<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
[AMENDMENT NO..............]
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/x/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
INSIGHT ENTERPRISES, INC.
................................................................................
(Name of Registrant as Specified in Its Charter)
................................................................................
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/x/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and O-11.
1) Title of each class of securities to which transaction applies:
.......................................................................
2) Aggregate number of securities to which transaction applies:
.......................................................................
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
.......................................................................
4) Proposed maximum aggregate value of transaction:
.......................................................................
5) Total fee paid:
.......................................................................
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form Schedule or Registration Statement No.:
3) Filing Party:
4) Date filed:
<PAGE> 2
INSIGHT ENTERPRISES, INC.
1912 WEST FOURTH STREET
TEMPE, ARIZONA 85281
NOTICE OF 1996 ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 12, 1996
TO OUR STOCKHOLDERS:
The 1996 Annual Meeting of Stockholders of Insight Enterprises, Inc., a
Delaware corporation (the "Company"), will be held on Thursday, December 12,
1996, at 3:00 p.m. local time, at Tempe Mission Palms, 60 East Fifth Street,
Tempe, Arizona 85281, for the following purposes:
(1) To elect two directors as Class II Directors to serve until
the 1999 Annual Meeting of Stockholders and until their
successors are duly elected and qualified;
(2) To approve amendments to the Company's Amended Certificate of
Incorporation to increase the authorized number of shares of
Common Stock, $.01 par value per share, from 10,000,000 to
30,000,000 and of Preferred Stock, $.01 par value per share,
from 1,000,000 to 3,000,000 (the "Proposed Amendment"); and
(3) To transact such other business as may properly come before
the Annual Meeting or any adjournment thereof. Management is
presently aware of no other business to come before the Annual
Meeting.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Each outstanding share of the Company's Common Stock entitles the
holder of record at the close of business on October 16, 1996 to receive notice
of and to vote at the Annual Meeting or any adjournment thereof. Shares of
Common Stock can be voted at the Annual Meeting only if the holder is present at
the Annual Meeting in person or by valid proxy. A copy of the Company's 1996
Annual Report to Stockholders, which includes audited financial statements, is
enclosed.
All stockholders are cordially invited to attend the Annual Meeting in
person.
By order of the Board of Directors
Tempe, Arizona Stanley Laybourne
November ____, 1996 Secretary, Treasurer
and Chief Financial Officer
IMPORTANT
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, STOCKHOLDERS ARE
REQUESTED TO COMPLETE, DATE AND MAIL THE ENCLOSED PROXY. A POSTAGE-PAID
ENVELOPE IS PROVIDED FOR MAILING IN THE UNITED STATES.
<PAGE> 3
INSIGHT ENTERPRISES, INC.
1912 WEST FOURTH STREET
TEMPE, ARIZONA 85281
PROXY STATEMENT
1996 ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 12, 1996
SOLICITATION, EXECUTION AND REVOCATION OF PROXIES
This Proxy Statement is furnished to the stockholders of record of
Insight Enterprises, Inc. (the "Company") in connection with the solicitation of
proxies to be used at the Annual Meeting of Stockholders (the "Annual Meeting")
to be held on Thursday, December 12, 1996, at 3:00 p.m. local time, at Tempe
Mission Palms, 60 East Fifth Street, Tempe, Arizona 85281, and at any and all
adjournments thereof. THE ENCLOSED PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
OF THE COMPANY. The proxy materials were mailed on or about November ____, 1996,
to stockholders of record at the close of business on October 16, 1996 (the
"Record Date").
When stock is in the name of more than one person, the proxy is valid
if signed by any of such persons unless the Company receives written notice to
the contrary. If the stockholder is a corporation, the proxy should be signed in
the name of such corporation by an executive or other authorized officer. If
signed as attorney, executor, administrator, trustee, guardian or in any other
representative capacity, the signer's full title should be given and, if not
previously furnished, a certificate or other evidence of appointment should be
furnished.
A stockholder executing and returning a proxy has the power to revoke
it at any time before it is voted. A stockholder who wishes to revoke a proxy
can do so by executing a later-dated proxy relating to the same shares and
delivering it to the Secretary of the Company at 1912 West Fourth Street, Tempe,
Arizona 85281 prior to the vote at the Annual Meeting, by written notice of
revocation received by the Secretary prior to the vote at the Annual Meeting or
by appearing in person at the Annual Meeting, filing a written notice of
revocation and voting in person the shares to which the proxy relates.
In addition to the use of the mails, proxies may be solicited by
personal interview, telephone and telegram by the directors, officers and
regular employees of the Company. Such persons will receive no additional
compensation for such services. Arrangements will also be made with certain
brokerage firms and certain other custodians, nominees and fiduciaries for the
forwarding of solicitation materials to the beneficial owners of Common Stock
held of record by such persons, and such brokers, custodians, nominees and
fiduciaries will be reimbursed for their reasonable out-of-pocket expenses
incurred in connection therewith. All expenses incurred in connection with this
solicitation will be borne by the Company.
<PAGE> 4
VOTING SECURITIES OUTSTANDING
Only holders of record of the Company's Common Stock at the close of
business on October 16, 1996 (the "Record Date") will be entitled to notice of
and to vote at the Annual Meeting. On the Record Date, there were issued and
outstanding ______________ shares of the Company's Common Stock. Each holder of
Common Stock is entitled to one vote, exercisable in person or by proxy, for
each share of the Company's Common Stock held of record on the Record Date. The
presence of a majority of the shares of Common Stock entitled to vote, in person
or by proxy, is required to constitute a quorum for the conduct of business at
the Annual Meeting. The Inspector of Election appointed by the Board of
Directors shall determine the shares represented at the meeting and the validity
of proxies and ballots, and shall count all votes and ballots.
The affirmative vote of a majority of the shares represented at the
meeting, in person or by proxy, and entitled to vote thereon is required with
respect to the election of directors. The affirmative vote of a majority of the
shares issued and outstanding on the Record Date and represented at the meeting,
in person or by proxy, and entitled to vote is required to approve the Proposed
Amendment. Abstentions and broker non-votes are each included in the
determination of the number of shares present for quorum purposes. Because
abstentions represent shares entitled to vote, the effect of an abstention will
be the same as a vote cast against the election of directors and the Proposed
Amendment. A broker non-vote, on the other hand, will not be regarded as
representing a share entitled to vote on a proposal. Accordingly, a broker
non-vote will have no effect on the voting for the election of directors, but
will have the same effect as a vote cast against the Proposed Amendment.
All shares represented by properly executed proxies, unless such
proxies have previously been revoked, will be voted in accordance with the
direction on the proxies. If no direction is indicated, the shares will be voted
in favor of the proposals to be acted upon at the Annual Meeting. The Board of
Directors is not aware of any other matter which may come before the meeting. If
any other matters are properly presented at the meeting for action, including a
question of adjourning the meeting from time to time, the persons named in the
proxies and acting thereunder will have discretion to vote on such matters in
accordance with their best judgment.
ELECTION OF DIRECTORS
The Company's Board of Directors currently consists of five members.
The present terms of Larry A. Gunning and Robertson C. Jones, who are Class II
incumbent directors, will expire at the Annual Meeting. Messrs. Gunning and
Jones have been nominated for re-election as directors of the Company and,
unless otherwise instructed, the proxy holders will vote the proxies received by
them for the election of Messrs. Gunning and Jones as directors of the Company.
If any nominee of the Company is unable or declines to serve as a
director at the time of the Annual Meeting, the proxies will be voted for any
nominee who shall be designated by the present Board of Directors to fill the
vacancy. It is not expected that any nominee will be unable or will decline to
serve as a director.
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<PAGE> 5
INFORMATION CONCERNING DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS
The names of the Company's directors whose terms continue beyond the
Annual Meeting, nominees for directors and executive officers, and certain
information about them, are set forth below.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Eric J. Crown (1) 34 Chief Executive Officer and Chairman of the Board
of the Company
Timothy A. Crown (1) 32 President and Director of the Company
Stanley Laybourne (1) 47 Chief Financial Officer, Secretary, Treasurer and
Director of the Company
Larry A. Gunning (2) 52 Director of the Company
Robertson C. Jones (2) 52 Director of the Company
Michael A. Gumbert 37 Chief Operating Officer of Insight Direct ,Inc.
Branson M. Smith 40 Chief Operating Officer of Direct Alliance
Corporation (formerly IA Direct, Inc.)
</TABLE>
- -----------------------
(1) Member of Executive Committee of the Board of Directors.
(2) Member of Audit and Compensation Committees of the Board of Directors.
Eric J. Crown. Mr. Crown has been the Chief Executive Officer and Chairman
of the Board of the Company since 1994, has held various officer and director
positions with the predecessor corporations since 1988, and is one of the
Company's founders. In 1984, he received a Bachelor of Science degree in
Business Computer Information Systems from Arizona State University. From 1983
to 1986, Mr. Crown operated an independent computer and business consulting
firm. From 1986 to 1988, Mr. Crown was a partner in Micronet Consulting, a
computer consulting and sales company. Eric J. Crown is the brother of Timothy
A. Crown.
Timothy A. Crown. Mr. Crown has been a director of the Company since 1994.
Mr. Crown has been employed by the Company or one of its predecessors since 1988
and has been President since 1989. He received a Bachelor of Science degree in
Business and Computer Science from the University of Kansas in 1986. From 1986
until 1987, Mr. Crown was employed by NCR Corporation as an Administrative
Analyst. From 1987 to 1988, Mr. Crown was a partner in Micronet Consulting.
Timothy A. Crown is the brother of Eric J. Crown.
Stanley Laybourne. Mr. Laybourne has been a director of the Company since
1994. Mr. Laybourne was an independent consultant to the Company or its
predecessors from September 1990 through March 1991 and became the Chief
Financial Officer and Treasurer in April 1991. In November 1994, he became
Secretary of the Company. Mr. Laybourne received a Bachelor of Science degree in
Accounting from The Ohio State University in 1971, with a Masters in Business
Administration degree from Arizona State University in 1972. From 1972 to 1985,
he was employed by Touche, Ross & Co., a predecessor to Deloitte & Touche, where
he was an audit partner from 1983 to 1985. From 1985 to 1989, Mr. Laybourne was
President and Chief Executive Officer of The Scottscom Group, a financial
services company. From 1989 to 1990, Mr. Laybourne was Executive Vice President
of Ovation Broadcasting Company, a company which operated commercial radio
broadcast properties. Mr. Laybourne is the Chief Financial Officer of the Fiesta
Bowl and a member of the City of Scottsdale Citizen's Bond Review Commission.
Mr. Laybourne is a Certified Public Accountant.
Larry A. Gunning. Mr. Gunning has been a Director of the Company since
January 1995. He has been President of Pasco One, Inc. and Pasco Petroleum
Corp., petroleum marketing companies, since 1990 and 1988,
4
<PAGE> 6
respectively. Mr. Gunning received a Bachelor of Science degree in Business
Management from Arizona State University in 1966. Mr. Gunning is a member of the
Arizona State University College of Business Dean's Council of 100 and a
director of several nonprofit organizations.
Robertson C. Jones. Mr. Jones has been a Director of the Company since
January 1995. Mr. Jones has been Vice President and General Counsel of Del Webb
Corporation, a developer of master-planned residential communities, since
January 1992. From March 1990 to November 1991 he was a partner with the law
firm of Gaston & Snow, and from January 1985 to February 1990 he was a director
and shareholder of Moya, Bailey, Bowers & Jones, P.C., which was a partner of
Gaston & Snow. In October 1991, while Mr. Jones was a partner of such firm,
Gaston & Snow filed a voluntary petition under Chapter 11 of the Bankruptcy
Code. Mr. Jones was never a member of that firm's management or executive
committees. All of Mr. Jones' involvement with Gaston & Snow was formally
terminated in September 1993. During November and December 1991, Mr. Jones was
an attorney with the law firm of Quarles & Brady. Mr. Jones received his
Bachelor of Arts degree from Williams College in 1966, his Masters in Business
Administration degree from Oklahoma City University in 1969 and his Juris Doctor
degree from University of California, Hastings College of Law, in 1977.
Michael A. Gumbert. Mr. Gumbert was hired on July 1, 1996, as Insight
Direct, Inc.'s Chief Operating Officer. From August 1995 to June 1996, Mr.
Gumbert was Senior Vice President, General Manager of Tandy Corporation, a
consumer electronic retailer. From 1983 through 1990, Mr. Gumbert held various
positions within MicroAmerica, Inc., a value added computer distributor. In
1990, MicroAmerica, Inc. was acquired by Merisel, Inc., a distributor of
computers, software and peripherals. From 1990 through June 1995, Mr. Gumbert
held several positions with Merisel, Inc., including Senior Vice President,
Sales and Operation from April 1992 to June 1995. Mr. Gumbert received a
Bachelor of Business Administration in Marketing from North Texas State
University.
Branson M. Smith. Mr. Smith has been employed by Insight Direct, Inc.
since March 1992 and has served as its Vice President of Distribution and Senior
Vice President of Fulfillment Services. In September 1996, Mr. Smith was
promoted to Chief Operating Officer of Direct Alliance Corporation (formerly IA
Direct, Inc.). From May 1991 to March 1992, Mr. Smith was a principal in
Southwest Automation, an industrial operations consulting firm. From December
1987 to May 1991, Mr. Smith was a Division Manager of Shape West, a computer
disk manufacturer. Mr. Smith received a Bachelor of Science degree in Business
Administration from the University of Arizona. Mr. Smith is a member of the
Board of Advisors of the National Catalog Operations Forum.
5
<PAGE> 7
MEETINGS OF THE BOARD AND ITS COMMITTEES
The Board of Directors held a total of nine meetings during the fiscal
year ended June 30, 1996, including taking action by consent in lieu of a
meeting five times. No director attended fewer than 75% of the aggregate of all
meetings of the Board of Directors and any committee on which such director
served during the period of such service.
The Board presently has an Executive Committee, an Audit Committee and a
Compensation Committee. The Executive Committee consists of Messrs. Eric J.
Crown, Timothy A. Crown and Stanley Laybourne. The Executive Committee is
empowered to act on Board matters that arise between meetings of the full Board
of Directors.
The Audit Committee consists of Messrs. Larry A. Gunning and Robertson C.
Jones and met two times in fiscal 1996. The Audit Committee meets independently
with representatives of the Company's independent auditors and with
representatives of senior management. The Committee reviews the general scope of
the Company's annual audit, the fee charged by the independent auditors and
other matters relating to internal control systems. In addition, the Audit
Committee is responsible for reviewing and monitoring the performance of
non-audit services by the Company's auditors. The Committee is also responsible
for recommending the engagement or discharge of the Company's independent
auditors.
The Compensation Committee currently consists of Messrs. Gunning and Jones
and met two times in fiscal 1996. The Compensation Committee reviews salaries
and benefit programs designed for senior management, officers and directors and
administers the Company's Stock Option Plan with a view to insure that the
Company is attracting and retaining highly qualified managers through
competitive salary and benefit programs and encouraging extraordinary effort
through incentive rewards.
The Company does not have a nominating committee or a committee performing
the functions of a nominating committee. Nominations of persons to be directors
are considered by the full Board of Directors.
6
<PAGE> 8
EXECUTIVE COMPENSATION
The following table sets forth for each of the last three fiscal years the
total compensation awarded to, earned by or paid to (i) the Company's Chief
Executive Officer, (ii) each of the Company's other executive officers who were
serving as executive officers at the end of fiscal 1996 and whose salary and
bonus aggregated at least $100,000 for services rendered to the Company during
fiscal 1996 and (iii) one individual, Mark D. Fife, for whom disclosure would
have been required under (ii) above but for the fact that Mr. Fife was not
serving as an executive officer of the Company at the end of fiscal 1996
(collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
----------------------------------------------- ------------
AWARDS
------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION($)(1) OPTIONS COMPENSATION(2)
- --------------------------- ---- ------ ----- ------------------ ------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Eric J. Crown 1996 $225,000(3) 0 -- 0 $ 3,043
Chief Executive Officer 1995 $293,750(3) 0 -- 0 $ 1,601
1994 $530,000 $227,000 -- 0 $ 1,505
Timothy A. Crown 1996 $225,000(3) 0 -- 0 $ 3,080
President 1995 $293,750(3) 0 -- 0 $ 1,585
1994 $530,000 $227,000 -- 0 $ 1,481
Stanley Laybourne 1996 $137,500 0 -- 50,000 $ 2,516
Chief Financial Officer 1995 $125,000 0 -- 0 $ 1,294
1994 $125,000 $ 19,201 -- 0 $ 964
Branson M. Smith 1996 $127,404(4) $ 500 -- 20,000 $ 1,414
Chief Operating Officer 1995 $118,000 $ 18,333 -- 20,000 $ 1,390
of Direct Alliance 1994 $105,000 $ 16,126 -- 0 $ 359
Corporation
Mark D. Fife 1996 $118,590 0 -- 20,000 $ 1,850
Senior Vice President of 1995 $103,346 $ 42,000 -- 15,000 $ 1,223
Strategic Alliance of 1994 $ 81,538 $ 5,687 -- 0 $ 265
Insight Direct, Inc.
</TABLE>
- --------
(1) The cost of certain perquisite and other personal benefits are not
included because they did not exceed, in the case of any executive
officer, the lesser of $50,000 or 10% of the total of the annual salary
and bonus for such executive.
(2) Represents payments for disability insurance premiums and 401(k)
contributions made by the Company to the account of the executive officer
in the following amounts, respectively: $652 and $2,391 in 1996, $578 and
$1,023 in 1995 and $581 and $924 in 1994 for Eric J. Crown; $652 and
$2,428 in 1996, $578 and $1,007 in 1995 and $581 and $900 in 1994 for
Timothy A. Crown; $454 and $2,062 in 1996, $395 and $899 in 1995 and $459
and $505 in 1994 for Mr. Laybourne; $391 and $1,023 in 1996, $333 and
$1,057 in 1995 and $96 and $263 in 1994 for Mr. Smith; and $367 and $1,483
in 1996, $310 and $913 in 1995 and $265 and $0 in 1994 for Mr. Fife.
(3) Effective October 1, 1994, the salaries for the Chief Executive Officer
and President were each set at $225,000 for the remainder of fiscal 1995
and for each of fiscal years 1996 and 1997. See "Employment Contracts,
Termination of Employment and Change-in-Control Agreements" below.
(4) Includes $2,404 of salary that was due at the end of fiscal 1995, but was
paid in fiscal 1996.
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<PAGE> 9
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information regarding stock options
granted during the fiscal year ended June 30, 1996 to the Named Executive
Officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------------- POTENTIAL REALIZABLE VALUE AT
NUMBER OF PERCENT OF TOTAL ASSUMED ANNUAL RATES OF
SECURITIES OPTIONS STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE OR FOR OPTION TERM(1)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION -----------------------------
NAME GRANTED (#) FISCAL YEAR ($/SHARE) DATE 5% 10%
---- ----------- ----------- --------- ---------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Eric J. Crown 0 0 0 0 0 0
Timothy A. Crown 0 0 0 0 0 0
Stanley Laybourne 50,000(2) 18.85% $13.00 1/01/06 $ 408,781 $1,035,934
Branson M. Smith 20,000(2) 7.54% $13.00 1/01/06 $ 163,513 $ 414,374
Mark D. Fife 20,000(2) 7.54% $13.00 1/01/06 $ 163,513 $ 414,374
</TABLE>
- ----------
(1) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term (10 years).
The potential realizable value of the foregoing options is calculated by
assuming that the market price of the underlying security appreciates in
value from the date of grant to the end of the term of the option at the
specified annual rates, and that the option is exercised at the exercise
price and sold on the last day of its term at the appreciated price. These
gains are based on assumed rates of stock appreciation of 5% and 10%
compounded annually from the date the respective options were granted to
their expiration date and are not presented to forecast possible future
appreciation, if any, in the price of the Common Stock.
(2) One-third of the options become exercisable on each of the first three
anniversaries of the grant date.
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<PAGE> 10
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information with respect to option
exercises of and the number and value of options outstanding at June 30, 1996
held by the Named Executive Officers.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT FY-END (#) OPTIONS AT FY-END
ACQUIRED ON VALUE --------------------------- ----------------------------
NAME EXERCISE (#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------ -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Eric J. Crown 0 0 0 0 0 0
Timothy A. Crown 0 0 0 0 0 0
Stanley Laybourne 24,120 $ 389,379 45,647 50,000 $1,028,582 $ 512,500
Branson M. Smith 0 0 10,000 30,000 $ 142,500 $ 347,500
Mark D. Fife 7,500 $ 73,750 0 27,500 0 $ 310,625
</TABLE>
- ---------------
(1) Value as of June 30, 1996 is based upon the closing price of $23.25 on
that date as reported on the Nasdaq National Market minus the exercise
price, multiplied by the number of shares underlying the option.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
Effective October 1, 1994, Eric J. Crown and Timothy A. Crown each entered
into an employment agreement with the Company on substantially identical terms.
Each employment agreement provides for an annual salary of $225,000 for the
remainder of 1995 and throughout fiscal years 1996 and 1997 and further provides
that no bonus will be paid either to Eric J. Crown or to Timothy A. Crown with
respect to the 1996 or 1997 fiscal years. Each of Eric J. Crown and Timothy A.
Crown has agreed that he will not consent to an amendment of his employment
agreement prior to the end of its stated term. Pursuant to their terms, both
agreements will terminate on June 30, 1997. The Company may terminate the
employee's employment without cause at any time upon the payment of severance
benefits equal to six months of salary.
Under the Company's 1994 Option Plan (the "Option Plan"), upon the
occurrence of a merger or reorganization in which the Company is not the
surviving corporation, outstanding options are required to be assumed by the
surviving corporation or the holders of vested options are to be paid, in cash,
the difference between the fair market value of the Company's Common Stock on
the date of the merger or reorganization and the exercise price of the vested
options. Options granted under a predecessor plan terminate upon the occurrence
of a merger or certain forms of reorganization transactions in which the Company
is not the surviving corporation unless provision is made for assumption of the
options by the surviving corporation, provided that, where no provision is made
for such assumption, the unvested portion of each outstanding option shall
become exercisable prior to the applicable transaction.
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<PAGE> 11
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company receive a retainer of
$1,000 per quarter plus $500 per meeting attended, plus reimbursement of
reasonable expenses and certain formula-based stock option awards as described
in the next paragraph. Directors who are employees of the Company do not receive
compensation for their service as directors.
Directors who are not employees of the Company ("nonemployee directors")
are eligible to receive nonqualified stock options only pursuant to a formula
grant provision of the Option Plan. The formula provided for an initial grant of
options for 2,500 shares to each nonemployee director on the closing date of the
Company's initial public offering. Commencing with the 1998 Annual Meeting of
Stockholders, nonemployee directors will receive options for 1,500 shares each
time they are elected for a three-year term on the board. Nonemployee directors
initially elected to the board between annual meetings will receive options for
500 shares multiplied by the number of full and partial years of their initial
terms. Options granted under the formula provision are exercisable for 10 years
at the fair market value of the stock on the date of grant and vest at the rate
of 500 options per year, subject to continued board service.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee") is
charged with the responsibility of:
(1) reviewing and approving the annual salary, bonus and other
benefits, direct and indirect, including perquisites and personal
benefits, to be paid or awarded to executive officers;
(2) reviewing and recommending to the Board of Directors new
compensation and stock plans and changes to existing plans; and
(3) administering the incentive compensation plans, stock option and
other stock-based plans, and other employee benefit plans of the
Company and its subsidiaries.
The Committee currently is comprised of Larry A. Gunning and Robertson C. Jones,
each of whom is an outside director.
COMPENSATION PHILOSOPHY
The general philosophy of the Company's executive compensation program is
to offer executive officers compensation that is competitive in the marketplace,
but also is based upon the Company's performance and/or the employee's
individual contribution and performance. The Company's executive compensation
policies are intended to motivate and reward executives for long-term strategic
management and the enhancement of stockholder value through cash payments
(salary and bonus) and equity incentives (in the form of stock options). The
ultimate goal of the Committee in its administration of the Company's executive
compensation program is to ensure that the Company attracts and retains highly
qualified managers through competitive salary and benefit programs and
encourages extraordinary effort on the part of management through well-designed
incentive opportunities.
10
<PAGE> 12
BASE SALARY
Executive officer base salaries for fiscal 1996 were set by the Committee
during fiscal 1995. Base salaries for fiscal 1996 were maintained at the rate
which had previously been established for fiscal 1995. Several factors were
considered in determining each executive's base salary, primarily including
compensation data for comparable companies in the Company's industry and
compensation data for executives with comparable responsibilities in the
Phoenix, Arizona metropolitan area, as derived primarily from published industry
data and proxy statements of publicly-held companies. The Company did not
utilize an independent consulting firm in formulating compensation decisions.
Effective October 1, 1994 and in anticipation of the Company's initial
public offering, each of Eric J. Crown, Chief Executive Officer, and Timothy A.
Crown, President, entered into an employment agreement with the Company that
provides for, among other things, a reduction of his annual base salary to
$225,000 for the remainder of fiscal 1995 and for fiscal years 1996 and 1997,
and further provides that no bonus will be paid to him for performance during
those three fiscal years. Also, the annual base salary of Stanley Laybourne,
Chief Financial Officer, was increased during fiscal 1996 from $125,000 to
$150,000 based upon the Committee's appraisal of the contributions of Mr.
Laybourne.
CASH BONUSES
Traditionally, the Company has viewed cash bonuses for executive officers
as an opportunity to tie a portion of an executive officer's compensation to the
financial performance of the Company. As mentioned above, the employment
agreements for the Chief Executive Officer and President specifically provide
that no bonuses shall be paid to those officers for performance during fiscal
years 1995, 1996 and 1997. Further, the Company did not pay bonuses to any of
its executive officers during fiscal 1996, except for Branson M. Smith. Mr.
Smith received a bonus of $500 as a result of being named the Company's Manager
of the Year.
STOCK INCENTIVES
In November 1994, the Company's Board of Directors adopted and the
Company's private stockholders approved the 1994 Stock Option Plan (the "Option
Plan") under which incentive stock options and nonqualified stock options may be
granted to executive officers, other key employees, non-employee directors and
consultants. Stock-based compensation is viewed as a critical incentive
component of the Company's overall executive compensation program because it
directly ties an executive's compensation to the value realized by the Company's
owners -- its stockholders -- and because it permits the Company to recruit and
retain top talent.
During fiscal 1996, incentive stock options to purchase a total of 70,000
shares of Company Common Stock were granted to the Company's executive officers
under the Option Plan. None of those options was granted to the Chief Executive
Officer or President. With respect to the grants made to the other executive
officers, the existing number of options held by each proposed optionee was
considered, with a goal of increasing the equity incentive of the optionees.
All of the options granted during fiscal 1996 to executive officers
provide that one-third of the options vest on each of the first three
anniversaries of the date of grant, provided the optionee is still an employee
of the Company at that time. A staged vesting was employed in order to provide
incentive for the Company's key executives to remain at the Company for at least
three years following the date of option grant to promote continuity of the
Company's previously successful management team. All of the options
11
<PAGE> 13
were granted with an exercise price equal to the market value of the Company's
Common Stock at the close of trading on the date of grant, thus serving to focus
the optionee's attention on managing the Company from the perspective of an
owner with an equity stake in the business.
REPORT ON REPRICING OF OPTIONS
In October 1995, the Committee approved stock option grants to several
executive officers and other employees. The options were granted at the then
fair market value of $20.00 with various vesting periods and expired 10 years
after the grant date. In light of the significant decline in market value of the
Company's common stock, the Committee decided to cancel those grants and
exchange them for options granted January 2, 1996, at the then fair market value
of $13.00. The options provide for various vesting periods and expire 10 years
after the grant date.
The following table sets forth information with respect to the repricing
of options held by any executive officer during the last ten completed fiscal
years.
TEN YEAR OPTION REPRICINGS
<TABLE>
<CAPTION>
LENGTH OF
NUMBER OF ORIGINAL
SECURITIES OPTION TERM
UNDERLYING MARKET PRICE OF EXERCISE PRICE REMAINING AT
OPTIONS STOCK AT TIME OF AT TIME OF NEW DATE OF
REPRICED OR REPRICING OR REPRICING OR EXERCISE REPRICING OR
NAME DATE AMENDED (#) AMENDMENT AMENDMENT PRICE AMENDMENT
- ---- ---- ----------- --------- --------- ----- ---------
<S> <C> <C> <C> <C> <C> <C>
Stanley Laybourne 1/2/96 50,000 $13.00 $20.00 $13.00 117 Months
Branson M. Smith 1/2/96 20,000 $13.00 $20.00 $13.00 117 Months
Mark D. Fife 1/2/96 20,000 $13.00 $20.00 $13.00 117 Months
</TABLE>
SECTION 162(m)
Section 162(m) of the Internal Revenue Code limits, to one million
dollars, the deductibility by a publicly held corporation of compensation paid
in a taxable year to the Chief Executive Officer and any other executive officer
whose compensation is required to be reported in the Summary Compensation Table.
Qualified performance-based compensation will not be subject to the deduction
limit if certain conditions are met. It is the Committee's intent to evaluate
and, to the fullest extent possible consistent with its other compensation
objectives and overall compensation philosophy, take the steps necessary to
satisfy those conditions in order to preserve the deductibility of executive
compensation. One of those
12
<PAGE> 14
conditions is that the performance goals under which the compensation is paid
must be established by a committee comprised solely of two or more outside
directors. The Committee believes that its current composition satisfies this
requirement.
COMPENSATION COMMITTEE
Larry A. Gunning Robertson C. Jones
STOCK PRICE PERFORMANCE GRAPH
Set forth below is a graph comparing the percentage change in the
cumulative total stockholder return on the Company's Common Stock with the
cumulative total return of the Nasdaq Composite Index and the Nasdaq Retail
Trade Index for the period commencing January 24, 1995 (the date on which
trading in the Company's Common Stock commenced) and ending June 30, 1996. The
graph assumes that $100 was invested on January 24, 1995 in Company Common Stock
and in each of the two Nasdaq indices, and that, as to such indices, dividends
were reinvested. The Company has not, since its inception, paid any dividends on
the Common Stock.
Historical stock price performance shown on the graph is not necessarily
indicative of future price performance.
<TABLE>
<CAPTION>
Jan. 24, 1995 June 30, 1995 June 30, 1996
------------- ------------- -------------
<S> <C> <C> <C>
Insight Enterprises, Inc. Common Stock $100.00 $149.40 $224.10
Nasdaq Stock Market U.S. Companies $100.00 $122.70 $157.60
(Market Index)
Nasdaq Retail Trade Stock (Peer Index) $100.00 $111.30 $135.30
</TABLE>
13
<PAGE> 15
PROPOSAL
AMENDMENT TO THE COMPANY'S CERTIFICATE
OF INCORPORATION TO INCREASE THE AUTHORIZED
NUMBER OF SHARES OF COMMON STOCK AND PREFERRED STOCK
The Company's Board of Directors has determined that it is in the best
interests of the Company and its stockholders to amend the Company's Certificate
of Incorporation to increase the authorized number of shares of Common Stock,
$.01 par value, from 10,000,000 to 30,000,000 and of Preferred Stock, $.01 per
value per share, from 1,000,000 to 3,000,000 (the "Proposed Amendment"). If the
Company's stockholders approve the Proposed Amendment, the Company will be
authorized to issue a total of 33,000,000 shares of capital stock: 30,000,000
shares of Common Stock and 3,000,000 shares of Preferred Stock.
If the Company's stockholders approve the Proposed Amendment, it will
become effective upon filing of the Company's Amended Certificate of
Incorporation with the Secretary of State of the State of Delaware. A copy of
the Company's Amended Certificate of Incorporation reflecting the adoption of
the Proposed Amendment is attached hereto as Exhibit A.
PURPOSE AND EFFECTS OF THE PROPOSED AMENDMENT
The objective of the increase in the authorized number of shares of
Common Stock and Preferred Stock is to ensure that the Company has sufficient
shares available for business needs and activities as they arise. Such future
activities may include, without limitation, effecting stock splits or dividends,
effecting additional financings, providing equity incentives to employees,
officers or directors or establishing strategic relationships with corporate
partners. The additional shares also may be issued to acquire or invest in other
businesses.
On the Record Date, there were ____________ shares of Common Stock issued
and outstanding. The issuance of additional shares of Common Stock would
decrease the proportionate equity interest of the Company's current stockholders
and, depending on the price paid for such additional shares, could result in
dilution to the Company's current stockholders. If issued, the additional shares
of Common Stock would have rights identical to the currently outstanding shares
of Common Stock. Adoption of the Proposed Amendment would not affect the rights
of the Company's current stockholders, except for effects incidental to
authorizing an increase in the number of authorized shares of Common Stock.
If the Company's stockholders approve the Proposed Amendment, the Board
of Directors may cause the issuance of additional shares of Common Stock without
further vote of the stockholders. Current holders of Common Stock do not have
preemptive or similar rights, which means that current stockholders do not have
a prior right to purchase any new issue of capital stock of the Company in order
to maintain their proportionate ownership level. Other than existing stock
options and warrants, the Company currently has no commitments to issue
additional shares of Common Stock, although it is continually exploring
potential acquisitions and financing possibilities which could lead to the
issuance of additional shares at any time.
There currently are no shares of Preferred Stock outstanding. If the
stockholders approve the Proposed Amendment, the Company would be authorized to
issue 3,000,000 shares of undesignated Preferred Stock. The Board of Directors
has the authority to issue the undesignated Preferred Stock in one or more
series and to determine the power preferences and rights and the qualifications,
limitations or
14
<PAGE> 16
restrictions granted to or imposed upon any wholly unissued series of
undesignated Preferred Stock and to fix the number of shares constituting any
series and the designation of such series, without any further vote or action by
the stockholders. Shares of Preferred Stock so designated may have voting,
conversion, liquidation preference, redemption, sinking fund provisions or other
rights that are superior to those of the Common Stock. The issuance of Preferred
Stock may have the effect of delaying, deferring or preventing a change in
control of the Company without further action by the stockholders, may
discourage bids for the Common Stock at a premium over the market price of the
Common Stock and may adversely affect the market price of and the voting and
other rights of the holders of Common Stock. The Company has no present plans to
issue any of the Preferred Stock.
The Proposed Amendment requires the affirmative vote of the holders of a
majority of the issued and outstanding shares of Common Stock entitled to vote
at the Annual Meeting.
As of the Record Date, the directors and executive officers of the
Company beneficially owned 37% of the outstanding Common Stock. All of the
directors and executive officers of the Company have indicated that they intend
to vote for approval of the Proposed Amendment.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR THE
APPROVAL OF THE PROPOSED AMENDMENT.
15
<PAGE> 17
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the Company's directors,
its executive officers, and any persons holding more than 10% of the Company's
Common Stock are required to report their initial ownership of the Company's
Common Stock and any subsequent changes in that ownership to the Securities and
Exchange Commission. Specific due dates for these reports have been established
and the Company is required to disclose any failure to file by these dates.
Based upon a review of such reports furnished to the Company, or written
representations that no reports were required, the Company believes that all of
these filing requirements were satisfied during the fiscal year ended June 30,
1996.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of the Record Date by (i)
each person or entity known to the Company to own beneficially more than 5% of
the outstanding shares of Common Stock, (ii) each of the Company's directors,
(iii) each of the Named Executive Officers, and (iv) all directors and executive
officers of the Company as a group.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
BENEFICIALLY OWNED(2)
----------------------------------
NAME(1) NUMBER OF SHARES PERCENT
- ------- ---------------- -------
<S> <C> <C>
Eric J. Crown 984,129(3) 18.2%
Timothy A. Crown 984,029 18.2
Stanley Laybourne 45,647(4) *
Branson M. Smith 0 *
Larry A. Gunning 5,250(5) *
Robertson C. Jones 1,000(5) *
Mark D. Fife 0 *
All directors and executive officers as a group (7 persons) 2,020,555(6) 37.0%
</TABLE>
---------------
* Less than 1%
(1) The address of Messrs. Crown, Crown, Laybourne, Smith, Gunning, Jones and
Fife is c/o Insight Enterprises, Inc., 1912 West Fourth Street, Tempe,
Arizona 85281.
(2) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission ("SEC") and generally includes voting
or investment power with respect to securities. In accordance with SEC
rules, shares which may be acquired upon exercise of stock options which
are currently exercisable or which become exercisable within 60 days of
the date of the information in the table are deemed to be beneficially
owned by the optionee. Except as indicated by footnote, and subject to
community property laws where applicable, to the Company's knowledge the
persons or entities named in the table above have sole voting and
investment power with respect to all shares of Common Stock shown as
beneficially owned by them.
(3) Includes 100 shares beneficially owned by Mr. Crown's spouse.
(4) Consists of 45,647 shares subject to options exercisable within 60 days
of the Record Date.
(5) Includes 500 shares subject to options exercisable within 60 days of the
Record Date.
(6) Includes 46,647 shares subject to options exercisable within 60 days of
the Record Date.
16
<PAGE> 18
CERTAIN TRANSACTIONS AND RELATIONSHIPS
Eric J. Crown and Timothy A. Crown each own 15% of the voting securities
of Concentric Systems, Inc., a reseller of computer products. Concentric
Systems, Inc. purchased $2,572,315, $2,383,655, and $3,590,000 of products from
the Company, consisting primarily of computer hard disk drives, for the fiscal
years 1996, 1995 and 1994, respectively. These products were sold to Concentric
Systems, Inc. at an average mark-up of approximately one percent over the cost
of such products to the Company in fiscal 1996 and approximately five percent
over cost in fiscal 1995 and 1994.
Commencing October 1993, the Company began leasing a parcel of vacant
land owned by a corporation that is owned by Eric J. Crown and Timothy A. Crown
pursuant to a month-to-month lease at a monthly rental rate of $3,500. The
vacant land is adjacent to the Company's facilities and is used as an employee
parking lot.
The Company believes that all transactions it has entered into with
affiliates are at arm's-length and on terms equivalent or similar to terms under
which the Company would conduct business with unaffiliated third parties.
RELATIONSHIP WITH INDEPENDENT AUDITORS
The principal independent accounting firm utilized by the Company during
the fiscal year ended June 30, 1996, was KPMG Peat Marwick LLP, independent
certified public accountants. KPMG Peat Marwick LLP has audited the Company's
financial statements annually since 1988. It is presently contemplated that KPMG
Peat Marwick LLP will be retained as the principal accounting firm to be
utilized by the Company during the 1997 fiscal year. A representative of KPMG
Peat Marwick LLP is expected to be present at the Annual Meeting for the purpose
of responding to appropriate questions and will be given the opportunity to make
a statement if they desire to do so.
STOCKHOLDER PROPOSALS
Proposals of stockholders of the Company which are intended to be
presented by such stockholders at the Company's Annual Meeting for the fiscal
year ending June 30, 1997 must be received by the Company no later than July 30,
1997 in order that they may be considered for inclusion in the proxy statement
and form of proxy relating to that meeting. Proposals should be addressed to the
Secretary of the Company at 1912 West Fourth Street, Tempe, Arizona 85281.
17
<PAGE> 19
OTHER MATTERS
The Company knows of no other matters to be brought before the Annual
Meeting. If any other matter properly comes before the Annual Meeting, it is the
intention of the persons named in the enclosed proxy card to vote the shares
represented by the proxies as the Board of Directors may recommend.
The foregoing Notice and Proxy Statement are sent by order of the Board
of Directors.
INSIGHT ENTERPRISES, INC.
November ___, 1996 Stanley Laybourne
Secretary, Treasurer
and Chief Financial Officer
18
<PAGE> 20
EXHIBIT A
CERTIFICATE OF INCORPORATION
OF
INSIGHT ENTERPRISES, INC.
(As amended through December 12, 1996)
1. Name. The name of the Corporation is Insight Enterprises, Inc.
2. Registered Office and Agent. The name and address of the registered
office and registered agent of the Corporation is The Corporation Trust Company,
Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County,
Delaware.
3. Purpose. The purpose for which this Corporation is organized is the
transaction of any or all lawful activity for which corporations may be
organized under the General Corporation Law of Delaware, as it may be amended
from time to time ("GCL").
4. Authorized Capital. The total number of shares of stock which the
Corporation shall have authority to issue is 33,000,000 shares, consisting of
30,000,000 shares of common stock having a par value of $.01 per share (the
"Common Stock") and 3,000,000 shares of preferred stock having a par value of
$.01 per share (the "Preferred Stock").
The Board of Directors is authorized, subject to limitations prescribed
by law and the provisions of this Article 4, to provide for the issuance of the
shares of Preferred Stock in series, and by filing a certificate pursuant to the
applicable law of the State of Delaware, to establish from time to time the
number of shares to be included in each such series, and to fix the designation,
powers, preferences and rights of the shares of each such series and the
qualifications, limitations or restrictions thereof.
The authority of the Board with respect to each series shall include, but
not be limited to, determination of the following:
(a) The number of shares constituting that series and the
distinctive designation of that series;
(b) The dividend rate on the shares of that series, whether
dividends shall be cumulative, and, if so, from which date or dates, and the
relative rights of priority, if any, of payment of dividends on shares of that
series;
(c) Whether that series shall have voting rights, in addition
to the voting rights provided by law, and, if so, the terms of such voting
rights;
(d) Whether that series shall have conversion privileges, and,
if so, the terms and conditions of such conversion, including provision for
adjustment of the conversion rate in such events as the Board of Directors shall
determine;
A-1
<PAGE> 21
(e) Whether or not the shares of that series shall be
redeemable, and, if so, the terms and conditions of such redemption, including
the date or dates upon or after which they shall be redeemable, and the amount
per share payable in case of redemption, which amount may vary under different
conditions and at different redemption dates;
(f) Whether that series shall have a sinking fund for the
redemption or purchase of shares of that series, and, if so, the terms and
amount of such sinking fund;
(g) The rights of the shares of that series in the event of
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation, and the relative rights of priority, if any, of payment of shares
of that series; and
(h) Any other relative rights, preferences and limitations of
that series.
5. Classification and Terms of Directors. The business and affairs of the
Corporation shall be managed by or under the direction of the Board of Directors
consisting of not less than three directors nor more than nine directors, the
exact number of directors to be determined from time to time by resolution
adopted by the Board of Directors. The directors shall be divided into three
classes, designated Class I, Class II and Class III. Each class shall consist,
as nearly as may be possible, of one-third of the total number of directors
constituting the entire Board of Directors. The terms of the initial Class I
directors shall terminate on the date of the 1995 annual meeting of
stockholders; the terms of the initial Class II directors shall terminate on the
date of the 1996 annual meeting of stockholders; and the terms of the initial
Class III directors shall terminate on the date of the 1997 annual meeting of
stockholders. At each annual meeting of stockholders beginning in 1995,
successors to the class of directors whose term expires at that annual meeting
shall be elected for a three-year term. If the number of directors is changed,
any increase or decrease shall be apportioned among the classes so as to
maintain the number of directors in each class as nearly equal as possible, and
any additional directors of any class elected to fill a vacancy resulting from
an increase in such class shall hold office for a term that shall coincide with
the remaining terms of that class, but in no case will a decrease in the number
of directors shorten the term of any incumbent director. A director shall hold
office until the annual meeting for the year in which his term expires and until
his successor shall be elected and shall qualify, subject, however, to prior
death, resignation, retirement, disqualification or removal from office. Any
vacancy on the Board of Directors that results from an increase in the number of
directors may be filled by a majority of the whole Board of Directors, and any
other vacancy may be filled by a majority of the directors then in office, even
if less than a quorum, or by a sole remaining director. Any director elected to
fill a vacancy shall hold office for a term that shall coincide with the term of
the class to which such director shall have been elected.
Notwithstanding the foregoing, whenever the holders of any one or more
classes or series of Preferred Stock issued by the Corporation shall have the
right, voting separately by class or series, to elect directors at an annual or
special meeting of stockholders, the election, term of office, filling of
vacancies and other features of such directorships shall be governed by the
terms of this Certificate of Incorporation or the resolution or resolutions
adopted by the Board of Directors pursuant to Article 4 applicable thereto, and
such directors so elected shall not be divided into classes pursuant to this
Article 5 unless expressly provided by such terms.
6. Removal of Directors. Subject to the rights, if any, of the holders of
shares of Preferred Stock then outstanding, any or all of the directors of the
Corporation may be removed from office at any time, but only for cause and only
by the affirmative vote of the holders of a majority of the outstanding
A-2
<PAGE> 22
shares of the Corporation then entitled to vote generally in the election of
directors, considered for purposes of this Article 6 as one class.
7. Election of Directors. Elections of directors at an annual or special
meeting of stockholders shall be by written ballot unless the Bylaws of the
Corporation shall otherwise provide. Advance notice of stockholder nominations
for the election of directors shall be given in the manner provided in the
Bylaws of the Corporation.
8. Special Meetings. Special meetings of the stockholders of the
Corporation for any purpose or purposes may be called at any time only by the
Chairman of the Board, the Chief Executive Officer, or the Board of Directors
pursuant to a resolution approved by a majority of the whole Board of Directors,
or at the request in writing of stockholders owning twenty-five percent (25%) or
more in amount of the capital stock issued and outstanding and entitled to vote.
Special meetings of the stockholders may not be called by any other person or
persons. Business transacted at any special meeting of the stockholders shall be
limited to the purposes stated in the notice of such meeting.
9. Special Voting Requirements.
(a) Except as set forth in Section B of this Article 9, the
affirmative vote of the holders of two-thirds of the outstanding stock of the
Corporation entitled to vote shall be required for:
(l) any merger or consolidation to which the
Corporation, or any of its subsidiaries, and an Interested Person (as
hereinafter defined) are parties;
(2) any sale or other disposition by the
Corporation, or any of its subsidiaries, of all or substantially all of its
assets to an Interested Person;
(3) any purchase or other acquisition by the
Corporation, or any of its subsidiaries, of all or substantially all of the
assets or stock of an Interested Person; and
(4) any other transaction with an Interested
Person which requires the approval of the stockholders of the Corporation under
the GCL, as in effect from time to time.
(b) The provisions of Section (a) of this Article 9 shall not
be applicable to any transaction described therein if such transaction is
approved by resolution of the Corporation's Board of Directors, provided that a
majority of the members of the Board of Directors voting for the approval of
such transaction are Continuing Directors. The term "Continuing Director" shall
mean any member of the Board of Directors of the Corporation who is not the
Interested Person, and not an affiliate, associate, representative or nominee of
the Interested Person or of such an affiliate or associate, that is involved in
the relevant transaction, and (A) was a member of the Board of Directors on
November 9, 1994 or (B) was a member of the Board of Directors prior to the date
that the person, firm or corporation, or any group thereof, with whom such
transaction is proposed, became an Interested Person, or (C) whose initial
election as a director of the Corporation succeeds a Continuing Director or is a
newly created directorship, and in either case was recommended by a majority
vote of the Continuing Directors then in office.
(c) As used in this Article 9, the term "Interested Person"
shall mean any person, firm or corporation, or any group thereof, acting or
intending to act in concert, including any person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such person, firm or corporation or group, which owns of record or beneficially,
directly or indirectly, five
A-3
<PAGE> 23
percent (5%) or more of any class of voting securities of the Corporation;
except that the term "Interested Person" shall not mean or apply to a person,
firm or corporation which owned of record or beneficially twenty-five percent
(25%) or more of any class of voting securities of the Corporation at the
effective time of the merger of Insight Enterprises, Inc., an Arizona
corporation, into the Corporation.
10. Limitation of Liability. No director of the Corporation shall be
personally liable to the Corporation or its stockholders for monetary damages
for any breach of fiduciary duty by such a director as a director.
Notwithstanding the foregoing sentence, a director shall be liable to the extent
provided by applicable law (i) for any breach of the director's duty of loyalty
to the Corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involve intentional misconduct or a knowing violation of law,
(iii) pursuant to Section 174 of the GCL, or (iv) for any transaction from which
such director derived an improper personal benefit. No amendment to or repeal of
this Article 10 shall apply to or have an effect on the liability or alleged
liability of any director of the Corporation for or with respect to any acts or
omissions of such director occurring prior to such amendment or repeal.
11. Bylaws. In furtherance and not in limitation of the powers conferred
by statute, the Board of Directors is expressly authorized by majority vote of
the whole Board of Directors to adopt, repeal, alter, amend or rescind the
Bylaws of the Corporation. In addition, the Bylaws of the Corporation may be
adopted, repealed, altered, amended, or rescinded by the affirmative vote of
two-thirds of the outstanding stock of the Corporation entitled to vote thereon;
provided, if the Continuing Directors, as defined in Article 9, shall by a
two-thirds favorable vote of such Continuing Directors have adopted a resolution
approving the amendment or repeal proposal and have determined to recommend it
for approval by the holders of stock entitled to vote thereon, then the vote
required shall be the affirmative vote of the holders of at least a majority of
the outstanding shares entitled to vote thereon.
12. Action by Consent of Stockholders. Any action required or permitted
to be taken by the stockholders must be effected at a duly called and noticed
annual or special meeting of such stockholders and may not be effected by any
consent in writing by such stockholders.
13. Certificate. The Corporation specifically elects not to be governed
by Section 203 of the GCL. The Corporation reserves the right to amend, alter,
change or repeal any provision contained in this Certificate of Incorporation in
the manner now or hereafter prescribed by statute and the Certificate of
Incorporation, and all rights conferred on stockholders herein are granted
subject to the reservations in this Article 13; provided, however, the
affirmative vote of the holders of at least two-thirds of the voting power of
the outstanding stock of the Corporation entitled to vote thereon shall be
required to alter, amend, or adopt any provision inconsistent with or repeal
Articles 5, 6, 7, 8, 9, 10, 11, 12 and this Article 13; provided, if the
Continuing Directors, as defined in Article 9, shall by a two-thirds favorable
vote of such Continuing Directors have adopted a resolution approving the
amendment or repeal proposal and have determined to recommend it for approval by
the holders of stock entitled to vote thereon, then the vote required shall be
the affirmative vote of the holders of at least a majority of the outstanding
shares entitled to vote thereon.
14. Incorporator. The name and address of the sole incorporator is as
follows:
Eric J. Crown
1912 West 4th Street
Tempe, Arizona 85281
A-4
<PAGE> 24
PROXY
INSIGHT ENTERPRISES, INC.
1996 ANNUAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints ERIC J. CROWN and STANLEY LAYBOURNE, or any one
of them acting in the absence of the other with full powers of substitution, the
true and lawful attorneys and proxies of the undersigned to vote, as designated
below, all shares of Common Stock of Insight Enterprises, Inc. (the "Company")
which the undersigned is entitled to vote at the 1996 Annual Meeting of
Stockholders of the Company to be held at Tempe Mission Palms, 60 East Fifth
Street, Tempe, Arizona 85281, on Thursday, December 12, 1996 at 10:00 a.m. local
time and at any and all adjournments or postponements thereof.
PLEASE MARK, SIGN, DATE AND RETURN THIS CARD USING THE ENCLOSED ENVELOPE
- -------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE> 25
Please mark your
vote as indicated / x /
in this example
1. Election of Two Class II Directors:
WITHHELD
VOTE FOR nominees listed below FOR FOR ALL
Larry A. Gunning / / / /
Robertson C. Jones
WITHHELD FOR: (Write that nominee's
name in the space provided below).
-----------------------------------
2. To approve an amendment to the Company's FOR AGAINST ABSTAIN
Certificate of Incorporation increasing
the number of authorized shares of Common / / / / / /
Stock, $.01 par value, from 10,000,000 to
30,000,000 and of Preferred Stock, $.01
par value, from 1,000,000 to 3,000,000
THIS PROXY WILL BE VOTED AS DIRECTED OR, IF
NO DIRECTION IS INDICATED, WILL BE VOTED FOR
THE PROPOSED AMENDMENT TO THE COMPANY'S
ARTICLES OF INCORPORATION, AND AS SAID
PROXIES DEEM ADVISABLE ON SUCH OTHER
MATTERS AS MAY COME BEFORE THE MEETING.
Signature Signature if held jointly Date
----------------- ------------- --------
Please sign exactly as your name appears. If shares are held by joint tenants,
both should sign. When signing as attorney, executor, administrator, trustee,
or guardian, please give full title.
- --------------------------------------------------------------------------------
FOLD AND DETACH HERE
