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As filed with the Securities and Exchange Commission on December 16, 1999
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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
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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
- ---------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
PENN ENGINEERING & MANUFACTURING CORP.
1998 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
(Full title of plan)
--------------------
Kenneth A. Swanstrom, Chairman of the Board
and Chief Executive Officer
P.O. Box 1000
Danboro, Pennsylvania 18916
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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:
John W. Kauffman, Esquire
Duane, Morris & Heckscher LLP
4200 One Liberty Place
Philadelphia, Pennsylvania 19103-7396
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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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, 100,000 shares (2) $2,421,250 $640
par value $.01
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</TABLE>
(1) This registration statement also registers such additional shares as may
be required to be issued under the Penn Engineering & Manufacturing Corp.
1998 Stock Option Plan for Non-Employee Directors in the event of a stock
dividend, reverse stock split, split-up, reclassification and/or other
similar event.
(2) Pursuant to paragraph (h) of Rule 457, the proposed maximum offering price
per share and the proposed maximum aggregate offering price have been
computed as follows: (a) with respect to the 30,000 shares for which
options have been granted but not exercised as of the date hereof,
computed on the basis (i) 15,000 shares at an exercise price of $22.00 per
share and (ii) 15,000 shares at $25.375 per share, and (b) with respect to
the 70,000 shares for which options have not been granted, computed on the
basis of $24.4375 per share, the average of the high and low prices of the
Common Stock of the Company on The New York Stock Exchange on December 14,
1999.
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<PAGE>
PART II
INFORMATION REQUIRED IN REGISTRATION STATEMENT
Item 3. 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 fiscal year ended December 31, 1998 as filed by
the Company with the Securities and Exchange Commission (the "Commission") on
March 31, 1999;
(b) The Company's Form 10-Q Report for the quarter ended March 31,
1999 as filed by the Company with the Commission on May 13, 1999;
(c) The Company's Form 10-Q Report for the quarter ended June 30,
1999 as filed by the Company with the Commission on August 13, 1999;
(d) The Company's Form 8-K Current Report as filed with the Commission
on October 15, 1999;
(e) The Company's Form 10-Q Report for the quarter ended September 30,
1999 as filed by the Company with the Commission on November 12, 1999;
(f) The Company's Form 8-K/A as filed by the Company with the
Commission on December 13, 1999; and
(g) The description of the Company's Common Stock set forth in the
Company's Registra tion 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(a), 13(c),
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 filing of a post-effective amendment that indicates
that all securities offered have been sold or that deregisters all securities
then remaining unsold, 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 supersed ed, to constitute a part of this
Registration Statement.
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<PAGE>
Item 4. 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 5. Interests of Named Experts and Counsel.
The validity of the issuance of the shares of Common Stock registered
hereby will be passed upon for the Company by Duane, Morris & Heckscher LLP,
Philadelphia, Pennsylvania. Thomas M. Hyndman, Jr., a director of the Company,
is Of Counsel to the law firm of Duane, Morris & Heckscher LLP and as of
December 9, 1999, Mr. Hyndman owned 2,110 shares of the Company's Common Stock,
570 shares of the Company's Class A Common Stock and options to purchase 625
shares of Common Stock that are currently exercisable or will become exercisable
within 60 days. Mr. Hyndman also serves as co-trustee of certain trusts which
hold an aggregate of 654,460 shares of Common Stock and an aggregate of 338,715
shares of Class A Common Stock.
Item 6. 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 the person 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 the person in connection with such action, suit or proceeding if the
person acted in good faith and in a manner the person 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 the
person's 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 the person 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 the
person's 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 the person is or was acting in any of the capacities set forth above
against expenses (including attorneys' fees) actually and reasonably incurred by
the person in connection with the defense or settlement of such action or suit
if the person acted in good faith and in a manner the person 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
II-3
<PAGE>
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 such person 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 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 or her and incurred by him or her in any such
capacity or arising out of his or her status as such whether or not the
corporation would have the power to indemnify him or her 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
or she 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, even though
less than a quorum, (ii) if there are no such directors or if such directors so
direct, 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 $25,000,000 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.
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<PAGE>
Item 7. 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 8. Exhibits.
4 Penn Engineering & Manufacturing Corp. 1998 Stock Option Plan for
Non-Employee Directors.
5 Opinion of Duane, Morris & Heckscher LLP.
23.1 Consent of Duane, Morris & Heckscher LLP (included in their
opinion filed as Exhibit 5).
23.2 Consent of Ernst & Young LLP.
23.3 Consent of DeLoitte & Touche LLP.
24 Power of Attorney (included on the signature pages hereto).
Item 9. 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:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933 (the "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. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective 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;
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<PAGE>
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) of this Item 9 do
not apply if the Registration Statement is on Form S-3, Form S-8 or Form F-3,
and the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or furnished to the
Commission 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 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 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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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 15, 1999.
PENN ENGINEERING & MANUFACTURING CORP.
By:/s/ Kenneth A. Swanstrom
---------------------------------
Kenneth A. Swanstrom, Chairman of the
Board and Chief Executive Officer
Know all men by these presents, that each person whose signature
appears below consti tutes 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>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Kenneth A. Swanstrom Chairman of the Board, Chief December 15, 1999
- ------------------------------------- Executive Officer and Director (principal
Kenneth A. Swanstrom executive officer)
/s/ Martin Bidart President, Chief Operating Officer December 15, 1999
- ------------------------------------- and Director
Martin Bidart
/s/ Mark W. Simon Vice President - Finance, Corporate December 15, 1999
- ------------------------------------- Secretary and Director (principal financial
Mark W. Simon and accounting officer)
/s/ Willard S. Boothby, Jr. Director December 15, 1999
- -------------------------------------
Willard S. Boothby, Jr.
</TABLE>
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<PAGE>
<TABLE>
<S> <C> <C>
/s/ Lewis W. Hull Director December 15, 1999
- -------------------------------------
Lewis W. Hull
/s/ Thomas M. Hyndman, Jr. Director December 15, 1999
- -------------------------------------
Thomas M. Hyndman, Jr.
/s/ Maurice D. Oaks Director December 15, 1999
- -------------------------------------
Maurice D. Oaks
/s/ Charles R. Smith Director December 15, 1999
- -------------------------------------
Charles R. Smith
/s/ Daryl L. Swanstrom Director December 15, 1999
- -------------------------------------
Daryl L. Swanstrom
</TABLE>
II-8
<PAGE>
EXHIBIT INDEX
(Pursuant to Item 601 of Regulation S-K)
<TABLE>
<CAPTION>
Exhibit No. Exhibit Reference
<S> <C> <C>
4 Penn Engineering & Manufacturing Corp. 1998
Stock Option Plan for Non-Employee Directors. Filed herewith
5 Opinion of Duane, Morris & Heckscher LLP. Filed herewith
23.1 Consent of Duane, Morris & Heckscher LLP (included in their
opinion filed as Exhibit 5).
23.2 Consent of Ernst & Young LLP. Filed herewith
23.3 Consent of DeLoitte & Touche LLP Filed herewith
24 Power of Attorney (see page II-7 of this Registration
Statement).
</TABLE>
EXHIBIT 4
PENN ENGINEERING & MANUFACTURING CORP.
1998 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
1. Purpose. The purpose of the Penn Engineering & Manufacturing Corp.
1998 Stock Option Plan for Non-Employee Directors (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 non-employee directors of the Company who are not
officers or employees of the Company ("Non-Employee Directors"), 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
and retaining Non-Employee Directors of high caliber and skills. To accomplish
these purposes, the Plan provides a means whereby Non-Employee Directors may
receive stock options ("Options") to purchase the Company's non-voting Common
Stock, par value $.0l par value (the "Common Stock"). All Non-Employee Directors
who are granted Options under this Plan are referred to herein as "Optionees."
2. Administration. The Plan shall be administered by the Company's
Board of Directors. The Board of Directors 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. All
decisions, determinations, and interpretations of the Board of Directors shall
be final and binding on all Optionees. The Board of Directors may act by vote of
a majority of its members present at a meeting of the Board at which a quorum is
present or by a written instrument signed by all members of the Board of
Directors.
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 100,000
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 Non-Employee Directors of the
Company shall be eligible to receive Options under the Plan. Directors of the
Company who are officers or employees of the Company or any subsidiary of the
Company shall not be eligible to participate in the Plan.
5. Granting of Options. Options may be granted by the Board of
Directors at any time and from time to time while the Plan shall be in effect.
The Board of Directors shall appoint a committee consisting of the members of
the then appointed Compensation Committee and the Chairman of the Board of
Directors of the Company (the "Committee"). The Committee shall make recommenda
tions to the Board of Directors regarding the Non-Employee Directors to whom
Options should be granted and the 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. Options may be granted under this Plan
in any year that options are granted to at least one employee under an employee
stock option or equity incentive plan of the Company (an "Employee Plan").
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<PAGE>
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 Board of Directors 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 Board of Directors in its sole discretion. Each option
agreement shall contain in substance the following terms and conditions:
(a) Type of Option. All Options granted under the Plan shall be
Options ("NonQualified Stock Options") not intended to qualify as incentive
stock options under Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code").
(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. The purchase price of the Common Stock subject to an 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 Board of Directors, 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 Board of Directors 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.
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 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 Directorship. In the event that an
Optionee ceases to be a director of the Company (for any reason other than
removal for cause in accordance with the provisions of the Company's By-laws),
the Optionee will immediately vest in all outstanding options, and the Optionee
(or his or her successor in the case of death) shall have the right to exercise
the Option during its term within a period of one year after termination of
directorship or within such other period, and subject to such terms
2
<PAGE>
and conditions, as may be specified by the Board of Directors. In the event of a
removal of the Optionee from the Board of Directors for cause in accordance with
the Company's By-laws, the Options shall terminate immediately upon the date of
such termination.
10. General Restrictions. Each Option granted under the Plan shall be
subject to the requirement that if at any time the Board of Directors 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 Optionee 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 exercised 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 Board of Directors.
11. Rights of a Stockholder. An Optionee under the Plan, unless
otherwise provided by the Plan, shall have no rights as a stockholder in respect
of any shares that may be purchased upon the exercise of any Option or portion
thereof unless and until certificates for shares of Common Stock are issued and
delivered to such recipient.
12. Right to Terminate Service As a Director. 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 his or her position as a director of
the Company or affect any right that the Company or its Board of Directors or
stockholders may have to terminate the directorship 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
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 Board of Directors, in its sole discretion, at any
time. Any securities so withheld or tendered will be valued by the Board of
Directors 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 Board of Directors may approve.
During the life of the recipient, such Option shall be exercisable only by the
Optionee.
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
3
<PAGE>
selectively among persons who receive, or are eligible to receive, grants of
Options under the Plan whether or not such persons are similarly situated.
However, no options may be granted under this Plan in any year that options are
not also granted under an Employee Plan.
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 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 consumma tion 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 Optionee
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 Optionee 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 Optionee 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.
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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. 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 December 31, 2008.
20. Forfeiture for Dishonesty. Notwithstanding anything to the contrary
in the Plan, if the Board of Directors 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
directorship or retention by 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 Board of
Directors in interpreting and applying the provisions of this Section 20 shall
be final.
21. 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.
22. Indemnification. With respect to the administration of the Plan,
the Company shall indemnify each present and future member of the Board of
Directors or the Committee against, and each member of the Board of Directors
and the Committee 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 Board of Directors or the Committee, 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 Board of Directors or the Committee (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 Board of Directors or the
Committee; 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 Board of Directors or the Committee 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
Board of Directors or the Committee and shall be in addition to all other rights
to which such member may be entitled as a matter of law, contract, or otherwise.
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23. 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 Board of
Directors, 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 Securities Exchange Act of 1934 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.
6
EXHIBIT 5
[Duane, Morris & Heckscher LLP letterhead]
December 15, 1999
The Board of Directors
Penn Engineering & Manufacturing Corp.
P.O. Box 1000
Danboro, Pennsylvania 18916
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 100,000 shares (the "Shares") of
Common Stock, $.01 par value, of the Company, pursuant to the Company's 1998
Stock Option Plan for Non-Employee Directors (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 and fully paid and
nonassessable.
We hereby consent to the use of this opinion in the Registration
Statement, and we further consent to the reference to us under the heading
"Interests of Named Experts and Counsel" in the Registration Statement.
Sincerely,
/s/ DUANE, MORRIS & HECKSCHER LLP
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration Statement on
Form S-8 pertaining to the Penn Engineering & Manufacturing Corp. 1998 Stock
Option Plan for Non-Employee Directors and related prospectus, of our reports
(a) dated January 27, 1999, with respect to the consolidated financial
statements of Penn Engineering & Manufacturing Corp. incorporated by reference
in its Annual Report (Form 10-K) for the year ended December 31, 1998, filed
with the Securities and Exchange Commission and (b) dated November 24, 1999 with
respect to the financial statements of R.C. Dudek Division of R.C. Dudek &
Company, Inc. for the year ended September 30, 1999, included in the Current
Report on Form 8-K/A of Penn Engineering & Manufacturing Corp., filed with the
Securities and Exchange Commission.
/s/Ernst & Young LLP
Philadelphia, Pennsylvania
December 15, 1999
EXHIBIT 23.3
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 January
29, 1997, appearing in the Annual Report on Form 10-K of Penn Engineering &
Manufacturing Corp. for the year ended December 31, 1998.
/s/ Deloitte & Touche LLP
Philadelphia, Pennsylvania
December 15, 1999
