Exhibit 10.1
Annex A
SUNSOURCE INC.
1998 EQUITY COMPENSATION PLAN
The purpose of the SunSource Inc. 1998 Equity Compensation Plan (the
"Plan") is to provide (i) designated officers (including officers who are also
directors) and other employees of SunSource Inc. (the "Company") and its
subsidiaries, and (ii) non-employee members of the board of directors of the
Company (the "Board") with the opportunity to receive grants of incentive stock
options, nonqualified stock options, stock appreciation rights, stock awards
and performance units (hereinafter collectively referred to as "Grants"). The
Company believes that the Plan will encourage the participants to contribute
materially to the growth of the Company, thereby benefitting the Company's
shareholders, and will align the economic interests of the participants with
those of the shareholders. For purposes of the Plan, the term subsidiary shall
refer to any company (whether a corporation, partnership, joint venture or
other entity) in which the Company owns, directly or indirectly, a majority of
the shares of capital stock or other equity interest.
1. Administration
(a) Committee. The Plan shall be administered and interpreted by a
committee (the "Committee"), which shall consist of two or more persons
appointed by the Board, all of whom shall be "outside directors" as defined
under section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code") and related Treasury regulations and non-employee directors as defined
under Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Notwithstanding the foregoing, the Board may ratify or approve
(and, in the case of Grants to the members of the Committee, shall approve)
Grants, in which case references to the Committee shall be deemed to include
the Board.
(b) Committee Authority. The Committee shall have the sole authority to
(i) determine the individuals to whom Grants shall be made under the Plan, (ii)
determine the type, size and terms of the Grants to be made to each such
individual, (iii) determine the time when the Grants will be made and the
duration of any applicable exercise or restriction period, including the
criteria for exercisability and the acceleration of exercisability, and (iv)
deal with any other matters arising under the Plan. Grants shall be made in
accordance with a compensation policy established by the Committee which may
require that Grants are made upon accomplishment of certain goals that relate
to the financial performance of the Company or its operating units, the
performance of the common stock of the Company (the "Company Stock"),
individual performance, or such other criteria as the Committee deems
appropriate. A description of the business criteria to be used, and the
procedures to be followed in awarding qualified performance-based compensation
are set forth in Section 9.
(c) Committee Determinations. The Committee shall have full power and
authority to administer and interpret the Plan, to make factual determinations
and to adopt or amend such rules, regulations, agreements and instruments for
implementing the Plan and for the conduct of its business as it deems necessary
or advisable, in its sole discretion. The Committee's interpretations of the
Plan and all determinations made by the Committee pursuant to the powers vested
in it hereunder shall be conclusive and binding on all persons having any
interest in the Plan or in any awards granted hereunder. All powers of the
Committee shall be executed in its sole discretion, in the best interest of the
Company, not as a fiduciary, and in keeping with the objectives of the Plan and
need not be uniform as to similarly situated individuals.
2. Grants
Awards under the Plan may consist of grants of stock options as described
in Section 5 ("Options"), stock awards as described in Section 6 ("Stock
Awards"), stock appreciation rights as described in Section 7 ("SARs"), and
performance units as described in Section 8 ("Performance Units"). All Grants
shall be subject to the terms and conditions set forth herein and to such other
terms and conditions consistent with this Plan as the Committee deems
appropriate and as are specified in writing by the Committee to the individual
in a grant instrument or an amendment to the grant instrument (the "Grant
Instrument"). The Committee shall approve the form and provisions of each Grant
Instrument. Grants under a particular Section of the Plan need not be uniform
as among the grantees.
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3. Shares Subject to the Plan
(a) Shares Authorized. The aggregate number of shares of Company Stock
("Common Shares") that may be issued or transferred under the Plan is 2,000,000
shares; but no more than the Applicable Percentage of the number of Common
Shares issued and outstanding on the effective date of the Plan and at any time
thereafter may be issued or transferred under the Plan. The Applicable
Percentage shall be five percent (5%) as of the effective date of the Plan and
shall increase by five percent (5%) on each anniversary of the effective date;
provided that the Applicable Percentage shall not exceed twenty-five percent
(25%). In no event, however shall the aggregate number of Common Shares that
may be issued or transferred under the Plan be less than the number of Common
Shares previously issued or transferred under the Plan or subject to then
outstanding Grants. The maximum number of Common Shares that may be issued or
transferred as Stock Awards at any time shall not exceed twenty-five percent
(25%) of the aggregate number of Common Shares that may then be issued or
transferred under the Plan. Notwithstanding anything in the Plan to the
contrary, the maximum aggregate number of Common Shares that shall be subject
to Grants made under the Plan to any one individual during any calendar year
shall be 200,000 shares. The shares may be authorized but unissued Common
Shares or reacquired Common Shares, including shares purchased by the Company
on the open market for purposes of the Plan. If and to the extent Options
granted under the Plan terminate, expire, or are canceled, forfeited, exchanged
or surrendered without having been exercised or if any Stock Awards are
forfeited, the shares subject to such Grants shall again be available for
purposes of the Plan.
(b) Adjustments. If there is any change in the number or kind of Common
Shares outstanding (i) by
reason of a stock dividend, spinoff, recapitalization, stock split, or
combination or exchange of shares, (ii) by reason of a merger, reorganization
or consolidation in which the Company is the surviving corporation, (iii) by
reason of a reclassification or change in par value, or (iv) by reason of any
other extraordinary or unusual event affecting the outstanding Company Stock as
a class without the Company's receipt of consideration, or if the value of
outstanding Common Shares is substantially reduced as a result of a spinoff or
the Company's payment of an extraordinary dividend or distribution, the maximum
number of Common Shares available for Grants, the maximum number of Common
Shares that any individual participating in the Plan may be granted in a year,
the number of shares covered by outstanding Grants, the kind of shares issued
under the Plan, and the price per share or the applicable market value of such
Grants may be appropriately adjusted by the Committee to reflect any increase
or decrease in the number of, or change in the kind or value of, issued Common
Shares to preclude, to the extent practicable, the enlargement or dilution of
rights and benefits under such Grants; provided, however, that any fractional
shares resulting from such adjustment shall be eliminated. Any adjustments
determined by the Committee shall be final, binding and conclusive.
4. Eligibility for Participation
(a) Eligible Persons. All employees of the Company and its subsidiaries
("Employees"), including Employees who are officers or members of the Board,
and members of the Board who are not Employees ("Non-Employee Directors") shall
be eligible to participate in the Plan.
(b) Selection of Grantees. The Committee shall select the Employees and
Non-Employee Directors to receive Grants and determine the number of Common
Shares subject to a particular Grant in such manner as the Committee determines
pursuant to Section 1(b). Employees and Non- Employee Directors who receive
Grants under this Plan shall hereinafter be referred to as "Grantees."
5. Granting of Options
(a) Number of Shares. The Committee, in its sole discretion, shall
determine the number of Common Shares that will be subject to each Grant of
Options to any Employee or Non-Employee Director.
(b) Type of Option and Price.
(i) The Committee may grant Options that are intended to qualify as
"incentive stock options" within the meaning of section 422 of the Code
("Incentive Stock Options") or Options which are not intended to so
qualify ("Nonqualified Stock Options") or any combination of Incentive
Stock Options and Nonqualified Stock Options, all in accordance with the
terms and conditions set forth herein. However, Incentive
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Stock Options may not be granted to any Non-Employee Director and may only
be granted to an Employee who is employed by the Company or any "parent
corporation" or "subsidiary corporation" (within the meaning of sections
424(e) and 424(f) of the Code, respectively).
(ii) The purchase price (the "Exercise Price") per share of Company
Stock subject to any Option shall be determined by the Committee and shall
not be less than the Fair Market Value (as defined below) of a share of
Company Stock on the date the Option is granted; provided that an
Incentive Stock Option may not be granted to an Employee who, at the time
of grant, owns stock possessing more than 10 percent of the total combined
voting power of all classes of stock of the Company or any "parent
corporation" or "subsidiary corporation" of the Company (within the
meaning of sections 424(e) and 424(f) of the Code, respectively), unless
the Exercise Price per share is not less than 110% of the Fair Market
Value of Company Stock on the date of grant. Notwithstanding the
foregoing, the Exercise Price per share of Grants of Nonqualified Stock
Options may be at less than the Fair Market Value of Company Stock, but
not less than (85%) of the Fair Market Value of Company Stock, on the date
the Option is granted; provided that the Grant is subject to the
satisfaction of performance goals established by the Committee in
accordance with Sections 8 or 9.
(iii) If the Company Stock is publicly traded, then the Fair Market
Value per share shall be determined as follows: (1) if the principal
trading market for the Company Stock is a national securities exchange or
the Nasdaq National Market, the last reported sale price thereof on the
relevant date or (if there were no trades on that date) the latest
preceding date upon which a sale was reported, or (2) if the Company
Stock is not principally traded on such exchange or market, the mean
between the last reported "bid" and "asked" prices of Company Stock on
the relevant date, as reported on Nasdaq or, if not so reported, as
reported by the National Daily Quotation Bureau, Inc. or as reported in a
customary financial reporting service, as applicable and as the Committee
determines. If the Company Stock is not publicly traded or, if publicly
traded, is not subject to reported transactions or "bid" or "asked"
quotations as set forth above, the Fair Market Value per share shall be
as determined by the Committee.
(c) Option Term. The Committee shall determine the term of each Option.
The term of any Option shall not exceed ten years from the date of grant.
However, an Incentive Stock Option that is granted to an Employee who, at the
time of grant, owns stock possessing more than 10 percent of the total combined
voting power of all classes of stock of the Company, or any parent or
subsidiary of the Company, may not have a term that exceeds five years from the
date of grant.
(d) Exercisability of Options. Options shall become exercisable in
accordance with such terms and conditions, consistent with the Plan, as may be
determined by the Committee, in its sole discretion, and specified in the Grant
Instrument. The Committee, in its sole discretion, may accelerate the
exercisability of any or all outstanding Options at any time for any reason.
(e) Termination of Employment or Service.
(i) Except as provided below and in Section 11, an Option may only be
exercised while the Grantee is employed by, or providing service to, the
Company as an Employee or Non-Employee Director. In the event that a
Grantee ceases to be employed by, or provide service to, the Company for
any reason other than a "disability", death, or termination for "cause",
any Option which is otherwise exercisable by the Grantee shall terminate
unless exercised within 90 days after the date on which the Grantee ceases
to be employed by, or provide service to, the Company (or within such
other period of time as may be specified by the Committee), but in any
event no later than the date of expiration of the Option term. Except as
otherwise provided by the Committee, any of the Grantee's Options that are
not otherwise exercisable as of the date on which the Grantee ceases to be
employed by, or provide service to, the Company shall terminate as of such
date.
(ii) In the event the Grantee ceases to be employed by, or provide
service to, the Company on account of a termination for "cause" by the
Company, any Option held by the Grantee shall terminate as of the date the
Grantee ceases to be employed by, or provide service to, the Company. In
the event a Grantee's employment or service is terminated for cause, in
addition to the immediate termination of all Grants, the Grantee shall
automatically forfeit all shares underlying any exercised portion of an
Option for which the Company has not yet delivered the share certificates,
upon refund by the Company of the Exercise Price paid by the Grantee for
such shares.
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(iii) In the event the Grantee ceases to be employed by, or provide
service to, the Company because the Grantee is "disabled", any Option
which is otherwise exercisable by the Grantee shall terminate unless
exercised within one year after the date on which the Grantee ceases to
be employed by, or provide service to, the Company (or within such other
period of time as may be specified by the Committee), but in any event no
later than the date of expiration of the Option term. Except as otherwise
provided by the Committee, any of the Grantee's Options which are not
otherwise exercisable as of the date on which the Grantee ceases to be
employed by, or provide service to, the Company shall terminate as of
such date.
(iv) If the Grantee dies while employed by, or providing service to, the
Company or within 90 days after the date on which the Grantee ceases to be
employed or provide service on account of a termination specified in
Section 5(e)(i) above (or within such other period of time as may be
specified by the Committee), any Option that is otherwise exercisable by
the Grantee shall terminate unless exercised within one year after the
date on which the Grantee ceases to be employed by, or provide service to,
the Company (or within such other period of time as may be specified by
the Committee), but in any event no later than the date of expiration of
the Option term. Except as otherwise provided by the Committee, any of the
Grantee's Options that are not otherwise exercisable as of the date on
which the Grantee ceases to be employed by, or provide service to, the
Company shall terminate as of such date.
(v) For purposes of this Section 5(e) and Sections 6, 7, 8 and 9:
(A) The term "Company" shall mean the Company and its parent and
subsidiaries.
(B) "Employed by, or provide service to, the Company" shall mean
employment or service as an Employee or Non-Employee Director (so that,
for purposes of exercising Options and SARs and satisfying conditions
with respect to Stock Awards and Performance Units, a Grantee shall not
be considered to have terminated employment or service until the
Grantee ceases to be an Employee or Non-Employee Director), unless the
Committee determines otherwise.
(C) "Disability" shall mean a Grantee's becoming disabled within the
meaning of section 22(e)(3) of the Code.
(D) "Cause" shall mean, except to the extent specified otherwise by
the Committee, a finding by the Committee that the Grantee has: (i)
breached his or her employment or service contract with the Company;
(ii) failed to adequately perform assigned duties (if the Grantee does
not have an employment agreement) and does not remedy such breach
within 30 days after receiving written notice specifying the details
thereof; (iii) been engaged in disloyalty to the Company, including,
without limitation, fraud, embezzlement, theft, commission of a felony
or proven dishonesty in the course of his or her employment or service;
or (iv) disclosed trade secrets or confidential information of the
Company to persons not entitled to receive such information.
(f) Exercise of Options. A Grantee may exercise an Option that has become
exercisable, in whole or in part, by delivering a notice of exercise to the
Committee with payment of the Exercise Price. The Grantee shall pay the
Exercise Price specified in the Grant Instrument (1) in cash, (2) with the
approval of the Committee, by delivering Common Shares owned by the Grantee
(including Company Stock acquired in connection with the exercise of an Option,
subject to such restrictions as the Committee deems appropriate) and having a
Fair Market Value on the date of exercise equal to the Exercise Price, or (3)
by such other method as the Committee may approve, including payment through a
broker in accordance with procedures permitted by Regulation T of the Federal
Reserve Board. Such notice may instruct the Company to deliver Common Shares
due upon the exercise of the Option to any registered broker or dealer
designated by the Committee ("Designated Broker") in lieu of delivery to the
Grantee. Such instructions must designate the account into which the shares are
to be deposited. The Grantee may tender a notice of exercise, which has been
properly executed by the Grantee, and the aforementioned delivery instructions
to any Designated Broker. Common Shares used to exercise an Option shall have
been held by the Grantee for the requisite period of time to avoid adverse
accounting consequences to the Company with respect to the Option. The Grantee
shall pay the Exercise Price and the amount of any withholding tax due at the
time of exercise.
(g) Limits on Incentive Stock Options. Each Incentive Stock Option shall
provide that, if the aggregate Fair Market Value of the Company Stock on the
date of the grant with respect to which Incentive Stock Options
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are exercisable for the first time by a Grantee during any calendar year, under
the Plan or any other stock option plan of the Company or "parent corporation"
or "subsidiary corporation" of the Company (within the meaning of sections
424(e) and 424(f) of the Code, respectively), exceeds $100,000, then such
Option, as to the excess, shall be treated as a Nonqualified Stock Option.
6. Stock Awards
The Committee may issue or transfer Common Shares to any Employee or
Non-Employee Director under a Stock Award, upon such terms as the Committee
deems appropriate. The Committee may grant Stock Awards with restrictions that
shall lapse over a period of time or restrictions that otherwise limit the
transferability of the Company Stock ("Restricted Stock"). The Committee may
also grant Stock Awards not subject to any such restrictions ("Unrestricted
Stock"); provided that Grants of Unrestricted Stock may only be made if the
Grant is subject to the satisfaction of performance goals established by the
Committee in accordance with Sections 8 or 9. The following provisions are
applicable to Stock Awards:
(a) General Requirements. Shares of Company Stock issued or transferred
pursuant to Restricted Stock Grants or Unrestricted Stock Grants may be issued
or transferred for consideration or for no consideration, at the sole
discretion of the Committee. The Committee may establish conditions under which
restrictions on shares of Restricted Stock shall lapse over a period of time or
according to such other criteria as the Committee deems appropriate. The period
of time during which the Restricted Stock will remain subject to restrictions
will be designated in the Grant Instrument as the "Restriction Period."
(b) Number of Shares. The Committee shall determine the number of Common
Shares to be issued or transferred pursuant to a Restricted Stock Grant or an
Unrestricted Stock Grant and, in the case of a Restricted Stock Grant, the
restrictions applicable to such shares.
(c) Requirement of Employment or Service. If the Grantee ceases to be
employed by, or provide service to, the Company (as defined in Section 5(e))
during a period designated in the Grant Instrument as the Restriction Period,
or if other specified conditions are not met, the Restricted Stock Grant shall
terminate as to all shares covered by the Grant as to which the restrictions
have not lapsed, and those Common Shares must be immediately returned to the
Company. The Committee may, however, provide for complete or partial exceptions
to this requirement as it deems appropriate.
(d) Restrictions on Transfer and Legend on Stock Certificate. During the
Restriction Period, a Grantee may not sell, assign, transfer, pledge or
otherwise dispose of the shares of Restricted Stock except to a Successor
Grantee under Section 11(a). Each certificate for a share of Restricted Stock
shall contain a legend giving appropriate notice of the restrictions in the
Grant. The Grantee shall be entitled to receive a stock certificate or
certificates, or have the legend removed from the stock certificate or
certificates covering any of the shares subject to restrictions, as applicable,
when all restrictions on such shares have lapsed. The Committee, in its sole
discretion, may determine that the Company will not issue certificates for
shares of Restricted Stock, or that the Company retain possession of
certificates for any shares issued pursuant to a Restricted Stock Grant, until
all restrictions on such shares have lapsed.
(e) Right to Vote and to Receive Cash Dividends. Unless the Committee
determines otherwise, during the Restriction Period, the Grantee shall have the
right to vote any shares of Restricted Stock for which certificates have been
issued or transferred to the Grantee and to receive any dividends or other
distributions paid on such shares, subject to any restrictions deemed
appropriate by the Committee.
(f) Lapse of Restrictions. All restrictions imposed on Restricted Stock
shall lapse upon the expiration of the applicable Restriction Period and the
satisfaction of all conditions imposed by the Committee. The Committee may
determine, as to any or all Restricted Stock Grants, that all the restrictions
shall lapse without regard to any Restriction Period.
7. Stock Appreciation Rights
(a) General Requirements. The Committee may grant stock appreciation
rights ("SARs") to an Employee or Non-Employee Director separately or in tandem
with any Option (for all or a portion of the applicable Option). Tandem SARs
may be granted either at the time the Option is granted or at any time
thereafter while
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the Option remains outstanding; provided, however, that, in the case of an
Incentive Stock Option, SARs may be granted only at the time of the Grant of
the Incentive Stock Option. The Committee shall establish the base amount of
the SAR at the time the SAR is granted. Unless the Committee determines
otherwise, the base amount of each SAR shall be equal to the per share Exercise
Price of the related Option or, if there is no related Option, the Fair Market
Value of a Common Share as of the date of Grant of the SAR.
(b) Tandem SARs. In the case of tandem SARs, the number of SARs granted to
a Grantee that shall be exercisable during a specified period shall not exceed
the number of Common Shares that the Grantee may purchase upon the exercise of
the related Option during such period. Upon the exercise of an Option or the
transfer of a Nonqualified Stock Option under Section 11(b), the SARs relating
to the Company Stock covered by such Option shall terminate. Upon the exercise
of SARs, the related Option shall terminate to the extent of an equal number of
Common Shares.
(c) Exercisability. An SAR shall be exercisable during the period
specified by the Committee in the Grant Instrument and shall be subject to such
vesting and other restrictions as may be specified in the Grant Instrument. The
Committee may accelerate the exercisability of any or all outstanding SARs at
any time for any reason. SARs may only be exercised while the Grantee is
employed by the Company or during the applicable period after termination of
employment as described in Section 5(e). A tandem SAR shall be exercisable only
during the period when the Option to which it is related is also exercisable.
(d) Value of SARs. When a Grantee exercises SARs, the Grantee shall
receive in settlement of such SARs an amount equal to the value of the stock
appreciation for the number of SARs exercised, payable in cash, Common Share or
a combination thereof. The stock appreciation for an SAR is the amount by which
the Fair Market Value of the underlying Common Share on the date of exercise of
the SAR exceeds the base amount of the SAR as described in Subsection (a).
(e) Form of Payment. The Committee shall determine whether the
appreciation in an SAR shall be paid in the form of cash, Common Shares, or a
combination of the two, in such proportion as the Committee deems appropriate.
For purposes of calculating the number of Common Shares to be received, Common
Shares shall be valued at their Fair Market Value on the date of exercise of
the SAR. If Common Shares are to be received upon exercise of an SAR, cash
shall be delivered in lieu of any fractional share.
8. Performance Units
(a) General Requirements. The Committee may grant performance units
("Performance Units") to an Employee. Each Performance Unit shall represent the
right of the Grantee to receive an amount based on the value of the Performance
Unit, if performance goals established by the Committee are met. A Performance
Unit may be based on the Fair Market Value of a Common Share or on such other
measurement base as the Committee deems appropriate. Anything contained herein
to the contrary notwithstanding, the Committee may grant Performance Units that
represent the right to receive a specified number of Common Shares, Options or
SARs. The Committee shall determine the number of Performance Units to be
granted and the requirements applicable to such Units.
(b) Performance Period and Performance Goals. When Performance Units are
granted, the Committee shall establish the performance period during which
performance shall be measured (the "Performance Period"), performance goals
applicable to the Units ("Performance Goals") and such other conditions of the
Grant as the Committee deems appropriate. Performance Goals may relate to the
financial performance of the Company or its operating units, the performance of
Company Stock, individual performance, or such other criteria as the Committee
deems appropriate.
(c) Payment with respect to Performance Units. At the end of each
Performance Period, the Committee shall determine to what extent the
Performance Goals and other conditions of the Performance Units are met and the
amount, if any, to be paid with respect to the Performance Units. Payments with
respect to Performance Units may be made in cash, in Common Shares, or in a
combination of the two, as determined by the Committee. If and to the extent
Performance Units represent the right to receive a specified number of Common
Shares, Options or SARs, payment of such Performance Units shall be made in
such form.
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(d) Requirement of Employment or Service. If the Grantee ceases to be
employed by, or provide service to, the Company (as defined in Section 5(e))
during a Performance Period, or if other conditions established by the
Committee are not met, the Grantee's Performance Units shall be forfeited. The
Committee may, however, provide for complete or partial exceptions to this
requirement as it deems appropriate.
9. Qualified Performance-Based Compensation
(a) Designation as Qualified Performance-Based Compensation. The Committee
may determine that a Grant to an Employee shall be considered "qualified
performance-based compensation" under section 162(m) of the Code. The
provisions of this Section 9 shall apply to Grants that are to be considered
"qualified performance-based compensation" under Section 162(m) of the Code.
(b) Performance Goals. When a Grant is to be considered "qualified
performance-based compensation," the Committee shall establish in writing (i)
the objective performance goals that must be met in order for restrictions on
the Restricted Stock to lapse or amounts to be paid under the Performance
Units, (ii) the Performance Period during which the performance goals must be
met, (iii) the threshold, target and maximum amounts that may be paid if the
performance goals are met, and (iv) any other conditions, including without
limitation provisions relating to death, disability, other termination of
employment or Change of Control, that the Committee deems appropriate and
consistent with the Plan and section 162(m) of the Code. The performance goals
may relate to the Employee's business unit or the performance of the Company
and its subsidiaries as a whole, or any combination of the foregoing. The
Committee shall use objectively determinable performance goals based on one or
more of the following criteria: stock price, earnings per share, net earnings,
operating earnings, return on assets, shareholder return, return on equity,
growth in assets, unit volume, sales, market share, or strategic business
criteria consisting of one or more objectives based on meeting specified
revenue goals, market penetration goals, geographic business expansion goals,
cost targets or goals relating to acquisitions or divestitures.
(c) Establishment of Performance Goals. The Committee shall establish the
Performance Goals in writing either before the beginning of the Performance
Period or during a period ending no later than the earlier of (i) 90 days after
the beginning of the Performance Period or (ii) the date on which 25% of the
Performance Period has been completed, or such other date as may be required or
permitted under applicable regulations under section 162(m) of the Code. The
Performance Goals shall satisfy the requirements for qualified
performance-based compensation, including the requirement that the achievement
of the goals be substantially uncertain at the time they are established and
that the goals be established in such a way that a third party with knowledge
of the relevant facts could determine whether and to what extent the
Performance Goals have been met. The Committee shall not have discretion to
increase the amount of compensation that is payable upon achievement of the
designated Performance Goals.
(d) Announcement of Grants. The Committee shall certify and announce the
results for each Performance Period to all Grantees immediately following the
announcement of the Company's financial results for the Performance Period. If
and to the extent that the Committee does not certify that the Performance
Goals have been met, Grants of Restricted Stock for the Performance Period
shall be forfeited, and amounts under the Performance Units shall not be paid.
10. Withholding of Taxes
(a) Required Withholding. All Grants under the Plan shall be subject to
applicable federal (including FICA), state and local tax withholding
requirements. The Company may require the Grantee or other person receiving
shares to pay to the Company the amount of any such taxes that the Company is
required to withhold with respect to such Grants, or the Company may deduct
from the amount payable under a Grant or from other wages paid by the Company
the amount of any withholding taxes due with respect to such Grants.
(b) Election to Withhold Shares. If the Committee so permits, a Grantee
may elect to satisfy the Company's income tax withholding obligation with
respect to an Option or Stock Award by having shares withheld up to an amount
that does not exceed the applicable withholding tax for federal (including
FICA), state and local tax liabilities. The election must be in the form and
manner prescribed by the Committee and is subject to the prior approval of the
Committee.
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11. Transferability of Grants
(a) Nontransferability of Grants. Except as provided below, only the
Grantee may exercise rights under a Grant during the Grantee's lifetime. The
Grantee may not transfer those rights except by will or by the laws of descent
and distribution or, with respect to Grants other than Incentive Stock Options,
if permitted in any specific case by the Committee in its sole discretion,
pursuant to a qualified domestic relations order (as defined under the Code or
Title I of the Employee Retirement Income Security Act of 1974, as amended or
the regulations thereunder). When a Grantee dies, the personal representative
or other person entitled to succeed to the rights of the Grantee ("Successor
Grantee") may exercise such rights. A Successor Grantee must furnish proof
satisfactory to the Company of his or her right to receive the Grant under the
Grantee's will or under the applicable laws of descent and distribution.
(b) Transfer of Nonqualified Stock Options. Notwithstanding the foregoing,
the Committee may provide, in a Grant Instrument, that a Grantee may transfer
Nonqualified Stock Options to family members, one or more trusts for the
benefit of family members, or one or more partnerships of which family members
are the only partners, or other persons or entities according to such terms as
the Committee may determine; provided that the Grantee receives no
consideration for the transfer of an Option and the transferred Option shall
continue to be subject to the same terms and conditions as were applicable to
the Option immediately before the transfer.
12. Change of Control of the Company
As used herein, a "Change of Control" shall be deemed to have occurred if:
(a) Any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) other than the management group of Harold J. Cornelius, Joseph M.
Corvino, Norman V. Edmonson, Max W. Hillman, Donald T. Marshall, and John P.
McDonnell, becomes a "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company
representing 20% or more of the voting power of the then outstanding securities
of the Company.
(b) The Company ceases to own, directly or indirectly, all of the general
and limited partnership interests in SDI Operating Partners, L.P.
(c) (i) A transaction is approved in which the stockholders of the Company
immediately before the transaction will not beneficially own, immediately after
the transaction, shares entitling such stockholders to 75% or more of all votes
to which all stockholders of the surviving entity would be entitled in the
election of directors or other governing persons (without consideration of the
rights of any class of stock to elect directors by a separate class vote), or
where the members of the board of directors, immediately prior to the
transaction, would not, immediately after the transaction, constitute a
majority of the board of directors of the surviving entity, (ii) the sale or
other disposition of all or substantially all of the assets of the Company,
SunSub A Inc., SunSub B Inc. or SDI Operating Partners, L.P., or (iii) a
liquidation or dissolution of the Company or SDI Operating Partners, L.P.
(d) Notwithstanding the foregoing, a Change of Control shall not occur as
a result of a reorganization of SunSub A Inc., SunSub B Inc., SDI Operating
Partners, L.P. and/or SDI Partners I, L.P.; provided that substantially all the
assets of SDI Operating Partners, L.P. continue to be owned directly or
indirectly by the Company.
(e) Any person has commenced a tender offer or exchange offer for 20% or
more of the voting power of the then outstanding securities of the Company.
(f) A majority of the Board shall cease for any reason to consist of (1)
individuals who on the effective date hereof are serving as directors of the
Company, or (2) individuals who subsequently become members of the Board and
whose nomination for election or election to the Board is recommended or
approved by a majority of the Board.
13. Consequences of a Change of Control
(a) Notice and Acceleration. Upon a Change of Control, unless the
Committee determines otherwise, (i) the Company shall provide each Grantee with
outstanding Grants written notice of such Change of Control, (ii) all
outstanding Options and SARs shall automatically accelerate and become fully
exercisable, (iii) the restrictions and conditions on all outstanding
Restricted Stock shall immediately lapse, and (iv) Grantees holding Performance
Units shall receive a payment in settlement of such Performance Units, in an
amount determined by the Committee, based on the Grantee's target payment for
the Performance Period and the portion of the Performance Period that precedes
the Change of Control.
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(b) Assumption of Grants. Upon a Change of Control where the Company is
not the surviving corporation (or survives only as a subsidiary of another
corporation), unless the Committee determines otherwise, all outstanding
Options and SARs that are not exercised shall be assumed by, or replaced with
comparable options or rights by, the surviving corporation.
(c) Other Alternatives. Notwithstanding the foregoing, subject to
subsection (d) below, in the event of a Change of Control, the Committee may
take one or both of the following actions: the Committee may (i) require that
Grantees surrender their outstanding Options and SARs in exchange for a payment
by the Company, in cash or Company Stock as determined by the Committee, in an
amount equal to the amount by which the then Fair Market Value of the Common
Shares subject to the Grantee's unexercised Options and SARs exceeds the
Exercise Price of the Options or the base amount of the SARs, as applicable, or
(ii) after giving Grantees an opportunity to exercise their outstanding Options
and SARs, terminate any or all unexercised Options and SARs at such time as the
Committee deems appropriate. Such surrender or termination shall take place as
of the date of the Change of Control or such other date as the Committee may
specify.
(d) Committee. The Committee making the determinations under this Section
13 following a Change of Control must be comprised of the same members as those
on the Committee immediately before the Change of Control. If the Committee
members do not meet this requirement, the automatic provisions of Subsections
(a) and (b) shall apply, and the Committee shall not have discretion to vary
them.
(e) Limitations.
(1) Notwithstanding anything in the Plan to the contrary, in the
event of a Change of Control, the Committee shall not have the right to
take any actions described in the Plan (including without limitation
actions described in Subsection (c) above) that would make the Change
of Control ineligible for pooling of interests accounting treatment or
that would make the Change of Control ineligible for desired tax
treatment if, in the absence of such right, the Change of Control would
qualify for such treatment and the Company intends to use such
treatment with respect to the Change of Control.
(2) The Committee shall limit the application of Section 13 if it
determines that: (i) a Grantee will receive an "excess parachute
payment," as defined in Section 280G of the Code, that will be subject
to an excise tax under Section 4999 of the Code, and (ii) the
Committee's imposition of limits on the application of Section 13 will
result in a Grantee receiving a larger amount on an after-tax basis than
he would have received had the Committee not imposed such limitations.
If the Committee must limit application of Section 13 as a result of the
foregoing, it shall do so in a manner that (A) maximizes total
compensation paid to the Grantee without causing any compensation to be
subject to the excise tax under Section 4999 of the Code, and (B) unless
the Committee determines otherwise, restores, in the following order,
Options, SARs, Restricted Stock and Performance Units on a
share-by-share or unit-by-unit basis, to the terms that applied before
the Change of Control.
14. Requirements for Issuance or Transfer of Shares
No Common Shares shall be issued or transferred in connection with any
Grant hereunder unless and until all legal requirements applicable to the
issuance or transfer of such Common Shares have been complied with to the
satisfaction of the Committee. The Committee shall have the right to condition
any Grant made to any Grantee hereunder on such Grantee's undertaking in
writing to comply with such restrictions on his or her subsequent disposition
of such Common Shares as the Committee shall deem necessary or advisable as a
result of any applicable law, regulation or official interpretation thereof,
and certificates representing such shares may be legended to reflect any such
restrictions. Certificates representing Common Shares issued or transferred
under the Plan will be subject to such stop-transfer orders and other
restrictions as may be required by applicable laws, regulations and
interpretations, including any requirement that a legend be placed thereon.
15. Amendment and Termination of the Plan
(a) Amendment. The Board may amend or terminate the Plan at any time;
provided, however, that the Board shall not amend the Plan without stockholder
approval if such approval is required by section 422 of the Code or section
162(m) of the Code.
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(b) Termination of Plan. The Plan shall terminate on the day immediately
preceding the tenth anniversary of its effective date, unless the Plan is
terminated earlier by the Board or unless extended by the Board with the
approval of the stockholders.
(c) Termination and Amendment of Outstanding Grants. A termination or
amendment of the Plan that occurs after a Grant is made shall not materially
impair the rights of a Grantee unless the Grantee consents or unless the
Committee acts under Section 21(b) hereof. The termination of the Plan shall
not impair the power and authority of the Committee with respect to an
outstanding Grant. Whether or not the Plan has terminated, an outstanding Grant
may be terminated or amended under Section 21(b) hereof or may be amended by
agreement of the Company and the Grantee consistent with the Plan.
(d) Governing Document. The Plan shall be the controlling document. No
other statements, representations, explanatory materials or examples, oral or
written, may amend the Plan in any manner. The Plan shall be binding upon and
enforceable against the Company and its successors and assigns.
16. Funding of the Plan
This Plan shall be unfunded. The Company shall not be required to
establish any special or separate fund or to make any other segregation of
assets to assure the payment of any Grants under this Plan. In no event shall
interest be paid or accrued on any Grant, including unpaid installments of
Grants.
17. Rights of Participants
Nothing in this Plan shall entitle any Employee, Non-Employee Director or
other person to any claim or right to be granted a Grant under this Plan.
Neither this Plan nor any action taken hereunder shall be construed as giving
any individual any rights to be retained by or in the employ of the Company or
any other employment rights. Except as otherwise provided by the Committee, a
Grantee or Successor Grantee shall have no rights as a stockholder with respect
to any Common Shares covered by a Grant until the shares are issued or
transferred to the Grantee or Successor Grantee on the stock transfer records
of the Company.
18. No Fractional Shares
No fractional Common Shares shall be issued or delivered pursuant to the
Plan or any Grant. The Committee shall determine whether cash, other awards or
other property shall be issued or paid in lieu of such fractional shares or
whether such fractional shares or any rights thereto shall be forfeited or
otherwise eliminated.
19. Headings
Section headings are for reference only. In the event of a conflict
between a title and the content of a Section, the content of the Section shall
control.
20. Effective Date of the Plan
This Plan shall be effective upon approval of the Plan by the Company's
stockholders.
21. Miscellaneous
(a) Grants in Connection with Corporate Transactions and
Otherwise. Nothing contained in this Plan shall be construed to (i) limit the
right of the Committee to make Grants under this Plan in connection with the
acquisition, by purchase, lease, merger, consolidation or otherwise, of the
business or assets of any corporation, firm or association, including Grants to
employees thereof who become Employees of the Company, or for other proper
corporate purposes, or (ii) limit the right of the Company to grant stock
options or make other awards outside of this Plan. Without limiting the
foregoing, the Committee may make a Grant to an employee of another corporation
who becomes an Employee by reason of a corporate merger, consolidation,
acquisition of stock or property, reorganization or liquidation involving the
Company or any of its subsidiaries in substitution for a stock option or
restricted stock grant made by such corporation. The terms and conditions of
the substitute grants may vary from the terms and conditions required by the
Plan and from those of the substituted stock incentives. The Committee shall
prescribe the provisions of the substitute grants.
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(b) Compliance with Law. The Plan, the exercise of Options and the
obligations of the Company to issue or transfer Common Shares under Grants
shall be subject to all applicable laws and to approvals by any governmental or
regulatory agency as may be required. With respect to persons subject to
Section 16 of the Exchange Act, it is the intent of the Company that the Plan
and all transactions under the Plan comply with all applicable provisions of
Rule 16b-3 or its successor under the Exchange Act. In addition, it is the
intent of the Company that Grants under the Plan intended to comply with the
applicable provisions of Sections 162(m) and 422 of the Code, so comply. To the
extent that any legal requirement of Section 16 of the Exchange Act or Section
162(m) or 422 of the Code as set forth in the Plan ceases to be required under
Section 16 of the Exchange Act or Section 162(m) or 422 of the Code, that
provision shall cease to apply. The Committee may revoke any Grant if it is
contrary to law or modify a Grant to bring it into compliance with any valid
and mandatory government regulation. The Committee may, in its sole discretion,
agree to limit its authority under this Section.
(c) Governing Law. The validity, construction, interpretation and effect
of the Plan and Grant Instruments issued under the Plan shall exclusively be
governed by and determined in accordance with the laws of the State of
Delaware.
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