Registration
Number 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
FREEDOM SECURITIES CORPORATION
(Exact name of issuer as specified in its charter)
Delaware 04-3335712
(State of Incorporation) (IRS Employer Identification Number)
One Beacon Street, Boston, MA 02108
(Address of Principal Executive Offices)
(617) 725-2000
(Registrant's telephone number, including area code)
1998 Employee Stock Purchase Plan
(Full title of the Plan)
James Westra, Esquire
Hutchins, Wheeler & Dittmar
A Professional Corporation
101 Federal Street
Boston, Massachusetts 02110
(617) 951-6600
(Name, address and telephone number of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered(l) Per Share Price Fee(2)
<S> <C> <C> <C> <C>
Common Stock 500,000 shares $16.09375 $8,046,875 $2,240
</TABLE>
(1) Also registered hereunder are such additional number of shares of
Common Stock, presently indeterminable, as may be necessary to satisfy
the antidilution provisions of the Plan to which this Registration
Statement relates.
(2) The registration fee has been calculated with respect to 500,000 shares
registered on the basis of the average of the high and low sale prices
on the New York Stock Exchange on December 15, 1998.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
The Company hereby incorporates by reference the documents listed in
(a) through (c) below. In addition, all documents subsequently filed by the
Company pursuant to Section 13(a), 13(c), 14 and 15(d) of the Securities
Exchange Act of 1934 (prior to filing of a post-effective amendment which
indicates that all securities offered have been sold or which deregisters all
securities then remaining unsold) shall be deemed to be incorporated by
reference in this Registration Statement and to be a part thereof from the date
of filing of such documents.
(a) The Company's latest annual report filed pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934 or the latest prospectus filed
pursuant to Rule 424(b) under the Securities Act of 1933, which contains either
directly or by incorporation by reference, audited financial statements for the
Company's latest fiscal year for which such statements have been filed.
(b) All of the reports filed by the Company pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934 since the end of the fiscal year
covered by the annual report or the prospectus referred to in (a) above.
(c) The description of the Company's Common Stock which is contained in
the Registration Statement filed by the Company under the Securities Exchange
Act of 1934, including any amendment or report filed for the purpose of updating
such description.
Item 4. Description of Securities
Inapplicable.
Item 5. Interests of Named Experts and Counsel
The validity of the authorization and issuance of the Common Stock
offered hereby will be passed upon for the Company by Hutchins, Wheeler &
Dittmar, A Professional Corporation, Boston, Massachusetts.
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Item 6. Indemnification of Directors and Officers
The Delaware General Corporate Law and the Company's Certificate of
Incorporation and By-Laws allow for indemnification of the Company's directors
and officers for liabilities and expenses that they may incur in such
capacities. In general, directors and officers are indemnified with respect to
actions taken in good faith in a manner reasonably believed to be in, or not
opposed to, the best interests of the Company, and with respect to any criminal
action or proceeding, actions that the indemnitee has no reasonable cause to
believe were unlawful.
Article 10 of the Amended and Restated By-Laws of the Company provides
as follows:
Section 10.1 Third Party Actions. The Corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Corporation) by reason of the fact that he is or was a Director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorney's fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
Section 10.2 Derivative Actions. The Corporation shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
Corporation to procure a judgment in its favor by reason of the fact that he is
or was a Director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of such action or
suit if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the Corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the Corporation unless and only to
the extent that the Court of Chancery or the court in which such action or suit
was brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Court of
Chancery or such other court shall deem proper.
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Section 10.3 Expenses. To the extent that a Director, officer, employee
or agent of the Corporation has been successful on the merits or otherwise in
defense of any action, suit or proceeding referred to in Sections 10.1 and 10.2,
or in defense of any claim, issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection therewith.
Section 10.4 Authorization. Any indemnification under Sections 10.1 and
10.2 (unless ordered by a court) shall be made by the Corporation only as
authorized in the specific case upon a determination that indemnification of the
Director, officer, employee or agent is proper in the circumstances because he
has met the applicable standard of conduct set forth in Sections 10.1 and 10.2.
Such determination shall be made (a) by the Board of Directors by a majority
vote of a quorum consisting of Directors who were not parties to such action,
suit or proceeding, or (b) if such a quorum is not obtainable, or, even if
obtainable a quorum of disinterested Directors so directs, by independent legal
counsel in a written opinion, or (c) by the stockholders.
Section 10.5 Advance Payment of Expenses. Expenses incurred by an
officer or Director in defending a civil or criminal action, suit or proceeding
may be paid by the Corporation in advance of the final disposition of such
action, suit or proceeding as authorized by the Board of Directors in the
specific case upon receipt of an undertaking by or on behalf of such officer or
Director to repay such amount unless it shall ultimately be determined that he
is entitled to be indemnified by the Corporation as authorized in this Article
10. Such expenses incurred by other employees and agents may be so paid upon
such terms and conditions, if any, as the Board of Directors deems appropriate.
Section 10.6 Non-Exclusiveness. The indemnification provided by this
Article 10 shall not be deemed exclusive of any other rights to which those
seeking indemnification may be entitled under any by-law, agreement, vote of
stockholders or disinterested Directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a Director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
Section 10.7 Insurance. The Corporation shall have power to purchase
and maintain insurance on behalf of any person who is or was a Director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the Corporation would have the
power to indemnify him against such liability under the provisions of this
Article 10.
Section 10.8 Constituent Corporations. The Corporation shall have power
to indemnify any person who is or was a director, officer, employee or agent of
a constituent corporation absorbed in a consolidation or merger with this
Corporation or is or was serving at the request of
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such constituent corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise, in
the same manner as hereinabove provided for any person who is or was a Director,
officer, employee or agent of the Corporation, or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise.
Section 10.9 Additional Indemnification. In addition to the foregoing
provisions of this Article 10, the Corporation shall have the power, to the full
extent provided by law, to indemnify any person for any act or omission of such
person against all loss, cost, damage and expense (including attorney's fees) if
such person is determined (in the manner prescribed in Section 10.4 hereof) to
have acted in good faith and in a manner he reasonably believed to be in, or not
opposed to, the best interest of the Corporation.
Item 7. Exemption from Registration Claimed
Not applicable.
Item 8. Exhibits
<TABLE>
Number Description
<S> <C>
4.1 1998 Employee Stock Purchase Plan (Filed herewith)
5 Opinion of Hutchins, Wheeler & Dittmar, A
Professional Corporation, as
to legality of shares being registered and consent
of Hutchins, Wheeler & Dittmar, A Professional
Corporation (filed herewith).
23 Consents of Independent Auditors - included in
Registration Statement under heading "Consent of
Independent Auditors."
</TABLE>
Item 9. Undertakings
The undersigned Registrant hereby undertakes the following:
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
<TABLE>
<S> <C> <C>
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
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<PAGE>
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement
(or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a
fundamental change in the information set forth in this
Registration Statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would
not exceed that which was registered) and any deviation
from the low or high end of the estimated maximum
offering range may be reflected in the form of the
prospectus filed with the Commission pursuant to
Rule 424(b) if, in aggregate, the changes in volume and
price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement;
iii) To include any material information with respect
to the plan of distribution not previously
disclosed in this Registration Statement or any
material change to such information in this
Registration Statement.
</TABLE>
Provided, however, that paragraphs (a)(l)(i) and (a)(l)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) The undersigned Registrant hereby undertakes, that, insofar as
indemnification for liabilities arising under the Securities Act of 1933 may be
permitted to directors, officers and
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controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
HWD: 376816-1
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Boston, Massachusetts on December 18, 1998.
FREEDOM SECURITIES CORPORATION
By /s/John H. Goldsmith
John H. Goldsmith
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
Signature Title Date
<S> <C> <C>
/s/John H. Goldsmith Director, Chairman December 18, 1998
John H. Goldsmith and Chief Executive Officer
(principal executive officer)
/s/William C.Dennis, Jr. Chief Financial Officer December 18, 1998
William C. Dennis, Jr. (principal financial and
accounting officer)
/s/David V. Harkins Director December 18, 1998
David V. Harkins
/s/C. Hunter Boll Director December 18, 1998
C. Hunter Boll
/s/Thomas M. Hagerty Director December 18, 1998
Thomas M. Hagerty
/s/Seth W. Lawry Director December 18, 1998
Seth W. Lawry
/s/Winston J. Churchill Director December 18, 1998
Winston J. Churchill
S-1
<PAGE>
/s/Robert H. Yevich Director December 18, 1998
Robert H. Yevich
/s/David P. Prokupek Director December 18, 1998
David P. Prokupek
/s/Hugh R. Harris Director December 18, 1998
Hugh R. Harris
</TABLE>
S-2
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
EXHIBITS
to
FORM S-8
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
FREEDOM SECURITIES CORPORATION
(Exact name of registrant as specified in its charter)
HWD: 376816-1
<PAGE>
1. Purpose
It is the purpose of this 1998 Employee Stock Purchase Plan to provide a
means whereby eligible employees may purchase Common Stock of Freedom Securities
Corporation (the "Company") and any subsidiaries as defined below through
after-tax payroll deductions. It is intended to provide a further incentive for
employees to promote the best interests of the Company and to encourage stock
ownership by employees in order that they may participate in the Company's
economic growth.
It is the intention of the Company that the Plan qualify as an
"employee stock purchase plan" within the meaning of Section 423 of the
Internal Revenue Code and the provisions of this Plan shall be construed in a
manner consistent with the Code and Treasury Regulations promulgated thereunder.
2. Definitions
The following words or terms, when used herein, shall have the following
respective meanings:
(a) "Plan" shall mean the 1998 Employee Stock Purchase Plan.
(b) "Company" shall mean Freedom Securities Corporation., a Delaware
corporation.
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<PAGE>
(c) "Account" shall mean the Employee Stock Purchase Account
established for a Participant under Section 7 hereunder.
(d) "Basic Compensation" shall mean the regular rate of salary or
wages in effect immediately prior to a Purchase Period, before
any deductions or withholdings, and including overtime, bonuses
and, for commission only employees, sales commissions, but
excluding amounts paid in reimbursement for expenses.
(e) "Board of Directors" shall mean the Board of Directors of
the Company. (f) "Code" shall mean the Internal Revenue Code
of 1986, as amended. (g) "Committee" shall mean the Compensation
Committee appointed by the Board of Directors.
(h) "Common Stock" shall mean shares of the Company's common stock,
$.01 par value per share.
(i) "IPO" shall mean the date of the closing of the Company's first
public offering of Common Stock made pursuant to an effective
Registration Statement filed with the Securities and Exchange
Commission.
(j) "Eligible Employees" shall mean all persons employed by the
Company or one of its Subsidiaries, but excluding: (1) Persons
who have been employed by the Company or its Subsidiaries for
less than 6 months on the first day of the Purchase
Period; (2) Persons whose customary employment is less than
twenty hours per week or five months or less per year;
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(3) Persons who are deemed for purposes of Section
423(b)(3) of the Code to own stock possessing 5% or
more of the total combined voting power or value of all
classes of stock of the Company or a subsidiary; and
(4) Persons who are subject to the reporting requirements
of Section 16(a) of the Securities Exchange Act of
1934, as amended.
For purposes of the Plan, employment will be treated as continuing
intact while a Participant is on military leave, sick leave, or other bona fide
leave of absence, for up to 90 days or so long as the Participant's right to
re-employment is guaranteed either by statute or by contract, if longer than 90
days.
(k) "Exercise Date" shall mean the last day of a Purchase Period;
provided, however, that if such date is not a business day,
"Exercise Date" shall mean the immediately preceding business
day.
(l) "Holding Period" shall mean the six month period commencing on
the "Exercise Date".
(m) "Participant" shall mean an Eligible Employee who elects to
participate in the Plan under Section 6 hereunder.
(n) Except as provided below, there shall be two "Purchase Periods"
in each full calendar year during which the Plan is in effect,
one commencing on January 2 of each calendar year and continuing
through June 30 of such calendar year, and the second commencing
on July 1 of each calendar year and continuing through
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<PAGE>
December 31 of such calendar year. The first Purchase Period
shall commence on the first, January 2 or June 30, to occur
after the IPO. The last Purchase Period shall commence on July
1, 2007 and end on December 31, 2007.
(o) "Purchase Price" shall mean the lower of (i) 85% of the fair
market value of a share of Common Stock for the first business
day of the relevant Purchase Period, or (ii) 85% of such value
on the relevant Exercise Date. If the shares of Common
Stock are listed on any national securities exchange, or traded
on the National Association of Securities Dealers Automated
Quotation System ("Nasdaq") National Market System, the fair
market value per share of Common Stock on a particular day shall
be the closing price, if any, on the largest such exchange, or
if not traded on an exchange, the Nasdaq National Market
System, on such day, and, if there are no sales of the shares
of Common Stock on such particular day, the fair market value
of a share of Common Stock shall be determined by taking a
weighted average of the means between the highest and lowest
sales on the nearest date before and the nearest date after the
particular day in accordance with Treasury Regulations Section
25.2512-2. If the shares of Common Stock are not then listed
on any such exchange or the Nasdaq National Market System, the
fair market value per share of Common Stock on a particular day
shall be the mean between the closing "Bid" and the closing
"Asked" prices, if any, as reported in the National Daily
Quotation Service for such day. If the fair market value cannot
be determined under the preceding sentences, it shall be
determined in good faith by the Board of Directors.
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<PAGE>
(p) "Subsidiary" shall mean any present or future corporation which
(i) would be a "subsidiary corporation" of the Company as that
term is defined in Section 424(f) of the Code and (ii) is
designated as a participant in the Plan by the Board.
3. Grant of Option to Purchase Shares.
Each Eligible Employee shall be granted an option effective on the first
business day of each Purchase Period to purchase shares of Common Stock. The
term of the option shall be the length of the Purchase Period. The number of
shares subject to each option shall be the quotient of the aggregate payroll
deductions in the Purchase Period authorized by each Participant in accordance
with Section 6 divided by the Purchase Price, but in no event greater than 2,500
shares per option, or such other number as determined from time to time by the
Board of Directors or the Committee (the "Share Limitation"). Notwithstanding
the foregoing, no employee shall be granted an option which permits his or her
right to purchase shares under the Plan to accrue at a rate which exceeds in any
one calendar year $25,000 of the fair market value of the Common Stock as of the
date the option to purchase is granted.
4. Shares.
There shall be 500,000 shares of Common Stock reserved for issuance to
and purchase by Participants under the Plan, subject to adjustment as herein
provided. The shares of Common Stock subject to the Plan shall be either shares
of authorized but unissued Common Stock or shares of Common Stock reacquired by
the Company and held as treasury shares. Shares of Common Stock not purchased
under an option terminated pursuant to the provisions of the Plan may again be
subject to options granted under the Plan.
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The aggregate number of shares of Common Stock which may be purchased
pursuant to options granted hereunder, the number of shares of Common Stock
covered by each outstanding option, and the purchase price for each such option
shall be appropriately adjusted for any increase or decrease in the number of
outstanding shares of Common Stock resulting from a stock split or other
subdivision or consolidation of shares of Common Stock or for other capital
adjustments or payments of stock dividends or distributions or other increases
or decreases in the outstanding shares of Common Stock effected without receipt
of consideration by the Company.
5. Administration.
The Plan shall be administered by the Board of Directors or the
Compensation Committee appointed from time to time by the Board of Directors.
The Board of Directors or the Committee, if one has been appointed and delegated
authority hereunder, is vested with full authority to make, administer and
interpret such equitable rules and regulations regarding the Plan as it may deem
advisable. The Board of Directors', or the Committee's, if applicable,
determinations as to the interpretation and operation of the Plan shall be final
and conclusive. No member of the Board of Directors or the Committee shall be
liable for any action or determination made in good faith with respect to the
Plan or any option granted under the Plan.
6. Election to Participate.
An Eligible Employee may elect to become a Participant in the Plan for a
Purchase Period by completing a "Stock Purchase Agreement" form prior to the
first day of the Purchase Period for which the election is made. Such Stock
Purchase Agreement shall be in such form as shall be determined by the Board of
Directors or the Committee. The election to participate shall be effective for
the Purchase Period for which it is made and shall remain effective for
subsequent
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Purchase Periods until revoked in writing by the Participant. There is no limit
on the number of Purchase Periods for which an Eligible Employee may be a
Participant in the Plan. In the Stock Purchase Agreement, the Eligible Employee
shall authorize regular payroll deductions of any full percentage of his or her
Basic Compensation, but in no event less than one percent (1%) nor more than ten
percent (10%) of his or her Basic Compensation, not to exceed $25,000 per year.
An Eligible Employee may not change his or her authorization except as otherwise
provided in Section 9. Options granted to Eligible Employees who have failed to
execute a Stock Purchase Agreement within the time periods prescribed by the
Plan will automatically lapse. By electing to participate each participant
agrees to the Holding Period. 7. Employee Stock Purchase Account.
An Employee Stock Purchase Account will be established for each
Participant in the Plan for bookkeeping purposes, and payroll deductions made
under Section 6 will be credited to such Accounts. However, prior to the
purchase of shares in accordance with Section 8 or withdrawal from or
termination of the Plan in accordance with the provisions hereof, the Company
may use for any valid corporate purpose all amounts deducted from a
Participant's wages under the Plan and credited for bookkeeping purposes to his
Account.
The Company shall be under no obligation to pay interest on funds
credited to a Participant's Account, whether upon purchase of shares in
accordance with Section 8 or upon distribution in the event of withdrawal from
or termination of the Plan as herein provided.
8. Purchase of Shares.
Each Eligible Employee who is a Participant in the Plan automatically
and without any act on his part will be deemed to have exercised his option on
each Exercise Date to the extent that
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the balance then in his Account under the Plan is sufficient to purchase at the
Purchase Price whole shares of the Common Stock subject to his option, subject
to the Share Limitations and the Section 423(b)(8) limitation described in
Section 3. Any balance remaining in the Participant's Account shall be
refunded to him in cash without interest.
9. Withdrawal.
A Participant who has elected to authorize payroll deductions for the
purchase of shares of Common Stock may cancel his or her election by written
notice of cancellation ("Cancellation") delivered to the office or person
designated by the Company to receive Stock Purchase Agreements, but any such
notice of Cancellation must be so delivered not later than ten (10) days before
the relevant Exercise Date.
A Participant will receive in cash, as soon as practicable after
delivery of the notice of Cancellation, the amount credited to his Account. Any
Participant who so withdraws from the Plan may again become a Participant at the
start of the next Purchase Period in accordance with Section 6.
Upon dissolution or liquidation of the Company every option outstanding
hereunder shall terminate, in which event each Participant shall be refunded the
amount of cash then in his Account. If the Company shall at any time merge into
or consolidate with another corporation, the holder of each option then
outstanding will thereafter be entitled to receive at the next Exercise Date,
upon exercise of such option and for each share as to which such option was
exercised, the securities or property which a holder of one share of the Common
Stock was entitled upon and at such time of such merger or consolidation. In
accordance with this paragraph and this Plan, the Board of Directors or
Compensation Committee, if applicable, shall
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determine the kind or amount of such securities or property which such holder
of an option shall be entitled to receive. A sale of all or substantially all
of the assets of the Company shall be deemed a merger or consolidation for the
foregoing purposes.
10. Holding Period and Restriction on Transfer.
As of each Exercise Date, the Company shall cause the ownership of
shares of Common Stock purchased through the exercise of an option granted under
this Plan to be registered in the appropriate name of each participant, or
jointly with spouse if so designated in his share purchase agreement. Such
designation may be changed at any time by completing the appropriate form and
filing it with the party designated by the Company. From each Exercise Date
forward, each participant shall have the rights of a shareholder pursuant to
such shares acquired on each Exercise Date, including the right to vote and
receive dividends. However, during the six-month Holding Period that commences
immediately following each Exercise Date, all shares acquired on that Exercise
Date shall be subject to a restriction prohibiting their transfer, sale,
hypothecation or other constructive use. To effect this restriction during the
Holding Period, all shares acquired under this plan shall be maintained in
Participant accounts, held in nominee name and shall not be released from such
status until the conclusion of the applicable Holding Period. As soon as
practical following the Exercise Date, participants shall be given written
confirmation of the number of shares purchased, the purchase price and the
status of their accounts. 11. Issuance of Shares.
At the conclusion of the Holding Period, the restriction on transfer set
forth in Section 10 above shall automatically lapse. Unless otherwise requested
by the Participant, all shares will
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automatically remain held in the Participant's account and remain in the nominee
name or, if the Company chooses, in its sole discretion, in the Participant's
name. Each Participant shall have the right to request that all shares purchased
under the Plan be transferred to a designated brokerage account. Such request
must be made in writing and filed with the party designated by the Company, and
such account designation may be changed at any time by repeating the process. At
no time under this Plan will the Company be required to issue stock certificates
to Participants pursuant to shares purchased under the Plan. 12. Termination of
Employment.
(a) Upon a Participant's termination of employment for any reason,
other than death, no payroll deduction may be made from any
compensation due him and the entire balance credited to his
Account shall be automatically refunded, and his rights under
the Plan shall terminate.
(b) Upon the death of a Participant, no payroll deduction shall be
made from any compensation due him at time of death, the entire
balance in the deceased Participant's Account shall be paid in
cash to the Participant's designated beneficiary, if any, under
a group insurance plan of the Company covering such employee, or
otherwise to his estate, and his rights under the Plan shall
terminate.
13. Rights Not Transferable.
The right to purchase shares of Common Stock under this Plan is
exercisable only by the Participant during his lifetime and is not transferable
by him. If a Participant attempts to transfer his right to purchase shares under
the Plan, he shall be deemed to have requested withdrawal from the Plan and the
provisions of Section 9 hereof shall apply with respect to such Participant.
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<PAGE>
14. No Guarantee of Continued Employment.
Granting of an option under this Plan shall imply no right of continued
employment with the Company for any Eligible Employee.
15. Notice.
Any notice which an Eligible Employee or Participant files pursuant to
this Plan shall be in writing and shall be delivered personally or by mail
addressed to Freedom Securities Corporation, One Beacon Street, Boston, MA
02108, Attn: General Counsel's Office. Any notice to a Participant or an
Eligible Employee shall be conspicuously posted in the Company's principal
office and other office locations or shall be mailed addressed to the
Participant or Eligible Employee at the address designated in the Stock Purchase
Agreement or in a subsequent writing. 16. Application of Funds.
All funds deducted from a Participant's wages in payment for shares
purchased or to be purchased under this Plan may be used for any valid corporate
purpose provided that the Participant's Account shall be credited with the
amount of all payroll deductions as provided in Section 7. 17. Government
Approvals or Consents.
This Plan and any offering and sales to Eligible Employees under it are
subject to any governmental approvals or consents that may be or become
applicable in connection therewith. Subject to the provisions of Section 18, the
Board of Directors of the Company may make such changes in the Plan and include
such terms in any offering under this Plan as may be necessary
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<PAGE>
or desirable, in the opinion of counsel, to comply with the rules or regulations
of any governmental authority, or to be eligible for tax benefits under the Code
or the laws of any state.
18. Amendment of the Plan.
The Board of Directors may, without the consent of the Participants,
amend the Plan at any time, provided that no such action shall adversely affect
options theretofore granted hereunder, and provided that no such action by the
Board of Directors without approval of the Company's shareholders may (a)
increase the total number of shares of Common Stock which may be purchased by
all Participants, (b) change the class of employees eligible to receive options
under the Plan, or (c) make any changes to the Plan which require shareholder
approval under applicable law or regulations, including Section 423 of the Code
and the regulations promulgated thereunder.
For purposes of this Section 18, termination of the Plan by the Board of
Directors pursuant to Section 19 shall not be deemed to be an action which
adversely affects options theretofore granted hereunder. 19. Term of the Plan.
The Plan shall become effective on the Effective Date, provided that it
is approved within twelve months after adoption by the Board of Directors by the
affirmative vote of holders of a majority of the stock of the Company present or
represented and entitled to vote at a duly held shareholders' meeting. The Plan
shall continue in effect through June 30, 2007, provided, however, that the
Board of Directors shall have the right to terminate the Plan at any time, but
such termination shall not affect options then outstanding under the Plan. It
will terminate in any case when all or substantially all of the unissued shares
of stock reserved for the purposes of the
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<PAGE>
Plan have been purchased. If at any time shares of stock reserved for the
purposes of the Plan remain available for purchase but not in sufficient number
to satisfy all then unfilled purchase requirements, the available shares shall
be apportioned among Participants in proportion to the amount of payroll
deductions accumulated on behalf of each Participant that would otherwise be
used to purchase stock and the Plan shall terminate. Upon such termination or
any other termination of the Plan, all payroll deductions not used to purchase
stock will be refunded, without interest. 20. Notice to Company of Disqualifying
Disposition; Legend.
By electing to participate in the Plan, each Participant agrees to
notify the Company in writing immediately after the Participant transfers Common
Stock acquired under the Plan, if such transfer occurs within two years after
the first business day of the Purchase Period in which such Common Stock was
acquired. Each Participant further agrees to provide any information about such
a transfer as may be requested by the Company or any subsidiary corporation in
order to assist it in complying with the tax laws. Such dispositions generally
are treated as "disqualifying dispositions" under Sections 421 and 424 of the
Code, which have certain tax consequences to Participants and to the Company and
its participating Subsidiaries. The Participant further agrees that all stock
certificates for Common Stock purchased under the Plan by the Participant shall
be held in his name or jointly with his spouse, as the case may be, and not in
the name of a broker, nominee or other person or entity for such two-year
period, and agrees that such stock certificates shall bear a legend reflecting
that such Common Stock was obtained upon the purchase of Common Stock under the
Plan. The Participant acknowledges that the Company may send a Form W-2, or
substitute therefor, as appropriate, to the Participant with
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<PAGE>
respect to any income recognized by the Participant upon a disqualifying
disposition of Common Stock.
21. Withholding of Additional Income Taxes.
By electing to participate in the Plan, each Participant acknowledges
that the Company and its participating Subsidiaries are required to withhold
taxes with respect to the amounts deducted from the Participant's compensation
and accumulated for the benefit of the Participant under the Plan and each
Participant agrees that the Company and its participating Subsidiaries may
deduct additional amounts from the Participant's compensation, when amounts are
added to the Participant's account, used to purchase Common Stock or refunded,
in order to satisfy such withholding obligations. Each Participant further
acknowledges that when Common Stock is purchased under the Plan, the Company and
its participating Subsidiaries may be required to withhold taxes with respect to
all or a portion of the difference between the fair market value of the Common
Stock purchased and its purchase price, and each Participant agrees that such
taxes may be withheld from compensation otherwise payable to such Participant.
It is intended that tax withholding will be accomplished in such a manner that
the full amount of payroll deductions elected by the Participant under Section 6
will be used to purchase Common Stock. However, if amounts sufficient to satisfy
applicable tax withholding obligations have not been withheld from compensation
otherwise payable to any Participant, then, notwithstanding any other provision
of the Plan, the Company may withhold such taxes from the Participant's
accumulated payroll deductions and apply the net amount to the purchase of
Common Stock, unless the Participant pays to the Company, prior to the exercise
date, an amount sufficient to satisfy such withholding obligations. Each
Participant further acknowledges that the Company and its participating
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<PAGE>
Subsidiaries may be required to withhold taxes in connection with the
disposition of stock acquired under the Plan and agrees that the Company or any
participating subsidiary may take whatever action it considers appropriate to
satisfy such withholding requirements, including deducting from compensation
otherwise payable to such Participant an amount sufficient to satisfy such
withholding requirements or conditioning any disposition of Common Stock by the
Participant upon the payment to the Company or such subsidiary of an amount
sufficient to satisfy such withholding requirements. 22. General.
Whenever the context of this Plan permits, the masculine gender shall
include the feminine and neuter genders.
Adopted by the Board of Directors : March 8, 1998 .
Approved by the Stockholders: March 8, 1998.
261385-4
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<PAGE>
[Hutchins, Wheeler & Dittmar Letterhead]
December 18, 1998
Freedom Securities Corporation
One Beacon Street
Boston, MA 02108
Ladies and Gentlemen:
We are general counsel to Freedom Securities Corporation, a Delaware
corporation (the "Company"), and as such counsel we are familiar with the
corporate proceedings taken in connection with the adoption of the Company's
1998 Employee Stock Purchase Plan (the "Plan"). We are also familiar with the
registration statement on Form S-8 to which a copy of this opinion will be
attached as an exhibit.
As such counsel, we have examined the corporate records of the Company,
including the Amended and Restated Certificate of Incorporation, Amended and
Restated By-laws, stock records, minutes of meetings of its Board of Directors
and stockholders and such other documents as we have deemed necessary as a basis
for the opinions herein expressed.
Based upon the foregoing, and having regard for such legal
considerations as we deem relevant, we are of the opinion that:
1. The Company is duly organized and validly existing under the
laws of the State of Delaware;
2. The Company is authorized to issue 60,000,000 shares of Common
Stock, par value $.01 per share, and 1,000,000 shares of Preferred Stock, par
value $.01 per share.
3. The shares of common stock issuable pursuant to the Plan, when sold
in accordance with the terms thereof, will be legally issued, fully paid and
non-assessable.
<PAGE>
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement on Form S-8 and to the reference to us under the caption
"Interests of Named Experts and Counsel" in the Registration Statement.
Very truly yours,
/s/Hutchins, Wheeler & Dittmar
HUTCHINS, WHEELER & DITTMAR
A Professional Corporation
351191-1
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement (Form S-8) to be filed December 18, 1998 of our report dated March 10,
1998, with respect to the consolidated financial statements of Freedom
Securities Corporation for the one month period ended December 31, 1996 and the
year ended December 31, 1997 and the consolidated financial statements of
Freedom Securities Holding Corporation for the year ended December 31, 1995 and
the eleven months ended November 29, 1996 included in the Freedom Securities
Corporation Registration Statement on Form S-1 (No. 333-44931) Amendment No. 3.
New York, New York
December 17, 1998 /s/ Ernst & Young LLP
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350885-1
