Document:

Untitled Document

Exhibit 4.4

 Rules and Regulations of Sanofi-Aventis Stock Option Plan 2005

 May 2005                   

 

  

 STOCK OPTION SUBSCRIPTION PLAN OF SANOFI-AVENTIS

 RULES OF THE 5TH PLAN

 

 ********** 

 

 

 

	 	 1.      	 PARTICIPANTS 
	 
	 	 2.      	 DURATION OF THE PLAN 
	 
	 	 3.      	 STOCK OPTION EXERCISE 
	 
	 	 4.      	 SALE OF SHARES 
	 
	 	 5.      	 SHARE RIGHTS 
	 
	 	 6.      	 OPTION PRICE ADJUSTMENT 
	 
	 	 7.      	 FOREIGN PARTICIPANTS 
	 

  

  

	 

      Free Translation of French version

        May 2005 

        (The French version prevails) 

    

 

 The Board of Directors of sanofi-aventis was authorized by a General Meeting of its Shareholders held on May 31, 2005, according to Articles L.225-177 to L.225-185 and L.225-129-2 of the French Commercial Code to set up stock option purchase or subscription plans for the whole of the sanofi-aventis group. By sanofi-aventis group we mean all companies or groupings of economic interest defined by Article L.225-180 of the aforementioned code. 

 Following the proposal of its Chairman, the Board of Directors has laid down the following rules of the stock option subscription plan with effect from May 31, 2005. 

	 1.      	 PARTICIPANTS 
	 
	 	 Upon the recommendation of the Chairman of sanofi-aventis acting upon the advice of the Compensation, Appointments and Governance Committee, the grant of options to subscribe shares of sanofi-aventis to a list of identified employees and corporate officers and the number of options granted to each such participants is approved by the Board of Directors. 
	 
	 	 The rights granted are not transferable unless the options are exercised. 
	 
	 2.      	 DURATION OF THE PLAN 
	 
	 	 Sanofi-aventis’ Stock Option Plan has a duration of ten years from the date of the approval of the Board of Directors on May 31, 2005. It will expire on May 31, 2015. 
	 
	 3.      	 STOCK OPTION EXERCISE 
	 
	 	 The exercise of the options, also called "exercise of the options to subscribe shares" is not allowed during the first four years following the Board of Directors' approval on May 31, 2005. 
	 

 

 The options can be exercised, on one or more occasions as the participants see fit, at any time between June 1st, 2009 and May 31, 2015 inclusive. Thereafter, the options will lapse. 

 Unless otherwise decided by the General Management of the Company in exceptional cases, any participant irrevocably loses his/her rights to exercise his/her options in the following cases: 

	 -      	 In the event of leaving his/her employment for whatever reason between now and June 30, 2006, other than through early retirement under the Group-wide framework agreement dated December 9, 2004; 
	 
	 -      	 In the event of resignation before the exercise date. Revocation of option rights takes effect on the day of notice of resignation; and 
	 
	 -      	 In the event of dismissal for serious or gross misconduct. Revocation of option rights takes effect on the day of notice of the dismissal. 
	 

 The Company reserves the right to temporarily suspend the exercise of the options, in particular when there are certain changes in the capital structure of sanofi-aventis.

 

	 Exceptions :
	 	 
	 3.1      	 If a participant retires or takes early retirement (including under the early retirement plan in connection with the Group-wide framework agreement dated December 9, 2004), at normal retirement age or earlier or later with the agreement of the Company, even before June 30, 2006, he keeps his/her option rights until their expiration, that is May 31, 2015. 
	 
	 3.2      	 Notwithstanding the four-year period mentioned under Article 3, Paragraph 1, if an employee becomes disabled, and such disability meets the conditions of the second and third categories as defined by Article L.341-4 of the French Social Security Code, the participant may exercise his options. The participant keeps his/her option rights until their expiration, that is May 31, 2015. 
	 
	 3.3      	 Notwithstanding the four-year period mentioned under Article 3, Paragraph 1, if an employee dies during the option period, his/her heirs can exercise the options during the six month period following the date of death. 
	 
	 
	4. 	 SALE OF SHARES 
	 	 
	 	 The sale of the shares through the exercise of the options is possible from June 1, 2009.

 However, any participant mentioned under article 3.2 or the heirs of a participant who has died mentioned under article 3.3 above are able to sell the corresponding shares without waiting for the end of the four year holding period. 

	 5.      	 SHARE RIGHTS 
	 
	 	 The participant will have rights to the shares that have been subscribed for upon exercise of the options from the first day of the year during which they have been subscribed. 
	 	 If he exercises his option between 1st January and the date on which the share becomes ex- dividend for the dividend relating to the previous year, the beneficiary will not to entitled to the dividend paid in the current year relating to the previous year; he will be entitled to the dividend paid in the following year relating to the current year. 
	 
	 6.      	 OPTION PRICE ADJUSTMENT 
	 
	 	 In the event of a redemption or reduction of share capital, a change in the allocation of profits, a consideration-free issue of shares, an increase in share capital by incorporation of reserves, profits or share premium, a distribution of reserves, or any issue of equity 
	 

   

   

	 	 instruments that includes subscription rights reserved for the shareholders, the exercise price and the number of shares to which an option gives right will be adjusted in order to take into account such issuance or other capital transaction. 
	 	 
	 	 If such a situation is covered by existing law or regulation, such law or regulation shall be applied. 
	 	 
	 	 If such a situation is not covered by existing law or regulation, the General Meeting of Shareholders or the Board of Directors when deciding to conduct such securities issuance or other capital transaction may adopt any measures necessary to protect the rights of the holders of the stock-options, using by analogy the rules and regulations which would govern similar cases. 
	 	 
	 7. 
	FOREIGN PARTICIPANTS
	 	 
	 	 Some specific arrangements for the exercise of subscription options will be notified to foreign participants on a case by case basis. Indeed, in some foreign countries, local regulations particularly those relating to tax and social securely require adjustments to the general terms described in these rules. 
	 	 
	 	 The participant employees of American companies of the Group will have the possibility to convert their ordinary shares into American Depositary Receipts ("ADRs") on exercise of their options. 

 

 

**********PURCHASE AGREEMENT

         THIS PURCHASE AGREEMENT (this "AGREEMENT"), dated as of May 17, 2005,
is among BHDH Family Partnership, L.P., Rea Brothers Limited, JAAVBR, L.P., J2
Family, L.P., Bajjer, LLC, AND Copano Bay Associates, L.P. (collectively, the
"SELLERS"), and Local Telecom Systems, Inc., a Nevada corporation ("PURCHASER").

                                    RECITALS

         A. The Purchaser is seeking to purchase all of the stock, debt and
claims held by Sellers in MBI Mortgage, Inc., a Texas corporation (the
"COMPANY").

         B. The Sellers are willing to sell to Purchaser all of their interests
in the Company,

         NOW, THEREFORE, Sellers and Purchaser hereby covenant and agree as
follows:

1.          SALE OF INTERESTS

                  1.1. SALE OF INTERESTS IN THE COMPANY. Sellers each hereby
         agree to sell to the Purchaser on the Closing Date all of their
         securities of the Company (including all promissory notes and stock) as
         well any and all other claims, rights, titles and interests in the
         Company to Purchaser in exchange for shares and warrants of Local
         Telecom Systems, Inc.( LTSI) as listed in Exhibit "A", attached. The
         shares and warrants issued to Sellers by LTSI shall have "piggy back"
         registration rights. The Closing Date shall be May 17, 2005.

         Subject to all of the terms and conditions of this Agreement, the
Sellers will sell and deliver to Purchaser all promissory notes of the Company
held by Sellers, all stock of the Company held by Sellers (duly endorsed for
transfer in blank), and a fully executed assignment of all claims against the
Company held by Sellers (collectively, the "INTERESTS") and Purchaser will
purchase from Sellers the Interests from the Sellers on the Closing Date at the
principal offices of the Purchaser, or such other place as they mutually agree.

2. REPRESENTATIONS AND WARRANTIES OF THE SELLERS

         As an inducement to Purchaser to enter into this Agreement, each Seller
separately represents and warrants that:

         2.1 AUTHORITY FOR AGREEMENT. This Agreement has been duly authorized by
all necessary corporate action of the Seller and, when executed and delivered by
the Seller, will be a legal, valid, and binding obligation of the Seller,
enforceable in accordance with its terms, except to the extent that the
enforceability hereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights generally or by general
principles of equity.

                                       -1-
<PAGE>

         2.2 ENTIRETY OF INTERESTS BEING SOLD. Each Seller hereby represents and
warrants that it is transferring all of the Interests it has in the Company to
Purchaser (whether directly or indirectly owned, beneficially or otherwise) in
exchange for the Purchase Price.

         2.3 NO DEFAULTS. Neither of the Sellers is in default under any
agreements (i) between the Sellers and third parties or (ii) among the Sellers,
third parties, and others and is not in default under any notes, mortgages, or
other financing documents. No event has occurred that, with the giving of
notice, the passage of time, or both, would cause the Sellers to be in default
under any of the foregoing.

3. REPRESENTATIONS, WARRANTIES AND AGREEMENTS BY PURCHASER

         Purchaser hereby represents, warrants and agrees that:

                  3.1. Purchaser and its advisors have received such information
         and documents from the Company, and have had a reasonable opportunity
         to ask questions of and receive answers from its executive officers,
         with respect to the business, affairs, financial condition, and
         prospects of the Company and with respect to the Interests as Purchaser
         has requested, and all such questions have been answered to Purchaser's
         full satisfaction.

                  3.2. All information which Sellers have provided concerning
         the Company and its financial position and Purchaser's knowledge of
         financial and business matters is correct and complete as of the date
         hereof, and if there should be any material change in such information
         prior to the acceptance of the subscription, Sellers will immediately
         provide the Purchasers with such information.

4.          FURTHER AGREEMENTS

4.1.        COVENANTS OF THE SELLERS. The Sellers agree to execute any and all
            instruments and documents necessary to vest title to the Interests
            in Purchaser.

4.2.        COVENANTS OF THE PURCHASER GOVERNING LAWS. This Agreement shall be
            governed by and construed under the laws of the State of Texas.

5.          GENERAL

                  5.1. SURVIVAL OF WARRANTIES. The warranties, representations
         and covenants of the parties contained in or made pursuant to this
         Agreement shall survive the execution and delivery of this Agreement
         and the Closing.

                  5.2. GOVERNING LAWS. This Agreement shall be governed by and
         construed under the laws of the State of Texas.

                  5.3. SEVERABILITY. If one or more provision of this Agreement
         are held to be unenforceable under applicable law, such provision shall
         be excluded from this Agreement and the balance of the Agreement shall
         remain in full force and effect and shall be interpreted as if such
         provision were so excluded.

              [REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

                                      -2-
<PAGE>

                                   SELLERS:

                                   /s/ DARIENNE K. HALL
                                   -----------------------------------------
                                   BHDH Family Partnership, L.P.

                                   /S/ JOHN E. (TED) REA
                                   -----------------------------------------
                                   Rea Brothers Limited

                                   /S/ JOHN E. (TED) REA
                                   -----------------------------------------
                                   JAAVBR, L.P.

                                   /S/ JOHN E. (TED) REA
                                   -----------------------------------------
                                   Bajjer, LLC

                                   /S/ JOHN E. (TED) REA
                                   -----------------------------------------
                                   J2 Family, L.P.

                                   /S/ DANNY W. LOONEY
                                   -----------------------------------------
                                   Copano Bay Associates, L.P.

                                   PURCHASER:
                                            Local Telecom Systems, Inc.

                                   By:   /S/ WILLIAM R. MIERTSCHIN
                                      ------------------------------------------
                                            William Miertschin, President

                                      -3-
<PAGE>

                                   Exhibit "A"

1)    3, 940,000 shares of Local Telecom System, Inc.(LTSI), post 50:1 reverse
      split approved by LTSI shareholders May 4, 2005.
2)    1,050,000 warrants (post reverse) to purchase shares at $0.20 per share
      for a period of three (3) years until May 16, 2008.
3)    350,000 warrants (post reverse) to purchase shares at $0.35 per share for
      a period of three (3) years until May 16, 2008.
4)    A consulting fee of $48,000 payable $2,000 per month beginning June 5,
      2005 and ending May 5, 2007.

                                      -4-

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