10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13
OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2002
Commission file number 001-11015

VIAD CORP

(Exact name of registrant as specified in its charter)

DELAWARE
(State or other jurisdiction of
incorporation or organization) 36-1169950
(I.R.S. Employer
Identification No.)

1850 N. CENTRAL AVE., PHOENIX, ARIZONA
(Address of principal executive offices) 85077
(Zip Code)

Registrant’s telephone number, including area code (602) 207-4000

Indicate by check mark whether the registrant (1) has filed all Exchange Act reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days.

Yes No

As of June 28, 2002, 89,199,040 shares of Common Stock ($1.50 par value) were outstanding.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION
	Item 1. Financial Statements
		CONSOLIDATED BALANCE SHEETS
		CONSOLIDATED STATEMENTS OF INCOME
		CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
		CONSOLIDATED STATEMENTS OF CASH FLOWS
		NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
	Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
	Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
PART II. OTHER INFORMATION
	Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
	Item 6. EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES
EXHIBIT INDEX
Exhibit 10.A

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

VIAD CORP
CONSOLIDATED BALANCE SHEETS

			June 30, 2002			December 31,
(000 omitted, except share data)			(Unaudited)			2001
ASSETS
Current assets:
	Cash and cash equivalents		$	55,341		$	46,593
	Short-term investments			174,306			118,021
	Receivables			76,606			64,134
	Inventories			51,248			55,682
	Deferred income taxes			40,635			45,916
	Other current assets			34,842			48,555
				432,978			378,901
	Funds, agents’ receivables and current maturities of investments restricted for payment service obligations			1,902,554			1,476,475
	Total current assets			2,335,532			1,855,376
Investments in securities				41,212			51,535
Investments restricted for payment service obligations				5,488,219			5,422,899
Property and equipment				256,263			260,480
Other investments and assets				77,875			67,715
Deferred income taxes				75,434			82,764
Goodwill				548,787			587,365
Other intangible assets				35,041			35,925
			$	8,858,363		$	8,364,059
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
	Short-term bank loans		$	—		$	457
	Accounts payable			55,156			60,913
	Other current liabilities			219,353			203,702
	Current portion of long-term debt			142,516			42,224
				417,025			307,296
	Payment service obligations			7,075,335			6,649,722
	Total current liabilities			7,492,360			6,957,018
Long-term debt				244,619			354,147
Pension and other postretirement benefits				95,141			94,424
Derivative financial instruments				119,616			91,414
Other deferred items and insurance liabilities				135,232			135,420
Minority interests				6,600			5,284
$4.75 Redeemable preferred stock				6,691			6,679
Common stock and other equity:
	Common stock, $1.50 par value, 200,000,000 shares authorized, 99,739,925 shares issued			149,610			149,610
	Additional capital			223,370			225,003
	Retained income			772,846			762,008
	Unearned employee benefits and other			(76,017	)		(82,952	)
	Accumulated other comprehensive income:
		Unrealized gain on securities classified as available for sale		63,314			29,876
		Unrealized loss on derivative financial instruments		(76,484	)		(53,875	)
		Cumulative translation adjustments		(8,344	)		(13,211	)
		Minimum pension liability adjustment		(13,739	)		(13,739	)
	Common stock in treasury, at cost, 10,540,885 and 10,806,006 shares			(276,452	)		(283,047	)
	Total common stock and other equity			758,104			719,673
			$	8,858,363		$	8,364,059

See Notes to Consolidated Financial Statements.

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VIAD CORP
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

		Quarter ended June 30,				Six months ended June 30,
(000 omitted, except per share data)		2002		2001		2002			2001
Revenues		$	408,511	$	444,566	$	853,532		$	904,130
Costs and expenses:
	Costs of sales and services		351,940		386,565		744,436			801,243
	Corporate activities and minority interests		7,291		4,113		11,851			8,680
	Net interest expense		3,575		5,298		7,364			11,563
	Nonrecurring item		—		29,274		—			29,274
			362,806		425,250		763,651			850,760
Income before income taxes and change in accounting principle			45,705		19,316		89,881			53,370
Income taxes			13,439		1,907		25,271			11,659
Net income before change in accounting principle			32,266		17,409		64,610			41,711
Change in accounting principle, net of tax			—		—		(37,739	)		—
NET INCOME		$	32,266	$	17,409	$	26,871		$	41,711
DILUTED NET INCOME PER COMMON SHARE
	Net income per share before change in accounting principle	$	0.36	$	0.20	$	0.73		$	0.48
	Change in accounting principle, net of tax		—		—		(0.43	)		—
	Net income per share	$	0.36	$	0.20	$	0.30		$	0.48
Average outstanding and potentially dilutive common shares			87,672		86,090		87,200			86,381
BASIC NET INCOME PER COMMON SHARE
	Net income per share before change in accounting principle	$	0.37	$	0.20	$	0.74		$	0.48
	Change in accounting principle, net of tax		—		—		(0.44	)		—
	Net income per share	$	0.37	$	0.20	$	0.30		$	0.48
Average outstanding common shares			86,693		85,158		86,394			85,359
Dividends declared per common share		$	0.09	$	0.09	$	0.18		$	0.18
Preferred stock dividends		$	285	$	284	$	570		$	568

See Notes to Consolidated Financial Statements.

Page 3

VIAD CORP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)

			Quarter ended June 30,						Six months ended June 30,
(000 omitted)			2002			2001			2002			2001
Net income			$	32,266		$	17,409		$	26,871		$	41,711
Other comprehensive income, net of tax:
	Unrealized gains (losses) on securities classified as available-for-sale:
		Statement of Financial Accounting Standards (“SFAS”) No. 133 transition adjustment, effective January 1, 2001, resulting from the transfer of securities classified as held-to-maturity to securities classified as available-for-sale		—			—			—			3,772
		Holding gains (losses) arising during the period		57,845			(13,677	)		36,891			11,523
		Reclassification adjustment for net realized gains included in net income		(1,304	)		(1,534	)		(3,453	)		(4,467	)
				56,541			(15,211	)		33,438			10,828
	Unrealized gains (losses) on derivative financial instruments:
		Cumulative effect of transition adjustment upon initial application of SFAS No. 133 on January 1, 2001		—			—			—			(7,501	)
		Holding gains (losses) arising during the period		(72,071	)		4,406			(61,216	)		(30,444	)
		Net reclassifications from other comprehensive income to net income		19,895			5,841			38,607			7,487
				(52,176	)		10,247			(22,609	)		(30,458	)
	Unrealized foreign currency translation adjustments:
		Holding gains (losses) arising during the period		5,208			2,634			4,867			(1,186	)
Other comprehensive income (loss)				9,573			(2,330	)		15,696			(20,816	)
Comprehensive income			$	41,839		$	15,079		$	42,567		$	20,895

See Notes to Consolidated Financial Statements.

Page 4

VIAD CORP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

			Six months ended June 30,
(000 omitted)			2002			2001
CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES:
Net income			$	26,871		$	41,711
Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation and amortization			25,753			34,922
	Deferred income taxes			7,840			13,749
	Change in accounting principle			40,000			—
	Nonrecurring item			—			29,274
	Other noncash items, net			(457	)		(7,198	)
	Change in operating assets and liabilities:
		Receivables and inventories		(12,495	)		1,459
		Accounts payable		(5,757	)		(7,700	)
		Other assets and liabilities, net		11,627			(18,020	)
				93,382			88,197
	Change in payment service assets and obligations, net			(766	)		856,384
Net cash provided by operating activities				92,616			944,581
CASH FLOWS PROVIDED (USED) BY INVESTING ACTIVITIES:
Capital expenditures				(17,711	)		(24,788	)
Proceeds from disposals of property and other assets, net of purchases				543			(640	)
Proceeds from sales and maturities of securities				1,532,098			1,249,628
Purchases of securities				(1,578,693	)		(2,116,951	)
Net cash used by investing activities				(63,763	)		(892,751	)
CASH FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES:
Payments on long-term borrowings				(418	)		(25,333	)
Net change in short-term borrowings				(10,457	)		6,211
Dividends on common and preferred stock				(16,150	)		(15,972	)
Exercise of stock options				8,965			12,097
Common stock purchased for treasury				(2,045	)		(34,622	)
Net cash used by financing activities				(20,105	)		(57,619	)
Net increase (decrease) in cash and cash equivalents				8,748			(5,789	)
Cash and cash equivalents, beginning of year				46,593			42,298
CASH AND CASH EQUIVALENTS, END OF PERIOD			$	55,341		$	36,509

See Notes to Consolidated Financial Statements.

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VIAD CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

NOTE A – Basis of Preparation

The Consolidated Financial Statements of Viad Corp (“Viad”) include the accounts of Viad and all of its subsidiaries. This information should be read in conjunction with the financial statements set forth in the Viad Corp Annual Report on Form 10-K for the year ended December 31, 2001.

Accounting policies utilized in the preparation of the financial information herein presented are the same as set forth in Viad’s annual financial statements except as modified for interim accounting policies which are within the guidelines set forth in Accounting Principles Board (“APB”) Opinion No. 28, “Interim Financial Reporting” and the adoption of Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets” and SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” as discussed in Note D. The interim consolidated financial information is unaudited. In the opinion of management, all adjustments, consisting only of normal recurring accruals, necessary to present fairly Viad’s financial position as of June 30, 2002, and its results of operations and its cash flows for the quarters and six months ended June 30, 2002 and 2001 have been included. Interim results of operations are not necessarily indicative of the results of operations for the full year.

Certain prior year amounts have been reclassified to conform with the 2002 presentation.

NOTE B – Assets Restricted for Payment Service Obligations

Viad’s Payment Services subsidiaries generate funds from the sale of official checks, money orders and other payment instruments, with the related liabilities classified as “Payment service obligations.” Substantially all of the proceeds of such sales are invested in accordance with state regulations, principally in high-quality debt instruments. These investments, along with related cash and funds in transit, are restricted to the extent that they represent proceeds from the sale of payment instruments to satisfy the liability to pay, upon presentment, the face amount of the payment service obligations. In addition, certain other assets of the Payment Services subsidiaries are available if necessary to meet such obligations. Such assets are not available to satisfy working capital or other financing requirements of Viad. Securities are included in the Consolidated Balance Sheets under the caption, “Investments restricted for payment service obligations.” Certain additional assets of the Payment Services subsidiaries relating to payment service obligations, including cash on hand, funds in transit from agents, and securities expected to be sold or maturing within one year, are included under the caption, “Funds, agents’ receivables and current maturities of investments restricted for payment service obligations.”

As described in notes to Viad’s annual financial statements, a Payment Services subsidiary business involves the payment of commissions to selling financial institutions of its official check program. In addition, it has also entered into agreements to sell receivables primarily from money order agents. The commissions and net proceeds from the agents’ receivables are computed based on short-term variable interest rates that are hedged through swap agreements (see Note E) that effectively convert the variable rate payments to fixed rates.

Under normal circumstances, the swap agreements will not be terminated prior to maturity, nor is there any requirement to sell long-term debt securities prior to maturity, as the funds flow from ongoing sales of money orders and other payment instruments and funds from maturing long-term and short-term investments are expected to be adequate to settle payment service items as they are presented.

Page 6

The following is a summary of asset and liability carrying amounts related to the payment service obligations, including additional subsidiary funds and the fair value of related swap agreements:

	June 30,			December 31,
(000 omitted)	2002			2001
Funds, agents’ receivables and current maturities of investments restricted for payment service obligations	$	1,902,554		$	1,476,475
Investments restricted for payment service obligations (1)		5,488,219			5,422,899
Payment service obligations		(7,075,335	)		(6,649,722	)
Fair value of derivative financial instruments (2)		(124,611	)		(87,187	)
Total	$	190,827		$	162,465

(1)	Securities classified as “available-for-sale” are carried at market value and securities classified as “held-to-maturity” are carried at amortized cost (see Note C).
(2)	The fair value represents the estimated amounts that Viad would pay to counterparties to terminate the swap agreements at June 30, 2002 and December 31, 2001.

NOTE C – Investments Restricted for Payment Service Obligations

Investments restricted for payment service obligations include the following debt and equity securities:

	June 30,			December 31,
(000 omitted)	2002			2001
Securities classified as available-for-sale, at fair value (amortized cost of $3,780,781 and $3,947,971)	$	3,884,018		$	3,997,058
Securities classified as held-to-maturity, at amortized cost (fair value of $1,669,811 and $1,478,178)		1,627,701			1,449,641
		5,511,719			5,446,699
Less current maturities		(23,500	)		(23,800	)
	$	5,488,219		$	5,422,899

NOTE D – Goodwill and Other Intangible Assets

In January 2002, Viad adopted SFAS No. 142, “Goodwill and Other Intangible Assets.” SFAS No. 142 specifies that goodwill and certain intangible assets with indefinite lives no longer be amortized but instead be subject to periodic impairment testing. At March 31, 2002, Viad completed the transitional impairment test for certain intangible assets with indefinite lives and found that no impairment exists. Viad completed the transitional impairment test for goodwill during the second quarter of 2002. The test was performed as of January 1, 2002 and concluded that a transitional impairment loss of $40.0 million ($37.7 million after-tax) should be recognized related to goodwill at the Exhibitgroup/Giltspur reporting unit of the Convention and Event Services segment. The fair value of that reporting unit was estimated using the expected present value of future cash flows. The impairment resulted from a change in the criteria for measurement of impairment from an undiscounted to a discounted cash flow method. This impairment was retroactively restated to the first quarter of 2002 in accordance with SFAS No. 142 and is included in the Consolidated Statements of Income under the caption “Change in accounting principle.”

Intangible assets with finite lives will continue to be amortized over their respective useful lives and will be tested for impairment in accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long- Lived Assets.” This statement, adopted in January 2002, supersedes SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,” and the accounting and

Page 7

reporting provisions of APB Opinion No. 30, “Reporting the Results of Operations – Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions.” SFAS No. 144 requires that one accounting model be used for long-lived assets to be disposed of by sale, whether previously held and used or newly acquired, and it broadens the presentation of discontinued operations to include more disposal transactions.

A summary of intangible assets at June 30, 2002 is presented below:

		Gross				Net
		Carrying		Accumulated		Carrying
(000 omitted)		Value		Amortization		Value
Amortized intangible assets:
	Customer lists	$	27,523	$	15,583	$	11,940
	Patents		13,200		9,446		3,754
	Other		6,379		6,223		156
			47,102		31,252		15,850
Unamortized intangible assets:
	Trademarks		13,182		—		13,182
	Pension intangible assets		6,009		—		6,009
			19,191		—		19,191
Total intangible assets		$	66,293	$	31,252	$	35,041

Intangible asset amortization expense for the quarter and six months ended June 30, 2002 was $489,000 and $979,000, respectively. Estimated amortization expense for the five succeeding fiscal years is as follows:

(000 omitted)
2002	$	1,961
2003		1,938
2004		1,882
2005		1,861
2006		1,570

The changes in the carrying amount of goodwill for the period ended June 30, 2002 are as follows:

			Convention
	Payment		and Event
(000 omitted)	Services		Services			Other		Total
Balance at beginning of year	$	297,705	$	262,243		$	27,417	$	587,365
Transitional impairment loss		—		(40,000	)		—		(40,000	)
Foreign currency translation adjustments		—		940			482		1,422
Balance at end of period	$	297,705	$	223,183		$	27,899	$	548,787

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Amortization expense of goodwill and intangible assets with indefinite lives for the quarter ended June 30, 2001 was $4,126,000 ($3,512,000 after-tax) and $98,000 ($61,000 after-tax), respectively. For the six months ended June 30, 2001, amortization expense of goodwill and intangible assets with indefinite lives amounted to $8,238,000 ($7,013,000 after-tax) and $196,000 ($122,000 after-tax), respectively. Net income as reported and as adjusted for the adoption of SFAS No. 142 is presented below:

		Quarter ended June 30,				Six months ended June 30,
(000 omitted, except per share data)		2002		2001		2002		2001
Reported net income		$	32,266	$	17,409	$	26,871	$	41,711
Amortization of goodwill and intangible assets with indefinite lives, net of tax			—		3,573		—		7,135
Adjusted net income		$	32,266	$	20,982	$	26,871	$	48,846
Diluted earnings per share:
	Reported net income	$	0.36	$	0.20	$	0.30	$	0.48
	Amortization of goodwill and intangible assets with indefinite lives, net of tax		—		0.04		—		0.08
	Adjusted net income	$	0.36	$	0.24	$	0.30	$	0.56
Basic earnings per share:
	Reported net income	$	0.37	$	0.20	$	0.30	$	0.48
	Amortization of goodwill and intangible assets with indefinite lives, net of tax		—		0.04		—		0.09
	Adjusted net income	$	0.37	$	0.24	$	0.30	$	0.57

NOTE E – Derivative Financial Instruments

Viad uses derivative financial instruments as part of its risk management strategy to manage exposure to fluctuations in interest and foreign currency rates. Derivatives are not used for speculative purposes.

A portion of Viad’s Payment Services business involves the payment of variable-rate commissions to selling financial institutions of its official check program. In addition, a Viad Payment Services subsidiary has agreements to sell, on a periodic basis, undivided percentage ownership interests in certain receivables primarily from money order agents in an amount not to exceed $450 million. The agreement expires in June 2003. The receivables, sold at a discount based on short-term variable interest rates, are sold in order to accelerate Payment Services’ cash flow for investment in permissible securities. Variable-to-fixed derivative financial instruments (swap agreements) have been entered into to mitigate the effects of fluctuations primarily on commission expense and to a lesser extent on the net proceeds from agents’ receivable sales.

Viad records all derivatives as either assets or liabilities, measured at fair value, with the change in fair value of the derivative recognized in earnings or in other comprehensive income, depending on the use of the derivative and whether it qualifies for hedge accounting. Viad’s swap agreements have been designated, and qualify, as cash flow hedges. The length of time over which future cash flows are hedged ranges from one to six years.

The effective portion of the change in fair values of derivatives qualifying as cash flow hedges is recorded in other comprehensive income. Amounts receivable or payable under the swap agreements are reclassified from other comprehensive income to net income as an adjustment to the expense of the related transaction. These amounts are included in the Consolidated Statements of Income under “Costs of sales and services.” The amount recognized in earnings due to the ineffectiveness of the cash flow hedges was not material. No cash flow hedges were discontinued during the quarter or six months ended June 30, 2002 or 2001.

Page 9

Viad is also exposed to foreign currency exchange risk. Forward derivative contracts are used to hedge assets and liabilities denominated in foreign currencies. While these contracts economically hedge Viad’s foreign currency risk, they are not designated as hedges for accounting purposes under SFAS No. 133. Accordingly, these contracts are recorded on the Consolidated Balance Sheets at fair value, with the change in fair value reflected in earnings. The effect of changes in foreign exchange rates on the foreign-denominated receivables and payables, net of the effect of the related forward contracts, is not significant.

NOTE F – Debt

At June 30, 2002 and December 31, 2001, Viad classified as long-term debt $156 million and $166 million, respectively, of short-term borrowings. These borrowings are supported by unused commitments under $425 million of long-term credit facilities.

NOTE G – Income Taxes

A reconciliation of the provision for income taxes and the amount that would be computed using statutory federal income tax rates on income before income taxes and change in accounting principle for the six months ended June 30, is as follows:

(000 omitted)	2002					2001
Computed income taxes at statutory federal income tax rate	$	31,458		35.0	%	$	18,680		35.0	%
Nondeductible goodwill amortization		—		0.0	%		1,743		3.3	%
State income taxes		3,777		4.2	%		2,126		4.0	%
Other, net		2,247		2.5	%		1,261		2.3	%
		37,482		41.7	%		23,810		44.6	%
Tax-exempt income		(11,261	)	(12.5	%)		(14,451	)	(27.1	%)
Adjustment to estimated annual effective rate (1)		(950	)	(1.1	%)		2,300		4.3	%
Provision for income taxes (2)	$	25,271		28.1	%	$	11,659		21.8	%

(1)	Accounting principles generally accepted in the United States of America for interim financial reporting (APB Opinion No. 28) require that income taxes be provided based on the estimated effective tax rate expected to be applicable for the entire fiscal year.
(2)	Excluding the effect of the nonrecurring item, the effective tax rate for the first six months of 2001 was 27.4 percent.

NOTE H – Segment Information

Viad measures profit and performance of its operations on the basis of operating income before nonrecurring items. An adjustment is made to the Payment Services segment to present revenues and operating income on a fully taxable equivalent basis as though amounts were invested in taxable investments. Intersegment sales and transfers are not significant. Corporate activities include expenses not allocated to operations. Disclosures regarding Viad’s reportable segments along with reconciliations to consolidated totals are presented below.

Page 10

			Quarter ended June 30,						Six months ended June 30,
(000 omitted)			2002			2001			2002			2001
Revenues:
	Payment Services		$	205,968		$	187,020		$	403,269		$	366,318
	Convention and Event Services			199,450			254,447			454,257			543,956
		Reportable segments		405,418			441,467			857,526			910,274
	Travel and Recreation Services			13,129			15,876			16,299			19,535
				418,547			457,343			873,825			929,809
	Less taxable equivalent adjustment			(10,036	)		(12,777	)		(20,293	)		(25,679	)
			$	408,511		$	444,566		$	853,532		$	904,130
Operating income before nonrecurring item:
	Payment Services		$	49,290		$	43,682		$	91,331		$	78,477
	Convention and Event Services			14,410			23,485			36,654			48,228
		Reportable segments		63,700			67,167			127,985			126,705
	Travel and Recreation Services			2,907			3,611			1,404			1,861
				66,607			70,778			129,389			128,566
	Corporate activities and minority interests			(7,291	)		(4,113	)		(11,851	)		(8,680	)
	Less taxable equivalent adjustment			(10,036	)		(12,777	)		(20,293	)		(25,679	)
				49,280			53,888			97,245			94,207
Other investment income				1,351			1,490			2,643			2,770
Interest expense				(4,926	)		(6,788	)		(10,007	)		(14,333	)
Nonrecurring item				—			(29,274	)		—			(29,274	)
Income before income taxes and change in accounting principle			$	45,705		$	19,316		$	89,881		$	53,370

NOTE I – Restructuring Charges and Nonrecurring Item

In the 2001 third quarter, Viad recorded restructuring charges totaling $66.1 million ($39.9 million after-tax) associated with the closure and consolidation of certain facilities, severance and other employee benefits. At June 30, 2002, there was $25.7 million of remaining accrued liabilities, of which $5.9 million and $19.8 million were included in the Consolidated Balance Sheets under the captions “Other current liabilities” and “Other deferred items and insurance liabilities,” respectively.

Payments under long-term lease obligations for closed facilities will continue to be made over the remaining terms of the leases. Approximately 97 percent of the facility closures and consolidation had been completed and approximately 98 percent of the positions had been eliminated as of June 30, 2002. Severance and benefits payments will continue to be made over the varying terms of the individual separation agreements.

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A summary of the change in the accrued liabilities is as follows:

				Facility Closure
	Severance			and Lease
(000 omitted)	and Benefits			Termination			Total
Balance at December 31, 2001	$	7,007		$	27,917		$	34,924
Cash payments		(4,985	)		(4,200	)		(9,185	)
Balance at June 30, 2002	$	2,022		$	23,717		$	25,739

In August 2000, Key3Media Group, Inc. (“Key3Media”), a company spun off by Ziff-Davis Inc., terminated a long-term agreement with GES Exposition Services, Inc. (“GES”) to produce tradeshows. The companies entered into litigation regarding the contract termination, and after reaching an agreement to end the litigation, Viad recorded a second quarter 2001 noncash provision totaling $29.3 million ($18.3 million after-tax). This provision represented primarily the write-off of net receivables and prepayments made to Key3Media.

NOTE J – Recent Accounting Pronouncements

In November 2001, the Emerging Issues Task Force reached a consensus on Issue 01-14, “Income Statement Characterization of Reimbursements Received for ‘Out-of Pocket’ Expenses Incurred” (“EITF 01-14”), which became effective for Viad on January 1, 2002. Under EITF 01-14, reimbursements received for out-of-pocket expenses incurred should be characterized as revenue in the income statement. Upon adoption of EITF 01-14, comparative financial statements for prior periods should be reclassified to comply with the current presentation. The adoption of EITF 01-14 does not have any impact on Viad’s consolidated financial statements.

In April 2002, the FASB issued SFAS No. 145, “Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections.” This Statement rescinds SFAS No. 4, “Reporting Gains and Losses from Extinguishment of Debt,” SFAS No. 44, “Accounting for Intangible Assets of Motor Carriers” and SFAS No. 64, “Extinguishment of Debt Made to Satisfy Sinking Fund Requirements.” This statement amends SFAS No. 13, “Accounting for Leases,” to eliminate an inconsistency between the required accounting for sale-leaseback transactions and the required accounting for certain lease modifications that have economic effects that are similar to sale-leaseback transactions. SFAS No. 145 is generally effective for the Company for fiscal year 2003. Viad does not expect the adoption of SFAS No. 145 to have a significant effect on its results of operations or financial position.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION

RESULTS OF OPERATIONS:

Viad Corp (“Viad”) focuses on two principal service businesses: Payment Services and Convention and Event Services.

There were no material changes in the nature of Viad’s business, nor were there any changes in the general characteristics of its operations as described and discussed in the “Results of Operations” section of Management’s Discussion and Analysis of Results of Operations and Financial Condition presented in the Viad Corp Annual Report on Form 10-K for the year ended December 31, 2001.

Effective January 1, 2002, Viad adopted Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets,” which requires that goodwill and certain other intangible assets no longer be amortized, but instead tested for impairment. The following discussion compares 2002 results with 2001 results as originally reported and also on an as adjusted for SFAS No. 142 basis.

All per share figures discussed are stated on the diluted basis.

COMPARISON OF SECOND QUARTER OF 2002 TO THE SECOND QUARTER OF 2001:

In the second quarter of 2002, revenues decreased 8.1 percent, to $408.5 million from $444.6 million in the 2001 second quarter. Payment Services invests in a mix of tax-exempt and taxable investments. The tax-exempt investments have lower pre-tax yields but produce higher income on an after-tax basis than comparable taxable investments. Fully taxable equivalent information is used by management to measure profit and performance of Viad’s operations. This information is supplemental to results presented under accounting principles generally accepted in the United States of America. Revenues on the fully taxable equivalent basis were $418.5 million in the 2002 second quarter, down 8.5 percent from $457.3 million in the 2001 second quarter. Segment operating income on the same basis (before corporate activities and minority interests) was $66.6 million for the 2002 second quarter compared with $70.8 million for the 2001 second quarter (down 5.9 percent), and operating margins were 15.9 percent in the second quarter of 2002 compared to 15.5 percent in the second quarter of 2001. Segment operating income and the operating margin in the second quarter of 2001 when adjusted for SFAS No. 142 would have been $75.0 million (down in 2002 by 11.2 percent) and 16.4 percent, respectively. See Note H of Notes to Consolidated Financial Statements for segment information.

Net income for the second quarter of 2002 was $32.3 million, or $0.36 per share, compared to $17.4 million, or $0.20 per share, for the second quarter of 2001. Excluding a nonrecurring, noncash provision related to the resolution of the Key3Media litigation (described further in Note I of Notes to Consolidated Financial Statements), second quarter 2001 income was $35.7 million, or $0.41 per share (with a 2002 decrease of 12.2 percent on a per share basis). When adjusted for SFAS No. 142, net income for the second quarter of 2001 would have been $21.0 million ($0.24 per share) or $39.2 million ($0.45 per share) excluding the nonrecurring item.

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	Quarter ended June 30,
(000 omitted, except per share data)	2002		2001
Income before nonrecurring item	$	32,266	$	35,676
Nonrecurring item, net of tax		—		(18,267	)
Net income	$	32,266	$	17,409
Diluted net income per common share:
Income before nonrecurring item	$	0.36	$	0.41
Nonrecurring item		—		(0.21	)
Diluted net income per common share	$	0.36	$	0.20

PAYMENT SERVICES. On the fully taxable equivalent basis, second quarter 2002 revenues of the Payment Services segment were $206.0 million, up 10.1 percent, from 2001 second quarter revenues of $187.0 million. On the same basis, operating income increased to $49.3 million, up 12.8 percent from 2001 second quarter operating income of $43.7 million. Operating margins on the fully taxable equivalent basis improved to 23.9 percent in the second quarter of 2002 compared with 23.4 percent in the 2001 second quarter. When adjusting the second quarter of 2001 for the impact of SFAS No. 142, operating income would have been $45.7 million (with a 2002 increase of 7.8 percent) and the operating margin would have been 24.5 percent. Revenue growth was driven by continuing strong growth in money transfer transactions and average investable balances. MoneyGram continued to show improvement with transaction volume growing over 32 percent, led by strong International and Express Payment transaction volume growth. MoneyGram’s agent base expanded by 25 percent over the 2001 second quarter. Overall, Payment Services average investable balances were up 18.5 percent in the 2002 second quarter compared to the 2001 second quarter. This increase was primarily a result of strong growth in the official check business driven by new customer signings. The money order business continues to contribute significantly to the operating margin, however, money order volume and related average investable balances were down slightly compared to the 2001 second quarter as some agents were eliminated to improve the credit profile of the money order business. Revenue and operating growth were negatively impacted due to the lower interest rate environment. Specifically, revenue and operating growth were impacted by lower yields on overnight cash balances, lower yields on new balances from the official check business and lower yields on reinvested funds which resulted from the prepayment of mortgage-backed securities associated with higher consumer refinancing activities.

CONVENTION AND EVENT SERVICES. Convention and Event Services revenues decreased $55.0 million, or 21.6 percent, to $199.5 million in the second quarter of 2002 from $254.4 million in the second quarter of 2001. Operating income for the segment decreased to $14.4 million, down 38.6 percent, from 2001 second quarter operating income of $23.5 million. Operating margins were 7.2 percent in the second quarter of 2002 versus 9.2 percent in the second quarter of 2001. Second quarter 2001 operating income would have been $25.4 million (with a 2002 decrease of 43.3 percent) and the operating margin would have been 10.0 percent when adjusted for SFAS No. 142. Show shrinkage, a heavier mix of technology shows and a shift in corporate spending from new exhibits to exhibit refurbishments resulted in lower revenue for the quarter. Given the weakness in most business sectors, particularly telecommunications and technology, the segment continues to focus on reducing its cost structure in order to position the segment to take advantage of new opportunities.

TRAVEL AND RECREATION SERVICES. Revenues of the travel and recreation businesses were $13.1 million for the second quarter of 2002, down 17.3 percent, from 2001 second quarter of $15.9 million. Operating income was $2.9 million in the 2002 second quarter, down 19.5 percent, compared to $3.6 million in the 2001 second quarter. Operating margins were 22.1 percent in the second quarter of 2002 compared with 22.7 percent in the prior year second quarter. When adjusted for SFAS No. 142, second quarter 2001 operating income and the operating margin would have been $3.8 million (down in 2002 by 24.1 percent) and 24.1 percent, respectively. These results are primarily due to a decline in tourism to Canada related to the post September 11, 2001 travel concerns and the current economic conditions.

Page 14

CORPORATE ACTIVITIES AND MINORITY INTERESTS. The increase in corporate activities expense in the second quarter of 2002 of $2.4 million as compared to the second quarter of 2001 relates to $2.3 million in legal, investment banking and other costs incurred in connection with a contemplated initial public offering and spin-off of Travelers Express/MoneyGram. Further consideration and implementation of the initial public offering and spin-off has been delayed pending improvement in overall economic and capital market conditions. The increase in minority interests in the second quarter of 2002 of $0.8 million as compared to the second quarter of 2001 relates primarily to strong revenue and transaction volume growth in the Payment Services segment’s 51 percent interest in an international money transfer services joint venture.

NET INTEREST EXPENSE. The decrease in net interest expense from $5.3 million in the 2001 second quarter to $3.6 million in the second quarter of 2002 was primarily related to the decrease in interest expense in the second quarter of 2002 to $4.9 million from $6.8 million in the second quarter of 2001. Lower short-term interest rates and reduced debt resulted in lower interest expense during the 2002 quarter.

INCOME TAXES. Excluding the 2001 nonrecurring item, the effective tax rate in the 2002 second quarter was 29.4 percent compared to 26.6 percent (25.7 percent as adjusted for SFAS No. 142) for the second quarter of 2001. The relatively low effective tax rate compared to the statutory federal rate is primarily attributable to tax-exempt income from Viad’s Payment Services businesses.

COMPARISON OF FIRST SIX MONTHS OF 2002 TO THE FIRST SIX MONTHS OF 2001:

Revenues for the first six months of 2002 decreased $50.6 million, or 5.6 percent, to $853.5 million from $904.1 million in 2001. Revenues on the fully taxable equivalent basis decreased 6.0 percent to $873.8 million from $929.8 million. Segment operating income on the same basis (before corporate activities and minority interests) was $129.4 million for the first six months of 2002, up 0.6 percent, compared with $128.6 million for the prior year, and operating margins were 14.8 percent in 2002 compared to 13.8 percent in 2001. Segment operating income and the operating margin for the six months ended June 30, 2001 when adjusted for SFAS No. 142 would have been $137.0 million (with a 2002 decrease of 5.6 percent) and 14.7 percent, respectively. See Note H of Notes to Consolidated Financial Statements for segment information.

Net income for the first six months of 2002 was $26.9 million, or $0.30 per share, compared to $41.7 million, or $0.48 per share, for the first six months of 2001. Before the change in accounting principle and nonrecurring item previously discussed, income for the first six months of 2002 and 2001 was $64.6 million, or $0.73 per share and $60.0 million, or $0.69 per share, respectively, with a 5.8 percent increase on a per share basis. Net income for the first six months of 2001 when adjusted for SFAS No. 142 would have been $48.8 million ($0.56 per share) or $67.1 million ($0.77 per share) excluding the nonrecurring item.

Page 15

	Six months ended June 30,
(000 omitted, except per share data)	2002			2001
Income before change in accounting principle and nonrecurring item	$	64,610		$	59,978
Change in accounting principle, net of tax		(37,739	)		—
Nonrecurring item, net of tax		—			(18,267	)
Net income	$	26,871		$	41,711
Diluted net income per common share:
Income before change in accounting principle and nonrecurring item	$	0.73		$	0.69
Change in accounting principle		(0.43	)		—
Nonrecurring item		—			(0.21	)
Diluted net income per common share	$	0.30		$	0.48

In June 2002, in accordance with the adoption of SFAS No. 142, Viad completed a transitional impairment test for goodwill. The test was performed as of January 1, 2002 and concluded that a transitional impairment loss of $40.0 million ($37.7 million after-tax) should be recognized related to goodwill at the Exhibitgroup/Giltspur reporting unit of the Convention and Event Services segment. The impairment was retroactively restated to the first quarter of 2002 as a cumulative effect of a change in accounting principle in accordance with SFAS No. 142.

PAYMENT SERVICES. On the fully taxable equivalent basis, revenues of the Payment Services segment for the first six months of 2002 were $403.3 million, up 10.1 percent, from 2001 six month revenues of $366.3 million. On the same basis, operating income increased to $91.3 million, up 16.4 percent from $78.5 million in the 2001 period. Operating margins on the fully taxable equivalent basis were 22.6 percent for the first six months of 2002, compared with 21.4 percent in the first six months of 2001. When adjusting the six month period ended June 30, 2001 for the impact of SFAS No. 142, operating income and the operating margin would have been $82.6 million (with a 2002 increase of 10.6 percent) and 22.5 percent, respectively. Average investable balances were 25.3 percent higher in 2002 compared to the same period in 2001, primarily driven by the strong growth in the official check business reflecting the ramp-up of key new accounts. Transaction volume for MoneyGram grew 33 percent over the prior year, with strong growth in Express Payment and in the international corridors.

CONVENTION AND EVENT SERVICES. Convention and Event Services revenues decreased $89.7 million, or 16.5 percent, to $454.3 million from $544.0 million in the 2001 six month period. Operating income for the segment was $36.7 million, down 24.0 percent, from $48.2 million in the 2001 period (or $52.1 million, down 29.7 percent, when 2001 is adjusted for SFAS No. 142). Operating margins were 8.1 percent compared with 8.9 percent in 2001 (or 9.6 percent when 2001 is adjusted for SFAS No. 142). The segment was impacted by show shrinkage, lower attendance and exhibit refurbishments instead of new builds, somewhat offset by the impact of the restructuring plan implemented last year.

TRAVEL AND RECREATION SERVICES. For the first six months of 2002, revenues of the travel and recreation businesses were $16.3 million, down 16.6 percent, from $19.5 million in the first six months of 2001, while operating income decreased $0.5 million from $1.9 million to $1.4 million for the same period. Operating income for the 2002 period would have been down 38.6 percent from $2.3 million in the six month period ended June 30, 2001, when adjusted for SFAS No. 142. The decrease in revenue and operating income relates primarily to a decrease in package tour volume as a result of a softened economy.

CORPORATE ACTIVITIES AND MINORITY INTERESTS. The increase in corporate activities expense in the first six months of 2002 of $1.7 million as compared to the first six months of 2001 primarily relates to $2.3 million in legal, investment banking and other costs incurred in connection with

Page 16

a contemplated initial public offering and spin-off of Travelers Express/MoneyGram. The increase in minority interests for the first six months of 2002 of $1.5 million as compared to the same period in 2001 relates primarily to strong revenue and transaction volume growth in the Payment Services segment’s 51 percent interest in an international money transfer services joint venture.

NET INTEREST EXPENSE. Net interest expense of $7.4 million for the first six months of 2002 decreased 36.3 percent as compared to $11.6 million for the first six months of 2001. This was driven by a decrease in interest expense to $10.0 million for the first six months of 2002 from $14.3 million for the first six months of 2001. The lower interest expense was a result of steadily decreasing interest rates as well as lower average debt balances.

INCOME TAXES. Excluding the 2002 effect of change in accounting principle and the 2001 nonrecurring item, the effective tax rate for the first six months of 2002 was 28.1 percent as compared to 27.4 percent for the first six months of 2001 (26.3 percent as adjusted for SFAS No. 142). The relatively low effective tax rate compared to the statutory federal rate is primarily attributable to tax-exempt income from Viad’s Payment Services businesses. APB Opinion No. 28 requires that income taxes be provided based on the estimated effective tax rate expected to be applicable for the entire fiscal year. The estimated annual tax rate of 28.1 percent for 2002 is expected to be higher than the annual effective tax rate of 23.6 percent in 2001, or 22.8 percent when adjusted for SFAS No. 142, (excluding the effect of the nonrecurring item) due to lower tax-exempt income in proportion to total pre-tax income, resulting from a shift in the mix of investments in the Payment Services segment from nontaxable to taxable investments.

LIQUIDITY AND CAPITAL RESOURCES:

Viad’s total debt at June 30, 2002 was $387.1 million compared with $396.8 million at December 31, 2001. The debt-to-capital ratio was 0.33 to 1 at June 30, 2002, compared with 0.35 to 1 at December 31, 2001. Capital is defined as total debt plus minority interests, preferred stock, common stock and other equity.

Under a Shelf Registration filed with the Securities and Exchange Commission, Viad can issue up to an aggregate $500 million of debt and equity securities. In the second quarter of 2002, Viad filed an amended Shelf Registration with the Securities and Exchange Commission to update disclosures in the original 1994 registration statement and to maintain Viad’s financial flexibility. No securities have been issued under the program.

Viad began its stock repurchase program in July 1998 for the purpose of replacing common shares issued upon exercise of stock options and in connection with other stock compensation plans, with the intended effect of reducing dilution caused by the issuance of such shares. While this program was on hold for most of 2001 and the first six months of 2002, Viad recently announced its intent to repurchase one to two million shares of its common stock in the last half of 2002. This will replace common stock issued upon exercise of stock options and in connection with other stock compensation plans. Net proceeds from the exercise of stock options totaled $9.0 million during the first six months of 2002.

EBITDA is a measure of Viad’s ability to service debt, fund capital expenditures and finance growth, and should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with accounting principles generally accepted in the United States of America. EBITDA is defined by Viad as net income from continuing operations before interest expense, income taxes, depreciation and amortization, change in accounting principle and nonrecurring item and includes the fully taxable equivalent adjustment. EBITDA for the first six months of 2002 was $145.8 million, down from $157.6 million in the 2001 period.

Page 17

There were no other material changes in Viad’s financial condition nor were there any substantive changes relative to matters discussed in the “Liquidity and Capital Resources” section of Management’s Discussion and Analysis of Results of Operations and Financial Condition as presented in Viad Corp’s Annual Report on Form 10-K for the year ended December 31, 2001.

FORWARD-LOOKING STATEMENTS:

As provided by the safe harbor provision under the “Private Securities Litigation Reform Act of 1995,” Viad cautions readers that, in addition to the historical information contained herein, this Quarterly Report on Form 10-Q includes certain information, assumptions and discussions that may constitute forward-looking statements. These forward-looking statements are not historical facts, but reflect current estimates, projections, or expectations of or current trends in future growth, operating cash flows, availability of short-term borrowings, consumer demand, new business, investment policies, productivity improvements, ongoing cost reduction efforts, efficiency, competitiveness, tax rates, restructure plans (including timing and realization of cost savings) and market risk disclosures. Actual results could differ materially from those projected in forward-looking statements. Viad’s businesses can be affected by a host of risks and uncertainties. Among other things, gains and losses of customers, consumer demand patterns, labor relations, purchasing decisions related to customer demand for convention and event services, existing and new competition, industry alliances and consolidation and growth patterns within the industries in which Viad competes may individually or in combination impact future results. In addition to the factors mentioned elsewhere, economic, competitive, governmental, technological, capital marketplace and other factors could affect the forward-looking statements contained in this filing.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Viad’s market risk exposures relate to fluctuations in interest rates and, to a lesser degree, to fluctuations in foreign exchange rates. Interest rate risk is the risk that changing interest rates will adversely affect the market value and earnings of Viad. Foreign exchange risk is the risk that fluctuating exchange rates will adversely affect earnings. Viad’s exposure to these risks is primarily associated with its Payment Services business. Certain derivative financial instruments are used as part of Viad’s risk management strategy to manage these exposures. Derivatives are not used for speculative purposes.

Stockholders’ equity can be adversely affected by changing interest rates, as after-tax changes in the fair value of securities classified as available for sale and in the fair value of derivative financial instruments are included as a component of stockholders’ equity. The fair value of derivative financial instruments generally increases when the market value of fixed rate, long-term debt investments decline and vice versa. However, an increase or decrease in stockholders’ equity related to changes in the fair value of securities classified as available for sale, may not be offset, in whole or in part, by the decrease or increase in stockholders’ equity related to changes in the fair value of derivative financial instruments.

A portion of Viad’s Payment Services business involves the payment of commissions to selling financial institutions of its official check program as described in Note E. A Viad Payment Services subsidiary has also entered into agreements to sell receivables primarily from its money order agents. The commissions and net proceeds from the agents’ receivables sales are computed based on short-term variable interest rates that subject Viad to risk arising from changes in such rates. Viad has hedged a substantial portion of this risk through swap agreements which convert the variable rate payments to fixed rates.

Viad is also exposed to short-term interest rate risk on certain of its debt obligations. Viad currently does not use derivative financial instruments to hedge cash flows for such obligations.

Page 18

         Earnings Sensitivity to Interest Rate Changes. Based on a hypothetical 10 percent proportionate increase in interest rates from the average level of interest rates during the last twelve months, and taking into consideration expected investment positions, commissions paid to selling financial institutions, growth in new business, the effects of the swap agreements and the expected borrowing level of variable-rate debt, the decrease in pre-tax income would be approximately $0.2 million. A hypothetical 10 percent proportionate decrease in interest rates, based on the same set of assumptions, would result in an increase in pre-tax income of approximately $2.4 million. These amounts are estimated based on a certain set of assumptions about interest rates and portfolio balance growth and do not represent expected results. In addition, refer to Management’s Discussion and Analysis of Results of Operations and Financial Condition for a discussion of Viad’s current period results of operations and the impact of interest rate fluctuations.

         Fair Value Sensitivity to Interest Rate Changes. The fair value of securities classified as available-for-sale, derivative financial instruments and fixed-rate debt is sensitive to changes in interest rates. A 10 percent proportionate increase in interest rates would result in an estimated decrease in the fair value of securities classified as available-for-sale of approximately $84.5 million (along with an after-tax decrease in accumulated other comprehensive income of approximately $51.5 million), an estimated increase in the fair value of Viad’s swap agreements of approximately $43.1 million (along with an after-tax increase in accumulated other comprehensive income of $26.3 million) and an estimated off-balance-sheet decrease in the fair value of Viad’s fixed-rate debt of approximately $1.1 million. A 10 percent proportionate decrease in interest rates would result in an estimated increase in the fair value of securities classified as available-for-sale of approximately $78.1 million (along with an after-tax increase in accumulated other comprehensive income of approximately $47.7 million), an estimated decrease in the fair value of Viad’s swap agreements of approximately $43.1 million (along with an after-tax decrease in accumulated other comprehensive income of $26.3 million) and an estimated off-balance-sheet increase in the fair value of Viad’s fixed-rate debt of approximately $1.1 million. These amounts are estimated based on a certain set of assumptions about interest rates and portfolio balance growth.

         Interest Rate Risk and Market Risk Oversight. Viad has established several levels of risk management oversight and control. An investment committee, comprised of senior officers of Viad and Payment Services, and reporting to the Chief Executive Officer of Viad, routinely reviews investment and risk management strategies and results. Additionally, Viad employs an independent advisor to its investment committee. Viad maintains formal procedures for entering into derivative transactions, and management regularly monitors and reports to the Audit Committee of the Board of Directors on such activity. The agreements are with major financial institutions which are currently expected to fully perform under the terms of the agreements, thereby mitigating the credit risk from the transactions in the event of nonperformance by the counterparties. In addition, Viad regularly monitors the credit ratings of the counterparties, and the likelihood of default is considered remote.

PART II. OTHER INFORMATION

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

(a)	The annual meeting of stockholders of Viad Corp was held May 14, 2002.
(b)	Not applicable-(i) proxies for the meeting were solicited pursuant to Regulation 14 under the Securities Exchange Act of 1934; (ii) there was no solicitation in opposition to management’s nominees as listed in the proxy statement; and (iii) all such nominees were elected.

Page 19

(c) Matters voted upon at the annual meeting for which proxies were solicited pursuant to Regulation 14 under the Securities Exchange Act of 1934:

1.	The election of Directors as follows:
	Judith K. Hofer
	Affirmative Vote	72,255,749
	Withheld Authority	1,811,504
	Jack F. Reichert
	Affirmative Vote	72,235,526
	Withheld Authority	1,831,727
2.	The appointment of Deloitte & Touche LLP to audit the accounts of Viad and its subsidiaries for the fiscal year 2002.
	Affirmative Vote	71,439,414
	Against	2,523,178
	Abstentions	104,661
3.	Approve material terms of the performance goals of the 1997 Viad Corp Omnibus Incentive Plan.
	Affirmative Vote	65,527,517
	Against	7,902,540
	Abstentions	637,196

Item 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)	Exhibit No. 10.A – Copy of Viad Corp Omnibus Incentive Plan as amended through May 14, 2002.
(b)	No reports on Form 8-K were filed by the registrant during the quarter for which this report is filed.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	VIAD CORP (Registrant)
August 1, 2002	By /s/ Ellen M. Ingersoll
	Ellen M. Ingersoll
	Chief Financial Officer
	(Principle Financial Officer
	and Authorized Officer)

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CERTIFICATION

Pursuant to 18 U.S.C. § 1350 (Sarbanes-Oxley Act of 2002, § 906), we hereby certify that this report fully complies with the requirements of section 13(a) or 15(d) of the Securities and Exchange Act of 1934 and that information contained in this report fairly presents, in all material respects, the financial condition and results of operations of Viad Corp.

	VIAD CORP	VIAD CORP
August 1, 2002	By /s/ Robert H. Bohannon	By /s/ Ellen M. Ingersoll
	Robert H. Bohannon	Ellen M. Ingersoll
	Chairman of the Board, President	Chief Financial Officer
	and Chief Executive Officer

Page 22

EXHIBIT INDEX

Exhibit
No.	Description
10.A	Copy of Viad Corp Omnibus Incentive Plan as amended through May 14, 2002.

EX-10.A

                                                                    EXHIBIT 10.A

                     1997 VIAD CORP OMNIBUS INCENTIVE PLAN,
                         AS AMENDED THROUGH MAY 14, 2002

SECTION 1. PURPOSE; DEFINITIONS.

         The purpose of the Plan is to give the Company a significant advantage
in attracting, retaining and motivating officers, employees and directors and to
provide the Company and its subsidiaries with the ability to provide incentives
more directly linked to the profitability of the Company's businesses and
increases in stockholder value. It is the current intent of the Committee that
the Plan shall replace the 1992 Stock Incentive Plan for purposes of new Awards
and that the Viad Corp Management Incentive Plan, the Viad Corp Performance Unit
Incentive Plan, and the Viad Corp Performance-Based Stock Plan continue under
the auspices of Sections 7 and 8 hereof subject to the discretion of the
Committee under the terms and conditions of this Plan.

         For purposes of the Plan, the following terms are defined as set forth
below:

         (a) "AFFILIATE" means a corporation or other entity controlled by the
Company and designated by the Committee as such.

         (b) "AWARD" means an award of Stock Appreciation Rights, Stock Options,
Restricted Stock or Performance-Based Awards.

         (c) "AWARD CYCLE" will mean a period of consecutive fiscal years or
portions thereof designated by the Committee over which Awards of Restricted
Stock or Performance-Based Awards are to be earned.

         (d) "BOARD" means the Board of Directors of the Company.

         (e) "CAUSE" means (1) the conviction of a participant for committing a
felony under federal law or the law of the state in which such action occurred,
(2) dishonesty in the course of fulfilling a participant's employment duties or
(3) willful and deliberate failure on the part of a participant to perform his
employment duties in any material respect, or such other events as will be
determined by the Committee. The Committee will have the sole discretion to
determine whether "Cause" exists, and its determination will be final.

         (f) "CHANGE IN CONTROL" and "CHANGE IN CONTROL PRICE" have the meanings
set forth in Sections 9(b) and (c), respectively.

         (g) "CODE" means the Internal Revenue Code of 1986, as amended from
time to time, and any successor thereto.

                                                                               2

         (h) "COMMISSION" means the Securities and Exchange Commission or any
successor agency.

         (i) "COMMITTEE" means the Committee referred to in Section 2.

         (j) "COMMON STOCK" means common stock, par value $1.50 per share, of
the Company.

         (k) "COMPANY" means Viad Corp, a Delaware corporation.

         (l) "COMPANY UNIT" means any subsidiary, group of subsidiaries, line of
business or division of the Company, as designated by the Committee.

         (m) "DISABILITY" means permanent and total disability as determined
under procedures established by the Committee for purposes of the Plan.

         (n) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor thereto.

         (o) "FAIR MARKET VALUE" means, as of any given date, the mean between
the highest and lowest reported sales prices of the Stock on the New York Stock
Exchange Composite Tape or, if not listed on such exchange, on any other
national exchange on which the Stock is listed or on the Nasdaq Stock Market. If
there is no regular public trading market for such Stock, the Fair Market Value
of the Stock will be determined by the Committee in good faith. In connection
with the administration of specific sections of the Plan, and in connection with
the grant of particular Awards, the Committee may adopt alternative definitions
of "Fair Market Value" as appropriate.

         (p) "INCENTIVE STOCK OPTION" means any Stock Option intended to be and
designated as an "incentive stock option" within the meaning of Section 422 of
the Code.

         (q) "MIP" means the Company's Management Incentive Plan providing
annual cash bonus awards to participating employees based upon predetermined
goals and objectives.

         (r) "NET INCOME" means the consolidated net income of the Company
determined in accordance with GAAP before extraordinary, unusual and other
non-recurring items.

         (s) "NON-EMPLOYEE DIRECTOR" means a member of the Board who qualifies
as a "Non-Employee Director" as defined in Rule 16b-3(b)(3), as promulgated by
the Commission under the Exchange Act, or any successor definition adopted by
the Commission.

                                                                               3

         (t) "NON-QUALIFIED STOCK OPTION" means any Stock Option that is not an
Incentive Stock Option.

         (u) "PERFORMANCE GOALS" means the performance goals established by the
Committee in connection with the grant of Restricted Stock or Performance-Based
Awards. In the case of Qualified Performance-Based Awards, such goals (1) will
be based on the attainment of specified levels of one or more of the following
measures with respect to the Company or any Company Unit, as applicable:
economic value added, sales or revenues, costs or expenses, net profit after
tax, gross profit, operating profit, base earnings, return on actual or pro
forma equity or net assets or capital, net capital employed, earnings per share,
earnings per share from continuing operations, operating income, pre-tax income,
operating income margin, net income, stockholder return including performance
(total stockholder return) relative to the S&P 500, MidCap 400 or similar index
or performance (total stockholder return) relative to the proxy comparator
group, in both cases as determined pursuant to Rule 402(l) of Regulation S-K
promulgated under the Exchange Act, cash generation, cash flow, unit volume and
change in working capital and (2) will be set by the Committee within the time
period prescribed by Section 162(m) of the Code and related regulations.

         (v) "PERFORMANCE-BASED AWARD" means an Award made pursuant to Section
8.

         (w) "PERFORMANCE-BASED RESTRICTED STOCK AWARD" has the meaning set
forth in Section 7(c)(1) hereof.

         (x) "PLAN" means the 1997 Viad Corp Omnibus Incentive Plan, As Amended,
as set forth herein and as hereafter amended from time to time.

         (y) "PREFERRED STOCK" means preferred stock, par value $0.01, of the
Company.

         (z) "QUALIFIED PERFORMANCE-BASED AWARDS" means an Award of Restricted
Stock or a Performance-Based Award designated as such by the Committee at the
time of grant, based upon a determination that (1) the recipient is or may be a
"covered employee" within the meaning of Section 162(m)(3) of the Code in the
year in which the Company would expect to be able to claim a tax deduction with
respect to such Restricted Stock or Performance-Based Award and (2) the
Committee wishes such Award to qualify for the exemption from the limitation on
deductibility imposed by Section 162(m) of the Code that is set forth in Section
162(m)(4)(C).

         (aa) "RESTRICTED STOCK" means an award granted under Section 7.

                                                                               4

         (bb) "RETIREMENT," except as otherwise determined by the Committee,
means voluntary separation of employment, voluntary termination of employment or
voluntary resignation from employment (a) at or after attaining age 55 on
pension or vested to receive pension under a pension plan of the Corporation
upon election, or (b) upon or after attaining age 55 and not less than five
years' continuous service with the Corporation or an affiliate of the
Corporation, whether or not vested for pension. Retirement shall be deemed to
occur at the close of business on the last day of the employee's participation
on the payroll of the Corporation whether receiving compensation for active
employment, accrued vacation, salary continuation (regular way or lump sum) or
like employment programs.

         (cc) "RULE 16b-3" means Rule 16b-3, as promulgated by the Commission
under Section 16(b) of the Exchange Act, as amended from time to time.

         (dd) "STOCK" means the Common Stock or Preferred Stock.

         (ee) "STOCK APPRECIATION RIGHT" means a right granted under Section 6.

         (ff) "STOCK OPTION" means an option granted under Section 5.

         (gg) "TERMINATION OF EMPLOYMENT" means the termination of the
participant's employment with the Company and any subsidiary or Affiliate. A
participant employed by a subsidiary or an Affiliate will also be deemed to
incur a Termination of Employment if the subsidiary or Affiliate ceases to be
such a subsidiary or Affiliate, as the case may be, and the participant does not
immediately thereafter become an employee of the Company or another subsidiary
or Affiliate. Transfers among the Company and its subsidiaries and Affiliates,
as well as temporary absences from employment because of illness, vacation or
leave of absence, will not be considered a Termination of Employment.

         In addition, certain other terms used herein have definitions given to
them in the first place in which they are used.

SECTION 2. ADMINISTRATION.

         The Plan will be administered by the Human Resources Committee of the
Board pursuant to authority delegated by the Board in accordance with the
Company's By-Laws. If at any time there is no such Human Resources Committee or
such Human Resources Committee shall fail to be composed of at least two
directors each of whom is a Non-Employee Director and is an "outside director"
under Section 162(m)(4) of the Code, the Plan will be administered by a
Committee selected by the Board and composed of not less than two individuals,
each of whom is such a Non-Employee Director and such an "outside director."

                                                                               5

         The Committee will have plenary authority to grant Awards pursuant to
the terms of the Plan to officers, employees and directors of the Company and
its subsidiaries and Affiliates, but the Committee may not grant MIP Awards
larger than the limits provided in Section 3.

         Among other things, the Committee will have the authority, subject to
the terms of the Plan:

         (a) to select the officers, employees and directors to whom Awards may
from time to time be granted;

         (b) to determine whether and to what extent Incentive Stock Options,
Non-Qualified Stock Options, Stock Appreciation Rights, Restricted Stock and
Performance-Based Awards or any combination thereof are to be granted hereunder;

         (c) to determine the number of shares of Stock or the amount of cash to
be covered by each Award granted hereunder;

         (d) to determine the terms and conditions of any Award granted
hereunder (including, but not limited to, the option price (subject to Section
5(a)), any vesting condition, restriction or limitation (which may be related to
the performance of the participant, the Company or any subsidiary, Affiliate or
Company Unit) and any rule concerning vesting acceleration or waiver of
forfeiture regarding any Award and any shares of Stock relating thereto, based
on such factors as the Committee will determine) provided, however, that the
Committee will have no power to accelerate the vesting, or waive the forfeiture,
regarding any Award and any shares of Stock relating thereto, except in
connection with a "change of control" of the Company, the sale of a subsidiary
or majority-owned affiliate of the Company (and then only with respect to
participants employed by each such subsidiary or affiliate), the death or
disability of a participant or termination of employment of a participant, and,
further provided, however, that the Committee will have no power to accelerate
the vesting, or waive the forfeiture, of any Qualified Performance-Based Awards;

         (e) to modify, amend or adjust the terms and conditions, at any time or
from time to time, of any Award, including but not limited to Performance Goals;
provided, however, that the Committee may not adjust upwards the amount payable
with respect to any Qualified Performance-Based Award or waive or alter the
Performance Goals associated therewith and provided, further, however, that the
Committee may not reprice Stock Options except for an amount of Stock Options
representing not more than 10% of then outstanding Stock Options;

         (f) to determine to what extent and under what circumstances Stock and
other amounts payable with respect to an Award will be deferred; and

                                                                               6

         (g) to determine under what circumstances a Stock Option may be settled
in cash or Stock under Section 5(j).

         The Committee will have the authority to adopt, alter or repeal such
administrative rules, guidelines and practices governing the Plan as it from
time to time deems advisable, to interpret the terms and provisions of the Plan
and any Award issued under the Plan (and any agreement relating thereto) and to
otherwise supervise the administration of the Plan.

         The Committee may act only by a majority of its members then in office,
except that the members thereof may (1) delegate to designated officers or
employees of the Company such of its powers and authorities under the Plan as it
deems appropriate (provided that no such delegation may be made that would cause
Awards or other transactions under the Plan to fail to be exempt from Section
16(b) of the Exchange Act or that would cause Qualified Performance-Based Awards
to cease to so qualify) and (2) authorize any one or more members or any
designated officer or employee of the Company to execute and deliver documents
on behalf of the Committee.

         Any determination made by the Committee or pursuant to delegated
authority pursuant to the provisions of the Plan with respect to any Award will
be made in the sole discretion of the Committee or such delegates at the time of
the grant of the Award or, unless in contravention of any express term of the
Plan, at any time thereafter. All decisions made by the Committee or any
appropriately delegated officer(s) or employee(s) pursuant to the provision of
the Plan will be final and binding on all persons, including the Company and
Plan participants.

         Notwithstanding anything to the contrary in the Plan, the Committee
will have the authority to modify, amend or adjust the terms and conditions of
any Award as appropriate in the event of or in connection with any
reorganization, recapitalization, stock split, stock dividend, combination or
exchange of shares, merger, consolidation or any change in the capital structure
of the Company.

SECTION 3. STOCK SUBJECT TO PLAN AND LIMITS ON AWARDS.

         (a) Subject to adjustment as provided herein, the number of shares of
Common Stock of the Company available for grant under the Plan in each calendar
year (including partial calendar years) during which the Plan is in effect shall
be equal to two percent (2.0%) of the total number of shares of Common Stock of
the Company outstanding as of the first day of each such year for which the Plan
is in effect; provided that any shares available for grant in a particular
calendar year (or partial calendar year) which are not, in fact, granted in such
year shall be added to the shares available for grant in any subsequent calendar
year.

                                                                               7

         (b) Subject to adjustment as provided herein, the number of shares of
Stock covered by Awards granted to any one participant will not exceed 500,000
shares for any consecutive twelve-month period and the aggregate dollar amount
for Awards denominated solely in cash will not exceed $5.0 million for any such
period.

         (c) In addition, and subject to adjustment as provided herein, no more
than 7.5 million shares of Common Stock will be cumulatively available for the
grant of Incentive Stock Options over the life of the Plan.

         (d) Shares subject to an option or award under the Plan may be
authorized and unissued shares or may be "treasury shares." In the event of any
merger, reorganization, consolidation, recapitalization, spin-off, stock
dividend, stock split, extraordinary distribution with respect to the Stock or
other change in corporate structure affecting the Stock, such substitution or
adjustments will be made in the aggregate number and kind of shares reserved for
issuance under the Plan, in the aggregate limit on grants to individuals, in the
number, kind, and option price of shares subject to outstanding Stock Options
and Stock Appreciation Rights, in the number and kind of shares subject to other
outstanding Awards granted under the Plan and/or such other equitable
substitutions or adjustments as may be determined to be appropriate by the
Committee or the Board, in its sole discretion; provided, however, that the
number of shares subject to any Award will always be a whole number.

         (e) Awards under the MIP may not exceed in the case of (i) the
Company's Chief Executive Officer, one and one-half percent (1.5%) of net income
as defined; (ii) a president of any of the Company's operating companies,
whether or not incorporated, six-tenths of one percent (0.6%) of net income as
defined; and (iii) all other executive officers of the Company individually,
one-half of one percent (0.5%) of net income as defined.

SECTION 4. ELIGIBILITY.

         Officers, employees and directors of the Company, its subsidiaries and
Affiliates who are responsible for or contribute to the management, growth and
profitability of the business of the Company, its subsidiaries and Affiliates
are eligible to be granted Awards under the Plan.

SECTION 5. STOCK OPTIONS.

         Stock Options may be granted alone or in addition to other Awards
granted under the Plan and may be of two types: Incentive Stock Options and
Non-Qualified Stock Options. Any Stock Option granted under the Plan will be in
such form as the Committee may from time to time approve.

                                                                               8

         The Committee will have the authority to grant any optionee Incentive
Stock Options, Non-Qualified Stock Options or both types of Stock Options (in
each case with or without Stock Appreciation Rights). Incentive Stock Options
may be granted only to employees of the Company and its subsidiaries (within the
meaning of Section 424(f) of the Code). To the extent that any Stock Option is
not designated as an Incentive Stock Option or even if so designated does not
qualify as an Incentive Stock Option, it will be deemed to be a Non-Qualified
Stock Option.

         Stock Options will be evidenced by option agreements, the terms and
provisions of which may differ. An option agreement will indicate on its face
whether it is an agreement for an Incentive Stock Option or a Non-Qualified
Stock Option. The grant of a Stock Option will occur on the date the Committee
by resolution selects an individual to be a participant in any grant of a Stock
Option, determines the number of shares of Stock to be subject to such Stock
Option to be granted to such individual and specifies the terms and provisions
of the Stock Option. The Company will notify a participant of any grant of a
Stock Option, and a written option agreement or agreements will be duly executed
and delivered by the Company to the participant.

         Anything in the Plan to the contrary notwithstanding, no term of the
Plan relating to Incentive Stock Options will be interpreted, amended or altered
nor will any discretion or authority granted under the Plan be exercised so as
to disqualify the Plan under Section 422 of the Code or, without the consent of
the optionee affected, to disqualify any Incentive Stock Option under such
Section 422.

         Stock Options granted under the Plan will be subject to the following
terms and conditions and will contain such additional terms and conditions as
the Committee will deem desirable:

         (a) OPTION PRICE. The option price per share of Stock purchasable under
a Stock Option will be determined by the Committee and set forth in the option
agreement, and will not be less than the Fair Market Value of the Stock subject
to the Stock Option on the date of grant.

         (b) OPTION TERM. The term of each Stock Option will be fixed by the
Committee, but no Incentive Stock Option may be exercisable more than 10 years
after the date the Incentive Stock Option is granted.

                                                                               9

         (c) EXERCISABILITY. Except as otherwise provided herein, Stock Options
will be exercisable at such time or times and subject to such terms and
conditions as will be determined by the Committee. If the Committee provides
that any Stock Option is exercisable only in installments, the Committee may,
subject to the provisions of Section 2(d) hereof, at any time waive such
installment exercise provisions, in whole or in part, based on such factors as
the Committee may determine. In addition, the Committee may, subject to the
provisions of Section 2(d) hereof, at any time accelerate the exercisability of
any Stock Option.

         (d) METHOD OF EXERCISE. Subject to the provisions of this Section 5,
Stock Options may be exercised, in whole or in part, at any time during the
option term by giving written notice of exercise to the Company specifying the
number of shares of Stock subject to the Stock Option to be purchased.

         Such notice must be accompanied by payment in full of the purchase
price by certified or bank check or such other instrument as the Company may
accept. An option agreement may provide that, if approved by the Committee,
payment in full or in part or payment of tax liability, if any, relating to such
exercise may also be made in the form of unrestricted Stock already owned by the
optionee of the same class as the Stock subject to the Stock Option and, in the
case of the exercise of a Non-Qualified Stock Option, Restricted Stock subject
to an Award hereunder which is of the same class as the Stock subject to the
Stock Option (in both cases based on the Fair Market Value of the Stock on the
date the Stock Option is exercised); provided, however, that, in the case of an
Incentive Stock Option, the right to make a payment in the form of already owned
shares of Stock of the same class as the Stock subject to the Stock Option may
be authorized only at the time the Stock Option is granted. In addition, an
option agreement may provide that, in the discretion of the Committee, payment
for any shares subject to a Stock Option or tax liability associated therewith
may also be made by instruction to the Committee to withhold a number of such
shares having a Fair Market Value on the date of exercise equal to the aggregate
exercise price of such Stock Option.

         If payment of the option exercise price of a Non-Qualified Stock Option
is made in whole or in part in the form of Restricted Stock, the number of
shares of Stock to be received upon such exercise equal to the number of shares
of Restricted Stock used for payment of the option exercise price will be
subject to the same forfeiture restrictions to which such Restricted Stock was
subject, unless otherwise determined by the Committee.

                                                                              10

         No shares of Stock will be issued until full payment therefor has been
made. Subject to any forfeiture restrictions that may apply if a Stock Option is
exercised using Restricted Stock, an optionee will have all of the rights of a
stockholder of the Company holding the class or series of Stock that is subject
to such Stock Option (including, if applicable, the right to vote the shares and
the right to receive dividends), when the optionee has given written notice of
exercise, has paid in full for such shares and, if requested, has given the
representation described in Section 12(a).

         (e) NONTRANSFERABILITY OF STOCK OPTIONS. (1) No Stock Option will be
transferable by the optionee other than (A) by will or by the laws of descent
and distribution or (B) in the case of a Non-Qualified Stock Option, pursuant to
a qualified domestic relations order (as defined in the Code or Title I of the
Employee Retirement Income Security Act of 1974, as amended, or the rules
thereunder). All Stock Options will be exercisable, during the optionee's
lifetime, only by the optionee or by the guardian or legal representative of the
optionee, it being understood that the terms "holder" and "optionee" include the
guardian and legal representative of the optionee named in the option agreement
and any person to whom a Stock Option is transferred by will or the laws of
descent and distribution or pursuant to a qualified domestic relations order.

                  (2) Notwithstanding Section 5(e)(1) above, the Committee may
grant Stock Options that are transferable, or amend outstanding Stock Options to
make them transferable, by the optionee (any such Stock Option so granted or
amended a "Transferable Option") to one or more members of the optionee's
immediate family, to partnerships of which the only partners are members of the
optionee's immediate family, or to trusts established by the optionee for the
benefit of one or more members of the optionee's immediate family. For this
purpose the term "immediate family" means the optionee's spouse, children or
grandchildren. Consideration may not be paid for the transfer of a Transferable
Option. A transferee described in this Section 5(e)(2) shall be subject to all
terms and conditions applicable to the Transferable Option prior to its
transfer. The option agreement with respect to a Transferable Option shall set
forth its transfer restrictions, such option agreement shall be approved by the
Committee, and only Stock Options granted pursuant to a stock option agreement
expressly permitting transfer pursuant to this Section 5(e)(2) shall be so
transferable.

         (f) TERMINATION BY DEATH. If an optionee's employment terminates by
reason of death, any Stock Option held by such optionee may thereafter be
exercised, to the extent then exercisable, or on such accelerated basis as the
Committee may determine, for a period of one year (or such other period as the
Committee may specify in the option agreement) from the date of such death or
until the expiration of the stated term of such Stock Option, whichever period
is the shorter.

                                                                              11

         (g) TERMINATION BY REASON OF DISABILITY. If an optionee's employment
terminates by reason of Disability, any Stock Option held by such optionee may
thereafter be exercised by the optionee, to the extent it was exercisable at the
time of termination, or on such accelerated basis as the Committee may
determine, for a period of three years (or such shorter period as the Committee
may specify in the option agreement) from the date of such termination of
employment or until the expiration of the stated term of such Stock Option,
whichever period is the shorter; provided, however, that if the optionee dies
within such three-year period (or such shorter period), any unexercised Stock
Option held by such optionee will, notwithstanding the expiration of such
three-year (or such shorter) period, continue to be exercisable to the extent to
which it was exercisable at the time of death for a period of 12 months from the
date of such death or until the expiration of the stated term of such Stock
Option, whichever period is the shorter. In the event of termination of
employment by reason of Disability, if an Incentive Stock Option is exercised
after the expiration of the exercise periods that apply for purposes of Section
422 of the Code, such Stock Option will thereafter be treated as a Non-Qualified
Stock Option.

         (h) TERMINATION BY REASON OF RETIREMENT. If an optionee's employment
terminates by reason of Retirement, any Stock Option held by such optionee may
thereafter be exercised by the optionee, to the extent it was exercisable at the
time of termination, or on such accelerated basis as the Committee may
determine, for a period of five years (or such shorter period as the Committee
may specify in the option agreement) from the date of such termination of
employment or until the expiration of the stated term of such Stock Option,
whichever period is the shorter; provided, however, that if the optionee dies
within such five-year period (or such shorter period), any unexercised Stock
Option held by such optionee will, notwithstanding such five-year (or such
shorter) period, continue to be exercisable to the extent to which it was
exercisable at the time of death for a period of 12 months from the date of such
death or until the expiration of the stated term of such Stock Option, whichever
period is the shorter. In the event of termination of employment by reason of
Retirement, if an Incentive Stock Option is exercised after the expiration of
the exercise periods that apply for purposes of Section 422 of the Code, such
Stock Option will thereafter be treated as a Non-Qualified Stock Option.

         (i) OTHER TERMINATION. Unless otherwise determined by the Committee, if
an optionee incurs a Termination of Employment for any reason other than death,
Disability or Retirement or Cause, any Stock Option held by such optionee will
thereupon terminate, except that such Stock Option, to the extent then
exercisable, or subject to the provisions of Section 2(d) hereof, on such
accelerated basis as the Committee may determine, may be exercised for the
lesser of three months from the date of such Termination of Employment or the
balance of such Stock Option's term; provided, however, that if the optionee
dies within such three-month period, any unexercised Stock Option held by such
optionee will, notwithstanding the expiration of such three-month period,
continue to be exercisable to the extent to which it was exercisable at the

                                                                              12

time of death for a period of 12 months from the date of such death or until the
expiration of the stated term of such Stock Option, whichever period is the
shorter. In the event of Termination of Employment, if an Incentive Stock Option
is exercised after the expiration of the exercise periods that apply for
purposes of Section 422 of the Code, such Stock Option will thereafter be
treated as a Non-Qualified Stock Option.

         (j) CASHING OUT OF STOCK OPTION. On receipt of written notice of
exercise, the Committee may elect to cash out all or part of the shares of Stock
for which a Stock Option is being exercised by paying the optionee an amount, in
cash or Stock, equal to the excess of the Fair Market Value of the Stock over
the option price times the number of shares of Stock for which the Option is
being exercised on the effective date of such cash-out.

         (k) CHANGE IN CONTROL CASH-OUT. Subject to Section 12(h), but
notwithstanding any other provision of the Plan, during the 60-day period from
and after a Change in Control (the "Exercise Period"), unless the Committee
determines otherwise at the time of grant, an optionee will have the right,
whether or not the Stock Option is fully exercisable and in lieu of the payment
of the exercise price for the shares of Stock being purchased under the Stock
Option and by giving notice to the Company, to elect (within the Exercise
Period) to surrender all or part of the Stock Option to the Company and to
receive cash, within 30 days of such notice, in an amount equal to the amount by
which the Change in Control Price per share of Stock on the date of such
election will exceed the exercise price per share of Stock under the Stock
Option (the "Spread") multiplied by the number of shares of Stock granted under
the Stock Option as to which the right granted under this Section 5(k) will have
been exercised.

SECTION 6. STOCK APPRECIATION RIGHTS.

         (a) GRANT AND EXERCISE. Stock Appreciation Rights may be granted in
conjunction with all or part of any Stock Option granted under the Plan. In the
case of a Non-Qualified Stock Option, such rights may be granted either at or
after the time of grant of such Stock Option. In the case of an Incentive Stock
Option, such rights may be granted only at the time of grant of such Stock
Option. A Stock Appreciation Right will terminate and no longer be exercisable
upon the termination or exercise of the related Stock Option.

         A Stock Appreciation Right may be exercised by an optionee in
accordance with Section 6(b) by surrendering the applicable portion of the
related Stock Option in accordance with procedures established by the Committee.
Upon such exercise and surrender, the optionee will be entitled to receive an
amount determined in the manner prescribed in Section 6(b). Stock Options which
have been so surrendered will no longer be exercisable to the extent the related
Stock Appreciation Rights have been exercised.

                                                                              13

         (b) TERMS AND CONDITIONS. Stock Appreciation Rights will be subject to
such terms and conditions as will be determined by the Committee, including the
following:

                  (1) Stock Appreciation Rights will be exercisable only at such
         time or times and to the extent that the Stock Options to which they
         relate are exercisable in accordance with the provisions of Section 5
         and this Section 6;

                  (2) Upon the exercise of a Stock Appreciation Right, an
         optionee will be entitled to receive an amount in cash, shares of Stock
         or both equal in value to the excess of the Fair Market Value of one
         share of Stock as of the date of exercise over the option price per
         share specified in the related Stock Option multiplied by the number of
         shares in respect of which the Stock Appreciation Right has been
         exercised, with the Committee having the right to determine the form of
         payment;

                  (3) Stock Appreciation Rights will be transferable only to
         permitted transferees of the underlying Stock Option in accordance with
         Section 5(e).

SECTION 7. RESTRICTED STOCK.

         (a) ADMINISTRATION. Shares of Restricted Stock may be awarded either
alone or in addition to other Awards granted under the Plan. The Committee will
determine the individuals to whom and the time or times at which grants of
Restricted Stock will be awarded, the number of shares to be awarded to any
participant, the conditions for vesting, the time or times within which such
Awards may be subject to forfeiture and any other terms and conditions of the
Awards, in addition to those contained in Section 7(c).

         (b) AWARDS AND CERTIFICATES. Shares of Restricted Stock will be
evidenced in such manner as the Committee may deem appropriate, including
book-entry registration or issuance of one or more stock certificates. Except as
otherwise set forth in a Restricted Stock Agreement, any certificate issued in
respect of shares of Restricted Stock will be registered in the name of such
participant and will bear an appropriate legend referring to the terms,
conditions, and restrictions applicable to such Award, substantially in the
following form:

         "The transferability of this certificate and the shares of stock
         represented hereby are subject to the terms and conditions (including
         forfeiture) of the 1997 Incentive Plan and a Restricted Stock
         Agreement. Copies of such Plan and Agreement are on file at the offices
         of Viad Corp, Viad Tower, Phoenix, Arizona."

                                                                              14

The Committee may require that the certificates evidencing such shares be held
in custody by the Company until the restrictions thereon have lapsed and that,
as a condition of any Award of Restricted Stock, the participant has delivered a
stock power, endorsed in blank, relating to the Stock covered by such Award.

         (c) TERMS AND CONDITIONS. Shares of Restricted Stock will be subject to
the following terms and conditions:

                  (1) The Committee may, prior to or at the time of grant,
         designate an Award of Restricted Stock as a Qualified Performance-Based
         Award, in which event it will condition the grant or vesting, as
         applicable, of such Restricted Stock upon the attainment of Performance
         Goals. If the Committee does not designate an Award of Restricted Stock
         as a Qualified Performance-Based Award, it may also condition the grant
         or vesting thereof upon the attainment of Performance Goals or such
         other performance-based criteria as the Committee shall establish (such
         an Award, a "Performance-Based Restricted Stock Award"). Regardless of
         whether an Award of Restricted Stock is a Qualified Performance-Based
         Award or a Performance-Based Restricted Stock Award, the Committee may
         also condition the grant or vesting upon the continued service of the
         participant. The provisions of Restricted Stock Awards (including the
         conditions for grant or vesting and any applicable Performance Goals)
         need not be the same with respect to each recipient. The Committee may
         at any time, in its sole discretion, subject to the provisions of
         Section 7(c)(10), accelerate or waive, in whole or in part, any of the
         foregoing restrictions; provided, however, that in the case of
         Restricted Stock that is a Qualified Performance-Based Award, the
         applicable Performance Goals have been satisfied.

                  (2) Subject to the provisions of the Plan and the Restricted
         Stock Agreement referred to in Section 7(c)(8), during the period set
         by the Committee, commencing with the date of such Award for which such
         participant's continued service is required (the "Restriction Period")
         and until the later of (A) the expiration of the Restriction Period and
         (B) the date the applicable Performance Goals (if any) are satisfied,
         the participant will not be permitted to sell, assign, transfer, pledge
         or otherwise encumber shares of Restricted Stock.

                  (3) Except as provided in this paragraph (3) and Sections
         7(c)(1) and (2) and the Restricted Stock Agreement, the participant
         will have, with respect to the shares of Restricted Stock, all of the
         rights of a stockholder of the Company holding the class or series of
         Stock that is the subject of the Restricted Stock, including, if
         applicable, the right to vote the shares and the right to receive any
         dividends. If so determined by the Committee in the applicable
         Restricted Stock Agreement and subject to Section 12(f) of the Plan,
         (A) dividends consisting of cash, stock or other property (other than
         Stock) on the class or series of Stock

                                                                              15

         that is the subject of the Restricted Stock shall be automatically
         deferred and reinvested in additional Restricted Stock (in the case of
         stock or other property, based on the fair market value thereof, and
         the Fair Market Value of the Stock, in each case as of the record date
         for the dividend) held subject to the vesting of the underlying
         Restricted Stock, or held subject to meeting any Performance Goals
         applicable to the underlying Restricted Stock, and (B) dividends
         payable in Stock shall be paid in the form of Restricted Stock of the
         same class as the Stock with which such dividend was paid and shall be
         held subject to the vesting of the underlying Restricted Stock, or held
         subject to meeting any Performance Goals applicable to the underlying
         Restricted Stock.

                  (4) Except to the extent otherwise provided in the applicable
         Restricted Stock Agreement, Section 7(c)(1), 7(c)(2), 7(c)(5) or
         9(a)(2), upon a participant's Termination of Employment for any reason
         during the Restriction Period or before any applicable Performance
         Goals are met, all shares still subject to restriction will be
         forfeited by the participant.

                  (5) Except to the extent otherwise provided in Section 9(a)(2)
         and Sections 7(c)(9) and (10), in the event that a participant retires
         or such participant's employment is involuntarily terminated (other
         than for Cause), the Committee will have the discretion to waive in
         whole or in part any or all remaining restrictions (other than, in the
         case of Restricted Stock which is a Qualified Performance-Based Award,
         satisfaction of the applicable Performance Goals unless the
         participant's employment is terminated by reason of death or
         Disability) with respect to any or all of such participant's shares of
         Restricted Stock.

                  (6) Except as otherwise provided herein or as required by law,
         if and when any applicable Performance Goals are satisfied and the
         Restriction Period expires without a prior forfeiture of the Restricted
         Stock, unlegended certificates for such shares will be delivered to the
         participant upon surrender of legended certificates.

                  (7) Awards of Restricted Stock, the vesting of which is not
         conditioned upon the attainment of Performance Goals or other
         performance-based criteria, is limited to twenty percent (20%) of the
         number of shares of Common Stock of the Corporation available for grant
         under the Plan in each calendar year.

                  (8) Each Award will be confirmed by, and be subject to the
         terms of, a Restricted Stock Agreement.

                  (9) Performance-Based Restricted Stock will be subject to a
         minimum one-year performance period and Restricted Stock which is not
         performance-based will be subject to a minimum three-year vesting
         period.

                                                                              16

                  (10) There will be no vesting acceleration, or waiver of
         forfeiture regarding any Award and any shares of Stock relating
         thereto, except in connection with a "change of control" of the
         Company, the sale of a subsidiary or majority-owned affiliate of the
         Company (and then only with respect to participants employed by each
         subsidiary or affiliate), the death or disability of a participant, or
         termination of employment of a participant.

SECTION 8. PERFORMANCE-BASED AWARDS.

(a) ADMINISTRATION. Performance-Based Awards may be awarded either alone or in
addition to other Awards granted under the Plan. Subject to the terms and
conditions of the Plan, the Committee shall determine the officers and employees
to whom and the time or times at which Performance-Based Awards will be awarded,
the number or amount of Performance-Based Awards to be awarded to any
participant, whether such Performance-Based Award shall be denominated in a
number of shares of Stock, an amount of cash, or some combination thereof, the
duration of the Award Cycle and any other terms and conditions of the Award, in
addition to those contained in Section 8(b).

(b) TERMS AND CONDITIONS. Performance-Based Awards will be subject to the
following terms and conditions:

                  (1) The Committee may, prior to or at the time of the grant,
         designate Performance-Based Awards as Qualified Performance-Based
         Awards, in which event it will condition the settlement thereof upon
         the attainment of Performance Goals. If the Committee does not
         designate Performance-Based Awards as Qualified Performance-Based
         Awards, it may also condition the settlement thereof upon the
         attainment of Performance Goals or such other performance-based
         criteria as the Committee shall establish. Regardless of whether
         Performance-Based Awards are Qualified Performance-Based Awards, the
         Committee may also condition the settlement thereof upon the continued
         service of the participant. The provisions of such Performance-Based
         Awards (including without limitation any applicable Performance Goals)
         need not be the same with respect to each recipient. Subject to the
         provisions of the Plan and the Performance-Based Award Agreement
         referred to in Section 8(b)(5), Performance-Based Awards may not be
         sold, assigned, transferred, pledged or otherwise encumbered during the
         Award Cycle.

                                                                              17

                  (2) Unless otherwise provided by the Committee (A) from time
         to time pursuant to the administration of particular Award programs
         under this Section 8, such as the Viad Corp Management Incentive Plan,
         the Viad Corp Performance Unit Incentive Plan or the Viad Corp
         Performance-Based Stock Plan or (B) in any agreement relating to an
         Award, and except as provided in Section 8(b)(3), upon a participant's
         Termination of Employment for any reason prior to the payment of an
         Award under this Section 8, all rights to receive cash or Stock in
         settlement of the Award shall be forfeited by the participant.

                  (3) In the event that a participant's employment is terminated
         (other than for Cause), or in the event a participant retires, the
         Committee shall have the discretion to waive, in whole or in part, any
         or all remaining payment limitations (other than, in the case of Awards
         that are Qualified Performance-Based Awards, satisfaction of the
         applicable Performance Goals unless the participant's employment is
         terminated by reason of death or Disability) with respect to any or all
         of such participant's Awards.

                  (4) At the expiration of the Award Cycle, the Committee will
         evaluate the Company's performance in light of any Performance Goals
         for such Award, and will determine the extent to which a
         Performance-Based Award granted to the participant has been earned, and
         the Committee will then cause to be delivered to the participant, as
         specified in the grant of such Award: (A) a number of shares of Stock
         equal to the number of shares determined by the Committee to have been
         earned or (B) cash equal to the amount determined by the Committee to
         have been earned or (C) a combination of shares of Stock and cash if so
         specified in the Award.

                  (5) No Performance-Based Award may be assigned, transferred,
         or otherwise encumbered except, in the event of the death of a
         participant, by will or the laws of descent and distribution.

                  (6) Each Award will be confirmed by, and be subject to, the
         terms of a Performance-Based Award Agreement.

                  (7) Performance-Based Awards will be subject to a minimum
         one-year performance period.

SECTION 9. CHANGE IN CONTROL PROVISIONS.

         (a) IMPACT OF EVENT. Notwithstanding any other provision of the Plan to
the contrary, in the event of a Change in Control:

                                                                              18

                  (1) Any Stock Options and Stock Appreciation Rights
         outstanding as of the date such Change in Control is determined to have
         occurred and not then exercisable and vested will become fully
         exercisable and vested to the full extent of the original grant;

                  (2) The restrictions and conditions to vesting applicable to
         any Restricted Stock will lapse, and such Restricted Stock will become
         free of all restrictions and become fully vested and transferable to
         the full extent of the original grant;

                  (3) Performance-Based Awards will be considered to be earned
         and payable to the extent, if any, and in an amount, if any, and
         otherwise, in accordance with the provisions of the agreement relating
         to such Awards.

         (b) DEFINITION OF CHANGE IN CONTROL. For purposes of the Plan, a
"Change in Control" will mean the happening of any of the following events:

                  (1) An acquisition by any individual, entity or group (within
         the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a
         "Person") of beneficial ownership (within the meaning of Rule 13d-3
         promulgated under the Exchange Act) of twenty percent (20%) or more of
         either (A) the then outstanding shares of common stock of the Company
         (the "Outstanding Company Common Stock") or (B) the combined voting
         power of the then outstanding voting securities of the Company entitled
         to vote generally in the election of directors (the "Outstanding
         Company Voting Securities"); excluding, however, the following: (i) any
         acquisition directly from the Company, other than an acquisition by
         virtue of the exercise of a conversion privilege unless the security
         being so converted was itself acquired directly from the Company, (ii)
         any acquisition by the Company, (iii) any acquisition by any employee
         benefit plan (or related trust) sponsored or maintained by the Company
         or any corporation controlled by the Company or (iv) any acquisition by
         any corporation pursuant to a transaction which complies with clauses
         (A), (B) and (C) of subsection (3) of this Section 9(b); or

                  (2) A change in the composition of the Board such that the
         individuals who, as of February 20, 1997, constitute the Board (such
         Board will be hereinafter referred to as the "Incumbent Board") cease
         for any reason to constitute at least a majority of the Board;
         provided, however, for purposes of this Section 9(b), that any
         individual who becomes a member of the Board subsequent to February 20,
         1997, whose election, or nomination for election by the Company's
         stockholders, was approved by a vote of at least a majority of those
         individuals who are members of the Board and who were also members of
         the Incumbent Board (or deemed to be such pursuant to this proviso)
         will be considered as though such individual were a member of the
         Incumbent Board; but, provided further, that any such individual whose
         initial assumption of office

                                                                              19

         occurs as a result of either an actual or threatened election contest
         (as such terms are used in Rule 14a-11 of Regulation 14A promulgated
         under the Exchange Act) or other actual or threatened solicitation of
         proxies or consents by or on behalf of a Person other than the Board
         will not be so considered as a member of the Incumbent Board; or

                  (3) The approval by the stockholders of the Company of a
         reorganization, merger or consolidation or sale or other disposition of
         all or substantially all of the assets of the Company ("Corporate
         Transaction") (or, if consummation of such Corporate Transaction is
         subject, at the time of such approval by stockholders, to the consent
         of any government or governmental agency, the earlier of the obtaining
         of such consent or the consummation of the Corporate Transaction);
         excluding, however, such a Corporate Transaction pursuant to which (A)
         all or substantially all of the individuals and entities who are the
         beneficial owners, respectively, of the Outstanding Company Common
         Stock and Outstanding Company Voting Securities immediately prior to
         such Corporate Transaction will beneficially own, directly or
         indirectly, more than sixty percent (60%) of, respectively, the
         outstanding shares of common stock, and the combined voting power of
         the then outstanding voting securities entitled to vote generally in
         the election of directors, as the case may be, of the corporation
         resulting from such Corporate Transaction (including, without
         limitation, a corporation which as a result of such transaction owns
         the Company or all or substantially all of the Company's assets either
         directly or through one or more subsidiaries) in substantially the same
         proportions as their ownership, immediately prior to such Corporate
         Transaction, of the Outstanding Company Common Stock and Outstanding
         Company Voting Securities, as the case may be, (B) no Person (other
         than the Company, any employee benefit plan (or related trust) of the
         Company or such corporation resulting from such Corporate Transaction)
         will beneficially own, directly or indirectly, twenty percent (20%) or
         more of, respectively, the outstanding shares of common stock of the
         corporation resulting from such Corporate Transaction or the combined
         voting power of the outstanding voting securities of such corporation
         entitled to vote generally in the election of directors except to the
         extent that such ownership existed prior to the Corporate Transaction
         and (C) individuals who were members of the Incumbent Board will
         constitute at least a majority of the members of the board of directors
         of the corporation resulting from such Corporate Transaction; or

                  (4) The approval by the stockholders of the Company of a
         complete liquidation or dissolution of the Company.

                                                                              20

         (c) CHANGE IN CONTROL PRICE. For purposes of the Plan, "Change in
Control Price" means the higher of (1) the highest reported sales price, regular
way, of a share of Stock in any transaction reported on the New York Stock
Exchange Composite Tape or other national exchange on which such shares are
listed or on The Nasdaq Stock Market during the 60-day period prior to and
including the date of a Change in Control or (2) if the Change in Control is the
result of a tender or exchange offer or a Corporate Transaction, the highest
price per share of Stock paid in such tender or exchange offer or Corporate
Transaction; provided, however, that in the case of Incentive Stock Options and
Stock Appreciation Rights relating to Incentive Stock Options, the Change in
Control Price will be in all cases the Fair Market Value of the Stock on the
date such Incentive Stock Option or Stock Appreciation Right is exercised. To
the extent that the consideration paid in any such transaction described above
consists all or in part of securities or other non-cash consideration, the value
of such securities or other non-cash consideration will be determined in the
sole discretion of the Board.

SECTION 10. TERM, AMENDMENT AND TERMINATION.

         The Plan will terminate May 31, 2007, but may be terminated sooner at
any time by the Board, provided that no Incentive Stock Options shall be granted
under the Plan after February 19, 2007. Awards outstanding as of the date of any
such termination will not be affected or impaired by the termination of the
Plan.

         The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration or discontinuation will be made which would (a) impair the rights of
an optionee under a Stock Option or a recipient of a Stock Appreciation Right,
Restricted Stock Award or Performance-Based Award theretofore granted without
the optionee's or recipient's consent, except such an amendment which is
necessary to cause any Award or transaction under the Plan to qualify, or to
continue to qualify, for the exemption provided by Rule 16b-3, or (b) disqualify
any Award or transaction under the Plan from the exemption provided by Rule
16b-3. In addition, no such amendment may be made without the approval of the
Company's stockholders to the extent such approval is required by law or
agreement.

         The Committee may amend the terms of any Stock Option or other Award
theretofore granted, prospectively or retroactively, but no such amendment will
(1) impair the rights of any holder without the holder's consent except such an
amendment which is necessary to cause any Award or transaction under the Plan to
qualify, or to continue to qualify, for the exemption provided by Rule 16b-3 or
(2) amend any

                                                                              21

Qualified Performance-Based Award in such a way as to cause it to cease to
qualify for the exemption set forth in Section 162(m)(4)(C). The Committee may
also substitute new Stock Options for previously granted Stock Options,
including previously granted Stock Options having higher option prices;
provided, however, that the Committee may take such action only with respect to
Stock Options representing not more than 10% of then outstanding Stock Options.

         Subject to the above provisions, the Board will have authority to amend
the Plan to take into account changes in law and tax and accounting rules, as
well as other developments and to grant Awards which qualify for beneficial
treatment under such rules without stockholder approval.

SECTION 11. UNFUNDED STATUS OF PLAN.

         It is presently intended that the Plan constitute an "unfunded" plan
for incentive and deferred compensation. The Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Stock or make payments; provided, however, that, unless the
Committee otherwise determines, the existence of such trusts or other
arrangements is consistent with the "unfunded" status of the Plan.

SECTION 12. GENERAL PROVISIONS.

         (a) The Committee may require each person purchasing or receiving
shares pursuant to an Award to represent to and agree with the Company in
writing that such person is acquiring any shares without a view to the
distribution thereof. The certificates for such shares may include any legend
which the Committee deems appropriate to reflect any restrictions on transfer.

         All certificates for shares of Stock or other securities delivered
under the Plan will be subject to such stock transfer orders and other
restrictions as the Committee may deem advisable under the rules, regulations
and other requirements of the Commission, any stock exchange upon which the
Stock is then listed and any applicable federal or state securities law, and the
Committee may cause a legend or legends to be put on any such certificates to
make appropriate reference to such restrictions.

         Notwithstanding any other provision of the Plan or agreements made
pursuant thereto, the Company shall not be required to issue or deliver any
certificate or certificates for shares of Stock under the Plan prior to
fulfillment of all of the following conditions:

                                                                              22

                  (1) Listing or approval for listing upon notice of issuance,
         of such shares on the New York Stock Exchange, Inc., or such other
         securities exchange as may at the time be the principal market for the
         Stock;

                  (2) Any registration or other qualification of such shares of
         the Company under any state or federal law or regulation, or the
         maintaining in effect of any such registration or other qualification
         which the Committee shall, in its absolute discretion upon the advice
         of counsel, deem necessary or advisable; and

                  (3) Obtaining any other consent, approval, or permit from any
         state or federal governmental agency which the Committee shall, in its
         absolute discretion after receiving the advice of counsel, determine to
         be necessary or advisable.

         (b) Nothing contained in the Plan will prevent the Company or any
subsidiary or Affiliate from adopting other or additional compensation
arrangements for its employees.

         (c) The adoption of the Plan will not confer upon any employee any
right to continued employment nor will it interfere in any way with the right of
the Company or any subsidiary or Affiliate to terminate the employment of any
employee at any time.

         (d) No later than the date as of which an amount first becomes
includible in the gross income of the participant for Federal income tax
purposes with respect to any Award under the Plan, the participant will pay to
the Company, or make arrangements satisfactory to the Company regarding the
payment of, any federal, state, local or foreign taxes of any kind required by
law to be withheld with respect to such amount. Unless otherwise determined by
the Company, withholding obligations may be settled with Stock, including Stock
that is part of the Award that gives rise to the withholding requirement. The
obligations of the Company under the Plan will be conditional on such payment or
arrangements, and the Company and its Affiliates will, to the extent permitted
by law, have the right to deduct any such taxes from any payment otherwise due
to the participant. The Committee may establish such procedures as it deems
appropriate, including the making of irrevocable elections, for the settlement
of withholding obligations with Stock.

         (e) At the time of grant, the Committee may provide in connection with
any grant made under the Plan that the shares of Stock received as a result of
such grant will be subject to a right of first refusal pursuant to which the
participant will be required to offer to the Company any shares that the
participant wishes to sell at the then Fair Market Value of the Stock, subject
to such other terms and conditions as the Committee may specify at the time of
grant.

                                                                              23

         (f) The reinvestment of dividends in additional Restricted Stock at the
time of any dividend payment will only be permissible if sufficient shares of
Stock are available under Section 3 for such reinvestment (taking into account
then outstanding Stock Options and other Awards).

         (g) The Committee will establish such procedures as it deems
appropriate for a participant to designate a beneficiary to whom any amounts
payable in the event of the participant's death are to be paid or by whom any
rights of the participant, after the participant's death, may be exercised.

         (h) Notwithstanding any other provision of the Plan or any agreement
relating to any Award hereunder, if any right granted pursuant to this Plan
would make a Change in Control transaction ineligible for
pooling-of-interests-accounting under APB No. 16 that, but for the nature of
such grant, would otherwise be eligible for such accounting treatment, the
Committee will have the ability, in its sole discretion, to substitute for the
cash payable pursuant to such grant Common Stock with a Fair Market Value equal
to the cash that would otherwise be payable hereunder.

         (i) The Plan and all Awards made and actions taken thereunder will be
governed by and construed in accordance with the laws of the State of Delaware.

SECTION 13. EFFECTIVE DATE OF PLAN.

         The Plan will be effective on the later of (a) the time it is approved
by the Board and (b) the time certain provisions of the Plan are approved by
stockholders for tax purposes.

SECTION 14. DIRECTOR STOCK OPTIONS.

         a) Each director of the Company who is not otherwise an employee of the
Company or any of its subsidiaries or Affiliates, will (1) on the date of his or
her first election as a director of the Company (such initial grant being an
"Initial Grant"), and (2) annually on the third Thursday of February, during
such director's term (the "Annual Grant"), automatically be granted
Non-Qualified Stock Options to purchase Common Stock having an exercise price
per share of Common Stock equal to 100% of Fair Market Value per share of Common
Stock at the date of grant of such Non-Qualified Stock Option. The number of
shares subject to each such Initial Grant, and each such Annual Grant, will be
5,000 shares. A non-employee director who is first elected as a director of the
Company during the course of a year (i.e., on a date other than the date of the
Annual Grant) will, in addition to the Initial Grant, receive upon election a
grant of

                                                                              24

Non-Qualified Stock Options prorated to reflect the number of months served in
the initial year of service, with the number of shares of Common Stock subject
to such Stock Option being equal to (1) the number of shares subject to the
Initial Grant multiplied by (2) a fraction the numerator of which will be the
number of months from the date of such election through the date of the next
Annual Grant and the denominator of which will be twelve (12).

         (b) An automatic director Stock Option will be granted hereunder only
if as of each date of grant the director (1) is not otherwise an employee of the
Company or any of its subsidiaries or Affiliates, (2) has not been an employee
of the Company or any of its subsidiaries or Affiliates for any part of the
preceding fiscal year, and (3) has served on the Board continuously since the
commencement of his term.

         (c) Except as expressly provided in this Section 14, any Stock Option
granted hereunder will be subject to the terms and conditions of the Plan as if
the grant were made pursuant to Section 5 hereof including, without limitation,
the rights set forth in Section 5(j) hereof.