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Exhibit 10.15
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into and shall be
effective as of January 1, 2000 between INSIGHT DIRECT WORLDWIDE, INC., an
Arizona corporation ("Company"), and XXXXXXX XXXXXXX ("Executive").
R E C I T A L S
Executive is currently employed by Company in the position of President and
Chief Operating Officer. Company is the wholly owned subsidiary of Insight
Enterprises, Inc. (the "Parent"). Company has decided to offer executive an
employment agreement, the terms and provisions of which are set forth below.
NOW, THEREFORE, IT IS HEREBY MUTUALLY AGREED AS FOLLOWS:
1. TERMS OF AGREEMENT
(a) Initial Term. Executive shall be employed by Company for the duties
set forth in Section 2 for a two-year term, commencing as of January
1, 2000 and ending on December 31, 2001 (the "Initial Term"), unless
sooner terminated in accordance with the provisions of this
Agreement.
(b) Renewal Term; Employment Period Defined. On each successive day
after the commencement of the Initial Term, without further action
on the part of Company or Executive, this Agreement shall be
automatically renewed for a new 2-year term dated effective and
beginning upon each such successive day (the "Renewal Term");
provided, however, that Company may notify Executive, or the
Executive may notify the Company, at any time, that there shall be
no renewal of this Agreement, and in the event of such notice,
neither party shall be under any obligation to renew or extend 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."
2. POSITION AND DUTIES
(a) Job Duties. Company does hereby employ, engage and hire Executive as
President and Chief Operating Officer of Company, and Executive does
hereby accept and agree to such employment, engagement, and hiring.
Executive's duties and authority during the Employment Period shall
be such executive and managerial duties as the Board of Directors of
the Company or the Board of Directors of the Parent (either or both
of which may be referred to herein as the "Board") shall reasonably
provided that such duties and authority shall not be materially
different than they are at the date of this Agreement; further that
the authority of Executive shall not be diminished, and that
Executive shall not be demoted. Executive will devote such time as
the Board 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.
(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 or Parent) 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 five percent
(5.0%) of the issued and outstanding equity of such public or
private company.
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3. COMPENSATION
(a) Base Salary. Company shall pay Executive a "Base Salary" in
consideration for Executive's services to Company at the rate of
$215,000 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 or
Parent's executives. The Base Salary may be adjusted from time to
time in accordance with the procedures established by Company or
Parent for salary adjustments for executives, provided that the Base
Salary shall not be reduced.
(b) Incentive Compensation.
(1) 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 two
percent (2.0%) of Parent's "net earnings", provided that Parent's
net earnings exceed the Minimum Amount for the applicable fiscal
quarter.
(2) For purposes of calculating Executive's incentive bonus pursuant to
this subsection (b), Parent's "net earnings" shall be Parent's
consolidated net after tax earnings prior to any incentive bonus
amounts for Executive and other executives of Parent and Company.
All calculations to determine Company's "net earnings" shall be on a
basis consistent with financial accounting and reporting methods
applied for prior accounting periods of Parent and Company,
provided, however, that changes thereto required by U.S. Generally
Accepted Accounting Principles shall be deemed acceptable. The
amounts payable pursuant to this subparagraph (b) shall be paid on
or before thirty (30) days after the public financial reporting by
Parent at the end of the applicable fiscal quarter. For purposes of
this subparagraph (b) the term "Minimum Amount" means an amount
equal to eighty percent (80%) of the average of Parent's net
earnings for the immediately preceding four fiscal quarters ended
prior to the applicable fiscal quarter.
(3) If upon final presentation of consolidated financial statements to
Parent by Parent's outside Certified Public Accountants , the "net
earnings" of Parent requires adjustment, then, within thirty (30)
days after such 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 (3), 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 Sections 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 or Parent's executives, including any
stock option plan maintained by Parent, 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 or Parent, including but not limited to, any
savings plan, life insurance plan and health insurance plan
available generally to employees of Company or Parent from time to
time, subject to any restrictions specified in, or amendments made
to, such plans.
(d) Vacation. The 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 or Parent'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.
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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. The determination of
any bonuses or incentive compensation to be payable for quarters
ending following Executive's death will be made 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 for
a minimum period of six (6) months 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 the severance compensation called for by Section 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;
(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
Parent, or any written directives of Company or Parent. A violation
will not be considered to be "repeated" unless such violation has
occurred more than once and after receipt of written
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notice from Company of such violation; or
(5) Failure to fully cooperate in any investigation by the Company or
Parent.
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 paragraph,
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 the total amount of his Base
Salary for the remainder of the Initial Term or current Renewal
Term, as applicable, 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 and officer 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.
(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 obligations under this Agreement and as an
employee 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
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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 become fully vested under any and all stock
bonus and stock option plans and agreements in which Executive had
an interest, vested or contingent. If applicable law or the terms of
such plan(s) prohibit 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, 2002, then the Employment
Period ends ninety days thereafter, on April 1, 2002, 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 two (assuming the contract started Jan 1, 2002) (2) years
totaling $430,000 (assuming the Base Salary was at that time
$215,000) plus (ii) the incentive compensation for eight fiscal
quarters computed as stated above, and Executive shall become 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"); or (ii) an adverse change in his titles, offices, or
authority as in effect on the Relevant Date; 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 Executive's
travel or contemplated travel 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
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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 or attempted termination of this Agreement 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; or
(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 Section 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, Parent and Parent's shareholders. Company and
Parent recognize that, as is the case with many publicly held
corporations, the continuing possibility of an unsolicited tender
offer or other takeover bid for Parent may be unsettling to
Executive and other senior executives of Company or Parent and may
result in the departure or distraction of management personnel to
the detriment of Company, Parent and Parent's shareholders. The
Board and the Compensation Committee of the Board (the "Committee")
have previously determined that it is in the best interests of
Company, Parent and Parent's 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 or Parent 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, Parent and Parent's
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.
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(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 subparagraph
(c) of this Section 8 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) two 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) two 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 become vested in any and all stock bonus and stock
option plans and agreements of Company or Parent 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.
(4) 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
Section 8(c), Executive's right to receive the compensation provided
by Section 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 of Parent 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
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directors at the beginning of such period;
(2) A change of control of Parent 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 Parent representing 20% or more of the combined voting power of
Parent's then outstanding securities;
(3) Any merger, consolidation or liquidation of Parent in which Parent
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 Parent 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 Parent approve any plan or proposal for the
liquidation or dissolution of Parent; or
(5) Substantially all of the assets of Parent are sold or otherwise
transferred to parties that are not within a "controlled group of
corporations" (as defined in Section 1563 of the Internal Revenue
Code of 1986, as amended (the "Code") in which Parent 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 Section 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 that an
excise tax is imposed on Executive as a result of the application of
Sections 280G and 4999 of the Code, 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,
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," 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:
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(A) "Base Period Income". "Base Period Income" is an amount equal to
Executive's "annualized includable compensation" for the "base
period" as defined in Sections 280G(d)(1) and (2) of the Internal
Revenue Code of 1986, as amended (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.
(B) "Cap" or "280G Cap". "Cap" or "280G 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 280G of the Code.
(C) "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 280G of the Code applies.
(3) Inclusion of Successor Sections. For purposes of this subsection (g)
of this Section 8, any reference to any Section of the Code shall
also be deemed a reference to any Code Section resulting from the
modification, amendment, renumbering or replacement of such Code
Section.
(h) Effect of Repeal. In the event that the provisions of Sections 280G
and 4999 of the Code are repealed without succession, Subsection
8(g) shall be of no further force or effect.
(i) Employment by Successor. For purposes of this Agreement, employment
by a successor of Company or Parent, or affiliate thereof, that has
assumed this Agreement, shall be considered to be employment by
Company or Parent or one of its affiliates. 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, he terminates his employment for Good
Reason or he terminates his employment within 120 days after the
Change in Control in accordance with subparagraph (b) of Section 8
of this Agreement.
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, Parent's and all other subsidiaries of Parent's
(collectively, "Parent's Family") confidential data, including but not limited
to information and documents concerning Parent's Family'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 Parent's Family,
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 Parent's Family.
10. RESTRICTIVE COVENANTS
(a) Covenant-not-to-Compete.
(1) In consideration of Company's agreements contained herein and the
payments to be made by it to
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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
("Time Period") 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, Canada and Europe ("Area"). 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 or Parent is engaged on the date of, or
any business contemplated by the Company's or Parent's business plan
in effect on the date of notice of, Executive's termination of
employment. Nothing in this subparagraph is intended to limit
Executive's ability to own equity in a public company constituting
less than one percent (1.0%) 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 and
Parent are 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 and Parent
may be treated as activities of which one may be engaged that is
competitive with Company and Parent.
(b) Non-Solicitation. Executive recognizes that Parent's Family's
customers are valuable and proprietary resources of Parent's Family.
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 located in the United States, Canada and Europe
which obtained services from Parent's Family at any time during
Executive's employment with Company; he will not solicit business
from any individual or entity located in the United States, Canada,
or Europe which was solicited by Executive on behalf of Parent's
Family, and he will not solicit employees of Parent's Family 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 Section 11(d). Notwithstanding
the
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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 Section 11(d).
The mediator shall not serve as the arbitrator. EXCEPT AS PROVIDED
IN SECTION 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. Sections 1-16. If no
such policy has been adopted, the arbitration shall be governed by
the National Rules for 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
fifteen (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. Sections 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 prevailing party's costs and expenses of any
arbitration (including reasonable attorneys' fees and costs) shall
be awarded to such prevailing party to such arbitration as
determined by the arbitrator.
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
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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.
c/o Xxxx Crown, Co-CEO
0000 Xxxx Xxxx Xxxxx
Xxxxx, Xxxxxxx 00000
If to Executive, to: Xxxxxxx Xxxxxxx
0000 Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 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
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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.
COMPANY:
INSIGHT DIRECT WORLDWIDE,INC.
an Arizona corporation
/s/ Xxxx Crown
------------------------
Xxxx Crown, Co-CEO
EXECUTIVE:
/s/ Xxxxxxx Xxxxxxx
-------------------------
XXXXXXX XXXXXXX
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