Amended and Restated Employment Agreement (2009)

Employment Agreement (2004)

Employment Agreement (1997)

EX-10.1 2 exhibit1.htm EX-10.1

Exhibit 10.1

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

This amended and restated Employment Agreement (the “Agreement”), entered into as of January 1, 2009, is between Insight Enterprises, Inc., a Delaware corporation (the “Company”), and Richard Fennessy (the “Executive”).

This amended and restated Employment Agreement is entered into in the following context:

RECITALS

A. Executive is employed by Company pursuant to an Employment Agreement dated as of October 24, 2004 (the “Existing Employment Agreement”).

B. Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), potentially applies to certain payments provided pursuant to the Existing Employment Agreement. The Existing Employment Agreement has been and shall continue to be administered in good faith compliance with the requirements of Section 409A of the Code from January 1, 2005 through December 31, 2008.

C. Company and Executive have decided to amend and restate the Existing Employment Agreement with this new Agreement, effective as of January 1, 2009, in order to satisfy the documentation requirements of Section 409A of the Code and to comply with the final regulations issued pursuant to Section 409A.

D. In this amended and restated Agreement, Company proposes and Executive agrees to certain changes that are intended to promote uniformity in the employment agreements entered into between Company and certain other executives and to clarify certain other provisions. Substantive changes also have been made in order to promote retention, positive morale and certainty among Company’s senior executives, including Executive. These changes also are intended to provide incentives that are in line with similar agreements provided to executives working in Company’s industry.

In exchange for valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

1. TERMS OF AGREEMENT.

(a) Initial Term. Executive shall be employed by Company for the duties set forth in Section 2 for a two-year term commencing as of January 1, 2009 and ending on December 31, 2010 (the “Initial Term”), unless sooner terminated in accordance with the provisions of this Agreement.

(b) Renewal Term; Employment Period Defined. This Agreement is intended to provide for a constantly renewing (or “evergreen”) two-year term. As a result, on each 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 two-year term from that day forward (a “Renewal Term”). Nevertheless, Company may notify Executive, or Executive may notify Company, at any time, that there shall be no renewal of this Agreement. If this notice of non-renewal is given, the Agreement shall immediately cease to renew and shall terminate naturally at the end of the then current Renewal Term. No severance or other post-termination compensation will be due or payable in the event of a termination resulting from non-renewal. The period of time commencing as of the date of this Agreement 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 employs, engages and hires Executive as its President and Chief Executive Officer, and Executive accepts and agrees 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 Company (the “Board”) shall reasonably determine. Executive will devote full time on behalf of Company, or such lesser amount of time as the Board may determine, reasonable absences because of illness, personal and family exigencies excepted. Except as otherwise required by applicable law, Executive shall be the only officer that reports directly to the Board.

(b) Best Efforts. Executive agrees that at all times during the Employment Period Executive will faithfully, and to the best of Executive’s ability, experience and talents, perform the duties that may be required of and from Executive and fulfill Executive’s responsibilities under this Agreement pursuant to its express terms. Executive’s ownership of or participation as an officer, director, consultant or employee of any entity (other than Company) must be disclosed to the Board. Additionally, Executive shall disclose to the Board any interest in a company that is engaged in a Competing Business as defined in Section 11, unless such interest constitutes less than five percent (5%) of the issued and outstanding equity of such company.

(c) Seat on Board of Directors. Executive currently serves on the Board. Company will use best efforts to make such appointment continuous during the term of this Agreement.

(d) Travel. Executive necessarily will be required to engage in reasonable travel in order to fulfill his duties under this Agreement. At the same time, Executive, without his consent, may not be required by the Board to substantially increase the amount of his travel as compared to the level of travel actually experienced in calendar year 2008. Executive will be deemed to have consented to any additional required travel in the absence of a specific written objection provided to the Board.

(e) Section 16. If, at the time Executive’s employment is terminated for any reason, Executive is a person designated to file pursuant to Section 16 under the Securities Exchange Act of 1934 (the “1934 Act”), Executive will provide to Company a written representation in a form acceptable to Company that all reportable pre-termination securities transactions relating to Executive have been reported.

3. COMPENSATION.

(a) Base Salary. Company shall pay Executive a “Base Salary” in consideration for Executive’s services to Company, payable as nearly as possible in equal semi-monthly installments or in such other installments as are customary from time to time for Company’s executives at the rate of $750,000.00 per annum. The Base Salary may be adjusted from time to time in accordance with the procedures established by Company for salary adjustments for executives, provided that the Base Salary shall not be reduced.

(b) Incentive Compensation. Executive shall be eligible for incentive compensation pursuant to one or more incentive compensation plans established by the Company from time to time (each, an “Incentive Compensation Plan”). The amount of the incentive compensation, if any, shall be based on the extent to which Executive or Company, or any combination of Executive, Company and Company’s direct and indirect subsidiaries, achieve objectives set forth in or pursuant to the Incentive Compensation Plan, or Incentive Compensation Plans, for the relevant time period. Company’s Compensation Committee is committed to offering cash bonus incentives for Executive on an annual basis. Executive will be targeted to receive the highest dollar value award each year. While there is no guarantee regarding the amount of the Incentive Compensation payments that will be made in any year, Company intends to provide Executive with an Incentive Compensation target opportunity of at least $1,000,000 per year, provided Executive reaches performance targets established for the year. For purposes of this Agreement, the terms “Incentive Compensation Plan” and “Incentive Compensation Plans” do not include any employee benefit, stock option, restricted stock or other equity-based plan.

(c) Equity Compensation. Executive shall also be permitted to participate in such equity compensation plans as are adopted by the Committee from time to time. The Committee, with input from senior management (including Executive), shall review the equity compensation plan or formula in light of all relevant circumstances and business conditions, and shall, in its discretion and business judgment, determine whether to provide equity compensation for the following year and, if so, make a determination as to the appropriate equity formula or equity allocation for Executive for such following year. The equity formula shall be the same as that used for the most senior executives of Company whose incentive is based on Company-wide performance, though amount of equity participation, if any, shall be at the discretion of the Committee. The Committee is committed to equity incentives for its executives on an annual basis. Executive will be targeted to receive the largest incentive each year.

(d) Benefit Plans. Executive will be entitled to participate in those benefit plans generally provided for Company’s executives in accordance with the terms of the applicable benefit plans. Additionally, Executive shall be entitled to participate in any other benefit plans made available generally to employees of Company from time to time, including but not limited to, any savings plan, life insurance plan and health insurance plan, all subject to any restrictions specified in, or amendments made to, such plans. Executive shall be entitled to D&O insurance and indemnification as provided by Company consistent with the coverage provided to other directors and officers. 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 carried over, scheduled and taken in accordance with Company’s standard vacation policies.

(e) Life Insurance. Company shall acquire and be the owner of a life insurance policy on the life of Executive. Company and Executive shall enter into a separate split-dollar life insurance agreement pursuant to which Executive will be entitled to designate a beneficiary or beneficiaries for all or a portion of the proceeds of such life insurance policy. At a minimum, Executive shall be entitled to designate the beneficiary for life insurance proceeds equal to at least 1.75 times Executive’s current Base Salary. The level of life insurance shall be reviewed periodically and will be increased to reflect any significant cumulative increases in Executive’s Base Salary, as agreed to by Executive and Company.

(f) Clawback. To the extent required by law or Company policy, Company may require Executive to repay to Company any bonus or other incentive-based or equity-based compensation paid to Executive. For example, in accordance with Section 304 of the Sarbanes-Oxley Act of 2002, if Company is required to restate its financial statements due to its material noncompliance, as a result of misconduct, with any financial reporting requirement under the federal securities laws, Executive may be required to repay any bonus or other incentive-based or equity-based compensation he receives from Company during the twelve-month period following the first public issuance or filing with the U.S. Securities and Exchange Commission of the financial document embodying such financial reporting requirement, as well as any profits he realizes from the sale of Company’s securities during this twelve-month period.

4. BUSINESS EXPENSES.

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 Company.

5. DEATH OR DISABILITY.

(a) Compensation. If Executive’s employment is terminated as a result of Executive’s death, or if Executive becomes Disabled, Executive, or Executive’s estate, as the case may be, shall be entitled to receive the Base Salary due to Executive through the date of Executive’s death or Disability. Executive or Executive’s estate, as the case may be, also shall be entitled to receive the following:

(1) A single lump sum payment equal to ninety (90) days of Executive’s Base Salary as in effect on the date of Executive’s death or Disability;

(2) With respect to any Incentive Compensation Plan with quarterly objectives, a single lump sum cash payment in an amount equal to a prorated portion (based on the number of calendar days that have elapsed during the quarter) of the payment to which Executive would be entitled under the Incentive Compensation Plan (had Executive’s death or Disability not occurred) for the quarter in which Executive died or became Disabled; and

(3) With respect to any Incentive Compensation Plan with annual objectives, a single lump sum cash payment in an amount equal to a prorated portion (based on the number of calendar days that have elapsed during the year) of the payment to which Executive would have been entitled (had Executive’s death or Disability not occurred) under the Incentive Compensation Plan for the calendar year in which Executive dies or becomes Disabled.

The payment to which Executive or Executive’s estate is entitled pursuant to paragraph (1) will be paid within thirty (30) days of Executive’s death or the effective date of Executive’s Disability, as the case may be. The payments to which Executive is entitled pursuant to paragraphs (2) and (3) shall be made within the time period described in the applicable Incentive Compensation Plan. In no event will the payments due pursuant to paragraphs (1), (2) or (3) be made later than March 15 of the year following the year in which Executive dies or the effective date of Executive’s Disability occurs.

(b) Disability. The term “Disability” or “Disabled” means that Executive with or without any accommodation required by law, is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident and health plan covering employees of Company. The effective date of Executive’s Disability is the last day of the third month for which Executive receives the income replacement benefits.

(c) Termination of Employment. Unless otherwise prohibited by law, Executive’s employment shall terminate on the first business day following the effective date of Executive’s “Disability.” Executive’s employment also shall terminate on the date of Executive’s death.

6. TERMINATION BY COMPANY.

(a) Termination for Cause. Company may terminate this Agreement and Executive’s employment at any time during the Initial Term or any Renewal Term for “Cause” upon written notice to Executive specifying the basis for the termination. 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 Plan 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, accrued and unused vacation pay and similar items. For purposes of this Agreement, the term “Cause” shall mean the termination of Executive’s employment by Company for one or more of the following reasons:

(1) the criminal conviction for any felony involving theft or embezzlement from Company or any affiliate;

(2) the criminal conviction for any felony involving moral turpitude that reflects adversely upon the standing of Company in the community;

(3) the criminal conviction for any felony involving fraud committed against Company, any affiliate or any individual or entity that provides goods or services to, receives goods or services from or otherwise deals with Company or any affiliate;

(4) acts by Executive that constitute repeated and material violations of this Agreement, any written employment policies of Company or any written directives of Company. A violation will not be considered to be “repeated” unless such violation has occurred more than once and after receipt of written notice from Company of such violation.

If Executive is terminated for Cause, Company shall be obligated to pay Executive only the Base Salary (from Section 3(a)) and benefits (from Section 3(d)) due to Executive through the termination date, and Executive will not be entitled to, nor will Executive receive, any type of severance payment.

If Company terminates Executive for Cause, and it is later determined as provided in Section 18 of this Agreement 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 and Executive’s employment at any time during the Initial Term or any Renewal Term without Cause. Company may, in its discretion, place Executive on a paid administrative leave prior to the actual date of termination set by Company. 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) Base Salary. In the event Executive’s employment is terminated by Company without Cause, Executive shall receive a single lump sum cash payment in an amount equal to two (2) times Executive’s Base Salary as in effect on the date Executive’s employment is terminated to be paid within three (3) days (or sooner if required by law) following the termination of Executive’s employment. Executive shall have no duty to mitigate damages in order to receive the compensation described by this Section 6(c), and the compensation shall not be reduced or offset by other income, payments or profits received by Executive from any source.

(d) Incentive Compensation. If Executive is terminated for Cause, Executive shall not be entitled to receive any Incentive Compensation Plan payments for the quarter or year in which Executive’s employment is terminated or for any other periods. If Executive is terminated without Cause, Executive shall receive a single lump sum cash payment in an amount equal to the sum of the following:

(1) Two (2) times the annual compensation paid to Executive in the one (1) of the two (2) preceding years in which Executive received the higher annual compensation under all Incentive Compensation Plans (annual and quarterly) in which Executive participates as of the date his employment is terminated or, if an Incentive Compensation Plan was not in existence in the preceding year, two (2) times the annual compensation paid to Executive in the one (1) of the two (2) preceding years in which Executive received the higher annual compensation under a predecessor Incentive Compensation Plan; plus

(2) With respect to any Incentive Compensation Plan with quarterly objectives, a prorated portion (based on the number of calendar days that have elapsed during the quarter) of the payment to which Executive would be entitled under the Incentive Compensation Plan (had Executive’s employment not been terminated) for the quarter in which Executive’s employment is terminated; plus

(3) With respect to any Incentive Compensation Plan with annual objectives, a prorated portion (based on the number of calendar days that have elapsed during the year) of the payment to which Executive would be entitled under the Incentive Compensation Plan (had Executive’s employment not been terminated) for the year in which Executive’s employment is terminated.

The payments described in this Section 6(d) will be made at the time described in the applicable Incentive Compensation Plan, but in no event later than March 15 of the year following the year in which Executive’s termination without Cause occurs. Executive shall have no duty to mitigate damages in order to receive the compensation described by this Section 6(d), and the compensation shall not be reduced or offset by other income, payments or profits received by Executive from any source.

(e) Welfare Benefit Continuation. If Executive’s employment is terminated by Company without Cause, and such employment termination qualifies as a Separation from Service, Executive shall be entitled to continue to receive life, disability, accident and group health and dental insurance benefits, at substantially the levels Executive was receiving immediately prior to Executive’s Separation from Service, for a period of time expiring upon the earlier of: (1) the end of the period of twenty-four (24) months following Executive’s Separation from Service, or (2) the day on which Executive becomes eligible to receive any substantially similar benefits under any plan or program of any other employer or source without being required to pay any premium with respect thereto. Company will satisfy the obligation to provide the health and dental insurance benefits pursuant to this Section 6(e) by either paying for or reimbursing Executive for the actual cost of COBRA coverage (and Executive shall cooperate with Company in all respects in securing and maintaining such benefits, including exercising all appropriate COBRA elections and complying with all terms and conditions of such coverage in a manner to minimize the cost). Following the expiration of the COBRA continuation period, Company will reimburse Executive for the cost of comparable health and dental insurance benefits. Similarly, Company will reimburse Executive for the cost of comparable coverage for all other insurance benefits that are not subject to the COBRA continuation rules. It will be Executive’s responsibility to procure such benefits and Company will promptly reimburse Executive for the premiums for such benefits in the specified amount upon Executive’s submission of an invoice or other acceptable proof of payment. Company’s obligation under this paragraph will cease with respect to a particular type of coverage when and if Executive becomes eligible to receive substantially similar coverage with a successor employer.

(f) Other Plans. Except to the extent specified in this Section 6 and as provided in this Section 6(f), termination of Executive’s employment shall not affect Executive’s participation in, distributions from, and vested rights under, any employee benefit, stock option, restricted stock or other equity-based plan of, or maintained by or for, Company, which benefits will be governed by the terms of those respective plans. Executive shall have no duty to mitigate damages in order to receive the compensation described by this Section 6(f), and the compensation shall not be reduced or offset by other income, payments or profits received by Executive from any source.

7. TERMINATION BY EXECUTIVE.

(a) General. Executive may terminate this Agreement and his employment at any time, with or without “Good Reason.” Company may, in its discretion, place Executive on a paid administrative leave prior to the actual date of termination of Executive’s employment. 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.

(b) Good Reason Defined. Executive may terminate this Agreement and his employment for Good Reason if Executive provides Company with written notice of the breach or action giving rise to Good Reason within ninety (90) days of the initial existence of such breach or action. 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) A material diminution in Executive’s authority, duties, or responsibilities. For example, if a Change in Control occurs and, following the Change in Control, Executive is required to report to an officer of the acquiring company, or to a subsidiary’s Board of Directors, Executive shall be deemed to have suffered a material diminution in his authority, duties or responsibilities. The prior sentence is not intended to provide an exclusive list of examples of actions or omissions that will result in a material diminution of Executive’s authority, duties, or responsibilities.

(2) A material change in the geographic location at which Executive must perform services.

(3) A material diminution in Executive’s Base Salary.

(4) Any action or inaction that constitutes a material breach of this Agreement by Company.

Notwithstanding any provisions of this Agreement to the contrary, none of the events described in this Section 7(b) will constitute Good Reason if, within thirty (30) days after Executive provides Company written notice specifying the occurrence or existence of the breach or action that Executive believes constitutes Good Reason, Company has fully corrected (or reversed) such breach or action. Executive’s employment will terminate on the day following the expiration of this thirty (30) day “cure period,” unless Executive and Company agree to a later date not later than two (2) years following the initial existence of such breach or action. Executive shall be deemed to have waived Executive’s right to terminate for Good Reason with respect to any such breach or action if Executive does not notify Company in writing of such breach or action within ninety (90) days of the event that gives rise to such breach or action.

(c) Effect of Termination by Executive for Good Reason. If Executive terminates this Agreement and his employment for Good Reason, it shall for all purposes be treated as a termination by Company without Cause and Executive shall be entitled to compensation in accordance with Section 6.

(d) Effect of Termination by Executive Without Good Reason. If Executive terminates this Agreement and his employment without Good Reason, while the termination shall not be characterized as a termination for Cause, it shall for all purposes result in the same compensation as a termination for Cause in accordance with Section 6.

8. CHANGE IN CONTROL OF COMPANY.

(a) Continued Eligibility to Receive Benefits. Company considers the maintenance of a sound and vital management to be essential to protecting and enhancing the best interests of Company and its shareholders. In furtherance of such goal and in further consideration of Executive’s continued employment with Company, if a Change in Control (as defined in Section 8(c)) occurs, Executive shall be entitled to the lump-sum severance benefit provided in Section 8(b) if, prior to the expiration of twenty-four (24) months after the Change in Control, (1) Executive terminates his employment with Company for Good Reason in accordance with the requirements of Section 7(b), or (2) Company terminates Executive’s employment without Cause pursuant to Section 6(b). The full severance benefits provided by this Section 8 shall be payable regardless of the period remaining until the expiration of the Initial Term or any Renewal Term.

(b) Receipt of Benefits. If Executive is entitled to receive a severance benefit pursuant to Section 8(a) hereof:

(1) Within ten (10) days following the date of termination of Executive’s employment, Company will provide Executive with a single lump sum cash payment in an amount equal to: (1) two (2) times Executive’s highest annualized Base Salary in effect on any date during the Initial Term or any Renewal Term; plus (2) two (2) times the annual compensation paid to Executive in the one (1) of the two (2) preceding years in which Executive received the higher annual compensation under all Incentive Compensation Plans (annual and quarterly) in which Executive participates as of the date his employment is terminated or, if an Incentive Compensation Plan was not in existence in the preceding year, two (2) times the annual compensation paid to Executive in the one (1) of the two (2) preceding years in which Executive received the higher annual compensation under a predecessor Incentive Compensation Plan; plus (3) with respect to any Incentive Compensation Plan with quarterly objectives, a prorated portion (based on the number of calendar days that have elapsed during the quarter) of the payment to which Executive would be entitled under the Incentive Compensation Plan (had Executive’s employment not been terminated) for the quarter in which Executive’s employment is terminated; plus (4) with respect to any Incentive Compensation Plan with annual objectives, a prorated portion (based on the number of calendar days that have elapsed during the year) of the payment to which Executive would be entitled under the Incentive Compensation Plan (had Executive’s employment not been terminated) for the calendar year in which Executive’s employment is terminated.

(2) Executive shall be vested in any and all equity-based plans and agreements of Company in which Executive had an interest, vested or contingent. If applicable law prohibits such vesting, then Company shall pay to Executive a single lump sum cash payment in an amount equal to the value of benefits and rights that would have, but for such prohibition, been vested in Executive. Any payment made pursuant to this Section 8(b)(2) will be made within sixty (60) days following the date of termination of Executive’s employment.

(3) If Executive’s employment termination constitutes a Separation from Service, Executive shall be entitled to continue to receive life, disability, accident and group health and dental insurance benefits, at substantially the levels Executive was receiving immediately prior to Executive’s Separation from Service, for a period of time expiring upon the earlier of: (1) the end of the period of forty-two (42) months following Executive’s Separation from Service, or (2) the day on which Executive becomes eligible to receive any substantially similar benefits under any plan or program of any other employer or source without being required to pay any premium with respect thereto. Company will satisfy the obligation to provide the health and dental insurance benefits pursuant to this Section 8(b)(3) by either paying for or reimbursing Executive for the actual cost of COBRA coverage (and Executive shall cooperate with Company in all respects in securing and maintaining such benefits, including exercising all appropriate COBRA elections and complying with all terms and conditions of such coverage in a manner to minimize the cost). Following the expiration of the COBRA continuation period, Company will reimburse Executive for the cost of comparable health and dental insurance benefits. Similarly, Company will reimburse Executive for the cost of comparable coverage for all other insurance benefits that are not subject to the COBRA continuation rules. It will be Executive’s responsibility to procure such benefits and Company will promptly reimburse Executive for the premiums for such benefits in the specified amount upon Executive’s submission of an invoice or other acceptable proof of payment. Company’s obligation under this paragraph will cease with respect to a particular type of coverage when and if Executive becomes eligible to receive substantially similar coverage with a successor employer.

Executive shall have no duty to mitigate damages in order to receive the compensation described by this Section 8(b), provided, however, that Company’s obligation to provide continued life, disability, accident and group health and dental insurance benefits will cease with respect to a particular type of coverage when and if Executive becomes eligible to receive substantially similar coverage with a successor employer. If Executive is entitled to receive the payments called for by this Section 8(b), Executive shall not be entitled to receive the compensation provided under Section 6 or 7.

(c) Change in Control Defined. For purposes of this Agreement, “Change in Control” shall mean each occurrence of any of the following:

(1) when the individuals who, at the beginning of any period of two (2) years or less, constituted the Board cease, for any reason, to constitute at least a majority thereof unless the election or nomination for election of each new director was approved by the vote of at least two thirds of the directors then still in office who were directors at the beginning of such period;

(2) a change in control of Company through a transaction or series of transactions, such that any person (as that term is used in Section 13 and 14(d)(2) of the 1934 Act), excluding affiliates of Company as of the Effective Date, is or becomes the beneficial owner (as that term is used in Section 13(d) of the 1934 Act) directly or indirectly, of securities of Company representing twenty percent (20%) or more of the combined voting power of Company’s then outstanding securities;

(3) any merger, consolidation or liquidation of Company in which Company is not the continuing or surviving company or pursuant to which stock would be converted into cash, securities or other property, other than a merger of Company in which the holders of the shares of stock immediately before the merger have the same proportionate ownership of common stock of the surviving company immediately after the merger;

(4) the shareholders of Company approve any plan or proposal for the liquidation or dissolution of Company; or

(5) substantially all of the assets of Company are sold or otherwise transferred to parties that are not within a “controlled group of corporations” (as defined in Section 1563 of the Code) in which Company is a member at the Relevant Date.

(d) 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” (as such term is defined in Section 280G(b)(2)(A)(i) of the Code and the regulations adopted thereunder) exceed prescribed limits. For example, if Executive’s “Base Period Income” is $100,000 and Executive’s “Total Payments” exceed 299% of such Base Period Income (the “Cap”), Executive will be subject to an excise tax under Section 4999 of the Code of 20% of all amounts paid to him in excess of $100,000. In other words, if Executive’s Cap is $299,999, he will not be subject to an excise tax if he receives exactly $299,999. If Executive receives $300,000, he will be subject to an excise tax of $40,000 (20% of $200,000). In the event such a consequence occurs, for any reason, due to this Agreement or otherwise, Company shall pay to Executive a “Gross-up Payment” equal in amount to the sum of: (1) the excise tax liability of Executive on the Total Payments; and (2) all the total excise, income, and payroll tax liability of Executive on the Gross-up Payment, further increased by all additional excise, and income, and payroll tax liability thereon, which increase shall be part of the Gross-up Payment for purpose of computing the Gross-up Payment. Company shall indemnify and hold Executive harmless from such additional tax liability for the income and payroll tax arising from the Gross-up Payment 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 Payment, and all penalties and interest thereon. The purpose and effect of the Gross-up Payment 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 Section 4999. In order to enable Company to calculate the amount of the Gross-Up Payment, Executive shall provide Company with a letter from an attorney or accountant (collectively a “Tax Professional”) acceptable to Company providing Company with all of the information necessary to calculate the Gross-Up Payment. If the Tax Professional selected by Executive is unacceptable to Company, Executive shall provide the necessary information to a Tax Professional selected by Company, with the information to be held in confidence by such Tax Professional. The Tax Professional will then provide Company, at Company’s expense, with a letter containing the information necessary to enable Company to calculate the Gross-Up Payment. The Gross-up Payment shall be made not later than December 31 of the tax year next following the tax year in which Executive remits such taxes.

(2) Special Definitions. For purposes of this Section 8(e), the following specialized terms will have the following meanings:

(i) “Base Period Income.” “Base Period Income” is an amount equal to Executive’s “annualized includable compensation” for the “base period” as defined in Sections 280G(d)(1) and (2) of the Code and the regulations adopted thereunder. Generally, Executive’s “annualized includable compensation” is the average of his annual taxable income from Company for the “base period,” which is the five calendar years prior to the year in which the change in control occurs.

(ii) “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.

(iii) “Total Payments.” The “Total Payments” include any “payments in the nature of compensation” (as defined in Section 280G of the Code and the regulations adopted thereunder), made pursuant to this Agreement or otherwise, to or for Executive’s benefit, the receipt of which is contingent or deemed contingent on a change in control and to which Section 280G of the Code applies.

(e) Effect of Repeal. In the event that the provisions of Sections 280G and 4999 of the Code are repealed without succession, Section 8(d) shall be of no further force or effect.

(f) Employment by Successor. For purposes of this Agreement, employment by a successor of Company or a successor of any subsidiary of Company that has assumed this Agreement shall be considered to be employment by Company or one of its subsidiaries. As a result, if Executive is employed by such a successor following a Change in Control, Executive will not be entitled to receive the benefits provided by Section 8 unless Executive’s employment with the successor is subsequently terminated without Cause or for Good Reason within twenty-four (24) months following the Change in Control.

9. SECTION 409A COMPLIANCE.

(a) Compliance Strategy. Section 409A of the Code imposes an additional twenty percent (20%) tax, plus interest, on payments from “non-qualified deferred compensation plans.” Certain payments under this Agreement could be considered to be payments under a “non-qualified deferred compensation plan.” The additional twenty percent (20%) tax, and interest, does not apply if the payment qualifies for an exception to the requirements of Section 409A or complies with the requirements of Section 409A. Company currently believes that the cash payments and benefits due pursuant to this Agreement either comply with the requirements of Section 409A or qualify for an exception to the requirements of Section 409A.

Company intends that the payments to which Executive is entitled upon Executive’s death or Disability under Section 5(a)(1), (2) and (3) qualify for the short-term deferral exception to Section 409A of the Code. In addition, Company intends that the payments made due to Executive’s termination without Cause under Sections 6(c) and (d) and 8(b)(1) and (2), or for Good Reason under Sections 7(c) and 8(b)(1) and (2), qualify for the short-term deferral exception to Section 409A of the Code as described in Treas. Reg. § 1.409A-1(b)(4)).

Company further intends that the group health and dental insurance benefits payable under Sections 6(e) and 8(b)(3) during the period of time during which Executive is entitled to continuation coverage under Section 4980B of the Code (COBRA) if Executive elected such coverage and paid the applicable premium qualify for the separation pay plan exception to Section 409A of the Code. Company has concluded that the life, disability and accident insurance benefits payable under Sections 6(e) and 8(b)(3) and the group health and dental insurance benefits payable after the conclusion of the COBRA coverage continuation period described in the preceding sentence may be subject to the requirements of Section 409A of the Code. To ensure that such payments comply with Section 409A of the Code, the payments are payable at a specified time or pursuant to a fixed schedule within the meaning of Treas. Reg. § 1.409A-3(i)(1)(iv) and the amounts reimbursed in one taxable year will not affect the amounts eligible for reimbursement by Company in a different taxable year. All reimbursements must be made no later than December 31 of the calendar year following the calendar year in which the expense was incurred. Executive may not elect to receive cash or any other benefit in lieu of the benefits provided by Sections 6(e) and 8(b)(3).

(b) Delay in Payments. Prior to making any payments due under this Agreement, Company will determine, on the basis of any regulations, rulings or other available guidance and the advice of counsel, whether the short-term deferral exception, the separation pay exception or any other exception to the requirements of Section 409A of the Code is available. If Company concludes that no exception is available, no payments will be made prior to Executive’s Separation from Service, despite any provision in Section 6, 7 or 8 to the contrary. In addition, if Executive is a “Specified Employee” (as defined in Treas. Reg. § 1.409A-1(i)), and Company concludes that no exception to the requirements of Section 409A of the Code is available, no payments shall be made to Executive prior to the first business day following the date which is six months after Executive’s Separation from Service. Any amounts that would have been paid during the six months following Executive’s Separation from Service will be paid on the first business day following the expiration of the six-month period without interest thereon. The provisions of this paragraph apply to all amounts due pursuant to this Agreement, other than amounts that do not constitute a deferral of compensation within the meaning of Treas. Reg. §1.409A-1(b) or other amounts or benefits that are not subject to the requirements of Section 409A of the Code.

(c) Separation from Service. For purposes of this Agreement, the term “Separation from Service” means, either (1) termination of Executive’s employment with Company and all Affiliates, or (2) a permanent reduction in the level of bona fide services Executive provides to Company and all Affiliates to an amount that is twenty percent (20%) or less of the average level of bona fide services Executive provided to Company in the immediately preceding thirty-six (36) months, with the level of bona fide service calculated in accordance with Treas. Reg. § 1.409A-1(h)(1)(ii).

For purposes of determining whether a Separation from Service has occurred, the term “Affiliate” shall have the meaning assigned in Treas. Reg. § 1.409A-1(h)(3) (which generally requires fifty percent (50%) common ownership).

Executive’s employment relationship is treated as continuing while Executive is on military leave, sick leave, or other bona fide leave of absence (if the period of such leave does not exceed six (6) months, or if longer, so long as Executive’s right to reemployment with Company or an Affiliate is provided either by statute or contract). If Executive’s period of leave exceeds six (6) months and Executive’s right to reemployment is not provided either by statute or by contract, the employment relationship is deemed to terminate on the first day immediately following the expiration of such six-month period. Whether a termination of employment has occurred will be determined based on all of the facts and circumstances and in accordance with regulations issued by the United States Treasury Department pursuant to Section 409A of the Code.

(d) Distributions Treated as Made upon a Designated Event. If Company fails to make any payment, either intentionally or unintentionally, within the time period specified in this Agreement, but the payment is made within the same calendar year, such payment will be treated as made within the time period specified in this Agreement pursuant to Treas. Reg. § 1.409A-3(d). In addition, if a payment is not made due to a dispute with respect to such payment, the payment may be delayed in accordance with Treas. Reg. § 1.409A-3(g).

(e) Reimbursements. In order to ensure compliance with the applicable regulations, the amounts reimbursed in one taxable year will not affect the amounts eligible for reimbursement by Company in a different taxable year. All reimbursements must be made no later than December 31 of the calendar year following the calendar year in which the expense was incurred. Executive may not elect to receive cash or any other benefit in lieu of the benefits provided by Sections 6(e) and 8(b)(3).

(f) Miscellaneous Payment Provisions. Under no circumstances may the time or schedule of any payment made or benefit provided pursuant to this Agreement be accelerated or subject to a further deferral except as otherwise permitted or required pursuant to regulations and other guidance issued pursuant to Section 409A of the Code. Executive does not have any right to make any election regarding the time or form of any payment due under this Agreement. This Agreement shall be operated in compliance with Section 409A of the Code and each provision of this Agreement shall be interpreted, to the extent possible, to comply with Section 409A of the Code.

10. INTELLECTUAL PROPERTY.

(a) Proprietary Information. Executive and Company hereby acknowledge and agree that in connection with the performance of Executive’s services, Executive shall be provided with or shall otherwise be exposed to or receive certain proprietary information of Company. Such proprietary information may include, but shall not be limited to, information concerning Company’s customers and products, information concerning certain marketing, selling, and pricing strategies of Company, and information concerning methods, manufacturing techniques, and processes used by Company in its operations (all of the foregoing shall be deemed “Proprietary Information” for purposes of this Agreement). Executive hereby agrees that, without the prior written consent of Company, any and all Proprietary Information shall be and shall forever remain the property of Company, and that during the Initial Term or any Renewal Term, and at all times thereafter, Executive shall not in any way disclose or reveal the Proprietary Information other than to Company’s executives, officers and other employees and agents in the normal course of Executive’s provision of services hereunder. The term “Proprietary Information” does not include information which (1) becomes generally available to the public other than as a result of a disclosure by Executive contrary to the terms of this Agreement, (2) was available on a non-confidential basis prior to its disclosure, or (3) becomes available on a non-confidential basis from a source other than Executive, provided that such source is not contractually obligated to keep such information confidential.

(b) Trade Secrets. Executive, prior to and during this Agreement, has had and will have access to and become acquainted with various trade secrets which are owned by Company or by its affiliates and are regularly used in the operation of their respective businesses and which may give Company or an affiliate an opportunity to obtain an advantage over competitors who do not know or use such trade secrets. Executive agrees and acknowledges that Executive has been granted access to these valuable trade secrets only by virtue of the confidential relationship created by Executive’s employment and Executive’s prior relationship to, interest in, and fiduciary relationships to Company. Executive shall not disclose any of the aforesaid trade secrets, directly or indirectly or use them in any way, either during the Initial or any Renewal Term of this Agreement or at any time thereafter, except as required in the course of employment by Company and for its benefit.

(c) Intellectual Property. Executive acknowledges and agrees that all products, services, methods, know-how, procedures, processes, specifications, and anything of a similar nature that relate to the services to be provided by Executive to Company, whether the same are derived from the use of Proprietary Information or otherwise developed or conceived of by Executive, shall be and shall remain the exclusive property of Company. Executive further agrees that for a period of one (1) year after the termination of this Agreement for any reason, there shall be an irrebuttable presumption that all products, services, methods, know-how, procedures, formulae, processes, specifications, and anything of a similar nature which relate to such services rendered hereunder developed, formulated, created, or conceived of by Executive were derived from the use of Proprietary Information or were otherwise developed, formulated, created, or conceived of by Executive during the Initial Term or any Renewal Term, and, as such, the same shall be and shall remain the exclusive property of Company. Executive shall promptly disclose to Company all written and graphic materials, computer software, inventions, discoveries and improvements authored, prepared, conceived or made by, for or at the direction of Executive during his employment hereunder and which are related to the business of Company, and shall execute all such documents and instruments, including but not limited to any assignments and invention disclosure documents, as Company may reasonably determine are necessary or desirable in order to give effect to the preceding sentence or to preserve, protect or enforce Company’s rights with respect to any such work and any intellectual property therein.

(d) Ownership of Documents. Company shall own all papers, records, books, drawings, documents, manuals, and anything of a similar nature (collectively, the “Documents”) prepared by Executive in connection with his employment. The Documents shall be the property of Company and are not to be used on other projects except upon Company’s prior written consent. At the end of the Initial Term or any Renewal Term, Executive shall surrender to Company any and all Documents or other property of whatsoever kind now or hereafter in Executive’s possession, custody, or control which contain or reflect in any manner whatsoever Proprietary Information or information which in any way relates to Company’s business.

(e) Company Defined. For purposes of this Section 10, “Company” shall be interpreted to include Company and all of its direct and indirect subsidiaries.

11. RESTRICTIVE COVENANTS.

(a) Covenant Not To Compete. In consideration of Company’s agreements contained herein and the payments to be made by it to Executive pursuant hereto, Executive agrees that during the Restricted Period and so long as Company is continuously not in material default of its obligations to provide payments or employment-type benefits to Executive hereunder or under any other agreement, covenant, or obligation, Executive 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 Restricted Territory, as defined below. For purposes of this Agreement, Executive shall be deemed to be engaged in a “Competing Business” if, in any capacity, including proprietor, shareholder, partner, officer, director or employee, Executive 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 and its operating subsidiaries and affiliates are engaged on the date of, or any business contemplated by such entities’ business plans in effect on the date of notice of, Executive’s termination of employment. (As of the date of execution of this Agreement, Company’s actual business is the direct marketing of information technology products and services to businesses and consumers.) Nothing in this Section 11(a) is intended to limit Executive’s ability to own equity in a public company constituting less than five percent (5%) of the outstanding equity of such company, when Executive is not actively engaged in the management thereof. If requested by Executive, Company shall furnish Executive with a good-faith written description of the business or businesses in which Company is then actively engaged or which is contemplated by Company’s current business plan within thirty (30) days after such request is made, and only those activities so timely described in which Company is, in fact, actively engaged or which are so contemplated may be treated as activities which are directly competitive with Company.

(b) Non-Solicitation. Executive recognizes that Company’s clients are valuable and proprietary resources of Company. Accordingly, Executive agrees that during the Restricted Period Executive will not directly or indirectly, through Executive’s own efforts or through the efforts of another person or entity, solicit business in the Restricted Territory for or in connection with any Competing Business from any individual or entity which obtained products or services from Company at any time during Executive’s employment with Company. In addition, during the Restricted Period Executive will not solicit business for or in connection with a Competing Business from any individual or entity which may have been solicited by Executive on behalf of Company. Further, during the Restricted Period Executive will not solicit, hire or engage employees of Company who would have the skills and knowledge necessary to enable or assist efforts by Executive to engage in a Competing Business. Company agrees that the restrictions described in this paragraph apply only so long as Company is continuously not in material default of its obligations to provide payments or employment-type benefits to Executive hereunder or under any other agreement, covenant, or obligation.

(c) Restricted Period. For purposes of this Section 11, the “Restricted Period” shall include the Employment Period and a period of two (2) years (or in the event any reviewing court finds this period to be over-broad or unenforceable, for a period of eighteen (18) months; or in the event any reviewing court finds this period to be over-broad or unenforceable, for a period of twelve (12) months; or in the event any reviewing court finds this period to be over-broad or unenforceable, for a period of nine (9) months; or in the event any reviewing court finds this period to be over-broad or unenforceable, for a period of six (6) months) following the termination of Executive’s employment with Company for any reason.

(d) Restricted Territory. Executive and Company understand and agree that Company’s business is not geographically restricted and is unrelated to the physical location of Company facilities or the physical location of any Competing Business, due to extensive use of the Internet, telephones, facsimile transmissions and other means of electronic information and product distribution. Executive and Company further understand and agree that Executive will, in part, work toward expanding Company’s markets and geographic business territories and will be compensated for performing this work on behalf of Company.

Accordingly, Company has a protectable business interest in, and the parties intend the Restricted Territory to encompass, each and every location from which Executive could engage in a Competing Business in any country, state, province, county or other political subdivision in which Company has clients, employees, suppliers, distributors or other business partners or operations. If, but only if, this Restricted Territory is held to be invalid on the ground that it is unreasonably broad, the Restricted Territory shall include each location from which Executive can conduct business in any of the following locations: each state in the United States in which Company conducts sales or operations, each province within Canada in which Company conducts sales or operations, and each political subdivision of the United Kingdom in which Company conducts sales or operations. If, but only if, this Restricted Territory is held to be invalid on the grounds that it is unreasonably broad, then the Restricted Territory shall be any location within a fifty (50) mile radius of any Company office.

(e) Remedies; Reasonableness. Executive acknowledges and agrees that a breach by Executive of the provisions of this Section 11 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 11. 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: (1) the Restrictive Covenants contained herein are reasonable as to time and geographical area and do not place any unreasonable burden upon Executive, (2) the general public will not be harmed as a result of enforcement of these Restrictive Covenants, and (3) Executive understands and hereby agrees to each and every term and condition of the Restrictive Covenants set forth in this Agreement.

Executive also expressly acknowledges and agrees that Executive’s covenants and agreements in this Section 11 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.

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, Executive’s heirs, executors, administrators, and legal representatives, provided that the obligations of Executive may not be delegated.

13. FREEDOM FROM RESTRICTIONS.

Executive represents and warrants that Executive has not entered into any agreement, whether express, implied, oral, or written, that poses an impediment to Executive’s employment by Company including Executive’s compliance with the terms of this Agreement. In particular, Executive is not subject to a valid, pre-existing non-competition agreement which prohibits Executive from fulfilling Executive’s job duties as set out in Section 2(a), and no restrictions or limitations exist respecting Executive’s ability to perform fully Executive’s obligations to Company, including Executive’s compliance with the terms of this Agreement.

14. THIRD-PARTY TRADE SECRETS.

During the term of this Agreement, Executive agrees not to copy, refer to, or in any way use, information that is proprietary to any third party (including any previous employer). Executive represents and warrants that Executive has not improperly taken any documents, listings, hardware, software, discs, or any other tangible medium that embodies proprietary information from any third party, and that Executive does not intend to copy, refer to, or in any way use, information that is proprietary to any third party in performing duties for Company.

15. NOTICES.

All notices hereunder shall be in writing and delivered personally or sent by United States registered or certified mail, postage prepaid and return receipt requested:

 

 

 

If to Company, to:

 

Insight Enterprises, Inc.
Attn: CFO and General Counsel
1305 West Auto Drive
Tempe, Arizona 85284

With a copy to:

 

Insight Enterprises, Inc.
Attn: Legal Department
1305 West Auto Drive
Tempe, Arizona 85284

If to Executive, to:

 

Richard Fennessy

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.

16. NONDELEGABILITY OF EXECUTIVE’S RIGHTS AND COMPANY ASSIGNMENT RIGHTS.

The obligations, rights and benefits of Executive hereunder are personal and may not be delegated, assigned or transferred in any manner whatsoever, nor are such obligations, rights or benefits subject to involuntary alienation, assignment or transfer. Upon reasonable notice to Executive, Company may transfer Executive to an affiliate of Company, which affiliate shall assume the obligations of Company under this Agreement. This Agreement shall be assigned automatically to any entity merging with or acquiring Company or its business.

17. SEVERABILITY.

If any term or provision of this Agreement is declared by a court or tribunal of competent jurisdiction to be invalid or unenforceable for any reason, this Agreement shall remain in full force and effect, and either (1) the invalid or unenforceable provision shall be modified to the minimum extent necessary to make it valid and enforceable or (2) if such a modification is not possible, this Agreement shall be interpreted as if such invalid or unenforceable provision were not a part hereof.

18. DISPUTE RESOLUTION

(a) The parties agree that any controversy, dispute or claim arising out of or relating to the Agreement or breach thereof, including without limitation Executive’s employment with or separation of employment from Company, compensatory and punitive damages, and to the extent allowable by law, all claims that the Company or any of its representatives engaged in conduct prohibited on any basis under any federal, state, or local statute, including federal or state discrimination statutes or public policy (collectively the “Dispute”), shall be resolved in accordance with the procedures described in this Section, which shall be the sole and exclusive procedures for resolution of any Dispute. The parties shall bear their own attorneys’ fees and costs, unless provided otherwise by an arbitration award, and share equally the cost thereof of all Dispute Resolution procedures described in the Section.

(b) The parties shall initially try in good faith to settle the Dispute through non-binding mediation. A party seeking mediation shall make a written request for mediation by certified mail, return receipt requested, setting forth with reasonable specificity the basis for the Dispute and the relief requested. A neutral third party mediator shall be agreed upon by the parties. If, within fourteen (14) days after a party makes a written request for mediation, the parties have not agreed upon the identity of the mediator and the procedure for mediation, the mediation shall be held in Phoenix, Arizona, and administered by the American Arbitration Association (“AAA”) under its Employment Arbitration and Mediation Procedures formally known as the National Rules for Resolution of Employment Disputes (“Rules”) currently in effect. Unless otherwise agreed, the parties shall select a mediator as provided by the Rules. A good faith attempt at mediation shall be a condition precedent to the commencement of arbitration, but is not a condition precedent to any court action for injunctive or other interim relief pending the outcome of these Dispute Resolution procedures.

(c) If the parties are unable to resolve the dispute by mediation in a timely manner (which, in any case, shall not exceed sixty (60) days from the first notice of mediation), the Dispute shall be resolved by final, binding and conclusive arbitration with a sole arbitrator in Phoenix, Arizona. The parties shall initiate arbitration by filing a written notice of intention to arbitrate at any office of the AAA. The selection of the arbitrator and the arbitration shall proceed pursuant to the Rules and judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.

(d) Any arbitration award may, in the discretion of the arbitrator, include reasonable attorneys’ fees and costs of the prevailing party. “Attorneys’ fees and costs” mean all reasonable pre-award expenses, administrative fees, travel expenses, out-of-pocket expenses such as copying and telephone costs, witness fees and attorneys’ fees. Any award of attorney’s fees and costs to the Executive shall be paid by Company on or before December 31 of the calendar year following the year of the conclusion of the arbitration.

(e) A party may apply to the arbitrator for injunctive or other equitable relief until the arbitration award is rendered or the matter is otherwise resolved. A party may, without waiving the Dispute Resolution procedures under the Agreement, seek from any court having jurisdiction any interim or provisional relief, including a temporary restraining order, an injunction both preliminary and final, and any other appropriate equitable relief, that is necessary to protect the rights or property of that party, pending the appointment of the arbitrator.

19. SUCCESSORS.

The failure of Company to obtain a specific written agreement satisfactory to Executive from any successor of Company or a successor of any subsidiary of Company to assume this Agreement or issue a substantially similar agreement shall constitute a material breach of this Agreement.

20. COUNTERPARTS.

This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but which together shall constitute one and the same instrument.

21. 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 stock option, health, benefit and similar plans or agreements.

22. GOVERNING LAW.

Executive’s employment shall be governed in all respects by the laws of the State of Arizona, including the conflicts of law principles, as governs transactions occurring entirely within Arizona among Arizona residents, except as preempted by Federal law.

23. 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.

24. 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.

25. 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.

26. CONSTRUCTION.

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. The language in all parts of this Agreement shall in all cases be construed as a whole according to its fair meaning and not strictly for or against either party. The Section headings contained in this Agreement are for reference purposes only and will not affect the meaning or interpretation of this Agreement in any way. Whenever the words “include,” “includes,” or “including” are used in the Agreement, they shall be deemed to be followed by the words “without limitation.”

Dated this 31st day of December, 2008.

Company:

INSIGHT ENTERPRISES, INC.,
a Delaware corporation

By: /s/ Steven R. Andrews
Name: Steven R. Andrews
Title: General Counsel and Secretary
Executive:

/s/ Richard Fennessy
Name: Richard Fennessy
Title: Chief Executive Officer



 

EMPLOYMENT AGREEMENT

     This Employment Agreement (the “Agreement”) is entered into as of October 24, 2004, between INSIGHT ENTERPRISES, INC., a Delaware corporation (“Company”), and RICHARD FENNESSY (“Executive”) to be effective as of Start Date.

     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 November 1, 2004, or such later date as parties agree (“Start Date”) and ending on the second anniversary of Start Date (the “Initial Term”), unless sooner terminated in accordance with the provisions of this Agreement.

          (b) Renewal Term; Employment Period Defined. The period of time Executive is employed by Company under this or any successor Agreement shall be referred to as the “Employment Period.” On each successive day after the commencement of the Initial Term, without further action on the part of Company or Executive, the Employment Period 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 the Employment Period, and in the event of such notice, the Employment Period shall immediately cease to renew and shall terminate naturally at the end of the then current Renewal Term. No severance or other post-termination compensation will be due or payable in the event of a termination resulting from non-renewal.

     2. POSITION AND DUTIES.

          (a) Job Duties. Company does hereby employ, engage and hire Executive as the President and Chief Executive Officer of Company, and Executive does hereby accept and agree to such employment, engagement, and hiring. Executive’s duties and authority during the Employment Period shall be such executive and managerial duties as the Board of Directors of the Company (the “Board”) shall reasonably determine. Executive will devote full time on behalf of the Company, or such lesser amount of time as the Board may determine, 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) must be disclosed to the Board; provided, however, that Executive need not disclose any equity interest held in any public company or any private company that is not engaged in a competing business as defined in Section 10 of this Agreement when such interest constitutes less than 5% of the issued and outstanding equity of such public or private company.

          (c) Seat on Board of Directors. Executive shall be appointed to the Board of Directors as soon as the Company, with assistance from Executive, appoints a new independent director. Company will use best efforts to make such appointments as soon as possible.

     3. COMPENSATION.

          (a) Base Salary. Beginning on Start Date, Company shall pay Executive a “Base Salary” in consideration for Executive’s services to Company at the rate of $695,000 per annum. The Base Salary shall be payable as nearly as possible in equal semi-monthly installments or in such other installments as are customary from time to time for Company’s executives. The Base Salary may be adjusted from time to time in accordance with the procedures established by Company for salary adjustments for executives, provided that the Base Salary shall not be reduced.

          (b) Incentive Compensation.

          (1) Executive shall also be permitted to participate in such incentive compensation plans as are adopted by the Board from time to time. For 2005, incentive compensation shall be the greater of (i) $1,000,000; or (ii) 1,000,000 times the actual diluted earnings per share divided by $1.20, not to exceed $1,875,000. The board of directors will determine the target earnings per share for 2006 for incentive compensation purposes in late 2005. If the target is equal to or greater than $1.20, the above calculation will apply; if the target is less than $1.20, the new target shall replace $1.20 in the above calculation. Certain quarterly payments may be made with respect to the first three quarters of the year as provided in the Section 3(b)(2), below. The Compensation Committee of the Board (the “Committee”) may, but is not required to, award additional bonus amounts for extraordinary performance or to adjust for inequities resulting from application of the formula. Beginning in 2005 and subsequent years, the Committee, with input from senior management (including Executive) shall review the incentive compensation plan or formula currently in place in light of all relevant circumstances and business conditions, and shall, in its discretion and business judgment, make a determination as to the appropriate incentive formula or incentive allocation for Executive for 2006 and subsequent years. Company’s Compensation Committee is committed to offering cash bonus incentives for its executives on an annual basis. The Executive will be targeted to receive the highest dollar value award each year. While there is no guarantee of incentive compensation payment, Company intends to target $1,000,000 per year, provided Executive reaches performance targets established for the year.

          (2) Quarterly payments shall be made as provided in this subsection (2). The annual threshold number based on the incentive formula (the “Minimum”) shall be prorated based on the quarterly budgets for the year in question. If the prorated quarterly Minimum is achieved in any quarter, Company will calculate the bonus that would be payable (assuming the annual Minimum is achieved) based on actual performance of the particular quarter. A percentage of this amount will be paid as a quarterly bonus. The percentage shall be 60% for 2005 and 50% for 2006 and later years.

          At the end of the year, the total bonus payable will be calculated. After deduction of actual amounts paid during the year, any additional amounts due will be paid. Clawbacks, are possible, but not mandatory, and shall be subject to the procedures and standards described below. Any clawbacks shall be in the form of decreases in future bonuses on a schedule as determined by the Committee. If Executive’s employment is terminated for any reason, any unpaid clawback amounts will be deducted from any severance compensation or shall be owed to Company by Executive after such termination except as set forth below.

Limitation on clawbacks:

     If 90% of the annual threshold is reached, there will be no clawback of any bonuses paid for the first three quarters.

     If 100% of the prior year’s actual earnings per share are reached, there will be no clawback of any bonuses paid for the first three quarters.

     If 75% of the annual threshold is reached, the clawback cannot exceed 50% of the bonuses paid for the first three quarters.

     Notwithstanding the foregoing, for 2005, any clawback cannot reduce Executive’s incentive compensation below $1,000,000.

Other steps required before a clawback will be instituted. A clawback will not be automatic. The Committee must decide to institute all or any part of a permitted clawback.

In determining whether there should be a clawback, the Committee shall consider at least all of the following factors: (1) the exent to which there were (a) changes in accounting policies, tax provisions or regulations not anticipated at the beginning of the year; (b) unusual or “one-time” occurrences not within the reasonable control of the Company; or (c) extraordinary steps taken by the Company that had an effect on financial performance but were in the longer term interests of the Company; (2) the extent to which actual results for the peers of Company is favorable or unfavorable vis-à-vis the Company; (3) industry trends and results for the year; and (4) other factors presented by the President and Chief Executive Officer.

Possibility of bonuses without regard to earnings. The Committee shall also have the discretion to award bonuses quarterly, or after the completion of any year, based upon the factors enumerated above, regardless of whether or not the Company achieves the annual threshold number.

          (3) Each final annual bonus payment, if any, shall be paid within the 30 days following the date of the year-end earnings press release.

          (c) Equity Compensation. On Start Date, Executive shall receive a 500,000 share grant of non-qualified stock options and at the close of business on Monday, January 3, 2005 Executive shall receive a 250,000 share grant of non-qualified stock options. Such options will expire five (5) years after the date of grant and will vest over a three (3) year period, 33.3% on each anniversary of the grant date in accordance with applicable plan(s). Executive shall also be permitted to participate in such equity compensation plans as are adopted by the Board from time to time. Beginning in 2006, the Committee, with input from senior management (including Executive) shall review the equity compensation plan or formula in light of all relevant circumstances and business conditions, and shall, in its discretion and business judgment, determine whether to provide equity compensation for the following year and, if so, make a determination as to the appropriate equity formula or equity allocation for Executive for such following year. The equity formula shall be the same as that used for the most senior executives of Company whose incentive is based on Company-wide performance, though amount of equity participation, if any, shall be at the discretion of the Committee. The Compensation Committee is committed to equity incentives for its executives on an annual basis. The Executive will be targeted to receive the largest incentive each year.

          (d) Incentive and Benefit Plans. Executive will be entitled to participate in those incentive compensation and benefit plans reserved for the Company’s executives, including any stock option plan maintained by the Company, in accordance with the terms of such compensation and benefit plans. Additionally, the Executive shall be entitled to participate in any other benefit plans sponsored by Company, including but not limited to, any retirement, 401(k), or savings plans, life insurance plan and health insurance plan available generally either to employees or to senior executives of Company from time to time, subject to any restrictions specified in, or amendments made to, such plans. Executive shall be entitled to D&O insurance and indemnification as provided by Company consistent with the coverage provided to other Directors and Officers. 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 carried over, scheduled and taken in accordance with the Company’s standard vacation policies.

          (e) Additional Initial Award. Company shall make the following grants/awards to Executive: (i) 75,000 share restricted stock grant vesting over a three (3) year period, 33% on each anniversary of grant date on January 3, 2005; and (ii) $350,000 cash bonus paid within two (2) weeks of Start Date (collectively, the “Additional Initial Award”). The Additional Initial Award shall become one-hundred percent (100%) vested upon a termination for any reason including termination for Cause.

          (f) Relocation Expenses. Relocation terms will be based upon reasonable and customary terms (including documentation of expenses). Reasonable travel, moving, living, accommodation, and transportation (business or first class) to, from and within Tempe, Arizona will be provided to Executive as required during his period of relocation, which shall begin upon the acceptance of this offer and continue for up to nine (9) months following Start Date. These benefits will be provided for the purposes of traveling to and from his current domicile, as well as living and travel expenses on a temporary basis during his period of relocation. Executive shall also be reimbursed for any customary commissions and closing costs payable upon the sale of his primary residence and closing costs payable upon the purchase of another primary residence in the Tempe, Arizona area. Reasonable relocation and travel expenses (business or first class) will be reimbursed on an actual out of pocket cost basis and Executive shall be grossed-up for any and all income taxes incurred in connection with the benefits and reimbursements referenced herein.

          (g) Reasonable Fees. All reasonable attorneys, tax advisors and other consultant fees incurred by Executive with respect to the preparation and negotiation of this Employment Agreement and the matters related thereto to be paid by Company up to $25,000, contingent upon employment of Executive by Company.

          (h) Vesting of Certain Initial Grants. Notwithstanding anything herein to the contrary, the initial 250,000 share option grant provided for in Section 3(c) and the 75,000 share restricted stock grant provided for in Section 3(e) shall become one-hundred percent (100%) vested upon termination for any reason including termination for Cause and such options shall be exercisable in accordance with applicable plan(s).

          (i) Direct Alliance Corporation. Company recognizes that the sale, spin off, combination or strategic alternative for Direct Alliance Corporation might impact Executive. The Compensation Committee will consider relevant facts relating to this and may award Executive a special one time bonus for the activities surrounding any strategic event for Direct Alliance Corporation.

     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. Company shall also pay to Executive’s estate within the 30 days following the date of the year-end earnings press release a prorated portion of any 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. If this Agreement is terminated due to Executive’s Death, Executive shall receive all of the payments and benefits called for by Section 6(c).

          (b) Disability. This Agreement shall also terminate in the event of Executive’s “Disability.” For purposes of this Agreement, “Disability” means the total and complete inability of Executive to perform the essential duties associated with his normal position with Company (after any accommodations required by the Americans with Disabilities Act or applicable state law) due to a physical or mental injury or illness that occurs while Executive is actively employed by Company. Any dispute concerning whether Disability has occurred will be determined by a physician selected by mutual agreement of Company and Executive. If this Agreement is terminated due to Executive’s Disability, Executive shall receive all of the payments and benefits 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; or

          (3) The criminal conviction for any felony involving fraud committed against Company, any affiliate or any individual or entity that provides goods or services to, receives goods or services from or otherwise deals with Company or any affiliate.

          (4) Acts by Executive that constitute repeated and material violations of this Agreement, any written employment policies of Company or any written directives of Company. A violation will not be considered to be “repeated” unless such violation has occurred more than once and after receipt of written notice from Company of such violation.

          Any termination of Executive when there is not Cause is “without Cause.” If Company terminates Executive for Cause, and it is later determined as provided in Section 11 of this Agreement 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 Executive’s employment at any time during the Initial Term or any Renewal Term without Cause. If Company terminates this Agreement pursuant to this paragraph, Company shall provide Executive with ninety (90) days advance written notice. This Agreement shall continue during such notice period. The termination of this Agreement shall be effective on the ninetieth (90th) day (the “Termination Date”) following the day on which the notice is given.

               Company may, at its discretion, place Executive on a paid administrative leave during all or any part of said notice period. During the administrative leave, Company may bar Executive’s access to Company’s offices or facilities if reasonably necessary to the smooth operation of Company, or may provide Executive with access subject to such reasonable terms and conditions as Company chooses to impose.

          (c) Continued Compensation. Should Executive’s employment by Company be terminated without Cause before Executive’s completion of the Initial Term, Executive shall receive a lump sum immediately upon such termination of the total amount of two (2) times his Base Salary, less ninety (90) days. Should Executive’s employment by Company be terminated after completion of the Initial Term, Executive shall receive a lump sum immediately upon such termination of the total amount of his Base Salary for the remainder of the Renewal Term, less 90 days, determined as if the employment of the Executive had not been terminated prior to the end of such term and as if the Executive had continued to perform all of his obligations under this Agreement and as an employee and officer of the Company. Executive shall have no duty to mitigate damages in order to receive the compensation described by this Subsection and the compensation shall not be reduced or offset by other income, payments or profits received by Executive from any source.

          (d) Incentive Compensation. Executive shall not be entitled to receive any incentive compensation payments for the fiscal year in which his employment is terminated for Cause or any later years. If Executive is terminated without Cause before he completes the Initial Term, Executive shall receive (i) two (2) times the higher of the incentive compensation guaranteed to him in the first year or the actual incentive compensation in the first year; and (ii) accelerated one-hundred percent (100%) vesting of the initial 500,000 share option grant and the 250,000 share option grant provided for in Section 3(c). If Executive is terminated without Cause in his third year of employment with Company, the initial 500,000 share option grant provided for in Section 3(c) shall be one-hundred percent (100%) vested. After Executive’s completion of the Initial Term, if Executive is terminated without Cause, Executive shall receive as a lump sum immediately upon such termination two (2) times the higher annual bonus that would have been awarded, based on the method of calculation then in effect, during the one of the two immediately preceding fiscal years which would produce the higher award. 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.

          (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, stock option, restricted stock or other equity-based plan of Company, which will be governed by the terms of those respective plans, in the event of Executive’s termination of employment. 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.

     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. Company may, at its discretion, place Executive on a paid administrative leave during all or any part of any such 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

          (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 removal of Executive’s title of President and Chief Executive Officer or the assignment to Executive by Company of duties that are not senior executive duties by nature except in connection with the termination of Executive’s employment by Company either without Cause or for Cause, Executive’s death or Disability, termination by Executive either with or without 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 the current Chief Executive Officer at November 1, 2004 (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 of Executive’s Base Salary as set forth in this Agreement or as the same may be increased from time to time.

          (5) Subject to the terms of this Agreement, failure by Company to compensate Executive pursuant to the same incentive and equity formulas as are used for the most senior executives of Company whose incentive is based on Company-wide performance or to continue in effect any savings, life insurance, health and accident or disability plan in which Executive will be eligible to participate on the Start Date (or plans which provide Executive with substantially similar benefits) or the taking of any action by Company which would adversely affect Executive’s participation in or materially reduce his benefit under any of such plans or deprive him of any material fringe benefit enjoyed by him as of the Relevant Date or any later date. Amendment or modification of said plans, to the extent required pursuant to applicable federal law and the procedures set forth in the respective plan, or amendments of such plans that apply to either all employees generally or all senior executives shall not be considered to be “Good Reason” for purposes of this clause (5).

          (6) Failure of Company to obtain a specific written agreement satisfactory to Executive from any successor to the business, or substantially all the assets, of Company to assume this Agreement or issue a substantially similar agreement.

          (7) The termination of this Agreement by Company without Cause or any attempted termination by Company purportedly for Cause if it is thereafter determined that Cause did not exist under this Agreement with respect to the termination.

          (8) Breach of any material provisions of this Agreement by Company which is not cured within thirty (30) days after receipt by Company of written notice of such breach from Executive.

          (9) Any action taken by Company over the specific, contemporaneous, written objection of the Executive that is likely (i) to cause a material reduction in the value of this Agreement to Executive or (ii) to materially impair Executive’s abilities to discharge his duties hereunder. This provision is not intended to affect either the Company’s or Executive’s right to terminate this Agreement as provided for elsewhere herein.

          (c) Effect of Good Reason Termination. If Executive terminates this Agreement for Good Reason (as defined in Section 7(b)), it shall for all purposes be treated as a termination by Company without Cause.

          (d) Effect of Termination without Good Reason. If Executive terminates this Agreement without Good Reason, while the termination shall not be characterized as a termination for Cause, it shall for all purposes, result in the same compensation as a termination for Cause.

     8. CHANGE IN CONTROL OF COMPANY.

          (a) General. Company considers the maintenance of a sound and vital management to be essential to protecting and enhancing the best interests of Company and its shareholders. Company recognizes that, as is the case with many publicly held corporations, the continuing possibility of an unsolicited tender offer or other takeover bid for Company may be unsettling to Executive and other senior executives of Company and may result in the departure or distraction of management personnel to the detriment of Company and its shareholders. The Board and the Committee have previously determined that it is in the best interests of Company and its shareholders for Company to minimize these concerns by making this Change in Control provision an integral part of this Employment Agreement, which would provide the Executive with a continuation of benefits in the event the Executive’s employment with Company terminates under certain limited circumstances.

               This provision is offered to help assure a continuing dedication by Executive to his duties to Company notwithstanding the occurrence of a tender offer or other takeover bid. In particular, the Board and the Committee believe it important, should Company receive proposals from third parties with respect to its future, to enable Executive, without being influenced by the uncertainties of his own situation, to assess and advise the Board whether such proposals would be in the best interests of Company and its shareholders and to take such other action regarding such proposals as the Board might determine to be appropriate. The Board and the Committee also wish to demonstrate to Executive that Company is concerned with his welfare and intends to see he is treated fairly.

          (b) Continued Eligibility to Receive Benefits. In view of the foregoing and in further consideration of Executive’s continued employment with Company, if a Change in Control occurs, Executive shall be entitled to a lump-sum severance benefit provided in 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. 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 (2) 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 (2) times the higher annual bonus that would have been awarded, based on the method of calculation then in effect, during the one of the two immediately preceding fiscal years which would produce the higher award.

          (2) Executive shall be vested in any and all stock bonus and stock option plans and agreements of Company in which Executive had an interest, vested or contingent. If applicable law prohibits such vesting, then Company shall pay Executive an amount equal to the value of benefits and rights that would have, but for such prohibition, been vested in Executive.

          (3) Executive shall be compensated in a manner selected by the Company to provide for life, disability, accident and group health and dental insurance benefits, at substantially the levels Executive was receiving immediately prior to his termination, for a period of time expiring upon the earlier of (i) the end of the period of 42 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 or source without being required to pay any premium with respect thereto. At Company’s option, Company may satisfy the obligation to provide the benefits pursuant to this Section by either (1) paying for or reimbursing Executive at reasonable intervals for the actual cost of such benefits (and Executive shall cooperate with Company in all respects in securing and maintaining such benefits, including exercising all appropriate COBRA elections and complying with all terms and conditions of such coverage in a manner to minimize the cost), (2) payment of a lump sum in the amount of the present value, discounted at Company’s effective borrowing rate, of the premiums for such benefits for the continuing coverage period (which shall be calculated based on the conclusive presumption that the cost or premiums will remain constant at the rate existing for COBRA coverage immediately following termination), or (3) a combination of the foregoing options (for example, Company may elect to pay Executive’s premiums during the period of time covered by COBRA, and thereafter pay a lump sum to cover the present value of the remaining cost).

          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 cease, for any reason, to constitute at least a majority thereof unless the election or nomination for election of each new director was approved by the vote of at least two thirds of the directors then still in office who were directors at the beginning of such period;

          (2) A change of control of the Company through a transaction or series of transactions, such that any person (as that term is used in Section 13 and 14(d)(2) of the Securities Exchange Act of 1934 (1934 Act), excluding affiliates of the Company as of the Effective Date, is or becomes the beneficial owner (as that term is used in Section 13(d) of the 1934 Act) directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company’s then outstanding securities;

          (3) Any merger, consolidation or liquidation of the Company in which the Company is not the continuing or surviving company or pursuant to which stock would be converted into cash, securities or other property, other than a merger of the Company in which the holders of the shares of stock immediately before the merger have the same proportionate ownership of common stock of the surviving company immediately after the merger;

          (4) The shareholders of the Company approve any plan or proposal for the liquidation or dissolution of the Company; or

          (5) Substantially all of the assets of the Company are sold or otherwise transferred to parties that are not within a “controlled group of corporations” (as defined in Section 1563 of the Code) in which the Company is a member at the Relevant Date.

          (e) Good Reason Defined. For purposes of this Section, “Good Reason” shall have the meaning assigned to it in Section 7(b), except that for this purpose only, Section 7(b)(1) shall read, “[t]the failure of Company and any ultimately controlling successor entity to continue Executive’s title of President and Chief Executive Officer of Company or any ultimately controlling successor entity, as applicable, or the assignment by Company or any ultimately controlling successor entity of duties that are materially different from Executive’s duties before the Change in Control or that are inconsistent with his position as President and Chief Executive Officer of Company and such ultimately controlling successor entity.”

          (f) Notice of Termination by Executive. Any termination by Executive under this Section 8 shall be communicated by written notice to Company which shall set forth generally the facts and circumstances claimed to provide a basis for such termination.

          (g) Gross-Up Allowance.

          (1) General Rules. The Code places significant tax consequences on Executive and Company if the total payments made to Executive due, or deemed due, to a Change in Control exceed prescribed limits. For example, if Executive’s “Base Period Income” (as defined below) is $100,000 and Executive’s “Total Payments” exceed 299% of such Base Period Income (the “Cap”), Executive will be subject to an excise tax under Section 4999 of the Code of 20% of all amounts paid to him in excess of $100,000. In other words, if Executive’s Cap is $299,999, he will not be subject to an excise tax if he receives exactly $299,999. If Executive receives $300,000, he will be subject to an excise tax of $40,000 (20% of $200,000). In the event such a consequence occurs, for any reason, due to this Agreement or otherwise, Company shall pay to Executive a “gross-up allowance” equal in amount to the sum of (i) the excise tax liability of Executive on the Total Payments, and (ii) all the total excise, income, and payroll tax liability of Executive on the “gross-up allowance,” further increased by all additional excise, and income, and payroll tax liability thereon, which increase shall be part of the “gross-up allowance” for purpose of computing the gross-up allowance. Company shall indemnify and hold Executive harmless from such additional tax liability for the income and payroll tax arising from the “gross-up allowance” and all excise tax arising with respect to compensation and other payments made to Executive under this Agreement and excise, income, and payroll tax on the gross-up allowance, 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 § 4999.

          (2) Special Definitions. For purposes of this Section, the following specialized terms will have the following meanings:

          (i) “Base Period Income”. “Base Period Income” is an amount equal to Executive’s “annualized includable compensation” for the “base period” as defined in Sections 28OG(d)(1) and(2)of the Code and the regulations adopted thereunder. Generally, Executive’s “annualized includable compensation” is the average of his annual taxable income from the Company for the “base period,” which is the five calendar years prior to the year in which the Change of Control occurs.

          (ii) “Cap” or “280G Cap”. “Cap” or “28OG Cap” shall mean an amount equal to 2.99 times Executive’s “Base Period Income.” This is the maximum amount which he may receive without becoming subject to the excise tax imposed by Section 4999 of the Code or which Company may pay without loss of deduction under Section 28OG of the Code.

          (iii) “Total Payments”. The “Total Payments” include any “payments in the nature of compensation” (as defined in Section 280G of the Code and the regulations adopted thereunder), made pursuant to this Agreement or otherwise, to or for Executive’s benefit, the receipt of which is contingent or deemed contingent on a Change of Control and to which Section 28OG of the Code applies.

          (h) Effect of Repeal. In the event that the provisions of Sections 28OG and 4999 of the Code are repealed without succession, this Section shall be of no further force or effect.

          (i) Employment by Successor. For purposes of this Agreement employment by a successor of Company or a successor of any subsidiary of Company that has assumed this Agreement shall be considered to be employment by Company or one of its subsidiaries. As a result, if Executive is employed by such a successor following a Change in Control, he will not be entitled to receive the benefits provided by Section 8 unless his employment with the successor is subsequently terminated without Cause or he terminates his employment for Good Reason.

     9. CONFIDENTIALITY.

          Because of Executive’s knowledge of and participation in executive issues and decisions as a result of his present and former executive positions, for purposes of Sections 9 and 10 of this Agreement, “Company” shall be interpreted to include Company and all of Company’s direct and indirect subsidiaries.

          Executive covenants and agrees to hold in strictest confidence, and not disclose to any person, firm or company, without the express written consent of Company, any and all of Company’s confidential data, including but not limited to information and documents concerning Company’s business, customers, and suppliers, market methods, files, trade secrets, or other “know-how” or techniques or information not of a published nature or generally known (for the duration they are not published or generally known) which shall come into his possession, knowledge, or custody concerning the business of Company, except as such disclosure may be required by law or in connection with Executive’s employment hereunder or except as such matters may have been known to Executive at the time of his employment by Company. This covenant and agreement of Executive shall survive this Agreement and continue to be binding upon Executive after the expiration or termination of this Agreement, whether by passage of time or otherwise so long as such information and data shall be treated as confidential by Company.

     10. RESTRICTIVE COVENANTS.

          (a) Covenant-not-to-Compete. In consideration of Company’s agreements contained herein and the payments to be made by it to Executive pursuant hereto, Executive agrees that, for a period of time equal to the time remaining in the Initial Term or any Renewal Term (or if, but only if, a court or tribunal of final authority finds that this period is unenforceable because it is unreasonably long, then, if it would shorten the duration, for one (1) year) following his termination of employment and so long as Company is continuously not in default of its obligations to provide payments or employment-type benefits 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 Restricted Territory, as defined below. 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, shareholder, 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 directly competitive with the business the Company is now engaged in (i.e., direct marketing of information technology products and services to businesses or consumers), or any future material business actively engaged in by Company, or any business specifically contemplated by the Company’s business plan in effect on the date 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 five percent (5%) of the outstanding equity of such company, when Executive is not actively engaged in the management thereof. If requested by Executive, Company shall furnish Executive with a good-faith written description of the business or businesses in which Company is then actively engaged or which is contemplated by the Company’s current business plan within 30 days after such request is made, and only those activities so timely described in which Company is, in fact, actively engaged or which are so contemplated may be treated as activities which are directly competitive with Company.

          (b) Non-Solicitation. Executive recognizes that Company’s customers are valuable and proprietary resources of Company. Accordingly, Executive agrees that for a period of one (1) year following his termination of employment, and only so long as Company is continuously not in default of its obligations to provide payments or employment-type benefits 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 in the Restricted Territory for or in connection with any Competing Business from any individual or entity which obtained products or services from Company and with whom Executive has had any contact directly or indirectly at any time during Executive’s employment with Company; he will not solicit business for or in connection with a Competing Business from any individual or which may have been solicited by Executive on behalf of Company and he will not solicit, hire or engage employees of Company who would have the skills and knowledge necessary to enable or assist efforts by Executive to engage in a Competing Business.

          (c) Remedies: Reasonableness. Executive acknowledges and agrees that a breach by Executive of the provisions of this Section 10 will constitute such damage as will be irreparable and the exact amount of which will be impossible to ascertain and, for that reason, agrees that Company will be entitled to an injunction to be issued by any court of competent jurisdiction restraining and enjoining Executive from violating the provisions of this Section. The right to an injunction shall be in addition to and not in lieu of any other remedy available to Company for such breach or threatened breach, including the recovery of damages from Executive.

               Executive expressly acknowledges and agrees that (i) the Restrictive Covenants contained herein are reasonable as to time and geographical area and do not place any unreasonable burden upon him; (ii) the general public will not be harmed as a result of enforcement of these Restrictive Covenants; and (iii) Executive understands and hereby agrees to each and every term and condition of the Restrictive Covenants set forth in this Agreement.

               Executive also expressly acknowledges and agrees that Executive’s covenants and agreements in this Section 10 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

          (d) Restricted Territory. Executive and Company understand and agree that Company’s business is not geographically restricted and is unrelated to the physical location of Company facilities or the physical location of any Competing Business, due to extensive use of the Internet, telephones, facsimile transmissions and other means of electronic information and product distribution. Executive and Company further understand and agree that Executive will, in part, work toward expanding the Company’s markets and geographic business territories, and will be compensated for performing this work on behalf of Company.

               Accordingly, Company has a protectable business interest in, and the parties intend the Restricted Territory to encompass, each and every location from which Exectutive could engage in Competing Business in any country, state, province, county or other political subdivision in which Company has customers, employees, suppliers, distributors or other business partners or operations. If, but only if, this Restrictive Territory is held to be invalid on the ground that it is unreasonably broad, the Restricted Territory shall include each location from which Executive can conduct business in any of the following locations: the United States (including each state in which the Company conducts sales or operations), Canada, the United Kingdom, and each policital subdivision of each of the foregoing countries. If, but only if, this Restrictive Territory is held to be invalid on the grounds that it is unreasonably broad, then the restricted territory shall be the United States (including each state in which the Company conducts sales or operations), Canada, the United Kingdom, any other country in which the Company conducts sales or operations, and each policital subdivision of each of the foregoing countries in which Company can articulate a legitimate protectible business interest.

     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. 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. Mediation or the waiver of mediation by both parties shall be a condition precedent to Arbitration.

          (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. 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 sixty (60) days of selection or appointment of the arbitrator unless such time period is extended by the arbitrator for good cause shown. If Company has adopted, with the consent of Executive, 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) Procedure. Issues of procedure, arbitrability, or confirmation of award shall be governed by the Federal Arbitration Act, 9 U.S. C. SS 1-16, except that court review of the arbitrator’s award shall be that of an appellate court reviewing a decision of a trial judge sitting without a jury.

          (d) Expenses. The costs and expenses of any arbitration shall be borne by Company. Should Executive or Company, at any time, initiate mediation or arbitration for breach of this Agreement, Company shall reimburse Executive for all amounts spent by Executive to pursue such mediation or arbitration (including reasonable attorneys fees and costs), regardless of the outcome, unless the mediator or arbitrator finds Executive’s action to have been frivolous and without merit.

     12. BENEFIT AND BINDING EFFECT.

          This Agreement shall inure to the benefit of and be binding upon Company, its successors and assigns, including but not limited to any company, person, or other entity which may acquire all or substantially all of the assets and business of Company or any company with or into which Company may be consolidated or merged, and Executive, his heirs, executors, administrators, and legal representatives, provided that the obligations of Executive may not be delegated.

     13. NOTICES.

          All notices hereunder shall be in writing and delivered personally or sent by registered or certified mail, postage prepaid and return receipt requested:

 

 

 

 

 

 

 

If to Company, to:

 

Insight Enterprises, Inc.

 

 

 

 

Attn: CFO and General Counsel

 

 

 

 

1305 West Auto Drive

 

 

 

 

Tempe, Arizona 85283

 

 

 

 

 

 

 

With a copy to:

 

The Chairman of Company’s

 

 

 

 

Compensation Committee

 

 

 

 

 

 

 

If to Executive, to:

 

Richard Fennessy

 

 

 

 

(address omitted)

 

 

 

 

  

          Either party may change the address to which notices are to be sent to it by giving ten (10) days written notice of such change of address to the other party in the manner above provided for giving notice. Notices will be considered delivered on personal delivery or on the date of deposit in the United States mail in the manner provided for giving notice by mail.

     14. ENTIRE AGREEMENT.

          The entire understanding and agreement between the parties has been incorporated into this Agreement, and this Agreement supersedes all other agreements and understandings between Executive and Company with respect to the relationship of Executive with Company, except with respect to other continuing or future bonus, incentive, stock option, health, benefit and similar plans or agreements.

     15. GOVERNING LAW.

          This Agreement shall be governed by and interpreted in accordance with the laws of the State of Arizona.

     16. CAPTIONS.

          The captions included herein are for convenience and shall not constitute a part of this Agreement.

     17. DEFINITIONS.

          Throughout this Agreement, certain defined terms will be identified by the capitalization of the first letter of the defined word or the first letter of each substantive word in a defined phrase. Whenever used, these terms will be given the indicated meaning.

     18. SEVERABILITY.

          If any one or more of the provisions or parts of a provision contained in this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity or unenforceability shall not affect any other provision or part of a provision of this Agreement, but this Agreement shall be reformed and construed as if such invalid, illegal or unenforceable provision or part of a provision had never been contained herein and such provisions or part thereof shall be reformed so that it would be valid, legal and enforceable to the maximum extent permitted by law. Any such reformation shall be read as narrowly as possible to give the maximum effect to the mutual intentions of Executive and Company.

     19. TERMINATION OF EMPLOYMENT.

          The termination of this Agreement by either party also shall result in the termination of Executive’s employment relationship with Company in the absence of an express written agreement providing to the contrary. Neither party intends that any oral employment relationship continue after the termination of this Agreement.

     20. TIME IS OF THE ESSENCE.

          Company and Executive agree that time is of the essence with respect to the duties and performance of the covenants and promises of this Agreement.

     21. NO CONSTRUCTION AGAINST EITHER PARTY.

          This Agreement is the result of negotiation between Company and Executive and both have had the opportunity to have this Agreement reviewed by their legal counsel and other advisors. Accordingly, this Agreement shall not be construed for or against Company or Executive, regardless of which party drafted the provision at issue. The language in all parts of this Agreement shall in all cases be construed as a whole according to its fair meaning and not strictly for or against either party. The Section headings contained in this Agreement are for reference purposes only and will not affect the meaning or interpretation of this Agreement in any way. Whenever the words “include,” “includes,” or “including” are used in the Agreement, they shall be deemed to be followed by the words “without limitation.”

 

 

 

 

 

 

 

INSIGHT ENTERPRISES, INC., a
Delaware Corporation

 

 

 

 

 

 

 

By:

 

/s/ Timothy A. Crown

 

 

 

 


 

 

 

 

 

Timothy A. Crown
Chief Executive Officer

 

 

 

 

 

 

 

By:

 

/s/ Richard Fennessy

 

 

 

 


 

 

 

 

 

Richard Fennessy

 

 

 

                              EMPLOYMENT AGREEMENT
 
             This Employment Agreement (the "Agreement") is entered into on
    March 31, 1998 between INSIGHT ENTERPRISES, INC., a Delaware
    corporation ("Company"), and TIMOTHY A. CROWN ("Executive") to be
    effective as of July 1, 1997.
 
                                 R E C I T A L S
 
         A. Executive is currently employed by Company in the position of
         President.
 
         B. Company has decided to offer Executive a new employment agreement,
the terms and provisions of which are set forth below, to replace Executive's
employment agreement that expired June 30, 1997.
 
                  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,
1997 and ending on June 30, 1999 (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 (the "Board") shall reasonably determine; provided
that such duties and authority shall not be materially different than they are
at the date of this Agreement; provided 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) must be disclosed to the Board; provided, however, that
Executive need not disclose any equity interest held in any public company or
any private company that is not engaged in a competing business as defined in
Section 10 of this Agreement when such interest constitutes less than 5% of the
issued and outstanding equity of such public or private company.
 
         3.       COMPENSATION.
 
                  (a) BASE SALARY. Company shall pay Executive a "Base Salary"
in consideration for Executive's services to Company at the rate of $250,000 per
annum. The Base Salary shall be payable as nearly as possible in equal
semi-monthly installments or in such other installments as are customary from
time to time for Company's executives. The Base Salary may be adjusted from time
to time in accordance with the procedures established by Company for salary
adjustments for executives, provided that the Base Salary shall not be reduced.
 
                  (b) INCENTIVE COMPENSATION. Executive shall also be permitted
to participate in such incentive compensation plans as adopted by the Board from
time to time. During the Employment Period, the Executive shall be entitled to
an incentive bonus, calculated and payable quarterly, equal to 2.5% 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, 1998 shall not exceed 270% of Executive's annual Base Salary
for that fiscal year,
and such limitation shall not be applicable thereafter. 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 earnings prior
to any incentive bonus amounts for Executive and other executives of Company.
The amounts payable pursuant to this subparagraph (b) shall be paid on or before
thirty (30) days after the end of the applicable fiscal quarter. For purposes of
this subparagraph (b) the term "Minimum Amount" means $2.5 million for the
applicable fiscal quarters ending on or before December 31, 1998, and for
applicable fiscal quarters ending after December 31, 1998, means an amount equal
to eighty percent (80%) of the average of the Company's net earnings for the
immediately preceding four fiscal quarters ended prior to the applicable fiscal
quarter.
 
                  (1) If upon final presentation of consolidated financial
         statements of Company, the "net earnings" are adjusted, then, within
         thirty (30) days after the presentation, Company or Executive, as the
         case may be, shall pay to the other the amount necessary to cause the
         net amount of incentive bonus paid to be the proper amount after
         adjustment; provided that if Executive shall pay Company pursuant to
         the provisions of this clause (1), then the amount the Executive shall
         pay will be reduced by the taxes withheld by Company attributable to
         such amount ("Withheld Portion"), and the Withheld Portion shall be
         offset against the next subsequent payments of Base Salary and
         incentive compensation made pursuant to 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 executives, including any stock option plan maintained by the Company,
in accordance with the terms of such compensation and benefit plans.
Additionally, the Executive shall be entitled to participate in any other
benefit plans sponsored by company, including but not limited to, any savings
plan, life insurance plan and health insurance plan available generally to
employees of Company from time to time, subject to any restrictions specified
in, or amendments made to, such plans. 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 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. Whether any bonuses or incentive compensation will be payable
for quarters ending following Executive's death will be determined in accordance
with the provisions of any incentive compensation program, practice, or policy
in which Executive participates at the time of Executive's death. If there is no
written incentive compensation program, policy, or practice in effect at the
time of Executive's death, Company, in the exercise of its discretion, may elect
to pay to Executive's estate a portion of the incentive compensation to which
Executive would have been entitled (had Executive not died) for the year in
which this Agreement terminated due to Executive's death.
 
                  (b) DISABILITY. This Agreement shall also terminate in the
event of Executive's "Disability". For purposes of this Agreement, "Disability"
means the total and complete inability of Executive to perform the essential
duties associated with his normal position with Company (after any
accommodations required by the Americans with Disabilities Act or applicable
state law) due to a physical or mental injury or illness that occurs while
Executive is actively employed by Company.
 
                  If this Agreement is terminated due to Executive's Disability,
Executive shall receive all of the payments and benefits called for by 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; or
 
                           (3) The criminal conviction for any felony involving
                  fraud committed against Company, any affiliate or any
                  individual or entity that provides goods or services to,
                  receives goods or services from or otherwise
                  deals with Company or any affiliate.
 
                            (4) Acts by Executive that constitute repeated and
                  material violations of this Agreement, any written employment
                  policies of Company or any written directives of Company. A
                  violation will not be considered to be "repeated" unless such
                  violation has occurred more than once and after receipt of
                  written notice from Company of such violation.
 
                  Any termination of Executive when there is not Cause is
"without Cause." If Company terminates Executive for Cause, and it is later
determined that Cause did not exist, Company will pay Executive the amount he
would have received under this Agreement if his employment had been terminated
by Company without Cause, plus interest at the Prime Rate published by the Wall
Street Journal on the date of termination. Such payments and interest shall be
calculated as of the effective date of the initial termination. Payment shall be
made within fifteen (15) days after such later determination is made.
 
                  (b) TERMINATION WITHOUT CAUSE. Company also may terminate this
Agreement at any time during the Initial Term or Renewal Terms without Cause. If
Company terminates this Agreement pursuant to this paragraph, Company shall
provide Executive with ninety (90) days advance written notice. This Agreement
shall continue during such notice period. The termination of this Agreement
shall be effective on the ninetieth (90th) day (the "Termination Date")
following the day on which the notice is given.
Company may, at its discretion, place Executive on a paid administrative leave
during all or any part of said notice period. During the administrative leave,
Company may bar Executive's access to Company's offices or facilities if
reasonably necessary to the smooth operation of Company, or may provide
Executive with access subject to such reasonable terms and conditions as Company
chooses to impose.
 
                  (c) CONTINUED COMPENSATION. Should Executive's employment by
Company be terminated without Cause, Executive shall receive as a lump sum
immediately upon such termination of the total amount of his Base Salary for the
remainder of the Initial Term or Renewal Terms, if later, determined as if the
employment of the Executive had not been terminated prior to the end of such
term and as if the Executive had continued to perform all of his obligations
under this Agreement and as an employee, officer, and director of the Company.
Executive shall have no duty to mitigate damages in order to receive the
Compensation described by this Subsection and the Compensation shall not be
reduced or offset by other income, payments or profits received by Executive
from any source.
 
                  (d) INCENTIVE COMPENSATION. Executive shall not be entitled to
receive any incentive compensation payments for the fiscal quarter in which his
employment is terminated for Cause or any later quarters. If Executive is
terminated without Cause, Executive shall receive as a lump sum immediately upon
such termination the total amount of incentive compensation payments
determined in accordance with the provisions of any incentive compensation
program, practice, or policy in which Executive participates on the effective
date of the termination, determined as if the employment of the Executive had
not been terminated prior to the end of the Initial Term or latest Renewal Term,
if later, and as if the financial performance of Company upon which the
programs, practice, or policy is determined continues as it had been for the
immediately preceding last four (4) fiscal quarters ended prior to either (i)
the date of notice of termination or (ii) the date of termination, as Executive
shall elect after receiving the report of such performance for the applicable
fiscal quarters, and as if the Executive had continued to perform all of his
obligation under this Agreement and as an employee, officer, and director of the
Company. Executive shall have no duty to mitigate damages in order to receive
the Compensation described by this Subsection and the Compensation shall not be
reduced or offset by other income, payments or profits received by Executive
from any source. If there is no binding incentive compensation program, policy,
or practice in effect on the effective date of the termination, Company, in the
exercise of its discretion, may elect to pay Executive a portion of the
incentive compensation to which he would have been entitled (had his employment
not terminated) for the quarter in which his employment is terminated without
Cause.
 
                  (a) OTHER PLANS. Except to the extent specified in this
Section 6 and as provided in this Subsection (e), termination of this Agreement
shall not affect Executive's participation in,
distributions from, and vested rights under any employee benefit plan of
Company, which will be governed by the terms of those respective plans, in the
event of Executive's termination of employment. If Executive is terminated
without Cause, then Executive shall be fully vested under any and all stock
bonus and stock option plans and agreements in which Executive had an interest,
vested or contingent. If applicable law prohibits such vesting, then Company
shall pay Executive an amount equal to the value of the benefits and rights that
would have, but for such prohibition, been vested. Executive shall have no duty
to mitigate damages in order to receive the Compensation described by this
Subsection and the Compensation shall not be reduced or offset by other income,
payments or profits received by Executive from any source.
 
                  (f) EXAMPLE. For example, if Company provides notice to
Executive of Termination without Cause on January 1, 1999, then the Employment
Period ends ninety days thereafter, on April 1, 1999, 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 (2) years totaling
$500,000 (assuming the Base Salary was at that time $250,000) plus (ii) the
incentive compensation for eight fiscal quarters computed as stated above, and
Executive shall be fully vested in all stock bonus and stock option plans and
agreements in which Executive had an interest.
 
         7.       TERMINATION BY EXECUTIVE
 
                  (a) GENERAL. Executive may terminate this Agreement at any
time, with or without "Good Reason." If Executive terminates this Agreement
without Good Reason, Executive shall provide Company with ninety (90) days
advance written notice. If Executive terminates this Agreement with Good Reason,
Executive shall provide Company with thirty (30) days advance written notice.
 
                  (b) GOOD REASON DEFINED. For purposes of this Agreement, "Good
Reason" shall mean and include each of the following (unless Executive has
expressly agreed to such event in a signed writing):
 
                           (1) The demotion of Executive by Company, such as (i)
                  assignment to Executive of any duties that are inconsistent
                  with or inferior to his positions, duties, responsibilities,
                  and status with Company as in effect on the date of execution
                  of this Agreement (the "Relevant Date"); (ii) an adverse
                  change in his titles, offices, or authority as in effect on
                  the Relevant Date; (iii) the involuntary (I) removal of
                  Executive as a member of the Board or (II) failure of the
                  Executive to be a Member of an executive committee of the
                  Board, if any such committee is established; or (iv) any
                  removal of him from or any failure to re-appoint or renew him
                  to any of such positions; except in connection with the
                  termination of this Agreement for Cause, Executive's death or
                  Disability, termination by Executive other than for Good 
                  Reason, or the expiration of the Agreement without renewal;
 
                        (2) The recommended travel of Executive by the Board in 
                  furtherance of Company business which is materially more 
                  extensive than at the Relevant Date;
 
                        (3) The assignment of Executive by the Company to a 
                  location more than 50 miles from the present executive offices
                  of the Company.
 
                        (4) Reduction by Company in Executives Base Salary as set 
                  forth in this Agreement or as the same may be increased from 
                  time to time.
 
                        (5) Failure by Company to continue in effect any incentive 
                  compensation program, policy or practice, or any savings, life 
                  insurance, health and accident or disability plan in which 
                  Executive is participating on the Relevant Date (or plans which 
                  provide Executive with substantially similar benefits) or the 
                  taking of any action by Company which would adversely affect 
                  Executive's participation in or materially reduce his benefit 
                  under any of such plans or deprive him of any material fringe 
                  benefit enjoyed by him as of the Relevant Date or any later date. 
                  Amendment or modification of said plans, to the extent required 
                  pursuant to applicable federal law and the procedures set forth
                  in the respective plan, or amendments of such plans that apply 
                  to either all employees generally or all senior executives
                  shall not be considered to be "Good Reason" for purposes of
                  this clause (5).
 
                           (6) Failure of Company to obtain a specific written
                  agreement satisfactory to Executive from any successor to the
                  business, or substantially all the assets, of Company to
                  assume this Agreement or issue a substantially similar
                  agreement.
 
                           (7) The termination of this Agreement by Company
                  without Cause or any attempted termination by Company
                  purportedly for Cause if it is thereafter determined that
                  Cause did not exist under this Agreement with respect to the
                  termination.
 
                           (8) Breach of any material provisions of this
                  Agreement by Company which is not cured within thirty (30)
                  days after receipt by Company of written notice of such breach
                  from Executive.
 
                           (9) Any action taken by Company over the specific,
                  contemporaneous, written objection of the Executive that is
                  likely (i) to cause a material reduction in the value of this
                  Agreement to Executive or (ii) to materially impair
                  Executive's abilities to discharge his duties hereunder. This
                  provision is not intended to affect either the Company's or
                  Executive's right to terminate this Agreement as provided for
                  elsewhere herein.
 
                  (c) EFFECT OF GOOD REASON TERMINATION. If Executive terminates
this Agreement for Good Reason (as defined in 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 and its shareholders. Company recognizes that, as is the case with
many publicly held corporations, the continuing possibility of an unsolicited
tender offer or other takeover bid for Company may be unsettling to Executive
and other senior executives of Company and may result in the departure or
distraction of management personnel to the detriment of Company and its
shareholders. The Board and the Compensation Committee of the Board (the
"Committee") have previously determined that it is in the best interests of
Company and its shareholders for Company to minimize these concerns by making this
Change in Control provision an integral part of this Employment Agreement, which
would provide the Executive with a continuation of benefits in the event the
Executive's employment with Company terminates under certain limited
circumstances.
 
                  This provision is offered to help assure a continuing
dedication by Executive to his duties to Company notwithstanding the occurrence
of a tender offer or other takeover bid. In particular, the Board and the
Committee believe it important, should Company receive proposals from third
parties with respect to its future, to enable Executive, without being
influenced by the uncertainties of his own situation, to assess and advise the
Board whether such proposals would be in the best interests of Company and its
shareholders and to take such other action regarding such proposals as the Board
might determine to be appropriate. The Board and the Committee also wish to
demonstrate to Executive that company is concerned with his welfare and intends
to see he is treated fairly.
 
                  (b) CONTINUED ELIGIBILITY TO RECEIVE BENEFITS. In view of the
foregoing and in further consideration of Executive's continued employment with
Company, if a Change in Control occurs, Executive shall be entitled to a
lump-sum severance benefit provided in 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)
                  three times the greater of Executive's annualized Base Salary
                  in effect on the date of termination of employment or
                  Executive's highest annualized Base Salary in effect on any
                  date during the term of this Agreement and (ii) three times
                  the amount of all incentive compensation paid or accrued to
                  Executive for the Company's most recent last four fiscal
                  quarters then ended.
 
                           (2) Executive shall be vested in any and all stock
                  bonus and stock option plans and agreements of Company in
                  which Executive had an interest, vested or contingent. If
                  applicable law prohibits such vesting, then Company shall pay 
                  Executive an amount equal to the value of benefits and rights 
                  that would have, but for such prohibition, have been vested 
                  in Executive.
 
                           (3) Executive will continue to receive life, 
                  disability, accident and group health and dental insurance 
                  benefits substantially similar to those which he was receiving 
                  immediately prior to his termination of employment until the 
                  earlier of (i) the end of the period of 24 months following 
                  his termination of employment or (ii) the day on which he 
                  becomes eligible to receive any substantially similar 
                  continuing health care benefits under any plan or program of 
                  any other employer. The benefits provided pursuant to this 
                  Section shall be provided on substantially the same terms and 
                  conditions as they were provided prior to the Change in Control, 
                  except that the full cost of such benefits shall be paid by 
                  Company. Executive's right to receive continued coverage under 
                  Company's group health plans pursuant to Section 601 et seq. of 
                  the Employee Retirement Income Security Act of 1974, as it may 
                  be amended or replaced from time to time, shall commence 
                  following the expiration of his right to receive continued 
                  benefits under this Agreement. Executive's right to receive all 
                  forms of benefits under this Section is reduced to the extent 
                  he is eligible to receive any health care benefit from any other 
                  employer without his request to pay any premium with respect thereto.
 
         Executive shall have no duty to mitigate damages or loss in order to
receive the benefits provided by this Section or in this Agreement. If Executive
is entitled to receive the payments called for by this 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 cease, for
                  any reason, to constitute at least a majority thereof unless
                  the election or nomination for election of each new director
                  was approved by the vote of at least two thirds of the
                  directors then still in office who were directors at the
                  beginning of such period;
 
                           (2) A change of control of the Company through a
                  transaction or series of transactions, such that any person
                  (as that term is used in Section 13 and 14(d)(2) of the
                  Securities Exchange Act of 1934 (1934 Act")), excluding
                  affiliates of the Company as of the Effective Date, is or
                  becomes the beneficial owner (as that term is used in Section
                  13(d) of the 1934 Act) directly or indirectly, of securities
                  of the Company representing 20% or more of the combined voting
                  power of the Company's then outstanding securities;
 
                           (3) Any merger, consolidation or liquidation of the
                  Company in which the Company is not the continuing or
                  surviving company or pursuant to which stock would be
                  converted into cash, securities or other property, other than
                  a merger of the Company in which the holders of the shares of
                  stock immediately before the merger have the same
                  proportionate ownership of common stock of the surviving
                  company immediately after the merger;
 
                           (4) The shareholders of the Company approve any plan
                  or proposal for the liquidation or dissolution of the Company;
                  or
 
                           (5) Substantially all of the assets of the Company
                  are sold or otherwise transferred to parties that are not
                  within a "controlled group of corporations" (as defined in
                  Section 1563 of the Code) in which the company is a member at
                  the Relevant Date.
 
                  (e) GOOD REASON DEFINED. For purposes of this Section, "Good
Reason" shall have the meaning assigned to it in 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 such a consequence occurs, for any
reason, due to this Agreement or otherwise, Company shall pay to Executive a
"gross-up allowance" equal in amount to the sum of (i) the excise tax liability
of Executive on the Total Payments, and (ii) all the total excise, income, and
payroll tax liability of Executive on the "gross-up allowance," further
increased by all additional excise, and income, and payroll tax liability
thereon, which increase shall be part of the "gross-up allowance" for purpose of
computing the gross-up allowance. Company shall indemnify and hold Executive
harmless from such additional tax liability for the income and payroll tax
arising from the "gross-up allowance" and all excise tax arising with respect to
compensation and other payments made to Executive under this Agreement and
excise, income, and payroll tax on the "gross-up allowance, 11 and all penalties
and interest thereon. The purpose and effect of the gross-up allowance is to
cause Executive to have the same net compensation after income, excise, and
payroll taxes that Executive would have if there was no tax under Code Section
4999.
 
         (2) SPECIAL DEFINITIONS. For purposes of this Section, the following
specialized terms will have the following meanings:
 
                  (i)      "BASE PERIOD INCOME". "Base Period Income" is an
                           amount equal to Executive's "annualized includable
                           compensation" for the "base period" as defined in
                           Sections 28OG(d)(1) and(2)of the Code and the
                           regulations adopted thereunder. Generally,
                           Executive's "annualized includable compensation" is
                           the average of his annual taxable income from the
                           Company for the "base period," which is the five
                           calendar years prior to the year in which the Change
                           of Control occurs.
 
                  (ii)     "CAP" OR 280G CAP". "Cap" or "28OG Cap" shall mean 
                           an amount equal to 2.99 times Executive's "Base Period 
                           Income." This is the maximum amount which he may 
                           receive without becoming subject to the excise tax 
                           imposed by Section 4999 of the Code or which Company 
                           may pay without loss of deduction under Section 28OG 
                           of the Code.
 
                  (iii)    "TOTAL PAYMENTS". The "Total Payments" include any 
                           "payments in the nature of compensation" (as defined 
                           in Section 280G of the Code and the regulations adopted 
                           thereunder), made pursuant to this Agreement or 
                           otherwise, to or for Executive's benefit, the receipt 
                           of which is contingent or deemed contingent on a Change 
                           of Control and to which Section 28OG of the Code applies.
 
                  (h) EFFECT OF REPEAL. In the event that the provisions of
Sections 28OG and 4999 of the Code are repealed without succession, this Section
shall be of no further force or effect.
 
                  (i) EMPLOYMENT BY SUCCESSOR. For purposes of this Agreement
employment by a successor of Company or a successor of any subsidiary of Company
that has assumed this Agreement shall be considered to be employment by Company
or one of its subsidiaries.  As a result, if Executive is employed by such a successor following a Change in
Control, he will not be entitled to receive the benefits provided by Section 8
unless his employment with the successor is subsequently terminated without
Cause or he terminates his employment for Good Reason.
 
         9.       CONFIDENTIALITY.
 
                  Executive covenants and agrees to hold in strictest
confidence, and not disclose to any person, firm or company, without the express
written consent of Company, any and all of Company's confidential data,
including but not limited to information and documents concerning Company's
business, customers, and suppliers, market methods, files, trade secrets, or
other "know-how" or techniques or information not of a published nature or
generally known (for the duration they are not published or generally known)
which shall come into his possession, knowledge, or custody concerning the
business of Company, except as such disclosure may be required by law or in
connection with Executive's employment hereunder or except as such matters may
have been known to Executive at the time of his employment by Company. This
covenant and agreement of Executive shall survive this Agreement and continue to
be binding upon Executive after the expiration or termination of this Agreement,
whether by passage of time or otherwise so long as such information and data
shall be treated as confidential by Company.
 
         10.      RESTRICTIVE COVENANTS.
 
                  (a) COVENANT-NOT-TO-COMPETE. In consideration of Company's
agreements contained herein and the payments to be made by it to Executive
pursuant hereto and except for termination of Executive's employment by Company
without Cause or termination of employment by Executive for Good Reason,
Executive agrees that, for two years following his termination of employment and
so long as company is continuously not in default of its obligations to
Executive hereunder or under any other agreement, covenant, or obligation, he
will not, without prior written consent of Company, consult with or act as an
advisor to another company about activity which is a "Competing Business" of
such company in the United States. For purposes of this Agreement, Executive
shall be deemed to be engaged in a "Competing Business" if, in any capacity,
including but not limited to proprietor, partner, officer, director or employee,
he engages or participates, directly or indirectly, in the operation, ownership
or management of the activity of any proprietorship, partnership, company or
other business entity which activity is competitive with the then actual
business in which Company is engaged on the date of, or any business
contemplated by the Company's business plan in effect on the date of notice of,
Executive's termination of employment. Nothing in this subparagraph is intended
to limit Executive's ability to own equity in a public company constituting less
than five percent (5%) of the outstanding equity of such company, when Executive
is not actively engaged in the management thereof. Company shall furnish
Executive with a good-faith written description of the business or businesses in which
Company is then actively engaged within 30 days after Executive's termination of
employment, and only those activities so timely described which are in fact
actively engaged by Company may be treated as activities of which one may be
engaged that is competitive with Company.
 
                  (b) NON-SOLICITATION. Executive recognizes that Company's
customers are valuable and proprietary resources of Company. Accordingly,
Executive agrees that for a period of one year following his termination of
employment, and only so long as company is continuously not in default of its
obligations to Executive hereunder or under any other agreement, covenant, or
obligation, he will not directly or indirectly, through his own efforts or
through the efforts of another person or entity, solicit business from any
individual or entity located in the state of Arizona which obtained services
from Company at any time during Executive's employment with Company; he will not
solicit business from any individual or entity located in the state of Arizona
which may have been solicited by Executive on behalf of Company and he will not
solicit employees of Company who would have the skills and knowledge necessary
to enable or assist efforts by Executive to engage in a Competing Business.
 
                  (c) REMEDIES: REASONABLENESS. Executive acknowledges and
agrees that a breach by Executive of the provisions of this Section 10 will
constitute such damage as will be irreparable and the exact amount of which will
be impossible to ascertain and, for
that reason, agrees that Company will be entitled to an injunction to be issued
by any court of competent jurisdiction restraining and enjoining Executive from
violating the provisions of this Section. The right to an injunction shall be in
addition to and not in lieu of any other remedy available to Company for such
breach or threatened breach, including the recovery of damages from Executive.
 
                  Executive expressly acknowledges and agrees that (i) the
Restrictive Covenants contained herein are reasonable as to time and
geographical area and do not place any unreasonable burden upon him; (ii) the
general public will not be harmed as a result of enforcement of these
Restrictive Covenants; and (iii) Executive understands and hereby agrees to each
and every term and condition of the Restrictive Covenants set forth in this
Agreement.
 
                  (d) CHANGE OF CONTROL. The provisions of this Section 10 shall
lapse and be of no further force or effect if Executive's employment is
terminated by Company "without Cause" or by Executive for "Good Reason."
 
         11.      DISPUTE RESOLUTION.
 
                  (a) MEDIATION. Any and all disputes arising under, pertaining
to or touching upon this Agreement, or the statutory rights or obligations of
either party hereto, shall, if not settled by negotiation, be subject to
non-binding mediation before an independent mediator selected by the parties
pursuant to 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. Sections 1-16. If no such policy has
been adopted, the arbitration shall be governed by the National Rules for the
Resolution of Employment Disputes of the American Arbitration Association
("AAA") in effect on the date of the first notice of demand for arbitration.
Notwithstanding any provisions in such rules to the contrary, the arbitrator
shall issue findings of fact and conclusions of law, and an award, within 
fifteen (15) days of the date of the hearing unless the parties otherwise agree.
 
                  (c) DAMAGES. In case of breach of contract or policy, damages
shall be limited to contract damages. In cases of discrimination claims
prohibited by statute, the arbitrator may direct payment consistent with the
applicable statute. In cases of employment tort, the arbitrator may award
punitive damages if proved by clear and convincing evidence. Issues of
procedure, arbitrability, or confirmation of award shall be governed by the
Federal Arbitration Act, 9 U.S.C. SS 1-16, except that court review of the
arbitrator's award shall be that of an appellate court reviewing a decision of a
trial judge sitting without a jury.
 
                  (d) SELECTION OF MEDIATOR OR ARBITRATOR. The parties shall
select the mediator and arbitrator from a panel list made available by the AAA.
If the parties are unable to agree to a mediator or an arbitrator within ten
(10) days of receipt of a demand for mediation or arbitration, the mediator or
arbitrator will be chosen by alternatively striking from a list of five (5)
mediators or arbitrators obtained by Company from the AAA. Executive shall have
the first strike.
 
                  (e) EXPENSES. The costs and expenses of any arbitration shall
be borne by Company. Should Executive or Company, at any time, initiate
mediation or arbitration for breach of this Agreement, Company shall reimburse
Executive for all amounts spent by Executive to pursue such mediation or
arbitration (including reasonable attorneys fees and costs), regardless of the
outcome, unless the mediator or arbitrator finds Executive's action to have been
frivolous and without merit.
 
         12.      BENEFIT AND BINDING EFFECT
 
                  This Agreement shall inure to the benefit of and be binding
upon company, its successors and assigns, including but not limited to any
Company, person, or other entity which may acquire all or substantially all of
the assets and business of Company or any Company with or into which Company may
be consolidated or merged, and Executive, his heirs, executors, administrators,
and legal representatives, provided that the obligations of Executive may not be
delegated.
 
         13.      NOTICES
 
                  All notices hereunder shall be in writing and delivered
personally or sent by registered or certified mail, postage prepaid and return
receipt requested:
 
                  If to Company, to:                Insight Enterprises, Inc.
                                                    6820 South Hall Avenue
                                                    Tempe, Arizona 85283
 
                  If to Executive, to:               Timothy A. Crown
                                                     1820 West Drake, No. 108
                                                     Tempe, AZ 85281
 
Either party may change the address to which notices are to be sent to it by
giving ten (10) days written notice of such change of address to the other party
in the manner above provided for giving notice. Notices will be considered
delivered on personal delivery or on the date of deposit in the United States
mail in the manner provided for giving notice by mail.
 
         14.      ENTIRE AGREEMENT
 
                  The entire understanding and agreement between the parties has
been incorporated into this Agreement, and this Agreement supersedes all other
agreements and understandings between Executive and Company with respect to the
relationship of Executive with Company, except with respect to other continuing
or future bonus, incentive, stock option, health, benefit and similar plans or
agreements.
 
         15.      GOVERNING LAW
 
                  This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Arizona.
 
         16.      CAPTIONS
 
                  The captions included herein are for convenience and shall not
constitute a part of this Agreement.
 
         17.      DEFINITIONS
 
                  Throughout this Agreement, certain defined terms will be
identified by the capitalization of the first letter of the defined word or the
first letter of each substantive word in a defined 
phrase. Whenever used, these terms will be given the indicated meaning.
 
         18.      SEVERABILITY
 
                  If any one or more of the provisions or parts of a provision
contained in this Agreement shall for any reason be held to be invalid, illegal
or unenforceable in any respect, such invalidity or unenforceability shall not
affect any other provision or part of a provision of this Agreement, but this
Agreement shall be reformed and construed as if such invalid, illegal or
unenforceable provision or part of a provision had never been contained herein
and such provisions or part thereof shall be reformed so that it would be valid,
legal and enforceable to the maximum extent permitted by law. Any such
reformation shall be read as narrowly as possible to give the maximum effect to
the mutual intentions of Executive and Company.
 
         19.      TERMINATION OF EMPLOYMENT
 
                  The termination of this Agreement by either party also shall
result in the termination of Executive's employment relationship with Company in
the absence of an express written agreement providing to the contrary. Neither
party intends that any oral employment relationship continue after the
termination of this Agreement.
 
         20.      TIME IS OF THE ESSENCE
 
                  Company and Executive agree that time is of the essence with
respect to the duties and performance of the covenants and promises of this
Agreement.
 
         21.      NO CONSTRUCTION AGAINST EITHER PARTY
 
                  This Agreement is the result of negotiation between Company
and Executive and both have had the opportunity to have this Agreement reviewed
by their legal counsel and other advisors. Accordingly, this Agreement shall not
be construed for or against Company or Executive, regardless of which party
drafted the provision at issue.
 
                                                  INSIGHT ENTERPRISES, INC., a
                                                  Delaware Corporation
 
                                                  By: /s/ Eric J.Crown
                                                     ---------------------------
                                                  Its: CEO
 
 
                                                    /s/Timothy A. Crown  
                                                  ------------------------------
                                                  TIMOTHY A. CROWN