As filed with the Securities and Exchange Commission on July 26, 1996
Registration Statement No. 33-__________
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
FREQUENCY ELECTRONICS, INC.
(Exact name of registrant as specified in its charter)
Delaware 11-1986657
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
55 Charles Lindbergh Boulevard, Mitchel Field, NY 11553
(Address of Principal Executive Offices) (Zip Code)
1982 FREQUENCY ELECTRONICS, INC. INCENTIVE STOCK OPTION PLAN
1984 FREQUENCY ELECTRONICS, INC. INCENTIVE STOCK OPTION PLAN
FREQUENCY ELECTRONICS, INC. 1987 INCENTIVE STOCK OPTION PLAN
FREQUENCY ELECTRONICS, INC. SENIOR EXECUTIVE STOCK OPTION PLAN
FREQUENCY ELECTRONICS, INC. RESTRICTED STOCK PLAN
FREQUENCY ELECTRONICS, INC. 1993 NONSTATUTORY STOCK OPTION PLAN
(Full title of the Plans)
Joseph P. Franklin, Chief Executive and Financial Officer
Frequency Electronics, Inc.
55 Charles Lindbergh Boulevard, Mitchel Field, NY 11553
(Name and address, including zip code of agent for services)
516-794-4500
(Telephone number, including area code, of agent for service)
Copies to:
John L. Milling, Esq.
115 River Road, Building 12
Edgewater, NJ 07020
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 of the Securities Act of
1933, check the following box. [X]
- --------------------------------------------------------------------------------
Page 1 of 46 pages
Exhibit Index at page 19
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Maximum Maximum
Amount Offering Aggregate Amount of
Title of Securities to be Price Per Offering Registration
to be Registered Registered Share* Price* Fee
Common Stock, par value
$1.00 per share, under 1982
Frequency Electronics, Inc.
Incentive Stock Option Plan 129,713 $6.9375 $899,884 $310
Common Stock, par value
$1.00 per share, under 1984
Frequency Electronics, Inc.
Incentive Stock Option Plan 131,900 6.9375 915,056 316
Common Stock, par value
$1.00 per share, under
Frequency Electronics, Inc.
1987 Incentive Stock
Option Plan 200,000 6.9375 1,387,500 478
Common Stock, par value
$1.00 per share, under
Frequency Electronics, Inc.
Senior Executive Stock
Option Plan 150,000 6.9375 1,040,625 359
Common Stock, par value
$1.00 per share, under
Frequency Electronics, Inc.
Restricted Stock Plan 215,500 6.9375 1,495,031 516
Common Stock, par value
$1.00 per share, under
Frequency Electronics, Inc.
1993 Nonstatutory Stock
Option Plan 250,000 6.9375 1,734,375 598
TOTALS $7,472,471 $2,577
*Estimated solely for the purpose of computing the registration fee pursuant to
Rule 457, on the basis of the average of the high and low prices of the Regis-
trant's Common Stock as reported on the American Stock Exchange on July 23,
1996.
2
R E O F F E R
P R O S P E C T U S
865,900 Shares
FREQUENCY ELECTRONICS, INC.
Common Stock
$1.00 Par Value
The shares of common stock offered hereby are being sold by certain share-
holders of Frequency Electronics, Inc. (the "Company") and such shareholders
are hereinafter referred to as "Selling Shareholders". The Company will not
receive any of the proceeds from the sale of the common stock. The common
stock is listed on the American Stock Exchange under the symbol FEI. On
July 23, 1996 the closing price for the Company's common stock on the American
Stock Exchange was $6.625 per share. Sales by the Selling Shareholder will be
made from time to time at market prices then obtainable on the American Stock
Exchange through securities dealers. See "Plan of Distribution".
THIS OFFERING INVOLVES CERTAIN RISKS. SEE "RISK FACTORS"
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is July 26, 1996
3
AVAILABLE INFORMATION
The Company is subject to the information requirements of the Securities
Exchange Act of 1934 (the "Exchange Act"), and in accordance therewith files
reports and other information with the Securities and Exchange Commission
(the "Commission"). Reports, proxy statements and other information filed by
the Company can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street N.W., Washington,
D.C. 20549; 7 World Trade Center, New York, New York 10048; and Citicorp
Center, 500 W. Madison Street, Suite 1400, Chicago, Illinois 60601-2511; and
copies of such material can be obtained from the Public Reference Section of
the Commission at Room 1024, 450 Fifth Street, N.W. Washington, D.C. 20549 at
prescribed rates. In addition, the Company's securities are listed on the
American Stock Exchange and such material can be inspected at such exchange.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates by reference in this prospectus the
Company's annual report on Form 10-K for its fiscal year ended April 30, 1995,
filed pursuant to Section 13(a) of the Exchange Act, the Company's quarterly
reports on Form 10-Q for the fiscal quarters ended July 31, 1995, October 31,
1995, and January 31, 1996, the Company's current reports on Form 8-K dated
July 27, 1995 and November 20, 1995, the Company's registration statement on
Form 8-A filed with the Commission on August 27, 1969, under Section 12 of the
Exchange Act including any amendments thereto, and all other reports, if any,
filed by the Company pursuant to Section 13(a) or 15(d) of the Exchange Act
since the end of the fiscal year ended April 30, 1995.
All reports and definitive proxy or information statements filed pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date
of this prospectus and prior to the termination of the offering of the shares
shall be deemed to be incorporated by reference into this prospectus and to be
a part hereof from the date of filing of such documents. Any statement con-
tained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this pro-
spectus to the extent that a statement contained herein or in any other sub-
sequently filed document which also is incorporated or deemed to be incor-
porated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this prospectus.
Any person receiving a copy of this prospectus may obtain without charge,
upon request, a copy of any of the documents incorporated by reference herein,
except for the exhibits to such documents. Requests should be directed to
Markus Hechler, Frequency Electronics, Inc., 55 Charles Lindbergh Boulevard,
Mitchel Field, NY 11553, telephone (516) 794-4500.
THE COMPANY
The Company is engaged in the design, development, manufacture, and
marketing of precision time and frequency control products. For a more
detailed discussion of the Company's business, reference is made to Part I,
Item 1 of the Company's annual report on Form 10-K for its fiscal year ended
April 30, 1995 which is incorporated herein by reference.
The Company's principal executive offices are located at 55 Charles
Lindbergh Boulevard, Mitchel Field, NY 11553. Its telephone number is
516-794-4500.
4
RISK FACTORS
The following are among the factors that should be considered carefully in
evaluating the Company and its business before purchasing shares offered by
this prospectus.
1. Dependence on the Precision Time and Frequency Control Products
Industry. The Company is, and has for many years been, engaged principally
in the design, development, manufacture, and marketing of precision time and
frequency control products by way of components, instruments, systems and
certain microwave products. Its future financial performance will depend in
large part on the continued growth in the market for its products, which in
turn will depend in part on the growth in the number of organizations utilizing
these products. There can be no assurance that this market will continue to
grow and, in fact, a significant portion of this market is in a state of
contraction. For many years the Company's principal customers have been the
US Department of Defense ("DOD") and the National Aeronautics and Space Agency
("NASA"), although in recent years the Company has materially increased the
portion of its business devoted to the commercial market for its products.
Changing defense priorities and consequent US Government budget cutbacks have
caused significant reductions in government demand for the Company's defense-
and space-related products and further reductions are anticipated. This
situation has had, and may continue to have, a material adverse effect upon the
Company's business. This reduced governmental demand for the Company's pro-
ducts has been exacerbated by the suspension in 1993 by the DOD of the Company
from contracting with any agency of the government, subject to certain ex-
ceptions by way of current contracted programs and the existence of compelling
reasons for new contracts. The suspension grew out of certain criminal
litigation by the government against the Company and is expected to continue
in effect until the disposition of that litigation, at which time it will
either be vacated or extended. There can be no assurance of the nature of
this eventual disposition. Further, while the Company has experienced consid-
erable and continuing growth in its commercial business there can be no
assurance that this growth will continue, that the commercial markets will
continue to grow, or that the Company will be able to respond effectively to
the evolving requirements of these markets. Any significant contraction or
cessation of growth in any of the Company's markets will have an adverse effect
on its financial performance and has had such an effect in the case of its
defense- and space-related markets. Reference is made to the subtopics
"General Discussion" and "Material Developments" of Item 1 and to Item 3 of
the Company's Form 10-K for the year ended April 30, 1995 (the "1995 Form
10-K"), incorporated herein by reference.
2. History of Operating Losses. The Company has, excluding the year
ended April 30, 1992, experienced operating losses for each of the years ended
April 30, 1991 through 1995 in the approximate aggregate amount of $22,783,000,
and has suffered a reduction of approximately $16,478,000 in its Stockholders'
Equity account between its 1991 and its 1995 fiscal year. The Company realized
an operating profit for its 1996 fiscal year and believes that it will continue
to do so in future fiscal periods, based in large part upon the continuing in-
crease in its commercial business. However, although the Company believes its
prospects to be highly favorable, there can be no assurance that the Company's
increasing commercial revenues or that its profitability will continue. Refer-
ence is made to the subtopic "Commercial Markets" of Item 1 and to Items 7 and
8 of the 1995 Form 10-K, incorporated herein by reference.
3. Criminal and Civil Litigation. In 1993 a federal indictment, and in
1994 an indictment superseding this indictment (collectively the "Indictment")
were returned, naming as defendants the Company and certain of its key person-
nel, alleging conspiracy to commit fraud and the commission of fraud by the
defendants by way of allegedly intentionally false invoices and statements
submitted by the Company under certain government contracts. A number of civil
actions (the "Actions") were commenced against the Company and certain of its
personnel and directors seeking substantial monetary damages, viz. (1) an
action by the government; (2) two qui tam actions (an action under which an
individual may, under certain circumstances, sue one or more third persons on
behalf of the government for damages and other relief); and (3) two derivative
actions (an action under which a shareholder may commence an action to enforce
an alleged right or claim of the corporation for its benefit, frequently
against its officers and/or directors who may
5
not reasonably be expected to cause the corporation to proceed against
themselves). In 1993 a federal grand jury commenced a separate investigation
which, the Company believes, relates to finance and/or pricing by the Company
concerning government contracts and products unrelated to those involved in the
Indictment. While the Company is vigorously contesting the Indictment and the
Actions as are the individual defendants thereof, and believes that it and the
individual defendants will prevail in these matters, there can be no assurance
that this will be the case. In the event, after exhaustion of appeals, of
the conviction of the Company under the Indictment and/or the entry of
judgment against the Company in the Actions, the Company will be subject to
extensive financial liabilities and will suffer material adverse damage with
respect to its financial condition, business prospects and otherwise.
Reference is made to the subtopic "U.S. Government Indictment" in Item 3 of the
1995 Form 10-K and to Item 5 of the Form 8-K of the Company, dated July 27,
1995, each of which is incorporated herein by reference.
4. Dependence on Personnel. The Company is highly dependent on the
continued services of Martin Bloch, its president (on leave), founder and
chief scientist. Mr. Bloch is a defendant in the Indictment and is exposed
to the possibility of conviction and incarceration. The loss of the services
of Mr. Bloch for any reason would have a material adverse effect on the Company
by way of both the results of its operations and its business prospects. Al-
though the Company believes that all defendants will be acquitted, there can be
no prediction with any degree of certainty as to the disposition of the
Indictment at this time. The Company's ability to maintain its competitive
technological position will depend in part upon its ability to attract and
retain highly qualified scientific, managerial and manufacturing personnel.
Competition for such personnel is intense. Further, the Company must recruit
and organize marketing and sales organizations for those products it will
commercialize directly. Reference is made to the subtopic "Employees" in
Item 1 and to the subtopic "U.S. Government Indictment" in Item 3 of the 1995
Form 10-K, each of which is incorporated herein by reference.
5. Protection of Intellectual Property Rights. The Company believes
that patents and licenses are not material to its business, which is not
dependent on this type of intellectual rights protection. The Company relies
on unpatented proprietary manufacturing processes and technologies, product
research and concepts by way of intellectual property, all of which the Com-
pany believes are important to the success of its products and its competitive
position. There can be no assurance that the actions taken by the Company to
protect its proprietary rights will be adequate to prevent imitation of its
products, processes or technology, that the Company's proprietary information
will not become known to competitors, that the Company can effectively protect
its rights to unpatented proprietary information or that others will not
independently develop substantially equivalent or better products than those of
the Company. No assurance can be given that others will not assert rights in,
and ownership of, the proprietary rights of the Company. Reference is made to
the subtopic "Patents and Licenses" in Item 1 of the 1995 Form 10-K, incor-
porated herein by reference.
6. Competition. The Company competes primarily on the basis of the
accuracy, performance and reliability of its products, the ability of its pro-
ducts to perform in severe environments, aerospatial and otherwise, prompt and
responsive contract performance, and the Company's technical competence and
price. Accordingly, the Company's success depends upon maintaining its com-
petitive position in the development of products and technologies in its areas
of concentration. Precision time and frequency control is a rapidly evolving
field in which developments are expected to continue at a fast pace. Com-
petition from other companies in these fields is intense and is expected to
increase. Many of these companies have substantially greater research and
development capabilities, experience, and marketing, financial and managerial
resources, and represent very significant long-term competition for the
Company. Acquisitions of competing companies in these fields by these large
competitors could enhance such competitors' financial, marketing, and other
resources. In addition, there can be no assurance that developments by others
will not render the Company's products or technologies noncompetitive. Refer-
ence is made to the subtopic "Competition" in Item 1 of the 1995 Form 10-K,
incorporated herein by reference.
6
7. Dividends Not Likely. For the foreseeable future it is anticipated
that any earnings which may be generated from the operations of the Company
will be used to finance the growth of the Company and that cash dividends will
not be paid to stockholders. Reference is made to Item 5 of the 1995 Form
10-K, incorporated herein by reference.
8. Fluctuations in Stock Price. The market price of the Company's com-
mon stock could be subject to significant fluctuations in response to
variations in financial results or announcements of material events by the
Company or it competitors. Developments in the time and frequency control
industry or changes in the general conditions of the economy or the financial
markets could also adversely affect the market price of the Company's common
stock. Reference is made to Item 5 of the 1995 Form 10-K, incorporated herein
by reference.
9. Possible Issuance of Additional Shares of Common Stock. The
Company's articles of incorporation authorize the issuance of 20,000,000
shares of common stock, of which 6,006,300 shares are issued, including
1,159,905 shares of common stock reacquired by the Company and currently being
held as treasury stock. Upon the exercise of all of the Company's currently
outstanding common stock options and stock purchase rights, which options and
rights provide for the purchase of 672,915 shares, approximately 13,320,785
shares of the Company's authorized common stock will remain unissued. The
Company's board of directors has the power to issue any or all of such unissued
shares of common stock plus all of the shares of treasury stock for general
corporate purposes without shareholder approval. Potential investors should be
aware that any such stock issuances may result in a reduction of the book value
or market price of the outstanding common stock. If the Company issues any
additional common stock, such issuance will reduce the proportionate ownership
and voting power of each other common stockholder. Reference is made to the
"Voting Securities and Principal Holders Thereof" section of Company's proxy
statement, dated September 1, 1995, incorporated herein by reference.
10. Adverse Effect of Stock Sales on Market Price. Future sales in the
public market of outstanding restricted shares of the Company's common stock
pursuant to Rule 144 under the Securities Act of 1933, as amended, could have a
material adverse effect on the market price of the Company's common stock.
Additionally, approximately 59,000 shares of the Company's outstanding common
stock, 672,915 shares issuable upon the exercise of outstanding common stock
purchase options or stock purchase rights and 345,198 shares issuable upon the
exercise of common stock purchase options or stock purchase rights issuable
in the future under certain employee benefit plans of the Company have been in-
cluded in the registration statement of which this prospectus is a part (the
"Registration Statement"). The outstanding shares and the shares, when issued
on the exercise of the common stock purchase options and rights (collectively
the "Shares"), will, subject in certain cases to contractual restrictions, be
freely tradeable by the holders thereof following the effectiveness of the
Registration Statement. The sale of the Shares in the open market could also
have a material adverse effect on the market price of the Company's common
stock. Reference is made to the "Voting Securities and Principal Holders
Thereof" section of Company's proxy statement, dated September 1, 1995, incor-
porated herein by reference.
SELLING SHAREHOLDERS
The Company has instituted several employee benefit plans (collectively
the "Plans") including the 1982 Frequency Electronics, Inc. Incentive Stock
Option Plan (the "1982 Plan"), the 1984 Frequency Electronics, Inc. Incentive
Stock Option Plan (the "1984 Plan"), the Frequency Electronics, Inc. 1987
Incentive Stock Option Plan (the "1987 Plan"), the Frequency Electronics, Inc.
Senior Executive Stock Option Plan (the"Senior Executive Plan"), the Frequency
Electronics, Inc. Restricted Stock Plan (the "Restricted Stock Plan"), and the
Frequency Electronics, Inc. 1993 Nonstatutory Stock Option Plan (the "1993
Plan"). The Plans provide for issuances of stock options and/or shares of
restricted common stock to certain employees, including affiliates, of the Com-
pany and its subsidiaries. The stock options can be exercised for shares of
the Company's common stock. Certain shares acquired pursuant to the Plans
whether directly or upon the exercise of stock options are being offered hereby
by the Selling Shareholders.
7
The table which follows identifies each Selling Shareholder that may
receive "control shares", as defined below, under one of the Plans or who owns
shares received under one of the Plans prior to the Company's registration of
the applicable Plan's shares on Form S-8, the Plan pursuant to which the shares
being offered have been or may be acquired, and the nature of all positions,
offices or other material relationships which each Selling Shareholder has had
with the Company within the past three years. It also indicates the number of
shares of common stock owned by each Selling Shareholder prior to the offering,
the number of shares of common stock to be offered for the account of each
Selling Shareholder, the number of shares of common stock to be owned by each
Selling Shareholder after the completion of the offering, and the percentage of
the Company's common stock to be owned by each Selling Shareholder after com-
pletion of the offering. The table also makes reference, in a generic manner,
to Selling Shareholders of "control shares" under each Plan, where applicable
and where the names of such Selling Shareholders are not presently known.
"Control shares" are securities acquired under a Securities Act registration
statement held by affiliates of the Company. As the names of such Selling
Shareholders become known, the Company will supplement this Reoffer Prospectus
as required by Rule 424(b) of the General Rules and Regulations under the
Securities Act of 1933.
8
No.
of No. %-age
Common of of
Shares No. Common Common
Owned of Shares Shares
Position Prior Common Owned Owned
Selling with to Shares After After
Shareholder Plan Company Offering Offered Offering Offering
Martin Bloch Sr. Exec. Plan Pres. &, 624,096 100,000 489,096 8.9%
Restricted Dir. 35,000
Stock Plan TOTAL 135,000
Joseph Franklin Sr.Exec. Plan Chairman, 90,000 25,000 30,000
Restricted CEO, CFO 35,000
Stock Plan TOTAL 60,000
Markus Hechler 1982 Plan V.P.&, 72,500 17,500 20,500
1984 Plan Secy. 6,500
1987 Plan 18,000
Restricted Stock Plan 10,000
TOTAL 52,000
John Ho 1982 Plan V.P. &, 99,525 15,000 41,025
1984 Plan Dir. 20,500
1987 Plan 8,000
Restricted Stock Plan 15,000
TOTAL 58,500
Abraham Lazar 1982 Plan Dir. 21,000 10,500 0 0
1984 Plan and 10,500
TOTAL 21,000
Len Martire 1984 Plan V.P. 38,900 24,900 0 0
1987 Plan 5,000
Restricted Stock Plan 9,000
TOTAL 38,900
Marvin Meirs 1982 Plan V.P. 79,967 16,500 22,967
1984 Plan 20,500
1987 Plan 10,000
Restricted Stock Plan 10,000
TOTAL 57,000
Harry Newman 1982 Plan Secy., 27,739 7,500 5,239
1984 Plan Treas, & 5,000
1987 Plan 5,000
Restricted Stock Plan 5,000
TOTAL 22,500
9
No.
of No. %-age
Common of of
Shares No. Common Common
Owned of Shares Shares
Position Prior Common Owned Owned
Selling with to Shares After After
Shareholder Plan Company Offering Offered Offering Offering
Charles Stone 1982 Plan V.P. 46,678 6,000 24,876
1984 Plan 3,000
1987 Plan 9,802
Restricted Stock Plan 5,000
TOTAL 23,802
Al Vulcan 1982 Plan V.P. 72,000 13,500 20,000
1984 Plan 10,500
1987 Plan 18,000
Restricted Stock Plan 10,000
TOTAL 52,000
Holders of
Control Secur. 1987 Plan N/A N/A TOTAL 3,698 N/A N/A
Holders of
Control Secur. Sr. Exec. Plan N/A N/A TOTAL 25,000 N/A N/A
Holders of
Control Secur. Restricted N/A N/A TOTAL 66,500 N/A N/A
Stock Plan
Holders of
Control Secur. 1993 Plan N/A N/A TOTAL 250,000 N/A N/A
GRAND TOTAL 865,900
Includes 672,915 shares of common stock which may be issued upon the
exercise of outstanding stock options or stock purchase rights under the
Plans but does not include (except as listed generically under the heading
"Number of Common Shares Offered") an additional 345,198 shares of common
stock which may be issued upon the exercise of stock options or stock pur-
chase rights issuable in the future under the Plans.
Based upon 5,519,310 shares being issued and outstanding including 672,915
shares of common stock which may be issued upon the exercise of outstanding
stock options or stock purchase rights under the Plans but excluding
1,159,905 issued common shares currently being held as treasury stock and
also excluding 345,198 common shares which may be issued upon the exercise
of stock options or stock purchase rights issuable in the future under the
Plans.
At this time, Martin Bloch has taken a voluntary leave of absence as pre-
sident of the Company, and is attending Company board meetings and acting
solely in an advisory capacity. He is not participating in any Company
board decisions or board actions (by vote, written consent or otherwise)
and is voluntarily abstaining from participation except when called upon
for information) from any board discussion of corporate policy or board
action.
At this time, Abraham Lazar is voluntarily abstaining from any further
attendance at or participation in Company board meetings or other board
activities.
At this time, Harry Newman has taken a voluntary leave of absence as
secretary and treasurer of the Company.
The foregoing restrictions on Messrs. Bloch's, Lazar's and Newman's
participation in the Company's affairs will abide until the final dispos-
ition of the Federal Indictment as to each of them respectively whereby,
depending on the result, they will respectively either resign from or re-
sume their original positions. See Item 3 - Legal Proceedings in the Com-
pany's Annual Report on Form 10-K for the fiscal year ended April 30, 1995
which is incorporated herein by reference.
The Selling Shareholder serves or has served as an officer and/or director
of one or more subsidiaries of the Company at some time within the past
three years.
Less than 1%
10
PLAN OF DISTRIBUTION
Selling Shareholders may sell all or part of the shares from time to time
at market prices then obtainable on the American Stock Exchange through securi-
ities dealers. The ability of the Selling Shareholders to sell any of the
shares however, is subject to any and all restrictions and limitations imposed
upon the Selling Shareholders by the Plan or Plans pursuant to which they
acquired the shares. The Common Stock of the Company is traded on the American
Stock Exchange.
EXPERTS
The consolidated balance sheet as of April 30, 1995 and 1994 and the
consolidated statements of income, retained earnings, cash flows and financial
statement schedule for each of the three years in the period ended April 30,
1995, incorporated by reference in this prospectus, have been incorporated
herein in reliance on the report which includes an explanatory paragraph as to
certain litigation, of Coopers & Lybrand L.L.P., independent accountants, given
on the authority of that Firm as experts in accounting and auditing.
LEGAL OPINIONS
The legality of the Shares offered hereby will be passed upon for the Com-
pany by the Law Office of John L. Milling, 115 River Road, Building 12,
Edgewater, NJ 07020.
INDEMNIFICATION
The Company's Certificate of Incorporation provides for indemnification to
the fullest extent permitted by Section 145 of the Delaware General Corporation
Law ("Section 145"). Pursuant thereto, the Company indemnifies its officers,
directors, employees and agents to the fullest extent permitted for losses and
expenses incurred by them in connection with actions in which they are involved
by reason of their having been directors, officers, employees or agents of the
Company. Section 145 permits a corporation to indemnify any person who is or
has been a director, officer, employee or agent of the corporation or who is or
has been serving as a director, officer, employee or agent of another cor-
poration, organization or enterprise at the request of the corporation, against
all liability and expenses (including, but not limited to, attorneys' fees and
disbursements and amounts paid in settlement or in satisfaction of judgments or
as fines or penalties) incurred or paid in connection with any action, suit or
proceeding, whether civil, criminal, administrative, investigative or
otherwise, in which he/she may be involved by reason of the fact that he/she
serves or is serving in these capacities, if he/she acted in good faith and
in a manner he/she reasonably believed to be in or not opposed to the best
interests of the corporation and, with respect to any criminal action or
proceeding, had no cause to believe his/her conduct was unlawful. In the
case of a claim, action, suit or proceeding made or brought by or in the
right of the corporation to procure a recovery or judgment in its favor, the
corporation shall not indemnify such person in respect of any claim, issue
or matter as to which such person has been adjudged to be liable to the
corporation for negligence or misconduct in the performance of his or her duty
to the corporation, except for such expenses as the Court may allow. Any such
person who has been wholly successful on the merits or otherwise with respect
to any such claim, action, suit or proceeding or with respect to any claim,
issue or matter therein, shall be indemnified as of right against all expenses
in connection therewith or resulting therefrom.
The Company's By-Laws provide for indemnification of the Company's
officers and directors against all liabilities (including reasonable costs,
expenses, attorneys' fees, obligations for payment in settlement and final
judgment) incurred by or imposed upon them in the preparation, conduct or
compromise of any actual or threatened action, suit, or proceeding, whether
civil, criminal or administrative, including any appeals therefrom
11
and any collateral proceedings in which they shall be involved by reason of any
action or omission by them in their capacity as a director or officer of the
Company, or of any other corporation which they serve as a director or officer
at the request of the Company, whether or not such person is a director or
officer at the time such liabilities are incurred or any such action, suit or
proceeding is commenced against them. The indemnification provided by the By-
Laws does not extend, however, to certain situations involving misconduct,
willful misfeasance, bad faith or gross negligence.
The Company maintains an insurance policy insuring its directors and
officers against liability for certain acts and omissions while acting in
their official capacities.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, or persons controlling
the Company, the Company has been informed that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is therefore unenforceable.
12
TABLE OF CONTENTS 865,900 Shares
Page
Available Information. . . . . . . 4
Incorporation of Certain Documents
by Reference . . . . . . . . . . 4
FREQUENCY ELECTRONICS, INC.
The Company. . . . . . . . . . . . 4
Risk Factors . . . . . . . . . . . 5
Selling Shareholders . . . . . . . 7
Plan of Distribution . . . . . . . 11 COMMON STOCK
$1.00 PAR VALUE
Experts. . . . . . . . . . . . . . 11
Legal Opinions . . . . . . . . . . 11
Indemnification. . . . . . . . . . 11
________________
PROSPECTUS
________________
13
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents are incorporated by reference in this registration
statement.
(a) Registrant's Annual Report on Form 10-K for the fiscal year
ended April 30, 1995, filed pursuant to Section 13(a) of the
Securities Exchange Act of 1934, as amended.
(b) Registrant's quarterly reports on Form 10-Q for the fiscal
quarters ended July 31, 1995, October 31, 1995, and January
31, 1996, Registrant's Current Reports on Form 8-K dated July 27,
1995 and November 20, 1995, and all other reports, if any, filed
by the Company pursuant to Section 13(a) or 15(d) of the Secur-
ities Exchange Act of 1934 since the end of the fiscal year
ended April 30, 1995.
(c) The description of Registrant's Common Stock contained in the
Registration Statement on Form 8-A filed with the Commission on
August 27, 1969 under Section 12 of the Securities Exchange Act
of 1934, including any amendment or report filed for the purpose
of updating such description.
All documents filed by the Registrant pursuant to Sections 13(a), 13(c),
14 and 15(d) of the Securities Exchange Act of 1934 after the date of this
registration statement and prior to the filing of a post-effective amendment
to this registration statement which indicates that all securities offered
hereunder have been sold, or which deregisters all securities then remaining
unsold under this registration statement, shall be deemed to be incorporated
by reference in this registration statement and to be a part hereof from the
date of filing of such documents.
Item 4. DESCRIPTION OF SECURITIES
Not applicable; the class of securities to be offered is registered under
Section 12 of the Securities Exchange Act of 1934.
Item 5. INTEREST OF NAMED EXPERTS AND COUNSEL
Not applicable.
Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Registrant's Certificate of Incorporation provides for indemnification
to the fullest extent permitted by Section 145 of the Delaware General Corpora-
tion Law ("Section 145"). Pursuant thereto, Registrant indemnifies its of-
ficers, directors, employees and agents to the fullest extent permitted for
losses and expenses incurred by them in connection with actions in which they
are involved by reason of their having been directors, officers, employees or
agents of Registrant. Section 145 permits a corporation to indemnify any person
who is or has been a director, officer, employee or agent of the corporation or
who is or has been serving as a director, officer, employee or agent of another
corporation, organization or enterprise at the request of the corporation,
against all liability and expenses (including, but not limited to, attorneys'
fees and disbursements and
14
amounts paid in settlement or in satisfaction ofjudgments or as fines or pen-
alties) incurred or paid in connection with any action, suit or proceeding,
whether civil, criminal, administrative, investigative or otherwise, in which
he/she may be involved by reason of the fact that he/she serves or is serving
in these capacities, if he/she acted in good faith and in a manner he/she
reasonably be lieved to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceeding, had no
cause to believe his/her conduct was unlawful. In the case of a claim, action,
suit or proceeding made or brought by or in the right of the corporation to
procure a recovery or judgment in its favor, the corporation shall not in-
demnify such person in respect of any claim, issue or matter as to which such
person has been adjudged to be liable to the corporation for negligence or mis-
conduct in the performance of his or her duty to the corporation, except for
such expenses as the Court may allow. Any such person who has been wholly
successful on the merits or otherwise with respect to any such claim, action,
suit or proceeding or with respect to any claim, issue or matter therein,
shall be indemnified as of right against all expenses in connection therewith
or resulting therefrom.
The Registrant's By-Laws provide for indemnification of the Registrant's
officers and directors against all liabilities (including reasonable costs, ex-
penses, attorneys' fees, obligations for payment in settlement and final
judgment) incurred by or imposed upon them in the preparation, conduct or com-
promise of any actual or threatened action, suit, or proceeding, whether civil,
criminal or administrative, including any appeals therefrom and any collateral
proceedings in which they shall be involved by reason of any action or omission
by them in their capacity as a director or officer of the Registrant, or of any
other corporation which they serve as a director or officer at the request of
the Registrant, whether or not such person is a director or officer at the time
such liabilities are incurred or any such action, suit or proceeding is com-
menced against them. The indemnification provided by the By-Laws does not ex-
tend, however, to certain situations involving misconduct, willful misfeasance,
bad faith or gross negligence.
The Registrant maintains an insurance policy insuring its directors and
officers against liability for certain acts and omissions while acting in their
official capacities.
Various matters of litigation which may result in claims for indemnifi-
cation by certain directors and officers of Registrant are presently pending
and are more fully described in Registrant's Annual Report on Form 10-K for
the fiscal year ended April 30, 1995 (see "Item 3. Legal Proceedings"),
Registrant's Current Report on Form 8-K dated July 27, 1995 (see "Item 5.
Other Events"), and the Quarterly Reports on Forms 10-Q dated July 31, 1995,
October 31, 1995 and January 31, 1996 (see "Part II - Item 1. Legal
Proceedings"), all of which reports are incorporated herein by reference.
Except as described in such reports, there is no other litigation pending, and
neither Registrant nor any of its directors know of any threatened litigation
which might result in a claim for indemnification by any director or officer.
Item 7. EXEMPTION FROM REGISTRATION CLAIMED
With respect to restricted securities issued under any of the Plans and to
be reoffered or resold pursuant to this Registration Statement, Registrant
relied on the exemption from registration contained in Section 4(2) of the
Securities Act of 1933, as amended, in that the issuance of such restricted
securities involved a transaction by an issuer not involving a public offering.
15
Item 8. EXHIBITS
Exhibit
Number Description of Document
4.1 Certificate of Incorporation of Registrant filed with the
Secretary of State of Delaware on May 23, 1968 (filed as
Exhibit 3.1 of Registrant's registration statement on Form
S-1 (File No. 2-29609), and incorporated herein by reference).
4.2 Amendment to Certificate of Incorporation of Registrant filed
with the Secretary of State of Delaware on March 27, 1981 (filed
as Exhibit 3.2 of Registrant's registration statement on Form
S-1 (File No. 2-71727), and incorporated herein by reference).
4.3 Amendment to Certificate of Incorporation of Registrant filed
with the Secretary of State of Delaware on October 26, 1984
(filed as Exhibit 27 of Registrant's Form 10-K for the year
ended April 30, 1985 and incorporated herein by reference).
4.4 Amendment to Certificate of Incorporation of Registrant filed
with the Secretary of State of Delaware on October 22, 1986
(filed as Exhibit 42 of Registrant's Form 10-K for the year
ended April 30, 1987 and incorporated herein by reference).
4.5 Amended and Restated Certificate of Incorporation of Registrant
filed with the Secretary of State of Delaware on
October 26, 1987 (filed as Exhibit 45 of Registrant's Form
10-K for the year ended April 30, 1990 and incorporated herein
by reference).
4.6 Amendment to Certificate of Incorporation of Registrant filed
with the Secretary of State of Delaware on November 2, 1989
(filed as Exhibit 59 of Registrant's Form 10-K for the year
ended April 30, 1990 and incorporated herein by reference).
4.7 Bylaws of Registrant (filed as Exhibit 3.3 to Registrant's
Form 10-K for the year ended April 30, 1981, and incorporated
herein by reference).
4.8 1982 Frequency Electronics, Inc. Incentive Stock Option Plan
(filed as Exhibit 25 of Registrant's Form 10-K for the year
ended April 30, 1982 and incorporated herein by reference).
4.9 1984 Frequency Electronics, Inc. Incentive Stock Option Plan
(filed as Exhibit 28 of Registrant's Form 10-K for the year
ended April 30, 1985 and incorporated herein by reference).
4.10 Frequency Electronics, Inc. 1987 Incentive Stock Option Plan
(filed as Exhibit 50 of Registrant's Form 10-K for the year
ended April 30, 1989 and incorporated herein by reference).
4.11 Frequency Electronics, Inc. Senior Executive Stock Option Plan
(filed as Exhibit 51 of Registrant's Form 10-K for the year
ended April 30, 1989 and incorporated herein by reference).
16
4.12 Frequency Electronics, Inc. Restricted Stock Plan.
4.13 Frequency Electronics, Inc. 1993 Nonstatutory Stock Option Plan.
5.1 Opinion of Law Offices of John L. Milling.
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Law Offices of John L. Milling (included in
Exhibit 5.1).
24.1 Powers of Attorney
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:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement
(or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a
fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement.
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply
if the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the Registrant
pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in this 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 amend-
ment any of the securities being registered which remain unsold at the termin-
ation 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 re-
lating 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.
17
(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, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdic-
tion 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.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Mitchel Field, County of Nassau, Town of Hempstead, State of
New York, on the 24th day of July, 1996.
FREQUENCY ELECTRONICS, INC.
By /s/ Joseph P. Franklin
JOSEPH P. FRANKLIN, Chairman of the Board,
Chief Executive and Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this Regis-
tration Statement has been signed by the following persons in the capacities
and on the date indicated.
Signature Title Date
/s/ Joseph P. Franklin Chairman of the Board, July 24, 1996
JOSEPH P. FRANKLIN Chief Executive Officer,
Chief Financial Officer,
and Director
/s/ John Ho Director and Vice President July 24, 1996
JOHN HO
/s/ Joel Girsky Director July 24, 1996
JOEL GIRSKY
/s/ E. John Rosenwald, Jr. Director July 24, 1996
E. JOHN ROSENWALD, JR.
18
INDEX TO EXHIBITS
Exhibit
Number Description of Documents Page
4.1 Certificate of Incorporation of Registrant filed with
the Secretary of State of Delaware on May 23, 1968
(filed as Exhibit 3.1 of Registrant's registration
statement on Form S-1 (File No. 2-29609), and incor-
porated herein by reference).
4.2 Amendment to Certificate of Incorporation of Registrant
filed with the Secretary of State of Delaware on March
27, 1981 (filed as Exhibit 3.2 of Registrant's regis-
tration statement on Form S-1 (File No. 2-71727), and
incorporated herein by reference).
4.3 Amendment to Certificate of Incorporation of Registrant
filed with the Secretary of State of Delaware on October
26, 1984 (filed as Exhibit 27 of Registrant's Form 10-K
for the year ended April 30,1985 and incorporated herein
by reference).
4.4 Amendment to Certificate of Incorporation of Registrant
filed with the Secretary of State of Delaware on October
22, 1986 (filed as Exhibit 42 of Registrant's Form 10-K
for the year ended April 30, 1987 and incorporated herein
by reference).
4.5 Amended and Restated Certificate of Incorporation of Regis-
trant filed with the Secretary of State of Delaware on
October 26, 1987 (filed as Exhibit 45 of Registrant's
Form 10-K for the year ended April 30, 1990 and incor-
porated herein by reference).
4.6 Amendment to Certificate of Incorporation of Registrant
filed with the Secretary of State of Delaware on November
2, 1989 (filed as Exhibit 59 of Registrant's Form 10-K
for the year ended April 30, 1990 and incorporated herein
by reference).
4.7 Bylaws of Registrant (filed as Exhibit 3.3 to Registrant's
Form 10-K for the year ended April 30, 1981, and incorporated
herein by reference).
4.8 1982 Frequency Electronics, Inc. Incentive Stock Option
Plan (filed as Exhibit 25 of Registrant's Form 10-K for
the year ended April 30, 1982 and incorporated herein by
reference).
4.9 1984 Frequency Electronics, Inc. Incentive Stock Option
Plan (filed as Exhibit 28 of Registrant's Form 10-K for
the year ended April 30, 1985 and incorporated herein by
reference).
4.10 Frequency Electronics, Inc. 1987 Incentive Stock Option
Plan (filed as Exhibit 50 of Registrant's Form 10-K for
the year ended April 30, 1989 and incorporated herein by
reference).
19
4.11 Frequency Electronics, Inc. Senior Executive Stock Option
Plan (filed as Exhibit 51 of Registrant's Form 10-K for
the year ended April 30, 1989 and incorporated herein
by reference.)
4.12 Frequency Electronics, Inc. Restricted Stock . . . . . 21
4.13 Frequency Electronics, Inc. 1993 Nonstatutory
Stock Option Plan. . . . . . . . . . . . . . . . . . 33
5.1 Opinion of Law Offices of John L. Milling. . . . . . . 41
23.1 Consent of Coopers & Lybrand L.L.P.. . . . . . . . . . 43
23.2 Consent of Law Offices of John L. Milling
(included in Exhibit 5.1)
24.1 Powers of Attorney . . . . . . . . . . . . . . . . . . 45
20
EXHIBIT 4.12
21
EXHIBIT 4.12
FREQUENCY ELECTRONICS, INC.
RESTRICTED STOCK PLAN
(Limited to 250,000 Shares)
ARTICLE 1
DEFINITIONS
As used herein, the following terms have the meanings hereinafter set
forth unless the context clearly indicates to the contrary:
(a) "Administrators" shall mean the Board or the Committee, as applicable.
(b) "Board" shall mean the Board of Directors of FEI.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(d) "Committee" shall mean the Restricted Stock Plan Committee of the
Board.
(e) "Common Stock" shall mean the $ 1.00 par value common stock of the
Company.
(f) "Company" shall mean Frequency Electronics, Inc. and its Subsidiaries.
(g) "Discharge for Cause" or "Cause" shall mean (i) such acts or conduct
on the part of the Participant which is contrary to the interests of the
Company, as determined by the Board; (ii) the occurrence of an event described
in Section 6.8(b) of this Plan; (iii) the commission of any crime or act of
material dishonesty by the Participant as against the Company; or (iv) the
commission of any willful, malicious, grossly negligent or reckless act by
the Participant which is deemed, in the reasonable judgment of the Board,
detrimental to the business, prospects or reputation of the Company.
Notwithstanding anything to the contrary contained herein, however, the term
"Discharge for Cause" or "Cause" shall not include a determination by a Board
constituted at any time following a Change of Control of the Company
(as defined below).
(h) "Disinterested" shall mean an individual who is not, and has not been
for one (l) year, eligible to receive benefits under the Plan and as defined in
Section 16(b) of the Exchange Act.
(i) "Effective Date of the Plan" shall be as defined in Article 2.3 hereof.
(j) "Escrow agent" shall mean any escrow agent or its successor designated
by the Administrators to act under the provisions of the Escrow Agreement.
(k) "Escrow Agreement" shall mean the form of escrow agreement as deter-
mined from time to time by the Administrators.
(l) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(m) "Fair Market Value" shall mean the average of the highest price and
the lowest price per share at which the Stock is sold in the regular way on
the American Stock Exchange (or any other exchange on which
22
EXHIBIT 4.12
it may be listed) on the day Restricted Stock is purchased hereunder, or in
the absence of any reported sales on such day, the first preceding day on
which there were such sales, provided such price shall not be less than the
Par Value of the Stock.
(n) "FEI" shall mean Frequency Electronics, Inc.
(o) "Key Management Employees" shall mean officers and directors who are
also employees of the Company, all employees of the Company holding the pos-
ition of project manager, all positions above such level, and those key or
outstanding employees including, without limitation, new employees of the
Company otherwise, from time to time, designated by the Administrators.
(p) "Operating Profits" are to be calculated by subtracting cost of sales
and selling and administrative expenses from net sales, and shall be determined
from the certified financial statements as prepared by the Company's indepen-
dent auditors.
(q) "Par Value" shall mean the value given to the Stock of FEI in its
Certificate of Incorporation or by resolution of its Board pursuant to its
Certificate of Incorporation.
(r) "Participant" shall mean a person who has purchased Restricted Stock
pursuant to the provisions hereof and which has not been forfeited under the
Plan.
(s) "Plan" shall mean the Frequency Electronics, Inc. Restricted Stock
Plan, the terms of which are set forth herein.
(t) "Restricted Stock" shall mean Common Stock delivered to or held by a
Participant which is subject to the restrictions described in Section 6.8 and
any new, additional or different stock or securities of FEI or some other cor-
poration, which a Participant may become entitled to receive with respect to
such shares by virtue of a stock split or stock dividend or any other change in
the corporate or capital structure of FEI. Shares of Restricted Stock de-
livered pursuant to the Plan, at the election of the Administrators, may
consist either in whole or in part of FEI's authorized and unissued shares
or FEI's authorized and issued shares thereafter re-acquired by FEI and held
in its treasury, as may from time to time, be determined by the Board.
(u) "Securities Act" shall mean the Securities Act of 1933, as amended.
(v) "Stock" shall mean the Common Stock of FEI or, in the event that the
outstanding shares of Stock are hereafter changed into or exchanged for shares
of a different stock or securities of FEI or some other corporation, any new,
additional or different stock or securities of FEI or some other corporation.
Shares of Stock delivered pursuant to the Plan at the election of the ad-
ministrators, may consist either in whole or in part of FEI's authorized and
unissued shares or FEI's authorized and issued shares thereafter re-acquired
by FEI, and held in its treasury, as may from time to time, be determined by
the Board.
(w) "Stock Purchase Agreement " shall mean the form of stock purchase
agreement as determined from time to time by the Administrators.
(x) "Subsidiary" shall mean any corporation, the majority of the outstand-
ing capital stock of which is owned, directly or indirectly, by the Company,
and as defined in Section 425 of the Code.
23
EXHIBIT 4.12
ARTICLE II
THE PLAN
2.1. Name. This Plan shall be known as the "Frequency Electronics, Inc.
Restricted Stock Plan."
2.2 Purpose. The purpose of the Plan is to advance the interests of the
Company and its stockholders by affording to Key Management Employees an
opportunity to acquire or increase their proprietary interest in the Company by
purchasing Restricted Stock under the terms set forth herein. This plan is
intended to serve as an employment incentive through which the Company seeks to
motivate, retain, and attract those highly competent individuals upon whose
judgment, initiative, leadership, and continued efforts the success of the
Company in large measure depends.
2.3. Effective Date. The Plan shall become effective upon the earlier of
the date of its adoption by the Board or its approval by the holders of a
majority of the shares of Common Stock of FEI represented at the next annual or
special meeting of the stockholders of FEI.
ARTICLE III
PARTICIPANTS
Any Key Management Employee of the Company shall be eligible to par-
ticipate in the Plan. Members of the Committee who are also Key Management
Employees shall not be eligible to purchase Restricted Stock under the Plan.
The Administrators may select any eligible Key Management Employee who may
purchase Restricted Stock in accordance with such determinations as the Ad-
ministrators from time to time in their sole discretion shall make. The Plan
does not entitle an eligible Key Management Employee to purchase Restricted
Stock unless such employee is selected by the Administrators. A Key Management
Employee who has been eligible to and/or selected by the Administrators to
purchase Restricted Stock in one year may not necessarily be eligible and/or
selected to purchase Restricted Stock in subsequent years. The Administrators
may, before they approve the purchase of Restricted Stock or as a condition of
such approval, require the Participant by whom the purchase is to be made, to
enter into an Escrow Agreement and/or Stock Purchase Agreement with FEI
containing such terms and conditions as the Administrators may prescribe.
Nothing contained in the Plan shall give any employee the right to be retained
in the employ of the Company or affect the right of the Company to dismiss
any employee. The adoption of the Plan shall not constitute a contract bet-
ween the Company and any employee.
ARTICLE IV
ADMINISTRATION
4.1. Duties and Powers of Administrators. The Plan shall be administered
by the Committee. In the absence of the existence of the Committee, the Plan
shall be administered by the Board. The Committee shall be designated by the
Board, need not be composed of Board members, and shall be composed of such
number of persons as the Board shall from time to time determine, but at least
three, all of whom shall be Disinterested. Vacancies on the Committee shall be
filled by the Board and the Board may replace members of the Committee from
time to time. The initial Committee shall consist of E. John Rosenwald, Jr.,
Joel Girsky and Arnold S. Schickler. The whole Board may designate one or
more individuals as alternate members of the Committee, who may replace any
absent or disqualified member at any meeting of the Committee, such
24
Exhibit 4.12
alternate member to be Disinterested. The resolution of the Board designating
or replacing the Committee or any of its members, filling vacancies and de-
signating alternates shall be adopted by a majority of the whole Board. The
Committee shall elect a Chairman and a Secretary; until such time, the initial
Chairman shall be E. John Rosenwald, Jr. and the initial Secretary shall be
Joel Girsky, each of whom shall serve until they resign or are replaced.
Meetings may be called by any member of the Administrators, to be held at the
principal offices of the Company or such other places as designated by the
Chairman. Actions of the Committee may be taken without a meeting, providing
such actions are specified in writing in accordance with Section 4.2 hereof.
Subject to the express provisions of the Plan, the Administrators shall
have the sole discretion and authority to determine (a) from among eligible Key
Management Employees those who may purchase Restricted Stock, (b) the time or
times at which Restricted Stock may be purchased, (c) the number of shares of
Restricted Stock which may be purchased, (d) the duration of the restrictions
on the Restricted Stock, (e) the manner and type of restrictions to be imposed
on the Restricted Stock, and (f) the valuation of the consideration to be paid
for the Restricted Stock, provided that the consideration may not be less than
the Par Value thereof (all of which need not be the same for each grant here-
under). Subject to the express provisions of the Plan, the Administrators
shall also have the sole discretion and complete authority to interpret the
Plan, to prescribe, amend, and rescind rules and regulations relating to it,
to determine the details and provisions of each Escrow Agreement and Stock
Purchase Agreement, and to take all such other and further steps as may or
shall be necessary or advisable to administer the Plan. If the Plan is ad-
ministered by the Committee, it shall report all action taken by it to the
Board, and report to the Board the names of those Key Management Employees who
have purchased Restricted Stock, the number of shares of Restricted Stock
purchased, the duration of the restrictions, the applicable prices, the re-
strictions on the Stock, the valuation of the consideration received therefor,
and submit to the Board a copy of any Escrow Agreement or Stock Purchase
Agreement executed or to be executed by each Participant.
The Administrators may employ such legal counsel, consultants and agents
as they may deem desirable for the administration of the Plan and may rely
upon any opinion received from any such counsel or consultant. None of the
Administrators shall be liable for any action or determination made in good
faith with respect to the Plan or any Restricted Stock purchased under it and
the Company shall indemnify and hold harmless each Administrator against any
liability, cost or expense (including reasonable counsel fees) arising out of
any act or omission to act in connection with the Plan, unless arising out of
such person's own fraud, bad faith or willful misconduct.
4.2. Majority Rule. The presence of two-thirds of the Committee, convened
with or without alternates shall constitute a quorum, and any action taken by a
majority present at a meeting at which a quorum is present or any action taken
without a meeting evidenced by a writing executed by a majority of all of the
Committee, shallconstitute the action of all of the Committee. Any resolution
adopted by the Board in accordance with the by-laws of FEI and provided a quorum
is present in accordance with such by-laws, shall be deemed sufficient for pur-
poses of taking any action required to be taken by the Board hereunder in-
cluding, without limitation, ratification of any acts undertaken by the
Committee.
4.3. Company Assistance. The Company shall supply full and timely infor-
mation to the Administrators on all matters relating to Key Management
Employees, their employment, death, retirement, disability or other termination
of employment, and such other pertinent facts as the Administrators may re-
quire. The Company shall furnish the Administrators with such clerical and
other assistance as is necessary in the performance of their duties.
25
Exhibit 4.12
ARTICLE V
SHARES OF RESTRICTED STOCK SUBJECT TO PLAN
5.1. Limitations. Subject to adjustment pursuant to the provisions of
Section 5.3 hereof, the number of shares of Restricted Stock which may be
issued and sold hereunder shall not exceed two hundred fifty thousand (250,000)
shares. Such shares may consist either in whole or in part, of FEI's
authorized and unissued shares or FEI's authorized and issued shares thereafter
re-acquired by FEI and held in its treasury, as may from time to time, be
determined by the Board. Any of such shares which remain unsold at the ter-
mination of the Plan shall cease to be reserved for the purposes of the Plan.
5.2. Stockholder Approval. FEI may, but shall not be required to, issue
or deliver any certificate for restricted stock which may be purchased under
the Plan, until the Plan has been approved by a resolution adopted by the
holders of a majority of the outstanding shares of Stock of FEI at an annual
or special meeting of stockholders held within twelve (12) months from the date
the Plan is approved by the Board, and if such approval is not obtained, FEI
may determine that Restricted Stock previously purchased pursuant to the Plan
shall be void and thereupon FEI shall have no liability whatsoever in con-
nection with any such Restricted Stock other than to return the purchase price
paid therefor.
5.3. Antidilution. In the event that the Stock hereafter are changed into
or exchanged for a different number or kind of shares or other securities of
FEI or of another corporation by reason of merger, consolidation, or other
reorganization, recapitalization, reclassification, combination of shares,
stock split-up, or stock dividend, then:
(a) The aggregate number and kind of shares in the Plan shall be
adjusted appropriately;
(b) The number of shares of Restricted Stock purchased by a Participant
pursuant hereto shall be adjusted appropriately, both as to the number of sub-
ject shares and the price;
(c) Such new or additional or different shares or securities which are
distributed to a Participant, in his capacity as the owner of Restricted Stock
purchased hereunder, shall be legended in accordance with Section 6.8(d) hereof
and shall be subject to all of the conditions and restrictions applicable to
Restricted Stock issued as provided herein.
Any adjustments required hereunder and the manner of application of the
foregoing provisions shall be determined solely by the Administrators, and any
such adjustment may provide for the elimination of fractional share interests.
ARTICLE VI
RESTRICTED STOCK PURCHASE
6.1. Restricted Stock Purchase. All Restricted Stock purchased pursuant
hereto shall be authorized by minutes of a meeting or the written consent of
the Administrators, which shall specify the terms and provisions to be con-
tained in the Stock Purchase Agreement and/or the Escrow Agreement, in accor-
dance with the Plan. The Escrow Agreement and the Stock Purchase Agreement
shall be executed by an authorized officer of FEI.
26
Exhibit 4.12
6.2. Restricted Stock Price. The per share Restricted Stock price shall
be determined by the Administrators, but the per share price shall not be less
than the Par Value of the Restricted Stock on the date the Restricted Stock is
purchased.
The purchase price for the Restricted Stock may be paid in such form and
in such manner as the Administrators may determine, and may include payment
in whole or in part with Stock of FEI (valued at the Fair Market Value of
said Stock on the date of purchase) or in services theretofore performed by
the Key Management Employee, valued by the Administrators in their sole dis-
cretion. Such valuation shall be reflected by minutes of a meeting or the
written consent of the Administrators. Any Stock used as payment for the pur-
chase price shall be delivered to FEI, endorsed for transfer to FEI with the
endorser's signature guaranteed or duly notarized, together with payment for
all applicable transfer taxes thereon, and all services in payment of the pur-
chase price shall be fully performed prior to issuance of any Restricted Stock.
6.3. Section 83(b) Election. A Participant who files an election with the
Internal Revenue Service to include the fair market value of any Restricted
Stock in gross income while it is still subject to restrictions shall promptly
furnish FEI with a copy of such election together with information as to the
amount of any federal, state, local or other taxes required to be withheld to
enable the Company to claim an income tax deduction with respect to such
election.
6.4. Withholding. All Restricted Stock purchased pursuant hereto and
dividends on such Restricted Stock shall be subject to withholding as required
by applicable federal, state and local laws, and the Administrators may make
such arrangements for the payment of any withholding taxes on Restricted Stock
purchased pursuant hereto as they deem satisfactory, including but not limited
to (i) reducing the number of shares of Restricted Stock otherwise deliverable,
based upon their Fair Market Value, to permit deduction of the amount of any
such withholding taxes from the amount which may otherwise be purchased under
the Plan, (ii) deducting the amount required to be withheld from salary or any
other amount then or thereafter payable to a Participant, and (iii) requiring a
Participant to pay to FEI the amount required to be withheld as a condition of
releasing the Restricted Stock and any other distributions related thereto.
6.5. Intentionally Omitted.
6.6. Nontransferability of Restricted Stock. Unless otherwise permitted
hereunder, no Restricted Stock shall be transferred by a Participant otherwise
than by Last Will and Testament or the laws of Descent and Distribution.
At such time that a Participant purchases Restricted Stock pursuant here-
to, the Participant shall represent to FEI in writing that he or she will hold
the Restricted Stock for his or her own account for investment only and not
with a view to distribution or resale and that the Participant will not make
any sale, transfer or other disposition of any shares of Restricted Stock pur-
chased except pursuant to registration under the Securities Act or pursuant to
an opinion of counsel satisfactory in form and substance to the Administrators,
that the sale, transfer or other disposition may be made without registration.
6.7. No Alienation of Benefits. Except insofar as may otherwise be re-
quired by law, no Restricted Stock held at any time pursuant to an Escrow
Agreement shall be subject in any manner to alienation by anticipation, sale,
transfer, assignment, bankruptcy, pledge, attachment, charge, or encumbrance
of any kind nor in any manner be subject to the debts or liabilities of any
person and any attempt to so alienate or subject any such amount, whether
presently or thereafter payable, shall be void. If any person shall attempt
to, or shall alienate, sell, transfer, assign, pledge, attach, charge, or
otherwise encumber any Restricted Stock purchased under the Plan, or any part
thereof, or if by reason of his of her bankruptcy or other event happening at
any such time such amount would be made subject to his debts or liabilities
or would otherwise not be enjoyed by him or her, then the Administrators, if
they so elect, may direct that such Restricted Stock be withheld and that the
same or any part thereof be paid or applied to or for the benefit of such
person, his or her spouse, children or other dependents, or any of them, in
such manner and proportion as the Administrators may deem proper, in their
sole discretion.
27
Exhibit 4.12
6.8. Restrictions Imposed. The Administrators may impose any or all of
the restrictions, enumerated in subsections (a), (b) and (c) hereof or such
other restrictions as provided in subsection (e) below, with respect to any
Restricted Stock purchased hereunder:
(a) If a Participant's employment with the Company shall be terminated by
the Company based upon Discharge For Cause, Cause or without Cause in accor-
dance with applicable Company policies, or by the act of the Participant,
within three (3) years from the date Restricted Stock shall have been pur-
chased hereunder, FEI shall have the option for a period of sixty (60) days
after such termination of employment, to buy any or all of the shares purchased
by such terminated employee for a sum equal to the consideration paid by the
terminated employee to FEI to acquire such shares ("Forfeiture Price"). The
provisions of this paragraph shall automatically terminate and the restrictions
shall be removed in accordance with Section 6.10 hereof, immediately following
a "Change of Control of the Company". (A "Change of Control of the Company"
shall be deemed to have occurred if and when (i) any person, other than Martin
B. Bloch, as such term is used in Sections 13(d) and 14(d)(ii) of the Exchange
Act, is or becomes a beneficial owner, directly or indirectly, of securities of
FEI representing fifteen percent (15%) or more of the combined voting power of
FEI's then outstanding securities or (ii) a change in the composition of the
Board so that a majority of the members of the Board immediately prior to such
change are no longer members of the Board after such change which, in the sole
discretion of the Board immediately prior to such change of control or change
in composition of the Board, is determined to be a change hostile to, and not
in the best interests of, the stockholders of FEI.)
(b) If a Participant shall, within three (3) years from the date Re-
stricted Stock shall have been purchased, directly or indirectly, own, manage,
operate, control, be employed by, or participate in, as a partner, joint ven-
turer, employee, agent, salesman, officer, director, five percent (5%) share-
holder, or be connected in any manner with the ownership, management, oper-
ation, control, employment or participation as a partner, joint venturer, em-
ployee, agent, salesman, officer, director, or five percent (5%) shareholder,
of any business similar to the type of business conducted by the Company at
that time, as determined in the sole discretion of the Administrators, the
Restricted Stock shall be forfeited to FEI and all rights thereunder shall
cease. The provisions of this paragraph shall automatically terminate and the
restrictions shall be removed in accordance with Section 6.10 hereof,
immediately following a Change of Control of the Company or if the Participant
is terminated by the Company without Cause.
(c) (i) If Operating Profits do not equal or exceed the target estab-
lished by the Administrators, in their sole discretion, for the Company for
each of the three (3) years following the purchase by the Participant of
Restricted Stock ("Minimum Operating Profits"), which Minimum Operating Profits
need not be the same for all Participants, FEI shall have the option for a
period of sixty (60) days after the date on which the certified financial
statements for such third year have been finally prepared and delivered to the
Company by the Company's independent auditors, to purchase a percentage of
such Restricted Stock as determined by the Administrators, in their sole
discretion, for a sum equal to the Forfeiture Price for the proportionate
number of shares of Restricted Stock so purchased; (ii) If Operating Profits
equal or exceed the Minimum Operating Profits established by the Administra-
tors for each of the three (3) years following the purchase by the Participant
of Restricted Stock, the restriction on such Restricted Stock created by this
paragraph shall automatically terminate and the restrictions shall be removed
in accordance with Section 6.10 hereof. The provisions of this paragraph shall
automatically terminate and the restrictions shall be removed in accordance
with Section 6.10 hereof, immediately following a Change of Control of the
Company.
(d) Stock certificates evidencing Restricted Stock purchased by a
Participant shall be issued and delivered in the sole name of the Participant
and each such certificate shall bear the following legends:
(i) "The shares of Frequency Electronics, Inc. $ 1.00 par value common
stock evidenced by this certificate are subject to repurchase by Frequency
Electronics, Inc., and such shares may not be sold or otherwise transferred,
pledged or hypothecated except pursuant to the provisions of the Escrow Agree-
ment
28
Exhibit 4.12
and/or Stock Purchase Agreement by and between the Escrow Agent, Frequency
Electronics, Inc. and the registered owner of such shares."; and
(ii) "This stock certificate may not be sold, transferred, pledged or
hypothecated unless it has first been registered under the Securities Act of
1933, as amended, or unless counsel for Frequency Electronics, Inc. has given
an opinion that registration under said Act is not required, except that after
a Change of Control of the Company, an opinion of counsel that registration
under said Act is not required, may be provided by counsel independent of
Frequency Electronics, Inc. These shares are subject to the terms of an
Escrow Agreement and/or Stock Purchase Agreement with the Escrow Agent,
Frequency Electronics, Inc. and the registered owner of such shares."
No such share may be sold, transferred, or otherwise alienated or hypo-
thecated so long as the certificate evidencing such share bears the legends
provided above.
The foregoing provisions in subsection (d) hereof shall not be effective
if and to the extent that the shares of Stock delivered under the Plan are
covered by an effective and current registration statement under the
Securities Act, or if and so long as the Administrators determine that
application of such provisions is no longer required. In making such deter-
mination, the Administrators shall rely upon an opinion of counsel for the
Company, except that after a Change of Control of the Company, an opinion of
counsel that registration under the Securities Act is not required, may be
provided by counsel independent of the Company.
(e) The Administrators may impose some or all of the restrictions set
forth in this Section and/or such other restrictions on any shares sold pur-
suant to the Plan as they may deem advisable in their sole discretion,
including without limitation, restrictions under the Securities Act, under
the requirements of any stock exchange upon which such shares or shares of
same class are then listed, and under any state or local blue sky or securities
laws applicable to such shares.
(f) In the event FEI exercises its sixty (60) day option with respect to
any shares, the Company may set off the Forfeiture Price from any obligation or
liability to a Participant, whether as compensation or otherwise.
6.9. Rights of Stockholder. Subject to the provisions of Section 6.11
hereof, a certificate or certificates for all shares of Restricted Stock re-
gistered in the name of a Participant shall be delivered to him or her as soon
as reasonably practicable and he or she shall thereupon be a stockholder and
have all the rights of a stockholder with respect to such shares, including the
right to vote and receive all dividends or other distributions made or paid
with respect to such shares; provided, that such shares of Restricted Stock,
and any new, additional or different securities the Participant may become en-
titled to receive with respect to such shares by virtue of a stock split or
stock dividend or any other change in the corporate or capital structure of
FEI, shall be subject to the restrictions theretofore imposed on the Restricted
Stock.
6.10. Removal of Restrictions. (a) If (i) a Participant shall die, re-
tire, or become permanently and totally disabled, as determined in accordance
with applicable Company personnel policies, or (ii) there is a Change ofControl
of the Company, at any time within three (3) years from the date Restricted
Stock shall have been purchased hereunder, the events of forfeiture specified
in Section 6.8 or as otherwise determined by the Administrators shall ter-
minate, and upon surrender and presentation to FEI of the legended certificates
evidencing such shares, replacement certificates shall be issued and delivered
to the Participant, free from the legend provided for in Section 6.8(d)(i)
hereof or any other restrictions on the sale or other transfer of such shares,
pursuant to the Plan, but legended in accordance with Section 6.8(d)(ii)
hereof, and such shares shall, nonetheless, remain subject to the Securities
Act and the Exchange Act, unless an opinion of counsel is provided in accor-
dance with Section 6.8(d).
29
Exhibit 4.12
(b) If FEI chooses not to exercise its sixty (60) day option with respect
to any shares or such sixty (60) day option period has expired, pursuant to
Section 6.8(a) or (c), the events of forfeiture specified in Section 6.8(a) and
(c) shall terminate, and upon surrender and presentation to FEI of the legended
certificates evidencing such shares, replacement certificates shall be issued
and delivered to the Participant, free from the legend provided for in Section
6.8(d)(i) hereof or any other restrictions on the sale or transfer of such
shares, pursuant to the Plan, but legended in accordance with Section
6.8(d)(ii) hereof, and such shares shall, nonetheless, remain subject to the
Securities Act and the Exchange Act, unless an opinion of counsel is provided
in accordance with Section 6.8(d).
(c) If a Participant shall not have violated the provisions of Section
6.8(b) of the Plan within three (3) years from the date Restricted Stock shall
have been purchased hereunder, the events of forfeiture specified in Section
6.8(b) shall terminate, and upon surrender and presentation to FEI of the
legended certificates evidencing such shares, replacement certificates shall
be issued and delivered to the Participant, free from the legend provided for
in Section 6.8(d)(i) hereof or any other restrictions on the sale or transfer
of such shares, pursuant to the Plan, but legended in accordance with Section
6.8(d)(ii) hereof, and such shares shall, nonetheless, remain subject to the
Securities Act and the Exchange Act, unless an opinion of counsel is provided
in accordance with Section 6.8(d).
6.11. Escrow. In order to enforce the restrictions imposed upon shares
issued under the Plan, the Administrators may require any Participant to de-
posit with the Escrow Agent all certificates for Restricted Stock together
with stock powers, appropriately endorsed in blank, and to enter into an
Escrow Agreement providing that the certificates representing shares issued
pursuant to the Plan shall remain in the physical custody of the Escrow Agent
until any or all of the restrictions imposed pursuant to the Plan have
terminated.
ARTICLE VII
STOCK CERTIFICATES
FEI may, but shall not be required to, issue or deliver any certificate
for shares of Restricted Stock purchased hereunder or any portion thereof,
prior to fulfillment of all of the following conditions:
(a) The admission of such shares to listing on all stock exchanges on
which the Stock is then listed;
(b) The completion of any registration or other qualification of such
shares under any federal or state law or under the rules or regulations of the
Securities and Exchange Commission or any other governmental regulatory body,
which the Administrators shall in their sole discretion deem necessary or
advisable;
(c) The obtaining of any approval or other clearance from any federal or
state governmental agency which the Administrators shall in their sole dis-
cretion determine to be necessary or advisable;
(d) Compliance with all terms and provisions of the Plan, the Stock
Purchase Agreement and the Escrow Agreement;
(e) The lapse of such reasonable period of time following the purchase of
the Restricted Stock as the Administrators from time to time in their sole dis-
cretion may establish for reasons of administrative convenience; and
30
Exhibit 4.12
(f) The approval of the Plan by the holders of a majority of the shares
of Stock of FEI represented at an annual or special meeting of the stockholders
of FEI; and
Nothing herein contained shall be construed as imposing any obligation on
the Administrators or the Company to undertake or complete any act with respect
to subparagraphs (a), (b) and (c) hereof.
ARTICLE VIII
TERMINATION, AMENDMENT, AND MODIFICATION OF PLAN
8.1. Termination. The Plan shall terminate and no further shares shall be
sold or issued hereunder on or after January 1, 1999, or such earlier date as
may be determined by the Administrators. The termination of the Plan, however,
shall not effect any restrictions previously imposed on shares issued pursuant
to the Plan.
8.2. Amendment and modification. The Board may at any time, upon recom-
mendation of the Administrators, terminate, and may at any time and from time
to time and in any respect amend or modify, the Plan; provided, that no such
action of the Board without approval of the stockholders of FEI may:
(a) Increase the total number of shares of Stock subject to the Plan
except as contemplated in Section 5.3 hereof;
(b) Provide for a purchase price for the Restricted Stock of less than
the Par Value thereof;
(c) Change the manner for removal of the restrictions set forth in Sec-
tion 6.10 hereof; or
(d) Withdraw the administration of the Plan from the Administrators.
No termination, amendment, or modification of the Plan shall in any manner
affect any Stock Purchase Agreement or Escrow Agreement theretofore executed
pursuant to the Plan without the consent of the Participant.
ARTICLE IX
MISCELLANEOUS
9.1. Employment. Nothing in the Plan or in any Stock Purchase Agreement
relating hereto shall confer upon any employee the right to continue in the
employ of the Company.
9.2. Other compensation plans. The adoption of the Plan shall not affect
any other stock option or incentive or other compensation plans in effect for
the Company, nor shall the Plan preclude the Company from establishing any
other forms of incentive or other compensation plans for employees of the
Company.
9.3. Plan binding on successors. The Plan shall be binding upon the
successors and assigns of the Company.
9.4. Singular, plural, gender. Whenever used herein, nouns in the sin-
gular shall include the plural, and the masculine pronoun shall include the
feminine gender.
31
Exhibit 4.12
9.5. Headings, etc., no part of plan. Headings or Articles and Sections
hereof are inserted for convenience and reference and they constitute no part
of the Plan.
9.6 Unfunded Plan; Governing Law. The Plan is intended to constitute an
unfunded deferred compensation arrangement for a select group of management,
key or outstanding personnel.
I hereby certify that the foregoing Plan was duly approved by the Board
of Directors of Frequency Electronics, Inc. on February 22, 1989.
Executed as of this 19th day of June 1989.
/s/ Harry Newman
HARRY NEWMAN, Secretary
32
EXHIBIT 4.13
33
EXHIBIT 4.13
FREQUENCY ELECTRONICS, INC.
1993 NONSTATUTORY STOCK OPTION PLAN
SECTION 1. PURPOSE AND SCOPE OF PLAN
The purpose of this Plan is to advance the interests of the Company and
its stockholders by helping the Company obtain and retain the services of key
management employees, officers, and directors upon whose judgment, initiative,
and efforts the Company is substantially dependent, and to provide those
persons with further incentives to advance the interests of the Company. These
goals will be effectuated by granting Options to purchase stock to certain key
management employees and directors of the Company. Such Options are not
intended to qualify as Incentive Stock Options under Section 422A of the
Internal Revenue Code of 1986, as amended.
SECTION 2. CERTAIN DEFINITIONS
Unless the context otherwise requires, the following defined terms
(together with other capitalized terms defined elsewhere in this Plan) will
govern the construction of this Plan, and of any stock option agreements
entered into pursuant to this Plan:
a. "1933 Act" means the federal Securities Act of 1933, as amended;
b. "Board of Directors" means the Board of Directors of the Company;
c. "Cause" shall mean such acts or conduct on the part of an employee or
director which are contrary to the interests of the Company, as determined by
the Board.
d. "Change of Control" shall mean (i) an acquisition of the Company,
which in the sole discretion of the Board immediately prior to such acqui-
sition, is determined to be an acquisition hostile to, and not in the best
interests of, the stockholders of the Company, or (ii) an acquisition of fifty
percent (50%) or more of the combined voting power of the Company's then out-
standing securities by any person, as such term is used in Sections 13(d)
and 14(d)(ii) of the Securities Exchange Act of 1934, as amended (other than
Martin B. Bloch), or (iii) a change in the composition of the Board so that a
majority of the members of the Board immediately prior to such change of
control or change in composition of the Board, is determined to be a change
hostile to, and not in the best interests of, the stockholders of the Company.
e. "Code" means the Internal Revenue Code of 1986, as amended (refer-
ences herein to Sections of the Code are intended to refer to Sections of the
Code as enacted at the time of this Plan's adoption by the Board and as sub-
sequently amended, or to any substantially similar successor provisions of the
Code resulting from recodification, renumbering or otherwise);
f. "Committee" means the committee of three Disinterested Directors,
appointed by the Board pursuant to subsection 3(a), below, to administer and
interpret this Plan; provided that the term "Committee" will refer to the
Board during such times as no Committee is appointed by the Board;
g. "Common Stock" means shares of the Company's Common Stock, $1.00 par
value;
h. "Company" means Frequency Electronics, Inc. a Delaware corporation,
and/or its Subsidiaries;
34
Exhibit 4.13
i. "Disability" has the same meaning as "permanent and total dis-
ability," as defined in Section 22(e)(3) of the Code;
j. "Disinterested Director" means a member of the Board who has not
been, during the period of one year prior to his or her service as an admini-
strator of the Plan, and is not, during the period of such service, eligible
to be granted or awarded Options under this Plan or any similar plan of the
Company;
k. "Eligible Participant" means a person who, at a particular time, is
an employee, officer, or director of the Company or of any of its subsidiaries;
l. "Fair Market Value" means the closing price of the Common Stock, as
traded on the American Stock Exchange, on the Grant Date or, if there shall
have been no trades of the Common Stock on such Grant Date, then the closing
price of the Common Stock on the last date, prior to the Grant Date, when the
stock was traded;
m. "Grant Date" means the date on which the option is deemed to be
granted to the Optionee, as determined by the Committee.
n. "Option" means an Option granted pursuant to this Plan entitling the
option holder to acquire shares of Stock issued by the Company pursuant to the
valid exercise of the Option;
o. "Option Price" with respect to any particular Option means the ex-
ercise price at which the Optionee may acquire each share of the Option Stock
called for under such Option;
p. "Option Stock" means Stock issued or issuable by the Company pursuant
to the valid exercise of an Option;
q. "Optionee" means an Eligible Participant to whom Options are granted
hereunder, and any transferee thereof pursuant to a Transfer authorized under
this Plan;
r. "Plan" means this 1993 Nonstatutory Stock Option Plan of the Company;
s. "QDRO" has the same meaning as "qualified domestic relations order"
as defined in Section 414(p) of the Code;
t. "Stock Option Agreement" means an agreement between the Company and
an Optionee, in form and substance satisfactory to the Committee in its sole
discretion, consistent with this Plan;
u. "Subject to an Option," or words to similar effect, means issuable
pursuant to the exercise of an Option;
v. "Subsidiary" has the same meaning as "Subsidiary Corporation" as
defined in Section 424(f) of the Code;
w. "Transfer", with respect to Option Stock, includes, without
limitation, a voluntary or involuntary sale, assignment, transfer, conveyance,
pledge, hypothecation, encumbrance, disposal, loan, gift, attachment or levy of
such Option Stock, including without limitation an assignment for the benefit
of creditors of the Optionee, a transfer by operation of law, such as a trans-
fer by will or under the laws of descent and distribution, an execution of
judgment against the Option Stock or the acquisition of record or beneficial
ownership thereof by a lender or creditor, a transfer pursuant to a QDRO, or to
any decree of divorce, dissolution or separate maintenance, any property set-
tlement, any separation agreement or any other agreement with a spouse (except
for estate planning purposes) under which a part or all of the shares of
35
Exhibit 4.13
Option Stock are transferred or awarded to the spouse of the Optionee or are
required to be sold; or a transfer resulting from the filing by the Optionee
of a petition for relief, or the filing of an involuntary petition against
such Optionee, under the bankruptcy laws of the United States or of any other
nation.
SECTION 3. ADMINISTRATION OF PLAN
(a) This Plan shall be administered by the Nonstatutory Stock Option Com-
mittee of the Board ofDirectors of the Company. The Committee shall consist of
not less than three members of the Board of Directors.
(b) The Committee and the president of Frequency Electronics, Inc. (the
"President") shall each have full authority and discretion to determine, con-
sistent with the provisions of this Plan, the Eligible Participants to be
granted Options, the times at which Options shall be granted, the Option Price
of the shares subject to each Option (subject to Section 7 of this Plan), the
number of shares subject to each Option, the period during which each Option
becomes exercisable, and the terms to be set forth on each Option certificate.
The Committee also shall have full authority and discretion to adopt and revise
such rules and procedures as it shall deem necessary for the administration of
this Plan.
(c) The Committee's interpretation and construction of any provisions of
this Plan or any Option granted hereunder shall be final, conclusive, and
binding.
SECTION 4. ELIGIBILITY AND AWARD OF STOCK OPTIONS
(a) The Board of Directors, upon recommendation of the Committee or of
the President, may from time to time determine the Eligible Participants who
shall be granted Options under this Plan. An Eligible Participant who has
been granted an Option may be granted an additional Option or Options under
this Plan if the Committee shall so determine. The granting of an Option under
this Plan shall not affect any outstanding stock option previously granted
to a Optionee under this Plan or any other plan of the Company.
(b) Additional Options may be granted by the Board of Directors, upon
recommendation of the Committee, at any time and from time to time to new
Optionees, or to then Optionees, or to a greater or lesser number of Optionees,
and may include or exclude previous Optionees. Options granted at different
times need not contain similar provisions.
(c) Notwithstanding the provisions of subsections 4(a) and (b), above,
Options granted to an individual, not previously employed by the Company, as an
inducement essential to entering a contract of employment with the Company, may
not authorize the issuance of more than five percent (5%) of the Company's
issued and outstanding Common Stock.
SECTION 5. SHARES OF STOCK SUBJECT TO PLAN
Subject to the provisions of Section 13 of this Plan, the number of shares
that may be issued pursuant to the Options granted by the Committee under this
Plan shall not exceed two hundred fifty thousand (250,000) shares of the Common
Stock of the Company, provided however that the maximum number of shares that
may be issued pursuant to Options granted under this Plan shall not exceed: (i)
five percent (5%) of the total number of shares of the issued and outstanding
Common Stock in any one year or (ii) ten percent (10%) of the total number of
shares of the issued and outstanding Common Stock in any five-year period.
Such shares may be authorized and unissued shares or shares previously acquired
or to be acquired by the
36
Exhibit 4.13
Company and held in treasury. Any shares subject to an Option under this Plan
that expires for any reason or is terminated unexercised as to such shares may
again be subject to an Option under this Plan.
SECTION 6. STOCK OPTION AGREEMENTS
Options granted pursuant to this Plan shall be authorized by the Board of
Directors of this Company and shall be evidenced by such Stock Option Agree-
ments or other agreements, in such form as the Board of Directors, upon recom-
mendation of the Committee, shall from time to time approve. Such agreements
shall comply with and be subject to the terms and conditions of this Plan.
SECTION 7. OPTION PRICE
(a) Each Option shall state the number of shares to which it pertains and
shall state the Option Price, which shall not be less than one hundred percent
(100%) of the Fair Market Value of the Common Stock on the date the Option is
granted, but in no event shall such Option Price be less than the par value of
the Common Stock.
(b) The Option Price shall be payable in United States dollars upon the
exercise of the Option and may be paid in cash or by check, provided, however,
that the Committee, in its discretion, may permit a particular Optionee to pay
all or a portion of the Option Price, and/or the tax withholding liability set
forth in subsection 8(c), below, with respect to the exercise of an Option
either by surrendering shares of Common Stock already owned by such Optionee or
by withholding shares of Option Stock, provided that the Committee determines
that the fair market value of such surrendered Common Stock or withheld Option
Stock is equal to the corresponding portion of such Option Price and/or tax
withholding liability, as the case may be, to be paid for therewith.
(c) The Company may, at the sole discretion of the President and/or the
Committee, lend to an Optionee the full amount of the Option Price, or any por-
tion thereof, on such terms and conditions as the Company and the Optionee
shall agree.
(d) If the Committee permits an Optionee to pay any portion of the Option
Price and/or tax withholding liability with shares of Stock with respect to the
exercise of an Option (the "Underlying Option") as provided in subsection 7(b),
above, then the Committee, in its discretion, may grant to such Optionee (but
only if Optionee remains an Eligible Participant at that time) additional
Options, the number of shares of Option Stock called for thereunder to be equal
to all or a portion of the Stock so surrendered or withheld (a "Replacement
Option"). Each Replacement Option will be evidenced by an Option Agreement.
Unless otherwise set forth therein, each Replacement Option will be immediately
exercisable upon such grant (without any Vesting Period) and will be coter-
minous with the Underlying Option. The Committee, in its sole discretion, may
establish such other terms and conditions for Replacement Options as it deems
appropriate.
(e) The cash proceeds from the sales of Common Stock pursuant to the
exercise of Options are to be added to the general funds of the Company and
used for its corporate purposes.
SECTION 8. TERM AND EXERCISE OF OPTIONS
(a) Subject to the provisions of subsection 8(c) and Sections 11, 12, and
13, below, the terms of exercisability of each Option granted hereunder shall
be determined by the President and the Committee at their discretion.
37
Exhibit 4.13
(b) An Option may be exercised to the extent exercisable by: (i) giving
written notice of exercise to the Company, specifying the number of full shares
of Option Stock to be purchased and accompanied by full payment of the Option
Price thereof and the amount of withholding taxes pursuant to subsection 8(c),
below; and (ii) giving assurances satisfactory to the Company that the shares
of Option Stock to be purchased upon such exercise are being purchased for
investment and not with a view to resale in connection with any distribution
of such shares in violation of the 1933 Act; provided, however, that in the
event the Option Stock called for under the Option is registered under the
1933 Act, or in the event resale of such Option Stock without such registration
would otherwise be permissible, this second condition will be inoperative if,
in the opinion of counsel for the Company, such condition is not required under
the 1933 Act, or any other applicable law, regulation or rule of any govern-
mental agency.
(c) As a condition to the issuance of the shares of Option Stock upon
full or partial exercise of an Option granted under this Plan, the Committee,
in its discretion, may request that the Optionee pay to the Company in cash,
or in such other form as the Committee may determine, the amount of the Com-
pany's tax withholding liability required in connection with such exercise.
For purposes of this subsection 8(c), "tax withholding liability" will mean
all federal and state income taxes, social security tax, and any other taxes
applicable to the compensation income arising from the transaction required
by applicable law to be withheld by the Company.
SECTION 9. NONTRANSFERABILITY
All Options granted under this Plan shall be nontransferable by the
Optionee, otherwise than by will or the laws of descent and distribution, and
shall be exercisable during the Optionee's lifetime, only by him or her.
SECTION 10. REQUIREMENTS OF LAW
The granting of Options and the issuance of shares of Common Stock upon
the exercise of an Option shall be subject to all applicable laws, rules, and
regulations and shares shall not be issued except upon approval of proper
government agencies or stock exchanges as may be required.
SECTION 11. TERMINATION OF EMPLOYMENT
(a) If an Optionee shall cease to be employed by, or cease to serve as a
director of, the Company as a result of early retirement or retirement for age
or disability, all in accordance with applicable Company policies, all out-
standing Options held by such Optionee shall become immediately exercisable in
full and shall remain exercisable in full during the full term of the remaining
period of exercisability of such Option.
(b) Termination of an Optionee's employment or service by the Company for
Cause in accordance with applicable Company policies shall result in the im-
mediate cancellation of all outstanding Options held by such Optionee, whether
or not such Options are then exercisable as of the date of such termination,
unless the Board of Directors, in its discretion, shall determine otherwise.
(c) If an Optionee shall cease to be employed by, or serve with, the Com-
pany for any reason other than those set forth in subsections 11(a) and (b),
above, such Optionee may, but only within a period of 90 days beginning the day
following the date of such termination of employment, exercise his or her Op-
tion, to the extent that such Optionee was entitled to exercise it at the date
of such termination.
38
Exhibit 4.13
SECTION 12. DEATH OF OPTIONEE
In the event of the death of an Optionee while in the employ of the Com-
pany or its Subsidiaries, the Option theretofore granted shall be exercisable
only by the proper beneficiary within a period of one year after the date of
death and then only if and to the extent that the Optionee was entitled to
exercise it at the date of death. In the case of an Optionee who dies sub-
sequent to the termination of his or her employment or term of service with
the Company in accordance with subsections 11(a) or (c), such deceased Op-
tionee's legal heirs or estate shall have the right to exercise all outstanding
Options to the extent that such deceased Optionee was entitled to exercise them
at the date of his or her death.
SECTION 13. CHANGE IN CONTROL
In the event there shall be a Change in Control of the Company, all out-
standing Options theretofore granted under this Plan shall become immediately
exercisable and shall remain exercisable during the full term of the remaining
respective periods of exercisability of such Options.
SECTION 14. ADJUSTMENTS
In the event of any change in the number of outstanding shares of Common
Stock by reason of any stock dividend or split, recapitalization, reclassifica-
tion, merger, consolidation, combination, or exchange of shares, or other
similar corporate change, then if the Committee shall determine, in its sole
discretion, that such change necessarily or equitably requires an adjustment in
the number of shares subject to each outstanding Option and the Option Prices
or in the maximum number of shares subject to this Plan, such adjustments shall
be made by the Committee and shall be conclusive and binding for all purposes
of this Plan. Notwithstanding the foregoing, no adjustment shall be made in
the number of shares subject to outstanding Options or in the number of shares
subject to this Plan that would result in Options granted under this Plan
authorizing the issuance of a number of shares: (i) which shall exceed five
percent (5%) of the total number of shares of the Company's issued and out-
standing Common Stock in any one year or to individuals not previously employed
by the Company, or (ii) which shall exceed ten percent (10%) of the total
number of shares of the Company's issued and outstanding Common Stock in any
five-year period. No adjustment shall be made in connection with the issuance
by the Company of any warrants, rights, or options to acquire additional shares
of Common Stock or of securities convertible into Common Stock.
SECTION 15. CLAIM TO STOCK OPTION, OWNERSHIP, OR EMPLOYMENT RIGHTS
No employee or other person shall have any claim or right to be granted
Options under this Plan. No Optionee, before issuance of the stock, shall be
entitled to voting rights, dividends, or other rights of stockholders except
as otherwise provided in this Plan. Neither this Plan nor any action taken
hereunder shall be construed as giving any employee or other person any right
to be retained in the employ of the Company or a Subsidiary.
SECTION 16. UNSECURED OBLIGATION
Optionees under this Plan shall not have any interest in any fund or
specific asset of the Company by reason of this Plan. No trust fund shall be
created in connection with this Plan or any award thereunder, and there shall
be no required funding of amounts that may become payable to any Optionee.
39
Exhibit 4.13
SECTION 17. EXPENSES OF PLAN
The expenses of administering the Plan shall be borne by the Company and
its Subsidiaries.
SECTION 18. INDEMNIFICATION
Each person who is or shall have been a member of the Committee or of the
Board of Directors shall be indemnified and held harmless by the Company
against and from any loss, cost, liability, or expense that may be imposed upon
or reasonably incurred in connection with or resulting from any claim, action,
suit, or proceeding to which the person may be a party or in which he or she
may be involved by reason of any action taken or failure to act under the Plan
and against and from any and all amounts paid in satisfaction of judgment in
any such action, suit, or proceeding against the person, provided the Company
shall be given an opportunity, at its own expense, to handle and defend the
action on the individual's own behalf. The foregoing right of indemnification
shall not be exclusive of any other rights of indemnification to which such
persons may be entitled under the Company's Articles of Incorporation or By-
laws, as a matter of law, or otherwise, or any power than the Company may have
to indemnify them or hold them harmless.
SECTION 19. AMENDMENT AND TERMINATION
Unless this Plan shall theretofore have been terminated as hereinafter
provided, no Options may be granted after October 13, 2003. The Board of
Directors may terminate this Plan or modify or amend this Plan in such respect
as it shall deem advisable, provided, however, that the Board of Directors may
not without prior approval by the Company's shareholders:
(a) Increase the aggregate number of shares of Common Stock as to which
Options may be granted under the Plan except as provided in Section 13, above;
or
(b) Extend the period during which Options may be granted.
SECTION 20. APPLICABILITY OF PLAN TO OTHER OUTSTANDING STOCK OPTIONS
This Plan shall not affect the terms and conditions of any other statutory
or nonstatutory stock options heretofore granted to any employee of the Company
or its Subsidiaries or to any other person under any other plan relating to
statutory or nonstatutory stock options, nor shall it affect any of the rights
of any employee to whom such a statutory or nonstatutory stock option was
granted.
SECTION 21. EFFECTIVE DATE OF PLAN
The plan shall become effective as of July 15, 1993.
40
EXHIBIT 5.1
41
EXHIBIT 5.1
July 23, 1996
Frequency Electronics, Inc.
55 Charles Lindbergh Boulevard
Mitchel Field, NY 11553
Gentlemen:
You have requested our opinion as counsel for Frequency Electronics, Inc.,
a Delaware corporation (the "Company"), in connection with the registration
under the Securities Act of 1933, as amended, and the Rules and Regulations
promulgated thereunder, of 1,077,113 shares of common stock issuable under the
Frequency Electronics, Inc. Restricted Stock Plan or upon the exercise of
options granted under certain of the Company's other employee benefit plans
including the 1982 Frequency Electronics, Inc. Incentive Stock Option Plan, the
1984 Frequency Electronics, Inc. Incentive Stock Option Plan, the Frequency
Electronics, Inc. 1987 Incentive Stock Option Plan, the Frequency Electronics,
Inc. Senior Executive Stock Option Plan, and the Frequency Electronics, Inc.
1993 Nonstatutory Stock Option Plan.
We have examined the Company's Registration Statement on Form S-8 in the
form to be filed with the Securities and Exchange Commission on or about
July 26, 1996 (the "Registration Statement"). We further have examined the
Certificate of Incorporation of the Company as certified by the Secretary of
State of the State of Delaware, the Bylaws and the minute books of the Company
as a basis for the opinion hereafter expressed.
Based on the foregoing examination, we are of the opinion that, upon
issuance and sale in the manner described in the Registrant Statement, the
shares of common stock covered by the Registration Statement will be legally
issued, fully paid and nonassessable.
We consent to the filing of this opinion as an exhibit to the Registration
Statement.
VERY TRULY YOURS,
JOHN L. MILLING
By /s/ Scott Rapfogel
Scott Rapfogel
42
EXHIBIT 23.1
43
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration Statement of
Frequency Electronics, Inc. on Form S-8 of our report, which includes an ex-
planatory paragraph as to certain litigation, dated July 5, 1995, on our audits
of the consolidated financial statements and financial statement schedule of
Frequency Electronics, Inc. as of April 30, 1995 and April 30, 1994, and for
each of the three years in the period ended April 30, 1995. We also consent
to the reference to our Firm under the caption "experts."
COOPERS & LYBRAND L.L.P.
Melville, New York
July 10, 1996
44
EXHIBIT 24.1
45
EXHIBIT 24.1
POWERS OF ATTORNEY
We, the undersigned, members of the Board of Directors of Frequency
Electronics, Inc. (the "Company"), hereby constitute and appoint Joseph P.
Franklin as our true and lawful attorney-in-fact and agent, with full power to
substitute John C. Ho, on any specific occasion, as attorney-in-fact and agent
for the undersigned. Joseph P. Franklin, as attorney-in-fact and agent may act
for the undersigned, for and in our stead, in any and all capacities, to sign on
our behalf any and all Registration Statements on Form S-8 with respect to
common stock issued or to be issued under the 1982 Frequency Electronics, Inc.
Incentive Stock Option Plan, 1984 Frequency Electronics, Inc. Incentive Stock
Option Plan, Frequency Electronics, Inc. 1987 Incentive Stock Option Plan,
Frequency Electronics, Inc. Senior Executive Stock Option Plan, Frequency
Electronics, Inc. Restricted Stock Plan, and Frequency Electronics, Inc. 1993
Nonstatutory Stock Option Plan, and to execute any amendments thereto (includ-
ing post-effective amendments) or certificates that may be required in con-
nection with such registration statements, and to file the same, with all
exhibits thereto, and all other documents in connection therewith, with the
Securities and Exchange Commission, with the full power and authority to do and
perform each and every act and thing necessary or advisable to be done in con-
nection therewith, as fully to all intents and purposes as the undersigned
might or could do in person. The undersigned hereby ratify and confirm all
that Joseph P. Franklin, as attorney-in-fact and agent, or his substitute, may
lawfully do or cause to be done by virtue hereof.
Dated: July 23, 1996 /s/ Joel Girsky
JOEL GIRSKY
/s/ E. John Rosenwald, Jr.
E. JOHN ROSENWALD, JR.
46
