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 (I.R.S. Employer Identification
incorporation or organization) No.)
95 Rte. 17 South, Paramus, New Jersey 07652
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(Address of Principal Executive Offices) (Zip Code)
The Employee Stock Purchase 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,
$.01 par value per 500,000 $10 $5,000,000 $1,390
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 Employee Stock
Purchase 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.
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.
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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 The Destia Communications, Inc. Employee Stock Purchase
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
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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
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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, Treasurer
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
Director
/S/ STEPHEN R. MUNGER
--------------------------------
Stephen R. Munger
Director
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Pursuant to the requirements of the Securities Act of 1933, the
Company's Compensation Committee, as administrator of the Company's Employee
Stock Purchase 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.
DESTIA COMMUNICATIONS, INC.
The Employee Stock Purchase Plan
/s/ STEPHEN R. MUNGER
By: -------------------------------------
Name: Stephen R. Munger
Title: Member of Compensation Committee
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EXHIBIT INDEX
Exhibit Number Exhibit
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4.1 Destia Communications, Inc. Employee Stock Purchase 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)
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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 500,000 shares of Common Stock, par value
$.01 per share, of the Company (the "Shares") issuable to participants in the
Company's Employee Stock Purchase 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
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
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 include in this
registration statement.
/s/ ARTHUR ANDERSEN LLP
------------------------------------------
ARTHUR ANDERSEN LLP
New York, New York
August 3, 1999
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Exhibit 4.1
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TABLE OF CONTENTS
Page
----
Available Information DESTIA COMMUNICATIONS, INC.
About the Company 2-9 COMMON STOCK
Par Value $.01 Per Share
Documents Incorporated
by Reference 2-9 -------------------
Plan Information 3-9 EMPLOYEE STOCK
PURCHASE PLAN
Restrictions on Resale
of Shares 5-9 -------------------
Federal Income Tax
Consequences 6-9
Experts 7-9 PROSPECTUS
Legal Matters 7-9
Incorporation of Certain
Documents by Reference 7-9 August 3, 1999
Indemnification 8-9
The Plan Exhibit A
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<PAGE>
THIS DOCUMENT CONSTITUTES A PROSPECTUS COVERING SECURITIES THAT
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
------------------
DESTIA COMMUNICATIONS, INC. COMMON STOCK
Par Value $.01 Per Share
------------------
EMPLOYEE STOCK PURCHASE 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 Employee Stock Purchase Plan (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 or 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.
PAGES 1 OF 9 PAGES
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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
this Prospectus, 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 this
Prospectus (not including exhibits to the information that is incorporated by
reference unless such exhibits are specifically incorporated by reference into
the information that this Prospectus 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
PAGES 2 OF 9 PAGES
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Plan Information
Set forth below is a brief description of the Destia
Communications, Inc. Employee Stock Purchase Plan (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.
The Plan.
--------
The Company has adopted the Plan, covering eligible employees of
the Company and its subsidiaries (each a "Participant"). The purpose of the
Plan is to provide Participants with an opportunity to purchase shares of
Common Stock through payroll deductions. The Employee Stock Purchase Plan
Committee of the Company (the "Committee"), with the assistance of outside
administrators, administers the Plan. The Plan is not subject to the
provisions of the Employee Retirement Income Security Act of 1974, as amended
("ERISA").
Eligible Employees.
------------------
After completion of thirty (30) days of continuous service, all
employees who are customarily employed for at least twenty (20) hours per week
by the Company or a subsidiary are eligible to participate in the Plan.
However, employees of a foreign subsidiary shall be excluded from
participation in the Plan if the Committee has determined, in its sole
discretion, that the legal, tax or administrative requirements of affording
participation in the Plan to such employees is unduly burdensome or that the
participation of such employees in the Plan would violate the law of the
jurisdiction in which such subsidiary is registered or conducts its business.
Purchase of Shares.
------------------
Prior to each six (6) month period set forth in the Plan (a
"Participation Period"), a Participant may authorize payroll deductions to be
taken from his or her salary (including commissions and overtime) to be used
to purchase shares of Common Stock under the Plan. The rate of payroll
deductions shall be between one percent (1%) and twenty percent (20%) of the
Participant's pre-tax salary. Participants may purchase up to a number of
shares of Common Stock equal to the total amount of payroll deductions
accumulated during the Participation Period divided by the lower of: (a)
eighty-five percent (85%) of the closing market price of a share of Common
Stock on the first day of the Participation Period (or in the case of the
first Participation Period, 100% of the initial public offering price of the
Common Stock) and (b) 85% of the closing market price on the last trading day
in the Participation Period. The closing market price of a share of Common
Stock is the closing sales price of a share of Common Stock as reported in The
Wall Street Journal for that day.
The maximum number of whole shares of Common Stock will be
purchased for each Participant using such individual's payroll deductions
accumulated during the Participation Period. No fractional
PAGES 3 OF 9 PAGES
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shares will be purchased; payroll deductions which are not sufficient to
purchase a full share will be retained in the Participant's account for the
subsequent Participation Period. In any calendar year, no Participant may
purchase shares of Common Stock which have a fair market value that exceeds
twenty-five thousand dollars ($25,000) based on the fair market value of such
shares of Common Stock on the first day of each Participation Period.
The maximum number of shares of Common Stock which shall be
available for sale under the Plan is five hundred thousand (500,000), subject
to adjustment by the Company upon a change in capitalization of the Company.
The shares of Common Stock to be sold to Participants under the Plan will be
authorized but unissued shares.
A Participant may terminate his or her payroll deductions during
each Participation Period to be effective as of the subsequent payroll period
ten (10) business days after the Company's receipt of a new subscription
agreement (or telephonic or electronic indication) authorizing such
termination. In such case, the Participant's account balance at the time of
termination shall be used to purchase Common Stock at the end of the
Participation Period. A Participant's payroll deductions shall remain
constant if not terminated at the Participant's request prior to the
applicable Enrollment Date for any subsequent Participation Period.
No interest shall accrue on the payroll deductions held in a
Participant's account under the Plan. Any cash dividends for the shares of
Common Stock held in a Participant's account shall be automatically invested
in shares of Common Stock at the fair market value of the shares of Common
Stock on the date that the cash dividends are invested in such shares (with no
contribution by the Company for any discount toward the purchase of such
shares of Common Stock). Shares of Common Stock purchased with cash dividends
shall be held in a Participant's account under the Plan.
A Participant shall have the right to vote shares of Common
Stock held in the Participant's account under the Plan. However, a
Participant shall have no interest or voting right in shares of Common Stock
until such shares have been purchased under the provisions of the Plan.
Withdrawal from Plan; Assignment of Interest.
--------------------------------------------
Participants may withdraw all, but not less than all, payroll
deductions accumulated during the Participation Period at any time prior to
the last day of the Participation Period by giving notice to the Company's
stock plan administrator. If a Participant withdraws from the Plan, the
accumulated payroll deductions will be paid to the Participant as promptly as
administratively possible and such Participant's rights to purchase shares
during the applicable Participation Period shall be automatically terminated
and no further payroll deductions will be made for the Participant for such
Participation Period. A Participant's withdrawal from the Plan during one
Participation Period shall not affect such Participant's eligibility
PAGES 4 OF 9 PAGES
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to participate in subsequent Participation Periods. However, in such a case,
the Participant must authorize the resumption of payroll deductions and the
rate of such payroll deductions. A Participant's termination of employment
for any reason during the Participation Period shall constitute an immediate
withdrawal from the Plan.
Neither payroll deductions credited to a Participant's account
nor any rights with regard to the purchase of shares of Common Stock under the
Plan may be assigned, transferred, pledged or otherwise disposed of in any way
(other than by will, the laws of descent and distribution or as provided to a
beneficiary in accordance with the provisions of the Plan) by the Participant.
The Committee.
-------------
The Plan is administered by the Committee, whose members are
appointed by the Board. The members of the Committee may be removed by the
Board for any reason or for no reason at any time. The Plan is of no set
duration, but may be amended or terminated at any time by the Committee
insofar as permitted by law.
The Brokers.
-----------
The Committee has designated Morgan Stanley Dean Witter and
National Discount Brokers (taken together, the "Brokers") to open and maintain
individual accounts for each Participant under the Plan and to perform other
administrative functions with respect to the Plan. The Committee reserves the
right under the Plan to change the Brokers at any time without prior notice to
Participants. Statements of Participants' accounts under the Plan will be
given to Participants at least annually. Such statements will set forth the
amount of payroll deductions and the number of shares of Common Stock
purchased. Participants who sell their shares may be charged a transaction
fee and commission per share of Common Stock sold. Such fee and commission
are subject to change.
Participants may request a certificate representing the number of whole shares
of Common Stock purchased pursuant to the Plan. In the event that a
Participant requests such a certificate, he or she will be charged an issuance
fee. Such fee is subject to change.
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 three (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. 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. Generally, this applies to select members of senior
management of the Company.
PAGES 5 OF 9 PAGES
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Federal Income Tax Consequences
The following summary describes the principal federal income tax
consequences of participation in 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 (the "Code"), 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
resulting from participation in the Plan. The Plan is not qualified under
Section 401(a) of the Code, but is intended to comply with the provisions of
Section 423 of the Code as an "employee stock purchase plan."
The payroll deductions authorized by a Participant under the
Plan continue to be taxable income to the Participant in the year such amounts
are earned. Such income is subject to taxation to the same extent (federal,
state and local) as other compensation income received by the Participant.
However, a Participant will not recognize income either upon enrollment in the
Plan or upon any purchase of shares of Common Stock under the Plan. All tax
consequences are deferred until a Participant sells the shares of Common Stock
acquired under the Plan, disposes of such shares by gift or dies.
The tax treatment with respect to a disposition of shares of
Common Stock purchased under the Plan depends on whether such shares of Common
Stock are disposed of within the holding period provided under Section 423 of
the Code. Under Section 423 of the Code, as applicable to the Plan, the
required holding period is two (2) years after the first day of the
Participation Period in which such Common Stock was acquired. The required
holding period is also satisfied if the Participant dies while holding shares
of Common Stock acquired under the Plan. If a disposition does not satisfy
the required holding period under Section 423 of the Code, such disposition is
called a "Disqualifying Disposition." If a Disqualifying Disposition occurs,
the Participant must recognize as ordinary income, in the year of such
Disqualifying Disposition, the difference between the fair market value of the
shares of Common Stock on the date that the shares are purchased and the
purchase price.
Since the Plan provides that the purchase price per share of
Common Stock shall be the lower of: (a) eighty-five percent (85%) of the
closing market price of a share of Common Stock on the first day of the
Participation Period (or in the case of the first Participation Period, 100%
of the initial public offering price of the Common Stock) and (b) 85% of the
closing market price on the last trading day in the Participation Period, a
Participant who satisfies the required holding period under Section 423 of the
Code must include as ordinary income at the time of sale or other taxable
disposition of the shares of Common Stock purchased under the Plan, or upon
the Participant's death while still holding the shares of Common Stock
purchased under the Plan, the lesser of:
PAGES 6 OF 9 PAGES
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(i) the amount, if any, by which the fair market value of
the shares of Common Stock on the day the shares were purchased exceeds the
purchase price; or
(ii) the amount, if any, by which the fair market value
of the shares of Common Stock at the time of such disposition or death exceeds
the purchase price paid.
The basis of the shares of Common Stock purchased will be
increased by the amount of ordinary income recognized. If a Participant
satisfies the applicable holding period with respect to the shares of Common
Stock purchased, such shares of Common Stock would be eligible for capital
gains treatment under the Code.
If a Disqualifying Disposition occurs, the Company will be
entitled to a tax deduction equal to the amount that the Participant includes
as ordinary income in the year in which the Disqualifying Disposition occurs.
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 after the first
business day of the Participation Period in which such Common Stock was
acquired.
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,
are incorporated by reference herein, in reliance upon the report of Arthur
Andersen LLP, independent certified public accountants, also incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing. To the extent that Arthur Andersen LLP audits and reports on
the financial statements of the Company issued at future dates, and consents
to the use of their report thereon, such financial statements also will be
incorporated by reference herein in reliance upon their 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:
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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;
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 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
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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 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.
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Exhibit A
Destia Communications, Inc. Employee Stock Purchase Plan
1. Purpose
The Destia Communications, Inc. Employee Stock Purchase Plan (the "Plan")
is designed to encourage employees of Destia Communications, Inc. ("Destia")
and its Subsidiaries, as defined herein (hereinafter collectively referred to
as the "Company"), where permitted by applicable laws and regulations, to
acquire an equity interest in Destia through the purchase of shares of the
common stock, par value $0.01 per share, of Destia ("Common Stock"). These
purchases are intended to establish a closer identification of employee,
Company and stockholder interests and to provide employees with a direct means
of participating in the Company's growth and earnings. It is anticipated that
Plan participation will motivate employees to remain in the employ of the
Company and give greater efforts on behalf of Destia. It is intended that
this Plan shall constitute an "employee stock purchase plan" within the
meaning of Section 423 of the Internal Revenue Code of 1986, as amended (the
"Code").
2. Definitions
The following words or terms, when used herein, shall have the following
respective meanings:
"Base Salary" shall mean an Employee's pre-tax salary or wages for each
pay period, including amounts attributable to overtime or received as
commissions, during any Participation Period as determined from the payroll
records of the Company. Base salary shall not include any amounts received
from the Company as a bonus, as determined by the Committee in its sole
discretion.
"Board" shall mean the Board of Directors of Destia.
"Closing Market Price" refers to the reported closing sales price for
shares of the Common Stock (or the closing bid, if no sales were reported) as
reported in The Wall Street Journal for that day or such other source as the
Committee deems reliable. In the absence of an established market for the
Common Stock, the Closing Market Price shall be determined in good faith by
the Committee.
"Code" is defined in Section 1 hereof.
"Committee" is defined in Section 3 hereof.
"Common Stock" is defined in Section 1 hereof.
"Effective Date" means the earlier of the date upon which this Plan is
approved by the Board and the date upon which this Plan is approved by the
stockholders of Destia.
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"Employee" refers to any individual who is a full time employee of the
Company for tax purposes and regular (non-temporary) part-time employees of
the Company whose customary employment with the Company is at least twenty
(20) hours per week. For purposes of the Plan, the employment relationship
shall be treated as continuing intact while the individual is on sick leave or
other leave of absence approved by the Company. When the period of leave
exceeds 90 days and the individual's right to reemployment is not guaranteed
either by statute or by contract, the employment relationship shall be deemed
to have terminated on the 91st day of such leave. The term Employee shall
include the employees of any Subsidiary incorporated or operating in a non-
U.S. jurisdiction unless the Committee has determined, in its sole discretion,
that the legal, tax or administrative requirements of affording participation
in the Plan to such employees is unduly burdensome or that the participation
of such employees in the Plan would violate the law of the jurisdiction in
which such Subsidiary is registered or conducts its business.
"Employee Contribution Amounts" refers to the amounts contributed by
employees via payroll deduction.
"Enrollment Period" refers to the period beginning on the Grant Date for
the current Participation Period and ending ten (10) business days prior to
the Grant Date for the upcoming Participation Period, during which period
Employees eligible to participate in the Plan are provided the opportunity to
enroll in the Plan for the upcoming Participation Period. The exact dates for
each Enrollment Period will be determined by the Committee, in its sole
discretion and communicated to all eligible Employees prior to the Enrollment
Period.
"Exercise Date" refers to the last Trading Day in a Participation Period.
"Fair Market Value" refers to the Closing Market Price on either the
first or last Trading Day in the Participation Period, as determined in
accordance with Section 9 hereof, or on the date shares of Common Stock are
purchased with cash dividends pursuant to Section 14 hereof, as the case may
be.
"Grant Date" refers to the first day of each Participation Period.
"Offering Price" refers to the per share price at which the Common Stock
is offered for sale in connection with Destia's initial public offering.
"Participant" refers to any employee meeting the eligibility requirements
specified in Section 4 hereof who has enrolled in the Plan.
"Participation Period" shall mean a period of approximately six (6)
months commencing on the first Trading Day on or after June 1 and terminating
on the last Trading Day on or before the following November 30, or commencing
on the first Trading Day on or after December 1 and terminating on the last
Trading Day on or before the following May 31; provided, however, that the
first Participation Period under the Plan
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<PAGE>
shall commence with the first Trading Day on or after the date on which the
Securities and Exchange Commission declares Destia's Registration Statement
effective and ending on the last Trading Day on or before November 30, 1999.
The duration of Participation Periods may be changed pursuant to Section 22
hereof.
"Plan" shall refer to this Destia Communications, Inc. Employee Stock
Purchase Plan.
"Plan Administrator" refers to the outside administrator that will assist
the Committee in administering the Plan and which may be designated from time
to time by the Committee. Initially, the Plan Administrator shall be AST
StockPlan, Inc.
"Purchase Price" for any Participation Period shall mean the lower of:
(a) 85% of the Closing Market Price on the Grant Date (or in the case of the
first Participation Period, 100% of the Offering Price) and (b) 85% of the
Closing Market Price on the Exercise Date for such Participation Period.
These dates constitute the date of grant and the date of exercise,
respectively, for valuation purposes under Section 423 of the Code.
"Stock Plan Administrator" shall mean the person or persons designated by
the Committee to provide administrative support for the Plan and coordinate
with the Plan Administrator. Initially, the Stock Plan Administrator shall be
certain of Destia's Human Resources Department and Legal Department.
"Subsidiary" shall mean any corporation that is a "subsidiary
corporation" of Destia within the meaning of Section 424 of the Code.
"Trading Day" shall mean a day on which national stock exchanges and the
Nasdaq National Market are open for trading.
3. Administration of the Plan
The Plan shall be administered by the Employee Stock Purchase Plan
Committee (the "Committee") appointed by the Board, which Committee shall
consist of at least three (3) persons, who need not be members of the Board.
The members of the Committee serve at the pleasure of the Board and may be
removed by the Board at any time with or without cause. The Committee shall
supervise the administration and enforcement of the Plan according to its
terms and provisions and shall have all powers necessary to accomplish these
purposes and discharge its duties hereunder including, but not limited to, the
power to interpret the Plan and resolve issues of eligibility, stock price
determination, or any other issues arising under the Plan or as a result of
participation of Participants in the Plan.
The Committee may act by majority decision of its members at a regular or
special meeting of the Committee or by decision reduced to writing and signed
by all members of the Committee without holding a formal meeting. Vacancies
in the membership of the Committee arising
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from death, resignation or other inability to serve shall be filled by
appointment by the Board as soon as possible. All decisions by the Committee
shall be final and conclusive and binding upon all Participants and the
Company.
4. Nature and Number of Shares
The Common Stock subject to issuance under the terms of the Plan shall be
shares of Destia authorized but unissued shares. The aggregate number of
shares that may be issued under the Plan shall not exceed five hundred
thousand (500,000) shares of Common Stock. If the total number of shares that
Employees elect to purchase under the Plan exceeds the aggregate shares
available, the Committee will allot shares among Employees in such manner as
it shall determine to be equitable.
In the event of any reorganization, recapitalization, stock split,
reverse stock split, stock dividend, combination of shares, merger,
consolidation, offering of rights or other similar change in the capital
structure of Destia, the Committee may make such adjustment, if any, as it
deems appropriate in the number, kind and purchase price of the shares
available for purchase under the Plan and in the maximum number of shares that
may be issued under the Plan, subject to the approval of the Board and in
accordance with Section 22 hereof.
If Destia is acquired in a transaction whereby it is not the surviving
entity or all or substantially all of Destia's assets are acquired, the
Committee shall determine a Plan termination date. This date shall precede
the expected effective date of such acquisition by not more than sixty (60)
days. Employee Contribution Amounts accumulated during the period between the
most recent Grant Date and Plan termination date shall be used to purchase
shares for Participants in the manner provided in Section 9 hereof utilizing
the Plan termination date as the Exercise Date for determining the purchase
price for shares of Common Stock. In the event the Plan is terminated and the
acquisition transaction is not consummated, the Plan may be reactivated on a
date determined by the Committee.
5. Eligibility Requirements
Each Employee who shall have completed thirty (30) days of continuous
service with the Company prior to the end of any Enrollment Period shall
become eligible to participate in the Plan in accordance with this Section 5
on the first Grant Date following such completion of thirty (30) days of
continuous service with the Company. Participation in the Plan is voluntary.
Notwithstanding any other provision of the Plan, no Employee shall be
entitled to participate in the Plan: (1) to the extent that, immediately after
such participation, such Employee (or any other person whose stock would be
attributed to such Employee pursuant to Section 424(d) of the Code) would own
capital stock of Destia or any Subsidiary and/or hold outstanding options to
purchase such stock possessing five percent (5%) or more of the total combined
voting power or value of all classes of capital stock of Destia or any
Subsidiary, or (2) to the
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<PAGE>
extent that his or her rights to purchase stock under all employee stock
purchase plans of the Company accrues at a rate that exceeds twenty-five
thousand dollars ($25,000) worth of stock (determined at the fair market value
of the shares at the applicable Grant Date) for any calendar year.
Employees of any corporation that may become a Subsidiary after the
Effective Date shall automatically be deemed to be eligible for participation
under this Plan effective as of the Grant Date following the date (1) the
corporation became a Subsidiary, (2) the Employee has satisfied the continuous
service requirements described above (including the continuous period of
employment with such Subsidiary prior to such Subsidiary becoming a
Subsidiary), and (3) if the Subsidiary is incorporated or operates in a non-
U.S. jurisdiction, the Committee has determined, in its sole discretion, that
the legal, tax or administrative requirements of affording participation in
the Plan to such Subsidiary's employees is not unduly burdensome and that the
participation of such employees in the Plan would not violate the law of the
jurisdiction in which such Subsidiary is registered or conducts its business.
6. Enrollment
Each eligible Employee of the Company as of the Effective Date may enroll
in the Plan as of the Effective Date. Each other Employee of the Company who
thereafter becomes eligible to participate may enroll in the Plan during any
Enrollment Period following the date he or she first meets the eligibility
requirements of Section 5 hereof. Any eligible Employee not enrolling in the
Plan when first eligible may, if still eligible, enroll in the Plan during any
succeeding Enrollment Period. In order to enroll, an eligible Employee must
complete, sign and submit a subscription agreement, or, if the Company in its
discretion implements a telephonic or electronic subscription mechanism,
through the completion and submission of such subscription, during the
applicable Enrollment Period.
Payroll deductions for a Participant shall commence on the first payroll
following the Grant Date and shall end on the last payroll in the
Participation Period to which such authorization is applicable, unless sooner
terminated by the Participant as provided in Section 15 hereof.
Continued enrollment in subsequent periods shall be automatic and no
additional documentation shall be required unless a Participant notifies the
Stock Plan Administrator that he or she elects not to re-enroll or desires to
discontinue such Participant's payroll deduction during such Participation
Period, pursuant to Section 8 hereof. A Participant's payroll deductions
shall remain constant if not terminated at the Participant's request during a
subsequent Enrollment Period. In order to terminate or suspend Plan
participation, at any time, the Participant must complete, sign and submit a
new subscription agreement to the Company's Stock Plan Administrator in the
manner described above. Such request will be processed effective for the
first payroll period that is administratively feasible. In such case, the
Participant's
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<PAGE>
account balance at the time of such termination or suspension shall be used to
purchase Common Stock at the end of the Participation Period. A Participant
who has suspended payroll deductions during any Participation Period must re-
enroll during a subsequent Enrollment Period.
7. Grant of Right to Purchase Shares
Enrollment in the Plan by an Employee on a Grant Date will constitute the
grant by Destia to the Participant of the right to purchase on the Exercise
Date of the applicable Participation Period (at the applicable Purchase Price)
shares of Destia's Common Stock, pursuant to Section 9 hereof; provided,
however, that such purchase shall be subject to the limitations set forth in
Sections 8 and 9 hereof. Each exercise of such right shall occur
automatically as provided in Section 9 hereof, unless the Participant has
terminated his or her employment or withdrawn from participation pursuant to
Section 10 hereof.
Each right to purchase shares of Common Stock under the Plan during any
Participation Period shall have the following terms:
i) the right to purchase shares of Common Stock during any
Participation Period shall expire on the earlier of: (A) the completion of the
purchase of shares on the Exercise Date or (B) the date on which the
Participant terminates employment;
ii) in no event shall the right to purchase shares of Common Stock
during any Participation Period extend beyond twenty-seven (27) months from
the Grant Date;
iii) payment for shares purchased shall be made only with amounts
contributed through payroll deductions;
iv) purchase of shares shall be accomplished only in accordance with
Section 9 hereof;
v) the Purchase Price shall be determined as provided in Section 9
hereof; and
vi) the right to purchase shares of Common Stock shall in all respects
be subject to the terms and conditions of the Plan, as interpreted by the
Committee from time to time.
8. Method of Payment
Payment for shares of Common Stock shall be made as of the applicable
Exercise Date with amounts contributed through payroll deductions collected
over the Plan's designated Participation Period, with the first such deduction
commencing with the payroll period ending after the Grant Date, or, with
respect to the first Participation Period under the Plan, such other payroll
period as the Committee shall determine in its sole discretion. Each
Participant will authorize such deductions from his or her pay for each pay
period during the Participation Period. A Participant may discontinue his or
her participation in the Plan in accordance with Section 6 hereof during the
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<PAGE>
Participation Period by completing, signing and filing with the Stock Plan
Administrator a new subscription agreement (or telephonic or electronic
indication) authorizing such termination. A termination shall be effective
during the subsequent payroll period following ten (10) business days after
the Company's receipt of the new subscription agreement unless the Company
elects, in its sole discretion, to process a given change in participation
more quickly. No lump sum or prepayments are permitted and Employees may not
make any additional payments into such Participant's account under the Plan.
Employees may select any Employee Contribution Amount as long as the following
requirements are met:
i) at least $10.00 is deducted each payroll period;
ii) the amount selected is a multiple of $5.00;
iii) the percentage of an Employee's Base Salary to be deducted is a
whole number (such as 5.0%) and not a fractional amount (such as 5.5%);
iv) the total amount deducted does not exceed 20% of the Employee's
Base Salary; and
v) the aggregate of monthly deduction amounts does not exceed $10,625
in any Participation Period (under this Plan and under all other similar stock
purchase plans, if any, of the Company). If for any reason a Participant's
contributions to the Plan exceed $10,625 during any Participation Period, such
excess amounts shall be refunded to the Participant as soon as practicable
after such excess has been determined to exist.
9. Purchase of Shares
The right to purchase shares of Common Stock granted by the Company under
the Plan is for the term of a Participation Period. The number of shares of
Common Stock, including fractional shares, purchased on behalf of a
Participant shall be recorded in the Plan Administrator stock trading account
established for each Participant as soon as administratively feasible, but no
later than five (5) business days following the last business day of the
preceding Participation Period. The aggregate number of shares purchased
shall be computed by dividing the aggregate Employee Contribution Amount
accumulated as of the Exercise Date and retained in the Participants' accounts
on such date by the applicable Purchase Price for the Common Stock.
Participants shall then be allocated shares based on their individual
Contribution Amounts. Participants shall be treated as the record owners of
the shares, with all rights of a stockholder, effective as of the date the
shares are posted to the Participant's stock trading account. Any fees
associated with maintaining these stock trading accounts shall be the
obligation of the Company.
No fractional shares shall be purchased and any payroll deductions
accumulated in a Participant's account which are not sufficient to purchase a
full share shall be retained by the Participant's account for
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the subsequent Participation Period, subject to earlier withdrawal by the
Participant as provided in Section 10 hereof. Any other monies remaining in a
Participant's account after the Exercise Date shall be returned to the
Participant.
10. Withdrawal from Plan; Withdrawal of Shares
A Participant may withdraw all but not less than all of the payroll
deductions credited to his or her account and not yet used to purchase shares
in accordance with the terms hereof at any time by giving written notice to
the Company's Stock Plan Administrator in the form designated by the Company
in its discretion, including a telephonic or electronic withdrawal mechanism.
All of the Participant's payroll deductions credited to his or her account
shall be paid to such Participant as soon as administratively feasible after
receipt of notice of the withdrawal and such Participant's rights to purchase
shares during the applicable Participation Period shall be automatically
terminated and no further payroll deduction for the purchase of shares shall
be made for such Participation Period. If a Participant withdraws from a
Participation Period, payroll deductions shall not resume at the beginning of
the succeeding Participation Period unless the Participant re-enrolls pursuant
to Section 6 hereof.
The record of shares of Common Stock purchased under the Plan shall be
maintained by the Plan Administrator and such shares shall remain in an
individual stock trading account maintained by Morgan Stanley Dean Witter or
National Discount Brokers until the shares are either withdrawn or sold. A
Participant may elect to withdraw all shares held in his or her account at any
time (without withdrawing from the Plan) by giving notice to the Stock Plan
Administrator. Upon receipt of such notice, the Plan Administrator will
arrange for either (a) the issuance and delivery of all shares held in the
Participant's account as soon as administratively feasible or (b) sale of the
shares, as directed by the Participant.
Certificates shall be issued only in the following situations:
i) if the Participant requests a certificate; or
ii) if the Participant terminates employment with the Company and
requests a certificate.
In both of these cases, the Participant will be required to notify the
Plan Administrator and pay an issuance fee. The share certificate will be
issued to the Participant as soon as administratively feasible after the
receipt by the Plan Administrator of the required form and payment of the
issuance fee.
11. Income Tax Obligations
Participants shall be responsible for all personal income tax obligations
associated with selling shares of Common Stock purchased through the Plan.
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12. Notice to Company of Disqualifying Disposition
By electing to participate in the Plan, 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 after the first business day of the Participation
Period in which such Common Stock was acquired. Each Participant further
agrees to provide any information about such a sale or other transfer as may
be requested by the Company in order to assist it in complying with the tax
laws and minimizing the Company's obligations thereunder.
13. Withholding of Additional Income Taxes
By electing to participate in the Plan, each Participant acknowledges
that the Company is required to withhold taxes with respect to the amounts
deducted from the Participant's compensation and accumulated for the benefit
of the Participant under the Plan, and each Participant agrees that the
Company may deduct additional amounts from the Participant's compensation,
when amounts are added to the Participant's account, used to purchase Common
Stock or refunded, in order to satisfy such withholding obligations.
It is intended that tax withholding will be accomplished in such a manner
that the full amount of payroll deductions elected by the Participant under
Article 8 will be used to purchase Common Stock. However, if amounts
sufficient to satisfy applicable tax withholding obligations have not been
withheld from compensation otherwise payable to any Participant, then,
notwithstanding any other provision of the Plan, the Company may withhold such
taxes from the Participant's accumulated payroll deductions and apply the net
amount to the purchase of Common Stock, unless the Participant pays the
Company, prior to the Exercise Date, an amount sufficient to satisfy such
withholding obligations. Each Participant further acknowledges that the
Company may be required to withhold taxes in connection with the disposition
of Common Stock acquired under the Plan and agrees that the Company may take
whatever action it considers appropriate to satisfy such withholding
requirements, including deducting from compensation otherwise payable to such
Participant an amount sufficient to satisfy such withholding requirements or
conditioning any disposition of Common Stock by the Participant upon the
payment to the Company of an amount sufficient to satisfy such withholding
requirements.
14. Dividends
Cash dividends, if any, for shares of Common Stock in Participants'
accounts under the Plan shall not be distributed to Participants directly, but
shall be automatically invested in shares of Common Stock at the full Fair
Market Value on the date of such investment as soon as administratively
possible after such dividends are paid by the Company. Such shares of Common
Stock will be held in accounts under the Plan.
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15. Termination of Participation
The right to participate in the Plan terminates automatically when a
Participant ceases to be employed by the Company. Employee Contribution
Amounts collected prior to the date of termination of employment and not
theretofore used for the purchase of Common Stock in accordance with the Plan
shall be returned to the Participant (or in the case of his or her death, to
the person or person's entitled thereto under Section 16 hereof). Such
amounts shall be delivered as soon as administratively feasible following the
end of the Participation Period in which the Participant's employment
terminates.
With regard to any shares of Common Stock acquired prior to the date of
termination of employment, such shares may be sold or withdrawn as provided in
Section 10 hereof or may be maintained in the Participant's stock trading
account.
16. Death of a Participant
As soon as administratively feasible after receiving notification of the
death of a Participant, Employee Contribution Amounts collected, and shares
purchased under the Plan but not delivered, prior to the date of termination
of employment shall be distributed in accordance with this Section 16. No
additional shares of Common Stock may be purchased on behalf of a Participant
after notification of death is received.
A Participant may file a written designation of a beneficiary who is to
receive any shares and cash, if any, from the Participant's account under the
Plan in the event of such Participant's death subsequent to an Exercise Date
on which the right to purchase shares is automatically exercised pursuant to
the terms hereof but prior to the delivery to such Participant of such shares
and cash. In addition, a Participant may file a written designation of a
beneficiary who is to receive any cash from the Participant's account under
the Plan in the event of such Participant's death prior to the exercise of the
right to purchase shares hereunder. In the absence of such a designation, the
surviving spouse of a married Participant shall be deemed to be such
Participant's beneficiary and, in the case of an unmarried Participant, the
Participant's estate shall be deemed to be such Participant's beneficiary.
Such designation of beneficiary may be changed by the Participant at any time
by written notice.
17. Assignment
Neither payroll deductions credited to a Participant's account nor any
rights of a Participant under the Plan shall be assignable or otherwise
transferable by the Participant except by will or the laws of descent and
distribution in accordance with Section 16 hereof. No purported assignment or
transfer of any rights of a Participant under the Plan, whether voluntary or
involuntary, by operation of law or otherwise, shall vest in the purported
assignee or transferee any interest or right therein whatsoever, but
immediately upon such assignment or transfer, or any attempt to make the same,
such rights shall terminate and become of no further effect. If the foregoing
provisions of this Section 17 are violated, the Participant's election
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to purchase Common Stock shall terminate and the only obligation of the
Company remaining under the Plan shall be to pay to the person entitled
thereto the payroll deductions then credited to the Participant's account. No
Participant may create a lien on any funds, securities, rights or other
property held for the account of the Participant under the Plan, except to the
extent permitted by will or the laws of descent and distribution if
beneficiaries have not been designated. A Participant's right to purchase
shares of Common Stock under the Plan shall be exercisable only during the
Participant's lifetime and only by him or her.
18. Costs
Destia will pay all expenses incident to establishing and administering
the Plan. Expenses to be incurred by Participants shall be limited to
brokerage fees relating to sales of stock from the Participant's account (as
described herein), issuance fees (as described in Section 10 hereof) and any
personal income tax obligations.
19. Reports
At least annually, the Company shall provide or cause to be provided to
each Participant a report of their Employee Contribution Amounts and the
shares of Common Stock purchased with such Employee Contribution Amounts by
that Participant on each Exercise Date.
20. Equal Rights and Privileges
All eligible Employees shall have equal rights and privileges with
respect to the Plan so that the Plan qualifies as an "employee stock purchase
plan" within the meaning of Section 423 or any successor provision of the Code
and related regulations. Any provision of the Plan that is inconsistent with
Section 423 or any successor provision of the Code shall without further act
or amendment by the Company be reformed to comply with the requirements of
Section 423 of the Code. This Section 20 shall take precedence over all other
provisions in the Plan.
21. Rights as Stockholder
A Participant shall have no rights as a stockholder under his or her
rights to purchase Common Stock until he or she becomes a stockholder as
herein provided. A Participant will become a stockholder with respect to
shares for which payment has been completed as provided in Section 8 hereof
effective as of the date such shares are purchased for the Participant's stock
trading account in accordance with the provisions of the Plan. Shares
purchased by a Participant under the Plan shall be registered in the name of
the Participant or in the name of the Participant and his or her spouse.
22. Modification and Termination
The Board or Committee may amend or terminate the Plan at any time
insofar as permitted by law. No amendment shall be effective unless within
one (1) year after the change is adopted by the Board it is approved by the
holders of a majority of the voting power of Destia's outstanding shares if:
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i) such amendment is required to be approved by stockholders to
continue the exemption provided for in Rule 16b-3 of the Securities Exchange
Act of 1934, as amended (the "1934 Act") (or any successor provision); or
ii) such amendment would cause the rights granted under the Plan to
purchase shares of Common Stock to fail to meet the requirements of Section
423 of the Code (or any successor provision).
23. Board and Stockholder Approval; Effective Date; Term
The Plan was approved by the Board and the stockholders of Destia on May
3, 1999, whereupon the Plan became effective. The Plan shall continue in
effect for a term of ten (10) years unless sooner terminated under Section 22
hereof.
24. Conditions Upon Issuance of Shares; Governmental Approvals or Consents
Shares shall not be issued with respect to any Participant's right to
purchase shares pursuant to the Plan unless the exercise of such right and the
issuance and delivery of shares pursuant thereto shall comply with all
applicable provisions of law, domestic or foreign, including, without
limitation, the Securities Act of 1933, as amended, the 1934 Act, any
applicable foreign securities laws, the rules and regulations promulgated
thereunder and the requirements of any stock exchange upon which the shares
may then be listed or quoted. The issuance of any shares pursuant to the Plan
shall be further subject to the approval of counsel for the Company with
respect to such compliance.
As a condition to the purchase of any shares pursuant hereto, the Company
may require the Participant to represent and warrant that the shares are being
acquired only for investment and without any present intention to sell or
distribute such shares.
Without limiting the foregoing, the Plan and any offering or sale made to
Employees under the Plan are subject to any governmental approvals or consents
that may be or become applicable in connection therewith. Subject to the
provisions of Section 22 hereof, the Board may make such changes in the Plan
and include such terms in any offering under the Plan as may be desirable to
comply with the rules or regulations of any governmental authority.
25. Use of Funds
All payroll deductions received or held by the Company under this Plan
may be used by the Company for any corporate purpose, and the Company shall
not be obligated to segregate such amounts.
26. No Additional Purchase Rights or Employment Rights
Other than for rights to purchase Common Stock under the Plan, the Plan
does not, directly or indirectly, create any right for the benefit of any
Employee or class of Employee to purchase any shares under the
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Plan, or create in any Employee or class of Employees any right with respect
to continuation of employment with the Company, and it shall not be deemed to
interfere in any way with the Company's right to terminate, or otherwise
modify, any Employee's employment at any time.
27. Effect Of Plan
The provisions of the Plan shall, in accordance with its terms, be
binding upon, and inure to the benefit of, all successors of each Employee
participating in the Plan, including, without limitation, such Employee's
estate and the executors, administrators or trustees thereof, heirs and
legatees, and any receiver, trustee in bankruptcy or representative of
creditors of such Employee.
28. Governing Law
The laws of the state of New York will govern all matters relating to the
Plan except to the extent superseded by the laws of the United States or the
property laws of any particular state.
29. No Payment of Interest
No interest will be paid or allowed on any Employee Contribution Amounts
or amounts credited to the account of any Participant.
30. Other Provisions
Any agreement to purchase shares of Common Stock under the Plan may
contain such other provisions as the Committee and the Board shall deem
advisable, provided that no such provision shall in any way conflict with the
terms of the Plan.
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