EXHIBIT 10.1
INTERFACE SYSTEMS, INC.
EMPLOYEE STOCK PURCHASE PLAN
1. Purpose. The purpose of the Interface Systems, Inc. Employee
Stock Purchase Plan (the "Plan") is to promote the best interests of
Interface Systems, Inc. (the "Company") and its stockholders by encouraging
employees of the Company to acquire a proprietary interest in the Company,
thus identifying their interests with those of stockholders and encouraging
the employees to make even greater efforts on behalf of the Company. The
Plan is intended to constitute an "employee stock purchase plan" under
Section 423 of the Internal Revenue Code of 1986, as amended (the "Code").
2. Certain Definitions. As used in this Plan, the term
"employee" means an individual with an "employment relationship" with the
Company as defined in Regulation 1.421-7(h) of the Income Tax Regulations;
the term "employment" means employment with the Company, the term "Purchase
Period" means a six month offering period commencing each June 1 and
December 1; and the term "compensation" means cash compensation, not
including overtime and bonuses.
3. Stock. The stock subject to option and purchase under the
Plan shall be the Common Stock of the Company (the "Common Stock") and may
be either authorized and unissued shares or shares that have been reacquired
by the Company. The total amount of Common Stock on which options may be
granted under the Plan shall not exceed 225,000 shares, subject to
adjustment in accordance with Section 12. Shares of Common Stock subject to
any unexercised portion of a terminated, canceled or expired option granted
under the Plan may again be used for option grants under the Plan.
4. Administration. The Plan shall be administered by the
Compensation Committee (the "Committee") of the Board of Directors
("Board"), comprised of nonemployee members of the Board, as defined in
Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended
("Exchange Act"). The Committee may prescribe rules and regulations from
time to time for the administration of the Plan and may decide questions
which may arise with respect to its interpretation or application. The
decisions of the Committee in interpreting the Plan shall be final,
conclusive and binding on all persons, including the Company, its employees
and optionees. In the event of insufficient shares during a Purchase
Period, the Committee shall allocate shares proportionately on the basis of
compensation.
5. Participants. (a) Except as provided in Section 6, below, any
employee who is employed by the Company on the first day of a Purchase
Period is eligible to participate in the Plan in accordance with its terms.
6. Ownership and Purchase Limitations. Notwithstanding anything
herein to the contrary, no employee shall be entitled to participate in an
offering under the Plan if such employee, immediately after a grant under
this Plan, would, in the aggregate, own or hold options to purchase shares
of Common Stock equal to or exceeding five percent (5%) or more of the total
combined voting power or value of all classes of stock of the Company or of
its subsidiary corporations. For the foregoing purposes, the rules of
Section 424(d) of the Code shall apply in determining stock ownership. With
respect to individual employees, Section 424(d) provides that an employee
shall be considered as owning the stock owned directly or indirectly, by or
for his brothers and sisters (whether by the whole or half blood), spouse,
ancestors, and lineal descendants. No employee shall be granted an option
under the Plan which, together with options granted under all employee stock
purchase plans (qualified under Section 423 of the Code) of the Company and
its subsidiaries permits the employee to accrue option rights to purchase
shares in any calendar year in excess of $25,000 of fair market value of
such shares (determined at the time the option is granted). For purposes of
this Plan, the "grant date" shall be the first day of each Purchase Period,
as defined in Section 9(b), below. The Company's non-employee directors are
not eligible to participate in the Plan.
7. Option Price. The option price of the shares shall be the
lower of 85% the fair market value of the Common Stock on first day of the
Purchase Period or 85% of the fair market value of the Common Stock on the
last day of the Purchase Period. For purposes of this paragraph, the fair
market value as of any date and in respect of any share of Common Stock
shall be the last sale price of the Common Stock on The Nasdaq Stock Market,
National Market (the "National Market"), on the date of determination or, if
no such reported sale of the Stock shall have occurred on such date on the
National Market, on the preceding date on which there was such a reported
sale on such National Market.
8. Payment for Option Shares.
(a) Shares Under Option. An eligible employee may elect to
participate in an offering by filing with the Human Resources Department a
payroll deduction form within the election period designated by the Company
prior to each Purchase Period (the "Election Period"). An eligible
employee's election to participate and payroll deduction form from the
preceding Election Period automatically shall carry over to the next
Election Period unless affirmatively revoked by the employee. An employee
who elects to participate may not authorize payroll deductions which, in the
aggregate, are less than one percent (1%) of the employee's cash
compensation during the Purchase Period (not including overtime and bonus
payments) or are more than 15% of the employee's cash compensation during
the Purchase Period (not including overtime and bonus payments). Only whole
shares of' Common Stock may be purchased under the Plan.
(b) A participating employee must authorize payroll
deductions over a six month Period beginning on June 1 or December 1 (the
"Purchase Period"). Purchase Periods automatically shall run successively
unless designated otherwise by the Company. An employee may suspend
payroll deductions during a Purchase Period at any time upon written notice
to the Human Resources Department which shall become effective no later than
the next payroll period following the suspension; provided, however, that
payroll deductions made prior to the suspension shall still be used to
purchase Common Stock for the employee at the end of the Purchase Period.
Upon suspension of such deductions, no further deductions will be made
during the Purchase Period or any future Purchase Periods unless the
employee submits the appropriate form to the Human Resources Department
electing to again participate in the Plan.
(c) Payroll deductions shall commence on the first payroll
date in the Purchase Period and shall continue until the last payroll date
in the Purchase Period; provided, however, that unless an election is
revoked, such election shall continue into successive six month Purchase
Periods.
(d) A participating employee's option shall be deemed to
have been exercised on the last business day of the Purchase Period.
(e) The Company retains the right to designate an exclusive
broker to handle the Common Stock transactions under the Plan. As soon as
practicable after the end of the Purchase Period, the Company shall deliver
to each employee or a designated brokerage account, through a certificate or
electronic transfer, the shares of Common Stock that such employee has
purchased. Any amount that has been deducted and withheld in excess of the
option price automatically shall be applied toward the purchase of option
shares in the next Purchase Period. An employee who elects not to
participate in the following Purchase Period shall receive a check from the
Company for any amount that has been deducted and withheld in excess of the
cost of shares.
9. Interest. No interest shall accrue or be paid on any amounts
paid by payroll deduction by any participating employee.
10. Termination of Employment, Unpaid Leave of Absence or Layoff.
If a participating employee ceases to be employed by the Company for any
reason (with or without severance pay), including but not limited to,
voluntary or forced resignation, retirement, death, layoff, or if an
employee is on an unpaid leave of absence, or during any period of
severance, within a reasonable time after notice of the termination or
unpaid leave of absence, the Company shall issue a check to the former
employee (or executor, administrator or legal representative, if applicable)
in the aggregate amount of the employee's payroll deductions that had not
yet been applied towards the purchase of shares as of the employee's date of
separation.
11. Non-Assignability. No option shall be transferable by an
employee, and an option shall be exercised only by an employee. Upon the
death of a participating employee, his or her executor, administrator or
other legal representative shall receive a check from the Company
representing the aggregate amount of the deceased employee's payroll
deductions that had not yet been applied towards the purchase of option
shares as of the date of death.
12. Adjustments. The total amount of Common Stock for which
options may be granted under the Plan, and the number of shares subject to
any option granted to a participant (both as to the number of shares of
Common Stock and the option price), shall be appropriately adjusted for any
increase or decrease in the number of outstanding shares of Common Stock
resulting from payment of a stock dividend on Common Stock, a subdivision or
combination of shares of Common Stock, or a reclassification of Common
Stock, and, pursuant to the paragraph below, in the event of a merger in
which the Company shall be the surviving corporation.
After any merger of one or more corporations into the Company, or
after any consolidation of the Company and one or more corporations in which
the Company shall be the surviving corporation, each participant shall, at
no additional cost, be entitled upon the exercise of an option, to receive
(subject to any required action by stockholders), in lieu of the number of
shares to which such option shall then be exercised, the number and class of
shares of stock or other securities to which such participant would have
been entitled to receive pursuant to the terms of the agreement of merger or
consolidation if at the time of such merger or consolidation such
participant had been a holder of record of a number of shares of Common
Stock equal to the number of shares to which such option shall then be so
exercised. Comparable rights shall accrue to each participant in the event
of successive mergers or consolidations of the character described above.
Anything contained herein to the contrary, upon the dissolution or
liquidation of the Company or upon any merger or consolidation in which the
Company is not the surviving corporation, the Purchase Period for any option
granted under this Plan shall terminate as of the date of the aforementioned
event, but each participant who is then an employee of the Company or a
subsidiary shall have the right, immediately prior to such dissolution,
liquidation, merger or consolidation, to exercise his option for such
Purchase Period in full on the earlier of the date of the merger or
liquidation or the last day of the Purchase Period.
The foregoing adjustments and the manner of application of the
foregoing provisions shall be determined by the Committee in its sole
discretion. Any such adjustment may provide for the elimination of any
fractional share which might otherwise become subject to an option.
13. Termination and Amendment. The Board may terminate the Plan,
or the granting of options under the Plan, at any time. No option shall be
granted under the Plan after October 30, 2007.
The Board may amend or modify the Plan at any time and from time to
time, but no amendment or modification shall disqualify the Plan under
Section 423 of the Code.
No amendment, modification, or termination of the Plan shall in any
manner affect any option granted under the Plan without the consent of the
participant holding the option.
14. Rule 16b-3 Requirements. Notwithstanding any other provision
of the Plan, the Committee may impose such conditions on the exercise of an
option as may be required to satisfy the requirements of Rule 16b-3 of the
Exchange Act, as amended from time to time (or any successor rule).
15. Rights Prior to Delivery of Shares. No participant shall have
any rights as a stockholder with respect to shares covered by an option
until the issuance of a stock certificate or electronic transfer to the
employee or his brokerage account of such shares. No adjustment shall be
made for dividends or other rights with respect to such shares for which the
record date is prior to the date the certificate is issued or the shares
electronically delivered to a brokerage account.
16. Securities Laws. Anything to the contrary herein
notwithstanding, the Company's obligation to sell and deliver stock pursuant
to the exercise of an option is subject to such compliance with federal and
state laws, rules and regulations applying to the authorization, issuance or
sale of securities as the Company deems necessary or advisable. The Company
shall not be required to sell and deliver stock unless and until it receives
satisfactory assurance that the issuance or transfer of such shares will not
violate any of the provisions of the Securities Act of 1933 or the Exchange
Act, or the rules and regulations of the Securities Exchange Commission
promulgated thereunder or those of any stock exchange on which the stock may
be listed, the provisions of any state laws governing the sale of
securities, or that there has been compliance with the provisions of such
acts, rules, regulations and laws.
The Committee may impose such restrictions on any shares of Common
Stock acquired pursuant to the exercise of an option under the Plan as it
may deem advisable, including, without limitation, restrictions (a) under
applicable federal securities laws, (b) under the requirements of any stock
exchange or other recognized trading market upon which such shares of Common
Stock are then listed or traded, and (c) under any blue sky or state
securities laws applicable to such shares. No shares shall be issued until
counsel for the Company has determined that the Company has complied with
all requirements under appropriate securities laws.
17. Approval of Plan. The Plan shall be subject to the approval
of at least a majority of the votes cast by the holders of the Company's
Common Stock entitled to vote at a meeting of stockholders of the Company
held within 12 months after the October 31, 1997 adoption of the Plan by the
Board. If not approved by stockholders within such 12-month period, the
Plan and any options granted hereunder shall become void and of no effect,
and the participating employees shall receive a check from the Company for
all payroll deductions relating to the Plan.
18. Effect on Employment. Neither the adoption of the Plan nor
the granting of an option pursuant to it shall be deemed to create any right
in any employee to be retained or continued in the employment of the
Company.
19. Use of Proceeds. The proceeds received from the sale of
shares of Common Stock pursuant to the Plan shall be used for corporate
purposes by the Company.
THIS EMPLOYEE STOCK PURCHASE PLAN is hereby executed on this the
21st day of November, 1997.
INTERFACE SYSTEMS, INC.
By:/s/ Robert A. Nero
Robert A. Nero
President
BOARD OF DIRECTORS APPROVAL: October 31, 1997
STOCKHOLDER APPROVAL: