As filed with the Securities and Exchange Commission on September 30, 1996
Registration No. 333-
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------
PENN ENGINEERING & MANUFACTURING CORP.
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(Exact name of registrant as specified in its charter)
Delaware 23-0951065
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
P.O. Box 1000
Danboro, Pennsylvania 18916-1000
- ---------------------------------------- -----------------
(Address of Principal Executive Offices) (Zip Code)
--------------------
PENN ENGINEERING & MANUFACTURING CORP.
1996 EMPLOYEE STOCK PURCHASE PLAN
--------------------------------------
(Full title of plan)
--------------------
Kenneth A. Swanstrom, Chairman of the Board and President
Penn Engineering & Manufacturing Corp.
P.O. Box 1000
Danboro, Pennsylvania 18916-1000
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(Name and address of agent for service)
(215) 766-8853
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(Telephone number, including area code,
of agent for service)
--------------------
Copy to:
Frederick W. Dreher, Esquire
Duane, Morris & Heckscher
4200 One Liberty Place
Philadelphia, Pennsylvania 19103-7396
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=============================================================================================
Proposed Proposed
Title of securities Amount to be maximum offering maximum aggregate Amount of
to be registered registered(1) price per share(2) offering price(2) registration fee
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 150,000 shares $17.375 $2,606,250 $899.00
par value $.01
=============================================================================================
</TABLE>
(1) In addition, pursuant to Rule 416(c) under the Securities Act of 1933,
this registration statement also covers an indeterminate amount of
interests to be offered or sold pursuant to the 1996 Employee Stock
Purchase Plan.
(2) Estimated solely for the purpose of calculating the registration fee based
on the average high and low prices of the Common Stock of the Company on
the New York Stock Exchange on September 25, 1996.
<PAGE>
PART II
INFORMATION REQUIRED IN REGISTRATION STATEMENT
Item 1. Incorporation of Documents by Reference.
The following material is incorporated herein by reference:
(a) The Annual Report on Form 10-K of Penn Engineering & Manufacturing
Corp. (the "Company") for the year ended December 31, 1995 as filed by the
Company with the Securities and Exchange Commission (the "Commission") and the
Amendment thereto as filed by the Company with the Commission on April 29, 1996.
(b) The Company's Form 10-Q Reports for the quarters ended March 31, 1996
and June 30, 1996 as filed by the Company with the Commission.
(c) The description of the Company's Common Stock set forth in the
Company's Registration Statement on Form S-2 filed with the Commission under the
Securities Act of 1933, as amended, on May 22, 1996 under the caption
"Description of Capital Stock" and "Dividend Policy."
All reports or other documents filed pursuant to Sections 13, 14 and 15(d)
of the Securities and Exchange Act of 1934, as amended (the "Exchange Act")
subsequent to the date of this Registration Statement, in each case filed by the
Company prior to the termination of the offering of the securities offered
hereby, shall be deemed to be incorporated by reference in this Registration
Statement and to be a part hereof from the date of filing of such reports and
documents. Any statement contained in a document incorporated or deemed to be
incorporated herein by reference shall be deemed to be modified or superseded
for the purposes of this Registration Statement to the extent that a statement
contained herein or in any other subsequently filed document, which also is or
is deemed to be incorporated herein by reference, modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Registration
Statement.
Item 2. Description of Securities.
No answer to this item is required because the class of securities to be
offered is registered under Section 12 of the Exchange Act.
Item 3. Interests of Named Experts and Counsel.
The consolidated financial statements and schedules of the Company as of
December 31, 1994 and 1995 and for each of the years in the three-year period
ended December 31, 1995 incorporated by reference in this Registration Statement
have been audited and reported on by Deloitte & Touche LLP, independent
auditors. Such financial statements and schedules have been
II-1
<PAGE>
incorporated by reference herein in reliance upon the reports of Deloitte &
Touche LLP, incorporated by reference herein (which reports express an
unqualified opinion and include an explanatory paragraph referring to a change
in the method of accounting for income taxes), and upon the authority of said
firm as experts in accounting and auditing.
The validity of the issuance of the shares of Common Stock registered
hereby will be passed upon for the Company by Duane, Morris & Heckscher,
Philadelphia, Pennsylvania.
Item 4. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of the State of Delaware
empowers a Delaware corporation to indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction, or upon plea of nolo contendere or its equivalent, does not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
In the case of an action or suit by or in the right of the corporation to
procure a judgment in its favor, Section 145 empowers a corporation to indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by reason of the fact that he is
or was acting in any of the capacities set forth above against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation, except that indemnification is not permitted
in respect of any claim, issue or matter as to which such person is adjudged to
be liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought determines upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
deems proper.
Section 145 further provides: That a Delaware corporation is required to
indemnify a director, officer, employee or agent against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection with any
action, suit or proceeding or in defense of any claim, issue or matter therein
as to which such person has been successful on the merits or
II-2
<PAGE>
otherwise; that indemnification provided for by Section 145 shall not be deemed
exclusive of any other rights to which the indemnified party may be entitled;
that indemnification provided for by Section 145 shall, unless otherwise
provided when authorized or ratified, continue as to a person who has ceased to
be a director, officer, employee or agent and shall inure to the benefit of such
person's heirs, executors and administrators; and empowers the corporation to
purchase and maintain insurance on behalf of a director or officer against any
liability asserted against him and incurred by him in any such capacity or
arising out of his status as such whether or not the corporation would have the
power to indemnify him against such liability under Section 145. A Delaware
corporation may provide indemnification only as authorized in the specific case
upon a determination that indemnification of the director, officer, employee or
agent is proper in the circumstances because he has met the applicable standard
of conduct. Such determination is to be made (i) by the board of directors by a
majority vote of a quorum consisting of directors who were not party to such
action, suit or proceeding, or (ii) if such a quorum is not obtainable, or, even
if obtainable, a quorum of disinterested directors so directs, by independent
legal counsel in a written opinion or (iii) by the stockholders.
Article VIII of the Company's By-laws provides for indemnification of
directors and officers of the Company to the fullest extent permitted by the
General Corporation Law of the State of Delaware, as presently or hereafter in
effect.
The Company provides liability insurance for each director and officer for
certain losses arising from claims or charges made against them while acting in
their capacities as directors or officers of the Company up to an aggregate of
$15,000,000 inclusive of defense costs, expenses and charges.
Additionally, as permitted by the General Corporation Law of the State of
Delaware, Article X of the Company's Certificate of Incorporation provides that
no director of the Company shall incur personal liability to the Company or its
stockholders for monetary damages for breach of his fiduciary duty as a
director; provided, however, that this provision does not eliminate or limit the
liability of a director for (i) any breach of the director's duty of loyalty to
the Company or its stockholders; (ii) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law; (iii) the
unlawful payment of dividends or unlawful purchase or redemption of stock under
Section 174 of the General Corporation Law of the State of Delaware; or (iv) any
transaction from which the director derived an improper personal benefit.
Item 5. Exemption from Registration Claimed.
No answer to this item is required because no restricted securities are to
be reoffered or resold pursuant to this Registration Statement.
Item 6. Exhibits.
(4) Penn Engineering & Manufacturing Corp. 1996 Employee Stock Purchase Plan.
(5) Opinion of Duane, Morris & Heckscher.
II-3
<PAGE>
(23)(A) Consent of Duane, Morris & Heckscher (included in their opinion filed
as Exhibit 5).
(23)(B) Consent of Deloitte & Touche LLP.
(24) Power of Attorney (see page II-5 of this Registration Statement).
Item 7. Undertakings.
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 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;
(b) that for purposes of determining any liability under the 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 offer thereof; and
(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.
The undersigned registrant hereby further undertakes that, for purposes of
determining any liability under the 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 the initial bona fide offering thereof.
The undersigned registrant hereby further undertakes that, insofar as
indemnification for liabilities arising under the Act may be permitted to
directors, officers and controlling persons of the registrant, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-4
<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 Danboro, Pennsylvania on September 11, 1996.
PENN ENGINEERING &
MANUFACTURING CORP.
By: /s/ Kenneth A. Swanstrom
---------------------------------
Kenneth A. Swanstrom, Chairman of
the Board and President
Know all men by these presents, that each person whose signature appears
below constitutes and appoints Kenneth A. Swanstrom and Mark W. Simon, and each
or either of them, as such person's true and lawful attorneys-in-fact and
agents, with full power of substitution, for such person, and in such person's
name, place and stead, in any and all capacities to sign any or all amendments
or post-effective amendments to this Registration Statement, and to file the
same, with all exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as such person might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them or their substitutes, may lawfully do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the date indicated.
Signature Title Date
- --------- ----- ----
/s/ Kenneth A. Swanstrom Chairman of the Board, President, September 11, 1996
- ------------------------ Chief Executive Officer,
Kenneth A. Swanstrom and Director (principal
executive officer)
/s/ Mark W. Simon Vice President-Finance, Corporate September 11, 1996
- ------------------------ Secretary, and Director
Mark W. Simon (principal financial and
accounting officer)
II-5
<PAGE>
Signature Title Date
- --------- ----- ----
/s/ Willard S. Boothby, Jr. Director September 30, 1996
- ---------------------------
Willard S. Boothby, Jr.
/s/ Frank S. Hermance Director September 30, 1996
- ---------------------------
Frank S. Hermance
/s/ Lewis W. Hull Director September 30, 1996
- ---------------------------
Lewis W. Hull
/s/ Thomas M. Hyndman, Jr. Director September 30, 1996
- ---------------------------
Thomas M. Hyndman, Jr.
/s/ Maurice D. Oaks Director September 30, 1996
- ---------------------------
Maurice D. Oaks
/s/ Daryl L. Swanstrom Director September 30, 1996
- ---------------------------
Daryl L. Swanstrom
II-6
<PAGE>
EXHIBIT INDEX
(Pursuant to Item 601 of Regulation S-K)
Exhibit No. Exhibit Page
- ----------- ------- ----
(4) Penn Engineering & Manufacturing Corp.
1996 Equity Incentive Plan.
(5) Opinion of Duane, Morris & Heckscher.
(23)(A) Consent of Duane, Morris & Heckscher
(included in their opinion filed as Exhibit 5).
(23)(B) Consent of Deloitte & Touche LLP.
(24) Power of Attorney.
EXHIBIT (4)
<PAGE>
PENN ENGINEERING & MANUFACTURING CORP.
1996 EMPLOYEE STOCK PURCHASE PLAN
As Adopted on May 22, 1996
Section 1. Purpose.
The Penn Engineering & Manufacturing Corp. 1996 Employee Stock Purchase
Plan (the "Plan") has been established by Penn Engineering & Manufacturing Corp.
(the "Company") for the benefit of the eligible employees of the Company and
participating subsidiaries of the Company. The purpose of this Plan is to
provide eligible employees with an opportunity to acquire or increase their
proprietary interests in the Company through the purchase of shares of the
Company's non-voting Common Stock, par value $.01 per share (the "Common
Stock"), at a discount from current market prices. This Plan is intended to meet
the requirements of Section 423 of the Internal Revenue Code of 1986, as amended
(the "Code").
Section 2. Eligible Employees.
(a) Employees eligible to participate in this Plan ("Eligible Employees")
shall consist of all individuals: (i) who are employees of the Company or any
subsidiary of the Company (as defined in Section 425 of the Code) that
participates in the Plan (a "Participating Subsidiary"), regularly scheduled to
work for more than 20 hours per week and (ii) who have completed 60 days of
employment on or prior to the date on which an Enrollment Period (as hereinafter
defined) begins.
(b) A person who is otherwise an Eligible Employee shall not be granted
any right to purchase shares of the Company's Common Stock under this Plan to
the extent that: (i) based on such person's ownership of the Company's Common
Stock at the time the right is granted, such right, if exercised, would cause
the person to own shares of the Company's Common Stock (including shares that
would be owned if all outstanding options to purchase Common Stock held by such
person were exercised) that possess 5% or more of the total combined voting
power or value of all classes of stock of the Company, or any subsidiary of the
Company, or (ii) such right would cause such person to have purchase rights
under this Plan and all other stock purchase plans of the Company or any
subsidiary of the Company that meet the requirements of Section 423 of the Code
that accrue at a rate that exceeds $25,000 of fair market value of the Common
Stock of the Company or any subsidiary of the Company (determined at the time
the right to purchase Common Stock under this Plan is granted) for each calendar
year in which such right is outstanding. For this purpose, a right to purchase
Common Stock accrues when such right first becomes exercisable during the
calendar year (but the rate of accrual for any calendar year may in no event
exceed $25,000 of the fair market value of the Common Stock subject to
<PAGE>
the right), and the number of shares of Common Stock under one right may not be
carried over to any other right.
Section 3. Duration of Plan and Subscription Periods.
This Plan shall be in effect from October 1, 1996 through and including
September 30, 2006. During the term of this Plan, there shall be 20 semi-annual
"Subscription Periods." Each Subscription Period shall extend from October 1
through March 31 or from April 1 through September 30, respectively, except for
the first Subscription Period which will begin on November 1, 1996 and end on
March 31, 1997. The last Subscription Period will end on September 30, 2006.
Section 4. Enrollment and Enrollment Period.
Enrollment for participation in this Plan shall take place during the
"Enrollment Period" preceding each Subscription Period, which shall be either
the period from the 1st through the 30th day of September or the period from the
1st through the 31st day of March of each Plan year, except that the first
Enrollment Period shall be from the 1st through the 31st day of October, 1996.
Any person who is an Eligible Employee and who desires to subscribe for the
purchase of Common Stock must file a subscription agreement during an Enrollment
Period, and such employee's participation in this Plan shall commence at the
outset of the next Subscription Period. Once enrolled, an Eligible Employee
shall continue to participate in this Plan for each succeeding Subscription
Period until such Eligible Employee terminates his or her participation or
ceases to be an Eligible Employee. An Eligible Employee who desires to change
his or her rate of contribution may do so during an Enrollment Period and such
change shall be effective as of the beginning of the next Subscription Period.
An Eligible Employee may also change his or her rate of contribution during a
Subscription Period only pursuant to Section 7(c) of this Plan. Participants
will be charged a fee of $2.50 per every Subscription Period during which they
participate in the Plan, which fee shall be used to offset the Plan's
administrative costs to the Company.
Section 5. Number of Shares To Be Offered.
The total number of shares to be made available under this Plan is 150,000
shares of the Company's Common Stock. Such Common Stock may be authorized and
unissued shares or shares issued and thereafter acquired by the Company. In the
event the total number of shares available for purchase under this Plan are
purchased prior to the expiration of this Plan, this Plan may be terminated in
accordance with Section 14 of this Plan.
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<PAGE>
Section 6. Subscription Price.
The "Subscription Price" for each share of Common Stock subscribed for
under this Plan during each Subscription Period shall be the lesser of 90% of
the fair market value of such share on the last trading day before the first day
of the Enrollment Period with respect to such Subscription Period or 90% of the
fair market value of such share on the last trading day of such Subscription
Period. The fair market value of a share shall be the closing price reported by
the New York Stock Exchange on the applicable date; provided, however, that the
Subscription Price shall never be less than $.01 per share.
Section 7. Amount of Contribution and Method of Payment.
(a) The Subscription Price shall be payable by the Eligible Employee by
means of payroll deduction. The maximum payroll deduction shall be no more than
10% of an Eligible Employee's Base Pay (as hereinafter defined) and may not
exceed $25,000 per year. The minimum payroll deduction an Eligible Employee must
authorize is a payroll deduction, based on such employee's rate of Base Pay at
the time of such authorization, that will enable such employee to accumulate by
the end of the Subscription Period an amount sufficient to purchase at least ten
shares of Common Stock. An Eligible Employee may not make separate cash deposits
toward the payment of the Subscription Price.
(b) "Base Pay" for an Eligible Employee equals (i) for an hourly employee,
the number of straight-time hours regularly scheduled with a maximum of 40
hours, multiplied by such employee's regular hourly rate in effect on the first
day of the applicable Subscription Period, excluding any shift differential, and
(ii) for salaried employees, their base salary in effect on the first day of the
applicable Subscription Period, and in each case shall not include overtime,
bonuses, gainsharing or other items that are not considered to be regular
compensation by the committee administering this Plan pursuant to Section 15 of
this Plan. Payroll deductions shall commence with the first paycheck issued
during the Subscription Period and shall continue with each paycheck throughout
the entire Subscription Period, except for pay periods for which the Eligible
Employee receives no compensation (i.e., uncompensated personal leave, leave of
absence, etc.).
(c) An Eligible Employee may at any time during a Subscription Period
reduce the amount previously authorized to be deducted from his or her Base Pay,
provided the reduction conforms with the minimum payroll deduction set forth in
Section 7(a) of this Plan, by forwarding to the Company a written notice setting
forth the reduction in his or her payroll deduction. The change shall become
effective on a prospective basis as soon as practicable after receipt by the
Company of the change notice. An Eligible Employee may reduce his or her payroll
deductions under this Section 7(c) of this Plan only once during any
Subscription Period and such change shall remain in effect for subsequent
Subscription Periods, subject to compliance with
-3-
<PAGE>
Section 7(a) of this Plan, until such Eligible Employee terminates his or her
participation, ceases to be an Eligible Employee or changes again during a
subsequent Enrollment Period or Subscription Period the amount of his or her
payroll deductions.
Section 8. Purchase of Shares.
The Company shall maintain on its books a "Withholding Account" in the
name of each Eligible Employee who authorized a payroll deduction (a
"Participant"). At the close of each pay period, the amount deducted from the
Participant's Base Pay shall be credited to the Participant's Withholding
Account. No interest shall be paid by the Company on any Withholding Account
balance, but instead, the interest on the Withholding Account balances shall be
used to offset the costs of administering the Plan. As of the last business day
of each Subscription Period, the amount then in the Participant's Withholding
Account shall be divided by the Subscription Price for such Subscription Period
and the Participant's "Plan Account", which shall be administered by the "Plan
Administrative Agent", shall be credited with the number of whole and fractional
shares that result. Statements of shares held in each Participant's Plan Account
(the "Plan Account Statements") shall be delivered to each Participant within a
reasonable time thereafter. Shares will be held in a Participant's Plan Account
in uncertificated form. Participants may obtain stock certificates for a fee of
$15.00 by completing the form included on the back of the Plan Account
Statements or upon written request to the Company. The Company recommends that
Participants leave shares in their Plan Account to facilitate maintenance of tax
records, to provide safe keeping for their shares and to make it easier if a
Participant decides to sell his or her shares. Participants who do not
accumulate sufficient funds in their Withholding Accounts to purchase at least
ten shares of Common Stock during a Subscription Period shall be deemed to have
withdrawn from this Plan pursuant to Section 10 of this Plan.
If the number of shares subscribed for during any Subscription Period
exceeds the number of shares available for purchase under this Plan, the
remaining shares available for purchase shall be allocated among all
Participants in proportion to their Withholding Account balances. If the number
of shares that would be credited to any Participant's Plan Account in either or
both of the Subscription Periods occurring during any calendar year exceeds the
limit specified in Section 2(c) of this Plan, the Participant's Plan Account
shall be credited with the maximum number of whole and fractional shares
permissible, and the remaining amounts shall be refunded in cash without
interest thereon.
Section 9. Sale of Shares.
Participants may sell all or a portion of the shares held in their Plan
Accounts by completing the form included on the back of the Plan Account
Statements. Sales of shares shall be made once a month by the Plan
Administrative Agent on the last business day of the month. All sales made under
the Plan will be treated for tax
-4-
<PAGE>
purposes as if the shares sold were the earliest shares purchased, i.e.,
first-in, first-out. The Company shall not be responsible for delays in delivery
of sales orders caused by mail carriers. Any shares for which sales orders are
received after the day of the month immediately preceding the day upon which
sales are made will be sold on the last business day of the immediately
following month. A Participant may not withdraw his or her order to sell shares
once such order is sent. Participants are advised that market prices of the
Common Stock may fluctuate between the time the Participant orders a sale of his
or her shares and the time such shares are actually sold and that any gains or
losses from sales of Common Stock made under this Plan are at the Participant's
own risk. There will be an administrative fee of $15.00 plus 10(cent) per share
for each sale by a Participant of shares from his or her Plan Account.
Section 10. Withdrawal from this Plan.
A Participant may withdraw from this Plan at any time by giving written
notice of withdrawal to the Company. As soon as practicable following receipt of
a notice of withdrawal, the amount credited to the Participant's Withholding
Account shall be refunded in cash without interest thereon. No further payroll
deductions shall be made with respect to such Participant except in accordance
with an authorization for a new payroll deduction filed during a subsequent
Enrollment Period in accordance with Section 4 of this Plan. A Participant's
withdrawal shall not affect such Participant's eligibility to participate during
any succeeding Subscription Period.
Section 11. Separation from Employment.
Separation from employment for any reason, including death, disability or
retirement (as hereinafter defined) shall be treated as an automatic withdrawal
pursuant to Section 10 of this Plan. However, if a Participant retires or dies,
the retired Participant or the deceased Participant's beneficiary may choose to
either receive the balance of such Participant's Withholding Account in cash
without interest thereon or to use such balance to purchase the appropriate
number of whole shares of Common Stock and receive the remainder in cash without
interest. The Subscription Price of such a purchase shall be determined in
accordance with Section 6 of this Plan using the date of such Participant's
retirement or death as though it was the last day of the Subscription Period. A
transfer of employment among the Company or any Participating Subsidiary shall
not be treated as a separation from employment. As used in this Section 11,
"retirement" means a termination of employment by reason of a Participant's
retirement at or after his or her earliest permissible retirement date pursuant
to and in accordance with his employer's regular retirement plan or practice.
Section 12. Assignment and Transfer Prohibited.
No Participant may assign, pledge, hypothecate or otherwise dispose of
such Participant's subscription or rights to subscribe under this Plan to any
other person, and any attempted assignment, pledge, hypothecation or disposition
shall be void.
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<PAGE>
However, a Participant may acquire the shares of Common Stock subscribed to
under this Plan in the name of the Participant and another person jointly with
the right of survivorship upon appropriate written notice to the Company. No
subscription or right to subscribe granted to a Participant under this Plan
shall be transferable by such Participant otherwise than by will or by the laws
of descent and distribution, and such subscription rights shall be exercisable,
during the Participant's lifetime, only by the Participant.
Section 13. Adjustment of and Changes in the Common Stock.
In the event that the outstanding shares of Common Stock of the Company
are hereafter increased or decreased or changed into or exchanged for a
different number or kind of shares or other securities of the Company, or of
another corporation, by reason of reorganization, merger, consolidation,
recapitalization, reclassification, stock split-up, stock dividend (either in
shares of the Company's Common Stock or of another class of the Company's
stock), spin-off or combination of shares, appropriate adjustments shall be made
by the committee appointed pursuant to Section 15 of this Plan in the aggregate
number and kind of shares that are reserved for sale under this Plan.
Section 14. Amendment or Discontinuance of this Plan.
The Plan will remain in effect until September 30, 2006 or until all
shares available for purchase are purchased under the Plan. The Board of
Directors of the Company shall have the right to terminate this Plan at any time
without notice, provided that no Participant's existing rights are adversely
affected thereby. Without stockholder approval, no amendments may be made to
this Plan to (i) increase materially the benefits accruing to Participants under
this Plan, (ii) increase the total number of shares subject to this Plan,
(iii) change the formula by which the price at which the shares of Common Stock
shall be sold is determined, or (iv) change the class of employees eligible to
participate in this Plan.
Section 15. Administration.
This Plan shall be administered by a committee (the "Committee") of at
least three persons to be appointed by the Company's Board of Directors. The
Committee is authorized to adopt rules and regulations from time to time for
carrying out this Plan. Any interpretation or construction of any provision of
this Plan by the Committee shall be final and conclusive on all persons absent
contrary action by the Board of Directors. Any interpretation or construction of
any provision of this Plan by the Board of Directors is final and conclusive as
to all persons. The initial members of the Committee, all of whom are currently
directors of the Company, will be Lewis W. Hull, Willard S. Boothby, Jr. and
Maurice D. Oaks.
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<PAGE>
Section 16. Designation of Beneficiary.
A Participant may designate, in writing, a beneficiary who is to receive
any cash credited to the Participant's Plan Account in the event such
Participant dies prior to the delivery to the Participant of such cash. Such
designation of a beneficiary may be changed by the Participant at any time upon
written notice. Upon the death of a Participant and upon receipt by the
Committee of proof of the Participant's death and of the identity and existence
of a beneficiary validly designated by the Participant under this Plan, the
Company shall deliver such cash to such beneficiary. If a Participant dies
without a beneficiary validly designated under this Plan who is living at the
time of such Participant's death, the Company shall deliver such cash to the
executor or administrator of the estate of the Participant, or if no such
executor or administrator has been appointed (to the knowledge of the Company),
the Company, in its sole discretion, may deliver such cash to the spouse or to
any one or more dependents or relatives of the Participant, or if no spouse,
dependent, or relative is known to the Company, then to such other person as the
Company may designate. No designated beneficiary shall, prior to the death of
the Participant by whom he or she has been designated, acquire any interest in
the shares or cash credited to the participant under this Plan.
Section 17. Employees' Rights.
Nothing contained in this Plan shall prevent the Company or any
Participating Subsidiary from terminating any employee's employment. No employee
shall have any rights as a stockholder of the Company by reason of participation
in this Plan unless and until the shares purchased at the end of a Subscription
Period shall have been credited to such employee's Plan Account.
Section 18. Use of Funds.
All payroll deductions received or held by the Company under this Plan
will be deposited into a separate interest bearing account. The Company will use
the interest only on such account to offset a portion of the administrative
costs of this Plan.
Section 19. Government Regulations.
The Company's obligation to sell and deliver Common Stock under this Plan
is subject to any prior approval or compliance that may be required to be
obtained or made from or with any governmental or regulatory authority in
connection with the authorization, issuance or sale of such Common Stock.
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<PAGE>
Section 20. Federal Income Tax Consequences.
This Plan is intended to qualify under the provisions of Section 423 of
the Code. No income will be realized for federal income tax purposes by a
Participant upon the purchase of shares under this Plan. For Participants who do
not dispose of their shares within two years after the date on which the right
to purchase was granted nor within one year after their shares were purchased,
the gain on sale of the shares following the end of the required holding period
(or their increase in value in the event of death prior to sale) will, under the
present provisions of the Code, be taxed as ordinary income to the extent of the
lesser of (i) an amount equal to the difference between the fair market value of
the shares on the first day of the Subscription Period and 90% of such value on
such date or (ii) an amount equal to the difference between the fair market
value of the shares at the time of disposition and the amount paid for such
shares under this Plan. Any additional gain will be treated as long-term capital
gain assuming the shares are capital assets in a Participant's hands. If a
Participant is entitled to long-term capital gain treatment upon a sale of the
shares, the Company will not be entitled to any deduction for federal income tax
purposes with respect thereto. For Participants who dispose of their shares
within two years after the date of grant or within one year after their shares
were purchased, the gain on the sale of the shares will, under the present
provisions of the Code, be taxed as ordinary income to the extent of the
difference between the purchase price of the shares and the fair market value of
the shares on the purchase date and such difference will be deductible by the
Company for federal income tax purposes. Any additional gain will be treated as
long-term or short-term capital gain, depending on whether the shares have been
held for more or less than one year from the date they were purchased.
Section 21. Titles.
Titles are provided herein for convenience only and are not to serve as a
basis for interpretation or construction of this Plan.
Section 22. Applicable Law.
This Plan shall be construed, administered and governed in all respects
under the laws of the Commonwealth of Pennsylvania and the United States of
America.
Section 23. Approval of Stockholders.
This Plan was approved by the holders of the Company's Common Stock on May
22, 1996.
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EXHIBIT (5)
<PAGE>
[LETTERHEAD OF DUANE, MORRIS & HECKSCHER]
September 18, 1996
The Board of Directors of
Penn Engineering & Manufacturing Corp.
P.O. Box 1000
Danboro, PA 18916-1000
Gentlemen:
We have acted as counsel to Penn Engineering & Manufacturing Corp. (the
"Company") in connection with the preparation and filing with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, of a
registration statement on Form S-8 (the "Registration Statement") relating to
the offer and sale by the Company of up to 150,000 shares (the "Shares") of
Common Stock, $.01 par value, of the Company, pursuant to the Company's 1996
Employee Stock Purchase Plan (the "Plan").
As counsel to the Company, we have supervised all corporate proceedings in
connection with the preparation and filing of the Registration Statement. We
have also examined the Company's Certificate of Incorporation and By-laws, as
amended to date, the corporate minutes and other proceedings and the records
relating to the authorization, sale and issuance of the Shares, and such other
documents and matters of law as we have deemed necessary or appropriate in order
to render this opinion.
Based upon the foregoing, it is our opinion that each of the Shares, when
issued in accordance with the terms and conditions of the Plan, will be duly
authorized, legally and validly issued and outstanding, fully paid and
nonassessable.
We hereby consent to the use of this opinion in the Registration
Statement.
Sincerely,
DUANE, MORRIS & HECKSCHER
By: /s/ Frederick W. Dreher
------------------------------
A Partner
FWD:PFS:kpd
EXHIBIT (23)(B)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Penn Engineering & Manufacturing Corp. on Form S-8 of our report dated
February 6, 1996 (April 17, 1996 as to Note 11), appearing in the Annual Report
on Form 10-K of Penn Engineering & Manufacturing Corp. for the year ended
December 31, 1995 and to the reference to us under the heading "Interests of
Named Experts and Counsel" in such Registration Statement.
DELOITTE & TOUCHE LLP
Philadelphia, Pennsylvania
September 27, 1996
