EXHIBIT 10(b2)
INTERLEAF, INC.
1987 EMPLOYEE STOCK PURCHASE PLAN
AMENDED EFFECTIVE AS OF MAY 1, 1989, APRIL 11, 1991, MAY 2, 1993
AND MAY 3, 1996.
1. PURPOSES.
The 1987 Employee Stock Purchase Plan of Interleaf, Inc. (the "Plan") is
intended to provide a method whereby employees of Interleaf, Inc. and its
subsidiary corporations (hereinafter collectively referred to, unless the
context otherwise requires, as "the Company") will have an opportunity to
acquire a proprietary interest in the Company through the purchase of shares
of the common stock of the Company ("Common Stock"). It is the intention of
the Company to have the Plan qualify as an "employee stock purchase plan"
under Section 423 of the Internal Revenue Code of 1986, as amended (the
"Code"). The provisions of the Plan shall, accordingly, be construed so as to
extend and limit participation in a manner consistent with the requirements
of that Section of the Code.
2. DEFINITIONS.
(a) "base pay" means regular straight-time earnings (as the same may be
adjusted from time to time) but excluding payments for overtime, shift
differentials, incentive compensation, bonuses and other special payments.
(b) "employee" means any person who is customarily employed for 20 or
more hours per week and more than five months in a calendar year by the
Company or by a subsidiary corporation.
(c) "Offering Commencement Date" means the applicable date on which an
Offering under the Plan commences pursuant to Paragraph 4.
(d) "Offering Termination Date" means the applicable date on which an
Offering under the Plan terminates pursuant to Paragraph 4.
(e) "subsidiary corporation" means any present or future corporation
which (i) is a "subsidiary corporation" as that term is defined in Section
425 of the Internal Revenue Code of 1954 and (ii) is designated as a
participant in the Plan by the Board of Directors or Committee described in
Paragraph 14.
(f) "total compensation" means base pay plus payments for overtime,
shift differentials, incentive compensation, bonuses and other special
payments.
3. ELIGIBILITY.
(a) Any employee who shall have completed three months employment and
shall be employed by the Company on the applicable Offering Commencement Date
shall be eligible to participate in the Plan.
(b) Any provision of the Plan to the contrary notwithstanding, no
employee shall be granted an option to participate in the Plan:
(i) if, immediately after the grant, such employee would own stock,
and/or hold outstanding options to purchase stock, possessing 5% or more
of the total combined voting power or value of all classes of stock of
the Company
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or of any subsidiary of the Company (for purposes of this
Paragraph the rules of Section 425(d) of the Code shall apply in
determining stock ownership of any employee); or
(ii) which permits his or her rights to purchase stock under all
employee stock purchase plans maintained by the Company and its
subsidiaries to accrue at a rate which exceeds $25,000 of the fair
market value of the stock (determined at the time such option is
granted) for each calendar year in which such option is outstanding at
any time.
4. OFFERING DATES.
The Plan will be implemented by sixteen (16) offerings (referred to
herein collectively as "Offerings" and individually as an "Offering"), of a
maximum of 50,000 shares (subject to adjustment as provided in Paragraphs
13(a) and (18) each of Common Stock for the first four Offerings and a
maximum of the total shares then remaining available to be issued and sold
under the Plan for the final thirteen Offerings, as follows:
(a) Offering I shall commence on May 1, 1987, and terminate on October
31, 1987.
(b) Offering II shall commence on November 1, 1987, and terminate on
April 30, 1988.
(c) Offering III shall commence on May 1, 1988, and terminate on October
31, 1988.
(d) Offering IV shall commence on November 1, 1988, and terminate on
April 30, 1989.
(e) Offering V shall commence on or about May 1, 1989, and terminate on
or about October 31, 1989.
(f) Offering VI shall commence on or about November 1, 1989, and
terminate on or about April 30, 1990.
(g) Offering VII shall commence on or about May 1, 1990, and terminate
on or about October 31, 1990.
(h) Offering VIII shall commence on or about November 1, 1990, and
terminate on or about April 30, 1991.
(i) Offering IX shall commence on or about May 1, 1991, and terminate on
or about April 30, 1992.
(j) Offering X shall commence on or about May 1, 1992, and terminate on
or about April 30, 1993.
(k) Offering XI shall commence on or about May 1, 1993, and terminate on
or about April 30, 1994.
(l) Offering XII shall commence on or about May 1, 1994, and terminate
on or about April 30, 1995.
(m) Offering XIII shall commence on or about May 1, 1995, and terminate
on or about April 30, 1996.
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(n) Offering XIV shall commence on or about May 1, 1996, and terminate
on or about April 30, 1997.
(o) Offering XV shall commence on or about May 1, 1997, and terminate on
or about April 30, 1998.
(p) Offering XVI shall commence on or about May 1, 1998, and terminate
on or about April 30, 1999.
Participation in any one or more of the sixteen (16) Offerings under the Plan
shall neither limit, nor require, participation in any other Offering.
5. PARTICIPATION.
All eligible employees will become participants in an Offering on the
applicable Offering Commencement Date. Payroll deductions for a participant
shall commence on the applicable Offering Commencement Date of the Offering
and shall end on the Offering Termination Date of such Offering, unless
sooner terminated pursuant to Paragraph 11.
6. PAYROLL DEDUCTIONS.
(a) Participants may elect to have amounts withheld from their total
compensation by completing an authorization for a payroll deduction
("Authorization") on the form provided by the Company and filing it with the
Human Resources Department. At the time a participant files his Authorization
for a payroll deduction, the participant shall elect to have deductions made
from his or her pay on each payday during the time he or she is a
participant in an Offering at the rate of 0, 1, 2, 3, 4, 5, 6, 7, 8, 9 or 10%
of his or her total compensation. If a participant has not filed an
Authorization for the applicable Offering at least seven (7) days prior to
the applicable Offering Commencement Date, he or she shall be deemed to file
an Authorization electing to withhold 0% of total compensation.
(b) All payroll deductions made for a participant shall be credited to
his or her account maintained by the Company under the Plan. A participant
may not make any separate cash payment into such account.
(c) Except as provided in Paragraphs 8(b) or 10, a participant may only
make changes to the rate of deductions from his or her total compensation
during an Offering by completing a new Authorization on the form provided by
the Company and filing it with the Human Resources Department as provided
herein. Such new Authorization shall be effective upon the commencement of
the first pay period subsequent to its filing. A participant may change his
or her Authorization at any time (subject to limitations on the frequency of
such changes as may be imposed by rules adopted by the "Committee" (as
defined in Paragraph 13)).
7. GRANTING OF OPTION.
(a) For each of the Offerings, a participating employee shall be deemed
to have been granted an option (the "Option") on the applicable Offering
Commencement Date, to purchase a maximum number of shares of the Common Stock
equal to an amount determined as follows: 85% of the market value of a share
of the Company's Common Stock on the applicable Offering Commencement Date
shall be divided into an amount equal to 12% of the employee's estimated
annualized total compensation as
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of such Offering Commencement Date. For all purposes of the Plan, the market
value of the Company's Common Stock shall be determined as provided in clause
(i) of subparagraph (b) below.
Estimated annualized total compensation of participating employees
shall be determined as follows: (i) in the case of full-time employees
normally paid on an hourly rate, by multiplying his or her annualized base
pay by 105%; (ii) in the case of salaried employees not eligible for bonuses,
his or her annualized base pay; (iii) in the case of salespersons, two times
annualized base pay; and (iv) in the case of employees eligible for bonuses,
annualized base pay plus 80% of the maximum eligible bonuses as determined by
management by objective for the current fiscal year.
The annualized base pay of participating employees shall be determined
as follows: (i) in the case of a full-time employee normally paid on an
hourly rate, by multiplying his or her normal hourly rate of base pay by
2080, (ii) in the case of a part-time employee normally paid on an hourly
rate, by multiplying his or her normal hourly rate of base pay by the product
of 52 times the number hours in his or her normal work week, (iii) in the
case of an employee normally paid at a bi-weekly rate, by multiplying his or
her normal bi-weekly rate of base pay by 26, (iv) in the case of a part-time
employee normally paid at a weekly rate, by multiplying his or her normal
weekly rate of base pay by 52; and (v) in the case of an employee normally
paid at a monthly rate, by multiplying his or her normal monthly rate of base
pay by 12.
(b) The purchase price of a share of Common Stock purchased pursuant to
the Plan during each Offering (the "Option Exercise Price") shall be the
lower of:
(i) 85% of the last sale price of the Common Stock on the NASDAQ
National Market System, as reported in THE WALL STREET JOURNAL, on the
applicable Offering Commencement Date (or on the next regular business
date on which shares of Common Stock shall be traded if no shares of
Common Stock shall have been traded on such Offering Commencement Date);
or
(ii) 85% of the last sale price of Common Stock on the NASDAQ
National Market System, as reported in THE WALL STREET JOURNAL, on the
applicable Offering Termination Date (or on the next regular business
date on which shares of Common Stock shall be traded if no shares of
Common Stock shall have been traded on such Offering Termination Date).
8. EXERCISE OF OPTION.
With respect to each Offering during the term of the Plan:
(a) Unless a participant gives written notice of withdrawal to the
Company as provided in Paragraphs 8(b) and 10, his or her Option will be
deemed to have been exercised automatically on the Offering Termination Date
applicable to such Offering, for the purchase of the number of full shares of
Common Stock which the accumulated payroll deductions (without interest) in
his or her account maintained by the Company under the Plan at that time will
purchase at the applicable Option Exercise Price (but not in excess of the
number of shares for which options have been granted the employee pursuant to
Paragraph 7(a)), and any excess in his or her account at that time will be
returned to him or her, with simple interest at the rate of 4% per annum,
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based on the assumption that such excess comprises funds most recently
deducted from the participant's pay; provided that any excess returned on
account of fractional shares will not be credited with any interest.
(b) By written notice to the Human Resources Department of the Company
at any time prior to the Offering Termination Date applicable to any such
Offering, a participant may elect to withdraw all, but not less than all, the
accumulated payroll deductions in his or her account at such time, with
simple interest computed at the rate of 4% per annum as aforesaid.
(c) Fractional shares will not be issued under the Plan and any
accumulated funds in a participant's account which would have been used to
purchase a fractional shares or which are in excess of the limitations of
Paragraph 7(a) shall be returned to an employee promptly following the
termination of an Offering.
9. DELIVERY.
As promptly as practicable after the Offering Termination Date of each
Offering, the Company will deliver to each participant, as appropriate, the
certificate or certificates representing the shares of Common Stock purchased
upon the exercise of such participant's Option.
10. WITHDRAWAL.
(a) As indicated in Paragraph 8(b), a participant may withdraw payroll
deductions credited to his or her account with the Company under any Offering
at any time prior to the applicable Offering Termination Date by giving
written notice of withdrawal to the Human Resources Department. All of the
participant's payroll deductions credited to his or her account will be paid
to the participant promptly after receipt of such notice of withdrawal and no
further funds will be credited to his or her account during such Offering.
The Company may, at its option, treat any attempt by an employee to borrow on
the security of accumulated payroll deductions as an election, under
Paragraph 8(b) to withdraw such payroll deductions.
(b) A participant's withdrawal from any Offering will not have any
effect upon his or her eligibility to participate in any succeeding Offering
or in any similar plan which may hereafter be adopted by the Company.
(c) Upon termination of the participant's employment for any reason,
including retirement but excluding death or disability while in the employ of
the Company, the payroll deductions credited to his or her account will be
returned to the participant, with simple interest at the rate of 4% per
annum, or, in the case of his or her death subsequent to the termination of
employment, to the person or persons entitled thereto under Paragraph 14.
(d) Upon termination of the participant's employment because of
disability or death, the participant or his or her beneficiary (as defined in
Paragraph 14) shall have the right to elect, by written notice given to the
Company's Human Resources Department prior to the expiration of the period of
30 days commencing with the date of the disability or death of the
participant, either
(i) to withdraw all of the funds credited to the participant's
account under the Plan with simple interest at the rate of 4% per annum;
or
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(ii) to exercise the participant's Option on the Offering
Termination Date next following the date of the participant's disability
or death for the purchase of the number of full shares of Common Stock
which the accumulated funds in the participant's account at the date of
the participant's disability or death will purchase at the applicable
Option Exercise Price, and any excess in such account will be returned
to the participant or said beneficiary.
If no such written notice of election is received by the Human
Resources Department, the participant or beneficiary shall automatically be
deemed to have elected to withdraw the funds credited to the participant's
account at the date of the participant's disability or death and the same
will be paid promptly to the participant or said beneficiary with simple
interest at the rate of 4% per annum as aforesaid.
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11. INTEREST.
No interest will be paid or allowed on any money paid into the Plan or
credited to the account of any participant employee except upon withdrawal as
provided under Paragraphs 8(b) and 10 or upon the return of funds credited to
the account as provided under Paragraph 12(a). In the event of the return of
excess funds under Paragraphs 8(a) and 12(a), interest thereon, if any, shall
be computed assuming that such excess comprises funds most recently deducted
from the participant's pay.
12. STOCK.
(a) Subject to adjustment as provided in Paragraph 17, the maximum
number of shares of Common Stock of the Company which may be issued and sold
under the Plan is 2,500,000 shares. Such shares may be authorized and
unissued shares or may be shares issued and thereafter acquired by the
Company. The maximum number of shares of Common Stock which shall be made
available for sale under the Plan shall be 50,000 shares, subject to
adjustment as provided in Paragraph 17, for each of the first four Offerings
and the total shares then remaining available to be issued and sold under the
Plan for each of the remaining Offerings. For Offerings XI, XII, XIII, XIV,
XV, and XVI, such limit shall not exceed 250,000 shares of common stock for
each of said Offering. If the total number of shares for which Options are
exercised on any Offering Termination Date in accordance with Paragraph 8
exceeds the number of shares made available, the Company shall make a pro
rata allocation of the shares available for delivery and distribution in as
nearly a uniform manner as shall be practicable and as it shall determine to
be equitable, and the balance of funds credited to the account of each
participant under the Plan shall be returned to him or her as promptly as
possible, with simple interest on such balance at the rate of 4% per annum,
based on the assumption that such excess comprises funds most recently
deducted from the participant's pay. If less than the number of shares made
available are purchased during an Offering, the amount not purchased may be
carried over to and made available during any subsequent Offering.
(b) The participant will have no interest in Common Stock covered by his
or her Option until such Option has been exercised.
(c) Common Stock to be delivered to a participant under the Plan will be
registered in the name of the participant, or, if the participant so directs,
by written notice to the Company prior to the Offering Termination Date
applicable thereto, in the names of the participant and one such other person
as may be designated by the participant, as joint tenants with rights of
survivorship, to the extent permitted by applicable law.
13. ADMINISTRATION.
The Plan shall be administered by the Compensation Committee appointed by
the Board of Directors of the Company (the "Committee"). The officer of the
Company charged with day-to-day administration of the Plan shall, for matters
involving the Plan, be an ex-officio member of that Committee. The
interpretation and construction of any provision of the Plan and the adoption
of rules and regulations for administering the Plan shall be made by the
Committee, subject, however, at all times to the final approval of the Board
of Directors of the Company. Such rules may include, without
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limitation, restrictions on the frequency of changes in withholding rates.
Determinations made by the Committee and approved by the Board of Directors
of the Company with respect to any matter or provision contained in the Plan
shall be final, conclusive and binding upon the Company and upon all
participants, their heirs or legal representatives. Any rule or regulation
adopted by the Committee shall remain in full force and effect unless and
until altered, amended, or repealed by the Committee or the Board of
Directors of the Company.
14. DESIGNATION OF BENEFICIARY.
A participant may file a written designation of a beneficiary who is to
receive any shares of Common Stock and/or cash in the event of the death of
the participant prior to the delivery of such shares or cash to the
participant. Such designation of beneficiary may be changed by the
participant at any time by written notice to the Human Resources Department
of the Company. Within 30 days after the participant's death, the beneficiary
may, as provided in Paragraph 10(d), elect to exercise the participant's
Option when it becomes exercisable on the Offering Termination Date of the
then current Offering. Upon the death of a participant and upon receipt by
the Company of proof of the identity and existence at the participant's death
of a beneficiary validly designated by the participant under the Plan, and
notice of election of the beneficiary to exercise the participant's Option,
the Company shall deliver such stock and/or cash to such beneficiary. In the
event of the death of a participant and in the absence of a beneficiary
validly designated under the Plan who is living at the time of such
participant's death, the Company shall deliver such cash to the executor or
administrator of the estate of the participant, or if no such executor or
administrator has been appointed (to the knowledge of the Company) the
Company, in its discretion, may deliver such cash to the spouse or to any one
or more dependents of the participant as the Company may determine. No
beneficiary shall prior to the death of the participant by whom he has been
designated acquire any interest in the stock or cash credited to the
participant's account maintained by the Company under the Plan.
15. TRANSFERABILITY.
Neither funds credited to a participant's account nor any rights with
regard to the exercise of an Option or to receive stock under the Plan may be
assigned, transferred, pledged, or otherwise disposed of in any way by the
participant otherwise than by will or the laws of descent and distribution.
Any such attempted assignment, transfer, pledge, or other disposition shall
be without effect, except that the Company may treat such act as an election
to withdraw funds in accordance with Paragraph 8(b).
16. USE OF FUNDS.
All funds received or held by the Company under this Plan may be used by
the Company for any corporate purpose and the Company shall not be obligated
to segregate such funds.
17. EFFECT OF CHANGES OF COMMON STOCK.
In the event of any changes of outstanding shares of the Common Stock by
reason of stock dividends, subdivisions, combinations and exchanges of
shares, recapitalizations, mergers in which the Company is the surviving
corporation,
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consolidations, and the like, the aggregate number and class of shares
available under the Plan and the Option Exercise Price per share shall be
appropriately adjusted by the Board of Directors of the Company, whose
determination shall be conclusive. Any such adjustments may provide for the
elimination of any fractional shares which would otherwise become subject to
any Options.
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18. AMENDMENT OR TERMINATION.
The Board of Directors of the Company may at any time terminate or amend
the Plan. Except as hereinafter provided, no such amendment may make any
change in Options previously granted which would adversely affect the rights
of any participant. In addition, no amendment may be made to the Plan without
prior approval of the shareholders of the Company if such amendment would (a)
materially increase the benefits accruing to participants under the Plan, (b)
materially increase the number of shares which may be issued under the Plan,
or (c) materially modify the requirements as to eligibility for participation
under the Plan.
19. NOTICES.
All notices or other communications by a participant to the Company under
or in connection with the Plan shall be deemed to have been duly given when
received by the Human Resources Department.
20. MERGER OR CONSOLIDATION.
If the Company shall at any time merge into or consolidate with another
corporation and the Company is the surviving entity, the holder of each
option then outstanding will thereafter be entitled to receive at the next
Offering Termination Date upon the automatic exercise of such Option under
Paragraph 8(a) (unless previously withdrawn pursuant to Paragraph 10) for
each share as to which such Option shall be exercised the securities or
property which a holder of one share of the Common Stock was entitled to
receive upon and at the time of such merger or consolidation, and the Board
of Directors of the Company shall take such steps in connection with such
merger or consolidation as the Board of Directors shall deem necessary to
assure that the provisions of Paragraph 17 shall thereafter be applicable, as
nearly as reasonably may be, to such securities or property. In the event of
a merger or consolidation in which the Company is not the surviving entity,
or of a sale of assets in which the Company is not the surviving entity, the
Plan shall terminate, and all funds credited to participants' accounts shall
be returned to them, with simple interest at the rate of 4% per annum.
21. APPROVAL OF SHAREHOLDERS.
All grants of options provided under any amendments shall be conditional
upon the approval of the Plan by the shareholders of the Company at its next
annual meeting. If such shareholder approval is not obtained at the Company's
next annual meeting of shareholders, any options previously granted under the
amendment to the Plan shall terminate and no further options shall be
granted. In such event, the balance of funds credited to the account of each
participant under the Plan shall be returned to him or her as promptly as
possible, with simple interest computed upon such balance at the rate of 4%
per annum.
22. REGISTRATION AND QUALIFICATION OF THE PLAN UNDER APPLICABLE SECURITIES
LAWS.
No Option shall be granted under the Plan until such time as the Company
has qualified or registered the shares which are subject to the Options under
all applicable state and federal securities laws to the extent required by
such laws.
Approved by the Board of Directors on February 27, 1987.
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Approved by the Shareholders on August 14, 1987.
Amended by the Board of Directors effective May 1, 1989 and approved by
the shareholders at a Special Meeting in Lieu of an Annual Meeting of
Shareholders held August 11, 1989.
Amended by the Board of Directors effective April 11, 1991, and approved
by the Shareholders at a Special Meeting in Lieu of an Annual Meeting of
Shareholders held on August 9, 1991.
Amended by the Board of Directors on May 2, 1993, and approved by
Shareholders at a Special Meeting in Lieu of an Annual Meeting of
Shareholders held on August 5, 1993.
Amended by the Board of Directors on May 3, 1996, and approved at an
Annual Meeting of Shareholders held on August 8, 1996.
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