<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
(Name of Registrant as Specified in Its Charter)
----------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or Item 22(a)(2)
of Schedule 14A.
/ / $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 number, or the Form or
Schedule and the date of its filing.
1) Amount Previously Paid:
---------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
---------------------------------------------------------------
3) Filing Party:
4) Date Filed:
<PAGE>
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
1900 Gulf Street
Lamar, Missouri 64759-1899
----------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 14, 1996
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
O'Sullivan Industries Holdings, Inc. will be held at 401 Ward Parkway,
Kansas City, Missouri 64112 on Thursday, November 14, 1996 at 10:00 A.M.
(Central Standard Time) for the following purposes:
(1) To elect three Class III Directors;
(2) To consider approval of the amendment and restatement of the Company's
1994 Incentive Stock Plan and the approval of Special Option awards
under such plan; and
(3) To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
The transfer books will not be closed. The date fixed by the Board of
Directors as the record date for the determination of the stockholders entitled
to notice of, and to vote at, said Annual Meeting or any adjournment or
adjournments thereof is the close of business on September 20, 1996.
By Order of the Board of Directors,
/s/ Rowland H. Geddie, III
Rowland H. Geddie, III
Vice President, General Counsel
and Secretary
Lamar, Missouri
September 26, 1996
EVEN IF YOU PLAN TO ATTEND THE MEETING IN PERSON, PLEASE EXECUTE THE
ENCLOSED PROXY AND MAIL IT PROMPTLY. SHOULD YOU ATTEND THE MEETING, YOU MAY
REVOKE YOUR PROXY AND VOTE IN PERSON. FOR YOUR CONVENIENCE, ENCLOSED IS A
RETURN ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
<PAGE>
PROXY STATEMENT
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
1900 Gulf Street
Lamar, Missouri 64759-1899
ANNUAL MEETING OF STOCKHOLDERS OF
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
TO BE HELD ON THURSDAY, NOVEMBER 14, 1996
This Proxy Statement is being furnished to stockholders of O'Sullivan
Industries Holdings, Inc., a Delaware corporation ("O'Sullivan" or the
"Company"), in connection with the solicitation of proxies by the Board of
Directors of the Company (the "Board") from holders of record of the Company's
common stock, par value $1.00 per share ("Common Stock"), as of the close of
business on September 20, 1996 (the "Annual Meeting Record Date"), for use at
the Annual Meeting of Stockholders of the Company (the "Annual Meeting") to be
held on Thursday, November 14, 1996, at 10:00 A.M. (Central Standard Time) at
401 Ward Parkway, Kansas City, Missouri 64112, and at any adjournment or
postponement thereof. This Proxy Statement is first being mailed to the holders
of Common Stock on or about September 26, 1996.
PURPOSES OF THE ANNUAL MEETING
At the Annual Meeting, holders of shares of Company securities entitled to
vote at the Annual Meeting will be asked to consider and to vote upon the
following matters:
(1) the election of three Class III Directors of the Company to hold
office in accordance with the By-laws of the Company;
(2) the approval of the amendment and restatement of the Company's 1994
Incentive Stock Plan and the approval of Special Option awards issued
thereunder; and
(3) such other business as may properly come before the meeting.
The Board unanimously recommends a vote FOR the election of the Board's
nominees for election as directors of the Company and FOR the approval of the
amendment and restatement of the Company's 1994 Incentive Stock Plan and Special
Option awards issued thereunder. As of the date of this Proxy Statement, the
Board knows of no other business to come before the Annual Meeting.
VOTING RIGHTS AND PROXY INFORMATION
Only holders of record of shares of Common Stock as of the close of
business on the Annual Meeting Record Date will be entitled to notice of, and to
vote at, the Annual Meeting or any adjournment or postponement thereof. Each
share of Common Stock is entitled to one vote. As of the Annual Meeting Record
Date, a total of 16,819,633 shares of Common Stock were issued and outstanding.
The presence, either in person or by properly executed proxy, of the
holders of a majority of the outstanding shares of Common Stock as of the Annual
Meeting Record Date is necessary to constitute a quorum at the Annual Meeting.
The affirmative vote of at least a majority of the outstanding shares of Common
Stock present and voting, in person or by properly executed proxy, at the Annual
Meeting is required to approve the election of each of the Company's nominees
for election as a director and any other matter properly coming before the
meeting.
For purposes of determining whether a proposal has received a majority
vote, abstentions will not be included in the vote total, and, therefore, will
have no effect on the outcome of the vote. For purposes of determining whether
a proposal has received a majority vote, in instances where brokers are
prohibited from exercising discretionary authority for beneficial holders of
Common Stock who have not returned a proxy (so-called "broker non-votes"), those
shares will not be included in the vote totals and, therefore, will have no
effect on the outcome of the vote. Shares held by holders who are either
present in person or represented by proxy who abstain or for whom the authority
to vote is withheld on certain matters will, however, be treated as present for
quorum purposes on all matters.
<PAGE>
All voting securities that are represented at the Annual Meeting by
properly executed proxies received by the Secretary of the Company prior to or
at the Annual Meeting and not revoked will be voted at the Annual Meeting in
accordance with the instructions indicated in such proxies. If no instructions
are indicated, such proxies will be voted FOR the election of the Board's
nominees for election as directors of the Company and FOR the approval of the
amendment and restatement of the Company's 1994 Incentive Stock Plan and Special
Option awards issued thereunder.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by (i) filing
with the Company, at or before the Annual Meeting, a written notice of
revocation bearing a later date than the proxy, (ii) duly executing a subsequent
proxy relating to the same voting securities and delivering it to the Company at
or before the Annual Meeting or (iii) attending the Annual Meeting, filing a
written revocation of proxy and voting in person (attendance at the Annual
Meeting and voting will not in and of itself constitute a revocation of a
proxy). Any written notice revoking a proxy or subsequent proxies should be
received by mail or hand-delivered to O'Sullivan Industries Holdings, Inc.,
Attention: Mr. Rowland H. Geddie, III, 1900 Gulf Street, Lamar, Missouri
64759-1899.
The Company will bear the cost of the solicitation. In addition to
solicitation by mail, the Company will request banks, brokers and other
custodian nominees and fiduciaries to supply proxy material to the beneficial
owners of Common Stock and will reimburse them for their expenses in so doing.
Certain directors, officers and other employees of the Company, not specially
employed for this purpose, may solicit proxies, without additional remuneration
therefor, by personal interview, mail, telephone, facsimile or other electronic
means.
ELECTION OF DIRECTORS
The Company's By-laws provide for a Board of Directors divided into three
classes (Class I, Class II and Class III) having staggered three-year terms with
each class as nearly equal in size as possible. The current term of office of
the directors in Class III expires at the Annual Meeting. The terms of office
of directors in Class I and Class II will expire at the annual meetings of
stockholders to be held in 1997 and 1998, respectively. At each annual meeting
of stockholders, directors will be elected to succeed those whose terms then
expire, with each newly elected director to serve for a three-year term.
On August 29, 1996, the Board of Directors was expanded to eight members.
Mr. Richard D. Davidson was appointed to fill the Class I vacancy created by the
resignation of Mr. Gregory C. Kowert, and Mr. Stewart M. Kasen was appointed to
fill the newly created Class III position.
NOMINEES
Messrs. William C. Bousquette, Stewart M. Kasen and Daniel F. O'Sullivan
have been nominated as Class III directors to serve a three-year term ending at
the annual meeting in 1999. It is intended that the persons named in the
accompanying proxy will vote shares represented by properly executed proxies for
the election of the three listed nominees as directors unless authority to vote
is withheld. If any nominee should become unavailable to serve on the Board of
Directors, the persons named in the proxy may act with discretionary authority
to vote the proxy for such other person, if any, as may be designated by the
Board of Directors. However, the Board of Directors is not aware of any
circumstances likely to render any of the nominees unavailable for election.
The following sets forth certain information with respect to the business
experience of each nominee during the past five years and certain other
directorships held by each nominee. References to service with the Company in
this section include service with O'Sullivan Industries, Inc., the Company's
wholly-owned subsidiary.
CLASS III DIRECTORS--TERM EXPIRING 1999
WILLIAM C. BOUSQUETTE, 59, was appointed a Director of the Company in December
1993. Since January 1995, Mr. Bousquette has been the Senior Vice President and
Chief Financial Officer of Texaco, Inc., an integrated petroleum company. From
January 1994 to January 1995 and from November 1990 to January 1993, he was
Executive Vice President and Chief Financial Officer of Tandy Corporation
("Tandy"), a retailer of consumer electronics products. From January 1993 to
January 1995, he was Chief Executive Officer of TE Electronics Inc. ("TE"), a
subsidiary of Tandy. From 1983 until the Company's initial public offerings
(the "Offerings") in February 1994, Tandy and TE owned all of the stock of the
Company. Mr. Bousquette is also a director of Cyprus Amax Minerals Company, a
mining company.
2
<PAGE>
STEWART M. KASEN, 57, is a private investor. He was the Chief Executive Officer
of Best Products Co., Inc., a chain of retail stores, from October 1989 to April
1996. He is a director of Markel Corp., an underwriter of specialty insurance
products, and Spreckels Industries, Inc., a manufacturer and distributor of
materials handling and industrial components products. Mr. Kasen was appointed
a director of the Company in August 1996 to fill a newly created Class III
Director position.
DANIEL F. O'SULLIVAN, 55, has been President of O'Sullivan Industries, Inc.
("Industries") since July 1986 and was appointed as Chief Executive Officer and
President and a Director of the Company in November 1993 and as a Director and
as Chairman of the Board of Industries in 1994. He became Chairman of the Board
of the Company in December 1993. He relinquished his position as President of
the Company and Industries in July 1996. Mr. O'Sullivan has been employed by
the Company since September 1962.
The following sets forth certain information with respect to all members of
the Company's Board of Directors whose current terms will continue after the
Annual Meeting.
CLASS I DIRECTORS--TERM EXPIRING 1997
RICHARD D. DAVIDSON, 48, was appointed President and Chief Operating Officer of
the Company and Industries in July 1996 and as a Director of Industries and the
Company in July 1996 and August 1996, respectively. From 1990 to October 1995,
Mr. Davidson served as Senior Vice President of Sunbeam Corporation and as
President of the Sunbeam Outdoor Products Division. Mr. Davidson was appointed
as a Class I Director in August 1996 to fill the vacancy created by the
resignation of Mr. Gregory C. Kowert.
RONALD G. STEGALL, 49, has been President and Chief Executive Officer of
Arlington Equity Partners, a venture capital investment firm, since 1992. From
November 1992 through April 1994, he was Chairman of the Board and Chief
Executive Officer of LiL' Things, Inc., a chain of retail children's stores; he
continues as Chairman of LiL' Things. From 1987 through 1991, he was Chairman
and Chief Executive Officer of BizMart, Inc., a chain of office products
superstores subsequently sold to Office Max, Inc. Mr. Stegall is also a
director of InterTAN, Inc., a retailer of consumer electronics products with
locations in Canada, Australia and the United Kingdom, and Hastings
Entertainment, Inc., a retailer of books, audio and video recordings and
software. Mr. Stegall was appointed a Director of the Company in July 1994.
CLASS II DIRECTORS--TERMS EXPIRING 1998
CHARLES G. HANSON, 83, retired on December 31, 1993 from his career as the
founder, President and Chief Executive Officer of Stuart Hall Co., a commercial
stationery manufacturer, following the sale of Stuart Hall to The Newell Co. He
is also a member of the Board of Trustees of the Eisenhower Medical Center and
the Barbara Sinatra Children's Center. Mr. Hanson was appointed a Director of
the Company in March 1995.
THOMAS M. O'SULLIVAN, SR., 74, was appointed Director of the Company in December
1993. He founded O'Sullivan Industries in 1954 and served as its President
until June 1986. He has been President of O'Sullivan Properties, Inc., a real
estate investment company, since December 1986. Mr. O'Sullivan has served as a
Director of the Company since December 1993.
TYRONE E. RIEGEL, 53, has been Executive Vice President of Industries since July
1986 and was appointed a Director and Executive Vice President of the Company in
November 1993. Mr. Riegel has been employed by the Company since January 1964.
CERTAIN RELATIONSHIPS. Daniel F. O'Sullivan, Thomas M. O'Sullivan, Jr., the
Company's Vice President-Sales, and Michael P. O'Sullivan, the Company's Vice
President-Marketing, are brothers. Tyrone E. Riegel and James C. Hillman, the
Corporation's Vice President-Human Resources, are brothers-in-law of Daniel F.
O'Sullivan, Thomas M. O'Sullivan, Jr. and Michael P. O'Sullivan. Tyrone E.
Riegel and E. Thomas Riegel, the Company's Vice President-Strategic Operations,
are brothers. Thomas M. O'Sullivan, Sr. is the father of Daniel F. O'Sullivan,
Thomas M. O'Sullivan, Jr. and Michael P. O'Sullivan and is the father-in-law of
Tyrone E. Riegel and James C. Hillman.
3
<PAGE>
ORGANIZATION OF THE BOARD OF DIRECTORS
The business of the Company is managed under the direction of the Board of
Directors. The Board of Directors has established two committees to oversee
specific matters affecting the Company, an Audit Committee and a Compensation
Committee.
The Audit Committee is composed entirely of non-employee directors,
currently Messrs. Bousquette (Chairman), Hanson and Stegall. The Audit
Committee reviews the Company's financial statements with management and the
independent auditors; recommends to the Board of Directors the firm of
independent accountants to perform the annual audit; reviews and approves the
scope of the independent auditors' work; reviews the adequacy of the Company's
significant accounting policies and its internal accounting controls; reviews
and approves the fees of the independent auditors; and has general
responsibility for related matters. This Committee held three meetings during
fiscal 1996.
The Compensation Committee members are Messrs. Stegall (Chairman),
Bousquette and Hanson. The principal functions of this Committee are to review
and make recommendations to the Board concerning officer compensation plans.
This Committee also makes grants of stock options, restricted stock and other
awards to executive officers and other employees under the Company's 1994
Incentive Stock Plan. This Committee met four times during fiscal 1996.
The Company does not have a Nominating Committee.
The Board of Directors of the Company held six meetings during fiscal 1996.
Each director attended all of the meetings of the Board of Directors and of each
committee on which he served held during fiscal 1996.
DIRECTORS' COMPENSATION
Directors of the Company who are not employees of the Company or its
subsidiaries are paid an annual retainer of $12,000. Each committee chairman
receives an additional $1,000 per year. Expenses of attendance at meetings are
paid by the Company. Non-employee directors receive an additional $1,000 for
each Board meeting attended in person or by telephone and $800 for each
committee meeting attended in person or by telephone. Employees of the Company
do not receive additional compensation for their service as a Director other
than payment of expenses, if any, to attend a meeting.
Under the Company's 1994 Incentive Stock Plan, which commenced in February
1994, each non-employee director automatically is granted non-qualified stock
options to purchase 1,000 shares of Common Stock on the first trading day in
September of each year that he or she serves as a director. The option exercise
price is set at the fair market value (as defined in the Company's 1994
Incentive Stock Plan) of a share of Common Stock on the first trading day
immediately preceding the date of grant. The options vest in three equal
increments on the first, second and third anniversaries of the date of grant.
4
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
OF COMPANY VOTING SECURITIES
The following table sets forth, as of the Annual Meeting Record Date,
certain information with respect to the beneficial ownership of Common Stock
(the only class of the Company's securities entitled to voting rights) by
(i) each director of the Company, (ii) each of the most highly compensated
executive officers of the Company for the fiscal year ended June 30, 1996, and
(iii) the Company's directors and officers as a group:
NAME SHARES BENEFICIALLY AMOUNT PERCENT
OWNED(1) OF CLASS
Daniel F. O'Sullivan 67,092(2) *
William C. Bousquette 6,001(3) *
Richard D. Davidson 30,300 *
Charles G. Hanson 15,334(4) *
Stewart M. Kasen 4,400 *
Thomas M. O'Sullivan, Sr. 163,359(5) *
Tyrone E. Riegel 50,112(6) *
Ronald G. Stegall 4,501(7) *
Thomas M. O'Sullivan, Jr. 45,400(8) *
Rowland H. Geddie, III 16,308(9) *
E. Thomas Riegel 19,746(10) *
Directors and Executive Officers as a
group (14 persons) 499,580(11) 3.0%
- ------------------------------
*Less than 1%.
(1)Each person has sole voting and investment power with respect to the
shares shown except as otherwise noted.
(2)Includes (a) 13,587 shares of restricted stock granted on February 2,
1994 subject to five-year vesting provisions, with respect to which
Mr. O'Sullivan has no investment power; (b) 25,659 shares issuable within
60 days upon the exercise of stock options; (c) 1,072 shares held under the
Company's Savings and Profit Sharing Plan (the "SPSP"), as to which
Mr. O'Sullivan has no investment power; and (d) 500 shares owned by
Mr. O'Sullivan's spouse, as to which Mr. O'Sullivan disclaims ownership.
(3)Includes 1,001 shares issuable upon the exercise of stock options.
(4)Includes 334 shares issuable upon the exercise of stock options.
(5)Includes 134,438 shares owned indirectly through O'Sullivan Properties,
Inc. Mr. O'Sullivan and his spouse own all of the voting stock of O'Sullivan
Properties, Inc. Of the remaining shares, (a) 1,001 shares are issuable upon
the exercise of stock options; (b) 10,150 shares are held by a trust of which he
and his spouse are co-trustees and he is the beneficiary; (c) 10,150 shares are
held by a trust of which he and his spouse are co-trustees and his spouse is the
beneficiary; and (d) 1,300 shares are owned by his spouse. Mr. O'Sullivan
shares voting and investment powers with respect to the shares held by the
trusts. Mr. O'Sullivan disclaims beneficial ownership of the shares of which
his spouse is the owner or the beneficiary.
(6)Includes (a) 6,363 shares of restricted stock granted on February 2,
1994 subject to five-year vesting requirements, with respect to which Mr. Riegel
has no investment power; (b) 809 shares held under the SPSP, as to which
Mr. Riegel has no investment power; and (c) 19,305 shares issuable within
60 days upon the exercise of stock options.
(7)Includes 1,001 shares issuable upon the exercise of stock options.
(8)Includes 13,036 shares held by a limited partnership of which
Mr. O'Sullivan is the general partner, and 4,995 shares held as custodian for
his minor son. Mr. O'Sullivan disclaims beneficial ownership of these shares.
Also includes (a) 8,334 shares issuable within 60 days upon the exercise of
stock options; and (b) 2,352 shares held under the SPSP as to which
Mr. O'Sullivan has no or limited investment power.
(9)Includes (a) 8,334 shares issuable within 60 days upon the exercise of
stock options; and (b) 487 shares held under the SPSP, as to which Mr. Geddie
has no investment power.
(10)Includes (a) 8,334 shares issuable within 60 days upon the exercise of
stock options; and (b) 827 shares held under the SPSP, as to which Mr. Riegel
has no or limited investment power.
(11)See notes 1 through 10 above. Includes a total of 87,638 shares
issuable, either currently or within 60 days, upon the exercise of stock
options.
5
<PAGE>
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS. The Company is not
aware of any person who beneficially owns in excess of 5% of the total issued
and outstanding shares of Common Stock, except for the persons in the table
below.
The table below sets forth as of the dates indicated in the footnotes
certain information regarding each person (including any "group" as that term is
used in Section 13(d)(3) of the Securities Exchange Act of 1934) who is known by
the Company to own beneficially more than 5% of the Common Stock, the only class
of voting securities of the Company that is outstanding.
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENTAGE
BENEFICIAL OWNER BENEFICIAL OWNERSHIP OF CLASS
------------------- -------------------- ----------
Glickenhaus & Co. 1,732,500(1) 10.3%
6 East 43rd Street
New York, New York 10017
Connor, Clark & Company Ltd. 1,339,850(2) 8.0%
Scotia Plaza
40 King Street
Suite 5110, Box 125
Toronto, Ontario M5H 3Y2
Wanger Asset Management Ltd. 912,000(3) 5.4%
Wanger Asset Management, L.P.
Ralph Wanger
227 West Monroe Street, Suite 3000
Chicago, Illinois 60606
- ------------------------------
(1)Based on information contained in a Schedule 13G dated April 1, 1996 and
filed with the Securities and Exchange Commission by Glickenhaus & Co.,
Glickenhaus & Co. exercised, as of March 31, 1996, investment discretion with
respect to the indicated shares.
(2)Based on information contained in an amendment Schedule 13G dated
February 1, 1996 and filed with the Securities and Exchange Commission by
Connor, Clark & Company Ltd., Connor, Clark & Company Ltd. exercised, as of
December 31, 1995, shared investment and/or voting power with respect to the
indicated shares, which were held in securities accounts of many clients.
(3)Based on information contained in a Schedule 13G dated February 9, 1996
and filed by Wanger Asset Management, L.P., Wanger Asset Management Ltd. and
Ralph Wanger, Wanger Asset Management, L.P. exercised investment discretion with
respect to the indicated shares, as the investment adviser to Acorn Investment
Trust, Series Designated Acorn Fund.
CERTAIN TRANSACTIONS
Industries leases training space and storage and repair shop space in
Lamar, Missouri from O'Sullivan Properties, Inc. ("Properties"), all of whose
voting stock is owned by Mr. Thomas M. O'Sullivan, Sr. and his wife. During a
portion of fiscal 1996, the Company also leased office and showroom space from
O'Sullivan Properties, Inc. The continuing leases are cancellable upon 90 days'
notice or less. During fiscal 1996, Industries paid Properties an aggregate of
$39,042 pursuant to the two leases. The Company believes the lease amounts paid
to O'Sullivan Properties, Inc. were competitive with other potential sites or,
where no other sites were available, were reasonable.
6
<PAGE>
SUMMARY COMPENSATION TABLE
The following table reflects the cash and non-cash compensation for the
Chief Executive Officer of the Company and the four next most highly compensated
executive officers of the Company at June 30, 1996 (the "Named Officers").
<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION(1) COMPENSATION
---------------- ---------------------
RESTRICTED SECURITIES
STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL FISCAL SALARY BONUS AWARDS(2) STOCK COMPENSATION
POSITION YEAR ($) ($) ($) OPTIONS (#)(3) ($)(4)
<S> <C> <C> <C> <C> <C> <C>
Daniel F. O'Sullivan, 1996 220,000 56,932 - 36,000 23,003
CHAIRMAN AND 1995 210,000 48,512 - 22,000 25,565
CHIEF EXECUTIVE OFFICER 1994 155,181 117,728 320,993 240,000(5) 35,544
Tyrone E. Riegel, 1996 177,500 36,068 - 22,000 14,242
EXECUTIVE VICE PRESIDENT 1995 173,750 30,985 - 14,000 14,667
1994 129,546 77,988 150,325 150,000(5) 20,858
Thomas M. O'Sullivan, Jr., 1996 115,000 16,548 - 11,000 16,956
VICE PRESIDENT-SALES 1995 112,502 14,208 - 7,000 16,908
1994 88,462 35,019 - 70,000(5) 20,642
Rowland H. Geddie, III, 1996 115,000 16,548 - 11,000 9,310
VICE PRESIDENT, GENERAL 1995 112,502 14,208 - 7,000 5,056
COUNSEL AND SECRETARY 1994 63,357 16,631 - 70,000(5) 33,496
E. Thomas Riegel, 1996 115,000 16,548 - 11,000 16,956
VICE PRESIDENT- 1995 112,502 13,908 - 7,000 16,908
STRATEGIC OPERATIONS 1994 95,519 33,946 - 70,000(5) 21,245
</TABLE>
- ------------------------------
(1)For the years shown, the Named Officers did not receive any annual
compensation not properly categorized as salary or bonus, except for certain
perquisites and other personal benefits. The amounts for perquisites and other
personal benefits for the Named Officers are not shown because the aggregate
amount of such compensation, if any, for each of the Named Officers during the
fiscal year shown does not exceed the lesser of $50,000 or 10% of total salary
and bonus reported for such officer.
(2)Restricted shares were awarded to Messrs. Daniel F. O'Sullivan and
Tyrone E. Riegel in connection with the Offerings under the Company's 1994
Incentive Stock Plan upon the surrender by Messrs. O'Sullivan and Riegel of
their options to purchase shares of Tandy Corporation common stock.
Mr. O'Sullivan received 13,587 shares of restricted stock and Mr. Riegel
received 6,363 shares, which shares are the only shares of restricted Common
Stock awarded by the Company. These shares had a value of $98,505 and $46,132,
respectively, based on the average of the high and the low prices of the Common
Stock on the New York Stock Exchange on June 30, 1996. The restricted Common
Stock becomes vested as to one-fifth of such shares on each of the first five
anniversaries of the date of the award, if they are still employed by the
Company. The restrictions on resale lapse on February 2, 1999. If dividends
are paid on Common Stock before the restrictions lapse, dividends on the
restricted shares would be held in escrow. Interest on any such dividends would
be paid at the prime rate.
(3)Includes all options granted during fiscal years shown under the
Company's 1994 Incentive Stock Plan. No stock appreciation rights were granted
with any options.
(4)In 1996, other compensation for Mr. Daniel F. O'Sullivan consisted of an
automobile allowance of $5,923, matching and profit sharing contributions under
the Company's Stock Purchase Program (the "SPP") and the SPSP of $6,713 and
$10,367, respectively. Other compensation for Mr. Terry Riegel in 1996
consisted of matching and profit sharing contributions under the SPP and the
SPSP of $5,212 and $9,030, respectively. Other compensation to each of Messrs.
Thomas M. O'Sullivan, Jr. and E. Thomas Riegel in 1996 consisted of an
automobile allowance of $7,000 and matching and profit sharing contributions
under the SPP and the SPSP of $3,230 and $6,725, respectively. In 1996, Mr.
Geddie received other compensation of matching and profit sharing contributions
under the SPP and the SPSP of $2,584 and $6,725, respectively. The table does
not include amounts payable in the event of a change in control. See "Change in
Control Protections."
(5)These options were cancelled effective September 1995.
7
<PAGE>
OPTION GRANTS IN THE LAST YEAR
During the year ended June 30, 1996, options were granted to the Named
Officers and to the other groups named in the table below. The potential value
of such options at the specified rates of appreciation are shown in this table.
The Company's 1994 Incentive Stock Plan provides for the grant of stock
appreciation rights; however, no such rights have been granted.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
NUMBER OF % OF TOTAL VALUE AT ASSUMED
SECURITIES OPTIONS ANNUAL RATES
UNDERLYING GRANTED TO EXERCISE --------------------
OPTIONS EMPLOYEES OR BASE
GRANTED DURING THE PRICE EXPIRATION 5%(2) 10%(2)
NAME (#)(1) FISCAL YEAR ($/SHARE) DATE ($) ($)
<S> <C> <C> <C> <C> <C> <C>
Daniel F. O'Sullivan 36,000 15.1 7.50 11/9/05 169,802 430,310
Tyrone E. Riegel 22,000 9.3 7.50 11/9/05 103,768 262,968
Thomas M. O'Sullivan, Jr. 11,000 4.6 7.50 11/9/05 51,884 131,484
Rowland H. Geddie, III 11,000 4.6 7.50 11/9/05 51,884 131,484
E. Thomas Riegel 11,000 4.6 7.50 11/9/05 51,884 131,484
All officers as a group (9 persons) 156,000 65.6 6.1875-7.50 11/9/05-2/6/06 715,171 1,812,384
All current directors
who are not officers 4,000 1.7 7.8125 9/1/05 19,653 49,804
All employees,
excluding executive officers 81,750 34.4 6.1875-7.50 11/9/05-2/6/06 381,464 966,704
</TABLE>
- -----------------
(1)All annual grant options to the Named Officers were incentive stock
options ("ISO's") to purchase Common Stock granted under the Company's 1994
Incentive Stock Plan, except that (a) Mr. Daniel F. O'Sullivan received ISO's to
purchase 15,555 shares and non-qualified options ("NSO's") to purchase 20,445
shares; and (b) Mr. Tyrone E. Riegel received ISO's to purchase 15,555 shares
and NSO's to purchase 6,445 shares. Each grant of ISO's becomes exercisable
over the first three anniversaries of the date of grant, with full vesting on
the third anniversary. Each grant of NSO's becomes exercisable on each of the
first five anniversaries of the date of grant, with full vesting on the fifth
anniversary. For persons who continue to serve as employees of the Company, the
options expire 10 years from the date of grant. The exercise price and any tax
withholding may be paid by cash or delivery of already owned shares and cash.
(2)The potential gains reported are net of the per share option exercise
price, but before taxes associated with the exercise. If these gains are
achieved, the value of the Common Stock would likewise increase 5% or 10%,
respectively, per year. These gains are calculated based on the market price on
the date of grant and the stated assumed rates of appreciation each year over
the life of the option. Actual gains, if any, on stock option exercises depend
on the future performance of the Common Stock, overall market conditions, and
the option holder's continued employment through the option expiration date.
The amounts reflected in the table may not be achieved. If stockholders on the
date of grant held their shares for the same period of time (representing the
ten year life of the option), they would have seen an increase in the collective
value of their Common Stock, calculated at the assumed 5% and 10% annual
appreciation rates and over the same period, in excess of $79,334,000 and
$201,050,000, respectively.
8
<PAGE>
FISCAL 1997 OPTION GRANTS
In July 1996, the Compensation Committee awarded annual and special option
grants to the Company's officers and other key employees. The number of shares
of Common Stock covered by the options to the Named Officers and all officers as
a group were as follows:
ANNUAL SPECIAL
NAME OPTION OPTION
GRANTS GRANTS
Daniel F. O'Sullivan 36,000 100,000
Tyrone E. Riegel 22,000 62,500
Thomas M. O'Sullivan, Jr. 11,000 30,000
Rowland H. Geddie, III 11,000 30,000
E. Thomas Riegel 11,000 30,000
All officers as a group (9 persons) 181,000 406,250
All current directors who are not executive officers
(5 persons) - -
All employees, excluding executive officers 79,200 219,000
The exercise price for all of the options awarded on July 1, 1996, is
$7.1875 per share. The options to purchase an aggregate of 625,250 shares of
Common Stock shown under the column titled "Special Option Grants" are the
Special Options being submitted to the Company's stockholders for approval at
the 1996 Annual Meeting.
ISO's covered by the annual grants vest in increments over the first three
anniversaries of the date of grant. NSO's covered by the annual grants become
exercisable in increments over the first five anniversaries of the date of
grant. All of the annual grant options awarded to the Named Officers were ISO's
except that Mr. Daniel F. O'Sullivan received NSO's covering 22,087 shares and
Mr. Tyrone E. Riegel received NSO's covering 8,087 shares.
The Special Options are NSO's. To the extent certain performance
objectives regarding (a) Company quarterly earnings measured against Company
goals and (b) percentage sales increases measured against a competitor are met,
the Special Options become exercisable in one-third increments on each of the
first three anniversaries of the date of grant and expire ten years after the
date of grant. To the extent the performance objectives are not met, the
Special Options become exercisable on August 10, 2003, and expire on
September 10, 2003.
OPTION EXERCISES IN THE LAST YEAR
AND YEAR-END OPTION VALUES
The following table summarizes information on outstanding options to
purchase Common Stock held by the Named Officers as of June 30, 1996. No
options were exercised during the fiscal year ended June 30, 1996. At June 30,
1996, no options held by the Named Officers were "in-the-money."
NUMBER OF UNEXERCISED OPTIONS AT
YEAR END (#)
--------------------------------
NAME EXERCISABLE UNEXERCISABLE
Daniel F. O'Sullivan 9,442 48,558
Tyrone E. Riegel 7,375 28,625
Thomas M. O'Sullivan, Jr. 2,334 15,666
E. Thomas Riegel 2,334 15,666
Rowland H. Geddie, III 2,334 15,666
In September 1995, the Committee cancelled the stock options granted in
connection with the Offerings, with the agreement of each option recipient.
9
<PAGE>
CHANGE IN CONTROL PROTECTIONS
TERMINATION PROTECTION AGREEMENTS
The Company has entered into Termination Protection Agreements with its
executive officers (collectively, the "Executives"). The Termination Protection
Agreements (all of which are substantially similar) have initial terms of two
years which automatically extend for successive one-year periods unless
terminated by either party. If the employment of any of the Executives is
terminated (with certain exceptions) within 24 months following a "Change in
Control," or in certain other instances in connection with a Change in Control,
the Executives are entitled to receive certain cash payments (an amount equal to
current annual salary and bonus, and an amount equal to the contributions that
the Company would have made to the SPP and the SPSP over a twelve month period
assuming the foregoing salary and bonus were used to calculate the Company's
contributions), as well as the continuation of fringe benefits (including life
insurance, disability, medical, dental and hospitalization benefits) for a
period of up to twelve months. Additionally, profit sharing benefits under the
SPSP vest, all restrictions on any outstanding incentive awards or shares of
restricted Common Stock will lapse and such awards or shares will become fully
vested, all outstanding stock options will become fully vested and immediately
exercisable, and the Company will be required to purchase for cash, on demand
made within 60 days following a Change in Control, any shares of unrestricted
Common Stock and options for shares at the then current per-share fair market
value. The Agreements as amended in February 1996 also provide one year of
outplacement services for the Executive and that, if the Executive moves more
than twenty miles from his primary residence in order to accept permanent
employment within 36 months after leaving the Company, the Company will, upon
request, repurchase his primary residence at a price determined in accordance
with the Agreement.
The Termination Protection Agreements also provide that the Company will
make an additional "gross-up payment" (as defined in the Agreements) to the
Executives to offset fully the effect of any excise tax imposed under
Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code"), on
any payment made to any of the Executives arising out of or in connection with
the employment of any of the Executives. In addition, the Company will pay all
legal fees and related expenses incurred by any of the Executives arising out of
employment or termination of employment.
A "Change in Control" will be deemed to have occurred if either (i) any
person or group acquires beneficial ownership of 15% of the voting securities of
the Company, (ii) there is a change in the composition of a majority of the
Board of Directors within any two-year period which is not approved by certain
of the directors who were directors at the beginning of such two-year period or
(iii) the stockholders of the Company approve a merger, consolidation or
reorganization involving the Company; there is a complete liquidation or
dissolution of the Company; or the Company enters into an agreement for the sale
or other disposition of all or substantially all of the assets of the Company.
RABBI TRUST
The Company is authorized to enter into a Rabbi Trust, which is intended to
be a grantor trust under Section 671 of the Code. The Rabbi Trust may be funded
by the Company at any time but is required to be funded upon a Change in Control
or a threatened Change in Control. Funding must be in an amount sufficient to
provide for the payment of all benefits provided for under the Termination
Protection Agreements. The Rabbi Trust will also provide funds for litigation
on behalf of the participants in such plans to the extent necessary to ensure
their rights thereunder. The Rabbi Trust will be a trust of which the Company,
for tax purposes, is the beneficiary. The trust assets, as assets of the
Company, will be subject to the claims of the Company's creditors in the event
of the Company's bankruptcy or insolvency.
PAYMENTS UPON A CHANGE IN CONTROL
Assuming that a Change in Control had occurred on August 30, 1996, that all
of the Named Officers were still employed on that date and that the Named
Officers' employment had terminated on that date, the approximate cash payment
that would have been made by virtue of all change in control protections
implemented by the Company (not including the gross-up payments or amounts to
purchase the Named Officers' primary residences) to Messrs. Daniel F.
O'Sullivan, Tyrone E. Riegel, Thomas M. O'Sullivan, Jr., Rowland H. Geddie, III
and E. Thomas Riegel would have been approximately $827,501, $553,727, $288,546,
$271,587 and $287,534, respectively. The amount of the gross-up payment, if
any, to be paid may be substantial and will depend upon numerous factors,
including the
10
<PAGE>
price per share of Common Stock and the extent, if any, that payments or
benefits made to the Executives constitute "excess parachute payments" within
the meaning of Section 280G of the Code.
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The members of the Compensation Committee (the "Committee") are William C.
Bousquette, Charles G. Hanson and Ronald G. Stegall. No member of the Committee
was an officer or employee of the Company or its subsidiaries during the fiscal
year ended June 30, 1996 and none was formerly an officer of the Company or any
of its subsidiaries, except that Mr. Bousquette was a Vice President of
O'Sullivan Industries, Inc. from July 12, 1991 until February 7, 1994. In
addition, no executive officer of the Company serves on the board of directors
or the compensation committee of another entity where a Committee member is
employed.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") was established in February
1994 and is composed entirely of non-employee directors.
The Company's officer compensation plan is designed to provide competitive
executive compensation that has a significant component contingent upon the
enhancement of stockholder value while also taking into account the impact on
stockholder value of stock market actions that are beyond the control of Company
management. The Committee believes that base salary and target incentive
compensation for executive officers should approximate averages of publicly
traded manufacturing companies whose annual revenues approximate those of the
Company, with adjustments for the Company's performance. Incentive compensation
should be a significant part of overall compensation and should be contingent
based on the level of achievement of targeted financial goals. Individual
compensation levels should reflect individual responsibilities, performance and
experience, in addition to Company performance. The Committee also believes the
executive officers should have a substantial equity ownership interest, both
through direct ownership and through stock options and other stock-based awards,
to provide long-term incentives which closely link executive compensation to the
Company's long-term performance and return to stockholders.
For fiscal 1996, the Committee reviewed total compensation levels and
compared them with officers of publicly held manufacturing companies and other
companies similar in size and revenues with the Company. In the review, a
national compensation consulting firm compared the Company's compensation
practices with those of durable-goods manufacturers with similar projected
annual revenues. Executive officer salaries were adjusted based upon an analysis
of the total compensation of officers with similar responsibilities at similarly
sized durable-goods manufacturers, also considering the individual's
responsibilities, experience and performance and the Company's performance. The
salaries of the Named Officers were at or below the competitive market average
of the companies surveyed for their respective positions. As a result of the
Company's performance in fiscal 1995, the Committee determined to leave salaries
unchanged for fiscal 1996. (The increases in salaries between fiscal 1995 and
fiscal 1996 represent increases in compensation effective January 1, 1995.)
The Company established an officer incentive plan based on Company
performance for fiscal 1996. Incentive award opportunities were established as
a percentage of each participant's salary based on data from the compensation
survey and advice provided by outside compensation specialists, so that total
cash compensation opportunities would be at or below the competitive market
average for better-than-average performance. Payment of the awards was based
upon the achievement of Company performance goals for earnings and sales.
Because the earnings goal was not achieved, incentive compensation was
substantially below the targeted amounts.
In September 1995, the Committee determined that the options to purchase
775,000 shares of Common Stock granted to executive officers in connection with
the Offerings were not providing any incentive. With the agreement of the
executive officers, such options were cancelled. In November 1995, the
Committee awarded eight executive officers options covering an aggregate of
131,000 shares of Common Stock with an exercise price equal to the market value
of the Common Stock on the date of grant. The award levels were determined
after consultation with a national compensation consulting firm regarding levels
of annual long-term incentive awards to officers of similarly sized
durable-goods manufacturers. Mr. Terry L. Crump was awarded options covering an
aggregate of 25,000 shares of Common Stock upon joining the Company as its Vice
President-Finance and Chief Financial Officer. The Committee believes that an
ongoing options program can serve as an effective long-term incentive
compensation program for the Company's officers.
11
<PAGE>
In July 1996, the Committee reviewed compensation for executive officers of
the Company. The Committee reviewed salaries, incentive compensation and stock
option grants. With respect to each component and total compensation, the
Committee reviewed survey information for manufacturing companies with sales
comparable to those of the Company. The surveys indicated salaries and total
compensation for the Company's executive officers were below, in some cases
substantially, those of most executives holding comparable positions. The
Committee also reviewed the performance of the Company during fiscal 1996,
noting the improvements in the last half of the fiscal year. Accordingly, the
Committee recommended, and the Board of Directors approved, an increase in the
salaries of the executive officers of the Corporation averaging 4.9%, effective
July 1, 1996.
The Committee also reviewed the Company's incentive compensation program.
The program was revised to provide incentives for the executive officers of the
Company to increase sales and earnings and to manage working capital
efficiently. The Committee plans to review the incentive compensation program
quarterly to ensure that it is providing the proper incentive to executive
officers to improve the Company's sales, profitability and stock price.
The Committee also reviewed stock options. Because of the September 1995
cancellation of the options granted in connection with the Offerings, the
Committee felt management had inadequate long-term incentives. Accordingly, the
Committee granted Special Options to the executive officers and other key
employees of the Company. The Special Options contain performance objectives
that govern the exercisability and expiration of the Special Options. To the
extent certain performance objectives regarding (a) Company quarterly earnings
measured against Company goals and (b) percentage sales increases measured
against a competitor are met, the Special Options become exercisable in
one-third increments on each of the first three anniversaries of the date of
grant and expire ten years after the date of grant. To the extent the
performance objectives are not met, the Special Options become exercisable on
August 10, 2003, and expire on September 10, 2003. The Committee also awarded
an annual grant of stock options in July 1996. See "Fiscal 1997 Option Grants"
on page 9. The Committee believes that these stock option grants will help
provide appropriate long-term incentives for the executive officers and key
employees of the Company to increase stockholder value.
On July 1, 1996, the Company named Mr. Richard D. Davidson as President and
Chief Operating Officer of the Company. The Committee established
Mr. Davidson's salary at $210,000, set an annual incentive compensation goal of
65% of Mr. Davidson's salary and awarded him a Special Option covering 50,000
shares and an annual option covering 50,000 shares of Common Stock.
CHIEF EXECUTIVE OFFICER COMPENSATION
The Chief Executive Officer's salary was reviewed in November 1995 based
upon his responsibilities, experience and a comparison with the chief executive
salaries and incentive compensation of other durable-goods manufacturing
companies with similar annual revenues. Because of the Company's performance in
fiscal 1995, his salary was left unchanged for fiscal 1996. Because the
earnings performance goal was not met, his incentive compensation for the year
ending June 30, 1996 was $57,632, well below target levels. In November 1995,
the Committee awarded Mr. O'Sullivan options covering 36,000 shares of Common
Stock.
The Committee reviewed the Chief Executive Officer's compensation as part
of the review of the compensation for executive officers for fiscal 1997.
Mr. O'Sullivan's salary was substantially below that of the median for chief
executive officers of other durable-goods manufacturing companies with revenues
comparable to the Company. After considering the Chief Executive Officer's
performance over fiscal 1996, the Committee recommended a salary increase of
$10,000, or 4.5%, for Mr. O'Sullivan. The Committee also increased his target
for incentive compensation from 65% to 70%. To provide increased long-term
incentives to Mr. O'Sullivan, he was awarded a Special Option covering 100,000
shares of Common Stock (with the performance objectives described above) and an
annual option covering 36,000 shares of Common Stock.
With its still relatively low salary and higher contingent compensation,
the Committee believes that the adjusted compensation package for the Chief
Executive Officer is designed to emphasize the need for improved performance at
the Company, which should lead to increased stockholder value.
12
<PAGE>
TAX POLICY
The Omnibus Budget Reconciliation Act of 1993 amended the Code to limit,
with certain exceptions, the allowable tax deduction that a publicly held
corporation may take for compensation paid or accrued to the Chief Executive
Officer and the four other highest-paid executive officers named in the Summary
Compensation Table on page 7. While the Committee cannot predict with certainty
how the Company's compensation might be affected, the Committee intends to try
to preserve the tax deductibility of all future executive compensation while
maintaining the programs and strategies described in this report. The
submission of the Company's Amended and Restated 1994 Incentive Compensation
Plan for stockholder approval will preserve tax deductibility for the plan under
current tax law.
COMPENSATION COMMITTEE
Ronald G. Stegall William C. Bousquette Charles G. Hanson
PERFORMANCE GRAPH
The graph below compares the cumulative total stockholder return on the
Common Stock against the cumulative total return on the S&P Corporate-500 Stock
Index and the S&P Household Furnishings and Appliance Index (assuming $100 was
invested on January 27, 1994 in Common Stock and that $100 was invested on
December 31, 1993 in the stocks comprising the S&P Corporate-500 Stock Index and
the S&P Household Furnishings and Appliance Index and also assuming the
reinvestment of all dividends).
The historical stock price performance of the Common Stock shown on the
graph below is not necessarily indicative of future price performance.
The graph shall not be deemed incorporated by reference by any general
statement incorporating by reference this Proxy Statement into any filing under
the Securities Act of 1933 or the Securities Exchange Act of 1934, except in the
event that the Company specifically incorporates this information by reference,
and shall not otherwise be deemed filed under such acts.
COMPARISON OF 29 MONTH CUMULATIVE TOTAL RETURN*
AMONG O'SULLIVAN INDUSTRIES HOLDINGS, INC., THE S & P 500 INDEX
AND THE S & P HOUSEHOLD FURNISHINGS & APPLIANCES INDEX
<TABLE>
<CAPTION>
Cumulative Total Return
------------------------------------------------------------------------------------
1/27/94 3/94 6/94 9/94 12/94 3/95 6/95 9/95 12/95 3/96 6/96
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
O'SULLIVAN INDS HLDGS INC OSU 100 81 52 50 52 41 32 32 27 24 31
S & P 500 1500 100 96 97 101 101 111 122 131 139 147 153
S & P HOUSEHLD FURN & APPL IHHF 100 98 88 85 82 89 90 97 99 102 96
</TABLE>
<PAGE>
Section 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the Company's directors,
executive officers and any persons holding 10% or more of Common Stock are
required to report their ownership of the Company's securities and any changes
in that ownership to the Securities and Exchange Commission and the New York
Stock Exchange. Specific due dates for these reports have been established and
the Company is required to report in this Proxy Statement any failure to file by
these dates during the fiscal year ended June 30, 1996. All of these filing
requirements were satisfied by the Company's directors and executive officers,
except that (a) Mr. Michael P. O'Sullivan did not include in his Form 3 report
2,981 shares of Common Stock held in his IRA and 405 shares held in his spouse's
IRA, and (b) Mr. Daniel F. O'Sullivan did not timely report two purchase
transactions in March 1996 for a total of 3,600 shares of Common Stock. Such
holdings and transactions were reported in August 1996.
APPROVAL OF AMENDED AND RESTATED 1994 INCENTIVE STOCK PLAN
The Company's Board of Directors is requesting that the stockholders of the
Company approve the O'Sullivan Industries Holdings, Inc. Amended and Restated
1994 Incentive Stock Plan (as amended and restated, the "ISP") and the issuance
of certain Special Options awarded under the ISP. The ISP has been amended and
restated for three principal reasons:
1. to increase the total number of shares available for grant under the
ISP from 1,500,000 shares to 2,500,000 shares;
2. to comply with certain restrictions necessary to conform the ISP to
the deductibility requirements of Section 162(m) of the Code; and
3. to take advantage of the amendments adopted in May 1996 by the
Securities and Exchange Commission to Rule 16b-3 promulgated under the
Securities Exchange Act of 1934.
Section 162(m) of the Code provides that a corporation may not deduct
compensation in excess of $1,000,000 paid to an executive named in the
Compensation Table in its proxy statement (a "Named Executive Officer"), with
specified exceptions. One exception is for compensation paid to Named Executive
Officers under stock-based incentive plans such as the ISP that have been
approved by the Company's stockholders. Accordingly, the Board is requesting
approval of the ISP by the stockholders of the Company.
The Board is also requesting approval of the Special Option awards under
the ISP. Under the terms of the ISP prior to its amendment and restatement, the
ISP required that any cancellation and reissue of options under the ISP that
resulted in a reduction in the exercise price of such options be approved by the
Company's stockholders. Holders of options issued in connection with the
Offerings in 1994 surrendered those options in September 1995, largely to
eliminate the charge to earnings associated with the options. Under the terms
of the ISP, the shares underlying such options became available for regrant
under the ISP. On July 1, 1996, the Compensation Committee awarded a portion of
these options to executive officers and key employees of the Company as Special
Options. Because the price of the Company's stock has declined since February
1994, the exercise price of the July 1996 options was lower than the exercise
price of the cancelled options. However, the Special Options contain
performance objectives that substantially affect the exercisability and
expiration of the options. The Special Options are conditioned on approval of
their grant at the 1997 Annual Meeting of Stockholders. If the ISP and the
awards granted thereunder are not approved, the Committee may consider other
means to provide proper incentives to its officers and key employees.
Approximately 53 key employees and five outside directors have received
outstanding awards under the old ISP. Under the old ISP, options to purchase an
aggregate of 1,206,700 shares of Common Stock have been awarded and are
outstanding, and 19,950 shares of restricted Common Stock have been issued.
AMENDMENTS TO THE ISP
A copy of the Company's 1994 Incentive Stock Plan, as amended and restated,
is attached as an appendix to this Proxy Statement. The following paragraphs
summarize the changes from the ISP prior to its amendment and restatement (the
"old ISP").
INCREASE IN SHARES AVAILABLE UNDER THE ISP. Over the past three years,
awards under the old ISP, net of cancellations, total 1,226,650 of the 1,500,000
shares of Common Stock authorized under the old ISP. In order to
14
<PAGE>
ensure that an adequate number of shares are available for grant under the ISP,
the Board approved an increase in the number of shares that may be awarded under
the ISP from 1,500,000 shares to 2,500,000 shares. The Board currently believes
that this amount will be sufficient for the operation of the ISP for several
years.
AMENDMENT TO CONFORM TO IRC SECTION 162(m). As originally adopted, the old
ISP did not limit the amount of securities that could be awarded to any one
participant as required by Section 162(m). The ISP places such limits on stock-
based awards to 250,000 shares to any one person per year. Cash-based awards
are limited to $250,000 per person per year. These limits are to be adjusted in
the event of a change in the capitalization of the Company that would also
require a similar adjustment to outstanding options and other awards under the
ISP.
AMENDMENTS TO CONFORM TO REVISED RULE 16b-3. A number of the changes to
the old ISP are the result of the adoption by the Securities and Exchange
Commission of a substantially revised Rule 16b-3 on May 30, 1996. The revised
rule is the result of the Commission's premise that "[T]ransactions between an
issuer and its officers and directors are intended to provide a benefit or other
form of compensation to reward service or to incentivize performance.
Generally, these transactions do not appear to present the same opportunities
for insider profit on the basis of non-public information as to market
transactions by officers and directors." This change in philosophy led to a
simpler system for the exemption transactions between an officer or a director
and an issuer from the strictures of Section 16(b) of the Exchange Act. The
changes to old Rule 16b-3 led to the following changes in the old ISP.
NON-EMPLOYEE DIRECTORS MAY SERVE ON THE COMPENSATION COMMITTEE. The
revised Rule 16b-3 eliminates the concept of a "disinterested director" in favor
of a "non-employee director" for the persons who may grant awards under the ISP.
As the term indicates, a "non-employee director" is a director of the Company
who is not employed by the Company and who does not receive compensation from
the Corporation other than as a director in excess of specified amounts (with
exceptions, $60,000 per year). Examples of the other types of compensation that
might render a Director ineligible to serve on the Committee include consulting
fees, contractual benefits, legal or investment banking fees. The ISP
incorporates the definition of "non-employee director" as provided in revised
Rule 16b-3.
NON-TRANSFERABILITY RESTRICTIONS EASED. Old Rule 16b-3 prohibited the
transfer of awards under a plan such as the ISP. This restriction was removed
with the adoption of the revised Rule 16b-3. Section 7.2 of the ISP has been
amended to provide that options and other awards under the ISP may be
transferred to a member of the grantee's immediate family or to a charitable
organization. The Board believes that awards under the ISP should not be freely
transferable because the grantee would not thereafter have the incentives to
maximize stockholder value that is one of the goals of the ISP. The Committee
felt, however, that the limited transfers permitted by the ISP would not have
this effect.
EXERCISE OF OPTIONS BY DELIVERY OF PREVIOUSLY OWNED SHARES. A staff
interpretation of old Rule 16b-3 provided that a right to deliver previously
owned shares for the exercise price of an option or the right to elect to have
shares withheld to pay taxes due upon exercise was a separate security requiring
Section 16 reporting. Accordingly, the old ISP and many similar plans provided
that such provisions could be exercised only in the discretion of the Committee.
Revised Rule 16b-3 reversed this position. Accordingly, the ISP provides that
grantees of options have the right to surrender previously owned shares in
payment of the exercise price of options and to request that shares be withheld
in order to pay withholding taxes applicable to the exercise of an option.
EXERCISE OF STOCK APPRECIATION RIGHTS FOR CASH. The old ISP provided that
payment upon the exercise of a stock appreciation right can be made in cash only
during window periods specified by old Rule 16b-3. The window periods were
eliminated in the revised Rule 16b-3. Because the Company still has concerns
about the potential for abuse of the exercise of stock appreciation rights,
however, the ISP provides that stock appreciation rights may be exercised for
cash only upon compliance with the Company's pre-trading clearance policy.
PLAN AMENDMENTS. Pursuant to old Rule 16b-3, the old ISP provided that
material amendments to the ISP would not become effective unless approved by the
stockholders of the Company. The old ISP also limited the amendment of the
provisions of the formula grants to outside directors to not more than once
every six months, excluding amendments to comport with regulatory rule changes.
Finally, any option repricing had to be approved by the stockholders. Revised
Rule 16b-3 eliminates the requirement to submit amendments of the ISP to the
stockholders, so these provisions have been eliminated from the ISP. The ISP
also does not contain the requirement that repriced option grants be submitted
to the stockholders for approval. Pursuant to the rules of the New York Stock
Exchange, however, stockholder approval must still be obtained prior to any
increase in the number of shares issuable under the ISP.
15
<PAGE>
SUMMARY OF THE AMENDED AND RESTATED 1994 INCENTIVE STOCK PLAN
Under the ISP, designated officers, employees, directors and consultants
(collectively, "Eligible Employees") of the Company are eligible to receive
awards in the form of stock options, stock appreciation rights, restricted stock
grants or performance awards. Non-employee directors automatically receive, on
the first trading day of September of each year, options to purchase 1,000
shares of Common Stock under the ISP. The ISP is intended to promote the
long-term financial interests of the Company by encouraging employees and others
to acquire an ownership position in the Company and to provide incentives for
performance. The ISP was approved in January 1994 and was amended and restated
in September 1996.
An aggregate of 2,500,000 shares of Common Stock have been reserved for
issuance under the ISP, subject to adjustment in the event of a stock split,
stock dividend or other change in the Common Stock or the capital structure of
the Company. As of September 13, 1996, the closing price for the Common Stock
on the New York Stock Exchange was $9.625 per share.
The ISP is administered by the Compensation Committee of the Board of
Directors. Subject to the provisions of the ISP, the Compensation Committee is
authorized to determine who may participate in the ISP, the number and types of
awards made to each participant and the terms, conditions and limitations
applicable to each award. In addition, the Compensation Committee has the
exclusive power to interpret the ISP and to adopt such rules and regulations as
it may deem necessary or appropriate for purposes of administering the plan.
The Board of Directors is authorized to amend, modify or terminate the ISP to
meet any changes in legal requirements or for any other purpose permitted by
law.
STOCK OPTIONS. Under the ISP, the Compensation Committee is authorized to
grant options to purchase shares of Common Stock, including options qualifying
as ISO's under Section 422 of the Code, and NSO's to Eligible Employees and as
additional compensation for their services to the Company. Options granted will
be subject to adjustment in the event of a stock split, stock dividend or other
change in the Common Stock or the capital structure of the Company.
Options shall be exercisable over such period as may be determined by the
Compensation Committee, but no stock option may be exercised after ten years
from the date of grant. Options may be exercisable in installments and upon
such other terms as determined by the Compensation Committee. Options will be
evidenced by option agreements. The purchase price of Common Stock subject to
an option shall not be less than 100% of the Fair Market Value (as defined in
the ISP) of such Common Stock on the date of grant. The purchase price of
Common Stock under any options shall be paid in full in cash, Common Stock or a
combination of both. For outstanding grants of options to certain executive
officers of the Company, see the tables on pages 8 and 9.
STOCK APPRECIATION RIGHTS. Under the ISP, the Compensation Committee also
may grant stock appreciation rights either in tandem with an option or alone.
Stock appreciation rights granted in tandem with a stock option may be granted
at the same time as the stock option or at a later time. A stock appreciation
right shall entitle the participant to receive from the Company an amount
payable in cash, in shares of Common Stock or in a combination of cash and
Common Stock equal to the positive difference between the fair market value of a
share of Common Stock on the date of exercise and the grant price, or such
lesser amount as the Compensation Committee may determine. No stock
appreciation right shall be exercisable earlier than six months after grant,
except upon the occurrence of a change in control. Stock appreciation rights
may be exercised for cash only upon compliance with the Company's pre-trading
clearance policy. No stock appreciation rights have been issued under the ISP.
RESTRICTED STOCK AWARDS. Under the ISP, the Compensation Committee may
grant shares of restricted Common Stock, which are subject to forfeiture under
such conditions and for such period of time (not less than one year) as the
Compensation Committee may determine. The Compensation Committee shall
determine the conditions or restrictions of any restricted Common Stock awards,
which may include restrictions on transferability, requirements of continued
employment, individual performance or the Company's financial performance.
In 1994, the Company awarded Messrs. Daniel F. O'Sullivan and Tyrone E.
Riegel restricted shares of Common Stock under the ISP having a value equal to
the value of all Tandy options (whether vested or unvested) held by each of them
at the time of the Offerings. The value of the Tandy options held by Messrs.
O'Sullivan and Riegel was based on the positive difference between the exercise
price of the options and the average of the high and low
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prices per share of Tandy common stock on the closing date of the Offerings.
Mr. O'Sullivan and Mr. Riegel received 13,587 and 6,363 shares of restricted
Common Stock, respectively.
To receive restricted Common Stock of the Company, Messrs. O'Sullivan and
Riegel agreed to the cancellation of all of their Tandy option agreements. The
restricted Common Stock becomes vested as to one-fifth of such shares on each of
the first five anniversaries of the date of the award, if they are still
employed by the Company. The restrictions on resale by Messrs. O'Sullivan and
Riegel will lapse five years after the consummation of the Offerings. The
restrictions will also lapse upon death, disability, retirement at age 55 or
older or termination without cause.
PERFORMANCE AWARDS. The Compensation Committee in its discretion may
grant awards of performance units or performance shares to an employee
contingent upon the attainment of a specified objective during a specified
period of time. Performance units may be denominated in shares of Common Stock
or a specified dollar amount and are contingent upon attainment of the specified
performance objectives within the specified period of time. Performance shares
will be awarded in the form of shares of Common Stock. The Compensation
Committee will determine the total number of performance shares subject to an
award, the terms of the performance shares and the time at which the performance
shares will be issued. Performance shares may not be sold, transferred,
assigned, pledged or otherwise encumbered so long as such performance shares
remain restricted.
STOCK OPTIONS FOR NON-EMPLOYEE DIRECTORS. Under the ISP, each
non-employee director will automatically be granted, on the first trading day in
September of each year, an option to purchase 1,000 shares of Common Stock. The
option exercise price will be equal to 100% of the Fair Market Value of the
Common Stock on the trading day prior to the date of grant. The options will
become exercisable in one-third increments, on each of the first, second and
third anniversaries of the grant date, and will expire ten years after the date
of grant. The option price may be paid in cash, shares of Common Stock or a
combination of cash and shares. If a non-employee director's service terminates
for any reason, options that are not then exercisable shall be cancelled and
options that are then exercisable may be exercised at any time within 90 days
after the date of such termination (but not later than ten years from the date
of grant). The portion of the ISP applicable to non-employee directors is
designed to operate automatically and not require administration.
LIMITATIONS ON AWARDS AND OPTIONS. The ISP provides that the Committee may
not grant share-based Awards and Options relating to more than 250,000 shares of
Common Stock to any participant during any fiscal year of the Company. The
grant of an Option to purchase Shares and a Stock Appreciation Right in
connection therewith shall be deemed to relate to the same Shares. The 250,000
share limit shall be subject to adjustment as provided in the event of a stock
split, stock dividend or other change in the Common Stock or the capital
structure of the Company. In addition, the Committee shall not grant dollar-
based awards in excess of $250,000 to any Eligible Employee during any fiscal
year of the Company.
TAX CONSEQUENCES OF THE ISP
THE FOLLOWING DISCUSSION IS A GENERAL SUMMARY OF THE FEDERAL INCOME TAX
CONSEQUENCES UNDER CURRENT LAW OF AWARDS GRANTED UNDER THE ISP. THIS
INFORMATION IS NOT A DEFINITIVE EXPLANATION OF THE TAX CONSEQUENCES OF SUCH
AWARDS.
OPTIONS. In general, an Optionee will not recognize taxable income upon
the grant or exercise of an ISO, and the Company will not be entitled to any
business expense deduction with respect to the grant or exercise of an ISO.
However, upon the exercise of an ISO, the excess of the fair market value on the
date of exercise of the shares of Stock received over the exercise price of the
Options will be treated as an adjustment to the Optionee's alternative minimum
taxable income. In order for the exercise of an ISO to qualify for this tax
treatment, the Optionee generally must be an employee of the Company from the
date the ISO is granted through the date three months before the date of
exercise (one year preceding the date of exercise in the case of an Optionee
whose employment is terminated due to disability). The employment requirement
does not apply where an Optionee's employment is terminated due to his or her
death.
If the Optionee has held the shares of Stock acquired upon exercise of an
ISO for at least two years after the date of grant and for at least one year
after the date of exercise, when the Optionee disposes of the shares, the
difference, if any, between the sales price of the shares and the exercise price
of the Option will be treated as a long-term capital gain or loss. If the
Optionee disposes of the shares prior to satisfying these holding period
requirements
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(a "disqualifying disposition"), the Optionee will recognize ordinary income
(taxable as compensation) at the time of the disqualifying disposition,
generally in an amount equal to the excess of the fair market value of the
shares at the time the Option was exercised over the exercise price of the
Option. The balance of the gain realized, if any, will be long-term or short-
term capital gain, depending upon whether or not the shares were sold more than
one year after the Option was exercised. If the Optionee sells the shares in a
disqualifying disposition at a price below the fair market value of the shares
at the time the Option was exercised, the amount of ordinary income (taxable as
compensation) will be limited to the amount realized on the sale over the
exercise price of the Option. If the Company complies with certain
requirements, the Company will be allowed a business expense deduction to the
extent the Optionee recognizes ordinary income.
In general, an Optionee who receives an NSO will recognize no income at the
time of the grant of the Option. Upon exercise of an NSO, an Optionee will
recognize ordinary income (taxable as compensation) in an amount equal to the
excess of the fair market value of the shares of Stock on the date of exercise
over the exercise price of the Option. The basis in shares acquired upon
exercise of an NSO will equal the fair market value of such shares at the time
of exercise, and the holding period of the shares (for capital gain purposes)
will begin on the date of exercise. If the Company complies with certain
requirements, it will be entitled to a business expense deduction in the same
amount and at the same time as the Optionee recognizes ordinary income.
The foregoing discussion assumes that at the time of exercise, the sale of
the shares of Stock at a profit would not subject the Optionee to liability
under Section 16(b) of the 1934 Act. Special rules may apply with respect to
persons who may be subject to Section 16(b) of the 1934 Act (which rules may
have the effect of deferring the time at which a taxable event will be
considered to have occurred in connection with the exercise of an Option).
Generally, if an Optionee delivers previously owned shares to pay the
exercise price, no gain or loss will be recognized in respect of the shares
delivered, and there will be a carryover basis and holding period for a like
number of shares acquired. If, however, the shares delivered were acquired upon
exercise of an ISO and are delivered prior to the Optionee's satisfying the ISO
holding period requirements described above, the delivery of shares will
constitute a disqualifying disposition as to which the rules described above
will apply. If the Option being exercised is an NSO, ordinary income (taxable
as compensation) will be recognized only on the additional shares acquired and
will be equal to the fair market value of the shares on the date of exercise
less any additional cash paid. Special rules apply in computing the amount and
character of an Optionee's income (or loss) upon the subsequent sale of shares
acquired upon the exercise of an ISO where the exercise price is paid by the
delivery of previously owned shares.
In general, if an Option is surrendered for payment in connection with a
Change in Control or upon exercise of a Stock Appreciation Right, the Optionee
will recognize ordinary income (taxable as compensation) in an amount equal to
the cash payment or the fair market value of the shares of Stock received, and
the Company will be entitled to a business expense deduction in the same amount.
STOCK APPRECIATION RIGHTS. Upon exercise of a Stock Appreciation Right,
the Grantee will recognize ordinary income (taxable as compensation) in an
amount equal to the cash or the fair market value of the shares received on the
exercise or payment date. If the Company complies with certain requirements, it
will be entitled to a business expense deduction in the same amount and at the
same time as the Grantee of a Stock Appreciation Right recognizes ordinary
compensation income.
RESTRICTED STOCK. In the absence of a Section 83(b) election (as
described below), a Grantee who receives Restricted Stock that is subject to a
substantial risk of forfeiture will recognize no income at the time of grant.
When the restrictions expire, a Grantee will recognize ordinary income (taxable
as compensation) equal to the fair market value of the Stock when the
restrictions expire over the amount paid for the Restricted Stock (if any). If
the restrictions applicable to a grant of Restricted Stock expire over time (for
example, if the restrictions on 20% of a grant expire on each anniversary of the
date of grant), the Grantee will include an appropriate portion of the shares as
ordinary income (taxable as compensation) as the restrictions expire. The
Grantee's basis in the Stock is equal to the amount included in income on the
expiration of the restrictions and the amount paid (if any), and the holding
period begins when the restrictions end. Any disposition of the Stock will
result in a long- or short-term capital gain or loss (depending on the time the
Stock is held after the restrictions end). Dividends received by the Grantee
constitute ordinary income (taxable as compensation) in the year received. The
Company will be entitled to a deduction equal to the fair market value of the
Stock when it is included in the Grantee's income, and also is entitled to a
business expense deduction for dividends paid to the Grantee on Stock which
remains subject to restrictions.
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If a Section 83(b) election is made within 30 days of the initial grant,
the Grantee must include the fair market value of the Stock on the date of grant
as ordinary income (taxable as compensation) as of the date of grant and the
holding period begins at the time the Restricted Stock is granted. The Company
is entitled to a corresponding business expense deduction for the grant, but
dividends on the Stock would not be deductible. Any subsequent disposition of
the Stock by the Grantee, other than by forfeiture, would result in capital gain
or loss, which would be long- or short-term depending on the holding period. No
deduction is permitted to a Grantee who has made the Section 83(b) election and
who subsequently forfeits the Restricted Stock, other than a deduction for the
amount (if any) a Grantee paid for the Restricted Stock, which is treated as a
long-or short-term capital loss, depending on the holding period.
PERFORMANCE AWARDS. Generally, in the case of Performance Units and
Performance Shares the Grantee will recognize ordinary income (taxable as
compensation) at the end of the Performance Cycle when they are no longer
subject to a substantial risk of forfeiture (subject to the special rules
applicable if the Performance Units are paid in Restricted Stock) in an amount
equal to the amount of cash or fair market value of property received. The
Company will be entitled to a business expense deduction in the same amount and
at the same time as the Grantee recognizes ordinary income.
EXCISE TAXES. Under certain circumstances, the accelerated vesting or
exercise of Options or Stock Appreciation Rights, or the accelerated lapse of
restrictions on other Awards, in connection with a Change in Control might be
deemed an "excess parachute payment" for purposes of the golden parachute tax
provisions of Section 280G of the Code. To the extent it is so considered, the
Grantee may be subject to a 20% excise tax and the Company may be denied a tax
deduction.
The Plan is not qualified under Section 401(a) of the Code.
EFFECT OF CHANGE IN CONTROL.
The ISP provides for the acceleration of certain benefits in the event of a
"Change in Control" of the Company. A Change in Control will be deemed to have
occurred if either (i) any person or group acquires beneficial ownership of 15%
of the voting securities of the Company, (ii) there is a change in the
composition of a majority of the Board of Directors within any two-year period
which is not approved by certain of the directors who were directors at the
beginning of such two-year period or (iii) the stockholders of the Company
approve a merger, consolidation or reorganization involving the Company; there
is a complete liquidation or dissolution of the Company; or the Company enters
into an agreement for the sale or other disposition of all or substantially all
of the assets of the Company.
STOCKHOLDER PROPOSALS FOR THE
1997 ANNUAL MEETING
In order for proposals of stockholders to be considered for inclusion in
the proxy statement for the 1997 Annual Meeting of Stockholders of the Company,
such proposals must be received by the Secretary of the Company by May 29, 1997.
Stockholders who wish to nominate persons for election as directors at the
1997 Annual Meeting, which is now scheduled to be held on November 13, 1997,
must give notice of their intention to make a nomination in writing to the
Secretary of the Company on or before August 18, 1997. Each notice must set
forth: (a) the name and address of the stockholder who intends to make the
nomination and of the person or persons to be nominated; (b) a representation
that the stockholder is a holder of record of stock of the Company entitled to
vote at such meeting and intends to appear in person or by proxy at the meeting
to nominate the person or persons specified in the notice; (c) a description of
all arrangements or understandings between the stockholder and each nominee and
any other person or persons (naming such person or persons) pursuant to which
the nomination or nominations are to be made by the stockholder; (d) such other
information regarding each nominee proposed by such stockholder as would be
required to be included in a proxy statement filed pursuant to the proxy rules
of the Securities and Exchange Commission as then in effect; and (e) the consent
of each nominee to serve as a director of the Company if so elected.
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INDEPENDENT ACCOUNTANTS
The Board selected Price Waterhouse as independent accountants for fiscal
1996. Representatives of Price Waterhouse are expected to be present at the
Annual Meeting with an opportunity to make a statement and respond to
appropriate questions.
ANNUAL REPORT
A copy of the Company's Annual Report for the fiscal year ended June 30,
1996 is being mailed to stockholders with this Proxy Statement. Stockholders
who do not receive a copy of such Annual Report may obtain a copy without charge
by writing or calling the Secretary, O'Sullivan Industries Holdings, Inc., 1900
Gulf Street, Lamar, Missouri 64759-1899, telephone number 417-682-3322.
OTHER MATTERS
As of the date of this Proxy Statement, management of the Company has no
knowledge of any other business to be presented to the meeting. If other
business is properly brought before the meeting, the persons named in the Proxy
will vote according to their discretion.
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
Lamar, Missouri
September 26, 1996
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APPENDIX
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
AMENDED AND RESTATED 1994 INCENTIVE STOCK PLAN
The O'Sullivan Industries Holdings, Inc. 1994 Incentive Stock Plan, as
amended to date, is hereby further amended and restated to read as follows,
effective September 20, 1996:
1. PURPOSE.
The purpose of this Plan is to strengthen O'Sullivan Industries Holdings,
Inc. (the "Company") by providing an incentive to its key employees, consultants
and advisors and directors and thereby encouraging them to devote their
abilities and industry to the success of the Company's business enterprise. It
is intended that this purpose be achieved by extending to directors, key
employees, consultants and advisors of the Company and its subsidiaries an added
long-term incentive for high levels of performance and unusual efforts through
the grant of Incentive Stock Options, Non-Qualified Stock Options, Stock
Appreciation Rights, Restricted Stock, Performance Units and Performance Shares
(as each term is hereinafter defined).
2. DEFINITIONS. For purposes of the Plan:
2.1 "Adjusted Fair Market Value" means, in the event of a Change in
Control, the greater of (i) the highest price per Share paid to holders of the
Shares in any transaction (or series of transactions) constituting or resulting
in a Change in Control or (ii) the highest Fair Market Value of a Share during
the 90 day period ending on the date of a Change in Control.
2.2 "Agreement" means the written agreement between the Company and an
Optionee or Grantee evidencing the grant of an Option or Award and setting forth
the terms and conditions thereof.
2.3 "Award" means a grant of Restricted Stock, a Stock Appreciation Right,
a Performance Award or any or all of them.
2.4 "Board" means the Board of Directors of the Company.
2.5 "Cause" means the commission of an act of fraud or intentional
misrepresentation or an act of embezzlement, misappropriation or conversion of
assets or opportunities of the Company or any Subsidiary.
2.6 "Change in Capitalization" means any increase or reduction in the
number of Shares, or any change (including, but not limited to, a change in
value) in the Shares or exchange of Shares for a different number or kind of
shares or other securities of the Company, by reason of a reclassification,
recapitalization, merger, consolidation, reorganization, spin-off, split-up,
issuance of warrants or rights or debentures, stock dividend, stock split or
reverse stock split, cash dividend, property dividend, combination or exchange
of shares, repurchase of shares, change in corporate structure or otherwise.
2.7 A "Change in Control" shall mean the occurrence during the term of the
Plan of:
(a) An acquisition (other than directly from the Company) of any
voting securities of the Company (the "Voting Securities") by any "Person" (as
the term person is used for purposes of Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended (the "1934 Act")) immediately after which such
Person has "Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated
under the 1934 Act) of 15% or more of the combined voting power of the Company's
then outstanding Voting Securities; provided, however, in determining whether a
Change in Control has occurred, Voting Securities which are acquired in a
"Non-Control Acquisition" (as hereinafter defined) shall not constitute an
acquisition which would cause a Change in Control. A "Non-Control Acquisition"
shall mean an acquisition by (i) an employee benefit plan (or a trust forming a
part thereof) maintained by (A) the Company or (B) any corporation or other
Person of which a majority of its voting power or its voting equity securities
or equity interest is owned, directly or indirectly, by the Company (for
purposes of this definition, a "Subsidiary"), (ii) the Company or its
Subsidiaries, or (iii) any Person in connection with a "Non-Control Transaction"
(as hereinafter defined).
(b) The individuals who, as of February 1, 1994, are members of
the Board (the "Incumbent Board"), cease for any reason to constitute at
least two-thirds of the Board; provided, however, that if the election, or
nomination for election by the Company's stockholders, of any new director
was approved by a vote of at least two-thirds of the Incumbent Board, such
new director shall, for purposes of this Plan, be considered as a member of
the Incumbent Board; provided further, however, that no individual shall be
considered a member of the Incumbent
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Board if such individual initially assumed office as a
result of either an actual or threatened "Election Contest" (as described in
Rule 14a-11 promulgated under the 1934 Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board (a "Proxy Contest") including by reason of any agreement intended to avoid
or settle any Election Contest or Proxy Contest; or
(c) Approval by stockholders of the Company of:
(i) A merger, consolidation or reorganization involving the
Company, unless
(A) the stockholders of the Company, immediately before
such merger, consolidation or reorganization, own, directly or indirectly
immediately following such merger, consolidation or reorganization, at least 60%
of the combined voting power of the outstanding voting securities of the
corporation resulting from such merger or consolidation or reorganization (the
"Surviving Corporation") in substantially the same proportion as their ownership
of the Voting Securities immediately before such merger, consolidation or
reorganization,
(B) the individuals who were members of the Incumbent Board
immediately prior to the execution of the agreement providing for such merger,
consolidation or reorganization constitute at least two-thirds of the members of
the board of directors of the Surviving Corporation,
(C) no Person other than the Company, any Subsidiary, any
employee benefit plan (or any trust forming a part thereof) maintained by the
Company, the Surviving Corporation, or any Subsidiary, or any Person who,
immediately prior to such merger, consolidation or reorganization had Beneficial
Ownership of 15% or more of the then outstanding Voting Securities has
Beneficial Ownership of 15% or more of the combined voting power of the
Surviving Corporation's then outstanding voting securities, and
(D) a transaction described in clauses (A) through (C)
shall herein be referred to as a "Non-Control Transaction";
(ii) A complete liquidation or dissolution of the Company; or
(iii) An agreement for the sale or other disposition of all or
substantially all of the assets of the Company to any Person (other than a
transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be deemed to
occur solely because any Person (the "Subject Person") acquired Beneficial
Ownership of more than the permitted amount of the outstanding Voting Securities
as a result of the acquisition of Voting Securities by the Company which, by
reducing the number of Voting Securities outstanding, increases the proportional
number of shares Beneficially Owned by the Subject Person, provided that if a
Change in Control would occur (but for the operation of this sentence) as a
result of the acquisition of Voting Securities by the Company, and after such
share acquisition by the Company, the Subject Person becomes the Beneficial
Owner of any additional Voting Securities which increases the percentage of the
then outstanding Voting Securities Beneficially Owned by the Subject Person,
then a Change in Control shall occur.
2.8 "Code" means the Internal Revenue Code of 1986, as amended.
2.9 "Committee" means the Organization and Compensation Committee of the
Board consisting solely of at least two (2) Non-Employee Directors appointed by
the Board to administer the Plan and to perform the functions set forth herein.
2.10 "Company" means O'Sullivan Industries Holdings, Inc.
2.11 "Director Option" means an Option granted pursuant to Section 5.
2.12 "Disability" means a physical or mental infirmity which impairs the
Optionee's ability to perform substantially his or her duties for a period of
one hundred eighty (180) consecutive days.
2.13 "Division" means any of the operating units or divisions of the
Company designated as a Division by the Committee.
2.14 "Eligible Employee" means any Director, officer or other key employee
or consultant or advisor of the Company or a Subsidiary designated by the
Committee as eligible to receive Options or Awards subject to the conditions set
forth herein.
2.15 "Employee Option" means an Option granted pursuant to Section 6.
2.16 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
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2.17 "Fair Market Value" on any date means the average of the high and low
sales prices of the Shares on such date on the principal national securities
exchange on which such Shares are listed or admitted to trading, or if such
Shares are not so listed or admitted to trading, the arithmetic mean of the per
Share closing bid price and per Share closing asked price on such date as quoted
on the National Association of Securities Dealers Automated Quotation System or
such other market in which such prices are regularly quoted, or, if there have
been no published bid or asked quotations with respect to Shares on such date,
the Fair Market Value shall be the value established by the Board in good faith
and, in the case of an Incentive Stock Option, in accordance with Section 422 of
the Code.
2.18 "Grantee" means a person to whom an Award has been granted under the
Plan.
2.19 "Incentive Stock Option" means an Option satisfying the requirements
of Section 422 of the Code and designated by the Committee as an Incentive Stock
Option.
2.20 "IPO" means the initial public offering of the Company's common stock.
2.21 "Non-Employee Director" means a director who is a "non-employee
director" of the Company or any Subsidiary as defined in Rule 16b-3(b)(3) under
the Exchange Act, or any successor provision.
2.22 "Non-Qualified Stock Option" means an Option which is not an Incentive
Stock Option.
2.23 "Option" means a Employee Option, a Director Option, or either or both
of them.
2.24 "Optionee" means a person to whom an Option has been granted under the
Plan.
2.25 "Outside Director" means a Director of the Company who is not an
employee of the Company or any Subsidiary.
2.26 "Parent" means any corporation which is a parent corporation (within
the meaning of Section 424(e) of the Code) with respect to the Company.
2.27 "Performance Awards" means Performance Units, Performance Shares or
either or both of them.
2.28 "Performance Cycle" means the time period specified by the Committee
at the time a Performance Award is granted during which the performance of the
Company, a Subsidiary or a Division will be measured.
2.29 "Performance Shares" means Shares issued or transferred to an Eligible
Employee under Section 10.
2.30 "Performance Unit" means Performance Units granted to an Eligible
Employee under Section 10.
2.31 "Restricted Stock" means Shares issued or transferred to an Eligible
Employee pursuant to Section 9.
2.32 "Retirement" means voluntary termination of service as a Director at
age 65 or older.
2.33 "Stock Appreciation Right" means a right to receive all or some
portion of the increase in the value of the Shares as provided in Section 8.
2.34 "Plan" means the O'Sullivan Industries Holdings, Inc. 1994 Incentive
Stock Plan.
2.35 "Shares" means the common stock, par value $1.00 per share, of the
Company.
2.36 "Subsidiary" means any corporation which is a subsidiary corporation
(within the meaning of Section 424(f) of the Code) with respect to the Company.
2.37 "Successor Corporation" means a corporation, or a parent or subsidiary
thereof within the meaning of Section 424(a) of the Code, which issues or
assumes a stock option in a transaction to which Section 424(a) of the Code
applies.
2.38 "Ten-Percent Stockholder" means an Eligible Employee, who, at the time
an Incentive Stock Option is to be granted to him or her, owns (within the
meaning of Section 422(b)(6) of the Code) stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company, or of a
Parent or a Subsidiary.
3. ADMINISTRATION.
3.1 The Plan shall be administered by the Committee, which shall hold
meetings at such times as may be necessary for the proper administration of the
Plan. No member of the Committee shall be liable for any action, failure to
act, determination or interpretation made in good faith with respect to this
Plan or any transaction hereunder, except for liability arising from his or her
own willful misfeasance, gross negligence or reckless disregard of his or her
duties. The Company hereby agrees to indemnify each member of the Committee for
all costs and expenses and,
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to the extent permitted by applicable law, any liability incurred in connection
with defending against, responding to, negotiation for the settlement of or
otherwise dealing with any claim, cause of action or dispute of any kind arising
in connection with any actions in administering this Plan or in authorizing or
denying authorization to any transaction hereunder.
3.2 Subject to the express terms and conditions set forth herein, the
Committee shall have the power from time to time to:
(a) determine those individuals to whom Employee Options shall be
granted under the Plan and the number of Incentive Stock Options and/or
Non-Qualified Stock Options to be granted to each Eligible Employee and to
prescribe the terms and conditions (which need not be identical) of each
Employee Option, including the purchase price per Share subject to each Employee
Option, and make any amendment or modification to any Agreement consistent with
the terms of the Plan; and
(b) select those Eligible Employees to whom Awards shall be granted
under the Plan and to determine the number of Stock Appreciation Rights,
Performance Units, Performance Shares, and/or Shares of Restricted Stock to be
granted pursuant to each Award, the terms and conditions of each Award,
including the restrictions or performance criteria relating to such Performance
Units or Performance Shares, the maximum value of each Performance Unit and
Performance Share and make any amendment or modification to any Agreement
consistent with the terms of the Plan.
3.3 Subject to the express terms and conditions set forth herein, the
Committee shall have the power from time to time:
(a) to construe and interpret the Plan and the Options and Awards
granted thereunder and to establish, amend and revoke rules and regulations for
the administration of the Plan, including, but not limited to, correcting
any defect or supplying any omission, or reconciling any inconsistency in the
Plan or in any Agreement, in the manner and to the extent it shall deem
necessary or advisable to make the Plan fully effective, and all decisions and
determinations by the Committee in the exercise of this power shall be final,
binding and conclusive upon the Company, its Subsidiaries, the Optionees and
Grantees and all other persons having any interest therein;
(b) to determine the duration and purposes for leaves of absence
which may be granted to an Optionee or Grantee on an individual basis without
constituting a termination of employment or service for purposes of the Plan;
(c) to exercise its discretion with respect to the powers and rights
granted to it as set forth in the Plan; and
(d) generally, to exercise such powers and to perform such acts as
are deemed necessary or advisable to promote the best interests of the Company
with respect to the Plan.
4. STOCK SUBJECT TO THE PLAN.
4.1 The maximum number of Shares that may be made the subject of Options
and Awards granted under the Plan is 2,500,000. Upon a Change in Capitalization
the maximum number of Shares shall be adjusted in number and kind pursuant to
Section 12. The Company shall reserve for the purposes of the Plan, out of its
authorized but unissued Shares or out of Shares held in the Company's treasury,
or partly out of each, such number of Shares as shall be determined by the
Board.
4.2 Upon the granting of an Option or an Award, the number of Shares
available under Section 4.1 for the granting of further Options and Awards shall
be reduced as follows:
(a) In connection with the granting of an Option or an Award (other
than the granting of a Performance Unit denominated in dollars), the number of
Shares shall be reduced by the number of Shares in respect of which the Option
or Award is granted or denominated.
(b) In connection with the granting of a Performance Unit denominated
in dollars, the number of Shares shall be reduced by an amount equal to the
quotient of (i) the dollar amount in which the Performance Unit is denominated,
divided by (ii) the Fair Market Value of a Share on the date the Performance
Unit is granted.
4.3 Whenever any outstanding Option or Award or portion thereof expires,
is canceled or is otherwise terminated for any reason without having been
exercised or payment having been made in respect of the entire Option or Award,
the Shares allocable to the expired, canceled or otherwise terminated portion of
the Option or Award may again be the subject of Options or Awards granted
hereunder.
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4.4 Notwithstanding anything contained in this Section 4, the number of
Shares available for Options and Awards at any time under the Plan shall be
reduced to such lesser amount as may be required pursuant to the methods of
calculation necessary so that the exemptions provided pursuant to Rule 16b-3
under the Exchange Act will continue to be available for transactions involving
all current and future Options and Awards. In addition, during the period that
any Options and Awards remain outstanding under the Plan, the Committee may make
good faith adjustments with respect to the number of Shares attributable to such
Options and Awards for purposes of calculating the maximum number of Shares
available for the granting of future Options and Awards under the Plan, provided
that following such adjustments the exemptions provided pursuant to Rule 16b-3
under the Exchange Act will continue to be available for transactions involving
all current and future Options and Awards.
5. OPTION GRANTS FOR OUTSIDE DIRECTORS.
5.1 GRANT. Director Options shall be granted to each Outside Director on
the first trading day of September of each year that the Plan is in effect.
Each Director Option granted shall be in respect of 1,000 Shares. The purchase
price of each Director Option shall be as provided in Section 5.2, and such
Options shall be evidenced by an Agreement containing such other terms and
conditions not inconsistent with the provisions of this Plan as determined by
the Board; PROVIDED, HOWEVER, that such terms shall not vary the timing of
awards of Director Options, including provisions dealing with forfeiture or
termination of such Director Options.
5.2 PURCHASE PRICE. The purchase price for Shares under each Director
Option shall be equal to 100% of the Fair Market Value of such Shares on the
trading date immediately preceding the date of grant.
5.3 VESTING. Subject to Section 7.4, each Director Option shall become
exercisable with respect to one-third (1/3) of the Shares subject thereto
effective as of each of the first, second and third anniversaries of the grant
date; PROVIDED, HOWEVER, that the Optionee continues to serve as a Director as
of such dates. Notwithstanding the foregoing, if a Director's service
terminates by reason of his death, Disability or Retirement, all Director
Options then held by the Director which had been granted more than one year
prior to his termination shall be fully vested. If an Optionee ceases to serve
as a Director for any reason, the Optionee shall have no rights with respect to
that portion of a Director Option which has not then vested pursuant to the two
preceding sentences and the Optionee shall automatically forfeit that portion of
the Director Option which remains unvested.
5.4 DURATION. Each Director Option shall terminate on the date which is
the 10th anniversary of the grant date, unless terminated earlier as follows:
(a) If an Optionee's service as a Director terminates for any reason
other than Retirement, resignation, removal from the Board due to Disability,
death or Cause, the Optionee may, for a period of three (3) months after such
termination, exercise his or her Option to the extent, and only to the extent,
that such Option or portion thereof was vested and exercisable as of the date
the Optionee's service as a Director terminated, after which time the Option
shall automatically terminate in full.
(b) If an Optionee's service as a Director terminates by reason of
the Optionee's Retirement or by resignation or removal from the Board due to
Disability, the Optionee may, for a period of 12 months after such termination,
exercise his or her Option to the extent, and only to the extent that such
Option or portion thereof was vested and exercisable, as of the date the
Optionee's service as a Director terminated, after which time the Option shall
automatically terminate in full.
(c) If an Optionee's service as a Director terminates for Cause, the
Option granted to the Optionee hereunder shall immediately terminate in full and
no rights thereunder may be exercised.
(d) If an Optionee dies while a Director or within three (3) months
after termination of service as a Director as described in clause (a) or (b) of
this Section 5.4, the Option granted to the Optionee may be exercised at any
time within 12 months after the Optionee's death by the person or persons to
whom such rights under the Option shall pass by will, or by the laws of descent
or distribution, after which time the Option shall terminate in full; PROVIDED,
HOWEVER, that an Option may be exercised to the extent, and only to the extent,
that the Option or portion thereof was exercisable on the date of death or
earlier termination of the Optionee's services as a Director.
6. OPTION GRANTS FOR ELIGIBLE EMPLOYEES.
6.1 AUTHORITY OF COMMITTEE. Subject to the provisions of the Plan and to
Section 4.1 above, the Committee shall have full and final authority to select
those Eligible Employees who will receive Options (each an "Employee Option"),
the terms and conditions of which shall be set forth in an Agreement; PROVIDED,
HOWEVER, that
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no person shall receive any Incentive Stock Options unless he or she is an
employee of the Company, a Parent or a Subsidiary at the time the Incentive
Stock Option is granted.
6.2 PURCHASE PRICE. The purchase price or the manner in which the
purchase price is to be determined for Shares under each Employee Option shall
be determined by the Committee and set forth in the Agreement; PROVIDED,
HOWEVER, that the purchase price per Share under each Incentive Stock Option
shall not be less than 100% of the Fair Market Value of a Share on the date the
Incentive Stock Option is granted (110% in the case of an Incentive Stock Option
granted to a Ten-Percent Stockholder) and the purchase price per Share under
each Non-Qualified Stock Option shall not be less than the Fair Market Value of
a Share on the date the Non-Qualified Stock Option is granted.
6.3 MAXIMUM DURATION. Employee Options granted hereunder shall be for
such term as the Committee shall determine, provided that an Incentive Stock
Option shall not be exercisable after the expiration of 10 years from the date
it is granted (five (5) years in the case of an Incentive Stock Option granted
to a Ten-Percent Stockholder) and a Non-Qualified Stock Option shall not be
exercisable after the expiration of ten (10) years from the date it is granted.
The Committee may, subsequent to the granting of any Employee Option, extend the
term thereof but in no event shall the term as so extended exceed the maximum
term provided for in the preceding sentence.
6.4 VESTING. Subject to Section 7.4 hereof, each Employee Option shall
become exercisable in such installments (which need not be equal) and at such
times as may be designated by the Committee and set forth in the Agreement. To
the extent not exercised, installments shall accumulate and be exercisable, in
whole or in part, at any time after becoming exercisable, but not later than the
date the Employee Option expires. The Committee may accelerate the
exercisability of any Option or portion thereof at any time.
6.5 MODIFICATION OR SUBSTITUTION. The Committee may, in its discretion,
modify outstanding Employee Options or accept the surrender of outstanding
Employee Options (to the extent not exercised) and grant new Options in
substitution for them. Notwithstanding the foregoing, no modification of an
Employee Option shall adversely alter or impair any rights or obligations under
the Employee Option without the Optionee's consent.
7. TERMS AND CONDITIONS APPLICABLE TO ALL OPTIONS.
7.1 NON-TRANSFERABILITY. No Option granted hereunder shall be
transferable by the Optionee to whom granted otherwise than (a) by will or the
laws of descent and distribution, or (b) to an immediate family member of the
Optionee or to a charitable organization. The terms of such Option shall be
final, binding and conclusive upon the beneficiaries, executors, administrators,
heirs, successors, transferees, donees and other assigns of the Optionee.
7.2 METHOD OF EXERCISE. The exercise of an Option shall be made only by a
written notice which is received by the Secretary of the Company at the
Company's principal executive office, specifying the number of Shares to be
purchased and accompanied by payment therefor and otherwise in accordance with
the Agreement pursuant to which the Option was granted. The purchase price for
any Shares purchased pursuant to the exercise of an Option shall be paid in full
upon such exercise by any one or a combination of the following: (i) cash or
(ii) transferring Shares to the Company upon such terms and conditions as
determined by the Committee. The written notice pursuant to this Section 7.2
may also provide instructions from the Optionee to the Company that upon receipt
of the purchase price in cash from the Optionee's broker or dealer, designated
as such on the written notice, in payment for any Shares purchased pursuant to
the exercise of an Option, the Company shall issue such Shares directly to the
designated broker or dealer. Any Shares transferred to the Company as payment
of the purchase price under an Option shall be valued at their Fair Market Value
on the day preceding the date of exercise of such Option. If requested by the
Committee, the Optionee shall deliver the Agreement evidencing the Option to the
Secretary of the Company who shall endorse thereon a notation of such exercise
and return such Agreement to the Optionee. No fractional Shares (or cash in
lieu thereof) shall be issued upon exercise of an Option and the number of
Shares that may be purchased upon exercise shall be rounded to the nearest
number of whole Shares.
7.3 RIGHTS OF OPTIONEES. No Optionee shall be deemed for any purpose to
be the owner of any Shares subject to any Option unless and until (i) the Option
shall have been exercised pursuant to the terms thereof, (ii) the Company shall
have issued and delivered the Shares to the Optionee or his designated broker or
dealer and (iii) the Optionee's name or the name of his designated broker or
dealer shall have been entered as a stockholder of record with respect to the
Shares on the books of the Company, whereupon, the Optionee shall have full
voting, dividend and other ownership rights with respect to such Shares.
7.4 EFFECT OF CHANGE IN CONTROL. Notwithstanding anything contained in
the Plan or an Agreement to the contrary, in the event of a Change in Control,
(i) all Options outstanding on the date of such Change in Control
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shall become immediately and fully exercisable through the expiration of the
Option and (ii) an Optionee will be permitted to surrender for cancellation
within 60 days after such Change in Control, any Option or portion of an Option
to the extent not yet exercised and the Optionee will be entitled to receive a
cash payment in an amount equal to the excess, if any, of (x) (A) in the case of
a Non-Qualified Stock Option, the greater of (1) the Fair Market Value, on the
date preceding the date of surrender, of the Shares subject to the Option or
portion thereof surrendered or (2) the Adjusted Fair Market Value of the Shares
subject to the Option or portion thereof surrendered or (B) in the case of an
Incentive Stock Option, the Fair Market Value, on the date preceding the date of
surrender, of the Shares subject to the Option or portion thereof surrendered,
over (y) the aggregate purchase price for such Shares under the Option or
portion thereof surrendered; PROVIDED, HOWEVER, that in the case of an Option
granted within six (6) months prior to the Change in Control to any Optionee who
may be subject to liability under Section 16(b) of the Exchange Act, such
Optionee shall be entitled to surrender for cancellation his or her Option
during the 60 day period commencing upon the expiration of six (6) months from
the date of grant of any such Option.
8. STOCK APPRECIATION RIGHTS. The Committee may, in its discretion,
either alone or in connection with the grant of an Option, grant Stock
Appreciation Rights in accordance with the Plan and the terms and conditions of
which shall be set forth in an Agreement. If granted in connection with an
Option, a Stock Appreciation Right shall cover the same Shares covered by the
Option (or such lesser number of Shares as the Committee may determine) and
shall, except as provided in this Section 8, be subject to the same terms and
conditions as the related Option.
8.1 TIME OF GRANT. A Stock Appreciation Right may be granted (i) at any
time if unrelated to an Option, or (ii) if related to an Option, either at the
time of grant, or at any time thereafter during the term of the Option.
8.2 STOCK APPRECIATION RIGHT RELATED TO AN OPTION.
(a) EXERCISE. Subject to Section 8.6, a Stock Appreciation Right
granted in connection with an Option shall be exercisable at such time or times
and only to the extent that the related Option is exercisable, and will not be
transferable except to the extent the related Option may be transferable. A
Stock Appreciation Right granted in connection with an Incentive Stock Option
shall be exercisable only if the Fair Market Value of a Share on the date of
exercise exceeds the purchase price specified in the related Incentive Stock
Option Agreement.
(b) AMOUNT PAYABLE. Upon the exercise of a Stock Appreciation Right
related to an Option, the Grantee shall be entitled to receive an amount
determined by multiplying (A) the excess of the Fair Market Value of a Share on
the date preceding the date of exercise of such Stock Appreciation Right over
the per Share purchase price under the related Option, by (B) the number of
Shares as to which such Stock Appreciation Right is being exercised.
Notwithstanding the foregoing, the Committee may limit in any manner the amount
payable with respect to any Stock Appreciation Right by including such a limit
in the Agreement evidencing the Stock Appreciation Right at the time it is
granted.
(c) TREATMENT OF RELATED OPTIONS AND STOCK APPRECIATION RIGHTS UPON
EXERCISE. Upon the exercise of a Stock Appreciation Right granted in connection
with an Option, the Option shall be canceled to the extent of the number of
Shares as to which the Stock Appreciation Right is exercised, and upon the
exercise of an Option granted in connection with a Stock Appreciation Right or
the surrender of such Option, the Stock Appreciation Right shall be canceled to
the extent of the number of Shares as to which the Option is exercised or
surrendered.
8.3 STOCK APPRECIATION RIGHT UNRELATED TO AN OPTION. The Committee may
grant to Eligible Employees Stock Appreciation Rights unrelated to Options.
Stock Appreciation Rights unrelated to Options shall contain such terms and
conditions as to exercisability (subject to Section 8.6), vesting and duration
as the Committee shall determine, but in no event shall they have a term of
greater than 10 years. Upon exercise of a Stock Appreciation Right unrelated to
an Option, the Grantee shall be entitled to receive an amount determined by
multiplying (A) the excess of the Fair Market Value of a Share on the date
preceding the date of exercise of such Stock Appreciation Right over the Fair
Market Value of a Share on the date the Stock Appreciation Right was granted, by
(B) the number of Shares as to which the Stock Appreciation Right is being
exercised. Notwithstanding the foregoing, the Committee may limit in any manner
the amount payable with respect to any Stock Appreciation Right by including
such a limit in the Agreement evidencing the Stock Appreciation Right at the
time it is granted.
8.4 METHOD OF EXERCISE. Stock Appreciation Rights shall be exercised by a
Grantee only by a written notice received by the Corporate Secretary or the
President of the Company at the Company's principal executive office, specifying
the number of Shares with respect to which the Stock Appreciation Right is being
exercised. If requested by the Committee, the Grantee shall deliver the
Agreement evidencing the Stock Appreciation Right being exercised and the
Agreement evidencing any related Option to the Corporate Secretary or President
of the Company who shall endorse thereon a notation of such exercise and return
such Agreement to the Grantee.
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8.5 FORM OF PAYMENT. Payment of the amount determined under
Sections 8.2(b) or 8.3 may be made in the discretion of the Committee, solely in
whole Shares in a number determined at their Fair Market Value on the date
preceding the date of exercise of the Stock Appreciation Right, or solely in
cash, or in a combination of cash and Shares. If the Committee decides to make
full payment in Shares and the amount payable results in a fractional Share,
payment for the fractional Share will be made in cash. Notwithstanding the
foregoing, no payment in the form of cash may be made upon the exercise of a
Stock Appreciation Right pursuant to Sections 8.2(b) or 8.3 to an officer of the
Company or a Subsidiary who is subject to liability under Section 16(b) of the
Exchange Act, unless the exercise of such Stock Appreciation Right occurs after
the optionee has cleared such exercise pursuant to the Company's pre-trading
clearance policy.
8.6 RESTRICTIONS. Except as provided in Section 8.8, no Stock
Appreciation Right or portion thereof may be exercised before the date which is
six (6) months after the date of grant.
8.7 MODIFICATION OR SUBSTITUTION. Subject to the terms of the Plan, the
Committee may modify outstanding Awards of Stock Appreciation Rights or accept
the surrender of outstanding Awards of Stock Appreciation Rights (to the extent
not exercised) and grant new Awards in substitution for them. Notwithstanding
the foregoing, no modification of an Award shall adversely alter or impair any
rights or obligations under the Agreement without the Grantee's consent.
8.8 EFFECT OF CHANGE IN CONTROL. Notwithstanding anything contained in
this Plan to the contrary, in the event of a Change in Control, all Stock
Appreciation Rights shall become immediately and fully exercisable.
Notwithstanding Sections 8.3 and 8.5, upon the exercise of a Stock Appreciation
Right unrelated to an Option or any portion thereof during the 60 day period
following a Change in Control, the amount payable shall be in cash and shall be
an amount equal to the excess, if any, of (A) the greater of (x) the Fair Market
Value, on the date preceding the date of exercise, of the Shares subject to the
Stock Appreciation Right or portion thereof exercised and (y) the Adjusted Fair
Market Value, on the date preceding the date of exercise, of the Shares over (B)
the aggregate Fair Market Value, on the date the Stock Appreciation Right was
granted, of the Shares subject to the Stock Appreciation Right or portion
thereof exercised; PROVIDED, HOWEVER, that in the case of a Stock Appreciation
Right granted within six (6) months prior to the Change in Control to any
Grantee who may be subject to liability under Section 16(b) of the Exchange Act,
such Grantee shall be entitled to exercise his Stock Appreciation Right during
the 60 day period commencing upon the expiration of six (6) months from the date
of grant of any such Stock Appreciation Right.
9. RESTRICTED STOCK.
9.1 GRANT. The Committee may grant to Eligible Employees Awards of
Restricted Stock, and may issue Shares of Restricted Stock in payment in respect
of vested Performance Units (as hereinafter provided in Section 10.2), which
shall be evidenced by an Agreement between the Company and the Grantee. Each
Agreement shall contain such restrictions, terms and conditions as the Committee
may, in its discretion, determine and (without limiting the generality of the
foregoing) such Agreements may require that an appropriate legend be placed on
Share certificates. Awards of Restricted Stock shall be subject to the terms
and provisions set forth below in this Section 9.
9.2 RIGHTS OF GRANTEE. Shares of Restricted Stock granted pursuant to an
Award hereunder shall be issued in the name of the Grantee as soon as reasonably
practicable after the Award is granted provided that the Grantee has executed an
Agreement evidencing the Award, the appropriate blank stock powers and, in the
discretion of the Committee, an escrow agreement and any other documents which
the Committee may require as a condition to the issuance of such Shares. If a
Grantee shall fail to execute the Agreement evidencing a Restricted Stock Award,
the appropriate blank stock powers and, in the discretion of the Committee, an
escrow agreement and any other documents which the Committee may require within
the time period prescribed by the Committee at the time the Award is granted,
the Award shall be null and void. At the discretion of the Committee, Shares
issued in connection with a Restricted Stock Award shall be deposited together
with the stock powers with an escrow agent (which may be the Company) designated
by the Committee. Unless the Committee determines otherwise and as set forth in
the Agreement, upon delivery of the Shares to the escrow agent, the Grantee
shall have all of the rights of a stockholder with respect to such Shares,
including the right to vote the Shares and to receive all dividends or other
distributions paid or made with respect to the Shares.
9.3 NON-TRANSFERABILITY. Until any restrictions upon the Shares of
Restricted Stock awarded to a Grantee shall have lapsed in the manner set forth
in Section 9.4, such Shares shall not be sold, transferred or otherwise disposed
of and shall not be pledged or otherwise hypothecated, nor shall they be
delivered to the Grantee.
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9.4 LAPSE OF RESTRICTIONS.
(a) GENERALLY. Restrictions upon Shares of Restricted Stock awarded
hereunder shall lapse at such time or times and on such terms and conditions as
the Committee may determine, which restrictions shall be set forth in the
Agreement evidencing the Award.
(b) EFFECT OF CHANGE IN CONTROL. Notwithstanding anything contained
in the Plan, unless the Agreement evidencing the Award provides to the contrary,
in the event of a Change in Control, all restrictions upon any Shares of
Restricted Stock shall lapse immediately and all such Shares shall become fully
vested in the Grantee.
9.5 MODIFICATION OR SUBSTITUTION. Subject to the terms of the Plan, the
Committee may modify outstanding Awards of Restricted Stock or accept the
surrender of outstanding Shares of Restricted Stock (to the extent the
restrictions on such Shares have not yet lapsed) and grant new Awards in
substitution for them. Notwithstanding the foregoing, no modification of an
Award shall adversely alter or impair any rights or obligations under the
Agreement without the Grantee's consent.
9.6 TREATMENT OF DIVIDENDS. At the time the Award of Shares of Restricted
Stock is granted, the Committee may, in its discretion, determine that the
payment to the Grantee of dividends, or a specified portion thereof, declared or
paid on such Shares by the Company shall be (i) deferred until the lapsing of
the restrictions imposed upon such Shares and (ii) held by the Company for the
account of the Grantee until such time. In the event that dividends are to be
deferred, the Committee shall determine whether such dividends are to be
reinvested in shares of Stock (which shall be held as additional Shares of
Restricted Stock) or held in cash. If deferred dividends are to be held in
cash, there may be credited at the end of each year (or portion thereof)
interest on the amount of the account at the beginning of the year at a rate per
annum as the Committee, in its discretion, may determine. Payment of deferred
dividends in respect of Shares of Restricted Stock (whether held in cash or as
additional Shares of Restricted Stock), together with interest accrued thereon,
if any, shall be made upon the lapsing of restrictions imposed on the Shares in
respect of which deferred dividends were paid, and any dividends deferred
(together with any interest accrued thereon) in respect of any Shares of
Restricted Stock shall be forfeited upon the forfeiture of such Shares.
9.7 DELIVERY OF SHARES. Upon the lapse of the restrictions on Shares of
Restricted Stock, the Committee shall cause a stock certificate to be delivered
to the Grantee with respect to such Shares, free of all restrictions hereunder.
10. PERFORMANCE AWARDS.
10.1 PERFORMANCE OBJECTIVES. Performance objectives for Performance Awards
may be expressed in terms of (i) earnings per Share, (ii) pre-tax profits,
(iii) net earnings or net worth, (iv) return on equity or assets, (v) any
combination of the foregoing, or (vi) any other standard or standards deemed
appropriate by the Committee at the time the Award is granted. Performance
objectives may be in respect of the performance of the Company and its
Subsidiaries (which may be on a consolidated basis), a Subsidiary or a Division.
Performance objectives may be absolute or relative and may be expressed in terms
of a progression within a specified range. Prior to the end of a Performance
Cycle, the Committee, in its discretion, may adjust the performance objectives
to reflect a Change in the Capitalization, a change in the tax rate or book tax
rate of the Company or any Subsidiary, or any other event which may materially
affect the performance of the Company, a Subsidiary or a Division, including,
but not limited to, market conditions or a significant acquisition or
disposition of assets or other property by the Company, a Subsidiary or a
Division.
10.2 PERFORMANCE UNITS. The Committee, in its discretion, may grant Awards
of Performance Units to Eligible Employees, the terms and conditions of which
shall be set forth in an Agreement between the Company and the Grantee.
Performance Units may be denominated in Shares or a specified dollar amount and,
contingent upon the attainment of specified performance objectives within the
Performance Cycle, represent the right to receive payment as provided in
Section 10.2(b) of (i) in the case of Share-denominated Performance Units, the
Fair Market Value of a Share on the date the Performance Unit was granted, the
date the Performance Unit became vested or any other date specified by the
Committee, (ii) in the case of dollar-denominated Performance Units, the
specified dollar amount or (iii) a percentage (which may be more than 100%) of
the amount described in clause (i) or (ii) depending on the level of performance
objective attainment; PROVIDED, HOWEVER, that the Committee may at the time a
Performance Unit is granted, specify a maximum amount payable in respect of a
vested Performance Unit. Each Agreement shall specify the number of the
Performance Units to which it relates, the performance objectives which must be
satisfied in order for the Performance Units to vest and the Performance Cycle
within which such objectives must be satisfied.
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(a) VESTING AND FORFEITURE. A Grantee shall become vested with
respect to the Performance Units to the extent that the performance objectives
set forth in the Agreement are satisfied for the Performance Cycle.
(b) PAYMENT OF AWARDS. Payment to Grantees in respect of vested
Performance Units shall be made within 60 days after the last day of the
Performance Cycle to which such Award relates unless the Agreement evidencing
the Award provides for the deferral of payment, in which event the terms and
conditions of the deferral shall be set forth in the Agreement. Subject to
Section 10.4, such payments may be made entirely in Shares valued at their Fair
Market Value as of the last day of the applicable Performance Cycle or such
other date specified by the Committee, entirely in cash, or in such combination
of Shares and cash as the Committee in its discretion, shall determine at any
time prior to such payment; PROVIDED, HOWEVER, that if the Committee in its
discretion determines to make such payment entirely or partially in Shares of
Restricted Stock, the Committee must determine the extent to which such payment
will be in Shares of Restricted Stock and the terms of such Restricted Stock at
the time the Award is granted.
10.3 PERFORMANCE SHARES. The Committee, in its discretion, may grant
Awards of Performance Shares to Eligible Employees, the terms and conditions of
which shall be set forth in an Agreement between the Company and the Grantee.
Each Agreement may require that an appropriate legend be placed on Share
certificates. Awards of Performance Shares shall be subject to the following
terms and provisions:
(a) RIGHTS OF GRANTEE. The Committee shall provide at the time an
Award of Performance Shares is made, the time or times at which the actual
Shares represented by such Award shall be issued in the name of the Grantee;
PROVIDED, HOWEVER, that no Performance Shares shall be issued until the Grantee
has executed an Agreement evidencing the Award, the appropriate blank stock
powers and, in the discretion of the Committee, an escrow agreement and any
other documents which the Committee may require as a condition to the issuance
of such Performance Shares. If a Grantee shall fail to execute the Agreement
evidencing an Award of Performance Shares, the appropriate blank stock powers
and, in the discretion of the Committee, an escrow agreement and any other
documents which the Committee may require within the time period prescribed by
the Committee at the time the Award is granted, the Award shall be null and
void. At the discretion of the Committee, Shares issued in connection with an
Award of Performance Shares shall be deposited together with the stock powers
with an escrow agent (which may be the Company) designated by the Committee.
Except as restricted by the terms of the Agreement, upon delivery of the Shares
to the escrow agent, the Grantee shall have, in the discretion of the Committee,
all of the rights of a stockholder with respect to such Shares, including the
right to vote the Shares and to receive all dividends or other distributions
paid or made with respect to the Shares.
(b) NON-TRANSFERABILITY. Until any restrictions upon the Performance
Shares awarded to a Grantee shall have lapsed in the manner set forth in
Sections 10.3(c) or 10.4, such Performance Shares shall not be sold, transferred
or otherwise disposed of and shall not be pledged or otherwise hypothecated, nor
shall they be delivered to the Grantee. The Committee may also impose such
other restrictions and conditions on the Performance Shares, if any, as it deems
appropriate.
(c) LAPSE OF RESTRICTIONS. Subject to Section 10.4, restrictions
upon Performance Shares awarded hereunder shall lapse and such Performance
Shares shall become vested at such time or times and on such terms, conditions
and satisfaction of performance objectives as the Committee may, in its
discretion, determine at the time an Award is granted.
(d) TREATMENT OF DIVIDENDS. At the time the Award of Performance
Shares is granted, the Committee may, in its discretion, determine that the
payment to the Grantee of dividends, or a specified portion thereof, declared or
paid on actual Shares represented by such Award which have been issued by the
Company to the Grantee shall be (i) deferred until the lapsing of the
restrictions imposed upon such Performance Shares and (ii) held by the Company
for the account of the Grantee until such time. In the event that dividends are
to be deferred, the Committee shall determine whether such dividends are to be
reinvested in shares of Stock (which shall be held as additional Performance
Shares) or held in cash. If deferred dividends are to be held in cash, there
may be credited at the end of each year (or portion thereof) interest on the
amount of the account at the beginning of the year at a rate per annum as the
Committee, in its discretion, may determine. Payment of deferred dividends in
respect of Performance Shares (whether held in cash or in additional Performance
Shares), together with interest accrued thereon, if any, shall be made upon the
lapsing of restrictions imposed on the Performance Shares in respect of which
the deferred dividends were paid, and any dividends deferred (together with any
interest accrued thereon) in respect of any Performance Shares shall be
forfeited upon the forfeiture of such Performance Shares.
x
<PAGE>
(e) DELIVERY OF SHARES. Upon the lapse of the restrictions on
Performance Shares awarded hereunder, the Committee shall cause a stock
certificate to be mailed to the Grantee with respect to such Shares, free of all
restrictions hereunder.
10.4 EFFECT OF CHANGE IN CONTROL. Notwithstanding anything contained in
the Plan or any Agreement to the contrary, in the event of a Change in Control:
(a) With respect to the Performance Units, the Grantee shall
(i) become vested in a percentage of Performance Units as determined by the
Committee at the time of the Award of such Performance Units and as set forth in
the Agreement and (ii) be entitled to receive in respect of all Performance
Units which become vested as a result of a Change in Control, a cash payment
within 10 days after such Change in Control in an amount as determined by the
Committee at the time of the Award of such Performance Unit and as set forth in
the Agreement.
(b) With respect to the Performance Shares, all restrictions shall
lapse immediately on all or a portion of the Performance Shares as determined by
the Committee at the time of the Award of such Performance Shares and as set
forth in the Agreement.
(c) The Agreements evidencing Performance Shares and Performance
Units shall provide for the treatment of such Awards (or portions thereof) which
do not become vested as the result of a Change in Control, including, but not
limited to, provisions for the adjustment of applicable performance objectives.
10.5 NON-TRANSFERABILITY. No Performance Awards shall be transferable by
the Grantee otherwise than by will or the laws of descent and distribution.
10.6 MODIFICATION OR SUBSTITUTION. Subject to the terms of the Plan, the
Committee may modify outstanding Performance Awards or accept the surrender of
outstanding Performance Awards and grant new Performance Awards in substitution
for them. Notwithstanding the foregoing, no modification of a Performance Award
shall adversely alter or impair any rights or obligations under the Agreement
without the Grantee's consent.
11. EFFECT OF A TERMINATION OF EMPLOYMENT. The Agreement evidencing the
grant of each Employee Option and each Award shall set forth the terms and
conditions applicable to such Employee Option or Award upon a termination or
change in the status of the employment of the Optionee or Grantee by the
Company, a Subsidiary or a Division (including a termination or change by reason
of the sale of a Subsidiary or a Division), as the Committee may, in its
discretion, determine at the time the Employee Option or Award is granted or
thereafter.
12. ADJUSTMENT UPON CHANGES IN CAPITALIZATION.
(a) In the event of a Change in Capitalization, the Committee shall
conclusively determine the appropriate adjustments, if any, to the (i) maximum
number and class of Shares or other stock or securities with respect to which
Options or Awards may be granted under the Plan, (ii) the number and class of
Shares or other stock or securities which are subject to Director Options
issuable under Section 5; (iii) the number and class of Shares or other stock or
securities which are subject to outstanding Options or Awards granted under the
Plan, and the purchase price therefor, if applicable; and (iv) the maximum award
amount.
(b) Any such adjustment in the Shares or other stock or securities
subject to outstanding Incentive Stock Options (including any adjustments in the
purchase price) shall be made in such manner as not to constitute a modification
as defined by Section 424(h)(3) of the Code and only to the extent otherwise
permitted by Sections 422 and 424 of the Code.
(c) Any stock adjustment in the Shares or other stock or securities
subject to outstanding Director Options (including any adjustments in the
purchase price) shall be made only to the extent necessary to maintain the
proportionate interest of the Optionee and preserve, without exceeding, the
value of such Director Option.
(d) If, by reason of a Change in Capitalization, a Grantee of an
Award shall be entitled to, or an Optionee shall be entitled to exercise an
Option with respect to, new, additional or different shares of stock or
securities, such new additional or different shares shall thereupon be subject
to all of the conditions, restrictions and performance criteria which were
applicable to the Shares subject to the Award or Option, as the case may be,
prior to such Change in Capitalization.
13. EFFECT OF CERTAIN TRANSACTIONS. Subject to Sections 7.7, 8.8, 9.4(b)
and 10.4, in the event of (i) the liquidation or dissolution of the Company or
(ii) a merger or consolidation of the Company (a "Transaction"), the Plan and
the Options and Awards issued hereunder shall continue in effect in accordance
with their respective terms and each Optionee and Grantee shall be entitled to
receive in respect of each Share subject to any outstanding Options or
xi
<PAGE>
Awards, as the case may be, upon exercise of any Option or payment or transfer
in respect of any Award, the same number and kind of stock, securities, cash,
property, or other consideration that each holder of a Share was entitled to
receive in the Transaction in respect of a Share.
14. TERMINATION AND AMENDMENT OF THE PLAN. The Plan shall terminate on
the day preceding the tenth anniversary of the date of its adoption by the Board
and no Option or Award may be granted thereafter. The Board may sooner
terminate the Plan and the Board may at any time and from time to time amend,
modify or suspend the Plan; PROVIDED, HOWEVER, that:
(a) No such amendment, modification, suspension or termination shall
impair or adversely alter any Options or Awards theretofore granted under the
Plan, except with the consent of the Optionee or Grantee, nor shall any
amendment, modification, suspension or termination deprive any Optionee or
Grantee of any Shares which he or she may have acquired through or as a result
of the Plan; and
(b) To the extent necessary under applicable law, no amendment shall
be effective unless approved by the stockholders of the Company in accordance
with applicable law and regulations.
15. NON-EXCLUSIVITY OF THE PLAN. The adoption of the Plan by the Board
shall not be construed as amending, modifying or rescinding any previously
approved incentive arrangement or as creating any limitations on the power of
the Board to adopt such other incentive arrangements as it may deem desirable,
including, without limitation, the granting of stock options otherwise than
under the Plan, and such arrangements may be either applicable generally or only
in specific cases.
16. LIMITATION OF LIABILITY. As illustrative of the limitations of
liability of the Company, but not intended to be exhaustive thereof, nothing in
the Plan shall be construed to:
(i) give any person any right to be granted an Option or Award other
than at the sole discretion of the Committee;
(ii) give any person any rights whatsoever with respect to Shares
except as specifically provided in the Plan;
(iii) limit in any way the right of the Company to terminate the
employment of any person at any time; or
(iv) be evidence of any agreement or understanding, expressed or
implied, that the Company will employ any person at any particular rate of
compensation or for any particular period of time.
17. REGULATIONS AND OTHER APPROVALS; GOVERNING LAW.
17.1 Except as to matters of federal law, this Plan and the rights of all
persons claiming hereunder shall be construed and determined in accordance with
the laws of the State of Delaware without giving effect to conflicts of law
principles.
17.2 The obligation of the Company to sell or deliver Shares with respect
to Options and Awards granted under the Plan shall be subject to all applicable
laws, rules and regulations, including all applicable federal and state
securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee.
17.3 The Plan is intended to comply with Rule 16b-3 promulgated under the
Exchange Act and the Committee shall interpret and administer the provisions of
the Plan or any Agreement in a manner consistent therewith. Any provisions
inconsistent with such Rule shall be inoperative and shall not affect the
validity of the Plan.
17.4 The Board may make such changes as may be necessary or appropriate to
comply with the rules and regulations of any government authority, or to obtain
for Eligible Employees granted Incentive Stock Options the tax benefits under
the applicable provisions of the Code and regulations promulgated thereunder.
17.5 Each Option and Award is subject to the requirement that, if at any
time the Committee determines, in its discretion, that the listing, registration
or qualification of Shares issuable pursuant to the Plan is required by any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the grant of an Option or Award or the
issuance of Shares, no Options or Awards shall be granted or payment made or
Shares issued, in whole or in part, unless listing, registration, qualification,
consent or approval has been effected or obtained free of any conditions as
acceptable to the Committee.
xii
<PAGE>
17.6 Notwithstanding anything contained in the Plan or any Agreement to the
contrary, in the event that the disposition of Shares acquired pursuant to the
Plan is not covered by a then current registration statement under the
Securities Act of 1933, as amended, and is not otherwise exempt from such
registration, such Shares shall be restricted against transfer to the extent
required by the Securities Act of 1933, as amended, and Rule 144 or other
regulations thereunder. The Committee may require any individual receiving
Shares pursuant to an Option or Award granted under the Plan, as a condition
precedent to receipt of such Shares, to represent and warrant to the Company in
writing that the Shares acquired by such individual are acquired without a view
to any distribution thereof and will not be sold or transferred other than
pursuant to an effective registration thereof under said Act or pursuant to an
exemption applicable under the Securities Act of 1933, as amended, or the rules
and regulations promulgated thereunder. The certificates evidencing any of such
Shares shall be appropriately amended to reflect their status as restricted
securities as aforesaid.
17.7 LIMITATION ON AWARDS AND OPTIONS. Notwithstanding the foregoing, the
Committee shall not grant share-based Awards and Options relating to more than
250,000 Shares to any Eligible Employee during any fiscal year of the Company.
For the purposes of this Section, the grant of an Option to purchase Shares and
a Stock Appreciation Right in connection therewith shall be deemed to relate to
the same Shares. The 250,000 limit shall be subject to adjustment as provided
in Section 12. In addition, the Committee shall not grant dollar-based awards
under this Plan in excess of $250,000 to any Eligible Employee during any fiscal
year of the Company.
18. MISCELLANEOUS.
18.1 MULTIPLE AGREEMENTS. The terms of each Option or Award may differ
from other Options or Awards granted under the Plan at the same time, or at some
other time. The Committee may also grant more than one Option or Award to a
given Eligible Employee during the term of the Plan, either in addition to, or
in substitution for, one or more Options or Awards previously granted to that
Eligible Employee.
18.2 WITHHOLDING OF TAXES. (a) The Company shall have the right to deduct
from any distribution of cash to any Optionee or Grantee, an amount equal to the
federal, state and local income taxes and other amounts as may be required by
law to be withheld (the "Withholding Taxes") with respect to any Option or
Award. If an Optionee or Grantee is to experience a taxable event in connection
with the receipt of Shares pursuant to an Option exercise or payment of an Award
(a "Taxable Event"), the Optionee or Grantee shall pay the Withholding Taxes to
the Company prior to the issuance, or release from escrow, of such Shares. In
satisfaction of the obligation to pay Withholding Taxes to the Company, the
Optionee or Grantee may make a written election (the "Tax Election") to have
withheld a portion of the Shares then issuable to him or her having an aggregate
Fair Market Value, on the date preceding the date of such issuance, equal to the
Withholding Taxes. Notwithstanding the foregoing, the Committee may, by the
adoption of rules or otherwise, modify the provisions of this Section 18.2 or
impose such other restrictions or limitations on Tax Elections as may be
necessary to ensure that the Tax Elections will be exempt transactions under
Section 16(b) of the Exchange Act.
(b) If an Optionee makes a disposition, within the meaning of
Section 424(c) of the Code and regulations promulgated thereunder, of any Share
or Shares issued to such Optionee pursuant to the exercise of an Incentive Stock
Option within the two-year period commencing on the day after the date of the
grant or within the one-year period commencing on the day after the date of
transfer of such Share or Shares to the Optionee pursuant to such exercise, the
Optionee shall, within 10 days of such disposition, notify the Company thereof,
by delivery of written notice to the Company at its principal executive office.
(c) The Committee shall have the authority, at the time of grant of
an Employee Option or Award under the Plan or at any time thereafter, to award
tax bonuses to designated Optionees or Grantees, to be paid upon their exercise
of Employee Options or payment in respect of Awards granted hereunder. The
amount of any such payments shall be determined by the Committee. The Committee
shall have full authority in its absolute discretion to determine the amount of
any such tax bonus and the terms and conditions affecting the vesting and
payment thereof.
19. EFFECTIVE DATE. The effective date of the Plan shall be January 22,
1994.
xiii
<PAGE>
O'SULLIVAN -REGISTERED TRADEMARK-
INDUSTRIES HOLDINGS, INC.
<PAGE>
P
R
O
X
Y
O'SULLIVAN INDUSTRIES HOLDINGS, INC.
1900 Gulf Street, Lamar, MO 64759-1899
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING ON NOVEMBER 14, 1996
The undersigned stockholder of O'Sullivan Industries Holdings, Inc., a
Delaware corporation (the "Company"), hereby acknowledges receipt of the Notice
of Annual Meeting of Stockholders and Proxy Statement, each dated September 26,
1996 and hereby appoints RICHARD D. DAVIDSON and TYRONE E. RIEGEL, or either of
them, as proxies, each with the power of substitution, on behalf and in the name
of the undersigned, to represent the undersigned at the Annual Meeting of
Stockholders of the Company to be held on November 14, 1996, at 10:00 A.M.,
C.S.T., and at any adjournments or postponements thereof, and to vote all shares
of Common Stock, par value $1.00 per share, of the Company which the undersigned
would be entitled to vote if then and there personally present, on the matters
set forth on the reverse side.
THE PROXY WILL BE VOTED AS DIRECTED, OR, IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR THE ELECTION OF DIRECTORS, FOR THE APPROVAL OF THE
COMPANY'S AMENDED AND RESTATED 1994 INCENTIVE STOCK PLAN AND THE APPROVAL OF
SPECIAL OPTION AWARDS UNDER SUCH PLAN AND AS SUCH PROXIES DEEM ADVISABLE ON SUCH
OTHER MATTERS AS MAY COME BEFORE THE MEETING.
CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE
<PAGE>
O'SULLIVAN-REGISTERED TRADEMARK-
INDUSTRIES HOLDINGS, INC.
ATTACHED BELOW IS A PROXY CARD FOR THE 1996 ANNUAL MEETING OF STOCKHOLDERS OF
O'SULLIVAN INDUSTRIES HOLDINGS, INC. PLEASE DETACH THE PROXY CARD AND MARK THE
BOXES TO INDICATE HOW YOUR SHARES SHOULD BE VOTED. SIGN AND RETURN YOUR PROXY
AS SOON AS POSSIBLE IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
REGARDLESS OF WHETHER YOU PLAN TO ATTEND OUR ANNUAL MEETING OF STOCKHOLDERS ON
NOVEMBER 14, 1996, YOU CAN BE SURE YOUR SHARES ARE REPRESENTED AT THE MEETING BY
RETURNING YOUR PROXY PROMPTLY.
DETACH HERE
Please mark
/x/ votes as in
this example
The Board of Directors recommends that you vote FOR the nominees and FOR the
approval of the Company's Amended and Restated 1994 Incentive Stock Plan and the
approval of Special Option awards under such plan. This proxy will be voted as
specified.
1. Election of Three Class III Directors
Nominees: William C. Bousquette, Stewart M. Kasen, Daniel F. O'Sullivan
FOR WITHHOLD
ALL AUTHORITY TO
NOMINEES / / / / VOTE FOR ALL
NOMINEES
/ /
---------------------------------------------
To withhold authority to vote for any individual
nominee, write that nominee's name on the line
provided above and mark the box at left.
Signature: Date:
--------------------------------------- ----------------
2. Approval of the FOR AGAINST ABSTAIN
Company's Amended and / / / / / /
Restated 1994 Incentive
Stock Plan and approval
of Special Option awards
under such plan.
MARK HERE
FOR ADDRESS / /
CHANGE AND
NOTE AT LEFT
PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED ENVELOPE
EVEN IF YOU PLAN TO ATTEND THE MEETING.
Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such.
Signature: Date:
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