-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Rvbncagwf/tX/ARTEQ3R+EfToOopV9Lx+OBdsQpWrbr7l+v9Dl+zDxFD80EJiAM6 OQf/1Py2fg+R1EdLfRSmog== 0000927016-99-001374.txt : 19990408 0000927016-99-001374.hdr.sgml : 19990408 ACCESSION NUMBER: 0000927016-99-001374 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 19990407 EFFECTIVENESS DATE: 19990407 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DYNATECH CORP CENTRAL INDEX KEY: 0000030841 STANDARD INDUSTRIAL CLASSIFICATION: INSTRUMENTS FOR MEAS & TESTING OF ELECTRICITY & ELEC SIGNALS [3825] IRS NUMBER: 042258582 STATE OF INCORPORATION: MA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: S-8 SEC ACT: SEC FILE NUMBER: 333-75797 FILM NUMBER: 99588622 BUSINESS ADDRESS: STREET 1: 3 NEW ENGLAND EXECUTIVE PARK CITY: BURLINGTON STATE: MA ZIP: 01803-5087 BUSINESS PHONE: 6172726100 MAIL ADDRESS: STREET 1: 3 NEW ENGLAND EXECUTIVE PARK CITY: BURLINGTON STATE: MA ZIP: 01803-5087 S-8 1 FORM S-8 As filed with the Securities and Exchange Commission on April __, 1999 Registration No. 333-_________ -------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM S-8 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 DYNATECH CORPORATION -------------------- (Exact name of issuer as specified in its charter) Massachusetts 04-2258582 -------------------------------- --------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 3 New England Executive Park, Burlington, MA 01803 ----------------------------------------------------------- (Address of principal executive offices) (Zip Code) DYNATECH CORPORATION AMENDED AND RESTATED 1994 STOCK OPTION AND INCENTIVE PLAN DYNATECH CORPORATION NON-EMPLOYEE DIRECTORS STOCK INCENTIVE PLAN -------------------------------------------- (Full title of the plan) Mark V. B. Tremallo, Esq. Dynatech Corporation 3 New England Executive Park Burlington, Massachusetts 01803-5087 -------------------------------------------- (Name and address of agent for service) (781) 272-6100 ----------------------------------------------------------- (Telephone number, including area code, of agent for service) CALCULATION OF REGISTRATION FEE ------------------------------- Title of Proposed Proposed Securities Maximum Maximum to be Amount to be Offering Price Aggregate Amount of Registered Registered Per Share(1) Offering Price(1) Registration Fee - ------------- ------------- --------------- ------------------ ---------------- Common Stock, 36,864,200 $3.40625 $125,568,681.30 $34,908.09 No par value shares ____________________ (1) Estimated solely for the purpose of calculating the registration fee, and based on the average of the high and low prices as reported by the NASDAQ National Market on March 31, 1999, in accordance with Rules 457(c) and (h) of the Securities Act of 1933, as amended. PART I. INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS The information required by Part I is included in documents sent or given to participants in the Dynatech Corporation Amended and Restated 1994 Stock Option and Incentive Plan and the Dynatech Corporation Non-Employee Directors Stock Incentive Plan, a Massachusetts corporation (the "Registrant"), pursuant to Rule 428(b)(1) of the Securities Act of 1933, as amended (the "Securities Act"). PART II. INFORMATION REQUIRED IN THE REGISTRATION STATEMENT Item 3. Incorporation of Certain Documents by Reference. ----------------------------------------------- The Registrant is subject to the informational and reporting requirements of Sections 13(a), 14 and 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Securities and Exchange Commission. The following documents, which are filed with the Securities and Exchange Commission, are incorporated in this Registration Statement by reference: (1) The Registrant's latest annual report filed pursuant to Sections 13(a) or 15(d) of the Exchange Act or the latest prospectus filed pursuant to Rule 424(b) under the Securities Act that contains audited financial statements for the Registrant's latest fiscal year for which such statements have been filed. (2) All other reports filed pursuant to Sections 13(a) or 15(d) of the Exchange Act since the end of the fiscal year covered by the document referred to in (1) above. (3) The description of the Common Stock, no par value per share ("Common Stock"), contained in a registration statement filed under the Exchange Act, including any amendment or report filed for the purpose of updating such description. All documents subsequently filed by the Registrant pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the filing of a post- effective amendment which indicates that all shares of Common Stock offered hereby have been sold or which deregisters all shares of Common Stock then remaining unsold, shall be deemed to be incorporated by reference herein and to be part hereof from the date of the filing of such documents. Item 4. Description of Securities. ------------------------- Not applicable. Item 5. Interests of Named Experts and Counsel. -------------------------------------- The validity of the Common Stock will be passed upon for the Company by Mark V.B. Tremallo, its General Counsel. Item 6. Indemnification of Directors and Officers. ----------------------------------------- The Company's Articles of Organization (the "Articles") provide that except as limited by law, the Company shall indemnify its directors and officers against all expenses incurred by them in connection with any proceeding resulting from their serving as an officer or director, except that no indemnification shall be provided regarding any matter as to which it shall be adjudicated that such director or officer did not act in good faith and in the reasonable belief that his or her action was in the best interests of the Company. In addition, the Articles provide that no director of the Company shall be personally liable to the Company or its stockholders for monetary damages for breach of fiduciary duty as a director notwithstanding any provisions of law imposing such liability; provided, however, that such provision shall not eliminate or limit the liability of a director (i) for any breach of the director's duty of loyalty to the Company or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 61 or 62 of the Business Corporation Law of the Commonwealth of Massachusetts, or (iv) with respect to any transaction from which the director derived an improper personal benefit. The Company maintains directors' and officers' liability insurance for the benefit of its directors and certain of its officers. Item 7. Exemption from Registration Claimed. ----------------------------------- Not applicable. Item 8. Exhibits. -------- The Exhibit Index immediately preceding the exhibits is incorporated herein by reference. Item 9. Undertakings. ------------ 1. The Registrant hereby undertakes: (a) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act; (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; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; 2 PROVIDED, HOWEVER, that paragraphs (i) and (ii) do not apply if the Registration Statement is on Form S-3 or Form S-8, and 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 Exchange Act that are incorporated by reference in the Registration Statement. (b) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. 2. The Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the Registration Statement shall be deemed to be a new Registration Statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be in the initial bona fide offering thereof. 3. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. 3 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 the City of Burlington, Commonwealth of Massachusetts, on ___________, 1999. DYNATECH CORPORATION By: _________________________________ John F. Reno Chairman, President and Chief Executive Officer 4 Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated.
Signatures Capacity Date - --------------------------------- ----------------------------------- ------------------------------------ Chairman of the Board of _________________________________ Directors, President, Chief ____________________________, 1999 John F. Reno Executive Officer and Director Vice President, Chief Financial Officer, Treasurer _________________________________ (Principal Financial Officer), ____________________________, 1999 Allan M. Kline and Director Corporate Vice President - _________________________________ Communications Test ____________________________, 1999 John R. Peeler Business, and Director _________________________________ ____________________________, 1999 Brian D. Finn Director _________________________________ Director ____________________________, 1999 Charles P. Pieper _________________________________ Director ____________________________, 1999 Joseph L. Rice, III _________________________________ Director ____________________________, 1999 Ned C. Lautenbach _________________________________ Director ____________________________, 1999 Brian H. Rowe _________________________________ Director ____________________________, 1999 Marvin L. Mann
5 EXHIBIT INDEX -------------
Exhibit Sequential Number Page Number - ---------- ------------- 3.1 Amended and Restated Articles of Organization of the -- Registrant - filed as Exhibit 3(1) to the Registrant's Annual Report on 10-K for the fiscal year ended March 31, 1998 and incorporated herein by reference. 3.2 By-Laws filed as Exhibit 3.2(ii) to the Registrant's -- Annual Report on Form 10-K for the fiscal year ended March 31, 1998 and incorporated herein by reference. 4.1 Specimen Certificate of Common Stock of the -- Registrant (filed herein). 5 Opinion of Mark V. B. Tremallo, Dynatech -- Corporation's General Counsel (filed herein) 23.1 Consent of Mark V.B. Tremallo, Dynatech -- Corporation's General Counsel's consent is stated with said counsel's opinion as Exhibit No. 5 (filed herein) 23.2 Consent of PricewaterhouseCoopers L.L.P. (filed -- herein) 24 Power of Attorney (filed herein). -- 99(i) Dynatech Corporation Amended and Restated 1994 -- Stock Option and Incentive Plan (filed herein) 99(ii) Dynatech Corporation Non-Employee Directors Stock -- Incentive Plan (filed herein).
EX-5 2 OPINION OF MARK V.B. TREMALLO [LETTERHEAD OF DYNATECH CORPORATION APPEARS HERE] April 6, 1999 Dynatech Corporation 3 New England Executive Park Burlington, MA 01803-5087 Dear Sirs: As Vice President and General Counsel of Dynatech Corporation, a Massachusetts corporation (the "Company"), I have participated in the preparation of the Registration Statement on Form S-8 (the "Registration Statement") to be filed under the Securities Act of 1933 (the "Act") relating to 36,864,200 shares of the Company's common stock, no par value (the "Common Stock"), to be issued pursuant to the Dynatech Corporation Amended and Restated 1994 Stock Option and Incentive Plan and the Dynatech Corporation Non-Employee Directors Stock Incentive Plan (the "Plans"). I am familiar with the written documents which comprise the Plans, and in rendering the opinion expressed below, I have examined and am relying on originals, or copies certified or otherwise identified to my satisfaction, of such other corporate records, documents, certificates or other instruments, as in my judgment are necessary or appropriate as a basis for such opinion. In rendering such opinion, I have noted that the exercise price of options to be granted pursuant to each Plan will not be less than the fair market value of the underlying shares as of the date of said options' grant. Based on the foregoing, I am of the opinion that the authorized but previously unissued shares of Common Stock which may be issued by the Company pursuant to the Plan have been duly authorized and when issued in accordance with the terms of the Plan will be validly issued, fully paid and non-assessable. I hereby consent to the filing of this opinion as an exhibit to the Company's Registration Statement. In giving such consent, I do not thereby admit that I am within the category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Securities and Exchange Commission thereunder. Very truly yours, /s/ Mark V. B. Tremallo Mark V. B. Tremallo Vice President and General Counsel EX-23.2 3 CONSENT OF PRICEWATERHOUSECOOPERS L.L.P. CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in this registration statement of Dynatech Corporation on Form S-8 of our reports dated April 28, 1998, except for the "Subsequent Event" note, for which the date is May 21, 1998, on our audits of the consolidated financial statements and financial statement schedule of Dynatech Corporation as of March 31, 1998 and 1997, and for the fiscal years ended March 31, 1998, 1997 and 1996, which reports are included in the Company's 1998 Annual Report on Form 10-K. /s/ PricewaterhouseCoopers LLP Boston, Massachusetts April 6, 1999 EX-24 4 POWER OF ATTORNEY LIMITED POWER OF ATTORNEY For DYNATECH CORPORATION Section 16(a) Filings --------------------- Know all by these presents, that the undersigned hereby constitutes and appoints each of Mark V. B. Tremallo and Allan M. Kline, signing singly, the undersigned's true and lawful attorney-in-fact to: (1) Execute for and on behalf of the undersigned, in the undersigned's capacity as an officer, director, and/or stockholder of Dynatech Corporation and/or Dynatech LLC (the "Company"), Forms 3, 4, and 5 in accordance with Section 16 (a) of the Securities Exchange Act of 1934 and the rules thereunder. (2) Do and perform any and all acts for and on behalf of the undersigned which may be necessary or desirable to complete and execute any such Form 3, 4, or 5 and timely file such form with the United States Securities and Exchange Commission (the "SEC") and any stock exchange or similar authority; and (3) Take any other action of any type whatsoever which, in the opinion of such attorney-in-fact, may be necessary or desirable in connection with the foregoing authority, it being understood that the documents executed by such attorney-in-fact on behalf of the undersigned pursuant to this Power of Attorney shall be in such form and shall contain such terms and conditions as such attorney- in-fact may approve. The undersigned hereby grants to each such attorney-in-fact full power and authority to do and perform any and every act and thing whatsoever requisite, necessary, or proper to be done in the exercise of any of the rights and powers herein granted, as fully to all intents and purposes as the undersigned might or could do if personally present, with full power of substitution or revocation, hereby ratifying and confirming all that such attorney-in-fact, or such attorney-in-fact's substitute or substitutes, shall lawfully do or cause to be done by virtue of this Power of Attorney and the rights and powers herein granted. The undersigned acknowledges that the foregoing attorneys-in-fact, in serving in such capacity at the request of the undersigned, are not assuming, nor is the Company assuming, any of the undersigned's responsibilities to comply with Section 16 of the Securities Exchange Act of 1934. This Power of Attorney shall remain in full force and effect until the undersigned is no longer required to file Forms 3, 4, and 5 with respect to the undersigned's holdings of and transaction in securities of the Company, unless earlier revoked by the undersigned in a signed writing delivered to the foregoing attorneys-in-fact. This Power of Attorney may be filed with the SEC as a confirming statement of the authority granted herein. IN WITNESS WHEREOF, the undersigned has caused this Power of Attorney to be executed as of this _____ day of ______________________, 199__. ________________________________ Print Name ________________________________ Signature EX-99.1 5 1994 STOCK OPTION AND INCENTIVE PLAN EXHIBIT 99(I) ------------- DYNATECH CORPORATION AMENDED AND RESTATED 1994 STOCK OPTION AND INCENTIVE PLAN Section 1. General Purpose of the Plan; Definitions ---------------------------------------- The name of the plan is the Amended and Restated Dynatech Corporation 1994 Stock Option and Incentive Plan (the "Plan"). The purpose of the Plan is to encourage and enable the officers and other eligible employees of the Company and its Subsidiaries upon whose judgment, initiative and efforts the Company largely depends for the successful conduct of its business to acquire a proprietary interest in the Company. It is anticipated that providing such persons with a direct stake in the Company's welfare will assure a closer identification of their interests with those of the Company, thereby stimulating their efforts on the Company's behalf and strengthening their desire to remain with the Company. Effective as of May 21, 1998, the Plan was amended and restated in its entirety in connection with and to reflect amendments required as a result of the Merger and was further amended and restated, also effective as of May 21, 1998, as stated herein. The following terms shall be defined as set forth below: "Act" means the Securities Exchange Act of 1934, as amended. "Affiliate" means, with respect to any person, any other person controlled by, controlling or under common control with such person. "Award" or "Awards," except where referring to a particular category of grant under the Plan, shall include Incentive Stock Options, Non-Qualified Stock Options, Restricted Stock Awards, Unrestricted Stock Awards and Performance Share Awards. "Board" means the Board of Directors of the Company. "Cause" means and shall be limited to a vote of the Board of Directors resolving that the participant should be dismissed as a result of (i) - any material breach by the participant of any agreement to which the participant and the Company or any Subsidiary thereof are parties, (ii) any act (other than -- retirement) or omission to act by the participant which may have a material and adverse effect on the business of the Company or any Subsidiary or on the participant's ability to perform services for the Company or any Subsidiary, including without limitation, the commission of any crime (other than ordinary traffic violations), (iii) any material misconduct or --- neglect of duties by the participant in connection with the business or affairs of the Company or any Subsidiary, (iv) the performance of duties in an -- incompetent manner after notice to the participant and the expiration of a 90- day period during which the participant has an opportunity to correct such incompetence, and (v) any unlawful conduct or act of moral turpitude by the - participant. "CD&R Fund" means the Clayton, Dubilier & Rice Fund V Limited Partnership, a Cayman Islands exempted limited partnership, and any successor investment vehicle managed by Clayton, Dubilier & Rice, Inc. "Change in Control" means, the first to occur of the following events after the Restatement Effective Date: (i) the acquisition by any person, entity or "group" (as defined in Sec tion 13(d) of the Securities Exchange Act), other than the Company, its Subsid iaries, any employee benefit plan of the Company or its Subsidiaries, the CD&R Fund or any Affiliate of the CD&R Fund, of 50% or more of the combined voting power of the then outstanding voting securities of the Company; (ii) the merger or consolidation of the Company, as a result of which persons who were stockholders of the Company immediately prior to such merger or consolidation, do not, immediately thereafter, own, directly or indirectly, more than 50% of the combined voting power entitled to vote generally in the election of directors of the merged or consolidated company; (iii) the liquidation or dissolution of the Company other than a liquidation of the Company into any of its Subsidiaries; and (iv) the sale, transfer or other disposition of all or substantially all of the assets of the Company to one or more persons or entities that are not, immediately prior to such sale, transfer or other disposition, Affiliates of the Company or the CD&R Fund. "Change in Control Price" means the price per share of Common Stock paid in conjunction with any transaction resulting in a Change in Control (as determined in good faith by the Board if any part of such price is payable other than in cash). 2 "Code" means the Internal Revenue Code of 1986, as amended, and any successor Code, and related rules, regulations and interpretations. "Committee" means the Compensation Committee of the Board, except that any Award granted to any employee of the Company or any Subsidiary who is, as of the date of grant of such Award, an executive officer subject to the reporting requirements of Section 16(a) of the Act, and the terms and conditions of any such Award, shall be separately approved by the Board. "Company" means Dynatech Corporation, a Massachusetts corporation. "Disability" means disability as set forth in Section 22(e)(3) of the Code. "Effective Date" means the date on which the Plan was originally approved by shareholders as set forth in Section 15. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and the related rules, regulations and interpretations. "Fair Market Value" means the fair market value of a share of Stock, as determined in good faith by the Board on the basis of an independent valuation of the Stock and such other factors as the Board deems appropriate, including, without limitation, the earnings and certain other financial and operating information of the Company and its Subsidiaries in recent periods, the potential value of the Company and its Subsidiaries as a whole, the future prospects of the Company and its Subsidiaries and the industries in which they compete, the history and management of the Company and its Subsidiaries, the general condition of the securities markets, the fair market value of securities of companies engaged in businesses similar to those of the Company and its Subsidiaries and the trading price of the Stock. The determination of Fair Market Value will not give effect to any restrictions on transfer of the Stock, the fact that the Stock would represent a minority interest in the Company or the fact that the Stock is not liquid. The Fair Market Value as determined in good faith by the Board and in the absence of fraud shall be binding and conclusive upon all parties. "Incentive Stock Option" means any Stock Option designated and qualified as an "incentive stock option" as defined in Section 422 of the Code. "Merger" means the merger, on the Restatement Effective Date, of CDRD Merger Corporation with and into the Company pursuant to the Agreement and Plan of Merger (the "Merger Agreement"), dated as of December 20, 1997, between ---------------- 3 the Company and CDRD Merger Corporation, with the Company as the surviving corporation of the Merger; "Non-Qualified Stock Option" means any Stock Option that is not an Incentive Stock Option. "Option" or "Stock Option" means any option to purchase shares of Stock granted pursuant to Section 5. "Outside Director" means a member of the Board who qualifies as such under Section 162(m) of the Code. "Performance Option" means an Option which may become vested and exercisable upon the achievement of one or more performance objectives specified in the agreement governing the grant of such Option. An option shall be treated as a Performance Option even if, in addition to the vesting criteria associated with the achievement of performance objectives, the Option may alternatively become vested upon the passage of time and the continued performance of service. "Performance Share Award" means an Award granted pursuant to Section 8. "Person" shall include any natural person, any entity, any "affiliate" of any such natural person or entity as such term is defined in Rule 405 under the Securities Act of 1933 and any "group" (within the meaning of such term in Rule 13d-5 promulgated under the Act). "Public Offering" means an underwritten public offering of the Common Stock after the Restatement Effective Date led by at least one underwriter of nationally recognized standing. "Restatement Effective Date" means May 21, 1998. "Restricted Stock Award" means any Award granted pursuant to Section 6. "Stock" means the Common Stock of the Company, no par value, subject to adjustments pursuant to Section 3. "Subsidiary" means any corporation or other entity (other than the Company) in any unbroken chain of corporations or other entities, beginning with the 4 Company if each of the corporations or entities (other than the last corporation or entity in the unbroken chain) owns stock or other interests possessing 50% or more of the total combined voting power of all classes of stock or other interests in one of the other corporations or entities in the chain. "Unrestricted Stock Award" means an Award granted pursuant to Section 7. Section 2. Administration of Plan; Committee Authority to Select Participants and Determine Awards ------------------------------------------------------ (a) Committee. The Plan shall be administered by the Committee. All --------- determinations of the Committee pursuant to the Plan, including this Section 2, shall be made in its sole and absolute discretion. (b) Powers of Committee. The Committee shall have the power and ------------------- authority to grant Awards consistent with the terms of the Plan, including the power and authority: (i) to select the current or prospective officers and other employees of the Company and its Subsidiaries to whom Awards may from time to time be granted; (ii) to determine the time or times of grant, and the extent, if any, of Incentive Stock Options, Non-Qualified Stock Options, Restricted Stock, Unrestricted Stock , and Performance Shares or any combination of the foregoing, granted to any one or more participants; (iii) to determine the number of shares to be covered by any Award; (iv) to determine and modify the terms and conditions, including restrictions, not inconsistent with the terms of the Plan, of any Award, which terms and conditions may differ among individual Awards and participants, and to approve the form of written instruments evidencing the Awards; (v) to accelerate the exercisability or vesting of all or any portion of any Option; (vi) subject to the provisions of Section 5(a)(iii), to extend the period in which Stock Options may be exercised; 5 (vii) to determine whether, to what extent, and under what circumstances Stock and other amounts payable with respect to an Award shall be deferred either automatically or at the election of the participant and whether and to what extent the Company shall pay or credit amounts constituting interest (at rates determined by the Committee) or dividends or deemed dividends on such deferrals; and (viii) to adopt, alter and repeal such rules, guidelines and practices for administration of the Plan and for its own acts and proceedings as it shall deem advisable; to interpret the terms and provisions of the Plan and any Award (including related written instruments); to make all determinations it deems advisable for the administration of the Plan; to decide all disputes arising in connection with the Plan; and to otherwise supervise the administration of the Plan. All decisions and interpretations of the Committee shall be binding on all persons, including the Company and Plan participants. Section 3. Shares Issuable under the Plan; Mergers; Substitution ----------------------------------------------------- (a) Shares Issuable. The aggregate maximum number of shares of Stock --------------- reserved and available for issuance under the Plan shall be 36,114,200. For purposes of this limitation, the shares of Stock underlying any Awards which are forfeited, canceled, reacquired by the Company, satisfied without the issuance of Stock or otherwise terminated (other than by exercise) shall be added back to the shares of Stock available for issuance under the Plan so long as the participants to whom such Awards had been previously granted received no benefits of ownership of the underlying shares of Stock to which the Award related. Subject to such overall limitation, shares of Stock may be issued up to such maximum number pursuant to any type or types of Award; provided, -------- however, that (i) no more than 1,960,000 Stock Options may be granted to any one - ------- - individual participant during any one-year period, (ii) no more than 1,764,000 -- shares of Restricted Stock and Unrestricted Stock may be granted under the Plan, and (iii) no more than 392,000 shares of Restricted Stock and Unrestricted Stock --- may be granted to any one individual participant. Shares issued under the Plan may be authorized but unissued shares or shares reacquired by the Company. (b) Stock Dividends, Mergers, etc. In the event of a stock dividend, ----------------------------- stock split or similar change in capitalization affecting the Stock, the Committee shall make appropriate adjustments to prevent the enlargement or diminution of the rights of any participant in (i) the number and kind of shares - of stock or securities with respect to which Awards may thereafter be granted, (ii) the number and kind of shares remaining subject to outstanding Awards, and -- (iii) the option or purchase price in respect of such shares. In --- 6 the event of any merger, consolidation, dissolution or liquidation of the Company, the Committee in its sole discretion may, as to any Outstanding Awards, make such substitution or adjustment in the aggregate number of shares reserved for issuance under the Plan and the number and purchase price (if any) of shares subject to such Awards as it may determine and as may be permitted by the terms of such transaction, or amend or terminate such Awards upon such terms and conditions as it shall provide (which, in the case of the termination of the vested portion of any Award, shall require payment or other consideration which the Committee deems equitable in the circumstances). (c) Substitute Awards. The Committee may grant Awards under the Plan ----------------- in substitution for stock and stock based awards held by employees of another corporation who concurrently become employees of the Company or a Subsidiary as the result of a merger or consolidation of the employing corporation with the Company or a Subsidiary or the acquisition by the Company or a Subsidiary of property or stock of the employing corporation. The Committee may direct that the substitute awards be granted on such terms and conditions not inconsistent with the Plan as the Committee considers appropriate in the circumstances. Section 4. Eligibility and General Rules ----------------------------- Participants in the Plan will be such current or prospective full or part-time officers and other employees of the Company and its Subsidiaries who are responsible for or contribute to the management, growth or profitability of the Company and its Subsidiaries and who are selected from time to time by the Committee, in its sole discretion. All Awards granted under the Plan shall be evidenced by a separate award agreement between the Company and the participant containing such terms and conditions not inconsistent with the Plan as the Committee shall determine. Section 5. Stock Options ------------- (a) In General. Any Stock Option granted under the Plan shall be in ---------- such form as the Committee may from time to time approve. Stock Options granted under the Plan may be either Incentive Stock Options or Non-Qualified Stock Options. To the extent that any Option does not qualify as an Incentive Stock Option, it shall constitute a Non-Qualified Stock Option. No Incentive Stock Option shall be granted under the Plan after June 15, 2004. 7 (b) Stock Options Granted to Employees. The Committee in its ---------------------------------- discretion may grant Stock Options to employees of the Company or any Subsidiary. Stock Options granted to current or prospective employees pursuant to this Section 5(a) shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Committee shall deem desirable: (i) Exercise Price. The exercise price per share for the Stock -------------- covered by a Stock Option granted pursuant to this Section 5(a) shall be determined by the Committee at the time of grant but shall not be less than 100% of Fair Market Value on the date of grant, except that Stock Options granted to selected employees in connection with the Merger (including certain performance based options) may be granted at an exercise price equal to the price per share of Stock paid by CD&R Fund upon the consummation of the Merger. If an employee owns or is deemed to own (by reason of the attribution rules applicable under Section 424(d) of the Code) more than 10% of the combined voting power of all classes of stock of the Company or any Subsidiary or parent corporation and an Incentive Stock Option is granted to such employee, the option price of such Incentive Stock Option shall be not less than 110% of Fair Market Value on the grant date. (ii) Option Term. The term of each Stock Option shall be fixed by ----------- the Committee, but no Incentive Stock Option shall be exercisable more than ten years after the date the option is granted. If an employee owns or is deemed to own (by reason of the attribution rules of Section 424(d) of the Code) more than 10% of the combined voting power of all classes of stock of the Company or any Subsidiary or parent corporation and an Incentive Stock Option is granted to such employee, the term of such option shall be no more than five years from the date of grant. (iii) Exercisability; Rights of a Shareholder. Stock Options shall --------------------------------------- become vested and exercisable at such time or times, whether or not in installments, as shall be determined by the Committee at or after the grant date. The Committee may at any time accelerate the exercisability of all or any portion of any Stock Option. An optionee shall have the rights of a shareholder only as to shares acquired upon the exercise of a Stock Option that have been issued and not as to unexercised Stock Options. (iv) Method of Exercise. Stock Options may be exercised in whole or ------------------ in part, by giving written notice of exercise to the Company, specifying the number of shares to be purchased. Payment of the purchase price may be made by one or more of the following methods: 8 (A) In cash, by certified or bank check or other instrument acceptable to the Committee; (B) In the form of shares of Stock that are not then subject to restrictions under any Company plan and that have been held, unrestricted, by the optionee for at least six months, if permitted by the Committee in its discretion. Such surrendered shares shall be valued at Fair Market Value on the exercise date; or (C) By the optionee delivering to the Company a properly executed exercise notice together with irrevocable instructions to a broker to promptly deliver to the Company cash or a check payable and acceptable to the Company to pay the purchase price; provided that in -------- the event the optionee chooses to pay the purchase price as so provided, the optionee and the broker shall comply with such procedures and enter into such agreements of indemnity and other agreements as the Committee shall prescribe as a condition of such payment procedure. Payment instruments will be received subject to collection. The delivery of certificates representing the shares of Stock to be purchased pursuant to the exercise of a Stock Option will be contingent upon receipt from the optionee (or a purchaser acting in his stead in accordance with the provisions of the Stock Option) by the Company of the full purchase price for such shares and the fulfillment of the requirements of Section 10 hereof and any other requirements contained in the Stock Option or applicable provisions of law. To the extent deemed necessary or appropriate by the Company, such certificates shall bear appropriate legends. (v) Non-transferability of Options. No Stock Option shall be ------------------------------ transferable by the optionee otherwise than by will or by the laws of descent and distribution and all Options shall be exercisable, during the optionee's lifetime, only by the optionee. (vi) Annual Limit on Incentive Stock Options. To the extent required --------------------------------------- for "incentive stock option" treatment under Section 422 of the Code, the aggregate Fair Market Value (determined as of the time of grant) of the stock with respect to which Incentive Stock Options granted under this Plan and any other plan of the Company or its Subsidiaries become exercisable for the first time by an optionee during any calendar year shall not exceed $100,000. 9 (vii) Form of Settlement. Shares of Stock issued upon ------------------ exercise of a Stock Option shall be free of all restrictions under the Plan, except as otherwise provided in this Plan, in any agreement evidencing such Stock Option or in any agreement entered into be the Company and the option holder at the time of exercise of the Option. Section 6. Restricted Stock Awards ----------------------- (a) Nature of Restricted Stock Award. The Committee may grant -------------------------------- Restricted Stock Awards to any current or prospective employee of the Company or any Subsidiary. A Restricted Stock Award is an Award entitling the recipient to acquire, at no cost or for a purchase price determined by the Committee, shares of Stock subject to such restrictions and conditions as the Committee may determine at the time of grant ("Restricted Stock"). Conditions may be based on continuing employment and/or achievement of preestablished performance goals and objectives. In addition, a Restricted Stock Award may be granted to an employee by the Committee in lieu of a cash bonus due to such employee pursuant to any other plan of the Company. (b) Acceptance of Award. A participant who is granted a ------------------- Restricted Stock Award shall have no rights with respect to such Award unless the participant shall have accepted the Award within 60 days (or such shorter date as the Committee may specify) following the award date by making payment to the Company, if required, by certified or bank check or other instrument or form of payment acceptable to the Committee in an amount equal to the specified purchase price, if any, of the shares of Stock covered by the Award and by executing and delivering to the Company a written instrument that sets forth the terms and conditions of the Restricted Stock in such form as the Committee shall determine. (c) Rights as a Shareholder. Upon complying with Section 6(b) ----------------------- above, a participant shall have the rights of a shareholder with respect to the voting of the Restricted Stock, subject to non-transferability restrictions and Company repurchase or forfeiture rights described in this Section 6 and subject to such other conditions contained in the written instrument evidencing the Restricted Stock Award. Unless the Committee shall otherwise determine, certificates evidencing shares of the Restricted Stock shall remain in the possession of the Company until such shares are vested as provided in Section 6(e) below. (d) Restrictions. Shares of Restricted Stock may not be sold, ------------ assigned, transferred, pledged or otherwise encumbered or disposed of except as specifically provided herein. In the event of termination of employment by the Company and its Subsidiaries for any reason (including death, retirement, Disability, and for Cause), the 10 Company shall have the right, at the discretion of the Committee, to repurchase Restricted Stock with respect to which conditions have not lapsed at their purchase price, or to require forfeiture of such shares to the Company if acquired at no cost, from the participant or the participant's legal representative. The Company must exercise such right of repurchase or forfeiture not later than the 90th day following such termination of employment (unless otherwise specified in the written instrument evidencing the Restricted Stock Award). (e) Vesting of Restricted Stock. The Committee at the time of --------------------------- grant shall specify the date or dates and/or the attainment of pre-established performance goals, objectives and other conditions on which the non- transferability of the Restricted Stock and the Company's right of repurchase or forfeiture shall lapse. Subsequent to such date or dates and/or the attainment of such pre-established performance goals, objectives and other conditions, the shares on which all restrictions have lapsed shall no longer be Restricted Stock and shall be deemed "vested." (f) Waiver, Deferral and Reinvestment of Dividends. The written ---------------------------------------------- instrument evidencing the Restricted Stock Award may require or permit the immediate payment, waiver, deferral or investment of dividends paid on the Restricted Shares. Section 7. Unrestricted Stock Awards ------------------------- (a) Grant or Sale of Unrestricted Stock. The Committee may, in its sole discretion, grant (or sell at a purchase price determined by the Committee) to any current or prospective employees of the Company or any Subsidiary shares of Stock free of any restrictions under the Plan ("Unrestricted Stock"). Shares of Unrestricted Stock may be granted or sold as described in the preceding sentence in respect of past services or other valid consideration, or in lieu of any cash compensation due to such employee. (b) Elections to Receive Unrestricted Stock In Lieu of -------------------------------------------------- Compensation. Upon the request of an employee and with the consent of the - ------------ Committee, each employee may, pursuant to an irrevocable written election delivered to the Company no later than the date or dates specified by the Committee, receive a portion of the cash compensation otherwise due to him in Unrestricted Stock (valued at Fair Market Value on the date or dates the cash compensation would otherwise be paid, or on the effective date of the election, if later). With respect to any employee who is subject to Section 16 of the Act, such irrevocable election shall become effective no earlier than six months and one day following the date of such election and the revocation of such election shall be effective six months and one day following the date of the revocation. Section 8. Performance Share Awards ------------------------ 11 (a) Nature of Performance Shares. A Performance Share Award is an ---------------------------- award entitling the recipient to acquire shares of Stock upon the attainment of specified performance goals. The Committee may make Performance Share Awards independent of or in connection with the granting of any other Award under the Plan. Performance Share Awards may be granted under the Plan to any current or prospective employees of the Company or any Subsidiary, including those who qualify for awards under other performance plans of the Company. The Committee in its sole discretion shall determine whether and to whom Performance Share Awards shall be made, the performance goals applicable under each such Award, the periods during which performance is to be measured, and all other limitations and conditions applicable to the awarded Performance Shares; provided, however, that the Committee may rely on the performance goals and other standards applicable to other performance unit plans of the Company in setting the standards for Performance Share Awards under the Plan. (b) Restrictions on Transfer. Performance Share Awards and all ------------------------ rights with respect to such Awards may not be sold, assigned, transferred, pledged or otherwise encumbered. (c) Rights as a Shareholder. A participant receiving a Performance ----------------------- Share Award shall have the rights of a shareholder only as to shares actually received by the participant under the Plan and not with respect to shares subject to the Award but not actually received by the participant. A participant shall be entitled to receive a stock certificate evidencing the acquisition of shares under a Performance Share Award only upon satisfaction of all conditions specified in the written instrument evidencing the Performance Share Award (or in a performance plan adopted by the Committee). (d) Termination. Except as may otherwise be provided by the ----------- Committee at any time prior to termination of employment, a participant's rights in all Performance Share Awards shall automatically terminate upon the participant's termination of employment by the Company and its Subsidiaries for any reason (including death, Disability and for Cause). (e) Acceleration, Waiver, Etc. At any time prior to the -------------------------- participant's termination of employment by the Company and its Subsidiaries, the Committee may in its sole discretion accelerate, waive or, subject to Section 12, amend any or all of the goals, restrictions or conditions imposed under any Performance Share Award. Section 9. Certain Rights upon Termination of Employment Prior to Public ------------------------------------------------------------- Offering. -------- Unless otherwise determined by the Committee at the time of grant, the Committee shall provide in each agreement evidencing any Award granted hereunder that, 12 upon a termination of a participant's employment with the Company and any of its Subsidiaries that employs the participant prior to a Public Offering for any reason, the Company and CD&R Fund and its Affiliates shall have successive rights to repurchase for cash any vested Options or shares of Common Stock then held by the Participant, for a repurchase price equal to the Fair Market Value, reduced in the case of any Options by the exercise price per share of Common Stock for such Option, and upon such additional terms and conditions as are set forth in such agreement. Section 10. Tax Withholding --------------- (a) Payment by Participant. Each Participant shall, no later ---------------------- than the date as of which the value of an Award or of any Stock or other amounts received thereunder first becomes includable in the gross income of the participant for Federal income tax purposes, pay to the Company, or make arrangements satisfactory to the Committee regarding payment of any Federal, state, or local taxes of any kind required by law to be withheld with respect to such income. The Company and its Subsidiaries shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the participant. (b) Payment in Shares. Subject to the consent of the Committee, ----------------- a participant may elect to have such tax withholding obligation satisfied, in whole or in part, by (i) authorizing the Company to withhold from shares of Stock to be issued pursuant to any Award a number of shares with an aggregate Fair Market Value (as of the date the withholding is effected) that would satisfy the minimum withholding amount due, or (ii) transferring to the Company shares that have been owned by the participant on an unrestricted basis for at least six months with an aggregate Fair Market Value (as of the date the withholding is effected) that would satisfy the withholding amount due. With respect to any participant who is subject to Section 16 of the Act, the election to satisfy tax withholding obligations relating to an Award in the manner permitted by this Section 10 (b) shall be made at least six months following the date such participant made another election pursuant to any plan or program of the Company or any Subsidiary thereof involving an acquisition of any shares of Common Stock. Section 11. Transfer, Leave of Absence, Etc. ------------------------------- For purposes of the Plan, the following events shall not be deemed a termination of employment: (a) a transfer to the employment of the Company from a Subsidiary or from the Company to a Subsidiary, or from one Subsidiary to another; or 13 (b) an approved leave of absence for military service or sickness, or for any other purpose approved by the Company, if the employee's right to re-employment is guaranteed either by a statute or by contract or under the policy pursuant to which the leave of absence was granted or if the Committee otherwise so provides in writing. Section 12. Amendments and Termination -------------------------- The Board may, at any time, amend or discontinue the Plan and the Committee may, at any time, amend or cancel any outstanding Award (or provide substitute Awards at the same or reduced exercise or purchase price), but no such action shall adversely affect rights under any outstanding Award without the holder's consent. Section 13. Status of Plan -------------- With respect to the portion of any Award which has not been exercised and any payments in cash, shares of Stock or other consideration not received by a participant, a participant shall have no rights greater than those of a general creditor of the Company unless the Committee shall otherwise expressly determine in connection with any Award or Awards. In its sole discretion, the Committee may authorize the creation of trusts or other arrangements to meet the Company's obligations to deliver Stock or make payments with respect to Awards hereunder, provided that the existence of such trusts or other arrangements is consistent with the provision of the foregoing sentence. Section 14. Change of Control Provisions ---------------------------- (a) Accelerated Vesting and Payment. ------------------------------- (i) Options. Unless the Board otherwise determines in ------- the manner set forth in paragraph (b) below, in the event of a Change in Control, each Option (other than any Performance Option that has not become vested prior to the occurrence of the Change of Control) shall become fully vested and exercisable and may, in the discretion of the Board, be canceled in exchange for a payment in accordance with subparagraph (iii) below of an amount equal to the excess, if any, of (i) the product of the Change in - Control Price multiplied by the aggregate number of shares of Stock covered by such Option immediately prior to the Change in Control, (ii) over the aggregate Option Price for all shares -- subject to such Option. Unless otherwise specified in the agreement governing the terms and conditions of such Performance Agreement, each Performance Option that has not become vested prior to the occurrence of the Change of Control 14 shall automatically terminate and be canceled upon the consummation of the transaction constituting the Change in Control. (ii) Timing of Option Cancellation Payments. Payment of the -------------------------------------- amount calculated in accordance with subparagraph (i) above shall be made in cash, as soon as reasonably practicable, but in no event later than 30 days, following the Change in Control. (iii) Restricted Stock Awards. Unless the Board otherwise ----------------------- determines in the manner set forth in paragraph (b) below, in the event of a Change in Control, restrictions and conditions on Restricted Stock Awards shall automatically be deemed waived, and the recipients of such Awards shall become entitled to receipt of the Stock subject to such Awards unless the Committee shall otherwise expressly provide at the time of grant. (b) Alternative Awards. Notwithstanding paragraph (a), no ------------------ cancellation, termination, acceleration of exercisability or vesting or settlement or other payment shall occur with respect to any outstanding Award if the Board (as constituted immediately prior to the consummation of the transaction constituting the Change in Control) reasonably determines, in good faith, prior to the Change in Control that such outstanding Awards shall be honored or assumed, or new rights substituted therefor (such honored, assumed or substituted Awards being hereinafter referred to as an "Alternative Awards") by the acquiring entity (or the direct or indirect parent thereof) provided that -------- any Alternative Awards must: (i) provide the participant with rights and entitlements substantially equivalent to or better than the rights and entitlements applicable under the terms of such participant's outstanding Awards immediately prior to the consummation of the transaction constituting the Change in Control, including, but not limited to, an identical or better exercise and vesting schedule and identical or better timing and methods of exercise or payment; (ii) have substantially equivalent economic value to such outstanding Awards (determined at the time of the Change in Control); and (iii) have terms and conditions which provide that in the event that the participant suffers an involuntary termination of his employment within two years following a Change in Control: (x) any conditions on the participant's rights under, or any restrictions on transfer or exercisability applicable to, each 15 Alternative Award held by such participant shall be waived or shall lapse, as the case may be; or (y) the participant shall have the right to surrender such Alternative Award within 30 days following such termination in exchange for a payment in cash equal to the excess of the fair market value of the Common Stock subject to the Alternative Award over the price, if any, that the participant would be required to pay to exercise such Alternative Award. (c) Certain Take-Along Rights Prior to a Public Offering. Unless ---------------------------------------------------- otherwise determined by the Committee at the time of grant, the Committee shall provide in each agreement evidencing Awards granted hereunder that, upon certain transactions constituting a Change in Control, the participant will be required to sell those shares of Common Stock then owned by him or her that are free of restrictions imposed under the Plan or the agreement evidencing the related Award, for a payment per share of Common Stock equal to the Change in Control Price, and upon such additional terms and conditions as are set forth in such agreement. Section 15. General Provisions ------------------ (a) No Distribution; Compliance with Legal Requirements. The --------------------------------------------------- Committee may require each person acquiring shares of Stock pursuant to an Award to represent to and agree with the Company in writing that such person is acquiring the shares without a view to distribution thereof. No shares of Stock shall be issued pursuant to an Award until all applicable securities law and other legal and stock exchange requirements have been satisfied. The Committee may require the placing of such stop-orders and restrictive legends on certificates for Stock and Awards as it deems appropriate. (b) Delivery of Stock Certificates. Delivery of stock ------------------------------ certificates to participants under this Plan shall be deemed effected for all purposes when the Company or a share transfer agent of the Company shall have delivered such certificates in the United States mail, addressed to the participant, at the participant's last known address on file with the Company. (c) Other Compensation Arrangements; No Employment Rights. ----------------------------------------------------- Nothing contained in this Plan shall prevent the Board from adopting other or additional compensation arrangements, including trusts, subject to shareholder approval if such approval is required; and such arrangements may be either generally applicable or 16 applicable only in specific cases. The adoption of the Plan and the grant of Awards do not confer upon any employee any right to continued employment with the Company or any Subsidiary. Section 16. Original Effective Date of Plan ------------------------------- The Plan, prior to its amendment and restatement, originally became effective upon approval by the holders of a majority of the shares of capital stock of the Company present or represented and entitled to vote at a meeting of shareholders. Subject to such approval by the shareholders, and to the requirement that no Stock may be issued hereunder prior to such approval, Stock Options and other Awards may be granted hereunder on and after adoption of the Plan by the Board. Section 17. Governing Law ------------- This Plan shall be governed by Massachusetts law except to the extent such law is preempted by federal law. 17 EX-99.2 6 NON-EMPLOYEE DIRECTORS STOCK INCENTIVE PLAN EXHIBIT 99(II) -------------- DYNATECH CORPORATION NON-EMPLOYEE DIRECTORS STOCK INCENTIVE PLAN Section 1. General Purpose of the Plan; Definitions ---------------------------------------- The name of the plan is the Dynatech Corporation Non-Employee Directors Stock Incentive Plan (the "Plan"). The purpose of the Plan is to encourage and enable Eligible Directors to acquire a proprietary interest in the Company. It is anticipated that providing such persons with a direct stake in the Company's welfare will assure a closer identification of their interests with those of the Company and shareholders, thereby stimulating their efforts on the Company's behalf and strengthening their desire to remain with the Company. The following terms shall be defined as set forth below: "Act" means the Securities Exchange Act of 1934, as amended. "Affiliate" means, with respect to any person, any other person controlled by, controlling or under common control with such person. "Award" means either an Option or a Share Award granted under the Plan. "Board" means the Board of Directors of the Company. "CD&R Fund" means the Clayton, Dubilier & Rice Fund V Limited Partnership, a Cayman Islands exempted limited partnership, and any successor investment vehicle managed by Clayton, Dubilier & Rice, Inc. "Change in Control" means the first to occur of any of the following events: (i) the acquisition by any person, entity or "group" (as defined in Section 13(d) of the Act), other than the Company, its Subsidiaries, any employee benefit plan of the Company or its Subsidiaries, the CD&R Fund or any Affiliate of the CD&R Fund, of 50% or more of the combined voting power of the then outstanding voting securities of the Company; (ii) the merger or consolidation of the Company, as a result of which persons who were stockholders of the Company immediately prior to such merger or consolidation, do not, immediately thereafter, own, directly or indirectly, more than 50% of the combined voting power entitled to vote generally in the election of directors of the merged or consolidated company; (iii) the liquidation or dissolution of the Company other than a liquidation of the Company into any of its Subsidiaries; and (iv) the sale, transfer or other disposition of all or substantially all of the assets of the Company to one or more persons or entities that are not, immediately prior to such sale, transfer or other disposition, Affiliates of the Company or the CD&R Fund. "Company" means Dynatech Corporation, a Massachusetts corporation. "Effective Date" means the date on which the Plan is adopted by the Board. "Eligible Director" means a member of the Board who is not also an officer or employee of the Company or any Subsidiary or a representative of the CD&R Fund. "Fair Market Value" means the fair market value of a share of Stock, as determined in good faith by the Board, which determination after May 1999 shall be made on the basis of an independent valuation of the Stock and such other factors as the Board deems appropriate, including, without limitation, the earnings and certain other financial and operating information of the Company and its Subsidiaries in recent periods, the potential value of the Company and its Subsidiaries as a whole, the future prospects of the Company and its Subsidiaries and the industries in which they compete, the history and management of the Company and its Subsidiaries, the general condition of the securities markets, the fair market value of securities of companies engaged in businesses similar to those of the Company and its Subsidiaries and the trading price of the Stock. The determination of Fair Market Value will not give effect to any restrictions on transfer of the Stock, the fact that the Stock would represent a minority interest in the Company or the fact that the Stock is not liquid. The Fair Market Value as determined in good faith by the Board and in the absence of fraud shall be binding and conclusive upon all parties. Notwithstanding the foregoing, after any Public Offering, Fair Market Value on any date shall be the average of the high and low trading price of a share of Stock on the principal national securities exchange on which the Stock is admitted to trade or, if none, on the National Association of Securities Dealers Automated Quotation System if the Stock is admitted for quotation thereon; provided, however, that if any such exchange or quotation system is closed on - ----------------------- any day on which Fair Market Value is to be determined, Fair Market Value shall be determined as of the first day immediately preceding such day on which such exchange or quotation system was open for trading. 2 "Option" or "Stock Option" means any non-qualified stock option to purchase shares of Stock granted pursuant to Section 4. "Public Offering" means an underwritten public offering of the Stock after the Effective Date led by at least one underwriter of nationally recognized standing. "Share Award" means an award of Stock to an Eligible Director pursuant to Section 5. "Stock" means the Common Stock of the Company, no par value, subject to adjustments pursuant to Section 3. "Stock Account" shall mean a memorandum account established to record the Share Awards otherwise distributable to an Eligible Director which shall be deemed invested in Units. "Subsidiary" means any corporation or other entity (other than the Company) in any unbroken chain of corporations or other entities, beginning with the Company if each of the corporations or entities (other than the last corporation or entity in the unbroken chain) owns stock or other interests possessing 50% or more of the total combined voting power of all classes of stock or other interests in one of the other corporations or entities in the chain. "Units" shall have the meaning ascribed thereto in Section 5(c). Section 2. Administration of Plan ---------------------- The Plan shall be administered by the Board. The Board shall have the power and authority to adopt, alter and repeal such rules, guidelines and practices for administration of the Plan and for its own acts and proceedings as it shall deem advisable; to interpret the terms and provisions of the Plan and any Award (including related written instruments); to make all determinations it deems advisable for the administration of the Plan; to decide all disputes arising in connection with the Plan; and to otherwise supervise the administration of the Plan. All decisions and interpretations of the Board shall be binding on all persons, including the Company and Eligible Directors. 3 Section 3. Shares Issuable under the Plan; Mergers; Substitution ----------------------------------------------------- (a) Shares Issuable. The aggregate maximum number of shares of Stock --------------- reserved and available for issuance under the Plan shall be 750,000. For purposes of this limitation, the shares of Stock underlying any Awards which are forfeited, canceled, reacquired by the Company other than through the payment of cash or the distribution of property (including Stock) or otherwise terminated (other than by exercise) shall be added back to the shares of Stock available for issuance under the Plan. Shares of Stock issued under the Plan may be authorized but unissued shares or shares reacquired by the Company. (b) Stock Dividends, Mergers, etc. In the event of a stock dividend, ----------------------------- stock split or similar change in capitalization affecting the Stock, the Board shall make appropriate adjustments to prevent the enlargement or diminution of the rights of any participant in (i) the number and kind of shares of stock or - securities with respect to which Awards may thereafter be granted, (ii) the -- number and kind of shares remaining subject to outstanding Options, (iii) the --- option or purchase price in respect of any shares subject to any outstanding Options and (iv) the number of Shares to be awarded pursuant to a Share Award. -- In the event of any merger, consolidation, dissolution or liquidation of the Company, the Board in its sole discretion may, as to any outstanding Options, make such substitution or adjustment in the aggregate number of shares reserved for issuance under the Plan and the number and purchase price (if any) of shares subject to such Options as it may determine and as may be permitted by the terms of such transaction, or amend or terminate such Options upon such terms and conditions as it shall provide (which, in the case of the termination of the vested portion of any Option, shall require payment or other consideration which the Board deems equitable in the circumstances). Section 4. Stock Options ------------- (a) Grant of Options. Each Eligible Director shall automatically be ---------------- granted a Stock Option to purchase 25,000 shares of Stock on the later to occur of November 30, 1998 and the date he or she is first elected to the Board. The exercise price per share for the Stock covered by a Stock Option granted hereunder shall be equal to the Fair Market Value of the Stock on the date the Stock Option is granted. (b) Option Term. Except as otherwise expressly provided herein, the term ----------- of each Stock Option shall be ten years after the date the option is granted. 4 (c) Exercise; Termination; Non-transferability. ------------------------------------------ (1) Except as otherwise expressly provided herein, each Option granted hereunder shall be and become exercisable in five equal annual installments on each of the first five anniversaries of the date of grant of such Option, provided that the Eligible Director is still serving as a member of the Board on the relevant anniversary date. (2) No Stock Option granted under this Section 4 shall be transferable by an Eligible Director otherwise than by will or by the laws of descent and distribution, and such Options shall be exercisable, during the Eligible Director's lifetime only by him or her. Any Option granted to an Eligible Director and outstanding on the date of his or her death may be exercised by the legal representative or legatee of the optionee for a period of six months from the date of death until the expiration of the stated term of the option, if earlier. (3) Options granted under this Section 4 may be exercised, in whole or in part, by written notice to the Company specifying the number of shares to be purchased. Payment of the full purchase price of the shares to be purchased may be made in cash, by certified or bank check or by such other instrument acceptable to the Board or, with the consent of the Board, in whole or in part in the form of shares of Stock that are not then subject to restrictions under any Company plan and that have been held, unrestricted, by the optionee for at least six months. For purposes of the Plan, such surrendered shares shall be valued at Fair Market Value on the exercise date. (4) An optionee shall have the rights of a shareholder only as to shares acquired upon the exercise of a Stock Option and not as to unexercised Stock Options. The delivery of certificates representing the shares of Stock to be purchased pursuant to the exercise of a Stock Option will be contingent upon receipt from the optionee (or a purchaser acting in his stead in accordance with the provisions of the Stock Option) by the Company of the full purchase price for such shares and the fulfillment of any other requirements contained in the Stock Option or applicable provisions of law. To the extent deemed necessary or appropriate by the Company, such certificates shall bear appropriate legends. 5 Section 5. Share Awards ------------ (a) Grant. Except to the extent that an Eligible Director elects to ----- defer receipt of a Share Award, each Eligible Director shall receive, in advance and on the first day of each calendar quarter, a Share Award in respect of that number of shares of Stock recommended by the Compensation Committee of the Board of Directors and approved by the Board. The number of shares of Stock awarded in respect of Share Awards for each calendar year shall be issued in lieu of other any fees (including, but not limited to, any annual retainer fees, meeting fees or chairman's fees) that would be payable for services as a director, and are expected to have a value (at the time the number of shares subject to quarterly Share Awards for such year are established) approximately equal to the amount of fees that would be payable to each Eligible Director for his or her services based on appropriate competitive practices. For periods prior to 2000, the quarterly Share Award will be 4,000 shares of Stock. (b) Deferral. Prior to the later of the last day of the calendar year -------- in which any Share Awards will be made and the date on which an Eligible Director commences services as a director, such Eligible Director may elect to defer receipt of all or any part of any Share Awards to be made in the next calendar year (or, in the case an election made prior to service on the Board, in the remainder of the then current calendar year) and to have such deferred portion of the Share Award credited to the Eligible Director's Stock Account. A deferral election shall be made by written notice filed with the Clerk of the Company. Such election shall continue in effect (including with Share Awards payable for subsequent calendar years) unless and until the Eligible Director revokes or modifies such election by written notice filed with the Clerk of the Company. Any such revocation or modification of a deferral election shall become effective as of the end of the calendar year in which such notice is given and only with respect to Share Awards to be made in subsequent calendar years. Amounts credited to the Eligible Director's Stock Account prior to the effective date of any such revocation or modification of a deferral election shall not be affected by such revocation or modification and shall be distributed only in accordance with the otherwise applicable terms of the Plan. An Eligible Director who has revoked an election to participate in the Plan may file a new election to defer Share Awards granted in the calendar year following the year in which such new election is filed. (c) Stock Account. Any Share Award deferred shall be deemed to be ------------- invested in a number of notional shares of Stock (the "Units") equal to the number of shares of Stock subject to the portion of the Share Award deferred. Whenever a dividend other than a dividend payable in the form of shares is declared with respect to the shares, the number of Units in an Eligible Director's Stock Account shall be increased by the number of Units determined by dividing (i) the product of (A) the number of Units in such Stock Account on the - - related dividend record date and (B) the amount of any cash dividend declared by - 6 the Company on a share (or, in the case of any dividend distributable in property other than Stock, the per Share Award of such dividend, as determined by the Company for purposes of income tax reporting) by (ii) the Fair Market -- Value on the related dividend payment date. In the case of any dividend declared on shares of Stock which is payable in Stock, the Eligible Director's Stock Account shall be increased by the number of Units equal to the product of (i) the number of Units credited to his or her Stock Account on the related - dividend record date and (ii) the number of shares (including any fraction -- thereof) distributable as a dividend on a share. In the event of any change in the number or kind of outstanding shares by reason of any recapitalization, reorganization, merger, consolidation, stock split or any similar change affecting the Stock, other than a stock dividend as provided above, the Board shall make an appropriate adjustment in the number of Units credited to the Eligible Director's Stock Account. (d) Distribution from Accounts Upon Termination of Service as a Director. -------------------------------------------------------------------- All distributions from an Eligible Director's Stock Account shall be in shares of Stock, except that any fractional shares distributable shall be paid in cash based on the Fair Market Value of a share on the date of distribution. At the time an Eligible Director makes a deferral election, such Eligible Director shall also file with the Clerk of the Company a written election with respect to (i) when distribution from such Stock Account shall commence (e.g., at a fixed - ---- date, immediately following the date the Eligible Director ceases to be a director or on the first business day of any calendar year following the calendar year in which the Eligible Director ceases to be a director) and (ii) -- whether such distribution shall be in a single distribution or in such number of annual installments (not to exceed ten) as the Eligible Director may designate. An Eligible Director may at any time, and from time to time, change any distribution election applicable to his or her Stock Account, provided that no ------------- election to change the timing of any terminal distribution shall be effective unless it is made in writing and received by the Clerk of the Company at least one full calendar year prior to the time at which the Eligible Director ceases to be a director. If an Eligible Director fails to specify a commencement date for a distribution in accordance herewith, such distribution shall commence on the first business day of the calendar year immediately following the year in which the Eligible Director ceases to be a director. If an Eligible Director fails to specify that a distribution shall be made in a single distribution or a number of installments, such distribution shall be made in a single distribution. In the case of any distribution being made in annual installments, each installment after the first installment shall be paid on the first business day of each subsequent calendar year until the entire amount subject to such installment distribution election shall have been paid. Any distribution in installments shall be in respect of the greatest number of whole shares determined by multiplying the number of Units standing to the credit of the Eligible Director by a fraction, the numerator of which is one (1) and the denominator of which shall be the number of installments (including the current 7 installment) yet to be paid; provided that the last installment shall always be ------------- the balance in the Eligible Director's Stock Account. Section 6. Amendments and Termination -------------------------- The Board may, at any time, amend or discontinue the Plan and may, at any time, amend or cancel any outstanding Award for the purpose of satisfying changes in law or for any other lawful purpose, but no such action shall adversely affect rights under any outstanding Award without the holder's consent. Section 7. Change in Control Provisions. ---------------------------- (a) Options. In the event of a Change in Control, each Option shall ------- become fully vested and exercisable and may, in the discretion of the Board, be canceled in exchange for a payment in accordance with subparagraph (iii) below of an amount equal to the excess, if any, of (i) the product of the Change in - Control Price multiplied by the aggregate number of shares of Stock covered by such Option immediately prior to the Change in Control over (ii) the aggregate -- Option Price for all shares subject to such Option. Payment of the amount calculated in accordance with the immediately preceding sentence shall be made in cash or, if the transaction giving rise to the Change in Control is intended to qualify for pooling of interests accounting treatment, in a number of shares of Stock having a value (based on the Change in Control Price) equal to such amount, as soon as reasonably practicable, but in no event later than 30 days, following the Change in Control. (b) Alternative Awards. Notwithstanding paragraph (a), no cancellation, ------------------ termination, acceleration of exercisability or vesting or settlement or other payment shall occur with respect to any outstanding Option if the Board (as constituted immediately prior to the consummation of the transaction constituting the Change in Control) reasonably determines, in good faith, prior to the Change in Control that such outstanding Options shall be honored or assumed, or new rights substituted therefor (such honored, assumed or substituted Options being hereinafter referred to as an "Alternative Awards") by the acquiring entity (or the direct or indirect parent thereof) provided that -------- any Alternative Awards must: (i) provide the participant with rights and entitlements substantially equivalent to or better than the rights and entitlements applicable under the terms of such participant's outstanding Options immediately prior to the consummation of the transaction constituting the Change in Control, including, but not limited to, an identical or better exercise and vesting schedule and identical or better timing and methods of exercise or payment; 8 (ii) have substantially equivalent economic value to such outstanding Options (determined at the time of the Change in Control); and (iii) have terms and conditions which provide that in the event that the participant suffers an involuntary termination of his Board membership within two years following a Change in Control: (x) any conditions on the participant's rights under, or any restrictions on transfer or exercisability applicable to, each Alternative Award held by such participant shall be waived or shall lapse, as the case may be; or (y) the participant shall have the right to surrender such Alternative Award within 30 days following such termination in exchange for a payment equal to the excess of the fair market value of the stock subject to the Alternative Award over the price, if any, that the participant would be required to pay to exercise such Alternative Award, which payment shall be made in cash or, if the transaction giving rise to the Change in Control is intended to qualify for pooling of interests accounting treatment, in a number of shares of the stock subject to the Alternative Award having a fair market value equal to such amount. Section 8. General Provisions ------------------ (a) No Distribution; Compliance with Legal Requirements. The Board may --------------------------------------------------- require each person acquiring shares of Stock pursuant to an Award to represent to and agree with the Company in writing that such person is acquiring the shares without a view to distribution thereof. No shares of Stock shall be issued pursuant to an Award until all applicable securities law and other legal and stock exchange requirements have been satisfied. The Board may require the placing of such stock-orders and restrictive legends on certificates for Stock and Options as it deems appropriate. (b) Delivery of Stock Certificates. Delivery of stock certificates to ------------------------------ participants under this Plan shall be deemed effected for all purposes when the Company or a share transfer agent of the Company shall have delivered such certificates in the United States mail, addressed to the participant, at the participant's last known address on file with the Company. (c) Other Compensation Arrangements; No Rights to Board Membership. -------------------------------------------------------------- Nothing contained in this Plan shall prevent the Board from adopting other or additional compensation arrangements for Directors; and such arrangements may be either generally applicable or applicable only in specific cases. The adoption of the Plan and the grant of 9 Options do not confer upon any Director any right to continued membership on the Board. (d) Status of Plan. With respect to the portion of any Option which has -------------- not been exercised, a participant shall have no rights greater than those of a general creditor of the Company. Section 9. Effective Date of Plan ---------------------- The Plan shall become effective upon approval by the Board; provided -------- that no further grants of Awards shall be made hereunder after the first meeting - ---- of shareholders of the Company occurring after the date of adoption of the Plan unless the Plan is approved at or before such meeting by the holders of a majority of the shares of capital stock of the Company present or represented and entitled to vote at a meeting of shareholders. Section 10. Governing Law ------------- This Plan shall be governed by Massachusetts law except to the extent such law is preempted by federal law. 10 -----END PRIVACY-ENHANCED MESSAGE-----