EXHIBIT 10.68
FORM OF
RETENTION AGREEMENT
This Retention Agreement is dated as of June 23, 1997 and is between
Merisel, Inc., a Delaware corporation (the "Company"), and Xxxxx X. Xxxxxxx
("Executive").
The Company desires to employ Executive as an employee of the Company.
Accordingly, Executive and the Company desire to set forth the terms and
conditions governing Executive's employment by the Company following a Change
of Control (as defined below). Accordingly, Executive 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 Executive's annual base salary as in effect
on the business day preceding a Change of Control or as the same may be
increased thereafter 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) The "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 stockholders of the Company before the transaction, or (iii) within one
year following a transaction in which the holders of the Company's 12.5%
Senior Notes due 2004 (the "Senior Notes") exchange all or substantially
all of the Senior Notes for Common Stock of the Company, Xxxxxx X.
Xxxxxxxxxx is terminated by the Company's Board of Directors as Chief
Executive Officer of the Company or the Company breaches its employment
agreement with Xx. Xxxxxxxxxx in any material respect. It is expressly
understood that, for purposes of this Section 1(c), 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 debtholders or by
exercising their rights with respect thereto.
(d) "Covered Termination" shall mean any cessation of the Executive's
employment by the Company that occurs after a Change of Control other than
as a result of (i) Termination for Cause, (ii) Executive's death or
permanent disability, or (iii) Executive's resignation without Good Reason
(as hereinafter defined).
(e) A resignation by Executive shall be with "Good Reason" if after a
Change of Control (i) there has been a material reduction in Executive's
job responsibilities from those that existed immediately prior to the
Change of Control, it being understood that a mere change in title alone
shall not constitute a material reduction in Executive's job
responsibilities, (ii) without Executive's prior written approval, the
Company requires Executive to be based anywhere other than the Executive's
then current location, it being understood that required travel on the
Company's business to an extent consistent with Executive's business travel
obligation prior to the Change of Control does not constitute "Good
Reason," (iii) there is a reduction in Executive's Base Salary, except that
an across-the-board reduction in the salary level of all of the Company's
executives in the same percentage amount as part of a general salary level
reduction shall not constitute "Good Reason," or (iv) a successor to all or
substantially all of the business and assets of the Company fails to
furnish Executive with the assumption agreement required by Section 7
hereof.
(f) "Termination for Cause" shall mean if the Company terminates
Executive's employment for any of the following reasons: Executive
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 Executive in violation of the Company's
policies); excessive absenteeism; abuse of sick time; or Executive's
conviction for or a plea of nolo contendere by Executive to a felony or any
crime involving moral turpitude.
(g) "Expiration Date" shall mean July 31, 1999.
2. At-Will Employee. Subject to the express provisions of this Agreement,
the Company shall have no obligation to retain or continue Executive as an
employee and Executive's employment status as an "at-will" employee of Company
is not affected by this Agreement.
3. Change of Control Covered Termination. If a Change of Control shall occur
on or before the Expiration Date and if a Covered Termination shall occur
within one year after the Change of Control, then: (A) on the effective date
of such Covered Termination, the Company shall make a lump sum payment to
Executive equal to (i) twelve (12) months of Executive's Base Salary plus (ii)
an amount equal to one times the annual performance bonus received by the
Executive during the year preceding the effective date of the Covered
Termination; and (B) the Company will reimburse Executive for the cost of
Executive'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 twelve (12) month period following
the date of the Covered Termination. The amount of such reimbursement will be
grossed up so that Executive will receive an amount equal to the COBRA
payments, after taking into account all applicable taxes. The payments to be
made to Executive upon 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.
4. Withholding. 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.
5. Mitigation. Executive shall have no obligation to mitigate the amount of
any payment provided for in this Agreement by seeking employment or otherwise.
6. Executive's Obligations. In exchange for Company providing the above
described benefits to Executive, Executive agrees that prior to receiving any
severance compensation from Company in respect of such Covered Termination,
whether under this Agreement or otherwise, Executive will execute and deliver
to Company a Release and a Confidentiality Agreement, each in the form
provided to Executive 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 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.
8. Miscellaneous. This Agreement shall be binding upon and inure to the
benefit of Company and Executive; provided that Executive shall not assign any
of Executive'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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, as of
the day and year first written above.
MERISEL, INC. XXXXX X. XXXXXXX
By: _________________________________ -------------------------------------
Its: ________________________________
