RETENTION AGREEMENT
This Retention Agreement is dated as of April 5, 1996
and is between Merisel, Inc. (the "Company"), a Delaware
corporation, and the undersigned employee of the Company
("Associate").
The Company desires to retain Associate as an employee
of the Company. Accordingly, Associate and the Company
desire to set forth certain (i) retention benefits to be
paid to the Associate and (ii) the terms and conditions
governing Associate's employment by the Company following a
Change of Control (as defined below). Accordingly,
Associate and the Company 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) "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.
(c) A "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.
(d) "Covered Termination" shall mean any cessation
of the Associate's employment by the Company 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, the Company requires Associate to be
based anywhere other than the Associate's then current
location, it being understood that required travel on the
Company's business to an extent consistent with Associate's
business travel obligation 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 the
Company's Associates 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 fails to
furnish Associate with the assumption agreement required by
Section 7 hereof.
(f) "Termination for Cause" shall mean if the Company
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); excessive absenteeism;
abuse of sick time; or Associate conviction for or a plea
of nolo contendere by Associate to a felony or any crime
involving moral turpitude.
(g) "Expiration Date" shall mean April 30, 1997.
2. Retention Bonus. In order to induce Associate to
remain as an employee of the Company, the Company shall
guarantee to pay Associate fifty percent (50%) of
Associate's annual target bonus for 1996 (the "Guaranteed
Bonus"), a quarter of which Guaranteed Bonus shall be paid
quarterly as provided in the next sentence. Accordingly,
provided that Associate continues to be employed by the
Company on the date that the earnings for the applicable
fiscal quarter of the Company are released (the "Earnings
Release Date"), the Company shall pay to the Associate the
Guaranteed Bonus for that quarter on the next regularly
scheduled payday following the Earnings Release Date;
provided, however, for the first fiscal quarter of 1996,
the "Earnings Release Date" shall be April 15, 1996.
3. At-Will Employee. Subject to the express
provisions of this Agreement, the Company shall have no
obligation to retain or continue Associate as an employee
and Associate's employment status as an "at-will" employee
of Company is not affected by this Agreement.
4. Change of Control Covered Termination. 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 shall make a lump sum
payment to Associate equal to (i) one half of Associate's
Base Salary plus (ii) an amount equal to one-half (1/2)
times the annual performance bonus received by the
Associate, excluding Guaranteed Bonus, during the year
preceding the effective date of the Covered Termination; and
(B) the Company 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 six month period following the
date of the Covered Termination. The amount of such
reimbursement will be grossed up so that Associate will
receive an amount equal to the COBRA payments, after taking
into account all applicable taxes. The payments to be made
to Associate upon a Covered Termination 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.
5. Withholding. Company 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.
6. Mitigation. Associate shall have no obligation to
mitigate the amount of any payment provided for in this
Agreement by seeking employment or otherwise.
6. Associate's Obligations. In exchange for Company
providing the above described benefits to Associate,
Associate agrees that prior to receiving any severance
compensation from Company in respect of such Covered
Termination, whether under this Agreement or otherwise,
Associate will execute and deliver to Company a Release and
a Confidentiality Agreement, each in the form provided to
Associate with this Agreement.
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 Company 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 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.
This Agreement shall continue in effect until the
Expiration Date. IN WITNESS WHEREOF, the parties hereto
have executed this Agreement, as of the day and year first
written above.
MERISEL, INC.
By:/s/Xxxxxx Xxxxxxxxxx
Its:Chairman and CEO
"ASSOCIATE"
/s/Xxxxx Xxxxxx
Xxxxx Xxxxxx
Vice President and Corporate Controller
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