<PAGE>
As filed with the Securities and Exchange Commission on January 21, 1997
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------
EXCEL COMMUNICATIONS, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 75-2624939
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8750 NORTH CENTRAL EXPRESSWAY, SUITE 2000
DALLAS, TEXAS 75231
(Address, including zip code, of principal executive offices)
------------------------
EXCEL COMMUNICATIONS, INC. 1995 STOCK OPTION PLAN
EXCEL COMMUNICATIONS, INC. 1997 DIRECTOR STOCK OPTION PLAN
EXCEL COMMUNICATIONS, INC. DIRECTOR STOCK OPTION AGREEMENT WITH RONALD A.
MCDOUGALL
(Full title of the plans or agreements)
------------------------
J. CHRISTOPHER DANCE, ESQUIRE
EXCEL COMMUNICATIONS, INC.
8750 NORTH CENTRAL EXPRESSWAY, SUITE 2000
DALLAS, TEXAS 75231
(Name and address of agent for service)
(214) 863-8000
(Telephone number, including area code, of agent for service)
------------------------
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===============================================================================================================================
Title of securities to be Amount to be Proposed maximum offering Proposed maximum aggregate Amount of
registered registered(1) price per share offering price(2) registration
fee
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value 9,330,000 (3) $106,433,736 $32,253
$.001 per share............ shares
===============================================================================================================================
</TABLE>
(1) Consists of 8,910,000 shares of Common Stock issuable pursuant to the EXCEL
Communications, Inc. 1995 Stock Option Plan, 400,000 shares of Common Stock
issuable pursuant to the EXCEL Communications, Inc. 1997 Director Stock
Option Plan, and 20,000 shares of Common Stock issuable pursuant to a
Director Stock Option Agreement between EXCEL Communications, Inc. and
Ronald A. McDougall.
(2) Estimated pursuant to Rules 457(c) and (h) solely for purposes of computing
the registration fee. The calculation of the proposed maximum aggregate
offering price is based upon the aggregate exercise price for shares of
Common Stock issuable upon the exercise of options already granted and is
based upon the average of the high and low sales prices per share of the
Common Stock reported on The New York Stock Exchange on January 15, 1997
for all other shares being registered.
(3) Because there are options still available for grant under the 1995 Stock
Option Plan and the 1997 Director Stock Option Plan and the exercise prices
thereof may be based on the fair market value of the Common Stock on the
date of grant, it is not possible as of the date hereof to determine the
maximum offering price per share of the shares of Common Stock to be
offered under the 1995 Stock Option Plan and the 1997 Director Stock Option
Plan. The maximum offering price per share of the shares of Common Stock
offered to Ronald A. McDougall under his Director Stock Option Agreement
with EXCEL Communications, Inc. is $21.25.
================================================================================
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
Note: The document(s) containing the information concerning the EXCEL
Communications, Inc. 1995 Stock Option Plan, as amended (the "1995 Stock Option
Plan"), the EXCEL Communications, Inc. 1997 Director Stock Option Plan (the
"1997 Director Stock Option Plan"), and the Director Stock Option Agreement
between EXCEL Communications, Inc. and Ronald A. McDougall (the "McDougall
Option Agreement") required by Item 1 of Form S-8 and the statement of
availability of registrant information and information relating to the 1995
Stock Option Plan, the 1997 Director Stock Option Plan and the McDougall Option
Agreement and other information required by Item 2 of Form S-8 will be sent or
given to the employees and eligible directors of the registrant and Mr.
McDougall, as the case may be, as specified by Rule 428(b)(1) under the
Securities Act of 1933, as amended (the "Securities Act"). In accordance with
Rule 428 and the requirements of Part I of Form S-8, such documents are not
being filed with the Securities and Exchange Commission (the "Commission")
either as part of this Registration Statement or as prospectuses or prospectus
supplements pursuant to Rule 424. The registrant will maintain a file of such
documents in accordance with the provisions of Rule 428. Upon request, the
registrant will furnish to the Commission or its staff a copy or copies of any
or all of the documents included in such file.
I-1
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents, which EXCEL Communications, Inc. (the "Company")
has filed with the Commission pursuant to the Securities Act or the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), are incorporated in this
Registration Statement by reference and shall be deemed to be a part hereof:
(i) The Prospectus dated May 9, 1996 as filed on May 10, 1996 with the
Commission pursuant to Rule 424(b) under the Securities Act in
connection with the Company's Registration Statement on Form S-1, as
amended (Registration No. 333-1076), which contains audited financial
statements for the Company's fiscal year ended December 31, 1995,
which is the Company's latest fiscal year for which audited financial
statements have been filed with the Commission;
(ii) The Company's Quarterly Report on Form 10-Q for the quarter ended June
30, 1996 filed with the Commission on August 6, 1996;
(ii) The Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1996 filed with the Commission on November 14, 1996;
(iv) The Company's Current Reports on Form 8-K filed with the Commission on
June 6, 1996, July 2, 1996, and August 31, 1996; and
(v) The description of the Common Stock of the Company contained in the
Company's Registration Statement on Form 8-A (Commission File No. 1-
14322), as filed with the Commission pursuant to the Exchange Act on
April 12, 1996, as may be amended, modified or superseded by any
report or amendment filed with the Commission for the purpose of
updating such description.
All documents filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14, and 15(d) of the Exchange Act subsequent to the date of this
Registration Statement and prior to the filing of a post-effective amendment to
this Registration Statement that indicates that all securities offered hereby
have been sold or that deregisters all securities then remaining unsold, shall
be deemed to be incorporated in this Registration Statement by reference and to
be a part hereof from the date of filing of such documents.
Any statement contained in this Registration Statement, in an amendment
hereto or in a document incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this Registration Statement to the extent
that a statement contained herein, in any
II-1
<PAGE>
subsequently filed amendment to this Registration Statement, or in any document
that also is incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Registration
Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company, a Delaware corporation, is empowered by Section 145 of the
Delaware General Corporation Law (the "DGCL"), subject to the procedures and
limitations stated therein, to 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, or investigative
(other than an action by or in the right of the Company), by reason of the fact
that such person is or was a director, officer, employee, or agent of the
Company, or is or was serving at the request of the Company as a director,
officer, employee, or agent of another corporation, partnership, joint venture,
trust, or other enterprise, against expenses (including attorneys' fees),
judgments, fines, and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit, or proceeding, if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the Company and, with respect to any criminal action or
proceeding, had no reasonable cause to believe that his conduct was unlawful.
Section 145 of the DGCL requires that to the extent a director, officer,
employee, or agent of the Company has been successful, on the merits or
otherwise, in the defense of any action, suit, or proceeding or in defense of
any action, suit, or proceeding described in Section 145, or in defense of any
claim, issue, or matter therein, such person shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection therewith. Section 145 of the DGCL further provides that expenses
(including attorneys' fees) incurred by an officer or director in defending any
civil, criminal, administrative, or investigative action, suit, or proceeding
may be paid by the Company in advance of the final disposition of such action,
suit, or proceeding upon receipt of an undertaking by or on behalf of such
director or officer to repay such amount if it shall ultimately be determined
that he is not entitled to be indemnified by the Company as authorized in
Section 145. Such expenses (including attorneys' fees) incurred by other
employees and agents may be so paid upon such terms and conditions, if any, as
the board of directors deems appropriate. In addition, Section 145 provides
that indemnification and advancement of expenses provided by, or granted
pursuant to, its provisions shall not be deemed exclusive of any rights to which
a person seeking indemnification or advancement of expenses may be entitled
under any bylaw, agreement, vote of stockholders, or disinterested directors or
otherwise, both as to action in his official capacity and as
II-2
<PAGE>
to action in another capacity while holding such office. Section 145 also allows
the Company to purchase and maintain insurance on behalf of any person who is or
was a director, officer, employee, or agent of the Company, or is or was serving
at the request of the Company as a director, officer, employee, or agent of
another corporation, partnership, joint venture, trust, or other enterprise
against any liability asserted against him and incurred by him in any such
capacity, or arising out of his status as such, whether or not the Company would
have the power to indemnify him against such liability under Section 145.
Article TENTH of the Company's Certificate of Incorporation, a copy of
which is filed as Exhibit 4.1 to this Registration Statement, provides the
following:
"The Corporation shall indemnify any person who was, is, or is threatened
to be made a party to a proceeding (as hereinafter defined) by reason of
the fact that he or she (i) is or was a director or officer of the
Corporation or (ii) while a director or officer of the Corporation, is or
was serving at the request of the Corporation as a director, officer,
partner, venturer, proprietor, trustee, employee, agent, or similar
functionary of another foreign or domestic corporation, partnership, joint
venture, sole proprietorship, trust, employee benefit plan, or other
enterprise, to the fullest extent permitted under the Delaware General
Corporation Law, as the same exists or may hereafter be amended. Such
right shall be a contract right and as such shall run to the benefit of any
director or officer who is elected and accepts the position of director or
officer of the Corporation or elects to continue to serve as a director or
officer of the Corporation while this Article Tenth is in effect. Any
repeal or amendment of this Article Tenth shall be prospective only and
shall not limit the rights of any such director or officer or the
obligations of the Corporation with respect to any claim arising from or
related to the services of any such director or officer in any of the
foregoing capacities prior to any such repeal or amendment to this Article
Tenth. Such right shall include the right to be paid by the Corporation
expenses incurred in defending any such proceeding in advance of its final
disposition to the maximum extent permitted under the Delaware General
Corporation Law, as the same exists or may hereafter be amended. If a
claim for indemnification or advancement of expenses hereunder is not paid
in full by the Corporation within sixty (60) days after a written claim has
been received by the Corporation, the claimant may at any time thereafter
bring suit against the Corporation to recover the unpaid amount of the
claim, and if successful in whole or in part, the claimant shall also be
entitled to be paid the expenses of prosecuting such claim. It shall be a
defense to any such action that such indemnification or advancement of
costs of defense are not permitted under the Delaware General Corporation
Law, but the burden of proving such defense shall be on the Corporation.
Neither the failure of the Corporation (including its board of directors or
any committee thereof, independent legal counsel, or stockholders) to have
made its determination prior to the commencement of such action that
indemnification of, or advancement of costs of defense to, the claimant is
permissible in the circumstances nor an actual determination by the
Corporation (including its board of directors or any committee thereof,
independent legal counsel, or stockholders) that such indemnification or
advancement is not permissible shall be a defense to the action or create a
presumption that such indemnification or advancement
II-3
<PAGE>
is not permissible. In the event of the death of any person having a right
of indemnification under the foregoing provisions, such right shall inure
to the benefit of his or her heirs, executors, administrators, and personal
representatives. The rights conferred above shall not be exclusive of any
other right which any person may have or hereafter acquire under any
statute, by-law, resolution of stockholders or directors, agreement, or
otherwise.
The Corporation may additionally indemnify any employee or agent of the
Corporation to the fullest extent permitted by law.
As used herein, the term "proceeding" means 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."
Article ELEVENTH of the Company's Certificate of Incorporation provides the
following:
"A director of the Corporation shall not be personally liable to the
Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of
the director's duty of loyalty to the Corporation or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentional
misconduct or knowing violation of law, (iii) under Section 174 of the
Delaware General Corporation Law, or (iv) for any transaction from which
the director derived an improper personal benefit. Any repeal or amendment
of this Article Eleventh by the stockholders of the Corporation shall be
prospective only, and shall not adversely affect any limitation on the
personal liability of a director of the Corporation arising from an act or
omission occurring prior to the time of such repeal or amendment. In
addition to the circumstances in which a director of the Corporation is not
personally liable as set forth in the foregoing provisions of this Article
Eleventh, a director shall not be liable to the Corporation or its
stockholders to such further extent as permitted by any law hereafter
enacted, including without limitation any subsequent amendment to the
Delaware General Corporation Law."
The Underwriting Agreement entered into by the Company in connection with
the initial public offering of its Common Stock, a copy of which is filed as
Exhibit 1.1 to the Company's Registration Statement on Form S-1, as amended
(Registration No. 333-1076), provides for indemnification by the underwriters of
such initial public offering of the Company and its officers and directors and
such selling stockholders. Such agreement also provides for indemnification by
the Company and such selling stockholders of such underwriters for certain
liabilities arising under the Securities Act or otherwise.
The Company currently has in effect a directors and officers liability
insurance policy.
As a result of these provisions, the Company and its stockholders may be
unable to obtain monetary damages from a director for breach of the duty of
care. Although stockholders may
II-4
<PAGE>
continue to seek injunctive or other equitable relief for an alleged breach of
fiduciary duty by a director, stockholders may not have any effective remedy
against the challenged conduct if equitable remedies are unavailable.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
EXHIBIT
NUMBER DOCUMENT DESCRIPTION
- ------- --------------------
4.1 Certificate of Incorporation of the Company, as amended
(incorporated by reference to Exhibit 3.1 to the Company's
Registration Statement on Form S-1, as amended (Commission
No. 333-1076)).
4.2 Bylaws of the Company (incorporated by reference to
Exhibit 3.2 to the Company's Registration Statement on
Form S-1, as amended (Commission File No. 333-1076)).
4.3
Specimen Certificate for Common Stock of the Company
(incorporated by reference to Exhibit 4.1 to the Company's
Registration Statement on Form S-1, as amended (Commission
File No. 333-1076)).
4.4* EXCEL Communications, Inc. 1995 Stock Option Plan, as
amended by Amendments Nos. 1 and 2.
4.5* EXCEL Communications, Inc. 1997 Director Stock Option
Plan.
4.6* Director Stock Option Agreement between EXCEL
Communications, Inc. and Ronald A. McDougall dated August
26, 1996.
5.1* Opinion of Munsch Hardt Kopf Harr & Dinan, P.C.
23.1 Consent of Munsch Hardt Kopf Harr & Dinan, P.C. (included
in the opinion filed as Exhibit 5.1 to this Registration
Statement).
23.2* Consent of Arthur Andersen LLP, independent public
accountants.
24.1 Powers of Attorney (included on the signature page of this
Registration Statement).
___________________
*Filed herewith.
II-5
<PAGE>
ITEM 9. UNDERTAKINGS.
(a) The Company hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement (or the most
recent post-effective amendment hereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this Registration Statement (notwithstanding the foregoing, any
increase or decrease in the volume of the securities offered (if the
total dollar value of the securities offered would not exceed that
which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in this Registration
Statement);
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this Registration
Statement or any material change in the information set forth in this
Registration Statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed with
or furnished to the Commission by the Company pursuant to Section 13 or
Section 15(d) of the Exchange Act that are incorporated by reference in
this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, 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 Company hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Company's annual report
pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) that is incorporated by reference in this
II-6
<PAGE>
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 may be permitted to directors, officers and controlling persons
of the Company pursuant to the foregoing provisions, or otherwise, the Company
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer or controlling person of the Company 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
Company 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 and will be governed by the final adjudication
of such issue.
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Dallas, State of Texas, on January 17, 1997.
EXCEL COMMUNICATIONS, INC.
By: /s/ KENNY A. TROUTT
-----------------------------------------
Kenny A. Troutt
President and Chief Executive Officer
The undersigned directors and executive officers of EXCEL Communications,
Inc. each hereby constitutes and appoints Kenny A. Troutt and John J. McLaine,
and each of them, with full power to act without the other and with full power
of substitution, the undersigned's true and lawful attorneys-in-fact with full
power to execute in the undersigned's name and behalf in the capacities
indicated below any and all amendments (including post-effective amendments and
amendments thereto) to this Registration Statement and any registration
statement for the same offering that is to be effective upon filing pursuant to
Rule 462(b) of the Securities Act, and to file the same, with all exhibits
thereto and other documents in connection with the Commission, and hereby
ratifies and confirms all that such attorneys-in-fact, or either of them, or
their substitutes, shall 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/ KENNY A. TROUTT President, Chief Executive January 17, 1997
- -------------------------- Officer, Chairman of the Board,
Kenny A. Troutt and Director (Principal Executive
Officer)
/s/ JOHN J. McLAINE Executive Vice President, Chief January 17, 1997
- -------------------------- Financial Officer, Secretary, and
John J. McLaine Director (Principal Financial
Officer)
/s/ CRAIG E. HOLMES Vice President and Chief January 17, 1997
- -------------------------- Accounting Officer (Principal
Craig E. Holmes Accounting Officer)
/s/ STEPHEN R. SMITH Executive Vice President of January 17, 1997
- -------------------------- Marketing and Director
Stephen R. Smith
/s/ RONALD A. McDOUGALL Director January 17, 1997
- --------------------------
Ronald A. McDougall
II-8
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DOCUMENT DESCRIPTION
------- --------------------
4.1 Certificate of Incorporation of the Company, as amended (incorporated
by reference to Exhibit 3.1 to the Company's Registration Statement on
Form S-1, as amended (Commission No. 333-1076)).
4.2 Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the
Company's Registration Statement on Form S-1, as amended (Commission
File No. 333-1076)).
4.3 Specimen Certificate for Common Stock of the Company (incorporated by
reference to Exhibit 4.1 to the Company's Registration Statement on
Form S-1, as amended (Commission File No. 333-1076)).
4.4* EXCEL Communications, Inc. 1995 Stock Option Plan, as amended by
Amendments Nos. 1 and 2.
4.5* EXCEL Communications, Inc. 1997 Director Stock Option Plan.
4.6* Director Stock Option Agreement between EXCEL Communications, Inc. and
Ronald A. McDougall dated August 26, 1996.
5.1* Opinion of Munsch Hardt Kopf Harr & Dinan, P.C.
23.1 Consent of Munsch Hardt Kopf Harr & Dinan, P.C. (included in the
opinion filed as Exhibit 5.1 to this Registration Statement).
23.2* Consent of Arthur Andersen LLP, independent public accountants.
24.1 Powers of Attorney (included on the signature page of this
Registration Statement).
___________________
*Filed herewith.
<PAGE>
EXHIBIT 4.4
EXCEL TELECOMMUNICATIONS, INC.
1995 STOCK OPTION PLAN
ADOPTED AS OF OCTOBER 30, 1995
1. PURPOSES.
(a) Opportunity to Purchase Stock. The purpose of the Plan is to provide a
-----------------------------
means by which selected Employees of and Consultants to the Company and its
Affiliates may be given an opportunity to purchase stock of the Company. The
Company, by means of the Plan, seeks to retain the services of persons who are
now Employees of or Consultants to the Company and its Affiliates, to secure and
retain the services of new Employees and Consultants, and to provide incentives
for such persons to exert maximum efforts for the success of the Company and its
Affiliates.
(b) Incentive and Nonstatutory Options. The Company intends that the
----------------------------------
Options issued under the Plan shall, in the discretion of the Committee, 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.
2. DEFINITIONS.
(a) "Affiliate" means any parent corporation or subsidiary corporation of
the Company, as those terms are defined in Sections 424(e) and (f) respectively,
of the Code, whether such corporations are now or hereafter existing.
(b) "Board" means the Board of Directors of the Company.
(c) "Change of Control" means the occurrence, at any time after January
31, 1996, of (i) a merger or consolidation of the Company with or into another
Person or the merger of another Person into the Company or the transfer of
ownership of any voting stock of the Company to any Person or "group" (as such
term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), of Persons as a consequence of which those
Persons who held all of the voting stock of the Company immediately prior to
such merger, consolidation or transfer do not hold either directly or indirectly
a majority of the voting stock of the Company (or, if applicable, the surviving
company of such merger or consolidation) after the consummation of such merger,
consolidation or transfer; (ii) the sale of all or substantially all of the
assets of the Company to any Person or "group" of Persons (other than to an
entity which owns a majority or more of the Common Stock of the Company, a
subsidiary of the Company, or to an entity whose equity interests are owned
directly or indirectly by the Company or by an entity which owns directly or
indirectly a majority or more of the Common Stock of the Company); or (iii) any
event or series of events (which event or series of events must include a proxy
fight or proxy solicitation with respect to the election of directors of the
Company made in opposition to the nominees recommended by the Continuing
Directors) during any period of 12 consecutive months all or any portion of
which is after (i) the date set forth above, and (ii) the date the Company first
has securities registered under Section 12 of the
<PAGE>
Exchange Act, as a result of which a majority of the Board of Directors of the
Company consists of individuals other than Continuing Directors.
(d) "Code" means the Internal Revenue Code of 1986, -as amended.
(e) "Committee" means the Board of Directors of the Company unless a
separate committee has been appointed by the Board in accordance with Section
3(c) of the Plan.
(f) "Common Stock" means the no par value common stock of the Company.
(g) "Company" means Excel Telecommunications, Inc., a Texas corporation.
(h) "Consultant"" means any person, including an advisor or a Director,
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 or expense reimbursements by the
Company or who are not compensated by the Company for their services as
Directors.
(i) "Continuing Directors of the Company" means with respect to any period
of 12 consecutive months, (i) any members of the Board of Directors of the
Company on the first day of such period, (ii) any members of the Board of
Directors of the Company elected after the first day of such period at any
annual meeting of shareholders who were nominated by the Board of Directors or a
committee thereof, if a majority of the members of the Board of Directors or
such committee were Continuing Directors at the time of such nomination, and
(iii) any members of the Board of Directors of the Company elected to succeed
Continuing Directors by the Board of Directors or a committee thereof, if a
majority of the members of the Board of Directors or such committee were
Continuing Directors at the time of such election.
(j) "Continuous Status as an Employee or Consultant" means the employment
or relationship as an Employee or Consultant is not interrupted or terminated
with the Company or any Affiliate. Continuous Status as an Employee or
Consultant shall not be considered interrupted in the case of: (i) any sick
leave, military leave, or any other leave of absence approved by the Committee;
provided, however, that for purposes of Incentive Stock Options, any such leave
is for a period of not more than ninety (90) days or reemployment upon the
expiration of such leave is guaranteed by contract or statute; or (ii) transfers
between locations of the Company or between the Company and its Affiliates or
between the Company or its Affiliates on the one hand and their successors, on
the other hand.
(k) "Director" means a member of the Board.
(l) "Disability" means permanent and total disability as defined in Section
22(e)(3) of the Code.
2
<PAGE>
(m) "Disinterested Person" means a Director who is considered to be a
"disinterested person" in accordance with Section (c)(2)(i) of Rule 16b-3, and
any other applicable rules, regulations and interpretations of the Securities
and Exchange Commission.
(n) "Employee" means any person, including officers and Directors, employed
by the Company or any Affiliate. Neither service as a Director nor payment of a
director's fee by the Company shall be sufficient to constitute "employment" by
the Company.
(o) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(p) "Fair Market Value" means, as of any date, the value of the Common
Stock determined as follows:
(i) If the Common Stock is listed on any established stock exchange
or a national market system, including without limitation the National Market
System of the National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") System, the Fair Market Value of a share of Common Stock
shall be the closing sales price for such stock on the date of determination
(or, if no such price is reported on such date, such price as reported on the
nearest preceding day) as quoted on such system or exchange (or the exchange
with the greatest volume of trading in the Common Stock), as reported in The
---
Wall Street Journal or such other source as the Committee deems reliable;
- -------------------
(ii) If the Common Stock is quoted on the NASDAQ System (but not on
the National Market System thereof) or is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a share of Common Stock shall be the mean of the closing bid and asked prices
for the Common Stock on the date of determination (or, if such prices are not
reported on such date, such prices as reported on the nearest preceding date),
as reported in The Wall Street Journal or such other source as the Committee
-----------------------
deems reliable;
(iii) If the Fair Market Value is not determined pursuant to (i) or
(ii) above, then the Fair Market Value shall be determined in good faith by the
Committee.
(q) "Incentive Stock Option" means an Option qualifying as an incentive
stock option within the meaning of Section 422 of the Code and the regulations
promulgated thereunder.
(r) "Nonstatutory Stock Option" means an Option not qualifying as an
Incentive Stock Option.
(s) "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.
(t) "Option" means a stock option granted pursuant to the Plan.
3
<PAGE>
(u) "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.
(v) "Optioned Shares" means with respect to any Option the Shares of
Common Stock subject to the Option.
(w) "Optionee" means an Employee or Consultant who holds an outstanding
Option.
(x) "Person" means an individual or entity.
(y) "Plan" means this Excel Telecommunications, Inc. 1995 Stock Option
Plan.
(z) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any successor to
Rule 16b-3.
(aa) "Shares" shall mean a share of -Common Stock, as adjusted in
accordance with Section 10.
3. ADMINISTRATION.
(a) Committee. The Plan shall be administered by the Committee.
---------
(b) Powers. The Committee shall have the power, subject to, and within the
------
limitations of, the express provisions of the Plan to:
(i) grant Options;
(ii) determine, in accordance with Section 6 of the Plan, the Fair
Market Value per Share of the Common Stock;
(iii) determine, in accordance with Section 6 of the Plan, the
exercise price per Share at which Options may be exercised;
(iv) determine the Employees and Consultants to whom, and the time or
times at which, Options shall be granted, the number of shares of Optioned Stock
subject to each Option, the vesting schedule of such Options and whether such
Options shall be Incentive Stock Options, Nonstatutory Stock Options, or any
combination thereof,
(v) determine the terms and provisions of each Option granted (which
need not be identical) and the forms of Option Agreements and, with the consent
of the Optionee, and subject to Section 11, to modify or amend any outstanding
Option;
4
<PAGE>
(vi) accelerate or defer (with the consent of the Optionee) the
exercise date of any outstanding Option;
(vii) authorize any person to execute on behalf of the Company any
instrument required to effectuate the grant of an Option previously granted by
the Committee;
(viii) amend the Plan as provided in Section 11;
(ix) construe and interpret the Plan and Options granted under it,
and to establish, amend and revoke rules and regulations for its administration
of the Plan, subject to Section 11; including, correcting any defect, omission
or inconsistency in the Plan or in any Option Agreement, in any manner and to
the extent it shall deem necessary or expedient to make the Plan fully
effective;
(x) authorize the sale of shares of the Company's Common Stock
hereunder;
(xi) effect, at any time and from time to time, with the consent of
the affected Optionee, the cancellation of any or all outstanding Options and
grant in substitution therefor new Options relating to the same or different
numbers of Shares, but having an exercise price per Share consistent with
Section 6(b) at the date of the new Option grant; and
(xii) make all other determinations deemed necessary or advisable for
the administration of the Plan.
(c) Committee. The Board may appoint a committee composed of not fewer
---------
than two (2) members of the Board to serve in its place with respect to the
Plan. All of the members of such committee shall be Disinterested Persons, if
required under Section 3(d). From time to time, the Board may increase the size
of such committee and appoint additional members, remove members (with or
without cause) and substitute new members, fill vacancies (however caused) and
remove all members of the committee and thereafter directly administer the Plan,
all to the extent permitted by the rules governing plans intended to qualify as
a discretionary plan under Rule 16b-3.
(d) Exchange Act Registration. 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) Number of Shares. Subject to the provisions of Section 10 relating to
----------------
adjustments upon changes in stock, the stock that may be sold pursuant to
Options is 5,940 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 Optioned Shares not purchased under such Option shall revert to
5
<PAGE>
and again become available for issuance under the Plan unless the Plan shall
have terminated; provided, however, that Shares that have been actually issued
under the Plan shall not be returned to the Plan and shall not become available
for future issuance under the Plan. Shares that are withheld as payment of the
Exercise Price of any Options (as set forth in Section 6(c)) shall be deemed
issued for purposes of this Section 4(a).
(b) Stock Subject to the Plan. The stock subject to the Plan may be
-------------------------
unissued shares or reacquired shares, bought on the market or otherwise.
5. ELIGIBILITY.
(a) Employees and Consultants. Incentive Stock Options may be granted only
-------------------------
to Employees. Subject to Section 5(b) below, Nonstatutory Stock Options may be
granted only to Employees or Consultants.
(b) Directors. A Director shall only be eligible for the benefits of the
---------
Plan if he or she is also an Employee or a Consultant, provided, however, 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 Optioned
Shares which may be covered by Options granted to the Director: (i) the
Committee consists solely of Disinterested Persons; or (ii) the Plan otherwise
complies with the requirements of Rule 16b-3. This Section 5(b) shall not apply
prior to the date of the first registration of an equity security of the Company
under Section 12 of the Exchange Act.
(c) 10% Holders. No person shall be eligible for the grant of an Incentive
-----------
Stock 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 Affiliates 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 Incentive Stock Option is not exercisable after the
expiration of five (5) years from the date of grant.
(d) Other Limits on Incentive Stock Options. To the extent that the
---------------------------------------
aggregate Fair Market Value (determined at the time of grant) of stock with
respect to which Incentive Stock Options 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 that exceed such limit (according to the order in which they
were granted) shall be treated as Nonstatutory Stock Options.
6
<PAGE>
6. OPTION PROVISIONS.
Each Option Agreement shall be in such form and shall contain such terms
and conditions as the Committee shall deem appropriate. In the event any
provisions of the Option Agreement and the Plan conflict, the provisions of the
Plan shall control. The provisions of separate Options need not be identical,
but each Option Agreement shall include (through incorporation of provisions
hereof by reference in the Option Agreement 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 and the term of each Option shall be stated
in the Option Agreement.
(b) Price. Subject to Section 5(c), 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 Stock Option shall be not less than the par
value of the Optioned Shares on the date the Option is exercised.
(c) Consideration. The purchase price of stock acquired pursuant to an
-------------
Option shall be paid, to the extent permitted by applicable statutes and
regulations at the time the Option is exercised, either (i) in cash or check, or
(ii) at the discretion of the Committee in one or a combination of the following
ways, (A) by delivery to the Company of other Shares of Common Stock of the
Company to be valued at their Fair Market Value on the exercise date, (B)
according to a deferred payment or other arrangement with the person to whom the
Option is granted or to whom the Option is transferred pursuant to Section 6(f),
(C) withholding of Shares that would otherwise be issued upon the exercise of
the Option, valued at their Fair Market Value on the exercise date, or (D) in
any other form of legal consideration that may be acceptable to the Committee.
If the Fair Market Value of the number of whole Shares transferred or the number
of whole shares surrendered is less than the total exercise price of the Option,
the shortfall must be made up in cash or by check.
(d) Interest. 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.
(e) Exercise. Subject to Section 9(f), an Option shall be deemed to be
--------
exercised when written notice of such exercise has been given to the Company in
accordance with the terms of the Option Agreement by the person entitled to
exercise the Option and full payment for the Shares with respect to which the
Option is exercised has been received by the Company by cash or check. Each
Optionee who exercises an Option shall, upon notification of the amount due (if
any) and prior to or concurrent with delivery of the certificate representing
the Shares, pay to the Company by cash or check, amounts necessary to satisfy
applicable federal, state and local tax withholding requirements.
(f) Non-Transferability. An Incentive Stock Option shall not be
-------------------
transferable except by will or by the laws of descent and distribution and shall
be exercisable during the lifetime of the
7
<PAGE>
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 of 1974, as amended ("ERISA"), 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.
(g) 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 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 are subject to any Option provisions governing
the minimum number of Shares as to which an Option may be exercised. Options
may not be exercised for fractional Shares.
(h) Securities Law Compliance. The Company may require any Optionee, or
-------------------------
any person to whom an Option is transferred under Section 6(f), as a condition
of exercising any such Option, (i) 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 matter, and that he or she is capable of evaluating, alone or
together with the purchaser representative, the merits and risks of exercising
the Option; (ii) 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; and (iii) to deliver such other documentation as may be
necessary to comply with federal and state securities laws. 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"), and all applicable
state securities laws, 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 Plan 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, and may enter stop-transfer orders
against the transfer of the Shares of Common Stock issued upon the exercise of
an Option. The Company has no obligation to undertake registration of Options
or the Shares of Common Stock issued upon the exercise of an Option.
(i) Termination of Employment or Relationship as a Consultant. In the
---------------------------------------------------------
event an Optionee's Continuous Status as an Employee or Consultant terminates
(other than upon the optionee's death or Disability), the Optionee may exercise
his or her Option but only prior to the
8
<PAGE>
earlier of the (i) expiration of 3 months after the date of such termination and
(ii) expiration of the term of such Option as set forth in the Option Agreement,
and only to the extent that the optionee was entitled to exercise it at the date
of such termination. If, at the date of such 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 fully
exercise his or her Option within the time specified in the Option Agreement,
the Option shall terminate, and the shares covered by the unexercised portion of
such Option shall revert to and again become available for issuance under the
Plan.
(j) Disability of Optionee. In the event an Optionee's Continuous Status
----------------------
as an Employee or Consultant terminates as a result of the Optionee's
Disability, the Optionee or his or her personal representative may exercise his
or her Option, but only within one (1) year from the date of such termination
(or such longer period for Nonstatutory Stock Options or shorter period for any
Option as 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 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 such 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 such termination, the Optionee does not
fully exercise his or her Option within the time specified herein, the Option
shall terminate, and the Shares covered by the unexercised portion of such
Option shall revert to and again become available for issuance under the Plan.
(k) Death of Optionee. In the event of the death of an Optionee, the
-----------------
Option may be exercised, at any time within twelve (12) 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 fully exercise the Option
within the time specified herein, the Option shall terminate, and the Shares
covered by the unexercised portion of such Option shall revert to and again
become available for issuance under the Plan.
9
<PAGE>
7. COVENANTS OF THE COMPANY.
(a) Reserves. During the terms of the Options, the Company shall keep
--------
available at all times and shall reserve the number of Shares required to
satisfy such Options upon exercise thereof.
(b) Regulatory Approvals. 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 upon exercise of the Options;
provided, however, that this undertaking shall not require the Company to
register under the Securities Act either the Plan, any Option or any Shares
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 that counsel for the Company deems necessary for the lawful
issuance and sale of Shares under the Plan, the Company shall be relieved from
any liability for failure to issue and sell Shares 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) Acceleration of Vesting. The Committee 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 Section 6(g),
notwithstanding the provisions in the Option Agreement stating the time at which
it may first be exercised or the time during which it will Vest.
(b) No Rights as Shareholder. Neither an Optionee nor any person to whom
------------------------
an Option is transferred under Section 6(f) 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 including, but not limited to, rights to vote or to receive
dividends unless and until such person has satisfied all requirements for
exercise of the Option pursuant to its terms, the certificates evidencing such
Shares have been issued and such person has become a record holder of such
Shares.
(c) No Right to Continue as Employee or Consultant. Nothing in the Plan or
----------------------------------------------
any instrument executed or Option granted pursuant thereto shall confer upon any
Employee, Consultant or Optionee any right to continue in the employ of the
Company or any Affiliate (or to continue acting as a Consultant) or shall affect
the right of the Company or any Affiliate to terminate the employment or
relationship of any Employee, Consultant or Optionee with or without cause.
(d) Date of Grant. Once shareholder approval of the Plan has been
-------------
obtained, the date of grant of an Option shall, for all purposes, be the date on
which the Committee makes the determination granting such Option. Notice of the
determination shall be given to each Optionee
10
<PAGE>
within a reasonable time after the date of such grant. The Code may cause the
grant date to be recognized as of the date of grant even though shareholder
approval has not been obtained.
(e) Rule 16b-3. With respect to persons subject to Section 16 of the
----------
Exchange Act, transactions under the Plan are intended to comply with all
applicable conditions of Rule 16b-3 and with respect to such persons all
transactions shall be subject to such conditions regardless of whether they are
expressly set forth in the Plan or the Option Agreement. To the extent any
provision of the Plan or action by the Committee fails to so comply, it shall
not apply to such persons or their transactions and shall be deemed null and
void, to the extent permitted by law and deemed advisable by the Committee.
(f) Conditions Upon Exercise of Options. Notwithstanding any other
-----------------------------------
provisions, Shares shall not be issued and Options shall not be exercised unless
the exercise of such Option and the issuance and delivery of such Shares
pursuant thereto shall comply with all relevant provisions of law, including,
without limitation, the Securities Act of 1933, as amended, applicable state
securities laws, the Exchange Act, the rules and regulations promulgated
thereunder, and the requirements of any stock exchange (including NASDAQ) upon
which the Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
(g) Grants Exceeding Allotted Shares. If the Optioned Shares exceed, as of
--------------------------------
the date of grant, the number of Shares that may be issued under the Plan
without additional shareholder approval, such Option shall be void with respect
to such excess Optioned Shares, unless shareholder approval of an amendment
sufficiently increasing the number of Shares subject to the Plan is timely
obtained in accordance with Section 11 of the Plan.
(h) Notice. Any written notice to the Company required by any of the
------
provisions of the Plan shall be addressed to the Secretary of the Company and
shall become effective when it is received. Any written notice to Optionees
required by any provisions of the Plan shall be addressed to the Optionee at the
address on file with the Company and shall become effective 3 days after it is
mailed by certified mail, postage prepaid to such address or at the time of
delivery if delivered sooner by messenger or overnight courier.
10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER.
(a) Changes in Capitalization. Subject to any required action by the
-------------------------
shareholders of the Company, the maximum number of shares of Common Stock
subject to the Plan, the number of shares of Common Stock covered by each
outstanding Option and the number of shares of Common Stock that have been
authorized for issuance under the Plan but as to which no Options have yet been
granted or that have been returned to the Plan upon cancellation or expiration
of an Option, as well as the price per share of Common Stock covered by each
such outstanding Option, shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock resulting from a stock
split, reverse stock split, stock dividend, combination or reclassification of
the Common Stock, or any other increase or decrease in the number of issued
shares of Common Stock effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of the Company
shall not be deemed to have
11
<PAGE>
been "effected without receipt of consideration." Such adjustment shall be
made by the Committee, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no issuance by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or exercise price of Optioned Shares.
(b) Dissolution or Liquidation. In the event of the proposed dissolution
--------------------------
or liquidation of the Company, each outstanding Option will terminate
immediately prior to the consummation of such proposed action, unless otherwise
provided by the Committee. The Committee may, in the exercise of its sole
discretion in such instances, declare that any Option shall terminate as of a
date fixed by the Committee and give each Optionee the right to exercise his or
her Option as to all or any part of the Optioned Shares, including Shares as to
which the Option would not otherwise be exercisable.
(c) Merger or Asset Sale. Subject to Section 10(d), in the event of a
--------------------
proposed sale of all or substantially all of the assets of the Company, or the
merger, restructure, reorganization or consolidation of the Company with or into
another entity or entities in which the shareholders of the Company receive cash
or securities of another issuer, or any combination thereof, in exchange for
their shares of Common Stock, each outstanding Option shall be assumed or an
equivalent option shall be substituted by such successor entity or an Affiliate
of such successor entity, unless the Committee determines, in the exercise of
its sole discretion and in lieu of such assumption or substitution, that the
Optionee shall have the right to exercise the Option as to all Optioned Shares,
including Shares as to which the Option would not otherwise be vested. If the
Committee makes an Option fully exercisable in lieu of assumption or
substitution in the event of a merger, restructure, reorganization,
consolidation or sale of assets, the Committee shall notify the Optionee that
the Option shall be fully exercisable for a period of thirty (30) days from the
date of such notice or such shorter period as the Committee may specify in the
notice, and the Option will terminate upon the expiration of such period. For
the purposes of this Section, the Option shall be considered assumed if,
following the merger, restructure, reorganization, consolidation or sale of
assets, the Option confers the right to purchase, for each Optioned Share
immediately prior to the merger, restructure, reorganization, consolidation or
sale of assets, the consideration (whether stock, cash, or other securities or
property) received in the merger or sale of assets by holders of Common Stock
for each share of Common Stock held on the effective date of the consummation of
the transaction (and if holders were offered a choice of consideration, the type
of consideration chosen by the holders of a majority of the outstanding shares
of Common Stock); provided, however, that if such consideration received in the
merger, restructure, reorganization consolidation or sale of assets was not
solely common equity of the successor entity or its Affiliate, the Committee
may, with the consent of the successor entity and the Optionee, provide for the
consideration to be received upon the exercise of the Option, for each Optioned
Share, to be solely common stock of the successor entity or its Affiliate equal
in fair market value to the per share consideration received by holders of
Common Stock in the merger, restructure, reorganization, consolidation or sale
of assets.
(d) Change of Control. Notwithstanding anything to the contrary, the
-----------------
Committee may grant options which provide for the acceleration of the vesting of
shares subject to an Option upon a Change of Control. Such provisions shall be
set forth in the Option Agreement.
12
<PAGE>
11. AMENDMENT OF THE PLAN.
(a) Amendments by the Committee. The Committee at any time, and from time
---------------------------
to time, may amend the Plan; provided, however, that if required by Rule 16b-3,
no amendment shall be made more than once every six months, other than to
comport with changes in the Code, ERISA or the rules and regulations promulgated
thereunder.
(b) Compliance with the Code and Rule 16b-3. It is expressly contemplated
---------------------------------------
that the Committee may amend the Plan in any respect the Committee deems
necessary or advisable to bring the Plan and/or Incentive Stock Options granted
under it into compliance with the Code and with Rule 16b-3.
(c) Shareholder Approval. Notwithstanding anything to the contrary, the
--------------------
Company shall obtain shareholder approval of any Plan amendment to the extent
necessary or desirable to comply with Rule 16b-3 or with Section 422 of the Code
(or any successor rule or statute or other applicable law, rule or regulation,
including the requirements of any exchange or quotation system on which the
Common Stock is listed or quoted). Such shareholder approval, if required,
shall be obtained in such a manner and to such a degree as is required by the
applicable law, rule or regulation.
(d) Rights and Obligations Granted Prior to Amendments. Rights and
--------------------------------------------------
obligations under any Option granted before amendment of the Plan shall not be
altered or impaired by any amendment of the Plan unless (i) the Company requests
the consent of the Optionee or his or her successor and (ii) such person
consents in writing.
12. TERMINATION OR SUSPENSION OF THE PLAN.
(a) Termination Date. The Committee may suspend or terminate the Plan at
----------------
any time. Unless sooner terminated, the Plan shall terminate October 30, 2005,
which shall be within ten (10) years from the date the Plan is adopted by the
Board or approved by the shareholders 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) Alteration of Existing Rights. 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 Optionee
or his or her successor.
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 shareholders of the Company. Continuance of the Plan shall be
subject to receipt of the approval of the shareholders within 12 months from the
date of adoption of the Plan or by the Board.
13
<PAGE>
EXCEL TELECOMMUNICATIONS, INC.
1995 STOCK OPTION PLAN ("PLAN")
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall have
the same defined meanings in this Stock Option Agreement ("Option Agreement").
I. NOTICE OF STOCK OPTION GRANT
----------------------------
Optionee's Name and Address _____________________________
_____________________________
_____________________________
You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as
follows:
Date of Grant _________________________________
Exercise Price per Share _________________________________
Total Number of Optioned Shares _________________________________
Total Exercise Price $________________________________
Type of Option: _____ Incentive Stock Option
______ Nonstatutory Stock Option
Expiration Date _________________________________
(No more than 10 years from date of
grant, 5 years for certain grants)
Vesting Schedule
----------------
This Option may be exercised, in whole or in part, in accordance with the
following schedule, except only as specifically provided elsewhere herein or in
the Plan, this option shall be exercisable in the following cumulative
installments:
Up to twenty percent (20%) of the total Optioned Shares at any time after
the earlier of (i) the expiration of eighteen (18) months from the date of
grant; or (ii) the expiration of one year from the closing date of the sale by
the Company of any of its shares of Common Stock pursuant to a registration
statement declared effective under the Securities Act of 1933, as amended (the
"IPO Closing Date");
14
<PAGE>
Up to an additional twenty percent (20%) of the total Optioned Shares at
any time after the earlier of (i) the expiration of thirty (30) months from the
date of grant, or (ii) the expiration of two (2) years from the IPO Closing
Date;
Up to an additional ten percent (10%) of the total Optioned Shares at any
time after the earlier of (i) the expiration of forty-two (42) months from the
date of grant, or (ii) the expiration of three (3) years from the IPO Closing
Date;
Up to an additional twenty percent (20%) of the total Optioned Shares at
any time after the earlier of (i) the expiration of fifty-four (54) months from
the date of grant, or (ii) the expiration of four (4) years from the IPO Closing
Date;
Up to an additional ten percent (10%) of the total Optioned Shares at any
time after the earlier of (i) the expiration of sixty-six (66) months from the
date of grant, or (ii) the expiration of five (5) years from the IPO Closing
Date;
Up to an additional twenty percent (20%) of the total Optioned Shares at
any time after the earlier of (i) the expiration of seventy-eight (78) months
from the date of grant, or (ii) the expiration of six (6) years from the IPO
Closing Date.
If an installment covers a fractional share, such installment will be
rounded off to the next highest share, except the final installment, which will
be for the balance of the total optioned shares.
In addition, in the event of a Change of Control, the Optionee shall in
such event have the right immediately prior to such event to exercise optionee's
option in whole or part without regard to the vesting schedule set forth above.
Termination Period
------------------
This Option may be exercised prior to the expiration of 3 months after
termination of the Optionee's employment or consulting relationship with the
Company and shall immediately terminate at the end of such 3 month period. Upon
the death or disability of the Optionee, this Option may be exercised for such
longer period as provided in the Plan. In no event shall this Option be
exercised later than the Expiration Date as provided above.
II. AGREEMENT
---------
1. Grant of Option. The Committee hereby grants to the Optionee named in
---------------
Section I of this Option Agreement (the "Optionee"), an option (the "Option") to
purchase the number of Shares set forth in Section I, at the exercise price per
share set forth in Section I (the "Exercise Price"), subject to the terms and
conditions of the Plan, which is incorporated herein by reference. In the event
of a conflict between the terms and conditions of the Plan and the terms and
conditions of this Option Agreement, the terms and conditions of the Plan shall
prevail. The Optionee may
15
<PAGE>
review a copy of the Plan at the office of the Secretary of the Company at 9101
LBJ Freeway, Dallas, Texas 75243.
If designated as an Incentive Stock Option ("ISO") in Section I hereof,
this Option is intended to qualify as an ISO under Section 422 of the Internal
Revenue Code (the "Code"). However, to the extent that the aggregate fair market
value of shares subject to the Optionee's ISOs granted by the Company or any
Affiliate becoming exercisable for the first time in any one calendar year
exceeds the $100,000 (as determined pursuant to Code Section 422(d)), the
options that exceed such amount shall be treated as a Nonstatutory Stock Option
("NSO").
2. Exercise of Option.
------------------
(a) Right to Exercise. The Option is exercisable during its term in
-----------------
accordance with the Vesting Schedule set out in Section I. In the event of
Optionee's death, Disability or other termination of Optionee's employment or
consulting relationship, the exercisability of the Option is governed by the
applicable provisions of the Plan and this Option Agreement.
(b) Method of Exercise. This Option is exercisable by delivery of an
------------------
exercise notice, in the form attached as Exhibit A (the "Exercise Notice"),
which shall state the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised (the "Exercised Shares"), and
such other representations and agreements as may be required by the Company
pursuant to the provisions of the Plan. The Exercise Notice shall be signed by
the Optionee and shall be delivered in person or by certified mail to the
Secretary of the Company. The Exercise Notice shall be accompanied by payment
of the aggregate Exercise Price as to all Exercised Shares and/or the direction
to withhold a certain number of shares of Common Stock of the Company and shall
be accompanied by the payment in cash or by check of all amounts necessary to
satisfy applicable federal, state and local tax withholding requirements. The
Option shall be deemed to be exercised upon receipt by the Company of such fully
executed Exercise Notice accompanied by such aggregate Exercise Price.
(c) No Shares shall be issued pursuant to the exercise of this Option
unless such issuance and exercise complies with all relevant provisions of law
and the requirements of any stock exchange or quotation service upon which the
Shares are then listed. Assuming such compliance, for income tax purposes the
Exercised Shares shall be considered transferred to the Optionee on the date the
Option is exercised with respect to such Exercised Shares.
(d) The Optionee shall, upon notification of the amount due (if any)
as a result of the exercise of the Option and prior to or concurrent with
delivery of the certificate representing the Shares, pay to the Company amounts
necessary to satisfy applicable federal, state and local tax withholding
requirements.
3. Method of Payment. The purchase price of Exercised Shares acquired
-----------------
pursuant to the Option shall be paid as set forth in the Plan. THE USE OF
SHARES OF STOCK ACQUIRED
16
<PAGE>
OR TO BE ACQUIRED TO PAY FOR EXERCISED SHARES MAY HAVE INCOME TAX CONSEQUENCES
FOR THE OPTIONEE.
4. Non-Transferability of Option. This Option may not be transferred in
-----------------------------
any manner except as provided in the Plan and may be exercised only by the
Optionee or such other persons as allowed by the Plan. The terms of the Plan
and this Option Agreement shall be binding upon the executors, administrators,
heirs, successors and assigns of the Optionee.
5. Term of Option. This Option may be exercised only on or before the
--------------
expiration date set out in Section I and may be exercised only in accordance
with the Plan and the terms of this Option Agreement.
6. Tax Consequences. The grant and/or exercise of the Option will have
----------------
federal and state income tax consequences. THE OPTIONEE SHOULD CONSULT A TAX
ADVISER UPON THE GRANT OF THE OPTION AND BEFORE EXERCISING THE OPTION OR
DISPOSING OF THE SHARES ACQUIRED UPON EXERCISE, PARTICULARLY WITH RESPECT TO HIS
OR HER STATE'S TAX LAWS.
7. Entire Agreement: Governing Law. The Plan is incorporated herein by
-------------------------------
reference. The Plan and this Option Agreement constitute the entire agreement
of the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee. This Agreement is governed by Texas law except for that body of law
pertaining to conflict of laws.
8. Warranties, Representatives and Covenants. The undersigned Optionee
-----------------------------------------
warrants and represents that he or she has reviewed the Plan and this Option
Agreement in their entirety, has had an opportunity to obtain the advice of
counsel prior to executing this Option Agreement and fully understand all
provisions of the Plan and Option Agreement. Optionee hereby agrees to accept
as binding, conclusive and final all decisions or interpretations of the
Committee upon any questions relating to the Plan and Option Agreement.
Optionee further agrees to notify the Company upon any change in the residence
address indicated below.
9. Restrictions on Transfer of Common Stock. In addition to any other
----------------------------------------
terms or provisions of this Option Agreement, no sale, assignment, transfer,
pledge, hypothecation or other disposition ("Transfer of Restricted Stock") by
any Optionee of any of the Common Stock of the Company acquired pursuant to an
Option or subsequently issued in respect of such shares of Common Stock
(collectively, "Restricted Stock") other than transfers by gift, bequest or by
the laws of descent and distribution shall be valid unless made in accordance
with the terms and provisions of this paragraph.
(a) Right of First Refusal. None of the Optionees of the Company
----------------------
shall make any Transfer of Restricted Stock unless such shareholder shall have
first offered all of his shares of
17
<PAGE>
Restricted Stock subject to transfer to the Company in the manner and to the
extent hereinafter set forth.
(b) Offer. The Optionee desiring to effect a Transfer of Restricted
-----
Stock ("Offeror") shall send to the Company a notice ("Notice") which includes a
true copy of a bona fide written offer or the terms upon which such Transfer of
Stock is proposed to be effected for the purchase of all or any portion of the
Restricted Stock of the Offeror, together with reasonable information requested
by the Company from which a judgment may be made as to the desirability of
permitting the prospective purchaser to be a shareholder of the Company. The
consideration set forth in the Offer shall be stated in its equivalent of U.S.
dollars.
(c) Company's Option. The Company shall have a prior option to
----------------
purchase all (but not less than all) of the Restricted Stock subject to the
Notice at the same price per share and upon substantially the same terms and
conditions contained in such Notice by sending written notice of acceptance to
the Offeror within thirty (30) days after the Notice is received by the
Corporation.
(d) Delivery of Stock. In the event the Company purchases the
-----------------
Restricted Stock pursuant to this paragraph, the purchase price shall be paid
within ten (10) days after the expiration of the last date of the option to
purchase. Upon receipt of the purchase price, the Offeror shall assign and
deliver such Restricted Stock to the Company.
(e) Sale to Third Party. In the event that Restricted Stock has been
-------------------
offered for sale under and pursuant to this paragraph 9, and the Company has not
exercised its option to purchase all of the Restricted Stock subject to the
Offer, then the Offeror may sell or dispose of all such Restricted Stock, but
only to the original proposed purchaser and only upon the terms and conditions
contained in the Notice. Such sale or disposition must occur within sixty (60)
days after the expiration of the last date of the option of the Company to
purchase; provided, however, that such sale or disposition shall not be in
violation of any state or federal securities laws. Any such Restricted Stock
which is not sold or disposed of within such sixty (60) day period shall again
become fully subject to the terms of this Agreement.
(f) Legends. In addition to any other legends that may be required,
-------
the certificates evidencing the Common Stock issued upon exercise of the Options
shall contain appropriate legends referencing the restrictions on
transferability set forth in this paragraph 9.
(g) Termination. The restrictions on the Transfer of Restricted
-----------
Stock set forth in this paragraph 9 shall terminate upon the closing of the sale
of any of the Common Stock of the Company pursuant to a registration statement
declared effective under the Securities Act of 1933, as amended.
OPTIONEE: EXCEL TELECOMMUNICATIONS, INC.,
a Texas corporation
____________________ By:______________________________
18
<PAGE>
Signature Title: President
____________________
Print Name
Residence Address:
____________________
____________________
19
<PAGE>
EXHIBIT A
---------
EXCEL TELECOMMUNICATIONS, INC.
1995 STOCK OPTION PLAN
EXERCISE NOTICE
Excel Telecommunications, Inc.
9330 LBJ Freeway
Suite 1200
Dallas, TX 75243
Attention: Secretary
1. Exercise of Option. Effective. as of today, _____________, 199____,
------------------
the undersigned ("Purchaser") hereby elects to purchase _________________ shares
(the "Shares") of the Common Stock of Excel Telecommunications, Inc. (the
"Company") under and pursuant to the 1995 Stock Option Plan (the "Plan") and the
Stock Option Agreement dated ___________, 199__ (the "Option Agreement"). The
purchase price for the Shares shall be $____________, as specified in the Option
Agreement.
2. Delivery of Payment. Purchaser herewith delivers to the Company the
full purchase price for the Shares or___________________________________________
____________________________________________________________. THE USE OF SHARES
OF STOCK ACQUIRED OR TO BE ACQUIRED FOR EXERCISED SHARES MAY HAVE INCOME TAX
CONSEQUENCES FOR THE OPTIONEE.
3. Representations of Purchaser. Purchaser acknowledges that Purchaser
----------------------------
has received, read and understood the Plan and the Option Agreement and agrees
to abide by and be bound by their terms and conditions.
4. Rights as Shareholder. The Purchaser shall not be deemed to be the
---------------------
holder of, or to have any of the rights of a holder with respect to, any Shares
subject for which such Option is exercised including, but not limited to, rights
to vote or to receive dividends unless and until the Purchaser has satisfied all
requirements for exercise of the Option pursuant to its terms, the certificates
evidencing such Shares have been issued and the Purchaser has become a record
holder of such Shares. A share certificate for the number of Shares so acquired
shall be issued to the Optionee as soon as practicable after exercise of the
Option. No adjustment will be made for a dividend or other right for which the
record date is prior to the date all the conditions set forth above are
satisfied, except as provided in Section 10 of the Plan.
5. Tax Consultation. Purchaser understands that Purchaser may suffer
----------------
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares. Purchaser represents
<PAGE>
that Purchaser has consulted with any tax consultants Purchaser deems advisable
in connection with the purchase or disposition of the Shares and that Purchaser
is not relying on the Company for any tax advice.
6. Entire Agreement Governing Law. The Plan and Option Agreement are
------------------------------
incorporated herein by reference. This Agreement, the Plan and the Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Purchaser with respect to the subject matter
hereof, and may not be modified adversely to the Purchaser's interest except by
means of a writing signed by the Company and Purchaser. This agreement is
governed by Texas law except for that body of law pertaining to conflict of
laws.
Submitted by: Accepted by:
PURCHASER: EXCEL TELECOMMUNICATIONS, INC.
____________________ By:______________________________
Signature Its:_____________________________
____________________
Print Name
Address: Address:
____________________ ____________________
____________________ ____________________
<PAGE>
EXCEL COMMUNICATIONS, INC.
FIRST AMENDMENT TO
1995 STOCK OPTION PLAN
(a) On or about October 30, 1995, Excel Telecommunications,
Inc., a Texas corporation ("Excel Texas"), adopted the Excel Telecommunications,
Inc. 1995 Stock Option Plan (the "Plan"). Effective January 1, 1996, the Plan
was assumed by EXCEL Communications, Inc., a Delaware company (the "Company"),
pursuant to an Agreement and Plan of Merger among Excel Texas, the Company and a
wholly owned subsidiary of Excel Texas ("Agreement and Plan of Merger"). The
Company desires to amend the Plan as set forth herein:
(b) The name of the Plan as set forth in the Paragraph 2(y) of
the Plan is hereby changed to the "EXCEL Communications, Inc. 1995 Stock Option
Plan," "Common Stock" as set forth in Paragraph 2(f) means the $.001 par value
common stock of the Company, and "Company" as set forth in Paragraph 2(g) shall
mean Excel Communications, Inc., a Delaware corporation.
(c) The first sentence of paragraph 4 of the Plan is hereby
amended and restated to provide in its entirety as follows:
Subject to the provision of Section 10 relating to
adjustments upon changes in stock, the stock that
may be sold pursuant to Options is 8,910,000 shares
of the Company's Common Stock, which reflects the
adjustments made pursuant to Paragraph 10 pursuant
to the Agreement and Plan of Merger.
4. The remaining terms and provisions of the Plan shall continue in full force
and effect.
5. This First Amendment to the Plan was adopted by the Board on March 18, 1996
and by the stockholders of the Company on March 18, 1996.
<PAGE>
EXCEL COMMUNICATIONS, INC.
SECOND AMENDMENT TO
1995 STOCK OPTION PLAN
1. On or about October 30, 1995, Excel Telecommunications, Inc., a Texas
corporation ("Excel Texas"), adopted the Excel Telecommunications, Inc. 1995
Stock Option Plan (the "Plan"). Effective January 1, 1996, the Plan was assumed
by EXCEL Communications, Inc., a Delaware company (the "Company"), pursuant to
an Agreement and Plan of Merger among Excel Texas, the Company and a wholly
owned subsidiary of Excel Texas ("Agreement and Plan of Merger"). A First
Amendment to the Plan was adopted by the Board and by the stockholders of the
Company on March 18, 1996. The Company hereby desires to further amend the Plan
as set forth herein:
2. Section 6(e) of the Plan, titled Exercise, is hereby amended and
--------
restated to provide in its entirety as follows:
(e) Exercise and Withholding. Subject to Section 9(f), an Option
------------------------
shall be deemed to be exercised when written notice of such exercise
has been given to the Company in accordance with the terms of the
Option Agreement by the person entitled to exercise the Option and
full payment for the Shares with respect to which the Option is
exercised has been received by the Company. To the extent required by
applicable federal, state, local or foreign law, an Optionee shall
make arrangements satisfactory to the Company for the satisfaction of
any withholding tax obligations that arise by reason of an option
exercise or any sale of Shares. The Company shall not be required to
issue Shares until such obligations are satisfied. Such obligations
shall be satisfied either (i) in cash or by check or (ii) at the
discretion of the Committee in one or a combination of the following
ways: (A) by delivery to the Company of other Shares of Common Stock
of the Company to be valued at their Fair Market Value on the
applicable date (provided that any Shares acquired directly or
indirectly from the Company shall have been owned by the Optionee for
more than six months on the date of surrender), (B) withholding of
Shares that would otherwise be issued upon the exercise of the Option,
valued at their Fair Market Value on the applicable date, or (C) in
any other form of legal consideration that may be acceptable to the
Committee. If the Fair Market Value of the number of whole Shares
transferred or the number of whole Shares surrendered is less than the
total withholding tax obligation, the shortfall must be made up in
cash or by check.
3. The remaining terms and provisions of the Plan shall continue in full
force and effect.
4. This Second Amendment to the Plan was adopted by the Board on
January 15, 1997.
<PAGE>
EXHIBIT 4.5
EXCEL COMMUNICATIONS, INC.
1997 DIRECTOR STOCK OPTION PLAN
1. Purpose. The purpose of this 1997 Director Stock Option Plan (the
-------
"Plan") of EXCEL Communications, Inc., a Delaware corporation (the "Company"),
is to encourage ownership in the Company by outside directors of the Company
whose continued services are considered essential to the Company's future
progress and to provide them with a further incentive to remain as directors of
the Company.
2. Eligibility. Options (each, an "Option") to purchase shares
-----------
("Shares") of the Company's common stock, par value $.001 per share ("Common
Stock"), may be granted only to Outside Directors. An "Outside Director" is a
member of the Board of Directors of the Company ("Board of Directors") that is
not an employee (each, an "Optionee"). "Employee" means any person, including
officers and directors, employed by the Company or any Parent or Subsidiary of
the Company. The payment of a Director's fee by the Company shall not be
sufficient to constitute "employment" by the Company. A "Parent" means a
"parent corporation," whether now or hereafter existing, as defined in Section
424(e) of the Internal Revenue Code of 1986, as amended to date and as it may be
amended from time to time (the "Code"), and a "Subsidiary" means a "subsidiary
corporation," whether now or hereafter existing, as defined in Section 424(f) of
the Code.
3. Administration
--------------
(a) Board of Directors. The Board of Directors of the Company shall
------------------
supervise and administer the Plan in compliance with the rules under Rule 16b-3
or any successor thereto ("Rule 16b-3") under the Securities Exchange Act of
1934, as amended (the "Exchange Act"). All questions of interpretation of the
Plan or of any Options issued under it shall be determined by the Board of
Directors and such determination shall be final and binding upon all persons
having an interest in the Plan. In the event it becomes necessary after the
date on which the Plan is adopted to have the Plan administered by a committee
of the Board of Directors, then a committee designated by the Board of Directors
will administer the Plan, which committee shall be constituted to comply with
the rules under Rule 16b-3 relating to the administration of employee benefit
plans for Outside Directors, and all references in the Plan to the Board of
Directors shall be deemed to be a reference to such committee.
(b) Powers of the Board of Directors. Subject to the provisions of
--------------------------------
the Plan and subject to the approval of any relevant authorities, including the
approval, if required, of any stock exchange upon which the Common Stock is
listed, the Board of Directors shall have the authority in its discretion:
(i) to determine the Fair Market Value of the Common Stock, in
accordance with Section 5(b) of the Plan;
<PAGE>
(ii) to determine the recipients of Options and the number of
shares to be covered by each Option granted hereunder, including the number
of shares to be covered by Options to be granted to an Optionee who,
pursuant to a separate contractual arrangement with the Company, elects to
convert the annual retainer to be paid to such Optionee into Options valued
using a Black/Scholes pricing model agreed upon by the Company and such
Optionee;
(iii) to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted hereunder. Such terms and
conditions include, but are not limited to, the exercise price, the time or
times when Options may be exercised, any vesting, acceleration or waiver of
forfeiture restrictions, and any restriction or limitation regarding any
Option or the shares of Common Stock relating thereto, based in each case
on such factors as the Board of Directors, in its sole discretion, shall
determine; and
(iv) to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan, and to amend, suspend or discontinue the Plan
as provided for in Section 10 hererof.
4. Stock Subject to the Plan
-------------------------
(a) Maximum Number of Shares. The maximum number of shares which may
------------------------
be issued under the Plan shall be 400,000 shares of Common Stock, subject to
adjustment as provided in Section 9 below.
(b) Termination of Options. 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 unless the Plan shall have terminated; provided,
however, that shares of Common Stock that have been actually issued under the
Plan shall not be returned to the Plan and shall not become available for future
issuance under the Plan. Shares that are withheld as payment of the Exercise
Price of any Options (as set forth in Section 5(f)) shall be deemed issued for
purposes of this Section.
(c) Stock Subject to the Plan. The stock subject to the Plan may be
-------------------------
unissued shares or reacquired shares, bought on the market or otherwise.
5. Terms, Conditions and Form of Options
-------------------------------------
(a) Option Agreement
----------------
Each option agreement governing an Option ("Option Agreement")
shall be in the form attached hereto as Exhibit A. In the event any provisions
of the Option Agreement and the Plan conflict, the provisions of the Plan shall
control. The provisions of separate Options need not be identical, but each
Option Agreement shall include (through incorporation of provisions hereof
2
<PAGE>
by reference in the Option or otherwise) the substance of each of the following
provisions set forth in this Section 5.
(b) Option Exercise Price. The exercise price per share for each
---------------------
Option granted under the Plan shall be equal to one hundred percent (100%) of
the fair market value of each such share ("Fair Market Value") on the date of
grant. The Fair Market Value shall be equal to (i) if the Common Stock is
listed on any established stock exchange or a national market system, including
without limitation the New York Stock Exchange (the "NYSE"), the closing sales
price for such stock on the date of determination (or, if no such price is
reported on such date, such price as reported on the nearest preceding day) as
quoted on such exchange or system (or the exchange with the greatest volume of
trading in the Common Stock), as reported in The Wall Street Journal or such
-----------------------
other source as the Board of Directors deems reliable, or (ii) if the Common
Stock is quoted on the NASDAQ System (but not on the NASDAQ National Market
thereof) or is regularly quoted by a recognized securities dealer but selling
prices are not reported, the mean of the closing bid and asked prices for the
Common Stock on the date of determination (or if such prices are not reported on
such date, such prices as reported on the nearest preceding date), as reported
in The Wall Street Journal or such other source as the Board of Directors deems
-----------------------
reliable; or (iii) if the fair market value is not determined pursuant to (i) or
(ii) above, the fair market value as determined in good faith by the Board of
Directors.
(c) Options Non-Transferable. No Option shall be transferable by the
------------------------
Optionee otherwise than by will, or by the laws of descent and distribution, or
pursuant to a qualified domestic relations order, as defined in the Code or
Title I of the Employee Retirement Security Act of 1974, as amended ("ERISA"),
or the rules thereunder ("QDRO"), and shall be exercised during the lifetime of
the Optionee only by such person or any transferee pursuant to a QDRO. No
Option or interest therein may be transferred, assigned, pledged or hypothecated
by the Optionee during such person's lifetime, whether by operation of law or
otherwise, or be made subject to execution, attachment or similar process.
(d) Exercise Period. Subject to Section 7, each Option shall become
---------------
vested and exercisable as follows: The Options will vest one-third on the day
preceding the first Annual Meeting of Stockholders of the Company held after the
date of grant and one-third on each of the two following anniversaries of that
date so long as Optionee continues to serve as a director of the Company. In
the event an Optionee ceases to serve as a director of the Company, each such
Option may be exercised by the Optionee (or, in the event of such person's
death, by such person's administrator, executor or heirs), at any time within 12
months after the Optionee ceases to serve as a director, but only to the extent
such Option was exercisable at the time of such cessation of service.
Notwithstanding the foregoing, no Option shall be exercisable after the
expiration of 10 years from the date of grant.
(e) Exercise Procedure. Subject to Section 12, an Option shall be
------------------
deemed to be exercised when written notice ("Exercise Notice") of such exercise
has been given to the Company in accordance with the terms of the Option
Agreement by the person entitled to exercise the Option
3
<PAGE>
and full payment for the shares of Common Stock with respect to which the Option
is exercised has been received by the Company. Each Optionee who exercises an
Option shall, upon notification of the amount due (if any) and prior to or
concurrent with delivery of the certificate representing the shares, pay by cash
or check to the Company all amounts necessary to satisfy applicable federal,
state and local tax withholding requirements. No Option may at any time be
exercised with respect to a fractional share.
(f) Payment of Exercise Price. The purchase price of stock acquired
-------------------------
pursuant to an Option shall be paid, to the extent permitted by applicable
statutes and regulations at the time the Option is exercised, either (i) in cash
or check, or (ii) at the discretion of the Board of Directors in one or a
combination of the following ways, (A) by delivery to the Company of other
shares of Common Stock of the Company to be valued at their Fair Market Value on
the exercise date (provided that any shares acquired directly or indirectly from
the Company shall have been owned by the Optionee for more than six months on
the date of surrender), or (B) withholding of shares that would otherwise be
issued upon the exercise of the Option to be valued at their Fair Market Value
on the exercise date. If the Fair Market Value of the number of whole shares
transferred or the number of whole shares subject to an Option surrendered is
less than the total exercise price of the Option, the shortfall must be made up
in cash or by check.
6. Nonstatutory Options. All Options granted under the Plan shall be
--------------------
nonstatutory Options not entitled to special tax treatment under Section 422 of
the Code.
7. Effective Date and Term
-----------------------
The Plan was adopted by the Board of Directors of the Company as of
5:00 p.m. on January 15, 1997 and became effective upon its adoption. The Plan
shall continue in effect until it is terminated by action of the Board, but such
termination shall not affect the terms of any outstanding Options.
8. Limitation of Rights
--------------------
(a) No Right to Continue as Director. Neither the Plan, nor the
--------------------------------
granting of an Option nor any other action taken pursuant to the Plan, shall
constitute or be evidence of any agreement or understanding, express or implied,
that the Company will retain a director for any period of time.
(b) No Shareholders' Rights for Optionees. Neither an Optionee nor
-------------------------------------
any person to whom an Option is transferred pursuant to the Plan shall be deemed
to be the holder of, or to have any of the rights of a holder with respect to,
any shares of Common Stock subject to such Option including, but not limited to,
rights to vote or to receive dividends, unless and until such person has
satisfied all requirements for exercise of the Option pursuant to its terms, the
certificates evidencing such shares have been issued and such person has become
a record holder of such shares.
4
<PAGE>
9. Adjustments Upon Changes in Capitalization or Merger
----------------------------------------------------
(a) Changes in Capitalization. Subject to any required action by the
-------------------------
shareholders of the Company, the aggregate number of shares of Common Stock
subject to Options, the number of shares of Common Stock subject to Options to
be granted on each event described in Section 5, the number of shares of Common
Stock covered by each outstanding Option and the number of shares of Common
Stock that have been authorized for issuance under the Plan but as to which no
Options have yet been granted or that have been returned to the Plan upon
cancellation or expiration of an Option, as well as the price per share of
Common Stock covered by each such outstanding Option, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board
of Directors, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject to an Option.
(b) Dissolution or Liquidation. In the event of the proposed
--------------------------
dissolution or liquidation of the Company, each outstanding Option will
terminate immediately prior to the consummation of such proposed action.
(c) Merger or Asset Sale. In the event of a proposed sale of all or
--------------------
substantially all of the assets of the Company, or the merger or consolidation
of the Company with or into another entity in which the shareholders of the
Company receive cash or securities of another issuer, or any combination
thereof, in exchange for their shares of Common Stock, each outstanding Option
shall be assumed or an equivalent option shall be substituted by such successor
entity or a parent or subsidiary of such successor entity. For the purposes of
this Section, the Option shall be considered assumed if, following the merger,
consolidation or sale of assets, the Option confers the right to purchase, for
each share of Common Stock subject to the Option immediately prior to the
merger, consolidation or sale of assets, the consideration (whether stock, cash,
or other securities or property) received in the merger, consolidation or sale
of assets by holders of Common Stock for each share held on the effective date
of the consummation of the transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of
the outstanding shares of common stock).
10. Amendment of the Plan
---------------------
The Board of Directors may suspend or discontinue the Plan or review
or amend it in any respect whatsoever.
5
<PAGE>
11. Notice
------
Any written notice to the Company required by any of the provisions of
the Plan shall be addressed to the Secretary of the Company and shall become
effective when it is received. Any written notice to Optionees required by any
provisions of the Plan shall be addressed to the Optionee at the address on file
with the Company and shall become effective 3 days after it is mailed by
certified mail, postage prepaid to such address or at the time of delivery if
delivered sooner by messenger or overnight courier.
12. Regulatory Approval, Compliance and Other Matters.
-------------------------------------------------
(a) Options shall not be exercised, and shares shall not be issued
upon such exercise, unless the exercise of such Option and the issuance and
delivery of such shares shall comply with all relevant provisions of law,
including, without limitation, any applicable state securities laws, the
Securities Act of 1933, as amended ("the Securities Act"), the Exchange Act, the
rules and regulations thereunder and the requirements of any stock exchange upon
which such shares may then be listed or approved for listing upon notice of
issuance, and such issuance shall be further subject to the approval of counsel
for the Company with respect to such compliance, including the availability of
an exemption from registration for the issuance and sale of such shares. The
inability of the Company to obtain from any regulatory body the authority deemed
by the Company to be necessary for the lawful issuance and sale of any shares
under this Plan, or the unavailability of an exemption from registration for the
issuance and sale of any shares under this Plan, shall relieve the Company of
any liability with respect to the non-issuance or sale of such shares.
(b) Other Conditions. The Company may require any Optionee, or any
----------------
person to whom an Option is transferred pursuant to the Plan, as a condition to
exercising any such Option, (i) 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
matter, and that he or she is capable of evaluating, alone or together with the
purchaser representative, the merits and risks of exercising the Option; (ii) 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; and
(iii) to deliver such other documentation as may be necessary to comply with
federal and state securities laws. 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 and all
applicable state securities laws, 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 Plan 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 and may enter stop
transfer orders against the transfer of the shares of Common Stock issuable upon
the
6
<PAGE>
exercised Options. The Company has no obligation to undertake registration of
Options or the shares of Common Stock issuable upon the exercise of Options.
(c) Rule 16b-3. With respect to persons subject to Section 16 of the
----------
Exchange Act, transactions under the Plan are intended to comply with all
applicable conditions of Rule 16b-3 and with respect to such persons all
transactions shall be subject to such conditions regardless of whether they are
expressly set forth in the Plan or the Option Agreement. To the extent any
provision of the Plan or action by the Board of Directors fails to so comply, it
shall not apply to such persons or their transactions and shall be deemed null
and void, to the extent permitted by law and deemed advisable by the Board of
Directors.
13. Governing Law. The Plan and all rights and obligations thereunder
-------------
shall be construed in accordance with and governed by the laws of the state of
Delaware without regard to its conflict of laws rules.
7
<PAGE>
EXHIBIT A
---------
8
<PAGE>
EXCEL COMMUNICATIONS, INC.
DIRECTOR STOCK OPTION AGREEMENT
THIS DIRECTOR STOCK OPTION AGREEMENT ("Agreement" or "Option Agreement") is
entered into between EXCEL COMMUNICATIONS, INC., a Delaware corporation (the
"Company"), and the person named on the signature page hereof ("Optionee") with
the date of grant of the option as set forth on such signature page.
To carry out the purposes of the EXCEL COMMUNICATIONS, INC. 1997 DIRECTOR
STOCK OPTION PLAN (the "Plan"), by affording Optionee the opportunity to
purchase shares of common stock of the Company ("Common Stock"), and in
consideration of the mutual agreements and other matters set forth herein and in
the Plan, the Company and Optionee hereby agree as follows:
1. Grant of Option. The Company hereby irrevocably grants to Optionee
---------------
the right and option ("Option") to purchase all or any part of the number of
shares of Common Stock as set forth on the signature page hereto, on the terms
and conditions set forth herein and in the Plan, which Plan is incorporated
herein by reference as a part of this Agreement. In the event of a conflict
between the terms and conditions of the Plan and the terms and conditions of
this Option Agreement, the terms and conditions of the Plan shall prevail. The
Optionee may review a copy of the Plan at the office of the Secretary of the
Company at 8750 North Central Expressway, Suite 2000, Dallas, Texas 75231. This
Option shall not be treated as an incentive stock option within the meaning of
Section 422(b) of the Internal Revenue Code of 1986, as amended (the "Code").
2. Vesting Schedule. Except only as specifically provided elsewhere
----------------
herein, the Option shall be exercisable in the following cumulative
installments:
Up to one-third, or ______, of the total shares ("Optioned Shares") at
any time after the Initial Vesting Date. For purposes of this Option Agreement,
the "Initial Vesting Date" shall mean the day immediately preceding the day on
which the Company's ______ [INSERT DATE] annual meeting of stockholders is held;
Up to an additional one-third, or _____, of the total Optioned Shares
at any time after the first anniversary of the Initial Vesting Date; and
Up to an additional one-third, or _____, of the total Optioned Shares
at any time after the second anniversary of the Initial Vesting Date.
If an installment covers a fractional share, such installment will be
rounded off to the next highest share, except the final installment, which will
be for the balance of the total Optioned Shares.
9
<PAGE>
3. Purchase Price. The purchase price of Common Stock purchased pursuant
--------------
to the exercise of this Option is set forth on the signature page hereto, which
has been determined to be not less than the Fair Market Value of the Common
Stock at the date of grant of this Option.
4. Exercise of Option. This Option is exercisable by delivery of an
------------------
exercise notice, in the form attached as Exhibit A (the "Exercise Notice"),
which shall state the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised (the "Exercised Shares"), and
such other representations and agreements as may be required by the Company
pursuant to the provisions of the Plan. The Exercise Notice shall be signed by
the Optionee and shall be delivered in person or by certified mail to the
Secretary of the Company. The Exercise Notice shall be accompanied by payment
of the aggregate Exercise Price as to all Exercised Shares.
5. Method of Payment. The purchase price of Exercised Shares acquired
-----------------
pursuant to an Option shall be paid as set forth in the Plan.
6. Nontransferable and Termination. This Option is not transferable by
-------------------------------
Optionee otherwise than by will or the laws of descent and distribution, and may
be exercised only by Optionee during Optionee's lifetime, except as provided in
the Plan.
7. Term. This Option shall not be exercisable in any event after the
----
expiration of ten years from the date of grant hereof. The purchase price of
shares as to which this Option is exercised shall be paid in full at the time of
exercise for the consideration set forth in the Plan. No fraction of a share of
Common Stock shall be issued by the Company upon exercise of an Option or
accepted by the Company in payment of the purchase price thereof.
8. Withholding of Tax. To the extent that the exercise of this Option or
------------------
the disposition of shares of Common Stock acquired by exercise of this Option
obligates the Company to withhold federal, state or local tax the Optionee shall
pay such amounts to the Company upon request by delivery of cash or check or in
such other manner as is permitted by the Plan.
9. Compliance with Securities Laws. Optionee agrees that the shares of
-------------------------------
Common Stock which Optionee may acquire by exercising this Option will not be
sold or otherwise disposed of in any manner which would constitute a violation
of any applicable securities laws, whether federal or state. Optionee also
agrees (i) that the certificates representing the shares of Common Stock
purchased under this Option may bear such legend or legends as the Board of
Directors of the Company deems appropriate in order to assure compliance with
applicable securities laws, (ii) that the Company may refuse to register the
transfer of the shares of Common Stock purchased under this Option on the stock
transfer records of the Company if such proposed transfer would in the opinion
of counsel to the Company constitute a violation of any applicable securities
law and (iii) that the Company may give related instructions to its transfer
agent, if any, to stop registration of the transfer of the shares of Common
Stock purchased under this Option.
10
<PAGE>
10. Tax Consequences. The grant and/or exercise of the Option will have
----------------
federal and state income tax consequences. THE OPTIONEE SHOULD CONSULT A TAX
ADVISER UPON THE GRANT OF THE OPTION AND BEFORE EXERCISING THIS OPTION OR
DISPOSING OF THE SHARES, PARTICULARLY WITH RESPECT TO HIS OR HER STATE'S TAX
LAWS.
11. Binding Effect. This Agreement shall be binding upon and inure to the
--------------
benefit of any successors to the Company and all persons lawfully claiming under
Optionee.
12. Entire Agreement and Governing Law. The Plan is incorporated herein
----------------------------------
by reference. The Plan and this Option Agreement constitute the entire agreement
of the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee. In the event of any conflicts between this Agreement and the Plan,
the Plan shall control. This Agreement is governed by Delaware law except for
that body of law pertaining to conflict of laws.
13. Miscellaneous. Optionee warrants and represents that he or she has
-------------
reviewed the Plan and this Option Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Option
Agreement and fully understand all provisions of the Plan and Option Agreement.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Board of Directors upon any questions relating to the
Plan and Option Agreement. Optionee further agrees to notify the Company upon
any change in the residence address indicated below.
11
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed by its officer thereunto duly authorized, and Optionee has executed
this Agreement, all as of the day and year first above written.
EXCEL COMMUNICATIONS, INC.
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
__________________________________________________
___________________, Optionee
Address:
__________________________________________________
__________________________________________________
Date of Grant: ________________
Exercise Price Per Share: $_______________
Total Number of Optioned Shares: ________________
Total Exercise Price: $_______________
Type of Option: Nonstatutory
Stock Option
Expiration Date: ________________
12
<PAGE>
EXCEL COMMUNICATIONS, INC.
1997 DIRECTOR STOCK OPTION PLAN
EXERCISE NOTICE
EXCEL Communications, Inc.
8750 North Central Expressway, Suite 2000
Dallas, TX 75231
Attention: Secretary
1. Exercise of Option. Effective as of today, _____________, 199__, the
------------------
undersigned ("Purchaser") hereby elects to purchase __________ shares (the
"Shares") of the Common Stock of EXCEL Communications, Inc. (the "Company")
under and pursuant to the 1997 Director Stock Option Plan (the "Plan") and the
Director Stock Option Agreement dated _________, 199__ (the "Option Agreement").
The per share exercise price for the Shares shall be $__________, as specified
in the Option Agreement.
2. Delivery of Payment. Purchaser herewith delivers to the Company the
-------------------
full purchase price for the Shares or ________________________________.
3. Representations of Purchaser. Purchaser acknowledges that Purchaser
----------------------------
has received, read and understood the Plan and the Option Agreement and agrees
to abide by and be bound by their terms and conditions.
4. Rights as Stockholder. Until the issuance (as evidenced by the
---------------------
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the stock certificate evidencing such Shares, no right
to vote or receive dividends or any other rights as a stockholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
A share certificate for the number of Shares so acquired shall be issued to the
Purchaser as soon as practicable after exercise of the Option. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the stock certificate is issued, except as provided in Section 9 of the
Plan.
5. Tax Consultation. Purchaser understands that Purchaser may suffer
----------------
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares. Purchaser represents that Purchaser had consulted with any tax
consultants Purchaser deems advisable in connection with the purchaser or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.
13
<PAGE>
6. Entire Agreement; Governing Law. The Plan and Option Agreement are
-------------------------------
incorporated herein by reference. This Agreement, the Plan and the Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Purchaser with respect to the subject matter
hereof, and may not be modified adversely to the Purchaser's interest except by
means of a writing signed by the Company and Purchaser. This agreement is
governed by Delaware law except for that body of law pertaining to conflict of
laws.
Submitted by: Accepted by:
PURCHASER: EXCEL COMMUNICATIONS, INC.
____________________________ By:______________________
Signature
____________________________ Its:_____________________
Print Name
Address: Address:
- ------- -------
____________________________ 8750 North Central Expressway, Suite 2000
____________________________ Dallas, TX 75231
14
<PAGE>
EXHIBIT 4.6
EXCEL COMMUNICATIONS, INC.
DIRECTOR STOCK OPTION AGREEMENT
THIS DIRECTOR STOCK OPTION AGREEMENT (this "Option Agreement") is entered
into as of August 26, 1996, between EXCEL COMMUNICATIONS, INC., a Delaware
corporation (the "Company"), and Ronald A. McDougall ("Optionee").
To afford Optionee, whose continued service as a director of the Company is
considered essential to the Company's future progress, the opportunity to
purchase shares of common stock, par value $.001 per share, of the Company (the
"Common Stock") and to provide Optionee with a further incentive to remain a
director of the Company, and in consideration of the mutual agreements and other
matters set forth herein, the Company and Optionee hereby agree as follows:
1. Grant of Option. The Company hereby irrevocably grants to Optionee
---------------
the right and option (the "Option") to purchase Common Stock of the Company, on
the terms and conditions set forth herein, as set forth below:
Optionee's Name and Address: Ronald A. McDougall
Brinker International, Inc.
6820 LBJ Freeway
Dallas, Texas 75240
Date of Grant: August 26, 1996
Exercise Price Per Share: $21.25
Total Number of Optioned Shares: 20,000
Total Exercise Price: $425,000
Type of Option: Nonstatutory Stock Option
Expiration Date: August 26, 2006
The Option shall not be treated as an incentive stock option within the meaning
of Section 422(b) of the Internal Revenue Code of 1986, as amended (the "Code").
The Option will be a nonstatutory Option not entitled to special tax treatment
under Section 422 of the Code.
2. Vesting Schedule. Except only as specifically provided elsewhere
----------------
herein, the Option shall be exercisable in the following cumulative
installments:
Up to 6,667 total shares ("Optioned Shares") at any time after the
Initial Vesting Date. For purposes of this Option Agreement, the "Initial
Vesting Date" shall mean the day immediately preceding the day on which the
Company's 1997 annual meeting of stockholders is held;
<PAGE>
Up to an additional 6,667 total Optioned Shares at any time after the
first anniversary of the Initial Vesting Date; and
Up to an additional 6,666 total Optioned Shares at any time after the
second anniversary of the Initial Vesting Date.
If an installment covers a fractional share, such installment will be
rounded off to the next highest share, except the final installment, which will
be for the balance of the total Optioned Shares.
3. Purchase Price. The exercise price per share of Common Stock
--------------
purchased pursuant to the exercise of the Option, which is set forth in Section
1, has been determined to be not less than the Fair Market Value of the Common
Stock on the date of grant of the Option. The term "Fair Market Value" means
(i) if the Common Stock is listed on any established stock exchange or a
national market system, including without limitation the New York Stock Exchange
("NYSE"), the closing sales price for such stock on the date of determination
(or, if no such price is reported on such date, such price as reported on the
nearest preceding day) as quoted on such exchange or system (or the exchange
with the greatest volume of trading in the Common Stock), as reported in The
---
Wall Street Journal or such other source as the Board of Directors deems
- -------------------
reliable, or (ii) if the Common Stock is quoted on the NASDAQ System (but not on
the NASDAQ National Market thereof) or is regularly quoted by a recognized
securities dealer but selling prices are not reported, the mean of the closing
bid and asked prices for the Common Stock on the date of determination (or if
such prices are not reported on such date, such prices as reported on the
nearest preceding date), as reported in The Wall Street Journal or such other
-----------------------
source as the Board of Directors deems reliable; or (iii) if the fair market
value is not determined pursuant to (i) or (ii) above, the fair market value as
determined in good faith by the Board of Directors.
4. Exercise of Option. The Option is exercisable by delivery of an
------------------
exercise notice, in the form attached hereto as Exhibit A (the "Exercise
Notice"), which shall state the election to exercise the Option, the number of
Optioned Shares in respect of which the Option is being exercised (the
"Exercised Shares"), and such other representations and agreements as may be
required by the Company pursuant to the provisions of this Option Agreement. The
Exercise Notice shall be signed by the Optionee and shall be delivered in person
or by certified mail to the Secretary of the Company. The Exercise Notice shall
be accompanied by payment of the aggregate exercise price as to all Exercised
Shares. The Option may not at any time be exercised with respect to a fractional
share, and no fraction of a share of Common Stock shall be issued by the Company
upon exercise of the Option or accepted by the Company in payment of the
purchase price thereof. No shares shall be issued pursuant to the exercise of
the Option unless such issuance and exercise complies with all relevant
provisions of Section 9(a) hereof. Assuming such compliance, for income tax
purposes the Exercised Shares shall be considered transferred to the Optionee on
the date the Option is exercised with respect to such Exercised Shares. The
stock issued to Optionee upon exercise of the Option may be unissued shares or
reacquired shares, bought on the market or otherwise.
2
<PAGE>
5. Method of Payment. The purchase price of Common Stock acquired
-----------------
pursuant to the Option shall be paid, to the extent permitted by applicable
statutes and regulations at the time the Option is exercised, either (i) in cash
or check, and/or (ii) at the discretion of the Board of Directors, in one or a
combination of the following ways, (A) by delivery to the Company of other
shares of Common Stock of the Company to be valued at their Fair Market Value on
the exercise date (provided that any shares acquired directly or indirectly from
the Company shall have been owned by the Optionee for more than six months on
the date of surrender), or (B) withholding of shares that would otherwise be
issued upon the exercise of the Option to be valued at their Fair Market Value
on the exercise date. If the Fair Market Value of the number of whole shares
transferred or the number of whole shares subject to the Option surrendered is
less than the total exercise price of the Option, the shortfall must be made up
in cash or by check. THE USE OF SHARES OF STOCK ACQUIRED OR TO BE ACQUIRED TO
PAY FOR EXERCISED SHARES MAY HAVE INCOME TAX CONSEQUENCES FOR THE OPTIONEE.
6. Nontransferable and Termination.
-------------------------------
(a) The Option is not transferable by Optionee otherwise than by will
or the laws of descent and distribution, or pursuant to a qualified domestic
relations order, as defined in the Code or Title I of the Employee Retirement
Security Act of 1974, as amended ("ERISA"), or the rules thereunder ("QDRO"),
and may be exercised during Optionee's lifetime only by Optionee or any
transferee pursuant to a QDRO. Neither the Option nor an interest therein may
be transferred, assigned, pledged or hypothecated by the Optionee during such
person's lifetime, whether by operation of law or otherwise, or be made subject
to execution, attachment or similar process.
(b) In the event Optionee ceases to serve as a director of the
Company, the Option may be exercised by the Optionee (or, in the event of such
person's death, by such person's administrator, executor or heirs), at any time
within 12 months after the Optionee ceases to serve as a director, but only to
the extent the Option was exercisable at the time of such cessation of service.
Notwithstanding the foregoing, the Option shall not be exercisable in any event
after the expiration of 10 years from the date of grant.
7. Limitation of Rights.
--------------------
(a) No Right to Continue as Director. The granting of the Option
--------------------------------
shall not constitute or be evidence of any agreement or understanding, express
or implied, that the Company will retain Optionee as a director for any period
of time.
(b) No Shareholders' Rights for Optionee. Neither the Optionee nor
------------------------------------
any person to whom the Option is transferred pursuant to Section 6(a) hereof
shall be deemed to be the holder of, or to have any of the rights of a holder
with respect to, any shares of Common Stock subject to the Option including, but
not limited to, rights to vote or to receive dividends, unless and until such
person has satisfied all requirements for exercise of the Option pursuant to its
terms, the certificates evidencing such shares have been issued and such person
has become a record holder of such shares.
3
<PAGE>
8. Withholding of Tax. Optionee shall, upon notification of the amount
------------------
due (if any) and prior to or concurrent with delivery of the certificate
representing the Optioned Shares, pay by cash or check to the Company amounts
necessary to satisfy applicable federal, state and local tax withholding
requirements.
9. Compliance with Securities Laws.
-------------------------------
(a) The Option shall not be exercised, and shares shall not be issued
upon such exercise, unless the exercise of the Option and the issuance and
delivery of such shares shall comply with all relevant provisions of law,
including, without limitation, any applicable state securities laws, the
Securities Act of 1933, as amended ("the Securities Act"), the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), the rules and regulations
thereunder and the requirements of any stock exchange upon which such shares may
then be listed or approved for listing upon notice of issuance, and such
issuance shall be further subject to the approval of counsel for the Company
with respect to such compliance, including the availability of an exemption from
registration for the issuance and sale of such shares. The inability of the
Company to obtain from any regulatory body the authority deemed by the Company
to be necessary for the lawful issuance and sale of any shares under this Option
Agreement, or the unavailability of an exemption from registration for the
issuance and sale of any shares under this Option Agreement, shall relieve the
Company of any liability with respect to the non-issuance or sale of such
shares.
(b) Optionee agrees that the shares of Common Stock which Optionee
may acquire by exercising the Option will not be sold or otherwise disposed of
in any manner which would constitute a violation of any applicable securities
laws, whether federal or state. Optionee also agrees (i) that the certificates
representing the shares of Common Stock purchased under the Option may bear such
legend or legends as the Board of Directors of the Company deems appropriate in
order to assure compliance with applicable securities laws, (ii) that the
Company may refuse to register the transfer of the shares of Common Stock
purchased under the Option on the stock transfer records of the Company if such
proposed transfer would in the opinion of counsel to the Company constitute a
violation of any applicable securities law and (iii) that the Company may give
related instructions to its transfer agent, if any, to stop registration of the
transfer of the shares of Common Stock purchased under the Option. The Company
may require Optionee, or any person to whom the Option is transferred under
Section 6(a), as a condition of exercising the Option, (i) 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; and (ii) to
deliver such other documentation as may be necessary to comply with federal and
state securities laws. In addition, the Company may require any person to whom
the Option is transferred under Section 6(a), as a condition of exercising the
Option, to give written assurances satisfactory to the Company as to such
person'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 is
4
<PAGE>
capable of evaluating, alone or together with the purchaser representative, the
merits and risks of exercising the Option.
10. Tax Consequences. The grant and/or exercise of the Option will have
----------------
federal and state income tax consequences, including a requirement that the
Company file certain information returns with the Internal Revenue Service. THE
OPTIONEE SHOULD CONSULT A TAX ADVISER UPON THE GRANT OF THE OPTION AND BEFORE
EXERCISING THE OPTION OR DISPOSING OF THE SHARES, PARTICULARLY WITH RESPECT TO
HIS STATE'S TAX LAWS.
11. Administration. The Board of Directors or a duly appointed committee
--------------
of the Board (the "Administrators") shall supervise and administer this Option
Agreement. All questions of interpretation of the Option issued hereunder shall
be determined by the Administrators and such determination shall be final and
binding upon the Optionee.
12. Adjustments Upon Changes in Capitalization or Merger.
----------------------------------------------------
(a) Changes in Capitalization. The number of shares of Common Stock
-------------------------
covered by the Option, as well as the price per share of Common Stock covered by
the Option, shall be proportionately adjusted for any increase or decrease in
the number of issued shares of Common Stock resulting from a stock split,
reverse stock split, stock dividend, combination or reclassification of the
Common Stock, or any other increase or decrease in the number of issued shares
of Common Stock effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of the Company
shall not be deemed to have been "effected without receipt of consideration."
Such adjustment shall be made by the Administrators, whose determination in that
respect shall be final, binding and conclusive. Except as expressly provided
herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or
exercise price of Optioned Shares.
(b) Dissolution or Liquidation. In the event of the proposed
--------------------------
dissolution or liquidation of the Company, the Option will terminate immediately
prior to the consummation of such proposed action, unless otherwise provided by
the Administrators. The Administrators may, in the exercise of their sole
discretion in such instances, declare that the Option shall terminate as of a
date fixed by the Administrators and give the Optionee the right to exercise the
Option as to all or any part of the Optioned Shares, including shares as to
which the Option would not otherwise be exercisable.
(c) Merger or Asset Sale. In the event of a proposed sale of all or
--------------------
substantially all of the assets of the Company, or the merger, restructure,
reorganization or consolidation of the Company with or into another entity or
entities in which the shareholders of the Company receive cash or securities of
another issuer, or any combination thereof, in exchange for their shares of
Common Stock, the Option shall be assumed or an equivalent option shall be
substituted by such successor entity or an affiliate of such successor entity,
unless the Administrators determine, in the
5
<PAGE>
exercise of their sole discretion and in lieu of such assumption or
substitution, that the Optionee shall have the right to exercise the Option as
to all Optioned Shares, including shares as to which the Option would not
otherwise be vested. If the Administrators make the Option fully exercisable in
lieu of assumption or substitution in the event of a merger, restructure,
reorganization, consolidation or sale of assets, the Administrators shall notify
the Optionee that the Option shall be fully exercisable for a period of thirty
(30) days from the date of such notice or such shorter period as the
Administrators may specify in the notice, and the Option will terminate upon the
expiration of such period. For the purposes of this Section, the Option shall be
considered assumed if, following the merger, restructure, reorganization,
consolidation or sale of assets, the Option confers the right to purchase, for
each Optioned Share immediately prior to the merger, restructure,
reorganization, consolidation or sale of assets, the consideration (whether
stock, cash, or other securities or property) received in the merger or sale of
assets by holders of Common Stock for each share of Common Stock held on the
effective date of the consummation of the transaction (and if holders were
offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding shares of Common Stock); provided,
however, that if such consideration received in the merger, restructure,
reorganization, consolidation or sale of assets was not solely common equity of
the successor entity or its affiliate, the Administrators may, with the consent
of the successor entity and the Optionee, provide for the consideration to be
received upon the exercise of the Option, for each Optioned Share, to be solely
common stock of the successor entity or its affiliate equal in fair market value
to the per share consideration received by holders of Common Stock in the
merger, restructure, reorganization, consolidation or sale of assets.
13. Binding Effect. This OptionAgreement shall be binding upon and inure
--------------
to the benefit of any successors to the Company and all persons lawfully
claiming under Optionee.
14. Entire Agreement and Governing Law. This Option Agreement constitutes
----------------------------------
the entire agreement of the parties with respect to the subject matter hereof
and supersedes in its entirety all prior undertakings and agreements of the
Company and Optionee with respect to the subject matter hereof, and may not be
modified adversely to the Optionee's interest except by means of a writing
signed by the Company and Optionee. This Option Agreement is governed by
Delaware law except for that body of law pertaining to conflict of laws.
15. Reserves. During the term of the Option, the Company shall keep
--------
available at all times and shall reserve the number of shares of Common Stock
required to satisfy the Option upon exercise thereof.
16. Notice. Any written notice to the Company required by any of the
------
provisions of this Option Agreement shall be addressed to the Secretary of the
Company and shall become effective when it is received. Any written notice to
the Optionee required by any provisions of this Option Agreement shall be
addressed to the Optionee at the address on file with the Company and shall
become effective three days after it is mailed by certified mail, postage
prepaid to such address or at the time of delivery if delivered sooner by
messenger or overnight courier.
6
<PAGE>
17. Miscellaneous. Optionee warrants and represents that he has reviewed
-------------
this Option Agreement in its entirety, has had an opportunity to obtain the
advice of counsel prior to executing this Option Agreement and fully understand
all provisions of this Option Agreement. Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the
Administrators upon any questions relating to this Option Agreement. Optionee
further agrees to notify the Company upon any change in the address indicated in
Section 1 above.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed by its officer thereunto duly authorized, and Optionee has executed
this Agreement, all as of the day and year first above written.
EXCEL COMMUNICATIONS, INC.
By: /s/ Kenny A. Troutt
------------------------------------
Name: Kenny A. Troutt
Title: President and Chief Executive Officer
/s/ Ronald A. McDougall
---------------------------------------
Ronald A. McDougall, Optionee
7
<PAGE>
Exhibit A
<PAGE>
EXCEL COMMUNICATIONS, INC.
DIRECTOR STOCK OPTION AGREEMENT
EXERCISE NOTICE
EXCEL Communications, Inc.
8750 North Central Expressway
20th Floor
Dallas, Texas 75231
Attention: Secretary
1. Exercise of Option. Effective as of today, _____________, 199__, the
------------------
undersigned ("Purchaser") hereby elects to purchase __________ shares (the
"Shares") of the Common Stock of EXCEL Communications, Inc. (the "Company")
under and pursuant to the Director Stock Option Agreement dated as of August 26,
1996 (the "Option Agreement"). The per share exercise price for the Shares
shall be $__________, as specified in the Option Agreement.
2. Delivery of Payment. Purchaser herewith delivers to the Company the
-------------------
full purchase price for the Shares or___________________________________.
3. Representations of Purchaser. Purchaser acknowledges that Purchaser
----------------------------
has read and understood the Option Agreement and agrees to abide by and be bound
by its terms and conditions.
4. Rights as Stockholder. Until the issuance (as evidenced by the
---------------------
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the stock certificate evidencing such Shares, no right
to vote or receive dividends or any other rights as a stockholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
A share certificate for the number of Shares so acquired shall be issued to the
Purchaser as soon as practicable after exercise of the Option. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the stock certificate is issued, except as provided in the Option
Agreement.
5. Tax Consultation. Purchaser understands that Purchaser may suffer
----------------
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares. Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.
<PAGE>
6. Entire Agreement; Governing Law. The Option Agreement is incorporated
-------------------------------
herein by reference. This exercise notice and the Option Agreement constitute
the entire agreement of the parties with respect to the subject matter hereof
and supersede in their entirety all prior undertakings and agreements of the
Company and Purchaser with respect to the subject matter hereof, and may not be
modified adversely to the Purchaser's interest except by means of a writing
signed by the Company and Purchaser. This exercise notice is governed by
Delaware law except for that body of law pertaining to conflict of laws.
Submitted by: Accepted by:
PURCHASER: EXCEL COMMUNICATIONS, INC.
By:__________________________
_____________________________
Ronald A. McDougall Its:_________________________
Address: Address:
- ------- -------
Brinker International, Inc. 8750 North Central Expressway,
6820 LBJ Freeway 20th Floor
Dallas, Texas 75240 Dallas, Texas 75231
2
<PAGE>
EXHIBIT 5.1
[LETTERHEAD OF MUNSCH HARDT KOPF HARR & DINAN, P.C.]
(214) 855-7567
January 17, 1997
EXCEL Communications, Inc.
8750 North Central Expressway
Dallas, Texas 75231
Re: Registration of up to 9,330,000 shares of Common Stock,
par value $.001 per share, pursuant to a Registration Statement on
Form S-8
Gentlemen:
At the request of EXCEL Communications, Inc., a Delaware corporation (the
"Company"), this opinion is being furnished to the Company for filing as Exhibit
5.1 to the Registration Statement on Form S-8 (the "Registration Statement") to
be filed by the Company with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Act"), relating
to up to 9,330,000 shares (the "Shares") of the Common Stock, par value $.001
per share, of the Company that may be issued by the Company from time to time
(i) to participants in the EXCEL Communications, Inc. 1995 Stock Option Plan
(the "1995 Stock Option Plan") pursuant to the provisions of the 1995 Stock
Option Plan, (ii) to participants in the EXCEL Communications, Inc. 1997
Director Stock Option Plan (the "1997 Director Stock Option Plan") pursuant to
the provisions of the 1997 Director Stock Option Plan, and (iii) to Ronald A.
McDougall pursuant to a Director Stock Option Agreement, dated as of August 26,
1996 (the "McDougall Agreement"), between Mr. McDougall and the Company.
In our capacity as counsel to the Company and for the purpose of rendering
the opinions hereinafter expressed, we have relied solely upon the documents,
certificates and other items described on Exhibit A attached hereto and have
---------
made no other investigation or inquiry.
This opinion letter is governed by, and shall be interpreted in accordance
with, the Legal Opinion Accord (the "Accord") of the ABA Section of Business Law
(1991). As a consequence, it is subject to a number of qualifications,
exceptions, definitions, limitations on coverage and other limitations, all as
more particularly described in the Accord, and this opinion letter should be
read in conjunction therewith. The general qualifications of the Accord apply
to all of the opinions set forth herein.
<PAGE>
EXCEL Communications, Inc.
January 17, 1997
Page 2
Based solely upon the foregoing, and subject to the qualifications,
limitations, and assumptions set forth in the Accord and set forth below, we are
of the opinion that the Shares that may be issued and sold pursuant to the 1995
Stock Option Plan, the 1997 Director Stock Option Plan and the McDougall
Agreement and, where required, authorized forms of agreements evidencing the
grant of stock options thereunder will be, when issued and sold in accordance
with the 1995 Stock Option Plan, the 1997 Director Stock Option Agreement and
the McDougall Agreement, as the case may be, and such authorized forms of stock
option agreements and for a consideration at least equal to the par value of
such Shares, duly authorized and validly issued, fully paid, and nonassessable.
For purposes of rendering the above opinion, we have assumed with respect
to shares of Common Stock issued after the date hereof, (i) the receipt of
proper consideration for the issuance thereof in excess of the par value
thereof, (ii) the availability of a sufficient number of shares of Common Stock
authorized by the Company's Certificate of Incorporation then in effect, (iii)
compliance with the terms of any agreement entered into in connection with any
options or shares of Common Stock issued under the 1995 Stock Option Plan, the
1997 Director Stock Option Plan and the McDougall Agreement, and (iv) that no
change occurs in the applicable law or the pertinent facts.
The opinion set forth above is limited to the substantive laws of the State
of Delaware and no opinion is expressed herein as to matters governed by any
other law.
This opinion is rendered solely to you in connection with the foregoing
matters. This opinion may not be relied upon by you for any other purpose or
relied upon by or furnished to any other person without our prior written
consent.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and also to the use of our name in the Registration
Statement and the prospectus that is deemed to be a part thereof under the
caption "Legal Matters" as having passed upon certain legal matters in
connection with the Shares. By so consenting, we do not thereby admit that we
come within the category of persons whose consent is required under Section 7 of
the Act or the rules and regulations of the Commission promulgated thereunder.
Very truly yours,
MUNSCH HARDT KOPF HARR & DINAN, P.C.
By: /s/ A. Michael Hainsfurther
-----------------------------------
A. Michael Hainsfurther
<PAGE>
EXHIBIT A
---------
1. Certificate of Incorporation of the Company, as certified by the Secretary
of State of Delaware on January 14, 1997.
2. Bylaws of the Company.
3. Certificate of Existence for the Company issued by the Secretary of State
of Delaware on January 14, 1997.
4. The 1995 Stock Option Plan, together with authorized forms of agreements
evidencing the grant of stock options thereunder.
5. The 1997 Director Stock Option Plan, together with authorized forms of
agreements evidencing the grant of stock options thereunder.
6. The McDougall Agreement.
7. Officer's Certificate, dated the date hereof, executed by the President and
Secretary of the Company certifying, among other things, (i) the
resolutions pursuant to which the 1995 Stock Option Plan and the First
Amendment thereto were adopted by the directors and stockholders of the
Company and pursuant to which shares to be issued pursuant to the 1995
Stock Option Plan were reserved for issuance by the Company's board of
directors, (ii) the resolutions pursuant to which the Second Amendment to
the 1995 Stock Option Plan and the 1997 Director Stock Option Plan were
adopted by the directors of the Company and pursuant to which shares to be
issued pursuant to the 1997 Director Stock Option Plan were reserved for
issuance by the Company's board of directors, (iii) the resolutions
pursuant to which the McDougall Agreement was adopted by the directors of
the Company and pursuant to which shares to be issued pursuant to the
McDougall Agreement were reserved for issuance by the Company's board of
directors, (iv) the Certificate of Incorporation and Bylaws of the Company,
as amended, (v) the 1995 Stock Option Plan, together with authorized forms
of agreements evidencing the grant of stock options thereunder, the 1997
Director Stock Option Plan, together with authorized forms of agreements
evidencing the grant of stock options thereunder, and the McDougall
Agreement and (vi) the authorized Common Stock, the number of issued and
outstanding shares of Common Stock of the Company, and the number of shares
of Common Stock reserved for issuance by the Company under the 1995 Stock
Option Plan, the 1997 Director Stock Option Plan and the McDougall
Agreement.
8. Telephone confirmation by the Secretary of State of Delaware on the date
hereof that the Company is validly existing and in good standing under the
laws of the State of Delaware.
<PAGE>
Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-8 and the related prospectus deemed to be
included therein pertaining to the EXCEL Communications, Inc. 1995 Stock Option
Plan, the EXCEL Communications, Inc. 1997 Director Stock Option Plan, and an
EXCEL Communications, Inc. Director Stock Option Agreement with Ronald A.
McDougall and to the incorporation by reference therein of our report dated
February 8, 1996 with respect to the consolidated financial statements of EXCEL
Communications, Inc. (the "Company") included in the Prospectus dated May 9,
1996 as filed with the Securities and Exchange Commission on May 10, 1996 in
connection with the Company's Registration Statement on Form S-1, as amended
(Registration No. 333-1076).
ARTHUR ANDERSEN LLP
Dallas, Texas
January 16, 1997
