USCS INTERNATIONAL, INC.
EMPLOYEE STOCK PURCHASE PLAN
AS AMENDED THROUGH OCTOBER 1, 1997
The following constitutes the EMPLOYEE STOCK PURCHASE PLAN (the "Plan") of
USCS International, Inc. (the "Company").
1. PURPOSE. The purpose of the Plan is to provide employees of the Company
and its majority-owned subsidiaries(1) with an opportunity to purchase Common
Stock of the Company through payroll deductions. The Plan is intended to
qualify as an "Employee Stock Purchase Plan" under the provisions of Sections
421 and 423 of the Internal Revenue Code of 1986, as amended (the "Code").
It is the intention of the Company that the Plan shall not constitute a plan
for any purpose or provision under the Employee Retirement Income Security
Act of 1974, as amended (29 U.S.C.A. Sections 1001 et seq.).
2. DEFINITIONS.
(a) "COMPENSATION" means(2) total wages and other compensation paid to
an Employee by his Employer during the Plan Year and reportable as
compensation on the Employee's Wage and Tax Statement (W-2), but excluding
bonuses, taxable perquisites, relocation assistance payments, and payments
made to or on behalf of an Employee to reimburse him for additional costs and
expenses associated with working outside the United States, plus the amount
of any elective deferral contributions made in accordance with Code sections
125, 129, 401(k), 402(a)(8), or 402(h) of the Code.
(b) "EMPLOYEE" means(3) any person who (as of the date of payroll
withholding under the Plan), is an employee of the Company (or of its Parent
or Subsidiary if such employees are to be participants in the Plan). A leased
employee, as described in Section 414(n) of the Internal Revenue Code, is not
an Employee for purposes of this Plan.
(c) "PARENT" means any corporation (other than the Company) in an unbroken
chain of corporations ending with the Company if, at the time of the purchase of
shares by a participant in the Plan, each of the corporations other than the
Company owns stock possessing fifty percent (50%) or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.
(d) "SUBSIDIARY" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, at the time of the
purchase of shares by a participant in the Plan, each of the corporations other
than the last corporation in the unbroken chain owns stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.
3. ELIGIBILITY.
(a) Any employee, as defined in Section 2(b), shall be eligible to
participate in the Plan on the first day of the first month following date of
hire.(4)
- -----------
(1) Sec. 1, 2(b) and 2(d) were amended September 13, 1996 to add "U.S."
before, respectively, "subsidiaries" and "Subsidiary" and to add
"incorporated in one of the United States of America"; and were amended
October 1, 1997 to remove "U.S." before, respectively, "subsidiaries" and
"Subsidiary" and to remove "incorporated in one of the United States of
America";
(2) Sec. 2(a) was amended September 13, 1996, to be consistent with the
definition of "Compensation" in the Company's 401(k) Plan. Prior to
amendment, this definition read as follows: "'Compensation' means regular
straight time earnings including payments for overtime, shift premium,
incentive compensation, bonuses, and commissions."
(3) Sec. 2(b) was amended September 13, 1996 to read as stated. Prior to
amendment, Sec. 2(b) read as follows: "'Employee' means any person who, (as
of the date of purchase of shares under the Plan,) is an employee of the
Company (or of its Parent or Subsidiary if such employees are to be
participants in the Plan) except for employees who have been employed for
less than one (1) year (2) employees whose customary employment is twenty
(20) hours or less per week and (3) employees whose customary employment is
for not more than five (5) months in any calendar year."
(4) Sec. 3(a) was amended September 13, 1996 to delete "who has completed one
(1) year continuous employment with the Company or its Parent or Subsidiary
on the date of his or her participation in the Plan is effective." This
amendment was approved by stockholders holding a majority of the voting
shares as required by Sec.19.
1
(b) Notwithstanding any provisions of the Plan to the contrary, no
employee shall be permitted to participate in the Plan: (i) if, immediately
after any purchase of shares under the Plan, such employee would own,
directly or indirectly, shares (including shares issuable upon the exercise
of outstanding options to purchase stock) possessing five percent (5%) or
more of the total combined voting power or value of all classes of shares of
the Company or of its Parent or Subsidiary; or (ii) if such employee's rights
to purchase shares under all employee stock purchase plans of the Company or
of its Parent or Subsidiary will accrue at a rate that exceeds $25,000 of the
fair market value of such shares (determined at the beginning of the purchase
period(5)) for each calendar year in which such right to purchase is
outstanding at any time.
4. PURCHASE PERIODS. The Plan shall be implemented by calendar quarter
purchase periods during the term of the Plan (each, a "Purchase Period").
The Company's Board of Directors shall designate the commencement date of the
initial Purchase Period.(6) Thereafter, each Purchase Period shall
correspond to a calendar quarter until otherwise determined by the Board of
Directors or the committee appointed to administer the Plan in accordance
with Section 13.
5. PARTICIPATION.(7)
(a) An eligible employee may become a participant in the Plan by
completing an ESPP enrollment form authorizing payroll deductions on the form
provided by the Company and filing it with the Company's benefits office not
less than ten (10) days prior to the commencement of any pay day. Once
enrolled, an employee will continue to participate until he withdraws from
the Plan or his participation is terminated, as provided in Section 10.
(b) Payroll deductions for a participant shall commence on the first
pay day following the receipt of the ESPP enrollment form pursuant to Section
5(a) above, and shall end upon the participant's withdrawal from the Plan or
the termination of the participant's participation in the Plan, as provided
in Section 10.
(c) From time to time, as necessary, the Board of Directors of the
Company (or the administrative committee for the Plan) may meet with
representatives of any corporation which becomes a Parent or Subsidiary
subsequent to the Plan's adoption date to determine whether and to what
extent the employees of such Parent or Subsidiary shall be eligible to
participate in the Plan.
6. PAYROLL DEDUCTIONS.(8)
(a) At the time a participant files his ESPP enrollment form, he shall
elect to have payroll deductions in whole percentages made on each payday
during the Purchase Period at a rate not less than two percent (2%) and not
exceeding ten percent (10%) of the compensation which he receives on such
payday, and the aggregate of such payroll deductions during the Purchase
Period shall not exceed ten percent (10%) of his aggregate compensation
during said Purchase Period, excluding the effect of any increase in the rate
of compensation which becomes effective during the Purchase Period.
(b) All payroll deductions made by a participant shall be applied to
purchase shares on the next share purchase date as set forth in Section 8. A
participant may not make any additional payments into the Plan.
- ----------
(5) Sec. 3 (b)(iii) was amended October 1, 1997 to change "at the time such
purchase option is granted" to "at the beginning of the purchase period" to
clarify that the ESPP is not a stock option plan for UK tax purposes.
(6) Sec 4: On September 13, 1996, the Board of Directors of the Company
designated January 1, 1997 as the commencement date of the initial Purchase
Period.
(7) Sec. 5 was amended September 13, 1996 as follows: subsection 5(a)
changed "payroll office" to "benefits office", " 7 days" to "10 days",
"Purchase Period" to "pay day" and deleted "on a quarterly basis" in last
sentence; subsection 5(b) changed " on the first payroll following the
commencement of the first calendar quarter for which the participant's
participation is effective" to "on the first pay day following the receipt of
the ESPP enrollment form pursuant to Section 5(a) above"; deleted subsection
(c) and renumbered subsection (d) as subsection 5(c).
(8) Sec. 6 was amended September 13, 1996 as follows: subsection 6(a)
changed "subscription agreement" to "ESPP enrollment form", added "in whole
percentages", changed "$10.00 per month" to "two percent (2%)" and deleted
the following: "and the aggregate of such payroll deductions during the
Purchase Period shall not exceed ten percent (10%) of his aggregate
compensation during said Purchase Period, excluding the effect of any
increase in the rate of compensation which becomes effective during the
Purchase Period."; subsection 6(b) amended to read as stated; prior to
amendment, 6(b) read as follows: "All payroll deductions made by a
participant shall be credited to his account under the Plan. A participant
may not make any additional payments into such account."; subsection 6(c) to
read as stated; prior to amendment, 6(c) read as follows: "A participant
may discontinue his participation in the Plan as provided in Section 10, or
may lower, but not increase, the rate of his payroll deductions (within the
limitation set forth in subparagraph (a) above) by completing or filing with
the Company a new authorization for payroll deduction. The change in rate
shall be effective within fifteen (15) days following the Company's receipt
of the new authorization"
2
(c) A participant may discontinue his participation in the Plan as
provided in Section 10, or may change the rate of his payroll deductions
(within the limitation set forth in subparagraph (a) above) by completing or
filing with the Company a new ESPP enrollment form for payroll deduction.
(d) Non-US employees' payroll deduction will be valued at the average
of the exchange rate on the last day of the quarter for the purchase of
shares.(9)
7. PURCHASE PRICE.
(a) Each eligible employee participating in the Plan shall have the
right to purchase (at the per share price set forth below) up to the number
of shares of the Company's Common Stock determined by dividing each
employee's accumulated payroll deductions for the Purchase Period(10) of his
annual compensation as of the date of the commencement of the applicable
Purchase Period) by the lower of ninety percent (90%)(11) of the fair market
value of a share of the Company's Common Stock on (i) the first business day
of such Purchase Period or (ii) the last business day of such Purchase
Period, subject to the limitations set forth in Sections 3(b) and 12. Fair
market value of a share of the Company's Common Stock shall be determined as
provided in subsection (b) below.
(b) The fair market value of the Company's Common Stock on any date
shall be determined by the Company's Board of Directors based upon such
factors as they deem relevant; provided, however, that where 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, 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 the NASDAQ National Market System, the fair market value per share
shall be the closing price on such exchange, as reported in THE WALL STREET
JOURNAL, on the date of determination.
8. PURCHASE OF SHARES. Unless a participant withdraws from the Plan as
provided in Section 10, his purchase of shares in any Purchase Period will be
automatic as of the first business day of the next Purchase Period and the
maximum number of shares(12) will be purchased for him at the applicable
price with the accumulated payroll deductions in his account. During the
participant's lifetime, only the participant may purchase shares under the
Plan.
9. HOLD PERIOD; DELIVERY OF SHARE CERTIFICATES.(13)
(a) Shares of the Company's Common Stock issued pursuant to this Plan
shall be subject to a six (6) month hold period commencing on the date that
such shares are issued by the Company (the "Hold Period"). No participant
may sell, assign, dispose of by gift or otherwise transfer any shares of the
Company's Common Stock issued pursuant to this Plan prior to the termination
of the Hold Period.
(b) The Company shall maintain a record of all shares issued to
participants in the Plan. Upon the termination of the applicable Hold
Period, a participant in the Plan may request in writing addressed to the
director of benefits of the Company a share certificate for shares of Common
Stock issued to such participant and no longer subject to a Hold Period.
Upon receipt of such written request, the Company shall arrange the delivery
to such participant of a certificate representing the shares purchased by
such participant. The participant will be responsible for paying any
administrative fees for certificate issuance.
- ----------
(9) Sec. 6(d) was added on October 1, 1997.
(10) Sec. 7(a) was amended September 13, 1996 to delete: "(at the rate
designated by such employee, not to exceed an amount equal to ten percent
(10%))"
(11) Sec. 7(a) was amended on October 1, 1997 to change 95% to 90%.
(12) Sec. 8 was amended September 13, 1996, to change "full shares" to
"shares."
(13) Sec. 9 was amended September 13, 1996 as follows: subsection 9(b)
"Secretary" changed to "director of benefits" and added "The participant will
be responsible for paying any administrative fees for certificate issuance";
subsection 9 (c) deleted, which read: "(c) Any cash remaining to the credit
of a participant's account under the Plan after a purchase by him of shares
in any Purchase Period, or which is insufficient to purchase a full share of
Common Stock of the Company, shall be accumulated in the participant's
account and applied to the purchase of shares in the next succeeding Purchase
Period. All such funds shall be delivered to a participant in the Plan upon
such participant's withdrawal from the Plan or termination of employment
pursuant to Section 10."
3
10. WITHDRAWAL; TERMINATION OF EMPLOYMENT.(14)
(a) A participant may withdraw from the Plan at any time by giving
written notice to the Company. After receipt of his notice of withdrawal, his
participation in the Plan will be automatically terminated, and no further
payroll deductions for the purchase of shares will be made under the Plan.
All of the participant's payroll deductions credited to his account prior to
withdrawal will be used to purchase shares at the next share purchase date
and will not be paid to him in cash.
(b) Upon termination of the participant's employment for any reason,
including retirement or death, his participation in the Plan will be
automatically terminated. All of the participant's payroll deductions
credited to his account prior to such termination will be used to purchase
shares at the next share purchase date and will not be paid in cash.
(c) A participant's withdrawal from the Plan will not have any effect
upon his eligibility to participate in the Plan at a future date or in any
similar plan which may hereafter be adopted by the Company, so long as the
participant is otherwise eligible to participate in such plan.
11. INTEREST. No interest shall accrue on the payroll deductions of a
participant in the Plan.
12. STOCK.
(a) The maximum number of shares of the Company's Common Stock which
shall be made available for sale under the Plan shall be two hundred thousand
(200,000) shares(15), subject to adjustment upon changes in capitalization of
the Company as provided in Section 18. If the total number of shares which
would otherwise be subject to purchase by participants pursuant to Section
7(a) exceeds the number of shares then available under the Plan (after
deduction of all shares which have been purchased under the Plan), the
Company shall make a pro rata allocation of the shares remaining available
for purchase in as uniform a manner as shall be practicable, provided that no
participant shall be permitted to purchase more shares than the maximum
number of shares allowable to such participant as calculated pursuant to the
provisions of Section 7(a) hereof. In such event, the Company shall give
written notice of such reduction of the number of shares available for
purchase to each employee affected thereby and shall similarly reduce the
rate of payroll deductions, if necessary.
(b) The participant will have no interest or voting right in shares to
be purchased by a participant under the Plan until such shares have been
issued by the Company.
(c) Shares to be delivered to a participant under the Plan will be
registered in the name of the participant or in the name of the participant
and his or her spouse.
13. ADMINISTRATION. The Plan shall be administered by the Board of
Directors of the Company or a committee appointed by the Board. The
administration, interpretation or application of the Plan by the Board or its
committee shall be final, conclusive and binding upon all participants.
Members of the Board of Directors or its committee who are eligible employees
are permitted to participate in the Plan.
14. DESIGNATION OF BENEFICIARY.
(a) A participant may file a written designation of a beneficiary who
is to receive any shares and cash, if any, from the participant's account
under the Plan in the event of such participant's death prior to delivery to
him of such shares and cash. In addition, a participant may file a written
designation of a beneficiary who is to receive any cash from the
participant's account under the Plan in the event of such participant's death.
- ----------
(14) Sec. 10(a) and 10(b) were amended September 13, 1996 to read as stated.
Prior to amendment, read as follows: "10(a) A participant may withdraw all,
but not less than all, the payroll deductions credited to his account under
the Plan at any time by giving written notice to the Company. All of the
participant's payroll deductions credited to his account will be paid to him
promptly after receipt of his notice of withdrawal, his participation in the
Plan will be automatically terminated, and no further payroll deductions for
the purchase of shares will be made under the Plan. 10(b) Upon termination
of the participant's employment for any reason, including retirement or
death, the payroll deductions credited to his account will be returned to
him, or, in the case of his death, to the person or persons entitled thereto
under Section 14, and his participation in the Plan will be automatically
terminated"
(15) Sec. 12: The original number of shares authorized for this plan was
95,239; this was adjusted on June 21, 1996 to 200,000 shares because of a
2.1:1 stock split.
4
(b) Such designation of beneficiary may be changed by the participant
at any time by written notice. In the event of the death of a participant
and in the absence of a beneficiary validly designated under the Plan who is
living at the time of such participant's death, the Company shall deliver
such shares and/or cash to the executor or administrator of the estate of the
participant, or if no such executor or administrator has been appointed (to
the knowledge of the Company), the Company, in its discretion, may deliver
such shares and/or cash to the spouse or to any one or more dependents or
relatives of the participant, or if no spouse, dependent or relative is known
to the Company, then to such other person as the Company may designate.
15. TRANSFERABILITY. Neither payroll deductions credited to a participant's
account nor any rights with regard to the receipt of shares under the Plan
may be assigned, transferred, pledged or otherwise disposed of in any way
(other than by will, the laws of descent and distribution or 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 or as
provided in Section 14) by the participant. Any such attempt at assignment,
transfer, pledge or other disposition shall be without effect, except that
the Company may treat such act as an election to withdraw funds in accordance
with Section 10.
16. USE OF FUNDS. All payroll deductions received or held by the Company
under the Plan may be used by the Company for any corporate purpose, and the
Company shall not be obligated to segregate such payroll deductions.
17. REPORTS. Individual accounts will be maintained for each participant in
the Plan. Statements of account will be given to participating employees
periodically.(16)
18. CHANGES IN CAPITALIZATION. If any shares are purchased under this Plan
subsequent to any stock dividend, stock split, spin-off, recapitalization,
merger, combination, reclassification, exchange of shares or the like,
occurring after such shares were purchased but prior to delivery of the stock
certificate therefor, as a result of which shares of any class shall be
issued in respect of the outstanding shares, or shares shall be changed into
the same, whether a different number of the same or another class or classes,
the number of shares to be issued by the Company and the purchase price for
such shares shall be appropriately adjusted by the Company, as necessary to
maintain the equality of rights and privileges afforded participants and
shares issuable under the Plan, provided that, in any transaction described
in Section 424 of the Code, the Plan shall be administered in such a manner
as to satisfy the provisions of Section 424 and the regulations thereunder;
and provided further, that any increase in the aggregate number of shares
subject to the Plan (other than an increase merely reflecting a change in
capitalization such as a stock dividend or stock split) must be approved by
the Company's stockholders in accordance with Section 22 hereof.
19. AMENDMENT OR TERMINATION. The Board of Directors of the Company may at
any time terminate, modify, extend or renew the Plan or any rights to
purchase shares granted hereunder; provided that no such modification,
extension or renewal be made without prior approval of the stockholders of
the Company if such amendment would:
(a) Increase the number of shares reserved under the Plan;
(b) Permit payroll deductions at a rate in excess of ten percent (10%)
of the participant's compensation rate;
(c) Materially modify the eligibility requirements; or
(d) Materially increase the benefits which may accrue to participants
under the Plan.
20. NOTICES. All notices or other communications by a participant to the
Company under or in connection with the Plan shall be deemed to have been
duly given when received in the form specified by the Company at the
location, or by the person, designated by the Company for the
- ----------
(16) Sec. 17 was amended September 13, 1996 by inserting the word
"periodically" in place of "promptly after the end of each Purchase Period,
which statements will set forth the total payroll deductions accumulated, the
per share purchase price, the number of shares purchased and the remaining
cash balance, if any".
5
receipt thereof.
21. TERM OF PLAN. The Plan shall become effective upon the earlier to occur
of its adoption by the Board of Directors or its approval by the stockholders
of the Company as described in Section 22. It shall continue in effect for a
term of twenty (20) years unless sooner terminated pursuant to Section 19.
APPROVAL OF STOCKHOLDERS. The Plan and any increase in the number of
shares reserved under the Plan must be approved by the stockholders of the
Company within twelve (12) months before or after the date the Plan has been
adopted or an increase in the number of shares reserved under the Plan has
been approved by the Board of Directors. Such stockholder approval shall be
by the affirmative vote of a majority of the capital stock of the Company
present or represented and entitled to vote at a duly held meeting or by the
written consent of the holders of a majority of the outstanding capital stock
of the Company entitled to vote. Any purchases of shares pursuant to the
Plan before stockholder approval is obtained must be rescinded if stockholder
approval is not obtained within twelve (12) months after the Plan is
adopted(17). Such shares shall not be counted in determining whether such
approval is obtained.
- --END OF PLAN--
- ----------
(17) Sec. 22: Stockholder approval of the Plan was granted on May 16, 1996,
within the 12 month period.
6