EXHIBIT 10.4
SECOND AMENDMENT TO
EMPLOYMENT AGREEMENT
AND CONSULTING AGREEMENT
This Second Amendment (this "Amendment") to Employment Agreement, which
shall be effective as of April 1, 2003 is by and among Xxxx Xxxxxxx ("Xxxxxxx"),
Insight Services Corporation ("ISC") and Insight Direct Worldwide, Inc. ("IDW").
ISC, IDW, and/or any of their affiliates as may be appropriate under applicable
facts and circumstances, are collectively called "Company."
RECITALS
X. Xxxxxxx is currently employed by Company pursuant to an
Employment Agreement dated 11/17/2000 (the "Original Agreement"), an Amendment
to Employment Agreement effective April 25, 2002 (the "First Amendment") and a
letter from ISC dated December 27, 2002 notifying Xxxxxxx of the termination of
the renewal under the Agreement as amended by the First Amendment (the
"Notice"). For purposes of this Amendment, the Original Agreement, the First
Amendment and the Notice are collectively called the "Agreement."
B. The parties mutually desire to modify their current employment
relationship, provide for an orderly termination of Xxxxxxx'x employment, and
provide for a period of consulting by Xxxxxxx, all on terms satisfactory to both
Xxxxxxx and Company, as further set forth in this Amendment.
AGREEMENTS
In consideration of the acts, payments, covenants and mutual agreements
contained herein, Company and Xxxxxxx agree as follows:
1. Modification of Current Relationship. Effective as of March
18, 2003 (the "Effective Date"), Xxxxxxx hereby resigns from all officer
positions he holds with Company. Thereafter, Xxxxxxx'x employment by Company
shall continue until June 16, 2003, at which time it shall end for all purposes
(the "Date of Termination"). As of the Effective Date, Xxxxxxx will have no
specific duties with respect to the Company, but shall be available to consult
on Company matters and assist with Company projects as may be requested from
time to time by the CEO or President of Insight Enterprises, Inc. or by the
President of Insight North America, Inc. Xxxxxxx shall be entitled to receive
his base salary and accrued vacation through June 16, 2003 and a bonus with
respect to the first quarter of 2003 in accordance with the provisions of the
Agreement. Payment for the base salary, the accrued but unpaid vacation, and the
bonus shall be made in accordance with Company's standard payroll policies. From
and after the Effective Date, and continuing throughout the Consulting Term, as
defined below, Xxxxxxx shall no longer have access to Company premises, except
by invitation, and shall not have any required number
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of work hours so long as he responds appropriately to Company's reasonable
requests for consulting services; he shall not have any Company titles and shall
not have any authority to act for or on behalf of the Company or to bind the
Company in any way. From and after the Date of Termination, Xxxxxxx shall have
no further rights or duties as an employee or officer for or on behalf of
Company. The termination shall be treated by both parties as a termination by
Xxxxxxx without "Good Reason."
2. Engagement as Consultant. Subject to the terms and conditions
of this Agreement, during the Consulting Term, as defined below, Xxxxxxx agrees
to perform services for Company as defined in this Section 2. Beginning on June
17, 2003 and continuing until March 31, 2004, Xxxxxxx shall serve as a
consultant for Company unless the consulting arrangement is terminated earlier
as provided in this Agreement (the "Consulting Term"). During the Consulting
Term, Xxxxxxx shall be available to consult on Company matters and assist with
Company projects as may be requested from time to time by the CEO or President
of Insight Enterprises, Inc. or by the President of Insight North America, Inc.
The Consulting arrangement may only be terminated by Company for "Cause," which
is defined for this purpose to mean Company's reasonable belief that Xxxxxxx has
breached any provision of the Agreement or this Amendment or any other
obligation to Company, engaged in any misconduct or dishonesty relating to
Company or engaged in any other conduct disruptive to the business or operations
of Company. Any termination of the Consulting arrangement by Company for Cause
shall be as provided in Section 16 of this Amendment.
3. Total Compensation Payable. During the Consulting Term,
Company agrees to pay Xxxxxxx, at the annual rate of $300,000 in monthly
installments of $25,000 which shall be payable mid-monthly and prorated for
periods of less than one full month. Except as specifically stated in this
Agreement, after June 16, 2003, no other compensation whatsoever, including
without limitation any Base Salary, bonuses or severance benefits, after a
Change in Control or otherwise, of any type, shall be earned by or paid to
Xxxxxxx by Company. The first prorated payment for the period beginning on June
16 and ending on June 30, 2003 shall be paid on July 1, 2003, with the remaining
payments due and payable on the fifteenth day of each month commencing on July
15, 2003. Payments falling on Saturday, Sundays or holidays shall be due the
next business day.
4. Expenses. Xxxxxxx shall pay all of his own expenses in
connection with this engagement as a consultant.
5. Independent Contractor Relationship During the Consulting
Term. Xxxxxxx and Company understand and acknowledge that Xxxxxxx'x relationship
with Company during the Consulting Term will be that of an independent
contractor and nothing in this Agreement is intended to or should be construed
to create a partnership, joint venture, employment, or other relationship.
Xxxxxxx further acknowledges that neither Xxxxxxx nor any of Xxxxxxx'x employees
or agents will be treated or regarded as Company's employees under the laws or
regulations of any government or governmental agency. Company will not withhold
from Xxxxxxx'x fees any amounts for income taxes or other similar assessments,
and Xxxxxxx will
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indemnify Company to the extent of any payments imposed on the Company by any
taxing authority characterizing Xxxxxxx as an employee for tax purposes. Xxxxxxx
will be the sole judge of the means, manner and method by which he will perform
the services contracted for, the times at which those services will be performed
(within the deadlines reasonably and mutually established by Company and
Xxxxxxx) and the sequence of performance of those services. Company does not
have the authority to supervise or control the actual work of Xxxxxxx. It is
further agreed that Company:
A. will not provide Xxxxxxx with any transportation, business
registrations or licenses required to perform the specific
services set forth in this Agreement;
B. will not pay Xxxxxxx a salary or hourly rate;
C. will not terminate this Agreement before the expiration of its
Term, unless Xxxxxxx violates or fails to perform the services
required by this Agreement;
D. will not provide an automobile, tools or equipment for
Xxxxxxx;
E. will not dictate the time of performance of Xxxxxxx'x
performance;
F. will pay Xxxxxxx in the name appearing on this Agreement; and
G. will not combine business operations with Xxxxxxx, but instead
will keep the operations of Xxxxxxx and Company separate.
6. Nondelegability of Xxxxxxx'x Rights and Company Assignment
Rights. The obligations, rights and benefits of Xxxxxxx hereunder are personal
and may not be delegated, assigned or transferred in any manner whatsoever, nor
are such obligations, rights or benefits subject to involuntary alienation,
assignment or transfer. This Agreement shall be assigned automatically to and
assumed by any entity merging with or acquiring Company.
7. Benefits. Between the Effective Date and the Date of
Termination, Company shall extend benefits to Xxxxxxx, on the same basis upon
which he participated prior to the Effective Date, including without limitation,
to the extent Xxxxxxx previously had coverage, dental, health, vision,
short-term and long-term disability, and long term care. Beginning as of the
Termination Date, Xxxxxxx, his currently covered domestic partner and each
eligible dependent who constitutes a qualified beneficiary, as defined in
Section 4980B(g)(1) of the Internal Revenue Code of 1986, as amended, will be
eligible to continue benefits coverage under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA"), within the time period
prescribed pursuant to COBRA. Xxxxxxx acknowledges that the Company has provided
him with information concerning his obligations and time requirements to secure
COBRA benefits. With respect to the period between the Termination Date and
March 31, 2004, Company will reimburse Xxxxxxx for any incremental cost incurred
by Xxxxxxx over the costs to Company employees to secure comparable benefits to
the extent they are available under COBRA. To the extent he desires such
coverages, Xxxxxxx will need to obtain replacement coverages for vision, life
and disability insurance since they will not be available under COBRA. Company
will reimburse Xxxxxxx for the difference in premiums between what employees of
Company are required to pay for coverages maintained by Xxxxxxx through Company
prior to the date of this Amendment and reasonable premiums actually paid by
Xxxxxxx with respect to the
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same types and levels of coverage for the period between the Termination Date
and March 31, 2004. Xxxxxxx will also be permitted to participate through March
31, 2004 in the employee product purchase plan at the discount rate, and subject
to the same terms and conditions, as are in effect as of the date of this
Amendment. Except as specifically stated in this Xxxxxxx 0, Xxxxxxx shall not be
entitled to participate in any new or additional benefits.
8. Stock Options. Xxxxxxx'x options to purchase stock of Company
stock and or any Company subsidiaries shall continue, vest and expire pursuant
to their existing terms, consistent with a termination by Xxxxxxx, without Good
Reason, effective as of the Date of Termination. Specifically, Xxxxxxx will have
seven business days after the Date of Termination to exercise his vested
options. Any options not vested on the Date of Termination and any vested
options not exercised within seven business days after the Date of Termination
will be forfeited back to Company. Xxxxxxx agrees that all options to purchase
stock of the Company's subsidiaries will be forfeited on the Date of
Termination.
9. Mutual Release and Covenant Not to Xxx. Except as provided in
this Amendment, Xxxxxxx hereby releases, acquits and forever discharges Company,
its subsidiaries, affiliates, directors, officers, employees and agents of and
from any and all actions, claims, damages, expenses or costs of whatever nature
arising out of Xxxxxxx'x employment and the termination of such relationship, or
arising from the Agreement, including, but not limited to, any rights or claims
to any vacation, sick leave, severance, medical, dental or any other benefits
under the Company's internal policies, under any federal, state or local statute
or regulation, or under common law. By way of example only and without limiting
the immediately preceding paragraph, this release is applicable to any cause of
action, right, claim or liability under Title VII of the 1964 Civil Rights Act
of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment Act
of 1967, Section 1981 of the 1866 Civil Rights Act, the Equal Pay Act of 1963,
the Americans with Disabilities Act of 1990, the Arizona Civil Rights Act, the
Fair Labor Standards Act, the Employee Retirement Income Security Act of 1974,
the Worker Adjustment and Retraining Notification Act, the Older Workers Benefit
Protection Act and/or any other equal employment opportunity law or statute, or
in the nature of wrongful discharge, breach of implied or express contract,
breach of the covenant of good faith and fair dealing, intentional or negligent
infliction of emotional distress or defamation and to any other claim in
contract or tort.
Except for an appropriate administrative charge challenging the
validity of this release (which Company reserves the right to contest), Xxxxxxx
further covenants and agrees not to join in or commence any action, suit or
proceeding, in law or in equity, or before any administrative agency, or to
incite, encourage, or participate in any such action, suit or proceedings,
against Company, its subsidiaries, affiliates, directors, officers, employees or
agents in any way pertaining to or arising out of the termination of his
employment by or service as an employee, consultant, officer or director of
Company (or any subsidiary).
Xxxxxxx acknowledges that the consideration afforded him under this
Amendment, including the payments described in Paragraph 2 above, are in full
and complete satisfaction of
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any claims Xxxxxxx may have, or may have had, arising out of his employment with
Company (or any subsidiary) or the termination thereof.
Company, for itself, and any parent, subsidiary and affiliated
corporations does fully release and discharge Xxxxxxx, his heirs and successors,
from all known grievances, suits, causes of action, and/or claims of any nature
whatsoever, which Company has or may have against Xxxxxxx arising out of or in
any way relating to the Agreement, including without limitation actions taken by
Xxxxxxx during the term of said Agreement, whether such claims exist in law or
in equity, under federal, state or other law and whether the same be upon
statutory, tort, contract or other basis.
Xxxxxxx hereby assigns to Company any and all intellectual property
rights or interests he has in or to the technology known as Asset Spider,
including, without limitation, any interest in the pending patent application
and any future patents or patent applications. Xxxxxxx represents that he has
not assigned or transferred any such rights to any other person or entity, and
will take any additional actions appropriate for the completion of this
assignment.
10. Time Period for Considering or Canceling this Amendment.
Xxxxxxx acknowledges that Company has advised him to consult with an attorney of
his choice with respect to this Amendment. Xxxxxxx further acknowledges that he
has been offered a period of time of at least 21 days to consider whether to
sign this Amendment, and Company agrees that Xxxxxxx may cancel this Amendment
at any time during the seven days following the date on which this Amendment has
been signed by him. In order to cancel or revoke this Amendment, Xxxxxxx must
deliver to the attention of General Counsel at 0000 X. Xxxx Xxxxx, Xxxxx,
Xxxxxxx 00000, written notice stating that Xxxxxxx is canceling or revoking this
Amendment. If this Amendment is timely canceled or revoked, none of the
provisions of this Amendment shall be effective or enforceable, Company shall
not be obligated to make any payments described herein to Xxxxxxx or to provide
Xxxxxxx with the other benefits described in this Amendment, and neither party
shall be bound by the characterization of the termination as one by Xxxxxxx
without Good Reason.
11. Competing Business. Xxxxxxx and Company agree that "Competing
Business" as used in the Agreement shall refer solely to the companies and
businesses described in this Section 11. The companies contemplated in the
preceding sentence are CDW Computer Centers Inc., PC Connection Inc, Micro
Warehouse Inc., PC Mall, Inc., Compucom Systems, Inc., and Dell Computer
Corporation plus any affiliate of any such company and any companies or
businesses acquired by or sold or spun or split off, or otherwise divested, by
any of such companies, regardless of the form of entity in which such business
is conducted or such company is included. The parties further agree that
"Competing Business" shall also include the customer- direct activities of
Hewlett-Packard Company and International Business Machines Corporation, whether
developed internally, outsourced or acquired, but shall specifically exclude
the non-customer-direct activities or divisions of the Hewlett-Packard Company
and International Business Machines Corporation, and any companies or businesses
sold or spun or split off, or otherwise divested, by either Hewlett-Packard
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Company or International Business Machines Corporation so long as such
companies, businesses or affiliates do not engage in direct selling to
customers.
12. Time Period for Restrictive Covenants. Xxxxxxx and Company
agree that all restrictive covenants as set forth in Section 9 of the Original
Agreement shall terminate on March 31, 2004.
13. Confidentiality. Except with respect to disclosure by Company
of this Amendment to its officers, board members, parent companies, attorneys
and accountants on a need-to-know basis, disclosure by Xxxxxxx to his attorneys
and accountants on a need-to-know basis, or disclosure by either party in
connection with reasonable enforcement of his or its rights pursuant to the
Agreement or this Amendment, each of Xxxxxxx and Company agrees not to
disseminate or disclose to any person or entity the terms of this Amendment or
the events, discussions and correspondence leading to this Amendment.
Notwithstanding the foregoing, no provision of this Amendment shall be construed
as prohibiting compliance with a valid subpoena issued by a court of competent
jurisdiction requesting specific information to be disclosed. However, should
Xxxxxxx or Company receive such a subpoena, he or it will immediately inform the
other party and, except to the extent required by law, will not produce any
information until the other party has had a reasonable period of time to seek to
quash or modify the subpoena.
14. Reliance. Xxxxxxx warrants and represents that (i) he has
consulted with an attorney of his choosing or decided not to contact an
attorney; (ii) he has relied on his own judgment regarding the consideration for
and language of this Amendment; (iii) Company has not in any way coerced or
unduly influenced him to execute this Amendment; and (iv) this Amendment is
written in a manner that is understandable to him and he has read an understood
all paragraphs of this Amendment.
15. Nature of the Agreement plus this Amendment. Except as
specifically modified by this Amendment, the Agreement shall remain in full
force and effect and shall be enforceable by the parties in accordance with its
terms. All provisions of this Amendment, including all representations and
promises contained herein, are contractual and not a mere recital and shall
continue in permanent force and effect. The Agreement plus this Amendment
constitute the sole and entire agreement of the parties with respect to the
subject matter hereof, superseding all prior agreements and understandings
between the parties, and there are no agreements of any nature whatsoever
between the parties hereto except as expressly stated herein. The Agreement plus
this Amendment may not be modified or changed except by means of a written
instrument signed by both parties. If any portion of the Agreement plus this
Amendment is found to be unenforceable for any reason whatsoever, the
unenforceable provision shall be considered to be severable, and the remainder
of the Agreement plus this Amendment shall continue to be in full force and
effect, provided, however, that all of the Company's obligations hereunder are
expressly conditioned on Xxxxxxx'x compliance with Sections 9, 11, 12, 13 and 17
of this Amendment and the Restrictive Covenants in Section 9 of the Original
Agreement as modified
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by this Amendment. The Agreement plus this Amendment shall be governed by and
construed and enforced in accordance with the laws of the State of Arizona.
16. Termination and Remedies. Either party may terminate its
continuing obligations under the Agreement, as modified by this Amendment, by
written notice to the other party, but only after giving the allegedly
non-performing party 15 days notice of the alleged material breach or grounds
for Cause and an opportunity to cure the breach or grounds for Cause. Any and
all remedies set forth herein are intended to be nonexclusive and either party
may, in addition to such remedies, seek any additional remedies available either
in law or in equity in the event of default or material breach by the other
party. In addition to any remedies available at law or in equity, (a) if Company
fails to cure a material breach within 15 days after receiving notice from
Xxxxxxx, all payments due and payable to Xxxxxxx under this Agreement shall be
due and payable immediately and the restrictions set forth in Section 9 of the
Original Agreement and as amended by this Amendment shall be deemed null and
void; and (b) if Xxxxxxx fails to cure a material breach or grounds for Cause
within 15 days after receiving notice from Company, Company shall be entitled to
discontinue all payments to and benefits for Xxxxxxx, and shall be entitled to
pursue any and all legal remedies without thereby excusing Xxxxxxx from his
continuing obligations under the Agreement as modified by this Amendment.
17. Testimony. If Xxxxxxx has knowledge of or is alleged to have
knowledge of any matters which are the subject of any pending, threatened or
future litigation involving Company, he will make himself available to testify
if and as necessary. Xxxxxxx will also make himself available to the attorneys
representing Company in connection with any such litigation or dispute for such
purposes as they may deem necessary or appropriate, including but not limited to
the review of documents, discussion of the case and preparation for any legal
proceedings. This Amendment is not intended to and shall not be construed so as
to in any way limit or affect the testimony which Xxxxxxx gives in any such
proceedings. Further, it is understood and agreed that Xxxxxxx will at all times
testify fully, truthfully and accurately, whether in deposition, hearing, trial
or otherwise.
18. Forum and Arbitration. Any disputes under the Agreement or
this Amendment not resolved by agreement of the parties will be submitted to
binding arbitration in metropolitan Phoenix, Arizona, before a single
arbitrator; or, if the parties cannot agree upon a single arbitrator, before a
panel of three arbitrators, one selected by each party (within 10 days after
notice of a dispute and failure to agree upon a single arbitrator) and a third
appointed by the arbitrators selected by the parties. The selection of
arbitrators and all arbitration proceedings will be in accordance with the rules
of the American Arbitration Association, as amended to the date of the
proceedings, and judgment upon the award may be entered in any court having
jurisdiction. The arbitrators shall have the discretion to permit or require
such discovery as is relevant and necessary to a fair resolution of the dispute,
subject to such orders of protection and confidentiality as they deem
appropriate and may award the costs of arbitration as they see fit.
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Dated as of April 1, 2003.
By: /s/ Xxxx Xxxxxxx
-------------------
XXXX XXXXXXX
INSIGHT SERVICES CORPORATION
By: /s/ P. Xxxxxx Xxxx
----------------------
Name: P. Xxxxxx Xxxx
Title: Executive Vice President
INSIGHT DIRECT WORLDWIDE, INC.
By: /s/ P. Xxxxxx Xxxx
----------------------
Name: P. Xxxxxx Xxxx
Title: Executive Vice President
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