<PAGE> 1
As filed with the Securities and Exchange Commission on November 7, 1996
Registration No. 333-______
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
MIDCOM COMMUNICATIONS INC.
(Exact name of issuer as specified in its charter)
Washington 91-1438806
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1111 Third Avenue, Seattle, Washington 98101
(Address of Principal Executive Offices) (Zip Code)
MIDCOM COMMUNICATIONS INC. AMENDED AND RESTATED 1993 STOCK OPTION PLAN
(Full titles of the plan)
Paul P. Senio
Vice President and General Counsel
MIDCOM Communications
1111 Third Avenue
Seattle, Washington 98101
(Name and address of agent for service)
(206) 628-8000
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==================================================================================================================================
Title of Proposed Maximum Proposed Maximum Amount of
Securities Amount to be Offering Price Aggregate Registration
to be Registered Registered (1) Per Share Offering Price Fee
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value
$.0001, subject to 2,220,723 shares $1.00 - $18.50 $18,796,611 $6,482
outstanding options (2)
- ----------------------------------------------------------------------------------------------------------------------------------
Common Stock, par
value $.0001, not subject 779,277 shares $10.6875 $8,328,523 $2,872
to outstanding options (3)
- ----------------------------------------------------------------------------------------------------------------------------------
Total (2)(3)..................................................................................................... $9,354
==================================================================================================================================
</TABLE>
(1) Pursuant to Rule 416(c), this registration statement also includes
an indeterminate number of shares as may become issuable by reason of the
anti-dilution provisions of the Amended and Restated 1993 Stock Option Plan.
(2) Based upon the exercise price of options granted and outstanding as
of the date of the filing of the registration statement.
(3) Estimated, pursuant to Rule 457(h)(1), solely for the purpose of
calculating the amount of the registration fee which is based on the average of
the high and low prices for shares of common stock of MIDCOM Communications Inc.
on November 5, 1996, as quoted by the National Association of Securities Dealers
Automated Quotation National Market System which was $10.6875 per share.
PAGE 1 OF ___ PAGES
EXHIBIT INDEX IS LOCATED ON PAGE 6.
<PAGE> 2
REGISTRATION OF ADDITIONAL SECURITIES
Pursuant to General Instruction E, this registration statement on Form
S-8 is filed by MIDCOM Communications Inc. (the "Company") to register
additional securities under the Company's Revised and Restated 1993 Stock Option
Plan (the "Plan") described in Registration Statement No. 33-94682 to be issued
pursuant to an amendment to the Plan approved by the Company's Board of
Directors on July 25, 1996 and by the Company's shareholders on October 29,
1996. Portions of Registration Statement No. 33-94682 are incorporated herein by
reference.
PART II
INFORMATION REQUIRED IN THE REGISTRATION
STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The documents listed in (a) through (c) below are incorporated by reference in
this registration statement.
(a) The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995, as amended, filed with the Commission
pursuant to Section 13(a) of the Exchange Act of 1934, as
amended (the "Exchange Act").
(b) All other reports filed pursuant to Section 13(a) or 15(d) of
the Exchange Act since the filing of the Form 10-K referred to
in (a) above.
(c) The description of the Common Stock of the registrant
contained in the registration statement on Form 8-A (File No.
0-18054) filed under the Exchange Act registering such Common
Stock under Section 12 of the Exchange Act.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date hereof and prior to the termination of
the offering of the common stock pursuant to the Plan described herein shall be
deemed to be incorporated by reference herein and to be a part hereof from the
date of filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not Applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
None.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 23B.08.320 of the Washington Business Corporation Act allows a
Washington corporation to include in its certificate of incorporation a
provision which limits a director's personal liability to the corporation or its
shareholders for monetary damages for conduct as a director, with certain
exceptions. The Company's Articles of Incorporation includes such provision
limiting directors' personal liability in accordance with Section 23B.08.320 of
the Washington Business Corporation Act.
2
<PAGE> 3
Additionally, the Company has the power, pursuant to Section 23B.08.510
and 23B.08.570 of the Washington Business Corporation Act, to indemnify its
directors, officers and other persons for certain acts. Pursuant to its by-laws,
the Company will indemnify its officers, directors and other persons described
in Section 23B.08.510 of the Washington Business Corporation Act to the full
extent permitted by law. The Company maintains insurance for this purpose. Such
insurance generally insures the directors and officers against claims due to any
breach of duty, neglect, error, misstatement, misleading statement, omission or
other act solely by reason of their being directors and officers and for acts,
errors and omissions by them in the provision of professional services to the
Company.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not Applicable.
ITEM 8. EXHIBITS.
Exhibit Number Exhibit
4.1 MIDCOM Communications Inc. Revised and Restated 1993 Stock
Option Plan
5.1 Opinion of Heller, Ehrman, White & McAuliffe
23.1 Consent of Heller, Ehrman, White & McAuliffe (See Exhibit
5.1)
23.2 Consent of Ernst & Young LLP, Independent Auditors
24 Power of Attorney (See page 5 of this Registration
Statement)
ITEM 9. UNDERTAKINGS.
(a) 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:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) 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 the
registration statement;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the 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 by the
3
<PAGE> 4
registrant pursuant to section 13 or section 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in this registration statement.
(2) That for the purpose of determining any liability under
the Securities Act of 1933, 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 undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934, (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
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.
(h) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 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 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 of whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
4
<PAGE> 5
SIGNATURES
The Registrant. 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 Seattle, State of Washington, on the 29th day of
October, 1996.
MIDCOM COMMUNICATIONS INC.
By:/s/ Robert J. Chamberlain
--------------------------------
Robert J. Chamberlain
Executive Vice President and
Chief Financial Officer
POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes
and appoints Robert J. Chamberlain and Paul P. Senio, and each of them, with
full power of substitution and full power to act without the other, as his true
and lawful attorney-in-fact and agent to act in his name, place and stead and to
execute in the name and on behalf of each person, individually and in each
capacity stated below, any and all amendments to this registration statement,
and to file the same, including any and all post-effective amendments and any
registration statement relating to the same offering as this registration
statement that is to be effective upon filing pursuant to Rule 462(b) under the
Securities Act of 1933, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that said attorneys-in-fact, or their substitute or 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 indicated below on the 29th day of October, 1996.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ William H. Oberlin President, Chief Executive Officer and Director
- ------------------------------ (Principal Executive Officer)
William H. Oberlin
/s/ Robert J. Chamberlain Executive Vice President and Chief Financial Officer
- ------------------------------ (Principal Accounting and Financial Officer)
Robert J. Chamberlain
/s/ Paul H. Pfleger Director
- ------------------------------
Paul H. Pfleger
/s/ John M. Orehek Director
- ------------------------------
John M. Orehek
/s/ Scott B. Perper Director
- ------------------------------
Scott B. Perper
/s/ Karl D. Guelich Director
- ------------------------------
Karl D. Guelich
/s/ John M. Zrno Director
- ------------------------------
John M. Zrno
/s/ Marvin C. Moses Director
- ------------------------------
Marvin C. Moses
/s/ Daniel M. Dennis Director
- ------------------------------
Daniel M. Dennis
</TABLE>
5
<PAGE> 6
EXHIBIT INDEX
Sequential
Exhibit Number Exhibit Page No.
4.1 MIDCOM Communications Inc. Revised and
Restated 1993 Stock Option Plan
5.1 Opinion of Heller, Ehrman, White &
McAuliffe
23.1 Consent of Heller, Ehrman, White &
McAuliffe (See Exhibit 5.1)
23.2 Consent of Ernst & Young LLP, Independent
Auditors
24 Power of Attorney (See page 5 of this
Registration Statement)
6
<PAGE> 1
EXHIBIT 4.1
MIDCOM COMMUNICATIONS INC.
REVISED AND RESTATED
1993 STOCK OPTION PLAN
AS AMENDED ON FEBRUARY 21, 1994, MARCH 28, 1994,
JULY 26, 1995, AND JULY 25, 1996
This Stock Option Plan (the "Plan") provides for the
grant of options to acquire shares of Common Stock, $.0001 par value (the
"Common Stock"), of MIDCOM COMMUNICATIONS INC., a Washington corporation (the
"Company"). Stock options granted under this Plan that qualify under Section 422
of the Internal Revenue Code of 1986, as amended (the "Code"), are referred to
in this Plan as "Incentive Stock Options." Both Incentive Stock Options and
stock options that do not qualify under Section 422 of the Code ("Non-Qualified
Stock Options") granted under this Plan are referred to as "Options."
1. PURPOSES.
The purposes of this Plan are to retain the services
of valued key employees and consultants of the Company and such other persons as
the Plan Administrator shall select in accordance with Section 3 below, to
encourage such persons to acquire a greater proprietary interest in the
Company, thereby strengthening their incentive to achieve the objectives of
the shareholders of the Company, and to serve as an aid and inducement in the
hiring of new employees, consultants and other persons selected by the Plan
Administrator.
2. ADMINISTRATION.
This Plan shall be administered by the Board of
Directors of the Company (the "Board"). If the Board so desires, the Plan shall
be administered by a committee designated by the Board and composed of one (1)
or more members of the Board, which committee (the "Committee") may be an
executive, compensation or other committee, including a separate committee
especially created for this purpose. In the event the Company is or becomes
subject to the provisions of Section 16 of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), the Board shall attempt to provide for
administration of the Plan, insofar as it relates to the participation of
officers, directors or shareholders of the Company who are subject to the
reporting and liability provisions of Section 16 of the Exchange Act (the
"Insiders"), in a manner which shall qualify the grant, exercise, expiration or
surrender of Options under this Plan for the treatment afforded by Securities
and Exchange Commission Rule 16b-3, as amended from time to time, or any
successor rule or regulatory requirements (the "Rule"). The Committee shall have
the powers and authority vested in the Board hereunder (including the power and
authority to interpret any provision of this Plan or of any Option). The members
of any such Committee shall serve at the pleasure of the Board. A majority of
the members of the Committee shall constitute a quorum, and all actions of the
Committee shall be taken by a majority of the members present. Any action may be
taken by a written instrument signed by all of the members of the Committee and
any action so taken shall be fully effective as if it had been taken at a
meeting. The Board, or any committee thereof appointed to administer the Plan,
is referred to herein as the "Plan Administrator."
<PAGE> 2
Subject to the provisions of this Plan, and with a
view to effecting its purpose, the Plan Administrator shall have sole authority,
in its absolute discretion, to (a) construe and interpret this Plan; (b) define
the terms used in this Plan; (c) prescribe, amend and rescind rules and
regulations relating to this Plan; (d) correct any defect, supply any omission
or reconcile any inconsistency in this Plan; (e) determine the individuals to
whom Options shall be granted under this Plan and whether the Option is an
Incentive Stock Option or a Non-Qualified Stock option; (f) determine the time
or times at which options shall be granted under this Plan; (g) determine the
number of shares of Common Stock subject to each Option, the exercise price of
each Option, the duration of each Option and the times at which each Option
shall become exercisable; (h) determine all other terms and conditions of
Options; and (i) make all other determinations necessary or advisable for the
administration of this Plan. In addition, the Plan Administrator may grant to
any officer of the Company the authority to grant options and otherwise
administer the Plan solely with respect to persons who are not Insiders. All
decisions, determinations and interpretations made by the Plan Administrator
shall be binding and conclusive on all participants in this Plan and on their
legal representatives, heirs and beneficiaries.
The Board or the Committee may delegate to one or
more executive officers of the Company the authority to grant Options under this
Plan to employees of the Company who, at the time of grant, are not subject to
Section 16(b) of the Exchange Act with respect to the Common Stock
("Non-Insiders"), and in connection therewith the authority to determine: (a)
whether the Option in an Incentive Stock Option or a Non-qualified Stock Option;
(b) the number of shares of Common Stock subject to such Option; (c) the
duration of the Option; (d) the vesting schedule for determining the times at
which such Option shall become exercisable; and (e) all other terms and
conditions of such Options. The exercise price for any Option granted by action
of an executive officer pursuant to such delegation of authority shall not be
less than the fair market value per share of the Common Stock on the Date of
Grant determined by reference to the closing price for the Common Stock on the
day preceding the Date of Grant. Unless expressly approved in advance by the
Board or the Committee, such delegation of authority shall not include the
authority to accelerate the vesting, extend the period for exercise or otherwise
alter the terms of outstanding Options. The term "Plan Administrator" when used
in any provision of this Plan other than Sections 2, 5(1) and 11 shall be deemed
to refer to the Board, Ashok Rao, or the Committee, as the case may be, who are
hereby authorized to grant Options pursuant hereto, insofar as such provision
may be applied to Non-Insiders and Options granted to Non-Insiders.
3. ELIGIBILITY.
Incentive stock options may be granted to any
individual who, at the time the Option is granted, is an employee of the Company
or any Related Corporation (as defined below), including employees who are
Directors of the Company ("Employees"). Non-Qualified Stock Options may be
granted to Employees and to such other persons who are not Employees as the Plan
Administrator shall select. Options may be granted in substitution for
outstanding Options of another corporation in connection with the merger,
consolidation, acquisition of property or stock or other reorganization between
such other corporation and the Company or any subsidiary of the Company. Options
also may be granted in exchange for outstanding Options. Any person to whom an
Option is granted under this Plan is referred to as an "Optionee."
2
<PAGE> 3
Provided that shares of Common Stock remain available
for issuance pursuant to Options granted pursuant to this Plan, Directors of the
Company who at the time of election to the Board of Directors are not also
employees of the Company or of any Related Corporation shall concurrent with
election to the Board of Directors (the "Election Date"), automatically receive
a Non-Qualified Stock Option to purchase 50,000 shares of Common Stock, subject
to adjustment as set forth in Section 5(m) below, at an exercise price equal to
the fair market value of the Common Stock on the Election Date. Except as noted
below with respect to prior grants, each Option granted pursuant to this
paragraph shall become exercisable at a rate of twenty percent (20%) for each
year of service commencing on the Election Date, and such option shall expire,
unless otherwise terminated pursuant to Section 5(g), ten (10) years from the
Election Date. Each Non-Employee Director serving as a director of the Company
as of July 25, 1996, shall receive an increase to 50,000 in the Option shares
granted to Non-Employee Directors pursuant to this paragraph, an Option (a
"Recognition Option") to purchase a number of shares of Common Stock equal to
50,000 minus the number of shares covered by Options previously granted to such
Non-Employee Director pursuant to this paragraph. The vesting schedule for the
Recognition Options will be twenty percent (20%) per year as stated above. The
vesting schedule applicable to a Recognition Option shall commence with the date
of the earliest prior grant under this section before the amendment of July 25,
1996, but in no event will the vesting schedule change with respect to the
earlier grant or grants made before the enactment of the amendment to this
section on July 25, 1996. For purposes of this paragraph, the term "fair market
value" on the Date of Grant shall be deemed to be the closing price on the day
preceding the Date of Grant. Such increase in Option shares may not be sold by
the option holder for a period of at least six (6) months from the date of
shareholder ratification of the number of shares which may be issued under the
Plan.
As used in this Plan, the term "Related Corporation,"
when referring to a subsidiary corporation, shall mean any corporation (other
than the Company) in an unbroken chain of corporations beginning with the
Company if, at the time of the granting of the Option, each of the corporations
other than the last corporation in the unbroken chain owns stock possessing
fifty percent (50%) or more of the total combined voting power of all classes of
stock of one of the other corporations in such chain. When referring to a parent
corporation, the term "Related Corporation" shall mean any corporation (other
than the Company) in an unbroken chain of corporations ending with the Company
if, at the time of granting of the Option, each of the corporations other than
the Company owns stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock of one of the other corporations
in such chain.
4. STOCK.
The Plan Administrator is authorized to grant Options
to acquire up to a total of Four Million Seven Hundred and Thirty-Nine Thousand
and Sixty-Two (4,739,062) shares of the Company's authorized but unissued Class
A Common Stock. The number of shares with respect to which Options may be
granted hereunder is subject to adjustment as set forth in Section 5(m) hereof.
In the event that any outstanding Option expires or is terminated for any
reason, the shares of Common Stock allocable to the unexercised portion of such
Option may again be subject to an Option to the same Optionee or to a different
person eligible under Section 3 of this Plan.
3
<PAGE> 4
5. TERMS AND CONDITIONS OF OPTIONS.
Each Option granted under this Plan shall be
evidenced by a written agreement approved by the Plan Administrator (the
"Agreement"). Agreements may contain such additional provisions, not
inconsistent with this Plan, as the Plan Administrator in its discretion may
deem advisable. All Options also shall comply with the following requirements:
(a) Number of Shares and Type of Option.
Each Agreement shall state the number of shares of
Common Stock to which it pertains and whether the Option is intended to be an
Incentive Stock Option or a Non-Qualified Stock Option. In the absence of action
to the contrary by the Plan Administrator in connection with the grant of an
Option, all Options shall be Non-Qualified Stock Options. The aggregate fair
market value (determined at the Date of Grant, as defined below) of the stock
with respect to which Incentive Stock Options are exercisable for the first time
by the Optionee during any calendar year (granted under this Plan and all other
Incentive Stock Option plans of the Company, a Related Corporation or a
predecessor corporation) shall not exceed $100,000, or such other limit as may
be prescribed by the Code as it may be amended from time to time. Any Option
which exceeds the annual limit shall not be void but rather shall be a
Non-Qualified Stock option.
(b) Date of Grant.
Each Agreement shall state the date the Plan
Administrator has deemed to be the effective date of the option for purposes of
this Plan (the "Date of Grant").
(c) Option Price.
Each Agreement shall state the price per share of
Common Stock at which it is exercisable. The exercise price shall be fixed by
the Plan Administrator at whatever price the Plan Administrator may determine in
the exercise of its sole discretion in good faith; provided that the per share
exercise price for an Incentive Stock Option shall not be less than the fair
market value per share of the Common Stock at the Date of Grant as determined
by the Plan Administrator in good faith; provided further, that with respect
to Incentive Stock Options granted to greater-than-10 percent (>10%)
shareholders of the Company (as determined with reference to Section 424(d) of
the Code), the exercise price per share shall not be less than 110 percent
(110%) of the fair market value per share of the Common Stock at the Date of
Grant; and, provided further, that Options granted in substitution for
outstanding options of another corporation in connection with the merger,
consolidation, acquisition of property or stock or other reorganization
involving such other corporation and the Company or any subsidiary of the
Company may be granted with an exercise price equal to the exercise price for
the substituted option of the other corporation, subject to any adjustment
consistent with the terms of the transaction pursuant to which the substitution
is to occur.
4
<PAGE> 5
(d) Duration of Options.
At the time of the grant of the Option, the Plan
Administrator shall designate, subject to paragraph 5(g) below, the expiration
date of the Option, which date shall not be later than 10 years from the Date of
Grant in the case of Incentive Stock Options; provided, that the expiration date
of any Incentive Stock Option granted to a greater-than-10 percent shareholder
of the Company (as determined with reference to Section 424(d) of the Code)
shall not be later than five years from the Date of Grant. In the absence of
action to the contrary by the Plan Administrator in connection with the grant of
a particular Option, and except in the case of Incentive Stock Options as
described above, all Options granted under this Plan shall expire ten (10) years
from the Date of Grant.
(e) Vesting Schedule.
No Option shall be exercisable until it has vested.
The vesting schedule for each Option shall be specified by the Plan
Administrator at the time of grant of the Option; provided, that if no vesting
schedule is specified at the time of grant, the Option shall vest according to
the following schedule:
<TABLE>
<CAPTION>
Number of Years Percentage of Total
Following Date of Grant Option Vested
----------------------- -------------
<S> <C>
One 20%
Two 40%
Three 60%
Four 80%
Five 100%
</TABLE>
(f) Acceleration of Vesting.
The vesting of one or more outstanding Options may be
accelerated by the Plan Administrator at such times and in such amounts as it
shall determine in its sole discretion. The vesting of Options also shall be
accelerated under the circumstances described in Section 5(m) below.
5
<PAGE> 6
(g) Term of Option.
Vested Options shall terminate, to the extent not
previously exercised, upon the occurrence of the first of the following events:
(i) the expiration of the Option, as designated by the Plan Administrator in
accordance with Section 5(d) above; (ii) the expiration of 90 days from the date
of an Optionee's termination of employment or contractual relationship with the
Company or any Related Corporation for any reason whatsoever other than death or
Disability (as defined below) unless, in the case of a Non-Qualified Stock
Option, the exercise period is extended by the Plan Administrator until a date
not later than the expiration date of the Option; or (iii) the expiration of one
year from (A) the date of death of the optionee or (B) cessation of an
Optionee's employment or contractual relationship by reason of Disability (as
defined below) unless, in the case of a Non-Qualified Stock Option, the exercise
period is extended by the Plan Administrator until a date not later than the
expiration date of the Option. If an Optionee's employment or contractual
relationship is terminated by death, any option held by the Optionee shall be
exercisable only by the person or persons to whom such Optionee's rights under
such Option shall pass by the Optionee's will or by the laws of descent and
distribution of the state or county of the Optionee's domicile at the time of
death. For purposes of the Plan, unless otherwise defined in the Agreement,
"Disability" shall mean any physical, mental or other health condition which
substantially impairs the Optionee's ability to perform her or his assigned
duties for one hundred twenty (120) days or more in any two hundred forty (240)
day period or that can be expected to result in death. The Plan Administrator
shall determine whether an Optionee has incurred a Disability on the basis of
medical evidence acceptable to the Plan Administrator. Upon making a
determination of Disability, the Plan Administrator shall, for purposes of the
Plan, determine the date of an Optionee's termination of employment or
contractual relationship. Unvested Options shall terminate immediately upon the
termination of employment of the Optionee by the Company for any reason
whatsoever, including death or disability.
Unless accelerated in accordance with Section 5(f)
above, unvested Options shall terminate immediately upon termination of
employment of the Optionee by the Company for any reason whatsoever, including
death or Disability. If, in the case of an Incentive Stock Option, an Optionee's
relationship with the Company changes (e.g., from an Employee to a non-Employee,
such as a consultant), such change shall not constitute a termination of an
Optionee's employment with the Company but rather the optionee's Incentive Stock
Option shall automatically be converted into a Non-Qualified Stock Option if the
Plan Administrator so determines.
For purposes of this Plan, transfer of employment
between or among the Company and/or any Related Corporation shall not be deemed
to constitute a termination of employment with the Company or any Related
Corporations. For purposes of this subsection with respect to Incentive Stock
Options, employment shall be deemed to continue while the Optionee is on
military leave, sick leave or other bona fide leave of absence (as determined by
the Plan Administrator). The foregoing notwithstanding, employment shall not be
deemed to continue beyond the first ninety (90) days of such leave, unless the
optionee's re-employment rights are guaranteed by statute or by contract.
6
<PAGE> 7
(h) Exercise of Options.
Options shall be exercisable, either all or in part,
at any time after vesting, until termination; provided, however, that after
registration of any of the Company's securities under Section 12 of the Exchange
Act and regardless of when the Option is exercised, any Optionee who is an
Insider shall be precluded from selling or transferring any Common Stock or
other security underlying an Option during the six (6) months immediately
following the grant of that Option. If less than all of the shares included in
the vested portion of any Option are purchased, the remainder may be purchased
at any subsequent time prior to the expiration of the option term. No portion of
any Option for less than 100 shares (as adjusted pursuant to Section 5(m) below)
may be exercised; provided, that if the vested portion of any Option is less
than 100 shares, it may be exercised with respect to all shares for which it is
vested. Only whole shares may be issued pursuant to an Option, and to the extent
that an Option covers less than one (1) share, it is unexercisable. Options or
portions thereof may be exercised by giving written notice to the Company, which
notice shall specify the number of shares to be purchased, and be accompanied by
payment in the amount of the aggregate exercise price for the Common Stock so
purchased, which payment shall be in the form specified in Section 5(i) below.
The Company shall not be obligated to issue, transfer or deliver a certificate
of Common Stock to any Optionee, or to his personal representative, until the
aggregate exercise price has been paid for all shares for which the option shall
have been exercised and adequate provision has been made by the Optionee for
satisfaction of any tax withholding obligations associated with such exercise.
During the lifetime of an Optionee, Options are exercisable only by the
Optionee.
(i) Payment upon Exercise of Option.
Upon the exercise of any Option, the aggregate
exercise price shall be paid to the Company in cash or by certified or cashier's
check. In addition, upon approval of the Plan Administrator, an Optionee may pay
for all or any portion of the aggregate exercise price by delivering to the
Company shares of Common Stock previously held by such Optionee, or by complying
with any other payment mechanism approved by the Plan Administrator from time to
time. The shares of Common Stock received or withheld by the Company as payment
for shares of Common Stock purchased upon the exercise of Options shall have a
fair market value at the date of exercise (as determined by the Plan
Administrator) equal to the aggregate exercise price (or portion thereof) to be
paid by the Optionee upon such exercise.
(j) Rights as a Shareholder.
An Optionee shall have no rights as a shareholder
with respect to any shares covered by an Option until such Optionee becomes a
record holder of such shares, irrespective of whether such optionee has given
notice of exercise. Subject to the provisions of Sections 5(m) hereof, no rights
shall accrue to an Optionee and no adjustments shall be made on account of
dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights declared on, or created in, the
Common Stock for which the record date is prior to the date the Optionee becomes
a record holder of the shares of Common Stock covered by the Option,
irrespective of whether such Optionee has given notice of exercise.
7
<PAGE> 8
(k) Transfer of Option.
Unless otherwise specified in the Agreement or by the
Plan Administrator, Options granted under this Plan and the rights and
privileges conferred by this Plan may not be transferred, assigned, pledged or
hypothecated in any manner (whether by operation of law or otherwise) other than
by will or by applicable laws of descent and distribution, and shall not be
subject to execution, attachment or similar process. Upon any attempt to
transfer, assign, pledge, hypothecate or otherwise dispose of any Option or of
any right or privilege conferred by this Plan contrary to the provisions hereof,
or upon the sale, levy or any attachment or similar process upon the rights and
privileges conferred by this Plan, such Option shall thereupon terminate and
become null and void, provided, however, that, effective August 15, 1996,
nothing contained in this Section 5(k) shall preclude an Optionee, upon written
notice to the Administrator, from transferring an option held by the Optionee or
to be granted to the Optionee to (i) a trust or series of trusts which are
established solely for the benefit of the immediate family members of the
Optionee, or (ii) a partnership or partnerships of which the only partners are
members of the Optionee's immediate family.
(l) Securities Regulation and Tax Withholding.
(1) Shares shall not be issued with respect
to an Option 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 Exchange Act
of 1933, as amended, the Exchange Act, the rules and
regulations thereunder and the requirements of any stock
exchange upon which such shares may then be listed, 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.
As a condition to the exercise of an Option,
the Plan Administrator may require the optionee to represent
and warrant in writing at the time of such exercise that the
shares are being purchased only for investment and without any
then-present intention to sell or distribute such shares. At
the option of the Plan Administrator, a stop-transfer order
against such shares may be placed on the stock books and
records of the Company, and a legend indicating that the stock
may not be pledged, sold or otherwise transferred unless an
opinion of counsel is provided stating that such transfer is
not in violation of any applicable law or regulation, may be
stamped on the certificates representing such shares in order
to assure an exemption from registration. The Plan
Administrator also may require such other documentation as may
from time to time be necessary to comply with federal and
state securities laws. THE COMPANY HAS NO OBLIGATION TO
UNDERTAKE REGISTRATION
8
<PAGE> 9
OF OPTIONS OR THE SHARES OF STOCK ISSUABLE UPON THE EXERCISE
OF OPTIONS.
(2) As a condition to the exercise of any
Option granted under this Plan, the optionee shall make such
arrangements as the Plan Administrator may require for the
satisfaction of any federal, state or local withholding tax
obligations that may arise in connection with such exercise.
(3) The issuance, transfer or delivery of
certificates of Common Stock pursuant to the exercise of
Options may be delayed, at the discretion of the Plan
Administrator, until the Plan Administrator is satisfied that
the applicable requirements of the federal and state
securities laws and the withholding provisions of the Code
have been met.
(m) Stock Dividend, Reorganization or Liquidation.
(1) If (i) the Company shall at any time be
involved in a transaction described in Section 424(a) of the
Code (or any successor provision) or any "corporate
transaction" described in the regulations thereunder; (ii) the
Company shall declare a dividend payable in, or shall
subdivide or combine, its Common Stock or (iii) any other
event with substantially the same effect shall occur, the Plan
Administrator shall, with respect to each outstanding Option,
proportionately adjust the number of shares of Common Stock
and/or the exercise price per share so as to preserve the
rights of the Optionee substantially proportionate to the
rights of the Optionee prior to such event, and to the extent
that such action shall include an increase or decrease in the
number of shares of Common Stock subject to outstanding
Options, the number of shares available under Section 4 of
this Plan shall automatically be increased or decreased, as
the case may be, proportionately, without further action on
the part of the Plan Administrator, the Company or the
Company's shareholders.
(2) If the Company is liquidated or
dissolved, the Plan Administrator shall allow the holders of
any outstanding Options to exercise all or any part of the
unvested portion of the Options held by them; provided,
however, that such options must be exercised prior to the
effective date of such liquidation or dissolution. If the
Option holders do not exercise their Options prior to such
effective date, each outstanding Option shall terminate as of
the effective date of the liquidation or dissolution.
(3) The foregoing adjustments in the shares
subject to Options shall be made by the Plan Administrator, or
by any successor administrator of this Plan, or by the
applicable terms of any assumption or substitution document.
(4) The grant of an Option shall not affect
in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure, to merge, consolidate or dissolve, to liquidate or to sell or
transfer all or any part of its business or assets.
9
<PAGE> 10
(n) Change of Control.
(1) Any and all options granted under this Plan that have been
outstanding hereunder for at least six (6) months at the time of occurrence of
any of the events described in Subparagraphs (A) and (B) below (an "Eligible
Option") shall become immediately vested and fully exercisable upon the
occurence of the following events:
(A) The date that a tender or exchange offer
for Common Stock by any Person (other than the Company, any
subsidiary of the Company, any employee benefit plan of the
Company or of any subsidiary of the Company, or any Person or
entity organized, appointed or established by the Company for
or pursuant to the terms of any such employee benefit plan) is
first published or sent or given within the meaning of Rule
14d-2 under the Exchange Act (including any extensions or
renewals of such offer), unless by the terms of such offer the
offeror, upon consummation thereof, would be the Beneficial
Owner of less than thirty percent (30%) of the shares of
Common Stock then outstanding;
(B) The day on which the shareholders of the
Company (or, if later, approval by the shareholders of any
Person) duly approve any merger, consolidation, reorganization
or other transaction providing for the conversion or exchange
of more than fifty percent (50%) of the outstanding shares of
Common Stock into securities of any Person, or cash, or
property, or a combination of any of the foregoing; provided,
however, options which are converted into options to purchase
shares of Exchange Stock are subject to the provisions of item
2 below.
(2) If the shareholders of the Company receive shares of
capital stock of another Person ("Exchange Stock") in exchange for or in place
of shares of Common Stock in any transaction involving any merger,
consolidation, reorganization or other transaction providing for the conversion
or exchange of all or substantially all outstanding shares of Common Stock into
Exchange Stock, then at the closing of such transaction all Options granted
hereunder shall be converted into options to purchase shares of Exchange Stock
Option. The number of shares of Exchange Stock issuable upon exercise of an
Exchange Stock Option and the exercise price therefor shall be determined by the
Plan Administrator by adjusting the number of shares of Common Stock issuable
upon exercise of the Option converted into such Exchange Stock Option, and the
exercise price therefor, in the same proportion as used for determining the
shares of Exchange Stock received by holders of Common Stock in connections with
a transaction described in this item (2). All Exchange Stock Options shall be
fully vested and immediately exercisable.
(3) For the purpose of this Section 5(n): "Person" shall
include any individual, firm, corporation, partnership or other entity; (ii)
"Affiliate" and "Associate" shall have the meanings assigned to them in Rule
12b-2 under the Exchange Act; and (iii) "Beneficial Owner" shall have the
meaning assigned to it in Rule 16a-1 under the Exchange Act.
10
<PAGE> 11
(o) No individual shall be granted options hereunder
of an amount in excess of 1,500,000 shares in any three (3) year period.
6. EFFECTIVE DATE; TERM.
This Plan shall be effective as of December 10, 1993,
SUBJECT TO RECEIPT OF SHAREHOLDER APPROVAL. Incentive Stock options may be
granted by the Plan Administrator from time to time thereafter until December 9,
2003. Non-Qualified Stock options may be granted until this Plan is terminated
by the Board in its sole discretion. Termination of this Plan shall not
terminate any Option granted prior to such termination. Any Options granted by
the Plan Administrator prior to the approval of this Plan by a majority of the
shareholders of the Company shall be granted subject to ratification of this
Plan by the shareholders of the Company within twelve (12) months after this
Plan is adopted by the Board, and if shareholder ratification is not obtained,
each and every Option granted under this Plan shall be null and void and shall
convey no rights to the holder thereof.
7. NO OBLIGATIONS TO EXERCISE OPTION.
The grant of an Option shall impose no obligation
upon the optionee to exercise such Option.
8. NO RIGHT TO OPTIONS OR TO EMPLOYMENT.
Whether or not any Options are to be granted under
this Plan shall be exclusively within the discretion of the Plan Administrator,
and nothing contained in this Plan shall be construed as giving any person any
right to participate under this Plan. The grant of an Option shall in no way
constitute any form of agreement or understanding binding on the Company or any
Related Company, express or implied, that the Company or any Related Company
will employ or contract with an Optionee for any length of time, nor shall it
interfere in any way with the Company's or, where applicable, a Related
Company's right to terminate Optionee's employment at any time, which right is
hereby reserved.
9. APPLICATION OF FUNDS.
The proceeds received by the Company from the sale of
Common Stock issued upon the exercise of Options shall be used for general
corporate purposes, unless otherwise directed by the Board.
11
<PAGE> 12
10. INDEMNIFICATION OF PLAN ADMINISTRATOR.
In addition to all other rights of indemnification
they may have as members of the Board, members of the Plan Administrator shall
be indemnified by the Company for all reasonable expenses and liabilities of any
type or nature, including attorneys' fees, incurred in connection with any
action, suit or proceeding to which they or any of them are a party by reason
of, or in connection with, this Plan or any Option granted under this Plan, and
against all amounts paid by them in settlement thereof (provided that such
settlement is approved by independent legal counsel selected by the Company),
except to the extent that such expenses relate to matters for which it is
adjudged that such Plan Administrator member is liable for willful misconduct;
provided, that within fifteen (15) days after the institution of any such
action, suit or proceeding, the Plan Administrator member involved therein
shall, in writing, notify the Company of such action, suit or proceeding, so
that the Company may have the opportunity to make appropriate arrangements to
prosecute or defend the same.
11. AMENDMENT OF PLAN.
The Plan Administrator may, at any time, modify,
amend or terminate this Plan and Options granted under this Plan, including,
without limitation, such modifications or amendments as are necessary to
maintain compliance with applicable statutes, rules or regulations; provided
however, that any amendment for which shareholder approval is required by the
Rule in order for the Plan to be eligible or continue to qualify for the
benefits of the Rule shall be subject to approval of the requisite percentage of
the shareholders of the Company in accordance with the Rule. Without limiting
the generality of the foregoing, the Plan Administrator may modify grants to
persons who are eligible to receive Options under this Plan who are foreign
nationals or employed outside the United States to recognize differences in
local law, tax policy or custom.
Dates of Approval (as amended) by Board of Directors of the
Company: December 29, 1993, February 21, 1994, March
28, 1994, July 26, 1995, and July 25, 1996.
----------------------------------
Paul P. Senio, Corporate Secretary
Date of Original Approval by Shareholders of Company: December 29, 1993
----------------------------------
Paul P. Senio, Corporate Secretary
12
<PAGE> 13
MIDCOM COMMUNICATIONS INC.
REVISED AND RESTATED 1993 STOCK OPTION PLAN
AMENDMENT OF JULY 26, 1995 NOTE, 1995
. . . [T]he Board of Directors desiring to amend the 1993
Stock Option Plan (the "Plan") to provide for the delegation to the Compensation
Committee ("Committee") and to the Chief Executive Officer of the Company of the
authority to grant options under the Plan to employees of the Company
("Non-Insiders") who, at the time of grant, are not subject to the provisions of
Section 16(b) of the Securities and Exchange Act of 1934, as amended, with
respect to the Company's Common Stock;
RESOLVED BY FORMAL RESOLUTION:
That Section 2 of the Plan be amended by adding the following
paragraph to the end of Section 2 thereof;
"The Board or the Committee may delegate to one or more
executive officers of the Company the authority to grant Options under this Plan
to employees of the Company who, at the time of grant, are not subject to
Section 16(b) of the Exchange Act with respect to the Common Stock
("Non-Insiders"), and in connection therewith the authority to determine: (a)
whether the Option in an Incentive Stock Option or a Non-qualified Stock Option;
(b) the number of shares of Common Stock subject to such Option; (c) the
duration of the Option; (d) the vesting schedule for determining the times at
which such Option shall become exercisable; and (e) all other terms and
conditions of such Options. The exercise price for any Option granted by action
of an executive officer pursuant to such delegation of authority shall not be
less than the fair market value per share of the Common Stock on the Date of
Grant determined by reference to the closing price for the Common Stock on the
day preceding the Date of Grant. Unless expressly approved in advance by the
Board or the Committee, such delegation of authority shall not include the
authority to accelerate the vesting, extend the period for exercise or otherwise
alter the terms of outstanding Options. The term "Plan Administrator" when used
in any provision of this Plan other than Sections 2, 5(1) and 11 shall be deemed
to refer to the Board, Ashok Rao, or the Committee, as the case may be, who are
hereby authorized to grant Options pursuant hereto, insofar as such provision
may be applied to Non-Insiders and Options granted to Non-Insiders."
<PAGE> 1
EXHIBIT 5.1
[HELLER, EHRMAN, WHITE & McAULIFFE Letterhead]
October 31, 1996
MIDCOM Communications Inc.
1111 Third Avenue
Seattle, Washington 98101
Re: Registration Statement on Form S-8 under
the Securities Act of 1933, as amended
Ladies and Gentlemen:
MIDCOM Communications Inc., a Washington corporation (the "Company"),
has requested our opinion with respect to certain matters relating to the
registration statement on Form S-8 (the "Registration Statement") which the
Company will be filing with the Securities and Exchange Commission (the
"Commission") in connection with the registration under the Securities Act of
1933, as amended, of an additional 3,000,000 shares (the "Shares") of the
Company's common stock, par value $.0001 (the "Common Stock"), issuable by the
Company upon the exercise of options (the "Options") granted pursuant to the
MIDCOM Communications Inc. Amended and Restated 1993 Stock Option Plan (the
"Plan").
The Shares are currently unissued shares of the Company. The Shares are
to be sold to employees of the Company, consultants to the Company and members
of the Company's board of directors (the "Board") as described in the Plan.
We have assumed the authenticity of all records, documents and
instruments submitted to us as originals, the genuineness of all signatures,
the legal capacity of natural persons and the authenticity and conformity to
the originals of all records, documents and instruments submitted to us as
copies. We have based our opinion upon our review of the following records,
documents, instruments and certificates and such additional certificates
relating to factual matters as we have deemed necessary and appropriate for our
opinion:
1. The Amended Articles of Incorporation of the Company,
certified by the Secretary of State of the State of Washington
as of October 29, 1996 and certified to us by an officer of
the Company as being complete, unamended and in full force and
effect as of the date of this opinion;
2. A Certificate of Existence/Authorization relating to the
Company issued by the Secretary of State of the State of
Washington, dated as of October 29, 1996;
3. The Bylaws of the Company, certified to us by an officer of
the Company as being complete, unamended and in full force and
effect as of the date of this opinion;
3. Records certified to us by an officer of the Company as
constituting all records of proceedings and actions of the
Board and the shareholders of the Company relating to the
adoption and amendment of the Plan;
4. The Plan;
<PAGE> 2
5. Forms of Nonqualified Stock Option Agreement and Incentive
Stock Option Agreement (the "Option Agreements");
6. Information provided by the Company's transfer agent as to the
number of outstanding shares of Common Stock as of October 31,
1996;
7. A Certificate of the Company's inspector of election at the
Company's annual meeting of shareholders, dated as of October
29, 1996; and
8. A certificate of an officer of the Company, dated as of the
date of this opinion, stating that no dissolution proceedings
have been commenced with respect to the Company.
This opinion is limited to the laws of the State of Washington and we
disclaim any opinion as to the laws of any other jurisdiction. We further
disclaim any opinion as to any statute, rule, regulation, ordinance, order or
other promulgation of any regional or local governmental body or as to any
related judicial or administrative opinion.
Based upon the foregoing and our examination of such questions of law
as we have deemed necessary or appropriate for the purpose of this opinion, and
subject to the assumptions and qualifications expressed herein, it is our
opinion that upon exercise of the Options, payment of the exercise price for
the Shares and issuance and delivery of the Shares pursuant to the terms of the
Plan and the relevant Option Agreements, such Shares will be validly issued,
fully paid and non-assessable.
Our opinion is qualified to the extent that in the event of a stock
split, share dividend or other reclassification of the Common Stock effected
subsequent to the date hereof, the number of shares of Common Stock issuable
upon the exercise of Options may be adjusted automatically, as set forth in the
terms of the Plan, such that the number of such shares may exceed the number of
Company's remaining authorized, but unissued shares of Common Stock at the time
the Options are exercised.
We expressly disclaim any obligation to advise you of any developments
in areas covered by this opinion that occur after the date of this opinion.
We hereby authorize and consent to the use of this opinion as Exhibit
5.1 to the Registration Statement.
Very truly yours,
HELLER, EHRMAN, WHITE & McAULIFFE
<PAGE> 1
EXHIBIT 23.2
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the registration statement on
Form S-8 pertaining to the MIDCOM Communications Inc. Amended and Restated 1993
Stock Option Plan of our report dated March 29, 1995 with respect to the
consolidated financial statements and schedule of MIDCOM Communications Inc. and
subsidiaries included in its Annual Report (Form 10-K) for the year ended
December 31, 1995, filed with the Securities and Exchange Commission.
Ernst & Young LLP
Seattle, Washington
October 30, 1996
