TECHDYNE , INC.
STOCK OPTION AGREEMENT
AGREEMENT, dated this 1st day of July, 1999, between TECHDYNE, INC.,
a Florida corporation (hereinafter called the "Company"), and XXXXXX XXXXXX
& COMPANY, INC. (hereinafter called the "Optionee").
WITNESSETH:
WHEREAS, the board of directors of the Company, in consideration for
the Consulting Agreement dated July 1, 1999 between the Company and Optionee
("Consulting Agreement"), has authorized to grant the Optionee a non-
qualified stock option ("Option") to purchase 100,000 shares of common
stock, par value $.01 per share ("Option Shares") of the Company, exercisable
at $3.50 per share expiring on September 15, 2000.
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 consideration, the
receipt whereof is hereby acknowledged, the parties hereto, intending to be
legally bound hereby, agree as follows:
GRANT OF OPTION:
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1.1 The Company hereby grants to the Optionee an Option to purchase
from the Company, upon the terms and conditions hereinafter set forth,
100,000 Option Shares at an exercise price of $3.50 per share ("Exercise
Price").
PAYMENT FOR SHARES
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2.1 The Exercise Price for the Option Shares to be purchased pursuant
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
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3.1 The Option is exercisable immediately during the term of the
Consulting Agreement which commences of July 1, 1999 and terminates on the
close of business on September 15, 2000.
3.2 At least five (5) days prior to the date upon which any portion of
the 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.
3.3 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 Exercise Price for the Option Shares
in respect of which the Option is being exercised, to wit, the amount of the
product of $3.50 times the number of Option Shares 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 Xxxxxxxx X. Xxxxx,
the Secretary of the Company, 000 Xxxxxxx Xxx., Xxxxxxxxx Xxxxxxx, Xxx Xxxxxx
00000. 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 connec-
tion 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.
3.4 The Optionee shall not have any rights and privileges of a share-
holder of the Company in respect of any of the Option Shares underlying the
Option unless and until and only to the extent it shall have properly
exercised the Option and paid for the Option Shares in accordance 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
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4.1 In addition to the limitations on the exercise of an Option as
provided herein, the Option shall not be exercisable if:
(a) The exercise thereof will involve a violation of any appli-
cable 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 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.
(b) The Optionee understands that the Option and the Option Shares
issuable upon exercise of the Option are being issued to it pursuant 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
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not required"; and that such Option Shares and the Option shall have stop
transfer instructions issued against the same.
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, unless the Option Shares have been registered pursuant
to Section 4 of the Consulting Agreement.
4.4 Subject to Section 4 of the Consulting Agreement, 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 affirmative
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
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5.1 Existence of this 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 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 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 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 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 securities 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.
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(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 Securities 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 transaction.
MISCELLANEOUS
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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 representative 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.
6.4 This Stock Option Agreement shall become effective as of the date
hereof and shall remain in effect through September 15, 2000. No modifica-
tion 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.
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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.
/s/ Xxxxxx X. Xxxxxxxx
By----------------------------
Xxxxxx X. Xxxxxxxx,
Chairman of the Board
The Optionee hereby accepts and agrees to be bound by all the terms and
conditions hereof.
XXXXXX XXXXXX & COMPANY, INC.
(Optionee)
/s/ Xxxxxx Xxxxxx
By----------------------------
Xxxxxx Xxxxxx, Chief
Executive Officer
Date: July 1, 1999
