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Exhibit C
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EMPLOYMENT AGREEMENT
AGREEMENT made this 28th day of July, 1995 between Sudbury, Inc., a
Delaware corporation with its principal office at 00000 Xxxxxxx Xxxx., Xxxxx
000, Xxxxxx Xxxx, Xxxx 00000 (the "Company"), and Xxxxxxx X. Xxxxxx, whose
residential address is 0000 Xxxxxxx Xxxx Xxxx, Xxxxx, Xxxx 00000 ("Sardas").
RECITALS
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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
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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
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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
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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.
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3. Time and Efforts
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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
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(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
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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
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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.
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6. Payment Upon Termination
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(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
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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
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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
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(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.
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(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"):
Option Purchase Date Number of 1992 Option Shares
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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
(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
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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
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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
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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 Xx. Xxxxxx, 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.
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8. New Option
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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
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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
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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
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Sardas agrees to be bound by the Company's confidentiality policy.
12. Arbitration
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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
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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
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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
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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
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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
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The validity, interpretation, construction, performance and enforcement
of this Agreement shall be governed by the laws of the State of Ohio.
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17. Invalidity
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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/Xxxx X. Xxxxx
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Xxxx X. Xxxxx, Vice President and
Chief Financial Officer
And: /s/Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx, Chairman
Compensation Committee of the
Board of Directors
/s/Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx, Individually
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