As Filed with the Securities and Exchange Commission on June 26, 1997
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
FORENSIC TECHNOLOGIES INTERNATIONAL CORPORATION
(Exact name of issuer as specified in its charter)
Maryland 52-1261113
(State of Incorporation) (IRS Employer Identification Number)
2021 Research Drive, Annapolis, Maryland 21401
(Address of Principal Executive Offices)
(410) 224-8770
(Registrant's telephone number, including area code)
FORENSIC TECHNOLOGIES INTERNATIONAL CORPORATION
Employee Stock Purchase Plan
(Full title of the Plan)
----------------------------
Jack B. Dunn, IV
Chief Executive Officer and President
Forensic Technologies International Corporation
2021 Research Drive
Annapolis, Maryland 21401
(410) 224-8770
(Name, address and telephone number of agent for service)
----------------------------
Copy to:
John B. Watkins, Esquire
Wilmer, Cutler & Pickering
100 Light Street
Baltimore, Maryland 21202
(410) 986-2800
----------------------------
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered(1) Per Share Price Fee (2)
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Options 400,000 shares ___ ___ ___
- ----------------------------------------------------------------------------------------------------------------
Common Stock, 400,000 shares $ 7.25 $ 2,900,000 $ 878.78
par value $.01 per
share,
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
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(1) Also registered hereunder are such additional number of shares of Common
Stock, presently indeterminable, as may be necessary to satisfy the
antidilution provisions of the Plan to which this Registration Statement
relates.
(2) The registration fee has been calculated in accordance with Rule 457(h)
with respect to the 400,000 shares of Common Stock registered hereby on the
basis of the average of the high and low sale prices reported on The Nasdaq
National Market ("Nasdaq") on June 24, 1997.
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<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Note: The document(s) containing the information required by Item 1 of
Form S-8 and the statement of availability of registrant information and any
other information required by Item 2 of Form S-8 will be sent or given to
participants as specified by Rule 428 under the Securities Act of 1933, as
amended (the "Securities Act"). In accordance with Rule 428 and the requirements
of Part I of Form S-8, such documents are not being filed with the Securities
and Exchange Commission (the "Commission") either as part of this Registration
Statement or as prospectuses or prospectus supplements pursuant to Rule 424
under the Securities Act. Forensic Technologies International Corporation (the
"Registrant" or the "Company") shall maintain a file of such documents in
accordance with the provisions of Rule 428. Upon request, the Registrant shall
furnish the Commission or its staff a copy or copies of all of the documents
included in such file.
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PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
The Company hereby incorporates by reference the documents listed in
(a) through (c) below. In addition, all documents subsequently filed by the
Company pursuant to Section 13(a), 13(c), 14 and 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") (prior to filing of a
Post-Effective Amendment which indicates that all securities offered have been
sold or which deregisters all securities then remaining unsold) shall be deemed
to be incorporated by reference in this Registration Statement and to be a part
hereof from the date of filing of such documents.
(a) The Company's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1996.
(b) All other reports filed by the Company pursuant to Section 13(a) or
15(d) of the Exchange Act, including the Company's quarterly financial
statements on Form 10-Q for the quarter ended March 31, 1997 filed on May 15,
1997 pursuant Section 13(a) of the Exchange Act
(c) The description of the Company's Common Stock which is incorporated
by reference in the Registration Statement on Form 8-A filed by the Company
under the Exchange Act on April 30, 1996, including any amendment or report
filed for the purpose of updating such description.
Item 4. Description of Securities
Inapplicable.
Item 5. Interests of Named Experts and Counsel
The validity of the authorization and issuance of the Common Stock
offered hereby will be passed upon for the Company by Wilmer, Cutler &
Pickering, Baltimore, Maryland. George P. Stamas, a member of the Board of
Directors and a stockholder of the Company, is a partner in Wilmer, Cutler &
Pickering. As of June 1, 1997, Mr. Stamas was the beneficial owner of 5,838
shares of Common Stock and stock options to purchase 9,800 shares of Common
Stock of the Company.
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<PAGE>
Item 6. Indemnification of Directors and Officers
1. Statutory Provisions of the Maryland General Corporation Law.
Section 2-418. Indemnification of directors, officers, employees and
agents.
(a) Definitions. - In this section the following words have
the meanings indicated.
(1) "Director" means any person who is or was a
director of a corporation and any person who, while a director
of a corporation, is or was serving at the request of the
corporation as a director, officer, partner, trustee,
employee, or agent of another foreign or domestic corporation,
partnership, joint venture, trust, other enterprise, or
employee benefit plan.
(2) "Corporation" includes any domestic or foreign
predecessor entity of a corporation in a merger,
consolidation, or other transaction in which the predecessor's
existence ceased upon consummation of the transaction.
(3) "Expenses" include attorney's fees.
(4) "Official capacity" means the following:
(i) When used with respect to a director,
the office of director in the corporation; and
(ii) When used with respect to a person
other than a director as contemplated in subsection (j), the
elective or appointive office in the corporation held by the
officer, or the employment or agency relationship undertaken
by the employee or agent in behalf of the corporation.
(iii) "Official capacity" does not include
service of any other foreign or domestic corporation or any
partnership, joint venture, trust, other enterprise, or
employee benefit plan.
(5) "Party" includes a person who was, is, or is
threatened to be made a named defendant or respondent in a
proceeding.
(6) "Proceeding" means any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative, or investigative.
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(b) Permitted indemnification of director. - (1) A corporation
may indemnify any director made a party to any proceeding by
reason of service in that capacity unless it is established
that:
(i) The act or omission of the director was
material to the matter giving rise to the proceeding; and
1. Was committed in bad faith; or
2. Was the result of active and
deliberate dishonesty; or
(ii) The director actually received an
improper personal benefit in money, property, or services; or
(iii) In the case of any criminal
proceeding, the director had reasonable cause to believe that
the act or omission was unlawful.
(2)(i) Indemnification may be against judgments,
penalties, fines, settlements, and reasonable expenses
actually incurred by the director in connection with the
proceeding.
(ii) However, if the proceeding was one by
or in the right of the corporation, indemnification may not be
made in respect of any proceeding in which the director shall
have been adjudged to be liable to the corporation.
(3)(i) The termination of any proceeding by judgment,
order, or settlement does not create a presumption that the
director did not meet the requisite standard of conduct set
forth in this subsection.
(ii) The termination of any proceeding by
conviction, or a plea of nolo contendere or its equivalent, or
an entry of an order of probation prior to judgment, creates a
rebuttable presumption that the director did not meet that
standard of conduct.
(c) No indemnification of director liable for improper
personal benefit. - A director may not be indemnified under
subsection (b) of this section in respect of any proceeding
charging improper personal benefit to the director, whether or
not involving action in the director's official capacity, in
which the director was adjudged to be liable on the basis that
personal benefit was improperly received.
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(d) Required indemnification against expenses incurred in
successful defense. - Unless limited by the charter:
(1) A director who has been successful, on the merits
or otherwise, in the defense of any proceeding referred to in
subsection (b) of this section shall be indemnified against
reasonable expenses incurred by the director in connection
with the proceeding.
(2) A court of appropriate jurisdiction, upon
application of a director and such notice as the court shall
require, may order indemnification in the following
circumstances:
(i) If it determines a director is entitled
to reimbursement under paragraph (1) of this subsection, the
court shall order indemnification, in which case the director
shall be entitled to recover the expenses of securing such
reimbursement; or
(ii) If it determines that the director is
fairly and reasonably entitled to indemnification in view of
all the relevant circumstances, whether or not the director
has met the standards of conduct set forth in subsection (b)
of this section or has been adjudged liable under the
circumstances described in subsection (c) of this section, the
court may order such indemnification as the court shall deem
proper. However, indemnification with respect to any
proceeding by or in the right of the corporation or in which
liability shall have been adjudged in the circumstances
described in subsection (c) shall be limited to expenses.
(3) A court of appropriate jurisdiction may be the
same court in which the proceeding involving the director's
liability took place.
(e) Determination that indemnification is proper. - (1)
Indemnification under subsection (b) of this section may not
be made by the corporation unless authorized for a specific
proceeding after a determination has been made that
indemnification of the director is permissible in the
circumstances because the director has met the standard of
conduct set forth in subsection (b) of this section.
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(2) Such determination shall be made:
(i) By the board of directors by a majority
vote of a quorum consisting of directors not, at the time,
parties to the proceeding, or, if such a quorum cannot be
obtained, then by a majority vote of a committee of the board
consisting solely of two or more directors not, at the time,
parties to such proceeding and who were duly designated to act
in the matter by a majority vote of the full board in which
the designated directors who are parties may participate:
(ii) By special legal counsel selected by
the board of directors or a committee of the board by vote as
set forth in subparagraph (i) of this paragraph, or, if the
requisite quorum of the full board cannot be obtained therefor
and the committee cannot be established, by a majority vote of
the full board in which directors who are parties may
participate; or
(iii) By the stockholders.
(3) Authorization of indemnification and
determination as to reasonableness of expenses shall be made
in the same manner as the determination that indemnification
is permissible. However, if the determination that
indemnification is permissible is made by special legal
counsel, authorization of indemnification and determination as
to reasonableness of expenses shall be made in the manner
specified in subparagraph (ii) of paragraph (2) of this
subsection for selection of such counsel.
(4) Shares held by directors who are parties to the
proceeding may not be voted on the subject matter under this
subsection.
(f) Payment of expenses in advance of final disposition of
action. - (1) Reasonable expenses incurred by a director who
is a party to a proceeding may be paid or reimbursed by the
corporation in advance of the final disposition of the
proceeding upon receipt by the corporation of:
(i) A written affirmation by the director of
the director's good faith belief that the standard of conduct
necessary for indemnification by the corporation as authorized
in this section has been met; and
(ii) A written undertaking by or on behalf
of the director to repay the amount if it shall ultimately be
determined that the standard of conduct has not been met.
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(2) The undertaking required by subparagraph (ii) of
paragraph (1) of this subsection shall be an unlimited general
obligation of the director but need not be secured and may be
accepted without reference to financial ability to make the
repayment.
(3) Payments under this subsection shall be made as
provided by the charter, bylaws, or contract or as specified
in subsection (e) of this section.
(g) Validity of indemnification provision. - The
indemnification and advancement of expenses provided or
authorized by this section may not be deemed exclusive of any
other rights, by indemnification or otherwise, to which a
director may be entitled under the charter, the bylaws, a
resolution of stockholders or directors, an agreement or
otherwise, both as to action in an official capacity and as to
action in another capacity while holding such office.
(h) Reimbursement of director's expenses incurred while
appearing as witness. - This section does not limit the
corporation's power to pay or reimburse expenses incurred by a
director in connection with an appearance as a witness in a
proceeding at a time when the director has not been made a
named defendant or respondent in the proceeding.
(i) Director's service to employee benefit plan. - For
purposes of this section:
(1) The corporation shall be deemed to have requested
a director to serve an employee benefit plan where the
performance of the director's duties to the corporation also
imposes duties on, or otherwise involves services by, the
director to the plan or participants or beneficiaries of the
plan;
(2) Excise taxes assessed on a director with respect
to an employee benefit plan pursuant to applicable law shall
be deemed fines; and
(3) Action taken or omitted by the director with
respect to an employee benefit plan in the performance of the
director's duties for a purpose reasonably believed by the
director to be in the interest of the participants and
beneficiaries of the plan shall be deemed to be for a purpose
which is not opposed to the best interests of the corporation.
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(j) Officer, employee or agent. - Unless limited by the
charter:
(1) An officer of the corporation shall be
indemnified as and to the extent provided in subsection (d) of
this section for a director and shall be entitled, to the same
extent as a director, to seek indemnification pursuant to the
provisions of subsection (d);
(2) A corporation may indemnify and advance expenses
to an officer, employee, or agent of the corporation to the
same extent that it may indemnify directors under this
section; and
(3) A corporation, in addition, may indemnify and
advance expenses to an officer, employee, or agent who is not
a director to such further extent, consistent with law, as may
be provided by its charter, bylaws, general or specific action
of its board of directors, or contract.
(k) Insurance or similar protection. - (1) A corporation may
purchase and maintain insurance on behalf of any person who is
or was a director, officer, employee, or agent of the
corporation, or who, while a director, officer, employee, or
agent of the corporation, is or was serving at the request of
the corporation as a director, officer, partner, trustee,
employee, or agent of another foreign or domestic corporation,
partnership, joint venture, trust, other enterprise, or
employee benefit plan against any liability asserted against
and incurred by such person in any such capacity or arising
out of such person's position, whether or not the corporation
would have the power to indemnify against liability under the
provisions of this section.
(2) A corporation may provide similar protection,
including a trust fund, letter of credit, or surety bond, not
inconsistent with this section.
(3) The insurance or similar protection may be
provided by a subsidiary or an affiliate of the corporation.
(l) Report of indemnification to stockholders. - Any
indemnification of, or advance of expenses to, a director in
accordance with this section, if arising out of a proceeding
by or in the right of the corporation, shall be reported in
writing to the stockholders with the notice of the next
stockholders' meeting or prior to the meeting.
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2. Charter Provisions.
The Company has provided for indemnification by the following provision
of ARTICLE EIGHTH of its Charter.
The Corporation shall indemnify (a) its directors and
officers, whether serving the Corporation or at its request any other
entity, to the full extent required or permitted by the General Laws of
the State of Maryland now or hereafter in force, including the advance
of expenses under the procedures and to the full extent permitted by
law, and (b) its other employees and agents to such extent as shall be
authorized by the Board of Directors or in the Corporation's By-laws
and be permitted by law. The foregoing shall not be exclusive of any
other rights to which those seeking indemnification may be entitled.
The Board of Directors may take such actions as are necessary to carry
out these indemnification provisions and is expressly empowered to
adopt, approve, and amend from time to time such By-Laws, resolutions
and contracts implementing such provisions or such further
indemnification arrangements as may be permitted by law. No amendment
of the charter of the Corporation shall limit or eliminate the right to
indemnification provided hereunder with respect to acts or omissions
occurring prior to such amendment or appeal.
3. By-laws Provisions.
The Company has provided for indemnification by the following
provisions of ARTICLE XI of its By-laws:
SECTION 1. Definitions. As used in this Article XI, any word
or words that are defined in Section 2-418 of the Corporations and
Associations Article of the Annotated Code of Maryland (the
"Indemnification Section"), as amended from time to time, shall have
the same meaning as provided in the Indemnification Section.
SECTION 2. Indemnification of Directors and Officers. The
Corporation shall indemnify and advance expenses to a director or
officer of the Corporation in connection with a proceeding to the
fullest extent permitted by and in accordance with the Indemnification
Section.
SECTION 3. Indemnification of Other Agents and Employees. With
respect to an employee or agent, other than a director or officer of
the Corporation, the Corporation may, as determined by and in the
discretion of the Board of Directors of the Corporation, indemnify and
advance expenses to such employees or agents in connection with a
proceeding to the extent permitted by and in accordance with the
Indemnification Section.
Item 7. Exemption from Registration Claimed
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Not Applicable.
Item 8. Exhibits
Number Description
4.1* Amended and Restated Articles of Incorporation of the
Registrant.
4.2* Restated By-Laws of the Registrant.
4.3 Employee Stock Purchase Plan
4.4* Specimen certificate representing the Common Stock of
Registrant.
5.1 Opinion of Wilmer, Cutler & Pickering.
23.1 Consent of Independent Public Accountants.
23.2 Consent of Wilmer, Cutler & Pickering (included in
Exhibit 5.1).
------------
* Incorporated herein by reference from the Registrant's Registration
Statement on Form SB-2 (File No. 333-2002).
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Item 9. Undertakings
The undersigned Registrant hereby undertakes the following:
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1993;
(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;
(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 (a)(1)(i) and (a)(1)(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.
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(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
(b) The undersigned registrant hereby undertakes
that, for purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to section 13(a) or
section 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of any employee benefit plan's annual report pursuant to section
15(d) of the Securities Exchange Act of 1934) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
reflating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) The undersigned registrant hereby undertakes,
that, insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the 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 of 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.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Annapolis, Maryland on June 27, 1997.
FORENSIC TECHNOLOGIES INTERNATIONAL CORPORATION
/S/ Jack B. Dunn IV
-------------------------------------
Jack B. Dunn, IV
Chief Executive Officer and President
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below constitutes and appoints Jack B. Dunn, IV his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him or in his name, place and stead, in any and all capacities to sign any
and all amendments or post-effective amendments to this Registration Statement,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite or necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/S/ Jack B. Dunn, IV
- --------------------------
Jack B. Dunn, IV Director, Chief Executive Officer June 27, 1997
and President (principal executive
officer)
/S/ Gary Sindler
- --------------------------
Gary Sindler Executive Vice President and June 27, 1997
Chief Financial Officer, Secretary
and Treasurer (principal financial
and accounting officer)
/S/ Daniel W Luczak
- --------------------------
Daniel W. Luczak Chairman of the Board June 27, 1997
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<S> <C> <C>
/S/ Joseph R. Reynolds Jr.
- --------------------------
Joseph R. Reynolds, Jr. Vice Chairman of the Board June 27, 1997
/S/ James A Flick
- --------------------------
James A. Flick Director June 27, 1997
/S/Peter F. O'Malley
- --------------------------
Peter F. O'Malley Director June 27, 1997
/S/ Dennis J. Shaughnessy
- --------------------------
Dennis J. Shaughnessy Director June 27, 1997
/S/ George P. Stamas
- --------------------------
George P. Stamas Director June 27, 1997
</TABLE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
EXHIBITS
to
FORM S-8
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933, AS AMENDED
FORENSIC TECHNOLOGIES INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
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<PAGE>
Exhibits
Number Description
4.1* Amended and Restated Articles of Incorporation of
the Registrant.
4.2* Restated By-Laws of the Registrant.
4.3 Employee Stock Purchase Plan
4.4* Specimen certificate representing the Common
Stock of Registrant.
5.1 Opinion of Wilmer, Cutler & Pickering.
23.1 Consent of Independent Public Accountants.
23.2 Consent of Wilmer, Cutler & Pickering (included
in Exhibit 5.1).
------------------
* Incorporated herein by reference from the Registrant's Registration
Statement on Form SB-2 (File No. 333-2002).
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FORENSIC TECHNOLOGIES INTERNATIONAL CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
PURPOSE The Forensic Technologies International Corporation Employee
Stock Purchase Plan (the "ESPP" or the "Plan") provides
employees of Forensic Technologies International Corporation
(the "Company") and selected Company Subsidiaries with an
opportunity to become owners of the Company through the
purchase of shares of the Company's common stock (the "Common
Stock"). The Company intends this Plan to qualify as an
employee stock purchase plan under Section 423 of the Internal
Revenue Code of 1986, as amended (the "Code"), and its terms
should be construed accordingly.
ELIGIBILITY An Employee whom the Company or a Eligible Subsidiary has
employed continuously for one year as of the first day of an
Offering Period is eligible to participate in the ESPP for
that Offering Period; provided, however, that an Employee may
not make a purchase under the ESPP if such purchase would
result in the Employee's owning Common Stock possessing 5% or
more of the total combined voting power or value of the
Company's outstanding stock. For purposes of determining an
individual's amount of stock ownership, any options to acquire
shares of Company Common Stock are counted as shares of stock,
and the attribution rules of Section 424(d) of the Code apply.
Employee means any person employed as a common law employee of
the Company or an Eligible Subsidiary. Employee excludes
anyone not treated initially on the payroll records as a
common law employee.
ADMINISTRATOR The Compensation Committee of the Board of Directors of the
Company, or such other committee as the Board designates (the
"Committee"), will administer the ESPP. The Committee is
vested with full authority and discretion to make, administer,
and interpret such rules and regulations as it deems necessary
to administer the ESPP (including rules and regulations deemed
necessary in order to comply with the requirements of Section
423 of the Code). Any determination or action of the Committee
in connection with the administration or interpretation
FTI Employee Stock Purchase Plan
Page 1 of 11
<PAGE>
of the ESPP shall be final and binding upon each Employee,
Participant and all persons claiming under or through any
Employee or Participant.
OFFERING Offering Periods are successive six month periods beginning on
PERIOD PERIOD January 1 and July 1, and the first such period will
begin on July 1, 1997.
PARTICIPATION An eligible Employee may become a "Participant" for an
Offering Period by completing an authorization notice and
delivering it to the Committee through the Company's Human
Resources Department within a reasonable period of time before
the first day of such Offering Period. The Committee will send
to each new Employee who satisfies the rules in ELIGIBILITY
above a notice advising the Employee of his right to
participate in the ESPP for the following Offering Period. All
Participants receiving options under the ESPP will have the
same rights and privileges.
METHOD A Participant may contribute to the ESPP through payroll
OF PAYMENT deductions, as follows: The Participant must elect on an
authorization notice to have deductions made from his
Compensation for each payroll period during the Offering
Period at a rate of at least 1% but not more than 15% of his
Compensation. Compensation under the Plan means an Employee's
regular compensation, including overtime, bonuses, and
commissions, from the Company or an Eligible Subsidiary paid
during an Offering Period.
All payroll deductions will be credited to the Participant's
account under the ESPP. No interest or earnings will accrue on
any payroll deductions credited to such accounts.
Payroll deductions will begin on the first payday coinciding
with or following the first day of each Offering Period and
will end with the last payday preceding or coinciding with the
end of that Offering Period, unless the Participant sooner
withdraws as authorized under WITHDRAWALS below.
A Participant may not alter the rate of payroll deductions
during the Offering Period.
FTI Employee Stock Purchase Plan
Page 2 of 11
<PAGE>
The Company may use the consideration it receives for general
corporate purposes.
GRANTING OF On the first day of each Offering Period, a Participant will
OPTIONS receive options to purchase a number of shares of Common Stock
with funds withheld from his Compensation. Such number of
shares will be determined at the end of the Offering Period
according to the following procedure:
Step 1 -- Determine the amount the Company withheld from
Compensation since the beginning of the Offering Period;
Step 2 -- Determine the amount that represents 85% of the
lower of Fair Market Value of a share of Common Stock on
the (I) first day of the Offering Period, or (II) the last
day of the Offering Period; and
Step 3 -- Divide the amount determined in Step 1 by the
amount determined in Step 2 and round down the quotient to
the nearest whole number.
FAIR MARKET The Fair Market Value of a share of Common Stock for purposes
VALUE of the Plan as of each date described in Step 2 will be
determined as follows:
if the Common Stock is traded on a national securities
exchange, the closing sale price on that date;
if the Common Stock is not traded on any such exchange,
the closing sale price as reported by the National
Association of Securities Dealers, Inc. Automated
Quotation System ("Nasdaq") for such date;
if no such closing sale price information is available,
the average of the closing bid and asked prices as
reported by Nasdaq for such date; or
if there are no such closing bid and asked prices, the
average of the closing bid and asked prices as reported by
any other commercial service for such date.
FTI Employee Stock Purchase Plan
Page 3 of 11
<PAGE>
For January 1 and any other date described in Step 2 that is
not a trading day, the Fair Market Value of a share of Common
Stock for such date shall be determined by using the closing
sale price or the average of the closing bid and asked prices,
as appropriate, for the immediately preceding trading day.
No Participant shall receive options:
if, immediately after the grant, that Participant would
own shares, or hold outstanding options to purchase
shares, or both, possessing 5% or more of the total
combined voting power or value of all classes of shares of
the Company or any Subsidiaries; or
that permit the Participant to purchase shares under all
employee stock purchase plans of the Company and any
Subsidiary with a Fair Market Value (determined at the
time the options are granted) that exceeds $25,000 in any
calendar year.
EXERCISE Unless a Participant effects a timely withdrawal pursuant to
OF OPTION the WITHDRAWAL paragraph below, his option for the purchase of
shares of Common Stock during an Offering Period will be
automatically exercised as of the last day of the Offering
Period for the purchase of the maximum number of full shares
that the sum of the payroll deductions credited to the
Participant's account during such Offering Period can purchase
pursuant to the formula specified in GRANTING OF OPTIONS.
Any payroll deductions credited to a Participant's account
during the Offering Period that are not used for the purchase
of shares will be treated as follows:
If the Participant has elected to withdraw from the ESPP
as of the end of the Offering Period, the Company will
deliver the amount of the payroll deductions to the
Participant.
The amount of any other excess payroll deductions will be
applied to the purchase of shares in the immediately
succeeding Offering Period.
DELIVERY OF As soon as administratively feasible after the options are
COMMON used to purchase Common Stock, the Company will deliver to
STOCK each Participant or, in the alternative, to a custodian that
the Committee designates, the shares of Common Stock the
Participant purchased upon the exercise of
FTI Employee Stock Purchase Plan
Page 4 of 11
<PAGE>
the option. If shares are delivered to a custodian, the
Participant may elect at any time thereafter to take
possession of the shares or to have the Committee deliver the
shares to any brokerage firm. The Committee may, in its
discretion, establish a program for cashless sales of Common
Stock received under the ESPP.
SUBSEQUENT A Participant will be deemed to have elected to participate in
OFFERINGS each subsequent Offering Period following his initial election
to participate in the ESPP, unless the Participant files a
written withdrawal notice with the Human Resources Department
at least ten days before the beginning of the Offering Period
as of which the Participant desires to withdraw from the ESPP.
WITHDRAWAL A Participant may withdraw all, but not less than all, payroll
FROM THE deductions credited to his account for an Offering Period
PLAN before the end of such Offering Period by delivering a written
notice to the Human Resources Department on behalf of the
Committee at least thirty days before the end of such Offering
Period. A Participant who for any reason, including
retirement, termination of employment, or death, ceases to be
an Employee before the last day of any Offering Period will be
deemed to have withdrawn from the ESPP as of the date of such
cessation.
Upon the withdrawal of a Participant from the ESPP under the
terms of the preceding paragraph, his outstanding options
under the ESPP will immediately terminate.
If a Participant withdraws from the ESPP for any reason, the
Company will pay to the Participant all payroll deductions
credited to his account or, in the event of death, to the
persons designated as provided in DESIGNATION OF BENEFICIARY,
as soon as administratively feasible after the date of such
withdrawal and no further deductions will be made from the
Participant's Compensation.
A Participant who has elected to withdraw from the ESPP may
resume participation in the same manner and pursuant to the
same rules as any Employee making an initial election to
participate in the ESPP, i.e., he may elect to participate in
the next following Offering Period so long as he files the
authorization form by the deadline for that Offering Period.
Any Participant who is subject to Section 16 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and who
withdraws from the ESPP for any reason will only be permitted
to resume participation
FTI Employee Stock Purchase Plan
Page 5 of 11
<PAGE>
in a manner that will permit transactions under the ESPP to
continue to be exempt within the meaning of Rule 16b-3, as
issued under the Exchange Act.
STOCK SUBJECT The shares of Common Stock that the Company will sell to
TO PLAN Participants under the ESPP will be shares of authorized but
unissued Common Stock. The maximum number of shares made
available for sale under the ESPP will be 400,000 (subject to
the provisions in ADJUSTMENTS UPON CHANGES IN CAPITAL STOCK).
If the total number of shares for which options are to be
exercised in an Offering Period exceeds the number of shares
then available under the ESPP, the Company will make, so far
as is practicable, a pro rata allocation of the shares
available.
A Participant will have no interest in shares covered by his
option until the Participant exercises the option.
Shares that a Participant purchases under the ESPP will be
registered in the name of the Participant.
The Company will not issue fractional shares pursuant to the
ESPP, but the Administrator may, in its discretion, direct the
Company to make a cash payment in lieu of fractional shares.
ADJUSTMENTS Subject to any required action by the Company (which it shall
UPON CHANGES promptly take) or its stockholders, and subject to the
IN CAPITAL STOCK provisions of applicable corporate law, if, during an Offering
Period,
the outstanding shares of Common Stock increase or
decrease or change into or are exchanged for a different
number or kind of security by reason of any
recapitalization, reclassification, stock split, reverse
stock split, combination of shares, exchange of shares,
stock dividend, or other distribution payable in capital
stock, or
some other increase or decrease in such Common Stock
occurs without the Company's receiving consideration,
the Administrator will make a proportionate and appropriate
adjustment in the number of shares of Common Stock underlying
the options, so that the proportionate interest of the
Participant immediately following such event will, to the
extent practicable, be the same as immediately
FTI Employee Stock Purchase Plan
Page 6 of 11
<PAGE>
before such event. Any such adjustment to the options will not
change the total price with respect to shares of Common Stock
underlying the Participant's election but will include a
corresponding proportionate adjustment in the price of the
Common Stock, to the extent consistent with Section 424 of the
Code.
The Administrator will make a commensurate change to the
maximum number and kind of shares provided in the STOCK
SUBJECT TO PLAN section.
Any issue by the Company of any class of preferred stock, or
securities convertible into shares of common or preferred
stock of any class, will not affect, and no adjustment by
reason thereof will be made with respect to, the number of
shares of Common Stock subject to any options or the price to
be paid for stock except as this ADJUSTMENTS section
specifically provides. The grant of an option under the Plan
will not affect in any way the right or power of the Company
to make adjustments, reclassifications, reorganizations or
changes of its capital or business structure, or to merge or
to consolidate, or to dissolve, liquidate, sell, or transfer
all or any part of its business or assets.
Substantial Upon a Substantial Corporate Change, the Plan and the offering
Corporate will terminate unless provision is made in writing in
Change connection with such transaction for
the assumption or continuation of outstanding elections,
or
the substitution for such options or grants of any options
or grants covering the stock or securities of a successor
employer corporation, or a parent or subsidiary of such
successor, with appropriate adjustments as to the number
and kind of shares of stock and prices, in which event the
options will continue in the manner and under the terms so
provided.
If an option would otherwise terminate pursuant to the
preceding sentence, the optionee will have the right, at such
time before the consummation of the transaction causing such
termination as the Board reasonably designates, to exercise
any unexercised portions of the option. However, the Board may
determine that allowing such exercise before the end of the
Offering Period will not occur if the election would render
unavailable "pooling of interest" accounting for any
reorganization, merger, or consolidation of the Company.
FTI Employee Stock Purchase Plan
Page 7 of 11
<PAGE>
A Substantial Corporate Change means the
dissolution or liquidation of the Company,
merger, consolidation, or reorganization of the Company
with one or more corporations in which the Company is not
the surviving corporation,
the sale of substantially all of the assets of the Company
to another corporation, or
any transaction (including a merger or reorganization in
which the Company survives) approved by the Board that
results in any person or entity (other than any affiliate
of the Company as defined in Rule 144(a)(1) under the
Securities Act) owning 100% of the combined voting power
of all classes of stock of the Company.
DESIGNATION OF A Participant may file with the Committee a written
BENEFICIARY designation of a beneficiary who is to receive any payroll
deductions credited to the Participant's account under the
ESPP or any shares of Common Stock owed to the Participant
under the ESPP if the Participant's dies. A Participant
may change a beneficiary at any time by filing a notice in
writing with the Human Resources Department on behalf of
the Committee.
Upon the death of a Participant and upon receipt by the
Committee of proof of the identity and existence of the
Participant's designated beneficiary, the Company shall
deliver such cash or shares, or both, to the beneficiary.
If a Participant dies and is not survived by a beneficiary
that the Participant designated in accordance with the
immediate preceding paragraph, the Company will deliver
such cash or shares, or both, to the personal
representative of the estate of the deceased Participant.
If, to the knowledge of the Committee, no personal
representative has been appointed within 90 days following
the date of the Participant's death, the Committee, in its
discretion, may direct the Company to deliver such cash or
shares, or both, to the surviving spouse of the deceased
Participant, or to any one or more dependents or relatives
of the deceased Participant, or if no spouse, dependent or
relative is known to the Committee, then to such other
person as the Committee may designate.
FTI Employee Stock Purchase Plan
Page 8 of 11
<PAGE>
No designated beneficiary may acquire any interest in such
cash or shares before the death of the Participant.
SUBSIDIARY Employees of Company Subsidiaries will be entitled to
EMPLOYEES participate in the ESPP, except as otherwise designated by
the Board of Directors or the Committee.
Eligible Subsidiary means each of the Company's
Subsidiaries, except as the Board otherwise specifies.
Subsidiary means any corporation (other than the Company)
in an unbroken chain of corporations beginning with the
Company if, at the time an option is granted to a
Participant under the ESPP, each of the corporations
(other than the last corporation in the unbroken chain)
owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other
corporations in such chain.
TRANSFERS, A Participant may not assign, pledge, or otherwise dispose
ASSIGNMENTS, of payroll deductions credited to the Participant's
AND PLEDGES account or any rights to exercise an option or to receive
shares of Common Stock under the ESPP other than by will
or the laws of descent and distribution or pursuant to a
qualified domestic relations order, as defined in the
Employee Retirement Income Security Act. Any other
attempted assignment, pledge or other disposition will be
without effect, except that the Company may treat such act
as an election to withdraw under the WITHDRAWAL section.
AMENDMENT OR The Board of Directors of the Company may at any time
TERMINATION terminate or amend the ESPP. Any amendment of the ESPP
OF PLANC that (i) materially increases the benefits to
Participants, (ii) materially increases the number of
securities that may be issued under the ESPP, or (iii)
materially modifies the eligibility requirements for
participation in the ESPP must be approved by the
shareholders of the Company to take effect. The Company
shall refund to each Participant the amount of payroll
deductions credited to his account as of the date of
termination as soon as administratively feasible following
the effective date of the termination.
NOTICES All notices or other communications by a Participant to
the Committee or the Company shall be deemed to have been
duly given when the Human Resources Department or the
Secretary of the Company receives them or when any other
person the Company designates receives the notice or other
communication in the form the Company specifies.
FTI Employee Stock Purchase Plan
Page 9 of 11
<PAGE>
GENERAL ASSETS Any amounts the Company invests or otherwise sets aside or
segregates to satisfy its obligations under this ESPP will
be solely the Company's property (except as otherwise
required by Federal or state wage laws), and the
optionee's claim against the Company under the ESPP, if
any, will be only as a general creditor. The optionee will
have no right, title, or interest whatever in or to any
investments that the Company may make to aid it in meeting
its obligations under the ESPP. Nothing contained in the
ESPP, and no action taken pursuant to its provisions, will
create or be construed to create an implied or
constructive trust of any kind or a fiduciary relationship
between the Company and any Employee, Participant, former
Employee, former Participant, or any beneficiary.
PRIVILEGES OF No Participant and no beneficiary or other person claiming
STOCK OWNERSHIP under or OWNERSHIP through such Participant will have any
right, title, or interest in or to any shares of Common
Stock allocated or reserved under the Plan except as to
such shares of Common Stock, if any, that have been issued
to such Participant.
LIMITATIONS ON Notwithstanding any other provisions of the ESPP, no
LIABILITY individual acting as a director, employee, or agent of the
Company shall be liable to any Employee, Participant,
former Employee, former Participant, or any spouse or
beneficiary for any claim, loss, liability, or expense
incurred in connection with the ESPP, nor shall such
individual be personally liable because of any contract or
other instrument he executes in such other capacity. The
Company will indemnify and hold harmless each director,
employee, or agent of the Company to whom any duty or
power relating to the administration or interpretation of
the ESPP has been or will be delegated, against any cost
or expense (including attorneys' fees) or liability
(including any sum paid in settlement of a claim with the
FTI Board's approval) arising out of any act or omission
to act concerning this ESPP unless arising out of such
person's own fraud or bad faith.
NO EMPLOYMENT Nothing contained in this Plan constitutes an employment
CONTRACT contract between the Company or an Eligible Subsidiary and
any Employee. The ESPP does not give an Employee any right
to be retained in the Company's employ, nor does it
enlarge or diminish the Company's right to terminate the
Employee's employment.
DURATION OF ESPP Unless the FTI Board extends the Plan's term, no Offering
Period will begin after December 31, 2006.
FTI Employee Stock Purchase Plan
Page 10 of 11
<PAGE>
APPLICABLE LAW The laws of the State of Maryland (other than its choice
of law provisions) govern the ESPP and its interpretation.
APPROVAL OF The ESPP must be submitted to the shareholders of the
SHAREHOLDERS Company for their approval within 12 months after the
Board of Directors of the Company adopts the ESPP. The
adoption of the ESPP is conditioned upon the approval of
the shareholders of the Company, and failure to receive
their approval will render the ESPP and any outstanding
options thereunder void and of no effect.
FTI Employee Stock Purchase Plan
Page 11 of 11
WILMER, CUTLER & PICKERING
100 LIGHT STREET
BALTIMORE, MD 21202
---
TELEPHONE (410) 986-2800
FACSIMILE (410) 986-2828
June 24, 1997
Forensic Technologies International Corporation
2021 Research Drive
Annapolis, Maryland 21401
Re: Forensic Technologies International Corporation Employee Stock
Purchase Plan
--------------------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel to Forensic Technologies
International Corporation, a Maryland corporation (the "Company"), in connection
with the preparation by the Company of a Registration Statement on Form S-8 in
the form to be filed with the Securities and Exchange Commission on June 26,
1997 (the "Registration Statement") under the Securities Act of 1933, as
amended, for the registration of options (the "Options") covering 400,000 shares
of Common Stock, $.01 par value per share (the "Shares"), of the Company and
400,000 Shares issuable upon the exercise of the Options pursuant to the
Employee Stock Purchase Plan of the Company (the "Plan").
For purposes of this opinion letter, we have examined copies
of the following documents:
1. An executed copy of the Registration Statement;
2. A copy of the document disclosing material information
to Plan participants prepared in connection with the
Registration Statement;
3. A copy of the Plan, as certified on June 24, 1997 by the
Secretary of the Company as then being complete,
accurate and in effect;
4. A copy of the Amended and Restated Articles of
Incorporation of the Company, as certified on June 24,
1997 by the Maryland State Department of Assessments and
Taxation. ("SDAT");
<PAGE>
Forensic Technologies International Corporation
June 24, 1997
Page 2
5. A copy of the By-Laws of the Company, as certified on
June 24, 1997 by the Secretary of the Company as then
being complete, accurate and in effect;
6. Resolutions of the Board of Directors of the Company
adopted at a special meeting held May 21, 1997, as
certified by the Secretary of the Company on June 24,
1997 as then being complete, accurate and in effect;
7. Minutes of the Annual Meeting of Stockholders of the
Company held May 21, 1997, as certified by the Secretary
of the Company on June 24, 1997 as then being complete,
accurate and in effect;
8. A Certificate of Good Standing of the Company in the
State of Maryland as certified on June 24, 1997 by SDAT;
and
9. A certificate of the Secretary of the Company as to
factual matters dated June 24, 1997.
In our examination of the aforesaid documents, we have assumed
the genuineness of all signatures, the legal capacity of natural persons, the
authenticity of all documents submitted to us as originals, and the conformity
with the original documents of all documents submitted to us as certified,
telecopied, photostatic or reproduced copies. We have assumed the accuracy of
the foregoing certifications, on which we are relying, and have made no
independent investigation or verification thereof. We have assumed that there
will be no amendments, modifications, additions, deletions or changes to the
form of Registration Statement as filed on June 26, 1997 from the form of
Registration Statement reviewed for this opinion letter.
We are members of the Bar of the State of Maryland and do not
hold ourselves out as being experts in the law of any other state. This opinion
letter is limited to the laws of the United States and the Maryland General
Corporation Law. Our opinions in this letter are rendered only with respect to
the laws and the rules, regulations and orders thereunder that are currently in
effect.
Based upon, subject to, and limited by the foregoing, we are
of the opinion that:
1. The issuance of the Options in accordance with the terms
of the Plan has been lawfully and duly authorized by the
Board of Directors and Stockholders of the Company.
<PAGE>
Forensic Technologies International Corporation
June 24, 1997
Page 3
2. The issuance of the Shares upon the exercise of Options
granted, when issued and exercised in accordance with
the terms of the Plan, has been lawfully and duly
authorized by the Board of Directors and Stockholders of
the Company.
3. When the Options have been exercised, the exercise price
has been paid in full and the Shares have been issued
and delivered in accordance with the terms of the Plan,
the Shares will be validly issued, fully paid and
nonassessable under the Maryland General Corporation
Law.
We assume no obligation to advise you of any changes in the
foregoing subsequent to the delivery of this opinion letter. This opinion letter
has been prepared solely for your use in connection with the filing of the
Registration Statement, and should not be quoted in whole or in part or
otherwise be referred to, nor otherwise be filed with or furnished to any
governmental agency or other person or entity, without our prior written
consent.
We hereby consent to the filing of this opinion letter as an
exhibit to the Registration Statement. Nothing herein shall be construed to
cause us to be considered "experts" within the meaning of Section 11 of the
Securities Act of 1933, as amended.
Very truly yours,
WILMER, CUTLER & PICKERING
By: /s/John B. Watkins
-----------------------------------
John B. Watkins, a partner
Consent of Ernst & Young, LLP, Independent Auditors
We consent to the incorporation by reference in the Registration Statements
(Form S-8 No. 333-_____ ) pertaining to the Employee Stock Purchase Plan of our
report dated January 31, 1997, with respect to the consolidated financial
statements of Forensic Technologies International Corporation included in its
Annual Report (Form 10-KSB) for the year ended December 31, 1996, filed with the
Securities and Exchange Commission.
/s/ Ernst & Young, LLP
Baltimore, Maryland
June 25, 1997