Exhibit 10.40
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SCANSOURCE, INC.
NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN
1. Purpose. The purpose of the ScanSource, Inc. Non-Employee Director
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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.
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(i) Termination of Directorship. Upon termination of the
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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
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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
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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
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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
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within a period of ten (10) years after the effective date of the Plan.
6. Adjustments.
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(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.
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(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
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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
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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
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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