1
EXHIBIT 10 (jj)
NON-STATUTORY STOCK OPTION AGREEMENT
DATED SEPTEMBER 5, 1996
BETWEEN THE COMPANY AND
XXXXX X. XXXXXX
2
CDW COMPUTER CENTERS, INC.
NONSTATUTORY STOCK OPTION AGREEMENT
CDW Computer Centers, Inc. (the "Company") desiring to afford an
opportunity to the Grantee named below to purchase certain shares of the
Company's common stock, $.01 par value, to provide the Grantee with an added
incentive as an employee of the Company, hereby grants to Grantee, pursuant to
the terms hereof, an option to purchase the number of such shares optioned as
specified below, during the term ending at 5 o'clock p.m. (prevailing local
time at the Company's principal offices) on the expiration date of this Option
specified below, at the option exercise price specified below, subject to and
upon the following terms and conditions:
1. Identifying Provisions. As used in this Agreement, the following
terms shall have the following respective meanings:
(a) Grantee: Xxxxx X. Xxxxxx
(b) Date of grant: September 5, 1996
(c) Number of shares optioned: 25,000
(d) Option exercise price per share: $40.00
(e) Expiration date: September 5, 2016
2. Timing of Purchases. Subject to the other terms of this Agreement
regarding the exercisability of this Option, this Option may be exercised in
accordance with the following schedule:
This Option Shall Be Exercisable
With Respect to the Following
On Or After This Date Cumulative Number of Shares
--------------------- --------------------------------
January 1, 2000 6,250
January 1, 2001 6,250
January 1, 2002 12,500
3. Exercise: Payment For and Delivery of Stock. This Option may be
exercised by the Grantee or other person then entitled to exercise it by
giving written notice of exercise to the Company specifying the number of
shares to be purchased and the total purchase price, accompanied by a check
to the order of the Company in payment of such price, plus any
3
withholding for Federal or state income taxes. The Compensation and Stock Option
Committee (the "Committee") shall have the sole discretion to determine whether
such withholding shall be satisfied by a cash payment from Grantee or by
withholding shares having a fair market value equal to the amount of the
required withholding. "Fair market value" shall be determined using the
closing price of the Company's common stock quoted on the NASDAQ National Market
System as reported in the Wall Street Journal or such other reported value of
the Common Stock of the Company as shall be specified by the Committee, on the
date notice of exercise is tendered to the Company, or if such day is not a
trading day, then on the immediately preceding trading date. However, no such
withholding of stock shall occur unless the Company has been subject to the
requirements of Section 13(a) of the Securities Exchange Act of 1934 (the
"Exchange Act") for at least one year immediately prior to the exercise of the
Option, and the Company regularly releases its quarterly and annual summary
statements of sales and earnings for publication. Proceeds of cash or property
received by the Company from the sale of common stock pursuant to Options
granted under this Agreement will be used for general corporate purposes.
4. Alternative Payment Permitted. Notwithstanding the foregoing
provisions requiring payment by check, payment of such purchase price or any
portion thereof may be made by delivering to the Company shares of stock of the
same class as the shares then subject to this Option, such shares to be credited
toward such purchase price on the valuation basis set forth below, valued as of
the day immediately preceding the date the notice of exercise is delivered to
the Company, in which event the stock certificates evidencing the shares so to
be used shall accompany the notice of exercise and shall be duly endorsed or
accompanied by duly executed stock powers to transfer the same to the Company;
provided, however, that such payment in stock instead of cash shall not be
effective and shall be rejected by the Company if (i) the Company is then
prohibited from purchasing or acquiring shares of the class of its stock thus
tendered to it, or (ii) the right or power of the person exercising the Option
to deliver such shares in payment of said purchase price is subject to the prior
interests of any other person (excepting the Company), as indicated by legends
upon the certificate(s) or as known to the Company; if the Company rejects the
payment in stock, the tendered notice of exercise shall not be effective
hereunder unless within 10 business days after being notified of such rejection
the person exercising the Option pays the purchase price in acceptable form.
Fair market value of the common stock for purposes of this Paragraph 4
shall be determined in accordance with the provisions of Paragraph 3.
Notwithstanding the foregoing, the Company shall not be obligated to
accept payment of the exercise price pursuant to this Paragraph unless the
stock tendered as payment for the exercise price has been held by the Grantee
for at least six months. The Company also has the discretion to refuse any
methods of payment that would cause the Company to recognize a charge to its
earnings.
2
4
5. Restrictions on Exercise. The following additional provisions shall
apply to the exercise of this Option:
(a) If Grantee, who is not then subject to a Disability (as defined
below), voluntarily terminates employment with the Company, the exercisable
but unexercised portion of this Option shall continue to be exercisable by
the Grantee until the earlier of (i) the expiration date of such Option or
(ii) three months after the date of termination of employment; provided,
however, that if Grantee is terminated "for cause" (as defined below),
Grantee's right to exercise the exercisable but unexercised portion of this
Option shall terminate effective as of the time notice of termination is
given by the Company to Grantee. In either event, the unexercisable options
shall be forfeited as of the date of termination.
(b) If a Grantee terminates employment with the Company as a result
of a Disability (as defined below) ("Disabled Grantee"), any unexercised
portion of this Option held by the Disabled Grantee shall be exercisable in
full (including the portion of which, but for this provision, would not be
exercisable) by the Disabled Grantee until the earlier of (i) the expiration
date of such Option or (ii) the date one year after the date of termination
of employment.
(c) Following the death of the Grantee during such time as he or she
shall be employed by the Company, the unexercised portion of this Option at
the time of death shall be exercisable in full (including the portion which,
but for this provision, would not be exercisable) by the person or persons
entitled to do so under the will of the Grantee, or, if the Grantee shall
fail to make testamentary disposition of the Option or shall die intestate,
by the legal representative of the Grantee until the earlier of (i) the
expiration date of such Option or (ii) the date one year after the date of
death.
(d) For purposes of this Agreement, "for cause" shall include: (i)
the commission of a criminal act, fraud, gross negligence or willful
misconduct against, or in derogation of the interests of the Company; (ii)
divulging confidential information regarding the Company; (iii) interference
with the relationship between the Company and any major supplier or
customer; or (iv) the performance of any similar action that the Committee,
in its sole discretion, may deem to be sufficiently injurious to the
interests of the Company to constitute cause for termination.
(e) The time of cessation of employment and whether an authorized
leave of absence or absence on military or government service shall
constitute cessation of employment, for the purpose of this Agreement, shall
be determined by the Committee.
(f) "Disability" for purposes of this Agreement shall be defined as
follows:
(i) If Grantee becomes disabled while any unexercised Options
issued pursuant to this Agreement are outstanding by reason
of illness,
3
5
accident or any other cause, the Company shall have the
right to appoint a physician or physicians to (A) examine
Grantee at reasonable intervals from time to time in
connection with such disability and (B) deliver to the
Company: (I) a certificate ("Initial Certificate")
certifying whether or not such disability occurred and, if
so, the date on which it commenced ("Onset Date"); and (II)
if the condition or disability continues uninterrupted for a
one (1) year period beginning on the Onset Date and ending
on the one (1) year anniversary thereof, a certificate
("Final Certificate") certifying that fact. The Grantee
shall cooperate fully with the physician(s) as set forth in
either the Initial Certificate or the Final Certificate or
both and the Grantee shall have the right to appoint another
physician to examine the Grantee and determine the same
matters. If the physicians appointed by the Company and by
the Grantee do not agree, such physicians shall jointly
appoint a third physician to examine the Grantee and
determine the same matters. The determination of the third
physician shall be binding on the Company and the Grantee;
and
(ii) In determining whether the Grantee is disabled for purposes
of the Initial Certificate, the standard to be applied by
any physician appointed in accordance with this Subparagraph
shall be, at the Company's election, either of the
following: the Grantee will be deemed disabled if on the
applicable Onset Date (A) he or she is unable to render to
the Company services of substantially the kind and
nature, and to substantially the extent, being rendered by
him or her during the fiscal quarter next preceding such
Onset Date, or (B) his or her medical condition satisfies
such other standard of total disability as is to be applied
under any policy of insurance, the proceeds of which would
be payable to fund a claim or claims of disability with
respect to the Grantee. If more than one such policy is in
effect at the time of such physician's determination, the
Company shall designate which policy standard shall apply.
The standard used for purposes of the Initial Certificate
shall also be used for purposes of the Final Certificate.
(g) Grantee agrees that in the event that Grantee 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 of the Company at any time prior
to the expiration of the 12 month period following the date of termination
of employment with the Company: (i) all unexercised Options shall be
forfeited and (ii) any Option Proceeds shall be immediately due and payable
by the Grantee to the Company. For purposes of this Paragraph, "Competitor"
shall be any
4
6
entity or person which engages for any portion of its business in the
direct marketing of personal computer products to residents of the United
States including, but not limited to, sale by mail order. For purposes of
this Paragraph, "Option Proceeds" shall mean (i) the difference between (A)
the per share closing price of the Company's Common Stock as reported on the
Nasdaq Stock Market or such other reported value of the Common Stock as
shall be specified by the Committee at the date of exercise and (B) the per
share exercise price of the option, multiplied by (ii) the number of shares
acquired pursuant to any exercise of options issued under this Agreement
which occurs after the date 12 months prior to the date of termination of
employment with the Company. The remedy provided by this Paragraph shall be
in addition to and not in lieu of any rights or remedies which Company may
have against Grantee in respect of a breach by Grantee of any duty or
obligation to the Company.
6. Nontransferability. The Grantee may not transfer this Option except
by will or the laws of descent and distribution. This Option shall not be
otherwise transferred, assigned, pledged, hypothecated or disposed of in any
way, whether by operation of law or otherwise, and shall be exercisable during
the Grantee's lifetime only by the Grantee or his guardian or legal
representative. The designation of a beneficiary shall not constitute a
transfer.
7. Changes in Capital Structure. If the outstanding shares of Common
Stock of the Company are increased or decreased or changed into or exchanged for
a different number or kind of shares or other securities of the Company or of
another corporation by reason of any reorganization, merger, consolidation, plan
of exchange, recapitalization, reclassification, stock split-up, combination of
shares or dividend payable in shares, appropriate adjustment shall be made by
the Committee to the end that the Grantee's proportionate interest is maintained
as before the occurrence of such event. The Committee may also require that any
securities issued in respect of or in exchange for Shares issued hereunder that
are subject to restrictions be subject to similar restrictions. Notwithstanding
the foregoing, the Committee shall have no obligation to effect any adjustment
that would or might result in the issuance of fractional shares, and any
fractional shares resulting from any adjustment may be disregarded or provided
for in any manner determined by the Committee. Any such adjustments made by the
Committee shall be conclusive.
Subject to the provisions of Paragraph 8, if the Company shall be a
party to a transaction involving a sale of substantially all its assets, a
merger or a consolidation, this Option shall pertain and apply to the securities
to which the Grantee would have been entitled if the Grantee actually owned the
Shares subject to the Option immediately prior to the time any such transaction
became effective; provided, however, that any unexercised Options may be
canceled by the Company as of the effective date of any such transaction, by
giving notice to the Grantee of its intention to do so and by permitting the
exercise, during the thirty (30) day period preceding the effective date of such
transaction, of all partly or wholly unexercised Options in full (without regard
to installment exercise limitations).
5
7
In the case of dissolution of the Company, every Option outstanding
hereunder shall terminate; provided, however, that each Option holder shall have
thirty (30) days prior written notice of such event, during which time he or she
shall have a right to exercise his or her partly or wholly unexercised Options
(without regard to installment exercise limitations).
On the basis of information known to the Company, the Committee shall
make all determinations under this Paragraph 7, including whether a transaction
involves a sale of substantially all the Company's assets; and all such
determinations shall be conclusive and binding.
If any such adjustment provided for in this Paragraph 7 requires the
approval of shareholders of the Company in order to enable the Company to adjust
the Option, then no such adjustment shall be made without the required
shareholder approval.
8. Special Acceleration in Certain Events.
(a) Notwithstanding any other provisions of this Option, a
special acceleration ("Special Acceleration") of these options shall
occur with the effect set forth in Subparagraph (b) at any time when
the shareholders of the Company approve one of the following
("Approved Transactions"):
(i) Any consolidation, merger, plan of exchange, or
transaction involving the Company ("Merger") in which the
Company is not the continuing or surviving corporation or
pursuant to which the Common Stock of the Company would be
converted into cash, securities or other property, other than a
Merger involving the Company in which the holders of the Common
Stock of the Company immediately prior to the Merger have the
same proportionate ownership of common stock of the surviving
corporation after the Merger; or
(ii) Any sale, lease, exchange, or other transfer (in one
transaction or a series of related transactions) of all or
substantially all of the assets of the Company or the adoption
of any plan or proposal for the liquidation or dissolution of
the Company.
In addition, Special Acceleration shall occur in the event a
"person" within the meaning of Section 13(d) of the Exchange Act becomes the
beneficial owner (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, in one or more transactions, of shares of common stock of the
Company representing 50% or more of the total number of votes that may be
cast by all shareholders of the Company voting as a single class, without
the approval or consent of the Board of Directors.
6
8
Notwithstanding the provisions of this Paragraph, no Option may be
exercised or stock disposed of in connection with a Special
Acceleration to the extent that such exercise or disposition would
result in an excess parachute payment to Grantee (as defined in Section
280G of the Internal Revenue Code of 1986, as amended (the "Code"),
without the prior consent of the Company. The Company is authorized by
Grantee to collect from Grantee any additional income or excise taxes
which the Company may incur due to a violation of this provision.
(b) Effect on Option. Except as provided below in this
Subparagraph (b) upon a Special Acceleration pursuant to Subparagraph
(a), this Option shall immediately become exercisable in full
(including any portion of the Option, which, but for this provision,
would not be exercisable) during the 30-day period prior to an approved
Transaction during which Grantee shall have the right to exercise this
Option, in whole or in part, and upon the expiration of such 30-day
period all rights hereunder with respect to unexercised shares shall
immediately terminate.
9. Rights in Shares Before Issuance and Delivery. Grantee, or his or her
executor, administrator or legatee if he or she be deceased, shall have no
rights as a shareholder with respect to any stock covered by this Option
until the date of issuance of the stock certificate to him or her for such
stock after receipt of the consideration in full set forth herein or as may
be approved by the Company. No adjustments shall be made for dividends,
whether ordinary or extraordinary, whether in cash, securities, or other
property, or for distributions in which the record date is prior to the date
for which the stock certificate is issued.
10. Requirements of Law and of Stock Exchanges. Until such time as the
shares to be issued pursuant to this Option are registered under applicable
federal, state or foreign securities laws, Grantee represents and warrants that
the shares of the common stock to be acquired upon exercise of the Option are
being acquired for investment for the account of such person and not with a view
to the resale or other distribution thereof, and that Grantee will not, directly
or indirectly, transfer, sell, assign, pledge, hypothecate or otherwise dispose
of any shares acquired hereunder. Grantee agrees that he will execute such
further documents as may be reasonably required by the Company upon exercise of
the Option or any part thereof, including but not limited to stock transfer
restrictions. The certificate or certificates representing the shares of the
common stock to be issued or delivered upon exercise of this Option may bear a
legend evidencing the foregoing and other legends required by any applicable
securities laws. Furthermore, nothing herein shall require the Company to issue
any stock upon exercise of this Option if the issuance would, in the opinion of
counsel for the Company, constitute a violation of the Securities Act of 1933,
as amended, the Illinois securities laws, or any other applicable rule or
regulation then in effect.
11. Federal Income Tax Treatment. This Option is intended to be a
non-statutory stock option for purposes of the Code. The provisions of this
Agreement shall be interpreted in a manner consistent with the Code and with all
valid regulations issued thereunder.
7
9
12. No Right to Continued Employment. This Option shall not confer upon
the Grantee any right with respect to continued employment by the Company nor
shall it alter, modify, limit or interfere with any right or privilege of the
Company under any employment contract, heretofore or hereinafter executed,
with the Grantee, including the right to terminate the Grantee's employment
at any time for or without cause.
13. Indemnification of Board of Directors. In addition to such other
rights of indemnification as they may have as Directors, the members of the
Board of Directors and the Committee shall be indemnified by the Company
against the reasonable expenses, including attorney's fees actually and
necessarily incurred in connection with the defense of any action, suit or
proceeding (or in connection with any appeal thereof), to which they or any
of them may be a party by reason of any action taken or failure to act under
or in connection with this Option and against all amounts paid by them in
settlement thereof (provided such settlement is approved by independent legal
counsel selected by the Company) or paid by them in satisfaction of a
judgment in any such action, suit or proceeding, except in relation to
matters as to which it shall be adjudged in such action, suit or proceeding
that such Board or Committee member is liable for gross negligence or gross
misconduct in the performance of his or her duties; provided that within
sixty (60) days after institution of any such action, suit or proceeding a
board or Committee member shall in writing offer the Company the opportunity,
at its own expense, to handle and defend the same.
14. Notices. Any notice to be given to the Committee shall be addressed
to the Committee in care of the Company at its principal office, and any notice
to be given to the Grantee shall be addressed to him or her at the address given
beneath his or her signature hereto or at such other address as the Grantee may
hereafter designate in writing to the Company. Any such notice shall be deemed
duly given when enclosed in a properly sealed envelope or wrapper addressed as
aforesaid, registered or certified, and deposited postage and registry or
certification fee prepaid, in a post office or branch post office regularly
maintained by the United States Postal Service.
15. Miscellaneous. This Agreement constitutes the entire agreement and
understanding between the Company and the Grantee and may not be changed,
modified or amended by oral statements to the contrary, but only by written
document signed by both parties hereto. The titles to each paragraph herein are
for convenience only and are not to be used in the construction or
interpretation of this document. This Agreement shall be binding on and inure to
the benefit of the parties hereto, and their respective heirs, legatees,
successors and assigns. This Agreement shall be construed in accordance with the
laws of the State of Illinois. The granting of this Option shall impose no
obligation upon the Grantee to exercise such Option or right.
8
10
IN WITNESS THEREOF, the Company has granted this Option on the date of grant
specified above.
ACCEPTED: CDW COMPUTER CENTERS INC.,
an Illinois corporation
Grantee Xxxxx X. Xxxxxx By: Xxxxxxx X. Xxxxxx
------------------------ -----------------------------
Xxxxx X. Xxxxxx
Address: Title: Chairman and CEO
------------------------ -------------------------
------------------------ Dated as of September 5, 1996
------------------------
Dated as of September 5, 1996
9
11
NOTATIONS AS TO PARTIAL EXERCISE
Number of Balance of
Date of Purchased Shares on Authorized Notation
Exercise Shares Option Signature Date
-------- --------- ---------- ---------- --------
10
