As Amended and Restated
EXECUTIVE TELECARD, LTD.
1995 Directors Stock Option and
Appreciation Rights Plan
TABLE OF CONTENTS
1. Purpose 1
2. General Provisions 1
3. Eligibility 2
4. Number of Shares Subject to Plan 2
5. Stock Options 2
6. Stock Appreciation Rights 6
7. Effect of Changes in Capitalization 8
8. Nontransferability 9
9. Amendment, Suspension, or Termination of Plan 10
10. Effective Date 10
11. Termination Date 10
12. Resale of Shares Purchased 10
13. Acceleration of Rights and Options 11
14. Written Notice Required; Tax Withholding 11
15. Compliance with Securities Laws 12
16. Waiver of Vesting Restrictions by Committee 12
17. Reports to Participants 12
18. No Employee Contract 12
EXECUTIVE TELECARD, LTD.
1995 Directors Stock Option and
Appreciation Rights Plan
As Amended and Restated
1. Purpose. Executive TeleCard, Ltd. hereby
establishes its 1995 Directors Stock Option and Appreciation
Rights Plan (the "Plan"). The purpose of the Plan is to advance
the interests of Executive TeleCard, Ltd. ("the Company") and the
Company's stockholders by providing a means by which the Company
shall be able to attract and retain the highest caliber of
persons to serve on its Board of Directors by providing them with
an opportunity to participate in the increased value of the
Company which their effort, initiative, skill and guidance have
helped produce.
2. General Provisions.
(a) The Plan will be administered by the
Compensation Committee of the Board of Directors of the Company
(the "Committee"), provided, however, that except as otherwise
expressly provided in this Plan or in order to comply with Rule
16b-3 under the Securities Exchange Act of 1934, as now in effect
or as hereafter amended (the "Exchange Act"), the Board of
Directors of the Company (the "Board") may exercise any power or
authority granted to the Committee under this Plan. The
Committee shall be comprised of two or more directors designated
by the Board.
(b) The Committee shall have full power to
construe and interpret the Plan and to establish and amend rules
and regulations for its administration. Any action of the
Committee with respect to the Plan shall be taken by majority
vote or by the unanimous written consent of the Committee
members.
(c) The Committee shall determine, in its sole
discretion, which participants under the Plan shall be granted
stock options or stock appreciation rights, the time or times at
which options or rights are granted, as well as the number and
the duration of the options or rights which are granted to
participants; provided, however, that no participant may be
granted options to purchase more than 300,000 shares of common
stock of the Company ("Common Stock") under the Plan in any two
(2) year period.
(d) The Committee shall also determine any other
terms and conditions relating to options and rights granted under
the Plan as the Committee may prescribe, in its sole discretion.
(e) The Committee shall make all other
determinations and take all other actions which it deems
necessary or advisable for the administration of the Plan.
(f) All decisions, determinations and
interpretations made by the Committee shall be binding and
conclusive on all participants in the Plan and on their legal
representatives, heirs and beneficiaries.
(g) The Board of Directors (with members of the
Committee abstaining) shall have the authority to make grants
under this Plan to members of the Committee under the Plan or the
Board may create a formula by which grants will automatically be
made to eligible members of the Committee. The Committee shall
have the authority to make grants hereunder to eligible members
of the Board other than Committee members and may also establish
a formula by which grants will automatically be made to Board
members.
3. Eligibility. All of the members of the Company's
Board of Directors shall be eligible to participate in the Plan
and to receive options and rights hereunder, provided, however,
that Incentive Stock Options may only be granted to directors who
are also employees of the Company or its subsidiaries at all
times during the period beginning on the date of granting of the
option and ending on the day three months before the date of
exercise. Employees of the Company who are also directors of the
Company shall be eligible to participate in the Plan in addition
to any other similar plans for which they may be eligible because
of their status as directors.
4. Number of Shares Subject to Plan. The aggregate
number of shares of the Company's Common Stock which may be
granted to participants shall be 870,000 shares, subject to
adjustment only as provided in Sections 5(h) and 7 hereof. These
shares may consist of shares of the Company's authorized but
unissued Common Stock or shares of the Company's authorized and
issued Common Stock reacquired by the Company and held in its
treasury or any combination thereof. If an option granted under
this Plan is surrendered, or for any other reason ceases to be
exercisable in whole or in part, the shares as to which the
option ceases to be exercisable shall be available for options to
be granted to the same or other participants under the Plan,
except to the extent that an option is deemed surrendered by the
exercise of a tandem stock appreciation right and that right is
paid by the Company in stock, in which event the shares issued in
satisfaction of the right shall not be available for new options
or rights under the Plan.
5. Stock Options.
(a) Type of Options. Options granted may be
either Nonqualified Stock Options or Incentive Stock Options as
determined by the Committee in its sole discretion and as
reflected in the Notice of Grant issued by the Committee.
"Incentive Stock Option" means an option intended to qualify as
an incentive stock option within the meaning of 422 of the
Internal Revenue Code of 1986 (the "Code"). "Nonqualified Stock
Option" means an option not intended to qualify as an Incentive
Stock Option or an Incentive Stock Option which is converted to a
Nonqualified Stock Option under Section 5(f) hereof.
(b) Option Price. The price at which options may
be granted under the Plan shall be determined by the Committee at
the time of grant as follows:
(i) For Incentive Stock Options the option
price shall be equal to 100% of the Fair Market Value of the
stock on the date the option is granted; provided, however, that
for Incentive Stock Options granted to any person who, at the
time such option is granted, owns (as defined in 422 of the
Code) shares possessing more than 10% of the total combined
voting power of all classes of shares of the Company or its
parent or subsidiary corporation, the option price shall be 110%
of the Fair Market Value.
(ii) For Nonqualified Stock Options the
option price shall be equal to the Fair Market Value of the stock
on the date the option is granted.
(iii) For purposes of this Plan, and
except as otherwise set forth herein, "Fair Market Value" shall
mean: (A) if there is an established market for the Company's
Common Stock on a stock exchange, in an over-the-counter market
or otherwise, shall be the closing price of the shares of Common
Stock on such exchange or in such market (the highest such
closing price if there is more than one such exchange or market)
on the valuation date, or (B) if there were no such sales on the
valuation date, then in accordance with Treas. Reg. 20.2031-2
or successor regulations. Unless otherwise specified by the
Committee at the time or grant (or in the formula proposed for
such grant, if applicable), the valuation date for purposes of
determining Fair Market Value shall be the date of grant. The
Committee (or the Board of Directors with respect to grants to
Committee members pursuant to Section 5(g) hereof may specify in
any grant of an option or stock appreciation right that, instead
of the date of grant, the valuation date shall be a valuation
period of up to ninety (90) days prior to the date of grant, and
Fair Market Value for purposes of such grant shall be the average
over the valuation period of the closing price of the shares of
Common Stock on such exchange or in such market (the highest such
closing price if there is more than one such exchange or market)
on each date on which sales were made in the valuation period,
provided, however, that if the Committee (or the Board of
Directors) fails to specify a valuation period and there were no
sales on the date of grant then Fair Market Value shall be
determined as if the Committee had specified a thirty (30) day
valuation period for such determination, unless there is no
established market for the Company's Common Stock in which case
the determination of Fair Market Value shall be in accordance
with clause (B) above.
(c) Exercise of Option. The right to purchase
shares covered by any option under this Plan shall be exercisable
only in accordance with the terms and conditions of the grant to
the participant. Such terms and conditions may include a time
period or schedule whereby some of the options granted may become
exercisable, or "vested", over time and certain conditions, such
as continuous service or specified performance criteria or goals,
must be satisfied for such vesting. The determination as to
whether to impose any such vesting schedule or performance
criteria, and the terms of such schedule or criteria, shall be
within the sole discretion of the Committee. These terms and
conditions may be different for different participants so long as
all options satisfy the requirements of the Plan.
The exercise of options shall be paid for in cash or in
shares of the Company's Common Stock, or any combination thereof.
Shares tendered as payment for option exercises shall, if
acquired from the Company, have been held for at least six months
and shall be valued at the Fair Market Value of the shares on the
date of exercise. The Committee may, in its discretion, agree to
a loan by the Company to one or more participants of a portion of
the exercise price (not to exceed the exercise price minus the
par value of the shares to be acquired, if any) for up to three
(3) years with interest payable at the prime rate quoted in the
Wall Street Journal on the date of exercise. Members of the
Committee may receive such loans from the Company for the
exercise of their options, if any, only with approval by the
Board.
The Committee may also permit a participant to effect a
net exercise of an option without tendering any shares of the
Company's stock as payment for the option. In such an event, the
participant will be deemed to have paid for the exercise of the
option with shares of the Company's stock and shall receive from
the Company a number of shares equal to the difference between
the shares that would have been tendered and the number of
options exercised. Members of the Committee may effect a net
exercise of their options only with the approval of the Board.
The Committee may also cause the Company to enter into
arrangements with one or more licensed stock brokerage firms
whereby participants may exercise options without payment
therefor but with irrevocable orders to such brokerage firm to
immediately sell the number of shares necessary to pay the
exercise price for the option and the withholding taxes, if any,
and then to transmit the proceeds from such sales directly to the
Company in satisfaction of such obligations.
The Committee may prescribe forms which must be
completed and signed by a participant and tendered with payment
of the exercise price in order to exercise an option.
(d) Duration of Options. Unless otherwise
prescribed by the Committee or this Plan, options granted
hereunder shall expire ten (10) years from the date of grant,
subject to early termination as provided in Section 5(f) hereof.
(e) Incentive Stock Options Limitations. In no
event shall an Incentive Stock Option be granted to any person
who, at the time such option is granted, owns (as defined in
422 of the Code) shares possessing more than 10% of the total
combined voting power of all classes of shares of the Company or
of its parent or subsidiary corporation, unless the option price
is at least 110% of the Fair Market Value of the stock subject to
the Option, and such Option is by its terms not exercisable after
the expiration of five (5) years from the date such Option is
granted. Moreover, the aggregate Fair Market Value (determined
as of the time that option is granted) of the shares with respect
to which Incentive Stock Options are exercisable for the first
time by any individual employee during any single calendar year
under the Plan shall not exceed $100,000. In addition, in order
to receive the full tax benefits of an Incentive Stock Option,
the employee must not resell or otherwise dispose of the stock
acquired upon exercise of the Incentive Stock Option until two
(2) years after the date the option was granted and one (1) year
after it was exercised.
(f) Early Termination of Options. In the event a
participant's service to the Company shall terminate as the
result of total disability, as defined below, or the result of
retirement at 65 years of age or later, then any options granted
to such participant shall expire and may no longer be exercised
three (3) months after such termination. If the participant dies
while still in the service of the Company, to the extent that the
option was exercisable at the time of the participant's death,
such option may, within one year after the participant's death,
be exercised by the person or persons to whom the participant's
rights under the option shall pass by will or by the applicable
laws of descent and distribution; provided, however, that an
option may not be exercised to any extent after the expiration of
the option as originally granted. In the event a participant's
service to the Company shall terminate as the result of any
circumstances other than those referred to above, whether
terminated by the participant or the Company, with or without
cause, then all options granted to such participant under this
Plan shall terminate and no longer be exercisable as of the date
of such termination, provided, however, that if an employee with
an Incentive Stock Option terminates employment prior to its
exercise, but notwithstanding such termination becomes or remains
a non-employee advisor, consultant or director eligible for
Nonqualified Stock Options hereunder or any other stock option
plan of the Company, then the Incentive Stock Option shall be
converted to a Nonqualified Stock Option on the date the
Incentive Stock Option would otherwise have terminated. A change
in a participant's status from a director to an eligible category
under another stock option plan (e.g., from a director to a
consultant) without a break in service shall not be considered a
termination of that participant's service for purposes hereof.
An employee who is absent from work with the Company
because of total disability, as defined below, shall not by
virtue of such absence alone be deemed to have terminated such
participant's employment with the Company. All rights which such
participant would have had to exercise options granted hereunder
will be suspended during the period of such absence and may be
exercised cumulatively by such participant upon his return to the
Company so long as such rights are exercised prior to the
expiration of the option as originally granted. For purposes of
this Plan, "total disability" shall mean disability, as a result
of sickness or injury, to the extent that the participant is
prevented from engaging in any substantial gainful activity and
is eligible for and receives a disability benefit under Title II
of the Federal Social Security Act.
Notwithstanding the foregoing, the Committee may, in
its discretion, permit the exercise of an option after
termination of a participant's service by the Company.
(g) Grants to Committee Members. In accordance
with Section 2(h) hereof, the Committee shall have no authority
to make grants to its members hereunder, rather the Board of
Directors (with members of the Committee abstaining) shall have
the authority to make grants under this Plan to members of the
Committee. Any designation of such grants may be by means of a
formula specified by the Board of Directors to award grants
automatically at a stated time. The option price of any such
option shall be calculated in accordance with the grant or
formula designation based on the Fair Market Value (determined in
accordance with Section 5(b)(iii) above) on the valuation date or
valuation period specified by the Board of Directors in the grant
or designation. Nothing in this Section 5(g) shall be
interpreted to prohibit the Board of Directors from granting
options or rights to its members if the Board of Directors is
administering the Plan in accordance with Section 2(a) above.
6. Stock Appreciation Rights.
(a) Grant. Stock appreciation rights may be
granted by the Committee under this Plan upon such terms and
conditions as it may prescribe. A stock appreciation right may
be granted in connection with an option previously granted to or
to be granted under this Plan or may be granted by itself. Each
stock appreciation right related to an option (a "Tandem Right")
shall become nonexercisable and be forfeited if the option to
which it relates (the "Related Option") is exercised. "Stock
appreciation right" as used in this Plan means a right to receive
the excess of Fair Market Value, on the date of exercise, of a
share of the Company's Common Stock on which an appreciation
right is exercised over the option price provided for in the
related option and is issued in consideration of services
performed for the Company or for its benefit by the participant.
Such excess is hereafter called "the differential."
(b) Exercise of Stock Appreciation Rights. Stock
appreciation rights shall be exercisable and be payable in the
following manner:
(i) A stock appreciation right not issued
with a Related Option (a "Separate Right") shall be exercisable
at the time or times prescribed by the Committee. A Tandem Right
shall be exercisable by the participant at the same time or times
that the Related Option could be exercised. A participant
wishing to exercise a stock appreciation right shall give written
notice of such exercise to the Company. Upon receipt of such
notice, the Company shall determine, in its sole discretion,
whether the participant's stock appreciation rights shall be paid
in cash or in shares of the Company's Common Stock or any
combination of cash and shares and thereupon shall, without
deducting any transfer or issue tax, deliver to the person
exercising such right an amount of cash or shares of the
Company's Common Stock or a combination thereof with a value
equal to the differential. The date the Company receives the
written notice of exercise hereunder is the exercise date. The
shares issued upon the exercise of a stock appreciation right may
consist of shares of the Company's authorized but unissued Common
Stock or of its authorized and issued Common Stock reacquired by
the Company and held in its treasury or any combination thereof.
No fractional share of Common Stock shall be issued; rather, the
Committee shall determine whether cash shall be given in lieu of
such fractional share or whether such fractional share shall be
eliminated.
(ii) The exercise of a Tandem Right shall
automatically result in the surrender of the Related Option by
the participant on a share for share basis. Likewise, the
exercise of a stock option shall automatically result in the
surrender of the related Tandem Right. Shares covered by
surrendered options shall be available for granting further
options under this Plan except to the extent and in the amount
that such rights are paid by the Company with shares of stock, as
more fully discussed in Section 4 hereof.
(iii) The Committee may impose any other
terms and conditions it prescribes upon the exercise of a stock
appreciation right, which conditions may include a condition that
the stock appreciation right may only be exercised in accordance
with rules and regulations adopted by the Committee from time to
time.
(c) Limitation on Payments. Notwithstanding any
other provision of this Plan, the Committee may from time to time
determine, including at the time of exercise, the maximum amount
of cash or stock which may be given upon exercise of any stock
appreciation right in any year; provided, however, that all such
amounts shall be paid in full no later than the end of the year
immediately following the year in which the participant exercised
such stock appreciation rights. Any determination under this
paragraph may be changed by the Committee from time to time
provided that no such change shall require the participant to
return to the Company any amount theretofore received or to
extend the period within which the Company is required to make
full payment of the amount due as the result of the exercise of
the participant's stock appreciation rights.
(d) Expiration or termination of stock
appreciation rights.
(i) Each Tandem Right and all rights and
obligations thereunder shall expire on the date on which the
Related Option expires or terminates. Each Separate Right shall
expire on the date prescribed by the Committee.
7. Effect of Changes in Capitalization
(a) Changes in Common Stock. If the number of
outstanding shares of Common Stock is increased or decreased or
changed into or exchanged for a different number or kind of
shares or other securities of the Company by reason of any
recapitalization, reclassification, stock split-up, combination
of shares, exchange of shares, stock dividend or other
distribution payable in capital stock, or other increase or
decrease in such shares effected without receipt of consideration
by the Company, occurring after the effective date of the Plan, a
proportionate and appropriate adjustment shall be made by the
Company in the number and kind of shares for which options or
stock appreciation rights are outstanding, so that the
proportionate interest of the participant immediately following
such event shall, to the extent practicable, be the same as
immediately prior to such event. Any such adjustment in
outstanding options shall not change the aggregate option price
payable with respect to shares subject to the unexercised portion
of the option outstanding but shall include a corresponding
proportionate adjustment in the option price per share. Similar
adjustments shall be made to the terms of stock appreciation
rights.
(b) Reorganization with the Company Surviving.
Subject to Section 7(c) hereof, if the Company shall be the
surviving entity in any reorganization, merger or consolidation
of the Company with one or more other entities, any option or
stock appreciation rights theretofore granted pursuant to the
Plan shall pertain to and apply to the securities to which a
holder of the number of shares of Common Stock subject to such
option would have been entitled immediately following such
reorganization, merger or consolidation, with a corresponding
proportionate adjustment of the option price per share so that
the aggregate option price thereafter shall be the same as the
aggregate option price of the shares remaining subject to the
option immediately prior to such reorganization, merger or
consolidation. Similar adjustments shall be made to the terms of
stock appreciation rights.
(c) Other Reorganizations, Sale of Assets or
Common Stock. Upon the dissolution or liquidation of the
Company, or upon a merger, consolidation or reorganization of the
Company with one or more other entities in which the Company is
not the surviving entity, or upon a sale of substantially all of
the assets of the Company to another person or entity, or upon
any transaction (including, without limitation, a merger or
reorganization in which the Company is the surviving entity)
approved by the Board that results in any person or entity (other
than persons who are holders of stock of the Company at the time
the Plan is approved by the Stockholders and other than an
Affiliate) owning 80 percent or more of the combined voting power
of all classes of stock of the Company, the Plan and all options
and stock appreciation rights outstanding hereunder shall
terminate, except to the extent provision is made in connection
with such transaction for the continuation of the Plan and/or the
assumption of the options and stock appreciation rights
theretofore granted, or for the substitution for such options and
stock appreciation rights of new options and stock appreciation
rights covering the stock of a successor entity, or a parent or
subsidiary thereof, with appropriate adjustments as to the number
and kinds of shares and exercise prices, in which event the Plan,
options and stock appreciation rights and stock appreciation
rights theretofore granted shall continue in the manner and under
the terms so provided. In the event of any such termination of
the Plan, each participant shall have the right (subject to the
general limitations on exercise set forth in Section 5(d) hereof
and except as otherwise specifically provided in the option
agreement relating to such option or stock appreciation right),
immediately prior to the occurrence of such termination and
during such period occurring prior to such termination as the
Committee in its sole discretion shall designate, to exercise
such option or stock appreciation right in whole or in part,
whether or not such option or stock appreciation right was
otherwise exercisable at the time such termination occurs, but
subject to any additional provisions that the Committee may, in
its sole discretion, include in any option agreement. The
Committee shall send written notice of an event that will result
in such a termination to all participants not later than the time
at which the Company gives notice thereof to its stockholders.
(d) Adjustments. Adjustments under this Section
7 relating to stock or securities of the Company shall be made by
the Committee, whose determination in that respect shall be final
and conclusive. No fractional shares of Common Stock or units of
other securities shall be issued pursuant to any such adjustment,
and any fractions resulting from any such adjustment shall be
eliminated in each case by rounding downward to the nearest whole
share or unit.
(e) No Limitations on Company. The grant of an
option or stock appreciation right pursuant to the Plan shall not
affect or limit in any way the right or power of the Company to
make adjustments, reclassifications, reorganizations or changes
of its capital or business structure or to merge, consolidate,
dissolve or liquidate, or to sell or transfer all or any part of
its business or assets.
8. Nontransferability. During a participant's
lifetime, a right or an option may be exercisable only by the
participant. Options and rights granted under the Plan and the
rights and privileges conferred thereby shall not be subject to
execution, attachment or similar process and may not be
transferred, assigned, pledged or hypothecated in any manner
(whether by operation of law or otherwise) other than by will or
by the applicable laws of descent and distribution.
Notwithstanding the foregoing, to the extent permitted by
applicable law and, if the Company has a class of securities
registered under the Exchange Act, by Exchange Act Rule 16b-3,
the Committee may, in its sole discretion, (i) permit a recipient
of a Nonqualified Stock Option to designate in writing during the
participant's lifetime a beneficiary to receive and exercise the
participant's Nonqualified Stock Options in the event of such
participant's death (as provided in Section 5(f)), (ii) grant
Nonqualified Stock Options that are transferable to the immediate
family, a family trust of the participant or a partnership in
which immediate family members are the only partners, and (iii)
modify existing Nonqualified Stock Options to be transferable to
the immediate family, a family trust or a family partnership of
the participant. Any other attempt to transfer, assign, pledge,
hypothecate or otherwise dispose of any option or right under the
Plan, or of any right or privilege conferred thereby, contrary to
the provisions of the Plan shall be null and void.
9. Amendment, Suspension, or Termination of Plan.
The Committee or the Board of Directors may at any time suspend
or terminate the Plan and may amend it from time to time in such
respects as the Committee may deem advisable in order that
options and rights granted hereunder shall conform to any change
in the law, or in any other respect which the Committee or the
Board may deem to be in the best interests of the Company;
provided, however, that no such amendment shall, without the
participant's consent, alter or impair any of the rights or
obligations under any option or stock appreciation rights
theretofore granted to him or her under the Plan; and provided
further that no such amendment shall, without shareholder
approval: increase the total number of shares available for
grants of options or rights under the Plan (except as provided by
Section 7 hereof); or effect any change to the Plan which is
required by law to be approved by shareholders, including without
limitation the regulations promulgated under 422 of the Code
and any applicable rules of the Nasdaq Stock Market or any stock
exchange on which the Company's common stock is principally
quoted or listed.
10. Effective Date. The effective date of the Plan is
December 14, 1995.
11. Termination Date. Unless this Plan shall have
been previously terminated by the Committee, this Plan shall
terminate on December 14, 2005, except as to stock, options and
rights theretofore granted and outstanding under the Plan at that
date, and no stock, option or right shall be granted after that
date.
12. Resale of Shares Purchased. All shares of stock
acquired under this Plan may be freely resold, subject to
applicable state and federal securities laws restricting their
transfer. As a condition to exercise of an option, however, the
Company may impose various conditions, including a requirement
that the person exercising such option represent and warrant
that, at the time of such exercise, the shares of Common Stock
being purchased are being purchased for investment and not with a
view to resale or distribution thereof. In addition, the resale
of shares purchased upon the exercise of Incentive Stock Options
may cause the employee to lose certain tax benefits if the
employee fails to comply with the holding period requirements
described in Section 5(e) hereof.
13. Acceleration of Rights and Options. If the
Company or its shareholders enter into an agreement to dispose of
all or substantially all of the assets or stock of the Company by
means of a sale, merger or other reorganization, liquidation, or
otherwise, any right or option granted pursuant to the Plan shall
become immediately and fully exercisable during the period
commencing as of the date of the agreement to dispose of all or
substantially all of the assets or stock of the Company and
ending when the disposition of assets or stock contemplated by
that agreement is consummated or the option is otherwise
terminated in accordance with its provisions or the provisions of
the Plan, whichever occurs first; provided that no option or
right shall be immediately exercisable under this Section on
account of any agreement of merger or other reorganization where
the shareholders of the Company immediately before the
consummation of the transaction will own 50% or more of the total
combined voting power of all classes of stock entitled to vote of
the surviving entity (whether the Company or some other entity)
immediately after the consummation of the transaction. In the
event the transaction contemplated by the agreement referred to
in this section is not consummated, but rather is terminated,
canceled or expires, the options and rights granted pursuant to
the Plan shall thereafter be treated as if that agreement had
never been entered into. If the transaction contemplated hereby
is expressly conditioned upon the availability of "pooling of
interests" accounting and such accounting treatment will not, in
the opinion of the Company's independent certified public
accounting firm, be available if the options are accelerated as
provided herein, then the Committee may elect to void such
acceleration in favor of a substitute plan with substantially
identical rights for participants in the new combined entity.
14. Written Notice Required; Tax Withholding. Any
option or right granted pursuant to the Plan shall be exercised
when written notice of that exercise by the participant has been
received by the Company at its principal office and, with respect
to options, when full payment for the shares with respect to
which the option is exercised has been received by the Company.
By accepting a grant under the Plan, each participant agrees
that, if and to the extent required by law, the Company shall
withhold or require the payment by participant of any state,
federal or local taxes resulting from the exercise of an option
or right; provided, however, that to the extent permitted by law,
the Committee (or, for Committee members, the Board) may in its
discretion, permit some or all of such withholding obligation to
be satisfied by the delivery by the participant of, or the
retention by the Company of, shares of its Common Stock.
15. Compliance with Securities Laws. Shares shall not
be issued with respect to any option or right granted under the
Plan unless the exercise of that option and the issuance and
delivery of the shares pursuant thereto shall comply with all
relevant provisions of state and federal law, including without
limitation the Securities Act of 1933, as amended, the rules and
regulations promulgated thereunder and the requirements of any
stock exchange or automated quotation system upon which shares of
the Company's stock may then be listed or traded, and shall be
further subject to the approval of counsel for the Company with
respect to such compliance. Further, each participant must
consent to the imposition of a legend on the certificate
representing the shares of Common Stock issued upon the exercise
of the option or right restricting their transferability as may
be required by law, the option or right, or the Plan.
16. Waiver of Vesting Restrictions by Committee.
Notwithstanding any provision of the Plan, in the event a
participant dies, becomes totally or partially disabled, retires
(before or after the age of 65) as an employee, officer or
director of the Company, the Committee shall have the discretion
to waive any vesting restrictions on the participant's options or
rights, or the early termination thereof.
17. Reports to Participants. The Company shall
furnish to each participant a copy of the annual report, if any,
sent to the Company's shareholders. Upon written request, the
Company shall furnish to each participant a copy of its most
recent annual report and each quarterly report to shareholders
issued since the end of the Company's most recent fiscal year.
18. No Employee Contract. The grant of restricted
stock or an option or right under the Plan shall not confer upon
any participant any right with respect to continuation of
employment by, or the rendition of advisory or consulting
services to, the Company, nor shall it interfere in any way with
the Company's right to terminate the participant's employment or
services at any time.
As adopted by the Board of Directors of the Company on
December 14, 1995, as approved by stockholders on July 26, 1996,
as amended and restated by the Board of Directors on October 25,
1997, as amended and restated by the Board of Directors on
January 17, 1998, and as approved by stockholders on February 26,
1998.
EXECUTIVE TELECARD, LTD.
By: