RETENTION AGREEMENT
This Retention Agreement is dated as of April 5, 1996
and is between Merisel, Inc. (the "Company"), a Delaware
corporation, and Xxxxx X. Xxxxxx ("Associate").
The Company desires to retain Associate as the Vice
President and General Counsel of the Company. Accordingly,
Associate and the Company desire to set forth certain (i)
retention benefits to be paid to the Associate and (ii) the
terms and conditions of certain benefits to be paid to
Associate upon a termination of Associate's employment by
the Company. Accordingly, Associate and the Company hereby
agree as follows:
1. Definitions. For purposes of this Agreement, the
following terms shall have the meanings set forth below:
(a) "Base Salary" shall mean Associate's annual base
salary as in effect on the date hereof, being $175,000, or
as the same may be increased (but not decreased) hereafter
from time to time, exclusive of any bonus or incentive
compensation, benefits (whether standard or special),
automobile allowances, relocation or tax equalization
payments, pension payments or reimbursements for
professional services.
(b) "Company" shall mean Merisel, Inc., a Delaware
corporation, and each of its successor enterprises that
result from any merger, consolidation, reorganization, sale
of assets or otherwise.
(c) A "Change of Control" shall have occurred if (i)
any person, corporation, partnership, trust, association,
enterprise or group shall become the beneficial owner,
directly or indirectly, of outstanding capital stock of the
Company possessing at least 50% of the voting power (for the
election of directors) of the outstanding capital stock of
the Company, or (ii) there shall be a sale of all or
substantially all of the Company's assets or the Company
shall merge or consolidate with another corporation and the
stockholders of the Company immediately prior to such
transaction do not own, immediately after such transaction,
stock of the purchasing or surviving corporation in the
transaction (or of the parent corporation of the purchasing
or surviving corporation) possessing more than 50% of the
voting power (for the election of directors) of the
outstanding capital stock of that corporation, which
ownership shall be measured without regard to any stock of
the purchasing, surviving or parent corporation owned by the
stock holders of the Company before the transaction.
(d) "Change of Control Covered Termination" shall
mean any cessation of the Associate's employment by the
Company that occurs after a Change of Control other than as
a result of (i) Termination for Cause, (ii) Associate's
death or permanent disability, or (iii) Associate's
resignation without Good Reason (as hereinafter defined).
(e) A resignation by Associate shall be with "Good
Reason" if (A) after a Change of Control the Company does
not offer and provide (for a period of at least one year) to
Associate a part time position as General Counsel, with
hours, salary, benefits and responsibilities substantially
similar to Associate's hours, salary, benefits and
responsibilities as in effect on January 1, 1996, it being
noted for the sake of clarity that on January 1, 1996,
Associate was required to work on Mondays, Wednesdays and
Thursdays at a salary of $105,000 per annum, with full
benefits, or (B) prior to a Change of Control (i) without
Associate's written consent, there has been a material
reduction in Associate's job responsibilities from those
that existed on the date hereof, or (ii) there is a
reduction in Associate's Base Salary; or (C) either prior to
or after a Change of Control (i) without Associate's prior
written approval, the Company requires Associate to be based
anywhere other than the Associate's then current location,
it being understood that required travel on the Company's
business to an extent consistent with Associate's prior
business travel obligations does not constitute "Good
Reason", (ii) the Company ceases at any time and does not at
all times provide at least $1,000,000 of professional
liability insurance coverage for Associate, or (iii) a
successor to all or substantially all of the business and
assets of the Company fails to furnish Associate with the
assumption agreement required by Section 7 hereof.
(f) "Termination for Cause" shall mean if the Company
terminates Associate's employment for any of the following
reasons: Associate misconduct (misconduct includes physical
assault, insubordination, falsification or misrepresentation
of facts on company records, fraud, dishonesty, willful
destruction of company property or assets, or harassment of
another associate by Associate); excessive absenteeism;
abuse of sick time; or Associate conviction for or a plea
of nolo contendere by Associate to a felony or any crime
involving moral turpitude.
(g) "Expiration Date" shall mean April 30, 1997.
(h) "Covered Termination" shall mean any cessation
of the Associate's employment by the Company that occurs
prior to a Change of Control other than as a result of (i)
Termination for Cause, (ii) Associate's death or permanent
disability, or (iii) Associate's resignation without Good
Reason (as hereinafter defined).
2. Retention Bonus. In order to induce Associate to
remain as an employee of the Company, the Company agrees to
pay to Associate a bonus of $25,000 on September 1, 1996.
3. At-Will Employee. Subject to the express
provisions of this Agreement, the Company shall have no
obligation to retain or continue Associate as an employee
and Associate's employment status as an "at-will" employee
of Company is not affected by this Agreement.
4. Termination Benefits. (A) If a Change of Control
shall occur on or before the Expiration Date and if a Change
of Control Covered Termination shall occur within one year
after the Change of Control, then: (i) on the effective date
of such Change of Control Covered Termination, the Company
shall make a lump sum payment to Associate equal to one half
of Associate's Base Salary; and (ii) the Company will
reimburse Associate for the cost of Associate's COBRA
payments (at the level of coverage, including dependent care
coverage, as in effect immediately prior to such Covered
Termination) under the Company's health insurance plans for
a six month period following the date of the Covered
Termination.
(B) If a Covered Termination shall occur prior to a
Change of Control and on or before the Expiration Date,
then: (i) on the effective date of such Covered Termination,
the Company shall make a lump sum payment to Associate equal
to one quarter of Associate's Base Salary; and (ii) the
Company will reimburse Associate for the cost of Associate's
COBRA payments (at the level of coverage, including
dependent care coverage, as in effect immediately prior to
such Covered Termination) under the Company's health
insurance plans for a three month period following the date
of the Covered Termination.
(C) The amount of any reimbursement for the cost of
COBRA payments upon either a Change of Control Covered
Termination or a Covered Termination will be grossed up so
that Associate will receive an amount equal to the COBRA
payments, after taking into account all applicable taxes.
The payments to be made to Associate upon a either a Change
of Control Covered Termination or a Covered Termination are
in addition to the payments made to employees by the Company
upon termination in the ordinary course, such as
reimbursement for business expenses and vacation pay through
the date of termination.
5. Withholding. Company shall deduct from all
payments paid to Associate under this Agreement any required
amounts for social security, federal and state income tax
withholding, federal or state unemployment insurance
contributions, and state disability insurance or any other
required taxes.
6. Mitigation. Associate shall have no obligation to
mitigate the amount of any payment provided for in this
Agreement by seeking employment or otherwise.
6. Associate's Obligations. In exchange for Company
providing the above described benefits to Associate,
Associate agrees that prior to receiving any severance
compensation from Company in respect of such Covered
Termination, whether under this Agreement or otherwise,
Associate will execute and deliver to Company a Release and
a Confidentiality Agreement, each in the form provided to
Associate with this Agreement.
7. Assumption Agreement. The Company will require any
successor (whether direct or indirect, by purchase, merger
consolidation or otherwise) to all or substantially all of
the business and assets of the Company, expressly to assume
and agree to perform both this Agreement and that certain
Indemnity Agreement, dated as of August 1, 1994, between the
Company and Associate, both in the same manner and to the
same extent that the Company would be required to perform
such agreements whether or not such succession had taken
place.
8. Miscellaneous. This Agreement shall be binding
upon and inure to the benefit of Company and Associate;
provided that Associate shall not assign any of Associate's
rights or duties under this Agreement without the express
prior written consent of Company. This Agreement sets forth
the parties' entire agreement with regard to the subject
matter hereof. No other agreements, representations, or
warranties have been made by either party to the other with
respect to the subject matter of this Agreement. This
agreement may be amended only by a written agreement signed
by both parties. This Agreement shall be governed by and
construed in accordance with the laws of the State of
California. Any waiver by either party of any breach of any
provision of this Agreement shall not operate as or be
construed as a waiver of any subsequent breach. If any
legal action is necessary to enforce the terms of this
Agreement, the prevailing party shall be entitled to
reasonable attorneys' fees in addition to any other relief
to which that party may be entitled.
This Agreement shall continue in effect until the
Expiration Date. IN WITNESS WHEREOF, the parties hereto
have executed this Agreement, as of the day and year first
written above.
MERISEL, INC.
By:/s/ Xxxxxx Xxxxxxxxxx
Its:Chairman and CEO
"ASSOCIATE"
/s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
