0001021408-01-508729.txt : 20011030
0001021408-01-508729.hdr.sgml : 20011030
ACCESSION NUMBER: 0001021408-01-508729
CONFORMED SUBMISSION TYPE: DEF 14A
PUBLIC DOCUMENT COUNT: 1
CONFORMED PERIOD OF REPORT: 20011206
FILED AS OF DATE: 20011025
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: SCANSOURCE INC
CENTRAL INDEX KEY: 0000918965
STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-COMPUTER & PERIPHERAL EQUIPMENT & SOFTWARE [5045]
IRS NUMBER: 570965380
STATE OF INCORPORATION: SC
FISCAL YEAR END: 0630
FILING VALUES:
FORM TYPE: DEF 14A
SEC ACT: 1934 Act
SEC FILE NUMBER: 000-26926
FILM NUMBER: 1766044
BUSINESS ADDRESS:
STREET 1: 6 LOGUE COURT STE G
CITY: GREENVILLE
STATE: SC
ZIP: 29615
BUSINESS PHONE: 8032882432
MAIL ADDRESS:
STREET 1: 6 LOGUE COURT STE G
CITY: GREENVILLE
STATE: SC
ZIP: 29615
DEF 14A
1
ddef14a.txt
PROXY STATEMENT
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. __)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-12
SCANSOURCE, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
_________________________________________________________________________
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
_________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
_________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
_________________________________________________________________________
(4) Proposed maximum aggregate value of transaction:
_________________________________________________________________________
(5) Total fee paid:
_________________________________________________________________________
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
_________________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
_________________________________________________________________________
(3) Filing Party:
_________________________________________________________________________
(4) Date Filed:
_________________________________________________________________________
-2-
SCANSOURCE, INC.
6 Logue Court
Greenville, South Carolina 29615
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held December 6, 2001
The Annual Meeting of Shareholders of ScanSource, Inc. will be held at the
GSP Airport Marriott, 1 Parkway East, Greenville, South Carolina on Thursday,
December 6, 2001, at 10:00 a.m., for the following purposes:
(1) To elect five members to the Board of Directors;
(2) To approve amendments to the Company's Non-Employee Director 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 appear of record on the books of the Company
at the close of business on October 17, 2001 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 26, 2001
SCANSOURCE, INC.
6 Logue Court
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
at the GSP Airport Marriott, 1 Parkway East, Greenville, South Carolina on
Thursday, December 6, 2001, 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 26, 2001.
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 giving written notice to the Secretary of the Company of such
revocation, by executing and delivering to the Secretary of the Company a proxy
bearing a later date, or by attending the Annual Meeting and voting 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 17,
2001 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 such date, 5,716,330 shares of the Company's no par value common
stock (the "Common Stock") were outstanding. All of such shares are eligible to
be voted on each matter currently scheduled to come before the Annual Meeting,
and no other outstanding shares of capital stock of the Company are 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 (who are
elected by plurality vote as indicated below), 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 any matter requiring the affirmative vote of a majority of the shares
present and entitled to vote at the Annual Meeting. Broker non-votes will be
considered shares present but not entitled to vote and therefore will have no
effect on the outcome of the vote. A broker non-vote occurs when a broker or
other nominee holding shares of Common Stock for a beneficial owner does not
vote on a particular proposal because the broker or other nominee does not have
discretionary voting power with respect to that item and has not received voting
instructions from the beneficial owner.
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
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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.
PROPOSAL ONE
ELECTION OF DIRECTORS
Five 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. At the Company's 2000 Annual
Meeting of Shareholders (the "2000 Annual Meeting"), the shareholders elected
four directors (Michael L. Baur, Steven R. Fischer, James G. Foody and Steven H.
Owings), leaving a vacancy on the Board. Pursuant to the Company's Bylaws and
applicable South Carolina law, the four directors elected at the 2000 Annual
Meeting were authorized to fill the vacancy. As of June 13, 2001, pursuant to
such authority, they appointed John P. Reilly as a fifth director to serve on
the Company's Board of Directors.
The Board of Directors has recommended each of the five existing
members of the Board of Directors as the five 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 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, Steven H. Owings
and John P. Reilly.
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 five, 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 five
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.
PROPOSAL TWO
AMENDMENTS TO NON-EMPLOYEE DIRECTOR
STOCK OPTION PLAN
General. On September 30, 1999 the Board of Directors adopted the
ScanSource, Inc. Non-Employee Director Stock Option Plan (the "Director
Plan") for non-employee directors of the Company. The Board of Directors
approved the Director Plan to be effective on the date of its approval by the
Company's shareholders, which occurred at the Company's 1999 Annual Meeting of
Shareholders. The following discussion of the Director Plan (a copy of which, as
currently in effect, has been filed with the SEC as an exhibit to the Company's
Annual Report on Form 10-K for the fiscal year ended June 30, 2001) is qualified
in its entirety
2
by reference to the Director Plan, as proposed to be amended as described below.
A copy of the Director Plan and the proposed amendment thereto have been
submitted to the SEC with this Proxy Statement.
As of September 15, 2001, the Board of Directors approved the following
amendments to the Director Plan, subject to the approval of the shareholders at
the Annual Meeting:
(1) To reduce from 5,000 to 3,000 the number of shares underlying
options to be granted on an annual basis to non-employee directors; and
(2) To simplify the amendment provisions of the Director Plan to
permit the Board of Directors to amend the plan in the future without
shareholder approval except for amendments (i) to increase the maximum aggregate
number of shares of Common Stock as to which options may be granted under the
Director Plan, and (ii) as to which the Board of Directors determines that
shareholder approval is necessary or advisable with respect to tax, securities
or other applicable laws, policies or regulations.
Purpose. The purpose of the Director Plan is to advance the interests
of the Company and its shareholders by encouraging and enabling non-employee
directors of the Company to acquire proprietary interests in the Company through
stock ownership. The Company's management believes that those non-employee
directors who participate in the Director Plan will have a closer identification
with the Company and its shareholders by virtue of their ability to participate
in the Company's growth and earnings, thereby giving such directors an increased
incentive to devote their efforts to the success of the Company.
The proposed reduction in the annual option grant to non-employee
directors is proposed in conjunction with the increases in cash compensation
described in "Management - Compensation of Directors" below. The proposed
changes to the amendment provisions of the Director Plan are proposed as a
result of changes in SEC regulations in recent years and to bring this provision
of the Director Plan more into conformity with current practice. Management and
the Board of Directors believe that such changes, by providing the Board of
Directors with more discretion in amending the Director Plan, will enable it to
respond more quickly and efficiently to the changing needs of the Company to
attract and retain non-employee directors in the future.
Administration. The Director Plan is administered by the Board of
Directors of the Company which has the power to interpret the Director Plan and
prescribe such rules, regulations and procedures in connection with the
operations of the Director Plan as it deems necessary and advisable. All
questions of interpretation and application of the Director Plan, or as to stock
options granted under the Director Plan, are subject to the determination of the
Board of Directors, which shall be final and binding.
Term. The Director Plan is effective for a term of ten years after the
date of its approval by the shareholders of the Company at the 1999 Annual
Meeting of Shareholders (until December 2, 2009). The Board of Directors may
terminate the Director Plan sooner without further action by the shareholders.
Amendments. The Board of Directors may amend the Director Plan, as
currently in effect, without shareholder approval, except that any amendment
that increases the maximum number of shares as to which options may be granted
under the Director Plan, changes the termination date of the Director Plan,
changes the number of shares subject to each option, changes the option price
under any options, or changes the persons eligible to participate in the
Director Plan beyond the non-employee directors of the Company will not become
effective until it is approved by the shareholders. See above for the proposed
amendment of the "Amendment" provision of the Director Plan.
Shares in the Plan. A maximum of 100,000 shares of Common Stock may be
issued pursuant to awards granted under the Director Plan, and the Board of
Directors has reserved 100,000 shares for this purpose. The number of shares
reserved for issuance under the Director Plan will be adjusted in the event of
an adjustment in the capital structure of the Company affecting the Common Stock
(in connection with a
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merger, consolidation, recapitalization, reclassification, combination, stock
dividend, stock split or similar event). All obligations of the Company under
the Director Plan or under any award granted under the Director Plan are binding
upon any successor to the Company.
Eligibility. Each director of the Company who is not an employee of the
Company or any of its subsidiaries is eligible to participate in the Director
Plan. On the date of this Proxy Statement, three directors are eligible to
participate in the Director Plan.
Option Grants. Under the Director Plan, as currently in effect, each
non-employee director is automatically granted on an annual basis an option for
the purchase of 5,000 shares (proposed to be reduced to 3,000 shares per annum
as indicated above) at an exercise price equal to the fair market value of the
shares on the date the option is granted. On October 18, 2001, the reported
closing price of the Common Stock on The Nasdaq National Market was $54.00 per
share. The number of shares included in each annual grant to a non-employee
director is reduced by the number of shares included in stock options or
warrants otherwise granted to such director for service during that year on any
committee of the Board of Directors. Options under the Director Plan are granted
annually as of the date following the date of the Company's regularly scheduled
annual meeting of shareholders to each non-employee director (currently Messrs.
Fischer, Foody and Reilly) who is serving as a director on that date.
All options granted under the Director Plan are evidenced by written
option agreements between the Company and the non-employee director. Options are
not assignable or transferable by the option holder except by will, by the laws
of descent and distribution, or pursuant to a qualified domestic relations order
as defined in Title I of ERISA and the Internal Revenue Code.
Option Exercise. Each option granted under the Director Plan becomes
exercisable six months after the date of the grant of the option. No option will
be exercisable following the tenth anniversary of the date of the grant of such
option. 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 unexercised options held by such director expire upon such termination.
Options granted under the Director Plan are exercisable in whole or in part by
the option holder by providing written notice of intent to exercise to the
Secretary of the Company at its principal executive offices.
All options granted under the Director Plan will provide for the
payment of the option price in cash, shares of Common Stock, or part in cash and
part in shares of Common Stock. Shares tendered to the Company in payment or
partial payment will be valued at the closing price on The Nasdaq Stock Market
as of the day of exercise of the option.
Termination of Option. Any unexercised option or part thereof will
terminate upon the earlier to occur of the expiration of ten years from its date
of grant and the date one year following the expiration or termination of the
option holder's membership on the Company's Board of Directors for any reason
except termination for cause, in which case the Director Plan provides for
immediate termination of such director's options. If the option holder exercises
the option after the expiration or termination of the option holder's membership
on the Company's Board of Directors for any reason other than for cause, the
option holder may exercise the option only with respect to the shares which were
otherwise exercisable on such date of expiration or termination of Board
membership.
Federal Income Tax Consequences. Options granted under the Director
Plan will be non-qualified stock options. With non-qualified stock options, no
income is realized by the optionee at the time the option is granted. Generally,
(a) at exercise, ordinary income is realized by the optionee in an amount equal
to the difference between the option price and the fair market value of the
shares on the date of exercise, and the Company receives a tax deduction for the
same amount, and (b) at disposition, appreciation or depreciation
4
after the date of the exercise is treated as either short-term or long-term
capital gain or loss, depending on how long the shares have been held.
Currently Outstanding and Proposed Awards. Set forth below are the
numbers of shares underlying options which have been awarded under the Director
Plan since its inception in December 1999, and that are to be granted for the
fiscal year ended June 30, 2002, to the persons and groups identified, subject
to shareholder approval of the proposed amendments.
Number of Shares
Number of Shares Underlying Options
Underlying Options to be Granted for
Name and Position Granted to Date 2002 Fiscal Year
----------------- --------------- ----------------
Steven H. Owings
Chairman of the Board...................................... -0- -0-
Michael L. Baur
Chief Executive Officer and President...................... -0- -0-
Jeffery A. Bryson
Chief Financial Officer and Treasurer...................... -0- -0-
Robert S. McLain, Jr.
Vice President - Marketing................................. -0- -0-
All current executive officers, as a group
(including the persons named above)........................ -0- -0-
All current directors who are not executive officers,
as a group................................................. 20,000 9,000
All employees, including all current officers who are not
executive officers, as a group............................. -0- -0-
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE
AMENDMENTS TO THE COMPANY'S NON-EMPLOYEE DIRECTOR 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 AMENDMENTS TO THE
COMPANY'S NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN.
PROPOSAL THREE
RATIFICATION OF APPOINTMENT OF AUDITORS
The Board of Directors, upon recommendation of the Audit Committee, has
appointed the firm of Deloitte & Touche LLP, certified public accountants, as
independent auditors to make an examination of the accounts of the Company for
the fiscal year ending June 30, 2002. See the "Audit Committee Report" below for
more information. 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" THE PROPOSAL TO APPROVE
THE APPOINTMENT OF DELOITTE & TOUCHE LLP. 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 APPOINTMENT OF DELOITTE & TOUCHE LLP.
5
A representative of Deloitte & Touche 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.
Changes in Certifying Accountant
On October 19, 2000, the Company notified KPMG LLP that it would not be
retained by the Company to perform the audit of the financial statements of the
Company for the fiscal year ending June 30, 2001. KPMG LLP had served as the
Company's principal independent accountants for the fiscal years ended June 30,
2000 and 1999. The decision not to retain KPMG LLP was approved by the Audit
Committee of the Board of Directors of the Company and, upon recommendation by
that committee, was approved by the full Board of Directors on October 19, 2000.
In connection with the audits of the financial statements of the
Company for the fiscal years ended June 30, 2000 and 1999, the Company had no
disagreement with KPMG LLP on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreement, if not resolved to the satisfaction of KPMG LLP, would have caused
them to make reference to such disagreement in their report for such periods.
The audit reports of KPMG LLP on the financial statements of the
Company for the fiscal years ended June 30, 2000 and 1999 contained no adverse
opinion or disclaimer of opinion, nor were they qualified or modified as to
uncertainty, audit scope, or accounting principles. KPMG LLP was provided a copy
of the above disclosures, set forth in the Company's report on Form 8-K dated
October 19, 2000 filed with the SEC, and was requested to furnish the Company
with a letter addressed to the Commission stating whether it agreed with the
above statements and, if not, stating the respects in which it did not agree.
KPMG LLP's letter was filed as an exhibit to such report.
On October 19, 2000, the Audit Committee of the Board of Directors of
the Company approved, and, upon recommendation by that committee, the Board of
Directors of the Company approved, the engagement of the accounting firm of
Deloitte & Touche LLP as independent accountants to audit the Company's
financial statements for the fiscal year ending June 30, 2001. As of October 19,
2000, the Company had not on any prior occasions consulted with Deloitte &
Touche LLP regarding any of the matters set forth in Item 304(a)(2) of
Regulation S-K.
Services and Fees of Deloitte & Touche During the Fiscal Year Ended June 30,
2001
Audit fees. Deloitte & Touche's fees and expenses were $115,478 in
connection with their audit of the Company's annual financial statements for the
fiscal year ended June 30, 2001, and their reviews of the Company's quarterly
financial information included in the Company's three quarterly reports on Form
10-Q that the Company filed with the SEC during the fiscal year.
All other fees. Deloitte & Touche billed the Company $39,250 in fees
and expenses in connection with all other services that they rendered in the
fiscal year ended June 30, 2001. A substantial portion of the fees for these
services related to services traditionally provided by auditors,
including accounting consultation and income tax services and consultation
(including preparation of the fiscal 2000 income tax returns).
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, then the persons named in the
enclosed form of proxy intend to vote such proxy in accordance with their best
judgment.
6
PROPOSALS FOR 2002 ANNUAL MEETING
Shareholder proposals intended to be presented at the 2002 Annual
Meeting of Shareholders must be received by the Company by June 28, 2002 for
possible inclusion in the proxy material relating to such meeting, in accordance
with the SEC's Rule 14a-8. Any proposal received after this date will be
considered untimely and may be excluded from the proxy material.
The deadline for shareholders to provide written notice of intent to
make nominations for the election of directors at the 2002 Annual Meeting of
Shareholders (but not for inclusion in the proxy material relating to such
meeting) will be 90 days prior to the date of the meeting. Such notice must also
otherwise conform to the requirements of the Company's Bylaws. For any other
shareholder proposal intended to be presented at the 2002 Annual Meeting of
Shareholders received by the Company after September 11, 2002, the persons named
in the proxy for such meeting may exercise their discretionary voting power with
respect to such proposal.
MANAGEMENT
Executive Officers and Directors
The following sets forth certain information regarding the Company's
executive officers and directors:
Steven H. Owings, 48, has served as Chairman of the Board of Directors
of the Company since its inception in December 1992, and was Chief Executive
Officer of the Company from December 1992 until January 2000. From 1991 to 1992
Mr. Owings served as Chairman of the Board, Chief Executive Officer and the sole
shareholder of Argent Technologies, Inc. ("Argent"), a personal computer
manufacturer. From 1983 to 1991 Mr. Owings held various positions with Gates/FA
Distributing, Inc., a distributor of PC products, and its predecessors
("Gates"), 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. From December
1987 to September 1994 Mr. Owings served as a director of Gates. From July 1996
to April 1997, he served as a director of Globelle Corporation, an international
distributor of personal computer products. Mr. Owings is currently a director of
Falconstor Software Inc. ("Falconstor"), a provider of storage networking
infrastructure software.
Michael L. Baur, 44, has served as Chief Executive Officer of the
Company since January 2000, President of the Company since its inception in
December 1992, and as a director since December 1995. Prior to joining the
Company, from April 1991 to November 1992, Mr. Baur served in various positions
at Argent, including President and General Manager. In September 1989, Mr. Baur
joined Gates as Product Manager and served as Merchandising Director from
February 1990 to March 1991.
Jeffery A. Bryson, 41, has served as Chief Financial Officer and
Treasurer of the Company since December 1993. Prior to joining the Company, from
1990 to 1993, Mr. Bryson served as a senior manager with the accounting firm of
KPMG LLP, where he was employed for more than seven years. Mr. Bryson is a
certified public accountant.
Robert S. McLain, Jr., 41, has served as the Company's Vice President
of Marketing since September 1997. Prior to joining the Company, from July 1995
to September 1997, Mr. McLain served as President of Transition Marketing, Inc.,
a majority-owned subsidiary of the Company. From July 1993 to June 1995, Mr.
McLain was Director of Marketing with Gates, and from July 1991 to June 1993 he
was a senior account executive with a broadcasting firm in Greenville, South
Carolina.
Steven R. Fischer, 56, has served as a director of the Company since
December 1995. Mr. Fischer has served Transamerica Business Credit Corporation
as President since September 2000, as Executive Vice President and Division
Manager from October 1997 to September 2000 and as Senior Vice President and
7
Regional Manager from March 1992 to October 1997. From February 1981 to March
1992, Mr. Fischer served as Vice President and Regional Manager of Citibank,
N.A. Mr. Fischer is currently a director of Falconstor.
James G. Foody, 71, 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 LLP.
John P. Reilly, 52, has served as a director of the Company since June
2001. Mr. Reilly is co-founder and managing partner of Keltic Financial
Services, LLC in Rye, New York. Prior to that, from 1977 to 1999, he held
various senior management positions in the Leverage Buy-Out, Leasing, Corporate
Finance and Private Banking divisions at Citibank, N.A.
Board Meetings and Committees
The Board of Directors of the Company met or acted by written consent a
total of ten times during the Company's fiscal year ended June 30, 2001. 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, Foody and Reilly.
The functions of the Audit Committee include recommending to the Board of
Directors the retention of independent auditors, reviewing the scope of the
annual audit undertaken by the Company's independent auditors and the progress
and results of their work, and reviewing the financial statements of the Company
and its internal accounting and auditing procedures. No directors of the Company
who are also executive officers may serve on the Audit Committee. This committee
met or acted by written consent ten times during the fiscal year ended June 30,
2001.
The Compensation Committee is composed of Messrs. Fischer and Foody.
The functions of the Compensation Committee include reviewing and approving
executive compensation policies and practices, reviewing salaries and bonuses
for certain officers of the Company, administering the Company's stock option
plans, and considering such other matters as may from time to time be referred
to the Compensation Committee by the Board of Directors. 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
officers. This committee met or acted by written consent two times during the
fiscal year ended June 30, 2001.
8
Executive Compensation
The following table sets forth the cash compensation earned by the
Company's Chairman of the Board, Chief Executive Officer and President, Chief
Financial Officer and Treasurer, and Vice President-Marketing (the "Named
Executive Officers") for the fiscal years ended June 30 in each of 2001, 2000
and 1999.
Summary Compensation Table
Long-Term
Annual Compensation Compensation
------------------------------------------ ------------------------
Awards
------------------------
Fiscal Securities Underlying
Name and Principal Position Year Salary Bonus Options
--------------------------- ------ ------ ----- ------------------------
Steven H. Owings.............................. 2001 $200,000 $370,308 7,500 (1)
Chairman of the Board 2000 200,000 250,198 17,500
1999 96,000 103,733 30,000
Michael L. Baur............................... 2001 $150,000 $643,905 17,500 (1)
Chief Executive Officer and President 2000 125,000 455,586 25,000
1999 87,000 272,129 55,000
Jeffery A. Bryson............................. 2001 $ 90,000 $253,337 5,000
Chief Financial Officer and Treasurer 2000 90,000 182,827 15,000
1999 80,000 115,383 35,000
Robert S. McLain, Jr.......................... 2001 $150,000 $ 39,900 3,000
Vice President - Marketing 2000 100,000 47,251 5,000
1999 100,000 33,276 4,500
(1) On December 15, 2000, in addition to the Company options indicated, Messrs.
Owings and Baur received options to purchase 50,000 shares and 25,000
shares, respectively, of the Company's 95% owned subsidiary ChannelMax,
Inc. (the "ChannelMax Options"). There is no public market for shares
underlying the ChannelMax Options.
Option Grants
The following table sets forth information with respect to the stock
options granted to the Named Executive Officers during the fiscal year ended
June 30, 2001.
Option Grants In Last Fiscal Year
Potential Realizable Value
at
Individual Grants Assumed Annual Rates of
---------------------------------------------------------
Number of Stock
Securities Percent of Total Price Appreciation for
Underlying Options Granted Option Term
to ------------------------------
Options Employees in Exercise Expiration
Name Granted Fiscal Year Price Date 5% 10%
---- ------- ------------- ----- ---- ----- -----
Steven H. Owings............ 7,500 6.0% $37.25 12/10 $175,697 $ 445,252
50,000 (1) (1) .7111 12/10 22,360 56,665
Michael L. Baur............. 17,500 14.1% 37.25 12/10 409,961 1,038,921
25,000 (1) (1) .7111 12/10 11,180 28,333
Jeffery A. Bryson........... 5,000 4.0% 37.25 12/10 117,132 296,835
Robert S. McLain, Jr........ 3,000 2.4% 37.25 12/10 70,279 178,101
(1) Shares indicated represent ChannelMax Options. Mr. Owings received 22.3% and
Mr. Baur received 11.1% of the ChannelMax Options granted to employees during
the fiscal year.
9
Option Exercises and Fiscal Year-End Option Values
The following table sets forth certain information with respect to stock
options exercised by the Named Executive Officers during the fiscal year ended
June 30, 2001, and the number and value of unexercised stock options held by
each of the Named Executive Officers at June 30, 2001.
Aggregated Option Exercises in Fiscal 2001 and Fiscal Year-End Option Values
Number of Securities
Underlying Unexercised Value of Unexercised
Options at In-the-Money Options at
Fiscal Year-End Fiscal Year-End (1)
-------------------------- ----------------------------
Shares
Acquired Value
Name On Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- ----------- -------- ----------- ------------- ----------- -------------
Steven H. Owings........... -0- $ -0- 153,333 29,167 $ 4,664,916 $ 543,296
16,666 (4) 33,334 (4) 77,645 (4) 155,300 (4)
Michael L. Baur............ 7,619 219,999 (2) 113,381 52,500 3,681,703 986,243
8,333 (4) 16,667 (4) 38,823 (4) 77,650 (4)
Jeffery A. Bryson.......... 2,600 100,425 (3) 45,833 26,667 1,386,115 556,210
Robert S. McLain, Jr....... -0- -0- 24,665 7,835 853,069 123,643
_______________
(1) Based on a per share price of $47.42, the closing price of the Common Stock
as reported on The Nasdaq National Market on June 30, 2001, the last
trading day of the fiscal year.
(2) The amount realized is based on a per share price of $37.75, the price of
the Common Stock as reported on The Nasdaq National Market on the day of
exercise.
(3) The amount realized is based on a per share price of $47.50, the price of
the Common Stock as reported on The Nasdaq National Market on the day of
exercise.
(4) Shares indicated represent ChannelMax Options. Fiscal year-end values are
based on contractual arrangements relating to the ChannelMax Options and
shares of the subsidiary. There is no public market for shares underlying
such options.
Employment Agreements
Effective July 1, 1999, and for a term extending through June 30, 2002, the
Company entered into employment agreements with each of Steven H. Owings,
Michael L. Baur and Jeffery A. Bryson. These agreements provide for annual
salaries of $200,000, $125,000 and $90,000 for Messrs. Owings, Baur and Bryson,
respectively, plus incentive bonuses based upon a percentage of the Company's
operating income. Mr. Baur's employment agreement was amended effective January
1, 2001 to provide an annual salary of $175,000. The agreements also include
non-competition provisions for two years following the expiration of the
agreements or the earlier termination of employment.
Compensation of Directors
All directors are reimbursed for their expenses incurred in connection with
the performance of their services as directors. In addition, for the fiscal year
ended June 30, 2001, directors who were not otherwise compensated as officers of
the Company received a fee of $1,000 per calendar quarter for their service on
the Board of Directors. Directors were granted, as part of an annual formula
award, ten-year options to purchase 5,000 shares of Common Stock under the terms
of the Director Plan. Grants of options under the Director Plan are automatic
and are made each year to each non-employee director. 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 of Directors is
terminated for cause, in which case all options granted to such director expire
upon such termination.
10
On December 8, 2000, the day following the 2000 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. On June 15, 2001, in connection with his accepting a position as a
director of the Company, Mr. Reilly received options for the purchase of 4,500
shares under the Company's 1997 Stock Incentive Plan.
On December 15, 2000, Messrs. Fischer and Foody each received options
to purchase 5,000 shares of stock of the Company's 95% owned subsidiary
ChannelMax, Inc. Such options have an exercise price of $.7111 per share and
vest one-third on March 1, 2001, one-third on March 1, 2002 and one-third on
March 1, 2003. There is currently no market for such shares. No other
compensation was paid or awarded during the fiscal year ended June 30, 2001 to
any director for service on the Board of Directors.
For the fiscal year ended June 30, 2002, non-employee director
compensation has been modified to provide a fee of $15,000 per calendar year
and, subject to approval by the shareholders of the amendment to the Director
Plan at the Annual Meeting as provided above, a reduction in the number of
shares that are the subject to annual option grants from 5,000 to 3,000. See
"Proposal Two - Approval of Amendments to Non-Employee Director Stock Option
Plan" above.
Compensation Committee Interlocks and Insider Participation
During the fiscal year ended June 30, 2001, matters of executive
compensation were decided by the Compensation Committee of the Board of
Directors. The Compensation Committee is currently composed of Messrs. Fischer
and Foody.
Compensation Committee Report on Executive Compensation
The compensation of the Company's executive officers is generally
determined by the Compensation Committee of the Board of Directors. The
following report with respect to certain compensation paid or awarded to the
Company's executive officers during the fiscal year ended June 30, 2001 is
furnished by the directors who comprise the Compensation Committee.
General Policies. The Company's compensation program is intended to
enable the Company to attract, motivate, reward and retain the management talent
to achieve corporate objectives, and thereby increase shareholder value. It is
the Company's policy to provide incentives to senior management to achieve both
short-term and long-term objectives. To attain these objectives, the Company's
executive compensation program is composed of a base salary and bonus, which is
generally established for the Named Executive Officers in an employment
agreement.
Base Salary. Base salaries for each of the Named Executive Officers as
established in his employment agreement are determined by a subjective
assessment of the executive officer's performance, in light of the officer's
responsibilities and position with the Company and the Company's performance
during prior periods. In evaluating overall Company performance, the primary
focus is upon financial performance for the relevant annual period measured by
operating income. Base salaries are reviewed periodically and from time to time
by the Compensation Committee and adjusted appropriately.
Incentive Compensation. Incentive compensation for each of the Named
Executive Officers is established in his employment agreement as a percentage of
the Company's operating income. Incentive compensation is reviewed periodically
and from time to time by the Compensation Committee and adjusted accordingly.
Stock Options. Executive compensation includes the grant of stock
options in order to more closely align the interests of the executive with the
long-term interests of the shareholders.
11
Chief Executive Officer Compensation. Michael L. Baur is an original
founder of the ScanSource concept and has devoted his career to this concept
since the inception of the Company in December 1992. The Compensation Committee
believes that Mr. Baur's entrepreneurial drive, dedication, commitment and
knowledge have been vitally important to the successful and ongoing growth of
the Company. Mr. Baur's overall compensation for the fiscal year ended June 30,
2001 consisted of base salary, bonus and stock options. In determining Mr.
Baur's compensation, the Compensation Committee evaluated Mr. Baur's personal
performance, the performance of the Company and Mr. Baur's long-term commitment
to the success of and ownership position in the Company.
Compensation Committee:
----------------------
Steven R. Fischer
James G. Foody
Certain Transactions
At June 30, 2001, Michael L. Baur, Chief Executive Officer and
President of the Company, was indebted to the Company under the terms of a loan
to him from the Company with a principal balance of $333,251 bearing interest at
an annual interest rate of 6.5%. The principal and accrued interest are due in
August 2002, having been extended during the year from May 2001.
Performance Graph
The following graph compares cumulative total shareholder return of the
Common Stock over a five-year period with The Nasdaq Stock Market (US) Index and
with a Peer Group of companies for the same period. Total shareholder return
represents stock price changes and assumes the reinvestment of dividends. The
graph assumes the investment of $100 on June 30, 1996.
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG SCANSOURCE INC.,
NASDAQ MARKET INDEX AND PEER GROUP INDEX
[GRAPHIC]
------------------------------------------------------------------------------------------------------------------
6/30/96 6/30/97 6/30/98 6/30/99 6/30/00 6/30/01
------------------------------------------------------------------------------------------------------------------
SCANSOURCE, INC. $ 100.00 $ 102.68 $ 137.50 $ 154.46 $ 277.68 $ 338.71
------------------------------------------------------------------------------------------------------------------
PEER GROUP* 100.00 126.63 210.09 180.57 248.90 178.36
------------------------------------------------------------------------------------------------------------------
NASDAQ MARKET INDEX (US) 100.00 120.46 159.68 223.77 336.71 186.46
------------------------------------------------------------------------------------------------------------------
* The members of the Peer Group are Daisytek International Corporation, Ingram
Micro, Inc., Symbol Technologies, Inc., Tech Data Corp. and Zebra Technologies
Corporation. The returns of each company in the Peer Group have been weighted
according to their respective stock market capitalization for purposes of
arriving at a Peer Group average.
12
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding the
beneficial ownership of the Common Stock at September 30, 2001 of: (i) each
person known by the Company to beneficially own five percent or more of the
Common Stock; (ii) each director of the Company who beneficially owns Common
Stock; (iii) each executive officer who beneficially owns Common Stock; and (iv)
all directors and executive officers of the Company, as a group.
Shares Beneficially
Owned (1)
-------------------------
Name Number Percentage
---- ---------- ------------
FMR Corp. (2)................................................. 582,503 10.2%
John Hancock Mutual Life Insurance Company (3)................ 447,700 7.8
JP Morgan Chase & Co. (4)..................................... 379,255 6.6
Pilgrim Baxter & Associates, Ltd. (5)......................... 317,900 5.6
Steven H. Owings (6).......................................... 327,113 5.6
Michael L. Baur (7).......................................... 139,333 2.4
Jeffery A. Bryson (8)........................................ 61,470 1.1
James G. Foody (9)........................................... 31,000 *
Steven R. Fischer (10)........................................ 34,000 *
Robert S. McLain, Jr. (11).................................... 26,730 *
John P. Reilly (12)........................................... 4,500 *
All directors and executive officers as a group (7 persons)... 624,146 10.2
* Amount represents less than 1.0%.
(1) Applicable percentage of ownership is based upon 5,716,330 shares of
Common Stock outstanding. Beneficial ownership is determined in accordance
with the rules of the SEC and includes voting and investment power with
respect to shares shown as beneficially owned. Shares of Common Stock
subject to options currently exercisable or exercisable within 60 days are
deemed outstanding for computing the shares and percentage ownership of
the person holding such options, but are not deemed outstanding for
computing the percentage ownership of any other person or entity. Except
as otherwise indicated, the persons or entities listed in the table have
sole voting and investment power with respect to all shares shown as
beneficially owned by them.
(2) A Schedule 13G filed with the SEC reflects that FMR Corp. is the ultimate
parent company of a variety of companies engaged in the securities
business and was, along with certain related persons, the beneficial owner
of the indicated shares as of December 31, 2000, including 147,763 shares
as to which sole voting power was held and as to all of which sole
investment power was held. The business address of the named shareholder
is 82 Devonshire Street, Boston, Massachusetts 02109.
(3) A Schedule 13G filed with the SEC reflects that John Hancock Mutual
Life Insurance Company is the ultimate parent company of John Hancock
Advisors, Inc. which held sole voting and investment power with respect to
the indicated shares as of December 31, 2000. The business address of the
named shareholder is John Hancock Place, Post Office Box 111, Boston,
Massachusetts 02117.
13
(4) A Schedule 13G filed with the SEC reflects that J.P. Morgan Chase & Co. is
the ultimate parent company of Robert Flemming Holding Ltd. which had sole
voting and investment power with respect to the indicated shares as of
December 31, 2000. The business address of the named shareholder is 270
Park Avenue, New York, NY 10017.
(5) A Schedule 13G filed with the SEC reflects that Pilgrim Baxter &
Associates, Ltd. was the beneficial owner of the indicated shares as of
December 31, 2000, including 117,800 shares as to which sole voting power
was held and as to all of which sole investment power was held. The
business address of the named shareholder is 825 Duportail Road, Wayne, PA
19087.
(6) Includes 163,333 shares issuable pursuant to currently exercisable stock
options granted by the Company. Does not include 19,167 shares issuable
pursuant to options granted by the Company which are not currently
exercisable. Includes 5,697 shares owned in a trust of which Mr. Owings is
the trustee. The business address for the named shareholder is 6 Logue
Court, Greenville, South Carolina 29615.
(7) Includes 131,714 shares issuable pursuant to currently exercisable options
granted by the Company. Does not include 34,167 shares issuable pursuant to
options granted by the Company which are not currently exercisable.
(8) Includes 57,500 shares issuable pursuant to currently exercisable options
granted by the Company. Does not include 15,000 shares issuable pursuant to
options granted by the Company which are not currently exercisable.
(9) Includes 25,000 shares issuable pursuant to currently exercisable options
granted by the Company.
(10) Includes 25,000 shares issuable pursuant to currently exercisable options
granted by the Company.
(11) Includes 26,166 shares issuable pursuant to currently exercisable options
granted by the Company. Does not include 6,334 shares issuable pursuant to
options granted by the Company which are not currently exercisable.
(12) Includes 4,500 shares issuable pursuant to currently exercisable options
granted by the Company.
Section 16(a) Beneficial Ownership Reporting Requirements
The Company believes that each of its officers and directors complied
with all requirements applicable to them during the fiscal year ended June 30,
2001 pursuant to Section 16(a) of the Securities Exchange Act of 1934.
14
AUDIT COMMITTEE REPORT
The Audit Committee oversees the Company's financial reporting process
on behalf of the Board of Directors. The Audit Committee operates under a
written charter adopted on June 1, 2000, a copy of which is attached as Exhibit
-------
A to this proxy statement. This report reviews the actions taken by the Audit
-
Committee with regard to the financial reporting process during the fiscal year
ended June 30, 2001 and particularly with regard to the Company's audited
consolidated financial statements as of June 30, 2001 and June 30, 2000 and for
the three years ended June 30, 2001.
The Audit Committee is composed solely of independent directors. None
of the committee members is or has been an officer or employee of the Company or
any of its subsidiaries or has engaged in any business transaction or has any
business or family relationship with the Company or any of its subsidiaries or
affiliates.
The Company's management has the primary responsibility for the
Company's financial statements and reporting process, including the systems of
internal controls. The independent auditors are responsible for performing an
independent audit of the Company's consolidated financial statements in
accordance with auditing standards generally accepted in the United States and
issuing a report thereon. The Audit Committee's responsibility is to monitor and
oversee these processes and to recommend annually to the Board of Directors the
accountants to serve as the Company's independent auditors for the coming year.
The Audit Committee has implemented procedures to ensure that during
the course of each fiscal year it devotes the attention that it deems necessary
or appropriate to fulfill its oversight responsibilities under the Audit
Committee's charter. To carry out its responsibilities, the Audit Committee met
ten times during the fiscal year ended June 30, 2001.
In fulfilling its oversight responsibilities, the Audit Committee
reviewed with management the audited consolidated financial statements in the
Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2001,
including a discussion of the quality, rather than just the acceptability, of
the accounting principles, the reasonableness of significant judgments and the
clarity of disclosures in the financial statements.
The Audit Committee also reviewed with the independent auditors, who
are responsible for expressing an opinion on the conformity of those audited
consolidated financial statements with accounting principles generally accepted
in the United States, their judgments as to the quality, rather than just the
acceptability, of the Company's accounting principles and such other matters as
are required to be discussed with the Audit Committee under Statement on
Auditing Standards No. 61, Communication with Audit Committees, as currently in
effect. In addition, the Audit Committee discussed with the auditors their
independence from management and the Company, including the matters in the
written disclosures required of auditors by Independence Standards Board
Standard No. 1, Independence Discussions with Audit Committees. The Audit
Committee also considered whether the provision of services during the fiscal
year ended June 30, 2001 by the auditors that were unrelated to their audit of
the consolidated financial statements referred to above and to their reviews of
the Company's interim consolidated financial statements during the fiscal year
is compatible with maintaining their independence.
Additionally, the Audit Committee discussed with the independent
auditors the overall scope and plan for their audit. The Audit Committee met
with the independent auditors, with and without management present, to discuss
the results of their examination, their evaluation of the Company's internal
controls and the overall quality of its financial reporting.
In reliance on the reviews and discussions referred to above, the Audit
Committee recommended to the Board of Directors that the audited consolidated
financial statements be included in the Company's Annual Report on Form 10-K for
the fiscal year ended June 30, 2001 for filing with the SEC. The Audit Committee
also recommended to the Board of Directors that the Company retain Deloitte &
Touche LLP as its independent auditors for the fiscal year ending June 30, 2002.
Audit Committee:
---------------
Steven R. Fischer
James G. Foody
John P. Reilly
15
ANNUAL REPORT ON FORM 10-K
A copy of the Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 2001, which is required to be filed with the SEC, 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, Greenville, South Carolina 29615.
By order of the Board of Directors,
Steven H. Owings
Chairman of the Board
October 26, 2001
16
Exhibit A
---------
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
OF SCANSOURCE, INC.
I. Audit Committee Purpose
The Audit Committee is appointed by the Board of Directors to assist
the Board in fulfilling its oversight responsibilities. The Audit
Committee's primary duties and responsibilities are to:
. Monitor the integrity of the Company's financial reporting process
and systems of internal controls regarding finance, accounting,
and legal compliance.
. Monitor the independence and performance of the Company's
independent auditors and internal auditing department.
. Provide an avenue of communication among the independent auditors,
management, the internal auditing department, and the Board of
Directors.
The Audit Committee has the authority to conduct any investigation
appropriate to fulfilling its responsibilities, and it has direct
access to the independent auditors as well as anyone in the
organization. The Audit Committee has the responsibility to request the
Board of Directors to retain, at the Company's expense, special legal,
accounting, or other consultants or experts it deems necessary in the
performance of the Audit Committee's duties.
II. Audit Committee Composition and Meetings
Audit Committee members shall meet the requirements of the NASDAQ
Exchange. The Audit Committee shall be comprised of three or more
directors as determined by the Board, each of whom shall be independent
nonexecutive directors, free from any relationship that would interfere
with the exercise of his or her independent judgment. All members of
the Committee shall have a basic understanding of finance and
accounting and be able to read and understand fundamental financial
statements, and at least one member of the Committee shall have
accounting or related financial management expertise.
Audit Committee members shall be appointed by the Board on
recommendation of the Nominating Committee. If an audit committee Chair
is not designated or present, the members of the Committee may
designate a Chair by majority vote of the Committee membership.
The Committee shall meet at least four times annually, or more
frequently as circumstances dictate. The Audit Committee Chair shall
prepare and/or approve an agenda in advance of each meeting. The
Committee should meet privately in executive session at least annually
with management, the director of the internal auditing department, the
independent auditors, and as a committee to discuss any matters that
the Committee or each of these groups believe should be discussed. In
addition, the Committee, or at least its Chair, should communicate with
management and the independent auditors quarterly to review the
Company's financial statements and significant findings based upon the
auditors' limited review procedures.
III. Audit Committee Responsibilities and Duties
Review Procedures
-----------------
1. Review and reassess the adequacy of this Charter at least annually.
Submit the charter to the Board of Directors for approval and have the
document published at least every three years in accordance with SEC
regulations.
2. Review the Company's annual audited financial statements prior to
filing or distribution. Review should include discussion with
management and independent auditors of significant issues regarding
accounting principles, practices, and judgments.
3. In consultation with the management, the independent auditors, and the
internal auditors, consider the integrity of the Company's financial
reporting processes and controls. Discuss significant financial risk
exposures and the steps management has taken to monitor, control, and
report such exposures. Review significant findings prepared by the
independent auditors and the internal auditing department together with
management's responses.
4. Review with financial management and the independent auditors the
Company's quarterly financial results prior to the release of earnings
and/or the Company's quarterly financial statements prior to filing or
distribution. Discuss any significant changes to the Company's
accounting principles and any items required to be communicated by the
independent auditors in accordance with SAS 61.
Independent Auditors
--------------------
5. The independent auditors are ultimately accountable to the Audit
Committee and the Board of Directors. The Audit Committee shall review
the independence and performance of the auditors and annually recommend
to the Board of Directors the appointment of the independent auditors
or approve any discharge of auditors when circumstances warrant.
6. Approve the fees and other significant compensation to be paid to the
independent auditors.
7. On an annual basis, the Committee should review and discuss with the
independent auditors all significant relationships they have with the
Company that could impair the auditors' independence.
8. Review the independent auditors audit plan - discuss scope, staffing,
locations, reliance upon management, and internal audit and general
audit approach.
9. Prior to releasing the year-end earnings, discuss the results of the
audit with the independent auditors. Discuss certain matters required
to be communicated to audit committees in accordance with AICPA SAS 6
1.
10. Consider the independent auditors' judgments about the quality and
appropriateness of the Company's accounting principles as applied in
its financial reporting.
11. Request the independent auditors to confirm in writing that the firm is
in compliance with the accounting and exchange regulations as to
independence.
Internal Audit Department and Legal Compliance
----------------------------------------------
12. Review the appointment, performance, and replacement of the senior
internal audit executive.
13. Review significant reports prepared by the internal audit department
together with management's response and follow-up to these reports.
14. On at least an annual basis, review with the Company's counsel any
legal matters that could have a significant impact on the
organization's financial statements, the Company's compliance with
applicable laws and regulations, and inquiries received from regulators
or governmental agencies.
Other Audit Committee Responsibilities
--------------------------------------
15. Annually prepare a report to shareholders if required by the Securities
and Exchange Commission or the Stock Exchange(s) where company
securities are listed. The report, if required, should be included in
the Company's annual proxy statement.
16. Perform any other activities consistent with this Charter, the
Company's by-laws, and governing law, as the Committee or the Board
deems necessary or appropriate.
17. Maintain minutes of meetings and periodically report to the Board of
Directors on significant results of the foregoing activities.
18. Review financial and accounting personnel succession planning within
the company.
19. Annually review a summary of directors' and officers' related party
transactions and potential conflicts of interest.
20. Annually review the Company's conflict of interest policy and
compliance with that policy from the appropriate management officer.
SCANSOURCE, INC.
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
1. Purpose. The purpose of the ScanSource, Inc. Non-Employee Director
-------
Stock Option Plan (the "Plan") is to advance the interests of ScanSource, Inc.
(the "Company") and its shareholders by encouraging ownership of the Company's
common stock, no par value (the "Common Stock"), by non-employee directors of
the Company, thereby giving such directors an increased incentive to devote
their efforts to the success of the Company.
2. Administration. The Plan shall be administered by the Board of
--------------
Directors of the Company. Subject to the provisions of the Plan, the Board of
Directors shall have the power to interpret the Plan and prescribe such rules,
regulations and procedures in connection with the operations of the Plan as it
shall deem to be necessary and advisable for the administration of the Plan
consistent with the purposes of the Plan. All questions of interpretation and
application of the Plan, or as to stock options granted under the Plan, shall be
subject to the determination of the Board of Directors, which shall be final and
binding. Nothwithstanding the above, the selection of the Directors to whom
stock options are to be granted, the timing of such grants, the number of shares
subject to any stock option, the exercise price of any stock option, the periods
during which any stock option may be exercised and the term of any stock option
shall be as hereinafter provided, and the Board of Directors shall have no
discretion as to such matters.
3. Eligibility. Except as otherwise provided in this paragraph 3, options
-----------
under the Plan shall be granted in accordance with paragraph 5 to each member of
the Company's Board of Directors who is not an employee of the Company or any of
its subsidiaries ("Outside Director"), provided that shares of the Company's
Common Stock remain available for grant hereunder in accordance with paragraph
4. In the event that a new Outside Director is appointed by the Board of
Directors to fill a directorship position, the new Outside Director shall not be
eligible for an option grant pursuant to the Plan until elected as a director of
the Company. A person to whom an option is granted under the Plan shall be
referred to hereinafter as a "Grantee".
4. Shares Subject to Plan. The shares subject to the Plan shall be
----------------------
authorized but unissued or reacquired shares of the Company's Common Stock.
Subject to adjustment in accordance with the provisions of paragraph 6 of the
Plan, the maximum number of shares of Common Stock for which options may be
granted under the Plan shall be one hundred thousand (100,000), and the initial
adoption of the Plan by the Board of Directors of the Company shall constitute a
reservation of one-hundred thousand (100,000) authorized but unissued, or
reacquired, shares of Common Stock for issuance only upon the exercise of
options granted under the Plan. In the event that any outstanding option granted
under the Plan for any reason expires or is terminated prior to the end of the
period during which options may be granted under the Plan, the shares of Common
Stock allocable to the unexercised portion of such option may again be subject
in whole or in part to any option granted under the Plan.
5. Terms and Conditions of Options. Options granted to a Grantee pursuant
-------------------------------
to the Plan shall be evidenced by a Stock Option Agreement in such form as shall
comply with and be subject to the following terms and conditions:
(a) Grant. As of the day following the annual meeting of the
-----
Company's shareholders ("Annual Meeting") at which the Plan is approved by the
Company's shareholders and the day following each subsequent Annual Meeting,
each Outside Director who is serving in such capacity as of such date shall
automatically and without further action by the Board of Directors be granted an
option to purchase 5,000 shares of Common Stock, subject to adjustment pursuant
to paragraph 6.
If on the date following an Annual Meeting (and during the term of this
Plan) there are not sufficient shares of Common Stock available under the Plan
to grant each Outside Director an option to purchase the full amount of shares
of Common Stock contemplated by the immediately preceding paragraph, then each
Outside Director shall receive an option to purchase shares of Common Stock in
an amount equal to the number of shares of Common Stock then available under the
Plan divided by the number of Outside Directors as of the day following the
applicable Annual Meeting. Fractional shares shall be ignored and not granted.
If during the term of this Plan, additional shares of Common Stock become
available for grant (e.g., because of the forfeiture or lapse of an option),
each person who was an Outside Director on both the day following the Annual
Meeting at which sufficient shares for full grants under the Plan were not
available and the date the additional shares of Common Stock become available
("Continuing Outside Director") shall receive an additional option to purchase
shares of Common Stock. The number of available shares shall be divided equally
among the options granted to the Continuing Outside Directors. However, the
aggregate number of shares of Common Stock subject to any Continuing Outside
Director's new option and any prior option granted to the Continuing Outside
Director on the day following the applicable Annual Meeting at which sufficient
shares for full grants under the Plan were not available shall not exceed 5,000
shares of Common Stock (subject to adjustment pursuant to paragraph 6). If
Outside Directors have not received the full amount of shares of Common Stock
during two or more Annual Meetings, available options shall be granted beginning
with the earliest Annual Meeting.
(b) Option Price. The option price for each option granted under the
------------
Plan shall be the Fair Market Value (as defined below) of the shares of Common
Stock subject to the option on the date of grant of the option. For purposes of
the Plan, the "Fair Market Value" of the shares of Common Stock shall mean the
closing "asked" price of the shares in the over-the-counter market on the day on
which such value is to be determined or, if such "asked" price is not available,
the last sales price on such day or, if no shares were traded on such day, on
the next preceding day on which the shares were traded, as reported by the
Nasdaq Stock Market or other national quotation service. If the shares are
listed on a national securities exchange, "Fair Market Value" means the closing
price of the shares on such national securities exchange on the day on which
such value is to be determined or, if no shares were traded on such day, on the
next preceding day on which shares were traded, as reported by National
Quotation Bureau, Inc. or other national quotation service. If there is no
public market for the Common Stock, "Fair Market Value" means the value
determined by the employee directors of the Board of Directors of the Company to
be the fair market value of the Common Stock.
(c) Medium and Time of Payment. The option price shall be payable in
--------------------------
full upon the exercise of an option in cash, by check, in shares of Common Stock
already held by the Grantee, or any combination thereof. In the event that all
or part of the option price is paid in shares of Common Stock, the value of such
shares shall be equal to the Fair Market Value of such shares on the date of
exercise of the option (determined as provided in paragraph 5(b) of the Plan),
and the Grantee shall deliver to the Company a certificate or certificates
representing such shares duly endorsed to the Company or accompanied by a
duly-executed separate instrument of transfer satisfactory to the Board of
Directors.
(d) Term. Each option granted under the Plan shall, to the extent not
----
previously exercised, terminate and expire on the date ten (10) years after the
date of grant of the option, unless earlier terminated as provided hereinafter
in paragraph 5(g).
(e) Exercisability. Beginning on the date six (6) months after the
--------------
option is granted and continuing until the expiration or earlier termination of
the option, the option may be exercised from time to time, in whole or in part.
(f) Method of Exercise. All options granted under the Plan shall be
------------------
exercised by an irrevocable written notice directed to the Secretary of the
Company at the Company's principal place of business. Such written notice shall
specify the form of payment made by the Grantee or his successor as provided by
paragraph 5(c) of the Plan and shall be accompanied by payment in full of the
option price for the shares for which such option is being exercised. The
Company shall make delivery of certificates representing the shares for which an
option has been exercised within a reasonable period of time; provided, however,
that if any law, regulation or agreement requires the Company to take any action
with respect to the shares for which an option has been exercised before the
issuance thereof, then the date of delivery of such shares shall be extended for
the period necessary to take such action. Certificates representing shares for
which options are exercised under the Plan may bear such restrictive legends as
may be necessary or desirable in order to comply with applicable federal and
state securities laws. Nothing contained in this Plan shall be construed to
require the Company to register any shares of Common Stock underlying options
granted under this Plan.
(g) Effect of Termination of Directorship or Death.
----------------------------------------------
(i) Termination of Directorship. Upon termination of the
---------------------------
directorship of any Grantee with the Company for any reason other than for
cause, the option held by the Grantee under the Plan shall terminate one
year following the date of the Grantee's termination or, if earlier, on the
date of expiration of the option as provided by paragraph 5(d) of the Plan.
If the Grantee exercises the option after termination of the Grantee's
directorship, the Grantee may exercise the option only with respect to the
shares which were otherwise exercisable on the termination date of the
Grantee's directorship. Such exercise shall otherwise be subject to the
terms and conditions of the Plan. If the Outside Director's membership on
the Board of Directors is terminated for cause, all options granted to such
Outside Director shall expire upon such termination.
(ii) Death. In the event of the death of a Grantee, the Grantee's
-----
personal representatives, heirs or legatees (the "Grantee's Successors")
may exercise the options that were held by the Grantee on the date of the
Grantee's death, to the extent then exercisable, upon proof satisfactory to
the Company of their authority. The Grantee's Successors must exercise any
such option within one year after the date of the Grantee's death and in
any event prior to the date on which the option expires as provided by
paragraph 5(e) of the Plan. Such exercise otherwise shall be subject to the
terms and conditions of the Plan.
(h) Nonassignability of Option Rights. No option shall be assignable
---------------------------------
or transferable by the Grantee except by will, by the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined in
Title I of ERISA and the Internal Revenue Code of 1986. During the lifetime of
the Grantee, the option shall be exercisable only by the Grantee.
(i) Rights as Shareholder. Neither the Grantee nor the Grantee's
---------------------
Successors shall have rights as a shareholder of the Company with respect to
shares of Common Stock covered by the Grantee's option until the Grantee or the
Grantee's Successors become the holder of record of such shares.
(j) No Options in Certain Cases. No options shall be granted except
---------------------------
within a period of ten (10) years after the effective date of the Plan.
6. Adjustments.
-----------
(a) The number of shares of Common Stock included in any annual grant
to a Grantee of an option under the Plan shall be reduced on a share for share
basis (but not less than zero) by the number of shares of Common Stock included
in any stock options or warrants otherwise granted to such Grantee with respect
to such Grantee's service on any committee of the Board of Directors of the
Company for the year as to which the annual grant under the Plan is being made.
Any shares forfeited pursuant to this paragraph 6(a) shall remain available for
succeeding annual grants of options under the Plan.
(b) If any change is made in the stock subject to the Plan or the
stock subject to any option granted under the Plan (through merger,
consolidation, reorganization, recapitalization, stock dividend, dividend in
property other than cash, stock split, liquidating dividend, combination of
shares, exchange of shares, change in corporate structure or otherwise), the
Plan and outstanding options will be automatically and appropriately adjusted,
including the maximum number of shares subject to the Plan and the number of
shares and the price per share of stock subject to outstanding options.
(c) In the event of: (1) a dissolution or liquidation of the Company;
(2) a merger or consolidation in which the Company is not the surviving
corporation; (3) a reverse merger in which the Company is the surviving
corporation but the shares of the Company's common stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash other otherwise; or (4) any other
capital reorganization in which more than fifty percent (50%) of the shares of
the Company entitled to vote are exchanged, then any surviving corporation shall
assume any options outstanding under the Plan or shall substitute similar
options for those outstanding under the Plan. If there is no surviving
corporation, all outstanding options shall continue in full force and effect.
7. Effective Date and Termination of Plan.
--------------------------------------
(a) Effective Date. The Plan shall become effective as of the day the
Plan is adopted by the shareholders of the Company.
(b) Termination. The Plan shall terminate ten (10) years after its
effective date, but the Board of Directors may terminate the Plan at any time
prior to such date. Termination of the Plan shall not alter or impair any of the
rights or obligations under any option theretofore granted under the Plan unless
the Grantee shall so consent.
8. Application of Funds. The proceeds received by the Company from the
--------------------
sale of shares of Common Stock pursuant to options granted under the Plan may be
used for general corporate purposes.
9. No Obligation to Exercise Option. The granting of an option shall
--------------------------------
impose no obligation upon the Grantee to accept such grant or to exercise such
option.
10. Amendment. The Board of Directors of the Company by majority vote may
---------
amend the Plan; provided, however, that without the approval of the shareholders
of the Company, no such amendment shall change:
(a) The maximum number of shares of Common Stock as to which options
may be granted under the Plan (except by operation of the adjustment provisions
of the Plan); or
(b) The date on which the Plan will terminate as provided by
paragraph 7(b) of the Plan; or
(c) The number of shares of Common Stock subject to each option; or
(d) The option price as provided under paragraph 5(b) of the Plan; or
(e) The provisions of paragraph 3 of the Plan related to the
determination of the Outside Directors to whom options may be granted.
The provisions of the Plan determining (i) the persons eligible to receive
grants of options, (ii) the timing of option grants, (iii) the number of shares
subject to options, (iv) the exercise price of options, (v) the periods during
which options are exercisable, and (vi) the dates on which options terminate,
may not be amended more than once every six months other than to comport with
changes in the Internal Revenue Code, the Employee Retirement Income Security
Act of 1974, or the rules thereunder.
Any amendment to the Plan shall not, without the written consent of the
Grantee, affect such Grantee's rights under any option theretofore granted to
such Grantee.
SCANSOURCE, INC. NON-EMPLOYEE DIRECTOR
STOCK OPTION PLAN
STOCK OPTION AGREEMENT
Date of Grant: _____________, _____
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 a
non-employee director of ScanSource.
WHEREAS, the Board of Directors of ScanSource (the "Board") has adopted,
subject to shareholder approval, the ScanSource, Inc. Non-Employee Director
Stock Option Plan (the "Plan"); and
WHEREAS, the Plan provides for the automatic annual grant of stock options
by ScanSource to non-employee directors of ScanSource to purchase shares of the
common stock, no par value, of ScanSource (the "Stock"), in accordance with the
terms and provisions thereof; and
WHEREAS, ScanSource considers the Grantee to be a person who is eligible
for a grant of stock options under the Plan.
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 hereby grants to the Grantee, as of the Date of Grant, an option to
purchase up to 5,000 shares of Stock at a price of $_______ per share, being the
fair market value per share of such Stock as determined pursuant to the Plan.
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 number of Option Shares subject to this Option may be
adjusted pursuant to paragraph 6 of the Plan.
2. Exercise. Subject to such further limitations as are provided herein, six (6)
months after the Date of Grant, the Option may be exercised from time to time,
in whole or in part.
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 expire and become null and void
after the expiration of ten (10) years from the Date of Grant, unless earlier
terminated as provided herein (the "Expiration Date").
(b) Upon the occurrence of the termination of Grantee's position as a
director of ScanSource for any reason other than for cause, the Option shall
terminate one (1) year following the date of such termination or, if earlier, on
the date of expiration of the Option as provided by paragraph 3(a) hereof. If
the Grantee exercises the Option after termination of the Grantee's
directorship, the Grantee may exercise the Option only with respect to the
Option Shares which were otherwise exercisable on the termination date of the
Grantee's directorship. Such exercise shall otherwise be subject to the terms
and conditions of the Plan. If the Grantee's membership on the Board of
Directors is terminated for cause, all Options granted to Grantee shall expire
upon such termination.
(c) In the event of the death of Grantee, the Grantee's personal
representatives, heirs or legatees (the "Grantee's Successors") may exercise the
Options that were held by the Grantee on the date of the Grantee's death, to the
extent then exercisable, upon proof satisfactory to ScanSource of their
authority. The Grantee's Successors must exercise the Option within one (1) year
after the date of the Grantee's death and in any event prior to the date on
which the Option expires as provided by paragraph 3(a) hereof. Such exercise
otherwise shall be subject to the terms and conditions of the Plan.
4. Exercise of Options.
(a) The option price shall be payable in full upon the exercise of an
Option in cash (U.S. funds), by check, in shares of Stock already held by the
Grantee, or any combination thereof. In the event that all or part of the option
price is paid in shares of Stock, the value of such shares shall be equal to the
Fair Market Value of such shares on the date of exercise of the option
(determined as provided in paragraph 5(b) of the Plan), and the Grantee shall
deliver to ScanSource a certificate or certificates representing such shares
duly endorsed to ScanSource or accompanied by a duly-executed separate
instrument of transfer satisfactory to the Board.
(b) The Option shall be exercised by an irrevocable written notice directed
to the Secretary of ScanSource at ScanSource's principal place of business. Such
written notice shall specify the form of payment made by the Grantee or his
successor as provided by paragraph 4(a) hereof and shall be accompanied by
payment in full of the option price for the Option Shares for which the Option
is being exercised. ScanSource shall make delivery of certificates representing
the Option Shares for which the Option has been exercised within a reasonable
period of time; provided, however, that if any law, regulation or agreement
requires ScanSource to take any action with respect to the Option Shares for
which the Option has been exercised before the issuance thereof, then the date
of delivery of such Option Shares shall be extended for the period necessary to
take such action. Certificates representing Option Shares for which the Option
is exercised under the Plan may bear such restrictive legends as may be
necessary or desirable in order to comply with applicable federal and state
securities laws. Nothing contained in this Option shall be construed to require
ScanSource to register any Option Shares granted under the Plan.
(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.
5. No Rights as Shareholders. Neither the Grantee nor any personal
representative shall be, or shall have any of the rights and privileges of, a
shareholder 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.
6. 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.
7. 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, or such other address as shall
be provided to Grantee by ScanSource and any notice to the Grantee shall be
addressed to the Grantee at the current address shown on the 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.
8. 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
Board of Directors 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.
9. 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 officer to
execute this Stock Option Agreement, and the Grantee has placed his or her
signature hereon, effective as of the Date of Grant.
SCANSOURCE, INC.
By:
Its:
ACCEPTED AND AGREED TO:
By:
Grantee
Amendment No. 1
to
ScanSource, Inc.
Non-Employee Director Stock Option Plan
The ScanSource, Inc. Non-Employee Director Stock Option Plan (as
amended hereby, the "Plan") is hereby amended, subject to obtaining the
requisite approvals of the shareholders of ScanSource, Inc. (the "Company"), as
follows:
1. Section 5(a) is amended to delete "5,000" where it appears and
to substitute, in lieu thereof, "3,000", with appropriate corresponding changes
to the form of Stock Option Agreement provided to optionees in connection with
the grant of options under the Plan.
2. Section 10 is amended by deleting it in its entirety and
substituting in lieu thereof the following:
"10. Amendment. The Board of Directors of the Company by majority
---------
vote may amend the Plan; provided, however, that:
(a) No such amendment shall increase the maximum aggregate
number of shares of Common Stock as to which options may be granted under the
Plan (except by operation of the adjustment provisions of the Plan) without the
approval of the shareholders of the Company; and
(b) The Board of Directors may otherwise condition any
amendment on the approval of shareholders of the Company if such approval is
necessary or deemed advisable with respect to tax, securities or other
applicable laws, policies or regulations.
Any amendment to the Plan shall not, without the written
consent of the Grantee, affect such Grantee's rights under any option
theretofore granted to such Grantee."
SCANSOURCE, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR THE 2001 ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON THURSDAY, DECEMBER 6, 2000, AT THE GSP AIRPORT
MARRIOTT, 1 PARKWAY EAST, GREENVILLE, SOUTH CAROLINA AT 10:00 A.M. LOCAL TIME.
The undersigned hereby appoints Michael L. Baur and Jeffery A. Bryson, or
either 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 2001
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
5. John P. Reilly
2. Approval of the amendments to the Company's Non-Employee Director
Stock Option Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Ratification of the appointment of Deloitte & Touche LLP as
independent auditors for the Company for the fiscal year ending June
30, 2002.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. In their discretion, upon any other business which may properly come
before the meeting or any adjournment thereof.
DATE ____________________ __________________________________
__________________________________
(Please sign exactly as shown on
envelope addressed to you. If
securities are jointly owned, each
should sign. If voting less than all
shares held, please so indicate.)
THIS PROXY WILL BE VOTED AS INSTRUCTED.
IN THE ABSENCE OF SUCH INSTRUCTIONS,
THIS PROXY WILL BE VOTED "FOR" EACH OF
THE MATTERS SET FORTH 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 BEST JUDGMENT.
October 25, 2001
via EDGAR Transmission
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Scansource, Inc.--Proxy Materials for 2001 Annual Meeting
Ladies and Gentlemen:
Transmitted herewith, via EDGAR, are the Notice of Meeting, Proxy Statement
and form of Proxy for the 2001 Annual Meeting of Stockholders of Scansource,
Inc. scheduled for December 6, 2001. Such Proxy Statement and related materials
are being distributed to stockholders on or about October 26, 2001.
With respect to a proposed amendment to the Non-Employee Director Stock
Option Plan of the company (the "Plan"), to be presented for approval by the
stockholders, a copy of such Plan as currently in effect and the proposed
amendment thereto are filed as appendices to the Proxy Statement pursuant to
Instruction 3 of Item 10 of Schedule 14A. They are not, however, being provided
to stockholders as a part of the Proxy Statement.
As supplemental information, pursuant to Instruction 5 of Item 10 of
Schedule 14A, shares issuable under the Plan were originally the subject of a
registration statement on Form S-8 previously filed with the SEC (File No.
333-36766). No additional shares will be authorized pursuant to the proposed
amendment to the Plan.
Should you have any questions, please contact the undersigned at
704-444-1090.
Very truly yours,
Gary C. Ivey