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Exhibit
10.1
Andrea D. Meade
3 East Cleveland Bay
Court
Greenville, SC 29615
SCAN
SOURCE , INC.
AMENDMENT TO STOCK OPTION
AGREEMENTS AND
PROMISE TO MAKE CASH
PAYMENT
November 6, 2007
Dear Andrea,
Scan Source , Inc., a
South Carolina corporation (“Scan Source ”) has
determined that certain of your stock options were granted, for
accounting purposes, with an exercise price that is less than the
fair market value of the Scan Source common stock subject to
such options on the applicable “measurement date”
(which is not necessarily the same as the “grant date”
set forth on your option agreement). As a result, these stock
options will be subject to potentially adverse personal tax
consequences under Section 409A (“Section 409A”)
of the Internal Revenue Code of 1986, as amended.
In order to address the
potentially adverse personal tax consequences that may apply to
certain of your options under Section 409A, Scan Source
is offering to amend the exercise price of your eligible options
(as identified on the schedule on the last page of this agreement)
(the “Eligible Options”) to increase the exercise price
of the Eligible Portion(s) (as defined below) to the fair
market value of the common stock on the date that was determined to
be the measurement date for accounting purposes for such options
(the “Corrected Exercise Price”). Such options will be
amended as of the date of this agreement. These Eligible Options,
if already vested or once vested in accordance with the terms of
grant, are exercisable at the amended exercise price as listed on
the schedule on the last page of this agreement.
Only certain portions of your
Eligible Options will be amended. The portion of an Eligible Option
that will be amended has both of the following characteristics (the
“Eligible Portion”):
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the portion
of the Eligible Option that vested after, or is scheduled to vest
after, December 31, 2004; and
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the portion
of the Eligible Option that is still outstanding and unexercised as
of the date of this agreement.
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Please note that the portions
of Eligible Options that (A) are considered
“Grandfathered Options” (defined below), (B) have
already been exercised, (C) have expired or otherwise been
cancelled or (D) are beneficially owned by someone other than
you, will not be amended. A “Grandfathered Option” is
the portion of an Eligible Option that was vested as of
December 31, 2004, and as a result are exempt from the adverse
personal tax treatment under Section 409A and therefore do not
need to be amended. Any amendment of the Eligible Portions of your
Eligible Options will not affect the remaining portions of your
Eligible Options.
In exchange for your
agreement to amend your outstanding Eligible Options to raise the
exercise price as indicated on the schedule on the last page of
this agreement, Scan Source hereby promises to pay you a
special cash payment in the amount described on the schedule on the
last page of this agreement (the “Make Whole Payment”).
The Make Whole Payment is an amount equal to the difference between
the Corrected Exercise Price per share of your Eligible Options and
the original exercise price per share of your Eligible Options
multiplied by the number of shares subject to the Eligible Portions
of your Eligible Options. Your Make Whole Payment will be paid,
less applicable tax withholding, promptly on or before your first
regular payroll date in January 2008. This payment is not
subject to vesting or forfeiture.
This payment will be
“grossed up” to reimburse you for Medicare tax
obligations arising from such payments.
This agreement acts as an
amendment to each of your Eligible Options. Each Eligible Option
that is amended pursuant to this agreement will have the same
material terms and conditions as it did prior to the amendment,
including the same vesting schedule and expiration date, except
that the Eligible Portions of the Eligible Options will have a new
exercise price. To the extent not amended by this agreement, your
Eligible Options will continue to be subject to the terms and
conditions of the 1997 Stock Incentive Plan, as amended, or the
Amended and Restated 2002 Long-Term Incentive Plan, as amended, as
applicable under which the original options were
granted.
By signing my name on the
last page hereto, I understand and agree to all of the
following:
1. I hereby consent to the
amendment by Scan Source to amend my Eligible Options in
accordance with the terms set forth in this agreement. My Eligible
Options consist of the portions of the options granted to me under
Scan Source , Inc.’s 1997 Stock Incentive Plan, as
amended, or the Amended and Restated 2002 Long-Term Incentive Plan,
as amended, that have the grant dates and exercise prices per share
listed on the schedule on the last page of this agreement and that
(i) were unvested as of December 31, 2004 and
(ii) will be outstanding and unexercised as of the date of
this agreement. My Eligible Options will be amended as of the date
of this agreement to have an adjusted exercise price per share
listed on the schedule on the last page of this agreement. Except
for such adjusted exercise price, all the terms and provisions of
my amended Eligible Options will be the same as in effect
immediately before the amendment.
2. I will also receive the
Make Whole Payment as listed on the schedule on the last page of
this agreement. This Make Whole Payment, less any applicable tax
withholdings, will be made on or before my first regular payroll
date following January 1, 2008. This payment will be
“grossed up” to reimburse me for Medicare tax
obligations arising from such payments.
3. My consent hereto will
constitute my acceptance of all of the terms and conditions of this
agreement and this agreement will constitute a binding agreement
between Scan Source and me.
4. I am the registered holder
of the Eligible Options amended hereby, and my name and other
information appearing on page 1 and the last page of this agreement
are true and correct.
5. Scan Source cannot
give me legal, tax or investment advice with respect to my Eligible
Options and has advised me to consult with my own legal, tax and
investment advisors as to the consequences of amending or not
amending my Eligible Options.
6. I understand that neither
Scan Source nor the board of directors of Scan Source
is making any recommendation as to whether I should consent to this
amendment of my Eligible Options, and that I must make my own
decision whether to consent to this amendment of my Eligible
Options, taking into account my own personal circumstances and
preferences.
This agreement reflects the
entire agreement between you and Scan Source with respect to
this transaction. This agreement may be amended only by means of a
writing signed by you and an authorized officer
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