STOCK OPTION AGREEMENT

 

                            STOCK OPTION AGREEMENT
                            ----------------------

        AGREEMENT made this 27th day of August, 1996, by and among Elcom 
Technologies Corporation, a corporation organized under the laws of the 
Commonwealth of Pennsylvania (hereinafter referred to as "ELCOM"), and C.B.
Patel, an individual employee of ELCOM (hereinafter referred to as "EMPLOYEE").

                                  BACKGROUND
                                  ----------

        WHEREAS; ELCOM's corporate charter currently permits ELCOM to issue up 
to Twenty Million (20,000,000) shares of common stock; and

        WHEREAS, as of the execution of this Agreement, ELCOM's total issued, 
and outstanding shares of common stock is approximately Thirteen Million 
(13,000,000) shares.

        WHEREAS, ELCOM desires to grant to EMPLOYEE an option to purchase two
hundred thousand (200,000) shares of ELCOM Technologies Corporation's common
stock.

        NOW, THEREFORE, in consideration of the mutual promises herein and other
valuable considerations, ELCOM and EMPLOYEE agrees as follows:

1.      Prior Agreements. EMPLOYEE and ELCOM have previously entered into the 
following Agreement:
                          Employment Agreement dated July 28, 1995
                          Stock Option Agreement dated July 28, 1995

1.1     Upon execution of this Agreement, all Stock Options granted under the 
Stock Option Agreement dated July 28, 1995 are hereby canceled in full and all
rights, duties and obligations of the Parties thereto ar hereby declared null
and void.

2.      Grant of Options.  Subject to all of the terms and conditions of this 
        ----------------
Agreement, ELCOM hereby grants to EMPLOYEE options to purchase a total of two
hundred thousand (200,000) Shares of ELCOM's common stock at the price of fifty
cents ($0.50) per share in accordance with the following schedule:

        Number of Shares            Date Exercisable           Expiration Date
        ----------------            ----------------           ---------------
        40,000                      November 24, 1995          December 31, 2002
        40,000                      November 24, 1996          December 31, 2002
        40,000                      November 24, 1997          December 31, 2002
        40,000                      November 24, 1998          December 31, 2002
        40,000                      November 24, 1999          December 31, 2002
 

                                  Page 1 of 4

Any Options not exercised by the Expiration Date listed above shall be 
terminated in full for all purposes whatsoever.

2.1  Sale of Company. In the event that a controlling interest (over 50%) of 
     ---------------
ELCOM is sold to a third party, other then the Public markets, EMPLOYEE may 
exercise one hundred percent (100%) of all options granted under Section 2 
herein. EMPLOYEE must exercise said options within sixty (60) days of 
notification of the acquisition of a controlling interest by a third party. Any 
Options not exercised by EMPLOYEE within this sixty (60) day period will 
terminate in full upon expiration of said sixty (60) day period.

3.   Termination of Employment. In the event that EMPLOYEE terminates employment
     -------------------------
with ELCOM for any reason whatsoever, including death or disability, all 
Options to purchase ELCOM common stock granted under this Agreement shall 
terminate in full and be declared null and void for all purposes whatsoever, 
sixty (60) days subsequent to the date of EMPLOYEE's last day of active 
employment with ELCOM. EMPLOYEE shall receive no further vesting of Options 
under Section 2 herein, after EMPLOYEE's last day of active employment with 
ELCOM.

4.   Registration of Options. In the event that ELCOM makes an initial public 
     -----------------------
offering (the "IPO") of its common stock pursuant to rules established by the 
United States Securities and Exchange Commission and the NASDAQ stock exchange, 
the options granted in Section 2 of this Agreement shall be registered with the 
Securities and Exchange Commission pursuant to the following schedule:

     Six (6) months after completion of the IPO........25% (twenty five percent)
     Eighteen (18) months after completion of the IPO..25% (twenty five percent)
     Thirty (30) months after completion of the IPO....25% (twenty five percent)
     Forty two (42) months after completion of the IPO.25% (twenty five percent)
     
5.   Restrictions and Regulations. EMPLOYEE agrees that any Shares of ELCOM's 
     ----------------------------
common stock purchased under this Stock Option Agreement will be subject to the 
restrictions and regulations outlined in this Agreement and that these SHARES 
may be subject to further restrictions and regulations. Said restrictions and 
regulations may be imposed at any time by ELCOM at the sole discretion of ELCOM 
and without the approval of EMPLOYEE.

5.1  In addition to the aforementioned restrictions, EMPLOYEE agrees that any 
Shares purchased by EMPLOYEE pursuant to this Agreement, shall be subject to all
of the restrictions, regulations and non-dilution provisions of the ELCOM 
Private Placement Memorandum dated, July 12, 1996.

6.   Exercise of Option. EMPLOYEE may exercise any Options earned in accordance
     ------------------
with Section 2, herein, in any number that EMPLOYEE elects.

                                  Page 2 of 4

7.      Adjustment of Option Shares.    Prior to any public offering of ELCOM 
        ---------------------------
shares, if the outstanding common shares of Elcom Technologies Corporation, are 
changed into or exchanged for a different number or kind of shares or other 
securities of Elcom Technologies Corporation or of another corporation, whether 
through reorganization, share split-up, combination of shares, merger or 
consolidation, then these shares shall be substituted for each common share of 
Elcom Technologies Corporation then subject to this Stock Option Agreement.  The
number and kinds of shares or other securities into which each such ELCOM share 
is so changed or for which each ELCOM share is exchanged shall be at the sole 
discretion of ELCOM.

8.      Time for Payment for Shares.    The option price of the Shares to be 
        ---------------------------
purchased pursuant to the exercise of Options under this Agreement shall be paid
in full at the time of the exercise of the options.

9.      Method of Exercising Option.    EMPLOYEE shall provide ELCOM with at 
        ---------------------------
least five (5) business days prior written notice in order to exercise any 
options under this Agreement.  EMPLOYEE shall comply with all procedures 
established by ELCOM from time to time concerning exercising any options under 
this Agreement.

10.     Modification.  This Agreement shall be effective as of the date hereof 
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and, unless sooner terminated under the provisions of this Agreement, shall 
remain in effect until December 31, 2002.  No modification or amendment of this 
Agreement shall be effective unless in writing and signed by the parties hereto.

11.     Notices.    All notices or other communications required or permitted to
        -------
be given under the terms of this Agreement shall be in writing,  delivered 
personally, or sent via certified mail, postage prepaid, return receipt 
requested.

12.     Entire Agreement.    This Agreement constitutes the entire agreement 
        ----------------
between the parties hereto and supersedes all prior negotiations, understandings
and agreements of any nature with respect to the subject matter hereto.  No 
amendment, waiver or discharge of any of the provisions of this Agreement shall 
be effective against any part, unless that party shall have consented thereto in
writing.

13.     Binding Effect.    This Agreement shall be binding upon execution by 
        --------------
ELCOM and inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, successors, and assigns.

14.     Governing Law.    This Agreement shall be construed, interpreted and 
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enforced in accordance with the laws of the Commonwealth of Pennsylvania.

                                  Page 3 of 4

        IN WITNESS WHEREOF, ELCOM and EMPLOYEE have set their hands and seals 
hereto the day and year first above written.

ATTEST:                                 Elcom Technologies Corporation

/s/ [SIGNATURE APPEARS HERE]            BY: /s/ [SIGNATURE APPEARS HERE] 
- --------------------------------           --------------------------------
Robert B. Sando, Secretary                 Robert A. Vito, President

                                        /s/ [SIGNATURE APPEARS HERE] 
                                        -----------------------------------
                                        EMPLOYEE

                                  Page 4 of 4 

Basic Info X:

Name: STOCK OPTION AGREEMENT
Type: Stock Option Agreement
Date: Oct. 17, 1996
Company: ELCOM TECHNOLOGIES CORP
State: Pennsylvania

Other info:

Date:

  • 27th day of August , 1996
  • July 28 , 1995
  • November 24 , 1995 December 31 , 2002
  • November 24 , 1996 December 31 , 2002
  • November 24 , 1997 December 31 , 2002
  • November 24 , 1998 December 31 , 2002
  • November 24 , 1999 December 31 , 2002
  • Eighteen 18
  • Thirty 30
  • Forty two 42
  • July 12 , 1996

Organization:

  • Number of Shares Date Exercisable Expiration Date
  • United States Securities and Exchange Commission
  • ELCOM Private Placement Memorandum
  • Stock Option Agreement
  • Time for Payment for Shares
  • Commonwealth of Pennsylvania
  • Elcom Technologies Corporation

Money:

  • fifty cents
  • $ 0.50

Person:

  • Patel
  • Robert B. Sando
  • Robert A. Vito

Percent:

  • 50 %
  • one hundred percent 100 %
  • IPO..25 %
  • IPO.25 %
  • five percent