As filed with the Securities and Exchange Commission on January 21, 1997
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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PENN ENGINEERING & MANUFACTURING CORP.
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(Exact name of registrant as specified in its charter)
Delaware 23-0951065
- ------------------------------- ------------------------------------
(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 EQUITY INCENTIVE 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)
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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, 500,000 shares $19.4375 $9,718,750 $2,946
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 Equity Incentive
Plan.
(2) Estimated solely for the purpose of calculating the registration fee based
on the average of the high and low prices of the Common Stock of the
Company on the New York Stock Exchange on January 15, 1997.
<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, June 30, 1996 and September 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 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
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<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
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<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 Equity Incentive Plan.
(5) Opinion of Duane, Morris & Heckscher.
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(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.
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<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 December 31, 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.
<TABLE>
<S> <C> <C>
Signature Title Date
- --------- ----- ----
/s/ Kenneth A. Swanstrom Chairman of the Board, President,
- ------------------------------ Chief Executive Officer, and December 31, 1996
Kenneth A. Swanstrom Director (principal executive
officer)
/s/ Mark W. Simon Vice President-Finance, Corporate
- ------------------------------ Secretary, and Director (principal December 31, 1996
Mark W. Simon financial and accounting officer)
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C>
Signature Title Date
- --------- ----- ----
/s/ Willard S. Boothby, Jr.
- ------------------------------ Director December 31, 1996
Willard S. Boothby, Jr.
/s/ Frank S. Hermance
- ------------------------------ Director December 31, 1996
Frank S. Hermance
/s/ Lewis W. Hull
- ------------------------------ Director December 31, 1996
Lewis W. Hull
/s/ Thomas M. Hyndman, Jr.
- ------------------------------ Director December 31, 1996
Thomas M. Hyndman, Jr.
/s/ Maurice D. Oaks
- ------------------------------ Director December 31, 1996
Maurice D. Oaks
/s/ Daryl L. Swanstrom
- ------------------------------ Director December 31, 1996
Daryl L. Swanstrom
</TABLE>
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<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.
<PAGE>
EXHIBIT (4)
<PAGE>
PENN ENGINEERING & MANUFACTURING CORP.
1996 EQUITY INCENTIVE PLAN
1. Purpose. The purpose of the Penn Engineering & Manufacturing Corp.
1996 Equity Incentive Plan (the "Plan") is to further the growth, development
and financial success of Penn Engineering & Manufacturing Corp. (the "Company")
and the subsidiaries of the Company by providing additional incentives to
employees of the Company and/or subsidiaries of the Company, which will enable
them to participate directly in the growth of the value of the capital stock of
the Company. The Company intends that the Plan will facilitate securing,
retaining and motivating employees of high caliber and potential. To accomplish
these purposes, the Plan provides a means whereby all employees may receive
stock options ("Options") to purchase the Company's non-voting Common Stock, par
value $.01 par value (the "Common Stock").
2. Administration.
(a) Composition of the Committee. The Plan shall be administered by
a committee (the "Committee") of at least two directors appointed by the
Company's Board of Directors. From time to time the Board of Directors may
increase the size of the Committee and appoint additional members thereof,
remove members (with or without cause) and appoint new members in substitution
therefor, fill vacancies, however caused, or remove all members of the Committee
and thereafter directly administer the Plan. The current members of the
Committee consist of the members of the Company's Compensation Committee.
(b) Authority of the Committee. The Committee shall have full and
final authority, in its sole discretion, to interpret the provisions of the Plan
and to decide all questions of fact arising in its application and to make all
other determinations necessary or advisable for the administration of the Plan,
absent contrary action by the Board of Directors. All decisions, determinations,
and interpretations of the Committee shall be final and binding on all optionees
and all other holders of Options granted under the Plan. The Committee shall
make recommendations to the Board of Directors regarding the employees to whom
Options should be granted and the type, amount, size, and terms of each such
grant and the time when Options should be granted, which the Board of Directors
shall approve or disapprove in its discretion. All decisions of the Board of
Directors shall be final and binding on the Committee, all optionees, and all
other holders of Options granted under the Plan.
3. Stock Subject to the Plan. Subject to Section 16 hereof, the shares
that may be issued under the Plan shall not exceed in the aggregate 500,000
shares of Common Stock. Such shares may be authorized and unissued shares or
shares issued and subsequently reacquired by the Company. Except as otherwise
provided herein, any shares subject to an Option that for any reason expires or
is terminated unexercised as to such shares shall again be available under the
Plan.
4. Eligibility To Receive Options. All employees of the Company and any
participating subsidiary of the Company (as defined in Section 424 of the
Internal Revenue Code of 1986 (the "Code")
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or any amendment or substitute thereto) regularly scheduled to work 40 or more
hours per week and who have completed 60 days of employment shall be eligible to
receive Options under the Plan. Directors of the Company who are not also
officers or employees of the Company or any subsidiary of the Company shall not
be eligible to participate in the Plan.
5. Types of Options. Grants may be made at any time and from time to
time by the Board of Directors in the form of options to purchase shares of
Common Stock. Options granted hereunder may be Options that are intended to
qualify as incentive stock options within the meaning of Section 422 of the Code
or any amendment or substitute thereto ("Incentive Stock Options") or Options
that are not intended to so qualify ("Nonqualified Stock Options").
6. Option Agreements. Options for the purchase of Common Stock shall be
evidenced by written agreements in such form not inconsistent with the Plan as
the Committee shall approve from time to time. The Options granted hereunder may
be evidenced by a single agreement or by multiple agreements, as determined by
the Committee in its sole discretion. Each option agreement shall contain in
substance the following terms and conditions:
(a) Type of Option. Each option agreement shall identify the Options
represented thereby either as Incentive Stock Options or Nonqualified Stock
Options, as the case may be.
(b) Option Price. Each option agreement shall set forth the purchase
price of the Common Stock purchasable upon the exercise of the Option evidenced
thereby. Subject to the limitation set forth in Section 6(d)(ii) of the Plan,
the purchase price of the Common Stock subject to an Incentive Stock Option
shall be not less than 100% of the fair market value of such stock on the date
the Option is granted, but in no event less than the par value of such stock.
The purchase price of the Common Stock subject to a Nonqualified Stock
Option shall be not less than 100% of the fair market value of such stock on the
date the Option is granted, as determined by the Committee, but in no event less
than the par value of such stock. For this purpose, fair market value on any
date shall mean the closing price of the Common Stock, as reported in The Wall
Street Journal, or if not so reported, as otherwise reported by the New York
Stock Exchange or such other exchange or system on which the Common Stock shall
then be listed, or if not so reported, the fair market value shall be as
determined by the Committee pursuant to Section 422 of the Code.
(c) Exercise Term. Each Option shall vest in four cumulative
installments consisting of 25% of the shares of Common Stock subject to the
Option commencing on the first, second, third, and fourth anniversaries of the
grant date of the Option. The Board of Directors shall have the power to permit
an acceleration of exercise terms upon such circumstances and subject to such
terms and conditions as the Board of Directors deems appropriate. No Option may
have an expiration date that is more than ten years from the date the Option is
granted, or five years from the date of grant in the case of employees described
in Section 6(d)(ii) hereof.
(d) Incentive Stock Options. Subject to approval by the Board of
Directors, in the case of an Incentive Stock Option, each option agreement shall
contain such other terms,
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conditions, and provisions as the Committee determines to be necessary or
desirable in order to qualify such Option as a tax-favored Option (within the
meaning of Section 422 of the Code or any amendment or substitute therefor)
including without limitation, each of the following, except that any of these
provisions may be omitted or modified if it is no longer required in order to
have an Option qualify as a tax-favored Option within the meaning of Section 422
of the Code or any amendment or substitute therefor:
(i) The aggregate fair market value (determined as of the date
the Option is granted) of the Common Stock with respect to which Incentive Stock
Options are first exercisable by any employee during any calendar year (under
all plans of the Company) shall not exceed $100,000.
(ii) No Incentive Stock Options shall be granted to any
employee if at the time the Option is granted the individual owns stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company and its subsidiaries unless at the time such Option is
granted the Option price is at least 110% of the fair market value of the stock
subject to the Option and, by its terms, the Option is not exercisable after the
expiration of five years from the date of grant.
(iii) No Incentive Stock Options shall be exercisable more
than three months (or one year, in the case of an employee who dies or becomes
disabled within the meaning of Section 22(e)(3) of the Code or any amendment or
substitute therefor) after termination of employment.
(e) Substitution of Options. Options may be granted under the Plan
from time to time in substitution for stock options held by employees of other
corporations who are about to become, and who do concurrently with the grant of
such options become, employees of the Company or a subsidiary of the Company as
a result of a merger or consolidation of the employing corporation with the
Company or a subsidiary of the Company, or the acquisition by the Company or a
subsidiary of the Company of the assets of the employing corporation, or the
acquisition by the Company or a subsidiary of the Company of stock of the
employing corporation. The terms and conditions of the substitute options so
granted may vary from the terms and conditions set forth in this Section 6 to
such extent as the Board of Directors at the time of grant may deem appropriate
to conform, in whole or in part, to the provisions of the stock options in
substitution for which Options are granted.
7. Date of Grant. The date on which an Option shall be deemed to have
been granted under the Plan shall be the date of the Board of Directors'
authorization of the Option or such later date as may be determined by the Board
of Directors at the time the Option is authorized. Notice of the determination
shall be given to each individual to whom an Option is so granted within a
reasonable time after the date of such grant.
8. Exercise and Payment for Shares; Restriction on Transferability of
Shares. Options may be exercised in whole or in part, from time to time, by
giving written notice of exercise to the Treasurer of the Company, specifying
the number of shares to be purchased. The
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<PAGE>
purchase price of the shares with respect to which an Option is exercised shall
be payable in full with the notice of exercise in cash, Common Stock at the fair
market value thereof at the time of exercise, or a combination thereof, as the
Board of Directors may determine from time to time and subject to such terms and
conditions as may be prescribed by the Board of Directors for such purpose.
9. Rights upon Termination of Employment. In the event that an optionee
ceases to be an employee of the Company or any subsidiary of the Company for any
reason other than death, retirement, as hereinafter defined, or disability
(within the meaning of Section 22(e)(3) of the Code or any amendment or
substitute therefor), the optionee shall have the right to exercise the Option
during its term within a period of three months after such termination to
the extent that the Option was exercisable at the time of termination, or within
such other period, and subject to such terms and conditions, as may be specified
by the Board of Directors. In the event that an optionee dies, retires, or
becomes disabled prior to the expiration of his or her Option and without having
fully exercised his or her Option, the optionee or his or her successor shall
have the right to exercise the Option during its term within a period of one
year after termination of employment due to death, retirement, or disability (i)
in the case of Incentive Stock Options, to the extent that the Option was
exercisable at the time of termination and (ii) in the case of Nonqualified
Stock Options, to the extent of the full number of Options granted to the
optionee at the time of the optionee's death, retirement or disability, or
within such other period, and subject to such terms and conditions, as may be
specified by the Board of Directors. As used in this Section 9, "retirement"
means a termination of employment by reason of an optionee's retirement at or
after the optionee's normal retirement date pursuant to and in accordance with
his or her employer's regular retirement plan or personnel practices.
Notwithstanding the provisions of Section 6(d)(iii) hereof, if the term of an
Incentive Stock Option continues for more than three months after termination of
employment due to retirement or more than one year after termination of
employment due to death or a qualifying disability, such Option shall thereupon
lose its status as an Incentive Stock Option and shall thereafter be treated as
a Nonqualified Stock Option.
10. General Restrictions. Each Option granted under the Plan shall be
subject to the requirement that if at any time the Committee shall determine
that (i) the listing, registration, or qualification of the shares of Common
Stock subject or related thereto upon any securities exchange or under any state
or federal law, or (ii) the consent or approval of any government regulatory
body, or (iii) an agreement by the recipient of an Option with respect to the
disposition of shares of Common Stock is necessary or desirable as a condition
of or in connection with the granting of such Option or the issuance or purchase
of shares of Common Stock thereunder, such Option shall not be consummated in
whole or in part unless such listing, registration, qualification, consent,
approval, or agreement shall have been effected or obtained free of any
conditions not acceptable to the Committee.
11. Rights of a Stockholder. The recipient of any Option under the
Plan, unless otherwise provided by the Plan, shall have no rights as a
stockholder unless and until certificates for shares of Common Stock are issued
and delivered to such recipient.
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<PAGE>
12. Right to Terminate Employment. Nothing contained in the Plan or in
any option agreement entered into pursuant to the Plan shall confer upon any
optionee the right to continue in the employment of the Company or any
subsidiary of the Company or affect any right that the Company or any subsidiary
of the Company may have to terminate the employment of such optionee.
13. Withholding. Whenever the Company proposes or is required to issue
or transfer shares of Common Stock under the Plan, the Company shall have the
right to require the recipient to remit to the Company an amount sufficient to
satisfy any federal, state, or local withholding tax requirements prior to the
delivery of any certificate or certificates for such shares. If and to the
extent authorized by the Board of Directors, in its sole discretion, an optionee
may make an election, by means of a form of election to be prescribed by the
Board of Directors, to have shares of Common Stock that are acquired upon
exercise of an Option withheld by the Company or to tender other shares of
Common Stock or other securities of the Company owned by the optionee to the
Company at the time of exercise of an Option to pay the amount of tax that would
otherwise be required by law to be withheld by the Company as a result of any
exercise of an Option. Any such election shall be irrevocable and shall be
subject to termination by the Committee, in its sole discretion, at any time.
Any securities so withheld or tendered will be valued by the Committee at the
fair market value thereof as of the date of exercise.
14. Non-Assignability. No Option under the Plan shall be assignable or
transferable by the recipient thereof except by will or by the laws of descent
and distribution or by such other means as the Committee may approve. During the
life of the recipient, such Option shall be exercisable only by such person or
by such person's guardian or legal representative.
15. Non-Uniform Determinations. Determinations by the Board of
Directors and the Committee, as the case may be, under the Plan (including
without limitation recommendations and determinations of the persons to receive
Options, the form, amount and timing of such grants, the terms and provisions of
Options, and the agreements evidencing same) need not be uniform and may be made
selectively among persons who receive, or are eligible to receive, grants of
Options under the Plan whether or not such persons are similarly situated.
16. Adjustments.
(a) Changes in Capitalization. Subject to any required action by
the stockholders of the Company, the number of shares of Common Stock covered by
each outstanding Option and the number of shares of Common Stock that have been
authorized for issuance under the Plan but as to which no Options have yet been
granted or which have become available again upon cancellation or expiration of
an Option, as well as the price per share of Common Stock covered by each such
outstanding Option, shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock resulting from a stock
split, reverse stock split, stock dividend, combination, or reclassification of
the Common Stock, or any other increase or decrease in the number of issued
shares of Common Stock effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of the Company
shall not be deemed to have been "effected without receipt of consideration."
Such
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<PAGE>
adjustment shall be made by the Board of Directors, whose determination in that
respect shall be final, binding, and conclusive. Except as expressly provided
herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an Option.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, all outstanding Options will
terminate immediately prior to the consummation of such proposed action, unless
otherwise provided by the Board of Directors. The Board of Directors may, in the
exercise of its sole discretion in such instances, declare that any Option shall
terminate as of a date fixed by the Board of Directors and give each Option
holder the right to exercise his or her Option as to all or any part of the
shares of Common Stock covered by the Option, including shares as to which the
Option would not otherwise be exercisable.
(c) Sale or Merger. In the event of a proposed sale of all or
substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, the Board of Directors, in the exercise of its
sole discretion, may take such action as it deems desirable, including, but not
limited to: (i) causing an Option to be assumed or an equivalent option to be
substituted by such successor corporation or a parent or subsidiary of such
successor corporation, (ii) providing that each Option holder shall have the
right to exercise his or her Option as to all of the shares of Common Stock
covered by the Option, including shares as to which the Option would not
otherwise be exercisable, or (iii) declare that an Option shall terminate at a
date fixed by the Board of Directors provided that the Option holder is given
notice and opportunity to exercise his or her Option prior to such date.
17. Amendment. The Board of Directors, in its sole discretion, may
terminate, modify, or amend the Plan at any time. The termination or any
modification or amendment of the Plan shall not, without the consent of a
participant, adversely affect his or her rights under an Option previously
granted.
18. Reservation of Shares. The Company, during the term of the Plan,
will at all times reserve and keep available such number of shares as shall be
sufficient to satisfy the requirements of the Plan. Inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any shares hereunder, shall relieve the Company of any liability for the
failure to issue or sell such shares as to which such requisite authority shall
not have been obtained.
19. Effect on Other Plans. Participation in the Plan shall not affect
an employee's eligibility to participate in any other benefit or incentive plan
of the Company or any subsidiary of the Company. Any Options granted pursuant to
the Plan shall not be used in determining the benefits provided under any other
plan of the Company or any subsidiary of the Company unless specifically
provided.
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20. Duration of the Plan. The Plan shall remain in effect until all
Options granted under the Plan have been satisfied by the issuance of shares,
but no Option shall be granted after April 17, 2006.
21. Forfeiture for Dishonesty. Notwithstanding anything to the contrary
in the Plan, if the Committee finds, by a majority vote, after full
consideration of the facts presented on behalf of both the Company and any
optionee, that the optionee has been engaged in fraud, embezzlement, theft,
commission of a felony or dishonest conduct in the course of such optionee's
employment or retention by the Company or any subsidiary of the Company that
damaged the Company or any subsidiary of the Company or that the optionee has
disclosed confidential information of the Company or any subsidiary of the
Company, the optionee shall forfeit all unexercised Options and all exercised
Options under which the Company has not yet delivered the certificates. The
decision of the Committee in interpreting and applying the provisions of this
Section 21 shall be final. No decision of the Committee, however, shall affect
the finality of the discharge or termination of such optionee by the Company or
any subsidiary of the Company in any manner.
22. No Prohibition on Corporate Action. No provision of the Plan shall
be construed to prevent the Company or any officer or director thereof from
taking any action deemed by the Company or such officer or director to be
appropriate or in the Company's best interest, whether or not such action could
have an adverse effect on the Plan or any Options granted hereunder, and no
optionee or optionee's estate, personal representative, or beneficiary shall
have any claim against the Company or any officer or director thereof as a
result of the taking of such action.
23. Indemnification. With respect to the administration of the Plan,
the Company shall indemnify each present and future member of the Committee and
the Board of Directors against, and each member of the Committee and the Board
of Directors shall be entitled without further action on his or her part to
indemnity from the Company for all expenses (including the amount of judgments
and the amount of approved settlements made with a view to the curtailment of
costs of litigation, other than amounts paid to the Company itself) reasonably
incurred by him or her in connection with or arising out of, any action, suit or
proceeding in which he or she may be involved by reason of being or having been
a member of the Committee or the Board of Directors, whether or not he or she
continues to be such member at the time of incurring such expenses; provided,
however, that such indemnity shall not include any expenses incurred by any such
member of the Committee or the Board of Directors (i) in respect of matters as
to which the member shall be finally adjudged in any such action, suit or
proceeding to have been guilty of gross negligence or willful misconduct in the
performance of the member's duty as such member of the Committee or the Board of
Directors; or (ii) in respect of any matter in which any settlement is effected
for an amount in excess of the amount approved by the Company on the advice of
its legal counsel; and provided further that no right of indemnification under
the provisions set forth herein shall be available to or enforceable by any
such member of the Committee or the Board of Directors unless, within 60 days
after institution of any such action, suit, or proceeding, the member shall have
offered the Company in writing the opportunity to handle and defend the same at
its own expense. The foregoing right of indemnification shall inure to the
benefit of the heirs, executors, and administrators of each such member of the
Committee or the
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Board of Directors and shall be in addition to all other rights to which such
member may be entitled as a matter of law, contract, or otherwise.
24. Miscellaneous Provisions.
(a) Compliance with Plan Provisions. No optionee or other person
shall have any right with respect to the Plan, the Common Stock reserved for
issuance under the Plan or in any Option until a written option agreement shall
have been executed by the Company and the optionee and all the terms,
conditions, and provisions of the Plan and the Option applicable to such
optionee (and each person claiming under or through him) have been met.
(b) Approval of Counsel. In the discretion of the Committee, no
shares of Common Stock, other securities or property of the Company or other
forms of payment shall be issued hereunder with respect to any Option unless
counsel for the Company shall be satisfied that such issuance will be in
compliance with applicable federal, state, local, and foreign laws, securities
exchange requirements, and other applicable requirements.
(c) Compliance with Rule 16b-3. To the extent that Rule 16b-3 under
the Exchange Act applies to Options granted under the Plan, it is the intent of
the Company that the Plan comply in all respects with the requirements of Rule
16b-3, that any ambiguities or inconsistencies in construction of the Plan be
interpreted to give effect to such intention and that if the Plan shall not so
comply, whether on the date of adoption or by reason of any later amendment to
or interpretation of Rule 16b-3, the provisions of the Plan shall be deemed to
be automatically amended so as to bring them into full compliance with such
rule.
(d) Effects of Acceptance of Option. By accepting any Option or
other benefit under the Plan, each optionee and each person claiming under or
through an optionee shall be conclusively deemed to have indicated his or her
acceptance and ratification of, and consent to, any action taken under the Plan
by the Company, the Board of Directors, and/or the Committee or its delegates.
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<PAGE>
EXHIBIT (5)
<PAGE>
[Duane, Morris & Heckscher letterhead]
January 15, 1997
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 500,000 shares (the "Shares") of
Common Stock, $.01 par value, of the Company, pursuant to the Company's 1996
Equity Incentive 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 and to the reference to us under the heading "Interests of Named
Experts and Counsel" in such Registration Statement.
Sincerely,
DUANE, MORRIS & HECKSCHER
By: /s/ Frederick W. Dreher
-------------------------------
A Partner
FWD:PKS
<PAGE>
EXHIBIT (23)(B)
<PAGE>
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
January 16, 1997
