As filed with the Securities and
Exchange Commission on February 16, 1999
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 Registrant 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. 1997 EQUITY INCENTIVE PLAN
------------------------------
(Full Title of Plan)
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, Vice President - General Counsel
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>
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
- --------------------------------------------------------------------------
<S> <C> <C> <C> <C> <S>
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
- --------------------------------------------------------------------------
Common Stock
par value $.01 750,000 $4.031 $3,023,250 $917.63
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 February 12, 1999
<PAGE>
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>
INTRODUCTION
This Registration Statement on Form S-8 relates to the
registration of 750,000 shares of WPI Group, Inc. (the "Company")
common stock issuable under the WPI Group, Inc. 1997 Equity
Incentive Plan (the "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>
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 27, 1998.
2. Quarterly Reports on Form 10-Q for the quarters
ended December 27, 1998.
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 and 8.56, 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>
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 this
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>
and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act 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>
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 February 16, 1999.
WPI GROUP, INC.
By:/s/ John Allard
------------------
John Allard, President
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 16th day of
February, 1999.
Signature Title
- --------- -----
/s/Michael Foster Chairman, Chief Executive Officer
- ----------------- and Director (Principal
Michael Foster Executive Officer)
/s/ John Allard President, Chief Operating Officer
- ----------------- and Director
John Allard
/s/John Powers Vice President and Chief
- -------------- Financial Officer
John Powers (Principal Accounting
Officer)
/s/Stephen Carlotti Director
- -------------------
Stephen Carlotti
/s/Paul Giovacchini Director
- -------------------
Paul Giovacchini
/s/Irving Gutin Director
- ---------------
Irving Gutin
/s/Steven Shulman Director
- -----------------
Steven Shulman
/s/Bernard Tenenbaum Director
- --------------------
Bernard Tenenbaum
II-4
<PAGE>
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
February 16, 1999.
WPI GROUP, INC.
(Plan Administrator)
By:/s/ John Allard
------------------
John Allard, President
and Chief Operating Officer
II-5
<PAGE>
INDEX OF EXHIBITS
Exhibit
Number Description of Exhibits
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. 1997 Equity Incentive Plan,
adopted on June 10, 1997.
II-6
<PAGE>
</TABLE>
Exhibit 5
February 16, 1999
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. 1997 Equity Incentive Plan ("Plan") and
pursuant to vote of the Board of Directors dated June 10, 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 Plan is 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
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 Registration Statement of our
report dated December 10, 1998 (except with respect to the matter
discussed in Note 3, as to which the date is December 27, 1998)
included in WPI Group Inc.'s Annual Report on Form 10-K for the year
ended September 27, 1998.
Arthur Andersen LLP
Boston, Massachusetts
February 16, 1999
Exhibit 99
WPI GROUP, INC.
1997 EQUITY INCENTIVE PLAN
1. Establishment and Purpose.
There is hereby adopted the WPI Group, Inc. 1997 Equity
Incentive Plan (the "Plan"). This Plan is intended to promote
the interests of the Company (as defined below) and the
stockholders of WPI Group, Inc. ("WPI") by providing officers and
other employees of the Company (including directors who are also
employees of the Company) with appropriate incentives and rewards
to encourage them to enter into and continue in the employ of the
Company and to acquire a proprietary interest in the long-term
success of the Company; to compensate WPI's non-employee
directors and provide incentives to such non-employee directors
which are directly linked to increases in stock value; and to
reward the performance of individual officers, other employees,
consultants and non-employee directors in fulfilling their
personal responsibilities for long-range achievements.
2. Definitions.
As used in the Plan, the following definitions apply to the
terms indicated below:
(a) "Agreement" shall mean the written agreement between
WPI and a Participant evidencing an Incentive Award.
(b) "Board of Directors" shall mean the Board of
Directors of WPI.
(c) "Cause" shall mean (1) the willful and continued
failure by the Participant substantially to perform his
or her duties and obligations to the Company (other
than any failure resulting from his or her incapacity
due to physical or mental illness); (2) the willful
engaging by the Participant in misconduct which is
materially injurious to the Company; (3) the commission
by the Participant of a felony; or (4) the commission
by the Participant of a crime against the Company which
is materially injurious to the Company. For purposes
of this Section 2(c), no act, or failure to act, on a
Participant's part shall be considered "willful" unless
done, or omitted to be done, by the Participant in bad
faith and without reasonable belief that his or her
action or omission was in the best interest of the
Company. Determination of Cause shall be made by the
Committee in its sole discretion.
(d) "Change In Control" shall have the same meaning as in
the WPI Group, Inc. Change In Control Plan adopted on
December 15, 1995.
(e) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time, and any regulations
promulgated thereunder.
(f) "Committee" shall mean the Stock Option/Compensation
Committee of the Board of Directors. The Committee
shall consist of two or more persons, each of whom is
an "outside director" within the meaning of Section
162(m) of the Code and a "Non-Employee Director" within
the meaning of Rule 16b-3.
(g) "Company" shall mean, collectively, WPI and each of its
Subsidiaries now held or hereinafter acquired.
(h) "Company Stock" shall mean the common stock of WPI, par
value of $.01 per share.
(i) "Disability" shall mean: (1) any physical or mental
condition that would qualify a Participant for a
disability benefit under the long-term disability plan
maintained by the Company and applicable to him or her;
<PAGE>
(2) when used in connection with the exercise of an
Incentive Stock Option following termination of
employment, disability within the meaning of Section
22(e)(3) of the Code; or (3) such other condition as
may be determined in the sole discretion of the
Committee to constitute Disability.
(j) "Effective Date" shall mean the date upon which this
Plan is adopted by the Board of Directors.
(k) "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended from time to time.
(l) The "Fair Market Value" of a share of Company Stock, as
of a date of determination, shall mean the closing
sales price per share of Company Stock on the
NASDAQ/NMS on the date preceding the date of the
action requiring such determination.
(m) "Incentive Award" shall mean any Option, Tandem SAR,
Stand-Alone SAR, Restricted Stock, Phantom Stock or
Other Award granted pursuant to the terms of the Plan.
(n) "Incentive Stock Option" shall mean an Option that
is an "incentive stock option" within the meaning of
Section 422 of the Code, or any successor provision,
and that is designated by the Committee as an Incentive
Stock Option.
(o) "Issue Date" shall mean the date established by WPI on
which certificates representing shares of Restricted
Stock shall be issued by WPI pursuant to the terms of
Section 10(e).
(p) "Non-Employee Director" shall mean a member of the
Board of Directors who is not an employee of the
Company.
(q) "Non-Qualified Stock Option" shall mean an Option other
than an Incentive Stock Option.
(r) "Option" shall mean an option to purchase shares of
Company Stock granted pursuant to Section 7.
(s) "Other Award" shall mean an award granted pursuant to
Section 13 hereof.
(t) "Partial Exercise" shall mean an exercise of an
Incentive Award for less than the full extent permitted
at the time of such exercise.
(u) "Participant" shall mean (1) an employee, non-employee
director or consultant of the Company to whom an
Incentive Award has been granted pursuant to the Plan,
and (2) upon the death of an individual described in
(1), his or her successors, heirs, executors and
administrators, as the case may be.
(v) "Phantom Stock" shall mean the right, granted pursuant
to Section 11, to receive in cash or shares the Fair
Market Value of a share of Company Stock.
(w) "Reload Option" shall mean a Non-Qualified Stock Option
granted pursuant to Section 7(c)(5).
(x) "Restricted Stock" shall mean a share of Company Stock
which is granted pursuant to the terms of Section 10
hereof and which is subject to the restrictions set
forth in Section10(c).
(y) "Rule 16b-3" shall mean the Rule 16b-3 promulgated
under the Exchange Act, as amended from time to time.
(z) "Securities Act" shall mean the Securities Act of 1933,
as amended from time to time.
(aa) "Stand-Alone SAR" shall mean a stock appreciation right
which is granted pursuant to Section 9 and which is not
related to any Option.
<PAGE>
(bb) "Subsidiary" shall mean a "subsidiary corporation"
within the meaning of Section 424(f) of the Code.
(cc) "Tandem SAR" shall mean a stock appreciation right
which is granted pursuant to Section 8 and which is
related to an Option.
(dd) "Vesting Date" shall mean the date established by the
Committee on which a share of Restricted Stock or
Phantom Stock may vest.
3. Stock Subject to the Plan.
(a) Shares Available for Awards
The maximum number of shares of Company Stock reserved
for issuance under the Plan shall be 750,000 (subject
to adjustment as provided herein). The maximum number
of shares of Company Stock which may be the subject of
Options (which shall include any Tandem SARs related to
such Options) granted to any individual during any
calendar year shall not exceed 200,000 shares. Such
shares may be authorized but unissued Company Stock or
authorized and issued Company Stock held in WPI's
treasury. The Committee may direct that any stock
certificate evidencing shares issued pursuant to the
Plan shall bear a legend setting forth such
restrictions on transferability as may apply to such
shares pursuant to the Plan.
The grant of a Tandem SAR, a Stand-Alone SAR which is
paid only in cash or Phantom Stock which is paid only
in cash shall not reduce the number of shares of
Company Stock with respect to which Incentive Awards
may be granted pursuant to the Plan. Notwithstanding
the preceding, the maximum number of shares of Company
Common Stock with respect to which Stand-Alone SARs may
be granted to any individual during any calendar years
shall not exceed 200,000 shares.
(b) Adjustment for Change in Capitalization
In the event that the Committee shall determine that
any dividend or other distribution (whether in the form
of cash, Company Stock, or other property),
recapitalization, Company Stock split, reverse Company
Stock split, reorganization, merger, consolidation,
spin-off, combination, repurchase, or share exchange,
or other similar corporate transaction or event,
affects the Company Stock such that an adjustment is
appropriate in order to prevent dilution or enlargement
of the rights of Participants under the Plan, then the
Committee shall make such equitable changes or
adjustments as it deems necessary or appropriate to any
or all of (1) the number and kind of shares of Company
Stock which may thereafter be issued in connection with
Incentive Awards, (2) the number and kind of shares of
Company Stock issued or issuable in respect of
outstanding Incentive Awards, (3) the exercise price,
grant price or purchase price relating to any Incentive
Award, and (4) the maximum number of shares subject to
Incentive Awards which may be awarded to any employee
during any tax year of the Company; provided that, with
respect to Incentive Stock Options, such adjustment
shall be made in accordance with Section 424 of the
Code.
(c) Re-use of Shares.
Except as restricted by applicable laws or regulations,
any shares subject to an Incentive Award that remain
unissued upon the cancellation, surrender, exchange or
termination of such award for any reason whatsoever and
any shares of Restricted Stock forfeited shall again
become available for Incentive Awards. Notwithstanding
the preceding, with respect to any Option (and any
related Tandem SAR) and/or any Stand-Alone SAR granted
to any individual who is a "covered employee" within
the meaning of Section 162(m) of the Code that is
cancelled, the number of shares subject to such Option
(and Tandem SARs), and/or Stand-Alone SAR, shall
continue to count against the maximum number of shares
which may be the subject of Options (and Tandem SARs)
<PAGE>
and Stand-Alone SARs granted to such individual. For
purposes of the preceding sentence, if, after grant,
the exercise price of an Option (and any related Tandem
SAR) and/or the base amount of any Stand-Alone SAR is
reduced, such reduction shall be treated as a
cancellation of such Option, Tandem SAR and/or Stand-
Alone SAR and the grant of a new Option, Tandem SAR
and/or Stand-Alone SAR and both the cancellation and
the new grant shall reduce the maximum number of shares
for which Options (and related Tandem SARs) and Stand-
Alone SARs may be granted to the holder of such Option
(and related Tandem SAR) and/or Stand-Alone SAR.
4. Administration of the Plan.
The Plan shall be administered by the Committee. The
Committee shall have the authority in its sole discretion,
subject to and not inconsistent with the express provisions of
the Plan, to administer the Plan and to exercise all the powers
and authorities either specifically granted to it under the Plan
or necessary or advisable in the administration of the Plan,
including, without limitation, the authority to grant Incentive
Awards; to determine the person to whom and the time or times at
which Incentive Awards shall be granted; to determine the type
and number of Incentive Awards to be granted, the number of
shares of Stock to which an Award may relate and the terms,
conditions, restrictions and performance criteria relating to any
Incentive Award; to determine whether, to what extent, and under
what circumstances an Incentive Award may be settled, cancelled,
forfeited, exchanged, or surrendered; to make adjustments in the
performance goals in recognition of unusual or non-recurring
events affecting the Company or the financial statements of the
Company, or in response to changes in applicable laws,
regulations, or accounting principles; to construe and interpret
the Plan and any Incentive Award; to prescribe, amend and rescind
rules and regulations relating to the Plan; to determine the
terms and provisions of Agreements; and to make all other
determinations deemed necessary or advisable for the
administration of the Plan; provided, however, that the Committee
may not exercise discretion under any provision of the Plan with
respect to Non-Qualified Stock Options granted to Non-Employee
Directors pursuant to Section 12 of the Plan.
The Committee may, in its absolute discretion, without
amendment to the Plan, (a) except with regard to Non-Qualified
Stock Options granted to Non-Employee Directors pursuant to
Section 12 hereof, accelerate the date on which any Option or
Stand-Alone SAR granted under the Plan becomes exercisable, waive
or amend the operation of Plan provisions respecting exercise
after termination of employment or otherwise adjust any of the
terms of such Option or Stand-Alone SAR, and (b) accelerate the
Vesting Date or Issue Date, or waive any condition imposed
hereunder, with respect to any share of Restricted Stock, Phantom
Stock or other Incentive Award or otherwise adjust any of the
terms applicable to any such Incentive Award.
No member of the Committee shall be liable for any action,
omission or determination relating to the Plan, and the Company
shall indemnify (to the extent permitted under New Hampshire law
and the bylaws of the of the Company) and hold harmless each
member of the Committee and each other director or employee of
the Company to whom any duty or power relating to the
administration or interpretation of the Plan has been delegated
against any cost or expense (including counsel fees) or liability
(including any sum paid in settlement of a claim with the
approval of the Committee) arising out of any action, omission or
determination relating to the Plan, unless, in either case, such
action, omission or determination was taken or made by such
member, director or employee in bad faith and without reasonable
belief that it was in the best interests of the Company.
5. Eligibility.
The persons who shall be eligible to receive Incentive
Awards pursuant to the Plan shall be such employees of the
Company (including officers of the Company, whether or not they
are directors of the Company) and consultants of the Company as
the Committee shall select from time to time. Non-Qualified
Stock Options shall be granted to Non-Employee Directors in
accordance with the provisions of Section 12 hereof.
6. Awards Under the Plan; Agreement.
The Committee may grant Options, Tandem SARs, Stand-Alone
SARs, shares of Restricted Stock, shares of Phantom Stock and
Other Awards in such amounts and with such terms and conditions
as the Committee shall determine, subject to the provisions of
the Plan.
<PAGE>
Each Incentive Award granted under the Plan shall be
evidenced by an Agreement which shall contain such provisions as
the Committee may in its sole discretion deem necessary or
desirable. By accepting an Incentive Award, a Participant
thereby agrees that the award shall be subject to all of the
terms and provisions of the Plan and the applicable Agreement.
7. Options.
The provisions of this Section 7 shall apply to the grant of
Options under the Plan, except to the extent the same are
inconsistent with Section 12, which shall govern grants of Non-
Qualified Stock Options to Non-Employee Directors.
(a) Identification of Options.
Each Option shall be clearly identified in the
applicable Agreement as either Incentive Stock Option
or a Non-Qualified Stock Option.
(b) Exercise Price.
Each Agreement with respect to an Option shall set
forth the amount (the "option exercise price") payable
by the grantee to the Company upon exercise of the
Option. The option exercise price per share shall be
determined by the Committee; provided, however, that in
the case of an Incentive Stock Option, the option
exercise price shall in no event be less than the Fair
Market Value of a share of Company Stock on the date
the Option is granted.
(c) Term and Exercise of Options.
(1) The Committee shall determine the vesting
and the expiration date of each Option; provided,
however, that no Incentive Stock Option shall be
exercisable more than 10 years after the date of
grant.
(2) An Option many be exercised for all or any portion
of the shares as to which it is exercisable,
provided that no Partial Exercise of an Option shall be
for an aggregate exercise price of less
than $1,000. The Partial Exercise of an Option
shall not cause the expiration, termination or
cancellation of the remaining portion
thereof.
(3) An Option shall be exercised by delivering notice
to WPI's principal office, to the attention of its
Secretary. Such notice shall specify the number
of shares of Company Stock with respect to which
the Option is being exercised and the effective
date of the proposed exercise and shall be signed
by the Participant or other person then having the
right to exercise the Option. Payment for shares
of Company Stock purchased upon the exercise of an
Option shall be made on the effective date of such
exercise by one or a combination of the following
means: (i) in cash or by personal check, certified
check, bank cashier's check or wire transfer; (ii)
subject to the approval of the Committee, in
shares of Company Stock owned by the Participant
for at least six months prior to the date of
exercise and valued at their Fair Market Value on
the effective date of such exercise; or (iii)
subject to the approval of the Committee, by such
other means as the Committee may from time to
time authorize. Any payment in shares of Company
Stock shall be effected by the delivery of such
shares to the Secretary of WPI, duly endorsed in
blank or accompanied by stock powers duly executed
in blank, together with any other documents and
evidences as the Secretary of WPI shall require.
(4) Certificates for shares of Company Stock purchased
upon the exercise of an Option shall be issued in
the name of the Participant or other person
entitled to receive such shares, and delivered to
the Participant or such other person as soon as
practicable following the effective date on
which the option is exercised.
<PAGE>
(5) The Committee shall have the authority to specify,
at the time of grant or, with respect to Non-
Qualified Stock Options, at or after the time of
grant, that a Participant shall be granted a new
Non-Qualified Stock Option (a "Reload Option") for
a number of shares equal to the number of shares
surrendered by the Participant upon exercise of
all or a part of an Option in the manner described
in Section 7(c)(3)(ii) above, subject to the
availability of shares of Company Stock under the
Plan at the time of such exercise; provided,
however, that no Reload Option shall be granted to
a Non-Employee Director. Reload Options shall be
subject to such conditions as may be specified by
the Committee in its discretion, subject to the
terms of the Plan.
(d) Limitations on Incentive Stock Options.
(1) To the extent that the aggregate Fair Market Value
of shares of Company Stock with respect to which
Incentive Stock Options are exercisable for the
first time by a Participant during any calendar
year under the Plan and any other stock option
plan of the Company (or any Subsidiary) shall
exceed $100,000, such Options shall be treated as
Non-Qualified Stock Options. Such Fair Market
Value shall be determined as of the date on which
each such Incentive Stock Option is granted.
(2) No Incentive Stock Option may be granted to an
individual if, at the time of the proposed grant,
such individual owns (or is attributed to own by
virtue of the Code) stock possessing more than ten
percent of the total combined voting power of all
classes of stock of the Company or any Subsidiary
unless (i) the exercise price of such Incentive
Stock Option is at least 110 percent of the Fair
Market Value of a share of Company Stock at the
time such Incentive Stock Option is granted and
(ii) such Incentive Stock Option is not
exercisable more than five years after the date
such Incentive Stock Option is granted.
(e) Effect of Termination of Employment.
(1) Unless the applicable Agreement provides
otherwise, in the event that the employment of a
Participant with the Company shall terminate for
any reason other than Disability or death, Options
granted to such Participant shall terminate on the
date of termination of such employment or other
relationship. The Committee may, in its sole
discretion, extend the exercise period for the
vested portion of the Option for up to three
consecutive months after such termination, on
which date the Option shall expire. Options
granted to such Participant, to the extent that
they were not exercisable at the time of such
termination, shall expire at the close of business
on the date of such termination. Notwithstanding
the foregoing, no Option shall be exercisable
after the expiration of its term.
(2) Unless the applicable Agreement provides
otherwise, in the event that the employment of a
Participant with the Company shall terminate on
the account of the Disability or death of a
Participant, (i) Options granted to such
Participant, to the extent that they were
exercisable at the time of such termination, shall
remain exercisable until the first anniversary of
such termination, on which date they shall expire,
and (ii) Options granted to such Participant, to
the extent that they were not exercisable at the
time of such termination, shall expire at the
close of business on the date of such termination;
provided, however, that no Option shall be
exercisable after the expiration of its term.
(f) Acceleration of Exercise Date Upon Change In Control.
Unless the Committee otherwise determines or
unless the applicable agreement otherwise
provides, upon the occurrence of a Change In
Control, each Option granted under the Plan and
outstanding at such time shall become fully and
immediately exercisable and shall remain
exercisable until its expiration, termination or
cancellation.
<PAGE>
8. Tandem SARs.
The Committee may grant in connection with any Option
granted hereunder, except a Non-Qualified Stock Option granted to
a Non-Employee Director pursuant to Section 12 hereof, one or
more Tandem SARs relating to a number of shares of Company Stock
less than or equal to the number of shares of Company Stock
subject to the related Option. A Tandem SAR granted in
connection with a Non-Qualified Stock Option may be granted
subsequent to the time that such Non-Qualified Stock Option is
granted.
(a) Benefit Upon Exercise.
The exercise of a Tandem SAR with respect to any number
of shares of Company Stock shall entitle the
Participant to cash payment, for each such share, equal
to the excess of (1) the Fair Market Value of a share
of Company Stock on the exercise date over (2) the
option exercise price of the related Option. Such
payment shall be made as soon as practicable after the
effective date of such exercise.
(b) Term and Exercise of Tandem SAR.
(1) A Tandem SAR shall be exercisable only if and to
the extent that its related Option is exercisable.
(2) The exercise of a Tandem SAR with respect to a
number of shares of Company Stock shall cause the
immediate and automatic cancellation of its
related Option with respect to an equal number of
shares. The exercise of an Option, or the
cancellation, termination or expiration of an
Option (other than pursuant to this Section
8(b)(2)), with respect to a number of shares of
Company Stock shall cause the automatic and
immediate cancellation of any related Tandem SARs
to the extent of the number of shares of Company
Stock subject to such Option which is so
exercised, cancelled, terminated or expired.
(3) A Tandem SAR may be exercised for all or any
portion of the shares as to which it is
exercisable; provided, that no Partial Exercise of
a Tandem SAR shall be for an aggregate payment by
the Company of less than $1,000.
(4) No Tandem SAR shall be assignable or transferable
otherwise than together with its related Option.
(5) A Tandem SAR shall be exercised by delivering
notice to WPI's principal office, to the attention
of its Secretary. Such notice shall be
accompanied by the applicable Agreement, shall
specify the number of shares of Company Stock with
respect to which the Tandem SAR is being exercised
and the effective date of the proposed exercise
and shall be signed by the Participant or other
person then having the right to exercise the
Option to which the Tandem SAR is related.
9. Stand-Alone SARs.
(a) Base Amount.
The base amount per share of a Stand-Alone SAR shall be
determined by the Committee at the time of grant, but
shall in no event be less than the Fair Market Value of
a share of Company Stock on the date of grant.
(b) Benefit Upon Exercise.
The exercise of a Stand-Alone SAR with respect to any
number of shares of Company Stock shall entitle the
Participant to a payment, for each such share, equal to
the excess of (1) the Fair Market Value of a share of
<PAGE>
Company Stock on the exercise date over (2) the base
amount of the Stand-Alone SAR. Such payments shall be
made as soon as practicable after such exercise, in
cash and/or shares of the Company Stock, as determined
by the Committee.
(c) Term and Exercise of Stand-Alone SAR's.
(1) The Committee shall determine the terms, vesting
and expiration date of each Stand-Alone SAR.
Unless the applicable Agreement provides
otherwise, no Stand-Alone SAR shall be exercisable
prior to the first anniversary of the date of
grant.
(2) A Stand-Alone SAR may be exercised for all or any
portion of the shares as to which it is
exercisable; provided, that no Partial Exercise of
a Stand-Alone SAR shall be for an aggregate
payment by the Company of less than $1,000.
(3) A Stand-Alone SAR shall be exercised by delivering
notice to WPI's principal office, to the attention
of its Secretary. Such notice shall be
accompanied by the applicable Agreement, shall
specify the number of shares of Company Stock with
respect to which the Stand-Alone SAR is being
exercised, and the effective date of the proposed
exercise, and shall be signed by the Participant.
(d) Effect of Termination of Employment.
The provisions set forth in Section 7(e) with respect
to the exercise of Options following termination of
employment shall apply as well to such exercise of
Stand-Alone SARs.
(e) Acceleration of Exercise Date Upon Change In Control.
Unless the Committee otherwise determines or unless the
applicable agreement otherwise provides, upon the
occurrence of a Change In Control, any Stand Alone SAR
granted under the Plan and outstanding at such time
shall become fully and immediately exercisable and
shall remain exercisable until its expiration,
termination or cancellation.
10. Restricted Stock.
(a) Issue Date and Vesting Date.
At the time of the grant of shares of Restricted Stock,
the Committee shall establish an Issue Date or Issue
Dates and a Vesting Date or Vesting Dates with respect
to such shares. The Committee may divide such shares
into classes and assign a different Issue Date and/or
Vesting Date for each class. If the grantee is
employed by the Company on an Issue Date (which may be
the date of grant), the specified number of shares of
Restricted Stock shall be issued in accordance with the
provisions of Section 10(e). Provided that all
conditions to the vesting of a share of Restricted
Stock imposed pursuant to Section 10(b) are satisfied,
and except as provided in Section 10(g), upon the
occurrence of the Vesting Date with respect to a share
of Restricted Stock, such share shall vest and the
restrictions of Section 10(c) shall lapse.
(b) Conditions to Vesting.
At the time of grant of shares of Restricted Stock, the
Committee may impose such restrictions or conditions to
the vesting of such shares as it, in its absolute
discretion, deems appropriate.
(c) Restrictions on Transfer Prior to Vesting.
Prior to the vesting of a share of Restricted Stock, no
transfer of a Participant's rights with respect to such
share, whether voluntary or involuntary, by operation
of law or otherwise, shall be permitted. Immediately
<PAGE>
upon any attempt to transfer such rights, such share,
and all of the rights related thereto, shall be
forfeited by the Participant.
(d) Dividends on Restricted Stock.
The Committee in its discretion may require that any
dividends paid on shares of Restricted Stock be held in
escrow until all restrictions on such shares have
lapsed.
(e) Issuance of Certificates.
(1) Reasonably promptly after the Issue Date with
respect to shares of Restricted Stock, WPI shall
cause to be issued a stock certificate, registered
in the name of the Participant to whom such shares
were granted, evidencing such shares; provided
that WPI shall not cause such a stock certificate
to be issued unless it has received a stock power
duly endorsed in blank with respect to such
shares. Each such stock certificate shall bear
the following legend:
The transferability of this certificate and
the shares of stock represented hereby are
subject to the restrictions, terms and
conditions (including forfeiture provisions
and restrictions against transfer) contained
in the WPI Group, Inc. 1997 Equity Incentive
Plan and an Agreement entered into between
the registered owner of such shares and WPI.
A copy of the Plan and Agreement is on file
in the office of the Secretary of WPI, 1155
Elm Street., Manchester, New Hampshire,
03101.
Such legend shall not be removed until such shares
vest pursuant to the terms hereof.
(2) Each certificate issued pursuant to this Section
10(e), together with the stock powers relating to
the shares of Restricted Stock evidenced by such
certificate, shall be held by WPI unless the
Committee determines otherwise.
(f) Consequences of Vesting.
Upon the vesting of a share of Restricted Stock
pursuant to the terms hereof, the restrictions of
Section 10(c) shall lapse with respect to such share.
Reasonably promptly after a share of Restricted Stock
vests, WPI shall cause to be delivered to the
Participant to whom such shares were granted, a
certificate evidencing such share, free of the legend
set forth in Section 10(e).
(g) Effect of Termination of Employment.
Subject to such other provision as the Committee may
set forth in the applicable Agreement, and to the
Committee's amendment authority pursuant to Section 4,
upon the termination of a Participant's employment for
any reason any and all shares to which restrictions on
transferability apply shall be immediately forfeited by
the Participant and transferred to, and reacquired by,
WPI; provided that if the Committee, in its sole
discretion, shall within thirty (30) days after such
termination of employment notify the Participant in
writing of its decision not to terminate the
Participant's rights in such shares, then the
Participant shall continue to be the owner of such
shares subject to such continuing restrictions as the
Committee may prescribe in such notice. In the event
of a forfeiture of shares pursuant to this section, WPI
shall repay to the Participant (or the Participant's
estate) any amount paid by the Participant for such
shares. In the event that WPI requires a return of
shares, it shall also have the right to require the
return of all dividends paid on such shares, whether by
termination of any escrow arrangement under which such
dividends are held or otherwise.
(h) Effect of Change In Control.
Unless the Committee otherwise determines or unless the
applicable agreement otherwise
<PAGE>
provides, upon the occurrence of a Change In Control,
all outstanding shares of Restricted Stock which have
not theretofore vested shall immediately vest and all
restrictions on such shares shall immediately lapse.
11. Phantom Stock.
(a) Vesting Date.
At the time of the grant of shares of Phantom Stock,
the Committee shall establish a Vesting Date or Vesting
Dates with respect to such shares. The Committee may
divide such shares into classes and assign a different
Vesting Date for each class. Provided that all
conditions to the vesting of a share of Phantom Stock
imposed pursuant to Section 11(c) are satisfied, and
except as provided in Section 11(d), upon the
occurrence of the Vesting Date with respect to a share
of Phantom Stock, such share shall vest.
(b) Benefit Upon Vesting.
Upon the vesting of a share of Phantom Stock, the
Participant shall be entitled to receive, within 30
days of the date on which such share vests, an amount,
in cash and/or shares of Company Stock, as determined
by the Committee, equal to the sum of (1) the Fair
Market Value of a share of Company Stock on the date on
which such share of Phantom Stock vests and (2) the
aggregate amount of cash dividends paid with respect to
a share of Company Stock during the period commencing
on the date on which the share of Phantom Stock was
granted and terminating on the date on which such share
vests.
(c) Conditions to Vesting.
At the time of the grant of shares of Phantom Stock,
the Committee may impose such restrictions or
conditions to the vesting of such shares as it, in its
absolute discretion, deems appropriate.
(d) Effect of Termination of Employment.
Subject to such other provision as the Committee may
set forth in the applicable Agreement, and to the
Committee's amendment authority pursuant to Section 4,
shares of Phantom Stock that have not vested, together
with any dividends credited on such shares, shall be
forfeited upon the Participant's termination of
employment for any reason.
(e) Effect of Change In Control.
Unless the Committee otherwise determines or unless the
applicable agreement otherwise provides, upon the
occurrence of a Change In Control, all outstanding
shares of Phantom Stock which have not theretofore
vested shall immediately vest and payment in respect of
such shares shall be made in accordance with the Plan.
12. Non-Employee Director Formula Stock Options.
The provisions of this Section 12 shall apply only to grants
of Non-Qualified Stock Options to Non-Employee Directors.
(a) General.
Non-Employee Directors shall receive Non-Qualified
Stock Options under the Plan. The exercise price per
share of the Company Stock purchasable under Non-
Qualified Stock Options granted to Non-Employee
Directors shall be the Fair Market Value of a share of
Company Stock on the date of grant. Non-Qualified Stock
Options granted to a Non-Employee Director shall not be
<PAGE>
subject to an acceleration of exercisability except
upon a Change in Control as described in Section 12(g).
(b) Initial Grants to Directors.
Each Non-Employee Director who first became a director
after April 1, 1997 and is reelected at the
stockholders meeting at which the Plan is approved
shall be granted automatically a Non-Qualified Stock
Option to purchase 10,000 shares of Company Stock,
effective at such stockholders meeting. Each Non-
Employee Director who is first elected after such
stockholders meeting shall be granted automatically, at
the times such director first becomes a member of the
Board of Directors, a Non-Qualified Stock Option to
purchase 10,000 shares of Company Stock.
(c) Subsequent Grants to Directors.
Commencing with the annual meeting of the stockholders
of the Company held in 1999, on the date of the first
Board meeting following the annual meeting of
stockholders of each year, each Non-Employee Director
(other than a director who is first elected at the
annual meeting for that year or within six months prior
to such annual meeting) shall be granted automatically
a Non-Qualified Stock Option to purchase 2,500 shares
of Company Stock. Notwithstanding the foregoing, no
annual grants to Non-Employee Directors shall be made
unless the Company's earnings per share for the most
recently completed fiscal year has increased from the
prior fiscal year by at least 15%.
(d) Method and Time of Payment.
The Option exercise price shall be paid in full, at the
time of exercise, in cash (including cash received from
the Company as compensation or, in the discretion of
the Committee, cash borrowed from the Company on such
terms and subject to such conditions as the Committee
shall prescribe), in shares of Company Stock having a
Fair Market Value equal to such Option exercise price,
in a combination of cash and Company Stock or through a
cashless exercise procedure.
(e) Term and Exercisability.
Each Non-Qualified Stock Option granted under this
Section 12 shall (i) be exercisable in 1/3 increments
beginning on the first anniversary of the date that the
Non-Qualified Stock Option is granted and (ii) expire
ten years from the date of grant.
(f) Termination.
In the event of the termination of a Non-Employee
Director's service with the Company other than for
Cause, any Non-Qualified Stock Option granted to such
Non-Employee Director under this Section 12, to the
extent that it is exercisable on the date of such
termination, may be exercised by such Non-Employee
Director (or, if applicable, by his or her executors,
administrator, legatees or distributees) until the
earlier of (i) the date that is two years from the date
of such termination or (ii) the expiration of such Non-
Qualified Stock Option. In the event of the
termination of a Non-Employee Director's service with
the Company for Cause, all outstanding Non-Qualified
Stock Options granted to such Non-Employee Director
shall expire at the commencement of business on the
date of such termination.
(g) Acceleration of Exercise Date Upon Change In Control.
Upon the occurrence of a Change In Control, each Non-
Qualified Stock Option granted under this Section 12
and outstanding at such time shall become fully and
immediately exercisable and shall remain exercisable
until its expiration, termination or cancellation.
<PAGE>
13. Other Awards.
Other forms of Incentive Awards ("Other Awards") valued in
whole or in part by reference to, or otherwise based on, Company
Stock may be granted either alone or in addition to other
Incentive Awards under the Plan. Subject to the provisions of the
Plan, the Committee shall have sole and complete authority to
determine the persons to whom and the time or times at which such
Other Awards shall be granted, the number of shares of Company
Stock to be granted pursuant to such Other Awards and all other
conditions of such Other Awards.
14. Rights as a Stockholder.
No person shall have any rights as a stockholder with
respect to any shares of Company Stock covered by or relating to
any Incentive Award until the date of issuance of a stock
certificate with respect to such shares. Except as otherwise
expressly provided in Section 3(c), no adjustments to any
Incentive Award shall be made for dividends or other rights for
which the record date occurs prior to the date such stock
certificate is issued.
15. No Special Employment Rights; No Right to Incentive Award.
Nothing contained in the Plan or any Agreement shall confer
upon any Participant any right with respect to the continuation
of employment by the Company or interfere in any way with the
right of the Company, subject to the terms of any separate
employment agreement to the contrary, at any time to terminate
such employment or to increase or decrease the compensation of
the Participant.
Except for the automatic grant of Non-Qualified Stock
Options to Non-Employee Directors pursuant to Section 12 hereof,
no person shall have any claim or right to receive an Incentive
Award hereunder and there is no obligation of uniformity for
treatment of Participants.. The Committee's granting of an
Incentive Award to a Participant at any time shall neither
require the Committee to grant any other Incentive Award to such
Participant or other person at any time or preclude the Committee
from making subsequent grants to such Participant or any other
person.
16. Securities Matters.
(a) WPI shall be under no obligation to effect the
registration pursuant to the Securities Act of any
interests in the Plan or any Options or shares of
Company Stock to be issued hereunder or to effect
similar compliance under any state laws.
Notwithstanding anything herein to the contrary, WPI
shall not be obligated to cause to be issued or
delivered any certificates evidencing shares of Company
Stock pursuant to the Plan unless and until WPI is
advised by its counsel that the issuance and delivery
of such certificates is in compliance with all
applicable laws, regulations of governmental authority
and the requirements of any securities exchange on
which shares of Company Stock are traded. The
Committee may require, as a condition of the issuance
and delivery of certificates evidencing shares of
Company Stock pursuant to the terms hereof, that the
recipient of such shares make such agreements and
representations, and that such certificates bear such
legends, as the Committee, in its sole discretion,
deems necessary or desirable.
(b) The transfer of any shares of Company Stock hereunder
shall be effective only at such time as counsel to WPI
shall have determined that the issuance and delivery of
such shares is in compliance with all applicable laws,
regulations of governmental authority and the
requirements of any securities exchange on which shares
of Company Stock are traded. The Committee may, in its
sole discretion, defer the effectiveness of any
transfer of shares of Company Stock hereunder in order
to allow the issuance of such shares to be made
pursuant to registration or an exemption from
registration or other methods for compliance available
under federal or state securities laws. The Committee
shall inform the Participant in writing of its decision
to defer the effectiveness of a transfer. During the
period of such deferral in connection with the exercise
of an Option, the Participant may, by written notice,
withdraw such exercise and obtain the refund of any
amount paid with respect thereto.
<PAGE>
17. Withholding Taxes.
Whenever cash is to be paid pursuant to an Incentive Award,
the Company shall have the right to deduct therefrom an amount
sufficient to satisfy any federal, state and local withholding
tax requirements related thereto.
Whenever shares of Company Stock are to be delivered
pursuant to an Incentive Award, the Company shall have the right
to require the Participant to remit to the Company in cash an
amount sufficient to satisfy any federal, state and local
withholding tax requirements related thereto. With the approval
of the Committee, a Participant may satisfy the foregoing
requirement by electing to have the Company withhold from
delivery shares of Company Stock having a value equal to the
amount of tax to be withheld. Such shares shall be valued at
their Fair Market Value on the date as of which the amount of tax
to be withheld is determined (the "Tax Date"). Fractional share
amounts shall be settled in cash. Such a withholding election
may be made with respect to all or any portion of the shares to
be delivered pursuant to an Incentive Award.
18. Notification of Election Under Section 83(b) of the Code.
If any Participant shall, in connection with the acquisition
of shares of Company Stock under the Plan, make the election
permitted under Section 83(b) of the Code (i.e., an election to
include in gross income in the year of transfer the amounts
specified in Section 83(b)), such Participant shall notify the
Company of such election within 10 days of filing notice of the
election with the Internal Revenue Service, in addition to any
filing and notification required pursuant to regulation issued
under the authority of Section 83(b) of the Code.
19. Notification Upon Disqualifying Disposition Under Section
421(b) of the Code.
Each Agreement with respect to an Incentive Stock Option
shall require the Participant to notify the Company of any
disposition of shares of Company Stock issued pursuant to the
exercise of such Option under the circumstances described in
Section 421(b) of the Code (relating to certain disqualifying
dispositions), within 10 days of such disposition.
20. Amendment or Termination of the Plan.
The Board of Directors may, at any time, suspend or
terminate the Plan or revise or amend it in any respect
whatsoever; provided, however, that stockholder approval shall be
required if and to the extent required by Rule 16b-3 or by any
comparable or successor exemption under which the Board of
Directors believes it is appropriate for the Plan to qualify, or
if and to the extent the Board of Directors determines that such
approval is appropriate for purposes of satisfying Sections
162(m) or 422 of the Code. Incentive Awards may be granted under
the Plan prior to the receipt of such stockholder approval but
each such grant shall be subject in its entirety to such approval
and no award may be exercised, vested or otherwise satisfied
prior to the receipt of such approval. Nothing herein shall
restrict the Committee's ability to exercise its discretionary
authority pursuant to Section 4, which discretion may be
exercised without amendment to the Plan. No action hereunder
may, without the consent of a Participant, reduce the
Participant's rights under any outstanding Incentive Award.
21. Transfers Upon Death; Nonassignability.
Upon the death of a Participant, outstanding Incentive
Awards granted to such Participant may be exercised only by the
executor or administrator of the Participant's estate or by a
person who shall have acquired the right to such exercise by will
or by the laws of descent and distribution. No transfer of an
Incentive Award by will or the laws of descent and distribution
shall be effective to bind the Company unless the Committee shall
have been furnished with (a) written notice thereof and with a
copy of the will and/or such evidence as the Committee may deem
necessary to establish the validity of the transfer and (b) an
agreement by the transferee to comply with all the terms and
conditions of the Incentive Award that are or would have been
applicable to the Participant and to be bound by the
acknowledgments made by the Participant in connection with the
grant of the Incentive Award.
During a Participant's lifetime, the Committee may permit
the transfer, assignment or other encumbrance of an outstanding
Option unless such Option is an Incentive Stock Option and the
Committee and the Participant intend that it shall retain such
<PAGE>
status. Subject to any conditions as the Committee may prescribe
and to approval by the Committee, a Participant may, upon
providing written notice to the Secretary of WPI, elect to
transfer any or all such Options granted to such Participant
pursuant to the Plan to members of his or her immediate family,
including, but not limited to, children, grandchildren and spouse
or to trusts for the benefit of such immediate family members or
to partnerships in which such family members are the only
partners; provided, however, that no such transfer by any
Participant may be made in exchange for consideration.
22. Expenses and Receipts.
The expenses of the Plan shall be paid by the Company.
23. Failure to Comply.
In addition to the remedies of the Company elsewhere
provided for herein, failure by a Participant (or beneficiary) to
comply with any of the terms and conditions of the Plan or the
applicable Agreement, unless such failure is remedied by such
Participant (or beneficiary) within ten days after notice of such
failure by the Committee, shall be grounds for the cancellation
and forfeiture of such Incentive Award, in whole or in part, as
the Committee, in its absolute discretion, may determine.
24. Effective Date and Term of Plan.
The Plan became effective on the Effective Date, but the
Plan (and any grants of Incentive Awards made prior to
stockholder approval of the Plan) shall be subject to the
requisite approval of the stockholders of WPI. In the absence of
such approval, such Incentive Awards shall be null and void.
Unless earlier terminated by the Board of Directors, the right to
grant Incentive Awards under the Plan will terminate on the tenth
anniversary of the Effective Date. Incentive Awards outstanding
at Plan termination will remain in effect according to their
terms and the provisions of the Plan.
25. Applicable Law.
Except to the extent preempted by any applicable federal
law, the Plan will be construed and administered in accordance
with the laws of the State of New Hampshire, without reference to
its principles of conflicts of law.
26. Participant Rights.
Except as provided specifically herein, a Participant or a
transferee of an Incentive Award shall have no rights as a
stockholder with respect to any shares covered by any award until
the date of issuance of a Company Stock certificate to him or her
for such shares.
27. Unfunded Status of Awards.
The Plan is intended to constitute an "unfunded" plan for
incentive compensation. With respect to any payments not yet
made under or pursuant to an Incentive Award, nothing contained
in the Plan or any Agreement shall give any such Participant any
rights that are greater than those of a general creditor of the
Company.
28. No Fractional Shares.
No fractional shares of Company Stock shall be issued or
delivered pursuant to the Plan. Except as provided specifically
herein, the Committee shall determine whether cash, other
Incentive Awards, or other property shall be issued or paid in
lieu of such fractional shares or whether such fractional shares
or any rights thereto shall be forfeited or otherwise eliminated.
29. Interpretation.
The Plan is designed and intended to permit Options, Tandem
SARs and Stand-Alone SARs which have an exercise price or base
amount equal to the Fair Market Value of the underlying Company
Stock on the date of grant to qualify as performance-based
<PAGE>
compensation under Section 162(m) of the Code, and all provisions
hereof shall be construed in accordance with such intention.
30. Severability.
If any provision of the Plan is held to be invalid or
unenforceable, the other provisions of the Plan shall not be
affected but shall be applied as if the invalid or unenforceable
provision had not been included in the Plan.
