EXHIBIT 10.65
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into as of the 3rd day
of February, 1997, by and between Merisel, Inc., a Delaware Corporation (the
"Company"), and Xxxxxx X. XxXxxxxxx ("Executive").
RECITALS
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The Company and Executive desire to set forth the terms and conditions
governing Executive's employment by the Company.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties hereto have agreed as follows:
1. Term of Employment.
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The Company shall employ Executive as its President and Chief
Operating Officer and Executive agrees to be so employed by the Company under
the terms and conditions of this Agreement commencing as of February 3, 1997
(the "Effective Date") and ending on the earlier of (i) the third anniversary of
the Effective Date, or (ii) termination of Executive's employment pursuant to
this Agreement (the period commencing on the Effective Date and ending on the
third anniversary thereof is hereinafter referred to as the "Employment Term"),
subject to renewal for additional periods as may be mutually agreed by the
Company and Executive. The original term and any renewal terms of this
Agreement may be sooner terminated as provided herein.
2. Scope of Duties.
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Executive shall undertake and assume the responsibility of performing
for and on behalf of the Company those duties as shall be consistent with the
position of the President and Chief Operating Officer. Executive shall report to
the Chief Executive Officer of the Company. Executive covenants and agrees that
at all times during the term of this Agreement he shall devote his substantially
full-time and best efforts to the execution of his duties pursuant hereto.
3. Compensation.
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As compensation for services rendered pursuant to this Agreement, the
Company shall pay to Executive, in installments customary with the Company's
standard payroll periods, base annual compensation of $300,000 during the
Employment Term, provided, however, that the Board of Directors ("Board") may,
in its sole discretion, increase such base annual compensation as merited by the
performance of Executive. The Company shall deduct from all payments paid to
Executive 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.
4. Bonus, Expenses, Reimbursements and Additional Benefits.
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In addition to the compensation to be paid to Executive pursuant to
Section 3, the Company shall pay, reimburse or otherwise confer the following
items of benefit to Executive:
4.1 During the Employment Term, Executive shall be eligible to
receive an annual bonus of $200,000 (the "Bonus Amount"), which may be paid in
quarterly installments based on the Company's financial performance for such
quarter measured against its consolidated business plan for such period. One
quarter of the Bonus Amount shall be guaranteed to Executive for the first
fiscal quarter of 1997, provided, however, that such bonus payable with respect
to the first fiscal quarter of 1997 shall be reduced on a prorata basis based on
the number of days within the period commencing on the first day of the first
fiscal quarter of 1997 and ending on the Effective Date of this Agreement. In
addition, one quarter of the Bonus Amount shall be guaranteed to Executive for
the second fiscal quarter of 1997.
4.2 The Company shall pay Executive a monthly car allowance of
$1600.
4.3 The Company shall pay Executive for the dues at one country club
of Executive's choice of $425 per month.
4.4 Executive shall be eligible to participate in all benefit
programs and plans which may be afforded senior management of the Company and
the Company shall make contributions to such plans and arrangements on behalf of
Executive as shall be required or consistent with the terms and conditions of
said plans; provided, however, that Executive shall be subject to all waiting
periods and preexisting conditions of such plans and no waiting periods or
preexisting conditions shall be waived. Such plans and programs may include, by
way of example, deferred compensation, group insurance benefits, long-term or
permanent disability insurance and major medical coverage.
4.5 Executive shall be entitled, during the Employment Term, to
vacation time with compensation and time off with compensation on account of
illness or injury, in accordance with the Company's written policies for
employees in effect from time to time.
4.6 Effective February 3, 1997 (the "Option Grant Date"), the Board
approved a grant to Executive of a non-qualified stock option (the "Option") to
purchase 200,000 shares of the Company's Common Stock ("Option Shares") under
the Company's 1991 Stock Option Plan. Except as otherwise provided in Section
5.5 below, the Option shall vest monthly at a rate of 50,000 of the Option
Shares over a four-year period beginning on the Option Grant Date, with an
Option exercise price of $2.00 per share, as more specifically provided in the
stock option agreement between the Company and Executive to be entered into
concurrently herewith. Except as otherwise provided herein, the terms and
conditions of the Option shall be governed by the Company's 1991 Stock Option
Plan and by the option agreement evidencing such Option.
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4.7 During the Employment Term, the Company shall maintain a
directors' and officers' liability insurance policy with a carrier having a
"Best" rating of not less than A+. In the event that such an insurance policy
is not in place, the Executive shall have such rights with respect to the
payment of expenses and retention of counsel as are provided in the indemnity
agreement to be entered into between the Company and the Executive concurrently
herewith (including without limitation paragraphs 6 and 8 thereunder) and as are
otherwise provided under the Company's certificate of incorporation and bylaws
and applicable law.
5. Termination of Agreement.
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5.1 Termination by Either Party. This Agreement may be terminated at
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any time prior to expiration of the Employment Term by Executive upon sixty (60)
days written notice to the Company. If the Company terminates Executive's
employment during the period commencing on the Effective Date and ending on the
second anniversary of the Effective Date, the Company shall pay Executive all
salary and other compensation payable, if any, under Section 4 for the period
commencing on the date of such termination of employment and ending on the
second anniversary of the Effective Date. From the second anniversary of the
Effective Date to the expiration of the Employment Term, the Company may
terminate Executive at any time upon sixty (60) days written notice to
Executive. Upon any termination (i) by the Company after the second anniversary
of the Effective Date or (ii) by Executive, the Company shall promptly pay
Executive all salary and other compensation, including amounts payable, if any,
under Section 4 and any unused vacation pay, earned by him through the effective
date of such termination. Executive shall not be entitled to any severance
payment. After any notice of termination is given under this Section 5.1,
whether by the Company or Executive, the Company may remove or suspend Executive
from performance of his office or of any of his duties hereunder during the
period prior to the effective date of termination, provided, that such removal
or suspension shall not affect Executive's right to receive compensation and
benefits during such period. The Board must approve the termination of
Executive's employment under this Section 5.1.
5.2 Termination by Reason of Death or Disability. This Agreement
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shall be terminated upon the death or, at the Company's option, the disability
of Executive. For purposes of this Agreement, the term "disability" shall mean
the inability of Executive to perform substantially all of his duties hereunder
for any 90 days in a 105 consecutive day period; provided that until such time
as the Company elects to terminate this Agreement due to Executive's disability,
Executive shall continue to receive from the Company 100% of his compensation
and other benefits and distributions by way of compensation, which Executive
would otherwise be entitled to receive. Upon the termination of this Agreement
due to death or disability of Executive, the Company shall promptly pay
Executive or his estate as the case may be, all salary and other compensation,
including unused vacation pay, earned by him through the effective date of such
termination, less income taxes and other standard employee deductions. All other
benefits and payments provided for hereunder shall terminate; provided, that
nothing in this Section 5.2 shall be construed to prohibit Executive or his
estate, as the case may be, from collecting any insurance proceeds or state
disability payments to which he or his estate might otherwise be entitled.
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5.3 Termination for Cause. This Agreement may be terminated, at the
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Company's option, (i) upon the occurrence of any theft by Executive or
conviction for or a plea of nolo contendere by Executive to a felony or any
crime involving moral turpitude, (ii) upon the material breach by Executive of
any of the provisions of this Agreement, or (iii) upon Executive's misconduct
(as defined below). Termination for Cause shall not be deemed to have occurred
unless the Board adopts a resolution, at a meeting called and held for that
purpose (after reasonable notice to Executive and after allowing Executive and
his counsel to be heard before the Board) finding that Executive was guilty of
conduct set forth in (i), (ii) or (iii) and specifying the particulars thereof.
Notwithstanding any such determination by the Board, Executive may challenge
such determination in arbitration pursuant to Section 12. Upon a termination for
Cause, which, if contested in arbitration by Executive, is upheld in
arbitration, all compensation, benefits and payments provided for hereunder
shall terminate, and Executive shall not be entitled to any severance or other
payments other than for salary and other compensation (including unused vacation
pay) earned by him through the effective date of such termination. "Misconduct"
shall mean physical assault, falsification or misrepresentation of facts on
Company records, creating or contributing to unsafe working conditions, fraud,
dishonesty, willful destruction of Company property or assets or harassment of
another employee by Executive. No act, or failure to act, by Executive shall be
considered "willful" unless committed without good faith and without a
reasonable belief that the act or omission was in the Company's best interest.
5.4 Termination Without Cause. If the Company terminates Executive
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without Cause at any time other than within one year following a Sale of the
Company, then in addition to the amounts due under Section 5.1:
(a) The Company shall pay Executive, in equal monthly installments
for a period of 12 months following termination, an amount equal to
one times the Executive's annual base salary as then in effect plus
one times the average of the annual performance bonus received by the
Executive over the Employment Term;
(b) The Company shall reimburse Executive for the cost of Executive's
COBRA payments under the Company's health insurance plans for a period
of 18 months following such termination; and
(c) Any remaining unvested portion of the Option shall vest.
5.5 Termination Following a Sale of the Company. If the Company
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terminates Executive without Cause, and other than by reason of death or
Disability, within one year following a Sale of the Company, then in addition to
the amounts due under Section 5.1:
(a) The Company shall pay Executive, in equal monthly installments
for a period of 18 months following termination, an amount equal to
one a half (1.5) times the Executive's annual base salary as then in
effect plus one and a half (1.5) times the average of the annual
performance bonus received by the Executive over the Employment Term;
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(b) The Company shall reimburse Executive for the cost of Executive's
COBRA payments under the Company's health insurance plans for a period
of 18 months following such termination; and
(c) Any remaining unvested portion of the Option shall vest.
A "Sale of the Company" shall be deemed to occur 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 ownership of the purchasing, surviving or
parent corporation by the stockholders of the Company before the transaction.
It is expressly understood that, for purposes of the definition of "Sale of the
Company," the holders of indebtedness of the Company or its subsidiaries shall
not be deemed to constitute a "group" solely by virtue of their roles as debt
holders or by exercising their rights with respect thereto.
5.6 Voluntary Resignation by Executive. In the event Executive
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voluntarily resigns prior to the expiration of the Employment Term, then, at the
time the resignation is effective, all benefits and payments provided for
hereunder shall terminate, and, without limiting the foregoing, Executive shall
not be entitled to any severance payment other than amounts due under Section
5.1.
6. Disclosure of Information.
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Executive acknowledges that in connection with and as a result of his
employment pursuant to this Agreement, he shall make use of, acquire and add to
Confidential Information (as defined below). Except as required in connection
with his obligations hereunder, Executive shall not, in any manner, disclose or
use any Confidential Information, including Confidential Information received
from the Company or others either before, during or after his employment with
the Company or received before during or after the term of this Agreement,
except upon the prior written consent of the Company. Executive acknowledges
that such Confidential Information of the Company will include matters conceived
or developed by Executive, as well as matters learned by Executive from
employees of the Company. Any Confidential Information that Executive has, shall
prepare or shall have prepared, used, use or come into contact with shall be and
remain the Company's sole property and shall not be removed from the Company's
premises without its prior written consent, and shall be returned upon
termination of this Agreement. Executive will not, except as the Company may
otherwise consent or direct in writing, sell, use, lecture, or publish any
Confidential Information or other proprietary information
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of the Company or authorize anyone else to do those things at any time either
during or subsequent to this Agreement. For purposes of this Agreement, the term
"Confidential Information" means either: (A) information concerning the
financial condition of the Company or its subsidiaries that is not generally
available to the public; or (B) trade secrets as defined in California Civil
Code Section 3426.1. In the event that Executive is requested or required (by
deposition, interrogatories, requests for information or documents in legal
proceedings, subpoena, civil investigative demand or other similar process) to
disclose any Confidential Information, Executive shall provide the Company with
prompt written notice of any such request or requirement so that the Company may
seek a protective order or other appropriate remedy and/or waive compliance with
the provisions of this Agreement. If, in the absence of a protective order or
other remedy or the receipt of a waiver by the Company, Executive is
nonetheless, legally compelled to disclose Confidential Information to any
tribunal or else stand liable for contempt or suffer other censure of penalty,
Executive may, without liability hereunder disclose to such tribunal only that
portion of the Confidential Information which Executive is legally required to
disclose, provided that Executive exercises his best efforts to preserve the
confidentiality of the Confidential Information, including, without limitation,
by cooperating with the Company to obtain an appropriate protective order or
other reliable assurance that confidential treatment will be accorded the
Confidential Information by such tribunal.
7. Employee's Covenants.
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7.1 During the term of this Agreement, Executive shall (i) observe
and conform to the policies and directions promulgated by the Chief Executive
Officer, act at the instruction of the Chief Executive Officer and report
exclusively to the Chief Executive Officer, (ii) exercise and perform faithfully
to the best of his ability on behalf of the Company the powers and duties
reasonably required by the Chief Executive Officer; and (iii) devote his
substantially full time and effort to the business affairs of the Company and
its subsidiaries.
7.2 Executive agrees that during the term of this Agreement and, in
the event Executive's employment with the Company terminates pursuant to Section
5.3, Section 5.4 or Section 5.6 hereof during the term of this Agreement, for a
period of eighteen (18) months following such termination (provided that if
Executive is terminated pursuant to Section 5.4, Executive shall be subject to
the obligations hereunder for such period of time as Executive is paid pursuant
to such Section 5.4) Executive will not directly or indirectly (i) engage in a
"Restricted Business" (as defined herein), (ii) own or control any debt equity
or other interest in a Restricted Business (except as a passive investor of less
than 5% of the capital stock or publicly traded notes or debentures of a
publicly-held company), (iii) act as director, officer, manager, employee,
participant or consultant to a Restricted Business, or (iv) be obligated to
or connected in any advisory business enterprise or ownership capacity with a
Restricted Business. For purposes of this Agreement, a "Restricted Business"
shall mean any of Tech Data Corp., Xxxxxx Micro, Inc., Computer 2000 AG (C2000),
Intelligent Electronics, Inc., MicroAge, Inc., Inacom Corp., Compucom, Entex
Information Services, Inc., Vanstar Corp., SYNNEX Information Technologies,
Inc., Arrow Electronics, Incorporated or any other wholesale distributor of
micro computer products or with any subsidiary, division or successor of any of
them or with any entity
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that acquires, whether by acquisition, merger or otherwise, any significant
amount of the assets or substantial part of any of the business of any of them.
Executive further agrees that during the term of this Agreement and, in the
event Executive's employment with the Company terminates during the term of this
Agreement, for a period of eighteen months following such termination, Executive
shall not, on behalf of any business enterprise other than the Company and its
subsidiaries, solicit the employment of or hire any person that is or was
employed by the Company or any of its subsidiaries at any time on or after
January 1, 1997.
7.3 In the event of any material breach by Executive of any of the
restrictions contained in this Agreement (including, without limitation, those
set forth in Sections 6, 7, and 8), the Company shall have no further obligation
to compensate Executive hereunder and Executive acknowledges that the harm to
the Company cannot be reasonably or adequately compensated in damages in any
action at law. Accordingly, Executive agrees that, upon any violation of such
restrictions, the Company shall be entitled to seek preliminary and permanent
injunctive relief in addition to any other remedy, without the necessity of
proving actual damages.
7.4 Executive represents and warrants to the Company that (i) his
employment with the Company as contemplated herein does not and will not
conflict with, violate or cause a breach of any agreement, contract or
instrument to which Executive is a party, (ii) he is not a party to or obligated
under any agreement, contract or instrument that will in any way impair his
ability to devote his substantially full-time and best efforts to the execution
of his duties pursuant hereto, and (iii) he will not engage in any business or
other activity that materially interferes with his ability to devote his
substantially full-time and best efforts to the execution of his duties pursuant
hereto.
7.5 As an independent covenant hereunder, to the extent permitted by
law, Employer and Executive represent and warrant to the other that they will
not challenge the validity or enforceability of any of the provisions of Section
7 of this Agreement.
8. Return of Work Product.
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Upon termination of this Agreement, or at the request of the Company,
Executive agrees to deliver to the Company any and all materials, whether
printed, written or otherwise obtained or prepared by Executive and pertaining
to the business of the Company or as otherwise acquired by Executive in the
performance of this Agreement, and it is further agreed by the parties that all
such materials shall be the sole property of the Company.
9. Agreement Binding Upon Successors and Assigns.
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9.1 All of the terms and provisions of this Agreement shall bind and
inure to the benefit of the parties hereto. Because this Agreement is personal
and indivisible in nature, Executive may not assign or transfer this Agreement
without the Company's written consent. The Company may, with Executive's written
consent, assign or transfer its rights or obligations
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to any successor corporation or affiliate or in connection with any merger,
business combination or sale of all or substantially all of the Company's
assets.
9.2 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 this Agreement in the same manner and to the same extent
that the Company would be required to perform it whether or not such succession
had taken place .
10. No Waiver.
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The waiver of a breach of any provision of this Agreement by any party
shall not operate or be construed as a waiver of any subsequent breach or
violation thereof by the other party.
11. Notices.
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All notices and communications provided for hereunder shall be in
writing and shall be mailed or delivered to the business or residence address of
the respective parties hereinafter provided or to such other address as either
party shall designate in writing to the other. Any notice to the Company
hereunder shall be sent to the attention of the Chief Executive Officer of the
Company.
12. Arbitration.
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Any claim, dispute or controversy including, without limitation, all
employment disputes, harassment or discrimination in violation of state or
federal law, between the Company and Executive arising out of this Agreement,
the interpretation, validity or enforceability of this Agreement or the alleged
breach thereof shall, on written request of either party served on the other be
submitted to binding arbitration by the American Arbitration Association in Los
Angeles, California, under its National Rules for the Resolution of Employment
Disputes then in effect, in accordance with the rules and regulations of that
Association. Within ten days after demanding arbitration, the party filing such
demand shall provide the adverse party with the names and addresses of all
witnesses, and true and exact copies of all documents proposed to be utilized in
the arbitration. Within twenty days thereafter, the respondent in the
arbitration shall provide the claimant with a list of the names and addresses of
all witnesses intended to be called by respondent, and copies of all documents
intended to be utilized in the arbitration by the respondent. Each party to the
arbitration shall have the right, within fifteen days after the receipt of the
list of witness, and documents, to either interview informally, or to take
formal depositions of any witnesses so identified. Any dispute with regards to
discovery shall be settled by the arbitrator.
The arbitration shall be conducted on a date set by the arbitrator,
which shall not be later than sixty days after the filing of the demand for
arbitration, and a decision shall be rendered by the arbitrator, within ten days
after the conclusion of hearings. All hearings shall
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be conducted, on successive days, if the hearing is not capable of being
terminated on the first day.
Any determination rendered by the arbitrator, shall be a proper
application of the law of the State of California, and shall be consistent with
any judicial decisions, rules, regulations, or statutes in the same venue in
which the arbitration is conducted. A judgment may be entered on the
arbitrator's award, in any court in the State of California and in any federal
court, provided appropriate diversity jurisdiction exists. Notwithstanding
anything to the contrary herein, the award may be set aside only on the grounds
permitted under the laws of the State of California or the Federal Arbitration
Act. The arbitrator's fee and all costs of the arbitration, shall initially be
shared equally by the parties, but the arbitrator shall have the right to
determine, as part of its decision who shall bear the entire cost of such
arbitration, including the attorney's fees for the successful party.
13. Counterparts.
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This Agreement may be executed in counterparts, each of which shall be
deemed to be an original but all of which together shall constitute one and the
same agreement.
14. Amendments.
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No modifications, extensions, or waiver of any provisions hereof or
release of any right hereunder shall be valid, unless the same is in writing.
15. Governing Law.
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This Agreement shall be governed by and interpreted in accordance with
the laws of the State of California.
16. Severability.
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Any provision hereof prohibited by or unlawful or unenforceable under
any applicable law of any jurisdiction shall as to such jurisdiction be
ineffective without affecting any other provision of this Agreement. To the full
extent, however, that the provisions of such applicable law may be waived, they
are hereby waived, to the end that this Agreement be deemed to be a valid and
binding agreement enforceable in accordance with its terms. However, if any
provision, or any part thereof, is held to be unenforceable because of the scope
or duration of such provision, Executive of the Company agree that the court
making such determination shall have the power to reduce the scope, duration
and/or area of such provisions in order to make such provision enforceable to
the fullest extent permitted by law, and/or to delete specific words and phrases
("blue-penciling"), and in its reduced or blue-penciled from such provision
shall then be enforceable and shall be enforced.
17. Entire Agreement.
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This Agreement and all other written agreements/documents evidencing
matters referred to herein, including but not limited to any indemnification
agreement with the Company, contains the entire agreement of the parties with
respect to the terms and conditions of the employment of Executive by the
Company during the Employment Term, and this Agreement supersedes any and all
other agreements, either oral or in writing, between the parties hereto with
respect to the employment of Executive by the Company. Each party to this
Agreement acknowledges that no representations, inducements, promises, or
agreements, oral or otherwise, have been made by any party, or anyone acting on
behalf of any party, which are not embodied herein, and that no other agreement,
statement, or promise not contained in this Agreement will be valid or binding.
Executive acknowledges that he was represented by counsel in connection with the
negotiating and drafting of this Agreement. Executive acknowledges that he has
not relied upon information or advice provided by the Company, except as set
forth herein and that he is voluntarily entering into this Agreement and that he
understands that all terms and provisions of this Agreement are binding upon
him, and are not mere recitals.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement,
effective as of the date hereinabove provided.
MERISEL, INC.,
a Delaware corporation
(the "Company")
Address:
Merisel, Inc. By /s/ XXXXXX X. XXXXXXXXXX
000 Xxxxxxxxxxx Xxxx. -------------------------------
Xx Xxxxxxx, XX 00000 Xxxxxx X. Xxxxxxxxxx
Chief Executive Officer
Address:
By /s/ XXXXXX X. XXXXXXXXX
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Xxxxxx X. XxXxxxxxx
(Executive)
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