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EXHIBIT 10.13
SOFTWARE SPECTRUM, INC.
MANAGEMENT CONTINUITY AGREEMENT
This Agreement (the "Agreement") is entered into by and between
Software Spectrum, Inc., a Texas corporation (the "Company"), and
__________________ (the "Executive"), dated as of the _____ day of
_____________, 199__.
The Board of Directors of the Company (the "Board"), has determined
that it is in the best interests of the Company and its shareholders to assure
that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control
(as defined in Section 2) of the Company. The Board believes it is imperative
to diminish the inevitable distraction of the Executive by virtue of the
personal uncertainties and risks created by a pending or threatened Change of
Control and to encourage the Executive's full attention and dedication to the
Company currently and in the event of any threatened or pending Change of
Control, and to provide the Executive with compensation and benefits
arrangements upon a Change of Control which ensure that the compensation and
benefits expectations of the Executive will be satisfied and which are
competitive with those of other corporations. Therefore, in order to
accomplish these objectives, the Board has caused the Company to enter into
this Agreement.
NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:
1. CERTAIN DEFINITIONS.
(a) The "Effective Date" shall mean the first date during the
Change of Control Period (as defined in Section 1(b)) on which
a Change of Control occurs. Anything in this Agreement to the
contrary notwithstanding, if a Change of Control occurs and if
the Executive's employment with the Company is terminated
prior to the date on which the Change of Control occurs, and
if it is reasonably demonstrated by the Executive that such
termination of employment (i) was at the request of a third
party who has taken steps reasonably calculated to effect the
Change of Control or (ii) otherwise arose in connection with
or anticipation of the Change of Control, then for all
purposes of this Agreement the "Effective Date" shall mean the
date immediately prior to the date of such termination of
employment.
(b) The "Change of Control Period" shall mean the period
commencing on the date hereof and ending on the second
anniversary of such date; provided, however, that commencing
on the date one year after the date hereof, and on each annual
anniversary of such date (such date and each annual
anniversary thereof shall be hereinafter referred to as the
"Renewal Date"), the Change of Control Period shall be
automatically extended so as to terminate two years from such
Renewal Date, unless at least 60 days prior to the Renewal
Date the Company shall give notice to the Executive that the
Change of Control Period shall not be so extended.
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2. CHANGE OF CONTROL. For the purpose of this Agreement, a "Change of
Control" shall mean:
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) (a
"Person") of beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of 50% or more of
either (i) the then outstanding shares of common stock of the
Company (the "Outstanding Company Common Stock") or (ii) the
combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the
election of directors (the "Outstanding Company Voting
Securities"); provided, however, that the following
acquisitions shall not constitute a Change of Control: (i) any
acquisition directly from the Company (excluding an
acquisition by virtue of the exercise of a conversion
privilege), (ii) any acquisition by the company, (iii) any
acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation
controlled by the Company or (iv) any acquisition by any
corporation pursuant to a reorganization, merger or
consolidation, if, following such reorganization, merger or
consolidation, the conditions described in clauses (i) and
(ii) of subsection (c) of this Section 2 are satisfied; or
(b) Individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof
whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as
such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf
of a Person other than the Board; or
(c) Approval by the shareholders of the Company of a
reorganization, merger or consolidation, in each case, unless,
following such reorganization, merger or consolidation, (i)
more than 60% of, respectively, the then outstanding shares of
common stock of the corporation resulting from
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such reorganization, merger or consolidation and the combined
voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of
directors is then beneficially owned, directly or indirectly,
by all or substantially all of the individuals and entities
who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company
Voting Securities immediately prior to such reorganization,
merger or consolidation in substantially the same proportions
as their ownership, immediately prior to such reorganization,
merger or consolidation, of the outstanding Company Common
Stock and Outstanding Company Voting Securities, as the case
may be and (ii) at least a majority of the members of the
board of directors of the corporation resulting from such
reorganization, merger or consolidation were members of the
Incumbent Board at the time of the execution of the initial
agreement providing for such reorganization, merger or
consolidation; or
(d) Approval by the shareholders of the Company of (i) a complete
liquidation or dissolution of the Company or (ii) the sale or
other disposition of all or substantially all of the assets of
the Company, other than to a corporation, with respect to
which following such sale or other disposition, (A) more than
60% of, respectively, the then outstanding shares of common
stock of such corporation and the combined voting power of the
then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is
then beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company
Common Stock and outstanding Company Voting Securities
immediately prior to such sale or other disposition in
substantially the same proportion as their ownership,
immediately prior to such sale or other disposition, of the
outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be and (B) at least a
majority of the members of the board of directors of such
corporation were members of the Incumbent Board at the time of
the execution of the initial agreement or action of the Board
providing for such sale or other disposition of assets of the
Company.
3. EMPLOYMENT PERIOD. The Company hereby agrees to continue the
Executive in its employ, and the Executive hereby agrees to remain in
the employ of the Company, in accordance with the terms and provisions
of this Agreement, for the period commencing on the Effective Date and
ending on the second anniversary of such date (the "Employment
Period").
4. TERMS OF EMPLOYMENT.
(a) POSITION AND DUTIES.
(i) During the Employment Period, (A) the Executive's
position (including status, offices, titles and
reporting requirements), authority, duties and
responsibilities shall be at least commensurate in
all material aspects with the most significant of
those held, exercised and assigned at any time during
the 90-day period immediately preceding the Effective
Date and (B) the Executive's services shall be
performed at the location where the Executive was
employed immediately preceding the Effective Date or
any office which is the headquarters of the Company
and is less than 35 miles from such location.
(ii) During the Employment Period, and excluding any
periods of vacation and sick leave to which the
Executive is entitled, the Executive agrees to devote
reasonable attention and time during normal business
hours to the business
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and affairs of the Company and, to the extent
necessary to discharge the responsibilities assigned
to the Executive hereunder, to use the Executive's
reasonable best efforts to perform faithfully and
efficiently such responsibilities. During the
Employment Period it shall not be a violation of this
Agreement for the Executive to (A) serve on
corporate, civic or charitable boards or committees,
(B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage
personal investments, so long as such activities are
similar to such activities of the Executive prior to
the Effective Date and do not significantly interfere
with the performance of the Executive's
responsibilities as an employee of the Company in
accordance with this Agreement. It is expressly
understood and agreed that to the extent that any
such activities have been, conducted by the Executive
prior to the Effective Date, the continued conduct of
such activities (or the conduct of activities similar
in nature and scope thereto) subsequent to the
Effective Date shall not thereafter be deemed to
interfere with the performance of the Executive's
responsibilities to the Company.
(b) COMPENSATION.
(i) BASE SALARY. During the Employment Period, the
Executive shall receive an annual base salary
("Annual Base Salary"), which shall be paid in equal
installments in accordance with the Company's
customary pay periods, at least equal to twelve times
the highest monthly base salary paid or payable to
the Executive by the Company and its affiliated
companies in respect of the twelve-month period
immediately preceding the month in which the
Effective Date occurs. For purposes of determining
Annual Base Salary for this Agreement, there will be
included in, or added to, the base salary all
quarterly or other periodic bonuses (other than
annual bonus) to which the Executive would have been
entitled for the year in which the Effective Date
occurs as if all criteria for such bonuses had been
satisfied at 100% of plan, with such bonuses to be
paid in accordance with the Company's customary pay
periods for such bonuses. During the Employment
Period, the Annual Base Salary shall be reviewed at
least annually and shall be increased at any time and
from time to time as shall be substantially
consistent with increases in base salary generally
awarded in the ordinary course of business to other
peer executives of the Company and its affiliated
companies. Any increase in Annual Base Salary shall
not serve to limit or reduce any other obligation to
the Executive under this Agreement. Annual Base
Salary shall not be reduced after any such increase
and the term Annual Base Salary as utilized in this
Agreement shall refer to Annual Base Salary as so
increased. As used in this Agreement, the term
"affiliated companies" shall include any company
controlled by, controlling or under common control
with the Company.
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(ii) ANNUAL BONUS. In addition to Annual Base Salary, the
Executive shall be awarded, for each fiscal year
ending during the Employment Period, an annual bonus
(the "Annual Bonus") in cash at least equal to the
greater of (A) the average annualized (for any fiscal
year consisting of less than twelve full months or
with respect to which the Executive has been employed
by the Company for less than twelve full months)
bonus paid or payable, including by reason of any
deferral, to the Executive by the Company and its
affiliated companies in respect of the three fiscal
years immediately preceding the fiscal year in which
the Effective Date occurs (the "Recent Average
Bonus"), or (B) the annual bonus paid or payable,
including by reason of any deferral, to the Executive
(and annualized for any fiscal year consisting of
less than twelve full months or for which the
Executive has been employed for less than twelve full
months) for the most recently completed fiscal year
as if all criteria for such bonus at 100% of plan had
been satisfied (such greater amount shall be
hereinafter referred to as the "Highest Annual
Bonus"). Each such Annual Bonus shall be paid no
later than the end of the third month of the fiscal
year next following the fiscal year for which the
Annual Bonus is awarded, unless the Executive shall
elect to defer the receipt of such Annual Bonus.
(iii) SPECIAL BONUS. In addition to the Annual Base Salary
and Annual Bonus payable as hereinabove provided, if
the Executive remains employed with the Company or
its affiliated companies through the first
anniversary of the Effective Date, the Company shall
pay to the Executive a special bonus (the "Special
Bonus") in recognition of the Executive's services
during the crucial one-year transition period
following the Change of Control in cash equal to the
sum of (A) the Executive's Annual Base Salary and (B)
the Highest Annual Bonus. The Special Bonus shall be
paid no later than 30 days following the first
anniversary of the Effective Date.
(iv) INCENTIVE, SAVINGS AND RETIREMENT PLANS. During the
Employment Period, the Executive shall be entitled to
participate in all incentive, savings and retirement
plans, practices policies and programs applicable
generally to other peer executives of the Company and
its affiliated companies, but in no event shall such
plans, practices, policies and programs provide the
Executive with incentive opportunities (measured with
respect to both regular and special incentive
opportunities, to the extent, if any, that such
distinction is applicable), savings opportunities and
retirement benefit opportunities, in each case, less
favorable, in the aggregate, than the most favorable
of those provided by the Company and its affiliated
companies for the Executive under such plans,
practices, policies and programs as in effect at any
time during the 90-day period immediately preceding
the Effective Date or if more favorable to the
Executive, those provided generally at any time after
the Effective Date to other peer executives of the
Company and, its affiliated companies.
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(v) WELFARE BENEFIT PLANS. During the Employment Period,
the Executive and/or the Executive's family, as the
case may be, shall be eligible for participation in
and shall receive all benefits under welfare benefit
plans, practices, policies and programs provided by
the Company and its affiliated companies (including,
without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group
life, accidental death and travel accident insurance
plans and programs) to the extent applicable
generally to other peer executives of the Company and
its affiliated companies, but in no event shall such
plans, practices, policies and programs provide the
Executive with benefits which are less favorable, in
the aggregate, than the most favorable of such plans,
practices, policies and programs in effect for the
Executive at any time during the 90-day period
immediately preceding the Effective Date or, if more
favorable to the Executive, those provided generally
at any time after the Effective Date to other peer
executives of the Company and its affiliated
companies.
(vi) EXPENSES. During the Employment Period, the
Executive shall be entitled to receive prompt
reimbursement for all reasonable employment expenses
incurred by the Executive in accordance with the most
favorable policies, practices and procedures of the
Company and its affiliated companies in effect for
the Executive at any time during the 90-day period
immediately preceding the Effective Date or, if more
favorable to the Executive, as in effect generally at
any time thereafter with respect to other peer
executives of the Company and its affiliated
companies.
(vii) FRINGE BENEFITS. During the Employment Period, the
Executive shall be entitled to fringe benefits in
accordance with the most favorable plans, practices,
programs and policies of the Company and its
affiliated companies in effect for the Executive at
any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to
the Executive, as in effect generally at any time
thereafter with respect to other peer executives of
the Company and its affiliated companies.
(viii) OFFICE AND SUPPORT STAFF. During the Employment
Period, the Executive shall be entitled to an office
or offices of a size and with furnishings and other
appointments, and to personal secretarial and other
assistance, at least equal to the most favorable of
the foregoing provided to the Executive by the
Company and its affiliated companies at any time
during the 90-day period immediately preceding the
Effective Date or, if more favorable to the
Executive, as provided generally at any time
thereafter with respect to other peer executives of
the Company and its affiliated companies.
(ix) VACATION. During the Employment Period, the
Executive shall be entitled to paid vacation in
accordance with the most favorable plans, policies,
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programs and practices of the Company and its
affiliated companies as in effect for the Executive
at any time during the 90-day period immediately
preceding the Effective Date or, if more favorable to
the Executive, as in effect generally at any time
thereafter with respect to other peer executives of
the Company and its affiliated companies.
5. TERMINATION OF EMPLOYMENT.
(a) DEATH OR DISABILITY. The Executive's employment shall
terminate automatically upon the Executive's death during the
Employment Period. If the Company determines in good faith
that the Disability of the Executive has occurred during the
Employment Period (pursuant to the definition of Disability
set forth below), it may give to the Executive written notice
in accordance with Section 11(b) of its intention to terminate
the Executive's employment. In such event, the Executive's
employment with the Company shall terminate effective on the
30th day after receipt of such notice by the Executive (the
"Disability Effective Date"), provided that, within the 30
days after such receipt, the Executive shall not have returned
to full-time performance of the Executive's duties. For
purposes of this Agreement, "Disability" shall mean the
absence of the Executive from the Executive's duties with the
Company on a full-time basis for 180 consecutive business days
as a result of incapacity due to mental or physical illness
which is determined to be total and permanent by a physician
selected by the Company or its insurers and acceptable to the
Executive or the Executive's legal representative (such
agreement as to acceptability not to be withheld
unreasonably).
(b) CAUSE. The Company may terminate the Executive's employment
during the Employment Period for Cause. For purposes of this
Agreement, "Cause" shall mean (i) a material breach by the
Executive of the Executive's obligations under Section 4(a)
(other than as a result of incapacity due to physical or
mental illness) which is demonstrably willful and deliberate
on the Executive's part, which is committed in bad faith or
without reasonable belief that such breach is in the best
interests of the Company and which is not remedied in a
reasonable period of time after receipt of written notice from
the Company specifying such breach or (ii) the conviction of
the Executive of a felony involving moral turpitude.
(c) GOOD REASON; WINDOW PERIOD. The Executive's employment may be
terminated (i) during the Employment Period by the Executive
for Good Reason or (ii) during the Window Period by the
Executive without any reason. For purposes of this Agreement,
the "Window Period" shall mean the 60-day period immediately
following the four-month anniversary of the Effective Date
(with the fourth-month anniversary to be determined as the
same calendar day as the Effective Date four months later; for
example, if the Effective Date were January 6, 1997, the
Window Period would begin on May 6, 1997). For purposes of
this Agreement, "Good Reason" shall mean:
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(i) the assignment to the Executive of any duties
inconsistent in any respect with the Executive's
position (including status, offices, titles and
reporting requirements), authority, duties or
responsibilities as contemplated by Section 4(a) or
any other action by the Company which results in a
diminution in such position, authority, duties or
responsibilities, excluding for this purpose an
isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the
Company promptly after receipt of notice thereof
given by the Executive;
(ii) any failure by the Company to comply with any of the
provisions of Section 4(b), other than an isolated,
insubstantial and inadvertent failure not occurring
in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the
Executive;
(iii) the Company's requiring the Executive to be based at
any office or location other than that described in
Section 4(a)(i)(B);
(iv) any purported termination by the Company of the
Executive's employment otherwise than as expressly
permitted by this Agreement; or
(v) any failure by the Company to comply with and satisfy
Section 10(c), provided that such successor has
received at least ten days prior written notice from
the company or the Executive of the requirements of
Section 10(c).
For purposes of this Section 5(c), any good faith determination of
"Good Reason" made by the Executive shall be conclusive.
(d) NOTICE OF TERMINATION. Any termination by the Company for
Cause, or by the Executive without any reason during the
Window Period or for Good Reason, shall be communicated by
Notice of Termination to the other party hereto given in
accordance with section 11(b). For purposes of this
Agreement, a "Notice of Termination" means a written notice
which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets
forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive's
employment under the provision so indicated and (iii) if the
Date of Termination (as defined below) is other than the date
of receipt of such notice, specifies the termination date
(which date shall be not more than 15 days after the giving of
such notice). The failure by the Executive or the Company to
set forth in the Notice of Termination any fact or
circumstance which contributes to a showing of Good Reason or
cause shall not waive any right of the Executive or the
Company hereunder or preclude the Executive or the Company
from asserting such fact or circumstance in enforcing the
Executive's or the Company's rights hereunder.
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(e) DATE OF TERMINATION. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause,
or by the Executive during the Window Period or for Good
Reason, the date of receipt of the Notice of Termination or
any later date specified therein, as the case may be, (ii) if
the Executive's employment is terminated by the Company other
than for Cause or Disability, the Date of Termination shall be
the date on which the Company notifies the Executive of such
termination and (iii) if the Executive's employment is
terminated by reason of death or Disability, the Date of
Termination shall be the date of death of the Executive or the
Disability Effective Date, as the case may be.
6. OBLIGATIONS OF THE COMPANY UPON TERMINATION.
(a) GOOD REASON OR DURING THE WINDOW PERIOD; OTHER THAN FOR CAUSE,
DEATH OR DISABILITY. If, during the Employment Period, the
Company shall terminate the Executive's employment other than
for Cause or Disability (and other than a termination due to
death) or the Executive shall terminate employment either for
Good Reason or without any reason during the Window Period:
(i) the Company shall pay to the Executive in a lump sum
in cash within 30 days after the Date of Termination
the aggregate of the following amounts:
A. the sum of (1) the Executive's Annual Base
Salary through the Date of Termination to the
extent not theretofore paid, (2) the product
of (x) the Highest Annual Bonus and (y) a
fraction, the numerator of which is the
number of days in the current fiscal year
through the Date of Termination, and the
denominator of which is 365 and (3) the
Special Bonus, if due to the Executive
pursuant to Section 4(b)(iii), to the extent
not theretofore paid and (4) any compensation
previously deferred by the Executive
(together with any accrued interest or
earnings thereon) and any accrued vacation
pay, in each case to the extent not
theretofore paid (the sum of the amounts
described in clauses (1), (2), (3) and (4)
shall be hereinafter referred to at the
"Accrued Obligations"); and
B. the amount (such amount shall be hereinafter
referred to as the "Severance Amount") equal
to the product of (1) one and one-half (1.5)
and (2) the sum of (x) the Executive's Annual
Base Salary and (y) the Highest Annual Bonus;
and
(ii) for the remainder of the Employment Period, or such
longer period as any plan, program, practice or
policy may provide, the Company shall continue
benefits to the Executive and/or the Executive's
family at least equal to those which would have been
provided to them in accordance with the plans,
programs, practices and policies described in Section
4(b)(v) if the Executive's employment had not been
terminated in accordance with the
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most favorable plans, practices, programs or policies
of the Company and its affiliated companies as in
effect and applicable generally to other peer
executives and their families during the 90-day
period immediately preceding the Effective Date or,
if more favorable to the Executive, as in effect
generally at any time thereafter with respect to
other peer executives of the Company and its
affiliated companies and their families, provided,
however, that if the Executive becomes reemployed
with another employer and is eligible to receive
medical or other welfare benefits under another
employer provided plan, the medical and other welfare
benefits described herein shall be secondary to those
provided under such other plan during such applicable
period of eligibility (such continuation of such
benefits for the applicable period herein set forth
shall be hereinafter referred to as "Welfare Benefit
Continuation"). For purposes of determining
eligibility of the Executive for retirement benefits
pursuant to such plans, practices, programs and
policies, the Executive shall be considered to have
remained employed until the end of the Employment
Period and to have retired on the last day of such
period; and,
(iii) to the extent not theretofore paid or provided, the
Company shall timely pay or provide to the Executive
and/or the Executive's family any other amounts or
benefits required to be paid or provided or which the
Executive and/or the Executive's family is eligible
to receive pursuant to this Agreement and under any
plan, program, policy or practice or contract or
agreement of the Company and its affiliated companies
as in effect and applicable generally to other peer
executives and their families during the 90-day
period immediately preceding the Effective Date or,
if more favorable to the Executive, as in effect
generally thereafter with respect to other peer
executives of the Company and its affiliated
companies and their families (such other amounts and
benefits shall be hereinafter referred to as the
"Other Benefits").
(b) DEATH. If the Executive's employment is terminated by reason
of the Executive's death during the Employment Period, this
Agreement shall terminate without further obligations to the
Executive's legal representatives under this Agreement, other
than for (i) payment of Accrued Obligations (which shall be
paid to the Executive's estate or beneficiary, as applicable,
in a lump sum in cash within 30 days of the Date of
Termination) and the timely payment or provision of the
Welfare Benefit Continuation and other Benefits (excluding, in
each case, Death Benefits (as defined below)) and (ii) payment
to the Executive's estate or beneficiary, as applicable, in a
lump sum in cash within 30 days of the Date of Termination of
an amount equal to the greater of (A) the Severance Amount or
(B) the present value determined as provided in Section
280G(d)(4) of the Code of any cash amount to be received by
the Executive or the Executive's family as a death benefit
pursuant to the terms of any plan, policy or arrangement of
the Company and its affiliated companies, but not including
any proceeds of life insurance
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covering the Executive to the extent paid for directly or on a
contributory basis by the Executive (which shall be paid in
any event as an Other Benefit) (the benefits included in this
clause (B) shall be hereinafter referred to as the "Death
Benefits").
(c) DISABILITY. If the Executive's employment is terminated by
reason of the Executive's Disability during the Employment
Period, this Agreement shall terminate without further
obligations to the Executive, other than for (i) payment of
Accrued Obligations (which shall be paid to the Executive in a
lump sum in cash within 30 days of the Date of Termination)
and the timely payment or provision of the Welfare Benefit
Continuation and Other Benefits (excluding, in each case,
Disability Benefits (as defined below)) and (ii) payment to
the Executive in a lump sum in cash within 30 days of the Date
of Termination of an amount equal to the greater of (A) the
Severance Amount or (B) the present value (determined as
provided in Section 28OG(d)(4) of the Code) of any cash amount
to be received by the Executive as a disability benefit
pursuant to the terms of any plan, policy or arrangement of
the Company and its affiliated companies, but not including
any proceeds of disability insurance covering the Executive to
the extent paid for directly or on a contributory basis by the
Executive (which shall be paid in any event as an Other
Benefit) (the benefits included in this clause (B) shall be
hereinafter referred to as the "Disability Benefits").
(d) CAUSE; OTHER THAN FOR GOOD REASON. If the Executive's
employment shall be terminated for Cause during the Employment
Period, this Agreement shall terminate without further
obligations to the Executive other than the obligation to pay
to the Executive Annual Base Salary through the Date of
Termination plus the amount of any compensation previously
deferred by the Executive, in each case to the extent
theretofore unpaid. If the Executive terminates employment
during the Employment Period, excluding a termination either
for Good Reason or without any reason during the Window
Period, this Agreement shall terminate without further
obligations to the Executive, other than for Accrued
Obligations and the timely payment or provision of Other
Benefits. In such case, all Accrued Obligations shall be paid
to the Executive in a lump sum in cash within 30 days of the
Date of Termination.
7. NON-EXCLUSIVITY OF RIGHTS. Except as provided in sections 6(a)(ii),
6(b) and 6(c), nothing in this Agreement shall prevent or limit the
Executive's continuing or future participation in any plan, program,
policy or practice provided by the Company or any of its affiliated
companies and for which the Executive may qualify, nor shall anything
herein limit or otherwise affect such rights as the Executive may have
under any contract or agreement with the Company or any of its
affiliated companies. Amounts which are vested benefits or which the
Executive is otherwise entitled to receive under any plan, policy,
practice or program of or any contract or agreement with the Company
or any of its affiliated companies at or subsequent to the Date of
Termination shall be payable in accordance with such plan, policy,
practice or program or contract or agreement except as explicitly
modified by this Agreement.
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8. FULL SETTLEMENT; RESOLUTION OF DISPUTES.
(a) The Company's obligation to make the payments provided for in
this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the
Company may have against the Executive or others. In no event
shall the Executive be obligated to seek other employment or
take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this
Agreement and, except as provided in Section 6(a)(ii), such
amounts shall not be reduced whether or not the Executive
obtains other employment. The Company agrees to pay promptly
as incurred, to the full extent permitted by law, all legal
fees and expenses which the Executive may reasonably incur as
a result of any contest (regardless of the outcome thereof) by
the Company, the Executive or others of the validity or
enforceability of, or liability under, any provision of this
Agreement or any guarantee of performance thereof (including
as a result of any contest by the Executive about the amount
of any payment pursuant to this Agreement), plus in each case
interest on any delayed payment at the applicable Federal rate
provided for in Section 7872(f)(2)(A) of the Code.
(b) If there shall be any dispute between the Company and the
Executive (i) in the event of any termination of the
Executive's employment by the Company, whether such
termination was for Cause, or (ii) in the event of any
termination of employment by the Executive, whether Good
Reason existed, then, unless and until there is a final,
nonappealable judgment by a court of competent jurisdiction
declaring that such termination was for Cause or that the
determination by the Executive of the existence of Good Reason
was not made in good faith, the Company shall pay all amounts,
and provide all benefits, to the Executive and/or the
Executive's family or other beneficiaries, as the case may be,
that the Company would be required to pay or provide pursuant
to Section 6(a) as though such termination were by the Company
without Cause or by the Executive with Good Reason; provided,
however, that the Company shall not be required to pay any
disputed amounts pursuant to this paragraph except upon
receipt of an undertaking by or on behalf of the Executive to
repay all such amounts to which the Executive is ultimately
adjudged by such court not to be entitled.
9. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Anything in this Agreement to the contrary notwithstanding, in
the event it shall be determined that any payment or
distribution by the Company to or for the benefit of the
Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or
otherwise, but determined without regard to any additional
payments required under this Section 9) (a "Payment") would be
subject to the excise tax imposed by Section 4999 of the Code
or any interest or penalties are incurred by the Executive
with respect to such excise tax (such excise tax,
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together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the
Executive shall be entitled to receive an additional payment
(a "Gross-Up Payment") in an amount such that after payment by
the Executive of all taxes (including any interest or
penalties imposed with respect to such taxes), including,
without limitation, any income taxes (and any interest and
penalties imposed with respect thereto) and Excise Tax imposed
upon the Gross-Up Payment, the Executive retains an amount of
the Gross-Up Payment equal to the Excise Tax imposed upon the
Payments.
(b) Subject to the provisions of Section 9(c), all determinations
required to be made under this Section 9, including whether
and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment and the assumptions to be utilized in
arriving at such determination, shall be made by an
independent national accounting firm selected by the Company
(the "Accounting Firm") which shall provide detailed
supporting calculations both to the Company and the Executive
within 15 business days of the receipt of notice from the
Executive that there has been a Payment, or such earlier time
as is requested by the Company. In the event that the
Accounting Firm is serving as accountant or auditor for the
individual, entity or group affecting the Change of Control,
the Executive shall appoint another nationally recognized
accounting firm to make the determinations required hereunder
(which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any
Gross-Up Payment, as determined pursuant to this Section 9,
shall be paid by the Company to the Executive within five days
of the receipt of the Accounting Firm's determination. If the
Accounting Firm determines that no Excise Tax is payable by
the Executive, it shall furnish the Executive with a written
opinion that failure to report the Excise Tax on the
Executive's applicable federal income tax return would not
result in the imposition of a negligence or similar penalty.
Any determination by the Accounting Firm shall be binding upon
the Company and the Executive. As a result of the uncertainty
in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it
is possible that Gross-Up Payments which will not have been
made by the Company should have been made ("Underpayment"),
consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its
remedies pursuant to Section 9(c) and the Executive thereafter
is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly
paid by the Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would
require the payment by the Company of the Gross-Up Payment.
Such notification shall be given as soon as practicable but no
later than ten business days after the Executive is informed
in writing of such claim and shall apprise the Company of the
nature of such claim and the date on which such claim is
requested to be paid. The Executive shall not pay such claim
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prior to the expiration of the 30-day period following the
date on which it gives such notice to the Company (or such
shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Company notifies
the Executive in writing prior to the expiration of such
period that it desires to contest such claims the Executive
shall:
(i) give the Company any information reasonably requested
by the Company relating to such claim,
(ii) take such action in connection with contesting such
claim as the Company shall reasonably request in
writing from time to time, including, without
limitation, accepting legal representation with
respect to such claim by an attorney reasonably
selected by the Company,
(iii) cooperate with the Company in good faith in order to
effectively contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay
directly all costs and expenses (including additional interest
and penalties) incurred in connection with such contest and
shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a
result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of
this Section 9(c), the Company shall control all proceedings
taken in connection with such contest and, at its sole option,
may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole
option, either direct the Executive to pay the tax claimed and
sue for a refund or contest the claim in any permissible
manner, and the Executive agrees to prosecute such contest to
a determination before any administrative tribunal, in a court
of initial jurisdiction and in one or more appellate courts,
as the Company shall determine; provided, however, that if the
Company directs the Executive to pay such claim and sue for a
refund, the Company shall advance the amount of such payment
to the Executive, on an interest-free basis and shall
indemnify and hold the Executive harmless, on an after-tax
basis, from any Excise Tax or income tax (including interest
or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with
respect to such advance; and further provided that any
extension of the statute of limitations relating to payment of
taxes for the taxable year of the Executive with respect to
which such contested amount is claimed to be due is limited
solely to such contested amount. Furthermore, the Company's
control of the contest shall be limited to issues with respect
to which a Gross-Up Payment would be payable hereunder and the
Executive shall be entitled to settle or contest, as the case
may be, any other issue raised by the Internal Revenue Service
or any other taxing authority.
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(d) If, after the receipt by the Executive of an amount advanced
by the Company pursuant to Section 9(c), the Executive becomes
entitled to receive any refund with respect to such claim, the
Executive shall (subject to the Company, complying with the
requirements of Section 9(c)) promptly pay to the Company the
amount of such refund (together with any interest paid or
credited thereon after taxes applicable thereto). If, after
the receipt by the Executive of an amount advanced by the
Company pursuant to Section 9(c), a determination is made that
the Executive shall not be entitled to any refund with respect
to such claim and the Company does not notify the Executive in
writing of its intent to contest such denial of refund prior
to the expiration of 30 days after such determination, then
such advance shall be forgiven and shall not be required to be
repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be
paid.
10. SUCCESSORS.
(a) This Agreement is personal to the Executive and without the
prior written consent of the Company shall not be assignable
by the Executive otherwise than by will or the laws of descent
and distribution. The economic benefit provisions of this
Agreement shall inure to the benefit of and be enforceable by
the Executive's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding
upon the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of the
Company to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "Company" shall
mean the Company as hereinbefore defined and any successor to
its business and/or assets as aforesaid which assumes and
agrees to perform this Agreement by operation of law, or
otherwise.
11. MISCELLANEOUS; NOTICES.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas without
reference to principles of conflict of laws. The captions of
this Agreement are not part of the provisions hereof and shall
have no force or effect. This Agreement may not be amended or
modified otherwise than by a written agreement executed by the
parties hereto or their respective successors and legal
representatives.
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(b) All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party
or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to the Executive:
If to the Company: Software Spectrum, Inc.
2140 Merritt Drive
Garland, Texas 75041
Attention: Chief Executive Officer
or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notice and communications
shall be effective when actually received by the addressee.
(c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
(d) The Company may withhold from any amounts payable under this
Agreement such Federal, state or local taxes as shall be
required to be withheld pursuant to any applicable law or
regulation.
(e) The Executive's or the Company's failure to insist upon strict
compliance with any provision hereof or the failure to assert
any right the Executive or the Company may have hereunder,
including, without limitation, the right of the Executive to
terminate employment for Good Reason pursuant to Section
5(c)(i)-(v), shall not be deemed to be a waiver of such
provision or right or any other provision or right of this
Agreement.
(f) The Executive and the Company acknowledge that, except as may
otherwise be provided under any other written agreement
between the Executive and the Company, the employment of the
Executive by the Company is "at will" and, prior to the
Effective Date, may be terminated by either the Executive or
the Company at any time. Moreover, if prior to the Effective
Date, the Executives employment with the Company terminates,
then the Executive shall have no further rights under this
Agreement.
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IN WITNESS WHEREOF, the Executive has hereunto set the Executive's
hand and, pursuant to the authorization from its Board of Directors, the
Company has caused these presents to be executed in its name on its behalf, all
as of the day and year first above written.
EXECUTIVE
------------------------------------
Name:
SOFTWARE SPECTRUM, INC.
By:
-------------------------
Name: Judy O. Sims
Title: Chief Executive Officer
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