<PAGE>
As filed with the Securities and Exchange Commission on April __, 1999
Registration No. 333-_________
--------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
DYNATECH CORPORATION
--------------------
(Exact name of issuer as specified in its charter)
Massachusetts 04-2258582
-------------------------------- ---------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3 New England Executive Park, Burlington, MA 01803
-----------------------------------------------------------
(Address of principal executive offices) (Zip Code)
DYNATECH CORPORATION
AMENDED AND RESTATED
1994 STOCK OPTION AND INCENTIVE PLAN
DYNATECH CORPORATION
NON-EMPLOYEE DIRECTORS
STOCK INCENTIVE PLAN
--------------------------------------------
(Full title of the plan)
Mark V. B. Tremallo, Esq.
Dynatech Corporation
3 New England Executive Park
Burlington, Massachusetts 01803-5087
--------------------------------------------
(Name and address of agent for service)
(781) 272-6100
-----------------------------------------------------------
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
-------------------------------
Title of Proposed Proposed
Securities Maximum Maximum
to be Amount to be Offering Price Aggregate Amount of
Registered Registered Per Share(1) Offering Price(1) Registration Fee
- ------------- ------------- --------------- ------------------ ----------------
Common Stock, 36,864,200 $3.40625 $125,568,681.30 $34,908.09
No par value shares
____________________
(1) Estimated solely for the purpose of calculating the registration fee,
and based on the average of the high and low prices as reported by the NASDAQ
National Market on March 31, 1999, in accordance with Rules 457(c) and (h) of
the Securities Act of 1933, as amended.
<PAGE>
PART I. INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
The information required by Part I is included in documents sent or given
to participants in the Dynatech Corporation Amended and Restated 1994 Stock
Option and Incentive Plan and the Dynatech Corporation Non-Employee Directors
Stock Incentive Plan, a Massachusetts corporation (the "Registrant"), pursuant
to Rule 428(b)(1) of the Securities Act of 1933, as amended (the "Securities
Act").
PART II. INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference.
-----------------------------------------------
The Registrant is subject to the informational and reporting requirements
of Sections 13(a), 14 and 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and in accordance therewith files reports, proxy
statements and other information with the Securities and Exchange Commission.
The following documents, which are filed with the Securities and Exchange
Commission, are incorporated in this Registration Statement by reference:
(1) The Registrant's latest annual report filed pursuant to Sections
13(a) or 15(d) of the Exchange Act or the latest prospectus filed pursuant
to Rule 424(b) under the Securities Act that contains audited financial
statements for the Registrant's latest fiscal year for which such
statements have been filed.
(2) All other reports filed pursuant to Sections 13(a) or 15(d) of the
Exchange Act since the end of the fiscal year covered by the document
referred to in (1) above.
(3) The description of the Common Stock, no par value per share
("Common Stock"), contained in a registration statement filed under the
Exchange Act, including any amendment or report filed for the purpose of
updating such description.
All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the filing of a post-
effective amendment which indicates that all shares of Common Stock offered
hereby have been sold or which deregisters all shares of Common Stock then
remaining unsold, shall be deemed to be incorporated by reference herein and to
be part hereof from the date of the filing of such documents.
Item 4. Description of Securities.
-------------------------
Not applicable.
Item 5. Interests of Named Experts and Counsel.
--------------------------------------
The validity of the Common Stock will be passed upon for the Company by
Mark V.B. Tremallo, its General Counsel.
<PAGE>
Item 6. Indemnification of Directors and Officers.
-----------------------------------------
The Company's Articles of Organization (the "Articles") provide that
except as limited by law, the Company shall indemnify its directors and officers
against all expenses incurred by them in connection with any proceeding
resulting from their serving as an officer or director, except that no
indemnification shall be provided regarding any matter as to which it shall be
adjudicated that such director or officer did not act in good faith and in the
reasonable belief that his or her action was in the best interests of the
Company. In addition, the Articles provide that no director of the Company
shall be personally liable to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a director notwithstanding any
provisions of law imposing such liability; provided, however, that such
provision shall not eliminate or limit the liability of a director (i) for any
breach of the director's duty of loyalty to the Company or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 61 or 62 of the
Business Corporation Law of the Commonwealth of Massachusetts, or (iv) with
respect to any transaction from which the director derived an improper personal
benefit.
The Company maintains directors' and officers' liability insurance for the
benefit of its directors and certain of its officers.
Item 7. Exemption from Registration Claimed.
-----------------------------------
Not applicable.
Item 8. Exhibits.
--------
The Exhibit Index immediately preceding the exhibits is incorporated
herein by reference.
Item 9. Undertakings.
------------
1. The Registrant hereby undertakes:
(a) 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;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
2
<PAGE>
PROVIDED, HOWEVER, that paragraphs (i) and (ii) do not apply if the
Registration Statement is on Form S-3 or Form S-8, and 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 Exchange Act that are incorporated by
reference in the Registration Statement.
(b) That, for the purpose of determining any liability under the
Securities Act, 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.
(c) 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.
2. The Registrant hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference
in the Registration Statement 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 in the initial bona fide offering thereof.
3. Insofar as indemnification for liabilities arising under the Securities
Act 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 Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Burlington, Commonwealth of Massachusetts, on
___________, 1999.
DYNATECH CORPORATION
By:
_________________________________
John F. Reno
Chairman, President and
Chief Executive Officer
4
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Capacity Date
- --------------------------------- ----------------------------------- ------------------------------------
<S> <C> <C>
Chairman of the Board of
_________________________________ Directors, President, Chief ____________________________, 1999
John F. Reno Executive Officer and
Director
Vice President, Chief
Financial Officer, Treasurer
_________________________________ (Principal Financial Officer), ____________________________, 1999
Allan M. Kline and Director
Corporate Vice President -
_________________________________ Communications Test ____________________________, 1999
John R. Peeler Business, and Director
_________________________________ ____________________________, 1999
Brian D. Finn Director
_________________________________ Director ____________________________, 1999
Charles P. Pieper
_________________________________ Director ____________________________, 1999
Joseph L. Rice, III
_________________________________ Director ____________________________, 1999
Ned C. Lautenbach
_________________________________ Director ____________________________, 1999
Brian H. Rowe
_________________________________ Director ____________________________, 1999
Marvin L. Mann
</TABLE>
5
<PAGE>
EXHIBIT INDEX
-------------
<TABLE>
<CAPTION>
Exhibit Sequential
Number Page Number
- ---------- -------------
<S> <C> <C>
3.1 Amended and Restated Articles of Organization of the --
Registrant - filed as Exhibit 3(1) to the Registrant's
Annual Report on 10-K for the fiscal year ended
March 31, 1998 and incorporated herein by reference.
3.2 By-Laws filed as Exhibit 3.2(ii) to the Registrant's --
Annual Report on Form 10-K for the fiscal year ended
March 31, 1998 and incorporated herein by reference.
4.1 Specimen Certificate of Common Stock of the --
Registrant (filed herein).
5 Opinion of Mark V. B. Tremallo, Dynatech --
Corporation's General Counsel (filed herein)
23.1 Consent of Mark V.B. Tremallo, Dynatech --
Corporation's General Counsel's consent is stated with
said counsel's opinion as Exhibit No. 5 (filed herein)
23.2 Consent of PricewaterhouseCoopers L.L.P. (filed --
herein)
24 Power of Attorney (filed herein). --
99(i) Dynatech Corporation Amended and Restated 1994 --
Stock Option and Incentive Plan (filed herein)
99(ii) Dynatech Corporation Non-Employee Directors Stock --
Incentive Plan (filed herein).
</TABLE>
<PAGE>
[LETTERHEAD OF DYNATECH CORPORATION APPEARS HERE]
April 6, 1999
Dynatech Corporation
3 New England Executive Park
Burlington, MA 01803-5087
Dear Sirs:
As Vice President and General Counsel of Dynatech Corporation, a Massachusetts
corporation (the "Company"), I have participated in the preparation of the
Registration Statement on Form S-8 (the "Registration Statement") to be filed
under the Securities Act of 1933 (the "Act") relating to 36,864,200 shares of
the Company's common stock, no par value (the "Common Stock"), to be issued
pursuant to the Dynatech Corporation Amended and Restated 1994 Stock Option and
Incentive Plan and the Dynatech Corporation Non-Employee Directors Stock
Incentive Plan (the "Plans").
I am familiar with the written documents which comprise the Plans, and in
rendering the opinion expressed below, I have examined and am relying on
originals, or copies certified or otherwise identified to my satisfaction, of
such other corporate records, documents, certificates or other instruments, as
in my judgment are necessary or appropriate as a basis for such opinion. In
rendering such opinion, I have noted that the exercise price of options to be
granted pursuant to each Plan will not be less than the fair market value of the
underlying shares as of the date of said options' grant.
Based on the foregoing, I am of the opinion that the authorized but previously
unissued shares of Common Stock which may be issued by the Company pursuant to
the Plan have been duly authorized and when issued in accordance with the terms
of the Plan will be validly issued, fully paid and non-assessable.
I hereby consent to the filing of this opinion as an exhibit to the Company's
Registration Statement. In giving such consent, I do not thereby admit that I
am within the category of persons whose consent is required under Section 7 of
the Act or the rules and regulations of the Securities and Exchange Commission
thereunder.
Very truly yours,
/s/ Mark V. B. Tremallo
Mark V. B. Tremallo
Vice President and General Counsel
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement of
Dynatech Corporation on Form S-8 of our reports dated April 28, 1998, except for
the "Subsequent Event" note, for which the date is May 21, 1998, on our audits
of the consolidated financial statements and financial statement schedule of
Dynatech Corporation as of March 31, 1998 and 1997, and for the fiscal years
ended March 31, 1998, 1997 and 1996, which reports are included in the Company's
1998 Annual Report on Form 10-K.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
April 6, 1999
<PAGE>
LIMITED POWER OF ATTORNEY
For
DYNATECH CORPORATION
Section 16(a) Filings
---------------------
Know all by these presents, that the undersigned hereby constitutes and
appoints each of Mark V. B. Tremallo and Allan M. Kline, signing singly, the
undersigned's true and lawful attorney-in-fact to:
(1) Execute for and on behalf of the undersigned, in the
undersigned's capacity as an officer, director, and/or stockholder
of Dynatech Corporation and/or Dynatech LLC (the "Company"), Forms
3, 4, and 5 in accordance with Section 16 (a) of the Securities
Exchange Act of 1934 and the rules thereunder.
(2) Do and perform any and all acts for and on behalf of the
undersigned which may be necessary or desirable to complete and
execute any such Form 3, 4, or 5 and timely file such form with
the United States Securities and Exchange Commission (the "SEC")
and any stock exchange or similar authority; and
(3) Take any other action of any type whatsoever which, in the
opinion of such attorney-in-fact, may be necessary or desirable in
connection with the foregoing authority, it being understood that
the documents executed by such attorney-in-fact on behalf of the
undersigned pursuant to this Power of Attorney shall be in such
form and shall contain such terms and conditions as such attorney-
in-fact may approve.
The undersigned hereby grants to each such attorney-in-fact full power and
authority to do and perform any and every act and thing whatsoever requisite,
necessary, or proper to be done in the exercise of any of the rights and powers
herein granted, as fully to all intents and purposes as the undersigned might or
could do if personally present, with full power of substitution or revocation,
hereby ratifying and confirming all that such attorney-in-fact, or such
attorney-in-fact's substitute or substitutes, shall lawfully do or cause to be
done by virtue of this Power of Attorney and the rights and powers herein
granted. The undersigned acknowledges that the foregoing attorneys-in-fact, in
serving in such capacity at the request of the undersigned, are not assuming,
nor is the Company assuming, any of the undersigned's responsibilities to comply
with Section 16 of the Securities Exchange Act of 1934.
This Power of Attorney shall remain in full force and effect until the
undersigned is no longer required to file Forms 3, 4, and 5 with respect to the
undersigned's holdings of and transaction in securities of the Company, unless
earlier revoked by the undersigned in a signed writing delivered to the
foregoing attorneys-in-fact. This Power of Attorney may be filed with the SEC
as a confirming statement of the authority granted herein.
IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney
to be executed as of this _____ day of ______________________, 199__.
________________________________
Print Name
________________________________
Signature
<PAGE>
EXHIBIT 99(I)
-------------
DYNATECH CORPORATION
AMENDED AND RESTATED
1994 STOCK OPTION AND INCENTIVE PLAN
Section 1. General Purpose of the Plan; Definitions
----------------------------------------
The name of the plan is the Amended and Restated Dynatech Corporation
1994 Stock Option and Incentive Plan (the "Plan"). The purpose of the Plan is
to encourage and enable the officers and other eligible employees of the Company
and its Subsidiaries upon whose judgment, initiative and efforts the Company
largely depends for the successful conduct of its business to acquire a
proprietary interest in the Company. It is anticipated that providing such
persons with a direct stake in the Company's welfare will assure a closer
identification of their interests with those of the Company, thereby stimulating
their efforts on the Company's behalf and strengthening their desire to remain
with the Company.
Effective as of May 21, 1998, the Plan was amended and restated in its
entirety in connection with and to reflect amendments required as a result of
the Merger and was further amended and restated, also effective as of May 21,
1998, as stated herein.
The following terms shall be defined as set forth below:
"Act" means the Securities Exchange Act of 1934, as amended.
"Affiliate" means, with respect to any person, any other person
controlled by, controlling or under common control with such person.
"Award" or "Awards," except where referring to a particular category
of grant under the Plan, shall include Incentive Stock Options, Non-Qualified
Stock Options, Restricted Stock Awards, Unrestricted Stock Awards and
Performance Share Awards.
"Board" means the Board of Directors of the Company.
"Cause" means and shall be limited to a vote of the Board of
Directors resolving that the participant should be dismissed as a result of (i)
-
any material breach by the participant of any agreement to which the participant
and the Company or any Subsidiary thereof are parties, (ii) any act (other than
--
retirement) or omission to act by the participant which may have a material and
adverse effect on the business of the Company
<PAGE>
or any Subsidiary or on the participant's ability to perform services for the
Company or any Subsidiary, including without limitation, the commission of any
crime (other than ordinary traffic violations), (iii) any material misconduct or
---
neglect of duties by the participant in connection with the business or affairs
of the Company or any Subsidiary, (iv) the performance of duties in an
--
incompetent manner after notice to the participant and the expiration of a 90-
day period during which the participant has an opportunity to correct such
incompetence, and (v) any unlawful conduct or act of moral turpitude by the
-
participant.
"CD&R Fund" means the Clayton, Dubilier & Rice Fund V Limited
Partnership, a Cayman Islands exempted limited partnership, and any successor
investment vehicle managed by Clayton, Dubilier & Rice, Inc.
"Change in Control" means, the first to occur of the following events
after the Restatement Effective Date:
(i) the acquisition by any person, entity or "group" (as defined in
Sec tion 13(d) of the Securities Exchange Act), other than the Company, its
Subsid iaries, any employee benefit plan of the Company or its
Subsidiaries, the CD&R Fund or any Affiliate of the CD&R Fund, of 50% or
more of the combined voting power of the then outstanding voting securities
of the Company;
(ii) the merger or consolidation of the Company, as a result of
which persons who were stockholders of the Company immediately prior to
such merger or consolidation, do not, immediately thereafter, own, directly
or indirectly, more than 50% of the combined voting power entitled to vote
generally in the election of directors of the merged or consolidated
company;
(iii) the liquidation or dissolution of the Company other than a
liquidation of the Company into any of its Subsidiaries; and
(iv) the sale, transfer or other disposition of all or substantially
all of the assets of the Company to one or more persons or entities that
are not, immediately prior to such sale, transfer or other disposition,
Affiliates of the Company or the CD&R Fund.
"Change in Control Price" means the price per share of Common Stock
paid in conjunction with any transaction resulting in a Change in Control (as
determined in good faith by the Board if any part of such price is payable other
than in cash).
2
<PAGE>
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor Code, and related rules, regulations and interpretations.
"Committee" means the Compensation Committee of the Board, except that
any Award granted to any employee of the Company or any Subsidiary who is, as of
the date of grant of such Award, an executive officer subject to the reporting
requirements of Section 16(a) of the Act, and the terms and conditions of any
such Award, shall be separately approved by the Board.
"Company" means Dynatech Corporation, a Massachusetts corporation.
"Disability" means disability as set forth in Section 22(e)(3) of the
Code.
"Effective Date" means the date on which the Plan was originally
approved by shareholders as set forth in Section 15.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the related rules, regulations and interpretations.
"Fair Market Value" means the fair market value of a share of Stock,
as determined in good faith by the Board on the basis of an independent
valuation of the Stock and such other factors as the Board deems appropriate,
including, without limitation, the earnings and certain other financial and
operating information of the Company and its Subsidiaries in recent periods, the
potential value of the Company and its Subsidiaries as a whole, the future
prospects of the Company and its Subsidiaries and the industries in which they
compete, the history and management of the Company and its Subsidiaries, the
general condition of the securities markets, the fair market value of securities
of companies engaged in businesses similar to those of the Company and its
Subsidiaries and the trading price of the Stock. The determination of Fair
Market Value will not give effect to any restrictions on transfer of the Stock,
the fact that the Stock would represent a minority interest in the Company or
the fact that the Stock is not liquid. The Fair Market Value as determined in
good faith by the Board and in the absence of fraud shall be binding and
conclusive upon all parties.
"Incentive Stock Option" means any Stock Option designated and
qualified as an "incentive stock option" as defined in Section 422 of the Code.
"Merger" means the merger, on the Restatement Effective Date, of CDRD
Merger Corporation with and into the Company pursuant to the Agreement and Plan
of Merger (the "Merger Agreement"), dated as of December 20, 1997, between
----------------
3
<PAGE>
the Company and CDRD Merger Corporation, with the Company as the surviving
corporation of the Merger;
"Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.
"Option" or "Stock Option" means any option to purchase shares of
Stock granted pursuant to Section 5.
"Outside Director" means a member of the Board who qualifies as such
under Section 162(m) of the Code.
"Performance Option" means an Option which may become vested and
exercisable upon the achievement of one or more performance objectives specified
in the agreement governing the grant of such Option. An option shall be treated
as a Performance Option even if, in addition to the vesting criteria associated
with the achievement of performance objectives, the Option may alternatively
become vested upon the passage of time and the continued performance of service.
"Performance Share Award" means an Award granted pursuant to Section
8.
"Person" shall include any natural person, any entity, any "affiliate"
of any such natural person or entity as such term is defined in Rule 405 under
the Securities Act of 1933 and any "group" (within the meaning of such term in
Rule 13d-5 promulgated under the Act).
"Public Offering" means an underwritten public offering of the Common
Stock after the Restatement Effective Date led by at least one underwriter of
nationally recognized standing.
"Restatement Effective Date" means May 21, 1998.
"Restricted Stock Award" means any Award granted pursuant to Section
6.
"Stock" means the Common Stock of the Company, no par value, subject
to adjustments pursuant to Section 3.
"Subsidiary" means any corporation or other entity (other than the
Company) in any unbroken chain of corporations or other entities, beginning with
the
4
<PAGE>
Company if each of the corporations or entities (other than the last corporation
or entity in the unbroken chain) owns stock or other interests possessing 50% or
more of the total combined voting power of all classes of stock or other
interests in one of the other corporations or entities in the chain.
"Unrestricted Stock Award" means an Award granted pursuant to Section
7.
Section 2. Administration of Plan; Committee Authority to Select
Participants and Determine Awards
------------------------------------------------------
(a) Committee. The Plan shall be administered by the Committee. All
---------
determinations of the Committee pursuant to the Plan, including this Section 2,
shall be made in its sole and absolute discretion.
(b) Powers of Committee. The Committee shall have the power and
-------------------
authority to grant Awards consistent with the terms of the Plan, including the
power and authority:
(i) to select the current or prospective officers and other
employees of the Company and its Subsidiaries to whom Awards may from time
to time be granted;
(ii) to determine the time or times of grant, and the extent, if
any, of Incentive Stock Options, Non-Qualified Stock Options, Restricted
Stock, Unrestricted Stock , and Performance Shares or any combination of
the foregoing, granted to any one or more participants;
(iii) to determine the number of shares to be covered by any Award;
(iv) to determine and modify the terms and conditions, including
restrictions, not inconsistent with the terms of the Plan, of any Award,
which terms and conditions may differ among individual Awards and
participants, and to approve the form of written instruments evidencing the
Awards;
(v) to accelerate the exercisability or vesting of all or any
portion of any Option;
(vi) subject to the provisions of Section 5(a)(iii), to extend the
period in which Stock Options may be exercised;
5
<PAGE>
(vii) to determine whether, to what extent, and under what
circumstances Stock and other amounts payable with respect to an Award
shall be deferred either automatically or at the election of the
participant and whether and to what extent the Company shall pay or credit
amounts constituting interest (at rates determined by the Committee) or
dividends or deemed dividends on such deferrals; and
(viii) to adopt, alter and repeal such rules, guidelines and practices
for administration of the Plan and for its own acts and proceedings as it
shall deem advisable; to interpret the terms and provisions of the Plan and
any Award (including related written instruments); to make all
determinations it deems advisable for the administration of the Plan; to
decide all disputes arising in connection with the Plan; and to otherwise
supervise the administration of the Plan.
All decisions and interpretations of the Committee shall be binding on
all persons, including the Company and Plan participants.
Section 3. Shares Issuable under the Plan; Mergers; Substitution
-----------------------------------------------------
(a) Shares Issuable. The aggregate maximum number of shares of Stock
---------------
reserved and available for issuance under the Plan shall be 36,114,200. For
purposes of this limitation, the shares of Stock underlying any Awards which are
forfeited, canceled, reacquired by the Company, satisfied without the issuance
of Stock or otherwise terminated (other than by exercise) shall be added back to
the shares of Stock available for issuance under the Plan so long as the
participants to whom such Awards had been previously granted received no
benefits of ownership of the underlying shares of Stock to which the Award
related. Subject to such overall limitation, shares of Stock may be issued up
to such maximum number pursuant to any type or types of Award; provided,
--------
however, that (i) no more than 1,960,000 Stock Options may be granted to any one
- ------- -
individual participant during any one-year period, (ii) no more than 1,764,000
--
shares of Restricted Stock and Unrestricted Stock may be granted under the Plan,
and (iii) no more than 392,000 shares of Restricted Stock and Unrestricted Stock
---
may be granted to any one individual participant. Shares issued under the Plan
may be authorized but unissued shares or shares reacquired by the Company.
(b) Stock Dividends, Mergers, etc. In the event of a stock dividend,
-----------------------------
stock split or similar change in capitalization affecting the Stock, the
Committee shall make appropriate adjustments to prevent the enlargement or
diminution of the rights of any participant in (i) the number and kind of shares
-
of stock or securities with respect to which Awards may thereafter be granted,
(ii) the number and kind of shares remaining subject to outstanding Awards, and
--
(iii) the option or purchase price in respect of such shares. In
---
6
<PAGE>
the event of any merger, consolidation, dissolution or liquidation of the
Company, the Committee in its sole discretion may, as to any Outstanding Awards,
make such substitution or adjustment in the aggregate number of shares reserved
for issuance under the Plan and the number and purchase price (if any) of shares
subject to such Awards as it may determine and as may be permitted by the terms
of such transaction, or amend or terminate such Awards upon such terms and
conditions as it shall provide (which, in the case of the termination of the
vested portion of any Award, shall require payment or other consideration which
the Committee deems equitable in the circumstances).
(c) Substitute Awards. The Committee may grant Awards under the Plan
-----------------
in substitution for stock and stock based awards held by employees of another
corporation who concurrently become employees of the Company or a Subsidiary as
the result of a merger or consolidation of the employing corporation with the
Company or a Subsidiary or the acquisition by the Company or a Subsidiary of
property or stock of the employing corporation. The Committee may direct that
the substitute awards be granted on such terms and conditions not inconsistent
with the Plan as the Committee considers appropriate in the circumstances.
Section 4. Eligibility and General Rules
-----------------------------
Participants in the Plan will be such current or prospective full or
part-time officers and other employees of the Company and its Subsidiaries who
are responsible for or contribute to the management, growth or profitability of
the Company and its Subsidiaries and who are selected from time to time by the
Committee, in its sole discretion.
All Awards granted under the Plan shall be evidenced by a separate
award agreement between the Company and the participant containing such terms
and conditions not inconsistent with the Plan as the Committee shall determine.
Section 5. Stock Options
-------------
(a) In General. Any Stock Option granted under the Plan shall be in
----------
such form as the Committee may from time to time approve.
Stock Options granted under the Plan may be either Incentive Stock
Options or Non-Qualified Stock Options. To the extent that any Option does not
qualify as an Incentive Stock Option, it shall constitute a Non-Qualified Stock
Option.
No Incentive Stock Option shall be granted under the Plan after June
15, 2004.
7
<PAGE>
(b) Stock Options Granted to Employees. The Committee in its
----------------------------------
discretion may grant Stock Options to employees of the Company or any
Subsidiary. Stock Options granted to current or prospective employees pursuant
to this Section 5(a) shall be subject to the following terms and conditions and
shall contain such additional terms and conditions, not inconsistent with the
terms of the Plan, as the Committee shall deem desirable:
(i) Exercise Price. The exercise price per share for the Stock
--------------
covered by a Stock Option granted pursuant to this Section 5(a) shall be
determined by the Committee at the time of grant but shall not be less than
100% of Fair Market Value on the date of grant, except that Stock Options
granted to selected employees in connection with the Merger (including
certain performance based options) may be granted at an exercise price
equal to the price per share of Stock paid by CD&R Fund upon the
consummation of the Merger. If an employee owns or is deemed to own (by
reason of the attribution rules applicable under Section 424(d) of the
Code) more than 10% of the combined voting power of all classes of stock of
the Company or any Subsidiary or parent corporation and an Incentive Stock
Option is granted to such employee, the option price of such Incentive
Stock Option shall be not less than 110% of Fair Market Value on the grant
date.
(ii) Option Term. The term of each Stock Option shall be fixed by
-----------
the Committee, but no Incentive Stock Option shall be exercisable more than
ten years after the date the option is granted. If an employee owns or is
deemed to own (by reason of the attribution rules of Section 424(d) of the
Code) more than 10% of the combined voting power of all classes of stock of
the Company or any Subsidiary or parent corporation and an Incentive Stock
Option is granted to such employee, the term of such option shall be no
more than five years from the date of grant.
(iii) Exercisability; Rights of a Shareholder. Stock Options shall
---------------------------------------
become vested and exercisable at such time or times, whether or not in
installments, as shall be determined by the Committee at or after the grant
date. The Committee may at any time accelerate the exercisability of all
or any portion of any Stock Option. An optionee shall have the rights of a
shareholder only as to shares acquired upon the exercise of a Stock Option
that have been issued and not as to unexercised Stock Options.
(iv) Method of Exercise. Stock Options may be exercised in whole or
------------------
in part, by giving written notice of exercise to the Company, specifying
the number of shares to be purchased. Payment of the purchase price may be
made by one or more of the following methods:
8
<PAGE>
(A) In cash, by certified or bank check or other instrument
acceptable to the Committee;
(B) In the form of shares of Stock that are not then subject to
restrictions under any Company plan and that have been held,
unrestricted, by the optionee for at least six months, if permitted by
the Committee in its discretion. Such surrendered shares shall be
valued at Fair Market Value on the exercise date; or
(C) By the optionee delivering to the Company a properly
executed exercise notice together with irrevocable instructions to a
broker to promptly deliver to the Company cash or a check payable and
acceptable to the Company to pay the purchase price; provided that in
--------
the event the optionee chooses to pay the purchase price as so
provided, the optionee and the broker shall comply with such
procedures and enter into such agreements of indemnity and other
agreements as the Committee shall prescribe as a condition of such
payment procedure. Payment instruments will be received subject to
collection.
The delivery of certificates representing the shares of Stock to be
purchased pursuant to the exercise of a Stock Option will be contingent
upon receipt from the optionee (or a purchaser acting in his stead in
accordance with the provisions of the Stock Option) by the Company of the
full purchase price for such shares and the fulfillment of the requirements
of Section 10 hereof and any other requirements contained in the Stock
Option or applicable provisions of law. To the extent deemed necessary or
appropriate by the Company, such certificates shall bear appropriate
legends.
(v) Non-transferability of Options. No Stock Option shall be
------------------------------
transferable by the optionee otherwise than by will or by the laws of
descent and distribution and all Options shall be exercisable, during the
optionee's lifetime, only by the optionee.
(vi) Annual Limit on Incentive Stock Options. To the extent required
---------------------------------------
for "incentive stock option" treatment under Section 422 of the Code, the
aggregate Fair Market Value (determined as of the time of grant) of the
stock with respect to which Incentive Stock Options granted under this Plan
and any other plan of the Company or its Subsidiaries become exercisable
for the first time by an optionee during any calendar year shall not exceed
$100,000.
9
<PAGE>
(vii) Form of Settlement. Shares of Stock issued upon
------------------
exercise of a Stock Option shall be free of all restrictions under the
Plan, except as otherwise provided in this Plan, in any agreement
evidencing such Stock Option or in any agreement entered into be the
Company and the option holder at the time of exercise of the Option.
Section 6. Restricted Stock Awards
-----------------------
(a) Nature of Restricted Stock Award. The Committee may grant
--------------------------------
Restricted Stock Awards to any current or prospective employee of the Company or
any Subsidiary. A Restricted Stock Award is an Award entitling the recipient to
acquire, at no cost or for a purchase price determined by the Committee, shares
of Stock subject to such restrictions and conditions as the Committee may
determine at the time of grant ("Restricted Stock"). Conditions may be based on
continuing employment and/or achievement of preestablished performance goals and
objectives. In addition, a Restricted Stock Award may be granted to an employee
by the Committee in lieu of a cash bonus due to such employee pursuant to any
other plan of the Company.
(b) Acceptance of Award. A participant who is granted a
-------------------
Restricted Stock Award shall have no rights with respect to such Award unless
the participant shall have accepted the Award within 60 days (or such shorter
date as the Committee may specify) following the award date by making payment to
the Company, if required, by certified or bank check or other instrument or form
of payment acceptable to the Committee in an amount equal to the specified
purchase price, if any, of the shares of Stock covered by the Award and by
executing and delivering to the Company a written instrument that sets forth the
terms and conditions of the Restricted Stock in such form as the Committee shall
determine.
(c) Rights as a Shareholder. Upon complying with Section 6(b)
-----------------------
above, a participant shall have the rights of a shareholder with respect to the
voting of the Restricted Stock, subject to non-transferability restrictions and
Company repurchase or forfeiture rights described in this Section 6 and subject
to such other conditions contained in the written instrument evidencing the
Restricted Stock Award. Unless the Committee shall otherwise determine,
certificates evidencing shares of the Restricted Stock shall remain in the
possession of the Company until such shares are vested as provided in Section
6(e) below.
(d) Restrictions. Shares of Restricted Stock may not be sold,
------------
assigned, transferred, pledged or otherwise encumbered or disposed of except as
specifically provided herein. In the event of termination of employment by the
Company and its Subsidiaries for any reason (including death, retirement,
Disability, and for Cause), the
10
<PAGE>
Company shall have the right, at the discretion of the Committee, to repurchase
Restricted Stock with respect to which conditions have not lapsed at their
purchase price, or to require forfeiture of such shares to the Company if
acquired at no cost, from the participant or the participant's legal
representative. The Company must exercise such right of repurchase or forfeiture
not later than the 90th day following such termination of employment (unless
otherwise specified in the written instrument evidencing the Restricted Stock
Award).
(e) Vesting of Restricted Stock. The Committee at the time of
---------------------------
grant shall specify the date or dates and/or the attainment of pre-established
performance goals, objectives and other conditions on which the non-
transferability of the Restricted Stock and the Company's right of repurchase or
forfeiture shall lapse. Subsequent to such date or dates and/or the attainment
of such pre-established performance goals, objectives and other conditions, the
shares on which all restrictions have lapsed shall no longer be Restricted Stock
and shall be deemed "vested."
(f) Waiver, Deferral and Reinvestment of Dividends. The written
----------------------------------------------
instrument evidencing the Restricted Stock Award may require or permit the
immediate payment, waiver, deferral or investment of dividends paid on the
Restricted Shares.
Section 7. Unrestricted Stock Awards
-------------------------
(a) Grant or Sale of Unrestricted Stock. The Committee may, in
its sole discretion, grant (or sell at a purchase price determined by the
Committee) to any current or prospective employees of the Company or any
Subsidiary shares of Stock free of any restrictions under the Plan
("Unrestricted Stock"). Shares of Unrestricted Stock may be granted or sold as
described in the preceding sentence in respect of past services or other valid
consideration, or in lieu of any cash compensation due to such employee.
(b) Elections to Receive Unrestricted Stock In Lieu of
--------------------------------------------------
Compensation. Upon the request of an employee and with the consent of the
- ------------
Committee, each employee may, pursuant to an irrevocable written election
delivered to the Company no later than the date or dates specified by the
Committee, receive a portion of the cash compensation otherwise due to him in
Unrestricted Stock (valued at Fair Market Value on the date or dates the cash
compensation would otherwise be paid, or on the effective date of the election,
if later). With respect to any employee who is subject to Section 16 of the Act,
such irrevocable election shall become effective no earlier than six months and
one day following the date of such election and the revocation of such election
shall be effective six months and one day following the date of the revocation.
Section 8. Performance Share Awards
------------------------
11
<PAGE>
(a) Nature of Performance Shares. A Performance Share Award is an
----------------------------
award entitling the recipient to acquire shares of Stock upon the attainment of
specified performance goals. The Committee may make Performance Share Awards
independent of or in connection with the granting of any other Award under the
Plan. Performance Share Awards may be granted under the Plan to any current or
prospective employees of the Company or any Subsidiary, including those who
qualify for awards under other performance plans of the Company. The Committee
in its sole discretion shall determine whether and to whom Performance Share
Awards shall be made, the performance goals applicable under each such Award,
the periods during which performance is to be measured, and all other
limitations and conditions applicable to the awarded Performance Shares;
provided, however, that the Committee may rely on the performance goals and
other standards applicable to other performance unit plans of the Company in
setting the standards for Performance Share Awards under the Plan.
(b) Restrictions on Transfer. Performance Share Awards and all
------------------------
rights with respect to such Awards may not be sold, assigned, transferred,
pledged or otherwise encumbered.
(c) Rights as a Shareholder. A participant receiving a Performance
-----------------------
Share Award shall have the rights of a shareholder only as to shares actually
received by the participant under the Plan and not with respect to shares
subject to the Award but not actually received by the participant. A
participant shall be entitled to receive a stock certificate evidencing the
acquisition of shares under a Performance Share Award only upon satisfaction of
all conditions specified in the written instrument evidencing the Performance
Share Award (or in a performance plan adopted by the Committee).
(d) Termination. Except as may otherwise be provided by the
-----------
Committee at any time prior to termination of employment, a participant's rights
in all Performance Share Awards shall automatically terminate upon the
participant's termination of employment by the Company and its Subsidiaries for
any reason (including death, Disability and for Cause).
(e) Acceleration, Waiver, Etc. At any time prior to the
--------------------------
participant's termination of employment by the Company and its Subsidiaries, the
Committee may in its sole discretion accelerate, waive or, subject to Section
12, amend any or all of the goals, restrictions or conditions imposed under any
Performance Share Award.
Section 9. Certain Rights upon Termination of Employment Prior to Public
-------------------------------------------------------------
Offering.
--------
Unless otherwise determined by the Committee at the time of
grant, the Committee shall provide in each agreement evidencing any Award
granted hereunder that,
12
<PAGE>
upon a termination of a participant's employment with the Company and any of its
Subsidiaries that employs the participant prior to a Public Offering for any
reason, the Company and CD&R Fund and its Affiliates shall have successive
rights to repurchase for cash any vested Options or shares of Common Stock then
held by the Participant, for a repurchase price equal to the Fair Market Value,
reduced in the case of any Options by the exercise price per share of Common
Stock for such Option, and upon such additional terms and conditions as are set
forth in such agreement.
Section 10. Tax Withholding
---------------
(a) Payment by Participant. Each Participant shall, no later
----------------------
than the date as of which the value of an Award or of any Stock or other amounts
received thereunder first becomes includable in the gross income of the
participant for Federal income tax purposes, pay to the Company, or make
arrangements satisfactory to the Committee regarding payment of any Federal,
state, or local taxes of any kind required by law to be withheld with respect to
such income. The Company and its Subsidiaries shall, to the extent permitted by
law, have the right to deduct any such taxes from any payment of any kind
otherwise due to the participant.
(b) Payment in Shares. Subject to the consent of the Committee,
-----------------
a participant may elect to have such tax withholding obligation satisfied, in
whole or in part, by (i) authorizing the Company to withhold from shares of
Stock to be issued pursuant to any Award a number of shares with an aggregate
Fair Market Value (as of the date the withholding is effected) that would
satisfy the minimum withholding amount due, or (ii) transferring to the Company
shares that have been owned by the participant on an unrestricted basis for at
least six months with an aggregate Fair Market Value (as of the date the
withholding is effected) that would satisfy the withholding amount due. With
respect to any participant who is subject to Section 16 of the Act, the election
to satisfy tax withholding obligations relating to an Award in the manner
permitted by this Section 10 (b) shall be made at least six months following the
date such participant made another election pursuant to any plan or program of
the Company or any Subsidiary thereof involving an acquisition of any shares of
Common Stock.
Section 11. Transfer, Leave of Absence, Etc.
-------------------------------
For purposes of the Plan, the following events shall not be
deemed a termination of employment:
(a) a transfer to the employment of the Company from a
Subsidiary or from the Company to a Subsidiary, or from one Subsidiary to
another; or
13
<PAGE>
(b) an approved leave of absence for military service or
sickness, or for any other purpose approved by the Company, if the employee's
right to re-employment is guaranteed either by a statute or by contract or under
the policy pursuant to which the leave of absence was granted or if the
Committee otherwise so provides in writing.
Section 12. Amendments and Termination
--------------------------
The Board may, at any time, amend or discontinue the Plan and the
Committee may, at any time, amend or cancel any outstanding Award (or provide
substitute Awards at the same or reduced exercise or purchase price), but no
such action shall adversely affect rights under any outstanding Award without
the holder's consent.
Section 13. Status of Plan
--------------
With respect to the portion of any Award which has not been
exercised and any payments in cash, shares of Stock or other consideration not
received by a participant, a participant shall have no rights greater than those
of a general creditor of the Company unless the Committee shall otherwise
expressly determine in connection with any Award or Awards. In its sole
discretion, the Committee may authorize the creation of trusts or other
arrangements to meet the Company's obligations to deliver Stock or make payments
with respect to Awards hereunder, provided that the existence of such trusts or
other arrangements is consistent with the provision of the foregoing sentence.
Section 14. Change of Control Provisions
----------------------------
(a) Accelerated Vesting and Payment.
-------------------------------
(i) Options. Unless the Board otherwise determines in
-------
the manner set forth in paragraph (b) below, in the event of a
Change in Control, each Option (other than any Performance Option
that has not become vested prior to the occurrence of the Change
of Control) shall become fully vested and exercisable and may, in
the discretion of the Board, be canceled in exchange for a
payment in accordance with subparagraph (iii) below of an amount
equal to the excess, if any, of (i) the product of the Change in
-
Control Price multiplied by the aggregate number of shares of
Stock covered by such Option immediately prior to the Change in
Control, (ii) over the aggregate Option Price for all shares
--
subject to such Option. Unless otherwise specified in the
agreement governing the terms and conditions of such Performance
Agreement, each Performance Option that has not become vested
prior to the occurrence of the Change of Control
14
<PAGE>
shall automatically terminate and be canceled upon the consummation of
the transaction constituting the Change in Control.
(ii) Timing of Option Cancellation Payments. Payment of the
--------------------------------------
amount calculated in accordance with subparagraph (i) above shall be
made in cash, as soon as reasonably practicable, but in no event later
than 30 days, following the Change in Control.
(iii) Restricted Stock Awards. Unless the Board otherwise
-----------------------
determines in the manner set forth in paragraph (b) below, in the
event of a Change in Control, restrictions and conditions on
Restricted Stock Awards shall automatically be deemed waived, and the
recipients of such Awards shall become entitled to receipt of the
Stock subject to such Awards unless the Committee shall otherwise
expressly provide at the time of grant.
(b) Alternative Awards. Notwithstanding paragraph (a), no
------------------
cancellation, termination, acceleration of exercisability or vesting or
settlement or other payment shall occur with respect to any outstanding Award if
the Board (as constituted immediately prior to the consummation of the
transaction constituting the Change in Control) reasonably determines, in good
faith, prior to the Change in Control that such outstanding Awards shall be
honored or assumed, or new rights substituted therefor (such honored, assumed or
substituted Awards being hereinafter referred to as an "Alternative Awards") by
the acquiring entity (or the direct or indirect parent thereof) provided that
--------
any Alternative Awards must:
(i) provide the participant with rights and entitlements
substantially equivalent to or better than the rights and entitlements
applicable under the terms of such participant's outstanding Awards
immediately prior to the consummation of the transaction constituting
the Change in Control, including, but not limited to, an identical or
better exercise and vesting schedule and identical or better timing
and methods of exercise or payment;
(ii) have substantially equivalent economic value to such outstanding
Awards (determined at the time of the Change in Control); and
(iii) have terms and conditions which provide that in the event that
the participant suffers an involuntary termination of his employment
within two years following a Change in Control:
(x) any conditions on the participant's rights under, or any
restrictions on transfer or exercisability applicable to, each
15
<PAGE>
Alternative Award held by such participant shall be waived or
shall lapse, as the case may be; or
(y) the participant shall have the right to surrender such
Alternative Award within 30 days following such termination in
exchange for a payment in cash equal to the excess of the fair
market value of the Common Stock subject to the Alternative Award
over the price, if any, that the participant would be required to
pay to exercise such Alternative Award.
(c) Certain Take-Along Rights Prior to a Public Offering. Unless
----------------------------------------------------
otherwise determined by the Committee at the time of grant, the Committee shall
provide in each agreement evidencing Awards granted hereunder that, upon certain
transactions constituting a Change in Control, the participant will be required
to sell those shares of Common Stock then owned by him or her that are free of
restrictions imposed under the Plan or the agreement evidencing the related
Award, for a payment per share of Common Stock equal to the Change in Control
Price, and upon such additional terms and conditions as are set forth in such
agreement.
Section 15. General Provisions
------------------
(a) No Distribution; Compliance with Legal Requirements. The
---------------------------------------------------
Committee may require each person acquiring shares of Stock pursuant to an Award
to represent to and agree with the Company in writing that such person is
acquiring the shares without a view to distribution thereof.
No shares of Stock shall be issued pursuant to an Award until all
applicable securities law and other legal and stock exchange requirements have
been satisfied. The Committee may require the placing of such stop-orders and
restrictive legends on certificates for Stock and Awards as it deems
appropriate.
(b) Delivery of Stock Certificates. Delivery of stock
------------------------------
certificates to participants under this Plan shall be deemed effected for all
purposes when the Company or a share transfer agent of the Company shall have
delivered such certificates in the United States mail, addressed to the
participant, at the participant's last known address on file with the Company.
(c) Other Compensation Arrangements; No Employment Rights.
-----------------------------------------------------
Nothing contained in this Plan shall prevent the Board from adopting other or
additional compensation arrangements, including trusts, subject to shareholder
approval if such approval is required; and such arrangements may be either
generally applicable or
16
<PAGE>
applicable only in specific cases. The adoption of the Plan and the grant of
Awards do not confer upon any employee any right to continued employment with
the Company or any Subsidiary.
Section 16. Original Effective Date of Plan
-------------------------------
The Plan, prior to its amendment and restatement, originally
became effective upon approval by the holders of a majority of the shares of
capital stock of the Company present or represented and entitled to vote at a
meeting of shareholders. Subject to such approval by the shareholders, and to
the requirement that no Stock may be issued hereunder prior to such approval,
Stock Options and other Awards may be granted hereunder on and after adoption of
the Plan by the Board.
Section 17. Governing Law
-------------
This Plan shall be governed by Massachusetts law except to the
extent such law is preempted by federal law.
17
<PAGE>
EXHIBIT 99(II)
--------------
DYNATECH CORPORATION
NON-EMPLOYEE DIRECTORS STOCK INCENTIVE PLAN
Section 1. General Purpose of the Plan; Definitions
----------------------------------------
The name of the plan is the Dynatech Corporation Non-Employee Directors
Stock Incentive Plan (the "Plan"). The purpose of the Plan is to encourage and
enable Eligible Directors to acquire a proprietary interest in the Company. It
is anticipated that providing such persons with a direct stake in the Company's
welfare will assure a closer identification of their interests with those of the
Company and shareholders, thereby stimulating their efforts on the Company's
behalf and strengthening their desire to remain with the Company.
The following terms shall be defined as set forth below:
"Act" means the Securities Exchange Act of 1934, as amended.
"Affiliate" means, with respect to any person, any other person
controlled by, controlling or under common control with such person.
"Award" means either an Option or a Share Award granted under the Plan.
"Board" means the Board of Directors of the Company.
"CD&R Fund" means the Clayton, Dubilier & Rice Fund V Limited Partnership,
a Cayman Islands exempted limited partnership, and any successor investment
vehicle managed by Clayton, Dubilier & Rice, Inc.
"Change in Control" means the first to occur of any of the following
events:
(i) the acquisition by any person, entity or "group" (as defined in
Section 13(d) of the Act), other than the Company, its Subsidiaries, any
employee benefit plan of the Company or its Subsidiaries, the CD&R Fund or
any Affiliate of the CD&R Fund, of 50% or more of the combined voting power
of the then outstanding voting securities of the Company;
(ii) the merger or consolidation of the Company, as a result of which
persons who were stockholders of the Company immediately prior to such merger
or consolidation, do not, immediately thereafter, own, directly or
indirectly, more than 50% of
<PAGE>
the combined voting power entitled to vote generally in the election of
directors of the merged or consolidated company;
(iii) the liquidation or dissolution of the Company other than a
liquidation of the Company into any of its Subsidiaries; and
(iv) the sale, transfer or other disposition of all or substantially all
of the assets of the Company to one or more persons or entities that are not,
immediately prior to such sale, transfer or other disposition, Affiliates of
the Company or the CD&R Fund.
"Company" means Dynatech Corporation, a Massachusetts corporation.
"Effective Date" means the date on which the Plan is adopted by the Board.
"Eligible Director" means a member of the Board who is not also an officer
or employee of the Company or any Subsidiary or a representative of the CD&R
Fund.
"Fair Market Value" means the fair market value of a share of Stock, as
determined in good faith by the Board, which determination after May 1999 shall
be made on the basis of an independent valuation of the Stock and such other
factors as the Board deems appropriate, including, without limitation, the
earnings and certain other financial and operating information of the Company
and its Subsidiaries in recent periods, the potential value of the Company and
its Subsidiaries as a whole, the future prospects of the Company and its
Subsidiaries and the industries in which they compete, the history and
management of the Company and its Subsidiaries, the general condition of the
securities markets, the fair market value of securities of companies engaged in
businesses similar to those of the Company and its Subsidiaries and the trading
price of the Stock. The determination of Fair Market Value will not give effect
to any restrictions on transfer of the Stock, the fact that the Stock would
represent a minority interest in the Company or the fact that the Stock is not
liquid. The Fair Market Value as determined in good faith by the Board and in
the absence of fraud shall be binding and conclusive upon all parties.
Notwithstanding the foregoing, after any Public Offering, Fair Market Value on
any date shall be the average of the high and low trading price of a share of
Stock on the principal national securities exchange on which the Stock is
admitted to trade or, if none, on the National Association of Securities Dealers
Automated Quotation System if the Stock is admitted for quotation thereon;
provided, however, that if any such exchange or quotation system is closed on
- -----------------------
any day on which Fair Market Value is to be determined, Fair Market Value shall
be determined as of the first day immediately preceding such day on which such
exchange or quotation system was open for trading.
2
<PAGE>
"Option" or "Stock Option" means any non-qualified stock option to
purchase shares of Stock granted pursuant to Section 4.
"Public Offering" means an underwritten public offering of the Stock after
the Effective Date led by at least one underwriter of nationally recognized
standing.
"Share Award" means an award of Stock to an Eligible Director pursuant to
Section 5.
"Stock" means the Common Stock of the Company, no par value, subject to
adjustments pursuant to Section 3.
"Stock Account" shall mean a memorandum account established to record the
Share Awards otherwise distributable to an Eligible Director which shall be
deemed invested in Units.
"Subsidiary" means any corporation or other entity (other than the
Company) in any unbroken chain of corporations or other entities, beginning with
the Company if each of the corporations or entities (other than the last
corporation or entity in the unbroken chain) owns stock or other interests
possessing 50% or more of the total combined voting power of all classes of
stock or other interests in one of the other corporations or entities in the
chain.
"Units" shall have the meaning ascribed thereto in Section 5(c).
Section 2. Administration of Plan
----------------------
The Plan shall be administered by the Board. The Board shall have the
power and authority to adopt, alter and repeal such rules, guidelines and
practices for administration of the Plan and for its own acts and proceedings as
it shall deem advisable; to interpret the terms and provisions of the Plan and
any Award (including related written instruments); to make all determinations it
deems advisable for the administration of the Plan; to decide all disputes
arising in connection with the Plan; and to otherwise supervise the
administration of the Plan. All decisions and interpretations of the Board
shall be binding on all persons, including the Company and Eligible Directors.
3
<PAGE>
Section 3. Shares Issuable under the Plan; Mergers; Substitution
-----------------------------------------------------
(a) Shares Issuable. The aggregate maximum number of shares of Stock
---------------
reserved and available for issuance under the Plan shall be 750,000. For
purposes of this limitation, the shares of Stock underlying any Awards which are
forfeited, canceled, reacquired by the Company other than through the payment of
cash or the distribution of property (including Stock) or otherwise terminated
(other than by exercise) shall be added back to the shares of Stock available
for issuance under the Plan. Shares of Stock issued under the Plan may be
authorized but unissued shares or shares reacquired by the Company.
(b) Stock Dividends, Mergers, etc. In the event of a stock dividend,
-----------------------------
stock split or similar change in capitalization affecting the Stock, the Board
shall make appropriate adjustments to prevent the enlargement or diminution of
the rights of any participant in (i) the number and kind of shares of stock or
-
securities with respect to which Awards may thereafter be granted, (ii) the
--
number and kind of shares remaining subject to outstanding Options, (iii) the
---
option or purchase price in respect of any shares subject to any outstanding
Options and (iv) the number of Shares to be awarded pursuant to a Share Award.
--
In the event of any merger, consolidation, dissolution or liquidation of the
Company, the Board in its sole discretion may, as to any outstanding Options,
make such substitution or adjustment in the aggregate number of shares reserved
for issuance under the Plan and the number and purchase price (if any) of shares
subject to such Options as it may determine and as may be permitted by the terms
of such transaction, or amend or terminate such Options upon such terms and
conditions as it shall provide (which, in the case of the termination of the
vested portion of any Option, shall require payment or other consideration which
the Board deems equitable in the circumstances).
Section 4. Stock Options
-------------
(a) Grant of Options. Each Eligible Director shall automatically be
----------------
granted a Stock Option to purchase 25,000 shares of Stock on the later to occur
of November 30, 1998 and the date he or she is first elected to the Board. The
exercise price per share for the Stock covered by a Stock Option granted
hereunder shall be equal to the Fair Market Value of the Stock on the date the
Stock Option is granted.
(b) Option Term. Except as otherwise expressly provided herein, the term
-----------
of each Stock Option shall be ten years after the date the option is granted.
4
<PAGE>
(c) Exercise; Termination; Non-transferability.
------------------------------------------
(1) Except as otherwise expressly provided herein, each Option
granted hereunder shall be and become exercisable in five equal annual
installments on each of the first five anniversaries of the date of grant
of such Option, provided that the Eligible Director is still serving as a
member of the Board on the relevant anniversary date.
(2) No Stock Option granted under this Section 4 shall be
transferable by an Eligible Director otherwise than by will or by the laws
of descent and distribution, and such Options shall be exercisable, during
the Eligible Director's lifetime only by him or her. Any Option granted to
an Eligible Director and outstanding on the date of his or her death may
be exercised by the legal representative or legatee of the optionee for a
period of six months from the date of death until the expiration of the
stated term of the option, if earlier.
(3) Options granted under this Section 4 may be exercised, in whole
or in part, by written notice to the Company specifying the number of
shares to be purchased. Payment of the full purchase price of the shares
to be purchased may be made in cash, by certified or bank check or by such
other instrument acceptable to the Board or, with the consent of the
Board, in whole or in part in the form of shares of Stock that are not
then subject to restrictions under any Company plan and that have been
held, unrestricted, by the optionee for at least six months. For purposes
of the Plan, such surrendered shares shall be valued at Fair Market Value
on the exercise date.
(4) An optionee shall have the rights of a shareholder only as to
shares acquired upon the exercise of a Stock Option and not as to
unexercised Stock Options.
The delivery of certificates representing the shares of Stock to be
purchased pursuant to the exercise of a Stock Option will be contingent upon
receipt from the optionee (or a purchaser acting in his stead in accordance
with the provisions of the Stock Option) by the Company of the full purchase
price for such shares and the fulfillment of any other requirements contained
in the Stock Option or applicable provisions of law. To the extent deemed
necessary or appropriate by the Company, such certificates shall bear
appropriate legends.
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Section 5. Share Awards
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(a) Grant. Except to the extent that an Eligible Director elects to
-----
defer receipt of a Share Award, each Eligible Director shall receive, in advance
and on the first day of each calendar quarter, a Share Award in respect of that
number of shares of Stock recommended by the Compensation Committee of the Board
of Directors and approved by the Board. The number of shares of Stock awarded in
respect of Share Awards for each calendar year shall be issued in lieu of other
any fees (including, but not limited to, any annual retainer fees, meeting fees
or chairman's fees) that would be payable for services as a director, and are
expected to have a value (at the time the number of shares subject to quarterly
Share Awards for such year are established) approximately equal to the amount of
fees that would be payable to each Eligible Director for his or her services
based on appropriate competitive practices. For periods prior to 2000, the
quarterly Share Award will be 4,000 shares of Stock.
(b) Deferral. Prior to the later of the last day of the calendar year
--------
in which any Share Awards will be made and the date on which an Eligible
Director commences services as a director, such Eligible Director may elect to
defer receipt of all or any part of any Share Awards to be made in the next
calendar year (or, in the case an election made prior to service on the Board,
in the remainder of the then current calendar year) and to have such deferred
portion of the Share Award credited to the Eligible Director's Stock Account. A
deferral election shall be made by written notice filed with the Clerk of the
Company. Such election shall continue in effect (including with Share Awards
payable for subsequent calendar years) unless and until the Eligible Director
revokes or modifies such election by written notice filed with the Clerk of the
Company. Any such revocation or modification of a deferral election shall
become effective as of the end of the calendar year in which such notice is
given and only with respect to Share Awards to be made in subsequent calendar
years. Amounts credited to the Eligible Director's Stock Account prior to the
effective date of any such revocation or modification of a deferral election
shall not be affected by such revocation or modification and shall be
distributed only in accordance with the otherwise applicable terms of the Plan.
An Eligible Director who has revoked an election to participate in the Plan may
file a new election to defer Share Awards granted in the calendar year following
the year in which such new election is filed.
(c) Stock Account. Any Share Award deferred shall be deemed to be
-------------
invested in a number of notional shares of Stock (the "Units") equal to the
number of shares of Stock subject to the portion of the Share Award deferred.
Whenever a dividend other than a dividend payable in the form of shares is
declared with respect to the shares, the number of Units in an Eligible
Director's Stock Account shall be increased by the number of Units determined by
dividing (i) the product of (A) the number of Units in such Stock Account on the
- -
related dividend record date and (B) the amount of any cash dividend declared by
-
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the Company on a share (or, in the case of any dividend distributable in
property other than Stock, the per Share Award of such dividend, as determined
by the Company for purposes of income tax reporting) by (ii) the Fair Market
--
Value on the related dividend payment date. In the case of any dividend
declared on shares of Stock which is payable in Stock, the Eligible Director's
Stock Account shall be increased by the number of Units equal to the product of
(i) the number of Units credited to his or her Stock Account on the related
-
dividend record date and (ii) the number of shares (including any fraction
--
thereof) distributable as a dividend on a share. In the event of any change in
the number or kind of outstanding shares by reason of any recapitalization,
reorganization, merger, consolidation, stock split or any similar change
affecting the Stock, other than a stock dividend as provided above, the Board
shall make an appropriate adjustment in the number of Units credited to the
Eligible Director's Stock Account.
(d) Distribution from Accounts Upon Termination of Service as a Director.
--------------------------------------------------------------------
All distributions from an Eligible Director's Stock Account shall be in shares
of Stock, except that any fractional shares distributable shall be paid in cash
based on the Fair Market Value of a share on the date of distribution. At the
time an Eligible Director makes a deferral election, such Eligible Director
shall also file with the Clerk of the Company a written election with respect to
(i) when distribution from such Stock Account shall commence (e.g., at a fixed
- ----
date, immediately following the date the Eligible Director ceases to be a
director or on the first business day of any calendar year following the
calendar year in which the Eligible Director ceases to be a director) and (ii)
--
whether such distribution shall be in a single distribution or in such number of
annual installments (not to exceed ten) as the Eligible Director may designate.
An Eligible Director may at any time, and from time to time, change any
distribution election applicable to his or her Stock Account, provided that no
-------------
election to change the timing of any terminal distribution shall be effective
unless it is made in writing and received by the Clerk of the Company at least
one full calendar year prior to the time at which the Eligible Director ceases
to be a director.
If an Eligible Director fails to specify a commencement date for a
distribution in accordance herewith, such distribution shall commence on the
first business day of the calendar year immediately following the year in which
the Eligible Director ceases to be a director. If an Eligible Director fails to
specify that a distribution shall be made in a single distribution or a number
of installments, such distribution shall be made in a single distribution. In
the case of any distribution being made in annual installments, each installment
after the first installment shall be paid on the first business day of each
subsequent calendar year until the entire amount subject to such installment
distribution election shall have been paid. Any distribution in installments
shall be in respect of the greatest number of whole shares determined by
multiplying the number of Units standing to the credit of the Eligible Director
by a fraction, the numerator of which is one (1) and the denominator of which
shall be the number of installments (including the current
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<PAGE>
installment) yet to be paid; provided that the last installment shall always be
-------------
the balance in the Eligible Director's Stock Account.
Section 6. Amendments and Termination
--------------------------
The Board may, at any time, amend or discontinue the Plan and may, at any
time, amend or cancel any outstanding Award for the purpose of satisfying
changes in law or for any other lawful purpose, but no such action shall
adversely affect rights under any outstanding Award without the holder's
consent.
Section 7. Change in Control Provisions.
----------------------------
(a) Options. In the event of a Change in Control, each Option shall
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become fully vested and exercisable and may, in the discretion of the Board, be
canceled in exchange for a payment in accordance with subparagraph (iii) below
of an amount equal to the excess, if any, of (i) the product of the Change in
-
Control Price multiplied by the aggregate number of shares of Stock covered by
such Option immediately prior to the Change in Control over (ii) the aggregate
--
Option Price for all shares subject to such Option. Payment of the amount
calculated in accordance with the immediately preceding sentence shall be made
in cash or, if the transaction giving rise to the Change in Control is intended
to qualify for pooling of interests accounting treatment, in a number of shares
of Stock having a value (based on the Change in Control Price) equal to such
amount, as soon as reasonably practicable, but in no event later than 30 days,
following the Change in Control.
(b) Alternative Awards. Notwithstanding paragraph (a), no cancellation,
------------------
termination, acceleration of exercisability or vesting or settlement or other
payment shall occur with respect to any outstanding Option if the Board (as
constituted immediately prior to the consummation of the transaction
constituting the Change in Control) reasonably determines, in good faith, prior
to the Change in Control that such outstanding Options shall be honored or
assumed, or new rights substituted therefor (such honored, assumed or
substituted Options being hereinafter referred to as an "Alternative Awards") by
the acquiring entity (or the direct or indirect parent thereof) provided that
--------
any Alternative Awards must:
(i) provide the participant with rights and entitlements substantially
equivalent to or better than the rights and entitlements applicable under
the terms of such participant's outstanding Options immediately prior to
the consummation of the transaction constituting the Change in Control,
including, but not limited to, an identical or better exercise and vesting
schedule and identical or better timing and methods of exercise or
payment;
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<PAGE>
(ii) have substantially equivalent economic value to such outstanding
Options (determined at the time of the Change in Control); and
(iii) have terms and conditions which provide that in the event that the
participant suffers an involuntary termination of his Board membership
within two years following a Change in Control:
(x) any conditions on the participant's rights under, or any
restrictions on transfer or exercisability applicable to, each
Alternative Award held by such participant shall be waived or shall
lapse, as the case may be; or
(y) the participant shall have the right to surrender such
Alternative Award within 30 days following such termination in
exchange for a payment equal to the excess of the fair market value
of the stock subject to the Alternative Award over the price, if
any, that the participant would be required to pay to exercise such
Alternative Award, which payment shall be made in cash or, if the
transaction giving rise to the Change in Control is intended to
qualify for pooling of interests accounting treatment, in a number
of shares of the stock subject to the Alternative Award having a
fair market value equal to such amount.
Section 8. General Provisions
------------------
(a) No Distribution; Compliance with Legal Requirements. The Board may
---------------------------------------------------
require each person acquiring shares of Stock pursuant to an Award to represent
to and agree with the Company in writing that such person is acquiring the
shares without a view to distribution thereof. No shares of Stock shall be
issued pursuant to an Award until all applicable securities law and other legal
and stock exchange requirements have been satisfied. The Board may require the
placing of such stock-orders and restrictive legends on certificates for Stock
and Options as it deems appropriate.
(b) Delivery of Stock Certificates. Delivery of stock certificates to
------------------------------
participants under this Plan shall be deemed effected for all purposes when the
Company or a share transfer agent of the Company shall have delivered such
certificates in the United States mail, addressed to the participant, at the
participant's last known address on file with the Company.
(c) Other Compensation Arrangements; No Rights to Board Membership.
--------------------------------------------------------------
Nothing contained in this Plan shall prevent the Board from adopting other or
additional compensation arrangements for Directors; and such arrangements may be
either generally applicable or applicable only in specific cases. The adoption
of the Plan and the grant of
9
<PAGE>
Options do not confer upon any Director any right to continued membership on the
Board.
(d) Status of Plan. With respect to the portion of any Option which has
--------------
not been exercised, a participant shall have no rights greater than those of a
general creditor of the Company.
Section 9. Effective Date of Plan
----------------------
The Plan shall become effective upon approval by the Board; provided
--------
that no further grants of Awards shall be made hereunder after the first meeting
- ----
of shareholders of the Company occurring after the date of adoption of the Plan
unless the Plan is approved at or before such meeting by the holders of a
majority of the shares of capital stock of the Company present or represented
and entitled to vote at a meeting of shareholders.
Section 10. Governing Law
-------------
This Plan shall be governed by Massachusetts law except to the extent
such law is preempted by federal law.
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