EXHIBIT 10.3
SUNSOURCE INC.
2001 STOCK INCENTIVE PLAN
1. ESTABLISHMENT, PURPOSE AND TYPES OF AWARDS
SUNSOURCE INC., a Delaware corporation (the "Company"), hereby
establishes the SUNSOURCE INC. 2001 STOCK INCENTIVE PLAN (the "Plan"). The
purpose of the Plan is to promote the long-term growth and profitability of the
Company by (i) providing key people with incentives to improve stockholder value
and to contribute to the growth and financial success of the Company, and (ii)
enabling the Company to attract, retain and reward the best-available persons.
The Plan permits the granting of stock options (including incentive
stock options qualifying under Code section 422 and nonqualified stock options),
stock appreciation rights, restricted or unrestricted stock awards, phantom
stock, performance awards, other stock-based awards, or any combination of the
foregoing.
2. DEFINITIONS
Under this Plan, except where the context otherwise indicates, the
following definitions apply:
(a) "Administrator" means the Board or committee(s)
appointed by the Board that administers the Plan in accordance with
Section 3 hereof.
(b) "Affiliate" means any entity, whether now or
hereafter existing, which controls, is controlled by, or is under
common control with, the Company (including, but not limited to,
joint ventures, limited liability companies, and partnerships). For
this purpose, "control" shall mean ownership of 50% or more of the
total combined voting power or value of all classes of stock or
interests of the entity.
(c) "Award" means any stock option, stock appreciation
right, stock award, phantom stock award, performance award, or other
stock-based award.
(d) "Board" means the Board of Directors of the Company.
(e) "Change in Control" means: (i) the closing of a sale
of all or substantially all of the assets of the Company; (ii) the
acquisition by any Person, as defined in this Section 2(e), of
securities of the Company representing 50% or more of the aggregate
voting power of the Company's then outstanding common stock; or (iii)
the effective time of any merger or acquisition of the Company in which
the voting equity securities of the Company (together with all options
to acquire such securities whether vested or unvested) beneficially
owned by Allied Capital Corporation and the Minority Holders (as
defined in the Stockholders Agreement with respect to the Company) is
reduced below 51%. For purposes of this Section 2(e), a "PERSON" means
any individual, entity or group within the meaning of Section 13(d)(3)
or 14(d)(2) of the Securities Exchange Act of 1934, as amended, other
than: the Company, employee benefit plans sponsored or maintained by
the Company and corporations controlled by the Company.
(f) "Code" means the Internal Revenue Code of 1986, as
amended, and any regulations promulgated thereunder.
(g) "Common Stock" means shares of common stock of the
Company, par value $0.01 per share.
(h) "Fair Market Value" means, with respect to a share of
the Company's Common Stock for any purpose on a particular date, the
value determined by the Administrator in good faith. However, if the
Common Stock is registered under Section 12(b) or 12(g) of the
Securities Exchange Act of 1934, as amended, and listed for trading on
a national exchange or market, "Fair Market Value" means, as
applicable, (i) either the closing price or the average of the high and
low sale price on the relevant date,
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as determined in the Administrator's discretion, quoted on the New York
Stock Exchange, the American Stock Exchange, or the Nasdaq National
Market; (ii) the last sale price on the relevant date quoted on the
Nasdaq SmallCap Market; (iii) the average of the high bid and low asked
prices on the relevant date quoted on the Nasdaq OTC Bulletin Board
Service or by the National Quotation Bureau, Inc. or a comparable
service as determined in the Administrator's discretion; or (iv) if the
Common Stock is not quoted by any of the above, the average of the
closing bid and asked prices on the relevant date furnished by a
professional market maker for the Common Stock, or by such other
source, selected by the Administrator. If no public trading of the
Common Stock occurs on the relevant date but the shares are so listed,
then Fair Market Value shall be determined as of the next preceding
date on which trading of the Common Stock does occur. In any case,
"Fair Market Value" in the event of a Change in Control may not be less
than the value obtained for shares of Common Stock in the Change in
Control transaction. For all purposes under this Plan, the term
"relevant date" as used in this Section 2(h) means either the date as
of which Fair Market Value is to be determined or the next preceding
date on which public trading of the Common Stock occurs, as determined
in the Administrator's discretion.
(i) "Grant Agreement" means a written document
memorializing the terms and conditions of an Award granted pursuant to
the Plan and shall incorporate the terms of the Plan.
3. ADMINISTRATION
(a) Administration of the Plan. The Plan shall be
administered by the Board or by such committee or committees as may be
appointed by the Board from time to time (the Board, committee or
committees hereinafter referred to as the "Administrator").
(b) Powers of the Administrator. The Administrator shall
have all the powers vested in it by the terms of the Plan, such powers
to include authority, in its sole and absolute discretion, to grant
Awards under the Plan, prescribe Grant Agreements evidencing such
Awards and establish programs for granting Awards.
The Administrator shall have full power and authority to take
all other actions necessary to carry out the purpose and intent of the
Plan, including, but not limited to, the authority to: (i) determine
the eligible persons to whom, and the time or times at which Awards
shall be granted; (ii) determine the types of Awards to be granted;
(iii) determine the number of shares to be covered by or used for
reference purposes for each Award; (iv) impose such terms, limitations,
restrictions and conditions upon any such Award as the Administrator
shall deem appropriate; (v) modify, amend, extend or renew outstanding
Awards, or accept the surrender of outstanding Awards and substitute
new Awards (provided however, that, any modification that would
materially adversely affect any outstanding Award shall not be made
without the consent of the holder); (vi) accelerate or otherwise change
the time in which an Award may be exercised or becomes payable and to
waive or accelerate the lapse, in whole or in part, of any restriction
or condition with respect to such Award, including, but not limited to,
any restriction or condition with respect to the vesting or
exercisability of an Award following termination of any grantee's
employment or other relationship with the Company; (vii) establish
objectives and conditions, if any, for earning Awards and determining
whether Awards will be paid after the end of a performance period; and
(viii) for any purpose, including but not limited to, qualifying for
preferred tax treatment under foreign tax laws or otherwise complying
with the regulatory requirements of local or foreign jurisdictions, to
establish, amend, modify, administer or terminate sub-plans, and
prescribe, amend and rescind rules and regulations relating to such
sub-plans.
The Administrator shall have full power and authority, in its
sole and absolute discretion, to administer and interpret the Plan,
Grant Agreements and all other documents relevant to the Plan and
Awards issued thereunder, and to adopt and interpret such rules,
regulations, agreements, guidelines and instruments for the
administration of the Plan and for the conduct of its business as the
Administrator deems necessary or advisable.
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(c) Non-Uniform Determinations. The Administrator's
determinations under the Plan (including without limitation,
determinations of the persons to receive Awards, the form, amount and
timing of such Awards, the terms and provisions of such Awards and the
Grant Agreements evidencing such Awards) need not be uniform and may be
made by the Administrator selectively among persons who receive, or are
eligible to receive, Awards under the Plan, whether or not such persons
are similarly situated.
(d) Limited Liability. To the maximum extent permitted by
law, no member of the Administrator shall be liable for any action
taken or decision made in good faith relating to the Plan or any Award
thereunder.
(e) Indemnification. To the maximum extent permitted by
law and by the Company's charter and by-laws, the members of the
Administrator shall be indemnified by the Company in respect of all
their activities under the Plan.
(f) Effect of Administrator's Decision. All actions taken
and decisions and determinations made by the Administrator on all
matters relating to the Plan pursuant to the powers vested in it
hereunder shall be in the Administrator's sole and absolute discretion
and shall be conclusive and binding on all parties concerned, including
the Company, its stockholders, any participants in the Plan and any
other employee, consultant, or director of the Company, and their
respective successors in interest.
4. SHARES AVAILABLE FOR THE PLAN
Subject to adjustments as provided in Section 7(d) of the Plan, the
shares of Common Stock that may be issued with respect to Awards granted under
the Plan shall not exceed an aggregate of 1,364,495 shares of Common Stock. The
Company shall reserve such number of shares for Awards under the Plan, subject
to adjustments as provided in Section 7(d) of the Plan. If any Award, or portion
of an Award, under the Plan expires or terminates unexercised, becomes
unexercisable or is forfeited or otherwise terminated, surrendered or canceled
as to any shares, or if any shares of Common Stock are surrendered to the
Company in connection with any Award (whether or not such surrendered shares
were acquired pursuant to any Award), or if any shares are withheld by the
Company, the shares subject to such Award and the surrendered and withheld
shares shall thereafter be available for further Awards under the Plan;
provided, however, that any such shares that are surrendered to or withheld by
the Company in connection with any Award or that are otherwise forfeited after
issuance shall not be available for purchase pursuant to incentive stock options
intended to qualify under Code section 422.
5. PARTICIPATION
Participation in the Plan shall be open to all employees, officers, and
directors of, and other individuals providing bona fide services to or for, the
Company, or of any Affiliate of the Company, as may be selected by the
Administrator from time to time. The Administrator may also grant Awards to
individuals in connection with hiring, retention or otherwise, prior to the date
the individual first performs services for the Company or an Affiliate, provided
that such Awards shall not become vested or exercisable prior to the date the
individual first commences performance of such services.
6. AWARDS
The Administrator, in its sole discretion, establishes the terms of all
Awards granted under the Plan. Awards may be granted individually or in tandem
with other types of Awards. All Awards are subject to the terms and conditions
provided in the Grant Agreement. The Administrator may permit a recipient of an
Award to defer such individual's receipt of the payment of cash or the delivery
of Common Stock that would otherwise be due to such individual by virtue of the
exercise of, payment of, or lapse or waiver of restrictions respecting, any
Award. If any such payment deferral is permitted, the Administrator shall, in
its sole discretion, establish rules and procedures for such payment deferrals.
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(a) Stock Options. The Administrator may from time to
time grant to eligible participants Awards of incentive stock options
as that term is defined in Code section 422 or nonstatutory stock
options; provided, however, that Awards of incentive stock options
shall be limited to employees of the Company or of any current or
hereafter existing "parent corporation" or "subsidiary corporation," as
defined in Code sections 424(e) and (f), respectively, of the Company.
Options intended to qualify as incentive stock options under Code
section 422 must have an exercise price at least equal to Fair Market
Value as of the date of grant, but nonstatutory stock options may be
granted with an exercise price less than Fair Market Value. No stock
option shall be an incentive stock option unless so designated by the
Administrator at the time of grant or in the Grant Agreement evidencing
such stock option.
(b) Stock Appreciation Rights. The Administrator may from
time to time grant to eligible participants Awards of Stock
Appreciation Rights ("SAR"). An SAR entitles the grantee to receive,
subject to the provisions of the Plan and the Grant Agreement, a
payment having an aggregate value equal to the product of (i) the
excess of (A) the Fair Market Value on the exercise date of one share
of Common Stock over (B) the base price per share specified in the
Grant Agreement, times (ii) the number of shares specified by the SAR,
or portion thereof, which is exercised. Payment by the Company of the
amount receivable upon any exercise of an SAR may be made by the
delivery of Common Stock or cash, or any combination of Common Stock
and cash, as determined in the sole discretion of the Administrator. If
upon settlement of the exercise of an SAR a grantee is to receive a
portion of such payment in shares of Common Stock, the number of shares
shall be determined by dividing such portion by the Fair Market Value
of a share of Common Stock on the exercise date. No fractional shares
shall be used for such payment and the Administrator shall determine
whether cash shall be given in lieu of such fractional shares or
whether such fractional shares shall be eliminated.
(c) Stock Awards. The Administrator may from time to time
grant restricted or unrestricted stock Awards to eligible participants
in such amounts, on such terms and conditions, and for such
consideration, including no consideration or such minimum consideration
as may be required by law, as it shall determine. A stock Award may be
paid in Common Stock, in cash, or in a combination of Common Stock and
cash, as determined in the sole discretion of the Administrator.
(d) Phantom Stock. The Administrator may from time to
time grant Awards to eligible participants denominated in
stock-equivalent units ("phantom stock") in such amounts and on such
terms and conditions as it shall determine. Phantom stock units granted
to a participant shall be credited to a bookkeeping reserve account
solely for accounting purposes and shall not require a segregation of
any of the Company's assets. An Award of phantom stock may be settled
in Common Stock, in cash, or in a combination of Common Stock and cash,
as determined in the sole discretion of the Administrator. Except as
otherwise provided in the applicable Grant Agreement, the grantee shall
not have the rights of a stockholder with respect to any shares of
Common Stock represented by a phantom stock unit solely as a result of
the grant of a phantom stock unit to the grantee.
(e) Performance Awards. The Administrator may, in its
discretion, grant performance awards which become payable on account of
attainment of one or more performance goals established by the
Administrator. Performance awards may be paid by the delivery of Common
Stock or cash, or any combination of Common Stock and cash, as
determined in the sole discretion of the Administrator. Performance
goals established by the Administrator may be based on the Company's or
an Affiliate's operating income or one or more other business criteria
selected by the Administrator that apply to an individual or group of
individuals, a business unit, or the Company or an Affiliate as a
whole, over such performance period as the Administrator may designate.
(f) Other Stock-Based Awards. The Administrator may from
time to time grant other stock-based awards to eligible participants in
such amounts, on such terms and conditions, and for such consideration,
including no consideration or such minimum consideration as may be
required by law, as it shall determine. Other stock-based awards may be
denominated in cash, in Common Stock or other
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securities, in stock-equivalent units, in stock appreciation units,
in securities or debentures convertible into Common Stock, or in any
combination of the foregoing and may be paid in Common Stock or other
securities, in cash, or in a combination of Common Stock or other
securities and cash, all as determined in the sole discretion of the
Administrator.
7. MISCELLANEOUS
(a) Withholding of Taxes. Grantees and holders of Awards
shall pay to the Company or its Affiliate, or make provision
satisfactory to the Administrator for payment of, any taxes required to
be withheld in respect of Awards under the Plan no later than the date
of the event creating the tax liability. The Company or its Affiliates
may, to the extent permitted by law, deduct any such tax obligations
from any payment of any kind otherwise due to the grantee or holder of
an Award. In the event that payment to the Company or its Affiliate of
such tax obligations is made in shares of Common Stock, such shares
shall be valued at Fair Market Value on the applicable date for such
purposes and shall not exceed in amount the minimum statutory tax
withholding obligation.
(b) Loans. The Company or its Affiliate may make or
guarantee loans to grantees to assist grantees in exercising Awards and
satisfying any withholding tax obligations.
(c) Transferability. Except as otherwise determined by
the Administrator, and in any event in the case of an incentive stock
option or a stock appreciation right granted with respect to an
incentive stock option, no Award granted under the Plan shall be
transferable by a grantee otherwise than by will or the laws of descent
and distribution. Unless otherwise determined by the Administrator in
accord with the provisions of the immediately preceding sentence, an
Award may be exercised during the lifetime of the grantee, only by the
grantee or, during the period the grantee is under a legal disability,
by the grantee's guardian or legal representative.
(d) Adjustments for Corporate Transactions and Other
Events. Except as otherwise provided in an individual Grant Agreement:
(i) Stock Dividend, Stock Split and Reverse
Stock Split. In the event of a stock
dividend of, or stock split or reverse stock
split affecting, the Common Stock, (A) the
maximum number of shares of such Common
Stock as to which Awards may be granted
under this Plan, as provided in Section 4 of
the Plan, and (B) the number of shares
covered by and the exercise price and other
terms of outstanding Awards, shall, without
further action of the Board, be adjusted to
reflect such event. The Administrator may
make adjustments, in its discretion, to
address the treatment of fractional shares
and fractional cents that arise with respect
to outstanding Awards as a result of the
stock dividend, stock split or reverse stock
split.
(ii) Non-Change in Control Transactions. Except
with respect to the transactions set forth
in Section 7(d)(i), in the event of any
change affecting the Common Stock, the
Company or its capitalization, by reason of
a spin-off, split-up, dividend,
recapitalization, merger, consolidation,
reorganization or share exchange, other than
any such change that is part of a
transaction resulting in a Change in Control
of the Company, the Administrator, in its
discretion and without the consent of the
holders of the Awards, shall make (A)
appropriate and equitable adjustments to the
maximum number and kind of shares reserved
for issuance or with respect to which Awards
may be granted under the Plan, as provided
in Section 4 of the Plan; and (B) equitable
adjustments in outstanding Awards, including
but not limited to modifying the number,
kind and price of securities subject to
Awards, whenever the Administrator
determines that such adjustments are
appropriate in order to prevent dilution or
enlargement of the benefits or potential
benefits intended to be made available under
the Options or
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the Plan. The Administrator shall, in the
good faith exercise of its discretion,
reduce the exercise price of outstanding
Awards to reflect the diminution in the
equity value of the Company as a result of
the sale of the assets of SunSource
Technology Services, LLC and/or the
distribution of the Company's interest in
GC-Sun Holdings L.P.
(iii) Change in Control Transactions. In the event
of any transaction resulting in a Change in
Control of the Company, outstanding stock
options and SARs under this Plan will
terminate upon the effective time of such
Change in Control unless provision is made
in connection with the transaction for the
continuation or assumption of such Awards
by, or for the substitution of the
equivalent awards of, the surviving or
successor entity or a parent thereof. In the
event of such termination, (A) the
outstanding stock options and SARs that will
terminate upon the effective time of the
Change in Control shall become fully vested
immediately before the effective time of the
Change in Control, (B) the Company shall
provide written notice of the Change in
Control transaction at least twenty days
prior to the effective time of such Change
in Control to those holders of stock options
and SARs under the Plan who are no longer
employed by the Company, and (C) the holders
of stock options and SARs under the Plan
will be permitted, for a period of at least
twenty days prior to the effective time of
the Change in Control, to exercise all
portions of such Awards that are then
exercisable or which become exercisable upon
or prior to the effective time of the Change
in Control; provided, however, that any such
exercise of any portion of such an Award
which becomes exercisable upon the same
date as the Change in Control occurs shall
be deemed to occur immediately prior to the
effective time of such Change in Control.
(e) Substitution of Awards in Mergers and Acquisitions.
Awards may be granted under the Plan from time to time in substitution
for awards held by employees, officers, consultants or directors of
entities who become or are about to become employees, officers,
consultants or directors of the Company or an Affiliate as the result
of a merger or consolidation of the employing entity with the Company
or an Affiliate, or the acquisition by the Company or an Affiliate of
the assets or stock of the employing entity. The terms and conditions
of any substitute Awards so granted may vary from the terms and
conditions set forth herein to the extent that the Administrator deems
appropriate at the time of grant to conform the substitute Awards to
the provisions of the awards for which they are substituted.
(f) Other Agreements. As a condition precedent to the
grant of any Award under the Plan, the exercise pursuant to such an
Award, or to the delivery of certificates for shares issued pursuant to
any Award, the Administrator may require the grantee or the grantee's
successor or permitted transferee, as the case may be, to become a
party to a stock restriction agreement, shareholders' agreement, voting
trust agreement or other agreements regarding the Common Stock of the
Company in such form(s) as the Administrator may determine from time to
time.
(g) Termination, Amendment and Modification of the Plan.
The Board may terminate, amend or modify the Plan or any portion
thereof at any time; provided, that any such termination, amendment or
modification would not cause an adverse change to any outstanding
Awards.
(h) Non-Guarantee of Employment or Service. Nothing in
the Plan or in any Grant Agreement thereunder shall confer any right on
an individual to continue in the service of the Company or shall
interfere in any way with the right of the Company to terminate such
service at any time with or without cause or notice and whether or not
such termination results in (i) the failure of any Award to vest; (ii)
the forfeiture of any unvested or vested portion of any Award; and/or
(iii) any other adverse effect on the individual's interests under the
Plan.
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(i) Compliance with Securities Laws; Listing and
Registration. If at any time the Administrator determines that the
delivery of Common Stock under the Plan is or may be unlawful under the
laws of any applicable jurisdiction, or Federal or state securities
laws, the right to exercise an Award or receive shares of Common Stock
pursuant to an Award shall be suspended until the Administrator
determines that such delivery is lawful, and in the event that such
suspension occurs within the one year period immediately preceding the
expiration of the exercise period of the Award, such exercise period
Award will be extended for the period of the suspension. The Company
shall use its reasonable efforts to effect any required registration or
qualification of the Common Stock under state or foreign laws.
The Company may require that a grantee, as a
condition to exercise of an Award, and as a condition to the delivery
of any share certificate, make such written representations (including
representations to the effect that such person will not dispose of the
Common Stock so acquired in violation of Federal, state or foreign
securities laws) and furnish such information as may, in the opinion of
counsel for the Company, be appropriate to permit the Company to issue
the Common Stock in compliance with applicable Federal, state or
foreign securities laws. The stock certificates for any shares of
Common Stock issued pursuant to this Plan may bear a legend restricting
transferability of the shares of Common Stock unless such shares are
registered or an exemption from registration is available under the
Securities Act of 1933, as amended, and applicable state or foreign
securities laws.
(j) No Trust or Fund Created. Neither the Plan nor any
Award shall create or be construed to create a trust or separate fund
of any kind or a fiduciary relationship between the Company and a
grantee or any other person. To the extent that any grantee or other
person acquires a right to receive payments from the Company pursuant
to an Award, such right shall be no greater than the right of any
unsecured general creditor of the Company.
(k) Governing Law. The validity, construction and effect
of the Plan, of Grant Agreements entered into pursuant to the Plan, and
of any rules, regulations, determinations or decisions made by the
Administrator relating to the Plan or such Grant Agreements, and the
rights of any and all persons having or claiming to have any interest
therein or thereunder, shall be determined exclusively in accordance
with applicable federal laws and the laws of the State of Delaware
without regard to its conflict of laws principles.
(l) Effective Date; Termination Date. The Plan is
effective as of the date on which the Plan is adopted by the Board,
subject to approval of the stockholders within twelve months before or
after such date. No Award shall be granted under the Plan after the
close of business on the day immediately preceding the tenth
anniversary of the effective date of the Plan, or if earlier, the tenth
anniversary of the date this Plan is approved by the stockholders.
Subject to other applicable provisions of the Plan, all Awards made
under the Plan prior to such termination of the Plan shall remain in
effect until such Awards have been satisfied or terminated in
accordance with the Plan and the terms of such Awards.
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