As filed with the Securities and Exchange Commission on December 12, 1997
Registration No. 333-
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UNITED STATES
--
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------------
US WATS, INC.
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(Exact name of Registrant as specified in its charter)
New York 22-3055962
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
111 Presidential Boulevard
Suite 114
Bala Cynwyd, Pennsylvania 19004
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(Address of Principal Executive Offices) (Zip Code)
US WATS, Inc.
-------------
Amended and Restated Stock Option Plan (Merger and
Restatement of the US WATS, Inc. Employee Compensation Stock
Option Plan and US WATS, Inc. 1993 Executive Stock Option Plan)
----------------------------------------------------------------
(Full title of the plan)
Stephen J. Parker
President and Chief Executive Officer
US WATS, Inc.
111 Presidential Boulevard, Suite 114
Bala Cynwyd, PA 19004
(610) 660-0100
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(Name, address and telephone number of agent for service)
Copy to:
Robert H. Strouse, Esq.
Drinker Biddle & Reath LLP
Suite 300
105 College Road East
Post Office Box 627
Princeton, NJ 08542-0627
CALCULATION OF REGISTRATION FEE
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Proposed Proposed
Title of maximum maximum
securities Amount offering aggregate Amount of
to be to be price per offering registration
registered registered(1) share(2) price(2) fee
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Common Stock, 6,100 shares $1.92185 $11,723.29 $3.46
par value $.001
per share.
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(1) Pursuant to Rule 416(a), this Registration Statement also registers such
indeterminate number of additional shares as may become issuable under the
Plan in connection with share splits, share dividends or similar
transactions.
(2) Calculated pursuant to Rule 457(c) and (h). As to shares subject to
outstanding but unexercised options, the price and fee are computed based
upon the price at which such options may be exercised. As to the remaining
shares, the price and fee are computed based upon a price per share of
$1.92185, the average of the high and low prices for the Common Stock as
reported on the National Association of Securities Dealers, Inc. Automated
Quotation System on December 8, 1997. The Registration Statement on Form
S-8 (Registration No. 33-97558) had previously registered an aggregate of
3,493,900 shares of Common Stock issuable under the Plan. This
Registration Statement also constitutes a Post-Effective Amendment to that
Registration Statement.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a)
PROSPECTUS
(Not required to be filed as part of this
registration statement)
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Pursuant to General Instruction E (Registration of Additional Securities)
to Form S-8, the Registrant hereby incorporates by reference the contents of its
Registration Statement on Form S-8 (Registration No. 33-97558) relating to the
US WATS, Inc. Employee Compensation Stock Option Plan and to the US WATS, Inc.
1993 Executive Stock Option Plan, except for the Items set forth below.
Item 3. Incorporation of Documents By Reference.
The following documents heretofore filed with the Securities and Exchange
Commisssion by US WATS, Inc. (the "Registrant" and the "Company") are
incorporated in this Registration Statement by reference:
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1996;
2. The Company's Quarterly Reports on Form 10-Q for the
quarters ended March 31, June 30, and September 30, 1997;
3. The Company's Registration Statement on Form S-8 (File No.
33-97558) under the Securities Act, filed October 7, 1993.
In addition, all reports and other documents filed by the Company pursuant
to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934
(the "Exchange Act"), after the date of this Registration Statement and prior to
the filing of a post-effective amendment which indicates that all securities
offered hereby have been sold or which deregisters all such 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 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.
Item 8. Exhibits.
4 US WATS, Inc. Amended and Restated Stock Option Plan (merger
and restatement of the US WATS, Inc. Employee Compensation
Stock Option Plan and the US WATS, Inc. 1993 Executive Stock
Option Plan)
5 Opinion of Drinker Biddle & Reath LLP (Counsel to
Registrant)
23 Consents of Experts and Counsel
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<PAGE>
a. Consent of Deloitte & Touche LLP (Independent Auditors)
b. Consent of Rudolph, Palitz LLP (Independent Auditors)
c. Consent of Baratz & Associates, P.A. (Independent Auditors)
d. The consent of counsel is contained in the opinion filed as
Exhibit 5 hereto.
24 Powers of Attorney (See Signature Page)
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<PAGE>
SIGNATURES AND POWERS OF ATTORNEY
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 From S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Bala Cynwyd, Pennsylvania on December 8, 1997.
US WATS, INC.
By /s/ Stephen J. Parker
--------------------------------------
Stephen J. Parker, President,
Chief Executive Officer and Director
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<PAGE>
Each person whose signature appears below hereby constitutes and
appoints Stephen J. Parker and David Hurwitz as his or her attorneys-in-fact and
agents, with full power of substitution and resubstitution for him or her, in
any and all capacities, to sign any or all amendments or post-effective
amendments to this Registration Statement, and to file the same, with exhibits
thereto and other documents in connection therewith, granting unto each of such
attorneys-in- fact and agents full power and authority to do and perform each
and every act and thing requisite and necessary in connection with such matters
and hereby ratifying and confirming all that each of such attorneys-in-fact and
agents or his substitutes may 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.
/s/ Aaron R. Brown
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Aaron R. Brown Director December 2, 1997
/s/ Stephen J. Parker
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Stephen J. Parker President, Chief Executive December 3, 1997
Officer and Director
/s/ Murray Goldberg
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Murray Goldberg Director December 3, 1997
/s/ Artie Regan
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Artie Regan Director and Secretary December 3, 1997
/s/ Michael McAnulty
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Michael McAnulty Treasurer, Comptroller December 3, 1997
(Principal Financial and
Accounting Officer)
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<PAGE>
EXHIBIT INDEX
Exhibit Description
Number of Exhibit Page
- --------------------------------------------------------------------------------
4 US WATS, Inc. Amended and Restated Stock 7
Option Plan (merger and restatement of the
US WATS, Inc. Employee Compensation Stock
Option Plan and the US WATS, Inc. 1993
Executive Stock Option Plan).
5 Opinion of Drinker Biddle & Reath LLP 20
(Counsel to Registrant)
23a Consent of Deloitte & Touche LLP 22
(Independent Auditors)
23b Consent of Rudolph, Palitz LLP 23
(Independent Auditors)
23c Consent of Baratz & Associates, P.A 24
(Independent Auditors)
23d Consent of Drinker Biddle and
Reath LLP (included in the
opinion filed as Exhibit 5
hereto)
24 Powers of Attorney (see Signature Page)
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<PAGE>
EXHIBIT 4
EXHIBIT A
US WATS, INC.
STOCK OPTION PLAN
(As Amended and Restated Effective August 13, 1996)
<PAGE>
EXHIBIT A
TABLE OF CONTENTS
Page
SECTION 1 Purpose........................................ 1
SECTION 2 Definitions.................................... 1
SECTION 3 Administration................................. 2
SECTION 4 Eligibility.................................... 3
SECTION 5 Stock.......................................... 3
SECTION 6 Granting of Options............................ 4
SECTION 7 Annual Limit for ISOs.......................... 4
SECTION 8 Terms and Conditions of Options................ 4
SECTION 9 Capital Adjustments............................ 7
SECTION 10 Financial Information.......................... 8
SECTION 11 Amendment or Discontinuance of the Plan........ 8
SECTION 12 Termination of Plan............................ 8
SECTION 13 Effective Date................................. 9
SECTION 14 Miscellaneous.................................. 9
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<PAGE>
EXHIBIT A
US WATS, INC.
STOCK OPTION PLAN
(As Amended and Restated Effective August 13, 1996)
----------------------------------------------------
SECTION 1
Purpose
---------
This US WATS, INC. STOCK OPTION PLAN ("Plan") is intended to provide a
means whereby US WATS, INC. ("Company") and any Subsidiary (as defined in
Section 2 hereof) of the Company may, through the grant of incentive stock
options and nonqualified stock options to Key Employees and Consultants (both as
defined in Section 2 hereof), attract and retain such Key Employees and
Consultants and motivate such individuals to exercise their best efforts on
behalf of the Company and of any Subsidiary.
The Plan, as amended and restated effective August 13, 1996,
constitutes a merger and amendment and restatement of the Prior Plans (as
defined in Section 2 hereof). Such merger and amendment and restatement shall
not, in and of itself, affect Prior Options (as defined in Section 2 hereof)
which are outstanding as of August 12, 1996.
SECTION 2
Definitions
For all purposes of the Plan, unless the context requires otherwise,
the following words and phrases shall have the meanings set forth below. In all
cases, the singular shall include the plural, and vice versa, and the masculine
shall include the feminine.
(a) "Board" means the Company's Board of Directors.
(b) "Code" means the Internal Revenue Code of 1986, as amended.
(c) "Committee" means the administrator of the Plan, as described in
Section 3 hereof.
(d) "Common Share" means a share of the Company's $.001 par value
common stock.
(e) "Consultant" means any consultant of the Company or a Subsidiary
who is not an officer or employee thereof.
(f) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(g) "Fair Market Value" means the value of a Common Share, which
shall be arrived at by a reasonable, good faith determination of the Committee
and shall be:
(1) The mean between the highest and lowest quoted selling
price, if there is a market for the Common Shares on a registered securities
exchange or on an over the counter market, on the date specified;
(2) The weighted average of the means between the highest and
lowest sales on the nearest date before and the nearest date after the specified
date, if there are no such sales on the specified date but there are such sales
on dates within a reasonable period both before and after the specified date;
(3) The mean between the bid and asked prices, as reported by
the National Quotation Bureau on the specified date, if actual sales are not
available during a reasonable period beginning before and ending after the
specified date; or
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<PAGE>
EXHIBIT A
(4) If Subparagraphs (1) through (3) above are not applicable,
such other method of determining fair market value as shall be authorized by the
Code, or the rules or regulations thereunder, and adopted by the Committee.
Where the Fair Market Value of Common Shares is determined under
Subparagraph (2) above, the average of the means between the highest and lowest
sales on the nearest date before and the nearest date after the specified date
shall be weighted inversely by the respective numbers of trading days between
the dates of reported sales and the specified date (i.e., the valuation date),
in accordance with Treas. Reg. [SECTION] 20.2031-2(b)(1), or any successor
thereto.
(h) "ISO" means an Option which qualifies as an incentive stock
option within the meaning of section 422 of the Code.
(i) "Key Employee" means any executive or managerial employee of the
Company or a Subsidiary.
(j) "NQSO" means an Option which is a nonqualified stock option
(i.e., an Option which does not qualify as an incentive stock option within the
meaning of section 422 of the Code).
(k) "Option" means any stock option granted to a Key Employee or
Consultant under Section 6 hereof.
(l) "Optionee" means any Key Employee or Consultant who has been
granted an Option.
(m) "Prior Option" shall mean an incentive stock option or a
nonqualified stock option granted under a Prior Plan.
(n) "Prior Plan" shall mean the Company's Employee Compensation Stock
Option Plan, adopted November 6, 1992, or the Company's 1993 Executive Stock
Option Plan, adopted August 30, 1993, in both cases, as in effect prior to
August 13, 1996.
(o) "Subsidiary" means any corporation (whether or not in existence
at the time the Plan is restated) which, at the time an Option is granted, is a
subsidiary of the Company under the definition of "subsidiary corporation" con
tained in section 424(f) of the Code, or any successor thereto.
SECTION 3
Administration
---------------
The Plan shall be administered:
(a) By a committee, which shall consist of not fewer than two non-
employee directors (within the meaning of Rule 16b-3(b)(3) under the Exchange
Act, or any successor thereto) of the Company who shall be appointed by, and
shall serve at the pleasure of, the Board; or
(b) In the event a committee has not been established in accordance
with subsection (a) or cannot be constituted to vote on the grant of an Option,
by the entire Board.
The administrator of the Plan shall hereinafter be referred to as the
"Committee." Each member of the Committee, while serving as such, shall be
deemed to be acting in his or her capacity as a director of the Company.
The Committee shall have full and final authority in its absolute
discretion, subject to the terms of the Plan, to select the Key Employees and
Consultants to be granted Options under the Plan, to grant Options on behalf of
the Company, and to set the date of grant and the other terms of such Options;
provided, however, that Consultants shall not be eligible to receive ISOs under
the Plan.
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<PAGE>
EXHIBIT A
The Committee may correct any defect, supply any omission and
reconcile any inconsistency in the Plan and in any Option granted hereunder in
the manner and to the extent it shall deem desirable. The Committee also shall
have the authority to establish such rules and regulations, not inconsistent
with the provisions of the Plan, for the proper administration of the Plan, and
to amend, modify or rescind any such rules and regulations, and to make such
determinations and interpretations under, or in connection with, the Plan, as it
deems necessary or advisable. All such rules, regulations, determinations and
interpretations shall be binding and conclusive upon the Company, its
shareholders and all officers, employees, and consultants and former officers,
employees, and consultants, and upon their respective legal representatives,
beneficiaries, successors and assigns and upon all other persons claiming under
or through any of them.
No member of the Board or the Committee shall be liable for any action
or determination made in good faith with respect to the Plan or any Option
granted hereunder.
SECTION 4
Eligibility
-----------
Key Employees and Consultants shall be eligible to receive Options
under the Plan. Key Employees shall be eligible to receive ISOs and/or NQSOs.
Consultants shall be eligible to receive only NQSOs. More than one Option may
be granted to an Optionee under the Plan.
SECTION 5
Stock
-----
The number of Common Shares that may be subject to ISOs under the Plan
shall be 3,000,000, reduced by the number of Common Shares issued pursuant to
Prior Options granted under the Company's 1993 Executive Stock Option Plan; the
number of Common Shares that may be subject to NQSOs under the Plan shall be
500,000, reduced by the number of Common Shares issued pursuant to Prior Options
granted under the Company's Employee Compensation Stock Option Plan. However,
both limits in the preceding sentence shall be subject to adjustment as
hereinafter provided. Common Shares issuable under the Plan may be authorized
but unissued shares or reacquired shares, as the Company may determine from time
to time.
Any Common Shares subject to an Option or a Prior Option which expires
or otherwise terminates for any reason whatever (including, without limitation,
the Key Employee or Consultant's surrender thereof) without having been
exercised shall continue to be available for the granting of Options under the
Plan.
SECTION 6
Granting of Options
-------------------
From time to time until the expiration or earlier suspension or
discontinuance of the Plan, the Committee may, on behalf of the Company, grant
to Key Employees and Consultants under the Plan such Options as it determines
are warranted, subject to the limitations of the Plan; provided, however, that
grants of ISOs and NQSOs shall be separate and not in tandem. The granting of
an Option under the Plan shall not be deemed either to entitle the Optionee to,
or to disqualify the Optionee from, any other Options under the Plan. In making
any determination as to whether a Key Employee or Consultant shall be granted an
Option, the type of Option to be granted, and the number of Common Shares to be
covered by the Option, the Committee shall take into account the duties of the
Key Employee or Consultant, his or her present and potential contributions to
the success of the Company or a Subsidiary, the tax implications to the Company
and the Key Employee or Consultant of any Options granted, and such other
factors as the Committee shall deem relevant in accomplishing the purposes of
the Plan. Moreover, the Committee may provide in the Option Agreement that the
Option may be exercised only if certain conditions, as determined by the
Committee, are fulfilled.
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<PAGE>
EXHIBIT A
SECTION 7
Annual Limit for ISOs
---------------------
(a) Annual Limit. The aggregate Fair Market Value (determined as of
the date the ISO is granted) of the Common Shares with respect to which ISOs
become exercisable for the first time by a Key Employee during any calendar year
(under this Plan and any other incentive stock option plan of the Company or any
parent corporation (within the meaning of section 424(e) of the Code ("Parent"))
or Subsidiary) shall not exceed $100,000.
(b) Options Over Annual Limit. If an Option intended as an ISO is
granted to a Key Employee and such Option may not be treated in whole or in part
as an ISO pursuant to the limitation in Paragraph (a) above, such Option shall
be treated as an ISO to the extent it may be so treated under such limitation
and as an NQSO as to the remainder, but shall continue to be subject to the
provisions of the Plan that apply to ISOs. For purposes of determining whether
an ISO would cause such limitation to be exceeded, the Key Employee's incentive
stock options shall be taken into account in the order granted.
(c) NQSOs. The annual limit set forth above for ISOs shall not apply
to NQSOs.
SECTION 8
Terms and Conditions of Options
-------------------------------
The Options granted pursuant to the Plan shall include expressly or by
reference the following terms and conditions, as well as such other provisions
not inconsistent with the provisions of this Plan as the Committee shall deem
desirable, and for ISOs granted under this Plan, the provisions of section
422(b) of the Code:
(a) Number of Common Shares. The Option shall state the number of
Common Shares to which it pertains.
(b) Price.
(1) ISOs. The Option exercise price of an ISO shall be
determined and fixed by the Committee in its discretion at the time of grant,
but shall not be less than 100% (110% in the case of an ISO granted to a more
than 10% shareholder as provided in Paragraph (i) below) of the Fair Market
Value of the optioned Common Shares on the date the Option is granted.
(2) NQSOs. The Option exercise price of an NQSO shall be
determined and fixed by the Committee in its discretion at the time of grant;
provided that in the case of NQSOs granted to an Optionee who is a resident of
the State of California, the Option exercise price shall not be less than 85%
(110% in the case of an NQSO granted to a more than 10% shareholder as provided
in Paragraph (i) below) of the Fair Market Value of the optioned Common Shares
on the date the NQSO is granted.
(c) Term.
(1) ISOs. Subject to earlier termination as provided in
Paragraphs (e), (f), and (g) below, the term of each ISO shall be not more than
10 years (5 years in the case of a more than 10% shareholder as provided in
Paragraph (i) below) from the date of grant.
(2) NQSOs. Subject to earlier termination as provided in
Paragraphs (e), (f) and (g) below, the term of each NQSO shall be not more than
10 years (five years in the case of an NQSO granted to a California resident who
is also a more than 10% shareholder as provided in Paragraph (i) below) from the
date of grant.
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<PAGE>
EXHIBIT A
(d) Exercisability and Purchase.
(1) Exercisability. Options granted under this Plan shall be
exercisable in such installments and on such dates as the Committee may specify,
provided that:
(A) In the case of Options granted to Optionees who are
residents of the State of California, such Options shall be exercisable at the
rate of at least 20% per year over five years from the date of grant;
(B) In the case of new Options granted in replacement for
options (whether granted under the Plan or otherwise) held by an Optionee, the
new Options may be made exercisable, if so determined by the Committee, in its
discretion, at the earliest date the replaced options were exercisable; and
(C) The Committee may accelerate the exercise date of any
outstanding Options granted to an Optionee in its discretion, if it deems such
acceleration to be desirable. However, with respect to an Optionee who is a
California resident, acceleration is permitted only if the Optionee is an
officer, director or consultant.
(2) Purchase. Any Common Shares, the right to the purchase of
which has accrued, under an Option may be purchased at any time up to the
expiration or termination of the Option. Exercisable Options may be exercised,
in whole or in part, from time to time by giving written notice of exercise to
the Company at its principal office, specifying the number of Common Shares to
be purchased and accompanied by payment in full of the aggregate Option exercise
price for such shares. Only full shares shall be issued under the Plan, and any
fractional share which might otherwise be issuable upon the exercise of an
Option granted hereunder shall be forfeited. The Option price shall be
payable --
(A) In cash or its equivalent;
(B) In the case of an ISO, if the Committee, in its
discretion, causes the Option Agreement so to provide and in the case of an NQSO
if the Committee, in its discretion, so determines at or prior to the time of
exercise, in Common Shares previously acquired by the Optionee, provided that if
such shares were acquired through the exercise of an incentive stock option and
are used to pay the Option exercise price of an ISO, such shares have been held
by the Optionee for a period of not less than the holding period described in
section 422(a)(1) of the Code on the date of exercise, or if such Common Shares
were acquired through exercise of a nonqualified stock option and are used to
pay the Option exercise price of an NQSO, such shares have been held by the
Optionee for a period of more than 12 months on the date of exercise; or
(C) In the discretion of the Committee, in any combination
of (A) and (B) above.
In the event such Option exercise price is paid, in whole or in
part, with Common Shares, the portion of the Option exercise price so paid shall
equal the Fair Market Value on the date of exercise of the Option of the Common
Shares surrendered in payment of such Option exercise price.
(e) Exercise Upon Termination of Employment or Service.
(1) General. If an Optionee's employment by or service with the
Company and Subsidiaries terminates for any reason other than death, disability,
or Cause (as described in Subparagraph (2) below) prior to the expiration date
fixed for his or her Option, such Option may be exercised, to the extent of the
number of Common Shares with respect to which the Optionee could have exercised
it on the date of such termination, or to any greater extent permitted by the
Committee, by the Optionee at any time prior to the earlier of:
(A) The expiration date specified in such Option; or
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<PAGE>
EXHIBIT A
(B) An accelerated termination date determined by the
Committee, in its discretion, and set forth in the Option Agreement; except that
such accelerated termination date shall not be earlier than 30 days or later
than 90 days after the date of the Optionee's termination of employment or
service.
If an Optionee's employment by or service with the Company and
Subsidiaries terminates by reason of Cause prior to the expiration date fixed
for his or her Option, such Option shall terminate immediately.
(2) Cause. For purposes of this Paragraph (e), "Cause" shall
include any act of fraud or intentional misrepresentation, or embezzlement,
misappropriation, or conversion of assets or opportunities of the Company.
(f) Exercise upon Disability of Optionee. If an Optionee shall
become disabled (within the meaning of section 22(e)(3) of the Code) during his
or her employment by or service with the Company and Subsidiaries and, prior to
the expiration date fixed for his or her Option, his or her employment or
service is terminated as a consequence of such disability, such Option may be
exercised, to the extent of the number of shares with respect to which the
Optionee could have exercised it on the date of such termination, or to any
greater extent permitted by the Committee, by the Optionee at any time prior to
the earlier of:
(A) The expiration date specified in such Option; or
(B) One year after the date of such termination of
employment or service.
In the event of the Optionee's legal disability, such Option may be so
exercised by the Optionee's legal representative.
(g) Exercise after Death of Optionee. If an Optionee's employment
terminates by reason of the Optionee's death prior to the expiration date fixed
for his or her Option, or if an Optionee whose employment is terminated for any
reason shall die following his or her termination of employment but prior to the
earlier of:
(A) The expiration date fixed for his or her Option; or
(B) The expiration of the period determined under Paragraph
(e) or (f) above, such Option may be exercised to the extent of the number of
Common Shares with respect to which the Optionee could have exercised it on the
date of his or her death, or to any greater extent permitted by the Committee,
by the Optionee's estate, personal representative or beneficiary who acquired
the right to exercise such Option by bequest or inheritance or by reason of the
death of the Optionee, at any time prior to the earlier of:
(i) The expiration date specified in such Option; or
(ii) One year after the date of death.
(h) Rights as a Shareholder. An Optionee shall have no rights as a
shareholder with respect to any Common Shares covered by his or her Option until
the issuance of a stock certificate to him or her for such shares.
(i) Ten Percent Shareholder. In the case of any ISO granted under the
Plan and in the case of an NQSO which is granted to an Optionee who is a
resident of the State of California, if the Optionee owns more than 10% of the
total combined voting power of all classes of stock of the Company or of a
Subsidiary or Parent at the time the Option is granted to such Optionee, the
Option exercise price for such Option shall be not less than 110% of the Fair
Market Value of the optioned Common Shares on the date such Option is granted.
In addition, such Option shall not be exercisable after the expiration of five
years from the date it is granted.
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<PAGE>
EXHIBIT A
(j) Option Agreements. Options granted under the Plan shall be
evidenced by written documents ("Option Agreements") in such form as the
Committee shall, from time to time, approve. Option Agreements shall contain
such provisions, not inconsistent with the provisions of the Plan, for NQSOs
granted pursuant to the Plan, and such conditions, not inconsistent with section
422(b) of the Code or the provisions of the Plan, for ISOs granted pursuant to
the Plan, as the Committee shall deem advisable. An Option Agreement shall
specify whether the Option is an ISO or NQSO; provided, however, if the Option
is not designated in the Option Agreement as an ISO or NQSO, the Option shall
constitute an ISO to the extent it complies with the terms of section 422 of the
Code, and otherwise, it shall constitute an NQSO. Each Optionee shall enter
into, and be bound by, the terms of an Option Agreement.
(k) Holding Period Requirement. In the case of an Option which is an
ISO, the Option Agreement shall provide that Common Shares acquired by the Key
Employee upon exercise of the ISO may not be disposed of (1) within two years
after the ISO is granted or (2) within one year after the Common Shares are
transferred to the Key Employee. This holding period requirement shall not
apply in the case of an ISO exercised in accordance with Paragraph (g) after the
Key Employee's death.
SECTION 9
Capital Adjustments
-------------------
The number of Common Shares which may be issued under the Plan, the
maximum number of Common Shares with respect to which Options may be granted to
any Key Employee under the Plan, both as stated in Section 5 hereof, and the
number of Common Shares issuable upon the exercise of outstanding Options under
the Plan (as well as the Option exercise price per share under such outstanding
Options) shall, subject to the provisions of section 424(a) of the Code, be
adjusted to reflect any stock dividend, stock split, share combination, or
similar change in the capitalization of the Company.
In the event of a corporate transaction (as that term is described in
section 424(a) of the Code and the Treasury Regulations issued thereunder as,
for example, a merger, consolidation, acquisition of property or stock,
separation, reorganization, or liquidation), each outstanding Option shall be
assumed by the surviving or successor corporation. As provided in Section
8(d)(1)(C) hereof, the Committee, in its discretion, may accelerate, in whole or
in part, the date on which any outstanding Option becomes exercisable. The
Committee also may, in its discretion, change the terms of any outstanding
Option to reflect any such corporate transaction, provided that, in the case of
ISOs, such change is excluded from the definition of a "modification" under
section 424(h) of the Code.
SECTION 10
Financial Information
---------------------
With respect to Optionees (including Optionees who have already
exercised their Options or Prior Options) who are residents of the State of
California, the Company will comply with Section 240.140.46 of Title 10,
California Administrative Code, which requires the Company to deliver financial
statements at least annually to such Optionees.
SECTION 11
Amendment or Discontinuance of the Plan
---------------------------------------
(a) In General. The Board from time to time may suspend or discon
tinue the Plan or amend it in any respect whatsoever, except that, without the
approval of the shareholders (given in the manner set forth in Paragraph (b)
below): (1) the class of persons eligible to receive Options shall not be
changed; (2) the maximum number of Common Shares with respect to which Options
may be granted under the Plan shall not be increased except as permitted under
Section 9 hereof; and (3) the duration of the Plan under Section 12 hereof with
respect to any Options granted hereunder shall not be extended.
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<PAGE>
EXHIBIT A
(b) Manner of Shareholder Approval. The approval of the Company's
shareholders must occur by a majority of all outstanding shares of voting stock
entitled to vote thereon.
Notwithstanding the foregoing, no such suspension, discontinuance or
amendment shall terminate or affect the continued existence of rights created
under Options granted and outstanding or materially impair the rights of any
holder of an outstanding Option without the consent of such holder.
SECTION 12
Termination of Plan
-------------------
Unless earlier terminated as provided in the Plan, the Plan and all
authority granted hereunder shall terminate absolutely at 12:00 midnight on
August 28, 2003, which date is within 10 years after the date the 1993 Executive
Stock Option Plan was adopted by the Board, and no Options hereunder shall be
granted thereafter. Notwithstanding the foregoing, no NQSO other than an Option
which is treated as an NQSO under Section 7(b) hereof may be granted after
November 5, 2002, the date that is 10 years after the date the Employee
Compensation Stock Option Plan was adopted. Nothing contained in this Section
12, however, shall terminate or affect the continued existence of rights created
under Options issued hereunder and outstanding on August 28, 2003 (November 5,
2002, in the case of NQSOs) which by their terms extend beyond such date.
SECTION 13
Effective Date
--------------
This Plan merger and amendment and restatement shall become effective
on August 13, 1996 (the date the amendment and restatement was adopted by the
Board); provided that the Plan merger and amendment and restatement shall be
approved by the Company's shareholders (in accordance with Section 12(b)) within
12 months of such date. In the event such shareholder approval is not obtained,
the merger and amendment and restatement of the Plan and all Options granted
hereunder shall be null and void; no additional Options shall be granted
hereunder; and, if any shares of Common Stock were issued pursuant to such an
Option such Option shall be rescinded. Any shares issued pursuant to such an
Option shall not be counted in determining whether such approval is obtained. In
no event may any Option be exercised prior to shareholder approval of the Plan.
Nothing in this Section 13 shall limit an Optionee's right to exercise any Prior
Option in accordance with its terms. In addition, in the event shareholder
approval is not obtained as required by this Section 13, the Prior Plans shall
continue as separate Plans as though this merger and amendment and restatement
had never been attempted.
SECTION 14
Miscellaneous
-------------
(a) Governing Law. The Plan and the Option Agreements entered into,
and the Options granted hereunder, shall be governed by the applicable Code
provisions to the maximum extent possible. Otherwise, the operation of, and the
rights of Optionees under, the Plan, the Option Agreements, and the Options
shall be governed by applicable federal law and otherwise by the laws of the
state of New York.
(b) Rights. Neither the adoption or amendment and restatement of the
Plan nor any action of the Board or the Committee shall be deemed to give any
individual any right to be granted an Option, or any other right hereunder,
unless and until the Committee shall have granted such individual an Option, and
then his or her rights shall be only such as are provided by the Plan and the
Option Agreement.
Any Option under the Plan shall not entitle the holder thereof to any
rights as a shareholder of the Company prior to the exercise of such Option and
the issuance of the Common Shares pursuant thereto. Further, notwithstanding
any provisions of the Plan or any Option Agreement with an Optionee, the Company
and Subsidiaries shall have the right, in their discretion, to retire a Key
Employee at any time pursuant to their retirement rules or otherwise to
terminate a Key Employee's employment or a Consultant's service at any time for
any reason whatsoever.
-8-
<PAGE>
EXHIBIT A
(c) No Obligation to Exercise Option. The granting of an Option
shall impose no obligation upon an Optionee to exercise such Option.
(d) Non-Transferability. No Option shall be assignable or
transferable by an Optionee otherwise than by will or by the laws of descent and
distribution, and during the lifetime of the Optionee, any Option shall be
exercisable only by the Optionee or by his or her guardian or legal
representative. If an Optionee is married at the time of exercise of an Option
and if the Optionee so requests at the time of exercise, the certificate or
certificates issued shall be registered in the name of the Optionee and the
Optionee's spouse, jointly, with right of survivorship.
(e) Withholding and Use of Common Shares to Satisfy Tax Obligations.
The obligation of the Company to deliver Common Shares or to pay cash to a Key
Employee pursuant to any Option under the Plan shall be subject to applicable
federal, state and local tax withholding requirements. Subject to the
withholding requirements of applicable federal tax laws, the Committee, in its
discretion (and subject to such withholding rules ("Withholding Rules") as shall
be adopted by the Committee), may permit the Key Employee to satisfy the minimum
required federal withholding tax, in whole or in part, by electing to have the
Company withhold (or by returning to the Company) Common Shares, which shares
shall be valued, for this purpose, at their Fair Market Value on the date of
exercise of the Option (or if later, the date on which the Key Employee
recognizes ordinary income with respect to such Option) (the "Determination
Date").
An election to use Common Shares to satisfy federal tax withholding
requirements must be made in compliance with and subject to the Withholding
Rules. The Company may not withhold Common Shares in excess of the number
necessary to satisfy the minimum federal income tax withholding requirements. In
the event Common Shares acquired under the exercise of an ISO are used to
satisfy such withholding requirement, such Common Shares must have been held by
the Key Employee for a period of not less than the holding period described in
section 422(a)(1) of the Code on the Determination Date, or if such Common
Shares were acquired through the exercise of an NQSO or of an option under a
similar plan, such option must have been granted to the Key Employee at least
six months prior to the Determination Date.
(f) Listing and Registration of Common Shares. Each Option shall be
subject to the requirement that, if at any time the Committee shall determine,
in its discretion, that the listing, registration or qualification of the Common
Shares covered thereby upon any securities exchange or under any state or
federal law, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of, or in connection with, the granting of
such Option or the purchase or vesting of Common Shares thereunder, or that
action by the Company or by the Optionee should be taken in order to obtain an
exemption from any such requirement, no such Option may be exercised, in whole
or in part, unless and until such listing, registration, qualification, consent,
approval, or action shall have been effected, obtained, or taken under
conditions acceptable to the Committee. Without limiting the generality of the
foregoing, each Optionee or his or her legal representative or beneficiary may
also be required to give satisfactory assurance that Common Shares purchased
upon exercise of an Option are being purchased for investment and not with a
view to distribution, and certificates representing such Common Shares may be
legended accordingly.
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<PAGE>
DRINKER BIDDLE & REATH LLP
A PENNSYLVANIA LIMITED PARTNERSHIP
105 COLLEGE ROAD EAST, SUITE 300
P. O. BOX 627
PRINCETON, NJ 08542-0627
Phone (609) 716-5500
December 10, 1997
US WATS, Inc.
111 Presidential Boulevard
Suite 114
Bala Cynwyd, Pennsylvania 19004
Gentlemen:
We have acted as counsel to US WATS, Inc. (the "Company") in
connection with the preparation and filing with the Securities and Exchange
Commission of the Company's Registration Statement on Form S-8 under the
Securities Act of 1933 (the "Registration Statement) relating to 6,100 shares of
Common Stock of the Company, par value $.001 per share (the "Shares"), issuable
upon the exercise of options granted under the Company's Amended and Restated
Stock Option Plan (merger and restatement of the Company's Employee Compensation
Stock Option Plan and the Company's 1993 Executive Stock Option Plan) (the
"Plan").
In this connection, we have reviewed originals or copies, certified or
otherwise identified to our satisfaction, of the Company's Certificate of
Incorporation, its By-Laws, resolutions of its Board of Directors and
stockholders, the Plan, and such other documents and corporate records as we
have deemed appropriate in the circumstances.
Based upon the foregoing and consideration of such questions of law as
we have deemed relevant, we are of the opinion that the issuance of the Shares
by the Company upon the exercise of stock options properly granted under the
Plan has been duly authorized by the necessary corporate action of the Board of
Directors and stockholders of the Company, and such Shares, upon exercise of
such options and payment therefor in accordance with the terms of the Plan, will
be validly issued, fully paid and nonassessable by the Company.
The opinions expressed herein are limited to the federal laws of the
United States, the Business Corporation Law of the State of New York and the
laws of the State of New Jersey.
We consent to the use of this opinion as an exhibit to the
Registration Statement. This does not constitute a consent under Section 7 of
the Securities Act of 1933 since we have not certified any part of such
Registration Statement and do not otherwise come within the categories of
persons whose consent is required under said Section 7 or the rules and
regulations of the Securities and Exchange Commission.
Very truly yours,
/s/ DRINKER BIDDLE & REATH LLP
-------------------------------------
DRINKER BIDDLE & REATH LLP
A Pennsylvania Limited Partnership
EXHIBIT 23a
We consent to the incorporation by reference in this Registration Statement of
US WATS, Inc. on Form S-8 of our report dated March 28, 1997, except for Note 9
for which the date is April 29, 1997, appearing in the Annual Report on Form 10-
K of US WATS, Inc. for the year ended December 31, 1996.
DELOITTE & TOUCHE LLP
Philadelphia, Pennsylvania
December 12, 1997
EXHIBIT 23b
We consent to the incorporation by reference in this Registration Statement of
US WATS, Inc. on Form S-8 of our report on the consolidated financial statements
as of and for the year ended December 31, 1995 dated March 25, 1996, appearing
in the Annual Report on Form 10-K of US WATS, Inc. for the year ended December
31, 1996.
RUDOLPH, PALITZ LLP
Plymouth Meeting, Pennsylvania
December 10, 1997
EXHIBIT 23c
We consent to the incorporation by reference in this Registration Statement of
US WATS, Inc. on Form S-8 of our report on the consolidated statements of
operations, shareholder's equity, and cash flows for the year ended December 31,
1994 dated March 8, 1995, appearing in the Annual Report on Form 10-K of US
WATS, Inc. for the year ended December 31, 1996.
BARATZ & ASSOCIATES, P.A.
Marlton, New Jersey
December 9, 1997
