<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 10-K/A
AMENDMENT NO. 1
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[X]
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
OR
[_]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission file number 0-17156
MERISEL, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 95-4172359
- ------------------------------------- -------------------------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
200 Continental Boulevard
El Segundo, California 90245-0948
- ------------------------------------- -------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE (ZIP CODE)
OFFICES)
Registrant's telephone number, including area code: (310) 615-3080
------------------------------------------
Securities registered pursuant to Section 12(b) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.01 Par Value
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TITLE OF CLASS
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. YES X NO
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to the Form 10-K. [_]
As of April 25, 1996 the aggregate market value of voting stock held by non-
affiliates of the Registrant based on the last sales price as reported by the
Nasdaq National Market was $108,361,316 (28,896,351 shares at a closing price
of $3 3/4).
As of April 25, 1996 the Registrant had 29,863,495 shares of Common Stock
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None.
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<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information regarding the directors
and executive officers and a former director and officer of the Company.
<TABLE>
<CAPTION>
NAME AGE* POSITION
---- ---- --------
<S> <C> <C>
Dwight A. Steffensen...... 52 Chairman of the Board of Directors and
Chief Executive Officer
Ronald A. Rittenmeyer..... 48 President and Chief Operating Officer
and Director
James L. Brill............ 44 Senior Vice President--Finance, Chief
Financial Officer, Secretary and
Director
Joseph Abrams............. 60 Director
David L. House............ 53 Director
Dr. Arnold Miller......... 67 Director
Lawrence J. Schoenberg.... 63 Director
John F. Thompson.......... 51 Senior Vice President--Worldwide
Operations
Susan J. Miller-Smith..... 43 Senior Vice President--European
Operations
Thomas P. Reeves.......... 34 Senior Vice President--Canadian
Operations
Paul M. Lemerise.......... 50 Senior Vice President--Chief Information
Officer
Martin D. Wolf............ 37 Senior Vice President
Verilyn Smith............. 43 Senior Vice President--Franchise and
Aggregation Operations
Michael D. Pickett**...... 48 Former Chairman of the Board of
Directors, President and Chief Executive
Officer
</TABLE>
- --------
* As of March 29, 1996
** Mr. Pickett resigned on February 12, 1996
DIRECTORS
The Board of Directors presently consists of seven members divided into
three classes serving staggered terms, with one class of directors elected
annually. Each class consists of three directors. There are currently two
vacancies, one in Class III and one in Class I. The terms of the directors
constituting Class III will expire this year. The term of the directors in
Class I extends through 1997, and the term of the directors in Class II
extends through 1998. The table below indicates the names of the directors in
each class and the expiration of the terms of the directors in each class.
<TABLE>
<CAPTION>
CLASS I CLASS II CLASS III
(TERMS EXPIRING IN 1997) (TERMS EXPIRING IN 1998) (TERMS EXPIRING IN 1996)
------------------------ ------------------------ ------------------------
<S> <C> <C>
James L. Brill Joseph Abrams David L. House
Lawrence J. Schoenberg Dr. Arnold Miller Dwight A. Steffensen
Ronald A. Rittenmeyer
</TABLE>
No arrangement or understanding exists between any director or officer and
any other person or persons pursuant to which any such person was or is to be
selected as a director or officer. None of the directors or officers has any
family relationship between them.
The business experience, principal occupations and employment during the
past five years of each of the directors, together with their periods of
service as directors and executive officers of the Company, as applicable, are
set forth below.
1
<PAGE>
Dwight A. Steffensen was elected as Chief Executive Officer and Chairman of
the Board of the Company in February 1996. Mr. Steffensen has been a member of
the Board of Directors since August 1990. From January 1985 to March 1992, Mr.
Steffensen served as a director and Executive Vice President of Bergen
Brunswig Corporation ("Bergen"), a pharmaceuticals distributor. From April
1992 to October 1995, Mr. Steffensen served as President and Chief Operating
Officer for Bergen. In January 1996, he resigned from Bergen's Board of
Directors.
Ronald A. Rittenmeyer joined the Company in October 1995 as President and
Chief Operating Officer and was appointed a director of the Company in
February 1996 to fill a vacancy. Prior to joining the Company, Mr. Rittenmeyer
was employed by Burlington Northern Railroad from April 1994 until September
1995, where he served in various capacities, most recently as Chief Operating
Officer. Previously, Mr. Rittenmeyer was employed by Frito-Lay, where he began
his career as a shipping supervisor in 1974 and worked his way through various
management positions including Vice President of Operations.
James L. Brill joined the Company in May 1988 as Vice President--Finance,
Chief Financial Officer and Assistant Secretary. He was elected a director in
April 1990 and, while retaining his position as Chief Financial Officer,
became Senior Vice President--Finance and Secretary in May 1992. For eight
years prior to joining the Company, Mr. Brill was employed at Union Bank,
where his most recent position was Regional Vice President.
Joseph Abrams was elected a director of the Company following the
acquisition of Microamerica, Inc. ("Microamerica") by the Company in April
1990. Mr. Abrams had previously served as a director of Microamerica from 1983
to April 1990 and also served as President, Chief Operating Officer and
Secretary of AGS Computers, Inc. ("AGS"), a software development company,
which was a subsidiary of NYNEX Corp., a telecommunications company, from 1988
until his retirement in 1991. He is also a director of Spectrum Signal
Processing, a hardware and software electronics company and Phonetel
Technologies, a provider of pay telephone services.
David L. House was appointed to the Board of Directors in March 1994 to fill
a vacancy. Since 1987, Mr. House has served as Senior Vice President and
General Manager of the Enterprise Server Group of Intel Corporation, a
manufacturer of microprocessing systems, where he has been employed in various
capacities since 1974.
Dr. Arnold Miller was elected to the Board of Directors in August 1989 and
was appointed the Governance Director in May 1995. Since its formation in
1987, he has been President of Technology Strategy Group, a consulting firm
organized to assist businesses and government in the fields of corporate
strategy development, international technology transfer and joint ventures, as
well as business operations support. Prior to joining Technology Strategy
Group, Dr. Miller was employed at Xerox Corporation, a consumer products and
information services company, for 14 years, where his most recent position was
Corporate Vice President with responsibility for worldwide electronics
operations.
Lawrence J. Schoenberg was elected a director of the Company following the
acquisition of Microamerica in April 1990. Mr. Schoenberg had previously
served as a director of Microamerica from 1983 to April 1990. From 1967
through 1990, Mr. Schoenberg served as Chairman of the Board and Chief
Executive Officer of AGS. From January to December 1991, Mr. Schoenberg served
as Chairman and as a member of the executive committee of the Board of
Directors of AGS. Mr. Schoenberg retired from AGS in 1992. He is also a
director of Sungard Data Services, Inc., a computer services company,
Government Technology Services, Inc., a microcomputer reseller, Penn-America
Group, Inc., a casualty insurance company, and Forecross Inc., a computer
software company.
The Board of Directors maintains an Audit Committee, comprised of Dr. Miller
and Mr. Schoenberg; an Organization and Compensation Committee, comprised of
Dr. Miller and Messrs. Abrams and House; and a Nominating Committee, comprised
of Dr. Miller and Messrs. Schoenberg and Steffensen.
FORMER DIRECTOR
Michael D. Pickett joined the Company in October 1983 as Vice President,
Finance and Chief Financial Officer and was appointed President and Chief
Operating Officer effective April 1986 and Chief Executive Officer in June
1988. He was elected a director in December 1987, became Co-Chairman of the
Board of
2
<PAGE>
Directors in May 1992 and was named Chairman in February 1995. In September
1995 Mr. Rittenmeyer became President and Chief Operating Officer of the
Company, and in February 1996 Mr. Steffensen became Chairman of the Board of
Directors and Chief Executive Officer of the Company. Mr. Pickett resigned as a
director of the Company effective February 1996 and his existing employment
agreement was terminated by the Board of Directors of the Company as of that
time.
EXECUTIVE OFFICERS
Executive officers of the Company are elected by and serve at the discretion
of the Board of Directors. Set forth below is a brief description of the
business experience for the previous five years of all executive officers
except those who are also directors. For information concerning the business
experience of Messrs. Steffensen, Rittenmeyer and Brill see "Directors" above.
John F. Thompson joined the Company in April 1983 as Vice President--
Operations, became Senior Vice President--Operations in April 1989 and became
Senior Vice President--Worldwide Operations in May 1992. Prior to joining the
Company, Mr. Thompson was Vice President, Manufacturing and Distribution of
Vidal Sassoon, Inc., a consumer products company.
Susan J. Miller-Smith joined Merisel in 1987 as President of the Company's
Canadian subsidiary and became a Senior Vice President in charge of Canadian
operations in May 1992. She continued in that capacity until August 1994, when
she was named Senior Vice President--European Operations and became Managing
Director of the Company's operations in Europe.
Thomas P. Reeves joined Merisel in 1987 as director of International
Strategic Planning. From March 1990 to February 1992, Mr. Reeves served as
Managing Director of the Company's United Kingdom subsidiary. From February
1992 until August 1994, Mr. Reeves served as the Company's Managing Director of
operations in Europe. Mr. Reeves was named Senior Vice President-European
Operations in May 1992. In August 1994, he became Senior Vice President--
Canadian Operations as well as President of the Company's Canadian subsidiary.
Paul M. Lemerise joined Merisel in May 1992 as Senior Vice President--Chief
Information Officer. From February 1990 to April 1992, Mr. Lemerise served as
Vice President of Management Information Systems at Marshall Industries, an
industrial distributor of electronic components. From 1984 to 1990, Mr.
Lemerise served as Divisional Vice President, Information Services at Carter
Hawley Hale Corporation, a major California retailer.
Martin D. Wolf joined the Company in February 1994 as President of Merisel
FAB, Inc. and became Senior Vice President of the Company in March 1994. In
March 1995, he was named Executive Vice President of Merisel Americas, Inc., to
fulfill a senior level business development role. From July 1989 until he
joined the Company, Mr. Wolf was employed by Vanstar Corporation (formerly
ComputerLand Corporation), a computer products reseller, most recently as
President of the U.S. Franchise and Distribution Division.
Verilyn Smith joined the Company in October 1989 as Managing Director of
Merisel Australia and became Managing Director of the Company's Asia Pacific
region in February 1994. She was appointed Senior Vice President--Asia/Pacific
Operations in December 1994. In March 1995, she was named Senior Vice
President-- Franchise and Aggregation Operations and President of Merisel FAB,
Inc.
SECTION 16 MATTERS
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors to file reports of ownership and changes in ownership with the
Securities and Exchange Commission and the Nasdaq National Market, and to
furnish the Company with copies of all Section 16(a) forms they file.
Based on its review of the copies of such forms received by it and on written
representations from such persons that no Forms 5 were required for those
persons, the Company believes that, during the fiscal year ended December 31,
1995, all filing requirements applicable to its directors and executive
officers were complied with, except for the following: Form 4s reporting the
annual grant of options to non-employee directors were filed late by each of
Dr. Miller, Messrs. Abrams, House, Schoenberg, Steffensen, and Wagman and a
Form 5 reporting the grant of options to Ronald A. Rittenmeyer was filed late.
3
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth the cash and non-cash compensation for each
of the last three fiscal years awarded to or earned by the Company's former
Chief Executive Officer and the four other most highly compensated executive
officers of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM ALL OTHER
NAME AND PRINCIPAL COMPENSATION COMPENSATION
POSITION YEAR ANNUAL COMPENSATION(1) AWARDS(3) ($)(4)
------------------ ---- ------------------------ ------------ ------------
SALARY($)(2) BONUS($)(2) OPTIONS(#)
---- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Michael D. Pickett, 1995 502,092 -0- 211,741 18,542
Former Chairman of the 1994 501,630 77,438 -0- 17,022
Board of Directors, 1993 490,066 279,688 -0- 18,739
President and Chief
Executive Officer(5)
James L. Brill, 1995 227,700 -0- 80,000 4,436
Senior Vice President-- 1994 217,517 19,688 -0- 3,306
Finance, Chief Financial 1993 207,503 72,656 -0- 4,122
Officer, Secretary and
Director
Susan J. Miller-Smith, 1995 241,664 -0- 100,000 84,101
Senior Vice President-- 1994 160,854 91,488 -0- 177,308
Managing Director-- 1993 166,346 95,112 -0- 5,944
Europe (6)
Paul M. Lemerise 1995 248,100 -0- 80,000 3,378
Senior Vice President-- 1994 216,029 29,876 -0- 3,522
Chief Information 1993 191,030 40,507 -0- 5,088
Officer
Martin D. Wolf 1995 215,000 26,875 75,000 3,444
Senior Vice President 1994 214,354 17,899 -0- 3,166
1993 n/a n/a n/a n/a
</TABLE>
- --------
(1) While the named executive officers enjoyed certain perquisites
commensurate with their positions with the Company, such perquisites did
not exceed the lesser of $50,000 or ten percent (10%) of such officer's
salary and bonus.
(2) Portions of the salary and/or bonus earned by named executive officers may
be deferred pursuant to the Company's executive deferred compensation plan
(the "Deferred Compensation Plan"), which was adopted by the Board of
Directors in 1990. Under the Deferred Compensation Plan, executive
officers may elect on an annual basis to defer any portion of their pre-
tax compensation until retirement or termination of employment. The
Company will pay participants in the Deferred Compensation Plan, upon
retirement or termination of employment, an amount equal to the amount of
deferred compensation plus a guaranteed return at a specified rate that is
no less than a base interest rate. In addition, upon the death of a
participant the Company will pay a death benefit to a named beneficiary.
(3) At December 31, 1995, the only long-term compensatory arrangement the
Company had for its executive officers was its stock option plan, grants
under which are listed in the Summary Compensation Table for completeness
of presentation.
(4) For Mr. Pickett, the amount listed for 1995 includes the Company's
contributions on behalf of Mr. Pickett of (a) $3,722 to the Merisel, Inc.
40l(k) Plan (the "40l(k) Plan"), (b) $1,320 of premiums paid with respect
to the Company's group term life insurance policy (the "Term Life
Policy"), and (c) $13,500 to Mr. Pickett's split-dollar life insurance
policy. For Mr. Brill, the amount listed for 1995 includes the Company's
contributions on behalf of Mr. Brill of (a) $3,722 to the 401(k) Plan and
(b) $714 to the Term Life Policy. For Ms. Miller-Smith, the amount listed
for 1995 includes (a) reimbursement of relocation costs of $84,101. For
Mr. Lemerise, the amount listed for 1995 includes the Company's
contributions on behalf of Mr. Lemerise of (a) $1,025 to the 401(k) Plan
and (b) $2,353 to the Term Life Policy. For Mr. Wolf, the amount listed
for 1995 includes the Company's contributions on behalf of Mr. Wolf of (a)
$3,000 to the 401(k) Plan and (b) $444 to the Term Life Policy. Itemized
disclosure of amounts of other compensation in 1994 and 1993 is not
required.
(5) Mr. Pickett resigned on February 12, 1996.
(6) Ms. Miller-Smith became Senior Vice President--Canadian Operations in May
1992. She was named Senior Vice President--European Operations in August
1994.
4
<PAGE>
OPTIONS IN 1995 FISCAL YEAR
The following tables summarize option grants and exercises during the 1995
fiscal year to or by the executive officers named in the Summary Compensation
Table above and the value of the options held by such persons at the end of
the 1995 fiscal year.
OPTION GRANTS IN 1995 FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES
OF STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM ($)(1)
-------------------------------------------- ---------------------------
PERCENT OF
TOTAL
OPTIONS
GRANTED TO PER SHARE
OPTIONS EMPLOYEES EXERCISE EXPIRATION
NAME GRANTED (#) IN 1995 (%) PRICE ($) DATE 5% ($) 10% ($)
- ---- ----------- ----------- --------- ---------- ---------------------------
<S> <C> <C> <C> <C> <C> <C>
Michael D. Pickett...... 24,241 1.4% $4.579 03/27/05 69,807 176,905
187,500 11.2% $6.313 06/09/05 744,356 1,886,344
James L. Brill.......... 25,000 1.5% $4.579 03/27/05 71,993 182,444
55,000 3.3% $6.313 06/09/05 218,344 553,327
Susan J. Miller-Smith... 25,000 1.5% $4.579 03/27/05 71,993 182,444
75,000 4.5% $6.313 06/09/05 297,742 553,327
Paul M. Lemerise........ 25,000 1.5% $4.579 03/27/05 71,993 182,444
55,000 3.3% $6.313 06/09/05 218,344 553,327
Martin D. Wolf.......... 75,000 4.5% $4.579 03/27/05 215,978 547,331
</TABLE>
- --------
(1) Potential realizable value is determined by taking the initial market
value per share and applying the stated annual appreciation rate
compounded annually for the remaining term of the option, subtracting the
exercise price at the end of that period and multiplying that number by
the number of options granted. Actual gains, if any, recognized by a named
executive officer are dependent on the future performance of the Common
Stock and on overall market conditions. There can be no assurance that the
potential realizable values reflected in this table will be achieved.
AGGREGATED OPTION EXERCISES IN 1995 FISCAL YEAR
AND VALUE OF OPTIONS AT FISCAL 1995 YEAR END
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
YEAR END (#) FISCAL YEAR END ($)(1)
------------------------- -------------------------
SHARES
ACQUIRED ON VALUE
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Michael D. Pickett...... -0- -0- 537,371 309,241 365,198 -0-
James L. Brill.......... -0- -0- 162,138 93,750 166,221 -0-
Susan J. Miller-Smith... -0- -0- 83,647 95,000 32,515 -0-
Paul M. Lemerise........ -0- -0- 47,500 87,500 -0- -0-
Martin D. Wolf.......... -0- -0- 18,750 56,250 -0- -0-
</TABLE>
- --------
(1) Value is determined by subtracting the exercise price of each option held
by the named executive officer from $4.375, the fair market value of the
Common Stock as of December 31, 1995, and multiplying the resulting number
by the number of underlying shares of Common Stock.
5
<PAGE>
COMPENSATION OF DIRECTORS
During fiscal 1995, each nonemployee director was entitled to receive an
annual retainer of $8,000, $1,000 per Board of Directors meeting attended,
$5,000 annually for acting as the chairman of a committee of the Board, $2,000
annually for committee membership, $250 per committee meeting attended and
reimbursement for travel expenses to and from Board of Directors and committee
meetings. Technology Strategy Group, a consulting firm associated with Dr.
Miller, also received $75,000 for consulting fees in 1995.
Pursuant to the Company's 1992 Stock Option Plan for Nonemployee Directors
(the "Nonemployee Director Plan"), immediately following the Company's 1995
Annual Meeting, Messrs. Abrams, House, Miller, Schoenberg and Steffensen were
each awarded options to purchase 1,000 shares of Common Stock at an exercise
price of $5.875 per share. The Nonemployee Director Plan provides for the
granting of nonqualified stock options to each member of the Company's Board
of Directors who is not otherwise an employee or officer of the Company or any
subsidiary of the Company (an "Eligible Director"). Currently, four members of
the Board of Directors are Eligible Directors. The Nonemployee Director Plan
provides for the issuance of options to purchase up to 50,000 shares of Common
Stock at an exercise price per share of not less than the fair market value of
the Common Stock on the date of grant.
The Nonemployee Director Plan provides for initial grants with respect to
options to purchase 1,000 shares of Common Stock to each Eligible Director
immediately following the annual meeting at which such director is first
elected or appointed, whichever is applicable. Each Eligible Director who has
received an initial option grant will also receive annual automatic option
grants of 1,000 shares immediately following each of the Company's annual
meetings. Each option becomes exercisable when, and only if, the optionee
continues to serve as a director for twelve months following the date on which
the option was granted. Options expire ten years and one day from the date of
grant, subject to earlier termination in accordance with the Nonemployee
Director Plan. Any vested and exercisable options may be exercised in whole or
in part by payment in cash of the full exercise price.
EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS
On April 25, 1996, the Board of Directors approved the terms of employment
agreements with each of Mr. Steffensen and Mr. Rittenmeyer, to be effective as
of February 1996 for Mr. Steffensen and as of September 1995 for Mr.
Rittenmeyer. The terms of these agreements described below are subject to the
negotiation and execution of definitive agreements.
Pursuant to his one-year employment agreement, Mr. Steffensen will serve as
Chairman of the Board of Directors and Chief Executive Officer with an annual
salary of $505,000 and a quarterly bonus based on the Company's financial
performance up to a maximum of $126,250 per quarter (a minimum bonus of
$37,875 is guaranteed for the first quarter of 1996). The agreement also
entitles Mr. Steffensen to 500,000 stock appreciation rights ("SAR Shares")
vesting on a deferred basis (except in the event of certain extraordinary
transactions, as specified) and subject to the receipt by the Company of
certain gross proceeds from specified extraordinary transactions. The SAR
Shares have an exercise price of $2.8175 per share. Mr. Steffensen is also
eligible to receive a lump-sum bonus of $990,000 in connection with the sale
of the Company (as defined) and of $200,000 in the event of a sale of the
Company's European operations (as defined) (together, the "Extraordinary
Transactions"), as well as certain other benefits, including specified fees
for legal and accounting services and the payment of business and automobile
expenses. If the employment agreement is terminated by the Company other than
for cause (as defined), Mr. Steffensen will be entitled to receive the
remainder of his base salary and may remain eligible to receive bonuses in
connection with Extraordinary Transactions.
Mr. Rittenmeyer's employment agreement provides for his employment as
President and Chief Operating Officer with an annual salary of $355,000
(subject to discretionary increases approved by the Board of Directors) and an
annual performance bonus of at least $200,000 per year (payable quarterly).
For 1996, Mr. Rittenmeyer's
6
<PAGE>
bonus has been guaranteed to him. Mr. Rittenmeyer is also entitled to certain
other benefits, including 300,000 SAR Shares (vesting and payable as specified
in the agreement), specified fees for legal and accounting services and the
payment of business and automobile expenses and certain housing and travel
expenses. If a change of control (as defined) occurs and if the employment
agreement is terminated by the Company without cause (as defined) or Mr.
Rittenmeyer resigns within two years following such change of control, Mr.
Rittenmeyer will be entitled to receive a lump-sum payment equal to his annual
base salary, a lump-sum payment of three times his average bonus, plus certain
other benefits and the immediate vesting of an option to purchase 200,000
shares of the Company's Common Stock granted in September 1995 (the "Option")
and his SAR Shares. In the event of any other termination by the Company
without cause, Mr. Rittenmeyer will be entitled to receive a lump-sum payment
of $125,000 plus specified other benefits, and the immediate vesting of the
Option and SAR Shares upon the satisfaction of certain conditions precedent.
Upon Mr. Rittenmeyer's voluntary resignation, he will be entitled to severance
payments of at least three months' salary and bonus, in accordance with
formulae dependent upon the timing of such resignation. In addition, if Mr.
Rittenmeyer's employment terminates following certain events, he will receive
a payment equal to the number of shares represented by the vested portion of
his Option multiplied by the lesser of (i) $3.313 or (ii) the price of the
Company's Common Stock minus $2.812, calculated on a per share basis.
In addition, both Mr. Steffensen and Mr. Rittenmeyer are subject to
specified obligations of non-competition, non-solicitation and confidentiality
obligations and are entitled to receive lump sum payments of $1,010,000 and
$710,000, respectively, in consideration for such obligations in the event of
the sale of the Company or certain other termination events (as defined).
In April 1992, the Company and Mr. Pickett entered into a five-year
employment agreement. Pursuant to the terms of that agreement, Mr. Pickett was
to serve as the Chairman of the Board of Directors, President and Chief
Executive Officer of Merisel with an annual salary (subject to discretionary
increases approved by the Board of Directors) of $502,092 (as of February 12,
1996) and, if predetermined objectives were achieved, an annual performance
bonus of at least $295,000 under any management bonus plan adopted by the
Board of Directors as well as certain other benefits. Effective February 12,
1996, the Board of Directors terminated the above described employment
agreement and determined to pay Mr. Pickett the resulting benefits, including
a cash payment of $750,000. The Company concurrently entered into a new
employment agreement with Mr. Pickett, which provides for his continued
employment through June 14, 1996 to provide information and otherwise
facilitate a smooth transition between Mr. Pickett and Mr. Steffensen. The new
agreement entitles Mr. Pickett to $31,350 per month as well as certain other
benefits, including payment of specified fees for legal and outplacement
services. The agreement subjects Mr. Pickett to specified obligations of non-
competition, non-solicitation and confidentiality, in consideration for which
Mr. Pickett is entitled to $500,000 (paid out periodically over 12 months or
immediately upon a change in control).
In January 1995, the Company entered into an Early Retirement Agreement with
John Connors, formerly the Senior Vice President--U.S. Operations. Mr. Connors
resigned as Senior Vice President, but continued to remain employed by the
Company on a part-time basis until February 1996. Under his agreement, Mr.
Connors received cash compensation of $500,000 plus certain benefits. In
exchange, Mr. Connors agreed not to compete with Merisel or to hire any of
Merisel's employees for the term of the agreement.
In September and October 1995, the Company entered into retention agreements
(the "Retention Agreements") and employment agreements (the "Employment
Agreements") with Messrs. Brill, Lemerise, Thompson, Reeves and Wolf effective
through August 1998. The Retention Agreements provide that if the Company
terminates the executive's employment without cause or the executive resigns
with good reason (each as defined in the Retention Agreements and together,
"Covered Terminations") following a change of control, the Company will pay
the executive's base salary for 180 days over the course of such period, as
well as a lump-sum payment of one-half of the executive's average annual
performance bonus. The Employment Agreements provide for the continued payment
of annual base salaries, average bonuses and COBRA payments for Covered
Terminations following the termination of Mr. Pickett as Chief Executive
Officer.
7
<PAGE>
In April 1996, the Company entered into a retention agreement with Ms.
Miller-Smith which provides for the lump-sum payment of Ms. Miller-Smith's
annual base salary, average bonus and specified relocation expenses upon the
cessation of her employment due to a termination without cause (as defined),
or her resignation with good reason (as defined) following specified change of
control transactions, including changes of control affecting the Company's
European operations.
Under the foregoing Retention Agreements, the Employment Agreements and Ms.
Miller-Smith's retention agreement, the executives are subject to specified
obligations of non-competition, non-solicitation and confidentiality during
the benefit periods or the terms of the agreements, as applicable.
ORGANIZATION AND COMPENSATION COMMITTEE REPORT ON 1995 EXECUTIVE COMPENSATION
The Organization and Compensation Committee (the "Committee") of the Merisel
Board of Directors is currently comprised of Messrs. Abrams, House and Miller.
Dwight A. Steffensen and David S. Wagman also served on the Committee in 1995.
The Committee establishes policies relating to the compensation of Company
executive officers and other key employees. The administration of the
Company's employee stock option plans is the responsibility of the Company's
Option Committee, which is currently comprised of Messrs. Abrams, House and
Schoenberg. All decisions of the Committee relating to compensation of the
Company's executive officers are ratified by the entire Board of Directors.
Decisions relating to the grant of stock options to executive officers, are
made solely by the Option Committee so that grants of such options satisfy
Rule 16b-3 of the Securities Exchange Act of 1934. In the 1995 fiscal year,
the Company's Board of Directors ratified all of the Committee's
recommendations regarding executive compensation, as submitted. Additionally,
each member of the Board of Directors who is also an executive officer does
not participate when the Board of Directors reviews his compensation.
As required by rules designed to enhance the disclosure of Merisel's
executive compensation policies and practices, the following is the
Committee's report submitted to the Board of Directors addressing the
compensation of the Company's executive officers for the 1995 fiscal year.
Compensation Policy.
Merisel's executive compensation policy is designed to establish an
appropriate relationship between executive pay and the Company's annual
performance, its long-term objectives and its ability to attract and retain
qualified executive officers. The Committee attempts to achieve these goals by
integrating competitive annual base salaries with (a) bonuses based on
corporate performance and on the achievement of internal strategic objectives
and (b) executive stock options through the Company's stock option plans. The
Committee believes that cash compensation in the form of salary and bonus
provides Company executives with short-term rewards for success in operations,
and that long-term compensation through the award of stock options encourages
growth in management stock ownership, which in turn leads to the expansion of
management's stake in the long-term performance and success of the Company.
Base Salary. Due to the Company's financial performance in fiscal 1994, the
base salary level of executive officers in fiscal 1995 was generally not
increased. Only Susan Miller-Smith's, Thomas Reeves' and Verilyn Smith's 1995
base salaries were changed as a result of the new positions held within the
Company by each of these executives. In addition, a portion of Mr. Lemerise's
target bonus amount was added to his base salary and the value of car
allowances previously provided to certain executive officers was added to such
officers' base salaries. Base salaries in 1995 were paid either directly to
the Company's executive officers in cash or, at the option of the executive,
deferred as part of the Deferred Compensation Plan or the 401(k) Plan.
Bonuses. The Merisel Management Incentive Program (the "Incentive Program")
is intended to encourage and reward the achievement of certain short-term
corporate objectives. Participants in the Incentive Program are assigned
target bonus amounts ranging from 12.5% to 60% of the base salaries paid to
such persons. Actual bonuses could then range from 0% to 150% of the target
amounts, depending on the level of achievement of various performance
objectives, including the satisfaction of net income milestones, the
achievement of cost center budgets, the completion of priority tasks or a
combination of these objectives. Bonuses are paid quarterly, based upon
whether the executive meets quarterly objectives. In 1995, only Mr. Wolf met
any of his quarterly objectives. Mr. Rittenmeyer, who was hired on September
29, 1995, was guaranteed his bonus for the last quarter of fiscal 1995.
8
<PAGE>
Stock Options. The Company has adopted a long-term incentive compensation
strategy to provide incentives and reward management's contribution to the
achievement of long-term Company performance, as measured by the market value
of the Common Stock. Under this long-term strategy, the Option Committee
awarded stock options in 1995 to executive officers under the Company's
existing employee stock option plan who were deemed to be able to cause a
measurable impact on the Company's earnings per share over an extended period.
The options granted to executive officers in 1995 vest over a five-year
period. In 1995, due to the volatility of the Company's stock price, the
Committee determined to change the timing of stock option grants on a going
forward basis and to phase in annual stock option grants, rather than granting
options every three years. The Committee believes this changed strategy
provides more meaningful incentives for senior management to remain with the
Company and improve its long-term performance.
Retention Program. In August 1995, the Committee authorized the Company to
enter into certain retention and employment agreements with all of its
executive officers, other than Mr. Pickett. The agreements provide for
severance payments if the executive officer is terminated without cause (as
defined). The amount of the payment varies, depending on whether the
termination occurs after certain events, which events include a change in the
chief executive officer or a change of control. The Committee believes that
such agreements enable the Company to retain those executive officers who are
critical to the success of the Company.
Compensation of Former Chief Executive Officer.
The annual salary earned by Michael Pickett, the Company's Chief Executive
Officer for 1995, was $502,092, an amount that did not increase materially
from his base salary in fiscal 1994. Mr. Pickett's base salary was determined
pursuant to the terms of his employment agreement with the Company. Under his
employment agreement, he participated in the Company's Management Incentive
Bonus Plan as adopted from time to time by the Committee. In 1994, based on
(a) improvements in the Company's performance and profitability in fiscal 1993
and (b) an increase in Mr. Pickett's responsibilities, as a result of a
significant increase in both the Company's size and sales volume, the
Committee determined that an increase in Mr. Pickett's base salary would have
been appropriate. However, with the agreement of Mr. Pickett, the Committee
agreed to increase the long-term compensation component of his compensation by
increasing the amount of stock options that he would otherwise ordinarily
receive under the Company's long-term incentive strategy, described above, in
1995. Accordingly, in fiscal 1995, Mr. Pickett was granted options to purchase
24,241 and 187,500 shares of the Company's common stock at an exercise price
of $4.579 and $6.3125, respectively. The potential target bonus payable to Mr.
Pickett in 1995, upon achievement of predetermined objectives set forth in the
Incentive Program, was not raised from the 1994 level of $309,752. Mr.
Pickett's bonus depended entirely on the Company achieving certain net income
objectives each quarter. Pursuant to the Incentive Program, Mr. Pickett did
not earn a bonus in any quarter of the 1995 fiscal year. On February 12, 1996,
the Board of Directors voted to terminate Mr. Pickett's employment agreement
and to pay him the resulting benefits, including a cash payment of $750,000.
Mr. Pickett also received certain other benefits, including reimbursement for
outplacement services and legal and accounting fees. Mr. Pickett also agreed
not to compete with the Company for a period of 12 months, for which agreement
he will receive an aggregate of $500,000, paid out periodically over such 12
months or immediately upon a change of control.
Corporate Tax Deduction on Compensation.
To the extent readily determinable and as one of the factors in its
consideration of compensation matters, the Committee considers the anticipated
tax treatment to the Company and to the executives of various compensation.
Some types of compensation and their deductibility depend upon the timing of
an executive's vesting or exercise of previously granted rights. Further,
interpretations of and changes in the tax laws also affect the deductibility
of compensation. To the extent reasonably practicable and to the extent it is
within the Committee's control, the Committee intends to limit executive
compensation in ordinary circumstances to that deductible under Section 162(m)
of the Internal Revenue Code of 1986. In doing so, the Committee may utilize
alternatives (such as deferring compensation) for qualifying executive
compensation for deductibility and may rely on grandfathering provisions with
respect to existing contractual commitments.
9
<PAGE>
The Committee believes that a direct relationship between executive
compensation and Merisel's performance, as measured by growth in income and
earnings, ultimately results in increased value to the Company's stockholders.
The Committee believes that management compensation levels during the
Company's 1995 fiscal year appropriately reflect the application of the
Committee's compensation policy.
ORGANIZATION AND COMPENSATION COMMITTEE
Joseph Abrams
David House
Dr. Arnold Miller
10
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of March 29, 1996 certain information
regarding beneficial ownership of Common Stock by each stockholder known by
the Company to be the beneficial owner of more than 5% of Common Stock as of
such date, each director, certain executive officers of the Company and all
directors and executive officers, as a group. Unless otherwise indicated, the
stockholders have sole voting and investment power with respect to shares
beneficially owned by them, subject to community property laws, where
applicable.
<TABLE>
<CAPTION>
COMMON STOCK PERCENT OF SHARES
NAME AND ADDRESS BENEFICIALLY OWNED OWNED
---------------- ------------------ -----------------
<S> <C> <C>
Dwight A. Steffensen....................... 4,000 *
Merisel, Inc.
200 Continental Boulevard
El Segundo, California 90245(1)
Ronald A. Rittenmeyer(1)................... 66,666 *
James L. Brill(1)(2)....................... 176,638 *
Susan J. Miller-Smith(1)................... 98,147 *
Paul M. Lemerise(1)........................ 55,750 *
David L. House(1).......................... 2,000 *
Joseph Abrams(3)........................... 600,560 2.01%
Dr. Arnold Miller(3)....................... 6,000 *
Lawrence J. Schoenberg(3).................. 364,584 1.22%
Martin D. Wolf(4).......................... 45,500 *
State of Wisconsin Investment Board........ 2,925,000 9.83%
P.O. Box 7842
Madison, Wisconsin 53707(5)
Wellington Management Company.............. 2,315,900 7.76%
75 State Street
Boston, Massachusetts 02109(5)(6)
David S. Wagman............................ 2,065,000 6.91%
c/o Merisel, Inc.
200 Continental Boulevard
El Segundo, CA 90245(5)(7)
Robert S. Leff............................. 1,615,648 5.41%
c/o Merisel, Inc.
200 Continental Boulevard
El Segundo, California 90245(5)(8)
All Directors and Executive Officers
as a Group (13 Persons) (9)............... 1,637,210 5.49%
</TABLE>
- --------
* Percentage of Common Stock owned is less than one percent.
(Footnotes on following page)
11
<PAGE>
(1) Represents shares issuable with respect to stock options exercisable
within 60 days after March 29, 1996.
(2) Excludes 6,000 shares held by Mr. Brill's wife. Mr. Brill disclaims all
beneficial interest in such shares.
(3) Includes 4,000 shares issuable with respect to stock options exercisable
within 60 days after March 29, 1996.
(4) Includes 37,500 shares issuable with respect to stock options exercisable
within 60 days after March 29, 1996.
(5) All information regarding share ownership is taken from and furnished in
reliance upon the Schedule 13G, as amended to date, filed by the
stockholder pursuant to Section 13(g) of the Exchange Act.
(6) Wellington Management Company, in its capacity as investment advisor, may
be deemed beneficial owner of such shares, which are owned by certain of
Wellington's investment counseling clients.
(7) Shares are held by Mr. Wagman as Trustee of the David S. Wagman Trust
dated March 3, 1982.
(8) Shares are held by Mr. Leff as Trustee of the Robert S. Leff Trust dated
February 23, 1990. Mr. Leff's share holdings include 929 and 10,200 shares
held by his wife and minor sons, respectively.
(9) Includes 670,066 shares issuable with respect to stock options exercisable
within 60 days after March 29, 1996.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In August 1994, Ms. Miller-Smith was named Senior Vice President-European
Operations. In connection with her move from Canada to the United Kingdom, the
Company reimbursed Ms. Miller-Smith for certain relocation costs, including
costs incurred in connection with the marketing and sale of her primary
residence, moving expenses, reimbursement of her monthly housing costs while
in the United Kingdom and reimbursement of the incremental increase in payroll
taxes incurred while in the United Kingdom. In addition, due to her relocation
to the United Kingdom and her assumption of the responsibility of Senior Vice
President-European Operations, her bonus payments were guaranteed to her for
the last two quarters of fiscal 1994.
Merisel has entered into Indemnity Agreements with each of its directors and
certain of its officers, which agreements require Merisel, among other things,
to indemnify them against certain liabilities that may arise by reason of
their status or service as directors, officers, employees or agents of Merisel
(other than liabilities arising from conduct in bad faith or which is
knowingly fraudulent or deliberately dishonest), and, under certain
circumstances, to advance their expenses incurred as a result of proceedings
brought against them.
12
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES ACT OF
1934, THE REGISTRANT HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE REPORT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
DATE: APRIL 29, 1996
Merisel, Inc.
/s/ James L. Brill
By___________________________________
James L. Brill
Senior Vice President, Finance,
Chief Financial Officer and
Secretary
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
AMENDMENT NO. 1 TO THE REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS
ON BEHALF OF THE REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Dwight A. Steffensen Chairman of the Board of April 29, 1996
____________________________________ Directors, and Chief Executive
Dwight A. Steffensen Officer (Principal Executive
Officer)
/s/ Ronald A. Rittenmeyer President and Director April 29, 1996
____________________________________
Ronald A. Rittenmeyer
/s/ James L. Brill Senior Vice President--Finance, April 29, 1996
____________________________________ Chief Financial Officer,
James L. Brill Secretary and Director
(Principal Financial Officer)
/s/ Bruce Zeedik Corporate Controller (Principal April 29, 1996
____________________________________ Accounting Officer)
Bruce Zeedik
/s/ Joseph Abrams Director April 29, 1996
____________________________________
Joseph Abrams
/s/ Dr. Arnold Miller Director April 29, 1996
____________________________________
Dr. Arnold Miller
</TABLE>
13
<PAGE>
EXHIBIT INDEX
DESCRIPTION
10.47Retention Agreement between Merisel, Inc. and Susan J. Miller-Smith dated
April 22, 1996.
<PAGE>
EXHIBIT 10.47
RETENTION AGREEMENT
This Retention Agreement is dated as of April 22, 1996 and is between
Merisel, Inc. (the "Company"), a Delaware corporation, and Susan J. Miller-
Smith, an executive officer of the Company ("Executive").
Executive and the Company desire to set forth certain of the terms and
conditions governing Executive's employment by the Company (as defined below).
Accordingly, Executive 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 Executive's annual base salary, 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. "Merisel Europe" shall mean
Merisel Europe, 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
(collectively, an "Entity") 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. A "European Change of Control" shall have occurred
if (i) any Entity, other than the Company or any of its subsidiaries, shall
become the beneficial owner, directly or indirectly, of outstanding capital
stock of Merisel Europe possessing at least 50% of the voting power (for
the election of directors) of the outstanding capital stock of Merisel
Europe, or (ii) there shall be a sale of all or substantially all of
Merisel Europe's assets or Merisel Europe shall merge or consolidate with
another corporation and immediately after such transaction any Entity,
other than the Company or any of its subsidiaries, shall own 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.
(d) "Covered Termination" shall mean any cessation of the Executive's
employment by the Company that occurs prior to the Expiration Date 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
(as hereinafter defined). "Change of Control Covered Termination" shall
mean any Covered Termination that occurs within one year following a Change
of Control or European Change of Control.
(e) A resignation by Executive shall be with "Good Reason" if: (i) after
a Change of Control (A) there has been a material reduction in Executive's
job responsibilities from those that existed immediately prior to the
Change of Control, (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 7 hereof; (ii) after a European
Change of Control (A) there has been a material reduction in Executive's
job responsibilities from those that existed immediately prior to the
<PAGE>
European Change of Control and neither the successor to all or
substantially all of the business and assets of Merisel Europe, Inc (the
"European Successor") nor the Company has offered Executive a job with
similar or higher responsibilities in London, England or Toronto, Canada
(for the sake of clarity, if Executive is offered the position of President
of Merisel Canada Inc., then her resignation would not be with "Good
Reason"), (B) without Executive's prior written approval, the Company
requires Executive to be based anywhere other than the Executive's then
current location or Toronto Canada, (C) the European Successor fails to
furnish Executive with the assumption agreement required by Section 7 and
the Company has not offered Executive another job in London, England or
Toronto, Canada with similar or higher responsibilities than those that
existed immediately prior to such European Change of Control Canada (for
the sake of clarity, if Executive is offered the position of President of
Merisel Canada Inc., then her resignation would not be with "Good Reason");
(iii) prior to a Change of Control or European Change of Control (A) there
has been a material reduction in Executive's job responsibilities from
those that existed on the date hereof and nor the Company has not offered
Executive a job with similar or higher responsibilities in London, England
or Toronto, Canada (for the sake of clarity, if Executive is offered the
position of President of Merisel Canada Inc., then her resignation would
not be with "Good Reason"), (B) without Executive's prior written approval,
the Company requires Executive to be based anywhere other than the
Executive's then current location or Toronto Canada; or (iv) either prior
to or after a Change of Control or European Change of Control there is (A)
a reduction in Executive's Base Salary or (B) a material reduction in
Executive's Other Remuneration, in each case, from that in effect on the
date hereof or as the same may be increased from time to time, except that
an across-the-board reduction in the salary level of all of the Company's
senior vice presidents in the same percentage amount as part of a general
salary level reduction shall not constitute "Good Reason"; provided,
however, that if, the Company or the European Successor elects to take one
of the actions described in the foregoing clauses (i), (ii), (iii) or (iv)
in lieu of a Termination of the Executive for Cause, then if the Executive
subsequently resigns as a result of such action being taken such
resignation shall not be for "Good Reason." For purposes of the foregoing
definition, it is understood that (i) a mere change in title alone shall
not constitute a material reduction in Executive's job responsibilities
sufficient to constitute "Good Reason" and (ii) required travel on the
Company's business to an extent consistent with Executive's business travel
obligation prior to the date hereof or the applicable Change of Control or
European Change of Control does not constitute "Good Reason."
(f) "Termination for Cause" shall mean if the Company terminates
Executive's employment for any of the following reasons: Executive
misconduct (misconduct includes, but is not limited to, physical assault,
insubordination, falsification or misrepresentation of facts on company
records, fraud, dishonesty, willful destruction of company property or
assets, or sexual harassment of another Associate by Executive); poor job
performance; excessive absenteeism; abuse of sick time; creating or
contributing to unsafe working conditions; violation of company policy; or
Executive conviction for or a plea of nolo contendere by Executive to a
felony or any crime involving moral turpitude.
(g) "Benefit Period" shall mean a period of 180 days commencing with the
day next following the effectiveness of a Covered Termination.
(h) "Expiration Date" shall mean August 15, 1998.
(i) "Relocation Benefit" shall mean the cost to relocate Executive and
Executive's immediate family to Toronto, Ontario, Canada, grossed up so
that Executive receives an amount equal to the cost of such relocation,
after taking into account all applicable taxes. Provided, however, that the
amount of the Relocation Benefit and the particulars of the relocation
shall be in conformity with the Company's relocation policy as then in
effect. For example, Executive may be required to use the least expensive
available carrier, air travel will be coach class and the Company may pay
the moving service directly or may require Executive to use a moving
service chosen by the Company. The relocation must occur during the Benefit
Period. The Relocation Benefit only covers the cost of moving Executive's
family and does not cover any cost or loss Executive may incur in the sale
of Executive's home.
<PAGE>
(j) "Other Remuneration" shall mean health insurance benefits, automobile
benefits, return travel benefits to Canada, legal and accounting
reimbursement benefits and for so long as Executive remains in the United
Kingdom, rental housing benefits, all as more fully described in that
certain letter agreement between Executive and the Company dated October
25, 1994.
(k) "Other Company Paid Benefits" shall mean Executive's health insurance
benefits and automobile benefits and, for so long as Executive remains in
the United Kingdom, rental housing benefits, all as more fully described in
that certain letter agreement between Executive and the Company dated
October 25.
2. EXECUTIVE'S COMMITMENT UPON A CHANGE OF CONTROL. If a Change of Control
or a European Change of Control shall occur on or before the Expiration Date,
Executive agrees to remain in the employ of the Company for a period of 180
days from the effectiveness of such event. Subject to the express provisions
of this Agreement, 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 Company, whose employment may be terminated at any time without
notice, is not affected by this Agreement.
3. COVERED TERMINATION. If a Covered Termination shall occur, then:
(a) Company shall make a lump sum payment to Executive (or at the
direction of Executive, to Executive's Channel Island Bank Account) within
two weeks of the effective date of the Covered Termination equal to (I)
Executive's Base Salary plus (ii) 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 and was
not earned as a result of achievement of performance criteria);
(c) Company will recommend to the Company's Option Committee for such
Option Committee to cause all unvested options to purchase the stock of the
Company previously granted to Executive to vest as of the date of such
Covered Termination; and
(d) Company shall provide the Relocation Benefit to Executive.
In addition for the year in which the Covered Termination shall have
occurred, the Company shall reimburse Executive for the cost of Executive's
preparing and filing the applicable personal taxation forms.
4. WITHHOLDING. Company shall deduct from all payments paid to Executive
under this Agreement any required amounts for applicable taxes or tax
withholding as required by applicable law.
5. MITIGATION. Executive shall have no obligation to mitigate the amount of
any payment provided for in this Agreement by seeking employment or
otherwise, unless the company in its sole discretion determines that
Executive's choice of new employer following the Covered Termination is
detrimental to the Company. Executive shall not be entitled to payment
hereunder if Executive's employment ceases as a result of Executive's death
or permanent disability or Executive resigns without Good Reason.
6. EXECUTIVE'S OBLIGATIONS. In exchange for Company providing the above
described benefits to Executive, Executive agrees to the following:
(a) Executive agrees that during the Benefit Period, 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., Ingram Micro, Inc., Computer 2000 AG (C2000), 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;
<PAGE>
(b) 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 January 1, 1995;
(c) 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;
and
(d) 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.
7. ASSUMPTION AGREEMENT. In the event of a Change of Control, 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. In the
event of a European Change of Control in connection with which the Company
has not offered Executive another job in London, England or Toronto, Canada
with similar or higher responsibilities than those that existed immediately
prior to such European Change of Control, then the Company will require any
European Successor 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, and upon such assumption the Company shall be relieved of all of
its responsibilities hereunder.
8. MISCELLANEOUS. This Agreement shall be binding upon and inure to the
benefit of 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 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 provided,
however, that if on the Expiration Date moneys are then owed by the Company
hereunder, then this Agreement shall continue in effect until such moneys have
been paid.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, as of
the day and year first written above.
MERISEL, INC.
By:
- -------------------------------
Its:
- -------------------------------
"EXECUTIVE"
- -------------------------------
Susan J. Miller-Smith
