CHANGE OF CONTROL AGREEMENT
This Change of Control Agreement is dated as of August 18, 1999 and is
between Merisel, Inc., a Delaware corporation (the "Company"), Merisel Americas,
Inc., a Delaware corporation ("Americas"), and Xxxxx Xxxxxxx ("Associate").
The Company and Americas desire to retain Associate. Accordingly,
Associate, the Company and Americas desire to set forth the terms and conditions
governing Associate's employment by Americas following a Change of Control (as
defined below). Associate, the Company and Americas 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 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 results from any merger,
consolidation, reorganization, sale of assets or otherwise. As used herein, the
term "Americas" shall also include each successor enterprise of Merisel
Americas, Inc. that results from any merger, consolidation, reorganization, sale
of assets or otherwise.
(c) An "Americas Change of Control" shall have occurred if (i)
any person, corporation, partnership, trust, association, enterprise or group,
other than the Company, shall become the beneficial owner, directly or
indirectly, of outstanding capital stock of Americas possessing at least 50% of
the voting power (for the election of directors) of the outstanding capital
stock of Americas, or (ii) there shall be a sale of all or substantially all of
Americas' assets or Americas shall merge or consolidate with another corporation
and the stockholders of Americas 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 Americas before the
transaction. A "Company 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. A "Change of Control" shall be the first to occur of a Company
Change of Control or an Americas Change of Control.
(d) "Covered Termination" shall mean any cessation of
Associate's employment by Americas 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
after a Change of Control (i) there has been a material reduction in Associate'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 Associate's job responsibilities, (ii)
without Associate's prior written approval, Americas requires Associate to be
based anywhere other than Associate's then current location, it being understood
that required travel on Americas' business to an extent consistent with
Associate's business travel obligations prior to the Change of Control does not
constitute "Good Reason," (iii) there is a reduction in Associate's Base Salary,
except that an across-the-board reduction in the salary level of all of
Americas' associates and similarly situated employees of any purchasing or
surviving corporation 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 or Americas fails
to furnish Associate with the assumption agreement required by Section 8 hereof.
(f) "Termination for Cause" shall mean if Americas 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 in violation of Americas' policies); excessive absenteeism; abuse of
sick time; or Associate's conviction for or a plea of nolo contendere by
Associate to a felony or any crime involving moral turpitude.
(g) "Expiration Date" shall mean July 31, 2001.
2. At-Will Employee. Americas shall have no obligation to retain or
continue Associate as an employee and Associate's employment status as an
"at-will" employee of Americas is not affected by this Agreement.
3. Covered Termination Following Change of Control. 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 or Americas shall
make a lump sum payment to Associate equal to twelve (12) months of Associate's
Base Salary; and (B) the Company or Americas 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 twelve (12) month
period following the date of the Covered Termination. The payments to be made to
Associate upon a Covered Termination are in addition to the payments made to
employees by Americas upon termination in the ordinary course, such as
reimbursement for business expenses and vacation pay through the date of
termination. The obligations of the Company and Americas hereunder shall be
joint and several.
4. Withholding. The Company or Americas, as applicable, 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.
5. Benefit Reduction. In the event any payments are required to be made
pursuant to Section 3 hereof, the first dollar amount of such payments shall be
reduced to the extent necessary to assure that the payments that are received
pursuant to the terms and conditions of this Agreement which are "parachute
payments" under Internal Revenue Code Section 280G (or any successor section)
and the Department of Treasury regulations issued thereunder do not exceed the
maximum amount which may be paid hereunder without such amounts being treated as
subject to a loss of a federal income tax deduction under such section.
6. Mitigation. Associate shall have no obligation to mitigate the
amount of any payment provided for in this Agreement by seeking employment or
otherwise.
7. Associate's Obligations. In exchange for the Company or Americas
providing the above-described benefits to Associate, Associate agrees that prior
to receiving any severance compensation from the Company or Americas in respect
of such Covered Termination, whether under this Agreement or otherwise,
Associate will execute and deliver to the Company a Release and a
Confidentiality Agreement, each substantially in the form provided to Associate
with this Agreement.
8. Assumption Agreement. The Company and Americas 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
or Americas, as the case may be, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent that the Company or Americas
would be required to perform it whether or not such succession had taken place.
9. Arbitration. Any dispute that may arise between Associate and the
Company and/or Americas in connection with or relating to this Agreement,
including any monetary claim arising from or relating to this Agreement, will be
submitted to final and binding arbitration in Los Angeles, California, in
accordance with the rules of the American Arbitration Association ("AAA") then
in effect. Such arbitration shall proceed before a single arbitrator who shall
be selected by the mutual agreement of the parties. If the parties are unable to
agree on the selection of an arbitrator, such arbitrator shall be selected in
accordance with the Employment Dispute Resolution Rules and procedures of the
AAA. The decision of the arbitrator, including determination of the amount of
any damages suffered, shall be conclusive, final and binding on such arbitrating
parties, their respective heirs, legal representatives, successors, and assigns.
Each party to any such arbitration proceeding shall bear her or his own
attorney's fees and costs in connection with any such arbitration and each party
shall pay half of all costs associated with the arbitration including the
arbitrator's fees.
10. Miscellaneous. This Agreement shall be binding upon and inure to
the benefit of Company, Americas 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 the Company and Americas. This Agreement
together with the Merisel Employment Agreement signed by Associate 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 the parties hereto. 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 Xxxxxxx
By:_______________________________ _____________________________
Name: Xxxxxx X. Xxxxxxxxxx
Title: Chief Executive Officer
MERISEL AMERICAS, INC.
By:________________________________
Name: Xxxxxx X. Xxxxxxxxxx
Title: Chief Executive Officer
