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EXHIBIT 10.7
CONNECTED CORPORATION
2000 NONEMPLOYEE DIRECTOR STOCK OPTION PLAN
1. Purpose. The purpose of this 2000 Nonemployee Director Stock Option
Plan is to attract and retain the services of experienced and knowledgeable
independent directors of the Corporation for the benefit of the Corporation and
its stockholders and to provide additional incentives for such independent
directors to continue to work for the best interests of the Corporation and its
stockholders through continuing ownership of its common stock.
2. Definitions. As used herein, each of the following terms has the
indicated meaning:
"Corporation" means Connected Corporation.
"Fair Market Value" means the last sale price of the Shares as reported
on the NASDAQ National Market ("NASDAQ") or another national securities exchange
on which the Shares may be traded on the date on which such determination is to
be made. If the Shares are not publicly traded, the fair market value shall mean
the "Fair Market Value" of the Shares as determined by the Board of Directors.
"Option" means the contractual right to purchase Shares upon the
specific terms set forth in this Plan.
"Option Exercise Period" means the period commencing on the date of
grant of an Option pursuant to this Plan and ending ten years from the date of
grant.
"Plan" means this Connected Corporation 2000 Nonemployee Director Stock
Option Plan.
"Shares" means the Common Stock, $.001 par value, of the Corporation.
3. Stock Subject to the Plan. The aggregate number of Shares that may be
issued and sold under the Plan shall be 1,000,000 Shares. The Shares to be
issued upon exercise of Options granted under this Plan shall be made available,
at the discretion of the Board of Directors, from (i) treasury Shares and/or
Shares reacquired by the Corporation for such purposes, including Shares
purchased in the open market, (ii) authorized but unissued Shares, and (iii)
Shares previously reserved for issuance upon exercise of Options which have
expired or been terminated. If any Option granted under this Plan shall expire
or terminate for any reason without having been exercised in full, the
unpurchased Shares covered thereby shall become available for grant as
additional Options under the Plan so long as it shall remain in effect.
4. Administration of the Plan. The Plan shall be administered by the
Board of Directors of the Corporation (the "Board"). The Board shall, subject to
the provisions of the Plan, grant options under the Plan and shall have the
power to construe the Plan, to determine all questions as to eligibility, and to
adopt and amend such rules and regulations for the
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administration of the Plan as it may deem desirable. The Board may delegate any
and all of its authority hereunder to one or more Committees of the Board.
5. Eligibility; Grant of Options. Options will be granted only to a
director who is not, at the time of the grant, an employee of the Corporation
("Eligible Director"). Each Eligible Director will be granted an Option to
purchase 90,000 shares of Common Stock under the Plan as of the date he or she
is first elected or appointed as a director, provided, however, that the number
of shares of Common Stock subject to the Option may be increased at the time of
grant by the Board in appropriate circumstances; and each Eligible Director who
is a director on the effective date of the Plan will be granted an Option to
purchase 90,000 shares of Common Stock under the Plan on the effective date of
the Plan. Each Eligible Director shall be granted an additional Option to
purchase 90,000 shares on the third anniversary of the date on which such
Eligible Director most recently received an Option under the Plan.
6. Terms of Options and Limitations Thereon.
(a) Option Agreement. Each Option granted under this Plan shall
be evidenced by an option agreement between the Corporation and the Option
holder and shall be upon such terms and conditions not inconsistent with this
Plan as the Board may determine. Each Option shall explicitly state that it is
not intended to be an "incentive stock option" as that term is defined in
Section 422 of the Internal Revenue Code.
(b) Price. The price at which any Shares may be purchased
pursuant to the exercise of an Option shall be the Fair Market Value of the
Shares on the date of grant, but in no event shall the price be less than the
par value of the Shares.
(c) Exercise of Options. Subject to Paragraph 7 of this Plan,
each Option granted under this Plan may be exercised in full at one time or in
part from time to time only during the Option Exercise Period by the giving of
written notice, signed by the person or persons exercising the Option, to the
Corporation stating the numbers of Shares with respect to which the Option is
being exercised, accompanied by full payment for such Shares pursuant to section
7(b) hereof; provided, however, (i) if a person to whom an Option has been
granted is permanently disabled or dies during the Option Exercise Period, the
portion of such Option then exercisable, as provided in Paragraph 7(a) shall be
exercisable by him or her or by the executors, administrators, legatees or
distributees of his or her estate during the 12 months following his or her or
death or permanent disability and, (ii) if a person to whom an Option has been
granted ceases to be a director of the Corporation for any cause other than
death or permanent disability, the portion of Option then exercisable shall be
exercisable during the thirty (30) day period following the date such person
ceased to be a director, but, in any event, only to the extent vested pursuant
to Paragraph 7(a) hereof.
(d) Non-Assignability. No Option or right or interest in an
Option shall be assignable or transferable by the holder except by will or the
laws of descent and distribution and during the lifetime of the holder shall be
exercisable only by him or her.
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7. Vesting; Payment.
(a) Options granted under this Plan may be exercised during the
Option Exercise Period at the rate of 27.777% per month, commencing at the end
of the first full month after the date of grant, such that the Option may be
exercised in full from and after three years from the date of grant.
(b) If a person to whom an Option is granted ceases to be an
Eligible Director, then each Option issued to said person shall be exercisable,
during the remainder of the Option Exercise Period or such shorter period as
specified in subparagraph 6(c), only as to the number of Shares as to which the
Option was exercisable immediately prior to said termination of affiliation.
(c) The purchase price of Shares upon exercise of an Option
shall be paid by the Option holder in full upon exercise and may be paid (i) in
cash or, if the Corporation's shares are traded on NASDAQ or a national
securities exchange; (ii) by delivery of Shares having a Fair Market Value on
the date of exercise equal to the purchase price, or (iii) any combination of
cash and Shares.
(d) No Shares shall be issued or transferred upon exercise of
any Option under this Plan unless and until all legal requirements applicable to
the issuance or transfer of such shares and such other requirements as are
consistent with the Plan have been complied with to the satisfaction of the
Board, including without limitation those described in Paragraph 10 hereof.
(e) Notwithstanding any other provisions of this Plan to the
contrary, in the event of a Change of Control, if Options granted under this
Plan are not yet exercisable pursuant to this Section 7, the Options shall
become fully exercisable to the extent of the original grant. For purposes of
this Agreement, "Change of Control" shall mean:
(i) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") of
beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of thirty percent (30%) or
more of the then outstanding shares of stock of the Corporation
entitled to vote in the election of directors (the "Outstanding
Corporation Common Stock"), whether in one transaction or in
multiple transactions which in the aggregate equal or exceed
thirty percent (30%) of the Outstanding Corporation Common
Stock; provided, however, that (A) any acquisition by the
Corporation or its subsidiaries, or any employee benefit plan
(or related trust) of the Corporation or its subsidiaries of
thirty percent (30%) or more of Outstanding Corporation Common
Stock shall not constitute a Change of Control; (B) any
acquisition by any individual, entity or group of beneficial
ownership of thirty percent (30%) or more but less than forty
percent (40%) of the Outstanding Corporation Common
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Stock may be deemed unanimously by the Board as it is
constituted as of the effective date of this Plan (the
"Incumbent Board"), excluding any members of the Incumbent
Board affiliated with the acquiror, to not constitute a Change
of Control, in the Incumbent Board's sole and absolute
discretion; and (C) any acquisition by a corporation with
respect to which, following such acquisition, more than fifty
percent (50%) of the then outstanding shares of common stock of
such corporation, is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners of the Outstanding
Corporation Common Stock immediately prior to such acquisition
in substantially the same proportion as their ownership,
immediately prior to such acquisition, of the Outstanding
Corporation Common Stock, shall not constitute a Change of
Control; or
(ii) Individuals who, as of the effective date of this
Plan, constitute the members of the Incumbent Board cease for
any reason to constitute at least a majority of the Board,
provided that any individual becoming a director subsequent to
the effective date of this Plan whose election or nomination
for election by the Corporation's stockholders, was approved by
a vote of at least a majority of the directors then comprising
the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding,
for this purpose, any such individual whose initial assumption
of office was or is in connection with any solicitation,
subject to Rules 14a-3 to 14a-15 of the Exchange Act, by any
person or group of persons for the purpose of opposing a
solicitation, subject to Rules 14a-3 to 14a-15 of the Exchange
Act, by any other person or group of persons with respect to
the election or removal of directors at any annual or special
meeting of stockholders; or
(iii) Approval by the stockholders of the Corporation
of (A) a reorganization, merger or consolidation, in each case,
with respect to which all or substantially all of the
individuals and entities who were the beneficial owners of the
Outstanding Corporation Common Stock immediately prior to such
reorganization, merger or consolidation will not, following
such reorganization, merger or consolidation, beneficially own,
directly or indirectly, more than 50% of the then outstanding
shares of common stock of the corporation resulting from such a
reorganization, merger or consolidation, other than a merger or
consolidation effected to implement a recapitalization of the
Corporation (or similar transaction) in which no "person" (as
such term is used in Sections 13(d) and 14(d) of the Exchange
Act) acquires 30% or more of Outstanding Corporation Common
Stock; or (B) the sale or other disposition of all or
substantially all of the assets of the Corporation, excluding a
sale or other disposition of assets to a subsidiary of the
Corporation and excluding a sale or license of a portion of the
business of the Corporation which is deemed by the Incumbent
Board,
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acting in its sole and absolute discretion, to not constitute a Change
of Control.
8. Stock Adjustments.
(a) If the Corporation is a party to any merger or
consolidation, any purchase or acquisition of property or stock, or any
separation, reorganization or liquidation, the Board (or, if the Corporation is
not the surviving corporation, the board of directors of the surviving
corporation) shall have the power to make arrangements, which shall be binding
upon the holders of unexpired Options, for the substitution of new options for,
or the assumption by another corporation of, any unexpired Options then
outstanding hereunder.
(b) If by reason of recapitalization, reclassification, stock
split-up, combination of shares, separation (including a spin-off) or dividend
on the Common Stock payable in Shares, the outstanding Shares of the Corporation
are increased or decreased or changed into or exchanged for a different number
or kind of shares or other securities of the Corporation, the Board shall
conclusively determine the appropriate adjustment in the exercise prices of
outstanding Options and in the number and kind of shares as to which outstanding
Options shall be exercisable.
(c) In the event of a transaction of the type described in
Paragraphs (a) and (b) above, the total number of Shares on which Options may be
granted under this Plan shall be appropriately adjusted by the Board.
9. No Rights Other Than Those Expressly Created. No person
affiliated with the Corporation or other person shall have any claim or right to
be granted an Option hereunder. Neither this Plan nor any action taken hereunder
shall be construed as (i) giving any Option holder any right to continue to be
affiliated with the Corporation, (ii) giving any Option holder any equity or
interest of any kind in any assets of the Corporation, or (iii) creating a trust
of any kind or a fiduciary relationship of any kind between the Corporation and
any such person. No Option holder shall have any of the rights of a stockholder
with respect to Shares covered by an Option until such time as the Option has
been exercised and Shares have been issued to such person.
10. Miscellaneous.
(a) Withholding of Taxes. Pursuant to applicable federal, state,
local or foreign laws, the Corporation may be required to collect income or
other taxes upon the grant of an Option to, or exercise of an Option by, a
holder. The Corporation may require, as a condition to the exercise of an
Option, that the recipient pay the Corporation, at such time as the Board
determines, the amount of any taxes which the Board may determine is required to
be withheld.
(b) Securities Law Compliance. Upon exercise of an Option, the
holder shall be required to make such representations and furnish such
information as may, in the opinion of counsel for the Corporation, be
appropriate to permit the Corporation to issue or transfer the
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Shares in compliance with the provisions of applicable federal or state
securities laws. The Corporation, in its discretion, may postpone the issuance
and delivery of Shares upon any exercise of an Option until completion of such
registration or other qualification of such Shares under any federal or state
laws, or stock exchange listing, as the Corporation may consider appropriate.
The Corporation is not obligated to register or qualify the Shares under federal
or state securities laws and may refuse to issue such Shares if neither
registration nor exemption therefrom is practical. The Board may require that
prior to the issuance or transfer of any Shares upon exercise of an Option, the
recipient enter into a written agreement to comply with any restrictions on
subsequent disposition that the Board or the Corporation deems necessary or
advisable under any applicable federal and state securities laws. Certificates
representing the Shares issued hereunder may be legended to reflect such
restrictions.
(c) Indemnity. The Board shall not be liable for any act,
omission, interpretation, construction or determination made in good faith in
connection with its responsibilities with respect to the Plan, and the
Corporation hereby agrees to indemnify the members of the Board, in respect of
any claim, loss, damage, or expense (including counsel fees) arising from any
such act, omission, interpretation, construction or determination to the full
extent permitted by law.
11. Effective Date; Amendment; Termination.
(a) The effective date of this Plan shall be the date on which
approved by written consent of the holders of a majority of the shares of
outstanding voting stock of the Corporation or by the holders of a majority of
the shares of voting stock of the Corporation present and entitled to vote at a
duly held meeting of such stockholders.
(b) The date of grant of any Option granted hereunder shall be
the date upon which the Eligible Director to whom the Option is granted becomes
a director of the Company.
(c) The Board, or any Committee who has been delegated the
authority to do so, may at any time, and from time to time, amend, suspend or
terminate this Plan in whole or in part. Provided however, that so long as there
is a requirement under Rule 16b-3 under the Securities Exchange Act of 1934, as
amended, for stockholder approval of a Plan and certain amendments thereto, any
such amendment which (i) materially increases the number of Shares which may be
subject to Options granted under the Plan, (ii) materially increases the
benefits accruing to participants in the Plan, or (iii) materially modifies the
requirement for eligibility to participate in the Plan, shall be subject to
stockholder approval, to the extent so required under said Rule; and provided
further that the Plan may not be modified more often than once every six months
to materially modify (i) the requirements for eligibility under the Plan, (ii)
the timing of the grants of Options under the Plan or (iii) the number of Shares
subject to Options to be granted under the Plan. Except as provided herein, no
amendment, suspension or termination of this Plan may adversely affect the
rights of any person under an Option that has been granted to such person
without such person's consent.
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(d) This Plan shall terminate ten years from its effective date,
and no Option shall be granted under this Plan thereafter, but such termination
shall not affect the validity of Options granted prior to the date of
termination.
Date of Board of Director Adoption: March __, 2000.
Date of Stockholder Adoption:
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