NORTHSTAR COMPUTER FORMS, INC.
AMENDED AND RESTATED
OUTSIDE DIRECTORS STOCK OPTION PLAN
1. ESTABLISHMENT AND PURPOSE. Northstar Computer Forms, Inc. (the
"Company") established in 1995 a plan providing for the grant of stock options
to certain non-employee members of its Board of Directors who are serving or
will serve on the Board of the Company. This plan is known as the Northstar
Computer Forms, Inc. Outside Directors Stock Option Plan and is hereby amended
and restated effective February 5, 1999 (the "Plan"). The purpose of the Plan
is to advance the interests of the Company and its shareholders by enhancing the
Company's ability to attract and retain qualified persons to serve on its Board
of Directors.
2. DEFINITIONS. The following terms have the meanings set forth below,
unless the context otherwise requires:
2.1 "BOARD" means the Board of Directors of the Company.
2.2 "CODE" means the Internal Revenue Code of 1986, as amended.
2.3 "COMMON STOCK" means the common stock of the Company, par value $.05
per share, or the number and kind of shares of stock or other securities into
which such Common Stock may be changed in accordance with Section 4.3 of the
Plan.
2.4 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
2.5 "FAIR MARKET VALUE" means, with respect to the Common Stock, the
following:
(a) If the Common Stock is listed or admitted to unlisted trading
privileges on any national securities exchange or is not so listed or
admitted but transactions in the Common Stock are reported on the Nasdaq
National Market, the last sale price of the Common Stock on such exchange
or reported by the Nasdaq National Market as of such date (or, if no shares
were traded on such day, as of the next preceding day on which there was
such a trade.).
(b) If the Common Stock is not so listed or admitted to unlisted
trading privileges or reported on the Nasdaq National Market, and bid and
asked prices therefor in the over-the-counter market are reported by The
Nasdaq SmallCap Market-Registered Trademark- or the National Quotation
Bureau, Inc. (or any comparable reporting service), the mean of the closing
bid and asked prices as of such date, as so reported by the Nasdaq System,
or, if not so reported thereon, as reported by the National Quotation
Bureau, Inc. (or such comparable reporting service).
(c) If the Common Stock is not so listed or admitted to unlisted
trading privileges, or reported on the Nasdaq National Market, and such bid
and asked prices are
not so reported, such price as the Board determines in good faith in the
exercise of its reasonable discretion.
2.6 "NASD" means the National Association of Securities Dealers, Inc.
2.7 "OPTION" means a right to purchase Common Stock granted to an Outside
Director under this Plan that does not qualify as an incentive stock option
under Section 422 of the Code. Options may be either Formula Options or
Discretionary Options.
2.8 "OUTSIDE DIRECTOR" means a member of the Board who is not an employee
of the Company or any Subsidiary.
2.9 "PERSON" means any individual, corporation, partnership, group,
association or other "person" (as such term is used in Section 14(d) of the
Exchange Act), other than the Company, a wholly owned subsidiary of the Company
or any employee benefit plan sponsored by the Company or a wholly owned
subsidiary of the Company.
2.10 "PREVIOUSLY ACQUIRED SHARES" means shares of Common Stock that are
already owned by the Participant and shares of Common Stock that could be
acquired by the Participant pursuant to the exercise of an Option.
2.11 "SECURITIES ACT" means the Securities Act of 1933, as amended.
2.12 "DISCRETIONARY OPTION" means an Option granted pursuant to Section 5A
of the Plan, which is granted at the discretion of the Administrator.
2.13 "FORMULA OPTION" means an Option granted pursuant to Section 5 of the
Plan, as amended.
3. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the
Company's Compensation Committee (the "Administrator"), who shall be responsible
for overseeing that the terms and conditions of the Plan are complied with and
that grants are made to Outside Directors at the proper times and in the proper
amounts as are required hereunder with respect to Formula Options and properly
implemented with respect to Discretionary Options. The Administrator shall have
the power and authority to make grants of Discretionary Options to Outside
Directors from time to time pursuant to the terms of the Plan, including the
power to determine the number of shares to be covered by each such award granted
hereunder and the terms and conditions, not inconsistent with the terms of the
Plan, of any award granted hereunder (including, but not limited to, any vesting
schedule or restriction on any Option and/or the shares of Common Stock relating
thereto). The Administrator shall have no discretion with respect to Formula
Options.
The Administrator shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable; to interpret the terms and provisions of the
Plan and any award issued under the Plan (and any agreements relating thereto);
and to otherwise supervise the administration of the
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Plan. The Administrator may delegate its authority to officers of the
Company for the purpose of implementing any aspect of the Plan.
4. COMMON STOCK SUBJECT TO THE PLAN.
4.1 NUMBER OF SHARES. Subject to adjustment as provided in Section 4.3
below, the maximum number of shares of Common Stock that shall be authorized and
reserved for issuance under the Plan shall be 150,000 shares of Common Stock.
The maximum number of shares authorized may also be increased from time to time
by approval of the Board and, if required pursuant to Rule 16b-3 under the
Exchange Act or the applicable rules of any securities exchange or the NASD, the
shareholders of the Company.
4.2 SHARES AVAILABLE FOR USE. Shares of Common Stock that may be issued
upon exercise of Options shall be applied to reduce the maximum number of shares
of Common Stock remaining available for use under the Plan. Any shares of
Common Stock that are subject to an Option (or any portion thereof) that lapses,
expires or for any reason is terminated unexercised shall automatically again
become available for use under the Plan.
4.3 ADJUSTMENTS TO SHARES. In the event of any reorganization, merger,
consolidation, recapitalization, liquidation, reclassification, stock dividend,
stock split, combination of shares, rights offering, extraordinary dividend or
divestiture (including a spin-off) or any other change in the corporate
structure or shares of the Company, appropriate adjustment shall be made as to
the number and kind of securities subject to outstanding Options. Without
limiting the generality of the foregoing, in the event that any of such
transactions are effected in such a way that holders of Common Stock shall be
entitled to receive stock, securities or assets, including cash, with respect to
or in exchange for such Common Stock, any Outside Director holding outstanding
Options shall upon the exercise of such Option receive, in lieu of any shares of
Common Stock he or she may be entitled to receive, such stock, securities or
assets, including cash, as have been issued to such Outside Directors if their
Options had been exercised and such Outside Directors had received Common Stock
prior to such transaction.
5. TERMS AND CONDITIONS OF FORMULA OPTIONS
5.1 GRANT. Subject to the terms and conditions of the Plan, the
Administrator shall grant Formula Options to each Outside Director who is not,
on the date such Option would be granted, the beneficial owner (as defined in
Rule 13d-3 under the Exchange Act) of more than 5% of the outstanding Common
Stock, on the terms and conditions set forth in this Section 5. During the term
of the Plan and provided that sufficient shares of Common Stock are available
pursuant to Section 4:
(a) OUTSIDE DIRECTORS ELECTED PRIOR TO 1993. No Outside directors
elected to the Board prior to 1993 shall be eligible to participate in, or
receive Formula Options under, the Plan.
(b) OUTSIDE DIRECTORS ELECTED DURING OR AFTER 1993. Any Outside
Director elected during or after 1993 shall receive a Formula Option to
purchase 10,000 shares of
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Common Stock, which Option shall be issued effective on the date the
Outside Director is elected to the Board (the "Grant Date").
5.2 EXERCISE PRICE. The exercise price for the Formula Options granted
hereunder shall be equal to the Fair Market Value of the Common Stock on the
Grant Date.
5.3 VESTING OF OPTIONS. Subject to the provisions of Section 5.4 hereof,
Formula Options granted hereunder shall vest over a five year period at the rate
of 20% per year, commencing one year from the Grant Date.
5.4 DURATION. Each Formula Option granted to an Outside Director pursuant
to this Plan and all rights to purchase Common Stock thereunder shall terminate
on the earliest of:
(a) Ten years after the date such Option is granted; or
(b) The expiration of the period specified in Section 6, whichever is
applicable, after an Outside Director ceases to be a member of the
Board.
In no event shall a Formula Option be exercisable at any time after its original
expiration date.
5.5 MANNER OF EXERCISE. A Formula Option may be exercised by an Outside
Director in whole or in part from time to time, subject to the conditions
contained herein, by delivery, in person or through certified or registered
mail, of written notice of exercise to the Company at its principal executive
office (Attention: Chief Financial Officer), and by paying in full the total
Option exercise price for the shares of Common Stock purchased. Such notice
shall be in a form satisfactory to the Administrator and shall specify the
particular Option (or portion thereof) that is being exercised and the number of
shares with respect to which the Option is being exercised. The exercise of the
Option shall be deemed effective upon receipt of such notice and payment
complying with the terms of the Plan. As soon as practicable after the
effective exercise of the Option, the Outside Director shall be recorded on the
stock transfer books of the Company as the owner of the shares purchased, and
the Company shall deliver to the Outside Director one or more duly issued stock
certificates evidencing such ownership. If an Outside Director exercises any
Formula Option with respect to some, but not all, of the shares of Common Stock
subject to such Option, the right to exercise such Option with respect to the
remaining shares shall continue until it expires or terminates in accordance
with its terms. A Formula Option shall only be exercisable with respect to
whole shares.
5.6 PAYMENT OF EXERCISE PRICE. The total purchase price of the shares to
be purchased upon exercise of a Formula Option may be paid entirely in cash
(including check, bank draft or money order) or in whole or in part, by transfer
from the Outside Director to the Company of Previously Acquired Shares. In the
event the Outside Director pays the purchase price of a Formula Option in whole
or in part with Previously Acquired Shares, the value of such shares shall be
equal to their Fair Market Value on the date of exercise of the Option.
5.7 RIGHTS AS A SHAREHOLDER. No Outside Directors shall have any rights
as a shareholder with respect to any shares of Common Stock covered by a Formula
Option until the
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Outside Director shall have become the holder of record of such shares, and
no adjustments shall be made for dividends or other distributions or other
rights as to which there is a record date preceding the date the Outside
Director becomes the holder of record of such shares.
5A. TERMS AND CONDITIONS OF DISCRETIONARY OPTIONS
5A.1 GRANT. Subject to the terms and conditions of the Plan, the
Administrator shall have the discretion and authority to grant Discretionary
Options to each Outside Director who is not, on the date such Option would be
granted, the beneficial owner (as defined in Rule 13d-3 under the Exchange Act)
of more than 5% of the outstanding Common Stock, on the terms and conditions set
forth in this Section 5A. The terms and conditions of the Discretionary Options
shall be as specified in a resolution approved by the Administrator or a stock
option grant agreement entered into between an authorized representative of the
Administrator and an Outside Director and may contain or vary any of the
provisions specified in this Section 5A (except for Section 5A.2).
5A.2 EXERCISE PRICE. The exercise price for all Discretionary Options
granted hereunder shall be equal to the Fair Market Value of the Common Stock on
the Grant Date.
5A.3 VESTING OF OPTIONS. Unless otherwise specified by the Administrator,
and subject to the provisions of Section 5A.4 hereof, Discretionary Options
granted hereunder shall vest over a five year period at the rate of 20% per
year, commencing one year from the Grant Date.
5A.4 DURATION. Unless otherwise specified by the Administrator, each
Discretionary Option granted to an Outside Director pursuant to this Plan and
all rights to purchase Common Stock thereunder shall terminate on the earliest
of:
(a) Ten years after the date such Option is granted; or
(b) The expiration of the period specified in Section 6, whichever is
applicable, after an Outside Director ceases to be a member of the Board.
In no event shall a Discretionary Option be exercisable at any time after its
original expiration date.
5A.5 MANNER OF EXERCISE. Unless otherwise specified by the Administrator, a
Discretionary Option may be exercised by an Outside Director in whole or in part
from time to time, subject to the conditions contained herein, by delivery, in
person or through certified or registered mail, of written notice of exercise to
the Company at its principal executive office (Attention: Chief Financial
Officer), and by paying in full the total Option exercise price for the shares
of Common Stock purchased. Such notice shall be in a form satisfactory to the
Administrator and shall specify the particular Option (or portion thereof) that
is being exercised and the number of shares with respect to which the Option is
being exercised. The exercise of the Option shall be deemed effective upon
receipt of such notice and payment complying with the terms of the Plan. As
soon as practicable after the effective exercise of the Option, the Outside
Director shall be recorded on the stock transfer books of the Company as the
owner of the shares purchased, and the Company shall deliver to the Outside
Director one or more duly issued stock certificates evidencing such ownership.
If an Outside Director exercises any Discretionary Option with respect
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to some, but not all, of the shares of Common Stock subject to such Option,
the right to exercise such Option with respect to the remaining shares shall
continue until it expires or terminates in accordance with its terms. A
Discretionary Option shall only be exercisable with respect to whole shares.
5A.6 PAYMENT OF EXERCISE PRICE. The total purchase price of the shares to
be purchased upon exercise of a Discretionary Option may be paid entirely in
cash (including check, bank draft or money order) or in whole or in part, by
transfer from the Outside Director to the Company of Previously Acquired Shares.
In the event the Outside Director pays the purchase price of a Discretionary
Option in whole or in part with Previously Acquired Shares, the value of such
shares shall be equal to their Fair Market Value on the date of exercise of the
Option.
5A.7 RIGHTS AS A SHAREHOLDER. No Outside Directors shall have any rights
as a shareholder with respect to any shares of Common Stock covered by a
Discretionary Option until the Outside Director shall have become the holder of
record of such shares, and no adjustments shall be made for dividends or other
distributions or other rights as to which there is a record date preceding the
date the Outside Director becomes the holder of record of such shares.
6. TERMINATION OF SERVICE ON THE BOARD. An Option granted to an Outside
Director shall continue to be exercisable for a period of one year after the
date such Outside Director ceases to be a member of the Board, for any reason,
but only to the extent that the Option was exercisable immediately prior to said
Outside Director's ceasing to be a member of the Board (and in no event beyond
the date set forth in Section 5.4(a) or Section 5A.4(a), as the case may be).
7. CHANGE IN CONTROL. In the event of any Change in Control of the
Company, as defined herein, all Options held by Outside Directors pursuant to
this Plan shall immediately vest and become exercisable. For purposes of
this Section 7, a "Change in Control" of the Company shall mean (a) the sale,
lease, exchange or other transfer of all or substantially all of the assets
of the Company (in one transaction or in a series of related transactions) to
a corporation that is not controlled by the Company, (b) the approval by the
shareholders of the Company of any plan or proposal for the liquidation or
dissolution of the Company, or (c) a change in control of the Company of a
nature that would be required to be reported (assuming such event has not
been "previously reported") in response to Item 1(a) of the Current Report on
Form 8-K, as in effect on the effective date of the Plan, pursuant to Section
13 or 15(d) of the Exchange Act, whether or not the Company is then subject
to such reporting requirement; provided, however, that, without limitation,
such a Change in Control shall be deemed to have occurred at such time as (i)
any Person becomes after the effective date of the Plan the "beneficial
owner" (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of 20% or more of the combined voting power of the Company's
outstanding securities ordinarily having the right to vote at elections of
directors, or (ii) individuals who constitute the Board on the effective date
of the Plan cease for any reason to constitute at least a majority thereof,
provided that any person becoming a director subsequent to the effective date
of the Plan whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the directors
comprising or deemed pursuant hereto to comprise the Board on the effective
date of the Plan (either by a specific vote or by approval of the proxy
statement of the Company in which such person is named as a nominee for
director) shall be, for purposes of this clause (ii) and the following
sentence, considered as
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though such person were a member of the Board on the effective date of the
Plan. Notwithstanding anything in the foregoing to the contrary, no Change
in Control shall be deemed to have occurred for purposes of this Section 7 by
virtue of any transaction which shall have been approved by the affirmative
vote of at least a majority of the members of the Board on the effective date
of the Plan.
8. RESTRICTIONS ON TRANSFER. Other than pursuant to a qualified domestic
relations order (as defined by the Code), no right or interest of any Outside
Director in an Option prior to the exercise of such Options shall be assignable
or transferable, or subjected to any lien, during the lifetime of the Outside
Director, either voluntarily or involuntarily, directly or indirectly, by
operation of law or otherwise, including execution, levy, garnishment,
attachment, pledge, divorce or bankruptcy. In the event of an Outside
Director's death, such person's rights and interest in Options shall be
transferable by testamentary will or the laws of descent and distribution, and
payment of any amounts due under the Plan shall be made to, and exercise of any
Options (to the extent permitted pursuant to Section 6 of the Plan) may be made
by, the Outside Director's legal representatives, heirs or legatees.
9. NON-EXCLUSIVITY OF THE PLAN. Nothing contained in the Plan is
intended to amend, modify or rescind any previously approved compensation plans
or programs entered into by the Company. The Plan will be construed to be in
addition to any and all such other plans or programs. Neither the adoption of
the Plan nor the submission of the Plan to the shareholders of the Company for
approval will be construed as creating any limitations on the power or authority
of the Board to adopt such additional or other compensation arrangements as the
Board may deem necessary or desirable.
10. SECURITIES RESTRICTIONS. Shares of Common Stock issued pursuant to
Options granted under the Plan may not be sold, assigned, transferred, pledged,
encumbered or otherwise disposed of, whether voluntarily or involuntarily,
directly or indirectly, by operation of law or otherwise, except pursuant to
registration under the Securities Act and applicable state securities laws or
pursuant to exemptions from such registration. The Company may condition the
sale, assignment, transfer, pledge, encumbrance or other disposition of such
shares not issued pursuant to an effective and current registration statement
under the Securities Act and all applicable state securities laws on the receipt
from the party to whom the shares of Common Stock are to be so transferred of
any representations or agreement requested by the Company in order to permit
such transfer to be made pursuant to exemptions from registration under the
Securities Act and applicable state securities laws.
11. PLAN AMENDMENT, MODIFICATION AND TERMINATION. The Board may suspend
or terminate the Plan or any portion thereof at any time, and may amend the Plan
from time to time in such respects as the Board may deem advisable in order that
Options under the Plan shall conform to any change in applicable laws or
regulations or in any other respect the Board may deem to be in the best
interests of the Company; provided, however, that no such amendment shall be
effective, without approval of the shareholders of the Company, if shareholder
approval of the amendment is then required pursuant to Rule 16b-3 under the
Exchange Act or any successor rule or under the applicable rules or regulations
of any securities exchange or the NASD; and provided further that this Plan
shall not be amended more than once in any six month period, except to comply
with applicable rules and regulations of the Code, the Exchange Act, any
securities exchange or the
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NASD. No termination, suspension or amendment of the Plan shall alter or
impair any outstanding Option without the consent of the Outside Director
affected thereby.
12. GOVERNING LAW. This Plan shall be governed by and construed in
accordance with the laws of the State of Minnesota.
13. EFFECTIVE DATE. This Plan shall become effective on the date it is
adopted by the Shareholders of the Company.
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