<PAGE> 1
As filed with the Securities and Exchange Commission on October 17, 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.
(formerly named New RES, Inc.)
(Exact name of Registrant as specified in its charter)
DELAWARE 75-2720091
(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. 1997 STOCK OPTION PLAN
EXCEL COMMUNICATIONS, INC. 1997 DIRECTOR STOCK OPTION PLAN
(Full title of the plans or agreements)
________________________
J. CHRISTOPHER DANCE, ESQUIRE
EXECUTIVE VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
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)
________________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
========================================================================================================================
Proposed maximum
Title of securities to Amount to be Proposed maximum aggregate offering Amount of
be registered registered(1) offering price per share price(2) registration fee
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value 4,400,000 (3) $117,425,000 $35,584
$.001 per share . . . shares
=======================================================================================================================
</TABLE>
(1) Consists of 4,000,000 shares of Common Stock issuable pursuant to the
EXCEL Communications, Inc. 1997 Stock Option Plan and 400,000 shares
of Common Stock issuable pursuant to the EXCEL Communications, Inc.
1997 Director Stock Option Plan.
(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 average of the high
and low sales prices per share of the Common Stock reported on The New
York Stock Exchange on October 15, 1997 for all shares being
registered.
(3) Because there are options still available for grant under the EXCEL
Communications, Inc. 1997 Stock Option Plan and the EXCEL
Communications, Inc. 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 Plans.
================================================================================
<PAGE> 2
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Note: The document(s) containing the information concerning the
EXCEL Communications, Inc. 1997 Stock Option Plan and the EXCEL Communications,
Inc. 1997 Director Stock Option Plan (collectively, the "Plans") required by
Item 1 of Form S-8 and the statement of availability of registrant information
and information relating to the Plans and other information required by Item 2
of Form S-8 will be sent or given to the employees and/or directors of the
Registrant and its subsidiaries, as applicable, 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> 3
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents, which EXCEL Communications, Inc., a Delaware
corporation formerly named New RES, Inc. (the "Company"), has previously 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:
(a) The description of the Common Stock of the Company contained
in the Company's Registration Statement on Form 8-A
(Commission File No. 001-13433), as filed with the Commission
pursuant to the Exchange Act on September 30, 1997, as amended
by Amendment No. 1 thereto filed with the Commission on
October 3, 1997, and as may be further amended, modified or
superseded by any report or amendment filed with the
Commission for the purpose of updating such description; and
(b) The Registration Statement (Registration No. 333-35377) on
Form S-4 of the Company, as amended, first filed with the
Commission on September 11, 1997 pursuant to the Securities
Act, including the Joint Proxy Statement/Prospectus dated
September 15, 1997 included therein.
The following documents, which Excelcom, Inc., a Delaware corporation
formerly named EXCEL Communications, Inc. ("Excelcom") (File No. 001-14322), has
previously filed with the Commission under the Exchange Act, are incorporated
in this Registration Statement by reference and shall be deemed a part hereof:
(a) Excelcom's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996;
(b) Excelcom's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 1997;
(c) Excelcom's Quarterly Report on Form 10-Q for the fiscal
quarter ended June 30, 1997; and
(d) Excelcom's Current Reports on Form 8-K dated March 31, 1997,
June 5, 1997 and June 25, 1997.
II-1
<PAGE> 4
The following documents, which Telco Communications Group, Inc., a
Virginia corporation ("Telco") (File No. 0-28668), has previously
filed with the Commission under the Exchange Act, are incorporated in this
Registration Statement by reference and shall be deemed a part hereof:
(a) Telco's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996, as amended by Form 10- K/A, dated September
11, 1997;
(b) Telco's Quarterly Report on Form 10-Q for the fiscal quarter
ended March 31, 1997;
(c) Telco's Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1997; and
(d) Telco's Current Reports on Form 8-K dated March 11, 1997,
March 18, 1997, April 15, 1997, June 5, 1997 and June 24,
1997.
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 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.
II-2
<PAGE> 5
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law (the "DGCL")
permits a corporation to indemnify any of its directors or officers who was or
is a party, or is threatened to be made a party to any third party proceeding
by reason of the fact that such person is or was a director or officer of the
corporation, against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, if such person acted in good
faith and in a manner such person reasonably believed to be in or not opposed
to the best interests of the corporation, and, with respect to any criminal
action or proceeding, had no reason to believe that such person's conduct was
unlawful. In a derivative action, i.e., one by or in the right of the
corporation, the corporation is permitted to indemnify directors and officers
against expenses (including attorneys' fees) actually and reasonably incurred
by them in connection with the defense or settlement of an action or suit if
they acted in good faith and in a manner that they reasonably believed to be in
or not opposed to the best interests of the corporation, except that no
indemnification shall be made if such person shall have been adjudged liable to
the corporation, unless and only to the extent that the court in which the
action or suit was brought shall determine upon application that the defendant
directors or officers are fairly and reasonably entitled to indemnity for such
expenses despite such adjudication of liability.
Article 7 of the Amended and Restated Certificate of Incorporation of
the Company makes mandatory the indemnification expressly authorized under the
DGCL and permits the Company to enter into agreements with any director or
officer for the purpose of providing for such indemnification.
Pursuant to Section 7.7 of the Agreement and Plan of Merger dated as
of June 5, 1997 among the Company, Excelcom, Telco and certain other parties
thereto named therein (the "Merger Agreement"), (a) for a period of six years
after October 14, 1997 (the "Effective Time"), (i) the Company and Telco
jointly and severally shall indemnify the directors and officers of Telco who
hold such positions at any time during the period from the date of the Merger
Agreement through the Effective Time to the fullest extent to which Telco is
permitted to indemnify such officers and directors under the Telco charter, the
Telco bylaws and applicable law (including, without limitation, indemnification
for actions in the right of Telco) and (ii) the Company and Excelcom jointly
and severally shall indemnify the directors and officers of Excelcom who hold
such positions at any time during the period from the date of the Merger
Agreement through the Effective Time to the fullest extent to which Excelcom is
permitted to indemnify such officers and directors under the Excelcom charter,
the Excelcom bylaws and applicable law and (b) for a period of four years after
the Effective Time, the Company shall cause to be maintained in effect the
current policies of directors' and officers' liability insurance maintained by
Telco (provided that the Company may substitute therefor policies of at least
the same coverage and amounts and containing terms and conditions which are no
less advantageous) with respect to claims arising from facts or events which
occurred before the Effective Time.
II-3
<PAGE> 6
The Company currently has in effect a directors and officers liability
insurance policy covering the directors and executive officers of the Company,
Excelcom and Telco.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
Exhibit
Number Document Description
------- --------------------
4.1 Amended and Restated Certificate of Incorporation of the
Company, as amended (incorporated by reference to Exhibit 4.1
to Post-Effective Amendment No. 1 on Form S-8 to the Company's
Registration Statement on Form S-4 (Commission File No.
333-35377)).
4.2 Bylaws of the Company (incorporated by reference to Exhibit
3.2 to the Company's Registration Statement on Form S-4, as
amended (Commission File No. 333-35377)).
4.3 Specimen certificate for the Company's Common Stock
(incorporated by reference to Exhibit 4.3 to Post-Effective
Amendment No. 1 on Form S-8 to the Company's Registration
Statement on Form S-4 (Commission File No. 333-35377)).
4.4* EXCEL Communications, Inc. 1997 Stock Option Plan.
4.5* EXCEL Communications, Inc. 1997 Director Stock Option Plan.
5.1* Opinion of Munsch Hardt Kopf Harr & Dinan, P.C. regarding the
validity of the securities being registered.
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
of Excelcom.
23.3* Consent of Deloitte & Touche LLP, independent public
accountants of Telco.
24.1 Powers of Attorney (included on the signature page of this
Registration Statement).
___________________
*Filed herewith.
II-4
<PAGE> 7
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
II-5
<PAGE> 8
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 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-6
<PAGE> 9
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 October 17, 1997.
EXCEL COMMUNICATIONS, INC.
By: /s/ JOHN J. McLAINE
----------------------------------
John J. McLaine
President and Chief Operating
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.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C> <C> <C>
/s/ KENNY A. TROUTT Chairman of the Board, Chief October 17, 1997
-------------------------------------------------- Executive Officer, and Director
Kenny A. Troutt (Principal Executive Officer)
/s/ JOHN J. McLAINE President, Chief Operating Officer October 17, 1997
-------------------------------------------------- and Director
John J. McLaine
/s/ CRAIG E. HOLMES Vice President and Chief Accounting October 17, 1997
-------------------------------------------------- Officer (Principal Accounting
Craig E. Holmes Officer)
/s/ NICHOLAS A. MERRICK Executive Vice President and Chief October 17, 1997
------------------------------------------------ Financial Officer (Principal
Nicholas A. Merrick Financial Officer)
Executive Vice President of October , 1997
-------------------------------------------------- Marketing and Director
Stephen R. Smith
/s/ DONALD A. BURNS Executive Vice President and October 17, 1997
----------------------------------------------- Director
Donald A. Burns
/s/ HENRY G. LUKEN, III Executive Vice President and October 17, 1997
------------------------------------------------ Director
Henry G. Luken, III
/s/ RONALD A. McDOUGALL Director October 17, 1997
----------------------------------------
Ronald A. McDougall
/s/ T. ALLAN McARTOR Director October 17, 1997
----------------------------------------------
T. Allan McArtor
</TABLE>
II-7
<PAGE> 10
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Document Description
- ------- --------------------
<S> <C>
4.1 Amended and Restated Certificate of Incorporation of the
Company, as amended (incorporated by reference to Exhibit 4.1
to Post-Effective Amendment No. 1 on Form S-8 to the Company's
Registration Statement on Form S-4 (Commission File No.
333-35377)).
4.2 Bylaws of the Company (incorporated by reference to Exhibit
3.2 to the Company's Registration Statement on Form S-4, as
amended (Commission File No. 333-35377)).
4.3 Specimen certificate for the Company's Common Stock
(incorporated by reference to Exhibit 4.3 to Post-Effective
Amendment No. 1 on Form S-8 to the Company's Registration
Statement on Form S-4 (Commission File No. 333-35377)).
4.4* EXCEL Communications, Inc. 1997 Stock Option Plan.
4.5* EXCEL Communications, Inc. 1997 Director Stock Option Plan.
5.1* Opinion of Munsch Hardt Kopf Harr & Dinan, P.C. regarding the
validity of the securities being registered.
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
of Excelcom.
23.3* Consent of Deloitte & Touche LLP, independent public
accountants of Telco.
24.1 Powers of Attorney (included on the signature page of this
Registration Statement).
</TABLE>
___________________
*Filed herewith.
<PAGE> 1
EXHIBIT 4.4
EXCEL COMMUNICATIONS, INC.
1997 STOCK OPTION PLAN
Adopted September 1, 1997
1. PURPOSES OF THE PLAN.
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. Options granted under the Plan may be Incentive Stock Options or
Nonqualified Stock Options, as determined by the Committee at the time of grant
of an Option and subject to the applicable provisions of Section 422 of the
Code and the regulations promulgated thereunder.
2. DEFINITIONS.
As used herein, the following definitions shall apply:
(a) "Affiliate" means, with respect to any Person, any Parent or
Subsidiary of such Person, whether such Parent or Subsidiary is now or
hereafter existing.
(b) "Applicable Laws" means the legal requirements relating to the
administration of stock option plans under U.S. state corporate laws, U.S.
federal and state securities laws, the Code and the applicable laws of any
foreign country or jurisdiction where Options are, or will be, granted under
the Plan.
(c) "Beneficial Owner" means a "beneficial owner" as defined in
Rule 13d-3 of the Exchange Act.
(d) "Board" means the Board of Directors of the Company.
(e) "Change of Control" means the occurrence at any time after the
effective time of the Mergers of (i) any Person or Group of Persons becoming
for the first time the Beneficial Owner, directly or indirectly, of more than
fifty percent (50%) of the total combined voting power of all classes of
capital stock of the Company normally entitled to vote for the election of
directors of the Company ("Voting Stock"), other than as a result of a transfer
or series of related transfers of Voting Stock from a Person or Group of
Persons who immediately prior to such transfer or transfers was the Beneficial
Owner, and who after giving effect to such transfer or transfers continues to
be the Beneficial Owner, of more than fifty percent (50%) of the Voting Stock
of the Company; (ii) a merger (other than the Mergers) or consolidation of the
Company with or into another Person or the
<PAGE> 2
merger of another Person into the Company as a consequence of which those
Persons who held all of the Voting Stock of the Company immediately prior to
such merger or consolidation 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
or consolidation; (iii) 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 (iv) 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
the effective time of the Mergers, as a result of which a majority of the Board
of Directors of the Company consists of individuals other than Continuing
Directors; provided, however, that a "Change of Control" shall not be deemed to
have occurred as a result of the Mergers.
(f) "Code" means the Internal Revenue Code of 1986, as amended.
(g) "Committee" means the Compensation Committee of the Board of
Directors.
(h) "Common Stock" means the Common Stock, par value $.001 per
share, of the Company.
(i) "Company" means Excel Communications, Inc.
(j) "Consultant" means (i) any person who is engaged by the
Company or any Parent or Subsidiary to render consulting or advisory services
and is compensated for such services and (ii) any Director of the Company,
whether such Director is compensated for such services or not.
(k) "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 stockholders 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 of the Company within the meaning of
clause (i) above at the time of such nomination, and (iii) any members of the
Board of Directors of the Company elected to succeed Continuing Directors of
the Company 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 of the Company within the meaning of clause (i) or (ii) above at the
time of such election.
(l) "Continuous Status as an Employee or Consultant" means that
the employment or consulting relationship with the Company or any Affiliate is
not interrupted or terminated. Continuous Status as an Employee or Consultant
shall not be considered interrupted in the case of
2
<PAGE> 3
(i) any leave of absence approved by the Company or (ii) transfers between
locations of the Company or between the Company or any Affiliate or any
successor. A leave of absence approved by the Company shall include sick
leave, military leave, or any other personal leave approved by an authorized
representative of the Company. For purposes of Incentive Stock Options, no
such leave may exceed 90 days, unless reemployment upon expiration of such
leave is guaranteed by statute or contract. If reemployment upon expiration of
a leave of absence approved by the Company is not so guaranteed, on the 91st
day of such leave any Incentive Stock Option held by the Optionee shall cease
to be treated for tax purposes as an Incentive Stock Option and shall be
treated for tax purposes as a Nonqualified Stock Option.
(m) "Director" means a member of the Board of Directors of the
Company.
(n) "Employee" means any person, including Officers and Directors,
employed by the Company or any Affiliate of the Company. The payment of a
Director's fee by the Company shall not 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 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 Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system
for the last market trading day prior to the time of determination, as reported
in The Wall Street Journal or such other source as the Committee deems
reliable;
(ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean between the high bid and low asked prices for the Common
Stock on the last market trading day prior to the day of determination; or
(iii) In the absence of an established market for the Common Stock,
the Fair Market Value thereof shall be determined in good faith by the
Committee.
(q) "Group" means a "group" as such term is used in Section
13(d)(3) of the Exchange Act.
(r) "Incentive Stock Option" means an Option intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code.
3
<PAGE> 4
(s) "Mergers" means the merger of a subsidiary of the Company with
and into Telco Communications Group, Inc. and the merger of another subsidiary
of the Company with and into EXCEL Communications, Inc.
(t) "Nonqualified Stock Option" means an Option not intended to
qualify as an Incentive Stock Option.
(u) "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.
(v) "Option" means a stock option granted pursuant to the Plan.
(w) "Option Agreement" shall mean the written option agreement,
substantially in the form attached hereto as Exhibit A (or such other form as
may be approved by the Committee for use under the Plan pursuant to Section
3(b)(v) hereof), between the Company and Optionee evidencing the grant of an
Option.
(x) "Optioned Stock" means the Common Stock subject to an Option.
(y) "Optionee" means an Employee or Consultant who receives an
Option.
(z) "Parent" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(aa) "Person" means an individual or entity.
(bb) "Plan" means this 1997 Stock Option Plan.
(cc) "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange
Act or any successor rule thereto.
(dd) "Section 16(b)" means Section 16(b) of the Securities Exchange
Act of 1934, as amended.
(ee) "Share" means a share of the Common Stock.
(ff) "Subsidiary" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code, including without
limitation, in the case of the Company, EXCEL Communications, Inc. and Telco
Communications Group, Inc.
4
<PAGE> 5
3. ADMINISTRATION OF THE PLAN.
(a) Plan Administration. The Plan at all times shall be
administered by the Committee, which shall be comprised solely of not less than
two members who shall be (i) "Non-Employee Directors" within the meaning of
Rule 16b-3 and (ii) unless otherwise determined by the Board of Directors,
"outside directors" within the meaning of Treasury Regulation Section
1.162-27(e)(3) under Section 162(m) of the Code.
(b) Powers of the Committee. 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 Committee shall have the authority in its discretion:
(i) to determine the Fair Market Value of the Common Stock;
(ii) to select the Consultants and Employees to whom Options may
from time to time be granted hereunder;
(iii) to determine whether and to what extent Options or any
combination thereof are granted hereunder;
(iv) to determine the number of Shares to be covered by each such
award granted hereunder;
(v) to approve forms of agreement for use under the Plan;
(vi) 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 (which may be based on performance
criteria), 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 Committee, in
its sole discretion, shall determine; and
(vii) to construe and interpret the terms of the Plan and awards
granted pursuant to the Plan.
(c) Effect of Committee's Decision. All decisions, determinations
and interpretations of the Committee shall be final and binding on all
Optionees and any other holders of any Options. No member of the Board or any
Committee administering the Plan shall be liable for any action taken or
determination made in good faith with respect to the Plan or any Option granted
hereunder.
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<PAGE> 6
4. STOCK SUBJECT TO THE PLAN.
The maximum aggregate number of Shares that may be subject to Options
and sold under the Plan is 13,000,000 Shares and the maximum number of Shares
that may be subject to Options granted to an individual Optionee under the Plan
shall not exceed 2,000,000 (in each case subject to adjustment as provided in
Section 8 of the Plan). The Shares may be authorized but unissued or
reacquired Common Stock.
If an Option expires or becomes unexercisable without having been
exercised in full, or is surrendered pursuant to an option exchange program,
the unpurchased Shares that were subject thereto shall become available for
future grant or sale under the Plan (unless the Plan has terminated). The
preceding sentence shall apply only for purposes of determining the aggregate
number of Shares that may be subject to Options but shall not apply for
purposes of determining the maximum number of Shares subject to Options that
may be granted to any individual Optionee under the Plan. However, Shares that
have actually been issued under the Plan, upon exercise of an Option, shall not
be returned to the Plan and shall not become available for future distribution
under the Plan.
5. ELIGIBILITY.
(a) Nonqualified Stock Options may be granted to Employees and
Consultants. Incentive Stock Options may be granted only to Employees. An
Employee or Consultant who has been granted an Option may, if otherwise
eligible, be granted additional Options.
(b) Each Option shall be designated in the Option Agreement as
either an Incentive Stock Option or a Nonqualified Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company or any Affiliate) exceeds $100,000, such Options shall
be treated for tax purposes as Nonqualified Stock Options. For purposes of
this Section 5(b), Incentive Stock Options shall be taken into account in the
order in which they were granted. For purposes of this Section 5(b), the Fair
Market Value of the Shares shall be determined as of the time the Option with
respect to such Shares is granted.
(c) Neither the Plan nor any Option shall confer upon any Optionee
any right with respect to continuation of his or her employment or consulting
relationship with the Company or any Affiliate, nor shall it interfere in any
way with his or her right or the Company's right to terminate his or her
employment or consulting relationship at any time, with or without cause.
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<PAGE> 7
6. OPTION EXERCISE PRICE AND CONSIDERATION.
(a) The per Share exercise price for the Shares to be issued upon
exercise of an Option shall be such price as is determined by the Committee,
but shall be subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time of
grant of such Option, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of
the Company or any Affiliate, the per Share exercise price
shall not be less than 110% of the Fair Market Value per Share
on the date of grant; and
(B) granted to any other Employee, the per Share
exercise price shall not be less than 100% of the Fair Market
Value per Share on the date of grant.
(ii) In the case of a Nonqualified Stock Option granted to a Person
who, at the time of grant of such Option, owns stock representing more than ten
percent (10%) of the voting power of all classes of stock of the Company or any
Affiliate, the per Share exercise price shall not be less than 110% of the Fair
Market Value per Share on the date of the grant.
(b) The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined by
the Committee (and, in the case of an Incentive Stock Option, shall be
determined at the time of grant). Such consideration 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 (which may be in
combination with or in lieu of payment by cash or check): (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 11, (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. In making its
determination as to the type of consideration to accept, the Committee shall
consider if acceptance of such consideration may be reasonably expected to
benefit the Company. In addition, such consideration shall be accompanied by
the delivery by the Optionee of a properly executed exercise notice together
with such other documentation as the Committee and a broker, if applicable,
shall require to effect an exercise of the Option and delivery to the Company
of the sale or loan proceeds required to pay the exercise price.
7. EXERCISE OF OPTION.
(a) Procedure for Exercise; Rights as a Stockholder. Any Option
granted hereunder shall be exercisable at such times and under such conditions
as determined by the Committee, including performance criteria with respect to
the Company and/or the Optionee, and as shall be permissible
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<PAGE> 8
under the terms of the Plan. The total number of Shares 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 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.
An Option may not be exercised for a fraction of a Share. Exercise of
an Option in any manner shall result in a decrease in the number of Shares that
thereafter may be available, both for purposes of the Plan and for sale under
the Option, by the number of Shares as to which the Option is exercised.
Subject to Section 14, 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, which obligations may, as authorized by the Committee, consist
of any consideration and method of payment allowable under Section 6(b) hereof.
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, receive dividends or any
other rights as a stockholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause
to be issued) such stock certificate promptly upon exercise of the Option. No
adjustment shall 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 8 hereof.
(b) Termination of Employment or Consulting Relationship. Subject
to paragraph (c) below, in the event of termination of an Optionee's Continuous
Status as an Employee or Consultant, such Optionee may exercise his or her
Option to the extent that the Optionee was entitled to exercise it at the date
of such termination; provided, however, that such Option may be exercised only
within such period of time as is determined by the Committee at the date of
grant. Such time period shall not, in the case of an Incentive Stock Option,
exceed three (3) months after the date of such termination and shall not, in
any case, be later than the expiration date of the term of such Option as set
forth in the Option Agreement. To the extent that the Optionee was not
entitled to exercise the Option at the date of such termination, or if the
Optionee does not exercise such Option to the extent so entitled within the
time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan. An Optionee's Continuous Status as an
Employee or Consultant shall not be terminated in the event of Optionee's
change of status from an Employee to a Consultant or from a Consultant to an
Employee; provided, however, that in the event of an Optionee's change of
status from an Employee to a Consultant, any Incentive Stock Option granted to
such Employee shall automatically cease to be treated
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<PAGE> 9
for tax purposes as an Incentive Stock Option and shall be treated for tax
purposes as a Nonqualified Stock Option on the day three months and one day
following such change of status.
(c) Disability of Optionee. In the event of termination of an
Optionee's Continuous Status as an Employee or Consultant as a result of his or
her disability, the Optionee may, but only within twelve (12) months from the
date of such termination (and in no event later than the expiration date of the
term of such Option as set forth in the Option Agreement), exercise the Option
to the extent he or she otherwise was entitled to exercise it at the date of
such termination. If such disability is not a "disability" as such term is
defined in Section 22(e)(3) of the Code, then in the case of an Incentive Stock
Option such Incentive Stock Option shall automatically cease to be treated for
tax purposes as an Incentive Stock Option and shall be treated for tax purposes
as a Nonqualified Stock Option on the day three months and one day following
such termination. To the extent that the Optionee was not entitled to exercise
the Option at the date of termination, or if the Optionee does not exercise
such Option to the extent so entitled within the time specified herein, the
Option shall terminate, and the Shares covered by such Option shall revert to
the Plan.
(d) 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 (but in no event later than the expiration date of the term of
such Option as set forth in the Option Agreement) by the Optionee's estate or
by any Person who acquired the right to exercise the Option by bequest or
inheritance (the "Option Beneficiary"), but only to the extent that the
Optionee was entitled to exercise the Option on the date of death. To the
extent that, at the time of death, the Optionee was not entitled to exercise
the Option, or if the Option Beneficiary does not exercise the Option within
the time specified herein, the Option shall terminate and the Shares covered by
such Option shall revert to the Plan.
8. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER.
(a) Changes in Capitalization. Subject to any required action by
the stockholders of the Company, the number of shares of Common Stock covered
by each outstanding Option, and the number of shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options have yet
been granted or which 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. The 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 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 or exchangeable into shares of stock of any
class, shall affect, and no adjustment by reason thereof shall
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<PAGE> 10
be made with respect to, the number or exercise 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, the Committee shall notify the
Optionee at least fifteen (15) days prior to such proposed action. To the
extent it has not been previously exercised, the Option shall terminate
immediately prior to the consummation of such proposed action; provided,
however, that the Committee may, in the exercise of its sole discretion in such
instances, declare that any Option shall terminate as of an earlier 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 Stock, including Shares as to which the
Option would not otherwise be exercisable.
(c) Merger or Asset Sale. Subject to Section 8(d), in the event
of the merger of the Company into, or the consolidation of the Company with,
another corporation in which the stockholders of the Company receive cash or
securities of another issuer, or any combination thereof, in exchange for their
shares of Common Stock, or the sale of all or substantially all of the assets
of the Company, each outstanding Option shall be assumed or an equivalent
option or right substituted by the successor corporation or an Affiliate of the
successor corporation. In the event that the successor corporation refuses to
assume or substitute for the Option, the Optionee shall fully vest in and have
the right to exercise the Option (provided it has not already terminated) as to
all of the Optioned Stock, including Shares as to which it would not otherwise
be vested or exercisable. If an Option becomes fully vested and exercisable in
lieu of assumption or substitution in the event of a merger, consolidation or
sale of assets, the Committee shall notify the Optionee that the Option shall
be fully exercisable for a period of fifteen (15) days from the date of such
notice, and the Option shall terminate upon the expiration of such period. For
the purposes of this paragraph, the Option shall be considered assumed if,
following the merger, consolidation or sale of assets, the option substituted
for such Option confers the right to purchase or receive, for each Share of
Optioned Stock subject to the Option immediately prior to the merger,
consolidation or sale of assets, the per Share consideration (whether stock,
cash, or other securities or property) received in the merger, consolidation or
sale of assets by holders of Common Stock (and if holders were offered a choice
of consideration, the type of consideration chosen by the holders of a majority
of the outstanding Shares); provided, however, that if such consideration
received in the merger, consolidation or sale of assets is not solely common
stock of the successor corporation or its Parent (if any), the Committee may,
with the consent of the successor corporation, provide for the consideration to
be received upon the exercise of the Option, for each Share of Optioned Stock
subject to the Option, to be solely common stock of the successor corporation
or its Parent (if any) equal in fair market value to the per Share
consideration received by holders of Common Stock in the merger, 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 the Option upon a Change of Control. Such
provisions shall be set forth in the Option Agreement.
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<PAGE> 11
(e) Further Adjustments. In the event of any change of a type
described in paragraphs (a) or (c) above, the Committee shall make any further
adjustment to the maximum number of Shares which may be acquired under the Plan
pursuant to the exercise of Options, the maximum number of Shares for which
Options may be granted to any one Employee and the number of Shares and price
per Share subject to outstanding Options as shall be equitable to prevent
dilution or enlargement of rights under such Options, and the determination of
the Committee as to these matters shall be conclusive and binding on the
Optionee; provided, however, that (i) each such adjustment with respect to an
Incentive Option shall comply with the rules of Section 424(a) of the Code (or
any successor provision) and (ii) in no event shall any adjustment be made
which would render any Incentive Stock Option granted hereunder other than an
"incentive stock option" as defined in Section 422 of the Code.
(f) No Limitation on Right to Merge, Etc. The grant of Options
pursuant to the Plan shall not restrict in any way the right or power of the
Company to make adjustments, reclassifications, reorganizations or changes of
its capital or business structure or to merge, consolidate, dissolve,
liquidate, or sell or transfer all or any part of its business or assets.
9. TERM OF PLAN.
The Plan shall become effective upon the earlier to occur of its
adoption by the Committee or its approval by the stockholders of the Company,
as described in Section 17 of the Plan. It shall continue in effect for a term
of ten (10) years unless sooner terminated under Section 13 of the Plan.
10. TERM OF OPTIONS.
The term of each Option shall be the term stated in the Option
Agreement; provided, however, that the term shall be no more than ten (10)
years from the date of grant thereof; and provided further that in the case of
an Incentive Stock Option granted to an Optionee who, at the time the Option is
granted, owns stock representing more than ten percent (10%) of the voting
power of all classes of stock of the Company or any Affiliate, the term of the
Option shall be no more than five (5) years from the date of grant thereof.
11. NON-TRANSFERABILITY OF OPTIONS.
An Incentive Stock Option shall not be transferrable except by will or
by the laws of descent and distribution and shall be exercisable during the
lifetime of the Person to whom the Incentive Stock Option is granted only by
such Person. A Nonqualified 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 by Title I of the Employee
Retirement Income Security Act of 1974, as amended, 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.
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<PAGE> 12
12. TIME OF GRANTING OPTIONS.
The date of grant of an Option shall, for all purposes, be the date
on which the Committee makes the determination granting such Option, or such
other date as is determined by the Committee. Notice of the determination
shall be given to each Employee or Consultant to whom an Option is so granted
within a reasonable time after the date of such grant.
13. AMENDMENT AND TERMINATION OF THE PLAN.
(a) Amendment and Termination. The Board may at any time amend,
alter, suspend or discontinue the Plan, but no amendment, alteration,
suspension or discontinuation shall be made which would impair the rights of
any Optionee under any grant theretofore made, without his or her consent. No
amendment of the Plan shall, without approval of the stockholders of the
Company, (i) increase the maximum number of Shares which may be subject to
Options under the Plan or the maximum number of Shares subject to Options that
may be granted to any individual Optionee under the Plan, (ii) modify the
requirements as to eligibility for Options under the Plan or (iii) materially
increase the benefits to Optionees under the Plan. In addition, to the extent
necessary and desirable to comply with Rule 16b-3 or with Section 422 of the
Code or Section 162(m) of the Code (or any other Applicable Law, including the
requirements of the NASD or an established stock exchange), the Company shall
obtain stockholder approval of any Plan amendment in such a manner and to such
a degree as required.
(b) Effect of Amendment or Termination. Any amendment or
termination of the Plan shall not affect Options already granted, and such
Options shall remain in full force and effect as if the Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee
and the Committee, which agreement must be in writing and signed by the
Optionee and the Company.
14. CONDITIONS UPON ISSUANCE OF SHARES.
Shares shall not be issued pursuant to the exercise of an Option
unless the exercise of such Option and the issuance and delivery of such Shares
pursuant thereto shall comply with all relevant Applicable Laws, including,
without limitation, the Securities Act of 1933, as amended (the "Securities
Act"), the Exchange Act, the rules and regulations promulgated thereunder, and
the requirements of any stock exchange upon which the Shares may then be listed
or any automatic quotation system upon which the Shares may then be quoted, and
shall be further subject to the approval of counsel for the Company with
respect to such compliance.
The Company may require any Optionee, or any Person to whom an Option
is transferred under Section 11, 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
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<PAGE> 13
Option; (ii) to give written assurances satisfactory to the Company stating
that such Person is acquiring the Shares subject to the Option for such
Person's own account and not with any present intention of selling or otherwise
distributing such Shares; 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 Shares, and may enter stop-transfer orders against the transfer
of the Shares issued upon the exercise of an Option.
The inability of the Company to obtain authority from any regulatory
body having jurisdiction, which authority is deemed by the Company's counsel to
be necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.
15. RESERVATION OF SHARES.
The Company, during the term of the Plan, shall at all times reserve
and keep available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.
16. AGREEMENTS.
Options shall be evidenced by Option Agreements in such form as the
Committee shall approve from time to time.
17. STOCKHOLDER APPROVAL.
Continuance of the Plan shall be subject to approval by the
stockholders of the Company within twelve (12) months before or after the date
the Plan is adopted. Such stockholder approval shall be obtained to the extent
and in manner required under Applicable Laws and the rules of any stock
exchange upon which the Common Stock is listed or any automatic quotation
system upon which the Common Stock is quoted.
18. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to Options shall constitute
general funds of the Company.
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19. 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, 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) 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.
(c) Grants Exceeding Allotted Shares. If the number of shares of
Optioned Stock exceeds, as of the date of grant, the number of Shares that may
be issued under the Plan without additional stockholder approval, such Option
shall be void with respect to such excess Shares, unless stockholder approval
of an amendment sufficiently increasing the number of Shares subject to the
Plan is timely obtained in accordance with Section 13 of the Plan.
(d) 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
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.
(e) Savings Clause. Notwithstanding any other provision hereof,
the Plan is intended to qualify as a plan pursuant to which Incentive Stock
Options may be issued under Section 422 of the Code. If the Plan or any
provision of the Plan shall be held to be invalid or to fail to meet the
requirements of Section 422 of the Code or the regulations promulgated
thereunder, such invalidity or failure shall not affect the remaining parts of
the Plan, but rather it shall be construed and enforced as if the Plan or the
affected provision thereof, as the case may be, complied in all respects with
the requirements of Section 422 of the Code.
(f) 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.
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EXHIBIT A
EXCEL COMMUNICATIONS, INC.
1997 STOCK OPTION PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this 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 this Option Agreement and the
Plan, including the provisions thereof relating to increases in the number of
shares covered by this Option upon the occurrence of certain specified events,
as follows:
Grant Number __________________________
Date of Grant __________________________
Vesting Commencement Date __________________________
Exercise Price per Share $_________________________
Total Number of Shares Granted __________________________
Total Exercise Price $_________________________
Type of Option: ___ Incentive Stock Option
___ Nonqualified Stock Option
Term/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:
[NOTE: TO BE COMPLETED UPON GRANT OF OPTIONS]
Termination Period
You may exercise this Option for three months (or such shorter period
provided for elsewhere herein) after your employment or consulting relationship
with the Company terminates, or for such
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longer period upon your death or disability as provided in the Plan. If your
status changes from Employee to Consultant or Consultant to Employee, this
Option Agreement shall remain in effect. In no case may you exercise this
Option after the Term/Expiration Date as provided above. Notwithstanding the
foregoing, in the event the Company terminates your employment for Cause (as
defined below), this Option will terminate on the date of the termination of
your employment and will not be exercisable thereafter. For purposes of this
Agreement, "Cause" means the occurrence of any of the following events or
reasons:
(a) Optionee's conviction for a felony offense or commission by
Optionee of any act abhorrent to the community that the Company considers
materially damaging to or tending to discredit the reputation of the Company;
(b) Dishonesty, fraud, willful misconduct, unlawful discrimination
or theft on the part of Optionee;
(c) Optionee's using for his or her own benefit any confidential
or proprietary information of the Company, or willfully or negligently
divulging any such information to third parties without the prior written
consent of the Company;
(d) Optionee's public drunkenness, public use of illegal
substances or drugs or the use, possession, distribution or being under the
influence of alcohol or illegal substances or drugs in the workplace (the only
exception is that Optionee may consume alcohol reasonably and responsibly, if
he or she so chooses, at legitimate business events and functions where alcohol
is legally available); or
(e) the determination by the Company that Optionee has continually
failed or refused to comply, after notice of and a reasonable opportunity to
cure such failure or refusal, with the policies, standards, regulations,
instructions, or directions of the Company as they currently exist or as they
may be modified from time to time.
II. AGREEMENT
1. Grant of Option. Excel Communications, Inc. (the "Company")
hereby grants to the Optionee named in Section I hereof (the "Optionee") an
option (the"Option") to purchase the total number of shares of Common Stock
(the "Shares") set forth in Section I hereof, at the exercise price per share
set forth in Section I hereof (the "Exercise Price") subject to the terms,
definitions and provisions of the 1997 Stock Option Plan (the "Plan") adopted
by the Company, which is incorporated herein by reference. Unless otherwise
defined herein, the terms defined in the Plan shall have the same defined
meanings in this Option Agreement.
If designated in Section I hereof as an Incentive Stock Option, this
Option is intended (subject to Section 5(b) of the Plan) to qualify as an
Incentive Stock Option as defined in Section 422 of the Code.
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2. Exercise of Option.
(a) Right to Exercise. This Option shall be exercisable during
its term in accordance with the Vesting Schedule set out in Section I hereof
and with the applicable provisions of the Plan and this Option Agreement. In
the event of Optionee's death, disability or other termination of the
employment or consulting relationship, this Option shall be exercisable in
accordance with the applicable provisions of the Plan and this Option
Agreement.
(b) Method of Exercise. This Option shall be exercisable by
written notice (in the form attached hereto as Exhibit A) which shall state the
election to exercise the Option, the number of Shares in respect of which the
Option is being exercised, and such other representations and agreements as to
the holder's investment intent with respect to such shares of Common Stock as
may be required by the Company pursuant to the provisions of the Plan. Such
written notice shall be signed by the Optionee and shall be delivered in person
or by certified mail to the Secretary of the Company. The written notice shall
be accompanied by payment of the Exercise Price. This Option shall be deemed
to be exercised upon receipt by the Company of such written notice accompanied
by the Exercise Price.
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.
No Shares will be issued pursuant to the exercise of an Option unless
such issuance and such exercise shall comply with all relevant provisions of
law and the requirements of any stock exchange upon which the Shares may then
be listed or any automatic quotation system upon which the Shares may then be
quoted. Assuming such compliance, for income tax purposes the Shares shall be
considered transferred to the Optionee on the date on which the Option is
exercised with respect to such Shares.
3. Method of Payment. The purchase price of Optioned Shares
acquired pursuant to the Option shall be paid as set forth in the Plan. THE
USE OF SHARES OF STOCK ACQUIRED OR TO BE ACQUIRED TO PAY FOR EXERCISED SHARES
MAY HAVE INCOME TAX CONSEQUENCES FOR THE OPTIONEE.
4. Restrictions on Exercise. This Option may not be exercised
until such time as the Plan has been approved by the stockholders of the
Company, and may not be exercised if the issuance of such Shares upon such
exercise or the method of payment of consideration for such shares would
constitute a violation of any applicable federal or state securities or other
law or regulation, including any rule under Part 207 of Title 12 of the Code of
Federal Regulations as promulgated by the Federal Reserve Board.
17
<PAGE> 18
5. Non-Transferability of Option. This Option may not be
transferred in any manner otherwise than by will or by the laws of descent or
distribution or as otherwise set forth in the Plan and may be exercised during
the lifetime of Optionee only by Optionee or a permitted transferee as set
forth in the Plan. The terms of the Plan and this Option shall be binding upon
the executors, administrators, heirs, successors and assigns of the Optionee.
6. Term of Option. This Option may be exercised only within the
term set out in Section I hereof, and may be exercised during such term only in
accordance with the Plan and the terms of this Option. The limitations set out
in Sections 5 and 6 of the Plan regarding Options designated as Incentive Stock
Options and Options granted to more than ten percent (10%) stockholders shall
apply to this Option.
7. 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.
8. 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 this Option
Agreement may not be amended 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.
9. Warranties, Representations 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 understands 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. OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF
SHARES PURSUANT TO THE OPTION HEREOF IS EARNED ONLY BY CONTINUING CONSULTANCY
OR EMPLOYMENT AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED,
BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER
ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS OPTION AGREEMENT, NOR IN THE PLAN,
WHICH IS INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON OPTIONEE ANY RIGHT
WITH RESPECT TO CONTINUATION OF EMPLOYMENT OR CONSULTANCY BY THE COMPANY, NOR
SHALL IT INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO
TERMINATE OPTIONEE'S EMPLOYMENT OR CONSULTANCY AT ANY TIME, WITH OR WITHOUT
CAUSE.
18
<PAGE> 19
EXCEL COMMUNICATIONS, INC.
By:
---------------------------------
Name:
----------------------------
Title:
----------------------------
OPTIONEE:
-----------------------------------
Signature
-----------------------------------
Print Name
-----------------------------------
Residence Address
-----------------------------------
Area Code/Telephone Number
19
<PAGE> 20
EXHIBIT A
EXCEL COMMUNICATIONS, INC.
1997 STOCK OPTION PLAN
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 1997 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 of _____________________________
______________________________________________________________. 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 Stockholder. 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 8 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 has consulted
with any tax consultants Purchaser deems advisable in connection with
20
<PAGE> 21
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 this Agreement may not be amended 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,
20th Floor
- ------------------------------- Dallas, Texas 75231
21
<PAGE> 1
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 hereafter 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 rule thereto ("Rule 16b-3") promulgated 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 the
Board of Directors so determines, 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 national market system or
established stock exchange upon which the Common Stock is quoted or listed, the
Board of Directors shall have the authority in its discretion to, among other
things:
(i) determine the Fair Market Value of the Common
Stock, in accordance with Section 5(b) of the Plan;
(ii) 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 any Optionee who, pursuant to a separate contractual arrangement
<PAGE> 2
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) 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
relating thereto, based in each case on such factors as the Board of
Directors, in its sole discretion, shall determine; and
(iv) construe and interpret the terms of the Plan
and awards granted pursuant to the Plan, and to amend or terminate the
Plan as provided for in Section 10 hereof.
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
Shares 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 substantially 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 by reference in the Option or otherwise) the
substance of each of the following provisions set forth in this Section 5.
2
<PAGE> 3
(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 quoted or listed on any national market system or established stock
exchange, 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 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 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
transferred, assigned, pledged or hypothecated by the Optionee or be made
subject to execution, attachment or similar process otherwise than by will, 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.
(d) Exercise Period. Subject to Section 7, each Option
granted hereunder shall be exercisable at such times and under such conditions
as determined by the Board of Directors and as shall be permissible under the
terms of the Plan. The total number of Shares 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 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. In
the event an Optionee ceases to serve as a director of the Company, each such
Option may be exercised by the Optionee or by a permitted transferee (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 or entity entitled to exercise the
3
<PAGE> 4
Option and full payment for the Shares with respect to which the Option is
exercised has been received by the Company. Each person or entity 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 (which may be in combination with or
in lieu of payment by cash or check), (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, 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.
6. Nonstatutory Options. All Options granted under the Plan
shall be nonqualified 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
on September 1, 1997 and by the stockholders of the Company on October 11, 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 Stockholders' 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 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> 5
9. Adjustments Upon Changes in Capitalization or Merger
(a) Changes in Capitalization. Subject to any required
action by the stockholders of the Company, 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 or
exchangeable 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, the Board of Directors
shall notify the Optionee at least fifteen (15) days prior to such proposed
action. To the extent it has not been previously exercised, the Option shall
terminate immediately prior to the consummation of such proposed action;
provided, however, that the Board of Directors may, in the exercise of its sole
discretion in such instances, declare that any Option shall terminate as of an
earlier date fixed by the Board of Directors and give each Optionee the right
to exercise his or her Option as to all or any part of the Shares covered by
such Option, 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 or
consolidation of the Company with or into another entity in which the
stockholders 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 per share consideration (whether stock, cash, or other securities
or property) received in the merger, consolidation or sale of assets by holders
of Common Stock (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).
5
<PAGE> 6
(d) In the event of any change of a type described in
paragraphs (a) or (c) above, the Board of Directors shall make any further
adjustment to the maximum number of shares which may be acquired under the Plan
pursuant to the exercise of Options, the maximum number of Shares for which
Options may be granted to any one employee and the number of Shares and price
per Share subject to outstanding Options as shall be equitable to prevent
dilution or enlargement of rights under such Options, and the determination of
the Board of Directors as to these matters shall be conclusive and binding on
the Optionee.
10. Amendment and Termination of the Plan
The Board of Directors may amend or terminate the Plan in any
respect whatsoever, provided that any such amendment or termination of the Plan
shall not affect Options already granted and such Options shall remain in full
force and effect as if the Plan had not been amended or terminated. In
addition, to the extent necessary and desirable to comply with Rule 16b-3 (or
any other applicable law or regulation, including the requirements of the NASD
or an established stock exchange), the Company shall obtain stockholder
approval of any Plan amendment in such a manner and to such a degree as
required.
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 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.
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.
6
<PAGE> 7
(b) Other Conditions. The Company may require any
Optionee, or any person or entity 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 matters, and that he or she is capable of
evaluating, alone or together with the purchaser representative, the merits and
risks of exercising the Option; (ii) to give written assurances satisfactory to
the Company stating that such person is acquiring the Shares subject to the
Option for such person's own account and not with any present intention of
selling or otherwise distributing the Shares; 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 Shares and may enter stop transfer orders
against the transfer of the Shares issuable upon the exercised Options. The
Company has no obligation to undertake registration of Options or the Shares
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> 8
EXHIBIT A
EXCEL COMMUNICATIONS, INC.
DIRECTOR STOCK OPTION AGREEMENT
THIS DIRECTOR STOCK OPTION AGREEMENT (this "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. The Optionee may
review a copy of the Plan at the office of the Secretary of the Company at 8750
North Central Expressway, 20th Floor, 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:
[NOTE: TO BE COMPLETED UPON GRANT OF OPTIONS.]
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, or pursuant to a qualified domestic
<PAGE> 9
relations orders, 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 taxes 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. 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 as a part of this Agreement. The Plan and this 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 this Agreement may not be amended except by means of a writing
signed by the Company and Optionee. In the event of a conflict between the
terms and conditions of this Agreement and the Plan, the terms and conditions
of the Plan shall control. This Agreement is governed by Delaware law except
for that body of law pertaining to conflict of laws.
2
<PAGE> 10
13. Miscellaneous. Optionee acknowledges receipt of a copy of the
Plan and hereby warrants and represents that he or she has reviewed the Plan
and this Agreement in their entirety, has had an opportunity to obtain the
advice of counsel prior to executing this Agreement and fully understands all
of the provisions of the Plan and this 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 this Agreement.
Optionee further agrees to notify the Company upon any change in the residence
address indicated below.
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: Nonqualified Stock
Option
Expiration Date:
----------------
3
<PAGE> 11
EXCEL COMMUNICATIONS, INC.
1997 DIRECTOR STOCK OPTION PLAN
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 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.
6. Entire Agreement; Governing Law. The Plan and the Option
Agreement are incorporated herein by reference. This Exercise Notice, 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
<PAGE> 12
to the subject matter hereof, and this Exercise Notice may not be amended
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:
- ------------------------ ------------------------
Signature
Its:
- ------------------------ -----------------------
Print Name
Address: Address:
- ------------------------ 8750 North Central Expressway,
20th Floor
- ------------------------ Dallas, Texas 75231
2
<PAGE> 1
EXHIBIT 5.1
(214) 855-7580
October 17, 1997
EXCEL Communications, Inc.
8750 North Central Expressway, Suite 2000
Dallas, Texas 75231
Re: Registration of up to 13,400,000 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 13,400,000 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. 1997
Stock Option Plan (the "1997 Stock Option Plan") pursuant to the provisions of
the 1997 Stock Option Plan and (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.
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.
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
1997 Stock Option Plan and the 1997 Director Stock Option
<PAGE> 2
EXCEL Communications, Inc.
October 17, 1997
Page 2
Plan, and, where required, authorized forms of agreements evidencing the grant
of stock options thereunder will be, when issued and sold in accordance with
the 1997 Stock Option Plan and the 1997 Director Stock Option 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 1997 Stock Option Plan and
the 1997 Director Stock Option Plan, 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/ MARK A. KOPIDLANSKY
---------------------------------
Mark A. Kopidlansky
<PAGE> 3
EXHIBIT A
1. Amended and Restated Certificate of Incorporation of the Company, as
amended, as certified by the Secretary of State of Delaware on October 16,
1997.
2. Bylaws of the Company.
3. Certificate of Existence for the Company issued by the Secretary of State
of Delaware on October 7, 1997.
4. The 1997 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. 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 1997 Stock Option Plan were adopted by
the directors and stockholders of the Company and pursuant to which shares
to be issued pursuant to the 1997 Stock Option Plan were reserved for
issuance by the Company's board of directors, (ii) the resolutions and/or
minutes of meetings pursuant to which the 1997 Director Stock Option Plan
was adopted by the directors and stockholders 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 Amended and Restated Certificate of Incorporation, as amended, and
Bylaws of the Company, (iv) the 1997 Stock Option Plan, together with
authorized forms of agreements evidencing the grant of stock options
thereunder, and the 1997 Director Stock Option Plan, together with
authorized forms of agreements evidencing the grant of stock options
thereunder, and (v) 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 1997
Stock Option Plan and the 1997 Director Stock Option Plan.
7. 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> 1
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 of EXCEL Communications, Inc. and the
related prospectus deemed to be included therein pertaining to the EXCEL
Communications, Inc. 1997 Stock Option Plan and the EXCEL Communications, Inc.
1997 Director Stock Option Plan and to the incorporation by reference therein
of our report dated January 24, 1997 with respect to the consolidated financial
statements of Excelcom, Inc. (formerly known as EXCEL Communications, Inc.)
(the "Company") included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1996.
ARTHUR ANDERSEN LLP
Dallas, Texas
October 16, 1997
<PAGE> 1
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
We consent to the use in the Registration Statement on Form S-8 dated October
17, 1997 of our report dated February 7, 1997 (related to the financial
statements of Telco Communications Group, Inc.), incorporated by reference in
the Prospectus pertaining to the EXCEL Communications, Inc. 1997 Stock Option
Plan and the EXCEL Communications, Inc. 1997 Director Stock Option Plan, which
is a part of this Registration Statement.
DELOITTE & TOUCHE LLP
Richmond, Virginia
October 17, 1997
