SEPARATION AGREEMENT
THIS AGREEMENT entered into as of this ___ day of
August, 1996, by and between Merisel, Inc., a Delaware
corporation ("Merisel" or the "Company"), having its principal
offices at 000 Xxxxxxxxxxx Xxxxxxxxx, Xx Xxxxxxx, Xxxxxxxxxx
00000, and Xxxxx X. Xxxxx ("Xxxxx").
RECITALS
WHEREAS, Xxxxx and the Company are parties to that
certain Employment Agreement, dated as of October 3, 1995 (the
"Employment Agreement"), pursuant to which the Company is
obligated to provide certain benefits to Xxxxx upon the
termination of his employment;
WHEREAS, Xxxxx and the Company are parties to that
certain Split-Dollar Life Insurance Agreement, dated as of July
1, 1994 (the "Split-Dollar Agreement"), pursuant to which the
Company provided certain deferred compensation benefits to Xxxxx;
WHEREAS, Xxxxx and the Company are parties to that
certain Collateral Security Assignment Agreement, dated as of
July 1, 1994 (the "Security Agreement");
WHEREAS, Xxxxx and the Company are parties to that
certain Merisel, Inc. Incentive Stock Option Agreement, dated as
of April 19, 1991, that certain Merisel, Inc. Non Qualified Stock
Option Agreement, dated as of April 19, 1991, that certain
Merisel, Inc. Non Qualified Stock Option Agreement, dated as of
May 27, 1992, that certain Merisel, Inc. Non Qualified Stock
Option Agreement, dated as of March 27, 1995, and that certain
Merisel, Inc. Non Qualified Stock Option Agreement, dated as of
June 9, 1995 (the "Option Agreements"), pursuant to which the
Company grants Xxxxx the right to purchase shares of stock of the
company at certain set option prices;
WHEREAS, Xxxxx has faithfully performed all obligations
required of him under his Employment Agreement, the Split-Dollar
Agreement and the Security Agreement;
WHEREAS, the Company acknowledges that it has no rights
under the Security Agreement since Xxxxx has faithfully performed
all obligations secured thereby, and has no interest whatsoever
in the Policies (as that term is defined in the Security
Agreement) and the cash values thereof;
WHEREAS, Xxxxx and the Company agree that Xxxxx'x
separation from the Company constitutes a CEO Covered Termination
as that term is defined in the Employment Agreement and a
Qualifying Termination as that term is defined in the Split
Dollar Agreement, and that Xxxxx'x separation from the Company is
not a termination for cause as defined by either agreement;
WHEREAS, Xxxxx and the Company have agreed to provide
for the termination of Xxxxx'x employment by the Company and the
provision of services by Xxxxx to the Company on a consultancy
basis on the terms and conditions set forth herein; and
WHEREAS, the Company has determined that because it
retains high confidence in Xxxxx'x judgment and veracity, such
consultancy services provide significant additional benefits to
the Company, and accordingly, the Company has decided to provide
additional benefits to Xxxxx as provided herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises
and agreements contained herein, the parties hereby agree as
follows:
1. TERMINATION OF EMPLOYMENT
Effective as of September 3, 1996, Xxxxx'x employment
with the Company shall terminate (the "Termination Date"). Prior
to that date, Xxxxx shall resign from all of his positions with
Merisel and its affiliates, including without limitation his
positions as a member of the Board of Directors (effective August
19, 1996), as well as Chief Financial Officer and Senior Vice
President, Finance, of Merisel (effective August 14, 1996).
2. CONSULTING
After the Termination Date, the Company
hereby agrees to continue to employ Xxxxx, and Xxxxx agrees
to continue to serve the Company as an independent
contractor on a consulting basis on the terms set forth in
this Agreement. In particular, Xxxxx shall be available at
reasonable times and upon reasonable notice to provide
services to facilitate the Company's operations and the
conduct of Merisel and its subsidiaries' wholesale computer
distribution business (the "Business").
Xxxxx shall perform his duties under
this Agreement personally and shall report to the Chief
Executive Officer of Merisel.
The Company shall make available to
Xxxxx an office for his use and reasonable administrative
support to enable him to perform his duties hereunder.
3. TERM OF CONSULTANT AGREEMENT
Xxxxx'x employment as a consultant hereunder shall
begin the first business day after the Termination Date and,
unless terminated prior to that time pursuant to Section 9
hereof, shall continue until September 30, 1996 (such period
being the "Term").
4. COMPENSATION AND BENEFITS RELATED TO SEPARATION
In connection with Xxxxx'x separation
from the Company, the Company will pay to Xxxxx the
following:
(i) an amount equal to Xxxxx'x "Base Salary"
(as defined in the Employment Agreement), one half of which shall
be paid in a lump sum payment on the Termination Date and one
half of which (the "Remaining Base Salary") shall be paid in a
lump sum on the closing date of the sale of the entities commonly
known as Merisel's European subsidiaries, Merisel Mexico and
Merisel Latin America (the "Closing"). If the Closing does not
occur before November 30, 1996, the Company shall pay the
-2-
Remaining Base Salary in equal monthly installments payable on
the last day of each month beginning on November 30, 1996 until
April 30, 1997, unless the Closing occurs during that period, in
which event, any unpaid balance of the Remaining Base Salary
shall be paid in a lump sum on the Closing date;
(ii) on the Termination Date, a lump sum
payment equal to the average of the annual performance bonus
received by Xxxxx over the three year period preceding the
Termination Date; and
(iii) on the Termination Date, all salary and
other compensation including unused vacation pay, earned by him
through the Termination Date.
Any amounts owing to Xxxxx under
Section 4(a) that remain unpaid, in the event that Xxxxx
dies, shall be paid as a death benefit to Xxxxx'x estate on
the same terms. The Company shall deduct from all payments
paid to Xxxxx under Section 4(a) any required amount for
social security, federal and state income tax withholding,
federal or state unemployment insurance contributions, and
state disability insurance or any other required taxes.
Unless Xxxxx shall become eligible to
receive health insurance from another employer which is
substantially comparable to his current coverage, the
Company shall reimburse Xxxxx for the cost of Xxxxx'x COBRA
payments under the Company's health insurance plans for a
one year period following the Termination Date. The amount
of such reimbursement shall be grossed up so that Xxxxx will
receive an amount equal to the COBRA payments, after taking
into account all applicable taxes. To the extent any other
federal law regarding the transportability of health
insurance is implemented, this section shall be adjusted as
necessary to carry out the stated intentions of the parties
to reimburse Xxxxx for the full cost of comparable health
insurance during the one year period following the
Termination Date or until Xxxxx becomes eligible to receive
comparable health insurance from another employer.
Except for the payment under Section
4(a), Xxxxx shall not be entitled to any bonus or other
incentive compensation or vacation pay or vacation benefits
during the Term.
The Company shall permit Xxxxx to retain
as his property the car phone, lap top computer and home fax
machine previously provided to him for his use.
Under the Employment Agreement, the
Company previously agreed to vest all unvested options to
purchase the stock of the Company previously granted to
Xxxxx (the "Unvested Options") as of the Termination Date.
Xxxxx hereby waives such right and agrees that all of his
Unvested Options shall terminate as of the Termination Date.
This Agreement shall in no way affect Xxxxx'x vested
options, which he shall retain and which shall continue to
be exercisable for a period of three months after the
Termination Date, notwithstanding any other provision of the
Option Agreements.
The Company acknowledges and agrees that
Xxxxx'x separation from the Company constitutes a Qualifying
Termination (as that term is defined in the Split-Dollar
Agreement) and that, therefore, effective on the Termination
-3-
Date, all rights of the Company with respect to the Policies
under the Split-Dollar Agreement and under the Security
Agreement will be terminated, the Company's security
interest and collateral assignment in the Policies and the
cash values thereof will be terminated and the Company's
rights in the Policies and the cash values thereof will be
released. Accordingly, the Company agrees that it will
execute, acknowledge and deliver any further documents and
instruments, and will take any further actions that may be
requested by Xxxxx in order to carry out the purposes and
intent of this Agreement and effect the termination of the
Company's security interest in the Policies and the cash
values thereof. Such further actions shall include, without
limitation, providing to the insurer of the Policies notice
that such security interest and collateral assignment are
terminated and released and revoking any designations that
the Company may have made with respect to the Policies.
The Company agrees to reimburse Xxxxx
for legal and accounting fees up to a total of $5,000.00.
The Company agrees to pay for
outplacement services to a maximum of $15,000 for Xxxxx for
a period up to one year.
To the extent the Company maintains
Director's and Officer's liability insurance coverage for
its then existing Officer's and Director's, the Company
shall cause such insurance to cover Xxxxx relating to any
occurrence during his tenure as an officer or director of
the Company, notwithstanding any limitation on the Company's
obligation to provide such coverage in the Indemnity
Agreement.
5. COMPENSATION AND BENEFITS RELATED TO CONSULTING
In full payment for the services to be
rendered under Section 2 during the Term of this Agreement,
Xxxxx shall receive compensation of $2,000.00 per day
payable on the fifteenth day and thirtieth day of September.
The Company shall not deduct from the compensation paid to
Xxxxx under this Section 5(a) any amounts for social
security, federal and state income tax withholding, federal
or state unemployment insurance contributions, and state
disability insurance. The Company shall not obtain workers'
compensation insurance for Xxxxx. Xxxxx shall pay all taxes
which may be due and arise out of the relationship between
the Company and Xxxxx pursuant to Section 2 of this
Agreement.
Xxxxx shall not incur any expenses in
rendering his services under Section 2 of this Agreement,
unless such expenses have received the prior approval of
Merisel's Chief Executive Officer. The Company shall from
time to time promptly reimburse Xxxxx, upon receipt of
proper documentation, for all reasonable out-of-pocket pre-
approved expenses that are incurred by Xxxxx in rendering
his advisory services.
6. PERFORMANCE
During the Term, Xxxxx shall observe and comply with
all Company policies and all lawful and reasonable directions and
instructions by the Company.
-4-
7. INDEPENDENT CONTRACTOR; INDEMNIFICATION
It is understood and agreed, and it is
the intention of the parties hereto, that during the Term,
Xxxxx shall be an independent contractor, and not the
employee, agent, joint venturer or partner of the Company
for any purpose whatsoever. Nothing contained in this
Agreement shall be construed to create an employment
relationship between Xxxxx and the Company during the Term.
The terms of this Agreement shall be
independent of and shall not operate to terminate any of the
provisions of that certain Indemnity Agreement, dated as of
February 11, 1992 between Merisel and Xxxxx, which Indemnity
Agreement shall continue in force and effect, except as
modified in Section 4(j) of this Agreement.
8. NON-COMPETITION AND RELATED COVENANTS
Xxxxx agrees that for a period of one
year following the Termination Date, he will not directly or
indirectly (a) engage in; (b) own or control any debt or
equity, or other interest in (except as a passive investor
of less that 5% of the capital stock or publicly traded
notes or debentures of a publicly held company); or
(c) (1) act as director, officer, manager, employee,
participant or consultant to or (2) be obligated to or
connected in any advisory business enterprise or ownership
capacity with, any of Tech Data Corp., Xxxxxx Micro, Inc.,
Inacom Corp., Computer 2000 AG (C2000), Intelligent
Electronics, Inc., MicroAge, Inc., Inacom Corp., Compucom,
Entrex Information Services, Inc. or Vanstar Corp. or with
any entity that or with any subsidiary, division or
successor of any of them or with any entity 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 (collectively, a "Prohibited
Entity"), provided however that the foregoing shall not
apply if Xxxxx goes to work for a company which company is
subsequently acquired by any Prohibited Entity or if such
company acquires a Prohibited Entity.
For the one year period following the
Termination Date, Xxxxx shall not solicit the employment of
any person that is employed by Merisel or any of its
subsidiaries at any time on or after the Termination Date.
In the event of any breach of the
restrictions contained in this Section 8, Xxxxx acknowledges
that the harm to the Company cannot be reasonably or
adequately compensated in damages in any action at law.
Accordingly, Xxxxx agrees that, upon any violation of such
restrictions, the Company shall be entitled to preliminary
and permanent injunctive relief in addition to any other
remedy, without the necessity of proving actual damages.
9. TERMINATION OF AGREEMENT
This Agreement shall terminate immediately at the
earliest of the following events: a finding by an Arbitrator
following the procedures set forth in Section 21 of fraud or
gross misconduct by Xxxxx with respect to any fiduciary
obligations he has to the Company, or a finding by such
Arbitrator of a material violation of Section 8 hereof on the
part of Xxxxx.
-5-
Upon such termination, the Company shall have no
further obligations under Section 2 of this Agreement.
10. SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their successors and assigns;
provided that Xxxxx shall not assign any of his rights or duties
under this Agreement without the express prior written consent of
Merisel. 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 whether or not the succession had taken
place.
11. PRESERVATION OF CLAIMS BY XXXXX SOLELY
FOR OFFSET AND AS AFFIRMATIVE DEFENSES
In the event the Company, its successors or assigns,
including, without limitation, any trustee or other entity with
the powers of a trustee in any bankruptcy of the Company, asserts
a claim against Xxxxx which relates to this Agreement or to the
transactions contemplated hereby, then Xxxxx shall be free to
assert any and all claims he may have against the Company, its
officers and agents, including, without limitation, any claims
that might otherwise have been released as part of the
transactions described in this Agreement, which claims are hereby
revived, but Xxxxx may only assert such claims for the purpose of
asserting an affirmative defense or to effect an offset against
the claims being asserted against him. In no event may Xxxxx
assert such claims in an attempt to obtain any other form of
affirmative relief from the Company.
12. ENTIRE AGREEMENT
This Agreement sets forth the entire agreement between
the parties with regard to the subject matter hereof. This
Agreement supersedes and replaces the terms of the Employment
Agreement, which shall be of no further force and effect. No
other agreements, representations, or warranties have been made
by either party to the other with respect to the subject matter
of this Agreement.
13. AMENDMENT
This Agreement may be amended only by a written
agreement signed by both parties.
14. CONFIDENTIALITY; RELEASE
-6-
Xxxxx agrees to execute and deliver to the Company a
Release and Xxxxx and the Company agree to execute and deliver to
the other a Confidentiality Agreement, each in the form agreed to
by Xxxxx and the Company.
15. COUNTERPARTS
This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but
which counterparts together shall constitute but one and the same
instrument. If any party elects to execute and deliver a
counterpart signature page by means of a facsimile transmission,
it shall deliver an original of such counterpart to the other
party within 5 business days of the facsimile date, but in no
event will the failure to do so affect in any way the validity of
the facsimile signature or its delivery.
16. APPLICABLE LAW
This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
17. WAIVER
Any waivers 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 thereof.
18. ATTORNEYS' FEES
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.
19. SEVERABILITY
If any of the provisions of this Agreement is found or
deemed by a court of competent jurisdiction to be invalid or
unenforceable, such provision shall be considered severable from
the remainder of this Agreement and shall not cause the remainder
to be invalid or unenforceable.
20. PUBLIC ANNOUNCEMENTS
Except as required by applicable law, neither the
Company nor Xxxxx shall make or issue or cause to be made or
issued any public dissemination concerning the subject matter of
this Agreement without the prior written consent of the other
party. No party shall make any statement which disparages the
personal or business reputation of any other party to this
Agreement.
21. ARBITRATION
Any dispute or controversy arising out of, or under, or
in connection with or in relating to this Agreement which cannot
be settled by the parties or their legal representatives shall be
determined and settled by arbitration conducted before a single
arbitrator in Los Angeles, California in accordance with the
rules of the American Arbitration Association then in effect.
The parties agree that the award rendered by the arbitrator shall
be final and binding upon the parties and their successors in
interest, and judgment thereon may be entered in any court of
competent jurisdiction. The arbitrator shall be mutually
selected by the parties. The cost of such proceeding shall be
paid by the party instigating the arbitration unless that party
is declared by said arbitrator to be substantially successful in
securing the award or determination sought by it, in which latter
event the cost of the proceedings shall be paid by the
unsuccessful party. The arbitrator may award reasonable
attorneys' fees to the substantially successful party.
-7-
IN WITNESS WHEREOF, the undersigned have duly executed this
agreement as of the date first set forth above.
"COMPANY" or "MERISEL"
MERISEL, INC.
By:_____________________________
Xxxxxx X. Xxxxxxxxxx, Chairman
and Chief Executive Officer
"XXXXX"
By:_____________________________
Xxxxx X. Xxxxx
