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EXHIBIT 10.4
TELOCITY, INC.
2000 OUTSIDE DIRECTORS STOCK PLAN
1. ESTABLISHMENT, PURPOSE AND TERM OF PLAN.
1.1 ESTABLISHMENt. The Telocity, Inc 2000 Outside Directors Stock
Plan (the "PLAN") is hereby established effective as of the effective date of
the initial registration by the Company of its Stock under Section 12 of the
Securities Exchange Act of 1934, as amended (the "EFFECTIVE DATE").
1.2 PURPOSE. The purpose of the Plan is to advance the interests
of the Participating Company Group and its stockholders by providing an
incentive to attract, retain and reward persons performing services as Outside
Directors of the Company and by creating an additional incentive for such
persons to promote the growth and profitability of the Participating Company
Group.
1.3 TERM OF PLAN. The Plan shall continue in effect until the
earlier of its termination by the Board or the date on which all of the shares
of Stock available for issuance under the Plan have been issued and all
restrictions on such shares under the terms of the Plan have lapsed.
2. DEFINITIONS AND CONSTRUCTION.
2.1 DEFINITIONS. Whenever used herein, the following terms shall
have their respective meanings set forth below:
(a) "AWARD" means any Option or Director Fee Award granted
under the Plan.
(b) "AWARD AGREEMENT" means a written agreement between
the Company and a Participant setting forth the terms, conditions and
restrictions of an Award granted to the Participant. An Award Agreement may be
an "Outside Director Stock Option Agreement," an "Outside Director Fee Option
Agreement" or an "Outside Director Stock Units Agreement."
(c) "BOARD" means the Board of Directors of the Company.
If one or more Committees have been appointed by the Board to administer the
Plan, "Board" also means such Committee(s).
(d) "CODE" means the Internal Revenue Code of 1986, as
amended, and any applicable regulations promulgated thereunder.
(e) "COMMITTEE" means the Compensation Committee or other
committee of the Board duly appointed to administer the Plan and having such
powers as shall be specified by the Board. Unless the powers of the Committee
have been specifically limited, the
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Committee shall have all of the powers of the Board granted herein, including,
without limitation, the power to amend or terminate the Plan at any time,
subject to the terms of the Plan and any applicable limitations imposed by law.
(f) "COMPANY" means Telocity, Inc., a Delaware
corporation, or any successor corporation thereto.
(g) "CONSULTANT" means a person engaged to provide
consulting or advisory services (other than as an Employee or a Director) to a
Participating Company.
(h) "DIRECTOR" means a member of the Board or of the board
of directors of any other Participating Company.
(i) "DIRECTOR FEE AWARD" means any Director Fee Option or
Stock Units Award.
(j) "DIRECTOR FEE OPTION" means an Option granted pursuant
to Section 7.
(k) "DIRECTOR FEES" mean an Outside Director's annual
retainer fee, meeting fees and any other compensation payable with respect to
such individual's Service as a Director.
(l) "DISABILITY" means the inability of the Participant,
in the opinion of a qualified physician acceptable to the Company, to perform
the major duties of the Participant's position with the Participating Company
Group because of the sickness or injury of the Participant.
(m) "DIVIDEND EQUIVALENT" means a credit to the account of
a Participant in an amount equal to the cash dividends paid on one share of
Stock for each share of Stock represented by a Stock Units Award held by such
Participant.
(n) "EMPLOYEE" means any person treated as an employee
(including an officer or a Director who is also treated as an employee) in the
records of a Participating Company; provided, however, that neither service as a
Director nor payment of a director's fee shall be sufficient to constitute
employment for purposes of the Plan.
(o) "EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended.
(p) "FAIR MARKET VALUE" means, as of any date, the value
of a share of Stock determined as follows:
(i) If, on such date, the Stock is listed on a
national or regional securities exchange or market system, the Fair Market Value
of a share of Stock shall be the closing price of a share of Stock (or the mean
of the closing bid and asked prices of a share of
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Stock if the Stock is so quoted instead) as quoted on the Nasdaq National
Market, The Nasdaq SmallCap Market or such other national or regional securities
exchange or market system constituting the primary market for the Stock, as
reported in The Wall Street Journal or such other source as the Company deems
reliable. If the relevant date does not fall on a day on which the Stock has
traded on such securities exchange or market system, the date on which the Fair
Market Value shall be established shall be the last day on which the Stock was
so traded prior to the relevant date.
(ii) If, on such date, the Stock is not listed on a
national or regional securities exchange or market system, the Fair Market Value
of a share of Stock shall be as determined by the Board in good faith without
regard to any restriction other than a restriction which, by its terms, will
never lapse.
(q) "OPTION" means a right to purchase Stock (subject to
adjustment as provided in Section 4.2) pursuant to the terms and conditions of
the Plan. Unless the context clearly requires otherwise, the term "Option"
includes both an Option granted pursuant to Section 6 and a Director Fee Option
granted pursuant to Section 7. Each Option shall be a nonstatutory stock option;
that is, an option not intended to qualify as an incentive stock option within
the meaning of Section 422(b) of the Code.
(r) "OUTSIDE DIRECTOR" means a Director of the Company who
is not an Employee or a Consultant.
(s) "PARENT CORPORATION" means any present or future
"parent corporation" of the Company, as defined in Section 424(e) of the Code.
(t) "PARTICIPANT" means a person who has been granted one
or more Awards.
(u) "PARTICIPATING COMPANY" means the Company or any
Parent Corporation or Subsidiary Corporation.
(v) "PARTICIPATING COMPANY GROUP" means, at any point in
time, all corporations collectively which are then Participating Companies.
(w) "RULE 16b-3" means Rule 16b-3 under the Exchange Act,
as amended from time to time, or any successor rule or regulation.
(x) "SECURITIES ACT" means the Securities Act of 1933, as
amended.
(y) "SERVICE" means a Participant's employment or service
with the Participating Company Group, whether in the capacity of an Employee, a
Director or a Consultant. A Participant's Service shall not be deemed to have
terminated merely because of a change in the capacity in which the Participant
renders Service to the Participating Company Group or a change in the
Participating Company for which the Participant renders such Service, provided
that there is no interruption or termination of the Participant's Service.
Furthermore, a
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Participant's Service with the Participating Company Group shall not be deemed
to have terminated if the Participant takes any military leave, sick leave, or
other bona fide leave of absence approved by the Company; provided, however,
that if any such leave exceeds ninety (90) days, on the ninety-first (91st) day
of such leave the Participant's Service shall be deemed to have terminated
unless the Participant's right to return to Service with the Participating
Company Group is guaranteed by statute or contract. Notwithstanding the
foregoing, unless otherwise designated by the Company or required by law, a
leave of absence shall not be treated as Service for purposes of determining
vesting under the Participant's Award Agreement. The Participant's Service shall
be deemed to have terminated either upon an actual termination of Service or
upon the corporation for which the Participant performs Service ceasing to be a
Participating Company. Subject to the foregoing, the Company, in its discretion,
shall determine whether the Participant's Service has terminated and the
effective date of such termination.
(z) "STOCK" means the common stock of the Company, as
adjusted from time to time in accordance with Section 4.2.
(aa) "STOCK UNIT" means a bookkeeping entry representing a
right granted to a Participant pursuant to the terms and conditions of Section 7
to receive payment of one (1) share of Stock.
(bb) "STOCK UNITS AWARD" means an Award of Stock Units
granted pursuant to Section 7.
(cc) "SUBSIDIARY CORPORATION" means any present or future
"subsidiary corporation" of the Company, as defined in Section 424(f) of the
Code.
2.2 CONSTRUCTION. Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of any
provision of the Plan. Except when otherwise indicated by the context, the
singular shall include the plural and the plural shall include the singular. Use
of the term "or" is not intended to be exclusive, unless the context clearly
requires otherwise.
3. ADMINISTRATION.
3.1 ADMINISTRATION BY THE BOARD. The Plan shall be administered
by the Board. All questions of interpretation of the Plan or of any Award shall
be determined by the Board, and such determinations shall be final and binding
upon all persons having an interest in the Plan or such Award. At any time that
any class of equity security of the Company is registered pursuant to Section 12
of the Exchange Act, the Plan shall be administered in compliance with the
requirements, if any, of Rule 16b-3.
3.2 AUTHORITY OF OFFICERS. Any officer of a Participating Company
shall have the authority to act on behalf of the Company with respect to any
matter, right, obligation, determination or election which is the responsibility
of or which is allocated to the Company herein, provided the officer has
apparent authority with respect to such matter, right, obligation, determination
or election.
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3.3 INDEMNIFICATION. In addition to such other rights of
indemnification as they may have as members of the Board or officers or
employees of the Participating Company Group, members of the Board and any
officers or employees of the Participating Company Group to whom authority to
act for the Board or the Company is delegated shall be indemnified by the
Company against all reasonable expenses, including attorneys' fees, actually and
necessarily incurred in connection with the defense of any action, suit or
proceeding, or in connection with any appeal therein, to which they or any of
them may be a party by reason of any action taken or failure to act under or in
connection with the Plan, or any right granted hereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is approved
by independent legal counsel selected by the Company) or paid by them in
satisfaction of a judgment in any such action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such person is liable for gross negligence, bad faith or
intentional misconduct in duties; provided, however, that within sixty (60) days
after the institution of such action, suit or proceeding, such person shall
offer to the Company, in writing, the opportunity at its own expense to handle
and defend the same.
4. SHARES SUBJECT TO PLAN.
4.1 MAXIMUM NUMBER OF SHARES ISSUABLE. Subject to adjustment as
provided in Section 4.2, the maximum aggregate number of shares of Stock that
may be issued under the Plan shall be four hundred thousand (400,000),
cumulatively increased on January 1, 2001 and each January 1 thereafter by a
number of shares of Stock (the "ANNUAL INCREASE") equal to the lesser of (a) two
tenths of one percent (0.20%) of the number of shares of Stock issued and
outstanding on the immediately preceding December 31, (b) one hundred fifty
thousand (150,000) shares or (c) an amount determined by the Board, and shall
consist of authorized but unissued or reacquired shares of Stock, or any
combination thereof. If an outstanding Award for any reason expires or is
terminated or canceled or if shares of Stock issued pursuant to an Award are
repurchased by the Company, the shares of Stock allocable to the terminated
portion of such Award or such repurchased shares of Stock shall again be
available for issuance under the Plan.
4.2 ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE. In the event of
any stock dividend, stock split, reverse stock split, recapitalization,
combination, reclassification or similar change in the capital structure of the
Company, appropriate adjustments shall be made in the number and class of shares
subject to the Plan, to the Annual Increase, to the Options to be granted
automatically pursuant to Section 6.1 and to any outstanding Awards, and in the
exercise price per share of any outstanding Options. If a majority of the shares
which are of the same class as the shares that are subject to outstanding Awards
are exchanged for, converted into, or otherwise become (whether or not pursuant
to an Ownership Change Event, as defined in Section 8.1) shares of another
corporation (the "NEW SHARES"), the Board may unilaterally amend the outstanding
Awards to provide that such Awards shall relate to New Shares. In the event of
any such amendment, the number of shares subject to outstanding Awards and the
exercise price per share under outstanding Options shall be adjusted in a fair
and equitable manner as determined by the Board, in its discretion.
Notwithstanding the foregoing, any fractional share resulting from an adjustment
pursuant to this Section 4.2 shall be rounded down
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to the nearest whole number, and in no event may the exercise price of any
Option be decreased to an amount less than the par value, if any, of the stock
subject to the Option. The adjustments determined by the Board pursuant to this
Section 4.2 shall be final, binding and conclusive.
5. ELIGIBILITY FOR PARTICIPATION.
Only those persons who, at the time of grant, are serving as
Outside Directors shall be eligible to become Participants and to be granted an
Award.
6. TERMS AND CONDITIONS OF OPTIONS.
Options shall be evidenced by Award Agreements specifying the
number of shares of Stock covered thereby, in such form as the Board shall from
time to time establish. Award Agreements may incorporate all or any of the terms
of the Plan by reference and shall comply with and be subject to the following
terms and conditions:
6.1 AUTOMATIC GRANT. Subject to the execution by an Outside
Director of an appropriate Award Agreement, Options shall be granted
automatically and without further action of the Board, as follows:
(a) INITIAL OPTION. Each person who first becomes an
Outside Director on or after the Effective Date shall be granted on the date
such person first becomes an Outside Director an Option to purchase forty
thousand (40,000) shares of Stock (an "INITIAL OPTION"); provided, however, that
an Initial Option shall not be granted to a Director who previously did not
qualify as an Outside Director but who subsequently becomes an Outside Director
as a result of the termination of his or her status as an Employee or
Consultant.
(b) ANNUAL OPTION. Each Outside Director (including any
Director who previously did not qualify as an Outside Director but who
subsequently becomes an Outside Director) shall be granted on the date of each
annual meeting of the stockholders of the Company which occurs on or after the
Effective Date (an "ANNUAL MEETING") immediately following which such person
remains an Outside Director an Option to purchase ten thousand (10,000) shares
of Stock (an "ANNUAL OPTION"); provided, however, that an Outside Director
granted an Initial Option on, or within a period of six (6) months prior to, the
date of an Annual Meeting shall not be granted an Annual Option pursuant to this
Section with respect to the same Annual Meeting.
(c) RIGHT TO DECLINE OPTION. Notwithstanding the
foregoing, any person may elect not to receive an Option pursuant to this
Section 6.1 by delivering written notice of such election to the Board no later
than the day prior to the date such Option would otherwise be granted. A person
so declining an Option shall receive no payment or other consideration in lieu
of such declined Option. A person who has declined an Option may revoke such
election by delivering written notice of such revocation to the Board no later
than the day prior to the date such Option would be granted pursuant to Section
6.1(a) or (b), as the case may be. This Section 6.1(c) shall not apply to the
receipt of any Director Fee Option.
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6.2 EXERCISE PRICE. The exercise price per share of Stock subject
to an Option shall be the Fair Market Value of a share of Stock on the date of
grant of the Option.
6.3 EXERCISABILITY AND TERM OF OPTIONS. Each Option shall vest
and become exercisable as set forth below and shall terminate and cease to be
exercisable on the tenth (10th) anniversary of the date of grant of the Option,
unless earlier terminated in accordance with the terms of the Plan or the Award
Agreement evidencing such Option.
(a) INITIAL OPTIONS. Except as otherwise provided in the
Plan or in the Award Agreement evidencing such Option, each Initial Option shall
vest and become exercisable in four (4) substantially equal installments on each
of the first four (4) anniversaries of the date of grant of the Option, provided
that the Participant's Service has not terminated prior to the relevant date.
(b) ANNUAL OPTIONS. Except as otherwise provided in the
Plan or in the Award Agreement evidencing such Option, each Annual Option shall
become fully vested and exercisable on the day immediately preceding the date of
the Annual Meeting next following the date of grant of the Option, provided the
Participant's Service has not terminated prior to such date.
6.4 PAYMENT OF EXERCISE PRICE.
(a) FORMS OF CONSIDERATION AUTHORIZED. Except as otherwise
provided below, payment of the exercise price for the number of shares of Stock
being purchased pursuant to any Option shall be made (i) in cash, by check or
cash equivalent, (ii) by tender to the Company, or attestation to the ownership,
of shares of Stock owned by the Participant having a Fair Market Value not less
than the exercise price, (iii) by delivery of a properly executed notice
together with irrevocable instructions to a broker providing for the assignment
to the Company of the proceeds of a sale or loan with respect to some or all of
the shares being acquired upon the exercise of the Option (including, without
limitation, through an exercise complying with the provisions of Regulation T as
promulgated from time to time by the Board of Governors of the Federal Reserve
System) (a "CASHLESS EXERCISE"), or (iv) by any combination thereof.
(b) LIMITATIONS ON FORMS OF CONSIDERATION.
(i) TENDER OF STOCK. Notwithstanding the foregoing,
an Option may not be exercised by tender to the Company, or attestation to the
ownership, of shares of Stock to the extent such tender or attestation would
constitute a violation of the provisions of any law, regulation or agreement
restricting the redemption of the Company's stock. Unless otherwise provided by
the Board, an Option may not be exercised by tender to the Company, or
attestation to the ownership, of shares of Stock unless such shares either have
been owned by the Participant for more than six (6) months or were not acquired,
directly or indirectly, from the Company.
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(ii) CASHLESS EXERCISE. The Company reserves, at
any and all times, the right, in the Company's sole and absolute discretion, to
establish, decline to approve or terminate any program or procedures for the
exercise of Options by means of a Cashless Exercise.
6.5 EFFECT OF TERMINATION OF SERVICE.
(a) OPTION EXERCISABILITY. Subject to earlier termination
of the Option as otherwise provided herein, an Option shall be exercisable after
a Participant's termination of Service only during the applicable time period
determined in accordance with this Section 6.5 and thereafter shall terminate:
(i) DISABILITY. If the Participant's Service with
the Participating Company Group terminates because of the Disability of the
Participant, the Option, to the extent unexercised and exercisable on the date
on which the Participant's Service terminated, may be exercised by the
Participant (or the Participant's guardian or legal representative) at any time
prior to the expiration of twelve (12) months after the date on which the
Participant's Service terminated, but in any event no later than the date of
expiration of the Option's term as set forth in the Award Agreement evidencing
such Option (the "OPTION EXPIRATION DATE").
(ii) DEATH. If the Participant's Service with the
Participating Company Group terminates because of the death of the Participant,
the Option, to the extent unexercised and exercisable on the date on which the
Participant's Service terminated, may be exercised by the Participant's legal
representative or other person who acquired the right to exercise the Option by
reason of the Participant's death at any time prior to the expiration of twelve
(12) months after the date on which the Participant's Service terminated, but in
any event no later than the Option Expiration Date. The Participant's Service
shall be deemed to have terminated on account of death if the Participant dies
within three (3) months after the Participant's termination of Service.
(iii) OTHER TERMINATION OF SERVICE. If the
Participant's Service with the Participating Company Group terminates for any
reason, except Disability or death, the Option, to the extent unexercised and
exercisable by the Participant on the date on which the Participant's Service
terminated, may be exercised by the Participant at any time prior to the
expiration of six (6) months after the date on which the Participant's Service
terminated, but in any event no later than the Option Expiration Date.
(b) EXTENSION IF EXERCISE PREVENTED BY LAW.
Notwithstanding the foregoing, if the exercise of an Option within the
applicable time periods set forth in Section 6.5(a) is prevented by the
provisions of Section 10 below, the Option shall remain exercisable until the
date three (3) months after the date the Participant is notified by the Company
that the Option is exercisable, but in any event no later than the Option
Expiration Date.
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(c) EXTENSION IF PARTICIPANT SUBJECT TO SECTION 16(b).
Notwithstanding the foregoing, if a sale within the applicable time periods set
forth in Section 6.5(a) of shares acquired upon the exercise of the Option would
subject the Participant to suit under Section 16(b) of the Exchange Act, the
Option shall remain exercisable until the earliest to occur of (i) the tenth
(10th) day following the date on which a sale of such shares by the Participant
would no longer be subject to such suit, (ii) the one hundred and ninetieth
(190th) day after the Participant's termination of Service, or (iii) the Option
Expiration Date.
6.6 TRANSFERABILITY OF OPTIONS. During the lifetime of the
Participant, an Option shall be exercisable only by the Participant or the
Participant's guardian or legal representative. No Option shall be assignable or
transferable by the Participant, except by will or by the laws of descent and
distribution. Notwithstanding the foregoing, to the extent permitted by the
Board, in its discretion, and set forth in the Award Agreement evidencing such
Option, an Option shall be assignable or transferable subject to the applicable
limitations, if any, described in the General Instructions to Form S-8
Registration Statement under the Securities Act.
7. DIRECTOR FEE AWARDS.
7.1 EFFECTIVE DATE AND DURATION OF THIS SECTION. This Section 7
shall become effective commencing with the first calendar quarter beginning
after the Effective Date and shall continue in effect for the remainder of the
calendar year of the Effective Date (the "INITIAL PLAN YEAR") and each
subsequent calendar year commencing during the term (as provided in Section 1.3)
of the Plan (a "PLAN YEAR"). Notwithstanding any Participant's prior election
pursuant to Section 7.2, no Director Fee Award shall be granted to such
Participant after termination of the Plan, and all Director Fees with respect to
which Director Fee Awards have not been granted prior to termination of the Plan
shall thereafter be paid in cash in accordance with the Company's normal
Director Fee payment procedures. However, subject to compliance with applicable
law as provided in Section 10, all Director Fee Awards granted prior to
termination of the Plan shall continue to be governed by and may be exercised or
settled in accordance with the terms of the Plan and the Award Agreement
evidencing such Director Fee Award.
7.2 DIRECTOR FEE AWARD ELECTIONS. Each Outside Director may elect
to receive Director Fee Awards in lieu of payment in cash of all or any portion
not less than twenty-five percent (25%) of such Outside Director's Director Fees
during the Initial Plan Year and each subsequent Plan Year (or the portion of
such Plan Year following an individual's initial appointment or election as an
Outside Director). For the Initial Plan Year and each subsequent Plan Year or
applicable portion thereof, a Participant shall be entitled to elect one of the
following alternative forms of payment of the value of the Participant's
Director Fees:
(a) PAYMENT IN THE FORM OF A DIRECTOR FEE OPTION. If
elected, that portion of the Participant's Director Fees elected by the
Participant will be paid in the form of a Director Fee Option in accordance with
Section 7.5, and the balance will be paid in cash in accordance with the
Company's normal Director Fee payment procedures.
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(b) PAYMENT IN THE FORM OF A STOCK UNITS AWARD. If
elected, that portion of the Participant's Director Fees elected by the
Participant will be paid in the form of a Stock Units Award in accordance with
Section 7.6, and the balance will be paid in cash in accordance with the
Company's normal Director Fee payment procedures. In connection with an election
to receive a Stock Units Award, the Participant may elect an "Early Settlement
Date" (as defined below) upon which the Stock Units Award will be settled in
accordance with Section 7.6(c); provided, however, that upon termination of the
Participant's Service prior to the Early Settlement Date, settlement shall be
made as provided in Section 7.6(c). An "EARLY SETTLEMENT DATE" is a date, if
any, elected by the Participant which shall be a date no sooner than January 1
of the third Plan Year following the Plan Year of the Stock Units Award. A
Participant's election of an Early Settlement Date shall become irrevocable as
provided in Section 7.3(b).
7.3 TIME AND MANNER OF ELECTION.
(a) TIME OF ELECTION. Each Outside Director making an
election pursuant to Section 7.2 shall make such election:
(i) for the Initial Plan Year, prior to the earlier
of (1) the date thirty (30) days following in the Effective Date or (2) the
commencement of the first calendar quarter beginning after the Effective Date;
(ii) for each subsequent Plan Year, prior to the
first day of such Plan Year; and
(iii) in the case of a newly appointed or elected
Outside Director, on the date of such appointment or election for the remainder
of the Initial Plan Year or subsequent Plan Year of appointment or election, as
the case may be.
(b) ELECTION IRREVOCABLE. A Participant's elections
pursuant to Section 7.2 shall become irrevocable as of the commencement of the
Plan Year or portion thereof to which it applies.
(c) FAILURE TO TIMELY ELECT. Any Outside Director who
fails to make an election in accordance with this Section for any Plan Year (or
the Initial Plan Year, as the case may be) shall be deemed to have elected to
receive all of such individual's Director Fees in cash in accordance with the
Company's normal Director Fee payment procedures.
(d) MANNER OF ELECTION. Each election in accordance with
this Section shall be made on a form prescribed by the Company for this purpose
and shall be delivered to the Chief Financial Officer of the Company.
7.4 AUTOMATIC GRANT OF DIRECTOR FEE AWARDS. Subject to the
provisions of Section 4.1 and this Section 7, effective as of the last day of
each quarter during any Plan Year (or the Initial Plan Year, as the case may
be), each Participant shall be granted automatically and without further action
of the Board a Director Fee Award in lieu of that portion, if any (the "ELECTED
QUARTERLY FEES"), of the Director Fees earned by the Participant during such
quarter
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and specified by the Participant's election under Section 7.2 for such Plan Year
(or Initial Plan Year). In accordance with the Participant's election under
Section 7.2 for the Plan Year (or Initial Plan Year), the Director Fee Award
shall be either in the form of a Director Fee Option pursuant to Section 7.5 or
a Stock Units Award pursuant to Section 7.6.
7.5 DIRECTOR FEE OPTION. Each Director Fee Option shall be
evidenced by a Director Fee Option Agreement specifying the number of shares of
Stock covered thereby, in such form as the Board shall from time to time
establish. Director Fee Option Agreements may incorporate all or any of the
terms of the Plan by reference and shall comply with and be subject to the terms
and conditions of Section 6 to the extent not inconsistent with this Section 7
and to the terms and conditions set forth in Sections 7.5(a) through 7.5(c)
below:
(a) EXERCISE PRICE OF DIRECTOR FEE OPTION. The exercise
price per share for each Director Fee Option shall be fifty percent (50%) of the
Fair Market Value of a share of Stock on the date of grant of the Director Fee
Option.
(b) NUMBER OF SHARES SUBJECT TO DIRECTOR FEE OPTION. The
number of shares of Stock subject to a Director Fee Option shall be determined
by the following formula (with any resulting fractional share being
disregarded):
X = A / (B x 50%)
where,
"X" is the number of shares subject to the Director
Fee Option;
"A" is the amount of Elected Quarterly Fees in lieu
of which the Director Fee Option is granted; and
"B" is the Fair Market Value of a share of Stock on
the date of grant of the Director Fee Option.
(c) EXERCISABILITY AND TERM OF DIRECTOR FEE OPTION. Each
Director Fee Option shall be immediately exercisable and vested in full on and
after the date of grant and shall terminate and cease to be exercisable on the
tenth (10th) anniversary of the date of grant of the Director Fee Option, unless
earlier terminated pursuant to the terms of the Plan or the Director Fee Option
Agreement.
7.6 STOCK UNITS AWARD. Each Stock Units Award shall be evidenced
by a Stock Units Agreement that shall specify the number of Stock Units to which
such agreement pertains, the form and time of settlement of such Stock Units and
such other provisions as the Board shall determine. Stock Units Agreements may
incorporate all or any of the terms of the Plan by reference and shall comply
with and be subject to the terms and conditions set forth in Sections 7.6(a)
through 7.6(d) below:
(a) NUMBER OF STOCK UNITS AWARDED. The number of Stock
Units subject to a Stock Units Award shall be determined by the following
formula (with any resulting fractional Stock Unit being disregarded):
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X = A / B
where,
"X" is the number of Stock Units subject to the
Stock Units Award;
"A" is the amount of Elected Quarterly Fees in lieu
of which the Stock Units Award is granted; and
"B" is the Fair Market Values of a share of Stock
on the date of grant of the Stock Units Award.
(b) VOTING AND DIVIDEND EQUIVALENT RIGHTS. Participants
shall have no voting rights with respect to shares of Stock represented by Stock
Units until the date of the issuance of a certificate for such shares (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company). Prior to settlement of a Stock Units
Award, such Award shall include the right to Dividend Equivalents, pursuant to
which the Participant shall be credited with additional whole and/or fractional
Stock Units as of the date of any payment of cash dividends with respect to the
Stock occurring prior to such settlement date. Such additional Stock Units shall
be subject to the same terms and conditions and shall be settled in the same
manner and at the same time as the Stock Units originally subject to the Stock
Units Award. The number of such whole and/or fractional Stock Units to be
credited with respect to any Stock Units Award on the date of payment of any
cash dividend shall be determined by the following formula:
X = (A x B) / C
where,
"X" is the number of whole and/or fractional Stock
Units to be credited with respect to the Stock
Units Award;
"A" is the amount of cash dividends paid on one
share of Stock;
"B" is the number of whole and fractional Stock
Units subject to the Stock Units Award as of the
cash dividend payment date and immediately prior to
the crediting of Dividend Equivalents; and
"C" is the Fair Market Value of a share of Stock on
the cash dividend payment date.
(c) SETTLEMENT OF STOCK UNITS AWARD. Subject to the
provisions of Section 10 below, the Company shall issue to the Participant,
within thirty (30) days following the earlier of (i) the Early Settlement Date
elected by the Participant with respect to the Stock Units Award or (ii) the
date of termination of the Participant's Service, a number of whole shares of
Stock equal to the number of whole Stock Units subject to the Stock Units Award.
Such shares of Stock shall be fully vested and shall not be subject to any
restriction on transfer other than any such restriction as may be required
pursuant to Section 10 or any applicable law, rule or regulation. The
Participant shall not be required to pay any additional consideration to acquire
shares of Stock upon settlement of a Stock Units Award. Any fractional Stock
Unit subject to the Stock Units Award shall be settled in accordance with
Section 7.8.
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(d) NONTRANSFERABILITY OF STOCK UNITS. Prior to their
settlement pursuant to Section 7.6(c), no Stock Units granted to a Participant
shall be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, or garnishment by creditors of the Participant
or the Participant's beneficiary, except by will or by the laws of descent and
distribution.
7.7 EFFECT OF TERMINATION OF SERVICE. Notwithstanding any
Participant's prior election pursuant to Section 7.2, no Director Fee Award
shall be granted to such Participant after termination of such Participant's
Service as an Outside Director, and all Director Fees with respect to which
Director Fee Awards have not been granted prior to termination of such
Participant's Service as an Outside Director shall thereafter be paid in cash in
accordance with the Company's normal Director Fee payment procedures. However,
subject to compliance with applicable law as provided in Section 10, all
Director Fee Awards granted prior to termination of a Participant's Service
shall continue to be governed by and may be exercised or settled in accordance
with the terms of the Plan and the Award Agreement evidencing such Director Fee
Award.
7.8 FRACTIONAL SHARES. No fractional shares of Stock shall be
issued upon the exercise of any Director Fee Option or settlement of any Stock
Units Award. Upon the settlement of any Stock Units Award, the Company shall pay
to the Participant cash in lieu of any fractional Stock Unit subject to the
Stock Units Award in an amount equal to the Fair Market Value on the settlement
date of such fractional share of Stock. Furthermore, any portion of a
Participant's Elected Quarterly Fees representing a fractional share amount that
would otherwise be paid in the form of a Director Fee Option or a Stock Units
Award shall instead be paid in cash in accordance with the Company's normal
Director Fee payment procedures.
8. STANDARD FORMS OF AWARD AGREEMENT.
8.1 AWARD AGREEMENT. Each Award shall comply with and be subject
to the terms and conditions set forth in the appropriate form of Award Agreement
approved by the Board concurrently with its adoption of the Plan and as amended
from time to time. Any Award Agreement may consist of an appropriate form of
Notice of Grant and a form of Agreement incorporated therein by reference, or
such other form or forms as the Board may approve from time to time.
8.2 AUTHORITY TO VARY TERMS. The Board shall have the authority
from time to time to vary the terms of any standard form of Award Agreement
either in connection with the grant or amendment of an individual Award or in
connection with the authorization of a new standard form or forms; provided,
however, that the terms and conditions of any such new, revised or amended
standard form or forms of Award Agreement are not inconsistent with the terms of
the Plan.
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9. CHANGE IN CONTROL.
9.1 DEFINITIONS.
(a) An "OWNERSHIP CHANGE EVENT" shall be deemed to have
occurred if any of the following occurs with respect to the Company: (i) the
direct or indirect sale or exchange in a single or series of related
transactions by the stockholders of the Company of more than fifty percent (50%)
of the voting stock of the Company; (ii) a merger or consolidation in which the
Company is a party; (iii) the sale, exchange, or transfer of all or
substantially all of the assets of the Company; or (iv) a liquidation or
dissolution of the Company.
(b) A "CHANGE IN CONTROL" shall mean an Ownership Change
Event or a series of related Ownership Change Events (collectively, a
"TRANSACTION") wherein the stockholders of the Company immediately before the
Transaction do not retain immediately after the Transaction, in substantially
the same proportions as their ownership of shares of the Company's voting stock
immediately before the Transaction, direct or indirect beneficial ownership of
more than fifty percent (50%) of the total combined voting power of the
outstanding voting stock of the Company or the corporation or corporations to
which the assets of the Company were transferred (the "TRANSFEREE
CORPORATION(s)"), as the case may be. For purposes of the preceding sentence,
indirect beneficial ownership shall include, without limitation, an interest
resulting from ownership of the voting stock of one or more corporations which,
as a result of the Transaction, own the Company or the Transferee
Corporation(s), as the case may be, either directly or through one or more
subsidiary corporations. The Board shall have the right to determine whether
multiple sales or exchanges of the voting stock of the Company or multiple
Ownership Change Events are related, and its determination shall be final,
binding and conclusive.
9.2 EFFECT OF CHANGE IN CONTROL ON OPTIONS. In the event of a
Change in Control, any unexercisable or unvested portions of outstanding Options
and any shares acquired upon the exercise thereof held by Participants whose
Service has not terminated prior to such date shall be immediately exercisable
and vested in full as of the date ten (10) days prior to the date of the Change
in Control. However, if it is determined that the provisions or operation of the
preceding sentence would preclude treatment of a Change in Control as a
"pooling-of-interests" for accounting purposes and provided further that in the
absence of the preceding sentence such Change in Control would be treated as a
"pooling-of-interests" for accounting purposes, then the preceding sentence
shall be void ab initio, and the vesting and exercisability of each outstanding
Option and any shares acquired upon the exercise thereof shall be determined
under any other applicable provision of the Plan or the Award Agreement
evidencing such Option. The exercise or vesting of any Option and any shares
acquired upon the exercise thereof that was permissible solely by reason of this
Section 9.2 shall be conditioned upon the consummation of the Change in Control.
In addition, the surviving, continuing, successor, or purchasing corporation or
parent corporation thereof, as the case may be (the "ACQUIRING CORPORATION"),
may either assume the Company's rights and obligations under outstanding Options
or substitute for outstanding Options substantially equivalent options for the
Acquiring Corporation's stock. Any Options which are neither assumed or
substituted for by the Acquiring Corporation in connection with the Change in
Control nor exercised as of the date of the Change
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in Control shall terminate and cease to be outstanding effective as of the date
of the Change in Control. Notwithstanding the foregoing, if the corporation the
stock of which is subject to the outstanding Options immediately prior to an
Ownership Change Event described in Section 9.1(a)(i) constituting a Change in
Control is the surviving or continuing corporation and immediately after such
Ownership Change Event less than fifty percent (50%) of the total combined
voting power of its voting stock is held by another corporation or by other
corporations that are members of an affiliated group within the meaning of
Section 1504(a) of the Code without regard to the provisions of Section 1504(b)
of the Code, the outstanding Options shall not terminate.
9.3 EFFECT OF CHANGE IN CONTROL ON STOCK UNITS. In the event of a
Change in Control, the Acquiring Corporation may either assume the Company's
rights and obligations under outstanding Stock Units Awards or substitute for
outstanding Stock Units Awards substantially equivalent awards with respect to
the Acquiring Corporation's stock. Any outstanding Stock Units Awards not
assumed or substituted for by the Acquiring Corporation shall be settled in
accordance with Section 7.6(c) immediately prior to the effective date of the
Change in Control.
9.4 EFFECT OF CHANGE IN CONTROL ON UNPAID DIRECTOR FEES. In the
event of a Change in Control, any Director Fees with respect to which the
Company has not granted either a Director Fee Option or a Stock Units Award
pursuant to Section 7 prior to the effective date of the Change in Control shall
be paid in cash immediately prior to such effective date.
10. COMPLIANCE WITH SECURITIES LAW.
The grant of Awards and the issuance of shares of Stock pursuant
to any Award shall be subject to compliance with all applicable requirements of
federal, state and foreign law with respect to such securities and the
requirements of any stock exchange or market system upon which the Stock may
then be listed. In addition, no Option may be exercised unless (a) a
registration statement under the Securities Act shall at the time of exercise of
the Option be in effect with respect to the shares issuable upon exercise of the
Option or (b) in the opinion of legal counsel to the Company, the shares
issuable upon exercise of the Option may be issued in accordance with the terms
of an applicable exemption from the registration requirements of the Securities
Act. The inability of the Company to obtain from any regulatory body having
jurisdiction the authority, if any, deemed by the Company's legal counsel to be
necessary to the lawful issuance and sale of any shares hereunder shall relieve
the Company of any liability in respect of the failure to issue or sell such
shares as to which such requisite authority shall not have been obtained. As a
condition to the issuance of any Stock, the Company may require the Participant
to satisfy any qualifications that may be necessary or appropriate, to evidence
compliance with any applicable law or regulation and to make any representation
or warranty with respect thereto as may be requested by the Company.
11. TERMINATION OR AMENDMENT OF PLAN.
The Board may terminate or amend the Plan at any time. However,
subject to changes in applicable law, regulations or rules that would permit
otherwise, without the approval
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of the Company's stockholders, there shall be (a) no increase in the maximum
aggregate number of shares of Stock that may be issued under the Plan (except by
operation of the provisions of Section 4.1 or Section 4.2) and (b) no other
amendment of the Plan that would require approval of the Company's stockholders
under any applicable law, regulation or rule. No termination or amendment of the
Plan shall affect any then outstanding Award unless expressly provided by the
Board. In any event, no termination or amendment of the Plan may adversely
affect any then outstanding Award without the consent of the Participant, unless
such termination or amendment is necessary to comply with any applicable law,
regulation or rule.
12. MISCELLANEOUS PROVISIONS.
12.1 TAX WITHHOLDING. The Company shall have the right, but not
the obligation, to deduct from the shares of Stock issuable pursuant to an
Award, or to accept from the Participant the tender of, a number of whole shares
of Stock having a Fair Market Value, as determined by the Company, equal to all
or any part of the federal, state, local and foreign taxes, if any, required by
law to be withheld by the Participating Company Group with respect to such
Award. Alternatively or in addition, in its discretion, the Company shall have
the right to require the Participant, through payroll withholding, cash payment
or otherwise, including by means of a Cashless Exercise, to make adequate
provision for any such tax withholding obligations of the Participating Company
Group arising in connection with the Award. The Fair Market Value of any shares
of Stock withheld or tendered to satisfy any such tax withholding obligations
shall not exceed the amount determined by the applicable minimum statutory
withholding rates. The Company shall have no obligation to deliver shares of
Stock until the Participating Company Group's tax withholding obligations have
been satisfied by the Participant.
12.2 PROVISION OF INFORMATION. Each Participant shall be given
access to information concerning the Company equivalent to that information
generally made available to the Company's common stockholders.
12.3 BENEFICIARY DESIGNATION. Each Participant may name, from
time to time, any beneficiary or beneficiaries (who may be named contingently or
successively) to whom any benefit under the Plan is to be paid in case of such
Participant's death before he or she receives any or all of such benefit. Each
designation will revoke all prior designations by the same Participant, shall be
in a form prescribed by the Company, and will be effective only when filed by
the Participant in writing with the Company during the Participant's lifetime.
In the absence of any such designation, benefits remaining unpaid at the
Participant's death shall be paid to his or her estate.
12.4 UNFUNDED OBLIGATION. Any benefits payable to Participants
pursuant to the Plan shall be unfunded obligations for all purposes, including,
without limitation, Title I of the Employee Retirement Income Security Act of
1974. No Participating Company shall be required to segregate any monies from
its general funds, or to create any trusts, or establish any special accounts
with respect to such obligations. The Company shall retain at all times
beneficial ownership of any investments, including trust investments, which the
Company may make to fulfill its payment obligations hereunder. Any investments
or the creation or maintenance of any trust or any Participant account shall not
create or constitute a trust or
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fiduciary relationship between the Committee or any Participating Company and a
Participant, or otherwise create any vested or beneficial interest in any
Participant or the Participant's creditors in any assets of any Participating
Company. The Participants shall have no claim against any Participating Company
for any changes in the value of any assets which may be invested or reinvested
by the Company with respect to the Plan. To the extent that any person acquires
a right to receive any payment from a Participating Company under the Plan, such
right shall be no greater than the right of an unsecured general creditor of
such Participating Company.
IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies
that the foregoing sets forth the Telocity, Inc. Outside Directors Stock Plan as
duly adopted by the Board on January 4, 2000.
/s/ SCOTT MARTIN
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Secretary
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