<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.
1305 WEST AUTO DRIVE
TEMPE, ARIZONA 85284
NOTICE OF 2000 ANNUAL MEETING OF STOCKHOLDERS
MAY 16, 2000
TO OUR STOCKHOLDERS:
Notice is hereby given that the 2000 Annual Meeting of Stockholders of
Insight Enterprises, Inc., a Delaware corporation (the "Company"), will be held
on Tuesday, May 16, 2000, at 3:00 p.m. local time, at the Company's corporate
headquarters, 1305 West Auto Drive, Tempe, Arizona 85284, for the following
purposes:
(1) To elect two Class III Directors to serve until the 2003
Annual Meeting of Stockholders or until their successors have
been duly elected and qualified;
(2) To approve an amendment to the Company's Amended and Restated
Certificate of Incorporation increasing the authorized number
of shares of Common Stock, $.01 par value per share, from
30,000,000 to 100,000,000;
(3) To approve amendments to the Insight Enterprises, Inc. 1998
Long-Term Incentive Plan increasing the number of shares
authorized for issuance thereunder 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 21, 2000 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 1999
Annual Report to Stockholders, which includes audited financial statements, is
enclosed. The Annual Report is not part of our proxy soliciting material.
All stockholders are cordially invited to attend the Annual Meeting.
By order of the Board of Directors
Tempe, Arizona Stanley Laybourne
March 31, 2000 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.
1305 WEST AUTO DRIVE
TEMPE, ARIZONA 85284
PROXY STATEMENT
2000 ANNUAL MEETING OF STOCKHOLDERS
MAY 16, 2000
SOLICITATION, EXECUTION AND REVOCATION OF PROXIES
This Proxy Statement is furnished to the stockholders of record of Insight
Enterprises, Inc. (the "Company") for the solicitation of proxies to be used at
the Annual Meeting of Stockholders (the "Annual Meeting") to be held on Tuesday,
May 16, 2000, at 3:00 p.m. local time, at the Company's corporate headquarters,
1305 West Auto Drive, Tempe, Arizona 85284, 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 14, 2000,
to stockholders of record at the close of business on March 21, 2000 (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.
You have the power to revoke the proxy at any time before it is voted by
executing a later-dated proxy relating to the same shares and delivering it to
the Secretary of the Company at 1305 West Auto Drive, Tempe, Arizona 85284 prior
to the vote at the Annual Meeting, or by written notice of revocation to the
Secretary prior to the vote at the Annual Meeting, or by appearing in person at
the Annual Meeting and voting the shares to which the proxy relates. If your
shares are held of record by a broker, bank or other nominee and you wish to
vote at the Annual Meeting, you must bring to the Annual Meeting a letter from
the broker, bank or other nominee confirming your 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 other custodians, nominees and fiduciaries for the forwarding of
solicitation materials to the beneficial owners of Common Stock. 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. The estimated
fee for this proxy solicitation is $15,000, plus reasonable out of pocket
expenses.
<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 26,904,269
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 marked "withhold
authority" with respect to the election of one or more directors, 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 that the
broker or other nominee lacks discretionary authority.
All shares represented by valid proxies 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 matters, 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 in the form of a stock dividend payable on February 18, 1999 to the
stockholders of record at the close of business on January 25, 1999.
2
<PAGE> 5
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's Board of Directors consists of five members divided into
three classes, with the directors in each class serving for a term of three
years. The three-year terms of Timothy A. Crown and Stanley Laybourne, who are
Class III directors, expire at the Annual Meeting. The Board of Directors has
nominated Messrs. Crown and Laybourne for re-election as directors and, unless
otherwise instructed, the proxy holders will vote for the election of Messrs.
Crown and Laybourne as directors of the Company.
If any nominee of the Company is unable or declines to serve as a director,
or if a vacancy occurs before election (which events are not anticipated), the
proxy holders will vote for the election of such other person or persons
nominated by the Board of Directors.
REQUIRED VOTE
The two nominees who receive the most votes will be elected to the Board of
Directors. Votes may be cast FOR the nominees or WITHHELD. In addition, you may
indicate that you are voting FOR the nominees except for any nominee(s)
specified in writing on the proxy card. 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.
3
<PAGE> 6
INFORMATION CONCERNING DIRECTORS AND EXECUTIVE OFFICERS
The names of the Company's directors and executive officers, and
information about them, are set forth below.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Eric J. Crown (1) 38 Co-Chief Executive Officer and Chairman of the Board
of the Company (Term expires in 2001)
Timothy A. Crown (1) 36 Co-Chief Executive Officer, President and Director
of the Company (Term expires in 2000)
Stanley Laybourne (1) 51 Chief Financial Officer, Secretary, Treasurer and
Director of the Company (Term expires in 2000)
Larry A. Gunning (2) 56 Director of the Company (Term expires in 2002)
Robertson C. Jones (2) 55 Director of the Company (Term expires in 2002)
Michael A. Gumbert 41 President of Insight Direct Worldwide, Inc., a
subsidiary of the Company
Branson M. Smith 44 President of Direct Alliance Corporation, a
subsidiary 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 Insight's 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. Mr. Crown was named as Co-Chief Executive
Officer on January 25, 2000. 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 business-consulting firm. Timothy A. Crown is the brother
of Eric J. Crown.
Stanley Laybourne. Mr. Laybourne has been a director of the Company since
1994. He became the Chief Financial Officer and Treasurer in 1991, and in 1994
he became Secretary of the Company. Mr. Laybourne received a Bachelor of Science
degree in Accounting from The Ohio State University in 1971 and 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. Mr. Laybourne is a Certified Public
Accountant.
4
<PAGE> 7
Larry A. Gunning. Mr. Gunning has been a director of the Company since
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
1995. Mr. Jones is Senior Vice President and General Counsel of Del Webb
Corporation, a developer of master-planned residential communities, where he has
worked since 1992. 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 1996 as Chief Operating
Officer of Insight Direct USA, Inc., a subsidiary of the Company. In July 1999,
Mr. Gumbert was promoted to President of Insight Direct Worldwide, 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 1995, Mr. Gumbert held
several positions with Merisel, Inc., including Senior Vice President, Sales and
Operation. From 1995 to 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 in 1981.
Branson M. Smith. Mr. Smith was employed by Insight Direct USA, Inc., a
subsidiary of the Company, from 1992 to 1996, serving as its Vice President of
Distribution and Senior Vice President of Fulfillment Services. In 1996, Mr.
Smith was promoted to Chief Operating Officer of Direct Alliance Corporation, a
subsidiary of the Company, and in July 1999 was further promoted to President.
From 1987 to 1991, Mr. Smith was a Division Manager of Shape West, a computer
disk manufacturer. From 1991 to 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 in 1978.
5
<PAGE> 8
MEETINGS OF THE BOARD AND ITS COMMITTEES
The Board of Directors held five meetings during the year ended December
31, 1999. No director attended fewer than 75% of the aggregate of all meetings
of the Board of Directors and any committee on which such director served during
the period of such service. The Board presently has an Executive Committee, an
Audit Committee and a Compensation Committee.
The Executive Committee consists of Eric J. Crown, Timothy A. Crown and
Stanley Laybourne. The Executive Committee is empowered to act on Board matters
that arise between meetings of the full Board of Directors.
The Audit Committee consists of Larry A. Gunning and Robertson C. Jones and
met two times in 1999. 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 the extent of non-audit services by the Company's
auditors in relation to the objectivity needed in the audit. The Committee is
responsible to review all related party transactions and to review potential
conflict of interest situations where appropriate. The Committee is also
responsible for recommending the engagement or discharge of the Company's
independent auditors.
The Compensation Committee consists of Messrs. Gunning and Jones and met
two times in 1999. The Compensation Committee administers salaries and benefit
programs designed for senior management, officers and directors and the
Company's stock option plans 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 ("non-employee directors")
receive a retainer of $2,000 per quarter, $500 per Board meeting attended, $300
per committee meeting attended and reimbursement of reasonable expenses and
certain formula-based stock option awards as described below. Directors who are
employees of the Company do not receive compensation for their service as
directors. Non-employee directors are eligible to receive nonqualified stock
options pursuant to an annual formula grant. The formula provided for an initial
grant of options for 8,437 shares to each non-employee director on the closing
date of the Company's initial public offering. Commencing in 1996, non-employee
directors started receiving options for 5,062 shares each time they were elected
for a three-year term on the Board. Non-employee directors who are initially
elected to the Board between annual meetings receive options for 1,687 shares
multiplied by the number of full and partial years of their initial terms.
Options are exercisable for 10 years at the fair market value of the stock on
the date of grant and vest over a three year period, subject to continued Board
service.
6
<PAGE> 9
EXECUTIVE COMPENSATION
The following table sets forth for each of the last three years the total
for services rendered to the Company by (i) the Company's Chief Executive
Officer and (ii) its four other most highly compensated executive officers
(collectively, the "Named Executive Officers"). The amounts shown include both
amounts paid and amounts deferred.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
---------------------------------------------
OTHER
ANNUAL
NAME AND PRINCIPAL POSITION COMPEN-
YEAR SALARY ($) BONUS ($) SATION($)(1)
- ----------------------------- ------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Eric J. Crown 1999 $ 250,000 $ - --
Co-Chief Executive Officer 1998 $ 250,000 $ 111,879 --
1997 $ 237,500 $ 195,042 --
Timothy A. Crown 1999 $ 250,000 $ - --
Co-Chief Executive Officer 1998 $ 250,000 $ 111,879 --
& President 1997 $ 237,500 $ 195,042 --
Stanley Laybourne 1999 $ 190,000 $ - --
Chief Financial Officer, 1998 $ 190,000 $ 22,391 --
Secretary and Treasurer 1997 $ 170,000 $ 85,342 --
Michael A. Gumbert 1999 $ 215,000 $ 357,260 --
President of Insight Direct 1998 $ 215,000 $ 52,980 --
Worldwide, Inc. 1997 $ 192,500 $ 110,967 --
Branson M. Smith 1999 $ 200,000 $ 65,281 --
President of Direct 1998 $ 155,000 $ 20,922 --
Alliance Corporation 1997 $ 146,000 $ 36,118 --
</TABLE>
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
AWARDS
----------------------------------
RESTRICTED SECURITIES ALL OTHER
NAME AND PRINCIPAL POSITION STOCK UNDERLYING COMPEN-
YEAR AWARDS ($) (2) OPTIONS(#) SATION($)(3)
- ----------------------------- ------- --------------- --------------- ------------
<S> <C> <C> <C> <C>
Eric J. Crown 1999 $ 848,495 120,000 $ 3,288
Co-Chief Executive Officer 1998 $ 456,845 168,750 $ 2,279
1997 - 151,872 $ 1,542
Timothy A. Crown 1999 $ 848,495 120,000 $ 3,311
Co-Chief Executive Officer 1998 $ 456,845 168,750 $ 1,732
& President 1997 - 151,872 $ 1,396
Stanley Laybourne 1999 $ 169,700 100,000 $ 3,322
Chief Financial Officer, 1998 $ 91,392 90,000 $ 1,851
Secretary and Treasurer 1997 - 50,622 $ 2,916
Michael A. Gumbert 1999 $ 102,139 100,000 $ 3,572
President of Insight Direct 1998 $ 70,875 90,000 $ 3,363
Worldwide, Inc. 1997 - 67,497 $ 3,195
Branson M. Smith 1999 $ 41,235 100,000 $ 3,458
President of Direct 1998 $ 31,988 56,250 $ 1,737
Alliance Corporation 1997 - 67,500 $ 1,620
</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 the 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 36,423, 36,423, 6,932,
5,839, and 2,544 shares of restricted stock held at December 31, 1999
by Messrs. Crown, Crown, Laybourne, Gumbert and Smith, respectively
(calculated by multiplying the number of shares held by the closing
price on December 31, 1999 as reported on the Nasdaq National Market)
was $1,479,684, $1,479,684, $281,613, $237,209, and $103,350 as of
December 31, 1999. 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,
subject to acceleration in certain circumstances.
(3) Represents payments for disability insurance premiums and 401(k)
contributions made by the Company to the accounts of the executive
officers in the following amounts, respectively: $788 and $2,500 in
1999, $1,060 and $1,219 in 1998, and $1,060 and $482 in 1997 for Eric
J. Crown; $811 and $2,500 in 1999, $1,060 and $672 in 1998 and $914
and $482 in 1997 for Timothy A. Crown; $822 and $2,500 in 1999, $885
and $966 in 1998 and $885 and $2,031 in 1997 for Stanley Laybourne;
$1,072 and $2,500 in 1999, $1,097 and $2,266 in 1998 and $1,097 and
$2,098 in 1997 for Michael A. Gumbert; $958 and $2,500 in 1999, $784
and $953 in 1998 and $783 and $837 in 1997 for Branson M. Smith.
7
<PAGE> 10
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information regarding stock options granted
during the year ended December 31, 1999 to the Named Executive Officers.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------------------
PERCENT OF
NUMBER OF TOTAL POTENTIAL REALIZABLE VALUE AT
SECURITIES OPTIONS ASSUMED ANNUAL RATES OF STOCK
UNDERLYING GRANTED TO EXERCISE PRICE APPRECIATION FOR OPTION
OPTIONS EMPLOYEES IN PRICE EXPIRATION TERM (2)
GRANTED (#)(1) FISCAL YEAR ($/SHARE) DATE ------------------------------
NAME 5%($) 10%($)
- ----------------------- ---------------- -------------- ------------ ------------ ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Eric J. Crown 50,000 3.1% $25.3750 07/01/09 $ 797,910 $2,022,061
20,000 1.3% $31.6562 10/01/09 $ 398,168 $1,009,037
25,000 1.6% $29.8750 10/08/09 $ 469,706 $1,190,326
25,000 1.6% $32.0000 11/19/09 $ 503,116 $1,274,994
------- ---- ---------- ----------
120,000 7.5% $2,168,900 $5,496,418
Timothy A. Crown 50,000 3.1% $25.3750 07/01/09 $ 797,910 $2,022,061
20,000 1.3% $31.6562 10/01/09 $ 398,168 $1,009,037
25,000 1.6% $29.8750 10/08/09 $ 469,706 $1,190,326
25,000 1.6% $32.0000 11/19/09 $ 503,116 $1,274,994
------- ---- ---------- ----------
120,000 7.5% $2,168,900 $5,496,418
Stanley Laybourne 25,000 1.6% $25.3750 07/01/09 $ 398,955 $1,011,030
75,000 4.7% $27.6250 09/28/09 $1,302,991 $3,302,035
------- ---- ---------- ----------
100,000 6.3% $1,701,946 $4,313,066
Michael A. Gumbert 25,000 1.6% $25.3750 07/01/09 $ 398,955 $1,011,030
75,000 4.7% $27.6250 09/28/09 $1,302,991 $3,302,035
------- ---- ---------- ----------
100,000 6.3% $1,701,946 $4,313,066
Branson M. Smith 25,000 1.6% $25.3750 07/01/09 $ 398,955 $1,011,030
75,000 4.7% $27.6250 09/28/09 $1,302,991 $3,302,035
------- ---- ---------- ----------
100,000 6.3% $1,701,946 $4,313,066
</TABLE>
- ----------------
(1) One-third of the options become exercisable on each of the first three
anniversaries of the grant date.
(2) Amounts represent hypothetical gains that could be achieved over the
full option term (10 years). The potential realizable value is
calculated by assuming that the market price of the underlying
security appreciates in value from the date of grant to the end of the
term of the option at the specified annual rates, and that the option
is exercised at the exercise price and sold on the last day of its
term at the appreciated price. These gains are based on assumed rates
of stock appreciation of 5% and 10% compounded annually from the date
the respective options were granted to their expiration date and are
not presented to forecast possible future appreciation, if any, in the
price of the Common Stock.
8
<PAGE> 11
AGGREGATED OPTION EXERCISES AND FISCAL YEAR-END OPTION VALUES
The following table sets forth information with respect to option exercises
of and the number and value of options outstanding at December 31, 1999 held by
the Named Executive Officers.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
SHARES UNDERLYING UNEXERCISED IN-THE-MONEY
ACQUIRED ON VALUE OPTIONS AT YEAR-END (#) OPTIONS AT YEAR-END ($) (1)
----------------------------- ----------------------------
NAME EXERCISE (#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------ ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Eric J. Crown 112,498 $ 2,247,214 0 283,124 $ 0 $ 5,593,755
Timothy A. Crown 112,498 $ 2,242,272 0 283,124 $ 0 $ 5,593,755
Stanley Laybourne 139,497 $ 2,984,982 0 176,873 $ 0 $ 3,262,136
Michael A. Gumbert 120,002 $ 2,601,106 0 182,497 $ 0 $ 3,446,450
Branson M. Smith 58,119 $ 1,238,129 0 154,379 $ 0 $ 2,748,894
</TABLE>
(1) Value as of December 31, 1999 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.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-OF-CONTROL
ARRANGEMENTS
The Company has entered into employment agreements with five 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 an initial 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,
under their respective agreements equal to 2.5%, 2.5% and 0.5%, respectively, of
the Company's net earnings (before deducting the incentive bonuses) provided
that the Company's net earnings exceed stated minimum amounts. These incentive
bonuses are paid in the form of either cash or restricted stock at the election
of the officer. The restricted stock vests quarterly over three years, subject
to acceleration in certain circumstances and unvested shares are forfeited if
the recipient ceases to be an employee of the Company.
Eric J. Crown, the Company's Co-Chief Executive Officer, approved the base
salaries and incentive bonuses for Michael A. Gumbert and Branson M. Smith for
an initial period of two years effective July 1, 1999. These agreements contain
provisions that constantly renew the agreement for additional two year terms.
The base salaries for Michael A. Gumbert and Branson M. Smith are set at
$215,000 and $200,000, respectively. Messrs. Gumbert and Smith are entitled to
receive an incentive bonus, payable quarterly, for the period under their
agreement based on a percentage of net earnings (before deducting the incentive
bonuses) of their respective subsidiaries provided that the Company's net
earnings exceed stated minimum amounts and provided further that the incentive
bonus for the fiscal year ending December 31, 1999 shall not exceed 270% of
Executive's annual Base Salary for that fiscal year, but such limitation shall
not be applicable thereafter.
9
<PAGE> 12
The agreements for Messrs. Crown, Crown and Laybourne contain
Change-of-Control (as defined) and non-compete provisions that, upon a
Change-of-Control, could result in payments to these individuals equal to three
times their base salary and an 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 agreements for Michael A. Gumbert and Branson M. Smith contain the same
provisions except their payment could be two times their base salary and
incentive bonus for the preceding quarters four quarters, if a Change-of-Control
did occur.
The agreements for Messrs. Crown, Crown, Laybourne, Gumbert and Smith
provide that the individuals will receive certain benefits if their employment
is terminated without cause. In the event an agreement is terminated without
cause, the individual executive shall receive a lump sum distribution consisting
of (i) the total amount of his base salary for the remainder of the agreement
term, and (ii) the total amount of incentive compensation payments, calculated
based on a defined formula, as if the executive had not been terminated.
The Compensation Committee and the Co-Chief Executive Officers commissioned
KPMG LLP, in 1997, and Hewitt Associates, in 1999, to analyze and review the
competitiveness of executive compensation. The analyses have provided the basis
for recommendations and approvals with respect to the terms and provisions
included in the current executive employment agreements. The analyses 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 Co-Chief Executive Officers considered all such factors in
their decision to adopt the related agreements. The Co-Chief Executive Officers
as well as the Compensation Committee had separate meetings with KPMG LLP and
Hewitt Associates to review their findings. The Compensation Committee believes
that the agreements provide appropriate compensation for the individuals.
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
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 Co-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 a non-employee director.
10
<PAGE> 13
The Compensation Committee and the Co-Chief Executive Officers commissioned
KPMG LLP, in 1997, and Hewitt Associates, in 1999, to analyze and review the
competitiveness of executive compensation. The analyses have provided the basis
for recommendations and approvals with respect to the terms and provisions
included in the current executive employment agreements. The analyses 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 Co-Chief
Executive Officers as well as the Compensation Committee had separate meetings
with KPMG LLP and Hewitt Associates to review their findings. The Compensation
Committee and the Co-Chief Executive Officers considered all such factors when
setting executive compensation.
COMPENSATION PHILOSOPHY
The general philosophy of the Company's executive compensation program is
to place base salaries below the marketplace while bonuses and equity incentives
offer the executive compensation that is at least competitive in the
marketplace. Bonuses, including equity incentives are 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
In 1999, the 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 $200,000, respectively. Additionally, Messrs.
Crown, Crown and Laybourne are entitled to receive an incentive bonus, payable
quarterly, 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 Insight Direct Worldwide, Inc., and
Direct Alliance Corporation, respectively (subsidiaries of the Company),
provided that the Company's net earnings exceed stated minimum amounts.
CASH BONUSES AND RESTRICTED STOCK BONUSES
The Company views 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. These bonuses may be paid with restricted stock
instead of cash. Such restricted stock vests quarterly over three years and
unvested shares are forfeited if the recipient ceases to be an employee of the
Company. The vesting of such shares accelerates in the event that the Company's
stock closes at or above a certain price, ranging from $44 to $66. Messrs.
Crown, Crown and Laybourne received restricted stock for 1999, in lieu of cash
bonuses. Messrs. Gumbert and Smith received restricted stock for the first and
second quarters and cash for the third and fourth quarters of 1999. During 1999,
cash bonuses were earned by the Company's Named Executive Officers as follows:
Michael A. Gumbert - $102,139; and Branson M. Smith - $41,235.
During 1999, the number of restricted shares earned by the Company's Named
Executive Officers were as follows: Eric J. Crown - 30,859 shares; Timothy A.
Crown - 30,859 shares; Stanley Laybourne - 6,173 shares; Michael A. Gumbert -
4,491 shares; and Branson M. Smith - 1,793 shares.
11
<PAGE> 14
STOCK INCENTIVES
In 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, non-employee directors and
consultants. In 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 component of the Company's
overall executive compensation program because it ties directly an executive's
compensation to the value realized by the Company's stockholders, and because it
permits the Company to recruit and retain top talent.
During 1999, stock options to purchase a total of 540,000 shares of Company
Common Stock were granted to the Company's Named Executive Officers as follows:
Eric J. Crown - 120,000 shares; Timothy A. Crown - 120,000 shares; Stanley
Laybourne - 100,000 shares; Michael A. Gumbert - 100,000 shares; and Branson M.
Smith - 100,000 shares.
All of the options granted during 1999 to Named Executive Officers vest
equally on each of the first three anniversaries of the date of grant, provided
the officer is still an employee of the Company. The Company believes that
staged vesting provides an incentive for key executives to remain at the Company
for at least three years and promotes continuity of a 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 officer's attention on managing the Company
from the perspective of an owner with an equity stake in the business.
SECTION 162(M)
Section 162(m) of the Internal Revenue Code generally disallows a tax
deduction to public companies for compensation over $1 million paid 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 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
12
<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 (NSIT) with
the cumulative total return of the Nasdaq Stock Market U.S. Companies (Market
Index) and the Nasdaq Retail Trade Stocks (Peer Index) for the period commencing
January 24, 1995 (the date on which trading in the Company's Common Stock
commenced) and ended December 31, 1999. The graph assumes that $100 was invested
on January 24, 1995 in Insight 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 cash dividends on the Common Stock.
Historical stock price performance shown on the graph is not necessarily
indicative of future price performance.
[LINE GRAPH]
<TABLE>
<CAPTION>
Jan. 24, Dec. 31, Dec. 31, Dec. 31, Dec. 31, Dec. 31,
--------- -------- ------- --------- --------- -------
1995 1995 1996 1997 1998 1999
---- ------ ---- ---- ---- ------
<S> <C> <C> <C> <C> <C> <C>
Insight Enterprises, Inc. Common Stock $100.0 $120.5 $269.9 $531.3 $1,103.3 $1,321.5
(NSIT)
Nasdaq Stock Market U.S. Companies (Market $100.0 $139.1 $171.2 $209.7 $ 295.5 $ 533.9
Index)
Nasdaq Retail Trade Stocks (Peer Index) $100.0 $112.5 $134.2 $157.6 $ 191.7 $ 185.4
</TABLE>
13
<PAGE> 16
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the Company's directors,
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,
1999.
14
<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, as of December 31, 1999, 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>
AIM Management Group, Inc. 2,027,326(3) 7.6%
Janus Capital Corporation 1,941,066(4) 7.2%
Eric J. Crown 1,315,161(5) 4.9%
Timothy A. Crown 1,214,935(6) 4.5%
Stanley Laybourne 31,971(7) *
Robertson C. Jones 27,000(8) *
Michael A. Gumbert 25,741(9) *
Larry Gunning 8,439(10) *
Branson M. Smith 2,583(11) *
All directors and executive officers as a group (7 2,625,830(12) 9.8%
persons)
</TABLE>
* Less than 1%
(1) The address of Messrs. Crown, Crown, Laybourne, Gumbert, Smith,
Gunning and Jones is c/o Insight Enterprises, Inc., 1305 West Auto
Drive, Tempe, Arizona, 85284.
(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) Number of shares based on the stockholder's 13G filing for December
31, 1999. The address of AIM Management Group, Inc. is 1315 Peachtree
Street, N.E., Atlanta, Georgia 30309. The information contained in
this section was obtained from a Schedule 13G filed February 4, 2000
by AIM Management Group, Inc. with the Securities Exchange Commission.
The Company makes no representation as to the accuracy or completeness
of the information reported.
(4) Number of shares based on the stockholder's 13G filing for December
31, 1999. The address of Janus Capital Corporation is 100 Fillmore
Street, Denver, Colorado 80206-4923. The information contained in this
section was obtained from a Schedule 13G filed February 15, 2000 by
Janus Capital Corporation with the Securities Exchange Commission. The
Company makes no representation as to the accuracy or completeness of
the information reported.
(5) Includes 337 shares beneficially owned by Mr. Crown's spouse and 59
shares held in the Company's 401(k) Plan.
(6) Includes 39 shares held in the Company's 401(k) Plan.
(7) Includes 38 shares held in the Company's 401(k) Plan.
(8) Consists of 25,312 shares subject to options exercisable within 60
days of December 31, 1999 and 1,688 shares held in the name of a
family trust.
(9) Includes 5,622 shares subject to options exercisable within 60 days of
December 31, 1999, and 71 shares held in the Company's 401(k) Plan.
(10) Consists of 8,439 shares subject to options exercisable within 60 days
of December 31, 1999.
(11) Includes 39 shares held in the Company's 401(k) Plan.
(12) Includes 39,373 shares subject to options exercisable within 60 days
of December 31, 1999, and 246 shares held in the Company's 401(k)
Plan.
15
<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 recommends that the stockholders
approve, an amendment to Article 4 of the Company's Amended and Restated
Certificate of Incorporation ("Certificate of Incorporation") increasing the
total authorized number of shares of Common Stock, $.01 par value per share,
from 30,000,000 to 100,000,000. The full text of the proposed amendment to the
Amended and Restated Certificate of Incorporation is set forth in Appendix A to
this Proxy Statement. If adopted by the stockholders, the amendment will become
effective upon filing of an appropriate certificate with the Secretary of 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. The
additional shares of Common Stock authorized by the proposed amendment will have
the same rights and privileges as the shares of Common Stock currently
authorized.
At March 15, 2000, 26,904,269 shares of Common Stock were issued and
outstanding, and 5,260,631 shares of Common Stock were reserved for issuance
under the Company's stock option and benefit plans. The Board of Directors
recommends increasing the number of authorized common shares because, 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 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 affords the Company
flexibility to take advantage of business and financial opportunities without
the delay and expense of seeking stockholders approval for the authorization of
additional stock.
If this proposal is approved, all or any of the authorized shares of Common
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. Therefore, the
issuance of additional shares of Common Stock might dilute, under certain
circumstances, the ownership and voting rights of existing stockholders.
Except 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 to issue shares of newly
authorized Common Stock.
The Company has not proposed the increase in the authorized number of
shares of Common 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.
16
<PAGE> 19
REQUIRED VOTE
Approval of the proposal to increase the number of authorized shares of
Common 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 and the number of shares
outstanding and entitled to vote. 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.
17
<PAGE> 20
PROPOSAL NO. 3
AMENDMENTS TO INSIGHT ENTERPRISES, INC.
1998 LONG-TERM INCENTIVE PLAN
GENERAL
The Company seeks stockholder approval of amendments (the "Amendments") to
the Insight Enterprises, Inc. 1998 Long-Term Incentive Plan (the "Plan")
increasing the number of shares of Common Stock authorized for issuance
thereunder to 4,000,000, subject to the ability of the Board of Directors to
increase such amount without further stockholder approval provided that 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) may not exceed twenty
percent (20%) of the outstanding shares of stock of the Company, and to make
certain other changes. The closing price for the Common Stock on March 15, 2000,
as reported on Nasdaq, was $26.02.
The Plan promotes the success and enhances the value of the Company by:
- - linking the personal interests of participants to those of the Company's
stockholders,
- - providing participants with an incentive for outstanding performance, and
- - 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 recommends the stockholders approve the
Amendments. The Plan was originally adopted in October 1997. A copy of the
proposed Amendments as proposed herein are set forth as Appendix B.
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
2,350 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 Co-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.
18
<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.
19
<PAGE> 22
STOCK APPRECIATION RIGHTS
A 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.
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
the 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.
20
<PAGE> 23
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
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, 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 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 500,000 shares (as the Plan is proposed to be Amended). In the event the
performance-based award is payable in cash, the maximum amount is determined by
multiplying 500,000 (as adjusted for stock splits) by the fair market value of
the Common Stock as of the date the performance-based award is granted.
21
<PAGE> 24
CHANGE OF CONTROL
In the event of a 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 become immediately
exercisable.
Upon the occurrence of a Change of Control (as defined in the Plan), all
outstanding awards granted under the Plan 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
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 Compensation Committee, subject to the approval of the Board, may
terminate, amend or modify the Plan at any time; provided, however, that
shareholder approval must be obtained for any amendment to the extent necessary
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
1999 to:
- - each of the Named Executive Officers identified above,
- - all current executive officers as a group,
- - all current directors who are not executive officers, as a group, and
- - 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 Compensation
Committee. Accordingly, future grants under the Plan are not yet determinable.
The following table shows grants made under the Plan in 1999.
22
<PAGE> 25
1998 LONG-TERM INCENTIVE PLAN
<TABLE>
<CAPTION>
Weighted Average
Securities Underlying Exercise Price of
Name and Position Options Granted (#) Options Granted ($)
----------------- ------------------- -------------------
<S> <C> <C>
Eric J. Crown 120,000 $ 28.74
Chairman of the Board of Directors and Co-Chief
Executive Officer
Timothy A. Crown 120,000 $ 28.74
Co-Chief Executive Officer, President and
Director
Stanley Laybourne 100,000 $ 27.06
Chief Financial Officer,
Secretary, Treasurer and Director
Michael A. Gumbert 100,000 $ 27.06
President of
Insight Direct Worldwide, Inc.
Branson M. Smith 100,000 $ 27.06
President of
Direct Alliance Corporation
Executive Officer Group 540,000 $ 27.81
Non-Executive Director Group 10,124 $ 27.00
Non-Executive Employee Group 390,032 $ 24.59
</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 15, 2000, (i) 889,062 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 2,537,601 shares
were outstanding under the Plan. There are only options to purchase 409,074
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 and the maximum number of shares that may be issued to any one
individual during a year are being increased as well. Therefore, the Board is
proposing Amendments to the Plan increasing (i) the number of shares authorized
for issuance under the Plan to 4,000,000, (ii) the maximum number of options
that may be granted as ISOs under the Plan to 3,000,000, and (iii) the maximum
number of shares of common stock that may be granted to any individual during
any calendar year from 225,000 to 500,000.
23
<PAGE> 26
In addition, the Plan, prior to the Amendment, provides that for each year
an additional one to four percent of the outstanding shares of Common Stock of
the Company, in the Board's discretion, may 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, from time to time,
additional shares of stock for grant under the Plan, in its discretion. However,
the aggregate number of shares of stock reserved for grant under the Plan is
limited to the following, which in the aggregate may not exceed twenty percent
(20%) of the outstanding shares of stock of the Company:
- - the number of shares of our Common Stock available for grant under the Plan
and any other option plan sponsored by the Company, and
- - the number of shares of our Common Stock granted, but not yet exercised or
cancelled, under the Plan and any other option plan sponsored by the
Company.
The Amendments, if approved by stockholders, would be effective as of March
13, 2000, the date of the Board's approval of the Amendments.
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 on the
proposal, 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.
24
<PAGE> 27
RELATIONSHIP WITH INDEPENDENT AUDITORS
The principal independent accounting firm utilized by the Company during
the year ended December 31, 1999 was KPMG LLP, independent certified public
accountants. KPMG LLP has audited the Company's financial statements annually
since 1988. It is contemplated that KPMG LLP will be retained as the principal
accounting firm to be utilized by the Company during 2000. 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 2001 Annual Meeting must be received by
the Company no later than December 15, 2000 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 2001 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, 2001. 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 1305 West Auto Drive, Tempe, Arizona 85284.
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.
March 31, 2000 Stanley Laybourne
Secretary, Treasurer
and Chief Financial Officer
25
<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 103,000,000 shares,
consisting of 100,000,000 shares of common stock having a par value of
$.01 per share (the "Common Stock") and 3,000,000 shares of preferred
stock having a par value of $.01 per share (the "Preferred Stock").
The Board of Directors is authorized, subject to limitations prescribed by
law and the provisions of this Article 4, to provide for the issuance of the
shares of Preferred Stock in series, and by filing a certificate pursuant to the
applicable law of the State of Delaware, to establish from time to time the
number of shares to be included in each such series, and to fix the designation,
powers, preferences and rights of the shares of each such series and the
qualifications, limitations or restrictions thereof.
The authority of the Board with respect to each series shall include, but
not be limited to, determination of the following:
(a) The number of shares constituting that series and the distinctive
designation of that series;
(b) The dividend rate on the shares of that series, whether dividends
shall be cumulative, and, if so, from which date or dates, and the relative
rights of priority, if any, of payment of dividends on shares of that series;
(c) Whether that series shall have voting rights, in addition to the
voting rights provided by law, and, if so, the terms of such voting rights;
(d) Whether that series shall have conversion privileges, and, if so,
the terms and conditions of such conversion, including provision for adjustment
of the conversion rate in such events as the Board of Directors shall determine;
(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 "Company") previously adopted the Insight
Enterprises, Inc. 1998 Long-Term Incentive Plan (the "Plan"). By this
instrument, the Company 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
4,000,000. 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. Section 5.4 of the Plan is hereby amended and restated in its
entirety as follows:
"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 500,000. "
4. This Amendment shall be effective as of the date adopted by the
Company'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 13, 2000)
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 4,000,000. 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 500,000.
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
7
<PAGE> 37
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
8
<PAGE> 38
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.
9
<PAGE> 39
(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
10
<PAGE> 40
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
11
<PAGE> 41
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.
12
<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
13
<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.
14
<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
15
<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.
16
<PAGE> 46
[INSIGHT LOGO]
INSIGHT ENTERPRISES, INC.
ANNUAL MEETING OF STOCKHOLDERS
TUESDAY, MAY 16, 2000
3:00 P.M. LOCAL TIME
INSIGHT CORPORATE HEADQUARTERS
1305 WEST AUTO DRIVE
TEMPE, ARIZONA 85284
[INSIGHT LOGO]
INSIGHT ENTERPRISES, INC.
1305 WEST AUTO DRIVE, TEMPE, AZ 85284 PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR USE AT THE ANNUAL MEETING
ON MAY 16, 2000.
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.
<PAGE> 47
Company #
Control #
See reverse for voting instructions.
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 (located above).
- - Follow the simple instructions of the automated attendant.
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 (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 voting by phone or Internet, please do not mail your proxy card.
-- Please detach here --
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEMS 1, 2 AND 3.
1. Election of Two Class II Directors:
01 Timothy A. Crown 02 Stanley Laybourne
/ / 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
/ / 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 attend the / /
Indicate changes below: Annual Meeting? Mark Box
Date:
-------------------
Signature(s) in Box Please
sign exactly as your name(s)
appear on the 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.*
