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).
-18-
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
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
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
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
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
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
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
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
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
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
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");
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.
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
