<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
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 Rule 14a-11(c) or Rule 14a-12
OWOSSO CORPORATION.
- -----------------------------------------------------------------------------
(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/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form 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>
[GRAPHIC OMITTED]
The Triad Building
2200 Renaissance Boulevard
Suite 150
King of Prussia, Pennsylvania 19406
------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
March 18, 1998
------------------
To the Shareholders of Owosso Corporation:
The Annual Meeting of Shareholders of Owosso Corporation, a Pennsylvania
corporation (the "Company") will be held at 10:00 a.m., local time, on March
18, 1998, at the Philadelphia Marriott - West, 111 Crawford Avenue, West
Conshohocken, Pennsylvania, for the following purposes:
1. To elect seven directors of the Company for a one-year term;
2. To ratify the appointment of Deloitte & Touche LLP as independent
auditors for the Company for the fiscal year ending October 25, 1998;
3. To consider and vote upon a proposal to approve the adoption of the
1998 Long-Term Incentive Plan; and
4. To transact such other business as may properly come before the
meeting or any adjournments thereof.
Only holders of the Company's Common Stock or Class A Convertible
Preferred Stock at the close of business on February 17, 1998, are entitled to
notice of, and to vote at, the Annual Meeting and any adjournments or
postponements thereof. Such shareholders may vote in person or by proxy. The
stock transfer books of the Company will not be closed. The accompanying form
of proxy is solicited by the Board of Directors of the Company.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. YOU ARE
CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR NOT YOU EXPECT
TO ATTEND IN PERSON, YOU ARE URGED TO COMPLETE, SIGN AND RETURN THE ENCLOSED
PROXY CARD IN THE SELF-ADDRESSED ENVELOPE, ENCLOSED FOR YOUR CONVENIENCE,
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU DECIDE TO
ATTEND THE MEETING AND WISH TO VOTE IN PERSON, YOU MAY REVOKE YOUR PROXY BY
WRITTEN NOTICE AT THAT TIME.
By Order of the Board of Directors
/s/ George B. Lemmon, Jr.
----------------------------------
George B. Lemmon, Jr.
President & Chief Executive Officer
February 18, 1998
<PAGE>
[GRAPHIC OMITTED]
The Triad Building
2200 Renaissance Boulevard
Suite 150
King of Prussia, Pennsylvania 19406
------------------
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON
MARCH 18, 1998
------------------
This Proxy Statement, which is first being mailed to shareholders on or
about February 18, 1998, is furnished in connection with the solicitation by
the Board of Directors of Owosso Corporation (the "Company") of proxies to be
used at the Annual Meeting of Shareholders of the Company (the "Annual
Meeting"), to be held at 10:00 a.m. on March 18, 1998, at the Philadelphia
Marriott - West, 111 Crawford Avenue, West Conshohocken, Pennsylvania, and at
any adjournments or postponements thereof. If proxies in the accompanying form
are properly executed and returned prior to voting at the meeting, the shares
represented thereby will be voted as instructed on the proxy. If no
instructions are given on a properly executed and returned proxy, the shares
represented thereby will be voted (i) for the election of the nominees for
director named below, (ii) for the ratification of the appointment of Deloitte
& Touche LLP as independent auditors, (iii) for the approval of the adoption
of the 1998 Long-Term Incentive Plan, and (iv) in support of management on
such other business as may properly come before the Annual Meeting or any
adjournments thereof. Shareholders whose shares are held of record by a broker
or other nominee are nevertheless encouraged to fill in the boxes of their
choice on the proxy, as brokers and other nominees may not be permitted to
vote shares with respect to certain matters for which they have not received
specific instructions from the beneficial owners of the shares. Any proxy may
be revoked by a shareholder prior to its exercise upon written notice to the
Secretary of the Company, by delivering a duly executed proxy bearing a later
date, or by the vote of a shareholder cast in person at the Annual Meeting.
VOTING
Holders of record of the Company's Common Stock or Class A Convertible
Preferred Stock on February 17, 1998, will be entitled to vote at the Annual
Meeting or any adjournments or postponements thereof. As of that date, there
were 5,808,676 shares of Common Stock and 1,071,143 shares of Class A
Convertible Preferred Stock outstanding and entitled to vote. The presence, in
person or by proxy, of holders of Common Stock and Class A Convertible
Preferred Stock entitled to cast at least a majority of the votes which all
holders of Common Stock and Class A Convertible Preferred Stock are entitled
to cast will constitute a quorum for purposes of the transaction of business.
Each share of Common Stock and each share of Class A Convertible
Preferred Stock entitles the holder thereof to one vote on the election of six
nominees for director and on any other matter that may properly come before
the Annual Meeting. Additionally, holders of Class A Convertible Preferred
Stock have the right, voting as a separate voting group, to elect one
director. Shareholders are not entitled to cumulative voting in the election
of directors.
Under Pennsylvania law and the By-laws of the Company, the presence of a
quorum is required for each matter to be acted upon at the Annual Meeting. The
presence at the Annual Meeting in person or by proxy, of shareholders entitled
to cast at least a majority of the votes that all shareholders are entitled to
cast on a particular matter shall constitute a quorum for the purposes of
consideration and action on the matter.
1
<PAGE>
Directors are elected by a plurality vote. All other actions to be taken by
the shareholders at the Annual Meeting shall be taken by the affirmative vote
of a majority of the votes cast by all shareholders entitled to vote thereon.
Votes that are withheld and abstentions will be counted in determining the
presence of a quorum, but will not be counted in determining the number of
votes cast in connection with any particular matter. Broker non-votes, which
occur when a broker or other nominee holding shares for a beneficial owner
does not vote on a proposal because the beneficial owner has not checked one
of the boxes on the proxy card, are not voted and will therefore have no
effect on the outcome of any of the matters to be voted upon at the Annual
Meeting.
The cost of solicitation of proxies by the Board of Directors will be
borne by the Company. Proxies may be solicited by mail, personal interview,
telephone or telegraph and, in addition, directors, officers and regular
employees of the Company may solicit proxies by such methods without
additional remuneration. Banks, brokerage houses and other institutions,
nominees or fiduciaries will be requested to forward the proxy materials to
beneficial owners in order to solicit authorizations for the execution of
proxies. The Company will, upon request, reimburse such banks, brokerage
houses and other institutions, nominees and fiduciaries for their expenses in
forwarding such proxy materials to the beneficial owners of the Company's
stock.
ELECTION OF DIRECTORS
(Proposal 1)
The Company's Board of Directors consists of seven members, and all seven
seats for director are up for election. Unless otherwise specified in the
accompanying proxy, the shares of Common Stock and Class A Convertible
Preferred Stock voted pursuant thereto will be cast for George B. Lemmon, Jr.,
John R. Reese, Eugene P. Lynch, Ellen D. Harvey, Harry E. Hill and James A.
Ounsworth, and the shares of Class A Convertible Preferred Stock voted
pursuant thereto will be cast for Lowell P. Huntsinger, each for terms
expiring at the Annual Meeting of Shareholders to be held in 1999. If, for any
reason, at the time of election, any of the nominees named should decline or
be unable to accept his or her nomination or election, it is intended that
such proxy will be voted for the election, in the nominee's place, of a
substituted nominee, who would be recommended by the Board of Directors
(except in the case of a substituted nominee for Lowell P. Huntsinger, who
would be recommended by the holders of 25% of the Class A Convertible
Preferred Stock). The Board of Directors, however, has no reason to believe
that any of the nominees will be unable to serve as a director.
The following biographical information is furnished as to the current
directors of the Company, each of whom is a nominee for election:
Nominees for Election by Holders of Common Stock or Class A Convertible
Preferred Stock
George B. Lemmon, Jr., 36, became President of the Company in May 1996,
and has served as Chief Executive Officer of the Company since August 1995 and
as a director of the Company since March 1994. Mr. Lemmon was also the
Company's Secretary and Treasurer from March 1994 until June 1996. From
January 1995 to August 1995, Mr. Lemmon served as Executive Vice President --
Corporate Development. From March 1994 until January 1995, Mr. Lemmon was the
Company's Executive Vice President and Chief Financial Officer. Mr. Lemmon
served as Chief Financial Officer of Brynavon Group, Inc., a corporation
controlled by certain members of the Company's Board of Directors or its
affiliates (collectively, "Brynavon Group") from 1990 to October 1994. He held
various managerial and sales positions with Brynavon Group since 1983.
John R. Reese, 54, was elected Chairman of the Board of Directors in
March 1997. He has served as a director of the Company since March 1994, and
served as a director of Brynavon Group from 1982 until October 1994. Mr. Reese
served as the Vice Chairman of the Board of the Company from June 1996 to
March 1997 and then became Chairman. Mr. Reese is also a Managing Director at
Lazard Freres & Co., LLC, a position he has held since 1995, where he is in
charge of the Private Clients Division, which provides investment advice to
high net worth individuals. From 1986 to 1995, Mr. Reese was a partner at
Lazard, Freres & Co.
2
<PAGE>
Eugene P. Lynch, 36, has served as a director of the Company since the
reorganization of the Company which took place in connection with the public
offering of the Common Stock at the end of fiscal 1994 (the "Reorganization").
Since 1990, Mr. Lynch has been a partner of The Clipper Group, and he has been
a Managing Director of the firm since October 1993. The Clipper Group is a New
York-based private investment management firm which was formed in 1990 by
certain former employees of CS First Boston. Prior to that, he worked in the
merchant banking group of CS First Boston from 1987 to 1990, and served as a
Vice President of that firm in 1990. Mr. Lynch serves as a director of AVTEAM,
Inc. as well as several private companies.
Ellen D. Harvey, 44, has served as a director of the Company since the
Reorganization. Since September 1996, she has been a principal of Morgan
Stanley & Co. From 1984 to September 1996, Ms. Harvey served as a portfolio
manager for Miller, Anderson & Sherrerd, a money management firm in West
Conshohocken, Pennsylvania, and was a partner of that firm from 1989 to
January 1996, at which time it was acquired by Morgan Stanley & Co. From 1981
to 1984, she served as Vice President of Morgan Futures Corporation. In 1981,
Ms. Harvey served as Director of Market Surveillance for the New York Futures
Exchange, and from 1980 to 1981 she was a financial economist for the U.S.
Department of the Treasury, Office of Capital Markets Policy.
Harry E. Hill, 49, has served as a director of the Company since January
1995. Since 1991, Mr. Hill has served as President and Chief Executive Officer
of Empire Abrasive Equipment Company, which manufactures portable, cabinet and
automated pneumatic blasting equipment. Since 1984, Mr. Hill has been Managing
Partner of H.E. Hill and Company, which offers consulting services to
manufacturing and other companies. Since 1987, he has also been the President
and Chief Executive Officer of Delaware Car Company, which is engaged in the
railroad repair and equipment manufacturing business.
James A. Ounsworth, 55, has been a Senior Vice President of Safeguard
Scientifics, Inc. since November 1995 and Vice President, Secretary and
General Counsel of Safeguard Scientifics, Inc. since December 1991. Safeguard
Scientifics, Inc., the common stock of which is listed on the New York Stock
Exchange, is engaged primarily in the business of identifying, acquiring
interests in, and developing partnership companies, most of which are engaged
in information technology businesses. Prior to December 1991, Mr. Ounsworth
was a partner in the Business Department of Pepper Hamilton LLP, a law firm
based in Philadelphia, Pennsylvania, where he practiced business law for 16
years after graduating from the University of Virginia School of Law in 1975.
Before entering law school, Mr. Ounsworth was a nuclear engineer in the U.S.
Navy's Fleet Ballistic Missile Submarine program, where he served on two FBM
submarines, the second one as chief engineer, after graduating from the U.S.
Naval Academy in 1964.
Nominee for Election by Holders of Class A Convertible Preferred Stock,
Voting as a Separate Voting Group
Lowell P. Huntsinger, 65, has served as a director of the Company since
November 1995. Mr. Huntsinger was the president of Stature Electric, Inc.
("Stature") until it was acquired by the Company in October 1995. Mr.
Huntsinger was elected to the Board of Directors by the owners of the Company's
Class A convertible preferred stock which was issued in connection with the
Stature acquisition. In 1974, Mr. Huntsinger co-founded Stature with its two
other stockholders who remain with Stature. Prior to founding Stature, Mr.
Huntsinger worked at the Northland Electric division of the Scott Fetzer
Company.
The Board of Directors Recommends a Vote FOR Proposal 1 to Elect All
Nominees.
Committees and Meetings of the Board of Directors
During the Company's 1997 fiscal year, which ended on October 26, 1997,
the Board of Directors held four meetings. Each director attended at least 75%
of the aggregate of the total number of meetings of the Board of Directors and
committees of the Board of Directors on which he or she served.
During fiscal 1997, the Audit Committee, which consisted of Mr. Lynch
(Chairman), Ms. Harvey, Mr. Hill, Mr. Huntsinger, and Mr. Ounsworth, met four
times. In fiscal 1998, the composition of the Audit Committee was changed to
consist of Mr. Hill, Mr. Lynch and Mr. Ounsworth. The function of the Audit
Committee is to make recommendations to the Board of Directors regarding the
annual selection of independent public accountants to audit annually the
Company's books and records and to review recommendations made by such
accounting firm as a result of their audit. The Audit Committee also
periodically reviews the activities of the Company's audit staff and the
adequacy of the Company's internal controls.
3
<PAGE>
During fiscal 1997, the Compensation Committee, which consisted of Ms.
Harvey (Chairman), Mr. Huntsinger and Mr. Ounsworth, met four times. In fiscal
1998, the composition of the Compensation Committee was changed to consist of
Ms. Harvey and Mr. Ounsworth. The Compensation Committee is responsible for
establishing the salaries of the executive officers of the Company, incentives
and other forms of compensation and benefit plans, and also administers the
Company's 1994 Stock Option Plan.
The Company does not have a standing Nominating Committee.
Compensation of Directors
The Company pays each director who is not also an employee of the Company
an annual fee of $5,000, plus $1,000 for each Board meeting and $250 for each
Committee meeting attended by such director in person. The Company will also
reimburse the directors for expenses incurred in connection with their
activities as directors. The Board of Directors is currently evaluating the
level of compensation paid to directors and may adopt changes to the level
and/or form of compensation paid to directors for future years.
The Company's 1994 Stock Option Plan provides for the automatic grant of
an option to purchase 10,000 shares of the Company's Common Stock to each
person (other than an employee of the Company) upon his initial election as a
director of the Company by the shareholders at a per share purchase price
equal to the closing sale price of the Common Stock on the date of grant. Each
such option vests, on a cumulative basis, as to one-fifth of the number of
shares of Common Stock underlying the option on each anniversary of the grant
date commencing on the first anniversary. The options expire, as to each
vested portion of the option, on the fifth anniversary of the vest date.
During fiscal 1997, Mr. Ounsworth received an automatic grant of options under
the 1994 Stock Option Plan for 10,000 shares at an exercise price of $7 5/8
per share.
EXECUTIVE COMPENSATION
Cash and Non-Cash Compensation Paid To Certain Executive Officers
The following table sets forth, with respect to services rendered during
fiscal 1997, 1996 and 1995, the total compensation paid by the Company to the
Company's Chief Executive Officer and each other executive officer whose total
annual salary and bonus exceeded $100,000 during fiscal 1997 (the "named
executive officers"). The Company has no written employment agreements with
any of the named executive officers.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term Compensation
-----------------------------
Annual Compensation Restricted Securities All Other
------------------------ Stock Underlying Compensation
Name and Principal Position Year Salary($) Bonus($) Awards($)(1) Options(#) ($)(2)
- --------------------------- ------------- ----------- ---------- -------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
George B. Lemmon, Jr. 1997 $165,000 $ 55,463 $ 6,100 15,000 $ 3,520
President and Chief Executive 1996 $165,000 $ 2,459 -- 20,000 $ 3,480
Officer 1995 $112,539 $ 86,564 -- -- $ 7,704
Harry Holiday III 1997 $192,308 $ 63,450 $ 7,050 -- $ 4,031
Executive Vice President and 1996(3) $ -- -- -- 50,000 --
Chief Operating Officer
John H. Wert, Jr. 1997 $118,666 $ 23,457 $ 2,606 -- $ 6,838
Senior Vice President -- 1996 $113,416 $ 25,000 -- 5,000 $ 5,369
Finance, Chief Financial Officer, 1995 $106,070 $ 41,130 -- -- $10,217
Secretary and Treasurer
Brian Tidwell 1997 $101,481 $ 21,245 $ 2,361 2,000 $ 3,681
Vice President of Operations 1996(4) $ 87,308 $ 16,000 -- 5,000 $ 2,713
</TABLE>
- ------------
(1) The named executive officers received restricted stock awards for fiscal
1997 in the following share amounts: Mr. Lemmon, 775 shares; Mr. Holiday,
895 shares; Mr. Wert, 331 shares; and Mr. Tidwell, 300 shares. The
restricted stock awards vest on January 4, 1999.
4
<PAGE>
(2) Amounts indicated include insurance premiums paid with respect to term life
insurance in the following amounts: Mr. Lemmon, $966; Mr. Holiday, $102;
Mr. Wert, $66; and Mr. Tidwell, $66.
(3) Mr. Holiday was elected as an executive officer of the Company in November
1996.
(4) Mr. Tidwell was elected as an executive officer of the Company in June
1996.
Stock Options Granted to Certain Executive Officers During Last Fiscal Year
Under the 1994 Stock Option Plan, options to purchase Common Stock are
available for grant to directors, officers and other key employees of the
Company. The following table sets forth certain information regarding options
for the purchase of Common Stock that were awarded to the named executive
officers during fiscal 1997.
OPTION GRANTS IN FISCAL YEAR ENDED OCTOBER 26, 1997
<TABLE>
<CAPTION>
Percent of
Number of Total Options
Securities Granted to
Underlying Employees in Exercise or
Options Last Base Price
Name Granted (#) Fiscal Year ($/Sh)
- ------------------------------- ------------- --------------- -------------
<S> <C> <C> <C>
George B. Lemmon, Jr. ......... 15,000 20.9% $ 8.000
Harry Holiday III ............. -- -- --
John H. Wert, Jr. ............. -- -- --
Brian Tidwell ................. 2,000 2.8% $ 6.125
Potential Realizable
Gain at Assumed Annual
Rates of Stock
Appreciation for
Option Terms
Market Price Compounded Annually
on Grant Expiration ------------------------
Name Date ($/sh) Date (1) 5% 10%
- ------------------------------- -------------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
George B. Lemmon, Jr. ......... $ 7.625 02/03/07 $ 57,840 $139,440
Harry Holiday III ............. -- -- -- --
John H. Wert, Jr. ............. -- -- -- --
Brian Tidwell ................. $ 8.000 06/15/07 $ 5,905 $ 14,235
</TABLE>
- ------------
(1) The stock options were granted under the Company's 1994 Stock Option Plan.
The options vest equally over five years beginning with the first
anniversary of the grant date (or, in Mr. Lemmon's case, June 11, 1997),
and the options expire, with respect to each vested portion of the
options, five years after the vesting date of such portion, or, if sooner,
the tenth anniversary of the grant date.
Stock Options Exercised by Certain Executive Officers During Fiscal 1997 Fiscal
Year and Held by Certain Executive Officers at October 26, 1997
No options granted by the Company were exercised by the named executive
officers during fiscal 1997. The following table sets forth certain
information regarding options for the purchase of Common Stock that were
exercised and/or held by the named executive officers:
<PAGE>
AGGREGATED OPTIONS EXERCISED IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Shares Number of Securities
Acquired on Value Unexercised Options at Value of Unexercised In-the-
Name Exercise (#) Realized ($) FY-End (#) Money Options at FY-End ($)
- --------------------------- -------------- -------------- ------------------------------ -----------------------------
Exercisable Unexercisable Exercisable Unexercisable
------------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
George B. Lemmon, Jr. ..... -- -- 34,000 51,000 0 0
Harry Holiday III ......... -- -- 10,000 40,000 17,790 71,160
John H. Wert, Jr. ......... -- -- 7,000 8,000 0 0
Brian Tidwell ............. -- -- 1,000 6,000 0 1,594
</TABLE>
Board Compensation Committee Report on Executive Compensation
The Compensation Committee of the Company, consisting of the three
non-employee directors, establishes the salaries of the executive officers of
the Company, incentives and other forms of compensation and benefit plans, and
also administers the Company's 1994 Stock Option Plan.
The Compensation Committee's policy regarding executive compensation
reflects a commitment to offer competitive compensation opportunities for its
executive officers, so as to attract and retain quality executives,
5
<PAGE>
to provide incentives to such executives so as to achieve performance
objectives that enhance shareholder value, and to reward excellent
performance. Accordingly, the Compensation Committee has instituted a
compensation program that provides the Company's executives with (i) a
competitive base salary, (ii) a bonus arrangement that encourages individual
achievement, and (iii) stock options and other stock-based compensation
granted at market value in order to provide long-term incentives, thereby
encouraging long-term strategic management and enhancement of shareholder
value.
The Compensation Committee believes that the following current base
salaries for the Company's executive officers are appropriate in light of the
executive officers' contribution to the Company's operations and performance:
George B. Lemmon, Jr., $206,000, Harry Holiday III, $206,000, John H. Wert,
Jr., $126,000 and Brian Tidwell, $110,000. In considering each officer's
contribution to the Company's success, the Compensation Committee considers,
among other things, such officer's role in enhancing the Company's growth,
both internally and through its acquisition program, controlling costs, making
efficient use of the Company's assets and employees, and monitoring the
Company's operations. During fiscal 1996, the Compensation Committee
commissioned an independent study of the compensation paid to executive
officers of comparable publicly held companies. The study showed that the
overall compensation of the Company's executive officers is below the average
for the comparable companies. Updated information received in fiscal 1997
reveals this still to be true. In light of this disparity, the Committee is
evaluating different plans of long-term compensation to bring officers'
compensation up to competitive levels.
The Committee believes that executive officers' compensation should
correlate with the Company's annual performance. Consequently, the officers
have the ability to receive a relatively large proportion of their
compensation pursuant to bonus arrangements, which the Compensation Committee
intends to continue. Before fiscal 1997, the bonuses were calculated based on
a percentage of the Company's pre-tax profit and/or its operating profit for
the preceding fiscal year, with adjustments in some cases based on subjective
performance-based factors. In fiscal 1997, the bonus arrangement for the
Company's executive officers was tied to matrices incorporating Company
performance compared to budget in the following categories: sales, operating
profit margin, and achievement of specific individual goals. In addition, the
Committee determined that 10% of the bonus payable to executive officers and
certain subsidiary management will be paid in the form of restricted Common
Stock, subject to a one-year vesting requirement.
The Compensation Committee may from time to time grant options to the
Company's executive officers to further align their long-term interests with
those of other shareholders. The Committee believes that such options
encourage the executives to employ strategies designed to enhance the
long-term value of the Company's Common Stock. During fiscal 1997, options
were granted to George B. Lemmon, Jr. (options on 15,000 shares) and Brian
Tidwell (options on 2,000 shares). The Compensation Committee based the grants
on a variety of factors, including the financial performance of the Company in
fiscal 1996, an assessment of the personal performance of the officers, and
expected future contribution to the Company's performance. The Compensation
Committee may also grant stock options in the future based on these and other
factors.
Ellen D. Harvey (Chairman)
Lowell P. Huntsinger
James A. Ounsworth
6
<PAGE>
Stock Performance Chart
The following Stock Performance Chart compares the Company's cumulative
total shareholder return on its Common Stock for the period from October 25,
1994 (the date the Common Stock commenced trading on the Nasdaq National
Market) to October 26, 1997 (the date the Company's 1997 fiscal year ended),
with the cumulative total return of the Standard & Poor's 500 Stock Index and
the Standard & Poor's Manufacturing (Diversified Industrials) Index. The
comparison assumes $100 was invested on October 25, 1994 in the Company's
Common Stock and in each of the foregoing indices and assumes reinvestment of
dividends.
TOTAL SHAREHOLDER RETURN
250|------------------------------------------------------------------|
| |
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| @
225|------------------------------------------------------------------|
| #
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200|------------------------------------------------------------------|
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175|------------------------------------------------------@-----------|
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| # |
150|------------------------------------------------------------------|
| |
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| @# |
D 125|------------------------------------------------------------------|
O | |
L | |
L | |
A 100|@#------------@#--------------------------------------------------|
R | * |
S | |
| |
75|------------------------------------------------------------------|
| *
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| * |
50|------------------------------------------------------------------|
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25|------------------------------------------------------------------|
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0|-|----------------|--------------|--------------|-------------|---|
25Oct94 30Oct94 29Oct95 27Oct96 26Oct97
YEARS ENDING
*=OWOSSO CORP -- @=MANUFACTURING (DIVERS)-500 -- #=S&P 500 INDEX
7
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, as of February 1, 1998, with
respect to the beneficial ownership of shares of Common Stock and Class A
Convertible Preferred Stock of the Company by each person who is known to the
Company to be the beneficial owner of more than five percent of either class
of stock, by each director or nominee for director, by each of the named
executive officers, and by all directors and executive officers as a group.
Unless otherwise indicated, each person listed has sole voting power and sole
investment power over the shares indicated.
<TABLE>
<CAPTION>
Class A Convertible
Common Stock Preferred Stock (2)
----------------------------------------- ---------------------------
Amount and Amount and
Nature of Percent of Nature of Percent of
Name and Address of Beneficial Class Beneficial Class Percent of Voting
Beneficial Owner (1) Ownership Outstanding Ownership Outstanding Power
- ------------------------------------ -------------------------- ------------- ------------ ------------- ------------------
<S> <C> <C> <C> <C> <C>
George B. Lemmon, Jr. .............. 263,538(3) 4.5% -- -- 3.8%
Harry Holiday III .................. 11,500(4) * -- -- *
John H. Wert, Jr. .................. 18,700(5)(6) * -- -- *
Brian Tidwell ...................... 2,000(7) * -- -- *
Ellen D. Harvey .................... 13,500(6) * -- -- *
Harry E. Hill ...................... 15,500(8)(9) * -- -- *
Lowell P. Huntsinger ............... 6,000(9) * 518,433 48.4% 7.6%
Eugene P. Lynch .................... 9,000(6) * -- -- *
James A. Ounsworth ................. 2,000(7) * -- -- *
John R. Reese ...................... 2,100,401(9)(10) 36.1% -- -- 30.5%
Morris R. Felt ..................... 700(11) * 259,216 24.2% 3.8%
Randall V. James ................... 2,000(7) * 293,779 27.4% 4.3%
George B. Lemmon, Sr. .............. 510,927 8.8% -- -- 7.4%
John F. Northway, Sr. .............. 668,949 11.5% -- -- 9.7%
All directors and executive officers
as a group (10 persons) ........... 2,442,139(12) 41.4% 518,433 48.4% 44.4%
</TABLE>
- ------------
* Less than 1%
(1) The address of each person named in the table is: c/o Owosso Corporation,
The Triad Building, 2200 Renaissance Boulevard, Suite 150, King of
Prussia, Pennsylvania 19406.
(2) Shares of Class A Convertible Preferred Stock are entitled to one vote
per share and vote with the Common Stock on all matters on which holders
of Common Stock are entitled to vote. Each share of Class Convertible
Preferred Stock is convertible into one share of Common Stock.
(3) Includes 41,000 shares of Common Stock purchasable upon the exercise of
stock options. All of these shares (other than those issuable upon the
exercise of stock options) are held by Mr. Lemmon, Jr. jointly with his
wife. Except for shares issuable upon exercise of options, the shares
indicated are held jointly with Mr. Lemmon's wife.
(4) Includes 10,000 shares of Common Stock purchasable upon the exercise of
stock options.
(5) Of these shares, 1,000 are held by Mr. Wert as custodian for his children
and 1,700 are held by Mr. Wert's wife.
(6) Includes 8,000 shares of Common Stock purchasable upon the exercise of
stock options.
(7) Includes 2,000 shares of Common Stock purchasable upon the exercise of
stock options.
(8) Of these shares, 1,000 are held by Mr. Hill as custodian for his
children.
(9) Includes 6,000 shares of Common Stock purchasable upon the exercise of
stock options.
(10) Of these shares, 91,241 are held by Mr. Reese as trustee under a trust
under which the descendants of Mr. Lemmon, Sr. are beneficiaries. Also
includes 1,500,000 shares held by a limited partnership of which George
Lemmon, Sr. and family members are limited partners and of which the
general partners are trusts of which Mr. Reese is the trustee and family
members of Mr. Lemmon are beneficiaries.
(11) Includes 200 shares of Common Stock purchasable upon the exercise of
stock options.
(12) Includes 97,000 shares of Common Stock purchasable upon the exercise of
stock options.
8
<PAGE>
CERTAIN RELATIONSHIPS AND TRANSACTIONS
On October 26, 1997, the Company had a subordinated promissory note
payable to Lowell Huntsinger, an affiliate, with an outstanding balance of
$1,814,516. Interest paid under this note was $162,465 in fiscal 1997. The
note, which was issued in connection with the acquisition of Stature, is
payable on demand upon 30 days' notice. Subordinated notes in the principal
amount of $350,000 were repaid when due during fiscal 1997, to the following
persons in the following percentage amounts: 54.5% to George B. Lemmon, Sr.,
14.25% to John R. Reese, 23.75% to John F. Northway, Sr., and 2.5% to George
B. Lemmon, Jr.
In October 1995, in connection with the Company's acquisition of Stature
from the shareholders of Stature, which included Lowell P. Huntsinger, the
Company entered into a consulting agreement with Mr. Huntsinger. Mr.
Huntsinger was elected as a director of the Company in connection with the
acquisition. Pursuant to the agreement, the Company has agreed to pay Mr.
Huntsinger $40,000 per year during the term of the agreement, which expired in
October 1997, and provides Mr. Huntsinger with certain insurance and fringe
benefits, in exchange for consulting services and an agreement on the part of
Mr. Huntsinger not to compete with the Company in the business of the
manufacture and sale of electric motors and parts during the term of the
agreement and for three years thereafter.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file with
the Securities and Exchange Commission ("SEC") initial reports of ownership
and reports of changes in ownership of Common Stock and other equity
securities of the Company. Officers, directors and greater than ten-percent
shareholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended October 26, 1997, all
Section 16(a) filing requirements applicable to the Company's officers,
directors and greater than ten-percent beneficial owners were complied with,
except that Mr. Lemmon, Jr. filed two forms late relating to two transactions,
Mr. Tidwell filed one form late relating to one transaction, Mr. Ounsworth
filed his initial statement of beneficial ownership late, and Mr. Lemmon, Sr.
filed one form late relating to four transactions.
RATIFICATION OF
APPOINTMENT OF AUDITORS
(Proposal 2)
The Board of Directors has selected Deloitte & Touche LLP, independent
public accountants, to audit the consolidated financial statements of the
Company for the fiscal year ending October 25, 1998, and recommends that the
shareholders ratify such selection. This appointment will be submitted to the
shareholders for ratification at the Annual Meeting.
The submission of the appointment of Deloitte & Touche LLP is not
required by law or by the By-laws of the Company. The Board of Directors is
nevertheless submitting it to the shareholders to ascertain their views. If
the shareholders do not ratify the appointment, the selection of other
independent public accountants will be considered by the Board of Directors.
If Deloitte & Touche LLP shall decline to accept or become incapable of
accepting it appointment, or if its appointment is otherwise discontinued, the
Board of Directors will appoint other independent public accountants.
A representative of Deloitte & Touche LLP is expected to be present at
the Annual Meeting, will have the opportunity to make a statement, and will be
available to respond to appropriate questions.
The Board of Directors Recommends a Vote FOR Proposal 2 to Ratify the
Appointment of Deloitte & Touche LLP as Independent Auditors for the Year
Ending October 25, 1998.
9
<PAGE>
ADOPTION OF
1998 LONG-TERM INCENTIVE PLAN
(Proposal 3)
The Company believes that the grant of stock, stock-related and
performance-based awards is an effective method of attracting and retaining
valuable employees, directors and consultants and also serves to strengthen
the identity of interest between them and the Company. In order to enhance the
ability of the Company to recruit and retain talented employees, directors and
consultants, the Shareholders are asked to approve the adoption of the 1998
Long-Term Incentive Plan (the "Incentive Plan").
The Incentive Plan is intended to provide the Company flexibility to
adapt the compensation of key employees and provide compensation to directors
and consultants in a changing business environment. The Incentive Plan permits
the granting of any or all of the following types of awards ("Awards"): (i)
Stock Options; (ii) Stock Appreciation Rights; (iii) Restricted Stock; (iv)
Long-Term Performance Awards; (v) Performance Shares; and (vi) Performance
Units. If approved by shareholders at the Meeting, future grants of stock
options may be made under either the Incentive Plan or the Company's 1994
Stock Option Plan.
Officers and other employees of the Company (including directors) or its
subsidiaries are eligible to receive any of the Awards under the Incentive
Plan. Directors and consultants who are not employees are eligible to receive
any of the Awards under the Incentive Plan other than "Incentive Stock
Options," as defined under federal tax law. At the end of fiscal 1997, the
Company had approximately 1,500 employees and seven directors (six of whom are
not employees).
The Incentive Plan will be administered by the entire Board of Directors
or a committee thereof (the "Administrators"). The Administrators will select
those persons eligible to receive Awards from time to time and will determine
the type, terms and conditions of Awards. The Administrators will have the
authority to interpret the provisions of the Incentive Plan.
The Board may generally amend, alter or discontinue the Incentive Plan at
any time, but no amendment, alteration or discontinuation will be made which
would impair the rights of a participant with respect to an Award which has
been made under the Incentive Plan, without the participant's consent.
The maximum number of shares of Common Stock of the Company that may be
made the subject of Awards granted under the Incentive Plan is 500,000. No
participant will be awarded Long-Term Performance Awards over the term of the
Incentive Plan for more than an aggregate of 30% of the shares of stock
authorized for grant under the Incentive Plan. In the event of any merger,
reorganization, consolidation, recapitalization, stock dividend or other
change in corporate structure affecting the Common Stock, the Administrators
will adjust accordingly the number, type and issuer of shares reserved for
issuance under the Incentive Plan, the number and option price of shares
subject to outstanding Options granted under the Incentive Plan and the number
and price of shares subject to other Awards made under the Incentive Plan. In
addition, the shares related to the unexercised or undistributed portion of
any terminated, expired or forfeited Award will also be made available for
distribution in connection with future Awards.
Stock Options
The Incentive Plan permits the Administrators to grant to any participant
Non-Qualified Stock Options and, to participants who are also employees,
Incentive Stock Options. The per share exercise price of a Stock Option will
be determined by the Administrators; provided, however, that the exercise
price per share of Common Stock purchasable under an Incentive Stock Option
will not be less than 100% of the fair market value of the Common Stock at the
time of grant (and not less than 110% in the case of an Incentive Stock Option
granted to a participant who, at the time the Option is granted, owns more
than 10% of the voting power of all classes of stock of the Company (a "10%
Owner")). The provisions of Stock Option awards need not be the same with
respect to each recipient.
Subject to the limitations of the Incentive Plan, each Stock Option will
be exercisable at such time or times and in the installments determined by the
Administrators. No Stock Option will be exercisable more
10
<PAGE>
than ten years after the date it is granted. An Incentive Stock Option granted
to a 10% Owner will not have a term of more than five years. Incentive Stock
Options are subject to additional restrictions imposed by the Internal Revenue
Code of 1986, as amended (the "Code"). Stock Options are not transferable by
the participant other than by will or by the laws of descent and distribution
or pursuant to a qualified domestic relations order, and all Stock Options
will be exercisable, during the participant's lifetime, only by the
participant. In the discretion of the Administrators, the purchase price for
shares acquired pursuant to the exercise of a Stock Option may be paid in cash
or by shares of Restricted or unrestricted shares of Common Stock. In the
event of a Change of Control (defined below), the Administrators may, in their
discretion, cause all outstanding Stock Options to immediately become vested.
When a participant gives notice of exercise of an Option, the Administrators
may elect to terminate all or part of the portion of the Option(s) proposed to
be exercised provided the Company pays the participant an amount in cash equal
to the excess of the fair market value of the Common Stock otherwise issuable
over the exercise price on the effective date of such cash-out. In addition,
the Administrators may require that all or part of the shares to be issued
pursuant to exercise of an Option take the form of Restricted Stock. The
Administrators may also agree to cooperate in a "cashless exercise" of a Stock
Option, which will be effected by the participant's delivering to a securities
broker instructions to sell a sufficient number of shares of Common Stock to
cover the costs and expenses associated therewith.
Under the Code, a participant will not recognize taxable income upon
grant or exercise of an Incentive Stock Option, and the Company and its
subsidiaries will not be entitled to any deduction with respect thereto.
However, upon the exercise of an Incentive Stock Option, the excess of the
fair market value on the date of exercise of the shares received over the
exercise price of shares will be treated as an adjustment to alternative
minimum taxable income. Consequently, exercise of an Incentive Stock Option
could subject an optionee to alternative minimum tax or increase an optionee's
alternative minimum taxable income. In order for the exercise of an Incentive
Stock Option to qualify for the foregoing tax treatment, the participant
generally must be an employee of the Company or a subsidiary from the date the
Incentive Stock Option is granted through the date three months before the
date of exercise, except that special rules apply in the case of death of
disability.
If the participant has held the shares acquired upon exercise of an
Incentive Stock Option for at least two years after the date of grant and for
at least one year after the date of exercise, upon disposition of the shares
by the participant, the difference, if any, between the sales price of the
shares and the exercise price of the Option will be treated as long-term
capital gain or loss. If the participant does not satisfy these holding period
requirements, a "disqualifying disposition" occurs and the participant will
recognize ordinary income in the year of the disposition of the shares 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
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 participant sells the shares prior to the satisfaction
of the holding period requirements but at a price below the fair market value
of the shares at the time the Option was exercised, the amount of ordinary
income will be limited to the amount realized on the sale in excess of the
exercise price of the Option. The Company and its subsidiaries will generally
be allowed a deduction to the extent the participant recognizes ordinary
income.
In general, a participant to whom a Non-Qualified Stock Option is granted
will recognize no income when the Option is granted. Upon exercise of a
Non-Qualified Stock Option, the participant will recognize ordinary income
equal to the excess of the fair market value of the shares on the date of
exercise over the exercise price of the Option, unless the shares received are
Restricted Stock, in which case, unless the exercising participant elects to
recognize such income, the income recognition is deferred until the
restrictions lapse or the Restricted Stock becomes transferable. The Company
will generally be entitled to a compensation deduction in the same amount and
at the same time as the participant recognizes ordinary income, and will
comply with applicable withholding requirements with respect to such
compensation.
There are no tax consequences to a participant or to the Company if a
Stock Option lapses before it is exercised or forfeited.
11
<PAGE>
Stock Appreciation Rights
The Incentive Plan permits the grant of Stock Appreciation Rights
independent of or in connection with the grant of Stock Options. A Stock
Appreciation Right or the applicable portion thereof granted with respect to a
given Stock Option will generally terminate and no longer be exercisable upon
the termination or exercise of the related Stock Option. A Stock Appreciation
Right permits the participant to receive, upon exercise of the Stock
Appreciation Right, an amount in cash and/or shares of Common Stock equal in
value to the excess of the fair market value of one share of Common Stock over
the base amount of the Stock Appreciation Right or the exercise price per
share specified in the related Stock Option, multiplied by the number of
shares in respect of which the Stock Appreciation Right will have been
exercised. The Administrators will have the right to determine the form of
payment. Stock Appreciation Rights granted in connection with Stock Options
will be exercisable only at such time or times and to the extent that the
Stock Options to which they relate will be exercisable; provided, however,
that any Stock Appreciation Right granted subsequent to the grant of the
related Stock Option will, in general, not be exercisable during the first six
months of its term.
Upon exercise of a Stock Appreciation Right, the participant will
recognize ordinary income in an amount equal to the cash or the fair market
value of the shares received on the exercise date. The Company will generally
be entitled to a compensation deduction in the same amount and at the same
time that participant holding a Stock Appreciation Right recognizes ordinary
income, and will comply with applicable withholding requirements with respect
to such compensation.
Restricted Stock
Shares of Restricted Stock may be issued either alone or in addition to
other Awards granted under the Incentive Plan. The Administrators will
determine the recipients of shares of Restricted Stock, the number of shares
to be awarded, the price (if any) to be paid by such recipient, the time or
times within which such Awards may be subject to forfeiture, and all other
conditions of the Award. The provisions of Restricted Stock Awards need not be
the same with respect to each recipient. The Company will issue a certificate
to each recipient representing the shares of Restricted Stock, which will bear
a legend marking such stock as Restricted Stock. Although such certificate(s)
will be held in custody by the Company until the restrictions thereon have
elapsed, such recipient will have, with respect to the shares of Restricted
Stock, all rights of a shareholder of the Company, including the right to vote
the shares, and the right to receive any cash dividends. The Administrators,
at the time of Award, may permit or require the payment of cash dividends to
be deferred and reinvested in additional shares of Restricted Stock. During
the Restriction Period set by the Administrators, the participant will not be
permitted to transfer or encumber shares of Restricted Stock; provided that
the Administrators may provide for the lapse of such restrictions in
installments and may accelerate or waive such restrictions in whole or in
part. Upon the expiration of the Restriction Period without a prior forfeiture
of the Restricted Stock, the certificates for such shares of Restricted Stock
will be delivered to the participant receiving the Award. In the event of a
Change of Control, the Administrators may, in their discretion, cause all
forfeiture limitations on Restricted Stock to lapse and a stock certificate or
certificates representing such unrestricted shares to be issued to the
participant.
Unless the participant elects to recognize income at the time of a
Restricted Stock award, a participant will not recognize taxable income until
the shares are no longer subject to a substantial risk of forfeiture or become
transferable. In either event, the participant's recognized income will equal
the excess of the fair market value of such shares at grant if an election is
made, or at the time the restrictions lapse or are removed, and any amount
paid for such Common Stock (the "Bargain Element"). The Company will generally
be entitled to a deduction in the same amount, and in the same year as the
recipient of Restricted Stock has income. The Company will comply with all
applicable withholding requirements with respect to such income.
The aforementioned election allows the participant to recognize the
Bargain Element as income in the year of the Award by making an election with
the Internal Revenue Service within 30 days after the Award is made. Dividends
received by a participant on Restricted Stock during the Restricted Period are
taxable to the participant as ordinary compensation income and will be
deductible by the Company unless the aforementioned election is made,
rendering dividends taxable as dividends and nondeductible.
Long-Term Performance Awards
The Incentive Plan permits the Administrators to grant to any participant
Long-Term Performance Awards. The Administrators will determine in advance the
nature, length and starting date of the performance
12
<PAGE>
period for each Long-Term Performance Award, which will be at least two years,
and will determine the performance objectives to be used in valuing Long-Term
Performance Awards and determining the extent to which such Long-Term
Performance Awards have been earned. Performance objectives may vary from
participant to participant and between groups of participants. In the event of
special or unusual events or circumstances affecting the application of one or
more performance objectives to a Long-Term Performance Award, the
Administrators may revise the performance objectives and/or underlying factors
and criteria applicable to the Long-Term Performance Awards affected.
Performance Awards may be denominated in dollars or in shares of Common Stock,
and to the extent that the relevant measure of performance is met, payments
may be made in the form of cash or Common Stock, including shares of
Restricted Stock, either in a lump sum payment or in annual installments
commencing as soon as practicable after the end of the relevant performance
period. Unless otherwise provided in the applicable Award agreement, if a
participant terminates service with the Company during a performance period
because of death, disability or retirement, the participant will be entitled
to a payment with respect to each outstanding Long-Term Performance Award at
the end of the applicable performance period based upon the participant's
performance for the portion of such performance period ending on the date of
termination and pro-rated for the portion of the performance period during
which the participant was employed by or served on the Board of Directors of
the Company, as determined by the Administrators. In the event of a Change of
Control, the Administrators may, in their discretion, cause all conditions
applicable to a Long-Term Performance Award to immediately terminate and a
stock certificate or cash, as the case may be, to be issued or paid to the
participant.
A participant receiving a Long-Term Performance Award will recognize
taxable income when an Award is paid at which time the participant will
realize income in an amount equal to the amount of cash received or the fair
market value of shares received in payment. The Company will generally be
entitled to a corresponding deduction at such time, and will comply with
applicable withholding requirements with respect thereto. If Restricted Stock
is used in payment of a Long-Term Performance Award, the participant's federal
income tax consequences will be as described above under "Restricted Stock."
Performance Shares
The Administrators will determine the persons to whom Performance Shares
will be granted and the times and the number of such Performance Shares that
will be granted. Performance Shares are awards of the right to receive Common
Stock at the end of a specified period upon the attainment of performance
goals specified by the Administrators at the time of grant. The provisions of
the Performance Shares need not be the same with respect to each participant.
Performance Shares generally will be forfeited if the participant ceases to be
an employee of the Company during the Performance period for any reason other
than death, disability or retirement. In the event of death, disability or
retirement, the participant or the participant's estate, as the case may be,
will be entitled to receive, at the expiration of the performance period, a
percentage of Performance Shares that is equal to the percentage of the
performance period that had elapsed as of the date of death or date on which
such disability or retirement commenced, provided that the Administrators
determine that the applicable performance goals have been met. In the event of
a Change of Control, the Administrators may, in their discretion, cause all
conditions applicable to the Performance Shares to immediately terminate and
the full number of shares of Common Stock subject to the Performance Shares
award to be issued to the participant.
At the end of a performance period, the participant will recognize
ordinary income in an amount equal to the fair market value of the Common
Stock received. The Company will generally be entitled to a compensation
deduction in the same amount and at the same time as the participant of a
Performance Share award recognizes ordinary income, and will comply with
applicable withholding requirements with respect thereto.
Performance Units
The Administrators will determine the persons to whom Performance Units
will be granted and the times and the number of such Performance Units that
will be granted. Performance Units are awards of the right to receive a fixed
dollar amount, payable in cash, at the end of a specified period upon the
attainment of
13
<PAGE>
performance goals specified by the Administrators at the time of the grant.
The provisions of Performance Unit awards need not be the same with respect to
each participant. Performance Units will be forfeited if the participant
ceases to be an employee of the Company during the Performance period for any
reason other than death, disability or retirement. In the event of death,
disability or retirement, the participant or his or her estate will be
entitled to receive, at the expiration of the performance period, cash for a
percentage of his or her Performance Units equal to the percentage of the
performance period that elapsed at the time of death or commencement of
disability or retirement, provided that the Administrators determine that the
applicable performance goals have been met. In the event of a Change of
Control, the Administrators may, in their discretion, cause all conditions
applicable to Performance Units to terminate and a cash payment for the full
amount of the Performance Unit to be made to the participant.
At the end of a performance period, the participant will recognize
ordinary income in an amount equal to the cash received on such date. The
Company will generally be entitled to a compensation deduction in the same
amount and at the same time as the participant of a Performance Unit award
recognizes ordinary income, and will comply with applicable withholding
requirements with respect thereto.
For purposes of the Incentive Plan, the term "Change of Control" means
(i) the acquisition in one or more transactions by any person (including any
group acting in concert) of beneficial ownership of 50% or more of the
combined voting power of the Company's then outstanding voting securities (the
"Voting Securities"), excluding Voting Securities acquired directly from the
Company (but such Voting Securities shall be included in the calculation of
the total number of Voting Securities then outstanding); or (ii) approval by
shareholders of the Company of (A) a merger, reorganization or consolidation
involving the Company if the shareholders of the Company immediately before
such merger, reorganization or consolidation do not or will not own directly
or indirectly immediately following such merger, reorganization or
consolidation, more than fifty percent (50%) of the combined voting power of
the outstanding voting securities of the corporation resulting from or
surviving such merger, reorganization or consolidation in substantially the
same proportion as their ownership of the Voting Securities outstanding
immediately before such merger, reorganization or consolidation or (B) (1) a
complete liquidation or dissolution of the Company or (2) an agreement for the
sale or other disposition of all or substantially all of the assets of the
Company; or (3) acceptance by shareholders of the Company of shares in a share
exchange if the shareholders of the Company immediately before such share
exchange do not or will not own directly or indirectly immediately following
such share exchange more than fifty percent (50%) of the combined voting power
of the outstanding voting securities of the corporation resulting from or
surviving such share exchange in substantially the same proportion as their
ownership of the Voting Securities outstanding immediately before such share
exchange. However, a Change of Control shall not be deemed to occur solely
because 50% or more of the then outstanding Voting Securities is acquired by
(1) a corporation which immediately prior to such acquisition is owned
directly or indirectly by the Company's shareholders in the same proportion as
their ownership of stock in the Company immediately prior to such acquisition
or (2) any or all of George B. Lemmon, Jr., George B. Lemmon, Sr., and John R.
Reese.
The Company believes that granting the Administrators the authority to
cause the acceleration of the exercisability of outstanding Stock Options, the
lapse of restrictions applicable to Restricted Stock and the elimination of
conditions applicable to Long Term Performance Awards, Performance Shares and
Performance Units upon the occurrence of an event constituting a Change in
Control will help to preserve the benefits of the options granted under the
Incentive Plan in the event of a Change in Control. Such provisions may
increase the cost to a third party of acquiring control of the Company
(whether pursuant to a friendly or hostile transaction) by reason of the
immediate expense it would be obligated to incur upon a Change of Control.
The Incentive Plan is intended to constitute an "unfunded" plan for
incentive and deferred compensation. The Incentive Plan states that with
respect to any payments not yet made to a participant by the Company, nothing
contained in the Incentive Plan gives any participant any rights that are
greater than those of a general creditor of the Company.
The foregoing discussion, as it relates to certain federal income tax
consequences of the Incentive Plan, does not purport to address all of the tax
consequences that may be applicable to any particular participant or
14
<PAGE>
to the Company. In addition, such discussion does not address foreign, state,
or local taxes, nor does it address federal taxes other than federal income
tax. Such discussion is based upon applicable statutes, regulations, case law,
administrative interpretations and judicial decisions in effect as of the date
of this Proxy Statement.
On December 31, 1997, the closing sale price of a share of Common Stock,
as reported on the Nasdaq National Market, was $7.875.
The affirmative vote of the majority of shares present in person or
represented by proxy at the Meeting and entitled to vote on the proposed
approval of the Incentive Plan is required to approve the adoption of the
Incentive Plan. If such approval is not received, the Incentive Plan will not
become effective.
The Board of Directors recommends a vote FOR Proposal 3 to approve the
adoption of the 1998 Long-Term Incentive Plan.
OTHER BUSINESS
Management knows of no other matters that will be presented at the Annual
Meeting. However, if any other matter properly comes before the meeting, or
any adjournment or postponement thereof, it is intended that proxies in the
accompanying form will be voted in accordance with the judgment of the persons
named therein.
ANNUAL REPORT
A copy of the Company's Annual Report to Shareholders for the fiscal year
ended October 26, 1997 accompanies this Proxy Statement.
SHAREHOLDER PROPOSALS
To be eligible for inclusion in the Company's proxy materials for the
1998 Annual Meeting of Shareholders, a proposal intended to be presented by a
shareholder for action at that meeting must, in addition to meeting the
shareholder eligibility and other requirements of the Securities and Exchange
Commission's rules governing such proposals, be received not later than
October 20, 1998, by the Chief Financial Officer of the Company at the
Company's principal executive offices, The Triad Building, 2200 Renaissance
Boulevard, Suite 150, King of Prussia, Pennsylvania 19406.
---------------------
THE COMPANY WILL PROVIDE TO EACH PERSON SOLICITED, WITHOUT CHARGE EXCEPT
FOR EXHIBITS, UPON REQUEST IN WRITING, A COPY OF ITS ANNUAL REPORT ON FORM
10-K, INCLUDING THE FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES, AS
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FOR THE FISCAL YEAR ENDED
OCTOBER 26, 1997. REQUESTS SHOULD BE DIRECTED TO CHIEF FINANCIAL OFFICER,
OWOSSO CORPORATION, THE TRIAD BUILDING, 2200 RENAISSANCE BOULEVARD, SUITE 150,
KING OF PRUSSIA, PENNSYLVANIA 19406.
By Order of the Board of Directors
George B. Lemmon, Jr.
/s/ George B. Lemmon, Jr.
----------------------------------
President & Chief Executive Officer
Date: February 18, 1998
King of Prussia, Pennsylvania
15
<PAGE>
OWOSSO CORPORATION
Proxy Solicited On Behalf Of The Board of Directors
from holders of Common Stock
The undersigned, revoking all previous proxies, hereby appoints George B.
Lemmon, Jr. and Harry Holiday III, and each of them acting individually, as
the attorney and proxy of the undersigned, with full power of substitution, to
vote, as indicated below and in their discretion upon such other matters as
may properly come before the meeting, all shares of Common Stock which the
undersigned would be entitled to vote at the Annual Meeting of the
Shareholders of Owosso Corporation to be held on March 18, 1998, and at any
adjournment or postponement thereof.
1. Election of Directors:
[ ] FOR the nominees listed below [ ] WITHHOLD AUTHORITY to vote for
the nominees listed below
Nominees: For a one-year term expiring at the Annual Meeting to be held in
1999: Ellen D. Harvey, Harry E. Hill, George B. Lemmon, Jr., Eugene
P. Lynch, James A. Ounsworth, and John R. Reese.
(Instruction: To withhold authority to vote for any nominee(s), write the
name(s) of such nominee(s) on the line below.)
------------------------------------------
2. Ratification of appointment of Deloitte & Touche LLP as independent
auditors for the Company for the fiscal year ending October 25, 1998:
[ ] For [ ] Against [ ] Abstain
3. Approve adoption of 1998 Long-Term Incentive Plan:
[ ] For [ ] Against [ ] Abstain
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. UNLESS
OTHERWISE SPECIFIED, THE SHARES WILL BE VOTED "FOR" THE ELECTION OF THE
NOMINEES FOR DIRECTOR LISTED ON THE REVERSE SIDE HEREOF, "FOR" RATIFICATION OF
APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR
THE FISCAL YEAR ENDING OCTOBER 25, 1998, AND "FOR" THE ADOPTION OF THE 1998
LONG-TERM INCENTIVE PLAN. THIS PROXY ALSO DELEGATES DISCRETIONARY AUTHORITY
WITH RESPECT TO ANY OTHER BUSINESS WHICH MAY PROPERLY COME BEFORE THE MEETING
OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL
MEETING AND PROXY STATEMENT.
---------------------------------------------------
Signature of Shareholder
---------------------------------------------------
Signature of Shareholder
Date:_______________________________________ , 1998
NOTE: PLEASE SIGN THIS PROXY EXACTLY AS NAME(S)
APPEAR ON YOUR STOCK CERTIFICATE. WHEN SIGNING AS
ATTORNEY-IN-FACT, EXECUTOR, ADMINISTRATOR, TRUSTEE
OR GUARDIAN, PLEASE ADD YOUR TITLE AS SUCH, AND IF
SIGNER IS A CORPORATION, PLEASE SIGN WITH FULL
CORPORATE NAME BY A DULY AUTHORIZED OFFICER OR
OFFICERS AND AFFIX THE CORPORATE SEAL. WHERE STOCK
IS ISSUED IN THE NAME OF TWO (2) OR MORE PERSONS,
ALL SUCH PERSONS SHOULD SIGN.
<PAGE>
OWOSSO CORPORATION
Proxy Solicited On Behalf Of The Board of Directors
from holders of Class A Convertible Preferred Stock
The undersigned, revoking all previous proxies, hereby appoints George B.
Lemmon, Jr. and Harry Holiday III, and each of them acting individually, as
the attorney and proxy of the undersigned, with full power of substitution, to
vote, as indicated below and in their discretion upon such other matters as
may properly come before the meeting, all shares of Common Stock and Class A
Convertible Preferred Stock which the undersigned would be entitled to vote at
the Annual Meeting of the Shareholders of Owosso Corporation to be held on
March 18, 1998, and at any adjournment or postponement thereof.
1. Election of Directors:
[ ] FOR the nominees listed below [ ] WITHHOLD AUTHORITY to vote for
the nominees listed below
Nominees: For a one-year term expiring at the Annual Meeting to be held in
1999: Ellen D. Harvey, Harry E. Hill, Lowell P. Huntsinger, George B.
Lemmon, Jr., Eugene P. Lynch, James A. Ounsworth, and John R. Reese.
(Instruction: To withhold authority to vote for any nominee(s), write the
name(s) of such nominee(s) on the line below.)
------------------------------------------
2. Ratification of appointment of Deloitte & Touche LLP as independent
auditors for the Company for the fiscal year ending October 25, 1998:
[ ] For [ ] Against [ ] Abstain
3. Approve adoption of 1998 Long-Term Incentive Plan:
[ ] For [ ] Against [ ] Abstain
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. UNLESS
OTHERWISE SPECIFIED, THE SHARES WILL BE VOTED "FOR" THE ELECTION OF THE
NOMINEES FOR DIRECTOR LISTED ON THE REVERSE SIDE HEREOF, "FOR" RATIFICATION OF
APPOINTMENT OF DELOITTE & TOUCHE LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR
THE FISCAL YEAR ENDING OCTOBER 25, 1998, AND "FOR" THE ADOPTION OF THE 1998
LONG-TERM INCENTIVE PLAN. THIS PROXY ALSO DELEGATES DISCRETIONARY AUTHORITY
WITH RESPECT TO ANY OTHER BUSINESS WHICH MAY PROPERLY COME BEFORE THE MEETING
OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
THE UNDERSIGNED HEREBY ACKNOWLEDGES RECEIPT OF THE NOTICE OF ANNUAL
MEETING AND PROXY STATEMENT.
---------------------------------------------------
Signature of Shareholder
---------------------------------------------------
Signature of Shareholder
Date:_______________________________________ , 1998
NOTE: PLEASE SIGN THIS PROXY EXACTLY AS NAME(S)
APPEAR ON YOUR STOCK CERTIFICATE. WHEN SIGNING AS
ATTORNEY-IN-FACT, EXECUTOR, ADMINISTRATOR, TRUSTEE
OR GUARDIAN, PLEASE ADD YOUR TITLE AS SUCH, AND IF
SIGNER IS A CORPORATION, PLEASE SIGN WITH FULL
CORPORATE NAME BY A DULY AUTHORIZED OFFICER OR
OFFICERS AND AFFIX THE CORPORATE SEAL. WHERE STOCK
IS ISSUED IN THE NAME OF TWO (2) OR MORE PERSONS,
ALL SUCH PERSONS SHOULD SIGN.
