SEVERANCE AGREEMENT
This Severance Agreement is dated as of March 3, 1999 and is between
Merisel, Inc., a Delaware corporation, and Xxxxxxx X. Xxxxxx ("Executive").
The Company and Executive 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 date hereof or as the same may be increased from time to time and
without giving effect to any reduction referenced by clause (d)(iii) below that
is not part of an across-the-board reduction, 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) "Change of Control Agreement" shall mean that certain Change of
Control Agreement dated as of July 26, 1997 between Executive and the Company.
(c) 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.
(d) A resignation by Executive shall be with "Good Reason" if (i) there
has been a material reduction in Executive's job responsibilities from those
that existed immediately prior to such reduction, 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 normal and
customary business travel obligations does not constitute "Good Reason," or
(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."
(e) "Termination for Cause" shall mean if the Company 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 associate by
Executive in violation of the Company' 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.
2. At-Will Employee. 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 the Company is not affected by this Agreement.
3. Termination. If Executive's employment by the Company terminates for
any reason other than as a result of a Termination for Cause, death or permanent
disability, or Executive's resignation without Good Reason, then: (A) the
Company shall pay Executive as severance compensation (the "Severance Payment")
an amount equal to one times Executive's Base Salary, which shall be paid to
Executive bi-weekly in equal amounts over a period of 52 weeks ("Payment
Period") in accordance with the Company's standard payroll practices, and (B)
the Company shall 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 termination) under the Company's health insurance
plans for a twelve-month period following the date of such termination;
provided, however, that (i) the amount payable under clause (A) above shall be
reduced by any lump sum payment made to Executive under the Change of Control
Agreement and (ii) Executive shall not be entitled to payments under clause (B)
above to the extent they are made to Executive pursuant to the Change of Control
Agreement. The payments to be made to Executive upon a termination contemplated
by this paragraph 3 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. 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.
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. (a) In exchange for the Company agreeing to
provide the above-described benefits to Executive, Executive agrees that prior
to receiving any severance compensation from the Company in respect of such
termination, whether under this Agreement or otherwise, Executive will execute
and deliver to the Company a Release and a Confidentiality Agreement, each in
the form provided to Executive with this Agreement.
(b) During the Payment Period, Executive will 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 March 3, 1999. If Executive breaches
this provision, the Company will have no further obligation to pay any unpaid
portion of the Severance Payment or amounts payable pursuant to paragraph 3(B)
above.
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 the 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 the Company. This Agreement together with the Change of
Control Agreement sets forth the parties' entire agreement with regard to the
subject matter hereof. Neither party has made any other agreements,
representations, or warranties 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.
9. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same instrument, which shall be effective upon the
execution hereof by all of the parties hereto. A complete set of counterparts
shall be made available to each party hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, as
of the day and year first written above.
MERISEL, INC.
By: /s/Xxxxxx X. Xxxxxxxxxx
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Its: CEO
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XXXXXXX X. XXXXXX
/s/Xxxxxxx X. Xxxxxx
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