Exhibit 10.13
NATIONAL COMPUTER SYSTEMS, INC.
1997 LONG-TERM INCENTIVE PLAN
1. Objectives of the Plan.
This Plan shall be known as the "National Computer Systems,
Inc. 1997 Long-Term Incentive Plan (the "Plan"). The objectives of the Plan are
to promote the interests of National Computer Systems, Inc., a Minnesota
corporation (the "Company"), by enhancing its ability to attract, retain and
motivate key employees, including salaried officers and directors, and including
salaried officers and directors of any of the Company's subsidiary corporations
("Affiliates"), to provide incentives for such employees to remain with the
Company of its Affiliates 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, conditional cash bonuses and restricted stock awards as long term
incentives based on the financial success of the Company.
2. Administration of the Plan.
(a) The Plan shall be administered by the Compensation
Committee (the "Committee") of the Board of Directors of the Company. The
Committee shall be comprised of not less than such number of directors as shall
be required to permit the Plan to qualify under Section 16b-3 ("Section 16b-3")
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Each
member of the Committee shall be a "disinterested persons" with respect to the
Plan within the meaning of Section l6b-3 and shall be an "outside director"
within the meaning of section 162(m) of the Internal Revenue Code of 1986, as
amended (the "Code"). The members of the Committee shall be appointed by and
serve at the pleasure of the Board of Directors.
(b) Subject to the other provisions of the Plan and to
applicable law, the Committee shall have full power and authority, in its
discretion: (i) to construe and interpret the Plan and all options, conditional
cash bonuses and restricted stock awards granted under the Plan (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 whether
options granted under the Plan are incentive stock options ("Incentive Stock
Options") within the meaning of section 422 of the Code, or options which do not
qualify as Incentive Stock Options; (iv) 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, (v) to amend or modify the terms of any Award with the consent of
the persons receiving the Award, (vi) to prescribe, amend and rescind rules and
regulations relating to the administration of the Plan, (vii) to determine the
terms and provisions of each agreement evidencing an Award under the Plan (which
agreements need not be identical), and (viii) to make all other determinations
necessary or advisable for the administration of the Plan, subject to the
exclusive authority of the Board of Directors under section 13 to amend or
terminate the Plan. The Committee's determinations on the foregoing matters
shall be final and conclusive.
(c) The granting of an Award pursuant to the Plan shall be
effective only if a written agreement 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 Plan to one or more
officers of the Company or any Affiliate or a committee of such officers,
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 Plan with regard to officers or
directors of the Company or any Affiliate 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 Plan 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 Plan to such key full or
part-time employees (which term as used herein includes, but is not limited to,
officers and directors who are also employees) of the Company and of its present
and future Affiliates as shall be determined by the Committee from time to time.
In determining the persons to whom Awards shall be granted 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 Plan may be granted additional Awards under the Plan
if the Committee shall so determine; provided, however, that to the extent 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 are
exercisable for the first time by optionee during any calendar year (under all
plans described in section 422 of the Code of the Company and its Affiliates)
exceeds $100,000, such options shall be treated as options which 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. Shares Subject to the Plan .
The shares of stock to be subject to Awards under the Plan
shall be shares of the Company's authorized common stock, $.03 par value. Such
shares may be either authorized but unissued shares. Subject to the adjustment
as provided in section 5, the maximum number of shares that may be subject to
Awards under the Plan shall be 300,000. If an Award under the Plan expires, or
for any reason is terminated or unexercised with respect to any shares, such
shares shall again be available for Awards thereafter granted during the term of
the Plan.
5. Adjustments .
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 Plan 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 Plan, 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 .
(a) The Plan was approved by the Company's Board of Directors
on March 3, 1997, and shall be effective as of such date, subject to approval by
the shareholders of the Company within twelve (12) months thereafter.
(b) Unless the Plan has been discontinued as provided in
section 13, the Plan shall terminate on January 31, 2007. No Award may be
granted after such termination, but termination of the Plan shall not, without
the consent of the grantee of any Award, alter or impair any rights or
obligations under any Award theretofore granted. Subject to the foregoing, each
Award and all rights and obligations thereunder shall expire on the date
determined by the Committee and specified in the Award agreement. The Committee
shall be under no duty to provide terms of like duration for Awards granted
under the Plan, but the term of an Incentive Stock Option may not extend more
than ten (10) years from the date of granting of such option, and the term of
any option granted under the Plan which does not qualify as an Incentive Stock
Options may not extend more than fifteen (15) years from the date of granting of
such option.
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 an agreement in such form as the Committee shall from time
to time require. Such notice or agreement shall refer to the Plan and shall make
acceptance of the Award by a grantee subject to the provisions of the Plan.
8. Terms and Conditions of Options Granted under the
Plan .
(a) Each agreement evidencing an option granted under the Plan
shall state the number of shares to which it pertains.
(b) The option price for all Incentive Stock Options granted
under the Plan 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. The option price for options granted under the
Plan which do not qualify as Incentive Stock Options shall also be determined by
the Committee. For purposes of this section 8 and for all other valuation
purposes under the Plan, the fair market value of the Company's common stock
shall be as reasonably determined by the Committee, but shall not be less than
(i) the average of the opening and closing prices of such shares of stock on the
date as of which fair market value is being determined, if the Company's common
stock is then traded on a national securities exchange, or (ii) the "last sale
price" of the Company's common stock on the date as of which fair market value
is being determined, if the Company's common stock is then quoted on the NASDAQ
National Market System. If on the date of grant of any option granted under the
Plan, the common stock of the Company is not publicly traded, the Committee
shall make a good faith attempt to satisfy the option price requirement of this
section 8 and in connection therewith shall take such action as it deems
necessary or advisable. Subject to the foregoing, the Committee shall have full
authority and discretion in fixing the option price and shall be fully protected
in doing so.
(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 option price for the number of shares for which
the option is exercised shall become immediately due and payable in cash;
provided, however, that an optionee may, with the approval of the Committee,
make payment for all or a portion of the option price by tendering to the
Company shares of the Company's common stock owned by the optionee and
registered in the optionee's name, and which has a fair market value equal to
the portion of the purchase price of the shares being acquired which is not
being paid in cash.
(d) No option granted under the Plan 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) In the event that an optionee shall cease to be employed
by the Company or its Affiliates or any reason, other than his gross and willful
misconduct or his death or disability, such optionee shall have the right to
exercise the option at any time within three months (or such longer period as
the Committee in its discretion shall determine to be appropriate) after such
termination of employment to the extent of the full number of shares he was
entitled to purchase under the option on the date of termination to the extent
that the optionee's right to exercise the same had vested on such date and had
not previously been exercised, subject to the condition that no option shall be
exercisable after the expiration of the term of the option. Whether authorized
leaves of absence or absence because of military or governmental service shall
constitute termination of employment for the purposes of the Plan shall be
determined by the Committee, which determination shall be final and conclusive.
(f) In the event that an optionee shall cease to be employed
by the Company or its Affiliates by reason of his gross and willful misconduct
during the course of his employment, including but not limited to wrongful
appropriation of funds of his employer or the commission of a gross misdemeanor
or felony, the option shall be terminated as of the date of the misconduct.
(g) If the optionee shall die while in the employ of the
Company or any Affiliate, or within three months (or such longer period as the
Committee in its discretion shall determine to be appropriate) after termination
of employment for any reason other than gross and willful misconduct, or the
optionee's employment is terminated because optionee has become disabled (within
the meaning of Code section 22(e)(3)) while in the employ of the Company or any
Affiliate, and such optionee shall not have fully exercised the option, such
option may be exercised at any time within twelve months (or such longer period
as the Committee in its discretion shall determine to be appropriate) after the
date of such death or disability by the optionee or the personal representatives
of the optionee, as applicable, or by any person or persons to whom the option
is transferred by will or the applicable laws of descent and distribution, to
the extent of the full number of shares the optionee was entitled to purchase
under the option on the date of death (or termination of employment, if earlier)
and subject to the condition that no option shall be exercisable after the
expiration of the term of the option.
(h) 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)
shares of common stock of the Company possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company or its
parent or subsidiary corporations (within the meaning of section 424(e) or
424(f) of the Code), if any, 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, the option price shall be not less than 110% of the fair
market value of the common stock of the Company determined as described herein,
and such option by its terms shall not be exercisable after the expiration of
five (5) years from the date such option is granted.
(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 and
Restricted Stock Awards .
(a) Each conditional cash bonus and restricted stock Award
granted under the Plan (i) shall be for an amount of cash or a number of common
shares of the Company as shall be determined by the Committee and set forth in
the agreement containing the terms of such Award, and (ii) shall require the
grantee to remain in the continuous employment of the Company in order for the
forfeiture and transfer restrictions relating to such Award to lapse. If the
Committee so determines, the restrictions may lapse during such restricted
period in installments with respect to specified portions of the shares or cash
bonus covered by the Award. The agreement may also, in the discretion of the
Committee, set forth performance or other conditions that will subject the
common shares or 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) At the time of a restricted stock Award, a certificate
representing the number of common shares awarded thereunder shall be registered
in the name of the grantee. Such certificate shall be held by the Company or any
custodian appointed by the Company for the account of the grantee subject to the
terms and conditions of the Plan, and shall bear such a legend setting forth the
restrictions imposed thereon as the Committee, in its discretion, may determine.
The grantee shall have all rights of a shareholder with respect to the common
shares, including the right to receive dividends and the right to vote such
shares, subject to the following restrictions: (i) the grantee shall not be
entitled to delivery of the stock certificate until the expiration of the
restriction period and the fulfillment of any other restrictive conditions set
forth in the restricted stock agreement with respect to such common shares; (ii)
none of the common shares may be sold, assigned, transferred, pledged,
hypothecated or otherwise encumbered or disposed of during such restriction
period or until after the fulfillment of any such other restrictive conditions;
and (iii) except as otherwise determined by the Committee and set forth in the
Award agreement, some or all of the common shares subject to the restricted
stock Award shall be forfeited and all rights of the grantee to such common
shares shall terminate, without further obligation on the part of the Company,
if the restrictive conditions relating to such shares (including any conditions
relating to the continuing employment of the grantee by the Company) are not
satisfied. Any common shares, any other securities of the Company and any other
property (except for cash dividends) distributed with respect to the common
shares subject to restricted stock awards shall be subject to the same
restrictions, terms and conditions as such restricted common shares.
(c) Termination of Restrictions. At the end of the restriction
period and provided that any other restrictive conditions of the restricted
stock award are met, or at such earlier time as otherwise determined by the
Committee, all restrictions set forth in the agreement relating to the
restricted stock Award or in the Plan shall lapse as to the restricted common
shares subject thereto, and a stock certificate for the appropriate number of
common shares, free of the restrictions and the restricted stock legend, shall
be delivered to the grantee or his beneficiary or estate, as the case may be.
10. Income Tax Matters; Tax Bonuses .
(a) 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 Plan, are withheld or collected from such grantee.
In order to assist a grantee in paying all federal and state taxes to be
withheld or collected upon exercise of an option or award which does not qualify
as an Incentive Stock Option hereunder, the Committee, in its absolute
discretion and subject to such additional terms and conditions as it may adopt,
shall permit the optionee or grantee to satisfy such tax obligation by (i)
electing to have the Company withhold a portion of the shares otherwise to be
delivered upon exercise of such option or award with a fair market value,
determined in accordance with subsection 8(b), equal to such taxes or (ii)
delivering to the Company common shares other than the shares issuable upon
exercise of such option or award with a fair market value, determined in
accordance with subsection 8(b), equal to such taxes.
(b) The Committee shall have the authority, at the time of
grant of an option under the Plan or at any time thereafter, to approve tax
bonuses to designated optionees or grantees to be paid upon their exercise of
options or awards granted hereunder. The amount of any such payments shall be
determined by the Committee. The Committee shall have full authority in its
absolute discretion to determine the amount of any such tax bonus and the terms
and conditions affecting the vesting and payment thereafter.
(c) If an optionee disposes 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 such option
was granted or within one year after the transfer of any such shares to the
optionee upon exercise of such 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.
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 Plan 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 Plan 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 Plan 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. Until
the shares of common stock that are the subject of Awards granted under the Plan
are registered and listed, if applicable and if required by law, the Committee
may condition the delivery of any certificate for such shares upon the receipt
of a written representation from the grantee that at the time of acquiring such
shares the grantee of the Award intends to acquire the shares being purchased
for investment and not for resale or further distribution. If the shares or
other securities subject to an Award are traded on a securities exchange or
other securities market, the Company shall not be required to deliver any shares
or other securities covered by an Award unless and until such shares or other
securities have been admitted for trading on such securities exchange or market.
(b) The Plan 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 Plan. Any provision of the Plan that is contrary to the
conditions of Section 16b-3 shall not apply to Insider-Participants.
13. Amendment or Discontinuance of Plan .
The Company's Board of Directors may amend, suspend or
discontinue the Plan at any time. However, no amendment of the Plan shall,
without shareholder approval: (i) increase the maximum number of shares under
the Plan as provided in section 4, (ii) decrease the minimum option price
provided in section 8, (iii) extend the maximum option term under section 6,
(iv) materially modify the eligibility requirements for participation in the
Plan, or (v) in any other fashion cause any options granted under the Plan which
are intended to be Incentive Stock Options, and which are designated as such by
the Award agreement evidencing the granting of such option, to fail to qualify
as an Incentive Stock Option. The Company shall not alter or impair any Award
theretofore granted under the Plan without the consent of the holder of the
Award.
14. Time of Granting .
Nothing contained in the Plan 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 Plan.
15. General Provisions .
(a) No Rights to Awards. No person shall have any claim to be
granted any Award under the Plan, and there is no obligation for uniformity of
treatment of holders or beneficiaries of Awards under the Plan. 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 Plan shall prevent the Company or any Affiliate 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 or any Affiliate, nor will it affect in any way the right
of the Company or such Affiliate to terminate such employment at any time, with
or without cause. In addition, the Company or any Affiliate may at any time
dismiss an Award grantee from employment free from any liability or any claim
under the Plan, unless otherwise expressly provided in the Plan or in any Award
agreement.
(e) Governing Law. The validity, construction and effect of
the Plan or any Award, and any rules and regulations relating to the Plan or any
Award, shall be determined in accordance with the laws of the State of
Minnesota.
(f) Severability. If any provision of the Plan or any Award is
or becomes or is deemed to be invalid, illegal or unenforceable in any
jurisdiction or would disqualify the Plan 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 Plan or the Award, such provision shall be stricken as to such
jurisdiction or Award, and the remainder of the Plan or any such Award shall
remain in full force and effect.
(g) No Trust or Fund Created. Neither the Plan 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 or any Affiliate and a Participant or
any other Person. To the extent that any Person acquires a right to receive
payments from the Company or any Affiliate pursuant to an Award, such right
shall be no greater than the right of any unsecured general creditor of the
Company or any Affiliate.
(h) No Fractional Shares. No fractional Shares shall be issued
or delivered pursuant to the Plan 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 Plan 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 Plan or any provision thereof.
Original Plan - Approved by the Board on March 3, 1997
- Approved by the Company's Stockholders on ___________