CHANGE OF CONTROL AGREEMENT
This Change of Control Agreement is dated as of May 11, 1998 and is
between Merisel Americas, Inc. ("Americas"), a Delaware corporation, and
Xxxxxxx X. Xxxxxx ("Executive").
Americas desires to employ Executive. Accordingly, Executive and
Americas desire to set forth the terms and conditions governing Executive's
employment by Americas following a Change of Control (as defined below) and in
certain other circumstances. Accordingly, Executive 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 Executive's annual base salary as in
effect on the business day preceding a Covered Resignation (as defined below) or
a Change of Control or, in the case of a Change of Control, 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. 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 stock holders 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 stock holders of the Company before the
transaction. 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. A "Change of Control" shall be
the first to occur of a Company Change of Control or an Americas Change of
Control.
(d) "Covered Resignation" shall mean a resignation by Executive that
occurs within six months after there has been a material reduction in
Executive's job responsibilities from those that existed immediately prior to
the reduction, it being understood that a mere change in title alone shall not
constitute a material reduction in Executive's job responsibilities.
(e) "Covered Termination" shall mean any cessation of the Executive's
employment by Americas 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).
(f) 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, Americas requires Executive to be
based anywhere other than the Executive's then current location, it being
understood that required travel on Americas' 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
Americas' 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 Americas fails to furnish
Executive with the assumption agreement required by Section 8 hereof.
(g) "Termination for Cause" shall mean if Americas terminates
Executive's employment for any of the following reasons: Executive's 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 Executive by
Executive in violation of Americas' 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.
(h) "Expiration Date" shall mean May 31, 2000.
2. At-Will Employee. Subject to the express provisions of this
Agreement, Americas shall have no obligation to retain or continue Executive as
an employee and Executive's employment status as an "at-will" employee of
Americas is not affected by this Agreement.
3. Consequences of Covered Termination or Covered Resignation. If (1) 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 or (2) a
Covered Resignation shall occur prior to the Expiration Date, then: (A) on the
effective date of such Covered Termination or Covered Resignation, Americas
shall make a lump sum payment to Executive equal to twelve months of Executive's
Base Salary; (B) Americas 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 or Covered Resignation)
under Americas' health insurance plans for a twelve month period following the
date of the Covered Termination or Covered Resignation; and (C) on the effective
date of such Covered Termination or Covered Resignation, Americas will forgive
the outstanding principal amount of the $150,000 housing loan made to Executive
following the commencement of Executive's employment. The amount of the
reimbursement for COBRA payments 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 or Covered Resignation 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.
4. Withholding. Americas 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. 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
an "excess parachute payment" under such section.
6. Mitigation. Executive shall have no obligation to mitigate the
amount of any payment provided for in this Agreement by seeking employment or
otherwise.
7. Executive's Obligations. In exchange for Americas providing the
above described benefits to Executive, Executive agrees that prior to receiving
any severance compensation from Americas in respect of such Covered Termination
or Covered Resignation, whether under this Agreement or otherwise, Executive
will execute and deliver to Americas a Release and a Confidentiality Agreement,
each substantially in the form provided to Executive with this Agreement.
8. Assumption Agreement. 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 Americas, expressly to assume
and agree to perform this Agreement in the same manner and to the same extent
that Americas would be required to perform it whether or not such succession had
taken place.
9. Arbitration. Any dispute that may arise between Executive and
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 Americas 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 Americas. 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 AMERICAS, INC.
/s/ Xxxxxx X. Xxxxxxxxxx /s/ Xxxxxxx X. Xxxxxx
By:__________________________ __________________________
Name: Xxxxxx X. Xxxxxxxxxx Xxxxxxx X. Xxxxxx
Title: Chief Executive Officer
