As filed with the Securities and Exchange Commission on October 4, 1995
Registration No. 33-_____
_______________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
________________
TECHNITROL, INC.
(Exact Name of Registrant as specified in its charter)
________________
Pennsylvania 23-1292472
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification Number)
1210 Northbrook Drive, Suite 385
Trevose, Pennsylvania 19053
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
________________
PULSE ENGINEERING, INC. 1991 LONG-TERM INCENTIVE STOCK OPTION PLAN
PULSE ENGINEERING, INC. BOARD OF DIRECTORS STOCK OPTION PLAN
PULSE ENGINEERING, INC. SENIOR MANAGEMENT STOCK OPTION PLAN
PULSE ENGINEERING, INC. NONQUALIFIED STOCK OPTION PLAN
-----------------
THOMAS J. FLAKOLL
President
Technitrol, Inc.
1210 Northbrook Drive, Suite 385
Trevose, Pennsylvania 19053
(215) 355-2900
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
----------------
Copy to:
James M. Papada, III, Esquire
Stradley, Ronon, Stevens & Young
2600 One Commerce Square
Philadelphia, Pennsylvania 19103
(215) 564-8000
Fax: (215) 564-8120
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
__________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C>
Proposed Maximum Proposed Maximum
Amount to be Offering Price Per Aggregate Offering Amount of
Title of Securities to be Registered Registered Share (2) Price (2) Registration Fee
Common Stock,
$0.125
Upon exercise of options under the
Pulse Engineering, Inc. 1991 Long-term
Incentive Stock Option Plan, the
Pulse Engineering, Inc. Board of
Directors Stock Option Plan,
the Pulse Engineering, Inc.
Senior Management Stock Option Plan
and the Pulse Engineering, Inc.
NonQualified Stock Option Plan(1) 253,306 shares $15.75 $3,989,569.50 $1,375.00
__________________________________________________________________________________________________________________________
(1) Pursuant to an Agreement and Plan of Merger dated as of May 23, 1995 (the "Merger Agreement"), among the registrant,
Teco Sub, Inc. and Pulse Engineering, Inc. ("Pulse"), the Registrant assumed all of the outstanding options to
purchase common stock of Pulse under the Pulse Engineering, Inc. 1991 Long-term Incentive Stock Option Plan, the Pulse
Engineering, Inc. Board of Directors Stock Option Plan, the Pulse Engineering, Inc. Senior Management Stock Option
Plan and the Pulse Engineering, Inc. NonQualified Stock Option Plan (the "Assumed Options"), with appropriate
adjustments to the number of shares and exercise price of each Assumed Option to reflect the ratio at which the common
stock of Pulse was converted into common stock of the Registrant under the Merger Agreement.
(2) Estimated in accordance with Rule 457(h)(1) solely for the purpose of computing the amount of the registration fee
based on the average of the high ($16.00) and low ($15.50) prices of the Company's Common Stock as reported on the
American Stock Exchange on September 27, 1995.
__________________________________________________________________________________________________________________________
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<PAGE>
TECHNITROL, INC.
REGISTRATION STATEMENT ON FORM S-8
PART II
INFORMATION REQUIRED IN REGISTRATION STATEMENT
As used in this Registration Statement, unless the context otherwise
requires, the terms "Technitrol" and the "Company" mean Technitrol, Inc. and
its subsidiaries.
Item 3. Incorporation of Documents by Reference.
The following documents, previously filed by the Company with the
Commission pursuant to the Exchange Act, are hereby incorporated by reference
in this Registration Statement, except as superseded or modified herein:
(a) the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1994 filed March 21, 1995, pursuant to Section 13 of
the Securities Exchange Act of 1934, as amended (the "1934 Act");
(b) the Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1995 filed May 2, 1995, pursuant to Section 13 of the
1934 Act;
(c) the Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1995 filed August 11, 1995, pursuant to Section 13 of the
1934 Act; and
(d) the Company's Form S-4 Registration Statement filed August 21,
1995, pursuant to the Securities Act of 1933, as amended (the "Securities
Act").
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
and 15(d) of the 1934 Act on or after the date of this Registration Statement
and prior to the filing of a post-effective amendment which indicates that all
securities offered have been sold or which deregisters all securities then
remaining unsold shall be deemed to be incorporated by reference in this
Registration Statement and to be part hereof from the date of filing of such
documents.
<PAGE>
Item 4. Description of Securities.
Not Applicable
Item 5. Interests of Named Experts and Counsel.
Not Applicable
Item 6. Indemnification of Directors and Officers.
Pennsylvania law authorizes a court to award, or a corporation's
Board of Directors to grant indemnity to directors and officers in terms
sufficiently broad to permit such indemnification under certain circumstances
for liabilities (including reimbursement for expenses incurred) arising under
the Securities Act.
The Bylaws of the Company provide that: (i) the Company is required
to indemnify its officers and directors to the fullest extent permitted by
law, including those circumstances in which indemnification would othewise be
discretionary; (ii) the Company is required to advance expenses to its
officers and directors as incurred, provided that they undertake to repay the
amount advanced if its is ultimately determined that they are not entitled to
indemnifiction; and (iii) the Company is authorized to enter into
indemnification agreements with its officer, directors and employees.
The Company carries Directors' and Officers' Liability and Corporate
Reimbursement Insurance.
Item 7. Exemption from Registration Claimed.
Not Applicable.
Item 8. Exhibits.
Exhibit
Number Description
------ ------------------------------------------------------------
4.1 Pulse Engineering, Inc. 1991 Long-Term Incentive Stock
Option Plan
4.2 Pulse Engineering, Inc. Board of Directors Stock Option Plan
4.3 Pulse Engineering, Inc. Senior Management Stock Option Plan
4.4 Pulse Engineering, Inc. Nonqualified Stock Option Plan
5.1 Opinion of Counsel as to Legality of Securities being
Registered.
23.1 Consent of Counsel (contained in Exhibit 5.1)
23.2 Consent of Independant Accountants
24.1 Power of Attorney
<PAGE>
Item 9. Undertakings.
A. The undersigned registrant hereby undertakes:
(1) 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.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new Registration Statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) 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.
B. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) 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.
C. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
<PAGE>
SIGNATURES
Pursuant to the requirement sof the Securities Act of 1933, the
registrant Technitrol, Inc. certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form S-8 and has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Philadlephia,
Commonwealth of Pennsylvania, on September 29, 1995.
TECNITROL, INC.
By: /s/ Thomas J. Flakoll
-----------------------------------------
Thomas J. Flakoll, President and Director
Exhibit 4.1
PULSE ENGINEERING, INC.
1991 LONG-TERM INCENTIVE PLAN
SECTION 1
GENERAL
1.1 Purpose. The Pulse Engineering, Inc. 1991 Long-Term Incentive Plan
(the "Plan") has been established by Pulse Engineering, Inc. (the "Company")
to:
(a) attract and retain key executive and managerial employees,
directors and other key persons providing services to the
Company or any Subsidiary;
(b) motivate participating employees, and other persons providing
services to the Company or any Subsidiary, by means of
appropriate incentives, to achieve long-range goals;
(c) provide incentive compensation opportunities which are
competitive with those of other corporations; and
(d) further the identity of interests of participants with those of
the stockholders of the Company;
<PAGE>
and thereby promote the long-term financial interest of the Company and its
Subsidiaries, including the growth in value of the Company's equity and
enhancement of long-term stockholder return.
1.2 Effective Date. Subject to the approval of the stockholders of the
Company, the Plan shall be effective as of April 17, 1991 (the "Effective
Date"). The Plan shall be unlimited in duration and, in the event of Plan
termination, all Plan provisions shall remain in effect as to outstanding
awards until those awards expire or otherwise terminate.
1.3 Definitions. The following definitions are applicable to the Plan:
"Board" means the Board of Directors of the Company.
"Change in Control" has the meaning ascribed to it in subsection
1.11.
"Code" means the Internal Revenue Code of 1986, as amended, and any
successor statute.
"Committee" has the meaning ascribed to it in subsection 1.4.
<PAGE>
"Fair Market Value" of a share of stock, as of any date, means the
fair value of such share determined in accordance with procedures
established by the Committee.
"Participant" means any key executive or managerial employee of the
Company or any Subsidiary, any other key person providing services
to the Company or any Subsidiary, and any nonemployee director of
the Company who, pursuant to subsection 1.5, participates in the
Plan.
"Restricted Period" has the meaning ascribed to it in paragraph
4.3(a).
"Restricted Stock" has the meaning ascribed to it in subsection 4.1.
"Rule 16b-3" means such rule adopted under the Securities Exchange
Act of 1934, as amended, or any successor rule.
"Stock" means Pulse Engineering, Inc. Class A Voting Common Stock,
par value $.01 per share, or other securities as may be substituted
therefor pursuant to subsection 1.10.
<PAGE>
"Stock Appreciation Right" has the meaning ascribed to it in
subsection 3.1.
"Stock Option" has the meaning ascribed to it in subsection 2.1.
"Subsidiary" means any corporation in which the Company has a direct
or indirect equity interest which is so designated by the Committee.
1.4 Administration. The authority to manage and control the operation
and administration of the Plan shall be vested in a committee (the
"Committee") selected by the Board; provided, however, that until the Board by
resolution determines otherwise, the Board shall have final authority to
review and approve the Plan's administration and any awards granted by the
Committee, and any such awards will not be deemed final until such Board
review and approval. All of the members of the Committee shall be members of
the Board. Subject to the limitations of the Plan and the final authority
vested in the Board, the Committee shall have the sole and complete authority:
(a) to select participants in the Plan; (b) to make awards in such forms and
amounts as it shall determine; (c) to impose such limitations, restrictions
and conditions upon such awards as it shall deem appropriate; (d) to interpret
the Plan and to adopt, amend and rescind administrative guidelines and other
rules and regulations relating to the Plan; (e) to correct any defect or
<PAGE>
omission or to reconcile any inconsistency in the Plan or in any award granted
hereunder; and (f) to make all other determinations and to take all other
actions necessary or advisable for the implementation and administration of
the Plan. The Committee's determinations on matters within its authority shall
be conclusive and binding upon the Company and all other persons. All
expenses associated with the Plan shall be borne by the Company, subject to
such allocation to its Subsidiaries as it deems appropriate. The Committee
may, to the extent such action is consistent with the laws of the State of
Delaware and will not prevent the Plan from complying with Rule 16b-3,
delegate any of its authority hereunder to such persons as it deems
appropriate.
1.5 Participation. Subject to the terms and conditions of the Plan, the
Committee shall determine and designate, from time to time, the key executive
and managerial employees of the Company or any Subsidiary, other key persons
(who need not be natural persons) providing services to the Company or any
Subsidiary who will participate in the Plan. In determining who shall be a
Participant in the Plan, the Committee shall take into account a person's
contribution and potential contribution to the profitability of the Company,
any contractual obligations between the Company and the person, and any other
factors that the Committee shall determine to be appropriate. Nothing in this
subsection 1.5 shall be construed to prevent awards from being made by the
<PAGE>
Committee to any member of the Board (regardless of whether such Board member
is employed by the Company or any Subsidiary); provided that no award shall be
made under the Plan to a Board member to the extent that such award would
prevent the Plan from complying with Rule 16b-3. Consistent with Rule 16b-3,
any member of the Board who is a member of the Committee shall not receive any
award under the Plan while serving on the Committee, unless such award is made
pursuant to one or more amendments to the Plan providing for "formula awards,"
as described in Rule 16b-3. Any such amendment providing for formula awards
shall be adopted in accordance with subsection 1.13 (which amendment shall not
require shareholder approval). The formula set forth in any such amendment
may not be amended more than once in any six- month period, except to comport
with changes in the Code, the Employee Retirement Income Security Act, or the
rules thereunder. The Committee may grant to Participants, in accordance with
the provisions of the Plan, Stock Options, Stock Appreciation Rights,
Restricted Stock, and other awards.
1.6 Shares Subject to the Plan. The shares of Stock with respect to
which awards may be made under the Plan shall be either authorized and
unissued shares or issued and outstanding shares (including, in the discretion
of the Board, shares purchased in the market). Subject to the provisions of
subsection 1.10, the number of shares of Stock which may be issued with
respect to awards under the Plan shall not exceed 500,000 shares in the
<PAGE>
aggregate. If, for any reason, any award under the Plan otherwise
distributable in shares of Stock, or any portion of the award, shall expire
unexercised, terminate or be surrendered, forfeited or canceled, be settled in
cash in lieu of Stock, or in such manner that all or some of the shares
covered by the award are not issued to a Participant, such shares shall
immediately become available for additional awards under the Plan, except for
shares withheld pursuant to subsection 1.7 of the Plan.
1.7 Compliance with Applicable Laws and Withholding of Taxes.
Notwithstanding any other provision of the Plan, the Company shall have no
liability to issue any shares of Stock under the Plan unless such issuance
would comply with all applicable laws and the applicable requirements of any
securities exchange or similar entity. Prior to the issuance of any shares of
Stock under the Plan, the Company may require a written statement that the
recipient is acquiring the shares for investment and not for the purpose of
with the intention of distributing the shares. In the case of a Participant
who is subject to Sections 16(a) and 16(b) of the Securities Exchange Act of
1934, the Committee may, at any time, add such conditions and limitations to
any Stock Appreciation Right awarded such Participant, or to any election to
satisfy tax withholding obligations through the withholding or surrender of
shares of Stock as the Committee, in its sole discretion, deems necessary or
desirable to comply with Section 16(a) of 16(b) and the rules and regulations
<PAGE>
thereunder or to obtain any exemption therefrom. All awards and payments under
the Plan are subject to withholding of all applicable taxes, which withholding
obligations may be satisfied, with the consent of the Committee, through the
surrender of shares of Stock which the Participant already owns, or to which a
Participant is otherwise entitled under the Plan.
1.8 Transferability. No award under the Plan, and no interest therein,
shall be transferable except as designated by the Participant by will or by
the laws of descent and distribution, or, to the extent not inconsistent with
the applicable provisions of the Code, pursuant to a qualified domestic
relations order (as that term is defined in the Code). All awards shall be
exercisable or received by the Participant's legal representative.
1.9 Employment and Stockholder Status. The Plan does not constitute a
contract of employment, and selection as a Participant will not give any
employee or Participant the right to be retained in the employ of the Company
or any Subsidiary, or otherwise to continue to provide services to the Company
or any Subsidiary, or any right or claim to any benefit under the Plan unless
such right or claim has specifically accrued under the terms of the Plan.
Except as otherwise provided in the Plan, no award under the Plan shall confer
upon the holder thereof any right as a stockholder of the Company prior to the
<PAGE>
date on which he fulfills all service requirements and other conditions for
receipt of shares of Stock. If the redistribu tion of shares is restricted
pursuant to subsection 1.7, certificates representing such shares may bear a
legend referring to such restrictions.
1.10 Adjustments to Number of Shares Subject to the Plan. In the event of
any change in the outstanding shares of Stock of the Company by reason of any
stock dividend, split, spinoff, recapitalization, merger, consolidation,
combination, exchange of shares or otherwise, the aggregate number of shares
of Stock with respect to which awards may be made under the Plan, and the
terms, type of shares and the number of shares of any outstanding awards under
the Plan may be equitably adjusted by the Committee in its sole discretion to
preserve the benefit of the award for the Company and the Participant.
1.11 Change in Control. The Committee may provide in any award that, in
the event of a Change in Control, the Participant may (I) exercise any
outstanding Stock Options or Stock Appreciation Rights which would not then be
exercisable by the Participant absent the Change in Control, provided that,
with respect to directors and officers subject to Section 16(b) of the
Securities Exchange Act of 1934, such Stock Appreciation Rights have been
outstanding for at least six months as of the date of exercise; (II) require
the Company to release all restrictions on shares of Restricted Stock awarded
to the Participants; and (III) require the Company to distribute to the
<PAGE>
Participant, in cash or Stock, the fair value (prorated to the date of the
Change in Control) or any other awards under the Plan then held by the
Participant. For purposes of the Plan, the term "Change in Control" means a
change in the beneficial ownership of the Company's voting stock or a change
in the composition of the Board which occurs as follows:
(a) any "person" (as such term is used in Section 13(d) of the
Securities Exchange Act of 1934), other than a trustee or other
fiduciary of securities held under an employee benefit plan of
the Company or any of its Subsidiaries, is or becomes a
beneficial owner, directly or indirectly, of stock of the
Company representing 25 percent or more of the total voting
power of the Company's then outstanding stock in one or a
series of transactions that are not approved by the Board prior
to such person becoming a 25- percent beneficial owner;
(b) a tender offer (for which a filing has been made with the
Securities and Exchange Commission ("SEC") which purports to
comply with the requirements of Section 14(d) of the Securities
Exchange Act of 1934 and the corresponding SEC rules) is made
for the stock of the Company, which has not been negotiated and
<PAGE>
approved by the Board, provided that, in case of a tender offer
described in this paragraph (b), the Change of Control will be
deemed to have occurred upon the first to occur of:
(i) any time during the offer when the person (using the
definition in (a) above and in Section 14(d)(2) of the
Securities Exchange Act of 1934) making the offer owns or
has accepted for payment stock of the Company with 25
percent or more of the total voting power of the Company's
stock; or
(ii) three business days before the offer is to terminate
unless the offer is withdrawn first, if the person (using
the definition in (i) above) making the offer could own,
by the terms of the offer plus any shares owned by this
person, stock with 50 percent or more of the total voting
power of the Company's stock when the offer terminates; or
(c) individuals who were the Board's nominees for election as
directors of the Company immediately prior to a vote or consent
of the stockholders of the Company involving a contest for the
<PAGE>
election of directors shall not constitute a majority of the
Board following the election.
The Committee may, in its discretion, modify the definition of the term
"Change in Control" as it applies to the awards to individual Participants,
and groups of Participants, and may also provide for the funding of awards
under the Plan upon a Change in Control.
1.12 Agreement with Company. At the time of any awards under the Plan,
the Committee will require a Participant to enter into an agreement with the
Company in a form specified by the Committee, agreeing to the terms and
conditions of the Plan and to such additional terms and conditions, not
inconsistent with the Plan, as the Committee may, in its sole discretion,
prescribe.
1.13 Amendment and Termination of Plan. Subject to the following
provisions of this subsection 1.13, the Board may at any time and in any way
amend, suspend or terminate the Plan; provided, however, that no such
amendment shall be made without stockholder approval to the extent such
approval is required by law, agreement or the rules of any exchange or
automated quotation system upon which the Stock is listed or quoted. No such
amendment, suspension or termination shall impair the rights of Participants
affected thereby or make any change that would disqualify the Plan, or any
<PAGE>
other plan of the Company intended to be so qualified, from the exemption
provided by Rule 16b-3.
SECTION 2
STOCK OPTIONS
2.1 Definitions. The award of a Stock Option under the Plan entitles
the Participant to purchase shares of Stock at a price fixed at the time the
option is awarded, subject to the following terms of this Section 2.
2.2 Eligibility. The Committee shall designate the Participants to whom
Stock Options are to be awarded under the Plan, and shall determine the number
of option shares to be offered to each of them. Stock Options granted under
the Plan may be incentive stock options within the meaning of Section 422 of
the Code or any successor provision, or in such other form, consistent with
the Plan, as the Committee may determine. The Committee may require Stock
Options, other than incentive stock options, to be purchased by Participants
for a purchase price determined by the Committee. The Committee may, as a
condition of an award to a Participant of a Stock Option; or as a condi tion
of a Stock Option becoming effective as to a Participant, require that the
Participant agree to the cancellation of awards made under this Plan or any
other plan or arrangement of the Company or affiliated companies.
<PAGE>
2.3 Price. The purchase price of a share of Stock under each Stock
Option shall be determined by the Committee, provided that the purchase price
shall not be less than the par value of a share of Stock on such date. To the
extent provided by the Committee, the full purchase price of each share of
Stock purchased upon the exercise of any Stock Option shall be paid (a) in
cash (including check, bank draft or money order); (b) in shares of Stock
(valued at Fair Market Value as of the day of exercise); (c) in any
combination of cash and Stock; or (d) with any other consideration (including
payment in accordance with a cashless exercise program under which, if so
instructed by the Participant, shares of Stock may be issued directly to the
Participant's broker or dealer upon receipt of the option price in cash from
the broker or dealer).
2.4 Exercise. Stock Options shall be exercised in whole or in part by
written notice to the Company. Stock Options shall be exercisable at such
time or times as the Committee shall determine at the time of award, or
subsequent to the time of award.
SECTION 3
STOCK APPRECIATION RIGHTS
3.1 Definition. A Stock Appreciation Right is an award that entitles
its holder to receive from the Company, at the time of exercise of the right,
an amount equal to:
<PAGE>
(a) the number of shares as to which the holder is exercising the
Stock Appreciation Right;
MULTIPLIED BY
(b) the excess of the Fair Market Value (at the date of exercise)
of a share of Stock over a price specified by the Committee.
The Committee may provide that the amount determined in accordance with
paragraph (b) next above, with respect to a share of Stock, shall be increased
by the amount of the dividends paid by the Company with respect to a share of
Stock between the date of grant of the Stock Appreciation Right and the date
of its exercise.
3.2 Eligibility. The Committee may, in its discretion, award Stock
Appreciation Rights in tandem with any previously or contemporaneously granted
Stock Option or independent of any option. The price of a tandem Stock
Appreciation Right shall be the exercise price of the related Stock Option.
3.3 Exercise. A Stock Appreciation Right shall be exercised in whole or
in part by written notice to the Company. Stock Appreciation Rights shall be
exercisable at such time or times as the Committee shall determine at the time
of award, or subsequent to the time of award. The amount payable upon
<PAGE>
exercise of a Stock Appreciation Right may be paid by the Company in Stock
(valued at its Fair Market Value on the date of exercise), cash, or a
combination thereof, as the Committee may determine, which determination shall
be made after considering any preference expressed by the holder. To the
extent that a Stock Appreciation Right that is in tandem with a Stock Option
is exercised, the related Stock Option will be canceled, and to the extent
that a Stock Option in tandem with a Stock Appreciation Right is exercised,
the tandem Stock Appreciation Right will be canceled.
SECTION 4
RESTRICTED STOCK
4.1 Definition. Restricted Stock awards are grants of Stock to
Participants, the vesting of which is subject to a required period of
employment and any other conditions established by the Committee.
4.2 Eligibility. The Committee shall designate the Participants to whom
Restricted Stock is to be awarded, and the number of shares of Stock that are
subject to the award.
4.3 Terms and Conditions of Awards. All shares of Restricted Stock
awarded to Participants under the Plan shall be subject to the following terms
<PAGE>
and conditions and to such other terms and conditions, not inconsistent with
the Plan, as shall be prescribed by the Committee in its sole discretion.
(a) Restricted Stock awarded to Participants may not be sold,
assigned, transferred, pledged or otherwise encumbered, except
as hereinafter provided, for such period as the Committee may
determine, after the time of the award of such stock (the
"Restricted Period"). Except for such restrictions, and such
other restrictions as the Committee shall impose, the
Participant as owner of such shares shall have all the rights
of a stockholder, including but not limited to the right to
vote such shares and, except as otherwise provided by the
Committee, the right to receive all dividends paid on such
shares.
(b) The Committee may, in its discretion, at any time after the
date of the award of Restricted Stock, adjust the length of the
Restricted Period to account for individual circumstances of a
Participant or group of Participants.
(c) Except as otherwise determined by the Committee in its sole
discretion, a Participant whose employment with the Company and
<PAGE>
all Subsidiaries terminates prior to the end of the Restricted
Period for any reason shall forfeit all shares of Restricted
Stock remaining subject to any outstanding Restricted Stock
award.
(d) Each certificate issued in respect of shares of Restricted
Stock awarded under the Plan shall be registered in the name of
the Participant and, at the discretion of the Committee, each
such certificate may be deposited in a bank designated by the
Committee. Each such certificate shall bear the following (or
a similar) legend:
"The transferability of this certificate and the shares of
stock represented hereby are subject to the terms and
conditions (including forfeiture) contained in the Pulse
Engineering, Inc. 1991 Long-Term Incentive Plan and an
agreement entered into between the registered owner and Pulse
Engineering, Inc. A copy of such plan and agreement is on file
in the office of the Secretary of Pulse Engineering, Inc., 7250
Convoy Street, San Diego, California 92111."
<PAGE>
(e) At the end of the Restricted Period for Restricted Stock, such
Restricted Stock will be transferred free of all restrictions
to the Participant (or his legal representative, beneficiary or
heir).
4.4 Substitution of Cash. The Committee may, in its discretion,
substitute cash equal to the Fair Market Value (determined as of the date of
destruction) of Stock otherwise required to be distributed to a Participant in
accordance with subsection 4.3.
SECTION 5
OTHER AWARDS
Other awards, including without limitation performance units, and other
forms of awards measured in whole or in part by the value of shares of Stock,
the performance of the Participant or the performance of the Company, may, in
the discretion of the Committee, be granted under the Plan. Such awards may
be payable in Stock, cash or both, and shall be subject to such restrictions
and conditions as the Committee shall determine. At the time of such an award,
the Committee shall, if applicable, determine a performance period and
performance goals to be achieved during the performance period, subject to
such later revisions as the Committee shall deem appropriate to reflect
<PAGE>
significant unforeseen events. Following the conclusion of each performance
period, the Committee shall determine the extent to which performance goals
have been attained or the degree of achievement between maximum and minimum
levels during the performance period in order to evaluate the level of payment
to be made, if any.
<PAGE>
AMENDMENT TO THE PULSE ENGINEERING, INC.
LONG-TERM INCENTIVE PLAN
RESOLVED, that Section 2.5 of the Pulse Engineering, Inc. Long-Term
Incentive Plan be amended to read in full as follows:
2.5 Formula Award for Directors. Notwithstanding any other
provision of the Plan, each non-employee Director of the Company
appointed or elected as a Director on or after November 11, 1993 shall,
(i) upon his or her appointment or election to the Board, be issued
pursuant to the Plan an option to purchase 10,000 shares of the Stock and
(ii) every three years after his or her appointment or election, be
issued pursuant to the Plan an option to purchase 6,000 shares of the
Stock. Each non-employee Director of the Company appointed or elected as
a Director before November 11, 1993 shall, upon the next anniversary of
his appointment or election, be issued pursuant to the Plan an option to
purchase 6,000 shares of the Stock. Such options shall: a) have a per
share exercise price equal to the fair market value of the Stock on the
date of issuance; b) vest in three equal installments, with the first
such installment vesting on October 1 following the issuance of such
option and additional installments vesting on October 1 of the following
two years; and c) be subject to all other terms and conditions of the
Plan. The provisions of this Section 2.5 shall not be amended more than
once every six months, other than to comport with changes in the Code,
the Employee Retirement Income Security Act of 1974, as amended, or the
rules thereunder.
<PAGE>
EXHIBIT B
RESOLUTIONS RELATING TO AMENDMENT
OF THE BOARD OF DIRECTORS STOCK OPTION PLAN,
SENIOR MANAGEMENT STOCK OPTION PLAN AND
NON-QUALIFIED STOCK OPTION PLAN
OF
PULSE ENGINEERING, INC.
Whereas, the Corporation maintains a Board of Directors Stock Option
Plan, a Senior Management Stock Option Plan, a Non-Qualified Stock Option Plan
and a Long-Term Incentive Plan (the "Plans") under which options to purchase
the Corporation's Common Stock may be granted;
Whereas, the provisions of three of the Plans and the underlying
Option Agreements state that in the event of a merger or consolidation in
which the Corporation is not the surviving entity or sale of substantially all
of the assets of the Corporation, outstanding options granted thereunder shall
terminate at the time of such corporate event;
Whereas, the Board of Directors has authorized the appropriate
officers to execute and deliver an Agreement of Merger (the "Agreement of
Merger") involving the Corporation and Technitrol, Inc. ("Technitrol") in
which the Corporation will not be the surviving entity; and
Whereas the Agreement of Merger provides that all of the
Corporation's outstanding options will be assumed by Technitrol and converted
into options to purchase Technitrol Common Stock and Technitrol has requested
that the Corporation's Plans and underlying Option Agreements be amended (as
necessary) to allow for such assumption;
NOW, THEREFORE, BE IT RESOLVED that Paragraph 6.9 of the Board of
Directors Stock Option Plan, Paragraph 6.11 of the Senior Management
Stock Option Plan and Section 7.9 of the Non-Qualified Stock Option
Plan, and any similar provision of any of the Plans as well as any
similar provision contained in any outstanding Option Agreement
under any such Plan, shall be and they hereby are amended to delete
termination of outstanding options upon a merger or consolidation
involving the Corporation in which the Corporation is not the
surviving entity or sale of substantially all of the assets of the
Corporation and to allow assumption of outstanding options in such
<PAGE>
event by the surviving corporation, conditioned upon approval of the
Agreement of Merger by the Stockholders of the Corporation and
effective immediately prior to the Effective Time of the Merger
contemplated by the Agreement of Merger; and
BE IT FURTHER RESOLVED that the proper officers of the Corporation
are authorized and directed to take any and all action that may be
necessary or appropriate to give effect to the intent of the
foregoing resolution.
Exhibit 4.2
PULSE ENGINEERING, INC.
BOARD OF DIRECTORS STOCK OPTION PLAN
1. Purpose of the Plan. The purpose of this Board of Directors Stock
Option Plan (the "Plan") is to serve as an incentive to, and to encourage
stock ownership by, the outside (non-employee) directors of Pulse Engineering,
Inc., a Delaware corporation (the "Company"). The Plan has been developed to
enable such directors of the Company to participate in the Company's growth
and profitability and to induce them to remain on the Board of Directors
("Board") of the Company. The Company is the surviving corporation in a
merger between the Company and Pulse Engineering, Inc., a California
corporation, effective on August 24, 1987. This Plan applies to all options
granted hereunder on or after December 1, 1989.
2. Stockholder Approval and Term of Plan. This Plan shall be approved
by a majority of the stockholders, after adoption by the Board. Options may
be granted, but not exercised, prior to stockholder approval. If the Board
fails to adopt this Plan or if the stockholders fail to approve this Plan, any
options granted under this Plan shall be of no effect. This Plan shall
terminate April 29, 1997 unless terminated earlier by the Board. The Board
may terminate this Plan at any time without stockholder approval, but
termination of this Plan prior to April 29, 1997 shall not affect rights and
obligations with respect to options theretofore granted and then in effect.
3. Administration of Plan. This Plan shall be administered by the
Board. No option shall be granted to an eligible director of the Company
except by the Board, a majority of which Board and a majority of the directors
acting in the matter, are "disinterested" (as defined below). A person shall
be deemed "disinterested" if at the time he exercises discretion in
administering the Plan, he is not eligible, and has not at any time within one
year prior thereto been eligible, for selection as a person to whom options
may be granted pursuant to this plan or any other plan of the Company
entitling participants to acquire stock, stock options or stock appreciation
rights of the Company or any of its affiliates. If circumstances prevent the
Board from being deemed to be "disinterested" for purposes of granting options
to a director pursuant to this Plan, then the Board shall refer such proposed
grant to a stockholder vote and a majority of the stockholders must vote
affirmatively to approve the subject grant for it to be effective.
4. Eligible Directors. The Board shall not grant an option under the
Plan to any eligible director who owns stock possessing more than 10% of the
total combined voting power or value of all classes of stock of the Company,
or any parent or subsidiary of the Company. Only the directors of the Company
who are not employees or managers of the Company (the "eligible director(s)")
<PAGE>
shall be eligible to participate in the Plan. No person shall be granted an
option under the Plan unless, on the date of grant, such person is an eligible
director of the Company.
5. Stock Subject to the Plan. The stock subject to the options shall
be shares of the Company's authorized but unissued or acquired or reacquired
Class A Voting Common Stock ("Voting Common Stock"). Subject to the
provisions of Sections 6.8 and 8 of the Plan, the maximum aggregate number of
shares for which options may be granted and sold under the Plan is 40,000
shares.
6. Time of Grant; Terms and Conditions of Options. No options may be
granted under the Plan after September 30, 1991. Any option granted pursuant
to the Plan shall be evidenced by an agreement, which agreement shall comply
with and be subject to the following terms and conditions:
6.1 Number of Shares. Each option shall state the number of shares
to which it pertains.
6.2 Exercise of Installments. The number of shares subject to the
option shall be divided into installments, and shall be exercisable ("accrue")
as follows:
(a) Installments. Any option granted on or after December 1,
1989 but before October 1, 1990 shall be divided into two installments. Any
option granted on or after October 1, 1990 but before October 1, 1991 shall
have a single installment, constituting the total number of shares subject to
the option. The base amount of each installment shall consist of the total
number of shares subject to the option, divided by the number of installments.
(b) Accrual. Initially, each installment, or any part
thereof, shall be exercisable (accrue) only within an option exercise period
for such installment ("Option Exercise Period"), as follows:
Option Exercise Period for Installments
If Total
Installments are: 2 1
- ----------------
Installment Number Corresponding
Within Total: Option Exercise Period
- ------------ ----------------------
1 October 1, 1990 to
February 28, 1991
2 1 October 1, 1991 to
February 29, 1992
If an installment, or any part thereof, is not exercised during the
Option Exercise Period for such installment, such installment, or any part
<PAGE>
thereof, shall be exercisable only during the Option Exercise Period for any
subsequent installment. In the years 1992, 1993, 1994, 1995 and 1996, any
installment, or any part thereof, shall be exercisable during an Option
Exercise Period consisting of the five-month period commencing October 1 of
such year and terminating on the last day of February in the following year.
Notwithstanding any provision of the Plan to the contrary, the Board may
extend the Option Exercise Period for any year to the period consisting of the
12 months beginning October 1 of such year and terminating on the last day of
September in the following year. In no event shall an option be exercisable
in whole or in part after April 29, 1997.
6.3 Option Exercise Period. Each option shall state the option
exercise price. The option exercise price for options granted pursuant to
this Plan shall be not less than 85% of the fair market value of the shares
subject to the option on the date the option is granted.
6.4 Method of Exercise. An option shall be exercised by delivery
of both written notice of exercise to the Company at its principal place of
business by the person entitled to exercise the option and payment for the
shares with respect to which the option is exercised. Payment shall be:
(a) By bank certified or cashier's check; or
(b) By the optionee's personal recourse promissory note for
all or part of the option price, which promissory note is secured by a
security interest in the shares issuable upon exercise of such option. Such
promissory note shall be in the form and contain such terms as are determined
by the Board, including a term of not less than two years, and shall bear
interest at a rate determined by the Board at the time of exercise of the
option, which interest rate shall be the lowest rate which will not cause (i)
imputation of interest pursuant to Section 483 of the Internal Revenue Code of
1986, as amended, (ii) the inclusion in the gross income of any party of any
original issue discount pursuant to Section 1271, et seq., of the Internal
Revenue Code of 1986, as amended, (iii) the inclusion in the gross income of
any party of any original issue discount, or other amounts treated as
transferred, retransferred or received, pursuant to Section 7872 of the
Internal Revenue Code of 1986, as amended, or (iv) any similar tax
consequences under any similar or successor provisions of the Internal Revenue
Code of 1986, as amended.
Until an optionee becomes a stockholder of record, no right to vote
or to receive dividends or any other rights as a stockholder shall exist with
respect to shares notwithstanding the exercise of the option. No adjustment
shall be made for dividend or other rights as to which the record date
precedes the date the optionee becomes a stockholder of record, except as
<PAGE>
provided in Section 6.8. Options may not be exercised as to fractional
shares. As soon as reasonably practicable after receipt by the Company of a
notice of exercise, the Company shall deliver to the optionee at the principal
office of the Company, or at such other appropriate place as may be determined
by the Board, a certificate or certificates for shares of stock with respect
to which the option is exercised. The options granted in accordance wit this
Plan shall be subject to any legend and restriction imposed pursuant to any
applicable state, federal or foreign securities law. Notwithstanding the
foregoing, the Company may postpone delivery of any certificate or
certificates after notice of exercise for such reasonable period as may be
required to comply with any applicable listing requirements of any national or
other securities exchange. In the event an option shall be exercisable by any
person other than the optionee, the required notice under this Section 6.4
shall be accompanied by appropriate proof of the right of such person to
exercise the option.
6.5 Rights and Obligations Upon Exercise. All shares of stock
issued upon exercise of an option shall be subject to the terms and conditions
of Sections 5, 6 and 7 of a standard Stock Subscription Agreement of the
Company regarding restrictions on transfer, rights of first refusal, third
party sales, registration rights, legends and matters related thereto, a copy
of which is attached hereto as Exhibit A.
6.6 Term of Options. To the extent it is not exercised, an option
granted under the Plan shall terminate and expire on the earlier of: (i) the
breach by an optionee of any provision of the Agreement; (ii) midnight on
April 29, 1997; or (iii) three months after an optionee ceases, for any
reason, to be a director of the Company, its parents or subsidiaries as
provided in Section 6.7.
6.7 Termination of Directorship. All options granted to an
optionee under the Plan which have not otherwise expired or been exercised
shall terminate three months after the date such optionee ceases, for any
reason, to be a director of the Company, its parents or subsidiaries. During
the three month period following any termination of directorship, an optionee
may exercise any or all of such optionee's option rights under the Plan, but
only to the extent such options rights are or have previously been exercisable
on the date of termination of employment. Notwithstanding the foregoing:
(a) In the event of a termination of directorship of an
optionee due to the optionee's death, the personal representatives of the
optionee, or any person or persons to whom the rights of the optionee under
such options pass by will or by the applicable laws of descent and
distribution, may, at any time within a period of six months after the date of
such optionee, exercise any or all of such option rights to the extent such
<PAGE>
option rights are or have previously been exercisable on the date of death of
such optionee, provided that no option shall be exercisable, in whole or in
part, after April 29, 1997;
(b) In the event such a termination of optionee's directorship
is due to the disability of the optionee (within the meaning of Section
37(e)(3) of the Internal Revenue Code of 1986, as amended), the optionee, the
optionee's guardian or legal representative, or (in the event of the
optionee's death) the personal representative of the optionee or any person or
persons to whom the rights of the optionee under such options pass by will or
by the applicable laws of descent and distribution, may, at any time within a
period of one year after the optionee's termination of directorship, exercise
any or all of such option rights to the extent such option rights are or have
previously been exercisable on the date of the termination of directorship,
provided that no option shall be exercisable, in whole or in part, after April
29, 1997.
The Board shall determine whether an authorized leave of absence,
absence for military or governmental service or disability shall constitute
termination of directorship for purposes of this Section 6.7.
6.8 Recapitalization. Subject to any required action by the
Company's stockholders, the number of shares of Voting Common Stock which may
be purchased upon the exercise of each outstanding option, and the exercise
price per share set forth in such options, shall be proportionately adjusted
for any increase or decrease in the number of issued shares of Voting Common
Stock of the Company resulting from any subdivision or consolidation of
shares, the payment of a stock dividend, or any other transaction in which the
Company increases or decreases its issued shares of Voting Common Stock but
does not receive payment for such shares, but excluding conversion or exchange
of securities which are convertible or exchangeable into shares of Voting
Common Stock of the Company. Any fraction of a share subject to an option
that would otherwise result from an adjustment pursuant to this Section 6.8
shall be rounded downward to the next full number of shares without other
compensation or consideration to the holder of such option.
6.9 Mergers, Sale of All Assets, or Dissolution. Subject to any
required action by the Company's stockholders, if the Company shall be the
surviving corporation in any merger or consolidation, each outstanding option
shall pertain to and apply to the securities and/or other property to which a
holder of the number of shares of the Company's Voting Common Stock subject to
the option would have been entitled in such merger or consolidation, provided
that if such merger or consolidation in which the Company shall be the
surviving corporation constitutes, in substance, a sale or transfer of all of
the outstanding Voting Common Stock of the Company, such merger or
consolidation shall cause each unexercised option to terminate and each
<PAGE>
optionee shall have the right immediately prior to such merger or
consolidation to exercise the options held by such optionee, in whole or in
part, whether or not then otherwise exercisable under the terms of this Plan.
Subject to any required action by the Company's stockholders, a merger or
consolidation involving the Company in which the Company is not the surviving
corporation, a sale or transfer of all or substantially all of the Company's
assets, or a dissolution or liquidation of the Company shall cause each
unexercised option to terminate; provided, however, that each optionee shall
have the right immediately prior to such merger, consolidation, sale,
transfer, dissolution or liquidation to exercise the options held by such
optionee, in whole or in part, whether or not then otherwise exercisable under
the terms of this Plan. Notwithstanding any other provision hereof, upon a
sale of all of the outstanding Voting Common Stock of the Company, a merger or
consolidation involving the Company in which the Company is the surviving
corporation, a public offering of the Voting Common Stock of the Company
registered pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "Act"), or any other similar
transaction, the Board may (but shall not be obligated to) terminate any
unexercised options granted pursuant to this Plan, provided that in such event
the Board shall grant each optionee the right immediately prior to such sale
of stock, merger or consolidation, public offering or similar transaction, to
exercise the options held by such optionee, in whole or in part, whether or
not then otherwise exercisable under the terms of this Plan.
6.10 Adjustments by the Board. To the extent that the adjustments
set forth in Sections 6.8 and 6.9 relate to stock or securities of the
Company, such adjustments shall be made by the Board. The determination of
the Board shall be final, binding and conclusive. The grant of an option
pursuant to the Plan shall not affect in any way the right or power of the
Company to make adjustments, reclassification, reorganizations or changes of
its capital or business structure or to merge, consolidate, dissolve,
liquidate, or sell or transfer all or any part of its business or assets.
6.11 Withholding Taxes. Upon and after the exercise of an option,
the Company shall withhold such amounts from any wages or other sums due to an
optionee necessary in order for the Company to satisfy any withholding
requirements in respect of any applicable income, employment or other taxes.
If the amount required to be withheld exceeds 20% of the wages and other
amounts then owed to the optionee, the Company at its option may determine
that the exercise of the option shall not apply to some portion or all of the
number of shares designated in the notice of exercise unless the optionee pays
the Company in cash the amounts necessary in order for the Company to satisfy
the withholding requirements.
<PAGE>
6.12 Extension and Renewal of Options. Subject to the terms and
conditions and within the limitations of the Plan, the Board may extend or
renew outstanding options granted under the Plan, or accept the surrender of
outstanding options to the extent not exercised and authorize the granting of
new options in substitution therefor, up to the maximum aggregate number of
shares for which options may be granted and sold under Section 5.
6.13 Reports to Optionees. The Company shall provide financial and
other information regarding the Company to each optionee at least annually
while such optionee's option is outstanding. Such financial and other
information shall be the information regularly provided by the Company to each
of its stockholders, and shall be provided to such optionee when and
substantially in the manner provided to the Company's stockholders.
6.14 Other Provisions. The Agreement authorized under the Plan
shall contain such other provisions, including, without limitation,
restrictions upon the exercise of the option and sale of stock required upon
exercise of the option, as the Board shall deem advisable.
7. Non-Assignability of Options. Options granted under the Plan may
not be sold, pledged, assigned or transferred in any manner otherwise than by
will or by the laws of descent and distribution, and may be exercised during
the lifetime of an optionee only by such optionee or by his guardian or legal
representative. Notwithstanding the foregoing, in the event of a termination
of an optionee's directorship due to the optionee's death or disability, the
optionee, the optionee's guardian or legal representative, or (in the event of
the optionee's death) the optionee's personal representative or any person or
persons to whom the rights of the optionee under the option pass by will or by
the applicable laws of descent and distribution, may, subject to Section 6 of
the Plan, exercise the option to the extent and on the terms set forth in
Section 6.7.
For purposes of this Section 7, an optionee shall be deemed disabled
if, and only if, optionee is disabled within the meaning of Section 37(e)(3)
of the Internal Revenue Code of 1986, as amended.
8. Amendment of the Plan. The Board of Directors may amend the Plan
from time to time in such respects as are permitted by law. Any such
amendment of the Plan shall be subject to the approval of the Company's
stockholders if required by law or the terms of this Plan. An amendment shall
require stockholder approval if such amendment would (i) materially increase
the benefits accruing to participants under the Plan; (ii) materially increase
<PAGE>
the number of shares which may be issued under the Plan; or (iii) materially
modify the requirements as to eligibility for participation in the Plan.
9. Application of Funds. The proceeds received by the Company from the
sale of stock pursuant to options granted under the Plan shall be used for
general corporate purposes.
10. Securities Law Compliance. The Board may, in its discretion, cause
the Plan, options issued hereunder and the shares to be offered pursuant to
options granted hereunder to be registered and/or qualified in accordance with
the applicable regulations under the Securities Act of 1933, as amended, the
Delaware General Corporation Law, the California Corporate Securities Law of
1968, as amended, and other applicable state securities laws. If the Company
has not so registered and qualified the Plan and such options and shares, the
Company may, as a condition to the exercise of any portion of an option,
require the director exercising such option to represent and warrant at the
time of such exercise that the shares are being purchased only for investment
and without any present intention to sell or distribute such shares if, in the
opinion of counsel for the Company, such a representation is required under
the Securities Act of 1933, as amended, or any other applicable federal or
state law, or any regulation or rule of any governmental agency, and for this
purpose may require such other representations as the Company reasonably may
deem to be necessary. Notwithstanding any provision of the Plan to the
contrary, the Company shall not be obligated to grant any option or issue any
shares upon exercise of such option under the Plan and no such grant or
exercise shall be effective, unless such grant or exercise is effectively
registered, qualified or exempt from registration and qualification under all
applicable federal and state securities laws. Notwithstanding any other
provision of this Plan or the Agreement, the Board shall have the right to
suspend an optionee's ability to exercise the option (or any portion thereof)
if, but only if, in the Board's judgment, such suspension is necessary or
desirable in order to permit grants of options or sales of the Company's
shares (whether under the Plan or otherwise) to qualify for any exemption from
the registration and/or qualification requirements of applicable state and
federal securities laws. Any such suspension of exercisability shall be for
such period or periods as are determined by the Board. All such suspensions
and other determinations made in connection therewith shall be made by the
Board. Neither the Company nor the Board, nor any officers, directors or
members thereof, shall have any liability with respect to the non-issuance or
failure to sell shares as the result of any suspensions of exercisability
imposed pursuant to this Section 10.
11. Reservation of Shares. The Company, during the term of this Plan,
shall at all times reserve and keep available such number of the shares as
shall be sufficient to satisfy the requirements of the Plan.
<PAGE>
12. Relationship. Subject to applicable law, nothing set forth in this
Plan or any option granted hereunder shall be construed so as to (i) in any
way limit the right of the Company, its parents or subsidiaries to terminate
any optionee's directorship at any time, or (ii) confer upon any optionee any
right to continue as a director of the Company, its parents or subsidiaries.
<PAGE>
EXHIBIT A
Section 5
5.1 Restrictions on Transfer.
(a) Except as otherwise provided herein and in Schedule SEC, the
undersigned shall not transfer, sell, pledge, hypothecate or otherwise dispose
of any Shares and no transfer of any Shares by the undersigned in violation of
this Agreement or Schedule SEC shall be made or recorded on the books of the
Company.
(b) The foregoing notwithstanding, this Agreement shall not
prohibit (i) the undersigned from exchanging any Shares pursuant to the
Merger, or (ii) upon the death of the undersigned after the Closing Date, the
transfer to the undersigned's executor, administrator, testamentary trustee,
legatee or beneficiary (hereinafter "Executor"), of any Shares then owned by
the undersigned; provided, however, that no transfer to any Executor hereunder
shall be given effect on the books of the Company unless and until such
Executor shall have delivered to the Company an undertaking, in form and
substance satisfactory to the Company, to become, and shall have become, bound
by the provisions of Sections 5 and 8 of this Agreement.
5.2 Rights of First Refusal.
(a) If prior to the Initial Public Offering, the undersigned shall
desire to sell any Shares, he shall (i) give written notice (the "Notice") to
the Company (and the Company promptly shall deliver a copy of such Notice to
each other Shareholder) setting forth the number of Shares proposed to be sold
(the "Offered Shares"). Such Notice shall constitute an irrevocable offer to
sell the Offered Shares and the Company shall have thirty days from the date
of receipt of such Notice to purchase all or any portion of the Offered
Shares.
(b) If the Company does not exercise its right as aforesaid to
purchase all of the Offered Shares, the other Shareholders shall be entitled
to purchase the remaining Offered Shares pro rata in accordance with the
number of shares of Common Stock (including shares of Common Stock issuable
upon the exercise of any option or warrant or the conversion or exchange of
any security convertible into or exchangeable for shares of Common Stock)
owned by each of them, by giving written notice to each of the Company and the
undersigned within forty days of receipt of the Notice by the Company (or
within such greater number of days as may be provided by operation of Section
5.5(b) hereof); provided, however, that if the Offered Shares represent less
than two percent (2%) of the outstanding Shares on a fully diluted basis, then
the undersigned, upon expiration of the Company's right of first refusal,
<PAGE>
shall be entitled to designate the purchaser of the Offered Shares by giving
written notice to the Company; provided, further, that the transfer of Shares
shall, in all cases, remain subject to the provisions of Section 5.3 hereof
and of Schedule SEC.
5.3 Third Party Sales.
(a) Prior to the earlier of (i) three years from the Closing Date
or (ii) the Initial Public Offering there shall be no sales to Third Parties.
Thereafter, if the Company and the Shareholders do not exercise their rights
pursuant to Section 5.2 hereof to purchase all of the Offered Shares, then the
undersigned shall be permitted to sell such Shares for thirty days following
expiration of the forty day period commencing upon delivery by the undersigned
to the Company of the Notice relating to such Offered Shares (or for such
greater number of days as may be provided by operation of Section 5.5(b)
hereof); provided, however, that (i) all requirements of Schedule SEC shall
have been complied with, and (ii) the Company shall have (A) consented to such
sale in writing, which consent shall not be unreasonably withheld or delayed,
(B) received from the prospective purchaser a valid undertaking, in form and
substance satisfactory to the Company, to become, and such purchaser shall
have become, bound by the provisions of Sections 5 and 8 of this Agreement and
by the provisions of Schedule SEC.
(b) Promptly after any sale pursuant to paragraph (a) of this
Section 5.3, the undersigned shall notify the Company of the consummation
thereof, and shall furnish such evidence of the time and terms of completion
of such sale as the Company may reasonably request.
(c) If at the end of the thirty day period referred to in paragraph
(a) of this Section 5.3, the undersigned shall not have consummated the sale
of all Offered Shares, all restrictions on the sale, transfer or other
disposition of Shares imposed by this Agreement shall be again in effect with
respect to any unpurchased Offered Shares.
5.4 Closing.
(a) Purchase Price. The purchase price to be paid by any Person
for any Offered Shares shall be (i) equal to the book value of the Shares
being purchased, on a fully diluted basis determined in accordance with
generally accepted accounting principles as of the end of the fiscal quarter
preceding the Notice, and (ii) be payable by delivery to the undersigned of a
bank or certified check payable to the undersigned in the appropriate amount.
(b) The closing of any purchase of Offered Shares pursuant to this
Section 5 shall take place at the Company's principal office (or such other
place as the purchaser and seller of such Share may agree) on such date as
<PAGE>
shall be communicated to the undersigned by written notice from the purchaser,
but in no event (i) earlier than six days after receipt of such notice by the
undersigned, or (ii) later than ninety days (or such greater number of days as
may be provided by operation of Section 5.5(b) hereof) after receipt by the
Company of the Notice relating to such Shares. At any such closing, the
undersigned shall deliver, or cause to be delivered, certificates evidencing
the Shares to be sold, duly endorsed in blank for transfer, free and clear of
any security interest, lien or other encumbrance, claim or restriction other
than those imposed by this Agreement, against payment of the purchase price
therefor.
5.5 Limitation on Obligation to Purchase.
(a) The Company shall not be obligated to purchase any Shares
pursuant to Section 5.2 hereof, regardless of whether it shall have delivered
a notice of its election to purchase such Shares, (i) to the extent that the
purchase thereof would result (A) in a violation of any law, statute, rule,
regulation, policy, guideline, order, writ, injunction, decree or judgment
promulgated or entered by any federal, state, local or foreign court or
governmental authority applicable to the Company or any of its subsidiaries or
any of their property, or (B) after giving effect thereto, in a Financing
Default or (ii) if immediately prior to such purchase there exists a Financing
Default.
(b) Notwithstanding anything to the contrary contained in Section
5.2 hereof, if the Company shall, in its discretion, undertake to obtain the
waiver of any impediment to its purchase of the Shares, the Company shall
notify the undersigned within thirty days of its receipt of the Notice; and
the Company then shall have thirty additional days to exercise its right of
first refusal pursuant to Section 5.2 hereof. Upon expiration of such
additional thirty day period, the Shares shall be offered for sale as set
forth in this Section 5, provided, however, that all time periods set forth in
this Section 5 shall be extended by thirty days.
Section 6
6. Registration.
6.1 Registration Rights.
(a) The undersigned shall be entitled to such registration
rights with respect to shares of common stock issued by Pulse and owned by the
undersigned as are set forth in Schedule SEC, and the undersigned agrees to be
bound by all of the terms and conditions thereof as though fully set forth
herein.
<PAGE>
Section 7
7.1 Legend on Certificates. The undersigned acknowledges and
consents to the fact that each certificate for the Shares shall be stamped or
otherwise imprinted with a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE TRANSFER OF SUCH
SECURITIES IS SUBJECT TO RESTRICTIONS SET FORTH IN SCHEDULE SEC TO THE
AGREEMENT PURSUANT TO WHICH THESE SECURITIES WERE ORIGINALLY ISSUED.
COPIES OF SAID SCHEDULE SEC ARE AVAILABLE FOR INSPECTION AT THE OFFICE OF
THE COMPANY AND SUCH SECURITIES MAY BE TRANSFERRED ONLY IN COMPLIANCE
WITH THE TERMS AND CONDITIONS OF SAID SCHEDULE SEC.
FURTHER, ANY OFFER, SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THESE
SECURITIES IS SUBJECT TO THE COMPANY'S RIGHT OF FIRST REFUSAL TO PURCHASE
SAID SECURITIES AS SPECIFIED IN THE AGREEMENT. NO TRANSFER OF THESE
SECURITIES MAY BE CONSUMMATED UNLESS AND UNTIL THE CONDITIONS OF THE
AGREEMENT HAVE BEEN FULFILLED. A COPY OF THE AGREEMENT IS ON FILE AND
MAY BE INSPECTED AT THE PRINCIPAL OFFICE OF THE COMPANY. THE HOLDER OF
THIS CERTIFICATE, BY ACCEPTANCE OF IT, AGREES TO BE BOUND BY THE
PROVISIONS OF THE AGREEMENT.
The undersigned further agrees that each certificate for the Shares shall
be stamped with any additional legends which may be required under any
applicable state securities laws.
<PAGE>
AMENDMENT TO THE PULSE ENGINEERING, INC.
BOARD OF DIRECTORS STOCK OPTION PLAN
NOW, THEREFORE, Section 6.5 of the Board Plan is hereby amended to add
the following provision to the end of the first sentence of that section:
; provided, however, that for as long as a Registration Statement on Form
S-8 shall be in effect under the securities Act of 1933, as amended, with
respect to the shares of Common Stock to be issued upon the exercise of
options granted pursuant to the Plan, the legend conditions required by
Section 7 of the standard Stock Subscription Agreement of the Company
shall not be required to be placed upon certificates evidencing such
Common Stock.
Exhibit 4.3
AMENDED AND RESTATED
PULSE ENGINEERING, INC.
SENIOR MANAGEMENT STOCK OPTION PLAN
1. Purpose of the Plan. The purpose of this Senior Management Stock
Option Plan (the "Plan") is to serve as an incentive to, and to encourage
stock ownership by, the senior management of Pulse Engineering, Inc., a
Delaware corporation (the "Company"). The Plan has been developed to enable
such employees of the Company to participate in the Company's growth and
profitability and to induce them to remain in the employ of the Company. The
Company is the surviving corporation in a merger between the Company and ECO
Acquisition Corporation, a California corporation, which became effective July
31, 1986. This Plan applies to all options granted hereunder on or after
April 30, 1987.
2. Shareholder Approval and Term of Plan. This Plan shall be approved
by a majority of the shareholders in accordance with Rule 16b-3 under the
Securities Exchange Act of 1934, 17 C.F.R. section 240.16b-3, after adoption by
the Board of Directors of the Company (the "Board"). Options may be granted,
but not exercised, prior to shareholder approval. If the Board fails to adopt
this Plan or if the shareholders fail to approve this Plan, any options
granted under this Plan shall be of no effect. This Plan shall terminate
April 29, 1997 unless terminated earlier by the Board. The Board may terminate
this Plan at any time without shareholder approval, but termination of this
<PAGE>
Plan prior to April 29, 1987 shall not affect rights and obligations with
respect to options theretofore granted and then in effect.
3. Administration of Plan. This Plan shall be administered by the
Board or by a committee to which administration of this Plan is delegated (in
either case, the "Committee"). No option shall be granted to a director of
the Company except by the Board, a majority of which Board and a majority of
the directors acting in the matter, are "disinterested" (as defined below) or
by a Committee composed of at lease three persons all of whom are
"disinterested." No option shall be granted to an officer of the Company who
is not a director except by the Board, by a committee of three or more
directors, or by a Committee composed of at least three persons, all of whom
are "disinterested." A person shall be deemed "disinterested" if at the time
he exercises discretion in administering the Plan, he is not eligible, and has
not at any time within one year prior thereto been eligible, for selection as
a person to whom options may be granted pursuant to this Plan or any other
plan of the Company entitling participants to acquire stock, stock options or
stock appreciation rights of the Company or any of its affiliates. The
Committee may delegate nondiscretionary administrative duties to such
employees of the Company as it shall deem proper. The Committee may make such
rules and regulations as it deems necessary to administer this Plan and to
interpret the provisions of this Plan. Any determination, decision or action
<PAGE>
of the Committee in connection with the construction, interpretation,
administration or application of this Plan or any option granted under this
Plan shall be final, conclusive and binding. No member of the Committee shall
be liable for any determination, decision or action made with respect to this
Plan or an option granted under this Plan.
4. Eligible Employees. The Committee shall not grant an option under
the Plan to any employee who owns stock possessing more than 10% of the total
combined voting power or value of all classes of stock of the Company, or any
parent or subsidiary of the Company. Only the President of the Company and
those employees who report directly to the President (collectively, the
"senior management") shall be eligible to participate in the Plan. No person
shall be granted an option under the Plan unless, on the date of grant, such
person is an employee of the Company or any parent or subsidiary of the
Company.
5. Stock Subject to the Plan. The stock subject to the options shall
be shares of the Company's authorized but unissued or acquired or reacquired
Class A Voting Common Stock ("Voting Common Stock"). Subject to the
provisions of Section 6.10 and 8 of the Plan, the maximum aggregate number of
shares for which options may be granted and sold under the Plan is 712,000
shares.
6. Time of Grant; Terms and Conditions of Options. No options may be
granted under the Plan after September 30, 1991. Any option granted pursuant
<PAGE>
to the Plan shall be evidenced by an agreement, which agreement shall comply
with and be subject to the following terms and conditions:
6.1 Number of Shares. Each option shall state the number of shares
to which it pertains.
6.2 Exercise of Installments. The number of shares subject to the
option shall be divided into installments, and shall be exercisable ("accrue")
as follows:
(a) Installments. Any option granted before October 1, 1987
shall be divided into five installments. Any option granted on or after
October 1, 1987, but before October 1, 1988 shall be divided into four
installments. Any option granted on or after October 1, 1988, but before
October 1, 1989, shall be divided into three installments. Any option granted
on or after October 1, 1989 but before October 1, 1990 shall be divided into
two installments. Any option granted or after October 1, 1990 but before
October 1, 1991 shall have a single installment, consti tuting the total
number of shares subject to the option. The base amount of each installment
shall consist of the total number of shares subject to the option, divided by
the number of installments, subject to adjustment and carryover as provided in
Section 6.3 and residual carryover as provided in Section 6.4.
(b) Accrual. Initially, each installment, or any part
thereof, shall be exercisable (accrue) only within an option
<PAGE>
exercise period for such installment ("Option Exercise Period"),
as follows:
Option Exercise Period for Installments
If Total
Installments are: 5 4 3 2 1
- ---------------------------------------------------------------------
Installment Number Corresponding
within Total: Option Exercise Period
- ------------------ -----------------------
1 October 1, 1987-
February 29, 1988
2 1 October 1, 1988-
February 28, 1989
3 2 1 October 1, 1989-
February 28, 1990
4 3 2 1 October 1, 1990-
February 28, 1991
5 4 3 2 1 October 1, 1991-
February 29, 1992
If an installment, or any part thereof, is not exercised during the
Option Exercise Period for such installment, such installment, or any part
thereof, shall be exercisable only during the Option Exercise Period for any
subsequent installment. In the years 1992, 1993, 1994, 1995 and 1996, any
installment, or any part thereof, shall be exercisable during an Option
Exercise Period consisting of the five-month period commencing October 1 of
such year and terminating on the last day of February in the following year.
Notwithstanding any provision of the Plan to the contrary, the Committee may
extend the Option Exercise Period for any year to the period consisting of the
12 months beginning October 1 of such year and terminating on the last day of
<PAGE>
September in the following year. In no event shall an option be exercisable
in whole or in part after April 29, 1997.
6.3 Adjustments in Installments. For each optionee, the number of
shares exercisable (accruing) in any installment shall be adjusted by the
Committee, based upon the Company's performance, as provided herein.
All calculations shall be made by or under the direction of the
Committee. Prior to the commencement of the Option Exercise Period for each
installment, the Committee shall notify each optionee of the adjusted amount
of the installment as applicable to such optionee, and the basis for
calculating such adjustment. For each optionee, the Committee shall determine
the number of shares exercisable in each installment as follows: First, the
Committee shall determine the base amount of exercisable option shares in the
installment for all optionees ("Base Pool") pursuant to Section 6.3(a).
Second, the Committee shall evaluate the Company's performance for the fiscal
year ending prior to the commencement of the Option Exercise Period for the
installment in question and establish a measurement of that performance with
respect to the installment (the "Performance Factor") pursuant to Section
6.3(b). Third, the Committee shall calculate the adjusted total number of
shares exercisable (accruing) within the installment for all optionees (the
"Adjusted Pool"), determined by reference to the Performance Factor pursuant
<PAGE>
to Section 6.3(c) (initial five (5) installments) and Section 6.3(d)
(carryover installment). Fourth, the Committee shall allocate the number of
exercisable shares within the Adjusted Pool to the optionees participating in
the installment, pursuant to Section 6.3(e).
(a) Base Pool. For each installment, the Committee shall
calculate the Base Pool as follows: For each optionee, divide the total
number of shares subject to the option granted to the optionee by the number
of installments for the option, as determined under Section 6.2. The
resulting number constitutes the accrual base amount for all installments with
respect to the optionee. For each installment, add up the accrual base
amounts for all optionees. The resulting sum of the accrual base amounts in
the installment for all optionees constitutes the Base Pool for that
installment. See Exhibit A attached hereto for an example of the calculation
of the Base Pool.
(b) Evaluation of Performance. Prior to the commencement of
the Option Exercise Period for an installment, the Committee shall compare the
Company's actual performance for the fiscal year ending previous to the Option
Exercise Period for the installment, with the Company's goals for that fiscal
year. Actual performance shall be measured in terms of the Company's annual
earnings before interest and taxes ("EBIT") and the Company's annual return on
assets ("ROA"), where return refers to pre-tax earnings for the fiscal year
and assets refers to the average value of assets for the fiscal year
<PAGE>
determined by adding the value of assets at the beginning of the fiscal year
and the value of assets at the end of the fiscal year and dividing by two.
EBIT and ROA shall be determined from the Company's audited annual financial
statements. The Company's goals for EBIT and ROA for the fiscal years ending
in 1987 through 1992 are as set forth in Exhibit B. These goals may be
revised by the Board, by action of the Board duly taken in accordance with the
Company's Articles and Bylaws. The comparison between actual performance and
goals for any fiscal year shall be made as follows:
(1) Actual EBIT for the fiscal year shall be divided by the goal
for EBIT for that fiscal year, and the resulting number converted to a
percentage.
(2) Actual ROA for the fiscal year shall be divided by the goal for
ROA for that fiscal year, and the resulting number converted to a
percentage.
(3) Item (1) and Item (2) shall be added and the resulting
percentage shall be divided by two. The number resulting from the
procedure specified in this Item (3) shall be identified as the
"Performance Factor" with respect to the installment in question.
See Exhibit C attached hereto for an example of the calculation of the
Performance Factor.
<PAGE>
(c) Adjustment. With respect to each installment, the
Committee shall determine the adjusted amount of the installment (the
"Adjusted Pool") based upon the Performance Factor for that installment as
follows:
(1) If the Performance Factor is less than One Hundred
Percent (100%), then the Adjusted Pool for the installment in
question shall be the Base Pool multiplied by the Performance
Factor, unless the Performance Factor is less than Eighty Percent
(80%), in which case the Adjusted Pool shall be zero (0) shares. See
Exhibit D for an example of this calculation.
(2) If the Performance Factor is equal to One Hundred
Percent (100%), then the Adjusted Pool for the installment in
question shall be equal to the Base Pool. See Exhibit E for an
example of this calculation.
(3) If the Performance Factor is greater than One Hundred
Percent (100%), then the Adjusted Pool for the installment in
question shall be the Base Pool for that installment plus the
Carryover Accrual for that installment, as determined herein. The
Carryover Accrual for any installment shall be the lesser of the
Previous Installment Makeup as determined under (i) below, the
<PAGE>
Aggregate Performance Makeup as determined under (ii) below, or the
unexercisable portion of all previous installments.
(i) The Previous Installment Makeup is calculated by
multiplying (A) the Base Pool for the previous installment, by (B)
the Pro Forma Adjustment Factor for the current installment
determined according to the table ("Table") set forth below. For
purposes of the Table, any Performance Factor which is not a whole
percentage shall be rounded down to the nearest whole percentage.
For example, for purposes of the Table, 101.9% shall be rounded down
to 101%. See Exhibit F for an example of the calculation of the
Previous Installment Makeup.
PERFORMANCE FACTOR/PRO FORMA ADJUSTMENT TABLE
Corresponding
Performance Pro Forma Adjustment
Factor Factor
---------------- -----------------------
101% 2%
102% 4%
103% 6%
104% 8%
105% 10%
106% 14%
107% 18%
108% 22%
109% 26%
110% 30%
111% 36%
112% 42%
113% 48%
114% 54%
115% 60%
116% 68%
117% 76%
118% 84%
119% 92%
120% or more 100%
<PAGE>
(ii) The Aggregate Performance Makeup is calculated by
determining the Cumulative Pro Forma Adjusted Pool for all
installments as set forth in (A) herein and subtracting from that
number the Cumulative Accrued Shares determined as set forth in (B)
herein.
(A) The Cumulative Pro Forma Adjusted Pool is
determined by multiplying (A1) the cumulative sum of the Base Pools
for all installments from the commencement of the Plan (including
the current installment) by (A2) the average Performance Factor for
all installments, which in turn is calculated by adding the
Performance Factors for all installments from the commencement of
the Plan (including the current installment) and dividing the
resulting sum by the total number of installments from the
commencement of the Plan. See Exhibit G for an example of this
calculation.
(B) The number of Cumulative Accrued Shares is
determined by adding (B1) the Adjusted Pool for all installments
through the previous installment, with (B2) the Base Pool for the
current installment. See Exhibit H for an Example of this
calculation.
Exhibit I contains a summary example of the method used to calculate the
Adjusted Pool.
<PAGE>
(d) Option Carryover. If any portion of the original
installments remains unexercisable after the Adjusted Pool for all original
installments have been determined, the unexercisable portion of the original
installments shall be carried forward into a carryover installment for 1992.
The Adjusted Pool for the carryover installment shall consist only of the
Carryover Accrual for that installment determined as provided in Section
6.3(c)(3). The unexercisable portion of the original installments shall be
exercisable to the extent of the Adjusted Pool in the carryover installment.
(e) Allocation to Individual Optionees. The Committee
shall allocate the Adjusted Pool for a given installment to the optionees
participating in that installment as follows:
(1) If the Adjusted Pool is equal to or less than
the Base Pool for the installment in question, the Adjusted Pool shall be
allocated pro rate among the optionees participating in that installment
in proportion to each optionee's accrual base amount for the installment.
See Exhibit J for an example of this calculation.
(2) If the Adjusted Pool is equal to the Base Pool
for the installment in question plus a Carryover Accrual, or in the case
of a carryover installment, if the Adjusted Pool includes only the
Carryover Accrual, then (i) with respect to the portion of the Adjusted
Pool equal to the Base Pool, each optionee shall be allocated the accrual
base amount for such optionee, and (ii) the Carryover Accrual shall be
allocated pro rata among all optionees whose option shares from previous
installments are unexercisable, in whole or in part, in proportion to the
number of unexercisable option shares for each such optionee. See
Exhibit K for an example of this calculation.
6.4 Residual Carryover. For each optionee, if any portion of the
original installments remains unexercisable after the adjusted amount for all
original installments has been determined and the amount of the carryover
installment under Section 6.3(d) has been determined, such remaining
unexercisable amount shall become exercisable on April 1, 1997, and may be
exercised during the period from April 1, 1997 to April 29, 1997, but in no
event shall an option be exercisable in whole or in part after April 29, 1997.
6.5 Option Exercise Price. Each option shall state the option
exercise price. The option exercise price for options granted pursuant to
this Plan shall be not less than 85% of the fair market value of the shares
subject to the option on the date the option is granted.
<PAGE>
6.6 Method of Exercise. An option shall be exercised by delivery
of both written notice of exercise to the Company at its principal place of
business by the person entitled to exercise the option and payment for the
shares with respect to which the option is exercised. Payment shall be:
(a) By bank certified or cashier's check; or
(b) By the optionee's personal recourse promissory note for
all or part of the option price, which promissory note is secured by a
security interest in the shares issuable upon exercise of such option. Such
promissory note shall be in the form and contain such terms as are determined
by the Committee, including a term of not less than two years, and shall bear
interest at a rate determined by the Committee at the time of exercise of the
option, which interest rate shall be the lowest rate which will not cause (i)
imputation of interest pursuant to Section 483 of the Internal Revenue Code of
1954, as amended, (ii) the inclusion in the gross income of any party of any
original issue discount pursuant to Section 1271, et seq., of the Internal
Revenue Code of 1954, as amended, (iii) the inclusion in the gross income of
any party of any original issue discount, or other amounts treated as
transferred, retransferred or received, pursuant to Section 7872 of the
Internal Revenue Code of 1954, as amended, or (iv) any similar tax
consequences under any similar or successor provisions of the Internal Revenue
Code of 1954, as amended.
<PAGE>
Until an optionee becomes a shareholder of record, no right to vote or to
receive dividends or any other rights as a shareholder shall exist with
respect to shares notwithstanding the exercise of the option. No adjustment
shall be made for dividend or other rights as to which the record date
precedes the date the optionee becomes a shareholder of record, except as
provided in Section 6.10. Options may not be exercised as to fractional
shares. As soon as reasonably practicable after receipt by the Company of a
notice of exercise, the Company shall deliver to the optionee at the principal
office of the Company, or at such other appropriate place as may be determined
by the Board, a certificate or certificates for shares of stock with respect
to which the option is exercised. The options granted in accordance with this
Plan shall be subject to any legend and restriction imposed pursuant to any
applicable state, federal or foreign securities law. Notwithstanding the
foregoing, the Company may postpone delivery of any certificate or
certificates after notice of exercise for such reasonable period as may be
required to comply with any applicable listing requirements of any national or
other securities exchange. In the event an option shall be exercisable by any
person other than the optionee, the required notice under this Section 6.6
shall be accompanied by appropriate proof of the right of such person to
exercise the option.
6.7 Rights and Obligations Upon Exercise. All shares of stock
issued upon exercise of an option shall be subject to the terms and conditions
<PAGE>
of Sections 5, 6 and 7 of a standard Stock Subscription Agreement of the
Company regarding restrictions on transfer, rights of first refusal, third
party sales, registration rights, legends and matters related thereto, a copy
of which is attached hereto as Exhibit L.
6.8 Term of Options. To the extent it is not exercised, an option
granted under the Plan shall terminate and expire on the earlier of: (i) the
breach by an optionee of any provision of the Agreement; (ii) midnight on
April 29, 1997; or (iii) three months after an optionee ceases, for any
reason, to be an employee of the Company, its parents or subsidiaries as
provided in Section 6.9.
6.9 Termination of Employment. All options granted to an optionee
under the Plan which have not otherwise expired or been exercised shall
terminate three months after the date such optionee ceases, for any reason, to
be an employee of the Company, its parents or subsidiaries. During the three
month period following any termination of employment, an optionee may exercise
any or all of such optionee's option rights under the Plan, but only to the
extent such option rights are or have previously been exercisable on the date
of termination of employment. Notwithstanding the foregoing:
(a) In the event of a termination of employment of an optionee
due to the optionee's death, the personal representatives of the optionee, or
any person or persons to whom the rights of the optionee under such options
<PAGE>
pass by will or by the applicable laws of descent and distribution, may, at
any time within a period of six months after the death of such optionee,
exercise any or all of such option rights to the extent such option rights are
or have previously been exercisable on the date of death of such optionee,
provided that no option shall be exercisable, in whole or in part, after April
29, 1997;
(b) In the event such a termination of optionee's employment is due
to the disability of the optionee (within the meaning of Section 37(e)(3) of
the Internal Revenue Code of 1954, as amended), the optionee, the optionee's
guardian or legal representative, or (in the event of the optionee's death)
the personal representative of the optionee or any person or persons to whom
the rights of the optionee under such options pass by will or by the
applicable laws of descent and distribution, may, at any time within a period
of one year after the optionee's termination of employment, exercise any or
all of such option rights to the extent such option rights are or have
previously been exercisable on the date of the termination of employment,
provided that no option shall be exercisable, in whole or in part, after April
29, 1997.
The Committee shall determine whether an authorized leave of absence,
absence for military or governmental service or disability shall constitute
termination of employment for purposes of this Section 6.9.
<PAGE>
6.10 Recapitalization. Subject to any required action by the
Company's shareholders, the number of shares of Voting Common Stock which may
be purchased upon the exercise of each outstanding option, and the exercise
price per share set forth in such options, shall be proportionately adjusted
for any increase or decrease in the number of issued shares of Voting Common
Stock of the Company resulting from any subdivision or consolidation of
shares, the payment of a stock dividend, or any other transaction in which the
Company increases or decreases its issued shares of Voting Common Stock but
does not receive payment for such shares, but excluding conversion or exchange
of securities which are convertible or exchangeable into shares of Voting
Common Stock of the Company. Any fraction of a share subject to an option
that would otherwise result from an adjustment pursuant to this Section 6.10
shall be rounded downward to the next full number of shares without other
compensation or consideration to the holder of such option.
6.11 Mergers, Sale of All Assets, or Dissolution. Subject to any
required action by the Company's stockholders, if the Company shall be the
surviving corporation in any merger or consolidation, each outstanding option
shall pertain to and apply to the securities and/or other property to which a
holder of the number of shares of the Company's Voting Common Stock subject to
the option would have been entitled in such merger or consolidation, provided
that if such merger or consolidation in which the Company shall be the
<PAGE>
surviving corporation constitutes, in substance, a sale or transfer of all of
the outstanding Voting Common Stock of the Company, such merger or
consolidation shall cause each unexercised option to terminate, and each
optionee shall have the right immediately prior to such merger or
consolidation to exercise the options held by such optionees, in whole or in
part, whether or not then otherwise exercisable under the terms of this Plan.
Subject to any required action by the Company's stockholders, a merger or
consolidation involving the Company in which the Company is not the surviving
corporation, a sale or transfer of all or substantially all of the Company's
assets or a dissolution or liquidation of the Company shall cause each
unexercised option to terminate; provided, however, that each optionee shall
have the right immediately prior to such merger, consolidation, sale,
transfer, dissolution or liquidation to exercise the options held by such
optionee, in whole or in part, whether or not then otherwise exercisable under
the terms of this Plan. Notwithstanding any other provision hereof, upon a
sale of all the outstanding Voting Common Stock of the Company, a merger or
consolidation involving the Company in which the Company is the surviving
corporation, a public offering of the Voting Common Stock of the Company
registered pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "Act"), or any other similar
transaction, the Board may (but shall not be obligated to) terminate all
unexercised options granted pursuant to this Plan, provided that in such event
the Board shall grant each optionee the right immediately prior to a
termination in contemplation of such sale of stock,
<PAGE>
merger or consolidation, public offering or similar transaction, to exercise
the options held by such optionee, in whole or in part, whether or then
otherwise exercisable under the terms of this Plan.
6.12 Adjustments by the Committee. To the extent that the
adjustments set forth in Sections 6.10 and 6.11 relate to stock or securities
of the Company, such adjustments shall be made by the Committee. The
determination of the Committee shall be final, binding and conclusive. The
grant of an option pursuant to the Plan shall not affect in any way the right
or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge,
consolidate, dissolve, liquidate, or sell or transfer all or any part of its
business or assets.
6.13 Withholding Taxes. Upon and after the exercise of an option,
the Company shall withhold such amounts from any wages or other sums due to an
optionee necessary in order for the Company to satisfy any withholding
requirements in respect of any applicable income, employment or other taxes.
If the amount required to be withheld exceeds 20% of the wages and other
amounts then owed to the optionee, the Company at its option may determine
that the exercise of the option shall not apply to some portion or all of the
number of shares designated in the notice of exercise unless the optionee pays
the Company to satisfy the withholding requirements.
<PAGE>
6.14 Extension and Renewal of Options. Subject to the terms and
conditions and within the limitations of the Plan, the Committee may extend or
renew outstanding options granted under the Plan, or accept the surrender of
outstanding options to the extent not exercised and authorize the granting of
new options in substitution therefor, up to the maximum aggregate number of
shares for which options may be granted and sold under Section 5.
6.15 Reports to Optionees. The Company shall provide financial and
other information regarding the Company to each optionee at least annually
while such optionee's option is outstanding. Such financial and other
information shall be the information regularly provided by the Company to each
of its shareholders, and shall be provided to such optionee when and
substantially in the manner provided to the Company's shareholders.
6.16 Other Provisions. The Agreement authorized under the Plan
shall contain such other provisions, including, without limitation,
restrictions upon the exercise of the option and sale of stock required upon
exercise of the option, as the Committee shall deem advisable.
7. Non-assignability of Options. Options granted under the Plan may
not be sold, pledged, assigned or transferred in any manner otherwise than by
will or by the laws of descent and distribution, and may be exercised during
the lifetime of an optionee only by such optionee or by his guardian or legal
<PAGE>
representative. Notwithstanding the foregoing, in the event of a termination
of an optionee's employment due to the optionee's death or disability, the
optionee, the optionee's guardian or legal representative, or (in the event of
the optionee's death) the optionee's personal representative or any person or
persons to whom the rights of the optionee under the option pass by will or by
the applicable laws of descent and distribution, may, subject to Section 6 of
the Plan, exercise the option to the extent and on the terms set forth in
Section 6.9.
For purposes of this Section 7, an optionee shall be deemed disabled
if, and only if, optionee is disabled within the meaning of Section 37(e)(3)
of the Internal Revenue Code of 1954, as amended.
8. Amendment of the Plan. The Board of Directors may amend the Plan
from time to time in such respects as are permitted by law. Any such
amendment of the Plan shall be subject to the approval of the Company's
shareholders if required by law or the terms of this Plan. An amendment shall
require shareholder approval if such amendment would (i) materially increase
the benefits accruing to participants under the Plan; (ii) materially increase
the number of shares which may be issued under the Plan; or (iii) materially
modify the requirements as to eligibility for participation in the Plan.
<PAGE>
9. Application of Funds. The proceeds received by the Company from the
sale of stock pursuant to options granted under the Plan shall be used for
general corporate purposes.
10. Securities Law Compliance. The Committee may, in its discretion,
cause the Plan, options issued hereunder and the shares to be offered pursuant
to options granted hereunder to be registered and/or qualified in accordance
with the applicable regulations under the Securities Act of 1933, as amended,
the California Corporate Securities Law of 1968, as amended, and other
applicable state securities laws. If the Company has not so registered and
qualified the Plan and such options and shares, the Company may, as a
condition to the exercise of any portion of an option, require the employee
exercising such option to represent and warrant at the time of such exercise
that the shares are being purchased only for investment and without any
present intention to sell or distribute such shares if, in the opinion of
counsel for the Company, such a representation is required under the
Securities Act of 1933, as amended, or any other applicable federal or state
law, or any regulation or rule of any governmental agency, and for this
purpose may require such other representations as the Company reasonably may
deem to be necessary. Notwithstanding any provision of the Plan to the
contrary, the Company shall not be obligated to grant any option or issue any
shares upon exercise of such option under the Plan and no such grant or
exercise shall be effective, unless such grant or exercise is effectively
registered, qualified or exempt from registration and qualification under all
<PAGE>
applicable federal and state securities laws. Notwithstanding any other
provision of this Plan or the Agreement, the Committee shall have the right to
suspend an optionee's ability to exercise the option (or any portion thereof)
if, but only if, in the Committee's judgment, such suspension is necessary or
desirable in order to permit grants of options or sales of the Company's
shares (whether under the Plan or otherwise) to qualify for any exemption from
the registration and/or qualification requirements of applicable state and
federal securities laws. Any such suspension of exercisability shall be for
such period or periods as are determined by the Committee. All such
suspensions and other determinations made in connection therewith shall be
made by the Committee. Neither the Company nor the Committee, nor any
officers, directors or members thereof, shall have any liability with respect
to the non-issuance or failure to sell shares as the result of any suspensions
of exercisability imposed pursuant to this Section 10.
11. Reservation of Shares. The Company, during the term of this Plan,
shall at all times reserve and keep available such number of the shares as
shall be sufficient to satisfy the requirements of the Plan.
12. Employment Relationship. Nothing set forth in this Plan or any
option granted hereunder shall be construed so as to (i) in any way limit the
right of the Company, its parents or subsidiaries to terminate any optionee's
<PAGE>
employment at any time, or (ii) confer upon any optionee any right to continue
in the employ of the Company, its parents or subsidiaries.
<PAGE>
AMENDMENT TO THE PULSE ENGINEERING, INC.
SENIOR MANAGEMENT STOCK OPTION PLAN
NOW, THEREFORE, Section 6.7 of the Senior Plan is hereby amended to add
the following provision to the end of the first sentence of that section:
; provided, however, that for as long as a Registration Statement on Form
S-8 shall be in effect under the securities Act of 1933, as amended, with
respect to the shares of Common Stock to be issued upon the exercise of
options granted pursuant to the Plan, the legend conditions required by
Section 7 of the standard Stock Subscription Agreement of the Company
shall not be required to be placed upon certificates evidencing such
Common Stock.
<PAGE>
AMENDMENT TO THE PULSE ENGINEERING, INC.
SENIOR MANAGEMENT STOCK OPTION PLAN
RESOLVED, that the Pulse Engineering, Inc. Senior Management Stock Option
Plan is hereby amended, subject to stockholder approval, by deleting the text
of Section 3, "Administration of Plan," and adding the following text:
This Plan shall be administered by the Board or by a committee
of three or more directors to which administration of this Plan is
delegated by the Board (in either case, the "Committee"). No option
shall be granted to a director or officer of the Company except by the
Board or the Committee, a majority of which Board and a majority of the
directors acting in the matter, or all members of the Committee, are
"disinterested" as that term is defined in Rule 16b-3 promulgated
pursuant to Section 16 of the Securities and Exchange Act of 1934 and if
such disinterested administration is required in order to comply with
Rule 16b-3. The Committee may delegate nondiscretionary administrative
duties to such employees of the Company as it shall deem proper. The
Committee may make such rules and regulations as it deems necessary to
administer this Plan and to interpret the provisions of this Plan. Any
determination, decision or action of the Committee in connection with the
construction, interpretation, administration or application of this Plan
or any option granted under this Plan shall be final, conclusive and
binding. No member of the Committee shall be liable for any
determination, decision or action made with respect to this Plan or an
option granted under this Plan.
Exhibit 4.4
AMENDED AND RESTATED
PULSE ENGINEERING, INC.
NONQUALIFIED STOCK OPTION PLAN
1. Purpose of the Plan. The purpose of this Nonqualified Stock Option
Plan (the "Plan") is to serve as an incentive to, and to encourage stock
ownership by, selected employees of Pulse Engineering, Inc., a Delaware
corporation (the "Company"). The Plan has been developed to enable such
employees of the Company to participate in the Company's growth and
profitability and to induce them to remain in the employ of the Company. The
Company is the surviving corporation in a merger between the Company and ECO
Acquisition Corporation, a California corporation, which became effective July
31, 1986. This Plan applied to all options granted hereunder on or after
April 30, 1987.
2. Shareholder Approval and Term of Plan. This Plan shall be approved
by a majority of the shareholders of the Company in accordance with Rule 16b-3
under the Securities Exchange Act of 1934, 17 C.F.R. section 240.16b-3, after
adoption by the Board of Directors of the Company (the "Board"). Options may
be granted, but not exercised, prior to shareholder approval. If the Board
fails to adopt this Plan or if the shareholders fail to approve this Plan, any
options granted under this Plan shall be of no effect. This Plan shall
terminate September 30, 1996 unless terminated earlier by the Board. The
Board may terminate this Plan at any time without shareholder approval, but
termination of this Plan prior to September 30, 1996 shall not affect rights
and obligations with respect to options theretofore granted and then in
effect.
3. Administration of Plan. This Plan shall be administered by the
Board or by a committee of three or more directors to which administration of
this Plan is delegated by the Board (in either case, the "Committee"). No
<PAGE>
option shall be granted to a director or officer of the Company except by the
Board or the Committee, a majority of which Board and a majority of the
directors acting in the matter, or all members of the Committee, are
"disinterested" as that term is defined in Rule 16b-3 promulgated pursuant to
Section 16 of the Securities and Exchange Act of 1934 and if such
disinterested administration is required in order to comply with Rule 16b-3.
The Committee may delegate nondiscretionary administrative duties to such
employees of the Company as it shall deem proper. The Committee may make such
rules and regulations as it deems necessary to administer this Plan and to
interpret the provisions of this Plan. Any determination, decision or action
of the Committee in connection with the construction, interpretation,
administration or application of this Plan or any option granted under this
Plan shall be final, conclusive and binding. No member of the Committee shall
be liable for any determination, decision or action made with respect to this
Plan or an option granted under this Plan.
4. Eligibility.
4.1 Eligible Employees. The Committee shall not grant an option
under the Plan to any employee who owns stock possessing more than 10% of the
total combined voting power or value of all classes of stock of the Company,
or any parent or subsidiary of the Company. Except as provided in Section 4.2
below, all employees of the Company or any parent or subsidiary of the Company
(including subsidiaries which become such after the adoption of the Plan) who
are selected by the Committee shall be eligible to participate in the Plan.
No person shall be granted an option under the Plan unless, on the date of
grant, such person is an employee of the Company or any parent or subsidiary
of the Company.
4.2 Persons Ineligible. Options may not be granted under this Plan
to the President of the Company or to those senior management employees who
report directly to the President.
<PAGE>
5. Stock Subject to the Plan. The stock subject to the options shall
be shares of the Company's authorized but unissued or acquired or reacquired
Class A Voting Common Stock ("Voting Common Stock"). Subject to the
provisions of Sections 7.8 and 10 of the Plan, the maximum aggregate number of
shares for which options may be granted and sold under the Plan is 158,000
shares.
6. Time of Grant. The Committee shall not grant options until all
securities of the Company issued under the Plan are qualified under the
California Corporate Securities Law of 1968, as amended, and other applicable
state securities laws. No options may be granted under the Plan after
September 30, 1991.
7. Terms and Conditions of Options. Any option granted pursuant to the
Plan shall be evidenced by an agreement, which agreement shall comply with and
be subject to the following terms and conditions:
7.1 Number of Shares. Each option shall state the number of shares
to which it pertains.
7.2 Exercise of Installments. Each option granted under the Plan
shall become exercisable ("vest") in installments. All options granted under
the Plan shall become exercisable at a rate no less favorable to an optionee
than 20% per year. Each installment, or any part thereof, shall become
exercisable ("vest") commencing with the vesting dates as follows:
Vesting Dates for Installments
-------------------------------------------
Percentage Corresponding
Vesting Vesting Dates
------------ ------------------
50% October 1, 1991
50% October 1, 1992
Notwithstanding any provision of the Plan to the contrary, the Committee may
accelerate the earliest date or dates upon which any outstanding options are
<PAGE>
exercisable. Each installment of an option may be exercised any time after
the installment first becomes exercisable (the vesting date); but not later
than September 30, 1996, subject, however, to the other provisions of the
Plan. Each option shall by its terms provide that it is not exercisable after
September 30, 1996.
7.3 Option Exercise Price. Each option shall state the option
price. The option exercise price for options granted to employees shall be
not less than 85% of the fair market value of the shares subject to the option
on the date the option is granted.
7.4 Method of Exercise. An option shall be exercised by delivery
of both written notice of exercise to the Company at its principal place of
business by the person entitled to exercise the option and payment for the
shares with respect to which the option is exercised. Payment shall be:
(a) By bank certified or cashier's check; or
(b) By the optionee's personal recourse promissory note for
all or part of the option price, which promissory note is secured by a
security interest in the shares issuable upon exercise of such option. Such
promissory note shall be in the form and contain such terms as are determined
by the Committee, including a term of not less than two years, and shall bear
interest at a rate determined by the Committee at the time of exercise of the
option, which interest rate shall be the lowest rate which will not cause (i)
imputation of interest pursuant to Section 483 of the Internal Revenue Code of
1954, as amended, (ii) the inclusion in the gross income of any party of any
original issue discount pursuant to Section 1271, et seq., of the Internal
Revenue Code of 1954, as amended, (iii) the inclusion in the gross income of
any party of any original issue discount, or other amounts treated as
<PAGE>
transferred, retransferred or received, pursuant to Section 7872 of the
Internal Revenue Code of 1954, as amended, or (iv) any similar tax
consequences under any similar or successor provisions of the Internal Revenue
Code of 1954, as amended.
Until an optionee becomes a shareholder of record, no right to vote or to
receive dividends or any other rights as a shareholder shall exist with
respect to shares notwithstanding the exercise of the option. No adjustment
shall be made for dividend or other rights as to which the record date
precedes the date the optionee becomes a shareholder of record, except as
provided in Section 7.8. Options may not be exercised as to fractional
shares. As soon as reasonably practicable after receipt by the Company of a
notice of exercise, the Company shall deliver to the optionee at the principal
office of the Company, or at such other appropriate place as may be determined
by the Board, a certificate or certificates for shares of stock with respect
to which the option is exercised. The options granted in accordance with this
Plan shall be subject to any legend and restriction imposed pursuant to any
applicable state, federal or foreign securities law. Notwithstanding the
foregoing, the Company may postpone delivery of any certificate or
certificates after notice of exercise for such reasonable period as may be
required to comply with any applicable listing requirements of any national or
other securities exchange. In the event an option shall be exercisable by any
person other than the optionee, the required notice under this Section 7.4
shall be accompanied by appropriate proof of the right of such person to
exercise the option.
7.5 Rights and Obligations Upon Exercise. All shares of stock
issued upon exercise of an option shall be subject to the terms and conditions
of Sections 5, 6 and 7 of a standard Stock Subscription Agreement of the
Company regarding restrictions on transfer, rights of first refusal, third
party sales, registration rights, legends and matters related thereto, a copy
<PAGE>
of which is attached hereto as Exhibit 1. These terms shall be incorporated
in the agreement evidencing any option granted under this Plan.
7.6 Term of Options. The term of an option granted under the Plan
shall be determined by the Committee at the time of grant, consistent with the
provisions of the Plan, but in no event shall extend beyond September 30,
1996. In no event shall any option be exercisable after the expiration of its
term.
7.7 Termination of Employment. all options granted to an optionee
under the Plan which have not otherwise expired or been exercised shall
terminate three months after the date such optionee ceases, for any reason, to
be an employee of the Company, its parents or subsidiaries. During the three
month period following any termination of employment, an optionee may exercise
any or all of such optionee's option rights under the Plan, but only to the
extent such option rights are exercisable on the date of termination of
employment. Notwithstanding the foregoing:
(a) In the event of a termination of employment of an optionee
due to the optionee's death, the personal representative of the optionee or
any person or persons to whom the rights of the optionee under such options
pass by will or by the applicable laws of descent and distribution may, at any
time within a period of six months after the death of such optionee, exercise
any or all of such option rights to the extent such option rights are
exercisable on the date of death of such optionee, provided that no option
shall be exercisable, in whole or in part, after September 30, 1996;
(b) In the event such a termination of optionee's employment is
due to the disability of the optionee (within the meaning of Section 37(e)(3)
of the Internal Revenue Code of 1954, as amended), the optionee, optionee's
<PAGE>
guardian or legal representative, or (in the event of optionee's death) the
personal representative of the optionee or any person or persons to whom the
rights of the optionee under such options pass by will or by the applicable
laws of descent and distribution, may, at any time within a period of one year
after the optionee's termination of employment, exercise any or all of such
option rights to the extent such option rights are exercisable on the date of
the termination of employment, provided that no option shall be exercisable,
in whole or in part, after September 30, 1996.
The Committee shall determine whether an authorized leave of absence,
absence for military or governmental service or disability shall constitute
termination of employment for purposes of this Section 7.7.
7.8 Recapitalization. Subject to any required action by the
Company's shareholders, the number of shares of Voting Common Stock which may
be purchased upon the exercise of each outstanding option, and the exercise
price per share set forth in such options, shall be proportionately adjusted
for any increase or decrease in the number of issued shares of Voting Common
Stock of the Company resulting from any subdivision or consolidation of
shares, the payment of a stock dividend, or any other transaction in which the
Company increases or decreases its issued shares of Voting Common Stock but
does not receive payment for such shares, but excluding conversion or exchange
of securities which are convertible or exchangeable into shares of Voting
Common Stock of the Company. Any fraction of a share subject to an option
that would otherwise result from an adjustment pursuant to this Section 7.8
shall be rounded downward to the next full number of shares without other
compensation or consideration to the holder of such option.
7.9 Mergers, Sale of All Assets, or Dissolution. Subject to any
required action by the Company's stockholders, if the Company shall be the
<PAGE>
surviving corporation in any merger or consolidation, each outstanding option
shall pertain to and apply to the securities and/or other property to which a
holder of the number of shares of the Company's Voting Common Stock subject to
the option would have been entitled in such merger or consolidation, provided
that if such merger or consolidation in which the Company shall be the
surviving corporation constitutes, in substance, a sale or transfer of all of
the outstanding Voting Common Stock of the Company, such merger or
consolidation shall cause each unexercised option to terminate and each
optionee shall have the right immediately prior to such merger or
consolidation to exercise the options held by such optionee in whole or in
part, whether or not then otherwise exercisable under the terms of this Plan.
Subject to any required action by the Company's stockholders, a merger or
consolidation involving the Company in which the Company is not the surviving
corporation, a sale or transfer of all or substantially all of the Company's
assets or a dissolution or liquidation of the Company shall cause each
unexercised option to terminate; provided, however, that each optionee shall
have the right immediately prior to such merger, consolidation, sale,
transfer, dissolution or liquidation to exercise the options held by such
optionee, in whole or in part, whether or not then otherwise exercisable under
the terms of this Plan. Notwithstanding any other provision hereof, upon a
sale of all the outstanding Voting Common Stock of the Company, a merger or
consolidation involving the Company in which the Company is the surviving
corporation, a public offering of the Voting Common Stock of the Company
registered pursuant to an effective registration statement under the
securities Act of 1933, as amended (the "Act"), or any other similar
transaction, the Board may (but shall not be obligated to) terminate all
unexercised options granted pursuant to this Plan, provided that in such event
the Board shall grant each optionee the right immediately prior to a
termination in contemplation of such sale of stock, merger or consolidation,
public offering or similar transaction, to exercise the options held by such
optionee, in whole or in part, whether or not then otherwise exercisable under
the terms of this Plan.
7.10 Adjustment by Committee. To the extent that the adjustments
set forth in Sections 7.8 and 7.9 relate to stock or securities of the
Company, such adjustments shall be made by the Committee. The determination
of the Committee shall be final, binding and conclusive. The grant of an
option pursuant to the Plan shall not affect in any way the right or power of
the Company to make adjustments, reclassification, reorganizations or changes
of its capital or business structure or to merge, consolidate, dissolve,
liquidate or sell or transfer all or any part of its business or assets.
7.11 Withholding Taxes. Upon and after the exercise of an option,
the Company shall withhold such amounts from any wages or other sums due to an
optionee necessary in order for the Company to satisfy any withholding
requirements in respect of any applicable income, employment or other taxes.
If the amount required to be withheld exceeds 20% of the wages and other
amounts then owed to the optionee, the Company at its option may determine
that the exercise of the option shall not apply to some portion or all of the
number of shares designated in the notice of exercise unless the optionee pays
the Company in cash the amounts necessary in order for the Company to satisfy
the withholding requirements.
7.12 Extension and Renewal of Options. Subject to the terms and
conditions and within the limitations of the Plan, the Committee may extend or
renew outstanding options granted under the Plan, or accept the surrender of
outstanding options to the extent not exercised and authorize the granting of
new options in substitution therefor, up to the maximum aggregate number of
shares for which options may be granted and sold under Section 5 of the Plan.
<PAGE>
7.13 Reports to Optionees. The Company shall provide financial and
other information regarding the Company to each optionee at least annually
while such optionee's option is outstanding. Such financial and other
information shall be the information regularly provided by the Company to each
of its shareholders, and shall be provided to such optionee when and
substantially in the manner provided to the Company's shareholders.
7.14 Other Provisions. The option agreements authorized under the
Plan shall contain such other provisions, including, without limitation,
restrictions upon the sale of stock acquired upon exercise of the option, as
the Committee shall deem advisable.
8. Non-assignability of Options. Options granted under the Plan may
not be sold, pledged, assigned or transferred in any manner otherwise than by
will or by the laws of descent and distribution, and may be exercised during
the lifetime of an optionee only by such optionee or by such optionee's
guardian or legal representative. Notwithstanding the foregoing, in the event
of a termination of an optionee's employment due to the optionee's death or
disability, the optionee, the optionee's guardian or legal representative, or
(in the event of the optionee's death) the optionee's personal representative
or any person or persons to whom the rights of the optionee under the option
pass by will or by the applicable laws of descent and distribution, may,
subject to Section 7 of the Plan, exercise the option to the extent and on the
terms set forth in Section 7.7.
For purposes of this Section 8, an optionee shall be deemed disabled if,
and only if, optionee is disabled within the meaning of Section 37(e)(3) of
the Internal Revenue Code of 1954, as amended.
<PAGE>
9. Term of Plan. The Plan shall become effective upon its adoption by
the Board of Directors and shall continue in effect until September 30, 1996.
10. Amendment of the Plan. The Board of Directors may amend the Plan
from time to time in such respects as are permitted by law. Any such
amendment of the Plan shall be subject to the approval of the Company's
shareholders, if required by law or the terms of this Plan. An amendment
shall require shareholder approval if such amendment would (i) materially
increase the benefits accruing to participants under the Plan; (ii) materially
increase the number of shares which may be issued under the Plan or (iii)
materially modify the requirements as to eligibility for participation in the
Plan.
11. Application of Funds. The proceeds received by the Company from the
sale of stock pursuant to options granted under the Plan shall be used for
general corporate purposes.
12. Securities Law Compliance. The Committee may, in its discretion,
cause the Plan, options issued hereunder and the shares to be offered pursuant
to options granted hereunder to be registered and/or qualified in accordance
with the applicable regulations under the Securities Act of 1933, as amended,
the California Corporate Securities Law of 1968, as amended, and other
applicable state securities laws. If the Company has not so registered and
qualified the Plan and such options and shares, the Company may, as a
condition to the exercise of any portion of an option, require the employee
exercising such option to represent and warrant at the time of such exercise
that the shares are being purchased only for investment and without any
present intention to sell or distribute such shares if, in the opinion of
counsel for the Company, such a representation is required under the
Securities Act of 1933, as amended, or any other applicable federal or state
law, or any regulation or rule of any governmental agency, and for this
<PAGE>
purpose may require such other representations as the Company reasonably may
deem to be necessary. Notwithstanding any provision of the Plan to the
contrary, the Company shall not be obligated to grant any option under the
Plan and no such grant shall be effective, unless such grant is effectively
registered, qualified or exempt from registration and qualification under all
applicable federal and state securities laws.
13. Reservation of Shares. The Company, during the term of this Plan,
shall at all times reserve and keep available, such number of the shares as
shall be sufficient to satisfy the requirements of the Plan.
14. Employment Relationship. Nothing set forth in this Plan or any
option granted hereunder shall be construed so as to (i) in any way limit the
right of the Company, its parents or subsidiaries to terminate any optionee's
employment at any time, or (ii) confer upon any optionee any right to continue
in the employ of the Company, its parents or subsidiaries.
<PAGE>
AMENDMENT TO THE PULSE ENGINEERING, INC.
NON-QUALIFIED STOCK OPTION PLAN
NOW, THEREFORE, Section 7.5 of the Non-Qualified Plan is hereby amended
to add the following provision to the end of the first sentence of that
section:
; provided, however, that for as long as a Registration Statement on Form
S-8 shall be in effect under the securities Act of 1933, as amended, with
respect to the shares of Common Stock to be issued upon the exercise of
options granted pursuant to the Plan, the legend conditions required by
Section 7 of the standard Stock Subscription Agreement of the Company
shall not be required to be placed upon certificates evidencing such
Common Stock.
<PAGE>
AMENDMENT TO THE PULSE ENGINEERING, INC.
NON-QUALIFIED STOCK OPTION PLAN
RESOLVED, that the Pulse Engineering, Inc. Non-Qualified Stock Option
Plan is hereby amended, subject to stockholder approval, by deleting the text
of Section 3, "Administration of Plan," and adding the following text:
This Plan shall be administered by the Board or by a committee
of three or more directors to which administration of this Plan is
delegated by the Board (in either case, the "Committee"). No option
shall be granted to a director or officer of the Company except by the
Board or the Committee, a majority of which Board and a majority of the
directors acting in the matter, or all members of the Committee, are
"disinterested" as that term is defined in Rule 16b-3 promulgated
pursuant to Section 16 of the Securities and Exchange Act of 1934 and if
such disinterested administration is required in order to comply with
Rule 16b-3. The Committee may delegate nondiscretionary administrative
duties to such employees of the Company as it shall deem proper. The
Committee may make such rules and regulations as it deems necessary to
administer this Plan and to interpret the provisions of this Plan. Any
determination, decision or action of the Committee in connection with the
construction, interpretation, administration or application of this Plan
or any option granted under this Plan shall be final, conclusive and
binding. No member of the Committee shall be liable for any
determination, decision or action made with respect to this Plan or an
option granted under this Plan.
Exhibit 5.1
- -----------------
STRADLEY
RONON
STEVENS
&YOUNG
- -----------------
Attorneys At Law
2600 One Commerce Square
Philadelphia, Pennsylvania 19103-7098
Telephone (215) 564-8000
FAX: (215) 564-8120
Malvern, Pennsylvania
Cherry Hill, New Jersey
_________
Affiliated Office, Vineland, New Jersey
Gruccio, Pepper,
Giovinazzi, DeSanto and Farnoly, P.A.
October 2, 1995
Technitrol, Inc.
1210 Northbrook Drive, Suite 385
Trevose, Pennsylvania 19053
Re: Registration Statement on Form S-8
----------------------------------
Ladies and Gentlemen:
We have acted as counsel to Technitrol, Inc. (the "Company") in the
preparation and filing with the Securities and Exchange Commission of a
registration statement on Form S-8 (the "Registration Statement"), for the
purpose of registering under the Securities Act of 1933, as amended, 253,306
shares of the Company's common stock, par value $.125 per share (the "Common
Stock").
For the purpose of rendering the opinions contained herein, we have
examined such matters of law as we deem necessary or appropriate and have
examined and relied (without independent investigation) on only the following
documents, records and certificates:
(1) a subsistence certificate with respect to the Company issued by the
Secretary of State of the Commonwealth of Pennsylvania on September
20, 1995;
(2) the Articles of Incorporation, as amended, of the Company, certified
by the Secretary of the Company;
(3) the By-laws of the Company, certified by the Secretary of the
Company; and
(4) the Registration Statement.
In rendering this opinion, we have assumed and relied upon, without
independent investigation, other than the inquiry referred to above, (i) the
authenticity, completeness, truth and due authorization, execution and
delivery of all documents submitted to us as originals, (ii) the genuineness
of all signatures on all documents submitted to us as originals, and (iii) the
conformity to the originals of all documents submitted to us as certified or
photostatic copies.
The laws covered by the opinions expressed herein are limited to the
Federal statutes, judicial decisions and rules and regulations of the
governmental agencies of the United States and the statutes, judicial and
administrative decisions and rules and regulations of the governmental
agencies of the Commonwealth of Pennsylvania.
This opinion letter is given only with respect to laws and regulations
presently in effect. We assume no obligation to advise you of any changes in
law or regulation which may hereafter occur, whether the same are
retroactively or prospectively applied, or to update or supplement this letter
in any fashion to reflect any facts or circumstances which hereafter come to
our attention.
Based upon the foregoing, it is our opinion that the Common Stock when
issued will be legally and validly issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion letter as an exhibit to
the Registration Statement.
Very Truly Yours,
STRADLEY, RONON, STEVENS & YOUNG
By: /s/ James M. Papada, III
----------------------------------------
James M. Papada, III, Esquire, a Partner
Exhibit 23.2
Consent of Independent Certified Public Accountants
---------------------------------------------------
The Board of Directors
Technitrol, Inc.
We consent to incorporation by reference in the registration statement on Form
S-8 of Technitrol, Inc. of our report dated March 3, 1995, relating to the
consolidated balance sheets of Technitrol, Inc. and subsidiaries as of
December 31, 1994 and 1993, and the related consolidated statements of
earnings and retained earnings and cash flows for each of the years in the
three-year period ended December 31, 1994 which report appears in the December
31, 1994 annual report on Form 10-K and Form S-4 Registration Statement dated
August 21, 1995 of Technitrol, Inc. Our report refers to a change in 1993 in
the method of accounting for income taxes.
Philadelphia, Pennsylvania
October 2, 1995
Exhibit 24.1
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Thomas J. Flakoll and Albert Thorp,
III, jointly and severally, his attorneys-in-fact, each with the power of
substitution, for him in any and all capacities to sign any amendments to this
Registration Statement on Form S-8, and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that each of said
attorneys-in- fact, or his subsitute or substitutes, may do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- ------------------------ ------------------------------- ------------------
/s/ Roy E. Hock Chairman, Chief Executive September 29, 1995
Roy E. Hock Officer, and Director
(Principal Executive Officer)
/s/ Thomas J. Flakoll President, Chief Operating September 29, 1995
Thomas J. Flakoll Officer and Director
<PAGE>
/s/ Albert Thorp, III Vice President of Finance and September 29, 1995
Albert Thorp, III Treasurer (Principal Financial
Officer)
/s/ Drew A. Moyer Corporate Controller (Principal September 29, 1995
Drew A. Moyer Accounting Officer)
/s/ J. Barton Harrison Director September 29, 1995
J. Barton Harrison
/s/ James M. Papada, III Director September 29, 1995
James M. Papada, III
/s/ James J. Rafferty, Jr. Director September 29, 1995
James J. Rafferty, Jr.
/s/ Edward M. Mazze Director September 29, 1995
Edward M. Mazze
/s/ Graham Humes Director September 29, 1995
Graham Humes
/s/ Stanley E. Basara Director September 29, 1995
Stanley E. Basara
/s/ John E. Burrows, Jr. Director September 29, 1995
John E. Burrows, Jr.
