<PAGE> 1
As filed with the Securities and
Exchange Commission on June 3, 1997
Registration No. 333-
-------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
----------------------------------
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
----------------------------------
WPI GROUP, INC.
(Exact name of issuer as specified in its charter)
New Hampshire 02-218767
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1155 Elm Street
Manchester, New Hampshire 03101
(Address of Principal Executive Offices Including Zip Code)
WPI GROUP, INC. EMPLOYEE STOCK PURCHASE PLAN AND BONUS AWARD PLAN
(Full Title of Plans)
MICHAEL H. FOSTER
Chairman and Chief Executive Officer
WPI GROUP, INC.
1155 Elm Street
Manchester, NH 03101
(603) 627-3500
(Name, address, including zip code, and telephone number
including area code, of agent for service)
Copy to: MICHAEL B. TULE, ESQUIRE
WPI GROUP, INC.
1155 Elm Street
Manchester, NH 03101
----------------------------------
Approximate date of proposed sales pursuant to the Plan:
From time to time after the effective date of this Registration Statement
<PAGE> 2
<TABLE>
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------------------
<CAPTION>
Title of Proposed Maximum Proposed Maximum Amount of
Securities To Amount To Be Offering Aggregate Registration
Be Registered Registered Price Per Share(1) Offering Price(1) Fee
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock
par value $.01 50,000 $8.25 $412,500 $125
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(h) on the basis of the average of the high and low reported
sale prices of the registrant's Common Stock as quoted in the National Market
System of the NASDAQ on May 30, 1997
<PAGE> 3
TABLE OF CONTENTS
-----------------
PAGE
----
INTRODUCTION............................................................ 1
AVAILABLE INFORMATION................................................... 1
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT...................... II-1
Item 3. Incorporation of Documents by Reference.................. II-1
---------------------------------------
Item 6. Indemnification of Directors and Officers................ II-1
-----------------------------------------
Item 8. Exhibits................................................. II-2
--------
Item 9. Undertakings............................................. II-2
------------
SIGNATURES.............................................................. II-4
INDEX OF EXHIBITS....................................................... II-6
<PAGE> 4
INTRODUCTION
This Registration Statement on Form S-8 relates to the registration of
30,000 shares of WPI Group, Inc. (the "Company") common stock issuable under the
WPI Group, Inc. Employee Stock Purchase Plan (the "Purchase Plan") and 20,000
shares of Company Common Stock issuable under the WPI Group, Inc. Bonus Award
Plan (the "Bonus Plan").
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities of the Commission at Room 1024, 450 Fifth Street N.W.,
Washington, D.C. 20549; and at the Regional Offices of the Commission at
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and 75 Park Place, Room 1400, New York, NY 10007. Copies of such
materials can be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. In
addition, the Company is required to filed electronic versions of these
materials with the Commission through the Commission's Electronic Data
Gathering, Analysis and Retrieval (EDGAR) System. The Commission maintains a
Word Wide Web site at http://www.sec.gov that contains reports, proxy and
information statements and other information regarding registrants and file
electronically with the Commission. The common stock of the Company is traded on
the NASDAQ National Market. Reports and other information concerning the Company
be inspected at the National Association of Securities Dealers, Inc., 1735 K
Street, N.W., Washington, D.C. 20006.
The Company will provide without charge to any person, including any
beneficial owner, to whom this Prospectus is delivered, upon written or oral
request, a copy of its most recent annual report to stockholders and any and all
documents incorporated herein by reference (other than certain exhibits to such
documents). See "Certain Other Information." Written requests should be directed
to Investor Relations, WPI Group, Inc., 1155 Elm Street, Manchester, New
Hampshire 03101. Telephone requests may be directed to (603) 627-3500.
- 1 -
<PAGE> 5
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
---------------------------------------
The following documents filed by the Company with the Commission are
incorporated herein by reference:
1. Annual Report on Form 10-KSB for the Fiscal Year Ended September 29,
1996.
2. Quarterly Reports on Form 10-Q for the quarters ended December 29,
1996 and March 30, 1997.
3. The description of the Common Stock which is contained in the
Company's Registration Statement filed pursuant to Section 12 of the
Exchange Act, and any amendment or report filed for the purpose of
updating such description.
All documents filed by the Company after the date of this Prospectus
pursuant to Sections 13(a), 13(c), 14, and 15(d) of the Exchange Act, prior to
the filing of a post-effective amendment which indicates that all securities
offered hereby have been sold or which deregisters such securities then
remaining unsold, shall be deemed to be incorporated herein by reference and to
be a part hereof from the date of filing such documents. Any statement contained
in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall be deemed, except as so modified or superseded, to constitute a
part of this Prospectus.
Item 6. Indemnification of Directors and Officers
-----------------------------------------
New Hampshire Revised Statutes Annotated ("RSA") 293-A, Sections 8.51
through 8.58, empower a corporation, subject to certain limitations, to
indemnify its directors and officers against expenses (including attorneys'
fees, judgments, fines and amounts paid in settlement) actually and reasonably
incurred by them in connection with any civil or criminal suit or proceeding
(other than a derivative action) to which they are parties or threatened to be
made parties by reason of being directors or officers, if they acted in good
faith and in a manner 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 their conduct was unlawful). The
power to indemnify in connection with an action or suit by or in the right of
the corporation (a derivative action) is more limited. Indemnification against
expenses actually and reasonably incurred is required if a director or officer
is wholly successful in defense of an action, suit or proceeding of the type
where indemnity is permitted by the statute. Unless ordered by a court,
indemnification under the statute, other than mandatory indemnification against
expenses, may be made only if a determination that indemnification is proper has
been made by a prescribed vote of the board of directors, special legal counsel
in certain cases, by the shareholders or by the prescribed vote of a committee
duly designated by the board of directors, in certain cases. Indemnification
provided for by RSA 293-A:8.50-8.58 is not exclusive and a corporation is
empowered to maintain insurance on behalf of its directors and officers against
any liability asserted against them in that capacity, whether or not the
corporation would have the power under that section to indemnify them.
II-1
<PAGE> 6
The by-laws of the Registrant provide that it shall indemnify any director
or officer pursuant to the provisions of RSA 293-A:8.50-8.58.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing or any existing arrangement or otherwise,
the Registrant has been advised that, in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy and is,
therefore, unenforceable.
The by-laws of the Company provide that it shall indemnify any director or
officer to the fullest extent allowed by law. The Company currently maintains
insurance on behalf of its directors and officers against liability asserted
against them in that capacity.
Item 8. Exhibits
--------
The exhibits listed on the Exhibit Index on Page II-6 of this Registration
Statement are filed herewith or are incorporated herein by reference to other
filings.
Item 9. Undertakings
------------
(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 the Registration Statement
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1993 ("Act");
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
provided, however, that paragraphs (i) and (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 the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that for the purpose 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 1933 that is incorporated by reference in
the Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein,
II-2
<PAGE> 7
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(e) The undersigned Registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is
sent or given, the latest annual report to security holders that is
incorporated by reference in the prospectus and furnished pursuant to and
meeting the requirement of Rule 14a-3 or Rule 14c-3 under the Securities
Exchange Act of 1934; and, where interim financial information required to
be presented by Article 3 of Regulation S-X is not set forth in the
prospectus, to deliver, or cause to be delivered to each person to whom the
prospectus is sent or given, the latest quarterly report that is
specifically incorporated by reference in the prospectus to provide such
interim financial information.
(h) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the provisions set forth in Item 6, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE> 8
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 behalf by the undersigned, thereunto duly authorized,
in the City of Manchester, State of New Hampshire, on June 3, 1997.
WPI GROUP, INC.
By: /s/ Dennis M. Deegan
----------------------------------------
Dennis M. Deegan, President,
Treasurer and Chief Operating Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on the 3rd day of June, 1997.
SIGNATURE TITLE
- --------- -----
/s/ Michael Foster Chairman, Chief Executive Officer and
- ------------------------------- Director (Principal Executive Officer)
Michael Foster
/s/ Dennis M. Deegan President, Chief Operating Officer and
- ------------------------------- Director (Principal Financial Officer)
Dennis M. Deegan
/s/ John P. Powers Vice President and Chief Financial Officer
- ------------------------------- (Principal Accounting Officer)
John P. Powers
/s/ Robert C. Mccray Director
- -------------------------------
Robert C. McCray
/s/ Paul G. Giovacchini Director
- -------------------------------
Paul G. Giovacchini
/s/ Peter D. Danforth Director
- -------------------------------
Peter D. Danforth
/s/ Irving Gutin Director
- -------------------------------
Irving Gutin
/s/ Bernard H. Tenenbaum Director
- -------------------------------
Bernard H. Tenenbaum
II-4
<PAGE> 9
Pursuant to the requirements of the Securities Act of 1933, the trustees
(or other persons who administer the employee benefit plan) have duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Manchester, State of New Hampshire, on
June 3, 1997.
WPI GROUP, INC.
(Plan Administrator)
By: /s/ Dennis M. Deegan
----------------------------------------
Dennis M. Deegan, President,
Treasurer and Chief Operating Officer
II-5
<PAGE> 10
INDEX OF EXHIBITS
-----------------
Exhibit
Number Description of Exhibits
- ------ -----------------------
3.1 WPI Group, Inc. Amended and Restated Articles of Incorporation is
incorporated by reference to Exhibit 3.1 of the Registrant's Report on
Form 10-KSB for the year ended September 29, 1996.
3.2 Bylaws of WPI Group, Inc. are hereby incorporated by reference to
Exhibit 3.2 of the Registrant's Registration Statement on Form S-4
filed with the Commission on February 22, 1994, Registration No.
33-75656.
4.1 Revolving Line of Credit Promissory Note, dated October 24, 1995 is
incorporated by reference to Exhibit 4.8 of the Registrant's Report on
Form 10-KSB for the year ended September 24, 1995.
4.2 Commercial Loan Agreement, dated October 24, 1995, is incorporated by
reference to Exhibit 4.9 of the Registrant's Report on Form 10-KSB for
the year ended September 24, 1995.
4.3 Revolving Line of Credit Promissory Note, dated March 20, 1996,
replacement to Revolving Line of Credit Promissory Note dated October
24, 1995 is incorporated by reference to Exhibit 4.3 of the
Registrant's Report on Form 10-KSB for the year ended September 29,
1996.
4.4 First Amendment, dated March 20, 1996, to Commercial Loan Agreement
dated October 24, 1995 is incorporated by reference to Exhibit 4.4 of
the Registrant's Report on Form 10-KSB for the year ended September
29, 1996.
4.5 Revolving Line of Credit Promissory Note, dated July 12, 1996,
replacement to Revolving Line of Credit Promissory Note dated March
20, 1996 is incorporated by reference to Exhibit 4.5 of the
Registrant's Report on Form 10-KSB for the year ended September 29,
1996.
4.6 Second Amendment, dated July 12, 1996 to Commercial Loan Agreement
dated October 24, 1995 is incorporated by reference to Exhibit 4.6 of
the Registrant's Report on Form 10-KSB for the year ended September
29, 1996.
4.7 Asset Purchase Agreement dated September 28, 1993 among WPI Group,
Inc. and Magnetec Corporation and Tridex Corporation, previously filed
and incorporated by reference to Registrant's Report on Form 10-KSB
for the year ended September 26, 1993.
4.8 Revolving Line of Credit Promissory Note, dated February 27, 1997,
replacement to Revolving Line of Credit Promissory Note dated July 12,
1996 is incorporated by reference to Exhibit 4.1 of the Registrant's
Report on Form 10-Q for the quarter ended March 30, 1997.
4.9 Third Amendment, dated February 27, 1997 to Commercial Loan Agreement
dated October 24, 1995 is incorporated by reference to Exhibit 4.2 of
the Registrant's Report on Form 10-Q for the quarter ended March 30,
1997.
II-6
<PAGE> 11
4.10 Agreement and Plan of Merger, dated as of January 27, 1994, by and
between WPI Group, Inc. and Termiflex Corporation, previously filed
and incorporated by reference to Exhibit 28.11 of Registrant's report
on Form 8-K filed on September 30, 1994.
4.11 Agreement and Plan of Merger, dated August 31, 1994, by and between
WPI Group, Inc. and Micro Palm Computers, Inc., previously filed and
incorporated by reference to Exhibit 28.11 of Registrant's report on
Form 8-K filed on September 30, 1994.
4.12 Stock Purchase Agreement, dated November 7, 1995 between WPI Group,
Inc. and IVHS Technologies, Inc. previously filed and incorporated by
reference to Exhibit 28.13 of Registrant's report on Form 8-K, dated
November 10, 1995.
4.13 Share Purchase Agreement dated July 16, 1996 by and between WPI Group
(U.K.) and D.R. Watkins and others, previously filed and incorporated
by reference to Exhibit 28.15 in Registrant's report on Form 8-K,
dated July 16, 1996.
5 Opinion re: Legality
23.1 Consent of Michael B. Tule, Vice President, General Counsel and
Secretary is contained in Exhibit 5
23.2 Consent of Arthur Andersen LLP
99 WPI Group, Inc. Employee Stock Purchase Plan and Bonus Award Plan,
each adopted on February 12, 1997.
II-7
<PAGE> 1
Exhibit 5
June 2, 1997
WPI Group, Inc.
1155 Elm Street
Manchester, NH 03101
Ladies and Gentlemen:
You have requested my opinion as to certain matters concerning shares of
WPI Group, Inc. common stock with respect to which you are filing a Registration
Statement on Form S-8 with the Securities and Exchange Commission ("Registration
Statement"). The aforesaid shares are to be issued pursuant to the WPI Group,
Inc. Employee Stock Purchase Plan and Bonus Award Plan ("Plans") and pursuant to
vote of the Board of Directors dated February 12, 1997. Such shares will either
be issued by WPI Group, Inc. from unauthorized but unissued shares or will be
purchased by WPI Group, Inc. from issued and outstanding shares and reissued to
plan participants ("Shares"). The Plans are each included as Exhibit 99 to the
Registration Statement.
I have examined such corporate documents and made such investigation of
matters of fact in law as I deemed necessary to the rendition of this opinion. I
have assumed that there will be no material changes in the documents examined
and the matters investigated and that there will be unauthorized but unissued
shares available for issue in sufficient amounts at the time that any Shares are
issued. Based upon such examinations and investigations, and upon those
assumptions, I am of the opinion that the Shares, when issued in accordance with
the Plans, will be duly authorized, legally issued, fully paid and
non-assessable.
I consent to the filing of this letter as an exhibit to the Registration
Statement and to all references to me in the Registration Statement.
Very truly yours,
/s/Michael B. Tule
Michael B. Tule
Vice President, General Counsel
and Secretary
MBT/lmr
<PAGE> 1
Exhibit 23.2
ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this Form S-8 of our report dated November 18, 1996, included in
WPI Group Inc.'s Annual Report on Form 10-KSB for the fiscal year ended
September 29, 1996.
Boston, Massachusetts
May 29, 1997
<PAGE> 1
Exhibit 99
WPI GROUP, INC.
1997 EMPLOYEE STOCK PURCHASE PLAN AND STOCK BONUS AWARD PLAN
INTRODUCTION - GENERAL INFORMATION
WPI Group, Inc. (the "Company") has adopted this Employee Stock Purchase Plan
(the "Purchase Plan") and this Stock Bonus Award Plan (the "Bonus Plan";
collectively, the "Plans") for the benefit of eligible employees. The following
description of the Plans are in question and answer format for ease of
reference.
WHAT ARE THE PURPOSES OF THE PLANS? The purpose of the Purchase Plan is to
provide the employees of the Company with an incentive to become shareholders in
the Company. It is believed that employee participation in the ownership of the
business will help to achieve the unity of purpose essential to the continued
growth of the Company and the mutual benefit of its employees and shareholders.
The Bonus Plan has the additional purpose of rewarding employees of the Company
for outstanding contributions to the continued growth of the Company.
WHO ADMINISTERS THE PLANS? The administrator for both Plans is WPI Group, Inc.
The Company's Vice President - Human Resources maintains all records relating to
the Plans and is the person to whom questions should be directed. Written
inquiries should be directed to the Vice President - Human Resources at 1155 Elm
Street, Manchester, NH 03101 and telephone inquiries should be directed to (603)
627-3500.
The Purchase Plan is intended to be a qualified stock purchase plan under the
Internal Revenue Code, but not a welfare benefit arrangement subject to the
provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"). If
the Purchase Plan is determined to be a welfare benefit arrangement under ERISA,
it shall be revoked and no longer effective.
The Bonus Plan is not a part of the Purchase Plan and is not intended to be a
qualified stock purchase plan under the Internal Revenue Code or a welfare
benefit arrangement subject to the provisions of the Employee Retirement Income
Security Act of 1974 ("ERISA"). If the Bonus Plan is determined to be a part of
the Purchase Plan, a qualified stock purchase plan, or a welfare benefit
arrangement under ERISA, it shall be revoked and no longer effective.
Both Plans begin on June 1, 1997 and end on May 31, 2007.
The fiscal year for both Plans is the twelve consecutive months beginning on
October 1 of each year.
<PAGE> 2
ELIGIBILITY AND PARTICIPATION IN THE PLANS
WHO IS ELIGIBLE TO PARTICIPATE IN THE PLANS? Any full-time employee is eligible
to participate in the Purchase Plan or Bonus Award Plan. However, Employees of
the Company who own (or who would become owners of) 5% of the Company's
outstanding stock are not eligible to make purchases or receive bonus awards
under the Plans.
WHEN DOES A PARTICIPANT'S ELIGIBILITY TERMINATE? A participant's eligibility in
either Plan ends on the earlier of: (a) the date the Plan terminates; or (b) the
date of termination of the employee's employment with the Company.
ARE EMPLOYEES OBLIGATED TO PARTICIPATE? No. An eligible employee's participation
under either Plan is completely voluntary. With respect to the Purchase Plan,
the decision to invest in Company common stock is solely the employee's
investment decision and should be made with reasonable care and prudence. The
Company can make no representation or warranty regarding the advisability of
investing in its common stock and urges each employee to consult his or her
investment advisor prior to making such purchases.
All participants in the Purchase Plan will have the same rights and privileges.
These rights and privileges are not transferable.
PROCEDURE FOR PURCHASE OF STOCK UNDER THE STOCK PURCHASE PLAN
HOW ARE SHARES PURCHASED UNDER THE PURCHASE PLAN? Eligible employees may
purchase shares of the Company's $.01 par value common stock (the "Common
Stock") by submitting the necessary form to the Human Resources Manager
indicating the number of shares that the employee wishes to purchase. The form
must be received by the Human Resources Manager by the close of business on the
day prior to the Purchase Date (defined below). Eligible employees may purchase
no less than ten shares on any Purchase Date, and may purchase no more than 400
shares under the Purchase Plan during a Plan Year. In addition, no Employee may
purchase more than $25,000 worth of Common Stock in a calendar year. The Human
Resources Manager will calculate the purchase price for the shares on the
Purchase Date, and advise each participating employee of the price for the
number of shares that the employee wishes to purchase. Payments must be remitted
to the Human Resources Manager by cash, money order or personal check on the
next business day following advice of the purchase price.
WHEN MAY PURCHASES BE MADE? Purchases can only be made on a quarterly basis, on
December 15, March 15, June 15 and September 15 of each year (the "Purchase
Dates"). If any Purchase Date falls on a Saturday, Sunday or holiday, the
Purchase Date shall be the following business day.
WHAT IS THE PRICE OF THE SHARES PURCHASED? The price of the Common Stock
purchased under the Plan will be ninety-three percent (93%) of the average of
the closing prices of the Common Stock as reported on the National Association
of Securities Dealers Automated Quotation System ("NASDAQ") during the period of
five (5) trading days ending on the Purchase Date or the five (5) days
immediately preceding the Purchase Date, if the Market is closed on the Purchase
Date. However, in no event shall the price be less than eighty-five percent
(85%) of the fair market value on the Purchase Date itself or less than the par
value ($.01).
<PAGE> 3
Although participants in the Purchase Plan receive a discount on the price of
the Common Stock purchased under the Purchase Plan and pay no commission for the
purchase of such stock, they also experience the disadvantage of being unable to
select the day on which the Common Stock is purchased. Therefore, participants
cannot time investments under the Purchase Plan to coincide with fluctuations in
the price of the Common Stock.
STOCK BONUS AWARDS UNDER THE STOCK BONUS PLAN
WHAT ARE STOCK BONUS AWARDS? Bonus awards under the Bonus Plan are grants of
Common Stock to eligible employees. From time to time the Chief Executive
Officer may in his discretion award bonuses of Common Stock to its employees.
WHO MAY RECEIVE BONUS AWARDS? Bonus awards may be awarded to any employee. Bonus
awards will be made only in the discretion of the Chief Executive Officer and
may be made to certain employees who have demonstrated outstanding achievement
in their work or to certain groups of employees who have shown outstanding
achievement in their collective work.
HOW MANY SHARES MAY BE AWARDED IN A BONUS AWARD? The number of shares that are
awarded pursuant to a bonus award is at the discretion of the Chief Executive
Officer. The aggregate number of shares that may be awarded by the Chief
Executive Officer pursuant to bonus awards is 20,000 shares during the term of
the Plan, unless additional shares are reserved for such purposes by the
Company's Board of Directors. The Chief Executive Officer may award all or none
of the shares allocated by the Board of Directors for the purpose of bonus
awards, in his complete discretion.
Because bonus stock awards are subject to federal income taxation as explained
below, it is necessary to provide for withholding of federal income tax and
social security tax. That will be done by issuing a smaller number of shares
than the actual award. The number of shares not issued will cover the federal
income tax and social security withholding requirement. No cash will have to be
paid to the Company by an Employee who receives a stock bonus award.
OTHER INFORMATION
ARE CERTIFICATES ISSUED FOR SHARES PURCHASED OR AWARDED UNDER THE PLAN? Yes.
Participants will receive certificates for their shares of Common Stock
purchased under the Purchase Plan, together with a statement advising the
participant of his or her purchase, as soon as practicable after payment has
been received by the Vice President - Human Resources. Recipients of stock bonus
awards will also receive certificates as soon as practicable after the award,
together with a statement advising the Employee of the number of shares awarded,
the number of shares retained to cover withholding (explained above) and the net
shares shown on the certificate. The certificates should be retained in a secure
place. The statements should also be retained for cost information and tax
purposes.
<PAGE> 4
ARE THERE ANY EXPENSES TO PARTICIPANTS IN CONNECTION WITH PURCHASES OR AWARDS
UNDER THE PLAN? No. There are no brokerage fees on purchases because shares are
purchased from the Company. All costs of administration of the Plan are paid by
the Company. Any withholding requirements for stock bonus awards will be covered
by reducing the number of shares on the certificate.
WHAT IS THE SOURCE OF SHARES PURCHASED UNDER THE PLAN? Shares purchased or
awarded under the Plans will come from the authorized but unissued shares of the
Common Stock. Shares will not be purchased on the open market.
MAY THE PLANS BE CHANGED OR DISCONTINUED? Yes. The Company reserves the
right to amend or terminate each Plan at any time. Participants will be
notified if these Plans are terminated or amended.
WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF PARTICIPATION IN THE PLANS? With
respect to the Purchase Plan, Employees will not recognize income on receiving
the right to participate in and purchase Common Stock through the Plan. Further,
except as described below, employees will not recognize income on the Purchase
Date on the purchase of stock. Instead, gain or loss from the sale or exchange
of shares acquired by purchase under the Purchase Plan will generally be treated
as capital gain or loss at the time of such sale or exchange, provided that the
shares are held as capital assets at the time of sale or exchange and that the
sale or exchange occurs no earlier than one year from the date the shares were
purchased. Generally, the basis of the shares purchased under the Purchase Plan
will be the price paid.
If stock purchased under the Purchase Plan is disposed of before the qualifying
date described above then Employees will be treated as having received ordinary
income equal to the difference between the fair market value of the shares
purchased on the Purchase Date and the purchase price.
Recipients of shares as a bonus award under the Bonus Plan will be treated as
having received, on the award date, ordinary income equal to the fair market
value of the shares on that date. Income received by such recipients will be
subject to income tax and social security tax withholding, as explained above.
The amount of the income and the withholdings will be reported on the
recipient's Form W-2 (See "Stock Bonus Awards Under the Stock Bonus Plan--How
Many Shares are Awarded"). The basis of the shares received as an award will be
their fair market value on the award date.
Shares purchased through the Purchase Plan or received through the Bonus Plan
are treated with respect to the sale of shares like shares otherwise purchased
by the participant.
All comments concerning possible federal income tax consequences of
participating in the Plans are based upon the Company's interpretation of
federal tax law as it existed on the date of adoption of the Plan. Since the
federal law is subject to change and each participant's tax consequences may be
different, the participant is advised to consult his or her own tax advisor
concerning the federal income tax consequences to him or her.
WHO BEARS RISK OF MARKET PRICE FLUCTUATIONS IN THE COMPANY'S COMMON STOCK? A
participant's investment in shares purchased under the Purchase Plan is no
different than his investment in shares of the Company acquired in other ways.
The participant bears the risk of loss and the
<PAGE> 5
benefits of gain from market price changes with respect to all his shares. The
Company cannot guarantee that shares purchased under the Purchase Plan will, at
any particular time, be worth more or less than their purchase price, nor can
the Company guarantee that shares received under the Bonus Plan, will, at any
particular time, be worth more or less than their fair market value at the time
of the award.
WHAT ARE THE RESPONSIBILITIES OF THE COMPANY UNDER THE PLANS? In performing its
duties under the Plans, the Company is not liable for any act done in good
faith, or for any good faith omission to act, including, without limitation, any
claim of liability arising out of the prices or timing at which shares are
purchased under the Plans or fluctuations in market value of shares.
The Plans are not contracts of employment. No part of either Plan shall give any
employee the right to be retained in the Company's service or interfere with the
Company's right to terminate his or her employment at any time, nor shall it
give the Company the right to interfere with the employee's right to terminate
his or her employment at any time.
WHO INTERPRETS AND REGULATES THE PLANS? The Company reserves the right to
interpret and regulate the Plans as deemed desirable or necessary in connection
with their respective operations.
