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EXHIBIT 10.2
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GENUITY INC.
OUTSIDE DIRECTORS' COMPENSATION PLAN
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Effective May 22, 2000
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TABLE OF CONTENTS
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<C> <S> <C>
1. PURPOSE................................................................ 1
2. EFFECTIVE DATE AND TERM OF THE PLAN.................................... 1
3. DEFINITIONS............................................................ 1
4. PARTICIPATION.......................................................... 2
5. ADMINISTRATION......................................................... 2
6. OPTIONS................................................................ 3
7. LIMITATIONS ON OPTIONS................................................. 3
8. OPTION AGREEMENTS...................................................... 4
9. REVOCATION OR AMENDMENT OF OPTIONS..................................... 4
10. FORFEITURE OF OPTIONS.................................................. 4
11. AMENDMENT OR TERMINATION OF THE PLAN................................... 5
12. ADJUSTMENT PROVISIONS.................................................. 5
13. NO REQUIRED SEGREGATION OF ASSETS...................................... 6
14. COSTS.................................................................. 6
15. SEVERABILITY........................................................... 6
16. GOVERNING LAW.......................................................... 6
</TABLE>
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Genuity Inc. Outside Directors' Compensation Plan Table of Contents
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1. PURPOSE
The purpose of the Plan is to benefit the shareholders of Genuity Inc. by
increasing the proprietary interests of non-employee directors of Genuity
Inc. or any Related Entity in the growth and success of Genuity Inc. In
addition to the stock options provided for herein, each eligible director
will receive annual cash compensation in the amount of $30,000 or such
other amount as shall be determined by the Board.
2. EFFECTIVE DATE AND TERM OF THE PLAN
The Plan became effective on May 22, 2000. Unless the Plan is terminated
earlier in accordance with Section 11 hereof, the Plan shall remain in full
force and effect until the close of business on the date of the Company's
annual meeting of shareholders in the year 2010, at which time the right to
grant Options under the Plan shall terminate automatically unless the
shareholders of the Company approve an extension or renewal of the Plan.
3. DEFINITIONS
Except where otherwise indicated, the following terms shall have the
definitions set forth below for purposes of the Plan:
"Board" means the Board of Directors of the Company.
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor thereto.
"Committee" means the Executive Compensation Committee of the Board.
"Common Stock" means the Class A common stock of the Company, including
both treasury shares and authorized but unissued shares, or any security of
the Company issued in substitution or exchange therefor or in lieu thereof.
"Company" means Genuity Inc.
"Director" means a member of the Board.
"Fair Market Value" means the average of the high and low sales prices of a
Share on Nasdaq (or any other reporting system or market selected by the
Committee) on the relevant date, or if no sale of Shares is reported for
that date, on the date or dates that the Committee determines, in its sole
discretion, to be appropriate for purposes of the valuation.
"Grant Price" means the price per Share at which Shares may be purchased
under an Option. Except as provided in Section 6(d), below, the Grant
Price shall not be less than the Fair Market Value of the Shares covered by
the Option on the date the Option is granted.
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"Option" means the right to purchase a specified number of Shares, at a
fixed Grant Price, during a specified term (not to exceed ten years from
the date as of which the Grant Price is determined) as the Committee may
determine.
"Option Agreement" means an agreement entered into between the Company and
a Participant, in a form determined by the Committee in its sole
discretion, setting forth the terms and conditions applicable to the
Options granted to the Participant.
"Participant" means a Director who has been granted an Option under the
Plan.
"Plan" means the Genuity Inc. Outside Directors' Compensation Plan, as set
forth herein.
"Related Entity" means a corporation, partnership, joint venture or other
entity in which the Company has an ownership or other proprietary interest
of at least ten percent.
"Share" means a share of Common Stock.
4. PARTICIPATION
Only those individuals who are Directors and who are not employees of the
Company or a Related Company shall participate in the Plan and receive
Options hereunder.
5. ADMINISTRATION
(a) The Plan and all Options granted pursuant thereto shall be
administered by the Committee. All questions of interpretation and
administration with respect to the Plan, Options, and Option
Agreements shall be determined by the Committee in its sole and
absolute discretion, and its determinations shall be final and binding
upon all parties.
(b) The Committee may delegate its authority under subsection (a), above,
to persons other than its members to the extent it deems such action
advisable. Any person to whom the Committee has delegated authority
under subsection (a), above, may receive Options only if the Options
are granted directly by the Committee without delegation.
(c) The Committee may, in its sole discretion, promulgate general
regulations and guidelines governing the administration of the Plan
and the Options granted hereunder.
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6. OPTIONS
(a) At the beginning of each Participant's initial term as a Director,
the Participant shall receive an option to purchase 30,000 Shares. At
the beginning of any subsequent three-year term to which each
Participant may be elected and begin to serve as a Director, the
Participant shall receive an additional option to purchase 30,000
Shares; provided, that a participant whose initial term was less than
three years shall not receive an additional 30,000 options upon his or
her first election to a full three-year term. The Committee shall have
discretion to award a pro rated option to any Director who begins to
serve a term as a Director that is expected to be less than three
years in duration.
(b) The Grant Price shall be payable, at the discretion of the Committee,
by the payment of cash, the delivery of Shares, and/or any other means
that the Committee determines to be consistent with the Plan's
purposes and applicable law.
(c) The Committee also may grant an Option to purchase additional Shares
to a Participant contingent upon the surrender of Shares owned by the
Participant in payment of the Grant Price under an Option or upon the
surrender of Shares by the Participant in payment of withholding tax
liability with respect to an Option.
(d) The initial Option granted to the eligible members of the Company's
initial Board shall be exercisable at the initial public offering
price per Share. Any other Option granted under the Plan shall be
exercisable at the Grant Price.
7. LIMITATIONS ON OPTIONS
(a) The only Options that may be granted under the Plan are those set
forth in Section 6 hereof.
(b) No Option awarded under the Plan shall be assignable or transferable
other than by will or by the laws of descent and distribution. During
the Participant's lifetime, an Option may be exercised only by the
Participant or by the Participant's guardian or legal representative.
(c) No fractional Shares shall be issued in connection with Options under
the Plan. The Committee shall determine whether cash, other
securities, or other property shall be paid or transferred in lieu of
fractional Shares, or whether fractional Shares or any rights thereto
shall be canceled, terminated, or otherwise eliminated.
(d) Except as provided in subsection (c), above, and Section 10 hereof,
payments of Options shall be wholly in Shares. The Committee, in its
sole
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discretion, shall determine whether the Shares shall be subject to
restrictions on transfer and/or forfeiture provisions.
8. OPTION AGREEMENTS
An Option may be evidenced by an Option Agreement, the terms of which have
been approved by the Committee, setting forth the terms and conditions
applicable to the Option, including
(a) terms and conditions governing the extent (if any) to which the Option
may become vested or exercisable or be exercised or paid,
(b) terms and conditions governing the disposition of the Option in the
event of disability, death or other termination of a Participant's
status as a Director, and
(c) a provision that a Participant shall have no rights as a shareholder
with respect to any Shares covered by an Option until the date on
which the Participant or his nominee becomes the holder of record of
such Shares.
9. REVOCATION OR AMENDMENT OF OPTIONS
(a) Except as provided in subsection (b) and Section 10, below, the
Committee may not, without the written consent of the Participant,
revoke an Option Agreement, and may not without such written consent
make or change any determination or change any term, condition, or
provision affecting an Option if the determination or change would
adversely affect the Option or a Participant's rights thereto.
(b) The Committee may at any time and in any manner modify the terms of an
Option that relate to the early termination of the Option after the
Participant's separation from the Board; provided that such
modification shall not apply to an Option to the extent that it has
been previously exercised.
10. FORFEITURE OF OPTIONS
(a) A Participant who does not complete the term as a Director for
which an Option was granted shall, upon removal or withdrawal from the
Board, forfeit any then-unvested portion of the Option.
(b) Except to the extent a shorter time period is dictated by another
provision of the Plan or by an Award Agreement, any portion of an
Option that is not exercised within five years of the Participant's
separation or withdrawal from the Board shall be forfeited.
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11. AMENDMENT OR TERMINATION OF THE PLAN
The Board may, from time to time, alter, amend, suspend, or terminate the
Plan as it shall deem advisable, subject to any requirement for shareholder
approval imposed by applicable law. The termination of the Plan shall not
cause any previously granted Options to terminate. After the termination
of the Plan, any previously granted Options shall remain in effect and
shall continue to be governed by the terms of the Plan, the Options, and
any applicable Option Agreements. This Section applies regardless of
whether the termination of the Plan occurs pursuant to Section 2 hereof or
pursuant to this Section 11.
12. ADJUSTMENT PROVISIONS
If the Committee determines that any dividend or other distribution
(whether in the form of cash, Shares, other securities, or other property),
extraordinary cash dividend, recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spin-off,
combination, repurchase, or exchange of Shares or other securities, the
issuance of warrants or other rights to purchase Shares or other
securities, or other similar corporate transaction or event affects the
Shares with respect to which Options have been or may be issued under the
Plan and that an adjustment is appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made
available under the Plan, then the Committee shall, in a manner that the
Committee deems appropriate to prevent such dilution or enlargement, adjust
any or all of
(a) the number and type of securities that thereafter may be issued under
the Plan,
(b) the number and type of securities subject to outstanding Options, and
(c) the Grant Price with respect to any outstanding Option, or, if deemed
appropriate, make provision for a cash payment to the holder of an
outstanding Option.
The number of Shares subject to any Option shall always be a whole number.
Subject to any required action by the Company's shareholders, if the
Company is a party to any merger or consolidation, a Participant holding an
outstanding Option shall be entitled to receive, upon the exercise of the
Option, the same per Share consideration on the same terms that a holder of
the same number of Shares that are subject to the Option would be entitled
to receive pursuant to the merger or consolidation.
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13. NO REQUIRED SEGREGATION OF ASSETS
The Company shall be required to segregate any assets that may at any time
be represented by Options pursuant to the Plan.
14. COSTS
The Committee may require a Participant or beneficiary to bear all or part
of the cost of exercising an Option or issuing Shares under the Plan.
15. SEVERABILITY
If any provision of the Plan shall be held unlawful or otherwise invalid or
unenforceable in whole or in part, the unlawfulness, invalidity, or
unenforceability shall not affect any other provision of the Plan or part
thereof, each of which shall remain in full force and effect.
16. GOVERNING LAW
To the extent not preempted by federal law, the provisions of the Plan will
be construed and enforced in accordance with the laws of the State of
Delaware, excluding any conflicts or choice of law rule or principle that
might otherwise refer construction or interpretation of this provision to
the substantive law of another jurisdiction.
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