<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment No. )
Filed by 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 Materials Pursuant to Section 240.14a-11(c) or Section
240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
OAKHURST COMPANY, INC.
(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) an 0-11.
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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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):
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided in 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:
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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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<PAGE> 2
OAKHURST COMPANY, INC.
3513 CONCORD PIKE
WILMINGTON, DELAWARE 19803
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Notice is hereby given that the Annual Meeting of Stockholders of Oakhurst
Company, Inc., a Delaware corporation, will be held as follows:
DATE: February 25, 1998
PLACE: The Offices of Kurzman & Eisenberg
One North Broadway
White Plains, New York 10601
TIME: 9:00 a.m., local time
PURPOSES: To elect two Class II directors to serve for a term of three
years and until their successors are elected and qualified and to
elect one Class I director to serve for a term of two years and
until his successor is elected and qualified.
To transact such other business as may properly come before the
meeting.
Only stockholders of record at the close of business on February 2, 1998 are
entitled to notice of, and to vote at, the meeting or any adjournment thereof.
By Order of the Board of Directors
Roger M. Barzun, Secretary
February 3, 1998
YOU ARE URGED TO COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED
PROXY IN THE ENVELOPE PROVIDED. THE EXECUTION OF A PROXY
WILL NOT AFFECT A RECORD HOLDER'S RIGHT TO VOTE
IN PERSON IF PRESENT AT THE MEETING.
<PAGE> 3
OAKHURST COMPANY, INC.
3513 CONCORD PIKE
WILMINGTON, DELAWARE 19803
(817) 416-0717
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PROXY STATEMENT
---------------------
GENERAL INFORMATION
This Proxy Statement is furnished to stockholders of Oakhurst Company, Inc., a
Delaware corporation (the "Company"), in connection with the solicitation of
proxies by the Board of Directors of the Company for use at the Annual Meeting
of Stockholders to be held on February 25, 1998 at the offices of Kurzman &
Eisenberg, One North Broadway, White Plains, New York. Proxies in the form
enclosed will be voted at the meeting if they are properly executed, returned to
the Company prior to the meeting and not revoked prior to the voting.
A proxy may be revoked at any time before it is voted (i) by giving to the
Secretary of the Company written notice of revocation executed by the
stockholder of record, which notice should be received prior to the vote being
taken on the matter or matters as to which the proxy is being revoked, (ii) by
delivering prior to the vote being taken on a given matter a duly executed proxy
bearing a later date, or (iii) by the stockholder of record attending the
meeting and expressing a desire to vote the shares in person. This Proxy
Statement and the accompanying proxy were first sent to the Company's
stockholders on or about February 3, 1998.
MATTERS TO BE CONSIDERED
The Annual Meeting has been called for the following purposes:
1. To elect two Class II directors to serve for a term of three years and
until their successors are elected and qualified and to elect one
Class I director to serve for a term of two years and until his
successor is elected and qualified; and
2. To transact such other business as may properly come before the
meeting.
RECORD DATE AND VOTING
Only stockholders of record at the close of business on February 2, 1998 (the
"Record Date") are entitled to notice of, and to vote at, the meeting or any
adjournment thereof. At the close of business on the Record Date, there were
3,207,053 shares of the common stock, $0.01 par value ("Common Stock") so held.
The Company has no other class of securities outstanding.
Each duly executed proxy received by the Company will be voted FOR the election
of the nominees for director described herein unless the record holder otherwise
specifies on the proxy, and in the discretion of the proxy holders as to the
transaction of any other business that may properly come before the meeting.
Other than the possible adjournment of the meeting for purposes of soliciting
additional proxies to achieve a quorum, the directors do not know of any such
other matter or business to be brought before the meeting.
OUTSTANDING SHARES, QUORUM AND VOTING RIGHTS AND PROCEDURES
The Company has one class of common stock, par value $.01 per share (the "Common
Stock"). Each share entitles the holder to one vote. The presence at the
meeting, in person or represented by proxy, of the holders of a majority of the
outstanding common stock is necessary to constitute a quorum for the transaction
of business at the Annual Meeting. Abstentions are counted for purposes of
determining whether the quorum requirement is satisfied, but as not voted for
purposes of determining
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<PAGE> 4
the approval of any matter submitted to the stockholders for a vote. Common
stock represented by "broker non-votes" will be treated as present for purposes
of determining a quorum. A broker non- vote relates to shares of Common Stock
held in the name of a nominee as to which (i) the nominee has not received
instructions from the beneficial owner or person entitled to vote and the
nominee does not have discretionary voting power under applicable rules or the
instrument under which it serves as a nominee; or (ii) the record holder has
indicated on the proxy card or has executed a proxy and otherwise notified the
Company that the nominee does not have authority to vote such shares on a given
matter.
Because directors are elected by the affirmative vote of the holders of a
plurality of the shares of Common Stock present and entitled to vote, in person
or by proxy, abstentions and broker non-votes will not affect their election.
PROXY SOLICITATION AND EXPENSES
The accompanying proxy is being solicited on behalf of the Board of Directors of
the Company. The expense of preparing, printing and mailing the form of proxy
and the solicitation material will be borne by the Company. In addition to the
use of the mails, proxies may be solicited by directors, officers and employees
of the Company, and if deemed necessary, through a third party solicitation
agent by means of personal interview, telephone, facsimile or telegram. The
Company will request banks, brokerage houses and other custodians, nominees and
fiduciaries to solicit their customers who are beneficial owners of Common Stock
and to forward solicitation materials to such beneficial owners. The Company
will reimburse them for their reasonable out-of-pocket expenses incurred in such
solicitation.
PROPOSAL 1 -- ELECTION OF DIRECTORS
The following section contains certain information about the nominees for
director, incumbent directors whose terms do not expire at the Annual Meeting,
and the Board of Directors.
The by-laws of the Company provide for such number of directors as is determined
from time to time by the Board of Directors. There are currently six directors
divided into three classes, each class having a term of three years. The new
Class II directors will be elected for a term of three years and until their
successors are elected and qualified.
<TABLE>
<CAPTION>
NOMINATED
NOMINEES AGE CURRENT TERM EXPIRES DIRECTOR SINCE FOR CLASS
<S> <C> <C> <C> <C>
John D. Abernathy 60 1997 1994 I
Mark Auerbach 59 1997 1991 II
Bernard H. Frank 77 1997 1995 II
</TABLE>
<TABLE>
<CAPTION>
CURRENT
INCUMBENT DIRECTORS AGE CURRENT TERM EXPIRES DIRECTOR SINCE CLASS
<S> <C> <C> <C> <C>
Joel S. Lever 46 1998 1994 III
Anthony N. Puma 34 1998 1995 III
Robert M. Davies 47 1999 1991 I
</TABLE>
All nominees have expressed their intention to serve if elected. Should a
nominee become unavailable to serve when elected, the proxy holders may vote
each proxy (unless authority to vote has been
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<PAGE> 5
withheld for such nominee) for the election in his stead of any other person the
Board of Directors may recommend. Mr. Abernathy is currently a Class II
director, but in order to more evenly balance the number in each class, he is
being nominated to serve as a Class I director to serve until nominees for that
class are due for election at the 1999 annual meeting of stockholders. The proxy
solicited by this Proxy Statement cannot be voted for a greater number of
persons than the number of nominees named in this Proxy Statement.
BUSINESS HISTORY OF NOMINEES AND CONTINUING DIRECTORS
The following section sets forth for each of the nominees listed above and the
incumbent directors his business experience for at least the last five years and
his principal occupation and other directorships held by him in public
companies.
Robert M. Davies. Mr. Davies was elected Chairman, President and Chief Executive
Officer of the Company in May 1997. Mr. Davies was a Vice President of Wexford
Capital Corporation, which acts as the investment manager to several private
investment funds from 1994 to March 1997. From November 1995 to March 1997 Mr.
Davies also served as Executive Vice President of Wexford Management LLC, a
private investment management company. From September 1993 to May 1994 he was a
Managing Director of Steinhardt Enterprises, Inc., an investment banking
company, and from 1987 to August 1993, he was Executive Vice President of The
Hallwood Group Incorporated, a merchant banking firm. Mr. Davies is a director
of the Company's majority owned, publicly traded subsidiary, Steel City
Products, Inc.
Mr. Abernathy. Mr. Abernathy has been Executive Director of Patton Boggs,
L.L.P., a Washington DC law firm, since January 1995. From March 1991 to
February 1994 he was the Managing Director of Summit, Solomon & Feldesman, a New
York City law firm, and from July 1983 until June 1990, Mr. Abernathy was
Chairman and Chief Executive Partner of BDO Seidman, a public accounting firm.
Mr. Abernathy is a director of Barringer Technologies, Inc., a manufacturer of
high sensitivity analytical instruments for chemical sensing.
Mr. Auerbach. Mr. Auerbach has been Chief Financial Officer of the Company and
its publicly traded subsidiary, Steel City Products, Inc., since December 1995
and was formerly its Chief Executive Officer from December 1995 to May 1997. Mr.
Auerbach has been Senior Vice President and Chief Financial Officer since April
1993 of Central Lewmar, L.P., a fine paper merchant. From September 1992 until
April 1993, he was a partner of Marron Capital, L.P., an investment banking
company. Prior to that, he was President, Chief Executive Officer and Chairman
of the Board of Implant Technology, Inc., a manufacturer of artificial hip
systems, from 1990 to 1992. He is a director of Pharmaceutical Resources, Inc.,
a generic drug manufacturer. Mr. Auerbach is a certified public accountant.
Mr. Frank. Mr. Frank has been Executive Vice President and Chief Operating
Officer of the Company since May 1994 and is a founder of the Company's majority
owned, publicly traded subsidiary, Steel City Products, Inc., of which he has
been Chief Executive Officer since 1993, Chairman since 1994 and an executive
officer for more than the last five years.
Joel S. Lever. Mr. Lever has been associated with the law firm of Kurzman &
Eisenberg or its predecessor since 1980, and became a member of the firm in
1984. Mr. Lever specializes in transactional business matters with particular
emphasis on fine arts publishing, distribution and investment, and the sale and
acquisition of commercial real estate entities. Prior to 1980, Mr. Lever was an
Assistant District Attorney for Kings County, New York.
Anthony N. Puma. Mr. Puma is President and founder (in 1988) of Puma Products,
Inc., which was a subsidiary of the Company from October 1994 until June 1997
when Mr. Puma re-purchased it from the Company. Before that, Mr. Puma held
various positions with SDI Corporation, a distributor of accessories to the
small truck and van conversion markets.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTOR
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<PAGE> 6
MEETINGS OF THE BOARD OF DIRECTORS AND ITS COMMITTEES
The Board of Directors held four meetings during the fiscal year ended February
28, 1997. During that period, each incumbent director attended all of the
meetings of the Board of Directors held while he was a director, as well as all
meetings of committees of the Board on which he served.
The standing committees of the Board of Directors are the Audit Committee, the
Compensation Committee and the Stock Plans Committee.
The Audit Committee (composed of Messrs. Abernathy and Lever) reviews the
Company's system of internal controls, selects the Company's independent
auditors and accountants, and periodically reviews their services. The Audit
Committee held three meetings during the fiscal year ended February 28, 1997.
The Compensation Committee (composed of Messrs. Abernathy and Lever) reviews and
determines cash compensation payable to executive officers of the Company. The
Compensation Committee held no meetings during the fiscal year ended February
28, 1997.
The Stock Plans Committee (composed of Messrs. Abernathy and Lever) administers
the Company's stock plans. The Stock Plans Committee held no meetings during the
fiscal year ended February 28, 1997.
DIRECTORS' COMPENSATION
Each director who is not an employee of the Company (other than Mr. Davies, who
is not an employee, but who receives compensation as a consultant) receives an
annual fee of $10,000, but no meeting fees, and is entitled to reimbursement for
his out-of-pocket expenses incurred in attending meetings. Non-employee
directors also receive annual ("formula") stock option grants on May 1 each year
under the Non-Employee Director Stock Option Plan covering 3,000 shares of
Common Stock, which are immediately exercisable at an option price equal to the
market value on the date of grant.
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<PAGE> 7
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following section sets forth certain information regarding ownership of the
Common Stock at February 2, 1998. Except as otherwise indicated in the
footnotes, the Company believes that the beneficial owners of the Common Stock
listed in the tables, based on information furnished by such owners, have sole
investment and voting power with respect to the shares of Common Stock shown as
beneficially owned by them. The numbers and percentages assume for each person
or group listed, the exercise of all stock options held by such person or group
that are exercisable within 60 days of February 2, 1998, in accordance with Rule
13d-3(d)(1) of the Securities Exchange Act of 1934, but not the exercise of such
stock options owned by any other person.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth each person known by the Company (other than
management) to own beneficially more than 5% of the outstanding common stock of
the Company.
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES OF COMMON PERCENTAGE OF
OF BENEFICIAL OWNER STOCK CLASS
<S> <C> <C>
Fidelity Capital Appreciation Fund (1) 289,000 9.0%
82 Devonshire Street
Boston, Massachusetts 02109
Special Situations Fund, L.P. (2) 289,000 9.0%
153 East 53rd Street
New York, NY 10022
William D. Witter, Inc. 175,400 5.5%
One Citicorp Center
New York, NY 10022
</TABLE>
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1. Fidelity Capital Appreciation Fund is a portfolio of the Fidelity Capital
Trust, an investment company registered under the Investment Company Act of
1940.
2. By agreement with the Company dated June 25, 1990, as amended, Special
Situations Fund, L.P. (formerly Prudential-Bache Special Situations Fund,
L.P.) agreed not to increase its beneficial ownership of the Common Stock
of the Company or Steel City Products, Inc. ("SCPI") above 8.2% of the then
outstanding shares, except in transactions to which the Company or SCPI, as
the case may be, is a party or under certain other circumstances.
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information regarding beneficial ownership of the
Common Stock by each director, each individual named in the Summary Compensation
Table, below, and by all directors, all such named individuals, and all
executive officers of the Company as a group.
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME OF BENEFICIAL OWNER SHARES OF COMMON STOCK CLASS
<S> <C> <C>
John D. Abernathy 41,996 (1) 1.30%
Mark Auerbach 126,996 (2) 3.81%
Robert M. Davies 109,992 (3) 3.38%
Laurence D. Finman 37,500 (4) 1.16%
Bernard H. Frank 70,034 (5) 2.14%
</TABLE>
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<PAGE> 8
<TABLE>
<CAPTION>
PERCENTAGE OF
NAME OF BENEFICIAL OWNER SHARES OF COMMON STOCK CLASS
<S> <C> <C>
Joel S. Lever 72,815 (6) 2.25%
Anthony N. Puma 266,667 8.32%
Terrance W. Allan 28,581 (7) *
John R. Ruda 8,500 *
All directors and executive officers
as a group, 10 persons 785,241 (8) 22.0%
</TABLE>
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* Less than 1%
1. This number includes 26,996 shares issuable under outstanding stock options
that are presently exercisable at prices ranging from $1.00 to $3.375 per
share.
2. These shares are issuable under outstanding stock options that are
presently exercisable at prices ranging from $1.00 to $3.375 per share.
3. This number includes 26,996 shares issuable under outstanding stock options
that are presently exercisable at prices ranging from $1.00 to $3.37 per
share and 17,996 shares Mr. Davies has the right to acquire through a
contractual arrangement with a former director at $2.75 per share.
4. This number includes 17,500 shares issuable under outstanding stock options
that are presently exercisable at prices ranging from $1.25 to $2.00 per
share.
5. This number includes 68,327 shares issuable under outstanding stock options
that are presently exercisable at prices ranging from $1.25 to $2.00 per
share.
6. This number includes 26,996 shares issuable under outstanding stock options
that are presently exercisable at prices ranging from $1.00 to $3.375 per
share.
7. This number includes 28,081 shares issuable under outstanding stock options
that are exercisable within 60 days of February 2, 1998 at prices ranging
from $1.25 to $2.00 per share. Mr. Allan is an executive officer of the
Company's subsidiary, Steel City Products, Inc.
8. This number includes 355,888 shares issuable under outstanding stock
options that are exercisable within 60 days of February 2, 1998 at prices
ranging from $1.00 to $3.375 per share.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than 10% of a registered class
of the Company's equity securities ("Insiders") to file reports of ownership and
certain changes in ownership with the Securities and Exchange Commission and to
furnish the Company with copies of those reports.
Based solely on a review of those reports and amendments thereto furnished to
the Company during its most recent fiscal year or written representations by
Insiders that no Forms 5 were required to be filed, the Company believes that
during the fiscal year ended February 28, 1997, all Section 16(a) filing
requirements applicable to the Company's Insiders were satisfied.
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<PAGE> 9
EXECUTIVE COMPENSATION
The following section contains information about compensation, stock options and
awards, employment arrangements and other information concerning certain of the
executive officers of the Company and of its largest subsidiary, Steel City
Products, Inc. ("SCPI").
SUMMARY COMPENSATION TABLE
The following table sets forth all compensation for the 1997, 1996 and 1995
fiscal years allocated or paid on or before February 28,1997 to those who served
as the Company's Chief Executive Officer during fiscal 1997 and to the other
most highly compensated executive officers of the Company whose compensation
exceeded $100,000 in 1997 and who were serving at the end of the 1997 fiscal
year for services rendered in all capacities to the Company and its
subsidiaries. Also included is compensation paid to an executive officer of SCPI
who is not, however, an executive officer of the Company.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------------- ---------------------------
OTHER ALL
ANNUAL SECURITIES OTHER
COMPEN- UNDERLYING COMPEN-
NAME AND PRINCIPAL YEAR SALARY BONUS SATION OPTIONS SATION
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Mark Auerbach (1) 1997 100,000 -- -- -- --
Chairman President & 1996 24,000 -- -- 100,000 --
Chief Executive Officer
Bernard H. Frank (2) 1997 50,243 16,000 -- 68,327 13,908 (3)
Executive Vice 1996 82,775 -- -- -- 19,151
President & Chief 1995 100,100 55,779 -- 27,500 21,029
Operating Officer
John R. Ruda (4) 1997 100,385 16,000 35,827 --
Senior Vice President - 1996 151,500 -- -- -- 6,847
Marketing 1995 151,525 73,632 -- 15,000 9,103
Laurence D. Finman 1997 101,440 -- -- --
Vice President 20,000
Terrance W. Allan (5) 1997 126,490 14,000 -- 24,333 --
Executive Vice 1996 106,160 -- -- 5,000 4,797
President SCPI 1995 110,855 21,746 -- 6,000 6,498
</TABLE>
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* Excludes perquisites and other personal benefits if the aggregate amount of
such items of compensation was less than the lesser of either $50,000 or
10% of the total annual salary and bonus of the named executive officer.
1. Mr. Auerbach became Chief Executive Officer of the Company in December 1995
and served in that capacity as a consultant to the Company until May 1997,
when Mr. Davies was elected Chief Executive Officer as his successor.
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<PAGE> 10
2. Mr. Frank, who is also Chairman and Chief Executive Officer of SCPI, is
compensated only by SCPI, except with respect to stock options and stock
awards. Of the 68,327 shares shown as underlying options, 48,327 shares
relate to options granted in previous years, but which, under Securities
and Exchange Commission rules, are deemed granted on the date of their
re-pricing in May 1996. See "Ten-Year Option Re-Pricing," below. In fiscal
1997, in light of SCPI's financial performance, Mr. Frank voluntarily
reduced his annual salary by 50%.
3. This amount consists of $6,504, $5,508 and $1,896 that Mr. Frank received
under three substantially identical agreements amended in 1987 in
consideration of the waiver by Mr. Frank of his bankruptcy claims for
annuity rights in SCPI's predecessor's bankruptcy.
4. Mr. Ruda ceased to be an executive officer and employee of the Company on
February 28, 1997. The 35,827 shares shown as underlying options relate to
options granted in previous years, but which, under Securities and Exchange
Commission rules, are deemed granted on the date of their re-pricing in May
1996. See "Ten-Year Option Re-Pricing," below.
5. Mr. Allan is compensated only by SCPI, except with respect to stock options
and stock awards. Of the 24,331 shares shown as underlying options, 14,331
relate to options granted in previous years, but which, under Securities
and Exchange Commission rules, are deemed granted on the date of their
repricing in May 1996. See "Ten-Year Option Re-Pricing," below.
COMPENSATION AGREEMENTS
Mr. Auerbach. In December 1995 the Company entered into a one-year consulting
agreement with Mr. Auerbach in connection with his appointment as Chairman,
President and Chief Executive Officer of the Company. The agreement provided for
the payment to Mr. Auerbach of $10,000 per month in consulting fees plus
reimbursement of expenses incurred in carrying out his duties and
responsibilities. The agreement also provided for the grant to him of a stock
option to purchase 100,000 shares of Common Stock pursuant to the Company's 1994
Omnibus Stock Plan. The option is exercisable in two equal installments at $1.25
and $2.50 per share, respectively, on the grant date and the first anniversary
of the grant date. In October 1996 the agreement was amended to provide that it
would continue through June 30, 1997 and that Mr. Auerbach's compensation for
the period from January 1, 1997 through June 30, 1997 would be $2,500 per month.
On May 27, 1997 Mr. Auerbach resigned as President and Chief Executive Officer,
but remained Chief Financial Officer of the Company at his then current rate of
compensation, and Mr. Davies was elected Chairman and Chief Executive Officer of
the Company. Effective July 1, 1997, Mr. Auerbach received only normal
directors fees from the Company.
Mr. Frank and Mr. Allan. SCPI has three-year employment agreements with each of
Messrs. Frank and Allan (sometimes hereinafter referred to as the "executive")
commencing September 1, 1993 that provide for base salaries of $100,000 (Mr.
Frank) and $96,200 increasing to $115,050 (Mr. Allan). The agreements provide
for the payment of annual management bonuses based upon the defined profits of
SCPI's operating division, with Mr. Frank entitled to a minimum bonus of fifteen
percent of base salary. The aggregate amount of such management bonuses payable
each year to the executives and to all other SCPI executives is not to exceed 8%
of such defined profits and the allocation thereof is made by the Compensation
Committee of SCPI based on recommendations of Mr. Frank as Chief Executive
Officer of SCPI. Mr. Allan is also entitled to an executive bonus calculated as
a percentage of defined annual profits of SCPI that exceed $2,000,000. The
Agreements were extended in September 1996.
In the event of non-renewal of the agreements, the executive is entitled to an
aliquot portion of the bonuses he would have earned during the year of
non-renewal, since the contract year does not coincide with the fiscal year of
SCPI. The agreements also provide that if the executive's employment terminates
by reason of his death or disability, he is entitled to the greater of two
years' salary (one year for Mr. Allan) or the salary for the balance of the term
of the agreement and the minimum bonus for such period in the case of Mr. Frank
and the management bonus that would otherwise have been paid in the case of Mr.
Allan. If the executive's employment is otherwise terminated without cause,
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<PAGE> 11
he is entitled to his salary and bonuses for the greater of one year or the
balance of the term of the agreement.
The agreements provide for car allowances, and the executives are eligible to
participate in all defined contribution plans, survivor and supplemental
benefits, short and long-term disability benefits, and all other benefit plans
and perquisites available now or in the future to the senior executives of SCPI.
The agreements also provide for certain termination rights in the event of a
change in control of SCPI. Change in control is defined to include certain
changes in the make-up of the SCPI board of directors or a sale of SCPI's assets
or business. Each executive has the right to terminate his employment within a
defined period (ranging up to one year) following a change in control and (i) to
be paid his base salary for a period of up to 24 months following such
termination; (ii) to continue to receive for a like period the benefits that he
is entitled to receive under his agreement and (iii) to be paid 25% of base
salary in lieu of all bonus entitlement. The agreements also provide for
substantially the same payments and benefits in the event the executive's
employment is terminated by SCPI without cause as a result of a change in
control. In the event of any termination other than for cause, or voluntary
resignation in the absence of a change in control, the executive's options
become fully exercisable for a period of seven months following termination. If
a change in control had occurred on June 1, 1997, and if each of Messrs. Frank
and Allan had exercised his rights of termination, payments by SCPI would have
been approximately $525,000 in the aggregate. In fiscal 1997, in light of
SCPI's financial performance, Mr. Frank voluntarily reduced his annual salary
by 50%.
Mr. Frank. Mr. Frank also receives compensation of $13,908 per year, in the
aggregate, under three substantially identical agreements amended in 1987 in
consideration of the waiver by Mr. Frank of his bankruptcy claims for annuity
rights in SCPI's predecessor's bankruptcy. The amended agreements provide for
payments to be made for a period of fifteen years subsequent to January 1988 of
$6,504, $5,508 and $1,896 per year for the three agreements, respectively.
Mr. Ruda. In December 1995, the Company entered into a one-year agreement with
Mr. Ruda in connection with his appointment as Senior Vice President --
Marketing of the Company commencing March 1, 1996. The agreement provided for
the payment to Mr. Ruda of a base salary of $8,333 per month and participation
in all benefits plans made available to employees and for the use of a Company
car. The agreement also provided for a bonus based on revenues achieved by the
Company's subsidiary, Steel City Products, Inc. ("SCPI"), as follows: one
percent of the defined net revenues of SCPI that exceed seventeen million
dollars up to and including $21 million; plus one-half of one percent of the
defined net revenues of SCPI that exceed $21 million up to and including $23
million; plus one-quarter of one percent of the defined net revenues of SCPI
that exceed $23 million; plus one percent of the defined net revenues of SCPI
derived from the sale of pet supplies; plus one-half of one percent of the
defined net revenues derived from new product categories. If Mr. Ruda's
employment were terminated by the Company without cause, the Company was obliged
to pay him in a lump sum his salary for the balance of the term of the agreement
together with any portion of his bonus earned to the date of termination.
Otherwise, the Company was obliged to give Mr. Ruda 60 days notice of
termination unless termination was for cause, in which event his employment
would terminate on the giving of such notice. If Mr. Ruda elected to resign from
the Company, he was obliged to give 60 days notice. On February 28, 1997 the
agreement expired by its terms and Mr. Ruda's employment by the Company ceased.
OPTION GRANTS IN THE LAST FISCAL YEAR
The following table sets forth certain information with respect to stock options
granted to the individuals named in the Summary Compensation Table, above,
during the fiscal year ended February 28, 1997. For purposes of this table,
under Securities and Exchange Commission regulations, options re-priced on May
1, 1996 are considered to have been re-granted on that date. Accordingly, the
information under the columns entitled "Number of Securities Underlying
Options," "Percent of Total Options Granted to Employees in FY 1997," and
"Potential Realizable Value at Assumed Annual Rates
- 9 -
<PAGE> 12
of Stock Price Appreciation for Option Term" are all computed on that basis. The
expiration dates of the re-priced options were not affected by the re-pricing.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE
APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM (3)
--------------------------------------------------- ------------------------
PERCENT OF
TOTAL OPTIONS
NUMBER OF GRANTED TO
SECURITIES EMPLOYEES IN EXERCISE EXPI-
UNDERLYING FISCAL YEAR PRICE RATION 5% 10%
NAME OPTIONS (%) ($)(2) DATE ($) ($)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Mark Auerbach 3,000 (1) 1.69 1.219 05/01/06 2,299 5,828
Bernard H. Frank 20,000 (1) 11.27 1.25 02/27/07 15,722 39,843
20,827*(1) 11.74 2.00 08/29/01 -- 24,180
27,500*(1) 15.50 2.00 04/29/04 -- 31,928
John R. Ruda 20,827*(1) 11.74 2.00 08/29/01 -- 24,180
15,000*(4) 8.46 2.00 04/29/04 -- 17,415
Laurence D. Finman 10,000* 5.64 2.00 02/01/05 -- 11,610
Terrance W. Allan 10,000 (1) 5.64 1.25 02/27/07 7,861 19,921
8,331*(1) 4.70 2.00 08/29/01 -- 9,672
5,000*(4) 2.82 2.00 04/29/04 -- 5,805
1,000*(5) 0.56 2.00 06/19/04 -- 1,161
</TABLE>
- --------------
* These options were granted in prior years, but were re-priced in May 1996.
See footnote 2, below.
1. This option became exercisable at the date of grant.
2. The original exercise price per share of each option was equal to the
market value on the date of grant. Effective May 1, 1996, the exercise
price per share was reduced to $2.00, in excess of the closing price per
share of the Common Stock on the Nasdaq Smallcap Market on that date
($1.219). See "Ten-Year Option Re-Pricings," below.
3. The "potential realizable value" is calculated based on the term of the
option (ten years) at its date of grant. It is calculated by assuming that
the stock price on the date of grant appreciates at the indicated annual
rate compounded annually for the entire term of the option. However, the
optionee will not actually be able to realize any benefit from the option
unless the market value of the Common Stock in fact increases over the
option price.
4. This option becomes exercisable in three installments of one-third of the
shares, each, from and after the grant date and the following two
anniversaries of the grant date.
5. This option becomes exercisable in four installments of one-fourth of the
shares, each, from and after the grant date and the following three
anniversaries of the grant date.
AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth certain information based upon the fair market
value per share of the Common Stock at February 27, 1997 ($1.25), the day
closest to the Company's February 28, 1997 fiscal year end on which trades were
made, with respect to stock options held at that date by each of the individuals
named in the Summary Compensation Table, above. The "value" of unexercised
in-the-money options is the difference between the market value of the Common
Stock subject to the options at February 28, 1997 and the exercise (purchase)
price of the option shares. At that date none
- 10 -
<PAGE> 13
of the options listed were in-the-money. During fiscal 1997, there were no
option exercises by any of these individuals.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING VALUE OF UNEXERCISED IN-THE-
UNEXERCISED OPTIONS AT FISCAL MONEY OPTIONS AT FISCAL YEAR
YEAR END END ($)
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C>
Mark Auerbach 123,996 -- 3,000 --
Bernard H. Frank 68,327 -- -- --
John R. Ruda 35,827 -- -- --
Laurence D. Finman 12,500 7,500 -- --
Terrance W. Allan 26,581 2,750 -- --
</TABLE>
TEN-YEAR OPTION RE-PRICINGS
The following table sets forth the only re-pricing of options that has occurred
since April 1991 when the Company became a reporting company pursuant to Section
13 or 15(d) of the Securities Exchange Act of 1934. The new exercise price,
$2.00 per share, was in excess of the $1.219 market price of the underlying
securities at the time of the re-pricing.
<TABLE>
<CAPTION>
LENGTH OF
NUMBER OF MARKET PRICE ORIGINAL OPTION
SECURITIES OF UNDERLYING TERM REMAINING
UNDERLYING SECURITIES AT EXERCISE PRICE AT DATE OF RE-
OPTIONS RE- TIME OF RE- AT TIME OF RE- PRICING
DATE OF RE- PRICED PRICING PRICING (IN YEARS)
NAME AND POSITION PRICING (#) ($) ($) (#)
<S> <C> <C> <C> <C> <C>
Terrance W. Allan 05/01/96 8,331 1.219 2.750 5.3
05/01/96 5,000 1.219 2.750 8.0
05/01/96 1,000 1.219 3.375 8.1
Roger M. Barzun 05/01/96 8,000 1.219 3.375 8.1
05/01/96 8,000 1.219 3.125 8.8
Laurence D. Finman 05/01/96 10,000 1.219 3.125 8.8
Bernard H. Frank 05/01/96 20,827 1.219 2.75 5.3
05/01/96 27,500 1.219 2.75 8.0
John R. Ruda 05/01/96 20,827 1.219 2.75 5.3
05/01/96 15,000 1.219 2.75 8.0
</TABLE>
The option re-pricing of May 1, 1996 was implemented because the market price of
the Company's common stock had been severely depressed notwithstanding the
dedication and hard work of certain of the Company's key employees, including
certain executive officers, and because those employees had voluntarily agreed
to take salary cuts.
Stock Plans Committee: John D. Abernathy; Joel S. Lever
REPORT ON EXECUTIVE COMPENSATION IN THE 1997 FISCAL YEAR
This report has been prepared by the Compensation Committee and the Stock Plans
Committee of the Board of Directors and addresses the Company's compensation
policies with respect to the Chief Executive Officer and executive officers of
the Company in general for the fiscal year ended February 28, 1997. All members
of the Committees are non-employee directors. The Company has no operating
business of its own, but is a holding company of operating businesses. The
Company has
- 11 -
<PAGE> 14
elected to include in the Summary Compensation Table, above, certain information
concerning an executive officer of the Company's largest subsidiary, Steel City
Products, Inc.,("SCPI") who is not, however, an executive officer of the Company
and accordingly, a discussion of his compensation is included here. Reference is
made generally to the information under the heading "Compensation Agreements,"
above.
Compensation Policy. The overall intent in respect of executive officers is to
establish levels of compensation that provide appropriate incentives in order to
command high levels of individual performance and thereby increase the value of
the Company to its stockholders, and that are sufficiently competitive to
attract and retain the skills required for the success and profitability of the
Company. The principal components of executive compensation are salary, bonus
and stock options.
Chief Executive Officer's Compensation. The Chief Executive Officer's consulting
fee and stock option grant are the result of a written consulting agreement that
was negotiated between Mr. Auerbach and the Company and that is described above
under the heading "Compensation Agreements." His compensation, consisting of
both cash and stock options, was determined to be appropriate by the members of
the Committees serving at the time based on the non-full-time nature of the
position; the expertise and responsibility that the position requires; the Chief
Executive Officer's prior financial and accounting experience in former
employments; and the subjective judgement of the members of a reasonable level
of compensation.
Other Executive Officers. Mr. Frank is an Executive Officer of the Company, but
receives all of his compensation in his capacity of Chairman and Chief Executive
Officer of SCPI. Mr. Allan is included in the Company's proxy disclosures
relating to compensation because of his importance to the success of the Company
on a consolidated basis. Prior to December 1995, Mr. Ruda was an executive
officer of SCPI. Each of these and the other executive officers of the Company
is compensated under a written employment agreement that was reviewed and
approved by the Company's Compensation Committee and in the case of Mr. Allan,
by the SCPI Compensation Committee.
Salary. Three of the executive officers are long-term employees of SCPI and its
predecessor, and one of them is a founder of the original business. Accordingly,
the salary of each such executive was based on the level of his prior salary. As
to those and the other executive officers of the Company, salary levels are also
based on the subjective judgement of the members of the respective Compensation
Committees as to the value of the executive's past contribution and potential
future contribution to the business.
Bonuses. Bonuses payable to Messrs. Frank and Allan under their employment
agreements consist of an Annual Management Bonus, and in the case of Mr. Allan,
an additional Annual Executive Bonus. The Annual Management Bonus is paid from a
pool of funds equal to 8% of SCPI's consolidated net income before interest,
taxes, depreciation, LIFO adjustments and amortization, prepared in accordance
with generally accepted accounting principles consistently applied. The amount
of the bonus pool allocation is based on Mr. Frank's recommendations to SCPI's
Compensation Committee. Mr. Frank's recommendations, in turn, are based on his
subjective judgement, formed by over fifty years experience with the business,
of the performance of each officer during the preceding year. Mr. Frank is
entitled to a minimum Annual Management Bonus of 15% of salary provided that
SCPI has earnings for the year in question. Bonuses paid in fiscal 1997 related
to earnings in the prior year.
The Annual Executive Bonus for Mr. Allan is equal to 1% of the amount by which
SCPI's consolidated net income (defined in the same manner as for the Annual
Management Bonus) exceeds $2,000,000. SCPI's defined net income did not exceed
the $2,000,000 threshold in fiscal 1997 and accordingly no Annual Executive
Bonuses were paid.
The bonus percentages and amounts contained in the executive's employment
agreements are based on the executive's years of service, his perceived
importance to the profitability of SCPI, and the subjective judgement of members
of the SCPI Compensation Committee as to the best balance between
- 12 -
<PAGE> 15
salary and bonus, and what is fair and reasonable. No bonuses were paid to any
other executive officers of the Company during fiscal 1997.
Stock Options. The Committees believe that stock ownership by executive officers
is important in aligning management's and stockholders' interests in the
enhancement of stockholder value over the long term. The exercise price of stock
option grants to date is equal to the market price of the Common Stock on the
date of grant. The stock option grants made to executive officers (other than to
the Chief Executive Officer) in fiscal 1997 were made in recognition of the
executives' services to the Company during the year and prior years and were in
amounts deemed in the subjective judgement of the Stock Plans Committee to be
appropriate.
Compliance with Internal Revenue Code Section 162(m). Section 162(m) of the
Internal Revenue Code (enacted in 1993) generally disallows a tax deduction to
public companies for compensation over $1 million paid to its chief executive
officer and its four other most highly compensated executives. The Company's
compensation payable to any one executive officer (including potential income
from outstanding stock options) is currently and for the foreseeable future
unlikely to reach that threshold. In addition, because of the significant net
operating loss carryforwards of SCPI, the deductibility of compensation payments
is not currently an issue. However, should circumstances change, the
Compensation Committee will study the matter and make recommendations to the
Board.
<TABLE>
<CAPTION>
The Compensation Committee The Stock Plans Committee:
<S> <C>
Joel S. Lever John D. Abernathy
John D. Abernathy Joel S. Lever
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1997, no member of the Compensation Committee or Stock Plans
Committee was an employee of the Company or any or its subsidiaries. Mr. Frank
serves on the Compensation Committee of SCPI and is a director of SCPI and of
the Company.
In connection with the acquisition of Puma Products, Inc. in October 1994, Puma
Products entered into a lease agreement with a partnership controlled by its
founder, Anthony N. Puma, a director of the Company. The lease covers the 25,000
square foot facility used by Puma Products and runs for six years, with an
option to extend for an additional four years. Rent under the lease is $3.25 per
square foot and is subject to increases as a result of increases in real estate
taxes and the Consumer Price Index. In May 1997 the Company sold the capital
stock of Puma Products back to Mr. Puma.
Mr. Davies was elected Chairman, President and Chief Executive Officer of the
Company in May 1997 to succeed Mr. Auerbach. He is compensated at the rate of
$5,000 per month under a one-year consulting agreement and receives
reimbursement of expenses incurred by him in carrying out his duties and
responsibilities. Pursuant to the agreement, the Company has granted to Mr.
Davies ten-year stock options at the market price on the date of the grant to
purchase 100,000 shares of Common Stock, in the aggregate, under the Company's
1994 Omnibus stock Plan. The options become exercisable in full in May 1998.
Subsequent to the 1997 fiscal year end, the Board of Directors granted ten-year
stock options at the market price on the date of grant (January 13, 1998) to
certain non-employee directors under the Company's 1994 Omnibus Stock Plan: Mr.
Abernathy 65,000 shares, Mr. Davies 100,000 shares; Mr. Lever 65,000 shares. The
vesting of these options is dependent upon the Company achieving certain
financial objectives, but in any event, they vest on the ninth anniversary of
the grant date.
The Board of Directors intends that any transactions with officers, directors
and affiliates will be entered into on terms no less favorable to the Company
than could be obtained from unrelated third parties and that they will be
approved by a majority of the directors of the Company who are independent and
disinterested with respect to the proposed transaction. No such transactions
occurred in fiscal 1997.
-----------------------
- 13 -
<PAGE> 16
[CHART]
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Oakhurst Company, Inc. 100.00 72.73 90.91 122.73 43.16 40.91
DJ Global US 100.00 111.11 119.86 101.29 144.18 197.70
Dow Jones Retailers - Other 100.00 120.29 117.14 105.39 102.71 148.40
</TABLE>
<PAGE> 17
The following Performance Graph and the foregoing Report of the Compensation
Committee on Executive Compensation are not and shall not be deemed incorporated
by reference into any filings of the Company with the Securities and Exchange
Commission by implication or by any reference in any such filings to this Proxy
Statement.
PERFORMANCE GRAPH
The following graph compares the percentage change in the Company's cumulative
total stockholder return on Common Stock for the last five years with (i) the
Dow Jones Global US Market Index (a broad market index), and (ii) the Dow Jones
Retailers - Other Specialty Index, a group of companies whose marketing strategy
is focused on a limited product line, such as automotive parts, over the same
period. Both indices are published in the Wall Street Journal.
The returns are calculated assuming the value of an investment in the Company's
stock and each index of $100 on February 28, 1992 and that all dividends were
reinvested; however, the Company paid no dividends during the periods shown. The
graph lines merely connect the beginning and end of the measuring periods and do
not reflect fluctuations between those dates. The historical stock performance
shown on the graph is not intended to, and may not be indicative of, future
stock performance.
- 14 -
<PAGE> 18
AUDITORS
The firm of Deloitte & Touche LLP, certified public accountants, served as the
Company's independent auditors and accountants for the fiscal year ended
February 28, 1997 and has been selected by the Audit Committee as the Company's
independent auditors and accountants for the fiscal year ending February 28,
1998. A representative of Deloitte & Touche LLP is expected to be available at
the Annual Meeting to make a statement if he wishes to do so and to respond to
appropriate questions.
SUBMISSION OF STOCKHOLDER PROPOSALS
Any stockholder who wishes to present a proposal for action at the 1998 annual
meeting of stockholders and who wishes to have it set forth in the proxy
statement and identified in the form of proxy prepared by the Company, must
deliver such proposal to the Company at its principal executive offices no later
than May 1, 1998 in such form as is required under regulations promulgated by
the Securities and Exchange Commission.
By Order of the Board of Directors
Roger M. Barzun, Secretary
February 3, 1998
- 15 -
<PAGE> 19
OAKHURST COMPANY, INC.
ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 25, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby (i) revokes previous proxies given with respect to the
shares of the common stock of Oakhurst Company, Inc. (the "Company") noted on
the reverse side hereof and registered in the name of the undersigned (the
"Shares"); (ii) acknowledges receipt of the Notice and Proxy Statement dated
February 3, 1998 in connection with the Annual Meeting of Stockholders of the
Company to be held on February 25, 1998 at 9:00 a.m. at the offices of Kurzman &
Eisenberg, One North Broadway, White Plains, New York or at any adjournment
thereof; and (iii) appoints Robert M. Davies, Joel S. Lever and Roger M. Barzun,
or any one of them, each with full power to act alone, the attorneys and proxies
of the undersigned with power of substitution to each, to vote all of the Shares
that the undersigned is entitled to vote at the aforesaid Annual Meeting of
Stockholders of the Company, and at any adjournment thereof, with all the powers
the undersigned would have had if personally present at said meeting. Without
limiting the generality of the authorization hereby given, said proxies are, and
each of them is instructed to vote or act as follows on the matters to be voted
upon set forth in said Proxy Statement:
Election of three directors (or if the nominee is not available for
election, such substitute as the Board of Directors may designate).
NOMINEES: Class II: Mark Auerbach and Bernard H. Frank. Class I: John D.
Abernathy.
IF YOU WISH TO VOTE IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE BOARD OF
DIRECTORS, YOU NEED ONLY SIGN AND DATE THIS PROXY ON THE REVERSE SIDE -- YOU
NEED NOT MARK ANY BOXES.
CONTINUED AND TO BE SIGNED AND DATED ON THE REVERSE SIDE
[SEE REVERSE SIDE]
[OAKHURST COMPANY PROXY CARD]
<PAGE> 20
[X] Please mark
votes as in
this example
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
"FOR" THE ELECTION OF ALL NOMINEES AND "FOR" PROPOSALS 2 AND 3.
<TABLE>
<S> <C> <C>
1. Election of FOR THE WITHHOLD 2. In their discretion, the Proxies are authorized to
Directors NOMINEES vote upon such other business as may properly
come before the meeting or any adjournment
thereof.
(see reverse side) [ ] [ ]
[ ] [ ] [ ]
FOR AGAINST ABSTAIN
</TABLE>
- ---------------------------------------------------
To withhold authority to vote for a nominee, write
his name on the line above.
Mark here [ ]
for address
change and
note the change
at left.
Please sign exactly as your name appears hereon. Joint owners should both sign.
When signing as an attorney, executor, administrator, trustee or guardian,
please give full title as such. If a corporation, please sign in full corporate
name by President or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
Signature: Date:
--------------- --------
Signature: Date:
--------------- --------
PLEASE PROMPTLY MARK, SIGN, DATE AND RETURN THIS
PROXY USING THE ENCLOSED ENVELOPE.
[OAKHURST COMPANY PROXY CARD]
