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EXHIBIT 4
SUN HYDRAULICS CORPORATION
EMPLOYEE STOCK PURCHASE PLAN
(AS AMENDED THROUGH JUNE 18, 2001)
1. PURPOSES
The Sun Hydraulics Corporation Employee Stock Purchase Plan (the
"Plan") is intended to provide employees of Sun Hydraulics Corporation,
a Florida corporation (the "Company") and its Subsidiaries with an
opportunity to acquire shares of the Company's Common Stock at an
advantageous price, with savings accumulated through payroll
deductions. It is the intention of the Company that the Plan be an
"employee stock purchase plan" under Section 423 of the Code. The
provisions of the Plan shall, accordingly, be construed in a manner
consistent with the requirements of that section of the Code.
2. DEFINITIONS
A. "Agent" means the firm appointed by the Company's Board of
Directors to carry out the functions assigned to the Agent.
B. "Board of Directors" means the Company's Board of Directors.
C. "Closing Market Price" means the last sale price of the Common
Stock as reported on the Nasdaq National Market (or any other
exchange or quotation system, if applicable) on the date
specified; or if no sales occurred on such day, at the last
sale price reported for the Common Stock; but if there should
be any material alteration in the present system of reporting
sales prices of such Common Stock, or if such Common Stock
should no longer be listed on the Nasdaq National Market (or
other exchange or quotation system), or if the last sale price
reported shall be on a date more than 30 days from the date in
question, the market value of the Common Stock as of a
particular date shall be determined in such a method as shall
be specified by the Plan's Agent.
D. "Code" means the Internal Revenue Code of 1986, as amended.
E. "Common Stock" means the Company's common stock, par value
$.001 per share, as traded on the Nasdaq National Market.
F. "Compensation" means cash compensation before any payroll
deductions for taxes or any other purpose, paid by the Company
or a Subsidiary to a Participant in respect of the service of
such Participant to the Company or a Subsidiary during an
Offering Period. This amount shall be deemed to include any
amount that the Participant has elected to defer for federal
income tax purposes under any 401(k) savings plan, cafeteria
plan or deferred compensation plan maintained by the Company
or a Subsidiary. Compensation shall not include any amount
paid to the Participant that
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(i) is paid during the relevant Offering Period under any
employee pension benefit plan (as defined in Section 3(2) of
the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"); (ii) is calculated as an excess, incentive
compensation or bonus amount; and (iii) except as otherwise
provided in the preceding sentence, is not included in the
income of the Participant for federal income tax purposes.
G. "Enrollment Date" means August 1, 2001, and the first day of
any calendar quarter thereafter.
H. "Offering Date" means August 1, 2001, and the first day of any
calendar quarter thereafter.
I. "Offering Period" means the period from August 1, 2001 through
September 30, 2001, and thereafter, the three-month period
commencing on any Offering Date after the first Offering Date
and ending on the Purchase Date.
J. "Option" means the right of a Participant to acquire Common
Stock pursuant to Plan provisions.
K. "Participant" means an eligible employee who has authorized
payroll deductions for the purchase of Common Stock under the
Plan and has an account maintained by the Agent, containing
shares of Common Stock and/or Proceeds.
L. "Proceeds" means the total amount of cash accumulated for the
benefit of a Participant during a single Offering Period,
comprised of the aggregate of the payroll deductions taken
from the Participant's Compensation during such Offering
Period together with earnings thereon and dividends paid on
shares of Common Stock beneficially owned by the Participant.
M. "Purchase Date" means the last Trading Day of each Offering
Period.
N. "Subsidiary" means a corporation that is a subsidiary of the
Company within the meaning thereof as stated in Code Section
424(f). Each Subsidiary shall participate in the Plan unless
designated by the Board of Directors not to participate.
O. "Trading Day" means any day that the principal stock exchange
or other national market upon which the Common Stock is traded
is open for business.
Wherever appropriate in this Plan the singular shall include
the plural; the masculine, the feminine; and vice versa.
3. ELIGIBILITY
All employees of the Company who have been employed for at least six
(6) months as of the Enrollment Date shall be eligible to participate
in the Plan, provided that no employee shall be eligible if such
employee:
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A. owns immediately after any Option is granted, stock possessing
five percent (5%) or more of the total combined voting power
or value of all classes of Company stock, applying the rules
of Code Section 424(d) in determining stock ownership, or
B. is an employee whose customary employment is twenty hours or
less per week, or whose customary employment is for not more
than five months in any calendar year.
In addition, all employees of each Subsidiary shall be eligible to
participate in the Plan to the extent they satisfy the requirements set
forth in the preceding paragraph.
4. EMPLOYEE PARTICIPATION AND PAYROLL DEDUCTIONS
A. An eligible employee shall become a Participant in the Plan by
completing and filing with the Company at least 20 days prior
to the Enrollment Date an authorization for a payroll
deduction on the form provided by the Company, together with
instructions to use the deductions to purchase shares of
Common Stock under the Plan. The Participant shall choose a
deduction in a whole percentage from 1% to 15%. As of each pay
day during each Offering Period, the Company will deduct the
specified amount from the Compensation payable to each
Participant. The Company will hold each Participant's Proceeds
in non-interest bearing accounts until each Participant's
proceeds are used to purchase shares. The Agent will perform
the record keeping function under the Plan, assuring that the
Agent, from the information provided to it by the Company,
will account for each Participant's deductions and maintain
each Participant's account. A Participant may not make any
separate cash payment into such account.
B. On each Offering Date, each Participant shall be granted the
right to purchase on the next Purchase Date such number of
shares of Common Stock as may be purchased by the
Participant's Proceeds accumulated during the preceding
Offering Period. No Participant, however, may be granted the
right to purchase shares of Common Stock under all Section 423
plans of the Company where the accrual is at a rate that
exceeds $25,000 of the Common Stock's fair market value,
determined at the time the option is granted, for any one
calendar year in which an option is outstanding for any part
of the year.
C. A Participant may not increase or reduce the amount of
Participant's payroll deductions until the next Enrollment
Date, except Participant may reduce the amount of
Participant's payroll deductions to 0% as described in Section
7. A Participant shall be deemed to have elected to purchase
all shares able to be purchased with the Proceeds on the
applicable Purchase Date.
5. OPTION PRICE
The price to Participants for each share to be purchased on a Purchase
Date shall be the lesser of:
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A. eighty-five percent (85%) of the Closing Market Price on the
Offering Date, or
B. eighty-five percent (85%) of the Closing Market Price on the
Purchase Date.
6. METHOD OF PURCHASE
A. On each Purchase Date the Agent shall cause all Participants'
Proceeds, together with applicable Company contributions
during the preceding Offering Period, if any, to be applied to
the purchase of Common Stock from the Company.
B. As of the Purchase Date, the account of each Participant shall
be credited with a number of shares of Common Stock that were
able to be purchased with that Participant's Proceeds.
7. WITHDRAWALS
Prior to any Purchase Date, a Participant may give written notice to
the Company or its agent of an intent to reduce the amount of payroll
deductions to 0% and to withdraw the entire cash balance and earnings
accumulated during the Offering Period preceding the said Purchase
Date. The written notice shall effectuate a withdrawal only if the
Agent has not purchased shares for the account of the notifying
Participant. Such withdrawal will terminate the Participant's right to
exercise any Options for that Offering Period. A Participant who
withdraws shall not participate again in the Plan unless and until a
new Enrollment Form is filed at least 20 days prior to the next
Enrollment Date.
8. TERMINATION OF EMPLOYMENT
As soon as administratively practicable after the termination of a
Participant's employment with the Company for any reason other than
death, the Participant's Proceeds accumulated during the Offering
Period in which his employment terminated will be refunded, and any
shares of Common Stock held by the Agent will be distributed in kind.
As an alternative to the latter, the terminated Participant may request
that the Agent, at the Participant's expense, sell the Common Stock in
the account and forward the net proceeds to the Participant.
9. RIGHTS AS A SHAREHOLDER; DIVIDENDS; HOLDING AND ISSUANCE OF SHARES
A. A Participant shall have no rights as a shareholder with
respect to any shares of Common Stock offered hereunder until
completion of payment therefor. Shares purchased pursuant to
the Plan initially will be registered in the name of the Agent
as custodian for the account of the Participant entitled
thereto. In regard to shares paid for and in a Participant's
account, the Participant shall have all rights accruing to an
owner of record of such shares, including voting rights and
the right to receive dividends.
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B. The Agent shall receive the dividends payable on the shares in
its custody and shall credit to the Proceeds account of each
Participant as beneficial owner of a certain number of shares
the amount of dividends attributable thereto. In the event
that the Participant has not authorized payroll deductions
during the Offering Period in which the Agent receives the
Participant's dividends, unless requested otherwise by the
Participant on notice from the Agent, the Agent shall
re-establish a Proceeds account to contain these dividends and
earnings thereon. In the event that the Participant's shares
have been distributed when dividends are received, the Agent
shall return said dividends to the Common Stock's transfer
agent for reissuance to the distributee of the shares.
C. Until such time as the Plan has been approved by the Company's
shareholders, the stock certificates representing all of the
shares purchased on behalf of Participants under this Plan
shall be retained by the Agent, and Participants may not
withdraw or sell such shares.
D. After the Plan has been approved by the Company's
shareholders, the stock certificate or certificates
representing the shares purchased on behalf of a Participant
on each Purchase Date shall be retained by the Agent until
such time as the Participant may request the Agent in writing
to distribute such shares to the Participant. The Company and
the Agent may establish such rules and procedures as they, in
their discretion, determine to be necessary or desirable with
respect to distributions of shares purchased under this Plan,
including any rules imposing limits on such distributions or
restricting the timing or frequency of such distributions they
may determine to be suitable.
10. NONTRANSFERABILITY
Neither payroll deductions credited to the account of a Participant nor
any Options to purchase shares of common Stock under the Plan may be
assigned, transferred, or alienated, and Options must be exercised only
by the Participant during his lifetime.
11. BENEFICIARY DESIGNATION AND RIGHTS
A Participant may file with the Company's Chief Financial Officer, or
such delegee appointed by the Chief Financial Officer, a written
designation of beneficiary, or a revision thereof. In the absence of
such designation, or if the named beneficiary predeceased the
Participant, the Participant's estate shall be deemed to be the
beneficiary. In the event of the Participant's death, the Agent shall
apply the Proceeds to the purchase of shares on the next Purchase Date,
and deliver all the Common Stock held for the deceased Participant to
the beneficiary, together with any remaining Proceeds, subject to the
Agent's receipt of Participant's death certificate and satisfactory
evidence of the beneficiary's identity and acceptance of the Common
Stock and Proceeds. The beneficiary shall have no rights under the Plan
during the Participant's lifetime.
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12. SHARES AUTHORIZED; CHANGE IN CORPORATE STRUCTURE AND CAPITALIZATION
A. Subject to adjustment upon changes in the capitalization of
the Company, the maximum number of shares of Common Stock
which shall be made available for purchase under the Plan is
325,000 shares. The shares of Common Stock purchased under the
Plan may, at the election of the Company, be authorized but
unissued shares of the Company's Common Stock, authorized but
unissued treasury shares held by the Company, or shares of
Common Stock purchased on the open market by the Agent.
B. In the event of any change in the number of outstanding shares
of Common Stock by reason of a recapitalization, merger,
consolidation, reorganization, separation, liquidation, stock
split, stock dividend, combination of shares, or any other
change in the corporate structure or shares of stock of the
Company, the Board of Directors will make an appropriate
adjustment, in accordance with applicable provisions of the
Code and law, in the number and kind of shares which may be
offered under the Plan, both in the aggregate and as to each
Participant, the number of shares then subject to offerings
theretofore made, and the price of shares offered under the
Plan.
C. If the Company shall not be the surviving corporation in any
merger or consolidation, or survives only as a subsidiary of
another entity, or if the Company is to be dissolved or
liquidated, and unless a surviving corporation assumes or
substitutes new options within the meaning of Section 424(a)
of the Code, for all Options then outstanding under the Plan,
i. the Purchase Date for all Options then outstanding
shall be accelerated to a date fixed by the Board of
Directors prior to the effective date of such merger
or consolidation or such dissolution or liquidation
and shall be deemed to be exercised, and
ii. upon such effective date any unexercised Options
shall expire.
13. SECURITIES LAWS
The Plan is intended to comply with Rule 16b-3 of the Securities Act of
1934, and shall be interpreted therewith. The Company shall not be
obligated to issue any Common Stock pursuant to the Plan at any time
when the shares have not been registered under the Securities Act of
1933, as amended, and such other state and federal laws, rules or
regulations as the Company or the Board of Directors deems applicable
and, in the opinion of legal counsel for the Company, there is no
exemption from the registration requirements of such laws, rules or
regulations available for the issuance and sale of such shares.
Further, all Common Stock acquired pursuant to the Plan shall be
subject to, and may be sold only in a manner consistent with the
Company's Policy on Confidentiality-Insider Trading and other policies
concerning compliance with securities laws and insider trading, as the
same may be amended from time to time.
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14. ADMINISTRATION
A. The Plan shall be administered by the Board of Directors.
Notwithstanding the preceding sentence, the Board of Directors
may delegate its authority to a Compensation Committee of at
least two members of the Board of Directors. The members of
the Compensation Committee shall serve at the pleasure of the
Board of Directors. The interpretation and construction of any
provision of the Plan, and the adoption of rules for
administering the Plan, shall be made by the Board of
Directors (or, in its place, the Compensation Committee).
Determinations made by the Board of Directors (or the
Compensation Committee) with respect to any matter or
provision contained in the Plan shall be final, conclusive and
binding upon the Company and all Participants, their
beneficiaries and legal representatives. Any rule adopted by
the Board of Directors (or the Compensation Committee) shall
remain in full force and effect unless and until amended or
repealed by the Board of Directors (or the Compensation
Committee).
B. The Board of Directors (or the Compensation Committee) shall
have the right to appoint the Agent and any other entity or
person, including Company employees, and to delegate to them
certain functions or services to be performed in connection
with Plan administration, and to name successors.
C. The Participant or beneficiary, as the case may be, shall bear
all costs and expenses associated with requests for the
issuance of stock certificates, the sale of Common Stock, and
a Participant's withdrawal from the Plan.
D. The Agent will mail to each Participant's home address a
quarterly statement showing the number of shares of Common
Stock held beneficially for the Participant, the amount and
derivation of cash in the Participant's Proceeds account, and
any purchases of shares in the Offering Period that closed
during the calendar quarter reflected in the statement.
E. If at any time the number of shares as to which Options have
been granted shall exceed the number of shares authorized for
purchase under the Plan on a certain Purchase Date, the number
of shares which may be purchased by each Participant shall be
reduced proportionately. Payroll deductions not able to be
used shall remain in the Participant's Proceeds account.
15. AMENDMENT AND TERMINATION
The Board of Directors may at any time terminate or amend the Plan,
provided that no amendment may be made without approval of the
shareholders of the Company if such amendment would increase the number
of shares which may be available under the Plan, except by operation of
Section 12 of the Plan, or materially modify the requirements as to
eligibility for participation in the Plan.
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16. NONGUARANTEE OF EMPLOYMENT
Neither eligibility to participate in, actual participation in, nor any
provision of the Plan shall be construed as giving any eligible
employee or Participant any employment right with the Company or a
Subsidiary.
17. AGENT FOR SERVICE OF PROCESS
Legal process may be served upon the Secretary of the Company or the
Chief Financial Officer, Sun Hydraulics Corporation, 1500 West
University Parkway, Sarasota, FL 34243.
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