death of Optionee. In the event of an Optionee, the Option may
be exercised, at any time within eighteen (18) months following the date of
death (or such longer or shorter period specified in the Option Agreement)
(but in no event later than the expiration of the term of such Option as set
forth in the Option Agreement), by the Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or inheritance, but only
to the extent the Optionee was entitled to exercise the Option at the date of
death. If, at the time of death, the Optionee was not entitled to exercise
his or her entire Option, the shares covered by the unexercisable portion of
the Option shall revert to and again become available for issuance under the
Plan. If, after death, the Optionee's estate or a person who acquired the
right to exercise the Option by bequest or inheritance does not exercise the
Option within the time specified herein, the Option shall terminate, and the
shares covered by such Option shall revert to and again become available for
issuance under the Plan.
(j) Early Exercise. The Option may, but need not, include a
provision whereby the Optionee may elect at any time while an Employee,
Director or Consultant to exercise the Option as to any part or all of the
shares subject to the Option prior to the full vesting of the Option. Any
invested shares so purchased may be subject to a repurchase right in favor of
the Company or to any other restriction the Board determines to be
appropriate.
(k) Withholding. To the extent provided by the terms of an Option
Agreement, the Optionee may satisfy any federal, state or local tax
withholding obligation relating to the exercise of such Option by any of the
following means or by a combination of such means: (1) tendering a cash
payment; (2) authorizing the Company to withhold shares from the shares of the
common stock otherwise issuable to the participant as a result of the exercise
of the Option; or (3) delivering to the Company owned and unencumbered shares
of the common stock of the Company.
7. COVENANTS OF THE COMPANY.
(a) During the terms of the Options, the Company shall keep available
at all times the number of shares of stock required to satisfy such Options.
(b) The Company shall seek to obtain from each regulatory commission
or agency having jurisdiction over the Plan such authority as may be required
to issue and sell shares of stock upon exercise of the Options; provided,
<PAGE>
<PAGE>
however, that this undertaking shall not require the Company to register under
the Securities Act either the Plan, any Option or any stock issued or issuable
pursuant to any such Option. If, after reasonable efforts, the Company is
unable to obtain from any such regulatory commission or agency the authority
which counsel for the Company deems necessary for the lawful issuance and sale
of stock under the Plan, the Company shall be relieved from any liability for
failure to issue and sell stock upon exercise of such Options unless and until
such authority is obtained.
8. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to Options shall constitute
general funds of the Company.
9. MISCELLANEOUS.
(a) The Board shall have the power to accelerate the time at which
an Option may first be exercised or the time during which an Option or any
part thereof will vest pursuant to subsection 6(e), notwithstanding the
provisions in the Option stating the time at which it may first be exercised
or the time during which it will vest.
(b) Neither an Optionee nor any person to whom an Option is
transferred under subsection 6(d) shall be deemed to be the holder of, or to
have any of the rights of a holder with respect to, any shares subject to such
Option unless and until such person has satisfied all requirements for
exercise of the Option pursuant to its terms.
(c) Nothing in the Plan or any instrument executed or Option granted
pursuant thereto shall confer upon any Employee, Director, Consultant or
Optionee any right to continue in the employ of the Company or any Affiliate
(or to continue acting as a Director or Consultant) or shall affect the right
of the Company or any Affiliate to terminate the employment or relationship as
a Director or Consultant of any Employee, Director, Consultant or Optionee
with or without cause.
(d) To the extent that the aggregate Fair Market Value (determined
at the time of grant) of stock with respect to which Incentive Stock Options
granted after 1986 are exercisable for the first time by any Optionee during
any calendar year under all plans of the Company and its Affiliates exceeds
One Hundred Thousand Dollars ($100,000.00), the Options or portions thereof
which exceed such limit (according to the order in which they were granted)
shall be treated as Nonstatutory Stock Options.
10. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or
subject to any Option (through merger, consolidation, reorganization, <PAGE>
<PAGE>
recapitalization, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares, change
in corporate structure or otherwise), the Plan and outstanding Options will be
appropriately adjusted in the class(es) and maximum number of shares subject
to the Plan and the class(es) and number of shares and price per share of
stock subject to outstanding Options.
(b) In the event of: (1) a dissolution or liquidation of the
Company; (2) a merger or consolidation in which the Company is not the
surviving corporation; or (3) a reverse merger in which the Company is the
surviving corporation but the shares of the Company's common stock outstanding
immediately preceding the merger are converted by virtue of the merger into
other property, whether in the form of securities, cash or otherwise, then to
the extent permitted by applicable law; (i) any surviving corporation shall
assume any Options outstanding under the Plan or shall substitute similar
Options for those outstanding under the Plan, or (ii) such Options shall
continue in full force and effect. In the event any surviving corporation
refuses to assume or continue such Options, or to substitute similar options
for those outstanding under the Plan, then, with respect to Options held by
persons then performing services as Employees, Directors or Consultants, the
time during which such Options may be exercised shall be accelerated and the
Options terminated if not exercised prior to such event.
11. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may amend the
Plan. However, except as provided in Section 10 relating to adjustments upon
changes in stock, no amendment shall be effective unless approved by the
stockholders of the Company within twelve (12) months before or after the
adoption of the amendment, where the amendment will:
(1) Increase the number of shares reserved for Options under
the Plan;
(2) Modify the requirements as to eligibility for participation
in the Plan (to the extent such modification requires stockholder approval in
order for the Plan to satisfy the requirements of Section 422 of the Code); or
(3) Modify the Plan in any other way if such modification
requires stockholder approval in order for the Plan to satisfy the
requirements of Section 422 of the Code or to comply with the requirements of
Rule 16b-3.
(b) It is expressly contemplated that the Board may amend the Plan
in any respect the Board deems necessary or advisable to provide Optionees
with the maximum benefits provided or to be provided under the provisions of
the Code and the regulations promulgated thereunder relating to Incentive
Stock Options and/or to bring the Plan and/or Incentive Stock Options granted
under it into compliance therewith.
(c) Rights and obligations under any Option granted before amendment
of the Plan shall not be altered or impaired by any amendment of the Plan<PAGE>
<PAGE>
unless (i) the Company requests the consent of the person to whom the Option
was granted and (ii) such person consents in writing.
12. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate on January 1, 2002, which shall be
within ten (10) years from the date the Plan is adopted by the Board or
approved by the stockholders of the Company, whichever is earlier. No Options
may be granted under the Plan while the Plan is suspended or after it is
terminated.
(b) Rights and obligations under any Option granted while the Plan
is in effect shall not be altered or impaired by suspension or termination of
the Plan, except with the consent of the person to whom the Option was
granted.
13. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the Board, but no
Options granted under the Plan shall be exercised unless and until the Plan
has been approved by the stockholders of the Company.
EXHIBIT 4.2
OUTSIDE DIRECTORS STOCK OPTION PLAN
OF
THE POLISH TELEPHONES AND MICROWAVE CORPORATION
1. Purpose of Plan. This Outside Directors Stock Option Plan (the
---------------
Plan) is intended to encourage ownership of the common stock of Polish
Telephones and Microwave Corporation (the "Company") by Outside Directors (as
hereinafter defined) of the Company or any Subsidiary or Subsidiaries of the
Company (as hereinafter defined) in order to provide additional incentive for
such persons to promote the success and the business of the Company or its
Subsidiaries and to encourage them to become and remain an Outside Director of
the Company or its Subsidiaries by providing such persons an opportunity to
benefit from any appreciation of the common stock of the Company through the
issuance of stock options to such persons in accordance with the terms of the
Plan. It is further intended that options granted pursuant to this Plan shall
constitute nonqualified stock options (the "Options") within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). As
used herein the term "Subsidiary" or "Subsidiaries" shall mean any corporation
(other than the employer corporation) in an unbroken chain of corporations
beginning with the employer corporation if, at the time of granting of the
Option, each of the corporations other than the last corporation in the
unbroken chain owns stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
2. Stock Subject to the Plan. Subject to adjustment as provided in
-------------------------
Section 11 hereof, there will be reserved for the use upon the exercise of
Options to be granted from time to time under the Plan, an aggregate of One
Hundred Thousand (100,000) shares of the common stock, $0.001 par value, of
the Company (the "Common Stock"), which shares in whole or in part shall be
authorized, but unissued, shares of the Common Stock or issued shares of
Common Stock which shall have been reacquired by the Company as determined
from time to time by the Board of Directors. To determine the number of
shares of Common Stock available at any time for the granting of Options under
the Plan there shall be deducted from the total number of reserved shares of
Common Stock, the number of shares of Common Stock with respect to which
Options have been granted pursuant to the Plan which remain outstanding or
which have been exercised. If and to the extent that any Option to purchase
reserved shares shall not be exercised by the optionee for any reason or if
such Option to purchase shall terminate as provided herein, such shares which
have not been so purchased hereunder shall again become available for the
purposes of the Plan unless the Plan shall have been terminated, but such
unpurchased shares shall not be deemed to increase the aggregate number of
shares specified above to be reserved for purposes of the Plan (subject to
adjustment as provided in Section 11 hereof).
The Company shall not be required upon the exercise of any Option to
issue or deliver any shares of stock prior to the completion of such
registration or other qualification of such shares under any State or Federal
law, rule or regulation as the Company shall determine to be necessary or
desirable.
<PAGE>
<PAGE>
3. Administration of the Plan.
--------------------------
(a) General. The Plan shall be administered by the Compensation
-------
Committee (the "Committee") appointed by the Board of Directors of the
Company, which Committee shall consist of not less than two (2) members of the
Board of Directors who are not eligible to participate in the Plan, and have
not, for a period of at least one (1) year prior thereto been eligible to
participate in the Plan, except that if at any time there shall be less than
two (2) directors who are qualified to serve on the Committee, then the Plan
shall be administered by the full Board of Directors. All references in this
Plan to the Committee shall be deemed to refer instead to the full Board of
Directors at any time there is not a committee of two (2) members qualified to
act hereunder. The Board of Directors may from time to time appoint members
of the Committee in substitution for or in addition to members previously
appointed and may fill vacancies, however caused, in the Committee. If the
Board of Directors does not designate a Chairman of the Committee, the
Committee shall select one of its members as its Chairman and shall hold its
meetings at such times and places as it shall deem advisable. A majority of
its members shall constitute a quorum. All action of the Committee shall be
taken by a majority vote of its members. Any action may be taken by a written
instrument signed by all of the members, and any action so taken shall be
deemed fully as effective as if it had been taken by a vote of the members
present in person at the meeting duly called and held. The Committee may
appoint a Secretary, shall keep minutes of its meetings, and shall make such
rules and regulations for the conduct of its business as it shall deem
advisable.
The Committee shall have the sole authority and power, subject to the
express provisions and limitations of the Plan, to construe the Plan and
option agreements granted hereunder, and to adopt, prescribe, amend, and
rescind rules and regulations relating to the Plan, and to make all
determinations necessary or advisable for administering the Plan, including,
but not limited to, (i) which Outside Director shall be granted Options under
the Plan, (ii) the term of each Option, (iii) the number of shares covered by
such Option, (iv) the exercise price for the purchase of the shares of the
Common Stock covered by the Option, (v) the period during which the Option may
be exercised, (vi) whether the right to purchase the number of shares covered
by the Option shall be fully vested on issuance of the Option so that such
shares may be purchased in full at one time or whether the right to purchase
such shares shall become vested over a period of time so that such shares may
only be purchased in installments, and (vii) the time or times at which
Options shall be granted. The Committee's determinations under the Plan,
including the above enumerated determinations, need not be uniform and may be
made by it selectively among the persons who receive, or are eligible to
receive, Options under the Plan, whether or not such persons are similarly
situated. The interpretation and construction by the Committee of any
provision of the Plan or of any Option granted hereunder shall be final and
conclusive, unless otherwise determined by the Board of Directors. No member
of the Board of Directors or the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any Option
granted under it. Upon issuing an Option under the Plan, the Committee shall
report to the Board of Directors the name of the person granted the Option,
the number of shares of Common Stock covered by the Option, and the terms and
conditions of such Option.
<PAGE>
<PAGE>
(b) Changes in Law Applicable. If the laws relating to
-------------------------
nonqualified stock options are changed, altered or amended during the term of
the Plan, the Board of Directors shall have full authority and power to alter
or amend the Plan with respect to Options to conform to such changes in the
law without the necessity of obtaining further shareholder approval, unless
such changes require such approval.
4. Outside Directors to Whom Options Shall Be Granted. Options shall
--------------------------------------------------
be granted only to Outside Directors selected by the Committee. As used
herein, the term "Outside Directors" shall mean only those directors of the
Company or any Subsidiary of the Company who are not regular salaried
employees of either the Company or a Subsidiary as of the date an Option is
granted; provided, however, Outside Directors shall include any directors of
the Company or a Subsidiary who were formerly regular salaried employees of
either the Company or a Subsidiary but who have ceased to be regular salaried
employees thereof through retirement or otherwise as of the date an Option is
granted. The determination of the Committee shall be conclusive as to the
eligibility of any director to participate in the Plan.
5. Factors to Be Considered in Granting Options. In making any
--------------------------------------------
determination as to Outside Directors to whom Options shall be granted and as
to the number of shares to be covered by such Options, the Committee shall
take into account the duties and responsibilities of the respective Outside
Directors, their current and potential contributions to the success of the
Company or a Subsidiary, the time devoted by such Outside Director to matters
pertaining to the Company or a Subsidiary, and such other factors as the
Committee shall deem relevant in connection with accomplishing the purpose of
the Plan.
6. Time of Granting Options. Neither anything contained in the Plan
------------------------
or in any resolution adopted or to be adopted by the Board of Directors or the
Shareholders of the Company nor any action taken by the Committee shall
constitute the granting of any Option. The granting of an Option shall be
effected only when a written Option Agreement acceptable in form and substance
to the Committee, subject to the terms and conditions hereof including those
set forth in Section7 hereof, shall have been duly executed and delivered by
or on behalf of the Company and the person to whom such Option shall be
granted. No person shall have any rights under the Plan until such time, if
any, as a written Option Agreement shall have been duly executed and delivered
as set forth in this Section 6.
7. Terms and Conditions of Options. All Options granted pursuant to
-------------------------------
this Plan must be granted within ten (10) years from the date the Plan is
adopted by the Board of Directors of the Company. Each Option Agreement
governing an Option granted hereunder shall be subject to at least the
following terms and conditions, and shall contain such other terms and
conditions, not inconsistent therewith, that the Committee shall deem
appropriate:
(a) Number of Shares. Each Option shall state the number of
----------------
shares of Common Stock which it represents.
<PAGE>
<PAGE>
(b) Option Period.
-------------
(1) General. Each Option shall state the date upon which it
-------
is granted. Each Option shall be exercisable in whole or in part during such
period as is provided under the terms of the Option subject to any vesting
period set forth in the Option, but in no event shall an Option be exercisable
either in whole or in part after the expiration of ten (10) years from the
date of grant.
(2) Termination of Status as Outside Director. In the event
-----------------------------------------
an optionee's status as an Outside Director is terminated for any reason,
other than the death of such optionee or a Change of Control (as hereinafter
defined) prior to the full exercise of the Option, such optionee may exercise
his Option at any time within ninety (90) days after such termination to the
extent he was entitled to exercise such option at the date such optionee's
status as an Outside Director terminated; provided, however, that no Option
shall be exercisable after the expiration of ten (10) years from the date it
is granted.
(3) Death. If an optionee dies while an Outside Director of
-----
the Company or Subsidiary and shall not have fully exercised Options granted
pursuant to the Plan, such Options may be exercised in whole or in part at any
time within six (6) months after the optionee's death, by the executors or
administrators of the optionee's estate or by any person or persons who shall
have acquired the Options directly from the optionee by bequest or
inheritance, but only to the extent that the Outside Director was entitled to
exercise such Option at the date of such optionee's death, subject to the
condition that no Option shall be exercisable after the expiration of ten (10)
years from the date it is granted.
(4) Acceleration and Exercise Upon Change of Control.
------------------------------------------------
Notwithstanding the preceding provisions of this Section 7(b), if any Option
granted under the Plan provides for either (a) an incremental vesting period
hereby such Option may only be exercised in installments as each such
incremental vesting period is satisfied or (b) a delayed vesting period
whereby such Option may only be exercised after the lapse of a specified
period of time, such as after the expiration of one (1) year, such vesting
period shall be accelerated upon the occurrence of a change of Control of the
Company so that such Option shall thereupon become exercisable immediately in
part or in its entirety by the holder thereof, as such holder shall elect,
subject to the condition that no Option shall be exercisable after the
expiration of ten (10) years from the date it is granted. For the purposes of
this Plan, a "Change of Control" shall be deemed to have occurred if:
(i) Any "person," including a "group" as determined in
accordance with Section 13(d)(3) of the Securities Exchange Act of 1934 (the
"Exchange Act") and the Rules and Regulations promulgated thereunder, is or
becomes, through one or a series of related transactions or through one or
more intermediaries, the beneficial owner, directly or indirectly, of
securities of the Company representing 25% or more of the combined voting
powers of the Company's then outstanding securities, other than a person who
is such a beneficial owner on the effective date of the Plan and any affiliate
of such person;
<PAGE>
<PAGE>
(ii) As a result of, or in connection with, any tender offer
or exchange offer, merger or other business combination, sale of assets or
contested election, or any combination of the foregoing transactions (a
"Transaction"), the persons who were Directors of the Company before the
Transaction shall cease to constitute a majority of the Board of Directors of
the Company or any successor to the Company;
(iii) Following the effective date of the Plan, the Company is
merged or consolidated with another corporation and as a result of such merger
or consolidation less than 40% of the outstanding voting securities of the
surviving or resulting corporation shall then be owned in the aggregate by the
former shareholders of the Company, other than (x) any party to such merger or
consolidation, or (y) any affiliates of any such party;
(iv) A tender offer or exchange offer is made and consummated
for the ownership of securities of the Company representing 25% or more of the
combined voting power of the Company's then outstanding voting securities; or
(v) The Company transfers more than 50% of its assets, or the
last of a series of transfers result in the transfer of more than 50% of the
assets of the Company to another corporation that is not a wholly-owned
corporation of the Company. For purposes of this subsection 7(b)(4)(v), the
determination of what constitutes more than 50% of the assets of the Company
shall be determined based on the sum of the values attributed to (i) the
Company's real properties as determined by an independent appraisal thereof
and (ii) the net book value of all other assets of the Company, each taken as
of the date of the Transaction involved.
In addition, upon a Change of Control, any Options previously
granted under the Plan may be exercised to the extent not already exercised
either immediately or at any time during the term of the Option as such holder
shall elect.
(c) Option Prices. The purchase price or prices of the shares
-------------
of the Common Stock of the Company which shall be offered to any Outside
Director under the Plan and covered by each Option shall be one hundred
percent (100%) of the fair market value of the Common Stock at the time of
granting the Option or such higher purchase price as may be determined by the
Committee at the time of granting the Option. During such time as the Common
Stock of the Company is not listed upon an established stock exchange, the
fair market value per share shall be deemed to be the closing sales price of
the Common Stock on the National Association of Securities Dealers Automated
Quotation System ("NASDAQ") on the day the Option is granted, as reported by
NASDAQ, if the Common Stock is so quoted, and if not so quoted, the mean
between dealer "bid" and "ask" prices of the Common Stock in the New York
over-the-counter market on the date the Option is granted, as reported by the
National Association of Securities Dealers, Inc. If the Common Stock is listed
upon an established stock exchange or exchanges, such fair market value shall
be deemed to be the highest closing price of the Common Stock on such stock
exchange or exchanges on the day the Option is granted or, if no sale of the
Common Stock of the Company shall have been made on any stock exchange on such
day, on the next preceding day on which there was a sale of such stock. If
there is no market price for the Common Stock, then the Board of Directors and
the Committee may, after taking all relevant facts into consideration,
determine the fair market value of the Common Stock.
<PAGE>
<PAGE>
(d) Exercise of Options. To the extent that a holder of an
-------------------
Option has a current right to exercise, the Option may be exercised from time
to time by written notice to the Company at its principal place of business.
Such notice shall state the election to exercise the Option, the number of
shares in respect of which it is being exercised, shall be signed by the
person or persons so exercising the Option, and shall contain any investment
representation required by Section 12 hereof. Such notice shall be
accompanied by payment of the full purchase price of such shares and by the
Option Agreement evidencing the Option. In addition, if the Option shall be
exercised, pursuant to Section 7(b)(3) hereof, by any person or persons other
than the optionee, such notice shall also be accompanied by appropriate proof
of the right of such person or persons to exercise the Option. The Company
shall deliver a certificate or certificates representing such shares as soon
as practicable after the aforesaid notice and payment of such shares shall be
received. The certificate or certificates for the shares as to which the
Option shall have been so exercised shall be registered in the name of the
person or persons so exercising the Option. In the event the Option shall not
be exercised in full, the Secretary of the Company shall endorse or cause to
be endorsed on the Option the number of shares which has been exercised
thereunder and the number of shares that remain exercisable under the Option
and return such Option Agreement to the holder thereof.
(e) Nontransferability of Options. An Option granted pursuant
-----------------------------
to the Plan shall be exercisable only by the optionee during his or her
lifetime and shall not be assignable or transferable by him or her otherwise
than by Will or the laws of descent and distribution. An Option granted
pursuant to the Plan shall not be assigned, pledged or hypothecated in any way
(whether by operation of law or otherwise other than by Will or the laws of
descent and distribution) and shall not be subject to execution, attachment,
or similar process. Any attempted transfer, assignment, pledge,
hypothecation, or other disposition of any Option or of any rights granted
thereunder contrary to the foregoing provisions of this Section 7(e), or the
levy of any attachment or similar process upon an Option or such rights, shall
be null and void.
(f) Compliance with Securities Law. The Plan and the grant
------------------------------
and exercise of the rights to purchase shares hereunder, and the Company's
obligations to sell and deliver shares upon the exercise of rights to purchase
shares, shall be subject to all applicable federal and state laws, rules and
regulations, and to such approvals by any regulatory or governmental agency as
may, in the opinion of counsel for the Company, be required, and shall also be
subject to all applicable rules and regulations of any stock exchange upon
which the Common Stock of the Company may then be listed. At the time of
exercise of any Option, the Company may require the optionee to execute any
documents or take any action which may be then necessary to comply with the
Securities Act of 1933, as amended (the "Securities Act") and the rules and
regulations promulgated thereunder, or any other applicable federal or state
laws regulating the sale and issuance of securities; and the Company may, if
it deems necessary, include provisions in the stock option agreements to
assure such compliance. The Company may, from time to time, change its
requirements with respect to enforcing compliance with federal and state
securities laws including the request for and enforcement of agreements of
investment intent, such requirements to be determined by the Company in its
judgment as necessary to assure compliance with such laws. Such changes may
be made with respect to any particular Option or stock issued upon exercise
<PAGE>
<PAGE>
thereof. Without limiting the generality of the foregoing, if the Common
Stock issuable upon exercise of an Option granted under the Plan is not
registered under the Securities Act, the Company at the time of exercise will
require that the registered owner execute and deliver an investment
representation agreement to the Company in form acceptable to the Company and
its counsel, and the Company will place a legend on the certificate evidencing
such Common Stock restricting the transfer thereof, which legend shall be
substantially as follows:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
APPLICABLE STATE SECURITIES LAW BUT HAVE BEEN ACQUIRED FOR THE
PRIVATE INVESTMENT OF THE HOLDER HEREOF AND MAY NOT BE OFFERED, SOLD
OR TRANSFERRED UNTIL EITHER (i) A REGISTRATION STATEMENT UNDER SUCH
SECURITIES ACT OR SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE
BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) THE COMPANY SHALL HAVE
RECEIVED AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY AND ITS
COUNSEL THAT REGISTRATION UNDER SUCH SECURITIES ACT OR SUCH
APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH
SUCH PROPOSED OFFER, SALE OR TRANSFER.
(g) Additional Provisions. The option agreements authorized
---------------------
under the Plan shall contain such other provisions as the Committee shall deem
advisable, including, without limitation, restrictions upon the exercise of
the Option.
8. Limitations on Options. The maximum number of shares for which
----------------------
Options may be granted under the Plan to any Outside Director during any
calendar year shall be Twenty Thousand (20,000).
9. Medium and Time of Payment. The purchase price of the shares of
--------------------------
the Common Stock as to which any Option shall be exercised shall be paid in
full either (i) in cash at the time of exercise of such Option, (ii) by
tendering to the Company shares of the Company's Common Stock having a fair
market value equal to the purchase price for the number of shares of Common
Stock purchased, or (iii) partly in cash and partly in shares of the Company's
Common Stock valued at fair market value as of the date of receipt of such
shares by the Company. Cash payment for the shares of the Common Stock
purchased upon exercise of the Option shall be in the form of either a
cashier's check, certified check or money order. Personal checks may be
submitted, but will not be considered as payment for the shares of the Common
Stock purchased and no certificates for such shares will be issued until the
personal check clears in normal banking channels. If a personal check is not
paid upon presentment by the Company, then the attempted exercise of the
Option will be null and void. In the event the optionee tenders shares of the
Company's Common Stock in full or partial payment for the shares being
purchased pursuant to the Option, the shares of Common Stock so tendered shall
be accompanied by fully executed stock powers endorsed in favor of the Company
with the signature on such stock power being guaranteed. If an optionee
tenders shares, such optionee assumes sole and full responsibility for the tax
consequences, if any, to such optionee arising therefrom.
10. Rights as a Shareholder. The holder of an Option shall have no
------------------------
rights as a shareholder of the Company with respect to the shares covered by
<PAGE>
<PAGE>
the Option until the due exercise of the Option and the date of issuance of
one or more stock certificates to such holder for such shares. No adjustment
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
provided in Section 11 hereof.
11. Adjustments on Changes in Capitalization or Reorganization.
----------------------------------------------------------
(a) Changes in Capitalization. Subject to any required action by
-------------------------
the Shareholders of the Company, the number of shares of Common Stock covered
by the Plan, the number of shares of Common Stock covered by each outstanding
Option, and the exercise price per share specified in each such Option, shall
be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock of the Company resulting from a subdivision or
consolidation of shares or the payment of a stock dividend (but only on the
Common Stock) or any other increase or decrease in the number of such shares
effected without receipt of consideration by the Company after the date the
Option is granted, so that upon exercise of the Option, the optionee shall
receive the same number of shares the optionee would have received had the
optionee been the holder of all shares subject to such optionee's outstanding
Option immediately before the effective date of such change in the number of
issued shares of the Common Stock of the Company.
(b) Reorganization, Dissolution or Liquidation. Subject to any
------------------------------------------
required action by the Shareholders of the Company, if the Company shall be
the surviving corporation in any merger or consolidation, each outstanding
Option shall pertain to and apply to the securities to which a holder of the
number of shares of Common Stock subject to the Option would have been
entitled. A dissolution or liquidation of the Company or a merger or
consolidation in which the Company is not the surviving corporation, shall
cause each outstanding Option to terminate as of a date to be fixed by the
Committee (which date shall be as of or prior to the effective date of any
such dissolution or liquidation or merger or consolidation); provided, that
not less than thirty (30) days written notice of the date so fixed as such
termination date shall be given to each optionee, and each optionee shall, in
such event, have the right, during such period of thirty (30) days preceding
such termination date, to exercise such optionee's Option in whole or in part
in the manner herein set forth.
(c) Change in Par Value. In the event of a change in the Common
-------------------
Stock of the Company as presently constituted, which change is limited to a
change of all of its authorized shares with par value into the same number of
shares with a different par value or without par value, the shares resulting
from any change shall be deemed to be the Common Stock within the meaning of
the Plan.
(d) Notice of Adjustments. To the extent that the adjustments set
---------------------
forth in the foregoing paragraphs of this Section 11 relate to stock or
securities of the Company, such adjustments, if any, shall be made by the
Committee, whose determination in that respect shall be final, binding and
conclusive. The Company shall give timely notice of any adjustments made to
each holder of an Option under this Plan and such adjustments shall be
effective and binding on the optioned.<PAGE>
<PAGE>
(e) Effect Upon Holder of Option. Except as hereinbefore expressly
----------------------------
provided in this Section 11, the holder of an Option 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 increases or decrease in the
number of shares of stock of any class by reason of any dissolution,
liquidation, merger, reorganization, or consolidation, or spin-off of assets
or stock of another corporation, and any issue by the Company of shares of
stock of any class, or securities convertible into shares of stock of any
class, shall not affect, and no adjustment by reason thereof shall be made
with respect to, the number or price of shares of Common Stock subject to the
Option. Without limiting the generality of the foregoing, no adjustment shall
be made with respect to the number or price of shares subject to any Option
granted hereunder upon the occurrence of any of the following events:
(1) The grant or exercise of any other options which may be
granted or exercised under any qualified or nonqualified stock option plan or
under any other employee benefit plan of the Company whether or not such
options were outstanding on the date of grant of the Option or thereafter
granted;
(2) The sale of any shares of Common Stock in the Company's
initial or any subsequent public offering, including, without limitation,
shares sold upon the exercise of any over allotment option granted to the
underwriter in connection with such offering;
(3) The issuance, sale or exercise of any warrants to purchase
shares of Common Stock whether or not such warrants were outstanding on the
date of grant of the Option or thereafter issued;
(4) The issuance or sale of rights, promissory notes or other
securities convertible into shares of Common Stock in accordance with the
terms of such securities ("Convertible Securities") whether or not such
Convertible Securities were outstanding on the date of grant of the Option or
were thereafter issued or sold;
(5) The issuance or sale of Common Stock upon conversion or
exchange of any Convertible Securities, whether or not any adjustment in the
purchase price was made or required to be made upon the issuance or sale of
such Convertible Securities and whether or not such Convertible Securities
were outstanding on the date of grant of the Option or were thereafter issued
or sold; or
(6) Upon any amendment to or change in the terms of any rights
or warrants to subscribe for or purchase, or options for the purchase of,
Common Stock or Convertible Securities or in the terms of any Convertible
Securities, including, but not limited to, any extension of any expiration
date of any such right, warrant or option, any change in any exercise or
purchase price provided for in any such right, warrant or option, any
extension of any date through which any Convertible Securities are convertible
into or exchangeable for Common Stock or any change in the rate at which any
Convertible Securities are convertible into or exchangeable for Common Stock.
(f) Right of Company to Make Adjustments. The grant of an Option
------------------------------------
pursuant to the 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 or to consolidate or to <PAGE>
<PAGE>
dissolve, liquidate or sell, or transfer all or any part of its business or
assets.
12. Investment Purpose. Each Option under the Plan shall be granted
------------------
on the condition that the purchase of the shares of stock thereunder shall be
for investment purposes, and not with a view to the sale or distribution;
provided, however, that in the event the shares of stock subject to such
Option are registered under the Securities Act or in the event a resale of
such shares of stock without such registration would otherwise be permissible,
such condition shall be inoperative if in the opinion of counsel for the
Company such condition is not required under the Securities Act or any other
applicable law, regulation, or rule of any governmental agency.
13. No Obligation to Exercise Option. The granting of an Option
--------------------------------
shall impose no obligation upon the optionee to exercise such Option.
14. Modification, Extension, and Renewal of Options. Subject to the
-----------------------------------------------
terms and conditions and within the limitations of the Plan, the Committee and
the Board of Directors may modify, extend or renew outstanding Options granted
under the Plan, or accept the surrender of outstanding Options (to the extent
not theretofore exercised). Neither the Committee nor the Board of Directors
shall, however, modify any outstanding Options so as to specify a lower price
or accept the surrender of outstanding Options and authorize the granting of
new Options in substitution therefor specifying a lower price.
Notwithstanding the foregoing, however, no modification of an Option shall,
without the consent of the optionee, alter or impair any rights or obligations
under any Option theretofore granted under the Plan.
15. Effective Date of the Plan. The Plan shall become effective on
--------------------------
the date of execution hereof, which is the date the Board of Directors
approved and adopted the Plan (the "Effective Date"); provided, however, if
the Shareholders of the Company shall not have approved the Plan by the
requisite vote of the Shareholders, within twelve (112) months after the
Effective Date, then the Plan shall terminate and all Options theretofore
granted under the Plan shall terminate and be null and void.
16. Termination of the Plan. This Plan shall terminate as of the
-----------------------
expiration of six (6) years from the date of execution hereof, which date of
execution is the date the plan was approved and adopted by the Board of
Directors of the Company. Options may be granted under this Plan at any time
and from time to time prior to its termination. Any Option outstanding under
the Plan at the time of its termination shall remain in effect until the
Option shall have been exercised or shall have expired.
17. Amendment of the Plan. The Plan may be terminated at any time by
----------------------
the Board of Directors of the Company. The Board of Directors may at any time
and from time to time, without obtaining the approval of the Shareholders of
the Company, modify or amend the Plan (including the form of Option Agreement
as hereinabove mentioned) in such respects as it shall deem advisable to
conform to any change in the law, or in any other respect which shall not
change: (a) the maximum number of shares for which Options may be granted
under the Plan, except as provided in Section 11 hereof; or (b) the option
<PAGE>
<PAGE>
prices other than to change the manner of determining the fair market value of
the Common Stock for the purpose of Section 7(c) hereof to conform with any
then applicable laws or regulations thereunder; or (c) the periods during
which Options may be granted or exercised; or (d) the provisions relating to
the determination of persons to whom Options shall be granted and the number
of shares to be covered by such Options; or (e) the provisions relating to
adjustments to be made upon changes in capitalization. The termination or any
modification or amendment of the Plan shall not, without the consent of the
person to whom any Option shall theretofore have been granted, affect that
persons' rights under an Option theretofore granted to that person. With the
consent of the person to whom such Option was granted, an outstanding Option
may be modified or amended by the Committee in such manner as it may deem
appropriate and consistent with the requirements of this Plan applicable to
the grant of a new Option on the date of modification or amendment.
18. Indemnification of Committee. In addition to such other rights
----------------------------
of indemnification as they may have as Directors or as members of the
Committee, the members of the Committee shall be indemnified by the Company
against the reasonable expenses, including attorneys' fees actually and
necessarily incurred in connection with the defense of any action, suit or
proceedings, or in connection with any appeal therein, to which they or any of
them may be a party by reason of any action taken or failure to act under or
in connection with the Plan or any Option granted thereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is
approved by independent legal counsel selected by the Company) or paid by them
in satisfaction of a judgment in any such action, suit or proceeding, except
in relation to matters as to which it shall be adjudged in such action, suit
or proceeding that such Committee member is liable for negligence or
misconduct in the performance of his duties; provided that within sixty (60)
days after institution of any such action, suit or proceeding a Committee
member shall in writing offer the Company the opportunity, at its own expense,
to pursue and defend the same.
19. Withholding. Whenever an optionee shall recognize compensation
------------
income as a result of the exercise of any Option granted under the Plan, the
optionee shall remit in cash to the Company or Subsidiary the minimum amount
of federal income and employment tax withholding which the Company or
Subsidiary is required to remit to the Internal Revenue Service in accordance
with the then current provisions of the Code. The full amount of such
withholding shall be paid by the optionee simultaneously with the award or
exercise of an Option, as applicable.
20. Application of Funds. The proceeds received by the Company from
--------------------
the sale of Common Stock pursuant to Options granted hereunder will be used
for general corporate purposes.
21. Governing Law. This Plan shall be governed and construed in
-------------
accordance with the laws of the state of incorporation of the Company.
<PAGE>
<PAGE>
EXECUTED this 1st day of June, 1994; effective, however, as of the
Effective Date.
POLISH TELEPHONES AND MICROWAVE CORPORATION
By:
-------------------------------
W. Dal Berry
President
ATTEST:
- -------------------------
EXHIBIT 4.3
TELEREUNION, INC.
1995 STOCK OPTION AND APPRECIATION RIGHTS PLAN
(as amended and restated in September 1995)
ARTICLE I
ESTABLISHMENT AND PURPOSE
Section 1.1 TeleReunion, Inc. (the "Company"), a Delaware
corporation, hereby establishes a stock option and appreciation rights
plan to be named the TeleReunion, Inc. 1995 Stock Option and
Appreciation Rights Plan (the "Plan").
Section 1.2 The purpose of the Plan is to induce persons who are
officers, directors, employees and consultants of the Company or any
of its subsidiaries who are in a position to contribute materially to
the Company's prosperity to remain with the Company, to offer such
persons incentives and rewards in recognition of their contributions
to the Company's progress, and to encourage such persons to continue
to promote the best interests of the Company. The Plan provides for
options which qualify as incentive stock options ("Incentive Options")
under Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"), to be issued to such persons who are employees or
officers, as well as options which do not so qualify ("Non-Qualified
Options") to be issued to officers, directors, employees and
consultants. The Plan also provides for grants of stock appreciation
rights ("Rights") in connection with the grant of options under the
Plan.
Section 1.3 All stock options granted by the Company on or after the
date that this Plan has been approved or adopted by the Company's
Stockholders shall be governed by the terms and conditions of this
Plan unless the terms of such option specifically indicate that it is
not to be governed by this Plan.
ARTICLE II
ADMINISTRATION
Section 2.1 All determinations under the Plan concerning the
selection of persons eligible to receive awards under the Plan and
with respect to the timing, pricing and amount of a grant or award
under this Plan (other than pursuant to a non-discretionary formula
set forth in this Plan) shall be made by the administrator (the
"Administrator") of the Plan. The Administrator shall be either (a)
the Company's Board of Directors (the "Board"), if each member of the
Board is a "disinterested person" for the purposes of this Plan within
the meaning of such term under Rule 16b-3 under the Securities
<PAGE>
<PAGE>
Exchange Act of 1934, as amended (the "Exchange Act"), as such rule
may be amended from time to time ("Rule 16b-3"), or, (b) in the
discretion of the Board by a committee (the "Committee") of not less
than two members of the Board, each of whom is a "disinterested
person." A "disinterested person" within the meaning of Rule 16b-3 as
in effect on the date this Plan is adopted by the Board is a person
who has not been granted or awarded equity securities, within the
meaning of the Exchange Act, under this Plan or any other plan of the
Company or any affiliate thereof at any time within one year prior to
such person's service as a member of the Administrator or during such
service, except as otherwise permitted by Rule 16b-3(c). In the event
the Committee is the Administrator, the Committee shall select one of
its members as its Chairman and shall hold its meetings at such times
and places as it may determine. In such case, a majority of the
Committee shall constitute a quorum, and the acts of a majority of the
members present at any meeting at which a quorum is present, or acts
approved in writing by a majority of the Committee, shall be deemed
the acts of the Committee. With respect to persons subject to Section
16 of the Exchange Act, transactions under this Plan are intended to
comply with all applicable conditions of Rule 16b-3 or its successors
under the Exchange Act. To the extent any provision of the Plan or
action by the Administrator fails to so comply, it shall be deemed
null and void, to the extent permitted by law and deemed advisable by
the Administrator.
Section 2.2 The provisions of this Plan relating to Incentive Options
are intended to comply in every respect with Section 422 of the Code
and the regulations promulgated thereunder ("Section 422"). In the
event any future statute or regulation shall modify Section 422, this
Plan shall be deemed to incorporate by reference such modification.
Any stock option agreement relating to any Incentive Option granted
pursuant to this Plan outstanding and unexercised at the time that any
modifying statute or regulation becomes effective shall also be deemed
to incorporate by reference such modification, and no notice of such
modification need be given to the optionee. Any stock option
agreement relating to an Incentive Option shall provide that the
optionee hold his stock received upon exercise of such Incentive
Option for a minimum of two years from the date of grant of the
Incentive Option and one year from the date of the exercise of such
Incentive Option, absent the written approval, consent or waiver of
the Committee.
Section 2.3 If any provision of this Plan is determined to disqualify
the shares purchasable pursuant to the Incentive Options granted under
this Plan from the special tax treatment provided by Section 422, such
provision shall be deemed to incorporate by reference the modification
required to qualify the shares for said tax treatment.
Section 2.4 The Company shall grant Incentive Options and
Non-Qualified Options (collectively, "Options"), and Rights under the
Plan in accordance with the formula set forth herein and/or
determinations made by the Board or the Committee pursuant to the
provisions of the Plan, as the case may be. All Options granted
pursuant to the Plan shall be clearly identified as Incentive Options
or Non-Qualified Options. The Board or the Committee may from time to
time adopt (and thereafter amend or rescind) such rules and
<PAGE>
<PAGE>
regulations for carrying out the Plan and take such action in the
administration of the Plan, not inconsistent with the provisions
hereof, as it shall deem proper. The Board or, subject to the
supervision of the Board, the Committee shall have plenary discretion,
subject to the express provisions of this Plan, to determine which
officers, directors, employees and consultants shall be granted
Options, the number of shares subject to each Option, the time or
times when an Option may be exercised (whether in whole or in
installments), whether stock appreciation rights under Section 7.6
hereof shall be granted, the terms and provisions of the respective
Option agreements (which need not be identical), including such terms
and provisions which may be amended from time to time as shall be
required, in the judgment of the Board or the Committee, to conform to
any change in any law or regulation applicable hereto, and to make all
other determinations deemed necessary or advisable for the
administration of the Plan. The interpretation and construction of
any provisions of the Plan by the Board or the Committee (unless
otherwise determined by the Board) shall be final, conclusive and
binding upon all persons. Directors who are not also employees of the
Company or any of its subsidiaries may only participate in this Plan
to the extent specified in Section 2.5.
Section 2.5 Directors of the Company who are not also employees of
the Company shall participate in the Plan to the extent that they
shall be granted Non-Qualified Options on a non-discretionary basis in
accordance with the following formula: on the date of election to the
Board, pursuant to the provisions of the Company's By-Laws providing
for such election, each non-employee director shall receive a
Non-Qualified Option to purchase ten thousand (10,000) shares of the
Company's common stock at an exercise price equal to the fair market
value per share of such common stock on that date. Each such Option
granted pursuant to the formula discussed herein each non-employee director
shall receive a Non-Qualified Option to purchase ten thousand (10,000) shares
of the Company's common stock Each such Option shall be subject to the
restrictions upon transfer, limitations on exercise and restrictions upon
transfer of the Common Stock to be issued upon exercise of the Option as are
set forth elsewhere herein or which are imposed by applicable law, including
without limitation applicable federal and state securities laws. Except as
otherwise provided in this paragraph, all Options issued pursuant to this
paragraph shall be subject to the terms and conditions of this Plan; to the
extent such terms and conditions are inconsistent with this paragraph, this
paragraph shall control. To the extent required pursuant to Rule 16b-3, as
such rule relates to formula awards and as such rule may be amended from time
to time, this paragraph shall not be amended more than once every six months
over than to comport with changes in the Code, the Employee Retirement Income
Security Act or the rules thereunder.
Section 2.6 No member of the Board or the Committee shall be liable for any
action or determination made in good faith with respect to the Plan or any
Option granted under it. A member of the Board or the Committee shall be
indemnified by the Company, pursuant to the Company's By-Laws, for any
expenses, judgments or other costs incurred as a result of a lawsuit filed
against such member claiming any rights or remedies due to such member's
participation in the administration of the Plan.
<PAGE>
<PAGE>
ARTICLE III
TOTAL NUMBER OF SHARES TO BE OPTIONED
Section 3.1 There shall be reserved for issuance or transfer upon
exercise of Options to be granted from time to time under this Plan an
aggregate of 2,000,000 shares of common stock of the Company (subject
to adjustment as provided in Article VIII hereof). The shares sold
under the Plan may be either issued shares reacquired by the Company
at any time or authorized but unissued shares, as the Board from time
to time may determine.
Section 3.2 In the event that any outstanding Options under the Plan
for any reason expire or are terminated without having been exercised
in full or shares of common stock subject to Options are surrendered
in whole or in part pursuant to stock appreciation rights granted
under Section 7.6 hereof (except to the extent that shares of common
stock are paid to the holder of the Option upon such surrender) the
unpurchased shares subject to such Option and any such surrendered
shares may again be available for transfer under the Plan.
Section 3.3 No Options shall be granted pursuant to this Plan to any
optionee after the tenth anniversary of the earlier of the date that
this Plan is adopted by the Board or the date that this Plan is
approved by the shareholders.
ARTICLE IV
ELIGIBILITY
Section 4.1 Subject to Section 2.5, Non-Qualified Options may be
granted pursuant to this Plan only to officers, directors, employees
and consultants of the Company or any of its subsidiaries selected by
the Board or the Committee, and Incentive Options may be granted
pursuant to this Plan only to officers, directors who are also
employees and employees of the Company or any of its subsidiaries
selected by the Committee. Persons granted Options pursuant to this
Plan are hereinafter referred to as "Optionees." For purposes of
determining who is an employee with respect to eligibility for
Incentive Options, Section 422 shall govern. The Board or the
Committee may determine in its sole discretion that any person who
would otherwise be eligible to be granted Options shall, nonetheless,
be ineligible to receive any award under this Plan.
Section 4.2 Except as otherwise provided in Section 2.5, the Board or
the Committee will, in its discretion, determine the persons to be
granted Options, the time or times at which Options shall be granted,
the number of shares subject to each Option, the terms of a vesting or
forfeiture schedule, if any, the type of Option issued, the period
during which they may be exercised, the manner in which Options may be
exercised and all other terms and conditions of the Options; provided,
however, no Option will be granted which has terms or conditions
inconsistent with those stated in Articles V and VI hereof. Relevant
<PAGE>
<PAGE>
factors in making such determinations may include the value of the
services rendered by the respective Optionee, his present and potential
contributions to the Company, and such other factors which are deemed relevant
in accomplishing the purpose of the Plan.
Section 4.3 No Options may be granted to any member of the Committee, or if
this Plan is administered by the Board rather than the Committee, no Options
may be granted to any director (other than pursuant to non-discretionary
formulas meeting the conditions in Rule 16b-3(c)(2)(ii), including the formula
set forth in Section 2.5 hereof) if such director or Committee member has,
during the one year prior to such person's service as an administrator of this
Plan or during such service, received any Options or equity securities
pursuant to any plan of the Company or any of its affiliates (other than
pursuant to formulas in Section 2.5 of this Plan or otherwise in a manner
described in Rule 16b-3(c)(2)(i), as such rule may be amended from time to
time). No Option may be granted pursuant to this Plan after the registration
of the securities of the Company pursuant to Section 12 of the Exchange Act
unless the Plan is administered by the Board consisting of "disinterested
persons" or by the Committee thereof consisting of two or more "disinterested
persons" as defined in Rule 16b-3(c).
ARTICLE V
TERMS AND CONDITIONS OF OPTIONS
Section 5.1 Each Option granted under the Plan shall be evidenced by a Stock
Option Certificate and Agreement in a form not inconsistent with the Plan,
provided that the following terms and conditions shall apply:
(a) The price at which each share of common stock covered by an Option may be
purchased shall be set forth in the Stock Option Certificate and Agreement and
shall be determined by the Board or the Committee or such applicable formula
as may be set forth herein or therein, provided that the Option price for any
Incentive Option shall not be less than the "fair market value" of the common
stock at the time of grant. Notwithstanding the foregoing, if an Incentive
Option to purchase shares is granted pursuant to this Plan to an Optionee who,
on the date of the grant, directly or indirectly owns more than 10% of the
voting power of all classes of stock of the Company or its parent or
subsidiary, not including the stock obtainable under the Option, the minimum
Option price of such Option shall be not less than 110% of the "fair market
value" of the stock on the date of grant.
(b) The "fair market value" shall be determined by the Board or the
Committee, which determination shall be binding upon the Company and its
officers, directors, employees and consultants. The determination of the fair
market value shall be based upon the following: (i) if the common stock is
not listed and traded upon a recognized securities exchange and there is no
report of stock prices with respect to the common stock published by a
recognized stock quotation service, on the basis of the recent purchases and
sales of the common stock in arms-length transactions; or (ii) if the common
stock is not then listed and traded upon a recognized securities exchange or
quoted on the NASDAQ National Market System, and there are reports of stock
prices by a recognized quotation service, upon the basis of the mean between
the closing bid and asked quotations for such stock on the date of grant as
reported by a recognized stock quotation service, or, if there are no bid or
asked quotations on that day, then upon the basis of the mean between the bid
<PAGE>
<PAGE>
and asked quotations for such stock on the date nearest preceding that day; or
(iii) if the common stock shall then be listed and traded upon a recognized
securities exchange or quoted on the NASDAQ National Market System, upon the
basis of the mean between the highest and lowest selling prices at which
shares of the common stock were traded on such recognized securities exchange
on that date or, if the common stock was not traded on such date, upon the
basis of the mean of such prices on the date nearest preceding that date. The
Board or the Committee shall also consider such other factors relating to the
fair market value of the common stock as it shall deem appropriate.
(c) For the purpose of determining whether an Optionee owns more than 10% of
the voting power of all classes of stock of the Company, an Optionee is
considered to own those shares which are owned directly or indirectly through
brothers and sisters (including half-blooded siblings), spouse, ancestors and
lineal descendants; and proportionately as a shareholder of a corporation, a
partner of a partnership, and/or a beneficiary of a trust or an estate that
owns shares of the Company.
(d) Notwithstanding any other provision of this Plan, in accordance with the
provisions of Section 422(d) of the Code, to the extent that the aggregate
fair market value (determined at the time the Option is granted) of the stock
of the Company with respect to which Incentive Options (without reference to
this provision) are exercisable for the first time by any individual in any
calendar year under any and all stock option plans of the Company, its
subsidiary corporations and its parent (if any) exceeds $100,000, such Options
shall be treated as Non-Qualified Options.
(e) An Optionee may, in the Board or the Committee's discretion or pursuant
to the formula set forth herein or referenced herein, be granted more than one
Incentive Option or Non-Qualified Option during the duration of this Plan, and
may be issued a combination of Non-Qualified Options and Incentive Options;
provided that non-employees are not eligible to receive Incentive Options and
non-employee directors may only receive Options in accordance with Section 2.5
hereof.
(f) Except as set forth in Section 2.5, each non-employee director shall
receive a Non-Qualified Option to purchase ten thousand (10,000) shares of the
Company's common stock.
(g) Any Option and any right related thereto shall not be transferable by the
Optionee other than by will, or by the laws of descent and distribution. An
Option may be exercised during the Optionee's lifetime only by the Optionee.
(h) At least six months shall elapse from the date on which an Option is
granted to a director, officer or beneficial owner of more than 10% of the
outstanding common stock under this Plan by the Board (or the Committee) to
the date on which any share of common stock underlying such Option is sold or
any Right associated with such Option is exercised, unless the Board or the
Committee otherwise consents in writing.
ARTICLE VI
EMPLOYMENT OR SERVICE OF OPTIONEE
Section 6.1 If the employment or service of an Optionee is terminated
for cause, the Option rights of such Optionee, both accrued and
future, under any then outstanding Non-Qualified or Incentive Option
<PAGE>
<PAGE>
shall terminate immediately. However, under no circumstances will the
termination of the service of a non-employee director result in the
termination under this Section 6.1 of any Option issued pursuant to Section
2.5. Unless the Board or the Committee determines to define "cause"
differently and such definition is set forth in the Stock Option Certificate,
"cause" shall mean incompetence in the performance of duties, disloyalty,
dishonesty, theft, embezzlement, unauthorized disclosure of patents, processes
or trade secrets of the Company, individually or as an employee, partner,
associate, officer or director of any organization. The determination of the
existence and the proof of "cause" shall be made by the Board or the Committee
and, subject to the review of any determination made by the Committee by the
Board, such determination shall be binding on the Optionee and the Company.
Section 6.2 If the employment or service of the Optionee is terminated by
either the Optionee or the Company for any reason other than for cause, death,
or for disability, as defined in Section 22(e)(3) of the Code, the Option
rights of such Optionee under any then outstanding Non-Qualified or Incentive
Option shall, subject to the provisions of Section 5.1(h) hereof, be
exercisable by such Optionee at any time prior to the expiration of the Option
or within three months after the date of such termination, whichever period of
time is shorter, but only to the extent of the accrued right to exercise the
Option at the date of such termination.
Section 6.3 In the case of an Optionee who becomes disabled, as defined by
Section 22(e)(3) of the Code, the Option rights of such Optionee under any
then outstanding Non-Qualified or Incentive Option shall, subject to the
provisions of Section 5.1(h) hereof, be exercisable by such Optionee at any
time prior to the expiration of the Option or within one year after the date
of termination of employment or service due to disability, whichever period of
time is shorter, but only to the extent of the accrued right to exercise the
Option at the date of such termination.
Section 6.4 In the event of the death of an Optionee, the Option rights of
such Optionee under any then outstanding Non-Qualified or Incentive Option
shall be exercisable by the person or persons to whom these rights pass by
will or by the laws of descent and distribution, at any time prior to the
expiration of the Option or within three years after the date of death,
whichever period of time is shorter, but only to the extent of the accrued
right to exercise the Option at the date of death. If a person or estate
acquires the right to exercise a Non-Qualified or Incentive Option by bequest
or inheritance, the Committee may require reasonable evidence as to the
ownership of such Option, and may require such consents and releases of taxing
authorities as the Committee may deem advisable.
Section 6.5 In addition to the requirements set forth in the Plan, with the
exception of any Options issued pursuant to Section 2.5 of the Planhereof, the
Committee or the Board may set such other targets, restrictions or other terms
relating to the employment or service of the Optionee, including but not
limited to a requirement that an employee must be continuously employed by the
Company for such period of time as the Board or Committee, in its discretion,
deems advisable before the right to exercise any portion of an Option granted
to such employee will accrue, which targets, restrictions, or terms must be
fulfilled or complied with, as the case may be, prior to the exercise of any
portion of an Option granted to any Optionee.
Section 6.6 Options granted under the Plan shall not be affected by any
change of duties or position, so long as the Optionee continues in the service
of the Company.
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<PAGE>
Section 6.7 Nothing contained in the Plan, or in any Option granted pursuant
to the Plan, shall confer upon any Optionee any right with respect to
continuance of employment or service by the Company nor interfere in any way
with the right of the Company to terminate the Optionee's employment or
service or change the Optionee's compensation at any time.
ARTICLE VII
PURCHASE OF SHARES
Section 7.1 Except as provided in this Article VII, an Option shall be
exercised by tender to the Company of the total exercise price of the shares
with respect to which the Option is exercised and written notice of the
exercise. The right to purchase shares shall be cumulative so that, once the
right to purchase any shares has accrued, such shares or any part thereof may
be purchased at any time thereafter until the expiration or termination of the
Option. A partial exercise of an Option shall not affect the right of the
Optionee to exercise the Option from time to time, in accordance with the
Plan, as to the remaining number of shares subject to the Option. The
purchase price of the shares shall be in United States dollars, payable in
cash or by certified bank check. Notwithstanding the foregoing, in lieu of
cash, a non-director Optionee may, with the approval of the Board or the
Committee, exercise his Option by tendering to the Company shares of the
common stock of the Company owned by him and having an aggregate fair market
value at least equal to the total exercise price. The fair market value of
any shares of common stock so surrendered shall be determined by the Board or
the Committee in accordance with Section 5.1(b) hereof.
Section 7.2 Except as provided in Article VI, an Option may not be exercised
unless the holder thereof is an officer, director, employee or consultant of
the Company at the time of exercise.
Section 7.3 No Optionee, or optionee's executor, administrator, legatee,
distributee or other permitted transferee, shall be deemed to be a holder of
any shares subject to an Option for any purpose whatsoever unless and until a
stock certificate or certificates for such are issued to such person(s) under
the terms of the Plan. No adjustment 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 provided in Article VIII hereof.
Section 7.4 If (i) the listing, registration or qualification of the Options
issued hereunder, or of any securities that may be purchased upon exercise of
such Options (the "Subject Securities") upon any securities exchange or
quotation system, or under federal or state law is necessary as a condition of
or in connection with the issuance or exercise of the Options, or (ii) the
consent or approval of any governmental regulatory body is necessary as a
condition of or in connection with the issuance or exercise of the Options,
the Company shall not be obligated to deliver the certificates representing
the Subject Securities or to accept or to recognize an Option exercise unless
and until such listing, registration, qualification, consent or approval shall
have been effected or obtained. The Company will take reasonable action to so
list, register, or qualify the Options and the Subject Securities, or effect
or obtain such consent or approval, so as to allow for their issuance.
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Section 7.5 An Optionee may be required to represent to the Company as a
condition of his exercise of Options issued under this Plan: (i) that the
Subject Securities acquired upon Option exercise are being acquired by him for
investment and not with a view to distribution or resale, unless counsel for
the Company is then of the view that such a representation is not necessary
and is not required under the Securities Act of 1933, as amended, or any other
applicable statute, law, regulation or rule; and (ii) that the Optionee shall
make no exercise or disposition of an Option or of the Subject Securities in
contravention of the Exchange Act or the rules and regulations thereunder.
Optionees may also be required to provide (as a condition precedent to
exercise of an Option) such documentation as may be reasonably requested by
the Company to assure compliance with applicable law and the terms and
conditions of the Plan and the subject Option.
Section 7.6 The Board or the Committee may, in its discretion, grant in
connection with any Option, at any time prior to the exercise thereof, the
Right to surrender all or part of the Option to the extent that such Option is
exercisable and receive in exchange an amount (payable in cash, shares of the
Company's stock valued at the then fair market value, or a combination thereof
as determined by the Board or the Committee) equal to the difference between
the then fair market value of the shares issuable upon the exercise of the
Option or portions thereof surrendered and the Option price payable upon the
exercise of the Option or portions thereof surrendered (the "Spread"). Such
Rights may be included in an Option only under the following conditions: (a)
the Rights will expire no later than the expiration of the underlying Option;
(b) the Rights may be for no more than 100% of the Spread; (c) the Rights are
transferable only when the underlying Option is transferable, and under the
same conditions; (d) the Rights may be exercised only when the underlying
Option is eligible to be exercised; and (e) the Rights may be exercised only
when the Spread is positive, i.e., when the market price of the stock subject
to the Option exceeds the exercise price of the Option.
Section 7.7 An Option may also be exercised by tender to the Company of a
written notice of exercise together with advice of the delivery of an order to
a broker to sell part or all of the shares of common stock subject to such
exercise notice and an irrevocable order to such broker to deliver to the
Company (or its transfer agent) sufficient proceeds from the sale of such
shares to pay the exercise price and any withholding taxes. All documentation
and procedures to be followed in connection with such a "cashless exercise"
shall be approved in advance by the Company.
ARTICLE VIII
CHANGE IN NUMBER OF OUTSTANDING SHARES OF
STOCK, ADJUSTMENTS, REORGANIZATIONS, ETC.
Section 8.1 In the event that the outstanding shares of common stock of the
Company are hereafter increased or decreased or changed into or exchanged for
a different number of shares or kind of shares or other securities of the
Company or of another corporation by reason of reorganization, merger,
consolidation, recapitalization, reclassification, stock split, combination of
shares, or a dividend payable in capital stock, appropriate adjustment may be
made by the Board or the Committee in the number and kind of shares for the
purchase of which Options may be granted under the Plan, including the maximum
number that may be granted to any one person. In addition, the Board or the
Committee may make appropriate adjustments in the number and kind of shares as
to which outstanding Options, or portions thereof then unexercised, shall be
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exercisable, to the end that the Optionee's proportionate interest shall be
maintained as before the occurrence to the unexercised portion of the Option
and with a corresponding adjustment in the Option price per share. Any such
adjustment made by the Board or the Committee shall be conclusive.
Section 8.2 The grant of an Option pursuant to the 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 or to consolidate or to dissolve, liquidate or sell, or
transfer all or any part of its business or assets.
Section 8.3 Upon the dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation of the Company as a result of which
the outstanding securities of the class then subject to Options hereunder are
changed into or exchanged for cash or property or securities not of the
Company's issue, or upon a sale of substantially all the property of the
Company to an association, person, party, corporation, partnership, or control
group as that term is construed for purposes of the Exchange Act, the Plan
shall terminate, and all Options theretofore granted hereunder shall
terminate, unless provision be made in writing in connection with such
transaction for the continuance of the Plan and/or for the assumption of
Options theretofore granted, or the substitution for such Options of Options
covering the stock of a successor employer corporation, or a parent or a
subsidiary thereof, with appropriate adjustments as to the number and kind of
shares and prices, in which event the Plan and Options theretofore granted
shall continue in the manner and under the terms so provided. If the Plan and
unexercised Options shall terminate pursuant to the foregoing sentence, all
persons owning any unexercised portions of Options then outstanding shall have
the right, at such time prior to the consummation of the transaction causing
such termination as the Company shall designate, to exercise the unexercised
portions of their Options, including the portions thereof which would, but for
this Section 8.3 not yet be exercisable.
ARTICLE IX
DURATION, AMENDMENT AND TERMINATION
Section 9.1 The Board may at any time terminate the Plan or make such
amendments thereto as it shall deem advisable and in the best interests of the
Company, without action on the part of the stockholders of the Company unless
such approval is required pursuant to Section 422 or the regulations
thereunder or Rule 16b-3; provided, however, that no such termination or
amendment shall, without the consent of the individual to whom any Option
shall theretofore have been granted, affect or impair the rights of such
individual under such Option, and provided further, that, unless the holders
of a majority of all classes of the Company's outstanding voting stock
entitled to vote thereon shall have first approved thereof, no amendment of
this Plan shall be made whereby (a) the total number of shares which may be
Optioned under the Plan to all individuals, or any of them, shall be
increased, except by operation of the adjustment provisions of Article VIII
hereof, (b) the authority to administer the Plan by the Board or the Committee
shall be withdrawn, (c) the maximum term of the Options shall be extended, (d)
the minimum Option price of Incentive Options shall be decreased, (e) the
price to Optionees to whom Options have been granted shall be changed, or (f)
the class of individuals eligible to participate in the Plan is modified.
Pursuant to '422(b)(2) of the Code, no Incentive Option may be granted <PAGE>
<PAGE>
pursuant to this Plan more than 10 years from the date the Plan is adopted or
the date the Plan is approved by the stockholders of the Company, whichever is
earlier.
ARTICLE X
RESTRICTIONS
Section 10.1 Any shares issued pursuant to the Plan shall be subject to such
restrictions on transfer and limitations as shall, in the opinion of the Board
or the Committee, be necessary or advisable to assure compliance with the
laws, rules and regulations of the United States government or any state or
jurisdiction thereof. In addition, except for those Non-Qualified Options
issued pursuant to Section 2.5, the Board or the Committee may in any Stock
Option Certificate and Agreement impose such other restrictions upon the
exercise of an Option or upon the sale or other disposition of the shares of
common stock deliverable upon exercise thereof as the Board or the Committee
may, in its sole discretion, determine, including but not limited to
provisions which allow the Company to reacquire such shares at their original
purchase price if the Optionee's employment terminates within a stated period
after the acquisition of such shares. By accepting an award pursuant to the
Plan each Optionee shall thereby agree to any such restrictions.
Section 10.2 Any certificate issued to evidence shares issued pursuant to an
Option shall bear such legends and statements as the Board or counsel to the
Company shall deem advisable to assure compliance with the laws, rules and
regulations of the United States government or any state or jurisdiction
thereof. No shares will be delivered under the Plan until the Company has
obtained such consents or approvals from such regulatory bodies of the United
States government or any state or jurisdiction thereof as the Board or counsel
to the Company deems necessary or advisable.
ARTICLE XI
FINANCIAL ASSISTANCE
Section 11.1 The Company is vested with authority under this Plan to assist
any employee to whom an Option is granted hereunder (including any director or
officer of the Company or any of its subsidiaries who is also an employee) in
the payment of the purchase price payable on exercise of that Option, by
lending the amount of such purchase price to such employee on such terms and
at such rates of interest and upon such security (or unsecured) as shall have
been authorized by or under authority of the Board. Any such assistance shall
comply with the requirements of Regulation G promulgated by the Board of the
Federal Reserve System, as amended from time to time, and any other applicable
law, rule or regulation.
ARTICLE XII
APPLICATION OF FUNDS
Section 12.1 The proceeds received by the Company from the sale of stock
pursuant to the Plan are to be added to the general funds of the Company and
used for its corporate purposes as determined by the Board.
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ARTICLE XIII
EFFECTIVENESS OF PLAN
Section 13.1 This Plan shall become effective upon adoption by the Board, and
Options may be issued hereunder from and after that date subject to the
provisions of Section 3.3. This Plan shall be submitted for approval by the
Company's stockholders in accordance with the applicable provisions (relating
to the issuance of stock or Options) of the Company's governing documents and
state law or, if no such approval is prescribed therein, by the affirmative
vote of the holders of a majority of the votes cast at a duly held
stockholders meeting at which a quorum representing a majority of all the
Company's outstanding voting stock is present and voting (in person or by
proxy) or, without regard to any required time period for approval, by any
other method permitted by Section 422 and the regulations thereunder. If such
shareholder approval is not obtained within one year of the adoption of the
Plan by the Board or within such other time period required under Section 422
and the regulations thereunder, this Plan shall remain in force, provided
however, that all Options issued and issuable hereunder shall automatically be
deemed to be Non-Qualified Options.
*****
IN WITNESS WHEREOF, pursuant to the adoption of this Plan by the Board
of Directors of the Company, this Plan as amended and restated is
hereby executed this _____ day of __________, 1995.
TELEREUNION, INC.
By:
-------------------------
Name:
Title:
ATTEST:
By:
---------------------------
Secretary
EXHIBIT 4.4
POLISH TELEPHONES AND MICROWAVE CORPORATION
1996 STOCK OPTION AND APPRECIATION RIGHTS PLAN
ESTABLISHMENT AND PURPOSE
-------------------------
Section 1.1 Polish Telephones and Microwave Corporation (the
"Company"), a Texas corporation, hereby establishes a stock option and
appreciation rights plan to be named the Polish Telephones and Microwave
Corporation 1996 Stock Option and Appreciation Rights Plan (the "1996 Plan").
Section 1.2 The purpose of this 1996 Plan is to induce persons who
are officers, directors, employees and consultants of the Company or any of
its subsidiaries who are in a position to contribute materially to the
Company's prosperity to remain with the Company, to offer said persons
incentives and rewards in recognition of their contributions to the Company's
progress, and to encourage said persons to continue to promote the best
interests of the Company. This 1996 Plan provides for the grant of options to
purchase shares of common stock of the Company, par value $.001 per share (the
"Common Stock") which qualify as incentive stock options ("Incentive Options")
under Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), to persons who are employees, as well as options which do not so
qualify ("Non-Qualified Options") to be issued to persons or consultants,
including those who are not employees. This 1996 Plan also provides for
grants of stock appreciation rights ("SARs") in connection with the grant of
options under this 1996 Plan. Incentive Options and Non-Qualified Options may
be collectively referred to hereinafter as the "Options" as the context may
require.
Section 1.3 All options and other rights previously granted by the
Company under any other plan previously adopted by the Company shall continue
to be governed by such plan. All Options granted hereunder on or after the
date that this 1996 Plan has been approved and adopted by the Company's board
of directors (the "Board of Directors") shall be governed by the terms and
conditions of this 1996 Plan unless the terms of such Option specifically
indicate that it is not to be so governed.
ARTICLE II
ADMINISTRATION
Section 2.1 All determinations under this 1996 Plan concerning the
selection of persons eligible to receive awards under this 1996 Plan and with
respect to the timing, pricing and amount of an award under this 1996 Plan
shall be made by the administrator (the "Administrator") of this 1996 Plan.
The Administrator shall be either: (a) the Board of Directors or (b) in the
discretion of the Board of Directors by a committee (the "Committee") of the
Board of Directors of two or more members of the Board of Directors, each of
whom is a "Non-Employee Director" as such term is defined by Rule 16b-3 (as
such rule may be amended from time to time, "Rule 16b-3") under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). In such case, a
majority of the total number of members of the Committee shall be necessary to
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constitute a quorum; and (i) the affirmative act of a majority of the members
present at any meeting at which a quorum is present, or (ii) the approval in
writing by a majority of the members of the Committee shall be necessary to
constitute action by the Committee.
With respect to persons subject to Section 16 of the Exchange Act,
transactions under this 1996 Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the Exchange Act. To the
extent that any provision of this 1996 Plan or action by the Administrator
fails to so comply, it shall be deemed to be null and void, to the extent
permitted by law and deemed advisable by the Administrator.
Section 2.2 The provisions of this 1996 Plan relating to Incentive
Options are intended to comply in every respect with Section 422 of the Code
("Section 422") and the regulations promulgated thereunder. In the event that
any future statute or regulation shall modify Section 422, this 1996 Plan
shall be deemed to incorporate by reference such modification. Any stock
option agreement relating to the grant of any Incentive Option pursuant to
this 1996 Plan, which option is outstanding and unexercised at the time that
any modifying statute or regulation becomes effective, shall also be deemed to
incorporate by reference such modification, and no notice of such modification
need be given to the Optionee (as hereinafter defined). Any stock option
agreement relating to an Incentive Option shall provide that the Optionee (as
hereinafter defined) hold the stock received upon exercise of such Incentive
Option for a minimum of two years from the date of grant of the Incentive
Option and one year from the date of exercise of such Incentive Option, absent
the written approval, consent or waiver of the Administrator.
Section 2.3 If any provision of this 1996 Plan is determined to
disqualify the shares of Common Stock purchasable upon exercise of an
Incentive Option granted under this 1996 Plan from the special tax treatment
provided by Section 422, such provision shall be deemed to incorporate by
reference the modification required to qualify such shares of Common Stock for
said tax treatment.
Section 2.4 The Company shall grant Options under this 1996 Plan in
accordance with determinations made by the Administrator pursuant to the
provisions of this 1996 Plan. All Options granted pursuant to this 1996 Plan
shall be clearly identified as Incentive Options or Non-Qualified Options.
The Administrator may from time to time adopt (and thereafter amend or
rescind) such rules and regulations for carrying out this 1996 Plan and take
such action in the administration of this 1996 Plan, not inconsistent with the
provisions hereof, as it shall deem proper. The Board of Directors or,
subject to the supervision of the Board of Directors, the Committee, as the
Administrator, shall have plenary discretion, subject to the express
provisions of this 1996 Plan, to determine which officers, directors,
employees and consultants shall be granted Options, the number of shares
subject to each Option, the time or times when an Option may be exercised
(whether in whole or in installments), whether Rights under Section 7.6 hereof
shall be granted, the terms and provisions of the respective option agreements
(which need not be identical), including such terms and provisions which may
be amended from time to time as shall be required, in the judgment of the
Administrator, to conform to any change in any law or regulation applicable
hereto, and to make all other determinations deemed necessary or advisable for
the administration of this 1996 Plan. The interpretation and construction of
any provision of this 1996 Plan by the Administrator (unless otherwise
determined by the Board of Directors) shall be final, conclusive and binding
upon all persons.
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<PAGE>
Section 2.5 No member of the Administrator shall be liable for any
action or determination made in good faith with respect to administration of
this 1996 Plan or the Options granted hereunder. A member of the
Administrator shall be indemnified by the Company, pursuant to the Company's
bylaws, for any expenses, judgments or other costs incurred as a result of a
lawsuit filed against such member claiming any rights or remedies arising out
of such member's participation in the administration of this 1996 Plan.
ARTICLE III
TOTAL NUMBER OF SHARES TO BE OPTIONED
Section 3.1 There shall be reserved for issuance or transfer upon
exercise of Options to be granted from time to time under this 1996 Plan an
aggregate of 1,200,000 shares of Common Stock of the Company (subject to
adjustment as provided in Article VIII hereof). The shares issued upon
exercise of any Options granted under this 1996 Plan may be shares of Common
Stock previously issued and reacquired by the Company at any time or
authorized but unissued shares of Common Stock, as the Board of Directors from
time to time may determine.
Section 3.2 In the event that any Options outstanding under this 1996
Plan for any reason expire or are terminated without having been exercised in
full or shares of Common Stock subject to Options are surrendered in whole or
in part pursuant to Rights granted under Section 7.6 hereof (except to the
extent that shares of Common Stock are issued as payment to the holder of the
Option upon such surrender) the unpurchased shares of Common Stock subject to
such Option and any such surrendered shares of Common Stock may again be
available for transfer under this 1996 Plan.
Section 3.3 No Options shall be granted pursuant to this 1996 Plan to
any Optionee after the tenth anniversary of the date that this 1996 Plan is
adopted by the Board of Directors.
ARTICLE IV
ELIGIBILITY
Section 4.1 Non-Qualified Options may be granted pursuant to this
1996 Plan to officers, directors, employees and consultants of the Company (or
any of its subsidiaries) selected by the Administrator, and Incentive Options
may be granted pursuant to this 1996 Plan only to employees (including
officers and directors who are also employees) of the Company (or any of its
subsidiaries) selected by the Administrator. Persons granted Options pursuant
to this 1996 Plan are referred to herein as "Optionees." For purposes of
determining who is an employee with respect to eligibility for Incentive
Options, Section 422 shall govern. The Administrator may determine (in its
sole discretion) that any person who would otherwise be eligible to be granted
Options shall, nonetheless, be ineligible to receive any award under this 1996
Plan.
Section 4.2 The Administrator will (in its discretion) determine the
persons to be granted Options, the time or times at which Options shall be
granted, the number of shares of Common Stock subject to each Option, the
terms of a vesting or forfeiture schedule, if any, the type of Option issued,
the period during which such Options may be exercised, the manner in which
Options may be exercised and all other terms and conditions of the Options;
provided, however, no Option will be granted which has terms or conditions
inconsistent with those stated in Articles V and VI hereof. Relevant factors
in making such determinations may include the value of the services rendered
by the respective Optionee, his or her present and potential contributions to
the Company, and such other factors which are deemed relevant in accomplishing
the purpose of this 1996 Plan.<PAGE>
<PAGE>
ARTICLE V
TERMS AND CONDITIONS OF OPTIONS
Section 5.1 Each Option granted under this 1996 Plan shall be
evidenced by a stock option certificate and agreement (the "Stock Option
Certificate and Agreement") in a form consistent with this 1996 Plan, provided
that the following terms and conditions shall apply:
(a) The price at which each share of Common Stock covered by an Option
may be purchased shall be set forth in the Stock Option Certificate and
Agreement and shall be determined by the Administrator, provided that the
option price for any Incentive Option shall not be less than the "fair market
value" of the shares of Common Stock at the time of grant determined in
accordance with Section 5.1(b) below. Notwithstanding the foregoing, if an
Incentive Option to purchase shares of Common Stock is granted pursuant to
this 1996 Plan to an Optionee who, on the date of the grant, directly or
indirectly owns more than ten percent (10%) of the voting power of all classes
of capital stock of the Company (or its parent or subsidiary), not including
the shares of Common Stock obtainable upon exercise of the Option, the minimum
exercise price of such Option shall be not less than one hundred ten percent
(110%) of the "fair market value" of the shares of Common Stock on the date of
grant determined in accordance with Section 5.1(b) below.
(b) The "fair market value" shall be determined by the Administrator,
which determination shall be binding upon the Company and its officers,
directors, employees and consultants. The determination of the fair market
value shall be based upon the following: (i) if the shares of Common Stock are
not listed and traded upon a recognized securities exchange and there is no
report of stock prices with respect to the shares of Common Stock published by
a recognized stock quotation service, on the basis of the recent purchases and
sales of the shares of Common Stock in arms-length transactions; or (ii) if
the shares of Common Stock are not then listed and traded upon a recognized
securities exchange or quoted on the NASDAQ Stock Market, and there are
reports of stock prices by a recognized quotation service, upon the basis of
the last reported sale or transaction price of such stock on the date of grant
as reported by a recognized quotation service, or, if there is no last
reported sale or transaction price on that day, then upon the basis of the
mean of the last reported closing bid and closing asked prices for such stock
on that day or on the date nearest preceding that day; or (iii) if the shares
of Common Stock shall then be listed and traded upon a recognized securities
exchange or quoted on the NASDAQ Stock Market, upon the basis of the last
reported sale or transaction price at which shares of Common Stock were traded
on such recognized securities exchange on the date of grant or, if the shares
of Common Stock were not traded on such date, upon the basis of the last
reported sale or transaction price on the date nearest preceding that date.
The Administrator shall also consider such other factors relating to the fair
market value of the shares of Common Stock as it shall deem appropriate.
(c) For the purpose of determining whether an Optionee owns more than
ten percent (10%) of the voting power of all classes of stock of the Company,
an Optionee is considered to own those shares which are owned directly or
indirectly through brothers and sisters (including half-blooded siblings),
spouse, ancestors and lineal descendants; and proportionately as a shareholder
of a corporation, a partner of a partnership, and/or a beneficiary of a trust
or an estate that owns shares of the Company.
(d) Notwithstanding any other provision of this 1996 Plan, in accordance
with the provisions of Section 422(d) of the Code, to the extent that the
aggregate fair market value (determined at the time the Option is granted) of
<PAGE>
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the shares of Common Stock of the Company with respect to which Incentive
Options (without reference to this provision) are exercisable for the first
time by any individual in any calendar year under any and all stock option
plans of the Company, its subsidiary corporations and its parent (if any)
exceeds $100,000, such Options shall be treated as Non-Qualified Options.
(e) An Optionee may, in the Administrator's discretion, be granted more
than one Incentive Option or Non-Qualified Option during the duration of this
1996 Plan, and may be issued a combination of Non-Qualified Options and
Incentive Options; provided, however, that non-employees are not eligible to
receive Incentive Options.
(f) The duration of any Option and any Right related thereto shall be
within the sole discretion of the Administrator; provided, however, that any
Incentive Option granted to a ten percent (10%) or less stockholder or any
Non-Qualified Option shall, by its terms, be exercised within ten years after
the date the Option is granted and any Incentive Option granted to a greater
than ten percent (10%) stockholder shall, by its terms, be exercised within
five years after the date the Option is granted.
(g) An Option and any Right related thereto shall not be transferable by
the Optionee other than by will, or by the laws of descent and distribution.
An Option may be exercised during the Optionee's lifetime only by the
Optionee.
(h) The Administrator may impose such other or further conditions on any
transaction under the 1996 Plan, including without limitation, the grant or
award of any Option or the exercise or other disposition thereof, as it, in
its discretion, may deem necessary or advisable in order to exempt the
transaction from Section 16(b) of the Exchange Act, including without
limitation thereto, the approval or ratification of the transaction by
shareholders or a six-month restriction on disposition of the Option or the
Common Stock issuable upon exercise thereof.
ARTICLE VI
EMPLOYMENT OR SERVICE OF OPTIONEE
Section 6.1 If the employment or service of an Optionee is terminated
for cause, the option rights of such Optionee, both accrued and future, under
any then outstanding Non-Qualified or Incentive Option shall terminate
immediately. "Cause" shall mean incompetence in the performance of duties,
disloyalty, dishonesty, theft, embezzlement, unauthorized disclosure of
patents, processes or trade secrets of the Company, individually or as an
employee, partner, associate, officer or director of any organization. The
determination of the existence and the proof of "cause" shall be made by the
Administrator and, subject to the review of any determination made by the
Administrator, such determination shall be binding on the Optionee and the
Company.
Section 6.2 If the employment or service of the Optionee is
terminated by either the Optionee or the Company for any reason other than for
cause, death, or for disability, as defined in Section 22(e)(3) of the Code,
the option rights of such Optionee under any then outstanding Non-Qualified or
Incentive Option shall, subject to the provisions of Section 5.1(h) hereof, be
exercisable by such Optionee at any time prior to the expiration of the Option
or within three months after the date of such termination, whichever period of
time is shorter, but only to the extent of the accrued right to exercise the
Option at the date of such termination.
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Section 6.3 In the case of an Optionee who becomes disabled, as
defined by Section 22(e)(3) of the Code, the option rights of such Optionee
under any then outstanding Non-Qualified or Incentive Option shall, subject to
the provisions of Section 5.1(h) hereof, be exercisable by such Optionee at
any time prior to the expiration of the Option or within one year after the
date of termination of employment or service due to disability, whichever
period of time is shorter, but only to the extent of the accrued right to
exercise the Option at the date of such termination.
Section 6.4 In the event of the death of an Optionee, the option
rights of such Optionee under any then outstanding Non-Qualified or Incentive
Option shall be exercisable by the person or persons to whom these rights pass
by will or by the laws of descent and distribution, at any time prior to the
expiration of the Option or within three years after the date of death,
whichever period of time is shorter, but only to the extent of the accrued
right to exercise the Option at the date of death. If a person or estate
acquires the right to exercise a Non-Qualified or Incentive Option by bequest
or inheritance, the Administrator may require reasonable evidence as to the
ownership of such Option, and may require such consents and releases of taxing
authorities as the Administrator may deem advisable.
Section 6.5 The Administrator may also provide that an employee must
be continuously employed by the Company for such period of time as the
Administrator, in its discretion, deems advisable before the right to exercise
any portion of an Option granted to such employee will accrue, and may also
set such other targets, restrictions or other terms relating to the employment
of the Optionee which targets, restrictions, or terms must be fulfilled or
complied with, as the case may be, prior to the exercise of any portion of an
Option granted to any employee.
Section 6.6 Options granted under this 1996 Plan shall not be
affected by any change of duties or position, so long as the Optionee
continues in the service of the Company.
Section 6.7 Nothing contained in this 1996 Plan, or in any Option
granted pursuant to this 1996 Plan, shall confer upon any Optionee any right
with respect to continuance of employment or service by the Company nor
interfere in any way with the right of the Company to terminate the Optionee's
employment or service or change the Optionee's compensation at any time.
ARTICLE VII
PURCHASE OF SHARES
Section 7.1 Except as provided in this Article VII, an Option shall
be exercised by tender to the Company of the full exercise price of the shares
of Common Stock with respect to which the Option is exercised and written
notice of the exercise. The right to purchase shares of Common Stock shall be
cumulative so that, once the right to purchase any shares of Common Stock has
accrued, such shares or any part thereof may be purchased at any time
thereafter until the expiration or termination of the Option. A partial
exercise of an Option shall not affect the right of the Optionee to exercise
the Option from time to time, in accordance with this 1996 Plan, as to the
remaining number of shares of Common Stock subject to the Option. The
purchase price of the shares shall be in United States dollars, payable in
cash or by certified bank check. Notwithstanding the foregoing, in lieu of
cash, an Optionee may, with the approval of the Administrator, exercise his or
her Option by tendering to the Company shares of Common Stock of the Company
owned by him or her and having an aggregate fair market value at least equal
to the full exercise price. The fair market value of any shares of Common
Stock so surrendered shall be determined by the Administrator in accordance
with Section 5.1(b) hereof.<PAGE>
<PAG>
Section 7.2 Except as provided in Article VI above, an Option may not
be exercised unless the holder thereof is an officer, director, employee, or
consultant of the Company at the time of exercise.
Section 7.3 No Optionee, or Optionee's executor, administrator,
legatee, or distributee or other permitted transferee, shall be deemed to be a
holder of any shares of Common Stock subject to an Option for any purpose
whatsoever unless and until a stock certificate or certificates for such
shares are issued to such person under the terms of this 1996 Plan. No
adjustment 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 provided in Article VIII hereof.
Section 7.4 If: (i) the listing, registration or qualification of the
Options issued hereunder, or of any securities issuable upon exercise of such
Options (the "Subject Securities") upon any securities exchange or quotation
system or under federal or state law is necessary as a condition of or in
connection with the issuance or exercise of the Options, or (ii) the consent
or approval of any governmental regulatory body is necessary as a condition of
or in connection with the issuance or exercise of the Options, the Company
shall not be obligated to deliver the certificates representing the Subject
Securities or to accept or to recognize an Option exercise unless and until
such listing, registration, qualification, consent or approval shall have been
effected or obtained. The Company will take reasonable action to so list,
register, or qualify the Options and the Subject Securities, or effect or
obtain such consent or approval, so as to allow for their issuance.
Section 7.5 An Optionee may be required to represent to the Company
as a condition of his or her exercise of Options issued under this 1996 Plan
that: (i) the Subject Securities acquired upon exercise of his or her Option
are being acquired by him or her for investment purposes only and not with a
view to distribution or resale, unless counsel for the Company is then of the
view that such a representation is not necessary and is not required under the
Securities Act of 1933, as amended (the "Securities Act"), or any other
applicable statute, law, regulation or rule; and (ii) that the Optionee shall
make no exercise or disposition of an Option or of the Subject Securities in
contravention of the Securities Act, the Exchange Act or the rules and
regulations thereunder. Optionees may also be required to provide (as a
condition precedent to exercise of an Option) such documentation as may be
reasonably requested by the Company to assure compliance with applicable law
and the terms and conditions of this 1996 Plan and the subject Option.
Section 7.6 The Administrator may, in its discretion, grant in
connection with any Option, at any time prior to the exercise thereof, the
right (previously defined as an "SAR" or collectively, the "SARs") to
surrender all or part of the Option to the extent that such Option is
exercisable and receive in exchange an amount (payable in cash, shares of
Common Stock valued at the then fair market value, or a combination thereof as
determined by the Administrator) equal to the difference (the "Spread")
between the then fair market value of the shares of Common Stock issuable upon
the exercise of the Option (or portions thereof surrendered) and the option
price payable upon the exercise of the Option (or portions thereof
surrendered). Such SARS may be included in an Option only under the following
conditions: (a) the SARS will expire no later than the expiration of the
underlying Option; (b) the SARS may be for no more than one hundred percent
(100%) of the Spread; (c) the SARS are transferable only when the underlying
Option is transferable and under the same conditions; (d) the SARS may be
exercised only when the underlying Option is eligible to be exercised; and (e)
<PAGE>
<PAGE>
the SARS may be exercised only when the Spread is positive, i.e., when the
market price of the stock subject to the Option exceeds the exercise price of
the Option.
Section 7.7 An Option may also be exercised by tender to the Company
of a written notice of exercise together with advice of the delivery of an
order to a broker to sell part or all of the shares of Common Stock subject to
such exercise notice and an irrevocable order to such broker to deliver to the
Company (or its transfer agent) sufficient proceeds from the sale of such
shares to pay the exercise price and any withholding taxes. All documentation
and procedures to be followed in connection with such a "cashless exercise"
shall be approved in advance by the Administrator.
ARTICLE VIII
CHANGE IN NUMBER OF OUTSTANDING SHARES OF
STOCK, ADJUSTMENTS, REORGANIZATIONS, ETC.
Section 8.1 In the event that the outstanding shares of Common Stock
of the Company are hereafter increased or decreased or changed into or
exchanged for a different number of shares or kind of shares or other
securities of the Company or of another corporation by reason of
reorganization, merger, consolidation, recapitalization, reclassification,
stock split, combination of shares, or a dividend payable in capital stock,
appropriate adjustment shall be made by the Administrator in the number and
kind of shares for the purchase of which Options may be granted under this
1996 Plan, including the maximum number that may be granted to any one person.
In addition, the Administrator shall make appropriate adjustments in the
number and kind of shares as to which outstanding Options, or portions thereof
then unexercised, shall be exercisable, to the end that the Optionee's
proportionate interest shall be maintained as before the occurrence to the
unexercised portion of the Option and with a corresponding adjustment in the
option price per share. Any such adjustment made by the Administrator shall
be conclusive.
Section 8.2 The grant of an Option pursuant to this 1996 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 or to consolidate or to dissolve, liquidate or sell, or
transfer all or any part of its business or assets.
Section 8.3 Upon the dissolution or liquidation of the Company, or
upon a reorganization, merger or consolidation of the Company as a result of
which the outstanding securities of the class then subject to Options
hereunder are changed into or exchanged for cash or property or securities not
of the Company's issue, or upon a sale of substantially all the property of
the Company to an association, person, party, corporation, partnership, or
control group as that term is construed for purposes of the Exchange Act, this
1996 Plan shall terminate, and all outstanding Options theretofore granted
hereunder shall terminate, unless provision be made in writing in connection
with such transaction for the continuance of this 1996 Plan and/or for the
assumption of Options theretofore granted, or the substitution for such
Options of options covering the stock of a successor employer corporation, or
a parent or a subsidiary thereof, with appropriate adjustments as to the
number and kind of shares and prices, in which event this 1996 Plan and
options theretofore granted shall continue in the manner and under the terms
so provided. If this 1996 Plan and unexercised Options shall terminate
pursuant to the foregoing sentence, all persons owning any unexercised
portions of Options then outstanding shall have the right, at such time prior
to the consummation of the transaction causing such termination as the Company
shall designate, to exercise the unexercised portions of their Options, <PAGE>
<PAGE>
including the portions thereof which would, but for this Section 8.3 not yet
be exercisable.
ARTICLE IX
DURATION, AMENDMENT AND TERMINATION
Section 9.1 The Board of Directors may at any time terminate this
1996 Plan or make such amendments hereto as it shall deem advisable and in the
best interests of the Company, without action on the part of the shareholders
of the Company unless such approval is required pursuant to Section 422 of the
Code or the regulations thereunder or other federal or state law; provided,
however, that no such termination or amendment shall, without the consent of
the individual to whom any Option shall theretofore have been granted,
materially adversely affect or impair the rights of such individual under such
Option. Pursuant to Section 422(b) of the Code, no Incentive Option may be
granted pursuant to this 1996 Plan after ten years from the date this 1996
Plan is adopted or the date this 1996 Plan is approved by the shareholders of
the Company, whichever is earlier.
ARTICLE X
RESTRICTIONS
Section 10.1 Any Options and shares of Common Stock issued pursuant
to this 1996 Plan shall be subject to such restrictions on transfer and
limitations as shall, in the opinion of the Administrator, be necessary or
advisable to assure compliance with the laws, rules and regulations of the
United States government or any state or jurisdiction thereof. In addition,
the Administrator may in any Stock Option Certificate and Agreement impose
such other restrictions upon the disposition or exercise of an Option or upon
the sale or other disposition of the shares of Common Stock deliverable upon
exercise thereof as the Administrator may, in its sole discretion, determine.
By accepting an award pursuant to this 1996 Plan, each Optionee shall thereby
agree to any such restrictions.
Section 10.2 Any certificate issued to evidence shares of Common
Stock issued pursuant to an Option shall bear such legends and statements as
the Committee, the Board of Directors or counsel to the Company shall deem
advisable to assure compliance with the laws, rules and regulations of the
United States government or any state or jurisdiction thereof. No shares of
Common Stock will be delivered pursuant to exercise of the Options granted
under this 1996 Plan until the Company has obtained such consents or approvals
from such regulatory bodies of the United States government or any state or
jurisdiction thereof as the Committee, the Board of Directors or counsel to
the Company deems necessary or advisable.
ARTICLE XI
FINANCIAL ASSISTANCE
Section 11.1 The Company is vested with authority under this 1996
Plan to assist any employee to whom an Option is granted hereunder (including
any officer or director of the Company or any of its subsidiaries who is also
an employee) in the payment of the purchase price payable on exercise of such
Option, by lending the amount of such purchase price to such employee on such
terms and at such rates of interest and upon such security (or unsecured) as
shall have been authorized by or under authority of the Board of Directors.
Any such assistance shall comply with the requirements of Regulation G
promulgated by the Board of the Federal Reserve System, as amended from time
to time, and any other applicable law, rule or regulation.
<PAGE>
<PAGE>
ARTICLE XII
APPLICATION OF FUNDS
Section 12.1 The proceeds received by the Company from the issuance
and sale of Common Stock upon exercise of Options granted pursuant to this
1996 Plan are to be added to the general funds of the Company and used for its
corporate purposes as determined by the Board of Directors.
ARTICLE XIII
EFFECTIVENESS OF PLAN
Section 13.1 This 1996 Plan shall become effective upon adoption by
the Board of Directors, and Options may be issued hereunder from and after
that date subject to the provisions of Section 3.3 above. This 1996 Plan must
be approved by the Company's shareholders in accordance with the applicable
provisions (relating to the issuance of stock or options) of the Company's
governing documents and state law or, if no such approval is prescribed
therein, by the affirmative vote of the holders of a majority of the votes
cast at a duly held shareholders meeting at which a quorum representing a
majority of all the Company's outstanding voting stock is present and voting
(in person or by proxy) or, without regard to any required time period for
approval, by any other method permitted by Section 422 of the Code and the
regulations thereunder. If such stockholder approval is not obtained within
one year of the adoption of this 1996 Plan by the Board of Directors or within
such other time period required under Section 422 of the Code and the
regulations thereunder, this 1996 Plan shall remain in force, provided
however, that all Options issued and issuable hereunder shall automatically be
deemed to be Non-Qualified Options.
IN WITNESS WHEREOF, pursuant to the approval of this 1996 Plan by the
Board of Directors, this 1996 Plan is executed and adopted as of the day
of , 1996.
Polish Telephones and Microwave Corporation
[CORPORATE SEAL]
By:
--------------------------------------
Its:
--------------------------------------
ATTEST:
By:
-----------------------------
Secretary
EXHIBIT 4.5
TELSCAPE INTERNATIONAL, INC.
1998 STOCK OPTION AND APPRECIATION RIGHTS PLAN
ARTICLE 1
ESTABLISHMENT AND PURPOSE
Section 1.1. Telscape International, Inc. (the "Company"), a Texas
corporation, hereby establishes a stock option and appreciation rights plan to
be named the Telscape International, Inc. 1998 Stock Option and Appreciation
Rights Plan (the "1998 Plan").
Section 1.2. The purpose of this 1998 Plan is to induce persons who
are officers, directors, employees and consultants of the Company or any of
its subsidiaries who are in a position to contribute materially to the
Company's prosperity to remain with the Company, to offer said persons
incentives and rewards in recognition of their contributions to the Company's
progress, and to encourage said persons to continue to promote the best
interests of the Company. This 1998 Plan provides for the grant of options to
purchase shares of common stock of the Company, par value $.001 per share (the
"Common Stock") which qualify as incentive stock options ("Incentive Options")
under Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code"), to persons who are employees, as well as options which do not so
qualify ("Non-Qualified Options") to be issued to persons or consultants,
including those who are not employees. This 1998 Plan also provides for
grants of stock appreciation rights ("SARs") in connection with the grant of
options under this 1998 Plan. Incentive Options and Non-Qualified Options may
be collectively referred to hereinafter as the "Options" as the context may
require.
Section 1.3. All options and other rights previously granted by the
Company under any other plan previously adopted by the Company shall continue
to be governed by such plan. All Options granted hereunder on or after the
date that this 1998 Plan has been approved and adopted by the Company's board
of directors (the "Board of Directors") shall be governed by the terms and
conditions of this 1998 Plan unless the terms of such Option specifically
indicate that it is not to be so governed.
ARTICLE 2
ADMINISTRATION
Section 2.1. Administration and Authorization: Power and Procedure.
-----------------------------------------------------
(A) Committee. This 1998 Plan shall be administered by, and all Options
---------
shall be authorized by, the Committee. Action of the Committee with respect
to the administration of this 1998 Plan shall be taken pursuant to a majority
vote or by written consent of its members.
(1) "Committee" shall mean a committee appointed by the Board to
---------
administer this 1998 Plan, which committee shall be comprised only of two or
more directors or such greater number of directors as may be required under
applicable law, each of whom, during such time as one or more Optionees may be
subject to Section 16 of the Exchange Act, shall be Disinterested. In <PAGE>
<PAGE>
addition, from and after the consummation of any initial public offering
undertaken by the Company, no person may serve as a member of the Committee
unless such person is also an "outside director" within the meaning of
Treasury Regulation section 1.162-27(e)(3)(i).
(2) "Disinterested" shall mean disinterested within the meaning of
-------------
any applicable regulatory requirements, including Rule 16b-3.
(B) Options: Interpretation: Powers of Committee. Subject to the express
--------------------------------------------
provisions of this 1998 Plan, the Committee shall have the authority:
(1) to determine from among those persons eligible the particular
persons who will receive any Options;
(2) to grant Options to officers, directors, employees and
consultants, determine the price at which securities will be offered and the
amount of securities to be offered to any of such persons, and determine the
other specific terms and conditions of such Options consistent with the
express limits of this 1998 Plan, and establish the installments (if any) in
which such Options shall become exercisable or determine that no delayed
exercisability is required, and establish the events of termination of such
Options;
(3) to approve the forms of Options (which need not be identical
either as to type of Option or among Optionees);
(4) to construe and interpret this 1998 Plan and any agreements
defining the rights and obligations of the Company and Optionees under this
1998 Plan, further define the terms used in this 1998 Plan, and prescribe,
amend and rescind rules an deregulations relating to the administration of
this 1998 Plan;
(5) to cancel, modify or waive the Company's rights with respect to,
or modify, discontinue, suspend or terminate any or all outstanding Options
held by Optionees, subject to any required consent;
(6) to accelerate or extend the exercisability or extend the term of
any or all such outstanding Options within a maximum ten-year term of Options;
and
(7) to make all other determinations and take such other action as
contemplated by this 1998 Plan or as may be necessary or advisable for the
administration of this 1998 Plan and the effectuation of its purposes.
(C) Binding Determinations. Any action taken by, or inaction of, the
----------------------
Company, any Subsidiary, the Board or the Committee relating or pursuant to
this 1998 Plan shall be within the absolute discretion of that entity or body
and shall be conclusive and binding upon all persons. No member of the Board
or Committee, or officer of the Company or any Subsidiary, shall be liable for
any such action or inaction of the entity or body, of another person or,
except in circumstances involving bad faith, of himself or herself. Subject
only to compliance with the express provisions hereof, the Board and Committee
may act in their absolute discretion in matters within their authority related
to this 1998 Plan.
<PAGE>
<PAGE>
(D) Reliance on Experts. In making any determination or in taking or not
-------------------
taking any action under this 1998 Plan, the committee or the Board, as the
case may be, may obtain and may rely upon the advice of experts, including
professional advisors to the Company. No director, officer or agent of the
company shall be liable for any such action or determination taken or made or
omitted in good faith.
(E) Delegation. The Committee may delegate ministerial, non-discretionary
----------
functions to individuals who are officers or employees of the Company.
With respect to persons subject to Section 16 of the Exchange Act,
transactions under this 1998 Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the Exchange Act. To the
extent that any provision of this 1998 Plan or action by the Committee fails
to so comply, it shall be deemed to be null and void, to the extent permitted
by law and deemed advisable by the Committee.
Section 2.2. The provisions of this 1998 Plan relating to Incentive
Options are intended to comply in every respect with Section 422 of the Code
("Section 422") and the regulations promulgated thereunder. In the event that
any future statute or regulation shall modify Section 422, this 1998 Plan
shall be deemed to incorporate by reference such modification. Any stock
option agreement relating to the grant of any Incentive Option pursuant to
this 1998 Plan, which option is outstanding and unexercised at the time that
any modifying statute or regulation becomes effective, shall also be deemed to
incorporate by reference such modification, and no notice of such modification
need be given to the Optionee (as hereinafter defined). Any stock option
agreement relating to an Incentive Option shall provide that the Optionee (as
hereinafter defined) hold the stock received upon exercise of such Incentive
Option for a minimum of two years from the date of grant of the Incentive
Option and one year from the date of exercise of such Incentive Option, absent
the written approval, consent or waiver of the Committee.
Section 2.3. If any provision of this 1998 Plan is determined to
disqualify the shares of Common Stock purchasable upon exercise of an
Incentive Option granted under this 1998 Plan from the special tax treatment
provided by Section 422, such provision shall be deemed to incorporate by
reference the modification required to qualify such shares of Common Stock for
said tax treatment.
ARTICLE 3
SHARES AVAILABLE FOR OPTIONS: SHARE LIMITS
Section 3.1 Shares Available. The capital stock that may be
----------------
delivered under this 1998 Plan shall be shares of the Company's authorized but
unissued Common Stock and any shares of its Common Stock held as treasury
shares. The shares may be delivered for any lawful consideration.
Section 3.2 Share Limits. The maximum number of shares of Common
-------------
Stock that may be delivered pursuant to Options granted under this 1998 Plan
shall not exceed 800,000 shares. The maximum number of shares of Common Stock
subject to those Options that are granted during any calendar year to any
individual under this 1998 Plan shall not exceed 250,000 shares. Each of the
foregoing numerical limits shall be subject to adjustment as contemplated by
this Section 3.2.
<PAGE>
<PAGE>
Section 3.3 Calculation of Available Shares and Replenishment. Shares
-------------------------------------------------
subject to outstanding Options shall be reserved for issuance. If any Option
or other right to acquire shares of Common Stock under an Option shall expire
or be canceled or terminated without having been exercised in full, or any
Common Stock subject to an Option shall not vest or be delivered, the
unpurchased, unvested or undelivered shares subject thereto shall again be
available for the purposes of the 1998 Plan, subject to any applicable
limitations under Rule 16b-3. If a Stock Appreciation Right or similar right
is exercised, the number of shares of Common Stock to which such exercise or
payment relates under the applicable Option shall be charged against the
maximum amount of Common Stock that may be delivered pursuant to Options under
this 1998 Plan and, if applicable, such Option. If the Company withholds
shares of Common Stock pursuant to Section 4.5, the number of shares that
would have been deliverable with respect to an Option but that are withheld
pursuant to the provisions of Section 4.5 may in effect not be issued, but the
aggregate number of shares issuable with respect to the applicable Option and
under the 1998 Plan shall be reduced by the number of shares withheld and such
shares shall not be available for additional Options under the 1998 Plan. No
Options shall be granted pursuant to this 1998 Plan to any Optionee after the
tenth anniversary of the date that this 1998 Plan is adopted by the Board.
ARTICLE 4
ELIGIBILITY
Section 4.1. Non-Qualified Options may be granted pursuant to this
1998 Plan to officers, directors, employees and consultants of the Company (or
any of its subsidiaries) selected by the Committee, and Incentive Options may
be granted pursuant to this 1998 Plan only to employees (including officers
and directors who are also employees) of the Company (or any of its
subsidiaries) selected by the Committee. Persons granted Options pursuant to
this 1998 Plan are referred to herein as "Optionees." For purposes of
determining who is an employee with respect to eligibility for Incentive
Options, Section 422 shall govern. The Committee may determine (in its sole
discretion) that any person who would otherwise be eligible to be granted
Options shall, nonetheless, be ineligible to receive any award under this 1998
Plan.
ARTICLE 5
TERMS AND CONDITIONS OF OPTIONS
Section 5.1. Each Option granted under this 1998 Plan shall be
evidenced by a stock option certificate and agreement (the "Stock Option
Certificate and Agreement") in a form consistent with this 1998 Plan, provided
that the following terms and conditions shall apply:
(1) The price at which each share of Common Stock covered by an
Option may be purchased shall be set forth in the Stock Option Certificate and
Agreement and shall be determined by the Committee, provided that the option
price for any Option shall not be less than the "fair market value" of the
shares of Common Stock at the time of grant determined in accordance with
Section 5.1(2) below. Notwithstanding the foregoing, if an Option to purchase
shares of Common Stock is granted pursuant to this 1998 Plan to an Optionee
who, on the date of the grant, directly or indirectly owns more than ten
percent (10%) of the voting power of all classes of capital stock of the
Company (or its parent or subsidiary), not including the shares of Common
Stock obtainable upon exercise of the Option, the minimum exercise price of
such Option shall be not less than one hundred ten percent (110%) of the "fair
market value" of the shares of Common Stock on the date of grant determined in
accordance with Section 5.1(2) below.
<PAGE>
<PAGE>
(2) The "fair market value" shall be determined by the Committee,
which determination shall be binding upon the Company and its officers,
directors, employees and consultants. The determination of the fair market
value shall be based upon the following: (i) if the shares of Common Stock are
not listed and traded upon a recognized securities exchange and there is no
report of stock prices with respect to the shares of Common Stock published by
a recognized stock quotation service, on the basis of the recent purchases and
sales of the shares of Common Stock in arms-length transactions; or (ii) if
the shares of Common Stock are not then listed and traded upon a recognized
securities exchange or quoted on the NASDAQ Stock Market, and there are
reports of stock prices by a recognized quotation service, upon the basis of
the last reported sale or transaction price of such stock on the date of grant
as reported by a recognized quotation service, or, if there is no last
reported sale or transaction price on that day, then upon the basis of the
mean of the last reported closing bid and closing asked prices for such stock
on that day or on the date nearest preceding that day; or (iii) if the shares
of Common Stock shall then be listed and traded upon a recognized securities
exchange or quoted on the NASDAQ Stock Market, upon the basis of the last
reported sale or transaction price at which shares of Common Stock were traded
on such recognized securities exchange on the date of grant or, if the shares
of Common Stock were not traded on such date, upon the basis of the last
reported sale or transaction price on the date nearest preceding that date.
The Committee shall also consider such other factors relating to the fair
market value of the shares of Common Stock as it shall deem appropriate.
(3) For the purpose of determining whether an Optionee owns more than
ten percent (10%) of the voting power of all classes of stock of the Company,
an Optionee is considered to own those shares which are owned directly or
indirectly through brothers and sisters (including half-blooded siblings),
spouse, ancestors and lineal descendants; and proportionately as a Stockholder
of a company, a partner of a partnership, and/or a beneficiary of a trust or
an estate that owns shares of the Company.
(4) Notwithstanding any other provision of this 1998 Plan, in
accordance with the provisions of Section 422(d) of the Code, to the extent
that the aggregate fair market value (determined at the time the Option is
granted) of the shares of Common Stock of the Company with respect to which
Incentive Options (without reference to this provision) are exercisable for
the first time by any individual in any calendar year under any and all stock
option plans of the Company, its subsidiary corporations and its parent (if
any) exceeds $100,000, such Options shall be treated as Non-Qualified Options.
(5) An Optionee may, in the Committee's discretion, be granted more
than one Incentive Option or Non-Qualified Option during the duration of this
1998 Plan, and may be issued a combination of Non-Qualified Options and
Incentive Options; provided, however, that non-employees are not eligible to
receive Incentive Options.
(6) The duration of any Option and any Right related thereto shall be
within the sole discretion of the Committee; provided, however, that any
Incentive Option granted to a ten percent (10%) or less stockholder or any
Non-Qualified Option shall, by its terms, be exercised within ten years after
the date the Option is granted and any Incentive Option granted to a greater
than ten percent (10%) stockholder shall, by its terms, be exercised within
five years after the date the Option is granted.
(7) An Option and any Right related thereto shall not be transferable
by the Optionee other than by will, or by the laws of descent and
distribution. An Option may be exercised during the Optionee's lifetime only
by the Optionee.
<PAGE>
<PAGE>
(8) The Committee may impose such other or further conditions on any
transaction under the 1998 Plan, including without limitation, the grant or
award of any Option or the exercise or other disposition thereof, as it, in
its discretion, may deem necessary or advisable in order to exempt the
transaction from Section 16(b) of the Exchange Act, including without
limitation thereto, the approval or ratification of the transaction by
stockholders or a six-month restriction on disposition of the Option or the
Common Stock issuable upon exercise thereof.
ARTICLE 6
EMPLOYMENT OR SERVICE OF OPTIONEE
Section 6.1. If the employment or service of an Optionee is
terminated for cause, the option rights of such Optionee, both accrued and
future, under any then outstanding Non-Qualified or Incentive Option shall
terminate immediately. "Cause" shall mean incompetence in the performance of
duties, disloyalty, dishonesty, theft, embezzlement, unauthorized disclosure
of patents, processes or trade secrets of the Company, individually or as an
employee, partner, associate, officer or director of any organization. The
determination of the existence and the proof of "cause" shall be made by the
Committee and, such determination shall be binding on the Optionee and the
Company.
Section 6.2. If the employment or service of the Optionee is
terminated by either the Optionee or the Company for any reason other than for
cause, death, or for disability, as defined in Section 22(e)(3) of the Code,
the option rights of such Optionee under any then outstanding Non-Qualified or
Incentive Option shall, subject to the provisions of Section 5.1(8) hereof, be
exercisable by such Optionee at any time prior to the expiration of the Option
or within three months after the date of such termination, whichever period of
time is shorter, but only to the extent of the accrued right to exercise the
Option at the date of such termination.
Section 6.3. In the case of an Optionee who becomes disabled, as
defined by Section 22(e)(3) of the Code, the option rights of such Optionee
under any then outstanding Non-Qualified or Incentive Option shall, subject to
the provisions of Section 5.1(8) hereof, be exercisable by such Optionee at
any time prior to the expiration of the Option or within one year after the
date of termination of employment or service due to disability, whichever
period of time is shorter, but only to the extent of the accrued right to
exercise the Option at the date of such termination.
Section 6.4. In the event of the death of an Optionee, the option
rights of such Optionee under any then outstanding Non-Qualified or Incentive
Option shall be exercisable by the person or persons to whom these rights pass
by will or by the laws of descent and distribution, at any time prior to the
expiration of the Option or within three years after the date of death,
whichever period of time is shorter, but only to the extent of the accrued
right to exercise the Option at the date of death. If a person or estate
acquires the right to exercise a Non-Qualified or Incentive Option by bequest
or inheritance, the Committee may require reasonable evidence as to the
ownership of such Option, and may require such consents and releases of taxing
authorities as the Committee may deem advisable.
Section 6.5. The Committee may also provide that an employee must be
continuously employed by the Company for such period of time as the Committee,
in its discretion, deems advisable before the right to exercise any portion of
an Option granted to such employee will accrue, and may also set such other
targets, restrictions or other terms relating to the employment of the <PAGE>
<PAGE>
Optionee which targets, restrictions, or terms must be fulfilled or complied
with, as the case may be, prior to the exercise of any portion of an Option
granted to any employee.
Section 6.6. Options granted under this 1998 Plan shall not be
affected by any change of duties or position, so long as the Optionee
continues in the service of the Company.
Section 6.7. Nothing contained in this 1998 Plan, or in any Option
granted pursuant to this 1998 Plan, shall confer upon any Optionee any right
with respect to continuance of employment or service by the Company nor
interfere in any way with the right of the Company to terminate the Optionee's
employment or service or change the Optionee's compensation at any time.
ARTICLE 7
PURCHASE OF SHARES
Section 7.1. Except as provided in this Article VII, an Option shall
be exercised by tender to the Company of the full exercise price of the shares
of Common Stock with respect to which the Option is exercised and written
notice of the exercise. The right to purchase shares of Common Stock shall be
cumulative so that, once the right to purchase any shares of Common Stock has
accrued, such shares or any part thereof may be purchased at any time
thereafter until the expiration or termination of the Option. A partial
exercise of an Option shall not affect the right of the Optionee to exercise
the Option from time to time, in accordance with this 1998 Plan, as to the
remaining number of shares of Common Stock subject to the Option. The
purchase price of the shares shall be in United States dollars, payable in
cash or by certified bank check. Notwithstanding the foregoing, in lieu of
cash, an Optionee may, with the approval of the Committee, exercise his or her
Option by tendering to the Company shares of Common Stock of the Company owned
by him or her and having an aggregate fair market value at least equal to the
full exercise price. Such shares tendered by the Optionee must have been
owned by the Optionee for a period of a minimum of six months prior to the
date they are tendered. The fair market value of any shares of Common Stock so
surrendered shall be determined by the Committee in accordance with
Section 5.1(2) hereof.
Section 7.2 The Company may, with the committee's approval at or
prior to the time of exercise of any option, accept one or more notes from any
Optionee who is an employee in connection with the exercise or receipt of any
outstanding Option; provided that any such note shall be subject to the
following terms and conditions:
(1) The principal of the note shall not exceed the amount required to
be paid to the Company upon the exercise or receipt of one or more Options
under the 1998 Plan and the note shall be delivered directly to the Company in
consideration of such exercise or receipt.
(2) The initial term of the note shall be determined by the
committee; provided that the term of the note, including extensions, shall not
exceed a period of five (5) years.
(3) The note shall provide for full recourse to the Optionee.
(4) If the employment of the Optionee terminates, the unpaid
principal balance of the note shall become due and payable within thirty (30)
days after such termination; provided, however, that if a sale of shares would
cause such Optionee to incur liability under Section 16(b) of the Exchange
<PAGE>
<PAGE>
Act, the unpaid balance shall become due and payable on the tenth (10)
business day after the first day on which a sale of such shares could have
been made without incurring such liability, assuming for these purposes that
there are no other transactions by the Optionee subsequent to such
termination.
(5) If required by the Committee or by applicable law, the note shall
be secured by a pledge of any shares or rights financed thereby in compliance
with applicable law.
(6) The terms, repayment provisions and collateral release provisions
of the note and the pledge securing the note shall conform with applicable
rules and regulations of the Federal Reserve Board as them in effect.
Section 7.3. Except as provided in Article VI above, an Option may
not be exercised unless the holder thereof is an officer, director, employee,
or consultant of the Company at the time of exercise.
Section 7.4. No Optionee, or Optionee's executor, administrator,
legatee, or distributee or other permitted transferee, shall be deemed to be a
holder of any shares of Common Stock subject to an Option for any purpose
whatsoever unless and until a stock certificate or certificates for such
shares are issued to such person under the terms of this 1998 Plan. No
adjustment 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 provided in Article VIII hereof.
Section 7.5. If: (i) the listing, registration or qualification of
the Options issued hereunder, or of any securities issuable upon exercise of
such Options (the "Subject Securities") upon any securities exchange or
quotation system or under federal or state law is necessary as a condition of
or in connection with the issuance or exercise of the Options, or (ii) the
consent or approval of any governmental regulatory body is necessary as a
condition of or in connection with the issuance or exercise of the Options,
the Company shall not be obligated to deliver the certificates representing
the Subject Securities or to accept or to recognize an Option exercise unless
and until such listing, registration, qualification, consent or approval shall
have been effected or obtained. The Company will take reasonable action to so
list, register, or qualify the Options and the Subject Securities, or effect
or obtain such consent or approval, so as to allow for their issuance.
Section 7.6. An Optionee may be required to represent to the Company
as a condition of his or her exercise of Options issued under this 1998 Plan
that: (i) the Subject Securities acquired upon exercise of his or her Option
are being acquired by him or her for investment purposes only and not with a
view to distribution or resale, unless counsel for the Company is then of the
view that such a representation is not necessary and is not required under the
Securities Act of 1933, as amended (the "Securities Act"), or any other
applicable statute, law, regulation or rule; and (ii) that the Optionee shall
make no exercise or disposition of an Option or of the Subject Securities in
contravention of the Securities Act, the Exchange Act or the rules and
regulations thereunder. Optionees may also be required to provide (as a
condition precedent to exercise of an Option) such documentation as may be
reasonably requested by the Company to assure compliance with applicable law
and the terms and conditions of this 1998 Plan and the subject Option.
Section 7.7. The Committee may, in its discretion, grant in
connection with any Option, at any time prior to the exercise thereof, the
right (previously defined as an "SAR" or collectively, the "SARs") to <PAGE>
<PAGE>
surrender all or part of the Option to the extent that such Option is
exercisable and receive in exchange an amount (payable in cash, shares of
Common Stock valued at the then fair market value, or a combination thereof as
determined by the Committee) equal to the difference (the "Spread") between
the then fair market value of the shares of Common Stock issuable upon the
exercise of the Option (or portions thereof surrendered) and the option price
payable upon the exercise of the Option (or portions thereof surrendered).
Such SARS may be included in an Option only under the following conditions:
(a) the SARS will expire no later than the expiration of the underlying
Option; (b) the SARS may be for no more than one hundred percent (100%) of the
Spread; (c) the SARS are transferable only when the underlying Option is
transferable and under the same conditions; (d) the SARS may be exercised only
when the underlying Option is eligible to be exercised; and (e) the SARS may
be exercised only when the Spread is positive, i.e., when the market price of
the stock subject to the Option exceeds the exercise price of the Option.
Section 7.8. An Option may also be exercised by tender to the Company
of a written notice of exercise together with advice of the delivery of an
order to a broker to sell part or all of the shares of Common Stock subject to
such exercise notice and an irrevocable order to such broker to deliver to the
Company (or its transfer agent) sufficient proceeds from the sale of such
shares to pay the exercise price and any withholding taxes. All documentation
and procedures to be followed in connection with such a "cashless exercise"
shall be approved in advance by the Committee.
ARTICLE 8
CHANGE IN NUMBER OF OUTSTANDING SHARES OF
STOCK, ADJUSTMENTS, REORGANIZATIONS, ETC.
Section 8.1 If there shall occur any extraordinary dividend or other
extraordinary distribution in respect of the Common Stock (whether in the form
of cash, Common Stock, other securities or other property), or any
recapitalization, stock split (including a stock split in the form of a stock
dividend), reverse stock split, reorganization, merger, combination
consolidation, split-up, spin-off, combination, repurchase, or exchange of
Common Stock or other securities of the Company, or there shall occur any
other fundamental change or event in respect of the Common Stock or a sale of
substantially all the assets of the Company as an entirety, then the Committee
shall, in such manner and to such extent (if any) as it in good faith deems
appropriate and equitable (1) proportionately adjust any or all of (a) the
number and type of shares of Common Stock (or other securities) which
thereafter may be made the subject of Options (including the specific maxima
and numbers of shares set forth elsewhere in this Plan), (b) the number,
amount and type of shares of Common Stock (or other securities or property)
subject to any or all outstanding Options, (c) the grant, exercise or base
price of any or all outstanding Options, (d) the securities or property
deliverable upon exercise of any outstanding Options; or (2) in the case of an
extraordinary dividend or other distribution, merger, reorganization,
consolidation, combination, sale of assets, split-up, exchange, or spin-off,
make other provision for a cash payment or for the substitution or exchange of
any or all outstanding Options or securities deliverable to the holder of any
or all outstanding Options based upon the distribution or consideration
payable to holders of the Common Stock of the Company upon or in respect of
such event; provided, however, in each case, that with respect to Incentive
Stock Options, no such adjustment shall be made which would cause the 1998
Plan to violate section 424 of the Code or any successor provisions thereto
without the written consent of the holders of Incentive Stock Options who are
materially adversely affected thereby.
<PAGE>
<PAGE>
Section 8.2. The grant of an Option pursuant to this 1998 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 or to consolidate or to dissolve, liquidate or sell, or
transfer all or any part of its business or assets.
Section 8.3. If any Option or other right to acquire Common Stock
under this 1998 Plan is not exercised prior to a dissolution of the Company,
and no express provision has been made in the Option or otherwise for the
survival, substitution, exchange or other settlement of such Option or right,
such Option or right shall thereupon terminate. Unless other provision is made
for the payment of the fair value thereof, under a reorganization event of the
type described in Section 8.1 that the Company does not legally survive, the
Options shall be converted into or otherwise substituted for a right to
receive, on exercise, the consideration distributed or payable upon such
reorganization event in respect of the number of shares of Common Stock as to
which the Option is exercised.
ARTICLE 9
DURATION, AMENDMENT AND TERMINATION
Section 9.1. The Board of Directors may at any time terminate this
1998 Plan or make such amendments hereto as it shall deem advisable and in the
best interests of the Company, without action on the part of the stockholders
of the Company unless such approval is required pursuant to Section 422 of the
Code or the regulations thereunder or other federal or state law; provided,
however, that no such termination or amendment shall, without the consent of
the individual to whom any Option shall theretofore have been granted,
materially adversely affect or impair the rights of such individual under such
Option. Pursuant to Section 422(b) of the Code, no Incentive Option may be
granted pursuant to this 1998 Plan after ten years from the date this 1998
Plan is adopted or the date this 1998 Plan is approved by the stockholders of
the Company, whichever is earlier.
ARTICLE 10
RESTRICTIONS
Section 10.1. Any Options and shares of Common Stock issued pursuant
to this 1998 Plan shall be subject to such restrictions on transfer and
limitations as shall, in the opinion of the Committee, be necessary or
advisable to assure compliance with the laws, rules and regulations of the
United States government or any state or jurisdiction thereof. In addition,
the Committee may in any Stock Option Certificate and Agreement impose such
other restrictions upon the disposition or exercise of an Option or upon the
sale or other disposition of the shares of Common Stock deliverable upon
exercise thereof as the Committee may, in its sole discretion, determine. By
accepting an award pursuant to this 1998 Plan, each Optionee shall thereby
agree to any such restrictions.
Section 10.2. Any certificate issued to evidence shares of Common
Stock issued pursuant to an Option shall bear such legends and statements as
the Committee, the Board of Directors or counsel to the Company shall deem
advisable to assure compliance with the laws, rules and regulations of the
United States government or any state or jurisdiction thereof. No shares of
Common Stock will be delivered pursuant to exercise of the Options granted
under this 1998 Plan until the Company has obtained such consents or approvals
from such regulatory bodies of the United States government or any state or
jurisdiction thereof as the Committee, the Board of Directors or counsel to
the Company deems necessary or advisable.<PAGE>
<PAGE>
ARTICLE 11
NON FUNDED 1998 PLAN
Section 11.1. Options payable under this 1998 Plan shall be payable
in shares of the Company. No special or separate reserve, fund or deposit
shall be made to assure payment of such Options. No optionee or other person
shall have any right, title or interest in any fund or in any specific asset
(including shares of Common Stock, except as expressly otherwise provided) of
the Company by reason of any Option hereunder. Neither the provisions of this
1998 Plan (or of any related documents), nor the creation or adoption of this
1998 Plan, nor any action taken pursuant to the provisions of the 1998 Plan
shall create, or be construed to create, a trust of any kind or a fiduciary
relationship between the Company and any Optionee or other person. To the
extent that an Optionee or other person acquires a right to receive payment
pursuant to any Option hereunder, such right shall be no greater than the
right of any unsecured general creditor of the company.
ARTICLE 12
APPLICATION OF FUNDS
Section 12.1. The proceeds received by the Company from the issuance
and sale of Common Stock upon exercise of Options granted pursuant to this
1998 Plan are to be added to the general funds of the Company and used for its
corporate purposes as determined by the Board of Directors.
ARTICLE 13
TAX WITHHOLDING
Section 13.1 Upon the exercise of any Option or upon the disposition
of shares of Common Stock acquired pursuant to the exercise of an Incentive
Stock Option prior to satisfaction of the holding period requirements of
Section 422 of the Code, the Company shall have the right at its option to (i)
require the Optionee (or their representative, as the case may be) to pay or
provide for payment of the amount of any taxes which the Company may be
required to withheld with respect to such transaction, or (ii) deduct from any
amount payable in cash the amount of any taxes which the Company may be
required to withhold with respect to such cash amount. In any case where a tax
is required to be withhold in connection with the delivery of shares of Common
Stock under this 1998 Plan, the Committee may grant (either at the time of the
Option grant or thereafter) to the optionee the right to elect, pursuant to
such rules and subject to such conditions as the Committee may establish, to
have the Company reduce the number of shares to be delivered by (or otherwise
reacquire) the appropriate number of shares valued at their then Fair Market
Value, to satisfy such withholding obligation.
ARTICLE 14
EFFECTIVENESS OF 1998 PLAN
Section 14.1. This 1998 Plan shall become effective upon adoption by
the Board of Directors, and approved by the stockholders of the Company in
accordance with the applicable provisions (relating to the issuance of stock
or options) of the Company's governing documents and state law or, if no such
approval is prescribed therein, by the affirmative vote of the holders of a
majority of the votes cast at a duly held stockholders meeting at which a
quorum representing a majority of all the Company's outstanding voting stock
is present and voting (in person or by proxy) or, without regard to any <PAGE>
<PAGE>
required time period for approval, by any other method permitted by
Section 422 of the Code and the regulations thereunder.
IN WITNESS WHEREOF, pursuant to the approval of this 1998 Plan by the
Board of Directors, this 1998 Plan is executed and adopted as of the day of
, 1998.
TELSCAPE INTERNATIONAL, INC.
[CORPORATE SEAL]
By:
--------------------------
Its:
-------------------------
ATTEST:
By:
------------------------
Secretary
EXHIBIT 4.6
TELSCAPE INTERNATIONAL, INC.
1998 MSN STOCK OPTION AND APPRECIATION RIGHTS PLAN
ARTICLE 1
ESTABLISHMENT AND PURPOSE
Section 1.1. Telscape International, Inc. (the "Company"), a Texas
corporation, hereby establishes a stock option and appreciation rights plan to
be named the Telscape International, Inc. 1998 MSN Stock Option and
Appreciation Rights Plan (the "1998 MSN Plan").
Section 1.2. The purpose of this 1998 MSN Plan is to induce persons
who are officers, directors, employees and consultants of the Company or any
of its subsidiaries who are in a position to contribute materially to the
Company's prosperity to remain with the Company, to offer said persons
incentives and rewards in recognition of their contributions to the Company's
progress, and to encourage said persons to continue to promote the best
interests of the Company. This 1998 MSN Plan provides for the grant of
options to purchase shares of common stock of the Company, par value $.001 per
share (the "Common Stock") which qualify as incentive stock options
("Incentive Options") under Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code"), to persons who are employees, as well as options
which do not so qualify ("Non-Qualified Options") to be issued to persons or
consultants, including those who are not employees. This 1998 MSN Plan also
provides for grants of stock appreciation rights ("SARs") in connection with
the grant of options under this 1998 MSN Plan. Incentive Options and Non-
Qualified Options may be collectively referred to hereinafter as the "Options"
as the context may require.
Section 1.3. All options and other rights previously granted by the
Company under any other plan previously adopted by the Company shall continue
to be governed by such plan. All Options granted hereunder on or after the
date that this 1998 MSN Plan has been approved and adopted by the Company's
board of directors (the "Board of Directors") shall be governed by the terms
and conditions of this 1998 MSN Plan unless the terms of such Option
specifically indicate that it is not to be so governed.
ARTICLE 2
ADMINISTRATION
Section 2.1. Administration and Authorization: Power and Procedure.
-----------------------------------------------------
(A) Committee. This 1998 MSN Plan shall be administered by, and all
----------
Options shall be authorized by, the Committee. Action of the Committee with
respect to the administration of this 1998 MSN Plan shall be taken pursuant to
a majority vote or by written consent of its members.
(1) "Committee" shall mean a committee appointed by the Board to
---------
administer this 1998 MSN Plan, which committee shall be comprised only of two
or more directors or such greater number of directors as may be required under
applicable law, each of whom, during such time as one or more Optionees may be
subject to Section 16 of the Exchange Act, shall be Disinterested. No person
may serve as a member of the Committee unless such person is also an "outside
director" within the meaning of Treasury Regulation section 1.162-27(e)(3)(i).
<PAGE>
<PAGE>
(2) "Disinterested" shall mean disinterested within the meaning of
-------------
any applicable regulatory requirements, including Rule 16b-3.
(B) Options: Interpretation: Powers of Committee. Subject to the express
--------------------------------------------
provisions of this 1998 MSN Plan, the Committee shall have the authority:
(1) to determine from among those persons eligible the particular
persons who will receive any Options;
(2) to grant Options to officers, directors, employees and
consultants, determine the price at which securities will be offered and the
amount of securities to be offered to any of such persons, and determine the
other specific terms and conditions of such Options consistent with the
express limits of this 1998 MSN Plan, and establish the installments (if any)
in which such Options shall become exercisable or determine that no delayed
exercisability is required, and establish the events of termination of such
Options;
(3) to approve the forms of Options (which need not be identical
either as to type of Option or among Optionees);
(4) to construe and interpret this 1998 MSN Plan and any agreements
defining the rights and obligations of the Company and Optionees under this
1998 MSN Plan, further define the terms used in this 1998 MSN Plan, and
prescribe, amend and rescind rules an deregulations relating to the
administration of this 1998 MSN Plan;
(5) to cancel, modify or waive the Company's rights with respect to,
or modify, discontinue, suspend or terminate any or all outstanding Options
held by Optionees, subject to any required consent;
(6) to accelerate or extend the exercisability or extend the term of
any or all such outstanding Options within a maximum ten-year term of Options;
and
(7) to make all other determinations and take such other action as
contemplated by this 1998 MSN Plan or as may be necessary or advisable for
the administration of this 1998 MSN Plan and the effectuation of its purposes.
(C) Binding Determinations. Any action taken by, or inaction of, the
----------------------
Company, any Subsidiary, the Board or the Committee relating or pursuant to
this 1998 MSN Plan shall be within the absolute discretion of that entity or
body and shall be conclusive and binding upon all persons. No member of the
Board or Committee, or officer of the Company or any Subsidiary, shall be
liable for any such action or inaction of the entity or body, of another
person or, except in circumstances involving bad faith, of himself or herself.
Subject only to compliance with the express provisions hereof, the Board and
Committee may act in their absolute discretion in matters within their
authority related to this 1998 MSN Plan.
(D) Reliance on Experts. In making any determination or in taking or not
-------------------
taking any action under this 1998 MSN Plan, the committee or the Board, as the
case may be, may obtain and may rely upon the advice of experts, including
professional advisors to the Company. No director, officer or agent of the
<PAGE>
<PAGE>
company shall be liable for any such action or determination taken or made or
omitted in good faith.
(E) Delegation. The Committee may delegate ministerial, non-discretionary
----------
functions to individuals who are officers or employees of the Company.
With respect to persons subject to Section 16 of the Exchange Act,
transactions under this 1998 MSN Plan are intended to comply with all
applicable conditions of Rule 16b-3 or its successors under the Exchange Act.
To the extent that any provision of this 1998 MSN Plan or action by the
Committee fails to so comply, it shall be deemed to be null and void, to the
extent permitted by law and deemed advisable by the Committee.
Section 2.2. The provisions of this 1998 MSN Plan relating to
Incentive Options are intended to comply in every respect with Section 422 of
the Code ("Section 422") and the regulations promulgated thereunder. In the
event that any future statute or regulation shall modify Section 422, this
1998 MSN Plan shall be deemed to incorporate by reference such modification.
Any stock option agreement relating to the grant of any Incentive Option
pursuant to this 1998 MSN Plan, which option is outstanding and unexercised at
the time that any modifying statute or regulation becomes effective, shall
also be deemed to incorporate by reference such modification, and no notice of
such modification need be given to the Optionee (as hereinafter defined). Any
stock option agreement relating to an Incentive Option shall provide that the
Optionee (as hereinafter defined) hold the stock received upon exercise of
such Incentive Option for a minimum of two years from the date of grant of the
Incentive Option and one year from the date of exercise of such Incentive
Option, absent the written approval, consent or waiver of the Committee.
Section 2.3. If any provision of this 1998 MSN Plan is determined to
disqualify the shares of Common Stock purchasable upon exercise of an
Incentive Option granted under this 1998 MSN Plan from the special tax
treatment provided by Section 422, such provision shall be deemed to
incorporate by reference the modification required to qualify such shares of
Common Stock for said tax treatment.
ARTICLE 3
SHARES AVAILABLE FOR OPTIONS: SHARE LIMITS
Section 3.1 Shares Available. The capital stock that may be
----------------
delivered under this 1998 MSN Plan shall be shares of the Company's authorized
but unissued Common Stock and any shares of its Common Stock held as treasury
shares. The shares may be delivered for any lawful consideration.
Section 3.2 Share Limits. The maximum number of shares of Common
------------
Stock that may be delivered pursuant to Options granted under this 1998 MSN
Plan shall not exceed 100,000 shares. The maximum number of shares of Common
Stock subject to those Options that are granted during any calendar year to
any individual under this 1998 MSN Plan shall not exceed 50,000 shares. Each
of the foregoing numerical limits shall be subject to adjustment as
contemplated by this Section 3.2.
Section 3.3 Calculation of Available Shares and Replenishment. Shares
-------------------------------------------------
subject to outstanding Options shall be reserved for issuance. If any Option
<PAGE>
<PAGE>
or other right to acquire shares of Common Stock under an Option shall expire
or be canceled or terminated without having been exercised in full, or any
Common Stock subject to an Option shall not vest or be delivered, the
unpurchased, unvested or undelivered shares subject thereto shall again be
available for the purposes of the 1998 MSN Plan, subject to any applicable
limitations under Rule 16b-3. If a Stock Appreciation Right or similar right
is exercised, the number of shares of Common Stock to which such exercise or
payment relates under the applicable Option shall be charged against the
maximum amount of Common Stock that may be delivered pursuant to Options under
this 1998 MSN Plan and, if applicable, such Option. If the Company withholds
shares of Common Stock pursuant to Section 4.5, the number of shares that
would have been deliverable with respect to an Option but that are withheld
pursuant to the provisions of Section 4.5 may in effect not be issued, but the
aggregate number of shares issuable with respect to the applicable Option and
under the 1998 MSN Plan shall be reduced by the number of shares withheld and
such shares shall not be available for additional Options under the 1998 MSN
Plan. No Options shall be granted pursuant to this 1998 MSN Plan to any
Optionee after the tenth anniversary of the date that this 1998 MSN Plan is
adopted by the Board.
ARTICLE 4
ELIGIBILITY
Section 4.1. Non-Qualified Options may be granted pursuant to this
1998 MSN Plan to officers, directors, employees and consultants of the Company
(or any of its subsidiaries) selected by the Committee, and Incentive Options
may be granted pursuant to this 1998 MSN Plan only to employees (including
officers and directors who are also employees) of the Company (or any of its
subsidiaries) selected by the Committee. Persons granted Options pursuant to
this 1998 MSN Plan are referred to herein as "Optionees." For purposes of
determining who is an employee with respect to eligibility for Incentive
Options, Section 422 shall govern. The Committee may determine (in its sole
discretion) that any person who would otherwise be eligible to be granted
Options shall, nonetheless, be ineligible to receive any award under this 1998
MSN Plan.
ARTICLE 5
TERMS AND CONDITIONS OF OPTIONS
Section 5.1. Each Option granted under this 1998 MSN Plan shall be
evidenced by a stock option certificate and agreement (the "Stock Option
Certificate and Agreement") in a form consistent with this 1998 MSN Plan,
provided that the following terms and conditions shall apply:
(1) The price at which each share of Common Stock covered by an
Option may be purchased shall be set forth in the Stock Option Certificate and
Agreement and shall be determined by the Committee, provided that the option
price for any Option shall not be less than the "fair market value" of the
shares of Common Stock at the time of grant determined in accordance with
Section 5.1(2) below. Notwithstanding the foregoing, if an Option to purchase
shares of Common Stock is granted pursuant to this 1998 MSN Plan to an
Optionee who, on the date of the grant, directly or indirectly owns more than
ten percent (10%) of the voting power of all classes of capital stock of the
Company (or its parent or subsidiary), not including the shares of Common
Stock obtainable upon exercise of the Option, the minimum exercise price of
such Option shall be not less than one hundred ten percent (110%) of the "fair
market value" of the shares of Common Stock on the date of grant determined in
accordance with Section 5.1(2) below.
<PAGE>
<PAGE>
(2) The "fair market value" shall be determined by the Committee,
which determination shall be binding upon the Company and its officers,
directors, employees and consultants. The determination of the fair market
value shall be based upon the following: (i) if the shares of Common Stock are
not listed and traded upon a recognized securities exchange and there is no
report of stock prices with respect to the shares of Common Stock published by
a recognized stock quotation service, on the basis of the recent purchases and
sales of the shares of Common Stock in arms-length transactions; or (ii) if
the shares of Common Stock are not then listed and traded upon a recognized
securities exchange or quoted on the NASDAQ Stock Market, and there are
reports of stock prices by a recognized quotation service, upon the basis of
the last reported sale or transaction price of such stock on the date of grant
as reported by a recognized quotation service, or, if there is no last
reported sale or transaction price on that day, then upon the basis of the
mean of the last reported closing bid and closing asked prices for such stock
on that day or on the date nearest preceding that day; or (iii) if the shares
of Common Stock shall then be listed and traded upon a recognized securities
exchange or quoted on the NASDAQ Stock Market, upon the basis of the last
reported sale or transaction price at which shares of Common Stock were traded
on such recognized securities exchange on the date of grant or, if the shares
of Common Stock were not traded on such date, upon the basis of the last
reported sale or transaction price on the date nearest preceding that date.
The Committee shall also consider such other factors relating to the fair
market value of the shares of Common Stock as it shall deem appropriate.
(3) For the purpose of determining whether an Optionee owns more than
ten percent (10%) of the voting power of all classes of stock of the Company,
an Optionee is considered to own those shares which are owned directly or
indirectly through brothers and sisters (including half-blooded siblings),
spouse, ancestors and lineal descendants; and proportionately as a Stockholder
of a company, a partner of a partnership, and/or a beneficiary of a trust or
an estate that owns shares of the Company.
(4) Notwithstanding any other provision of this 1998 MSN Plan, in
accordance with the provisions of Section 422(d) of the Code, to the extent
that the aggregate fair market value (determined at the time the Option is
granted) of the shares of Common Stock of the Company with respect to which
Incentive Options (without reference to this provision) are exercisable for
the first time by any individual in any calendar year under any and all stock
option plans of the Company, its subsidiary corporations and its parent (if
any) exceeds $100,000, such Options shall be treated as Non-Qualified Options.
(5) An Optionee may, in the Committee's discretion, be granted more
than one Incentive Option or Non-Qualified Option during the duration of this
1998 MSN Plan, and may be issued a combination of Non-Qualified Options and
Incentive Options; provided, however, that non-employees are not eligible to
receive Incentive Options.
(6) The duration of any Option and any Right related thereto shall be
within the sole discretion of the Committee; provided, however, that any
Incentive Option granted to a ten percent (10%) or less stockholder or any
Non-Qualified Option shall, by its terms, be exercised within ten years after
the date the Option is granted and any Incentive Option granted to a greater
than ten percent (10%) stockholder shall, by its terms, be exercised within
five years after the date the Option is granted.
(7) An Option and any Right related thereto shall not be transferable
by the Optionee other than by will, or by the laws of descent and <PAGE>
<PAGE>
distribution. An Option may be exercised during the Optionee's lifetime only
by the Optionee.
(8) The Committee may impose such other or further conditions on any
transaction under the 1998 MSN Plan, including without limitation, the grant
or award of any Option or the exercise or other disposition thereof, as it, in
its discretion, may deem necessary or advisable in order to exempt the
transaction from Section 16(b) of the Exchange Act, including without
limitation thereto, the approval or ratification of the transaction by
stockholders or a six-month restriction on disposition of the Option or the
Common Stock issuable upon exercise thereof.
ARTICLE 6
EMPLOYMENT OR SERVICE OF OPTIONEE
Section 6.1. If the employment or service of an Optionee is
terminated for cause, the option rights of such Optionee, both accrued and
future, under any then outstanding Non-Qualified or Incentive Option shall
terminate immediately. "Cause" shall have the meaning specified for that term
in the Stock Option Certificate and Agreement entered into between the
Optionee and Company, which meaning shall include, without limitation,
incompetence in the performance of duties, disloyalty, dishonesty, theft,
embezzlement, unauthorized disclosure of patents, processes or trade secrets
of the Company, individually or as an employee, partner, associate, officer or
director of any organization. The determination of the existence and the
proof of "cause" shall be made by the Committee and, such determination shall
be binding on the Optionee and the Company.
Section 6.2. If the employment or service of the Optionee is
terminated by either the Optionee or the Company for any reason other than for
cause, death, or for disability, as defined in Section 22(e)(3) of the Code,
the option rights of such Optionee under any then outstanding Non-Qualified or
Incentive Option shall, subject to the provisions of Section 5.1(8) hereof, be
exercisable by such Optionee at any time prior to the expiration of the Option
or within three months after the date of such termination, whichever period of
time is shorter, but only to the extent of the accrued right to exercise the
Option at the date of such termination.
Section 6.3. In the case of an Optionee who becomes disabled, as
defined by Section 22(e)(3) of the Code, the option rights of such Optionee
under any then outstanding Non-Qualified or Incentive Option shall, subject to
the provisions of Section 5.1(8) hereof, be exercisable by such Optionee at
any time prior to the expiration of the Option or within one year after the
date of termination of employment or service due to disability, whichever
period of time is shorter, but only to the extent of the accrued right to
exercise the Option at the date of such termination.
Section 6.4. In the event of the death of an Optionee, the option
rights of such Optionee under any then outstanding Non-Qualified or Incentive
Option shall be exercisable by the person or persons to whom these rights pass
by will or by the laws of descent and distribution, at any time prior to the
expiration of the Option or within three years after the date of death,
whichever period of time is shorter, but only to the extent of the accrued
right to exercise the Option at the date of death. If a person or estate
acquires the right to exercise a Non-Qualified or Incentive Option by bequest
or inheritance, the Committee may require reasonable evidence as to the
ownership of such Option, and may require such consents and releases of taxing
authorities as the Committee may deem advisable.
<PAGE>
<PAGE>
Section 6.5. The Committee may also provide that an employee must be
continuously employed by the Company for such period of time as the Committee,
in its discretion, deems advisable before the right to exercise any portion of
an Option granted to such employee will accrue, and may also set such other
targets, restrictions or other terms relating to the employment of the
Optionee which targets, restrictions, or terms must be fulfilled or complied
with, as the case may be, prior to the exercise of any portion of an Option
granted to any employee.
Section 6.6. Options granted under this 1998 MSN Plan shall not be
affected by any change of duties or position, so long as the Optionee
continues in the service of the Company.
Section 6.7. Nothing contained in this 1998 MSN Plan, or in any
Option granted pursuant to this 1998 MSN Plan, shall confer upon any Optionee
any right with respect to continuance of employment or service by the Company
nor interfere in any way with the right of the Company to terminate the
Optionee's employment or service or change the Optionee's compensation at any
time.
ARTICLE 7
PURCHASE OF SHARES
Section 7.1. Except as provided in this Article VII, an Option shall
be exercised by tender to the Company of the full exercise price of the shares
of Common Stock with respect to which the Option is exercised and written
notice of the exercise. The right to purchase shares of Common Stock shall be
cumulative so that, once the right to purchase any shares of Common Stock has
accrued, such shares or any part thereof may be purchased at any time
thereafter until the expiration or termination of the Option. A partial
exercise of an Option shall not affect the right of the Optionee to exercise
the Option from time to time, in accordance with this 1998 MSN Plan, as to the
remaining number of shares of Common Stock subject to the Option. The
purchase price of the shares shall be in United States dollars, payable in
cash or by certified bank check. Notwithstanding the foregoing, in lieu of
cash, an Optionee may, with the approval of the Committee, exercise his or her
Option by tendering to the Company shares of Common Stock of the Company owned
by him or her and having an aggregate fair market value at least equal to the
full exercise price. Such shares tendered by the Optionee must have been
owned by the Optionee for a period of a minimum of six months prior to the
date they are tendered. The fair market value of any shares of Common Stock so
surrendered shall be determined by the Committee in accordance with
Section 5.1(2) hereof.
Section 7.2 The Company may, with the committee's approval at or
prior to the time of exercise of any option, accept one or more notes from any
Optionee who is an employee in connection with the exercise or receipt of any
outstanding Option; provided that any such note shall be subject to the
following terms and conditions:
(1) The principal of the note shall not exceed the amount required to
be paid to the Company upon the exercise or receipt of one or more Options
under the 1998 MSN Plan and the note shall be delivered directly to the
Company in consideration of such exercise or receipt.
(2) The initial term of the note shall be determined by the
committee; provided that the term of the note, including extensions, shall not
exceed a period of five (5) years.
<PAGE>
<PAGE>
(3) The note shall provide for full recourse to the Optionee.
(4) If the employment of the Optionee terminates, the unpaid
principal balance of the note shall become due and payable within thirty (30)
days after such termination; provided, however, that if a sale of shares would
cause such Optionee to incur liability under Section 16(b) of the Exchange
Act, the unpaid balance shall become due and payable on the tenth (10)
business day after the first day on which a sale of such shares could have
been made without incurring such liability, assuming for these purposes that
there are no other transactions by the Optionee subsequent to such
termination.
(5) If required by the Committee or by applicable law, the note shall
be secured by a pledge of any shares or rights financed thereby in compliance
with applicable law.
(6) The terms, repayment provisions and collateral release provisions
of the note and the pledge securing the note shall conform with applicable
rules and regulations of the Federal Reserve Board as them in effect.
Section 7.3. Except as provided in Article VI above, an Option may
not be exercised unless the holder thereof is an officer, director, employee,
or consultant of the Company at the time of exercise.
Section 7.4. No Optionee, or Optionee's executor, administrator,
legatee, or distributee or other permitted transferee, shall be deemed to be a
holder of any shares of Common Stock subject to an Option for any purpose
whatsoever unless and until a stock certificate or certificates for such
shares are issued to such person under the terms of this 1998 MSN Plan. No
adjustment 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 provided in Article VIII hereof.
Section 7.5. If: (i) the listing, registration or qualification of
the Options issued hereunder, or of any securities issuable upon exercise of
such Options (the "Subject Securities") upon any securities exchange or
quotation system or under federal or state law is necessary as a condition of
or in connection with the issuance or exercise of the Options, or (ii) the
consent or approval of any governmental regulatory body is necessary as a
condition of or in connection with the issuance or exercise of the Options,
the Company shall not be obligated to deliver the certificates representing
the Subject Securities or to accept or to recognize an Option exercise unless
and until such listing, registration, qualification, consent or approval shall
have been effected or obtained. The Company will take reasonable action to so
list, register, or qualify the Options and the Subject Securities, or effect
or obtain such consent or approval, so as to allow for their issuance.
Section 7.6. An Optionee may be required to represent to the Company
as a condition of his or her exercise of Options issued under this 1998 MSN
Plan that: (i) the Subject Securities acquired upon exercise of his or her
Option are being acquired by him or her for investment purposes only and not
with a view to distribution or resale, unless counsel for the Company is then
of the view that such a representation is not necessary and is not required
under the Securities Act of 1933, as amended (the "Securities Act"), or any
other applicable statute, law, regulation or rule; and (ii) that the Optionee
shall make no exercise or disposition of an Option or of the Subject
Securities in contravention of the Securities Act, the Exchange Act or the
<PAGE>
<PAGE>
rules and regulations thereunder. Optionees may also be required to provide
(as a condition precedent to exercise of an Option) such documentation as may
be reasonably requested by the Company to assure compliance with applicable
law and the terms and conditions of this 1998 MSN Plan and the subject Option.
Section 7.7. The Committee may, in its discretion, grant in
connection with any Option, at any time prior to the exercise thereof, the
right (previously defined as an "SAR" or collectively, the "SARs") to
surrender all or part of the Option to the extent that such Option is
exercisable and receive in exchange an amount (payable in cash, shares of
Common Stock valued at the then fair market value, or a combination thereof as
determined by the Committee) equal to the difference (the "Spread") between
the then fair market value of the shares of Common Stock issuable upon the
exercise of the Option (or portions thereof surrendered) and the option price
payable upon the exercise of the Option (or portions thereof surrendered).
Such SARS may be included in an Option only under the following conditions:
(a) the SARS will expire no later than the expiration of the underlying
Option; (b) the SARS may be for no more than one hundred percent (100%) of the
Spread; (c) the SARS are transferable only when the underlying Option is
transferable and under the same conditions; (d) the SARS may be exercised only
when the underlying Option is eligible to be exercised; and (e) the SARS may
be exercised only when the Spread is positive, i.e., when the market price of
the stock subject to the Option exceeds the exercise price of the Option.
Section 7.8. An Option may also be exercised by tender to the Company
of a written notice of exercise together with advice of the delivery of an
order to a broker to sell part or all of the shares of Common Stock subject to
such exercise notice and an irrevocable order to such broker to deliver to the
Company (or its transfer agent) sufficient proceeds from the sale of such
shares to pay the exercise price and any withholding taxes. All documentation
and procedures to be followed in connection with such a "cashless exercise"
shall be approved in advance by the Committee.
ARTICLE 8
CHANGE IN NUMBER OF OUTSTANDING SHARES OF
STOCK, ADJUSTMENTS, REORGANIZATIONS, ETC.
Section 8.1 If there shall occur any extraordinary dividend or other
extraordinary distribution in respect of the Common Stock (whether in the form
of cash, Common Stock, other securities or other property), or any
recapitalization, stock split (including a stock split in the form of a stock
dividend), reverse stock split, reorganization, merger, combination
consolidation, split-up, spin-off, combination, repurchase, or exchange of
Common Stock or other securities of the Company, or there shall occur any
other fundamental change or event in respect of the Common Stock or a sale of
substantially all the assets of the Company as an entirety, then the Committee
shall, in such manner and to such extent (if any) as it in good faith deems
appropriate and equitable (1) proportionately adjust any or all of (a) the
number and type of shares of Common Stock (or other securities) which
thereafter may be made the subject of Options (including the specific maxima
and numbers of shares set forth elsewhere in this Plan), (b) the number,
amount and type of shares of Common Stock (or other securities or property)
subject to any or all outstanding Options, (c) the grant, exercise or base
price of any or all outstanding Options, (d) the securities or property
deliverable upon exercise of any outstanding Options; or (2) in the case of an
<PAGE>
<PAGE>
extraordinary dividend or other distribution, merger, reorganization,
consolidation, combination, sale of assets, split-up, exchange, or spin-off,
make other provision for a cash payment or for the substitution or exchange of
any or all outstanding Options or securities deliverable to the holder of any
or all outstanding Options based upon the distribution or consideration
payable to holders of the Common Stock of the Company upon or in respect of
such event; provided, however, in each case, that with respect to Incentive
Stock Options, no such adjustment shall be made which would cause the 1998 MSN
Plan to violate section 424 of the Code or any successor provisions thereto
without the written consent of the holders of Incentive Stock Options who are
materially adversely affected thereby.
Section 8.2. The grant of an Option pursuant to this 1998 MSN 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 or to consolidate or to dissolve, liquidate or
sell, or transfer all or any part of its business or assets.
Section 8.3. If any Option or other right to acquire Common Stock
under this 1998 MSN Plan is not exercised prior to a dissolution of the
Company, and no express provision has been made in the Option or otherwise for
the survival, substitution, exchange or other settlement of such Option or
right, such Option or right shall thereupon terminate. Unless other provision
is made for the payment of the fair value thereof, under a reorganization
event of the type described in Section 8.1 that the Company does not legally
survive, the Options shall be converted into or otherwise substituted for a
right to receive, on exercise, the consideration distributed or payable upon
such reorganization event in respect of the number of shares of Common Stock
as to which the Option is exercised.
ARTICLE 9
DURATION, AMENDMENT AND TERMINATION
Section 9.1. The Board of Directors may at any time terminate this
1998 MSN Plan or make such amendments hereto as it shall deem advisable and in
the best interests of the Company, without action on the part of the
stockholders of the Company unless such approval is required pursuant to
Section 422 of the Code or the regulations thereunder or other federal or
state law; provided, however, that no such termination or amendment shall,
without the consent of the individual to whom any Option shall theretofore
have been granted, materially adversely affect or impair the rights of such
individual under such Option. Pursuant to Section 422(b) of the Code, no
Incentive Option may be granted pursuant to this 1998 MSN Plan after ten years
from the date this 1998 MSN Plan is adopted or the date this 1998 MSN Plan is
approved by the stockholders of the Company, whichever is earlier.
ARTICLE 10
RESTRICTIONS
Section 10.1. Any Options and shares of Common Stock issued pursuant
to this 1998 MSN Plan shall be subject to such restrictions on transfer and
limitations as shall, in the opinion of the Committee, be necessary or
advisable to assure compliance with the laws, rules and regulations of the
United States government or any state or jurisdiction thereof. In addition,
the Committee may in any Stock Option Certificate and Agreement impose such
other restrictions upon the disposition or exercise of an Option or upon the
<PAGE>
<PAGE>
sale or other disposition of the shares of Common Stock deliverable upon
exercise thereof as the Committee may, in its sole discretion, determine. By
accepting an award pursuant to this 1998 MSN Plan, each Optionee shall thereby
agree to any such restrictions.
Section 10.2. Any certificate issued to evidence shares of Common
Stock issued pursuant to an Option shall bear such legends and statements as
the Committee, the Board of Directors or counsel to the Company shall deem
advisable to assure compliance with the laws, rules and regulations of the
United States government or any state or jurisdiction thereof. No shares of
Common Stock will be delivered pursuant to exercise of the Options granted
under this 1998 MSN Plan until the Company has obtained such consents or
approvals from such regulatory bodies of the United States government or any
state or jurisdiction thereof as the Committee, the Board of Directors or
counsel to the Company deems necessary or advisable.
ARTICLE 11
NON FUNDED 1998 MSN PLAN
Section 11.1. Options payable under this 1998 MSN Plan shall be
payable in shares of the Company. No special or separate reserve, fund or
deposit shall be made to assure payment of such Options. No optionee or other
person shall have any right, title or interest in any fund or in any specific
asset (including shares of Common Stock, except as expressly otherwise
provided) of the Company by reason of any Option hereunder. Neither the
provisions of this 1998 MSN Plan (or of any related documents), nor the
creation or adoption of this 1998 MSN Plan, nor any action taken pursuant to
the provisions of the 1998 MSN Plan shall create, or be construed to create, a
trust of any kind or a fiduciary relationship between the Company and any
Optionee or other person. To the extent that an Optionee or other person
acquires a right to receive payment pursuant to any Option hereunder, such
right shall be no greater than the right of any unsecured general creditor of
the company.
ARTICLE 12
APPLICATION OF FUNDS
Section 12.1. The proceeds received by the Company from the issuance
and sale of Common Stock upon exercise of Options granted pursuant to this
1998 MSN Plan are to be added to the general funds of the Company and used for
its corporate purposes as determined by the Board of Directors.
ARTICLE 13
TAX WITHHOLDING
Section 13.1 Upon the exercise of any Option or upon the disposition
of shares of Common Stock acquired pursuant to the exercise of an Incentive
Stock Option prior to satisfaction of the holding period requirements of
Section 422 of the Code, the Company shall have the right at its option to (i)
require the Optionee (or their representative, as the case may be) to pay or
provide for payment of the amount of any taxes which the Company may be
required to withheld with respect to such transaction, or (ii) deduct from any
amount payable in cash the amount of any taxes which the Company may be
required to withhold with respect to such cash amount. In any case where a tax
is required to be withhold in connection with the delivery of shares of Common
Stock under this 1998 MSN Plan, the Committee may grant (either at the time of
<PAGE>
<PAGE>
the Option grant or thereafter) to the optionee the right to elect, pursuant
to such rules and subject to such conditions as the Committee may establish,
to have the Company reduce the number of shares to be delivered by (or
otherwise reacquire) the appropriate number of shares valued at their then
Fair Market Value, to satisfy such withholding obligation.
ARTICLE 14
EFFECTIVENESS OF 1998 MSN PLAN
Section 14.1. This 1998 MSN Plan shall become effective upon adoption
by the Board of Directors, and Options may be issued hereunder from and after
that date subject to the provisions of Section 3.3 above. In order for
Options to qualify as incentive options, this 1998 MSN Plan must be approved
by the shareholders of the Company in accordance with the applicable
provisions (relating to the issuance of stock or options) of the Company's
governing documents and state law or, if no such approval is prescribed
therein, by the affirmative vote of the holders of a majority of the votes
cast at a duly held stockholders meeting at which a quorum representing a
majority of all the Company's outstanding voting stock is present and voting
(in person or by proxy) or, without regard to any required time period for
approval, by any other method permitted by Section 422 of the Code and the
regulations thereunder. If such shareholder approval is not obtained within
one year of the adoption of this 1998 MSN Plan by the Board of Directors or
within such other time period required under Section 422 of the Code and the
regulations thereunder, this 1998 MSN Plan shall remain in force, provided
however, that all Options issued and issuable hereunder shall automatically be
deemed to be Non-Qualified Options.
IN WITNESS WHEREOF, pursuant to the approval of this 1998 MSN Plan by the
Board of Directors, this 1998 MSN Plan is executed and adopted as of the 1st
day of January, 1998.
TELSCAPE INTERNATIONAL, INC.
[CORPORATE SEAL]
By:
---------------------------
Its:
--------------------------
ATTEST:
By: _____________________________
-------------------------
Secretary
EXHIBIT 5
[LETTERHEAD OF GARDERE WYNNE SEWELL & RIGGS, L.L.P.]
October 28, 1998
Telscape International, Inc.
2700 Post Oak Boulevard, Suite 1000
Houston, Texas 77056
Re: REGISTRATION STATEMENT ON FORM S-8
Gentlemen:
As set forth in the Registration Statement (the "Registration Statement") on
----------------------
Form S-8 to be filed by Telscape International, Inc., a Texas corporation (the
"Company"), with the Securities and Exchange Commission (the "Commission")
------- ----------
under the Securities Act of 1933, as amended (the "Act"), relating to the
---
issuance of up to 2,412,644 shares (the "Shares") of the Company's common
------
stock, par value $.001 per share ("Common Stock") subject to options granted
------------
or to be granted under each of the 1993 Stock Option Plan, 1994 Outside
Directors Stock Option Plan, 1995 Stock Option and Appreciation Rights Plan,
1996 Stock Option and Appreciation Rights Plan, 1998 MSN Stock Option and
Appreciation Rights Plan and 1998 Stock Option and Stock Appreciation Rights
Plan (collectively, the "Plans"), certain legal matters in connection with the
-----
Common Stock are being passed upon for the Company by us. At your request,
this opinion is being furnished to you for filing as Exhibit 5 to the
Registration Statement.
In our capacity as your special Texas counsel in connection with rendering
this opinion, we have examined the Articles of Incorporation, as amended, and
Bylaws, as amended, of the Company and the originals, or copies certified or
otherwise identified, of corporate records of the Company, including minute
books of the Company as furnished to us by the Company, certificates of public
officials and of representatives of the Company, statutes and other
instruments and documents as a basis for the opinion hereinafter expressed.
In giving this opinion, we have relied upon certificates of officers of the
Company with respect to the accuracy of the material factual matters contained
in such certificates.
We have assumed the authenticity and completeness of all records, certificates
and other instruments submitted to us as originals, the conformity to original
documents of all records, certificates and other instruments submitted to us
as copies, the authenticity and completeness of the originals of those
records, certificates and other instruments submitted to us as copies and the
correctness of all statements of fact contained in all records, certificates
and other instruments that we have examined.
<PAGE>
<PAGE>
Based on the foregoing, and having regard for such legal considerations as we
have deemed relevant, we are of the opinion that, when issued and sold in the
manner referred to in the Plans, the Shares will be legally and validly
issued, fully paid and nonassessable.
The foregoing opinion is limited to the federal laws of the United States of
America and the Texas Business Corporation Act, and we are expressing no
opinion as to the effect of the laws of any other jurisdiction.
We hereby consent to the filing of this opinion with the Commission as an
exhibit to the Registration Statement. In giving this consent, we do hereby
admit that we are within the category of persons from whom consent is required
under Section 7 of the Securities Act of 1933, as amended, the rules and
regulations of the Commission promulgated thereunder, or Item 509 of
Regulation S-K.
Very truly yours,
Gardere Wynne Sewell & Riggs, L.L.P.
By: /s/ Eric A. Blumrosen
---------------------------------
Eric A. Blumrosen
EXHIBIT 23.2
Telscape International, Inc.
Houston, Texas
We hereby consent to the use in the Prospectus constituting a part of
this Registration Statement of our report dated March 9, 1998, relating to the
consolidated financial statements of Telscape International, Inc. and
subsidiaries (formerly Polish Telephones and Microwave Corporation), which is
contained in that Prospectus, and of our report dated March 6, 1998, relating
to the financial statements of MSN Communications, Inc., which is contained in
that Prospectus.
We also consent to the reference to us under the caption "Experts" in the
Prospectus.
/s/ BDO Seidman, LLP
- ---------------------
BDO SEIDMAN, LLP
Houston, Texas
October 30, 1998
EXHIBIT 23.3
Telscape International, Inc.
Houston, Texas
We hereby consent to the use in the Prospectus constituting a part of
this Registration Statement of our report dated March 27, 1996, relating to
the consolidated financial statements of Telscape International, Inc. and
subsidiaries (formerly Polish Telephones and Microwave Corporation), for the
year ended December 31, 1995, which is contained in that Prospectus.
We also consent to the reference to us under the caption "Experts" in the
Prospectus.
/s/ Hoffman, McBryde & Co., P.C.
- ---------------------------------
HOFFMAN, MCBRYDE & CO., P.C.
Dallas, Texas
October 30, 1998
EXHIBIT 23.4
Telscape International, Inc.
Houston, Texas
We hereby consent to the use in the Prospectus constituting a part of
this Registration Statement of our report dated September 6, 1997, relating to
the financial statements of Integracion de Redes, S.A. de C.V. as of December
31, 1996 and for the year then ended, which is contained in that Prospectus.
We also consent to the reference to us under the caption "Experts" in the
Prospectus.
/s/ De Las Fuentes, De La Mora y Valdivia, S.C.
- ------------------------------------------------
DE LAS FUENTES, DE LA MORA Y VALDIVIA, S.C.
Mexico City
October 30, 1998
