EXHIBIT 10F
NATIONAL COMPUTER SYSTEMS, INC.
1995 EMPLOYEE STOCK OPTION PLAN
1. Objectives of Plan.
This 1995 Employee Stock Option Plan (the "Plan") has been adopted by the
Board of Directors of National Computer Systems, Inc., a Minnesota
corporation (herein called the "Company"), to secure the advantages of
stock ownership on the part of its present and future key employees,
including salaried officers and directors, and including salaried
officers and directors of any one or more subsidiary corporations wholly
owned by it (herein called "related companies"), to provide incentives
for such individuals to remain with the company or related companies and
to devote their energies to strengthen and maintain the continued success
of the Company through stock ownership. Options granted under this Plan
may be either incentive stock options ("Incentive Stock Options") within
the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), or options which do not qualify as Incentive Stock
Options.
2. Administration of Plan.
(A) The Plan shall be administered by the Board of Directors of the
Company (the "Board"); provided, however, that all actions of the
Board with respect to the Plan shall be approved by the
affirmative vote of directors constituting a majority of the
members of the Board and all of whom are "disinterested persons"
with respect to the Plan within the meaning of Rule 16b-3(d)(3)
under the Securities Act of 1934 as presently in effect.
(B) Subject to the provisions of the Plan, the Board shall have
authority, in its discretion:
(1) To construe and interpret the Plan and all options granted
hereunder, and to determine the terms and provisions (and
amendments thereof) of the options granted under the Plan
(which need not be identical).
(2) To determine individuals to whom and the time or times at
which options shall be granted, the number of shares to be
subject to each option, the option price, and the duration
of leaves of absence which may be granted to participants
without constituting a termination of their employment for
the purposes of the Plan.
(3) To adopt, amend and rescind rules and regulations relating
to administration of the Plan and make all determinations
necessary or advisable for the administration of the Plan,
which shall be binding and conclusive on all participants in
the Plan and on their legal representatives and
beneficiaries.
(4) To accelerate the time at which all or any part of an option
may be exercised.
(5) To determine which options (that are not Incentive Stock
Options), whether granted before or after the date of
adoption or any amendments to this Plan, shall be deemed to
be stock options governed by and subject to the terms and
conditions of this Plan.
3. Participants.
Options may be granted under the Plan to such key full or part time
executive, administrative, supervisory, technical, or professional
employees (including salaried officers and directors) of the Company, or
of subsidiaries of the Company, including subsidiaries which become such
after adoption of the Plan, in such amounts as shall be determined from
time to time by the Board.
In determining the persons to whom options shall be granted and the
number of shares subject to each option, the Board may take into account
the nature of services rendered by the proposed grantees, their past,
present and potential contributions to the success of the Company, and
such other factors as the Board in its discretion shall deem relevant. A
person who has been granted an option under this Plan may be granted an
additional option or options under the Plan if the Board shall so
determine; provided, however, that to the extent that the aggregate fair
market value, determined at the time an Incentive Stock Option is
granted, of the stock with respect to which all Incentive Stock Options
owned by a Participant are exercisable for the first time by such
optionee during any calendar year under all plans of the employer
corporation and its parent and subsidiary corporations exceeds $100,000,
such options shall be treated as options that do not qualify as Incentive
Stock Options. No person may be granted options under the Plan for more
than 100,000 shares in the aggregate in any calendar year.
4. Number of Shares Available for Options.
Under this Plan, options may be granted for shares of the Company's
Common Stock, $.03 per value. The Common Stock subject to options shall
be either authorized but unissued shares or shares reacquired by the
Company. Subject to the provisions of paragraph 5 hereof, the number of
shares of Common Stock that may be made the subject of options shall not
exceed the aggregate of 350,000 shares. In the event that any outstanding
option under the Plan for any reason expires or is terminated
unexercised, the common shares allocable to the unexercised portion of
such option may again be subject to an option under the Plan.
5. Adjustments.
If there shall be any change in the Common Stock through merger,
consolidation, reorganization, recapitalization, stock dividend, stock
split or other change in the capitalization or corporate structure of the
Company, the Board shall make appropriate adjustments in the Plan and any
options outstanding under the Plan. Such adjustments shall include, where
appropriate, changes in the aggregate number of shares subject to the
Plan and such changes in the number of shares and the price per share
subject to outstanding options as are necessary in order to prevent
dilution or enlargement of option rights.
6. Term of Plan.
No option shall be granted pursuant to this Plan later than January 31,
2005, but options theretofore granted may extend beyond that date in
accordance with their terms.
7. Terms and Conditions of Options.
Options granted hereunder shall be evidenced by a written notice from the
Company to the participant evidencing the granting of an option
hereunder, or shall be evidenced by an agreement in such form as the
Board of Directors shall from time to time require. Said notice or
agreement shall refer to this Plan, and make acceptance thereof by a
participant subject to the provisions hereof. Such option shall comply
with and be subject to the following terms and conditions:
(A) Number of Shares. Each option shall state the number of shares to
which it pertains.
(B) Option Price. Each option shall state the option price, which
shall not be less than 100% of the fair market value of the shares
of the Common Stock of the Company on the date of the granting of
the option. During such time as the Common Stock is not listed
upon an established stock exchange, the fair market value per
share shall be the "last trade price" as reported by the National
Association of Security Dealers, Inc. If the Common Stock is
listed upon an established stock exchange or exchanges, such fair
market value shall be deemed to be the highest closing price of
the Common Stock on such stock exchange or exchanges on the date
the option is granted, or, if no sale of the Company's Common
Stock shall have been made on any stock exchange on that day, on
the next preceding day on which there was a sale of such stock.
Subject to the foregoing, the Board in fixing the option price
shall have full authority and discretion and be fully protected in
doing so.
(C) Option Period and Exercise of Option.
(1) No option period shall exceed ten years, and except as
otherwise provided on subdivisions (D) and (E) hereof, no
option period shall be for less than one year.
(2) Any option granted under the Plan may be exercised by
notifying the Company in writing of such exercise prior to
the termination of such option. The option price for the
number of shares of Common Stock for which the option is
exercised shall become immediately due and payable;
provided, however, that in lieu of cash an optionee may,
with the approval of the Board, exercise an option by
tendering to the Company shares of the Common Stock of the
Company owned by the optionee and with the certificates
therefor registered in the optionee's name, having a fair
market value equal to the cash exercise price of the shares
being purchased.
(3) During the lifetime of the optionee, the option shall be
exercisable only by the optionee and shall not be assignable
or transferable, and no other person shall acquire any
rights therein. Except as provided in Subdivisions (D) and
(E) hereof, 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.
(D) Termination of Employment Except Death. In the event an optionee
shall cease to be employed by the Company or a related company for
any reason other than death, then, and in that event, but subject
to the condition that no option shall be exercisable after its
expiration date, such optionee shall have the right to exercise
the option at any time within three months after such termination
of employment, to the extent the optionee's right to exercise same
had accrued pursuant to Article 7(C) of the Plan and had not
previously been exercised at the date of such termination. Whether
authorized leaves of absence or absence because of military or
governmental service shall constitute termination of employment,
for the purpose of the Plan, shall be determined by the Board,
which determination shall be final and conclusive.
(E) Death of Optionee and Transfer of Option. If any optionee shall
die while in the employ of the Company or a related company, or
within a period of three months after the termination of
employment with the Company or related companies and shall not
have fully exercised the option, said option may be exercised
(subject to the condition that no option shall be exercisable
after its expiration date), to the extent that the optionee's
right to exercise such option had accrued pursuant to Article 7(C)
of the Plan at the time of death and had not previously been
exercised, at any time within one year after the optionee's death,
by the executors or administrators of the optionee or by any
person or persons who shall have acquired the option directly from
the optionee by bequest or inheritance. No option shall be
transferable by the optionee otherwise than by will or by the laws
of descent and distribution.
(F) 10 - Percent Shareholder Rule. Notwithstanding any other provision
in the Plan, if at the time an Option is otherwise to be granted
pursuant to the Plan, the optionee owns directly or indirectly
(within the meaning of Section 424 (d) of the Code) Common Stock
of the Company possessing more than 10% of the total combined
voting power of all classes of stock of the Company or its parent
or subsidiary corporations, if any (within the meaning of Section
422(b)(6) of the Code), then any Incentive Stock Option to be
granted to such optionee pursuant to the Plan shall satisfy the
requirements of Section 422(c)(5) of the Code, and the option
price shall be not less than 110% of the fair market value of the
Common Stock of the Company on the date of grant, determined as
described herein, and such option by its terms shall not be
exercisable after the fifth anniversary of the date of grant.
(G) Rights as a Shareholder. An optionee or a transferee of an option
shall have no rights as a shareholder with respect to any 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 Article 5 hereof.
(H) Discontinuance and Amendment of the Plan. The Board of Directors
may, from time to time, alter, amend, suspend, or discontinue the
Plan with respect to any shares as to which options have not been
granted, and, with the consent of the participant who is a party
thereto, any option agreement may be modified or amended.
Unless approved by the stockholders of the Company, no amendment
to the Plan shall (a) increase the number of shares subject to the
Plan subject to the provisions of paragraph 5 hereof, (b) extend
the term of the Plan, (c) extend the term for which options may be
granted beyond ten years, (d) reduce the option price at which
options may be granted to less than 100% of fair market value at
the date of grant, or (e) in any other fashion cause the options
granted hereunder which are intended to be Incentive Stock
Options, and which are designated as such by the form of agreement
evidencing the granting of such option, to fail to qualify as an
Incentive Stock Option within the meaning of Section 422 of the
Code.
(I) Compliance with Laws Relating to Sale of Securities.
Notwithstanding any other provisions contained herein, the Company
shall have the right, in its exclusive discretion, to withhold the
issuance of any certificates for shares of stock in respect of
which any option has been exercised until, in the opinion of
counsel for the Company, any applicable registration requirements
of the Securities Act of 1933, as amended, any applicable listing
requirements of any national securities exchange on which the
stock may then be listed, and any other requirements of law or of
any regulatory bodies having jurisdiction over such issuance and
delivery, shall have been duly complied with. Pending the receipt
of such opinion of counsel for the Company, the Company may issue
certificates for such stock provided they contain a legend
indicating that said stock represented thereby is not registered
and may not be sold except in compliance with applicable law or
the release of said restrictions by the Company, and, in such
event, the Company shall have the right to instruct the transfer
agent and registrar of its common shares to effect "stop-transfer"
procedures with respect to such shares.
Until the shares reserved for options are registered and/or
listed, if required by law, the Committee may condition the
delivery of any certificate for option shares upon the receipt of
a written representation from the participant that at the time of
exercising such option the participant intends to acquire the
shares being purchased for investment and not for resale or
further distribution.
(J) Other Provisions. The option agreements authorized under the Plan
shall contain such other provisions as the Board of the Company
shall deem advisable.
8. Notification of Disposition.
If an optionee shall dispose of any of the shares of Common Stock of the
Company acquired pursuant to the exercise of an Incentive Stock Option
issued pursuant to the Plan within two years from the date said option
was granted or within one year after the transfer of any such shares to
the optionee upon exercise of said option, then, in order to provide the
Company with the opportunity to claim the benefit of any income tax
deduction which may be available to it under the circumstances, the
optionee shall promptly notify the Company of the dates of acquisition
and disposition of such shares, the number of shares so disposed of, and
the consideration, if any, received for such shares.
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 insure (i) notice to the Company of any disposition of the common
stock of the Company within the time periods described above and (ii)
that, if necessary, all applicable federal or state payroll, withholding,
income or other taxes are withheld or collected from the optionee.
9. Reliance on Information.
Each member of the Board of Directors 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 Plan
by any other person or persons. In no event shall any person who is or
shall have been a member of the Board of Directors 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.
10. Application of Funds.
The proceeds received by the Company from the sale of its Common Stock
pursuant to options will be used for general corporate purposes.
11. No Obligation to Exercise Option.
The granting of an option hereunder shall impose no obligation upon the
optionee to exercise such option, nor shall it be deemed to or construed
to impose any obligation on the Company or any related company to retain
the optionee in its employ for any period of time.