As filed with the Securities and Exchange Commission
on August 3, 1999
Registration Statement No. 333-
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
DESTIA COMMUNICATIONS, INC.
(Formerly Econophone, Inc.)
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(Exact name of registrant as specified in its charter)
Delaware 11-3132722
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(State or other jurisdiction of incorporation (I.R.S. Employer Identification
or organization) No.)
95 Rte. 17 South, Paramus, New Jersey 07652
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(Address of Principal Executive Offices) (Zip Code)
1999 FLEXIBLE INCENTIVE PLAN
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(Full title of the plan)
Richard L. Shorten, Jr., Esq.
Senior Vice President & General Counsel
Destia Communications, Inc.
95 Rte. 17 South
Paramus, New Jersey 07652
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(Name and address of agent for service)
(201) 226-4500
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(Telephone number, including area code, of agent for service)
Please send copies to:
Michael R. Littenberg, Esq.
Schulte Roth & Zabel LLP
900 Third Avenue
New York, New York 10022
CALCULATION OF REGISTRATION FEE
==============================================================================
Proposed Proposed
maximum maximum Amount of
Amount offering aggregate registration
Title of securities to be price offering fee
to be registered registered per price(2)
(1) share(2)
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Common Stock,
$.0009 par value 6,000,000 $10 $60,000,000 $16,680
per share
==============================================================================
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(1) The shares of Common Stock of Destia Communications, Inc. (formerly
Econophone, Inc.), a Delaware corporation (the "Company"), being registered
include restricted shares and shares that may be acquired by exercising
options issued or issuable to participants in the Company's 1999 Flexible
Incentive Plan (the "Plan").
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(h)(1) under the Securities Act of 1933, as amended (the
"Securities Act").
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PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
The documents containing information specified in Part I of Form S-8
will be sent or given to employees participating in the Plan as specified by
Rule 428(b)(1) of the Securities Act. Those documents and the documents
incorporated by reference into this registration statement (the "Registration
Statement") pursuant to Item 3 of Part II of this Registration Statement,
taken together, constitute a prospectus that meets the requirements of
Section 10(a) of the Securities Act.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The Securities and Exchange Commission (the "SEC") allows the Company to
"incorporate by reference" the information the Company files with the SEC,
which means the Company can disclose important information to investors by
referring investors to those documents. The information incorporated by
reference is an important part of this Registration Statement, and information
the Company files later will automatically update and supersede this
information. The following documents are incorporated by reference:
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1998;
2. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1999; and
3. The description of the Common Stock contained in registration
statement no. 333-71463, initially filed by the Company with the SEC on
January 29, 1999, under the Securities Act, which is incorporated by reference
into the registration statement on Form 8-A, filed by the Company with the SEC
on May 4, 1999 pursuant to the Securities Exchange Act of 1934, as amended
(the "Exchange Act").
The Company also incorporates by reference in this Registration Statement
all reports and other documents filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act after the date of this
Registration Statement and before the Company files a post-effective amendment
which indicates that all securities have been sold or which deregisters all
securities remaining unsold.
Item 4. Description of Securities.
Not applicable.
3
<PAGE>
Item 5. Interests of Named Experts and Counsel.
The legality of the issuance of the Common Stock being registered hereby
is being passed upon by Schulte Roth & Zabel LLP, 900 Third Avenue, New York,
New York 10022, counsel for the Company.
Item 6. Indemnification of Directors and Officers.
The Company's Certificate of Incorporation indemnifies its officers and
directors to the fullest extent permitted by the General Corporation Law of
Delaware (the "DGCL"). Under Section 145 of the DGCL, a corporation may
indemnify its directors, officers, employees and agents and those who serve,
at the corporation's request, in such capacities with another enterprise,
against expenses (including attorneys' fees), as well as judgments, fines and
settlements in nonderivative lawsuits, actually and reasonably incurred in
connection with the defense of any action, suit or proceeding in which they or
any of them were or are made parties or are threatened to be made parties by
reason of their serving or having served in such capacity. The DGCL provides,
however, that such person must have acted in good faith and in a manner such
person reasonably believed to be in (or not opposed to) the best interests of
the corporation and, in the case of a criminal action, such person must have
had no reasonable cause to believe his or her conduct was unlawful. In
addition, the DGCL does not permit indemnification in an action or suit by or
in the right of the corporation, where such person has been adjudged liable to
the corporation, unless, and only to the extent that, a court determines that
such person fairly and reasonably is entitled to indemnity for costs the court
deems proper in light of liability adjudication. Indemnity is mandatory to
the extent a claim, issue or matter has been successfully defended. The
Certificate of Incorporation and the DGCL also prohibit limitations on officer
or director liability for acts or omissions which resulted in a violation of a
statute prohibiting certain dividend declarations, certain payments to
stockholders after dissolution and particular types of loans. The effect of
these provisions is to eliminate the rights of the Company and its
stockholders (through stockholders' derivative suits on behalf of the Company)
to recover monetary damages against an officer or director for breach of
fiduciary duty as an officer or director (including breaches resulting from
grossly negligent behavior), except in the situations described above. These
provisions will not limit the liability of directors or officers under the
federal securities laws of the United States. The foregoing summary of the
Company's Certificate of Incorporation, as amended, is qualified in its
entirety by reference to the relevant provisions thereof.
In addition, The Company has entered into indemnification agreements with
its directors and officers providing for, among other things, indemnification
to the extent permitted under Delaware law.
Item 7. Exemption from Registration Claimed.
Not applicable.
4
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Item 8. Exhibits.
The following is a complete list of exhibits filed as part of this
Registration Statement:
Exhibit Number
4.1 Destia Communications, Inc. 1999 Flexible Incentive Plan,
effective as of May 3, 1999.
5 Opinion of Schulte Roth & Zabel LLP.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Schulte Roth & Zabel LLP (included in Exhibit 5).
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.
(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. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high of the estimated maximum offering range may be
reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price represent no more than a
20 percent change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective 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.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense or any action, suit or
proceeding) is asserted by such director, officer or controlling person in
5
<PAGE>
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the Borough of Paramus, State of New Jersey, on
this 3rd day of August, 1999.
DESTIA COMMUNICATIONS, INC.
By: /s/ Richard L. Shorten, Jr.
Richard L. Shorten, Jr.
Senior Vice President & General Counsel
7
<PAGE>
Power of Attorney
The Registrant and each person whose signature appears below hereby
appoint Alan L. Levy, Richard L. Shorten, Jr. and Alfred West, and each of
them, as their attorneys-in-fact, with full power of substitution, to execute
in their names and on behalf of the Registrant and each such person,
individually and in each capacity stated below, one or more amendments
(including post-effective amendments) to this Registration Statement as the
attorney-in-fact acting on the premise shall from time to time deem
appropriate and to file any such amendment to this Registration Statement with
the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated, on this 3rd day of August, 1999.
Signature and Title
/s/ ALFRED WEST
---------------------------------------------
Alfred West
Chief Executive Officer and
Chairman of the Board of Directors
(principal executive officer)
---------------------------------------------
Phillip J. Storin
Chief Financial Officer and Senior Vice
President (principal financial and accounting
officer)
/s/ ALAN L. LEVY
---------------------------------------------
Alan L. Levy
President and Chief Operating Officer and
Director
---------------------------------------------
Gary S. Bondi
Director
---------------------------------------------
Steven West
/s/ STEPHEN R. MUNGER
---------------------------------------------
Stephen R. Munger
Director
8
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, the
Company's Compensation Committee, as administrator of the Company's 1999
Flexible Incentive Plan, has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
Borough of Paramus, State of New Jersey, on this 3rd day of August, 1999.
THE DESTIA COMMUNICATIONS, INC.
1999 FLEXIBLE INCENTIVE PLAN
By: /s/ STEPHEN R. MUNGER
--------------------------------------
Name: Stephen R. Munger
Title: Member of Compensation Committee
9
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EXHIBIT INDEX
Exhibit Number Exhibit
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4.1 Destia Communications, Inc. 1999 Flexible Incentive Plan,
effective as of May 3, 1999.
5 Opinion of Schulte Roth & Zabel LLP.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Schulte Roth & Zabel LLP (included in Exhibit 5).
10
<PAGE>
EXHIBIT 5
[LETTERHEAD OF SCHULTE ROTH & ZABEL LLP]
August 3, 1999
Destia Communications, Inc.
95 Rte. 17 South
Paramus, New Jersey 07692
Dear Sirs:
We have acted as counsel to Destia Communications, Inc., a Delaware
corporation (the "Company"), in connection with the preparation and filing by
the Company with the Securities and Exchange Commission (the "Commission") of
a Registration Statement on Form S-8 (the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), relating to the
offer and sale of an aggregate of 6,000,000 shares of Common Stock, par value
$.01 per share, of the Company (the "Shares") issuable to participants in the
Company's 1999 Flexible Incentive Plan, as amended (the "Plan").
In this capacity, we have examined originals, telecopies or copies,
certified or otherwise identified to our satisfaction, of such records of the
Company and all such agreements, certificates of public officials,
certificates of officers or representatives of the Company and others, and
such other documents, certificates and corporate or other records as we have
deemed necessary or appropriate as a basis for this opinion.
In our examination, we have assumed the genuineness of all
signatures, the legal capacity of natural persons signing or delivering any
instrument, the authenticity of all documents submitted to us as originals,
the conformity to original documents of all documents submitted to us as
certified or photostatic copies and the authenticity of the originals of such
latter documents.
Based upon the foregoing, and having regard for such legal
considerations as we deem relevant, we are of the opinion that the Shares have
been duly authorized and, when issued and delivered to plan participants in
accordance with the terms of the Plan, will be validly issued, fully paid and
nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm under the heading
"Legal Matters" in the prospectus which forms a part thereof. In giving such
consent, we do not thereby admit that we are in the category of persons whose
consent is required under Section 7 of the Securities Act or the rules and
regulations of the Commission promulgated thereunder.
Very truly yours,
/s/ Schulte Roth & Zabel LLP
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors
Destia Communications, Inc.
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our reports dated
February 2, 1999 incorporated by reference in Destia Communications, Inc.
Form 10-K for the year ended December 31, 1998 and to all references to our
Firm included in this registration statement.
/s/ ARTHUR ANDERSEN LLP
------------------------------------------
ARTHUR ANDERSEN LLP
New York, New York
August 3, 1999
<PAGE>
THIS DOCUMENT CONSTITUTES A PROSPECTUS COVERING SECURITIES
THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
----------------
DESTIA COMMUNICATIONS, INC. CLASS A COMMON STOCK
Par Value $.01 Per Share
-----------------
1999 FLEXIBLE INCENTIVE PLAN
----------------
This Prospectus relates to the issuance of shares of Common
Stock, par value $.01 per share ("Common Stock"), of Destia Communications,
Inc. (formerly Econophone, Inc.), a Delaware corporation (the "Company"), to
participants in the Company's 1999 Flexible Incentive Plan (the "Plan"). Such
shares of Common Stock are issuable to plan participants upon the exercise of
stock options granted to participants under the Plan. Such shares are quoted
through the NASDAQ National Market System.
Shares of Common Stock acquired by affiliates of the Company
under the Plan may only be reoffered or resold pursuant to a separate
prospectus prepared for that purpose, pursuant to an exemption from the
registration requirements of the Securities Act of 1933 (the "Securities
Act"). An "affiliate" of the Company is defined as a person that directly or
indirectly, through one or more intermediaries, controls, or is controlled by,
or is under common control with, the Company.
--------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------
No person has been authorized to give any information or to
make any representations, other than as contained herein, in connection with
the offer contained in this Prospectus, and, if given or made, such
information or representations must not be relied upon.
Additional information about the Plan and its administrators
may be obtained from:
DESTIA COMMUNICATIONS, INC.
95 Rte. 17 South
Paramus, New Jersey 07652
Telephone No. (201) 226-4500
Attention: Richard L. Shorten, Jr., Esq., Senior Vice President & General
Counsel
The date of this Prospectus is August 3, 1999.
<PAGE>
Available Information About the Company
Pursuant to the Securities Exchange Act of 1934 (the "Exchange
Act"), the Company files annual, quarterly, and special reports, proxy
statements and other information with the Securities and Exchange Commission
(the "SEC"). Reports, proxy statements and other information filed by the
Company with the SEC can be inspected and copied at the SEC's public reference
rooms at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C.
20549, and at its regional offices in New York (7 World Trade Center, 13th
Floor, New York, New York 10048), and Chicago (Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661). Copies can also be
obtained from the Public Reference Section of the SEC (450 Fifth Street, N.W.,
Washington, D.C. 20549) at prescribed rates. The Company's reports, proxy
statements, and other information can also be inspected at the offices of the
New York Stock Exchange, Inc. (20 Broad Street, New York, New York 10005).
Also, the SEC maintains a Web site that contains reports, proxy statements,
and other information that the Company files electronically with the SEC using
the SEC's EDGAR system. The address of the SEC's web site is
http:\\www.sec.gov.
Documents Incorporated by Reference
The SEC allows the Company to "incorporate by reference" the
information the Company files with the SEC, which means the Company can
disclose important information to investors by referring investors to those
documents. The information incorporated by reference is an important part of
the Registration Statement, and information the Company files later will
automatically update and supersede this information. The Company has
incorporated by reference into this Prospectus certain documents which it is
not delivering with this Prospectus. See "Incorporation of Certain Documents
by Reference."
The Company will provide to any person to whom this Prospectus
has been delivered, upon written or oral request, without charge, a copy of
any and all information that either has been incorporated by reference in the
Registration Statement (not including exhibits to the information that is
incorporated by reference unless such exhibits are specifically incorporated
by reference into the information that the Registration Statement
incorporates) or is otherwise required to be delivered pursuant to Rule 428(b)
under the Securities Act. Requests for such documents should be directed to:
Destia Communications, Inc.
95 Rte. 17 South
Paramus, New Jersey 07652
Attn: Richard L. Shorten, Jr., Esq.
Senior Vice President & General Counsel
Telephone No. (201) 226-4500
<PAGE> A-2
Plan Information
In May 1999, the Company adopted a stock-based incentive plan, the
Destia Communications, Inc. 1999 Flexible Incentive Plan (the "Plan"),
covering Directors, consultants and employees of the Company and its
subsidiaries (each, a "Participant"). A committee (the "Administrator") of
the Board of Directors of the Company (the "Board") administers the Plan.
The Objectives of the Plan are:
(i) to optimize the profitability and growth of
the Company through incentives which are
consistent with the Company's goals and which
link the personal interests of Plan Participants
to the interests of the Company's stockholders;
(ii) to provide Plan Participants with an
incentive for excellence in individual
performance;
(iii) to promote teamwork among Plan
Participants;
(iv) to provide flexibility to the Company in
its ability to motivate, attract, and retain the
services of employees who make significant
contributions to the Company's success; and
(v) to allow employees to share in the success
of the Company.
Under the Plan, the Company may grant incentive and non-qualified
stock options, stock appreciation rights, and restricted shares (individually,
an "Award," or collectively, "Awards") to selected employees. The terms of
the Awards are set forth in award agreements ("Award Agreements") between the
Company and each Participant. The Administrator of the Plan selects the
employees to whom Awards are granted and determines the type, size and terms
and conditions applicable to each Award. The Administrator also has the
authority to interpret, construe and implement the provisions of the Plan.
The Administrator's decisions are binding.
The Plan shall remain in effect, subject to the right of the Board
to amend or terminate the Plan, until all Awards granted under the Plan are
satisfied by the issuance of shares of Common Stock and/or the payment of
cash. No Award of incentive stock options may be granted under the Plan on or
after the tenth anniversary of the effective date of the Plan. Although the
Board may amend, suspend or terminate the Plan, no such amendment, suspension
or termination may adversely affect any Award previously made under the Plan
without the affected Participant's written consent.
<PAGE> A-3
The maximum aggregate number of shares of Common Stock for which
Awards may be granted under the Plan is 6,000,000 shares. However, no
individual may receive Awards of or relating to more than 1,000,000 shares of
Common Stock in any calendar year. The Company may use authorized but
unissued shares, treasury shares or any combination of the two to issue shares
of Common Stock under the Plan.
Set forth below is a brief description of the Awards that may be
granted under the Plan. In the event of any inconsistency between the
following description and the terms of the Plan, the terms of the Plan shall
govern.
Stock Options. The Administrator may grant options (each an
"Option") to purchase shares of Common Stock under the Plan. The
Administrator, in its discretion, may determine the exercise price (the
"Option Price") of the Options, but the Option Price cannot be less than the
par value of the Common Stock ($0.01). The Options may be either incentive or
non-qualified stock options. Each Option represents the right to purchase one
share of Common Stock at the specified Option Price.
The Administrator sets the term of each Option, but incentive
stock options ("ISOs") can expire no later than 10 years after the date on
which they are granted. Options become exercisable at such times and in such
installments as the Administrator determines. Payment of the Option Price
shall be made in cash or, in the discretion of the Board, through the delivery
of shares of Common Stock having a market price equal to the Option Price (or
such portion thereof), or a combination of cash and Common Stock, in
accordance with procedures established by the Board. In the event that
payment for exercised Options is made through the delivery of shares of Common
Stock, the Board may grant non-qualified stock options ("NSOs"), called
"Restoration Options", to the person exercising the Option for the purchase of
a number of shares equal to the number of shares of Common Stock delivered to
the Company in connection with the payment of the exercise price of the Option
and the payment of or surrender of shares for any withholding taxes due upon
such exercise. The purchase price per share under each Restoration Option
shall be the market price of the Common Stock on the date the Restoration
Option is granted.
Stock Appreciation Rights. The Administrator may grant an Award
of a stock appreciation right ("SAR") under the Plan with respect to shares of
Common Stock. The SAR entitles the Participant, upon the exercise of the SAR,
to receive an amount equal to the appreciation in the underlying share of
Common Stock. The appreciation is equal to the difference between (i) the
"base value" of the SAR (which is based upon the market price of the Common
Stock on the date the SAR is granted) and (ii) the market price of the Common
Stock on the date the SAR is exercised. Upon exercising a vested SAR, the
exercising Participant is entitled to receive the appreciation in the value of
the shares of Common Stock subject to the SAR, payable at the discretion of
the Board in cash, shares of Common Stock, or some combination of the two,
subject to availability of shares of Common Stock.
<PAGE> A-4
SARs become exercisable at such times and in such installments as
the Administrator of the Plan determines.
Tandem Options/SARs. The Administrator may grant an Option and a
SAR "in tandem" with each other (a "Tandem Option/SAR"). An Option and a SAR
are considered to be in tandem with each other when the exercise of the Option
aspect of the tandem unit automatically cancels the right to exercise the SAR
of the tandem unit, and vice versa. The Option may be an ISO or NSO.
Descriptions of the terms of the Option and the SAR aspects of a Tandem
Option/SAR are provided above.
Restricted Shares. An Award of restricted shares ("Restricted
Shares") is an Award of Common Stock that is subject to such restrictions as
the Administrator of the Plan deems appropriate, including forfeiture
conditions and restrictions against transfer for a period specified by the
Administrator. Restricted Share Awards may be granted under the Plan for
services and/or payment of cash. Restrictions on Restricted Shares may lapse
in installments based on factors selected by the Administrator of the Plan.
Unless otherwise provided by the Administrator of the Plan, a grantee who has
received a Restricted Share Award generally has the rights of the stockholder
of the Company during the restricted period, including the right to vote and
to receive cash dividends on the shares subject to the Award. Stock dividends
issued with respect to a Restricted Share Award may be treated as additional
shares under such Award.
Change in Control. Generally, if there should be a "Change in
Control" of the Company, the Company shall give each holder of an Option or
SAR written notice of such Change in Control as promptly as practicable prior
to or after the effective date thereof and any outstanding Options or SARs
held by such holders shall become immediately exercisable. As provided in the
Plan, a Change in Control shall be deemed to have occurred if (i) any "person"
(as such term is used in Sections 13(d) and 14(d)(2) of the Exchange Act),
other than Alfred West, his designee(s) or "affiliate(s)" (as defined in Rule
12b-2 under the Exchange Act) or any combination thereof, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of securities of the Company representing forty percent (40%)
or more of the combined voting power of the Company's then outstanding
securities; (ii) the Company merges, combines or consolidates with another
entity and persons beneficially owning more than fifty percent (50%) of the
combined voting power of the Company's then outstanding securities prior to
the merger, combination or consolidation, cease to beneficially own more than
fifty percent (50%) of the combined voting power of the securities of the
surviving entity; (iii) a sale (in one transaction or a series of related
transactions) of all or substantially all of the assets of the Company; or
(iv) during any period of two (2) consecutive years, individuals who at the
beginning of such period constitute the Board cease for any reason to
constitute at least a majority thereof, unless the election of each director
who was not a director at the beginning of such period has been approved in
advance by directors representing at least a majority of the directors then in
office who were directors at the beginning of the
<PAGE> A-5
period.
Termination of Employment. The following rules with respect to a
Plan Participant's termination of employment shall be applicable except as
expressly provided in the Participant's Award Agreement relating to any Option
or SAR or as otherwise expressly determined by the Committee or the Board. In
the event that a recipient of Options or SARs ceases to be an employee or
consultant of the Company and its subsidiaries (a "Terminated Person") for any
reason other than cause, disability, retirement (as hereinafter defined) or
death, any Options or SARs which were held by such person on the date on which
he or she ceased to be director, employee or consultant (the "Termination
Date") and which were otherwise exercisable on such date will expire unless
exercised within 90 days following the Termination Date, but in no event after
the expiration of the exercise period of such Options or SARs.
The Board may cause any Option or SARs to be forfeited upon an
employee's termination of employment or the termination of a consultant's
consulting arrangement if the employee or consultant was terminated for cause.
"Cause" generally means one (or more) of the following reasons: (i) the
employee's or consultant's conviction, or plea of guilty or nolo contendere to
the commission, of a felony, (ii) the employee's or consultant's commission of
any fraud, misappropriation or misconduct which causes demonstrable injury to
the Company or a subsidiary, (iii) an act of dishonesty by the employee or
consultant resulting or intended to result, directly or indirectly, in gain or
personal enrichment at the expense of the Company or a subsidiary, (iv) any
breach of the employee's or consultant's fiduciary duties to the Company, or
(v) the employee's or consultant's willful failure to perform those duties
which the employee or consultant is required to perform as an employee or
consultant of the Company or a subsidiary.
In the event of a termination of employment or consulting
arrangement of a Terminated Person due to the disability or retirement of such
person, any Options or SARs which were held by such person on the Termination
Date and which were otherwise exercisable on such date shall expire at the
expiration date of the exercise period of such Options or Stock Appreciation
Rights.
In the event of the death of a recipient of Options or SARs while
an employee or consultant of the Company or any subsidiary or following a
termination of employment due to disability or retirement, any Options or SARs
which were held by such person at the date of death and which were otherwise
exercisable on such date shall be exercisable by the beneficiary designated by
the employee or consultant for such purpose (the "Designated Beneficiary") or
if no Designated Beneficiary shall be appointed or if the Designated
Beneficiary shall predecease the employee, by the employee's personal
representatives, heirs or legatees for a period up to the expiration date of
the exercise period of such Options or Stock Appreciation Rights, at which
time such Options or Stock Appreciation Rights shall expire.
All Options and SARs which were not exercisable by a
<PAGE> A-6
Terminated Person as of the Termination Date of such Terminated Person shall
terminate as of such date. Options and SARs shall not be affected by any
change of employment so long as the recipient continues to be employed by
either the Company or a subsidiary.
Transferability of Awards. Unless otherwise provided in the
Participant's Award Agreement, no Option or SAR may be transferred, pledged,
assigned, or otherwise hypothecated, other than by will or by the laws of
descent and distribution.
Restrictions on Resale of Shares
Any person (other than an affiliate, as defined below) who
acquires Common Stock of the Company pursuant to the Plan may freely resell
those shares. A Plan Participant who acquires Common Stock of the Company
while he or she is an affiliate of the Company, and for 3 months after he or
she is no longer an affiliate, may only reoffer or resell pursuant to a
separate prospectus prepared for that purpose or pursuant to an exemption from
the registration requirements of the Securities Act. Generally, this applies
to select members of senior management of the Company.
Federal Income Tax Consequences
The following summary describes the principal federal income tax
consequences of Awards made under the Plan. Capitalized terms used and not
otherwise defined have the meanings ascribed to them in the Plan. The summary
is based upon an analysis of the Internal Revenue Code of 1986, as currently
in effect, judicial decisions, administrative rulings, regulations and
proposed regulations, all of which are subject to change. Any such change
could have retroactive effect and could affect the consequences described in
the summary. The summary does not purport to cover all federal income tax
consequences that may apply to a Participant and does not contain any
discussion of foreign, state or local tax laws. Participants are urged to
consult their own tax advisors regarding the tax consequences to them of
Awards under the Plan. The Plan is not subject to the requirements of the
Employee Retirement Income Security Act of 1974, as amended, or qualified
under Section 401(a) of the Code.
Options.
A Participant will not recognize income upon the grant of a NSO.
The Participant will recognize ordinary income at the time of exercise of the
NSO in an amount equal to the difference between the fair market value of the
Shares received upon exercise of the NSO and the aggregate Option Price for
the Shares purchased upon such exercise. The Company will generally be
entitled to a deduction for federal income tax purposes at the same time and
in the same amount as the Participant is required to recognize ordinary
income. The Participant's basis in any Shares acquired upon exercise of a NSO
will equal the fair market value of the Shares on the exercise date. A
Participant who later sells
<PAGE> A-7
such Shares will generally recognize capital gain or loss on the sale of the
Shares equal to the difference between the amount realized and the
Participant's basis in the Shares.
A Participant to whom an ISO is granted will not recognize income
at the time of the grant or exercise of the ISO, and the Company will not be
entitled to a deduction at either time. However, upon the exercise of the
ISO, a Participant will be required to include in alternative minimum taxable
income an amount equal to the fair market value of the Shares purchased upon
such exercise at the time of exercise over the aggregate Option Price the
Participant paid in connection with such exercise, for purposes of the federal
alternative minimum tax that may apply to individual Participants. If the
Shares acquired upon exercise of an ISO are not disposed of until more than 1
year after the date of transfer of the Shares and more than 2 years after the
date of the grant of the ISO (the "Required Holding Period"), any gain
recognized on such disposition will be treated as a capital gain. If the
Shares purchased in the exercise of an ISO are disposed of prior to the
expiration of the Required Holding Period (a "Disqualifying Disposition"),
then the Participant will be required to recognize ordinary income in an
amount equal to the lesser of (i) the fair market value of the Shares at the
time of such exercise over the aggregate Option Price of the Shares purchased
and (ii) the amount realized on disposition over the Participant's adjusted
basis in the Shares. In the event of a Disqualifying Disposition, the Company
will be entitled to a deduction in an amount equal to the amount the
Participant was required to treat as ordinary income. Each Participant agrees
to notify the Company in writing immediately after the Participant sells or
otherwise transfers Common Stock acquired under the Plan, if such sale or
other transfer occurs within two years from the date of grant or one year from
the date of exercise.
Restricted Shares.
The grant of Restricted Shares will not result in any tax
consequences to the Participant or the Company unless the Participant makes an
election under Section 83(b) of the Code (a "Section 83(b) Election"), in
which case the grant will result in the tax consequences described below. In
the absence of such an election, upon the lapse of the restrictions applicable
to the Restricted Shares, the Participant will recognize ordinary income, and
the Company will be entitled to a deduction, in an amount equal to the fair
market value of the Restricted Shares at the time of such lapse. If the
Participant makes a Section 83(b) Election in respect of the receipt of
Restricted Shares, (i) the Participant will be required to recognize ordinary
income, and the Company will be entitled to a deduction, in an amount equal to
the fair market value of the Restricted Shares at the time of such receipt
(determined without regard to any applicable restrictions other than a
restriction that by its terms will never lapse), (ii) the Participant will not
be required to recognize any income, and the Company will not be entitled to a
deduction, upon the lapse of the applicable restrictions and (iii) if the
Participant subsequently forfeits the Restricted Shares, the Participant will
not be entitled to any deduction
<PAGE> A-8
or loss in respect of such forfeiture, despite the fact that the Participant
was required to recognize ordinary income as a result of the Section 83(b)
Election at the time the Participant received the Restricted Shares. A
Section 83(b) Election must be made in accordance with the requirements of the
Code and the Treasury Regulations promulgated thereunder, including the
requirement that the Election be made within 30 days of the transfer of the
Restricted Shares to the Participant.
Stock Appreciation Rights
The grant of an SAR will not have any tax consequences. A
Participant will recognize ordinary income, and the Company will be entitled
to a deduction, when the Participant exercises an SAR or receives payment with
respect to a Performance Share or Performance Unit, in an amount equal to the
cash and the fair market value of the Shares received.
Each Participant is advised to consult a tax advisor with respect
to current and possible future U.S. tax consequences of acquiring, holding and
disposing of Common Stock as well as any tax consequences that may arise under
the laws of any state, local or foreign jurisdiction.
Experts
The consolidated financial statements of the Company included in
the Company's Annual Report on Form 10-K for the year ended December 31, 1998
have been audited by Arthur Andersen LLP, independent certified public
accountants. Such financial statements are incorporated by reference into
this Prospectus in reliance upon the reports of Arthur Andersen LLP pertaining
to such financial statements based upon the authority of said firm as experts
in accounting and auditing. If Arthur Andersen LLP audits and reports on the
financial statements of the Company issued at future dates, and consents to
the use of its report on such financial statements, then such financial
statements also will be incorporated by reference into this Prospectus in
reliance upon its report and said authority.
Legal Matters
The legality of the issuance of the Common Stock being offered
hereby is being passed upon by Schulte Roth & Zabel LLP, 900 Third Avenue, New
York, New York 10022, counsel for the Company.
Incorporation of Certain Documents by Reference
The following documents filed by the Company with the SEC, are
incorporated in this Prospectus by reference:
1. The Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1999;
2. The Company's Annual Report on Form 10-K for the year ended
December 31, 1998;
<PAGE>
3. The Company's Current Reports on Form 8-K dated February 2,
1999, February 18, 1999 and April 20, 1999; and
4. The description of the Common Stock contained in registration
statement no. 333-71463, initially filed by the Company with the SEC on
January 29, 1999, as amended on February 17, 1999 and April 16, 1999, under
the Securities Act, which is incorporated by reference into the registration
statement on Form 8-A, filed by the Company with the SEC on May 4, 1999
pursuant to the Exchange Act.
The Company also incorporates by reference in this Prospectus all
reports and other documents filed by the Company after the date of this
Prospectus pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange
Act, and any appendix or supplement to this Prospectus filed by the Company
pursuant to Rule 424(c) under the Securities Act.
Indemnification
The Company's Certificate of Incorporation indemnifies its
officers and directors to the fullest extent permitted by the General
Corporation Law of Delaware (the "DGCL"). Under Section 145 of the DGCL, a
corporation may indemnify its directors, officers, employees and agents and
those who serve, at the corporation's request, in such capacities with another
enterprise, against expenses (including attorneys' fees), as well as
judgments, fines and settlements in nonderivative lawsuits, actually and
reasonably incurred in connection with the defense of any action, suit or
proceeding in which they or any of them were or are made parties or are
threatened to be made parties by reason of their serving or having served in
such capacity. The DGCL provides, however, that such person must have acted
in good faith and in a manner such person reasonably believed to be in (or not
opposed to) the best interests of the corporation and, in the case of a
criminal action, such person must have had no reasonable cause to believe his
or her conduct was unlawful. In addition, the DGCL does not permit
indemnification in an action or suit by or in the right of the corporation,
where such person has been adjudged liable to the corporation, unless, and
only to the extent that, a court determines that such person fairly and
reasonably is entitled to indemnity for costs the court deems proper in light
of liability adjudication. Indemnity is mandatory to the extent a claim,
issue or matter has been successfully defended. The Certificate of
Incorporation and the DGCL also prohibit limitations on officer or director
liability for acts or omissions which resulted in a violation of a statute
prohibiting certain dividend declarations, certain payments to stockholders
after dissolution and particular types of loans. The effect of these
provisions is to eliminate the rights of the Company and its stockholders
(through stockholders' derivative suits on behalf of the Company) to recover
monetary damages against an officer or director for breach of fiduciary duty
as an officer or director (including breaches resulting from grossly negligent
behavior), except in the situations described above. These provisions will
not limit the liability of directors or officers under the federal securities
laws of the United
<PAGE> A-10
States. The foregoing summary of certain portions of the Company's
Certificate of Incorporation, as amended, is qualified in its entirety by
reference to the relevant provisions thereof.
In addition, The Company has entered into indemnification
agreements with its directors and officers providing for, among other things,
indemnification to the extent permitted under Delaware law.
DESTIA COMMUNICATIONS, INC.
1999 FLEXIBLE INCENTIVE PLAN
AS OF MAY 3, 1999
<PAGE>
DESTIA COMMUNICATIONS, INC.
1999 FLEXIBLE INCENTIVE PLAN
TABLE OF CONTENTS
Page
ARTICLE 1 ESTABLISHMENT AND PURPOSE 1
1.1 Establishment and Effective Date 1
1.2 Purpose 1
ARTICLE 2 AWARDS 1
2.1 Form of Awards 1
2.2 Maximum Shares Available; Maximum Award 1
2.3 Return of Prior Awards 2
ARTICLE 3 ADMINISTRATION 2
3.1 Committee 2
3.2 Powers of the Committee 2
3.3 Delegation 3
3.4 Interpretations 3
3.5 Liability; Indemnification 3
ARTICLE 4 ELIGIBILITY 3
ARTICLE 5 STOCK OPTIONS 4
5.1 Grant of Options 4
5.2 Designation as Non-qualified Stock Option or
Incentive Stock Option 4
5.3 Option Price 4
5.4 Limitation on Amount of Incentive Stock Options 5
5.5 Limitation on Time of Grant 5
5.6 Exercise and Payment 5
5.7 Term 5
5.8 Rights as a Stockholder 5
5.9 General Restrictions 6
5.10 Cancellation of Stock Appreciation Rights 6
ARTICLE 6 STOCK APPRECIATION RIGHTS 6
6.1 Grants of Stock Appreciation Rights 6
6.2 Limitations on Exercise 6
6.3 Surrender or Exchange of Tandem Stock Appreciation Rights 7
6.4 Exercise of Nontandem Stock Appreciation Rights 7
6.5 Settlement of Stock Appreciation Rights 7
6.6 Cash Settlement 7
ARTICLE 7 NONTRANSFERABILITY OF OPTIONS AND STOCK APPRECIATION RIGHTS
8
ARTICLE 8 EFFECT OF TERMINATION OF EMPLOYMENT, DISABILITY, RETIREMENT, DEATH
OR CHANGE IN CONTROL 8
8.1 General Rule 8
8.2 Disability or Retirement 9
8.3 Death 9
8.4 Change in Control 10
8.5 Termination of Unvested Options 10
ARTICLE 9 RESTRICTED SHARES 11
9.1 Grant or Sale of Restricted Shares 11
9.2 Restrictions 11
9.3 Restricted Stock Certificates 11
9.4 Rights of Holders of Restricted Shares 11
<PAGE>
9.5 Forfeiture; Repurchase 11
9.6 Delivery of Restricted Shares 12
ARTICLE 10 ADJUSTMENT UPON CHANGES IN CAPITALIZATION 12
ARTICLE 11 AMENDMENT AND TERMINATION 12
ARTICLE 12 WRITTEN AGREEMENT 13
ARTICLE 13 MISCELLANEOUS PROVISIONS 13
13.1 Tax Withholding 13
13.2 Compliance With Section 16(b) 13
13.3 Successors 13
13.4 General Creditor Status 14
13.5 No Right to Employment 14
13.6 Notices 14
13.7 Severability 15
13.8 Governing Law 15
<PAGE>
DESTIA COMMUNICATIONS, INC.
1999 FLEXIBLE INCENTIVE PLAN
ARTICLE 1
ESTABLISHMENT AND PURPOSE
1.1 Establishment and Effective Date. Destia Communications,
Inc., a Delaware corporation (the "Corporation"), hereby establishes a stock
option plan to be known as the "Destia Communications, Inc. 1999 Flexible
Incentive Plan" (the "Plan"). The Plan shall become effective as of August 3,
1999, subject to the approval of the stockholders of the Corporation. In the
event that such stockholder approval is not obtained, any awards made
hereunder shall be canceled and all rights of employees and consultants with
respect to such awards shall thereupon cease. Upon approval of the Plan by
the Board of Directors of the Corporation (the "Board"), any awards may be
made by the Board or a committee of the Board duly authorized to administer
the Plan (the "Committee"), as provided herein.
1.2 Purpose. The purpose of the Plan is to encourage and
enable key employees and consultants (subject to such requirements as may be
prescribed by the Committee) of the Corporation and its subsidiaries to
acquire a proprietary interest in the Corporation through the ownership of the
Corporation's voting common stock ("Common Stock"), and other rights with
respect to the Common Stock. Such ownership will provide such employees and
consultants with a more direct stake in the future welfare of the Corporation
and encourage them to remain with the Corporation and its subsidiaries. It is
also expected that the Plan will encourage qualified persons to seek and
accept employment with the Corporation and its subsidiaries.
ARTICLE 2
AWARDS
2.1 Form of Awards. Awards under the Plan may be granted in
any one or all of the following forms: (i) incentive stock options
("Incentive Stock Options") meeting the requirements of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"); (ii) non-qualified
stock options ("Non-qualified Stock Options") (unless otherwise indicated,
references in the Plan to "Options" shall include both Incentive Stock Options
and Non-qualified Stock Options); (iii) stock appreciation rights ("Stock
Appreciation Rights"), as described in Article 6 hereof, which may be awarded
either in tandem with Options ("Tandem Stock Appreciation Rights") or on a
stand-alone basis ("Nontandem Stock Appreciation Rights") and (iv) shares of
Common Stock which are subject to vesting requirements as provided in Article
9 hereof ("Restricted Shares").
2.2 Maximum Shares Available; Maximum Award. The
<PAGE>
maximum aggregate number of shares of Common Stock available for award under
the Plan is 6,000,000, subject to adjustment pursuant to Article 10 hereof;
provided, however, that no individual may receive awards of or relating to
more than 1,000,000 shares of Common Stock in any calendar year. In the event
that prior to the end of the period during which Options may be granted under
the Plan, any Option or any Nontandem Stock Appreciation Rights under the Plan
expires unexercised or is terminated, surrendered or canceled (other than in
connection with the exercise of Stock Appreciation Rights) without being
exercised in whole or in part for any reason, or any Restricted Shares are
forfeited, or if such awards are settled in cash in lieu of shares of Common
Stock, then such shares shall be available for subsequent awards under the
Plan upon such terms as the Committee may determine.
2.3 Return of Prior Awards. As a condition to any subsequent
award, the Committee shall have the right, in its sole discretion, to require
employees and consultants to return to the Corporation awards previously
granted under the Plan. Subject to the provisions of the Plan, such new award
shall be upon such terms and conditions as are specified by the Committee at
the time the new award is granted.
ARTICLE 3
ADMINISTRATION
3.1 Committee. Awards shall be determined, and the Plan shall
be administered, by the Board or the Committee; provided, however, that from
and after the consummation of the initial public offering of the Common Stock
and so long as the Plan shall be required to comply with Rule 16b-3 ("Rule
16b-3") promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), in order to
permit transactions pursuant to the Plan by officers and directors of the
Corporation to be exempt from the provisions of Section 16(b) of the 1934 Act,
each member of the Committee, at the effective date of his appointment to the
Committee, shall be a "non-employee director," as that term is defined in Rule
16b-3, as in effect from time to time.
3.2 Powers of the Committee. Subject to the express provisions
of the Plan, the Committee at any time or prior to the designation of the
Committee, the Board, shall have the power and authority (i) to grant Options
and to determine the purchase price of the Common Stock covered by each
Option, the term of each Option, the number of shares of Common Stock to be
covered by each Option, the time or times at which each Option shall become
exercisable and the duration of the exercise period applicable to each Option;
(ii) to designate Options as Incentive Stock Options or Non-qualified Stock
Options and to determine which Options, if any, shall be accompanied by Tandem
Stock Appreciation Rights; (iii) to grant Tandem Stock Appreciation Rights and
Nontandem Stock Appreciation Rights and to determine the terms and conditions
of such rights; (iv) to grant or cause to be sold Restricted Shares and to
determine the purchase price, if any, of such shares and
<PAGE> 2
the vesting period and other conditions and restrictions applicable to such
shares; (v) to determine the directors, the employees and the consultants to
whom, and the time or times at which, Options, Stock Appreciation Rights and
Restricted Shares shall be granted or made; and (vi) to take all other actions
contemplated to be taken by the Board or the Committee under the Plan,
including, but not limited to, authorizing the amendment of any written
agreement relating to any award made thereunder. Without limiting the
foregoing, in the event of a merger, consolidation, combination, exchange of
shares, separation, spin-off, reorganization, liquidation or other similar
transaction, the Board may, in its sole discretion, accelerate the lapse of
Restricted Periods, as defined below, and other vesting periods and waiting
periods and extend exercise periods applicable to any award made under the
Plan.
3.3 Delegation. The Board or the Committee, as the case may
be, may delegate to one or more of its members or to any other person or
persons such ministerial duties as it may deem advisable; provided, however,
that the Committee may not delegate any of its responsibilities hereunder if
such delegation would cause the Plan or the grant of any award hereunder to
fail to qualify for exemption under Rule 16b-3. The Board and the Committee
may also employ attorneys, consultants, accountants or other professional
advisors and shall be entitled to rely upon the advice, opinions or valuations
of any such advisors.
3.4 Interpretations. The Board shall have sole discretionary
authority to interpret the terms of the Plan, to adopt and revise rules,
regulations and policies to administer the Plan and to make any other factual
determinations which it believes to be necessary or advisable for the
administration of the Plan. All actions taken and interpretations and
determinations made by the Board in good faith shall be final and binding upon
the Corporation, all directors, employees and consultants who have received
awards under the Plan and all other interested persons.
3.5 Liability; Indemnification. No member of the Board, nor
any person to whom ministerial duties have been delegated, shall be personally
liable for any action, interpretation or determination made with respect to
the Plan or awards made thereunder, and each member of the Board shall be
fully indemnified and protected by the Corporation with respect to any
liability he or she may incur with respect to any such action, interpretation
or determination, to the extent permitted by applicable law and to the extent
provided in the Corporation's Certificate of Incorporation and Bylaws, as
amended from time to time, or under any agreement between any such member and
the Corporation.
ARTICLE 4
ELIGIBILITY
Awards may be made to all directors, employees and consultants of
the Corporation or any of its subsidiaries (subject to such requirements as
may be prescribed by the Committee). In
<PAGE> 3
determining the directors, employees and consultants to whom awards shall be
granted and the number of shares to be covered by each award, the Board shall
take into account the nature of the services rendered by such directors,
employees and consultants, their present and potential contributions to the
success of the Corporation and its subsidiaries and such other factors as the
Board in its sole discretion shall deem relevant.
Notwithstanding the foregoing, only employees of the Corporation
and any present or future corporation which is or may be a "subsidiary
corporation" of the Corporation (as such term is defined in Section 424(f) of
the Code) shall be eligible to receive Incentive Stock Options.
ARTICLE 5
STOCK OPTIONS
5.1 Grant of Options. Options may be granted under the Plan
for the purchase of shares of Common Stock. Options shall be granted in such
form and upon such terms and conditions, including the satisfaction of
corporate or individual performance objectives and other vesting standards, as
the Committee shall from time to time determine.
5.2 Designation as Non-qualified Stock Option or Incentive
Stock Option. In connection with any grant of Options, the Board shall
designate in the written agreement required pursuant to Article 12 hereof
whether the Options granted shall be Incentive Stock Options or Non-qualified
Stock Options, or in the case both are granted, the number of shares of each.
5.3 Option Price. The purchase price per share under each
Incentive Stock Option shall be the Market Price (as hereinafter defined) of
the Common Stock on the date the Incentive Stock Option is granted. The
purchase price per share under each Non-qualified Stock Option shall be
determined by the Committee. In no case, however, shall the purchase price
per share of either an Incentive Stock Option or Non-qualified Stock Option be
less than the par value of the Common Stock ($0.01). In the case of an
Incentive Stock Option granted to an employee owning (actually or
constructively under Section 424(d) of the Code), more than 10% of the total
combined voting power of all classes of stock of the Corporation or of a
subsidiary, including treasury stock and stock of original issue (a "10%
Stockholder"), the option price shall not be less than 110% of the Market
Price of the Common Stock on the date of grant.
The "Market Price" of the Common Stock shall be determined as
follows: (i) if the Common Stock is listed on a national securities exchange
or quoted through the NASDAQ National Market System, the Market Price shall be
the average of either (x) the average of the closing bid and asked prices
reported on the Consolidated Trading listing for such day or (y) the closing
price reported on the Consolidated Trading listing for such day; (ii) if the
Common Stock is quoted on the NASDAQ
<PAGE> 4
interdealer quotation system, the Market Price shall be the average of the
representative bid and asked prices at the close of business for such day;
(iii) if the Common Stock is not listed on a national stock exchange or quoted
on NASDAQ, the Market Price shall be the average of the high bid and low asked
prices reported by the National Quotation Bureau, Inc. for such day; or (iv)
if the Common Stock is not registered under Section 12 of the Securities Act
of 1933, as amended, the Market Price shall be the fair market value of the
Common Stock as determined by the Board. In no event shall the Market Price
of a share of Common Stock subject to an Incentive Stock Option be less than
the fair market value as determined for purposes of Section 422(b)(4) of the
Code.
The Option price so determined shall also be applicable in
connection with the exercise of any Tandem Stock Appreciation Rights granted
with respect to such Option.
5.4 Limitation on Amount of Incentive Stock Options. In the
case of Incentive Stock Options, the aggregate Market Price (determined at the
time the Incentive Stock Option is granted) of the Common Stock with respect
to which Incentive Stock Options are exercisable for the first time by any
optionee during any calendar year (under all plans of the Corporation and any
subsidiary) shall not exceed $100,000.
5.5 Limitation on Time of Grant. No grant of an Incentive
Stock Option shall be made under the Plan more than ten (10) years after the
date the Plan is approved by the stockholders of the Corporation.
5.6 Exercise and Payment. Options may be exercised in whole
or in part. Common Stock purchased upon the exercise of Options shall be paid
for at the time of purchase. Such payment shall be made in cash or, in the
sole discretion of the Board, through delivery of shares of Common Stock, or a
combination of cash and Common Stock, in accordance with procedures to be
established by the Board. Any shares so delivered shall be valued at their
Market Price on the date of exercise. Upon receipt of a notice of exercise
and payment in accordance with procedures to be established by the Board, the
Corporation or its agent shall deliver to the person exercising the Option (or
his or her designee) a certificate for such shares.
In the event that payment for exercised Options is made through
the delivery of shares of Common Stock, the Board, in accordance with
procedures established by the Board, may grant Non-qualified Stock Options
("Restoration Options") to the person exercising the Option for the purchase
of a number of shares equal to the number of shares of Common Stock delivered
to the Corporation in connection with the payment of the exercise price of the
Option and the payment of or surrender of shares for any withholding taxes due
upon such exercise. The purchase price per share under each Restoration
Option shall be the Market Price of the Common Stock on the date the
Restoration Option is granted.
5.7 Term. The term of each Option granted hereunder
<PAGE> 5
shall be determined by the Board; provided, however, that, notwithstanding any
other provision of the Plan, in no event shall an Incentive Stock Option be
exercisable after ten (10) years from the date it is granted, or in the case
of an Incentive Stock Option granted to a 10% Stockholder, five (5) years from
the date it is granted.
5.8 Rights as a Stockholder. A recipient of Options shall
have no rights as a stockholder with respect to any shares issuable or
transferable upon exercise thereof until the date a stock certificate
representing such shares is issued to such recipient. Except as otherwise
expressly provided in the Plan or by the Board, no adjustment shall be made
for cash dividends or other rights for which the record date is prior to the
date such stock certificate is issued.
5.9 General Restrictions. Each Option granted under the Plan
shall be subject to the requirement that, if at any time the Board shall
determine, in its sole discretion, that the listing, registration or
qualification of the shares issuable or transferable upon exercise thereof
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
issue, transfer, or purchase of shares thereunder, such Option may not be
exercised in whole or in part unless such listing, registration,
qualification, consent, or approval shall have been effected or obtained free
of any conditions not acceptable to the Board.
The Board or the Committee may, in connection with the granting of
any Option, require the individual to whom the Option is to be granted to
enter into an agreement with the Corporation stating that as a condition
precedent to each exercise of the Option, in whole or in part, such individual
shall if then required by the Corporation represent to the Corporation in
writing that such exercise is for investment only and not with a view to
distribution, and also setting forth such other terms and conditions as the
Board or the Committee may prescribe.
5.10 Cancellation of Stock Appreciation Rights. Upon exercise
of all or a portion of an Option, the related Tandem Stock Appreciation Rights
shall be canceled with respect to an equal number of shares of Common Stock.
ARTICLE 6
STOCK APPRECIATION RIGHTS
6.1 Grants of Stock Appreciation Rights. Tandem Stock
Appreciation Rights may be awarded by the Board in connection with any Option
granted under the Plan, either at the time the Option is granted or thereafter
at any time prior to the exercise, termination or expiration of the Option.
Nontandem Stock Appreciation Rights may also be granted by the Board at any
time. At the time of grant of Nontandem Stock Appreciation Rights, the
Committee shall specify the number of
<PAGE> 6
shares of Common Stock covered by such right and the base price of shares of
Common Stock to be used in connection with the calculation described in
Section 6.4 below. The base price of any Nontandem Stock Appreciation Rights
shall be not less than 100% of the Market Price of a share of Common Stock on
the date of grant. Stock Appreciation Rights shall be subject to such terms
and conditions not inconsistent with the other provisions of the Plan as the
Board shall determine.
6.2 Limitations on Exercise. Tandem Stock Appreciation Rights
shall be exercisable only to the extent that the related Option is exercisable
and shall be exercisable only for such period as the Board may determine
(which period may expire prior to the expiration date of the related Option).
Upon the exercise of all or a portion of Tandem Stock Appreciation Rights, the
related Option shall be canceled with respect to an equal number of shares of
Common Stock. Shares of Common Stock subject to Options, or portions thereof,
surrendered upon exercise of Tandem Stock Appreciation Rights shall not be
available for subsequent awards under the Plan. Nontandem Stock Appreciation
Rights shall be exercisable during such period as the Committee shall
determine.
6.3 Surrender or Exchange of Tandem Stock Appreciation Rights.
Tandem Stock Appreciation Rights shall entitle the recipient to surrender to
the Corporation unexercised the related Option, or any portion thereof, and to
receive from the Corporation in exchange therefor that number of shares of
Common Stock having an aggregate Market Price equal to (A) the excess of (i)
the Market Price of one (1) share of Common Stock as of the date the Tandem
Stock Appreciation Rights are exercised over (ii) the option price per share
specified in such Option, multiplied by (B) the number of shares of Common
Stock subject to the Option, or portion thereof, which is surrendered. Cash
shall be delivered in lieu of any fractional shares.
6.4 Exercise of Nontandem Stock Appreciation Rights. The
exercise of Nontandem Stock Appreciation Rights shall entitle the recipient to
receive from the Corporation that number of shares of Common Stock having an
aggregate Market Price equal to (A) the excess of (i) the Market Price of one
(1) share of Common Stock as of the date on which the Nontandem Stock
Appreciation Rights are exercised over (ii) the base price of the shares
covered by the Nontandem Stock Appreciation Rights, multiplied by (B) the
number of shares of Common Stock covered by the Nontandem Stock Appreciation
Rights, or the portion thereof being exercised. Cash shall be delivered in
lieu of any fractional shares.
6.5 Settlement of Stock Appreciation Rights. As soon as is
reasonably practicable after the exercise of any Stock Appreciation Rights,
the Corporation shall (i) issue, in the name of the recipient, stock
certificates representing the total number of full shares of Common Stock to
which the recipient is entitled pursuant to Section 6.3 or 6.4 hereof and cash
in an amount equal to the Market Price, as of the date of exercise, of any
resulting fractional shares, and (ii) if the Committee causes the Corporation
to elect to settle all or part of its obligations arising out of the exercise
of the Stock Appreciation Rights
<PAGE> 7
in cash pursuant to Section 6.6 hereof, deliver to the recipient an amount in
cash equal to the Market Price, as of the date of exercise, of the shares of
Common Stock it would otherwise be obligated to deliver.
6.6 Cash Settlement. The Board, in its sole discretion, may
cause the Corporation to settle all or any part of its obligation arising out
of the exercise of Stock Appreciation Rights by the payment of cash in lieu of
all or part of the shares of Common Stock it would otherwise be obligated to
deliver in an amount equal to the Market Price of such shares on the date of
exercise.
ARTICLE 7
NONTRANSFERABILITY OF OPTIONS AND STOCK APPRECIATION RIGHTS
No Option or Stock Appreciation Rights may be transferred,
assigned, pledged or hypothecated (whether by operation of law or otherwise),
except as provided by will or the applicable laws of descent and distribution,
and no Option or Stock Appreciation Rights shall be subject to execution,
attachment or similar process. Any attempted assignment, transfer, pledge,
hypothecation or other disposition of an Option or Stock Appreciation Rights
not specifically permitted herein shall be null and void and without effect.
An Option or Stock Appreciation Rights may be exercised by the recipient only
during his or her lifetime, or following his or her death pursuant to Section
8.3 hereof.
Notwithstanding anything to the contrary in the preceding
paragraph, the Committee may, in its sole discretion, cause the written
agreement relating to any Non-qualified Stock Options or Stock Appreciation
Rights granted hereunder to provide that the recipient of such Non-qualified
Stock Options or Stock Appreciation Rights may transfer any of such Non-
qualified Stock Options or Stock Appreciation Rights other than by will or the
laws of descent and distribution in any manner authorized under applicable
law.
ARTICLE 8
EFFECT OF TERMINATION OF EMPLOYMENT,
DISABILITY, RETIREMENT, DEATH OR CHANGE IN CONTROL
8.1 General Rule. Except as expressly provided in the written
agreement relating to any Option or Stock Appreciation Rights or as otherwise
expressly determined by the Committee in its sole discretion, in the event
that a recipient of Options or Stock Appreciation Rights ceases to be an
employee or consultant of the Corporation and its subsidiaries (a "Terminated
Person") for any reason other than Cause, Disability, Retirement (as
hereinafter defined) or death, any Options or Stock Appreciation Rights which
were held by such Person on the date on which he or she ceased to be director,
employee or consultant (the "Termination Date") and which were otherwise
exercisable on such Date shall expire unless exercised within the period of 90
days following the Termination Date, but in no event after the expiration of
<PAGE> 8
the exercise period of such Options or Stock Appreciation Rights.
Except as expressly provided in the written agreement relating to
the Options or Stock Appreciation Rights or as otherwise expressly determined
by the Committee in its sole discretion, the Board may, in its sole
discretion, cause any Option or Stock Appreciation Rights to be forfeited upon
an employee's termination of employment or the termination of a consultant's
consulting arrangement if the employee or consultant was terminated for Cause.
"Cause" shall mean one (or more) of the following reasons: (i) the employee's
or consultant's conviction, or plea of guilty or nolo contendere to the
commission, of a felony, (ii) the employee's or consultant's commission of any
fraud, misappropriation or misconduct which causes demonstrable injury to the
Corporation or a subsidiary, (iii) an act of dishonesty by the employee or
consultant resulting or intended to result, directly or indirectly, in gain or
personal enrichment at the expense of the Corporation or a subsidiary, (iv)
any breach of the employee's or consultant's fiduciary duties to the
Corporation, or (v) the employee's or consultant's willful failure to perform
those duties which the employee or consultant is required to perform as an
employee or consultant of the Corporation or a subsidiary; provided, however,
that "cause," in the case of an employee or consultant who has an employment
or consulting agreement with the Corporation or a subsidiary thereof, shall
have the meaning, if any, set forth in such employment or consulting
agreement. It shall be within the sole discretion of the Board to determine
whether an employee's or consultant's termination was for one of the foregoing
reasons, and the decision of the Board shall be final and conclusive.
8.2 Disability or Retirement. Except as expressly provided
otherwise in the written agreement relating to any Option or Stock
Appreciation Rights granted under the Plan or as otherwise determined by the
Board in its sole discretion, in the event of a termination of employment or
consulting arrangement of a Terminated Person due to the Disability or
Retirement of such Person, any Options or Stock Appreciation Rights which were
held by such Person on the Termination Date and which were otherwise
exercisable on such Date shall expire at the expiration date of the exercise
period of such Options or Stock Appreciation Rights; provided, however, that
any Incentive Stock Option of such Terminated Person shall no longer be
treated as an Incentive Stock Option unless exercised within three (3) months
of the Termination Date (or within one (1) year in the case of an employee who
is "disabled" within the meaning of Section 22(e)(3) of the Code).
"Disability" shall mean any termination of employment or
consulting arrangement with the Corporation or a subsidiary because of a long-
term or total disability, as determined by the Committee in its sole
discretion. "Retirement" shall mean a termination of employment or consulting
arrangement with the Corporation or a subsidiary with the written consent of
the Board in its sole discretion. The decision of the Board shall be final
and conclusive.
8.3 Death. Except as expressly provided in the written
agreement relating to the Options or Stock Appreciation Rights or as
<PAGE> 9
otherwise expressly determined by the Board in its sole discretion, in the
event of the death of a recipient of Options or Stock Appreciation Rights
while an employee or consultant of the Corporation or any subsidiary, any
Options or Stock Appreciation Rights which were held by such Person at the
date of death and which were otherwise exercisable on such date shall be
exercisable by the beneficiary designated by the employee or consultant for
such purpose (the "Designated Beneficiary") or if no Designated Beneficiary
shall be appointed or if the Designated Beneficiary shall predecease the
employee, by the employee's personal representatives, heirs or legatees for a
period up to the expiration date of the exercise period of such Options or
Stock Appreciation Rights, at which time such Options or Stock Appreciation
Rights shall expire.
In the event of the death of a Terminated Person following a
termination of employment due to Disability or Retirement, any Options or
Stock Appreciation Rights which were held by such Person on the Termination
Date and which were exercisable on such Date shall be exercisable by such
recipient's Designated Beneficiary, or if no Designated Beneficiary shall be
appointed or if the Designated Beneficiary shall predecease such recipient, by
such recipient's personal representatives, heirs or legatees for a period up
to the expiration date of the exercise period of such Options or Stock
Appreciation Rights, at which time such Options or Stock Appreciation Rights
shall expire; provided, however, that any Incentive Stock Option of such
Terminated Person shall no longer be treated as an Incentive Stock Option
unless exercised within three (3) months of the date of such Termination Date
(or within one (1) year in the case of an employee who is "disabled" within
the meaning of Section 22(e)(3) of the Code).
8.4 Change in Control. Except as expressly provided otherwise
in the written agreement relating to any Option or Stock Appreciation Rights
granted under the Plan, if there should be a Change in Control of the
Corporation, the Corporation shall give each holder of an Option or Stock
Appreciation Right written notice of such Change in Control as promptly as
practicable prior to or after the effective date thereof and any outstanding
Options or Stock Appreciation Rights held by such holders shall become
immediately exercisable. For purposes hereof, "Change in Control" means (i)
any "person" (as such term is used in Sections 13(d) and 14(d)(2) of the 1934
Act), other than Alfred West, his designee(s) or "affiliate(s)" (as defined in
Rule 12b-2 under the 1934 Act) or any combination thereof, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under the 1934 Act), directly or
indirectly, of securities of the Corporation representing forty percent (40%)
or more of the combined voting power of the Corporation's then outstanding
securities; (ii) the Corporation merges, combines or consolidates with another
entity and persons beneficially owning more than fifty percent (50%) of the
combined voting power of the Corporation's then outstanding securities prior
to the merger, combination or consolidation, cease to beneficially own more
than fifty percent (50%) of the combined voting power of the securities of the
surviving entity; (iii) a sale (in one transaction or a series of related
transactions) of all or substantially all of the assets of the
<PAGE> 10
Corporation; or (iv) during any period of two (2) consecutive years,
individuals who at the beginning of such period constitute the Board cease for
any reason to constitute at least a majority thereof, unless the election of
each director who was not a director at the beginning of such period has been
approved in advance by directors representing at least a majority of the
directors then in office who were directors at the beginning of the period.
8.5 Termination of Unvested Options. All Options and Stock
Appreciation Rights which were not exercisable by a Terminated Person as of
the Termination Date of such Terminated Person shall terminate as of such
Date, except as expressly provided in the written agreement relating to the
Options or Stock Appreciation Rights or as otherwise expressly determined by
the Board in its sole discretion. Options and Stock Appreciation Rights shall
not be affected by any change of employment so long as the recipient continues
to be employed by either the Corporation or a subsidiary.
ARTICLE 9
RESTRICTED SHARES
9.1 Grant or Sale of Restricted Shares. The Committee may
from time to time cause the Corporation to grant or to sell Restricted Shares
under the Plan to employees and consultants, subject to such restrictions,
conditions and other terms as the Committee may determine. The purchase
price, if any, for Restricted Shares shall be determined by the Board in its
sole discretion.
9.2 Restrictions. At the time a grant of Restricted Shares is
made, the Board shall establish a period over which such Restricted Shares
will vest (the "Restricted Period"). Each grant of Restricted Shares may be
subject to a different Restricted Period. The Board may, in its sole
discretion, at the time a grant is made prescribe restrictions in addition to
or other than the expiration of the Restricted Period, including the
satisfaction of corporate or individual performance objectives, which shall be
applicable to all or any portion of the Restricted Shares. The Board may
also, in its sole discretion, at any time shorten or terminate the Restricted
Period or waive any other restrictions applicable to all or a portion of such
Restricted Shares. None of the Restricted Shares may be sold, transferred,
assigned, pledged or otherwise encumbered or disposed of during the Restricted
Period or prior to the satisfaction of any other restrictions prescribed by
the Board with respect to such Restricted Shares.
9.3 Restricted Stock Certificates. The Corporation shall
issue, in the name of each director, employee or consultant to whom Restricted
Shares have been granted or sold, stock certificates representing the total
number of Restricted Shares granted or sold to the employee or consultant, as
soon as reasonably practicable after the grant or sale. The Corporation, at
the direction of the Board, shall hold such certificates, properly endorsed
for transfer, for the
<PAGE> 11
employee's or consultant's benefit until such time as the Restricted Shares
are forfeited to or repurchased by the Corporation or the restrictions lapse.
9.4 Rights of Holders of Restricted Shares. Holders of
Restricted Shares shall have the right to receive any cash dividends with
respect to such shares and the right to vote such shares. All distributions,
if any, received by an employee or consultant with respect to Restricted
Shares as a result of any stock split, stock distribution, a combination of
shares, or other similar transaction shall be subject to the restrictions of
this Article 9.
9.5 Forfeiture; Repurchase. Except as expressly provided in
the written agreement relating to Restricted Shares or as otherwise expressly
determined by the Board in its sole discretion, any Restricted Shares held by
a director, employee or consultant pursuant to the Plan shall be forfeited or
subject to repurchase by the Corporation at a price equal to the original
price paid therefor, if any, by the director, employee or consultant upon the
termination of his or her employment or consulting agreement with the
Corporation or its subsidiaries, as the case may be, prior to the expiration
or termination of the Restricted Period and the satisfaction of any other
conditions applicable to such Restricted Shares. Upon any such forfeiture or
repurchase, the Restricted Shares shall be retained in the treasury of the
Corporation and available for subsequent awards under the Plan, unless the
Board directs that such Restricted Shares be canceled.
9.6 Delivery of Restricted Shares. Upon the expiration or
termination of the Restricted Period applicable to any Restricted Shares and
the satisfaction of any other conditions prescribed by the Board that are
applicable to such Shares, the restrictions applicable to the Restricted
Shares shall lapse and a stock certificate for the number of Restricted Shares
with respect to which the restrictions have lapsed shall be delivered, free of
all such restrictions, to the director, employee, consultant, beneficiary or
estate, as the case may be.
ARTICLE 10
ADJUSTMENT UPON CHANGES IN CAPITALIZATION
In the event of any change in the Common Stock by reason of any
stock dividend, stock split, recapitalization, merger, consolidation,
combination or exchange of shares, separation, spin-off, reorganization,
liquidation or the like, the number and kind of shares represented by any
awards and the purchase price per share thereof, if any, shall be
appropriately adjusted consistent with such change in such manner as the Board
may deem equitable to prevent dilution or enlargement of the rights granted
under any awards.
ARTICLE 11
AMENDMENT AND TERMINATION
<PAGE> 12
The Board or Committee may suspend, terminate, modify or amend the
Plan, provided that any amendment that would (i) materially increase the
aggregate number of shares which may be issued under the Plan, (ii) materially
increase the benefits accruing to employees under the Plan, or (iii)
materially modify the requirements as to eligibility for participation in the
Plan, shall be subject to the approval of the Corporation's stockholders,
except that any such increase or modification that may result from adjustments
authorized by Article 10 hereof shall not require such stockholder approval.
If the Plan is terminated, the terms of the Plan shall, notwithstanding such
termination, continue to apply to awards granted prior to such termination.
No suspension, termination, modification or amendment of the Plan may, without
the consent of the employee or consultant to whom an award shall theretofore
have been granted, adversely affect the rights of such employee or consultant
under such award.
ARTICLE 12
WRITTEN AGREEMENT
Each award of Options, Stock Appreciation Rights and Restricted
Shares shall be evidenced by a written agreement containing such restrictions,
terms and conditions, if any, as the Board may require. In the event of any
conflict between a written agreement and the Plan, the terms of the Plan shall
govern.
ARTICLE 13
MISCELLANEOUS PROVISIONS
13.1 Tax Withholding. The Corporation shall have the right to
require employees or their beneficiaries or legal representatives to remit to
the Corporation an amount sufficient to satisfy Federal, state and local
withholding tax requirements, or to deduct from all payments under the Plan,
amounts sufficient to satisfy all withholding tax requirements. Whenever
payments under the Plan are to be made to an employee in cash, such payments
shall be net of any amounts sufficient to satisfy all Federal, state and local
withholding tax requirements. The Board may, in its sole discretion, permit
an employee to satisfy his or her tax withholding obligation either by (i)
surrendering shares owned by the employee or (ii) having the Corporation
withhold from shares otherwise deliverable to the employee. Shares
surrendered or withheld shall be valued at their Market Price as of the date
on which income is required to be recognized for income tax purposes.
13.2 Compliance With Section 16(b). In the case of employees
who are or may be subject to Section 16 of the 1934 Act, it is the intent of
the Corporation that the Plan, any award granted hereunder and any other
transaction contemplated by the Plan satisfy and be interpreted in a manner
that satisfies the applicable requirements of Rule 16b-3 so that such persons
will be entitled to the benefits of Rule 16b-3 or other exemptive rules under
Section 16 of the 1934 Act and will
<PAGE> 13
not be subjected to liability thereunder. If any provision of the Plan, any
award or any other transaction contemplated by the Plan would otherwise
conflict with the intent expressed herein, that provision, to the extent
possible, shall be interpreted and deemed amended so as to avoid such
conflict. To the extent of any remaining irreconcilable conflict with such
intent, such provision shall be deemed void as applicable to directors or
employees who are or may be subject to Section 16 of the 1934 Act.
13.3 Successors. The obligations of the Corporation under the
Plan shall be binding upon any successor corporation or organization resulting
from the merger, consolidation or other reorganization of the Corporation, or
upon any successor corporation or organization succeeding to all or
substantially all of the assets and business of the Corporation. In the event
of any of the foregoing, the Board may, in its discretion prior to the
consummation of the transaction and subject to Article 11 hereof, cancel,
offer to purchase, exchange, adjust or modify any outstanding awards, at such
time and in such manner as the Board deems appropriate and in accordance with
applicable law.
13.4 General Creditor Status. Directors, employees and
consultants shall have no right, title, or interest whatsoever in or to any
investments which the Corporation may make to aid it in meeting its
obligations under the Plan. Nothing contained in the Plan, and no action
taken pursuant to its provisions, shall create or be construed to create a
trust of any kind, or a fiduciary relationship between the Corporation and any
director, employee, consultant, beneficiary or legal representative of such
person. To the extent that any person acquires a right to receive payments
from the Corporation under the Plan, such right shall be no greater than the
right of an unsecured general creditor of the Corporation. All payments to be
made hereunder shall be paid from the general funds of the Corporation and no
special or separate fund shall be established and no segregation of assets
shall be made to assure payment of such amounts except as expressly set forth
in the Plan.
13.5 No Right to Employment. Nothing in the Plan or in any
written agreement entered into pursuant to Article 12 hereof, nor the grant of
any award, shall confer upon any employee any right to continue in the employ
of the Corporation or a subsidiary or to be entitled to any remuneration or
benefits not set forth in the Plan or such written agreement or interfere with
or limit the right of the Corporation or a subsidiary to modify the terms of
or terminate such employee's employment at any time. The preceding sentence
shall be equally applicable with respect to directors or consultants of the
Corporation or a subsidiary.
13.6 Notices. Notices required or permitted to be made under
the Plan shall be sufficiently made if personally delivered or sent by regular
mail addressed (a) to the director, employee or consultant at the person's
address as set forth in the books and records
<PAGE> 14
of the Corporation or its subsidiaries, or (b) to the Corporation at the
principal office of the Corporation clearly marked "Attention: Stock Plan
Administrator."
13.7 Severability. In the event that any provision of the
Plan shall be held illegal or invalid for any reason, such illegality or
invalidity shall not affect the remaining parts of the Plan, and the Plan
shall be construed and enforced as if the illegal or invalid provision had not
been included.
13.8 Governing Law. To the extent not preempted by Federal
law, the Plan, and all agreements hereunder, shall be construed in accordance
with and governed by the laws of the State of New York.
<PAGE> 15
Exhibit 4.1
- - ------------------------------ ---------------------------------
TABLE OF CONTENTS
Page
Available Information
About the Company A-2
DESTIA COMMUNICATIONS, INC.,
COMMON STOCK
Documents Incorporated by Par Value $.01 Per Share
Reference A-2 ----------------------
Plan Information A-3
Restrictions on Resale of Shares A-7 1999 FLEXIBLE
INCENTIVE PLAN
Federal Income Tax Consequences ---------------------
Experts A-7
Legal Matters A-9 PROSPECTUS
Incorporation of Certain
Documents by Reference A-9
Indemnification A-10
The Plan Exhibit A August 3,1999
- - --------------------------- ----------------------------
<PAGE>
