Exhibit 10.17
NATIONAL COMPUTER SYSTEMS, INC.
2000 LONG-TERM INCENTIVE PROGRAM
1. Objectives of the Program
This Program shall be known as the "National Computer Systems, Inc. 2000
Long-Term Incentive Program (the "Program"). The objectives of the Program
are to promote the interests of National Computer Systems, Inc. (the
"Company"), by enhancing its ability to attract, retain and motivate key
senior officers, to provide incentives for such officers to remain with the
Company and to increase their identification with the interests of the
Company's shareholders and to afford them an opportunity to acquire a
proprietary interest in the Company through the granting of stock options
and conditional cash bonuses as long-term incentives based on the financial
success of the Company.
2. Administration of the Program
(a) The Program shall be administered by the Compensation Committee (the
"Committee") of the Board of Directors of the Company.
(b) Subject to the other provisions of the Program and to applicable law,
the Committee shall have full power and authority, in its discretion:
(i) to construe and interpret the Program and all stock options and
conditional cash bonuses granted under the Program (collectively,
"Awards"); (ii) to determine the persons to whom Awards shall be
granted, the time or times at which such Awards shall be granted, the
number of shares and the amount of cash to be subject to each Award
and the terms, conditions and restrictions under which each Award is
granted; (iii) to determine the terms of exercise of each option and
to accelerate the time at which all or any part of an option may be
exercised, (iv) to amend or modify the terms of any Award with the
consent of the persons receiving the Award, (v) to prescribe, amend
and rescind rules and regulations relating to the administration of
the Program, (vi) to determine the terms and provisions of each
agreement evidencing an Award under the Program (which agreements need
not be identical), and (vii) to make all other determinations
necessary or advisable for the administration of the Program, subject
to the exclusive authority of the Board of Directors under section 13
to amend or terminate the Program. The Committee's determinations on
the foregoing matters shall be final and conclusive.
(c) The granting of an Award pursuant to the Program shall be effective
only if written agreements shall have been duly executed and delivered
by and on behalf of the Company and the employee to whom such right is
granted.
(d) The Committee may delegate the responsibility for implementing the
decisions made by the Committee under the Program to one or more
officers of the Company, subject to such terms, conditions and
limitations as the Committee may establish in its sole discretion;
provided, however, that the Committee shall not delegate any
responsibilities or duties under the Program with regard to officers
or directors of the Company who are subject to Section 16 of the
Exchange Act.
(e) Each member of the Committee and each officer and employee of the
Company shall be fully justified in relying or acting upon any
information furnished in connection with the administration of the
Program by any other person or persons. In no event shall any person
who is or shall have been a member of the Committee or an officer or
employee of the Company, be liable for any determination made or other
action taken or omission to act in reliance upon any such information
or for any action (including the furnishing of information) taken or
any failure to act, if in good faith.
3. Participants
Awards may be granted under the Program to such key senior full time
officers of the Company as shall be determined by the Committee from time
to time. In determining the persons to whom Awards shall be granted, the
amount of any conditional cash bonus and the number of shares subject to
any Award, the Committee may take into account the nature of services
rendered by the proposed grantee, the proposed grantee's present and
potential contributions to the success of the Company and such other
factors as the Committee in its discretion shall deem relevant. A person
who has been granted an Award under the Program may be granted additional
Awards under the Program if the Committee shall so determine.
4. Shares Subject to the Program
Options for shares of Common Stock subject to Awards under the Program
shall be issued pursuant to one of the Company's Employee Stock Option
Plans (the "Option Plans"). Options issued under the Program are not
intended to qualify as Incentive Stock Options pursuant to Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code").
5. Adjustments
In accordance with the provisions of the Option Plans, if any change occurs
in the shares of the Company's common stock through merger, consolidation,
reorganization, recapitalization, stock dividend (of whatever amount),
stock split or other change in the Company's corporate structure,
appropriate adjustments in the Program and outstanding Awards shall be made
by the Committee. In the event of any such changes, adjustments shall
include, where appropriate, changes in the aggregate number of shares
subject to the Program, the number of shares and the price per share
subject to outstanding Awards in order to prevent dilution or enlargement
of the rights of the grantees under such Awards.
6. Term
The 2000 Program was approved by the Compensation Committee of the
Company's Board of Directors on March 7, 2000, and shall be effective as of
such date and for the 72 months thereafter.
7. General Terms and Conditions of Awards
Awards granted hereunder shall be evidenced by a written notice from the
Company to the grantee evidencing the granting of the Award, or shall be
evidenced by agreements in such form as the Committee shall from time to
time require. Such notice or agreements shall refer to the Program and
shall make acceptance of the Award by a grantee subject to the provisions
of the Program.
8. Terms and Conditions of Options Granted under the Program
(a) Each agreement evidencing an option granted under the Program shall
state the number of shares to which it pertains.
(b) The option price for all options granted under the Program shall be
determined by the Committee but shall not be less than 100% of the
fair market value of shares of the Company's common stock at the date
of granting of such option. For purposes of this section 8 and for all
other valuation purposes under the Program, the fair market value of
the Company's common stock shall be the "last trade price" of the
Company's common stock on the date as of which fair market value is
being determined and as quoted on The Nasdaq National Market
System(R).
(c) An optionee electing to exercise an option shall give written notice
to the Company of such election and of the number of shares subject to
such exercise. The date of receipt of such notice by the Company shall
be deemed the date of exercise. The exercise price and the withholding
taxes applicable to the exercise may be paid as follows:
(i) in cash,
(ii) by delivering to the Company previously owned NCS common stock
having a fair market value equal to the exercise price and the
amount of any withholding taxes required to be paid,
(iii) by having NCS withhold from stock to be delivered on exercise
shares which have a fair market value equal to an amount not to
exceed the maximum required statutory supplemental withholding
taxes to be paid, or
(iv) any combination of (i), (ii) and (iii).
(d) No option granted under the Program shall be transferable by an
optionee, otherwise than by will or the laws of descent or
distribution as provided in subsection 8(g). During the lifetime of an
optionee the option shall be exercisable only by such optionee and no
other person shall acquire any rights therein. Except as provided in
subsection 8(e) or 8(g), no option may be exercised at any time unless
the holder thereof is then an employee of the Company or a subsidiary
of the Company.
(e) If, prior to termination of the option, the optionee stops being an
employee of NCS for any reason other than serious misconduct or death,
disability or retirement, the optionee shall have up to three (3)
months from the last day worked, but in no event beyond the last day
of the term of the option period, to exercise the option to the extent
it was exercisable on the last day worked (which does not include any
period during which severance payments, lay off income benefits, or
salary continuation amounts are in effect).
(f) In the event that an optionee shall cease to be employed by the
Company by reason of the optionee's gross and willful misconduct
during the course of employment, including but not limited to wrongful
appropriation of funds of the Company or the commission of a gross
misdemeanor or felony, the option shall be terminated as of the date
of the misconduct.
(g) In the event the optionee should die while an employee of the Company,
the optionee's executor or administrator or any person acquiring
rights directly by bequest or inheritance shall have up to three (3)
months, but in no event beyond the date of termination of the option,
to exercise any non-exercised option right that had vested on the
optionee's death. In the event the optionee's death occurs during the
prescribed period of time during which specified financial performance
results of the Company are to be achieved ("Measurement Period"), the
optionee's beneficiaries or heirs will receive a pro-rata vesting of
the option based on actual months served to total months during the
Measurement Period and shall have up to three (3) months following the
commencement of the option exercise period to exercise such vested
shares. Any non-vested shares will be forfeited.
(h) In the event the optionee should retire or become disabled while an
employee of the Company, the optionee shall have up to three (3)
months, but in no event beyond the date of termination of the option,
to exercise any non-exercised option right that had vested as of the
date of disability or retirement. In the event of the optionee's
retirement or disability during the Measurement Period, the optionee
will receive a pro-rata vesting of the option based on actual months
served to total months during the Measurement Period and shall have up
to three (3) months following the commencement of the option exercise
period to exercise such vested shares. Any non-vested shares will be
forfeited.
For purposes of the Program, retirement means the optionee voluntarily
withdraws from active employment with NCS and meets the following
criteria:
(i) 55 years of age or older,
(ii) at least 5 years of service to the Company, and
(iii) the optionee's age plus years of service with the Company equal
or exceed 65 years.
For purposes of this Program, disability means the optionee cannot
perform the normal duties of the optionee's regular occupation for any
employer and is not engaged in any other occupation or employment for
wage or profit.
(i) An optionee or a transferee of an option shall have no rights as a
shareholder with respect to such shares covered by an option until the
date of the issuance of a stock certificate for such shares. No
adjustment shall be made for dividends (ordinary or extraordinary
whether in cash, securities or other property) or distributions or
other rights for which the record date is prior to the date such stock
certificate is issued, except as provided in section 5.
9. Terms and Conditions of Conditional Cash Bonuses
(a) Each conditional cash bonus Award granted under the Program shall be
for an amount of cash as shall be determined by the Committee and set
forth in the agreement containing the terms of such Award. The
agreement will also, in the discretion of the Committee, set forth
performance or other conditions that will subject the cash bonus to
forfeiture and transfer restrictions. The Committee may, at its
discretion, waive all or any part of the restrictions applicable to
any or all outstanding Awards, whether or not a restriction period has
expired or other specified conditions have been met.
(b) In the event of a grantee's death, disability or retirement prior to
the end of any Measurement Period, the amount of any cash bonus will
be pro-rata based on the actual months served to the total months
during the Measurement Period.
(c) Retirement and disability for cash bonus purposes will have the same
definition as set forth in subsection 8(h).
10. Income Tax Matters
In order to comply with all applicable federal or state income tax laws or
regulations, the Company may take such action as it deems appropriate to
ensure that all applicable federal or state payroll, withholding, income or
other taxes, which are the sole and absolute responsibility of a grantee of
an Award under the Program, are withheld or collected from such grantee.
11. Additional Restrictions
The Committee shall have full and complete authority to determine whether
all or any part of the shares of common stock of the Company acquired upon
exercise of any of the options granted under the Program or upon the
granting of an Award shall be subject to restrictions on the
transferability thereof or any other restrictions affecting in any manner
the optionee's or award recipient's rights with respect thereto, but any
such restriction shall be contained in the agreement relating to such
Awards.
12. Compliance with Securities Laws
(a) All certificates for shares or other securities delivered under the
Program pursuant to any Award or the exercise thereof shall be subject
to such stop transfer orders and other restrictions as the Committee
may deem advisable under the Program or the rules, regulations and
other requirements of the Securities and Exchange Commission and any
applicable federal or state securities laws, and the Committee may
cause a legend or legends to be placed on any such certificates to
make appropriate reference to such restrictions.
(b) The Program is intended to comply with all applicable conditions of
Section 16b-3 of the Exchange Act, and all transactions involving
persons subject to Section 16b of the Exchange Act
("Insider-Participants") are subject to such conditions regardless of
whether the conditions are expressly set forth in the Program. Any
provision of the Program that is contrary to the conditions of Section
16b-3 shall not apply to Insider-Participants.
13. Amendment or Discontinuance of Program
The Company's Board of Directors may amend, suspend or discontinue the
Program at any time. The Company shall not alter or impair any Award
theretofore granted under the Program without the consent of the holder of
the Award.
14. Time of Granting
Nothing contained in the Program or in any resolution adopted or to be
adopted by the Board of Directors or by the shareholders of the Company,
and no action taken by the Committee or the Board of Directors (other than
the execution and delivery of an agreement evidencing an Award), shall
constitute the granting of an Award under the Program.
15. General Provisions
(a) No Rights to Awards. No person shall have any claim to be granted any
Award under the Program, and there is no obligation for uniformity of
treatment of holders or beneficiaries of Awards under the Program. The
terms and conditions of Awards need not be the same with respect to
any grantee or with respect to different grantees.
(b) Award Agreements. No person will have rights under an Award granted to
such person unless and until an Award agreement evidencing such Award
has been duly executed on behalf of the Company.
(c) No Limit on Other Compensation Arrangements. Nothing contained in the
Program shall prevent the Company from adopting or continuing in
effect other or additional compensation arrangements, and such
arrangements may be either generally applicable or applicable only in
specific cases.
(d) No Right to Employment. The grant of an Award shall not be construed
as giving the grantee of the Award the right to be retained in the
employ of the Company, nor will it affect in any way the right of the
Company to terminate such employment at any time, with or without
cause. In addition, the Company may at any time dismiss an Award
grantee from employment free from any liability or any claim under the
Program, unless otherwise expressly provided in the Program or in any
Award agreement.
(e) Governing Law. The validity, construction and effect of the Program or
any Award, and any rules and regulations relating to the Program or
any Award, shall be determined in accordance with the laws of the
State of Minnesota.
(f) Severability. If any provision of the Program or any Award is or
becomes or is deemed to be invalid, illegal or unenforceable in any
jurisdiction or would disqualify the Program or any Award under any
law deemed applicable by the Committee, such provision shall be
construed or deemed amended to conform to applicable laws, or if it
cannot be so construed or deemed amended without, in the determination
of the Committee, materially altering the purpose or intent of the
Program or the Award, such provision shall be stricken as to such
jurisdiction or Award, and the remainder of the Program or any such
Award shall remain in full force and effect.
(g) No Trust or Fund Created. Neither the Program nor any Award shall
create or be construed to create a trust or separate fund of any kind
or a fiduciary relationship between the Company and any other Person.
To the extent that any Person acquires a right to receive payments
from the Company pursuant to an Award, such right shall be no greater
than the right of any unsecured general creditor of the Company.
(h) No Fractional Shares. No fractional Shares shall be issued or
delivered pursuant to the Program or any Award, and the Committee
shall determine whether cash shall be paid in lieu of any fractional
Shares or whether such fractional Shares or any rights thereto shall
be canceled, terminated or otherwise eliminated.
(i) Headings. Headings are given to the sections and subsections of the
Program solely as a convenience to facilitate reference. Such headings
shall not be deemed in any way material or relevant to the
construction or interpretation of the Program or any provision
thereof.