SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the registrant [ X ]
Filed by a party other than the registrant [ ]
Check the appropriate box:
[ ] Preliminary proxy statement
[ X ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
SCANSOURCE, INC.
(Name of Registrant as Specified in Its Charter)
Payment of filing fee (Check the appropriate box):
[ X ] $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(j)(2).
<PAGE>
SCANSOURCE, INC.
6 Logue Court, Suite G
Greenville, South Carolina 29615
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held December 3, 1996
The Annual Meeting of Shareholders of ScanSource, Inc. will be held in
the Ballroom of the Embassy Suites Hotel, 670 Verdae Boulevard, Greenville,
South Carolina on Tuesday, December 3, 1996, at 10:00 a.m., for the following
purposes:
(1) To elect four members to the Board of Directors;
(2) To approve an amendment to the Company's 1993 Incentive Stock
Option Plan;
(3) To ratify the appointment of the Company's independent
auditors; and
(4) To transact such other business as may properly come before
the Annual Meeting or any adjournments thereof.
Only shareholders whose names appeared of record on the books of the
Company at the close of business on October 25, 1996 will be entitled to notice
of and to vote at the Annual Meeting or at any adjournments thereof.
You are cordially invited and urged to attend the Annual Meeting in
person, but if you are unable to do so, please date, sign and promptly return
the enclosed proxy card in the enclosed postage paid envelope. If you attend the
Annual Meeting and desire to revoke your proxy and vote in person, you may do
so. In any event, you remain entitled to revoke your proxy at any time before it
is exercised.
Steven H. Owings
Chairman of the Board
October 25, 1996
<PAGE>
SCANSOURCE, INC.
6 Logue Court, Suite G
Greenville, South Carolina 29615
PROXY STATEMENT
General
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of ScanSource, Inc. (the "Company") to be
used in voting at the Annual Meeting of Shareholders of the Company to be held
in the Ballroom of the Embassy Suites Hotel, 670 Verdae Boulevard, Greenville,
South Carolina, on Tuesday, December 3, 1996, at 10:00 a.m., and at any
adjournments thereof. This Proxy Statement and the accompanying form of proxy
are being mailed to shareholders commencing on or about October 25, 1996.
Any shareholder who executes the form of proxy referred to in this
Proxy Statement may revoke it at any time before it is exercised. The proxy may
be revoked by either giving written notice to the Secretary of the Company of
such revocation, or by executing and delivering to the Secretary of the Company
a proxy bearing a later date. The voting of such proxy will be suspended if the
shareholder executing the proxy attends the Annual Meeting and elects to vote in
person. Whether or not you plan to attend, you are urged to sign and return the
enclosed proxy.
The cost of preparing, assembling and mailing this Proxy Statement and
the form of proxy will be borne by the Company. Directors, officers and
employees of the Company may also solicit proxies personally or by mail,
telephone or telegram. No compensation will be paid for such solicitations. In
addition, the Company will bear the reasonable expenses of brokerage houses and
other custodians, nominees and fiduciaries who, at the request of the Company,
may send proxies and proxy solicitation material to their clients and
principals.
Voting Securities Outstanding
The Board of Directors has fixed the close of business on October 25,
1996 as the record date and time for the determination of shareholders entitled
to notice of, and to vote at, the Annual Meeting and at any adjournments
thereof. As of October 25, 1996, there were 3,246,986 outstanding shares of the
Company's no par value common stock (the "Common Stock"). All of such shares are
eligible to be voted on each matter currently scheduled to come before the
Annual Meeting, and there are no other outstanding shares of capital stock of
the Company eligible to be voted at the Annual Meeting. Cumulative voting for
the election of directors is not available under the Company's Articles of
Incorporation. Consequently, each eligible share of Common Stock is entitled to
one vote on each matter to be voted upon at the Annual Meeting. Except for the
election of directors, for each matter specified in this Proxy Statement to be
submitted for shareholder approval at the Annual Meeting, the affirmative vote
of a majority of the shares of Common Stock present at the Annual Meeting in
person or by proxy and entitled to vote on such matter is required for approval.
Abstentions will be considered shares present in person or by proxy and entitled
to vote and, therefore, will have the effect of a vote against the matter.
Broker non-votes will be considered shares not present for this purpose and will
have no effect on the outcome of the vote.
The Bylaws of the Company provide that the presence in person or by
proxy of the holders of a majority of the outstanding shares of Common Stock
entitled to vote at the Annual Meeting is necessary to constitute a quorum at
the Annual Meeting and at any adjournments thereof. Directions to withhold
authority to vote for directors, abstentions and broker non-votes will be
counted for purposes of determining if a quorum is present at the Annual
Meeting. If a quorum is not present or represented at the Annual Meeting, the
chairman of the meeting or the shareholders holding a majority of the shares of
Common Stock entitled to vote, present in person or represented by proxy, have
the power to adjourn the meeting from time to time without notice, other than an
announcement at the meeting, until a quorum is present or represented.
Directors, officers and employees of the Company may solicit proxies for the
reconvened meeting in person or by mail, telephone or telegram. At any such
reconvened meeting at which a quorum is present or represented, any business may
be transacted that might have been transacted at the meeting as originally
scheduled.
1
<PAGE>
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information known to the Company
regarding the beneficial ownership of the Common Stock of the Company as of
September 1, 1996. At such date, 3,245,986 shares were outstanding. Information
is presented for (i) shareholders owning more than five percent of the
outstanding Common Stock, (ii) each director and executive officer of the
Company, individually, and (iii) all directors and executive officers of the
Company, as a group. Except as otherwise specified, each of the shareholders
named in the table has indicated to the Company that such shareholder has sole
voting and investment power with respect to all shares of Common Stock
beneficially owned by that shareholder. Beneficial ownership reflected in the
table below is determined in accordance with the rules and regulations of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. Shares of Common Stock issuable upon the
exercise of options or warrants currently exercisable or exercisable within 60
days are deemed to be outstanding for computing the percentage ownership of the
shareholder holding such options or warrants, but are not deemed to be
outstanding for computing the percentage ownership of any other shareholder.
<TABLE>
<CAPTION>
Number of Shares
Name Beneficially Owned Percentage
<S> <C> <C>
Richard Kaufman
635 Madison Avenue
New York, New York 10022.................................. 316,000 (1) 9.7%
Walter Scheuer
635 Madison Avenue
New York, New York 10022.................................. 269,000 (1) 8.3
Steven H. Owings
6 Logue Court, Suite G
Greenville, South Carolina 29615.......................... 265,000 (2) 8.2
Barry Rubenstein
68 Wheatley Road
Brookville, New York 11545............................... 210,000 (3)(4) 6.4
Wayne S. Reisner
635 Madison Avenue
New York, New York 10022.................................. 209,000 (1) 6.4
Dennis B. Gates
851 Arlington Boulevard
El Cerrito, California 94530............................. 190,000 5.9
Eli Oxenhorn
56 The Intervale
Roslyn, New York 11576.................................... 190,000 (3) 5.8
Michael L. Baur............................................. 46,666 (2)(5) 1.7
Jeffery A. Bryson........................................... 10,732 (6) *
Steven R. Fischer........................................... 11,000 (7) *
James G. Foody.............................................. 12,000 (7) *
All directors and executive officers
as a group (5 persons).................................... 329,398 10.0
</TABLE>
- -----------
* Amount represents less than 1.0%.
(1) Schedules filed with the Securities and Exchange Commission reflect (i)
Walter Scheuer, Richard Kaufman and Wayne S. Reisner as three of the
trustees of certain trusts for the benefit of Mr. Scheuer's children
and grandchildren, which trusts hold an aggregate of 159,000 shares,
(ii) Mr. Scheuer and Mr. Kaufman as executive officers of two
foundations holding an aggregate of 12,000 shares, (iii) Mr. Scheuer as
the general partner of a limited partnership holding 98,000 shares,
(iv) Mr. Kaufman and Mr. Reisner as two of the trustees of a trust for
the benefit of Mr. Scheuer and Mr. Scheuer's wife holding 50,000
shares, and
2
<PAGE>
(v)Mr. Kaufman as one of the trustees of a trust for the benefit of Mr.
Scheuer's children holding 95,000 shares. While such Schedules relate
to an aggregate of 414,000 shares of Common Stock, the aggregate
beneficial ownership reflected in the table for these individuals is
greater than such amounts since more than one individual may be deemed
to be the beneficial owner of the same securities. Each of Mr. Scheuer,
Mr. Kaufman, and Mr. Reisner disclaims beneficial ownership of all
shares held by the aforementioned entities.
(2) Includes 15,000 shares held of record by Mr. Owings that Mr. Baur has
the right to acquire pursuant to currently exercisable options granted
by Mr. Owings to Mr. Baur.
(3) Includes 50,000 shares issuable pursuant to currently exercisable
warrants.
(4) Includes 100,000 shares owned by Woodland Partners, an investment
partnership of which Mr. Rubenstein and his wife are the sole general
partners; 40,000 shares held by Mr. Rubenstein's wife; and 20,000
shares held by a limited partnership of which Mr. Rubenstein is a
general partner.
(5) Includes 31,667 shares issuable pursuant to currently exercisable
options granted to Mr. Baur by the Company.
(6) Includes 10,332 shares issuable pursuant to options exercisable
currently or within 60 days.
(7) Includes 5,000 shares issuable pursuant to currently exercisable
options issued under the Company's stock option plan for outside
directors and 5,000 shares issuable pursuant to certain other currently
exercisable non-qualified options.
Executive Officers and Directors
Set forth below are the age and certain other biographical information
with respect to each of the existing directors and executive officers of the
Company.
Steven H. Owings, 43, has served as Chairman of the Board of Directors
and Chief Executive Officer of the Company since the organization of the Company
in December 1992. Prior to organizing the Company, he served for a year as
Chairman of the Board, Chief Executive Officer and the sole shareholder of
Argent Technologies, Inc. ("Argent"), a personal computer manufacturer. Prior to
his association with Argent, he held various offices in the senior executive
management of Gates/Arrow Distributing, Inc., formerly Gates/FA Distributing,
Inc. ("Gates"), for over four years, including serving as President from
December 1987 until December 1990, Chief Executive Officer from December 1987 to
December 1991 and Chairman of the Board of Directors from December 1990 to
December 1991. He served as a director of Gates from December 1987 to September
1994. Mr. Owings is a director of Globelle Corporation.
Michael L. Baur, 39, has served as President of the Company since the
organization of the Company in December 1992 and as a director of the Company
since December 1995. Prior to joining the Company, Mr. Baur served as President
of Argent from December 1991 to November 1992 and as its General Manager from
April 1991 to November 1991. In September 1989, Mr. Baur joined Gates as Product
Manager and served as Merchandising Director from February 1990 until March
1991.
Jeffery A. Bryson, 36, has served as Chief Financial Officer and
Treasurer of the Company since December 1993. Prior to joining the Company, Mr.
Bryson served as a senior manager with the accounting firm of KPMG Peat Marwick
where he was employed for more than seven years.
Steven R. Fischer, 51, has served as a director of the Company since
December 1995. Mr. Fischer has served as Senior Vice President and Regional
Manager of Transamerica Business Credit Corporation since March 1992 and served
as Vice President and Regional Manager of Citibank, N.A. from February 1981 to
March 1992.
3
<PAGE>
James G. Foody, 66, has served as a director of the Company since
December 1995. Mr. Foody has served as a business consultant in Greenville,
South Carolina since October 1990. Prior to that time, he served as a partner in
the accounting firm of Ernst & Young, or its predecessors, for more than five
years.
PROPOSAL ONE
ELECTION OF DIRECTORS
Four directors are to be elected at the Annual Meeting. Pursuant to the
authority granted to it by the Company's Bylaws, the Board of Directors has set
the size of the Board of Directors at five members. A vacancy currently exists
on the Board of Directors which the Board of Directors has indicated it does not
expect to have filled at the Annual Meeting. Consequently, immediately following
the Annual Meeting, the Board of Directors will continue to consist of four
members. Pursuant to the Company's Bylaws and applicable South Carolina
corporate law, the four directors who will serve following the Annual Meeting
may elect a director to fill the vacancy that will exist on the Board of
Directors. Management is currently in the process of identifying a suitable
candidate for election to fill such vacancy.
The Board of Directors has recommended each of the four existing
members of the Board of Directors as the four nominees for election as directors
at the Annual Meeting to serve until the next annual meeting of shareholders or
until their respective successors shall have been elected and shall have
qualified. The following are the Company's nominees for election as directors at
the Annual Meeting: Michael L. Baur, Steven R. Fischer, James G. Foody and
Steven H. Owings.
In accordance with the Bylaws of the Company, those nominees receiving
the greatest number of votes cast (although not necessarily a majority of the
votes cast) will be elected to the Board of Directors. Abstentions and shares
held in street name that are not voted in the election of directors will not be
included in determining the number of votes cast in the election of directors.
The proxies solicited for the Annual Meeting cannot be voted for a greater
number of persons than the number of nominees named. Cumulative voting in the
election of directors is not permitted by the Company's Articles of
Incorporation. If any nominee shall become unavailable for any reason, the
persons named in the form of proxy shall vote for a substitute nominee or vote
to reduce the number of directors to be elected as directed by the Board of
Directors. The Board of Directors has no reason to believe that any of the four
nominees listed above will not be available for election as a director.
THE PERSONS NAMED IN THE FORM OF PROXY WILL VOTE THE PROXY AS
SPECIFIED. IF NO SPECIFICATION IS MADE, THE PROXY WILL BE VOTED "FOR" THE
ELECTION OF THE NOMINEES SET FORTH ABOVE.
4
<PAGE>
MANAGEMENT COMPENSATION
Compensation of Officers
The following table summarizes the compensation earned by the Company's
Chief Executive Officer and its President for services provided during the
fiscal years ended June 30, 1996, 1995 and 1994. No other executive officer of
the Company earned compensation in excess of $100,000 for services provided to
the Company during such periods.
Summary Compensation Table
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards
-------------------------------------------------------------------
Securities
Fiscal Underlying
Name and Principal Position Year Salary Bonus Options
<S> <C> <C> <C> <C> <C>
Steven H. Owings 1996 $ 87,266 $ -0- -0-
Chairman of the Board and 1995 72,000 -0- -0-
Chief Executive Officer 1994 72,000 -0- -0-
Michael L. Baur 1996 87,000 44,094 -0-
President 1995 72,000 57,550 30,000
1994 72,000 15,007 30,000
</TABLE>
Fiscal Year-End Option Values
The following table sets forth certain information with respect to
unexercised Common Stock purchase options held by the Company's President at
June 30, 1996 (the Company's fiscal 1996 year-end). No other executive officer
named in the Summary Compensation Table held any Common Stock purchase options
as of such date, and no options were exercised by any of such executive officers
during fiscal 1996 or, as of the date of this Proxy Statement, during fiscal
1997. The values of unexercised in-the-money options at fiscal 1996 year-end
reflected in the table have been calculated on the basis of a per share price of
$14.00, the average of the bid and ask price per share of the Company's Common
Stock as reported on the Nasdaq Stock Market on June 28, 1996, the last trading
day of the fiscal year.
Fiscal 1996 Year-End
Option Values
<TABLE>
<CAPTION>
Value of Unexercised
Number of Securities Underlying In-the-Money
Unexercised Options at 6/30/96 Options at 6/30/96
----------------------------- ------------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ------ ------------- -------------- ------------- ---------------
<S> <C> <C> <C> <C>
Michael L. Baur 40,000 20,000 $ 427,709 $ 105,416
</TABLE>
Employment Agreements
The Company entered into a three-year employment agreement with Steven
H. Owings effective March 18, 1994 pursuant to which Mr. Owings serves as Chief
Executive Officer. The agreement, which was amended in 1996, provides for an
annual salary of $96,000 and includes a non-competition obligation that extends
for two years following the expiration of the agreement or the earlier
termination of his employment.
5
<PAGE>
Compensation of Directors
All directors are reimbursed for their expenses incurred in connection
with the performance of their services as directors. In addition, directors who
are not otherwise compensated as officers of the Company receive a fee of $1,000
per calendar quarter for their service on the Board of Directors and are also
eligible to be granted on an annual basis five-year options to purchase 5,000
shares of Common Stock under the terms of the Company's stock option plan for
outside directors adopted in December 1993 (the "Director Plan"). Grants of
options under the Director Plan are automatic and are made each year to each
non-employee director. Under the Director Plan, the number of shares included in
each annual grant to a director is reduced by the number of shares of Common
Stock included in stock options or warrants otherwise granted to such director
for service during that year on any committee of the Board of Directors. The
exercise price of all options so granted is the fair market value of the Common
Stock on the date of grant. Options granted under the Director Plan are
exercisable beginning six months after the option is granted. Options may be
exercised only during the period in which the option holder remains a director
of the Company and for one year thereafter, unless the director's membership on
the Board is terminated for cause, in which case all options granted to such
director expire upon such termination. Any options that expire unexercised or
that terminate become available again for issuance. The Company has reserved
65,000 shares of Common Stock for issuance under the Director Plan.
On December 6, 1995, the day following the 1995 Annual Meeting of
Shareholders, automatic grants of options for the purchase of 5,000 shares of
Common Stock pursuant to the Director Plan were made to each of Messrs. Fischer
and Foody, the two non-employee directors. In addition, on December 6, 1995, the
Company made discretionary grants of options to each of Messrs. Fischer and
Foody for the purchase of 5,000 shares of Common Stock in connection with their
service on the Board of Directors. No other compensation was paid or awarded
during the year ended June 30, 1996 to any director for service on the Board of
Directors. Effective on December 4, 1996, the day following the Annual Meeting,
automatic grants of options for the purchase of 5,000 shares of Common Stock
pursuant to the Director Plan are scheduled to be made to each of the
non-employee directors elected at the Annual Meeting.
Board Meetings and Committees
The Board of Directors of the Company held a total of four meetings
during the Company's fiscal year ended June 30, 1996. No director attended fewer
than 75% of the total of such meetings and the meetings of the committees upon
which he served.
Pursuant to the Bylaws of the Company, the Board of Directors has
established an Audit Committee and a Compensation Committee. The Board of
Directors has not established a committee performing the functions traditionally
performed by a Nominating Committee. Such functions are currently performed by
the Board of Directors acting as a whole.
The Audit Committee is composed of Messrs. Fischer and Foody. This
committee makes recommendations regarding the Company's independent accountants,
considers the adequacy of internal accounting controls, reviews the results and
scope of the audit and other services provided by the Company's independent
accountants, and undertakes other activities related to the fiscal affairs of
the Company. No directors of the Company who are also executive officers may
serve on the Audit Committee. This committee met twice during the fiscal year
ended June 30, 1996.
The Compensation Committee is composed of Messrs. Foody and Owings.
This committee considers and oversees the development of programs to attract and
compensate employees, makes recommendations concerning salaries and incentive
compensation for employees of, and consultants to, the Company, and administers
the Company's incentive stock option plan for employees. No directors of the
Company who are also executive officers of the Company participate in
deliberations of such committee concerning the compensation of such executive
officer. This committee met twice during the fiscal year ended June 30, 1996.
6
<PAGE>
CERTAIN TRANSACTIONS
In June 1994, the Company made a $40,000 loan to Michael L. Baur,
President of the Company, to be repaid under terms of a note at 7.25% interest,
in interest only payments for three years, with the principal balance due at
June 9, 1997. During 1996, the Company modified the loan to include additional
advances of $43,000 to be repaid under the same terms as the original note.
In July 1995, the Company was granted 19% equity ownership in
Transition Marketing, Inc. ("Transition"), in exchange for the Company's
commitment to use Transition as its contract provider of marketing services. The
Company purchased $278,000 of marketing services from Transition for the year
ended June 30, 1996 and had loaned, at a 9% rate, $122,208 to Transition at June
30, 1996. Steven H. Owings, Chief Executive Officer of the Company and a
director, is a member of the Board of Directors of Transition. Management
believes the pricing of all transactions with Transition is representative of
arms' length costs, and is comparable to terms which could be negotiated with
other unrelated third parties.
PROPOSAL TWO
APPROVAL OF AMENDMENT TO 1993 INCENTIVE STOCK OPTION PLAN
General. On September 6, 1996, the Board of Directors approved an
amendment (the "Amendment") to the ScanSource, Inc. 1993 Incentive Stock Option
Plan (the "Stock Plan"), subject to the approval of the Amendment by the
shareholders at the Annual Meeting. The Amendment increases the number of shares
of Common Stock that may be issued under the Stock Plan from 200,000 shares to
280,000 shares and establishes a three-month period following termination of an
option holder's employment with the Company (for any reason other than for
cause) during which the option holder may exercise any and all stock purchase
options that were vested at the time of the termination of employment. Under the
existing Stock Plan provisions, no stock purchase options may be exercised
following termination of employment for any reason other than death, disability
or retirement. The Board of Directors approved the Amendment to be effective
September 6, 1996. The approval of the Amendment requires the affirmative vote
of the holders of a majority of the shares of Common Stock present or
represented by properly executed and delivered proxies at the Annual Meeting.
Abstentions and shares held in street name voted as to any matter at the Annual
Meeting will be included in determining the number of votes present or
represented at the Annual Meeting. If the Amendment is not approved by the
shareholders, the Stock Plan will remain in effect without the Amendment. The
following discussion of the Stock Plan, as amended by the proposed Amendment, is
qualified in its entirety by reference to the Stock Plan. The Company will
provide promptly, upon request and without charge, a copy of the full text of
the Stock Plan to each shareholder to whom a copy of this Proxy Statement is
delivered. Requests should be directed to Mr. Jeffery A. Bryson, Chief Financial
Officer, ScanSource, Inc., 6 Logue Court, Suite G, Greenville, South Carolina
29615, (864) 288-2432.
Purpose. The Stock Plan was approved by the shareholders of the Company
in 1993. The Stock Plan is intended to provide the Company maximum flexibility
to meet the evolving needs of the Company in providing stock-based compensation
to officers and employees in order to align more closely the interests of
corporate management and employees with those of shareholders. The Stock Plan is
also expected to promote the interests of the Company and its shareholders by
strengthening the Company's ability to attract and retain key officers and
employees through furnishing additional incentives whereby such present and
future executive officers and employees may be encouraged to acquire, or to
increase their acquisition of, Common Stock, thus maintaining their personal and
proprietary interests in the Company's continued success and progress.
Administration and Operation. The Stock Plan is currently administered
by the Board of Directors. Under the Stock Plan, the Board of Directors
determines the individuals who will receive options, the time period during
which the options may be partially or fully exercised, the number of shares of
Common Stock that may be
7
<PAGE>
purchased under each option and the exercise price per share under the option.
All awards made under the Stock Plan are evidenced by written agreements between
the Company and the participant.
As amended by the proposed Amendment, a maximum of 280,000 shares of
Common Stock may be issued pursuant to awards granted under the Stock Plan, and
the Board of Directors has reserved 280,000 shares for this purpose. The number
of shares reserved for issuance under the Stock Plan will be adjusted in the
event of an adjustment in the capital stock structure of the Company affecting
the Common Stock (due to a merger, share exchange, stock split, stock dividend,
combination, recapitalization or similar event), and the Board of Directors is
authorized to adjust awards in the terms of the Stock Plan in the event of a
change in the capital stock in order to prevent dilution or enlargement of
awards under the Stock Plan.
Stock Options. The Stock Plan provides for the grant of incentive stock
options ("ISOs"). A stock option entitles the participant to purchase shares of
Common Stock from the Company at the option exercise price. The option exercise
price is fixed by the Board of Directors at the time the option is granted, but
the exercise price per share cannot be less than the fair market value of a
share of Common Stock on the date of grant. All stock options that may be
granted under the Stock Plan provide for three-year vesting at a rate of 33% in
each of the three years following the grant of the option. Except as may
otherwise be provided in an option agreement, an option may be exercised in
whole or in part at any time during its term, but no option may be exercised
after the expiration of ten years from the date it is granted, and no option may
be exercised prior to the date one year, or after the date ten years, from the
date the option is granted. The option price may be paid in cash, with shares of
Common Stock, or with a combination of cash and Common Stock.
Eligibility. Each employee and officer of the Company is eligible to
participate in the Stock Plan. As of the date of this Proxy Statement, the
Company employed approximately 87 employees. The Board of Directors selects the
individuals who may participate in the Stock Plan, and members of the Board of
Directors who are also employees of the Company are not restricted under the
terms of the Stock Plan from participating in the Stock Plan while serving as
members of the Board of Directors. The Board of Directors may grant ISOs to any
officer, key executive, administrative or other employee of the Company
(including an employee who is a director of the Company). Options that are
granted at different times need not contain similar provisions.
No option may be granted under the Stock Plan after June 30, 2003. The
Board of Directors may terminate the Stock Plan sooner without further action by
the shareholders. The Board of Directors also may amend the Stock Plan, except
that no amendment that increases the number of shares of Common Stock that may
be issued under the Stock Plan or changes the class of individuals who may be
selected to participate in the Stock Plan will become effective until it is
approved by the shareholders.
Federal Income Tax Consequences. The Company has been advised by
counsel regarding the federal income tax consequences of the Stock Plan.
Assuming the stock options qualify as ISOs under Section 422 of the Internal
Revenue Code, no taxable income should be recognized by a participant at the
time an option is granted, and no taxable income should be recognized upon the
participant's exercise of the option. However, upon the disposition of shares of
Common Stock acquired pursuant to an ISO within two years from the date of the
granting of the ISO or within one year from the date that the shares are
acquired upon exercise, all profits will be treated as ordinary compensation
income. Profits realized upon the disposition of shares made after the foregoing
holding period will be treated as capital gain income. The Company will not be
entitled to a federal income tax deduction on account of the grant or the
exercise of an option. The Company may claim a federal income tax deduction on
account of certain dispositions of Common Stock acquired upon the exercise of an
option.
Set forth below are the numbers of shares underlying options which have
been awarded under the Stock Plan as of September 1, 1996 to the persons and
groups identified. The amounts of options that may be awarded in the future to
participating employees and officers of the Company cannot currently be
determined and will be within the discretion of the Board of Directors.
8
<PAGE>
<TABLE>
<CAPTION>
Number of Shares Underlying
Name and Position Options Granted
- ---------------------- ----------------------------------
<S> <C>
Steven H. Owings
Chief Executive Officer............................................................. -0-
Michael L. Baur
President........................................................................... 55,000
All current executive officers, as a group
(including the persons named above)................................................. 78,000
All current directors who are not
executive officers, as a group...................................................... -0-
All employees, including all current officers
who are not executive officers, as a group.......................................... 36,500
</TABLE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE
AMENDMENT TO THE COMPANY'S 1993 INCENTIVE STOCK OPTION PLAN. THE PERSONS NAMED
IN THE FORM OF PROXY WILL VOTE THE PROXY AS SPECIFIED. IF NO SPECIFICATION IS
MADE, THE PROXY WILL BE VOTED "FOR" THE APPROVAL OF THE AMENDMENT TO THE
COMPANY'S 1993 INCENTIVE STOCK OPTION PLAN.
PROPOSAL THREE
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors, upon recommendation of the Audit Committee, has
reappointed the firm of KPMG Peat Marwick LLP, certified public accountants, as
independent auditors to make an examination of the accounts of the Company for
the fiscal year ending June 30, 1997. If the shareholders do not ratify this
appointment, other certified public accountants will be considered by the Board
of Directors upon recommendation of the Audit Committee.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.
A representative of KPMG Peat Marwick LLP is expected to be in
attendance at the Annual Meeting and will have the opportunity to make a
statement and be available to respond to appropriate questions.
OTHER BUSINESS
The Board of Directors of the Company knows of no other matter to come
before the Annual Meeting. However, if any matter requiring a vote of the
shareholders should be duly presented for a vote, it is the intention of the
persons named in the enclosed form of proxy to vote such proxy in accordance
with their best judgment.
PROPOSALS FOR 1997 ANNUAL MEETING
Shareholder proposals intended to be presented at the 1997 Annual
Meeting of Shareholders must be received by the Company by June 30, 1997 for
possible inclusion in the proxy material relating to such meeting.
9
<PAGE>
ANNUAL REPORT ON FORM 10-KSB
A copy of the Company's Annual Report on Form 10-KSB for the year ended
June 30, 1996, which is required to be filed with the Securities and Exchange
Commission, will be made available to shareholders to whom this proxy statement
is mailed, without charge, upon written request to Mr. Jeffery A. Bryson, Chief
Financial Officer, ScanSource, Inc., 6 Logue Court, Suite G, Greenville, South
Carolina 29615.
By order of the Board of Directors,
Steven H. Owings
Chairman of the Board
October 25, 1996
10
<PAGE>
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APPENDIX
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SCANSOURCE, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE 1996 ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON TUESDAY, DECEMBER 3, 1996, IN THE BALLROOM OF THE
EMBASSY SUITES HOTEL, 670 VERDAE BOULEVARD, GREENVILLE, SOUTH CAROLINA AT 10:00
A.M. LOCAL TIME.
The undersigned hereby appoints Michael L. Baur and Jeffery A. Bryson,
or any of them acting in the absence of the other, as attorneys and proxies of
the undersigned, with full power of substitution, to vote all of the shares of
the common stock of ScanSource, Inc., a South Carolina corporation, held or
owned by the undersigned or standing in the name of the undersigned at the 1996
Annual Meeting of Shareholders of the Company and at any adjournment thereof,
and the undersigned hereby instructs said attorneys to vote as follows:
1. Election of Directors:
FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the to vote as to all nominees
contrary below)
[ ] [ ]
(This is considered a vote for
all nominees)
NOTE: To withhold authority to vote for any individual nominee, strike a line
through the nominee's name in the list below:
One year term:
1. Michael L. Baur
2. Steven R. Fischer
3. James G. Foody
4. Steven H. Owings
2. Approval of the Amendment to the ScanSource, Inc. 1993 Incentive Stock
Option Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. The ratification of the appointment of KPMG Peat Marwick LLP as independent
auditors for the Company for the fiscal year ending June 30, 1997.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. In their discretion, upon any other business which may properly come before
the meeting or any adjournment thereof.
DATE
NUMBER OF SHARES
(Please sign exactly
as shown on envelope
addressed to you. If
securities are jointly
owned, each should
sign.)
THIS PROXY WILL BE VOTED AS INSTRUCTED. IN THE ABSENCE OF SUCH INSTRUCTIONS,
THIS PROXY WILL BE VOTED "FOR" MATTERS (1), (2) AND (3) ABOVE, AND THE PROXIES
HEREIN NAMED WILL VOTE ON OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE
MEETING OR ANY ADJOURNMENT THEREOF IN ACCORDANCE WITH THEIR JUDGMENT.
<PAGE>
SCANSOURCE, INC.
1993 INCENTIVE STOCK OPTION PLAN
(As Amended)
1. Purpose. The purposes of this 1993 Incentive Stock Option Plan (the
"Plan") are to: (1) closely associate the interests of the employees of
ScanSource, Inc. (the "Company") with the shareholders by reinforcing the
relationship between employees' rewards and shareholder gains; (2) provide
selected employees with an equity ownership in the Company commensurate with
Company performance, as reflected in increased shareholder value; (3) maintain
competitive compensation levels; and (4) provide an incentive to employees for
continuous employment with the Company. The stock options granted under the Plan
are intended to qualify as incentive stock options within the meaning of
Internal Revenue Code Section 422.
2. Amount of Stock. The total number of shares of Common Stock to be
subject to options granted on and after July 1, 1993 pursuant to the Plan shall
not exceed 280,000 shares of the Company's Common Stock. In the event that
options granted under this Plan shall lapse without being exercised in whole or
in part, other options may be granted covering the shares not purchased under
such lapsed options.
3. Stock Option Committee. The Board of Directors shall from time to time
appoint a Committee (the "Committee"), which may also be the Compensation
Committee of the Board of Directors, to serve under this Plan. The Committee
shall consist of two or more directors.
4. Eligibility and participation. Options may be granted pursuant to the
Plan to any officer or employee of the Company. From time to time the Committee
shall select the officers and employees to whom options may be granted by the
Board of Directors and shall determine the number of shares to be covered by
each option so granted. Future as well as present officers and employees
(including officers and employees who are directors but who are not members of
the Committee) shall be eligible to participate in the Plan. Directors who are
members of the Committee or who are not officers or employees of the Company are
not eligible to participate in the Plan. No option may be granted under the Plan
after June 30, 2003.
5. Option Agreement. The terms and provisions of options granted pursuant
to the Plan shall be set forth in an agreement, herein called Option Agreement,
between the Company and the employee receiving the same. The Options may be in
such form, not inconsistent with the terms of this Plan, as shall be approved by
the Board of Directors.
6. Price. The purchase price per share of Common Stock purchasable under
options granted pursuant to the Plan shall not be less that 100 percent of the
fair market value at the time the options are granted. The purchase price per
share of Common Stock purchasable under options granted pursuant to this Plan to
a person who owns more than 10 percent of the voting power of the Company's
voting stock shall not be less than 110 percent of the fair market value of such
shares, at the time the options are granted. For the purposes of the preceding
sentence (a) the employee shall
<PAGE>
be considered as owning the stock owned directly or indirectly by or for
himself, the stock which the employee may purchase under outstanding options and
the stock owned, directly or indirectly, by or for his brothers and sisters
(whether of the whole or half blood), spouse, ancestors, and lineal descendants
and (b) stock owned directly or indirectly, by or for a corporation,
partnership, estate, or trust shall be considered as being owned proportionately
by or for its shareholders, partners, or beneficiaries. For all purposes of this
Plan, the fair market value of the Common Stock of the Company shall be
determined in good faith at the time of the grant of any option by decision of
the Stock Option Committee. In making such determination, the Stock Option
Committee shall not take into account the effect of any restrictions on the
Common Stock other than restrictions which, by their terms, will never lapse.
The full purchase price of shares purchased shall be paid upon exercise of the
option. Under certain circumstances such purchase price per share shall be
subject to adjustment as referred to in Section 10 of this Plan.
7. Option period. No option granted pursuant to the Plan shall be
exercisable after the expiration of ten years from the date the option is first
granted. No option granted pursuant to the Plan to a person then owning more
than 10 percent of the voting power of the Company's voting stock shall be
exercisable after the expiration of five years from the date the option is first
granted. For the purposes of the preceding sentence (a) the employee shall be
considered as owning the stock owned directly or indirectly by or for himself,
the stock which the employee may purchase under outstanding options and the
stock owned, directly or indirectly, by or for his brothers and sisters (whether
of the whole or half blood), spouse, ancestors, and lineal descendants and (b)
stock owned directly or indirectly, by or for a corporation, partnership,
estate, or trust shall be considered as being owned proportionately by or for
its shareholders, partners, or beneficiaries. The expiration date stated in the
Option Agreement is hereafter called the Expiration Date.
8. Termination of employment. The Option Agreement shall provide that upon
the occurrence of the employee ceasing to be employed by the Company as a result
of a termination of employment for cause by the Company, any unexercised option
of employee shall terminate and become null and void immediately upon such
termination of employment. Upon a termination of employment by reason of
disability, death or retirement or a termination at the Company's or the
employee's election (other than a termination for cause by the Company), the
Option Agreement shall provide that an outstanding and unexercised option may be
exercised during a time not exceeding the following periods:
(a) the one-year period following the date of such termination of the
employee's employment in the case of a disability (within the meaning of
Section 22(e)(3) of the Code),
(b) the one-year period following the date of an employee's death, and
(c) the three-month period following the date of such termination in the
case of retirement on or after attainment of age 65, or termination in the
case of disability other than as described in (a) above, or termination at
the Company's or the employee's election (other than termination for cause
by the Company).
In no event, however, shall any such period extend beyond the Expiration Date.
<PAGE>
9. Assignability. The Option Agreement shall provide that the option
granted thereby shall not be transferable or assignable by the employee
otherwise than by will or by the laws of descent and distribution or pursuant to
a qualified domestic relations order as defined by the Internal Revenue Code of
1986, as amended, or Title I of the Employee Retirement Income Security Act, or
the Rules thereunder. During the lifetime of the employee, the option granted
shall be exercisable only by the employee.
10. Adjustment in case of stock splits, stock dividends, etc. The Option
Agreement may contain such provisions as the Board of Directors may approve as
equitable concerning the effect upon options granted and the option price due to
(a) stock dividends upon, or subdivisions, split-ups, combinations,
consolidations or reclassifications of, the securities purchasable under the
option, or (b) proposals to merge or consolidate the Company or to sell all or
substantially all of its assets, or to liquidate or dissolve the Company.
11. Stock for Investment. The Option Agreement shall provide that the
employee shall upon each exercise of a part or all of the option granted
represent and warrant that his purchase of stock pursuant to such option is for
investment only, and not with a view to distribution involving a public
offering. At any time the Board of Directors of the Company may waive the
requirement of such a provision in any Option Agreement entered into under this
Stock Option Plan of the Company. The Option Agreement may also provide such
additional restrictions and requirements concerning the exercise of options and
issuance of shares as the Company determines in its discretion are necessary to
meet all applicable laws, rules, and regulations, and to obtain such approvals
as may be required by any governmental agencies, including state and Federal
securities agencies and national securities exchanges.
12. Amendment of the Plan. The Board of Directors of the Company may from
time to time alter, amend, suspend or discontinue the Plan and make rules for
its administration, except that the Board of Directors shall not amend the Plan
in any manner which would have the effect of preventing options issued under the
Plan from being "incentive stock options" as defined in Section 422 of the
Internal Revenue Code of 1986. However, nothing in this Plan shall be deemed to
prevent the Board of Directors from issuing non-qualified stock options to any
officer or employee.
13. Options discretionary. The granting of options under the Plan shall be
entirely discretionary with the Stock Option Committee and nothing in the Plan
shall be deemed to give any officer or employee any right to participate in the
Plan or to receive options.
14. Limitation as to amount. No person to whom options are granted
hereunder shall receive options, first exercisable during any single calendar
year, for shares, the fair market value of which (determined at the time of
grant of the options) exceeds $100,000. Accordingly, no optionee shall be
entitled to exercise options in any single calendar year, for shares of Common
Stock the value of which (determined at the time of grant of the options)
exceeds $100,000.
15. Stockholder approval. The Plan will be submitted to the stockholders of
the Company for approval by the holders of a majority of the outstanding shares
of stock of the Company. If the Plan is not approved by the holders of a
majority of the outstanding shares of stock of the Company by June 30, 1994,
then the Plan shall terminate and any options granted hereunder shall be void
and of no further force or effect.
<PAGE>
SCANSOURCE, INC. INCENTIVE STOCK OPTION AGREEMENT
GRANT OF INCENTIVE STOCK OPTION
Date of Grant: _____________, 19__
THIS GRANT, dated as of the date of grant first stated above (the "Date of
Grant"), is delivered by ScanSource, Inc., a South Carolina corporation
("ScanSource"), to ________________________ (the "Grantee"), who is an officer
or employee of ScanSource.
WHEREAS, the Board of Directors of ScanSource (the "Board") has adopted,
subject to shareholder approval, the ScanSource, Inc. 1993 Incentive Stock
Option Plan (the "Plan"); and,
WHEREAS, the Plan provides for the granting of incentive stock options by
the Board to officers and employees of ScanSource to purchase shares of the
Common Stock of ScanSource (the "Stock"), in accordance with the terms and
provisions thereof; and
WHEREAS, the Board considers the Grantee to be a person who is eligible for
a grant of incentive stock options under the Plan, and has determined that it
would be in the best interest of ScanSource to grant the incentive stock options
documented herein.
NOW, THEREFORE, the parties hereto, intending to be legally bound hereby,
agree as follows:
1. Grant of Option. Subject to the terms and conditions hereinafter set forth,
ScanSource, with the approval and at the direction of the Board, hereby grants
to the Grantee, as of the Date of Grant, an option to purchase up to _______
shares of Stock at a price of $_______ per share, the fair market value. Such
option is hereinafter referred to as the "Option" and the shares of stock
purchasable upon exercise of the Option are hereinafter sometimes referred to as
the "Option Shares." The Option is intended by the parties hereto to be, and
shall be treated as, an incentive stock option (as such term is defined under
section 422 of the Internal Revenue Code of 1986 (the "Code")).
2. Installment Exercise. Subject to such further limitations as are provided
herein, the Option shall become exercisable in three (3) installments, the
Grantee having the right hereunder to purchase from ScanSource the following
number of Option Shares upon exercise of the Option, on and after the following
dates, in cumulative fashion:
(a) on and after the first anniversary of the Date of Grant, up to
one-third (ignoring fractional shares) of the total number of Option Shares;
(b) on and after the second anniversary of the Date of Grant, up to an
additional one-third (ignoring fractional shares) of the total number of Option
Shares; and
(c) on and after the third anniversary of the Date of Grant, the remaining
Option Shares.
<PAGE>
3. Termination of Option.
(a) The Option and all rights hereunder with respect thereto, to the extent
such rights shall not have been exercised, shall terminate and become null and
void after the expiration of ten (10) years from the Date of Grant (the
"Expiration Date").
(b) Upon the occurrence of the Grantee's ceasing to be employed by
ScanSource as a result of a termination of employment for cause by the Company,
the Option, to the extent not previously exercised, shall terminate and become
null and void immediately upon such termination of the Grantee's employment.
Upon a termination of the Grantee's employment by reason of disability, death or
retirement, or a termination at the Company's or the employee's election (other
than a termination for cause by the Company), the Option may be exercised during
the following periods, but only to the extent that the Option was outstanding
and exercisable on any such date of termination:
(i) the one-year period following the date of such termination of the
Grantee's employment in the case of a disability (within the meaning
of Section 22(e)(3) of the Code),
(ii) the six-month period following the date of issuance of letters
testamentary or letters of administration to the executor or
administrator of a deceased Grantee, in the case of the Grantee's
death during his employment by the Employer, but not later than one
year after the Grantee's death, and
(iii) the three-month period following the date of such termination in
the case of retirement on or after attainment of age 65, or
termination in the case of disability other than as described in (i)
above, or termination at the Company's or the employee's election
(other than termination for cause by the Company).
In no event, however, shall any such period extend beyond the Expiration Date.
(c) In the event of the death of the Grantee, the Option may be exercised
by the Grantee's legal representative(s), but only to the extent that the Option
would otherwise have been exercisable by the Grantee.
(d) A transfer of the Grantee's employment between ScanSource and any
subsidiary of ScanSource, or between any subsidiaries of ScanSource, shall not
be deemed to be a termination of the Grantee's employment.
(e) Notwithstanding any other provisions set forth herein or in the Plan,
if the Grantee shall (i) commit any act of malfeasance or wrongdoing affecting
ScanSource, (ii) breach any covenant not to compete or employment contract with
ScanSource, or (iii) engage in conduct that would warrant the Grantee's
discharge for cause (excluding general dissatisfaction with the performance of
the Grantee's duties, but including any act of disloyalty or any conduct clearly
tending to bring discredit upon ScanSource), any unexercised portion of the
Option shall immediately terminate and be void.
<PAGE>
4. Exercise of Options.
(a) Subject to such further limitations as are provided herein, the Option
shall be exercisable at any time and from time to time during the period
commencing one (1) year from the Date of Grant and ending ten (10) years (five
(5) years for 110 percent shareholders as described in the Plan) from the Date
of Grant. The Grantee may exercise the Option with respect to all or any part of
the number of Option Shares then exercisable hereunder by giving the Secretary
of ScanSource written notice of intent to exercise. The notice of exercise shall
specify the number of Option Shares as to which the Option is to be exercised
and the date of exercise thereof, which date shall be at least five days after
the giving of such notice unless an earlier time shall have been mutually agreed
upon.
(b) Full payment (in U.S. dollars) by the Grantee of the option price for
the Option Shares purchased shall be made on or before the exercise date
specified in the notice of exercise in cash, or, with the prior written consent
of the Secretary, in whole or in part through the surrender of previously
acquired shares of Stock at their fair market value on the exercise date.
On the exercise date specified in the Grantee's notice or as soon
thereafter as is practicable, ScanSource shall cause to be delivered to the
Grantee, a certificate or certificates for the Option Shares then being
purchased (out of theretofore unissued Stock or reacquired Stock, as ScanSource
may elect) upon full payment for such Option Shares. The Grantee shall upon each
exercise of a part or all of the option granted represent and warrant that his
purchase of stock pursuant to such option is for investment only, and not with a
view to distribution involving a public offering. The obligation of ScanSource
to deliver Stock shall, however, be subject to the condition that if at any time
the Board shall determine in its discretion that the listing, registration or
qualification of the Option or the Option Shares upon any securities exchange or
under any state or federal law, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition of, or in connection
with, the Option or the issuance or purchase of Stock thereunder, the Option may
not be exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Board.
(c) If the Grantee fails to pay for any of the Option Shares specified in
such notice or fails to accept delivery thereof, the Grantee's right to purchase
such Option Shares may be terminated by ScanSource. The date specified in the
Grantee's notice as the date of exercise shall be deemed the date of exercise of
the Option, provided that payment in full for the Option Shares to be purchased
upon such exercise shall have been received by such date.
5. Adjustment of and Changes in Stock of ScanSource. In the event of a
reorganization, recapitalization, change of shares, stock split, spin-off, stock
dividend, reclassification, subdivision, consolidation or combination of shares,
merger, consolidation, rights offering, or any other change in the corporate
structure or shares of capital stock of ScanSource, the Board may make such
adjustment as it deems appropriate in the number and kind of shares of Stock
subject to the Option or in the option price; provided, however, that no such
adjustment shall give the Grantee any additional benefits under the Option.
<PAGE>
6. No Rights of Stockholders. Neither the Grantee nor any personal
representative shall be, or shall have any of the rights and privileges of, a
stockholder of ScanSource with respect to any shares of Stock purchasable or
issuable upon the exercise of the Option, in whole or in part, prior to the date
of exercise of the Option.
7. Non-Transferability of Option. During the Grantee's lifetime, the Option
hereunder shall be exercisable only by the Grantee or any guardian or legal
representative of the Grantee, and the Option shall not be transferable except,
in case of the death of the Grantee, by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined by
the Internal Revenue Code of 1986, as amended, or Title I of the Employee
Retirement Income Security Act, or the Rules thereunder, nor shall the Option be
subject to attachment, execution or other similar process. In the event of (a)
any attempt by the Grantee to alienate, assign, pledge, hypothecate or otherwise
dispose of the Option, except as provided for herein, or (b) the levy of any
attachment, execution or similar process upon the rights or interest hereby
conferred, ScanSource may terminate the Option by notice to the Grantee and it
shall thereupon become null and void.
8. Employment Not Affected. Neither the granting of the Option nor its exercise
shall be construed as granting to the Grantee any right with respect to
continuance of employment of the Employer. Except as may otherwise be limited by
a written agreement between the Employer and the Grantee, the right of the
Employer to terminate at will the Grantee's employment with it at any time
(whether by dismissal, discharge, retirement or otherwise) is specifically
reserved by ScanSource, as the employer, and is acknowledged by the Grantee.
9. Amendment of Option. The Option may be amended by the Board or the Committee
at any time (i) if the Board or the Stock Option Committee determines, in its
sole discretion, that amendment is necessary or advisable in the light of any
addition to or change in the Internal Revenue Code of 1986 or in the regulations
issued thereunder, or any federal or state securities law or other law or
regulation, which change occurs after the Date of Grant and by its terms applies
to the Option; or (ii) other than in the circumstances described in clause (i),
with the consent of the Grantee.
10. Notice. Any notice to ScanSource provided for in this instrument shall be
addressed to it in care of its Secretary at its executive offices at 6 Logue
Court, Suite G, Greenville, South Carolina 29615, and any notice to the Grantee
shall be addressed to the Grantee at the current address shown on the payroll
records of ScanSource. Any notice shall be deemed to be duly given if and when
properly addressed and posted by registered or certified mail, postage prepaid.
12. Incorporation of Plan by Reference. The Option is granted pursuant to the
terms of the Plan, the terms of which are incorporated herein by reference, and
the Option shall in all respects be interpreted in accordance with the Plan. The
Stock Option Committee shall interpret and construe the Plan and this
instrument, and its interpretations and determinations shall be conclusive and
binding on the parties hereto and any other person claiming an interest
hereunder, with respect to any issue arising hereunder or thereunder.
<PAGE>
13. Governing Law. The validity, construction, interpretation and effect of this
instrument shall exclusively be governed by and determined in accordance with
the law of the State of South Carolina, except to the extent preempted by
federal law, which shall to such extent govern.
IN WITNESS WHEREOF, ScanSource has caused its duly authorized officers to
execute and attest this Grant of Incentive Stock Option, and the Grantee has
placed his or her signature hereon, effective as of the Date of Grant.
SCANSOURCE, INC.
By:
Its: President
Attest:
Secretary
ACCEPTED AND AGREED TO:
By:
Grantee
<PAGE>
