Document:

nsit-ex1012_738.htm

EXHIBIT 10.12

EXECUTIVE EMPLOYMENT AGREEMENT

This Executive Employment Agreement (this “Agreement”) is entered into as of May 6, 2019 by and between Jeffery Shumway (“Executive”), an individual, and Insight Enterprises, Inc., (the “Company”) (together, the “Parties”).

WHEREAS, the Company desires to employ Executive on a full-time basis and the Executive desires to be so employed, subject to the terms and conditions set forth in this Agreement; 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and Executive agree as follows:

1.Position and Title.  The Company will employ Executive as its Chief Information Officer, reporting to the Company’s Chief Executive Officer, and Executive accepts employment to serve in such capacity, all upon the terms and conditions set forth in this Agreement.

2.Employment Commencement Date.  Executive will commence his employment as Chief Information Officer of the Company under the terms of this Agreement effective May 6, 2019 (the “Commencement Date”).

3.Duties and Responsibilities.  Executive shall have such duties and responsibilities as are consistent with Executive’s position as Chief Information Officer, as determined by the Chief Executive Officer of the Company.  Executive shall perform his duties faithfully and to the best of his ability and shall devote the whole of his professional time, attention and energies to the performance of his work responsibilities.  Executive shall not serve on the Boards of Directors of any other public, private or non-profit company or entity without the consent of the Chief Executive Officer.

4.Location.  The location of Executive’s principal place of employment shall be in the Company’s principal executive offices in Tempe, Arizona; provided, however, that Executive shall travel and perform occasional services outside of this area as reasonably required for the proper performance of Executive’s duties under this Agreement.  

5.Term.  Subject to the provisions for earlier termination set forth in Section 7, the term of Executive’s employment hereunder shall commence on the Commencement Date and continue for the period of one (1) year following the Commencement Date (the “Initial Term”).  The Initial Term will automatically renew for additional, successive one (1)-year periods (each a “Renewal Term”) unless either party provides written notice of such party’s intent not to continue this Agreement prior to the expiration of the Initial Term or any Renewal Term, as the case may be (the Initial Term and any Renewal Terms shall be referred to herein as the “Term”).  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, including those benefits outlined in Section 8, will be due or payable in the event of a termination resulting from non-renewal.  

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6.Compensation.

(a)Base Salary.  During the Term, the Company shall pay to Executive an annualized base salary, payable in accordance with the Company’s payroll practices in effect from time to time, at the rate of $275,000 per year (the “Base Salary”).

(b)Incentive Compensation.  Executive shall be eligible to participate in the Company’s Annual Cash Incentive Plan (the “Incentive Plan”).  However, the decision to provide any Incentive Plan and terms of any Incentive Plan shall be in the sole and absolute discretion of the Insight Board of Directors Compensation Committee (“Compensation Committee”).  For Executive’s Incentive Plan for 2019, the bonus target will be $120,000 at 100% attainment of objectives.  In no event will the incentive compensation be paid after March 15, 2020.  The Company, with approval from the Compensation Committee, reserves the right to change the terms and conditions of the Incentive Plan.  Upon execution of this Agreement, Executive shall no longer be eligible for any other Incentive Compensation previously offered to him while in his former position of SVP of Information Technology.  

(c)Equity Participation.  For 2019, except as provided in Section 6(d), Executive’s annual service-based restricted stock unit (“RSU”) grant will not change.  For 2020, the Company expects Executive will participate in stock incentive plans at a total value of $200,000, which will consist of 40% service-based RSUs and 60% performance-based RSUs, although the design and awards under any such future plan are at the discretion of the Compensation Committee.  The service-based RSUs vest in equal annual installments over four years from the date of grant.  The performance-based RSUs vest in equal annual installments over three years from the date of grant, with the final number of shares granted based on attainment against the Company’s annual performance metric, which, for example, was defined for 2019 as Return on Invested Capital, or ROIC.  The performance-based RSUs were granted on a grid from 0 – 200%, dependent on the final performance.  The RSU grant will be subject to the terms and conditions of the Insight Enterprises, Inc. 2007 Omnibus Plan, as amended (the “Equity Plan”), and the applicable agreements evidencing the grant.

(d)One-Time Equity Grant.  Executive will receive a one-time grant of RSUs having an aggregate value equal to $50,000, based on the Company’s closing stock price on the grant date.  The one-time RSU grant will be subject to the terms and conditions of the Equity Plan and the applicable agreement evidencing the grant.  The grant date will be the tenth day of the month following Executive’s Commencement Date.  The RSUs granted pursuant to this Section 6(d) will vest on a service basis in equal installments over a period of four (4) years on the first four anniversaries of the grant date, provided that Executive remains employed by the Company on each anniversary.   

(e)Employee Benefits.  During the Term, Executive shall be eligible to participate in all health benefits, insurance programs, retirement plans and other employee benefit plans and programs generally available to other executive employees of the Company.

(f)Business Expenses.  During the Term, Executive shall be entitled to reimbursement for reasonable business expenses incurred in the performance of his duties 

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hereunder and in accordance with the Company’s expense reimbursement policies as they exist from time to time or as otherwise approved by the Chief Executive Officer.  

(g)Vacation.  Executive shall be entitled participate in the Company’s Flexible Vacation Program in accordance with the Company’s policies and procedures applicable to other executive employees of the Company.

7.Termination of Employment.  Prior to the expiration of the Term, Executive’s employment under this Agreement shall terminate: 

(a)Immediately upon the death of Executive; 

(b)After ten (10) days’ written notice by the Company to Executive on account of Executive’s Disability.  “Disability” 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 the 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)After ten (10) days’ written notice by the Company to Executive stating that Executive’s employment is being terminated without “Cause” (as defined below). 

(d)After ten (10) days’ written notice by the Executive to the Company stating that Executive is resigning from his employment with the Company for any reason other than “Good Reason” (as defined herein).

(e)Immediately upon written notice by the Company to Executive for Cause.  For purposes of this Agreement, “Cause” shall be defined as:

(i)the misappropriation (or attempted misappropriation) of any of the Company’s funds or property;

(ii)the conviction of, or the entering of a guilty plea or a plea of no contest with respect to a felony;

(iii)repeated willful and significant neglect of duties;

(iv)acts of material dishonesty or disloyalty toward the Company;

(v)repeated material violation of any material written policy with respect to the Company’s business or operations;

(vi)repeated significant deficiencies with respect to performance objectives assigned by the Chief Executive Officer of the Company; 

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(vii)Executive’s material breach of this Agreement (after notice and an opportunity to cure); or

(viii)Executive’s failure to comply with the Company’s written policies or rules, as they may be in effect from time to time during the Term, if such failure causes reputational or financial harm to the Company.

(f)As provided in this Section 7(f), upon written notice by Executive to the Company stating that Executive is resigning from his employment with the Company for “Good Reason.”  For purposes of this Agreement, “Good Reason” shall be defined as:

(i)a material diminution in Executive’s authority, duties or responsibilities without his consent; 

(ii)a material reduction in Executive’s Base Salary, other than as part of a Company salary reduction program that includes senior executives of the Company;

(iii)any material act or acts of dishonesty by the Company directed toward or affecting Executive;

(iv)any illegal act or instruction directly affecting Executive by Company, which is not withdrawn after the Company is notified of the illegality by Executive; or 

(v)the Company’s material breach of this Agreement;

provided, however, that Executive must resign within 180 days of the initial occurrence of any of the foregoing circumstances and must provide written notice to the Chief Executive Officer of the facts and circumstances he alleges constitute Good Reason within ninety (90) days of the first occurrence of such fact or circumstance or Executive shall be deemed to have waived Executive’s right to terminate for Good Reason with respect to any such facts or circumstances; provided, further, that none of the actions set forth in (i)-(v) above shall constitute Good Reason if the action is cured or otherwise remedied by the Company within thirty (30) business days after receiving written notice from the Executive.

8.Compensation in the Event of Termination.

(a)Cause or Resignation.  If Executive’s employment terminates under Paragraph 7(d) or (e), Executive shall receive (i) payment of any earned but unpaid Base Salary earned up to and including the date of termination and (ii) reimbursement of any unreimbursed business expenses (together, the “Accrued Obligations”).

(b)Death or Disability.  If Executive’s employment terminates under Paragraph 7(a) or (b), Executive, or Executive’s estate, if applicable, shall receive the Accrued Obligations and any vested benefits Executive, or Executive’s estate, may be entitled to receive under any Company disability or insurance plan or other applicable employee benefit plan.  Executive or Executive’s estate, as the case may be, also shall be entitled to receive the following:

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(i)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;

(ii)With respect to any Incentive 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 be entitled under the Incentive Plan (had Executive’s death or Disability not occurred) for the calendar year in which Executive died or became Disabled.

The payment to which Executive or Executive’s estate is entitled pursuant to paragraph (i) 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 (ii) and (iii) shall be made within the time period described in the applicable Incentive Plan.  In no event will the payments due pursuant to paragraphs (i), (ii) or (iii) 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.

(c)Without Cause or by Executive for Good Reason.  If Executive’s employment terminates prior to the expiration of the Term under Paragraph 7(c) or (f), Executive shall receive the Accrued Obligations.  Executive also shall be entitled to receive the following: 

(i)severance pay in an amount equal to 100% of Executive’s Base Salary in effect on the date Executive’s employment is terminated (the “Severance Payment”); 

(ii)100% of the annual compensation paid to Executive in the preceding year under the Incentive Plan in which Executive participates as of the date Executive’s employment is terminated; plus (1) with respect to the Incentive Plan, 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 Plan (had Executive’s employment not been terminated) for the calendar year in which Executive’s employment is terminated; and 

(iii)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 termination of employment, for a period of time expiring upon the earlier of: (1) the end of the period of twelve (12) 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(c)(iii) 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). 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 

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respect to a particular type of coverage when and if Executive becomes eligible to receive substantially similar coverage with a successor employer.

Subject to Section 15 herein, the Severance Payment will be paid in equal installments over a period of twelve (12) months in accordance with the Company’s regular paydays and commencing on the Company’s first regular payday that falls at least sixty (60) days following Executive’s termination of employment; provided that (i) Executive has timely executed (and not revoked) a general release and waiver of all claims in a form acceptable to the Company (“General Release”) and (ii) any period of revocation applicable to such General Release has passed; provided, further, that the General Release shall be made available to Executive no later than five (5) days following the date of Executive’s termination of employment under Sections 7(c) or (f) herein.  As shall be further described in the General Release, Executive shall have either twenty-one (21) or forty-five (45) days following receipt of the General Release to consider its execution and seven (7) days following the execution of the General Release to revoke it.  If Executive fails to execute the General Release in a timely manner, or revokes the General Release, the benefits provided pursuant to this Section 8(c) (other than the Accrued Obligations) will not be due.

9.Change in Control of Company.  

(a)Eligibility to Receive Benefits.  If a Change in Control (as defined in Section 9(c)) occurs, Executive shall be entitled to the benefits provided in Section 9(b) if, prior to the expiration of twelve (12) months after the Change in Control (i) Executive terminates employment with the Company for Good Reason in accordance with the requirements of Section 7(f) or (ii) the Company terminates Executive’s employment without Cause pursuant to Section 7(c).  

(b)Receipt of Benefits.  If Executive is entitled to receive benefits pursuant to Section 9(a) hereof:

(i)Executive shall receive (1) the Accrued Obligations; (2) severance pay in an amount equal to: (a) 100% of the Executive’s highest annualized Base Salary in effect on any date during the Initial Term or any Renewal Term, plus (b) 100% of the annual compensation paid to Executive in the preceding year under the Incentive Plan in which Executive participates as of the date Executive’s employment is terminated; plus (c) with respect to the Incentive Plan, 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 Plan (had Executive’s employment not been terminated) for the calendar year in which Executive’s employment is terminated;   

(ii)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 termination of employment, for a period of time expiring upon the earlier of: (1) the end of the period of twelve (12) 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 9(b)(ii) by either paying 

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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). 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;

(iii)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 in 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; and  

(iv)Subject to Section 15 herein, the benefits provided pursuant to this Section 9(b) (other than the Accrued Obligations) will be paid in a single lump sum on the Company’s first regular payday that falls at least sixty (60) days following Executive’s termination of employment; provided that (1) Executive has timely executed (and not revoked) a general release and waiver of all claims in a form acceptable to the Company (“General Release”) and (2) any period of revocation applicable to such General Release has passed; provided, further, that the General Release shall be made available to Executive no later than five (5) days following the date of Executive’s termination of employment under Sections 7(c) or (f) herein.  As shall be further described in the General Release, Executive shall have either twenty-one (21) or forty-five (45) days following receipt of the General Release to consider its execution and seven (7) days following the execution of the General Release to revoke it.  If Executive fails to execute the General Release in a timely manner, or revokes the General Release, the benefits provided by this Section 9(b) (other than the Accrued Obligations) will not be due.  The Incentive Plan payments to which Executive is entitled for the year or quarter of the Executive’s termination shall be made within the time period described in the applicable Incentive Plan, provided Executive has timely executed and not revoked a General Release as described above.  In no event will the Incentive Plan payments be made later than March 15 of the year following the year in which Executive’s employment is terminated.

(c)Change in Control Defined.  For purposes of this Agreement, “Change in Control” shall have the meaning set forth in the Equity Plan.

(d)Cap on Payments.

(i)General Rules.  The Internal Revenue Code (the “Code”) imposes 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 

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an excise tax under Section 4999 of the Code of 20% of all amounts paid to Executive in excess of $100,000. In other words, if Executive’s Cap is $299,999, Executive will not be subject to an excise tax if Executive receives exactly $299,999.  If Executive receives $300,000, Executive will be subject to an excise tax of $40,000 (20% of $200,000).

(ii)Reduction of Payments.  Subject to the exception described in Section 9(d)(iii), in order to avoid the excise tax imposed by Section 4999 of the Code, one or more of the payments or benefits to which Executive is entitled that is not subject to Section 409A of the Code shall be reduced until the Total Payments equal the Cap. For purposes of this limitation:

(1)No portion of the Total Payments shall be taken into account which, in the opinion of the Consultant retained pursuant to Section 9(d)(iv), does not constitute a “parachute payment” within the meaning of Section 280G(b)(2) of the Code;

(2)A payment shall be reduced only to the extent necessary so that the Total Payments constitute reasonable compensation for services actually rendered within the meaning of Section 280G(b)(4) of the Code or are otherwise not subject to disallowance as deductions, in the opinion of the Consultant; and

(3)The value of any non-cash benefit or any deferred payment of benefit included in the Total Payments shall be determined in accordance with Section 280G of the Code and the regulations issued thereunder.

(4)If after the reductions called for by the preceding provisions of this Section 9(d)(ii), the Total Payments continue to exceed the Cap, the payments or benefits to which, Executive is entitled and which are subject to Section 409A shall be reduced proportionally until the Total Payments equal the Cap.

(iii)Exception.  The payment limitation called for by Section 9(d)(ii) shall not apply if Executive’ s “Uncapped Benefit” exceeds Executive’ s “Capped Benefit” by more than 25%.  The Consultant selected pursuant to Section 9(d)(iv) will calculate Executive’s Uncapped Benefit and Executive’ s Capped Benefit. For this purpose, the “Uncapped Benefit” is equal to the Total Payments to which Executive is entitled prior to the application of Section 9(d)(ii). Executive’s “Capped Benefit” is the amount to which Executive will be entitled after application of the limitations of Section 9(d)(ii).

(iv)Consultant.  Company will retain a “Consultant” to advise Company with respect to the applicability of any Section 4999 excise tax with respect to Executive’s Total Payments.  The Consultant shall be a law firm, a certified public accounting firm, and/or a firm nationally recognized as providing executive compensation consulting services. All determinations concerning Executive’s Capped Benefit and Executive’s Uncapped Benefit (as well as any assumptions to be used in making such determinations) shall be made by the Consultant selected pursuant to this Section 9(d)(iv).  The Consultant shall provide Executive and Company with a written explanation of its conclusions.  All fees and expenses of the Consultant shall be borne by Company.  The Consultant’s determination shall be binding on Executive and Company.

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(v)Special Definitions.  For purposes of this Section 9(d), the following specialized terms will have the following meanings:

(1)“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)( l) and (2) of the Code and the regulations adopted thereunder.  Generally, Executive ‘s “annualized includable compensation” is the average of Executive’s annual taxable income from Company for the “base period,” which is the five (5) calendar years prior to the year in which the change in control occurs.

(2)“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 Executive 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.

(3)“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.

(vi)Effect of Repeal.  In the event that the provisions of Sections 280G and 4999 of the Code are repealed without succession, Section 9(d) shall be of no further force or effect.

(vii)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 9 unless Executive’s employment with the successor is subsequently terminated without Cause or for Good Reason within twelve (12) months following the Change in Control.

10.Confidentiality, Intellectual Property, Non-Solicitation, and Non-Competition Agreement.  As a condition of employment, Executive also must sign the Confidentiality, Intellectual Property, Non-Solicitation and Non-Competition Agreement, which is attached as Exhibit A to this Agreement. 

11.Applicable Law.  This Agreement and any disputes or claims arising hereunder shall be construed in accordance with, governed by and enforced under the laws of the State of Arizona without regard for any rules of conflicts of law.

12.Company Policies.

(a)General Company Policies.  Except where inconsistent with the terms of this Agreement, Executive agrees that he will be subject to, and comply with, the employment policies and procedures established by the Company from time to time.  

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(b)Company Stock Ownership Guidelines.  Executive agrees that he will be subject to the Company’s stock ownership guidelines.

(c)Clawback.  To the extent required by law or Company policy, the Company may require Executive to repay to the Company any bonus or other incentive-based or equity-based compensation paid to Executive.  

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

14.Withholding.  The Company may effect withholdings from the payments due to Executive under this Agreement for the payment of taxes and other lawful withholdings or required employee contributions, in accordance with applicable law.

15.Section 409A.

(a)It is the intention of the Company and Executive that this Agreement not result in unfavorable tax consequences to Executive under Section 409A of the Code (“Section 409A”).  To the extent applicable, it is intended that the Agreement comply with the provisions of Section 409A, but the Company does not warrant or guarantee that the Agreement is either excepted from the requirements of Section 409A or that the Agreement complies with Section 409A.  The Agreement will be administered and interpreted in a manner consistent with this intent, and any provision that would cause the Agreement to fail to satisfy Section 409A will have no force and effect until amended to comply therewith (which amendment may be retroactive to the extent permitted by Section 409A).  The Company and Executive agree to work together in good faith in an effort to comply with Section 409A including, if necessary, amending this Agreement based on further guidance issued by the Internal Revenue Service from time to time, provided that the Company shall not be required to assume any increased economic burden.  Executive remains solely responsible for any adverse tax consequences imposed upon him by Section 409A.  

(b)Notwithstanding anything contained herein to the contrary, to the extent required in order to avoid accelerated taxation and/or tax penalties under Section 409A, Executive shall not be considered to have terminated employment with the Company for purposes of the Agreement and no payments shall be due to him under the Agreement which are payable upon his termination of employment until he would be considered to have incurred a “separation from service” from the Company within the meaning of Section 409A.

(c)To the extent required in order to avoid accelerated taxation and/or tax penalties under Section 409A, amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to the Agreement during the six-month period immediately following Executive’s termination of employment shall instead be paid within thirty (30) days following the first business day after the date that is six months following his termination of employment (or upon his death, if earlier).  If it is determined that all or a portion of the payments due pursuant to this Agreement are subject to Section 409A of the Code, and if the General Release 

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consideration period and revocation period spans two calendar years, the payments provided pursuant to this Agreement that are subject to Section 409A shall not begin until the second calendar year.  Executive may not elect the taxable year of the distribution.  In addition, for purposes of this Agreement, each amount to be paid or benefit to be provided to the Executive pursuant to this Agreement shall be construed as a separate identified payment for purposes of Section 409A.  

16.Dispute Resolution.  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, and all claims, to the extent allowable by law, that 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, shall be resolved by final, binding and conclusive arbitration in Maricopa County, Arizona, with a sole arbitrator to be mutually agreed upon by the Parties. The Parties shall bear equally the cost of the arbitrator.  The arbitration shall occur within thirty (30) days of selection of the arbitrator and shall be administered by the American Arbitration Association under its Employment Arbitration Rules and judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction thereof.  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 which Executive may be entitled shall be paid by Company, on or before December 31 of the calendar year following the year of the conclusion of the arbitration.  Either party may apply to the arbitrator to seek injunctive relief until the arbitration award is rendered or the matter is otherwise resolved.  Either party also may, without waiving any remedy 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 retention of the arbitrator.

17.No Conflict.  Executive hereby represents and warrants that he is under no conflicting duty or contractual or other legal obligation that would prevent him from executing this Agreement or performing the duties of Chief Information Officer of the Company.

18.No Waivers.  The failure of either party to enforce any provision of this Agreement shall not be construed as a waiver of any such provision, nor prevent such party thereafter from enforcing such provision or any other provision of this Agreement.  Rights granted the parties hereto herein are cumulative and the election of one shall not constitute a waiver of such party’s right to assert all other legal remedies available under the circumstances. 

19.Notices.  All notices or other communications hereunder shall be in writing and shall be deemed to have been duly given (i) when delivered personally or by local courier, (ii) upon confirmation of receipt when such notice or other communication is sent by facsimile, or (iii) one day after timely delivery to an overnight delivery courier.  The addresses for such notices shall be as follows:

TO THE COMPANY: 

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Insight Enterprises, Inc.

Attn: Chief Executive Officer

6820 South Harl Avenue 

Tempe, Arizona  85283

TO EXECUTIVE: 

At the most recent address on file in the records of the Company.

20.Severability.  The provisions of this Agreement are severable and if any provision of this Agreement shall be held to be invalid or otherwise unenforceable, in whole or in part, the remainder of the provisions, or enforceable parts thereof, shall not be affected thereby unless as a result of such severing the remaining provisions or enforceable parts do not substantially reflect the intention of the parties in entering into this Agreement.

21.Successors and Assigns.  This is an agreement for personal services and may not be assigned by Executive.  The rights and obligations of the parties under this Agreement shall inure to the benefit of and be binding upon their successors, heirs and assigns, including the survivor upon any merger, consolidation or combination of the Company with any other entity. 

22.Entire Agreement and Amendments.  This Agreement sets forth the entire agreement of the parties hereto and supersedes all prior agreements, negotiations, understandings and covenants (except as otherwise provided herein) with respect to the subject matter hereof, including any offer letter provided to Executive.  This Agreement may be amended, modified or canceled only by mutual agreement of the parties and only in writing.

23.Counterparts.  This Agreement may be executed in two (2) counterparts, each of which shall be deemed an original and all of which together shall constitute but one and the same instrument.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. 

		
	
INSIGHT ENTERPRISES, INC.
	
JEFFERY SHUMWAY

	
 
	
 

	
/s/ Kenneth Lamneck
	
/s/ Jeffery Shumway

	
 
	
 

	
 
	
 

	
By:  Kenneth Lamneck
	
 

	
Its:  President and CEO
	
 

 

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EXHIBIT A

 

 

CONFIDENTIALITY, INTELLECTUAL PROPERTY,

NON-SOLICITATION, AND NON-COMPETITION AGREEMENT

 

 

This Confidentiality, Intellectual Property, Non-Solicitation, and Non-Competition Agreement (“Agreement”) is entered into by and between Insight Enterprises, Inc., a Delaware corporation (“Insight”) and Jeffery Shumway (“Employee”).  In exchange for the mutual promises and consideration described herein, the Parties agree as follows.

1.Consideration.

As a condition of, and in consideration of, the Employment Agreement between Insight and Employee,  and in consideration for Employee’s promises in this Agreement, including restrictive covenants after Employee’s employment ends, Insight will provide to Employee the following: the consideration outlined in the Employment Agreement, the opportunity to participate in future merit increases in compensation; continued participation in Insight’s compensation and benefit programs; the eligibility of Employee for future pay raises; access to confidential information and client relationships that will enhance Employee’s employment opportunities with Insight, its parent, subsidiary, and affiliated companies (“Insight Company or Companies”); specialized training in information technology and sales programs; access to an Insight Company’s trade secrets, confidentiality and/or proprietary information, and/or confidential third-party information; and other good and valid consideration that Insight provides and will provide to Employee.

2.Confidentiality.

A.Protection of Trade Secrets.

For the purpose of this Agreement, a “Trade Secret” means any and all information that (i) derives actual or potential economic value from not being generally known to persons who can obtain economic value from its disclosure or use, (ii) is the subject of reasonable efforts by an Insight Company to maintain its secrecy, and (iii) is not generally known or available to the public or the industry.  Without limiting the foregoing, examples of Trade Secrets include, but are not limited to: 

	
 
	
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The identity of each client of an Insight Company that has not been publically disclosed by an Insight Company; 

	
 
	
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The identity, phone number, email address, and other similar contact information of key contact persons at each client of an Insight Company; 

	
 
	
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Lists of Insight Company or Companies’ clients and the key information regarding any such clients such as purchasing needs and habits, the technology products and services clients use or favor, client contract information and negotiated terms; 

	
 
	
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Lists of key distributors, suppliers, vendors, and partners of an Insight Company and the key information regarding such business relationships, such as key contact person(s) and contact information, special programs, and negotiated prices, terms and contracts, that is not otherwise disclosed; 

	
 
	
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Pricing, costs, discounts, margins, and profits for the products and services less than three years old of an Insight Company; 

	
 
	
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The products and services preferences and the nature and amount of products and services purchased from an Insight Company by each client of an Insight Company; 

 

 
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All information of any kind related to the client’s business obtained by an employee of an Insight Company from a client in the course of any private conversation or communication that has not been publicly disclosed by the client; 

	
 
	
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Software developed by an Insight Company;

	
 
	
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Strategic business initiatives, potential significant corporate events, or unique know-how of an Insight Company; 

	
 
	
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Sales, business and marketing plans and forecasts less than three years old of an Insight Company; 

	
 
	
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Sales data and results of an Insight Company before being reported and disclosed publically; 

	
 
	
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Business affairs, processes, and projects of an Insight Company that have not been publicly disclosed; 

	
 
	
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Technical designs, drawings, schematics, and matters created or developed by an Insight Company or contracted vendor or partner; 

	
 
	
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Non-public planned product and services offerings less than three years old of an Insight Company; 

	
 
	
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Non-public financial and accounting information and reports less than three years old of an Insight Company; and 

	
 
	
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Special pricing programs that are less than three years old but available to an Insight Company, and other similar pricing information for goods and services sold by an Insight Company.  

 

Both during and after employment with Insight, Employee agrees to protect and preserve the confidentiality of all Trade Secrets of an Insight Company, and agrees that Employee will not, directly or indirectly:

i.Disclose, publish or make available any Trade Secret of an Insight Company, other than to:

a.An employee, officer, or director of an Insight Company who, in the reasonable exercise of Employee’s judgment, needs to know such Trade Secret in order to perform his or her duties on behalf of an Insight Company;

b.A vendor, supplier, or strategic partner of an Insight Company, except that such disclosure is permissible only after Employee (a) receives approval from Employee’s immediate supervisor for each such disclosure, (b) ensures that each such vendor, supplier, or strategic partner is bound by a non-disclosure agreement with an Insight Company; and (c) ensures that there is no master agreement between an Insight Company and the affected client that would prohibit the sharing of that particular information with a vendor, supplier, or strategic partner.  

ii.Sell, transfer, or otherwise exploit or permit the sale, transfer, use or exploitation of any Trade Secret of an Insight Company for any purpose other than those for which it was provided.

The foregoing obligations shall cease when the particular Trade Secret of an Insight Company becomes generally known or available to the public or the industry other than by a disclosure in violation of an Employee’s agreement with Insight or when the particular Trade Secrets of an Insight Company are required to be disclosed pursuant to a subpoena or court order, provided that Employee provides immediate written notice of such planned disclosure to the Chief Executive Officer of Insight Enterprises, Inc. to allow Insight or an Insight Company to contest disclosure and thereafter does not disclose until the Insight Company’s objection to disclosure, if any, is ruled upon and otherwise takes reasonable and lawful actions to avoid and/or minimize the extent of such disclosure.

 

 
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Employee agrees that upon termination of Employee’s employment or at any time upon request by Insight, Employee shall promptly return to Insight all tangible (i.e., written, recorded, encoded) forms of Trade Secrets of an Insight Company in Employee’s possession, custody or control, including but not limited to the originals and all copies of such information regardless of the media in which it is stored.

B.Protection of Confidential and Proprietary Information.

For purposes of this Agreement, “Confidential and Proprietary Information” means information that is a valuable, special and unique asset of an Insight Company.  Confidential and Proprietary Information may include Trade Secrets, but it is not necessarily limited to Trade Secrets.  Without limiting the foregoing, examples of information that are Confidential and Proprietary Information include, but are not limited to: 

	
 
	
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Trade Secrets; 

	
 
	
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Pricing, costs, discounts, margins, and profits for the products and services of an Insight Company that are less than five years old ;

	
 
	
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Sales, business and marketing plans and forecasts of an Insight Company that are less than five years old;

	
 
	
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Non-public planned product and services offerings of an Insight Company that are less than five years old; 

	
 
	
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Non-public financial and accounting information and reports of an Insight Company that are less than five years old; 

	
 
	
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Special pricing programs of an Insight Company that are less than five years old and available to an Insight Company, and other similar pricing information for goods and services sold by an Insight Company;

	
 
	
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Policy and systems manuals of an Insight Company, other than employee handbooks and similar materials, that are less than five years old; 

	
 
	
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Computer printouts, software, databases and other similar data or information related to an Insight Company that contain Insight confidential information; 

	
 
	
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Non-public benefits and compensation plans and strategies for supervisory employees that are less than three years old of an Insight Company; 

	
 
	
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Employee recruiting plans and strategies less than three years old of an Insight Company; 

	
 
	
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Legal files of or related to an Insight Company; 

	
 
	
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Non-public funding, credit, investment, and lending policies, arrangements, or sources of an Insight Company; 

	
 
	
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Advertising and promotional ideas and strategies less than three years old of an Insight Company; 

	
 
	
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Market surveys and/or analyses of an Insight Company that are less than three years old; and

	
 
	
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Other compilations of confidential information and records belonging to or related to an Insight Company.

 

The term, “software,” as used in this Agreement, includes software in various stages of development or any product thereof and includes without limitation the literal elements of a program – source code, object code, or otherwise – its audiovisual components – menus, screens, structure, and organizations – any human or machine-readable form of the program, and any writing or medium in which the program or the information therein is sorted, written or described, including without limitation diagrams, flow charts, designs, drawings, specifications, models, date and customer information.

In addition to the Confidential and Proprietary Information of Insight and the Insight Companies, Employee understands and agrees that, in the performance of Employee’s duties for Insight, Employee will have access to, or become familiar with, trade secrets and confidential and proprietary 

 

 
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information of or concerning current and prospective clients, business partners, vendors, distributors, and suppliers of an Insight Company including, but not limited to, product and services information, sales figures, marketing strategies, plans, financial information and other confidential information concerning those entities or businesses, whether protected by a nondisclosure agreement or not (collectively, “Third-Party Information”).

Both during and after employment with Insight, Employee agrees to protect and preserve the confidentiality of all Confidential and Proprietary Information of an Insight Company and Third-Party Information, and agrees that Employee will not, directly or indirectly:

i.Disclose, publish or make available any Confidential and Proprietary Information of an Insight Company and Third-Party Information, other than to:

a.An employee, officer, or director of an Insight Company who, in the reasonable exercise of Employee’s judgment, needs to know such Confidential and Proprietary Information of an Insight Company and Third-Party Information to perform his or her duties;

b.A vendor, supplier, or strategic partner of an Insight Company, except that such disclosure is permissible only after Employee: (a) receives approval from Employee’s immediate supervisor for each such disclosure; (b) ensures that each such vendor, supplier, or strategic partner is bound by a non-disclosure agreement with an Insight Company; and (c) ensures that there is no agreement between an Insight Company and the affected client that would prohibit the sharing of that particular information with a vendor, supplier, or strategic partner. 

ii.Sell, transfer, or otherwise exploit or permit the sale, transfer, use or exploitation of any Confidential and Proprietary Information of an Insight Company and Third-Party Information for any purpose other than those for which it was provided.

The foregoing obligations shall cease when the particular Confidential and Proprietary Information of an Insight Company becomes generally known or available to the public or the industry other than by a disclosure in violation of an employee’s agreement with Insight, or when the particular Confidential and Proprietary Information of an Insight Company or Third-Party Information is required to be disclosed pursuant to a subpoena or court order, provided that Employee provides immediate written notice of such planned disclosure to the Chief Executive Officer of Insight Enterprises, Inc. to allow Insight or an Insight Company to contest disclosure and thereafter does not disclose until the Insight Company’s objection to disclosure, if any, is ruled upon and otherwise takes reasonable and lawful actions to avoid and/or minimize the extent of such disclosure.

Employee agrees that upon termination of Employee’s employment or at any time upon request by an Insight Company, Employee shall promptly return to Insight all Confidential and Proprietary Information of an Insight Company or Insight Companies and Third-Party Information including, but not limited to, the originals and all copies of such information regardless of how it is stored and that is in the possession, custody, or control of Employee.

	
 
	
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Provisions Applicable to Both Trade Secrets and Confidential and Proprietary Information.

Employee recognizes that the Trade Secrets of an Insight Company and various items of Confidential and Proprietary Information of an Insight Company are special and unique assets of the Insight Company or Companies and need to be protected from improper disclosure and unauthorized use in order to prevent damage to an Insight Company or Companies.  The obligation of non-disclosure and non-use of information shall continue to exist so long as such information remains a Trade Secret or Confidential and 

 

 
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Proprietary Information, except as otherwise limited above.  Further, to the extent that any Trade Secret or Confidential and Proprietary Information is held by a court of competent jurisdiction not to be a trade secret within the meaning of applicable law, the prohibitions against disclosing or using Trade Secrets and Confidential and Proprietary Information in this Paragraph 2 shall expire five years after Employee’s termination from employment with Insight, or if the period of five years is determined by a court to be unreasonably broad, then three years following Employee’s termination from employment with Insight.  

3.Return of Property.

“Insight Company Property” includes, but is not limited to: Trade Secrets; Confidential and Proprietary Information; information or things that would meet the definition of one of the above-listed examples of Trade Secrets or Confidential and Proprietary Information but for the time period (e.g., the item is older than three or five years); Third Party Information; credit and charge cards; all files; keys; records; computers; personal data assistants; smart phones (iPhones, Androids, Blackberries, etc.); tablet devices (iPad, Surface, etc.); peripherals; hard, thumb, or jump drives, computer programs, disks, and files; documents; drawings; models; specifications; lists, including client lists; equipment; data; manuals; supplies; promotional materials; plans; blueprints; site maps; and other similar items relating to, constituting, or containing information relating to the business of an Insight Company including any copies and electronic copies, whether prepared by Employee or otherwise coming into Employee’s possession.  Upon termination of Employee’s employment, or at any time upon request by an Insight Company, Employee agrees to return immediately to Insight all Insight Company Property that is in the possession, custody, or control of Employee and in as good condition as when received by Employee (normal wear and tear excepted) and any copies of the same regardless of how it is stored (including electronic copies).  In the event that Employee discovers or becomes aware of Insight Company Property that is in the possession, custody or control of Employee after termination of Employee’s employment, Employee agrees to immediately return such property and any copies to Insight without retaining any copies.

4.Intellectual Property.

a.Inventions Retained.  Employee represents that all matters that Employee has created or otherwise developed prior to employment with Insight, which Employee wishes to exclude as obligations to Insight under this Agreement, are listed below.  If no items are listed below, Employee represents that there are no such matters to be excluded.

 

b.Assignment of Creations.  Employee hereby agrees to hold in trust for the sole right and benefit of Insight Companies and assigns to Insight and the Insight Companies all right, title and interest in and to any and all Creations, as defined below, that Employee creates or otherwise develops, alone or in conjunction with others.  Employee further agrees to assign to any third party, including the United States government, all his or her right, title and interest in and to any and all Creations whenever such assignment is required by a contract between an Insight Company and such third party.  “Creation” means any invention, discovery, idea, concept, design, process, work of authorship, client list, development or improvement (whether or not subject to copyright or patent protection and whether or not reduced to practice by Employee), patent, copyright, or trademark: (i) relating to any past, present, or reasonably anticipated business of Insight or its parent, subsidiary, or related companies, and which is or was created or otherwise developed during Employee’s employment with an Insight Company, (ii) which is or was created or otherwise developed while performing work for an Insight Company, or (iii) which is or was created or otherwise developed at any time using equipment, supplies, facilities, information or proprietary rights or other property of an Insight Company.  

 

 
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c.Publicity.  Employee hereby consents to any and all uses and displays, by Insight and its parents, subsidiaries, affiliates and its and/or their agents, employees, representatives, and licensees, of the Employee's name, voice, likeness, image, appearance in, on or in connection with any pictures, photographs, audio and video recordings, digital images, websites, television programs and advertising, other advertising, sales and marketing brochures, books, magazines, other publications, CDs, DVDs, tapes and all other printed and electronic forms and media throughout the world created in connection with Employee’s employment with Insight (“Images”), at any time during or after the period of Employee’s employment by Insight. Employee acknowledges that Insight has an unconditional, non-exclusive, royalty-free, right to use, reproduce, edit, market, store, distribute, communicate, transmit, and promote these Images (collectively, “Permitted Uses”), or any portion thereof, in connection with Insight or any of its products or services.  

d.Maintenance of Records.  Employee agrees to keep and maintain adequate and current written records of all Creations made by him or her, in the form of notes, sketches, drawings and other notations which may be specified by Insight, which records shall be available to and remain the sole property of an Insight Company or Companies at all times.

e.Disclosure of Creations and Filings.  Employee agrees to promptly disclose to Insight in writing all Creations created or otherwise developed by him or her alone or in conjunction with others, as well as any and all patent applications or copyright registrations filed by him or her during and within one (1) year after termination of employment with an Insight Company. Employee further agrees to disclose to Insight promptly any idea that he or she does not believe to be a Creation, but which is conceived, developed, or reduced to practice by Employee (alone or with others) while he or she is employed by an Insight Company or during the one-year period following termination of employment. Employee will disclose the idea, along with all information and records pertaining to the idea, and an Insight Company or Companies will examine the disclosure in confidence to determine if in fact it is a Creation subject to this Agreement.

f.Post-Termination Period.  Employee agrees that any invention, discovery, idea, writing, concept, design, process, work of authorship, client list, patent, copyright or trademark or similar item or improvement shall be presumed to be a Creation if it is conceived, developed, used, sold, exploited or reduced to practice by him or her or with his or her aid within one (1) year after termination of employment with an Insight Company.  Employee can rebut this presumption if he or she proves that invention, discovery, idea, writing, concept, design, process, work of authorship, client list, patent, copyright, trademark or similar item or improvement is not a Creation covered by this Agreement.

g.Assistance.  During and after termination of employment by an Insight Company, Employee agrees that he or she will give Insight and Insight Companies all assistance it or they reasonably require (at Insight’s expense) to file for, maintain, protect and enforce an Insight Company or Companies’ patents, copyrights, trademarks, trade secrets and other rights in Creations, in any and all countries.  To that end, Employee will sign documents and do other acts that any Insight Company may determine necessary or desirable including, without limitation, giving evidence and testimony in support of the Insight Companies’ rights hereunder.

h.Intellectual Property Rights in Works of Authorship.  Employee acknowledges and agrees that any intellectual property rights in Creations that are works of authorship belong to Insight or the Insight Companies and are “works made for hire” within the definition of section 101 of the United States Copyright Acts of 1976, Title 17, United States Code. Insight, the Insight Companies or any of their direct or indirect licensees shall not be obligated to (i) distribute any works made for hire; or (ii) designate Employee as author of any design, software, firmware, related documentation, or any other work of authorship when distributed publicly or otherwise.

 

 
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i.Third Parties’ Rights.  Employee agrees not to use or disclose to an Insight Company, or induce or cause any of them to use any intellectual property belonging to a third party (i.e., other than Employee or an Insight Company) without the prior written consent of the third party.  Employee agrees to indemnify, defend, and hold harmless Insight Company and Companies, against any claims or losses caused by Employee’s use or disclosure of a third party’s intellectual property.

j.Use of Other Matters.  Employee agrees that if Employee uses his own invention, discovery, idea, concept, design, process, work of authorship, client list, development, improvement (whether subject to copyright or patent protection and whether or not reduced to practice by Employee), patent, copyright, or trademark, in the performance of Employee’s job with Insight, by doing so Employee automatically confers to Insight and the Insight Companies an unrestricted and irrevocable license to use freely all such matter(s) for its own benefit.

5.Non-Competition During Employment.

a.Definitions.

“Competing Business.”  “Competing Business” shall mean any information technology reseller, provider or seller of information technology services, or any entity that is engaged in or is preparing to engage in any business which involves the sale, lease, or provision of information technology products or services that are available from Insight or an Insight Company and that are marketed and sold to companies, businesses, non-profit organizations, governmental entities, and educational institutions or school districts.  

“Restricted Territory.”  Employee and Insight understand and agree that the business of Insight Companies is not geographically restricted and is often unrelated to the physical location of Insight Companies’ facilities or the physical location of any Competing Business, due to extensive use of the Internet, telephones, electronic mail, facsimile transmissions and other means of electronic information, service delivery, and product distribution.  Accordingly, Insight and the Insight Companies have a protectable business interest in, and the parties intend the “Restricted Territory” to encompass, each and every location in which Employee could engage in Competing Business in the states in the United States in which an Insight Company has customers, employees, suppliers, distributors, business partners, or operations, including, but not limited to, the states in which clients are located and in which Employee provided services, sold goods or services, or otherwise performed work during the 12-month period preceding the termination of Employee’s employment at Insight.  If, but only if, this Restricted Territory is held by a court to be invalid on the grounds that it is unreasonably broad, then the Restricted Territory shall include the state or states in which Employee worked for Insight, as well as Arizona, Illinois, Texas, and Florida.

b.Non-Competition.

Employee recognizes that the Insight Companies have legitimate and protectable business interests in protecting their investments in, and their relationships with, their employees, clients, and potential clients.  To protect these business interests, Employee agrees that, while Employee is employed by an Insight Company, Employee agrees that, other than for the Insight Companies, Employee will not, either directly or indirectly, either as a principal, agent, officer, director, proprietor, employee, consultant, independent contractor, employer, investor, lender, partner or shareholder (other than as an owner of 2% or less of the stock of a public corporation) or in any other capacity, become employed or otherwise engage in any manner in a Competing Business in a same or similar capacity as Employee’s position(s) during his or her employment with an Insight Company or Companies.

 

 
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6.Non-Competition After Employment.

Employee recognizes that the Insight Companies have legitimate and protectable business interests in protecting their investments in, and their relationships with, their employees, clients, and potential clients.  To protect these business interests, Employee agrees as the Principal Accounting Officer that for a period of fifteen months following the termination of Employee’s employment with Insight, or, if the period of fifteen months is determined by a court to be unreasonably broad, then for a period of twelve months following the termination of Employee’s employment with Insight, Employee will not, without prior written consent of Insight, engage in Competing Business in the Restricted Territory.

7.Non-Solicitation Covenants.

Employee recognizes that the Insight Companies have legitimate and protectable business interests in protecting their investments in, and their relationships with, their employees, clients, and potential clients.  To protect these interests, Employee agrees:

	
 
	
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Non-Solicitation of Insight Customers

If Employee is a Senior Vice President, for a period of eighteen months following the termination of Employee’s employment with Insight, Employee will not directly or indirectly encourage, induce, or solicit business from any client of an Insight Company with whom Employee had contact, for whose account Employee worked, or about whom Employee has knowledge of Trade Secrets, Confidential and Proprietary Information or Third-Party Information by reason of Employee’s employment with an Insight Company within the last twelve months of his or her employment with Insight, with the purpose, effect or potential of: (i) selling (or assisting another person’s selling) or providing such client products or services that are the same, similar, or related to products or services provided by an Insight Company; or (ii) in any way reducing the amount of business such client transacts with an Insight Company: (i) with whom or with which Employee communicated for the purpose of offering or attempting to sell the individual or entity products or services through an Insight Company within the last six months of Employee’s employment or (ii) about whom Employee learned Trade Secrets, Confidential and Proprietary Information and/or Third-Party Information within the last six months of Employee’s employment.  During Employee’s employment with an Insight Company, Employee shall not engage in the activities described in this Section 7(a), on behalf of any individual or entity other than the Insight Companies.

	
 
	
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Non-Solicitation of Insight Employees

During Employee’s employment with Insight and for a period of twelve months following the termination of Employee’s employment with an Insight Company, Employee will not directly or indirectly encourage, induce, or otherwise solicit, directly or indirectly, any employee of an Insight Company with whom the Employee worked to terminate his or her employment or otherwise interfere with the business relationship of an Insight Company with its employees.

8.Enforcement of Covenants.

Employee agrees that the breach by Employee of this Agreement could not reasonably or adequately be fully compensated in damages in an action at law, and that Insight shall therefore be entitled, without the necessity of showing any actual damages or that money damages would not afford an adequate remedy, and without the necessity of posting any bond or other security, to injunctive relief which may include, but shall not be limited to, restraining Employee from rendering any service or making any disclosure that would breach this Agreement.  However, no remedy conferred by any of the specific provisions of this Agreement (including this paragraph) is intended to be exclusive of any other remedy and each and every remedy shall be cumulative and shall be in addition to every other remedy given hereunder, or now or hereafter existing 

 

 
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in law or in equity, by statute or otherwise.  The election of any one or more remedies by Insight shall not constitute a waiver of the right to pursue other available remedies.  

In the event that it is necessary for such injunctive relief to address a breach of this Agreement, and an Insight Company is successful in obtaining the same, the duration of the restrictive covenant shall be tolled and computed from the date such relief is granted, reduced by the time period between termination of Employee’s employment, for any reason by either party, and the date of the first breach of the Agreement by Employee.

Employee also agrees that the restrictive covenants contained in Sections 2, 6 and 7 are justified by legitimate business interests, including goodwill, trade secrets, valuable confidential business information, substantial relationships with prospective or existing clients and extraordinary and specialized training, and that the covenants contained in Sections 2, 6 and 7 are reasonably necessary to protect these legitimate business interests.  To the extent that any of restrictive covenants contained herein conflict with any of Employee’s obligations contained in any separate agreements that Employee signed with an Insight Company regarding the treatment of confidential or proprietary information of the Company or one of its subsidiaries or affiliated companies or containing any restrictive covenants, including, but not limited to, any covenants not to solicit clients, customers, or employees, or not to compete, you acknowledge and agree that the Company may resolve any such conflicts by electing to enforce any restrictive covenants to the fullest extent allowed under applicable law.  If any of the restrictive covenants contained herein are deemed by a court of competent jurisdiction to be unenforceable under applicable law, then the restrictive covenants previously agreed to by you and the Company shall remain enforceable with respect to each such obligation.

Employee further acknowledges that: (i) in the event Employee’s employment terminates for any reason, Employee will be able to earn a livelihood without violating the foregoing restrictions in Sections 2, 6, and 7, and (ii) Employee’s ability to earn a livelihood without violating such restrictions is a material condition to Employer’s entry into this Agreement and willingness to employ Employee.

9.Termination.

Employee further understands and agrees that the restrictions in Section(s) 2, 6, and 7 of this Agreement shall apply upon termination of employment regardless of the reason or cause, if any, and whether with or without prior notice, and those restrictions apply regardless of whether Employee or Insight terminated employment.

10.Effect of Change in Position; Third-Party Beneficiary.

If Employee is promoted or otherwise changes his or her position, salary, commissions, bonuses and/or benefits during Employee’s employment or Employee becomes an employee of another Insight Company, this Agreement shall remain in effect, including the post-employment restrictive covenants set forth herein, unless a new agreement is entered or this Agreement is modified by the parties.  Employee and Insight understand and agree that the Insight Companies are expressly intended to be third-party beneficiaries of this Agreement with full rights to enforce the obligations, rights, undertakings, and commitments under this Agreement.

11.Notification of Existence of Agreement.

Employee agrees that in the event that Employee is offered employment with a Competing Business at any time during the existence of this Agreement, or such other period in which post-employment obligations of this Agreement apply, Employee shall immediately advise the Competing Business of the existence of this Agreement and shall immediately provide the Competing Business with a copy of this 

 

 
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Agreement.  Notwithstanding the foregoing, Insight may, if in its sole discretion it determines that it is appropriate to do so, notify the Competing Business regarding the existence of this Agreement and provide the Competing Business with a copy of this Agreement.

12.Entire Agreement.

This Agreement contains the entire agreement of the parties concerning the subject matter hereof and there are no other promises or conditions concerning the subject matter hereof in any other agreement whether oral or written.  This Agreement supersedes any prior written or oral agreements between the parties concerning the subject matter hereof.

13.Amendment.

This Agreement may be amended only if the amendment is made in writing and is signed by both parties.

14.Severability.

If any specific provisions of this Agreement are held by a court of competent jurisdiction to be invalid or unenforceable for any reason, the remaining provisions shall continue to be valid and enforceable.  If a court finds that any provision of this Agreement is invalid or unenforceable, but that by limiting such provision it would become valid or enforceable, then such provision shall be deemed to be written, construed, and enforced as so limited.

15.Attorneys’ Fees.

In any action seeking, in whole or in part, enforcement of the Agreement, challenging the enforceability of a restrictive covenant under this Agreement, or for a breach or threatened breach of this Agreement, the prevailing party will be entitled to recover its attorneys’ fees and costs.

16.Waiver of Rights.

If, on one or more occasions, either party fails to insist that the other party perform any of the terms of this Agreement, such failure shall not be construed as a waiver by such party of any past, present, or future right granted under this Agreement, and the obligations of both parties under this Agreement shall continue in full force and effect.  Further, no failure on the part of an Insight Company to seek to enforce a similar agreement with other Insight or Insight Company employees shall constitute a waiver of its rights under this Agreement.

17.Applicable Law.

This Agreement shall be governed by the laws of the State of Arizona without regard to its conflict of law principles.

18.Successors and Assigns – Binding Effect.

This Agreement shall not be assignable by Employee.  The rights and obligations of the parties under this Agreement shall be binding upon and shall inure to the benefit of the Insight Companies, and their successors and assigns.  This Agreement may be enforced by Insight’s assignee or successor.

 

 
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19.Voluntary Agreement – Counterparts.

Employee represents and warrants that Employee has read and understands this Agreement in its entirety, that Employee understands that Employee may, if Employee desires, obtain advice from legal counsel of Employee’s choice in order to advise him or her on any and all provisions of this Agreement, and that Employee has freely and voluntarily entered into this Agreement.

 

EMPLOYEE:INSIGHT:

 

/s/ Jeffery ShumwayBy: /s/ Kenneth Lamneck

Employee Signature

 

Jeffery ShumwayTitle: Chief Executive Officer

Print Name

 

May 6, 2019Date: May 6, 2019

Date

 

 

 
A-11ovv-ex1046_3101.htm

Exhibit 10.46

CHANGE IN CONTROL AGREEMENT

This Change in Control Agreement (this “Agreement”) is made effective as of January 24, 2020 between Ovintiv Inc., a corporation incorporated under the laws of the State of Delaware (the “Corporation”),  and Douglas J. Suttles of the City of Denver in the State of Colorado (the “Executive”).

AND WHEREAS the Board of Directors of the Corporation (the “Board”) has determined that it is in the best interests of the Corporation and its shareholders to assure that the Corporation will have the continued dedication of the Executive, notwithstanding the possibility or threat of a Change in Control (as defined herein);

AND WHEREAS 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 Corporation 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 that ensure that the compensation and benefits expectations of the Executive will be satisfied and that provide the Executive with compensation and benefits arrangements that are competitive with those of other companies;

AND WHEREAS to accomplish these objectives, the Board has caused the Corporation to enter into this Agreement;

NOW THEREFORE, in consideration of the covenants and agreements hereinafter set forth and for other good and valuable consideration (the receipt and sufficiency whereof are hereby acknowledged by each of the Executive and the Corporation (each, a “Party” and collectively, the “Parties”), the Parties hereby mutually covenant and agree as follows:

	
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Term of Agreement

	
1.1
	
Term. This Agreement shall commence on the date hereof and shall continue in effect during the Executive’s employment with the Corporation as an executive officer until such time as there shall occur a Change in Control of the Corporation and for a period of two years following the Effective Date (as defined below) of such Change in Control (the “Term”); provided, however, that the payment of compensation and benefits to the Executive under this Agreement may continue beyond the end of the Term in accordance with the applicable provisions of this Agreement.

	
2.0
	
Definitions

For purposes of this Agreement, the following definitions shall apply:

	
2.1
	
“Affiliate”: means any corporation, partnership or other entity in which the Corporation, directly or indirectly, has a majority ownership interest or which controls, or is under common control with, the Corporation. 

 

	
2.2
	
“Cause” means:

	
 
	
(a)
	
the willful and continued failure by the Executive to substantially perform his or her duties with the Corporation or an Affiliate after a written demand for substantial performance is delivered to the Executive by the Board, which demand specifically identifies the manner in which the Board believes the Executive has not substantially performed his or her duties, and the Executive fails to correct such failure to perform his or her duties within thirty (30) days after such written demand is delivered to the Executive; provided, however, that if such failure occurs after the occurrence of an event or circumstance which would entitle the Executive to resign for Good Reason, such alleged failure shall not constitute the basis for “Cause”; or

	
 
	
(b)
	
the willful engaging by the Executive in conduct which is demonstrably and materially injurious to the Corporation or an Affiliate, monetarily or otherwise. 

For purposes of this Section 2.2, (i) any action by the Executive or any failure on the Executive’s part to act, shall be deemed “willful” only when done (or omitted to be done) by the Executive not in good faith and only if, when done (or omitted to be done), the Executive had or ought to have had the reasonable belief that the Executive’s action or omission would not be in the best interests of the Corporation or an Affiliate, and (ii) if the Corporation is not the ultimate parent corporation of the group that includes the Corporation and all of its Affiliates after a Change in Control, references to the “Board” shall mean the board of directors (or equivalent governing body) of the ultimate parent entity of such group. 

Notwithstanding the foregoing, the Executive shall not be deemed to have been terminated for Cause unless and until (A) the Executive has been provided with the opportunity, after reasonable advance notice, to appear before the Board, together with the Executive’s legal counsel, prior to a determination by the Board regarding the existence of “Cause”, and (B) there shall have been delivered to the Executive a copy of a resolution duly adopted by a vote of at least two-thirds (2/3) of the members of the Board, finding that in the good faith opinion of the Board, the Executive was guilty of conduct set forth in clause (a) or (b) of this Section 2.2 and specifying the particulars thereof. A determination of “Cause” made by the Board that is challenged by the Executive in a court of competent jurisdiction shall be subject to “de novo” standard of review by such court.

	
2.3
	
“Change in Control” means:

	
 
	
(a)
	
any individual, partnership, firm, corporation, association, trust, unincorporated organization or other entity, or any persons acting jointly or in concert with the foregoing (each, a “Person”), is or becomes the beneficial owner directly or indirectly of 30% or more of either (A) the then-outstanding shares of common stock of the Corporation (the “Outstanding Corporation Common Stock”) or (B) the combined voting power of the then-outstanding voting securities of the Corporation entitled to vote generally in the election of directors (the “Outstanding Corporation Voting Securities”); provided, however, that, for purposes of this Section 2.3(a), the following acquisitions of shares or other voting securities of the Corporation shall not constitute a Change in Control: (i) any acquisition directly from the Corporation, (ii) any acquisition made by the Corporation, (iii) any acquisition by any employee plan (or related trust) sponsored or maintained by the Corporation or any of its 

 

	
 
		
subsidiaries, or (iv) any acquisition pursuant to a transaction that complies with Sections 2.3(b)(1), 2.3(b)(2) and 2.3(b)(3);

	
 
	
(b)
	
consummation of a reorganization, merger, statutory share exchange or consolidation or similar transaction involving the Corporation or any of its subsidiaries, a sale or other disposition of all or substantially all of the assets of the Corporation, or the acquisition of assets or securities of another entity by the Corporation or any of its subsidiaries (each, a “Business Combination”), in each case unless, following such Business Combination, (1) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding Corporation Common Stock and the Outstanding Corporation Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of the then-outstanding shares of common stock (or, for a non-corporate entity, equivalent securities) and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors (or, for a non-corporate entity, equivalent governing body), as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity that, as a result of such transaction, owns the Corporation or all or substantially all of the Corporation’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Corporation Common Stock and the Outstanding Corporation Voting Securities, as the case may be, (2) no Person (excluding any entity resulting from such Business Combination or any employee plan (or related trust) of the Corporation or of such entity resulting from such Business Combination) beneficially owns, directly or indirectly, 30% or more of, respectively, the then-outstanding shares of common stock (or, for a non-corporate entity, equivalent securities) of the entity resulting from such Business Combination or the combined voting power of the then-outstanding voting securities of such entity, except to the extent that such ownership existed prior to the Business Combination, and (3) at least a majority of the members of the board of directors (or, for a non-corporate entity, equivalent governing body) of the entity resulting from such Business Combination were members of the Incumbent Board (as defined below) at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination;

	
 
	
(c)
	
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 Corporation'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 was a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a person or entity other than the Board; or

	
 
	
(d)
	
approval by the shareholders of the Corporation of a complete liquidation or dissolution of the Corporation.

 

For purposes of this Section 2.3:

	
 
	
(i)
	
the term “acting jointly or in concert” shall be interpreted in accordance with Section 159 of the Securities Act (Alberta), as amended; and

	
 
	
(ii)
	
the term “beneficial ownership” shall be interpreted in accordance with Sections 5 and 6 of the Securities Act (Alberta) and “beneficial owner” shall have a corresponding meaning, except that for purposes of this Agreement, options and convertible securities granted by the Corporation to employees, officers or directors shall not be included in determining the percentage of beneficial ownership of any Person.

	
2.4
	
“Effective Date” means the date of the occurrence of a Change in Control.

	
2.5
	
“Good Reason” means the occurrence of any of the following on or after a Change in Control, unless the Executive shall have given express written consent thereto:

	
 
	
(a)
	
Changed Status, Position, Authorities, Duties or Responsibilities. The occurrence of any of the following:

	
 
	
(i)
	
any adverse change to the Executive’s status or position as in effect immediately prior to the Change in Control, including, without limitation, the Executive ceasing to serve as the sole chief executive officer of a publicly traded company, reporting directly and exclusively to the board of directors of a publicly traded company; and

	
 
	
(ii)
	
assignment to the Executive of any authorities, duties or responsibilities materially inconsistent with the Executive’s position and status as of immediately prior to the Change in Control; and 

	
 
	
(iii)
	
any diminution in the Executive’s authorities, duties or responsibilities from those in effect immediately prior to the Change in Control; or

	
 
	
(b)
	
Reduced Salary. A reduction by the Corporation in the Executive’s annual base salary as in effect immediately prior to the Change in Control; or

	
 
	
(c)
	
Relocation. The Corporation requiring the Executive to be based more than 50 miles from where the Executive is based immediately prior to the Change in Control, except for: (i) required travel on the Corporation’s business to an extent substantially consistent with the Executive’s business travel obligations in the ordinary course of business immediately prior to the Change in Control; or (ii) if the Executive has been relocated or repatriated by the Corporation prior to the Change in Control, such relocation as may be required by applicable law or performed in accordance with an agreement (whether written or unwritten) entered into between the Corporation (or an Affiliate) and the Executive prior to the Change in Control; or

	
 
	
(d)
	
Incentive Compensation Plans. The occurrence of any of the following: (i) a material reduction by the Corporation in the Executive’s (A) annual incentive compensation target or maximum opportunity, or (B) long-term incentive compensation target or maximum 

 

	
 
		
opportunity (measured based on grant date fair value of any equity-based awards), in each case, as in effect immediately prior to the Change in Control, or (ii) a change in the performance conditions, vesting, or other material terms and conditions applicable to annual and/or long-term incentive compensation awards granted to Executive after the Change in Control which would have the effect of materially reducing the Executive’s aggregate potential incentive compensation from the level in effect immediately prior to the Change in Control; or

	
 
	
(e)
	
Pension Plan, Benefit Plans and Perquisites. The failure by the Corporation to continue to provide the Executive:

	
 
	
(i)
	
with pension and other retirement benefits substantially similar to those provided to the Executive under the applicable pension and retirement plans and arrangements of the Corporation as of immediately prior to the Change in Control; or

	
 
	
(ii)
	
with benefits substantially similar to the benefits provided to the Executive as of immediately prior to the Change in Control under the Corporation’s life insurance, medical, health and accident, disability or investment plans; or

	
 
	
(iii)
	
with executive perquisites substantially similar to the material perquisites provided to the Executive by the Corporation as of immediately prior to the Change in Control; or

	
 
	
(iv)
	
with the number of paid vacation days to which the Executive is entitled in accordance with the normal vacation policy of the Corporation in effect in respect of the Executive as of immediately prior to the Change in Control; or

	
 
	
(f)
	
Deferred Compensation. The failure by the Corporation to pay the Executive (i) any portion of the Executive’s then current compensation, except pursuant to an across-the-board compensation deferral similarly affecting all senior executives of the Corporation and required by applicable law or (ii) any installment of deferred compensation at the time such installment is due under any deferred compensation program of the Corporation; or

	
 
	
(g)
	
No Assumption by Successor. The failure of the Corporation to obtain a satisfactory agreement from a successor to assume and agree to perform this Agreement as contemplated by Section 7.1 hereof.

	
3.0
	
Notice of Termination; Date of Termination

	
3.1
	
Notice of Termination. Any termination of the Executive’s employment either by the Executive for Good Reason or by the Corporation for Cause or without Cause, as applicable, shall be communicated by written Notice of Termination to the Executive or to the Corporation, as the case may be, in accordance with Section 8.0 hereof.

	
3.2
	
Content of Notice of Termination. The “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon by the Executive or the Corporation, as the case may be, and shall set forth in reasonable detail the facts and circumstances claimed as the basis for the Executive terminating the Executive’s employment or the Corporation terminating 

 

		
the Executive’s employment, as the case may be. The Executive’s failure to set forth in the Notice of Termination any fact or circumstance which contributes to a showing of “Good Reason” shall not result in a waiver of the Executive’s rights hereunder or preclude the Executive from subsequently asserting such fact or circumstance in enforcing the Executive’s rights hereunder.

	
3.3
	
Date of Termination. The “Date of Termination” shall mean (a) if the Executive’s employment is terminated by the Corporation without Cause or by the Executive for Good Reason, the date specified in the Notice of Termination (which, in the case of termination by the Executive for Good Reason, shall be not more than sixty (60) days following the date such Notice of Termination is given), or (b) if the Executive’s employment is terminated by the Corporation for Cause, the date on which the Board resolution referenced in Section 2.2 is delivered to the Executive.

	
3.4
	
Notice Required. For the purposes of this Agreement, any purported termination of the Executive’s employment which is not effected pursuant to a Notice of Termination satisfying the requirements of Section 3.2 hereof shall not be effective.

	
4.0
	
Compensation and Benefits following Change in Control

Upon the termination of the Executive’s employment by the Corporation without Cause or by the Executive for Good Reason, in accordance with the terms of this Agreement, in each case, on or after the Effective Date and prior to the end of the Term, the Corporation shall cause to be provided to the Executive, the following payments and benefits:

	
 
	
(a)
	
Accrued Obligations. The Corporation shall pay the Executive, in cash, in a lump sum, on the thirtieth (30th) day following the Date of Termination (the “Payment Date”), the sum of (i) the Executive’s full base salary through the Date of Termination at the rate in effect at the time the Notice of Termination is given (disregarding any reduction thereto that constitutes Good Reason), (ii) all accrued but unused vacation determined as of the Date of Termination, determined based upon the Executive’s Severance Salary Rate (as defined below) and the Corporation’s vacation policy in effect on the Date of Termination (or, if more favorable to the Executive, the vacation policy in effect as of immediately prior to the Effective Date), (iii) the Executive’s annual bonus for the fiscal year immediately preceding the fiscal year in which the Date of Termination occurs, if such bonus has been determined but not paid as of the Date of Termination, and (iv) the Executive’s business expenses that are reimbursable pursuant to the applicable policy of the Corporation as in effect on the Date of Termination but have not been reimbursed by the Corporation as of the Date of Termination.

	
 
	
(b)
	
Severance Payment, Severance Period and Severance Salary Rate. The Corporation shall pay to the Executive, on account of both compensation in lieu of notice and loss of office, on the Payment Date, in cash, in a lump sum, on the Payment Date, a severance payment (the “Severance Payment”) equal to the amount of base salary the Executive would have earned had he continued to be employed until the end of the twenty-fourth (24th) full calendar month following the Date of Termination (the “Severance Period”) assuming that the Executive’s rate of monthly base salary during the Severance Period would be equal to the highest monthly rate of base salary which was payable to the Executive by the Corporation or an Affiliate during the twenty-four (24)-month period immediately preceding the Date of 

 

	
 
		
Termination (disregarding any reduction thereto that constitutes Good Reason) (the “Severance Salary Rate”).

	
 
	
(c)
	
Annual Incentive Plans. The Corporation shall pay to the Executive, in cash, in a lump sum, on the Payment Date, a payment equal to: (i) two times the average of the annual bonuses paid to the Executive by the Corporation in respect of the three complete fiscal years of the Corporation immediately preceding the Effective Date (or, for any such complete fiscal year for which the Executive was not paid an annual bonus, the Executive’s target bonus as in effect immediately prior to the Effective Date) (the “Average Bonus”), plus (ii) if the Date of Termination is not the last day of a fiscal year, a prorated bonus payment equal to the Average Bonus multiplied by a fraction, the numerator of which is the number of days which have elapsed in the fiscal year in which the Date of Termination occurs and the denominator of which is the total number of days in such fiscal year. 

	
 
	
(d)
	
Retirement and Investment Plans. The Corporation shall pay the Executive, in cash, in a lump sum, on the Payment Date, a payment equal to the maximum contribution that the Corporation or a subsidiary thereof would have been required to make on behalf of the Executive to the Corporation’s retirement or investment plans in which the Executive participates as of immediately prior to the Effective Date (other than any amount covered by Section 4.0(e)) if the Executive had remained fully employed during the Severance Period and elected to have the Corporation or a subsidiary thereof match the Executive’s contributions to such plans, determined as if the Executive continued to make contributions to such plans at a rate equal to the contributions actually made by the Executive under such plans in the last complete calendar year immediately preceding the Date of Termination.

	
 
	
(e)
	
Pension Benefits. The Corporation shall pay to the Executive the maximum contribution that the Corporation or a subsidiary thereof would have been required to make on behalf of the Executive under the U.S. Retirement Plan at the percentage of salary specified therein in respect to the Severance Period based on:

	
 
	
 (i) 
	
The Executive’s annual base salary (using the Severance Salary Rate) if she were fully employed until the end of the 24th calendar month following the Date of Termination; and

	
 
	
(ii) 
	
The lesser of the Average Bonus and 67% of the amount of the annual base salary (using the Severance Salary Rate) the Executive would have earned had she continued to be employed until the end of the 24th calendar month following the Date of Termination.

This payment will be made to the Executive in a lump sum on the Payment Date.

	
 
	
(f)
	
Equity Awards. Each outstanding equity and equity-based compensation award granted by the Corporation to the Executive shall be treated in accordance with the terms of the plan and award agreement under which it was originally granted.

	
 
	
(g)
	
Insurance Benefits. The Corporation shall continue to provide the Executive with the same level of life, disability, accident, dental and health insurance benefits the Executive was receiving or entitled to receive from the Corporation immediately prior to the Date of 

 

	
 
		
Termination until the end of the Severance Period. The contributions or premiums required to be paid by the Executive under such programs shall be payable by the Executive to the Corporation or to the insurer, as applicable, on the same basis as if the Executive continued to be employed during the Severance Period.

	
 
	
(h)
	
Career Counselling. At the Executive’s request, the Corporation shall provide the Executive with career counselling services, at a maximum cost to the Corporation of $15,000 per annum, until the Executive obtains subsequent employment or establishes the Executive’s own business activity or the end of the Severance Period, whichever is earliest. The Executive shall be entitled to obtain such services from the recognized professional career counselling firm of the Executive’s choice in the major metropolitan area in or nearest to where the Executive resides at the time the Executive begins to use such services. 

	
 
	
(i)
	
Annual Allowance. The Corporation shall pay to the Executive, in cash, in a lump sum, on the Payment Date an amount equal to two times the annual allowance to which the Executive is entitled as of the date of the Date of Termination (or, if higher, as of immediately prior to the Effective Date).

	
 
	
(j)
	
Financial Counselling. The Corporation shall, during the Severance Period, continue to provide the Executive with the same financial counselling benefits as those to which the Executive was entitled as of immediately prior to the Date of Termination (or, if more favorable to the Executive, as of immediately prior to the Effective Date). Such services shall be provided throughout the Severance Period, including the preparation of the Executive’s tax return(s) for the tax year during which the Severance Period ends. 

	
 
	
(k)
	
Executive Medical. The Corporation shall continue to provide the Executive with the same executive physical examination benefits as those to which the Executive was entitled as of immediately prior to the Date of Termination (or, if more favorable to the Executive, as of immediately prior to the Effective Date). Such benefits shall be provided for the duration of the Severance Period. 

	
 
	
(l)
	
Professional Membership Fees. The Corporation shall pay the Executive, in cash, in a lump sum, on the Payment Date, an after-tax amount equal to two times the amount reimbursed or paid by the Corporation (separate from the annual allowance) in respect of membership fees for membership in professional organizations related to the Executive’s position and duties with the Corporation for the year preceding the year in which the Date of Termination occurs (or, if greater, preceding the year in which the Effective Date occurs).

	
5.0
	
Legal Fees and Expenses

The Corporation shall pay the Executive's actual legal or professional fees and expenses incurred by the Executive in seeking to obtain or enforce any right or benefit provided by this Agreement up to US$100,000 (and, if a court or other tribunal finds in favor of the Executive, any such fees or expenses that are in excess of US$100,000). Such fees or expenses shall be reimbursed by the Corporation reasonably promptly following receipt of a copy of any invoice from the Executive evidencing the payment by the Executive of such fees or expenses. If such fees or expenses are paid in Canadian dollars, the application of the US$100,000 cap under this Section 5.0 shall be 

 

applied by converting the reimbursed amounts to U.S. dollars based on the spot exchange rate at the time of the reimbursement.

	
6.0
	
Entire Agreement

	
6.1
	
This Agreement, including schedules hereto, constitutes the entire agreement between the Parties hereto concerning change in control benefits and obligations and supersedes all prior agreements or understandings, including the Prior Agreement, except that each outstanding equity and equity-based compensation award granted by the Corporation to the Executive shall be treated in accordance with the terms of the plan and award agreement under which it was granted, including any such terms that relate to change in control benefits. 

	
6.2
	
The Parties acknowledge and agree that this Agreement supersedes and replaces the Change in Control Agreement between Encana Corporation and the Executive dated February 14, 2018 (the “Prior Agreement”) in its entirety, which such Prior Agreement shall be of no further force and effect as of the date hereof.

	
7.0
	
Successors; Binding Agreement

	
7.1
	
Assumption by Successors. The Corporation will require any successor (whether direct or indirect, and whether by purchase, merger, consolidation or otherwise) to (a) all or substantially all of the business and/or assets of the Corporation in a transaction that constitutes a Change in Control, or (b) on or after the Effective Date and prior to the end of the Term, to the business in connection with which the Executive’s services are principally performed after a Change in Control in circumstances where the Executive’s employment is transferred to such successor, to expressly assume and to agree to perform this Agreement in the same manner and to the same extent as the Corporation, as if no such succession had taken place. Failure of the Corporation to obtain such assumption and agreement prior to the effectiveness of any such succession shall constitute Good Reason for purposes of this Agreement. As used in this Agreement, “Corporation” shall mean the Corporation as defined herein 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.

	
7.2
	
Assignment; Binding Agreement. 

	
 
	
(a)
	
This Agreement is personal to the Executive, and, without the prior written consent of the Corporation, shall not be assignable by the Executive. This Agreement shall inure to the benefit of and be enforceable by the Executive and the Executive’s legal representatives and, and if the Executive should die while any amount remains due to the Executive under this Agreement, such amount shall be paid in accordance with the terms of this Agreement to the Executive’s legatee, if there is no such legatee, to the Executive’s estate.

	
 
	
(b)
	
Except as provided in Section 7.1, without the prior written consent of the Executive, this Agreement shall not be assignable by the Corporation. This Agreement shall inure to the benefit of and be binding upon the Corporation and its successors and permitted assigns. 

 

	
8.0
	
Notices

	
8.1
	
Notices. For purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given (a) when hand delivered, (b) upon confirmation of receipt when sent by facsimile or email, or (c) on the third business day after having been sent by registered mail, postage prepaid, as follows:

If to the Corporation:

Ovintiv Inc. 
370 17th Street, Suite 1700

Denver, CO 80202
Attention: Executive Vice-President, Corporate Services
Facsimile: (303) 623-2400

 

If to the Executive:

At the Executive’s most recent address, facsimile number, or email address, as applicable, on file with the Corporation.

Each of the Corporation and the Executive may from time to time change its contact information for notice by notice to the other Party given in the manner aforesaid.

	
9.0
	
Section 409A Compliance

	
9.1
	
To the extent that Section 409A of the U.S. Internal Revenue Code of 1986, as amended (the “Code”) (together with any related regulations or other guidance promulgated by the U.S. Department of the Treasury or the Internal Revenue Service, “Section 409A”) is applicable to the Executive, this Agreement and any payment, distribution or other benefit hereunder is intended to comply with the requirements of Section 409A or an applicable exemption or exclusion therefrom, and shall be interpreted and administered in accordance with such intent in all respects; provided, that for the avoidance of doubt, this provision shall not be construed to require a gross-up payment in respect of any taxes, interest or penalties imposed on Executive as a result of Section 409A.

	
9.2
	
To the extent Section 409A is applicable to the Executive:

	
 
	
(a)
	
The Executive shall not be deemed to have terminated employment for purposes of any payment or benefit under this Agreement that constitutes non-qualified deferred compensation unless and until a separation from service (within the meaning of Treasury Regulation Section 1.409A-1(h)) has occurred. If the Executive is a “specified employee” under Section 409A, no payment, distribution or other benefit provided pursuant to this Agreement constituting non-qualified deferred compensation (within the meaning of Treasury Regulation Section 1.409A-1(b)) that is required to be delayed to comply with Section 409A(a)(2)(B)(i) shall be provided before the date that is six months after the date of the Executive’s separation from service (or, if earlier than the end of such six-month period, the date of death of the specified employee). Any payment, distribution or other 

 

	
 
		
benefit that is delayed pursuant to the prior sentence shall be paid on the first business day following the six-month anniversary of the separation from service.

	
 
	
(b)
	
In no event may the Executive, directly or indirectly, designate the calendar year of any payment to be made under this Agreement. 

	
 
	
(c)
	
Each payment under this Agreement shall be treated as a separate payment for purposes of Section 409A.

	
 
	
(d)
	
All reimbursements and in-kind benefits provided under this Agreement shall be made or provided in accordance with the requirements of Section 409A, including, where applicable, the requirement that (i) any reimbursement shall be for expenses incurred during the time period specified in this Agreement, (ii) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during a calendar year may not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year, (iii) the reimbursement of an eligible expense will be made not later than the last day of the Executive’s taxable year following the taxable year in which such expense was incurred, and (iv) the right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit. Notwithstanding anything in this Agreement to the contrary, with respect to payment of legal fees and expenses pursuant to Section 5.0 hereof, if the court or other tribunal has not yet found in favor or against the Executive prior to the last day of the Executive’s taxable year following the taxable year in which such fees and expenses were incurred, such fees and expenses will be paid on the last day of such taxable year following the taxable year in which such fees and expenses were incurred. If such court or other tribunal does not ultimately find in favor of the Executive, the Executive will repay to the Corporation as soon as practicable, but in no event more than ninety (90) days after the court or other tribunal renders its ruling, any amounts paid or reimbursed pursuant to the prior sentence that would not have been paid or reimbursed pursuant to Section 5.0 but for the prior sentence.

	
10.0
	
Reduction of Certain Payments. This Section 10.0 shall apply to the Executive only if and to the extent that Section 4999 of the Code is applicable to the Executive.

	
10.1
	
Anything in this Agreement to the contrary notwithstanding, if the Accounting Firm (as defined below) shall determine that receipt of all Payments (as defined below) of the Executive would subject the Executive to the Excise Tax (as defined below), the Accounting Firm shall determine whether to reduce any of the Payments paid or payable pursuant to this Agreement (the “Agreement Payments”) so that the Parachute Value (as defined below) of all Payments, in the aggregate, equals the Safe Harbor Amount (as defined below). The Agreement Payments shall be so reduced only if the Accounting Firm determines that the Executive would have a greater Net After-Tax Receipt (as defined below) of aggregate Payments if the Agreement Payments were so reduced. If the Accounting Firm determines that the Executive would not have a greater Net After-Tax Receipt of aggregate Payments if the Agreement Payments were so reduced, the Executive shall receive all Agreement Payments to which the Executive is entitled hereunder.

	
10.2
	
If the Accounting Firm determines that aggregate Agreement Payments should be reduced so that the Parachute Value of all Payments, in the aggregate, equals the Safe Harbor Amount, the 

 

		
Corporation shall promptly give the Executive notice to that effect and a copy of the detailed calculation thereof. All determinations made by the Accounting Firm under this Section 10.0 shall be binding upon the Corporation, its Affiliates and the Executive. All reasonable fees and expenses of the Accounting Firm shall be borne solely by the Corporation. For purposes of reducing the Agreement Payments so that the Parachute Value of all Payments, in the aggregate, equals the Safe Harbor Amount, only amounts payable under the Agreement (and no other Payments) shall be reduced. The reduction of the amounts payable hereunder, if applicable, shall be made by reducing the Agreement Payments that have a Parachute Value in the following order: first, non-cash benefits that do not constitute non-qualified deferred compensation, second, cash benefits that constitute non-qualified deferred compensation, third, non-cash benefits that constitute non-qualified deferred compensation, and fourth, cash benefits that constitute non-qualified deferred compensation, with benefits within each category reduced in reverse chronological order beginning with those that are to be paid or provided the farthest in time from the Date of Termination, based on the Accounting Firm’s determination. 

	
10.3
	
To the extent requested by the Executive, the Corporation and its Affiliates shall cooperate with the Executive in good faith in valuing, and the Accounting Firm shall take into account the value of, services provided or to be provided by the Executive (including, without limitation, the Executive’s agreeing to refrain from performing services pursuant to a covenant not to compete or similar covenant, before, on or after the date of a change in ownership or control of the Corporation (within the meaning of Q&A-2(b) of the final regulations under Section 280G of the Code)), such that payments in respect of such services may be considered reasonable compensation within the meaning of Q&A-9 and Q&A-40 to Q&A-44 of the Treasury Regulations under Section 280G of the Code and/or exempt from the definition of the term “parachute payment” within the meaning of Q&A-2(a) of the Treasury Regulations under Section 280G of the Code in accordance with Q&A-5(a) of the Treasury Regulations under Section 280G of the Code.

	
10.4
	
The following terms shall have the following meanings for purposes of this Section 9.0:

	
 
	
(a)
	
“Accounting Firm” shall mean a nationally recognized certified public accounting firm or other professional organization that is a certified public accounting firm recognized as an expert in determinations and calculations for purposes of Section 280G of the Code that is selected by the Corporation prior to a Change in Control for purposes of making the applicable determinations hereunder. 

	
 
	
(b)
	
“Excise Tax” means any excise tax imposed under Section 4999 of the Code.

	
 
	
(c)
	
“Net After-Tax Receipt” shall mean the present value (as determined in accordance with Sections 280G(b)(2)(A)(ii) and 280G(d)(4) of the Code) of a Payment net of all taxes imposed on the Executive with respect thereto under Sections 1 and 4999 of the Code and under applicable state and local laws, determined by applying the highest marginal rate under Section 1 of the Code and under state and local laws which applied to the Executive’s taxable income for the immediately preceding taxable year, or such other rate(s) as the Accounting Firm determines to be likely to apply to the Executive in the relevant tax year(s).

	
 
	
(d)
	
“Parachute Value” of a Payment shall mean the present value as of the date of the change in control for purposes of Section 280G of the Code of the portion of such Payment that 

 

	
 
		
constitutes a “parachute payment” under Section 280G(b)(2) of the Code, as determined by the Accounting Firm for purposes of determining whether and to what extent the Excise Tax will apply to such Payment.

	
 
	
(e)
	
“Payment” shall mean any payment or distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of the Executive, whether paid or payable pursuant to this Agreement or otherwise.

	
 
	
(f)
	
“Safe Harbor Amount” shall mean the maximum Parachute Value of all Payments that the Executive can receive without any Payments being subject to the Excise Tax.

	
11.0
	
Miscellaneous

	
11.1
	
Amendment and Waiver. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in a writing signed by the Parties hereto. No waiver by either Party of, or in compliance with, any condition or provision of this Agreement to be performed by the other Party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

	
11.2
	
Deductions. The Executive agrees that benefits and payments to which the Executive is entitled pursuant to this Agreement are subject to deductions or other source withholdings as may be required by law.

	
11.3
	
No Mitigation. The Executive shall not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise, nor shall the amount of any payment or benefit provided to the Executive by the Corporation referred to in this Agreement be reduced by any compensation earned by, or benefits paid to, the Executive as the result of employment, whether by another employer or self-employment, or by pension benefits after the Date of Termination, or otherwise, except as specifically provided in this Agreement.

	
11.4
	
Governing Law. The Agreement and the legal relations among the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules that would result in the application of the laws of another jurisdiction.

	
11.5
	
Currency. All amounts due under this Agreement shall be paid calculated and paid in the currency in which the Executive’s base salary is paid as of immediately prior to the Date of Termination.

	
11.6
	
Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

	
11.7
	
Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original and all of which together shall constitute one and the same Agreement.

	
11.8
	
Headings. The division of this Agreement into sections, subsections and clauses, or other portions hereof and the insertion of headings or subheadings, are for convenience of reference only and shall not affect the construction or interpretation of this Agreement.

 

	
12.0
	
Survivorship

Upon the expiration or other termination of this Agreement or the Executive’s employment, the respective rights and obligations of the Parties shall survive to the extent necessary to carry out the intentions of the Parties under this Agreement.

 

IN WITNESS WHEREOF, the Executive and the Corporation have caused this Agreement to be duly executed effective as of the date first above written.

OVINTIV INC.

	
 
	
Per:
	
/s/ Clayton Woitas                    

	
 
	

	
Name: Clayton Woitas
Title: Chairman of the Board of Directors

	
 
	

	
January 24, 2020

	
 
	
Per:
	
/s/ Michael Williams                  

	
 
	

	
Name: Michael Williams
Title: Executive Vice-President, Corporate Services

	
 
	

	
January 24, 2020

	
 
	

	
DOUGLAS J. SUTTLES

/s/ Douglas J. Suttles                  

Douglas J. Suttles

January 24, 2020

 

SCHEDULE “A”

INCENTIVE COMPENSATION CLAWBACK POLICY:

By resolution of the Board of Directors (the “Board”) of Ovintiv Inc. (“Ovintiv” or the “Corporation”), this Policy is effective as of this 24th day of January 2020 (the “Effective Date”).

This Policy applies to the President & Chief Executive Officer and each Executive-Vice President of the Corporation and any individual who serves in either such capacity on or following the Effective Date (collectively, the “Executive”). References in this Policy to the “Corporation” include, where applicable, any affiliate thereof.

This Policy has been adopted to enhance the Corporation’s alignment with best practices in respect of risk management and executive compensation and shall be, at all times, subject to and interpreted in a manner consistent with applicable laws or the rules of any applicable stock exchange (collectively, “Applicable Rules”).

This Policy applies to “Incentive-Based Compensation” which, for the purposes of this Policy, means compensation relating to the achievement of performance goals or similar conditions, excluding salary, perquisites, benefits and pension entitlements, and including, without limitation, any award or grant of or any eligibility, entitlement or gain of, an Executive under the Corporation’s: (i) High Performance Results Plan, or any other short-term incentive plan; or (ii) Long-Term Incentive (“LTI”) program including, without limitation, Employee Stock Option Plan, Employee Stock Appreciation Rights Plan, Performance Share Unit Plan, Restricted Share Unit Plan and Deferred Share Unit Plan, as each may be amended from time to time (including any performance-based grants under any such plans).  For greater clarity, this Policy shall not apply to any Incentive-Based Compensation awarded, granted or paid to an Executive prior to the Effective Date.

Where:

	
 
	
▪
	
the Corporation is required to prepare an accounting restatement due to its material non-compliance with any financial reporting requirement under applicable securities laws (the “Restatement”), (the date upon which the Corporation is required to prepare such Restatement is hereinafter the “Restatement Date”); 

	
 
	
▪
	
the Executive received Incentive-Based Compensation referable to the financial years subject to the Restatement in excess of what the Executive would have been paid under the Restatement (the “Overcompensation Amount”); and 

	
 
	
▪
	
the Executive engaged in gross negligence, intentional misconduct or fraud which caused or significantly contributed to the Corporation’s material non-compliance with applicable securities laws which resulted in the requirement for the Restatement; 

the Board shall be entitled:

	
 
	
▪
	
where and to the extent the Overcompensation Amount has been previously paid, transferred or otherwise made available to the Executive, to require the Executive, by written demand, to reimburse the Corporation for the Overcompensation Amount; and

 

	
 
	
▪
	
where all or a portion of the Overcompensation Amount has not been paid, transferred or otherwise made available to the Executive, the right of the Executive to be so paid or have such benefit transferred or otherwise made available to him or her shall, to the extent required to reimburse the Corporation for such Overcompensation Amount, immediately terminate and be forfeited by the Executive and where required, cancelled by the Corporation to such extent and upon such date as may be specified by the Board; and

	
 
	
▪
	
to the extent the Overcompensation Amount is not immediately recovered upon demand from the Executive, whether via direct reimbursement, forfeiture and/or cancellation, to require a sufficient quantity or value of any compensation owing by the Corporation to the Executive including, without limitation, any unvested or unexercised awards under the LTIs (the “Outstanding LTIs”), be immediately withheld and/or irrevocably cancelled by the Corporation to compensate for (or set off the value of same against) the Overcompensation Amount or any unrecovered portion thereof, and to bring any other actions against the Executive which the Board may deem necessary to recover the Overcompensation Amount.

The period of time during which the Corporation shall be entitled to seek recovery of the Overcompensation Amount from the Executive shall be three (3) years from the Restatement Date. Recoupment of Overcompensation Amounts under this Policy shall be initiated by the Corporation at the request of the Board, and all amounts recoverable or payable hereunder shall be paid to the Corporation or as directed by the Board.  

If Applicable Rules require the Corporation to adopt a policy or provisions relating to the recoupment or recovery of incentive-based or other compensation based on restated financial statements which are inconsistent with or materially differ from this Policy and the Board adopts such policy or provisions to comply with Applicable Rules (the “New Policy”), such New Policy shall replace and supersede this Policy and shall apply to Incentive-Based Compensation granted or awarded to the Executive following the effective date of the New Policy.  Subject to Applicable Rules, this Policy shall continue to apply to Incentive-Based Compensation granted or awarded to the Executive prior to the effective date of the New Policy. This Policy may be terminated at any time by the Board.

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