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:
[ ] Preliminary proxy statement [ ] Confidential, for use of the
[X] Definitive proxy statement Commission only (as permitted by
[ ] Definitive additional materials Rule 14a-6(e)(2))
[ ] Soliciting material pursuant to Rule 14a-11(C)or Rule 14a-12
CDW Computer Centers, Inc.
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(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:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined.):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
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[ ] 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:
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(2) Form, schedule or registration statement number:
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(3) Filing party:
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(4) Date filed:
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NOTICE OF
ANNUAL MEETING
OF SHAREHOLDERS
AND
PROXY STATEMENT
MAY 22, 2002
CDW Computer Centers, Inc.
200 North Milwaukee Avenue
Vernon Hills, Illinois 60061
CDW COMPUTER CENTERS, INC.
--------------
CDW Computer Centers, Inc.
200 North Milwaukee Avenue
Vernon Hills, Illinois 60061
April 12, 2002
Dear Fellow Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders
of CDW Computer Centers, Inc. ("CDW") scheduled for 6:00 p.m. on Wednesday, May
22, 2002, at CDW's office located at 26125 North Riverwoods Drive, Mettawa,
Illinois 60045.
The matters expected to be acted upon at the meeting are described in
detail in the attached Notice of Annual Meeting of Shareholders and Proxy
Statement.
I believe the annual meeting provides an excellent opportunity for you
to become better acquainted with CDW and our management team. Members of the
Board of Directors, management and I look forward to personally greeting those
shareholders who are able to attend the Annual Meeting.
Please be sure to sign and return the enclosed proxy card whether or
not you plan to attend the meeting so that your shares will be voted. You may
revoke your proxy by a later dated proxy or vote in person at the meeting, if
you prefer. The Board of Directors and I thank you for your continued support
and hope that you will attend the meeting.
Sincerely yours,
John A. Edwardson
Chairman
CDW COMPUTER CENTERS, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 22, 2002
---------------
The Annual Meeting of Shareholders of CDW Computer Centers, Inc. (the
"Company" or "CDW") will be held at 6:00 p.m. on Wednesday, May 22, 2002 at
CDW's office located at 26125 North Riverwoods Drive, Mettawa, Illinois 60045
for the purpose of considering and voting on:
1. The election of ten directors. Management's nominees are named in the
accompanying Proxy Statement.
2. The ratification of the selection of PricewaterhouseCoopers LLP,
independent accountants, as auditors for the Company for the year ending
December 31, 2002.
3. The approval and ratification of the amendment to the CDW 2000 Incentive
Stock Option Plan pertaining to the option grants made to Non-Employee
Directors.
4. The approval and ratification of the CDW Employee Stock Purchase Plan.
5. Such other business as may properly come before the meeting and all
adjournments thereof.
The Board of Directors has fixed April 5, 2002 as the record date for
determining the shareholders of the Company entitled to notice of and to vote at
the meeting. Only holders of record of the Company's stock at the close of
business on such date will be entitled to notice of and to vote at such meeting
and all adjournments.
YOUR VOTE IS IMPORTANT TO CDW. PLEASE SIGN AND DATE THE ENCLOSED
PROXY CARD AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED, UNLESS YOU INTEND
TO VOTE IN PERSON AT THE MEETING. Giving your proxy now will not affect your
right to vote in person if you attend the meeting.
Your signed and dated proxy card should be returned to:
51 Mercedes Way
Edgewood, New York 11717
Christine A. Leahy
Vice President, General Counsel
and Corporate Secretary
Vernon Hills, Illinois
April 12, 2002
YOUR VOTE IS IMPORTANT TO CDW
YOU ARE URGED TO DATE, SIGN AND PROMPTLY RETURN YOUR PROXY SO THAT YOUR SHARES
MAY BE VOTED IN ACCORDANCE WITH YOUR WISHES AND IN ORDER THAT THE PRESENCE OF A
QUORUM MAY BE ASSURED. THE PROMPT RETURN OF YOUR SIGNED PROXY, REGARDLESS OF THE
NUMBER OF SHARES YOU HOLD, WILL AID THE COMPANY IN REDUCING THE EXPENSE OF
ADDITIONAL PROXY SOLICITATION. THE GIVING OF SUCH PROXY DOES NOT AFFECT YOUR
RIGHT TO VOTE IN PERSON IN THE EVENT YOU ATTEND THE MEETING.
CDW Computer Centers, Inc.
200 North Milwaukee Avenue
Vernon Hills, Illinois 60061
PROXY STATEMENT
ANNUAL MEETING - MAY 22, 2002
Information Regarding Proxies
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of CDW Computer Centers, Inc. (the
"Company"), to be voted at the Annual Meeting of Shareholders on Wednesday, May
22, 2002 (the "Annual Meeting of Shareholders" or "Annual Meeting") and at any
and all adjournments thereof.
This Proxy Statement and the accompanying proxy card are first being
mailed to shareholders on or about April 18, 2002. The cost of solicitation of
proxies will be borne by the Company. In addition to solicitation by mail, some
of the directors, officers and regular employees of the Company may, without
extra compensation, solicit proxies by telephone, e-mail, facsimile, telegraph
and personal interview. Arrangements will be made with brokerage houses,
custodians, nominees and other fiduciaries to send proxy material to their
principals and the Company will reimburse them for postage and clerical expense
in doing so.
Votes cast by proxy or in person at the Annual Meeting of Shareholders
will be tabulated by the election inspectors appointed for the meeting and they
will determine whether or not a quorum is present. The election inspectors will
treat abstentions as shares that are present and entitled to vote for purposes
of determining the presence of a quorum but as not-voted for purposes of
determining the approval of any matter submitted to the shareholders for a vote.
Accordingly, an abstention will have the same effect as a vote against such
matter. Shares as to which proxies have been executed will be voted as specified
in the proxies. If no specification is made in an otherwise properly executed
proxy, the shares will be voted "FOR" the election of management's nominees as
directors and "FOR" the other proposals listed. If a broker indicates on the
proxy that it does not have discretionary authority as to certain shares to vote
on a particular matter, those shares will not be considered as present and
entitled to vote with respect to that matter.
Proxies may be revoked at any time prior to the exercise thereof by
filing with the Secretary of the Company, at the Company's executive offices, a
written revocation or a duly executed proxy bearing a later date. The executive
offices of the Company are located at 200 North Milwaukee Avenue, Vernon Hills,
Illinois 60061.
Unless otherwise indicated, all information provided herein is given
as of the date hereof.
1
Voting Securities
The securities of the Company entitled to be voted at the meeting
consist of shares of its Common Stock, $0.01 par value ("Common Stock"). Each
share of Common Stock is entitled to one vote on all matters. On April 5, 2002
(the "Record Date"), 85,949,156 shares of Common Stock were issued and
outstanding. In addition, 3,047,500 shares are held in Treasury by the Company
and are deemed issued but not outstanding.
Only shareholders of record at the close of business on the Record Date
will be entitled to receive notice of and to vote at the meeting. There are no
cumulative voting rights. A properly executed proxy marked "WITHHELD" with
respect to the election of one or more directors will not be voted with respect
to the director or directors indicated, although it will be counted for purposes
of determining the existence of a quorum.
Assuming a quorum is present in person or by proxy, the affirmative
vote of a majority of the votes represented in person or by proxy and entitled
to vote is required for election of the directors and ratification of the
independent accountant.
Shareholder Proposals
Any shareholder desirous of including any proposal in the Company's
proxy soliciting material for the next regularly scheduled Annual Meeting of
Shareholders (for the year ending December 31, 2002) must submit his or her
proposal, in writing, directed to the Company's executive offices not later than
December 19, 2002. Any such proposal must comply with Rule 14a-8 of Regulation
14A of the proxy rules of the Securities Exchange Act of 1934, as amended, in
order for such proposal to be considered for inclusion in the 2003 Proxy
Statement.
In addition, pursuant to the rules and regulations of the Securities
and Exchange Commission, at the Company's 2003 Annual Meeting of Shareholders
the proxy holders appointed by the Company may exercise discretionary authority
when voting on a shareholder proposal properly presented at such meeting that is
not included in the Company's proxy statement for such meeting if such proposal
is received by the Company after March 4, 2003. If notice of a shareholder
proposal is received by the Company on or prior to such date and such proposal
is properly presented at the 2003 Annual Meeting but not included in the
Company's proxy statement for such meeting, the proxy holders appointed by the
Company may exercise discretionary authority if in such proxy statement the
Company advises shareholders of the nature of such proposal and how the proxy
holders appointed by the Company intend to vote on such proposal, unless the
shareholder submitting such proposal satisfies certain requirements of the
Securities and Exchange Commission, including the mailing of a separate proxy
statement to the Company's shareholders.
All shareholder proposals should be directed to the Secretary of the
Company.
Security Ownership
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock at March 31, 2002, except
where noted below, by: (i) each person or group that is known by the Company to
be the beneficial owner of more than five percent (5%) of the outstanding shares
of Common Stock; (ii) each director and director nominee of the Company; (iii)
each of the Named Officers (as herein defined); and (iv) all directors, director
nominees and executive officers of the Company as a group. All information with
respect to beneficial ownership has been furnished by the respective
shareholders to the Company.
2
COMMON STOCK
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Amount and
Nature of Percent
Beneficial of Common
Name of Beneficial Owner Ownership Stock
- ------------------------ -------------- ---------
Michael P. Krasny (1) (2) 26,312,193 30.4%
Putnam Investments L.L.C. (3) 6,828,640 7.9%
FMR Corp. (4) 5,482,190 6.3%
Gregory C. Zeman (1) (5) 960,764 1.1%
John A. Edwardson (6) 520,000 *
Daniel B. Kass (7) 536,276 *
Harry J. Harczak, Jr. (8) 48,684 *
James R. Shanks (9) 63,425 *
Michelle L. Collins (10) 55,916 *
Casey G. Cowell 137,740 *
Donald P. Jacobs 0 *
Brian E. Williams 2,418 *
Terry L. Lengfelder 1,000 *
Daniel S. Goldin 0 *
All directors, director nominees and executive officers as a group (18 persons) (11) 27,231,811 31.5%
* Less than 1%
(1) The address for Messrs. Krasny and Zeman is the executive office of the
Company.
(2) Includes 1,493,240 shares remaining subject to the MPK Stock Option Plan
(all of which shares are also included in the holdings of Messrs. Zeman
and Kass above), 294,141 shares remaining subject to the MPK Restricted
Stock Plan and 37,861 shares owned by Mr. Krasny's minor stepson.
Mr. Krasny disclaims beneficial ownership with respect to the shares
subject to the MPK Stock Option Plan and the MPK Restricted Stock Plan.
(3) The address of Putnam Investments L.L.C. is One Post Office Square,
Boston, MA 02109. The number of shares held was obtained from the
holder's Schedule 13G filing with the Securities and Exchange Commission
dated February 13, 2002.
(4) The address of FMR Corp. is 82 Devonshire Street, Boston, MA 02109. The
number of shares held was obtained from the holder's Schedule 13G filing
with the Securities and Exchange Commission dated February 13, 2002.
(5) Includes 958,864 shares issuable pursuant to non-forfeitable options
granted under the MPK Stock Option Plan out of Mr. Krasny's own shares.
As of March 31, 2002 options for 330,214 shares are exercisable and the
remaining 628,650 options become exercisable on December 31, 2002.
Additional shares may be exercised proportionately to any shares sold by
Mr. Krasny from his holdings. All options granted to Mr. Zeman under the
MPK Stock Option Plan will become exercisable in the event that
Mr. Zeman terminates his employment with the Company. These shares are
also reported as being beneficially owned by Mr. Krasny. Also includes
options, exercisable as of March 31, 2002 or within 60 days thereafter,
to acquire 1,900 shares of Common Stock granted pursuant to the 2000 CDW
Incentive Stock Option Plan.
(6) Includes 100,000 shares of restricted stock granted on January 28, 2001
that vest at the rate of 25,000 shares on each of the first four
anniversaries of such grant date and options exercisable as of March 31,
2002 or within 60 days thereafter, to acquire 320,000 shares of Common
Stock granted pursuant to the 2000 CDW Incentive Stock Option Plan.
(7) Includes 534,376 shares issuable pursuant to options granted under the
MPK Stock Option Plan out of Mr. Krasny's own shares. As of March 31,
2002 options for 401,026 shares are exercisable and the remaining
3
133,350 options become exercisable on December 31, 2002. Additional
shares may be exercised proportionately to any shares sold by Mr. Krasny
from his holdings. All options granted to Mr. Kass under the MPK Stock
Option Plan will become exercisable in the event that Mr. Kass
terminates his employment with the Company. These shares are also
reported as being beneficially owned by Mr. Krasny. Also includes
options, exercisable as of March 31, 2002 or within 60 days thereafter,
to acquire 1,900 shares of Common Stock granted pursuant to the 2000 CDW
Incentive Stock Option Plan.
(8) Includes options, exercisable as of March 31, 2001 or within 60 days
thereafter, to acquire 9,851 shares of Common Stock granted pursuant to
the CDW Incentive Stock Option Plan, 9,125 shares of Common Stock
granted pursuant to the 1996 CDW Incentive Stock Option Plan, 21,000
shares of Common Stock granted pursuant to a 1996 Nonstatutory Stock
Option Agreement and 1,900 shares of Common Stock granted pursuant to
the 2000 CDW Incentive Stock Option Plan.
(9) Includes options, exercisable as of March 31, 2001 or within 60 days
thereafter, to acquire 5,525 shares of Common Stock granted pursuant to
the CDW Incentive Stock Option Plan, 6,000 shares of Common Stock
granted pursuant to the 1996 CDW Incentive Stock Option Plan, 50,000
shares of Common Stock granted pursuant to a 1996 Nonstatutory Stock
Option Agreement and 1,900 shares of Common Stock granted pursuant to
the 2000 CDW Incentive Stock Option Plan.
(10) Includes options, exercisable as of March 31, 2001 or within 60 days
thereafter, to acquire 53,916 shares of Common Stock granted pursuant to
the CDW Director Stock Option Plan.
(11) For purposes of computing the aggregate number of shares owned by
directors and officers of the Company as a group, shares of Common Stock
beneficially owned by more than one officer are counted only once.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 and regulations of
the Securities and Exchange Commission thereunder require the Company's
executive officers and directors and persons who own more than ten percent of
the Company's stock, as well as certain affiliates of such persons, to file
initial reports of ownership and changes in ownership with the Securities and
Exchange Commission and The Nasdaq Stock Market. Executive officers, directors
and persons owning more than ten percent of the Company's stock are required by
the Securities and Exchange Commission regulations to furnish the Company with
copies of all Section 16(a) forms they file. Based solely on its review of the
copies of such forms received by it and written representations that no other
reports were required for those persons, the Company believes that, except as
noted below, during the year ended December 31, 2001, all persons subject to
Section 16(a) were in compliance with all Section 16(a) filing requirements.
Brian Williams inadvertently failed to file a Form 5 to report the donation of
182 shares of CDW Computer Centers, Inc. within the prescribed time requirement.
Annual Report and Form 10-K
The 2001 Annual Report of the Company, which includes financial
statements for the years ended December 31, 2001, 2000 and 1999, has been mailed
with this Proxy Statement to shareholders of record on the Record Date. The
Annual Report does not constitute a part of the proxy material. A copy of the
Company's Report on Form 10-K for the year ended December 31, 2001, including
the financial statements and the financial statement schedule, as filed with the
Securities and Exchange Commission, is available to shareholders and may be
obtained by writing to the Secretary at the Company's executive offices.
4
PROPOSAL 1
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Election of Directors
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The Board of Directors has the responsibility for establishing broad
corporate policies and for the overall performance of the Company, although it
is not involved in day-to-day operating activities. Members of the Board are
kept informed of the Company's business by various reports and documents sent to
them on a regular basis, including operating and financial reports made at Board
and Committee meetings by the Chairman and other officers.
Ten directors, nine of whom are members of the present Board of
Directors, are recommended for election at the Annual Meeting. All directors
serve until the annual meeting next following their election and until their
successors have been elected. There are no family relationships between or among
any directors of the Company.
All of the nominees have consented to serve if elected and the Company
has no reason to believe that any of the named nominees will be unable to serve.
Correspondence may be directed to nominees at the Company's executive offices.
Unless otherwise directed, the persons named as proxies intend to vote in favor
of the election of all nominees.
Nominees for Election to Board of Directors
Set forth below is certain information concerning the nominees for
election to the Board of Directors of the Company.
Name Age Position(s) with the Company
---- --- ----------------------------
Michelle L. Collins..................... 42 Director
Casey G. Cowell......................... 49 Director
John A. Edwardson....................... 52 Chairman of the Board and Chief Executive Officer
Daniel S. Goldin........................ 61 Director Nominee
Donald P. Jacobs....................... 74 Director
Daniel B. Kass.......................... 45 Director and Executive Vice President
Michael P. Krasny....................... 48 Director
Terry L. Lengfelder..................... 64 Director
Brian E. Williams....................... 51 Director
Gregory C. Zeman........................ 43 Director and Advisor
Michelle L. Collins serves as a director. Ms. Collins is managing
director of Svoboda, Collins, L.L.C., a $150 million private equity firm. From
1992 through January 1998, Ms. Collins was a principal at William Blair &
Company, L.L.C. Ms. Collins became a director of our company in April 1996 and
currently serves on the Audit Committee and the Compensation and Stock Option
Committee. Ms. Collins has been a member of the Board of Directors of
Coldwater Creek, Inc. since January 1998. Ms. Collins is also a director of
several civic organizations and private companies. Ms. Collins is a 1982
graduate of Yale University and a 1986 graduate of the Harvard Graduate School
of Business.
Casey G. Cowell serves as a director. Mr. Cowell is Chairman and
principal owner of Durandal, Inc., a holding company for a number of
diversified private companies. Previously, Mr. Cowell co-founded U.S.
Robotics, one of the world's leading suppliers of data communications products
and systems. He served as Chairman and Chief Executive Officer of U.S.
Robotics from its inception in 1976 until its acquisition by 3Com in June
1997. Mr. Cowell became a director of our company in November 1999 and
currently serves on the Compensation and Stock Option Committee. Mr. Cowell
serves on the Board of Directors of Curious Networks, Xor, Inc., Northwestern
Memorial Hospital and the Illinois Coalition. Mr. Cowell is a member of the
Board of Trustees for the Golden Apple Foundation and the University of
Chicago and a governing member of the Chicago Symphony. Mr. Cowell is a 1975
graduate of the University of Chicago.
John A. Edwardson serves as our Chairman of the Board of Directors
and Chief Executive Officer.
5
Mr. Edwardson joined the Company in January 2001. Prior to joining the Company,
Mr. Edwardson served as Chairman and Chief Executive Officer of Burns
International Services Corporation from 1999 until 2000. Mr. Edwardson
previously served as a director (1994-1998), President (1994-1998) and Chief
Operating Officer (1995-1998) of UAL Corporation and United Airlines. Mr.
Edwardson served as Executive Vice President and Chief Financial Officer of
Ameritech Corporation from 1991 until 1994. Mr. Edwardson currently serves on
the Board of Directors of Household International and Focal Communications
Corporation and serves on the Board of Trustees of Purdue University. Mr.
Edwardson is a 1971 graduate of Purdue University where he earned a Bachelor
of Science in Industrial Engineering and a 1972 graduate of the University of
Chicago where he earned a Masters Degree in Business Administration.
Daniel S. Goldin is a nominee for election to the Company's Board of
Directors. Mr. Goldin is a Senior Fellow at the Council on Competitiveness, an
organization of leading corporate chief executives and research university
presidents dedicated to the improvement of American competitiveness. In November
2001, Mr. Goldin stepped down as the longest serving Administrator in the
history of NASA. In his decade-long leadership of America's Space Program, he
directly served three different U.S. presidents. Prior to his service to our
nation, Mr. Goldin was Vice President and General Manager of TRW's Space and
Technology Group, a supplier of cutting edge technology to the government and
private sectors. Mr. Goldin is a member of the National Academy of Engineering
and a Fellow of the American Institute of Aeronautics and Astronautics. He
obtained a Bachelor of Science degree in Mechanical Engineering from the City
College of New York and is a graduate of the Executive Management program of
UCLA.
Donald P. Jacobs serves as a director. Mr. Jacobs is the Gaylord
Freeman Distinguished Professor of Banking and Dean Emeritus of the J. L.
Kellogg Graduate School of Management and has been a member of the Kellogg
faculty since joining the school in 1957. Mr. Jacobs became a director of our
company in November 1999 and currently serves on the Audit and Corporate
Governance Committees. He serves on the Board of Directors of several
corporations, including Hartmarx, ProLogis Trust and Terex Corporation. Mr.
Jacobs is a graduate of Roosevelt University where he earned a Bachelor of
Arts degree in Economics in 1949 and a graduate of Columbia University where
he earned a Master of Arts degree in Economics in 1951 and a Doctorate in
Economics in 1956. Mr. Jacobs has received numerous honorary degrees from
prestigious national and international universities.
Daniel B. Kass serves as a director and as our Executive Vice
President. Mr. Kass joined the Company in November 1987 as an Account Manager.
He served as Sales Manager from January 1989 through December 1990. Mr. Kass
became Vice President - Operations in January 1991, a director of our company in
March 1993, Vice President - Sales in January 1996, and served as Executive Vice
President - Sales from January 2000 until January 2002. Mr. Kass is a 1981
graduate of Southern Illinois University where he earned a Bachelor of Science
degree in Journalism.
Michael P. Krasny is the founder of our company and currently serves as
a director. He is also a member of the Corporate Governance Committee. Mr.
Krasny served as Chairman of the Board and Chief Executive Officer from our
company's inception through May 2001 and January 2001, respectively, and served
as President from our company's incorporation through December 1990. Mr. Krasny
is a 1975 graduate of the University of Illinois where he earned a Bachelor of
Science degree in Finance.
Terry L. Lengfelder serves as a director. Mr. Lengfelder became a
director of our company in May 2001 and currently serves on the Audit and
Corporate Governance Committees. Mr. Lengfelder is a retired partner of
Andersen (formerly Arthur Andersen LLP), where he served as a regional
managing partner and in various other assignments from 1972 to 1998. Mr.
Lengfelder also served as Chairman of the Board of Partners of Andersen
Worldwide in 1993 and 1994. Mr. Lengfelder has been a member of the Board of
Directors of Lanoga Corporation since 1999. Mr. Lengfelder served on the Board
of Directors of Burns International Services Corporation from 1999 until 2000
and was chairman of the Finance and Audit Committee. Mr. Lengfelder is a 1961
graduate of Washington University with a Bachelor of Science degree in
Business Administration.
Brian E. Williams serves as a director. Mr. Williams is President and
Chief Executive Officer of Element
6
79 Partners, a full service advertising agency. Prior to joining Element 79
Partners in 2001, Mr. Williams was President of Foote, Cone & Belding Chicago,
an advertising firm. Prior to 1998, Mr. Williams was an Executive Vice
President at Leo Burnett Company, also an advertising firm. Mr. Williams
became a director of our company in January 2000 and currently serves on the
Compensation and Stock Option Committee. He serves on the Board of Directors
of Element 79 Partners and serves on the Board of Trustees of Children's
Memorial Hospital in Chicago, Illinois. Mr. Williams earned his Bachelor of
Arts degree from Dartmouth College in 1972 and is a 1975 graduate of
Northwestern University's J. L. Kellogg Graduate School of Management.
Gregory C. Zeman serves as a director and is employed as an advisor.
Mr. Zeman has been with the Company, serving in varying capacities, since
March 1987. Mr. Zeman served as our Vice-Chairman from January 2001 until
January 2002, and as our President from January 1991 until January 2001. Prior
to becoming President, Mr. Zeman served as an Account Manager, Sales Manager,
Purchasing Manager and Vice President of Sales, Purchasing and Marketing. Mr.
Zeman became a director of our company in June 1990. Mr. Zeman is a 1983
graduate of Marquette University where he earned a Bachelor of Science degree
in Computational Math.
Board of Directors Meetings and Committees
Regular meetings of the Board of Directors of the Company are conducted
quarterly. From time to time, special meetings of the Board of Directors are
conducted. The Board of Directors had four regular meetings and three special
meetings during the year ended December 31, 2001.
The Audit Committee is currently comprised of Ms. Collins and Messrs.
Jacobs and Lengfelder. Each member of the Audit Committee is "independent," as
such term is defined in the listing standards of the National Association of
Securities Dealers. The Audit Committee's primary duties and responsibilities
are set forth in the Audit Committee Charter, a copy of which was filed with the
Securities and Exchange Commission with the Company's 2001 Proxy Statement. The
Audit Committee held four regular meetings during the year ended December 31,
2001 and met quarterly via a telephonic conference call with management and the
independent auditors to review financial results prior to public release. See
"Report of the Audit Committee."
The Compensation and Stock Option Committee is currently comprised of
Ms. Collins and Messrs. Cowell and Williams. The functions performed by the
Compensation and Stock Option Committee include approval of the Chief Executive
Officer's compensation; review and approval of the terms of performance-based
compensation programs for officers; review and certification of amounts due
under performance-based compensation programs for officers; review and approval
of compensation and/or adjustments thereto for other officers and employees to
the extent requested by the Chief Executive Officer or otherwise required by the
terms of existing employment agreements; and review and approval of the terms of
stock option grants. The Compensation and Stock Option Committee had three
regular meetings during the year ended December 31, 2001. See "Report of the
Compensation and Stock Option Committee."
The Corporate Governance Committee is currently comprised of Messrs.
Jacobs, Krasny and Lengfelder. The Corporate Governance Committee advises the
Board on corporate governance issues and makes recommendations to the Board
regarding the adoption of best practices most appropriate for the governance of
the affairs of the Board. The Corporate Governance Committee had one regular
meeting during the year ended December 31, 2001.
7
Management
Set forth below are the names, ages and titles of each executive
officer of the Company. Executive officers are elected by and serve at the
discretion of the Board of Directors until their successors are duly chosen and
qualified.
Name Age Position(s) with the Company
---- --- ----------------------------
John A. Edwardson....................... 52 Chairman of the Board and Chief Executive Officer
Harry J. Harczak, Jr.................... 45 Executive Vice President - Sales
Daniel B. Kass.......................... 45 Executive Vice President and Director
James R. Shanks......................... 37 Executive Vice President and President, CDW Government, Inc.
Douglas E. Eckrote...................... 37 Senior Vice President - Purchasing and Operations
Barbara A. Klein........................ 47 Senior Vice President and Chief Financial Officer
Arthur S. Friedson .................... 47 Vice President - Coworker Services
Joseph K. Kremer ....................... 37 Vice President - Marketing
Christine A. Leahy...................... 37 Vice President, General Counsel and Corporate Secretary
Jonathan J. Stevens..................... 32 Vice President and Chief Information Officer
See "Election of Directors-Nominees for Election to Board of
Directors" for the discussion of Messrs. Edwardson and Kass.
Harry J. Harczak, Jr. serves as our Executive Vice President - Sales.
Mr. Harczak served as our Chief Financial Officer from May 1994 until January
2002. Mr. Harczak also served the Company as Treasurer from 1998 until January
2002 and Secretary from 2000 until January 2002. Mr. Harczak was appointed our
Executive Vice President Corporate Strategy in June 2001. Prior to joining the
Company, Mr. Harczak was an audit partner in the accounting firm of Coopers &
Lybrand L.L.P. where he worked since 1978. Mr. Harczak is responsible for our
sales force serving the corporate customer segment, and is also responsible
for our sales recruiting and training functions. He is a 1978 graduate of
DePaul University, where he earned a Bachelor of Science degree in Accounting,
and a 1995 graduate of the University of Chicago Executive Program, where he
earned a Masters of Business Administration. Mr. Harczak is a certified public
accountant.
James R. Shanks serves as our Executive Vice President and President
of CDW Government, Inc., or CDW-G, our wholly-owned subsidiary serving the
public sector. Mr. Shanks joined the Company in 1993 as Director of
Information Technology, was appointed Vice President - Information Systems in
1996 and served as Chief Information Officer from 1999 until 2001. Prior to
joining the company, Mr. Shanks was employed by American Hotel Register from
January 1985 to August 1993 as Manager of Information Systems. Mr. Shanks is a
1991 graduate of Barat College where he earned a Bachelor of Science degree in
Computer Information Systems and a 1996 graduate of Northwestern University's
J. L. Kellogg Graduate School of Management.
Douglas E. Eckrote serves as our Senior Vice President - Purchasing
and Operations. Mr. Eckrote joined the Company in January 1989 and since that
time has served as an Account Manager, Sales Manager and Director of
Operations. Mr. Eckrote was appointed Vice President - Operations in January
1999 and Senior Vice President - Purchasing in April 2001. Mr. Eckrote has
primary responsibility for product acquisition, managing vendor relationships
and the Company's warehousing, distribution and technical service functions.
He is a 1986 graduate of Purdue University where he earned a Bachelor of
Science degree in Agricultural Sales and Marketing.
Barbara A. Klein serves as our Senior Vice President and Chief
Financial Officer. Ms. Klein joined the Company in February 2002 and is
responsible for financial planning and analysis, accounting, SEC reporting,
budgeting, treasury, tax, risk management, internal audit, investor relations,
and corporate development and strategy. Prior to joining the Company she
served as Vice President, Finance and Chief Financial Officer of Dean Foods
Company. Prior to Dean Foods, Ms. Klein served as Vice President and Corporate
Controller for Ameritech Corporation. Additionally, Ms. Klein has held senior
management positions at Pillsbury and Sears, Roebuck and Co. Ms. Klein, a
certified public accountant and member of the American Institute of CPAs and
the Illinois Society of CPAs, earned an M.B.A. from Loyola University. Ms.
Klein graduated from Marquette University with a Bachelor of Science degree in
accounting and finance.
8
Arthur S. Friedson serves as our Vice President - Coworker Services.
Mr. Friedson joined the Company in May 1997 as Director of Human Resources and
was named Vice President - Coworker Services in January 2000. Mr. Friedson
oversees our coworker services function which provides comprehensive assistance
to our coworkers in a variety of areas including benefits, compensation,
performance management and recruitment. Prior to joining the Company, Mr.
Friedson had more than 15 years of experience in human resource management at
Columbia/HCA Healthcare Corporation and Amoco Corporation. Mr. Friedson is a
1980 graduate of The City College, City University of New York where he earned a
Bachelor of Arts degree in Psychology and a 1983 graduate of Loyola University
of Chicago where he earned a Master of Science degree in Industrial Relations.
Joseph K. Kremer has served as our Vice President - Marketing since
February 1998. Prior to joining the Company, Mr. Kremer was U.S. Manager of
Channel Marketing Programs at IBM Corporation, where he worked since 1987. Mr.
Kremer has primary responsibility for our advertising, marketing and public
relations activities, including our branding initiatives. Mr. Kremer is a 1987
graduate of Virginia Polytechnic Institute and State University where he earned
a Bachelor of Science degree in Accounting and a 1989 graduate of University of
Scranton where he earned a Masters of Business Administration Degree in Finance.
Christine A. Leahy serves as Vice President, General Counsel and
Corporate Secretary. Ms. Leahy leads all legal strategy and implementation.
Ms. Leahy joined the Company in January 2002 as the company's first in-house
counsel. Before joining the Company, Ms. Leahy served as a corporate partner
in the Chicago office of Sidley Austin Brown & Wood, where she specialized in
corporate governance, securities law, mergers and acquisitions, and strategic
counseling. Ms. Leahy received her undergraduate degree from Brown University
and her J.D. from Boston College Law School.
Jonathan J. Stevens serves as Vice President and Chief Information
Officer. Mr. Stevens joined the Company in June 2001 as our Vice President -
Information Technology and was named Chief Information Officer in January
2002. Mr. Stevens is responsible for the strategic direction of the company's
information technology infrastructure, applications development, help desk,
Web development, and e-commerce initiatives. Prior to joining the Company, Mr.
Stevens served as regional technology director for Avanade, an international
technology integration company formed through an alliance between Microsoft
and Accenture. Previously, Mr. Stevens was a principal with Microsoft
Consulting Services and led an IT group for a corporate division of AT&T/NCR.
Mr. Stevens is a graduate of the University of Dayton where he earned a
Bachelor of Science degree in computer information systems management.
Director Compensation
Directors who are not also employees of the Company ("Non-Employee
Directors") were paid an annual fee of $20,000 in 2001. Beginning in 2002, the
annual fee payable to Non-Employee Directors will be $30,000.
Additionally, the CDW 2002 Incentive Stock Option Plan contains
provisions for the automatic annual grant of stock options to Non-Employee
Directors. Non-Employee Directors received stock options to purchase a total of
19,800 shares of Common Stock pursuant to these provisions in 2001.
In Proposal 3 of this proxy statement, we are asking shareholders to
approve amendments to the provisions of the CDW 2000 Incentive Stock Option Plan
that relate to the granting of stock options to Non-Employee Directors. Please
see the paragraph captioned "Proposed Amendments" within Proposal 3 for
information relating to (i) how these provisions would operate if the proposed
amendments are approved by shareholders and (ii) how these provisions would
operate if the proposed amendments are not approved by shareholders.
9
Executive Compensation
Shown below is information concerning the annual and long-term
compensation for services in all capacities to the Company for the years ended
December 31, 2001, 2000 and 1999, of (i) all persons who served as the Company's
chief executive officer during 2001 and (ii) the other four most highly
compensated executive officers of the Company who were serving as an executive
officer as of December 31, 2001 (the "Named Officers"):
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards
----------------------- -----------------------
Securities
Restricted Underlying All Other
Bonus Stock Award(s) Options/ Compensation
Name and Principal Position Year Salary ($) ($) (1) (2) ($) SARs(#) ($) (3))
--------------------------- ---- ---------- ----------- -------------- ----------- ------------
Michael P. Krasny 2001 $93,895 $200 -- -- --
Chief Executive Officer 2000 $237,015 $809,522 -- 21,251 $4,000
(January 1, 1999 - January 28, 2001) 1999 $230,784 $1,240,346 -- -- $3,856
John A. Edwardson 2001 $546,923 $874,003 $3,662,500 1,608,067 $3,779
Chief Executive Officer 2000 -- -- -- -- --
(January 28, 2001 - December 31, 2001) 1999 -- -- -- -- --
Gregory C. Zeman 2001 $214,440 $1,105,038 -- 20,726 $3,279
Vice-Chairman 2000 $207,388 $1,227,310 -- 29,472 $4,000
1999 $201,936 $1,788,064 -- -- $3,856
Daniel B. Kass 2001 $214,440 $1,102,919 -- 20,602 $3,779
Executive Vice President 2000 $207,388 $1,224,410 -- 29,207 $4,000
1999 $201,936 $1,780,238 -- -- $3,856
Harry J. Harczak, Jr. 2001 $202,186 $588,003 -- 16,049 $3,779
Executive Vice President - Sales 2000 $195,537 $653,282 -- 19,484 $4,000
1999 $140,448 $761,768 -- 407,650 $3,856
James R. Shanks 2001 $202,186 $586,188 -- 16,049 $3,779
Executive Vice President 2000 $195,537 $652,344 -- 19,484 $4,000
President - CDWG 1999 $140,448 $760,578 -- 407,650 $3,856
(1) Amounts reflected are pursuant to performance-based compensation
programs.
(2) Includes amounts representing travel incentive awards and company-wide
bonus plans.
(3) Reflects the Company's contributions to the account of each of the Named
Officers under the CDW Computer Centers, Inc. Employees' Profit Sharing
Plan and Trust, including employer matching contributions. The amounts
for the 2001 contributions represent the Company's best estimate, as
final calculations have not been completed at the date of this Proxy
Statement.
10
Option Grants
Information with respect to grants of stock options to Named Officers
during 2001 is set forth below.
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants
- ------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f)
% of Total Exercise Market
Options Granted or Base Price on
Options Employees Price Grant Date Expiration
Name Granted in Fiscal Year (4) ($/Sh) ($/Sh) Date
---- ------- ------------------ ------ ------ ----------
Michael P. Krasny --- --- --- --- ---
John A. Edwardson 1,600,000 (1) 85.77% $36.625 $36.625 1/28/2011
8,067 (2) 0.43% $ 0.010 $53.710 12/31/2021
Gregory C. Zeman 9,500 (3) 0.51% $33.375 $33.375 3/12/2021
11,226 (2) 0.60% $ 0.010 $53.710 12/31/2021
Daniel B. Kass 9,500 (3) 0.51% $33.375 $33.375 3/12/2021
11,102 (2) 0.60% $ 0.010 $53.710 12/31/2021
Harry J. Harczak, Jr. 9,500 (3) 0.51% $33.375 $33.375 3/12/2021
6,549 (2) 0.35% $ 0.010 $53.710 12/31/2021
9,500 (3) 0.51% $33.375 $33.375 3/12/2021
6,549 (2) 0.35% $ 0.010 $53.710 12/31/2021
Potential Realizable Value at
Assumed Annual Rates of
Stock Price Appreciation for
Option Term
- -------------------------------------------------------------------
(a) (g)
Name 0% ($) 5% ($) 10% ($)
---- ------ ------ -------
Michael P. Krasny --- --- ---
John A. Edwardson $0 $96,883,245 $335,631,498
$433,198 $1,149,539 $2,914,801
Gregory C. Zeman $0 $524,201 $1,815,973
$602,836 $1,599,694 $4,056,223
Daniel B. Kass $0 $524,201 $1,815,973
$596,177 $1,582,024 $4,011,419
Harry J. Harczak, Jr. $0 $524,201 $1,815,973
$351,681 $933,226 $2,366,311
$0 $524,201 $1,815,973
$351,681 $933,226 $2,366,311
(1) Options are exercisable at the rate of 20% per year, beginning January
28, 2002. Options become fully exercisable upon a change-in-control of
the Company. These options were granted in January 2001 in connection
with Mr. Edwardson's Employment Agreement with the Company.
(2) Options represent a portion of the annual bonus that is granted pursuant
to the CDW Senior Management Incentive Plan. Options are exercisable in
full on April 30, 2006.
(3) Options are exercisable at the rate of 20% per year, beginning March 12,
2002. Options become fully exercisable upon a change-in-control of the
Company.
(4) The percentages of total employee options granted in the fiscal year for
Mr. Edwardson and the other Named Officers do not reflect the impact of
stock option grants for 2001 which were awarded to officers and
coworkers on February 1, 2002.
11
Option Exercises and Fiscal Year-End Values
Information with respect to options exercised and shares sold during
2001 and unexercised options to purchase Common Stock granted under the MPK
Stock Option Plan and CDW Incentive Stock Option Plans to the Named Officers and
held by them at December 31, 2001 is set forth below.
OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Number of
Securities Underlying Value of Unexercised
Unexercised Options at In-the-Money Options at
Shares Value December 31, 2001(#) December 31, 2001($) (3)
Acquired on Realized -------------------------- -----------------------------
Name Exercise(#) ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- -------- ----------- ------------- ----------- -------------
Michael P. Krasny --- --- --- 15,751 --- $845,829
John A. Edwardson --- --- --- 1,608,067 --- $27,769,198
Gregory C. Zeman (1) 2,315,732 $88,775,497 2,330,214 678,848 $125,146,065 $35,987,574
Daniel B. Kass (2) 436,000 $16,714,420 401,026 183,159 $21,537,432 $9,366,190
Harry J. Harczak, Jr. 34,908 $1,306,465 21,376 567,575 $845,008 $18,593,350
James R. Shanks 50,695 $1,882,513 9,125 566,375 $334,084 $18,533,847
(1) All shares acquired on exercise are attributable to the exercise of
options issued pursuant to the MPK Stock Option Plan. Unexercised
options at December 31, 2001 included options for 2,958,864 shares
pursuant to the MPK Stock Option Plan, of which 2,330,214 were
exercisable. All options pursuant to the MPK Stock Option Plan become
fully exercisable upon termination of employment. On March 26, 2002, Mr.
Zeman exercised options under the MPK Stock Option Plan for 2,000,000
shares and sold such shares with a value realized of $95,400,000.
(2) All shares acquired on exercise are attributable to the exercise of
options issued pursuant to the MPK Stock Option Plan. Unexercised
options at December 31, 2001 include options for 534,376 shares pursuant
to the MPK Stock Option Plan, of which 401,026 are exercisable. All
options pursuant to the MPK Stock Option Plan become fully exercisable
upon termination of employment.
(3) Based on the closing price as reported by The Nasdaq Stock Market of the
Company's Common Stock on December 31, 2001 ($53.710), less the
respective exercise prices.
MPK Stock Option Plan
At the time of the Company's initial public offering, Mr. Krasny
established the MPK Stock Option Plan pursuant to which he granted to Messrs.
Zeman and Kass and a former employee of the Company non-forfeitable options to
purchase in the aggregate 16,573,500 shares of Common Stock owned by him. As of
March 31, 2002, options to acquire an aggregate of 1,493,240 shares of common
stock remain outstanding, of which Mr. Zeman holds options to acquire 958,864
shares and Mr. Kass holds options to acquire 534,376 shares. These options are
non-forfeitable and become exercisable during the employment of such individual
at the rate of 5% per year upon each of the first four anniversaries of the
grant and an additional 15% on each anniversary date thereafter until all
options are exercisable. Additional shares may be exercised proportionately to
any shares sold by Mr. Krasny from his holdings. The options may be exercised at
a price of $0.004175 per share. The MPK Stock Option Plan provides that should
Messrs. Zeman or Kass terminate his employment with the Company, all options
become exercisable and such individual will be required to exercise his options
at the option exercise price within six months of the date of termination. The
MPK Stock Option Plan, which is wholly funded from shares of Common Stock owned
by Mr. Krasny, does not result in a cash payment from plan participants to the
Company or increase the number of outstanding shares of Common Stock.
12
Employment Related Agreements
Messrs. Krasny, Zeman and Kass
The Company entered into Employment and Non-Competition Agreements with
Messrs. Krasny, Zeman and Kass that became effective upon the consummation of
the Company's initial public offering in 1993. The initial base salaries of
Messrs. Krasny, Zeman and Kass were $200,000, $175,000 and $175,000,
respectively, to be adjusted in each case annually in accordance with the
Consumer Price Index. In accordance with the terms of each Agreement, employment
is terminable with or without Cause. Each Agreement contains a non-competition
restriction prohibiting the executive from undertaking certain competitive
activities for a two-year period after the date his employment with the Company
ceases. Effective May 23, 2001, Mr. Krasny resigned, thereby terminating his
employment with the Company. Mr. Krasny presently serves the Company solely in
the capacity of a director. Mr. Zeman's and Mr. Kass' base salaries have been
adjusted to reflect their current roles with the company. See "Management" and
"Executive Compensation".
Mr. Edwardson
The Company entered into an employment agreement with John A. Edwardson
on January 28, 2001. The agreement provides for Mr. Edwardson to serve as Chief
Executive Officer of the Company until the fifth anniversary of the agreement,
subject thereafter to annual renewal provisions. Pursuant to the employment
agreement, during the term of his employment with the Company, Mr. Edwardson
will be nominated for election as a member of the Board of Directors and, if so
elected will be appointed Chairman of the Board. Mr. Edwardson receives an
annual base salary of $600,000, subject to annual review by the Compensation
Committee, and participates in the Company's Senior Management Incentive Plan.
Incentive bonuses under the Senior Management Incentive Plan are based on
objective criteria established and approved by the Compensation Committee of the
Board each year.
In accordance with the employment agreement, Mr. Edwardson received
non-qualified stock options to purchase 1,600,000 shares of Common Stock under
the Company's 2000 Incentive Stock Option Plan. The exercise price of these
options is $36.625, the fair market value of the Company's Common Stock on the
date of grant. One-fifth of these options will vest on each of the first five
anniversaries of the employment agreement. In addition, Mr. Edwardson was
granted a restricted stock award of 100,000 shares of Common Stock that will
vest in equal annual installments on the first four anniversaries of the date of
grant. If Mr. Edwardson's employment is terminated by the Company without cause
or by Mr. Edwardson for Good Reason, one-half of any unexercisable options will
immediately become exercisable and one-half of the portion of the restricted
stock award that is not vested will immediately become vested. Beginning with
the 2002 fiscal year, Mr. Edwardson will be granted annually non-qualified stock
options to purchase 150,000 shares of Common Stock, which options will be
subject to terms substantially similar to the terms of the options described
above. With respect to his 2002 grant, Mr. Edwardson has indicated that he will
only accept options for the purchase of 100,000 shares in order to make options
for an additional 50,000 shares available to the Company's coworkers.
If the employment agreement is terminated by the Company without
Cause or by Mr. Edwardson for Good Reason, the Company will be required, among
other things, to make a lump sum cash payment to Mr. Edwardson equal to two
times the sum of his annual base salary and his average annual bonus and to
pay certain accrued obligations through the date of termination. For purposes
of the employment agreement, Good Reason includes the failure to elect Mr.
Edwardson as Chairman of the Board immediately following each annual meeting
of shareholders during the employment period. Such election is possible only
if the shareholders re-elect Mr. Edwardson as a member of the Board, and if he
is not so re-elected, he will be entitled to terminate the employment
agreement for Good Reason and receive the payments described above. The
agreement also contains standard non-competition and non-solicitation
covenants that survive during the term of the agreement and for a period of
two years thereafter.
The Company has also entered into a transitional compensation
agreement with Mr. Edwardson. In the event of a Change of Control (as defined
in the transitional compensation agreement), the employment relationship
between
13
the Company and Mr. Edwardson will be exclusively governed by the transitional
compensation agreement. Upon a Change in Control, all stock options,
restricted stock and other equity awards to Mr. Edwardson that are not
otherwise vested will vest in full, and all options will remain exercisable
for the period provided in the applicable award agreement. If, following a
Change of Control, there is a Qualifying Termination (as defined in the
transitional compensation agreement), Mr. Edwardson will receive the following
benefits in lieu of benefits under the employment agreement: (i) payment in a
lump sum of an amount equal to 300% of his base salary and his average annual
bonus, (ii) prorated annual incentive bonus (based on the target bonus under
the Incentive Plan) through the date of termination, (iii) payment of all
accrued obligations through the date of termination in a lump sum and (iv) the
continuation of all welfare benefits and senior executive perquisites for a
period of two years or an equivalent lump sum cash payment. In the event that
such payments and benefits subject Mr. Edwardson to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended, Mr. Edwardson
would be entitled to receive a "gross-up" payment, unless his net after-tax
benefit resulting from such gross-up payment, as compared to a reduction of
such payments and benefits so that no excise tax is incurred, is less than
$100,000.
Certain Transactions
On February 2, 2001, the Company, as part of its publicly announced
share repurchase program, entered into an agreement to purchase 1,181,818 shares
of Common Stock from Mr. Zeman and an agreement to purchase 318,182 shares of
Common Stock from Mr. Kass. The per-share price for both sales was $38.423,
resulting in a total payment to Mr. Zeman of $45,408,993.01 and a total payment
to Mr. Kass of $12,225,506.99. The per-share price was determined by subtracting
$0.015 per share from the closing price on the day of the agreements.
In connection with these purchases, on February 5, 2001, the Company
entered into a registration rights agreement with each of Mr. Zeman and Mr. Kass
(the "Registration Rights Agreements"). The Registration Rights Agreements give
each of Mr. Zeman and Mr. Kass the right to demand (a "Registration Demand"),
one time in each of calendar year 2001, 2002 and 2003, that the Company register
some or all of the shares of Common Stock held by him at such time or to be
acquired by him pursuant to the exercise of options under the MPK Stock Option
Plan. The Company will have the option, when a Registration Demand is presented
to it, to either (i) purchase, at a per share price equal to $0.015 less than
the then-current trading price, the shares subject to such Registration Demand,
(ii) register such shares on a "shelf" registration statement pursuant to Rule
415 under the Securities Act of 1933, as amended (the "Securities Act"), or
(iii) register such shares on an registration statement under the Securities Act
and cooperate with Mr. Zeman or Mr. Kass, as applicable, in developing and
conducting an organized marketing campaign and "road show" relating to such
registration statement. The Registration Rights Agreements contain customary
conditions and limitations, including those relating to blackouts resulting from
material non-public information which the Company should not be forced to
disclose prematurely and to giving priority to Company financings.
On June 26, 2001, the Company filed a registration statement to
facilitate the sale by Mr. Krasny, Mr. Zeman and Mr. Kass of shares of our
Common Stock. The underwritten sale, which was completed on August 14, 2001, was
for a total of 10,562,500 shares, of which Mr. Krasny and entities related to
Mr. Krasny sold 7,810,768, Mr. Zeman sold 2,315,732 and Mr. Kass sold 436,000.
The shares sold by Mr. Zeman and Mr. Kass were acquired by them from Mr. Krasny
upon the exercise of options granted to them by Mr. Krasny under the MPK Stock
Option Plan. The Company did not receive any of the proceeds of the offering and
there was no increase in the number of shares of Common Stock outstanding. The
Company did not incur any expenses in connection with the offering, however the
Company executed an underwriting agreement pursuant to which it agreed to
certain indemnities, including under the securities laws.
On January 25, 2002, the Company received a Registration Demand from
Mr. Zeman for 2,000,000 shares of Common Stock. On March 11, 2002, the Company
filed a "shelf" registration statement pursuant to Rule 415 under the Securities
Act covering the 2,000,000 shares of Common Stock. On March 26, 2002, Mr. Zeman
exercised options under the MPK Stock Option Plan and sold the shares in an
underwritten offering. Mr. Zeman received proceeds of $47.70 per share, which is
net of the underwriting discount. The company expects to incur approximately
$41,000 in expenses relating to the registration statement and the Company
executed an underwriting agreement pursuant to which it agreed to certain
indemnities, including under the securities laws.
14
The Company has agreed to pay the costs associated with an executive
assistant for Mr. Krasny during the two-year period following his resignation
effective May 23, 2001. In 2001, the Company paid approximately $67,500 under
this arrangement.
15
Report of the Audit Committee
The Audit Committee oversees the Company's financial reporting process
on behalf of the Board of Directors. The Audit Committee consists of three
independent directors. Its duties and responsibilities are set forth in a
written charter (the "Audit Committee Charter") adopted by the Board in April
2001. The Audit Committee Charter was attached as Exhibit A to the Company's
proxy statement for last year's Annual Meeting of Shareholders, which was filed
with the Securities and Exchange Commission on April 11, 2001 and mailed to
shareholders shortly thereafter.
In the course of fulfilling its responsibilities during fiscal year
2001, the audit committee has:
o reviewed and discussed with management the audited financial statements for
the year ended December 31, 2001;
o discussed with representatives of PricewaterhouseCoopers LLP (the
"Independent Auditor") the matters required to be discussed by Statement on
Auditing Standards No. 61, Communication with Audit Committees, as amended;
o received the written disclosures and the letter from the Independent
Auditor required by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees, as amended;
o discussed with the Independent Auditor its independence from the Company
and management; and
o considered whether the provision by the Independent Auditor of non-audit
services is compatible with maintaining the Independent Auditor's
independence.
Based on the foregoing, the Audit Committee recommended to the Board of
Directors that the audited financial statements referred to above be included in
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
2001.
THE AUDIT COMMITTEE
Michelle L. Collins
Donald P. Jacobs
Terry L. Lengfelder
16
Report of the Compensation and Stock Option Committee
The Compensation and Stock Option Committee (the "Compensation Committee") is
currently comprised of three independent directors.
Compensation Policy
General. The Company's executive compensation program is designed to
advance the interests of the Company by attracting, motivating and retaining
well-qualified executives, managers and other key employees, and to align
their interests with those of the Company's shareholders by providing them
with performance-based incentives linked to corporate performance factors. The
three primary components of the Company's executive compensation program are:
(i) base salary;
(ii) annual incentive awards; and
(iii) long-term incentive awards in the form of stock option grants.
Over the course of 2001, the Committee met several times with the
Company's staff and representatives of a nationally recognized consulting firm
to review key aspects of the Company's executive compensation plan. The purpose
of the review was to ensure that the Company's executive compensation program
continued to meet the talent-management needs of the organization and was
consistent with the Company's strategic vision.
As a result of this review, a number of changes were made to executive
programs. In addition to general consistency with the Company's strategic
vision, the changes implemented in 2001 and early 2002 helped the programs
better reflect the following defining characteristics:
o Focus on pay-for-performance
o Capable of delivering highly differentiated rewards
o Externally competitive and market-based
o Flexible and balanced in performance orientation
o Well integrated with other coworker programs to reinforce
commonality of purpose
o Straightforward, simple and well communicated
o Anchored in a consistent and logical framework
o Oriented toward delivery of an effective total compensation
package
Specific changes will be implemented in 2002. In general, the changes
implemented as a result of the review will reflect more clearly articulated
internal and external objectives for each element of total executive
compensation. In addition, the total compensation profile for executive officers
will be changed to render it more consistent with the Company's objectives,
including retention of key executives. Changes to underlying programs for 2002
reflect the desired compensation profile.
Base Salary. Base salaries for Named Officers of the Company reflect
their level of experience, past and expected future performance and market
conditions. The base salary of each executive also is set at a level such that
the greater portion of their total compensation is dependent upon Company
performance.
The base salary of Mr. Edwardson was initially established by the terms
of his employment agreement in 2001 and is subject to periodic adjustments by
the Committee. Annual adjustments in the base salaries of the other
17
Named Officers reflect several factors, including changes in the United States
Consumer Price Index, as well as merit increases, where applicable.
As part of the aforementioned executive compensation review, the
Committee outlined a two year transition toward a total compensation profile for
executives that is more consistent with the Company's talent-management
objectives and goal of retaining key executives.
One aspect of this transition is the development of market-rate base
pay levels for each executive role, targeted at or near the 50th percentile
among comparable incumbents at appropriate peer companies. As part of their
review, the Committee considered competitive data showing the Company's position
relative to targeted levels at peer companies, and evaluated 2002 base pay
increases for executive officers on that basis.
Annual Incentive Awards. The annual incentive element of the Company's
executive compensation program is pursuant to the Company's Senior Management
Incentive Plan. Awards for 2001 reflect the Company's performance relative to
goals relating to growth in net income from operations.
For 2002, funding of awards under the plan for executive officers will
continue to be based predominantly upon achievement of pre-established goals
related to income from operations. The Senior Management Incentive Plan has been
designed to provide opportunities for awards that will place executive total
cash compensation at or near the 75th percentile among a range of peer
companies, provided the Company delivers superior increases in operating income
levels relative to its key peers. Award opportunities for individual executive
officers have been set accordingly.
Following the conclusion of the aforementioned executive compensation
review, the Committee noted their desire to incorporate greater emphasis on
individual accountability for business results, particularly among the senior
executive group. Accordingly, starting in 2002, final awards under the Senior
Management Incentive Plan will also take into account individual performance
relative to pre-established goals and objectives, as well as other business and
environmental factors that the Committee deems relevant to attainment of the
Company's overall financial goals and strategic vision.
In addition to the Senior Management Incentive Plan, the Company's
executives participate in a company-wide management bonus pool. Each Named
Officer, other than Mr. Edwardson, received a $10,000 allocation of the pool for
fiscal year 2001.
Long-Term Incentive Awards. The long-term incentive element of the
Company's executive compensation program consists of the grant of stock
options to employees, including the Company's executive officers. Stock
options have been granted to the executive officers based upon factors
discussed below either (i) with an exercise price equal to 100% of fair market
value as of the date of grant or (ii) (on a selective basis) in partial
payment of annual incentive awards under the Senior Management Incentive Plan
which have been earned. Stock options that were granted in payment of 2001
annual incentive awards carried an exercise price of $0.01. The number of
stock options granted was determined by dividing the amount of the award by
the difference between the market price of the Common Stock as of the date of
grant and the option exercise price. For the 2002 compensation year, grants
made to the named executive officers and others will have an exercise price
equal to 100% of fair market value as of the date of grant. The Company's
Long-Term Incentive program will be reconfigured to provide opportunities at
or near the 75th percentile among a range of peer companies, underlining the
emphasis on longer-term results that the Committee believes is appropriate for
senior executive team members.
18
Implementation of Compensation Policy
The Compensation Committee met on January 25, 2001 to review and
certify annual incentive and stock option awards to officers and employees of
the Company relative to performance-based compensation programs in 2000 and to
establish, as necessary, the 2001 base compensation and performance-based
compensation programs for executive officers. The Compensation Committee met on
March 12, 2001 to review and approve the Company's Senior Management Incentive
Plan, including target bonus levels and performance achievement targets. The
Compensation Committee met on January 24, 2002 to discuss various matters,
including the status of 2001 performance-based compensation programs and
approved the formula to be applied for determining the number of options to be
granted to each coworker as of February 1, 2002. Further, the Compensation
Committee reviewed and approved stock option allocations to officers and
employees of the Company, and reviewed and certified annual incentive awards to
officers and employees pursuant to performance-based compensation programs.
There was a special meeting of the Compensation Committee on January 28, 2001 to
review and approve the terms of Mr. Edwardson's employment as Chief Executive
Officer and President of the Company, including the grant of restricted stock
and stock options. There also were special meetings on July 26, September 17 and
October 25, 2001 in the course of undertaking the aforementioned review of
executive compensation.
Compensation of the Chief Executive Officer. Mr. Krasny's compensation
for 2001 consisted solely of base salary of $93,895 that represented the pro
rata share from January 1, 2001 through the annual meeting on May 23, 2001 of
his annualized base salary of $237,015. Mr. Krasny's annualized base was not
raised in 2001 over 2000.
Per his contractual agreements for 2001, Mr. Edwardson received base
salary of $546,923, a bonus of $440,000, a restricted stock grant of 100,000
shares, and a stock option grant of 1,600,000 options. Mr. Edwardson's annual
incentive award based upon his participation in the 2001 Senior Management
Incentive Plan was $866,400, of which $433,200 was paid in the form of a stock
option grant for 8,067 shares.
Section 162(m) of the Internal Revenue Code generally disallows a
federal income tax deduction to public companies for compensation over
$1,000,000 paid to the corporation's chief executive officer and four other most
highly compensated executive officers. Qualified performance-based compensation
will not be subject to the deduction limit if certain requirements are met. The
Company currently intends to structure the performance-based portion of the
compensation of its executive officers in a manner that complies with this
provision so that such amounts will be deductible to the Company.
COMPENSATION AND STOCK OPTION COMMITTEE
Michelle L. Collins
Casey G. Cowell
Brian E. Williams
19
Shareholder Return Performance Presentation
Stock Price Performance Graph
Set forth below is a line graph comparing the yearly percentage change
in the cumulative total shareholder return on the Company's Common Stock with
the cumulative total return of the S&P Midcap 400 Index and the S&P Midcap
400 - Retail (Computers and Electronics) Index for the period commencing
December 31, 1996 and ending December 31, 2001 where $100 was invested on
December 31, 1996.
Historical stock price performance shown on the graph is not
necessarily indicative of future price performance.
[GRAPHIC OMITTED]
12/31/1996 12/31/1997 12/31/1998 12/31/1999 12/31/2000 12/31/2001
---------- ---------- ---------- ---------- ---------- ----------
CDW Computer Centers, Inc. $ 100 $ 88 $ 162 $ 265 $ 188 $ 362
S&P Midcap 400 $ 100 $ 132 $ 158 $ 181 $ 212 $ 196
S&P MC400 Retail (C&E) $ 100 $ 192 $ 262 $ 348 $ 318 $ 574
20
PROPOSAL 2
----------
RATIFICATION OF SELECTION OF
----------------------------
INDEPENDENT ACCOUNTANTS
-----------------------
Subject to ratification by shareholders at the Annual Meeting, the Audit
Committee has recommended to the Board of Directors, and the Board of Directors
has approved, the selection of the independent accounting firm of
PricewaterhouseCoopers LLP to audit the Company's financial statements for the
2002 fiscal year. PricewaterhouseCoopers LLP has audited the Company's financial
statements since March 31, 1992. It is expected that representatives of
PricewaterhouseCoopers LLP will be present at the Annual Meeting, will have the
opportunity to make a statement if they so desire and will be available to
respond to appropriate questions.
If the foregoing recommendation is rejected or if PricewaterhouseCoopers LLP
declines to act or otherwise becomes incapable of acting or if their appointment
is otherwise discontinued, the Board of Directors will appoint other independent
accountants whose appointment for any period subsequent to the 2002 fiscal year
shall be subject to the ratification of shareholders.
Fees incurred by the Company to PricewaterhouseCoopers LLP during Fiscal 2001:
Audit Fees:
Fees incurred by the Company to PricewaterhouseCoopers LLP for auditing the
Company's annual financial statements for the fiscal year ended December 31,
2001 and reviewing those financial statements included in the Company's
quarterly reports on Form 10-Q during that fiscal year totaled $240,500.
Financial Information Systems Design and Implementation Fees:
The Company did not engage PricewaterhouseCoopers LLP to provide services to the
Company regarding financial information systems design and implementation during
the fiscal year ended December 31, 2001.
All Other Fees:
Fees incurred by the Company to PricewaterhouseCoopers LLP for all other
non-audit services rendered to the Company during the Company's 2001 fiscal
year, primarily including internal audit and tax related services, totaled
$471,600.
21
PROPOSAL 3
----------
PROPOSAL TO APPROVE AMENDMENT TO THE
------------------------------------
CDW 2000 INCENTIVE STOCK OPTION PLAN
------------------------------------
General
The Board of Directors is proposing for shareholder approval an
amendment to the CDW 2000 Incentive Stock Option Plan, previously approved by
shareholders in May 2000. The CDW 2000 Incentive Stock Option Plan, as Amended
through April 2, 2002 (the "Amended Plan"), was approved by the Board of
Directors on such date, subject to shareholder approval. If the Amended Plan is
not approved by shareholders, the terms of the CDW 2000 Incentive Stock Option
Plan, as originally adopted by the Board of Directors and approved by
shareholders, will remain in effect, and, immediately following the Annual
Meeting, the Board of Directors will grant to each non-employee director a
discretionary option to purchase 12,480 shares of Common Stock, i.e., the stock
option that would have been granted automatically to each non-employee director
on January 2, 2002, in the absence of the proposed amendments described below.
The purposes of the Amended Plan are to align the interests of the
shareholders of the Company and the recipients of stock options granted under
the Amended Plan and to advance the interests of the Company by attracting,
motivating and retaining well-qualified persons by providing such persons with
performance-related incentives.
Proposed Amendment
In late 2001, in order to ensure that the Company remains
well-positioned to attract and retain qualified candidates to serve as
non-employee directors of the Company, the Compensation and Stock Option
Committee of the Board of Directors (the "Compensation Committee"), in
consultation with outside compensation consultants, reviewed and assessed the
Company's compensation package for non-employee directors. The Compensation
Committee determined it to be advisable to make the compensation package for
non-employee directors more competitive by increasing the annual cash retainer
fee and changing the equity component of the compensation package and
recommended such changes to the full Board of Directors. To effect the
recommended change in equity compensation, the Board of Directors approved,
subject to shareholder approval, the Amended Plan which provides that (1) each
person who is first elected or first begins to serve as a non-employee director,
other than by reason of termination of employment, on or after the Annual
Meeting will automatically be granted, on the date of such person's initial
election or commencement of service as a non-employee director, an option to
purchase 20,000 shares of Common Stock; and (2) on the date of each annual
meeting of shareholders, commencing with the Annual Meeting, each non-employee
director will be granted an option to purchase 10,000 shares of Common Stock
(which number will be prorated if such non-employee director was first elected
or began to serve as a non-employee director on a date more recent than that of
the previous annual meeting of shareholders). These new provisions will replace
the existing automatic annual grant on the first trading day of each year of
options to purchase a number of whole shares of Common Stock equal to the sum of
12,000 (6,000 shares adjusted for the 2-for-1 stock split on June 21, 2000) plus
the product of 12,000 multiplied by the percentage increase in the Company's
immediately preceding fiscal year's net income over the second immediately
preceding fiscal year's net income. All options granted to non-employee
directors under the existing automatic grant procedure vest in full three years
after the grant date. Under the terms of the Amended Plan, the new
non-discretionary option grants described in clauses (1) and (2) above become
exercisable in 20 percent increments over the five year period following the
date of grant and generally remain exercisable for the three-year period
following termination of service as a non-employee director. The Amended Plan
also permits each non-employee director to elect to receive additional options
in lieu of all or part of his or her annual cash retainer fee.
22
The proposed amendment does not increase the total number of shares of
Common Stock available under the Amended Plan.
Description of Amended Plan
The following is a summary of the Amended Plan, which is qualified in
its entirety by reference to the text of the Plan. The Amended Plan is attached
as Exhibit A to this Proxy Statement and incorporated herein by reference.
Administration. The Compensation Committee will administer the Amended
Plan. Each member of the Compensation Committee is a "Non-Employee Director"
within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934 and
an "outside director" within the meaning of Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code").
The Compensation Committee is authorized to interpret the Amended Plan
and its application and, subject to the terms of the Amended Plan, to establish
rules and regulations as it deems necessary or desirable for the administration
of the Amended Plan. The Compensation Committee may impose, incidental to the
grant of a stock option thereunder, conditions with respect to the grant, such
as limiting competitive employment or other activities. All such
interpretations, rules, regulations and conditions are final, binding and
conclusive.
The Compensation Committee is authorized to select eligible persons for
participation in the Amended Plan and, subject to the terms of the Amended Plan,
to determine the terms and conditions of each stock option granted under the
Amended Plan. Each stock option granted will be evidenced by a written agreement
between the Company and the optionee setting forth the terms and conditions of
such option.
Shares Available. The maximum number of shares of Common Stock
available under the Amended Plan is 4,000,000 (as adjusted for the 2-for-1 stock
split on June 21, 2000) plus the number of shares available for the future grant
of stock options under the CDW 1996 Incentive Stock Option Plan and the total
number of shares of Common Stock available for the future grant of stock options
under the CDW Incentive Stock Option Plan and the CDW Director Stock Option Plan
combined, shall be available for grants of options under this Amended Plan,
reduced by the sum of the aggregate number of shares of Common Stock which
become subject to outstanding option plans. As of March 31, 2002, the total
number of shares available for the future grant of stock options under the
Amended Plan is 5,651,650, subject to adjustment in the event of a stock split,
stock dividend or other similar change in capitalization. If shares of Common
Stock subject to an option granted under the Amended Plan or any of the
aforementioned prior stock option plans are not issued by reason of the
expiration, termination, cancellation or forfeiture of that option, those shares
will be available for the grant of new options under the Amended Plan.
Shares of Common Stock delivered upon the exercise of a stock option
granted under the Amended Plan may be treasury shares, authorized and unissued
shares, or a combination thereof. Stock options granted under the Amended Plan
may be either incentive stock options ("ISOs") or non-qualified stock options
("NQSOs"). An ISO is a stock option granted in accordance with Section 422 of
the Code that is intended by the Compensation Committee to constitute an ISO and
may entitle the optionee to favorable tax treatment as described below. An NQSO
is a stock option that is not an ISO.
Eligibility to Participate. The Compensation Committee may grant
options under the Amended Plan to any officer, employee or consultant of the
Company or any subsidiary or affiliate of the Company or to any director,
including any non-employee director, of the Company, as it may, in its sole
discretion, from time to time select. As of the date of this Proxy Statement,
approximately 2,800 employees (which number includes officers) and nine
directors are eligible to participate in the Amended Plan. Except as described
below under "Non-Discretionary Grants of Stock Options to Non-Employee
Directors," no determination has yet been made as to the number of options, if
any, that any individual who is eligible to participate in the Amended Plan will
be granted.
23
Discretionary Options. The Compensation Committee will determine which
eligible persons will receive grants of stock options under the Amended Plan
and, subject to the limitations described below, will determine the number of
shares of Common Stock subject to each stock option grant, the related purchase
price per share of Common Stock, the period during which the stock option may be
exercised, whether the stock option will become exercisable in cumulative or
non-cumulative installments and in part or in full at any time and whether the
stock option is intended to constitute an ISO. The Compensation Committee may,
for any reason at any time, take action to cause any or all outstanding options
granted under the Amended Plan to become exercisable in part or in full. The
Compensation Committee may also establish performance measures or other criteria
that need to be satisfied as conditions to the grant of an option or to the
exercisability of all or a portion of an option. We will refer to options
granted automatically under the Amended Plan to non-employee directors as
"non-discretionary options" and all other options granted under the Amended Plan
as "discretionary options."
Purchase Price. The purchase price per share of Common Stock subject to
a discretionary stock option granted under the Amended Plan may not be less than
100% of the Fair Market Value of a share of Common Stock on the date of grant.
If an ISO is granted to a person who, at the time of the grant, owns more than
10 percent of the Company's Common Stock, then the per share purchase price may
not be less than 110% of the Fair Market Value of a share of Common Stock on the
date of grant. The "Fair Market Value" of a share of Common Stock on a given
date is the closing transaction price of a share of Common Stock as reported on
The Nasdaq Stock Market on that date, or if there are no reported transactions
on such date, on the next preceding date for which a transaction was reported;
provided, however, that Fair Market Value may be determined by the Compensation
Committee by whatever means it, in the good faith exercise of its discretion,
shall deem appropriate.
Limitations on Number of Shares Subject to Stock Options. To the extent
necessary for an option to be qualified performance-based compensation under
Section 162(m) of the Code and the rules and regulations thereunder, and
therefore to be fully deductible by the Company for federal income tax purposes
if the optionee's compensation in the year of exercise exceeds $1 million, the
maximum number of shares of Common Stock with respect to which stock options may
be granted under the Amended Plan during any fiscal year of the Company to any
person is 2,000,000 (as adjusted for the 2-for-1 stock split on June 21, 2000).
Limitations on Period of Exercisability of ISOs. An ISO may not be
exercisable later than 10 years after its date of grant. If an ISO is granted to
a person who, at the time of the grant, owns more than 10 percent of the
Company's Common Stock, then that ISO may not be exercised later than five years
after its date of grant.
Noncompetition. If an optionee is employed by, receives compensation
from or otherwise is associated with or agrees in principle to be employed by or
to receive compensation from or otherwise be associated as an officer, agent,
director, employee, shareholder, consultant or otherwise with a Competitor (as
defined in the Amended Plan) at any time prior to the expiration of the
optionee's options, (i) all of that optionee's unexercised options shall be
forfeited and (ii) the optionee shall be required to repay to the Company all
Option Proceeds. The Amended Plan defines Option Proceeds as (i) the difference
between (A) the Fair Market Value of a share of Common Stock on the date of
exercise and (B) the per share exercise price of the option, multiplied by (ii)
the number of shares of Common Stock acquired pursuant to any exercise of
options granted under the Amended Plan that occurs after the date 24 months
prior to the date of the optionee's termination of employment with the Company.
Exercise of a Stock Option Following Termination of Employment or
Service. Unless otherwise provided in the agreement relating to a discretionary
stock option granted under the Amended Plan, the following rules apply in the
case of an optionee's termination of employment with, or service to, the
Company:
o If an optionee's employment with, or service to, the Company terminates by
reason of the disability of the optionee, each discretionary stock option
granted under the Amended Plan to the optionee will become fully
exercisable and may thereafter be exercised by such optionee (or such
optionee's legal representative or similar person) until and including the
earlier to occur of (i) the date that is one year after the date of the
termination of employment or service or (ii) the expiration date of the
term of such option.
24
o If an optionee retires on or after age 62 and has 10 or more years of
continuous service at the time of retirement, each discretionary stock
option granted under the Amended Plan to the optionee (i) will, to the
extent not exercisable as of the effective date of the optionee's
retirement, become exercisable in accordance with the vesting provisions
set forth in the agreement relating to such option and (ii) upon becoming
exercisable may be exercised by such optionee (or such optionee's legal
representative or similar person) until the expiration date of the term of
such option.
o If an optionee's employment with, or service to, the Company is terminated
because of the death of the optionee, each discretionary stock option
granted under the Amended Plan to the optionee will become fully
exercisable and may thereafter be exercised by such optionee's executor,
administrator, legal representative, beneficiary or similar person until
and including the earlier to occur of (i) the date that is one year after
the date of death and (ii) the expiration date of the term of such option.
o If an optionee's employment with, or service to, the Company terminates for
any other reason, each discretionary stock option granted under the Amended
Plan to the optionee will be exercisable only to the extent exercisable on
the date of termination of employment or service and may thereafter be
exercised by such optionee (or such optionee's legal representative or
similar person) until and including the earlier to occur of (i) the date
that is three months after the date of the termination of employment or
service or (ii) the expiration date of the term of such option; provided,
that if the optionee's employment with, or service to, the Company is
terminated for Cause, all stock options granted under the Amended Plan and
held by the optionee will terminate automatically on the effective date of
the optionee's termination of employment or service. For purposes of the
Amended Plan, "Cause" includes (i) the commission of a criminal act, fraud,
gross negligence or willful misconduct against, or in derogation of the
interests of the Company, (ii) divulging confidential information regarding
the Company, (iii) interference with the relationship between the Company
and any major supplier or customer, or (iv) the performance of any similar
action that our Board of Directors or Compensation Committee, in its sole
discretion, may deem to be sufficiently injurious to the interests of the
Company to constitute cause for termination.
o If an optionee dies during the period of exercisability following
termination of employment or service described above, each discretionary
stock option granted under the Amended Plan to the optionee will be
exercisable only to the extent exercisable on the date of death and may
thereafter be exercised by such optionee's executor, administrator, legal
representative, beneficiary or similar person until and including the
earlier to occur of (i) the date that is one year after the date of death
or (ii) the expiration date of the term of such option.
Notwithstanding the foregoing, with respect to discretionary stock
options granted to non-employee directors of the Company, the rules regarding
the exercise, cancellation or other disposition of such discretionary options
following termination of service as a non-employee director of the Company
will be determined by the Committee.
Non-Discretionary Grants of Stock Options to Non-Employee Directors.
Under the terms of the Amended Plan, each non-employee director will be
granted options to purchase shares of Common Stock as follows:
25
Stock Option Grant upon Initial Election or Commencement of Service.
Each person who is first elected or first begins to serve as a Non-Employee
Director, other than by reason of termination of employment, on or after the
Annual Meeting will automatically be granted, on the date of such person's
initial election or commencement of service as a non-employee director, an
option to purchase 20,000 shares of Common Stock.
Annual Stock Option Grant. On the date of each annual meeting of
shareholders, commencing with the Annual Meeting, each person who is a
non-employee director immediately prior to such meeting will be granted an
option to purchase 10,000 shares of Common Stock (which number will be
prorated if such non-employee director was first elected or began to serve as
a non-employee director after the date of the immediately proceeding annual
meeting of shareholders).
Stock Option Grant in lieu of Annual Cash Retainer Fee. Each
non-employee director may elect to receive, in lieu of all or part of the
annual cash retainer fee that would otherwise be payable to such non-employee
director, on the date of each annual meeting of shareholders, commencing with
the Annual Meeting, options to purchase shares of Common Stock having a value
on the date of grant equal to the foregone amount of such retainer fee,
determined in accordance with the Black-Scholes valuation model.
All of the above-described non-discretionary options are NQSOs, have a
per share purchase price equal to 100% of the Fair Market Value of a share of
Common Stock on the date of grant, are exercisable in one-fifth increments over
the five year period following the date of grant and expire 10 years after the
date of grant.
Exercise of Non-Discretionary Stock Options Following Termination of
Service. The following rules apply to non-discretionary options granted to
non-employee directors under the Amended Plan in the case of a non-employee
director's termination of service to the Company:
o If an optionee's service to the Company terminates by reason of the
disability of the optionee, each non-discretionary stock option granted
under the Amended Plan to the optionee will become fully exercisable and
may thereafter be exercised by such optionee (or such optionee's legal
representative or similar person) until and including the earlier to occur
of (i) the date that is three years after the date of the termination of
service or (ii) the expiration date of the term of such option.
o If an optionee retires after 10 years or more of continuous service as a
non-employee director of the Company, each non-discretionary stock option
held by such optionee will, to the extent not exercisable as of the
effective date of the optionee's retirement, become exercisable in
accordance with the vesting provisions set forth in the agreement relating
to such option and upon becoming exercisable may be exercised by such
optionee (or such optionee's legal representative or similar person) until
and including the earlier to occur of (i) the date that is five years after
the effective date of the optionee's retirement of service or (ii) the
expiration date of the term of such option.
o If an optionee's service to the Company is terminated because of the death
of the optionee, each non-discretionary stock option granted under the
Amended Plan to the optionee will become fully exercisable and may
thereafter be exercised by such optionee's executor, administrator, legal
representative, beneficiary or similar person until and including the
earlier to occur of (i) the date that is three years after the date of
death and (ii) the expiration date of the term of such option.
o If an optionee's service to the Company is terminated for any reason other
than disability, retirement, death or for cause, each non-discretionary
stock option granted under the Amended Plan to the optionee will be
exercisable only to the extent such option is exercisable on the effective
date of such optionee's ceasing to be a director and may thereafter be
exercised by such optionee (or such optionee's legal representative or
similar person) until and including the earlier to occur of (i) the date
which is three years after the effective date of such optionee's ceasing to
be a director and (ii) the expiration date of the term of such option;
provided, that if the optionee's service to the Company is terminated for
Cause, all stock options granted under the Amended Plan
26
and held by the optionee will terminate automatically on the effective date
of the optionee's termination of service.
o If an optionee dies during the period of exercisability following
termination of service described above, each non-discretionary stock option
granted under the Amended Plan to the optionee will be exercisable only to
the extent exercisable on the date of death and may thereafter be exercised
by such optionee's executor, administrator, legal representative,
beneficiary or similar person until and including the earlier of (i) the
expiration date of the term of such option and (ii) the date which is the
later of (A) the date which is one year after the date of death and (B) the
date which is three years after the effective date of such optionee's
ceasing to be a director in the case of death after termination of service
due to disability or for any other reason other than for Cause or
retirement, or the date which is five years after the effective date of
such optionee's ceasing to be a director in the case of death after
termination of service due to retirement.
Notwithstanding the foregoing, with respect to non-discretionary
stock options granted to non-employee directors under the CDW 2000 Incentive
Stock Option Plan prior to January 1, 2002, the rules regarding the exercise,
cancellation or other disposition of such non-discretionary options following
termination of service as a non-employee director of the Company will be
determined in accordance with the terms of the CDW 2000 Incentive Stock Option
Plan, as in effect prior to such date.
Change in Control. Upon a Change in Control (as defined in the Amended
Plan) in which the Company's shareholders receive shares of common stock that
are publicly traded, all outstanding options granted under the Amended Plan will
immediately become fully exercisable and there will be substituted for each
share of Common Stock available under the Amended Plan, whether or not then
subject to an outstanding option, the number and class of shares into which each
outstanding share of Common Stock shall be converted pursuant to the Change in
Control. In the event of any such substitution, the purchase price per share of
each option will be appropriately adjusted by the Compensation Committee,
without an increase in the aggregate purchase price.
Upon a Change in Control in which the Company's shareholders receive
consideration other than shares of common stock that are publicly traded, each
outstanding option granted under the Amended Plan will be surrendered to the
Company by the holder thereof, and each such option will immediately be
cancelled by the Company, and the holder will receive, within 10 days of the
occurrence of a Change in Control, a cash payment from the Company in an amount
equal to the number of shares of Common Stock then subject to the option,
multiplied by the excess, if any, of (i) the greater of (A) the highest per
share price offered to shareholders of the Company in any transaction whereby
the Change in Control takes place or (B) the Fair Market Value of a share of
Common Stock on the date of occurrence of the Change in Control over (ii) the
purchase price per share of Common Stock subject to the option.
Exercise of Stock Options; Non-Transferability; Designation of
Beneficiaries. Payment for shares of Common Stock purchased upon the exercise of
an option granted pursuant to the Amended Plan will be made as set forth in the
agreement relating to such option. Such agreement may provide for payment (i) in
cash, (ii) by delivery of certain previously-acquired shares of Common Stock,
(iii) by delivery of an irrevocable notice of exercise to a broker-dealer
acceptable to the Company or (iv) by a combination of cash and delivery of
certain previously-acquired shares of Common Stock. Except as otherwise set
forth in the agreement relating to an option, no stock option granted under the
Amended Plan may be transferred other than by will or the laws of descent and
distribution or pursuant to beneficiary designation procedures approved by the
Company. Except to the extent permitted by the foregoing sentence, each stock
option may be exercised during an optionee's lifetime only by the optionee or
the optionee's legal representative or similar person. Each optionee may file
with the Compensation Committee a written designation of one or more persons as
such optionee's beneficiary or beneficiaries (both primary and contingent) in
the event of such optionee's death.
27
Federal Income Tax Consequences
The following is a brief overview of the United States federal income
tax consequences of participation in the Amended Plan and should not be relied
upon as being a complete description. It does not address the state or local tax
aspects of participation in the Amended Plan.
Grant of Option. An optionee will not recognize taxable income upon the
grant of a stock option under the Amended Plan.
Exercise of Non-Qualified Options. An optionee will recognize
compensation taxable as ordinary income, and the Company generally will be
allowed a corresponding deduction for federal income tax purposes, in an amount
equal to the excess of the fair market value, on the date of exercise of an
NQSO, of the shares of Common Stock acquired over the purchase price paid for
the shares.
Exercise of Incentive Stock Options. An optionee will not recognize any
taxable income by reason of exercise of an ISO, and the Company will not be
allowed any deduction with respect to the exercise at that time. However, the
excess, if any, of the fair market value, at the time of exercise, of the Common
Stock acquired upon the exercise over the purchase price for the shares will be
included in alternative minimum taxable income and may be subject to the
alternative minimum tax.
Qualifying Disposition of ISO Shares. If an optionee disposes of Common
Stock acquired pursuant to the exercise of an ISO two years or more after the
date of grant of the ISO and one year or more after the date of transfer of
Common Stock to the optionee, the amount, if any, realized in excess of the
purchase price for such Common Stock will be treated as long-term capital gain
or the amount, if any, by which the purchase price exceeds the amount realized
upon the disposition will be treated as a long-term capital loss. The Company
will not be entitled to any deduction with respect to a disposition of Common
Stock occurring under the circumstances described in this paragraph.
Disqualifying Disposition of ISO Shares. If an optionee disposes of
Common Stock acquired pursuant to the exercise of an ISO within the period
ending on the later of two years after the date of grant of the ISO and one year
after the date of transfer of Common Stock to the optionee, the optionee will
recognize ordinary income, and the Company will be entitled to a corresponding
deduction, in an amount equal to the amount, if any, realized in excess of the
purchase price for the Common Stock, but only considering the amount realized to
the extent it does not exceed the fair market value of the Common Stock on the
date of exercise. Any amount realized upon disposition in excess of the fair
market value of the Common Stock on the date of exercise will be treated as
long-term capital gain if the Common Stock has been held for more than 12 months
or as a short-term capital gain if the Common Stock has been held for a shorter
period. If the amount realized upon disposition is less than the purchase price
for the shares, the excess of the purchase price over the amount realized will
be treated as a long-term or short-term capital loss, depending on the holding
period of the Common Stock. The Company will not be entitled to any deduction
with respect to the amount recognized by the employee as capital gain.
Income Tax Withholding. The taxable compensation recognized by the
optionee upon the exercise of an NQSO will be subject to withholding of tax by
the Company.
Benefits Table
The following table sets forth the number of shares of Common Stock
underlying options which automatically would be granted under the Amended Plan
to current non-employee directors on the date of each annual meeting of
shareholders beginning with the Annual Meeting if the Amended Plan is approved
by shareholders. However, the additional options that each non-employee director
may elect to receive on the date of each annual meeting of shareholders in lieu
of his or her annual cash retainer fee are not included in the table, because
the number of shares subject to such additional options is determined in
accordance with the Black-Scholes valuation model and depends upon the amount of
the cash retainer fee that each non-employee director elects to
28
forego and the trading price of the Common Stock on the date of grant and
therefore is not determinable until the date of grant.
No determination has been made by the Compensation Committee regarding
future discretionary stock option grants under the Amended Plan to directors,
officers and other employees.
2000 Incentive Stock Option Plan, as Amended through April 2, 2002
- --------------------------------------------------------------------------------------------------------------------------
Position Dollar Value ($) Number of Shares
- --------------------------------------------------------------------------------------------------------------------------
All Non-Employee Directors as a Group (five persons) -- (1) 50,000
- --------------------------------------------------------------------------------------------------------------------------
(1) The exercise price per share of options automatically granted to
non-employee directors would be 100% of the fair market value of a share of
Common Stock on the date of grant of the option. On April 5, 2002, the closing
transaction price per share of Common Stock as reported on The Nasdaq Stock
Market was $49.58. The general terms of each option is described above under
"Description of the Amended Plan - Non-Discretionary Grants of Stock Options
to Non-Employee Directors."
Effective Date, Amendment and Termination
If approved by shareholders at the Annual Meeting, the Amended Plan
will become effective as of January 1, 2002. The Board may amend the Amended
Plan at any time, subject to any requirement of shareholder approval required by
applicable law, rule or regulation, including Sections 162(m) and 422 of the
Code. Nonetheless, the Board may not increase the number of shares available
under the Amended Plan, effect any change inconsistent with Section 422 of the
Code, extend the term of the Amended Plan or permit the grant of a stock option
having an exercise price less than 100% of Fair Market Value on the date of
grant of such option, without shareholder approval. No amendment may impair the
rights of a holder of an outstanding stock option granted under the Amended Plan
without the holder's consent.
The Amended Plan will terminate on March 16, 2010, but may be
terminated earlier by the Company's Board of Directors. Termination of the
Amended Plan will not affect the terms or conditions of any stock option granted
under the Amended Plan prior to the termination date. No stock options may be
granted under the Amended Plan after it has been terminated.
The approval of the Amended Plan requires the affirmative vote of the
holders of a majority of the shares of Common Stock represented at the Annual
Meeting, in person or by proxy, and entitled to vote thereon.
The Board of Directors recommends a vote FOR approval of the Amended Plan.
29
PROPOSAL 4
----------
PROPOSAL TO APPROVE THE
-----------------------
CDW EMPLOYEE STOCK PURCHASE PLAN
--------------------------------
General
The Board of Directors is proposing for shareholder approval the CDW
Computer Centers, Inc. Employee Stock Purchase Plan (the "ESPP"). The ESPP was
adopted by the Board of Directors on April 2, 2002, to become effective July 1,
2002, subject to shareholder approval within 12 months after its adoption by the
Board of Directors.
The purposes of the ESPP are to encourage and facilitate the purchase
of shares of Common Stock by eligible employees of the Company and its
subsidiaries and to provide an additional incentive to promote the best
interests of the Company and its subsidiaries and an additional opportunity to
participate in their economic success.
Description of the ESPP
The following is a description of the ESPP. This description is
qualified in its entirety by reference to the plan document, a copy of which is
attached to this Proxy Statement as Exhibit B and incorporated herein by
reference.
Administration. The ESPP will be administered by the Compensation
Committee. The Compensation Committee will have discretionary authority to
interpret the ESPP and to establish rules and regulations relating to the ESPP
from time to time and to make all other determinations necessary or advisable
for the administration of the ESPP.
Shares Available. The maximum number of shares available for purchase
under the ESPP will be 500,000, subject to adjustment in the event of certain
changes to the Company's capital structure as described in the ESPP. The shares
of Common Stock sold under the ESPP may be treasury shares, authorized and
unissued shares, shares purchased in the open market or any combination of the
foregoing.
Eligibility. Any employee of the Company or any of its subsidiaries is
eligible to participate in the ESPP as of the first day of any purchase period
(as defined below), provided that such employee has at least 90 days of
continuous service with the Company or a subsidiary immediately prior to such
date. Notwithstanding anything to the contrary contained in the ESPP, no
employee may be granted an option under the ESPP to purchase shares of Common
Stock if such employee, immediately after the grant of such option, would own 5%
or more of the total combined voting power or value of all classes of stock of
the Company or an affiliate. As of the date of this Proxy Statement,
approximately 2,800 employees (which number includes officers) are eligible to
participate in the ESPP.
Participation and Payroll Deductions. Eligible employees may purchase
shares of Common Stock at below-market prices through payroll deductions during
each purchase period, with amounts accumulated during each purchase period. To
participate in the ESPP, an eligible employee must make a request to the
Compensation Committee or its designated agent, at the time and in the manner
specified by the Compensation Committee, stating the amount of the requested
payroll deduction. The amount of the payroll deduction must be a whole
percentage amount or, if permitted by the Compensation Committee, a whole dollar
amount that does not exceed 15%, or a lesser percentage determined by the
Compensation Committee, of the employee's compensation (before withholding or
other deductions) paid during the purchase period by the Company or any of its
subsidiaries. The amounts deducted from participants' pay is reflected in an
account maintained on the books and records of the Company. No interest is paid
on the amounts credited to these accounts.
30
Deduction Changes and Withdrawal. Employees may change their rate of
payroll deduction at any time. This change becomes effective as of the beginning
of the next purchase period following receipt of a new election form. A
participant may suspend his or her payroll deductions under the ESPP by giving
notice at the time and in the manner prescribed by the Compensation Committee.
At the election of the participant, upon suspending his or her payroll
deductions, such participant may either receive in cash the entire balance that
has accumulated in his or her account through the date of such suspension of
participation or have such account balance applied to the purchase of shares of
Common Stock at the close of the purchase period. A participant who withdraws
from the ESPP may again participate at the start of any subsequent purchase
period by filing a new request to participate with the Compensation Committee or
its designated agent at the time and in the manner specified by the Compensation
Committee.
Purchase of Shares. Shares of Common Stock will be offered under the
ESPP through a series of successive purchase periods, each with a duration of
three calendar months. Purchases will occur under the ESPP on the last day of
each purchase period. Funds held in a participant's account on the last day of
the purchase period will be used to purchase shares of Common Stock for the
participant. Shares will be purchased at 85% of fair market value on the last
day of the purchase period, or at 85% of fair market value as of the first day
of the purchase period, whichever price is lower. The fair market value of a
share of Common Stock on any relevant date under the ESPP will be the closing
transaction price of a share of Common Stock as reported on The NASDAQ Stock
Market on the date as of which such value is being determined or, if there shall
be no reported transactions on such date, on the next preceding date for which a
transaction was reported. On April 5, 2002, the fair market value per share of
Common Stock was $49.58.
Purchases are subject to the aggregate limitation on the number of
shares that are available under the ESPP and the ESPP limitations applicable
to individual participants. The provisions of the ESPP do not impose
restrictions upon the resale by holders of Common Stock acquired under the
ESPP. Certain resale restrictions are imposed, however, by the terms of the
Company's insider trading and confidentiality policies and the provisions of
the federal securities laws. In addition, the Compensation Committee has the
discretion to require that shares be deposited directly with a broker
designated by the Compensation Committee and that the shares be retained with
such broker for a designated period of time.
A participant's rights under the ESPP are not transferable by the
participant during his or her lifetime.
Limitations on Purchases of Shares. Notwithstanding anything to the
contrary in the ESPP, no participant may be granted an option to purchase
shares of Common Stock that permits such participant to purchase in any
calendar year under the ESPP and all other employee stock purchase plans
(within the meaning of Section 423 of the Code) of the Company and its
subsidiaries shares of Common Stock with an aggregate fair market value
(determined at the time such option is granted) in excess of $25,000. Further
notwithstanding anything contained in the ESPP to the contrary, no participant
may purchase more than 325 shares of Common Stock during any purchase period.
Termination of Participation. When a participant dies, terminates
employment or otherwise ceases to be an eligible employee under the ESPP, the
participant's participation in the ESPP will terminate immediately. Upon such
terminating event, the cash credited to the participant's account on the date
of termination, certificates for the number of full shares of Common Stock
held for his or her benefit, and the cash equivalent for any fractional share
so held, will be delivered to the participant or his or her legal
representative, as the case may be, as soon as practicable after such
terminating event.
Change in Control. In the event of a change in control of the Company
(as defined in the ESPP), the then current purchase period shall cease, and
the Compensation Committee, in its sole discretion, will either direct that
the cash credited to all participants' accounts be applied to purchase shares
of Common Stock or that such cash be returned to participants, and the ESPP
will terminate immediately thereafter.
31
Amendment and Termination of the ESPP. The Compensation Committee may
amend the ESPP at any time and for any reason; provided, however, that no
amendment may (i) materially adversely effect any purchase rights outstanding
under the ESPP with respect to the purchase period in which such amendment is
to be effected, (ii) increase the maximum number of shares of Common Stock
that may be purchased under the ESPP, (iii) decrease the purchase price for
any purchase period below 85% of the fair market value on the first day of
such purchase period or the last day of such purchase period, whichever is
less, or (iv) adversely affect the qualification of the ESPP under Section 423
of the Internal Revenue Code.
The Board of Directors may terminate the ESPP at any time. Upon
termination of the ESPP, one or more certificates for the number of full
shares of Common Stock held for each participant's benefit and the cash
equivalent of any fractional share so held will be delivered to such
participant as soon as practicable after the ESPP terminates, and, except as
otherwise provided in the event of a change in control, the cash, if any,
credited to the such participant's account, will also be distributed to such
participant as soon as practicable after the ESPP terminates.
Federal Income Tax Consequences
The following is a brief summary of the United States federal income
tax consequences under the ESPP.
The ESPP is intended to be an "employee stock purchase plan" within
the meaning of Section 423 of the Code. Under Section 423, an eligible
employee who elects to participate in the ESPP will not realize any taxable
income at the time stock is purchased under the ESPP for the employee.
If a participant does not dispose of the stock purchased under the
ESPP within two years after the first day of the purchase period in which the
stock was purchased, then upon the disposition of the stock, the participant
will recognize compensation taxable as ordinary income in an amount equal to
the lesser of (a) the excess of the fair market value of the stock at the time
of disposition over the purchase price under the ESPP and (b) 15% of the fair
market value of the stock on the first day of the purchase period. The
participant's cost basis in the stock will be increased by the amount of
ordinary income recognized by the participant. The portion of the gain that is
in excess of the amount recognized as ordinary income, if any, is taxed as
long-term capital gain. If the stock is disposed of at a price below the
purchase price under the ESPP, the loss will be treated as long-term capital
loss. The Company will not be entitled to any deduction with respect to a
disposition of the stock occurring under these circumstances.
If a participant disposes of the stock purchased under the ESPP
within two years after the first day of the purchase period in which the stock
was purchased, then upon the disposition of the stock, the participant will
recognize compensation taxable as ordinary income, and the Company will be
entitled to a corresponding deduction, in an amount equal to the excess of the
fair market value of the stock on the last day of the purchase period in which
the stock was purchased over the purchase price of the stock under the ESPP.
The participant's cost basis in the stock will be increased by the amount of
ordinary income recognized by such participant. In addition, upon the
disposition of the stock, a participant will recognize capital gain or loss
equal to the difference between the price at which the stock is disposed of
and the cost basis for the stock, as so increased. The Company will not be
entitled to any deduction with respect to the amount recognized by such
participant as capital gain.
New Plan Benefits
The benefits that might be received by employees under the ESPP
cannot be determined because the benefits depend upon the degree of
participation by employees and the trading price of the Common Stock in future
purchase periods.
The approval of the ESPP requires the affirmative vote of the holders
of a majority of the shares of Common Stock represented at the Annual Meeting,
in person or by proxy, and entitled to vote thereon.
The Board of Directors recommends a vote FOR approval of the ESPP.
32
Other Matters that May Come Before the Meeting
As of this date, the Company is not aware that any matters are to be
presented for action at the meeting other than those referred to in the Notice
of Annual Meeting, but the proxy form sent herewith, if executed and returned,
gives discretionary authority with respect to any other matters that may come
before the meeting
By Order of the Board of Directors,
Barbara A. Klein
Sr. Vice President and Chief Financial Officer
Vernon Hills, Illinois
April 12, 2002
33
Exhibit A
CDW 2000 INCENTIVE STOCK OPTION PLAN
------------------------------------
(As Amended through April 2, 2002)
I. INTRODUCTION
1.1 Purposes. The purposes of the 2000 Incentive Stock Option Plan (the
"Plan") of CDW Computer Centers, Inc., an Illinois corporation (the
"Company"), are (i) to align the interests of the Company's stockholders and
the recipients of options under this Plan by increasing the proprietary
interest of such recipients in the Company's growth and success, (ii) to
advance the interests of the Company by attracting, motivating and retaining
directors, officers, other employees, consultants and well-qualified persons
who are not officers or employees of the Company ("Non-Employee Directors")
for service as directors of the Company and (iii) to motivate such persons to
act in the long-term best interests of the Company and its stockholders.
1.2 Administration. This Plan shall be administered by a committee (the
"Committee") designated by the Board of Directors of the Company (the "Board")
consisting of two or more members of the Board. Each member of the Committee
may be a "Non-Employee Director" within the meaning of Rule 16b-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and an
"outside director" within the meaning of Section 162(m) of the Internal
Revenue Code of 1986, as amended (the "Code").
The Committee shall, subject to the terms of this Plan, select eligible
persons for participation in this Plan and shall determine the number of shares
of Common Stock subject to each option granted hereunder, the exercise price of
such option, the time and conditions of exercise of such option and all other
terms and conditions of such option, including, without limitation, the form of
the option agreement. The Committee may, in its sole discretion and for any
reason at any time, subject to the requirements of Section 162(m) of the Code
and regulations thereunder in the case of an option intended to be qualified
performance-based compensation, take action such that any or all outstanding
options shall become exercisable in part or in full. The Committee shall,
subject to the terms of this Plan, interpret this Plan and the application
thereof, establish rules and regulations it deems necessary or desirable for the
administration of this Plan and may impose, incidental to the grant of an
option, conditions with respect to the grant, such as limiting competitive
employment or other activities. All such interpretations, rules, regulations and
conditions shall be final, binding and conclusive. Each option shall be
evidenced by a written agreement (an "Agreement") between the Company and the
optionee setting forth the terms and conditions of such option.
To the extent permitted by applicable law, the Committee may delegate
some or all of its power and authority hereunder to the Board or the Chairman of
the Board and Chief Executive Officer or other executive officer of the Company
as the Committee deems appropriate; provided, however, that (i) the Committee
may not delegate its power and authority to the Board or the Chairman of the
Board and Chief Executive Officer or other executive officer of the Company with
regard to the grant of an award to any person who is a "covered employee" within
the meaning of Section 162(m) of the Code or who, in the Committee's judgment,
is likely to be a covered employee at any time during the period an award
hereunder to such employee would be outstanding and (ii) the Committee may not
delegate its power and authority to the Chairman of the Board and Chief
Executive Officer or other executive officer of the Company with regard to the
selection for participation in this Plan of an officer or other person subject
to Section 16 of the Exchange Act or decisions concerning the timing, pricing or
amount of an award to such an officer or other person.
No member of the Board or Committee, and neither the Chairman of the
Board and Chief Executive Officer nor other executive officer to whom the
Committee delegates any of its power and authority hereunder, shall be liable
for any act, omission, interpretation, construction or determination made in
connection with this Plan in good faith, and the members of the Board and the
Committee and the Chairman of the Board and Chief Executive Officer or other
executive officer shall be entitled to indemnification and reimbursement by
the Company in respect of any claim, loss, damage or expense (including
attorneys' fees) arising therefrom to the full extent permitted by law,
34
except as otherwise may be provided in the Company's Articles of Incorporation
and/or By-Laws, and under any directors' and officers' liability insurance
that may be in effect from time to time.
A majority of the Committee shall constitute a quorum. The acts of
the Committee shall be either (i) acts of a majority of the members of the
Committee present at any meeting at which a quorum is present or (ii) acts
approved in writing by all of the members of the Committee without a meeting.
1.3 Eligibility. Participants in this Plan shall consist of such directors
(including Non-Employee Directors), officers and other employees, persons
expected to become directors, officers and other employees and consultants of
the Company, its affiliates and its subsidiaries from time to time
(individually a "Subsidiary" and collectively the "Subsidiaries") as the
Committee in its sole discretion may select from time to time. For purposes of
this Plan, references to employment shall also mean an agency relationship
with the Company and references to employment by the Company shall also mean
employment by an affiliate of the Company or a Subsidiary. The Committee's
selection of a person to participate in this Plan at any time shall not
require the Committee to select such person to participate in this Plan at any
other time. Non-Employee Directors of the Company shall be eligible to
participate in this Plan in accordance with Section III.
1.4 Shares Available. Subject to adjustment as provided in Section 4.7,
4,000,000 shares of the common stock, par value $0.01 per share, of the Company
("Common Stock") plus the sum of: (i) the number of shares of Common Stock
available for the future grant of stock options under the CDW 1996 Incentive
Stock Option Plan and (ii) the total number of shares of Common Stock available
for the future grant of stock options under the CDW Incentive Stock Option Plan
and the CDW Director Stock Option Plan combined, shall be available for grants
of options under this Plan, reduced by the sum of the aggregate number of shares
of Common Stock which become subject to outstanding options. To the extent that
shares of Common Stock subject to an outstanding option are not issued or
delivered by reason of the expiration, termination, cancellation or forfeiture
of such option (other than by reason of the delivery or withholding of shares of
Common Stock to pay all or a portion of the exercise price of such option, or to
satisfy all or a portion of the tax withholding obligations relating to such
option), then such shares of Common Stock shall again be available under this
Plan.
Shares of Common Stock shall be made available from authorized and
unissued shares of Common Stock, or authorized and issued shares of Common Stock
reacquired and held as treasury shares or otherwise or a combination thereof.
To the extent necessary for an award to be qualified performance-based
compensation under Section 162(m) of the Code and the regulations thereunder,
the maximum number of shares of Common Stock with respect to which options may
be granted during any calendar year to any person shall be 2,000,000, subject to
adjustment as provided in Section 4.7.
II. STOCK OPTIONS
2.1 Grants of Stock Options. The Committee may, in its discretion, grant
options to purchase shares of Common Stock to such eligible persons as may be
selected by the Committee. Each option, or portion thereof, that is not an
Incentive Stock Option, shall be a "Non-Statutory Stock Option". An Incentive
Stock Option may not be granted to any person who is not an employee of the
Company or any subsidiary (as defined in Section 424 of the Code). An
"Incentive Stock Option" shall mean an option to purchase shares of Common
Stock that meets the requirements of Section 422 of the Code, or any successor
provision, which is intended by the Committee to constitute an Incentive Stock
Option. Each Incentive Stock Option shall be granted within ten years of the
date this Plan is adopted by the Board. To the extent that the aggregate Fair
Market Value (determined as of the date of grant) of shares of Common Stock
with respect to which options designated as Incentive Stock Options are
exercisable for the first time by a participant during any calendar year
(under this Plan or any other plan of the Company, or any parent or subsidiary
as defined in Section 424 of the Code) exceeds the amount (currently $100,000)
established by the Code, such options shall constitute Non-Statutory Stock
Options. "Fair Market Value" shall mean the closing transaction price of a
share of
35
Common Stock as reported on The NASDAQ Stock Market on the date as of which
such value is being determined or, if there shall be no reported transactions
on such date, on the next preceding date for which a transaction was reported;
provided, however, that Fair Market Value may be determined by the Committee
by whatever means or method as the Committee, in the good faith exercise of
its discretion, shall at such time deem appropriate.
2.2 Terms of Stock Options. Options shall be subject to the following terms
and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of this Plan, as the Committee shall deem
advisable:
(a) Number of Shares and Purchase Price. The number of shares of
Common Stock subject to an option and the purchase price per share of Common
Stock purchasable upon exercise of the option shall be determined by the
Committee; provided, however, that the purchase price per share of Common
Stock purchasable upon exercise of an option shall not be less than 100% of
the Fair Market Value of a share of Common Stock on the date of grant of such
option; provided further, that if an Incentive Stock Option shall be granted
to any person who, at the time such option is granted, owns capital stock
possessing more than ten percent of the total combined voting power of all
classes of capital stock of the Company (or of any parent or subsidiary as
defined in Section 424 of the Code) (a "Ten Percent Holder"), the purchase
price per share of Common Stock shall be the price (currently 110% of Fair
Market Value) required by the Code in order to constitute an Incentive Stock
Option.
(b) Option Period and Exercisability. The period during which an
option may be exercised shall be determined by the Committee; provided,
however, that no Incentive Stock Option shall be exercised later than ten
years after its date of grant and provided further, that if an Incentive Stock
Option shall be granted to a Ten Percent Holder, such option shall not be
exercised later than five years after its date of grant. The Committee may, in
its discretion, establish performance measures or other criteria which shall
be satisfied or met as a condition to the grant of an option or to the
exercisability of all or a portion of an option. The Committee shall determine
whether an option shall become exercisable in cumulative or non-cumulative
installments and in part or in full at any time. An exercisable option, or
portion thereof, may be exercised only with respect to whole shares of Common
Stock.
(c) Method of Exercise. An option may be exercised (i) by giving
written notice to the Company specifying the number of whole shares of Common
Stock to be purchased and accompanied by payment therefor in full (or
arrangement made for such payment to the Company's satisfaction) either (A) in
cash, (B) by delivery (either actual delivery or by attestation procedures
established by the Company) of previously owned whole shares of Common Stock
(which the optionee has held for at least six months prior to the delivery of
such shares or which the optionee purchased on the open market and in each
case for which the optionee has good title, free and clear of all liens and
encumbrances) having an aggregate Fair Market Value, determined as of the date
of exercise, equal to the aggregate purchase price payable by reason of such
exercise, (C) in cash by a broker-dealer acceptable to the Company to whom the
optionee has submitted an irrevocable notice of exercise or (D) a combination
of (A) and (B), in each case to the extent set forth in the Agreement relating
to the option and (ii) by executing such documents as the Company may
reasonably request. Any fraction of a share of Common Stock which would be
required to pay such purchase price shall be disregarded and the remaining
amount due shall be paid in cash by the optionee. No certificate representing
Common Stock shall be delivered until the full purchase price therefor has
been paid (or arrangement made for such payment to the Company's
satisfaction).
(d) Non-Competition. In the event that an optionee is employed by,
receives compensation from or otherwise is associated with or has agreed in
principle to be employed by or to receive compensation from or otherwise be
associated as an officer, agent, director, employee, shareholder, consultant
or otherwise with a Competitor (as hereinafter defined) of the Company at any
time prior to the expiration of the optionee's options: (i) any and all
unexercised options shall be forfeited and (ii) any and all Option Proceeds
(as hereinafter defined) shall be immediately due and payable by the optionee
to the Company. For purposes of this Section, "Competitor" shall mean any
entity or person which engages for any portion of its business in the sale of
personal computer products to residents of the United States. For purposes of
this Section, "Option Proceeds" shall mean (i) the difference between (A) the
Fair Market Value of a share of Common Stock on the date of exercise and (B)
the per share exercise price
36
of the option, multiplied by (ii) the number of shares of Common Stock
acquired pursuant to any exercise of options issued under this Plan which
occurs after the date 24 months prior to the date of the optionee's
termination of employment with the Company. The remedy provided by this
Section shall be in addition to and not in lieu of any rights or remedies
which the Company may have against the optionee in respect of a breach by the
optionee of any duty or obligation to the Company.
2.3 Termination of Employment or Service
(a) Disability. Subject to paragraph (e) below and unless otherwise
specified in the Agreement relating to an option, if an optionee's employment
with or service to the Company terminates by reason of Disability, each option
held by such optionee shall be fully exercisable and may thereafter be
exercised by such optionee (or such optionee's legal representative or similar
person) until and including the earlier to occur of (i) the date which is one
year after the effective date of such optionee's termination of employment or
service and (ii) the expiration date of the term of such option. For purposes
of this Plan, "Disability" shall mean the inability of an optionee
substantially to perform such optionee's duties and responsibilities for a
continuous period of at least six months.
(b) Retirement. Subject to paragraph (e) below and unless otherwise
specified in the Agreement relating to an option, if an optionee's employment
with or service to the Company terminates by reason of retirement on or after
age 62 after a minimum of 10 years of continuous employment with or service to
the Company ("Retirement"), each option held by such optionee (i) shall, to
the extent not exercisable as of the effective date of the optionee's
retirement, become exercisable in accordance with the vesting provisions set
forth in the Agreement relating to such option and (ii) upon becoming
exercisable may be exercised by such optionee (or such optionee's legal
representative or similar person) until the expiration date of the term of
such option.
(c) Death. If an optionee's employment with or service to the Company
terminates by reason of death, each option held by such optionee shall be
fully exercisable and may thereafter be exercised by such optionee's executor,
administrator, legal representative, beneficiary or similar person until and
including the earlier to occur of (i) the date which is one year after the
date of death and (ii) the expiration date of the term of such option.
(d) Other Termination. Subject to paragraph (e) below and unless
otherwise specified in the Agreement relating to an option, if an optionee's
employment with or service to the Company terminates for any reason other than
Disability, Retirement or death or for Cause, each option held by such
optionee shall be exercisable only to the extent that such option is
exercisable on the effective date of such optionee's termination of employment
or service and may thereafter be exercised by such optionee (or such
optionee's legal representative or similar person) until and including the
earlier to occur of (i) the date which is three months after the effective
date of such optionee's termination of employment or service and (ii) the
expiration date of the term of such option. For purposes of this Plan, "Cause"
shall mean (i) the commission of a criminal act, fraud, gross negligence or
willful misconduct against, or in derogation of, the interests of the Company;
(2) divulging confidential information regarding the Company; (3) interference
with the relationship between the Company and any major supplier or customer;
or (4) the performance of any similar action that the Committee, in its sole
discretion, may be deem to be sufficiently injurious to the interests of the
Company to constitute cause for termination.
(e) Termination of Employment - Incentive Stock Options. Unless
otherwise specified in the Agreement relating to an option, if the employment
with the Company of a holder of an Incentive Stock Option terminates by reason
of Permanent and Total Disability (as defined in Section 22(e)(3) of the
Code), each Incentive Stock Option held by such optionee shall be exercisable
to the extent set forth in Section 2.3(a), and may thereafter be exercised by
such optionee (or such optionee's legal representative or similar person)
until and including the earlier to occur of (i) the date which is one year
after the effective date of such optionee's termination of employment and (ii)
the expiration date of the term of such option.
Unless otherwise specified in the Agreement relating to an option, if
the employment with the Company of a holder of an Incentive Stock Option
terminates for any reason other than Permanent and Total Disability or death
or
37
for Cause, each Incentive Stock Option held by such optionee shall be
exercisable to the extent set forth in Section 2.3(a), Section 2.3(b) or
Section 2.3(d), as applicable, and may thereafter be exercised by such holder
(or such holder's legal representative or similar person) until and including
the earlier to occur of (i) the date which is three months after the effective
date of such optionee's termination of employment and (ii) the expiration date
of the term of such option.
(f) Death Following Termination of Employment or Service. Unless
otherwise specified in the Agreement relating to an option, if an optionee
dies during the period set forth in Section 2.3(a), Section 2.3(b), Section
2.3(d), if any, or Section 2.3(e) , each option held by such optionee shall be
exercisable only to the extent that such option is exercisable on the date of
such optionee's death and may thereafter be exercised by such optionee's
executor, administrator, legal representative, beneficiary or similar person
until and including the earlier to occur of (i) the date which is one year
after the date of death and (ii) the expiration date of the term of such
option.
(g) Cause. Notwithstanding anything to the contrary in this Plan or
in any Agreement relating to an option, if the employment with or service to
the Company of the holder of an option is terminated by the Company for Cause,
each option held by such holder shall terminate automatically on the effective
date of such holder's termination of employment or service.
III. PROVISIONS RELATING TO NON-EMPLOYEE DIRECTORS
3.1 Eligibility. Each Non-Employee Director shall be granted options to
purchase shares of Common Stock in accordance with this Section III. All
options granted under this Section III shall constitute Non-Statutory Stock
Options.
3.2 Automatic Grants of Stock Options. Each Non-Employee Director shall
be granted Non-Statutory Stock Options as follows:
(a) Time of Grants; Number of Shares. Automatic grants of
Non-Statutory Stock Options shall be made on the dates and with respect to the
number of shares of Common Stock specified below:
(i) Each person who is first elected or first begins to serve as a
Non-Employee Director, other than by reason of termination of employment, on
or after the annual meeting of stockholders of the Company to be held in 2002
shall automatically be granted, on the date of such person's initial election
or commencement of service as a Non-Employee Director, an option to purchase
20,000 shares of Common Stock.
(ii) On the date of the 2002 annual meeting of stockholders of the
Company and, thereafter, on the date of each annual meeting of stockholders of
the Company, each person who is a Non-Employee Director immediately after such
annual meeting of stockholders shall be granted an option to purchase 10,000
shares of Common Stock (which number shall be prorated if such Non-Employee
Director was first elected or began to serve as a Non-Employee Director after
the date more recent than that of the previous annual meeting of
stockholders).
Such options shall be granted at a purchase price per share equal to
100% of the Fair Market Value of the Common Stock on the date of grant of such
option.
(b) Option Period and Exercisability. Except as otherwise provided
herein, each option granted under this Section 3.2 shall become exercisable
(i) on and after the first anniversary of its date of grant with respect to
one-fifth of the number of shares of Common Stock subject to such option on
its date of grant and (ii) on and after each subsequent anniversary of its
date of grant, through and including the fifth anniversary of its date of
grant, with respect to an additional one-fifth of the number of shares of
Common Stock subject to such option on its date of grant. Each option granted
under this Section 3.2 shall expire 10 years after its date of grant. An
exercisable option,
38
or portion thereof, may be exercised in whole or in part only with respect to
whole shares of Common Stock. Options granted under this Section 3.2 shall be
exercisable in accordance with Section 2.2(c).
(c) Termination of Directorship.
(i) Disability. If the holder of an option granted under this Section
3.2 ceases to be a director of the Company by reason of Disability, each such
option held by such holder shall be fully exercisable and may thereafter be
exercised by such holder (or such holder's legal representative or similar
person) until and including the earlier to occur of (A) the date which is 3
years after the effective date of such holder's ceasing to be a director and
(B) the expiration date of the term of such option.
(ii) Retirement. If the holder of an option granted under this
Section 3.2 ceases to be a director of the Company by reason of retirement
after a minimum of 10 years of continuous service as a director of the Company
("Retirement as a Director"), each such option held by such holder (A) shall,
to the extent not exercisable as of the effective date of the optionee's
Retirement as a Director, become exercisable in accordance with the vesting
provisions set forth in the Agreement relating to such option and (B) upon
becoming exercisable may be exercised by such optionee (or such optionee's
legal representative or similar person) until and including the earlier to
occur of (x) the date which is five years after the effective date of such
holder's Retirement as a Director and (y) the expiration date of the term of
such option.
(iii) Death. If the holder of an option granted under this Section
3.2 ceases to be a director of the Company by reason of death, each such
option held by such holder shall be fully exercisable on the date of such
holder's death and may thereafter be exercised by such holder's executor,
administrator, legal representative, beneficiary or similar person until and
including the earlier to occur of (A) the date which is three years after the
date of death and (B) the expiration date of the term of such option.
(iv) Other Termination. If the holder of an option granted under this
Section 3.2 ceases to be a director of the Company for any reason other than
Disability, Retirement as a Director, death or for Cause, each such option
held by such holder shall be exercisable only to the extent such option is
exercisable on the effective date of such holder's ceasing to be a director
and may thereafter be exercised by such holder (or such holder's legal
representative or similar person) until and including the earlier to occur of
(A) the date which is three years after the effective date of such holder's
ceasing to be a director and (B) the expiration date of the term of such
option.
(v) Death Following Termination of Directorship. If the holder of an
option granted under this Section 3.2 dies during the period set forth in
Section 3.2(c)(i), Section 3.2(c)(ii) or Section 3.2(c)(iv), each such option
held by such holder shall be exercisable only to the extent that such option
is exercisable on the date of the holder's death and may thereafter be
exercised by such holder's executor, administrator, legal representative,
beneficiary or similar person until and including the earlier to occur of
(A) the date which is the later of (x) the date which is one year after the date
of death and (y) the date which is three years after the effective date of
such holder's ceasing to be a director, in the case of death during the period
set forth in Section 3.2(c)(i) or 3.2(c)(iv) or the date which is five years
after the effective date of such holder's ceasing to be a director in the case
of death during the period set forth in Section 3.2(c)(ii), and (B) the
expiration date of the term of such option.
(vi) Cause. Notwithstanding anything to the contrary in this Plan or
in any Agreement relating to an option, if the holder of an option granted
under Section 3.2 ceases to be a director of the Company due to Cause, each
option held by such holder shall terminate automatically on the effective date
of such holder's ceasing to be a director of the Company.
(d) Applicability of Provisions. Sections 3.2(a), (b) and (c) shall
apply with respect to any and all options granted to Non-Employee Directors
under this Plan on or after January 1, 2002, and the terms of Article III of
this Plan, as in effect prior to such date, shall apply to any and all options
granted to Non-Employee Directors under this
39
Plan prior to such date, provided that no options shall have been granted to
Non-Employee Directors on the first trading day of 2002.
3.3 Automatic Grant of Stock Options in Lieu of Fees. Each Non-Employee
Director may from time to time elect, in accordance with procedures to be
specified by the Committee, to receive in lieu of all or part of the annual
cash retainer fee that would otherwise be payable to such Non-Employee
Director, on the date of each annual meeting of stockholders, commencing with
the annual meeting of stockholders to be held in 2002, during the period that
such election is in effect, options having the terms (other than the number of
shares subject to grant) described in Section 3.2 to purchase shares of Common
Stock having a value on the date of grant equal to the foregone amount of such
retainer fee, determined in accordance with the Black-Scholes valuation model.
3.4 Discretionary Grants of Stock Options. The Committee may, in its
discretion, grant additional options to purchase shares of Common Stock
("Discretionary Director Options") to all Non-Employee Directors or to any one
or more of them. Each Discretionary Director Option shall be subject to the
following terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the terms of this Plan, as the Committee
shall deem advisable:
(a) Number of Shares and Purchase Price. The number of shares of
Common Stock subject to a Discretionary Director Option and the purchase price
per share of Common Stock purchasable upon exercise of the option shall be
determined by the Committee; provided, however, that the purchase price per
share of Common Stock purchasable upon exercise of the option shall not be
less than 100% of the Fair Market Value of a share of Common Stock on the date
of grant of such option.
(b) Exercise Period and Exercisability. The period during which a
Discretionary Director Option may be exercised shall be determined by the
Committee. The Committee may, in its discretion, establish performance
measures which shall be satisfied or met as a condition to the grant of a
Discretionary Director Option or to the exercisability of all or a portion of
a Discretionary Director Option. The Committee shall determine whether a
Discretionary Director Option shall become exercisable in cumulative or
non-cumulative installments and in part or in full at any time. An exercisable
Director Discretionary Option, or portion thereof, may be exercised only with
respect to whole shares of Common Stock. Each Discretionary Director Option
shall be exercisable in accordance with Section 2.2(c).
(c) Termination of Directorship. All of the terms relating to the
exercise, cancellation or other disposition of a Discretionary Director Option
upon a termination of service as a director of the Company of the recipient of
a Discretionary Director Option, whether by reason of Disability, Retirement
as a Director, death or any other reason, shall be determined by the
Committee.
IV. GENERAL
4.1 Effective Date and Term of Plan. This Plan, as amended through April 2,
2002, shall be submitted to the stockholders of the Company for approval and,
if approved by the affirmative vote of a majority of the shares of Common
Stock present in person or represented by proxy at the 2002 annual meeting of
stockholders, shall become effective as of January 1, 2002. No option may be
exercised prior to the date of such stockholder approval. This Plan shall
terminate on March 16, 2010, unless terminated earlier by the Board.
Termination of this Plan shall not affect the terms or conditions of any
option granted prior to termination.
4.2 Amendments. The Board may amend this Plan as it shall deem advisable,
subject to any requirement of stockholder approval required by applicable law,
rule or regulation, including Section 162(m) and Section 422 of the Code;
provided, however, that no amendment shall be made without stockholder
approval if such amendment would (a) increase the maximum number of shares of
Common Stock available under this Plan (subject to Section 4.7), (b) effect
any change inconsistent with Section 422 of the Code, (c) extend the term of
this Plan or (d) permit the
40
granting of a stock option having a purchase price per share of Common Stock
of less than 100% of the Fair Market Value of a share of Common Stock on the
date of grant of such stock option. No amendment may impair the rights of a
holder of an outstanding option without the consent of such holder.
4.3 Agreement. No option shall be valid until an Agreement is executed by the
Company and the optionee and, upon execution by the Company and the optionee
and delivery of the Agreement to the Company, such option shall be effective
as of the effective date set forth in the Agreement.
4.4 Non-Transferability. Unless otherwise specified in the Agreement relating
to an option, no option hereunder shall be transferable other than by will or
the laws of descent and distribution or pursuant to beneficiary designation
procedures approved by the Company. Except to the extent permitted by the
foregoing sentence, each option may be exercised during the optionee's
lifetime only by the optionee or the optionee's legal representative or
similar person. Except as permitted by the second preceding sentence, no
option hereunder shall be sold, transferred, assigned, pledged, hypothecated,
encumbered or otherwise disposed of (whether by operation of law or otherwise)
or be subject to execution, attachment or similar process. Upon any attempt to
so sell, transfer, assign, pledge, hypothecate, encumber or otherwise dispose
of any option hereunder, such option and all rights thereunder shall
immediately become null and void.
4.5 Tax Withholding. The Company shall have the right to require, prior to
the issuance or delivery of any shares of Common Stock, payment by the optionee
of any Federal, state, local or other taxes which may be required to be withheld
or paid in connection with an option hereunder. An Agreement may provide that
(i) the Company shall withhold whole shares of Common Stock which would
otherwise be delivered upon exercise of the option having an aggregate Fair
Market Value determined as of the date the obligation to withhold or pay taxes
arises in connection with the option (the "Tax Date") in the amount necessary
to satisfy any such obligation or (ii) the optionee may satisfy any such
obligation by any of the following means: (A) a cash payment to the Company,
(B) delivery (either actual delivery or by attestation procedures established
by the Company) to the Company of previously owned whole shares of Common
Stock having an aggregate Fair Market Value determined as of the Tax Date,
equal to the amount necessary to satisfy any such obligation, (C) authorizing
the Company to withhold whole shares of Common Stock which would otherwise be
delivered upon exercise of the option having an aggregate Fair Market Value
determined as of the Tax Date, equal to the amount necessary to satisfy any
such obligation, (D) a cash payment by a broker-dealer acceptable to the
Company to whom the optionee has submitted an irrevocable notice of exercise
or (E) any combination of (A), (B) and (C), in each case to the extent set
forth in the Agreement relating to the option. Shares of Common Stock to be
delivered or withheld may not have an aggregate Fair Market Value in excess of
the amount determined by applying the minimum statutory withholding rate. Any
fraction of a share of Common Stock which would be required to satisfy such an
obligation shall be disregarded and the remaining amount due shall be paid in
cash by the optionee.
4.6 Restrictions on Shares. Each option hereunder shall be subject to the
requirement that if at any time the Company determines that the listing,
registration or qualification of the shares of Common Stock subject to such
option upon any securities exchange or under any law, or the consent or
approval of any governmental body, or the taking of any other action is
necessary or desirable as a condition of, or in connection with, the exercise
of such option or the delivery of shares thereunder, such option shall not be
exercised and such shares shall not be delivered unless such listing,
registration, qualification, consent, approval or other action shall have been
effected or obtained, free of any conditions not acceptable to the Company.
The Company may require that certificates evidencing shares of Common Stock
delivered pursuant to any option hereunder bear a legend indicating that the
sale, transfer or other disposition thereof by the holder is prohibited except
in compliance with the Securities Act of 1933, as amended, and the rules and
regulations thereunder.
4.7 Adjustment. In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off or other similar change in capitalization or
event, or any distribution to holders of Common Stock other than a regular
cash dividend, the number and class of securities available under this Plan,
the maximum number and class of securities with respect to which options may
be granted during any calendar year to any person, the number (including on
its date of grant for purposes of determining
41
exercisability pursuant to Section 3.2(b)) and class of securities subject to
each outstanding option, the purchase price per security, and the number and
class of securities subject to each option to be granted to Non-Employee
Directors pursuant to Article III shall be appropriately adjusted by the
Committee, such adjustments to be made in the case of outstanding options
without an increase in the aggregate purchase price. The decision of the
Committee regarding any such adjustment shall be final, binding and
conclusive. If any adjustment would result in a fractional security being (a)
available under this Plan, such fractional security shall be disregarded, or
(b) subject to an option under this Plan, the Company shall pay the optionee,
in connection with the first exercise of the option in whole or in part
occurring after such adjustment, an amount in cash determined by multiplying
(A) the fraction of such security (rounded to the nearest hundredth) by (B)
the excess, if any, of (x) the Fair Market Value on the exercise date over (y)
the exercise price of the option.
4.8 Change in Control.
(a)(1) Notwithstanding any provision in this Plan or any Agreement, in
the event of a Change in Control pursuant to Section (b)(3) or (4) below in
connection with which the holders of Common Stock receive shares of common stock
that are registered under Section 12 of the Exchange Act, all outstanding
options shall immediately become exercisable in full and there shall be
substituted for each share of Common Stock available under this Plan, whether or
not then subject to an outstanding option, the number and class of shares into
which each outstanding share of Common Stock shall be converted pursuant to such
Change in Control. In the event of any such substitution, the purchase price per
share of each option shall be appropriately adjusted by the Committee (whose
determination shall be final, binding and conclusive), such adjustments to be
made without an increase in the aggregate purchase price or base price.
(2) Notwithstanding any provision in this Plan or any Agreement, in the
event of a Change in Control pursuant to Section (b)(1) or (2) below, or in the
event of a Change in Control pursuant to Section (b)(3) or (4) below in
connection with which the holders of Common Stock receive consideration other
than shares of common stock that are registered under Section 12 of the Exchange
Act, each outstanding option shall be surrendered to the Company by the holder
thereof, and each such option shall immediately be canceled by the Company, and
the holder shall receive, within ten days of the occurrence of a Change in
Control, a cash payment from the Company in an amount equal to the number of
shares of Common Stock then subject to such option, multiplied by the excess, if
any, of (i) the greater of (A) the highest per share price offered to
stockholders of the Company in any transaction whereby the Change in Control
takes place or (B) the Fair Market Value of a share of Common Stock on the date
of occurrence of the Change in Control over (ii) the purchase price per share of
Common Stock subject to the option. The Company may, but is not required to,
cooperate with any person who is subject to Section 16 of the Exchange Act to
assure that any cash payment in accordance with the foregoing to such person is
made in compliance with Section 16 and the rules and regulations thereunder.
(b) "Change in Control" shall mean
(1) the acquisition by any individual, entity or group (a "Person"),
including any "person" within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act , of beneficial ownership within the meaning of Rule 13d-3
promulgated under the Exchange Act, of both (x) 25% or more of the combined
voting power of the then outstanding securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company Voting
Securities") and (y) combined voting power of the Outstanding Company Voting
Securities equal to or in excess of the combined voting power of the Outstanding
Company Voting Securities held by the Krasny Family (as hereinafter defined);
excluding, however, the following: (A) any acquisition directly from the Company
or any member of the Krasny Family (excluding any acquisition resulting from the
exercise of an exercise, conversion or exchange privilege unless the security
being so exercised, converted or exchanged was acquired directly from the
Company or from any member of the Krasny Family), (B) any acquisition by the
Company , any member of the Krasny Family or any group that includes a member of
the Krasny Family, (C) any acquisition by an employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation controlled by
the Company, or (D) any acquisition by any corporation pursuant to a
reorganization, merger or consolidation involving the Company, if, immediately
after such reorganization, merger or consolidation, each of the conditions
described in
42
clauses (i), (ii) and (iii) of subsection (3) of this Section 4.8(b) shall be
satisfied, provided that, for purposes of clause (B), if any Person (other
than the Company or any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company or any
member of the Krasny Family) shall, by reason of an acquisition of Outstanding
Company Voting Securities by the Company, become the beneficial owner of both
(x) 25% or more of the Outstanding Company Voting Securities and (y) combined
voting power of the Outstanding Company Voting Securities equal to or in
excess of the combined voting power of the Outstanding Company Voting
Securities held by the Krasny Family, and such Person shall, after such
acquisition of Outstanding Company Voting Securities by the Company, become
the beneficial owner of any additional Outstanding Company Voting Securities
and such beneficial ownership is publicly announced, such additional
beneficial ownership shall constitute a Change in Control;
(2) individuals who, as of the date of approval of this Plan by the
stockholders of the Company, constitute the Board (the "Incumbent Board") cease
for any reason to constitute at least a majority of such Board; provided,
however, that any individual who becomes a director of the Company subsequent to
the date of approval of this Plan by the stockholders of the Company whose
election, or nomination for election by the Company's stockholders, was approved
by the vote of at least a majority of the directors then comprising the
Incumbent Board shall be deemed a member of the Incumbent Board; and provided
further, that no individual who was initially elected as a director of the
Company as a result of an actual or threatened solicitation by a person or group
for the purpose of opposing a solicitation by any other person or group with
respect to the election or removal of directors, or any other actual or
threatened solicitation of proxies or consents by or on behalf of any Person
other than the Board shall be deemed a member of the Incumbent Board;
(3) consummation of a reorganization, merger or consolidation unless,
in any such case, immediately after such reorganization, merger or
consolidation, (i) more than 50% of the combined voting power of the then
outstanding securities of the corporation resulting from such reorganization,
merger or consolidation entitled to vote generally in the election of directors
is then beneficially owned, directly or indirectly, by all or substantially all
of the individuals or entities who were the beneficial owners, respectively, of
the Outstanding Company Voting Securities immediately prior to such
reorganization, merger or consolidation, (ii) no Person (other than the Company,
any employee benefit plan (or related trust) sponsored or maintained by the
Company or the corporation resulting from such reorganization, merger or
consolidation (or any corporation controlled by the Company) and any Person
which beneficially owned, immediately prior to such reorganization, merger or
consolidation, directly or indirectly, 25% or more of the Outstanding Company
Voting Securities) beneficially owns, directly or indirectly, both (x) 25% or
more of the combined voting power of the then outstanding securities of such
corporation entitled to vote generally in the election of directors and (y)
combined voting power of the then outstanding securities of such corporation
equal to or in excess of the combined voting power of the then outstanding
securities of such corporation held by the Krasny Family and (iii) at least a
majority of the members of the board of directors of the corporation resulting
from such reorganization, merger or consolidation were members of the Incumbent
Board at the time of the execution of the initial agreement or action of the
Board providing for such reorganization, merger or consolidation; or
(4) consummation of (i) a plan of complete liquidation or dissolution
of the Company or (ii) the sale or other disposition of all or substantially all
of the assets of the Company other than to a corporation with respect to which,
immediately after such sale or other disposition, (A) more than 50% of the
combined voting power of the then outstanding securities thereof entitled to
vote generally in the election of directors is then beneficially owned, directly
or indirectly, by all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding Company Voting
Securities immediately prior to such sale or other disposition, (B) no Person
(other than the Company, any employee benefit plan (or related trust) sponsored
or maintained by the Company or such corporation (or any corporation controlled
by the Company) and any Person which beneficially owned, immediately prior to
such sale or other disposition, directly or indirectly, 25% or more of the
Outstanding Company Voting Securities) beneficially owns, directly or
indirectly, both (x) 25% or more of the combined voting power of the then
outstanding securities thereof entitled to vote generally in the election of
directors and (y) combined voting power of the then outstanding securities
thereof equal to or in excess of the combined voting power of the then
outstanding securities thereof held by the Krasny Family and (C) at least a
majority of the
43
members of the board of directors thereof were members of the Incumbent Board
at the time of the execution of the initial agreement or action of the Board
providing for such sale or other disposition.
(c) "Krasny Family" shall mean Michael P. Krasny, Janet Krasny, any
descendant of Michael P. Krasny or Janet Krasny or the spouse of any such
descendant (collectively, the "Krasny Family Group"), any trust, partnership or
other entity for the benefit of any member of the Krasny Family Group, the
estate of any member of the Krasny Family Group or any charitable organization
established by any member of the Krasny Family Group. No Right of Participation
or Employment. No person shall have any right to participate in this Plan.
Neither this Plan nor any option granted hereunder shall confer upon any person
any right to continued employment by the Company, any Subsidiary or any
affiliate of the Company or affect in any manner the right of the Company, any
Subsidiary or any affiliate of the Company to terminate the employment of any
person at any time without liability hereunder.
4.9 Rights as Stockholder. No person shall have any rights as a stockholder of
the Company with respect to any shares of Common Stock which are subject to an
option hereunder until such person becomes a stockholder of record with
respect to such shares of Common Stock.
4.10 Designation of Beneficiary. If permitted by the Company, an optionee may
file with the Committee a written designation of one or more persons as such
optionee's beneficiary or beneficiaries (both primary and contingent) in the
event of the optionee's death. To the extent an outstanding option granted
hereunder is exercisable, such beneficiary or beneficiaries shall be entitled
to exercise such option.
Each beneficiary designation shall become effective only when filed
in writing with the Committee during the optionee's lifetime on a form
prescribed by the Committee. The spouse of a married optionee domiciled in a
community property jurisdiction shall join in any designation of a beneficiary
other than such spouse. The filing with the Committee of a new beneficiary
designation shall cancel all previously filed beneficiary designations.
If an optionee fails to designate a beneficiary, or if all designated
beneficiaries of an optionee predecease the optionee, then each outstanding
option hereunder held by such optionee, to the extent exercisable, may be
exercised by such optionee's executor, administrator, legal representative or
similar person.
4.12 Governing Law. This Plan, each option hereunder and the related
Agreement, and all determinations made and actions taken pursuant thereto, to
the extent not otherwise governed by the Code or the laws of the United
States, shall be governed by the laws of the State of Illinois and construed
in accordance therewith without giving effect to principles of conflicts of
laws.
4.13 Foreign Employees. Without amending this Plan, the Committee may grant
options to eligible persons who are subject to laws of foreign countries or
jurisdictions on such terms and conditions different from those specified in
this Plan as may in the judgment of the Committee be necessary or desirable to
foster and promote achievement of the purposes of this Plan and, in
furtherance of such purposes the Committee may make such modifications,
amendments, procedures, subplans and the like as may be necessary or advisable
to comply with provisions of laws of other countries or jurisdictions in which
the Company or its Subsidiaries operates or has employees.
44
Exhibit B
EMPLOYEE STOCK PURCHASE PLAN
----------------------------
1. Purpose. The purpose of the CDW Computer Centers, Inc.
Employee Stock Purchase Plan (the "Plan") is to provide employees of CDW
Computer Centers, Inc., an Illinois corporation (the "Company"), and its
Subsidiary Companies (as defined below) added incentive to remain employed by
such companies and to encourage increased efforts to promote the best
interests of such companies by permitting eligible employees to purchase
shares of common stock, par value $.01 per share, of the Company ("Common
Stock") at below-market prices. The Plan is intended to qualify as an
"employee stock purchase plan" under section 423 of the Internal Revenue Code
of 1986, as amended (the "Code"). For purposes of the Plan, the term
"Subsidiary Companies" shall mean all corporations which are subsidiary
corporations (within the meaning of Section 424(f) of the Code) and of which
the Company is the common parent. The Company and its Subsidiary Companies
that, from time to time, adopt the Plan are sometimes hereinafter called
collectively the "Participating Companies."
2. Eligibility. Participation in the Plan shall be open to each
employee of the Participating Companies who has been continuously employed by
the Participating Companies for at least 90 consecutive days (an "Eligible
Employee").
No right to purchase Common Stock hereunder shall accrue under
the Plan in favor of any person who is not an Eligible Employee as of the
first day of a Purchase Period (as defined in Section 3). For purposes of the
Plan, the term "employee" shall not include any individual who performs
services for any of the Participating Companies, pursuant to an agreement
(written or oral) that classifies such individual's relationship with the
Participating Company as other than a common law employee of the Participating
Company, regardless of whether such individual is at any time determined to be
a common law employee of the Participating Company.
Notwithstanding anything contained in the Plan to the contrary,
no Eligible Employee shall acquire a right to purchase Common Stock hereunder
if (i) immediately after receiving such right, such employee would own 5% or
more of the total combined voting power or value of all classes of stock of
the Company or any Subsidiary Company (including any stock attributable to
such employee under section 424(d) of the Code), or (ii) for any calendar year
such right would permit such employee's aggregate rights to purchase stock
under all employee stock purchase plans of the Company and its Subsidiary
Companies exercisable during such calendar year to accrue at a rate which
exceeds $25,000 of fair market value of such stock for such calendar year.
Further notwithstanding anything contained in the Plan to the
contrary, the maximum number of shares that may be bought by any Eligible
Employee during any Purchase Period shall not exceed 325, subject to
adjustment in the same manner described in Section 12, in the case of the
occurrence of any of the events described in Section 12.
3. Effective Date of Plan; Purchase Periods. The Plan shall
become effective on July 1, 2002 or on such later date as may be specified by
the Committee (as defined in Section 11). The Plan shall cease to be effective
unless, within 12 months before or after the date of its adoption by the Board
of Directors of the Company (the "Board"), it has been approved by the
shareholders of the Company.
A "Purchase Period" shall consist of the three month period
beginning on the effective date and each three month period beginning three
months, six months, nine months and twelve months after the effective date as
well as the three month periods beginning on the anniversaries of such three
month periods and prior to termination of the Plan.
45
4. Basis of Participation. (A) Payroll Deduction. Subject to
compliance with applicable rules prescribed by the Committee, each Eligible
Employee shall be entitled to enroll in the Plan as of the first day of any
Purchase Period which begins on or after such employee has become an Eligible
Employee.
To enroll in the Plan, an Eligible Employee shall make a request
to the Company or its designated agent at the time and in the manner specified
by the Committee, specifying the amount of payroll deduction to be applied to
the compensation paid to the employee by the employee's employer while the
employee is a participant in the Plan. The amount of each payroll deduction
specified in such request for each such payroll period shall be a whole
percentage of a participant's compensation, unless otherwise determined by the
Committee to be a whole dollar amount, in either case not to exceed 15%, or
such lesser percentage as may be determined by the Committee, of the
participant's compensation (before withholding or other deductions) paid to
him or her during the Purchase Period by any of the Participating Companies.
Subject to compliance with applicable rules prescribed by the Committee, the
request shall become effective on the first day of the Purchase Period
following the day the Company or its designated agent receives such request.
Payroll deductions (and any other amount paid under the Plan)
shall be made for each participant in accordance with such participant's
request until such participant's participation in the Plan terminates, such
participant's payroll deductions are suspended, such participant's request is
revised or the Plan terminates, all as hereinafter provided.
A participant may change the amount of his or her payroll
deduction effective as of the first day of any Purchase Period by so directing
the Company or its designated agent at the time and in the manner specified by
the Committee. A participant may not change the amount of his or her payroll
deduction effective as of any date other than the first day of a Purchase
Period, except that a participant may elect to suspend his or her payroll
deduction under the Plan as provided in Section 7.
Payroll deductions for each participant shall be credited to a
purchase account established on behalf of the participant on the books of the
participant's employer or such employer's designated agent (a "Purchase
Account"). At the end of each Purchase Period, the amount in each
participant's Purchase Account will be applied to the purchase of the number
of whole shares of Common Stock determined by dividing such amount by the
Purchase Price (as defined in Section 5) for such Purchase Period. No interest
shall accrue at any time for any amount credited to a Purchase Account of a
participant.
(b) Other Methods of Participation. The Committee may, in its
discretion, establish additional procedures whereby Eligible Employees may
participate in the Plan by means other than payroll deduction, including, but
not limited to, delivery of funds by participants in a lump sum or automatic
charges to participants' bank accounts. Such other methods of participating
shall be subject to such rules and conditions as the Committee may establish.
The Committee may at any time amend, suspend or terminate any participation
procedures established pursuant to this paragraph without prior notice to any
participant or Eligible Employee.
5. Purchase Price. The purchase price (the "Purchase Price") per
share of Common Stock hereunder for any Purchase Period (as defined in Section
3) shall be the lesser of 85% of the fair market value of a share of Common
Stock on the first day of such Purchase Period and 85% of the fair market
value of a share of Common Stock on the last day of such Purchase Period. If
such sum results in a fraction of one cent, the Purchase Price shall be
increased to the next higher full cent. For purposes of the Plan, the fair
market value of a share of Common Stock on a given day shall be the closing
transaction price of a share of Common Stock as reported on The NASDAQ Stock
Market on the date as of which such value is being determined or, if there
shall be no reported transactions on such date, on the next preceding date for
which a transaction was reported. In no event, however, shall the Purchase
Price be less than the par value of a share of Common Stock.
6. Issuance of Stock. The Common Stock purchased by each
participant shall be posted to such participant's Purchase Account as
46
soon as practicable after, and credited to such participant's Purchase Account
as of, the last day of each Purchase Period. Except as provided in Section 7
and Section 8, a participant will be issued his or her shares when his or her
participation in the Plan is terminated, the Plan is terminated or upon
request, but, in the last case, only in denominations of at least 25 shares.
After the close of each Purchase Period, information will be
made available to each participant regarding the entries made to such
participant's Purchase Account, the number of shares of Common Stock purchased
and the applicable Purchase Price. In the event that the maximum number of
shares of Common Stock are purchased by the participant for the Purchase
Period and cash remains credited to the participant's Purchase Account, such
cash shall be delivered as soon as practicable to such participant. For
purposes of the preceding sentence, the maximum number of shares of Common
Stock that may be purchased by a participant for a Purchase Period shall be
determined under Section 2.
The Committee may permit or require that shares be deposited
directly with a broker designated by the Committee or to a designated agent of
the Company, and the Committee may use electronic or automated methods of
share transfer. The Committee may require that shares be retained with such
broker or agent for a designated period of time and/or may establish other
procedures to permit tracking of disqualifying dispositions of such shares.
7. Termination of Participation. (a) Suspension of Payroll
Deductions. A participant may elect at the time and in the manner specified by
the Committee to suspend his or her participation in the Plan, provided such
election is received by the Company or its designated agent prior to the date
specified by the Committee for suspension of participation with respect to the
Purchase Period for which such suspension is to be effective. Upon any
suspension of participation, the participant's payroll deductions shall cease,
and if the participant elects, the cash credited to such participant's
Purchase Account on the date of such suspension shall be delivered as soon as
practicable to such participant. If the participant does not elect to receive
such cash, such cash shall be applied to the purchase of shares of Common
Stock, as described in Sections 4, 5 and 6 hereof. A participant who elects to
suspend participation in the Plan shall be permitted to resume participation
in the Plan by making a new request to participate at the time and in the
manner described in Section 4 hereof.
(b) Termination of Participation. If the participant dies,
terminates employment with the Participating Companies for any reason, or
otherwise ceases to be an Eligible Employee, such participant's participation
in the Plan shall immediately terminate. Upon such terminating event, the cash
credited to such participant's Purchase Account on the date of such
termination shall be delivered as soon as practicable to such participant or
his or her legal representative, as the case may be, and certificates for the
number of full shares of Common Stock held, for his or her benefit and the
cash equivalent for any fractional share so held, shall be delivered to the
participant or his or her legal representative, as the case may be, as soon as
practicable after such termination. Such cash equivalent shall be determined
by multiplying the fractional share by the fair market value of a share of
Common Stock on the day immediately preceding such election to receive such
shares determined as provided in Section 5.
8. Termination or Amendment of the Plan. The Company, by action
of the Board, may terminate the Plan at any time, in which case notice of such
termination shall be given to all participants, but any failure to give such
notice shall not impair the effectiveness of the termination.
Without any action being required, the Plan shall terminate in
any event when the maximum number of shares of Common Stock to be sold under
the Plan (as provided in Section 12) has been purchased. Such termination
shall not impair any rights which under the Plan shall have vested on or prior
to the date of such termination. If at any time the number of shares of Common
Stock remaining available for purchase under the Plan are not sufficient to
satisfy all then-outstanding purchase rights, the Board or Committee may
determine an equitable basis of apportioning available shares of Common Stock
among all participants.
47
The Committee may amend the Plan from time to time in any
respect for any reason; provided, however, no such amendment shall (a)
materially adversely affect any purchase rights outstanding under the Plan
with respect to the Purchase Period in which such amendment is to be effected,
(b) increase the maximum number of shares of Common Stock which may be
purchased under the Plan, (c) decrease the Purchase Price of a share of Common
Stock for any Purchase Period below the lesser of 85% of the fair market value
thereof on the first day of such Purchase Period and 85% of such fair market
value on the last day of such Purchase Period or (d) adversely affect the
qualification of the Plan under section 423 of the Code.
Upon termination of the Plan, one or more certificates for the
number of full shares of Common Stock held for each participant's benefit and
the cash equivalent of any fractional share so held, determined as provided in
Section 7 shall be delivered to such participant as soon as practicable after
the Plan terminates, and, except as otherwise provided in Section 14, the
cash, if any, credited to the such participant's Purchase Account, shall also
be distributed to such participant as soon as practicable after the Plan
terminates.
9. Non-Transferability. Rights acquired under the Plan are not
transferable and may be exercised only by a participant.
10. Shareholder's Rights. No Eligible Employee or participant
shall by reason of the Plan have any rights of a shareholder of the Company
until he or she shall acquire a share of Common Stock as herein provided.
11. Administration of the Plan. The Plan shall be administered
by a committee (the "Committee") designated by the Board. In addition to the
power to amend the Plan pursuant to Section 8, the Committee shall have full
power and authority to: (i) interpret and administer the Plan and any
instrument or agreement entered into under the Plan; (ii) establish such rules
and regulations and appoint such agents as it shall deem appropriate for the
proper administration of the Plan; and (iii) make any other determination and
take any other action that the Committee deems necessary or desirable for
administration of the Plan. Decisions of the Committee shall be final,
conclusive and binding upon all persons, including the Company, any
participant and any other employee of the Company.
The Plan shall be administered so as to ensure that all participants
have the same rights and privileges as are provided by section 423(b)(5) of the
Code.
12. Maximum Number of Shares. The maximum number of shares of
Common Stock which may be purchased under the Plan is 500,000, subject to
adjustment as hereinafter set forth. Shares of Common Stock sold hereunder may
be treasury shares, authorized and unissued shares, shares purchased in the
open market (on an exchange or in negotiated transactions) or any combination
thereof. If the Company shall, at any time after the effective date of the
Plan, change its issued Common Stock into an increased number of shares, with
or without par value, through a stock dividend or a stock split, or into a
decreased number of shares, with or without par value, through a combination
of shares, then, effective with the record date for such change, the maximum
number of shares of Common Stock which thereafter may be purchased under the
Plan shall be the maximum number of shares which, immediately prior to such
record date, remained available for purchase under the Plan proportionately
increased, in case of such stock dividend or stock split, or proportionately
decreased in case of such combination of shares.
13. Miscellaneous. Except as otherwise expressly provided
herein, (i) any request, election or notice under the Plan from an Eligible
Employee or participant shall be transmitted or delivered to the Company or
its designated agent and, subject to any limitations specified in the Plan,
shall be effective when so delivered and (ii) any request, notice or other
communication from the Company or its designated agent that is transmitted or
delivered to Eligible Employees or participants shall be effective when so
transmitted or delivered. The Plan, and the Company's obligation to sell and
deliver shares of Common Stock hereunder, shall be subject to all applicable
federal and state laws, rules and regulations, and to such approval by any
regulatory or governmental agency as may, in the opinion of counsel for the
Company, be required.
48
14. Change in Control. In the event of any Change in Control of
the Company, as defined below, the then current Purchase Period shall
thereupon end, the Committee, in its sole discretion, shall either direct that
the cash credited to all participants' Purchase Accounts be applied to
purchase shares pursuant to Sections 4, 5 and 6 or that such cash be returned
to participants and the Plan shall immediately thereafter terminate. For
purposes of this Section 14, "Change in Control" shall have the same meaning
as the definition of "Change in Control" set forth in the CDW 2000 Incentive
Stock Option Plan, as amended from time to time, or any successor plan
thereto.
49
CDW VOTE BY INTERNET - www.proxyvote.com
C/O AMERICAN STOCK TRANSFER AND TRUST Use the Internet to transmit your voting instructions
59 MAIDEN LANE and for electronic delivery of information up until 11:59
NEW YORK, NY 10038 P.M. Eastern Time the day before the cut-off date or
meeting date. Have your proxy card in hand when you
access the web site. You will be prompted to enter
your 12-digit Control Number which is located below
to obtain your records and to create an electronic voting
instruction form.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting
instructions up until 11:59 P.M. Eastern Time the day
before the cut-off date or meeting date. Have your proxy
card in hand when you call. You will be prompted to
enter your 12-digit Control Number which is located
below and then follow the simple instructions the Vote
Voice provides you.
VOTE BY MAIL
Mark, sign, and date your proxy card and return it in the
postage-paid envelope we have provided or return it to
CDW Computer Centers, Inc., c/o ADP, 51 Mercedes
Way, Edgewood, NY 11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: CDWCC1 KEEP THIS PORTION FOR YOUR RECORDS
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY
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CDW COMPUTER CENTERS, INC.
DIRECTORS
---------
Directors recommend: A vote for election of the following nominees: To withhold authority to vote,
For Withhold For All mark "For All Except" and write
1. 01-Michelle L. Collins, 02-Casey G. Cowell, 03-John A. Edwardson, All All Except the nominee's number on the line
04-Daniel S. Goldin, 05-Donald P. Jacobs, 06-Daniel B. Kass, [ ] [ ] [ ] below.
07-Michael P. Krasny, 08-Terry L. Lengfelder, 09-Brian E. Williams,
10-Gregory C. Zeman ---------------------------------
PROPOSALS
---------
For Against Abstain
2. Ratification of the selection of PricewaterhouseCoopers LLP as the independent accountants of CDW [ ] [ ] [ ]
3. Approval and ratification of the amendment to the CDW 2000 Incentive Stock Option Plan [ ] [ ] [ ]
4. Approval and ratification of the CDW Employee Stock Purchase Plan [ ] [ ] [ ]
*NOTE* Such other business as may properly come before the meeting or any adjournment thereof
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Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
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CDW COMPUTER CENTERS,INC.
Annual Meeting of Stockholders - May 22, 2002
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder(s) of CDW Computer Centers, Inc., an Illinois
Corporation, hereby acknowledge(s) receipt of the Joint Proxy
Statement/Prospectus dated April 12, 2002, and hereby appoint(s) Barbara A.
Klein and Christine A. Leahy and each of them, proxies and attorneys-in-fact,
with full power to each of substitution, on behalf and in the name of the
undersigned at the Annual Meeting of Stockholders of CDW Computer Centers, Inc.,
to be held May 22, 2002 at 6:00 p.m., Central Daylight Time, at 26125 North
Riverwoods Drive, Mettawa, Illinois 60045, and at any adjournment or
adjournments thereof, and to vote (including cumulatively, if required) all
shares of Common Stock which the undersigned would be entitled to vote if then
and there personally present, on all matters set forth on the reverse side.
PLEASE MARK, SIGN AND DATE THIS PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE.
(Continued, and to be signed and dated, on the reverse side.)
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