<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 4)*
Sudbury, Inc.
-------------
(Name of Issuer)
Common Stock, par value $.01
----------------------------
(Title of Class of Securities)
86-4635-206
-------------
(CUSIP Number)
30100 Chagrin Blvd., St. 203, Cleveland, OH 44124
-------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
September 28, 1995
------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the statement [ ]. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
(Continued on following page(s))
<PAGE> 2
SCHEDULE 13D
<TABLE>
CUSIP NO. 86-4635-206 PAGE 2 OF 4 PAGES
<S> <C>
- -----------------------------------------------------------------------------------------------------------
| 1 | NAME OF REPORTING PERSON |
| | S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON |
| | |
| | JACQUES R. SARDAS - S.S. # ###-##-#### |
|-----|---------------------------------------------------------------------------------------------------|
| | CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] |
| | |
| | (b) [ ] |
| | |
|-----|---------------------------------------------------------------------------------------------------|
| 3 | SEC USE ONLY |
| | |
|-----|---------------------------------------------------------------------------------------------------|
| 4 | SOURCE OF FUNDS* |
| | |
| | N/A |
| | |
| | |
|-----|---------------------------------------------------------------------------------------------------|
| 5 | CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT |
| | TO ITEMS 2(d) OR 2(e) [ ] |
| | |
| | |
| | |
|-----|---------------------------------------------------------------------------------------------------|
| 6 | CITIZENSHIP OR PLACE OF ORGANIZATION |
| | |
| | UNITED STATES |
|-------------------------------|-------|-----------------------------------------------------------------|
| NUMBER OF | 7 | SOLE VOTING POWER |
| | | |
| SHARES | | 2,445,100 (see Item 5) |
| |-------|-----------------------------------------------------------------|
| BENEFICIALLY | 8 | SHARED VOTING POWER |
| | | |
| OWNED BY | | N/A |
| |-------|-----------------------------------------------------------------|
| EACH | 9 | SOLE DISPOSITIVE POWER |
| | | |
| REPORTING | | 2,445,100 (see Item 5) |
| | | |
| PERSON |-------|-----------------------------------------------------------------|
| | 10 | SHARED DISPOSITIVE POWER |
| WITH | | |
| | | N/A |
|-------------------------------|-------|-----------------------------------------------------------------|
| 11 | AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON |
| | |
| | 2,445,100 (see Item 5) |
|-----|---------------------------------------------------------------------------------------------------|
| 12 | CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* |
| | [ ] |
| | |
|-----|---------------------------------------------------------------------------------------------------|
| 13 | PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) |
| | |
| | 18.8% |
|-----|---------------------------------------------------------------------------------------------------|
| 14 | TYPE OF REPORTING PERSON* |
| | |
| | IN |
- -----------------------------------------------------------------------------------------------------------
*See Instructions Before Filling Out!
</TABLE>
<PAGE> 3
Item 1. Security and Issuer Page 3 of 4
- ---------------------------
This Amendment No. 4 amends the Statement on Schedule 13D as filed by
Jacques R. Sardas on April 1, 1993, Amendment No. 1 as filed by Jacques R.
Sardas on April 6, 1993, Amendment No. 2 as filed by Jacques R. Sardas on April
21, 1994 and Amendment No. 3 as filed by Jacques R. Sardas on October 19, 1994
and relates to 200,000 (Two Hundred Thousand) shares of common stock, $.01 par
value (the "Common Stock") of Sudbury, Inc., a Delaware corporation ("Sudbury")
which have been reserved for issuance pursuant to a Non-Qualified Stock Option
Agreement, dated July 28, 1995, between Sudbury and Jacques R. Sardas (the
"Agreement").
Under the Agreement, and in accordance with the provisions of the
Sudbury, Inc. 1995 Stock Option Plan approved by Sudbury's stockholders on
September 28, 1995, Mr. Sardas was issued options evidencing his right to
purchase, in the aggregate, 200,000 (Two Hundred Thousand) shares of the Common
Stock at an exercise price of $7.625 per share. These options vest in equal
installments on January 13, 1996 and January 13, 1997, expiring on July 27,
2000.
The principal executive offices of Sudbury are located at 30100 Chagrin
Blvd., Suite 203, Cleveland, Ohio 44124.
Item 2. Identity and Background
- ------- -----------------------
Jacques R. Sardas, whose business address is Sudbury, Inc., 30100
Chagrin Blvd., Suite 203, Cleveland, Ohio 44124, is Chairman, President and
Chief Executive Officer of Sudbury.
During the past five years, Mr. Sardas has not been convicted of any
criminal offenses (excluding traffic violations or similar misdemeanors).
During the past five years Mr. Sardas has not been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and
as a result of such proceeding been or is subject to a judgment, decree or
final order enjoining further violations of, or prohibiting or mandating
activities subject to, federal or state securities laws.
Mr. Sardas is a citizen of the United States.
Item 3. Source and Amount of Funds or Other Consideration
- ------- -------------------------------------------------
Mr. Sardas has not exercised his options to purchase shares of the
Common Stock, therefore no consideration has been paid. Shares of Common Stock
purchased pursuant to the terms of the Sudbury Savings and Profit Sharing Plan
have been purchased on a periodic basis at an average price of $6.76.
Item 4. Purpose of Transaction
- ------- ----------------------
See Item 1 above.
<PAGE> 4
Item 5. Interest in Securities of the Issuer Page 4 of 4
- ------- ------------------------------------
The aggregate number of shares of Common Stock is 2,445,100. These
include 2,244,599 shares reserved for issuance to Mr. Sardas under Stock Option
Agreements previously filed; 200,000 shares reserved for issuance to Mr. Sardas
under a Non Qualified Stock Option Agreement between Mr. Sardas and Sudbury,
Inc. Dated July 28, 1995, attached hereto as Exhibit A, and 501 shares being
held for Mr. Sardas by the Trustee of the Sudbury Savings and Profit Sharing
Plan. These shares of Common Stock represent approximately 18.8% of the
outstanding shares of Common Stock as of October 4, 1995.
See Item 1 on page 3 and numbers 7 and 9 on page 2 above.
Item 6. Contracts, Arrangements, Understandings or Relationship to
- ------- ----------------------------------------------------------
Securities of the Issuer
------------------------
Under the terms of Mr. Sardas' employment agreements with Sudbury dated
January 13, 1992 and July 28, 1995 (effective January 13, 1996), Mr. Sardas has
the right under certain conditions, to cause Sudbury (i) to purchase his
options or the shares underlying such options or (ii) to pay Mr. Sardas the
appraisal value of the shares underlying such options. Section 5 of Mr. Sardas'
1992 Employment Agreement and Section 7 of his 1995 Employment Agreement are
incorporated herein by reference. Additionally, the 1992 and 1995 Employment
Agreements are attached hereto as Exhibits B and C, respectively.
See Item 1 above.
Item 7. Material to be Filed as Exhibits
- ------- --------------------------------
Sudbury, Inc. Non-Qualified Stock Option Agreement between Sudbury,
Inc. and Jacques R. Sardas, dated July 28, 1995, Exhibit A.
Amended Employment Agreement between Jacques R. Sardas and Sudbury,
Inc. dated January 13, 1992, as amended April 16, 1992, Exhibit B.
Employment Agreement between Jacques R. Sardas and Sudbury, Inc dated
July 28, 1995, Exhibit C.
Stock Option Agreement between Sudbury, Inc. and Jacques R. Sardas,
dated July 29, 1994 (previously filed).
Sudbury, Inc. Non-Statutory Stock Option Agreement with Jacques R.
Sardas dated September 1, 1992 (previously filed).
Signature
- ---------
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
October 25, 1995 /s/ JACQUES R. SARDAS
--------------------------
Jacques R. Sardas
Chairman and Chief Executive
Officer
<PAGE> 1
Exhibit A
- ---------
SUDBURY, INC. NON-QUALIFIED STOCK OPTION AGREEMENT
---------------------------------------------------
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
<PAGE> 2
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
2
<PAGE> 3
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.
3
<PAGE> 4
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.
4
<PAGE> 5
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
-------------------------
EMPLOYEE:
/s/Jacques R. Sardas
----------------------------
5
<PAGE> 6
FORM OF EXERCISE OF OPTION
Granted Under the Sudbury, Inc.
1995 Stock Option Plan
Date:
Sudbury, Inc.
30100 Chagrin Blvd.
Suite 203
Pepper Pike, OH 44124
Attention: Secretary
Referring to the Stock Option Agreement dated as of______________,19_____
between Sudbury, Inc. (the "Company") and the undersigned, granting to me the
right to purchase a total of 200,000 shares of Common Stock of the Company at
$_________ per share, I hereby exercise my right to purchase pursuant to said
Agreement ___________ shares of such Common Stock.
In payment of the aggregate purchase price of $__________,I have
enclosed herewith a check, bank draft or money order in the amount of $_______,
and/or (if shares of Common Stock of the Company are being used in partial or
full payment of the purchase price) the following certificates for shares of
Common Stock.*
Certificate Nos. Shares Certificate Nos. Shares
__________________ _______ ________________ _______
__________________ _______ ________________ _______
__________________ _______ ________________ _______
________________________
* When this Exercise of Option is signed by the sole registered owner of
the certificate(s) listed and transmitted hereby, no endorsement of the
certificate(s) or separate stock powers is required. If this Form of
Exercise of Option is signed by a person other than the registered
owner of the certificate(s) listed, or if the certificate(s)
transmitted hereby is/are owned by two or more joint owners, such
certificate(s) must be endorsed or accompanied by appropriate stock
powers.
<PAGE> 7
The stock certificate(s) representing the shares purchased as
aforesaid, together with such additional shares, if any, as may be required to
adjust for stock splits or stock dividends subsequent to the date of the
option, and shares, if any, represented by a certificate tendered herewith in
excess of the number of shares required for payment of the purchase price,
should be issued and delivered to me as follows:
______ By delivery to me in person at the above office of the Company
______ By mailing the same to me at the address shown below my
signature hereto.
I understand that this exercise of stock option is subject to federal,
state, and local withholding requirements and I will comply, prior to the
issuance of the shares hereunder, with whatever arrangements the Company deems
necessary.
Please issue the stock certificate(s) in the following denominations:
____________________________________
____________________________________
Very truly yours,
___________________________
(Signature)
Street Address:____________________
___________________________
{City, State, Zip}
Social Security No.:_____________
<PAGE> 1
Exhibit B
---------
AMENDED EMPLOYMENT AGREEMENT
----------------------------
AGREEMENT made this 13th day of January, 1992 between Sudbury, Inc.,
a Delaware corporation with its principal office at 25800 Science Park Drive,
Suite 250, Cleveland, Ohio 44122 (the "Company"), and Jacques R. Sardas, whose
residential address is 1287 Country Club Road, Akron, Ohio 44313 ("Sardas"),
as amended as of April 16, 1992.
RECITALS
--------
The Company is a holding company with subsidiaries engaged in the
manufacture and sale of a broad range of industrial products, including metal,
rubber and plastic products, coating applications, solid waste disposal and
material handling equipment, special machine tools and systems, lubricants, and
precision machined components.
Shortly prior to the execution of this Agreement, the Company intends
to file a voluntary petition for relief under Chapter 11 of the United States
Bankruptcy Code. The Company intends to continue to operate its business and
manage its properties as a debtor-in-possession during its bankruptcy
proceedings, to implement an aggressive asset disposition program and to
improve operations of retained assets.
The Company desires to employ and utilize the experience, ability and
services of Sardas as its president and Chief Executive Officer, and Sardas
desires to be so employed.
The parties agree as follows:
<PAGE> 2
1. Employment
----------
The Company agrees to employ Sardas, and Sardas agrees to be so
employed, in the capacity of President and Chief Executive Officer, with such
duties and authority as are customary for such offices. Employment shall be
for a four-year term, commencing January 13, 1992 and ending on the earlier of
the consummation and closing of an Exit Transaction, as defined in Paragraph 3
herein, or January 12, 1996. In addition, Sardas shall be elected as a
Director of the Company and serve as a member of the Company's Executive
Committee, and shall so serve for the designated term of the directorship to
which he is elected, or until his earlier resignation or termination of
employment hereunder.
2. Time and Efforts
----------------
Sardas shall diligently and conscientiously devote his full
business time and attention and best efforts in discharging his duties as the
Company's President and Chief Executive Officer. It is understood that Sardas
may serve as a director of one or more other business entities upon consent by
the Company's Board of Directors.
3. Compensation
------------
(a) CASH COMPENSATION. The Company shall pay to Sardas a base
salary at a rate of $360,000 per year, subject to withholding tax,
payable at the same times as payments to other salaried corporate
employees. Such salary may be increased from time to time at the
discretion of the Board of Directors, in conjunction with salary
adjustments of others in the Company's corporate management group.
- 2 -
<PAGE> 3
(b) BONUSES. The Company shall pay to Sardas in a lump sum
payment within ninety (90) calendar days following the end of each
fiscal year of employment after fiscal year 1992, an annual target
bonus of fifty percent (50%) of his base salary for each year during
the term of his employment. Each such payment shall be conditioned
on Sardas' being employed at the time of payment, provided that in
the event that Sardas' employment is terminated by reason of his
death or disability, prior to payment but after such bonus is fully
earned, such payment shall be made to Sardas or his estate, as the
case may be. Achievement of the full amount of such bonus will
depend on Sardas' performance with respect to corporate goals and
objectives, as set by the Board of Directors after consultation with
Sardas no later than August 31st of each fiscal year. With respect
to the portion of fiscal year 1992 during which Sardas will be
employed, he shall receive a bonus of $90,000, payable on August 31,
1992.
(c) EQUITY. Sardas shall be entitled to receive common equity
of the Company pursuant to options for New Common Stock to be granted
on the terms herein, and as further reflected in an option agreement
in the form attached hereto as Exhibit A executed and delivered by
the Company and Sardas on the "Discharge Date," as defined below.
"New Common Stock" identifies the common stock that shall be issued
upon the Company's discharge from the bankruptcy proceeding (the
"Discharge Date") to current equity holders, certain debt holders,
and others, and shall represent all of the comnon equity of the
- 3 -
<PAGE> 4
Company as of the Discharge Date. As part of its plan of
reorganization to be filed with the Bankruptcy Court, the Company
shall allocate and reserve fifteen percent (15%) of its New Common
Stock to provide Sardas options as follows:
(i) The Company shall grant to Sardas on the Discharge Date
options for fifteen percent (15%) of the Company's New Common
Stock, which shall vest on the following schedule, provided that
Sardas continues to be employed by the Company on each such date:
(A) options for five percent (5%) of the New Common
Stock upon the Discharge Date; and
(B) options for an additional ten percent (10%) of the
New Common Stock upon the later of the Discharge Date, or six
(6) months from the date of this Agreement.
(ii) Such options shall have an exercise price of $.01 per
share of New Common Stock and shall have terms of five (5) years
from the Discharge Date.
(iii) None of such options shall be exercisabie prior to six
(6) months after the Discharge Date and such options shall be
nontransferrable. Furthermore, half of the options described
under clause (i) (B) herein (the "Last Options") covering five
percent (5%) of the New Common Stock shall become exercisable in
incremental amounts of one percent (1%) on the Valuation Date as
defined in clause (iv) below, if the "Fair Market Value" of the
Company, as defined in clause (v) below, then meets or exceeds
values indicated in the following schedule:
- 4 -
<PAGE> 5
<TABLE>
<CAPTION>
FAIR MARKET ADDITIONAL STOCK
VALUE LEVEL OPTION EXERCISABLE
----------- ------------------
<S> <C>
More than $15 million and up to $20 million 1%
More than $20 million and up to $25 million 1%
More than $25 million and up to $30 million 1%
More than $30 million and up to $35 million 1%
More than $35 million 1%
</TABLE>
(iv) 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 or
substantially all of the New Common Stock of the Company (whether
by sale, merger, public offering by the then holders of New
Common Stock, leveraged buy out, 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, Sardas 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 determine whether the
Targeted Amount has been achieved and sustained for a period of
at least six months, in which event such Last Options will become
exercisable at the end of such six month period.
(v) The "Fair Market Value" of the Company shall be deemed
to be (A) the total value and/or consideration received
(including debt then assumed or being paid off) by the then
holders of New Common Stock in the event of an Exit Transaction;
or (B) the appraised value of the Company as determined by an
- 5 -
<PAGE> 6
investment banking firm or appraiser mutually acceptable to the
Board of Directors and Sardas in the event that no Exit
Transaction occurs by January 12, 1996.
(d) CASH OVERRIDE. In the event that the Fair Market Value of
the Company as of the Valuation Date exceeds the Targeted Amount, the
Company shall pay to Sardas within sixty calendar days after the
Valuation Date a cash amount equal to five percent (5%) of any
incremental net fair market value in excess of $35 million.
4. Benefits
--------
Sardas shall be entitled to benefits and perquisites generally
provided by the Company to its executive officers and such benefits and
perquisites as are recommended by the Compensation Committee and approved by
the Board of Directors.
5. Payment Upon Termination
------------------------
(a) In the event of voluntary resignation by Sardas or
termination by the Company for "Cause" prior to January 12, 1996,
Sardas shall receive no severance pay or additional compensation
other than the fixed compensation and benefits earned and accrued as
of such termination date pursuant to Paragraphs 3 and 4 herein. For
the purposes of this Agreement, the Company shall have "Cause" to
terminate employment hereunder only (i) if termination shall have
been the result of an act or acts of dishonesty by Sardas constitu-
ting a felony and resulting or intended to result directly or
indirectly in substantial gain or personal enrichment at the expense
of the Company; or (ii) upon the willful and continued failure by
- 6 -
<PAGE> 7
Sardas substantially to perform his duties with the Company (other
than any such failure resulting from incapacity due to mental or
physical illness) after a demand in writing for substantial
performance is delivered by the Board, which demand specifically
identifies the manner in which the Board believes that Sardas has not
substantially performed his duties, and such failure results in
demonstrably material injury to the Company. Sardas' employment
shall in no event be considered to have been terminated by the
Company for Cause if such termination took place as the result of (i)
bad judgment or negligence, or (ii) any act or omission without
intent of gaining therefrom directly or indirectly a profit to which
Sardas was not legally entitled, or (iii) any act or omission
believed in good faith to have been in or not opposed to the interest
of the Company, or (iv) any act or omission in respect of which a
determination be made that Sardas met the applicable standard of
conduct prescribed for indemnification or reimbursement or payment of
expenses under the by-laws of the Company or the laws of the State of
Delaware, in each case as in effect at the time of such act or
omission. Sardas shall not be deemed to have been terminated for
Cause unless and until there shall have been delivered to him a copy
of a resolution duly adopted by the affirmative vote of not less than
three-quarters of the entire membership of the Board at a meeting of
the Board called and held for the purpose (after reasonable notice to
Sardas and an opportunity for him, together with his counsel, to be
heard before the Board), finding that in the good faith opinion of
-7-
<PAGE> 8
the Board Sardas was guilty of conduct set forth above in clauses (i)
or (ii) of the second sentence of this paragraph and specifying the
particulars thereof in detail.
(b) In the event of termination without "Cause" by the Company
prior to January 10, 1994, the Company shall pay to Sardas in two
annual installments in advance, a total of two (2) years of base
salary as severance pay.
(c) In the event of termination without "Cause" by the Company
on or after January 10, 1994, the Company shall pay to Sardas his
base salary at the rate in effect as of such termination date for the
remainder of the term of this Agreement. Payments shall be made in
annual lump sums in advance of each remaining year of the Agreement.
(d) In the event of death or permanent disability during the
term of this Agreement, this Agreement shall terminate and Sardas (or
his personal or legal representative) shall receive no severance pay
or additional compensation other than the fixed compensation and
benefits earned and accrued as of the date of such death or
termination for permanent disability, including any bonus due under
Paragraph 3(b) hereunder. Termination for permanent disability shall
occur on such date and in such circumstance that, as a result of his
incapacity due to physical or mental illness, Sardas were to have
been absent from his duty with the Company on a full-time basis for a
period of six (6) consecutive months, provided that the Company had
given Sardas thirty (30) days written notice of potential
termination, and within said thirty (30) day period after written
- 8 -
<PAGE> 9
notice of termination had been given, Sardas had not returned to the
full-time performance of his duties.
(e) In the event Sardas' employment is terminated by the
Company for "Cause," for reasons of Sardas' death or disability or
voluntarily by Sardas, the Company shall pay to Sardas in
cancellation of the options the appraised value of the shares
underlying the options held by Sardas and then exercisable, less
the exercise price thereof, as determined by an investment banking
firm or appraiser mutually acceptable to the Board of Directors
and Sardas.
6. Business Expenses
-----------------
The Company shall reimburse Sardas for all reasonable and
necessary expenses incurred in carrying out his duties under this Agreement.
Sardas shall present to the Company from time to time itemized accounts of
such expenses in the usual form required by the Company.
7. Indemnification
---------------
Sardas shall be covered by the Company's indemnification policies
for Directors and Officers and shall be offered an indemnification agreement
in the form as may from time to time be in effect with other Directors and
Officers of the Company.
8. Confidentiality
---------------
Sardas agrees to be bound by the Company's confidentiality
policy, a copy of which is attached hereto.
- 9 -
<PAGE> 10
9. Arbitration
-----------
Any controversy or claim arising out of, or relating to, this
Agreement or the breach thereof shall be settled by a three-member arbitration
panel (one member selected by the Company, one member by Sardas and one member
selected by the other two members, or if not by a court of competent
jurisdiction), in accordance with the governing rules of the American
Arbitration Association. During the pendency of the Company's Chapter 11
proceedings, arbitration decisions may be appealed to the Bankruptcy Court.
In all other instances, judgment upon the award rendered shall be final and
may be entered in any court of competent jurisdiction in Cleveland, Ohio.
10. Successors; Binding Agreement
-----------------------------
(a) 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 only such obligations
of this Agreement as are due and owing to Sardas as of the date of
consummation and closing of such Exit Transaction, including but not
limited to unpaid salary payments, cash override compensation,
reimbursable expenses, and accrued benefits.
(b) This Agreement and all rights of Sardas hereunder shall inure to
the benefit of, and be enforceable by Sardas' personal or legal
representatives.
11. Modifications and Waivers
-------------------------
No provisions of this Agreement may be modified or discharged unless
such modification or discharge is authorized by the Board and is agreed to in
writing, signed by Sardas and by another executive officer of the Company. No
- 10 -
<PAGE> 11
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 a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time.
12. Entire Agreement
----------------
This Agreement constitutes 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.
13. Governing Law
-------------
The validity, interpretation, construction, performance and
enforcement of this Agreement shall be governed by the laws of the State of
Ohio.
14. Invalidity
----------
The invalidity or unenforceability of any term or terms of this
Agreement shall not invalidate, make unenforceable or otherwise affect any
other term of this Agreement which shall remain in full force and effect.
15. Court Approval
--------------
Promptly after the filing of its petition for relief under Chapter
11 of the Bankruptcy Code, the Company shall apply for the Bankruptcy Court's
approval of the Company's assumption of this Agreement. The effectiveness of
this Agreement is conditioned upon such approval.
-11-
<PAGE> 12
IN WITNESS WHEREOF the parties have executed this Agreement as
amended as of the dates indicated above.
SUDBURY, INC.
By: /s/ Robert E. Kuhbach
----------------------------
Title: Executive Vice President
/s/ Jacques R. Sardas
---------------------------
Jacques R. Sardas
- 12 -
<PAGE> 1
Exhibit C
- ---------
EMPLOYMENT AGREEMENT
AGREEMENT made this 28th day of July, 1995 between Sudbury, Inc., a
Delaware corporation with its principal office at 30100 Chagrin Blvd., Suite
203, Pepper Pike, Ohio 44124 (the "Company"), and Jacques R. Sardas, whose
residential address is 1287 Country Club Road, Akron, Ohio 44313 ("Sardas").
RECITALS
--------
The Company is a holding company with subsidiaries engaged in the
manufacture and sale of a broad range of industrial products.
The Company and Sardas are currently parties to an amended employment
agreement made January 13, 1992, as amended as of April 16, 1992 (the "Current
Employment Agreement").
The Company and Sardas desire to enter into a new employment agreement
to commence upon the expiration of the Current Employment Agreement.
Now, therefore, the parties agree as follows:
1. Employment
----------
The Company agrees to employ Sardas, and Sardas agrees to be so
employed, in the capacity of Chairman and Chief Executive Officer, with such
duties and authority as are customary for such offices. The Company, by action
of the Company's Board of Directors (the "Board"), may, at any time during the
term of this Agreement, elect or designate a person other than Sardas as Chief
Executive Officer, upon which election or designation, Sardas's employment
pursuant hereto shall not include employment as Chief Executive Officer but
shall include employment as Chairman. From and after the time that Sardas is
no longer Chief Executive Officer of the Company, Sardas's duties and authority
as
<PAGE> 2
Chairman shall be in accordance with and subject to the direction and
approval of the Board; provided, however, that Sardas' duties will not be
inconsistent with duties customary for a Chairman.
2. Term
----
Subject to the provisions for termination as hereinafter provided and
except as specifically provided to the contrary herein, the term of this
Agreement shall begin on January 13, 1996 and shall continue for a term of two
(2) years from such date to and including January 12, 1998 unless terminated by
the Company for "Cause" (as defined below), or by Sardas's death or "permanent
disability" (as defined below); provided however, this Agreement shall be null
and void and of no effect if the Current Employment Agreement is validly
terminated prior to January 12, 1996. It is hereby acknowledged that the
Current Employment Agreement will not have been validly terminated for purposes
of this Section 2 if terminated by the Company without Cause (as defined for
purposes of this Section 2 in the Current Employment Agreement). However, it
will have been validly terminated for purposes of this Section 2 if terminated
by the Company for Cause (as defined therein for purposes of this Section 2),
if terminated by Sardas or if terminated as a result of the death or permanent
disability (as defined therein) of Sardas. Therefore, the parties acknowledge
and agree that unless prior to the expiration of the Current Employment
Agreement Sardas is terminated for Cause thereunder, dies, is permanently
disabled or Sardas terminates this Agreement, the provisions of this Agreement
will remain in full force and effect.
2
<PAGE> 3
3. Time and Efforts
----------------
Sardas shall diligently and conscientiously devote his full business
time and attention and best efforts in discharging his duties hereunder, as
specified by the Board, which duties shall be consistent with his position as
set forth in paragraph 1 above; provided, however, that from and after such
time as Sardas is no longer Chief Executive Officer of the Company, Sardas
shall be required to devote not more than fifty percent (50%) of his business
time and attention and best efforts in discharging his duties hereunder. During
the balance of such time, Sardas may engage in other business activities. It is
understood that Sardas may serve as a director of one or more other business
entities upon consent by the Board; provided, however, that such consent shall
no longer be required hereunder from and after such time as Sardas is no longer
Chief Executive Officer of the Company. Notwithstanding anything to the
contrary contained herein, during the term of this Agreement, Sardas shall not
be employed by, invest in or otherwise be affiliated with any entity which is
in competition with the Company if such activity would constitute a violation
of Sardas' fiduciary duty to the Company.
4. Compensation
------------
(a) CASH COMPENSATION. For all services he may render to the
Company, the Company shall pay to Sardas a base salary at a rate of
$500,000 per year, subject to withholding tax, payable at the same
times as payments to other salaried corporate employees. Upon the
later of (i) the date the Board elects or designates someone other
than Sardas as Chief Executive Officer (but Sardas shall remain as
Chairman hereunder) and (ii) January 13, 1997, the base salary rate to
be paid by the Company to Sardas for all services he may render
to the Company shall change to $250,000 per
3
<PAGE> 4
year. Such salary may be increased from time to time at the discretion
of the Board, in conjunction with salary adjustments of other in the
Company's corporate management group.
(b) BONUSES. The Company shall pay to Sardas in a lump sum payment
within ninety (90) calendar days following the end of each fiscal year of
employment an annual target bonus of up to sixty percent (60%) of his
aggregate paid base salary for each such previous fiscal year during the
term of his employment. Each such payment shall be conditioned on Sardas
being employed by the Company at the time of such fiscal year-end,
provided that in the event that Sardas's employment by the Company is
terminated by reason of his death or permanent disability or by the
Company other than for Cause, such bonus payment shall be made to Sardas
or his estate, as the case may be, on a pro rata basis, determined by
reference to the number of days from the beginning of the then current
fiscal year to the date of such termination as compared to the total
number of days in such fiscal year. Achievement of the full amount of such
bonus will depend on Sardas's performance with respect to corporate bonus
plan as set by the Board after consultation with Sardas no later than
August 31 of each fiscal year.
5. Benefits
--------
Sardas shall be entitled to benefits and perquisites generally provided
by the Company to its executive officers and such benefits and perquisites as
are recommended by the Compensation Committee and approved by the Board.
4
<PAGE> 5
6. Payment Upon Termination
------------------------
(a) In the event of a termination of this Agreement by Sardas or
termination by the Company for "Cause" prior to January 12, 1998, Sardas shall
receive no severance pay or additional compensation other than the fixed
compensation and benefits earned and accrued as of such termination date
pursuant to Paragraphs 4 and 5 herein. For the purposes of this Agreement, the
Company shall have "Cause" to terminate employment hereunder only (i) if
termination shall have been the result of an act or acts of dishonesty by
Sardas constituting a felony and resulting or intended to result directly or
indirectly in substantial gain or personal enrichment at the expense of the
Company; or (ii) upon the willful and continued failure by Sardas substantially
to perform his duties with the Company (other than any such failure resulting
from incapacity due to mental or physical illness) after a demand in writing
for substantial performance is delivered by the Board, which demand
specifically identifies the manner in which the Board believes that Sardas has
not substantially performed his duties, and such failure results in
demonstrably material injury to the Company. Sardas's employment shall in no
event be considered to have been terminated by the Company for Cause if such
termination took place as the result of (i) bad judgment or negligence, or (ii)
any act or omission without intent of gaining therefrom directly or indirectly
a profit to which Sardas was not legally entitled, or (iii) any act or
omission believed in good faith to have been in or not opposed to the interest
of the Company, or (iv) any act or omission in respect of which a determination
is made that Sardas met the applicable standard of conduct prescribed for
indemnification or reimbursement or payment of
5
<PAGE> 6
expenses under the by-laws of the Company or the laws of the State of Delaware,
in each case as in effect at the time of such act or omission. Sardas shall
not be deemed to have been terminated for Cause unless and until there shall
have been delivered to him a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire membership of
the Board at a meeting of the Board called and held for the purpose (after
reasonable notice to Sardas and an opportunity for him, together with his
counsel, to be heard before the Board), finding that in the good faith opinion
of the Board, Sardas was guiity of conduct set forth above in clauses (i) or
(ii) of the second sentence of this paragraph and specifying the particulars
thereof in detail.
(b) In the event of a termination by the Company without Cause at any
time after the date of execution hereof (even if prior to January 13, 1996) and
prior to January 12, 1998, the Company shall pay to Sardas his base salary at
the rates provided for in this Agreement (or such higher rate as may have been
provided for by the Board during the term of this Agreement pursuant to Section
4(a) hereof) for the remainder of the term of this Agreement and any bonus due
under Section 4(b) hereof.
(c) In the event of death or permanent disability during the term of this
Agreement, this Agreement shall terminate and Sardas (or his estate or personal
or legal representative) shall receive no severance pay or additional
compensation other than the fixed compensation and benefits earned and accrued
as of the date of such death or termination for permanent disability, including
any bonus due under Paragraph 4(b) hereunder. For purposes of this Agreement,
termination for
6
<PAGE> 7
permanent disability shall occur on such date and in such circumstance that, as
a result of his incapacity due to physical or mental illness, Sardas were to
have been absent from his duty with the Company on a full-time basis for a
period of six (6) consecutive months, provided that the Company had given
Sardas thirty (30) days written notice of potential termination, and within
said thirty (30) day period after written notice of termination had been given,
Sardas had not returned to the full-time performance of his duties.
7. Existing Options
----------------
(a) Pursuant to that certain Non-Statutory Stock Option Agreement dated
September 1, 1992 between the Company and Sardas, Sardas was granted the option
to purchase 1,764,706 shares (the "1992 Option Shares") of the Company's common
stock, subject to the terms and conditions set forth therein.
7
<PAGE> 8
(b) (i) Until January 13, 1998 (even if prior thereto Sardas shall
have terminated this Agreement), Sardas, or his estate, as the case may be,
shall have the right to sell to the Company, and the Company shall be required
to purchase from Sardas for cash, the following amounts of 1992 Option Shares
on each of the indicated dates (individually, an "Option Purchase Date" and
collectively, the "Option Purchase Dates"):
<TABLE>
<CAPTION>
Option Purchase Date Number of 1992 Option Shares
- -------------------- ----------------------------
<S> <C>
February 7, 1996 352,942
July 13, 1996 352,941
January 13, 1997 352,941
July 13, 1997 352,941
January 13, 1998 352,941
</TABLE>
(b) (ii) In order to exercise such right, Sardas must deliver to the
Company no later than five (5) business days prior to the relevant Option
Purchase Date a notice stating that he is exercising his right pursuant to this
Section 7(b) of this Agreement and setting forth the number of 1992 Option
Shares as to which such right was being exercised (e.g. no Option Shares or one
or two full installments as applicable pursuant to the provisions of this
Agreement). The purchase price for each of the 1992 Option Shares so purchased
shall be the Fair Market Value for the Company's common stock on the Option
Purchase Date. For purposes of this Section 7, the "Fair Market Value" for
the Company's common stock on the Option Purchase Date shall mean the average
closing price (or, as to any such day on which
8
<PAGE> 9
no sales of the Company's common stock shall have taken place, then as to such
day, the average of the last reported closing bid and asked prices) of the
Company's common stock on the principal stock exchange on which the Company's
common stock is then traded (or if the Company's common stock is not then
listed on any such exchange, then on the over-the-counter market) during the
period comprising the ten consecutive trading days immediately preceding the
fifth business day immediately preceding the relevant Option Purchase Date, as
such prices are reported in The Wall Street Journal, or if not so published in
such newspaper, in any other newspaper of general circulation selected by the
Company and reasonably acceptable to Sardas.
(b) (iii) Unless Sardas previously shall have been terminated for
Cause or has terminated this Agreement prior to the expiration of its term,
Sardas may, at his option, delay the exercise of his right pursuant to Section
7(b)(i) as to the indicated number of 1992 Option Shares until the next
succeeding Option Purchase Date. If at that next succeeding Option Purchase
Date, Sardas does not exercise his right as to the delayed 1992 Option Shares,
then his rights pursuant to this Section 7 as to those delayed 1992 Option
Shares shall cease.
(c) If this Agreement is terminated due to the death or permanent
disability of Sardas, then Sardas (or the estate or personal or legal
representative of Sardas, as the case may be) shall have the right, exercisable
by written notice delivered to the Company within thirty (30) days following
such death or disabiiity to sell to the Company, and the Company shall be
required to purchase for cash, all of the 1992 Option Shares at a purchase
price equal to the Fair Market Value for
9
<PAGE> 10
the Company's common stock on the date of such death or permanent disability,
calculated as if such date was an Option Purchase Date. Such purchase shall
occur within forty-five (45) days following receipt by the Company of the
written notice referred to in the immediately preceding sentence.
(d) If this Agreement is terminated by the Company other than for
Cause at any time after the date of execution hereof (even if prior to January
13, 1996) and prior to January 12, 1998, then, in such event, Sardas shall have
the right, exercisable by written notice to the Company delivered within
fifteen (15) days following such termination, to sell to the Company, and the
Company shall be required to purchase from Sardas for cash, all, but not less
than all, of the then remaining 1992 Option Shares. Such purchase shall occur
within forty-five (45) days following the receipt by the Company of the written
notice referred to in the immediately preceding sentence. The purchase price
for each share purchased pursuant to this Section 7(d) shall be the Fair Market
Value for the Company's common stock on the date of such termination calculated
as if such date was an Option Purchase Date.
(e) If this Agreement is terminated by the Company other
than for Cause or by reason of Sardas' death or permanent disability, and
Sardas does not exercise the right set forth in Sections 7(c) or 7(d) above, as
applicable, then, in such event, Sardas shall have the right, exercisable on
the Option Purchase Date immediately following such termination, to specify in
his notice to the Company pursuant to Section 7(b)(ii) above that the number of
1992 Option Shares as to which such right was being exercised is all, but not
less than all, of the then remaining 1992 Option
10
<PAGE> 11
Shares and such purchase shall occur within forty-five (45) days following the
receipt by the Company of such written notice.
(f) If this Agreement is terminated by the Company other than for
Cause or is terminated by reason of Sardas' death or permanent disability, and
Sardas does not exercise either the right set forth in Sections 7(c), 7(d) or
7(e) above, as appiicable, then, in such event, the provisions set forth in
Section 7(b) shall continue as set forth therein.
(g) If this Agreement is terminated by the Company for Cause, then,
in such event, the Company shall have the right, exercisable by written notice
to Sardas delivered within fifteen (15) days following such termination, to
purchase from Sardas for cash, and Sardas, subject to the next sentence of this
paragraph, shall be required to sell to the Company, all, but not less than
all, of the then remaining 1992 Option Shares. Such purchase shall occur within
forty-five (45) days following the delivery to Sardas of the written notice
referred to in the immediately preceding sentence, unless within fifteen (15)
days after such notice Mr. Sardas, by written notice to the Company, declines
to tender his 1992 Option Shares. In such event, all of the Company's
obligations hereunder to repurchase the 1992 Option Shares shall terminate
except only for those obligations that shall have arisen prior to such
termination of employment. The purchase price for each share purchased pursuant
to this Section 7(g) shall be the Fair Market Value for the Company's common
stock on the date of such termination calculated as if such date was an Option
Purchase Date.
11
<PAGE> 12
8. New Option
----------
Effective immediately under entering into this Employment Agreement,
the Company and Sardas shall enter into a certain Stock Option Agreement,
substantially in the fonn of Exhibit A hereto, granting to Sardas the option to
purchase up to 200,000 shares of the Company's common stock, on the terms and
conditions as set forth therein. Such option shall be granted under the Plan
(as defined in the Stock Option Agreement) and subject to stockholder approval
of the Plan.
9. Business Expenses
-----------------
The Company shall reimburse Sardas for all reasonable and necessary
expenses incurred in carrying out his duties under this Agreement. Sardas
shall present to the Company from time to time itemized accounts of such
expenses in the usual form required by the Company.
10. Indemnification
---------------
Sardas shall be covered by the Company's indemnification policies for
Directors and Officers and shall be offered an indemnification agreement in the
form as may from time to time be in effect with other Directors and Officers of
the Company.
11. Confidentiality
---------------
Sardas agrees to be bound by the Company's confidentiality policy.
12. Arbitration
-----------
Any controversy or claim arising out of, or relating to, this Agreement
or the breach thereof shall be settled by a three-member arbitration panel (one
member selected by the Company, one member by Sardas and one member selected by
the other two members, or if not by a court of competent jurisdiction), in
accordance with the governing rules of the
12
<PAGE> 13
American Arbitration Association. Judgment upon the award rendered shall be
final and may be entered in any court of competent jurisdiction in Cleveland,
Ohio.
13. Successors; Binding Agreement
-----------------------------
This Agreement and all rights of Sardas hereunder shall inure to the
benefit of, and be enforceable by Sardas's personal or legal representatives.
14. Modifications and Waivers
-------------------------
No provisions of this Agreement may be modified or discharged unless
such modification or discharge is authorized by the Board and is agreed to in
writing, signed by Sardas 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 a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time.
15. Entire Agreement
----------------
This Agreement constitutes 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.
16. Governing Law
-------------
The validity, interpretation, construction, performance and enforcement
of this Agreement shall be governed by the laws of the State of Ohio.
13
<PAGE> 14
17. Invalidity
----------
The invalidity or unenforceability of any term or terms of this
Agreement shall not invalidate, make unenforceable or otherwise affect any
other term of this Agreement which shall remain in full force and effect.
IN WITNESS WHEREOF the parties have executed this Agreement as amended
as of the dates indicated above.
SUDBURY, INC.
By: /s/Mark E. Brody
------------------------------------
Mark E. Brody, Vice President and
Chief Financial Officer
And: /s/Thomas F. Slater
------------------------------------
Thomas F. Slater, Chairman
Compensation Committee of the
Board of Directors
/s/Jacques R. Sardas
------------------------------------
Jacques R. Sardas, Individually
14
