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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 31, 1997
REGISTRATION NO. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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CDW COMPUTER CENTERS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
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ILLINOIS 5961 36-3310735
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
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1020 EAST LAKE COOK ROAD
BUFFALO GROVE, ILLINOIS 60089
(847) 465-6000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
MICHAEL P. KRASNY
CHIEF EXECUTIVE OFFICER
CDW COMPUTER CENTERS, INC.
1020 EAST LAKE COOK ROAD
BUFFALO GROVE, ILLINOIS 60089
(847) 465-6000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
Copies to:
ALAN B. PATZIK, ESQ.
SAITLIN, PATZIK, FRANK & SAMOTNY LTD.
150 SOUTH WACKER DRIVE
SUITE 900
CHICAGO, ILLINOIS 60606
(312) 551-8300
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE:
As soon as practicable after this Registration Statement has become effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number on the earlier
effective registration statement for the same offering. [ ] ____________
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ____________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
MAXIMUM OFFERING MAXIMUM
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO PRICE PER AGGREGATE AMOUNT OF
TO BE REGISTERED BE REGISTERED(1) SHARE(2) OFFERING PRICE(2) REGISTRATION FEE
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Shares of Common Stock, $.01 par value per
share, together with options issued 138,684 shares
pursuant to the CDW 1996 Incentive Stock and
Option Plan(3)........................... 138,684 options $61.875 $8,581,072.50 $2,600.33
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(1) In addition, pursuant to Rule 416(c) under the Securities Act of 1933, as
amended, this Registration Statement also covers an indeterminate amount of
interests to be offered or sold pursuant to the benefit plan described
herein.
(2) Estimated solely for purposes of determining the registration fee pursuant
to Rule 457(c) under the Securities Act of 1933, as amended, and based on
the average of the high ($64.50) and low ($59.25) prices as reported in the
consolidated reporting system on January 28, 1997.
(3) Plan Participants (as defined herein) electing the Modification (as defined
herein) will become vested in 25% of the total number of shares of Common
Stock held in their account under the MPK Restricted Stock Plan and will be
issued an equivalent number of options under the CDW 1996 Incentive Stock
Option Plan.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED JANUARY 31, 1997
PROSPECTUS
138,684 SHARES
AND
138,684 OPTIONS
CDW COMPUTER CENTERS, INC.
CDW LOGO CDW LOGO
COMMON STOCK
This Prospectus relates to 138,684 shares of Common Stock (the "Shares") of
CDW Computer Centers, Inc. (the "Company") which are being held under the MPK
Restricted Stock Plan (the "Plan") for the benefit of 96 of the Company's
employees (the "Plan Participants") and options to acquire 138,684 shares of
Common Stock to be granted to Plan Participants out of the CDW 1996 Incentive
Stock Option Plan (the "Options"). The Company's Chairman and Chief Executive
Officer established the Plan in 1993 out of his own shareholdings, and granted
all persons who were employees of the Company on December 31, 1992 the right to
receive a particular number of shares of Common Stock provided that the
employees remained continuously employed by the Company through January 1, 2000.
The Shares and Options are being offered in connection with a proposed
modification to the Plan (the "Modification") which would enable Plan
Participants, at their election, to (i) accelerate the date upon which they
become vested in a portion (25%) of the restricted shares allocated to them
under the Plan, and (ii) receive, from the Company, options to acquire a number
of shares of the Company's Common Stock equal to the number of shares received
upon electing the Modification, all in exchange for the electing Plan
Participants' agreement to defer the vesting date for the shares remaining in
the Plan upon completion of the offering through January 1, 2003. The
Modification is being proposed by the Plan, with the support of the Company, for
the purposes of (i) rewarding Plan Participants for their contributions to the
past success of the Company, (ii) incenting Plan Participants to remain in the
employ of the Company beyond the original vesting date of January 1, 2000 by
extending the vesting period attendant to the restricted shares remaining in
their Plan accounts, and (iii) motivating the Plan Participants to continue to
exert their best efforts toward the future performance of the Company. Plan
Participants will not tender to the Plan or the Company any cash or other
property when electing the Modification and, therefore, neither the Plan nor the
Company will receive any proceeds from the disposition of the Shares or Options
hereby.
The Company may assist Plan Participants with the resale of the Shares by
the Plan Participants to or through underwriters or dealers. The names of any
underwriters or dealers involved in the distribution of the Shares, any
applicable discounts, commissions or allowances, any public offering price and
the proceeds to the Plan Participants from the sale of the Shares, shall be set
forth in a separate prospectus. See "Plan of Distribution."
The Company's Common Stock is traded in the over-the-counter market and
quoted on the Nasdaq National Market under the symbol CDWC. On January 30, 1997,
the closing sale price of the Common Stock as reported by Nasdaq was $63.00 per
share. See "Price Range of Common Stock and Dividend Policy."
SEE "RISK FACTORS" ON PAGE 3 FOR A DISCUSSION OF CERTAIN RISK FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE RECIPIENTS OF THE SHARES OF COMMON STOCK
OFFERED HEREBY.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS , 1997
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated herein by reference: (1) the Company's Annual Report on Form 10-K
for the year ended December 31, 1995; (2) the Company's Quarterly Reports on
Form 10-Q for the quarters ended March 31, 1996, June 30, 1996 and September 30,
1996; and (3) the description of the Company's capital stock contained in the
Company's Registration Statement on Form 8-A filed May 19, 1993 registering the
Company's Common Stock under Section 12(g) of the Exchange Act. All documents
filed by the Company with the Commission pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date hereof and prior to the
termination of the offering of the Common Stock registered hereby shall be
deemed to be incorporated by reference into this Prospectus and to be a part
hereof from the date of filing such documents. Any statements contained herein
or in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus. The Company will provide without charge to each person to
whom this Prospectus is delivered, upon a written or oral request of such
person, a copy of any or all of the foregoing documents incorporated by
reference into this Prospectus (other than exhibits to such documents, unless
such exhibits are specifically incorporated by reference into such documents).
Requests for such copies should be directed to Investor Relations, 1020 East
Lake Cook Road, Buffalo Grove, Illinois 60089. Telephone (847) 419-8243.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission"), Washington, D.C. 20549, a Registration Statement on Form S-3
under the Securities Act of 1933 with respect to the Common Stock offered
hereby. This Prospectus does not contain all the information set forth in the
Registration Statement and exhibits and schedules thereto, certain parts of
which have been omitted in accordance with the rules and regulations of the
Commission. For further information with respect to the Company and the Common
Stock, reference is made to the Registration Statement and to the exhibits and
schedules thereto. Copies of the Registration Statement and the exhibits and
schedules thereto may be inspected without charge at the Commission's principal
offices in Washington, D.C., and copies of all or any part thereof may be
obtained from such office upon payment of prescribed fees.
The Company is subject to the informational requirements of the Exchange
Act, and, in accordance therewith, files reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information may be inspected and copies made at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Judiciary
Plaza, Washington, D.C. 20549; 500 West Madison Street, Suite 1400, Chicago, IL
60661; and 7 World Trade Center, Suite 1300, New York, NY 10048. Copies of such
material can be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549 at prescribed
rates.
PRINCIPAL EXECUTIVE OFFICES
The principal executive office of the Company is located at CDW Computer
Centers, Inc., 1020 East Lake Cook Road, Buffalo Grove, Illinois 60089 and its
phone number is (847) 465-6000.
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RISK FACTORS
This Prospectus, including information incorporated by reference, contains
forward-looking statements which involve certain risks and uncertainties. Such
forward-looking statements include, but are not limited to, the Company's
expectations regarding its future financial condition and operating results,
business and growth strategy, market conditions and competitive environment. The
Company's actual results could differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including, but not
limited to, those set forth in the following risk factors and elsewhere in this
Prospectus. In addition to the other information contained in this Prospectus,
prospective investors should carefully consider the following factors in
evaluating the Company, its business and the shares of Common Stock offered
hereby.
RISKS RELATED TO DEFERRAL OF VESTING DATE
As proposed, the Modification will result in an extension of the vesting
dates for the shares remaining in the account of each Plan Participant who
elects to be treated under the modified Plan. Specifically, the remaining shares
will vest in equal 25% increments on January 1, 2000, 2001, 2002 and 2003.
Therefore, except for certain limited exceptions related to death or disability,
each Plan Participant who elects the Modification will be required to maintain
continuous employment with the Company through January 1, 2003 in order to
receive all of the shares which the Plan Participant would be entitled to
receive on January 1, 2000 had the terms of the original Plan remained
unchanged. Because each Plan Participant's employment with the Company is
terminable at will by the Company, there can be no assurance that the Plan
Participants will remain employed by the Company through January 1, 2003.
Accordingly, there can be no assurance that Plan Participants who elect the
Modification will receive any or all of the remaining shares allocated to their
account.
Additionally, by extending the vesting date for a significant portion of
the shares allocated to their accounts under the Plan, Plan Participants
electing the Modification will be subject to the risk of changes in the market
price for the Company's Common Stock during the extended vesting period.
Specifically, due to the many factors further discussed herein, there can be no
assurance that the market price for the Company's Common Stock on each extended
vesting date will equal or exceed the market price of the Company's Common Stock
on January 1, 2000, the original vesting date under the Plan. See "Risk Factors"
generally for a discussion of the factors which could adversely affect the
market price of the Company's Common Stock.
RAPID GROWTH
Since its formation in June, 1984, the Company has experienced rapid
growth. As part of its business strategy, the Company intends to pursue the
continuation of this growth through further development of marketing programs,
the hiring of additional account executives, technical support personnel and
operations personnel and investment in additional facilities and systems. The
Company's success will, in part, be dependent upon the ability of the Company to
manage its growth effectively. The Company's business and growth could be
affected by the spending patterns of existing or prospective customers, the
cyclical nature of capital expenditures of businesses, continued competition and
pricing pressures, the successful development of new products, and other trends
in the general economy. Future revenue and profit increases could occur at
moderating rates. There can be no assurance that the Company's rapid growth will
continue in the future.
FACILITIES
In the first quarter of 1996, the Company acquired a 27 acre parcel of land
in Vernon Hills, Illinois, near its present facility, upon which it presently is
constructing a combined warehouse, telemarketing, retail showroom and corporate
office facility. The initial phase of construction includes approximately
218,000 square feet. The Company expects to vacate its current leased facility
and relocate its operations to this new facility in the third quarter of 1997.
The Company will likely incur certain moving and other costs, not expected to
exceed $1.0 million, relating to this relocation which would be charged to
operating results in the period incurred. The Company recorded a $4.0 million
charge in the first quarter of 1996 for estimated costs associated with vacating
its current facility, including estimated lease costs and costs to restore the
facility to
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its original condition. The Company calculated the amount of the exit charge
considering certain assumptions regarding its ability to sublease the facility.
There is no assurance that the $4.0 million charge will be adequate to cover
actual costs should the Company's actual experience in subleasing the facility
differ from its assumptions. Any additional costs would reduce operating results
at the time such costs are known.
In conjunction with the move to the new facility, the Company will acquire
and install certain new telephone and warehousing equipment. Any significant
unanticipated expense, capital cost or disruption of the Company's business or
operations caused by the construction of the new facility, relocation or
implementation of new telephone and warehousing equipment could have a material
adverse effect on the Company and its stock price. If the Company is unable to
generate increased sales and gross margins sufficient to absorb increased
overhead and other costs created by its expansion, the Company would likely
experience lower pre-tax margins.
Historically, the Company has operated, and upon relocation to its new
facility will continue to operate, its business from a single facility which is
a combined telemarketing, warehouse, corporate office and retail showroom
facility. As a result, the Company's business could be adversely affected by any
destruction of the facility or other interruption of the Company's business
resulting from a natural disaster or other cause.
MANAGEMENT INFORMATION SYSTEMS
The Company's success is dependent on the accuracy and proper utilization
of its management information systems, including its telephone system. The
Company's ability to manage its inventory and accounts receivable collections;
to purchase, sell and ship its products efficiently and on a timely basis; and
to maintain its cost-efficient operation is dependent upon the quality and
utilization of the information generated by its management information systems.
The Company recognizes the need to continually upgrade its management
information systems to most effectively manage its operations and customer data
base. In that regard, the Company anticipates that it will, from time to time,
require software and hardware upgrades for its present management information
systems. The Company believes that its management information systems, coupled
with these ongoing enhancements, are sufficient to sustain its present
operations and its anticipated growth for the foreseeable future. Any
interruption in the availability or use of the management information systems as
a result of system failure or otherwise could have a material adverse effect on
the Company's operations. The Company does not currently have a redundant or
back-up telephone system and any interruption in telephone service could have a
material adverse effect on the Company's operations.
DEPENDENCE ON SENIOR MANAGEMENT
The Company's future performance will depend to a significant extent upon
the efforts and abilities of certain members of senior management, in particular
those of Michael P. Krasny, Gregory C. Zeman, Daniel B. Kass, Harry J. Harczak,
Jr., Daniel F. Callen, Paul A. Kozak, James Shanks, Donald Gordon and Mary
Gerlits, who serve as Chief Executive Officer, President, Vice President-Sales,
Chief Financial Officer, Vice President-Finance, Vice President-Purchasing, Vice
President-MIS, Vice President-Advertising and Vice President-Human Resources,
respectively. The loss of service of one or more of these persons could have an
adverse effect on the Company's business. Messrs. Krasny, Zeman and Kass are
subject to employment agreements with the Company. The Company's success and
plans for future growth will also depend on its ability to hire, train and
retain skilled personnel in all areas of its business.
POTENTIAL QUARTERLY FLUCTUATIONS AND VOLATILITY OF STOCK PRICE
The Company could experience variability in its net sales and net income on
a quarterly basis as a result of many factors, including the condition of the
personal computer industry in general, shifts in demand for hardware and
software products and the introduction of new products or upgrades. The
Company's operating results are also highly dependent upon its level of gross
profit as a percentage of net sales which fluctuates due to numerous factors
which may be outside of the Company's control. Such factors include the
availability of opportunistic purchases, changes in prices from suppliers,
rebate and incentive programs available from
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suppliers, general competitive conditions, changes in currency exchange rates
and the relative mix of products sold during the period.
The technology sector of the United States stock markets has experienced
substantial volatility in recent periods, and the market price of the Company's
common stock has, likewise, experienced volatility during these periods.
Numerous conditions which impact the technology sector or the stock market in
general or the Company in particular, whether or not such events relate to or
reflect upon the Company's operating performance, could adversely affect the
market for the Company's common stock. Furthermore, fluctuations in the
Company's operating results, increased competition, reduced vendor incentives
and trade credit, higher postage and operating expenses, and other developments,
could have a significant impact on the market price of the common stock.
RELIANCE ON VENDORS AND PRODUCT LINES
The Company acquires products for resale both directly from manufacturers
and indirectly through distributors and other sources. The Company is generally
authorized by manufacturers to sell via direct marketing all or certain products
offered by the manufacturer. The Company's authorization with each manufacturer
provides for certain terms and conditions, which may include one or more of the
following: product return privileges, price protection policies, purchase
discounts and vendor incentive programs, such as purchase rebates and
cooperative advertising reimbursements. Additionally, certain products are
subject to manufacturer allocation, which limits the number of units of such
products available to resellers, including the Company. The Company's business
and results of operations may be adversely affected if the terms and conditions
of the Company's authorizations were significantly modified or if certain
products become unavailable to the Company, whether such unavailability is
because the manufacturer terminates the Company's authorization or the product
is subject to allocation or otherwise. In addition, the relocation of key
distributors utilized in the Company's just-in-time purchasing model could
adversely impact the Company's results of operations.
No individual vendor exceeded 10% of the Company's total purchases during
the twelve months ended December 31, 1995. For the nine months ended September
30, 1996, Toshiba America Incorporated and Ingram Micro were the only vendors
from whom purchases exceeded 10% of total purchases. The loss of either of these
vendors or any other key vendors could have an adverse effect on the Company.
Vendors currently provide the Company with trade credit as well as
substantial incentives in the form of discounts, rebates, credits, and
cooperative advertising reimbursement. Cooperative advertising reimbursements,
which represent the largest proportion of vendor incentives, were 2.1% of net
sales for the twelve months ended December 31, 1995 and the nine months ended
September 30, 1996. A reduction in, discontinuance of, or significant delay in
receiving trade credit or incentives could adversely affect the Company's
profitability and cash flow.
INVENTORY MANAGEMENT
Given the rapid technological changes that affect the market for products
sold by the Company, the Company seeks to minimize its inventory exposure
through a variety of inventory control procedures and policies, including
certain vendor programs. However, there can be no assurance that such practices
will continue or that unforeseen product developments will not adversely impact
the Company's operations. The Company maintained an investment in product
inventory of $27.4 million and $46.0 million at December 31, 1995 and at
September 30, 1996, respectively, of which approximately $174,000 (.79%) and
$313,000 (.76%), respectively, of product inventory on-hand was more than 90
days old. The Company's annualized inventory turn-over was 22 and 21 for the
twelve months ended December 31, 1995 and the nine months ended September 30,
1996, respectively.
The Company periodically takes advantage of cost savings associated with
certain opportunistic bulk inventory purchases. Such opportunistic bulk
purchases could increase the Company's exposure to inventory obsolescence.
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INDUSTRY EVOLUTION AND PRICE CHANGES
The microcomputer industry has evolved as a result of, among other things,
the development of new technologies which are translated by manufacturers into
new products and applications. The Company has been and will continue to be
dependent on the continued development of new technologies and products by its
vendors, as well as the acceptance of the new products by end-users. A decrease
in the rate of development of new technologies and new products by manufacturers
could have a material adverse effect on the Company's growth prospects and
results of operations.
Additionally, the industry has become more accepting of large-volume,
cost-effective channels of distribution such as computer superstores, consumer
electronic and office supply superstores, national direct marketers and mass
merchants. In addition, several of the Company's competitors are attempting to
market computer products through electronic commerce, including the Internet.
While these efforts to date represent only a small percentage of industry-wide
sales, such sales may grow if end-user acceptance of electronic commerce
increases. Although the Company offers products for sale via electronic
commerce, there can be no assurance that the Company's sales via electronic
commerce will meet or exceed sales levels generated by competitors.
The current industry configuration may result in increased pricing
pressures. Decreasing prices of microcomputers and related products, resulting
in part from technological changes, may require the Company to sell a greater
number of products to achieve the same level of net sales and gross profit. Such
a trend could make it more difficult for the Company to continue to increase its
net sales and earnings growth. In addition, if the growth rate of microcomputer
sales were to slow down, the Company's operating results could be adversely
affected.
COMPETITION
The microcomputer products industry is highly competitive. The Company
competes with a large number and variety of resellers of microcomputer and
related products. In the hardware category, the Company competes with
traditional microcomputer retailers, computer superstores, consumer electronic
and office supply superstores, mass merchandisers, national direct marketers and
value-added resellers. In the software and accessories categories, the Company
generally competes with these same resellers as well as specialty retailers and
resellers. Certain national computer resellers also have established or acquired
their own direct marketing operations. In addition, as a result of improving
technology, certain software manufacturers have developed and may continue to
develop sales methods that allow customers to download software programs and
packages directly onto the customer's system through the use of modem
telecommunications. The Company also competes with distributors and
manufacturers that sell hardware and software directly to certain customers.
Several of the Company's current and potential competitors are larger and have
substantially greater resources than the Company. Additionally, several
competitors in the direct market industry have raised capital in the public
markets through initial and subsequent public offerings. The increased
visibility of these companies and their access to the capital markets may
improve their market position and their ability to compete with the Company. The
Company believes that competition may increase in the future, which could
require the Company to reduce prices, increase advertising expenditures or take
other actions which may have an adverse effect on the Company's operating
results.
SHIPPING, POSTAGE AND PAPER COSTS
Shipping, postage and paper costs are significant expenses in the operation
of the Company's business. The Company ships its products to customers generally
by United Parcel Service, Federal Express and other overnight delivery and
surface services. The Company generally invoices customers for shipping and
handling charges. There can be no assurance that future increases in the cost of
commercial delivery services can be passed on to the Company's customers, which
could have an adverse effect on the Company's operating results. Additionally,
strikes or other service interruptions by such shippers could adversely affect
the Company's ability to market or deliver product on a timely basis.
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The Company incurs substantial paper and postage costs related to its
marketing activities. Although these costs are partially offset by cooperative
advertising rebates from vendors, any increases in postal or paper costs (paid
by the Company for its catalog production and mailings) could have an adverse
effect on the Company's operating results.
STATE SALES TAX COLLECTION
The Company presently collects retail occupation tax, commonly referred to
as sales tax, or other similar tax only on sales of products to non-exempt
residents of the State of Illinois. Various states have sought to impose on
direct marketers the burden of collecting state sales taxes on the sale of
products shipped to that state's residents. The United States Supreme Court has
ruled that the various states, absent Congressional legislation, may not impose
tax collection obligations on an out-of-state mail order company whose only
contacts with the taxing state are the distribution of catalogs and other
advertisement materials through the mail and whose subsequent delivery of
purchased goods is by U.S. mail or interstate common carriers. Although a 1995
New York state court case has imposed tax collection obligations on out-of-state
companies, one of which was a mail order company whose contacts with the other
state consisted of visiting the state several times a year to aid customers or
visiting stores stocking their goods, the Company believes its operations are
different from the operations of the companies in that case and thus do not give
rise to tax collection obligations. However, the Company cannot predict the
level of contact with any state which would give rise to future or past tax
collection obligations within the parameters of the Supreme Court case.
Additionally, within the first or second quarter of 1997, the Company
anticipates that certain legislation will be reintroduced in the United States
Senate which, if passed, would impose state sales tax collection obligations on
out-of-state mail order companies such as the Company, whose sales to residents
of the taxing state exceed $100,000 per year in the aggregate. The Company
believes its present sales to residents of numerous states would exceed this
level. If the bill is enacted, or the Company is deemed to have a physical
presence in one or more states, the imposition of a tax collection obligation on
the Company may result in additional administrative expenses to the Company and
price increases to the customer that could adversely affect the Company.
LEGAL PROCEEDINGS
In June, 1993 following the Company's initial public offering, a former
officer, director and shareholder of the Company filed a complaint against the
Company and its Chairman and Chief Executive Officer, Michael P. Krasny,
alleging violations of the federal securities laws, fraud and breach of
fiduciary duty in connection with the 1990 purchase by the Company of the former
shareholder's 20% interest in the Company. The Company and Mr. Krasny believe
that the purchase of the shares was conducted honestly and properly and that the
suit by the shareholder is without merit. The Company and Mr. Krasny are
committed to vigorously defending the litigation. Mr. Krasny has agreed to
indemnify and reimburse the Company for all damages and expenses, net of tax
benefits received by the Company, related to this action. The applicable
accounting rules provide that certain amounts assumed by Mr. Krasny on behalf of
the Company be recorded by the Company for financial reporting purposes as an
expense and a related increase to paid-in capital, net of tax effects.
Accordingly, while having no impact on the Company's cash flow, any such
expenses incurred by Mr. Krasny on behalf of the Company, including litigation,
settlement or judgment costs, would negatively impact the Company's results of
operations in the period incurred. If this action goes to trial, the expenses
attributable thereto are expected to increase significantly which, although
reimbursed by Mr. Krasny, will result in a decrease in the Company's reported
results of operations. Should a negative result occur in this action, Mr. Krasny
could be required to transfer certain of his shares of Common Stock to such
former shareholder or determine to sell certain of his shares to finance such
amounts. Such a transfer or sale by Mr. Krasny could adversely impact the market
price of the Common Stock.
CONTROL BY INSIDERS
Upon the completion of the offering, Michael P. Krasny and certain trusts
and entities controlled by Mr. Krasny and created for the benefit of Mr.
Krasny's family and certain employees will possess up to 58.9%
7
<PAGE> 9
of the total combined voting power of the Company's outstanding stock.
Accordingly, Mr. Krasny will be able to determine the outcome of all corporate
decisions, effect all corporate transactions (including mergers, consolidations
and the sale of all or substantially all of the Company's assets), or prevent or
cause a change in control in the Company without the consent of the other
holders of the Common Stock. In addition, Mr. Krasny may be able to cause the
Company to file a registration statement enabling him to sell additional shares
in the public market.
However, in order to maintain and motivate the Company's workforce, in 1993
Mr. Krasny granted out of his personal holdings restricted stock and options to
acquire Common Stock to certain employees, the effect of which could be to
reduce, over time, the total voting power possessed by Mr. Krasny. After giving
effect to the exercise of all of the options issued by, and the vesting of the
restricted stock granted by, Mr. Krasny under the MPK Stock Option Plan and MPK
Restricted Stock Plan, respectively, and assuming that no additional shares of
Common Stock are issued by the Company, Mr. Krasny will own up to approximately
41.4% of the issued and outstanding shares of Common Stock. In addition, the
Company has adopted stock option plans pursuant to which it is authorized to
issue up to 4,110,260 shares of its Common Stock.
SHARES ELIGIBLE FOR FUTURE SALE AND ISSUANCE OF ADDITIONAL SHARES
There will be 21,524,986 shares of Common Stock outstanding after
completion of this offering, of which 12,723,802 shares are "restricted shares"
for purposes of the Securities Act of 1933, as amended (the "Securities Act").
All of the restricted shares are currently eligible for sale into the market,
subject to the limitations set forth in Rule 144 promulgated under the
Securities Act and the terms of the MPK Restricted Stock Plan and the MPK Stock
Option Plan. Sales of a substantial number of shares of Common Stock in the
public market, whether by purchasers in the offering or other shareholders of
the Company, could adversely affect the prevailing market price of the Common
Stock and could impair the Company's future ability to raise capital through an
offering of its equity securities. In addition, the issuance of additional
shares of stock by the Company could result in the dilution of voting power of
the shares of Common Stock purchased in the offering.
8
<PAGE> 10
USE OF PROCEEDS
There will be no proceeds or property received by the Company or the Plan
upon completion of this offering. The Shares of Common Stock being offered
hereby by the Plan, and the options being offered by the Company, are being
offered in connection with the Modification for the purposes of (i) rewarding
the Plan Participants for their contributions to the past success of the
Company, (ii) incenting the Plan Participants to remain in the employ of the
Company past January 1, 2000, the original Plan vesting date and (iii)
motivating the Plan Participants to continue to exert their efforts toward the
future performance of the Company. Accordingly, in order to receive the Shares
being offered hereby, the Plan Participants who elect the Modification will be
required to agree to extend the vesting dates for the shares remaining in their
Plan account after the completion of this offering. See "Plan of Distribution."
PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY
The following table sets forth the high and low sales prices for the
Company's Common Stock (as adjusted for the Stock Split (as defined below)) for
the periods indicated as reported by the Nasdaq National Market. Trading began
in the Company's Common Stock on May 27, 1993. As of September 30, 1996, the
Company believes that there were approximately 2,400 beneficial owners of Common
Stock.
<TABLE>
<CAPTION>
PRICE RANGE
------------------
QUARTER ENDED HIGH LOW
------------- ---- ---
<S> <C> <C> <C> <C>
March 31, 1995.............................................. $26 5/32 $20 1/3
June 30, 1995............................................... 36 5/32 22 1/2
September 30, 1995.......................................... 42 1/3 32 53/64
December 31, 1995........................................... 38 1/3 24 53/64
March 31, 1996.............................................. 39 5/32 22 1/2
June 30, 1996............................................... 59 32 53/64
September 30, 1996.......................................... 74 35
December 31, 1996........................................... 72 1/4 59 1/4
March 31, 1997 (through January 30, 1997)................... 70 52
</TABLE>
The last reported sale price of the Company's Common Stock on January 30,
1997 was $63.00 per share.
The Company has never paid cash dividends on its Common Stock and does not
anticipate paying cash dividends on Common Stock in the foreseeable future. The
payment of cash dividends on shares of Common Stock will depend upon the
earnings of the Company, the Company's capital requirements and other financial
factors which are considered relevant by the Company's Board of Directors. On
July 15, 1996, the Company effected a stock split in the form of a stock
dividend pursuant to which each shareholder of record on July 5, 1996 received
three shares of the Company's Common Stock for every two shares of Common Stock
owned as of that date (the "Stock Split").
9
<PAGE> 11
SELLING SHAREHOLDER
The following table sets forth information regarding the beneficial
ownership of the Company's Common Stock as of December 31, 1996 and the number
of shares offered pursuant to this Prospectus by the Plan, which is the sole
Selling Shareholder.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
PRIOR TO OFFERING(1) AFTER OFFERING(1)(3)
---------------------- NUMBER OF ----------------------
NUMBER OF SHARES BEING NUMBER OF
NAME SHARES PERCENT OFFERED(2) SHARES PERCENT
---- --------- ------- ------------ --------- -------
<S> <C> <C> <C> <C> <C>
MPK Restricted Stock Plan(1)............. 554,736 2.6% 138,684 416,052 1.9%
</TABLE>
- -------------------------
(1) The Plan is administered by Michael P. Krasny, the Company's Chairman and
Chief Executive Officer. In his capacity as Administrator of the Plan, Mr.
Krasny exercises sole voting power of the shares. In addition to the Plan
shares, Mr. Krasny acts as administrator of the MPK Stock Option Plan, which
holds 3,343,838 shares of the Company's Common Stock for the benefit of
certain Company officers. In addition, Mr. Krasny owns 8,903,655 shares of
the Company's Common Stock directly, and has indirect ownership of 8,560
shares owned by Mr. Krasny's minor stepson and shares in certain trusts. The
Plan's mailing address is Michael P. Krasny, Administrator, MPK Restricted
Stock Plan c/o CDW Computer Centers, Inc., 1020 East Lake Cook Road, Buffalo
Grove, Illinois 60089.
(2) Represents 25% of all shares being held in the Plan, which shares are
eligible for accelerated vesting under the Modification.
(3) Assumes all Plan Participants elect to be treated under the Modification.
The shares remaining in the accounts of Plan Participants who elect the
Modification will vest in equal 25% installments on January 1, 2000, 2001,
2002 and 2003. Any Plan Participants who do not elect the Modification will
vest in all of their Plan shares on January 1, 2000, as originally
scheduled, provided they remain continuously employed by the Company through
such date. See "Plan of Distribution."
10
<PAGE> 12
PLAN OF DISTRIBUTION
The shares and accompanying options being offered hereby are being offered
in connection with a proposed modification (the "Modification") to the MPK
Restricted Stock Plan (the "Plan"), a plan established in 1993 by Mr. Krasny,
the Company's Chairman and Chief Executive Officer, out of his own Company
shareholdings, to reward certain of the Company's employees ("Plan
Participants") for past service on behalf of the Company. Pursuant to the
present terms of the Plan, each Plan Participant will receive a designated
number of shares of the Company's Common Stock on January 1, 2000, assuming the
Plan Participant remains continuously employed by the Company until such date.
Plan Participants who fail to remain continuously employed until such date
(other than by reason of death or disability) will forfeit their right to their
designated shares and such shares will revert to Mr. Krasny. The Plan and the
Company are proposing modifications to the Plan in order to permit Plan
Participants to receive a portion of their Plan shares prior to the original
vesting date, while at the same time further encouraging Plan Participants to
remain in the employ of the Company after the January 1, 2000 vesting date, and
motivating the Plan Participants to exert their best efforts toward the future
performance of the Company.
Under the Modification proposal, each Plan Participant will have the right
to elect, in his/her sole and absolute discretion, to continue to be treated
under the Plan as presently in effect or to adopt a modified vesting schedule
for his/her shares. The modified vesting schedule would provide that any
electing Plan Participant would receive accelerated vesting for 25% of the
shares allocated to his/her account. The accelerated vesting date shall be the
date upon which Mr. Krasny, as Plan Administrator, shall complete all actions
necessary to distribute the Shares to the Plan Participants electing the
Modification. Such date is not expected to be later than March 31, 1997. The
vesting dates for the remaining 75% of the shares would be modified to vest in
equal 25% installments on January 1, 2000, 2001, 2002 and 2003.
Additionally, any employee electing the Modification would receive options
from the Company to acquire the Company's Common Stock equal to the number of
shares received upon accelerated vesting. The exercise price for these options
would be the closing market price of the Company's Common Stock on the date
immediately preceding the date the Plan shares are distributed to the Plan
Participants electing the Modification and would vest in equal 25% installments
on January 1, 2001, 2002, 2003 and 2004. These options will be granted under the
CDW 1996 Incentive Stock Option Plan, for which a registration statement on Form
S-8 will be filed by the Company prior to any option exercise date. See
"Description of the Stock Option Plan."
The Shares being offered hereby represent 25% of all shares held under the
Plan, being the shares eligible for accelerated vesting under the Modification.
Plan Participants electing the Modification will receive their portion of the
Plan shares directly from the Plan on the accelerated vesting date. There will
be no underwriter or coordinating broker acting in connection with this
offering. All of the expenses of the offering, including filing, legal and
transfer agent fees shall be borne by the Company.
Upon receipt of the Shares, Plan Participants may, at their discretion, (i)
hold the Shares for investment or for future sale or (ii) effect a sale of the
Shares pursuant to an offering registered under the Securities Act of 1933, as
amended, through a managing underwriter or underwriters. The Company may assist
the Plan Participants with a registered resale of the Shares by Plan
Participants. In the event the Company arranges for the sale of the Shares, the
manner and terms of such offering, including the names of any underwriters or
dealers, the purchase price or prices of the Shares, the proceeds to the Plan
Participants from the sale of any Shares, any public offering price, any
underwriting discount or commission and any discounts, commissions or
concessions allowed or reallowed or paid by any underwriter to other dealers,
shall be set forth in a separate prospectus.
Underwriters or dealers who participate in a distribution of the Shares and
their officers, directors and controlling persons, may be entitled under
agreements to be entered into with the Company to indemnification by the Company
against certain liabilities, including liabilities under the Securities Act of
1933, or to contribution with respect to payments which such underwriters or
dealers may be required to make in respect of such liabilities.
11
<PAGE> 13
The Company has entered into a letter agreement with the Plan and Mr.
Krasny as administrator thereof (collectively, the "Indemnitees") pursuant to
which, among other things, the Company has agreed to indemnify and hold the
Indemnitees harmless, to the full extent permitted by law, from and against any
and all losses, claims, damages, liabilities, judgments, fines, penalties,
amounts paid in settlement and expenses (including reasonable attorney's fees
and costs of investigation and preparation) incurred by the Indemnitees in
connection with any action, claim, suit or other proceeding instituted or
threatened against the Indemnitees by any person, firm, corporation,
governmental body, agency or instrumentality, or other entity (including,
without limiting the generality of the foregoing, any action, claim, suit or
other proceeding brought by one or more of the security holders of the Company,
or in the name thereof), by the fact of, or in any way relating to, the
Indemnitees serving as a director or officer, or in a similar capacity of the
Company or of any of its affiliates, at any time, except to the extent that any
such liabilities or expenses result from the Indemnitees' willful misconduct,
gross negligence, fraud, acts or omissions not in good faith or transactions in
which the Indemnitees derived an improper personal benefit, in each case, as
determined by a court of competent jurisdiction in a final judgment from which
no further appeal can be taken. It shall not be deemed to be willful misconduct,
gross negligence or fraud if the Indemnitees act in good faith in accordance
with recommendations or policies of the management or any third party
professional advisor of the Company or its affiliates.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
DESCRIPTION OF THE STOCK OPTION PLAN
The Company has established the CDW 1996 Incentive Stock Option Plan (the
"Stock Option Plan") effective as of November 14, 1996. A maximum of 3,000,000
shares of Common Stock in aggregate, subject to adjustment, have been initially
authorized for the granting of stock options under the Stock Option Plan. The
purposes of the Stock Option Plan are to advance the interests of the Company
and its shareholders by providing Company employees with an additional incentive
to continue their efforts on behalf of the Company, as well as to attract to the
Company people of experience and ability. The Stock Option Plan is intended to
comply with Rule 16b-3 of the Securities Exchange Act of 1934, as amended.
It is expected that all directors, officers, employees and consultants of
the Company or its subsidiaries will be eligible to participate under the Stock
Option Plan, as deemed appropriate by the Compensation and Stock Option
Committee of the Company's Board of Directors. Recipients of options under the
Stock Option Plan will not pay any cash consideration to the Company to receive
the options. The Stock Option Plan will be administered by the Compensation and
Stock Option Committee. The options will have exercise prices at least equal to
100% of the fair market value of the Common Stock at date of grant. Options will
expire no later than the twentieth anniversary of the date of grant. An option
holder will be able to exercise options from time to time, subject to vesting.
Options will not vest prior to the third anniversary of the date of grant,
except that options will vest immediately upon the earlier of death or
disability of a participant. Upon termination for cause by the Company, all
vested and unvested options will be forfeited. Upon termination of employment
with the Company, other than for cause by the Company or upon death or
disability, all unvested options shall be forfeited and vested options shall be
exercisable only during the ninety (90) day period following termination of
employment. Subject to the above conditions, the exercise price, duration of the
options and vesting provisions will be set by the Compensation and Stock Option
Committee in its discretion. The Stock Option Plan can be amended by the
Compensation and Stock Option Committee for any reason, provided,
12
<PAGE> 14
however, that shareholder approval is required to effect any amendment which
alters the terms or conditions of any outstanding options.
THIS DESCRIPTION OF THE STOCK OPTION PLAN IS MERELY INTENDED TO BE A
SUMMARY AND IS QUALIFIED IN ITS ENTIRETY BY THE STOCK OPTION PLAN ITSELF, A COPY
OF WHICH HAS BEEN FILED AS AN EXHIBIT TO THE REGISTRATION STATEMENT OF WHICH
THIS PROSPECTUS IS A PART. PLAN PARTICIPANTS ELECTING THE MODIFICATION ARE URGED
TO READ THE STOCK OPTION PLAN IN FULL AND DIRECT ANY QUESTIONS OR REQUESTS FOR
INFORMATION TO MR. HARRY J. HARCZAK, JR., THE COMPANY'S CHIEF FINANCIAL OFFICER.
SUMMARY OF TAX EFFECTS
Plan Participants who elect the Modification will, upon completion of this
offering, recognize compensation income in an amount equal to the product of (i)
the number of shares which immediately vest (25% of their Plan shares) and (ii)
the fair market value for the Company's Common Stock on the accelerated vesting
date. This income is subject to ordinary income tax for both federal and state
tax purposes, and federal social security tax (FICA) and medicare tax, all for
the 1997 tax year. The tax obligations noted herein are the responsibility of
each Plan Participant. Such tax obligations may be met, in whole or part,
through withholding from the proceeds of the subsequent sale of any Plan shares,
direct payments by Plan Participants to taxing authorities, or withholding from
other compensation, all as is permissible, or required, by applicable statute,
rule or regulation.
The stock options to be received by Plan Participants electing the
Modification will not result in taxable income to the Plan Participants until
such options are exercised. Upon exercise, the Plan Participants will recognize
ordinary income in an amount equal to the product of (i) the difference between
the fair market value of the Company's Common Stock on the date of exercise and
the option exercise price, assuming the fair market value on the date of
exercise exceeds the exercise price, and (ii) the number of options exercised.
The income generated on exercise of these options also will be subject to
federal, state, FICA and medicare tax. Neither the Plan nor the Stock Option
Plan are subject to the provisions of the Employee Retirement Income Security
Act of 1974, as amended, nor are they qualified plans under the Internal Revenue
Code of 1986, as amended.
THE FOREGOING SUMMARY OF TAX EFFECTS RELATED TO THE MODIFICATION IS A
SUMMARY ONLY AND IS NOT INTENDED TO BE COMPREHENSIVE IN ITS SCOPE. EACH PLAN
PARTICIPANT SHOULD CONSULT HIS/HER OWN TAX AND/OR LEGAL REPRESENTATIVE TO
DETERMINE THE EFFECT THE MODIFICATION WILL HAVE ON HIS/HER PERSONAL FINANCIAL
SITUATION.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby is being passed
upon for the Plan by Saitlin, Patzik, Frank & Samotny Ltd., Chicago, Illinois.
EXPERTS
The consolidated financial statements and financial statement schedule of
the Company appearing in the Company's Annual Report on Form 10-K for the year
ended December 31, 1995 have been audited by Coopers & Lybrand L.L.P.
independent accountants, as set forth in their reports thereon included therein
and incorporated herein by reference. The consolidated financial statements and
financial statement schedule of the Company are incorporated by reference herein
in reliance upon the reports of such firm given the authority of such firm as
experts in accounting and auditing.
13
<PAGE> 15
- -------------------------------------------------------
- -------------------------------------------------------
NO DEALER, SALES REPRESENTATIVE, OR OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THIS
PROSPECTUS, AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE SELLING SHAREHOLDER.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY BY ANYONE IN ANY JURISDICTION
IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON
MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE
ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE OF THE PROSPECTUS.
-------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Incorporation of Certain Documents by
Reference............................ 2
Additional Information................. 2
Principal Executive Offices............ 2
Risk Factors........................... 3
Use of Proceeds........................ 9
Price Range of Common Stock and
Dividend Policy...................... 9
Selling Shareholder.................... 10
Plan of Distribution................... 11
Description of the Stock Option Plan... 12
Summary of Tax Effects................. 13
Legal Matters.......................... 13
Experts................................ 13
</TABLE>
- -------------------------------------------------------
- -------------------------------------------------------
- -------------------------------------------------------
- -------------------------------------------------------
138,684 SHARES
AND
138,684 OPTIONS
CDW LOGO
CDW COMPUTER CENTERS, INC.
COMMON STOCK
------------------------
PROSPECTUS
, 1997
------------------------
- -------------------------------------------------------
- -------------------------------------------------------
<PAGE> 16
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee......... $ 2,600.33
Printing and Engraving Expenses............................. 10,000+
Legal Fees and Expenses..................................... 20,000+
Transfer Agent Fees and Expenses............................ 5,000+
Miscellaneous............................................... 5,000+
----------
Total..................................................... $42,600.33+
==========
</TABLE>
- -------------------------
+ Estimated.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The indemnification provisions applicable to the directors of the Company
are set out in Article Ninth of the Certificate of Incorporation and Article VII
of the By-Laws, respectively, as follows:
CERTIFICATE OF INCORPORATION:
Ninth: The Corporation shall, to the full extent permitted by Section 8.75
of the Illinois Business Corporation Act, as amended from time to time,
indemnify all persons whom it may indemnify pursuant thereto.
BYLAWS:
ARTICLE VII
INDEMNIFICATION OF
DIRECTORS, EMPLOYEES AND AGENTS
SECTION 1. The corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or who is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonable
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment or settlement,
conviction or upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
SECTION 2. The corporation may indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment in
its favor by reason of the fact that he is or was a director, officer, employee
or agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable for negligence or misconduct in the
S-1
<PAGE> 17
performance of his duty to the corporation unless and only to the extent that
the court in which such action or suit was brought shall determine upon
application, that despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the court shall deem proper.
SECTION 3. To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in Sections 1 and 2, or in defense of any
claim, issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
SECTION 4. Any indemnification under Sections 1 and 2 (unless ordered by a
court) shall be made by the corporation only as authorized in the specific case
upon a determination that indemnification of the director, officer, employee or
agent is proper in the circumstances because he has met the applicable standard
of conduct set forth in Sections 1 and 2. Such determination shall be made (a)
by the Board of Directors by a majority vote of a quorum consisting of directors
who were not parties to such action, suit or proceedings, or (b) if such a
quorum is not obtainable, or, even if obtainable, a quorum of disinterested
directors so directs, by independent legal counsel in a written opinion, or (c)
by the shareholders.
SECTION 5. Expenses incurred in defending a civil or criminal action, suit
or proceeding may be paid by the corporation in advance of the final disposition
of such action, suit or proceeding, as authorized by the Board of Directors in
the specific case, upon receipt of an undertaking by or on behalf of the
director, officer, employee or agent to repay such amount, unless it shall
ultimately be determined that he is entitled to be indemnified by the
corporation authorized in this Article.
SECTION 6. The indemnification provided by this article shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any contract, agreement, vote of shareholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such a person.
SECTION 7. The corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the corporation would have the power to indemnify him
against such liability under the provisions of this Article.
CONTRACTUAL:
The Company has entered into a letter agreement with the Plan and Michael
P. Krasny, as Administrator thereof, (collectively, the "Indemnitees") pursuant
to which, among other things, the Company has agreed to indemnify and hold the
Indemnitees harmless, to the full extent permitted by law, from and against any
and all losses, claims, damages, liabilities, judgments, fines, penalties,
amounts paid in settlement and expenses (including reasonable attorneys' fees
and costs of investigation and preparation) incurred by the Indemnitees in
connection with any action, claim, suit or other proceeding instituted or
threatened against the Indemnitees by any person, firm, corporation,
governmental body, agency or instrumentality, or other entity (including,
without limiting the generality of the foregoing, any action, claim, suit or
other proceeding brought by one or more of the security holders of the Company,
or in the name thereof), by reason of the fact of, or in any way relating to,
the Indemnitees serving as a director or officer, or in a similar capacity of
the Company or of any of its affiliates, at any time, except to the extent that
any such liabilities or expenses result from the Indemnitees' willful
misconduct, gross negligence, fraud, acts or omissions not in good faith or
transactions in which the Indemnitees derived an improper personal benefit, in
each case, as determined by a court of competent jurisdiction in a final
judgment from which no further appeal can be taken. It shall not be deemed to be
willful misconduct, gross negligence or fraud if the Indemnitees act in good
faith in accordance with recommendations or policies of the management or any
third party professional advisor of the Company or its affiliates.
S-2
<PAGE> 18
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES. None
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF DOCUMENT
- ------- -----------------------
<C> <S>
2(a) Stock Purchase Agreement for Northbrook Ad Agency, Inc.(i)
2(b) Agreement and Plan of Merger by and between CDW Computer
Centers, Inc. (a Delaware corporation) and CDW Computer
Centers, Inc. (an Illinois corporation)(i)
2(c) Agreement and Plan of Merger by and between CDW Computer
Centers, Inc. (a Delaware corporation) and CDW Computer
Centers, Inc. (an Illinois corporation)(vii)
3(a) Certificate of Incorporation of CDW Computer Centers,
Inc.(i)
3(b) Bylaws of CDW Computer Centers, Inc.(i)
3(c) Articles of Incorporation of CDW Computer Centers, Inc. (an
Illinois corporation)(vii)
3(d) Bylaws of CDW Computer Centers, Inc. (an Illinois
corporation)(vii)
4 Specimen of Certificate for Common Stock(i)
5 Opinion of Saitlin, Patzik, Frank & Samotny Ltd. re:
Legality
10(a) CDW Computer Centers, Inc. Employees' Defined Contribution
Retirement Plan and Trust(i)
10(b) CDW Incentive Stock Option Plan(i)
10(c) MPK Stock Option Plan and Agreement(i)
10(d) MPK Restricted Stock Plan and Agreement(i)
10(e) Employment and Non-Competition Agreement dated as of March
15, 1993 between the Company and Michael P. Krasny(i)
10(f) Employment and Non-Competition Agreement dated as of March
15, 1993 between the Company and Gregory C. Zeman(i)
10(g) Employment and Non-Competition Agreement dated as of March
15, 1993 between the Company and Daniel B. Kass(i)
10(h) Employment and Non-Competition Agreement dated as of March
15, 1993 between the Company and Mary C. Gerlits(i)
10(i) Promissory Note dated December 31, 1992 in the principal
amount of $4,000,000 payable to Michael P. Krasny(i)
10(j) Security Agreement dated as of December 31, 1992 between the
Company and Michael P. Krasny(i)
10(k) Loan Modification Agreement dated as of March 17, 1993
between the Company and Michael P. Krasny(i)
10(l) Promissory Note dated March 19, 1993 in the principal amount
of $1,000,000 payable to Gregory C. Zeman(i)
10(m) Security Agreement dated as of March 19, 1993 between the
Company and Gregory C. Zeman(i)
10(n) Tax Indemnification Agreement to be dated as of the closing
between the Company and Michael P. Krasny(i)
10(o) Lease Agreement dated July 31, 1989 between the Company
(f/k/a MPK Computing, Inc.) as lessee, and IJM Management
Limited Partnership, as agent for the owner, as lessor,
relating to the premises located in Chicago, Illinois(i)
10(p) Lease Agreement dated February 22, 1993 between the Company,
as lessee, and Chevy Chase Business Park Limited
Partnership, as lessor, relating to the premises located in
Buffalo Grove, Illinois(i)
10(q) Loan and Security Agreement dated as of January 4, 1993
between the Company and American National Bank & Trust
Company of Chicago(i)
10(r) Indemnification Agreement between the Company and Michael P.
Krasny to be dated as of May 19, 1993(i)
10(s) CDW Director Stock Option Plan(i)
10(t) Second Loan Modification Agreement dated as of March 22,
1993 between the Company and Michael P. Krasny(i)
</TABLE>
S-3
<PAGE> 19
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION OF DOCUMENT
<C> <S>
10(u) Note dated April 30, 1993 between the Company and American National Bank & Trust Company of Chicago(i)
10(v) Indemnification and Hold Harmless Agreement between Michael P. Krasny and the Company dated May 14,
1993(i)
10(w) First Lease Amendment dated as of May 13, 1993 to Lease Agreement dated February 22, 1993 between the
Company, as lessee, and Chevy Chase Business Park Limited Partnership, as lessor, relating to the
premises located in Buffalo Grove, Illinois(i)
10(x) Purchase Agreement dated September 21, 1993 between the Company and C.W. Marketing, Inc.(ii)
10(y) Note dated July 31, 1993 between the Company and American National Bank and Trust Company of
Chicago(iii)
10(z) Note dated March 18, 1994 between the Company and American National Bank and Trust Company of
Chicago(iv)
10(aa) Form of Indemnification and Hold Harmless Agreement between the Company and the Selling
Stockholders(v)
10(bb) Form of Indemnification and Hold Harmless Agreement between the Company and the Selling Stockholders
(vii)
10(cc) Master Note between the Company and the Northern Trust Company dated June 30, 1995 (vii)
10(dd) Revolving Note between the Company and LaSalle National Bank dated June 30, 1995 (vii)
10(ee) Lease Agreement dated January 25, 1995 by and between the Company, as lessee, and IJM Management
Limited Partnership, as agent for the owner, as lessor, relating to the premises located in Chicago,
Illinois(vi)
10(ff) Purchase/Sale Agreement dated and effective February 12, 1996 between the Company, as buyer, and
Continental Executive Park, L.L.C., as seller, relating to the premises located in Vernon Hills,
Illinois, made on March 14, 1996 (viii)
10(gg) Revolving Note between the Company and LaSalle National Bank dated June 30, 1996 (ix)
10(hh) Revolving Note between the Company and The Northern Trust Company dated June 30, 1996 (ix)
10(ii) Non-statutory Stock Option Agreement dated September 5, 1996 between the Company and Harry J. Harczak,
Jr. (x)
10(jj) Non-statutory Stock Option Agreement dated September 5, 1996 between the Company and James R. Shanks
(x)
10(kk) Form of Indemnification and Hold Harmless Agreement between the Company and the Selling Shareholder
10(ll) CDW 1996 Incentive Stock Option Plan
16 Letter re: change in certifying accountant(i)
21 Subsidiaries of the Registrant(i)
23(a) Consent of Coopers & Lybrand L.L.P. Independent Accountants
23(b) Consent of Saitlin, Patzik, Frank & Samotny Ltd. (included in Exhibit 5)
24 Power of Attorney (included on page S-6)
</TABLE>
- -------------------------
(i) Incorporated by reference from the exhibits filed with the Company's
registration statement (33-59802) on Form S-1 filed under the
Securities Act of 1933.
(ii) Incorporated by reference from the exhibits filed with the Company's
quarterly report (0-21796) on Form 10-Q for the quarter ended
September 30, 1993.
(iii) Incorporated by reference from the exhibits filed with the Company's
annual report (0-21796) on Form 10-K for the year ended December 31,
1993.
(iv) Incorporated by reference from the exhibits filed with the Company's
quarterly report (0-21796) on Form 10-Q for the quarter ended March
31, 1994.
(v) Incorporated by reference from the exhibits filed with the Company's
registration statement (33-78924) on Form S-1 filed under the
Securities Act of 1933.
(vi) Incorporated by reference from the exhibits filed with the Company's
quarterly report (0-21796) on Form 10-Q for the quarter ended June
30, 1995.
S-4
<PAGE> 20
(vii) Incorporated by reference from the exhibits filed with the Company's
registration statement (33-94820) on Form S-3 filed under the Securities
Act of 1933.
(viii) Incorporated by reference from the exhibits filed with the Company's
quarterly report (0-21796) on Form 10-Q for the quarter ended March 31,
1996.
(ix) Incorporated by reference from the exhibits filed with the Company's
quarterly report (0-21796) on Form 10-Q for the quarter ended June 30,
1996.
(x) Incorporated by reference from the exhibits filed with the Company's
quarterly report (0-21796) on Form 10-Q for the quarter ended September
30, 1996.
(B) FINANCIAL STATEMENT SCHEDULE
None
ITEM 17. UNDERTAKINGS.
(a) Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Act"), may be permitted to directors, officers,
and controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit, or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(b) The undersigned Registrant hereby undertakes that:
(1) To file, during any period in which offers or sales are being made
of the securities registered hereby, a post-effective amendment to this
Registration Statement:
(i) to include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement; and
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in this Registration Statement
or any material change to such information in this Registration
Statement.
(2) For purposes of determining any liability under the Act, the
information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form
of Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(3) For purposes of determining any liability under the Act, each
post-effective amendment that contains a form of Prospectus shall be deemed
to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(c) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Act, each filing of the Registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act
of 1934 (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
S-5
<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the Village of Buffalo
Grove, State of Illinois, on January 31, 1997.
CDW COMPUTER CENTERS, INC.
By: /s/ MICHAEL P. KRASNY
--------------------------------------
Michael P. Krasny,
Chief Executive Officer
Secretary and Treasurer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints each of Michael P. Krasny and Gregory C. Zeman
and each of them acting alone, his true and lawful attorneys-in-fact or agent,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any and all amendments to
this Registration Statement, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully to all intents and purposes as
they might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or their substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed on its behalf by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
/s/ MICHAEL P. KRASNY Chairman of the Board, January 31, 1997
- ----------------------------------------------------- Chief Executive
Michael P. Krasny Officer,
Secretary and
Treasurer
(Principal
Executive Officer)
/s/ GREGORY C. ZEMAN President and Director January 31, 1997
- -----------------------------------------------------
Gregory C. Zeman
/s/ DANIEL B. KASS Vice President-Sales January 31, 1997
- ----------------------------------------------------- and Director
Daniel B. Kass
/s/ JOSEPH LEVY, JR. Director January 31, 1997
- -----------------------------------------------------
Joseph Levy, Jr.
/s/ MICHELLE L. COLLINS Director January 31, 1997
- -----------------------------------------------------
Michelle L. Collins
/s/ HARRY J. HARCZAK, JR. Chief Financial January 31, 1997
- ----------------------------------------------------- Officer
Harry J. Harczak, Jr. (Principal Financial
Officer)
/s/ DANIEL F. CALLEN Vice January 31, 1997
- ----------------------------------------------------- President-Finance,
Daniel F. Callen Controller and Chief
Accounting Officer
(Principal Accounting
Officer)
</TABLE>
S-6
<PAGE> 22
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF EXHIBITS PAGE
- ------- ----------------------- ------------
<C> <C> <S> <C>
2(a) -- Stock Purchase Agreement for Northbrook Ad Agency, Inc.(i)
2(b) -- Agreement and Plan of Merger by and between CDW Computer
Centers, Inc. (a Delaware corporation) and CDW Computer
Centers, Inc. (an Illinois corporation)(i)
2(c) -- Agreement and Plan of Merger by and between CDW Computer
Centers, Inc. (a Delaware corporation) and CDW Computer
Centers, Inc. (an Illinois corporation)(vii)
3(a) -- Certificate of Incorporation of CDW Computer Centers,
Inc.(i)
3(b) -- Bylaws of CDW Computer Centers, Inc.(i)
3(c) -- Articles of Incorporation of CDW Computer Centers, Inc. (an
Illinois corporation)(vii)
3(d) -- Bylaws of CDW Computer Centers, Inc. (an Illinois
corporation)(vii)
4 -- Specimen of Certificate for Common Stock(i)
5 -- Opinion of Saitlin, Patzik, Frank & Samotny Ltd. re:
Legality
10(a) -- CDW Computer Centers, Inc. Employees' Defined Contribution
Retirement Plan and Trust(i)
10(b) -- CDW Incentive Stock Option Plan(i)
10(c) -- MPK Stock Option Plan and Agreement(i)
10(d) -- MPK Restricted Stock Plan and Agreement(i)
10(e) -- Employment and Non-Competition Agreement dated as of March
15, 1993 between the Company and Michael P. Krasny(i)
10(f) -- Employment and Non-Competition Agreement dated as of March
15, 1993 between the Company and Gregory C. Zeman(i)
10(g) -- Employment and Non-Competition Agreement dated as of March
15, 1993 between the Company and Daniel B. Kass(i)
10(h) -- Employment and Non-Competition Agreement dated as of March
15, 1993 between the Company and Mary C. Gerlits(i)
10(i) -- Promissory Note dated December 31, 1992 in the principal
amount of $4,000,000 payable to Michael P. Krasny(i)
10(j) -- Security Agreement dated as of December 31, 1992 between the
Company and Michael P. Krasny(i)
10(k) -- Loan Modification Agreement dated as of March 17, 1993
between the Company and Michael P. Krasny(i)
10(l) -- Promissory Note dated March 19, 1993 in the principal amount
of $1,000,000 payable to Gregory C. Zeman(i)
10(m) -- Security Agreement dated as of March 19, 1993 between the
Company and Gregory C. Zeman(i)
10(n) -- Tax Indemnification Agreement to be dated as of the closing
between the Company and Michael P. Krasny(i)
10(o) -- Lease Agreement dated July 31, 1989 between the Company
(f/k/a MPK Computing, Inc.) as lessee, and IJM Management
Limited Partnership, as agent for the owner, as lessor,
relating to the premises located in Chicago, Illinois(i)
</TABLE>
<PAGE> 23
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF EXHIBITS PAGE
- ------- ----------------------- ------------
<C> <C> <S> <C>
10(p) -- Lease Agreement dated February 22, 1993 between the Company,
as lessee, and Chevy Chase Business Park Limited
Partnership, as lessor, relating to the premises located in
Buffalo Grove, Illinois(i)
10(q) -- Loan and Security Agreement dated as of January 4, 1993
between the Company and American National Bank & Trust
Company of Chicago(i)
10(r) -- Indemnification Agreement between the Company and Michael P.
Krasny to be dated as of May 19, 1993(i)
10(s) -- CDW Director Stock Option Plan(i)
10(t) -- Second Loan Modification Agreement dated as of March 22,
1993 between the Company and Michael P. Krasny(i)
10(u) -- Note dated April 30, 1993 between the Company and American
National Bank & Trust Company of Chicago(i)
10(v) -- Indemnification and Hold Harmless Agreement between Michael
P. Krasny and the Company dated May 14, 1993(i)
10(w) -- First Lease Amendment dated as of May 13, 1993 to Lease
Agreement dated February 22, 1993 between the Company, as
lessee, and Chevy Chase Business Park Limited Partnership,
as lessor, relating to the premises located in Buffalo
Grove, Illinois(i)
10(x) -- Purchase Agreement dated September 21, 1993 between the
Company and C.W. Marketing, Inc.(ii)
10(y) -- Note dated July 31, 1993 between the Company and American
National Bank and Trust Company of Chicago(iii)
10(z) -- Note dated March 18, 1994 between the Company and American
National Bank and Trust Company of Chicago(iv)
10(aa) -- Form of Indemnification and Hold Harmless Agreement between
the Company and the Selling Stockholders(v)
10(bb) -- Form of Indemnification and Hold Harmless Agreement between
the Company and the Selling Stockholders (vii)
10(cc) -- Master Note between the Company and The Northern Trust
Company dated June 30, 1995. (vii)
10(dd) -- Revolving Note between the Company and LaSalle National Bank
dated June 30, 1995. (vii)
10(ee) -- Lease Agreement dated January 25, 1995 between the Company,
as lessee, and IJM Management Limited Partnership, as agent
for the owner, as lessor, relating to the premises located
in Chicago, Illinois(vi)
10(ff) -- Purchase/Sale Agreement dated and effective February 12,
1996 between the Company, as buyer, and Continental
Executive Park, L.L.C., as seller, relating to the premises
located in Vernon Hills, Illinois, made on March 14, 1996
(viii)
10(gg) -- Revolving Note between the Company and LaSalle National Bank
dated June 30, 1996 (ix)
10(hh) -- Revolving Note between the Company and The Northern Trust
Company dated June 30, 1996 (ix)
10(ii) -- Non-statutory Stock Option Agreement dated September 5, 1996
between the Company and Harry J. Harczak, Jr. (x)
10(jj) -- Non-statutory Stock Option Agreement dated September 5, 1996
between the Company and James R. Shanks (x)
10(kk) -- Form of Indemnification and Hold Harmless Agreement between
the Company and the Selling Shareholder
10(ll) -- CDW 1996 Incentive Stock Option Plan
</TABLE>
<PAGE> 24
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF EXHIBIT PAGE
- ------- ---------------------- ------------
<C> <C> <S> <C>
16 -- Letter re: change in certifying accountant(i)
21 -- Subsidiaries of the Registrant(i)
23(a) -- Consent of Coopers & Lybrand L.L.P., Independent Accountants
23(b) -- Consent of Saitlin, Patzik, Frank & Samotny Ltd. (included in Exhibit 5)
24 -- Power of Attorney (included on page S-6)
</TABLE>
- -------------------------
(i) Incorporated by reference from the exhibits filed with the Company's
registration statement (33-59802) on Form S-1 filed under the Securities
Act of 1933.
(ii) Incorporated by reference from the exhibits filed with the Company's
quarterly report (0-21796) on Form 10-Q for the quarter ended September
30, 1993.
(iii) Incorporated by reference from the exhibits filed with the Company's
annual report (0-21796) on Form 10-K for the year ended December 31,
1993.
(iv) Incorporated by reference from the exhibits filed with the Company's
quarterly report (0-21796) on Form 10-Q for the quarter ended March 31,
1994.
(v) Incorporated by reference from the exhibits filed with the Company's
registration statement (33-78924) on Form S-1 filed under the Securities
Act of 1933.
(vi) Incorporated by reference from the exhibits filed with the Company's
quarterly report (0-21796) on Form 10-Q for the quarter ended June 30,
1995.
(vii) Incorporated by reference from the exhibits filed with the Company's
registration statement (33-94820) on Form S-3 filed under the Securities
Act of 1933.
(viii) Incorporated by reference from the exhibits filed with the Company's
quarterly report (0-21796) on Form 10-Q for the quarter ended March 31,
1996.
(ix) Incorporated by reference from the exhibits filed with the Company's
quarterly report (0-21796) on Form 10-Q for the quarter ended June 30,
1996.
(x) Incorporated by reference from the exhibits filed with the Company's
quarterly report (0-21796) on Form 10-Q for the quarter ended September
30, 1996.
<PAGE> 1
EXHIBIT 5
OPINION OF SAITLIN, PATZIK, FRANK & SAMOTNY LTD. RE: LEGALITY
<PAGE> 2
(312) 551-8300 January 31, 1997 1175-019-A
Board of Directors
CDW Computer Centers, Inc.
1020 East Lake Cook Road
Buffalo Grove, Illinois 60089
Re: CDW COMPUTER CENTERS, INC. REGISTRATION STATEMENT ON FORM S-3
Gentlemen:
We have acted as special counsel to CDW Computer Centers, Inc., an
Illinois corporation (the "Company"), in connection with the preparation of a
Registration Statement on Form S-3 (the "Registration Statement"), together
with Exhibits, filed with the Securities and Exchange Commission (the
"Commission") on January 31, 1997, relating to the registration of an offering
by one of its shareholders of up to 138,684 shares of the Company's common
stock, par value $.01 per share (the "Common Stock"). We have reviewed such
records, documents and matters of law as we have considered relevant for the
purpose of delivering this opinion.
In making our examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals and
the conformity to originals of all documents submitted to us as certified or
photostatic copies.
Based upon the foregoing, the shares of Common Stock, when offered and
distributed in the manner contemplated in the Registration Statement, will be
legally issued, fully paid and nonassessable.
We do not find it necessary for the purpose of this opinion, and
accordingly we do not purport to cover herein, the application of the
securities or "Blue Sky" laws of the various states to the distribution of the
Common Stock.
This opinion is furnished to you in connection with the filing of the
Registration Statement, and is not to be used, circulated, quoted or otherwise
relied upon for any other purpose.
<PAGE> 3
Board of Directors
January 31, 1997
Page 2
We hereby consent to the inclusion in the Registration Statement of
this opinion and to the references to our firm under the caption "Legal
Matters."
Very truly yours,
SAITLIN, PATZIK, FRANK & SAMOTNY LTD.
/s/ Saitlin, Patzik, Frank & Samotny Ltd.
SMP/cc
<PAGE> 1
EXHIBIT 10(KK)
FORM OF INDEMNIFICATION AND HOLD HARMLESS AGREEMENT
BETWEEN THE COMPANY AND THE SELLING SHAREHOLDER
<PAGE> 2
January 31, 1997
Mr. Michael P. Krasny, Administrator
of the MPK Restricted Stock Plan
CDW Computer Centers, Inc.
1020 East Lake Cook Road
Buffalo Grove, Illinois 60089
Dear Mr. Krasny:
You have been the Administrator of the MPK Restricted Stock Plan (the "Plan")
established by yourself as Chairman and Chief Executive Officer of CDW Computer
Centers, Inc., an Illinois corporation ("CDW") and, at the request of CDW, have
in the past and may in the future serve as an officer, director, administrator
of the Plan or in a similar capacity for CDW and/or its affiliates. In
consideration of your past and future work on behalf of CDW, CDW agrees that it
will indemnify you (which shall include the Plan) as follows:
A. CDW agrees and does hereby indemnify and hold you harmless, to the full
extent permitted by law, from and against any and all losses, claims,
damages, liabilities, judgments, fines, penalties, amounts paid in
settlement (subject to Paragraph C) and expenses (including reasonable
attorneys' fees and costs of investigation and preparation) incurred by
you in connection with any action, claim, suit or other proceeding
instituted or threatened against you by any person, firm, corporation,
governmental body, agency or instrumentality, or other entity (including,
without limiting the generality of the foregoing, any action, claim, suit
or other proceeding brought by one or more of the security holders of CDW,
or in the name thereof), by reason of the fact of, or in any way relating
to, your serving as Administrator of the Plan, or in a similar capacity of
CDW or any of its affiliates, at any time, except to the extent that any
such liabilities or expenses result from your willful misconduct, gross
negligence, fraud, acts or omissions not in good faith or transactions in
which you derived an improper personal benefit, in each case, as
determined by a court of competent jurisdiction in a final judgment from
which no further appeal can be taken. It shall not be deemed to be
willful misconduct, gross negligence or fraud if you act in good faith in
accordance with recommendations or policies of the management or any third
party professional advisor of CDW or its affiliates.
B. As a condition to recovery under the provisions of Paragraph A above, you
agree, within ten days after actual receipt by you of written notice of
the commencement of any action against you as to which you will claim
indemnification pursuant to Paragraph A, to notify CDW in writing of
commencement thereof. The failure to so notify CDW shall not relieve CDW
or any other entity or person from any
<PAGE> 3
Michael P. Krasny, Administrator
of the MPK Restricted Stock Plan
January 31, 1997
Page 2
other liability which any of them may have to you otherwise than pursuant
to the provisions of this Agreement and shall relieve CDW of its
obligations pursuant to this Agreement only to the extent that the
failure to give notice prejudices CDW's ability to conduct a defense or
otherwise increases CDW's and its affiliates' obligations.
C. After receipt by CDW of a notice given by you pursuant to Paragraph B, CDW
will be entitled to participate in the action involved, and to the extent
that CDW may elect by written notice delivered to you promptly after
receiving the aforesaid notice from you, to assume the defense thereof;
provided, however, if the defendants in such action include both CDW
and/or an affiliate of CDW and you and either (i) CDW and you mutually
agree or (ii) representation of both CDW and/or such affiliate and you by
the same counsel is inappropriate under the applicable standards of
professional conduct due to actual or potential differing interests
between CDW and/or such affiliate and you, you shall have the right to
select separate counsel to assume such defense of you and otherwise to
participate in the defense of such action on your behalf. Upon receipt of
a written notice from CDW to you of CDW's election so to assume the
defense of such action, neither CDW nor any of its affiliates will be
liable to you under Paragraph A or D for any legal or other expenses
subsequently incurred by you in connection with the defense thereof unless
(a) you shall have employed counsel in connection with the assumption of
the defense of such action in accordance with the proviso to the next
preceding sentence, (b) CDW shall not have employed counsel to represent
you within a reasonable time after the notice of such claim given by you
to CDW pursuant to Paragraph B or (c) CDW has authorized in writing the
employment of counsel for you at the expense of CDW and its affiliates.
If CDW elects to assume the defense of such actions as provided in this
Paragraph C, it shall have the right to effect a settlement of such action
without your consent, except that neither CDW nor its affiliates shall
have the right, without your written consent to effect any settlement that
imposes any liability or obligation upon you or results in a finding
regarding your actions that could adversely affect your future business or
other activities. CDW and its affiliates shall in no event be liable
under this Agreement for any settlement effected without the written
consent of CDW or one or more of its affiliates of any claim or action
against you.
<PAGE> 4
Michael P. Krasny, Administrator
of the MPK Restricted Stock Plan
January 31, 1997
Page 3
D. You shall be entitled to representation of an attorney in accordance with
the terms of this Agreement, if applicable, or payment by CDW and its
affiliates of expenses incurred by you in defending a civil or criminal
action, suit or proceeding, to the extent reimbursement of such expenses
is not excluded pursuant to Paragraph C, whether or not there are
allegations in the complaint which may result in your not being entitled
to indemnification because of the exclusions contained in Paragraph A, in
advance of the final disposition of such action, suit or proceeding. You
shall reimburse CDW and its affiliates for any amounts so paid upon a
final judgment from which no further appeal can be taken that you are not
entitled to indemnification by CDW and/or its affiliates.
E. To the extent that CDW and its affiliates advance expenses or indemnify
you pursuant to this Agreement and you are entitled to any indemnification
or advances of expenses from one or more other parties, you hereby agree
that CDW shall be subrogated to, and shall be entitled to, your rights
against such other party to receive any such indemnification or advances
of expenses. In such event, you shall cooperate with the advancing or
indemnifying indemnitor or indemnitors in connection with obtaining such
indemnification or advances of expenses.
F. Any written notice from CDW or any of its affiliates to you or from you to
CDW and/or any of its affiliates will be deemed given only when received
(a) by CDW and/or any of its affiliates c/o CDW at 1020 East Lake Cook
Road, Buffalo Grove, Illinois 60089, or at such other address as CDW may
substitute for such purposes by written notice to you or (b) by you at the
address you have designated in your personnel file or at such address as
you may substitute for such purposes by written notice to CDW.
G. The foregoing constitutes our entire agreement with respect to the subject
matter of this letter. The provisions hereof may not be modified or
waived except in writing signed by all of the parties hereto.
H. This Agreement is intended for the sole benefit of you and your personal
representatives and heirs and is not intended for the benefit of, nor may
any of its provisions be enforced by, any other person, firm, corporation
or
<PAGE> 5
Michael P. Krasny, Administrator
of the MPK Restricted Stock Plan
January 31, 1997
Page 4
governmental body, agency or instrumentality. This Agreement shall be
binding upon CDW and its affiliates and their respective successors and
assigns.
I. The termination of your employ with CDW shall in no event affect any
liability or obligation of CDW and its affiliates to indemnify you under
this Agreement.
If the foregoing correctly sets forth your understanding of our agreement
with respect to the subject matter of this letter, please so indicate by
signing and returning to CDW the enclosed copy of this letter.
Very truly yours,
CDW COMPUTER CENTERS, INC.
By:___________________________
Authorized Officer
ACCEPTED AND AGREED TO:
____________________________________
Michael P. Krasny, Administrator
of the MPK Restricted Stock Plan
<PAGE> 1
EXHIBIT 10(LL)
CDW 1996 INCENTIVE STOCK PLAN
<PAGE> 2
CDW 1996 INCENTIVE STOCK OPTION PLAN
1. PURPOSE OF THE PLAN
(a) The purpose of the CDW 1996 Incentive Stock Option Plan (the
"Plan") as hereinafter set forth, is to enable CDW Computer Centers, Inc., an
Illinois corporation (the "Company"), to attract, retain and reward all
directors, officers, employees and consultants by offering them an opportunity
to have a greater proprietary interest in and closer identity with the Company
and with its financial success and thereby encourage such individuals to remain
in the employ or service of the Company or to attract to the Company people of
exceptional experience and ability.
(b) Pursuant to the Plan, awards will be granted as stock options
("Options"). Options granted under the Plan are intended to be non- statutory
stock options for purposes of the Internal Revenue Code of 1986, as amended
(the "Code"). The provisions of this Plan and of each Option granted hereunder
shall be interpreted in a manner consistent with the Code and with all valid
regulations issued thereunder. Proceeds of cash or property received by the
Company from the sale of common stock pursuant to Options granted under the
Plan will be used for general corporate purposes.
(c) It is intended that this Plan shall comply in all material respects
with the provisions of Rule 16b-3 promulgated under Section 16 of the Exchange
Act. Any provision herein which would have the effect of causing the Plan to
fail to comply with Rule 16b-3 shall be invalid but shall not render other
provisions of the Plan invalid. This document shall constitute a written plan
which shall include the means or basis for determining eligibility to
participate as it relates to directors, officers, employees and consultants,
and the price at which the securities may be offered and the amount of
securities to be awarded, or the method by which the foregoing will be
determined.
2. ADMINISTRATION OF THE PLAN
(a) The Plan shall be operated under the direction of the Board of
Directors of the Company (the "Board") which may appoint a committee
("Committee") of two (2) or more board members to administer the Plan,
including the Option grant, Option surrender and Option acceleration
provisions.
(b) The Board or Committee, as the case may be, shall administer the
Plan with respect to all individuals eligible to receive options under the
Plan. Options shall be granted only to purchase common stock of the Company
($.01 par value) ("Shares"). Unless the Board determines otherwise, the
Committee shall be constituted such that as long as the Company has
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<PAGE> 3
securities registered under Section 12 of the Exchange Act, the Committee shall
be made up of Non-Employee Directors so that the Plan in all applicable
respects will qualify transactions related to the Plan for the exemptions from
Section 16(b) of the Exchange Act provided by Rule 16b-3, to the extent
exemptions thereunder may be available. For purposes of this section, the term
"Non-Employee Directors" shall have the meaning ascribed to it in Rule 16b-3,
as it may be amended.
(c) The Committee has been delegated responsibility for the
administration of the Plan and shall have full power and authority (subject to
the provisions of the Plan) to establish such rules and regulations as it may
deem appropriate for the proper administration of the Plan and to make such
determinations under, or issue such interpretations of, the Plan and any
outstanding Option as it may deem necessary or advisable. Decisions of the
Committee shall be final and binding on all parties who have an interest in the
Plan or any outstanding Option.
3. ELIGIBILITY
(a) Options may be granted under this Plan to all directors, officers,
employees and consultants of the Company (collectively "Employees"). The Board
or the Committee, as the case may be, shall determine, within the limits of the
express provisions of the Plan, those directors, officers, employees and
consultants to whom, and the time or times at which, Options shall be granted.
(b) The Board or the Committee shall also determine, subject to the
terms and conditions hereof, the number of Shares to be subject to each Option,
the duration of each Option, the exercise price ("Option Price") under each
Option, the time or times in which (during the term of the Option) all or
portions of each Option may be exercised, and whether cash, Shares, or other
property may be accepted in full or partial payment upon exercise of an Option.
In making such determinations, the Board or the Committee may take into account
the nature of the services rendered by the Employee, his or her present and
potential contributions to the Company's success and such other factors as the
Board or the Committee in its discretion shall deem relevant.
4. COMMON STOCK
(a) Options may be granted for a number of Shares not to exceed, in the
aggregate, 3,000,000 Shares, which number shall be subject to adjustment under
Section 6 hereof. Such Shares may be either authorized but unissued shares or
reacquired Shares. If and to the extent that Options granted under the Plan
are exercised, the Shares covered by such exercise shall be unavailable for
grants of new Options under the Plan.
(b) In the event that any Option granted under the Plan expires
unexercised, or is surrendered by a participant for cancellation, or is
terminated or ceases to be exercisable for any other reason without having been
fully exercised, prior to the end of the period during which Options may be
granted under the Plan, the Shares theretofore subject to such Option, or to
the
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<PAGE> 4
unexercised portion thereof, shall again become available for new Options to be
granted under the Plan to any eligible Employee (including the holder of such
former Option) at an Option Price determined in accordance with Section 5(a)
hereof, which price may then be greater, or less than the Option Price of such
former Option.
5. REQUIRED TERMS AND CONDITIONS OF OPTIONS
Each Option granted hereunder shall be subject to the following additional
terms and conditions:
(a) Option Price. The Option Price of each Option to purchase
Shares shall be at least one hundred percent (100%) of the fair market value
of the Shares subject to such Option at the time such Option is granted, such
fair market value to be determined in accordance with procedures established
by the Board or the Committee. The Option Price shall become immediately due
upon exercise of the Option and shall be payable in full in cash or cash
equivalents unless otherwise determined by the Board or the Committee.
(b) Maximum Term. All Options issued under the Plan shall be
for such period as the Board or the Committee shall determine, but for not
more than twenty (20) years from the date the Option is first granted.
(c) Installment Exercise Limitations. Each Option shall become
exercisable in such number of cumulative annual installments as the Board or
the Committee shall establish except that no Options shall vest prior to the
third anniversary of the date of grant.
(d) Modification, Extension or Renewal. Except as otherwise
provided and subject to the terms and conditions of the Plan and Rule 16b-3,
the Board or the Committee may (i) modify, extend or renew outstanding Options
granted under the Plan and (ii) accept the surrender of Options outstanding
and authorize the granting of new Options in substitution thereof.
(e) Investment Purpose. If necessary or advisable to comply
with applicable federal or state securities laws, any Option granted under
the Plan may be granted on the condition that the optionee agree that the
Shares purchased thereunder are for investment purposes only and not for
resale or distribution and that such Shares shall be disposed of only in
accordance with such laws. As a condition to issuance of any Shares
purchased upon the exercise of any Option granted pursuant to the Plan, the
optionee, his or her executor, administrator, heir or legatee (as the case
may be) receiving such Shares may be required to deliver to the Company an
instrument, in form and substance satisfactory to the Company and its
counsel, implementing such agreement. Any such condition may be eliminated
by the Board or the Committee if the Board or the Committee determines it is
no longer necessary or advisable.
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<PAGE> 5
(f) Termination of Option.
(i) In the event that an Employee shall cease to be employed by
the Company for any reason other than death or Disability
(as defined below) or for cause (as defined below), the
Employee or personal representative shall have the right,
subject to the provisions of Section 5(b) and 6 hereof, to
exercise his or her Options at any time within three (3)
months after such cessation of employment but only as to
such number of Shares as to which his or her Options were
vested and exercisable at the date of such cessation of
employment. The Employee shall forfeit all unvested
Options. Notwithstanding the provisions of the preceding
sentence:
(A) if cessation of employment occurs by reason of the
Disability of the Employee (as hereinafter defined),
such three (3) month period shall be extended to one
(1) year and all Options shall automatically vest
immediately;
(B) if cessation of employment occurs by reason of death
while in the employ of the Company or within three
(3) months after cessation of such employment (other
than by reason of termination by the Company for
cause), his or her estate, personal representative or
the person that acquires his or her Options by
bequest or inheritance may exercise the Options at
any time within one (1) year from the date of death
and all Options shall automatically vest immediately;
and
(C) if employment is terminated at the request of the
Company for cause, the Employee's right to exercise
his or her Options shall terminate at the time notice
of termination of employment is given by the Company
to such Employee. For purposes of this provision,
cause shall include: (I) the commission of a
criminal act, fraud, gross negligence or willful
misconduct against, or in derogation of the interests
of the Company; (II) divulging confidential
information regarding the Company; (III) interference
with the relationship between the Company and any
major supplier or customer; or (IV) the performance
of any similar action that the Board or the
Committee, in its sole discretion, may deem to be
sufficiently injurious to the interests of the
Company to constitute cause for termination.
The time of cessation of employment and whether an
authorized leave of absence or absence on military or
government service shall constitute cessation of
employment, for the purpose of the Plan, shall be
determined by the Board.
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<PAGE> 6
(ii) "Disability" for purposes of this Agreement shall be
defined as follows:
(A) If an Employee becomes disabled during the term of
this Agreement by reason of illness, accident or any
other cause, the Company shall have the right to
appoint a physician or physicians to (I) examine the
Employee at reasonable intervals from time to time in
connection with such disability and (II) deliver to
the Company: (1) a certificate ("Initial
Certificate") certifying whether or not such
disability occurred and, if so, the date on which it
commenced ("Onset Date"); and (2) if the condition or
disability continues uninterrupted for a one (1) year
period beginning on the Onset Date and ending on the
one (1) year anniversary thereof, a certificate
("Final Certificate") certifying that fact. The
Employee shall cooperate fully with the physician(s)
as set forth in either the Initial Certificate or the
Final Certificate or both and the Employee shall have
the right to appoint another physician to examine the
Employee and determine the same matters. If the
physicians appointed by the Company and by the
Employee do not agree, such physicians shall jointly
appoint a third physician to examine the Employee and
determine the same matters. The determination of the
third physician shall be binding on the Company and
the Employee; and
(B) In determining whether the Employee is disabled for
purposes of the Initial Certificate, the standard to
be applied by any physician appointed in accordance
with this Paragraph shall be, at the Company's
election, either of the following: the Employee will
be deemed disabled if on the applicable Onset Date
(I) he or she is unable to render to the Company
services of substantially the kind and nature, and to
substantially the extent, being rendered by him or
her pursuant to this Agreement during the fiscal
quarter next preceding such Onset Date, or (II) his
or her medical condition satisfies such other
standard of total disability as is to be applied
under any policy of insurance, the proceeds of which
would be payable to fund a claim or claims of
disability with respect to the Employee. If more
than one such policy is in effect at the time of such
physician's determination, the Company shall
designate which policy standard shall apply. The
standard used for purposes of the Initial Certificate
shall also be used for purposes of the
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<PAGE> 7
Final Certificate.
(g) Method of Exercise. Options may be exercised by giving ninety
(90) days, or such shorter period as the Board or the Committee may
establish, written notice to the Treasurer (or its designee) of the Company,
stating the number of Shares with respect to which the Option is being
exercised and tendering payment therefor, if any. Payment for the Shares,
whether in cash, other Shares or other property, shall be made in full at the
time that an Option, or any part thereof, is exercised.
(h) Withholding of Taxes Due Upon Exercise. An Employee, or upon
the Employee's death, his or her estate, personal representative or the
person that acquires his or her Option by bequest or inheritance
("Beneficiary"), may satisfy, in whole or in part, the obligation, if any, to
pay the Company an amount required to be withheld under the applicable
federal, state and local income tax laws in connection with the exercise of
an Option under the Plan or if larger, the actual tax which could be incurred
in connection with the exercise of an Option under the Plan by either: (A)
having the Company withhold from the Shares to be acquired upon the exercise
of the Option; or (B) delivering to the Company either previously acquired
Shares or Shares acquired upon the exercise of the Option which the Employee
or Beneficiary unconditionally obligated himself to deliver to the Company.
The Shares withheld or delivered will be valued at their fair market value as
of the date the amount of tax to be withheld is determined ("Tax Date"). The
fair market value of Shares will be determined in accordance with procedures
established by the Board or the Committee. Any amounts required to be
withheld in excess of the values of whole Shares withheld or delivered will
be paid in cash or withheld from other compensation paid by the Company.
(i) Stockholder Rights. An Option holder shall have no stockholder
rights with respect to any Shares covered by the Option until such Option
holder has exercised the Option, paid the Option Price and been issued a
certificate for the purchased Shares.
6. ADJUSTMENTS
(a) The aggregate number of Shares with respect to which Options may
be granted hereunder, the number of Shares subject to each outstanding Option,
and the Option Price per Share for each such Option, may all be appropriately
adjusted, as the Board or the Committee may determine, for any increase or
decrease in the number of Shares issued resulting from a subdivision or
consolidation of Shares either through reorganization, payment of a Share
dividend or other increase or decrease in the number of such Shares
outstanding effected without receipt of consideration by the Company; provided,
however, that no adjustment in the number of Shares with respect to which
Options may be granted under the Plan or in the number of Shares subject to
outstanding Options shall be made except in the event, and then only to the
extent, that such adjustment, together with all respective prior adjustments
which were not made as a result of this provision, involve a net change of more
than ten percent (10%) (i) from the number of Shares with respect to which
Options may be granted under the Plan, or (ii) with respect to the each
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<PAGE> 8
outstanding Option, from the respective number of Shares subject thereto on
the date of grant thereof.
(b) Subject to any required action by the stockholders, if the
Company shall be a party to a transaction involving a sale of substantially
all its assets, a merger or a consolidation, any Option granted hereunder
shall pertain and apply to the securities to which a holder of the number of
Shares subject to the Option would have been entitled if he or she actually
owned the Shares subject to the Option immediately prior to the time any such
transaction became effective; provided, however, that all unexercised Options
under the Plan may be canceled by the Company as of the effective date of any
such transaction, by giving notice to the holders thereof of its intention to
do so and by permitting the exercise, during the thirty (30) day period
preceding the effective date of such transaction, of all partly or wholly
unexercised Options in full (without regard to installment exercise
limitations).
(c) In the case of dissolution of the Company, every Option
outstanding hereunder shall terminate; provided, however, that each Option
holder shall have thirty (30) days prior written notice of such event, during
which time he or she shall have a right to exercise his or her partly or
wholly unexercised Options (without regard to installment exercise
limitations).
(d) On the basis of information known to the Company, the Board or
the Committee shall make all determinations under this Section 6, including
whether a transaction involves a sale of substantially all the Company's
assets; and all such determinations shall be conclusive and binding.
7. OPTION AGREEMENTS
Each Employee receiving an Option shall agree to such terms and
conditions in connection with the Option, including restrictions on the
disposition of the shares received or to be received, and shall agree to such
other terms and conditions, including restrictions on competition with the
Company, as the Board or the Committee may deem appropriate. Option
Agreements need not be identical. The certificates evidencing the Shares
awarded under the Plan or acquired upon exercise of an Option may bear a
legend referring to the terms and conditions contained in the respective
Option Agreement and the Plan, and the Company may place a stop transfer
order with its transfer agent against the transfer of such shares.
8. LEGAL AND OTHER REQUIREMENTS
(a) The obligation of the Company to deliver Shares under Options
granted under the Plan shall be subject to all applicable laws, regulations,
rules and approvals, including, but not by way of limitation, Rule 16b-3
under the Exchange Act, if deemed necessary or appropriate by the Board or
the Committee, of the Shares reserved for issuance upon exercise of Options
under the Plan. No adjustment other than pursuant to Section 6 hereof shall
be made for dividends or other rights for which the record date is prior to
the date such stock certificate is delivered. The Board or the Committee may
condition any delivery of Shares pursuant to an
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<PAGE> 9
Option under the Plan upon payment of any consideration the Board or the
Committee determines to be required in order to ensure compliance with
applicable state law. Any payment required under the preceding sentence
must be made no later than sixty (60) days after the exercise of the
Option. No other consideration shall be required with respect to an
award of Shares under the Plan.
(b) The Company shall comply with the obligations imposed on the
Company under the applicable tax withholding laws, if any, with respect to
the Options granted hereunder, the Shares transferred upon exercise of such
Options, the disposition of any such Shares thereafter and the lapse of any
restriction imposed upon any such Shares, and shall be entitled to do any
act or thing to effectuate any such required compliance, including, without
limitation, withholding from amounts payable by the Company to an Employee
and including making demand on an Employee for the amounts required to be
withheld.
9. NON-TRANSFERABILITY
During the lifetime of any Employee, any Option granted to him or her
shall be exercisable only by him or her or by his or her guardian or legal
representative. No Option shall be assignable or transferable, except by
will or by the laws of descent and distribution. The granting of an Option
shall impose no obligation upon the Employee to exercise such Option or
right.
10. NO CONTRACT OF EMPLOYMENT
Neither the adoption of this Plan, nor the grant of any Option
shall be deemed to obligate the Company to continue the employment of any
participant for any particular period, nor shall the granting of an Option
constitute a request or consent to postpone the retirement date of any
Employee.
11. INDEMNIFICATION OF BOARD
In addition to such other rights of indemnification as they may have as
Directors, the members of the Board and the Board or the Committee shall be
indemnified by the Company against the reasonable expenses, including
attorney's fees actually and necessarily incurred in connection with the
defense of any action, suit or proceeding (or in connection with any appeal
thereof), to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan or any Option
granted hereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved by independent legal counsel selected
by the Company) or paid by them in satisfaction of a judgment in any such
action, suit or proceeding, except in relation to matters as to which it
shall be adjudged in such action, suit or proceeding that such Board or
Committee member is liable for gross negligence or gross misconduct in the
performance of his or her duties; provided that within sixty (60) days after
institution of any such action, suit or proceeding a Board or Committee
member shall in writing offer the Company the opportunity, at its own
expense, to handle and defend the same.
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<PAGE> 10
12. TERMINATION AND AMENDMENT OF PLAN
No Option shall be granted under the Plan more than twenty (20) years
after the date the Plan was adopted by the Board. The Board or the
Committee, without further action on the part of the stockholders, may from
time to time alter, amend or suspend the Plan or any Option granted hereunder
or may at any time terminate the Plan, including, without limitation, the
ability to (i) (except as provided in Section 6 hereof) change the total
number of Shares available for Option under the Plan, (ii) extend the
duration of the Plan, (iii) increase the maximum term of Options, (iv)
decrease the minimum Option Price or otherwise materially increase the
benefits accruing to participants under the Plan, or (v) materially modify
the eligibility requirements of the Plan; and provided further that no such
action shall materially and adversely affect any outstanding Options.
13. EFFECTIVE DATE OF PLAN
The Plan shall become effective upon adoption by the Board.
APPROVED BY BOARD OF DIRECTORS - November 14, 1996
SIGNATURES
IN WITNESS WHEREOF, the undersigned have executed this CDW
1996 Incentive Stock Option Plan as of this 14th day of November, 1996, in
Buffalo Grove, State of Illinois.
Signature Title
--------- -----
/s/ Michael P. Krasny Chairman and Chief Executive
------------------------------ Officer
Michael P. Krasny
/s/ Gregory C. Zeman President and Director
------------------------------
Gregory C. Zeman
/s/ Daniel B. Kass Vice President - Sales
------------------------------ Director
Daniel B. Kassand
/s/ Michelle L. Collins Director
------------------------------
Michelle L. Collins
/s/ Joseph Levy, Jr. Director
------------------------------
Joseph Levy, Jr.
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<PAGE> 1
EXHIBIT 23(A)
CONSENT OF COOPERS & LYBRAND L.L.P.,
INDEPENDENT ACCOUNTANTS
<PAGE> 2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration
statement of CDW Computer Centers, Inc. on Form S-3 of our report dated January
22, 1996, on our audits of the consolidated financial statements and financial
statement schedule of CDW Computer Centers, Inc. as of December 31, 1995 and
1994 and for the years ended December 31, 1995, 1994 and 1993, which report is
included in the 1995 Annual Report on Form 10-K. We also consent to the
reference to our firm under the caption "Experts".
Coopers & Lybrand L.L.P.
Chicago, Illinois
January 31, 1997
