N EMPLOYEE STOCK PURCHASE PLAN ewfoundland Capital Corporation ( NCC or the Company ) has developed the Employee Stock Purchase Plan ( ESPP or the Plan ) to allow employees to identify more closely with the Company s goals and performance through share ownership. As both shareholder and employee, you will have an even stronger interest in the Company s financial well-being and will share in its long-term growth and prosperity. The principal features of the ESPP and the procedure for enrolment are outlined below. Highlights: You may contribute up to 6%, but not less than 2% of your salary on a regular basis (each pay period) through payroll deductions. As an incentive, at the end of each month, the Company will make a further contribution equal to one-third of your contributions. The Company s Administrator will purchase NCC.A shares each month with both your contributions and the Company s contributions and keep a record of the individual accounts. As with any investment, there are risks, but the ESPP does provide an opportunity to acquire ownership in the Company at a reduced cost while avoiding brokerage fees. Although we do not encourage frequent turnover (it should be treated as a long-term investment), your investment may be converted to cash as required. The following provides further information and your payroll administrator can help you with any questions you might have.
1. What is the Employee Stock Purchase Plan? The ESPP provides you with an opportunity to invest in the Company s long-term growth through the purchase of NCC Class A Subordinate Voting shares. 2. Who is eligible to participate in the Plan? All designated employees of a subsidiary company of NCC may take part in the Plan. You are eligible for participation immediately. 3. How do I participate in the Plan? Simply complete an enrollment form, available through your Payroll and/or Human Resources department and indicate how much you wish to contribute every pay period. The minimum you can contribute is 2% of your salary and the maximum contribution may not exceed 6% of your salary. 4. Does the Company contribute to the Plan? Yes. To encourage participation and to help protect you from adverse fluctuations of the stock market, the Company will contribute one-third of your monthly contributions at the end of each month. 5. How many shares can I purchase and how much will they cost? The shares are purchased for you by the Company s Administrator each month at the market price at that time. The amount of shares purchased in your name depends on both the amount you contribute and the Company s contribution on your behalf as well as the price per share at the time purchases are made. 6. Will I receive dividends? Yes. The shares held in your account will earn dividends and be credited and added to the amount used to purchase shares. 7. Are there any tax implications? Yes. You should consider three tax elements: 1. The Company s monthly contribution is a taxable benefit and will be reported on your T4 slip. 2. All dividends received are taxable income and will be reported on a tax slip. 3. At the time you sell your shares, the difference between the buying and selling price will result in either a capital gain or a capital loss. 8. Can I stop my contributions during the year?
Yes, provided proper notice in writing is filed at least fifteen (15) days prior to the first of the month in which payroll deductions are to be suspended. 9. How will I be kept informed of the evolution of my investment in the Plan? The Company s Administrator, CST Trust Company ( CST ), will supply each participant with a personalized statement on a quarterly basis indicating the balance of all shares held in the account and all transactions recorded in the account during the period. 10. Can I increase or decrease my contribution rate during the year? Yes, you may apply to have it changed effective the next January 1 st or July 1 st, provided fifteen (15) days written notice of such intent is filed. 11. What if I receive a promotional increase during the year? Since you are now earning more, you will be contributing more automatically. 12. Can I purchase shares in the Plan other than by payroll deduction? No. 13. Who is the Plan s trustee? The Plan is managed by CST. 14. Who will administer the Plan? CST, the Administrator, will carry out the administration of the Plan, at no cost to you. 15. When will I receive my shares? Ownership of shares will occur as the shares are purchased (on a monthly basis). The shares will be held in trust for the whole period of participation. 16. Can I withdraw from the Plan? Yes, at any time. 17. What happens if I retire, leave the company or withdraw from the Plan? You will receive the number of whole shares or the cash equivalent of the market value of the whole shares credited to your account, less brokerage fees, if any. Any fractional shares will be paid in cash.
18. When can I sell my shares? You may elect, from time to time, to sell all or part of the shares credited to your account. Remember that when you sell your shares you are required to pay brokerage fees, if any. The Company may not accept a practice whereby your shares are sold on a monthly basis. 19. Are there any brokerage fees charged when I purchase my shares, or for ongoing administration? No. The only charges you will incur are those associated with the sale of your shares, if any. 20. Is there any risk involved in purchasing shares? There is always an element of risk involved when you invest in the stock market. NCC cannot make any guarantees or give assurance on future share prices. In making your decision to participate, you should take the downside risk factor into consideration. 21. Will this Plan be available indefinitely? This Plan, like all our compensation plans, is subject to annual review by NCC.
Example: The following example illustrates the Plan and its effect on your pay. Annual Per Pay 24 pay periods Gross salary $30,000 $1,250 Payroll deduction (6% level of participation selected) 1,800 75 Company s contribution of one-third 600 25 Total contributions available $ 2,400 $100 Assume average share price over the year is $10.00 Total contributions will buy 240 shares 10 shares This example does not include any dividends received. For more information concerning this Plan, please contact your Company representative. Details of NCC share offerings can be obtained from the Annual Report to Shareholders. Shares are registered on the Toronto Stock Exchange and current share values are available under the symbol (see NCC.A ). This summary contains the provisions of the Company s Employee Stock Purchase Plan as precisely as possible in a non-technical manner. However, final interpretation is governed by the items of the official text of the Plan.