8-K

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): July 11, 2005

Insight Enterprises, Inc.
__________________________________________
(Exact name of registrant as specified in its charter)

Delaware	000-25092	86-0766246
_____________________ (State or other jurisdiction	_____________ (Commission	______________ (I.R.S. Employer
of incorporation)	File Number)	Identification No.)
1305 West Auto Drive, Tempe, Arizona		85284
_________________________________ (Address of principal executive offices)		___________ (Zip Code)

Registrant’s telephone number, including area code: 480-902-1001

Not Applicable
______________________________________________
Former name or former address, if changed since last report

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[  ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[  ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

On July 11, 2005, Direct Alliance Corporation, a subsidiary of Insight Enterprises, Inc. (the "Company"), entered into a First Amendment to Employment Agreement with Branson Smith, President of Direct Alliance. The First Amendment serves as a notice of termination of the employment agreement without cause, as described in Item 1.02, below, and makes certain other changes to Mr. Smith's employment agreement. The First Amendment clarifies the calculation of severance pay with respect to a discretionary bonus paid with respect to the fourth quarter of 2004, obligations of Mr. Smith with respect to certain post-employment activities, provides for Mr. Smith's continued assistance in connection with pending claims and contains a release of claims. A copy of the First Amendment is attached hereto as Exhibit 10.1.

Item 1.02 Termination of a Material Definitive Agreement.

As described in Item 1.01, above, Direct Alliance Corporation has elected to terminate its employment agreement with Branson Smith without cause. Under the employment agreement, Mr. Smith received a base salary of $255,000 per year, was eligible for incentive compensation and was entitled to participate in equity-based compensation plans of Insight Enterprises, Inc. and certain of its subsidiaries. The employment agreement had a successively renewing two-year term, unless earlier terminated under specified conditions. In accordance with the terms of the employment agreement, Mr. Smith will be on paid administrative leave from July 11, 2005 through October 9, 2005.

Pursuant to the employment agreement, Direct Alliance Corporation will pay Mr. Smith, in addition to base pay while on administrative leave, incentive compensation earned through the third quarter of 2005. As soon as reasonably practicable after the Company's release of results of operations for the third quarter of 2005, Mr. Smith will also receive, pursuant to Section 6(b) of his employment agreement, a lump sum severance payment equal to two times his base salary (less the amount paid during the 90-day notice period) plus two times the sum of the quarterly bonuses for the four most recently completed calendar quarters. The total severance amount, including incentive compensation for the third quarter of 2005, is estimated to be approximately $1.0 million.

James D. Kebert, Chief Operating Officer of Direct Alliance Corporation, will now serve as President of Direct Alliance Corporation.

Mr. Smith's employment agreement was previously filed as Exhibit 10.24 to the Company's Annual Report on Form 10-K for the year ended December 31, 2004.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Insight Enterprises, Inc.
July 12, 2005	By:	Stanley Laybourne
		Name: Stanley Laybourne
		Title: Executive Vice President, Chief Financial Officer, Treasurer and Secretary

Exhibit Index

Exhibit No.	Description
10.1	First Amendment to Employment Agreement between Direct Alliance Corporation and Branson Smith dated July 11, 2005.

EX-10.1

FIRST AMENDMENT TO EMPLOYMENT AGREEMENT

THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT (the “Amendment”), dated July 11, 2005, is by and between Direct Alliance Corporation, an Arizona corporation (“Company”), and Branson Smith (“Executive”).

RECITALS

A. Executive is currently employed by Company in the position of President.

B. Executive and Company entered into an employment agreement as of November 23, 2004 (the “Employment Agreement”).

C. Company and Executive mutually desire to modify the current employment relationship and provide for an orderly termination of Executive’s employment, all on terms satisfactory to both Company and Executive, as set forth below.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1. Employment Relationship. Executive will continue to serve as President of Company through July 11, 2005 (the “Notice Date”). With the intent of amending Sections 1 and 2 of the Employment Agreement, at July 11, 2005, and without the requirement of any further action by Company or Executive, Executive will cease serving as President of Company and as an officer of any affiliate of Company and hereby resigns as a Director of any entity controlled by or under common control with Company. Executive will continue as an employee of Company, reporting directly to the Chief Executive Officer of Insight Enterprises, Inc. (“IEI”), for a period of ninety days from the date hereof ending October 9, 2005 (the “Date of Termination”). From and after the Date of Termination, Executive’s employment by the Company shall end for all purposes, and Executive shall have no further rights or duties as an employee of Company or any of its affiliates. The period from the Notice Date through the Date of Termination may be referred to herein as the “Notice Period.” During the Notice Period, Executive will have access to Company premises, systems or network only by invitation (other than a Company voicemail box), will not have any duties other than as requested by the Chief Executive Officer of IEI, will not have any Company title and will not have any authority to act for or on behalf of the Company or to bind the Company in any way (unless pursuant to an express written delegation of authority from the Chief Executive Officer of IEI). Even if this Amendment is not executed and delivered, it also serves as notice pursuant to Section 6(b) of the Employment Agreement. Company and Executive agree that, if executed and delivered, the compensation and benefits described in this Amendment will be in lieu of and not in addition to any compensation and benefits which might be contemplated by Section 6 of the Employment Agreement.

2. Compensation.

a. Notice Period; Third Calendar Quarter 2005. Executive shall be entitled to receive his base salary during the Notice Period and 100% of incentive compensation earned with the respect to the third calendar quarter of 2005, each to be paid according to customary practices of the Company. Executive shall not be entitled to any incentive compensation with respect to the fourth calendar quarter of 2005 (or for the year ending December 31, 2005 as a whole) under the Employment Agreement or otherwise.

b. Continued Compensation. As soon as reasonably practical following the release of results of operations by IEI for the third quarter of 2005, Company will pay Executive, in one lump sum payment, continued compensation required by Section 6(c) of the Employment Agreement, calculated as twice Executive’s current rate of pay less salary paid to Executive during the Notice Period, and any accrued and untaken vacation pay.

c. Incentive Compensation. As soon as reasonably practical following the release of results of operations by IEI for the third quarter of 2005, Company will pay Executive, in one lump sum payment, incentive compensation required by Section 6(d) of the Employment Agreement, calculated as twice the sum of Executive’s bonuses for the third calendar quarter of 2005, the second calendar quarter of 2005, the first calendar quarter of 2005 and the fourth calendar quarter of 2004 (including a discretionary bonus of $75,000 during the fourth calendar quarter of 2004).

d. Deductions. Company shall deduct all required and authorized deductions from payments made pursuant to this Amendment.

3. Benefits. During the Notice Period, Executive’s eligibility to participate in benefit plans offered by Company shall continue to be governed by Section 6(e) of the Employment Agreement, but, as an amendment to Sections 3(c) and 3(d) of the Employment Agreement, Company and Executive agree that Executive will not participate in any new or additional grants of stock options, restricted stock, restricted stock units or other equity-based plans established by Company or IEI or in any other incentive compensation or benefit plan other than as described in this Amendment. For the purpose of clarity, Company and Executive agree that, with respect to options to acquire shares of the common stock of Insight Enterprises, Inc. granted prior to the date hereof, such options shall continue to vest through the Date of Termination and will be governed by the terms of the plan or plans pursuant to which the options were granted. Beginning as of the Date of Termination, Executive and each eligible dependent who constitutes a qualified beneficiary, as defined in Section 4980B(g)(1) of the Internal Revenue Code of 1986, as amended, will be eligible to continue benefits coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), for the time period prescribed pursuant to COBRA. Executive acknowledges that Company has provided him with information concerning his obligations and time requirements to secure COBRA benefits, and Company agrees to provide Executive with any changes made to those obligations and requirements prior to the Date of Termination.

4. Restrictive Covenants. Section 10 of the Employment Agreement is hereby amended by deleting subsection (b) and inserting the following therefor:

(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 (i) 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, (ii) 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 or (iii) solicit, hire or engage employees of Company.

5. Release and Covenant Not to Sue.

a. Executive understands and agrees that with respect to this Section 5 the term “Company” refers to Company and its parents, subsidiaries and affiliates, and the officers, directors, shareholders, agents, predecessors, successors, assigns, and current and past employees and representatives of each and all of the foregoing. Executive, for Executive and, as applicable, Executive’s respective agents, attorneys, successors, and assigns, hereby fully, forever, irrevocably, and unconditionally releases Company from any and all claims, charges, complaints, liabilities, and obligations of any nature whatsoever, which Executive may have against Company, whether now known or unknown, and whether asserted or unasserted, arising from any event or omission occurring prior to execution of this Agreement. Without limiting the foregoing, this release includes any and all claims arising out of or which could arise out of the employment relationship between Executive and Company and the termination of that employment, including but not limited to: (i) any and all claims under Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, Section 1981 of the Civil Rights Act of 1866, the Age Discrimination in Employment Act, the Equal Pay Act, the Family Medical Leave Act, ERISA, COBRA, the Worker Adjustment and Retraining Notification Act, the Arizona Civil Rights Act, state and local civil rights laws, Arizona wage payment laws and any similar laws in other states; (ii) any and all Executive Orders (governing fair employment practices) which may be applicable to Company; and (iii) any other provision or theory of law. This release may be pled as a complete bar and defense to any claim brought by Executive with respect to the matters released in this Agreement. This release does not waive claims that may arise after the date this Agreement is signed; however, Executive agrees that by signing, delivering and not revoking this Agreement and by accepting the compensation and benefits stated in Sections 2 and 3, above, respectively, Executive will be deemed to have repeated and given the foregoing releases at the Date of Termination.

b. Executive acknowledges and agrees that the consideration Executive is receiving under this Amendment is sufficient consideration to support the release of all entities identified in this Section 5, and that there is consideration given in addition to anything of value to which Executive is already entitled.

c. Executive acknowledges and agrees that Executive is not aware of any facts or circumstances that could be the basis for a valid claim or charge of discrimination or harassment against Company. Executive represents and warrants to Company that Executive has not filed, or caused to be filed, any claim or charge with any adjudicative body, regulatory body, or agency arising out of his employment. Executive agrees that by signing, delivering and not revoking this Amendment and by accepting the compensation and benefits stated in Sections 2 and 3, above, respectively, Executive will be deemed to have repeated and made the foregoing statements, representations, warranties and agreements at the Date of Termination.

6. Review. Executive has been advised that he has up to twenty-one (21) days from the date he is presented with this Amendment to consider this Amendment. If Executive executes this Amendment before the expiration of twenty-one (21) days, he acknowledges that he has done so for the purpose of expediting the resolution of this matter and that he has expressly waived his right to take twenty-one (21) days to consider this Amendment. To accept the offer in this Amendment, Executive must sign and return the Amendment to the Company, within the 21-day period, at the following address: Insight Enterprises, Inc., 1305 West Auto Drive, Tempe, Arizona 85284, Attention: Richard A. Fennessy, Chief Executive Officer.

7. Revocation. Executive may revoke this Amendment for a period of seven (7) days after he signs it. Executive agrees that if he elects to revoke this Amendment, he will notify the Chief Executive Officer of IEI (at the above address) in writing on or before the expiration of the revocation period. Receipt by IEI on behalf of Company of proper and timely notice of revocation from Executive cancels and voids this Amendment. Provided that Executive does not provide a notice of revocation, this Amendment will become effective upon expiration of the revocation period.

8. Testimony; Assistance. If Executive has knowledge of or is alleged to have knowledge of any matters which are the subject of any pending, threatened or future litigation involving IEI, Company or any of its affiliates, Executive will make himself available to testify if and as necessary. Executive will also make himself available to the attorneys representing IEI or Company, as applicable, in connection with any such litigation or dispute for such purposes as they may deem necessary or appropriate, including but not limited to the review of documents, discussion of the case and preparation for any legal proceedings. This Amendment is not intended to and shall not be construed so as to in any way limit or affect the testimony which Executive gives in any such proceedings. Further, it is understood and agreed that Executive will at all times testify fully, truthfully and accurately, whether in deposition, hearing, trial or otherwise.

9. Dispute Resolution. Company and Executive agree that 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 the dispute resolution procedures set forth in the Employment Agreement. This Section 9 shall survive any termination of this Amendment or the Employment Agreement or both.

10. Governing Law. This Amendment shall be governed by and interpreted in accordance with the laws of the State of Arizona.

11. Defined Terms. Capitalized terms used and not defined in this Amendment shall have the meanings given to them in the Employment Agreement.

12. Section 16 Reporting. Executive represents and warrants to Company that all reportable transactions under Section 16 of the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereto, through the date hereof have been reported and agrees to notify the Corporate Counsel of IEI of any reportable transactions through April 30, 2006.

13. Severability. If any one or more of the provisions or parts of a provision contained in this Amendment 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 Amendment, but this Amendment 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.

Direct Alliance Corporation,
an Arizona corporation

By: /s/ Richard A. Fennessy /s/ Branson Smith
Branson Smith

Name: Richard A. Fennessy

Title: CEO