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EXHIBIT NO. 10.16
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").
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 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; 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.
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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
$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 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
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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.
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
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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.
(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
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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 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
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is participating on the Relevant Date (or plans which provide
Executive with substantially similar benefits) or the taking
of any action by Company which would adversely affect
Executive's participation in or materially reduce his benefit
under any of such plans or deprive him of any material fringe
benefit enjoyed by him as of the Relevant Date or any later
date. Amendment or modification of said plans, to the extent
required pursuant to applicable federal law and the procedures
set forth in the respective plan, or amendments of such plans
that apply to either all employees generally or all senior
executives shall not be considered to be "Good Reason" for
purposes of this clause (5);
(6) Failure of Company to obtain a specific written agreement
satisfactory to Executive from any successor to the business,
or substantially all the assets of Company, to assume this
Agreement or issue a substantially similar agreement;
(7) The termination 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.
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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.
(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
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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 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
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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:
(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 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.
(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
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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
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
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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 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.
(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
12
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 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.
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16. CAPTIONS
The captions included herein are for convenience and shall not constitute a part
of this Agreement.
17. DEFINITIONS
Throughout this Agreement, certain defined terms will be identified by the
capitalization of the first letter of the defined word or the first letter of
each substantive word in a defined phrase. Whenever used, these terms will be
given the indicated meaning.
18. SEVERABILITY
If any one or more of the provisions or parts of a provision contained in this
Agreement shall for any reason be held to be invalid, illegal or unenforceable
in any respect, such invalidity or unenforceability shall not affect any other
provision or part of a provision of this Agreement, but this Agreement shall be
reformed and construed as if such invalid, illegal or unenforceable provision or
part of a provision had never been contained herein and such provisions or part
thereof shall be reformed so that it would be valid, legal and enforceable to
the maximum extent permitted by law. Any such reformation shall be read as
narrowly as possible to give the maximum effect to the mutual intentions of
Executive and Company.
19. TERMINATION OF EMPLOYMENT
The termination of this Agreement by either party also shall result in the
termination of Executive's employment relationship with Company in the absence
of an express written agreement providing to the contrary. Neither party intends
that any oral employment relationship continue after the termination of this
Agreement.
20. TIME IS OF THE ESSENCE
Company and Executive agree that time is of the essence with respect to the
duties and performance of the covenants and promises of this Agreement.
21. NO CONSTRUCTION AGAINST EITHER PARTY
This Agreement is the result of negotiation between Company and Executive and
both have had the opportunity to have this Agreement reviewed by their legal
counsel and other advisors. Accordingly, this Agreement shall not be construed
for or against Company or Executive, regardless of which party drafted the
provision at issue.
COMPANY:
INSIGHT DIRECT WORLDWIDE,INC.
an Arizona corporation
By /s/ Xxxx X. Crown
--------------------------
Xxxx Crown, CEO
EXECUTIVE:
By /s/ Branson X. Xxxxx
--------------------------
BRANSON XXXXX
