Exhibit 10.54

 

 

Separation Agreement

 

AGREEMENT made as of the 20th day of October, 2004 by and between PC Connection,
Inc., a Delaware corporation with offices at 730 Milford Road, Merrimack, New
Hampshire, 03054 (“PC Connection” or the “Company”) and Mark Gavin (“Mr. Gavin”
or “you”) (collectively, “the Parties”).

 

WHEREAS, Mr. Gavin has been employed by PC Connection as its Chief Financial
Officer;

 

WHEREAS, the parties wish to resolve amicably Mr. Gavin’s separation from the
Company and establish the terms of Mr. Gavin’s severance arrangement;

 

NOW, THEREFORE, in consideration of the promises and conditions set forth
herein, the sufficiency of which is hereby acknowledged, the Company and Mr.
Gavin agree as follows:

 

1. Resignation. The Company and you agree that your separation from the Company
will be characterized as a resignation.

 

2. Transition Period. From October 21, 2004 until November 19, 2004 (the
“Transition Period”), the Parties agree that, in exchange for the payment of his
current salary and benefits by PC Connection, Mr. Gavin shall render reasonable,
necessary and requested consulting services during regular and customary
business days and hours in order to assist PC Connection in the transition of
his services to a replacement chief financial officer.

 

3. Ongoing Cooperation. You agree to reasonably cooperate with the Company and
its attorneys and auditors with respect to any and all ongoing audits, internal
investigations and investigations by any regulatory authority.

 

4. Severance Benefits.

 

  (a) In return for your execution of the instant Agreement, PC Connection will
pay you salary continuation payments at your base rate of $ 260,000 per annum,
less all applicable state and federal taxes, for a period of six months,
commencing on November 20, 2004 (the Severance Pay Period).

 

  (b) PC Connection represents that you are currently vested in 156,250 stock
options under your Incentive Stock Option Agreement (“Option Agreement”) with
varying exercise prices. As provided in your Option Agreement, you shall have 30
days or 90 days depending on the plan in which to exercise the vested stock
options.

 

  (c) PC Connection represents that you are currently not vested in 286,250
additional stock options under the Option Agreement and these non-vested options
will terminate.

 

  (d) If, in addition to signing this Agreement, you choose to sign and return
the Covenant Not to Compete and Disclose Confidential Information and Assignment
of Rights (“Covenant Not to Compete”) attached to this Agreement as Attachment
A, the Company shall pay you, in addition to the severance benefits outlined in
this paragraph, the enhanced severance benefits described in the “Description of
Enhanced Severance Benefits” attached to this Agreement as Attachment B.

 

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5. Non-Disparagement. You agree that that as a condition for payment to you of
the consideration described herein, you will not make any false, disparaging or
derogatory statements to any media outlet, industry group, financial
institution, or current or former employee, consultant, client or customer of
the Company regarding the Company or any of its directors, officers, employees,
agents or representatives or about the Company’s business affairs and financial
condition, absent actual or threatened litigation or regulatory investigation,
or as required by law. Nothing herein shall prevent you from providing
information, documentation and/or testimony in connection with any investigation
or action by any governmental or regulatory authority which you believe to be
true.

 

Likewise, the Executive Officers and Directors of the Company agree not make any
false, disparaging or derogatory statements to any media outlet, industry group,
financial institution, prospective employer or current or former employee,
consultant, client or customer of the Company regarding Mr. Gavin, unless
required by law.

 

6. Return of Company Property. Upon the expiration of the Transition Period, you
agree to return all keys, ID badges, credit cards, cellular phones, computers,
diskettes, and other data storage and retrieval devices, software and other
materials and documents belonging to PC Connection or any affiliate. You also
agree that you will not retain any copies of any such material.

 

7. Rights in Work Product. You confirm that you have disclosed to PC Connection
all ideas and inventions and intellectual property (collectively, “Inventions”)
that arose from work performed by you for, on behalf of, at the expense of, or
on the premises of PC Connection or any other affiliate. Inventions include,
without limitation, any ideas for improvements or alternatives to PC
Connection’s operations and technology. You understand that under the terms of
your agreements with PC Connection, PC Connection owns all rights in the
Inventions and you agree to cooperate with PC Connection in executing any
necessary applications, assignments or similar forms respecting the Inventions.

 

8. Continuing Effect and Extension of Covenant. You acknowledge your obligation
to keep confidential all non-public information concerning the Company which you
acquired during the course of your employment with the Company, as stated more
fully in the Code of Business Conduct and Ethics (“Ethics Agreement”) you
executed annually during your employment, which remains in full force and
effect.

 

9. Confidentiality. To the extent permitted by law, the Parties understand and
agree that, as in exchange for the agreements herein contained and as a
condition for payment to Mr. Gavin of the consideration herein described, the
Parties, their agents and representatives shall keep the terms and contents of
this Agreement, and the contents of the negotiations and discussions resulting
in this Agreement, including, the contents and negotiations resulting in the
Enhanced Severance Benefits described in Attachment B, as confidential and none
of the above shall be disclosed to any third party except to the extent required
by federal or state law, in response to a request or investigation by a
regulatory authority, or as otherwise agreed to in writing by the other Party,
provided however, that this section does not preclude you from discussing the
terms of this Agreement with your immediate family, attorneys and tax advisors,
provided however, that before any such discussion, any such person must first
agree to keep the terms of this Agreement confidential.

 

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10. Complete Agreement. This Agreement together with the Covenant Not to
Compete, Ethics Agreement, and the Option Agreement and together with
Attachments A and B constitute the parties’ entire agreement with respect to its
subject matter and supersedes all prior negotiations, discussions, and
agreements with respect to the same subject matter, including, but not limited
to your offer letter dated February 5, 1998.

 

11. Release. In consideration of the payment of the severance benefits, you
hereby fully, forever, irrevocably and unconditionally release, remise,
discharge PC Connection, its officers, directors, stockholders, corporate
affiliates, subsidiaries, parent companies, agents and employees (each in their
individual and corporate capacities (hereinafter the “Released Parties”) from
any and all liabilities, obligations, debts, demands, actions, torts, breaches,
causes of action, suits, accounts, covenants, agreements, contingencies,
promises, understandings, damages, expenses, compensation, or claims that you
now have, may have or ever had against the Released Parties, whether in law or
in equity, or whether known or unknown, during all relevant time periods,
including but not limited to any claims arising out of your employment with or
separation from PC Connection, including, but not limited to all employment
discrimination claims under Title VII of the Civil Rights Act of 1964, 42 U.S.C.
§2000e et seq., the Age Discrimination in Employment Act (ADEA), 29 U.S.C. § 621
et seq. and the Older Workers Benefit Protection Act (OWBPA); the Americans With
Disabilities Act of 1990, 42 U.S.C., §12101 et seq., the Family and Medical
Leave Act, 29 U.S.C. § 2601 et seq.; all claims arising out of the Fair Credit
Reporting Act, 15 U.S.C. §1681 et seq., the Employee Retirement Income Security
Act of 1974 (“ERISA”), 29 U.S.C. §1001 et seq., the New Hampshire Law Against
Discrimination, N.H. Rev. Stat. Ann. § 354-A:1 et seq., N.H. Rev. Stat. Ann. §
275:36 et seq. (New Hampshire equal pay law), the New Hampshire Whistleblowers’
Protection Act, N.H. Rev. Stat. Ann. § 275-E:1 et seq., all as amended; all
common law claims including, but not limited to, actions in tort, defamation and
breach of contract; and any claim or damage arising out of your employment with
or separation from the Company (including a claim for retaliation) under any
common law theory or any federal, state or local statute or ordinance not
expressly referenced above; provided, however, that nothing in this Agreement
prevents you from filing, cooperating with, or participating in any proceeding
before the EEOC or a state Fair Employment Practices Agency (except that you
acknowledge that you may not be able to recover any monetary benefits in
connection with any such claim, charge or proceeding) or cooperating fully with
any federal regulatory authority.

 

12. Acknowledgments. You acknowledge that you have been given twenty-one (21)
days to consider this Agreement and that the Company advised you to consult with
an attorney of your own choosing prior to signing this Agreement. Further, you
acknowledge that you may revoke this Agreement for a period of seven (7) days
after you execute this Agreement, and the Agreement shall not be effective or
enforceable until the expiration of this seven (7) day revocation period. You
understand and agree that by entering into this letter agreement you are waiving
any and all rights or claims you might have under The Age Discrimination in
Employment Act, as amended by The Older Workers Benefit Protection Act, and that
you have received consideration beyond that to which you were previously
entitled.

 

13. Voluntary Assent. You affirm that no other promises or agreements of any
kind have been made to or with you by any person or entity whatsoever to cause
you to sign this Agreement, and that you fully understand the meaning and intent
of this Agreement. You state and represent that you have carefully read this
Agreement, understand the contents herein, freely and voluntarily assent to all
of the terms and conditions hereof, and sign your name of your own free act.

 

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14. Nature of Agreement. You understand and agree that this Agreement is a
severance and settlement agreement and does not constitute an admission of
liability or wrongdoing on the part of you or the Company.

 

15. Amendment. This Agreement shall be binding upon the Parties and may not be
abandoned, supplemented, changed or modified in any manner, orally or otherwise,
except by an instrument in writing of concurrent or subsequent date signed by a
duly authorized representative of the Parties hereto. This Agreement is binding
upon and shall inure to the benefit of the Parties and their respective agents,
assigns, heirs, executors, successors and administrators.

 

16. Waiver of Rights. No delay or omission by either of the Parties in
exercising any rights under this Agreement shall operate as a waiver of that or
any other right. A waiver or consent given by either of the Parties on any one
occasion shall be effective only in that instance and shall not be construed as
a bar or waiver of any right on any other occasion.

 

17. Validity. Should any provision of this Agreement be declared or be
determined by any court of competent jurisdiction to be illegal or invalid, the
validity of the remaining parts, terms, or provisions shall not be affected
thereby and said illegal or invalid part, term or provision shall be deemed not
to be a part of this Agreement.

 

18. Applicable Law. This Agreement shall be governed by the laws of the State of
New Hampshire, without regard to conflict of laws provisions. The Parties hereby
irrevocably submits to the jurisdiction of the courts of the State of New
Hampshire, or if appropriate, a federal court located in State of New Hampshire
(which courts, for purposes of this Agreement, are the only courts of competent
jurisdiction), over any suit, action or other proceeding arising out of, under,
or in connection with this Agreement or its subject matter.

 

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

 

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IN WITNESS WHEREOF, PC Connection and Mark Gavin have each caused this Agreement
to be executed on the date set forth below.

 

Agreed:

 

PC Connection, Inc.

    By:  

/s/ Brad Mousseau

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/s/ Mark Gavin

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    Brad Mousseau, V.P. H.R.   Mark Gavin

10/20/04

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10/20/04

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Date   Date

 

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ATTACHMENT A

 

COVENANT NOT TO COMPETE AND DISCLOSE CONFIDENTIAL INFORMATION

AND ASSIGNMENT OF RIGHTS

 

NON COMPETE AGREEMENT

 

This Covenant entered into October, 20th 2004 by and between _Mark Gavin
(Employee), residing at 11 Morgan Lane, Keene, NH 03431 with: PC Connection,
Inc.; _X PC Connection Sales Corp.; Merrimack Services Corp.; PC Connection
Sales of Massachusetts, Inc., all Delaware corporations with offices at 730
Milford Road, Merrimack, New Hampshire, and members of the PC Connection, Inc.
affiliated group of companies (“PC Connection”).

 

Whereas, PC Connection is engaged in the sales, marketing, and service of
computer and networking hardware, software, peripherals, and service primarily
through telephone and electronic commerce throughout the United States; and

 

Whereas, the business PC Connection is engaged in is extremely competitive and
success depends in great part on developing, protecting and maintaining
confidential information concerning plans, strategies, products, customers
lists, vendor lists, pricing, business techniques, and training methods, and
seeks by this Covenant to protect said information; and

 

Whereas, Employee acknowledges that in the course of his or her employment with
PC Connection he or she may have access to information that is valuable and
confidential to PC Connection, the improper disclosure of which or engagement in
unfair competition involving such information will seriously damage PC
Connection;

 

Now, therefore, in consideration of the mutual covenants contained herein, PC
Connection and Employee agree as follows:

 

1. NO COMPETITION WITH PC CONNECTION.

 

(a) While employed by any of the PC Connection companies, Employee shall not
own, manage, operate, control, consult for, aid or be employed by any entity
that is substantially similar to or directly competes with any business
conducted by PC Connection, including, but not limited to, the design,
development and production of the particular projects Employee will have worked
on or been involved with.

 

(b) For the period of twelve (12) months following any termination of employment
for any reason or for no reason, Employee, either as an employee of another
entity, independently or otherwise, shall not compete with PC Connection by (i)
engaging in the design, development, production, marketing or sale of goods or
services directly in competition with PC Connection or engaging in projects
substantially similar to those Employee worked on or was involved with on behalf
of PC Connection, whether or not the projects, in whole or in part, involved
confidential information or trade secrets, (ii) soliciting sales in competition
with PC Connection from PC Connection’s established customers with whom Employee
had other than incidental contact during

 

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his or her employment with PC Connection or (iii) soliciting other employees to
leave PC Connection in order to undertake other employment. ( c) Employee
represents and certifies that he or she is not currently subject to a
non-competition, non-disclosure, confidentiality or other agreement that may
affect his or her ability to perform work required by PC Connection.

 

2. NO DISCLOSURE OF TRADE SECRETS AND CONFIDENTIAL INFORMATION

 

(a) Employee acknowledges that some elements of PC Connection’s business
constitute trade secrets, are and must remain confidential, and are of value to
PC Connection, and that unauthorized disclosure of such elements will cause PC
Connection irreparable harm. PC Connection’s trade secrets and/or confidential
information include but are not limited to: identities of customers, customer
lists and other information about customers used by PC Connection, sales,
marketing and financial information, designs, diagrams, schematics, plans,
specifications and other technical information, oral and written agreements with
vendors and distributors, pricing methods, purchasing and sales contacts,
computer programs, sales figures and PC Connection’s short range and long range
product, sales, marketing, expansion, diversification, financing and similar
plans, regardless of whether stored in any tangible medium or of the type of
medium in which it is stored, used or contained and whether contained in created
materials reflecting such information, excepting information which is generally
known outside PC Connection or which becomes generally known outside PC
Connection by publication other than by or as a result of an unauthorized act or
omission by or involving the Employee or another. Created materials include any
documents, memoranda, notes, notebooks, reports, studies, programs, data,
drawings, schematics, ideas, discoveries and any other item of information
generated by or for PC Connection stored or contained in any medium, including
materials that Employee created individually or together with others whether
during or outside of regular working hours so long as they were created for the
benefit of PC Connection or by utilizing Company time, resources, materials or
information.

 

(b) Employee shall not disclose trade secrets or confidential information to
anyone except authorized Company officers, agents and employees, unless
specifically directed by an officer of PC Connection.

 

(c) Employee shall deliver to PC Connection all confidential information,
created materials and trade secrets, whether written or contained in any other
medium, which are in his or her possession or under his or her control, promptly
upon request. Employee shall not take any confidential information, created
materials and trade secrets, whether written or contained in any other medium,
or hardware outside PC Connection’s premises without the express consent of an
officer of PC Connection and shall return all such things promptly upon
termination of employment with PC Connection.

 

(d) Employee acknowledges that the obligation not to disclose confidential
information and trade secrets is a continuing one, which shall remain in force
and binding upon the Employee after his employment with PC Connection is
terminated for any reason and until such time as the information is no longer
confidential and does not constitute a trade secret.

 

3. ASSIGNMENT. Employee understands that all original work created by him or her
in the context of his employment is “work for hire” and is created for the
exclusive benefit of PC Connection. Employee hereby assigns any and all rights
he or she may have in any intellectual property or other information arising
from work performed as an Employee of PC Connection or any work performed for,
on behalf of, at the expense of, or on the premises of PC Connection, including,
but not limited to, rights to patents, mask works, copyrights, trade secrets,
trademarks, and trade names. Employee agrees to execute assignments of the
rights to said intellectual property or other information and to do such other
things as are necessary to secure these rights in PC Connection from time to
time upon its request.

 

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4. INJUNCTIVE RELIEF. In the event Employee breaches any of the foregoing
provisions, PC Connection will suffer irreparable harm and shall be entitled to
injunctive relief.

 

5. CONSIDERATION. The consideration for Employee’s obligations under this
Covenant include one or more of the following: PC Connection (a) hiring
Employee, (b) providing continued employment in one of the PC Connection, Inc.
group of companies, (c) granting Employee a promotion and/or pay increase.

 

6. GENERAL. This Covenant represents the entire agreement between the parties
relating to the subject matter covered, and may not be modified except by a
writing signed by both parties. This Covenant shall inure to the benefit of PC
Connection, its successors and assigns. If any provision in this Covenant is
deemed illegal or unenforceable, the offending provision shall either be
modified to make it legal and enforceable while retaining as far as possible the
original intent of the provision or, if that is not possible, it shall be
stricken; the remainder of the Covenant to continue in full force and effect.
This Covenant shall be construed and enforced under and in accordance with the
law of the State of New Hampshire.

 

Employee acknowledges that he or she has read and understands this Covenant and
has had an opportunity to discuss any questions with PC Connection Personnel
Manager or Legal Counselor with independent counsel of his or her choice.
Employee understands and agrees that this Covenant does not change the at-will
nature of his employment with PC Connection.

 

Agreed:

 

PC Connection   Employees By:  

/s/ Brad Mousseau

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/s/ Mark Gavin

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Brad Mousseau, VP HR

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Mark Gavin

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    Print name/title   print name

 

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ATTACHMENT B

DESCRIPTION OF ENHANCED SEVERANCE BENEFITS

 

If you sign and return the [Non-Compete, Non-Solicitation Agreement] attached to
this Agreement as Attachment A, the Company will provide to you the following
enhanced severance benefits:

 

  a) The Company will pay to you an additional 6 months of salary continuation
at your base rate of $260,000.00 (the “Enhanced Severance Pay Period”), less all
applicable state and federal taxes. This Enhanced Severance pay will be paid in
accordance with the Company’s normal payroll procedures, and will commence at
the conclusion of the Severance Pay Period.

 

  b) Provided you timely elect to continue receiving group medical insurance
pursuant to the federal “COBRA” law, 29 U.S.C. § 1161 etseq., the Company will
continue to pay the same portion of your health and dental coverage premiums
that it provides for similar employees, during both the Severance Pay Period and
the Enhanced Severance Pay Period, or until you become eligible for other
coverage, whichever comes first. During this period, the Company will continue
to deduct the employee contribution to such benefits from your salary
continuation payments. Thereafter, you may elect to continue receiving group
medical insurance and all premium costs shall be paid by you on a monthly basis
for as long as, and to the extent that, you remain eligible for COBRA
continuation. You should consult the COBRA materials to be provided by the
Company for details regarding these benefits.

 

  c) Executive outplacement services will be arranged for you with Lee Hecht
Harrison. Such services will continue throughout both the Severance Pay Period
and the Enhanced Severance Pay Period. The cost of the outplacement services
will be paid by the Company.

 

  d) Upon the execution of this Agreement, the Company agrees to provide to
Gavin a laptop computer similar in make, style and condition to the one utilized
by him during his employment with the Company.

 

  e) The Company agrees to make every effort to provide Gavin and his counsel
with a copy of any press release related to Gavin’s separation from the Company
as soon as possible, but prior to its release to the public.