<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
UNIDYNE CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
UNIDYNE CORPORATION
118 Pickering Way, Suite 104
Exton, Pennsylvania 19341
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON WEDNESDAY, JUNE 11, 1997
To the stockholders of UNIDYNE CORPORATION:
Notice is hereby given that the annual meeting of stockholders of
UNIDYNE CORPORATION (the "Company") will be held at the Hotel
Inter-Continental, Beekman Room II, 111 East 48th Street, New York, New York
10017, on Wednesday, June 11, 1997 at 4:00 p.m., for the following purposes:
(i) To elect two Class A directors to serve for three year terms
until the 2000 annual meeting and until their respective
successors are elected and qualified;
(ii) To consider and act upon a proposal to approve the 1997
Omnibus Stock Incentive Plan;
(iii) To ratify the selection of Arthur Andersen LLP as independent
auditors for the fiscal year ending December 31, 1997; and
(iv) To consider and act upon any matters incidental to the
foregoing or any other matters which may properly come before
the meeting or any adjournments or postponements thereof.
Only stockholders of record at the close of business on April 18, 1997
will be entitled to notice and to vote at the annual meeting and any
adjournments or postponements thereof.
By Order of the Board of Directors,
/s/ CHARLOTTE DOREMUS
Charlotte Doremus
Secretary
May 9, 1997
Exton, Pennsylvania
IMPORTANT
IT IS IMPORTANT THAT YOUR SHARES ARE REPRESENTED AT THE ANNUAL MEETING
OF THE STOCKHOLDERS. ACCORDINGLY, PLEASE COMPLETE, SIGN, DATE AND PROMPTLY
RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED POSTAGE PAID ENVELOPE. IF YOU
SO CHOOSE, YOU MAY VOTE YOUR SHARES IN PERSON AT THE MEETING.
<PAGE> 3
UNIDYNE CORPORATION
118 Pickering Way, Suite 104
Exton, Pennsylvania 19341
-------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
June 11, 1997
This Proxy Statement and the accompanying proxy card are being mailed
to stockholders commencing on or about May 9, 1997. The accompanying proxy is
solicited by the Board of Directors of UNIDYNE Corporation (the "Company") for
use at its annual meeting of stockholders to be held at the Hotel
Inter-Continental, Beekman Room II, 111 East 48th Street, New York, New York
10017, on Wednesday, June 11, 1997 at 4:00 p.m., and any adjournments or
postponements thereof. The cost of solicitation of proxies will be borne by
the Company. Directors, officers and a limited number of employees may assist
in the solicitation of proxies by mail, telephone and personal interview
without additional compensation.
When a proxy is returned properly signed, the shares represented
thereby will be voted by the persons named as proxies in accordance with the
stockholder's directions. You are urged to specify your choices on the
enclosed proxy card. If the proxy is signed and no instructions are given, the
shares will be voted "FOR" the nominees named herein under proposal number 1
and "FOR" proposals number 2 and 3 as set forth in the preceding Notice of
Annual Meeting, and in the proxies' discretion as to other matters that may
properly come before the meeting. The presence of a stockholder at the annual
meeting will not automatically revoke a stockholder's proxy. A stockholder
may, however, revoke a proxy at any time prior to the voting thereof on any
matter by filing with the Secretary of the Company a written notice of
revocation, by delivering a duly executed proxy bearing a later date or by
attending the annual meeting and voting in person.
The Board of Directors has fixed April 18, 1997 as the record date for
the meeting. Only stockholders of record on the record date are entitled to
notice of and to vote at the meeting and any adjournments or postponements
thereof. As of April 18, 1997, there were 8,646,890 shares of the Company's
Common Stock, par value $.001 per share (the "Common Stock"), and 500,000
shares of the Company's Class A Convertible Preferred Stock, par value $10.00
per share (the "Preferred Stock"), issued and outstanding. Each share of
Common Stock is entitled to one vote. A majority of the outstanding shares
will constitute a quorum at the meeting. Abstentions and broker non-votes are
counted for purposes of determining the presence or absence of a quorum for the
transaction of business. Abstentions are counted in tabulations of the votes
cast on proposals presented to stockholders, whereas broker non-votes are not
counted for purposes of determining whether a proposal has been approved.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth certain information as of April 18,
1997, with respect to the shares of Common Stock of the Company beneficially
owned by (i) any person who is known to the Company to be the beneficial owner
of five percent or more of the outstanding Common Stock of the Company, (ii)
each director of the Company and each of the nominees for election as director
of the Company, (iii)
<PAGE> 4
each of the executive officers named in the Summary Compensation Table
beginning on page 8 (the "Summary Compensation Table") and (iv) all directors
and executive officers as a group.
BENEFICIAL OWNERS
<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT(1/) AND NATURE OF PERCENTAGE OF
BENEFICIAL OWNER OWNERSHIP CLASS
<S> <C> <C>
Capital Idea, Inc. 5,103,860(2/) 49%
118 Pickering Way, Suite 104
Exton, PA 19341
C. Eugene Hutcheson 5,316,360(3/) 51%
UNIDYNE Corporation
118 Pickering Way, Suite 104
Exton, PA 19341
Charlotte E. Doremus 5,316,360(4/) 51%
UNIDYNE Corporation
118 Pickering Way, Suite 104
Exton, PA 19341
David M. Barrett, Esq. 1,014,866(5/) 10%
1000 Thomas Jefferson Street, NW
Suite 305
Washington, DC 20007
Dr. Frank B. Holze 1,269,805(6/) 12%
l'Astoria
26 bis, Blvd. Princess Charlotte
MC98000 Monaco
</TABLE>
- ----------------------------------
(1/) Unless otherwise indicated, all ownership is direct.
(2/) Includes 500,000 shares which Capital Idea, Inc. ("Capital Idea"),
a Colorado corporation, has the right to acquire upon conversion of the
Company's Preferred Stock.
(3/) Includes 107,927 shares which Mr. Hutcheson has the right to
acquire within sixty days through the exercise of options, 4,603,860 shares
owned by Capital Idea, of which Mr. Hutcheson is Chairman of the Board of
Directors and Chief Executive Officer and a 50% shareholder, and 500,000
shares which Capital Idea has the right to acquire upon conversion of the
Company's Preferred Stock.
(4/) Includes 167,957 shares which Ms. Doremus has the right to acquire
within sixty days through the exercise of options, 4,603,860 shares owned
by Capital Idea, of which Ms. Doremus is a director, Secretary and
Treasurer, and a 50% shareholder, and 500,000 shares which Capital Idea has
the right to acquire upon conversion of the Preferred Stock.
(5/) Includes 247,923 shares which Mr. Barrett has the right to acquire
within sixty days through the exercise of options.
(6/) Includes 500,000 shares owned by Darnley Holdings, Ltd., a Bahamian
corporation, of which Dr. Holze is Director, and 34,848 shares which Dr. Holze
has the right to acquire within sixty days through the exercise of options.
2
<PAGE> 5
DIRECTORS, DIRECTOR NOMINEES AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
NAME AND ADDRESS OF POSITION AMOUNT(1/) PERCENTAGE OF
BENEFICIAL OWNER CLASS
<S> <C> <C> <C>
C. Eugene Hutcheson Chairman of the Board of 5,316,360(2/) 51%
Directors, Chief Executive
Officer, President and Director
Timothy M. Flynn Senior Vice President and Chief 108,000(3/) 1%
Financial Officer
David M. Barrett, Esq. Director 1,014,866(4/) 10%
Dr. Frank B. Holze Director 1,269,805(5/) 12%
Charlotte E. Doremus Chief Administrative Officer, 5,316,360(6/) 51%
Secretary, Treasurer, Director and
Director Nominee
John M. Lison, Esq. Director and Director Nominee 100,100(7/) 1%
Brian C. Phelps President - Leasing Division 101,576(8/) 1%
</TABLE>
- ----------------------------------
(1/) Unless otherwise indicated, all ownership is direct.
(2/) Includes 107,927 shares which Mr. Hutcheson has the right to
acquire within sixty days through the exercise of options, 4,603,860 shares
owned by Capital Idea, of which Mr. Hutcheson is Chairman of the Board of
Directors and Chief Executive Officer and a 50% shareholder, and 500,000 shares
which Capital Idea has the right to acquire upon conversion of the Company's
Preferred Stock.
(3/) Includes 101,000 shares which Mr. Flynn has the right to acquire
within sixty days through the exercise of options.
(4/) Includes 247,923 shares which Mr. Barrett has the right to acquire
within sixty days through the exercise of options.
(5/) Includes 500,000 shares owned by Darnley Holdings, Ltd., a Bahamian
corporation, of which Dr. Holze is Director, and 34,848 shares which Dr. Holze
has the right to acquire within sixty days through the exercise of options.
(6/) Includes 167,957 shares which Ms. Doremus has the right to acquire
within sixty days through the exercise of options, 4,603,860 shares owned
by Capital Idea, of which Ms. Doremus is a director, Secretary and
Treasurer, and a 50% shareholder, and 500,000 shares which Capital Idea has
the right to acquire upon conversion of the Company's Preferred Stock.
(7/) Includes 95,823 shares which Mr. Lison has the right to acquire
within sixty days through the exercise of options, and 100 shares owned by
Mr. Lison's children, in which Mr. Lison disclaims any beneficial interest.
3
<PAGE> 6
<TABLE>
<S> <C> <C> <C>
Delbert A. Warosh President of Dynamatic 103,000(9/) 1%
Corporation
James M. Liou President and Chief Operating 100,000(10/) 1%
Officer - Unidyne Test Systems, ---------- --
Inc.
Directors and Executive 8,326,207 80%
Officers as a group
</TABLE>
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Company's directors and executive officers, and persons who own
more than ten percent of a registered class of the Company's equity securities,
to file with the Securities and Exchange Commission ("SEC") initial reports of
ownership and reports of changes in ownership of Common Stock and other equity
securities of the Company. Officers, directors and greater than ten percent
beneficial owners are required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms they file. To the Company's knowledge, based
solely on its review of the copies of such reports furnished to the Company and
written representations that no other reports were required, all Section 16(a)
filing requirements applicable to its officers, directors and greater than ten
percent beneficial owners were complied with during the fiscal year ended
December 31, 1996.
CHANGES IN CONTROL
The Company was incorporated under the laws of the State of Delaware
on December 1, 1980, under the name of Blue Jay Energy Corporation, to engage
in oil and gas exploration and development. Subsequently, the Company changed
its name to Blue Jay Enterprises, Inc. ("Blue Jay"). In or about 1986, Blue
Jay ceased operations in the oil and gas field and until 1990 confined its
activities to the winding up of matters arising out of the prior years'
operations. Blue Jay discontinued all business operations in or about 1990.
On September 2, 1996, Blue Jay completed the acquisition of all the
issued and outstanding stock of United Dynamatics, Inc. ("UDI"), a Delaware
corporation, and certain assets of Capital Idea in exchange for a total of
6,677,031 shares of the Company's Common Stock. The number of shares issued in
exchange for the Assets constituted approximately 90% of the Company's Common
Stock at the time of issuance. Prior to acquisition of the Assets, Robert M.
Bernstein owned 51.9% of the Company's issued and outstanding Common Stock.
After the acquisition, Mr. Bernstein's shares represented less than 5% of the
Company's issued and outstanding Common Stock. After the acquisition, Blue Jay
changed its name to UNIDYNE Corporation.
- ----------------------------------
(8/) Includes 70,000 shares which Mr. Phelps has the right to acquire
within sixty days through the exercise of options and 6,600 shares which Mr.
Phelps holds as custodian.
(9/) Includes 100,000 shares which Mr. Warosh has the right to acquire
within sixty days through the exercise of options.
(10/) Includes 100,000 shares which Mr. Liou has the right to
acquire within sixty days through the exercise of options.
4
<PAGE> 7
PROPOSAL NUMBER 1
ELECTION OF DIRECTORS
Pursuant to Delaware law, the Board of Directors of the Company has
voted to fix the number of directors at five and to classify the Board of
Directors. The members of each class are elected for terms to continue until
the annual meeting of stockholders held in the third year following the year of
their election and until their respective successors are elected and qualified.
Consequently, the term of office of the nominees elected to the Board of
Directors at the 1997 annual meeting will continue until the annual meeting of
stockholders to be held in 2000 and until their respective successors are
elected and qualified.
The nominees for the two Class A Directors to be voted upon at the
meeting are Charlotte E. Doremus and John M. Lison, Esq., the current holders
of the Class A directorships. PROXIES WILL BE VOTED FOR THESE NOMINEES UNLESS
OTHERWISE SPECIFIED IN THE PROXY. Management does not contemplate that any of
the nominees will be unable to serve, but in such an event, proxies solicited
hereby will be voted for the election of another person or persons, if any, to
be designated by the Board of Directors.
The affirmative vote of a majority of the outstanding shares of the
Company's Common Stock present or represented at the annual meeting is required
for the election of directors.
The following table sets forth information regarding Ms. Doremus and
Mr. Lison, the nominees for the Board of Directors, as well as information
regarding each director whose term is not to expire until the 1998 or 1999
annual meeting of stockholders and each executive officer of the Company. The
number of years remaining in the term of office for each director is listed
below. All directors have served since their election on September 2, 1996,
except for John Lison who was elected on March 10, 1997.
<TABLE>
<CAPTION>
NAME AGE POSITION TERM (YEARS
REMAINING IN TERM)
<S> <C> <C> <C>
C. Eugene Hutcheson 54 Chief Executive Officer, Two
Chairman of the Board of
Directors and President
Charlotte E. Doremus 53 Chief Administrative -----
Officer, Secretary,
Treasurer, Director and
Director Nominee
David M. Barrett, Esq. 59 Director Two
Dr. Frank B. Holze 58 Director One
</TABLE>
5
<PAGE> 8
<TABLE>
<S> <C> <C> <C>
John M. Lison, Esq. 52 Director and Director -----
Nominee
Timothy M. Flynn 41 Senior Vice President N/A
and Chief Financial
Officer
Brian C. Phelps 42 President - Leasing N/A
Division
Delbert A. Warosh 59 President - Dynamatic N/A
Corporation
James M. Liou 62 President and Chief N/A
Operating Officer -
UNIDYNE Test Systems,
Inc.
</TABLE>
C. EUGENE HUTCHESON has been Chief Executive Officer, Chairman of the Board of
Directors and President of the Company since September 2, 1996 and of UDI since
its inception in 1995. He was a co-founder of UDI and is Chairman of the Board
and President of Maxwell Dynamometer Systems, Inc. ("Maxwell"). Mr. Hutcheson
serves as Chairman and Chief Executive Officer of Dynamatic Corporation
("Dynamatic") and of Capital Idea, which he founded in 1989. Previously, he
was the Chairman and the President of CIDCO Group, Inc., which developed and
patented products for the packaging and container industry.
CHARLOTTE E. DOREMUS has been Chief Administrative Officer, Secretary,
Treasurer, and a Director of the Company since September 2, 1996 and of UDI and
Kenosha Corporation since its inception in 1995, and is currently a nominee for
Director of the Company. Ms. Doremus is also Secretary/Treasurer and a
Director of Maxwell and Capital Idea. Ms. Doremus has been an investor in
start-up companies for more than ten years. Ms. Doremus has also been an
Assistant to the Research Director and head of the Portfolio Review Department
at Argus Research Corp. and a Registered Representative and Portfolio Analyst
for Dean Witter Reynolds in New York City.
DAVID M. BARRETT, Esq., a Director of the Company since September 1996, is a
senior partner of the law firm of Barrett & Schuler, Washington, D.C. Mr.
Barrett has been an instructor in law at Notre Dame Law School. He has been an
Assistant United States Attorney for the District of Columbia and has been
appointed Independent Counsel for an investigation of a Cabinet Member of the
President of the United States.
DR. FRANK B. HOLZE, a Director of the Company since September 1996, founded and
manages Holze International Investment, a Monaco-based investment consulting
firm. Dr. Holze was with ITT Corporation for 12 years. Subsequently, Dr.
Holze was Vice President and a member of the board of management in Europe for
the Thyssen-Bornemisza Group, which is based in Monaco, and was general manager
of a number of the Group's companies.
6
<PAGE> 9
JOHN M. LISON, Esq., a Director of the Company since March 1997, and a nominee
for Director of the Company, is founder and managing partner of a Chicago-based
law firm, Lison & Griffin, P.C. where he oversees the firm's finance,
government relations, acquisitions and re-structuring practices. Lison
formerly served as Vice President, Secretary and General Counsel for Atcor,
Inc., a manufacturing company. Prior to that, Lison was Vice President, Legal
for Heizer Corporation.
TIMOTHY M. FLYNN has been Senior Vice President and Chief Financial Officer of
the Company since September 2, 1996 and of UDI since May 1996. From May 1991
until May 1996, Mr. Flynn was responsible for the Credit and Administration
functions for North, Central and South America at Konica Business Machines USA,
Inc.
BRIAN C. PHELPS joined the Company on February 1, 1997, to head a to-be-formed
leasing subsidiary of the Company, which will handle leases for the Maxwell
Emission Test Systems dynamometers. Mr. Phelps has 18 years experience in
executive management, including sales, business development, pricing, program
management, product development, operations and asset management. Prior to
joining the Company, Mr. Phelps held various executive officer positions at
Tokai Financial Services, Inc., including Director of Major Accounts, Director
of Asset Management, Director of Major Account Sales, and Director of National
Accounts.
DELBERT A. WAROSH has been President of Dynamatic since June 1996. Mr. Warosh
has held various management positions at Dynamatic over the past 30 years.
Prior to his appointment as President, Mr. Warosh was the Plant General
Manager.
JAMES M. LIOU has been President and Chief Operating Officer of the Company's
subsidiary, UNIDYNE Test Systems, Inc., since March 10, 1997. Prior to joining
the Company, Mr. Liou served as President of Ulan Corporation and Thai-Nippon
Foods of Haward, California until 1994, when he retired. Mr. Liou also served
previously as an executive of Ricca International. Mr. Liou presently serves
as a consultant to a U.S. container company doing business in China.
INFORMATION ABOUT BOARD OF DIRECTORS AND COMMITTEES
DIRECTORS AND EXECUTIVE OFFICERS
Directors who are not employees of the Company or otherwise
compensated by the Company did not receive any compensation for services
rendered in such capacity for the fiscal year ended December 31, 1996 but are
eligible to participate in the Company's 1996 Stock Option Plan (the "Plan")
and the 1997 Omnibus Stock Incentive Plan. Pursuant to the Plan, each eligible
director is granted options at the discretion of the Board of Directors. In
the fiscal year ended December 31, 1996, pursuant to the Plan, Charlotte E.
Doremus and C. Eugene Hutcheson were each granted options to purchase 212,500
shares of the Company's Common Stock, David M. Barrett, Esq. was granted
options to purchase 241,000 shares of the Company's Common Stock, and Frank B.
Holze was granted options to purchase 31,000 shares of the Company's Common
Stock, each at a per share exercise price of $3.25. Additionally, directors
who are also employees of the Company were eligible to participate in the
Company's 1996 Employee Stock Purchase Plan. For a discussion of the Company's
1997 Omnibus Stock Incentive Plan, see "Proposal Number 2 - Proposal to Approve
1997 Omnibus Stock Incentive Plan."
7
<PAGE> 10
The Company's Board of Directors held seven meetings during the fiscal
year ended December 31, 1996. All of the directors attended at least 75% of
these meetings and any meetings of any committees of which such director was a
member.
The Board of Directors has a standing Compensation Committee. This
committee is reconstituted at the first meeting of the Board of Directors
following the annual meeting of stockholders. The Compensation Committee,
which met one time during the fiscal year ended December 31, 1996, reviews and
makes recommendations to the full Board regarding the compensation of senior
officers of the Company. The present members of this committee are Messrs.
Barrett (Chairman) and Lison.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Executive Compensation. The following table provides certain summary
information concerning the compensation paid or accrued by the Company to or on
behalf of its Chief Executive Officer and other named executive officers of the
Company for services rendered in all capacities to the Company and its
subsidiaries for the year ended December 31, 1996 and the four months ended
December 31, 1995.
SUMMARY COMPENSATION TABLE(1/)
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
ANNUAL COMPENSATION AWARD PAYOUTS
NAME AND PRINCIPAL YEAR SALARY BONUS OTHER ANNUAL RESTRICTED OPTIONS/SARS LTIP
POSITION COMPENSATION STOCK PAYOUT
AWARDS
<S> <C> <C> <C> <C> <C> <C> <C>
C. Eugene Hutcheson 1996 234,000 ----- ----- ----- 212,500 -----
Chief Executive 1995 128,000 ----- ---(2/) ----- ----- -----
Officer, Chairman of
the Board of
Directors, President
and Director
Charlotte E. Doremus 1996 204,000 ----- ----- ----- 212,500 -----
Chief Administrative 1995 68,000 ----- ----- ----- ----- -----
Officer, Secretary,
Treasurer and Director
and Director Nominee
Dr. Frank B. Holze 1996 ----- ----- ---(3/) ----- 31,000 -----
Director 1995 ----- ----- ---(3/) ----- ----- -----
</TABLE>
- ----------------------------------
(1/) The compensation information for 1995 is for the period from
inception (September 1, 1995) to December 31, 1995.
(2/) Excludes a fee of $125,000 for services rendered in connection with
the acquisition of the Division.
(3/) Excludes consulting fees for the year ended December 31, 1996 and
the four months ended December 31, 1995 of $100,000 and $67,000 respectively.
8
<PAGE> 11
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
David M. Barrett, Esq. 1996 ----- ----- ---(4/) ----- 241,000 -----
Director 1995 ----- ----- ---(4/) ----- ----- -----
John M. Lison, Esq. 1996 ----- ----- ---(5/) ----- ----- -----
Director and Director 1995 ----- ----- ----- ----- ----- -----
Nominee
Timothy M. Flynn 1996 48,000 ----- ----- ----- 3,000 -----
Chief Financial 1995 ----- ----- ----- ----- ----- -----
Officer and Senior
Vice President
Delbert A. Warosh 1996 114,000 ----- ----- ----- ----- -----
President-Dynamatic 1995 33,000 ----- ----- ----- ----- -----
David E. Ingram 1996 63,000 ----- ----- ----- ----- -----
Executive Vice
President - Maxwell 1995 ----- ----- ----- ----- ----- -----
Brian C. Phelps 1996 ----- ----- ----- ----- ----- -----
President - Leasing 1995 ----- ----- ----- ----- ----- -----
Division
James M. Liou 1996 ----- ----- ----- ----- ----- -----
President and Chief 1995 ----- ----- ----- ----- ----- -----
Operating Officer -
UNIDYNE Test Systems,
Inc.
</TABLE>
Directors of the Company did not receive any compensation for services rendered
in such capacity for the twelve months ended December 31, 1996 and the four
months ended December 31, 1995.
Option/SAR Grants in Last Fiscal Year. The following table provides
information on option grants in the fiscal year ended December 31, 1996 to the
named executive officers. There were no options granted for the four months
ended December 31, 1995 to the named executive officers.
OPTIONS GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF SHARES % OF TOTAL OPTIONS EXERCISE PRICE EXPIRATION DATE
UNDERLYING GRANTED TO PER SHARE
NAME OPTIONS EMPLOYEES IN FISCAL
YEAR
<S> <C> <C> <C> <C>
C. Eugene Hutcheson 212,500 31% $3.25 September 2, 2001
Charlotte E. 212,500 31% 3.25 September 2, 2001
Doremus
</TABLE>
- ----------------------------------
(4/) Excludes legal fees to Barrett & Schuler for the year ended December
31, 1996 and the four months ended December 31, 1995 of $156,000 and $44,500,
respectively.
(5/) Excludes legal fees to Lison & Griffin, P.C. for the year ended
December 31, 1996 of $56,370.
9
<PAGE> 12
<TABLE>
<S> <C> <C> <C> <C>
Dr. Frank B. Holze 31,000 4% 3.25 September 2, 2001
David M. Barrett, 241,000 34% 3.25 September 2, 2001
Esq.
Timothy M. Flynn 3,000 less than 1% 3.25 September 2, 2001
</TABLE>
Aggregated Option/SAR Exercises in Last Fiscal Year and FY-End
Option/SAR Values. The following table provides information on option
exercises in the fiscal year ended December 31, 1996 by the named executive
officers and the value of such officers' unexercised options at December 31,
1996.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END
OPTION/SAR VALUES
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Number of Value of
Securities Unexercised
Underlying In-the-Money
Unexercised Options/SARs at
Options/SARs at FY-End ($)
FY-End (#)
Name Shares Acquired Value Realized Exercisable/ Exercisable/
on Exercise (#) ($) Unexercisable Unexercisable
<S> <C> <C> <C> <C>
C. Eugene Hutcheson 84,615 $49,076.70 127,885 $287,741.25
Charlotte E. Doremus 24,615 14,276.70 187,885 422,741.25
David M. Barrett, Esq. 12,308 7,138.64 228,692 514,557.00
Dr. Frank B. Holze 31,000 17,980.00 0 0.00
Timothy M. Flynn 2,000 1,160.00 1,000 2,250.00
</TABLE>
EMPLOYMENT ARRANGEMENTS
None of the executive officers of the Company are employed pursuant to
an employment agreement. Each executive officer is an employee "at will" and
may be terminated from, or may leave, the Company's employment at any time.
The Company has a consulting arrangement with Holze
10
<PAGE> 13
International Investment, of which Dr. Frank B. Holze, a director of the
Company, is the only principal. The consulting arrangement provides for
monthly payments of $8,333 until September 1, 1997.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company was provided administrative services by Capital Idea
through August 31, 1996. In the twelve months ended December 31, 1996, and the
four months ended December 31, 1995, the Company recorded administrative
expense of $127,000 and $62,000, respectively.
The Company was provided legal services by the firm Barrett and
Schuler. David M. Barrett, Esq., a director of the Company, is a partner in
the firm. The Company paid or accrued $156,000 and $44,500 for the year ended
December 31, 1996 and for the four months ended December 31, 1995,
respectively.
The Company paid C. Eugene Hutcheson a fee of $125,000 for services
rendered in connection with the acquisition of the Eddy Current Drive Division
of Eaton Corporation. Effective with the acquisition, the Division commenced
operations as Dynamatic, a wholly-owned subsidiary of UDI.
The Company sub-leases its Exton, Pennsylvania facility from Capital
Idea. The amount paid by the Company equals the amount paid by Capital Idea to
the landlord. The amounts charged to expense for the twelve months ended
December 31, 1996 and the four months ended December 31, 1995 were $92,400 and
$30,800 respectively.
On December 31, 1996, the Company acquired 81% of Maxwell from Capital
Idea for 500,000 shares of Preferred Stock. The Preferred Stock was entitled
to receive dividends in the amount of 7% of the liquidation preference of $10.
The Preferred Stock is redeemable by the Company on or after January 1, 2002 at
the redemption price of $11 per share and was convertible to Common Stock at
the rate of .54 of a share of Common Stock for each share of Preferred Stock.
In March 1997, Capital Idea agreed to pledge the Preferred Stock as collateral
for a loan to the Company. In exchange, the Company agreed to amend the terms
of the Preferred Stock to provide that it is convertible into Common Stock at
the rate of one share of Common Stock for each share of Preferred Stock and
that the Preferred Stock will have the same voting rights as Common Stock.
PROPOSAL NUMBER 2
PROPOSAL TO APPROVE 1997 OMNIBUS STOCK INCENTIVE PLAN
PROPOSAL
Summary of Incentive Plan. The following description of certain features of
the 1997 Omnibus Stock Incentive Plan (the "Incentive Plan") is intended to be
a summary only. The summary is qualified in its entirety by the full text of
the Incentive Plan, a copy of which is attached hereto as Exhibit A.
The Board of Directors has adopted the Incentive Plan for officers,
directors and other employees of the Company and its subsidiaries, subject to
the approval of the Incentive Plan by the stockholders. The Incentive Plan is
to be administered by the Company's Board of Directors. The Company
anticipates that approximately 140 persons will be eligible to participate in
the Incentive Plan.
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<PAGE> 14
The Incentive Plan provides for the granting of incentive stock
options ("Incentive Stock Options") within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), nonqualified stock
options, stock appreciation rights ("SARs") and grants of shares of Common
Stock subject to certain restrictions ("Restricted Stock") up to a maximum of
2,000,000 shares to officers, directors, employees and others. Incentive Stock
Options can be awarded only to employees and directors of the Company at the
time of the grant. No options, SARs or restricted stock may be granted under
the Incentive Plan subsequent to January 16, 2007. As of April 18, 1997, the
market value of the Company's Common Stock was $6.00 per share.
The Incentive Plan is administered by the Board of Directors, which
determines the terms and conditions of the options, SARs and Restricted Stock
granted under the Incentive Plan, including the exercise price, number of
shares subject to the option and the exercisability thereof.
The exercise price of all Incentive Stock Options granted under the
Incentive Plan must equal at least the fair market value of the Common Stock on
the date of grant. In the case of an optionee who owns stock possessing more
than ten percent of the total combined voting power of all classes of stock of
the Company ("Substantial Stockholders"), the exercise price of Incentive Stock
Options must be at least 110% of the fair market value of the Common Stock on
the date of grant. The exercise price of all nonqualified stock options
granted under the Incentive Plan shall be determined by the Board of Directors.
The term of any Incentive Stock Option granted under the Incentive Plan may not
exceed ten years, or, for Incentive Stock Options granted to Substantial
Stockholders, five years. The Incentive Plan may be amended or terminated by
the Board of Directors, but no such action may impair the rights of a
participant under a previously granted option.
The Incentive Plan provides the Board of Directors the discretion to
determine when options granted thereunder shall become exercisable and the
vesting period of such options. All options terminate and no longer are
exercisable three months after termination of a participant's employment or
relationship with the Company, unless termination is due to death or
disability, in which case the options are exercisable within one year of
termination.
The Incentive Plan provides that upon a change in control of the
Company, all previously granted options and SARs immediately shall become
exercisable in full and all Restricted Stock immediately shall vest and any
applicable restrictions shall lapse. The Incentive Plan defines a change of
control as the consummation of a tender offer for 25% or more of the
outstanding voting securities of the Company, a merger or consolidation of the
Company into another corporation less than 75% of the outstanding voting
securities of which are owned in aggregate by the stockholders of the Company
immediately prior to the merger or consolidation, the sale of substantially all
of the Company's assets other than to a wholly-owned subsidiary, or the
acquisition by any person, business or entity other than by reason of
inheritance of over 25% of the Company's outstanding voting securities.
The Incentive Plan provides the Board of Directors discretion to grant
SARs in connection with any grant of options. Upon the exercise of a SAR, the
holder shall be entitled to receive a cash payment in an amount equal to the
difference between the exercise price per share of options then exercised by
him and the fair market value of the Common Stock as of the exercise date. The
holder is required to exercise options covering the number of shares which are
subject to the SAR so exercised. SARs are not exercisable during the first six
months after the date of grant, and may be transferred only by will or the laws
of descent and distribution.
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<PAGE> 15
The Incentive Plan also provides the Board of Directors discretion to
grant to key persons shares of Restricted Stock subject to certain limitations
on transfer and substantial risks of forfeiture.
New Plan Benefits. The following table provides information on
benefits or amounts that will be received by or allocated to the Company's
Chief Executive Officer and the Company's executive officers, directors and
employees under the Incentive Plan.
NEW PLAN BENEFITS
1997 OMNIBUS STOCK INCENTIVE PLAN
<TABLE>
<CAPTION>
NAME AND POSITION DOLLAR VALUE ($) NUMBER OF UNITS
<S> <C> <C>
C. Eugene Hutcheson, Chief Executive $ --- ---
Officer, Chairman of the Board of Directors,
President and Director
Charlotte E. Doremus, Chief Administrative --- ---
Officer, Secretary, Treasurer, Director and
Director Nominee
Timothy M. Flynn, Chief Financial Officer 600,000 100,000
and Senior Vice President
Delbert A. Warosh, President - Dynamatic 600,000 100,000
David E. Ingram, Executive Vice President - 600,000 100,000
Maxwell
James M. Liou, President and Chief Operating 600,000 100,000
Officer - UNIDYNE Test Systems, Inc.
Brian C. Phelps, President - Leasing 420,000 70,000
Division ---------- -----------
Executive Group 2,820,000 470,000
---------- -----------
Frank B. Holze, Director 300,000 50,000
David M. Barrett, Esq. Director 300,000 50,000
John M. Lison, Esq., Director and Director 600,000 100,000
Nominee ---------- -----------
Non-Executive Director 1,200,000 200,000
Group ---------- -----------
</TABLE>
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<PAGE> 16
<TABLE>
<S> <C> <C>
Philip F. Evans, Senior Engineer - Maxwell 300,000 50,000
Betty A. Scott, Consultant 156,250 25,000
Michael Hipkiss, Sales Representative 156,250 25,000
Steven Strickland, Sales Representative 156,250 25,000
Craig W. Rodgers, Engineer - Dynamatic 62,500 10,000
Douglas A. Behr, Engineer - Dynamatic 62,500 10,000
Peter J. Fanduzzi, Engineer - Dynamatic 62,500 10,000
Douglas J. Haas, Plant Manager - Maxwell 31,250 5,000
Herbert J. Pearlman, Plant Manager - 300,000 50,000
Dynamatic
Richard G. Tanguay, Controller - Dynamatic 150,000 25,000
John E. Long, Controller - Maxwell 31,250 5,000
Brian J. Krause, Sales Representative - 31,250 5,000
Dynamatic ---------- -----------
Non-Executive Officer 1,500,000 245,000
Employee Group ---------- -----------
</TABLE>
Income Tax Considerations of Incentive Plan Participation. With respect to
non-qualified stock options, in general, for federal income tax purposes under
present law:
(i) The grant of a non-qualified stock option, by itself,
by the Company will not result in income to the optionee.
(ii) Except as provided in (v) below, the exercise of a
non-qualified stock option (in whole or in part, according to its
terms) will result in ordinary income to the optionee at that time in
an amount equal to the excess (if any) of the fair market value of the
shares on the date of exercise over the option price.
(iii) Except as provided in (v) below, the tax basis of the
shares acquired upon exercise of a non-qualified stock option, which
will be used to determine the amount of any capital gain or loss on a
future taxable disposition of such shares, will be the fair market
value of the shares on the date of exercise.
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<PAGE> 17
(iv) No deduction will be allowable to the Company upon
the grant of a non-qualified stock option, but upon the exercise of a
non-qualified stock option, a deduction will be allowable to the
Company at that time in an amount equal to the amount of ordinary
income realized by the optionee exercising such option if the Company
complies with appropriate federal withholding and reporting
requirements.
(v) With respect to the exercise of a non-qualified stock
option and the payment of the option price by the delivery of shares
of Common Stock, to the extent that the number of shares received does
not exceed the number of shares surrendered, no taxable income will be
realized by the optionee at that time, the tax basis of the shares
received will be the same as the tax basis of the shares surrendered,
and the holding period of the optionee in the shares received will
include his holding period in the shares surrendered. To the extent
that the number of shares received exceeds the number of shares
surrendered, ordinary income will be realized by the optionee at that
time in the amount of the fair market value of such excess shares, the
tax basis of such excess shares will be equal to the fair market value
of such shares at the time of exercise, and the holding period of the
optionee in such excess shares will begin on the date such shares are
transferred to the optionee.
With respect to Incentive Stock Options, in general, for federal income tax
purposes under present law:
(i) Neither the grant nor the exercise of an Incentive
Stock Option, by itself, will result in income to the optionee;
however, the excess of the fair market value of the shares at the time
of exercise over the option price is (unless there is a disposition of
the shares acquired upon exercise of an incentive stock option in the
taxable year of exercise) includable in alternative minimum taxable
income which may, under certain circumstances, result in an
alternative minimum tax liability to the optionee.
(ii) If the shares acquired upon exercise of an Incentive
Stock Option are disposed of in a taxable transaction after the later
of two years from the date on which the option is granted or one year
from the date on which such shares are transferred to the optionee,
long-term capital gain or loss will be realized by the optionee in an
amount equal to the difference between the amount realized by the
optionee and the optionee's basis which, except as provided in (v)
below, is the option price.
(iii) Except as provided in (v) below, if the shares
acquired upon the exercise of an Incentive Stock Option are disposed
of within the two-year period from the date of grant or the one-year
period after the transfer of the shares to the optionee (a
"disqualifying disposition"):
(a) Ordinary income will be realized by the
optionee at the time of such disposition in the amount of the
excess, if any, of the fair market value of the shares at the
time of such exercise over the option price, but not in an
amount exceeding the excess, if any, of the amount realized by
the optionee on the disposition over the fair market value of
the shares at the time of such exercise.
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<PAGE> 18
(b) Short-term or long-term capital gain will be
realized by the optionee at the time of any such taxable
disposition in an amount equal to the excess, if any, of the
amount realized over the fair market value of the shares at
the time of such exercise.
(c) Short-term or long-term capital loss will be
realized by the optionee at the time of any such taxable
disposition in an amount equal to the excess, if any, of the
option price over the amount realized.
(iv) No deduction will be allowed to the employer
corporation with respect to Incentive Stock Options granted or shares
transferred upon exercise thereof, except that if a disposition is
made by the optionee within the two-year period or the one-year period
referred to above, the employer corporation will be entitled to a
deduction in the taxable year in which the disposition occurred in an
amount equal to the amount of ordinary income realized by the optionee
making the disposition if the employer corporation complies with
appropriate federal withholding and reporting requirements.
(v) With respect to the exercise of an Incentive Stock
Option and the payment of the option price by the delivery of shares
of Common Stock, to the extent that the number of shares received does
not exceed the number of shares surrendered, no taxable income will be
realized by the optionee at that time, the tax basis of the shares
received will be the same as the tax basis of the shares surrendered,
and the holding period (except for purposes of the one-year period
referred to in (iii) above) of the optionee in shares received will
include his holding period in the shares surrendered. To the extent
that the number of shares received exceeds the number of shares
surrendered, no taxable income will be realized by the optionee at
that time, such excess shares will be considered Incentive Stock
Option stock with a zero basis, and the holding period of the optionee
in such shares will begin on the date such shares are transferred to
the optionee. If the shares surrendered were acquired as the result
of the exercise of an Incentive Stock Option and the surrender takes
place within two years from the date the option relating to the
surrendered shares was granted or within one year from the date of
such exercise, the surrender will result in a disqualifying
disposition and the optionee will realize ordinary income at that time
in the amount of the excess, if any, of the fair market value at the
time of exercise of the shares surrendered over the basis of such
shares. If any of the shares received are disposed of in a
disqualifying disposition, the optionee will be treated as first
disposing of the shares with a zero basis.
With respect to SARs, in general, for federal income tax purposes
under present law no income will be realized by a recipient in connection with
the grant of any SAR. The recipient must include in ordinary income the amount
of cash received on the exercise of a SAR. If the recipient receives shares of
Common Stock upon exercise of a SAR, the federal income tax treatment with
respect to the receipt of such stock after such exercise will be identical to
that applicable to Common Stock acquired pursuant to the exercise of a
nonqualified option. The Company will be entitled to a deduction equal to the
amount included in the recipient's income by reason of the exercise of a SAR in
its taxable year in which or with which ends the taxable year of the recipient
in which such income was recognized.
With respect to restricted stock, in general, for federal income tax
purposes under present law no income will be realized by a recipient on the
grant of restricted stock. Instead, the recipient will
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<PAGE> 19
include in ordinary income an amount equal to the fair market value of the
shares in the first taxable year in which the shares are transferable or are
not subject to a substantial risk of forfeiture. The Company will be entitled
to a deduction in an amount equal to a recipient's ordinary income in the
Company's taxable year in which or with which ends the taxable year of the
recipient in which the recipient includes such amount in income.
The federal income tax information presented herein is only a general
summary of the applicable provisions of the Code and regulations promulgated
thereunder as in effect on the date of this Proxy Statement. The actual
federal, state, local, and foreign tax consequences to the optionee may vary
depending upon his particular circumstances.
RECOMMENDATION
The Board of Directors believes that employee benefits and other
incentive awards can play an important role in the success of the Company by
encouraging and enabling the officers and other 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. The Board of Directors anticipates that
providing such persons with a direct stake in the Company will assure a closer
identification of the interests of participants in the Incentive Plan with
those of the Company, thereby stimulating their efforts on the Company's behalf
and strengthening their desire to remain with the Company.
The Board of Directors believes that the proposed Incentive Plan,
which provides for a greater range of stock-based incentive awards, will help
the Company achieve its goals by keeping the Company's incentive compensation
program dynamic and competitive with those of other companies. Accordingly,
the Board of Directors believes that the Incentive Plan is in the best
interests of the Company and its stockholders and recommends that the
stockholders approve the Incentive Plan. The Incentive Plan will not take
effect unless it is approved by the affirmative vote of the holders of at least
a majority of the shares of the Common Stock present or represented and
entitled to vote at the annual meeting of stockholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE INCENTIVE PLAN BE APPROVED,
AND THEREFORE RECOMMENDS A VOTE FOR THIS PROPOSAL.
PROPOSAL NUMBER 3
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected Arthur Andersen LLP, independent
certified public accountants, to audit the books, records and accounts of the
Company for the fiscal year ending December 31, 1997. In accordance with a
vote of the Board of Directors, this selection is being presented to the
stockholders for ratification at this meeting.
The firm of Arthur Andersen LLP has audited the books of the Company
since September 2, 1996. Prior to September 2, 1996, the Company's books were
audited by Jones, Jensen & Co., which was dismissed from its position as the
Company's independent auditor on September 2, 1996, by the Company which acted
upon authorization of its Board of Directors. Except as described below, the
reports of the Company's prior principal accountant for the two most recent
fiscal years did not contain
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<PAGE> 20
an adverse opinion or disclaimer of opinion, or modification as to uncertainty,
audit scope, or accounting principles. The reports related to periods before
the Company acquired its current business operations and to periods in which
the Company was a development stage company. Accordingly, the reports noted
that the Company was a development stage company which had no significant
operating results to the date of such reports and stated that unless the
Company was able to obtain significant outside financing, there existed
substantial doubt of its ability to continue as a going concern.
During the Company's two most recent fiscal years and any subsequent
interim period through the date of dismissal, there were no disagreements with
the Company's former principal accountant on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure.
Arthur Andersen LLP has no direct or indirect material financial
interest in the Company. A representative of Arthur Andersen LLP is expected
to be present at the meeting and will be given the opportunity to make a
statement, if he so desires. The representative also will be available to
respond to questions raised by those in attendance at the meeting.
The affirmative vote of a majority of the outstanding shares of the
Company's Common Stock present or represented at the annual meeting of
stockholders is required to approve the proposal. Ratification by the
stockholders is not required. If the proposal is not approved by the
stockholders, the Board of Directors does not plan to change the appointment
for the fiscal year ending December 31, 1997, but will consider the stockholder
vote in appointing auditors for fiscal 1998.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO RATIFY THE
SELECTION OF THE INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS.
OTHER MATTERS
The management of the Company knows of no matter not specifically
referred to above as to which any action is expected to be taken at the
meeting. It is intended, however, that the persons named as proxies in regard
to such other matters and the transaction of such other business as may
properly be brought before the meeting, as seems to them to be in the best
interest of the Company and its stockholders.
STOCKHOLDER PROPOSALS
In accordance with the rules established by the SEC for a proposal of
a stockholder to be included in the Board of Directors' Proxy Statement for the
Company's 1998 Annual Meeting, the proposal must be received at the principal
executive offices of the Company on or before January 1, 1998. Such a proposal
must also comply with the requirements as to form and substance established by
the SEC in order to be included in the Proxy Statement.
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<PAGE> 21
EXHIBIT A
UNIDYNE CORPORATION, INC.
1997 OMNIBUS STOCK INCENTIVE PLAN
1. General. This Omnibus Stock Incentive Plan (the
"Plan") provides eligible employees of UNIDYNE Corporation (the "Company") with
the opportunity to acquire or expand their equity interest in the Company by
making available for award or purchase shares of $.001 par value common stock
of the Company ("Common Shares"), through the granting of nontransferable
options to purchase Common Shares ("Stock Options"), the granting of Common
Shares subject to temporal restrictions on transfer and substantial risks of
forfeiture ("Restricted Stock"), and the granting of nontransferable options to
receive payments based on the appreciation of Common Shares ("SARs"). Stock
Options, Restricted Stock and SARs shall be collectively referred to herein as
"Grants"; an individual grant of Stock Options, Restricted Stock or SARs shall
be individually referred to herein as a "Grant". It is intended that key
employees may be granted, simultaneously or from time to time, Stock Options
that qualify as incentive stock options ("Incentive Stock Options") under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code") or
Stock Options that do not so qualify ("Non-qualified Stock Options"). No
provision of the Plan is intended or shall be construed to grant employees
alternative rights in any Incentive Stock Option granted under the Plan so as
to prevent such Stock Option from qualifying under Section 422 of the Code.
2. Purpose of the Plan. The purpose of the Plan is to
provide continuing incentives to key employees of the Company and of any
subsidiary corporation of the Company, by encouraging such key employees to
acquire new or additional share ownership in the Company, thereby increasing
their proprietary interest in the Company's business and enhancing their
personal interest in the Company's success.
For purposes of the Plan, a "subsidiary corporation" consists
of any corporation fifty percent (50%) of the stock of which is directly or
indirectly owned or controlled by the Company.
3. Effective Date of the Plan. The Plan shall become
effective upon its adoption by the Board of Directors, subject to approval by
holders of a majority of the outstanding shares of voting capital stock of the
Company. If the Plan is not so approved within twelve (12) months after the
date the Plan is adopted by the Board of Directors ("Board"), any Incentive
Stock Options hereunder shall be treated as options which do not qualify under
Section 422 of the Code. However, if the Plan is so approved, no further
shareholder approval shall be required with respect to the making of Grants
pursuant to the Plan, except as provided in Section 12 hereof.
4. Administration of the Plan. The Plan shall be
administered by the Board.
A majority of the Board shall constitute a quorum. The acts
of a majority of the members present at any meeting at which a quorum is
present (or acts unanimously approved in writing by the members of the Board)
shall constitute binding acts of the Board.
Subject to the terms and conditions of the Plan, the Board
shall be authorized and empowered:
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<PAGE> 22
(a) To select the key employees to whom Grants may be
made;
(b) To determine the number of Common Shares to be
covered by any Grant;
(c) To prescribe the terms and conditions of any Grants
made under the Plan, and the form(s) and agreement(s)
used in connection with such Grants, which shall
include agreements governing the granting of
Restricted Stock, Stock Options and/or SARs;
(d) To determine the time or times when Stock Options
and/or SARs will be granted and when they will
terminate in whole or in part;
(e) To determine the time or times when Stock Options and
SARs that are granted may be exercised;
(f) To determine, at the time a Stock Option is granted
under the Plan, whether such Option is an Incentive
Stock Option entitled to the benefits of Section 422
of the Code;
(g) To establish any other Stock Option agreement
provisions not inconsistent with the terms and
conditions of the Plan or, where the Stock Option is
an Incentive Stock Option, with the terms and
conditions of Section 422 of the Code; and
(h) To determine whether SARs will be made part of any
Grants consisting of Stock Options, and to approve
any SARs made part of any such Grants pursuant to
Section 9 hereof.
5. Employees Eligible for Grants. Grants may be made
from time to time to those key employees of the Company or a subsidiary
corporation, who are designated by the Board in its sole and exclusive
discretion. Key employees may include, but shall not necessarily be limited
to, members of the Board of Directors, and officers, of the Company and any
subsidiary corporation; however, Stock Options intended to qualify as Incentive
Stock Options shall only be granted to key employees while actually employed by
the Company or a subsidiary corporation. The Board may grant more than one
Stock Option, with or without SARs, to the same key employee. No Stock Option
shall be granted to any key employee during any period of time when such key
employee is on a leave of absence.
6. Shares Subject to the Plan. The shares to be issued
pursuant to any Grant made under the Plan shall be Common Shares. Either
Common Shares held as treasury stock, or authorized and unissued Common Shares,
or both, may be so issued, in such amount or amounts within the maximum limits
of the Plan as the Board of Directors shall from time to time determine. In
the event a SAR is granted in tandem with a Stock Option pursuant to Section 9
and such SAR is thereafter exercised in whole or in part, then such Stock
Option or the portion thereof to which the duly exercised SAR relates shall be
deemed to have been exercised for purposes of such Option, but may be made
available for reoffering under the Plan to any eligible employee.
Subject only to the provisions of the next succeeding
paragraph of this Section 6, the aggregate number of Common Shares made subject
to all Grants under the Plan shall be Two Million (2,000,000) Common Shares.
Such aggregate number of Common Shares shall not include any Common
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<PAGE> 23
Shares reacquired or never issued due to a forfeiture, exchange or
relinquishment of rights under a Grant made hereunder.
If, at any time subsequent to the date of adoption of the Plan
by the Board of Directors, the number of Common Shares are increased or
decreased, or changed into or exchanged for a different number or kind of
shares of stock or other securities of the Company or of another corporation
(whether as a result of a stock split, stock dividend, combination or exchange
of shares, exchange for other securities, reclassification, reorganization,
redesignation, merger, consolidation, recapitalization or otherwise): (i)
there shall automatically be substituted for each Common Share subject to an
unexercised Stock Option or SAR (in whole or in part) granted under the Plan,
the number and kind of shares of stock or other securities into which each
outstanding Common Share shall be changed or for which each such Common Share
shall be exchanged; (ii) the option price per Common Share or unit of
securities shall be increased or decreased proportionately so that the
aggregate purchase price for the securities subject to a Stock Option or SAR
shall remain the same as immediately prior to such event; and (iii) any
outstanding Restricted Stock that is converted, exchanged or otherwise changed
into a different number or kind of stock or security, shall continue to be
subject to any and all terms, conditions and restrictions originally applicable
to such Restricted Stock. In addition to the foregoing, the Board shall be
entitled in the event of any such increase, decrease or exchange of Common
Shares to make other adjustments to the securities subject to a Stock Option or
SAR, the provisions of the Plan, and to any related Stock Option or SAR
agreements (including adjustments which may provide for the elimination of
fractional shares), where necessary to preserve the terms and conditions of any
Grants hereunder.
7. Stock Option Provisions.
(a) General. The Board may grant to key employees (also
referred to as "optionees") nontransferable Stock Options that either qualify
as Incentive Stock Options under Section 422 of the Code or do not so qualify.
However, any Stock Option which is an Incentive Stock Option shall only be
granted within 10 years from the earlier of (i) the date this Plan is adopted
by the Board of Directors of the Company; or (ii) the date this Plan is
approved by the shareholders of the Company.
(b) Stock Option Price. The option price per Common
Share which may be purchased under an Incentive Stock Option under the Plan
shall be determined by the Board at the time of Grant, but shall not be less
than one hundred percent (100%) of the fair market value of a Common Share,
determined as of the date such Option is granted; however, if a key employee to
whom an Incentive Stock Option is granted is, at the time of the grant of such
Stock Option, an "owner," as defined in Section 422(b)(6) of the Code (modified
as provided in Section 424(d) of the Code) of more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company or any
subsidiary corporation (a "Substantial Shareholder"), the price per Common
Share of such Stock Option, as determined by the Board, shall not be less than
one hundred ten percent (110%) of the fair market value of a Common Share on
the date such Stock Option is granted. The option price per Common Share under
each Stock Option granted pursuant to the Plan which is not an Incentive Stock
Option shall be determined by the Board at the time of Grant. Except as
specifically provided above, the fair market value of a Common Share shall be
determined in accordance with procedures to be established by the Board. The
day on which the Board approves the granting of a Stock Option shall be
considered the date on which such Stock Option is granted.
(c) Period of Stock Option. The Board shall determine
when each Stock Option is to expire. However, no Incentive Stock Option shall
be exercisable for a period of more than ten (10)
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<PAGE> 24
years from the date upon which such Option is granted. Further, no Incentive
Stock Option granted to an employee who is a Substantial Shareholder at the
time of the grant of such Option shall be exercisable after the expiration of
(5) years from the date of grant of such Option.
(d) Limitation on Exercise and Transfer of Stock Options.
Only the key employee to whom a Stock Option is granted may exercise such Stock
Option, except where a guardian or other legal representative has been duly
appointed for such employee, and except as otherwise provided in the case of
such employee's death. No Stock Option granted hereunder shall be transferable
by an optionee other than by will or the laws of descent and distribution. No
Stock Option granted hereunder may be pledged or hypothecated, nor shall any
such Stock Option be subject to execution, attachment or similar process.
(e) Employment, Holding Period Requirements For Certain
Options. The Board may condition any Stock Option granted hereunder upon the
continued employment of the optionee by the Company or by a subsidiary
corporation, and may make any such Stock Option immediately exercisable.
However, the Board will require that, from and after the date of grant of any
Incentive Stock Option granted hereunder until the day three (3) months prior
to the date such Option is exercised, such optionee must be an employee of the
Company or of a subsidiary corporation, but always subject to the right of the
Company or any such subsidiary corporation to terminate such optionee's
employment during such period. Each Stock Option shall be subject to such
additional restrictions as to the time and method of exercise as shall be
prescribed by the Board. Upon completion of such requirements, if any, a Stock
Option or the appropriate portion thereof may be exercised in whole or in part
from time to time during the option period; however, such exercise right(s)
shall be limited to whole shares.
(f) Payment for Stock Option Price. A Stock Option shall
be exercised by an optionee giving written notice to the Company of his
intention to exercise the same, accompanied by full payment of the purchase
price. Such purchase price shall be paid with cash or check, or with a
surrender of Common Shares having a fair market value on the date of exercise
equal to that portion of the purchase price for which payment in cash or check
is not made. The Board may, in its sole discretion, approve other methods of
exercise for a Stock Option or payment of the option price, provided that no
such method shall cause any option granted under the Plan as an Incentive Stock
Option to not qualify under Section 422 of the Code, or cause any Common Share
issued in connection with the exercise of an option not to be a fully paid and
non-assessable Common Share.
(g) Certain Reissuances of Stock Options. To the extent
Common Shares are surrendered by an optionee in connection with the exercise of
a Stock Option in accordance with Section 7(f), new Stock Options shall
automatically be granted to such optionee (to the extent Common Shares remain
available for Grants); such newly-granted Stock Options shall have the
following terms and conditions:
(i) The number of Common Shares shall be equal to the
number of Common Shares being surrendered by the
optionee;
(ii) The option price per Common Share shall be equal to
the fair market value of Common Shares, determined on
the date of exercise of the Stock Options whose
exercise caused such Grant; and
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<PAGE> 25
(iii) The terms and conditions of such Stock Options shall
in all other respects replicate such terms and
conditions of the Stock Options whose exercise caused
such Grant, except to the extent such terms and
conditions are determined not to be wholly consistent
with the general provisions of this Section 7, or in
conflict with the remaining provisions of this Plan.
(h) Cancellation and Replacement of Stock Options and
Related Rights. The Board may at any time or from time to time permit the
voluntary surrender by an optionee who is the holder of any outstanding Stock
Options under the Plan, where such surrender is conditioned upon the granting
to such optionee of new Stock Options for such number of shares as the Board
shall determine, or may require such a voluntary surrender as a condition
precedent to the grant of new Stock Options. The Board shall determine the
terms and conditions of new Stock Options, including the prices at and periods
during which they may be exercised, in accordance with the provisions of this
Plan, all or any of which may differ from the terms and conditions of the Stock
Options surrendered. Any such new Stock Options shall be subject to all the
relevant provisions of this Plan. The Common Shares subject to any Stock
Option so surrendered shall no longer be charged against the limitation
provided in Section 6 of this Plan and may again become shares subject to the
Plan. The granting of new Stock Options in connection with the surrender of
outstanding Stock Options under this Plan shall be considered for the purposes
of the Plan as the granting of new Stock Options and not an alteration,
amendment or modification of the Plan or of the Stock Options being
surrendered.
(i) Limitation on Exercisable Incentive Stock Options.
The aggregate fair market value of the Common Shares first becoming subject to
exercise as Incentive Stock Options by a key employee during any given calendar
year shall not exceed the sum of one-hundred thousand dollars ($100,000). Such
aggregate fair market value shall be determined as of the date such Option is
granted, taking into account, in the order in which granted, any other
incentive stock options granted by the Company, or by a parent or subsidiary
thereof.
8. Restricted Stock.
(a) Grant. The Board shall determine the key employees
to whom, and the time or times at which, Grants of Restricted Stock will be
made, the number of shares of Restricted Stock to be granted, the price (if
any) to be paid by such key employees (subject to Section 8(b)), the time or
times within which such Restricted Stock grants may be subject to forfeiture,
and the other terms and conditions of the grants in addition to those set forth
in Section 8(b). The Board may condition the grant of Restricted Stock upon
the attainment of specified performance goals or such other factors as the
Board may determine in its sole discretion.
(b) Terms and Conditions. Restricted Stock granted under
the Plan shall contain any terms and conditions, not inconsistent with the
provisions of the Plan, imposed by the Board. A key employee who receives a
grant of Restricted Stock shall not have any rights with respect to such Grant,
unless and until such key employee has executed an agreement evidencing such
Grant in the form approved from time to time by the Board, has delivered a
fully executed copy thereof to the Company, and has otherwise complied with the
applicable terms and conditions of such Grant. In addition, Restricted Stock
granted under the Plan shall be subject to the following terms and conditions:
(i) The purchase price for Common Shares consisting of
Restricted Stock, if any, will be equal to their
stated value.
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<PAGE> 26
(ii) Grants of Restricted Stock shall only be accepted by
executing a Restricted Stock agreement and paying
whatever price (if any) is required under Section
8(b)(i).
(iii) Each key employee granted Restricted Stock shall be
issued a stock certificate in respect of such shares
of Restricted Stock. Such certificate shall be
registered in the name of such key employee, and
shall bear an appropriate legend referring to the
terms, conditions, and restrictions applicable to
such Grant.
(iv) Any stock certificates evidencing Common Shares
consisting of Restricted Stock shall either (A) be
held in custody by the Company until the employment
and other restrictions thereon shall all have lapsed;
or (B) be affixed with a legend, identifying such
Shares as Restricted Stock and expressly prohibiting
the sale, transfer, tender, pledge, assignment or
encumbrance of such Shares, as the Board shall
determine. With respect to any Restricted Stock held
in custody by the Company, the key employee granted
such Restricted Stock shall deliver to the Company a
stock power, endorsed in blank, relating to the
Common Shares represented by such Stock. With
respect to any Restricted Stock held by a key
employee under legend, the key employee granted such
Restricted Stock shall deliver to the Company an
acknowledgement that such Stock remains subject to a
substantial risk of forfeiture in the event of
termination of employment under certain
circumstances.
(v) Subject to the provisions of the Plan and the
Restricted Stock agreement, during a temporal period
set by the Board and commencing with the date of such
Grant (the "Restriction Period"), a key employee
shall not be permitted to sell, transfer, tender,
pledge, assign or otherwise encumber any Restricted
Stock granted under the Plan. However, the Board, in
its sole discretion, may provide for the lapse of
such transfer or other restrictions in installments,
or accelerate or waive such restrictions in whole or
in part, based on service, performance or other
factors and criteria selected by the Board.
(vi) Except as provided in this Section 8(b)(vi) and
Section 8(b)(v), a key employee shall have, with
respect to shares of Restricted Stock granted to him,
all of the rights of a shareholder of the Company,
including the right to vote such Stock and the right
to receive any dividends thereon. The Board, in its
sole discretion and as determined at the time of a
Grant of Restricted Stock, may permit or require cash
dividends otherwise due and payable to be deferred
and, if the Board so determines, reinvested either in
additional Restricted Stock (to the extent Common
Shares are available), or otherwise. Stock dividends
issued with respect to Restricted Stock shall be
treated as additional shares of Restricted Stock. As
Restricted Stock, such additional Common Shares will
be subject to the same restrictions, terms and
conditions applicable to the Restricted Stock with
respect to which such additional Common Shares were
issued.
(vii) No Restricted Stock shall be transferable by a key
employee other than by will or by the laws of descent
and distribution.
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<PAGE> 27
(c) Minimum Value Provisions. To ensure that Grants of
Restricted Stock reflect the performance of the Company and service of the key
employee, the Board may provide, in its sole discretion, for a tandem
performance-based award, or other grant, designed to guarantee a minimum value,
payable in cash or Common Shares, to the recipient of a Restricted Stock Grant,
subject to such performance, future service, deferral and other terms and
conditions as may be specified by the Board.
9. Stock Appreciation Rights. A key employee may be
granted the right to receive a payment based on the increase in the value of
Common Shares occurring after the date of such Grant; such rights shall be
known as Stock Appreciation Rights ("SARs"). SARs may (but need not) be
granted to a key employee in tandem with, and exercisable in lieu of
exercising, a Grant of Stock Options. SARs will be granted upon terms and
conditions specified by the Board, if the Company is the employer of the key
employee, or by a subsidiary corporation subject to the Board's approval, if
such subsidiary corporation is the employer of the key employee. No optionee
shall be entitled to SAR rights solely as a result of the grant of a Stock
Option to him. Any such rights, if granted, may only be exercised by the
holder thereof, either with respect to all, or a portion, of the Stock Option
to which it applies. When granted in tandem with a Stock Option, an SAR shall
provide that the holder of a Stock Option shall have the right to receive an
amount equal to one hundred percent (100%) of the excess, if any, of the fair
market value of the Common Shares covered by such Option, determined as of the
date of exercise of such SAR by the Board (in the same manner as such value is
determined for purposes of the granting of Stock Options), over the price to be
paid for such Common Shares under such Option. Such amount shall be payable by
either the Company or the subsidiary corporation, whichever is the employer of
the key employee, in one or more of the following manners, as determined by the
Board, if the Company is the employer of the key employee, or by the subsidiary
corporation subject to the Board's approval, if such subsidiary corporation is
the employer of the key employee:
(a) cash (or check);
(b) fully paid Common Shares having a fair market value
equal to such amount; or
(c) a combination of cash (or check) and Common Shares.
In no event may any person exercise any SARs granted hereunder unless (i) such
person is then permitted to exercise the Stock Option or the portion thereof
with respect to which such SARs relate, and (ii) the fair market value of the
Common Shares covered by the Stock Option, determined as provided above,
exceeds the option price of such Common Shares. Upon the exercise of any SARs,
the Stock Option, or that portion thereof to which such SARs relate, shall be
canceled and automatically extinguished. A SAR granted in tandem with a Stock
Option hereunder shall be made a part of the Stock Option agreement to which
such SAR relates, in a form approved by the Board and not inconsistent with
this Plan. The granting of a Stock Option or SAR shall impose no obligation
upon the optionee to exercise such Stock Option or SAR. The Company's or a
subsidiary corporation's obligation to satisfy SARs shall not be funded or
secured in any manner. No SAR granted hereunder shall be transferable by the
key employee granted such SAR, other than by will or the laws of descent and
distribution.
After the Grant of an SAR, an optionee intending to rely on an
exemption from Section 16(b) of the Securities Exchange Act of 1934 (the
"Exchange Act") shall be required to hold such SAR for six (6) months from the
date the price for such SAR is fixed to the date of cash settlement.
Additionally, in order to remain exempt from Section 16(b) of the Exchange Act,
an SAR must be exercised by an optionee subject to such Section only during the
period beginning on the third business
7
<PAGE> 28
day following the release of a summary statement of the Company's quarterly or
annual sales and earnings and ending on the twelfth business day following said
date.
10. Termination of Employment. If a key employee ceases
to be an employee of the Company and every subsidiary corporation, for a reason
other than death, retirement, or permanent and total disability, his Grants
shall, unless extended by the Board on or before his date of termination of
employment, terminate on the effective date of such termination of employment.
Neither the key employee nor any other person shall have any right after such
date to exercise all or any part of his Stock Options or SARs, and all
Restricted Stock which is not vested or otherwise subject to restriction shall
thereupon be forfeited, and/or declared void and without value.
If termination of employment is due to death or permanent and
total disability, then outstanding Stock Options and SARs may be exercised
within the one (1) year period ending on the anniversary of such death or
permanent and total disability. In the case of death, such outstanding Stock
Options and SARs shall be exercised by such key employee's estate, or the
person designated by such key employee by will, or as otherwise designated by
the laws of descent and distribution. Notwithstanding the foregoing, in no
event shall any Stock Option or SAR be exercisable after the expiration of the
option period, and in the case of exercises made after a key employee's death,
not to any greater extent than the key employee would have been entitled to
exercise such Option or SAR at the time of his death. Restricted Stock held by
a key employee whose employment by the Company or any subsidiary corporation
terminates by reason of death shall thereupon vest and all restrictions and
risks of forfeiture thereon shall thereupon lapse.
Subject to the discretion of the Board, in the event a key
employee terminates employment with the Company and all subsidiary corporations
because of normal or early retirement under any pension plan, (a) any then
outstanding Stock Options and/or SARs held by such key employee shall lapse at
the earlier of the end of the term of such Stock Option or SAR, or three (3)
months after such retirement or permanent and total disability; and (b) any
Restricted Stock held by such key employee shall thereafter vest and any
applicable restrictions shall lapse, to the extent such Restricted Stock would
have become vested or no longer subject to restriction within one year from the
time of termination had the key employee continued to fulfill all of the
conditions of the Restricted Stock during such period (or on such accelerated
basis as the Board may determine at or after date of Grant).
In the event an employee of the Company or one of its
subsidiary corporations is granted a leave of absence by the Company or such
subsidiary corporation to enter military service or because of sickness, his
employment with the Company or such subsidiary corporation shall not be
considered terminated, and he shall be deemed an employee of the Company or
such subsidiary corporation during such leave of absence or any extension
thereof granted by the Company or such subsidiary corporation.
11. Change of Control. Upon the occurrence of a Change
of Control (as defined below), notwithstanding any other provisions hereof or
of any agreement to the contrary, all Stock Options and SARs granted under
this Plan shall become immediately exercisable in full and all Restricted Stock
grants shall become immediately vested and any applicable restrictions shall
lapse.
For purposes of this Plan, a Change of Control shall be deemed
to have occurred if: (i) a tender offer shall be made and consummated for the
ownership of 25% or more of the outstanding voting securities of the Company;
(ii) the Company shall be merged or consolidated with another corporation and,
as a result of such merger or consolidation, less than 75% of the outstanding
voting
8
<PAGE> 29
securities of the surviving or resulting corporation shall be owned in the
aggregate by the former shareholders of the Company as the same shall have
existed immediately prior to such merger or consolidation; (iii) the Company
shall sell substantially all of its assets to any purchaser other then a wholly
owned subsidiary; or (iv) a person, within the meaning of Section 3(a)(9) or of
Section 13(d)(3) (as in effect on the date hereof) shall acquire, other than by
reason of inheritance, twenty-five percent (25%) or more of the outstanding
voting securities of the Company (whether directly, indirectly, beneficially or
of record). For purposes of this Plan, ownership of voting securities shall
take into account and shall include ownership as determined by applying the
provisions of Rule 13d-3(d)(1)(i) as in effect on the date hereof pursuant to
the Exchange Act.
12. Amendments to Plan. The Board is authorized to
interpret this Plan and from time to time adopt any rules and regulations for
carrying out this Plan that it may deem advisable. Subject to the approval of
the Board of Directors of the Company, the Board may at any time amend, modify,
suspend or terminate this Plan. In no event, however, without the approval of
shareholders, shall any action of the Board or the Board of Directors result
in:
(a) Materially amending, modifying or altering the
eligibility requirements provided in Section 5 hereof;
(b) Materially increasing, except as provided in Section
6 hereof, the maximum number of shares subject to
Grants; or
(c) Materially increasing the benefits accruing to
participants under this Plan;
except to conform this Plan and any agreements made hereunder to changes in the
Code or governing law.
13. Investment Representation, Approvals and Listing.
The Board may, if it deems appropriate, condition its grant of any Stock Option
hereunder upon receipt of a representation from the optionee which is
substantially as follows (and subject to modification from to tim in the
discretion of the Board):
I agree that any Common Shares of UNIDYNE Corporation which I may
acquire pursuant to this Stock Option shall be acquired for investment
purposes only and not with a view to distribution or resale, and may
not be transferred, sold, assigned, pledged, hypothecated or otherwise
disposed of by me unless (i) a registration statement or
post-effective amendment to a registration statement under the
Securities Act of 1933, as amended, with respect to said Common Shares
has become effective so as to permit the sale or other disposition of
said shares by me; or (ii) there is presented to UNIDYNE Corporation
an opinion of counsel satisfactory to UNIDYNE Corporation to the
effect that the sale or other proposed disposition of said Common
Shares by me may lawfully be made otherwise than pursuant to an
effective registration statement or post-effective amendment to a
registration statement relating to the said shares under the
Securities Act of 1933, as amended.
The Company shall not be required to issue any certificate or
certificates for Common Shares upon the exercise of any Stock Option or a SAR
granted under this Plan prior to (i) the obtaining of any approval from any
governmental agency which the Company shall, in its sole discretion, determine
to be necessary or advisable; (ii) the admission of such shares to listing on
any national securities
9
<PAGE> 30
exchange on which the Common Shares may be listed; (iii) the completion of any
registration or other qualifications of the Common Shares under any state or
federal law or ruling or regulations of any governmental body which the Company
shall, in its sole discretion, determine to be necessary or advisable or the
determination by the Company, in its sole discretion, that any registration or
other qualification of the Common Shares is not necessary or advisable; and
(iv) the obtaining of an investment representation from the optionee in the
form stated above or in such other form as the Company, in its sole discretion,
shall determine to be adequate.
14. General Provisions. The form and substance of Stock
Option agreements, Restricted Stock agreements, and SAR agreements made
hereunder, whether granted at the same or different times, need not be
identical. Nothing in this Plan or in any agreement shall confer upon any
employee any right to continue in the employ of the Company or any of its
subsidiary corporations, to be entitled to any remuneration or benefits not set
forth in this Plan or such Grant, or to interfere with or limit the right of
the Company or any subsidiary corporation to terminate his employment at any
time, with or without cause. Nothing contained in this Plan or in any Stock
Option agreement or SAR shall be construed as entitling any optionee to any
rights of a shareholder as a result of the grant of a Stock Option or an SAR,
until such time as Common Shares are actually issued to such optionee pursuant
to the exercise of such Option or SAR. This Plan may be assumed by the
successors and assigns of the Company. The liability of the Company under this
Plan and any sale made hereunder is limited to the obligations set forth herein
with respect to such sale and no term or provision of this Plan shall be
construed to impose any liability on the Company in favor of any employee with
respect to any loss, cost or expense which the employee may incur in connection
with or arising out of any transaction in connection with this Plan. The cash
proceeds received by the Company from the issuance of Common Shares pursuant to
this Plan will be used for general corporate purposes. The expense of
administering this Plan shall be borne by the Company. The captions and
section numbers appearing in this Plan are inserted only as a matter of
convenience. They do not define, limit, construe or describe the scope or
intent of the provisions of this Plan.
15. Termination of This Plan. This Plan shall terminate
on January 16, 2007, and thereafter no Stock Options or Restricted Stock or
SARs shall be granted hereunder. All Stock Options and SARs outstanding at the
time of termination of this Plan shall continue in full force and effect
according to their terms and the terms and conditions of this Plan.
IN WITNESS WHEREOF, the Company, by order of its Board of
Directors, has caused the undersigned, duly authorized officers to execute this
Plan as of the day and year first above written.
UNIDYNE CORPORATION
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
10
<PAGE> 31
DETACH HERE UDY F
P
UNIDYNE CORPORATION
R
118 PICKERING WAY, SUITE 104
O EXTON, PA 19341
X SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS, JUNE 11, 1997
Y
The undersigned hereby appoints C. Eugene Hutcheson and Charlotte E.
Doremus, each or either of them individually, attorneys with full power of
substitution, for and in the name of the undersigned, with all powers the
undersigned would possess if personally present, proxies to vote all of the
shares of the common stock of UNIDYNE Corporation held of record by the
undersigned on April 18, 1997, which the undersigned is entitled to vote at the
Annual Meeting of the Stockholders on June 11, 1997, or at any adjournment or
postponement thereof.
PLEASE DATE AND SIGN THIS PROXY IN THE SPACE PROVIDED ON THE REVERSE
SIDE AND RETURN IT IN THE ENCLOSED ENVELOPE WHETHER OR NOT YOU EXPECT TO ATTEND
THE MEETING IN PERSON. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN
THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDERS. IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2, AND 3.
CONTINUED AND TO BE SIGNED ON REVERSE SIDE SEE REVERSE
SIDE
<PAGE> 32
THIS IS YOUR PROXY.
YOUR VOTE IS IMPORTANT.
Regardless of whether or not you plan to attend the Annual Meeting of the
Stockholders, you can be sure your shares are represented at the Meeting by
promptly returning your proxy (attached below) in the enclosed envelope. Thank
you for your attention to this important matter.
DETACH HERE UDY F
PLEASE MARK
[X] VOTES AS IN
THIS EXAMPLE.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH PROPOSAL:
1. ELECTION OF DIRECTORS.
NOMINEES: Charlotte E. Doremus and John M. Lison to Class A Directorships for
3-year terms.
FOR WITHHELD
[ ] [ ]
-------------------------------------------------------------------------
WITHHOLD VOTE FROM THE NOMINEE THAT I/WE HAVE WRITTEN ON THE ABOVE LINE.
FOR AGAINST ABSTAIN
2. PROPOSAL TO APPROVE 1997 [ ] [ ] [ ]
OMNIBUS STOCK INCENTIVE
PLAN.
3. PROPOSAL TO RATIFY THE [ ] [ ] [ ]
APPOINTMENT OF ARTHUR
ANDERSEN LLP AS INDEPENDENT
PUBLIC ACCOUNTANTS OF THE
COMPANY.
4. In their discretion, upon other matters as may properly come before meeting.
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [ ]
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD AT ONCE USING THE ENCLOSED
ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE U.S.A.
PLEASE SIGN EXACTLY AS NAME APPEARS ON STOCK CERTIFICATE. IF JOINT ACCOUNT,
EACH OWNER SHOULD SIGN. WHEN SIGNING IN A REPRESENTATIVE CAPACITY, PLEASE GIVE
TITLE.
Signature: Date:
------------------------------ -----------------
Signature: Date:
------------------------------ -----------------
