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SUDBURY, INC. EXHIBIT 4.7
REGISTRATION STATEMENT -----------
ON FORM S-8/JANUARY, 1995
SUDBURY, INC.
NON-STATUTORY STOCK OPTION AGREEMENT
THIS NON-STATUTORY STOCK OPTION AGREEMENT, dated this 1st day of September,
1992, (being the date this option is granted) by and between Sudbury, Inc.
(hereinafter called the "Company"), and Jacques R. Sardas (hereinafter called
the "Optionee"), President and Chief Executive Officer of the Company.
W I T N E S S E T H:
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That the Parties hereto have agreed and do hereby agree as follows:
SECTION 1. The Company hereby grants to the Optionee the option to purchase
Shares of the Company's "New Common Stock" as defined herein at the price and
subject to the terms and conditions as hereinafter set forth. "New Common
Stock" shall mean the common stock of the Company that shall be issued upon the
Company's discharge from its bankruptcy proceeding under Chapter 11 of the
United States Bankruptcy Code to current equity holders, certain debt holder,
and others, and shall represent all of the common equity of the Company as of
the Discharge Date.
SECTION 2. The aggregate number of shares of New Common Stock purchasable
hereunder (the "Option Shares") shall be equal to fifteen percent of the total
number of shares of New Common Stock of the Company that shall be ordered to be
issued upon the Company's discharge from the bankruptcy proceeding (the date of
such discharge to be called the "Discharge Date"); provided that, solely for
purposes of determining the number of shares for which this option is
exercisable under the preceding clause, the total number of shares of New
Common Stock of the Company on such Discharge Date shall be deemed to include
the maximum number of shares of New Common Stock for which this option may be
exercised.
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SECTION 3. The option price is $.01 per Option Share.
SECTION 4. This option is not transferable by the Optionee otherwise than by
will or by the laws of descent and distribution, and is exercisable, during the
lifetime of the Optionee, only by him or his guardian or legal representative.
SECTION 5. Notwithstanding any other provision hereof, this option shall not
be exercisable after the expiration of five years from the date this option is
granted, or upon such earlier expiration date as may be provided by Sections 7
or 9. The options granted pursuant to this Agreement shall vest on the
following schedule:
(a) options for five percent (5%) of the New Common Stock upon the date of
this Agreement; and
(b) options for an additional ten percent (10%) of the New Common Stock upon
the later of the date of this Agreement or July 13, 1992.
SECTION 6. Notwithstanding the provisions of Section 5, none of the options
shall be exercisable prior to six (6) months after the date of this Agreement.
Furthermore, fifty percent (50%) of the options described under Section 5(b)
hereof (the "Last Options") shall only become exercisable in incremental
amounts of one percent (1%) each on the "Valuation Date" (as defined below) if
the "Fair Market Value" (as defined below) meets or exceeds the "Targeted
Amounts" set forth in the following schedule:
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"FAIR MARKET VALUE" OF THE COMPANY ADDITIONAL OPTIONS EXERCISABLE
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More than $15 million and up to $20 million 1%
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More than $20 million and up to $25 million 1%
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More than $25 million and up to $30 million 1%
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More than $30 million and up to $35 million 1%
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More than $35 million 1%
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The "Valuation Date" shall be the earlier of (a) the consummation and
closing of a transaction involving the sale or disposition of substantially
all of the then remaining assets of the Company or substantially all of the
Company's New Common Stock (whether by sale, merger, public offering,
leveraged buyout or other similar transaction (an "Exit Transaction")), or
(b) January 12, 1996; provided that solely for purposes of determining
whether the Last Options are exercisable, Optionee shall have one opportunity
at any time during the term of his employment, to require the Company to
engage an investment banking firm or appraiser (to be selected by the
Company) to determine whether a Targeted Amount has been achieved and
sustained for a period of at least six months, in which event such
corresponding increments of Last Options will become exercisable at the end
of such six month period.
The "Fair Market Value" of the Company shall be deemed to be (i) the total
value and/or consideration received (including debt then assumed or being paid
off) by the holders of the Company's New Common Stock (or by the Company, in
the case of a sale of assets) in the event of an Exit Transaction; or (ii) the
appraised value of the Company as determined by an investment banking firm or
appraiser mutually acceptable to the Company's Board of Directors and Optionee
in the event that no Exit Transaction occurs by January 12, 1996.
In the event the Fair Market Value of the Company as of the Valuation Date
exceeds the Targeted Amounts, it is understood and agreed that Optionee is also
entitled to receive the amount described in Section 3(d) of that certain
employment agreement dated January 13, 1992 by and between Optionee and the
Company (the "Employment Agreement") which agreement is hereby incorporated by
reference and made a part hereof.
SECTION 7. If the Optionee shall cease to be employed by the Company for any
reason, this option shall not be exercisable after thirty (30) days after the
date employment terminates; provided, however, that it is understood and agreed
that Optionee shall have the rights set forth in Section 5(e) of the Employment
Agreement.
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SECTION 8. In the event that at any time prior to the expiration of this
option each of the outstanding shares of New Common Stock of the Company
(except shares held by dissenting shareholders) shall be changed to or
exchanged for a different number or kind of shares of stock or other securities
of the Company or of another corporation, whether through reorganization,
recapitalization, stock split-up, combination of shares, merger or
consolidation, then for all purposes of this option there shall be substituted
for each Option Share purchasable hereunder the number and kind of shares of
stock or other securities into which each such Option Share shall be so
changed, or for which each such Option Share shall be so exchanged and the
shares or securities so substituted for each such Option Share shall be subject
to purchase at the option price, as above provided. In the event that the
Company shall issue a stock dividend in New Common Stock with respect to the
Option Shares, the number of Option Shares then purchasable hereunder shall be
adjusted by adding to each such Option Share the number of Option Shares which
would have been distributed as a stock dividend thereon had such Option Share
been outstanding on the record date for payment of the sock dividend, and each
such Option Share together with said additional New Common Stock shall be
purchasable at the option price, as above provided. In the event that there
shall be any other change in the number or kind of outstanding New Common Stock
of the Company or of any shares of stock into which Option Shares shall have
been changed or for which they shall have been exchanged then the Board of
Directors may make such adjustment in the number or kind of shares of stock or
other securities subject to purchase at the option price, as above provided, as
the Board, in its sole discretion, may determine is equitable to both the
Company and Optionee, and such adjustment so made shall be effective and
binding for all purposes of this option. Anything to the contrary herein
notwithstanding, the Optionee shall not be entitled to purchase a fraction of
an Option Share under this option.
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SECTION 9. If the Company shall liquidate or dissolve, or shall be a party
of a merger or consolidation with respect to which the Company shall not be the
surviving corporation or an Exit Transaction shall occur, the Company shall
give prior written notice thereof to the Optionee at least thirty (30) days
prior thereto. To the extent this option shall not have been exercised on or
prior to the effective date of such liquidation, dissolution, merger or
consolidation, it shall terminate on said date, unless it is assumed by another
corporation.
SECTION 10. Subject to the terms and conditions hereof, this option may be
exercised by delivering to the Company at the office of its Treasurer a written
notice, signed by the person entitled to exercise the option, of the election
to exercise the option and stating the number of Option Shares to be purchased.
Such notice shall, as an essential part thereof, be accompanied by the payment
of the full purchase price of the Option Shares then to be purchased. Upon
payment within the time period specified by the Company of the amount, if any,
in cash, required to be withheld for Federal, state and local tax purposes on
account of the exercise of the option (provided that the Optionee may at the
time of exercise of the option (provided that the Optionee may at the time of
exercise authorize the Company to withhold from his next salary payment all or
part of the amount, if any, required to be withheld by the Company on account
of such exercise) the option shall be deemed exercised as of the date the
Company received such notice. Payment of the full purchase price must be made
in cash. Upon the proper exercise of the option, the Company shall issue in
the name of the person exercising the option, and deliver to him, a certificate
or certificates for the Option Shares purchased. The Optionee agrees that as
holder of the option he shall have no rights as shareholder or otherwise in
respect of any of the Option Shares as to which the option shall not have
effectively been exercised as herein provided.
SECTION 11. This option shall not be exercisable if such exercise would
violate:
(a) Any applicable state securities law;
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(b) Any applicable registration or other requirements under the Securities
Act or applicable requirements of NASDAQ; or
(c) Any applicable legal requirement of any other governmental authority.
The Company agrees to make reasonable efforts to comply with the foregoing laws
and requirements so as to permit the exercise of this option. Furthermore, if
a registration statement with respect to the Option Shares to be issued upon
the exercise of this option is not effect or if counsel for the Company deems
it necessary or desirable in order to avoid possible violation of the
Securities Act of 1933 (the "Securities Act"), the Company may require, as a
condition to its issuance and delivery of certificates for the Option Shares,
the delivery to the Company of a commitment in writing by the person exercising
the option that at the time of such exercise it is his intention to acquire
such Option Shares for his own account for investment only and not with a view
to, or for resale in connection with, the distribution thereof; that such
person understands the Option Shares may be "restricted securities" as defined
in Rule 144, promulgated under the Securities Exchange Act of 1934; and that
any resale, transfer or other disposition of said Option Shares will be
accomplished in compliance with Rule 144, the Securities Act or other or
subsequent applicable rules and regulations thereunder. The Company may place
on the certificates evidencing such Options Shares an appropriate legend
reflecting the aforesaid commitment and may refuse to permit transfer of such
certificates until it has been furnished evidence satisfactory to it that no
violation of the Securities Act or the rules and regulations promulgated
thereunder would be involved in such transfer.
SECTION 12. The Board of Directors shall have authority, subject to the
express provisions of this Agreement, to make all determinations in the
judgment of the Board necessary or desirable for the interpretation of this
Agreement. The Board may correct any defect or supply any omission or
reconcile any inconsistency in this Agreement in the manner to the extent it
shall deem expedient, and it shall be the sole and final judge of such
expediency. All actions by the Board under the provisions of this section
shall be conclusive for all purposes.
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SECTION 13. In the event of an Exit Transaction, the Company shall require
any successor by agreement in form and substance reasonably satisfactory to
Sardas, to expressly assume and agree to perform the Company's obligations
under this Agreement.
SECTION 14. No provisions of this Agreement may be modified or discharged
unless such modification or discharge is authorized by the Board of Directors
of the Company and it is agreed to in writing, signed by Optionee and by
another executive officer of the Company. No waiver by either party hereto of
any breach by the other party hereto or any condition or provision of this
Agreement to be performed by such other party shall be deemed waiver of similar
or dissimilar provisions or conditions at the same or any prior or subsequent
time.
SECTION 15. This Agreement together with the Employment Agreement constitute
the entire agreement of the parties hereto relating to the subject matter
hereof and there are no written or oral terms or representations made by either
party other than those contained herein.
SECTION 16. The validity, interpretation, construction, performance and
enforcement of this Agreement shall be governed by the laws of the State of
Ohio.
SECTION 17. Contemporaneously with and as part of its request for approval
of the Employment Agreement, the Company shall seek the Bankruptcy Court's
approval for the Company's execution of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Non-Statutory Stock
Option Agreement in duplicate as for the day and year first written above.
SUDBURY, INC.
By: /s/Robert G. Kuhbach
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/s/Jacques R. Sardas
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Jacques R. Sardas, Optionee
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