1
EXHIBIT 10(ii)
NON-STATUTORY STOCK OPTION AGREEMENT
DATED SEPTEMBER 5, 1996
BETWEEN THE COMPANY AND
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇.
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. Indentifying Provisions. As used in this Agreement, the following
terms shall have the following respective meanings:
(a) Grantee: ▇▇▇▇▇ ▇. Harczark, Jr.
(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 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: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------- ----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
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
