<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act Of 1933
--------------------------
DST SYSTEMS, INC.
-----------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 43-1581814
---------------------------------------------
(State of Incorporation) (I.R.S. Employer
Identification No.)
333 West 11th Street, 5th Floor
Kansas City, Missouri 64105-1594
(Address of Principal Executive Offices)
Option Agreements under the Following Plans:
USCS INTERNATIONAL, INC. 1988 INCENTIVE STOCK OPTION PLAN, AS
AMENDED (the "1988 USCS Plan")
USCS INTERNATIONAL, INC. 1990 STOCK OPTION PLAN, AS AMENDED
(the "1990 USCS Plan")
USCS INTERNATIONAL, INC. 1993 INCENTIVE STOCK OPTION PLAN, AS
AMENDED (the "1993 USCS Plan")
USCS INTERNATIONAL, INC. 1996 STOCK OPTION PLAN, AS AMENDED
(the "1996 USCS Plan")
---------------------------------------------------------
(Full Title of the Plans)
ROBERT C. CANFIELD, ESQ.
Senior Vice President, General Counsel, and Secretary
DST Systems, Inc.
333 West 11th Street, 5th Floor
Kansas City, Missouri 64105-1594
(816) 435-1000
---------------------------------------------------------
(Name, Address, and Telephone Number of Agent for Service)
<PAGE>
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
Title of Proposed Proposed Amount of
securities Amount maximum maximum Regist-
to be to be offering price aggregate ration
registered registered per share offering price fee
------------ ---------- -------------- -------------- --------
To be offered pursuant to the 1988 USCS PLAN:
<S> <C> <C> <C> <C>
Common Stock, 172,294 $3,340,201 $929
par value shares N/A <F1><F2> <F1>
$0.01 per
share
Interests <F3> N/A N/A <F4>
in the 1988
USCS Plan
To be offered pursuant to the 1990 USCS PLAN:
Common Stock, 63,054 $1,895,446 $527
par value shares N/A <F1><F2> <F1>
$0.01 per
share
Interests <F3> N/A N/A <F4>
in the 1990
USCS Plan
To be offered pursuant to the 1993 USCS PLAN:
Common Stock, 315,536 $5,251,403 $1460
par value shares N/A <F1><F2> <F1>
$0.01 per share
Interests
in the 1993 <F3> N/A N/A <F4>
USCS Plan
To be offered pursuant to the 1996 USCS PLAN:
Common Stock,
par value 928,194 $21,891,248 $6086
$0.01 per shares N/A <F1><F2> <F1>
Interests <F3> N/A N/A <F4>
in the 1996
USCS Plan
Total Registration Fee $9002
<FN>
<F1> Calculated pursuant to Rules 457(h)(1) and 457(c) under the
Securities Act of 1933, as amended (the "Securities Act"),
based upon the aggregate exercise price of outstanding
options.
<F2> Estimated solely for the purpose of calculating the
registration fee in accordance with Rule 457 under the
Securities Act.
<F3> To the extent that the interests in the Plans constitute
securities, pursuant to Rule 416(c), this Registration
Statement shall be deemed to register an indeterminate
amount of interests in the Plans.
<F4> Pursuant to Rule 457(h)(2), no registration fee is required
with respect to the interests in the Plans.
</FN>
</TABLE>
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
EXPLANATORY NOTE
As permitted by the rules of the United States Securities
and Exchange Commission (the "Commission") under the Securities
Act, this Registration Statement omits the information specified
in Part I of Form S-8.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed or to be filed by DST Systems,
Inc. (the "Registrant") with the Commission are incorporated in
and made a part of this Registration Statement by reference, as
of their respective dates:
(a) The Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1997 dated March 16, 1998
(Commission file 001-14036) and any amendments thereto (the
"Annual Report");
(b) All reports and any amendments thereto filed by
the Registrant with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934, as amended, since the Annual Report;
(c) The description of the Registrant's Common Stock
under the headings "Description of Capital Stock" and
"Dividend Policy" in the Registrant's Registration Statement
on Form S-1 dated September 1, 1995 (SEC File No. 33-96526),
as amended (the "IPO Registration Statement");
(d) The Summary of the Preferred Stock Purchase Rights
set forth on Form 8-A dated November 15, 1995 (SEC file no.
1-14036) and the related Rights Agreement dated as of
October 6, 1995 between the Registrant and State Street Bank
and Trust Company, as rights agent, which is attached as
Exhibit 4.4 to the IPO Registration Statement;
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law ("DGCL")
provides, generally, that a corporation shall have the power to
indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit
or proceeding (except actions by or in the right of the
corporation) by reason of the fact that such person is or was a
director, officer, employee or agent of the corporation against
all expenses, judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection
with such action, suit or proceeding if such person acted in good
faith and in a manner such person reasonably believed to be in or
not opposed to the best interest of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable
cause to believe his or her conduct was unlawful. A corporation
may similarly indemnify such person for expenses actually and
reasonably incurred by such person in connection with the defense
or settlement of any action or suit by or in the right of the
corporation, provided such person acted in good faith and in a
manner he or she reasonably believed to be in or not opposed to
the best interests of the corporation, and, in the case of
claims, issues and matters as to which such person shall have
been adjudged liable to the corporation, provided that a court
shall have determined, upon application, that, despite the
adjudication of liability but in view of all the circumstances of
the case, such person is fairly and reasonably entitled to
indemnity for such expenses which such court shall deem proper.
Section 102(b)(7) of the DGCL provides, generally, that the
certificate of incorporation may contain a provision eliminating
or limiting the personal liability of a director to the
corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, provided that such provision may
not eliminate or limit the liability of a director (i) for any
breach of the director's duty of loyalty to the corporation or
its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of
law, (iii) under section 174 of Title 8 of the DGCL, or (iv) for
any transaction from which the director derived an improper
personal benefit. No such provision may eliminate or limit the
liability of a director for any act or omission occurring prior
to the date when such provision becomes effective.
The DST Certificate of Incorporation provides that the
directors and officers of DST, or persons who are or were serving
at the request of DST as directors or officers of other
corporations, shall be indemnified to the maximum extent
permitted by law against expenses incurred by such individuals in
defending a civil or criminal action, suit or proceeding brought
against such officers and directors in their capacities as such.
Such expenses shall be paid by DST in advance of the final
disposition of such action, suit or proceeding. As to directors
and officers, the DST Certificate of Incorporation requires
receipt by DST of an undertaking by or on behalf of the director
or officer to repay such amount if it is ultimately determined
that the director or officer is not entitled to be indemnified by
DST as authorized by the DGCL. The foregoing right of
indemnification and advancement of expenses is not exclusive of
any other rights of indemnification and advancement of expenses
to which any such individual may be entitled by by-law,
agreement, vote of stockholders or disinterested directors or
otherwise.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
The Exhibits to this Registration Statement on Form S-8 are
listed in the Exhibit Index of this Registration Statement, which
Exhibit Index is incorporated herein by reference in response to
this Item.
ITEM 9. UNDERTAKINGS.
Rule 415 Offering
-----------------
(a) The Registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(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;
and
(iii) To include any material information with
respect to the plan of distribution not previously
disclosed in the Registration Statement or any material
change to such information in the Registration
Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii)
above do not apply if the information required to be
included in a post-effective amendment by those paragraphs
is contained in periodic reports filed by the Registrant
with the Commission pursuant to Section 13 or Section 15(d)
of the Exchange Act that are incorporated by reference in
the Registration Statement.
(2) That, for the purpose of determining any liability
under the Securities Act, 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. 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 end of the estimated maximum offering range may
be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) ( 230.424(b) of this
chapter) if, in the aggregate, the changes in volume and
price represent no more than 20% change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective Registration
Statement.
(3) To remove from registration by means of a post-
effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
(b) The Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing
of the annual report of the Registrant pursuant to Section 13(a)
or Section 15(d) of the Exchange Act (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) that is incorporated by
reference in this 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.
(c) Insofar as indemnification for liabilities arising
under the Securities Act 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 Securities 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 Securities Act and will be governed by the final adjudication
of such issue.
(Remainder of page intentionally left blank.)
<PAGE>
SIGNATURES AND POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933,
as amended, 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 City of Kansas City, State of
Missouri, on December 21, 1998.
DST SYSTEMS, INC.
By: /s/ Thomas A. McDonnell
--------------------------------------
President and Chief Executive Officer
Each person whose signature appears below hereby constitutes
and appoints each of the Company's Chief Executive Officer,
General Counsel, and Chief Financial Officer (currently Thomas A.
McDonnell, Robert C. Canfield, and Kenneth V. Hager respectively)
as such person's true and lawful attorney-in-fact and agent, each
acting alone, with full power of substitution and resubstitution,
for and in such person's name, place and stead, in any and all
capacities, to sign any or all amendments (including post-
effective amendments) to this Registration Statement, and to file
the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission
and any exchange on which the Registrant's stock registered
hereunder is listed for trading, granting unto such attorneys-in-
fact and agents, each acting alone, full power and authority to
do and perform each and every act and thing required and
necessary to be done in and about the premises, as fully to all
intents and purposes as such person might or could do in person,
hereby ratifying and confirming all that such attorneys-in-fact
and agents, each acting alone, or such person's substitute or
substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933,
as amended, this Registration Statement has been signed by the
following persons in the capacities and on the date indicated.
Signature Title Date
--------- ----- ----
/s/Thomas A. McDonnell President, Chief December 21, 1998
----------------------- Executive Officer
(Principal Executive
Officer), and Director
/s/Kenneth V. Hager Vice President, Chief December 21, 1998
-------------------- Financial Officer, and
Treasurer (Principal
Financial Officer
/s/John J. Faucett Controller (Principal December 21, 1998
-------------------- Accounting Officer
/s/A. Edward Allinson Director December 21, 1998
-----------------------
/s/Michael G. Fitt* Director December 21, 1998
-----------------------
/s/Thomas A. McCullough Director December 21, 1998
-----------------------
/s/William C. Nelson* Director December 21, 1998
-----------------------
/s/M. Jeannine Director December 21, 1998
Strandjord*
-----------------------
Director
-----------------------
James C. Castle
Director
------------------------
George L. Argyros, Sr.
*Member of the Committee appointed to administer the Plans,
which committee has, pursuant to the instructions regarding
signatures on Form S-8, duly caused this Registration Statement
to be signed on behalf of the Plans.
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description of Exhibit
--------- ----------------------
4.1 Agreement and Plan of Merger, dated September 2, 1998
by and among DST Systems, Inc., DST Acquisitions, Inc.
and USCS International, Inc., which is attached as
Exhibit 2 to DST's Registration Statement on Form S-4
filed November 20, 1998, as amended, (SEC File No. 333-
67611), is hereby incorporated by reference as Exhibit
4.1.
4.2 DST's Delaware Certificate of Incorporation, as
restated, which is attached as Exhibit 3.1 to DST's
Registration Statement on Form S-1 dated September 1,
1995 (SEC File No. 33-96526) (the "IPO Registration
Statement"), is hereby incorporated by reference as
Exhibit 4.2.
4.3 Amended and Restated By-Laws of DST Systems, Inc.,
which are attached as Exhibit 3.2 to DST's IPO
Registration Statement, are hereby incorporated by
reference as Exhibit 4.3
4.4.1 The Certificate of Designations dated October 16, 1995,
establishing the Series A Preferred Stock of the
Company, which is attached as Exhibit 4.3 to the
Company's S-1 Registration Statement, is hereby
incorporated by reference as Exhibit 4.4.1.
4.4.2 The Summary of the Preferred Stock Purchase Rights set
forth in Form 8-A dated November 15, 1995 (SEC File No.
1-14036) (the "The Rights 8-A") is hereby incorporated
by reference as Exhibit 4.4.2.
4.4.3 The first amendment dated July 30, 1998 (the "July 8-A
Amendment") to The Rights 8-A is hereby incorporated by
reference as Exhibit 4.4.3.
4.4.4 The Rights Agreement dated as of October 6, 1995 (the
"Rights Agreement"), between the Company and State
Street Bank and Trust Company, as rights agent, which
is attached as Exhibit 4.4 to the Company's IPO
Registration Statement, is hereby incorporated by
reference as Exhibit 4.4.4.
4.4.5 The first amendment dated as of July 9, 1998 to Rights
Agreement, which is attached as Exhibit 99 to the July
8-A Amendment, is hereby incorporated by reference as
Exhibit 4.4.5.
4.5 The description of the Company's Common Stock, set
forth under the headings "Description of Capital Stock"
and "Dividend Policy" in the IPO Registration
Statement, is hereby incorporated by reference as
Exhibit 4.5.
4.6.1* The USCS International, Inc. 1988 Incentive Stock
Option Plan (the "1988 USCS Plan") dated July 1, 1988,
as amended and restated as of March 5, 1997.
4.6.2* Amendment dated January 22, 1998, to the 1988 USCS
Plan.
4.7.1* The USCS International, Inc. 1990 Stock Option Plan
(the "1990 USCS Plan") dated December 31, 1990, as
amended and restated as of March 5, 1997.
4.7.2* Amendment dated January 22, 1998, to the 1990 USCS
Plan.
4.8.1* The USCS International, Inc. 1993 Incentive Stock
Option Plan (the "1993 USCS Plan") dated May 18, 1993,
as amended and restated as of March 5, 1997.
4.8.2* Amendment dated January 22, 1998, to the 1993 USCS
Plan.
4.9.1* The USCS International, Inc. 1996 Stock Option Plan
(the "1996 USCS Plan") dated April 12, 1996.
4.9.2* Amendment dated July 25, 1996, to the 1996 USCS Plan.
4.9.3* Amendment dated January 23, 1997, to the 1996 USCS
Plan.
4.9.4* Amendment dated January 22, 1998, to the 1996 USCS
Plan.
5.1 Opinion of Sonnenschein Nath & Rosenthal, counsel to
DST, regarding legality (including consent).
23.1 Consent of Sonnenschein Nath & Rosenthal (included in
Exhibit 5.1).
23.2 Consent of PricewaterhouseCoopers LLP, independent
accountants.
24 Power of Attorney (included on signature page).
*The Plans and the amendments thereto are included as
exhibits only to the extent that they are incorporated into the
option agreements being assumed.
1988 STOCK OPTION PLAN
As amended and restated through 3/5/97
1. PURPOSES OF THE PLAN.
This 1988 Stock Option Plan is designed to enable executives
and other key managers of USCS International, Inc., a
Delaware corporation, and its wholly-owned Subsidiaries to
acquire or increase a proprietary interest in the Company
and thus to share in the future success of the Company's
business. The Plan is intended as a further means of
attracting and retaining outstanding management personnel.
Since the executives and managers eligible to receive
Options under the Plan will be those who are in positions to
make important and direct contributions to the success of
the Company, the directors believe that the grant of Options
under the Plan will be in the Company's interest. Options
granted hereunder may be either Incentive Stock Options or
Nonstatutory Stock Options at the discretion of the
Committee.
2. DEFINITIONS.
As used herein, and in any Option granted hereunder, the
following definitions shall apply:
(a) "BOARD" shall mean the Board of Directors of the
Company.
(b) "CODE" shall mean the Internal Revenue Code of 1986, as
amended.
(c) "COMMON STOCK" shall mean the Common Stock of the
Company.
(d) "COMPANY" shall mean USCS International. Inc., a
Delaware corporation.
(e) "COMMITTEE" shall mean the Committee appointed by the
Board in accordance with paragraph (a) of Section 4 of
the Plan. If the Board does not appoint or ceases to
maintain a Committee, the term "Committee" shall refer
to the Board.
(f) "CONTINUOUS EMPLOYMENT" shall mean the absence of any
interruption or termination of service as an Employee
or Non-Employee Director by the Company or any
Subsidiary. Continuous Employment shall not be
considered interrupted during any period of sick leave,
military leave or any other leave of absence approved
by the Board or in the case of transfers between
locations of the Company or between the Company and any
Parent, Subsidiary or successor of the Company.
(g) "DISINTERESTED PERSON" shall mean a person who has not
at any time within one year prior to service as a
member of the Committee (or during such service) been
granted or awarded Options or other equity securities
pursuant to the Plan or any other plan of the Company
or any Parent or Subsidiary. Notwithstanding the
foregoing, a member of the Committee shall not fail to
be a Disinterested Person merely because he or she
participates in a plan meeting the requirements of Rule
16b-3(c)(2)(i)(A) or (B) promulgated under the Exchange
Act.
(h) "EMPLOYEE" shall mean any person, including officers
(whether or not they are directors), employed by the
Company or any Subsidiary.
(i) "EXCHANGE ACT" shall mean the Securities Exchange Act
of 1934, as amended.
(j) "INCENTIVE STOCK OPTION" shall mean any option granted
under this Plan and any other option granted to an
Employee in accordance with the provisions of Section
422 of the Code. and the regulations promulgated
thereunder.
(k) "NONSTATUTORY STOCK OPTION" shall mean an Option
granted under the Plan that is subject to the
provisions of Section 1.83-7 of the Treasury
Regulations promulgated under Section 83 of the Code.
(l) "OPTION" shall mean a stock option granted pursuant to
the Plan.
(m) "OPTION AGREEMENT" shall mean a written agreement
between the Company and the Optionee regarding the
grant and exercise of Options to purchase Shares and
the terms and conditions thereof as determined by the
Committee pursuant to the Plan.
(n) "OPTIONED SHARES" shall mean the Common Stock subject
to an Option.
(o) "OPTIONEE" shall mean an Employee, Non-Employee
Director or Consultant who receives an Option.
(p) "PARENT" shall mean a "parent corporation," whether now
or hereafter existing. as defined by Section 424(e) of
the Code.
(q) "PLAN" shall mean this 1988 Stock Option Plan.
(r) "REGISTRATION DATE" shall mean June 21, 1996, the
effective date of the first registration statement
filed by the Company pursuant to Section 12(g) of the
Exchange Act with respect to any class of the Company's
equity securities.
(s) "SECURITIES ACT" shall mean the Securities Act of 1933,
as amended.
(t) "SHARE" shall mean a share of the Common Stock subject
to an Option, as adjusted in accordance with Section 11
of the Plan.
(u) "SUBSIDIARY" shall mean a "subsidiary corporation,"
whether now or hereafter existing, as defined in
Section 424(f) of the Code.
3. STOCK SUBJECT TO THE PLAN.
Subject to the provisions of Section 11 of the Plan, the
maximum aggregate number of Shares which may be optioned and
sold under the Plan is 945,000 Shares. The Shares may be
authorized but unissued or reacquired shares of Common
Stock. If an Option expires or becomes unexercisable for
any reason without having been exercised in full, the Shares
which were subject to the Option but as to which the Option
was not exercised shall, unless the Plan shall have been
terminated, become available for other Option grants under
the Plan.
4. ADMINISTRATION OF THE PLAN.
(a) PROCEDURE AFTER REGISTRATION DATE. The Plan shall be
administered either by: (i) the full Board, provided
that all members of the Board are Disinterested
Persons; or (ii) a Committee of three (3) or more
directors, each of whom is a Disinterested Person. The
Board shall take all action necessary to administer the
Plan in accordance with the then effective provisions
of Rule 16b.3 promulgated under the Exchange Act,
provided that any amendment to the Plan required for
compliance with such provisions shall be made
consistent with the provisions of Section 13 of the
Plan, and said regulations.
(b) POWERS OF THE COMMITTEE. Subject to the provisions of
the Plan, the Committee shall have the authority: (i)
to determine, upon review of relevant information, the
fair market value of the Common Stock; (ii) to
determine the exercise price of Options to be granted,
the Employees, Directors or consultants to whom and the
time or times at which Options shall be granted, and
the number of Shares to be represented by each Option;
(iii) to interpret the Plan; (iv) to prescribe, amend
and rescind rules and regulations relating to the Plan;
(v) to determine the terms and provisions of each
Option granted under the Plan (which need not be
identical) and, with the consent of the holder thereof,
to modify or amend any Option; (vi) to authorize any
person to execute on behalf of the Company any
instrument required to effectuate the grant of an
Option previously granted by the Committee; (vii) defer
an exercise date of any Option (with the consent of the
Optionee), subject to the provisions of Section 9(a) of
the Plan; (viii) to determine whether Options granted
under the Plan will be Incentive Stock Options or
Nonstatutory Stock Options; (ix) to make all other
determinations deemed necessary or advisable for the
administration of the Plan: and (x) to designate which
Options granted under the Plan will be issued in
reliance on Rule 701.
(c) EFFECT OF COMMITTEE'S DECISION. All decisions,
determinations and interpretations of the Committee
shall be final and binding on all potential or actual
Optionees, any other holder of an Option or other
equity security of the Company and all other persons.
5. ELIGIBILITY.
(a) PERSONS ELIGIBLE FOR OPTIONS. Options may be granted
under the Plan to key executives and managers who are
Employees of the Company. All determinations by the
Compensation Committee of the persons to whom Options
shall be granted hereunder shall be conclusive. An
Employee who has been granted an Option, if he or she
is otherwise eligible, may be granted an additional
Option or Options. However, the aggregate fair market
value (determined in accordance with the provisions of
Section 8(a) of the Plan) of the Shares subject to one
or more Incentive Stock Options grants that are
exercisable for the first time by an Optionee during
any calendar year (under all stock option plans of the
Company and its Parents and Subsidiaries) shall not
exceed $100,000 (determined as of the grant date); all
grants in excess of the $100,000 limit shall be
designated as Nonstatutory Stock Option.
(b) NO RIGHT TO CONTINUING EMPLOYMENT. Neither the
establishment nor the operation of the Plan shall
confer upon any Optionee or any other person any right
with respect to continuation of employment or other
service with the Company or any Subsidiary, nor shall
the Plan interfere in any way with the right of the
Optionee or the right of the Company (or any Parent or
Subsidiary) to terminate such employment or service at
any time.
6. TERM OF PLAN.
The Plan shall become effective as of July 1, 1988 and
subject to Section 13 hereof, shall extend for a term of ton
(10) years from that date pursuant to approval of the Plan
granted by the holders of a majority of the outstanding
Shares at the annual meeting of Shareholders of the Company
hold May 6, 1988.
7. TERM OF OPTION.
Unless the Committee determines otherwise, the term of each
Option granted under the Plan shall be ten (10) years from
the date of grant. The term of the Option shall be set
forth in the Option Agreement. No Incentive Stock Option
shall be exercisable after the expiration of ten (10) years
from the date such Option is granted; provided that, no
Incentive Stock Option granted to any Employee who, at the
date such Option is granted, owns (within the meaning of
Section 425(d) of the Code) more than ten percent (10%) of
the total combined voting power of all classes of stock of
the Company or any Parent or Subsidiary shall be exercisable
after the expiration of five (5) years from the date such
Option is granted.
8. EXERCISE PRICE AND CONSIDERATION.
(a) EXERCISE PRICE. Except as provided in subsection (b)
below, the exercise price for the Shares to be issued
pursuant to any Option shall be such price as is
determined by the Committee, which shall in no event be
less than, in the case of Incentive Stock Options, the
fair market value of such Shares on the date the Option
is granted, provided that, in the case of any Optionee
owning stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock
of the Company or any Parent or Subsidiary of the
Company, the exercise price shall be 110% of fair
market value on the date the Incentive Stock Option is
granted. Fair market value of the Common Stock shall
be determined by the Committee, using such criteria as
it deems relevant; provided, however, that for such
time as the Common Stock is listed on a national
securities exchange (within the meaning of Section 6 of
the Exchange Act) or on the NASDAQ National Market
System (or any successor national market system), the
fair market value per Share shall be the closing price
on such exchange on the date of grant of the Option, as
reported in THE WALL STREET JOURNAL.
(b) TEN PERCENT STOCKHOLDERS. No Option shall be granted
to any Employee who, at the date such Option is
granted, owns (within the meaning of Section 424(d) of
the Code) more than ten percent (10%) of the total
combined voting power of all classes of stock of the
Company or any Parent or Subsidiary, unless the
exercise price for the Shares to be issued pursuant to
such Option is at least equal to 110 percent (110%) of
the fair market value of such Shares on the grant date
determined by the Committee in the manner set forth in
subsection (a) above.
(c) CONSIDERATION. The consideration to be paid for the
Optioned Shares shall be payment in cash or by check
unless payment in some other manner, including by
promissory note, other shares of the Company's Common
Stock or such other consideration and method of payment
for the issuance of Optioned Shares as is authorized by
the Committee at the time of the grant of the Option.
Any cash or other property received by the Company from
the sale of Shares pursuant to the Plan shall
constitute part of the general assets of the Company.
9. EXERCISE OF OPTION.
(a) VESTING PERIOD. Any Option granted hereunder shall be
exercisable at such times and under such conditions as
determined by the Committee and as shall be permissible
under the terms of the Plan, which shall be specified
in the Option Agreement evidencing the Option. Options
granted under the Plan shall vest at a rate of at least
twenty percent (20%) per year.
(b) EXERCISE PROCEDURES. An Option shall be deemed to be
exercised when written notice of such exercise has been
given to the Company in accordance with the terms of
the option agreement evidencing the Option, and full
payment for the Shares with respect to which the Option
13 exercised has been received by the Company.
An Option may not be exercised for fractional shares.
As soon as practicable following the exercise of an
Option in the manner set forth above, the Company shall
issue or cause its transfer agent to issue stock
certificates representing the Shares purchased. Until
the issuance of such stock certificates (as evidenced
by the appropriate entry on the books of the Company or
of a duly authorized transfer agent of the Company), no
right to vote or receive dividends or any other rights
as a stockholder shall exist with respect to the
Optioned Shares notwithstanding the exercise of the
Option. No adjustment will be made for a dividend or
other rights for which the record date is prior to the
date of the transfer by the Optionee of the
consideration for the purchase of the Shares, except as
provided in Section 11 of the Plan. After the
Registration Date, the exercise of an Option by any
person subject to short-swing trading liability under
Section 16(b) of the Exchange Act shall be subject to
compliance with all applicable requirements of Rule
16b-3(d) or (a) promulgated under the Exchange Act.
(c) DEATH OF OPTIONEE. In the event of the death during
the Option period of an Optionee who is at the time of
his death, or was within the ninety (90)-day period
immediately prior thereto, an Employee or Non-Employee
Director, and who was in Continuous Employment as such
from the date of the grant of the Option until the date
of death or termination, the Option may be exercised,
at any time prior to the expiration of the Option
period, by the Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or
inheritance, but only to the extent of the accrued
right to exercise at the time of the termination or
death, whichever comes first.
(d) DISABILITY OF OPTIONEE. In the event of the disability
during the Option period of an Optionee who is at the
time of such disability, or was within the ninety
(90)-day period prior thereto, an Employee or
Non-Employee Director, and who was in Continuous
Employment as such from the date of the grant of the
Option until the date of disability or termination, the
Option may be exercised at any time within one (1) year
following the date of disability, but only to the
extent of the accrued right to exercise at the time of
the termination or disability, whichever comes first,
subject to the condition that no option shall be
exercised after the expiration of the Option period.
(e) TERMINATION OF STATUS AS EMPLOYEE. If an Optionee
shall cease to be an Employee for any reason other than
disability or death, the Optionee may, but only within
ninety (90) days (or such other period of time as is
determined by the Committee) after the date he or she
ceases to be an Employee, exercise his or her Option to
the extent that he or she was entitled to exercise it
at the date of such termination, subject to the
condition that no option shall be exercisable after the
expiration of the Option period.
(f) EXERCISE OF OPTION WITH STOCK AFTER REGISTRATION DATE.
After the Registration Date, the Committee may permit
an Optionee to exercise an Option by delivering shares
of the Company's Common Stock. If the Optionee is so
permitted, the option agreement covering such Option
may include provisions authorizing the Optionee to
exercise tho Option, in whole or in part, by: (i)
delivering whole shares of the Company's Common Stock
previously owned by such Optionee (whether or not
acquired through the prior exercise of a stock option)
having a fair market value equal to the aggregate
exercise price for the Optioned Shares issuable on
exercise of the Option; and/or (ii) directing the
Company to withhold from the Shares that would
otherwise be issued upon exercise of the Option that
number of whole Shares having a fair market value equal
to the aggregate exercise price for the Optioned Shares
issuable on exercise of the Option. Shares of the
Company's Common Stock so delivered or withheld shall
be valued at their fair market value at the close of
the last business day immediately preceding the date of
exercise of the Option, as determined by the Committee,
in accordance with the provisions of Section 8(a) of
the Plan. Any balance of the exercise price shall be
paid in cash. Any shares delivered or withheld in
accordance with this provision shall not again become
available for purposes of the Plan and for Options
subsequently granted thereunder.
(g) TAX WITHHOLDING. After the Registration Date, when an
Optionee is required to pay to the Company an amount
with respect to tax withholding obligations in
connection with the exercise of an Option granted under
the Plan, the Optionee may elect prior to the date the
amount of such withholding tax is determined (the "Tax
Date") to make such payment, or such increased payment
as the Optionee elects to make up to the maximum
federal, state and local marginal tax rates, including
any related FICA obligation, applicable to the Optionee
and the particular transaction, by: (i) delivering
cash; (ii) delivering part or all of the payment in
previously owned shares of Common Stock (whether or not
acquired through the prior exercise of an Option);
and/or (iii) irrevocably directing the Company to
withhold from the Shares that would otherwise be issued
upon exercise of the Option that number of whole Shares
having a fair market value equal to the amount of tax
required or elected to be withhold (a "Withholding
Election"). If an Optionee's Tax Date is deferred
beyond the date of exercise and the Optionee makes a
Withholding Election, the Optionee will initially
receive the full amount of Optioned Shares otherwise
issuable upon exercise of the Option, but will be
unconditionally obligated to surrender to the Company
on the Tax Date the number of Shares necessary to
satisfy his or her minimum withholding requirements, or
such higher payment as he or she may have elected to
make, with adjustments to be made in cash after the Tax
Date.
Any withholding of Optioned Shares with respect to
taxes arising in connection with the exercise of an
Option by any person subject to short-swing trading
liability under Section 16(b) of the Exchange Act shall
satisfy the following conditions:
(i) An advance election to withhold Optioned Shares in
settlement of a tax liability must satisfy the
requirements of Rule 16b-3(d)(1)(i), regarding
participant-directed transactions;
(ii) Absent such an election, the withholding of Optioned
Shares to settle a tax liability may occur only during
the quarterly window period described in Rule 16b-3(e);
(iii) Absent an advance election or window-period
withholding, the Optionee may deliver shares of Common
Stock owned prior to the exercise of an Option to
settle a tax liability arising upon exercise of the
Option, in accordance with Rule 16b-3(f); or
(iv) The delivery of previously acquired shares of Common
Stock (but not the withholding of newly acquired
Shares) will be allowed where an election under Section
83(b) of the Code accelerates the Tax Date to a day
that occurs less than six (6) months after the advance
election and is not within the quarterly window period
described in Rule 16b-3(e).
Any adverse consequences incurred by an Optionee with
respect to the use of shares of Common Stock to pay any
part of the exercise price or of any tax in connection
with the exercise of an Option, including without
limitation any adverse tax consequences arising as a
result of a disqualifying disposition within the
meaning of Section 422 of the Code shall be the sole
responsibility of the Optionee. Shares withheld in
accordance with this provision shall not again become
available for purposes of the Plan and for Options
subsequently granted thereunder.
10. NON-TRANSFERABILITY OF OPTIONS.
An Option may not be sold, pledged, assigned, hypothecated,
transferred or disposed of in any manner other than by will
or by the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined by the Code or
Title I of the Employee Retirement Income Security Act or
the rules thereunder, and may be exercised, during the
lifetime of the Optionee, only by the Optionee.
11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
Subject to any required action by the stockholders of the
Company, the number of Optioned Shares covered by each
outstanding Option, and the per share exercise price of each
such Option, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of
Common Stock resulting from a stock split, reverse stock
split, recapitalization, combination, reclassification, the
payment of a stock dividend on the Common Stock or any other
increase or decrease in the number of such shares of Common
Stock affected without receipt of consideration by the
Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to
have been "effected without receipt of consideration." Such
adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issue by the Company
of shares of stock of any class, or securities convertible
into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an
Option.
The Committee may, if it so determines in the exercise of
its sole discretion, also make provision for adjusting the
number or class of securities covered by any Option, as well
as the price to be paid therefor, in the event that the
Company effects one or more reorganizations,
recapitalizations, rights offerings, or other increases or
reductions of shares of its outstanding Common Stock, and in
the event of the Company being consolidated with or merged
into any other corporation.
If the Company dissolves, sells substantially all of its
assets, is acquired in a stock for stock or securities
exchange or is party to a merger or reorganization in which
it is not the surviving corporation (a "Change in Control"),
then fifty percent (50%) of the unvested portion of each
Option held at least six (6) months prior to the effective
date of a Change of Control shall immediately vest and each
Option shall be exercisable by the holder thereof for a
period of not less than thirty (30) days prior to such
Change in Control, provided, however, that the Optionee
shall be given not less than thirty (30) days notice of such
Change of Control and within such time period may exercise
his or her Options in whole or in part. All Options shall
terminate in their entirety to the extent not exercised on
or prior to such thirty (30) day period.
12. TIME OF GRANTING OPTIONS.
Unless otherwise specified by the Committee, the date of
grant of an Option under the Plan shall be the date on which
the Committee makes the determination granting such Option.
Notice of the determination shall be given to each Optionee
to whom an Option is so granted within a reasonable time
after the date of such grant.
13. AMENDMENT AND TERMINATION OF THE PLAN.
The Board may amend or terminate the Plan from time to time
in such respects as the Board may deem advisable, except
that, without approval of the holders of a majority of the
outstanding capital stock no such revision or amendment
shall change the number of Shares subject to the Plan,
change the designation of the class of employees eligible to
receive Options or add any material benefit to Optionees
under the Plan. Any such amendment or termination of the
Plan shall not affect Options already granted, and such
Options shall remain in full force and effect as if the Plan
had not been amended or terminated.
14. CONDITIONS UPON ISSUANCE OF SHARES.
Shares shall not be issued with respect to an Option granted
under the Plan unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall
comply with all relevant provisions of law, including,
without limitation, the Securities Act, the Exchange Act,
the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the Shares may
then be listed, and shall be further subject to the approval
of counsel for the Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may
require the person exercising such Option to represent and
warrant at the time of any such exercise that the Shares are
being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is
required by any of the aforementioned relevant provisions of
law.
15. RESERVATION OF SHARES.
During the term of this Plan the Company will at all times
reserve and keep available the number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
Inability of the Company to obtain from any regulatory body
having jurisdiction and authority deemed by the Company's
counsel to be necessary to the lawful issuance and sale of
any Shares hereunder shall relieve the Company of any
liability in respect of the nonissuance or sale of such
Shares as to which such requisite authority shall not have
been obtained.
16. INFORMATION TO OPTIONEE.
During the term of any Option granted under the Plan, the
Company shall provide or otherwise make available to each
Optionee a copy of its financial statements at least
annually.
17. OPTION AGREEMENT.
Options granted under the Plan shall be evidenced by Option
Agreements.
18. STOCKHOLDER APPROVAL.
The Plan shall be subject to approval by the affirmative
vote of the holders of a majority of the outstanding capital
stock of the Company entitled to vote within twelve (12)
months before or after the Plan is adopted. Any option
exercised before stockholder approval is obtained must be
rescinded if stockholder approval is not obtained within
twelve (12) months before or after the Plan is adopted.
Shares issued upon the exercise of such options shall not be
counted in determining whether such approval is obtained.
Any amendments to the Plan which require stockholder
approval shall be by the affirmative vote of the holders of
a majority of the outstanding capital stock of the Company
entitled to vote.
AMENDMENT DATED 1/22/98 TO 1988 STOCK OPTION PLAN
"9.(a) VESTING PERIOD. Any Option granted hereunder shall be
exercisable at such times and under such conditions as determined
by the Committee and as shall be permissible under the terms of
the Plan, which shall be specified in the Option Agreement
evidencing the Option. Options granted under the Plan shall vest
at a rate of at least twenty percent (20%) per year, except for
certain options for Vice Presidents and above granted on or after
January 22, 1998, which may vest on such criteria and rate
(including performance) without regard to minimum as the
Committee shall in its sole discretion determine."
1990 STOCK OPTION PLAN
As amended and restated through 3/5/97
1. PURPOSES OF THE PLAN.
The purposes of this Stock Option Plan are to attract and
retain the best available personnel for positions of
substantial responsibility, to provide additional incentives
to Employees, and to promote the success of the Company's
business. Options granted hereunder may be either incentive
Stock Options or Nonstatutory Stock Options at the
discretion of the Committee.
2. DEFINITIONS.
As used herein, and in any Option granted hereunder, this
following definitions shall apply:
(a) "BOARD" shall mean the Board of Directors of the
Company.
(b) "CODE" shall mean the Internal Revenue Code of 1986, as
amended.
(c) "COMMON STOCK" shall mean the Common Stock of the
Company.
(d) "COMPANY" shall mean USCS International, Inc., a
Delaware corporation.
(e) "COMMITTEE" shall mean the Committee appointed by the
Board in accordance with paragraph (a) of Section 4 of
the Plan if the Board does not appoint or ceases to
maintain a Committee, the term "Committee" shall refer
to the Board.
(f) "CONTINUOUS EMPLOYMENT" shall mean the absence of any
interruption or termination of service as an Employee
or Non-Employee Director by the Company or any
Subsidiary. Continuous Employment shall not be
considered interrupted during any period of sick leave,
military leave or any other leave of absence approved
by the Board or in the case of transfers between
locations of the Company or between the Company and any
Parent, Subsidiary or successor of the Company.
(g) "DISINTERESTED PERSON" shall mean a person who has not
at any time within one year prior to service as a
member of the Committee (or during such service) been
granted or awarded Options or other equity securities
pursuant to the Plan or any other plan of the Company
or any Parent or Subsidiary. Notwithstanding the
foregoing, a member of the Committee shall not fail to
be a Disinterested Person merely because he or she
participates in a plan meeting the requirements of Rule
16b-3(c)(2)(i)(A) or (B) promulgated under the Exchange
Act.
(h) "EMPLOY" shall mean any person, including officers
(whether or not they are directors), employed by the
Company or any Subsidiary.
(i) "EXCHANGE ACT" shall mean the Security Exchange Act of
1934, as amended.
(j) "INCENTIVE STOCK OPTION" shall mean any option granted
under this Plan and any other option granted to an
Employee in accordance with the provisions of Section
422 of the Code, and the regulations promulgated
thereunder.
(k) "NONSTATUTORY STOCK OPTION" will mean an Option granted
under the Plan that is subject to the provisions of
Section 1 83-7 of the Treasury Regulations promulgated
under Section 83 of the Code.
(l) "OPTION" shall mean a stock option granted pursuant to
the Plan.
(m) "OPTION AGREEMENT" shall mean a written agreement
between the Company and the Optionee regarding the
grant and exercise of Options to purchase Shares and
the terms and conditions thereof as determined by the
Committee pursuant to the Plan.
(n) "OPTIONED SHARES" shall mean the Common Stock subject
to an Option.
(o) "OPTIONEE" shall mean an Employee, Non-Employee
Director or Consultant who receives an Option.
(p) "PARENT" shall mean a "parent corporation," whether now
or hereafter existing, as defined by Section 424(e) of
the Code.
(q) "PLAN" shall mean this 1990 Stock Option Plan.
(r) "REGISTRATION DATE" shall mean June 21, 1996, the
effective date of the first registration statement
filed by the Company pursuant to Section 12(g) of the
Exchange Act with respect to any class of the Company's
equity securities.
(s) "SECURITIES ACT" shall mean the Securities Act of 1933,
as amended.
(t) "SHARE" shall mean a share of the Common Stock subject
to an Option, as adjusted in accordance with Section 11
of the Plan.
(u) "SUBSIDIARY" shall mean a "subsidiary corporation,"
whether now or hereafter existing, as defined in
Section 424(f) of the Code.
3. STOCK SUBJECT TO THE PLAN.
Subject to the provisions of Section 11 of the Plan, the
maximum aggregate number of Shares which may be optioned and
sold under the Plan is 1,039,500 Shares. The Shares may be
authorized but unissued or reacquired shares of Common Stock
if an Option expires or becomes unexercisable for any reason
without having been exercised in full, the Shares which were
subject to the Option but as to which the Option was not
exercised shall, unless the Plan shall have been terminated,
become available for other Option grants under the Plan.
The Company intends that as long as it is not subject to the
reporting requirements of Section 13 or 15(d) of the
Exchange Act and is not an investment company registered or
required to be registered under the Investment Company Act
of 1940, all offers and sales of Options and Shares issuable
upon exercise of any Option shall be exempt from
registration under the provisions of Section 5 of the
Securities Act, and the Plan shall be administered in such a
manner so as to preserve such exemption. The Company
intends that the Plan shall constitute a written
compensatory benefit plan within the meaning of Rule 701(b)
of 17 CFR Section 230.701 promulgated by the Securities and
Exchange Commission pursuant to such Act. The Committee
shall designate which Options granted under the Plan by the
Company are intended to be granted in reliance on Rule 701.
4. ADMINISTRATION OF THE PLAN.
(a) PROCEDURE. The Plan shall be administered by the Board.
The Board may appoint a Committee consisting of not
less than three (3) members of the Board to administer
the Plan. Subject to such terms and conditions, as the
Board may prescribe. Once appointed, the Committee
shall continue to serve until otherwise directed by the
Board. From time to time, the Board may increase the
size of the Committee and appoint additional members
thereof, remove members (with or without cause) and
appoint new members in substitution therefor, fill
vacancies, however caused, and remove all members of
the Committee and, thereafter, directly administer the
Plan.
Members of the Board or Committee who are either
eligible for Options or have been granted Options may
vote on any matters affecting the administration of the
Plan or the grant of Options pursuant to the Plan,
except that no such member shall act upon the granting
of an Option to himself, but any such member may be
counted in determining this existence of a quorum at
any meeting of the Board or the Committee during which
action is taken with respect to the granting of an
Option to him or her.
The Committee shall meet at such times and places and
upon such notice as the Chairperson determines. A
majority of the Committee shall constitute a quorum.
Any acts by the Committee may be taken at any meeting
at which a quorum is present and shall be by majority
vote of those members entitled to vote. Additionally,
any acts reduced to writing or approved in writing by
all of the members of the Committee shall be valid acts
of the Committee.
(b) PROCEDURE AFTER REGISTRATION DATE. Notwithstanding
subsection (a) above, after the date of registration of
the Company's Common Stock on a national securities
exchange or the Registration Date, the Plan shall be
administered either by: (i) the full Board, provided
that all members of the Board are Disinterested
Persons; or (ii) a Committee of three (3) or more
directors, each of whom is a Disinterested Person.
After such date, the Board shall take all action
necessary to administer the Plan in accordance with the
then effective provisions of Rule 16b-3 promulgated
under the Exchange Act, provided that any amendment to
the Plan required for compliance with such provisions
shall be made consistent with the provisions of Section
13 of the Plan, and said regulations.
(c) POWERS OF THE COMMITTEE. Subject to provisions of the
Plan, the Committee shall have the authority: (i) to
determine, upon review of relevant information, the
fair market value of the Common Stock; (ii) to
determine the exercise price of Options to be granted,
the Employees, Directors or consultants to whom and the
time or times at which Options shall be granted, and
the number of Shares to be represented by each Option:
(iii) to interpret the Plan; (iv) to prescribe, amend
and rescind rules and regulations relating to the Plan;
(v) to determine the terms and provisions of each
Option granted under the Plan (which need not be
identical) and, with the consent of the holder thereof,
to modify or amend any Option: (vi) to authorize any
person to execute on behalf of the Company any
instrument required to effectuate the grant of an
Option previously granted by the Committee: (vi) defer
an exercise date of any Option (with the consent of the
Optionee), subject to the provisions of Section 9(a) of
the Plan; (viii) to determine whether Options granted
under the Plan will be Incentive Stock Options or
Nonstatutory Stock Options: (ix) to make all other
determinations deemed necessary or advisable for the
administration of the Plan; and (x) to designate which
Options granted under the Plan will be issued in
reliance on Rule 701.
(d) EFFECT OF COMMITTEE'S DECISION. All decisions,
determinations and interpretations of the Committee
shall be final and binding on all potential or actual
Optionees, any other holder of an Option or other
equity security of the Company and all other persons.
5. ELIGIBILITY
(a) PERSONS ELIGIBLE FOR OPTIONS. Options under the Plan
may be granted only to Employees whom the Committee, in
its sole discretion, may designate from time to time.
An Employee who has been granted an Option, if he or
she is otherwise eligible, may be granted an additional
Option or Options. However, the aggregate fair market
value (determined in accordance with the provisions of
Section 8(a) of the Plan) of the Shares subject to one
or more incentive Stock Options grants that are
exercisable for the first time by an Optionee during
any calendar year (under ail stock option plans of the
Company and its Parents and Subsidiaries) shall not
exceed $100,000 (determined as of the grant data)); all
grants in excess of the $100,000 limit are designated
as Nonstatutory Stock Option.
(b) NO RIGHT TO CONTINUING EMPLOYMENT. Neither the
establishment nor the operation of the Plan shall
confer upon any Optionee or any other person any right
with respect to continuation of employment or other
service with the Company or any Subsidiary, nor shall
the Plan interfere in any way with the right of the
Optionee or the right of the Company (or any Parent of
Subsidiary) to terminate such employment or service at
any time.
6. TERM OF PLAN
The Plan small become effective upon its adoption by the
Board or its approval by vote of the holders of the
outstanding shares of the Company entitled to vote on the
adoption of the Plan (in accordance with the provisions of
Section 18 hereof), whichever is earlier. It shall continue
in effect for a term of ten (10) years unless sooner
terminated under Section 13 of the Plan.
7. TERM OF OPTION
Unless the Committee determines otherwise, the term of each
Option granted under the Plan shall be ten (10) years from
the date of grant. The term of the Option shall be set
forth in the Option Agreement. No incentive Stock Option
small be exercisable after the expiration of ten (10) years
from the date such Option is granted; provided that, no
incentive Stock Option granted to any Employee who, at the
date such Option is granted, owns (within the meaning of
Section 425(d) of the Code) more than ten percent (10%) of
the total combined voting power of all classes of stock of
the Company or any Parent or Subsidiary shall be exercisable
after the expiration of five (5) years from the date such
Option is granted.
8. EXERCISE PRICE AND CONSIDERATION
(a) EXERCISE PRICE. Except as provided in subsection (b)
below, the exercise price for the Shares to be issued
pursuant to any Option shall be such price as is
determined by the Committee, which shall in no event be
less than, in the case of Incentive Stock Options, the
fair market value of such Shares on the date the Option
is granted, provided that, in the case of any Optionee
owning stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock
of the Company or any Parent or Subsidiary of the
Company, the exercise price shall be 110% of fair
market value on the date the Incentive Stock Option is
granted. Fair market value of the Common Stock shall
be determined by the Committee, using such criteria as
it deems relevant; provided, however, that if there is
a public market for the Common Stock, the fair market
value per Share shall be the average of the last
reported bid and asked prices of the Common Stock on
the date of grant, as reported in THE WALL STREET
JOURNAL (or, if not so reported, as otherwise reported
by the National Association of Securities Dealers
Automated Quotation (NASDAQ) System) or, in the event
the Common Stock is listed an a national securities
exchange (within the meaning of Section 6 of the
Exchange Act) or on the NASDAQ National Market System,
(or any successor national market system), the fair
market value per Share shall be the closing price on
such exchange on the date of grant of the Option, as
reported in THE WALL STREET JOURNAL.
(b) TEN PERCENT STOCKHOLDERS. No Option shall be granted
to any Employee who, at the date such Option is
granted, owns (within the meaning of Section 424(d) of
the Code) more than ten percent (10%) of the total
combined voting power of all classes of stock of the
Company or any Parent or Subsidiary, unless the
exercise price for the Shares to be issued pursuant to
such option is at least equal to 110 percent (110%) of
the fair market value of such Shares on the grant date
determined by the Committee in the manner set forth in
subsection (a) above.
(c) CONSIDERATIONS. The consideration to be paid for the
Optioned Shares shall be payment in cash or by check
unless payment in some other manner, including by
promissory note, other shares of the Company's Common
Stock or such other consideration and method of payment
for the issuance of Optioned Shares as is authorized by
the Committee at the time of the grant of the Option.
Any cash or other property received by the Company from
the Sale of Shares pursuant to the Plan shall
constitute part of the general assets of the Company.
9. EXERCISE OF OPTION.
(a) VESTING PERIOD. Any Option granted hereunder shall be
exercised at such times and under such conditions as
determined by the Committee and as shall be permissible
under the terms of the Plan, which shall be specified
in the Option Agreement evidencing the Option. Options
granted under the Plan shall vest at a rate of at least
twenty percent (20%) per year.
(b) EXERCISE PROCEDURES. An Option shall be deemed to be
exercised when written notice of such exercise has been
given to the Company in accordance with the terms of
the option agreement evidencing the Option, and full
payment for the Shares with respect to which the Option
is exercised has been received by the Company.
An Option may not be exercised for fractional shares.
As soon as practicable following the exercise of an
Option in the manner set forth above, the Company shall
issue or cause its transfer agent to issue stock
certificates representing the Shares purchased. Until
the issuance of such stock certificates (as evidenced
by the appropriate entry on the books of the Company or
of a duty authorized transfer agent of the Company), no
right to vote or receive dividends or any other rights
as a stockholder shall exist with respect to the
Optioned Shares notwithstanding the exercise of the
Option. No adjustment will be made for a dividend or
other rights for which the record date is prior to the
date of the transfer by the Optionee of the
consideration for the purchase of the Shares, except as
provided in Section 11 of the Plan. After the
Registration Date, the exercise of an Option by any
person subject to short-swing trading liability under
Section 16(b) of the Exchange Act shall be subject to
compliance with all applicable requirements of Rule
16b-3(d) or (e) promulgated under the Exchange Act.
(c) DEATH OF OPTIONEE. In the event of the death during
the Option period of an Optionee who is at the time of
his death, or was within the ninety (90)-day period
immediately prior thereto, an Employee or Non-Employee
Director, and who was in Continuous Employment as such
from the date of the grant of the Option until the date
of death or termination, the Option may be exercised,
at any time prior to the expiration of the Option
period, by the Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or
inheritance, but only to the extent of the accrued
right to exercise at the time of the termination or
death, whichever comes first.
(d) DISABILITY OF OPTIONEE. In the event of the disability
during the Option period of an Optionee who is at the
time of such disability, or was within the ninety
(90)-day period prior thereto, an Employee or
Non-Employee Director, and who was in Continuous
Employment as such from the date of the grant of the
Option until the date of disability or termination, the
Option may be exercised at any time within one (1) year
following the date of disability, but only to the
extent of the accrued right to exercise at the time of
the termination or disability, whichever comes first,
subject to the condition that no option shall be
exercised after the expiration of the Option period.
(e) TERMINATION OF STATUS AS EMPLOYEE. If an Optionee
shall cease to be an Employee for any reason other than
disability or death, the Optionee may, but only within
ninety (90) days (or such other period of time as is
determined by the Committee) after the date he or she
ceases to be an Employee, exercise his or her Option to
the extent that he or she was entitled to exercise it
at the date of such termination, subject to the
condition that no option shall be exercisable after the
expiration of the Option period. Upon such exercise
and if so provided in the Restricted Stock Transfer
Agreement, the Company may, but only within ninety (90)
days (or such other period of time as is determined by
the Committee) after the date of such exercise,
repurchase from the Optionee the Optionee's Option
Shares at the higher of the original purchase price for
the Option Shares or fair market value (as determined
by the Company's Board of Directors) of the Option
Shares on the date of termination of employment. The
right to repurchase shall be exercisable for cash or
cancellation of purchase money indebtedness.
(f) EXERCISE OF OPTION WITH STOCK AFTER REGISTRATION DATE.
After the Registration Date, the Committee may permit
an Optionee to exercise an Option by delivering shares
of the Company's Common Stock. If the Optionee is so
permitted, the option agreement covering such Option
may include provisions authorizing the Optionee to
exercise the Option, in whole or in part, by: (i)
delivering whole shares of the Company's Common Stock
previously owned by such Optionee (whether or not
acquired through the prior exercise of a stock option)
having a fair market value equal to the aggregate
exercise price for the Optioned Shares issuable on
exercise of the Option; and/or (ii) directing the
Company to withhold from the Shares that would
otherwise be issued upon exercise of the Option that
number of whole Shares having a fair market value equal
to the aggregate exercise price for the Optioned Shares
issuable on exercise of the Option. Shares of the
Company's Common Stock so delivered or withheld shall
be valued at their fair market value at the close of
the last business day immediately preceding the date of
exercise of the Option, as determined by the Committee,
in accordance with the provisions of Section 8(a) of
the Plan. Any balance of the exercise price shall be
paid in cash. Any shares delivered or withheld in
accordance with this provision shall not again become
available for purposes of the Plan and for Options
subsequently granted thereunder.
(g) TAX WITHHOLDING. After the Registration Date, when an
Optionee is required to pay to the Company an amount
with respect to tax withholding obligations in
connection with the exercise of an Option granted under
the Plan, the Optionee may elect prior to the date the
amount of such withholding tax is determined (the "Tax
Date") to make such payment, or such increased payment
as the Optionee elects to make up to the maximum
federal, state and local marginal tax rates, including
any related FICA obligation, applicable to the Optionee
and the particular transaction, by: (i) delivering
cash, (ii) delivering part or all of the payment in
previously owned shares of Common Stock (whether or not
acquired through the prior exercise of an Option);
and/or (ii) irrevocably directing the Company to
withhold from the Shares that would otherwise be issued
upon exercise of the Option that number of whole Shares
having a fair market value equal to the amount of tax
required or elected to be withheld (a "Withholding
Election"). If an Optionee's Tax Date is deferred
beyond the date of exercise and the Optionee makes a
Withholding Election, the Optionee will initially
receive the full amount of Optioned Shares otherwise
issuable upon exercise of the Option, but will be
unconditionally obligated to surrender to the Company
on the Tax Date the number of Shares necessary to
satisfy his or her minimum withholding requirements, or
such higher payment as he or she may have elected to
make, with adjustments to be made in cash after the Tax
Date.
Any withholding of Optioned Shares with respect to
taxes arising in connection with the exercise of an
Option by any person subject to short-swing trading
liability under Section 16(b) of the Exchange Act shall
satisfy the following conditions:
(i) An advance election to withhold Optioned Shares in
Settlement of a tax liability must satisfy the
requirements of Rule 16b-3(d)(1)(i), regarding
participant-directed transactions;
(ii) Absent such an election, the withholding of Optioned
Shares to settle a tax liability may occur only during
the quarterly window period described in Rule 16b-3(e);
(iii) Absent an advance election or window-period
withholding, the Optionee may deliver shares, of
Common Stock owned prior to the exercise of an
Option to settle a tax liability arising upon
exercise of to Option, in accordance with Rule
16b-3(f); or
(iv) The delivery of previously acquired shares of Common
Stock (but not the withholding of newly acquired
Shares) will be allowed where an election under Section
83(b) of the Code accelerates the Tax Date to a day
that occurs less than six (6) months after the advance
election and is not within to quarterly window period
described in Rule 16b-3(e).
Any adverse consequences incurred by an Optionee with
respect to the use of shares of Common Stock to pay any
part of the exercise price or of any tax in connection
with the exercise of an Option, including without
limitation any adverse tax consequences arising as a
result of a disqualifying disposition within the
meaning of Section 422 of the Code shall be the sole
responsibility of the Optionee. Shares withheld in
accordance with this provision shall not again become
available for purposes of the Plan and for Options
subsequently granted thereafter.
10. NON-TRANSFERABILITY OF OPTIONS.
An Option may not be sold, pledged, assigned, hypothecated,
transferred or disposed of in any manner other than by will
or by the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined by this Code
or Title I of the Employee Retirement Income Security Act or
the rules thereunder, and may be exercised, during the
lifetime of the Optionee, only by the Optionee.
11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
Subject to any required action by the stockholders of the
Company, the number of Optioned Shares covered by each
outstanding Option, and the per share exercise price of each
such Option, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of
Common Stock resulting from a stock split, reverse stock
split, recapitalization, combination, reclassification, the
payment of a stock dividend on the Common Stock or any other
increase or decrease in the number of such shares of Common
Stock affected with receipt of consideration by the Company;
provided, however, that conversion of any convertible
securities of the Company shall not be deemed to have been
"effected without receipt of consideration." Such
adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issue by the Company
of shares of stock of any class, or securities convertible
into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an
Option.
The Committee may, if it so determines in the exercise of
its sole discretion, also make provision for adjusting the
number or class of securities covered by any Option, as well
as the price to be paid therefor, in the event that the
Company effects one or more reorganizations,
recapitalizations, rights offerings, or other increases or
reductions of shares of its outstanding Common Stock, and in
the event of the Company being consolidated with or merged
into any other corporation.
If the Company dissolves, sells substantially all of its
assets, is acquired in a stock for stock or securities
exchange or is party to a merger or reorganization in which
it is not the surviving corporation (a "Change in Control"),
then fifty percent (50%) of the unvested portion of each
Option held at least six (6) months prior to the effective
date of a Change of Control shall immediately vest and each
Option shall be exercisable by tho holder thereof for a
period of not less than thirty (30) days prior to such
Change in Control, provided, however, that the Optionee
shall be given not less than thirty (30) days notice of such
Change of Control and within such time period may exercise
his or her Options in whole or in part. All Options shall
terminate in their entirety to the extent not exercised on
or prior to such thirty (30) day period.
12. TIME OF GRANTING OPTIONS.
Unless otherwise specified by the Committee, the date of
grant of an Option under the Plan shall be the date on which
the Committee makes the determination granting such Option.
Notice of the determination shall be given to each Optionee
to whom an Option is so granted within a reasonable time
after the date of such grant.
13. AMENDMENT AND TERMINATION OF THE PLAN.
The Board may amend or terminate the Plan from time to time
in such respects as the Board may deem advisable, except
that, without approval of the holders of a majority of the
outstanding capital stock no such revision or amendment
shall change the number of Shares subject to the Plan,
change the designation of the class of employees eligible to
receive Options or add any material benefit to Optionees
under the Plan. Any such amendment or termination of the
Plan shall not affect Options already granted, and such
Options shall remain in full force and effect as if the Plan
had not been amended or terminated.
14. CONDITIONS UPON ISSUANCE OF SHARES.
Shares shall not be issued with respect to an Option granted
under to Plan unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall
comply with all relevant provisions of law, including,
without limitation, the Securities Act, the Exchange Act,
the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the Shares may
then be listed, and shall be further subject to the approval
of counsel for the Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may
require the person exercising such Option to represent and
warrant at the time of any such exercise that the Shares are
being purchased only for investment and without any present
intention to sell of distribute such Shares if, in the
opinion of counsel for the Company, such a representation is
required by any of the aforementioned relevant provisions of
law.
15. RESERVATION OF SHARES.
During the term of this Plan the Company will at all times
reserve and keep available the number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
Inability of the Company to obtain from any regulatory body
having jurisdiction and authority deemed by the Company's
counsel to be necessary to the lawful issuance and sale of
any Shares hereunder shall relieve the Company of any
liability in respect to the nonissuance or sale of such
Shares as to which such requisite authority shall not have
been obtained.
16. INFORMATION TO OPTIONEE.
During the term of any Option granted under the Plan, the
Company shall provide or otherwise make available to each
Optionee a copy of its financial statements at least
annually.
17. OPTION AGREEMENT.
Options granted under the Plan shall be evidenced by Option
Agreements.
18. STOCKHOLDER APPROVAL.
The Plan shall be subject to approval by the affirmative
vote of the holders of a majority of the outstanding capital
stock of the Company entitled to vote within twelve (12)
months before or after the Plan is adopted. Any option
exercised before stockholder approval is obtained must be
rescinded if stockholder approval is not obtained within
twelve (12) months before or after the Plan is adopted.
Shares issued upon the exercise of such options shall not be
counted in determining whether such approval is obtained.
Any amendments to the Plan which require stockholder
approval shall be by the affirmative vote of the holders of
a majority of the outstanding capital stock of the Company
entitled to vote.
AMENDMENT DATED 1/22/98 TO 1990 STOCK OPTION PLAN
"9.(a) VESTING PERIOD. Any Option granted hereunder shall be
exercisable at such times and under such conditions as determined
by the Committee and as shall be permissible under the terms of
the Plan, which shall be specified in the Option Agreement
evidencing the Option. Options granted under the Plan shall vest
at a rate of at least twenty percent (20%) per year, except for
certain options for Vice Presidents and above granted on or after
January 22, 1998, which may vest on such criteria and rate
(including performance) without regard to minimum as the
Committee shall in its sole discretion determine."
1993 STOCK OPTION PLAN
As amended and restated through 3/5/97
1. PURPOSES OF THE PLAN.
The purposes of this Stock Option Plan are to reward
outstanding performance and contribution, to provide a means
for sharing in the Company's value growth and to promote
long-term commitment to the Company Options granted
hereunder may be either Incentive Stock Options or
Nonstatutory Stock Options at the discretion of the
Committee.
2. DEFINITIONS.
As used herein, and in any Option granted hereunder the
following definitions shall apply:
(a) "Board" shall mean the Board of Directors of the
Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(c) "Common Stock' shall moan the Common Stock of this
Company.
(d) "Company" shall mean USCS International, Inc. a
Delaware corporation.
(e) "Committee" shall mean the Committee appointed by the
Board in accordance with paragraph (a) of Section 4 of
the Plan. If the Board does not appoint or ceases to
maintain a Committee, the term "Committee" shall refer
to the Board.
(f) "Continuous Employment" shall mean the absence of any
interruption or termination of service as an Employee
by the Company or any Subsidiary. Continuous Employment
shall not be considered interrupted during any period
of sick leave, military leave or any other leave of
absence approved by the Board or in the case of
transfers between locations of the Company or between
the Company and any Parent, Subsidiary or successor of
the Company.
(g) "Disinterested Person" shall mean a person who has not
at any time within one year prior to service as a
member of the Committee (or during such service) been
granted or awarded Options or other equity securities
pursuant to the Plan or any other plan of the Company
or any Parent or Subsidiary. Notwithstanding the
foregoing, a member of the Committee shall not fail to
be a Disinterested Person merely because he or she
participates in a plan meeting the requirements of Rule
16b-3(c)(2)(i)(A) or (B) promulgated under the Exchange
Act.
(h) "Employee" shall mean a person employed by the Company
or any Subsidiary.
(i) "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
(j) "Incentive Stock Option" shall mean any option granted
under this Plan and any other option granted to an
Employee in accordance with the provisions of Section
422 of the Code, and the regulations promulgated
thereunder.
(k) "Nonstatutory Stock Option" shall mean an Option
granted under the Plan that is subject to the
provisions of Section 1.83-7 of the Treasury
Regulations promulgated under Section 83 of the Code.
(l) "Option" shall mean a stock option granted pursuant to
the Plan.
(m) "Option Agreement" shall mean a written agreement
between the Company and the Optionee regarding the
grant and exercise of Options to purchase Shares and
the terms and conditions thereof as determined by the
Committee pursuant to the Plan.
(n) "Optioned Shares" shall mean the Common Stock subject
to an Option.
(o) "Optionee" shall mean an Employee at the level of vice
president or above who receives an Option.
(p) "Parent" shall mean a "parent corporation," whether now
or hereafter existing, as defined by Section 424(e) of
the Code.
(q) "Plan" shall mean this 1993 Stock Option Plan.
(r) "Registration Date" shall mean June 21, 1996, the
effective date of the first registration statement
filed by the Company pursuant to Section 12(g) of the
Exchange Act with respect to any class of the Company's
equity securities.
(s) "Securities Act" shall mean the Securities Act of 1933,
as amended.
(t) "Share" shall mean a share of the Common Stock subject
to an Option as adjusted in accordance with Section 11
of the Plan.
(u) "Subsidiary" shall mean a "subsidiary corporation,"
whether now or hereafter existing, as defined in
Section 424(f) of the Code.
3. STOCK SUBJECT TO THE PLAN.
Subject to the provisions of Section 11 of the Plan. The
number of Shares under this Plan shall be and shall not
exceed, an aggregate of 1,260,000 shares of Common voting
stock of USCS International, Inc. The Shares may be
authorized but unissued or reacquired shares of Common
Stock. If an Option expires or becomes unexercisable for any
reason without having been exercised in full, the Shares
which were subject to the Option but as to which the Option
was not exercised shall, unless the Plan shall have been
terminated, become available for other Option grants under
the Plan.
The Company intends that as long as it is not subject to the
reporting requirements of Section 13 or 15(d) of the
Exchange Act and is not an investment company registered or
required to be registered under the Investment Company Act
of 1940, all offers and sales of Options and Shares issuable
upon exercise of any Option shall be exempt from
registration under the provisions of Section 5 of the
Securities Act, and the Plan shall be administered in such a
manner so as to preserve such exemption. The Company intends
that the Plan shall constitute a written compensatory
benefit plan within the meaning of Rule 701(b) of 17 CFR
Section 230.701 promulgated by the Securities and Exchange
Commission pursuant to such Act. The Committee shall
designate which Options granted under the Plan by the
Company are intended to be granted in reliance on Rule 701.
4. ADMINISTRATION OF THE PLAN.
(a) PROCEDURE. The Plan shall be administered by the
Board. The Board may appoint a Committee consisting of
not less than three (3) members of the Board to
administer the Plan, subject to such terms and
conditions as the Board may prescribe. Once appointed,
the Committee shall continue to serve until otherwise
directed by the Board. From time to time, the Board may
increase the size of the Committee and appoint
additional members thereof, remove members (with or
without cause) and appoint new members in substitution
therefor, fill vacancies, however caused, and remove
all members of the Committee and, thereafter, directly
administer the Plan.
Members of the Board or Committee who are either
eligible for Options or have been granted Options may
vote on any matters affecting the administration of the
Plan or the grant of Options pursuant to the Plan,
except that no such member shall act upon the granting
of an Option to himself, but any such member may be
counted in determining the existence of a quorum at any
meeting of the Board or the Committee during which
action is taken with respect to the granting of an
Option to him or her.
The Committee shall meet at such times and places and
upon such notice as the Chairperson determines. A
majority of the Committee shall constitute a quorum.
Any acts by the Committee may be taken at any meeting
at which a quorum is present and shall be by majority
vote of those members entitled to vote. Additionally,
any acts reduced to writing or approved in writing by
all of the members of the Committee shall be valid acts
of the Committee.
(b) PROCEDURE AFTER REGISTRATION DATE. Notwithstanding
subsection (a) above, after the date of registration of
the Company's Common Stock on a national securities
exchange or the Registration Date, the Plan shall be
administered either by: (i) the full Board, provided
that all members of the Board are Disinterested Persons
or (ii) a Committee of three (3) or more directors,
each of whom is a Disinterested Person. After such date
the Board shall take all action necessary to administer
the Plan in accordance with the then effective
provisions of Rule 16b-3 promulgated under the Exchange
Act, provided that any amendment to the Plan required
for compliance with such provisions shall be made
consistent with the provisions of Section 13 of the
Plan, and said regulations.
(c) POWERS OF THE COMMITTEE. Subject to the provisions of
the Plan, the Committee shall have the authority: (i)
to determine, upon review of relevant information, the
fair market value of the Common Stock; (ii) to
determine the exercise price of Options to be granted,
the persons to whom and the time or times at which
Options shall be granted, and the number of Shares to
be represented by each Option; (iii) to interpret the
Plan: (iv) to prescribe, amend and rescind rules and
regulations relating to the Plan; (v) to determine the
terms and provisions of each Option granted under the
Plan (which need not be identical) and, with the
consent of the holder thereof, to modify or amend any
Option; (vi) to authorize any person to execute on
behalf of the Company any instrument required to
effectuate the grant of an Option previously granted by
the Committee; (vii) defer an exercise date of any
Option (with the consent of the Optionee), subject to
the provisions of Section 9(a) of the Plan; (viii) to
determine whether Options granted under the Plan will
be Incentive Stock Options or Nonstatutory Stock
Options, (ix) to make all other determinations deemed
necessary or advisable for the administration of the
Plan; and (x) to designate which Options granted under
the Plan will be issued in reliance on Rule 701.
(d) EFFECT OF COMMITTEE'S DECISION. All decisions,
determinations and interpretations of the Committee
shall be final and binding on all potential or actual
Optionees, any other holder of an Option or other
equity security of the Company and all other persons.
5. ELIGIBILITY.
(a) PERSONS ELIGIBLE FOR OPTIONS. Options under the Plan
may be granted only to Employees who are vice
presidents or above of the Company or any Subsidiary
whom the Committee, in its sole discretion, may
designate from time to time. An Employee who has been
granted an Option, if he of she is otherwise eligible,
may be granted an additional Option or Options.
However, the aggregate fair market value (determined in
accordance with the provisions of Section 8(a) of the
Plan) of the Shares subject to one or more incentive
Stock Options grants that are exercisable for the first
time by an Optionee during any calendar year (under all
stock option plans of the Company and its Parents and
Subsidiaries) shall not exceed $100,000 (determined of
the grant date); all grants in excess of the $100,000
limit are designated as Nonstatutory Stock Option.
(b) NO RIGHT TO CONTINUING EMPLOYMENT. Neither the
establishment nor the operation of the Plan shall
confer upon any Optionee or any other person any right
with respect to continuation of employment or other
service with the Company or any Subsidiary, nor shall
the Plan interfere in any way with the right of the
Optionee or the right of the Company (or any Parent or
Subsidiary) to terminate such employment or service at
any time.
6. TERM OF PLAN.
The Plan shall become effective upon its adoption by the
Board or its approval by vote of the holders of the
outstanding shares of the Company entitled to vote on the
adoption of the Plan (in accordance with the provisions of
Section 18 hereof), whichever is earlier. It shall continue
in effect for a term of ten (10) years unless sooner
terminated under Section 13 of the Plan.
7. TERM OF OPTION.
Unless the Committee determines otherwise, the term of each
Option granted under the Plan shall be ten (10) years from
the date of grant. The term of the Option shall be set forth
in the Option Agreement. No Incentive Stock Option shall be
exercisable after the expiration of ten (10) years from the
date such Option is granted; provided that, no Incentive
Stock Option granted to any Employee who, at the date such
Option is granted, owns (within the meaning of Section
425(d) of the Code) more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company
or any Parent or Subsidiary shall be exercisable after the
expiration of five (5) years from the date such Option is
granted.
8. EXERCISE PRICE AND CONSIDERATION.
(a) EXERCISE PRICE. Except as provided in subsection (b)
below, the exercise price for the Shares to be issued
pursuant to any Option shall be such price as is
determined by the Committee, which shall in no event be
less than, in the case of Incentive Stock Options, the
fair market value of such Shares on the date the Option
is granted, provided that, in the case of any Optionee
owning stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock
of the Company or any Parent or Subsidiary of the
Company, the exercise price shall be 110% of fair
market value on the date the Incentive Stock Option is
granted. Fair market value of the Common Stock shall be
determined by the Committee, using such criteria as it
deems relevant, provided, however, that if there is a
public market for the Common Stock, the fair market
value per Share shall be the average of the last
reported bid and asked prices of the Common Stock on
the date of grant, as reported in THE WALL STREET
JOURNAL (or, if not so reported, as otherwise reported
by the National Association of Securities Dealers
Automated Quotation (NASDAQ) System) or, in the event
the Common Stock is listed on a national securities
exchange (within the meaning of Section 6 of the
Exchange Act) or on the NASDAQ National Market System
(or any successor national market system), the fair
market value per Share shall be to closing price on
such exchange on the date of grant of the Option, as
reported in THE WALL STREET JOURNAL.
(b) TEN PERCENT STOCKHOLDERS. No Option shall be granted
to any Employee who, at the date such Option is
granted, owns (within the meaning of Section 424(d) of
the Code) more than ten percent (10%) of the total
combined voting power of all classes of stock of the
Company or any Parent or Subsidiary, unless the
exercise price for the Shares to be issued pursuant to
such Option is at least equal to 110 percent (110%) of
the fair market value of such Shares on the grant date
determined by the Committee in the manner set forth in
subsection (a) above.
(c) CONSIDERATION. The consideration to be paid for the
Optioned Shares shall be payment in cash or by check
unless payment in some other manner, including by
promissory note, other shares of the Company's Common
Stock or such other consideration and method of payment
for the issuance of Optioned Shares as is authorized by
the Committee at the time of the grant of the Option.
Any cash or other property received by the Company from
the sale of Shares pursuant to the Plan shall
constitute part of the general assets of the Company.
9. EXERCISE OF OPTION.
(a) VESTING PERIOD. Any Option granted hereunder shall be
exercisable at such times and under such conditions as
determined by the Committee and as shall be permissible
under the terms of the Plan, which shall be specified
in the Option Agreement evidencing the Option. Options
granted under the Plan shall vest at a rate of at least
twenty percent (20%) per year.
(b) EXERCISE PROCEDURES. An Option shall be deemed to be
exercised when written notice of such exercise has been
given to the Company in accordance with the terms of
the option agreement evidencing the Option, and full
payment for the Shares with respect to which the Option
is exercised has been received by the Company.
An Option may not be exercised for fractional shares.
As soon as practicable following the exercise of an
Option in the manner set forth above, the Company shall
issue or cause its transfer agent to issue stock
certificates representing the Shares purchased. Until
the issuance of such stock certificates (as evidenced
by the appropriate entry on the books of the Company or
of a duty authorized transfer agent of the Company), no
right to vote or receive dividends or any other rights
as a stockholder shall exist with respect to the
Optioned Shares notwithstanding the exercise of the
Option. No adjustment will be made for a dividend or
other rights for which the record date is prior to the
date of the transfer by the Optionee of the
consideration for the purchase of the Shares, except
as, provided in Section 11 of the Plan. After the
Registration Date, the exercise of an Option by any
person subject to short-swing trading liability under
Section 16(b) of the Exchange Act shall be subject to
compliance with all applicable requirements of Rule
16b-3(d) or (a) promulgated under the Exchange Act.
(c) DEATH OF OPTIONEE. In the event of the death during
the Option period of an Optionee who is at the time of
his death, or was within the ninety (90)-day period
immediately prior thereto, an Employee, and who was in
Continuous Employment as such from the date of the
grant of the Option until the date of death or
termination, the Option may be exercised, at any time
prior to the expiration of the Option period, by the
Optionee's estate or by a person who acquired the right
to exercise the Option by bequest or inheritance, but
only to the extent of the accrued right to exercise at
the time of the termination or death, whichever comes
first.
(d) DISABILITY OF OPTIONEE. In the event of the disability
during the Option period of an Optionee who is at the
time of such disability, or was within the ninety
(90)-day period prior thereto, an Employee, and who was
in Continuous Employment as such from the date of the
grant of the Option until the date of disability or
termination, the Option may be exercised at any time
within one (1) year following the date of disability,
but only to the extent of the accrued right to exercise
at the time of the termination or disability, whichever
comes first, subject to the condition that no option
shall be exercised after the expiration of the Option
period.
(e) TERMINATION OF STATUS AS EMPLOYEE. If an Optionee
shall cease to be an Employee for any reason other than
disability or death, the Optionee may, but only within
ninety (90) days (or such other period of time as is
determined by the Committee) after the date he or she
ceases to be an Employee, exercise his of her Option to
the extent that he or she was entitled to exercise it
at the date of such termination, subject to the
condition that no option shall be exercisable after the
expiration of the Option period. Upon such exercise
and of so provided in the Restricted Stock Transfer
Agreement, the Company may, but only within ninety (90)
days (or such other period of time as is determined by
the Committee) after the date of such exercise,
repurchase from the Optionee the Optionee's Option
Shares at the higher of the original purchase price for
the Option Shares or fair market value (as determined
by the Company's Board of Directors) of the Option
Shares on the date of termination of employment. The
right to repurchase shall be exercisable for cash or
cancellation of purchase money indebtedness.
(f) EXERCISE OF OPTION WITH STOCK AFTER REGISTRATION DATE.
After the Registration Date, the Committee may permit
an Optionee to exercise an Option by delivering shares
of the Company's Common Stock. If the Optionee is so
permitted, the option agreement covering such Option
may include provisions authorizing the Optionee to
exercise the Option, in whole or in part, by: (i)
delivering whole shares of the Company's Common Stock
previously owned by such Optionee (whether or not
acquired through the prior exercise of a stock option)
having a fair market value equal to the aggregate
exercise price for the Optioned Shares issuable on
exercise of the Option, and/or (ii) directing the
Company to withhold from the Shares that would
otherwise be issued upon exercise of the Option that
number of whole Shares having a fair market value equal
to the aggregate exercise price for the Optioned Shares
issuable on exercise of the Option. Shares of the
Company's Common Stock so delivered or withhold shall
be valued at their fair market value at the close of
the last business day immediately preceding the date of
exercise of the Option, as determined by the Committee,
in accordance with the provisions of Section 8(a) of
the Plan. Any balance of the exercise price shall be
paid in cash. Any shares delivered or withhold in
accordance with this provision shall not again become
available for purposes of the Plan and for Options
subsequently granted thereunder.
(g) TAX WITHHOLDING. After the Registration Date, when an
Optionee is required to pay to the Company an amount
with respect to tax withholding obligations in
connection with the exercise of an Option granted under
the Plan, the Optionee may elect prior to the date the
amount of such withholding tax is determined (the "Tax
Date") to make such payment, or such increased payment
as the Optionee elects to make up to the maximum
federal, state and local margins, tax rates, including
any related FICA obligation, applicable to the Optionee
and the particular transaction, by: (i) delivering
cash; (ii) delivering part or all of the payment in
previously owned shares of Common Stock (whether or not
acquired through the prior exercise of an Option);
and/or (iii) irrevocably directing the Company to
withhold from the Shares that would otherwise be issued
upon exercise of the Option that number of whole Shares
having a fair market value equal to the amount of tax
required or elected to be withhold (a "Withholding
Election"). If an Optionee's Tax Date is deterred
beyond the date of exercise and the Optionee makes a
Withholding Election, the Optionee will initially
receive the full amount of Optioned Shares otherwise
issuable upon exercise of the Option, but will be
unconditionally obligated to surrender to the Company
on the Tax Date the number of Shares necessary to
satisfy his or her minimum withholding requirements, or
9071814.07 December 21, 1998 (3:31pm)
49
such higher payment as he or she may have elected to
make, with adjustments to be made in cash after the Tax
Date.
Any withholding of Optioned Shares with respect to
taxes arising in connection with the exercise of an
Option by any person subject to short-swing trading
liability under Section 16(b) of the Exchange Act shall
satisfy the following conditions:
(i) An advance election to withhold Optioned Shares in
settlement of a tax liability must satisfy the
requirements of Rule 16b-3(d)(1)(i), regarding
participant-directed transactions:
(ii) Absent such an election, the withholding of
Optioned Shares to settle a tax liability may
occur only during the quarterly window period
described in Rule 16b-3(e);
(iii) Absent an advance election or window-period
withholding, the Optionee may deliver shares
of Common Stock owned prior to the exercise
of an Option to settle a tax liability
arising upon exercise of the Option, in
accordance with Rule 16b-3(f); or
(iv) The delivery of previously acquired share of
Common Stock (but not the withholding of newly
acquired Shares) will be allowed where an election
under Section 83(b) of the Code accelerates the
Tax Date to a day that occurs less than six (6)
months after the advance election and is not
within the quarterly window period described in
Rule 16b-3(o).
Any adverse consequences incurred by an Optionee
with respect to the use of shares of Common Stock
to pay any part of the exercise price or of any
tax in connection with the exercise of an Option,
including without limitation any adverse tax
consequences arising as a result of a
disqualifying disposition within the meaning of
Section 422 of the Code shall be the sole
responsibility of the Optionee. Shares withheld
in accordance with this provision shall not again
become available for purposes of the Plan and for
Options subsequently granted thereunder.
10. NON-TRANSFERABILITY OF OPTIONS.
9071814.07 December 21, 1998 (3:31pm)
50
An Option may not be sold, pledged, assigned, hypothecated,
transferred or disposed of in any manner other than by will
or by the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined by the Code or
Title I of the Employee Retirement Income Security Act or
the rules thereunder, and may be exercised, during the
lifetime of the Optionee, only by the Optionee.
11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.
Subject to any required action by the stockholders, of the
Company, the number of Optioned Shares covered by each
outstanding Option, and the per share exercise price of each
such Option, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of
Common Stock resulting from a stock split, reverse stock
split, recapitalization, combination, reclassification, the
payment of a stock dividend on the Common Stock or any other
increase or decrease in the number of such shares of Common
Stock effected without receipt of consideration by the
Company, provided, however, that conversion of any
convertible securities of the Company shall not be deemed to
have been "effected without receipt of consideration." Such
adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issue by the Company
of shares of stock of any class, or securities convertible
into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an
Option.
The Committee may, if it so determines in the exercise of
its sole discretion, also make provision for adjusting the
number or class of securities covered by any Option, as well
as the price to be paid therefor, in the event that the
Company effects one or more reorganizations,
recapitalizations, rights offerings, or other increases or
reductions of shares of its outstanding Common Stock, and in
the event of the Company being consolidated with or merged
into any other corporation.
If the Company dissolves, sells substantially all of its
assets, is acquired in a stock for stock or securities
exchange or is party to a merger or reorganization in which
it is not the surviving corporation (a "Change in Control"),
then fifty percent (50%) of the unvested portion of each
Option hold at least six (6) months prior to the effective
date of a Change of Control shall immediately vest and each
Option shall be exercisable by the holder thereof for a
period of not less than thirty (30) days prior to such
Change in Control, provided, however, that the Optionee
shall be given not less than thirty (30) days notice of such
Change of Control and within such time period may exercise
his or her Options in whole or in part. All Options shall
terminate in their entirety to the extent not exercised on
or prior to such thirty (30) day period.
12. TIME OF GRANTING OPTIONS.
Unless otherwise specified by the Committee, the date of
grant of an Option under the Plan shall be the date on which
the Committee makes the determination granting such Option.
Notice of the determination shall be given to each Optionee
to whom an Option is so granted within a reasonable time
after the date of such grant.
13. AMENDMENT AND TERMINATION OF THE PLAN.
The Board may amend or terminate the Plan from time to time
in such respects as the Board may doom advisable, except
that, without approval of the holders of a majority of the
outstanding capital stock no such revision or amendment
shall change the number of Shares subject to the Plan,
change the designation of the class of employees eligible to
receive Options or add any material benefit to Optionees
under the Plan. Any such amendment or termination of the
Plan shall not affect Options already granted, and such
Options shall remain in full force and effect as if the Plan
had not been amended or terminated.
14. CONDITIONS UPON ISSUANCE OF SHARES.
Shares shall not be issued with respect to an Option granted
under the Plan unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall
comply with all relevant provisions of law, including,
without limitation, the Securities Act, the Exchange Act,
the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the Shares may
than be listed, and shall be further subject to the approval
of counsel for the Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may
require the person exercising such Option to represent and
warrant at the time of any such exercise that the Shares are
being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is
required by any of the aforementioned relevant provisions of
law.
15. RESERVATION OF SHARES.
During the term of this Plan the Company will at all times
reserve and keep available the number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
Inability of the Company to obtain from any regulatory body
having jurisdiction and authority deemed by the Company's
counsel to be necessary to the lawful issuance and sale of
any Shares hereunder shall relieve the Company of any
liability in respect of the nonissuance or sale of such
Shares as to which such requisite authority shall not have
been obtained.
16. INFORMATION TO OPTIONEE.
During the term of any Option granted under the Plan, the
Company shall provide or otherwise make available to each
Optionee a copy of its financial statements at least
annually.
17. OPTION AGREEMENT.
Options granted under the Plan shall be evidenced by Option
Agreements.
18. STOCKHOLDER APPROVAL.
The Plan shall be subject to approval by the affirmative
vote of the holders of a majority of the outstanding
capital stock of the Company entitled to vote within twelve
(12) months before or after the Plan is adopted. Any option
exercised before stockholder approval is obtained must be
rescinded if stockholder approval is not obtained within
twelve (12) months before or after the Plan is adopted.
Shares issued upon the exercise of such options shall not be
counted in determining whether such approval is obtained.
Any amendments to the Plan which require stockholder
approval shall be by the affirmative vote of the holders of
a majority of the outstanding capital stock of the Company
entitled to vote.
AMENDMENT DATED 1/22/98 TO 1993 STOCK OPTION PLAN
"9.(a) VESTING PERIOD. Any Option granted hereunder shall be
exercisable at such times and under such conditions as determined
by the Committee and as shall be permissible under the terms of
the Plan, which shall be specified in the Option Agreement
evidencing the Option. Options granted under the Plan shall vest
at a rate of at least twenty percent (20%) per year, except for
certain options for Vice Presidents and above granted on or after
January 22, 1998, which may vest on such criteria and rate
(including performance) without regard to minimum as the
Committee shall in its sole discretion determine."
ATTACHMENT TO MINUTES OF 4/12/96 USCS BOARD MEETING
U.S. COMPUTER SERVICES
1996 STOCK OPTION PLAN
1. PURPOSES OF THE PLAN. The purposes of this Stock Option Plan
are to attract and retain the best available personnel for
positions of substantial responsibility, to provide
additional incentives to Employees. Non-Employee Directors
and Consultants of the Company and its Subsidiaries and to
promote the success of the Company's business. Options
granted hereunder may be either Incentive Stock Options or
Nonstatutory Stock Options at the discretion of the
Committee.
2. DEFINITIONS. As used herein, and in any Option granted
hereunder, the following definitions shall apply:
(a) "BOARD" shall mean the Board of Directors of the
Company.
(b) "CODE" shall mean the Internal Revenue Code of 1986, as
amended.
(c) "COMMON STOCK" shall mean the Common Stock of the
Company.
(d) "COMPANY" shall mean U.S. Computer Services, a
California corporation.
(e) "COMMITTEE" shall mean the Committee appointed by the
Board in accordance with paragraph (a) of Section 4 of
the Plan. If the Board does not appoint or ceases to
maintain a Committee, the term "Committee" shall refer
to the Board.
(f) "CONSULTANT" shall mean any independent contractor
retained to perform services for the Company or any
Subsidiary.
(g) "CONTINUOUS EMPLOYMENT" shall mean the absence of any
interruption or termination of service as an Employee
or Non-Employee Director by the Company or any
Subsidiary. Continuous Employment shall not be
considered interrupted during any period of sick leave,
military leave or any other leave of absence approved
by the Board or in the case of transfers between
locations of the Company or between the Company and any
Parent, Subsidiary or successor of the Company.
(h) "DISINTERESTED PERSON" shall mean a person who has not
at any time within one year prior to service as a
member of the Committee (or during such service) been
granted or awarded Options or other equity securities
pursuant to the Plan or any other plan of the Company
or any Parent or Subsidiary. Notwithstanding the
foregoing, a member of the Committee shall not fail to
be a Disinterested Person merely because he or she
participates in a plan meeting the requirements of Rule
16b-3(c)(2)(i)(A) or (B) promulgated under the Exchange
Act.
(i) "EMPLOYEE" shall mean any person, including officers
(whether or not they are directors), employed by the
Company or any Subsidiary.
(j) "EXCHANGE ACT" shall mean the Securities Exchange Act
of 1934, as amended.
(k) "INCENTIVE STOCK OPTION" shall mean any option granted
under this Plan and any other option granted to an
Employee in accordance with the provisions of Section
422 of the Code and the regulations promulgated
thereunder.
(l) "NON-EMPLOYEE DIRECTOR" shall mean any director of the
Company or any Subsidiary who is not employed by the
Company or such Subsidiary.
(m) "NONSTATUTORY STOCK OPTION" shall mean an Option
granted under the Plan that is subject to the
provisions of Section 1.83-7 of the Treasury
Regulations promulgated under Section 83 of the Code.
(n) "OPTION" shall mean a stock option granted pursuant to
the Plan.
(o) "OPTION AGREEMENT" shall mean a written agreement
between the Company and the Optionee regarding the
grant and exercise of Options to purchase Shares and
the terms and conditions thereof as determined by the
Committee pursuant to the Plan.
(p) "OPTIONED SHARES" shall mean the Common Stock subject
to an Option.
(q) "OPTIONEE" shall mean an Employee, Non-Employee
Director or Consultant who receives an Option.
(r) "PARENT" shall mean a "parent corporation," whether now
or hereafter existing, as defined by Section 424(e) of
the Code.
(s) "PLAN" shall mean this 1996 Stock Option Plan.
(t) "REGISTRATION DATE" shall mean the effective date of
the first registration statement filed by the Company
pursuant to Section 12(g) of the Exchange Act with
respect to any class of the Company's equity
securities.
(u) "SECURITIES ACT" shall mean the Securities Act of 1933,
as amended.
(v) "SHARE" shall mean a share of the Common Stock subject
to an Option, as adjusted in accordance with Section 11
of the Plan.
(w) "SUBSIDIARY" shall mean a "subsidiary corporation,"
whether now or hereafter existing, as defined in
Section 424(f) of the Code.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of
Section 11 of the Plan, the maximum aggregate number of
Shares which may be optioned and sold under the Plan is one
million four hundred thousand (1,400,000) Shares. The Shares
may be authorized but unissued or reacquired shares of
Common Stock. If an Option expires or becomes unexercisable
for any reason without having been exercised in full, the
Shares which were subject to the Option but as to which the
Option was not exercised shall, unless the Plan shall have
been terminated, become available for other Option grants
under the Plan.
The Company intends that as long as it is not subject
to the reporting requirements of Section 13 or 15(d) of the
Exchange Act and is not an investment company registered or
required to be registered under the Investment Company Act
of 1940, all offers and sales of Options and Shares issuable
upon exercise of any Option shall be exempt from
registration under the provisions of Section 5 of the
Securities Act, and the Plan shall be administered in such a
manner so as to preserve such exemption. The Company intends
that the Plan shall constitute a written compensatory
benefit plan within the meaning of Rule 701(b) of 17 CFR
Section 230.701 promulgated by the Securities and Exchange
Commission pursuant to such Act. The Committee shall
designate which Options granted under the Plan by the
Company are intended to be granted in reliance on Rule 701.
4. ADMINISTRATION OF THE PLAN.
(a) PROCEDURE. The Plan shall be administered by the Board.
The Board may appoint a Committee consisting of not
less than three (3) members of the Board to administer
the Plan, subject to such terms and conditions as the
Board may prescribe. Once appointed, the Committee
shall continue to serve until otherwise directed by the
Board. From time to time, the Board may increase the
size of the Committee and appoint additional members
thereof, remove members (with or without cause) and
appoint new members in substitution therefor, fill
vacancies, however caused, and remove all members of
the Committee and, thereafter, directly administer the
Plan.
Members of the Board or Committee who are either
eligible for Options or have been granted Options may
vote on any matters affecting the administration of the
Plan or the grant of Options pursuant to the Plan,
except that no such member shall act upon the granting
of an Option to himself, but any such member may be
counted in determining the existence of a quorum at any
meeting of the Board or the Committee during which
action is taken with respect to the granting of an
Option to him or her.
The Committee shall meet at such times and places and
upon such notice as the Chairperson determines. A
majority of the Committee shall constitute a quorum.
Any acts by the Committee may be taken at any meeting
at which a quorum is present and shall be by majority
vote of those members entitled to vote. Additionally,
any acts reduced to writing or approved in writing by
all of the members of the Committee shall be valid acts
of the Committee.
(b) PROCEDURE AFTER REGISTRATION DATE. Notwithstanding
subsection (a) above, after the date of registration of
the Company's Common Stock on a national securities
exchange or the Registration Date, the Plan shall be
administered either by: (i) the full Board, provided
that all members of the Board are Disinterested
Persons; or (ii) a Committee of three (3) or more
directors, each of whom is a Disinterested Person.
After such date, the Board shall take all action
necessary to administer the Plan in accordance with the
then effective provisions of Rule 16b-3 promulgated
under the Exchange Act, provided that any amendment to
the Plan required for compliance with such provisions
shall be made consistent with the provisions of Section
13 of the Plan, and said regulations.
(c) POWERS OF THE COMMITTEE. Subject to the provisions of
the Plan, the Committee shall have the authority: (i)
to determine, upon review of relevant information, the
fair market value of the Common Stock; (ii) to
determine the exercise price of Options to be granted,
the Employees, Directors or consultants to whom and the
time or times at which Options shall be granted, and
the number of Shares to be represented by each Option;
(iii) to interpret the Plan; (iv) to prescribe, amend
and rescind rules and regulations relating to the Plan;
(v) to determine the terms and provisions of each
Option granted under the Plan (which need not be
identical) and, with the consent of the holder thereof,
to modify or amend any Option; (vi) to authorize any
person to execute on behalf of the Company any
instrument required to effectuate the grant of an
Option previously granted by the Committee; (vii) defer
an exercise date of any Option (with the consent of the
Optionee), subject to the provisions of Section 9(a) of
the Plan; (viii) to determine whether Options granted
under the Plan will be Incentive Stock Options or
Nonstatutory Stock Options; (ix) to make all other
determinations deemed necessary or advisable for the
administration of the Plan; and (x) to designate which
Options granted under the Plan will be issued in
reliance on Rule 701.
(d) EFFECT OF COMMITTEE'S DECISION. All decisions,
determinations and interpretations of the Committee
shall be final and binding on all potential or actual
Optionees, any other holder of an Option or other
equity security of the Company and all other persons.
5. ELIGIBILITY.
(a) PERSONS ELIGIBLE FOR OPTIONS. Options under the Plan
may be granted only to Employees, Non-Employee
Directors or Consultants whom the Committee, in its
sole discretion, may designate from time to time.
Incentive Stock Options may be granted only to
Employees. An Employee who has been granted an Option,
if he or she is otherwise eligible, may be granted an
additional Option or Options. However, the aggregate
fair market value (determined in accordance with the
provisions of Section 8(a) of the Plan) of the Shares
subject to one or more Incentive Stock Options grants
that are exercisable for the first time by an Optionee
during any calendar year (under all stock option plans
of the Company and its Parents and Subsidiaries) shall
not exceed $100,000 (determined as of the grant date).
(b) NO RIGHT TO CONTINUING EMPLOYMENT. Neither the
establishment nor the operation of the Plan shall
confer upon any Optionee or any other person any right
with respect to continuation of employment or other
service with the Company or any Subsidiary, nor shall
the Plan interfere in any way with the right of the
Optionee or the right of the Company (or any Parent or
Subsidiary) to terminate such employment or service at
any time.
6. TERM OF PLAN. The Plan shall become effective upon its
adoption by the Board or its approval by vote of the holders
of the outstanding shares of the Company entitled to vote on
the adoption of the Plan (in accordance with the provisions
of Section 18 hereof), whichever is earlier. It shall
continue in effect for a term of ten (10) years unless
sooner terminated under Section 13 of the Plan.
7. TERM OF OPTION. Unless the Committee determines otherwise,
the term of each Option granted under the Plan shall be ten
(10) years from the date of grant. The term of the Option
shall be set forth in the Option Agreement. No Incentive
Stock Option shall be exercisable after the expiration of
ten (10) years from the date such Option is granted;
provided that, no Incentive Stock Option granted to any
Employee who, at the date such Option is granted, owns
(within the meaning of Section 425(d) of the Code) more than
ten percent (10%) of the total combined voting power of all
classes of stock of the Company or any Parent or Subsidiary
shall be exercisable after the expiration of five (5) years
from the date such Option is granted.
8. EXERCISE PRICE AND CONSIDERATION.
(a) EXERCISE PRICE. Except as provided in subsection (b)
below, the exercise price for the Shares to be issued
pursuant to any Option shall be such price as is
determined by the Committee, which shall in no event be
less than, in the case of Incentive Stock Options, the
fair market value of such Shares on the date the Option
is granted, PROVIDED THAT, in the case of any Optionee
owning stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock
of the Company or any Parent or Subsidiary of the
Company, the exercise price shall be 110% of fair
market value on the date the Incentive Stock Option is
granted. Fair market value of the Common Stock shall be
determined by the Committee, using such criteria as it
deems relevant; provided, however, that if there is a
public market for the Common Stock, the fair market
value per Share shall be the average of the last
reported bid and asked prices of the Common Stock on
the date of grant, as reported in THE WALL STREET
JOURNAL (or, if not so reported, as otherwise reported
by the National Association of Securities Dealers
Automated Quotation (NASDAQ) System) or, in the event
the Common Stock is listed on a national securities
exchange (within the meaning of Section 6 of the
Exchange Act) or on the NASDAQ National Market System
(or any successor national market system), the fair
market value per Share shall be the closing price on
such exchange on the date of grant of the Option, as
reported in THE WALL STREET JOURNAL.
(b) TEN PERCENT STOCKHOLDERS. No Option shall be granted
to any Employee who, at the date such Option is
granted, owns (within the meaning of Section 424(d) of
in the Code) more than ten percent (10%) of the total
combined voting power of all classes of stock of the
Company or any Parent or Subsidiary, unless the
exercise price for the Shares to be issued pursuant to
such Option is at least equal to 110 percent (110%) of
the fair market value of such Shares on the grant date
determined by the Committee in the manner set forth in
subsection (a) above.
(c) CONSIDERATION. The consideration to be paid for the
Optioned Shares shall be payment in cash or by check
unless payment in some other manner, including by
promissory note, other shares of the Company's Common
Stock or such other consideration and method of payment
for the issuance of Optioned Shares as is authorized by
the Committee at the time of the grant of the Option.
Any cash or other property received by the Company from
the sale of Shares pursuant to the Plan shall
constitute part of the general assets of the Company.
9. EXERCISE OF OPTION.
(a) VESTING PERIOD. Any Option granted hereunder shall be
exercisable at such times and under such conditions as
determined by the Committee and as shall be permissible
under the terms of the Plan, which shall be specified
in the Option Agreement evidencing the Option. Options
granted under the Plan shall vest at a rate of at least
twenty percent (20%) per year.
(b) EXERCISE PROCEDURES. An Option shall be deemed to be
exercised when written notice of such exercise has been
given to the Company in accordance with the terms of
the option agreement evidencing the Option, and full
payment for the Shares with respect to which the Option
is exercised has been received by the Company.
An Option may not be exercised for fractional shares.
As soon as practicable following the exercise of an
Option in the manner set forth above, the Company shall
issue or cause its transfer agent to issue stock
certificates representing the Shares purchased. Until
the issuance of such stock certificates (as evidenced
by the appropriate entry on the books of the Company or
of a duly authorized transfer agent of the Company), no
right to vote or receive dividends or any other rights
as a stockholder shall exist with respect to the
Optioned Shares notwithstanding the exercise of the
Option. No adjustment will be made for a dividend or
other rights for which the record date is prior to the
date of the transfer by the Optionee of the
consideration for the purchase of the Shares, except as
provided in Section 11 of the Plan. After the
Registration Date, the exercise of an Option by any
person subject to short-swing trading liability under
Section 16(b) of the Exchange Act shall be subject to
compliance with all applicable requirements of Rule
16b-3(d) or (e) promulgated under the Exchange Act.
(c) DEATH OF OPTIONEE. In the event of the death during
the Option period of an Optionee who is at the time of
his death, or was within the ninety (90)-day period
immediately prior thereto, an Employee or Non-Employee
Director, and who was in Continuous Employment as such
from the date of the grant of the Option until the date
of death or termination, the Option may be exercised,
at any time prior to the expiration of the Option
period, by the Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or
inheritance, but only to the extent of the accrued
right to exercise at the time of the termination or
death, whichever comes first.
(d) DISABILITY OF OPTIONEE. In the event of the disability
during the Option period of an Optionee who is at the
time of such disability, or was within the ninety (90)
day period prior thereto, an Employee or Non-Employee
Director, and who was in Continuous Employment as such
from the date of the grant of the Option until the date
of disability or termination, the Option may be
exercised at any time within one (1) year following the
date of disability, but only to the extent of the
accrued right to exercise at the time of the
termination or disability, whichever comes first,
subject to the condition that no option shall be
exercised after the expiration of the Option period.
(e) TERMINATION OF STATUS AS EMPLOYEE, NON-EMPLOYEE
DIRECTOR OR CONSULTANT. If an Optionee shall cease to
be an Employee or Non-Employee Director for any reason
other than disability or death, or if an Optionee shall
cease to be Consultant for any reason, the Optionee
may, but only within ninety (90) days (or such other
period of time as is determined by the Committee) after
the date he or she ceases to be an Employee or
Non-Employee Director, exercise his or her Option to
the extent that he or she was entitled to exercise it
at the date of such termination, subject to the
condition that no option shall be exercisable after the
expiration of the Option period. Upon such exercise and
if so provided in the Restricted Stock Transfer
Agreement, the Company may, but only within ninety (90)
days (or such other period of time as is determined by
the Committee) after the date of such exercise,
repurchase from the Optionee the Optionee's Option
Shares at the higher of the original purchase price for
the Option Shares or fair market value (as determined
by the Company's Board of Directors) of the Option
Shares on the date of termination of employment. The
right to repurchase shall be exercisable for cash or
cancellation of purchase money indebtedness.
(f) EXERCISE OF OPTION WITH STOCK AFTER REGISTRATION DATE.
After the Registration Date, the Committee may permit
an Optionee to exercise an Option by delivering shares
of the Company's Common Stock. If the Optionee is so
permitted, the option agreement covering such Option
may include provisions authorizing the Optionee to
exercise the Option, in whole or in part, by: (i)
delivering whole shares of the Company's Common Stock
previously owned by such Optionee (whether or not
acquired through the prior exercise of a stock option)
having a fair market value equal to the aggregate
exercise price for the Optioned Shares issuable on
exercise of the Option; and/or (ii) directing the
Company to withhold from the Shares that would
otherwise be issued upon exercise of the Option that
number of whole Shares having a fair market value equal
to the aggregate exercise price for the Optioned Shares
issuable on exercise of the Option. Shares of the
Company's Common Stock so delivered or withheld shall
be valued at their fair market value at the close of
the last business day immediately preceding the date of
exercise of the Option, as determined by the Committee,
in accordance with the provisions of Section 8(a) of
the Plan. Any balance of the exercise price shall be
paid in cash. Any shares delivered or withheld in
accordance with this provision shall not again become
available for purposes of the Plan and for Options
subsequently granted thereunder.
(g) TAX WITHHOLDING. After the Registration Date, when an
Optionee is required to pay to the Company an amount
with respect to tax withholding obligations in
connection with the exercise of an Option granted under
the Plan, the Optionee may elect prior to the date the
amount of such withholding tax is determined (the "Tax
Date") to make such payment, or such increased payment
as the Optionee elects to make up to the maximum
federal, state and local marginal tax rates, including
any related FICA obligation, applicable to the Optionee
and the particular transaction, by: (i) delivering
cash; (ii) delivering part or all of the payment in
previously owned shares of Common Stock (whether or not
acquired through the prior exercise of an Option);
and/or (iii) irrevocably directing the Company to
withhold from the Shares that would otherwise be issued
upon exercise of the Option that number of whole Shares
having a fair market value equal to the amount of tax
required or elected to be withheld (a "Withholding
Election"). If an Optionee's Tax Date is deferred
beyond the date of exercise and the Optionee makes a
Withholding Election, the Optionee will initially
receive the full amount of Optioned Shares otherwise
issuable upon exercise of the Option, but will be
unconditionally obligated to surrender to the Company
on the Tax Date the number of Shares necessary to
satisfy his or her minimum withholding requirements, or
such higher payment as he or she may have elected to
make, with adjustments to be made in cash after the Tax
Date.
Any withholding of Optioned Shares with respect to
taxes arising in connection with the exercise of an
Option by any person subject to short-swing trading
liability under Section 16(b) of the Exchange Act shall
satisfy the following conditions:
(i) An advance election to withhold Optioned Shares in
settlement of a tax liability must satisfy the
requirements of Rule 16b-3(d)(l)(i), regarding
participant-directed transactions;
(ii) Absent such an election, the withholding of
Optioned Shares to settle a tax liability may
occur only during the quarterly window period
described in Rule 16b-3(e);
(iii) Absent an advance election or window-period
withholding, the Optionee may deliver shares
of Common Stock owned prior to the exercise
of an Option to settle a tax liability
arising upon exercise of the Option, in
accordance with Rule 16b-3(f); or
(iv) The delivery of previously acquired shares of
Common Stock (but not the withholding of newly
acquired Shares) will be allowed where an election
under Section 83(b) of the Code accelerates the
Tax Date to a day that occurs less than six (6)
months after the advance election and is not
within the quarterly window period described in
Rule 16b-3(e).
Any adverse consequences incurred by an Optionee
with respect to the use of shares of Common Stock
to pay any part of the exercise price or of any
tax in connection with the exercise of an Option,
including without limitation any adverse tax
consequences arising as a result of a
disqualifying disposition within the meaning of
Section 422 of the Code shall be the sole
responsibility of the Optionee. Shares withheld in
accordance with this provision shall not again
become available for purposes of the Plan and for
Options subsequently granted thereunder.
10. NON-TRANSFERABILITY OF OPTIONS. An Option may not be sold,
pledged, assigned, hypothecated, transferred or disposed of
in any manner other than by will or by the laws of descent
and distribution or pursuant to a qualified domestic
relations order as defined by the Code or Title I of the
Employee Retirement Income Security Act or the rules
thereunder, and may be exercised, during the lifetime of the
Optionee, only by the Optionee.
11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. Subject to any
required action by the stockholders of the Company, the
number of Optioned Shares covered by each outstanding
Option, and the per share exercise price of each such
Option, shall be proportionately adjusted for any increase
or decrease in the number of issued shares of Common Stock
resulting from a stock split, reverse stock split,
recapitalization, combination, reclassification, the payment
of a stock dividend on the Common Stock or any other
increase or decrease in the number of such shares of Common
Stock effected without receipt of consideration by the
Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to
have been "effected without receipt of consideration". Such
adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issue by the Company
of shares of stock of any class, or securities convertible
into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an
Option.
The Committee may, if it so determines in the exercise of
its sole discretion, also make provision for adjusting the
number or class of securities covered by any Option, as well
as the price to be paid therefor, in the event that the
Company effects one or more reorganizations,
recapitalizations, rights offerings, or other increases or
reductions of shares of its outstanding Common Stock, and in
the event of the Company being consolidated with or merged
into any other corporation.
If the Company dissolves, sells substantially all of its
assets, is acquired in a stock for stock or securities
exchange or is party to a merger or reorganization in which
it not the surviving corporation (a "Change in Control"),
then fifty percent (50%) of the unvested portion of each
Option held at least six (6) months prior to the effective
date of a Change of Control shall immediately vest and each
Option shall be exercisable by the holder thereof for a
period of not less than thirty (30) days prior to such
Change in Control, provided, however, that the Optionee
shall be given not less than thirty (30) days notice of such
Change of Control and within such time period may exercise
his or her Options in whole or in part. All Options shall
terminate in their entirety to the extent not exercised on
or prior to such thirty (30) day period.
12. TIME OF GRANTING OPTIONS. Unless otherwise specified by the
Committee, the date of grant of an Option under the Plan
shall be the date on which the Committee makes the
determination granting such Option. Notice of the
determination shall be given to each Optionee to whom an
Option is so granted within a reasonable time after the date
of such grant.
13. AMENDMENT AND TERMINATION OF THE PLAN. The Board may amend
or terminate the Plan from time to time in such respects as
the Board may deem advisable, except that, without approval
of the holders of a majority of the outstanding capital
stock no such revision or amendment shall change the number
of Shares subject to the Plan, change the designation of the
class of employees eligible to receive Options or add any
material benefit to Optionees under the Plan. Any such
amendment or termination of the Plan shall not affect
Options already granted, and such Options shall remain in
full force and effect as if the Plan had not been amended or
terminated.
14. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be
issued with respect to an Option granted under the Plan
unless the exercise of such Option and the issuance and
delivery of such Shares pursuant thereto shall comply with
all relevant provisions of law, including, without
limitation, the Securities Act, the Exchange Act, the rules
and regulations promulgated thereunder, and the requirements
of any stock exchange upon which the Shares may then be
listed, and shall be further subject to the approval of
counsel for the Company with respect to such compliance. As
a condition to the exercise of an Option, the Company may
require the person exercising such Option to represent and
warrant at the time of any such exercise that the Shares are
being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is
required by any of the aforementioned relevant provisions of
law.
15. RESERVATION OF SHARES. During the term of this Plan the
Company will at all times reserve and keep available the
number of Shares as shall be sufficient to satisfy the
requirements of the Plan. Inability of the Company to obtain
from any regulatory body having jurisdiction and authority
deemed by the Company's counsel to be necessary to the
lawful issuance and sale of any Shares hereunder shall
relieve the Company of any liability in respect of the
nonissuance or sale of such Shares as to which such
requisite authority shall not have been obtained.
16. INFORMATION TO OPTIONEE. During the term of any Option
granted under the Plan, the Company shall provide or
otherwise make available to each Optionee a copy of its
financial statements at least annually.
17. OPTION AGREEMENT. Options granted under the Plan shall be
evidenced by Option Agreements.
18. STOCKHOLDER APPROVAL. The Plan shall be subject to approval
by the affirmative vote of the holders of a majority of the
outstanding capital stock of the Company entitled to vote
within twelve (12) months before or after the Plan is
adopted. Any option exercised before stockholder approval is
obtained must be rescinded if stockholder approval is not
obtained within twelve (12) months before or after the Plan
is adopted. Shares issued upon the exercise of such options
shall not be counted in determining whether such approval is
obtained. Any amendments to the Plan which require
stockholder approval shall be by the affirmative vote of the
holders of a majority of the outstanding capital stock of
the Company entitled to vote.
AMENDMENT DATED 7/25/96 TO 1996 STOCK OPTION PLAN
RESOLVED, that the 1996 STOCK OPTION PLAN is amended as follows:
1. Effective May 31, 1996, wherever the words "U.S.
Computer Services" appear in the 96-Q/NQ Plan, they
shall be replaced by the words "USCS International,
Inc."
2. Effective June 21, 1996, the first paragraph of the
provision entitled "Stock Subject to the Plan" is
amended to read as follows:
"Subject to the provisions of Section 11 of the Plan,
the maximum aggregate number of Shares which may be
optioned and sold under the Plan is two million nine
hundred forty thousand (2,940,000) Shares. The Shares
may be authorized but unissued or reacquired shares of
Common Stock. If an Option expires or becomes
unexercisable for any reason without having been
exercised in full, the Shares which were subject to the
Option but as to which the Option was not exercised
shall, unless the Plan shall have been terminated,
become available for other Option grants under the
Plan."
AMENDMENT DATED 1/23/97 TO 1996 STOCK OPTION PLAN
*(The common name of the Company's 1996 Stock Option Plan has
been changed from "96-Q/NQ", as used in previous minutes, to "96-
O", to conform to usage in the Company's option tracking
software.)
AMENDMENT DATED 1/22/98 TO 1996 STOCK OPTION PLAN
"9.(a) VESTING PERIOD. Any Option granted hereunder shall be
exercisable at such times and under such conditions as determined
by the Committee and as shall be permissible under the terms of
the Plan, which shall be specified in the Option Agreement
evidencing the Option. Options granted under the Plan shall vest
at a rate of at least twenty percent (20%) per year, except for
certain options for Vice Presidents and above granted on or after
January 22, 1998, which may vest on such criteria and rate
(including performance) without regard to minimum as the
Committee shall in its sole discretion determine."
Exhibit 5.1
Sonnenschein Nath & Rosenthal
4520 Main Street
Kansas City, Missouri 64111
December 21, 1998
DST Systems, Inc.
333 West 11th Street, 5th Floor
Kansas City, Missouri 64105-1594
Re: Registration Statement on Form S-8 in connection with
the registration of the offer and sale of DST Common
Stock pursuant to Option Agreements (the "Agreements")
under the USCS International, Inc. 1988 Incentive Stock
Option Plan, as amended, 1990 Stock Option Plan, as
amended, 1993 Incentive Stock Option Plan, as amended,
and 1996 Stock Option Plan
Ladies and Gentlemen:
In connection with the preparation of the above-referenced
Registration Statement (the "Registration Statement"), which is
being filed on or about the date of this letter, on behalf of DST
Systems, Inc., a Delaware corporation (the "Corporation"), you
have asked us to provide you this opinion letter in accordance
with subsection (b)(5) of Item 601 of Regulation S-K promulgated
by the United States Securities and Exchange Commission. The
Registration Statement relates to the offer and sale pursuant to
the Agreements of up to 1,479,078 shares (the "Shares") of the
Corporation's Common Stock, par value $0.01 per share (the
"Common Stock").
Pursuant to an Agreement and Plan of Merger dated as of
September 2, 1998, among the Corporation, DST Acquisition, Inc.,
a Delaware corporation and a wholly-owned subsidiary of DST (the
"Acquisition Sub"), and USCS International, Inc., a Delaware
corporation ("USCS"), Acquisition Sub will be merged with and
into USCS and USCS will become a wholly-owned subsidiary of the
Corporation (the "Merger"). In connection with the Merger, the
Corporation will assume certain of the obligations of USCS under
the Agreements and the Shares will be substituted for the stock
of USCS that was to be issued under the Agreements prior to the
Merger.
Based upon and subject to our examination described herein
and the assumptions, exceptions, qualifications, and limitations
set forth herein, we are of the opinion that the issuance of the
Shares that will be originally issued under the Agreements has
been duly authorized and the Shares will, when issued pursuant to
and in accordance with the terms of the applicable Agreements, be
validly issued, fully paid, and non-assessable.
In connection with this opinion, we have examined and relied
upon, without further investigation, the following in connection
with rendering the opinions expressed herein: (a) the form of
the Agreements; (b) the Corporation's Certificate of
Incorporation, as restated, certified by the Secretary of State
of Delaware as of December 16, 1998 and the Corporation's Bylaws;
(c) the Registration Statement, and (d) such other documents,
certificates, records, and oral statements of public officials
and the officers of the Corporation as we deemed necessary for
the purpose of rendering the opinions expressed herein.
In our examinations, we have assumed the genuineness of all
signatures, the legal capacity of all natural persons, the
authenticity, accuracy and completeness of all documents
submitted to us as originals, the conformity to original
documents of all documents submitted to us as certified,
conformed, or photostatic copies or by facsimile or electronic
mail, and the authenticity of the originals from which such
copies, facsimiles, or electronic transmissions were made. In
our examination of documents, including the Agreements, executed
by persons, legal or natural, other than the corporation, we have
assumed that such persons had the power, corporate or otherwise,
to enter into and perform all obligations thereunder and that
such documents are valid and binding. We have also assumed the
conformity of all Agreements to the form reviewed of such
Agreements.
This opinion letter is limited to the specific legal issues
that it expressly addresses, and accordingly, we express no
opinion as to the law of any other jurisdiction other than the
General Corporation Law of the State of Delaware, as amended. We
are not admitted to the Delaware Bar. In expressing our opinions
set forth herein, we have reviewed and relied upon, without
further investigation, such laws as published in generally
available sources.
We consent to the filing of this opinion letter, or a
reproduction thereof, as an exhibit to the Registration
Statement. In giving such consent, however, we are not admitting
that we are within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933, as
amended, or the rules or regulations promulgated by the
Securities and Exchange Commission thereunder.
This opinion letter is as of the date set forth above, and
we have not continuing obligation hereunder to inform you of
changes in the applicable law or the facts after such date or
facts of which we have become aware after the date hereof, even
though such changes could affect our opinions expressed herein.
Very truly yours,
SONNENSCHEIN NATH & ROSENTHAL
By: /s/ John F. Marvin
Exhibit 23.2
Consent of Independent Auditors
We hereby consent to the incorporation by reference in this
Registration Statement on Form S-8 of our report dated February
26, 1998, which appears in DST Systems, Inc.'s Annual Report on
Form 10-K for the year ended December 31, 1997.
/s/ PriceWaterhouseCoopers LLP
-------------------------------
Kansas City, Missouri
December 21, 1998
