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EXHIBIT 99.1
RHYTHMS NETCONNECTIONS INC. 2000 STOCK AWARD PLAN
RHYTHMS NETCONNECTIONS INC.
2000 STOCK AWARD PLAN
DATED MAY 5, 2000
I. PURPOSE OF THE PLAN
This 2000 Stock Award Plan (this "PLAN") is intended to promote the
interests of the Corporation by providing eligible Employees of the Corporation
with the opportunity to acquire a proprietary interest, or otherwise increase
their proprietary interest, in the Corporation as an incentive for them to
remain in the employ of the Corporation and to reward them for continuing to
provide services to the Corporation.
Capitalized terms used herein and not otherwise defined have the
meanings given to them in the attached APPENDIX, which is incorporated by
reference herein and made a part hereof.
II. ADMINISTRATION OF THE PLAN
A. PLAN ADMINISTRATOR. The Plan shall be administered by the Special
Stock Committee of the Board, or, in the absence thereof, a committee of one or
more Board members appointed by the Board (the Special Stock Committee or such
other committee of the Board being referred to herein as the "PLAN COMMITTEE"),
or, in the absence of a Plan Committee, by the Board, itself. The Board or the
Plan Committee, as the case may be, is referred to herein as the "PLAN
ADMINISTRATOR".
B. PLAN COMMITTEE. Members of the Plan Committee shall serve for
such period of time as the Board may determine and may be removed by the Board
at any time. The Board may also at any time terminate the functions of the Plan
Committee and reassume all powers and authority previously delegated to the Plan
Committee.
C. ESTABLISHMENT OF RULES. The Plan Administrator shall, within the
scope of its administrative functions under the Plan, have full power and
authority (subject to the provisions of the Plan) to establish such rules and
regulations as it may deem appropriate for proper administration of the Plan and
to make such determinations under, and issue such interpretations of, the
provisions of the Plan or any Stock Award Agreement (as defined below) issued
hereunder as it may deem necessary or advisable. Decisions of the Plan
Administrator under the Plan, with respect to the terms of the Plan and any
Stock Award Agreement issued thereunder shall be final and binding on the
Company and all Stock Award recipients ("GRANTEES").
D. SERVICE ON THE PLAN COMMITTEE; INDEMNIFICATION. Service on the
Plan Committee shall constitute service as a Board member, and members of the
Plan Committee shall accordingly be entitled to full indemnification and
reimbursement as Board members for their service on
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the Plan Committee. No member of the Plan Committee shall be liable for any act
or omission made in good faith with respect to the Plan or any Stock Awards
granted under this Plan.
III. ELIGIBILITY
A. ELIGIBLE EMPLOYEES. Only Employees shall be eligible to receive
Stock Awards under the Plan.
B. TERMS OF EACH STOCK AWARD. The Plan Administrator shall, within
the scope of its administrative jurisdiction under the Plan, have full authority
to determine, the Employees eligible to receive Stock Awards under the Plan, the
time or times when Stock Awards are to be made, the number of shares to be
covered by each such Stock Award ("STOCK AWARD SHARES"), the Vesting Schedule
(as defined in a Grantee's Stock Award Agreement), if any, applicable to a
Grantee's Stock Award Shares and/or any and all such other matters relating,
directly or indirectly, to Stock Awards granted hereunder as the Plan
Administrator shall determine in its sole and absolute discretion. The terms of
each Stock Award may differ, in the discretion of the Plan Committee, and
nothing herein shall entitle any Grantee to receive a Stock Award containing all
or any of the same terms as may be contained in the Stock Award granted to any
other Grantee.
IV. STOCK SUBJECT TO THE PLAN
A. STOCK AWARD SHARES. The shares of Corporation stock issuable
under this Plan as Stock Award Shares shall be shares of authorized but unissued
or reacquired Common Stock, including shares repurchased by the Corporation on
the open market. The number of Stock Award Shares initially reserved for
issuance over the term of the Plan shall be 1,200,000 shares.
B. CALENDAR YEAR CAP. No one Employee participating in the Plan may
receive Stock Awards for more than 30,000 shares of Common Stock in the
aggregate per calendar year.
C. REISSUANCE OF STOCK AWARD SHARES. Shares of Common Stock subject
to outstanding Stock Awards shall be available for subsequent issuance under the
Plan to the extent Stock Awards (i) expire or terminate for any reason prior to
vesting or (ii) are cancelled for any reason. Unvested Stock Award Shares issued
under this Plan and subsequently cancelled, terminated, repurchased or
reacquired by the Corporation for any reason, under any circumstances
whatsoever, shall be added back to the number of shares of Common Stock reserved
for issuance under the Plan and shall accordingly be available for regrant
hereunder. However, should shares of Common Stock otherwise issuable under the
Plan be withheld by the Corporation in satisfaction of the withholding taxes
incurred in connection with the grant of a Stock Award, then the number of
shares of Common Stock available for issuance under the Plan shall be reduced by
the gross number of shares subject to such Stock Award.
D. RECAPITALIZATION. If any change is made to the Common Stock by
reason of any stock split, stock dividend, recapitalization, combination of
shares, exchange of shares or other change affecting the outstanding Common
Stock as a class without the Corporation's receipt of consideration (a
"RECAPITALIZATION"), appropriate adjustments shall be made by the Plan
Administrator to (i) the maximum number and/or class of securities issuable
under the Plan, and (ii) the number and/or class of securities for which any one
Employee may be granted Stock Awards hereunder per calendar year. The
adjustments determined by the Plan Administrator shall be final, binding and
conclusive on the parties.
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V. STOCK AWARD TERMS
Shares of Common Stock shall be awarded directly to Employees who have
been designated as eligible Grantees of such Stock Awards. Each such Stock Award
shall be evidenced by a Stock Award Agreement which complies with the terms
specified below.
A. PURCHASE PRICE.
1. Unless specified otherwise by the Plan Administrator in a
Grantee's Stock Award Agreement, each Stock Award share shall be issued at no
cost to the Grantee (i.,e., the purchase price of each Stock Award share shall
be $0 per share).
2. If the purchase price of a share subject to a Stock Award is
greater than $0, such shares may be issued under such Stock Award for any of the
following items of consideration which the Plan Administrator may deem
appropriate in each individual instance:
a. cash or check made payable to the Corporation, or
b. past services rendered to the Corporation (or any
Parent or Subsidiary) or
c. shares of Common Stock of the Corporation.
B. VESTING PROVISIONS.
1. Stock Award Shares issued under this Plan may, in the
discretion of the Plan Administrator, be fully and immediately vested upon grant
or may vest in one or more installments over the Grantee's period of Service or
over some other period of time selected by the Plan Administrator, in it sole
and absolute discretion, or pursuant to such other vesting schedule as the Plan
Administrator may determine at any time and from time to time, in its sole and
absolute discretion. The Vesting Schedule for each Stock Award shall be set
forth in the Notice of Stock Award and/or Stock Award Agreement for such Stock
Award.
2. Any new, substituted or additional securities or other
property (including money paid, other than as a regular cash dividend) which a
Grantee may have the right to receive with respect to the Grantee's unvested
Stock Award Shares by reason of a Recapitalization ("RECAPITALIZATION
DISTRIBUTION") shall be issued subject to (a) the same Vesting Schedule
applicable to the Grantee's unvested Stock Award Shares and (b) such escrow
arrangements, to hold unvested Stock Award Shares and unvested Recapitalization
Distribution, as the Plan Administrator shall deem appropriate, in its sole and
absolute discretion. The term "Stock Award Shares" shall include any
Recapitalization Distribution shares from and after the date of distribution of
such Recapitalization Distribution shares.
3. Subject to Article VI. below, a Grantee shall have full
stockholder rights with respect to all Stock Award Shares, whether or not the
Grantee's interest in such shares is vested. Accordingly, the Grantee shall have
the right to vote such Stock Award Shares and to receive any regular cash
dividends paid on such shares.
4. Should a Grantee cease to remain in Service while holding
one or more unvested Stock Award Shares, then those shares shall be forfeited,
effective as of the date of cessation of the Grantee's Service, and immediately
surrendered to the Corporation for cancellation, and the Grantee shall have no
further stockholder rights from and after such termination date with respect to
those
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forfeited shares. To the extent the surrendered shares were previously issued to
the Grantee for consideration paid in cash or cash equivalent, the Corporation
shall repay to the Grantee the cash consideration paid for the surrendered
shares.
5. The Plan Administrator may, in its sole and absolute
discretion, waive, but only in writing signed and dated by the Plan
Administrator and delivered to the Grantee, the surrender and cancellation of
one or more unvested Stock Award Shares which would otherwise occur upon the
cessation of the Grantee's Service. Such waiver shall result in the immediate
vesting of the Grantee's interest in such Stock Award Shares, but only as to the
specific Stock Award Shares as to which the waiver expressly applies. Such
waiver may be effected at any time, whether before or after the Grantee's
cessation of Service.
C. CORPORATE TRANSACTIONS/CHANGE IN CONTROL. All unvested Stock
Award Shares shall immediately vest, in full, in the event of any Corporate
Transaction or Change of Control, except to the extent such accelerated vesting
is expressly precluded by the Plan Administrator, in its sole and absolute
discretion, in a Grantee's Stock Award Agreement as to all or any portion of the
Stock Award Shares subject to such Stock Award Agreement.
D. DEFERRED COMPENSATION ARRANGEMENTS. The Plan Committee shall have
the authority, in its sole and absolute discretion, upon the request of Grantee
to enter into deferred compensation arrangements with any Grantee with respect
to any or all of such Grantee's Award Shares on such terms and subject to such
conditions as the Plan Committee may determine in its sole and absolute
discretion.
VI. SHARE ESCROW/LEGENDS
Unvested Stock Award Shares may, in the Plan Administrator's sole and
absolute discretion, be held in escrow by the Corporation until the Grantee's
interest in such shares vests, or may be issued directly to the Grantee with
restrictive legends on the certificates evidencing those unvested shares.
VII. TAX WITHHOLDING
A. The Corporation's obligation to deliver Stock Award Shares to a
Grantee upon the vesting of such shares under the Plan shall be subject to the
satisfaction of all applicable Federal, state and local income and employment
tax withholding requirements.
B. The Plan Administrator may, in its discretion, provide any or all
Grantees of unvested Stock Award with the right to use shares of Common Stock in
satisfaction of all or part of the Withholding Taxes to which such holders may
become subject in connection with the vesting of their shares. Such right may be
provided to any such holder in either or both of the following formats:
- The election to have the Corporation withhold, from the
Stock Award Shares otherwise issuable upon the vesting of such shares, a portion
of those shares with an aggregate Fair Market Value equal to the percentage of
the Withholding Taxes (not to exceed one hundred percent (100%)) designated by
the Grantee.
- The election to deliver to the Corporation, at the time the
Stock Award Shares vest, one or more shares of Common Stock previously acquired
by such holder (other than in connection with the vesting triggering the
Withholding Taxes) with an aggregate Fair Market Value equal to the
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percentage of the Withholding Taxes (not to exceed one hundred percent (100%))
designated by the Grantee.
VIII. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Plan shall become effective immediately on the Plan Effective
Date. Stock Awards may be granted at any time on or after the Plan Effective
Date.
B. The Plan shall terminate upon the EARLIER to occur of (i) May 5,
2010, or (ii) the date on which all Stock Award Shares available for issuance
under the Plan shall have been fully awarded and vested. Should the Plan
terminate on May 5, 2010, then all unvested Stock Awards outstanding at that
time shall continue in full force and effect in accordance with the provisions
of this Plan and the applicable Stock Award Agreements.
IX. AMENDMENT OF THE PLAN
The Board shall have complete and exclusive power and authority to
amend or modify the Plan in any or all respects, in its sole and absolute
discretion. However, no such amendment or modification shall adversely affect
the rights and obligations with respect to unvested Stock Awards stock at the
time outstanding under the Plan unless the Grantee consents to such amendment or
modification.
X. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of Stock
Award Shares under the Plan shall be used for general corporate purposes.
XI. REGULATORY APPROVALS
A. The implementation of the Plan and the grant of any Stock Awards
hereunder shall be subject to the Corporation's procurement of all necessary
approvals and permits required by regulatory authorities having jurisdiction
over the Plan and the Stock Awards granted hereunder.
B. No Stock Award Shares shall be issued or delivered under the Plan
unless and until there shall have been compliance with all applicable
requirements of Federal and state securities laws, including the filing and
effectiveness of a Form S-8 registration statement for the shares of Common
Stock issuable under the Plan, and all applicable listing requirements of any
stock exchange (or the Nasdaq National Market, if applicable) on which the
Common Stock is then listed for trading.
XII. NO EMPLOYMENT/SERVICE RIGHTS
Nothing in the Plan shall confer upon any Grantee any right to
continue in Service for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Corporation (or any Parent or
Subsidiary employing or retaining such person) or of the Grantee, which rights
are hereby expressly reserved by each, to terminate such person's Service at any
time for any reason, with or without cause.
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APPENDIX
The following definitions shall be in effect under the Plan:
BOARD shall mean the Corporation's Board of Directors.
CHANGE IN CONTROL shall mean a change in ownership or control of the
Corporation effected through either of the following transactions:
(i) the acquisition, directly or indirectly by any person or related
group of persons (other than the Corporation or a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Corporation), of beneficial ownership (within the meaning of Rule 13d-3 of the
1934 Act) of securities possessing more than fifty percent (50%) of the total
combined voting power of the Corporation's outstanding securities pursuant to a
tender or exchange offer made directly to the Corporation's stockholders, or
(ii) a change in the composition of the Board over a period of
thirty-six (36) consecutive months or less such that a majority of the Board
members ceases, by reason of one or more contested elections for Board
membership, to be comprised of individuals who either (A) have been Board
members continuously since the beginning of such period or (B) have been elected
or nominated for election as Board members during such period by at least a
majority of the Board members described in clause (A) who were still in office
at the time the Board approved such election or nomination.
COMMON STOCK shall mean the Corporation's common stock.
CORPORATE TRANSACTION shall mean either of the following
stockholder-approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities possessing more
than fifty percent (50%) of the total combined voting power of the Corporation's
outstanding securities are transferred to a person or persons different from the
persons holding those securities immediately prior to such transaction, or
(ii) the sale, transfer or other disposition of all or substantially
all of the Corporation's assets in complete liquidation or dissolution of the
Corporation.
CORPORATION shall mean Rhythms NetConnections Inc., a Delaware corporation,
and any corporate successor to all or substantially all of the assets or voting
stock of Rhythms NetConnections Inc. which shall by appropriate action adopt the
Plan.
EMPLOYEE shall mean an individual who is in the employ of the Corporation
(or any Parent or Subsidiary), subject to the control and direction of the
employer entity as to both the work to be performed and the manner and method of
performance.
FAIR MARKET VALUE per share of Common Stock on any relevant date shall be
the closing selling price per share of Common Stock on the date in question, as
such price is reported on the stock exchange, the Nasdaq National Market or such
other over-the-counter quotation service on which the Common Stock is then
listed. If there is no closing selling price for the Common Stock on the date in
question, then the Fair Market Value shall be the closing selling price on the
last preceding date for which such quotation exists.
GRANTEE is defined in Article II.C.
1934 ACT shall mean the Securities Exchange Act of 1934, as amended.
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PARENT shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
PLAN is defined in Article I.
PLAN ADMINISTRATOR is defined in Article II.A.
PLAN COMMITTEE is defined in Article II.A.
PLAN EFFECTIVE DATE shall mean May 5, 2000, the date on which the Plan was
approved by the Board.
RECAPITALIZATION is defined in Article IV.D.
RECAPITALIZATION DISTRIBUTION is defined in Article V.B.2.
SERVICE shall mean the performance of services for the Corporation (or any
Parent or Subsidiary) by a person in the capacity of an Employee.
STOCK AWARD AGREEMENT shall mean the agreement entered into by the
Corporation and the Grantee at the time of the grant of a Stock Award hereunder.
STOCK AWARD SHARES is defined in Article III.B.
SUBSIDIARY shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
VESTING SCHEDULE is defined in the Stock Award Agreement.
WITHHOLDING TAXES shall mean the Federal, state and local income and
employment withholding taxes to which the Grantee of a Stock Award may become
subject in connection with the grant or exercise, as the case may, of such
shares.
