Exhibit 10.46 

Description ofO’Sullivan Key Employee Retention Plan 

        Pursuantto O’Sullivan’s Key Employee Retention Plan, certain O’Sullivan employees(“KERP employees”) could potentially receive a total of up to approximately $1.1million in cash over time. If any of the KERP employees is terminated or resigns prior tothe date on which an applicable KERP payment becomes due, such employee no longer shall beeligible to receive any payment thereunder. In addition, certain of O’Sullivan’sother employees (who are not among the KERP employees) shall be eligible to receivepayments from a $200,000 discretionary pool; approximately $63,000 of such discretionarypool has already been targeted for 15 of O’Sullivan’s employees. Except withrespect to payments from the discretionary pool, O’Sullivan does not intend tosubstitute or add employees in the event that any of the KERP employees no longer isemployed by O’Sullivan as of the date that a payment thereunder becomes due andpayable. 

        TheKERP employees are divided into two tiers, with one tier, consisting of four members ofO’Sullivan’s most senior management, potentially receiving a total cash paymentequal to 37.5% of their annual salary (representing up to $636,150 in the aggregate), anda second tier, consisting of approximately 16 other key employees, potentially receiving atotal cash payment equal to 25% of their annual salary (representing up to $482,294 in theaggregate). The payments are divided into a retention component and an incentivecomponent. 

        Themaximum potential aggregate amount of the KERP’s retention component is $520,758.Fifty percent of the retention component shall be paid upon the earlier of the effectivedate of O’Sullivan’s modified second amended plan of reorganization or June 30,2006, and the remaining 50% thereof shall be paid upon the earlier of September 30, 2006or 90 days after the effective date, in each case to those of the KERP employees who arestill employed by O’Sullivan on such date. 

        Themaximum potential aggregate amount of the KERP’s incentive component is $597,686. Theincentive component of the KERP is tied to two separate and distinct financial performancegoals, with each goal pertaining to one-half of the incentive component: (a) a net salesfor FY 2006 and (b) earnings before interest, taxes, depreciation, amortization andrestructuring expenses for FY 2006. If 100% of either such goal is achieved, then 100% ofthe incentive-based KERP amount with respect to each such goal (*i.e.*, up to$298,843) will be paid; if greater than or equal to 90% and less than 100% of either suchgoal is achieved, then 75% of the incentive-based KERP amount with respect to such goalwill be paid; if greater than or equal to 80% and less than 90% of either such goal isachieved, then 50% of the incentive-based KERP amount with respect to such goal will bepaid; and if less than 80% of either such goal is achieved, then none of theincentive-based KERP amount with respect to such goal will be paid. The incentivecomponent of the KERP will be paid to those of the KERP employees then employed byO’Sullivan on the earlier of (a) the completion of an audit of O’Sullivan’sFY 2006 financial statements or (b) 90 days after the end of FY 2006 (subject toO’Sullivan’s approval of the FY 2006 financial statements). 

        Forthose KERP employees in Tier I, the incentive component shall be 75% and the retentioncomponent shall be 25% of their total potential KERP payments. O’Sullivan will havethe discretion to decide what portion, if any, of the payments otherwise payable withrespect to O’Sullivan’s current President and Chief Executive Officer will bepaid under the circumstances. For those KERP employees in Tier II, the incentive componentshall be 25% and the retention component shall be 75% of their total potential KERPpayments. 

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