Document:

EX-10.12

EMPLOYMENT AGREEMENT

THIS AGREEMENT is made as of the _16th _ day of May , 2005, among STERLING
FINANCIAL CORPORATION (“Corporation”), a Pennsylvania business corporation having a place of
business at 101 North Pointe Boulevard, Lancaster, Pennsylvania 17601 and TITO L. LIMA
(“Executive”), an individual residing at 1123 Wishart Place, Hermitage, Pennsylvania, 16148.

WITNESSETH:

WHEREAS, the Corporation is a registered financial holding company;

WHEREAS, Corporation desires to employ Executive to serve in the capacity of Chief Financial
Officer of Corporation, effective May 23, 2005, under the terms and conditions set forth herein;

WHEREAS, Executive desires to accept employment with Corporation on the terms and conditions
set forth herein.

AGREEMENT:

NOW, THEREFORE, the parties hereto, intending to be legally bound, agree as follows:

1. Employment. Corporation hereby employs Executive and Executive hereby accepts
employment with Corporation, under the terms and conditions set forth in this Agreement.

2. Duties of Employee. Executive shall perform and discharge well and faithfully
such duties as an executive officer of Corporation, as may be assigned to Executive from
time to time by the Board of Directors of Corporation and the Chairman and Chief Executive
Officer and President of the Corporation so long as the assignment is consistent with the
Executive’s office and duties. Executive shall be employed as Chief Financial Officer of
Corporation effective May 23, 2005, and shall hold such other titles as may be given to him
from time to time by the Board of Directors of Corporation. Executive shall devote his full
time, attention and energies to the business of Corporation during the Employment Period (as
defined in Section 3 of this Agreement); provided, however, that this Section 2 shall not be
construed as preventing Executive from (a) engaging in activities incident or necessary to
personal investments, so long as such investment does not exceed 5% of the outstanding
 shares of any publicly held company, (b) acting as a member of the Board of Directors of any
other corporation or as a member of the Board of Trustees of any other organization, with
the prior approval of the Board of Directors of Corporation, or (c) being involved in any
other activity with the prior approval of the Board of Directors of Corporation. The
Executive shall not engage in any business or commercial activities, duties or pursuits
which compete with the business or commercial activities of Corporation or its subsidiaries
or affiliates, nor may the Executive serve as a director or officer or in any other capacity
in a company which competes with Corporation or its subsidiaries or affiliates. The
Executive represents that he is not subject to any other employment agreement and/or that
his employment with Corporation will not violate, breach or be contrary to any agreement or
contract to which Executive may be a party or subject.

3. Term of Agreement.

	 	(a)	 	This Agreement shall be for a three (3) year period (the “Employment Period”),
beginning on May 23, 2005 (the “Effective Date”) and, if not previously terminated
pursuant to the terms of this Agreement, the Employment Period shall end three (3)
years later; provided however, that this Agreement will be automatically renewed for
one year on the third anniversary date of the Effective Date (the “Renewal Date”),
unless either party gives written notice of non-renewal to the other party at least
sixty (60) days prior to the Renewal Date (in which case this Agreement will terminate
on the third anniversary of the Effective Date). If this Agreement is renewed on the
Renewal Date, it will be automatically renewed on the first anniversary date of the
Renewal Date and each subsequent year (the “Annual Renewal Date”) for a period ending
one year from each Annual Renewal Date, unless either party gives written notice of
non-renewal to the other party at least sixty (60) days prior to an Annual Renewal (in
which case this Agreement will terminate on the Annual Renewal Date immediately
following such notice).

	 	(b)	 	Notwithstanding the provisions of Section 3(a) of this Agreement, this
Agreement shall terminate automatically for Cause (as defined herein) upon written
notice from the Board of Directors of Corporation to Executive. As used in this
Agreement, “Cause” shall mean any of the following:

	 	(i)	 	Executive’s conviction of or plea of guilty or nolo contendere
to a felony, a crime of falsehood or a crime involving moral turpitude, or the
actual incarceration of Executive for a period of forty-five (45) consecutive
days or more;

	 	(ii)	 	Executive’s failure to follow the good faith lawful
instructions of the Board of Directors of Corporation with respect to its
operations, after written notice from Corporation and a failure to cure such
violation within thirty (30) days of said written notice;

	 	(iii)	 	Executive’s willful failure to substantially perform
Executive’s duties to Corporation, other than a failure resulting from
Executive’s incapacity because of physical or mental illness, as provided in
Section 3 (d) of this Agreement, after written notice from Corporation and a
failure to cure such violation within thirty (30) days of said written notice;

	 	(iv)	 	Executive’s intentional violation of the provisions of this
Agreement, after written notice from Corporation and a failure to cure such
violation within thirty (30) days of said written notice;

(v) dishonesty of the Executive in the performance of his duties;

	 	(vi)	 	Executive’s removal or prohibition from being an
institutional-affiliated party by a final order of an appropriate federal
banking agency pursuant to Section 8(e) of the Federal Deposit Insurance Act or
by the Office of the Comptroller of the Currency pursuant to national law;

	 	(vii)	 	conduct on the part of the Executive which brings public
discredit to Corporation or its subsidiaries or affiliates, as determined by an
affirmative vote of seventy percent (70%) of the disinterested members of the
Board of Directors of Corporation;

(viii) Executive’s breach of fiduciary duty involving personal profit;

	 	(ix)	 	unlawful discrimination by the Executive, including harassment
against employees, customers, business associates, contractors, or vendors or
Corporation or its subsidiaries or affiliates, which could result in liability
to Corporation or its subsidiaries or affiliates;

	 	(x)	 	theft or material abuse by Executive of property of Corporation
or its subsidiaries or affiliates, or the property of customers, employees,
contractors, vendors, or business associates of Corporation or its subsidiaries
or affiliates; or

	 	(xi)	 	provision of false or inaccurate information or documentation
or misrepresentations by Executive to Corporation, including without
limitation, during the interviewing and hiring process of Executive.

If this Agreement is terminated for Cause, all of Executive’s rights under this
Agreement shall cease as of the effective date of such termination.

	 	(c)	 	Notwithstanding the provisions of Section 3(a) of this Agreement, this
Agreement shall terminate automatically upon Executive’s voluntary termination of
employment (other than in accordance with Section 5 of this Agreement) for Good
Reason. The term “Good Reason” shall mean (i) the assignment of duties and
responsibilities inconsistent with Executive’s status as Chief Financial Officer of
Corporation, (ii) a reassignment which requires Executive to move his principal
residence and/or a requirement that Executive move his office more than fifty (50)
miles from the location of Corporation’s principal executive office immediately prior
to this Agreement, (iii) any removal of the Executive from office or any adverse
change in the terms and conditions of the Executive’s employment, except for any
termination of the Executive’s employment under the provisions of Section 3(b) of this
Agreement, (iv) any reduction in the Executive’s Annual Base Salary as in effect on
the date this Agreement is executed or as the same may be increased from time to time,
except such reductions that are the result of a national financial depression, or
national or bank emergency, or (v) any failure of Corporation to provide the Executive
with benefits at least as favorable as those enjoyed by the Executive during the
Employment Period under any of the pension or other qualified retirement, life
insurance, medical, health and accident, disability or other employee plans of
Corporation, or the taking of any action that would materially reduce any such
benefits, unless such reduction is part of a reduction applicable to all employees.

At the option of the Executive, exercisable by the Executive within ninety (90) days
after the occurrence of the event constituting “Good Reason,” the Executive may
resign from employment under this Agreement by a notice in writing (the “Notice of
Termination”) delivered to Corporation and the provisions of this Section 3(c) of
this Agreement shall thereupon apply.

If such termination occurs for Good Reason, then Corporation shall pay Executive an
amount equal to the remaining balance of the Agreed Compensation otherwise due to
the Executive for the remainder of the then existing Employment Period, which amount
shall be payable in equal monthly installments and shall be subject to federal,
state and local tax withholdings. In addition, for the remainder of the then
existing Employment Period, or until Executive secures substantially similar
benefits through other employment, whichever shall first occur, Executive shall
receive a continuation of all life, disability, medical insurance and other normal
health and welfare benefits in effect with respect to Executive during the two (2)
years prior to his termination of employment, or, if Corporation cannot provide such
benefits because Executive is no longer an employee, a dollar amount equal to the
cost to Executive of obtaining such benefits (or substantially similar benefits).
However, in the event that the payments and benefits described herein, when added to
all other amounts or benefits provided to or on behalf of the Executive in
connection with his termination of employment, would result in the imposition of an
excise tax under Section 4999 of the Internal Revenue Code of 1986, as amended (the
“Code”), such payments shall be retroactively (if necessary) reduced to the extent
necessary to avoid such excise tax imposition. Upon written notice to Executive,
together with calculations of Corporation’s independent auditors, Executive shall
remit to Corporation the amount of the reduction, plus such interest as may be
necessary to avoid the imposition of such excise tax. Notwithstanding the foregoing
or any other provision of this Agreement to the contrary, if any portion of the
amount herein payable to the Executive is determined to be non-deductible, pursuant
to the regulations promulgated under Section 280G of the Code, the Corporation shall
be required only to pay to Executive the amount determined to be deductible under
Section 280G.

	 	(d)	 	Notwithstanding the provisions of Section 3(a) of this Agreement, this
Agreement shall terminate automatically upon Executive’s Disability and Executive’s
rights under this Agreement shall cease as of the date of such termination; provided,
however, that Executive shall nevertheless be entitled to receive any benefits that may
be available under any disability plan of Corporation, until the earliest of (i)
Executive’s return to employment, (ii) his attainment of age 65, or (iii) his death.
In addition, Executive shall receive for such period a continuation of all life,
disability, medical insurance and other normal health and welfare benefits in effect
with respect to Executive during the two (2) years prior to his disability, or, if
Corporation cannot provide such benefits because Executive is no longer an employee, a
dollar amount equal to the cost to Executive of obtaining such benefits (or
substantially similar benefits). For purposes of this Agreement, the Executive shall
have a Disability if, as a result of physical or mental injury or impairment, Executive
is unable to perform all of the essential job functions of his position on a full time
basis taking into account any reasonable accommodation required by law, and without
posing a direct threat to himself and others, for a period of one hundred eighty (180)
days or more. The Executive shall have no duty to mitigate any payment provided for in
this Section 3(d) by seeking other employment.

	 	(e)	 	Executive agrees that in the event his employment under this Agreement is
terminated, regardless of the reason for termination, Executive shall resign as a
director of Corporation or any affiliate or subsidiary thereof, if he is then serving
as a director of any of such entities.

	 	(f)	 	The term “Agreed Compensation” shall equal the sum of (A) the Executive’s
highest Annual Base Salary under this Agreement and (B) the average of the Executive’s
annual bonuses with respect to the three (3) calendar years immediately preceding the
Executive’s termination; provided, however, that if the Executive’s employment
terminates prior to Executive working three calendar years, then the average of the
Executive’s annual bonuses shall be based on the bonuses that Executive received in the
full calendar years during which he was employed with Corporation. If Executive’s
employment terminates prior to working a full calendar year, then Agreed Compensation
shall only equal the Executive’s highest Annual Base Salary under this Agreement.

4. Employment Period Compensation.

	 	(a)	 	Annual Base Salary. For services performed by Executive under this
Agreement, Corporation shall pay Executive an Annual Base Salary at the rate of Two
Hundred Fifteen Thousand Dollars ($215,000) per year (subject to applicable
withholdings and deductions) payable at the same times as salaries are payable to other
executive employees of Corporation. The Annual Base Salary will not be increased
during the first two years of the Employment Period. Following the first two years of
the Employment Period, Corporation may, from time to time, increase Executive’s Annual
Base Salary, and any and all such increases shall be deemed to constitute amendments to
this Section 4(a) to reflect the increased amounts, effective as of the date
established for such increases by the Board of Directors of Corporation or any
committee of such Board in the resolutions authorizing such increases.

	 	(b)	 	Bonus. For services performed by Executive under this Agreement,
Corporation may, from time to time, pay a bonus or bonuses to Executive as Corporation,
in its sole discretion, deems appropriate. The payment of any such bonuses shall not
reduce or otherwise affect any other obligation of Corporation to Executive provided
for in this Agreement. Executive is entitled to participate in the bonus programs
available to senior executives, including Corporation’s Gain Sharing Plan, subject to
the terms and conditions of those programs.

	 	(c)	 	Paid Time Off and/or Vacations. During the term of this Agreement,
Executive shall be entitled to paid time off in accordance with the policies as
established from time to time by the Board of Directors of Corporation for the
Corporation’s senior management.

	 	(d)	 	Employee Benefit Plans. During the term of this Agreement, Executive
shall be entitled to participate in or receive the benefits of any employee benefit
plan currently in effect at Corporation, including Corporation’s Long-Term Incentive
Compensation Plan, subject to the terms of said plan, until such time that the Board of
Directors of Corporation authorizes a change in such benefits. Corporation shall not
make any changes in such plans or benefits that would adversely affect Executive’s
rights or benefits thereunder, unless such change occurs pursuant to a program
applicable to all executive officers of Corporation and does not result in a
proportionately greater adverse change in the rights of or benefits to Executive as
compared with any other executive officer of Corporation. Nothing paid to Executive
under any plan or arrangement presently in effect or made available in the future shall
be deemed to be in lieu of the salary payable to Executive pursuant to Section 4(a) of
this Agreement.

	 	(e)	 	Business Expenses. During the term of this Agreement, Executive shall
be entitled to receive prompt reimbursement for all reasonable expenses incurred by him
that are properly accounted for, in accordance with the policies and procedures
established by the Board of Directors of Corporation for its executive officers.
Corporation shall reimburse Executive for any and all initiation fees, membership dues,
assessments, and reasonably related business expenses associated with the Executive’s
membership in a mutually agreed upon country club.

	 	(f)	 	Stock Options. Executive shall be entitled to participate in the
Corporation’s stock option plans consistent with his position as a member of
Corporation’s senior management. Upon a Change in Control (as defined in Section 5(b)
of this Agreement), all options theretofore granted to the Executive by the Corporation
and not previously exercisable shall become fully exercisable to the same extent and in
the same manner as if they had become exercisable by passage of time or by virtue of
the Corporation achieving certain performance objectives in accordance with the
relevant provisions of any plan and any agreement.

5. Termination of Employment Following Change in Control.

	 	(a)	 	If a Change in Control (as defined in Section 5(b) of this Agreement) shall
occur, then, at the option of Executive, exercisable by Executive within three hundred
sixty five (365) days of the Change in Control, Executive may resign from employment
with Corporation (or, if involuntarily terminated, by delivering a written “Notice of
Intention to Collect Benefits” under this Agreement) by delivering a notice in writing
(the “Notice of Termination”) to Corporation and the provisions of Section 6 of this
Agreement shall apply.

	 	(b)	 	As used in this Agreement, “Change in Control” shall mean the occurrence of any
of the following:

	 	(i)	 	(A) a merger, consolidation or division involving Corporation,
(B) a sale, exchange, transfer or other disposition of substantially all of the
assets of Corporation, or (C) a purchase by Corporation of substantially all of
the assets of another entity, unless (y) such merger, consolidation, division,
sale, exchange, transfer, purchase or disposition is approved in advance by
seventy percent (70%) or more of the members of the Board of Directors of
Corporation (or the entity affected by the transaction) who are not interested
in the transaction and (z) a majority of the members of the Board of Directors
of the legal entity resulting from or existing after any such transaction and
of the Board of Directors of such entity’s parent corporation, if any, are
former members of the Board of Directors of Corporation (or the entity affected
by the transaction); or

	 	(ii)	 	any “person” (as such term is used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934 (the “Exchange Act”)), other than
Corporation or any “person” who on the date hereof is a director or officer of
Corporation is or becomes the “beneficial owner” (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of Corporation
representing twenty-five (25%) percent or more of the combined voting power of
Corporation’s then outstanding securities; or

	 	(iii)	 	during any period of two (2) consecutive years during the term
of Executive’s employment under this Agreement, individuals who at the
beginning of such period constitute the Board of Directors of Corporation,
cease for any reason to constitute at least a majority thereof, unless the
election of each director who was not a director at the beginning of such
period has been approved in advance by directors representing at least
two-thirds of the directors then in office who were directors at the beginning
of the period; or

	 	(iv)	 	any other change in control of Corporation similar in effect to
any of the foregoing.

6. Rights in Event of Termination of Employment Following Change in 

Control.

	 	(a)	 	In the event that Executive delivers a Notice of Intention to Collect Benefits
or a Notice of Termination, pursuant to Section 5(a) of this Agreement, to Corporation,
Executive shall be entitled to receive the compensation and benefits set forth below:

If, at the time of termination of Executive’s employment, a “Change in Control” (as
defined in Section 5(b) of this Agreement) has also occurred, Corporation shall pay
Executive a lump sum amount, equal to and no greater than 2.99 times the Executive’s
Agreed Compensation (as defined in Section 3(f) of this Agreement), the payment of
which shall be subject to applicable taxes and withholdings. In addition, for a
period of three (3) years from the date of termination of employment, or until
Executive secures substantially similar benefits through other employment, whichever
shall first occur, Executive shall receive a continuation of all life, disability,
medical insurance and other normal health and welfare benefits in effect with
respect to Executive during the two (2) years prior to his termination of
employment, or, if Corporation cannot provide such benefits because Executive is no
longer an employee, a dollar amount equal to the cost to Executive of obtaining such
benefits (or substantially similar benefits). However, in the event the payment
described herein, when added to all other amounts or benefits provided to or on
behalf of the Executive in connection with his termination of employment, would
result in the imposition of an excise tax under Code Section 4999, such payments
shall be retroactively (if necessary) reduced to the extent necessary to avoid such
excise tax imposition. Upon written notice to Executive, together with calculations
of Corporation’s independent auditors, Executive shall remit to Corporation
the amount of the reduction, plus such interest as may be necessary to avoid the
imposition of such excise tax. Notwithstanding the forgoing or any other provision
of this Agreement to the contrary, if any portion of the amount herein payable to
the Executive is determined to be non-deductible pursuant to the regulations
promulgated under Section 280G of the Code, the Corporation shall be required only
to pay to Executive the amount determined to be deductible under Section 280G.

	 	(b)	 	Executive shall not be required to mitigate the amount of any payment provided
for in this Section 6 by seeking other employment or otherwise. Unless otherwise
agreed to in writing, the amount of payment or the benefit provided for in this Section
6 shall not be reduced by any compensation earned by Executive as the result of
employment by another employer or by reason of Executive’s receipt of or right to
receive any retirement or other benefits after the date of termination of employment or
otherwise.

7. Rights in Event of Termination of Employment Absent Cause.

	 	(a)	 	In the event that Executive’s employment is involuntarily terminated by
Corporation without Cause, and in a situation not addressed by the Change in Control
provisions set forth in Section 6 of this Agreement, Corporation shall pay Executive an
amount equal to 2.0 times the Executive’s Agreed Compensation or the remaining
compensation that would otherwise be due to the Executive for the remainder of the then
existing Employment Period (at the levels and rates in effect for Executive on the date
of termination of employment), whichever is greater. Said amount shall be payable in
equal monthly installments and shall be subject to federal, state and local tax
withholdings. In addition, for the remainder of the existing Employment Period or
until Executive secures substantially similar benefits through other employment,
whichever shall first occur, Executive shall receive a continuation of all life,
disability, medical insurance and other normal health and welfare benefits in effect
with respect to Executive during the two (2) years prior to his termination of
employment, or, if Corporation cannot provide such benefits because Executive is no
longer an employee, a dollar amount equal to the cost to Executive of obtaining such
benefits (or substantially similar benefits). However, in the event that payment
described herein, when added to all other amounts or benefits provided to or on behalf
of the Executive in connection with his termination of employment, would result in the
imposition of an excise tax under Code Section 4999, such payments shall be
retroactively (if necessary) reduced to the extent necessary to avoid such excise tax
imposition. Upon written notice to Executive, together with calculations of
Corporation’s independent auditors, Executive shall remit to Corporation the amount of
the reduction, plus such interest as may be necessary to avoid the imposition of such
excise tax. Notwithstanding the forgoing or any other provision of this contract to
the contrary, if any portion of the amount herein payable to the Executive is
determined to be non-deductible pursuant to the regulations promulgated under Section
280G of the Code, the Corporation shall be required only to pay to Executive the amount
determined to be deductible under Section 280G.

	 	(b)	 	Executive shall not be required to mitigate the amount of any payment provided
for in this Section 7 by seeking other employment or otherwise. Unless otherwise
agreed to in writing, the amount of payment or the benefit provided for in this Section
7 shall not be reduced by any compensation earned by Executive as the result of
employment by another employer or by reason of Executive’s receipt of or right to
receive any retirement or other benefits after the date of termination of employment or
otherwise.

8. Covenant Not to Compete.

	 	(a)	 	Executive hereby acknowledges and recognizes the highly competitive nature of
the business of Corporation and its subsidiaries and affiliates and, accordingly,
agrees that, during and for the applicable period set forth in Section 8(c) of this
Agreement, Executive shall not, except as otherwise permitted in writing by the
Corporation:

	 	(i)	 	be engaged, directly or indirectly, either for his own account
or as agent, consultant, employee, partner, officer, director, proprietor,
investor (except as an investor owning less than 5% of the stock of a publicly
owned company) or otherwise of any person, firm, corporation or enterprise
engaged in (1) the banking (including financial or bank holding company) or
financial services industry, or (2) any other activity in which Corporation or
any of its subsidiaries or affiliates, other than Town and Country, Inc. and/or
Equipment Finance, Inc., are engaged during the Employment Period, and remain
so engaged at the end of the Employment Period, in any county in which, at any
time during the Employment Period or on the date of termination of the
Executive’s employment, Corporation, or any of its subsidiaries or affiliates
conducted business, or in any county contiguous to such a county, including
countries located outside of the Commonwealth of Pennsylvania (the
“Non-Competition Area”); or

	 	(ii)	 	provide financial or other assistance to any person, firm,
corporation, or enterprise engaged in (1) the banking (including financial or
bank holding company) or financial services industry, or (2) any other activity
in which Corporation or any of its subsidiaries or affiliates, other than Town
and County, Inc. and/or Equipment Finance. Inc., are engaged during the
Employment Period, in the Non-Competition Area; or

	 	(iii)	 	directly or indirectly contact, solicit or induce any person,
corporation or other entity who or which is a customer or referral source of
Corporation or any of its subsidiaries or affiliates, at any time during the
Employment Period or on the effective date of termination of the Executive’s
employment, to become a customer or referral source of any person or entity
other than Corporation or its subsidiaries or affiliates; or

	 	(iv)	 	directly or indirectly solicit, induce or encourage any
employee of Corporation or any of its subsidiaries or affiliates, who is
employed at any time during the Employment Period or on the effective date of
termination of the Executive’s employment, to leave the employ of Corporation
or any of its subsidiaries or affiliates or to seek, obtain or accept
employment with any person or entity other than Corporation or its subsidiaries
or affiliates.

	 	(b)	 	It is expressly understood and agreed that, although Executive and Corporation
consider the restrictions contained in Section 8(a) and (c) of this Agreement
reasonable for the purpose of preserving for Corporation and its subsidiaries and
affiliates, their good will and other proprietary rights, if a final judicial
determination is made by a court having jurisdiction that the time or territory or any
other restriction contained in Section 8(a) and (c) of this Agreement is an
unreasonable or otherwise unenforceable restriction against Executive, the provisions
of Section 8(a) and (c) of this Agreement shall not be rendered void, but shall be
deemed amended to apply as to such maximum time and territory and to such other extent
as such court may judicially determine or indicate to be reasonable.

	 	(c)	 	The provisions of this Section 8 shall be applicable, commencing on May 23,
2005 and ending on one of the following dates, as applicable:

	 	(i)	 	if Executive’s employment terminates in accordance with the
provisions of Section 3(c) of this Agreement (relating to termination for Good
Reason), the end of the then existing Employment Period; or

	 	(ii)	 	if Executive’s employment terminates in accordance with the
provisions of Section 3(b) of this Agreement (relating to termination for
Cause), the second anniversary date of the effective date of termination of
employment; or

	 	(iii)	 	if the Executive voluntarily terminates his employment in
accordance with the provisions of Section 5 of this Agreement (relating to
termination following Change in Control), the second anniversary date of the
effective date of termination of employment; or

	 	(iv)	 	if the Executive’s employment is involuntarily terminated in
accordance with the provisions of Section 7 of this Agreement (relating to
termination absent Cause), the second anniversary date of the effective date of
termination of employment; or

	 	(v)	 	if the Executive voluntarily terminates his employment without
Good Reason and absent Change in Control, the second anniversary date of the
effective date of termination of employment; or

	 	(vi)	 	if the Agreement expires by its terms in accordance with the
provisions of Section 3(a) and other than for Cause, the second anniversary
date of the effective date of termination of employment.

9. Unauthorized Disclosure. During the term of his employment under this Agreement,
or at any later time, the Executive shall not, without the written consent of the Board of
Directors of Corporation or a person authorized thereby, knowingly disclose to any person,
other than an employee of Corporation or a person to whom disclosure is reasonably
necessary or appropriate in connection with the performance by the Executive of his duties
as an executive of Corporation, any material confidential information obtained by him while
in the employ of Corporation with respect to any services, products, improvements, formulas,
designs or styles, processes, customers, customer lists, methods of business or any
business practices of Corporation or its subsidiaries or affiliates, the disclosure of which
could be or will be damaging to Corporation or its subsidiaries or affiliates; provided,
however, that confidential information shall not include any information known generally to
the public (other than as a result of unauthorized disclosure by the Executive or any person
with the assistance, consent or direction of the Executive) or any information of a type not
otherwise considered confidential by persons engaged in the same business or a business
similar to that conducted by Corporation or its subsidiaries or affiliates or any
information that must be disclosed as required by law.

10. Work Made for Hire. Any work performed by the Executive under this Agreement
should be considered a “Work Made for Hire” as that phrase is defined by the U.S. patent
laws and shall be owned by and for the express benefit of Corporation and/or its
subsidiaries and affiliates. In the event it should be established that such work does not
qualify as a Work Made for Hire, the Executive agrees to and does hereby assign to
Corporation and/or its affiliates and subsidiaries, all of his rights, title, and/or
interest in such work product, including, but not limited to, all copyrights, patents,
trademarks, and proprietary rights.

11. Return of Company Property and Documents. The Executive agrees that, at the
time of termination of his employment, regardless of the reason for termination, he will
deliver to Corporation and/or its subsidiaries and affiliates, any and all company property,
including, but not limited to, keys, security codes or passes, mobile telephones, pagers,
computers, devices, confidential information (as defined in this Agreement), records, data,
notes, reports, proposals, lists, correspondence, specification, drawings, blueprints,
sketches, software programs, equipment, other documents or property, or reproductions of any
of the aforementioned items developed or obtained by the Executive during the course of his
employment.

12. Liability Insurance. Corporation shall use its best efforts to obtain insurance
coverage for the Executive under an insurance policy covering officers and directors of
Corporation against lawsuits, arbitrations or other legal or regulatory proceedings;
however, nothing herein shall be construed to require Corporation to obtain such insurance,
if the Board of Directors of the Corporation determine that such coverage cannot be obtained
at a reasonable price.

13. Notices. Except as otherwise provided in this Agreement, any notice required or
permitted to be given under this Agreement shall be deemed properly given if in writing and
if mailed by registered or certified mail, postage prepaid with return receipt requested, to
Executive’s residence, in the case of notices to Executive, and to the principal executive
offices of Corporation, addressed to the Chief Executive Officer and Chairman of the Board
of Directors for Corporation, in the case of notices to Corporation. Notice is effective
upon date of mailing.

14. Waiver. No provision of this Agreement may be modified, waived or discharged
unless such waiver, modification or discharge is agreed to in writing and signed by
Executive and an executive officer specifically designated by the Board of Directors of
Corporation. No waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.

15. Assignment. This Agreement shall not be assignable by any party, except by
Corporation to any successor in interest to its respective businesses.

16. Attorney’s Fees and Costs. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to
reasonable attorney’s fees, costs, and necessary disbursements in addition to any other
relief that may be proper.

17. Indemnification. The Corporation will indemnify the Executive, to the fullest
extent permitted under Pennsylvania and federal law, with respect to any threatened, pending
or completed legal or regulatory action, suit or proceeding brought against him by reason of
the fact that he is or was a director, officer, employee or agent of the Corporation, or is
or was serving at the request of the Corporation as a director, officer, employee or agent
of another person or entity. To the fullest extent permitted by Pennsylvania and federal
law, the Corporation will, in advance of final disposition, pay any and all expenses
incurred by the Executive in connection with any threatened, pending or completed legal or
regulatory action, suit or proceeding with respect to which he may be entitled to
indemnification hereunder.

18. Entire Agreement. This Agreement supersedes any and all agreements, either oral
or in writing, between the parties with respect to the employment of the Executive by the
Corporation and this Agreement contains all the covenants and agreements between the parties
with respect to employment.

19. Successors; Binding Agreement.

	 	(a)	 	Corporation will require any successor (whether direct or indirect, by
purchase, merger, consolidation, or otherwise) to all or substantially all of the
businesses and/or assets of Corporation to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that Corporation would be required
to perform it if no such succession had taken place. Failure by Corporation to obtain
such assumption and agreement prior to the effectiveness of any such succession shall
constitute a breach of this Agreement and the provisions of Section 3 of this Agreement
shall apply.

	 	(b)	 	This Agreement shall inure to the benefit of and be enforceable by Executive’s
personal or legal representatives, executors, administrators, heirs, distributees,
devisees and legatees. If Executive should die after a Notice of Termination is
delivered by Executive, or following termination of Executive’s employment without
Cause, and any amounts would be payable to Executive under this Agreement if Executive
had continued to live, all such amounts shall be paid in accordance with the terms of
this Agreement to Executive’s devisee, legatee, or other designee, or, if there is no
such designee, to Executive’s estate.

20. Arbitration. Corporation and Executive recognize that in the event a dispute
should arise between them concerning the interpretation or implementation of this Agreement,
(except for any enforcement sought with respect to Sections 8, 9, 10 or 11 of this Agreement
which may be litigated in court,) lengthy and expensive litigation will not afford a
practical resolution of the issues within a reasonable period of time. Consequently, each
party agrees that all disputes, disagreements and questions of interpretation concerning
this Agreement are to be submitted for resolution, in Philadelphia, Pennsylvania, to the
American Arbitration Association (the “Association”) in accordance with the Association’s
National Rules for the Resolution of Employment Disputes or other applicable rules then in
effect (“Rules”). Corporation or Executive may initiate an arbitration proceeding at any
time by giving notice to the other in accordance with the Rules. Corporation and Executive
may, as a matter of right, mutually agree on the appointment of a particular arbitrator from
the Association’s pool. The arbitrator shall not be bound by the rules of evidence and
procedure of the courts of the Commonwealth of Pennsylvania but shall be bound by the
substantive law applicable to this Agreement. The decision of the arbitrator, absent fraud,
duress, incompetence or gross and obvious error of fact, shall be final and binding upon the
parties and shall be enforceable in courts of proper jurisdiction. Following written notice
of a request for arbitration, Corporation and Executive shall be entitled to an injunction
restraining all further proceedings in any pending or subsequently filed litigation
concerning this Agreement, except as otherwise provided herein or any enforcement sought
with respect to Sections 8, 9, 10 or 11.

21. No Mitigation or Offset. The Executive will not be required to mitigate the
amount of any payment provided for in this Agreement by seeking employment or otherwise; nor
will any amounts or benefits payable or provided hereunder be reduced in the event he does
not secure employment, except as otherwise provided in this Agreement.

22. 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.

23. Applicable Law. This Agreement shall be governed by and construed in accordance
with the domestic, internal laws of the Commonwealth of Pennsylvania, without regard to its
conflicts of laws principles.

24. Headings. The section headings of this Agreement are for convenience only and
shall not control or affect the meaning or construction or limit the scope or intent of any
of the provisions of this Agreement.

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

	 	 	 
	ATTEST:

	 	STERLING FINANCIAL CORPORATION
	 
	 	 
	     /s/ Kathleen A. Prime

	 	By      /s/ J. Roger Moyer, Jr.
	 

	 	 

	 	J.	 	Roger Moyer, Jr.

Chief Executive Officer

	 	 	 
	WITNESS:

	 	Executive
	 
	 	 
	     /s/ Kathleen A. Prime     

	 	     /s/ Tito L. Lima
	 

	 	 
	
 
	 	Tito L. LimaEX-10.1

EMPLOYMENT AGREEMENT

This Employment Agreement (the “Agreement”) is entered into as of May 15, 2005 (the “Effective
Date”), between Insight Direct USA, Inc., an Illinois corporation, (“Company”) and Mark McGrath
(“Executive”) to be effective as of May 23, 2005.

R E C I T A L S

A. Company desires to employ Executive as President, and Executive desires to accept such
employment.

	 	B.	 	Company has decided to offer Executive an employment agreement, the terms and
provisions of which are set forth below.

NOW, THEREFORE, IT IS HEREBY MUTUALLY AGREED AS FOLLOWS:

1. TERMS OF AGREEMENT.

(a) Initial Term. Executive shall be employed by Company for the duties set forth in Section
2 for a two-year term, commencing as of May 23, 2005 and ending on May 22, 2007 (the “Initial
Term”), unless sooner terminated in accordance with the provisions of this Agreement.

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

2. POSITION AND DUTIES.

(a) Job Duties. Company does hereby employ, engage and hire Executive as President, and
Executive does hereby accept and agree to such employment, engagement, and hiring. Executive’s
duties and authority during the Employment Period shall be such executive and managerial duties as
the Chief Executive Officer of Insight Enterprises Inc., a Delaware corporation (“Parent”), shall
reasonably determine. Executive will devote full time on behalf of the 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 he will
faithfully, and to the best of his ability, experience and talents, perform the duties that may be
required of and from him and fulfill his responsibilities hereunder pursuant to the express terms
hereof. Executive’s ownership of, or participation (including any board memberships) in, any
entity (other than Company) must be disclosed to the Chief Executive Officer of Parent; provided,
however, that Executive need not disclose any equity interest held in any public company or any
private company that is not engaged in a Competing Business (as defined in Section 10 of this
Agreement) when such interest constitutes less than 5% of the issued and outstanding equity of such
public or private company.

3. COMPENSATION.

(a) Base Salary. Company shall pay Executive a “Base Salary” in consideration for Executive’s
services to Company at the rate of $325,000 per annum. The Base Salary shall be payable as nearly
as possible in equal semi-monthly installments or in such other installments as are customary from
time to time for Company’s executives. The Base Salary may be adjusted from time to time in
accordance with the procedures established by Company for salary adjustments for executives,
provided that the Base Salary shall not be reduced.

(b) Incentive Compensation.

(1) Executive shall also be permitted to participate in such incentive compensation plans as
are adopted by the Compensation Committee of the Board (the “Committee”) from time to time.
Beginning with FY 2005, Executive shall be eligible for an incentive bonus, calculated and payable
annually, based upon the Company’s reported diluted earnings per share (“EPS”). Certain quarterly
payments may be made with respect to the first three quarters of the year as provided in the
Section 3(b)(2), below. The Committee may, but is not required to, award additional bonus amounts
for extraordinary performance or to adjust for inequities resulting from application of the
formula. During the last half of each year, the Committee, with input from senior management
(including Executive) shall review the incentive compensation plan or formula currently in place in
light of all relevant circumstances and business conditions, and shall, in its discretion and
business judgment, determine whether to provide incentive compensation for the following year and,
if so, make a determination as to the appropriate incentive formula or incentive allocation for
Executive for such following year.

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

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

Limitation on clawbacks:

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

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

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

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

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

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

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

(c) Equity Compensation. Executive shall also be permitted to participate in such equity
compensation plans as are adopted by the Board or Committee from time to time. During the last
half of each year, 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) Incentive and Benefit Plans. Executive will be entitled to participate in those incentive
compensation and benefit plans reserved for the Company’s executives, including any stock option
plan maintained by the Company, in accordance with the terms of such compensation and benefit
plans. Additionally, the Executive shall be entitled to participate in any other benefit plans
sponsored by Company, including but not limited to, any retirement, 401(k), or savings plans, life
insurance plan and health insurance plan available generally either to employees or to senior
executives of Company from time to time, subject to any restrictions specified in, or amendments
made to, such plans. Executive shall be entitled to D&O insurance and indemnification as provided
by Company consistent with the coverage provided to other Directors and Officers. The Executive
shall be entitled to four (4) weeks vacation during the calendar year, and such additional vacation
time as the Chief Executive Officer of Parent shall approve, with such vacation to be carried over,
scheduled and taken in accordance with the Company’s standard vacation policies.

4. BUSINESS EXPENSES.

The Company will reimburse Executive for any and all necessary, customary and usual expenses
which are incurred by Executive on behalf of Company, provided Executive provides Company with
receipts to substantiate the business expense in accordance with Company’s policies or otherwise
reasonably justifies the expense to the Company.

5. DEATH OR DISABILITY.

(a) Death. This Agreement shall terminate upon Executive’s death. Executive’s estate shall be
entitled to receive the Base Salary due through the date of his death. Company shall also pay to
Executive’s estate within the 30 days following the date of the year-end earnings press release a
prorated portion of any incentive compensation to which Executive would have been entitled (had
Executive not died) for the year in which this Agreement terminated due to Executive’s death. If
this Agreement is terminated due to Executive’s Death, Executive shall receive all of the payments
and benefits called for by Section 6(c).

(b) Disability. This Agreement shall also terminate in the event of Executive’s “Disability”.
For purposes of this Agreement, “Disability” means the total and complete inability of Executive to
perform the essential duties associated with his normal position with Company (after any
accommodations required by the Americans with Disabilities Act or applicable state law) due to a
physical or mental injury or illness that occurs while Executive is actively employed by Company.
Any dispute concerning whether Disability has occurred will be determined by a physician selected
by mutual agreement of Company and Executive. If this Agreement is terminated due to Executive’s
Disability, Executive shall receive all of the payments and benefits called for by Section 6(c).

6. TERMINATION BY COMPANY.

(a) Termination for Cause. Company may terminate this Agreement at any time during the
Initial Term or any Renewal Terms for “Cause” upon written notice to Executive. If Company
terminates this Agreement for “Cause,” Executive’s Base Salary shall immediately cease, and
Executive shall not be entitled to severance payments, incentive compensation payments or any other
payments or benefits pursuant to this Agreement, except for any vested rights pursuant to any
benefit plans in which Executive participates and any accrued compensation, vacation pay and
similar items. For purposes of this Agreement, the term “Cause” shall mean the termination of
Executive’s employment by Company for one or more of the following reasons:

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

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

(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; or

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

Any termination of Executive when there is not Cause is “without Cause”. If Company
terminates Executive for Cause, and it is later determined as provided in Section 11 of this
Agreement that Cause did not exist, Company will pay Executive the amount he would have received
under this Agreement if his employment had been terminated by Company without Cause, plus interest
at the Prime Rate published by the Wall Street Journal on the date of termination. Such payments
and interest shall be calculated as of the effective date of the initial termination. Payment shall
be made within fifteen (15) days after such later determination is made.

(b) Termination Without Cause. Company also may terminate Executive’s employment at any time
during the Initial Term or any Renewal Term without Cause. If Company terminates this Agreement
pursuant to this paragraph, Company shall provide Executive with ninety (90) days advance written
notice. This Agreement shall continue during such notice period. The termination of this Agreement
shall be effective on the ninetieth (90th) day (the “Termination Date”) following the day on which
the notice is given.

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

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

(d) Incentive Compensation. Executive shall not be entitled to receive any incentive
compensation payments for the fiscal year in which his employment is terminated for Cause or any
later years. If Executive is terminated without Cause, Executive shall receive as a lump sum
promptly after the amount can be determined a prorated portion (to the extent not previously paid)
of the annual incentive compensation that would have been awarded up to the Termination Date, plus
an amount equal to one times the higher annual bonus from the two immediately preceding complete
fiscal years. Executive shall have no duty to mitigate damages in order to receive the
compensation described by this Subsection and the compensation shall not be reduced or offset by
other income, payments or profits received by Executive from any source.

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

7. TERMINATION BY EXECUTIVE.

(a) General. Executive may terminate this Agreement at any time, with or without “Good
Reason”. If Executive terminates this Agreement without Good Reason, Executive shall provide
Company with ninety (90) days advance written notice. If Executive terminates this Agreement with
Good Reason, Executive shall provide Company with thirty (30) days advance written notice. Company
may, at its discretion, place Executive on a paid administrative leave during all or any part of
any such notice period. During the administrative leave, Company may bar Executive’s access to
Company’s offices or facilities if reasonably necessary to the smooth operation of Company, or may
provide Executive with access subject to such reasonable terms and conditions as Company chooses to
impose.

(b) Good Reason Defined. For purposes of this Agreement, “Good Reason” shall mean and include
each of the following (unless Executive has expressly agreed to such event in a signed writing):

(1) The assignment to Executive by Company of duties that are not senior executive duties by
nature except in connection with the termination of Executive’s employment by Company either
without Cause or for Cause, Executive’s death or Disability, termination by Executive either with
or without Good Reason, or the expiration of the Agreement without renewal.

(2) The assignment of Executive by the Company to a location more than 50 miles from the
present executive offices of the Company.

(3) Reduction by Company of Executive’s Base Salary as set forth in this Agreement or as the
same may be increased from time to time.

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

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

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

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

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

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

8. CHANGE IN CONTROL OF COMPANY.

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

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

(b) Continued Eligibility to Receive Benefits. In view of the foregoing and in further
consideration of Executive’s continued employment with Company, if a Change in Control occurs,
Executive shall be entitled to a lump-sum severance benefit provided in subparagraph (c) of this
Section 8 if, prior to the expiration of twenty-four (24) months after the Change in Control,
Executive notifies Company of his intent to terminate his employment with Company for Good Reason
or Company terminates Executive’s employment without Cause. If Executive triggers the application
of this Section by terminating employment for Good Reason, he must do so within one hundred twenty
(120) days following his receipt of notice of the occurrence of the last event that constitutes
Good Reason. The full severance benefits provided by this Section shall be payable regardless of
the period remaining until the expiration of the Agreement without renewal.

(c) Receipt of Benefits. If Executive is entitled to receive a severance benefit pursuant to
Section 8(b) hereof, Company will provide Executive with the following benefits:

(1) A lump sum severance payment within ten (10) days following Executive’s last day of work
equal to the sum of (i) two (2) times the greater of Executive’s annualized Base Salary in effect
on the date of termination of employment or Executive’s highest annualized Base Salary in effect on
any date during the term of this Agreement and (ii) two (2) times the higher annual bonus from the
two immediately preceding complete fiscal years.

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

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

Executive shall have no duty to mitigate damages or loss in order to receive the benefits
provided by this Section or in this Agreement. If Executive is entitled to receive the payments
called for by this Section 8(c), Executive’s right to receive the compensation provided by Section
6(c) or 7(c) shall to the extent of such payments be reduced.

(d) Change in Control Defined. For purposes of this Agreement, a “Change in Control” means any
one or more of the following events:

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

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

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

(4) Any merger, consolidation or liquidation of Company with non-affiliated parties in which
the Company is not the continuing or surviving company or pursuant to which Company’s stock would
be converted into cash, securities or other property;

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

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

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

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

(g) Gross-Up Allowance.

(1) General Rules. The Code places significant tax consequences on Executive and Company if
the total payments made to Executive due, or deemed due, to a Change in Control exceed prescribed
limits. For example, if Executive’s “Base Period Income” (as defined below) is $100,000 and
Executive’s “Total Payments” exceed 299% of such Base Period Income (the “Cap”), Executive will be
subject to an excise tax under Section 4999 of the Code of 20% of all amounts paid to him in excess
of $100,000. In other words, if Executive’s Cap is $299,999, he will not be subject to an excise
tax if he receives exactly $299,999. If Executive receives $300,000, he will be subject to an
excise tax of $40,000 (20% of $200,000). In the event such a consequence occurs, for any reason,
due to this Agreement or otherwise, Company shall pay to Executive a “gross-up allowance” equal in
amount to the sum of (i) the excise tax liability of Executive on the Total Payments, and (ii) all
the total excise, income, and payroll tax liability of Executive on the “gross-up allowance,”
further increased by all additional excise, and income, and payroll tax liability thereon, which
increase shall be part of the “gross-up allowance” for purpose of computing the gross-up allowance.
Company shall indemnify and hold Executive harmless from such additional tax liability for the
income and payroll tax arising from the “gross-up allowance” and all excise tax arising with
respect to compensation and other payments made to Executive under this Agreement and excise,
income, and payroll tax on the “gross-up allowance”, and all penalties and interest thereon. The
purpose and effect of the “gross-up allowance” is to cause Executive to have the same net
compensation after income, excise, and payroll taxes that Executive would have if there was no tax
under Code § 4999.

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

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

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

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

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

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

9. CONFIDENTIALITY.

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

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

10. RESTRICTIVE COVENANTS.

(a) Covenant-not-to-Compete. In consideration of Company’s agreements contained herein and
the payments to be made by it to Executive pursuant hereto, Executive agrees that, for a period of
time equal to the time remaining in the Initial Term or any Renewal Term (or if, but only if, a
court or tribunal of final authority finds that this period is unenforceable because it is
unreasonably long, then, if it would shorten the duration, for one year) following his termination
of employment and so long as Company is continuously not in default of its obligations to provide
payments or employment-type benefits to Executive hereunder or under any other agreement, covenant,
or obligation, he will not, without prior written consent of Company, be employed by, consult with
or act as an advisor to another company about activity which is a “Competing Business” of such
company in the Restricted Territory, as defined below. For purposes of this Agreement, Executive
shall be deemed to be engaged in a “Competing Business” if, in any capacity, including but not
limited to proprietor, shareholder, partner, officer, director or employee, he engages or
participates, directly or indirectly, in the operation, ownership or management of the activity of
any proprietorship, partnership, company or other business entity which activity is directly
competitive with the business the Company is now engaged in (i.e., direct marketing of information
technology products and services to businesses, government agencies or consumers), or any future
material business actively engaged in by Company, or any business specifically contemplated by the
Company’s business plan in effect on the date of Executive’s termination of employment. Nothing in
this subparagraph is intended to limit Executive’s ability to own equity in a public company
constituting less than five percent (5%) of the outstanding equity of such company, when Executive
is not actively engaged in the management thereof. If requested by Executive, Company shall
furnish Executive with a good-faith written description of the business or businesses in which
Company is then actively engaged or which is contemplated by the Company’s current business plan
within 30 days after such request is made, and only those activities so timely described in which
Company is, in fact, actively engaged or which are so contemplated may be treated as activities
which are directly competitive with Company.

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

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

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

Executive also expressly acknowledges and agrees that Executive’s covenants and agreements in
this Section 10 shall survive this Agreement and continue to be binding upon Executive after the
expiration or termination of this Agreement, whether by passage of time or otherwise

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

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

11. DISPUTE RESOLUTION.

(a) Mediation. Any and all disputes arising under, pertaining to or touching upon this
Agreement, or the statutory rights or obligations of either party hereto, shall, if not settled by
negotiation, be subject to non-binding mediation before an independent mediator. Notwithstanding
the foregoing, both Executive and Company may seek preliminary injunctive or other judicial relief
if such action is necessary to avoid irreparable damage during the pendency of the proceedings
described in this Section 11. Any demand for mediation shall be made in writing and served upon
the other party to the dispute, by certified mail, return receipt requested, at the address
specified in Section 13. The demand shall set forth with reasonable specificity the basis of the
dispute and the relief sought. The mediation hearing will occur at a time and place convenient to
the parties in Maricopa County, Arizona, within thirty (30) days of the date of selection or
appointment of the mediator. Mediation or the waiver of mediation by both parties shall be a
condition precedent to Arbitration.

(b) Arbitration. In the event that the dispute is not settled through mediation, the parties
shall then proceed to binding arbitration before an independent arbitrator. The mediator shall not
serve as the arbitrator. EXCEPT AS PROVIDED IN SECTION 11(a), ALL DISPUTES INVOLVING ALLEGED
UNLAWFUL EMPLOYMENT DISCRIMINATION, TERMINATION BY ALLEGED BREACH OF CONTRACT OR POLICY, OR ALLEGED
EMPLOYMENT TORT COMMITTED BY COMPANY OR A REPRESENTATIVE OF COMPANY, INCLUDING CLAIMS OF VIOLATIONS
OF FEDERAL OR STATE DISCRIMINATION STATUTES OR PUBLIC POLICY, SHALL BE RESOLVED PURSUANT TO THIS
SECTION 11 AND THERE SHALL BE NO RECOURSE TO COURT, WITH OR WITHOUT A JURY TRIAL.

The arbitration hearing shall occur at a time and place convenient to the parties in Maricopa
County, Arizona, within sixty (60) days of selection or appointment of the arbitrator unless such
time period is extended by the arbitrator for good cause shown. If Company has adopted, with the
consent of Executive, a policy that is applicable to arbitrations with executives, the arbitration
shall be conducted in accordance with said policy, to the extent that the policy is consistent with
this Agreement and the Federal Arbitration Act, 9 U.S.C. §§ 1-16. If no such policy has been
adopted, the arbitration shall be governed by the National Rules for the Resolution of Employment
Disputes of the American Arbitration Association (“AAA”) in effect on the date of the first notice
of demand for arbitration. Notwithstanding any provisions in such rules to the contrary, the
arbitrator shall issue findings of fact and conclusions of law, and an award, within fifteen (15)
days of the date of the hearing unless the parties otherwise agree.

(c) Procedure. Issues of procedure, arbitrability, or confirmation of award shall be governed
by the Federal Arbitration Act, 9 U.S. C. SS 1-16, except that court review of the arbitrator’s
award shall be that of an appellate court reviewing a decision of a trial judge sitting without a
jury.

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

12. BENEFIT AND BINDING EFFECT.

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

13. NOTICES.

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

	 	 	 
	If to Company, to:

	 	Insight Enterprises, Inc.

Attn: Corporate Counsel

1305 West Auto Drive

Tempe, Arizona 85284
	 
	 	 
	With a copy to:

	 	The Chairman of Parent’s

Compensation Committee
	 
	 	 
	If to Executive, to:

	 	Mark McGrath

506 Yarmouth Road

Raleigh, NC 27608

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

14. ENTIRE AGREEMENT.

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

15. GOVERNING LAW.

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

16. CAPTIONS.

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

17. DEFINITIONS.

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

18. SEVERABILITY.

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

19. TERMINATION OF EMPLOYMENT.

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

20. TIME IS OF THE ESSENCE.

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

21. NO CONSTRUCTION AGAINST EITHER PARTY.

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

Insight Direct USA, Inc.,

an Illinois corporation

By: /s/ Richard A. Fennessy

	 	 	 	Name: Richard A. Fennessy

Title: Chief Executive Officer

By: /s/ Mark McGrath

Mark McGrath

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