exv99wxayx1y
Exhibit (a)(1)
INSIGHT ENTERPRISES, INC.
OFFER TO AMEND ELIGIBLE OPTIONS
NOVEMBER 21, 2007
THE OFFER AND WITHDRAWAL RIGHTS EXPIRE
AT 11:59 P.M., ET, ON DECEMBER 20, 2007
UNLESS THE OFFER IS EXTENDED
Insight Enterprises, Inc., together with its subsidiaries and affiliates (“Insight”, the “Company”,
“us” or “we”) is making the offer described in this document (the “Offer”) to certain teammates to
amend certain outstanding stock options to buy Insight common stock that were previously granted to
them under the Insight Enterprises, Inc. 1998 Long-Term Incentive Plan (the “1998 Plan”).
A stock option will be subject to this Offer only if that option meets each of the following
conditions:
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(i) |
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The option was granted under the 1998 Plan; |
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(ii) |
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The option was retroactively priced, meaning that the exercise price per share for that
option is based on the fair market value per share of Insight common stock on a date that
was earlier than the date on which the option grant was actually finalized; |
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(iii) |
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The option has an exercise price per share that is less than the fair market value per
share of the common stock underlying the option on the date on which the option grant was
actually finalized; |
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(iv) |
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The option was unvested as of December 31, 2004; |
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(v) |
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The option is held by an individual who is, on the Expiration Date of this Offer, a
current employee of the Company (other than an executive officer or director) and subject
to income taxation in the United States with respect to that option (an “Eligible
Optionee”); and |
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(vi) |
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The option is outstanding on the Expiration Date (as defined below) of this Offer. |
An option that satisfies each of the above conditions is called an “Eligible Option” for purposes
of this Offer. The Offer will expire on the expiration date, which is currently set for December
20, 2007, unless the Offer is extended (the “Expiration Date”).
Unless corrective action is taken to adjust the exercise price of an Eligible Option, that option
may be subject to unfavorable tax consequences under Section 409A of the Internal Revenue Code of
1986, as amended (the “Code”), and comparable state tax laws. Therefore, the Company is making
this Offer so that each Eligible Optionee holding one or more Eligible Options will have the
opportunity to amend their options to the extent necessary to avoid unfavorable taxation. The
amendment will adjust the exercise price per share currently in effect for the Eligible Option to
the fair market value per share of Insight common stock on the date on which the option grant was
actually finalized. The new exercise price per share will be called the “New Exercise Price” and
will become effective on the first business day following the Expiration Date (the “Amendment
Date”). An option that is amended for the New Exercise Price will be called an “Amended Option.”
If only part of an outstanding option is an Eligible Option (i.e., the part of such option that was
unvested as of December 31, 2004), then only that part may be amended under this Offer. The rest
of the option will not be subject to this Offer and will not be an Eligible Option for purposes of
this Offer. That part (i.e., the part that was vested as of December 31, 2004) will keep its
current exercise price and will not be subject to unfavorable tax consequences under Section 409A
of the Code and comparable state tax laws.
Each Eligible Optionee whose Eligible Option is amended to increase the exercise price under this
Offer will be entitled to a special cash payment (the “Cash Payment”) with respect to that option.
The amount of the Cash Payment for each Eligible Option that is amended to increase the exercise
price to the New Exercise Price will be calculated by multiplying (i) the amount by which the New
Exercise Price is higher than the exercise price per share currently in effect for that Eligible
Option, times (ii) the number of shares of the Company’s common stock you can buy under that option
at the New Exercise Price. The Cash Payment is currently expected to be paid in January 2008, as
required by applicable Internal Revenue Service (“IRS”) regulations. When the payment is made, the
Company will collect all applicable withholding taxes and other amounts required to be withheld by
the Company. The Cash Payment will be paid whether or not you remain an employee through the
payment date.
If you are not an employee of the Company or any affiliated entity on the Expiration Date of this
Offer, then none of your tendered Eligible Options will be amended, and you will not become
entitled to any Cash Payment with respect to those options. The options you sent in or “tendered”
for amendment will be returned to you and will remain exercisable in accordance with the terms
currently in effect for them.
As long as all conditions to the Offer are satisfied, we currently intend to accept for amendment
on the Expiration Date all Eligible Options tendered by Eligible Optionees who accept the Offer.
The amendment will result in a new exercise price per share equal to the New Exercise Price. No
other changes will be made to the tendered Eligible Options. Accordingly, each amended Eligible
Option will otherwise continue to be subject to the same vesting schedule, exercise period, option
term and other terms and conditions as in effect for that option immediately before the amendment.
Although our Board of Directors has approved this Offer, neither the Board of Directors or the
Company is making any recommendation as to whether you should tender your Eligible Options for
amendment. You must make your own decision whether to tender your Eligible Options. You should be
aware that unfavorable tax consequences under Section 409A may apply to your Eligible Options if
they are not amended under this Offer, and you will be solely responsible for any taxes, interest
or penalties you may incur. For that reason, we recommend that you consult with your personal tax
or legal advisor to learn the consequences of accepting or declining the Offer.
We have not authorized anyone to give you any information or to make any representation in
connection with this Offer other than the information and representations contained in this
document and the related Schedule TO, including the documents incorporated therein and the exhibits
attached (the “Offer Package”). If anyone makes any representation or gives you any information
that is different from the representations and information contained in this Offer Package, you
must not rely upon that representation or information as having been authorized by us. We have not
authorized any person to make any recommendation on our behalf as to whether you should tender or
not tender your Eligible Options under the Offer. If anyone makes any recommendation to you, you
must not rely upon that recommendation as having been authorized by us.
The Offer has not been approved or disapproved by the United States Securities and Exchange
Commission (the “SEC”) or any state or foreign securities commission, nor has the SEC or any state
or foreign securities commission passed upon the accuracy or adequacy of the information
ii
contained in this Offer. Any representation to the contrary is a criminal offense. We recommend
that you consult with your personal tax or legal advisor to determine the tax consequences of
electing or not electing to participate in the Offer.
IMPORTANT INFORMATION
If you wish to tender any of your Eligible Options for amendment, you must tender all of your
Eligible Options. To do this you must properly complete and sign the Election Form you receive
with this Offer and return it to the Company prior to the Expiration Date.
The only document you are required to sign in connection with tendering your Eligible Options for
amendment is the Election Form. The Election Form will set forth the New Exercise Prices of your
Amended Options and confirm the Company’s obligation to pay you the Cash Payment for each of your
Amended Options. The Cash Payment is currently expected to be paid in January 2008 and will be
paid whether or not you remain an employee of the Company through the payment date. The Eligible
Options will be amended as of December 21, 2007 (unless we extend the Offer). Please be aware that
your option account with E*Trade may not accurately reflect the amendment for one to two business
days following the Amendment Date.
iii
TABLE OF CONTENTS
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SUMMARY TERM SHEET |
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CERTAIN RISKS OF PARTICIPATING IN THE OFFER |
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THE OFFER |
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1. ELIGIBLE OPTIONEES; ELIGIBLE OPTIONS; AMENDMENT OF ELIGIBLE OPTIONS AND CASH
PAYMENT; EXPIRATION DATE; ADDITIONAL CONSIDERATIONS |
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2. PURPOSE OF THE OFFER |
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3. STATUS OF ELIGIBLE OPTIONS NOT AMENDED |
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4. PROCEDURES FOR TENDERING ELIGIBLE OPTIONS |
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5. RESCISSION RIGHTS |
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6. ACCEPTANCE OF ELIGIBLE OPTIONS FOR AMENDMENT AND COMMITMENT TO PAY CASH PAYMENT WITH RESPECT
TO AMENDED OPTIONS |
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7. CONDITIONS OF THE OFFER |
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8. PRICE RANGE OF COMMON STOCK UNDERLYING THE OPTIONS |
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9. SOURCE AND AMOUNT OF CONSIDERATION; TERMS OF AMENDED OPTIONS |
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10. INFORMATION CONCERNING INSIGHT |
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11.
INTERESTS OF DIRECTORS AND OFFICERS; TRANSACTIONS AND ARRANGEMENTS CONCERNING THE OPTIONS; MATERIAL AGREEMENTS WITH DIRECTORS AND OFFICERS |
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12. STATUS
OF OPTIONS ACCEPTED BY US IN THE OFFER; ACCOUNTING CONSEQUENCES OF THE OFFER |
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13. LEGAL MATTERS; REGULATORY APPROVALS |
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14. MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES |
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15. EXTENSION OF THE OFFER; TERMINATION; AMENDMENT |
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16. FEES AND EXPENSES |
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17. ADDITIONAL INFORMATION |
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18. FORWARD-LOOKING STATEMENTS |
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iv
SUMMARY TERM SHEET
The following are answers to some of the questions that you may have about the offer made in this
document (the “Offer”). We urge you to read carefully the rest of this document because the
information in this summary and in the introductory pages before this summary is not complete and
may not contain all of the information that is important to you. Additional important information
is contained in the rest of this document. We have included section references to the other
sections of the document where you can find a more complete description of the topics in this
Summary Term Sheet.
WHAT OPTIONS ARE ELIGIBLE FOR AMENDMENT UNDER THE OFFER?
Section 409A of the Code provides that an option granted with a below-market exercise price, to the
extent it was not vested as of December 31, 2004, will be subject to unfavorable income taxation
(as described below), unless that option is brought into compliance with Section 409A before it is
exercised and before January 1, 2008. Insight Enterprises, Inc. together with its subsidiaries and
affiliates (“Insight,” the “Company,” “Us” or “We”) has decided to offer eligible persons holding
such options the opportunity to amend each such option to comply with Section 409A.
An outstanding option to purchase shares of Insight common stock will be eligible for amendment
under the Offer if that option meets each of the following conditions:
(i) |
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The option was granted under the 1998 Plan; |
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(ii) |
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The option was retroactively priced, meaning that the exercise price per share for that
option is based on the fair market value per share of Insight common stock on a date that
was earlier than the date on which the option grant was actually finalized; |
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(iii) |
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The option has an exercise price per share that is less than the fair market value per
share of the common stock underlying the option on the date on which the option grant was
actually finalized; |
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(iv) |
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The option was unvested as of December 31, 2004; |
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(v) |
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The option is held by an individual who is, on the Expiration Date, an Eligible
Optionee; and |
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(vi) |
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The option is outstanding on the Expiration Date of this Offer. |
An option that meets each of the above conditions will constitute an “Eligible Option” for purposes
of the Offer. If only part of the option meets those conditions, then only that part will be an
Eligible Option, and the rest of that option will not be eligible for amendment under this Offer.
(Section 1)
DOES THE OFFER APPLY TO SHARES OF INSIGHT COMMON STOCK THAT I CURRENTLY OWN?
No. The Offer relates only to Eligible Options that are currently unexercised.
WHAT HAPPENS TO THE PART OF MY ELIGIBLE OPTION(S) THAT I HAVE ALREADY EXERCISED?
According to Section 409A, if you exercised an option that meets the criteria set forth in items
(i) – (iv) in the first question above, (or part of such option) on or before December 31, 2005,
the exercised portions should not be subject to the unfavorable personal tax consequences under
Section 409A.
However, if you exercised such option(s) (or part of such option) during calendar year 2006 or
2007, the exercised portion may be subject to unfavorable personal tax consequences under
Section 409A (and similar state tax laws). To lessen these possible unfavorable tax consequences,
Insight will be making a separate cash payment to you. You have received, or will be receiving,
separate information concerning this payment.
WHAT HAPPENS TO THE PART OF MY ELIGIBLE OPTION(S) THAT WAS VESTED AS OF DECEMBER 31, 2004?
Subject to exceptions that we do not believe apply to you, stock options (or any part of a stock
option) that vested as of December 31, 2004 are not subject to Section 409A.
WHAT OTHER DEFINED TERMS ARE IMPORTANT TO UNDERSTANDING THE OFFER?
For purposes of this Offer, you also should be familiar with the following additional definitions.
“New Exercise Price” is the New Exercise Price per share that will be in effect for any tendered
Eligible Option that is amended under the Offer and will be equal to the fair market value per
share of the Company’s common stock on the date on which the option grant was actually finalized.
“Amended Option” will mean an Eligible Option that has been amended under the Offer to increase the
exercise price per share for the Insight common stock you can buy under that option to the New
Exercise Price for the option.
“Amendment Date” will mean the date on which each Eligible Option is amended to increase the
exercise price of that option to the New Exercise Price and will be December 21, 2007 or, if the
Offer is extended, the first business day following the extended expiration date of the Offer.
“Cash Payment” is the special Cash Payment to which each Eligible Optionee will become entitled if
the current exercise price of one or more of his or her Eligible Options is increased under the
Offer.
“Code” will mean the Internal Revenue Code of 1986, as amended.
“Election Form” is the form that the Eligible Optionee must use to notify the Company whether he or
she has elected to tender his or her Eligible Options for amendment under the terms of the Offer.
“Eligible Optionee” is each person who possesses Eligible Options and is, on the expiration date of
the Offer, an employee of the Company (other than an executive officer or director) and subject to
income taxation in the United States with respect to his or her Eligible Options.
“Expiration Date” will be December 20, 2007, unless the Offer is extended by the Company.
2
“Fair Market Value” per share of Insight common stock on any relevant date will be deemed to be
equal to the closing price per share of such stock on that date on the NASDAQ Global Select Market.
“IRS” will mean the Internal Revenue Service.
“New Exercise Price” means the fair market value per share of Insight common stock on the date on
which the option grant was actually finalized.
“1998 Plan” means The Insight Enterprises, Inc. 1998 Long-Term Incentive Plan.
“Tendering” an option means submitting your Eligible Options to the Company to be amended under the
Offer in return for the Cash Payment.
WHY IS INSIGHT MAKING THE OFFER?
We are making this Offer to amend the Eligible Options because of potential unfavorable tax
consequences that may apply to those options. As a result of a thorough investigation of the
Company’s past option granting practices and related accounting, the Company has found that each
Eligible Option was retroactively priced, meaning that the exercise price per share currently in
effect for that option was based on the fair market value per share of Insight common stock on a
date that was earlier than the date on which that option grant was actually finalized.
Section 409A of the Code provides that an option granted with a below-market exercise price, to the
extent unvested as of December 31, 2004, will be subject to unfavorable income taxation unless that
option is brought into compliance with Section 409A. Insight has decided to provide Eligible
Optionees with the opportunity to bring the Eligible Options into compliance by amending the
exercise price per share to the New Exercise Price for each such option. By taking such corrective
action, Eligible Optionees can avoid the unfavorable tax consequences described in Section 2 of the
Offer.
Your individualized Eligible Option table in the Election Form that you received with this Offer
sets forth the measurement date and option number for each Eligible Option you hold, the original
per share price of Insight common stock on that date, the number of shares of common stock subject
to each Eligible Option, the New Exercise Price and the cash amount payable to you in January 2008.
ARE OPTIONEES LIVING OUTSIDE THE UNITED STATES ELIGIBLE TO PARTICIPATE IN THE OFFER?
Yes. If you are a current employee of the Company (other than an executive officer or director)
and subject to taxation in the United States with respect to your Eligible Option, then you are
eligible to participate in the Offer even if you are not currently living in the United States.
(Section 1)
WHAT ARE THE COMPONENTS OF THE OFFER?
If an Eligible Option is amended under the Offer, then the exercise price of that option will be
increased to the fair market value per share on the date on which the option grant was actually
finalized, which will avoid the potential unfavorable tax consequences under Section 409A. In
addition, each Eligible Optionee whose Eligible Options are so amended will become entitled to the
special Cash Payment from the Company. The amount of the Cash Payment payable with respect to each
Amended Option will be determined by multiplying (i) the amount by which the New Exercise Price is
higher than the exercise price per share currently in effect for that Eligible Option, times
(ii) the number of shares of the Company’s common stock you can buy under that option at the New
Exercise Price. The Cash Payment
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is currently expected to be paid in January 2008, as required by applicable IRS regulations. When
the payment is made, the Company will collect all applicable withholding taxes and other amounts
required to be withheld by the Company. The Cash Payment will be paid whether or not you remain an
employee through the payment date. (Section 1)
IS THE CASH PAYMENT SUBJECT TO VESTING? WILL I RECEIVE THE CASH PAYMENT IF MY EMPLOYMENT TERMINATES
BEFORE I FULLY VEST IN THE AMENDED OPTIONS OR BEFORE THE CASH PAYMENT IS PAID?
The Cash Payment is not subject to vesting or otherwise subject to forfeiture. Eligible Optionees
will be entitled to receive the Cash Payment regardless of whether or not they remain employed with
Insight on the actual payment date and regardless of whether the Amended Options to which such
payment relates have vested or ever vest.
DO I RECEIVE THE CASH PAYMENT EVEN IF I NEVER EXERCISE THE AMENDED OPTIONS?
Yes. The Cash Payment is currently expected to be paid in January 2008, regardless of whether you
have exercised the Amended Options at that time and regardless of whether you ever exercise the
Amended Options.
WHY WON’T I RECEIVE MY CASH PAYMENT IMMEDIATELY FOLLOWING THE EXPIRATION OF THE OFFER?
The IRS guidance under Section 409A that allows us to offer you the opportunity to avoid
unfavorable tax consequences by amending your Eligible Options imposes certain requirements
regarding the timing of the Cash Payment. The guidance does not allow us to make the Cash Payment
in the same year in which the options are amended. Therefore, the earliest we can make these Cash
Payments to Eligible Optionees who participate in the Offer is in January of 2008. Any Cash
Payments received for Eligible Options that you elect to amend will be subject to regular income
and employment tax withholding at the time you receive it.
WHAT HAPPENS IF I AM NOT A CURRENT EMPLOYEE ON THE EXPIRATION DATE?
If you are not an employee of the Company on the Expiration Date, then none of your tendered
Eligible Options will be amended, and you will not be entitled to any Cash Payment with respect to
those options. The tendered options will be returned to you and will remain exercisable in
accordance with the terms in effect for them at the time of tender. (Section 1)
WHAT ARE THE TAX CONSEQUENCES OF AN OPTION SUBJECT TO SECTION 409A?
Section 409A was added to the Code by the American Jobs Creation Act of 2004. The U.S. Treasury
Department and IRS have provided guidance and issued final regulations about certain items of
compensation under Section 409A. That guidance and the final regulations provide that a stock
option granted with an exercise price per share below the fair market value of the underlying
shares on the grant date will, to the extent that option was not vested as of December 31, 2004, be
subject to the unfavorable tax consequences of Section 409A. Unless corrective action is taken to
bring that option into compliance before it is exercised and before January 1, 2008, we believe, on
the basis of our understanding and interpretation of the applicable guidance, that the option will
trigger unfavorable U.S. federal tax consequences to you under Section 409A as indicated below.
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The unfavorable tax consequences include income tax consequences in the year the option becomes
vested, even though the option has not been exercised. Under IRS guidance to date, you would
recognize taxable income in an amount equal to the fair market value of the option shares on
measurement date, minus the exercise price. The measurement date is December 31 of the year of
vesting, or the actual date of exercise if exercised during the year of vesting. In addition,
Section 409A imposes an additional 20% tax, plus interest. Further, it is possible that during
each subsequent taxable year (until the option is exercised or expires), any increase in the fair
market value of the shares underlying the option will be taxable to the holder and may be subject
to the additional 20% tax and interest penalties.
Note: Certain states, including California, have adopted provisions similar to Section 409A under
their tax laws, and for optionees subject to income taxation in such states, the total additional
tax (over and above ordinary income tax rates) could be up to 40% (a 20% additional federal tax and
up to a 20% additional state tax).
If you exercise an Eligible Option without first bringing that option into compliance with
Section 409A, then it is possible that the 20% additional tax under Section 409A may be based
solely on the amount by which the fair market value of the purchased shares at the time of exercise
is higher than the current exercise price, plus interest penalties.
WHAT ARE THE TAX CONSEQUENCES IF I ACCEPT THE OFFER?
If you tender your Eligible Options, you will not recognize any taxable income for U.S. federal
income tax purposes at the time of the tender or at the time your Eligible Options are amended to
adjust the exercise price.
By amending the exercise prices of your Eligible Options to the New Exercise Prices, you will also
avoid the unfavorable taxation of those options under Section 409A. Therefore, as your Amended
Options vest in one or more installments, you will not be subject to the additional 20% tax or any
interest penalty under Section 409A. However, you will recognize taxable income when you receive
the Cash Payment paid on your Amended Options. (Section 2)
If you are subject to the tax laws of other jurisdictions in addition to the United States, there
may be additional tax consequences of participation in the Offer. All Eligible Optionees should
consult with their own personal tax or legal advisor as to the tax consequences of accepting the
Offer.
HOW WILL MY CASH PAYMENT BE TAXED?
You will be taxed upon your receipt of the Cash Payment. The payment will be treated as wages for
tax withholding purposes. Therefore, the Company must withhold all applicable U.S. federal, state
and local income and employment taxes with respect to such payment. You will receive only the part
of the payment remaining after all those taxes and payments have been withheld. (Section 2)
WHAT ARE THE TAX CONSEQUENCES IF I DO NOT ACCEPT THE OFFER?
If you choose not to tender your Eligible Options and take no other action to bring those options
into compliance with Section 409A, then you will be subject to the unfavorable taxation under
Section 409A in the manner discussed above. You will be solely responsible for any taxes,
penalties or interest you may incur under Section 409A and comparable state tax laws.
5
WHAT SECURITIES ARE SUBJECT TO THE OFFER?
The Offer covers only Eligible Options. Your Election Form accompanying this Offer will contain a
personal summary of the Eligible Options that you currently hold, including the measurement date
and option number for each Eligible Option, the original per share price of Insight common stock on
that date, the number of shares of common stock subject to each Eligible Option, the New Exercise
Price and the cash amount payable to you in January 2008. (Section 1)
AM I REQUIRED TO PARTICIPATE IN THE OFFER?
No. Participation in the Offer is voluntary. If you decide to accept the Offer, you must submit a
properly completed Election Form for your tendered Eligible Options. (Section 4)
If you do not elect to tender your Eligible Options, all Eligible Options you currently hold will
remain unchanged with their original exercise price. If you choose not to tender your Eligible
Options and take no other action to bring those options into compliance with Section 409A, then you
may be subject to the unfavorable taxation under Section 409A. You will be solely responsible for
any taxes, penalties or interest payable under Section 409A and comparable state tax laws.
(Section 3)
WILL MY DECISION ABOUT WHETHER TO PARTICIPATE OR NOT IN THE OFFER AFFECT MY ELIGIBILITY TO RECEIVE
FUTURE EQUITY AWARDS FROM INSIGHT?
No. Your decision to accept or reject the Offer will have no effect on your eligibility to receive
additional option grants or other equity awards in the future from Insight.
HOW MIGHT STOCK PRICE FLUCTUATIONS IN THE FUTURE IMPACT MY DECISION?
While we believe that this Offer will give Eligible Optionees the opportunity to avoid the
unfavorable personal tax consequences of Section 409A and similar state tax laws, we cannot
guarantee that Eligible Optionees will ultimately be better off by holding options with the Amended
Exercise Price than they would by not participating in the Offer, exercising at the original
exercise price, and paying the resulting taxes and any associated penalties and interest charges.
We strongly recommend that you consult with your personal financial, tax, and legal advisors to
determine the consequences of accepting or rejecting the Offer.
DO I HAVE TO ACCEPT THE OFFER WITH RESPECT TO ALL OF MY ELIGIBLE OPTIONS OR MAY I DECIDE TO ACCEPT
THE OFFER WITH RESPECT TO ONLY A PART OF THE ELIGIBLE OPTIONS?
No. If you wish to accept this Offer you must tender all of your Eligible Options for amendment.
Please remember that not all of a particular outstanding option grant may be an Eligible Option.
Only the part of that grant that was not vested as of December 31, 2004 will be an Eligible Option.
(Section 4)
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IF I CHOOSE TO PARTICIPATE IN THE OFFER, ARE THERE CIRCUMSTANCES UNDER WHICH MY ELIGIBLE OPTIONS
WOULD BE AMENDED BUT I WOULD NOT RECEIVE A CASH PAYMENT FOR THEM?
No. However, your option will not be amended and the Cash Payment will not be made if we are
prohibited from doing so by applicable rules or laws. For example, we could become prohibited from
amending options as a result of changes in SEC or NASDAQ rules. However, we do not anticipate any
such prohibitions at this time.
WILL THE TERMS AND CONDITIONS OF MY AMENDED OPTIONS BE THE SAME AS THOSE CURRENTLY IN EFFECT FOR MY
ELIGIBLE OPTIONS?
Except for the change to the exercise price per share, each Eligible Option that is amended under
this Offer will continue to remain subject to the same terms and conditions that were in effect for
such option immediately before the amendment. Therefore, each Amended Option will vest on the same
vesting schedule measured from the same vesting commencement date and will have the same exercise
period, option term and other conditions currently in effect for that option. (Section 9)
WHEN WILL MY ELIGIBLE OPTIONS BE AMENDED?
The exercise price for each Eligible Option tendered under this Offer will be amended to the New
Exercise Price effective December 21, 2007, or if the Offer is extended, the first business day
following the extended expiration date. The date the exercise price for an Eligible Option is
increased to the New Exercise Price will be called the Amendment Date, and each Eligible Option
that is so amended will be called an Amended Option.
WHEN CAN I EXERCISE MY AMENDED OPTIONS?
You may exercise an Amended Option for vested option shares at any time after the Amendment Date
(subject to compliance with other Insight policies, such as policies designed to prevent insider
trading). With respect to vested and unvested options, the Amended Option will be exercisable in
accordance with the terms currently in effect.
WHEN WILL MY AMENDED OPTIONS VEST?
If your options are amended, they will continue to vest according to the vesting schedule of your
original options. Future vesting is subject to continued employment with us through each relevant
vesting date, as currently provided in the original options.
WHEN WILL MY AMENDED OPTIONS EXPIRE?
Your Amended Options will expire on the same date your original Eligible Options were scheduled to
expire under the terms of the relevant Plan.
CAN I EXERCISE MY ELIGIBLE OPTIONS AFTER I ACCEPT THE OFFER BUT BEFORE AMENDMENT?
Yes. However, such exercise will void your acceptance of the Offer. In addition, you may then
personally incur unfavorable tax consequences under Section 409A with respect to all your Eligible
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Options you exercise before the Amendment Date. You will be solely responsible for any taxes,
penalties or interest payable under Section 409A and comparable state tax laws.
WILL MY AMENDED OPTIONS BE INCENTIVE STOCK OPTIONS OR NON-STATUTORY OPTIONS?
Because your Eligible Options were granted with exercise prices below the fair market value of the
option shares on the actual dates on which those options were granted, the options are
non-statutory options under the U.S. federal income tax laws, and they will remain non-statutory
options after the amendment to the New Exercise Prices. Therefore, when you eventually exercise
your Amended Options, you will recognize immediate taxable income equal to the excess of (i) the
fair market value of the purchased shares at the time of exercise over (ii) the New Exercise Price
paid for those shares, and Insight must collect the applicable withholding taxes with respect to
such income.
If you are subject to the tax laws of other jurisdictions in addition to the United States, there
may be additional or different consequences in that jurisdiction of exercising your options.
WHEN MAY I EXERCISE THE PART OF MY OPTIONS THAT WAS VESTED AS OF DECEMBER 31, 2004?
You may exercise the part of each of your options that was vested as of December 31, 2004 at any
time before the termination or expiration of that option provided such exercise complies with (a)
the existing terms of your options, (b) Insight’s Stock Trading Policy and (c) any interim blackout
periods during which transactions to buy and sell Insight stock are prohibited. Such part is not
subject to the Offer and will not be subject to unfavorable taxation under Section 409A.
WHAT ARE THE CONDITIONS TO THE OFFER?
The Offer is subject to a number of conditions, including the conditions described in Section 7.
The Offer is not conditioned upon the tender of a minimum number of Eligible Options for amendment.
(Section 1)
WHEN DOES THE OFFER EXPIRE? CAN THE OFFER BE EXTENDED, AND IF SO, HOW WILL I BE NOTIFIED IF IT IS
EXTENDED?
The Offer will expire at 11:59 P.M. Eastern Time on December 20, 2007, unless we extend the Offer.
Although we do not currently intend to do so, we may, at our discretion, extend the Offer at any
time. If the Offer is extended, we will send you an email or other communication informing you of
the extension no later than 9:00 A.M. Eastern Time on the next business day following the
previously scheduled expiration of the Offer period. (Section 15)
HOW AND WHEN DO I TENDER MY ELIGIBLE OPTIONS?
In order to tender your Eligible Options for amendment under the Offer, you must complete and
return the Election Form that accompanies this Offer. After completing the Election Form, you must
mail it to Corporate Secretary, Insight Enterprises, Inc., 1305 West Auto Drive, Tempe, AZ 85284.
Please make and keep a copy of the completed Election Form for your records. Once we receive your
completed Election Form, you will then be deemed to have completed the election process for
tendering your Eligible Options. We must receive your Election Form before the Expiration Date.
8
You must complete the tender and election process in the above manner by 11:59 P.M. Eastern Time on
December 20, 2007. If we extend the Offer beyond December 20, 2007, you must complete the process
before the extended expiration date of the Offer.
We will not accept delivery of any Election Form after expiration of the Offer. If we do not
receive a properly completed and duly executed Election Form from you before the expiration of the
Offer, we will not accept your Eligible Options for amendment, and no Cash Payment will be paid
with respect to those options.
We reserve the right to reject any or all tenders of Eligible Options that we determine are not in
appropriate form or that we determine are unlawful to accept. Otherwise, we intend to accept all
properly and timely tendered Eligible Options that are not validly withdrawn. Subject to our
rights to extend, terminate or amend the Offer, we currently expect that we will accept all
properly tendered Eligible Options upon the expiration of the Offer, and we will amend those
options on the next business day thereafter. (Section 6)
DURING WHAT PERIOD OF TIME MAY I CHANGE MY MIND AND CHANGE MY ELECTION TO TENDER MY ELIGIBLE
OPTIONS?
You may change your previously submitted election at any time before 11:59 P.M. Eastern Time on
December 20, 2007 (or any extended expiration date of the Offer). This is called rescinding your
election to tender. If you would like to rescind your election, you must complete the “Rescission
Letter” that was mailed to you with this Offer and mail it to Corporate Secretary, Insight
Enterprises, Inc., 1305 West Auto Drive, Tempe, AZ 85284. You should make a copy of your
completed Rescission Letter and keep the copy with your other records for this Offer. We must
receive your Rescission Letter before the Expiration Date. (Section 5)
WHAT DOES INSIGHT THINK OF THE OFFER?
Although our Board of Directors has approved the Offer, neither the Board of Directors or the
Company is making any recommendation as to whether you should tender or not tender your Eligible
Options for amendment. You must make your own decision whether to tender your Eligible Options.
Insight recommends that you consult with your personal financial and tax or legal advisors when
deciding whether or not you should tender your Eligible Options.
TO WHOM CAN I TALK IF I HAVE QUESTIONS ABOUT THE OFFER?
For additional information or assistance, you should contact the Stock Plan Administrator at
_StockPlanAdmin@insight.com.
CERTAIN RISKS OF PARTICIPATING IN THE OFFER
Participating in the Offer involves risks discussed in this Offer and described below. In
addition, information about risk factors included in our Annual Report on Form 10-K/A for the year
ended December 31, 2006 and in our Quarterly Reports on Form 10-Q for the quarters ending March 31,
2007, June 30, 2007 and September 30, 2007 is incorporated by reference herein. These reports may
be inspected at, and copies may be obtained from, the places and in the manner described in
Section 17 “Additional Information.” You should carefully consider these risks and are encouraged
to consult your investment, tax and legal advisors before deciding to participate in the Offer.
9
Tax-Related Risks
The IRS could change the expected Section 409A tax consequences. As described above and in
Section 2, based on the current guidance and final regulations under Section 409A, your Eligible
Options will be subject to unfavorable tax consequences under Section 409A unless they are brought
into compliance with Section 409A before January 1, 2008 or any earlier exercise of those options.
We believe that we have structured the Offer in a way that will provide you with the opportunity to
avoid the taxation of your Eligible Options under Section 409A. However, we cannot guarantee the
effect of any future IRS guidance.
Taxable events even if Amended Options are not exercised. Any Cash Payments received for Eligible
Options that you elect to amend will be subject to regular income and employment tax withholdings
at the time of receipt. Your resulting tax liability when you file your income tax return could
differ from the amount of taxes we are required to withhold and, as a result, it is possible that
additional taxes may be due for the year you receive the Cash Payment.
Tax-related risks for residents of multiple countries. If you are subject to the tax laws in more
than one jurisdiction, you should be aware that tax consequences of more than one country may apply
to you as a result of your participation in the Offer. You should be certain to consult your
personal tax or legal advisor to discuss these consequences.
State and local taxes. The discussion in Section 2 and Section 14 of the Offer describes the
material U.S. federal income tax consequences if you participate in the Offer or if you elect not
to participate. State and local laws may provide different tax treatment. In addition, certain
states, including California, have adopted provisions similar to Section 409A. If you are subject
to income taxation in those states, you may incur additional taxes, interest and penalties under
such provisions if you do not bring your Eligible Options into compliance.
Eligible Optionees should consult with their own personal tax and legal advisors as to the tax
consequences of their participation in the Offer.
Procedural Risks
You are responsible for making sure that your Election Form and any later rescission of your
Election Form with which you withdraw your Eligible Options are received by us before the
Expiration Date. IT IS YOUR RESPONSIBILITY TO CONFIRM THAT WE HAVE RECEIVED YOUR COMPLETE
SUBMISSION BEFORE DECEMBER 20, 2007.
Business Related Risks
Whether or not you participate in the Offer, you should be aware that there are a number of risks
that Insight is exposed to in the ordinary course of business. You are encouraged to read the risk
factors outlined in our periodic and other reports filed with the SEC. Additional risks and
uncertainties not presently known to us or that we currently deem immaterial may also impair our
business operations. If any of the risks actually occur, our business could be harmed. In that
event, the trading price of our common stock could decline.
10
THE OFFER
1. |
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ELIGIBLE OPTIONEES; ELIGIBLE OPTIONS; AMENDMENT OF ELIGIBLE OPTIONS AND CASH PAYMENT;
EXPIRATION DATE; ADDITIONAL CONSIDERATIONS. |
Section 409A of the Code provides that an option granted with a below-market exercise price, to the
extent it was not vested as of December 31, 2004, will be subject to unfavorable income taxation
(as described below), unless that option is brought into compliance with Section 409A before
exercise and before January 1, 2008. Insight Enterprises, Inc. has decided to offer Eligible
Optionees holding Eligible Options the opportunity to amend each such option to comply with
Section 409A.
Eligible Options
An outstanding option to purchase shares of Insight common stock will be eligible for amendment
under the Offer if that option meets each of the following conditions:
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(i) |
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The option was granted under the 1998 Plan; |
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(ii) |
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The option was retroactively priced, meaning that the exercise price per share for
that option is based on the fair market value per share of Insight common stock on a date
that was earlier than the date on which the option grant was actually finalized; |
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(iii) |
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The option has an exercise price per share that is less than the fair market value
per share of the common stock underlying the option on the date on which the option grant
was actually finalized; |
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(iv) |
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The option was unvested as of December 31, 2004; |
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(v) |
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The option is held by an individual who is, on the Expiration Date, an Eligible
Optionee; and |
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(vi) |
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The option is outstanding on the expiration date of this Offer. |
An option that meets each of the above conditions will constitute an Eligible Option for purposes
of the Offer. If only a part of the option meets those conditions, then only that part will be an
Eligible Option, and the rest of that option will not be eligible for amendment under this Offer.
Your individualized Eligible Option table in the Election Form that accompanies this Offer also
describes the measurement date and option number for each Eligible Option you hold, the original
per share of Insight common stock on that date, the number of shares of common stock subject to
each Eligible Option, the New Exercise Price and the cash amount payable to you in January 2008.
Amendment of Eligible Options and Cash Payment
Upon the terms and subject to the conditions of the Offer, we will amend each Eligible Option that
is properly tendered by an Eligible Optionee in accordance with Section 4, and not validly
withdrawn in accordance with Section 5 before the Expiration Date. The Offer does not depend on
the tender of a minimum number of Eligible Options for amendment. The exercise price of each
Eligible Option that is amended under the Offer will be increased to the New Exercise Price
determined for that option. To the extent a retroactively-priced option was vested as of
December 31, 2004, that part of the option would not be subject to taxation under Section 409A and
will not be an Eligible Option for purposes of the Offer.
11
Therefore, the New Exercise Price would
not be in effect for the part of a retroactively-priced option that
was vested as of December 31, 2004. The New Exercise Price will apply only to the part of a
retroactively-priced option that was not vested as of December 31, 2004, and that part thereby
qualifies as an Eligible Option.
Each Amended Option will continue to vest in accordance with the same vesting schedule measured
from the same vesting commencement date currently in effect for that option. No change to the
vesting schedule will occur by reason of the amendment. In addition, except for the New Exercise
Price, the other terms and provisions of each Amended Option will be identical to the terms and
provisions in effect for each such Eligible Option immediately before the amendment to the exercise
price.
Each Eligible Optionee whose Eligible Options are amended under the Offer will become entitled to a
special Cash Payment from the Company. The amount of the Cash Payment payable with respect to each
Amended Option will be determined by multiplying (i) the amount by which the New Exercise Price is
higher than the exercise price per share currently in effect for that Eligible Option, times
(ii) the number of shares of the Company’s common stock you can buy under that option at the New
Exercise Price. The Cash Payment is currently expected to be in January 2008, as required by
applicable IRS regulations. When the payment is made, the Company will collect all applicable
withholding taxes and other amounts required to be withheld by the Company. Such Cash Payment will
be paid whether or not you remain an employee through the payment date.
Former Employees
If you are not an employee of the Company on the Expiration Date, then none of your tendered
Eligible Options will be amended and you will not be entitled to any Cash Payment with respect to
those options. The tendered options will be returned to you and will remain exercisable in
accordance with the terms in effect for them at the time of tender, including the current exercise
price per share.
Additional Considerations
In deciding whether to tender Eligible Options under the Offer, you should know that Insight
continually evaluates and explores strategic opportunities as they arise, including business
combination transactions, strategic partnerships, capital infusions, and the purchase or sale of
assets. At any given time, we may be engaged in discussions or negotiations with respect to
various corporate transactions. We also grant restricted stock units and other equity awards in
the ordinary course of business to our current and new employees, including our executive officers.
Our employees, including our executive officers, from time to time acquire or dispose of our
securities. On November 13, 2007, our Board of Directors authorized the Company to make purchases
of up to $50,000,000 of our common stock from time to time in open market purchases or through
privately negotiated transactions, including through the use of one or more Rule 10b5-1 trading
plans. Also on November 13, 2007, our Board of Directors approved and adopted amendments to the Company’s
Bylaws related to permitting uncertificated shares in response to
NASDAQ Marketplace Rule 4350(1), which requires that all companies listed on NASDAQ (including the Company) be eligible by
January 1, 2008 to participate in a Direct Registration System program operated by a clearing agency registered under Section 17A of
the Securities Exchange Act of 1934, as amended. Subject to the above and except as otherwise disclosed in the Offer or in our filings with
the SEC, we presently have no plans or proposals that relate to or would result in:
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(a) |
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Any extraordinary corporate transaction, such as a merger, reorganization or
liquidation, involving us or any of our subsidiaries; |
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(b) |
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Any purchase, sale or transfer of a material amount of our assets or the assets of any
of our subsidiaries; |
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(c) |
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Any material change in our present dividend policy or our indebtedness or
capitalization;
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(d) |
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Any change in our present Board of Directors or executive management team, including,
but not limited to, any plans or proposals to change the number or term of our directors or
to fill
any existing vacancies on the board or to change any material term of any employment
contract of any executive officer; |
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(e) |
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Any other material change in our corporate structure or business; |
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(f) |
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Our common stock ceasing to be authorized for quotation in an automated quotation
system operated by a national securities association; |
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(g) |
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Our common stock becoming eligible for termination of registration under
Section 12(g)(4) of the Securities Act; |
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(h) |
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The suspension of our obligation to file reports pursuant to Section 15(d) of the
Exchange Act; |
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(i) |
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The acquisition by any person of any of our securities or the disposition of our
securities, other than in the ordinary course or pursuant to existing options or other
rights; or |
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(j) |
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Any changes in our articles of incorporation or bylaws, or other actions that may
impede the acquisition of control of the Company. |
2. PURPOSE OF THE OFFER.
As a result of an investigation of the Company’s past option granting practices and related
accounting, we have found that each Eligible Option was retroactively priced, meaning that the
exercise price per share currently in effect for that option was based on the fair market value per
share of our common stock on a date earlier than the date on which that option was actually
finalized. We are making this Offer to amend the Eligible Options because of potential unfavorable
tax consequences that may result from the retroactive pricing of the Eligible Options.
Section 409A of the Code provides that an option granted with a below-market exercise price, to the
extent unvested as of December 31, 2004, will be subject to unfavorable income taxation unless that
option is brought into compliance with Section 409A. Insight has decided to provide Eligible
Optionees with the opportunity to bring the Eligible Options into compliance by amending the
exercise price per share to the New Exercise Price for each such option.
Section 409A was added to the Code by the American Jobs Creation Act of 2004. The U.S. Treasury
Department and IRS provided guidance and issued regulations with respect to certain items of
compensation under Section 409A. The guidance and final regulations provide that a stock option
granted with an exercise price per share below the fair market value of the underlying shares on
the grant date will, to the extent that option was not vested as of December 31, 2004, be subject
to the unfavorable tax consequences of Section 409A. Unless corrective action is taken to bring
that option into compliance before exercise and before January 1, 2008, we believe, on the basis of
our understanding and interpretation of the applicable guidance and final regulations, that the
option will trigger unfavorable U.S. federal tax consequences to you under Section 409A as
indicated below.
The unfavorable tax consequences include income tax consequences in the year the option becomes
vested, even though the option has not been exercised. You would recognize taxable income in an
amount equal to the fair market value of the option shares on the measurement date, minus the
exercise price. The measurement date is December 31 of the year of vesting, or the actual date of
exercise if
13
exercised during the year of vesting. In addition, Section 409A imposes an additional
20% tax, plus interest. Further, it is possible that during each subsequent taxable year (until
the option is exercised or
expires), any increase in the fair market value of the shares underlying the option will be taxable
to the optionee and may be subject to the additional 20% tax and interest penalties.
Note: Certain states, including California, have adopted provisions similar to Section 409A under
their tax laws, and for optionees subject to income taxation in such states, the total tax (over
and above ordinary income tax rates) could be up to 40% (a 20% additional federal tax and up to a
20% additional state tax).
If you elect not to amend your Eligible Options under the Offer, then you will be solely
responsible for any additional taxes or interest payable under Section 409A and comparable state
tax laws. If you exercise an Eligible Option without first bringing that option into compliance
with Section 409A, then it is possible that the 20% additional tax under Section 409A with respect
to that exercised option may be based solely on the amount by which the fair market value of the
purchased shares at the time of exercise is higher than the current exercise price, plus interest
penalties.
To avoid any unfavorable tax consequences under Section 409A with respect to the part of your stock
options that vested after December 31, 2004 (but were not exercised in 2005, 2006 or 2007), you
must take corrective action to bring that part of your options (the “409A Part”) into compliance
with the requirements of Section 409A. Insight is now offering you the opportunity to bring the
409A Part of your stock options into compliance with Section 409A as follows:
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• |
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The 409A Part of each of your stock options will be amended to increase the exercise
price to the New Exercise Price determined for that part. Such an amendment to the
exercise price would bring the 409A Part of each option into compliance with Section 409A,
and you could exercise that 409A-compliant part as you choose, subject only to the existing
exercise provisions and option term in effect for each such option. |
Therefore, under the Offer, you may tender your Eligible Options to Insight for amendment. The
exercise price per share for each Amended Option will be increased to the New Exercise Price for
that option, and that Amended Option would not be subject to unfavorable tax consequences under
Section 409A described above.
If you are subject to the tax laws in more than one jurisdiction, you should be aware that tax
consequences of more than one country may apply to you as a result of your participation in the
Offer. You should be certain to consult your personal tax or legal advisor to discuss these
consequences.
Neither the Board of Directors or the Company is making any recommendation as to whether you should
tender your Eligible Options for amendment, nor have we authorized any person to make any such
recommendation. You must make your own decision whether to tender your Eligible Options. You
should be aware that unfavorable tax consequences under Section 409A may apply to your Eligible
Options if they are not amended under the Offer, and you will be solely responsible for any taxes,
interest or penalties you may incur under Section 409A and comparable state tax laws. You are
urged to evaluate carefully all of the information in the Offer, and we recommend that you consult
your own personal tax or legal advisor.
14
3. STATUS OF ELIGIBLE OPTIONS NOT AMENDED.
If you choose not to tender your Eligible Options for amendment, those options will continue to
remain outstanding in accordance with their existing terms, including the below-market exercise
price component that may result in unfavorable tax consequences under Section 409A. Accordingly,
if you take no other action to bring those options into compliance with Section 409A, you may be
subject to the unfavorable U.S. federal tax consequences described in Section 2 above. You will be
solely responsible for any taxes, penalties or interest you may incur under Section 409A and
comparable state tax laws.
4. PROCEDURES FOR TENDERING ELIGIBLE OPTIONS.
You will receive with this Offer an Election Form that contains the following personalized
information with respect to each Eligible Option you hold:
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• |
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The grant date and option number for each Eligible Option that you hold; |
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• |
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The original price per share of Insight common stock on that date; |
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• |
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The number of shares of the common stock subject to each Eligible Option; |
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• |
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The New Exercise Price of each Eligible Option; and |
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• |
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The cash amount payable to you in January 2008. |
You will need to check the appropriate box to indicate whether you elect to tender your Eligible
Options for amendment in accordance with the terms of the Offer. After completing the Election
Form, you must mail it to Corporate Secretary, Insight Enterprises, Inc., 1305 West Auto Drive,
Tempe, AZ 85284. Please make and keep a copy of the completed Election Form for your records.
Once we receive your Election Form and unless you received your other as set forth in Section 5,
you will then be deemed to have completed the election process for tendering your Eligible Options.
We must receive your Election Form before the Expiration Date.
If you decide to accept the Offer with respect to your Eligible Options, we must receive your
properly completed Election Form at Corporate Secretary, Insight Enterprises, Inc., 1305 West Auto
Drive, Tempe, AZ 85284 by 11:59 Eastern Time on December 20, 2007. If we extend the Offer beyond
December 20, 2007, you must deliver those documents before the extended expiration date of the
Offer.
We will not accept any Election Form after the expiration of the Offer. If you do not complete and
submit the Election Form before the Expiration Date, your Eligible Options will not be amended, and
you will not be eligible for any Cash Payment.
If you choose to tender any of your Eligible Options for amendment, you must tender all of your
Eligible Options for amendment. Please remember that not all of a particular option grant may be
an Eligible Option. Only the 409A Part constitutes an Eligible Option.
Determination of validity; rejection of option shares; waiver of defects; no obligation to give
notice of defects. We will decide, in our discretion, all questions as to form of documents and
the validity, form, eligibility (including time of receipt), and acceptance of any option tender,
and we will decide, in our sole discretion, all questions as to: (i) the part of each outstanding
option that comprises an Eligible Option for purposes of this Offer; (ii) the New Exercise Price to
be in effect under each Amended Option; and
15
(iii) the amount of the Cash Payment payable with respect to each Amended Option. Our decision on
to those matters will be final and binding on all parties. We reserve the right to reject any or
all option tenders that we determine do not comply with the conditions of the Offer, that we
determine are not in appropriate form or that we determine are unlawful to accept. Otherwise, we
intend to accept for amendment each properly and timely tendered Eligible Option that is not
validly withdrawn. We also reserve the right to waive any of the conditions of the Offer or any
defect or irregularity in any tender with respect to any particular Eligible Option or any
particular Eligible Optionee. No tender of an Eligible Option will be deemed to have been properly
made until all defects or irregularities have been cured by the tendering Eligible Optionee or
waived by us. Neither we nor any other person is obligated to give notice of any defects or
irregularities in tenders, nor will anyone incur any liability for failure to give any such notice.
Our acceptance constitutes an agreement. Your tender of an Eligible Option under the procedures
described above is your acceptance of the terms and conditions of the Offer. Subject to our rights
to extend, terminate or amend the Offer, we currently expect that we will, promptly upon the
expiration of the Offer, accept for amendment all properly tendered Eligible Options that have not
been validly withdrawn, and on the next business day we will increase the exercise price per share
to the New Exercise Price determined for that option.
5. RESCISSION RIGHTS.
You may only rescind the tender of your Eligible Options for amendment in accordance with the
provisions of this Section 5. You may rescind the tender of your Eligible Options for amendment at
any time before 11:59 P.M. Eastern Time, on the Expiration Date of the Offer. In addition, unless
we accept and amend your Eligible Options before 11:59 P.M. on the Expiration Date, you may rescind
the tender of your options at any time thereafter. To validly rescind the tender of your Eligible
Options for amendment, you must complete the Rescission Letter and mail it to Corporate Secretary,
Insight Enterprises, Inc., 1305 West Auto Drive, Tempe, AZ 85284. By mailing this Rescission
Letter you are indicating that you no longer wish to tender your Eligible Options for amendment.
If you choose to rescind the tender of any of your Eligible Options, you must rescind the tender of
all of your Eligible Options.
Once you rescind the tender of your Eligible Options for amendment they will no longer be deemed
tendered for amendment under the Offer.
Neither Insight nor any other person is obligated to give notice of any defects or irregularities
in any Rescission Letter mailed to us for purposes of withdrawing tendered Eligible Options from
the Offer, nor will anyone incur any liability for failure to give any such notice. We will
decide, in our sole discretion, all questions as to the form and validity, including time of
receipt, of the Rescission Letter meant to withdraw tendered Eligible Options from the Offer. Our
determination of these matters will be final and binding.
6. |
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ACCEPTANCE OF ELIGIBLE OPTIONS FOR AMENDMENT AND COMMITMENT TO PAY CASH PAYMENT WITH RESPECT
TO AMENDED OPTIONS. |
Upon the terms and subject to the conditions of the Offer, we will, upon the Expiration Date,
accept for amendment all Eligible Options that have been properly tendered and not validly
withdrawn by a Rescission Letter before the Expiration Date. For each Amended Option, we will
increase the exercise
16
price per share to the New Exercise Price on the next business day, currently
scheduled to be
December 21, 2007. If we extend the Expiration Date, then the accepted Eligible Option will be
amended as soon as practicable after the extended Expiration Date.
We will provide written or electronic notice of our acceptance to each Eligible Optionee whose
tendered Eligible Options we have accepted for amendment. Such notice may be by email, press
release or other means. In addition, you will receive a notice (which may be by email) confirming
the fact that you have tendered your Eligible Options and setting forth the terms and conditions of
your Amended Options. This notice will incorporate the terms of the Stock Option Amendment and
Cash Payment Agreement (the “Amendment Agreement”) and together constitute an effective amendment
to your Eligible Options, and you will not be asked to sign any documents in connection with your
Amended Options. The Amendment Agreement documents the New Exercise Price for each of your Amended
Options and describes the terms of the Cash Payment payable with respect to those Amended Options.
The form of the Amendment Agreement is attached to the Schedule TO filed with the SEC. The notice
will set forth new Exercise Prices of your Amended Options and confirm the Company’s unconditional
obligation to pay you the Cash Payment for each of your Amended Options. Such Cash Payment is
currently expected to be paid in January 2008 and will be paid whether or not you remain an
employee through the payment date.
However, if you are not an employee of the Company or one of its subsidiaries on the Expiration
Date, then none of your tendered Eligible Options will be amended and you will not be entitled to
any Cash Payment with respect to those options. The tendered options will be returned to you and
will remain exercisable in accordance with the terms in effect for them at the time of tender,
including the current exercise price per share.
7. CONDITIONS OF THE OFFER.
If at any time on or after November 21, 2007, and before the Expiration Date, any of the following
events has occurred, or has been reasonably determined by us to have occurred, and if we think the
occurrence makes it inadvisable for us to proceed with the Offer or with our acceptance of the
Eligible Options tendered to us for amendment, we will not accept any Eligible Options tendered to
us for amendment, and we may terminate or amend the Offer or postpone our acceptance of any
Eligible Options tendered to us for amendment, in each case, subject to Rule 13e-4(f)(5) under the
Securities Exchange Act of 1934, as amended (the “1934 Act”).
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(i) |
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There shall have been threatened or instituted or be pending any action or proceeding
by any government or governmental, regulatory or administrative agency, authority or
tribunal or by any other person, domestic or foreign, before any court, authority, agency
or tribunal that directly or indirectly challenges the making of the Offer, the amendment
of the existing exercise price in effect for some or all of the tendered Eligible Options,
the payment of the Cash Payments or otherwise relates in any manner to the Offer or that,
in our judgment, could materially and adversely affect our business, condition (financial
or other), operating results, operations or prospects, or otherwise materially impair in
any way the contemplated future conduct of our business or the business of any of our
subsidiaries or materially impair the contemplated benefits of the Offer to us; |
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(ii) |
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There shall have been any action threatened, pending or taken, or approval withheld, or
any statute, rule, regulation, judgment, order or injunction threatened, proposed, sought,
promulgated, enacted, entered, amended, enforced or deemed to be applicable to the Offer or
us |
17
|
|
|
or any of our subsidiaries or other affiliated entities, by any court or any authority,
agency or tribunal that, in our reasonable judgment, would or might directly or indirectly: |
|
• |
|
make the amendment of the tendered Eligible Options or payment of the Cash
Payments illegal or otherwise restrict or prohibit consummation of the Offer; |
|
|
• |
|
delay or restrict our ability, or make us unable, to accept for amendment some or
all of the tendered Eligible Options; |
|
|
• |
|
materially weaken the benefits we hope to give you as a result of the Offer,
whether as a result of further changes to Section 409A of the Code, the regulations
promulgated thereunder or other tax laws that would affect the Offer or the Eligible
Options; or |
|
|
• |
|
materially and adversely affect our business, condition (financial or other),
operating results, operations or prospects or otherwise materially impair in any way
the contemplated future conduct of our business or the business of any of our
subsidiaries; |
|
(iii) |
|
There shall have occurred: |
|
• |
|
any general suspension of trading in, or limitation on prices for, securities on
any national securities exchange or in the over-the-counter market; |
|
|
• |
|
any significant change in the market price of the shares of our common stock or
any change in the general political, market, economic or financial conditions in the
United States or abroad that could, in our reasonable judgment, have a material
adverse effect on our business, condition (financial or other), operating results,
operations or prospects or on the trading in our common stock, or that, in our
reasonable judgment, makes it inadvisable to proceed with the Offer; |
|
|
• |
|
the declaration of banking moratorium or any suspension of payments in respect of
banks in the United States; |
|
|
• |
|
any limitation, whether or not mandatory, by any governmental, regulatory or
administrative agency or authority on, or any event that, in our reasonable judgment,
might effect the extension of credit to us by banks or other lending institutions; |
|
|
• |
|
the commencement or continuation of a war or other national calamity directly or
indirectly involving the United States, which could reasonably be expected to affect
materially or adversely, or to delay materially, the completion of the Offer; or |
|
|
• |
|
in the case of any of the foregoing existing at the time of the commencement of
the Offer, a material acceleration or worsening thereof; |
|
(iv) |
|
There shall have occurred any change in generally accepted accounting standards or the
application or interpretation thereof that could or would require us for financial
reporting purposes to record compensation expenses against our operating results in
connection with the Offer that would be in excess of any compensation expenses that we
would be required to record under generally accepted accounting standards in effect at the
time we commence the Offer; |
18
|
(v) |
|
A tender or exchange offer with respect to some or all of our outstanding common stock,
or a merger or acquisition proposal for us, shall have been proposed, announced or made by
another person or entity or shall have been publicly disclosed, or we shall have learned
that: |
|
• |
|
any person, entity or “group,” within the meaning of Section 13(d)(3) of the 1934
Act, shall have acquired or proposed to acquire beneficial ownership of more than 5%
of the outstanding shares of our common stock, or any new group shall have been
formed that beneficially owns more than 5% of the outstanding shares of our common
stock, other than any such person, entity or group that has filed a Schedule 13D or
Schedule 13G with the SEC before November 21, 2007; |
|
|
• |
|
any such person, entity or group that has filed a Schedule 13D or Schedule 13G
with the SEC before November 21, 2007, shall have acquired or proposed to acquire
beneficial ownership of an additional 2% or more of the outstanding shares of our
common stock; or |
|
|
• |
|
any person, entity or group shall have filed a Notification and Report Form under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976 or made a public
announcement reflecting an intent to acquire us or any of our subsidiaries or any of
the assets or securities of us or any of our subsidiaries; |
|
(vi) |
|
If we determine that an different solution is available to Insight and the Eligible
Optionees to resolve the unfavorable personal tax consequences for Eligible Optionees
relating to the Eligible Options and the Insight Board of Directors approves such actions; |
|
|
(vii) |
|
Any change or changes shall have occurred in our business, condition (financial or
other), assets, operating results, operations, prospects or stock ownership or that of our
subsidiaries that, in our judgment, is or may be material to us or our subsidiaries or
other affiliated entities or otherwise makes it inadvisable for us to proceed with the
Offer; or |
|
|
(viii) |
|
Any rules, regulations or actions by any governmental authority, NASDAQ, or other
regulatory or administrative authority of any national securities exchange have been
enacted, enforced or deemed applicable to Insight that makes it inadvisable for us to
proceed with the Offer. |
The conditions to the Offer are for our benefit. We may assert them in our discretion regardless
of the circumstances giving rise to them before the Expiration Date (or the extended expiration
date). We may waive them, in whole or in part, at any time and from time to time before the
Expiration Date, in our discretion, whether or not we waive any other condition to the Offer. Our
failure at any time to exercise any of these rights will not be deemed a waiver of any such rights.
The waiver of any of these rights with respect to particular facts and circumstances will not be
deemed a waiver with respect to any other facts and circumstances. Any determination we make
concerning the events described in this Section 7 will be final and binding upon all persons.
8. |
|
PRICE RANGE OF COMMON STOCK UNDERLYING THE OPTIONS. |
There is no established trading market for the Eligible Options or any other options granted under
the 1998 Plan.
19
Our common stock is quoted on The NASDAQ Global Select Market under the symbol “NSIT.” The
following table shows, for the periods indicated, the high and low sales prices per share of our
common stock on The NASDAQ Global Select Market.
|
|
|
|
|
|
|
|
|
QUARTER ENDED |
|
HIGH |
|
LOW |
September 30, 2007 |
|
$ |
26.50 |
|
|
$ |
22.24 |
|
June 30, 2007 |
|
$ |
22.65 |
|
|
$ |
17.98 |
|
March 31, 2007 |
|
$ |
20.33 |
|
|
$ |
17.75 |
|
December 31, 2006 |
|
$ |
22.69 |
|
|
$ |
18.59 |
|
September 30, 2006 |
|
$ |
20.96 |
|
|
$ |
16.22 |
|
June 30, 2006 |
|
$ |
22.46 |
|
|
$ |
17.78 |
|
March 31, 2006 |
|
$ |
22.14 |
|
|
$ |
19.79 |
|
December 31, 2005 |
|
$ |
21.60 |
|
|
$ |
18.14 |
|
September 30, 2005 |
|
$ |
21.19 |
|
|
$ |
18.20 |
|
June 30, 2005 |
|
$ |
20.47 |
|
|
$ |
17.39 |
|
March 31, 2005 |
|
$ |
20.36 |
|
|
$ |
17.23 |
|
On November 16, 2007, the last reported sale price of our common stock on The NASDAQ Global Select
Market was $19.85 per share.
The price of our common stock has been, and in the future may be, volatile and could decline. The
trading price of our common stock has fluctuated in the past and is expected to continue to do so
in the future, as a result of a number of factors, many of which are outside our control. In
addition, the stock market has experienced extreme price and volume fluctuations that have affected
the market prices of many companies, and that have often been unrelated or disproportionate to the
operating performance of these companies.
9. |
|
SOURCE AND AMOUNT OF CONSIDERATION; TERMS OF AMENDED OPTIONS. |
Consideration
Should you accept this Offer, then with respect to your Eligible Options, you will be eligible to
receive the special Cash Payment. The Cash Payment is currently expected to be paid in January
2008. The source of funds for the Company will be its working capital resources.
If all Eligible Options tendered under the Offer are amended, then the resulting Amended Options
will cover 259,130 shares of our common stock in the aggregate, which represents approximately 0.5%
of the total number of shares of our common stock outstanding as of November 16, 2007. The Cash
Payments payable under this Offer will be in the total maximum dollar amount of approximately
$58,200, assuming the exercise price of each tendered Eligible Option is increased to the fair
market value per share on the date on which the option grant was actually finalized.
Future Grants; Employment Relationship
The amendment of the tendered Eligible Options under the Offer will not create any contractual or
other right of the tendering Eligible Optionees to receive any future grants of stock options,
restricted stock units or other stock-based compensation. This Offer does not change the “at-will”
nature of an Eligible Optionee’s employment with us, and an Eligible Optionee’s employment may be terminated by us or by
the optionee at any time, for any reason, with or without cause.
20
Summary of the 1998 Plan
The following is a description of the principal features of the 1998 Plan. The description of the
1998 Plan is subject to, and qualified in its entirety by reference to, all the provisions of the
1998 Plan and the form of stock option agreement in effect for the Eligible Options granted under
the 1998 Plan. The 1998 Plan has been filed as an Exhibit to our Registration Statement on Form
S-8 filed on December 4, 2003. Please contact the Stock Plan Administrator at
_StockPlanAdmin@insight.com to receive a copy of each plan document and the form of stock option
agreement. We will promptly furnish you copies of those documents at our expense.
|
• |
|
The 1998 Plan was originally adopted in October 1997. Our Board of Directors approved
an amendment to 1998 Plan in March 2000, and our stockholders approved that amendment at
our annual meeting in May 2000. The 1998 Plan does not have an expiration date. However,
upon approval of our 2007 Omnibus Plan at our 2007 annual meeting of stockholders on
November 12, 2007, we stopped making new grants out of the 1998 Plan. Options granted
under the 1998 Plan vest according to the vesting schedule for each option grant and
generally expire 5 years after, and not more than 10 years after, the date of grant. If
the option recipient’s employment terminates, the recipient generally has seven business
days following termination to exercise the vested portion of a grant. Option grants made
in May 2005 and later allow for exercise following termination for a period of 90 days. |
Term of Options
The term of options granted under the 1998 Plan is as stated in the option agreements. All options
amended under this Offer will expire on the same date as the scheduled expiration of the Eligible
Options they amend. Amended options will expire earlier upon your termination of employment with
Insight, in accordance with terms of the 1998 Plan and your option agreement.
Exercise Price
The Amended Options will have an exercise price equal to the New Exercise Price, which is equal to
the fair market value of the underlying stock on the date on which the option grant was actually
finalized.
Vesting and Exercise
Any Amended Option you receive will be subject to the same vesting schedule as the option it
amends, and you will receive vesting credit for any vesting credit that accrued under the original
option. That means that upon the Amendment Date and time, your Amended Options will be vested to
the same extent and will continue to vest at the same rate as the options they amend. Continued
vesting is subject to your continued employment with us through each relevant vesting date.
Adjustments upon Certain Events
Although we do not currently anticipate any such merger or acquisition, if we merge or consolidate
into, or are acquired by another entity before the expiration of the Offer, you may choose to
withdraw any options with respect to which you elected to accept this Offer and your options will
be treated in accordance with the 1998 Plan and with your option agreement. Further, if we are
acquired before the expiration of the Offer, we reserve the right to withdraw the Offer, in which
case your options and your rights under them will remain intact and remain exercisable for the time period set forth in your
option agreement, and you will receive no Amended Options, Cash Payments or other consideration for
the
21
options. If we are acquired before the expiration of the Offer but do not withdraw the Offer,
we (or the successor entity) will notify you of any material changes to the terms of the Offer or
Amended Options, including any additional adjustments to the exercise price or number of shares
that will be subject to the
Amended Options. Under such circumstances, we expect that the type of security and the number of
shares covered by each Amended Option would be adjusted based on the consideration per share given
to holders of our common stock in connection with the acquisition. As a result of such
adjustments, you may receive options for more or fewer shares of the acquirer’s common stock than
the number of shares subject to the Eligible Options with respect to which you accept this Offer or
than the number you would have received under an Amended Option if no acquisition had occurred.
If we are acquired, it is possible that an acquirer could terminate your employment or other
service and therefore, to the extent that you have any Amended Options subject to vesting, such
options will cease to vest and will terminate in accordance with their terms. Regardless of
whether you remain an employee on the scheduled payment date, you will still receive any Cash
Payments to which you are entitled as a result of your participation in this Offer.
Finally, if we are acquired after the options for which you have chosen to accept this Offer have
been accepted for Amended Options, the treatment of your Amended Options in such a transaction will
be governed by the terms of the transaction agreement or the terms of the 1998 Plan and as amended
in accordance with this Offer.
Changes in Capitalization
The 1998 Plan generally provides that in the event of any stock split, stock dividend, combination
or reclassification, or other increase or decrease in the number of issued shares of common stock
effected without receipt of consideration, we will proportionately adjust the number of shares of
common stock which may be delivered under the 1998 Plan, and the number and price of shares of
common stock subject to outstanding awards thereunder.
Taxation of Non-Statutory Stock Options
An optionee will not recognize taxable income for U.S. federal income tax purposes upon the grant
of a non-statutory option. In general, an optionee will recognize ordinary income in the year in
which the option is exercised equal to the excess of the fair market value of the purchased shares
on the exercise date over the exercise price paid for the shares, and the optionee will be required
to satisfy the tax withholding requirements applicable to such income.
We will generally be entitled to an income tax deduction equal to the amount of ordinary income
recognized by the optionee with respect to the exercised non-statutory option.
If you are subject to the tax laws in more than one jurisdiction, you should be aware that tax
consequences of more than one country may apply to you as a result of your receipt, vesting or
exercise of an Insight grant. You should be certain to consult your personal tax or legal advisor
to discuss these consequences.
22
Transferability of Options
Options granted under the 1998 Plan generally may not be sold, pledged, assigned, hypothecated,
transferred or disposed of in any manner other than by will or by the laws of descent or
distribution.
Registration of Shares Underlying the Options
All of the shares of Insight common stock issuable upon exercise of Amended Options have been
registered under the United States Securities Act of 1933, as amended (the “Securities Act”), on
registration statements on Form S-8 filed with the SEC. Unless you are an employee who is
considered an affiliate of Insight for purposes of the Securities Act, you will be able to sell the
shares issuable upon exercise of your Amended Options free of any transfer restrictions under
applicable United States securities laws.
10. |
|
INFORMATION CONCERNING INSIGHT. |
Insight Enterprises, Inc. is a Delaware corporation incorporated in 1991. We are a leading
provider of brand-name information technology (“IT”) hardware, software and services to large
enterprises, small- to medium-sized businesses and public sector institutions in North America,
Europe, the Middle East, Africa and Asia-Pacific. Our principal executive offices are located at
1305 West Auto Drive, Tempe, Arizona 85284, and our telephone number is (480) 902-1001. Please see
Section 17 of this Offer entitled, “Additional Information,” for instructions on how you can obtain
copies of our SEC filings, including filings that contain our financial statements.
11. |
|
INTERESTS OF DIRECTORS AND OFFICERS; TRANSACTIONS AND ARRANGEMENTS CONCERNING THE OPTIONS;
MATERIAL AGREEMENTS WITH DIRECTORS AND OFFICERS. |
A list of the current members of our Board of Directors and executive officers is attached as
Schedule A to this document. As of November 16, 2007, our current executive officers and directors
as a group beneficially owned outstanding options under our various stock option plans to purchase
a total of 1,823,695 shares of our common stock under those plans. That number
represented approximately 52% of the shares of our common stock subject to options under our various stock option plans as of that date. We also
refer you to our definitive proxy statement for our 2007 annual meeting of stockholders, filed with
the SEC on October 9, 2007, for information concerning agreements, arrangements and understandings
between the Company and other persons with respect to the Company’s common stock. A copy of our
proxy statement can be found on the SEC’s website at www.sec.gov and on our website at
www.insight.com.
Members of our Board of Directors and our executive officers are not participating in this Offer
and, therefore, do not hold any interests in the subject securities.
Except as set forth below and other than stock option grants, restricted stock unit awards and
other stock-based awards in the ordinary course to employees who are not executive officers, there
have been no transactions in any outstanding options to purchase our common stock or in our common
stock that were effected during the 60-day period ended November 21, 2007, by Insight or by any
current executive officer, director, affiliate or subsidiary of Insight.
23
On October 10, 2007, David J. Robino, a member of the Board of Directors of the Company, was
granted 2,000 restricted stock units. Also on October 10, 2007, Steven Andrews, the Company’s
General Counsel, was granted 15,000 restricted stock units. On November 12, 2007, each of Timothy A. Crown, Bennett Dorrance, Michael
M. Fisher, Larry A. Gunning, Robertson C. Jones, Kathleen S. Pushor and David J. Robino received
2,500 restricted stock units.
12. |
|
STATUS OF OPTIONS ACCEPTED BY US IN THE OFFER; ACCOUNTING CONSEQUENCES OF THE OFFER. |
The terms and provisions of each Amended Option will not differ from the terms and provisions in
effect for that option at the time of tender, except that the Amended Option will have an exercise
price equal to the New Exercise Price for that option. Accordingly, each Amended Option will
continue to remain an outstanding option under the particular Plan under which it was originally
granted.
Pursuant to the accounting standards in effect under FAS 123R, we will not recognize a compensation
expense for financial reporting purposes with respect to the amendment of the Eligible Options to
increase the exercise price per share to the New Exercise Prices. We will recognize compensation
expense for financial reporting purposes in the amount of the Cash Payments that become payable
under the terms of the Offer. That expense will be accrued for the fiscal quarter in which we
accept the tendered Eligible Options for amendment.
13. |
|
LEGAL MATTERS; REGULATORY APPROVALS. |
We are not aware of any license or regulatory permit that appears to be material to our business
that might be adversely affected by our increasing the exercise prices of the Eligible Options to
the New Exercise Prices and paying the Cash Payments or of any approval or other action by any
government or governmental, administrative or regulatory authority or agency, domestic or foreign,
that would be required for such amendment to those options and the payment of the Cash Payments as
contemplated herein. Should any such approval or other action be required, we presently
contemplate that we will seek such approval or take such other action. We cannot assure you that
any such approval or other action, if needed, would be obtained or would be obtained without
substantial conditions or that the failure to obtain any such approval or other action might not
result in adverse consequences to our business. Our obligation to amend Eligible Options is
subject to certain conditions, including the conditions described in Section 7.
14. |
|
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES. |
The following is a general summary of the material U.S. federal income tax consequences applicable
to the amendment of the Eligible Options and the payment of the Cash Payments. Foreign, state and
local tax consequences are not addressed.
Acceptance of Offer
If you tender your Eligible Options, you will not recognize any taxable income for U.S. federal
income tax purposes at the time of your tender.
Amendment of Option
24
The amendment of your Eligible Options to increase the exercise price per share to the New Exercise
Price determined for that option is not a taxable event for U.S. federal income tax purposes.
Exercise of Amended Option
Your Amended Option will continue to be taxable as a non-statutory stock option for U.S. federal
income tax purposes. Accordingly, upon each exercise of such option, you will recognize immediate
taxable income equal to the excess of (i) the fair market value of the purchased shares at the time
of exercise over (ii) the exercise price paid for those shares. Insight must collect the
applicable withholding taxes with respect to such income upon exercise.
Sale of Acquired Shares
The subsequent sale of the shares acquired upon the exercise of your Amended Option will give rise
to a capital gain to the extent the amount realized upon that sale exceeds the sum of the
(i) exercise price paid for the shares plus (ii) the taxable income recognized in connection with
the exercise of such option for those shares. A capital loss will result to the extent the amount
realized upon such sale is less than such sum. The gain or loss will be long-term if the shares
are not sold until more than one year after the date the Amended Option is exercised for those
shares.
Cash Payment
The Cash Payment will be treated as wages for tax withholding purposes and will be subject to
taxation upon receipt. Therefore, Insight must withhold all applicable federal, state and local
income and employment taxes, and you will receive only the part of the payment remaining after
those taxes have been withheld.
Foreign Taxation
If you are subject to the tax laws of jurisdictions in addition to the Untied States, you should be
aware that tax consequences of more than one country may apply to you as a result of your receipt,
vesting or exercise of an Insight option grant and/or your participation in the Offer.
We recommend that you consult your own tax or legal advisor with respect to the foreign and U.S.
federal, state and local tax consequences of participating in the Offer.
15. |
|
EXTENSION OF THE OFFER; TERMINATION; AMENDMENT. |
We expressly reserve the right, in our discretion, at any time and from time to time, and
regardless of whether or not any event set forth in Section 7 has occurred or is deemed by us to
have occurred, to extend the period of time during which the Offer is open and thereby delay the
acceptance of any Eligible Options for amendment by giving notice of such extension to the
tendering Eligible Optionees and making a public announcement thereof.
We also expressly reserve the right, in our judgment, at any time before the Expiration Date, to
terminate or amend the Offer and to postpone our acceptance of any tendered Eligible Options for
amendment upon the occurrence of any of the conditions specified in Section 7, by giving written or
electronic notice of such termination or postponement to the tendering Eligible Optionees and
making a public announcement thereof. Our reservation of the right to delay our acceptance of the
tendered Eligible Options for amendment is limited by Rule 13e-4(f)(5) promulgated under the 1934
Act, which requires that we must
25
pay the consideration offered or return the tendered Eligible Options promptly after termination or
withdrawal of the Offer.
Amendments to the Offer may be made at any time and from time to time by public announcement of the
amendment. In the case of an extension, the amendment will be issued no later than 9:00 A.M.
Eastern Time on the next business day after the last previously scheduled or announced Expiration
Date. Any public announcement made under the Offer will be disseminated promptly to Eligible
Optionees in a manner reasonably designed to inform option holders of such change.
If we materially change the terms of the Offer or the information concerning the Offer, or if we
waive a material condition of the Offer, we will extend the Offer to the extent required by Rules
13e-4(d)(2) and 13e-4(e)(3) under the 1934 Act. Those rules require that the minimum period during
which an Offer must remain open following material changes in the terms of the Offer or information
concerning the Offer, other than a change in price or a change in percentage of securities sought,
will depend on the facts and circumstances, including the relative materiality of such terms or
information.
If we decide to take any of the following actions, we will give notice of such action and keep the
Offer open for at least ten business days after the date of such notification:
|
(1) |
|
we increase or decrease the amount of consideration offered for the Eligible Options;
or |
|
|
(2) |
|
we decrease or increase the number of Eligible Options eligible to be tendered in the
Offer. |
We will not pay any fees or commissions to any broker, dealer or other person for soliciting
submissions of Eligible Options for amendment under this Offer. The fees and expenses of the Offer
incurred by the Company are not material to the Company.
17. |
|
ADDITIONAL INFORMATION. |
We have filed with the SEC a Tender Offer Statement on Schedule TO, of which this document is a
part, with respect to the Offer. This document does not contain all of the information contained
in the Schedule TO and the exhibits to the Schedule TO. We recommend that you review the Schedule
TO, including its exhibits, and the following materials that we have filed with the SEC before
making a decision on whether to tender your Eligible Options for amendment:
|
(a) |
|
our Annual Report on Form 10-K for our fiscal year ended December 31, 2006, filed with
the SEC on July 26, 2007 and our Form 10-K/A amending our Annual Report on Form 10-K for
our fiscal year ended December 31, 2006, filed with the SEC on October 9, 2007; |
|
|
(b) |
|
our Quarterly Reports on Form 10-Q for our fiscal quarters ended March 31, 2007,
June 30, 2007 and September 30, 2007, filed with the SEC on July 26, 2007, August 9, 2007
and November 9, 2007, respectively; |
|
|
(c) |
|
our Current Report on Form 8-K, filed with the SEC on
November 16, 2007; |
|
|
(d) |
|
our Current Report on Form 8-K, filed with the SEC on
November 21, 2007; |
|
|
(e) |
|
our definitive proxy statement for our 2007 Annual Meeting of Stockholders; and |
|
|
(f) |
|
the description of our common stock included in our registration statement on Form 8-A,
which was filed with the SEC on November 9, 1994, including any amendments or reports we
file for the purpose of updating that description. |
26
Any additional documents that we may file with the SEC pursuant to Sections 13(a), 13(c), 14 or
15(d) of the 1934 Act between the date of the Offer and the Expiration Date are also incorporated
by reference. These include periodic reports, such as quarterly reports on Form 10-Q and current
reports on Form 8-K, as well as proxy statements.
These filings, our other annual, quarterly and current reports, our proxy statements and our other
SEC filings are available to the public on the SEC’s website at www.sec.gov. These filings may
also be examined, and copies may be obtained, at the following SEC public reference room located at
100 F Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the
public reference rooms by calling the SEC at 1-800-SEC-0330.
We will also provide without charge to each person to whom a copy of this document is delivered,
upon the written or oral request of any such person, a copy of any or all of the documents to which
we have referred you, other than exhibits to such documents (unless such exhibits are specifically
incorporated by reference into such documents). Requests should be directed to the Stock Plan
Administrator at _StockPlanAdmin@insight.com.
As you read the foregoing documents, you may find some inconsistencies in information from one
document to another. If you find inconsistencies between the documents, or between a document and
this document, you should rely on the statements made in the most recent document.
The information relating to Insight in this document should be read together with the information
contained in the documents to which we have referred you.
18. |
|
FORWARD-LOOKING STATEMENTS. |
This document and our SEC reports referred to above contain certain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the 1934 Act.
All statements other than statements of historical fact may be forward-looking statements. You can
identify these and other forward-looking statements by the use of words such as “may,” “will,”
“could,” “would,” “should,” “expects,” “plans,” “anticipates,” “relies,” “believes,” “estimates,”
“predicts,” “intends,” “potential,” “continue,” or the negative of such terms, or other comparable
terminology. Forward-looking statements also include the assumptions underlying or relating to any
of the foregoing statements. Such forward-looking statements are subject to a number of risks and
uncertainties that could cause actual results to differ materially from those anticipated by the
forward-looking statements, including, without limitation, the following risks: changes in the
information technology industry and/or the economic environment; our reliance on partners for
product availability, marketing funds, purchasing incentives and competitive products to sell;
disruptions in our information technology and voice and data networks, including the upgrade to
mySAP and the migration of Software Spectrum to our information technology and voice and data
networks; the integration and operation of Software Spectrum, including our ability to achieve the
expected benefits of the acquisition; actions of our competitors, including
manufacturers/publishers of products we sell; the informal inquiry from the SEC and the fact that
we could be subject to stockholder litigation related to our historical stock option granting
practices and the related restatement of our consolidated financial statements; the risks
associated with international operations; sales of software licenses are subject to seasonal
changes in demand; increased debt and interest expense and lower availability on our financing
facilities; increased exposure to currency exchange risks; our dependence on key personnel; risk
that purchased goodwill or amortizable intangible assets become impaired; our failure to comply
with the terms and conditions of our public sector contracts; risks associated with our very
limited experience in outsourcing business functions to India; rapid changes in product standards; intellectual property infringement claims.; and other risks
detailed in the Company’s filings with the SEC.
27
SCHEDULE A
INFORMATION CONCERNING
THE DIRECTORS AND EXECUTIVE OFFICERS
OF INSIGHT ENTERPRISES, INC.
The directors and executive officers of Insight Enterprises, Inc. are set forth below.
Timothy A. Crown
(Age 43)
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Chairman of the Board |
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Director |
Mr. Crown, a co-founder of the Company, stepped down from the position of President and Chief
Executive Officer in November 2004, positions he had held since January 2000 and October 2003,
respectively. Mr. Crown has been a director since 1994 and assumed the position of Chairman of the
Board in November 2004. Mr. Crown had been employed by us or one of our predecessors since 1988.
Bennett Dorrance
(Age 61)
Mr. Dorrance has been a director since 2004. He has been a managing Director of DMB Associates, a
real estate service company based in Scottsdale, Arizona since 1984. Mr. Dorrance has served on
the Board of Directors of Campbell Soup Company since 1989. He was also a member of the Board of
Directors of Bank One Corporation from 1997 to 2000.
Richard A. Fennessy
(Age 42)
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President and Chief Executive Officer |
Mr. Fennessy was elected President and Chief Executive Officer effective November 2004 and was
appointed Director in September 2004. From 1987 to 2004, Mr. Fennessy worked for International
Business Machines Corporation (“IBM”), where he held numerous domestic and international executive
positions. His most recent positions included: General Manager, Worldwide, ibm.com; Vice
President, Worldwide Marketing – Personal Computer Division; and General Manager, Worldwide PC
Direct organization.
Michael M. Fisher
(Age 61)
Mr. Fisher has been a director since 2001 and is the Audit Committee’s designated financial expert.
Mr. Fisher has served as President of Power Quality Engineering, Inc., a manufacturer of specialty
filters, since 1995.
Larry A. Gunning
(Age 63)
Mr. Gunning has been a director since 1995. He has been Manager and Director of 3D Petroleum LLC,
a petroleum company, since 2001. From 1988 to 2001, Mr. Gunning was President and a Director of
Pasco Petroleum Corp., a petroleum marketing company that merged with 3D Petroleum LLC in 2001.
Mr. Gunning is also a member and director of Cobblestone AutoSpa, which owns and operates several
full-service carwashes.
Stanley Laybourne
(Age 58)
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Chief Financial Officer, Secretary and Treasurer |
Mr. Laybourne has been a director since 1994. He became our Chief Financial Officer and Treasurer
in 1991, served as Executive Vice President from 2002 to 2006 and served as Secretary from 1994 to
October 2002 and from September 2004 to present. Mr. Laybourne is a certified public accountant.
Robertson C. Jones
(Age 62)
Mr. Jones has been a director since 1995. Mr. Jones was Senior Vice President and General Counsel
of Del Webb Corporation, a developer of master-planned residential communities, from 1992 through
2001.
Kathleen S. Pushor
(Age 49)
Ms. Pushor was appointed director in September 2005. Since January 2006, she has served as
President and Chief Executive Officer of the Greater Phoenix Chamber of Commerce. From 2003 to
2005, she served as the Chief Executive Officer of the Arizona Lottery. From 1999 to 2002, she
operated an independent consulting practice in the technology distribution sector, and from 1998 to
2005, she was a member of the Board of Directors of Zones, Inc., a direct marketer of IT products.
David J. Robino
(Age 47)
Mr. Robino has been a director since May 2007. Mr. Robino served as a Non-Executive Director of
Memec Group Holdings Limited, a global distributor of specialty semiconductors, from 2001 until the
sale of that business to Avnet, Inc. in 2005. He served Gateway, Inc., first as Executive Vice
President and Chief Administrative Officer and later as Vice Chairman from 1998 to 2001.
Previously, he held executive positions at The Nielsen Company from 1989 to 1995 and at AT&T from
1995 to 1997.
Steven R. Andrews
(Age 54)
Mr. Andrews joined Insight Enterprises, Inc. in September 2007 as our General Counsel. Prior to
joining Insight Enterprises, Inc., Mr. Andrews was Senior Vice President, Law and Human Resources
of ShopKo Stores, Inc. from 2002 to 2006. Prior to joining ShopKo, Mr. Andrews served as Senior
Vice President, General Counsel and Secretary of PepsiAmericas, Inc. from 1999 through 2001.
Before that, Mr.
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Andrews was the interim President and Chief Executive Officer of Multigraphics, Inc., after having
served as Vice President, General Counsel and Secretary from 1994 to 1999.
Catherine W. Eckstein
(Age 50)
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Chief Marketing Officer |
Ms. Eckstein joined Insight Enterprises, Inc. in March 2004 and was promoted to Chief Marketing
Officer of Insight Enterprises, Inc. in May 2005. Before joining Insight Enterprises, Inc., Ms.
Eckstein served as Senior Vice President of Marketing and Corporate Vice President of Worldwide
Marketing at Ingram Micro from 2000 to 2003.
Stuart A. Fenton
(Age 39)
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President – Insight EMEA |
Mr. Fenton joined Insight Enterprises, Inc. in October of 2002 and was most recently promoted to
President of our Insight EMEA operating segment in November 2006. Prior to his promotion, he held
the position of Managing Director of Insight Direct UK Ltd. From 1995 to 2002, Mr. Fenton held
various positions at Micro Warehouse Inc., serving most recently as the General Manager of Micro
Warehouse Canada.
Gary M. Glandon
(Age 48)
Mr. Glandon joined Insight Enterprises, Inc. in February 2005 as Chief People Officer. Prior to
joining Insight, Mr. Glandon served as Vice President of Human Resources for Honeywell
International’s Aerospace division from 2003 to 2005. From 2001 to 2003, Mr. Glandon served as
Vice President of Human Resources of Tanox, Inc., a publicly traded biopharmaceutical firm.
Karen K. McGinnis
(Age 40)
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Senior Vice President and Chief Accounting Officer |
Ms. McGinnis joined Insight Enterprises, Inc. in March 2000 and was named Chief Accounting Officer
in September 2006. She has served as Assistant Secretary since January 2005 and was promoted to
Senior Vice President of Finance in April 2001. Ms. McGinnis is a certified public accountant.
Mark T. McGrath
(Age 42)
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President – Insight North America/APAC |
Mr. McGrath joined Insight Enterprises, Inc. in May 2005 as President of Insight Direct USA, Inc.
He was appointed the President of our North America and APAC business segments in September 2006.
From 1987 to 2005, Mr. McGrath worked for IBM, most recently serving as Vice President of IBM.com
Americas, a division of IBM focused on leveraging the phone and the web. Earlier positions held at
IBM included Vice President, IBM Direct (a division of ibm.com), and Vice President of Channel
Sales, IBM Personal Computing Division.
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David B. Rice
(Age 54)
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Chief Information Officer |
Mr. Rice joined Insight Enterprises, Inc. in July 2000 and was named Chief Information Officer of
Insight Enterprises, Inc. in February 2005. Mr. Rice has served as Chief Information Officer of
one of our operating entities from July 2000 to January 2005. Prior to joining Insight, he served
as Vice President, IT Mail Order Operations at PCS Health Systems from 1994 to 2000.
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