SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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) of Rule 14a-12
O'SULLIVAN CORPORATION
(Name of Registrant as Specified In Its Charter)
C. Bryant Nickerson
Treasurer, CFO and Secretary
O'Sullivan Corporation
1944 Valley Avenue
Winchester, Virginia 22601
(703) 667-6666
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 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:
_________________________________________________________________
2) Aggregate number of securities to which transaction applies:
_________________________________________________________________
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(Set forth the amount on
which the filing fee is calculated and state how it was
determined):
_________________________________________________________________
4) Proposed maximum aggregate value of transaction:
_________________________________________________________________
5) Total fee paid:
_________________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] 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 of Schedule and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing Party:
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4) Date Filed:
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April 1, 1995
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held Tuesday, April 25, 1995
To The Holders of O'Sullivan Corporation Common Stock:
Notice is hereby given that the annual meeting of stockholders of
O'Sullivan Corporation will be held on Tuesday, April 25, 1995, at 11:00
a.m., at the office of the Company, 1944 Valley Avenue, City of Winchester,
Virginia for the purpose of:
(a) Election of directors for the ensuing year;
(b) Approval of O'Sullivan Corporation 1995 Stock Option Plan;
(c) Approval of O'Sullivan Corporation 1995 Outside Director Stock
Option Plan;
(d) Approval of the appointment of Yount, Hyde & Barbour, P.C.,
of Winchester, Virginia, as auditors for the 1995 fiscal year; and
(e) Transaction of such other business as may properly come before the
meeting.
Enclosed you will find a proxy form, a proxy statement, and the 1994
annual report.
Only stockholders of record at the close of business on March 10, 1995,
will be entitled to vote at the meeting.
The Board of Directors would like to have as many stockholders as
possible attend the meeting in person. However, whether or not you plan to
be present, please date, sign, and mail the enclosed proxy promptly in the
enclosed stamped return envelope.
Also, if you plan to attend the meeting this year, please complete and return
the enclosed Annual Meeting Registration card so that we may better plan the
necessary arrangements for the meeting.
/s/ C. Bryant Nickerson
---------------------------
C. BRYANT NICKERSON
Treasurer, CFO & Secretary
- 1 -
April 1, 1995
O'Sullivan Corporation
1944 Valley Avenue
Winchester, Virginia 22601
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
APRIL 25, 1995
The enclosed proxy is solicited by and on behalf of the Board of
Directors of O'Sullivan Corporation (the "Company") for the 1995 annual
meeting of the stockholders of the Company scheduled for April 25, 1995, or
any adjournments thereof, for the purposes set forth in the attached notice
of annual meeting. This proxy statement and enclosed proxy are being mailed
to stockholders on or about April 1, 1995.
Any stockholder executing a proxy may revoke it at any time before it is
voted by delivering another proxy or written notice of revocation to the
Company's Secretary. The giving of this proxy will not affect the right of
the stockholder to attend the meeting and vote in person. However,
attendance at the meeting will not, without notice of revocation, revoke a
proxy for the meeting.
Each holder of record of the Common Stock of the Company, $1.00 par value
(the "Common Stock"), at the close of business on March 10, 1995, will be
entitled to one vote for each share registered in his name on each matter
brought before the meeting. At the close of business on March 10, 1995,
16,502,766 shares of the Common Stock were outstanding and entitled to
vote.
The enclosed proxy, if executed and not revoked, will be voted for the
election of the nominees for director named herein, for the proposed 1995
Stock Option Plan, for the proposed 1995 Outside Director Stock Option Plan
and for the appointment of Yount, Hyde & Barbour, P.C. as auditors, unless
it contains specific instructions to the contrary, in which event it will
be voted in accordance with such instructions. At this time, no matters
other than those specified are expected to come before the meeting. If any
other matters are properly presented to the meeting for action, the proxy
holders will vote the proxies, which confer discretionary authority to vote
on such matters, in accordance with their best judgment.
Except for the election of directors, action on a matter submitted to the
stockholders at the meeting will be approved if a quorum is present at the
meeting and the votes cast in favor of the action exceed the votes cast
against it. With respect to the election of directors, the nine nominees
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receiving the greatest number of votes cast for the election of directors
will be elected, assuming a quorum is present at the meeting. Presence in
person or by proxy of the holders of a majority of the outstanding shares
of Common Stock entitled to vote at the meeting will constitute a quorum.
Shares for which the holder has elected to abstain or to withhold the
proxies' authority to vote (including broker non-votes) on a matter will
count toward a quorum but will have no effect on the action taken with
respect to such matter.
In addition to the solicitation of proxies by mail, the Company's
officers and regular employees may solicit proxies by telephone, facsimile
transmission or personal interview. The Company will bear the cost of all
solicitation.
VOTING SECURITIES AND PRINCIPAL STOCKHOLDERS
The following table sets forth certain information as to the beneficial
ownership of the Company's Common Stock by any person known to the Company
to be the beneficial owner of more than five percent of such stock as of
February 28, 1995. To the best knowledge of the Company, the persons named
in the table have sole voting and investment powers with respect to shares
shown as owned by them.
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT
BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
Arthur H. Bryant II 2,986,921 18.1%
P. O. Box 2929
Alexandria, VA 22313
Magalen O. Bryant 1,010,511 6.1%
Locust Hill Farm
Middleburg, VA 22117
ITEM ONE - ELECTION OF DIRECTORS
A board of nine directors of the Company is to be elected at the meeting
to serve until the next annual meeting or until their successors are
elected. Other than Messrs. Burrus, McCullough and Munn, each of the
nominees listed below is presently a director of the Company, and each was
elected by the stockholders at the last annual meeting for a term expiring
at the 1995 annual meeting. Messrs. Byrd, Jamieson, Neal, Terretta and
White are directors of the Company whose terms will expire at the annual
meeting and who will be retiring from the Board at that time.
Each director nominee has agreed to serve if elected. If any nominee is
unable or unavailable to serve, a circumstance which is not expected, the
proxy may be voted for the election of other persons that may be nominated
during the meeting, except that any proxy that is marked to withhold
authority to vote for election of directors will not be voted for any
nominee.
- 3 -
The names of the nominees and certain information concerning their
business experience and other matters are set forth below.
NAME, AGE, COMPANY POSITIONS, DIRECTOR COMMON STOCK PERCENT
PRINCIPAL OCCUPATION AND SINCE BENEFICIALLY OF CLASS
DIRECTORSHIPS IN PUBLIC OWNED AS OF
CORPORATIONS 2/28/95
John J. Armstrong, 70 1986(1) 134,541(2) 0.8%
Palm City, FL,
Private Investor;
Former President of the
Company, 1971-1975
C. Hugh Bloom, Jr., 61 1990 4,403 - -
Easton, PA,
Vice President, C.F.
Martin & Co., Inc.
Arthur H. Bryant, II, 52 1967 2,986,921(2)(3) 18.1%
Alexandria, VA,
Chairman of the Board
and Chief Executive Officer
of the Company
Magalen O. Bryant, 66 1982 1,010,511 6.1%
Middleburg, VA,
Private Investor;
Director, Carlisle
Companies, Incorporated
and Dover Corporation
Robert L. Burrus, Jr., 60 Nominee 1,000 - -
Richmond, VA, 1995
Partner; McGuire, Woods,
Battle & Boothe, L.L.P.,
a law firm retained by the
Company for a number of
years; Director, CSX Corporation,
Concepts Direct, Inc.,
Heilig-Meyers Company,
S & K Famous Brands, Inc.
Max C. Chapman, Jr., 51 1989 103,002 0.6%
Scarborough, NY,
Chairman, Nomura Securities
International, Inc.;
Director, The Nomura
Securities Co., Ltd.
James T. Holland, 54 1984 112,675(2)(4) 0.7%
Winchester, VA,
President and Chief
Operating Officer of the
Company since 1986;
Executive Vice President,
1984-1986; Vice President
and Treasurer, 1979-1984
- 4 -
R. Michael McCullough, 56 Nominee - - - -
McLean, VA, 1995
Senior Chairman,
Booz Allen & Hamilton,
a Delaware Corporation
Stephen P. Munn, 52 Nominee - - - -
Syracuse, New York, 1995
Chairman, President and
CEO Carlisle Companies
Incorporated; Director,
Carlisle Companies
Incorporated and
International Imaging
Materials Inc.
All Executive Officers and
Directors as a group (14 persons) 4,597,987(2)(3) 27.9%
(4)
In addition to the nominees listed above the remaining officers named in
the summary compensation table and directors who are not continuing in
office after the annual meeting had the following beneficial ownership of
shares at February 28, 1995:
COMMON STOCK
BENEFICIALLY
OWNED AS OF PERCENT
NAME AND TITLE 2/28/95 OF CLASS
Anthony A. Barone,
Vice President, CFO and
Secretary (A) 27,567(4) 0.2%
Phillip S. Griffin,
Vice President 95,484(4) 0.6%
John S. Campbell,
Vice President 21,553(4) 0.1%
Harry F. Byrd, Jr. (B) 11,177 0.1%
J. P. Jamieson (B) 10,000 0.1%
Alexander W. Neal, Jr.(B) 52,643 0.3%
Paul Terretta (B) 13,078 0.1%
C. Ridgely White (B) 25,270 0.2%
(1) Mr. Armstrong previously served as a director of the Company for
the period 1971 to 1983.
- 5 -
(2) Includes the following shares held by the spouses, children or
associates of the following directors, which shares may be deemed held
subject to shared investment and voting powers: John J. Armstrong,
12,497 shares; James T. Holland, 7,244 shares; Arthur H. Bryant II,
9,466 shares.
(3) Includes 1,719,528 shares as President and Trustee of the Bryant
Foundation.
(4) Includes the following shares for which options, which are or, within
60 days after February 28, 1995, will be exercisable, are held under
the Company's Incentive Stock Option Plan: James T. Holland, 30,228
shares; all Officers and Directors as a group, 143,958 shares; Anthony
A. Barone, 22,401 shares; Phillip S. Griffin, 11,156 shares; John S.
Campbell, 21,402 shares.
(A) Separated from service as of January 31, 1995.
(B) Term as director expires April 25, 1995, retiring from board at that
time.
Under the securities laws of the United States, the Company's directors,
its officers, and any persons holding ten percent or more of the Company's
Common Stock are required to report their ownership of the Common Stock and
any changes in that ownership to the Securities and Exchange Commission
("Commission") and the American Stock Exchange. Specific due dates for
these reports have been established by the Commission, and the Company is
required to report in this proxy statement any failure to file by these
dates during 1994. During the year, there were no known failures of any
officer or director to file in a timely manner the required filings. In
making this statement, the Company has relied on the written
representations of its incumbent directors and officers and copies of the
reports that they have filed with the Commission.
COMMITTEES OF THE BOARD OF DIRECTORS
AND MEETING ATTENDANCE
During 1994, there were one special and four regular quarterly board
meetings held and all of the incumbent board members attended at least 75%
of the meetings of the board and any committees on which they served,
except for Mr. Chapman, who was unable to attend the one regularly
scheduled meeting of the Compensation and Stock Option Committee.
The Company has an Audit Committee which consists of Messrs. Jamieson,
Byrd, and White. All members of the Audit Committee are outside directors.
Mr. Jamieson serves as Chairman of the Audit Committee. The Audit
Committee met two times during 1994. The principal responsibilities of the
Audit Committee are to direct the activity of the internal and external
audit functions, recommend the selection of external auditors to the board,
provide for the continuing review of the underlying internal controls of
the Company, and review published financial reports by the Company.
- 6 -
There is a Compensation and Stock Option Committee of the board which
consists of Messrs. Armstrong, Byrd, Chapman and Neal. All members of the
Compensation and Stock Option Committee are outside directors. Mr.
Armstrong serves as Chairman of this Committee. The Compensation and Stock
Option Committee met one time during 1994. The Committee is responsible
for administering the Company's stock incentive programs and for reviewing
and making recommendations to the board with respect to compensation of
officers and directors. The Committee also determines the key employees
who should receive options and the number of shares to be granted under
options.
There is a Nominating Committee of the board which consists of Messrs. A.
Bryant and M. Chapman and Ms. M.O. Bryant. All members of the Nominating
Committee except Mr. A. Bryant are outside directors. Mr. Chapman serves
as Chairman of this Committee. The Committee was first appointed in
February, 1995 and did not meet in 1994. The Nominating Committee is
responsible for recommending to the board candidates for election as
directors. The Nominating Committee will consider nominations from
stockholders. Any stockholder who wishes to make a nomination for a
director must advise the Secretary of the Company in writing, mailed no
later than ten days before the date of the stockholders' meeting, of the
name, address and business background of the nominee.
COMPENSATION OF DIRECTORS
A fee of $1,000 per quarter was paid to each outside director for 1994.
An additional $2,000 attendance fee was paid to each outside director for
regular directors' meetings held in January, April, July and October. An
attendance fee of $2,000 was paid outside directors for the special
directors' meeting held in December, 1994. If all meetings were attended
during 1994, a total of $14,000 would have been paid. Outside directors
who are committee members are paid $200 for each meeting attended. All
expenses in attending meetings are normally borne by the directors.
MANAGEMENT REMUNERATION
Summary Compensation Table
--------------------------
The following table provides certain information concerning annual and
long-term compensation paid to or accrued on behalf of the Chairman and
Chief Executive Officer of the Company and the four other most highly
compensated executive officers (the "Named Executive Officers") for the
years 1992, 1993, and 1994.
- 7 -
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION COMPENSATION
AWARDS
--------------------------------------------- --------- ------------------
Name and Principal Options All Other
Occupation Year Salary($) Bonus($) (#) Compensation($)(B)
Arthur H. 1994 $307,000 $ - - - - $65,275
Bryant, II 1993 307,000 - - - - 25,297
Chairman & CEO 1992 272,000 - - - - 8,849
James T. 1994 $306,400 $ - - - - $74,908
Holland 1993 306,400 - - - - 49,958
President & COO 1992 271,400 - - 10,660 37,160
Anthony A. 1994 $146,000 $ 50,000 - - $13,938
Barone (A) 1993 141,000 - - - - 13,203
Vice President 1992 134,400 27,950 8,200 12,612
Phillip S. 1994 $172,258 $ 40,627 - - $25,906
Griffin 1993 131,000 - - - - 24,007
Vice President 1992 123,700 25,620 - - 26,601
John S. 1994 $165,000 $ 52,606 - - $12,670
Campbell 1993 156,000 88,000 - - 12,855
Vice President 1992 146,000 11,698 8,200 11,392
(A) Joined the Company during 1985; separated from service in January,
1995. The Company and Mr. Barone entered into an agreement in
connection with his separation from service in January 1995. Under the
agreement, he received a lump sum payment under the Deferred
Compensation Program in an amount equal to the present value of 30% of
the benefit he would have received under the program had he remained
with the Company until age 65. In addition, Mr. Barone received a
payment in an amount equal to the present value of one year's salary.
(B) The "All Other Compensation" column includes amounts accrued under the
Company's Deferred Compensation Program, split dollar life insurance
premiums paid by the Company and Company contributions to the Company's
Retirement Savings Plan. These amounts reflected in the table for 1994
are as follows:
Name Deferred Split Retirement
Compensation Dollar Savings Plan
Accrual Premium Contribution
Arthur H. Bryant $58,791 $1,984 $ 4,500
James T. Holland $65,262 $2,146 $ 7,500
Anthony A. Barone $ 6,438 $ - - $ 7,500
Phillip S. Griffin $16,082 $2,324 $ 7,500
John S. Campbell $ 5,170 $ - - $ 7,500
- 8 -
Deferred Compensation Program
-----------------------------
Since 1985, the Company has had a deferred compensation program for key
employees of the Company. Under this program, the Company has agreed to
pay to each covered employee a certain sum annually for fifteen years upon
his retirement or, in the event of his death, to his designated
beneficiary. The annual amount payable to each of the Named Executive
Officers upon retirement at age 65 is as follows: Mr. Bryant, $150,000,
Mr. Holland, $150,000, Mr. Barone, $45,000, Mr. Campbell, $30,000, and Mr.
Griffin, $40,000. A benefit is also paid if the employee terminates
employment (other than by his voluntary action or discharge for cause)
before he attains age 65. In that event, the amount of the benefit depends
on the employee's years of service with the Company (with the full benefit
paid only if the employee has completed 25 years of service).
The Company has purchased individual life insurance contracts with
respect to each employee covered by this program. The Company is the owner
and beneficiary of these insurance contracts. The employees are general
creditors of the Company with respect to these benefits.
Split-Dollar Life Insurance
---------------------------
In 1979, the Company initiated a split-dollar insurance program for
certain key employees. The face amount of each policy is $100,000. The
premium is split between the Company and the employee. No portion of the
premium is expensed for financial reporting purposes since the Company will
recoup its cost in full.
Retirement Savings Plan
-----------------------
On January 31, 1989, the Board of Directors approved a trusteed
Retirement Savings Plan (the "Plan"), effective March 1, 1989, that covers
all employees of the Company and its subsidiaries whose employment is not
governed by the terms of a collective bargaining agreement between employee
representatives and the Company or its subsidiaries. It is the current
intent of the Company to contribute three percent (3%) of a participant's
annual compensation to the Plan without an employee contribution being
required, and to make an additional matching contribution of up to two
percent (2%) of annual compensation if the participant contributes an equal
amount.
During 1994, total Company contributions to this Plan for salaried
employees consisted of a normal Plan contribution of 3% of eligible
participants' annual compensation plus an additional matching contribution
of up to 2% of the participant's annual compensation.
- 9 -
Stock Option Holdings
---------------------
The following table provides information concerning the number and value
of unexercised stock options held as of December 31, 1994 by the Named
Executive Officers. None of the Named Executive Officers exercised stock
options during 1994. No options were granted to any of the Named Executive
Officers during 1994.
LAST FISCAL YEAR END OPTION VALUES
Number Of Value Of
Unexercised Unexercised In-
Options At The-Money Options
At FY-End At FY-End
Exercisable (1) Exercisable (1)
Name Unexercisable(2) Unexercisable(2)
Arthur H. Bryant II
Chairman & CEO - - - -
James T. Holland
President & COO 19,568(1) $ - -(1)
10,660(2) $11,913(2)
Anthony A. Barone
Vice President, CFO and 14,201(1) $ - -(1)
Secretary 8,200(2) $ 9,164(2)
Phillip S. Griffin
Vice President 11,156(1) $ - -(1)
John S. Campbell
Vice President 13,202(1) $ - -(1)
8,200(2) $ 9,164(2)
Report of Compensation and Stock Option Committee on Executive Compensation
---------------------------------------------------------------------------
The Compensation and Stock Option Committee of the board has provided the
following report on executive compensation:
The Compensation and Stock Option Committee is composed of Directors who
are not employees of the Company. The Committee reviews and recommends to
the Board of Directors the implementation of a compensation structure that
is intended to enhance the profitability of the Company and, consequently,
shareholder value. The compensation of the senior executives is structured
as a combination of salary, annual bonuses dependent on profitability,
stock options, and a deferred compensation program. This compensation
structure is intended to align the financial interests of the Company's
senior executives with those of the Company's shareholders.
At the beginning of the 1994 fiscal year, the Committee reviewed
proposals submitted by the Chairman (who is also the Company's Chief
Executive Officer) and President for annual salaries and bonuses for the
- 10 -
senior executives. The Committee determined the amount of the salary and
projected bonus to be paid to each senior executive for the year based on
management's recommendations and subjective factors. In making its
recommendations, management reviewed the compensation surveys for executives
of companies in the peer group used for purposes of the Company's proxy
statement (the domestic OEM automotive industry), to the extent such data
was available from the companies' proxy statements. Based on this data,
the salaries and bonuses of the Company's executive officers were generally
competitive with or lower than the manufacturing industry average and the
compensation of similar officers of the Company's peer group. The 1994
salary and projected bonus for each senior executive was set at a level
consistent with the Company's historical practice and in amounts considered
appropriate, taking into account this competitive data, the past
performance of the executive and the efforts required of the executive in a
very competitive business environment. The 1994 salary of the Chairman was
fixed at the same salary as the Chairman received in 1993. The Committee
approved increases in salaries and projected bonuses for other executive
officers.
The 1994 bonus programs for the Chairman and President were structured to
give the Chairman and President the opportunity to receive bonuses based on
the Company's consolidated net income. Target bonuses were established for
the other senior executives who are responsible for overall management of
the Company, based in part on the Company's attainment of net income goals
and in part on an evaluation of the executive's attainment of personal
goals and objectives, as determined by the Chairman and President. The
bonuses for the senior executives who are directly responsible for
divisions of the Company were based on the profitability of their divisions
and in most cases were subject to an evaluation of the executive's
attainment of personal goals and objectives, as determined by the Chairman
and President.
As a result of the sale of the Company's Gulfstream Division to
Automotive Industries, Inc. in 1994, all the senior executive bonus plans
were reevaluated to reflect the sale of the Division, to compensate
executives for their extraordinary efforts associated with the sale of the
Division, to recognize the transition responsibilities required as a result
of the sale, and to account for the additional general and administrative
expenses and overhead costs absorbed by continuing operations. As a
result, certain senior executive officers received bonuses based on the
performance of continuing operations, as adjusted for the sale, and certain
executive officers received discretionary bonuses in recognition of their
significant efforts to effect the sale of the Company's Gulfstream
Division. The Chairman and the President did not receive bonuses for
1994, because the financial goals of their bonus programs were not met.
The Committee grants long-term incentive compensation in the form of
stock options. The Committee considers stock options to be an important
means of compensating executives for their efforts and ensuring that the
executives maintain their incentive to increase the profitability of the
Company and the value of the Company's stock. Because of the Chairman's
substantial existing shareholdings, the Chairman has not received stock
options under the Company's stock option plan. No options were granted to
executive officers in 1994.
- 11 -
The Company maintains a deferred compensation program that provides
benefits in specified amounts to the executive officers upon their
retirement or death, or upon their termination of employment (other than by
the executive's voluntary action or discharge for cause) after at least ten
years of employment with the Company. This program is intended to provide
executives with an additional incentive to remain with the Company.
Section 162(m) of the Internal Revenue Code of 1986, as amended, imposes
a $1,000,000 limit on the amount of compensation that will be deductible by
the Company each year with respect to each of the chief executive officer
and the four other most highly compensated executive officers. The
compensation level of the Company's executives is well below this
$1,000,000 limit. The Company's new 1995 Stock Option Plan, which was
approved by the Board of Directors in February, 1995 and is being submitted
to the shareholders for approval at the April, 1995 annual meeting, is
structured to be able to comply with the exemption from the Section 162(m)
limitation as a performance-based plan.
When setting compensation, the Committee takes into account the complexity
of the Company's business and the need for strong, involved management. The
Committee also takes into account the substantial changes that have taken place
in the Company's business and business environment during recent years and
the special efforts made by senior management to continue the Company's
profitability despite significant economic pressures and competition.
At its February, 1995 meeting, the Committee reviewed proposals submitted
by the President for 1995 annual salaries and bonuses for the senior
executives. The Committee reviewed information from the Wyatt Company
survey of plastics and allied products companies' executive compensation,
as well as compensation data of the companies in the peer group used for
purposes of the Company's proxy statement (the domestic OEM automotive
industry), to the extent such data is available from the companies' proxy
statements. The proposed salaries and bonuses of the Company's executive
officers are generally competitive with compensation of similar officers of
the companies in the Wyatt survey and in the Company's peer group.
The Committee determined the amount of salary and projected bonus to be
paid to each senior executive for the 1995 year based on management's
proposals. The Committee took into consideration the Company's
profitability in 1994 and Company projections of increased profitability in
1995. The salaries and bonuses were set in amounts considered appropriate,
taking into account the competitive data, the responsibilities and
performance of each executive and the efforts required of the executives in
a very competitive business environment. No salary adjustment or target
bonus was established for the Chairman, Arthur Bryant, because Mr. Bryant
plans to retire in April, 1995.
The 1995 bonus program for the President was structured to give the
President a bonus opportunity based on the Company's net profit before
income taxes ("PBIT") for the year. Target bonuses were established for
each of the other senior executives, based in most cases on goals for the
PBIT of the divisions for the 1995 year. In appropriate cases, corporate
PBIT is also a factor.
John J. Armstrong (Committee Chairman)
Max C. Chapman, Jr.
Harry F. Byrd, Jr.
Alexander W. Neal, Jr.
- 12 -
COMPARATIVE PERFORMANCE
The following graph compares the yearly percentage change in the cumulative
total stockholder return of the Company's common stock against the cumulative
total return of the S&P Composite 500 Stock Index and a group of public co-
mpanies, each of which supplies products to the domestic OEM automotive in-
dustry that are similar to those supplied by the Company (the "peer group") for
the five-year period beginning January 1, 1989 and ending December 31, 1994.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
O'SULLIVAN CORPORATION, S&P 500 INDEX AND PEER GROUP
MEASURED PERIOD O'SULLIVAN PEER S&P 500
(FISCAL YEAR COVERED) CORPORATION GROUP INDEX
--------------------- ------------ ------------ ------------
DECEMBER 1989 100.00 100.00 100.00
DECEMBER 1990 77.01 68.92 96.89
DECEMBER 1991 83.12 98.54 126.42
DECEMBER 1992 101.53 117.16 136.05
DECEMBER 1993 97.51 171.58 149.76
DECEMBER 1994 104.51 139.23 151.74
The peer group consists of: Automotive Industries Holdings, Inc.;
Donnelly Corporation; Gencorp, Inc.; Larrizza Industries; The Standard
Products Company; and Trinova Corporation.
ITEM TWO - PROPOSAL TO ADOPT O'SULLIVAN CORPORATION 1995 STOCK OPTION PLAN
The Company's 1985 Incentive Stock Option Plan expired, according to its
terms, on January 28, 1995. On February 7, 1995, the Board of Directors
approved the adoption of a new 1995 Stock Option Plan (the "Plan") and
recommended that the Plan be submitted to the shareholders for approval.
A copy of the Plan is attached as Exhibit A. The purpose of the Plan is to
give key employees an opportunity to acquire a proprietary interest in the
Company and an additional incentive to promote its success, as well as to
encourage them to remain in the employ of the Company. Adoption of the new
Plan is contingent upon shareholder approval.
The Plan authorizes 200,000 shares of Company Common Stock to be issued
under the Plan. Appropriate adjustments will be made in the number and
kind of shares to be issued under the Plan, the exercise price, and other
relevant provisions in the event of a stock dividend, stock split, merger
or other similar change.
Stock options may be granted to key employees of the Company and its
subsidiaries. The Plan limits the number of options that an employee may
receive during any one calendar year to 50,000 shares. Stock options may
be incentive stock options under section 422 of the Internal Revenue Code
or nonstatutory options, and stock appreciation rights may be granted in
connection with options.
The Plan is administered by the Compensation and Stock Option Committee
of the Board, which is a committee of non-employee directors. The
Committee selects the key employees who are to receive options under the
Plan and determines the number of shares with respect to which each option
is granted. Options are granted at an exercise price not less than the
fair market value per share of the common stock on the date the option is
granted.
- 13 -
The Committee determines the terms of options, including any vesting
provisions and any provisions for exercise of options after termination of
employment. The Committee determines whether stock appreciation rights
will be issued in connection with options. The Committee may take such
actions as it deems appropriate in the event of a change of control or a
significant corporate change.
Participants may exercise options by tendering cash or shares of common
stock, by directing the Company to withhold shares of common stock, or by
making appropriate arrangements through a broker for delivery of the
exercise price. The Plan allows the Committee to establish alternate ways
of allowing participants to satisfy their tax withholding obligations upon
the exercise of options.
Options are generally not transferrable. However, the Plan permits the
Committee to grant nonstatutory stock options that may be transferred to a
member of the participant's immediate family or to a trust or partnership
established for family members.
In order to comply with Rule 16b-3 of the Securities Exchange Act of
1934, as amended, the Plan provides that the shareholders must approve any
amendment that would materially increase the benefits accruing to a
participant under the Plan, materially increase the number of securities
that my be issued under the Plan, or materially modify the requirements as
to eligibility for participation in the Plan, with limited exceptions.
The Company will receive a tax deduction when an employee exercises a
nonstatutory stock option, but generally will not receive such a deduction
when an employee exercises an incentive stock option. A participant will
be taxed on the amount by which the fair market value of the common stock
exceeds the exercise price on the date the underlying common stock is sold
for incentive stock options and on the date of exercise for nonstatutory
stock options. A participant will also be taxed on the amount of cash or
stock received upon the exercise of stock appreciation rights. Special tax
provisions apply to persons who are insiders. A participant may be subject
to an alternative minimum tax when he exercises an incentive stock option
on the amount by which the fair market value of the common stock exceeds
the exercise price on the date of exercise. There are generally no federal
income tax consequences to the Company or the participant at the time an
option is granted.
Approximately 20 key employees are currently eligible to participate in
the Plan. Stock options are granted at no cost to the employee. On
February 28, 1995, the market value of the common stock was $9.875 per
share based on the closing price on the American Stock Exchange Composite
Tape.
VOTE REQUIRED
-------------
Adoption of the proposed 1995 Stock Option Plan requires the affirmative
vote of a majority of the votes cast for or against the proposal at the
Annual Meeting of Shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THE PROPOSED
1995 STOCK OPTION PLAN.
- 14 -
ITEM THREE - PROPOSAL TO ADOPT O'SULLIVAN CORPORATION 1995 OUTSIDE
DIRECTORS STOCK OPTION PLAN
In March, 1995, the Board of Directors approved the adoption of a new
1995 Outside Directors Stock Option Plan,(the "Directors Plan") effective
as of April 25, 1995, and recommended that the Plan be submitted to the
shareholders for approval. A copy of the Directors Plan is attached as
Exhibit B. The purpose of the Directors Plan is to give Outside Directors
(defined below) of the Company an opportunity to acquire a proprietary
interest in the Company and an additional incentive to promote its success.
Adoption of the new Directors Plan is contingent upon shareholder approval.
The Directors Plan authorizes 200,000 shares of Company Common Stock to
be issued under the Directors Plan. Appropriate adjustments will be made
in the number and kind of shares to be issued under the Plan, the exercise
price, and other relevant provisions in the event of a stock dividend,
stock split, merger or other similar change.
Stock options will be automatically granted to members of the Company's
Board of Directors who are not employees of the Company or a subsidiary
("Outside Directors"). As of April 25, 1995, each Outside Director will
receive an option to purchase 10,000 shares of Company Common Stock. As of
each April 25 thereafter, each Outside Director will receive an option to
purchase an additional 1,000 shares of Company Common Stock. A person who
first becomes an Outside Director after April 25, 1995 will receive an
option to purchase 10,000 shares of Company Common Stock when he first
becomes an Outside Director.
The option price will be equal to the fair market value of the Company
Common Stock on the date of grant. All options will be nonstatutory stock
options. Options are not transferrable.
The options may not be exercised before the shareholders of the Company
approve the Directors Plan. The options will be exercisable for a period
of ten years after the date of grant, except that the options generally may
only be exercised while the Director is a member of the Board of Directors.
If a Director ceases to be a member of the Board of Directors after he
attains age 65 or on account of his disability or death, the Director's
options may be exercised within one year after the Director ceases to be a
member of the Board. If a Director ceases to be a member of the Board of
Directors for any other reason, the Director may exercise his options for
90 days after he ceases to be a member of the Board. In no event may the
options be exercised after ten years from the date of grant. Directors may
exercise options by tendering cash or shares of Common Stock, or by making
appropriate arrangements through a broker for delivery of the exercise price.
In order to comply with Rule 16b-3 of the Securities Exchange Act of 1934,
as amended, the Directors Plan provides that the shareholders must approve
any amendment that would materially increase the benefits accruing to a
participant under the Directors Plan, materially increase the number of
securities that may be issued under the Directors Plan, or materially
modify the requirements as to eligibility for participation in the
Directors Plan, with limited exceptions.
- 15 -
The Company will receive a tax deduction when a Director exercises a stock
option. A Director will generally be taxed at the time he exercises an option
on the amount by which the fair market value of the Company Stock on the date
of exercise exceeds the exercise price. There are no federal income tax
consequences to the Company or the Director at the time an option is granted.
On April 25, 1995, eight Outside Directors will be eligible to
participate in the Directors Plan. Each Outside Director will receive an
option to purchase 10,000 shares of Company Common Stock as of April 25,
1995 (a total of 80,000 shares). Stock options will be granted at no cost
to the Outside Director. On February 28, 1995, the market value of the
Company's Common Stock was $9.875 per share based on the closing price on
the American Stock Exchange Composite Tape.
VOTE REQUIRED
-------------
Adoption of the proposed 1995 Outside Directors Stock Option Plan
requires the affirmative vote of a majority of the votes cast for or
against the proposal at the Annual Meeting of Shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ADOPTION OF THE PROPOSED
1995 OUTSIDE DIRECTORS STOCK OPTION PLAN.
ITEM FOUR - SELECTION OF AUDITORS
Yount, Hyde & Barbour, P.C., a firm of certified public accountants in
Winchester, Virginia, has served as auditors of the Company for several
years. The Board of Directors recommends their appointment for the 1995
fiscal year and will ask the stockholders to approve such an appointment.
Representatives of the auditing firm are expected to be present at the
stockholders' meeting and will have the opportunity to make a statement if
they desire to do so and to respond to appropriate questions.
STOCKHOLDER PROPOSALS
Any stockholder desiring to make a proposal to be acted upon at the 1996
Annual Meeting tentatively scheduled for Tuesday, April 30, 1996, must
present such proposal to the Company at its principal office in Winchester,
Virginia not later than December 1, 1995, in order for the proposal to be
considered for inclusion in the Company's proxy statement. Additionally,
any stockholder who wishes to make a proposal from the floor at the 1995
stockholders' meeting must advise the Secretary of the Company in writing,
mailed no later than April 15, 1995, of the nature of the proposal.
MISCELLANEOUS
The annual report to stockholders, containing financial statements and
pertinent footnotes thereto, is included with the mailing of this proxy
statement.
/s/ C. Bryant Nickerson
----------------------------
C. BRYANT NICKERSON
Treasurer, CFO & Secretary
- 16 -
GRAPHIC MATERIAL CROSS-REFERENCE PAGE
A common stock performance graph showing a comparison of the cumulative
five year total return for O'Sullivan Corporation's common stock, the
Standard & Poor's Composite 500 Stock Index and a group of public
companies, each of which supplies products to the domestic OEM automotive
industry that are similar to those supplied by O'Sullivan Corporation ( the
"peer group"). The figures indicating the cumulative total return over the
five-year period are included on page 13 of this proxy statement.
- 17 -
[FRONT]
PROXY COMMON STOCK
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF O'SULLIVAN CORPORATION
The undersigned hereby appoints A.H. Bryant II, and J.T.Holland and each or
any of them, proxy for the undersigned, with power of substitution, to vote
with the same force and effect as the undersigned at the annual meeting of
the stockholders of O'Sullivan Corporation on April 25, 1995 and any
adjournment thereof. The matters to be voted upon at this stockholders'
meeting are listed on the other side. PLEASE READ EACH ITEM CAREFULLY.
The proxy may be revoked at any time before it is voted, and the giving of this
proxy will not affect the right of the stockholder to attend the meeting and
vote in person. This proxy will be voted as specified and in the absence of
direction will be voted FOR each of the matters listed.
The management does not know any other matters which will be presented for
action at the meeting, but the persons named in the proxy intend to vote or
act with respect to any other proposal which may be presented for action
according to their judgement in light of conditions then prevailing.
CONTINUED ON OTHER SIDE
[BACK]
THE MATTERS TO BE VOTED UPON ARE: ####
A. The election of directors for the ensuing year:
[ ] For all nominees listed below
J.J. Armstrong C.H. Bloom, Jr. A.H. Bryant II M.O. Bryant
R.L. Burrus, Jr. M.C. Chapman, Jr. J.T. Holland R.M. McCullough
S.P. Munn
[ ] For all nominees listed above except as marked to the contrary below
(Instruction: to withhold authority to vote for any individual
nominee, write the nominee's name in the space provided below.)
_________________________________________________________________
[ ] Withhold authority to vote for all nominees listed above.
B. Approval of the O'Sullivan Corporation 1995 Stock Option Plan
[ ] FOR [ ] AGAINST [ ] ABSTAIN
C. Approval of the O'Sullivan Corporation Outside Director 1995 Stock
Option Plan
[ ] FOR [ ] AGAINST [ ] ABSTAIN
D. Approval of the appointment of Yount, Hyde & Barbour, P.C. of
Winchester, Virginia as auditors for the company for the ensuing year.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
E. Upon such other matters as may properly come before the meeting.
------------------------ ---------
SIGNATURE DATE
------------------------ ---------
SIGNATURE DATE
Please sign, exactly as name appears above, date and return this proxy using
the enclosed envelope. When shares are owned by joint tenants, both should
sign. When signing as attorney, as executor, administrator, trustee or
guardian, please give full title as such.
- 18 -
EXHIBIT A
---------
O'SULLIVAN CORPORATION
1995 STOCK OPTION PLAN
1. Purpose. This 1995 Stock Option Plan (the "Plan") is intended to
advance the interests of the Company by providing certain key employees who
have substantial responsibility for the direction and management of the
Company and its Subsidiaries with an opportunity to acquire a proprietary
interest in the Company and an additional incentive to promote its success,
as well as to encourage them to remain in the employ of the Company or a
Subsidiary of the Company. The Plan is intended to conform to the
provisions of Securities and Exchange Commission Rule 16b-3.
2. Definitions. As used in the Plan, the following terms have the
meanings indicated:
(a) "Act" means the Securities Exchange Act of 1934, as amended.
(b) "Applicable Withholding Taxes" means the aggregate amount of
federal, state and local income and payroll taxes that the Company is
required to withhold in connection with any exercise of an Option or
Stock Appreciation Right.
(c) "Board" means the Board of Directors of the Company.
(d) "Change of Control" means:
(i) The acquisition by any unrelated Person of beneficial
ownership (as that term is used for purposes of the Act) of 20% or
more of the then outstanding shares of common stock of the
Company or the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the
election of directors. The term "unrelated Person" means any
Person other than (x) the Company and its Subsidiaries, (y) an
employee benefit plan or trust of the Company or its Sub-
sidiaries, and (z) a Person that acquires stock of the Company
pursuant to an agreement with the Company that is approved by the
Board in advance of the acquisition, unless the acquisition
results in a Change of Control pursuant to subsection (ii) below.
(ii) As the result of, or in connection with, any tender or
exchange offer, merger or other business combination, sale of
assets or contested election, or any combination of the foregoing
transactions, the persons who were directors of the Company before
such transactions shall cease to constitute a majority of the
Board of Directors of the Company or any successor to the Company.
(e) "Code" means the Internal Revenue Code of 1986, as amended.
(f) "Committee" means the committee appointed by the Board as
described under Section 13.
(g) "Company" means O'Sullivan Corporation, a Virginia
corporation.
- 19 -
(h) "Company Stock" means common stock of the Company. In the
event of a change in the capital structure of the Company (as provided
in Section 12), the shares resulting from such a change shall be
deemed to be Company Stock within the meaning of the Plan.
(i) "Corporate Change" means a consolidation, merger,
dissolution, or liquidation of the Company or a Subsidiary, or a sale
or distribution of assets or stock (other than in the ordinary course
of business) of the Company or a Subsidiary; provided that, unless the
Committee determines otherwise, a Corporate Change shall only be
considered to have occurred with respect to Participants whose
business unit is affected by the Corporate Change.
(j) "Date of Grant" means the date on which an Option is granted
by the Committee.
(k) "Fair Market Value" means, if the Company Stock is traded on
an exchange, the mean of the highest and lowest registered sales
prices of the Company Stock on the exchange on which the Company Stock
generally has the greatest trading volume. Fair Market Value shall be
determined as of the applicable date specified in the Plan or, if
there are no trades on such date, the value shall be determined as of
the last preceding day on which the Company Stock is traded. If
shares of Company Stock cease to be traded on an exchange, the Fair
Market Value shall be determined by the Committee using any reasonable
method in good faith.
(l) "Incentive Stock Option" means an Option intended to meet the
requirements of, and qualify for favorable federal income tax
treatment under, Code section 422.
(m) "Insider" means a person subject to Section 16(b) of the Act.
(n) "Nonstatutory Stock Option" means an Option that does not
meet the requirements of Code section 422, or that is not intended to
be an Incentive Stock Option and is so designated.
(o) "Option" means a right to purchase Company Stock granted
under the Plan, at a price determined in accordance with the Plan.
(p) "Parent" means, with respect to any corporation, a parent of
that corporation within the meaning of Code section 424(e).
(q) "Participant" means an employee who receives a Stock Option
under the Plan.
(r) "Person" means an individual, entity or group (as that term
is used for purposes of the Act).
(s) "Rule 16b-3" means Rule 16b-3 of the Securities and Exchange
Commission promulgated under the Act. A reference in the Plan to Rule
16b-3 shall include a reference to any corresponding subsequent rule
or any amendments to Rule 16b-3 enacted after the effective date of
the Plan.
(t) "Stock Appreciation Right" means a right to receive amounts
from the Company as described in Section 7.
- 20 -
(u) "Subsidiary" means, with respect to any corporation, a
subsidiary of that corporation within the meaning of Code section
424(f).
(v) "10% Shareholder" means a person who owns, directly or
indirectly, stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or any Parent or
Subsidiary of the Company. Indirect ownership of stock shall be
determined in accordance with Code section 424(d).
(w) "Window Period" means the period beginning on the third
business day and ending on the twelfth business day following the
release for publication of quarterly or annual summary statements of
the Company's sales and earnings. The release for publication shall
be deemed to have occurred if the specified financial data (i) appears
on a wire service, (ii) appears in a financial news service, (iii)
appears in a newspaper of general circulation, or (iv) is otherwise
made publicly available.
3. Stock. Subject to Section 12 of the Plan, there shall be reserved
for issuance under the Plan an aggregate of 200,000 shares of Company
Stock, which shall be authorized, but unissued, shares. The aggregate
number of shares of Company Stock reserved shall be reduced by the issuance
of shares upon the exercise of Options, but it shall not be reduced if
Options, for any reason, expire or terminate unexercised or, to the extent
permissible under Rule 16b-3, if shares are surrendered by a Participant or
retained by the Company in payment of Applicable Withholding Taxes, and
such shares may again be subjected to an Option under the Plan. The
Committee is expressly authorized to make an award of Options to a
Participant conditioned upon the surrender for cancellation of an existing
Option.
4. Eligibility. All present and future key employees of the Company
or any Subsidiary of the Company, whether now existing or hereafter created
or acquired, shall be eligible to receive Options under the Plan. The
Committee shall have the power and complete discretion, as provided in
Section 13, to select eligible employees to receive Options and to
determine for each employee the terms and conditions and the number of
shares to be allocated to each employee as part of each Option. Options
granted under the Plan may be Incentive Stock Options or Nonstatutory Stock
Options.
5. Grant of Stock Options.
(a) Whenever the Committee deems it appropriate to grant Options,
notice shall be given to the Participant stating the number of shares
for which Options are granted, the Option price per share, whether the
Options are Incentive Stock Options or Nonstatutory Stock Options,
whether and the extent to which Stock Appreciation Rights are granted,
and the conditions to which the grant and exercise of the Options are
subject. This notice, when duly accepted in writing by the
Participant, shall become a stock option agreement between the Company
and the Participant.
(b) The exercise price of shares of Company Stock covered by an
Option shall be not less than 100% of the Fair Market Value of such
shares on the Date of Grant; provided that if an Incentive Stock
Option is granted to a Participant who, at the time of the grant, is a
- 21 -
10% Shareholder, then the exercise price of the shares covered by the
Incentive Stock Option shall be not less than 110% of the Fair Market
Value of such shares on the Date of Grant.
(c) An employee may not receive awards of Options under the Plan
with respect to more than 50,000 shares of Company Stock during any
one calendar year.
(d) The Committee may grant Options with reload features, which
provide for the automatic grant to the Participant of an Option
covering shares equal to the number of shares of previously owned
Company Stock that the Participant delivers to the Company in order to
exercise an Option. A reload Option shall have such terms as the
Committee deems appropriate and consistent with this Plan.
(e) The grant of an Option shall not obligate the Company or any
Subsidiary of the Company to pay an employee any particular amount of
remuneration, to continue the employment of the employee after the
grant, or to make further grants to the employee at any time
thereafter.
6. Term and Limitations on Exercise.
(a) Options may be exercised, in whole or in part, but only with
respect to whole shares of Common Stock, at such times and under such
conditions as may be specified in the Participant's stock option
agreement. The Committee may impose such vesting conditions and other
requirements as the Committee deems appropriate, and the Committee may
include such provisions regarding a Change of Control or Corporate
Change as the Committee deems appropriate.
(b) The Committee shall establish the term of each Option in the
Participant's stock option agreement. The term of an Incentive Stock
Option shall not exceed ten years from the Date of Grant, except that
an Incentive Stock Option granted to a 10% Shareholder may not have a
term in excess of five years. No Option may be exercised after the
expiration of its term or, except as set forth in the Participant's
stock option agreement, after the termination of the Participant's
employment. The Committee shall set forth in the Participant's stock
option agreement when, and under what circumstances, an Option may be
exercised after termination of the Participant's employment.
(c) An Incentive Stock Option, by its terms, shall be exercisable
in any calendar year only to the extent that the aggregate Fair Market
Value (determined at the Date of Grant) of the Company Stock with
respect to which Incentive Stock Options are exercisable by the
Participant for the first time during the calendar year does not
exceed $100,000 (the "Limitation Amount"). Incentive Stock Options
granted under the Plan and all other plans of the Company and any
Parent or Subsidiary of the Company shall be aggregated for purposes
of determining whether the Limitation Amount has been exceeded. The
Committee may impose such conditions as it deems appropriate on an
Incentive Stock Option to ensure that the foregoing requirement is
met. If Incentive Stock Options that first become exercisable in a
calendar year exceed the Limitation Amount, the excess Options will be
treated as Nonstatutory Stock Options to the extent permitted by law.
- 22 -
(d) If a Participant dies and if the Participant's stock option
agreement provides that part or all of the Option may be exercised
after the Participant's death, then such portion of the Option may be
exercised by the Participant's legatees or distributees or by the
personal representative of the Participant's estate during the time
period specified in the stock option agreement.
7. Stock Appreciation Rights.
(a) Whenever the Committee deems it appropriate, Stock
Appreciation Rights may be granted in connection with all or any part
of an Option. A Stock Appreciation Right may only be granted with
respect to an Incentive Stock Option at the time the Option is
granted. Stock Appreciation Rights may be granted in connection with
a Nonstatutory Stock Option either concurrently with the grant or at
any time thereafter during the term of the Option. Stock Appreciation
Rights shall be evidenced in writing as part of the stock option
agreement to which they pertain.
(b) Stock Appreciation Rights shall entitle the Participant, upon
exercise of the Stock Appreciation Rights, to surrender to the Company
all or a portion of the underlying Option and to receive in exchange
from the Company an amount equal to the excess of (x) the Fair Market
Value on the date of exercise of the Company Stock covered by the
surrendered portion of the underlying Option over (y) the exercise
price of the Company Stock covered by the surrendered portion of the
underlying Option. The Committee may limit the amount that a
Participant will be entitled to receive upon the exercise of a Stock
Appreciation Right. An exercise of a Stock Appreciation Right shall
be effected by a written instrument in a form satisfactory to the
Committee.
(c) The Committee shall determine and set forth in the employee's
option agreement how the Company's obligation arising upon the
exercise of a Stock Appreciation Right shall be paid. The Committee
may provide for payment in cash or in Company Stock, or any
combination of the two, or the Committee may reserve the right to
determine the manner of payment at the time the Stock Appreciation
Right is exercised. Shares of Company Stock issued upon the exercise
of a Stock Appreciation Right shall be valued at their Fair Market
Value on the date of exercise.
(d) Notwithstanding the foregoing, if and to the extent required
by Rule 16b-3 or by other properly adopted law, rules or regulations,
the right of a Participant to exercise a Stock Appreciation Right and
to receive cash or stock therefor shall be effective only if consented
to by the Committee.
(e) Upon the exercise of a Stock Appreciation Right and surrender
of the related portion of the underlying Option, the Option, to the
extent surrendered, shall not thereafter be exercisable.
(f) Subject to any further conditions upon exercise imposed by
the Committee, a Stock Appreciation Right shall be exercisable only to
the extent that the related Option is exercisable, and a Stock
Appreciation Right shall expire no later than the date on which the
related Option expires.
- 23 -
(g) A Stock Appreciation Right may only be exercised at a time
when the Fair Market Value of the Company Stock covered by the Stock
Appreciation Right exceeds the exercise price of the Company Stock
covered by the underlying Option.
(h) If and to the extent required by Rule 16b-3, an Insider may
only exercise a Stock Appreciation Right during a Window Period or
otherwise pursuant to the requirements of Rule 16b-3, and a Stock
Appreciation Right held by an Insider shall not be exercisable during
the first six months of its term. The exercise of a Stock
Appreciation Right by an Insider shall be made in accordance with Rule
16b-3.
8. Method of Exercise of Options and Stock Appreciation Rights.
(a) Options and Stock Appreciation Rights may be exercised by
giving written notice of the exercise to the Company, stating the
number of shares the Participant has elected to purchase under the
Option and the number of Stock Appreciation Rights the Participant has
elected to exercise. Such notice shall be effective only if
accompanied by the Option exercise price in full in cash; provided
that, if the terms of an Option so permit, the Participant (i) may
deliver shares of Company Stock that the Participant has owned for at
least six months (valued at their Fair Market Value on the date of
exercise) in satisfaction of all or any part of the exercise price,
(ii) may cause to be withheld from the Option shares such shares of
Company Stock (valued at their Fair Market Value on the date of
exercise) as the Participant specifies in satisfaction of all or any
part of the exercise price, or (iii) may deliver a properly executed
exercise notice, together with irrevocable instructions to a broker to
deliver promptly to the Company, from the sale or loan proceeds with
respect to the sale of Company Stock or a loan secured by Company
Stock, the amount necessary to pay the exercise price and, if required
by the Committee, Applicable Withholding Taxes.
(b) Each Participant shall agree, as a condition of the exercise
of an Option or Stock Appreciation Right, to pay to the Company, or to
make arrangements satisfactory to the Company regarding the payment
of, Applicable Withholding Taxes. The Committee may grant Options
that permit a Participant to elect to satisfy Applicable Withholding
Taxes by delivering shares of Company Stock or by directing the
Company to retain that number of shares of Company Stock that will
satisfy all or a specified portion of the Applicable Withholding
Taxes. The Committee may also grant Options with automatic
withholding of shares to satisfy Applicable Withholding Taxes. The
Committee shall have the sole discretion to approve or disapprove any
election, and any election by an Insider must comply with Rule 16b-3.
Until the Applicable Withholding Taxes have been paid or arrangements
satisfactory to the Company have been made, no stock certificate shall
be issued or cash paid upon the exercise of an Option or Stock
Appreciation Right.
(c) The Company may place on a certificate representing Company
Stock issued upon the exercise of an Option or Stock Appreciation
Right any legend deemed desirable by the Company's counsel to comply
with federal or state securities laws, and the Company may require a
- 24 -
customary written indication of the Participant's investment intent.
Until the Participant has made all required payments, including any
Applicable Withholding Taxes, and has been issued a certificate for
the shares of Company Stock acquired, the Participant shall possess no
shareholder rights with respect to the shares.
(d) Notwithstanding anything herein to the contrary, with respect
to Insiders, Options and Stock Appreciation Rights shall always be
granted and exercised in such a manner as to conform to the provisions
of Rule 16b-3.
9. Nontransferability of Options and Stock Appreciation Rights.
(a) Options and Stock Appreciation Rights, by their terms, shall
not be transferable except by will or by the laws of descent and
distribution and shall be exercisable, during the Participant's
lifetime, only by the Participant, except as provided below.
(b) By a specific provision in an Option agreement, the Committee
may grant Nonstatutory Stock Options that permit a Participant to
transfer the Options to one or more immediate family members, to a
trust for the benefit of immediate family members or to a partnership
whose only partners are immediate family members. Consideration may
not be paid for the transfer of Options. The transferee of an Option
shall be subject to all conditions applicable to the Option prior to
its transfer. The agreement granting the Option shall set forth the
transfer conditions and restrictions. The Committee may impose on any
transferable Option and on Company Stock issued upon the exercise of
an Option such limitations and conditions as the Committee deems
appropriate. Except to the extent permitted by Rule 16b-3, Options
that are intended to be exempt from Section 16(b) of the Act pursuant
to Rule 16b-3 may not be transferable except by will or by the laws of
descent and distribution.
10. Effective Date of the Plan. This Plan shall be effective as of
February 7, 1995, subject to approval by the shareholders of the Company.
11. Termination, Modification. If not sooner terminated by the Board,
the Plan shall terminate at the close of business on February 6, 2005. No
Options shall be awarded under the Plan after its termination. The Board
may terminate the Plan or may amend the Plan in such respects as it shall
deem advisable; provided that (i) if and to the extent required by the Code
or Rule 16b-3, no change shall be made that increases the total number of
shares of Company Stock reserved for issuance pursuant to Options granted
under the Plan (except pursuant to Section 12), materially modifies the
requirements as to eligibility for participation in the Plan, or materially
increases the benefits accruing to Participants under the Plan, unless such
change is authorized by the shareholders of the Company and (ii) if the
Plan is to meet the requirements of Code Section 162(m) for performance-
based compensation, any amendment that makes a material change to the Plan
must be approved by the shareholders of the Company, to the extent required
by Code Section 162(m). The Board may unilaterally amend the Plan and
Options as it deems appropriate to ensure compliance with Rule 16b-3 and to
cause Options to meet the applicable requirements of the Code. Except as
provided in the preceding sentence, a termination or amendment of the Plan
shall not, without the consent of the Participant, adversely affect a
Participant's rights under an Option previously granted to the Participant.
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12. Change in Capital Structure.
(a) In the event of a stock dividend, stock split, combination of
shares, recapitalization, merger, consolidation or other change in the
Company's capital stock (including, but not limited to, the creation
or issuance to shareholders generally of rights, options or warrants
for the purchase of common stock or preferred stock of the Company),
the number and kind of shares of stock or other securities to be
issued under the Plan (under Options and Stock Appreciation Rights
then outstanding and to be granted in the future), the exercise price,
and any other relevant provisions shall be appropriately adjusted by
the Committee, whose determination shall be binding on all persons.
If the adjustment would produce fractional shares with respect to any
unexercised Options and Stock Appreciation Rights, the Committee may
adjust appropriately the number of shares covered by the Option and
Stock Appreciation Rights so as to eliminate the fractional shares.
(b) If a Change of Control or Corporate Change occurs, the
Committee may take such actions with respect to outstanding Options
and Stock Appreciation Rights as the Committee deems appropriate.
These actions may include, but shall not be limited to, accelerating
the expiration date of any or all outstanding Options and Stock
Appreciation Rights and the dates on which any part of the Options and
Stock Appreciation Rights may be exercised, or substituting, with
appropriate adjustments, securities or options of a successor company
for Options or Stock Appreciation Rights with respect to Company
Stock.
(c) Notwithstanding anything in the Plan to the contrary, the
Committee may take the foregoing actions without the consent of any
Participant, and the Committee's determination shall be conclusive and
binding on all persons for all purposes. The Committee shall make its
determinations consistent with Rule 16b-3 and the applicable
provisions of the Code.
13. Administration of the Plan.
(a) The Plan shall be administered by the Committee. The Committee
shall be appointed by the Board and shall consist of not less than two
members of the Board. The Committee shall be the Compensation and Stock
Option Committee of the Board, unless the Board shall appoint another
compensation committee to administer the Plan. If and to the extent re-
quired by Rule 16b-3, all members of the Committee shall be
"disinterested persons", as that term is defined in Rule 16b-3. The
Board from time to time may appoint members of the Committee and may
fill vacancies, however caused, in the Committee.
(b) The Committee shall have authority to impose such limitations or
conditions upon an Option or Stock Appreciation Right as the Committee
deems appropriate to achieve the objectives of the Plan. Without limiting
the foregoing and in addition to the powers set forth elsewhere in the
Plan, the Committee shall have the power and complete discretion to deter-
mine (i) which eligible employees shall receive Options and whether
Options shall be Incentive Stock Options or Nonstatutory Stock Options,
(ii) the number of shares of Company Stock to be covered by each Option,
(iii) when, whether and to what extent Stock Appreciation Rights shall be
granted in connection with Options, (iv) the Fair Market Value of Company
- 26 -
Stock, (v) the time or times at which Options shall be granted,
(vi) whether an Option shall become vested over a period of time, ac-
cording to a performance-based vesting schedule or otherwise, and when it
shall be fully vested, (vii) whether the Participant, the Company or a
business unit has met the conditions set forth in the Plan or the stock
option agreement with respect to the exercisability of the Option, (viii)
when Options may be exercised, (ix) whether a Change of Control or Cor-
porate Change exists, (x) conditions relating to the length of time before
disposition of Company Stock received upon the exercise of Options is
permitted, (xi) notice provisions relating to the sale of Company
Stock acquired under the Plan, and (xii) any additional requirements
relating to Options and Stock Appreciation Rights that the Committee
deems appropriate. Notwithstanding the foregoing, no "tandem stock
options" (where two stock options are issued together and the exercise
of one option affects the right to exercise the other option) may be
issued in connection with Incentive Stock Options.
(c) The Committee shall have the power to amend the terms of
previously granted Options, so long as the terms as amended are
consistent with the terms of the Plan and, where applicable,
consistent with the qualification of the Option as an Incentive Stock
Option. The consent of the Participant must be obtained with respect
to any amendment that would adversely affect a Participant's rights
under the Option, except that such consent will not be required if the
amendment is for the purpose of complying with Rule 16b-3 or any
requirement of the Code applicable to the Option.
(d) The Committee may adopt rules and regulations for carrying
out the Plan. The Committee shall have the express discretionary
authority to construe and interpret the Plan and the stock option
agreements, to resolve any ambiguities, to define any terms, and to
make any other determinations required by the Plan or the stock option
agreements. The interpretation and construction of any provision of
the Plan or a stock option agreement by the Committee shall be final
and conclusive. The Committee may consult with counsel, who may be
counsel to the Company, and shall not incur any liability for any
action taken in good faith in reliance upon the advice of counsel.
(e) A majority of the members of the Committee shall constitute a
quorum, and all actions of the Committee shall be taken by a majority
of the members present. Any action may be taken by a written
instrument signed by all of the members, and any action so taken shall
be fully effective as if it had been taken at a meeting.
14. Notice. All notices and other communications required or
permitted to be given under this Plan shall be in writing and shall be
deemed to have been duly given if delivered personally or mailed first
class, postage prepaid, as follows (a) if to the Company - at its principal
business address to the attention of the Treasurer; (b) if to any
Participant - at the last address of the Participant known to the sender at
the time the notice or other communication is sent.
15. Interpretation. The terms of this Plan are subject to all present
and future regulations and rulings of the Secretary of the Treasury
relating to the qualification of Incentive Stock Options under the Code and
the qualification of the Plan as performance-based compensation under Code
Section 162(m), and they are subject to all present and future rulings of
- 27 -
the Securities Exchange Commission with respect to Rule 16b-3. If any
provision of the Plan would cause Incentive Stock Options to fail to meet
the applicable requirements of the Code, would cause the Plan to fail to
meet the Code Section 162(m) requirements for performance-based
compensation, or would cause the Plan to fail to meet the requirements of
Rule 16b-3 as applicable to Insiders, then that provision of the Plan shall
be void and of no effect. The terms of this Plan shall be governed by the
laws of the Commonwealth of Virginia.
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EXHIBIT B
---------
O'SULLIVAN CORPORATION
1995 OUTSIDE DIRECTORS STOCK OPTION PLAN
1. Purpose. This 1995 Outside Directors Stock Option Plan (the
"Plan") is intended to advance the interests of the Company by providing
members of the Company's Board of Directors who are not employees of the
Company or a Subsidiary with an opportunity to acquire a proprietary
interest in the Company and an additional incentive to promote its success.
The Plan is intended to conform to the provisions of Securities and
Exchange Commission Rule 16b-3.
2. Definitions. As used in the Plan, the following terms have the
meanings indicated:
(a) "Act" means the Securities Exchange Act of 1934, as amended.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
(d) "Company" means O'Sullivan Corporation, a Virginia
corporation.
(e) "Company Stock" means common stock of the Company. In the
event of a change in the capital structure of the Company (as provided
in Section 11), the shares resulting from such a change shall be
deemed to be Company Stock within the meaning of the Plan.
(f) "Date of Grant" means the date on which an Option is granted
pursuant to the Plan.
(g) "Disability" means the inability of an Eligible Director to
perform the services for which the Eligible Director was employed
because of a mental or physical infirmity, or both, as determined by a
physician satisfactory to the Company.
(h) "Eligible Director" means a member of the Board who is not an
employee of the Company or a subsidiary.
(i) "Fair Market Value" means the mean of the highest and lowest
registered sales prices of the Company Stock on the exchange on which
the Company Stock generally has the greatest trading volume. Fair
Market Value shall be determined as of the applicable date specified
in the Plan or, if there are no trades on such date, the value shall
be determined as of the last preceding day on which the Company Stock
is traded.
(j) "Option" means a right to purchase Company Stock granted
under the Plan, at a price determined in accordance with the Plan.
(k) "Rule 16b-3" means Rule 16b-3 of the Securities and Exchange
Commission promulgated under the Act. A reference in the Plan to Rule
16b-3 shall include a reference to any corresponding subsequent rule
or any amendments to Rule 16b-3 enacted after the effective date of
the Plan.
- 29 -
3. Stock. Subject to Section 11 of the Plan, there shall be reserved
for issuance under the Plan an aggregate of 200,000 shares of Company
Stock, which shall be authorized, but unissued, shares. The aggregate
number of shares of Company Stock reserved shall be reduced by the issuance
of shares upon the exercise of Options, but it shall not be reduced if
Options, for any reason, expire or terminate unexercised, and such shares
may again be subjected to an Option under the Plan.
4. Administration. The Board shall be responsible for the proper
implementation of the Plan. The Board shall not exercise any discretion
with respect to the administration of the Plan, except as may be permitted
by Rule 16b-3. Grants of Options under the Plan shall be automatic as
described in Section 6. The Board shall have all powers vested in it by
the terms of the Plan, including the authority (within the limitations
described in the Plan) to prescribe the form of the Option agreements. Any
decision of the Board with respect to the Plan shall be final and
conclusive. The Board may act only by a majority of its members in office,
except that the members may authorize any one or more of their number or
any officer of the Company to execute and deliver documents on behalf of
the Board. The Board may consult with counsel, who may be counsel to the
Company, and shall not incur any liability for any action taken in good
faith in reliance upon the advice of counsel.
5. Participation in the Plan. Each member of the Board who is not an
employee of the Company or a Subsidiary shall be an Eligible Director and
shall receive Options under the Plan.
6. Grant of Stock Options.
(a) Options shall automatically be granted to all Eligible
Directors in the Plan as follows:
(i) As of April 25, 1995, each Eligible Director as of
that date shall receive an Option to purchase 10,000 shares of
Company Stock.
(ii) As of each April 25 thereafter, each Eligible Director
as of that date shall receive an Option to purchase 1,000 shares
of Company Stock.
(iii) Each Eligible Director who first becomes an Eligible
Director after April 25, 1995 shall receive an Option to purchase
10,000 shares of Company Stock as of the date on which he first
becomes an Eligible Director and shall be eligible thereafter to
receive the grants described in subsection (ii) above.
(iv) If at any time there are not sufficient shares
available under the Plan to permit the automatic Option grants
described above, the Option grants shall be reduced pro rata (to
zero, if necessary) so as not to exceed the number of shares
available under the Plan.
(b) The exercise price of shares of Company Stock covered by an
Option shall be equal to 100% of the Fair Market Value of such shares
on the Date of Grant.
(c) All Options granted under the Plan shall be nonstatutory
stock options and shall not be entitled to special tax treatment under
Code section 422.
- 30 -
(d) Each Option shall be exercisable for a period of ten years
after the date of grant, except as provided in subsection (e) below,
and except that no Options may be exercised before the shareholders of
the Company approve the Plan.
(e) An Option may only be exercised while the Eligible Director
is a member of the Board, except that:
(i) If an Eligible Director ceases to be a member of the
Board after he attains age 65 or on account of his Disability or
death, the Eligible Director (or his legatees or distributees or
the personal representative of his estate) may exercise any
outstanding Options until the first occur of (x) the date that is
one year after the Eligible Director ceases to be a member of the
Board or (y) the date that is ten years after the Date of Grant.
(ii) If an Eligible Director ceases to be a member of the
Board for any reason other than one described in subsection (i)
above, the Eligible Director may exercise his outstanding Options
until the first to occur of (x) the date that is 90 days after the
Eligible Director ceases to be a member of the Board or (y) the
date that is ten years after the Date of Grant.
(iii) If an Eligible Director dies after he ceases to be a
member of the Board, but within the time period during which his
outstanding Options may be exercised, the Eligible Director's
outstanding Options may be exercised by his legatees or
distributees or the personal representative of his estate within
the applicable time period described above.
(f) Each Option shall be evidenced by a written agreement in such
form as the Board shall from time to time approve and as shall be
consistent with the terms of the Plan.
7. Method of Exercise of Options.
(a) Options may be exercised by giving written notice of the
exercise to the Company, stating the number of shares the Eligible
Director (or his legatees or distributees or the personal
representative of his estate) has elected to purchase. Such notice
shall be effective only if accompanied by the Option exercise price in
full. The person exercising an Option (i) may pay the Option exercise
price in cash, (ii) may deliver shares of Company Stock that the
person has owned for at least six months (valued at their Fair Market
Value on the date of exercise) in satisfaction of all or any part of
the exercise price, or (iii) may deliver a properly executed exercise
notice, together with irrevocable instructions to a broker to deliver
promptly to the Company, from the sale or loan proceeds with respect
to the sale of Company Stock or a loan secured by Company Stock, the
amount necessary to pay the exercise price.
(b) Any person exercising an Option shall agree, as a condition
of the exercise of an Option, to pay to the Company, or to make
arrangements satisfactory to the Company regarding the payment of, any
applicable withholding taxes.
- 31 -
(c) The Company may place on a certificate representing Company
Stock issued upon the exercise of an Option any legend deemed
desirable by the Company's counsel to comply with federal or state
securities laws, and the Company may require a customary written
indication of the investment intent of the person exercising the
Option. Until the person exercising the Option has made all required
payments and has been issued a certificate for the shares of Company
Stock acquired, the person exercising the Option shall possess no
shareholder rights with respect to the shares.
(d) Notwithstanding anything herein to the contrary, Options
shall always be granted and exercised in such a manner as to conform
to the provisions of Rule 16b-3.
8. Nontransferability of Options. Options, by their terms, shall not
be transferable except by will or by the laws of descent and distribution
and shall be exercisable, during the Eligible Director's lifetime, only by
the Eligible Director.
9. Effective Date of the Plan. This Plan shall be effective as of
April 25, 1995, subject to approval of the Plan by the shareholders of the
Company.
10. Termination, Modification. If not sooner terminated by the Board,
the Plan shall terminate at the close of business on April 24, 2005. No
Options shall be awarded under the Plan after its termination. The Board
may terminate the Plan or may amend the Plan in such respects as it shall
deem advisable; provided that, if and to the extent required by Rule 16b-3,
no change shall be made that increases the total number of shares of
Company Stock reserved for issuance pursuant to Options granted under the
Plan (except pursuant to Section 11), materially modifies the requirements
as to eligibility for participation in the Plan, or materially increases
the benefits accruing to Eligible Directors under the Plan, unless such
change is authorized by the shareholders of the Company. If required by
Rule 16b-3, the Plan may not be amended periodically, and in no event more
often than every six months, except for amendments required to comply with
changes in the Code or the rules thereunder. The Board may unilaterally
amend the Plan and Options as it deems appropriate to ensure compliance
with Rule 16b-3 and to cause Options to meet the applicable requirements of
the Code. Except as provided in the preceding sentence, a termination or
amendment of the Plan shall not, without the consent of the Eligible
Director, adversely affect an Eligible Director's rights under an Option
previously granted to the Eligible Director.
11. Change in Capital Structure. In the event of a stock dividend,
stock split, combination of shares, recapitalization, merger, consolidation
or other change in the Company's capital stock (including, but not limited
to, the creation or issuance to shareholders generally of rights, options
or warrants for the purchase of common stock or preferred stock of the
Company), the number and kind of shares of stock or other securities to be
issued under the Plan (under Options then outstanding and to be granted in
the future), the exercise price, and any other relevant provisions shall be
appropriately adjusted. If the adjustment would produce fractional shares
with respect to any unexercised Options, the number of shares covered by
the Option shall be adjusted so as to eliminate the fractional shares. The
adjustments shall be made consistent with Rule 16b-3.
- 32 -
12. Notice. All notices and other communications required or
permitted to be given under this Plan shall be in writing and shall be
deemed to have been duly given if delivered personally or mailed first
class, postage prepaid, as follows (a) if to the Company - at its principal
business address to the attention of the Treasurer; (b) if to any Eligible
Director - at the last address of the Eligible Director known to the sender
at the time the notice or other communication is sent.
13. Interpretation. The terms of this Plan are subject to all present
and future rulings of the Securities Exchange Commission with respect to
Rule 16b-3. If any provision of the Plan would cause the Plan to fail to
meet the requirements of Rule 16b-3, then that provision of the Plan shall
be void and of no effect. The terms of this Plan shall be governed by the
laws of the Commonwealth of Virginia.
- 33 -
