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
Date of Report (Date of earliest event reported) May 15, 1998
TECHDYNE, INC.
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(Exact name of registrant as specified in its charter)
Florida 0-14659 59-1709103
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
2230 West 77th Street, Hialeah, Florida 33016
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (305) 556-9210
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<PAGE>
Item 5. Other Events
The Company together with its parent, Medicore, Inc. ("Medicore"),
have retained The Investor Relations Group ("IRG") as of May 15, 1998 to
provide it and its parent with investor relations and corporate communi-
cations services. The agreement is cancelable on 30 days notice after
the first 90 days. In addition to a monthly retainer fee and mainten-
ance of an expense account the Company has granted options to IRG for
25,000 shares of its common stock exercisable for three years through
May 14, 2001 at $4.25 per share. The options vest and may be exer-
cisable quarterly on the basis of 25% at the end of each quarter
commencing June 30, 1998. Should the investor relations agreement
terminate prior to its expiration, non-vested options are terminated.
On May 18, 1998, the Company sold an option to Joseph Dillon &
Company, Inc. ("Dillon") for $150,000 payable over the next several
months with the principle no later than August 31, 1998. The option
is for 500,000 shares of common stock of the Company exercisable for
one year to May 17, 1999 at an exercise price of $4.75 per share, in
excess of the current market price of the common stock on the date of
the sale of the option to Dillon. The option provides for one time
demand registration and is exercisable in amounts of no less than 100,000
shares of common stock of the Company.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits
(a) Financial statements of businesses acquired
Not Applicable
(b) Pro forma financial information
Not Applicable
(c) Exhibits
(10) Material Contracts
(i) Form of Stock Option to The Investor Relations Group,
Inc.(1)
(ii) Form of Stock Option to Joseph Dillon & Company, Inc.
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(1) Options were granted to four persons designated by The Investor
Relations Group, Inc. and are the same except as to number of options
and vesting dates.
<PAGE>
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.
TECHDYNE, INC.
/s/ Thomas K. Langbein
By---------------------------------
THOMAS K. LANGBEIN, Chairman
of the Board and Chief Executive
Officer
Dated: May 28, 1998
MEDICORE , INC.
STOCK OPTION AGREEMENT
AGREEMENT, dated this 15th day of May, 1998, between MEDICORE,
INC., a Florida corporation (hereinafter called the "Company"), and
DIAN GRIESEL (hereinafter called the "Optionee").
WITNESSETH:
WHEREAS, the Board of Directors of the Company authorized the
Company to enter into an Investor Relations Agreement with The Investor
Relations Group, Inc. ("IRG"), and pursuant thereto granted to the
Optionee as designated by IRG an option ("Medicore Option") to pur-
chase 11,500 shares of common stock, par value $.01 per share
("Medicore Option Shares"), of the Company at $2.25 per Medicore
Option Share (the "Option Price"), such Medicore Option to be
exercisable for three years to May 14, 2001 ("Expiration Date"),
subject to earlier termination as provided herein ("Medicore Option
Termination Date" as defined herein); and
WHEREAS, the Optionee accepts said Medicore Option and agrees to
be bound by the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and of the
mutual covenants herein contained and other good and valuable consid-
eration, the receipt whereof is hereby acknowledged, the parties
hereto, intending to be legally bound hereby, agree as follows:
GRANT OF MEDICORE OPTION: ADJUSTMENT OF MEDICORE OPTION SHARES
- - ---------------------------------------------------------------
1.1 The Company hereby issues a Medicore Option to purchase from
the Company, upon the terms and conditions herein, 11,500 Medicore
Option Shares for a consideration of the Option Price.
1.2 The number of Medicore Option Shares above stated, and the
Option Price thereof, shall be subject to adjustment from time to time
as provided herein.
PAYMENT FOR MEDICORE OPTION SHARES
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2.1 The Option Price for the Medicore Option Shares to be purchased
pursuant to each exercise of the within Medicore Option shall be paid to
the Company by the Optionee in full in cash or by certified or bank
cashier's check at the time of such exercise of the Medicore Option.
<PAGE> 1
EXERCISE OF MEDICORE OPTION
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3.1 The within Medicore Option is exercisable only to the extent
provided herein during the term of this Medicore Option, which is for
a period of three (3) years, terminating at the earlier of the (i)
close of business on the Expiration Date, or (ii) Medicore Option
Termination Date as defined below.
3.2 This Medicore Option and the right to purchase the Medicore
Option Shares shall vest in accordance with the Vesting Schedule A
attached commencing June 30, 1998.
3.3 This Medicore Option may be terminated for any reason by either
the Company, IRG or the Optionee at any time on or after August 15, 1998
upon thirty (30) days written notice to the other, or the Company may
terminate this Medicore Option immediately based upon notice of any
increase in fees for services by IRG ("Medicore Option Termination Date").
Should either the Company, IRG or the Optionee terminate this Medicore
Option, then the within Medicore Option to the extent vested as of the
Medicore Option Termination Date shall be exercisable through the Ex-
piration Date and the non-vested portion of the within Medicore Option
as of the Medicore Option Termination Date shall, without further action
or notice, become null and void.
3.4 The Company may delay the exercise of any Medicore Option if
the Medicore Option Shares are required to be listed, registered or
qualified on any securities or Nasdaq Stock Exchange under law. The
Company shall not be obligated to deliver any Medicore Option Shares
until such Medicore Option Shares have been so listed, registered or
qualified on any securities or Nasdaq Stock Exchange (or authorized for
listing, registration or qualification upon official notice of such ex-
change). However, any delay under this Section 3.4 shall not extend,
modify the exercisability of the Medicore Option to the extent then
vested, or otherwise affect the Expiration Date or the Medicore Option
Termination Date.
3.5 At least five (5) days prior to the date upon which any portion
of the vested Medicore Option is to be exercised, the Optionee shall
deliver to the Company written notice of its election to exercise all
or part of the vested Medicore Option, subject to the limitations
provided herein, which notice shall specify (i) the date and time for
the exercise of the Medicore Option, (ii) the number of Medicore
Option Shares in respect of which the Medicore Option is to be exer-
cised, and (iii) the address to which the Medicore Option Shares are
to be mailed. The date specified in such notice shall be a business
day and the time specified shall be during the regular business hours
of the Company.
3.6 The Optionee shall, at the date and time specified in such
notice, pay the Company cash or other consideration acceptable to the
Company, at the principle office of the Company, the Option Price for
the Medicore Option Shares in respect of which the vested Medicore
Option is being exercised, to wit, the amount of the product of $2.25
(or such then adjusted Option Price) times the number of Medicore
Option Shares into which the Medicore Option is being exercised. The
notice and payment shall be delivered in person or shall be sent by
registered mail, return receipt requested, to Lawrence E. Jaffe, the
Secretary of the Company, 777 Terrace Ave., Hasbrouck Heights, New
Jersey 07604. In either event upon timely and proper exercise of the
Medicore Option, the Company shall as soon as practicable and with all
due expedition deliver to the Optionee, who shall so have properly
exercised the Medicore Option, certificates registered in the name of
such person representing the number of Medicore Option Shares in
respect of which the Medicore Option was exercised, subject to the
approval of any governmental or regulatory authority required in
connection with the authorization, issuance, sale or transfer of such
Medicore Option Shares. Delivery shall be deemed effected for all
purposes when the Company's stock transfer agent shall have deposited
such Medicore Option Share certificate or certificates in the United
States mail, addressed as per the Optionee's notice. If the Medicore
Option is
<PAGE> 2
exercised in part, a new Medicore Option for the balance of the
unexercised Medicore Option Shares will be issued by the Company to
the Optionee.
3.7 The Optionee shall not have any rights and privileges of a
shareholder of the Company in respect of any of the Medicore Option
Shares underlying the Medicore Option unless and until and only to the
extent it, he or she shall have properly exercised the Medicore Option
and paid for the Medicore Option Shares in accordance with the terms
and provisions of this Option Agreement. The Medicore Option shall be
considered exercised on the date the notice and payment are delivered
to or received by the Secretary of the Company; provided if payment is
by check, the exercise date shall be the date such check clears payment.
The Optionee shall have no rights with respect to such Medicore Option
Shares not expressly conferred by this Option Agreement.
RESTRICTIONS ON EXERCISE OF MEDICORE OPTION AND SALE OF MEDICORE OPTION
- - -----------------------------------------------------------------------
SHARES
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4.1 In addition to the limitations on the exercise of a Medicore
Option as provided in Sections 3.1 et seq. hereof, the within Medicore
Option shall not be exercisable if:
(a) The exercise thereof will involve a violation of any ap-
plicable federal or state securities law; or
(b) The exercise thereof will require registration under the
Securities Act of 1933, as amended (the "Act") of the Medicore Option
Shares.
4.2 (a) The Optionee acknowledges that the Medicore Option and
underlying Medicore Option Shares are not transferable without compli-
ance with the registration requirements of the federal and state
securities laws or an opinion of counsel for the Optionee has been
received by and is satisfactory to the Company to the effect that
such registration is not required; any determination in this connec-
tion by the Company shall be final, binding and conclusive; that the
Optionee has no right to transfer either the Medicore Option or the
underlying Medicore Option Shares except as provided in Section 4.2(c)
below; and
(b) The Optionee understands that the Medicore Option and
any Medicore Option Shares with which the Medicore Option is exercised
are being issued to it pursuant to a non-public offering exemption
under the Act, that the Medicore Option Shares that may be issued upon
exercise of the Medicore Option shall have a legend on the face thereof
indicating the restrictive nature of the Medicore Option Shares in
pertinent part as follows: "The shares of Common Stock represented by
this certificate have not been registered under the Securities Act of
1933 or under the securities laws of any state and may not be sold or
transferred except upon such registration or upon receipt by the
Company of an opinion of counsel satisfactory to the Company that regis-
tration is not required"; and that such Medicore Option Shares and the
Medicore Option shall have stop transfer instructions issued against
the same.
(c) Should the Company file a registration statement for the
public sale of its securities, it shall, subject to Medicore Option
Shares then being outstanding and restricted from public resale as
contemplated in Section 4.2(a) and (b), or the Medicore Options then
remaining outstanding have vested and continue to be exercisable prior
the Expiration Date, notify the Optionee or the Medicore Option Share
holder if such Medicore Option Shares are then not otherwise freely
tradable, of the
<PAGE> 3
Company's filing of a registration statement, and if so requested by
such Optionee or Medicore Option Share holder, the Company shall
include in its registration statement such information as may be
required to permit a public offering of any of the Medicore Option
Shares then outstanding or otherwise issuable pursuant to Medicore
Options then vested and remaining exercisable as provided herein, as
the case may be, at the sole expense of the Company, except for fees
and expenses of the Optionee's or the Medicore Option Share holder's
counsel and other advisors and any selling expenses and commissions
or underwriting discounts applicable to the offer and sale of the
Medicore Option Shares by the Optionee or Medicore Option Share holder
pursuant to the registration statement, including any transfer taxes
relating to the Medicore Option Shares sold. The Optionee or the
Medicore Option Share holder shall furnish information reasonably
requested by the Company in accordance with such registration state-
ment and shall furnish indemnifications as set forth below.
This Section 4.2(c) relating to inclusion of Medicore Option Shares
in a registration statement is not applicable to any registration state-
ment filed by the Company on Forms S-4 or S-8 (including any Form S-3
related to such Form S-8) or any other comparable form. It is further
agreed that if the managing underwriter in any underwritten offering of
a registration statement by the Company shall advise the Company that
it declines to include a portion or all of the Medicore Option Shares
requested by the Optionee or the Medicore Option Share holder to be
included in the registration statement, then inclusion and distribution
of all or that specified portion of the Medicore Option Shares shall be
excluded from such registration statement.
The Company shall use its best efforts to cause any such registra-
tion statement to become effective; provided, the Optionee and the
Medicore Option Share holder acknowledge and agree that since the
effective date of a registration is beyond the control of the Company,
there is no guarantee when, if ever, any such registration will become
effective.
(d) Whenever pursuant to Sections 4.2(c) a registration
statement relating to the Medicore Option Shares is filed under the Act,
or is amended or supplemented, the Optionee and the Medicore Option
Share holder will indemnify and hold harmless the Company, each of its
directors, each of its officers who have signed said registration state-
ment and such amendments and supplements thereto, and each person, if
any, who controls the Company (within the meaning of the Act) against
any losses, claims, damages or liabilities to which the Company or any
such director, officer or controlling person may become subject under
the Act or otherwise, insofar as such losses, claims, damages or liabil-
ities (or actions in respect thereof) arise out of or are based upon
any untrue or alleged untrue statement of any material fact contained
in any such registration statement or any preliminary prospectus or
final prospectus constituting a part thereof, or any amendment or sup-
plement thereto, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent that such untrue state-
ment or alleged untrue statement or omission was made in said regis-
tration statement, said preliminary prospectus, said final prospectus
or said amendment or supplement in reliance upon and in conformity with
written information furnished by the Optionee and/or the Medicore
Option Share holder for use in the preparation thereof; and will
reimburse the Company or any such director, officer or controlling
person for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action.
4.3 At the time of any exercise of the within Medicore Option,
the Optionee shall represent to and agree with the Company in writing
that it, he or she is acquiring the Medicore Option Shares in
<PAGE> 4
respect of which the Medicore Option is being exercised for the purpose
of investment and not with a view to distribution, subject to Section
4.2(c).
4.4 Subject to Section 4.2(c), the Optionee agrees that it will not
sell, assign, pledge, gift, hypothecate, transfer, or otherwise dispose
of any of the Medicore Option Shares or the Medicore Option at any time
under circumstances which would require the filing of a registration
statement in respect of such Medicore Option or Medicore Option Shares
under the provisions of the Act.
4.5 The Company shall not be obligated to take any other affirmative
action in order to cause or facilitate the exercise of the Medicore
Option or the issuance of the Medicore Option Shares pursuant thereto
to comply with any state or federal law, rule or regulation.
CHANGES IN CAPITAL STRUCTURE
- - ----------------------------
5.1 Existence of this Medicore Option shall not impair the right
of the Company or its shareholders to make or effect any adjustments,
recapitalizations, reorganizations or other changes in the Company's
capital structure or its business, or any merger of consolidation of
the Company or the dissolution or liquidation of the Company, or any
sale or transfer of all or any part of its assets or business, or any
issue of bonds, debentures, preferred or prior preference stock ahead
of or affecting the Common Stock of the Company, or Common Stock of
the Company, or any grant of options on its securities through any
qualified or non-qualified stock plan or otherwise, or any other cor-
porate act or proceeding, whether of a similar character or otherwise.
5.2 Except as hereinafter expressly provided, the issuance by the
Company of shares of Common Stock of any class, for cash or property,
or for labor or services, either upon sale or upon the exercise of
rights or warrants to subscribe therefor, or upon conversion of shares
or obligations of the Company converted into such shares or other
securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to the Option Price, or the number, class or price
of the Medicore Option Shares then subject to the Medicore Option.
5.3 The only adjustment to the Medicore Option Shares are as
follows:
(a) If, at any time or from time to time after the date of
this Option Agreement and up through the earlier of the Expiration
Date or the Medicore Option Termination Date ("Adjustment Period"),
the Company shall distribute to the holders of its Common Stock, with
respect to the Common Stock, without payment therefor, securities or
property, other than shares of the Common Stock of the Company, other
than rights to purchase shares of the Common Stock, and other than
cash, then, and in each such case, the Optionee, upon the proper and
timely exercise of this Medicore Option, shall be entitled to receive
the securities and properties to which it would have been entitled had
it been a shareholder of record of the Medicore Option Shares received
upon such exercise of the Medicore Option at the time the Company made
such distribution of securities or property and had, during the period
from the date of this Medicore Option to and including the date of such
exercise, retained such Medicore Option Shares and the securities and
properties receivable by it during such Adjustment Period. Notice of
each such distribution shall be forthwith mailed to the Optionee.
(b) If the Company shall be consolidated with or merged into
another corporation or shall sell all or substantially all of its assets
as part of a reorganization within the meaning of the Internal Revenue
Code or shall reclassify or reorganize its capital structure (except a
stock split or combination
<PAGE> 5
covered by subparagraph (a) hereof), and in such transactions holders
of the Common Stock exchange their Common Stock for shares of stock or
other securities ("Transaction Securities") of the Company or another
corporation, receive additional Common Stock or other securities, or
surrender a portion of their Common Stock, then:
(1) Except as provided in Section 5.3(b)(2) hereof, the
Optionee shall be entitled, in lieu of the Medicore Option, to an
Option or Options to purchase Transaction Securities in an amount (if
any) equal to the Transaction Securities that the Optionee would have
received if the Optionee had exercised the Medicore Option in full and
held the Medicore Option Shares to which the Medicore Option related at
the time of such transaction. The Option Price per share or other unit
of such Transaction Securities shall be determined by dividing the
Option Price by the number of shares or other units (or the fraction
of a share or other unit) of Transaction Securities into which each
share of common stock is converted or for which common stock is ex-
changed in such transaction.
(2) Notwithstanding any other provision hereof, the
Board of Directors of the Company may cancel the Medicore Option as
of the effective date of any transaction described in this Section
5.3(b); provided that (A) notice of such cancellation shall have been
given to the Optionee at least thirty (30) days before the effective
date of such transaction, and (B) the Optionee shall have the right
to exercise the Medicore Option in accordance with and pursuant to
the limits of Sections 3.2 and 3.3 hereof during the thirty (30) day
period immediately preceding the effective date of such transaction.
MISCELLANEOUS
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6.1 The granting of this Medicore Option shall not impose upon the
Company any obligation to employ, retain or become affiliated with or
continue to employ, retain or be affiliated with IRG or the Optionee.
This Option Agreement shall not be construed as preventing nor shall
it prevent the Company from terminating any agreement or other affilia-
tion with the Company or its affiliated companies that might exist with
IRG or the Optionee.
6.2 This Option Agreement shall be binding upon and inure to the
benefit of the Company and its successors and upon IRG and the Optionee
and its, his and/or her successors, assigns, including without limitation
the estate of the Optionee and the executors, administrators and/or
trustees of such estate, and any creditor, receiver, trustee in bank-
ruptcy or representative of any such Optionee; provided that the within
Medicore Option shall be exercisable only by the Optionee except as may
be approved in writing by the Company.
6.3 This Option Agreement shall be deemed to be made under and
shall be construed in accordance with the laws of the State of New
Jersey.
6.4 This Option Agreement is effective as of May 15, 1998 and,
unless sooner terminated in accordance with the terms hereof, shall
remain in effect until the earlier of the Effective Date or the
Medicore Option Termination Date as provided herein. No modification
or amendment of this Option Agreement shall become effective until
such modification or amendment shall have been approved by the Board
of Directors of the Company.
6.5 The Company's obligation to deliver Medicore Option Shares
is subject to all the terms and conditions of this Option Agreement
and shall be subject to applicable federal, state and local tax with-
holding and reporting requirements.
<PAGE> 6
IN WITNESS WHEREOF, the Company, IRG and the Optionee have each
caused this Option Agreement to be executed by its President, Vice
President, or Secretary and/or individually, as the case may be, there-
unto duly authorized, the day and year first above written.
MEDICORE, INC.
/s/ Thomas K. Langbein
By--------------------------------
Thomas K. Langbein, Chairman of
the Board of Directors
THE INVESTOR RELATIONS GROUP, INC.
/s/ Dian Griesel
By--------------------------------
DIAN GRIESEL, President
The Optionee hereby accepts and agrees to be bound by all the terms
and conditions hereof.
DIAN GREISEL
(Optionee)
/s/ Dian Griesel
By--------------------------------
DIAN GRIESEL
Date: May 15, 1998
<PAGE> 7
SCHEDULE A
VESTING SCHEDULE OF MEDICORE OPTIONS
Date Medicore Option Vests
---- ---------------------
June 30, 1998 2,500 Medicore Option Shares
September 30, 1998 2,500 Medicore Option Shares
December 31, 1998 5,000 Medicore Option Shares
March 31, 1999 1,500 Medicore Option Shares
------
TOTAL 11,500 Medicore Option Shares
======
TECHDYNE , INC.
STOCK OPTION AGREEMENT
AGREEMENT, dated this 18th day of May, 1998, between TECHDYNE,
INC., a Florida Corporation (hereinafter called the "Company"), and
JOSEPH DILLON & COMPANY, INC. (hereinafter called the "Optionee").
WITNESSETH:
WHEREAS, the Board of Directors of the Company authorized the sale
of an option ("Option") to the Optionee to purchase 500,000 shares of
common stock, par value $.01 per share ("Option Shares"), of the Company
at $4.75 per Share ("Option Price"), such Option to be exercisable for
one year through May 17, 1999.
WHEREAS, the Optionee is willing to accept said Option and to be
bound by the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the
mutual covenants herein contained and other good and valuable consider-
ation, the receipt whereof is hereby acknowledged, the parties hereto,
intending to be legally bound hereby, agree as follows:
SALE OF OPTION:
- - ---------------
1.1 The Company sells, assigns and delivers an Option for 500,000
Option Shares to Optionee, upon the terms and conditions set forth
herein, for a cash consideration of $150,000 payable as follows:
(i) $10,000 by June 30, 1998;
(ii) $10,000 by July 31, 1998; and
(iii) The balance on or before August 31, 1998.
1.2 No part of the Option is exercisable, notwithstanding part
or installment payments have been made to the Company by the Optionee,
until the entire $150,000 consideration is paid.
1.3 The number of Option Shares above stated, and the Option
Price thereof, shall be subject to adjustment from time to time as
provided herein.
PAYMENT FOR SHARES
- - ------------------
2.1 The Option Price for the Option Shares to be purchased pur-
suant to each exercise of the within Option shall be paid to the
Company by the Optionee in full in cash or by certified or bank
cashier's check at the time of such exercise of the Option.
EXERCISE OF OPTION
- - ------------------
3.1 The within Option is exercisable only to the extent provided
herein during the term of this Option, which is for a period of one (1)
year, terminating at the close of business on May 17, 1999 ("Expiration
Date").
<PAGE> 1
3.2 The Option is exercisable, subject to the terms hereof, in
amounts equivalent to no less than 100,000 Option Shares per exercise
up to the Expiration Date. The Company may delay the exercise of any
Option if it determines that the Option Shares are required to be
listed, registered or qualified on any securities or Nasdaq stock
exchange. The Company shall not be obligated to deliver any Option
Shares until such Option Shares have been so listed, registered or
qualified on any securities or Nasdaq stock exchange (or authorized
for listing, registration or qualification upon official notice of such
exchange). Any delay under this Section 3.2 shall not extend, modify
the exercisability of the Option or otherwise affect the Expiration
Date.
3.3 At least five (5) days prior to the date upon which any portion
of the within Option is to be exercised, the Optionee shall deliver to
the Company written notice of its election to exercise all or part of
the Option, subject to the limitations provided herein, which notice
shall specify (i) the date and time for the exercise of the Option, and
(ii) the number of Option Shares in respect of which the Option is to be
exercised. The date specified in such notice shall be a business day and
the time specified shall be during the regular business hours of the
Company.
3.4 The Optionee shall, at the date and time specified in such
notice, pay the Company cash or other consideration acceptable to the
Company, at the principle office of the Company, the Option Price for
the Option Shares in respect of which the Option is being exercised, to
wit, the amount of the product of $4.75 (or such then adjusted exercise
price) times the number of Option Shares (subject to Section 3.2 of this
Stock Option Agreement) into which the Option is being exercised. The
notice and payment shall be delivered in person or shall be sent by
registered mail, return receipt requested, to Lawrence E. Jaffe, the
Secretary of the Company, 777 Terrace Ave., Hasbrouck Heights, New
Jersey 07604. The Company shall as soon as practicable and with all
due expedition deliver to the Optionee, who shall so have properly
exercised the Option, certificates registered in the name of such
person representing the number of Option Shares in respect of which the
Option was exercised, subject to the approval of any governmental or
regulatory authority required in connection with the authorization,
issuance, sale or transfer of such Option Shares. Delivery shall be
deemed effected for all purposes when the Company's stock transfer agent
shall have deposited such Option Share certificate or certificates in
the United States mail, addressed as per the Optionee's notice. If the
Option is only exercised in part, a new Option for the balance of the
unexercised Option Shares will be issued by the Company to the Optionee.
3.5 The Optionee shall not have any rights and privileges of a
shareholder of the Company in respect of any of the Option Shares under-
lying the Option unless and until and only to the extent it shall have
properly exercised the Option and paid for the Option Shares in ac-
cordance with the terms and provisions of this Stock Option Agreement.
The Option shall be considered exercised on the date the notice and
payment are delivered to or received by the Secretary of the Company;
provided if payment is by check, the exercise date shall be the date
such check clears payment. The Optionee shall have no rights with
respect to such Option Shares not expressly conferred by this Stock
Option Agreement.
RESTRICTIONS ON EXERCISE OF OPTION AND SALE OF STOCK
- - ----------------------------------------------------
4.1 In addition to the limitations on the exercise of an Option
as provided herein, the within Option shall not be exercisable if:
(a) The exercise thereof will involve a violation of any
applicable federal or state securities law; or
<PAGE> 2
(b) The exercise thereof will require registration under the
Securities Act of 1933, as amended, (the "Act") of the Option Shares or
other securities of the Company to be purchased by the Optionee pursuant
to such exercise.
4.2 (a) The Optionee acknowledges that the Option and Option
Shares are not transferable without compliance with the registration
requirements of the federal and state securities laws or an opinion of
counsel for the Optionee has been received by and is acceptable to the
Company and its counsel to the effect that such registration is not
required; any determination in this connection by the Company shall be
final, binding and conclusive; that the Optionee has no right to trans-
fer either the Option or the Option Shares except as provided in
Sections 4.2(c) and (d) below.
(b) The Optionee understands that the Option and the Option
Shares issuable upon exercise of the Option are being issued to it pur-
suant to a non-public offering exemption under the Act, that the Option
Shares issued upon exercise of the Option shall have a legend on the
face thereof indicating the restrictive nature of the Option Shares in
pertinent part as follows: "The shares of Common Stock represented by
this certificate have not been registered under the Securities Act of
1933 or under the securities laws of any state and may not be sold or
transferred except upon such registration or upon receipt by the Company
of an opinion of counsel satisfactory to the Company that registration
is not required"; and that such Option Shares and the Option shall have
stop transfer instructions issued against the same.
(c) For a period of one (1) year from the date the Option is
fully paid for, if the Optionee desires to register under the Act no less
than 100,000 Option Shares under the Act under circumstances that a
public distribution within the meaning of the Act of such Option Shares
will be involved, then the Company will, as promptly as practicable of
the receipt of such notice, file a registration statement pursuant to
the Act so that the Option Shares may be publicly sold, and the Company
will use its best efforts to cause such registration to become and remain
effective in order for the Optionee to publicly sell the Option Shares;
provided that the Optionee shall furnish the Company with appropriate
information in connection with the registration of the Option Shares as
the Company may reasonably request; and provided, further, that the
Company shall not be required to file such a registration on more than
one occasion. The Company shall supply prospectuses in order to facili-
tate the public sale of the Option Shares, use its best efforts to
register and qualify any of the Option Shares for sale in such states
as the Optionee requests, provided such qualification is not solely for
the purposes of subjecting the Company to jurisdiction in that state or
is not unduly burdensome.
The Company shall bear the entire cost and expense of the
registration of the Option Shares, except for fees and expenses of the
Optionee's counsel and other advisors and any selling expenses and com-
missions or underwriting discounts applicable to the offer and sale of
the Option Shares by the Optionee pursuant to the registration statement,
including any transfer taxes relating to the Option Shares sold.
(d) Whenever pursuant to Section 4.2(c) a registration state-
ment relating to the Option Shares is filed under the Act, or is amended
or supplemented, the Optionee will indemnify and hold harmless the
Company, each of its directors, each of its officers who have signed
said registration statement and such amendments and supplements thereto,
and each person, if any, who controls the Company (within the meaning of
the Act) against any losses, claims, damages or liabilities to which the
Company or any such director, officer or controlling person may become
subject under the federal or state securities laws, or otherwise, insofar
as such losses, claims, damages or liabilities (or
<PAGE> 3
actions in respect thereof) arise out of or are based upon any untrue or
alleged untrue statement of any material fact contained in any such
registration statement or any preliminary prospectus or final prospec-
tus constituting a part thereof, or any amendment or supplement thereto,
or arise out of or are based upon the omission or the alleged omission
to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to
the extent, but only to the extent that such untrue statement or alleged
untrue statement or omission was made in said registration statement,
said preliminary prospectus, said final prospectus or said amendment or
supplement in reliance upon and in conformity with written information
furnished by the Optionee for use in the preparation thereof; and will
reimburse the Company or any such director, officer or controlling
person for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action.
4.3 At the time of any exercise of the within Option, the Optionee
shall represent to and agree with the Company in writing that it is
acquiring the Option Shares for the purpose of investment and not with a
view to distribution, subject to Section 4.2(c).
4.4 Subject to Section 4.2(c), the Optionee agrees that it will
not sell, assign, pledge, gift, hypothecate, transfer or otherwise
dispose of any of the Option Shares or the Option at any time under
circumstances which would require the filing of a registration state-
ment in respect of such Option or Option Shares or under the provisions
of the Act.
4.5 The Company shall not be obligated to take any other affirma-
tive action in order to cause or facilitate the exercise of the Option
or the issuance of Option Shares pursuant thereto to comply with any
state or federal law, rule or regulation.
CHANGES IN CAPITAL STRUCTURE
- - ----------------------------
5.1 Existence of this Option shall not impair the right of the
Company or its shareholders to make or effect any adjustments, recapi-
talizations, reorganizations or other changes in the Company's capital
structure or its business, or any merger of consolidation of the Company
or the dissolution or liquidation of the Company, or any sale or transfer
of all or any part of its assets or business, or any issue of bonds,
debentures, preferred or prior preference stock ahead of or affecting the
Common Stock of the Company, or any grant of options on its securities
through any qualified or non-qualified stock plan or otherwise, or any
other corporate act or proceeding, whether of a similar character or
otherwise.
5.2 Except as hereinafter expressly provided, the issuance by the
Company of shares of Common Stock of any class, for cash or property, or
for labor or services, either upon sale or upon the exercise of rights
or warrants to subscribe therefor, or upon conversion of shares or obli-
gations of the Company converted into such shares or other securities,
shall not affect, and no adjustment by reason thereof shall be made with
respect to, the number, class or price of the Option Shares then subject
to the Option.
5.3 The only adjustment available to the Option Shares are as
follows:
(a) If at any time or from time to time after the date of
this Stock Option Agreement, the Company shall distribute to the
holders of its Common Stock, with respect to the Common Stock, without
payment therefor, securities or property, other than shares of the
Common Stock, other than rights to purchase shares of the Common Stock
which terminate prior to the exercise of this Option, and other than
cash, then, and in each such case, the Optionee upon the proper and
timely
<PAGE> 4
exercise of this Option, shall be entitled to receive the securities
and properties to which it would have been entitled had it been a
shareholder of record of the Option Shares received upon such exercise
of the Option at the time the Company made such distribution of secur-
ities or property and had, during the period from the date of this
Option to and including the date of such exercise, retained such shares
and the securities and properties receivable by it during such period.
Notice of each such distribution shall be forthwith mailed to the
Optionee.
(b) If the Company shall be consolidated with or merged into
another corporation or shall sell all or substantially all of its assets
as part of a reorganization within the meaning of the Internal Revenue
Code or shall reclassify or organize its capital structure (except a
stock split or combination covered by subparagraph (a) hereof), and in
such transactions holders of the Common Stock exchange their Common
Stock for shares of stock or other securities ("Transaction Securities")
of the Company or another corporation, receive additional Common Stock
or other securities, or surrender a portion of their Common Stock, then:
(1) Except as provided in Section 5.3(b)(2) hereof, the
Optionee shall be entitled, in lieu of the Option, to an Option or
Options to purchase Transaction Securities in an amount (if any) equal
to the Transaction Securities that the Optionee would have received if
the Optionee had exercised the Option in full and held the Option Shares
to which the Option related at the time of such transaction. The Option
Price per share or other unit of such Transaction Securities shall be
determined by dividing the Option Price by the number of shares or other
units (or the fraction of a share or other unit) of Transaction Securi-
ties into which each share of common stock is converted or for which
common stock is exchanged in such transaction.
(2) Notwithstanding any other provision hereof, the board
of directors of the Company may cancel the Option as of the effective
date of any transaction described in this Section 5.3(b); provided that
(A) notice of such cancellation shall have been given to the Optionee at
least thirty (30) days before the effective date of such transaction, and
(B) the Optionee shall have the right to exercise the Option in accordance
with and pursuant to the limits of Section 3.2 hereof during the thirty
(30) day period immediately preceding the effective date of such transac-
tion.
MISCELLANEOUS
- - -------------
6.1 The granting of this Option shall not impose upon the Company
any obligation to employ, retain or become affiliated with or continue
to employ, retain or be affiliated with the Optionee. This Stock Option
Agreement shall not be construed as preventing nor shall it prevent the
Company from terminating any agreement or other affiliation with the
Company or its affiliated companies that might exist with the Optionee.
6.2 This Stock Option Agreement shall be binding upon and inure to
the benefit of the Company and its successors and upon the Optionee and
its successors, assigns, including without limitation the estate of the
Optionee and the executors, administrators and/or trustees of such
estate, and any creditor, receiver, trustee in bankruptcy or representa-
tive of any such Optionee; provided that the within Option shall be non-
transferable by the Optionee, and shall not be encumbered in whole or in
part, and the Option shall be exerciseable only by the Optionee except as
may be approved by the Company.
6.3 This Stock Option Agreement shall be deemed to be made under
and shall be construed in accordance with the laws of the State of New
Jersey.
<PAGE> 5
6.4 This Stock Option Agreement shall become effective as of the
date hereof and shall remain in effect through May 17, 1999. No mod-
ification or amendment of this Stock Option Agreement shall become
effective until such modification or amendment shall have been approved
by the board of directors of the Company.
6.5 The Company's obligation to deliver Option Shares is subject
to all the terms and conditions of this Stock Option Agreement and shall
be subject to applicable federal, state and local tax withholding and
reporting requirements.
IN WITNESS WHEREOF, the Company and the Optionee have each caused
this Stock Option Agreement to be executed by its President, Vice
President, or Secretary thereunto duly authorized, the day and year
first above written.
TECHDYNE, INC.
By----------------------------------
Thomas K. Langbein,
Chairman of the Board
The Optionee hereby accepts and agrees to be bound by all the
terms and conditions hereof.
JOSEPH DILLON & COMPANY, INC.
(Optionee)
By----------------------------------
Steven Jaloza, Chief Executive
Officer
Date: May 18, 1998
