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EXHIBIT (10)(K)
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SUDBURY, INC. NON-QUALIFIED STOCK OPTION AGREEMENT
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This Agreement, dated this 28th day of July, 1995, by and between
Sudbury, Inc., a Delaware corporation with an office at 30100 Chagrin Blvd.,
Suite 203, Pepper Pike, Ohio 44124 (the "Company") and Jacques R. Sardas (the
"Employee"), a full-time employee of the Company or one of its subsidiaries.
SECTION 1. Under the provisions of the Company's 1995 Stock Option Plan
(the "Plan"), the Company hereby grants to the Employee the option of
purchasing an aggregate of 200,000 shares of common stock, par value $.01, of
the Company ("Shares") at the price of $7.625 per share [market price], subject
to the terms and conditions as hereinafter set forth.
SECTION 2. Notwithstanding any other provisions herein, this option
shall expire no later than five (5) years from the date of this Agreement.
SECTION 3. The option granted pursuant to this Agreement shall vest on
the following schedule:
(a) options to purchase 100,000 Shares on January 13, 1996; and
(b) options to purchase an additional 100,000 Shares on January
13, 1997.
SECTION 4. This option is not transferable by the Employee other than
(a) by will or by the laws of descent and distribution, and is exercisable,
during the lifetime of the Employee, only by him or her, or in the event of
death, his or her estate, or in the event of disability, his or her personal
representative, or (b) pursuant to a qualified domestic relations order, as
defined in the 1986 Internal Revenue Code, as amended (the "Code") or Title 1
of the Employee Retirement Income Security Act of 1974, as amended. Except as
otherwise provided in Sections 5, 6, and 9, this option can be exercised only
if the Employee has remained in the employ of the Company continuously from the
date this option is granted.
SECTION 5. In the event of termination of employment of the Employee
for any reason other than death, permanent disability (as defined in that
certain Employment Agreement between the Company and the Employee of even date
herewith (the "Employment Agreement")) or for Cause (as defined in the
Employment Agreement), then (a) the Employee, at any time within the
three-month period following such termination of employment (but within the
term specified in Section 2), may exercise the option rights or any unexercised
portion thereof to the extent such rights were otherwise exercisable by the
Employee at the date of termination of employment, and (b) the portion of the
option not vested as of the date of Employee's termination of employment shall
automatically vest as of the date of such termination. If, however, the
Employee is terminated from employment for Cause (as defined in the Employment
Agreement), all option rights, heretofore unexercised, shall expire.
SECTION 6. If the Employee shall die or become permanently disabled (as
defined in the Employment Agreement) while in the employ of the Company or
within the three-year
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period after termination of employment with the Company, (a) the option rights
or any unexercised portion thereof may be exercised within the one-year period
after the Employee's death or permanent disability (but within the term
specified in Section 2), by the person entitled by will or the applicable laws
of descent and distribution to the extent that the Employee was entitled to
exercise the same at the date of his or her death, and (b) the portion of the
option that has not vested as of the earlier of the Employee's (i) death or
permanent disability, as the case may be, or (ii) termination shall
automatically expire.
SECTION 7. Nothing herein contained shall confer upon the Employee any
right to continue in the employ of the company, or limit or restrict any right
which the company would otherwise have to terminate the employment of the
employee with or without cause or to adjust his or her compensation.
SECTION 8. Subject to the provisions of Section 9(a) of this Agreement,
in the event that, during the term hereof and while the option as to any of the
Shares covered hereby shall remain unexercised, the number of Shares subject to
the Plan and to options granted under the Plan shall be adjusted as follows:
(a) in the event that all of the outstanding Shares are changed by any stock
dividend, stock split or recapitalization or in the event that extraordinary
cash or non-cash dividends are declared with respect to the Shares, the number
of Shares subject to the Plan and to options granted hereunder shall be
equitably adjusted; (b) in the event of any merger, consolidation or
reorganization of the Company with any other corporation or corporations, there
shall be substituted, on an equitable basis as determined by the Compensation
Committee of the Board of Directors (the "Committee"), for each Share then
subject to the Plan, whether or not at the time subject to outstanding options,
the number and kind of Shares or other securities to which the holders of
Shares of the Company will be entitled pursuant to the transaction; and (c)
subject to the provisions of Section 9(b) of this Agreement in the event of any
other relevant change in the capitalization of the Company, the Committee shall
provide for an equitable adjustment in the number of Shares then subject to the
Plan, whether or not then subject to outstanding options.
In the event of any such adjustment the purchase price per Share shall be
equitably adjusted. Any such adjustment or substitution may provide for the
elimination of any fractional Share which might otherwise become subject to an
option. The adjustment and manner of application of the foregoing provisions
shall be determined by the Committee in its sole discretion.
SECTION 9.
(a) If the Company shall liquidate or dissolve, or shall be a
party to a merger or consolidation or other business combination with respect
to which it shall not be the surviving corporation, the Company shall give
written notice thereof to the Employee at least thirty days prior thereto, and
notwithstanding the provisions of Section 3, the Employee shall have the right
within said thirty-day period (but within
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the term specified in Section 2) to exercise this option in full to the
extent not previously exercised. To the extent that 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.
(b) Notwithstanding the provisions of Section 3, the option
granted hereby shall become exercisable in full if and when any
corporation, partnership, joint venture, person, or a group acting
together ("Acquiring Entity") for a similar purpose shall directly or
indirectly acquire or announce an intent to directly or indirectly acquire
control of the Company or any successor or assignee of the Company for
purposes of this Section, control shall mean the acquisition of, or the
formation of a group whose members beneficially own shares of the Company,
which after giving effect thereto, shall permit the Acquiring Entity to
vote 45% or more of the aggregate voting power, as measured by all Shares
then outstanding, in the election of directors of the Company.
SECTION 10. This option shall be exercised by delivering to the Company
at the office of its Secretary (a) a written notice, signed by the person
entitled to exercise the option, stating the number of Shares to be purchased
hereunder, (b) payment in an amount equal to the full purchase price of the
Shares to be purchased, and (c) in the event the option is exercised by a
person other than the Employee, evidence satisfactory to the Company that such
person has the right to exercise the option. Payment may be made, at the
election of the Employee (a) in cash (including check, bank draft, money order,
or wire transfer), (b) by delivering, in transferable form, that number of
Shares which, on the business day preceding the date of exercise, has an
aggregate fair market value equal to such purchase price, or (c) a combination
of the foregoing. The fair market value of the Shares shall be deemed to be (a)
the closing price of the Shares on the principal stock exchange on which the
Shares are then traded on the last business day preceding the date of exercise
of the option, or (b) if no sales take place on such day on any such exchange,
the average of the last reported closing bid and asked prices on such day as
officially quoted on the principal stock exchange on which the Shares are then
traded, or (c) if the Shares are not listed on any such exchange, the average
of the last reported closing bid and asked prices on the over-the-counter
market on the day preceding the date of exercise of the option. The National
Association of Securities Dealers Market System shall be deemed a principal
stock exchange. The Employee shall also pay, within the time period specified
by the Company, any amounts required to be withheld for federal, state, or
local tax purposes as a result of the exercise of the options. Upon due
exercise of the option, the Company shall issue in the name of the person
exercising the option and deliver to such person one or more certificates for
the shares in respect of which the option shall have been exercised. No holder
of this option shall have any rights as a stockholder in respect of any Shares
as to which the option shall not have been duly exercised and no rights as a
shareholder shall arise in respect of any Shares as to which the option shall
have been duly exercised until and except to the extent that a certificate or
certificates for such Shares shall have been issued.
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SECTION 11. This option shall not be exercisable if such exercise would
violate:
(a) Any applicable state securities law;
(b) Any applicable registration or other requirements under the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934,
as amended, or the listing requirements of any stock exchange; 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 Shares to be issued upon the
exercise of this option is not in effect or if counsel for the Company deems it
necessary or desirable in order to avoid possible violation of the Securities
Act of 1933, as amended (the "Act"), the Company may require, as a condition to
its issuance and delivery of certificates for the 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 or her intention to acquire such Shares for
his or her 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 Shares may be "restricted securities" as defined in Rule 144 of
the Securities and Exchange Commission; and that any resale, transfer or other
disposition of said Shares will be accomplished only in compliance with Rule
144, of the Act, or the other Rules and Regulations thereunder. The Company may
place on the certificates evidencing such 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 Act or the Rules and Regulations thereunder would be involved
in such transfer.
SECTION 12. References herein to the Company shall include all parents
and subsidiaries of the Company, and shall be determined consistently with the
definitions of parent and subsidiary in the Code and all relevant Treasury
Department Regulations.
SECTION 13. This option is a non-qualified stock option within the
meaning of Section 422 of the Code and shall not be treated or interpreted for
federal income tax purposes as an Incentive stock option as defined in the
Code.
SECTION 14. The Committee shall have authority, subject to the express
provisions of the plan, to construe and interpret this Agreement and the Plan,
to establish, and to make all other determinations in the judgment of the
Committee necessary or desirable for the administration of the Plan. All
determinations of the Committee shall be final and binding upon all persons.
The Board of Directors may at any time or from time to time grant to the
Committee such further powers and authority as the Board shall determine to be
necessary or desirable.
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SECTION 15. All of the provisions of the Plan are incorporated herein by
reference and are made a part of this Agreement. To the extent any conflict
shall arise between this Agreement and the terms of the Plan, the Plan shall
control.
SECTION 16. This Agreement shall be governed by the laws of the state of
Delaware.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
duplicate as of the day and year first written above.
SUDBURY, INC.
By: /s/ MARK E. BRODY
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EMPLOYEE
/s/ JACQUES R. SARDAS
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Jacques R. Sardas
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