<PAGE>
As filed with the Securities and Exchange Commission on September 27, 1995
Registration No. 33-_____________
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
----------
NORSTAN, INC.
(Exact name of issuer as specified in its charter)
MINNESOTA 41-0835746
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
605 NORTH HIGHWAY 169, PLYMOUTH, MINNESOTA 55441
(Address of principal executive offices, including Zip Code)
NORSTAN, INC. RESTATED NON-EMPLOYEE DIRECTORS' STOCK PLAN
(Full title of the plan)
RICHARD COHEN Copy to:
VICE CHAIRMAN OF THE BOARD
AND CHIEF FINANCIAL OFFICER WINSTON E. MUNSON
NORSTAN, INC. MACKALL, CROUNSE & MOORE
605 NORTH HIGHWAY 169 1400 AT&T TOWER
PLYMOUTH, MINNESOTA 55441 MINNEAPOLIS, MINNESOTA 55402
(Name and address of agent for service)
(612) 513-4500
(Telephone number, including area code, of agent for service)
Approximate date of commencement of proposed sale:
FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered Per Share (1) Price (1) Fee
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMON STOCK, 146,000 $25.00 $3,650,000 $1,258.62
$.10 PAR VALUE (2) SHARES
- -------------------------------------------------------------------------------
<FN>
(1) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457(c), based upon the average of the high and low prices
for such Common Stock on September 25, 1995, as reported on NASDAQ.
(2) Includes associated Common Stock Rights referred to herein.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Documents containing the information specified in this Part I will be sent
or given to directors as specified by Rule 428(b)(1). Such documents need not
be filed with the Securities and Exchange Commission either as part of this
registration statement or as prospectuses or prospectus supplements pursuant to
Rule 424. Such documents and the documents incorporated by reference in this
registration statement pursuant to Item 3 of Part II, taken together, constitute
a prospectus that meets the requirements of Section 10(a) of the Securities Act
of 1933.
ITEM 1. PLAN INFORMATION.
ITEM 2. REGISTRANT INFORMATION AND PLAN ANNUAL INFORMATION.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents are incorporated herein by reference:
a. Annual Report on Form 10-K of Norstan, Inc. ("Company") for the fiscal
year ended April 30, 1995, filed with the Securities and Exchange Commission
pursuant to Sections 13 or 15(d) of the Exchange Act.
b. All other reports filed by the Company with the Securities and
Exchange Commission since April 30, 1995, pursuant to Sections 13 or 15(d) of
the Exchange Act.
c. Description of the Company Common Stock, contained in the Company's
Registration Statement on Form S-8 (Registration No. 33-30323), filed with the
Securities and Exchange Commission, and the Company's Shareholder Rights Plan,
contained in the Company's Registration Statement on Form 8-A (File No. 0-8141),
filed May 25, 1988, with the Securities and Exchange Commission.
d. All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 and 15(d) of the Exchange Act subsequent to the date of this registration
statement and prior to the filing of a post-effective amendment which indicates
that all securities offered hereby have been sold or which deregisters all such
securities then remaining to be sold.
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<PAGE>
ITEM 4. DESCRIPTION OF SECURITIES.
The common stock, par value $.10 per share, (the "Common Stock") of
the Company offered pursuant to this registration statement is registered under
Section 12(g) of the Securities Exchange Act of 1934. The description of the
Company Common Stock is incorporated by reference pursuant to Item 3.c. above.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Legal matters in connection with the Common Stock offered pursuant to
the Plan have been passed upon for the Company by Messrs. Mackall, Crounse &
Moore, PLC, Minneapolis, Minnesota. Winston E. Munson, of counsel to Mackall,
Crounse & Moore, PLC, is a director, shareholder, optionee under the Restated
Non-Employee Directors' Stock Plan and Secretary of the Company.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As permitted by Section 302A.251 of the Minnesota Statutes, Article
XII of the Articles of Incorporation of the Company provides that a director of
the Company shall not be personally liable to the Company or its stockholders
for monetary damages for certain types of breaches of fiduciary duty as a
director.
Section 302A.521 of the Minnesota Statutes provides that a Minnesota
business corporation shall indemnify directors, officers, employees and agents
in certain circumstances and under certain conditions. In addition, the
Articles of Incorporation and the Bylaws of the Company specifically address
indemnification in accordance with the Minnesota Business Corporation Act. The
Company also maintains an insurance policy that will indemnify directors and
officers against certain liabilities.
Article VI of the Bylaws of the Company provides as follows:
a. The Company shall indemnify a person made or threatened to be made a
party to a proceeding by reason of the former or present official capacity of
the person with the Company in accordance with, and to the fullest extent
permitted by, the provisions of Chapter 302A, Minnesota Statutes.
b. The Company may purchase and maintain insurance at its expense to
protect itself or on behalf of a person in that person's official capacity with
the Company or a subsidiary, against any liability asserted against and incurred
by the person in or arising from that capacity, whether or not the Company would
be required by law to indemnify the person against the liability.
Information with respect to the Company's Articles of Incorporation
and the Minnesota Business Corporation Act relating to indemnification of
directors and officers is set forth in the Company's Registration Statement on
Form S-8 (Registration No. 33-30323), filed with the
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<PAGE>
Securities and Exchange Commission on August 2, 1989, under Item 19 -
"Indemnification of Directors and Officers," at page II-1 thereof, and is
incorporated herein by reference.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION PAGE
4.1 Rights Agreement, dated as of May 17, 1988, between Norstan,
Inc. and Norwest Bank Minnesota, N.A. [incorporated by
reference to Exhibit 1 to the Company's Registration Statement
on Form 8-A, File No. 0-8141, (filed May 25, 1988)]
5.1 Opinion of Mackall, Crounse & Moore, PLC, as to the legality
of Common Stock of the Company . . . . . . . . . . . . . . . . . . . 9
23.1 Consent of Arthur Andersen LLP . . . . . . . . . . . . . . . . . . .11
23.2 Consent of Mackall, Crounse & Moore, PLC [included in its
opinion filed as Exhibit 5.1].
25.1 Powers of Attorney [included as part of signature page].
28.1 Norstan, Inc. Restated Non-Employee Directors' Stock Plan . . . . .12
ITEM 9. UNDERTAKINGS.
(a) RULE 415 OFFERING.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which,
-4-
<PAGE>
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the registration statement is on Form S-3 or Form S-8, and
the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the
registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(b) FILINGS INCORPORATING SUBSEQUENT EXCHANGE ACT DOCUMENTS BY REFERENCE.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to Section 13 or Section 15(d) of
the Securities Exchange Act of 1934 (and, where applicable, each filing of
an employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(h) STATEMENT REQUIRED IN CONNECTION WITH FILING OF REGISTRATION STATEMENT ON
FORM S-8.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the
-5-
<PAGE>
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
-6-
<PAGE>
SIGNATURES
THE REGISTRANT
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Plymouth, State of Minnesota on September 27, 1995.
NORSTAN, INC.
By /s/ Paul Baszucki
----------------------------------
Paul Baszucki
Director, Co-Chairman of the Board and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Paul Baszucki, Richard Cohen and Winston
E. Munson, or such officer of Norstan, Inc. as any of them may designate, or any
one of them, his or her true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him or her and in his or her name,
place and stead, in any and all capacities, to sign any and all amendments or
post-effective amendments to this Registration Statement, and to file the same
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any one of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
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<PAGE>
Pursuant to the requirements of the Securities Act of 1933 this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
- --------- ----- ----
/s/ Paul Baszucki Co-Chairman of the Board, Chief September 27, 1995
- ------------------------ Executive Officer and Director
Paul Baszucki
/s/ Sidney R. Cohen Co-Chairman of the Board and September 27, 1995
- ------------------------- Director
Sidney R. Cohen
/s/ Richard Cohen Vice Chairman of the Board, September 27, 1995
- ------------------------- Chief Financial Officer and
Richard Cohen Director (Principal Financial
and Accounting Officer)
/s/ Max Mayer President, Chief Operating September 27, 1995
- ------------------------- Officer and Director
Max Mayer
/s/ Winston E. Munson Secretary and Director September 27, 1995
- -------------------------
Winston E. Munson
/s/ Arnold Lehrman Director September 27, 1995
- -------------------------
Arnold Lehrman
/s/ Connie M. Levi Director September 27, 1995
- -------------------------
Connie M. Levi
/s/ Gerald D. Pint Director September 27, 1995
- -------------------------
Gerald D. Pint
/s/ Stanley H. Schweitzer Director September 27, 1995
- -------------------------
Stanley H. Schweitzer
Director September __, 1995
- -------------------------
Jagdish N. Sheth
/s/ Herbert F. Trader Director September 27, 1995
- -------------------------
Herbert F. Trader
-8-
<PAGE>
[MACKALL CROUNSE & MOORE PLC LETTERHEAD]
September 27, 1995
EXHIBIT 5.1
Norstan, Inc.
605 North Highway 169
Plymouth, MN 55441
Re: Norstan, Inc. Restated Non-Employee
Directors' Stock Plan
Registration Statement on Form S-8
------------------------------------------------
Ladies and Gentlemen:
We have examined (a) the Registration Statement on Form S-8 (the
"Registration Statement") to be filed by you with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, and the Prospectus to
be used in connection therewith (the "Prospectus"), relating to the issuance by
you of up to 146,000 shares of your common stock, par value $.10 per share, (the
"Common Stock") in the manner set forth in the Registration Statement and the
Prospectus; (b) your Certificate of Incorporation and your Bylaws, both as
amended to date; and (c) your corporate proceedings relative to your
organization and to the issuance of the Common Stock.
In addition to the examination outlined above, we have reviewed such
other proceedings, documents, and records and have ascertained or verified such
additional facts as we deem necessary or appropriate for purposes of this
opinion.
Based upon the foregoing, we are of the opinion that:
1. Norstan, Inc. has been legally incorporated and is validly
existing under the laws of the State of Minnesota.
2. The Common Stock will, when issued by you as contemplated in the
Registration Statement and the Prospectus, be legally issued, fully paid,
and nonassessable.
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<PAGE>
Norstan, Inc.
September 27, 1995
Page 10
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement and to the references to our firm under the caption
"Legal Opinion" in the Prospectus. In giving this consent, we do not admit
hereby that we come within the category of persons whose consent is required
under Section 7 of the Securities Act of 1933 or the rules and regulations of
the Securities and Exchange Commission thereunder.
Very truly yours,
/s/ Mackall, Crounse & Moore, PLC
---------------------------------
MACKALL, CROUNSE & MOORE, PLC
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<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated June 14, 1995
included in Norstan, Inc.'s Form 10-K for the year ended April 30, 1995, and to
all references to our Firm included in this registration statement.
ARTHUR ANDERSEN LLP
Minneapolis, Minnesota
September 27, 1995
-11-
<PAGE>
Exhibit 28.1
NORSTAN, INC. RESTATED NON-EMPLOYEE
DIRECTORS' STOCK PLAN
-12-
<PAGE>
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.
1
<PAGE>
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.
2
<PAGE>
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
3
<PAGE>
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,
4
<PAGE>
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
5
<PAGE>
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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