As filed with the Securities and Exchange Commission on December 2, 1996.
Registration No.
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
----------
Form S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
-------------------
TELS Corporation
(Exact name of registrant as specified in charter)
UTAH 87-0373840
(State of incorporation) (I.R.S. Employer Identification Number)
406 West South Jordan Parkway
Suite 250
South Jordan, Utah 84095
(801) 571-1182
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
------------------------------------------
TEL Electronics, Inc. 1994 Director Option Plan
(Full title of plan)
-----------------------------------------
WILLIAM C. GIBBS, ESQ.
Snell & Wilmer, L.L.P.
111 East Broadway, Suite 900
Salt Lake City, Utah 84111
(801) 237-1900
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
----------------------------------------
Approximate date of proposed commencement of sales: As soon as
practicable after this Registration Statement becomes effective, at the
direction of employees who participate in the Plan (as defined herein).
CALCULATION OF REGISTRATION FEE
Title of each Proposed Proposed
class of securities Amount to be maximum maximum Amount of
to be registered(2) registered(3) offering price aggregate registration
per unit(1) offering price(1) fee
Common Stock, 270,000 $.5782 $156,114 $47.31
$.02 par value
==================== ============== ============== ================ ============
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rules 457(c) and 457(h) under the Securities Act of 1933,
as amended (the "Securities Act") based on the average of the high and
low prices for shares of Common Stock, as reported on the National
Association of Securities Dealers, Inc. Automated Quotation System
("Nasdaq") on November 25, 1996.
(2) This Registration Statement also shall cover any additional shares of
Common Stock which become issuable under the Plans by reason of any
stock split, stock dividend, recapitalization or any other similar
transaction without receipt of consideration which results in an
increase in the number of outstanding shares of Common Stock of the
registrant.
1
<PAGE>
(3) Of this total, 270,000 shares represent shares authorized for issuance
upon exercise of options under the TEL Electronics, Inc. 1994 Director
Option Plan (the "Plan"). There are a total of 500,000 shares of Common
Stock authorized for issuance under the Plan, the remaining 230,000 of
which are being registered pursuant to a registration statement and
reoffer prospectus on Form S-8 filed by the Company with the Commission
on December 2, 1996.
2
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Pursuant to Rule 428 of the Securities Act of 1933, as amended (the
"Securities Act"), the documents containing the information specified in Part I,
Items 1 and 2, will be delivered to employees in accordance with Form S-8.
I-1
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
The following documents filed with the Securities and Exchange
Commission (the "Commission") are hereby incorporated by reference in this
Registration Statement:
1. The Company's Form 10-K Report for the fiscal year ended December 31,
1995;
2. The Company's Form 10-Q Report for the fiscal quarter ended March 31,
1996;
3. The Company's Form 10-Q Report for the fiscal quarter ended June 30,
1996;
4. The Company's Form 10-Q Report for the fiscal quarter ended September
30, 1996;
5. The Company's Notice of Annual Meeting of Stockholders and Proxy
Statement for its Annual Meeting of Stockholders held on June 3, 1996, pursuant
to Section 14 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"); and
6. The description of the Company's Common Stock contained in Item 1 of
the Company's Registration Statement on Form 8-A filed with the Commission on
November 15, 1984, pursuant to Section 12 of the Exchange Act, including any
amendments or reports filed for the purpose of updating such description.
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934, prior to the
filing of a post-effective amendment which indicates that all securities offered
hereby have been sold or which deregisters all securities then remaining unsold,
shall be deemed to be incorporated by reference in this Registration Statement
and to be a part hereof from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be 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 or in any
subsequently filed document which also is or is deemed to be 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-1
<PAGE>
Item 6. Indemnification of Officers and Directors
The law of Utah permits extensive indemnification of present and former
directors, officers, employees or agents of a Utah company, whether or not
authority for such indemnification is contained in the indemnifying Company's
articles of incorporation or bylaws. Specific authority for indemnification of
present and former directors and officers, under certain circumstances, is
contained in Article VI of the Company's Bylaws. Under Utah law, in order for a
Company to provide indemnification, a disinterested majority of the Company's
board of directors, independent legal counsel, a court or the shareholders must
find that the director, officer, employee or agent acted, or failed to act, in
good faith and in a manner he reasonably believed, in the case of conduct in his
official capacity with the Company, was in the best interests of the Company or,
in all other cases, was at least not opposed to the Company's best interests,
and, with respect to any criminal action or proceeding, had no reasonable cause
to believe his conduct was unlawful. Statutory indemnification is permissive,
except in the event of a successful defense, in which case, unless limited by
the Articles of Incorporation, when a director, officer, employee or agent must
be indemnified against reasonable expenses incurred by him in connection
therewith. Indemnification is permitted with respect to expenses, judgments,
fines, and amounts paid in settlement by such persons.
The Company's Bylaws provide that the Company may indemnify any person
who was or is a party or is threatened to be made a party to any threatened,
pending, or completed action, suit, or proceeding, whether civil, criminal,
administrative, or investigative (other than an action by or in the right of the
Company), by reason of the fact that he is or was a director, officer, employee,
fiduciary or agent of the Company or is or was serving at the request of the
Company as a director, officer, employee, fiduciary or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines, and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit, or proceeding if he acted in good faith and in a manner he
reasonably believed to be in the best interests of the Company and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful.
The Company's Bylaws also provide that a corporation may indemnify a
person who was or is a party or is threatened to be made a party to any
proceeding by or in the right of the Company to procure a judgment in its favor
by reason of the fact that he is or was a director, officer, employee, or agent
of the Company, or is or was serving at the request of the Company as a
director, officer, employee, fiduciary or agent of another corporation or other
enterprise against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of such action if
he acted in good faith and in a manner he reasonably believed to be in the best
interests of the Company. No indemnification shall be made in respect of any
claim or matter as to which such person has been adjudged to be liable for
negligence or misconduct in the performance of his duty to the Company unless
and only to the extent that the court in which the action is brought determines
that in view of all circumstances such person is fairly and reasonably entitled
to indemnification for expenses which the court deems proper.
II-2
<PAGE>
The Company's Bylaws also provide that a director may, to the extent
that he is successful on the merits and defense of any action, be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred in
connection therewith. A determination of whether indemnification is proper shall
be made by the board of directors by a majority vote of a quorum consisting of
disinterested directors or, if such a quorum is not obtainable or even if
obtainable a quorum of disinterested directors so directs, by independent legal
counsel in a written opinion, or by the shareholders. The Company may advance
expenses (including attorneys' fees) upon receipt of an undertaking by or on
behalf of the director to repay such amount unless it is determined that he is
entitled to be indemnified.
Item 7. Exemption from Registration
Not applicable.
Item 8. Exhibits
Exhibit No. Description
4.1 TEL Electronics, Inc. 1994 Director Option Plan.
5.1 Opinion of Snell & Wilmer, L.L.P.
23.1 Consent of Coopers & Lybrand, L.L.P.
23.2 Consent of KPMG Peat Marwick, L.L.P.
23.3 Consent of Snell & Wilmer (included in the opinion
filed as Exhibit 5.1).
Item 9. Undertakings
The undersigned registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(a) To include any prospectus required by Section 10(a)
(3) of the Securities Act;
(b) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in this registration statement;
II-3
<PAGE>
(c) To include any material information with respect to
the plan of distribution not previously disclosed in
this registration statement or any material change to
such information in this registration statement.
Provided, however, that paragraphs (1)(a) and (1)(b) above do not apply
if the registration statement is on Form S-3 or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the registrant 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.
4. If the registrant is a foreign private issuer, to file a
post-effective amendment to this registration statement to include any financial
statements required by Rule 3-19 of Regulation S-X at the start of any delayed
offering or throughout a continuous offering.
5. For purposes of determining any liability under the 1933 Act, each
filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of
the 1934 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 the registration statement shall be deemed to be a
new registration statement relating to the securities at that time and shall be
deemed to be the initial bona fide offering thereof.
6. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing 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 South Jordan, State of Utah, on the 27th day of
November, 1996.
TELS Corporation
By: /s/ Stephen M. Nelson
Stephen M. Nelson
Director and President
By: /s/ Deborah Walford
Deborah Walford
Controller
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/ John L. Gunter Chairman of the Board of
John L. Gunter Directors and Chief November 29, 1996
Executive Officer
/s/ William H. Gardner Director and Secretary November 29, 1996
Willard H. Gardner
/s/ Stephen M. Nelson Director and President November 27, 1996
Stephen M. Nelson
/s/ David K. Doyle Director November 27, 1996
David K. Doyle
/s/ Ming T. Chen Director November 27, 1996
Ming T. Chen
II-5
TEL Electronics, Inc. 1994 Director Option Plan
<PAGE>
TEL electronics, inc.
1994 Director Option Plan
<PAGE>
TABLE OF CONTENTS
PURPOSES OF THE PLAN......................................................... 1
DEFINITIONS.................................................................. 1
STOCK SUBJECT TO THE PLAN.................................................... 3
ADMINISTRATION OF AND GRANTS OF OPTIONS UNDER THE PLAN....................... 3
Procedure for Grants................................................ 3
ELIGIBILITY.................................................................. 5
TERM OF PLAN................................................................. 5
FORM OF CONSIDERATION........................................................ 5
EXERCISE OF OPTION........................................................... 6
Procedure for Exercise: Rights as a Stockholder..................... 6
Rule 16b-3.......................................................... 6
Termination of Continuous Status as a Director...................... 6
Disability of Optionee.............................................. 7
Death of Optionee................................................... 7
NON-TRANSFERABILITY OF OPTIONS............................................... 7
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER
OR ASSET SALE....................................................... 7
Changes in Capitalization........................................... 7
Dissolution or Liquidation.......................................... 8
Merger or Asset Sale................................................ 8
AMENDMENT AND TERMINATION OF THE PLAN........................................ 8
Amendment and Termination........................................... 8
Effect of Amendment or Termination.................................. 8
TIME OF GRANTING OPTIONS..................................................... 8
CONDITIONS UPON ISSUANCE OF SHARES........................................... 8
RESERVATION OF SHARES........................................................ 9
OPTION AGREEMENT............................................................. 9
STOCKHOLDER APPROVAL......................................................... 9
i
<PAGE>
TEL electronics, inc.
1994 DIRECTOR OPTION PLAN
1. PURPOSES OF THE PLAN. The purposes of this 1994 Director Option Plan
are to attract and retain the best available personnel for service as Outside
Directors (as defined herein) of the Company, to provide additional incentive to
the Outside Directors of the Company to serve as Directors, and to encourage
their continued service on the Board.
All options granted hereunder shall be "non-statutory stock options."
2. DEFINITIONS. As used herein, the following definitions shall
apply:
(a) "Board" means the Board of Directors of the Company;
(b) "Code" means the Internal Revenue Code of 1986, as
amended;
(c) "Common Stock" means the Common Stock of the Company;
(d) "Company" means TEL electronics, inc.;
(e) "Continuous Status as a Director" means the absence
of any interruption or termination of service as a Director;
(f) "Director" means a member of the Board;
(g) "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 in and of itself to constitute "employment" by the Company;
(h) "Exchange Act" means the Securities Exchange Act of
1934, as amended;
(i) "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 National Market System of the National
Association of Securities Dealers, Inc. Automated Quotation
("Nasdaq") System, the Fair Market Value of a Share of Common
Stock shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such
system or exchange (or the exchange with the greatest volume
of trading in Common Stock) on the date of grant, as reported
in The Wall Street Journal or such other source as the Board
deems reliable;
<PAGE>
(ii) If the Common Stock is quoted on the Nasdaq
System (but not on the National Market System thereof) or
regularly quoted by a recognized securities dealer but selling
prices are not reported, the Fair Market Value of a Share of
Common Stock shall be the mean between the bid and asked
prices for the Common Stock on the last market trading day
prior to the day of determination, as reported in The Wall
Street Journal or such other source as the Board deems
reliable, 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 Board.
(j) "Increase in Stockholder Value" means the value determined
based on the following formula (as determined on December 31
of each year based on the annual audited financial
statements):
(i) The Sum of
1) two times the percentage increase
in the market capitalization of the
Company;
2) one times the percentage increase
in the retained earnings of the
Company;
3) one times the percentage increase
in earnings of the Company;
4) three times the percentage
increase in gross profit from
revenues of the Company;
5) three times the percentage
increase in total assets of the
Company;
(ii) Divided by 10 and multiplied by 2.
(k) "Option" means a stock option granted pursuant to the
Plan;
(l) "Optioned Stock" means the Common Stock subject to an
Option
(m) "Optionee" means an Outside Director who receives an
Option;
(n) "Outside Director" means a Director who is not an
Employee;
(o) "Parent" means a "parent corporation", whether now or
hereafter existing, as defined in Section 424(e) of the Code;
2
<PAGE>
(p) "Plan" means this 1994 Director Option Plan;
(q) "Share" means a share of the Common Stock, as
adjusted in accordance with Section 10 of the Plan;
(r) "Subsidiary" means a "subsidiary corporation",
whether now or hereafter existing, as defined in Section 424(f) of the
Internal Revenue Code of 1986;
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section
10 of the Plan, the maximum aggregate number of Shares which may be optioned and
sold under the Plan is five hundred thousand (500,000) Shares (the "Pool") of
Common Stock. The Shares may be authorized but unissued, or reacquired Common
Stock.
If an Option should expire or become unexercisable for any reason
without having been exercised in full, the unpurchased Shares which were subject
thereto shall, unless the Plan shall have been terminated, become available for
future grant under the Plan.
4. ADMINISTRATION OF AND GRANTS OF OPTIONS UNDER THE PLAN.
(a) Procedure for Grants. The provisions set forth in this
Section 4(a) shall not be amended more than once every six months,
other than to comport with changes in the Code, the Employee Retirement
Income Security Act of 1974, as amended, or the rules thereunder. All
grants of Options to Outside Directors under this Plan shall be
automatic and non-discretionary and shall be made strictly in
accordance with the following provisions:
(i) No person shall have any discretion to select
which Outside Directors shall be granted Options or to
determine the number of Shares to be covered by Options
granted to Outside Directors;
(ii) Each Outside Director shall be automatically
granted an Option to purchase five thousand (5,000) Shares
(their "First Option") on the date on which the later of the
following events occurs: (1) the effective date of this Plan,
as determined in accordance with Section 6 hereof, or (2) the
date on which such person first becomes a Director, whether
through election by the stockholders of the Company or
appointment by the Board to fill a vacancy;
(iii) After the First Option has been granted to the
Outside Directors, the Outside Director shall thereafter be
automatically granted an Option to purchase five thousand
(5,000) additional Shares on January 1 of each year, (if on
such date, he shall have served on the Board for at least six
(6) months), plus an additional Option to purchase up to a
maximum of fifteen thousand (15,000) additional Shares in
accordance with the formula set forth below which is based on
the Increase in Company's Stockholder Value, provided,
3
<PAGE>
however, that in no event shall any one Director receive
Options to purchase in excess of 20,000 Shares in one year,
or 40,000 Shares over three years. (The Options described
in this subparagraph (iii) shall collectively be referred to
as the "Subsequent Option")
Formula:
(1) In the event the Increase in
Company's Stockholder Value equals
or exceeds 30%, the Outside
Directors shall receive Options to
purchase five thousand (5,000)
Shares.
(2) In the event the Increase in
Company's Stockholder Value equals
or exceeds 60%, the Outside
Directors shall receive additional
Options to purchase ten thousand
(10,000) Shares.
(3) In the event the Increase in
Company's Stockholder Value equals
or exceeds 90%, the Outside
Directors shall receive additional
Options to purchase fifteen thousand
(15,000) Shares.
(iv) Notwithstanding the above provisions, any
exercise of an Option made before the Company has obtained
stockholder approval of the Plan in accordance with Section 16
hereof shall be conditioned upon obtaining such stockholder
approval of the Plan in accordance with Section 16 hereof;
(v) The terms of a First Option granted
hereunder shall be as follows:
(1) the term of the First Option shall
be ten (10) years;
(2) the First Option shall be
exercisable only while the Outside
Director remains a Director of the
Company, except as set forth in
Section 8 hereof;
(3) the exercise price per Share shall
be 100% of the fair market value per
Share on the date of grant of the
First Option;
(4) the First Option shall be fully
exercisable upon the six (6) month
anniversary of receipt.
(vi) The terms of a Subsequent Option granted
hereunder shall be as follows:
(1) the term of the Subsequent Option
shall be ten (10) years;
4
<PAGE>
(2) the Subsequent Option shall be
exercisable only while the Outside
Director remains a Director of the
Company, except as set forth in
Section 8 hereof;
(3) the exercise price per Share shall
be 100% of the fair market value per
Share on the date of grant of the
Subsequent Option;
(4) the Subsequent Option shall be fully
exercisable upon the six (6) month
anniversary of receipt.
(vii) In the event that any Option granted under the
Plan would cause the number of Shares subject to outstanding
Options plus the number of Shares previously purchased under
Options to exceed the Pool, then the remaining Shares
available for Option grant shall be granted under Options to
the Outside Directors on a pro rata basis. No further grants
shall be made until such time, if any, as additional Shares
become available for grant under the Plan through action of
the stockholders to increase the number of Shares which may be
issued under the Plan or through cancellation or expiration of
Options previously granted hereunder.
5. ELIGIBILITY. Options may be granted only to Outside Directors.
All Options shall be automatically granted in accordance with the terms set
forth in Section 4 hereof. An Outside Director who has been granted an Option
may, if he is otherwise eligible, be granted an additional Option or Options in
accordance with such provisions.
The Plan shall not confer upon any Optionee any right with respect to
continuation of service as a Director or nomination to serve as a Director, nor
shall it interfere in any way with any rights which the Director or the Company
may have to terminate his or her directorship at any time.
6. TERM OF PLAN. The Plan shall become effective upon the earlier to
occur of its adoption by the Board or its approval by the stockholders of the
Company as described in Section 16 of the Plan. It shall continue in effect for
a term of ten (10) years unless sooner terminated under Section 11 of the Plan.
7. FORM OF CONSIDERATION. The consideration to be paid for the Shares
to be issued upon exercise of an Option, including the method of payment, shall
consist of (i)cash, (ii)check, (iii)other shares which (a) in the case of Shares
acquired upon exercise of an Option, have been owned by the Optionee for more
than six (6) months on the date of surrender, and (b) have a Fair Market Value
on the date of surrender equal to the aggregate exercise price of the Shares as
to which said Option shall be exercised, or (iv) delivery of a properly executed
exercise notice together with such other documentation as the Company and the
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.
5
<PAGE>
8. EXERCISE OF OPTION.
(a) Procedure for Exercise: Rights as a Stockholder. Any
Option granted hereunder shall be exercisable at such times as are set
forth in Section 4 hereof; provided, however, that no Options shall be
exercisable until stockholder approval of the Plan in accordance with
Section 16 hereof has been obtained;
An Option may not be exercised for a fraction of a Share;
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 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. Full payment may consist of
any consideration and method of payment allowable under Section 7 of
the Plan. 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 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 the stock certificate is
issued, except as provided in Section 10 of the Plan;
Exercise of an Option in any manner shall result in a decrease
in the number of Shares which 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.
(b) Rule 16b-3. Options granted to Outside Directors must
comply with the applicable provisions of Rule 16b-3 promulgated under
the Exchange Act or any successor thereto and shall contain such
additional conditions or restrictions as may be required thereunder to
qualify for the maximum exemption from Section 16 of the Exchange Act
with respect to Plan transactions;
(c) Termination of Continuous Status as a Director. In the
event an Optionee's Continuous Status as a Director terminates (other
than upon the Optionee's death or total and permanent disability (as
defined in Section 22(e)(3) of the Code)), the Optionee may exercise
his or her Option, but only within three (3) months from the date of
such termination, and only to the extent that the Optionee was entitled
to exercise it at the date of such termination (but in no event later
than the expiration of its ten (10) year term). To the extent that the
Optionee was not entitled to exercise an Option at the date of such
termination, and to the extent that the Optionee does not exercise such
Option (to the extent otherwise so entitled) within the time specified
herein, the Option shall terminate;
(d) Disability of Optionee. In the event Optionee's Continuous
Status as a Director terminates as a result of total and permanent
6
<PAGE>
disability (as defined in Section 22(e)(3) of the Code), the Optionee
may exercise his or her Option, but only within twelve (12) months from
the date of such termination, and only to the extent that the Optionee
was entitled to exercise it at the date of such termination (but in no
event later than the expiration of its ten (10) year term). To the
extent that the Optionee was not entitled to exercise an Option at the
date of termination, or if he or she does not exercise such Option (to
the extent otherwise so entitled) within the time specified herein, the
Option shall terminate;
(e) Death of Optionee. In the event of an Optionee's death,
the Optionee's estate or a person who acquired the right to exercise
the Option by bequest or inheritance may exercise the Option, but only
within twelve (12) months following the date of death, and only to the
extent that the Optionee was entitled to exercise it at the date of
death (but in no event later than the expiration of its ten (10) year
term). To the extent that the Optionee was not entitled to exercise an
Option at the date of death, and to the extent that the Optionee's
estate or a person who acquired the right to exercise such Option does
not exercise such Option (to the extent otherwise so entitled) within
the time specified herein, the Option shall terminate.
9. NON-TRANSFERABILITY OF OPTIONS. The Option may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner other
than by will or by the laws of descent or distribution and may be exercised,
during the lifetime of the Optionee, only by the Optionee.
10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION,
MERGER OR ASSET SALE.
(a) Changes in Capitalization. Subject to any required action
by the stockholders of the Company, the number of Shares covered by
each outstanding Option and the number of Shares 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
covered by each such outstanding Option, shall be proportionately
adjusted for any increase or decrease in the number of issued Shares
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 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." Except
as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be
made with respect to, the number or price of Shares subject to an
Option;
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, to the extent that an Option
7
<PAGE>
has not been previously exercised, it will terminate immediately prior
to the consummation of such proposed action;
(c) Merger or Asset Sale. In the event of a merger of the
Company with or into another corporation, or the sale of substantially
all of the assets of the Company, each outstanding Option shall be
assumed or an equivalent option shall be substituted by the successor
corporation or a Parent or Subsidiary of the successor corporation. In
the event that the successor corporation does not agree to assume the
Option or to substitute an equivalent option, each outstanding Option
shall become fully vested and exercisable, including as to Shares as to
which it would not otherwise be exercisable, unless the Board, in its
discretion, determines otherwise. If an Option becomes fully vested and
exercisable in the event of a merger or sale of assets, the Board shall
notify the Optionee that the Option shall be fully exercisable for a
period of thirty (30) days from the date of such notice, and the Option
will terminate upon the expiration of such period. For the purposes of
this paragraph, the Option shall be considered assumed if, following
the merger or sale of assets, the option or right confers the right to
purchase, for each Share of Optioned Stock subject to the Option
immediately prior to the merger or sale of assets, the consideration
(whether stock, cash, or other securities or property) received in the
merger or sale of assets by holders of Common Stock for each Share held
on the effective date of the transaction (and if holders were offered a
choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding Shares).
11. AMENDMENT AND TERMINATION OF THE PLAN.
(a) Amendment and Termination. Except as set forth in Section
4, 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. In addition, to the
extent necessary and desirable to comply with Rule 16b-3 under the
Exchange Act (or any other applicable law or regulation), 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 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 this Plan had
not been amended or terminated.
12. TIME OF GRANTING OPTIONS. The date of grant of an Option shall, for
all purposes, be the date determined in accordance with Section 4 hereof. Notice
of the determination shall be given to each Outside Director to whom an Option
is so granted within a reasonable time after the date of such grant.
13. 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 provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, state securities laws, and the requirements of any stock exchange
upon which the Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
8
<PAGE>
without any present intention to sell or distribute such Shares, if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned relevant provisions of law.
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.
14. RESERVATION OF SHARES. The Company, during the term of this Plan,
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
15. OPTION AGREEMENT. Options shall be evidenced by written option
agreements in such form as the Board shall approve.
16. STOCKHOLDER APPROVAL. Continuance of the Plan shall be subject to
approval by the stockholders of the Company at or prior to the first annual
meeting of stockholders held subsequent to the granting of an Option hereunder.
Such stockholder approval shall be obtained in the degree and manner required
under applicable state and federal law.
9
Opinion of Snell & Wilmer, L.L.P.
Snell & Wilmer SALT LAKE CITY, UTAH
Law Offices
111 East Broadway, Suite 900 PHOENIX, ARIZONA
Broadway Centre
Salt Lake City, Utah 84111 TUCSON, ARIZONA
(801) 237-1900
Fax: (801) 237-1950 IRVINE, CALIFORNIA
December 2, 1996
TELS CORPORATION
406 West South Jordan Parkway, Suite 250
South Jordan, Utah 84095
Ladies and Gentlemen:
Reference is made to your proposed registration and offering of 270,000
shares of Common Stock of TELS Corporation, as contemplated by the Registration
Statement (the "Registration Statement") on Form S-8 filed by you on December
2, 1996, with the Securities and Exchange Commission under the Securities Act
of 1933, as amended.
We have examined originals or copies, certified or otherwise identified to
our satisfaction, of such corporate records, agreements, and other instruments,
certificates, orders, opinions, correspondence with public officials,
certificates provided by your officers and representatives, and other documents,
as we have deemed necessary or advisable for the purposes of rendering the
opinions set forth herein.
Based solely on the foregoing, it is our opinion that after the
Registration Statement shall have become effective and the shares shall have
been issued and delivered as described therein, such shares of Common Stock will
be validly issued, fully paid and non-assessable.
Consent is hereby given to the use of this opinion as part of the
Registration Statement referred to above and to the use of our name wherever it
appears in said Registration Statement and the related prospectus.
Very truly yours,
/s/Snell & Wilmer L.L.P.
SNELL & WILMER L.L.P.
Consent of Coopers & Lybrand, L.L.P.
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
Tels Corporation of Form S-8 of our report dated April 9,1996, on our audit of
the financial statements and financial statement schedule of Tels Corporation as
of December 31, 1995, and for the year then ended, which report is included in
the Tels Corporation Annual Report on Form 10-K.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Salt Lake City, Utah
November 27, 1996
Consent of KPMG Peat Marwick, L.L.P.
Accountants' Consent
The Board of Directors
TELS Corporation:
We consent to incoproration by reference in the registration statement of the
Tel Electronics, Inc. 1994 Director Option Plan on Form S-8 of TELS Corporation
of our report dated March 6, 1995 relating to the consolidated balance sheet of
TELS Corporation and subsidiaries as of December 31, 1994, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the years in the two-year period ended December 31, 1994, and related
schedule, which report appears in the December 31, 1995 annual report on Form
10-K of TELS Corporation.
/s/KPMG peat Marwick LLP
KPMG Peat Marwick LLP
Salt Lake City, Utah
December 2, 1996
Consent of Snell & Wilmer (Included
in the opinion filed as Exhibit 5)
