S-8

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 24, 2003
REGISTRATION NO. 333-     

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

NORSTAN, INC.
(Exact name of Registrant as specified in its charter)

MINNESOTA
(State or other jurisdiction of incorporation)

41-0835746
(IRS Employer Identification No.)

5101 SHADY OAK ROAD
MINNETONKA, MN 55343
(Address of principal executive offices)

NORSTAN, INC. 1995 LONG-TERM INCENTIVE PLAN
NORSTAN, INC. RESTATED NON-EMPLOYEE DIRECTORS’ STOCK PLAN
(Full title of Plan(s))

Scott G. Christian
Chief Financial Officer
Norstan, Inc.
5101 Shady Oak Road
Minnetonka, MN 55343
(Name and address of agent for service)

(952) 352-4000
(Telephone Number, Including Area Code, of Agent for Service

Copy to:

Philip J. Tilton, Esq.
Maslon Edelman Borman & Brand, LLP
3300 Wells Fargo Center
Minneapolis, MN 55402-4140
(612) 672-8200

This Registration Statement will become effective immediately upon filing with the Securities and Exchange Commission. Sales of the registered securities will begin as soon as reasonably practicable after the effective date of this Registration Statement.

CALCULATION OF REGISTRATION FEE

	Proposed Maximum	Proposed Maximum
Title of Securities	Amount to be	Offering Price Per		Amount of Aggregate
to be Registered	Registered (2)	Share(1)		Offering Price(1)		Registration Fee
stock options and common stock ($0.10 per value per share)	650,000 shares	$	2.85	$	1,852,500	$	149.87

(1)

Estimated solely for purposes of computing the registration fee in accordance with Rule 457(h) and based upon the average of the high and low sale prices of the Registrant’s common stock as reported on The Nasdaq Stock Market on October 23, 2003.

(2)

This Registration Statement will cover any additional shares of common stock which become issuable under the Norstan, Inc. 1995 Long-Term Incentive Plan or the Norstan, Inc. Restated Non-Employee Directors’ Stock Plan by reason of any stock dividend, stock split, recapitalization or any other similar transaction with receipt of consideration which results in an increase in the number of shares of the Registrant’s outstanding common stock.

TABLE OF CONTENTS

PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
	Item 3. Incorporation of Documents by Reference.
	Item 6. Indemnification of Officers and Directors.
	Item 8. Exhibits.
	Item 9. Undertakings.
SIGNATURES
POWER OF ATTORNEY
EXHIBITS
EX-5 Opinion/Consent: Maslon Edelman Borman Brand
EX-23(a) Consent of Deloitte & Touche LLP
EX-99(a) 1995 Long-Term Incentive Plan
EX-99(b) Non-Employee Directors' Stock Plan

PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3. Incorporation of Documents by Reference.

     The following documents filed by the Registrant with the Securities and Exchange Commission (“SEC”) are incorporated herein by reference and made a part hereof:

(1)	the Registrant’s Annual Report on Form 10-K for the year ended April 30, 2003 filed with the SEC on July 25, 2003;
(2)	the Registrant’s Schedule 14A, Notice of the 2003 Annual Meeting of Shareholders and Proxy Statement filed with the SEC on August 7, 2003;
(3)	the Registrant’s Quarterly Report on Form 10-Q for the three-month period ended August 2, 2003 filed with the SEC on September 16, 2003;
(4)	the description of the Registrant’s common stock contained in its registration statement on Form 8-A filed pursuant to Section 12 of the Exchange Act (and all amendments thereto and reports filed for the purpose of updating such description);
(5)	the Registrant’s registration statement on Form S-8 No. 33-62967 filed with the SEC on September 27, 1995;
(6)	the Registrant’s registration statement on Form S-8 No. 33-62971 filed with the SEC on September 27, 1995;
(7)	the Registrant’s registration statement on Form S-8 No. 333-68059 filed with the SEC on November 27, 1998;
(8)	the Registrant’s registration statement on Form S-8 No. 333-55764 filed with the SEC on February 16, 2001; and
(9)	the Registrant’s registration statement on Form S-8 No. 333-86410 filed with the SEC on April 17, 2002.

     All documents subsequently filed by the Registrant pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference in this Registration Statement and to be part hereof from the date of filing of such documents.

Item 6. Indemnification of Officers and Directors.

     The Company is governed by Minnesota Statutes Chapter 302A. Minnesota Statutes Section 302A.521 provides that a corporation shall indemnify any person made or threatened to be made a party to any proceeding by reason of the former or present official capacity of such

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person against judgments, penalties, fines, including, without limitation, excise taxes assessed against such person with respect to an employee benefit plan, settlements, and reasonable expenses, including attorneys’ fees and disbursements, incurred by such person in connection with the proceedings, if, with respect to the acts or omissions of such person complained of in the proceeding, such person has not been indemnified by another organization or employee benefit plan for the same expenses with respect to the same acts or omissions; acted in good faith; received no improper personal benefit and Section 302A.255, if applicable, has been satisfied; in the case of a criminal proceeding, had no reasonable cause to believe the conduct was unlawful; and in the case of acts or omissions by persons in their official capacity for the corporation, reasonably believed that the conduct was in the best interests of the corporation, or in the case of acts or omissions by persons in their capacity for other organizations, reasonably believed that the conduct was not opposed to the best interests of the corporation.

Item 8. Exhibits.

5	Opinion of Maslon Edelman Borman & Brand, LLP.
23(a)	Consent of Deloitte & Touche LLP.
23(b)	Consent of Maslon Edelman Borman & Brand, LLP (contained in Exhibit 5).
24	Power of Attorney (included on signature page).
99(a)	Norstan, Inc. 1995 Long-Term Incentive Plan.
99(b)	Norstan, Inc. Restated Non-Employee Directors’ Stock Plan.

Item 9. Undertakings.

     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(2)(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, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high and of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in

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	the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;
(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;

     (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.

     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(a) or 15(d) of the Security 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.

     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 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.

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SIGNATURES

     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 Minnetonka, State of Minnesota, as of October 20, 2003.

NORSTAN, INC.
By:	/s/ Scott G. Christian Scott G. Christian Chief Financial Officer (Principal Financial and Accounting Officer)

POWER OF ATTORNEY

     We, the undersigned officers and directors of Norstan, Inc. hereby severally constitute Scott G. Christian and Philip J. Tilton and each of them singly, our true and lawful attorneys with full power to them, and each of them singly, to sign for us and in our names, in the capacities indicated below the registration statement filed herewith and any amendments to said registration statement, and generally to do all such things in our name and behalf in our capacities as officers and directors to enable Norstan, Inc. to comply with the provisions of the Securities Act of 1933 as amended, and all requirements of the Securities and Exchange Commission, hereby ratifying and confirming our signatures as they may be signed by our said attorneys, or any of them, to said registration statement and any and all amendments thereto.

     Pursuant to the requirements of the Securities Exchange Act of 1933, this registration statement has been signed below as of October 20, 2003 by the following persons in the capacities and as of the date indicated.

NAME	TITLE
/s/ Paul Baszucki Paul Baszucki	Chairman of the Board of Directors
/s/ James C. Granger James C. Granger	Chief Executive Officer and Director (Principal Executive Officer)

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NAME	TITLE
/s/ John R. Eickhoff John R. Eickhoff	Director
/s/ Constance M. Levi Constance M. Levi	Director
/s/ James E. Ousley James E. Ousley	Director
/s/ Frank P. Russomanno Frank P. Russomanno	Director
/s/ Jagdish N. Sheth Jagdish N. Sheth	Director
Mercedes Walton	Director

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EXHIBITS

Exhibit
Number	Description of Exhibit
5	Opinion of Maslon Edelman Borman & Brand, LLP.
23(a)	Consent of Deloitte & Touche LLP.
23(b)	Consent of Maslon Edelman Borman & Brand, LLP (contained in Exhibit 5).
24	Power of Attorney (included on signature page).
99(a)	Norstan, Inc. 1995 Long-Term Incentive Plan.
99(b)	Norstan, Inc. Restated Non-Employee Directors’ Stock Plan.

7 EX-5 3 c80350exv5.txt EX-5 OPINION/CONSENT: MASLON EDELMAN BORMAN BRAND EXHIBIT 5 October 24, 2003 Norstan, Inc. 5101 Shady Oak Road Minnetonka, MN 55343 RE: REGISTRATION STATEMENT ON FORM S-8 (THE "REGISTRATION STATEMENT") ----------------------------------------------------------------- Gentlemen: We have acted as counsel for Norstan, Inc., a corporation organized under the laws of the State of Minnesota (the "Company"), in connection with the registration under the Securities Act of 1933, as amended (the "Securities Act") of 650,000 shares of the Company's common stock, $.10 par value (the "common stock"), issuable under the Norstan, Inc. 1995 Long-Term Incentive Plan and the Norstan, Inc. Restated Non-Employee Directors' Stock Plan (the "Plans") and, subject to adjustment as provided in each of the Plans, under the Registration Statement on Form S-8 proposed to be filed with the Securities and Exchange Commission. We have made such legal and factual examinations and inquiries, including an examination of originals, or copies certified or otherwise identified to our satisfaction as being true reproductions of originals, of all such corporate records of the Company, agreements and other instruments, certificates of public officials and officers and representatives of the Company, and such other documents as have deemed necessary as a basis for the opinions hereafter expressed. Without limiting the generality of the foregoing, in our examination, we have assumed without independent verification, that (i) each of the parties thereto has duly and validly executed and delivered each instrument, document and agreement to which such party is a signatory, and such party's obligations set forth therein are its legal, valid, and binding obligations, enforceable in accordance with their respective terms, (ii) each natural person executing any such instrument, document or agreement is legally competent to do so, and (iii) all corporate records made available to us by the Company and all public records reviewed are accurate and complete. Based upon the foregoing and having regard to legal considerations that we deem relevant, we are of the opinion that, when the shares of common stock have been registered under the Securities Act, and when the Company has received the consideration to be received for said shares in accordance with the provisions of the Plans and said shares of common stock have been issued by the Company, said shares of common stock will be duly authorized, validly issued, fully paid, and nonassessable. We are qualified to practice law in the State of Minnesota. The opinions set forth herein are expressly limited to the laws of the State of Minnesota. We express no opinion concerning, and we assume no responsibility as to laws or judicial decisions related to, or any orders, consents, or other authorizations or approvals as may be required by, any federal law, including any federal securities law, or any state securities or blue sky laws. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to this firm therein. 8 Very truly yours, /s/ Maslon Edelman Borman & Brand, LLP 9 EX-23.(A) 4 c80350exv23wxay.txt EX-23(A) CONSENT OF DELOITTE & TOUCHE LLP EXHIBIT 23(A) INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Registration Statement of Norstan, Inc. on Form S-8 of our report dated June 12, 2003 (except for Note 7 as to which the date is July 15, 2003), appearing in the Annual Report on Form 10-K of Norstan, Inc. for the year ended April 30, 2003. /s/ Deloitte & Touche LLP Minneapolis, Minnesota October 17, 2003 10 EX-99.(A) 5 c80350exv99wxay.txt EX-99(A) 1995 LONG-TERM INCENTIVE PLAN EXHIBIT 99(A) NORSTAN, INC. 1995 LONG-TERM INCENTIVE PLAN AS AMENDED SEPTEMBER 18, 2003 SECTION 1. PURPOSE; EFFECT ON PRIOR PLANS. (a) Purpose. The purpose of the Plan is to promote the interests of the Company and its stockholders by aiding the Company in attracting and retaining personnel capable of assuring the future success of the Company, to offer such personnel incentives to put forth maximum efforts for the success of the Company's business and to afford such personnel an opportunity to acquire a proprietary interest in the Company. (b) Effect on Prior Plans. From and after the date on which the Company's stockholders approve this Plan, no stock options, restricted stock awards, stock appreciation rights, performance awards or other awards shall be granted or awarded under the Company's 1986 Long-Term Incentive Plan, as amended ("1986 Plan"). All outstanding stock options, restricted stock awards, stock appreciation rights and performance awards granted under the 1986 Plan prior to the date on which the Company's stockholders approve this Plan shall continue and remain outstanding in accordance with the terms thereof. SECTION 2. DEFINITIONS. As used in the Plan, the following terms shall have the meanings set forth below: (a) "Affiliate" shall mean (i) any entity that, directly or indirectly through one or more intermediaries, is controlled by the Company and (ii) any entity in which the Company has a significant equity interest, in each case as determined by the Committee. (b) "Award" shall mean any Option, Stock Appreciation Right, Restricted Stock, Performance Award, or Other Award granted under the Plan. (c) "Award Agreement" shall mean any written agreement, contract or other instrument or document evidencing any Award granted under the Plan. (d) "Code" shall mean the internal Revenue Code of 1986, as amended from time to time, and any regulations promulgated thereunder. (e) "Committee" shall mean a committee of the Board of Directors of the Company designated by such Board to administer the Plan, which shall consist of members appointed from time to time by the Board of Directors and shall be comprised of not less than such number of directors as shall be required to permit the Plan to satisfy the requirements of Rule 16b-3. Each member of the Committee shall be a "non-employee director" within the meaning of Rule 16b-3. (f) "Company" shall mean NORSTAN, INC., a Minnesota corporation, and any successor corporation. 11 (g) "Eligible Person" shall mean any employee, or any consultant or advisor providing bona fide services to the Company or any Affiliate who the Committee determines to be an Eligible Person. A director of the Company who is not also an employee of the Company or an Affiliate shall not be an Eligible Person. (h) "Fair Market Value" shall mean, with respect to any property (including, without limitation, any Shares or other securities), the fair market value of such property determined by such methods or procedures as shall be established from time to time by the Committee. (i) "Incentive Stock Option" shall mean an option granted under Section 6(a) of the Plan that is intended to meet the requirements of Section 422 of the Code or any successor provision. (j) "Non-Qualified Stock Option" shall mean an option granted under Section 6(a) of the Plan that is not intended to be an Incentive Stock Option. (k) "Option" shall mean an Incentive Stock Option or a Non-Qualified Stock Option. (l) "Other (Stock-Based) Award" shall mean any right granted under Section 6(f) of the Plan. (m) "Participant" shall mean an Eligible Person designated to be granted an Award under the Plan. (n) "Performance Award" shall mean any right granted under Section 6(c) of the Plan. (o) "Plan" shall mean this 1995 Long-Term Incentive Plan, as amended from time to time. (p) "Restricted Stock" shall mean any Share granted under Section 6(b) of the Plan. (q) "Rule 16b-3" shall mean Rule 16b-3 promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, or any successor rule or regulation. (r) "Shares" shall mean shares of Common Stock, $.10 par value, of the Company or such other securities or property as may become subject to Awards pursuant to an adjustment made under Section 4(c) of the Plan. (s) "Stock Appreciation Right" shall mean any right granted under Section 6(e) of the Plan. SECTION 3. ADMINISTRATION. (a) Power and Authority of the Committee. The Plan shall be administered by the Committee. Subject of the express provisions of the Plan and to applicable law, the Committee shall have full power and authority to: (i) designate Participants; (ii) determine the type or types of Awards to be granted to each Participant under the Plan; (iii) determine the number of Shares to be covered by (or with respect to which payments, rights or other matters are to be calculated in connection with) each Award; (iv) determine the terms and conditions of any Award or Award Agreement; (v) amend the terms and conditions of any Award or Award Agreement and accelerate the exercisability of Options or the lapse of restrictions relating to Restricted Stock or other Awards; provided, however, that the Committee shall not have the authority to adjust or amend the exercise price of any Option, whether through amendment or cancellation grants of any additional Options; (vi) determine whether, to what extent and under what circumstances Awards may be exercised in cash, Shares, other securities, other Awards or other property, or canceled, forfeited or suspended; (vii) determine whether, to what extent and under what circumstances cash, Shares, other securities, other Awards, other property and other amounts 12 payable with respect to an Award under the Plan shall be deferred either automatically or at the election of the holder thereof or the Committee; (viii) interpret and administer the Plan and any instrument or agreement relating to, or Award made under, the Plan; (ix) establish, amend, suspend or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; and (x) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan. Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations and other decisions under or with respect to the Plan or any Award shall be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive and binding upon any Participant, any holder or beneficiary of any Award and any employee of the Company or any Affiliate. The Board of Directors of the Company shall also have the authority in its discretion from time to time to administer the Plan by granting awards or taking any other action authorized or permitted to be taken by the Committee under the Plan. SECTION 4. SHARES AVAILABLE FOR AWARDS. (a) Shares Available. Subject to adjustment as provided in Section 4(c), the number of Shares initially available for granting Awards under the Plan shall be 3,900,000. No more than 3,900,000 shares shall be cumulatively available for the grant of Incentive Stock Options under the Plan. If any Shares covered by an Award or to which an Award relates are not purchased or are forfeited, or if an Award otherwise terminates without delivery of any shares, then the number of Shares counted against the aggregate number of Shares available under the Plan with respect to such Award, to the extent of any such forfeiture or termination, shall again be available for granting Awards under the Plan. (b) Accounting for Awards. For purposes of this Section 4, if an Award entitles the holder thereof to receive or purchase Shares, the number of Shares covered by such Award or to which such Award relates shall be counted on the date of grant of such Award against the aggregate number of Shares available for granting Awards under the Plan. (c) Adjustments. In the event that the Committee shall determine that any dividend or other distribution (whether in the form of cash, Shares, other securities or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spinoff, combination, repurchase or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company or other similar corporate transaction or event affects the Shares such that an adjustment is determined by the Committee to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Committee shall, in such manner as it may deem equitable, adjust any or all of (i) the number and type of Shares (or other securities or other property) which thereafter may be made the subject of Awards, (ii) the number and type of Shares (or other securities or other property) subject to outstanding Awards and (iii) the purchase or exercise price with respect to any Award; provided, however, that the number of Shares covered by any Award or to which such Award relates shall always be a whole number. (d) Award Limitations Under the Plan. No Eligible Person nay be granted any Award or Awards, the value of which Awards are based solely on an increase in the value of the Shares after the date of grant of such Awards, for more than 100,000 Shares, in the aggregate, in any fiscal year of the Company. The foregoing limitation specifically includes the grant of any "performance-based" Awards within the meaning of Section 162(m) of the Code. 13 SECTION 5. ELIGIBILITY. Any Eligible Person, including any Eligible Person who is an officer or director of the Company or any Affiliate, shall be eligible to be designated a Participant. In determining which Eligible Persons shall receive an Award and the terms of any Award, the Committee may take into account the nature of the services rendered by the respective Eligible Persons, their present and potential contributions to the success of the Company or such other factors as the Committee, in its discretion, shall deem relevant. Notwithstanding the foregoing, an Incentive Stock Option may only be granted to full or part-time employees (which term as used herein includes, without limitation, officers and directors who are also employees) and an incentive Stock Option shall not be granted to an employee of an Affiliate unless such Affiliate is also a "subsidiary corporation" of the Company within the meaning of Section 424(f) of the Code or any successor provision. SECTION 6. AWARDS. (a) Options. The Committee is hereby authorized to grant Options to Participants with the following terms and conditions and with such additional terms and conditions not inconsistent with the provisions of the Plan as the Committee shall determine: (i) Exercise Price. The purchase price per Share purchasable under an Option shall be determined by the Committee; provided, however, that such purchase price shall not be less than 100% of the Fair Market Value of a Share on the date of grant of such Option. (ii) Option Term. The term of each Option shall be fixed by the Committee but shall not exceed ten years from the date such option is granted. (iii) Time and Method of Exercise. The Committee shall determine the time or times at which an Option may be exercised in whole or in part and the method or methods by which, and the form or forms (including, without limitation, cash, Shares, promissory notes, other securities, other Awards or other property, withholding of Shares that would otherwise be issued, cashless exercise program of a broker or agent, or any combination thereof, having a Fair Market Value on the exercise date equal to the relevant exercise price) in which, payment of the exercise price with respect thereto may be made or deemed to have been made. (b) Restricted Stock. The Committee is hereby authorized to grant Awards of Restricted Stock to Participants with the following terms and conditions and with such additional terms and conditions not inconsistent with the provisions of the Plan as the Committee shall determine: (i) Restrictions. Shares of Restricted Stock shall be subject to such restrictions as the Committee may impose (including, without limitation, any limitation on the right to vote a Share of Restricted Stock or the right to receive any dividend or other right or property with respect thereto, which restrictions may lapse separately or in combination at such time or times, in such installments or otherwise as the Committee may deem appropriate. (ii) Stock Certificates. Any Restricted Stock granted under the Plan shall be evidenced by issuance of a stock certificate or certificates, which certificate or certificates shall be held by the Company. Such certificate or certificates shall be registered in the name of the Participant and shall bear an appropriate legend referring to the terms, conditions and restrictions applicable to such Restricted Stock. 14 (iii) Forfeiture; Delivery of Shares. Except as otherwise determined by the Committee, upon termination of employment (as determined under criteria established by the Committee) during the applicable restriction period, all Shares of Restricted Stock at such time subject to restriction shall be forfeited and reacquired by the Company; provided, however, that the Committee may, when it finds that a waiver would be in the best interest of the Company, waive in whole or in part any or all remaining restrictions with respect to Shares of Restricted Stock. Any Share representing Restricted Stock that is no longer subject to restrictions shall be delivered to the holder thereof promptly after the applicable restrictions lapse or are waived. (c) Performance Awards. The committee is hereby authorized to grant Performance Awards to Participants subject to the terms of the Plan and any applicable Award Agreement. A Performance Award granted under the Plan (i) may be denominated or payable in cash, Shares, other securities, other Awards or other property and (ii) shall confer on the holder thereof the right to receive payments, in whole or in part, upon the achievement of such performance goals during such performance periods as the Committee shall establish. Subject to the terms of the Plan and any applicable Award Agreement, the performance goals to be achieved during any performance period, the length of any performance period, the amount of any Performance Award granted, the amount of any payment or transfer to be made pursuant to any Performance Award and any other terms and conditions of any Performance Award shall be determined by the Committee. (d) Stock Appreciation Rights. The Committee is hereby authorized to grant Stock Appreciation Rights to Participants subject to the terms of the Plan and any applicable Award Agreement. A Stock Appreciation Right granted under the Plan shall confer on the holder thereof a right to receive upon exercise thereof the excess of (i) the Fair Market Value of one Share on the date of exercise (or, if the Committee shall so determine, at any time during a specified period before or after the date of exercise) over (ii) the grant price of the Stock Appreciation Right as specified by the Committee, which price shall not be less than 100% of the Fair Market Value of one Share on the date of grant of the Stock Appreciation Right. Subject to the terms of the Plan and any applicable Award Agreement, the grant price, term, methods of exercise, dates of exercise, methods of settlement and any other terms and conditions of any Stock Appreciation Right shall be as determined by the Committee. The Committee may impose such conditions or restrictions on the exercise of any Stock Appreciation Right as it may deem appropriate. (e) Other Stock-Based Awards. The Committee is hereby authorized to grant to Participants such other Awards that are denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, Shares (including, without limitation, securities convertible into Shares), as are deemed by the Committee to be consistent with the purpose of the Plan; provided, however, that such grants must comply with Rule 16b-3 and applicable law. Subject to the terms of the Plan and any applicable Award Agreement, the Committee shall determine the terms and conditions of such Awards. Shares or other securities delivered pursuant to a purchase right granted under this Section 6(e) shall be purchased for such consideration, which may be paid by such method or methods and in such form or forms (including without limitation, cash, Shares, promissory notes, other securities, other Awards or other property, withholding of Shares that would otherwise be issued, cashless exercise program of a broker or agent, or any combination thereof), as the Committee shall determine, the value of which consideration, as established by the Committee shall not be less than 100% of the Fair Market Value of such Shares or other securities as of the date such purchase right is granted. (f) General (i) No Cash Consideration for Awards. Awards shall be granted for no cash consideration or for such minimal cash consideration as may be required by applicable law. 15 (ii) Awards May Be Granted Separately or Together. Awards may, in the discretion of the committee, be granted either alone or in addition to, in tandem with or in substitution for any other Award or any award granted under any plan of the Company or any Affiliate other than the Plan. Awards granted in addition to or in tandem with other Awards or in addition to or in tandem with awards granted under any such other plan of the Company or any Affiliate may be granted either at the same time as or at a different time from the grant of such other Awards or awards. (iii) Forms of Payment under Awards. Subject to the terms of the Plan and of any applicable Award Agreement, payments or transfers to be made by the Company or an Affiliate upon the grant, exercise or payment of an Award may be made in such form or forms as the Committee shall determine (including, without limitation, cash, Shares, promissory notes, other securities, other Awards or other property or any combination thereof), and may be made in a single payment or transfer, in installments or on a deferred basis, in each case in accordance with rules and procedures established by the Committee. Such rules and procedures may include, without limitation, provisions for the payment or crediting of reasonable interest on installment or deferred payments. (iv) Limits on Transfer of Awards. No Award and no right under any such Award shall be transferable by a Participant otherwise than by will or by the laws of descent and distribution; provided, however, that, if so determined by the Committee, a Participant may, in the manner established by the Committee, designate a beneficiary or beneficiaries to exercise the rights of the Participant and receive any property distributable with respect to any Award upon the death of the Participant. Each Award or right under any Award shall be exercisable during the Participant's lifetime only by the Participant. No Award or right under any such Award may be pledged, alienated, attached or otherwise encumbered, and any purported pledge, alienation, attachment or encumbrance thereof shall be void and unenforceable against the Company or any Affiliate. (v) Term of Awards. The term of each Award shall be for such period as may be determined by the Committee. (vi) Restrictions; Securities Exchange Listing. All certificates for Shares or other securities delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan or the rules, regulations and other requirements of the Securities and Exchange Commission and any applicable federal or state securities laws, and the Committee may cause a legend or legends to be placed on any such certificates to make appropriate reference to such restrictions. If the Shares or other securities are traded on a securities exchange, the Company shall not be required to deliver any Shares or other securities covered by an Award unless and until such Shares or other securities have been admitted for trading on such securities exchange. SECTION 7. AMENDMENT AND TERMINATION; ADJUSTMENTS. Except to the extent prohibited by applicable law and unless otherwise expressly provided in an Award Agreement or in the Plan: (a) Amendments to the Plan. The Board of Directors of the Company may amend, alter, suspend, discontinue or terminate the Plan; provided, however, that, notwithstanding any other provision of the Plan or any Award Agreement, without the approval of the stockholders of the Company, no such amendment, alteration, suspension, discontinuation or termination shall be made that, absent such approval: 16 (i) would cause Rule 16b-3 to become unavailable with respect to the Plan; (ii) would violate the rules or regulations of the National Association of Securities Dealers, Inc. or any securities exchange that are applicable to the Company; or (iii) would cause the Company to be unable, under the Code, to grant incentive Stock Options under the Plan. (b) Amendments to Awards. The Committee may waive any conditions of or rights of the Company under any outstanding Award, prospectively or retroactively. The Committee may not amend, alter, suspend, discontinue or terminate any outstanding Award, prospectively or retroactively, without the consent of the Participant or holder or beneficiary thereof, except as otherwise herein provided. (c) Correction of Defects, Omissions and Inconsistencies. The Committee may correct any defect, supply any omission or reconcile any inconsistency in the Plan or any Award in the manner and to the extent it shall deem desirable to carry the Plan into effect. SECTION 8. CHANGE IN CONTROL. In case of a "Change in Control" (as such term is hereinafter defined), each Participant shall be fully vested (as of the date of the Change in Control) in all shares of Restricted Stock, Performance Awards, Stock Appreciation Rights, Options and Other Awards granted or awarded under this Plan and any and all restrictions or performance requirements on the issuance, exercise or sale of said grants, awards, shares or rights under said Restricted Stock awards, Stock Performance Awards, Stock Appreciation Rights, Options and Other Awards shall be waived or removed as of the date of the Change in Control. For purposes of this 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): (i) 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 (ii) 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 stockholders 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 17 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 Board unless a majority of the directors taking such action are Continuing Directors. (d) Notwithstanding the foregoing provisions of Section 8, the Committee may impose such additional restrictions, limitations or requirements as it deems appropriate on the vesting of any Award in the event of a Change in Control before such Award shall be deemed to be fully vested. In the event that no such additional restrictions, limitations or requirements on the vesting of any Award in the event of a Change in Control are imposed in the Award Agreement, the Change in Control provisions set forth in the preceding paragraphs of this Section 8 shall govern such Award. SECTION 9. INCOME TAX WITHHOLDING. In order to comply with all applicable federal or state income tax laws or regulations, the Company may take such action as it deems appropriate to ensure that all applicable federal or state payroll, withholding, income or other taxes, which are the sole and absolute responsibility of a Participant, are withheld or collected from such Participant. In order to assist a Participant in paying all or a portion of the federal and state taxes to be withheld or collected upon exercise or receipt of (or the lapse of restrictions relating to) an Award, the Committee, in its discretion and subject to such additional terms and conditions as it may adopt, may permit the Participant to satisfy such tax obligation by (i) electing to have the Company withhold a portion of the Shares otherwise to be delivered upon exercise or receipt of (or the lapse of restrictions relating to) such Award with a Fair Market Value equal to the amount of such taxes or (ii) delivering to the Company Shares other than Shares issuable upon exercise or receipt of (or the lapse of restrictions relating to) such Award with a Fair Market Value equal to the amount of such taxes. SECTION 10. GENERAL PROVISIONS. (a) No Rights to Awards. No Eligible Person, Participant or other Person shall have any claim to be granted any Award under the Plan, and there is no obligation for uniformity of treatment of Eligible Persons, Participants or holders or beneficiaries of Awards under the Plan. The terms and conditions of Awards need not be the same with respect to any Participant or with respect to different Participants. (b) Award Agreements. No Participant will have rights under an Award granted to such Participant unless and until an Award Agreement shall have been duly executed on behalf of the Company. (c) No Limit on Other Compensation Arrangements. Nothing contained in the Plan shall prevent the Company or any Affiliate from adopting or continuing in effect other or additional compensation arrangements, and such arrangements may be either generally applicable or applicable only in specific cases. (d) No Right to Employment. The grant of an Award shall not be construed as giving Participant the right to be retained in the employ of the Company or any Affiliate, nor will it affect in any way the right of the Company or an Affiliate to terminate such employment at any time, with or without cause. In addition, the Company or an Affiliate may at any time dismiss a Participant from employment free from any liability or any claim under the Plan, unless otherwise expressly provided in the Plan or in any Award Agreement. (e) Governing Law. The validity, construction and effect of the Plan or any Award, and any rules and regulations relating to the Plan or any Award, shall be determined in accordance with the laws of the State of Minnesota. 18 (f) Severability. If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the purpose or intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction or Award, and the remainder of the Plan or any such Award shall remain in full force and effect. (g) No Trust or Fund Created. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any Affiliate and a Participant or any other Person. To the extent that any Person acquires a right to receive payments from the Company or any Affiliate pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company or any Affiliate. (h) No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine whether cash shall be paid in lieu of any fractional Shares or whether such fractional Shares or any rights thereto shall be canceled, terminated or otherwise eliminated. (i) Headings. Headings are given to the Sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof. SECTION 11. SECTION 16(B) COMPLIANCE. The Plan is intended to comply in all respects with Rule 16b-3 or any successor provision, as in effect from time to time and in all events the Plan shall be construed in accordance with the requirements of Rule 16b-3. If any Plan provision does not comply with Rule 16b-3 as hereafter amended or interpreted, the provision shall be deemed inoperative. Moreover, in the event the 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 Plan insofar as Participants subject to Section 16 are concerned. The Board, in its absolute discretion, may bifurcate the Plan so as to restrict, limit or condition the use of any provision of the Plan to participants who are officers or directors subject to Section 16 of the Securities and Exchange Act of 1934, as amended, without so restricting, limiting or conditioning the Plan with respect to other participants. SECTION 12. EFFECTIVE DATE OF THE PLAN. The Plan shall be effective as of August 8, 1995, subject to approval by the shareholders of the Company within one year thereafter. SECTION 13. TERM OF THE PLAN. Awards shall only be granted under the Plan during a ten-year period beginning on the effective date of the Plan. However, unless otherwise expressly provided in the Plan or in an applicable Award Agreement, any Award theretofore granted may extend beyond the end of such ten-year period, and the authority of the Committee provided for hereunder with respect to the Plan and any Awards, and the authority of the Board of Directors of the Company to amend the Plan, shall extend beyond the end of such period. 19 EX-99.(B) 6 c80350exv99wxby.txt EX-99(B) NON-EMPLOYEE DIRECTORS' STOCK PLAN EXHIBIT 99(B) NORSTAN, INC. RESTATED NON-EMPLOYEE DIRECTORS STOCK PLAN AS AMENDED SEPTEMBER 18, 2003 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 650,000 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 20,000 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 20,000 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 20,000 shares of Common Stock. 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, each option granted will be exercisable in one or more installments as shall determined on the date of grant by the Board of Directors of the Company. 20 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. 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 deter-mine 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 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 21 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 pro rata 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, 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, other-wise 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 Tease 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. 22 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 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 23 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 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 falls 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 24 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 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 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. 23. Discretionary Option Grants. In addition to the Automatic Option Grants provided under Paragraph 3 hereof, Non-Employee Directors and former Non-Employee Directors may be granted, in the discretion of the Board, additional stock options to purchase Common Stock of the Company. Such options shall contain such terms and provisions as the Board determines at the time of each grant. Provided, however, that the option price shall be the Fair Market Value on the date the option is granted. 25 -----END PRIVACY-ENHANCED MESSAGE-----

EX-5

                                                                       EXHIBIT 5

                                October 24, 2003




Norstan, Inc.
5101 Shady Oak Road
Minnetonka, MN 55343

         RE:   REGISTRATION STATEMENT ON FORM S-8 (THE "REGISTRATION STATEMENT")
               -----------------------------------------------------------------

Gentlemen:

         We have acted as counsel for Norstan, Inc., a corporation organized
under the laws of the State of Minnesota (the "Company"), in connection with the
registration under the Securities Act of 1933, as amended (the "Securities Act")
of 650,000 shares of the Company's common stock, $.10 par value (the "common
stock"), issuable under the Norstan, Inc. 1995 Long-Term Incentive Plan and the
Norstan, Inc. Restated Non-Employee Directors' Stock Plan (the "Plans") and,
subject to adjustment as provided in each of the Plans, under the Registration
Statement on Form S-8 proposed to be filed with the Securities and Exchange
Commission.

         We have made such legal and factual examinations and inquiries,
including an examination of originals, or copies certified or otherwise
identified to our satisfaction as being true reproductions of originals, of all
such corporate records of the Company, agreements and other instruments,
certificates of public officials and officers and representatives of the
Company, and such other documents as have deemed necessary as a basis for the
opinions hereafter expressed.

         Without limiting the generality of the foregoing, in our examination,
we have assumed without independent verification, that (i) each of the parties
thereto has duly and validly executed and delivered each instrument, document
and agreement to which such party is a signatory, and such party's obligations
set forth therein are its legal, valid, and binding obligations, enforceable in
accordance with their respective terms, (ii) each natural person executing any
such instrument, document or agreement is legally competent to do so, and (iii)
all corporate records made available to us by the Company and all public records
reviewed are accurate and complete.

         Based upon the foregoing and having regard to legal considerations that
we deem relevant, we are of the opinion that, when the shares of common stock
have been registered under the Securities Act, and when the Company has received
the consideration to be received for said shares in accordance with the
provisions of the Plans and said shares of common stock have been issued by the
Company, said shares of common stock will be duly authorized, validly issued,
fully paid, and nonassessable.

         We are qualified to practice law in the State of Minnesota. The
opinions set forth herein are expressly limited to the laws of the State of
Minnesota. We express no opinion concerning, and we assume no responsibility as
to laws or judicial decisions related to, or any orders, consents, or other
authorizations or approvals as may be required by, any federal law, including
any federal securities law, or any state securities or blue sky laws.

         We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm therein.



                                       8




                                          Very truly yours,


                                          /s/ Maslon Edelman Borman & Brand, LLP








                                       9

EX-23.(A)

                                                                   EXHIBIT 23(A)



                          INDEPENDENT AUDITORS' CONSENT


We consent to the incorporation by reference in this Registration Statement of
Norstan, Inc. on Form S-8 of our report dated June 12, 2003 (except for Note 7
as to which the date is July 15, 2003), appearing in the Annual Report on Form
10-K of Norstan, Inc. for the year ended April 30, 2003.


/s/ Deloitte & Touche LLP

Minneapolis, Minnesota
October 17, 2003





                                       10

EX-99.(A)

                                                                   EXHIBIT 99(A)

                                NORSTAN, INC.

                          1995 LONG-TERM INCENTIVE PLAN

                          AS AMENDED SEPTEMBER 18, 2003


SECTION 1. PURPOSE; EFFECT ON PRIOR PLANS.

         (a) Purpose. The purpose of the Plan is to promote the interests of the
Company and its stockholders by aiding the Company in attracting and retaining
personnel capable of assuring the future success of the Company, to offer such
personnel incentives to put forth maximum efforts for the success of the
Company's business and to afford such personnel an opportunity to acquire a
proprietary interest in the Company.

         (b) Effect on Prior Plans. From and after the date on which the
Company's stockholders approve this Plan, no stock options, restricted stock
awards, stock appreciation rights, performance awards or other awards shall be
granted or awarded under the Company's 1986 Long-Term Incentive Plan, as amended
("1986 Plan"). All outstanding stock options, restricted stock awards, stock
appreciation rights and performance awards granted under the 1986 Plan prior to
the date on which the Company's stockholders approve this Plan shall continue
and remain outstanding in accordance with the terms thereof.

SECTION 2. DEFINITIONS.

         As used in the Plan, the following terms shall have the meanings set
forth below:

         (a) "Affiliate" shall mean (i) any entity that, directly or indirectly
through one or more intermediaries, is controlled by the Company and (ii) any
entity in which the Company has a significant equity interest, in each case as
determined by the Committee.

         (b) "Award" shall mean any Option, Stock Appreciation Right, Restricted
Stock, Performance Award, or Other Award granted under the Plan.

         (c) "Award Agreement" shall mean any written agreement, contract or
other instrument or document evidencing any Award granted under the Plan.

         (d) "Code" shall mean the internal Revenue Code of 1986, as amended
from time to time, and any regulations promulgated thereunder.

         (e) "Committee" shall mean a committee of the Board of Directors of the
Company designated by such Board to administer the Plan, which shall consist of
members appointed from time to time by the Board of Directors and shall be
comprised of not less than such number of directors as shall be required to
permit the Plan to satisfy the requirements of Rule 16b-3. Each member of the
Committee shall be a "non-employee director" within the meaning of Rule 16b-3.

         (f) "Company" shall mean NORSTAN, INC., a Minnesota corporation, and
any successor corporation.



                                       11




         (g) "Eligible Person" shall mean any employee, or any consultant or
advisor providing bona fide services to the Company or any Affiliate who the
Committee determines to be an Eligible Person. A director of the Company who is
not also an employee of the Company or an Affiliate shall not be an Eligible
Person.

         (h) "Fair Market Value" shall mean, with respect to any property
(including, without limitation, any Shares or other securities), the fair market
value of such property determined by such methods or procedures as shall be
established from time to time by the Committee.

         (i) "Incentive Stock Option" shall mean an option granted under Section
6(a) of the Plan that is intended to meet the requirements of Section 422 of the
Code or any successor provision.

         (j) "Non-Qualified Stock Option" shall mean an option granted under
Section 6(a) of the Plan that is not intended to be an Incentive Stock Option.

         (k) "Option" shall mean an Incentive Stock Option or a Non-Qualified
Stock Option.

         (l) "Other (Stock-Based) Award" shall mean any right granted under
Section 6(f) of the Plan.

         (m) "Participant" shall mean an Eligible Person designated to be
granted an Award under the Plan.

         (n) "Performance Award" shall mean any right granted under Section 6(c)
of the Plan.

         (o) "Plan" shall mean this 1995 Long-Term Incentive Plan, as amended
from time to time.

         (p) "Restricted Stock" shall mean any Share granted under Section 6(b)
of the Plan.

         (q) "Rule 16b-3" shall mean Rule 16b-3 promulgated by the Securities
and Exchange Commission under the Securities Exchange Act of 1934, as amended,
or any successor rule or regulation.

         (r) "Shares" shall mean shares of Common Stock, $.10 par value, of the
Company or such other securities or property as may become subject to Awards
pursuant to an adjustment made under Section 4(c) of the Plan.

         (s) "Stock Appreciation Right" shall mean any right granted under
Section 6(e) of the Plan.

SECTION 3.  ADMINISTRATION.

         (a) Power and Authority of the Committee. The Plan shall be
administered by the Committee. Subject of the express provisions of the Plan and
to applicable law, the Committee shall have full power and authority to: (i)
designate Participants; (ii) determine the type or types of Awards to be granted
to each Participant under the Plan; (iii) determine the number of Shares to be
covered by (or with respect to which payments, rights or other matters are to be
calculated in connection with) each Award; (iv) determine the terms and
conditions of any Award or Award Agreement; (v) amend the terms and conditions
of any Award or Award Agreement and accelerate the exercisability of Options or
the lapse of restrictions relating to Restricted Stock or other Awards;
provided, however, that the Committee shall not have the authority to adjust or
amend the exercise price of any Option, whether through amendment or
cancellation grants of any additional Options; (vi) determine whether, to what
extent and under what circumstances Awards may be exercised in cash, Shares,
other securities, other Awards or other property, or canceled, forfeited or
suspended; (vii) determine whether, to what extent and under what circumstances
cash, Shares, other securities, other Awards, other property and other amounts



                                       12





payable with respect to an Award under the Plan shall be deferred either
automatically or at the election of the holder thereof or the Committee; (viii)
interpret and administer the Plan and any instrument or agreement relating to,
or Award made under, the Plan; (ix) establish, amend, suspend or waive such
rules and regulations and appoint such agents as it shall deem appropriate for
the proper administration of the Plan; and (x) make any other determination and
take any other action that the Committee deems necessary or desirable for the
administration of the Plan. Unless otherwise expressly provided in the Plan, all
designations, determinations, interpretations and other decisions under or with
respect to the Plan or any Award shall be within the sole discretion of the
Committee, may be made at any time and shall be final, conclusive and binding
upon any Participant, any holder or beneficiary of any Award and any employee of
the Company or any Affiliate. The Board of Directors of the Company shall also
have the authority in its discretion from time to time to administer the Plan by
granting awards or taking any other action authorized or permitted to be taken
by the Committee under the Plan.

SECTION 4.  SHARES AVAILABLE FOR AWARDS.

         (a) Shares Available. Subject to adjustment as provided in Section
4(c), the number of Shares initially available for granting Awards under the
Plan shall be 3,900,000. No more than 3,900,000 shares shall be cumulatively
available for the grant of Incentive Stock Options under the Plan. If any Shares
covered by an Award or to which an Award relates are not purchased or are
forfeited, or if an Award otherwise terminates without delivery of any shares,
then the number of Shares counted against the aggregate number of Shares
available under the Plan with respect to such Award, to the extent of any such
forfeiture or termination, shall again be available for granting Awards under
the Plan.

         (b) Accounting for Awards. For purposes of this Section 4, if an Award
entitles the holder thereof to receive or purchase Shares, the number of Shares
covered by such Award or to which such Award relates shall be counted on the
date of grant of such Award against the aggregate number of Shares available for
granting Awards under the Plan.

         (c) Adjustments. In the event that the Committee shall determine that
any dividend or other distribution (whether in the form of cash, Shares, other
securities or other property), recapitalization, stock split, reverse stock
split, reorganization, merger, consolidation, split-up, spinoff, combination,
repurchase or exchange of Shares or other securities of the Company, issuance of
warrants or other rights to purchase Shares or other securities of the Company
or other similar corporate transaction or event affects the Shares such that an
adjustment is determined by the Committee to be appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan, then the Committee shall, in such manner as it
may deem equitable, adjust any or all of (i) the number and type of Shares (or
other securities or other property) which thereafter may be made the subject of
Awards, (ii) the number and type of Shares (or other securities or other
property) subject to outstanding Awards and (iii) the purchase or exercise price
with respect to any Award; provided, however, that the number of Shares covered
by any Award or to which such Award relates shall always be a whole number.

         (d) Award Limitations Under the Plan. No Eligible Person nay be granted
any Award or Awards, the value of which Awards are based solely on an increase
in the value of the Shares after the date of grant of such Awards, for more than
100,000 Shares, in the aggregate, in any fiscal year of the Company. The
foregoing limitation specifically includes the grant of any "performance-based"
Awards within the meaning of Section 162(m) of the Code.


                                       13



SECTION 5.  ELIGIBILITY.

         Any Eligible Person, including any Eligible Person who is an officer or
director of the Company or any Affiliate, shall be eligible to be designated a
Participant. In determining which Eligible Persons shall receive an Award and
the terms of any Award, the Committee may take into account the nature of the
services rendered by the respective Eligible Persons, their present and
potential contributions to the success of the Company or such other factors as
the Committee, in its discretion, shall deem relevant. Notwithstanding the
foregoing, an Incentive Stock Option may only be granted to full or part-time
employees (which term as used herein includes, without limitation, officers and
directors who are also employees) and an incentive Stock Option shall not be
granted to an employee of an Affiliate unless such Affiliate is also a
"subsidiary corporation" of the Company within the meaning of Section 424(f) of
the Code or any successor provision.

SECTION 6.  AWARDS.

         (a) Options. The Committee is hereby authorized to grant Options to
Participants with the following terms and conditions and with such additional
terms and conditions not inconsistent with the provisions of the Plan as the
Committee shall determine:

                  (i) Exercise Price. The purchase price per Share purchasable
         under an Option shall be determined by the Committee; provided,
         however, that such purchase price shall not be less than 100% of the
         Fair Market Value of a Share on the date of grant of such Option.

                  (ii) Option Term.  The term of each Option shall be fixed by
         the Committee but shall not exceed ten years from the date such option
         is granted.

                  (iii) Time and Method of Exercise. The Committee shall
         determine the time or times at which an Option may be exercised in
         whole or in part and the method or methods by which, and the form or
         forms (including, without limitation, cash, Shares, promissory notes,
         other securities, other Awards or other property, withholding of Shares
         that would otherwise be issued, cashless exercise program of a broker
         or agent, or any combination thereof, having a Fair Market Value on the
         exercise date equal to the relevant exercise price) in which, payment
         of the exercise price with respect thereto may be made or deemed to
         have been made.

         (b) Restricted Stock. The Committee is hereby authorized to grant
Awards of Restricted Stock to Participants with the following terms and
conditions and with such additional terms and conditions not inconsistent with
the provisions of the Plan as the Committee shall determine:

                  (i) Restrictions. Shares of Restricted Stock shall be subject
         to such restrictions as the Committee may impose (including, without
         limitation, any limitation on the right to vote a Share of Restricted
         Stock or the right to receive any dividend or other right or property
         with respect thereto, which restrictions may lapse separately or in
         combination at such time or times, in such installments or otherwise as
         the Committee may deem appropriate.

                  (ii) Stock Certificates. Any Restricted Stock granted under
         the Plan shall be evidenced by issuance of a stock certificate or
         certificates, which certificate or certificates shall be held by the
         Company. Such certificate or certificates shall be registered in the
         name of the Participant and shall bear an appropriate legend referring
         to the terms, conditions and restrictions applicable to such Restricted
         Stock.


                                       14




                  (iii) Forfeiture; Delivery of Shares. Except as otherwise
         determined by the Committee, upon termination of employment (as
         determined under criteria established by the Committee) during the
         applicable restriction period, all Shares of Restricted Stock at such
         time subject to restriction shall be forfeited and reacquired by the
         Company; provided, however, that the Committee may, when it finds that
         a waiver would be in the best interest of the Company, waive in whole
         or in part any or all remaining restrictions with respect to Shares of
         Restricted Stock. Any Share representing Restricted Stock that is no
         longer subject to restrictions shall be delivered to the holder thereof
         promptly after the applicable restrictions lapse or are waived.

         (c) Performance Awards. The committee is hereby authorized to grant
Performance Awards to Participants subject to the terms of the Plan and any
applicable Award Agreement. A Performance Award granted under the Plan (i) may
be denominated or payable in cash, Shares, other securities, other Awards or
other property and (ii) shall confer on the holder thereof the right to receive
payments, in whole or in part, upon the achievement of such performance goals
during such performance periods as the Committee shall establish. Subject to the
terms of the Plan and any applicable Award Agreement, the performance goals to
be achieved during any performance period, the length of any performance period,
the amount of any Performance Award granted, the amount of any payment or
transfer to be made pursuant to any Performance Award and any other terms and
conditions of any Performance Award shall be determined by the Committee.

         (d) Stock Appreciation Rights. The Committee is hereby authorized to
grant Stock Appreciation Rights to Participants subject to the terms of the Plan
and any applicable Award Agreement. A Stock Appreciation Right granted under the
Plan shall confer on the holder thereof a right to receive upon exercise thereof
the excess of (i) the Fair Market Value of one Share on the date of exercise
(or, if the Committee shall so determine, at any time during a specified period
before or after the date of exercise) over (ii) the grant price of the Stock
Appreciation Right as specified by the Committee, which price shall not be less
than 100% of the Fair Market Value of one Share on the date of grant of the
Stock Appreciation Right. Subject to the terms of the Plan and any applicable
Award Agreement, the grant price, term, methods of exercise, dates of exercise,
methods of settlement and any other terms and conditions of any Stock
Appreciation Right shall be as determined by the Committee. The Committee may
impose such conditions or restrictions on the exercise of any Stock Appreciation
Right as it may deem appropriate.

         (e) Other Stock-Based Awards. The Committee is hereby authorized to
grant to Participants such other Awards that are denominated or payable in,
valued in whole or in part by reference to, or otherwise based on or related to,
Shares (including, without limitation, securities convertible into Shares), as
are deemed by the Committee to be consistent with the purpose of the Plan;
provided, however, that such grants must comply with Rule 16b-3 and applicable
law. Subject to the terms of the Plan and any applicable Award Agreement, the
Committee shall determine the terms and conditions of such Awards. Shares or
other securities delivered pursuant to a purchase right granted under this
Section 6(e) shall be purchased for such consideration, which may be paid by
such method or methods and in such form or forms (including without limitation,
cash, Shares, promissory notes, other securities, other Awards or other
property, withholding of Shares that would otherwise be issued, cashless
exercise program of a broker or agent, or any combination thereof), as the
Committee shall determine, the value of which consideration, as established by
the Committee shall not be less than 100% of the Fair Market Value of such
Shares or other securities as of the date such purchase right is granted.

         (f)      General

                  (i)  No Cash Consideration for Awards. Awards shall be granted
         for no cash consideration or for such minimal cash consideration as may
         be required by applicable law.


                                       15



                  (ii) Awards May Be Granted Separately or Together. Awards may,
         in the discretion of the committee, be granted either alone or in
         addition to, in tandem with or in substitution for any other Award or
         any award granted under any plan of the Company or any Affiliate other
         than the Plan. Awards granted in addition to or in tandem with other
         Awards or in addition to or in tandem with awards granted under any
         such other plan of the Company or any Affiliate may be granted either
         at the same time as or at a different time from the grant of such other
         Awards or awards.

                  (iii) Forms of Payment under Awards. Subject to the terms of
         the Plan and of any applicable Award Agreement, payments or transfers
         to be made by the Company or an Affiliate upon the grant, exercise or
         payment of an Award may be made in such form or forms as the Committee
         shall determine (including, without limitation, cash, Shares,
         promissory notes, other securities, other Awards or other property or
         any combination thereof), and may be made in a single payment or
         transfer, in installments or on a deferred basis, in each case in
         accordance with rules and procedures established by the Committee. Such
         rules and procedures may include, without limitation, provisions for
         the payment or crediting of reasonable interest on installment or
         deferred payments.

                  (iv) Limits on Transfer of Awards. No Award and no right under
         any such Award shall be transferable by a Participant otherwise than by
         will or by the laws of descent and distribution; provided, however,
         that, if so determined by the Committee, a Participant may, in the
         manner established by the Committee, designate a beneficiary or
         beneficiaries to exercise the rights of the Participant and receive any
         property distributable with respect to any Award upon the death of the
         Participant. Each Award or right under any Award shall be exercisable
         during the Participant's lifetime only by the Participant. No Award or
         right under any such Award may be pledged, alienated, attached or
         otherwise encumbered, and any purported pledge, alienation, attachment
         or encumbrance thereof shall be void and unenforceable against the
         Company or any Affiliate.

                  (v) Term of Awards. The term of each Award shall be for such
         period as may be determined by the Committee.

                  (vi) Restrictions; Securities Exchange Listing. All
         certificates for Shares or other securities delivered under the Plan
         pursuant to any Award or the exercise thereof shall be subject to such
         stop transfer orders and other restrictions as the Committee may deem
         advisable under the Plan or the rules, regulations and other
         requirements of the Securities and Exchange Commission and any
         applicable federal or state securities laws, and the Committee may
         cause a legend or legends to be placed on any such certificates to make
         appropriate reference to such restrictions. If the Shares or other
         securities are traded on a securities exchange, the Company shall not
         be required to deliver any Shares or other securities covered by an
         Award unless and until such Shares or other securities have been
         admitted for trading on such securities exchange.

SECTION 7.  AMENDMENT AND TERMINATION; ADJUSTMENTS.

         Except to the extent prohibited by applicable law and unless otherwise
expressly provided in an Award Agreement or in the Plan:

         (a) Amendments to the Plan. The Board of Directors of the Company may
amend, alter, suspend, discontinue or terminate the Plan; provided, however,
that, notwithstanding any other provision of the Plan or any Award Agreement,
without the approval of the stockholders of the Company, no such amendment,
alteration, suspension, discontinuation or termination shall be made that,
absent such approval:


                                       16




                  (i) would cause Rule 16b-3 to become unavailable with respect
         to the Plan;

                  (ii) would violate the rules or regulations of the National
         Association of Securities Dealers, Inc. or any securities exchange that
         are applicable to the Company; or

                  (iii) would cause the Company to be unable, under the Code, to
         grant incentive Stock Options under the Plan.

         (b) Amendments to Awards. The Committee may waive any conditions of or
rights of the Company under any outstanding Award, prospectively or
retroactively. The Committee may not amend, alter, suspend, discontinue or
terminate any outstanding Award, prospectively or retroactively, without the
consent of the Participant or holder or beneficiary thereof, except as otherwise
herein provided.

         (c) Correction of Defects, Omissions and Inconsistencies. The Committee
may correct any defect, supply any omission or reconcile any inconsistency in
the Plan or any Award in the manner and to the extent it shall deem desirable to
carry the Plan into effect.

SECTION 8.  CHANGE IN CONTROL.

         In case of a "Change in Control" (as such term is hereinafter defined),
each Participant shall be fully vested (as of the date of the Change in Control)
in all shares of Restricted Stock, Performance Awards, Stock Appreciation
Rights, Options and Other Awards granted or awarded under this Plan and any and
all restrictions or performance requirements on the issuance, exercise or sale
of said grants, awards, shares or rights under said Restricted Stock awards,
Stock Performance Awards, Stock Appreciation Rights, Options and Other Awards
shall be waived or removed as of the date of the Change in Control. For purposes
of this 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):

                  (i) 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

                  (ii) 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 stockholders 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


                                       17






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 Board unless a majority of the directors taking
such action are Continuing Directors.

         (d) Notwithstanding the foregoing provisions of Section 8, the
Committee may impose such additional restrictions, limitations or requirements
as it deems appropriate on the vesting of any Award in the event of a Change in
Control before such Award shall be deemed to be fully vested. In the event that
no such additional restrictions, limitations or requirements on the vesting of
any Award in the event of a Change in Control are imposed in the Award
Agreement, the Change in Control provisions set forth in the preceding
paragraphs of this Section 8 shall govern such Award.

SECTION 9.  INCOME TAX WITHHOLDING.

         In order to comply with all applicable federal or state income tax laws
or regulations, the Company may take such action as it deems appropriate to
ensure that all applicable federal or state payroll, withholding, income or
other taxes, which are the sole and absolute responsibility of a Participant,
are withheld or collected from such Participant. In order to assist a
Participant in paying all or a portion of the federal and state taxes to be
withheld or collected upon exercise or receipt of (or the lapse of restrictions
relating to) an Award, the Committee, in its discretion and subject to such
additional terms and conditions as it may adopt, may permit the Participant to
satisfy such tax obligation by (i) electing to have the Company withhold a
portion of the Shares otherwise to be delivered upon exercise or receipt of (or
the lapse of restrictions relating to) such Award with a Fair Market Value equal
to the amount of such taxes or (ii) delivering to the Company Shares other than
Shares issuable upon exercise or receipt of (or the lapse of restrictions
relating to) such Award with a Fair Market Value equal to the amount of such
taxes.

SECTION 10.  GENERAL PROVISIONS.

         (a) No Rights to Awards. No Eligible Person, Participant or other
Person shall have any claim to be granted any Award under the Plan, and there is
no obligation for uniformity of treatment of Eligible Persons, Participants or
holders or beneficiaries of Awards under the Plan. The terms and conditions of
Awards need not be the same with respect to any Participant or with respect to
different Participants.

         (b) Award Agreements. No Participant will have rights under an Award
granted to such Participant unless and until an Award Agreement shall have been
duly executed on behalf of the Company.

         (c) No Limit on Other Compensation Arrangements. Nothing contained in
the Plan shall prevent the Company or any Affiliate from adopting or continuing
in effect other or additional compensation arrangements, and such arrangements
may be either generally applicable or applicable only in specific cases.

         (d) No Right to Employment. The grant of an Award shall not be
construed as giving Participant the right to be retained in the employ of the
Company or any Affiliate, nor will it affect in any way the right of the Company
or an Affiliate to terminate such employment at any time, with or without cause.
In addition, the Company or an Affiliate may at any time dismiss a Participant
from employment free from any liability or any claim under the Plan, unless
otherwise expressly provided in the Plan or in any Award Agreement.

         (e) Governing Law. The validity, construction and effect of the Plan or
any Award, and any rules and regulations relating to the Plan or any Award,
shall be determined in accordance with the laws of the State of Minnesota.


                                       18




         (f) Severability. If any provision of the Plan or any Award is or
becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction
or would disqualify the Plan or any Award under any law deemed applicable by the
Committee, such provision shall be construed or deemed amended to conform to
applicable laws, or if it cannot be so construed or deemed amended without, in
the determination of the Committee, materially altering the purpose or intent of
the Plan or the Award, such provision shall be stricken as to such jurisdiction
or Award, and the remainder of the Plan or any such Award shall remain in full
force and effect.

         (g) No Trust or Fund Created. Neither the Plan nor any Award shall
create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Affiliate and a Participant or
any other Person. To the extent that any Person acquires a right to receive
payments from the Company or any Affiliate pursuant to an Award, such right
shall be no greater than the right of any unsecured general creditor of the
Company or any Affiliate.

         (h) No Fractional Shares. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award, and the Committee shall determine
whether cash shall be paid in lieu of any fractional Shares or whether such
fractional Shares or any rights thereto shall be canceled, terminated or
otherwise eliminated.

         (i) Headings. Headings are given to the Sections and subsections of the
Plan solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or interpretation of
the Plan or any provision thereof.

SECTION 11.  SECTION 16(B) COMPLIANCE.

         The Plan is intended to comply in all respects with Rule 16b-3 or any
successor provision, as in effect from time to time and in all events the Plan
shall be construed in accordance with the requirements of Rule 16b-3. If any
Plan provision does not comply with Rule 16b-3 as hereafter amended or
interpreted, the provision shall be deemed inoperative. Moreover, in the event
the 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 Plan insofar as Participants subject to Section 16 are
concerned. The Board, in its absolute discretion, may bifurcate the Plan so as
to restrict, limit or condition the use of any provision of the Plan to
participants who are officers or directors subject to Section 16 of the
Securities and Exchange Act of 1934, as amended, without so restricting,
limiting or conditioning the Plan with respect to other participants.

SECTION 12.  EFFECTIVE DATE OF THE PLAN.

         The Plan shall be effective as of August 8, 1995, subject to approval
by the shareholders of the Company within one year thereafter.

SECTION 13.  TERM OF THE PLAN.

         Awards shall only be granted under the Plan during a ten-year period
beginning on the effective date of the Plan. However, unless otherwise expressly
provided in the Plan or in an applicable Award Agreement, any Award theretofore
granted may extend beyond the end of such ten-year period, and the authority of
the Committee provided for hereunder with respect to the Plan and any Awards,
and the authority of the Board of Directors of the Company to amend the Plan,
shall extend beyond the end of such period.


                                       19

EX-99.(B)

                                                                   EXHIBIT 99(B)

                                  NORSTAN, INC.
                   RESTATED NON-EMPLOYEE DIRECTORS STOCK PLAN

                          AS AMENDED SEPTEMBER 18, 2003

     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 650,000
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 20,000 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 20,000 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 20,000 shares of Common Stock.

     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, each option granted will be exercisable in one
     or more installments as shall determined on the date of grant by the Board
     of Directors of the Company.


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     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.

          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 deter-mine 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 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


                                       21




     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 pro rata 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,
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, other-wise
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 Tease 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.


                                       22




          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 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


                                       23




               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 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
falls 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



                                       24




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
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 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.

     23. Discretionary Option Grants. In addition to the Automatic Option Grants
provided under Paragraph 3 hereof, Non-Employee Directors and former
Non-Employee Directors may be granted, in the discretion of the Board,
additional stock options to purchase Common Stock of the Company. Such options
shall contain such terms and provisions as the Board determines at the time of
each grant. Provided, however, that the option price shall be the Fair Market
Value on the date the option is granted.



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