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Exhibit 10.2
PAPER WAREHOUSE, INC.
1998 EMPLOYEE STOCK PURCHASE PLAN
(AS AMENDED AND RESTATED AND EFFECTIVE AS OF JANUARY 31, 2000)
1. PURPOSE.
The purpose of this 1998 Employee Stock Purchase Plan, as amended and
restated and effective as of January 31, 2000 (the "PLAN") is to advance the
interests of Paper Warehouse, Inc. (the "COMPANY") and its shareholders by
providing Eligible Employees of the Company and its Participating Subsidiaries
with an opportunity to acquire an ownership interest in the Company through the
purchase of Common Stock of the Company on favorable terms through payroll
deductions. The Plan shall constitute an amendment and restatement of the
Company's existing 1998 Employee Stock Purchase Plan (the "FORMER PLAN") and as
such shall supersede and replace the Former Plan. The Former Plan shall be
deemed outstanding, however, only to the extent necessary to determine the terms
and conditions of any such offers to purchase Company Common Stock or other
rights previously granted under the Former Plan. The Company intends that the
Plan qualify as an "employee stock purchase plan" under Section 423 of the Code.
Accordingly, provisions of the Plan will be construed so as to extend and limit
participation in a manner consistent with the requirements of Section 423 of the
Code.
2. DEFINITIONS.
2.1 "BOARD" means the Board of Directors of the Company.
2.2 "CHANGE IN CONTROL" means an event described in Section 9.1
of the Plan.
2.3 "CODE" means the Internal Revenue Code of 1986, as amended.
2.4 "COMMITTEE" means the group of individuals administering
the Plan, as provided in Section 3 of the Plan.
2.5 "COMMON STOCK" means the common stock, par value $0.01 per
share, of the Company, 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.
2.6 "COMPENSATION" means all gross cash compensation (including
wage, salary, incentive, bonus, commission and overtime earnings) paid by the
Company or any Participating Subsidiary to a Participant, including amounts that
would have constituted compensation but for a Participant's election to defer or
reduce compensation pursuant to any deferred compensation, cafeteria, capital
accumulation or any other similar plan of the Company; provided, however, that
the Committee, in its sole discretion, may expand or limit the amounts that will
be deemed compensation for purposes of the Plan in such manner as it deems
appropriate.
2.7 "ELIGIBLE EMPLOYEE" means any employee of the Company or a
Participating Subsidiary who, with respect to any Offering Period, has been
continuously employed by the Company or a Participating Subsidiary for at least
one year prior to the Offering Commencement Date for such Offering Period. With
respect to a Subsidiary that has been acquired by the Company and designated as
a Participating Subsidiary or a Subsidiary that is otherwise subsequently
designated by the Committee as a Participating Subsidiary, the period of
employment of employees of such Participating Subsidiary occurring prior to the
time of such acquisition or designation will be included for purposes of
determining whether an employee has been employed for the requisite period of
time under the Plan.
2.8 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
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2.9 "FAIR MARKET VALUE" means, with respect to the Common Stock,
as of any date (or, if no shares were traded or quoted on such date, as of the
next preceding date on which there was such a trade or quote) (a) the mean
between the reported high and low sale prices of the Common Stock if the Common
Stock is listed, admitted to unlisted trading privileges or reported on any
foreign or national securities exchange or on the Nasdaq National Market or an
equivalent foreign market on which sale prices are reported; (b) if the Common
Stock is not so listed, admitted to unlisted trading privileges or reported, the
closing bid price as reported by the Nasdaq SmallCap Market, OTC Bulletin Board,
National Quotation Bureau, Inc. or other comparable service; or (c) if the
Common Stock is not so listed or reported, such price as the Committee
determines in good faith in the exercise of its reasonable discretion.
2.10 "OFFERING COMMENCEMENT DATE" means the first day of an
Offering Period.
2.11 "OFFERING PERIOD" means any of the offerings to Participants
of Options under the Plan, each continuing for six months, as described in
Section 6 of the Plan.
2.12 "OFFERING TERMINATION DATE" means the last day of an Offering
Period.
2.13 "OPTION" means a right to purchase shares of Common Stock
granted to a Participant in connection with an Offering Period pursuant to
Section 7 of the Plan.
2.14 "OPTION PRICE" means, with respect to any Offering Period, the
lower of (a) 85% of the Fair Market Value of one share of Common Stock on the
Offering Commencement Date, or (b) 85% of the Fair Market Value of one share of
Common Stock on the Offering Termination Date.
2.15 "PARTICIPANT" means an Eligible Employee who elects to
participate in the Plan pursuant to Section 5 of the Plan.
2.16 "PARTICIPATING SUBSIDIARY" means a Subsidiary that has been
designated by the Committee from time to time, in its sole discretion, as a
corporation whose Eligible Employees may participate in the Plan.
2.17 "SECURITIES ACT" means the Securities Act of 1933, as amended.
2.18 "SUBSIDIARY" means any subsidiary corporation of the Company
within the meaning of Section 424(f) of the Code.
2.19 "TERMINATION OF EMPLOYMENT" means a Participant's complete
termination of employment with the Company and all Participating Subsidiaries
for any reason, including death, disability or retirement. In the event that a
Participant is in the employ of a Participating Subsidiary and the Participating
Subsidiary ceases to be a Participating Subsidiary of the Company for any
reason, such event will be deemed a termination of employment unless the
Participant continues in the employ of the Company or another Participating
Subsidiary.
3. ADMINISTRATION.
The Plan will be administered by the Board or by a Committee of the
Board. So long as the Company has a class of its equity securities registered
under Section 12 of the Exchange Act, the Plan will be administered by a
Committee of the Board consisting of at least two members of the Board who are
"non-employee directors" within the meaning of Rule 16b-3 under the Exchange
Act. Such a Committee will act by majority approval of the members (but may also
take action with the written consent of a majority of the members of such
Committee), and a majority of the members of such a Committee will constitute a
quorum. As used in the Plan, "Committee" will refer to the Board or to such
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a Committee, if established. To the extent consistent with corporate law, the
Committee may delegate to any officer of the Company the duties, power and
authority of the Committee under the Plan pursuant to such conditions or
limitations as the Committee may establish; provided, however, that only the
Committee may exercise such duties, power and authority with respect to
Participants who are subject to Section 16 of the Exchange Act. The Committee
may exercise its duties, power and authority under the Plan in its sole
discretion without the consent of any Participant or other party, unless the
Plan specifically provides otherwise. Each determination, interpretation or
other action made or taken by the Committee pursuant to the provisions of the
Plan will be final, conclusive and binding for all purposes and on all persons,
including, without limitation, the Company, the shareholders of the Company, the
Participants and their respective successors-in-interest. No member of the
Committee will be liable for any action or determination made in good faith with
respect to the Plan or any Option granted under the Plan.
4. SHARES AVAILABLE FOR ISSUANCE; ADJUSTMENTS FOR CERTAIN EVENTS.
4.1 MAXIMUM NUMBER OF SHARES AVAILABLE. Subject to adjustment as
provided in Section 4.3 of the Plan, the maximum number of shares of Common
Stock that will be available for issuance under the Plan will be one hundred
fifty thousand (150,000) shares of Common Stock. If the total number of shares
of Common Stock that would otherwise be issuable upon the exercise of Options
granted pursuant to Section 7 of the Plan on any Offering Termination Date
exceeds the number of shares then available for issuance under the Plan, the
Committee will make a pro rata allocation of the shares of Common Stock
remaining available for issuance under the Plan in as uniform and equitable a
manner as it deems appropriate.
4.2 ACCOUNTING FOR OPTIONS. Shares of Common Stock that are issued
under the Plan or that are subject to outstanding Options will be applied to
reduce the maximum number of shares of Common Stock remaining available for
issuance under the Plan. Any shares of Common Stock that are subject to an
Option that is terminated unexercised will automatically again become available
for issuance under the Plan.
4.3 ADJUSTMENTS TO SHARES AND OPTIONS. In the event of any
reorganization, merger, consolidation, recapitalization, liquidation,
reclassification, stock dividend, stock split, combination of shares, rights
offering, divestiture or extraordinary dividend (including a spin-off) or any
other change in the corporate structure or shares of the Company, the Committee
(or, if the Company is not the surviving corporation in any such transaction,
the board of directors of the surviving corporation) will make appropriate
adjustment (which determination will be conclusive) as to the number and kind of
securities or other property (including cash) available for issuance or payment
under the Plan and, in order to prevent dilution or enlargement of the rights of
Participants, the number and kind of securities or other property (including
cash) subject to, and the exercise price of, outstanding Options.
5. PARTICIPATION; PAYROLL DEDUCTIONS.
5.1 PARTICIPATION. Participation in the Plan is voluntary and is
not a condition of employment. Eligible Employees may elect to participate in
the Plan, beginning with the first Offering Period to commence after such person
becomes an Eligible Employee, by properly completing a subscription agreement
authorizing payroll deductions on the form provided by the Company and filing
the participation form with the Company's Human Resources Department not later
than the 1st day of the month immediately preceding the Offering Commencement
Date of the first Offering Period in which the Participant wishes to
participate. An Eligible Employee who elects to participate with respect to an
Offering Period will be deemed to have elected to participate in each subsequent
Offering Period, unless such Participant properly completes and files a notice
of withdrawal form in the manner described in Section 8.1 of the Plan.
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5.2 LIMITATION ON PARTICIPATION. Notwithstanding any provisions
of the Plan to the contrary, an Eligible Employee may not participate in the
Plan and will not be granted an Option under the Plan if, immediately after the
grant of such Option, such Eligible Employee (or any other person whose stock
ownership would be attributed to such Eligible Employee pursuant to Section
424(d) of the Code) would own stock or options possessing 5% or more of the
total combined voting power or value of all classes of stock of the Company or
of its "Parent" or "Subsidiary" corporations (within the meaning of Section 424
of the Code).
5.3 PAYROLL DEDUCTIONS.
(a) By completing and filing a participation form, a
Participant will elect to have payroll deductions made from such
Participant's total Compensation (in whole dollar amounts, provided,
however, that such dollar amounts may not exceed 15%, or such other
maximum percentage as the Committee may from time to time establish, of
the Participant's total Compensation) on each payday during the time he
or she is a Participant in the Plan in such amount as such Participant
designates on the participation form.
(b) All payroll deductions authorized by a Participant will be
credited as of each payday to an account established under the Plan for
the Participant. Such account will be solely for bookkeeping purposes,
no separate fund, trust or other segregation of such amounts will be
established or made and the amounts represented by such account will be
held as part of the Company's general assets, usable for any corporate
purpose. A Participant may not make any separate cash payment or
contribution to such Participant's account. No interest will accrue on
amounts held in such accounts under the Plan.
(c) A Participant may increase or decrease the amount of his
or her payroll deductions under the Plan (subject to such limitations
on the frequency of such changes as may be imposed by rules adopted by
the Committee from time to time) by properly completing an amended
participation form and filing it with the Company's Human Resources
Department not less than 30 days prior to the commencement of the pay
period for which such change in payroll deductions is to be effective
or, with respect to commissions, bonuses or other Compensation that is
indeterminate and subject to performance goals or criteria, not less
than 10 days prior to the date that such performance related
Compensation is paid.
(d) A Participant may withdraw from participation in the Plan
at any time as provided in Section 8.1 of the Plan.
6. OFFERING PERIODS.
Options to purchase shares of Common Stock will be offered to
Participants under the Plan through a continuous series of Offering Periods,
each continuing for six months, and each of which will commence on February 1
and August 1 of each year, as the case may be, and will terminate on July 31 and
January 31 of such year, as the case may be. The first Offering Period will
commence on August 1, 1999 and terminate on January
31, 2000. Offering Periods under the Plan will continue until either (a) the
Committee decides, in its sole discretion, that no further Offering Periods will
be made because the Common Stock remaining available under the Plan is
insufficient to make an Offering to all Eligible Employees, or (b) the Plan is
terminated in accordance with Section 13 below.
7. OPTIONS.
7.1 GRANT OF OPTIONS. With respect to any Offering Period, each
Participant participating in such Offering Period will be granted, by operation
of the Plan on the Offering Commencement Date for
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such Offering Period, an Option to purchase (at the Option Price) as many shares
of Common Stock as such Participant will be able to purchase with the
accumulated payroll deductions credited to such Participant's account during
such Offering Period.
7.2 LIMITATIONS ON PURCHASE. Notwithstanding Section 7.1 or any other
provision of the Plan to the contrary, the number of shares of Common Stock that
may be purchased under the Plan will be limited as follows:
(a) No Participant may purchase more than 5,000 shares of
Common Stock under the Plan in any given Offering Period; and
(b) No Participant may be granted an Option that permits such
Participant to purchase Common Stock under the Plan and any other
"employee stock purchase plans" (within the meaning of Section 423 of
the Code) of the Company and its Subsidiaries to accrue (I.E., become
exercisable) at a rate that exceeds $25,000 of the Fair Market Value of
such shares of Common Stock (determined at the time such Option is
granted) for each calendar year in which such Option is outstanding at
any time.
7.3 EXERCISE OF OPTIONS.
(a) Unless a Participant withdraws from the Plan as provided
in Section 8.1 of the Plan, the Participant's Option for the purchase
of shares of Common Stock granted with respect to an Offering Period
will be exercised automatically at the Offering Termination Date of
such Offering Period for the purchase of the number of shares of Common
Stock that the accumulated payroll deductions in such Participant's
account as of such Offering Termination Date will purchase at the
applicable Option Price pursuant to Section 7.3(b).
(b) On the Offering Termination Date of an Offering Period the
entire credit balance in each Participant's payroll deduction account
will be used to purchase the largest number of shares of Common Stock,
both whole and any fractional shares, in connection with the automatic
exercise of an Option granted for any Offering Period. The portion of
any balance remaining in a Participant's payroll deduction account at
the close of business on the Offering Termination Date of any Offering
Period, therefore, that is less than the purchase price of one full
share of Common Stock will automatically purchase such number of
fractional shares of Common Stock as would then be purchasable at the
applicable Option Price, with such fractional shares calculated to the
fourth (4th) decimal place.
(c) No Participant (or any person claiming through such
Participant) will have any interest in any Common Stock subject to an
Option under the Plan until such Option has been exercised, at which
point such interest will be limited to the interest of a purchaser of
the Common Stock purchased upon such exercise pending the delivery of
such Common Stock.
(d) As promptly as practicable after the Offering Termination
Date of each Offering Period, the Company will issue the shares of
Common Stock purchased upon exercise of such Participant's Option
granted for such Offering Period, registered in the name of the
Participant or, if the Participant so directs on his or her
Participation Form, in the names of the Participant and his or her
spouse. The Committee may determine, in its sole discretion, the manner
of delivery of shares of Common Stock purchased under the Plan, which
may be by electronic account entry into new or existing brokerage or
other accounts, delivery of physical stock certificates or such other
means as the Committee deems appropriate.
8. WITHDRAWAL FROM PLAN.
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8.1 VOLUNTARY WITHDRAWAL. A Participant may, at any time on or
before 5:00 p.m., Minnesota time, on the first day of the last month of an
Offering Period, terminate his or her participation in the Plan and withdraw
all, but not less than all, of the payroll deductions credited to such
Participant's account under the Plan by giving written notice to the Company's
Human Resources Department. Such notice must state that the Participant wishes
to terminate his or her participation in the Plan and request the withdrawal of
all of the Participant's payroll deductions held under the Plan. All of the
Participant's payroll deductions credited to his or her account will be paid to
such Participant as soon as practicable after receipt of the notice of
withdrawal, such Participant's Option for such Offering Period will
automatically be canceled and will no longer be exercisable, and no further
payroll deductions for the purchase of shares of Common Stock under the Plan
will be made.
8.2 TERMINATION OF EMPLOYMENT.
(a) Upon the Termination of Employment of a Participant at any
time, the payroll deductions credited to such Participant's account
will be paid to such Participant as soon as practicable after the
effective date of such Termination of Employment (or, in the case of
death, to the person or persons entitled thereto under Sections 10 and
11.3 of the Plan), such Participant's Option for the current Offering
Period will automatically be canceled and will no longer be
exercisable, and no further payroll deductions for the purchase of
shares of Common Stock under the Plan will be made.
(b) Unless the Committee otherwise determines in its sole
discretion, a Participant's employment will, for purposes of the Plan,
be deemed to have terminated on the date recorded on the personnel or
other records of the Company or the Participating Subsidiary for which
the Participant provides employment, as determined by the Committee in
its sole discretion based upon such records.
8.3 EFFECT OF WITHDRAWAL. A Participant's withdrawal pursuant to
Section 8.1 of the Plan will not have any effect upon such Participant's
eligibility to participate in a subsequent Offering Period (so long as such
Participant completes and files a new Participation Form pursuant to Section 5
of the Plan) or in any similar plan that may hereafter be adopted by the
Company.
9. CHANGE IN CONTROL.
9.1 CHANGE IN CONTROL. For purposes of this Section 9, a "CHANGE
IN CONTROL" of the Company will mean the following:
(a) the sale, lease, exchange or other transfer, directly or
indirectly, of substantially all of the assets of the Company (in one
transaction or in a series of related transactions) to a person or
entity 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;
(c) 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 (i) 20% or more, but less than 50%, of
the combined voting power of the Company's outstanding securities
ordinarily having the right to vote at elections of directors, unless
the transaction resulting in such ownership has been approved in
advance by the Continuity Directors (as defined in Section 9.2 below),
or (ii) 50% or more of the combined voting power of the Company's
outstanding securities ordinarily having the right to vote at elections
of directors (regardless of any approval by the Continuity Directors);
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(d) a merger or consolidation to which the Company is a party
if the shareholders of the Company immediately prior to effective date
of such merger or consolidation have "beneficial ownership" (as defined
in Rule 13d-3 under the Exchange Act), immediately following the
effective date of such merger or consolidation, of securities of the
surviving corporation representing (i) less than 80%, but more than
50%, of the combined voting power of the surviving corporation's then
outstanding securities ordinarily having the right to vote at elections
of directors, unless such merger or consolidation has been approved in
advance by the Continuity Directors, or (ii) 50% or less of the
combined voting power of the surviving corporation's then outstanding
securities ordinarily having the right to vote at elections of
directors (regardless of any approval by the Continuity Directors); or
(e) the Continuity Directors cease for any reason to
constitute at least a majority of the Board.
Notwithstanding anything in this Section 9.1 to the contrary, the
transfer by a Significant Shareholder (as defined below) of shares of
Common Stock or rights to acquire shares of Common Stock to the
following persons or entities, without consideration in money or
money's worth (such as by gift, bequest or devise), and the exercise or
conversion of any such transferred rights to acquire shares, will not,
in and of itself, be deemed to constitute a Change in Control for
purposes of this Section 9: (i) transfers to any spouse, child, heir,
legatee or successor of such Significant Shareholder; (ii) transfers to
any trust created for the benefit of such Significant Shareholder or
any such spouse, child, heir, legatee or successor, and amendments of
or distributions from any such trust; or (iii) transfers to any other
Significant Shareholder. For purpose of this Section 9.1(e),
"SIGNIFICANT SHAREHOLDER" will mean Yale T. Dolginow.
9.2 CONTINUITY DIRECTORS. For purposes of this Section 9, "CONTINUITY
DIRECTORS" of the Company will mean individuals who are members of the Board on
the effective date of the Plan and any individual who subsequently becomes a
member of the Board whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the Continuity
Directors (either by specific vote or by approval of the Company's proxy
statement in which such individual is named as a nominee for director without
objection to such nomination).
9.3 ADJUSTMENT OF OFFERING PERIOD. Without limiting the authority of
the Committee under Sections 3, 4.3 and 13 of the Plan, if a Change in Control
of the Company occurs, the Committee, in its sole discretion, may (a) accelerate
the Offering Termination Date of the then current Offering Period and provide
for the exercise of Options thereunder by Participants in accordance with
Section 7.3 of the Plan, or (b) accelerate the Offering Termination Date of the
then current Offering Period and provide that all payroll deductions credited to
the accounts of Participants will be paid to Participants as soon as practicable
after such Offering Termination Date and that all Options for such Offering
Period will automatically be canceled and will no longer be exercisable.
10. DESIGNATION OF BENEFICIARY.
A Participant may file with the Company's Human Resources Department a
written designation of a beneficiary who is to receive shares of Common Stock
and cash, if any, under the Plan in the event of such Participant's death prior
to delivery of such shares or cash to such Participant. Such designation of
beneficiary may be changed by the Participant at any time by written notice to
the Company's Human Resources Department. In the event of the death of a
Participant in the absence of a valid designation of a beneficiary who is living
at the time of such Participant's death, (a) the Company will deliver such
shares of Common Stock and cash to the executor or administrator of the estate
of the Participant, or (b) if to the Company's knowledge no such executor or
administrator has been appointed, the Company, in its sole discretion, may
deliver such shares of Common Stock and cash to the spouse or to any one or more
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dependents or relatives of the Participant or, if no spouse, dependent or
relative is known to the Company, to such other person as the Company may
designate.
11. RIGHTS OF ELIGIBLE EMPLOYEES AND PARTICIPANTS; TRANSFERABILITY.
11.1 NO RIGHT TO EMPLOYMENT. Nothing in the Plan will interfere
with or limit in any way the right of the Company or any Participating
Subsidiary to terminate the employment of any Eligible Employee or Participant
at any time, nor confer upon any Eligible Employee or Participant any right to
continue in the employ of the Company or any Participating Subsidiary.
11.2 RIGHTS AS A SHAREHOLDER. As a holder of an Option under the
Plan, a Participant will have no rights as a shareholder unless and until such
Option is exercised and the Participant becomes the holder of record of shares
of Common Stock. Except as otherwise provided in the Plan, no adjustment will be
made for dividends or distributions with respect to Options as to which there is
a record date preceding the date the Participant becomes the holder of record of
such shares, except as the Committee may determine in its sole discretion.
11.3 RESTRICTIONS ON TRANSFER. Neither payroll deductions credited
to a Participant's account nor any rights with regard to the exercise of an
Option or to receive shares of Common Stock under the Plan may be assigned,
transferred, pledged or otherwise disposed of in any way (other than by will,
the laws of descent and distribution, or as provided in Section 10 of the Plan)
by the Participant. Any such attempt at assignment, transfer, pledge or other
disposition will be without effect, except that the Company may treat such act
as an election to withdraw from the Plan in accordance with Section 8.1 of the
Plan. During his or her lifetime, a Participant's Option to purchase shares of
Common Stock under the Plan is exercisable only by such Participant.
12. SECURITIES LAW AND OTHER RESTRICTIONS.
Notwithstanding any other provision of the Plan or any agreements
entered into pursuant to the Plan, the Company will not be required to issue any
shares of Common Stock under the Plan, and a Participant may not sell, assign,
transfer or otherwise dispose of shares of Common Stock issued pursuant to
Options granted under the Plan, unless (a) there is in effect with respect to
such shares a registration statement under the Securities Act and any applicable
state or foreign securities laws or an exemption from such registration under
the Securities Act and applicable state or foreign securities laws, and (b)
there has been obtained any other consent, approval or permit from any other
regulatory body that the Committee, in its sole discretion, deems necessary or
advisable. The Company may condition such issuance, sale or transfer upon the
receipt of any representations or agreements from the parties involved, and the
placement of any legends on certificates representing shares of Common Stock, as
may be deemed necessary or advisable by the Company in order to comply with such
securities law or other restrictions.
13. AMENDMENT OR 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 will 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
amendments to the Plan will be effective without approval of the shareholders of
the Company if shareholder approval of the amendment is then required pursuant
to Section 423 of the Code or the rules of any stock exchange or Nasdaq or
similar regulatory body. Upon termination of the Plan, the Committee, in its
sole discretion, may take any of the actions described in Section 9.3 of the
Plan.
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14. EFFECTIVE DATE OF PLAN.
The Plan will be effective as of December 7, 1998, the date it was
adopted by the Board. On June 11, 1999, the shareholders of the Company also
adopted the Plan. The Plan will terminate at midnight on December 7, 2008 and
may be terminated prior to such time by Board action, and no Option will be
granted after such termination.
15. MISCELLANEOUS.
15.1 GOVERNING LAW. The validity, construction, interpretation,
administration and effect of the Plan and any rules, regulations and actions
relating to the Plan will be governed by and construed exclusively in accordance
with the laws of the State of Minnesota, notwithstanding the conflicts of laws
principles of any jurisdictions.
15.2 SUCCESSORS AND ASSIGNS. The Plan will be binding upon and inure to
the benefit of the successors and permitted assigns of the Company and the
Participants.
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PAPER WAREHOUSE, INC.
1998 EMPLOYEE STOCK PURCHASE PLAN
(AS AMENDED AND RESTATED AND EFFECTIVE AS OF JANUARY 31, 2000)
PARTICIPATION FORM
______ Original Application
______ Change in Payroll Deduction Amount
1. ___________________________________ hereby elects to participate in the
1998 Paper Warehouse, Inc. Employee Stock Purchase Plan, as amended and
restated and effective as of January 31, 2000 (the "Plan") and
subscribes to purchase shares of the Company's Common Stock (the
"Shares") in accordance with this Agreement and the Plan.
2.. I hereby authorize payroll deductions, beginning ____________, ____,
from each paycheck in the amount of $_______________ (which amount may
not exceed 15% of total compensation on each payday) in accordance with
the Plan.
3. I understand that said payroll deductions shall be accumulated for the
purchase of shares in accordance with the Plan, and that shares will be
purchased for me automatically at the end of each six-month offering
period under the Plan unless I withdraw my accumulated payroll
deductions, withdraw from the Plan, or both, by giving written notice
to the Company prior to the end of the offering period, as provided in
the Plan.
4. Shares purchased for me under the Plan should be issued or held in an
account in the name(s) of:
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(name(s))
-----------------------------------------------
(address)
-----------------------------------------------
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(social security number)
5. I understand that if I dispose of any Shares received by me pursuant to
the Plan within two years after the first day of the offering period
during which I purchased such Shares, I may be treated for federal
income tax purposes as having received ordinary income at the time of
such disposition in an amount equal to the excess of the fair market
value of the Shares at the time such Shares were delivered to me over
the option price paid for the Shares. I HEREBY AGREE TO NOTIFY THE
COMPANY IN WRITING WITHIN 30 DAYS AFTER THE DATE OF ANY SUCH
DISPOSITION. However, if I dispose of such shares at any time after the
expiration of the two-year holding period, I understand that I will be
treated for federal income tax purposes as having received income only
at the time of such disposition, and that such income will be taxed as
ordinary income only to the extent of an amount equal to the lesser of
(a) the excess of the fair market value of the Shares at the time of
such disposition over the amount paid for the Shares under the option,
or (b) the excess of the fair market value of the Shares over the
option price, measured as
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if the option had been exercised on the first day of the offering
period during which I purchased such shares. The remainder of the gain,
if any, recognized on such disposition will be taxed at capital gains
rates.
6. I have read the current prospectus for the Plan.
Date:
-------------------------------- --------------------------------
Signature of Employee
11
