EXHIBIT 10.1 INTERLEAF, INC.
1997 KEY MAN STOCK OPTION PLAN AND AGREEMENT
1. Grant of Option. Interleaf, Inc., a Massachusetts corporation (the
"Company"), hereby grants to the Xx. Xxxxx X. Xxxxxxxxx (the "Optionee") an
option, pursuant to the terms and conditions of this 1997 Key Man Stock
Option Plan and Agreement (the "Plan"), to purchase an aggregate of 725,000
shares of Common Stock ("Common Stock") of the Company at a price of $2.06
per share, purchasable as set forth in, and subject to the terms and
conditions of, this Plan. Except where the context otherwise requires, the
term "Company" shall include the parent and all present and future
subsidiaries of the Company as defined in Sections 425(e) and 425(f) of the
Internal Revenue Code of 1986, as amended or replaced from time to time
(the "Code").
2. Tax Treatment and Stock Subject to the Plan.
(a) Tax Treatment. The option granted under this Plan (the "Option") is not
intended to qualify as an incentive stock option under Section 422A of the
Code.
(b) Stock Subject to Plan. Subject to adjustment as provided in Section 9
below, the maximum number of shares of Common Stock of the Company which
may be issued and sold under this Plan is 725,000 shares. If an option
granted under the Plan shall expire or terminate for any reason without
having been exercised in full, the unpurchased shares subject to such
option shall not again be available for subsequent option grants under the
Plan.
3. Exercise of Option and Provisions for Termination.
(a) Vesting Schedule. Except as otherwise provided in this Plan, the Option may
be exercised prior to the 10th anniversary of the date this Plan is
executed by all parties (hereinafter the "Expiration Date") in installments
as to not more than the number of shares and during the respective
installment periods set forth in the table below.
Total No. of
Shares Exercisable
(Cumulative %
Exercise Period of Shares Vested)
Prior to the first anniversary of grant date 0%
On or after the first anniversary of grant date, 25%
but prior to the second anniversary date
On or after the second anniversary of grant date, 50%
but prior to the third anniversary date
On or after the third anniversary of grant date, 75%
but prior to the fourth anniversary date
On or after the fourth anniversary of grant date, 100%
but prior to the fifth anniversary date
The right of exercise shall be cumulative so that if the Option is not
exercised to the maximum extent permissible during any exercise period, it
shall be exercisable, in whole or in part, with respect to all shares not
so purchased at any time prior to the Expiration Date or the earlier
termination of the Option. This Option may not be exercised at any time on
or after the Expiration Date, except as otherwise provided in Section 3(e)
below.
(b) Exercise Procedure. Subject to the conditions set forth in this Plan, the
Option shall be exercised by
1
the Optionee's delivery of written notice of exercise to the President,
General Counsel, or Corporate Controller of the Company specifying the
number of shares to be purchased and the purchase price to be paid therefor
and accompanied by payment in full in accordance with Section 4. Such
exercise shall be effective upon receipt by the President, General Counsel
or Corporate Controller of the Company of such written notice together with
the required payment. The Optionee may purchase fewer than the total number
of shares covered hereby, provided that no partial exercise of the Option
may be for any fractional share or for fewer than ten whole shares.
(c) Continuous Relationship with the Company Required. Except as otherwise
provided in this Section 3, the Option may not be exercised unless the
Optionee, at the time he exercises the Option, is, and has been at all
times since the date of grant of the Option, an employee, officer or
director of, or consultant or advisor to, the Company.
(d) Termination of Relationship With the Company. If the Optionee ceases to be
eligible under the provisions of paragraph 3(c) for any reason, then,
except as provided in paragraph (e) below, the right to exercise the Option
shall terminate three (3) months after such cessation (but in no event
after the Expiration Date), provided that the Option shall be exercisable
only to the extent that the Optionee was entitled to exercise the Option on
the date of such cessation.
(e) Exercise Period Upon Death or Disability. If the Optionee dies or becomes
disabled (within the meaning of Section 22(e)(3) of the Code) prior to the
Expiration Date, while he is an Eligible Optionee, or if the Optionee dies
within three months after the Optionee ceases to be an Eligible Optionee of
the Company, the Option shall be exercisable, within the period of one (1)
year following the date of death or disability of the Optionee (whether or
not such exercise occurs before the Expiration Date), by the Optionee or by
the person to whom the Option is transferred by will or the laws of descent
and distribution, provided that the Option shall be exercisable only to the
extent that the Option was exercisable by the Optionee on the date of his
death or disability. Except as otherwise indicated by the context, the term
"Optionee", as used in the Option, shall be deemed to include the estate of
the Optionee or any person who acquires the right to exercise the Option by
bequest or inheritance or otherwise by reason of the death of the Optionee.
4. Payment of Purchase Price.
(a) Method of Payment. Payment of the purchase price for shares purchased upon
exercise of the Option shall be made by (i) delivery to the Company of cash
or a check to the order of the Company in an amount equal to the purchase
price of such shares, (ii) subject to the consent of the Company, by
delivery to the Company of shares of Common Stock of the Company then owned
by the Optionee having a fair market value equal in amount to the purchase
price of such shares, (iii) by any other means which the Board of Directors
determines are consistent with the purpose of this Plan and applicable laws
and regulations (including, without limitation, the provisions of Rule
l6b-3 or any successor rule ("Rule 16b-3") under the Securities Exchange
Act of 1934 (the "Exchange Act") and Regulation T promulgated by the
Federal Reserve Board), or (iv) by any combination of such methods of
payment.
(b) Valuation of Shares or Other Non-Cash Consideration Tendered in Payment of
Purchase Price. For the purposes hereof, the fair market value of any share
of the Company's Common Stock or other non-cash consideration which may be
delivered to the Company in exercise of the Option shall be determined in
good faith by the Board of Directors of the Company.
2
(c) Delivery of Shares Tendered in Payment of Purchase Price. If the Company
permits the Optionee to exercise options by delivery of shares of Common
Stock of the Company, the certificate or certificates representing the
shares of Common Stock of the Company to be delivered shall be duly
executed in blank by the Optionee or shall be accompanied by a stock power
duly executed in blank suitable for purposes of transferring such shares to
the Company. Fractional shares of Common Stock of the Company will not be
accepted in payment of the purchase price of shares acquired upon exercise
of the Option.
5. Delivery of Shares; Compliance With Securities Law, Etc.
(a) General. The Company shall, upon payment of the option price for the number
of shares purchased and paid for, make prompt delivery of such shares to
the Optionee, provided that if the securities laws or any other laws or
regulations require the Company to take any action with respect to such
shares before the issuance thereof, then the date of delivery of such
shares shall be extended for the period necessary to complete such action.
(b) Listing, Qualification, Etc. This option shall be subject to the
requirement that if, at any time, counsel to the Company shall determine
that the listing, registraion or qualification of the shares subject hereto
upon any securities exchange or under any state or federal law, or the
consent or approval of any governmental or regulatory body, or that the
disclosure of non-public information or the satisfaction of any other
condition is necessary as a condition of, or in connection with, the
issuance or purchase of shares hereunder, the Option may not be exercised,
in whole or in part, unless such listing, registration, qualification,
consent or approval, disclosure, or satisfaction of such other condition
shall have been effected or obtained on terms acceptable to the Board of
Directors. Nothing herein shall be deemed to require the Company to apply
for, effect or obtain such listing, registration, qualification, or
disclosure or satisfy such other condition.
6. Nontransferability of Option. Except as provided in Section 3(e) of this
Plan, the Option is personal and no rights granted hereunder may be
transferred, assigned, pledged or hypothecated in any way (whether by
operation of law or otherwise) nor shall any such rights be subject to
execution, attachment or similar process, except by will or the laws of
descent and distribution, and, during the life of the Optionee the Option
may be exercised only by the Optionee. Upon any attempt to transfer,
assign, pledge, hypothecate or otherwise dispose of the Option or of such
rights contrary to the provisions hereof, or upon the levy of any
attachment or similar process upon the Option or such rights, the Option
and such rights shall, at the election of the Company, become null and
void.
7. No Special Employment or Similar Rights; Administration.
(a) Nothing contained in this Plan or the Option shall be construed or deemed
by any person under any circumstances to bind the Company to continue the
employment or other relationship of the Optionee with the Company for the
period within which the Option may be exercised.
(b) The amount of any compensation deemed to be received by the Optionee as a
result of the exercise of an option or the sale of shares received upon
such exercise will not constitute compensation with respect to which any
other employee benefits of such Optionee are determined, including, without
limitation, benefits under any bonus, pension, profit-sharing, life
insurance or salary continuation plan, except as otherwise specifically
determined by the Board of Directors.
(c) Administration. This Plan will be administered by the Board of Directors of
the Company, whose construction and interpretation of the terms and
provisions of the Plan shall be final and conclusive. The Board shall have
authority, subject to the express provisions of this Plan, to construe this
Plan, to prescribe, amend and rescind rules and regulations relating to
this Plan, and to make all other determinations in the judgment of the
Board of Directors necessary or desirable for the administration
3
of this Plan. The Board of Directors may correct any defect or supply any
omission or reconcile any inconsistency in this Plan in the manner and to
the extent it shall deem expedient to carry this Plan into effect and it
shall be the sole and final judge of such expediency. No director shall be
liable for any action or determination made in good faith. The Board of
Directors may, to the full extent permitted by or consistent with
applicable laws or regulations (including, without limitation, applicable
state law and Rule l6b-3) delegate any or all of its powers under this Plan
to a committee (the "Committee") appointed by the Board of Directors, and
if the Committee is so appointed all references to the Board of Directors
in the Plan shall mean and relate to such Committee.
8. Rights as a Shareholder. The Optionee shall have no rights as a shareholder
with respect to any shares which may be purchased by exercise of the Option
(including, without limitation, any rights to receive dividends or non-cash
distributions with respect to such shares) unless and until a certificate
representing such shares is duly issued and delivered to the Optionee. No
adjustment shall be made for dividends or other rights for which the record
date is prior to the date such stock certificate is issued.
9. Adjustment Provisions.
(a) General. If, through or as a result of any merger, consolidation, sale of
all or substantially all of the assets of the Company, reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse
stock split, or other similar transaction, (i) the outstanding shares of
Common Stock are increased or decreased or are exchanged for a different
number or kind of shares or other securities of the Company, or (ii)
additional shares or new or different shares or other securities of the
Company or other non-cash assets are distributed with respect to such
shares of Common Stock or other securities, an appropriate and
proportionate adjustment may be made in (x) the maximum number and kind of
shares reserved for issuance under this Plan, (y) the number and kind of
shares or other securities subject to then outstanding options under this
Plan, and (z) the price for each share subject to any then outstanding
options under this Plan, without changing the aggregate purchase price as
to which such options remain exercisable, provided that no adjustment shall
be made pursuant to this Section 9 if such adjustment would cause this Plan
to fail to comply with Rule l6b-3.
(b) Board Authority to Make Adjustments. Any adjustments under this Section 9
will be made by the Board of Directors, whose determination as to what
adjustments, if any, will be made and the extent thereof will be final,
binding and conclusive. No fractional shares will be issued under the
Option on account of any such adjustments.
10. Mergers, Consolidation, Distributions, Liquidations Etc. In the event of a
consolidation or merger or sale of all or substantially all of the assets
of the Company in which outstanding shares of Common Stock are exchanged
for securities, cash or other property of any other corporation or business
entity or in the event of a liquidation of the Company, the Board of
Directors of the Company, or the board of directors of any corporation
assuming the obligations of the Company, may, in its discretion, take any
one or more of the following actions, as to outstanding options held by the
Optionee: (i) provide that such options shall be assumed, or equivalent
options shall be substituted, by the acquiring or succeeding corporation
(or an affiliate thereof), (ii) upon written notice to the Optionee,
provide that all unexercised options will terminate immediately prior to
the consummation of such transaction unless exercised by the Optionee
within a specified period following the date of such notice, (iii) in the
event of a merger under the terms of which holders of the Common Stock of
the Company will receive upon consummation thereof a cash payment for each
share surrendered in the merger (the "Merger Price"), make or provide for a
cash payment to the Optionee equal to the difference between (A) the Merger
Price times the number of shares of Common Stock subject to such
outstanding options held by the Optionee (to the extent then exercisable at
prices not in excess of the Merger
4
Price) and (B) the aggregate exercise price of all such outstanding options
in exchange for the termination of such options, and (iv) provide that all
or any outstanding options shall become exercisable in full immediately
prior to such event.
11. Change in Control.
Notwithstanding anything herein to the contrary, in the event of a "Change
in Control of the Company" (as defined below), the exercise dates of all
shares granted hereunder shall be accelerated in full so that all (100%)
percent of the total number of shares originally granted hereunder shall be
immediately exercisable. For purposes of this Plan, a "Change in Control of
the Company" shall occur or be deemed to have occurred only if (i) any
"person," as such term is used in Sections 13(d) and 14(d) of the Exchange
Act (other than the Company, any trustee of other fiduciary holding
securities under an employee benefit plan of the Company, or any
corporation owned directly or indirectly by the stockholders of the Company
in substantially the same proportion as their ownership of stock of the
Company), is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the
Company representing 25% or more of the combined voting power of the
Company's then outstanding securities; (ii) during any period of two
consecutive years ending during the term of this Plan (not including any
period prior to the adoption of this Plan), individuals who are the
beginning of such period constitute the Board of Directors of the Company,
and any new director whose election by the Board of Directors or nomination
for election by the Company's shareholders was approved by a vote of at
least two-thirds of the directors then still in office who were either
directors at the beginning of the period or whose election or whose
nomination for election was previously so approved (collectively, the
"Disinterested Directors"), cease for any reason to constitute a majority
of the Board of Directors; (iii) the shareholders of the Company approve a
merger or consolidation of the Company with any other corporation, other
than (A) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto continuing
to represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) more than 80% of the combined
voting power of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation or (B) a
merger or consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no "person" (as hereinabove
defined) acquires more than 25% of the combined voting power of the
Company's then outstanding securities.
12. Term and Amendment of the Plan.
(a) This Plan shall commence upon execution hereof by all parties, and
terminate on the Expiration Date.
(b) The Board of Directors may at any time, and from time to time, modify or
amend the Plan in any respect, except that if at any time the approval of
the shareholders of the Company is required as to such modification or
amendment under Rule l6b-3 with respect to options held by Reporting
Persons, the Board of Directors may not effect such modification or
amendment without such approval.
(c) The termination or any modification or amendment of this Plan shall not,
without the consent of the Optionee, affect his rights under the Option.
With the consent of the Optionee, the Board of Directors may amend the
Option in a manner not inconsistent with this Plan. The Board of Directors
shall have the right to amend or modify the terms and provisions of this
Plan to the extent necessary to ensure the qualification of this Plan under
Rule l6b-3.
13. Withholding Taxes. The Company's obligation to deliver shares upon the
exercise of the Option shall be subject to the Optionee's satisfaction of
all applicable federal, state and local income and employment tax
withholding requirements. Without limiting the foregoing, (a) The Company
shall have the right to deduct from payments of any kind otherwise due to
the Optionee any federal, state
5
or local taxes of any kind required by law to be withheld with respect to
any shares issued upon exercise of options under this Plan. Subject to the
prior approval of the Company, which may be withheld by the Company in its
sole discretion, the Optionee may elect to satisfy such obligations, in
whole or in part, (i) by causing the Company to withhold shares of Common
Stock otherwise issuable pursuant to the exercise of the Option or (ii) by
delivering to the Company shares of Common Stock already owned by the
Optionee. The shares so delivered or withheld shall have a fair market
value equal to such withholding obligation. The fair market value of the
shares used to satisfy such withholding obligation shall be determined by
the Company as of the date that the amount of tax to be withheld is to be
determined. If the Optionee has made an election pursuant to this Section
13, then he may only satisfy his her withholding obligation with shares of
Common Stock which are not subject to any repurchase, forfeiture,
unfulfilled vesting or other similar requirements.
14. Miscellaneous.
(a) Except as provided herein, the Plan and the Option may not be amended or
otherwise modified unless evidenced in writing and signed by the Company
and the Optionee.
(b) All notices under the Plan and the Option shall be mailed or delivered by
hand to the parties at their respective addresses set forth beneath their
names below or at such other address as may be designated in writing by
either of the parties to one another.
(c) This Plan and the Option shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts.
EXECUTED, by Interleaf, Inc. as of January 10, 1997
Interleaf, Inc.
By: /s/ Xxxx X. Xxxxx
-----------------------
Xxxx X. Xxxxx, Chairman
OPTIONEE'S ACCEPTANCE
The undersigned hereby accepts the foregoing Plan and the Option, and agrees to
the terms and conditions hereof. The undersigned hereby acknowledges that he has
read and understands the terms of this 1997 Key Man Stock Option Plan and
Agreement, and that the shares underlying the stock option contained herein may
not be sold unless they are registered with the SEC under the provisions of the
Securities Act of 1933, as amended. The Optionee represents and warrants that he
is acquiring the Common Stock subject to the Option for his own account for
investment and not with any present intention of selling or otherwise
distributing the same.
OPTIONEE:
/s/ Xxxxx X. Xxxxxxxxx Date: January 10, 1997
--------------------------------------- -----------------------
Xxxxx X. Xxxxxxxxx
6
