EXHIBIT 10.20
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement ("Agreement") is entered into and
shall be effective as of April 1, 2002 between INSIGHT ENTERPRISES, INC., a
Delaware corporation ("Company"), and XXXX X. CROWN ("Executive").
R E C I T A L S
A. Executive has been employed by Company pursuant to an Employment Agreement
entered into on March 31, 1998 to be effective as of July 1, 1997 (the
"1997 Employment Agreement"). Initially, Executive was serving as
Company's CEO. On May 31, 2001, Executive's title became Vice President
and Chairman of the Board and the CEO position was assumed by another
officer of Company.
B. Effective as of April 1, 2002, the parties wish to amend the 1997
Employment Agreement by replacing it with this Amended and Restated
Employment Agreement for all purposes.
NOW, THEREFORE, IT IS HEREBY MUTUALLY AGREED AS FOLLOWS:
1. AMENDMENT AND RESTATEMENT.
Effective as of April 1, 2002, the 1997 Employment Agreement is amended and
replaced by this Agreement for all purposes. The consideration for such
amendment and replacement is solely as stated in this Agreement and neither
party shall have any further rights or duties under the 1997 Employment
Agreement.
1A. TERM OF AGREEMENT.
Executive shall be employed by Company for the duties set forth in Section
2 for a two-year term, commencing as of April 1, 2002 and ending on March 31,
2004 (the "Term"), unless sooner terminated in accordance with the provisions of
this Agreement. The period of time commencing as of the date hereof and ending
on the effective date of the termination of employment of Executive under this
or any successor Agreement shall be referred to as the "Employment Period."
After the expiration of the two-year term of this Agreement, it may be extended
only by mutual written agreement of the parties. However, if the Term is not
extended at the end of the Term, all then-unvested stock options and restricted
stock held by Executive shall vest.
2. POSITION AND DUTIES.
(a) JOB DUTIES. Company does hereby employ, engage and hire Executive and
Executive does hereby accept and agree to such employment, engagement, and
hiring. Executive will report to Company's CEO. It is contemplated that
Executive will be involved in all potential acquisitions contemplated by Company
and specific projects relating to Company's completed acquisitions, strategic
planning and other key initiatives as may be assigned to him from time to time
by Company's CEO and reasonably accepted by Executive, and that Executive will
not have any other specific duties or any persons reporting to him. Executive
will devote such time as Company's Board of Directors (the "Board") or CEO shall
reasonably determine; provided that such devotion of time shall not be
materially different from Executive's devotion of time at the date of this
Agreement, reasonable absences because of illness, personal and family
exigencies excepted. Effective immediately, Executive hereby resigns from all
officer positions with Company, other than Chairman of the Board, and from all
officer or board of director positions with any of Company's affiliates.
(b) BEST EFFORTS. Executive agrees that at all times during the
Employment Period he will faithfully, and to the best of his ability, experience
and talents, perform the duties that may be required of and from him and fulfill
his responsibilities hereunder pursuant to the express terms hereof. Executive's
ownership of, or participation (including any board memberships) in, any entity
(other than Company) must be disclosed to the Board; provided, however, that
Executive need not disclose any equity interest held in any public company or
any private company that is not engaged in a competing business as defined in
Section 10 of this Agreement when such interest constitutes less than 5% of the
issued and outstanding equity of such public or private company.
3. COMPENSATION AS AN EMPLOYEE.
(a) BASE SALARY. Company shall pay Executive a "Base Salary" in
consideration for Executive's services to Company at the rate of $250,000 per
annum. The Base Salary shall be payable as nearly as possible in equal
semi-monthly installments or in such other installments as are customary from
time to time for Company's executives. The Base Salary may be adjusted from time
to time in accordance with the procedures established by Company for salary
adjustments for executives, provided that the Base Salary shall not be reduced.
(b) INCENTIVE COMPENSATION. Executive shall also be permitted to
participate in such incentive compensation plans as adopted by the Board from
time to time. During the Employment Period, the Executive shall be entitled to
an incentive bonus, calculated and payable quarterly, equal to 0.75% of the
Company's "net earnings" provided that the Company's net earnings exceed the
Minimum Amount for the applicable fiscal quarter. Any such incentive bonus may
be paid in either cash or restricted stock vesting in equal annual amounts over
a three-year period as elected by Executive. For purposes of calculating
Executive's incentive bonus pursuant to this Subsection 3(b), the Company's "net
earnings" shall be the Company's consolidated net earnings, calculated in
accordance with accounting principles generally accepted in the United States
(US GAAP) and applicable Securities and Exchange Commission regulations, prior
to any incentive bonus amounts for Executive and other executives of Company.
The amounts payable pursuant to this Subsection 3(b) shall be paid on or before
thirty (30) days after the end of the applicable fiscal quarter. For purposes of
this Subsection 3(b) the term "Minimum Amount" means an amount equal to eighty
percent (80%) of the average of the Company's net earnings for the immediately
preceding four fiscal quarters ended prior to the applicable fiscal quarter.
(1) If upon final presentation of consolidated financial statements
of Company, the "net earnings" are adjusted, then, within thirty (30) days
after the presentation, Company or Executive, as the case may be, shall
pay to the other the amount necessary to cause the net amount of incentive
bonus paid to be the proper amount after adjustment; provided that if
Executive shall pay Company pursuant to the provisions of this clause (1),
then the amount the Executive shall pay will be reduced by the taxes
withheld by Company attributable to such amount ("Withheld Portion"), and
the Withheld Portion shall be offset against the next subsequent payments
of Base Salary and incentive compensation made pursuant to Subsections
3(a) and (b).
(c) INCENTIVE AND BENEFIT PLANS. Executive will be entitled to participate
in those incentive compensation and benefit plans reserved for the Company's
executives, in accordance with the terms of such compensation and benefit plans.
Additionally, the Executive shall be entitled to participate in any other
benefit plans sponsored by Company, including but not limited to, any savings
plan, life insurance plan and health insurance plan available generally to
employees of Company from time to time, subject to any restrictions specified
in, or amendments made to, such plans. Executive shall be entitled to four (4)
weeks vacation during the calendar year, and such additional vacation time as
the Board shall approve, with such vacation to be scheduled and taken in
accordance with the Company's standard vacation policies, but this provision is
not intended to
interfere with or limit Executive's discretion to determine the appropriate time
to be devoted to his duties hereunder.
(d) STOCK OPTIONS. During the Term, Executive will be entitled to receive
one-half of the average stock options granted during any year to the CEO, CFO
and President of Company.
3A. COMPENSATION AS AN DIRECTOR.
(a) ANNUAL RETAINER. In addition to any other compensation payable
pursuant to this Agreement, so long as he is also a Director of Company,
Executive shall be entitled to recieve an retainer of $50,000 per year, which
shall be payable as described in Subsection 3(a).
(b) MEETING COMPENSATION. Once Executive is no longer also an Employee, so
long as he continues as a Director of Company, he shall be entitled to receive
$1,000 per Board meeting attended, and $500 per Board committee meeting
attended, regardless of whether attendance is in person or by telephone.
(c) DIRECTOR STOCK OPTIONS. Once Executive is no longer also an Employee,
he shall be entitled to receive double the stock options granted to any other
outside Director, on the same terms as other outside Director options granted in
substantially the same time period.
4. BUSINESS EXPENSES.
The Company will reimburse Executive for any and all necessary, customary and
usual expenses which are incurred by Executive on behalf of Company, provided
Executive provides Company with receipts to substantiate the business expense in
accordance with Company's policies or otherwise reasonably justifies the expense
to the Company.
5. DEATH OR DISABILITY.
(a) DEATH. This Agreement shall terminate upon Executive's death.
Executive's estate shall be entitled to receive the Base Salary due through the
date of his death and any incentive compensation payable for quarters ended
prior to Executive's death, but no Base Salary or other payment or benefit will
be payable after death except as expressly provided elsewhere in this Agreement.
Whether any bonuses or incentive compensation will be payable for quarters
ending following Executive's death will be determined in accordance with the
provisions of any incentive compensation program, practice, or policy in which
Executive participates at the time of Executive's death. If there is no written
incentive compensation program, policy, or practice in effect at the time of
Executive's death, Company, in the exercise of its discretion, may elect to pay
to Executive's estate a portion of the incentive compensation to which Executive
would have been entitled (had Executive not died) for the year in which this
Agreement terminated due to Executive's death.
(b) DISABILITY. This Agreement shall also terminate in the event of
Executive's "Disability". For purposes of this Agreement, "Disability" means the
total and complete inability of Executive to perform the essential duties
associated with his normal position with Company (after any accommodations
required by the Americans with Disabilities Act or applicable state law) due to
a physical or mental injury or illness that occurs while Executive is actively
employed by Company.
If this Agreement is terminated due to Executive's Disability,
Executive shall receive all of the payments and benefits called for by
Subsection 6(c).
6. TERMINATION BY COMPANY.
(a) TERMINATION FOR CAUSE. Company may terminate this Agreement at any
time during the Initial Term or any Renewal Terms for "Cause" upon written
notice to Executive. If Company terminates this Agreement for "Cause,"
Executive's Base Salary shall immediately cease, and Executive shall not be
entitled to severance payments, incentive compensation payments or any other
payments or benefits pursuant to this Agreement, except for any vested rights
pursuant to any benefit plans in which Executive participates and any accrued
compensation, vacation pay and similar items. For purposes of this Agreement,
the term "Cause" shall mean the termination of Executive's employment by Company
for one or more of the following reasons:
(1) The criminal conviction for any felony involving theft or
embezzlement from Company or any affiliate;
(2) The criminal conviction for any felony involving moral turpitude
that reflects adversely upon the standing of Company in the community; or
(3) The criminal conviction for any felony involving fraud committed
against Company, any affiliate or any individual or entity that provides
goods or services to, receives goods or services from or otherwise deals
with Company or any affiliate.
(4) Acts by Executive that constitute repeated and material
violations of this Agreement, any written employment policies of Company
or any written directives of Company. A violation will not be considered
to be "repeated" unless such violation has occurred more than once and
after receipt of written notice from Company of such violation.
Any termination of Executive when there is not Cause is "without
Cause." If Company terminates Executive for Cause, and it is later determined
that Cause did not exist, Company will pay Executive the amount he would have
received under this Agreement if his employment had been terminated by Company
without Cause, plus interest at the Prime Rate published by the Wall Street
Journal on the date of termination. Such payments and interest shall be
calculated as of the effective date of the initial termination. Payment shall be
made within fifteen (15) days after such later determination is made.
(b) TERMINATION WITHOUT CAUSE. Company also may terminate this Agreement
at any time during the Initial Term or Renewal Terms without Cause. If Company
terminates this Agreement pursuant to this Subsection, Company shall provide
Executive with ninety (90) days advance written notice. This Agreement shall
continue during such notice period. The termination of this Agreement shall be
effective on the ninetieth (90th) day (the "Termination Date") following the day
on which the notice is given. Company may, at its discretion, place Executive on
a paid administrative leave during all or any part of said notice period. During
the administrative leave, Company may bar Executive's access to Company's
offices or facilities if reasonably necessary to the smooth operation of
Company, or may provide Executive with access subject to such reasonable terms
and conditions as Company chooses to impose.
(c) SEVERANCE COMPENSATION. Should Executive's employment by Company be
terminated without Cause, Executive shall receive as a lump sum immediately upon
such termination of the total amount of his Base Salary for the remainder of the
Initial Term or Renewal Terms, if later, determined as if the employment of the
Executive had not been terminated prior to the end of such term and as if the
Executive had continued to perform all of his obligations under this Agreement
and as an employee, officer, and director of the Company. Executive shall have
no duty to mitigate damages in order to receive the Compensation described by
this Subsection and the Compensation shall not be reduced or offset by other
income, payments or profits received by Executive from
any source. Additionally upon a termination without cause, all then-unvested
stock options and restricted stock held by Executive shall vest.
(d) INCENTIVE COMPENSATION. Executive shall not be entitled to receive any
incentive compensation payments for the fiscal quarter in which his employment
is terminated for Cause or any later quarters. If Executive is terminated
without Cause, Executive shall receive as a lump sum immediately upon such
termination the total amount of incentive compensation payments determined in
accordance with the provisions of any incentive compensation program, practice,
or policy in which Executive participates on the effective date of the
termination, determined as if the employment of the Executive had not been
terminated prior to the end of the Initial Term or latest Renewal Term, if
later, and as if the financial performance of Company upon which the programs,
practice, or policy is determined continues as it had been for the immediately
preceding last four (4) fiscal quarters ended prior to either (i) the date of
notice of termination or (ii) the date of termination, as Executive shall elect
after receiving the report of such performance for the applicable fiscal
quarters, and as if the Executive had continued to perform all of his obligation
under this Agreement and as an employee, officer, and director of the Company.
Executive shall have no duty to mitigate damages in order to receive the
Compensation described by this Subsection and the Compensation shall not be
reduced or offset by other income, payments or profits received by Executive
from any source. If there is no binding incentive compensation program, policy,
or practice in effect on the effective date of the termination, Company, in the
exercise of its discretion, may elect to pay Executive a portion of the
incentive compensation to which he would have been entitled (had his employment
not terminated) for the quarter in which his employment is terminated without
Cause.
(e) OTHER PLANS. Except to the extent specified in this Section 6 and as
provided in this Subsection (e), termination of this Agreement shall not affect
Executive's participation in, distributions from, and vested rights under any
employee benefit plan of Company, which will be governed by the terms of those
respective plans, in the event of Executive's termination of employment. If
Executive is terminated without Cause, then Executive shall be fully vested
under any and all restricted stock, stock bonus and stock option plans and
agreements in which Executive had an interest, vested or contingent. If
applicable law prohibits such vesting, then Company shall pay Executive an
amount equal to the value of the benefits and rights that would have, but for
such prohibition, been vested. Executive shall have no duty to mitigate damages
in order to receive the Compensation described by this Subsection and the
Compensation shall not be reduced or offset by other income, payments or profits
received by Executive from any source.
(f) EXAMPLE. For example, if Company provides notice to Executive of
Termination without Cause on January 1, 2003, then the Employment Period ends
ninety days thereafter, on April 1, 2003, and Company will pay to Executive in a
lump sum payment immediately thereafter the sum of an amount equal to (i)
Executive's Base Salary for the next year totaling $250,000 (assuming the Base
Salary was at that time $250,000) plus (ii) the incentive compensation for four
fiscal quarters computed as stated above, and Executive shall be fully vested in
all stock bonus and stock option plans and agreements in which Executive had an
interest.
7. TERMINATION BY EXECUTIVE
(a) GENERAL. Executive may terminate this Agreement at any time, with or
without "Good Reason." If Executive terminates this Agreement without Good
Reason, Executive shall provide Company with ninety (90) days advance written
notice. If Executive terminates this Agreement with Good Reason, Executive shall
provide Company with thirty (30) days advance written notice.
(b) GOOD REASON DEFINED. For purposes of this Agreement, "Good Reason"
shall mean and include each of the following (unless Executive has expressly
agreed to such event in a signed writing):
(1) The demotion of Executive by Company, such as (i) assignment to
Executive of any duties that are inconsistent with or inferior to his
positions, duties, responsibilities, and status with Company as in effect
on the date of execution of this Agreement (the "Relevant Date"); (ii) an
adverse change in his titles, offices, or authority as in effect on the
Relevant Date; or (iii) the involuntary (I) removal of Executive as a
member of the Board; except in connection with the termination of this
Agreement for Cause, Executive's death or Disability, termination by
Executive other than for Good Reason, or the expiration of the Agreement
without renewal.
(2) The recommended travel of Executive by the Board in furtherance
of Company business which is materially more extensive than at the
Relevant Date.
(3) The assignment of Executive by the Company to a location more
than 50 miles from the present executive offices of the Company.
(4) Reduction by Company in Executive's Base Salary as set forth in
this Agreement or as the same may be increased from time to time.
(5) Failure by Company to continue in effect any incentive
compensation program, policy or practice, or any savings, life insurance,
health and accident or disability plan in which Executive is participating
on the Relevant Date (or plans which provide Executive with substantially
similar benefits) or the taking of any action by Company which would
adversely affect Executive's participation in or materially reduce his
benefit under any of such plans or deprive him of any material fringe
benefit enjoyed by him as of the Relevant Date or any later date.
Amendment or modification of said plans, to the extent required pursuant
to applicable federal law and the procedures set forth in the respective
plan, or amendments of such plans that apply to either all employees
generally or all senior executives shall not be considered to be "Good
Reason" for purposes of this clause (5).
(6) Failure of Company to obtain a specific written agreement
satisfactory to Executive from any successor to the business, or
substantially all the assets, of Company to assume this Agreement or issue
a substantially similar agreement.
(7) The termination of this Agreement by Company without Cause or
any attempted termination by Company purportedly for Cause if it is
thereafter determined that Cause did not exist under this Agreement with
respect to the termination.
(8) Breach of any material provisions of this Agreement by Company
which is not cured within thirty (30) days after receipt by Company of
written notice of such breach from Executive.
(9) Any action taken by Company over the specific, contemporaneous,
written objection of the Executive that is likely (i) to cause a material
reduction in the value of this Agreement to Executive or (ii) to
materially impair Executive's abilities to discharge his duties hereunder.
This provision is not intended to affect either the Company's or
Executive's right to terminate this Agreement as provided for elsewhere
herein.
(c) EFFECT OF GOOD REASON TERMINATION. If Executive terminates this
Agreement for Good Reason (as defined in Subsection 7[b]), Executive shall be
entitled to receive all of the payments and benefits provided by Section 6 and
otherwise in this Agreement to the same extent as if this Agreement had been
terminated by Company without Cause.
(d) EFFECT OF TERMINATION WITHOUT GOOD REASON. If Executive terminates
this Agreement without Good Reason, Executive shall be entitled to receive his
Base Salary through the effective date of his termination. Executive's
entitlement to receive any other amount shall be determined in accordance with
the provisions of any benefit plans in which Executive participates on the
effective date of the termination. Executive shall not be entitled to receive
any incentive compensation for the quarter in which his employment is terminated
by him without Good Reason or any later quarter.
8. CHANGE IN CONTROL OF COMPANY
(a) GENERAL. Company considers the maintenance of a sound and vital
management to be essential to protecting and enhancing the best interests of
Company and its shareholders. Company recognizes that, as is the case with many
publicly held corporations, the continuing possibility of an unsolicited tender
offer or other takeover bid for Company may be unsettling to Executive and other
senior executives of Company and may result in the departure or distraction of
management personnel to the detriment of Company and its shareholders. The Board
and the Compensation Committee of the Board (the "Committee") have previously
determined that it is in the best interests of Company and its shareholders for
Company to minimize these concerns by making this Change in Control provision an
integral part of this Employment Agreement, which would provide the Executive
with a continuation of benefits in the event the Executive's employment with
Company terminates under certain limited circumstances.
This provision is offered to help assure a continuing dedication by
Executive to his duties to Company notwithstanding the occurrence of a tender
offer or other takeover bid. In particular, the Board and the Committee believe
it important, should Company receive proposals from third parties with respect
to its future, to enable Executive, without being influenced by the
uncertainties of his own situation, to assess and advise the Board whether such
proposals would be in the best interests of Company and its shareholders and to
take such other action regarding such proposals as the Board might determine to
be appropriate. The Board and the Committee also wish to demonstrate to
Executive that company is concerned with his welfare and intends to see he is
treated fairly.
(b) CONTINUED ELIGIBILITY TO RECEIVE BENEFITS. In view of the foregoing
and in further consideration of Executive's continued employment with Company,
if a Change in Control occurs, Executive shall be entitled to a lump-sum
severance benefit provided in Subsection 8(c) if, prior to the expiration of
twenty-four (24) months after the Change in Control, Executive notifies Company
of his intent to terminate his employment with Company for Good Reason or
Company terminates Executive's employment without Cause or if, prior to the
expiration of one hundred twenty (120) days after the Change in Control,
Executive terminates his employment with Company. If Executive triggers the
application of this Section by terminating employment for Good Reason, he must
do so within one hundred twenty (120) days following his receipt of notice of
the occurrence of the last event that constitutes Good Reason. The full
severance benefits provided by this Section shall be payable regardless of the
period remaining until the expiration of the Agreement without renewal.
(c) RECEIPT OF BENEFITS. If Executive is entitled to receive a severance
benefit pursuant to Section 8(b) hereof, Company will provide Executive with the
following benefits:
(1) A lump sum severance payment within ten (10) days following
Executive's last day of work equal to the sum of (i) three times the
greater of Executive's annualized Base Salary in effect on the date of
termination of employment or Executive's highest annualized Base Salary in
effect on any date during the term of this Agreement and (ii) three times
the amount of all incentive compensation paid or accrued to Executive for
the Company's most recent last four fiscal quarters then ended.
(2) Executive shall be vested in any and all restricted stock, stock
bonus and stock option plans and agreements of Company in which Executive
had an interest, vested or contingent. If applicable law prohibits such
vesting, then Company shall pay Executive an amount equal to the value of
benefits and rights that would have, but for such prohibition, have been
vested in Executive.
(3) Executive will continue to receive life, disability, accident
and group health and dental insurance benefits substantially similar to
those which he was receiving immediately prior to his termination of
employment until the earlier of (i) the end of the period of 24 months
following his termination of employment or (ii) the day on which he
becomes eligible to receive any substantially similar continuing health
care benefits under any plan or program of any other employer. The
benefits provided pursuant to this Section shall be provided on
substantially the same terms and conditions as they were provided prior to
the Change in Control, except that the full cost of such benefits shall be
paid by Company. Executive's right to receive continued coverage under
Company's group health plans pursuant to Section 601 et seq. of the
Employee Retirement Income Security Act of 1974, as it may be amended or
replaced from time to time, shall commence following the expiration of his
right to receive continued benefits under this Agreement. Executive's
right to receive all forms of benefits under this Section is reduced to
the extent he is eligible to receive any health care benefit from any
other employer without his request to pay any premium with respect
thereto.
Executive shall have no duty to mitigate damages or loss in order to
receive the benefits provided by this Section or in this Agreement. If Executive
is entitled to receive the payments called for by this Subsection 8(c),
Executive's right to receive the compensation provided by Subsection 6(c) or
7(c) shall to the extent of such payments be reduced.
(d) CHANGE IN CONTROL DEFINED. For purposes of this Agreement, a "Change
in Control" means any one or more of the following events:
(1) When the individuals who, at the beginning of any period of two
years or less, constituted the Board cease, for any reason, to constitute
at least a majority thereof unless the election or nomination for election
of each new director was approved by the vote of at least two thirds of
the directors then still in office who were directors at the beginning of
such period;
(2) A change of control of the Company through a transaction or
series of transactions, such that any person (as that term is used in
Section 13 and 14(d)(2) of the Securities Exchange Act of 1934 (1934
Act")), excluding affiliates of the Company as of the Effective Date, is
or becomes the beneficial owner (as that term is used in Section 13(d) of
the 0000 Xxx) directly or indirectly, of securities of the Company
representing 20% or more of the combined voting power of the Company's
then outstanding securities;
(3) Any merger, consolidation or liquidation of the Company in which
the Company is not the continuing or surviving company or pursuant to
which stock would be converted into cash, securities or other property,
other than a merger of the Company in which the holders of the shares of
stock immediately before the merger have the same proportionate ownership
of common stock of the surviving company immediately after the merger;
(4) The shareholders of the Company approve any plan or proposal for
the liquidation or dissolution of the Company; or
(5) Substantially all of the assets of the Company are sold or
otherwise transferred to parties that are not within a "controlled group
of corporations" (as defined in Section 1563 of the Code) in which the
company is a member at the Relevant Date.
(e) GOOD REASON DEFINED. For purposes of this Section, "Good Reason" shall
have the meaning assigned to it in Subsection 7(b).
(f) NOTICE OF TERMINATION BY EXECUTIVE. Any termination by Executive under
this Section 8 shall be communicated by written notice to Company which shall
set forth generally the facts and circumstances claimed to provide a basis for
such termination.
(g) GROSS-UP ALLOWANCE
(1) GENERAL RULES. The Code places significant tax consequences on
Executive and Company if the total payments made to Executive due, or
deemed due, to a Change in Control exceed prescribed limits. For example,
if Executive's "Base Period Income" (as defined below) is $100,000 and
Executive's "Total Payments" exceed 299% of such Base Period Income (the
"Cap"), Executive will be subject to an excise tax under Section 4999 of
the Code of 20% of all amounts paid to him in excess of $100,000. In other
words, if Executive's Cap is $299,999, he will not be subject to an excise
tax if he receives exactly $299,999. If Executive receives $300,000, he
will be subject to an excise tax of $40,000 (20% of $200,000). In the
event such a consequence occurs, for any reason, due to this Agreement or
otherwise, Company shall pay to Executive a "gross-up allowance" equal in
amount to the sum of (i) the excise tax liability of Executive on the
Total Payments, and (ii) all the total excise, income, and payroll tax
liability of Executive on the "gross-up allowance," further increased by
all additional excise, and income, and payroll tax liability thereon,
which increase shall be part of the "gross-up allowance" for purpose of
computing the gross-up allowance. Company shall indemnify and hold
Executive harmless from such additional tax liability for the income and
payroll tax arising from the "gross-up allowance" and all excise tax
arising with respect to compensation and other payments made to Executive
under this Agreement and excise, income, and payroll tax on the "gross-up
allowance, 11 and all penalties and interest thereon. The purpose and
effect of the gross-up allowance is to cause Executive to have the same
net compensation after income, excise, and payroll taxes that Executive
would have if there was no tax under Code Section 4999.
(2) SPECIAL DEFINITIONS. For purposes of this Section, the
following specialized terms will have the following meanings:
(i) "BASE PERIOD INCOME". "Base Period Income" is an amount equal
to Executive's "annualized includable compensation" for the
"base period" as defined in Sections 28OG(d)(1) and(2)of the
Code and the regulations adopted thereunder. Generally,
Executive's "annualized includable compensation" is the
average of his annual taxable income from the Company for the
"base period," which is the five calendar years prior to the
year in which the Change of Control occurs.
(ii) "CAP" OR 280G CAP". "Cap" or "28OG Cap" shall mean an amount
equal to 2.99 times Executive's "Base Period Income." This is
the maximum amount which he may receive without becoming
subject to the excise tax imposed by Section 4999 of the Code
or which Company may pay without loss of deduction under
Section 28OG of the Code.
(iii) "TOTAL PAYMENTS". The "Total Payments" include any "payments
in the nature of compensation" (as defined in Section 280G of
the Code and the regulations adopted thereunder), made
pursuant to this Agreement or otherwise, to or for
Executive's benefit, the receipt of which is contingent or
deemed contingent on a Change of Control and to which Section
28OG of the Code applies.
(h) EFFECT OF REPEAL. In the event that the provisions of Sections 28OG
and 4999 of the Code are repealed without succession, this Section shall be of
no further force or effect.
(i) EMPLOYMENT BY SUCCESSOR. For purposes of this Agreement employment by
a successor of Company or a successor of any subsidiary of Company that has
assumed this Agreement shall be considered to be employment by Company or one of
its subsidiaries. As a result, if Executive is employed by such a successor
following a Change in Control, he will not be entitled to receive the benefits
provided by Section 8 unless his employment with the successor is subsequently
terminated without Cause or he terminates his employment for Good Reason.
9. CONFIDENTIALITY.
Executive covenants and agrees to hold in strictest confidence, and not disclose
to any person, firm or company, without the express written consent of Company,
any and all of Company's confidential data, including but not limited to
information and documents concerning Company's business, customers, and
suppliers, market methods, files, trade secrets, or other "know-how" or
techniques or information not of a published nature or generally known (for the
duration they are not published or generally known) which shall come into his
possession, knowledge, or custody concerning the business of Company, except as
such disclosure may be required by law or in connection with Executive's
employment hereunder or except as such matters may have been known to Executive
at the time of his employment by Company. This covenant and agreement of
Executive shall survive this Agreement and continue to be binding upon Executive
after the expiration or termination of this Agreement, whether by passage of
time or otherwise so long as such information and data shall be treated as
confidential by Company.
10. RESTRICTIVE COVENANTS.
(a) COVENANT-NOT-TO-COMPETE. In consideration of Company's agreements
contained herein and the payments to be made by it to Executive pursuant hereto
and except for termination of Executive's employment by Company without Cause or
termination of employment by Executive for Good Reason, Executive agrees that,
for two years following his termination of employment and so long as company is
continuously not in default of its obligations to Executive hereunder or under
any other agreement, covenant, or obligation, he will not, without prior written
consent of Company, consult with or act as an advisor to another company about
activity which is a "Competing Business" of such company in the United States.
For purposes of this Agreement, Executive shall be deemed to be engaged in a
"Competing Business" if, in any capacity, including but not limited to
proprietor, partner, officer, director or employee, he engages or participates,
directly or indirectly, in the operation, ownership or management of the
activity of any proprietorship, partnership, company or other business entity
which activity is competitive with the then actual business in which Company is
engaged on the date of, or any business contemplated by the Company's business
plan in effect on the date of notice of, Executive's termination of employment.
Nothing in this Subsection is intended to limit Executive's ability to own
equity in a public company constituting less than five percent (5%) of the
outstanding equity of such company, when Executive is not actively engaged in
the management thereof. Company shall furnish Executive with a good-faith
written description of the business or businesses in which Company is then
actively engaged within 30 days after Executive's termination of employment, and
only those activities so timely described which are in fact actively
engaged by Company may be treated as activities of which one may be engaged that
is competitive with Company.
(b) NON-SOLICITATION. Executive recognizes that Company's customers are
valuable and proprietary resources of Company. Accordingly, Executive agrees
that for a period of one year following his termination of employment, and only
so long as company is continuously not in default of its obligations to
Executive hereunder or under any other agreement, covenant, or obligation, he
will not directly or indirectly, through his own efforts or through the efforts
of another person or entity, solicit business from any individual or entity
which obtained services from Company at any time during Executive's employment
with Company; he will not solicit business from any individual or entity which
may have been solicited by Executive on behalf of Company and he will not
solicit employees of Company who would have the skills and knowledge necessary
to enable or assist efforts by Executive to engage in a Competing Business.
(c) REMEDIES: REASONABLENESS. Executive acknowledges and agrees that a
breach by Executive of the provisions of this Section 10 will constitute such
damage as will be irreparable and the exact amount of which will be impossible
to ascertain and, for that reason, agrees that Company will be entitled to an
injunction to be issued by any court of competent jurisdiction restraining and
enjoining Executive from violating the provisions of this Section. The right to
an injunction shall be in addition to and not in lieu of any other remedy
available to Company for such breach or threatened breach, including the
recovery of damages from Executive.
Executive expressly acknowledges and agrees that (i) the
Restrictive Covenants contained herein are reasonable as to time and
geographical area and do not place any unreasonable burden upon him; (ii) the
general public will not be harmed as a result of enforcement of these
Restrictive Covenants; and (iii) Executive understands and hereby agrees to each
and every term and condition of the Restrictive Covenants set forth in this
Agreement.
(d) CHANGE OF CONTROL. The provisions of this Section 10 shall lapse and
be of no further force or effect if Executive's employment is terminated by
Company "without Cause" or by Executive for "Good Reason."
11. DISPUTE RESOLUTION.
(a) MEDIATION. Any and all disputes arising under, pertaining to or
touching upon this Agreement, or the statutory rights or obligations of either
party hereto, shall, if not settled by negotiation, be subject to non-binding
mediation before an independent mediator selected by the parties pursuant to
Subsection 11(d). Notwithstanding the foregoing, both Executive and Company may
seek preliminary injunctive or other judicial relief if such action is necessary
to avoid irreparable damage during the pendency of the proceedings described in
this Section 11. Any demand for mediation shall be made in writing and served
upon the other party to the dispute, by certified mail, return receipt
requested, at the address specified in Section 13. The demand shall set forth
with reasonable specificity the basis of the dispute and the relief sought. The
mediation hearing will occur at a time and place convenient to the parties in
Maricopa County, Arizona, within thirty (30) days of the date of selection or
appointment of the mediator.
(b) ARBITRATION. In the event that the dispute is not settled through
mediation, the parties shall then proceed to binding arbitration before an
independent arbitrator selected pursuant to Subsection 11(d). The mediator shall
not serve as the arbitrator. EXCEPT AS PROVIDED IN SUBSECTION 11 (a), ALL
DISPUTES INVOLVING ALLEGED UNLAWFUL EMPLOYMENT DISCRIMINATION, TERMINATION BY
ALLEGED BREACH OF CONTRACT OR POLICY, OR ALLEGED EMPLOYMENT TORT COMMITTED BY
COMPANY OR A REPRESENTATIVE OF COMPANY, INCLUDING CLAIMS OF VIOLATIONS OF
FEDERAL OR STATE DISCRIMINATION STATUTES OR PUBLIC POLICY, SHALL BE RESOLVED
PURSUANT TO THIS SECTION 11 AND THERE SHALL BE NO RECOURSE TO COURT, WITH OR
WITHOUT A JURY TRIAL.
The arbitration hearing shall occur at a time and place convenient
to the parties in Maricopa County, Arizona, within thirty (30) days of selection
or appointment of the arbitrator. If Company has adopted a policy that is
applicable to arbitrations with executives, the arbitration shall be conducted
in accordance with said policy, to the extent that the policy is consistent with
this Agreement and the Federal Arbitration Act, 9 U.S.C. SectionSection 1-16. If
no such policy has been adopted, the arbitration shall be governed by the
National Rules f or the Resolution of Employment Disputes of the American
Arbitration Association ("AAA") in effect on the date of the first notice of
demand for arbitration. Notwithstanding any provisions in such rules to the
contrary, the arbitrator shall issue findings of fact and conclusions of law,
and an award, within f if teen (15) days of the date of the hearing unless the
parties otherwise agree.
(c) DAMAGES. In case of breach of contract or policy, damages shall be
limited to contract damages. In cases of discrimination claims prohibited by
statute, the arbitrator may direct payment consistent with the applicable
statute. In cases of employment tort, the arbitrator may award punitive damages
if proved by clear and convincing evidence. Issues of procedure, arbitrability,
or confirmation of award shall be governed by the Federal Arbitration Act, 9
U.S. C. SS 1-16, except that court review of the arbitrator's award shall be
that of an appellate court reviewing a decision of a trial judge sitting without
a jury.
(d) SELECTION OF MEDIATOR OR ARBITRATOR. The parties shall select the
mediator and arbitrator from a panel list made available by the AAA. If the
parties are unable to agree to a mediator or an arbitrator within ten (10) days
of receipt of a demand for mediation or arbitration, the mediator or arbitrator
will be chosen by alternatively striking from a list of five (5) mediators or
arbitrators obtained by Company from the AAA. Executive shall have the first
strike.
(e) EXPENSES. The costs and expenses of any arbitration shall be borne by
Company. Should Executive or Company, at any time, initiate mediation or
arbitration for breach of this Agreement, Company shall reimburse Executive for
all amounts spent by Executive to pursue such mediation or arbitration
(including reasonable attorneys fees and costs), regardless of the outcome,
unless the mediator or arbitrator finds Executive's action to have been
frivolous and without merit.
12. BENEFIT AND BINDING EFFECT
This Agreement shall inure to the benefit of and be binding upon company, its
successors and assigns, including but not limited to any Company, person, or
other entity which may acquire all or substantially all of the assets and
business of Company or any Company with or into which Company may be
consolidated or merged, and Executive, his heirs, executors, administrators, and
legal representatives, provided that the obligations of Executive may not be
delegated.
13. NOTICES
All notices hereunder shall be in writing and delivered personally or sent by
registered or certified mail, postage prepaid and return receipt requested:
If to Company, to: Insight Enterprises, Inc.
0000 Xxxx Xxxx Xxxxx
Xxxxx, Xxxxxxx 00000
If to Executive, to: Xxxx X. Crown
0000 Xxxx Xxxxx, Xx. 000
Xxxxx, XX 00000
Either party may change the address to which notices are to be sent to it by
giving ten (10) days written notice of such change of address to the other party
in the manner above provided for giving notice. Notices will be considered
delivered on personal delivery or on the date of deposit in the United States
mail in the manner provided for giving notice by mail.
14. ENTIRE AGREEMENT
The entire understanding and agreement between the parties has been incorporated
into this Agreement, and this Agreement supersedes all other agreements and
understandings between Executive and Company with respect to the relationship of
Executive with Company, except with respect to other continuing or future bonus,
incentive, stock option, health, benefit and similar plans or agreements.
15. GOVERNING LAW
This Agreement shall be governed by and interpreted in accordance with the laws
of the State of Arizona.
16. CAPTIONS
The captions included herein are for convenience and shall not constitute a part
of this Agreement.
17. DEFINITIONS
Throughout this Agreement, certain defined terms will be identified by the
capitalization of the first letter of the defined word or the first letter of
each substantive word in a defined phrase. Whenever used, these terms will be
given the indicated meaning.
18. SEVERABILITY
If any one or more of the provisions or parts of a provision contained in this
Agreement shall for any reason be held to be invalid, illegal or unenforceable
in any respect, such invalidity or unenforceability shall not affect any other
provision or part of a provision of this Agreement, but this Agreement shall be
reformed and construed as if such invalid, illegal or unenforceable provision or
part of a provision had never been contained herein and such provisions or part
thereof shall be reformed so that it would be valid, legal and enforceable to
the maximum extent permitted by law. Any such reformation shall be read as
narrowly as possible to give the maximum effect to the mutual intentions of
Executive and Company.
19. TERMINATION OF EMPLOYMENT
The termination of this Agreement by either party also shall result in the
termination of Executive's employment relationship with Company in the absence
of an express written agreement providing to the contrary. Neither party intends
that any oral employment relationship continue after the termination of this
Agreement.
20. TIME IS OF THE ESSENCE
Company and Executive agree that time is of the essence with respect to the
duties and performance of the covenants and promises of this Agreement.
21. NO CONSTRUCTION AGAINST EITHER PARTY
This Agreement is the result of negotiation between Company and Executive and
both have had the opportunity to have this Agreement reviewed by their legal
counsel and other advisors. Accordingly, this Agreement shall not be construed
for or against Company or Executive, regardless of which party drafted the
provision at issue.
INSIGHT ENTERPRISES, INC.,
a Delaware corporation
By: /s/ Xxxxxxx Xxxxxxxxx
-------------------------
Its: Chief Financial Officer,
Secretary and Treasurer
/s/ Xxxx X. Crown
-----------------------------
XXXX X. CROWN
