EXHIBIT 10.4
NATIONAL COMPUTER SYSTEMS, INC.
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
1. Purpose of Plan
This plan shall be known as the "National Computer Systems, Inc.
Non-Employee Director Stock Option Plan" and is hereinafter referred to as the
"Plan." The purpose of the Plan is to promote the interests of National Computer
Systems, Inc., a Minnesota corporation (the "Company"), by enhancing its ability
to attract and retain the services of experienced and knowledgeable non-employee
directors and by providing additional incentive for such directors to increase
their interest in the Company's long-term success and progress. Options granted
under this Plan shall be nonqualified stock options which do not qualify as
incentive stock options within the meaning of Section 422A of the Internal
Revenue Code of 1986, as amended (the "Code").
2. Stock Subject to Plan
Under this Plan, options may be granted for shares of the Company's Common
Stock, $03. par value. The Common Stock subject to options shall be either
authorized but unissued shares or shares reacquired by the Company. Subject to
the adjustment as provided in Section 10 hereof, the maximum number of shares of
Common Stock on which options may be exercised under this Plan shall be 200,000
(after giving effect to the 2-for-1 stock split declared in March, 1998) shares.
If an option under the Plan expires, or for any reason is terminated or
unexercised with respect to any shares, such shares shall again be available for
options thereafter granted during the term of the Plan.
3. Administration of Plan
The Plan shall be administered by the Board of Directors of the Company
(the "Board"). The Board shall have the authority, in its discretion, subject to
the express provisions of this Plan, to interpret the Plan, to prescribe, amend,
and rescind rules and regulations relating to the Plan, and to make all other
determinations necessary or advisable for the administration of the Plan. The
Board's determinations on the foregoing matters shall be final and conclusive.
4. Eligibility
Upon approval of the Plan by the Board of Directors, but subject to
approval of the Plan by shareholders of the Company pursuant to Section 13
hereof, each director of the Company who is not otherwise an employee of the
Company or any subsidiary of the Company (an "Eligible Director") shall
automatically be granted, on each date that he or she is elected or reelected as
a director of the Company, an option to acquire 3,000 shares of Common Stock
under the Plan.
5. Price
The option price for all options granted under the Plan shall be the fair
market value of the shares covered by the option on the date the option is
granted. For purposes of this Plan, the fair market value of the Common Stock on
a given date shall be (i) the last trade price of the Common Stock as reported
on the NASDAQ National Market System on such date, if the Common Stock is then
quoted on the NASDAQ National Market System; or (ii) the closing price of the
Common Stock on such date on a national securities exchange, if the Common Stock
is then being traded on a national securities exchange. If on the date as of
which the fair market value is being determined, the Common Stock is not
publicly traded, then the next preceding date on which there was a trade will be
used.
6. Term
Each option and all rights and obligations thereunder shall, subject to the
provisions of Section 8 herein, expire ten years from the date of granting of
the option.
7. Exercise of Option
(a) Options granted under the Plan shall not be exercisable for a period of
six months after date of grant, or until shareholder approval of the Plan has
been obtained, whichever occurs later, but thereafter will be exercisable in
full at any time or from time to time during the term of the option, subject to
the provisions of Section 8 hereof
(b) The exercise of any option granted hereunder shall only be effective at
such time as counsel to the Company shall have determined that the issuance and
delivery of Common Stock pursuant to such exercise will not violate any state or
federal securities or other laws. An optionee desiring to exercise an option may
be required by the Company, as a condition of the effectiveness of any exercise
of an option granted hereunder, to agree in writing that all Common Stock to be
acquired pursuant to such exercise shall be held for his or her own account
without a view to any further distribution thereof, that the certificates for
such shares shall bear an appropriate legend to that effect and that such shares
will not be transferred or disposed of except in compliance with applicable
federal and state securities laws.
(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 full purchase price of such shares shall be tendered with such
notice of exercise. Payment shall be made to the Company either (i) in cash
(including check, bank draft or money order), or (ii) by delivering the
Company's Common Stock already owned by the optionee having a fair market value
on the date of exercise equal to the full purchase price of the shares, or (iii)
by any combination of cash and the method specified in (ii) of this sentence;
provided, however, that an optionee shall not be entitled to tender shares of
Common Stock pursuant to successive, substantially simultaneous exercises of
options granted hereunder or in any manner tantamount to the technique commonly
referred to as "pyramiding." For purposes of the preceding sentence, the fair
market value of Common Stock tendered shall be determined as provided in Section
5 hereof as of the date of exercise. Until such person has been issued a
certificate or certificates for the shares subject to such exercise, he or she
shall possess no rights as a shareholder with respect to such shares.
8. Effect of Termination of Directorship or Death
(a) In the event that an optionee shall cease to be a director of the
Company for any reason other than his or her gross and willful misconduct or his
or her death, such optionee shall have the right to exercise the option at any
time within the remaining term of the option.
(b) In the event that an optionee shall cease to be a director of the
Company by reason of his or her gross and willful misconduct during the course
of his or her service as a director of the Company, including but not limited to
wrongful appropriation of funds of the Company, or the commission of a gross
misdemeanor or felony, any unexercised option granted pursuant to the Plan shall
be terminated as of the date of the misconduct.
(c) If the optionee shall die and such optionee shall not have fully
exercised any option granted under the Plan, such option may be exercised at any
time within twelve months after his or her death by the personal
representatives, administrators or, if applicable, 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 he or she was entitled
to purchase under the option on the date of death, and subject to the condition
that no option shall be exercisable after the expiration of the term of the
option.
(d) Nothing in this Plan or in any agreement hereunder shall confer on any
optionee any right to continue as a director of the Company or affect in any way
any legal rights with respect to termination of such directorship or removal of
such optionee as a director.
9. Non-Transferability
No option granted under the Plan shall be transferable by optionee,
otherwise than by will or the laws of descent or distribution as provided in
Section 8(c) herein. During the lifetime of an optionee, the option shall be
exercisable only by such optionee.
10. Dilution or Other Adjustments
If there shall be any change in the Common Stock through merger,
consolidation, reorganization, recapitalization, stock dividend (of whatever
amount), stock split or other change in the corporate structure, appropriate
adjustments in the Plan and outstanding options shall be made. 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 subject to
outstanding options and the exercise prices thereof in order to prevent dilution
or enlargement of option rights.
11. Amendment or Discontinuance of Plan
The Board of Directors may amend or discontinue the Plan at any time
subject to applicable law and regulations. The Board of Directors shall not
alter or impair any option theretofore granted under the Plan without the
consent of the holder of the option.
12. Effective Date and Termination of Plan
(a) The Plan was approved by the Board of Directors on February 27, 1989,
and shall be approved by shareholders of the Company within 12 months
thereafter.
(b) Unless the Plan shall have been discontinued as provided in Section 11
hereof, the Plan shall terminate on January 31, 1999. No option may be granted
after such termination, but termination of the Plan shall not without consent of
the optionee, alter or impair any rights or obligations under any option
theretofore granted.
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Plan approved by stockholders on May 25, 1989. Plan amended by directors on
February 1, 1997. Plan amended by directors on March 3, 1998.