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EXHIBIT 10.1
SOLO CUP INVESTMENT CORPORATION
2004
MANAGEMENT INVESTMENT AND INCENTIVE COMPENSATION PLAN
1. PLAN NAME
This Plan, as amended from time to time, shall be known as the Solo Cup
Investment Corporation 2004 Management Investment and Incentive
Compensation Plan (the "Plan").
2. PURPOSE OF THE PLAN
The purpose of this Plan is to benefit Solo Cup Investment Corporation (the
"Company") by (i) providing (A) long-term incentive opportunities to
employees and other service providers who will largely be responsible for
the Company's future success and growth and (B) additional incentive
opportunities to certain key employees whose deferred compensation accounts
will be converted into units that will be distributed in Convertible
Participating Preferred Stock, and (ii) aiding the Company and its
Subsidiaries in attracting and retaining employees and other service
providers who will largely be responsible for such growth in the Company's
value.
3. DEFINITIONS
As used herein, the following definitions shall apply:
A. ACCOUNT means the record keeping account maintained in the Company's
books and records for a Participant in the Plan.
B. AWARD means an award of Options or Convertible Preferred Units made
under the Plan.
C. AWARD AGREEMENT means, with respect to each Award, the written
agreement between the Company and the Participant setting forth the
terms and conditions of the Award.
D. BOARD shall have the meaning ascribed to such term in Section 4.A of
the Plan.
E. CAUSE shall have the meaning assigned to such term in the
Stockholders' Agreement.
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F. CHANGE OF CONTROL shall have the meaning ascribed to such term in the
Stockholders' Agreement.
G. CERTIFICATE OF DESIGNATIONS means the Certificate of Designations of
Convertible Participating Preferred Stock of Solo Cup Investment
Corporation dated February 27, 2004.
H. CLOSING DATE means the date on which the transactions contemplated by
the Stock Purchase Agreement are consummated.
I. CODE means the United States Internal Revenue Code of 1986, as
amended.
J. COMMITTEE shall have the meaning ascribed to such term in Section 4.A
of the Plan or, to the extent the Board performs the functions of the
Committee pursuant to Section 4, the Board.
K. COMMON STOCK OR COMMON SHARE means the common stock, par value $.01
per share, of the Company.
L. CONVERTIBLE PARTICIPATING PREFERRED STOCK OR CONVERTIBLE PARTICIPATING
PREFERRED SHARE means the convertible participating preferred stock of
the Company (or a share of such stock, as the context requires), par
value $.01 per share, having the terms set forth in the Stock Purchase
Agreement, the Stockholders' Agreement, and the Certificate of
Designations.
M. CONVERTIBLE PREFERRED UNIT OR CPU means a convertible participating
preferred unit credited to the Account of a Participant which shall
have a value on any given date equivalent to the Fair Market Value of
one share of Convertible Participating Preferred Stock (or any such
other security into which the Convertible Participating Preferred
Stock has been converted or is issuable in connection with such
conversion) of the Company.
N. DATE OF GRANT means the date of grant specified in the Award Agreement
provided to the Participant.
O. DISABILITY shall have the meaning ascribed to such term in the
Stockholders' Agreement.
P. ELIGIBLE PERSON means employees (including officers), directors,
consultants, and other service providers of the Company or its
Subsidiaries.
Q. EXERCISE PRICE shall have the meaning ascribed to such term in Section
8 of the Plan.
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R. EXPIRATION DATE shall have the meaning ascribed to such term in
Section 8 of the Plan.
S. FAIR MARKET VALUE shall have the meaning ascribed to such term in the
Stockholders' Agreement.
T. IPO shall have the meaning ascribed to such term in the Stockholders'
Agreement.
U. LIQUIDITY EVENT shall have the meaning ascribed to such term in the
Stockholders' Agreement.
V. OPTIONS means all nonstatutory stock options granted hereunder,
whether together or separately.
W. OPTIONEE means a Participant who receives a grant of Options.
X. PARTICIPANT means an Eligible Person selected by the Committee,
pursuant to the Committee's authority in Section 4 hereof, to receive
grants of Options or Convertible Preferred Units.
Y. PERMITTED TRANSFER shall have the meaning ascribed to such term in
Section 8.C of the Plan.
Z. PLAN AMOUNT means, as of the applicable date, the amount of cash,
assets or securities which the Executive is entitled to receive
pursuant to the Convertible Preferred Stock Unit Award Agreement.
AA. STOCK PURCHASE AGREEMENT means the Convertible Participating Preferred
Stock Purchase Agreement among the Company, Vestar Capital Partners
IV, L.P., Vestar Cup Investment, LLC and Vestar Cup Investment II, LLC
dated February 27, 2004.
BB. STOCKHOLDERS' AGREEMENT means the Stockholders' Agreement among Vestar
Capital Partners IV, L.P., Vestar Cup Investment, LLC, Vestar Cup
Investment II, LLC, SCC Holding Company LLC, the Company, Solo Cup
Company and the Management Investors (as defined therein), dated
February 27, 2004, as may be amended from time to time.
CC. SUBSIDIARY shall have the meaning ascribed to such term in the
Stockholders' Agreement.
DD. VESTAR means collectively Vestar Capital Partners IV, L.P., Vestar Cup
Investment, LLC, Vestar Cup Investment II, LLC or any entity which
succeeds to the rights and obligations of any of the foregoing under
the
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Stockholders' Agreement or any Affiliate (as defined in the
Stockholders' Agreement) of any of the foregoing other than the
Company or any Subsidiary.
4. ADMINISTRATION OF THE PLAN
A. The Board of Directors of the Company (the "Board") or a committee
appointed by the Board for such purpose (the "Committee") shall have
the power to administer the Plan. Notwithstanding the above, the Board
shall automatically have residual authority if no Committee shall be
constituted or if such Committee shall cease or shall be unable to
operate for any reason whatsoever.
B. In the event of an IPO, this Plan is intended to comply with Section
162(m) of the Code. Therefore, following the occurrence of an IPO, the
Committee shall consist of two or more persons, each of whom is an
"outside director" within the meaning of Section 162(m) of the Code
and a "non-employee director" within the meaning of Rule 16(b)-3
promulgated under the Securities and Exchange Act of 1934, as amended
from time to time.
C. Pursuant to the terms of the Plan, the Committee shall have full power
and authority as follows, without limitation:
i. To select the persons who will receive a grant of Options or
Convertible Preferred Units hereunder;
ii. To determine the terms and provisions of respective Award
Agreements (which need not be identical) in accordance with the
terms of the Plan;
iii. To determine the number of Common Shares or shares of
Convertible Participating Preferred Stock to be subject to an
Award granted hereunder;
iv. To accelerate the vesting date of an Award;
v. To determine the time or times of grant of any Award;
vi. To correct any defect or supply any omission or reconcile any
inconsistency in the Plan to the extent the Committee deems
necessary;
vii. To revise, alter or amend performance targets of any Options
with vesting schedules tied to Company performance to the
extent mutually agreed between the affected Optionee and the
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Committee; provided, however, that the VCP Director (as defined
in the Stockholders' Agreement) approves such revision,
alteration, or amendment;
viii. To interpret the provisions of the Plan and any Award Agreement
and supervise the administration of the Plan and to adopt or
modify such administrative rules, guidelines, and practices
governing the Plan as it shall from time to time deem
advisable; and
ix. To make any determination with respect to any other matter
which is necessary or desirable for, or incidental to
administration of, the Plan.
D. Unless otherwise specified in an Award Agreement, the interpretation
and construction by the Committee of any provision of the Plan or of
any Award hereunder shall be final and conclusive unless otherwise
determined by the Board. Subject to the Company's Certificate of
Incorporation, bylaws, and applicable law, each member of the Board or
the Committee shall be indemnified and held harmless by the Company
against any cost or expense (including counsel fees) reasonably
incurred by such member, or any liability (including any sum paid in
settlement of a claim with the approval of the Company) arising out of
any act or omission to act in connection with the Plan unless arising
out of such member's own fraud or bad faith, to the extent permitted
by applicable law. Such indemnification shall be in addition to any
rights of indemnification the member may have as a director or
otherwise under the Company's Certificate of Incorporation, any
agreement, any vote of shareholders or disinterested directors,
insurance policy or otherwise.
5. ELIGIBILITY; DESIGNATION OF PARTICIPANTS
A. Eligible Persons may be selected by the Committee to receive Awards
under the Plan, provided that only those Eligible Persons listed on
Exhibit A hereto may receive grants of Convertible Preferred Units
hereunder.
B. The grant of an Award hereunder shall not entitle the recipient
thereof to any future grants and shall neither entitle the recipient
thereof to participate nor disqualify him from participating in, any
other grant of Awards pursuant to the Plan or any other option or
stock plan of the Company or any of its Subsidiaries or affiliates.
C. Each Award granted pursuant to the Plan shall be evidenced by a
written Award Agreement between the Company and the holder of the
Award. Each Award Agreement shall provide that the Participant agrees
to be bound by the terms of the Stockholders' Agreement.
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6. SHARES RESERVED UNDER THE PLAN
The total number of Common Shares authorized for issuance under the Plan is
1.3 million shares and, together with the Common Shares underlying the
CPUs, 1.4 million, subject to adjustment as set forth in Section 9 below.
Should any Option for any reason expire or be forfeited prior to its
exercise or relinquishment in full, the Common Shares subject to such Award
may again be subject to an Award under the Plan. In addition, the Company
is authorized hereunder to issue up to 5,000 shares of Convertible
Participating Preferred Stock for purchase by key employees of the Company
pursuant to the terms and conditions set forth in subscription agreements
approved by the Board or upon conversion of CPUs.
7. CONVERTIBLE PREFERRED UNITS
A. The Board will grant to each Participant listed on Exhibit A hereto a
number of Convertible Preferred Units equal to the number of shares of
Convertible Participating Preferred Stock that could have been
purchased with the balance of the Participant's deferred compensation
account as of the Closing Date.
B. A Participant shall always be one hundred percent (100%) vested in his
Account.
C. To the extent provided for, and in the manner provided for, in the
Participant's Award Agreement, the Participant shall have the rights
attributable to holders of outstanding shares of Convertible
Participating Preferred Stock under the Stockholders' Agreement, which
the Participant shall execute prior to the grant of Convertible
Preferred Units (including without limitation the rights and
obligations set forth in Sections 3, 5 and 6 of the Certificate of
Designations and Sections 3.5, 3.7, and 3.8 of the Stockholders'
Agreement). No Participant who holds Convertible Preferred Units shall
have any rights under Section 4 of the Certificate of Designations or
otherwise relating to voting or the appointment of members of the
Board.
D. Payment.
i. The value of the Convertible Preferred Units contained in a
Participant's Account shall, as more specifically provided in
the Participant's Award Agreement, be payable in a lump sum
cash payment or in a distribution of Convertible Participating
Preferred Stock on a one-for-one basis, or in such other form
of property or securities as may become issuable in respect of
the underlying Convertible Participating Preferred Stock in
connection with a Liquidity Event or other event triggering a
distribution pursuant to
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the Participant's Award Agreement. The terms and conditions of
payment shall be set forth in each Participant's Award
Agreement.
ii. No special or separate fund shall be established or other
segregation of assets made to assure such payments in such a
way as to make the Plan a "funded" plan for purposes of the
Employee Retirement Income Security Act of 1974 (ERISA) or the
Code; provided, however, that the Company may, in its sole
discretion, establish a bookkeeping reserve, a separate trust
or some other arrangement to meet its obligations under the
Plan. Nothing contained in the Plan shall create or be
construed to create a trust of any kind and nothing contained
in the Plan nor any action taken pursuant to the provisions of
the Plan shall create or be construed to create a fiduciary
relationship between the Company and a Participant, Eligible
Person or other person. To the extent that any person acquires
a right to receive payments from the Company under the Plan,
such right shall be no greater than the right of any unsecured
general creditor of the Company.
iii. For purposes of the Code, the Company intends an Award of
Convertible Preferred Units under the Plan to be an unfunded,
unsecured promise on the part of the Company to pay cash or
property on a future date.
E. Dividend Equivalents. The Committee may determine that dividend
equivalents shall be payable or otherwise credited to the recipient of
a CPU with respect to any dividends that are paid (or would be paid if
the shares were then outstanding) on shares of Convertible
Participating Preferred Stock underlying the Award.
F. Transfer Restrictions. CPUs may not be assigned, transferred, pledged,
or encumbered, either voluntarily or by operation of law.
8. NONSTATUTORY STOCK OPTIONS
A. Each Option granted under the Plan shall be clearly designated in the
Award Agreement as a nonstatutory Option for the purposes of the Code.
B. Exercise of Options.
i. The exercise price of each Common Share subject to an Option
granted or any portion thereof shall be determined by the
Committee in its sole and absolute discretion in accordance
with applicable law, subject to any guidelines as may be
determined by the Board from time to time. Each Award Agreement
will contain the Exercise Price determined for each Optionee,
and in any event
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not less than the nominal value of the Common Shares underlying
the Options (the "Exercise Price").
ii. Except as otherwise provided in the Plan or in an Award
Agreement, an Option may be exercised for all, or from time to
time any part, of the Common Shares for which it is then
exercisable or vested (and for purposes hereof, any reference
to an Option being "vested" shall be deemed to mean that it is
exercisable, subject to any other conditions otherwise imposed
hereunder or in the Award Agreement). Options shall be
exercised by the Optionee by giving written notice to the
Company in such form and method as may be determined by the
Company. Such exercise shall be effective upon receipt of such
notice by the Company, specifying the number of Common Shares
with respect to which the Option is being exercised and
accompanied by: (a) the executed Stockholders' Agreement, (b)
the payment of the Exercise Price thereof in cash or by such
other method approved by the Committee; and (c) the payment of
any tax amount the Company is required to withhold at source
as a result of such exercise by the Optionee to the extent the
Company does not withhold pursuant to an Award Agreement a
portion of the Common Shares otherwise to be issued.
C. Vesting of Options; Treatment upon Termination of Employment or
Service.
Each Award Agreement shall set forth the terms and conditions of such
Option, including without limitation (i) the date or dates upon which
such Option shall vest and become exercisable, (ii) the circumstances
under which such Option shall not vest and become exercisable, or
(iii) the effect on the Optionee's Options of the Optionee's
termination of employment or service by reason of death, Disability,
Cause, or otherwise.
D. Additional Terms of Option Grants.
i. Except as set forth in the Optionee's Award Agreement, Options
granted under the Plan shall not be transferable by Optionees
other than by will or the laws of descent and distribution, and
during an Optionee's lifetime shall be exercisable only by that
Optionee. Notwithstanding the foregoing, each Award Agreement
may provide for the transfer of Options by a Participant
pursuant to a Permitted Transfer. For purposes of the Plan, a
"Permitted Transfer" will include a transfer by a Participant
to any Family Member (as defined in the Stockholders'
Agreement) (to the extent that such Family Member is a trust or
other entity, in all events only where such transferee, or
trust or other entity is established
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and maintained for estate planning purposes and conducts no
business other than holding passive investments).
ii. Options, to the extent not previously exercised, shall
terminate and expire upon the earlier of: (a) ten (10) years
following the Date of Grant (the "Expiration Date") or (b) such
earlier date set forth in the Award Agreement. No Option shall
be exercisable after the Expiration Date.
iii. Subject to the provisions of Section 9 of the Plan, the holders
of Options shall not have any rights or privileges of
shareholders of the Company in respect of any Options until the
registration of the Optionee as the owner of such Common Shares
in the Company's register.
9. GENERAL PROVISIONS
A. RIGHTS AS STOCKHOLDERS. Except as expressly set forth in a
Participant's Award Agreement, no Participant who holds Options or
Convertible Preferred Units shall have voting rights as a stockholder
(in any and all matters whatsoever) until the date as of which the
holder is registered as the owner of the Common Shares or Convertible
Participating Preferred Stock, as the case may be, in the Company's
register and then solely to the extent provided by the Stockholders'
Agreement.
B. NO ASSIGNMENT. If any person shall attempt to assign, transfer, pledge
or encumber any amount payable under the Plan, or if by reason of his
bankruptcy or other event happening at any time any such payment would
be made subject to his debts or liabilities or would otherwise devolve
upon anyone else and not be enjoyed by him, in contravention of the
provisions of Sections 7.F or 8.D(i), the Committee may, in its sole
discretion, terminate such person's interest in any such payment and
direct that the same be held and applied to or for the benefit of such
Family Member in such manner as the Committee may deem proper.
C. INCAPACITY. If the Committee shall find that any person to whom any
payment is payable under the Plan is unable to care for his affairs
because of illness or accident or is a minor, any payment due (unless
a prior claim for such payment shall have been made by a duly
appointed guardian, committee or other legal representative) may be
paid to his or her spouse, child, parent, or brother or sister, or any
other person deemed by the Committee, in its sole discretion, to have
incurred expenses for such person otherwise entitled to payment, in
such manner and proportions as the Committee may determine. Any such
payment shall be a complete discharge of the liabilities of the
Company under the Plan as to the amount paid.
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D. INFORMATION REQUIRED. Each Participant shall file with the Committee
such pertinent information concerning himself as the Committee may
specify, and no Participant or other person shall have any rights or
be entitled to any benefits under the Plan unless such information has
been filed by, or with respect to, him.
E. ELECTION BY PARTICIPANT. All elections, designations, requests,
notices, instructions and other communications from a Participant, or
other person, to the Committee required or permitted under the Plan
shall be in such form as is prescribed from time to time by the
Committee, shall be mailed by first-class mail or delivered to such
location as shall be specified by the Committee and shall be deemed to
have been given and delivered only upon actual receipt by the
Committee at such location.
F. NOTICES. Any notice under the Plan or an Award Agreement shall be
addressed to the Committee in care of the General Counsel of the
Company at the principal executive office of the Company. All notices,
statements, reports and other communications from the Committee to any
Eligible Person, Participant, or other person required or permitted
under the Plan shall be deemed to have been duly given when delivered
to, or when mailed first class mail, postage prepaid and addressed to,
such Eligible Person, Participant, or other person at his address last
appearing on the records of the Company.
G. NO EMPLOYMENT RIGHTS. Neither the Plan nor any action taken under the
Plan shall be construed as giving to any Eligible Person the right to
be retained in the employ of the Company, or to provide services to
the Company, or as affecting the right of the Company to dismiss any
Eligible Person at any time, with or without cause.
H. WITHHOLDING OF TAXES. Appropriate provisions shall be made for the
payment and withholding of applicable taxes in connection with the
vesting, exercise, or settlement of any Award under the Plan. The
Committee may provide in an Award Agreement that the Participant shall
be required to tender the amount of any such taxes to the Company
prior to the issuance of Convertible Participating Preferred Stock or
Common Shares to the Participant upon exercise or payment of amounts
due under the Award Agreement. In no event shall the Company be liable
for any of a Participant's income tax obligations.
I. ADJUSTMENTS. In the event of a reorganization, recapitalization, stock
dividend or stock split, or combination or other change in the Common
Shares or shares of Convertible Participating Preferred Stock, the
Board may, in order to prevent the dilution or enlargement of rights
under the Options or Convertible Preferred Units credited to a
Participant's Account,
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make such equitable adjustments in the Fair Market Value of the
Options and Convertible Units, the number of Convertible Preferred
Units so credited, and in the number of Common Shares or other
securities subject to the Option and the Option Exercise Price, as the
Board in its sole discretion may determine.
J. WAIVERS. Any waiver of any right granted pursuant to the Plan shall
not be valid unless the same is in writing and signed by the party
waiving such right. Any such waiver shall not be deemed to be a waiver
of any other rights.
K. SEVERABILITY. In the case that any one or more of the provisions
contained in the Plan shall be invalid, illegal or unenforceable in
any respect, the validity, legality and enforceability of the
remaining provisions in the Plan shall not in any way be affected or
impaired.
L. CAPTIONS AND GENDER. The captions preceding the Sections and
subsections of the Plan have been inserted solely as a matter of
convenience and in no way define or limit the scope or intent of any
provisions of the Plan. Where the context admits or requires, words
used in the masculine gender shall be construed to include the
feminine and the neuter also, the plural shall include the singular
and the singular shall include the plural.
M. CHOICE OF LAW. The Plan and all rights under this Plan shall be
governed by and construed in accordance with the laws of the State of
Delaware.
N. NO EFFECT ON BENEFIT PLANS. All Awards shall constitute a special
incentive payment to the Participant and shall not be taken into
account in computing the amount of salary or compensation of the
Participant for the purpose of determining any benefits under any
pension, retirement, profit-sharing, bonus, life insurance or other
benefit plan of the Company or under any agreement between the Company
and the Participant, unless such plan or agreement specifically
provides otherwise.
O. OBLIGATIONS UPON FAMILY MEMBERS . As a condition to the delivery of
any Award hereunder to a Family Member, such Family Member shall be
bound by the same terms and conditions of the transferor of such
Award.
P. AMENDMENT OR TERMINATION. The Board may, at any time and from time to
time, amend, alter or discontinue the Plan, except that no amendment
or alteration shall be made which would adversely affect the rights of
a Participant under an outstanding Award without his written consent.
Termination of the Plan shall not affect the Committee's and/or the
Board's ability to exercise the powers granted to it hereunder with
respect to the Awards granted under the Plan prior to the date of such
termination.
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Q. AWARDS SUBJECT TO THE PLAN. In the event of a conflict between any
term or provision contained in the Plan and a term or provision in any
Award Agreement, the applicable terms and provisions of the Plan will
govern and prevail.
R. EFFECTIVE DATE. The Plan shall be effective as of the Closing Date.
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IN WITNESS WHEREOF, the Company has executed this Plan on the 27th day of
February, 2004.
SOLO CUP INVESTMENT CORPORATION
By: /S/ RONALD L. WHALEY
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Name
Its: PRESIDENT AND CHIEF OPERATING OFFICER
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Title
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EXHIBIT A
PARTICIPANTS ELIGIBLE TO RECEIVE GRANTS OF CPUS
Ronald Whaley
William Coad
Patrick Bye
Susan Marks
Anil Shah
Kathleen Wolf
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