<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
<TABLE>
<S> <C>
[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 Rule 14a-11(c) or Rule 14a-12
</TABLE>
INSIGHT ENTERPRISES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
5) Total fee paid:
------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
INSIGHT ENTERPRISES, INC.
6820 SOUTH HARL AVENUE
TEMPE, ARIZONA 85283
NOTICE OF 1999 ANNUAL MEETING OF STOCKHOLDERS
MAY 13, 1999
TO OUR STOCKHOLDERS:
The 1999 Annual Meeting of Stockholders of Insight Enterprises, Inc., a
Delaware corporation (the "Company"), will be held on Thursday, May 13, 1999, at
3:00 p.m. local time, at the Company's corporate headquarters, 6820 South Harl
Avenue, Tempe, Arizona 85283, for the following purposes:
(1) To elect two Class II Directors to serve until the 2002 Annual
Meeting of Stockholders or until their successors have been
duly elected and qualified;
(2) To approve amendments to the Company's Amended and Restated
Certificate of Incorporation to increase the total authorized
number of shares of Common Stock, $.01 par value per share,
from 30,000,000 to 100,000,000 and of Preferred Stock, $.01
par value per share, from 3,000,000 to 10,000,000;
(3) To approve amendments to the Insight Enterprises, Inc. 1998
Long-Term Incentive Plan to increase the number of shares
authorized for issuance thereunder to 3,214,125 and to make
certain other amendments; and
(4) 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 March 17, 1999 to receive notice of and to
vote at the Annual Meeting or any adjournment or postponement 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 1998
Annual Report to Stockholders, which includes audited financial statements, is
enclosed.
All stockholders are cordially invited to attend the Annual Meeting.
By order of the Board of Directors
/s/ Stanley Laybourne
Tempe, Arizona Stanley Laybourne
March 31, 1999 Secretary, Treasurer
and Chief Financial Officer
IMPORTANT
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, YOU ARE REQUESTED TO
COMPLETE, SIGN, DATE AND MAIL THE ENCLOSED PROXY SO THAT YOUR SHARES MAY BE
REPRESENTED AT THE MEETING. A POSTAGE-PAID ENVELOPE IS PROVIDED FOR MAILING IN
THE UNITED STATES.
<PAGE> 3
INSIGHT ENTERPRISES, INC.
6820 SOUTH HARL AVENUE
TEMPE, ARIZONA 85283
PROXY STATEMENT
1999 ANNUAL MEETING OF STOCKHOLDERS
MAY 13, 1999
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, May 13, 1999, at 3:00 p.m. local time, at the Company's
corporate headquarters, 6820 South Harl Avenue, Tempe, Arizona 85283, and at any
and all adjournments or postponements thereof. THE ENCLOSED PROXY IS SOLICITED
BY THE BOARD OF DIRECTORS OF THE COMPANY. The proxy materials will be mailed on
or about April 20, 1999, to stockholders of record at the close of business on
March 17, 1999 (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 6820 South Harl Avenue, Tempe, Arizona
85283 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. Please note,
however, that if a stockholder's shares are held of record by a broker, bank or
other nominee and that stockholder wishes to vote at the Annual Meeting, the
stockholder must bring to the Annual Meeting a letter from the broker, bank or
other nominee confirming that stockholder's beneficial ownership of the shares.
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 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 25,533,064
shares of the Company's Common Stock. Each holder of Common Stock is entitled to
one vote on each proposal that comes before the Annual Meeting, 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 outstanding
Common Stock entitled to vote, in person or by proxy, is required to constitute
a quorum for the transaction 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. Shares represented by proxies pursuant to which
votes have been withheld from any nominee for director, or which contain one or
more abstentions, are counted as present or represented for purposes of
determining both (i) the presence or absence of a quorum for the Annual Meeting
and (ii) the total number of shares entitled to vote. A "broker non-vote" occurs
when a broker or other nominee holding shares for a beneficial owner does not
vote on a particular proposal because the broker or other nominee does not have
discretionary voting power with respect to that item and has not received
instructions from the beneficial owner. Broker non-votes are counted as present
or represented for purposes of determining the presence or absence of a quorum
for the Annual Meeting, but are not counted for purposes of determining the
number of shares entitled to vote with respect to any proposal for which the
broker or other nominee lacks discretionary authority.
All shares represented by valid proxies, unless such proxies have
previously been revoked, will be voted in accordance with the direction on the
proxies. Any proxy on which no direction is indicated, will be voted FOR
Proposals 1, 2 and 3. 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.
STOCK SPLITS
On January 6, 1999, the Company's Board of Directors approved a 3-for-2
stock split effected in the form of a stock dividend and payable on February 18,
1999 to the stockholders of record at the close of business on January 25, 1999.
Additionally, 3-for-2 stock splits were effected in the form of stock dividends
on September 8, 1998 and September 17, 1997. All share amounts, share prices and
related figures are restated in this Proxy Statement to reflect these 3-for-2
stock splits.
3
<PAGE> 5
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's Board of Directors currently consists of five members divided
into three classes, with the directors in each class serving for a term of three
years. The present terms of Larry A. Gunning and Robertson C. Jones, who are
Class II incumbent directors, will expire at the Annual Meeting. The Board of
Directors has nominated Messrs. Gunning and Jones 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
or if a vacancy should occur before election (which events are not anticipated),
the proxies will be voted for the election of such other person or persons
nominated 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.
REQUIRED VOTE
Directors are elected by a plurality of the shares represented at the
meeting, in person or by proxy, and entitled to vote at the Annual Meeting,
provided that a quorum is present. Votes may be cast FOR the nominees or
WITHHELD. In addition, a stockholder may indicate that he or she is voting FOR
the nominees except for any nominee(s) specified in writing on the proxy card.
The two nominees who receive the greatest number of votes cast FOR the election
of such nominees shall be elected as directors. As a result, any vote other than
a vote FOR the nominee will have the practical effect of voting AGAINST the
nominee. An abstention will have the same effect as voting WITHHELD for election
of directors, and, pursuant to Delaware law, a broker non-vote will not be
treated as voting in person or by proxy on the proposal.
Information concerning the director nominees is set forth below.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR ELECTION OF EACH OF
THE DIRECTOR NOMINEES.
4
<PAGE> 6
INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS
The names of the Company's 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) 37 Chief Executive Officer and Chairman of the Board of
the Company (Term expires in 2001)
Timothy A. Crown (1) 35 President and Director of the Company (Term expires
in 2000)
Stanley Laybourne (1) 50 Chief Financial Officer, Secretary, Treasurer and
Director of the Company (Term expires in 2000)
Larry A. Gunning (2) 55 Director of the Company (Term expires in 1999)
Robertson C. Jones (2) 54 Director of the Company (Term expires in 1999)
Michael A. Gumbert 40 Chief Operating Officer of Insight Direct USA, Inc.,
a subsidiary of the Company
Branson M. Smith 43 Chief Operating Officer of Direct Alliance
Corporation, a subsidiary of the Company
Robert J. Armao 35 Executive Vice President of the Company
Dennis A. Faggioni 50 Chief Information Officer of the Company
</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 1988, Mr. Crown operated an independent computer and business consulting
firm. 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
to 1987, Mr. Crown was employed by NCR Corporation as an Administrative Analyst.
From 1987 to 1988, Mr. Crown partnered with Eric Crown in operating an
independent computer consulting and sales company. 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 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 Arizona Sports Foundation, d/b/a
Fiesta Bowl, Fiesta Events, Inc. and the Tucson Bowl Foundation d/b/a
Insight.com Bowl and is a member of the City of Scottsdale Citizens' Bond Review
Commission. Mr. Laybourne is a Certified Public Accountant.
5
<PAGE> 7
Larry A. Gunning. Mr. Gunning has been a director of the Company since
January 1995. He has been President and Director of Pasco Petroleum Corp., a
petroleum marketing company, since 1988. 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 was Vice President and General Counsel of Del Webb
Corporation, a developer of master-planned residential communities, since
January 1992 and was named Senior Vice President in May 1998. 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. Mr. Jones is a director of several nonprofit organizations, including the
Arizona Chamber of Commerce.
Michael A. Gumbert. Mr. Gumbert was hired in July 1996 as Chief Operating
Officer of Insight Direct USA, Inc., a subsidiary of the Company. 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. From August 1995 to June 1996, Mr. Gumbert was Senior Vice President,
General Manager of Tandy Corporation, a consumer electronic retailer. Mr.
Gumbert received a Bachelor of Business Administration in Marketing from North
Texas State University.
Branson M. Smith. Mr. Smith was employed by Insight Direct USA, Inc., a
subsidiary of the Company, from March 1992 to September 1996, serving 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, a subsidiary of the Company. From December 1987
to May 1991, Mr. Smith was a Division Manager of Shape West, a computer disk
manufacturer. From May 1991 to March 1992, Mr. Smith was a principal in
Southwest Automation, an industrial operations consulting firm. Mr. Smith
received a Bachelor of Science degree in Business Administration from the
University of Arizona.
Robert J. Armao. Mr. Armao was hired in October 1998 as Executive Vice
President of Insight Enterprises, Inc. with responsibility for the Company's
overseas operations. From 1990 through 1996, Mr. Armao held various positions
within Intel Corporation including a business management role in their OEM
motherboard and systems operations, as well as the position of Business
Development Manager responsible for external investments and technology
licensing. From 1996 through 1998, Mr. Armao was Vice President of Business
Operations at NEC Corporation in their PC hardware division. Mr. Armao received
a Bachelor of Science degree in Finance from Bentley College and a Masters
degree in Business Administration from Purdue University.
Dennis A. Faggioni. Mr. Faggioni was hired in March 1998 as Chief
Information Officer of the Company. From 1996 to 1998, Mr. Faggioni held the
position of Vice President Information Systems with DSC Communications, a global
communications equipment developer and manufacturer. From 1993 to 1996, Mr.
Faggioni worked at Hogan Systems, an international financial software provider.
During that time his responsibilities included information systems, worldwide
customer support and maintenance, ending his employment there as Vice President
and General Manager of the client-server product group. Mr. Faggioni received
his Bachelor of Science degree from San Jose State University.
6
<PAGE> 8
MEETINGS OF THE BOARD AND ITS COMMITTEES
The Board of Directors held a total of three meetings during the year ended
December 31, 1998. 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 currently consists of 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 currently consists of Larry A. Gunning and Robertson C.
Jones and met three times in 1998. 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 one time in 1998. The Compensation Committee administers salaries and
benefit programs designed for senior management, officers and directors and the
Company's Stock Option Plans 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.
COMPENSATION OF DIRECTORS
Directors who are not employees of the Company ("nonemployee directors")
receive a retainer of $2,000 per quarter, $500 per Board meeting attended, $300
per committee meeting attended, reimbursement of reasonable expenses and certain
formula-based stock option awards as described below. Directors who are
employees of the Company do not receive compensation for their service as
directors. Nonemployee directors are eligible to receive nonqualified stock
options only pursuant to a formula grant provision of the Option Plans. The
formula provided for an initial grant of options for 8,437 shares to each
nonemployee director on the closing date of the Company's initial public
offering. Commencing with the 1996 Annual Meeting of Stockholders, nonemployee
directors started receiving options for 5,062 shares each time they were elected
for a three-year term on the Board. Nonemployee directors initially elected to
the Board between annual meetings will receive options for 1,687 shares
multiplied by the number of full and partial years of their initial terms.
Additionally, the nonemployee directors received options for 10,125 shares
during 1996. This additional grant was based on a compensation comparison to the
Company's competitors for nonemployee directors which was prepared by an
independent company. Options granted under the formula provision of the Option
Plan are exercisable for 10 years at the fair market value of the stock on the
date of grant and vest over a three year period, subject to continued Board
service.
7
<PAGE> 9
EXECUTIVE COMPENSATION
The following table sets forth for each of the last three years the total
compensation awarded to, earned by or paid to (i) the Company's Chief Executive
Officer and (ii) its four other most highly compensated executive officers
(collectively, the "Named Executive Officers") for services rendered in all
capacities.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
-------------------------------------- ---------------------------------
OTHER
ANNUAL RESTRICTED SECURITIES ALL OTHER
NAME AND PRINCIPAL POSITION COMPEN- STOCK UNDERLYING COMPEN-
YEAR SALARY BONUS SATION($)(1) AWARDS($)(2) OPTIONS(#) SATION($)(3)
- ----------------------------- ------- ----------- ----------- ----------- -------------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Eric J. Crown 1998 $250,000 $111,879 -- $456,845 168,750 $ 2,279
Chief Executive Officer 1997 $237,500(4) $195,042 -- - 151,872 $ 1,542
1996 $225,000(4) 0 -- - 0 $ 2,876
Timothy A. Crown 1998 $250,000 $111,879 -- $456,845 168,750 $ 1,732
President 1997 $237,500(4) $195,042 -- - 151,872 $ 1,396
1996 $225,000(4) 0 -- - 0 $ 2,876
Stanley Laybourne 1998 $190,000 $ 22,391 -- $91,392 90,000 $ 1,851
Chief Financial Officer, 1997 $170,000 $ 85,342 -- - 50,622 $ 2,916
Secretary and Treasurer 1996 $150,000 $ 5,182 -- - 168,750 $ 2,716
Michael A. Gumbert (5) 1998 $215,000 $ 52,980 -- $70,875 90,000 $ 3,363
Chief Operating Officer 1997 $192,500 $110,967 -- - 67,497 $ 3,195
of Insight Direct USA, Inc. 1996 $ 87,500 $ 42,859 - 202,500 $ 457
Branson M. Smith 1998 $155,000 $ 20,922 -- $31,988 56,250 $ 1,737
Chief Operating Officer 1997 $146,000 $ 36,118 -- - 67,500 $ 1,620
of Direct Alliance 1996 $128,000 $ 9,478 -- - 67,500 $ 1,476
Corporation
</TABLE>
- ----------
(1) The cost of certain perquisites 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 value based upon the number of shares awarded multiplied by the
closing price on the date of grant as reported on the Nasdaq National
Market. The value of the 19,218, 19,218, 3,844, 2,674, and 1,377 shares of
restricted stock granted in 1998 to Messrs. Crown, Crown, Laybourne,
Gumbert and Smith, respectively (calculated as described in the preceding
sentence) was $651,817, $651,817, $130,377, $90,694, and $46,704 as of
December 31, 1998. Recipients of restricted stock are entitled to receive
any dividends declared on the Company's Common Stock, regardless of
whether such shares have vested. The restricted stock vests quarterly over
a period of three years from the date of grant.
(3) Represents payments for disability insurance premiums and 401(k)
contributions made by the Company to the account of the executive officers
in the following amounts, respectively: $1,060 and $1,219 in 1998, $1,060
and $482 in 1997, and $853 and $2,023 in 1996 for Eric J. Crown; $1,060
and $672 in 1998, $914 and $482 in 1997, and $853 and $2,023 in 1996 for
Timothy A. Crown; $885 and $966 in 1998, $885 and $2,031 in 1997, and $690
and $2,026 in 1996 for Stanley Laybourne; $1,097 and $2,266 in 1998,
$1,097 and $2,098 in 1997, and $457 and $0 in 1996 for Michael A. Gumbert;
$784 and $953 in 1998, $783 and $837 in 1997, and $609 and $867 in 1996
for Branson M. Smith.
(4) Effective October 1, 1994, the salaries for the Chief Executive Officer
and President were each set at $225,000 until June 30, 1997. See
"Employment Contracts, Termination of Employment and Change-in-Control
Agreements" below.
(5) Mr. Gumbert was hired as Chief Operating Officer of Insight Direct USA,
Inc. in July 1996.
8
<PAGE> 10
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information regarding stock options
granted during the year ended December 31, 1998 to the Named Executive Officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------------------------
PERCENT OF POTENTIAL REALIZABLE VALUE AT
NUMBER OF TOTAL ASSUMED ANNUAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION FOR OPTION
UNDERLYING GRANTED TO EXERCISE OR TERM (2)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION -------------------------------
NAME GRANTED (#)(1) FISCAL YEAR ($/SHARE) DATE 5%($) 10%($)
- ----------------------- ---------------- -------------- ------------ ------------ ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Eric J. Crown 168,750 7.8% $ 17.81 07/01/08 $ 1,889,658 $ 4,788,764
Timothy A. Crown 168,750 7.8% $ 17.81 07/01/08 $ 1,889,658 $ 4,788,764
Stanley Laybourne 90,000 4.2% $ 17.81 07/01/08 $ 1,007,817 $ 2,554,007
Michael A. Gumbert 90,000 4.2% $ 17.81 07/01/08 $ 1,007,817 $ 2,554,007
Branson M. Smith 56,250 2.6% $ 17.81 07/01/08 $ 629,886 $ 1,596,255
</TABLE>
- -----------
(1) One-third of the options become exercisable on each of the first three
anniversaries of the grant date.
(2) 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.
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 December 31, 1998 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 ($)(1)
ACQUIRED ON VALUE ----------------------------- ---------------------------
NAME EXERCISE (#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------ ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Eric J. Crown 45,000 $ 538,318 5,624 269,998 $ 141,175 $ 5,240,281
Timothy A. Crown 44,999 $ 503,272 5,625 269,998 $ 136,234 $ 5,240,281
Stanley Laybourne 146,368 $ 2,632,182 36,372 179,998 $ 1,009,789 $ 3,988,319
Michael A. Gumbert 89,994 $ 1,049,099 3 202,498 $ 79 $ 4,404,787
Branson M. Smith 56,246 $ 929,817 0 112,498 $ 0 $ 2,429,864
</TABLE>
- -----------
(1) Value as of December 31, 1998 is based upon the closing price on that date
as reported on the Nasdaq National Market minus the exercise price,
multiplied by the number of shares underlying the option.
9
<PAGE> 11
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND
CHANGE-OF-CONTROL ARRANGEMENTS
The Company has entered into employment agreements with three of its Named
Executive Officers. The agreements provide for base salaries and incentive
bonuses and contain non-competition and change of control provisions. The Board
of Directors approved, based upon the Compensation Committee's recommendation,
the base salaries and incentive bonuses for Eric J. Crown, Timothy A. Crown and
Stanley Laybourne for a period of two years, effective July 1, 1997. These
agreements contain provisions that constantly renew the agreement for additional
two year terms.
The base salaries for Eric J. Crown, Timothy A. Crown and Stanley Laybourne
are set at $250,000, $250,000 and $190,000, respectively. Messrs. Crown, Crown
and Laybourne are entitled to receive an incentive bonus, payable quarterly, for
the period under their two year agreement equal to 2.5%, 2.5% and 0.5%,
respectively, of the Company's net earnings (before deducting the incentive
bonuses) provided that (i) the Company's net earnings exceed certain stated
minimums and (ii) in no event will the incentive bonuses exceed (A) with respect
to Messrs. Crown and Crown 270% of their base salaries and (B) with respect to
Mr. Laybourne 70% of his base salary. These incentive bonuses have been paid in
either cash or in the form of restricted stock, which vests quarterly over three
years with the unvested shares being forfeited if the recipient is no longer an
employee of the Company.
The agreements for Messrs. Crown, Crown and Laybourne contain
Change-of-Control (as defined) provisions and noncompete provisions that, upon a
Change-of-Control, could result in payments to these individuals equal to three
times their base salary and incentive bonus for the preceding four quarters (all
payments are to be grossed up for the individuals' taxes) and could accelerate
the vesting of all outstanding stock options and restricted stock.
The Compensation Committee and the Chief Executive Officer utilized KPMG
LLP, in 1997, to analyze and review the competitiveness of executive pay. The
analysis has provided the basis for recommendations and approvals with respect
to the terms and provisions included in the current executive employment
agreements. The analysis provided information regarding "peer" compensation
levels and long-term incentive compensation obtained from publicly held company
reports and SEC filings, executive compensation surveys and other relevant
sources. The Compensation Committee and the Chief Executive Officer considered
all such factors in its decision to adopt the related agreements. The
Compensation Committee continues to believe that the agreements provide
appropriate compensation for the individuals.
10
<PAGE> 12
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee") is
charged with:
(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 the Company's 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 makes compensation decisions with respect to Eric
J. Crown, Timothy A. Crown and Stanley Laybourne, but not with respect to
Michael A. Gumbert and Branson M. Smith. The Compensation Committee has
delegated its authority to make compensation decisions to Eric J. Crown, the
Company's Chief Executive Officer, with respect to Messrs. Gumbert, Smith and
all others. The Committee currently is comprised of Larry A. Gunning and
Robertson C. Jones, each of whom is an outside director.
The Compensation Committee and the Chief Executive Officer utilized KPMG
LLP, in 1997, to analyze and review the competitiveness of executive pay. The
analysis has provided the basis for recommendations and approvals with respect
to the terms and provisions included in the current executive employment
agreements. The analysis provided information regarding "peer" compensation
levels and long-term incentive compensation obtained from publicly held company
reports and SEC Filings, executive compensation surveys and other relevant
sources. The Compensation Committee and the Chief Executive Officer considered
all such factors in setting executive pay.
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 and
restricted stock). 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.
BASE SALARY
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
provided for, among other things, an annual base salary of $225,000 until June
30, 1997. These employment agreements terminated according to their terms on
June 30, 1997. As described under "Employment Contracts, Termination of
Employment and Change-of-Control Arrangements," the Compensation Committee
utilized KPMG LLP, in 1997, to analyze and review the competitiveness of
executive pay. The review has provided the basis for recommendations and
approvals with respect to the terms and provisions included in the current
executive employment agreements.
The 1998 base salaries for Eric J. Crown, Timothy A. Crown, Stanley
Laybourne, Michael A. Gumbert and Branson M. Smith were set at $250,000,
$250,000, $190,000, $215,000 and $155,000 respectively. Additionally, Messrs.
Crown, Crown and Laybourne are entitled to receive an incentive bonus,
11
<PAGE> 13
payable quarterly, during the two year agreement based on a percentage of the
Company's net earnings (before deducting the incentive bonuses) and Messrs.
Gumbert and Smith are entitled to receive an incentive bonus, payable quarterly,
based on a percentage of net earnings (before deducting the incentive bonuses),
of their respective subsidiaries, provided that (i) the Company's net earnings
exceed stated minimums and (ii) in no event will the incentive bonuses exceed
(A) with respect to Messrs. Crown and Crown, 270% of their base salaries and (B)
with respect to Mr. Laybourne 70% of his base salary.
CASH BONUSES AND RESTRICTED STOCK 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. Additionally, the Company paid some of the
bonuses due to the Company's Named Executive Officers with restricted stock
instead of cash. These restricted stock shares vest quarterly over three years
with the unvested shares being forfeited if the recipient is no longer an
employee of the Company. Messrs. Crown, Crown and Laybourne received a cash
bonus for the first quarter of 1998 and restricted stock for the remaining
quarters of 1998. Messrs. Gumbert and Smith received cash for the first and
second quarters and restricted stock for the third and fourth quarters. During
calendar 1998, cash bonuses were earned by the Company's Named Executive
Officers as follows: Eric J. Crown - $111,879; Timothy A. Crown - $111,879;
Stanley Laybourne - $22,391; Michael A. Gumbert - $52,980; and Branson M. Smith
- - $20,922. For 1998, the number of restricted stock shares earned by the
Company's Named Executive Officers are as follows: Eric J. Crown - 19,218
shares; Timothy A. Crown - 19,218 shares; Stanley Laybourne - 3,844 shares;
Michael A. Gumbert - 2,674 shares; and Branson M. Smith - 1,377 shares.
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 "1994
Option Plan") under which incentive stock options and nonqualified stock options
may be granted to executive officers, other key employees, nonemployee directors
and consultants. In October 1997, the Company's Board of Directors adopted and
the Company's stockholders approved the Company's 1998 Long-Term Incentive Plan
(the "LTIP") under which a variety of stock-based awards may be granted to
officers, employees, directors, and consultants or independent contractors,
including officers who are also directors of the Company and its subsidiaries.
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 calendar 1998, stock options to purchase a total of 573,750 shares
of Company Common Stock were granted to the Company's Named Executive Officers
as follows: Eric J. Crown - 168,750 shares; Timothy A. Crown - 168,750 shares;
Stanley Laybourne - 90,000 shares; Michael A. Gumbert - 90,000 shares; and
Branson M. Smith - 56,250 shares.
All of the options granted during 1998 to Named 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 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.
12
<PAGE> 14
SECTION 162(m)
Section 162(m) of the Internal Revenue Code limits, to $1 million, 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 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.
Nevertheless, the Company may not be able to preserve deductibility of executive
compensation recognized in connection with the exercise of certain options that
have been granted to covered executive officers. Specifically, compensation
resulting from the exercise of options granted to a covered executive officer
under the 1994 Option Plan will not qualify for deductibility to the extent that
the total of the base salary, bonuses and compensation from such option exercise
received by any covered executive officer exceeds $1 million in any taxable
year.
COMPENSATION COMMITTEE:
Larry A. Gunning
Robertson C. Jones
13
<PAGE> 15
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 ended December 31, 1998.
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, Dec. 31, Dec. 31, Dec. 31, Dec. 31,
-------- -------- -------- -------- --------
1995 1995 1996 1997 1998
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Insight Enterprises, Inc. Common Stock $100.00 $120.48 $269.88 $531.33 $1,103.31
Nasdaq Stock Market U.S. Companies (Market $100.00 $139.15 $171.12 $209.87 $ 295.72
Index)
Nasdaq Retail Trade Stock (Peer Index) $100.00 $112.54 $134.16 $157.63 $ 191.66
</TABLE>
14
<PAGE> 16
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 year ended December 31,
1998, except that (i) Eric J. Crown was one month late reporting a gift of 2,130
shares to a charitable organization, (ii) Dennis A. Faggioni was one month and
three months late reporting a grant of options to acquire 60,000 shares and a
grant of 1,500 shares of restricted stock, respectively, (iii) Michael A.
Gumbert was three months late reporting a grant of 1,366 shares of restricted
stock, (iv) Robert J. Armao was two months late reporting both a grant of
options to acquire 60,000 shares and a grant of 22,500 shares of restricted
stock, (v) Branson M. Smith was three months late reporting both a grant of
1,098 shares of restricted stock and a gift of 2,250 shares to a non-profit
organization (vi) James D. Kebert was one month and three months late reporting
a grant of options to acquire 2,813 shares and a grant of 3,000 shares of
restricted stock, respectively, and (vii) James A. McCoy was 12 months late
reporting a grant of options to acquire 2,813 shares.
15
<PAGE> 17
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 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 1,910,218(3) 7.5%
Timothy A. Crown 1,808,510(4) 7.1%
Pilgrim Baxter & Associates 2,082,967(11) 8.2%
AIM Management Group, Inc. 2,049,225(12) 8.1%
Maverick Capital Limited 1,481,250(13) 5.8%
Stanley Laybourne 102,145(5) *
Michael A. Gumbert 6,994(6) *
Branson M. Smith 23,597(7) *
Larry A. Gunning 6,750(8) *
Robertson C. Jones 18,563(9) *
All directors and executive officers as a group 3,930,777(10) 15.4%
(9 persons)
</TABLE>
- -----------
* Less than 1%
(1) The address of Messrs. Crown, Crown, Laybourne, Gumbert, Smith, Gunning and
Jones is c/o Insight Enterprises, Inc., 6820 South Harl Avenue, Tempe,
Arizona 85283.
(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 337 shares beneficially owned by Mr. Crown's spouse and 5,624
shares subject to options exercisable within 60 days of the Record Date.
(4) Includes 5,624 shares subject to options exercisable within 60 days of the
Record Date.
(5) Includes of 92,624 shares subject to options exercisable within 60 days of
the Record Date.
(6) Includes of 5,627 shares subject to options exercisable within 60 days of
the Record Date.
(7) Includes of 22,499 shares subject to options exercisable within 60 days of
the Record Date.
(8) Consists of 6,750 shares subject to options exercisable within 60 days of
the Record Date.
(9) Consists of 16,875 shares subject to options exercisable within 60 days of
the Record Date and 1,688 shares held in the name of a family trust.
(10) Includes 185,623 shares subject to options exercisable within 60 days of
the Record Date.
(11) Number of shares based on the stockholder's 13G filing for December 31,
1998. The address of Pilgrim Baxter & Associates is 825 Dupertail Road,
Wayne, PA 19087.
(12) Number of shares based on the stockholder's 13G filing for December 31,
1998. The address of AIM Management Group, Inc. is P.O. Box 4333, Houston,
TX 77210.
(13) Number of shares based on the stockholder's 13G filing for December 31,
1998. The address of Maverick Capital Limited is 8080 N. Central Expressway
Suite 1, Dallas, TX 75206.
16
<PAGE> 18
PROPOSAL NO. 2
APPROVAL OF AMENDMENT TO THE COMPANY'S
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
DESCRIPTION OF PROPOSED AMENDMENT
The Board of Directors has approved, and is recommending to the
stockholders for approval at the Annual Meeting, an amendment to Article 4 of
the Company's Amended and Restated Certificate of Incorporation ("Certificate of
Incorporation") (i) to increase the total authorized number of shares of Common
Stock, $.01 par value per share, from 30,000,000 to 100,000,000 and (ii) to
increase the total authorized number of shares of Preferred Stock, $.01 par
value per share, from 3,000,000 to 10,000,000. The Board of Directors determined
that this amendment is advisable and directed that the proposed amendment be
submitted to the stockholders for their approval at the Annual Meeting. The full
text of the proposed amendment to the Certificate of Incorporation is set forth
in Appendix A to this Proxy Statement. If adopted by the stockholders, the
amendment would become effective upon filing of an appropriate certificate with
the Secretary of State of the State of Delaware.
PURPOSES AND EFFECTS OF PROPOSED AMENDMENT
The proposed amendment would increase the number of shares of Common Stock
which the Company is authorized to issue from 30,000,000 to 100,000,000 and the
number of shares of Preferred Stock which the Company is authorized to issue
from 3,000,000 to 10,000,000. The additional shares of Common Stock and
Preferred Stock authorized by the proposed amendment would have the same rights
and privileges as the shares of Common Stock and Preferred Stock currently
authorized.
At March 18, 1999, 25,533,064 shares of Common Stock were issued and
outstanding, and 4,063,463 shares of Common Stock were reserved for issuance
under the Company's stock option and benefit plans. Consequently, under certain
circumstances, the Company may not be able to issue additional shares of Common
Stock if necessary for mergers or acquisitions, financing transactions, stock
splits in the form of stock dividends or for other corporate purposes without
first obtaining the approval of its stockholders. The Company has split its
Common Stock several times, most recently in the first quarter of 1999, by means
of a stock dividend, resulting in the issuance of additional shares of Common
Stock. The proposed increase in the number of authorized shares of Common Stock
will afford the Company additional flexibility to take advantage of business and
financial opportunities without the delay and expense of seeking stockholders'
approval for the authorization of additional stock.
Although no shares of Preferred Stock are issued and outstanding, the
Company is seeking to increase the number of shares of authorized Preferred
Stock in order to maintain the ratio of one share of authorized Preferred Stock
for every ten shares of Common Stock and to afford the Company the additional
flexibility referred to above.
If this proposal is approved, all or any of the authorized shares of Common
Stock and Preferred Stock may be issued without further action by the
stockholders (unless such approval is required by applicable law or regulatory
authorities) and without first offering such shares to the stockholders for
subscription. Thus, the issuance of additional shares of Common Stock and
Preferred Stock might dilute, under certain circumstances, the ownership and
voting rights of stockholders.
Other than for the possibility of issuing new shares of Common Stock under
the Company's stock option or benefit plans and under "earn-out" provisions
pursuant to the Company's recent acquisitions, the Company has no present
arrangements, commitments, understandings or pending negotiations for the
issuance of additional shares of newly authorized Common Stock or Preferred
Stock.
17
<PAGE> 19
The Company has not proposed the increase in the authorized number of
shares of Common Stock and Preferred Stock with the intention of using the
additional shares for anti-takeover purposes, although the Company could
theoretically use the additional shares to make more difficult or to discourage
an attempt to acquire control of the Company. The Company is not aware of any
pending or threatened efforts to acquire control of the Company.
REQUIRED VOTE
Approval of the proposal to increase the number of authorized shares of
Common Stock and Preferred Stock by amending the Company's Amended and Restated
Certificate of Incorporation requires the affirmative vote of a majority of the
shares outstanding on the Record Date. Votes may be cast FOR or AGAINST the
proposal, and stockholders may also ABSTAIN from voting on the proposal.
Abstentions and broker non-votes will be counted as present or represented for
purposes of determining both the presence or absence of a quorum. However,
because shares represented by abstentions or broker non-votes are considered
outstanding, as a practical matter abstentions and broker non-votes will have
the same effect as a vote AGAINST the proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR APPROVAL OF
THE PROPOSED AMENDMENT TO THE COMPANY'S AMENDED AND RESTATED CERTIFICATE OF
INCORPORATION TO INCREASE THE TOTAL NUMBER OF AUTHORIZED SHARES OF COMMON STOCK
TO 100,000,000 AND THE TOTAL NUMBER OF AUTHORIZED SHARES OF PREFERRED STOCK TO
10,000,000.
18
<PAGE> 20
PROPOSAL NO. 3
AMENDMENTS TO INSIGHT ENTERPRISES, INC.
1998 LONG-TERM INCENTIVE PLAN
GENERAL
At the Annual Meeting, the Company will seek stockholder approval of
amendments (the "Amendments") to the Insight Enterprises, Inc. 1998 Long-Term
Incentive Plan (the "Plan") to increase the number of shares of Common Stock
authorized for issuance thereunder to 3,214,125 and to make certain other
changes. The closing price for the Common Stock on March 17, 1999, as reported
on Nasdaq, was $23.50.
The Plan promotes the success and enhances the value of the Company by (i)
linking the personal interests of participants to those of the Company's
stockholders; (ii) providing participants with an incentive for outstanding
performance; and (iii) providing flexibility in motivating, attracting, and
retaining the services of officers, employees, directors, and consultants or
independent contractors upon whose judgment, interest, and special effort the
successful conduct of the Company's business is largely dependent.
The Company's Board of Directors has approved, subject to stockholder
approval, the Amendments to the Plan and has directed that the Amendments be
submitted as a proposal for stockholder approval at the Annual Meeting. The Plan
was originally adopted in October, 1997. A copy of the Amendments as proposed
herein is set forth in Appendix B. The description of the Plan herein is
qualified in its entirety by the actual text of such plan.
PLAN PROVISIONS
The Plan authorizes grants of incentive stock options ("ISOs"),
non-qualified stock options ("NQSOs"), stock appreciation rights ("SARs"),
performance shares, restricted stock and performance-based awards to officers,
employees, directors, and consultants or independent contractors. A total of
1,875 individuals are currently eligible to participate in the Plan. The maximum
number of shares of Stock that may be issued under the Plan as ISOs shall be
3,000,000.
The Plan is administered by the Compensation Committee of the Board of
Directors. Except as provided below, the Compensation Committee has the
exclusive authority to administer the Plan, including the power to determine
eligibility, the types of awards to be granted, the price and the timing of
awards. The Plan does, however, provide that the Company's Chief Executive
Officer has the authority to grant awards to any individual (other than the
three highest-ranking executives of the Company) and provides further that any
grant to an individual who is subject to Section 16 of the Securities Exchange
Act of 1934 may not be exercisable for at least six months from the date of
grant.
19
<PAGE> 21
INCENTIVE STOCK OPTIONS
ISOs are stock options that satisfy the requirements specified in Section
422 of the Internal Revenue Code, as amended (the "Code"). Under the Code, ISOs
may only be granted to employees. In order for an option to qualify as an ISO,
the price payable to exercise the option must equal or exceed the fair market
value of the underlying stock at the date of the grant, the option must lapse no
later than ten (10) years from the date of the grant, and the stock subject to
ISOs that are first exercisable by an employee in any calendar year must not
have a value of more than $100,000 as of the date of grant. Certain other
requirements must also be met.
An employee will not recognize taxable income upon either the grant of an
ISO or upon the exercise of an ISO. However, the difference between the exercise
price and the fair market value of the stock at the time of exercise is an item
of tax preference at the time of exercise in determining liability for the
alternative minimum tax, assuming that the Common Stock is either transferable
or is not subject to a substantial risk of forfeiture under Section 83 of the
Code.
If Common Stock acquired by the exercise of an ISO is not sold or otherwise
disposed of within two years from the date of its grant and is held for at least
one year after the date of exercise, such disposition is treated as long-term
capital gain or loss. If such Common Stock is disposed of before the expiration
of the above-mentioned holding periods, a "disqualifying disposition" occurs. If
a disqualifying disposition occurs, the employee realizes ordinary income in the
year of the disposition in an amount equal to the difference between the fair
market value of the Common Stock on the date of exercise and the exercise price,
or the selling price of the Common Stock and the exercise price, whichever is
less. The balance of the employee's gain on a disqualifying disposition, if any,
is taxed as capital gain.
The Company is not entitled to any tax deduction as a result of the grant
or exercise of an ISO, or on a later disposition of the Common Stock received,
except in the event of a disqualifying disposition, the Company is entitled to a
deduction equal to the amount of ordinary income realized by the employee.
NON-QUALIFIED STOCK OPTIONS
A NQSO is any stock option other than an ISO. Such options are referred to
as "non-qualified" because they do not meet the requirements of and are not
eligible for the favorable tax treatment provided by Section 422 of the Code.
If an employee is granted a NQSO, the grant itself typically does not
produce any taxable income for the employee, and the Company is not entitled to
a deduction at that time. On the date the NQSO is exercised, the employee
recognizes ordinary income in an amount equal to the difference between the fair
market value of the underlying stock at the date of exercise and the exercise
price. The Company generally is entitled to a corresponding deduction in the
same amount and in the same year in which the employee recognizes such income.
When an employee sells the stock acquired upon the exercise of an NQSO, the
employee recognizes capital gain equal to the difference between the sales price
of the stock and the fair market value of the stock as of the date of the
exercise. If the employee holds the stock for more than one (1) year following
the exercise of the option, the gain is treated as long-term capital gain.
STOCK APPRECIATION RIGHTS
An SAR is the right granted to an employee to receive the appreciation in
the value of a share of Common Stock over a certain period of time. Under the
Plan, the Company may pay that amount in cash, Common Stock, or a combination of
both.
20
<PAGE> 22
If an employee receives the appreciation inherent in the SARs in cash, the
cash is compensation income taxable to the employee. If the employee receives
the appreciation in the form of Common Stock, the stock received is taxable to
the employee in an amount equal to its fair market value. The Company is
entitled to receive a deduction in an amount equal to that taxable to the
employee in the year in which the employee recognizes taxable income with
respect to the SAR.
PERFORMANCE SHARES
Under the Plan, the Company may grant performance share units to an
eligible employee. Typically, each performance share unit will be deemed to be
the equivalent of one share of Common Stock. An award of a performance share
does not entitle an employee to any ownership, dividend, voting, or other rights
of a stockholder until distribution is made in Common Stock, if the award is
paid in stock. The value of the employee's performance share units generally is
measured by the fair market value of an equivalent number of shares of Common
Stock. At the end of the performance period, if the employee has satisfied
certain performance criteria established by the Compensation Committee, the
employee will be entitled to a payment equal to the difference between the value
of the performance share units on the date of grant and the value of such units
at the end of the performance period. The award may be payable in cash, Common
Stock, or property.
An employee who has been granted a performance share award will not realize
taxable income at the time of grant and the Company is not entitled to a
deduction at that time. However, the employee will recognize income in the year
the award is paid in an amount equal to the amount of cash and the fair market
value of the Common Stock issued to the employee. The Company generally is
entitled to a corresponding deduction at the same time.
RESTRICTED STOCK AWARDS
Under the restricted stock feature of the Plan, an eligible employee may be
granted a specified number of shares of the Company's Common Stock. However,
vested rights to such stock are subject to certain restrictions or are
conditioned on the attainment of certain goals. If the employee violates any of
the restrictions during the period specified by the Compensation Committee or
goals are not met, the stock is forfeited.
In the year in which the applicable restrictions lapse or the applicable
goal is satisfied, an employee will include in taxable income the excess of the
fair market value of restricted stock received over the amount, if any, paid for
the restricted stock. The Company is entitled to a corresponding deduction at
the same time.
Instead of postponing the tax consequences of a restricted stock award
until the applicable restrictions lapse or until the applicable goal is
satisfied, an employee may elect to include the fair market value of the stock
in income in the year the award is granted by filing an appropriate election
with the Internal Revenue Service within thirty (30) days of grant. This
election is made under Section 83(b) of the Code.
PERFORMANCE-BASED AWARDS
Grants of performance-based awards under the Plan enable the Compensation
Committee to treat restricted stock and performance share awards granted under
the Plan as "performance-based compensation" under Section 162(m) of the Code
and preserve the deductibility of these awards for Federal income tax purposes.
Because Section 162(m) of the Code only applies to those employees who are
"covered employees," as defined in Section 162(m) of the Code, only covered
employees are eligible to receive performance-based awards.
Participants for any given performance period are only entitled to receive
payment for a performance-based award for such period to the extent that
pre-established performance goals set by the Compensation Committee of the
21
<PAGE> 23
period are satisfied. These pre-established performance goals must be based on
one or more of the following performance criteria: pre- or after-tax net
earnings, sales growth, operating earnings, operating cash flow, return on net
assets, return on stockholders' equity, return on assets, return on capital,
share price growth, stockholder returns, gross or net profit margin, earnings
per share, price per share, and market share. These performance criteria may be
measured in absolute terms or as compared to any incremental increase or as
compared to results of a peer group. With regard to a particular performance
period, the Compensation Committee shall have the discretion to select the
length of the performance period, the type of performance-based awards to be
granted, and the goals that will be used to measure the performance for the
period. In determining the actual size of an individual performance-based award
for a performance period, the Compensation Committee may reduce or eliminate
(but not increase) the award. Generally, a participant will have to be employed
on the last day of the performance period in order to be eligible for a
performance-based award for that period.
SECTION 162(m)
Section 162(m) of the Code generally limits, to $1 million, the amount
that can be deducted by a publicly-held corporation for compensation paid to any
"covered employee" in any taxable year. The term "covered employee" for this
purpose is defined generally as the chief executive officer and the four other
highest paid employees of the corporation.
Performance-based compensation is outside the scope of the $1 million
limitation and, hence, generally can be claimed by a publicly-held corporation
without regard to amount, provided that among other requirements, such
compensation is approved by the Company's stockholders. Among the items of
performance-based compensation that can be deducted without regard to amount
(assuming stockholder approval and other applicable requirements are satisfied)
is compensation associated with the exercise price of a stock option so long as
the option has an exercise price equal to or greater than the fair market value
of the underlying stock at the date of the option grant. The Company currently
anticipates that all options granted under the Plan will have an exercise price
at least equal to the fair market value of the underlying stock on the date of
grant.
Of the shares of Common Stock available for awards under the Plan, the
maximum number that may be awarded annually to any one participant as awards of
ISOs, NQSOs, performance shares, restricted stock, or any combination of each,
is 225,000 shares.
The maximum number of shares of Common Stock that may be awarded under
performance-based awards during any performance period is 225,000. In the event
the performance-based award is payable in cash, the maximum amount is determined
by multiplying 225,000 (as adjusted for stock splits) by the fair market value
of the Common Stock as of the date the performance-based award is granted.
CHANGE OF CONTROL
In the event of a public tender for all or any portion of the Company's
Common Stock, or in the event a proposal to merge, consolidate, or otherwise
combine with another company is submitted to the Company's stockholders for
approval, the ISOs or NQSOs previously granted under the Plan will be
immediately exercisable.
Upon the occurrence of a Change of Control (as defined in the Plan), all
outstanding awards granted under the Plan shall become fully exercisable and all
restrictions on outstanding awards shall lapse. The Plan defines a "Change of
Control" to include (i) when the individuals who, at the beginning of any period
of two years or less, constituted the Board cease, for any reason, to constitute
at least a majority of the Board, unless the election (or nomination) for each
new director was approved by at least two-thirds of the directors then still in
office who were directors at the beginning of the period; (ii) a change of
control through a transaction or series of transactions, such that any person
(excluding affiliates of the Company as of October 30, 1997) is or becomes the
beneficial owner, directly or indirectly, of securities of the Company
representing 30% or more of the combined voting power of the Company's then
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<PAGE> 24
outstanding securities; (iii) any consolidation or liquidation of the Company
in which the Company is not the continuing or surviving corporation or pursuant
to which the Company's Common Stock would be converted into cash, securities or
other property, other than a merger of the Company in which the holders of the
Company's Common Stock immediately before the merger have same proportionate
ownership of Common Stock of the surviving corporation immediately after the
merger; (iv) the stockholders' approval of any plan or proposal for the
liquidation or dissolution of the Company; or (v) the sale or other transfer of
substantially all of the assets of the Company to parties that are not within a
controlled group of corporations in which the Company is a member.
AMENDMENT AND TERMINATION
The Committee, subject to the approval of the Board, may terminate, amend
or modify the Plan at any time; provided, however, that shareholder approval
will be obtained for any amendment to the extent necessary and desirable to
comply with any applicable law, regulation or rule.
No termination, amendment, or modification of the Plan shall adversely
affect in any material way any award previously granted under the Plan, without
the written consent of the participant.
PLAN BENEFITS
The following table sets forth grants of options made under the Plan during
1998 to (i) each of the Named Executive Officers identified above; (ii) all
current executive officers as a group; (iii) all current directors who are not
executive officers, as a group; and (iv) all employees, including all current
officers who are not executive officers, as a group. Grants under the Plan are
made at the discretion of the Committee. Accordingly, future grants under the
Plan are not yet determinable.
23
<PAGE> 25
1998 LONG-TERM INCENTIVE PLAN
<TABLE>
<CAPTION>
Weighted Average
Securities Underlying Exercise Price of Restricted Stock
Name and Position Options Granted (#) Options Granted ($) Awards (#)
- ----------------- ------------------- ------------------- -----------------
<S> <C> <C> <C>
Eric J. Crown 168,750 $ 17.81 14,412
Chairman of the Board of Directors and Chief
Executive Officer
Timothy A. Crown 168,750 $ 17.81 14,412
President and Director
Stanley Laybourne 90,000 $ 17.81 2,883
Chief Financial Officer,
Secretary, Treasurer and Director
Michael A. Gumbert 90,000 $ 17.81 1,366
Chief Operating Officer of
Insight Direct USA, Inc.
Branson M. Smith 56,250 $ 17.81 1,098
Chief Operating Officer of
Direct Alliance Corporation
Executive Officer Group 757,500 $ 17.49 56,671
Non-Executive Director Group - - -
Non-Executive Employee Group 1,355,771 $ 16.00 -
</TABLE>
PROPOSED AMENDMENTS TO PLAN
The Board of Directors has reviewed the number of shares currently
remaining in the pool for the Plan and has determined that it is appropriate to
increase the number of shares authorized for issuance under the Plan. As of
March 18, 1999, (i) 254,620 shares have been issued upon exercise of options or
as restricted stock and are included in the total number of shares of
outstanding Common Stock and (ii) option grants representing 1,950,332 shares
were outstanding under the Plan. Accordingly, there are only options to purchase
514,436 shares of Common Stock available under the Plan. The Board believes that
an increase in the number of authorized shares is necessary for the continued
optimal use of the Plan. In addition, the maximum number of options that may be
granted as ISOs is being increased to accommodate the proposed increase in the
total number of shares authorized for issuance under the Plan. Therefore, the
Board is proposing the Amendments to the Plan that would (i) increase the number
of shares authorized for issuance under the Plan to 3,214,125 and (ii) increase
the maximum number of options that may be granted as ISOs under the Plan to
3,000,000. The Amendments, if approved by stockholders, would be effective as of
March 18, 1999, the date of the Board's approval of the Amendments.
24
<PAGE> 26
The Plan, prior to the Amendment, provides that for each year an
additional one to four percent of the outstanding shares of Stock of the
Company (in the Board's discretion) shall be reserved for issuance under the
Plan, subject to quarterly increases to account for additional outstanding
shares. The Amendment, in addition to increasing the number of shares
authorized under the Plan, also provides that the Board may reserve additional
shares of Stock for grant under the Plan (in its discretion) from time to time;
provided, the aggregate number of shares of Stock reserved for grant under the
Plan is limited to an amount such that the number of shares of Stock remaining
available for grant under the Plan (and any other option plan sponsored by the
Company) plus the number of shares of Stock granted but not yet exercised or
cancelled (under the Plan and any other option plan sponsored by the Company)
may not exceed twenty percent (20%) of the outstanding shares of Stock of the
Company.
REQUIRED VOTE
Approval of the Amendments to the Plan requires the affirmative vote of a
majority of shares present, in person or by proxy, and entitled to vote at the
Annual Meeting, provided that a quorum is present. Votes may be cast FOR or
AGAINST the proposal, and stockholders may also ABSTAIN from voting on the
proposal. Abstentions will be counted as present or represented for purposes of
determining both the presence or absence of a quorum and the number of shares
entitled to vote on the proposal and as a practical matter will have the same
effect as a vote AGAINST the proposal. Broker non-votes will be counted as
present or represented for purposes of determining the presence or absence of a
quorum but will not be counted for purposes of determining the number of shares
entitled to vote on the proposal. The practical effect of broker non-votes is to
reduce the number of affirmative votes required to achieve a majority for the
proposal by reducing the total number of shares from which the majority is
calculated.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE FOR ADOPTION OF
THE AMENDMENTS TO THE 1998 LONG-TERM INCENTIVE PLAN.
25
<PAGE> 27
RELATIONSHIP WITH INDEPENDENT AUDITORS
The principal independent accounting firm utilized by the Company during
the year ended December 31, 1998 was KPMG LLP, independent certified public
accountants. KPMG LLP has audited the Company's financial statements annually
since 1988. It is presently contemplated that KPMG LLP will be retained as the
principal accounting firm to be utilized by the Company during 1999. A
representative of KPMG 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 he or she desires to do so.
STOCKHOLDER PROPOSALS
Proposals of stockholders of the Company which are intended to be presented
by such stockholders at the Company's 2000 Annual Meeting must be received by
the Company no later than December 21, 1999 in order that they may be considered
for inclusion in the proxy statement and form of proxy relating to that meeting.
Stockholders who intend to present a proposal at the 2000 Annual Meeting of
Stockholders without inclusion of such proposal in the Company's proxy materials
are required to provide notice of such proposal to the Company no later than
March 6, 2000. The Company reserves the right to reject, rule out of order, or
take other appropriate action with respect to any proposal that does not comply
with these and other applicable requirements. Proposals should be addressed to
the Secretary of the Company at 6820 South Harl Avenue, Tempe, Arizona 85283.
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.
/s/ Stanley Laybourne
March 31, 1999 Stanley Laybourne
Secretary, Treasurer
and Chief Financial Officer
26
<PAGE> 28
APPENDIX A
ARTICLE 4 OF THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF INSIGHT ENTERPRISES, INC.
(AS PROPOSED TO BE AMENDED)
4. Authorized Capital. The total number of shares of stock which the
Corporation shall have authority to issue is 110,000,000 shares, consisting of
100,000,000 shares of common stock having a par value of $.01 per share (the
"Common Stock") and 10,000,000 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;
(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.
A-1
<PAGE> 29
APPENDIX B
AMENDMENT TO THE INSIGHT ENTERPRISES, INC.
1998 LONG-TERM INCENTIVE PLAN
(AS PROPOSED)
Insight Enterprises, Inc. (the "Corporation") previously adopted the
Insight Enterprises, Inc. 1998 Long-Term Incentive Plan (the "Plan"). By this
instrument, the Corporation desires to amend the Plan as set forth below.
1. This Amendment shall amend only those provisions specified herein
and those provisions not amended hereby shall remain in full force and
effect.
2. Section 5.1 of the Plan is hereby amended and restated in its
entirety as follows:
"5.1. NUMBER OF SHARES. Subject to adjustment
provided in Section 13.1, the aggregate number of shares of
Stock reserved and available for grant under the Plan shall be
3,214,125. In addition, the Board may reserve additional
shares of Stock for grant under the Plan (in its discretion)
from time to time; provided, the aggregate number of shares of
Stock reserved for grant under the Plan shall be limited to an
amount such that the number of shares of Stock remaining
available for grant under the Plan (and any other option plan
sponsored by the Company) plus the number of shares of Stock
granted but not yet exercised (under the Plan and any other
option plan sponsored by the Company) shall not exceed twenty
percent (20%) of the outstanding shares of Stock of the
Company. Notwithstanding the above, the maximum number of
shares of Stock that may be issued under the Plan as ISOs
shall be 3,000,000."
3. This Amendment shall be effective as of the date adopted by the
Corporation's Stockholders.
B-1
<PAGE> 30
APPENDIX TO INSIGHT ENTERPRISES, INC. PROXY STATEMENT
(FILED PURSUANT TO PROXY RULES, SCHEDULE 14A,
ITEM 10, INSTRUCTION 3)
INSIGHT ENTERPRISES, INC.
1998 LONG-TERM INCENTIVE PLAN
(AS AMENDED MARCH 18, 1999)
ARTICLE 1 PURPOSE
1.1 GENERAL. The purpose of the Insight Enterprises, Inc. 1998
Long-Term Incentive Plan (the "Plan") is to promote the success, and enhance the
value, of Insight Enterprises, Inc. (the "Company") by linking the personal
interests of its officers, employees, directors, and consultants or independent
contractors to those of Company stockholders and by providing its officers,
employees, directors, and consultants or independent contractors with an
incentive for outstanding performance. The Plan is further intended to provide
flexibility to the Company in its ability to motivate, attract, and retain the
services of officers, employees, directors, and consultants or independent
contractors upon whose judgment, interest, and special effort the successful
conduct of the Company's operation is largely dependent. Accordingly, the Plan
permits the grant of incentive awards from time to time to officers, employees,
directors, and consultants or independent contractors.
ARTICLE 2 EFFECTIVE DATE
2.1 EFFECTIVE DATE. The Plan is effective as of October 30, 1997 (the
"Effective Date").
ARTICLE 3 DEFINITIONS AND CONSTRUCTION.
3.1 DEFINITIONS. When a word or phrase appears in this Plan with the
initial letter capitalized, and the word or phrase does not commence a sentence,
the word or phrase shall generally be given the meaning ascribed to it in this
Section or in Sections 1.1 or 2.1 unless a clearly different meaning is required
by the context. The following words and phrases shall have the following
meanings:
(a) "Award" means any Option, Stock Appreciation Right,
Restricted Stock Award, Performance Share Award, or
Performance-Based Award granted to a Participant under the Plan.
(b) "Award Agreement" means any written agreement, contract,
or other instrument or document evidencing an Award.
(c) "Board" means the Board of Directors of the Company.
(d) "Change of Control" means and includes each of the
following:
<PAGE> 31
(1) When the individuals who, at the beginning of any
period of two years or less, constituted the Board of Directors of the
Company cease, for any reason, to constitute at least a majority
thereof, unless the election or nomination for election of each new
director was approved by the vote of at least two-thirds of the
directors then still in office who were directors at the beginning of
such period;
(2) A change of control of the Company through a
transaction or series of transactions, such that any person (as that
term is used in Section 13 and 14(d)(2) of the 1934 Act), excluding
affiliates of the Company as of the Effective Date, is or becomes the
beneficial owner (as that term is used in Section 13(d) of the 1934
Act) directly or indirectly of securities of the Company representing
30% or more of the combined voting power of the Company's then
outstanding securities;
(3) Any consolidation or liquidation of the Company
in which the Company is not the continuing or surviving corporation or
pursuant to which Stock would be converted into cash, securities or
other property, other than a merger of the Company in which the holders
of the shares of Stock immediately before the merger have the same
proportionate ownership of common stock of the surviving corporation
immediately after the merger;
(4) The stockholders of the Company approve any plan
or proposal for the liquidation or dissolution of the Company; or
(5) Substantially all of the assets of the Company
are sold or otherwise transferred to parties that are not within a
"controlled group of corporations" (as defined in Section 1563 of the
Code) of which the Company is a member.
(e) "Code" means the Internal Revenue Code of 1986, as
amended.
(f) "Committee" means the committee of the Board described in
Article 4.
(g) "Covered Employee" means an Employee who is a "covered
employee" within the meaning of Section 162(m) of the Code.
(h) "Disability" shall mean any illness or other physical or
mental condition of a Participant which renders the Participant
incapable of performing his customary and usual duties for the
Company, or any medically determinable illness or other physical or
mental condition resulting from a bodily injury, disease or mental
disorder which in the judgment of the Committee is permanent and
continuous in nature. The Committee may require such medical or
other evidence as it deems necessary to judge the nature and
permanency of the Participant's condition.
2
<PAGE> 32
(i) "Fair Market Value" means, as of any given date, the fair
market value of Stock or other property on a particular date determined
by such methods or procedures as may be established from time to time
by the Committee. Unless otherwise determined by the Committee, the
Fair Market Value of Stock as of any date shall be the closing price
for the Stock as reported on the NASDAQ National Market System (or on
any national securities exchange on which the Stock is then listed) for
that date or, if no closing price is so reported for that date, the
closing price on the next preceding date for which a closing price was
reported.
(j) "Incentive Stock Option" means an Option that is intended
to meet the requirements of Section 422 of the Code or any successor
provision thereto.
(k) "Non-Employee Director" means a member of the Board who
qualifies as a "Non-Employee Director" as defined in Rule 16b-3(b)(3)
of the Exchange Act, or any successor definition adopted by the Board.
(l) "Non-Qualified Stock Option" means an Option that is not
intended to be an Incentive Stock Option.
(m) "Option" means a right granted to a Participant under
Article 7 of the Plan to purchase Stock at a specified price during
specified time periods. An Option may be either an Incentive Stock
Option or a Non-Qualified Stock Option.
(n) "Participant" means a person who, as an officer, employee,
director, and consultant or independent contractor of the Company or
any Subsidiary, has been granted an Award under the Plan.
(o) "Performance-Based Awards" means the Performance Share
Awards and Restricted Stock Awards granted to selected Covered
Employees pursuant to Articles 9 and 10, but which are subject to the
terms and conditions set forth in Article 11. All Performance-Based
Awards are intended to qualify as "performance-based compensation"
under Section 162(m) of the Code.
(p) "Performance Criteria" means the criteria that the
Committee selects for purposes of establishing the Performance Goal or
Performance Goals for a Participant for a Performance Period. The
Performance Criteria that will be used to establish Performance Goals
are limited to the following: pre- or after-tax net earnings, sales
growth, operating earnings, operating cash flow, return on net assets,
return on stockholders' equity, return on assets, return on capital,
Stock price growth, stockholder returns, gross or net profit margin,
earnings per share, price per share of Stock, and market share, any of
which may be measured either in absolute terms or as compared to any
incremental increase or as compared to results of a peer group. The
Committee shall, within the time prescribed by Section 162(m) of the
Code, define in an objective fashion the manner of calculating the
Performance Criteria it selects to use for such Performance Period for
such
3
<PAGE> 33
Participant.
(q) "Performance Goals" means, for a Performance Period, the
goals established in writing by the Committee for the Performance
Period based upon the Performance Criteria. Depending on the
Performance Criteria used to establish such Performance Goals, the
Performance Goals may be expressed in terms of overall Company
performance or the performance of a division, business unit or an
individual. The Committee, in its discretion, may, within the time
prescribed by Section 162(m) of the Code, adjust or modify the
calculation of Performance Goals for such Performance Period in order
to prevent the dilution or enlargement of the rights of Participants,
(i) in the event of, or in anticipation of, any unusual or
extraordinary corporate item, transaction, event, or development; or
(ii) in recognition of, or in anticipation of, any other unusual or
nonrecurring events affecting the Company, or the financial statements
of the Company, or in response to, or in anticipation of, changes in
applicable laws, regulations, accounting principles, or business
conditions.
(r) "Performance Period" means the one or more periods of
time, which may be of varying and overlapping durations, as the
Committee may select, over which the attainment of one or more
Performance Goals will be measured for the purpose of determining a
Participant's right to, and the payment of, a Performance-Based Award.
(s) "Performance Share" means a right granted to a Participant
under Article 9, to receive cash, Stock, or other Awards, the payment
of which is contingent upon achieving certain performance goals
established by the Committee.
(t) "Plan" means the Insight Enterprises, Inc. 1998 Long-Term
Incentive Plan, as amended from time to time.
(u) "Restricted Stock Award" means Stock granted to a
Participant under Article 10 that is subject to certain restrictions
and to risk of forfeiture.
(v) "Retirement" means a Participant's termination of
employment with the Company after attaining any normal or early
retirement age specified in any pension, profit sharing or other
retirement program sponsored by the Company.
(w) "Stock" means the common stock of the Company and such
other securities of the Company that may be substituted for Stock
pursuant to Article 12.
(x) "Stock Appreciation Right" or "SAR" means a right granted
to a Participant under Article 8 to receive a payment equal to the
difference between the Fair Market Value of a share of Stock as of the
date of exercise of the SAR over the grant price of the SAR, all as
determined pursuant to Article 8.
4
<PAGE> 34
(y) "Subsidiary" means any corporation of which a majority of
the outstanding voting stock or voting power is beneficially owned
directly or indirectly by the Company.
ARTICLE 4 ADMINISTRATION
4.1 COMMITTEE. The Plan shall be administered by a Committee that is
appointed by, and shall serve at the discretion of, the Board. The Committee
shall consist of at least two individuals, each of whom qualifies as (i) a
Non-Employee Director, and (ii) an "outside director" under Code Section 162(m)
and the regulations issued thereunder; provided, however that the Chief
Executive Officer of the Company shall have the authority to grant Awards to
individuals who are not subject to Section 16 of the Securities Exchange Act of
1934 and to those individuals who are subject to Section 16 (other than the
three highest ranking executives of the Company), provided that any grant to a
Section 16 insider shall not become exercisable for at least six months from the
date of grant. When the Chief Executive Officer is acting to grant Awards under
this Plan, solely for purposes of this Plan, the Chief Executive Officer shall
be deemed to be acting as the Committee.
4.2 ACTION BY THE COMMITTEE. A majority of the Committee shall
constitute a quorum. The acts of a majority of the members present at any
meeting at which a quorum is present and acts approved in writing by a majority
of the Committee in lieu of a meeting shall be deemed the acts of the Committee.
Each member of the Committee is entitled to, in good faith, rely or act upon any
report or other information furnished to that member by any officer or other
employee of the Company or any Subsidiary, the Company's independent certified
public accountants, or any executive compensation consultant or other
professional retained by the Company to assist in the administration of the
Plan.
4.3 AUTHORITY OF COMMITTEE. The Committee has the exclusive power,
authority and discretion to:
(a) Designate Participants to receive Awards;
(b) Determine the type or types of Awards to be granted to
each Participant;
(c) Determine the number of Awards to be granted and the
number of shares of Stock to which an Award will relate;
(d) Determine the terms and conditions of any Award granted
under the Plan including but not limited to, the exercise price,
grant price, or purchase price, any restrictions or limitations on
the Award, any schedule for lapse of forfeiture restrictions or
restrictions on the exercisability of an Award, and accelerations or
waivers thereof, based in each case on such considerations as the
Committee in its sole discretion determines; provided, however, that
the Committee shall not have
5
<PAGE> 35
the authority to accelerate the vesting, or waive the forfeiture, of
any Performance Based Awards;
(e) Determine whether, to what extent, and under what
circumstances an Award may be settled in, or the exercise price of an
Award may be paid in, cash, Stock, other Awards, or other property, or
an Award may be canceled, forfeited, or surrendered;
(f) Prescribe the form of each Award Agreement, which need not
be identical for each Participant;
(g) Decide all other matters that must be determined in
connection with an Award;
(h) Establish, adopt or revise any rules and regulations as it
may deem necessary or advisable to administer the Plan; and
(i) Make all other decisions and determinations that may be
required under the Plan or as the Committee deems necessary or
advisable to administer the Plan.
4.4 DECISIONS BINDING. The Committee's interpretation of the
Plan, any Awards granted under the Plan, any Award Agreement and all decisions
and determinations by the Committee with respect to the Plan are final, binding,
and conclusive on all parties.
ARTICLE 5 SHARES SUBJECT TO THE PLAN
5.1 NUMBER OF SHARES. Subject to adjustment provided in Section
13.1, the aggregate number of shares of Stock reserved and available for grant
under the Plan shall be 3,214,125. In addition, the Board may reserve additional
shares of Stock for grant under the Plan (in its discretion) from time to time;
provided, the aggregate number of shares of Stock reserved for grant under the
Plan shall be limited to an amount such that the number of shares of Stock
remaining available for grant under the Plan (and any other option plan
sponsored by the Company) plus the number of shares of Stock granted but not yet
exercised (under the Plan and any other option plan sponsored by the Company)
shall not exceed twenty percent (20%) of the outstanding shares of Stock of the
Company. Notwithstanding the above, the maximum number of shares of Stock that
may be issued under the Plan as ISOs shall be 3,000,000.
5.2 LAPSED AWARDS. To the extent that an Award terminates,
expires or lapses for any reason, any shares of Stock subject to the Award will
again be available for the grant of an Award under the Plan and shares subject
to SARs or other Awards settled in cash will be available for the grant of an
Award under the Plan.
6
<PAGE> 36
5.3 STOCK DISTRIBUTED. Any Stock distributed pursuant to an
Award may consist, in whole or in part, of authorized and unissued Stock,
treasury Stock or Stock purchased on the open market.
5.4 LIMITATION ON NUMBER OF SHARES SUBJECT TO AWARDS.
Notwithstanding any provision in the Plan to the contrary, and subject to the
adjustment in Section 13.1, the maximum number of shares of Stock with respect
to one or more Awards that may be granted to any one Participant during the
Company's fiscal year shall be 100,000.
ARTICLE 6 ELIGIBILITY AND PARTICIPATION
6.1 ELIGIBILITY. Persons eligible to participate in this Plan
include all officers, employees, directors, and consultants or independent
contractors of the Company or a Subsidiary, as determined by the Committee,
including employees who are also members of the Board.
6.2 ACTUAL PARTICIPATION. Subject to the provisions of the Plan,
the Committee may, from time to time, select from among all eligible
individuals, those to whom Awards shall be granted and shall determine the
nature and amount of each Award. No individual shall have any right to be
granted an Award under this Plan.
ARTICLE 7 STOCK OPTIONS
7.1 GENERAL. The Committee is authorized to grant Options to
Participants on the following terms and conditions:
(a) EXERCISE PRICE. The exercise price per share of
Stock under an Option shall be determined by the Committee and set forth in the
Award Agreement. It is the intention under the Plan that the exercise price for
any Option shall not be less than the Fair Market Value as of the date of grant;
provided, however that the Committee may, in its discretion, grant Options
(other than Incentive Stock Options) with an exercise price of less than Fair
Market Value on the date of grant.
(b) TIME AND CONDITIONS OF EXERCISE. The Committee
shall determine the time or times at which an Option may be exercised in whole
or in part. The Committee also shall determine the performance or other
conditions, if any, that must be satisfied before all or part of an Option may
be exercised.
(c) PAYMENT. The Committee shall determine the methods
by which the exercise price of an Option may be paid, the form of payment,
including, without limitation, cash, shares of Stock, or other property
(including broker-assisted "cashless
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exercise" arrangements), and the methods by which shares of Stock shall be
delivered or deemed to be delivered to Participants.
(d) EVIDENCE OF GRANT. All Options shall be evidenced
by a written Award Agreement between the Company and the Participant. The Award
Agreement shall include such provisions as may be specified by the Committee.
7.2 INCENTIVE STOCK OPTIONS. Incentive Stock Options shall be
granted only to employees and the terms of any Incentive Stock Options granted
under the Plan must comply with the following additional rules:
(a) EXERCISE PRICE. The exercise price per share of
Stock shall be set by the Committee, provided that the exercise price for any
Incentive Stock Option may not be less than the Fair Market Value as of the date
of the grant.
(b) EXERCISE. In no event, may any Incentive Stock
Option be exercisable for more than ten years from the date of its grant.
(c) LAPSE OF OPTION. An Incentive Stock Option shall
lapse under the following circumstances:
(1) The Incentive Stock Option shall lapse ten
years from the date it is granted, unless an earlier time is set
in the Award Agreement.
(2) The Incentive Stock Option shall lapse
three months after the Participant's termination of employment,
if the termination of employment was attributable to (i)
Disability, (ii) Retirement, or (iii) for any other reason,
provided that the Committee has approved, in writing, the
continuation of any Incentive Stock Option outstanding on the
date of the Participant's termination of employment.
(3) If the Participant separates from
employment other than as provided in paragraph (2), the
Incentive Stock Option shall lapse seven (7) days following the
Participant's termination of employment.
(4) If the Participant dies before the Option
lapses pursuant to paragraph (1), (2) or (3), above, the
Incentive Stock Option shall lapse, unless it is previously
exercised, on the earlier of (i) the date on which the Option
would have lapsed had the Participant lived and had his
employment status (i.e., whether the Participant was employed by
the Company on the date of his death or had previously
terminated employment) remained unchanged; or (ii) 12 months
after the date of the Participant's death. Upon the
Participant's death, any Incentive Stock Options exercisable at
the Participant's death may be exercised by the Participant's
legal representative or representatives, by the person or
persons entitled to do so under the Participant's last will and
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testament, or, if the Participant shall fail to make
testamentary disposition of such Incentive Stock Option or shall
die intestate, by the person or persons entitled to receive said
Incentive Stock Option under the applicable laws of descent and
distribution.
(d) INDIVIDUAL DOLLAR LIMITATION. The aggregate Fair
Market Value (determined as of the time an Award is made) of all
shares of Stock with respect to which Incentive Stock Options
are first exercisable by a Participant in any calendar year may
not exceed $100,000.00 or such other limitation as imposed by
Section 422(d) of the Code, or any successor provision. To the
extent that Incentive Stock Options are first exercisable by a
Participant in excess of such limitation, the excess shall be
considered Non-Qualified Stock Options.
(e) TEN PERCENT OWNERS. An Incentive Stock Option shall
be granted to any individual who, at the date of grant, owns
stock possessing more than ten percent of the total combined
voting power of all classes of Stock of the Company only if such
Option is granted at a price that is not less than 110% of Fair
Market Value on the date of grant and the Option is exercisable
for no more than five years from the date of grant.
(f) EXPIRATION OF INCENTIVE STOCK OPTIONS. No Award of
an Incentive Stock Option may be made pursuant to this Plan
after the tenth anniversary of the Effective Date.
(g) RIGHT TO EXERCISE. During a Participant's lifetime,
an Incentive Stock Option may be exercised only by the
Participant.
ARTICLE 8 STOCK APPRECIATION RIGHTS
8.1 GRANT OF SARs. The Committee is authorized to grant SARs to
Participants on the following terms and conditions:
(a) RIGHT TO PAYMENT. Upon the exercise of a Stock
Appreciation Right, the Participant to whom it is granted has
the right to receive the excess, if any, of:
(1) The Fair Market Value of a share of
Stock on the date of exercise; over
(2) The grant price of the Stock Appreciation
Right as determined by the Committee, which shall not be less
than the Fair Market Value of a share of Stock on the date of
grant in the case of any SAR related to any Incentive Stock
Option.
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(b) OTHER TERMS. All awards of Stock Appreciation
Rights shall be evidenced by an Award Agreement. The terms,
methods of exercise, methods of settlement, form of
consideration payable in settlement, and any other terms and
conditions of any Stock Appreciation Right shall be determined
by the Committee at the time of the grant of the Award and shall
be reflected in the Award Agreement.
ARTICLE 9 PERFORMANCE SHARES
9.1 GRANT OF PERFORMANCE SHARES. The Committee is authorized to
grant Performance Shares to Participants on such terms and conditions as may be
selected by the Committee. The Committee shall have the complete discretion to
determine the number of Performance Shares granted to each Participant. All
Awards of Performance Shares shall be evidenced by an Award Agreement.
9.2 RIGHT TO PAYMENT. A grant of Performance Shares gives the
Participant rights, valued as determined by the Committee, and payable to, or
exercisable by, the Participant to whom the Performance Shares are granted, in
whole or in part, as the Committee shall establish at grant or thereafter. The
Committee shall set performance goals and other terms or conditions to payment
of the Performance Shares in its discretion which, depending on the extent to
which they are met, will determine the number and value of Performance Shares
that will be paid to the Participant, provided that the time period during which
the performance goals must be met shall, in all cases, exceed six months.
9.3 OTHER TERMS. Performance Shares may be payable in cash,
Stock, or other property, and have such other terms and conditions as determined
by the Committee and reflected in the Award Agreement.
ARTICLE 10 RESTRICTED STOCK AWARDS
10.1 GRANT OF RESTRICTED STOCK. The Committee is authorized to
make Awards of Restricted Stock to Participants in such amounts and subject to
such terms and conditions as may be selected by the Committee. All Awards of
Restricted Stock shall be evidenced by a Restricted Stock Award Agreement.
10.2 ISSUANCE AND RESTRICTIONS. Restricted Stock shall be
subject to such restrictions on transferability and other restrictions as the
Committee may impose (including, without limitation, limitations on the right to
vote Restricted Stock or the right to receive dividends on the Restricted
Stock). These restrictions may lapse separately or in combination at such times,
under such circumstances, in such installments, or otherwise, as the Committee
determines at the time of the grant of the Award or thereafter.
10.3 FORFEITURE. Except as otherwise determined by the Committee
at the time of the grant of the Award or thereafter, upon termination of
employment during the
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applicable restriction period, Restricted Stock that is at that time subject to
restrictions shall be forfeited and reacquired by the Company, provided,
however, that the Committee may provide in any Award Agreement that restrictions
or forfeiture conditions relating to Restricted Stock will be waived in whole or
in part in the event of terminations resulting from specified causes, and the
Committee may in other cases waive in whole or in part restrictions or
forfeiture conditions relating to Restricted Stock.
10.4 CERTIFICATES FOR RESTRICTED STOCK. Restricted Stock granted
under the Plan may be evidenced in such manner as the Committee shall determine.
If certificates representing shares of Restricted Stock are registered in the
name of the Participant, certificates must bear an appropriate legend referring
to the terms, conditions, and restrictions applicable to such Restricted Stock,
and the Company shall retain physical possession of the certificate until such
time as all applicable restrictions lapse.
ARTICLE 11 PERFORMANCE-BASED AWARDS
11.1 PURPOSE. The purpose of this Article 11 is to provide the
Committee the ability to qualify the Restricted Stock Awards under Article 10
and the Performance Share Awards under Article 9 as "performance-based
compensation" under Section 162(m) of the Code. If the Committee, in its
discretion, decides to grant a Performance-Based Award to a Covered Employee,
the provisions of this Article 11 shall control over any contrary provision
contained in Articles 9 or 10.
11.2 APPLICABILITY. This Article 11 shall apply only to those
Covered Employees selected by the Committee to receive Performance-Based Awards.
The Committee may, in its discretion, grant Restricted Stock Awards or
Performance Share Awards to Covered Employees that do not satisfy the
requirements of this Article 11. The designation of a Covered Employee as a
Participant for a Performance Period shall not in any manner entitle the
Participant to receive an Award for the period. Moreover, designation of a
Covered Employee as a Participant for a particular Performance Period shall not
require designation of such Covered Employee as a Participant in any subsequent
Performance Period and designation of one Covered Employee as a Participant
shall not require designation of any other Covered Employees as a Participant in
such period or in any other period.
11.3 DISCRETION OF COMMITTEE WITH RESPECT TO PERFORMANCE AWARDS.
With regard to a particular Performance Period, the Committee shall have full
discretion to select the length of such Performance Period, the type of
Performance-Based Awards to be issued, the kind and/or level of the Performance
Goal, and whether the Performance Goal is to apply to the Company, a Subsidiary
or any division or business unit thereof.
11.4 PAYMENT OF PERFORMANCE AWARDS. Unless otherwise provided in
the relevant Award Agreement, a Participant must be employed by the Company or a
Subsidiary on the last day of the Performance Period to be eligible for a
Performance
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Award for such Performance Period. Furthermore, a Participant shall be eligible
to receive payment under a Performance-Based Award for a Performance Period only
if the Performance Goals for such period are achieved.
In determining the actual size of an individual
Performance-Based Award, the Committee may reduce or eliminate the amount of the
Performance-Based Award earned for the Performance Period, if in its sole and
absolute discretion, such reduction or elimination is appropriate.
11.5 MAXIMUM AWARD PAYABLE. Notwithstanding any provision
contained in the Plan to the contrary, the maximum Performance-Based Award
payable to any one Participant under the Plan for a Performance Period is
100,000 shares of Stock, or in the event the Performance-Based Award is paid in
cash, such maximum Performance-Based Award shall be determined by multiplying
100,000 by the Fair Market Value of one share of Stock as of the date of grant
of the Performance-Based Award.
ARTICLE 12 PROVISIONS APPLICABLE TO AWARDS
12.1 STAND-ALONE, TANDEM, AND SUBSTITUTE AWARDS. Awards granted
under the Plan may, in the discretion of the Committee, be granted either alone
or in addition to, in tandem with, or in substitution for, any other Award
granted under the Plan. If an Award is granted in substitution for another
Award, the Committee may require the surrender of such other Award in
consideration of the grant of the new Award. Awards granted in addition to or in
tandem with other Awards may be granted either at the same time as or at a
different time from the grant of such other Awards.
12.2 EXCHANGE PROVISIONS. The Committee may at any time offer to
exchange or buy out any previously granted Award for a payment in cash, Stock,
or another Award (subject to Section 12.1), based on the terms and conditions
the Committee determines and communicates to the Participant at the time the
offer is made.
12.3 TERM OF AWARD. The term of each Award shall be for the
period as determined by the Committee, provided that in no event shall the term
of any Incentive Stock Option or a Stock Appreciation Right granted in tandem
with the Incentive Stock Option exceed a period of ten years from the date of
its grant.
12.4 FORM OF PAYMENT FOR AWARDS. Subject to the terms of the
Plan and any applicable law or Award Agreement, payments or transfers to be made
by the Company or a Subsidiary on the grant or exercise of an Award may be made
in such forms as the Committee determines at or after the time of grant,
including without limitation, cash, Stock, other Awards, or other property, or
any combination, and may be made in a single payment or transfer, in
installments, or on a deferred basis, in each case determined in accordance with
rules adopted by, and at the discretion of, the Committee.
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<PAGE> 42
12.5 LIMITS ON TRANSFER. No right or interest of a Participant
in any Award may be pledged, encumbered, or hypothecated to or in favor of any
party other than the Company or a Subsidiary, or shall be subject to any lien,
obligation, or liability of such Participant to any other party other than the
Company or a Subsidiary. Except as otherwise provided by the Committee, no Award
shall be assignable or transferable by a Participant other than by will or the
laws of descent and distribution.
12.6 BENEFICIARIES. Notwithstanding Section 12.5, a Participant
may, in the manner determined by the Committee, designate a beneficiary to
exercise the rights of the Participant and to receive any distribution with
respect to any Award upon the Participant's death. A beneficiary, legal
guardian, legal representative, or other person claiming any rights under the
Plan is subject to all terms and conditions of the Plan and any Award Agreement
applicable to the Participant, except to the extent the Plan and Award Agreement
otherwise provide, and to any additional restrictions deemed necessary or
appropriate by the Committee. If the Participant is married, a designation of a
person other than the Participant's spouse as his beneficiary with respect to
more than 50 percent of the Participant's interest in the Award shall not be
effective without the written consent of the Participant's spouse. If no
beneficiary has been designated or survives the Participant, payment shall be
made to the person entitled thereto under the Participant's will or the laws of
descent and distribution. Subject to the foregoing, a beneficiary designation
may be changed or revoked by a Participant at any time provided the change or
revocation is filed with the Committee.
12.7 STOCK CERTIFICATES. All Stock certificates delivered under
the Plan are subject to any stop-transfer orders and other restrictions as the
Committee deems necessary or advisable to comply with Federal or state
securities laws, rules and regulations and the rules of any national securities
exchange or automated quotation system on with the Stock is listed, quoted, or
traded. The Committee may place legends on any Stock certificate to reference
restrictions applicable to the Stock.
12.8 TENDER OFFERS. In the event of a public tender for all or
any portion of the Stock, or in the event that a proposal to merge, consolidate,
or otherwise combine with another company is submitted for stockholder approval,
the Committee may in its sole discretion declare previously granted Options to
be immediately exercisable. To the extent that this provision causes Incentive
Stock Options to exceed the dollar limitation set forth in Section 7.2(d), the
excess Options shall be deemed to be Non-Qualified Stock Options.
12.9 ACCELERATION UPON A CHANGE OF CONTROL. If a Change of
Control occurs, all outstanding Options, Stock Appreciation Rights, and other
Awards shall become fully exercisable and all restrictions on outstanding Awards
shall lapse. To the extent that this provision causes Incentive Stock Options to
exceed the dollar limitation set forth in Section 7.2(d), the excess Options
shall be deemed to be Non-Qualified Stock Options. Upon, or in anticipation of,
such an event, the Committee may cause every Award outstanding hereunder to
terminate at a specific time in the future and shall give each Participant the
right to exercise Awards during a period of time as the Committee, in
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<PAGE> 43
its sole and absolute discretion, shall determine, except in the event that the
surviving or resulting entity agrees to assume the Awards on terms and
conditions that substantially preserve the Participant's rights and benefits of
the Award then outstanding.
ARTICLE 13 CHANGES IN CAPITAL STRUCTURE
13.1 GENERAL. In the event a stock dividend is declared upon the
Stock, the shares of Stock then subject to each Award (and the number of shares
subject thereto) shall be increased proportionately without any change in the
aggregate purchase price therefor. In the event the Stock shall be changed into
or exchanged for a different number or class of shares of Stock or of another
corporation, whether through reorganization, recapitalization, stock split-up,
combination of shares, merger or consolidation, there shall be substituted for
each such share of Stock then subject to each Award (and for each share of Stock
then subject thereto) the number and class of shares of Stock into which each
outstanding share of Stock shall be so exchanged, all without any change in the
aggregate purchase price for the shares then subject to each Award.
ARTICLE 14 AMENDMENT, MODIFICATION AND TERMINATION
14.1 AMENDMENT, MODIFICATION AND TERMINATION. With the approval
of the Board, at any time and from time to time, the Committee may terminate,
amend or modify the Plan.
14.2 AWARDS PREVIOUSLY GRANTED. No termination, amendment, or
modification of the Plan shall adversely affect in any material way any Award
previously granted under the Plan, without the written consent of the
Participant.
ARTICLE 15 GENERAL PROVISIONS
15.1 NO RIGHTS TO AWARDS. No Participant , employee, or other
person shall have any claim to be granted any Award under the Plan, and neither
the Company nor the Committee is obligated to treat Participants, employees, and
other persons uniformly.
15.2 NO STOCKHOLDERS RIGHTS. No Award gives the Participant any
of the rights of a stockholder of the Company unless and until shares of Stock
are in fact issued to such person in connection with such Award.
15.3 WITHHOLDING. The Company or any Subsidiary shall have the
authority and the right to deduct or withhold, or require a Participant to remit
to the Company, an amount sufficient to satisfy Federal, state, and local taxes
(including the Participant's FICA obligation) required by law to be withheld
with respect to any taxable event arising as a result of this Plan.
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<PAGE> 44
15.4 NO RIGHT TO EMPLOYMENT. Nothing in the Plan or any Award
Agreement shall interfere with or limit in any way the right of the Company or
any Subsidiary to terminate any Participant's employment at any time, nor confer
upon any Participant any right to continue in the employ of the Company or any
Subsidiary.
15.5 UNFUNDED STATUS OF AWARDS. The Plan is intended to be an
"unfunded" plan for incentive compensation. With respect to any payments not yet
made to a Participant pursuant to an Award, nothing contained in the Plan or any
Award Agreement shall give the Participant any rights that are greater than
those of a general creditor of the Company or any Subsidiary.
15.6 INDEMNIFICATION. To the extent allowable under applicable
law, each member of the Committee or of the Board shall be indemnified and held
harmless by the Company from any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by such member in connection with or
resulting from any claim, action, suit, or proceeding to which he or she may be
a party or in which he or she may be involved by reason of any action or failure
to act under the Plan and against and from any and all amounts paid by him or
her in satisfaction of judgment in such action, suit, or proceeding against him
or her provided he or she gives the Company an opportunity, at its own expense,
to handle and defend the same before he or she undertakes to handle and defend
it on his or her own behalf. The foregoing right of indemnification shall not be
exclusive of any other rights of indemnification to which such persons may be
entitled under the Company's Articles of Incorporation or By-Laws, as a matter
of law, or otherwise, or any power that the Company may have to indemnify them
or hold them harmless.
15.7 RELATIONSHIP TO OTHER BENEFITS. No payment under the Plan
shall be taken into account in determining any benefits under any pension,
retirement, savings, profit sharing, group insurance, welfare or other benefit
plan of the Company or any Subsidiary.
15.8 EXPENSES. The expenses of administering the Plan shall be
borne by the Company and its Subsidiaries.
15.9 TITLES AND HEADINGS. The titles and headings of the
Sections in the Plan are for convenience of reference only, and in the event of
any conflict, the text of the Plan, rather than such titles or headings, shall
control.
15.10 FRACTIONAL SHARES. No fractional shares of stock shall be
issued and the Committee shall determine, in its discretion, whether cash shall
be given in lieu of fractional shares or whether such fractional shares shall be
eliminated by rounding up.
15.11 SECURITIES LAW COMPLIANCE. With respect to any person who
is, on the relevant date, obligated to file reports under Section 16 of the 1934
Act, transactions under this Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the 1934 Act. To the extent any
provision of the Plan or
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<PAGE> 45
action by the Committee fails to so comply, it shall be void to the extent
permitted by law and voidable as deemed advisable by the Committee.
15.12 GOVERNMENT AND OTHER REGULATIONS. The obligation of the
Company to make payment of awards in Stock or otherwise shall be subject to all
applicable laws, rules, and regulations, and to such approvals by government
agencies as may be required. The Company shall be under no obligation to
register under the Securities Act of 1933, as amended (the "1933 Act"), any of
the shares of Stock paid under the Plan. If the shares paid under the Plan may
in certain circumstances be exempt from registration under the 1933 Act, the
Company may restrict the transfer of such shares in such manner as it deems
advisable to ensure the availability of any such exemption.
15.13 GOVERNING LAW. The Plan and all Award Agreements shall be
construed in accordance with and governed by the laws of the State of Delaware.
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INSIGHT ENTERPRISES, INC.
ANNUAL MEETING OF STOCKHOLDERS
THURSDAY, MAY 13, 1999
3:00 P.M. LOCAL TIME
INSIGHT CORPORATE HEADQUARTERS
6820 SOUTH HARL AVENUE
TEMPE, ARIZONA 85283
Insight Logo
INSIGHT ENTERPRISES, INC.
6820 S. HARL AVENUE, TEMPE, AZ 85283 PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT THE ANNUAL MEETING
ON MAY 13, 1999.
The shares of stock you hold in your account will be voted as you specify.
IF NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED "FOR" ITEMS 1, 2 AND 3.
By signing this proxy, you revoke all prior proxies and appoint ERIC J. CROWN
and STANLEY LAYBOURNE, and each of them, with full power of substitution, to
vote your shares on the matters shown on the reverse side and any other matters
which may come before the Annual Meeting and all adjournments.
See reverse for voting instructions.
<PAGE> 47
Company #
Control #
THERE ARE THREE WAYS TO VOTE YOUR PROXY:
YOUR TELEPHONE OR INTERNET VOTE AUTHORIZES THE NAMED PROXIES TO VOTE YOUR SHARES
IN THE SAME MANNER AS IF YOU MARKED, SIGNED AND RETURNED YOUR PROXY CARD.
VOTE BY PHONE -- TOLL FREE - 800-240-6326 - QUICK *** EASY *** IMMEDIATE
- - Use any touch-tone telephone to vote your proxy 24 hours a day, 7 days a
week.
- - You will be prompted to enter your 3-digit Company Number and your 7-digit
Control Number which is located above.
- - Follow the simple instructions the Voice provides you.
VOTE BY INTERNET - www.eproxy.com/nsit/ - QUICK *** EASY *** IMMEDIATE
- - Use the Internet to vote your proxy 24 hours a day, 7 days a week.
- - You will be prompted to enter your 3-digit Company number and your 7-digit
Control Number which is located above to obtain your records and create an
electronic ballot.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope
we've provided or return it to Insight Enterprises, Inc. c/o Shareowner
Services, P.O. Box 64873, St. Paul, MN 55164-9397.
If you vote by Phone or Internet, Please do not mail your Proxy Card
-- Please detach here --
Share Amounts
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3.
1. Election of Two Class II Directors:
01 Larry A. Gunning 02 Robertson C. Jones
/ / / /
Vote FOR Vote WITHHELD
all nominees from all nominees
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDICATED NOMINEE,
WRITE THE NUMBER OF THE NOMINEE IN THE BOX PROVIDED TO THE RIGHT.)
2. To approve an amendment to the Company's Amended and Restated Certificate
of Incorporation increasing the number of authorized shares of Common
Stock, $.01 par value, from 30,000,000 to 100,000,000 and of Preferred
Stock, $.01 par value, from 3,000,000 to 10,000,000
/ / / / / /
For Against Abstain
3. To approve amendments to the Company's 1998 Long-Term Incentive Plan
/ / / / / /
For Against Abstain
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION
IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL.
Address Change? Mark Box / / Planning to Date:
attend Annual ----------------------------
Indicate changes below: Meeting?
Mark box / /
Address area
Signature(s) in Box
Proxy # Account #
Please sign exactly as your name(s)
appear on Proxy. If held in joint
tenancy, all persons must sign.
Trustees, administrators, etc. should
include title and authority.
Corporations should provide full name or
corporation and title of authorized
officer signing the proxy.
