UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
January 24, 2000
(Date of earliest event reported)
UNIDYNE CORPORATION
(Exact name of small business issuer
as specified in its charter)
DELAWARE 0-10372 23-2154902
(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation or Identification No.)
organization)
118 PICKERING WAY, SUITE 104, EXTON, PENNSYLVANIA 19341
(Address of principal executive offices)
(610) 363-8237
(Issuer's telephone number)
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ITEM 5. OTHER EVENTS
Chairman and Chief Executive Officer E. Eugene Hutcheson and Secretary/Treasurer
Charlotte E. Doremus resigned their posts as directors and officers of UNIDYNE
Corporation, effective Friday, January 21, 2000.
ITEM 7. EXHIBITS0
1. Agreement by and between UNIDYNE Corporation ("UNIDYNE"), its subsidiaries
and Charlotte E. Doremus, C. Eugene Hutcheson, and Capital Idea, Inc.
2. First Amendment to Stock Conversion Agreement
3. Press Release dated January 24, 2000.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
UNIDYNE Corporation
January 25, 2000 /s/ Wayne R. Lorgus
-----------------------------------
Wayne R. Lorgus, President
and
Chief Financial Officer
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Agreement by and between UNIDYNE Corporation ("UNIDYNE"), its
subsidiaries and Charlotte E. Doremus, C. Eugene Hutcheson, and
Capital Idea, Inc.
- --------------------------------------------------------------------------------
1. Charlotte E. Doremus and C. Eugene Hutcheson will resign their positions as
employees, officers, and directors of UNIDYNE Corporation and each of its
subsidiaries effective 21 January 2000 and will provide all necessary
assistance to the officers and directors of UNIDYNE in effecting the
transfer of their responsibilities to their successors as same including,
but not limited to, files, contacts, passwords, keys, procedures, and
status of all business opportunities presently active at UNIDYNE and any of
its subsidiaries, and by signing any legal documents required to transfer
title, power, responsibility and legal obligation for the assets used by
UNIDYNE, except as may be specifically excluded by mutual agreement, and
2. Charlotte E. Doremus and C. Eugene Hutcheson, individually and acting as
and through Capital Idea, Inc., will place the 4,603, 860 shares of UNIDYNE
Common stock owned by Capital Idea, Inc., the 100,005 shares of UNIDYNE
Common stock owned by C. Eugene Hutcheson, and the 44,543 shares of UNIDYNE
Common stock owned by Charlotte E. Doremus, as well as any other shares
directly or indirectly owned, or controlled by them, (and will complete the
conversion of the 500,000 shares of UNIDYNE Class B Convertible Preferred
Stock owned by Capital Idea, Inc. into 500,000 shares of UNIDYNE Common
Stock and include those 500,000 shares as well) in a voting trust, voting
powers over which shall be exercised by an individual who is not, presently
or formerly, a director, officer, or employee of UNIDYNE or any of its
subsidiaries, or by a banking institution or trust company. The
specification of the voting trustee and the terms of the voting trust
agreement are subject to the approval of the Board of Directors of UNIDYNE
Corporation, which approval shall not be unreasonably withheld. The written
voting trust agreement shall be completed and executed on or before
February 1, 2000. The foregoing actions shall not preclude them from future
sales of such stock to unrelated third parties as may be otherwise
permitted under applicable Federal and state securities laws and other
applicable laws, and
3. Capital Idea, Inc. will agree to modify the lease for 118 Pickering Way,
Suite 104 to terminate December 31, 2001, and
4. Capital Idea, Inc. will sign the First Amendment to Stock Conversion
Agreement, attached, and
5. Charlotte E. Doremus and C. Eugene Hutcheson will return and cancel: the
unexercised options for 167,957 shares of UNIDYNE common stock granted
Charlotte E. Doremus and the unexercised options for 87,495 shares of
UNIDYNE common stock granted C. Eugene Hutcheson under the UNIDYNE
Corporation 1996 Employee Stock Purchase Plan, and the unexercised options
for 500,000 shares of
<PAGE>
UNIDYNE Common stock granted Charlotte E. Doremus and the 500,000 shares of
UNIDYNE Common stock granted C. Eugene Hutcheson by the Board of Directors
in a unanimous consent as of June 28, 1999 in order to facilitate the
$10,000,000 Credit Facility with Congress Financial Corporation; so that as
of the date hereof, Capital Idea, Inc, Charlotte E. Doremus, and C. Eugene
Hutcheson shall retain no options to purchase shares of UNIDYNE Common
Stock.
6. Payments to Capital Idea, Inc. on the lease for 118 Pickering Way, Suite
104 shall be made on their due date, beginning February 1, 2000 through
December 1, 2001.
7. UNIDYNE will further take all reasonable steps to change vendors' accounts
currently in the name of Capital Idea, Inc. (Bell Atlantic, Bell Atlantic
Mobile, BFI, Mobil Oil, Office Max, Federal Express, Ameriquest,
Philadelphia Ball & Bearing, Copi Qwik, and InterTel) to UNIDYNE's name and
to substitute for Charlotte E. Doremus as the responsible party on the
UNIDYNE American Express Corporate Account and the Maxwell Dynamometers
Travelers VISA as soon as reasonably possible.
8. Capital Idea, Inc., Charlotte E. Doremus, and C. Eugene Hutcheson and
UNIDYNE agree to sign the necessary legal documents to effect and carry out
this agreement.
9. The parties hereto understand that the terms hereof shall be disclosed to
the public as soon as reasonably possible and that this document will be
filed with the Securities and Exchange Commission under Form 8-K.
IN WITNESS WHEREOF, the parties have executed this Agreement as of January 23,
2000.
ATTEST: UNIDYNE Corporation
by: /s/ Wayne R. Lorgus
- ------------------- -----------------------------------
Wayne R. Lorgus, President
/s/ Charlotte E. Doremus
- ------------------- -----------------------------------
Charlotte E. Doremus
/s/ C. Eugene Hutcheson
- ------------------- -----------------------------------
C. Eugene Hutcheson
<PAGE>
CAPITAL IDEA, INC.
by: /s/ C. Eugene Hutcheson
- ------------------- -----------------------------------
C. Eugene Hutcheson, President
By/s/ Charlotte E. Doremus
- ------------------- -----------------------------------
Charlotte E. Doremus, Secretary
<PAGE>
FIRST AMENDMENT TO STOCK CONVERSION AGREEMENT
This First Amendment to Stock Conversion Agreement (the "Agreement") is
entered into this 23rd day of January, 2000 by and between UNIDYNE Corporation,
a Delaware corporation ("UNIDYNE"), and Capital Idea, Inc., a Colorado
corporation ("Capital").
WHEREAS, the parties entered into an agreement dated June 2, 1999 (the
"Conversion Agreement") whereby Capital agreed to convert all of its UNIDYNE
Class B Convertible Preferred Stock to common stock and UNIDYNE agreed to pay
certain accrued dividends to Capital according to a schedule as set forth
therein (a copy of the conversion Agreement is attached hereto as Exhibit A);
WHEREAS, all 500,000 shares of Capital's UNIDYNE Class B Convertible
Preferred Stock has been converted to 500,000 shares of UNIDYNE common stock,
and the respective shares of stock have been delivered by the parties to each
other;
WHEREAS, UNIDYNE timely paid to Capital the first installment of accrued
dividends on or about June 4, 1999, receipt of which is hereby affirmed;
WHEREAS, UNIDYNE has not paid only one of the succeeding installments due
to Capital pursuant to the accrued dividend payment plan established in the
Conversion Agreement;
WHEREAS, the parties wish to cure all defaults that have occurred under the
Conversion Agreement and to waive any which cannot be cured;
WHEREAS, the parties wish to establish a new schedule for payment of the
accrued dividends that remain unpaid, in the total amount of $572,916.67 (the
"Unpaid Dividends"), together with simple interest thereon at the agreed rate;
WHEREAS, Capital is wholly owned by Charlotte E. Doremus and C. Eugene
Hutcheson who are also officers and directors of Capital, and who are officers,
directors and, collectively, owners of a majority of the issued and outstanding
shares of the common stock of UNIDYNE;
NOW, THEREFORE, the in consideration of the premises and other good and
valuable consideration, receipt of which is hereby acknowledged, the parties
hereby amend the Conversion Agreement as follows:
1. Cure and Waiver of Prior Defaults.
Delivery of this Agreement by UNIDYNE shall cure any prior default under
the Conversion Agreement, including but not limited to any default arising from
<PAGE>
failure to make payments when due of Unpaid Dividends.
Capital hereby waives and agrees that it shall not exercise any rights or
remedies that have arisen or to which it is entitled by virtue of any default
through the date of this Agreement, provided that this waiver shall not
constitute a waiver of its prospective right to enforce the Conversion Agreement
as modified by this Agreement.
2. Payment of Debt. In lieu of the installment payments set forth in the
Conversion Agreement, UNIDYNE shall pay to Capital on or before December 31,
2003, at 118 Pickering Way, Suite 104, Exton, Pennsylvania 19341, or at such
other place Capital may later designate in writing, in lawful money of the
United States of America and in immediately available funds, the lesser of (i)
the principal sum of FIVE HUNDRED SEVENTY-TWO THOUSAND NINE HUNDRED SIXTEEN AND
67/100 DOLLARS ($572,916.67) or (ii) the aggregate unpaid principal amount of
all remaining Unpaid Dividends, and pay interest from the date hereof on such
principal amount as is from time to time outstanding, in accordance with the
terms set forth herein.
3. Rate of Interest. The outstanding principal balance due under this Agreement
shall bear interest at the same annual rate as the minimum rate necessary in
order to avoid incurring "imputed interest" on the unpaid obligation under the
rules and regulations of the Internal Revenue service then in force for each
calendar year that the obligation remains unpaid.
4. Application of Payments. UNIDYNE may pay the Unpaid Dividends and accrued
interest thereon in whole or in part at any time prior to December 31, 2003 at
the sole discretion of its Board of Directors, provided that payment received by
Capital from or on behalf of UNIDYNE shall be applied first to the payment of
interest which is due and payable and only thereafter to the outstanding
principal balance of the Unpaid Dividends.
5. Modification. This Agreement embodies all of the understandings and
obligations between the parties with respect to the subject matter hereof. No
amendment or modification of this Agreement shall be valid or binding upon the
parties unless made in writing and signed on behalf of each of the respective
parties by duly authorized officers.
6. Arbitration. Any controversy or claim arising out of or relating to this
Agreement or the Conversion Agreement, or any alleged breach thereof, shall be
settled by arbitration in Philadelphia, Pennsylvania, in accordance with the
rules of the American Arbitration Association or similar dispute resolution body
acceptable to the parties, and the judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof.
7. Assignment. Neither party may assign its rights and obligations, including
payment obligations, without the prior written consent of the other. This
provision shall not apply to an assignment in conjunction with the sale or
merger of a company or to a sale of substantially all of its assets.
8. Authorization. Each party warrants that it has taken all corporate action
necessary
<PAGE>
to authorize the execution, delivery and performance of this Agreement.
9. Counterparts. This Agreement may be executed in separate counterparts, each
of which when taken together shall constitute one and the same agreement.
10. No Party Deemed Drafter. As this Agreement was negotiated between
sophisticated parties and each party hereto has been represented by or had the
opportunity to consult with counsel, no party shall be deemed the drafter of the
Agreement, and the Agreement shall not be construed against either party as the
drafter.
11. Applicable Law. The terms and provisions of this Agreement shall be governed
by and construed in accordance with the laws of Pennsylvania, without regard to
the conflicts of laws principles thereof.
IN WITNESS WHEREOF, the parties have executed this Agreement under seal as
of the date first set forth above.
ATTEST: UNIDYNE CORPORATION
by: /s/ Wayne R. Lorgus
- ------------------- -----------------------------------
Wayne R. Lorgus, President
CAPITAL IDEA, INC.
by: /s/ C. Eugene Hutcheson
- ------------------- -----------------------------------
C. Eugene Hutcheson, President
UNIDYNE
CORPORATION
FOR IMMEDIATE RELEASE
CONTACT: Wayne Lorgus, President and Chief Financial Officer
UNIDYNE Corporation - (610) 363-8237
or
Brian Edwards, Jeff Lambert ([email protected])
Lambert, Edwards & Associates, Inc. - (616) 233-0500
UNIDYNE ANNOUNCES MANAGEMENT, BOARD CHANGES
EXTON, Pennsylvania, January 24, 2000 - UNIDYNE Corporation (OTC-BB: UDYNC)
today announced that Chairman and Chief Executive Officer C. Eugene Hutcheson
and Chief Administrative Officer Charlotte Doremus resigned their posts as
directors and officers, effective Friday, January 21, 2000. The Corporation
named director Juan E. Cintron as interim chairman of the board. UNIDYNE expects
to fill the two board seats vacated by Hutcheson and Doremus.
UNIDYNE said Wayne R. Lorgus would remain as president and chief financial
officer. Lorgus, who joined UNIDYNE in May 1999, will work closely with Colmen
Capital Advisors Inc., a Wayne, Penn.-based firm retained in December 1999 to
develop, institute and operate a business improvement program for UNIDYNE.
Colmen Capital Advisors is a private investment-banking firm that provides
advisory services in business turnarounds, financing, mergers and acquisitions,
and strategic planning.
UNIDYNE said it is negotiating with financial institutions to secure bridge
financing within the next 60 days for working capital purposes. The Corporation
said it would also seek additional long-term financing for working capital and
growth initiatives. The Corporation has failed to make required minimum pension
contributions and has significant unpaid tax liabilities, as well as unpaid
self-funded medical benefits and has a significant amount of overdue obligations
to trade creditors.
"We have a tremendous amount of hard work ahead at UNIDYNE," interim
Chairman Cintron said. "The board and senior management of UNIDYNE Corporation
will be working closely with Colmen Capital to develop a workable business
improvement plan. With the cooperation of our employees and creditors, we are
confident that we can work our way back to financial health, building on the
strength and reputation of our Dynamatic and Maxwell product lines."
--more--
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UNIDYNE/page 2
The terms of the agreement reached with Doremus, Hutcheson, and their
company, Capital Idea, Inc., provide that, in addition to their resignation,
they will place the UNIDYNE common shares owned or controlled by them in a
voting trust, voting powers over which will be exercised by an unrelated
individual or financial institution, subject to Board approval. The agreement
also provides that the term of the lease of the Corporation's headquarters from
Capital Idea, Inc. will be shortened to end December 31, 2001; that the $572,917
in preferred dividends still owed to Capital Idea will be deferred and be paid
not later than December 31, 2003; and that all outstanding and unexercised stock
options granted to Doremus or Hutcheson will be cancelled. The Corporation does
not anticipate taking any charge to earnings as a result of the agreement.
The corporation did not agree to pay any severance or separation payments
to Doremus or Hutcheson, nor did it agree to a specific date on which to pay
other monies owed to Doremus, Hutcheson and/or Capital Idea of approximately
$100,000 and a $350,000 promissory note to Capital Idea, on which the
corporation is currently in default.
Exton, Penn.-based UNIDYNE Corporation and its subsidiaries manufacture,
sell, service and finance a variety of products, including vehicle emissions
testing systems, specialized electric motors, and variable speed drives and
controls. UNIDYNE also manufactures engine and chassis dynamometer testing
systems for a variety of large industrial customers, primarily in the automotive
and heavy equipment industries.
The statements contained in this news release include certain predictions
and projections that may be considered forward-looking statements under
securities law. These statements involve a number of important risks and
uncertainties that could cause actual results to differ materially, including,
but not limited to, the performance of the emissions testing industry, certain
customer and affiliated companies, as well as other economic, competitive,
governmental and technological factors involving the Corporation's operations,
markets, services, products and prices.
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