Exhibit 10.2
AMENDED AND
RESTATED EMPLOYMENT AGREEMENT
This amended and restated Employment
Agreement (the “Agreement”), entered into as of
January 1, 2009, is between Insight Direct, USA, Inc., an
Illinois Corporation (the “Company”), and Mark McGrath
(the “Executive”).
This amended and restated Employment
Agreement is entered into in the following context:
RECITALS
A. Executive is employed by
Company pursuant to an Employment Agreement dated as of
May 23, 2005 (the “Existing Employment
Agreement”).
B. Section 409A of the
Internal Revenue Code of 1986, as amended (the “Code”),
potentially applies to certain payments provided pursuant to the
Existing Employment Agreement. The Existing Employment Agreement
has been and shall continue to be administered in good faith
compliance with the requirements of Section 409A of the Code
from the effective date of the Existing Employment Agreement
through December 31, 2008.
C. Company and Executive have
decided to replace the Existing Employment Agreement with this
amended and restated Agreement, effective as of January 1,
2009, in order to satisfy the documentation requirements of
Section 409A of the Code and to comply with the final
regulations issued pursuant to Section 409A.
D. In this amended and restated
Agreement, Company proposes and Executive agrees to certain changes
that are intended to promote uniformity in the employment
agreements entered into between Company and certain other
executives and to clarify certain other provisions. Substantive
changes also have been made in order to promote retention, positive
morale and certainty among Company’s senior executives,
including Executive. These changes also are intended to provide
incentives that are in line with similar agreements provided to
executives working in Company’s industry.
In exchange for valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. TERMS OF AGREEMENT .
(a) Initial Term
. Executive shall be employed by Company for the duties set forth
in Section 2 for a two-year term commencing as of
January 1, 2009 and ending on December 31, 2010 (the
“Initial Term”), unless sooner terminated in accordance
with the provisions of this Agreement.
(b) Renewal Term;
Employment Period Defined . This Agreement is intended to
provide for a constantly renewing (or “evergreen”)
two-year term. As a result, on each day after the commencement of
the Initial Term, without further action on the part of Company or
Executive, this Agreement shall be automatically renewed for a new
two-year term from that day forward (a “Renewal Term”).
Nevertheless, Company may notify Executive, or Executive may notify
Company, at any time, that there shall be no renewal of this
Agreement. If this notice of non-renewal is given, the Agreement
shall immediately cease to renew and shall terminate naturally at
the end of the then current Renewal Term. No severance or other
post-termination compensation will be due or payable in the event
of a termination resulting from non-renewal. The period of time
commencing as of the date of this Agreement and ending on the
effective date of the termination of employment of Executive under
this or any successor Agreement shall be referred to as the
“Employment Period.”
2. POSITION AND DUTIES .
(a) Job Duties .
Company employs, engages and hires Executive as its President, and
Executive accepts and agrees to such employment, engagement and
hiring. Executive’s duties and authority during the
Employment Period shall be such executive and managerial duties as
the Chief Executive Officer of Insight Enterprises, Inc. a Delaware
corporation (the “Parent”) shall reasonably determine.
Executive will devote full time on behalf of Company, or such
lesser amount of time as the Chief Executive Officer of Parent may
determine, reasonable absences because of illness, personal and
family exigencies excepted.
(b) Best Efforts
. Executive agrees that at all times during the Employment Period
Executive will faithfully, and to the best of Executive’s
ability, experience and talents, perform the duties that may be
required of and from Executive and fulfill Executive’s
responsibilities under this Agreement pursuant to its express
terms. Executive’s ownership of or participation as an
officer, director, consultant or employee of any entity (other than
Company) must be disclosed to the Chief Executive Officer of
Parent. Additionally, Executive shall disclose to the Chief
Executive Officer of Parent any interest in a company that is
engaged in a Competing Business as defined in Section 11,
unless such interest constitutes less than five percent (5%) of the
issued and outstanding equity of such company.
(c)
Section 16 . If, at the time Executive’s
employment is terminated for any reason, Executive is a person
designated to file pursuant to Section 16 under the Securities
Exchange Act of 1934 (the “1934 Act”), Executive will
provide to Company a written representation in a form acceptable to
Company that all reportable pre-termination securities transactions
relating to Executive have been reported.
3. COMPENSATION .
(a) Base Salary .
Company shall pay Executive a “Base Salary” in
consideration for Executive’s services to Company, payable as
nearly as possible in equal semi-monthly installments or in such
other installments as are customary from time to time for
Company’s executives at the rate of $425,000 per annum. The
Base Salary may be adjusted from time to time in accordance with
the procedures established by Company for salary adjustments for
executives, provided that the Base Salary shall not be reduced.
(b) Incentive
Compensation . Executive shall be eligible for incentive
compensation pursuant to one or more incentive compensation plans
established by the Compensation Committee of the Board of Directors
of Parent (the “Committee”) from time to time (each, an
“Incentive Compensation Plan”). The amount of the
incentive compensation, if any, shall be based on the extent to
which Executive or Company, or any combination of Executive,
Company and Company’s direct and indirect subsidiaries,
achieve objectives set forth in or pursuant to the Incentive
Compensation Plan, or Incentive Compensation Plans, for the
relevant time period. For purposes of this Agreement, the terms
“Incentive Compensation Plan” and “Incentive
Compensation Plans” do not include any employee benefit,
stock option, restricted stock or other equity-based plan.
(c) Equity
Compensation . Executive shall also be permitted to
participate in such equity compensation plans as are adopted by the
Committee from time to time. The Committee, with input from senior
management (including Executive), shall review the equity
compensation plan or formula in light of all relevant circumstances
and business conditions, and shall, in its discretion and business
judgment, determine whether to provide equity compensation for the
following year and, if so, make a determination as to the
appropriate equity formula or equity allocation for Executive for
such following year.
(d) Benefit Plans
. Executive will be entitled to participate in those benefit plans
generally provided for Company’s executives in accordance
with the terms of the applicable benefit plans. Additionally,
Executive shall be entitled to participate in any other benefit
plans made available generally to employees of Company from time to
time, including but not limited to, any savings plan, life
insurance plan and health insurance plan, all subject to any
restrictions specified in, or amendments made to, such plans.
Executive shall be entitled to D&O insurance and
indemnification as provided by Company consistent with the coverage
provided to other directors and officers. Executive shall be
entitled to four (4) weeks vacation during the calendar year,
and such additional vacation time as the Chief Executive Officer of
Parent shall approve, with such vacation to be carried over,
scheduled and taken in accordance with Company’s standard
vacation policies.
(e) Life
Insurance . Company shall acquire and be the owner of a
life insurance policy on the life of Executive. Company and
Executive shall enter into a separate split-dollar life insurance
agreement pursuant to which Executive will be entitled to designate
a beneficiary or beneficiaries for all or a portion of the proceeds
of such life insurance policy. At a minimum, Executive shall be
entitled to designate the beneficiary for life insurance proceeds
equal to at least 1.75 times Executive’s current Base Salary.
The level of life insurance shall be reviewed periodically and will
be increased to reflect any significant cumulative increases in
Executive’s Base Salary, as agreed to by Executive and
Company.
(f) Clawback . To
the extent required by law or Company policy, Company may require
Executive to repay to Company any bonus or other incentive-based or
equity-based compensation paid to Executive.
4. BUSINESS EXPENSES .
Company will reimburse Executive for
any and all necessary, customary and usual expenses which are
incurred by Executive on behalf of Company, provided Executive
provides Company with receipts to substantiate the business expense
in accordance with Company’s policies or otherwise reasonably
justifies the expense to Company.
5. DEATH OR DISABILITY .
(a) Compensation
. If Executive’s employment is terminated as a result of
Executive’s death, or if Executive becomes Disabled,
Executive, or Executive’s estate, as the case may be, shall
be entitled to receive the Base Salary due to Executive through the
date of Executive’s death or Disability. Executive or
Executive’s estate, as the case may be, also shall be
entitled to receive the following:
(1) A single lump sum payment
equal to ninety (90) days of Executive’s Base Salary as
in effect on the date of Executive’s death or Disability;
(2) With respect to any
Incentive Compensation Plan with quarterly objectives, a single
lump sum cash payment in an amount equal to a prorated portion
(based on the number of calendar days that have elapsed during the
quarter) of the payment to which Executive would be entitled under
the Incentive Compensation Plan (had Executive’s death or
Disability not occurred) for the quarter in which Executive died or
became Disabled; and
(3) With respect to any
Incentive Compensation Plan with annual objectives, a single lump
sum cash payment in an amount equal to a prorated portion (based on
the number of calendar days that have elapsed during the year) of
the payment to which Executive would have been entitled (had
Executive’s death or Disability not occurred) under the
Incentive Compensation Plan for the calendar year in which
Executive dies or becomes Disabled.
The payment to which Executive or Executive’s estate is
entitled pursuant to paragraph (1) will be paid within thirty
(30) days of Executive’s death or the effective date of
Executive’s Disability, as the case may be. The payments to
which Executive is entitled pursuant to paragraphs (2) and (3)
shall be made within the time period described in the applicable
Incentive Compensation Plan. In no event will the payments due
pursuant to paragraphs (1), (2) or (3) be made later
than March 15 of the year following the year in which
Executive dies or the effective date of Executive’s
Disability occurs.
(b) Disability .
The term “Disability” or “Disabled” means
that Executive with or without any accommodation required by law,
is, by reason of any medically determinable physical or mental
impairment that can be expected to result in death or can be
expected to last for a continuous period of not less than twelve
(12) months, receiving income replacement benefits for a
period of not less than three (3) months under an accident and
health plan covering employees of Company. The effective date of
Executive’s Disability is the last day of the third month for
which Executive receives the income replacement benefits.
(c) Termination of
Employment . Unless otherwise prohibited by law,
Executive’s employment shall terminate on the first business
day following the effective date of Executive’s
“Disability.” Executive’s employment also shall
terminate on the date of Executive’s death.
6. TERMINATION BY COMPANY .
(a) Termination for
Cause . Company may terminate this Agreement and
Executive’s employment at any time during the Initial Term or
any Renewal Term for “Cause” upon written notice to
Executive specifying the basis for the termination. If Company
terminates this Agreement for “Cause,”
Executive’s Base Salary shall immediately cease, and
Executive shall not be entitled to severance payments, Incentive
Compensation Plan payments or any other payments or benefits
pursuant to this Agreement, except for any vested rights pursuant
to any benefit plans in which Executive participates and any
accrued compensation, accrued and unused vacation pay and similar
items. For purposes of this Agreement, the term “Cause”
shall mean the termination of Executive’s employment by
Company for one or more of the following reasons:
(1) the criminal conviction for
any felony involving theft or embezzlement from Company or any
affiliate;
(2) the criminal conviction for
any felony involving moral turpitude that reflects adversely upon
the standing of Company in the community;
(3) the criminal conviction for
any felony involving fraud committed against Company, any affiliate
or any individual or entity that provides goods or services to,
receives goods or services from or otherwise deals with Company or
any affiliate;
(4) acts by Executive that
constitute repeated and material violations of this Agreement, any
written employment policies of Company or any written directives of
Company. A violation will not be considered to be
“repeated” unless such violation has occurred more than
once and after receipt of written notice from Company of such
violation.
If Executive is terminated for Cause, Company shall be obligated
to pay Executive only the Base Salary (from Section 3(a)) and
benefits (from Section 3(d)) due to Executive through the
termination date, and Executive will not be entitled to, nor will
Executive receive, any type of severance payment.
If Company terminates Executive for Cause, and it is later
determined as provided in Section 18 of this Agreement that
Cause did not exist, Company will pay Executive the amount he would
have received under this Agreement if his employment had been
terminated by Company without Cause, plus interest at the Prime
Rate published by the Wall Street Journal on the date of
termination. Such payments and interest shall be calculated as of
the effective date of the initial termination. Payment shall be
made within fifteen (15) days after such later determination
is made.
(b) Termination Without
Cause . Company also may terminate this Agreement and
Executive’s employment at any time during the Initial Term or
any Renewal Term without Cause. Company may, in its discretion,
place Executive on a paid administrative leave prior to the actual
date of termination set by Company. During the administrative
leave, Company may bar Executive’s access to Company’s
offices or facilities if reasonably necessary to the smooth
operation of Company, or may provide Executive with access subject
to such reasonable terms and conditions as Company chooses to
impose.
(c) Base Salary .
In the event Executive’s employment is terminated by Company
without Cause, Executive shall receive a single lump sum cash
payment in an amount equal to two (2) times Executive’s
Base Salary as in effect on the date Executive’s employment
is terminated to be paid within three (3) days (or sooner if
required by law) following the termination of Executive’s
employment. Executive shall have no duty to mitigate damages in
order to receive the compensation described by this
Section 6(c), and the compensation shall not be reduced or
offset by other income, payments or profits received by Executive
from any source.
(d) Incentive
Compensation . If Executive is terminated for Cause,
Executive shall not be entitled to receive any Incentive
Compensation Plan payments for the quarter or year in which
Executive’s employment is terminated or for any other
periods. If Executive is terminated without Cause, Executive shall
receive a single lump sum cash payment in an amount equal to the
sum of the following:
(1) One hundred percent (100%)
of the annual compensation paid to Executive in the one (1) of
the two (2) preceding years in which Executive received the
higher annual compensation under all Incentive Compensation Plans
(annual and quarterly) in which Executive participates as of the
date his employment is terminated or, if an Incentive Compensation
Plan was not in existence in the preceding year, one hundred
percent (100%) of the annual compensation paid to Executive in the
one (1) of the two (2) preceding years in which Executive
received the higher annual compensation under a predecessor
Incentive Compensation Plan; plus
(2) With respect to any
Incentive Compensation Plan with quarterly objectives, a prorated
portion (based on the number of calendar days that have elapsed
during the quarter) of the payment to which Executive would be
entitled under the Incentive Compensation Plan (had
Executive’s employment not been terminated) for the quarter
in which Executive’s employment is terminated; plus
(3) With respect to any
Incentive Compensation Plan with annual objectives, a prorated
portion (based on the number of calendar days that have elapsed
during the year) of the payment to which Executive would be
entitled under the Incentive Compensation Plan (had
Executive’s employment not been terminated) for the year in
which Executive’s employment is terminated.
The payments described in this Section 6(d) will be made at
the time described in the applicable Incentive Compensation Plan,
but in no event later than March 15 of the year following the
year in which Executive’s termination without Cause occurs.
Executive shall have no duty to mitigate damages in order to
receive the compensation described by this Section 6(d), and
the compensation shall not be reduced or offset by other income,
payments or profits received by Executive from any source.
(e) Welfare Benefit
Continuation . If Executive’s employment is
terminated by Company without Cause, and such employment
termination qualifies as a Separation from Service, Executive shall
be entitled to continue to receive life, disability, accident and
group health and dental insurance benefits, at substantially the
levels Executive was receiving immediately prior to
Executive’s Separation from Service, for a period of time
expiring upon the earlier of: (1) the end of the period of
twenty-four (24) months following Executive’s Separation
from Service, or (2) the day on which Executive becomes
eligible to receive any substantially similar benefits under any
plan or program of any other employer or source without being
required to pay any premium with respect thereto. Company will
satisfy the obligation to provide the health and dental insurance
benefits pursuant to this Section 6(e) by either paying for or
reimbursing Executive for the actual cost of COBRA coverage (and
Executive shall cooperate with Company in all respects in securing
and maintaining such benefits, including exercising all appropriate
COBRA elections and complying with all terms and conditions of such
coverage in a manner to minimize the cost). Following the
expiration of the COBRA continuation period, Company will reimburse
Executive for the cost of comparable health and dental insurance
benefits. Similarly, Company will reimburse Executive for the cost
of comparable coverage for all other insurance benefits that are
not subject to the COBRA continuation rules. It will be
Executive’s responsibility to procure such benefits and
Company will promptly reimburse Executive for the premiums for such
benefits in the specified amount upon Executive’s submission
of an invoice or other acceptable proof of payment. Company’s
obligation under this paragraph will cease with respect to a
particular type of coverage when and if Executive becomes eligible
to receive substantially similar coverage with a successor
employer.
(f) Other Plans .
Except to the extent specified in this Section 6 and as
provided in this Section 6(f), termination of
Executive’s employment shall not affect Executive’s
participation in, distributions from, and vested rights under, any
employee benefit, stock option, restricted stock or other
equity-based plan of, or maintained by or for, Company, which
benefits will be governed by the terms of those respective plans.
Executive shall have no duty to mitigate damages in order to
receive the compensation described by this Section 6(f), and
the compensation shall not be reduced or offset by other income,
payments or profits received by Executive from any source.
7. TERMINATION BY EXECUTIVE .
(a) General .
Executive may terminate this Agreement and his employment at any
time, with or without “Good Reason.” Company may, in
its discretion, place Executive on a paid administrative leave
prior to the actual date of termination of Executive’s
employment. During the administrative leave, Company may bar
Executive’s access to Company’s offices or facilities
if reasonably necessary to the smooth operation of Company, or may
provide Executive with access subject to such reasonable terms and
conditions as Company chooses to impose.
(b) Good Reason
Defined . Executive may terminate this Agreement and his
employment for Good Reason if Executive provides Company with
written notice of the breach or action giving rise to Good Reason
within ninety (90) days of the initial existence of such
breach or action. For purposes of this Agreement, “Good
Reason” shall mean and include each of the following (unless
Executive has expressly agreed to such event in a signed
writing):
(1) a material diminution in
Executive’s authority, duties, or responsibilities;
(2) a material change in the
geographic location at which Executive must perform services;
(3) any material act or acts of
dishonesty by Company directed toward or affecting Executive;
(4) any illegal act or
instruction directly affecting Executive by Company, which is not
withdrawn after Company is notified of the illegality by Executive;
or
(5) Company’s material
breach of this Agreement.
Notwithstanding any provisions of this Agreement to the
contrary, none of the events described in this Section 7(b)
will constitute Good Reason if, within thirty (30) days after
Executive provides Company written notice specifying the occurrence
or existence of the breach or action that Executive believes
constitutes Good Reason, Company has fully corrected (or reversed)
such breach or action. Executive’s employment will terminate
on the day following the expiration of this thirty (30) day
“cure period,” unless Executive and Company agree to a
later date not later than two (2) years following the initial
existence of such breach or action. Executive shall be deemed to
have waived Executive’s right to terminate for Good Reason
with respect to any such breach or action if Executive does not
notify Company in writing of such breach or action within ninety
(90) days of the event that gives rise to such breach or
action.
Notwithstanding any provisions of this Agreement to the
contrary, none of the events described in this Section 7(b)
will constitute Good Reason if, within thirty (30) days after
Executive provides Company written notice specifying the occurrence
or existence of the breach or action that Executive believes
constitutes Good Reason, Company has fully corrected (or reversed)
such breach or action. Executive’s employment will terminate
on the day following the expiration of this thirty (30) day
“cure period,” unless Executive and Company agree to a
later date not later than two (2) years following the initial
existence of such breach or action. Executive shall be deemed to
have waived Executive’s right to terminate for Good Reason
with respect to any such breach or action if Executive does not
notify Company in writing of such breach or action within ninety
(90) days of the event that gives rise to such breach or
action.
(c) Effect of Termination
by Executive for Good Reason . If Executive terminates this
Agreement and his employment for Good Reason, it shall for all
purposes be treated as a termination by Company without Cause and
Executive shall be entitled to compensation in accordance with
Section 6.
(d) Effect of Termination
by Executive Without Good Reason . If Executive terminates
this Agreement and his employment without Good Reason, while the
termination shall not be characterized as a termination for Cause,
it shall for all purposes result in the same compensation as a
termination for Cause in accordance with Section 6.
8. CHANGE IN CONTROL OF COMPANY .
(a) Continued Eligibility
to Receive Benefits . Company considers the maintenance of
a sound and vital management to be essential to protecting and
enhancing the best interests of Company and its shareholders. In
furtherance of such goal and in further consideration of
Executive’s continued employment with Company, if a Change in
Control (as defined in Section 8(c)) occurs, Executive shall
be entitled to the lump-sum severance benefit provided in
Section 8(b) if, prior to the expiration of twenty-four
(24) months after the Change in Control, (1) Executive
terminates his employment with Company for Good Reason in
accordance with the requirements of Section 7(b), or
(2) Company terminates Executive’s employment without
Cause pursuant to Section 6(b). The full severance benefits
provided by this Section 8 shall be payable regardless of the
period remaining until the expiration of the Initial Term or any
Renewal Term.
(b) Receipt of
Benefits . If Executive is entitled to receive a severance
benefit pursuant to Section 8(a) hereof:
(1) Within ten (10) days
following the date of termination of Executive’s employment,
Company will provide Executive with a single lump sum cash payment
in an amount equal to: (1) two (2) times Executive’s
highest annualized Base Salary in effect on any date during the
Initial Term or any Renewal Term; plus (2) two (2) times
the annual compensation paid to Executive in the one (1) of the two
(2) preceding years in which Executive received the higher
annual compensation under all Incentive Compensation Plans (annual
and quarterly) in which Executive participates as of the date his
employment is terminated or, if an Incentive Compensation Plan was
not in existence in the preceding year, two (2) times the
annual compensation paid to Executive in the one (1) of the
two (2) preceding years in which Executive received the higher
annual compensation under a predecessor Incentive Compensation
Plan; plus (3) with respect to any Incentive Compensation Plan
with quarterly objectives, a prorated portion (based on the number
of calendar days that have elapsed during the quarter) of the
payment to which Executive would be entitled under the Ince
