<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
SUDBURY, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
SUDBURY, INC.
(NAME OF PERSON(S) FILING PROXY STATEMENT)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
Not Applicable
(2) Aggregate number of securities to which transaction applies:
Not Applicable
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11:
Not Applicable
(4) Proposed maximum aggregate value of transaction:
Not Applicable
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
Not Applicable
(2) Form, schedule or registration statement no.:
Not Applicable
(3) Filing party:
Not Applicable
(4) Date filed:
Not Applicable
<PAGE> 2
SUDBURY, INC.
30100 Chagrin Boulevard
Suite 203
Cleveland, Ohio 44124
---------------------
NOTICE OF 1994 ANNUAL MEETING OF STOCKHOLDERS
---------------------
To our Stockholders:
You are cordially invited to attend the 1994 Annual Meeting of Stockholders
of Sudbury, Inc. to be held at the Embassy Suites, 3775 Park East Drive,
Beachwood, Ohio, on Thursday, October 13, 1994 at 10:00 a.m., local time, for
the following purposes:
1. To elect a board of seven directors to hold office until the next annual
meeting of stockholders and until their respective successors have been
elected or appointed;
2. To ratify the appointment of Ernst & Young LLP as independent auditors
for Sudbury, Inc. for the fiscal year ending May 31, 1995; and
3. To consider and act upon such other business as may properly come before
the meeting or any adjournment thereof.
Stockholders of record at the close of business on August 31, 1994 are
entitled to notice of, and to vote at, the meeting or any adjournment thereof.
If you attend the meeting, you may vote in person if you wish, even though you
have previously returned your proxy.
By Order of the Board of
Directors
Mary C. Farrar
Secretary
Cleveland, Ohio
September 6, 1994
WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE MEETING, PLEASE COMPLETE, SIGN
AND DATE THE ACCOMPANYING PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE.
<PAGE> 3
SUDBURY, INC.
30100 Chagrin Boulevard
Suite 203
Cleveland, Ohio 44124
------------------
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
OCTOBER 13, 1994
This Proxy Statement is furnished to stockholders in connection with the
1994 Annual Meeting of Stockholders of Sudbury, Inc. (the "Company") to be held
on October 13, 1994. The accompanying proxy is solicited on behalf of the Board
of Directors of the Company and will be voted in accordance with your
instructions if it is returned properly executed. Unless contrary instructions
are indicated on the proxy form, your shares will be voted as recommended by the
Board of Directors. The Board of Directors does not anticipate that any matters,
other than those set forth herein, will be brought before the Annual Meeting.
If, however, other matters are properly presented, the persons named on the
proxy will have discretion to vote on such matters.
A stockholder giving a proxy may revoke it at any time before it is
exercised by filing a revocation with the Secretary of the Company, by duly
executing a proxy bearing a later date, or by notifying the Company in open
meeting. Attendance at the Annual Meeting will not in itself revoke a proxy.
This Proxy Statement and the accompanying proxy form are scheduled to be
mailed to stockholders of the Company beginning on September 6, 1994, the date
of this Proxy Statement. The mailing address of the principal executive offices
of the Company is 30100 Chagrin Boulevard, Suite 203, Cleveland, Ohio 44124.
INFORMATION AS TO VOTING SECURITIES
VOTING RIGHTS
Stockholders of record at the close of business on August 31, 1994 are
entitled to vote in person or by proxy at the Annual Meeting or at any
adjournment thereof. On that date, there were 9,991,336 shares of the Company's
common stock, par value $.01 per share ("Common Stock") outstanding, which are
the only voting securities of the Company. Each share of Common Stock
outstanding on the record date is entitled to one vote per share on each matter
to be acted upon at the meeting.
1
<PAGE> 4
QUORUM AND TABULATION OF VOTES
The holders of record of a majority of the Company's issued and outstanding
stock, in person or by proxy, shall constitute a quorum at the Annual Meeting of
Stockholders. Pursuant to the By-Laws of the Company, directors shall be elected
by a plurality vote. All other matters shall be determined by a majority of the
votes cast, except as otherwise provided by statute, the Company's Certificate
of Incorporation or its By-Laws.
If a share is represented for any purpose at the meeting, it is deemed to
be present for all other matters. Abstentions and shares held of record by a
broker or its nominee ("Broker Shares") that are voted on any matter are
included for purposes of determining whether a quorum is present. Votes
"withheld" from, or Broker Shares not voted for, director-nominee(s) will not
count against the election of such nominee(s). In all other matters, abstentions
will have the same effect as a vote against the proposal to which the abstention
applies, and Broker Shares which are not voted will not be treated as either a
vote for or a vote against any of the proposals to which such broker non-votes
apply.
2
<PAGE> 5
<TABLE>
BENEFICIAL OWNERSHIP OF SECURITIES
The following table sets forth information regarding the ownership of the
Company's Common Stock on August 31, 1994 of (i) beneficial owners known to the
Company of more than five percent of the outstanding shares of Common Stock;
(ii) each director and executive officer; and (iii) all directors and executive
officers as a group. Except as otherwise indicated, each owner has sole voting
and sole investment powers with respect to the stock listed.
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP PERCENT OF CLASS
----------------------------------------- ----------------------- ----------------
<S> <C> <C>
Morgens, Waterfall, Vintiadis & Company,
Inc.
610 Fifth Avenue
New York, NY 10020 928,000(a) 9.3%
Cloyd J. Abruzzo, Director 14,000(b) *
Mark E. Brody, Executive Officer 30,641(b)(c)(d) *
Jerry A. Cooper, Director 15,000(b) *
Preston Heller, Jr., Director 5,000(b)(e) *
James A. Karman, Director 5,000(b) *
David A. Preiser, Director -0-(b) -0-
Jacques R. Sardas, Executive
Officer, Director
Sudbury, Inc.
30100 Chagrin Blvd., Suite 203
Cleveland, OH 44124 1,989,163(b)(f)(g) 19.9%
Thomas F. Slater, Director 40,000(b) *
All executive officers and directors
as a group (8 persons) 2,098,804(b) 21.0%
*Less than 1%
- - ---------------
<FN>
(a) Based on information contained in an amendment dated December 15, 1993 to a
report on Schedule 13D filed with the Securities and Exchange Commission by
Morgens, Waterfall, Vintiadis & Company, Inc. and its affiliates, Phoenix
Partners, Betje Partners, Phaeton International N.V., Morgens, Waterfall,
Vintiadis Investments N.V., Edwin H. Morgens and Bruce Waterfall.
(b) Information concerning beneficial ownership of shares is based in part on
information provided by each executive officer and director.
(c) Includes 641 shares held by the Sudbury Savings and Profit Sharing Plan as
of May 31, 1994 for the account of Mr. Brody.
(d) Mr. Brody is deemed to own these shares by virtue of currently exercisable
options to purchase 30,000 shares.
(e) Mr. Heller disclaims beneficial ownership of these shares which are owned of
record by his wife.
(f) Mr. Sardas is deemed to own these shares by virtue of currently exercisable
options to purchase 1,988,997 shares. (See also -- "CEO Employment
Agreement")
(g) Includes 166 shares held by the Sudbury Savings and Profit Sharing Plan as
of May 31, 1994 for the account of Mr. Sardas.
</TABLE>
3
<PAGE> 6
ELECTION OF DIRECTORS
(PROPOSAL NO. 1)
The Company's By-laws, as amended, provide that the number of directors of
the Company shall number up to seven persons. The Board of Directors has set the
number of directors at seven and has nominated the following seven candidates to
serve as directors of the Company until the 1995 Annual Meeting of Stockholders
and until their successors are elected and qualified: Cloyd J. Abruzzo, Jerry A.
Cooper, Preston Heller, Jr., James A. Karman, David A. Preiser, Jacques R.
Sardas and Thomas F. Slater. All of the nominees are presently directors of the
Company. The Company expects that each of the nominees will be available for
election. In the event that any of the nominees becomes unavailable for
election, the proxies will be voted for the election of such person, if any, as
shall be recommended by the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS
VOTE "FOR" EACH OF THE PROPOSED NOMINEES.
NAME AND PRINCIPAL OCCUPATION AT PRESENT AND FOR THE PAST FIVE YEARS;
DIRECTORSHIPS
Cloyd J. Abruzzo, Age 44
Mr. Abruzzo became a Director of the Company in September, 1992.
Since July, 1993, Mr. Abruzzo has been President of Stoneridge,
Inc., a group of companies whose principal activities include
the design and manufacture of power and signal distribution
systems and electro-mechanical and electronic components for the
automotive and transportation industries. Before being elected
President, Mr. Abruzzo served, since 1984, as the Vice President
and Chief Financial Officer of Stoneridge. In July, 1994 Mr.
Abruzzo was elected to serve on the Board of Directors of
Second National Bank of Warren, a financial services company.
Jerry A. Cooper, Age 55
Mr. Cooper became a Director of the Company in August, 1993.
Since July, 1993, Mr. Cooper has been a member of the Board of
Directors, President and Chief Executive Officer of Defiance,
Inc., an integrated supplier of products, engineering, design
testing and services to original equipment manufacturers in the
domestic transportation industry. From 1990 through March of
1993, Mr. Cooper was President and Chief Executive Officer of
Bettcher Manufacturing Corporation, a metal forming company.
From 1977 to 1990, Mr. Cooper served as President and General
Manager of Mather Seal Corporation, a subsidiary of Federal
Mogul Corporation, specializing in high performance rotary
shaft seals, piston rings and liners.
Preston Heller, Jr., Age 65
Mr. Heller became a Director of the Company in September, 1993.
Since 1983, Mr. Heller has served as the Chairman and Chief
Executive Officer of Pioneer-Standard Electronics, Inc., an
industrial distributor of electronic components, computer and
peripheral systems products. Mr. Heller has served as a Director
of Pioneer-Standard since 1969 and as a Director of National
City Bank, a financial services company, since January, 1994.
4
<PAGE> 7
James A. Karman, Age 54
Mr. Karman became a Director of the Company in October, 1993.
Since 1978, Mr. Karman has served as President and Chief
Operating Officer, and since 1963, as a member of the Board of
Directors of RPM, Inc., a worldwide producer of specialty
chemicals, coatings and sealants for industrial and consumer
markets. Since 1990, Mr. Karman has been a Director of McDonald
& Company Securities, Inc., a regional investment banking
company.
David A. Preiser, Age 37
Mr. Preiser became a Director of the Company in September, 1992.
Since 1990, Mr. Preiser has been affiliated with Houlihan,
Lokey, Howard & Zukin, a financial advisory and investment
banking firm, where he holds the position of Managing Director,
specializing in financial restructuring. From 1985 to 1990, Mr.
Preiser held the position of Vice President of Eastern
Properties, Inc. and Vice President of Toll Brothers, Inc., both
of which are real estate investment, development and
construction companies. Mr. Preiser also serves as a Director
on the Boards of NVR, Inc., a home-building firm and JoS. A.
Bank Clothiers, Inc., specializing in men and women's retail
clothing.
Jacques R. Sardas, Age 63
Mr. Sardas became a Director, President and Chief Executive
Officer of the Company in January, 1992. He was elected Chairman
of the Board of Directors and Treasurer in January, 1993. Mr.
Sardas was affiliated for 34 years with Goodyear Tire and Rubber
Company, which develops and sells tires domestically and abroad.
He was a member of Goodyear's Board of Directors and served that
company in many capacities including -- Executive Vice President
of the Company, President of Goodyear International, President
of North American Operations, and President and Chief
Operation Office -- Tires.
Thomas F. Slater, Age 50
Mr. Slater became a Director of the Company in December, 1992.
Since 1979, Mr. Slater has been President and Chief Executive
Officer of Actron Manufacturing Company, which designs,
manufacturer and markets automotive testing equipment. Since
1985, Mr. Slater has been a Director of Oatey Company, a maker
of specialty plumbing and automotive repair hardware. He has
also served since 1992 as a Director of AEXCEL, Inc., a
manufacturer of specialty paints.
ADDITIONAL INFORMATION CONCERNING
THE BOARD OF DIRECTORS
COMMITTEES AND MEETINGS
The Audit Committee The function of the Audit Committee is to provide
assistance in fulfilling the Company's responsibility to stockholders, potential
stockholders and the investment community in matters relating to corporate
accounting, reporting practices of the Company and the quality and integrity of
the financial reports of the Company. The members of the Audit Committee are all
non-employee directors: Cloyd J. Abruzzo, Chairman, James A. Karman
5
<PAGE> 8
and David A. Preiser. The members held three meetings and consulted informally
on other occasions during fiscal 1994.
The Compensation Committee The functions of the Compensation Committee are
to provide guidance and approval for all executive compensation and benefit
programs, as well as to designate those employees of the Company who will
receive grants of stock options under the Company's stock option plan. The
members of the Compensation Committee are all non-employee directors: Thomas F.
Slater, Chairman, Cloyd J. Abruzzo and Jerry A. Cooper. The Compensation
Committee held five meetings and consulted informally on other occasions during
fiscal 1994.
The Nominating Committee The function of the Nominating Committee is the
selection and nomination of candidates to fill vacancies on the Board as they
occur and to recommend to the Board a slate of nominees for election as
directors at the Company's Annual Meeting of Stockholders. The members of the
Nominating Committee are all non-employee directors: Preston Heller, Jr.,
Chairman, David A. Preiser and Thomas F. Slater. The members held three meetings
and consulted informally on other occasions during fiscal 1994.
The Company's Board of Directors held eight regularly scheduled meetings
and three special meetings during the fiscal year ended May 31, 1994. With the
exception of James A. Karman, all directors attended 75% or more of the total
meetings held by the Board and each of the Board committees on which they
served.
DIRECTOR COMPENSATION
Each non-employee director of the Company receives annual cash compensation
of $20,000 payable in four quarterly installments. Additionally, non-employee
Directors receive $1,200 for each Board meeting attended in person and $1,200
for on-site visits made to operating facilities of the Company.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT ON EXECUTIVE MANAGEMENT COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee") is
responsible for approving the Company's cash and non-cash compensation for its
executive officers and making recommendations to the Board of Directors with
respect to the establishment of the Company's executive compensation plans and
programs. The Committee is composed exclusively of independent, non-employee
directors who are not eligible to participate in any of the Company's executive
compensation programs.
The Company's executive compensation program is designed to provide (i)
fair compensation to executives based on their responsibilities and their
achievements of annually established goals and (ii) incentives which develop a
sense of Company ownership and commitment to attaining long-term profitable
operations of the Company's business. The Company's executive compensation
program currently consists of three components: base salary, short-term
incentive compensation(bonus) and long-term incentive compensation (stock
options).
6
<PAGE> 9
In setting executive compensation practices for the Company, the Committee
compares the Company's executive compensation program with other companies'
compensation programs for executives with similar responsibilities. The
Company's surveys for such purposes include (i) businesses included in the peer
group index, one of the comparables used in the Company's Performance Graph
shown below and (ii) other manufacturing concerns with comparable business lines
and revenue levels.
Base Salary: In setting annual salaries for the Company's executive
officer other than the Chief Executive Officer, the Committee reviewed with
the Chief Executive Officer an annual salary plan recommended by the Chief
Executive Officer. The Committee formally recommended to the Board of
Directors, for its final approval, the appropriate level of cash
compensation for the executive officer for the following year. The cash
compensation levels for such executive officer were determined upon
subjective consideration of the individual executive's scope of
responsibility and a comparison with industry pay practices. In making the
determination, such factors were accorded equal relative importance.
Annual Incentive Bonus: Executive officers were also eligible to earn
an annual cash incentive bonus under the Company's Incentive Bonus Plan
("Bonus Plan"). The amount of such bonus was determined as a percentage of
base salary ranging from a minimum of 15% up to a maximum of 50% as
determined by the category to which an executive officer is assigned for a
plan year. The assignment of category is based upon the Committee's
subjective determination of each individual's level of responsibility and
accountability.
The annual incentive bonus is tied directly to the achievement of
specific financial objectives for the Company. Each year, usually at its
August meeting, the Committee sets minimum and maximum target levels
relating to the Company's income (before bonuses) and cash flow. No awards
are paid if the specified minimum target is not met. All awards require
Committee approval and are submitted by the Committee to the Board of
Directors for the Board's final approval.
7
<PAGE> 10
At the close of fiscal year 1994, the Company had exceeded the maximum
target levels established at the beginning of fiscal 1994. Accordingly, the
Committee made incentive compensation awards to the participating
executives based on the factors described above.
Stock Options: No stock options were awarded to the Company's
executive officers during fiscal 1994. The Committee intends to use stock
options as a long-term incentive, having the dual purpose of retaining and
attracting superior-performing executives while, at the same time, aligning
the executives' interests with those of the Company's stockholders, since
the real value of such compensation is linked directly to the price of the
Company's stock.
CEO Compensation: Mr. Jacques R. Sardas, the Company's President and
Chief Executive Officer, is a party to an employment agreement which had
been confirmed as part of the Company's Plan of Reorganization in 1992.
Pursuant to this agreement Mr. Sardas is employed as President and Chief
Executive Officer of the Company through January 12, 1996 at a base salary
of $360,000, as adjusted in 1994 to reflect a cost of living increase. This
base amount, set forth in the agreement, was established as a result of
negotiations between Mr. Sardas and the Company at the time the agreement
was entered into.
Under the terms of Mr. Sardas' employment agreement, the Board of
Directors, upon recommendation of the Committee, established a target bonus
under the Bonus Plan tied directly to the achievement of specific financial
objectives by the Company. The financial objectives set were based on
minimum and maximum target levels relating to the Company's income (before
bonuses) and cash flow. Under the Bonus Plan and consistent with Mr.
Sardas' employment agreement, Mr. Sardas is entitled to bonus compensation
equal to a percentage of his base salary ranging from 20% to 50% if the
financial objectives are achieved. However, no awards are paid if the
specified minimum target levels are not met. All such awards require
Committee approval and are submitted by the Committee to the Board of
Directors for the Board's final approval. Inasmuch as the Company exceeded
the maximum target levels set for fiscal 1994, Mr. Sardas received bonus
compensation of $184,860 or 50% of his base salary. (See also -- "CEO
Employment Agreement").
Compliance with Section 162(m) of the Internal Revenue Code: Section
162(m) of the Internal Revenue Code enacted in 1993 generally disallows a
tax deduction to a public corporation for compensation in excess of one
million dollars paid to a corporation's chief executive officer and four
other most highly compensated executive officers. Qualifying
performance-based compensation will not be subject to the cap if certain
requirements are met. The Committee and the Board of Directors currently
intend to structure the compensation of its executive officers in a manner
that is intended to ensure that the Company does not lose any tax
deductions because of the one million dollar compensation limit. However,
there can be no assurance that the various incentive and performance
related elements of the Company's compensation arrangements with its five
highest paid executive officers will, in fact, qualify as performance based
compensation under Section 162(m) of the Internal Revenue Code.
COMPENSATION COMMITTEE
Thomas F. Slater, Chairman
Cloyd J. Abruzzo
Jerry A. Cooper
8
<PAGE> 11
COMPENSATION COMMITTEE INTERLOCKS
No member of the Compensation Committee has interlocking relationships with
third parties which might be considered conflicts of interest.
CEO EMPLOYMENT AGREEMENT
Mr. Jacques R. Sardas, the Company's President and Chief Executive Officer,
is a party to an employment agreement with the Company. Pursuant to this
agreement which was confirmed as part of the Company's Plan of Reorganization in
1992, Mr. Sardas is employed as President and Chief Executive Officer of the
Company through January 12, 1996. The terms of Mr. Sardas' salary and bonus
compensation arrangements pursuant to his employment agreement are detailed
above in the section entitled "Compensation Committee Report on Executive
Management Compensation -- CEO Compensation."
Additionally, under the terms of his employment agreement, Mr. Sardas was
granted options for a number of shares of the Company's Common Stock which
equaled 15% of the assumed aggregate shares of Common Stock outstanding at
September 1, 1992. All such options have an exercise price of $.01 per share and
a term of five years. Options for 10% of the assumed aggregate outstanding
Common Stock became exercisable on March 1, 1993. The remaining options for 5%
of the assumed aggregate outstanding Common Stock became exercisable on March
31, 1994 because the Company had determined, and an appraisal by an investment
banking firm confirmed in accordance with the procedures set forth in the
employment agreement, that the fair value of the Company exceeded the $35
million target value set forth in Mr. Sardas' employment agreement. Under the
terms of his employment agreement, Mr. Sardas also will receive in cash 5% of
any net fair market value of the Company in excess of $35 million achieved as of
January 12, 1996 ("Five Per-Cent Bonus").
In the event Mr. Sardas' employment is terminated without cause, Mr. Sardas
will receive, as severance pay, his base salary for the remainder of the term of
his employment agreement. If Mr. Sardas' employment is terminated for cause or
Mr. Sardas voluntarily terminates his employment, the Company is obligated to
pay Mr. Sardas the appraised value for the shares of Common Stock underlying the
options described above and amounts due him under the Five Per Cent Bonus.
Furthermore, in May 1994 the Company reached an agreement in principle with
Mr. Sardas relating to a claim by Mr. Sardas that under the terms of his
employment agreement and related stock option agreement entered into September
1, 1992, he is entitled to certain anti-dilution protection arising from the
issuance of Series A, B and C Participation Certificates.
The Participation Certificates referred to in the preceding paragraph were
issued pursuant to the Company's Plan of Reorganization. The Series A
Participation Certificates are rights to purchase 619,194 shares of Common Stock
and expire on September 1, 1996. The Series B Participation Certificates are
rights to purchase 651,784 shares of Common Stock and expire on September 1,
1999. The Series C Participation Certificates are rights to purchase 1,448,410
shares of Common Stock and expire on September 1, 2002. The Series A and Series
B Participation Certificates have increasing exercise prices ranging from $3.08
to $6.66 per share of Common Stock. The Series C Participation Certificates are
not exercisable by their holders until the closing price or the average of the
reported closing bid and asked prices of the Common
9
<PAGE> 12
Stock has averaged over a specified price per share ranging from $9.46 to $13.18
for 20 consecutive days. Thereafter, the Series C Participation Certificates may
be exercised at the option of the holder at increasing exercise prices ranging
from $4.73 to $6.59 per share of Common Stock.
In July, 1994, the Company executed its settlement agreement with Mr.
Sardas. Under the agreement, the Company issued options to Mr. Sardas in
settlement of his claim that he was entitled to certain anti-dilution protection
arising from the issuance of Series A, B and C Participation Certificates. Mr.
Sardas was issued options evidencing his right to purchase, in the aggregate,
479,893 shares of Common Stock which amount is equivalent to 15% of the total of
the (i) underlying shares of common stock reserved for issuance under the
Participation Certificates and (ii) Mr. Sardas' newly-issued options. Mr. Sardas
was issued options to purchase 109,270 shares of Common Stock, having an
exercise price per share of $3.17 (the exercise price of the Series A
Participation Certificates commencing September 1, 1994) and expiring September
1, 1996. These options are presently exercisable. Mr. Sardas also was issued
options to purchase 115,021 shares of the Common Stock having an exercise price
per share of $5.69 (the exercise price of the Series B Participation
Certificates commencing September 1, 1994) and expiring September 1, 1999. These
options are presently exercisable. Mr. Sardas was also issued options to
purchase 255,602 shares of the Common Stock, having an exercise price per share
of $5.015 and expiring on September 1, 2002. These options are exercisable
beginning January 12, 1996, the expiration date of Mr. Sardas' employment
agreement. The exercise price for such options is the exercise price for the
Series C Participation Certificates, subject to vesting in effect upon the
expiration of Mr. Sardas' employment agreement.
10
<PAGE> 13
<TABLE>
SUMMARY COMPENSATION TABLE
The following table provides a summary of annual and long-term compensation
during the last three fiscal years for the Chief Executive Officer and all other
executive officers of the Company whose annual salary exceeded $100,000
(hereinafter, referred to collectively as the "named executive officers").
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION (A) --------------
-------------------------------------------------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
NAME AND FISCAL COMPEN- OPTIONS/ COMPEN-
PRINCIPAL POSITION YEAR SALARY BONUS SATION SARS#(h) SATION
- - ----------------------- ---- -------------- -------------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Jacques R. Sardas 1994 $369,720(b) $184,860 (d) -0- (d)
Chairman, Chief 1993 $360,000 $180,000 (d) 1,764,706(e) (d)
Executive Officer, 1992(f) $137,420(f) $123,000(c) (d) -0- (d)
President and
Treasurer
Mark E. Brody 1994 $100,000 $ 45,000 (d) -0- (d)
Vice President - 1993 $ 85,833 $ 36,300 (d) 30,000 (d)
Finance and 1992(g)
Controller
- - ---------------
<FN>
(a) Includes amounts earned in the specified fiscal year, whether or not
received during such fiscal year.
(b) Represents an increase during fiscal year 1994 based upon the increase in
the All-Urban-Consumers Price Index for 1993.
(c) This total includes (i) $90,000 paid pursuant to the terms of an employment
agreement between Mr. Sardas and the Company and (ii) $33,000 paid by the
Company for certain professional costs and expenses incurred in matters
relating to Mr. Sardas' employment agreement.
(d) The aggregate amount of all other compensation was less than the lesser of
$50,000 or 10% of the annual salary and bonus reported for the named
executive officers.
(e) Granted pursuant to an employment agreement between Mr. Sardas and the
Company.
(See also -- "CEO Employment Agreement").
(f) Represents salary payments made to Mr. Sardas for that portion of the fiscal
year for which he was employed by the Company.
(g) Information with respect to the fiscal year 1992 has been omitted as Mr.
Brody was not employed in the capacity of an executive officer of the
Company until fiscal 1993.
(h) The Company has not granted any restricted stock or stock appreciation
rights.
</TABLE>
11
<PAGE> 14
OPTION GRANTS AND OPTION EXERCISES
The Compensation Committee did not grant stock options to any of the named
executive officers of the Company in fiscal 1994.
The following table sets forth information for all exercises of stock
options by each of the named executive officers and the number and value of
unexercised in-the-money options at May 31, 1994. The actual amount, if any,
realized upon exercise of stock options will depend upon the amount by which the
market price of the Company's common stock on the date of exercise exceeds the
exercise price. There is no assurance that the values of unexercised in-the-
money stock options reflected in this table will be realized.
<TABLE>
AGGREGATED OPTION/SAR EXERCISES IN FISCAL YEAR 1994
AND FISCAL YEAR END OPTION/SAR VALUES
<CAPTION>
NUMBER OF SECURITIES VALUE OF SECURITIES
UNDERLYING UNEXERCISED UNDERLYING UNEXERCISED IN-
OPTIONS/SARS AT FISCAL YEAR THE-MONEY OPTIONS/SARS AT
SHARES VALUE END (#)(A) FISCAL YEAR END ($)
ACQUIRED ON REALIZED ----------------------------- -----------------------------
NAME EXERCISE (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - ------------------- ------------- --------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Jacques R. Sardas -0- -- 1,764,706(b) -0- $12,114,706 $ -0-
Mark E. Brody -0- -- 30,000(c) -0- $ 93,750 $ -0-
- - ---------------
<FN>
(a) The Company has not granted any stock appreciation rights.
(b) All of Mr. Sardas' options were granted pursuant to an employment agreement
between Mr. Sardas and the Company. (See also -- "CEO Employment
Agreement").
(c) These options became exercisable on May 10, 1994 and were granted at the
fair market value on the date of grant which was May 10, 1993.
</TABLE>
12
<PAGE> 15
PERFORMANCE GRAPH
Set forth below is a graph comparing the total stockholder returns of the
Company, the Standard & Poor's 500 Composite Stock Index ("S&P 500"), and an
industry peer index compiled by the Company on the basis of similar business
lines, sales and total assets. The corporations making up the Company's peer
group of companies are ABS Industries, Inc., Acme-Cleveland Corporation, Federal
Screw Works, Gehl Company, Intermet Corporation, Lamson & Sessions Co.,
Park-Ohio Industries, Inc., Standard Products Company and Walbro Corporation.
The peer group consolidation was done on a weighted average basis (market
capitalization basis, adjusted at the end of each quarter). The graph assumes
$100 invested on June 1, 1989 in the Company and each of the other indices.
<TABLE>
COMPARISON OF CUMULATIVE TOTAL RETURN
ASSUMES INITIAL INVESTMENT OF $100 AND REINVESTMENT OF DIVIDENDS
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) SUDBURY INC. S & P 500 PEER GROUP
<S> <C> <C> <C>
1989 100 100 100
1990 64 118 80
1991 10 124 60
1992 9 140 100
1993 8 160 105
1994 9 165 103
</TABLE>
NOTE: TOTAL RETURNS BASED ON MARKET CAPITALIZATION
The graph set forth above was prepared based on requirements established by
the Securities and Exchange Commission. As depicted above, the cumulative total
return on the Company's Common Stock was adversely impacted by the deteriorating
financial condition and ultimate reorganization of the Company which occurred in
1992.
13
<PAGE> 16
The graph set forth below depicts the cumulative total return on the
Company's Common stock that would have been achieved if $100 had been invested
on September 1, 1992, the date on which the Company emerged from under the
protection of Chapter 11 of the United States Bankruptcy Code.
<TABLE>
COMPARISON OF CUMULATIVE TOTAL RETURN
ASSUMES INITIAL INVESTMENT OF $100 AND REINVESTMENT OF DIVIDENDS
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) SUDBURY INC. S & P 500 PEER GROUP
<S> <C> <C> <C>
9/1/92 100 100 100
5/31/93 390 110 120
5/31/94 560 110 120
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
TRANSACTIONS WITH MANAGEMENT AND OTHERS
Preston Heller, Jr., a director of the Company, is a member of the Board of
Directors of National City Bank, Cleveland, Ohio ("National City"). The Company
has a $48,000,000 loan agreement with National City, and two other banks until
May 28, 1996. National City has a 25% participation in that agreement. The Loan
Agreement was entered into prior to Mr. Heller's joining either the Company's or
National City's Board of Directors. National City, as Trustee of the Sudbury
Savings & Profit Sharing Plan, holds 126,827 shares of the Company's common
stock.
Mr. James A. Karman, a director of the Company, is a member of the Board of
Directors of McDonald & Company Securities, Inc. ("McDonald"). During the fiscal
year 1994, McDonald was engaged to prepare certain valuations for the Company.
14
<PAGE> 17
RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
(PROPOSAL NO. 2)
The Board of Directors of the Company, upon the recommendation of the Audit
Committee, has appointed the firm of Ernst & Young LLP as its independent
auditors to examine and certify the Company's financial statements for the
fiscal year ending May 31, 1995. The Company has been advised by Ernst & Young
LLP that neither it nor any member thereof has any financial interest, direct or
indirect, in the Company or any of its subsidiaries in any capacity. Ernst &
Young LLP has acted as independent auditors for the Company since 1983.
The favorable vote of a majority of the shares represented at the Annual
Meeting will be required to ratify the appointment of Ernst & Young LLP. In the
event the stockholders do not ratify the appointment of Ernst & Young LLP, the
selection of other independent auditors will be considered by the Company's
Board of Directors.
Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting. Such representatives will have the opportunity to make a
statement, if they desire to do so, and are expected to be available to respond
to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE "FOR" THE
RATIFICATION OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS FOR THE COMPANY.
OTHER MATTERS
The Board of Directors is not aware of any other matter which will be
presented to the stockholders for action at the Annual Meeting. Should any other
matter properly come before the Annual Meeting, or any adjournment thereof, the
person or persons voting the proxy accompanying this proxy statement will vote
such proxy in accordance with their best judgment as to such matters.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Directors, executive officers and greater than ten percent beneficial owners are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms that they file. Based solely on a review of the copies of such forms
received by the Company and/or written representations from certain reporting
persons, the Company believes that during the period June 1, 1993 to May 31,
1994, all filing requirements applicable to its directors, executive officers
and greater than ten percent owners were complied with.
EXPENSES OF SOLICITATION
The cost of soliciting proxies will be borne by the Company. Officers and
employees of the Company, without additional remuneration may, by letter or
telephone or in person, request the
15
<PAGE> 18
return of proxies. The Company will reimburse brokerage houses, custodians,
nominees, and others for their reasonable expenses in connection with this
solicitation.
STOCKHOLDER PROPOSALS FOR THE 1995 ANNUAL MEETING
Any stockholder who intends to present a proposal at the 1995 Annual
Meeting of Stockholders and who wishes to have the proposal included in the
Company's proxy statement and form of proxy for that meeting must deliver such
proposal to the Secretary of the Company, at the Company's corporate offices in
Cleveland, Ohio, no later than May 9, 1995.
ANNUAL REPORT
THE COMPANY'S ANNUAL REPORT FOR THE 1994 FISCAL YEAR ACCOMPANIES THIS PROXY
STATEMENT. COPIES OF THE COMPANY'S FORM 10-K AS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION MAY BE OBTAINED FROM THE COMPANY.
SUDBURY, INC.
/s/ Mary C. Farrar
----------------------------
Mary C. Farrar
Corporate Secretary
September 6, 1994
16
<PAGE> 19
<TABLE>
<S> <C>
SUDBURY, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING -- OCTOBER 13, 1994
P Jacques R. Sardas, Mark E. Brody and Mary C. Farrar, or any of
them, each with power of substitution, are hereby appointed Proxies of
R the undersigned to represent and to vote, as designated, all shares of
Common Stock of Sudbury, Inc. held of record by the undersigned on
O August 31, 1994, at the Annual Meeting of Stockholders to be held on
October 13, 1994, or any adjournment thereof, upon such business as
X may properly come before the meeting, including the items on the
reverse side of this card as set forth in the Notice of 1994 Annual
Y Meeting of Stockholders and the Proxy Statement. In their discretion
the Proxies are authorized to vote upon such other business as may
properly come before the meeting. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR PROPOSALS 1 AND 2.
<S> <C>
Election of Directors, Nominees: (change of address)
-------------------------------------
Cloyd J. Abruzzo, Jerry A. Cooper, Preston Heller, Jr., -------------------------------------
James A. Karman, David A. Preiser, Jacques R. Sardas and -------------------------------------
Thomas F. Slater. -------------------------------------
(If you have written in the above
space, please mark the corresponding
box on the reverse side of this card.)
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES, SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF
YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND
RETURN THIS CARD.
/ SEE REVERSE /
/ SIDE /
</TABLE>
<PAGE> 20
<TABLE>
<S> <C> <C>
/ X / PLEASE MARK YOUR NUMBER OF SHARES
VOTES AS IN THIS
EXAMPLE.
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of / / / / 2. Ratification of the appointment of / / / / / /
Directors Ernst & Young LLP as independent
(see reverse) auditors of the Company
For, except vote withheld from the following nominee(s):
_______________________________________________________
SUDBURY, INC.'S BOARD OF
DIRECTORS RECOMMENDS A VOTE
FOR PROPOSALS 1 AND 2.
THE UNDERSIGNED HEREBY
ACKNOWLEDGES RECEIPT OF A
COPY OF THE ACCOMPANYING
NOTICE OF ANNUAL MEETING AND
PROXY STATEMENT AND HEREBY
Change / / REVOKES ANY PROXY OR PROXIES
of PREVIOUSLY GIVEN:
Address
PLEASE MARK, SIGN, DATE AND
Attend / / RETURN THIS PROXY USING THE
Meeting ENCLOSED ENVELOPE.
SIGNATURE(S) _____________________________________________________________________ DATE ________________
SIGNATURE(S) _____________________________________________________________________ DATE ________________
NOTE: Please sign exactly as name appears hereon, joint owners should both sign. When signing as attorney, executor,
administrator, trustee or guardian, give your full title as such. In the case of a corporation, a duly authorized
officer should sign on its behalf, if a partnership, please sign in partnership name by authorized person.
</TABLE>
<PAGE> 21
<TABLE>
<S> <C>
SUDBURY, INC.
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON OCTOBER 13, 1994
INSTRUCTIONS FOR VOTING SHARES HELD BY NATIONAL CITY BANK, TRUSTEE
P UNDER THE SUDBURY SAVINGS AND PROFIT SHARING PLAN (THE "PLAN")
R Pursuant to Article 13.6 of the Plan, as named fiduciary, I
hereby direct National City Bank, as Trustee, to vote, in accordance
O with my directions as shown on the reverse side of this card, in
person or by proxy, all Common Shares of the Company credited to my
X Company stock fund account under the Plan as well as the pro rata
portion of the uninstructed Common Shares of the Company's Common
Y Stock for which I have voting authority under the Plan at the Annual
Meeting of Stockholders to be held on October 13, 1994, and at any
adjournment, or postponement thereof, as specified, on all matters
coming before said meeting including the election of the nominees for
Director listed in Proposal 1 and the selection of auditors.
Election of Directors, Nominees:
Cloyd J. Abruzzo, Jerry A. Cooper, Preston Heller, Jr.,
James A. Karman, David A. Preiser, Jacques R. Sardas and
Thomas F. Slater.
YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES, SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF
YOU WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS.
/ SEE REVERSE /
/ SIDE /
</TABLE>
<PAGE> 22
<TABLE>
<S> <C> <C>
/ X / PLEASE MARK YOUR NUMBER OF SHARES
VOTES AS IN THIS
EXAMPLE.
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
FOR WITHHELD FOR AGAINST ABSTAIN
1. Election of / / / / 2. Ratification of the appointment of / / / / / /
Directors Ernst & Young LLP as independent
(see reverse) auditors of the Company
For, except vote withheld from the following nominee(s):
_______________________________________________________
THE SHARES REPRESENTED BY THIS
PROXY WILL BE VOTED AS DIRECTED
OR, IF DIRECTIONS ARE NOT
INDICATED, WILL BE VOTED
PURSUANT TO THE TERMS OF THE
SUDBURY SAVINGS
AND PROFIT SHARING PLAN.
Change / /
of
Address
Attend / /
Meeting
SIGNATURE(S) _____________________________________________________________________ DATE ________________
SIGNATURE(S) _____________________________________________________________________ DATE ________________
NOTE: Please sign your name exactly as it appears above and return your proxy promptly in the enclosed
envelope which requires no postage.
</TABLE>
