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Exhibit
10.2
EMPLOYMENT
AGREEMENT
AGREEMENT made and entered into in
Merrimack, New Hampshire, by and between PC Connection, Inc. (the
“Company”), a New Hampshire corporation with its
principal place of business at Merrimack, New Hampshire, and
Timothy McGrath, of 10 Settlers Ridge Road, Windham, New Hampshire
03087 (the “Executive”), effective as of the 12 day of
May, 2008 (the “Effective Date”).
WHEREAS, the operations of
the Company and its Affiliates are a complex matter requiring
direction and leadership in a variety of areas, including
financial, strategic planning, project management and
others;
WHEREAS, the Executive is
possessed of certain experience and expertise that qualify him to
provide the direction and leadership required by the Company and
its Affiliates;
WHEREAS, the Executive has
been employed by the Company as its Executive Vice President since
May 2007; and
WHEREAS, subject to the terms
and conditions hereinafter set forth, the Company wishes to
continue to employ the Executive as its Executive Vice President,
PC Connection Enterprises, and the Executive wishes to accept such
continued employment;
NOW, THEREFORE, in
consideration of the foregoing premises and the mutual promises,
terms, provisions and conditions set forth in this Agreement, the
parties hereby agree:
1. Employment .
Subject to the terms and conditions set forth in this Agreement,
the Company hereby offers, and the Executive hereby accepts,
continued employment.
2. Term . This
agreement shall be for at-will employment, and is thus terminable
by either party at any time, with or without cause, subject to the
provisions of Section 5 hereof.
3. Capacity and
Performance .
(a) During the term hereof,
the Executive shall serve the Company as its Executive Vice
President, reporting to the Chief Executive Officer, or his/her
successor.
(b) During the term hereof,
the Executive shall be employed by the Company on a full-time
basis, and shall perform the duties and responsibilities of his
position and such other duties and responsibilities on behalf of
the Company and its Affiliates as may reasonably be designated from
time to time by the CEO or by his/her designee.
(c) During the term hereof,
the Executive shall devote his full business time and his best
efforts, business judgment, skill and knowledge exclusively to the
advancement of the business and interests of the Company and its
Affiliates and to the discharge of his duties and responsibilities
hereunder. The Executive shall not engage in any other business
activity or serve in any industry, trade, professional,
governmental or academic position during the term of this
Agreement, except as may be expressly approved in advance by the
Company in writing.
4. Compensation and
Benefits . As compensation for all services performed by the
Executive under and during the term hereof, and subject to
performance of the Executive’s duties and of the obligations
of the Executive to the Company and its Affiliates, pursuant to
this Agreement or otherwise:
(a) Base Salary .
During the term hereof, the Company shall pay the Executive a base
salary at the rate of Five Hundred Thousand Dollars ($500,000) per
annum, payable in accordance with the regular payroll practices of
the Company for its executives and subject to adjustment from time
to time by the Company, in its sole discretion. Such base salary,
as from time to time adjusted, is hereinafter referred to as the
“Base Salary”.
(b) Incentive and Bonus
Compensation . The Executive will be eligible to participate in
the Executive Bonus Plan. Any bonus or incentive compensation paid
to the Executive shall be in addition to the Base Salary, and will
be payable not later than two and one-half months following the
close of the fiscal year for which the bonus was earned.
(c) Vacations . During
the term hereof, the Executive shall earn vacation at the rate of
three (3) weeks per year, to be taken at such times and
intervals as shall be determined by the Executive, subject to the
reasonable business needs of the Company. Vacation shall otherwise
be governed by applicable policies of the Company, as in effect
from time to time.
(d) Other Benefits .
During the term hereof, the Executive shall be entitled to
participate in any and all Employee Benefit Plans from time to time
in effect for employees of the Company generally, except to the
extent any such Employee Benefit Plan is in a category of benefit
already otherwise provided to the Executive ( e.g ., a
severance pay plan). Such participation shall be subject to the
terms of the governing plan documents and generally applicable
Company policies. The Company may alter, modify, add to or
terminate its Employee Benefit Plans at any time that it, in its
sole judgment, determines to be appropriate, without recourse by
the Executive. For purposes of this Agreement, “ Employee
Benefit Plan ” shall have the meaning ascribed to such
term in Section 3(3) of ERISA, as amended from time to
time.
(e) Business Expenses
. The Company shall pay or reimburse the Executive for all
reasonable and customary business expenses incurred or paid by the
Executive in the performance of his duties and responsibilities
hereunder, subject to any maximum annual limit and other
restrictions on such expenses set by the Company and to such
reasonable substantiation and documentation as may be specified by
the Company from time to time.
5. Termination of
Employment and Severance Benefits . The Executive’s
employment hereunder may terminate under the following
circumstances:
(a) Death . In the
event of the Executive’s death during the term hereof, the
Executive’s employment under this Agreement shall immediately
and automatically terminate. In such event, the Company shall pay
to the Executive’s designated beneficiary or, if no
beneficiary has been designated by the Executive in writing, to his
estate, (i) any Base Salary earned but not paid during the
final payroll period of the Executive’s employment through
the date of termination, (ii) pay for any vacation time earned
but not used through the date of termination, (iii) any bonus
compensation awarded for the fiscal year preceding that in which
termination occurs, but unpaid as of the date of termination, and
(iv) any business expenses incurred by the Executive but
un-reimbursed as of the date of termination, provided that such
expenses and required substantiation and documentation are
submitted within sixty (60) days of termination and that such
expenses are reimbursable under Company policy (all of the
foregoing, “Final Compensation”). The Company shall
have no further obligations to the Executive hereunder.
(b) Disability
.
(i) The Company may terminate
the Executive’s employment hereunder, upon notice to the
Executive, in the event that the Executive becomes disabled during
his employment hereunder through any illness, injury, accident or
condition of either a physical or psychological nature and, as a
result, is unable to perform substantially all of his essential
duties and responsibilities hereunder, notwithstanding the
provision of any reasonable accommodation that may be due, for one
hundred and eighty (180) days during any period of three
hundred and sixty-five (365) consecutive calendar days. In the
event of such termination, the Company shall have no further
obligations to the Executive, other than for payment of Final
Compensation.
(ii) The Company may
designate another employee to act in the Executive’s place
during any period of the Executive’s disability.
Notwithstanding any such designation, the Executive shall continue
to receive the Base Salary in accordance with Section 4(a) and
benefits in accordance with Section 4(d), to the extent
permitted by the then-current terms of the applicable Employee
Benefit Plans, until the Executive becomes eligible for disability
income benefits under the Company’s disability income plan or
until the termination of his employment, whichever shall first
occur.
(iii) While receiving
disability income payments under the Company’s disability
income plan, the Executive shall not be entitled to receive any
Base Salary under Section 4(a) hereof, but shall continue to
participate in Employee Benefit Plans of the Company in accordance
with Section 4(d) and the terms of such plans, until the
termination of his employment.
(iv) If any question shall
arise as to whether during any period the Executive is disabled
through any illness, injury, accident or condition of either a
physical or psychological nature so as to be unable to perform
substantially all of his
essential duties and
responsibilities hereunder, the Executive may, and at the request
of the Company shall, submit to a medical examination by a
physician selected by the Company to whom the Executive or his duly
appointed guardian, if any, has no reasonable objection to
determine whether the Executive is so disabled, and such
determination shall for purposes of this Agreement be conclusive of
the issue. If any such question shall arise and the Executive shall
fail to submit to such medical examination, the Company’s
determination of the issue shall be final and binding on the
Executive.
(c) By the Company for
Cause . The Company may terminate the Executive’s
employment hereunder for Cause at any time upon written notice to
the Executive setting forth in reasonable detail the nature of such
Cause. The following, as determined by the Board in its reasonable
judgment, shall constitute Cause for termination:
(i) The Executive’s
failure to perform (other than by reason of disability), neglect
of, or negligence in the performance of, his duties and
responsibilities to the Company or any of its
Affiliates;
(ii) Material breach by the
Executive of any provision of this Agreement or any other agreement
with the Company or any of its Affiliates, or breach of any of the
terms of Sections 7, 8 or 9 of this Agreement;
(iii) The Executive’s
failure to comply with any of the rules, standards, or procedures
promulgated by the Company;
(iv) Falsification by the
Executive of Company records or documents or any other act of
dishonesty or moral turpitude committed by the Executive;
or
(vi) Other conduct by the
Executive that could be harmful to the business, interests or
reputation of the Company or any of its Affiliates.
Upon the giving of notice of termination
of the Executive’s employment hereunder for Cause, the
Company shall have no further obligations to the Executive, other
than for Final Compensation.
(d) By the Company Other
than for Cause . The Company may terminate the
Executive’s employment hereunder other than for Cause at any
time upon written notice to the Executive. In the event of such
termination during the term hereof, in addition to Final
Compensation and provided that no benefits are payable to the
Executive under a separate severance agreement as a result of such
termination, for a period of twelve (12) months following the
date of termination, or until such time as the Executive secures
other employment, whichever is earlier, the Company shall continue
to pay the Executive his Base Salary at the rate in effect on the
date of termination. Any obligation of the Company to the Executive
hereunder, other than for Final Compensation, shall be expressly
conditioned on the Executive’s execution of a general release
of claims in the form attached to this Agreement as Exhibit
A (the “Release of Claims”) within twenty-one days
following the date the Executive’s employment is
terminated
(or such longer period as the Company
shall determine it is required by law to permit the Executive to
consider the Release of Claims) and upon the Executive not revoking
such Release of Claims thereafter. Severance Pay to which the
Executive is entitled hereunder shall be payable in accordance with
the normal payroll practices of the Company, with the first
payment, which shall be retroactive to the day immediately
following the date the Executive’s employment terminated,
being due and payable on the Company’s next regular payday
for executives that follows the date the Executive returns a timely
and effective Release of Claims. The Release of Claims required for
separation benefits in accordance with Section 5(d) hereof
will create legally binding obligations on the part of the
Executive, and the Company and its Affiliates therefore advise the
Executive to seek the advice of an attorney before signing
it.
(e) Timing of Payments
. If at the time of the Executive’s separation from service,
the Executive is a “specified employee,” as hereinafter
defined, any and all amounts payable under this Section 5 in
connection with such separation from service that constitute
deferred compensation subject to Section 409A of the Internal
Revenue Code of 1986, as amended (“Section 409A”), as
determined by the Company in its sole discretion, and that would
(but for this sentence) be payable within six months following such
separation from service, shall instead be paid on the date that
follows the date of such separation from service by six
(6) months. For purposes of the preceding sentence,
“separation from service” shall be determined in a
manner consistent with subsection (a)(2)(A)(i) of Section 409A
and the term “specified employee” shall mean an
individual determined by the Company to be a specified employee as
defined in subsection (a)(2)(B)(i) of Section 409A.
6. Effect of
Termination . The provisions of this Section 6 shall apply
to any termination of employment, whether pursuant to
Section 5 or otherwise.
(a) Payment by the Company of
Final Compensation and of any Base Salary that may be due the
Executive under Section 5(d) shall constitute the entire
obligation of the Company to the Executive hereunder. The Executive
shall promptly give the Company notice of all facts necessary for
the Company to determine the amount and duration of its obligations
in connection with any termination pursuant to Section 5(d)
hereof, including without limitation immediate notice of any
successor employment he might accept.
(b) Except for any right of
the Executive to continue medical and dental plan participation in
accordance with applicable law, benefits shall terminate pursuant
to the terms of the applicable benefit plans based on the date of
termination of the Executive’s employment, without regard to
any continuation of Base Salary or other payment to the Executive
following such date of termination.
(c) Provisions of this
Agreement shall survive any termination of employment if so
provided herein or if necessary or desirable to accomplish the
purposes of other surviving provisions, including without
limitation the obligations of the Executive under Sections 7, 8 and
9 hereof. The obligation of the Company to make payments to or on
behalf of the Executive under Section 5(d) hereof, and the
Executive’s right to retain such payments, shall be
expressly
conditioned upon the Executive’s
continued full performance of his obligations under Sections 7, 8
and 9 hereof. The Executive recognizes that, except as expressly
provided in Section 5(d), no compensation is earned or will be
paid after termination of employment.
7. Confidential
Information .
(a) The Executive acknowledge
that some elements of the Company and its Affiliates’
business constitute trade secrets, are and must remain
confidential, and are of great value to the Company, and that
unauthorized disclosure of such elements would cause the Company
irreparable harm.
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