1
Exhibit (10.2)
STOCK OPTION AGREEMENT
OPTION granted this 27th day of January, 1995 by DeVlieg-Bullard,
Inc., a Delaware corporation (the "Company"), to James F. Harnish (the
"Optionee").
1. Stock Option. The Company hereby grants to the Optionee an
option (the "Option") to purchase up to 25,000 shares of the common stock of the
Company, par value $.01 per share, to be issued upon the exercise of the
Option, in the manner hereafter set forth, fully paid and nonassessable.
2. Definitions.
(a) "Disability" shall have the meaning set forth in the
Employment Agreement between Optionee and the Company dated as of the date
hereof.
(b) "Cause" shall have the meaning set forth in the
Employment Agreement between Optionee and the Company dated as of the date
hereof.
(c) "Early Retirement" means retirement from active
employment with the Company or any subsidiary or affiliate thereof on or after
Optionee attains age 55.
(d) "Fair Market Value" means, as of any given date, the
reported closing price of the Company's common stock on the National
Association of Securities Dealers, Inc. - National Market System.
(e) "Normal Retirement" means retirement from active
employment with the Company or any subsidiary or affiliate thereof on or after
Optionee attains age 65.
3. Time of Exercise. This Option shall be exercisable as follows:
(a) This Option shall expire on January 27, 2000.
(b) This Option shall be exercisable, in whole or in
part, at any time but not later than the date of expiration or termination of
the Option.
(c) (i) In the event that the Optionee dies while
this Option is exercisable by him, this Option may be exercised within
a period of one (1) year after the date of death, but no later than
the date of expiration or termination of the Option, by the executors
or administrators of the Optionee or the person or persons acquiring
this Option by bequest or inheritance.
(ii) In the event that the Optionee's employment
with the Company, or one of its subsidiaries, is terminated by reason
of Disability, this Option may be exercised within a period of one (1)
year after the date of such termination, but no later
2
than the date of expiration or termination of this Option. If
the Optionee dies during such one year period, this Option shall
be exercisable as described in paragraph (i) above.
(iii) In the event that the Optionee's employment
is terminated with the Company, or one of its subsidiaries, by reason
of Normal or Early Retirement, this Option may be exercised within a
period of sixty (60) days after the date of such termination, but no
later than the date of expiration or termination of this Option. If
the Optionee dies during such sixty (60) day period, this Option shall
be exercisable as described in (i) above.
(iv) In the event that the Optionee's employment
with the Company, or one of its subsidiaries, is terminated by reason
other than death, Disability or Normal or Early Retirement, this
Option shall terminate, except that in the event the Optionee is
involuntarily terminated without Cause, this Option may be exercised
within a period of sixty (60) days after the date of such termination,
the date of expiration or termination of this Option.
4. Method of Exercise. This Option shall be exercised by written
notice delivered to the Company, which notice shall state the number of shares
with respect to which the Option is being exercised and shall specify a date
(not less than five (5) nor more than ten (10) days after the date of such
notice) on which the shares will be taken up and payment made therefor at the
principal office of the Company in cash, by certified or official bank check.
If any law or regulation of any stock exchange or governmental authority
requires the Company to take any action with respect to the shares specified in
such notice, then the date for the delivery of such shares against payment
therefor shall be extended for the period necessary to take such action. In
the event of any failure to take up and pay for the number of shares specified
in such notice on the date set forth in such notice, as the same may be
extended as provided above, this Option shall terminate with respect to such
number of shares but shall continue with respect to the remaining shares
covered by this Option and not yet acquired pursuant hereto.
5. Purchase Price. The purchase price per share shall be $1.50.
6. Non-Transferability of Option Rights. This Option shall not
be transferable by the Optionee except by will or by the laws of descent and
distribution, and, during the life of the Optionee, shall be exercisable only
by the Optionee.
7. Rights as a Stockholder. The Optionee shall have no rights as
a shareholder with respect to any shares covered by this Option until the
Optionee has given written notice of exercise and has paid in full for such
shares. No adjustment shall be made for dividends for which the record date is
prior to the date of issuance of such stock certificate.
2
3
8. Adjustment Provisions. If prior to the expiration of the
Option there shall occur any of the following changes in the capitalization of
the Company, the shares covered by this Option and the purchase price payable
therefor shall in each instance be adjusted as follows:
(a) If a stock dividend is declared on the common stock
of the Company, there shall be added to the shares under this Option the number
of shares which would have been issuable to the Optionee had he been the holder
of record of the number of shares then under option but not theretofore
purchased and issued hereunder on the record date of such dividend. Such
additional shares resulting from such stock dividend shall be delivered
proportionately, from time to time, without additional cost, upon the exercise
of this Option. Any distribution to the holders of the common stock of the
Company, other than a distribution of cash as a dividend out of surplus or net
profits or a distribution by way of the granting of rights to subscribe, shall
be treated as a stock dividend.
(b) If an increase has been effected in the number of
outstanding shares of common stock by reason of a subdivision of such shares,
the number of additional shares which may thereafter be purchased under this
Option shall be the number of shares which would have been received by the
Optionee on the date of such subdivision had he been the holder of record of
the number of shares then under option but not theretofore purchased and issued
hereunder on the record date of such subdivision of shares. In such event, the
price per share under this Option shall be proportionately reduced.
(c) If there is any consolidation or merger of the
Company with any other corporation or corporations in which the Company is not
the surviving corporation, or the sale or distribution of all or substantially
all of the Company's property and assets, adequate provision shall be made by
the Company so that there shall remain and be substituted under this Option the
shares, securities, or assets which would have been issuable or payable to the
Optionee had he been the holder of record of the number of shares then under
option and not theretofore purchased and issued hereunder on the applicable
record date. Any shares so substituted under this Option shall be subject to
adjustment as provided in this Section 8 in the same manner and to the same
extent as the shares covered by this Option.
9. Redemption. If, on January 27, 1998, the Fair Market Value of
the shares covered by this Option is not at least $3.50 per share (which amount
shall be subject to adjustment pursuant to Section 8 hereof), Optionee may
elect to either (i) retain the Option until the date of expiration or (ii)
cause the Company to redeem the Option for $37,500 in cash, payable in the form
of a certified or official bank check. If Optionee elects to have the Option
redeemed, Optionee shall deliver written notice to the Company, which notice
shall state the Optionee is electing to have the Option redeemed and shall
specify a date for payment (not less than five (5) nor more than thirty (30)
days after the delivery date of such notice).
3
4
10. Investment Covenant. Optionee by his acceptance hereof
covenants that this Option is, and any stock issued hereunder will be, acquired
for his own account for investment purposes, and that the Optionee will not
distribute the same in violation of any state or federal law or regulation.
11. Sale of Option or Shares. Neither this Option nor the shares
of common stock of the Company issuable upon exercise of the Option have been
registered under the Securities Act of 1933, as amended, or under the
securities laws of any state. Neither this Option nor any shares when issued
may be sold, assigned, transferred, pledged or hypothecated or otherwise
disposed of in the absence of (i) an effective registration statement for the
shares under the Securities Act of 1933, as amended, and such registration or
qualification as may be necessary under the securities laws of any state, or
(ii) an opinion of counsel reasonably satisfactory to the Company that such
registration or qualification is not required. The Company shall cause a
certificate or certificates evidencing all or any of the shares issued upon
exercise of the Option prior to said registration and qualification of such
shares to bear the following legend: "The shares evidenced by this certificate
have not been registered under the Securities Act of 1933, as amended, or under
the securities laws of any state. The shares may not be sold, assigned,
transferred, pledged or hypothecated or otherwise disposed of in the absence of
an effective registration statement under the Securities act of 1933, as
amended, and such registration or qualification as may be necessary under the
securities laws of any state, or an opinion of counsel satisfactory to the
Company that such registration or qualification is not required."
DeVLIEG-BULLARD, INC.
Attest: By: /s/ William O. Thomas
-------------------- ---------------------------------
Title: President
---------------------------------
4