EXHIBIT 10.17
NATIONAL COMPUTER SYSTEMS, INC.
1998 EMPLOYEE STOCK PURCHASE PLAN
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Section 1. Purpose
1.1 The purpose of the National Computer Systems, Inc. 1998 Employee
Stock Purchase Plan is to give employees an opportunity to share in
the ownership of National Computer Systems, Inc. through a regular
and systematic purchase program from current income by payroll
deduction.
Section 2. Definitions
2.1 For the purpose of the Plan, the following terms will have the
meanings set forth below:
a. Plan. The term "Plan" shall mean the National Computer Systems,
Inc. 1998 Employee Stock Purchase Plan, the terms and
provisions of which are set forth herein.
b. NCS. The term "NCS" will mean National Computer Systems, Inc.,
a Minnesota corporation, and all wholly-owned subsidiaries.
c. Stock. The term "Stock" shall mean the common stock of National
Computer Systems, Inc.
d. Participant. The term "Participant" shall mean an employee of
NCS who has authorized payroll deductions in the manner set
forth in the Plan. Each Participant shall have the same rights
and privileges as every other Participant.
e. Current Compensation. The term "Current Compensation" shall
mean gross earnings of each Participant paid by NCS to such
Participant before any withholding deductions have been made.
f. Purchase Period. The term "Purchase Period" shall mean any
fiscal quarter ending on April 30, July 31, October 31 and
January 31.
g. Enrollment Form. The term "Enrollment Form" shall mean the
Employee Stock Purchase Enrollment Form which an eligible
employee uses to elect to participate in the Plan and to
authorize payroll deductions.
h. Fair Market Value. The term "Fair Market Value" shall be the
last sale price on any business day as reported by NASDAQ.
i. Stock Purchase Account. The term "Stock Purchase Account' shall
mean the individual account established by NCS to which payroll
deductions are credited under the Plan.
j. Regular Employee. The term "Regular Employee" means all
employees of NCS (including officers and directors who are also
employees), except employees who are classified by NCS as
temporary employees whose customary employment is for not more
than 5 months in any calendar year.
Section 3. Eligible Employees
3.1 All Regular Employees of NCS shall be eligible to participate in
the Plan on employment by NCS.
3.2 No employee shall be granted any option hereunder if such employee,
immediately after the option is granted, would own stock possessing
5% or more of the total combined voting power or value of all
classes of stock of NCS or of its parent or subsidiary corporation.
Section 4. Election to Participate
4.1 An eligible employee may elect to participate in this Plan by
completing an Enrollment Form and submitting it to the NCS
Corporate Secretary.
4.2 Participation in the Plan will begin as soon as practicable after
receipt of the Enrollment Form by the NCS Corporate Secretary.
4.3 Participation in the Plan on the part of the Participant is
voluntary and such participation is not a condition of employment,
nor does participation in the Plan entitle a Participant to be
retained as an employee.
Section 5. Purchase Price
5.1 The purchase price for each share of Stock will be the lesser of
the following:
a. 85% of Fair Market Value on the first business day of each
Purchase Period; or
b. 85% of Fair Market Value on the last business day of each
Purchase Period.
Section 6. Payroll Deductions
6.1 A Participant may elect payroll deductions in whole percentages
from two to ten percent of Current Compensation.
6.2 A Participant may elect at any time, but only once in any six-month
period, to increase or reduce the amount of the payroll deduction
within the limitations of Section 6.1 by submitting a new
Enrollment Form with the payroll deduction portion completed. The
effective date of the change will be as soon as practicable after
receipt of the Enrollment Form by the NCS Corporate Secretary.
6.3 Payroll deductions will be credited to the Participant's Stock
Purchase Account on each payroll payment date.
Section 7. Stock Purchase Account
7.1 All funds withheld from a Participant's Current Compensation in
accordance with the payroll authorization shall be credited to the
Participant's Stock Purchase Account. A Participant may not make
any separate cash payments into the Participant's Stock Purchase
Account.
7.2 At the end of each Purchase Period, the largest whole number of
shares of Stock that can be purchased will be purchased for each
Participant who has not withdrawn from the Plan. The purchase
amount, calculated in accordance with Section 5.1, will be charged
to the Participant's Stock Purchase Account.
7.3 Excess funds remaining in a Participant's Stock Purchase Account
after purchase of Stock because the amount of such excess is
insufficient to purchase one whole share of Stock will remain in
the Stock Purchase Account. Excess funds remaining in the
Participant's Stock Purchase Account for any other reason will be
returned to the Participant after the end of each Purchase Period,
but in no case more than thirty days after the end of the Purchase
Period.
7.4 Each Participant will be provided an accounting of the
Participant's Stock Purchase Account as soon as practical after the
end of each Purchase Period, but in no case more than thirty days
after the end of the Purchase Period.
7.5 No Participant shall be permitted to purchase Stock under this Plan
(and any other employee stock purchase plan maintained by NCS and
its parent or subsidiary corporations, if any) at a rate which
exceeds $25,000 in Fair Market Value of capital Stock (determined
at the time the option is granted) for each calendar year in which
such option granted to such Participant is outstanding at any time.
Section 8. Stock Certificates
8.1 As soon as practical after the end of each Purchase Period, NCS
will deliver to Participants certificates representing the shares
of Stock purchased.
8.2 NCS will not be required to issue or deliver any certificate for
Stock purchased under this Plan prior to registration under the
Securities Act of 1933, or registration or filing under any state
law, if such registration or filing is required. NCS will use its
best efforts to accomplish such registrations or filings, including
amendments thereto, but delivery of Stock by NCS may be deferred
until required registrations or filings are accomplished.
8.3 A Participant shall have no interest in the Stock until
certificates for such Stock are issued.
8.4 All certificates issued under the Plan shall be registered in the
name of the Participant or jointly in the name of the Participant
and another person, as the Participant may direct by completing the
Enrollment Form.
Section 9. Withdrawal or Termination
9.1 A Participant may at any time by written notice withdraw from the
Plan. Once a Participant withdraws from the Plan, that Participant
shall not be eligible to reenter the Plan for a period of six
months.
9.2 Payroll deductions will cease upon notice of withdrawal except that
a deduction will be made on the next unpaid payroll where the
withdrawal notice is received after the cut-off date for changes to
such payroll.
9.3 Participation under the Plan will cease upon the date of
termination from employment or death.
9.4 Funds accumulated in the Stock Purchase Account of a Participant
who has withdrawn from the Plan or has terminated participation
under the Plan, in accordance with Sections 9.2 and 9.3, will be
held in the Account until the end of the current Purchase Period.
At that time the funds will be paid to the Participant within
thirty days after the end of the Purchase Period; however, if a
Participant's withdrawal or termination is at the end of the
current Purchase Period so that funds were withheld from the last
payroll of the current Purchase Period, Stock will be purchased to
the extent possible in accordance with Section 7.2 before remaining
funds are paid to the Participant.
9.5 Approved leaves of absence shall not be deemed a termination of
employment for purposes of Section 9.
9.6 A Participant may designate in writing to the Corporate Secretary
the Beneficiaries to receive any distribution under the Plan in the
event of the Participant's death. If no beneficiary is named, the
distribution will be paid to the first of the following classes of
persons in which there is anyone living (and if there are more than
one living in such class, then in equal shares to them):
Participant's widow or widower
Participant's surviving issue (per stirpes and not per
capita)
Participant's surviving parents
Participant's surviving brothers and sisters
Executor or administrator of Participant's estate
Section 10. Transferability
10.1 Any and all rights a Participant may have under this Plan may not
be assigned, transferred, pledged or hypothecated (whether by
operation of law or otherwise) and shall not be subject to
execution, attachment or similar process. Any attempted assignment,
transfer, pledge, hypothecation, other disposition of such rights,
or levy or attachment or similar process shall be null and void and
without effect. Only the Participant may purchase stock under the
Plan.
10.2 The funds accumulated in the Stock Purchase Account may not be
assigned, transferred, pledged or hypothecated in any way, and any
attempted assignment, transfer, pledge, hypothecation or other
disposition of the funds accumulated in the Stock Purchase Account
shall be null and void and without effect.
Section 11. Effective Date and Amendment or Termination of Plan
11. The Plan was adopted by the Board of Directors of NCS on March 3,
1998. The Plan must be approved by the Shareholders of NCS at their
Annual Meeting to be held on May 21, 1998. This 1998 Plan will
become effective for the Purchase Period beginning May 1, 1998.
Should approval not be granted this Plan will terminate and all
funds held in Stock Purchase Accounts will be refunded to
Participants.
11.2 The Plan shall automatically terminate on January 31, 2008 unless
extended by the Board of Directors. The Board of Directors may by
resolution extend the Plan for one or more additional periods of
five years each.
11.3 The Board of Directors may at any time terminate or amend the Plan
except that no amendment shall be made without prior approval by
the Shareholders which would authorize the sale of more than an
aggregate of 500,000 shares of Stock, (after giving effect to the
2-for-1 stock split effected in the form of an 100% stock dividend
as approved by the NCS Board of Directors on March 3, 1998), except
as provided in Section 13.
11.4 Upon termination of the Plan, the accumulated funds in each
Participant's Stock Purchase Account will be used to purchase the
largest number of whole shares of Stock as possible. Any balance
remaining after said purchase shall be refunded to the Participant.
Section 12. Administration
12.1 The Plan shall be administered by the NCS Board of Directors. In
administering the Plan, it will be necessary to follow various laws
and regulations. The Board of Directors may from time to time
interpret the Plan to conform with the law, to meet special
circumstances not anticipated or covered in the Plan, or to carry
on successful operations of the Plan. Determinations as to the
interpretation and operation of this Plan shall be final and
conclusive.
12.2 No charge will be made by NCS against the funds received from each
Participant for purchase of Stock under the Plan.
12.3 All expenses and fees incurred by NCS in the administration of this
Plan will be borne by NCS. However, all brokerage fees or other
expenses incurred by a Participant in selling or otherwise
transferring shares of Stock will be borne by the Participant.
Section 13. Adjustment in Shares Available under the Plan, Merger or
Consolidation
13.1 If the outstanding shares of Stock are increased, decreased,
changed into or exchanged for a different number or kind of shares
of securities of NCS, or shares of a different par value or without
par value, through split, amendment to NCS' Articles of
Incorporation, or reverse stock split, an appropriate or
proportionate adjustment shall be made in the maximum number and/or
kind of securities to be sold under this Plan with a corresponding
adjustment in the purchase price to be paid for each share to be
purchased under this Plan.
13.2 If NCS is merged into or consolidated with one or more corporations
during the term of the Plan, appropriate adjustments shall be made
to give effect thereto on an equitable basis in terms of issuance
of shares of the corporation surviving the merger or the
consolidated corporation, as the case may be.
Section 14. Stock to Be Sold
14.1 Stock to be issued and sold under the Plan will be unissued stock.
14.2 The number of shares of Stock to be sold under the Plan shall not
exceed 500,000 shares, except as provided in Section 13. If such
limitation would otherwise be exceeded at the end of a Purchase
Period the remaining shares of Stock will be allocated to
Participants pro-rata on the basis of the funds in each Stock
Purchase Account.
Section 15. Funds in Stock Purchase Account
15.1 The funds in the Participant's Stock Purchase Account, after
receipt by NCS, shall be under the direction of NCS and applied to
the payment of stock purchased or refunded to the Participant in
accordance with the Plan as set forth herein.
15.2 Funds held by NCS in the Stock Purchase Accounts are held for the
benefit of the Participants but may be commingled with other NCS
funds.
15.3 No interest will be accumulated or paid by NCS on funds held in the
Stock Purchase Accounts.
Section 16. Construction; Notices
16.1 NCS intends that the Plan qualify as an "Employee Stock Purchase
Plan" under Section 423 of the Internal Revenue Code of 1986, as
amended, if approved by the NCS Shareholders; therefore, the Plan
shall be construed in a manner consistent therewith if so approved.
All Participants shall have the same rights and privileges
consistent with the terms of the Plan.
16.2 Notices to the Board of Directors shall be addressed as follows:
National Computer Systems, Inc.
Attention: Corporate Secretary
11000 Prairie Lakes Drive
P.O. Box 9365
Minneapolis, MN 55440