RCN CORPORATION
2000 EMPLOYEE STOCK PURCHASE PLAN
1. Purpose.
The RCN Corporation 2000 Employee Stock Purchase
Plan (the "Plan") is intended to encourage and facilitate
the purchase of Shares of the Common Stock of RCN
Corporation (the "Company") by employees of the Company and
any Participating Companies, thereby providing employees
with a personal stake in the Company and a long range
inducement to remain in the employ of the Company and
Participating Companies. It is the intention of the Company
that the Plan qualify as an "employee stock purchase plan"
within the meaning of Section 423 of the Code.
2. Definitions.
(a) "Account" means a bookkeeping account established
by the Committee on behalf of a Participant to hold Payroll
Deductions.
(b) "Approved Leave of Absence" means a leave of
absence that has been approved by the applicable
Participating Company in such a manner as the Board may
determine from time to time.
(c) "Board" means the Board of Directors of the
Company.
(d) "Code" means the Internal Revenue Code of 1986, as
amended.
(e) "Committee" means the Committee appointed pursuant
to section 14 of the Plan.
(f) "Company" means RCN Corporation.
(g) "Compensation" means an Employee's cash
compensation payable for services to a Participating Company
during an Offering Period.
(h) "Election Form" means the form acceptable to the
Committee which an Employee shall use to make an election to
purchase Shares through Payroll Deductions pursuant to the
Plan.
(i) "Eligible Employee" means an Employee who meets
the requirements for eligibility under section 3 of the
Plan.
(j) "Employee" means a person who is an employee of a
Participating Company.
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(k) "Fair Market Value" means the closing price per
Share on the principal national securities exchange on which
the shares are listed or admitted to trading or, if not
listed or traded on any such exchange, on the National
Market System of the National Association of Securities
Dealers Automated Quotation System ("NASDAQ"), or if not
listed or traded on any such exchange or system, the fair
market value as reasonably determined by the Board, which
determination shall be conclusive.
(l) "Five Percent Owner" means an Employee who, with
respect to a Participating Company, is described in section
423(b) of the Code.
(m) "Offering" means an offering of Shares to Eligible
Employees pursuant to the Plan.
(n) "Offering Commencement Date" means the first day
of an Offering Period; provided that the first Offering
Commencement Date shall be on or after July 1, 2000, as
determined by the Committee.
(o) "Offering Period" means the period extending from
an Offering Commencement Date through the following Offering
Termination Date. Offering Periods may be on a payroll
period, bi-weekly, monthly, quarterly, semi-annual, annual,
bi-annual or other basis, as determined by the Committee.
(p) "Offering Termination Date" means the last day of
an Offering Period.
(q) "Option Price" means 85 percent of the lesser of:
(1) the Fair Market Value per Share on the Offering
Commencement Date, or if such date is not a trading day,
then on the next trading day thereafter or (2) the Fair
Market Value per Share on the Offering Termination Date, or
if such date is not a trading day, then on the next trading
day thereafter. Notwithstanding the preceding, the Option
Price for an Offering Period may be a greater amount, as
determined by the Committee prior to the start of the
applicable Offering.
(r) "Participant" means an Employee who meets the
requirements for eligibility under section 3 of the Plan and
who has timely delivered an Election Form to the Committee.
(s) "Participating Company" means, as provided in
Schedule A, the Company and subsidiaries of the Company,
within the meaning of section 424(f) of the Code, if any,
that are approved by the Board from time to time and whose
employees are designated as Employees by the Board.
(t) "Payroll Deductions" means amounts withheld from a
Participant's Compensation pursuant to the Plan, as
described in section 5 of the Plan.
(u) "Plan" means RCN Corporation 2000 Employee Stock
Purchase Plan, as set forth in this document, and as may be
amended from time to time.
(v) "Plan Termination Date" means the earlier of:
(1) The Offering Termination Date for the
Offering in which the maximum number of Shares specified in
section 5 of the Plan have been issued pursuant to the Plan;
or
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(2) The date as of which the Board chooses to
terminate the Plan as provided in section 15 of the Plan.
(w) "Shares" means shares of common stock of the
Company, $1.00 par value per Share.
(x) "Successor-in-Interest" means the Participant's
executor or administrator, or such other person or entity to
whom the Participant's rights under the Plan shall have
passed by will or the laws of descent and distribution.
(y) "Termination Form" means the form acceptable to
the Committee which an Employee shall use to withdraw from
an Offering pursuant to section 8 of the Plan.
3. Eligibility and Participation.
(a) Initial Eligibility. Except as provided in
section 3(b) of the Plan, each individual who is an Employee
on an Offering Commencement Date shall be eligible to
participate in the Plan with respect to the Offering that
commences on that date.
(b) Ineligibility. An Employee shall not be eligible
to participate in the Plan if such Employee:
(1) Is a Five Percent Owner;
(2) Has not customarily worked more than 20 hours
per week during a 24-consecutive-month period (or a shorter
period of time as determined by the Committee and applied on
a uniform basis with respect to an Offering) ending on the
last day of the month immediately preceding the effective
date of an election to purchase Shares pursuant to the Plan;
or
(3) Is restricted from participating under
section 3(d) of the Plan.
(c) Leave of Absence. A Participant who goes on an
Approved Leave of Absence before an Offering Termination
Date after having filed an Election Form with respect to
such Offering shall continue to be eligible to participate
in the Plan through the end of such Offering Period.
Termination by the Participating Company of an Employee's
Approved Leave of Absence, other than return to
non-temporary employment, shall terminate an Employee's
employment for all purposes of the Plan and shall terminate
such Employee's participation in the Plan and the right to
exercise any option. An Approved Leave of Absence shall be
considered active employment for purposes of sections
3(b)(2) and 3(b)(3) of the Plan.
(d) Restrictions on Participation. Notwithstanding
any provisions of the Plan to the contrary, no Employee
shall be granted an option to participate in the Plan if:
(1) Immediately after the grant, such Employee
would be a Five Percent Owner; or
(2) Such option would permit such Employee's
rights to purchase stock under all employee stock purchase
plans of the Participating Companies which meet the
requirements of section 423(b) of the Code to accrue at a
rate which exceeds $25,000 in fair market value (as
determined pursuant to section 423(b)(8) of the Code) for
each calendar year in which such option is outstanding.
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(e) Commencement of Participation. An Employee who
meets the eligibility requirements of sections 3(a) and 3(b)
of the Plan and whose participation is not restricted under
section 3(d) of the Plan shall become a Participant by
completing an Election Form and filing it with the Committee
on or before the 15th day of month immediately preceding the
Offering Commencement Date for the first Offering to which
such Election Form applies. Payroll Deductions for a
Participant shall commence on the applicable Offering
Commencement Date when his or her authorization for Payroll
Deductions becomes effective, and shall end on the Plan
Termination Date, unless sooner terminated by the
Participant pursuant to section 8 of the Plan.
4. Shares Per Offering.
The Plan shall be implemented by a series of Offerings
that shall terminate on the Plan Termination Date.
Offerings shall be made with respect to Compensation payable
for each Offering Period occurring on or after adoption of
the Plan by the Board and ending with the Plan Termination
Date. Shares available for any Offering shall be the
difference between the maximum number of Shares that may be
issued under the Plan, as determined pursuant to section
10(a) of the Plan, for all of the Offerings, less the actual
number of Shares purchased by Participants pursuant to prior
Offerings. If the total number of Shares for which options
are exercised on any Offering Termination Date exceeds the
maximum number of Shares available, the Committee shall make
a pro rata allocation of Shares available for delivery and
distribution in as nearly a uniform manner as practicable,
and as it shall determine to be fair and equitable, and the
unapplied Account balances shall be returned to Participants
as soon as practicable following the Offering Termination
Date.
5. Payroll Deductions.
(a) Amount of Payroll Deductions. An Eligible
Employee who wishes to participate in the Plan shall file an
Election Form with the Committee at least 15 days before the
Offering Commencement Date for the first Offering for which
such Election Form is effective on which he or she may elect
to have Payroll Deductions of such amounts designated by the
Committee on the Election Form from time to time made from
his or her Compensation on each regular payday during the
time he or she is a Participant in the Plan, provided that
the rules established by the Committee shall be consistent
with section 423(b)(5) of the Code.
(b) Participants' Accounts. All Payroll Deductions
with respect to a Participant pursuant to section 5(a) of
the Plan shall be credited to the Participant's Account
under the Plan.
(c) Changes in Payroll Deductions. A Participant may
discontinue his participation in the Plan as provided in
section 8(a) of the Plan, but no other change can be made
during an Offering, including, but not limited to, changes
in the amount of Payroll Deductions for such Offering. A
Participant may change the amount of Payroll Deductions for
subsequent Offerings by giving written notice of such change
to the Committee on or before the 15th day of the month
immediately preceding the Offering Commencement Date for the
Offering for which such change is effective.
(d) Leave of Absence. A Participant who goes on an
Approved Leave of Absence before the Offering Termination
Date after having filed an Election Form with respect to
such Offering may:
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(1) Withdraw the balance credited to his or her
Account pursuant to section 8(b) of the Plan;
(2) Discontinue contributions to the Plan but
remain a Participant in the Plan through the Offering
Termination Date;
(3) Remain a Participant in the Plan during such
Approved Leave of Absence through the Offering Termination
Date and continue the authorization for the Participating
Company to make Payroll Deductions for each payroll period
out of continuing payments to such Participant, if any.
6. Granting of Options.
On each Offering Termination Date, each Participant
shall be deemed to have been granted an option to purchase
the number of whole Shares equal to the quotient obtained by
dividing the balance credited to the Participant's Account
as of the Offering Termination Date, by the Option Price.
7. Exercise of Options.
(a) Automatic Exercise. With respect to each
Offering, a Participant's option for the purchase of Shares
granted pursuant to section 6 of the Plan shall be deemed to
have been exercised automatically on the Offering
Termination Date applicable to such Offering.
(b) Fractional Shares and Minimum Number of Shares.
Fractional Shares shall not be issued under the Plan.
Amounts credited to an Account remaining after the
application of such Account to the exercise of options
shall be credited to the Participant's Account for the next
succeeding Offering, or, at the Participant's election,
returned to the Participant as soon as practicable following
the Offering Termination Date, without interest.
(c) Transferability of Option. No option granted to a
Participant pursuant to the Plan shall be transferable other
than by will or by the laws of descent and distribution, and
no such option shall be exercisable during the Participant's
lifetime other than by the Participant.
(d) Delivery of Certificates for Shares. The Company
shall deliver certificates for Shares acquired on the
exercise of options during an Offering Period as soon as
practicable following the Offering Termination Date.
8. Withdrawals.
(a) Withdrawal of Account. A Participant may elect to
withdraw the balance credited to the Participant's Account
by providing a Termination Form to the Committee at any time
before the Offering Termination Date applicable to any
Offering.
(b) Amount of Withdrawal. A Participant may withdraw
all, but not less than all, of the amounts credited to the
Participant's Account by giving a Termination Form to the
Committee. All amounts credited to such Participant's
Account shall be paid as soon as practicable following the
Committee's receipt of the Participant's Termination Form,
and no further Payroll Deductions will be made with respect
to the Participant.
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(c) Termination of Employment. Upon termination of a
Participant's employment for any reason other than death,
including termination due to disability or continuation of a
leave of absence beyond 90 days, all amounts credited to
such Participant's Account shall be returned to the
Participant. In the event of a Participant's (1)
termination of employment due to death or (2) death after
termination of employment but before the Participant's
Account has been returned, all amounts credited to such
Participant's Account shall be returned to the Participant's
Successor-in-Interest.
(d) Leave of Absence. A Participant who is on an
Approved Leave of Absence shall, subject to the
Participant's election pursuant to section 5(d) of the Plan,
continue to be a Participant in the Plan until the end of
the first Offering ending after commencement of such
Approved Leave of Absence. A Participant who has been on an
Approved Leave of Absence for more than 90 days shall not be
eligible to participate in any Offering that begins on or
after the commencement of such Approved Leave of Absence so
long as such leave of absence continues.
9. Interest.
No interest shall be paid or allowed with respect to
amounts paid into the Plan or credited to any Participant's
Account.
10. Shares.
(a) Maximum Number of Shares. No more than 1,000,000
Shares may be issued under the Plan. Such Shares shall be
authorized but unissued shares of the Company. The number
of Shares available for any Offering and all Offerings shall
be adjusted if the number of outstanding Shares of the
Company is increased or reduced by split-up,
reclassification, stock dividend or the like. All Shares
issued pursuant to the Plan shall be validly issued, fully
paid and nonassessable.
(b) Participant's Interest in Shares. A Participant
shall have no interest in Shares subject to an option until
such option has been exercised.
(c) Registration of Shares. Shares to be delivered to
a Participant under the Plan shall be registered in the name
of the Participant.
(d) Restrictions on Exercise. The Board may, in its
discretion, require as conditions to the exercise of any
option such conditions as it may deem necessary to assure
that the exercise of options is in compliance with
applicable securities laws.
11. Expenses.
The Participating Companies shall pay all fees and
expenses incurred (excluding individual Federal, state,
local or other taxes) in connection with the Plan. No
charge or deduction for any such expenses will be made to a
Participant upon the termination of his or her participation
under the Plan or upon the distribution of certificates
representing Shares purchased with his or her contributions.
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12. Taxes.
The Participating Companies shall have the right to
withhold from each Participant's Compensation an amount
equal to all Federal, state, city or other taxes as the
Participating Companies shall determine are required to be
withheld by them. In connection with such withholding, the
Participating Companies may make any such arrangements as
are consistent with the Plan as it may deem appropriate,
including the right to withhold from Compensation paid to a
Participant other than in connection with the Plan and the
right to withdraw such amount from the amount standing to
the credit of the Participant's Account.
13. Plan and Contributions Not to Affect Employment.
The Plan shall not confer upon any Eligible Employee
any right to continue in the employ of the Participating
Companies.
14. Administration.
The Plan shall be administered by the Board, which may
delegate responsibility for such administration to a
committee of the Board (the "Committee"). If the Board
fails to appoint the Committee, any references in the Plan
to the Committee shall be treated as references to the
Board. The Board, or the Committee, shall have authority to
interpret the Plan, to prescribe, amend and rescind rules
and regulations relating to it, and to make all other
determinations deemed necessary or advisable in
administering the Plan, with or without the advice of
counsel. The determinations of the Board or the Committee
on the matters referred to in this paragraph shall be
conclusive and binding upon all persons in interest.
15. Amendment and Termination.
The Board may terminate the Plan at any time and may
amend the Plan from time to time in any respect; provided,
however, that upon any termination of the Plan, all Shares
or Payroll Deductions (to the extent not yet applied to the
purchase of Shares) under the Plan shall be distributed to
the Participants, provided further, that no amendment to the
Plan shall affect the right of a Participant to receive his
or her proportionate interest in the Shares or his or her
Payroll Deductions (to the extent not yet applied to the
purchase of Shares) under the Plan, and provided further
that the Company may seek shareholder approval of an
amendment to the Plan if such approval is determined to be
required by or advisable under the regulations of the
Securities or Exchange Commission or the Internal Revenue
Service, the rules of any stock exchange or system on which
the Shares are listed or other applicable law or regulation.
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16. Effective Date.
The Plan shall be effective on the date it is adopted
by the Board, subject to approval by the Company's
shareholders within one year of the adoption of the Plan by
the Board. Any option granted before the approval of the
Plan by the Company's shareholders shall be expressly
conditioned upon such approval, and no Share certificates
shall be issued until such approval. If shareholder
approval is not received within 12 months before or after
the date of the initial adoption of the Plan by the Board,
no Share certificates shall be issued with respect to any
automatic exercises which may have occurred pursuant to
section 7 of the Plan, and all amounts credited to
Participants' Accounts with respect to such Shares shall be
returned to Participants as soon as administratively
practicable.
17. Government and Other Regulations.
(a) In General. The purchase of Shares under the Plan
shall be subject to all applicable laws, rules and
regulations, and to such approvals by any governmental
agencies as may be required.
(b) Securities Law. The Committee shall have the
power to make each grant under the Plan subject to such
conditions as it deems necessary or appropriate to comply
with the then-existing requirements of the Securities Act of
1933, as amended, and the Securities Exchange Act of 1934,
as amended, including Rule 16b-3 (or any similar rule) of
the Securities and Exchange Commission.
18. Non-Alienation.
No Participant shall be permitted to assign, alienate,
sell, transfer, pledge or otherwise encumber his interest
under the Plan prior to the distribution to him of Share
certificates. Any attempt at assignment, alienation, sale,
transfer, pledge or other encumbrance shall be void and of
no effect.
19. Notices.
Any notice required or permitted hereunder shall be
sufficiently given only if delivered personally, telecopied,
or sent by first class mail, postage prepaid, and addressed:
If to the Company:
RCN Corporation
105 Carnegie Center
Princeton, New Jersey 08540
Fax: (609) 734-3875
Attention: Employee Stock Purchase Plan Committee
Or any other address provided pursuant to written
notice.
If to the Participant:
At the address on file with the Company from time to
time, or to such other address as either party may
hereafter designate in writing by notice similarly
given by one party to the other.
20. Successors.
The Plan shall be binding upon and inure to the benefit
of any successor, successors or assigns of the Company.
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21. Severability.
If any part of this Plan shall be determined to be
invalid or void in any respect, such determination shall not
affect, impair, invalidate or nullify the remaining
provisions of this Plan which shall continue in full force
and effect.
22. Acceptance.
The election by any Eligible Employee to participate in
this Plan constitutes his or her acceptance of the terms of
the Plan and his or her agreement to be bound hereby.
23. Applicable Law.
This Plan shall be construed in accordance with the law
of the State of Delaware, to the extent not preempted by
applicable Federal law.
IN WITNESS WHEREOF, the foregoing Plan is adopted this
16 day of May, 2000.
[CORPORATE SEAL] RCN CORPORATION
By: /s/ Louis Monari
-----------------
Name: Louis Monari
Title: Senior Vice President
of Human Resources
ATTEST:________________
SCHEDULE A
Participating Companies
RCN Corporation
