EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement"), is dated as
of September 5, 1996 and is between Merisel, Inc. (the
"Company"), a Delaware corporation ("Merisel"), and Xxxxx X.
Xxxxxx ("Executive"). As used herein, "Company" shall refer
to either Merisel or Merisel Americas, Inc. or both.
Merisel and Executive desire to set forth the terms and
conditions governing Executive's employment by the Company.
Accordingly, Executive and Merisel hereby agree as follows:
1. Term of Employment. Executive and Merisel agree
that Executive shall be employed by the Company and shall
serve in the capacity of Senior Vice President - Sales of
Merisel Americas, Inc. ("Americas"), under the terms and
conditions of this Agreement commencing as of August 29,
1996 and continuing for a three year period (such three year
period is referred to herein as the "Employment Term") or
until termination of Executive's employment pursuant to this
Agreement, and subject to renewal for additional periods as
may be mutually agreed by Merisel and Executive. The
original term and any renewal terms of this Agreement may be
sooner terminated as provided herein.
2. Scope of Duties. Executive shall undertake and
assume the responsibility of performing for and on behalf of
the Company those duties as shall be consistent with the
positions of Senior Vice - Sales of Americas. Executive
shall report to either the Chairman of the Board, the Chief
Executive Officer or the President of the Company, as
determined by the Company. Executive covenants and agrees
that at all times during the term of this Agreement, he
shall devote his substantially full-time and best efforts to
the execution of his duties pursuant hereto.
3. Compensation. As compensation for services
rendered pursuant to this Agreement, Merisel shall pay (or
cause Americas to pay) to Executive, in installments
customary with Merisel's (or Americas, as the case may be)
standard payroll periods, base annual compensation of
$225,000 during the Employment Term, provided that the Board
of Directors (the "Board') may, in its sole discretion,
increase such base annual compensation as merited by the
performance of Executive. Merisel shall deduct from all
payments paid to Executive under this Agreement any required
amount for applicable income tax withholding or any other
required taxes or contributions.
4. Bonus and Additional Benefits. In addition to the
compensation to be paid to Executive pursuant to Section 3,
Merisel shall pay, reimburse or otherwise confer the
following items of benefit to Executive:
4.1 During the Employment Term, Executive shall be
eligible to receive an annual bonus of $112,500 based on the
Company's financial performance (the "Bonus Amount"). One
quarter of the Bonus Amount, that is $28,125 (the "Quarterly
Bonus Amount"), shall be earned and paid following each
fiscal quarter in which Executive achieves his financial/
performance objectives for that quarter, which financial/
performance objectives shall be determined from time to time
by officer to whom Executive reports and Executive. Whether
or not such objectives are achieved, Merisel shall guarantee
to pay to Executive (a) 100% of his Quarterly Bonus Amount
for the third and fourth fiscal quarters of 1996 and for the
first fiscal quarter of 1997 (prorated in the case of the
third fiscal quarter of 1996 for time Executive is actually
employed at Merisel) and (b) 50% of his Quarterly Bonus
Amount for the second, third and fourth fiscal quarters of
1997.
4.2 Effective August 21, 1996, Merisel granted
Executive a nonqualified stock option (the "Option") to
purchase 75,000 shares of Merisel's Common Stock under
Merisel's 1991 Stock Option Plan. The Option is governed by
the Option Agreement issued to Executive.
4.3 In addition, Executive shall be eligible to
participate in all other benefit programs and plans that may
be afforded to senior management of the Company. Merisel
shall make contributions to such plans and arrangements on
behalf of Executive as shall be required or consistent with
the terms and conditions of such plans. Such plans and
programs may included, by way of example, deferred
compensation, group insurance benefits, long-term or
permanent disability insurance and major medical coverage.
Executive shall be entitled, during the Employment Term, to
vacation time with compensation and time off with
compensation on account of illness or injury, in accordance
with the Company's written policies for employees in effect
from time to time.
5. Termination of Employment.
5.1 Notice. Executive may resign or Merisel may
terminate Executive's employment in either case prior to the
expiration of the Employment Term, upon 30 days written
notice by Executive or Merisel, as the case may be, to the
other party. Upon any such resignation or termination,
Merisel shall promptly pay Executive all salary and other
compensation, including amounts payable, if any, under
Section 3 and any unused vacation pay, earned by him through
the effective date of such termination or resignation.
5.2 Termination by Company.
(A) If there is a Covered Termination at any time
prior to the sixth month anniversary of Executive's
employment by the Company, then in addition to the amounts
due under Section 5.1:
(a) Company shall make a lump sum payment to Executive
within two weeks of the effective date of the Covered
Termination equal to (i) one third (1/3) of Executive's
annual base salary as then in effect plus (ii) one third
(1/3) of the average of the annual performance bonus
received by the Executive over the three year period
preceding the effective date of the Covered Termination
(excluding from such calculation however, any performance
bonus that was paid on a guaranteed basis for any quarter
after the first fiscal quarter of 1997 and was not earned as
a result of achievement of financial/ performance criteria);
and
(b) Company will reimburse Executive for the cost of
Executive's COBRA payments under Company's health insurance
plans for a period of three months following such 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.
(B) If there is a Covered Termination at any time on
or after the sixth month anniversary of Executive's
employment by the Company, then Executive shall not be
entitled to any payments under Section 5.2 (A), and in
addition to the amounts due under Section 5.1:
(a) Company shall make a lump sum payment to Executive
within two weeks of the effective date of the Covered
Termination equal to (i) one half (1/2)of Executive's annual
base salary as then in effect plus (ii) one half (1/2) of
the average of the annual performance bonus received by the
Executive over the three year period preceding the effective
date of the Covered Termination (excluding from such
calculation however, any performance bonus that was paid on
a guaranteed basis for any quarter after the first fiscal
quarter of 1997 and was not earned as a result of
achievement of financial/ performance criteria); and
(b) Company will reimburse Executive for the cost of
Executive's COBRA payments under Company's health insurance
plans for a period of six months following such 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.
5.3 Termination Following a Sale. If there is a
Covered Termination (as defined below) within one year
following a Sale of the Company, then in addition to the
amounts due under Sections 5.1 and 5.2:
(a) Company shall make a lump sum payment to Executive
within two weeks of the effective date of the Covered
Termination equal to (i) one half (1/2) of Executive's
annual base salary as then in effect plus (ii) one half
(1/2) times the average of the annual performance bonus
received by the Executive over the three year period
preceding the effective date of the Covered Termination
(excluding from such calculation however, any performance
bonus that was paid on a guaranteed basis for any quarter
after the first fiscal quarter of 1997 and was not earned as
a result of achievement of financial/ performance criteria);
(b) Company will reimburse Executive for the cost of
Executive's COBRA payments under Company's health insurance
plans for an additional three months following the period of
such reimbursement as provided in either Section 5.2 (A)(b)
or Section 5.2 (B)(b). 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; and
(c) Any remaining unvested portion of the Option shall
vest.
5.4 Voluntary Resignation by Executive. In the event
that Executive resigns without Good Reason (as defined
below) prior to the expiration of the Employment Term,
then, at the time the resignation is effective, all benefits
and payments provided for hereunder shall terminate, and,
without limiting the foregoing, Executive shall not be
entitled to any severance payment other than amounts due
under Section 5.1.
5.5 Definitions. (a) A "Sale" of the Company shall
have occurred if (i) any person, corporation, partnership,
trust, association, enterprise or group (collectively, an
"Entity") shall become the beneficial owner, directly or
indirectly, of outstanding capital stock of Merisel
possessing at least 50% of the voting power (for the
election of directors) of the outstanding capital stock of
Merisel, or (ii) there shall be a sale of all or
substantially all of Merisel's assets or Merisel shall merge
or consolidate with another corporation and the stockholders
of Merisel 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 Merisel
before the transaction.
(b) "Covered Termination" shall mean any
termination of the Executive's employment by Merisel that
occurs prior to completion of the Employment Term 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.
(c) A resignation by Executive shall be with "Good
Reason" if after a Sale of the Company, (A) there has been a
material reduction in Executive's job responsibilities from
those that existed immediately prior to the Sale, (B)
without Executive's prior written approval, the Company
requires Executive to be based anywhere other than the
Executive's then current location, or (C) 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 8 hereof.
(d) "Termination for Cause" shall mean if the Company
terminates Executive's employment for any of the following
reasons: Executive misconduct (misconduct shall mean
physical assault, falsification or misrepresentation of
facts on company records, fraud, dishonesty, creating or
contributing to unsafe working conditions, willful
destruction of company property or assets, or harassment of
another Associate by Executive); or Executive conviction for
or a plea of nolo contendere by Executive to a felony or to
any crime involving moral turpitude.
6. Mitigation. Executive shall have no obligation to
mitigate the amount of any payment provided for in this
Agreement by seeking employment or otherwise. Executive
shall not be entitled to payment hereunder if Executive's
employment ceases as a result of Executive's death or
permanent disability.
7. Executive's Obligations.
7.1 Executive agrees that during the Employment Term
and for the Benefit Period (as defined below), Executive
will not directly or indirectly (a) engage in; (b) own or
control any debt 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., Computer 2000 AG (C2000), Arrow Electronics,
Inc., Intelligent Electronics, Inc., MicroAge, Inc., Inacom
Corp., Compucom, Entex Information Services, Inc. or Vanstar
Corp. 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. As used herein, "Benefit Period" shall mean either
the 180 day period following Executive's receipt of payment
under Section 5.2 or the 365 day period following
Executive's receipt of payment under Section 5.3.
7.2 During the term of this Agreement, or if longer,
the Benefit 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 September 1, 1996.
7.3 Within two weeks of the effective date of a Covered
Termination, and 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 substantially in the form
provided to Executive with this Agreement, with such changes
as Company might request.
7.4 In the event of any breach by Executive of the
restrictions contained in this Agreement, Company shall have
no further obligation to compensate Executive hereunder and
Executive acknowledges that the harm to Company cannot be
reasonably or adequately compensated in damages in any
action at law. Accordingly, Executive agrees that, upon any
violation of such restrictions, Company shall be entitled to
preliminary and permanent injunctive relief in addition to
any other remedy, without the necessity of proving actual
damages.
8. Assumption Agreement. In the event of a Sale of the
Company, 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.
9. Miscellaneous. This Agreement shall be binding
upon and inure to the benefit of Company, its successors and
assigns and to 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.
WHEREOF, the parties hereto have executed this
Agreement, as of the day and year first written above.
MERISEL, INC.
By:/s/ Xxxxxx X. Xxxxxxxxxx
Xxxxxx X. Xxxxxxxxxx, Chief Executive Officer
"EXECUTIVE"
/s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
