Exhibit 28.1
NORSTAN, INC. RESTATED NON-EMPLOYEE
DIRECTORS' STOCK PLAN
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NORSTAN, INC.
RESTATED NON-EMPLOYEE DIRECTORS' STOCK PLAN
1. PURPOSE. The purpose of this Norstan, Inc. Restated Non-Employee
Directors' Stock Plan (the "Restated Plan") is to strengthen the ability of
Norstan, Inc. (the "Company") to attract and retain as directors persons of
experience and ability who are not employees of the Company or its Subsidiaries
("Non-Employee Directors"), and to encourage such directors to acquire a
proprietary interest in the Company, thereby creating an additional incentive to
such directors to promote the Company's best interests and to continue as
directors. For purposes of this Restated Plan, "Subsidiary" means any
corporation, at least 50% of the outstanding voting stock or voting power of
which is beneficially owned, directly or indirectly, by the Company. The Board
of Directors adopted the Restated Plan to amend and restate the 1986 Directors'
Stock Option Plan (the "1986 Plan").
2. SHARES OF STOCK SUBJECT TO THIS RESTATED PLAN. The number of shares
which may be issued pursuant to this Restated Plan shall not exceed 150,000
shares of the $.10 par value common stock of the Company (the "Common Stock"),
subject to adjustment as provided herein. Such shares may be authorized and
unissued shares or shares previously acquired or to be acquired by the Company
and held in treasury. Any shares subject to an option which expires for any
reason or is terminated unexercised as to such shares may again be available for
grant under this Restated Plan.
3. AUTOMATIC OPTION GRANT. Under this Restated Plan, each Non-Employee
Director is automatically granted an option to purchase shares of Common Stock.
Each person who was elected to be a director of the Company at the 1986 Annual
Meeting of Shareholders of the Company and who was not an employee of the
Company or its Subsidiaries at the time of such election, received a one-time
grant of an option under this Restated Plan for 10,000 shares of Common Stock.
Each person who was first elected or appointed to be a director of the Company
subsequent to the 1986 Annual Meeting of Shareholders of the Company and who was
not then an employee of the Company or its Subsidiaries, at the time of such
election or appointment, received a one-time grant of an option under this
Restated Plan for 10,000 shares of Common Stock. Any other person who, during
the term of this Restated Plan, is first elected or appointed to be a director
of the Company and who is not then an employee of the Company or its
Subsidiaries shall, upon such election or appointment, receive a one-time grant
of an option under this Restated Plan for 10,000 shares of Common Stock.
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4. TERM AND EXERCISE OF OPTION. The term of each option shall be for ten
years from the date of grant, subject to earlier termination as provided herein.
a. As to directors elected at the 1986 Annual Meeting of
Shareholders of the Company, except as otherwise provided herein, each option is
exercisable in full at any time during the period commencing on the date of
grant and ending ten years from the date of grant.
b. As to directors elected subsequent to the 1986 Annual Meeting of
Shareholders of the Company, except as otherwise provided herein, each option
granted will be exercisable in cumulative installments as follows:
(1) Twenty percent (20%) of the shares subject to the option may be
purchased at any time during the period commencing six months from the date
of grant and ending ten years from the date of grant;
(2) An additional twenty percent (20%) of the shares subject to the
option may be purchased at any time during the period commencing one year
from the date of grant and ending ten years from the date of grant;
(3) An additional twenty percent (20%) of the shares subject to the
option may be purchased at any time during the period commencing two years
from the date of grant and ending ten years from the date of grant;
(4) An additional twenty percent (20%) of the shares subject to the
option may be purchased at any time during the period commencing three
years from the date of grant and ending ten years from the date of grant;
and
(5) An additional twenty percent (20%) of the shares subject to the
option may be purchased at any time during the period commencing four years
from the date of grant and ending ten years from the date of grant.
The amounts set forth in subparagraphs (1), (2), (3), (4) and (5), above,
shall be cumulative.
5. ISSUANCE AND TERMS OF OPTION AGREEMENTS. Each person to whom an
option is granted under this Restated Plan shall be entitled to receive an
appropriate agreement evidencing the option and referring to the terms and
conditions of this Restated Plan.
6. OPTION PRICE.
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a. Each option agreement shall state the number of shares to which
it pertains and shall state the option price, which shall be the Fair Market
Value of the Common Stock on the date the option is granted. "Fair Market
Value", as used in this Restated Plan, shall mean the average of the high and
low sale prices of the Common Stock as reported on the NASDAQ National Market
System for a pertinent option grant date.
b. The option price for each stock option shall be paid in full upon
exercise and shall be payable in cash in United States dollars (including check,
bank draft or money order); provided, however, that in lieu of such cash the
person exercising the stock option may pay the option price in whole or in part
by delivering to the Company shares of the Common Stock having a fair market
value on the date of exercise of the stock option, equal to the option price for
the shares being purchased; except that any portion of the option price
representing a fraction of a share shall in any event be paid in cash, or by
delivering instructions to the Company to withhold from the shares that would
otherwise be issued upon exercise that number of shares having a fair market
value equal to the exercise price or by any combination of the above. Delivery
of shares may also be accomplished through the effective transfer to the Company
of shares held by a broker or other agent. The Company will also cooperate with
any person exercising a stock option who participates in a cashless exercise
program of a broker or other agent under which all or part of the shares
received upon exercise of the stock option are sold through the broker or other
agent or under which the broker or other agent makes a loan to such person. As
of the date of exercise the person exercising the stock option shall be
considered for all purposes to be the owner of the shares with respect to which
the stock option has been exercised. Payment of the option price with shares
shall not increase the number of shares of the Common Stock which may be issued
under the Restated Plan.
7. ANNUAL RETAINER.
a. The Board shall each year determine the annual retainer payable
to all Non-Employee Directors of the Company.
b. Commencing with the Annual Meeting of Shareholders in September
1995 and on the date of each annual meeting of shareholders thereafter, each
Non-Employee Director shall receive for service as a director of the Company his
or her annual retainer (exclusive of any per meeting fees, committee fees,
bonuses or expense reimbursements), as set from time to time by the Board
("Annual Retainer") in the form of a stock payment ("Stock Payment") in shares
of the Company's Common Stock.
c. The Annual Retainer shall automatically be paid in shares of
Common Stock on the date of the Annual Meeting of
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Shareholders in September of 1995 and on the date of the annual meeting of
shareholders in each succeeding year (rounded to the nearest ten shares). The
total number of shares of Common Stock included in each Stock Payment shall be
determined by dividing the amount of a Non-Employee Director's Annual Retainer
that is to be paid in shares of Common Stock by the Fair Market Value of a share
of Common Stock. The Annual Retainer payable to each Non-Employee Director
elected at the September 1995 Annual Meeting of Shareholders has been set at
$10,000 by the Board of Directors. For purposes of the Restated Plan, Fair
Market Value shall be determined on September 20, 1995 and on the date of each
annual meeting of shareholders thereafter by taking the average of the high and
low sale prices of the Common Stock as reported on the NASDAQ National Market
System.
d. A Non-Employee Director who becomes a member of the Board after
the annual meeting of shareholders in any year will be awarded a prorated number
of shares based on the number of full months of service for that year. For
purposes of determining such number of shares, the Fair Market Value of a share
of Common Stock on the day of the director's election or appointment to the
Board will be used.
e. If a Non-Employee Director's services as a board member are
terminated prior to the next annual meeting of the Company's shareholders, and
such termination is not a qualified termination ("Qualified Termination"), a
prorata portion of the Annual Retainer reflecting payment for service during the
remainder of such annual term shall be repaid to the Company by such Non-
Employee Director.
f. Any shares of common stock issued as the Annual Retainer shall be
restricted shares and shall not be sold or transferred by the Non-Employee
Director for a period of at least six months.
8. WITHHOLDING TAXES. The Company and its Subsidiaries shall have the
right to require the payment (through withholding or otherwise) of any federal,
state or local taxes required by law to be withheld with respect to the issuance
of shares upon the exercise of an option or the payment of the Annual Retainer.
9. GENERAL RESTRICTIONS. The issuance of Common Stock or the delivery of
certificates for such Common Stock to Non-Employee Directors hereunder shall be
subject to the requirement that, if at any time the Company shall reasonably
determine, in its discretion, that the listing, registration or qualification of
such shares upon any securities exchange or under any state or federal law, the
consent or approval of any government body, or an agreement by the Non-Employee
Director with respect to the shares of Common Stock, is necessary or desirable
as a condition of, or in connection with, such issuance or delivery thereunder,
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such issuance or delivery shall not take place unless such listing,
registration, qualification, consent, approval or agreement shall have been
effected or obtained free of any conditions not reasonably acceptable to the
Company.
10. NONTRANSFERABILITY. All options and other rights granted under this
Restated Plan shall be nontransferable by the Non-Employee Director, otherwise
than by will or the laws of descent and distribution, and shall be exercisable
during the Non-Employee Director's lifetime, only by the Non-Employee Director.
11. TERMINATION OF DIRECTORSHIP.
a. If an optionee shall cease to be a director of the Company, and
such termination is not a Qualified Termination, the optionee may, within a
period of two years after the date of such termination, exercise any option
hereunder if and to the extent that the optionee was entitled to exercise it at
the date of such termination.
b. In the event of the death of an optionee while a director of the
Company, the option theretofore granted to the optionee shall be exercisable
only by the proper beneficiary within a period of two years after the date of
death.
c. Notwithstanding paragraphs a and b of this Section 11 or any
other provision of this Restated Plan, no option or part of an option shall be
exercisable by the optionee or any beneficiary after the expiration of the term
of the option.
12. QUALIFIED TERMINATION. A Qualified Termination is termination of
service as a director for any of the following reasons: (a) the director's
retirement at any time after age 65, (b) the director's Board service is
terminated by reason of the director's death or disability, or (c) the
director's Board service is terminated with the consent of a majority of the
other directors. In the event of a director's Qualified Termination, any
nonvested stock options granted to the director shall immediately vest and may
be exercised within a period of two years after the date of such termination and
no portion of the Annual Retainer shall be repayable to the Company by the
director.
13. ADJUSTMENTS. In the event of any change in the outstanding shares of
Common Stock by reason of any stock dividend or split, recapitalization,
reclassification, merger, consolidation, combination or exchange of shares or
other similar corporate change, then if the Board of Directors shall determine,
in its sole discretion, that such change necessarily or equitably requires an
adjustment in the number of shares subject to each outstanding option, in the
option prices or in other rights
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granted hereunder or in the maximum number of shares subject to this Restated
Plan, such adjustments shall be made by the Board of Directors and shall be
conclusive and binding for all purposes of this Restated Plan. No adjustment
shall be made in connection with the issuance by the Company of any warrants,
rights, or options to acquire additional shares of Common Stock or of securities
convertible into Common Stock.
14. CHANGE IN CONTROL. Notwithstanding any other provision contained in
the Restated Plan, in case any Change in Control ("Change in Control") occurs,
all outstanding stock options shall become immediately and fully exercisable
whether or not otherwise exercisable by their terms and any and all restrictions
on Common Stock issued hereunder shall be immediately waived and released. For
the purposes of the Restated Plan, a Change in Control shall be deemed to occur
when and if:
a. Any Person (meaning any individual, firm, corporation,
partnership, trust or other entity, and includes a "group" (as that term is used
in Sections 13(d) and 14(d) of the Act), but excludes Continuing Directors (as
defined below) and benefit plans sponsored by the Company):
(1) makes a tender or exchange offer for any shares of the
Company's outstanding voting securities at any point in time (the
"Company Stock") pursuant to which any shares of the Company's Stock
are purchased; or
(2) together with its "affiliates" and "associates" (as those
terms are defined in Rule 12b-2 under the Securities Exchange Act of
1934 (the "Act")) becomes the "beneficial owner" (within the meaning
of Rule 13d-3 under the Act) of at least 20% of Company's Stock; or
b. The shareholders of the Company approve a definitive agreement or
plan to merge or consolidate the Company with or into another unaffiliated
corporation, to sell or otherwise dispose of all or substantially all of its
assets, or to liquidate the Company; or
c. A majority of the members of the Board become individuals other
than Continuing Directors (as defined below).
A "Continuing Director" means: (a) any member of the Board as of
June 8, 1995, and (b) any other member of the Board, from time to time, who was
(i) nominated for election by the Board or (ii) appointed by the Board to fill a
vacancy on the Board or to fill a newly-created directorship, in each case
excluding any individual nominated or appointed (y) at a Board meeting at which
the majority of directors present are not Continuing Directors or (z) by
unanimous written action of the
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Board unless a majority of the directors taking such action are Continuing
Directors.
15. CLAIM TO STOCK OWNERSHIP OR DIRECTORSHIP. Except as otherwise
provided herein, no Non-Employee Director shall have any claim or right to be
granted an option or to have stock issued under the Restated Plan. No Non-
Employee Director, prior to issuance of the stock, shall be entitled to voting
rights, dividends or other rights of shareholders except as otherwise provided
in this Restated Plan. This Restated Plan shall not be construed as giving any
person any right to continue as a director of the Company.
16. EXPENSES OF RESTATED PLAN. The expenses of administering this
Restated Plan shall be borne by the Company.
17. AMENDMENT OR DISCONTINUANCE. The Restated Plan may be amended or
modified at any time and from time to time by the Board as the Board shall deem
advisable, provided, however, that no amendment or modification may become
effective without approval by the shareholders of the Company in accordance with
Paragraph 21 below if shareholder approval is required to enable the Restated
Plan to satisfy any applicable statutory or regulatory requirements, or if the
Company, on the advice of counsel, determines that shareholder approval is
otherwise necessary or desirable, and provided further, that no amendment or
modification shall be made more than once every six months, other than to
comport with changes in the Internal Revenue Code of 1986, as amended, the
Employment Retirement Income Security Act of 1974, as amended, or the rules
promulgated thereunder. No amendment or modification of the Restated Plan shall
materially and adversely affect any right of any Non-Employee Director with
respect to any Annual Retainer shares theretofore received, or stock options
theretofore granted, without such Non-Employee Director's written consent.
Unless earlier terminated by action of the Board, the Restated Plan will
terminate on August 7, 2005.
18. SECTION 16 COMPLIANCE. With respect to persons subject to Section 16
of the Act, transactions under this Restated Plan are intended to comply with
all applicable conditions of Rule 16b-3 or its successors under the Act. To the
extent any provision of the Restated Plan or action by the plan administrators
fails to so comply, it shall be deemed null and void, to the extent permitted by
law and deemed advisable by the Board of Directors. Moreover, in the event the
Restated Plan does not include a provision required by Rule 16b-3 to be stated
therein, such provision (other than one relating to eligibility requirements, or
the price and amount of awards) shall be deemed automatically to be incorporated
by reference into the Restated Plan insofar as Non-Employee Directors subject to
Section 16 are concerned. All grants and exercises of options and the issuance
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of shares under the Restated Plan shall be executed in accordance with Section
16 and any regulations promulgated thereunder.
19. INTERPRETATION. This Restated Plan shall be administered by the Board
of Directors. The interpretation and construction of any provision of this
Restated Plan and any option granted hereunder shall be made by the Board of
Directors and shall be final, conclusive and binding on the Company, the Non-
Employee Director and all other persons.
20. GOVERNING LAW. To the extent not preempted by federal law, the
Restated Plan shall be governed by the laws of the State of Minnesota.
21. SHAREHOLDER APPROVAL AND ADOPTION. The Restated Plan shall be
submitted to the shareholders of the Company for their approval and adoption at
the meeting of shareholders of the Company to be held on September 20, 1995.
The Restated Plan, as amended, shall not be effective unless and until the
Restated Plan has been so approved and adopted. The shareholders shall be
deemed to have approved and adopted the Restated Plan only if it is approved and
adopted at a meeting of the shareholders duly held on that date (or any
adjournment of said meeting occurring subsequent to such date) by vote taken in
the manner required by the laws of the State of Minnesota. Any option granted
under the Restated Plan subsequent to August 8, 1995, and prior to the date of
such approval shall be contingent on such approval. The provisions of the
Restated Plan including the amendments made herein shall apply to the stock
options now outstanding which were granted under the 1986 Plan.
22. EFFECTIVE DATE OF THE RESTATED PLAN. The effective date of this
amended and Restated Plan shall be August 8, 1995, subject to shareholder
approval as described above on or before August 7, 1996.
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