1
EXHIBIT 10.8
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement") is entered into as of July
1, 1999 between DIRECT ALLIANCE CORPORATION, INC., an Arizona corporation
("Company"), and BRANSON XXXXX ("Executive").
RECITALS
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 July 1, 1999 and ending on June 30, 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 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;
2
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 1% of the issued and
outstanding equity of such public or private company.
3. COMPENSATION
(a) Base Salary. Company shall pay Executive a "Base Salary" in
consideration for Executive's services to Company at the rate
of $200,000 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 2.0% of the Company's "net earnings",
provided that the Company's net earnings exceed the
Minimum Amount for the applicable fiscal quarter; and
provided further that the incentive bonus for the
total of the four quarters constituting the fiscal
year ending December 31, 1999 shall not exceed 270%
of Executive's annual Base Salary for that fiscal
year, but such limitation shall not be applicable
thereafter.
(2) For purposes of calculating Executive's incentive
bonus pursuant to this subsection (b), the Company's
"net earnings" shall be the Company's consolidated
net after tax earnings prior to any incentive bonus
amounts for Executive and other executives of
Company. All allocations of overhead expense from
Parent to determine Company's "net earnings" shall be
on a
-2-
3
basis consistent with the allocation 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 the Company'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 the Parent's outside
Certified Public Accountants, the "net earnings" of
Company 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.
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.
-3-
4
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;
-4-
5
(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 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
"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, 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.
-5-
6
(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 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, 2000, then the
Employment Period ends ninety days thereafter, on April 1,
2000, 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, 2000) (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
-6-
7
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 materially
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) a materially 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
-7-
8
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 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
-8-
9
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.
(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.
-9-
10
(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 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
-10-
11
securities of Parent representing 50% 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
-11-
12
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:
(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 Chance 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 also shall 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.
-12-
13
(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 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
-13-
14
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%) 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.
-14-
15
(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 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. " 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.
-15-
16
(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. " 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 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, CEO
0000 Xxxxx Xxxx Xxxxxx
Xxxxx, Xxxxxxx 00000
If to Executive, to: Branson Xxxxx
0000 X. Xxxx Xxxxxx Xxx
Xxxxxxxx, 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
-16-
17
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
-17-
18
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, CEO
EXECUTIVE:
/s/
---------------------------------------------
BRANSON XXXXX
-18-
