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EXHIBIT 10.3
INTERFACE SYSTEMS, INC.
1993 STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
(AS AMENDED AND RESTATED ON AUGUST 8, 1997)
1. CERTAIN DEFINITIONS.
The "Board" is the Board of Directors of the Company.
The "Code" is the Internal Revenue Code of 1986, as amended.
The "Common Stock" is the common stock, $.10 par value per share, of
the Company.
The "Company" is Interface Systems, Inc., a Delaware corporation.
"Disabled" or "Disability" means permanently disabled as defined in
Section 22(e)(3) of the Code.
"Employee" means an individual with an "employment relationship" with
the Company, or any Parent or Subsidiary, as defined in Regulation 1.421-7(h)
promulgated under the Code, and shall include, without limitation, employees who
are directors of the Company, or any Parent or Subsidiary.
"Employment" means the state of being an Employee.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" shall mean the last sale price on the Nasdaq Stock
Market National Market, as reported in the Wall Street Journal, for the last
preceding day on which the Common Stock was traded prior to the date with
respect to which the fair market value is to be determined, as determined by the
Board of Directors in accordance herewith.
A "Nonqualified Stock Option" is an option granted under the Plan other
than an Incentive Stock Option, intended to meet the requirements of Section 422
of the Code.
The "Plan" is the 1993 Stock Option Plan for Non-Employee Directors.
2. PURPOSE.
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The purpose of the Plan is to promote the best interests of the Company
and its shareholders by attracting and retaining the best available personnel to
serve as directors of the Company, to provide the non-employee directors with
additional incentive to direct the Company's future affairs in the long-term
benefit of the Company and its shareholders and to encourage continued service
on the Board.
3. ADMINISTRATION.
The Board of Directors shall interpret the Plan as it deems necessary
or advisable for administration of the Plan. The decision of the Board on any
matter on which it may make a determination under the immediately preceding
sentence shall be final and binding on all participants.
4. PARTICIPANTS.
Participants in the Plan shall be directors of the Company who are not
Employees and who are members of the Board on the date an option is granted
under the Plan.
5. STOCK.
The stock subject to options under the Plan shall be the Common Stock.
The total amount of Common Stock on which options may be granted under the Plan
shall not exceed 175,000 shares, subject to adjustment in accordance with
Section 11. Shares subject to any unexercised portion of a terminated, canceled,
forfeited or expired option granted under the Plan may again be available for
subsequent option grants under the Plan.
6. AWARD OF OPTIONS.
(a) Automatic Grants.
On the later of the effective date of the Plan or the date on
which a participant first becomes a member of the Board, each
participant shall, automatically and without discretion, be granted an
initial option to purchase 6,000 shares of Common Stock (a
"Pre-Amendment Option") with an exercise price equal to the Fair Market
Value per share of Common Stock on the date of grant. Effective January
11, 1996, on the later of the effective date of the Plan or the date on
which a participant becomes a member of the Board, each participant
shall automatically and without discretion be granted an initial option
to purchase 5,100 shares of Common Stock (an "Initial Option") with an
exercise price equal to the Fair Market Value per share of Common Stock
on the day of grant. Subsequent thereto, (a) on January 11, 1996, and
every third January 11 thereafter, until the termination of the Plan,
every participant who is a member of the Board of Directors on January
11, 1996, shall automatically and without discretion be granted an
option to purchase 5,100 shares of Common Stock (a "Subsequent Option")
with an exercise price equal to the Fair Market
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Value per share of Common Stock on the date of grant, and (b) on the
third anniversay of the date a person became a member of the Board of
Directors and, thereafter, on the third anniversary of the date of
grant of the prior Subsequent Option until the termination of the Plan,
every participant who becomes a member of the Board of Directors after
January 11, 1996, shall automatically and without discretion be granted
a Subsequent Option to purchase 5,100 shares of Common Stock with an
exercise price equal to the Fair Market Value per share of Common Stock
on the date of the grant. Pre-Amendment, Initial and Subsequent Options
may be exercised in installments as follows: (i) Beginning on the date
after the first anniversary date of grant, an option may be exercised
up to 1/3 of the shares subject to the option; (ii) After the
expiration of each succeeding anniversary date of the grant, the option
may be exercised up to an additional 1/3 of the shares subject to
option, so that after the expiration of the third anniversary the
option shall be exercisable in full; (iii) To the extent no exercised,
installments shall be cumulative and may be exercised in whole or in
part.
(b) Discretionary Grants.
Subject to the limitations set forth in the Plan, the Board of
Directors from time to time may grant options to such participants and
for such number of shares of Common Stock and upon such other terms
(including, without limitation, the exercise price and the times at
which the option may be exercised) as it shall designate (a
"Discretionary Option"). The exercise price per share for Discretionary
Options shall not be less than the Fair Market Value per share of the
Common Stock on the date of grant and the expiration date shall be no
later than the tenth anniversary of the date of grant.
(c) General.
References herein to Options shall mean Pre-Amendment,
Initial, Subsequent and Discretionary Options, unless otherwise
provided. Options granted pursuant to this Plan shall be Nonqualified
Stock Options. Each option granted under the Plan shall meet all the
terms and conditions of the Plan.
7. PAYMENT FOR SHARES.
The purchase price for shares of Common Stock to be acquired upon
exercise of an option granted hereunder shall be paid in full, at the time of
exercise, in cash, by certified check, bank draft or money order or by tendering
to the Company shares of Common Stock then owned by the participant, duly
endorsed for transfer or with duly executed stock power attached, which shares
shall be valued at their Fair Market Value as of the date of such exercise and
payment. Notwithstanding the foregoing, the option exercise price may be paid by
delivery to the Company of a properly executed exercise notice, acceptable to
the Company, together with irrevocable instructions to the participant's broker
to deliver to the Company a sufficient amount of cash to pay the exercise price,
in accordance with a written agreement, if any, between the Company and the
brokerage firm ("Cashless Exercise").
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8. NON-ASSIGNABILITY.
No option shall be transferable by a participant except by will or the
laws of descent and distribution or pursuant to a qualified domestic relations
order as defined by the Code or Title I of the Employee Retirement Income
Security Act, or the rules thereunder. During the lifetime of a participant, an
option shall be exercised only by the optionee. No transfer of an option shall
be effective to bind the Company unless the Company shall have been furnished
with written notice thereof and such evidence as the Company may deem necessary
to establish the validity of the transfer and the acceptance by the transferee
of the terms and conditions of the option.
9. TERMINATION OF DIRECTORSHIP.
(a) If, prior to the date that an option shall first become
exercisable, the participant shall cease to be a director of the Company, with
or without cause, or due to the act, death, Disability, or retirement of the
participant, the participant's right to exercise the option shall terminate and
all rights thereunder shall cease. (b) If, on or after the date that an option
shall first become exercisable, a participant shall cease to be a director of
the Company for any reason other than death or Disability, the participant shall
have the right, prior to the earlier of (i) the expiration of the option or (ii)
the day which is three months after the date on which the Participant ceased to
be a director of the Company, to exercise the option to the extent that it was
exercisable and is unexercised on the date the participant ceased to be a
director of the Company, subject to any other limitation on the exercise of the
option in effect at the date of exercise. (c) If, on or after the date that an
option shall have become exercisable, the participant shall die or become
Disabled which a director of the company or while such option remains
exercisable, the participant or the executor or administrator of the estate of
the participant (as the case may be), or the person or persons to whom the
option shall have been transferred by will or by the laws of descent and
distribution, shall have the right, prior to the earlier of (i) the expiration
of the option or (ii) the day which is one year after the date of the
participant's death or Disability to exercise the option to the extent that it
was exercisable and unexercised on the date of death, subject to any other
limitation on exercise in effect at the date of exercise.
10. ADJUSTMENTS.
In the event that any dividend or other distribution (whether in the
form of cash, Common Stock, other securities, or other property),
recapitalization, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase, or exchange of
Common Stock, or other securities of the Company, issuance of warrants or other
rights to purchase Common Stock or other securities of the Company, or other
similar corporate transaction or event affects the common Stock such that an
adjustment is determined by the Board of Directors to be appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits intended
to be made available under the Plan, then the Board of Directors shall, in such
manner as it may deem equitable, adjust any or all of (a) the number and type of
shares of Common Stock or other securities which thereafter may be made the
subject of options, (b) the number and type of shares
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of Common Stock or other securities subject to outstanding options, and (c) the
exercise price with respect to any option, or, if deemed appropriate, make
provision for a cash payment to the holder of an outstanding option; provided,
however, that the number of shares of Common Stock subject to any option shall
always be a whole number.
11. RIGHTS PRIOR TO ISSUANCE OF SHARES.
No participant shall have any rights as a shareholder with respect to
any shares covered by an option until the issuance of a stock certificate to the
participant for 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 such certificate is issued.
12. 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 ten years after
adoption of the Plan by the Board or approval of the Plan by the Company's
shareholders, whichever is earlier. Termination of the Plan shall not affect the
rights of the holders of any options previously granted.
The Board may amend or modify the Plan at any time and from time to
time. 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.
13. APPROVAL OF PLAN.
The Plan shall be subject to the approval of the holders of at least a
majority of the shares of Common Stock of the Company present and entitled to
vote at a meeting of shareholders of the Company. No option granted under the
Plan may be exercised in whole or in part until the Plan has been approved by
the shareholders as provided herein. If not approved by shareholders the Plan,
any options granted hereunder shall become void and of no effect.
APPROVED BY BOARD OF DIRECTORS: MARCH 26, 1993
APPROVED BY SHAREHOLDERS: MARCH 25, 1994
AMENDED: JANUARY 11, 1996
APRIL 17, 1997
AMENDED AND RESTATED: AUGUST 8, 1997
APPROVED BY SHAREHOLDERS: FEBRUARY 20, 1998
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