MANAGEMENT RETENTION
AGREEMENT
THIS MANAGEMENT
RETENTION AGREEMENT (the “Agreement”) is made and
entered into by and between ____________________ (the
“Employee”) and Bell Microproducts Inc .
(the “Company”), on _____________, ____ (the
“Effective Date”).
R E C I T A L S
A. It
is expected that the Company from time to time will consider the
possibility of an acquisition by another company or other change of
control. The Board of Directors of the Company (the
“Board”) recognizes that such consideration can be a
distraction to the Employee and can cause the Employee to consider
alternative employment opportunities. The Board has
determined that it is in the best interests of the Company and its
shareholders to assure that the Company will have the continued
dedication and objectivity of the Employee, notwithstanding the
possibility, threat or occurrence of a Change of Control (as
defined below) of the Company.
B. The
Board believes that it is in the best interests of the Company and
its shareholders to provide the Employee with an incentive to
continue his employment and to motivate the Employee to maximize
the value of the Company upon a Change of Control for the benefit
of its shareholders.
C. The
Board believes that it is imperative to provide the Employee with
certain severance benefits upon Employee’s termination of
employment following a Change of Control which provides the
Employee with enhanced financial security and provides incentive
and encouragement to the Employee to remain with the Company
notwithstanding the possibility of a Change of Control.
D. Certain
capitalized terms used in the Agreement are defined in Section 5
below.
The parties
hereto agree as follows:
1.
Term of Agreement . The term of this Agreement
shall initially be three years following the Effective Date
(“Initial Term”), and shall automatically be extended
for successive one year periods (“Extended Term”)
unless the agreement is terminated, amended or modified by the
Company prior to the end of the Initial Term or any Extended
Term. Upon the Employee’s resignation or the
termination of Employee’s employment, for any reason, this
Agreement is automatically terminated except as provided in Section
3.
2.
At-Will Employment . The Company and the Employee
acknowledge that the Employee’s employment is and shall
continue to be at-will, as defined under applicable
law. If the Employee’s employment terminates for
any reason, including (without limitation) any termination prior to
a Change of Control, the Employee shall not be entitled to any
payments, benefits, damages, awards or compensation other than as
provided by this Agreement, or as may otherwise be available in
accordance with the Company’s written employee plans or
pursuant to other written agreements with the Company; provided,
however, that if severance benefits are triggered under Section
3(a) hereof, then Employee shall not be eligible for additional
severance benefits under any other plan or agreement with the
Company, except as required by statute (such as COBRA or similar
state laws).
3.
Severance Benefits .
(a)
Termination Following A Change of Control . If
the Employee’s employment terminates at any time within
twelve (12) months following a Change of Control, then, subject to
Section 4, the Employee shall be entitled to receive the following
severance benefits:
(i)
Involuntary Termination . If the
Employee’s employment is the result of Involuntary
Termination other than for Cause, then the Employee shall receive
the following severance benefits from the Company:
(1)
Severance Payment . A cash payment in an amount
equal to one hundred percent (100%) of the Employee’s Base
Salary.
(2)
Continued Employee Benefits . For a period of
twelve (12) months following employee’s termination, the
Company will pay one hundred percent (100%) of the Employee’s
premiums for coverage under Title X of the Consolidated Budget
Reconciliation Act of 1985 (“COBRA”), for health,
dental, and vision insurance when due (subject to Employee timely
electing COBRA coverage). If Employee’s coverage
immediately prior to the Change of Control included
Employee’s dependents, such dependents shall also be covered
under the premium payments by the Company. Company-paid
premiums shall continue until the earlier of (i) one year from the
date of the Change of Control, or (ii) the date that the Employee
and his dependents become covered under another employer’s
group health, dental, or vision insurance plans that provide
Employee and his dependents with comparable benefits and levels of
coverage.
(3)
Accelerated Vesting . One hundred percent (100%)
of the unvested portion of any stock option, restricted stock and
restricted stock units held by the Employee shall automatically be
accelerated in full so as to become completely vested.
(b)
Timing of Severance Payments . Subject to any
delay required to avoid the imposition of additional taxes under
Internal Revenue Code Section 409A, any severance payment to which
Employee is entitled under Section 3(a)(i) shall be paid by the
Company to the Employee (or to the Employee’s successors in
interest, pursuant to Section 6(b)) in cash and in full, not later
than thirty (30) calendar days following the Termination
Date. In no event shall payment be made later than two
and one-half (2½) months following the calendar year in
which the Termination Date occurs.
(c)
Voluntary Resignation; Termination For Cause . If
the Employee’s employment terminates by reason of the
Employee’s voluntary resignation (and is not an Involuntary
Termination), or if the Employee is terminated for Cause, then the
Employee shall not be entitled to receive severance or other
benefits except for those (if any) as may then be established under
the Company’s then existing written employee plans or
pursuant to other written agreements with the Company.
(d)
Disability; Death . If the Company terminates the
Employee’s employment as a result of the Employee’s
Disability, or such Employee’s employment is terminated due
to the death of the Employee, then the Employee shall not be
entitled to receive severance or other benefits except for those
(if any) as may then be established under the Company’s
then-existing written employee plans or pursuant to other written
agreements with the Company.
(e)
Termination Apart from Change of Control . In the
event the Employee’s employment is terminated for any reason,
either prior to the occurrence of a Change of Control or after the
twelve (12)-month period following a Change of Control, then the
Employee shall be entitled to receive severance and any other
benefits only as may then be established under the Company’s
existing severance and benefits plans and practices or pursuant to
other agreements with the Company.
4.
Limitation on Payments . In the event that the
severance and other benefits provided for in this Agreement or
otherwise payable to the Employee (i) constitute
“parachute payments” within the meaning of Section 280G
of the Internal Revenue Code of 1986, as amended (the
“Code”) and (ii) but for this Section 4, would be
subject to the excise tax imposed by Section 4999 of the Code, then
the Employee’s severance benefits under Section 3(a)(i)
shall be reduced as to such lesser extent as would result in no
portion of such severance benefits being subject to excise tax
under Section 4999 of the Code. Unless the Company and
the Employee otherwise agree in writing, any determination required
under this Section 4 will be made in writing by a national
“Big Four” accounting firm selected by the Company or
such other person or entity to which the parties mutually agree
(the “Accountants”), whose determination shall be
conclusive and binding upon the Employee and the Company for all
purposes. For purposes of making the calculations
required by this Section 4, the Accountants may make
reasonable assumptions and approximations concerning applicable
taxes and may rely on reasonable, good faith interpretations
concerning the application of Sections 280G and 4999 of the
Code. The Company and the Employee shall furnish to the
Accountants such information and documents as the Accountants may
reasonably request in order to make a determination under this
Section. The Company shall bear all costs the
Accountants may reasonably incur in connection with any
calculations contemplated by this Section 4. Any
reduction in payments and/or benefits required by this
Section 4 shall occur in the following order: (1) reduction of
cash payments; (2) reduction of full-value equity award vesting
acceleration, (3) reduction of stock option vesting acceleration,
and (4) reduction of other benefits paid to Employee. In
the event that acceleration of vesting of equity awards is to be
reduced, such acceleration of vesting shall be cancelled in the
reverse order of the date of grant for Employee equity
awards.
5.
Definition of Terms . The following terms
referred to in this Agreement shall have the following
meanings:
(a)
Base Salary . “Base Salary” means an
amount equal to twelve (12) times Employee’s monthly Company
salary for the last full month preceding the Change of
Control.
(b)
Cause . “Cause” shall mean (i) any
act of personal dishonesty taken by the Employee in connection with
his responsibilities as an employee and intended to result in
substantial personal enrichment of the Employee, (ii) the
conviction of a felony, (iii) a willful act by the Employee which
constitutes gross misconduct and which is injurious to the Company,
and (iv) following delivery to the Employee of a written demand for
performance from the Company which describes the basis for the
Company’s belief that the Employee has not substantially
performed his duties, continued violations by the
Employee
