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Prospectus Supplement Filed Pursuant to Rule 424(b)(3)
File No. 333-19077
Supplement dated September 10, 1997 to Proxy Statement/Prospectus of SunSource
L.P. dated August 14, 1997
Limited Partner Litigation
The Proxy Statement/Prospectus describes on page 48 under
the heading "SPECIAL FACTORS - Limited Partner Litigation" a consolidated
purported class action brought by two holders of B Interests against the
Partnership, the Corporation, the General Partner, Lehman/SDI, Lehman Brothers
Holdings Inc. and all of the directors of Lehman/SDI, alleging that the terms of
the Conversion unfairly transfer substantial equity to the General Partner to
the detriment of the B Interests and constitute a breach of fiduciary duty,
breach of contract and breach of a covenant of good faith and fair dealing.
The parties to the litigation have reached an agreement in
principle to settle and dismiss the action. The settlement is subject to
confirmatory discovery by the plaintiffs' counsel, notice to members of the
class and approval by the Delaware Chancery Court. The terms of the settlement
are: (i) the parties acknowledge that certain modifications to the Conversion
Proposal and the disclosures in the Proxy Statement/Prospectus were made, in
material part, as a result of the filing of the complaint and subsequent
consultations with the plaintiffs' counsel; and (ii) management will recommend
to the Board of Directors of the Corporation the payment of an annual dividend
of $.40 per share on SunSource Common Stock, it being understood that (a)
dividends are subject to the discretion of the Board of Directors in accordance
with the ordinary course of business and applicable law (including, without
limitation, Sections 170 and 173 of the Delaware General Corporation Law), (b)
such dividend payment will depend, among other things, on earnings, financial
condition, capital requirements, availability of acquisition candidates, level
of indebtedness, contractual restrictions with respect to the payment of
dividends and other factors that the Board of Directors deems relevant, and (c)
there can be no assurance that the foregoing dividends will be adopted or
maintained by the Board of Directors. In addition, the defendants have agreed
that they will not oppose an award of fees and costs to counsel for the
plaintiffs not to exceed $350,000.
The defendants expressly deny that there is any basis for the
claims in the complaint. However, in recognition of the costs and diversion of
management time which would be incurred if the matter were fully litigated to a
conclusion, they have determined that it is in the best interests of the
Partnership to settle the lawsuit at this time.
