SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN A PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other that the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2)
/ X / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
MERISEL, INC.
(Name of Registrant as Specified in Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box): N/A
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A / / $500 per each party to the controversy
pursuant to Exchange Act Rule 14a-6(i)(3). / / Fee computed on table below per
Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
- -------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- -------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- -------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- -------------------------------------------------------------------------------
(5) Total fee paid:
- -------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- -------------------------------------------------------------------------------
(2) Form, Schedule or Registration No.:
- -------------------------------------------------------------------------------
(3) Filing Party:
- -------------------------------------------------------------------------------
(4) Date Filed:
- -------------------------------------------------------------------------------
<PAGE>
MERISEL, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 19, 1999
TO THE STOCKHOLDERS OF MERISEL, INC.:
The Annual Meeting of Stockholders (the "Annual Meeting") of Merisel,
Inc., a Delaware corporation (the "Company"), will be held on Wednesday, May 19,
1999 at 8:00 a.m., Los Angeles time, at the Company's headquarters located at
200 Continental Boulevard, El Segundo, California, for the following purposes as
described in the accompanying Proxy Statement:
1. To elect two Class II directors to the Board of Directors to
serve until the third succeeding annual meeting of
stockholders.
2. To transact such other business as may properly come before
the Annual Meeting or any adjournment or adjournments
thereof.
The Board of Directors has fixed March 31, 1999 as the record date for
determination of stockholders entitled to receive notice of and to vote at the
Annual Meeting and any adjournment thereof, and only record holders of Common
Stock at the close of business on that day will be entitled to vote. A copy of
the Company's 1998 Annual Report and Form 10-K, including financial statements
for the fiscal year ended December 31, 1998, is enclosed with this Notice of
Annual Meeting but is not to be considered part of the proxy soliciting
material.
All stockholders are cordially invited to attend the Annual Meeting in
person. Whether or not you expect to attend the Annual Meeting, to ensure your
representation at the Annual Meeting, please mark, sign, date and return the
enclosed proxy card as promptly as possible in the postage-prepaid envelope
enclosed for that purpose. Any stockholder attending the Annual Meeting may vote
in person even if he or she previously returned a proxy.
By Order of the Board of Directors
Karen A. Tallman
Secretary
El Segundo, California
April 7, 1999
<PAGE>
MERISEL, INC.
200 Continental Boulevard
El Segundo, California 90245
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is being sent on or about April 12, 1999 in
connection with the solicitation of proxies by the Board of Directors of
Merisel, Inc., a Delaware corporation (the "Company" or "Merisel"). The proxies
will be voted at the Company's Annual Meeting of Stockholders (the "Annual
Meeting"), which will be held on May 19, 1999, at 8:00 a.m., Los Angeles time,
at the Company's headquarters located at 200 Continental Boulevard, El Segundo,
California, or at any adjournment thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting of Stockholders. The record date for the
Annual Meeting is the close of business on March 31, 1999 (the "Record Date"),
and all holders of record of Merisel's common stock, par value $0.01 per share
(the "Common Stock"), on the Record Date are entitled to notice of the Annual
Meeting and to vote at the Annual Meeting, or at any adjournment thereof. The
Company's principal executive offices are located at 200 Continental Boulevard,
El Segundo, California 90245, and its telephone number is (310) 615-3080.
A proxy form for use at the Annual Meeting is enclosed. Whether or not
you plan to attend the Annual Meeting in person, please date, sign and return
the enclosed proxy as promptly as possible in the postage prepaid envelope
provided in order to ensure that your shares will be voted at the Annual
Meeting. Any stockholder who returns a proxy has the power to revoke it at any
time prior to its effective use by filing an instrument revoking it or a duly
executed proxy bearing a later date with the Secretary of the Company or by
attending the Annual Meeting and voting in person. Unless contrary instructions
are given, any such proxy, if not revoked, will be voted at the Annual Meeting
for the Director nominees named herein and with regard to all other matters in
the discretion of the persons named in the accompanying form of proxy.
The only voting securities of the Company are the outstanding shares of
Common Stock. At the Record Date, 80,278,682 shares of Common Stock were
outstanding and there were 1,072 stockholders of record. The holders of record
of a majority of the outstanding shares of Common Stock will constitute a quorum
for the transaction of business at the Annual Meeting. As to all matters, each
holder of Common Stock is entitled to one vote for each share of Common Stock
held. Abstentions and broker non-votes are counted for purposes of determining
the presence or absence of a quorum for the transaction of business. The
director nominees who receive the greatest number of votes at the Annual Meeting
will be elected to the Board of Directors of the Company. Stockholders are not
entitled to cumulate votes. Votes against a candidate and votes withheld have no
legal effect with respect to the election of directors. In matters other than
the election of directors, abstentions are counted as votes against in
tabulations of the votes cast on proposals presented to stockholders, whereas
broker non-votes are not counted for purposes of determining whether a proposal
has been approved.
The cost of preparing, assembling, printing and mailing this Proxy
Statement and the accompanying form of proxy, and the cost of soliciting proxies
relating to the Annual Meeting, will be borne by Merisel. The Company may
request banks and brokers to solicit their customers who beneficially own Common
Stock listed of record in names of nominees, and will reimburse such banks and
brokers for their reasonable out-of-pocket expenses of such solicitation. The
original solicitation of proxies by mail may be supplemented by telephone,
telegram and personal solicitation by officers, directors and regular employees
of the Company, but no additional compensation will be paid to such individuals.
<PAGE>
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Board of Directors presently consists of seven members divided into
three classes serving staggered terms, with one class of directors elected
annually. Class I consists of three directors and each of Class II and Class III
consists of two directors. At the Annual Meeting, the terms of the two present
directors constituting Class II will expire. The term of the directors in Class
III extends through the next succeeding annual meeting of stockholders, and the
term of the directors in Class I extends through the second succeeding annual
meeting of stockholders. The table below indicates the names of the directors in
each class.
Class I Class II Class III
Albert J. Fitzgibbons III Bradley J. Hoecker Thomas P. Mullaney
James E. Illson Dr. Arnold Miller Dwight A. Steffensen
Lawrence J. Schoenberg
In May 1998, Robert J. McInerney, former President of the Company,
resigned as a Class II director. In March 1999, Stephen M. McLean resigned as a
Class III director. Effective thereafter, the Board of Directors decreased the
size of the Board from nine to seven.
The Board of Directors has nominated the two incumbent Class II
directors named above for election as Class II directors at the Annual Meeting.
Each nominee has consented to being named in this Proxy Statement as a nominee
for election as director and has agreed to serve as a director if elected. Each
director elected at the Annual Meeting will be elected for a term that will
expire at the third succeeding Annual Meeting of Stockholders.
If, by reason of death or other unexpected occurrence, any one or more
of such nominees should for any reason become unavailable for election (although
management knows of no reason to anticipate that this will occur), the persons
named in the accompanying form of proxy may vote for the election of such
substitute nominees as the Board of Directors may propose. The accompanying form
of proxy contains a discretionary grant of authority with respect to this
matter.
Information Regarding Nominees and the Board of Directors
The nominees for election as Class II directors and all current Class I
and III directors are listed below, together with their ages and all Company
positions and offices held by them.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Dwight A. Steffensen............ 55 Chairman of the Board of Directors and Chief Executive
Officer
James E. Illson................. 46 President, Chief Operating Officer, Assistant Secretary and
Director
Albert J. Fitzgibbons III....... 53 Director
Bradley J. Hoecker.............. 37 Director
Dr. Arnold Miller............... 70 Director
Thomas P. Mullaney.............. 66 Director
Lawrence J. Schoenberg.......... 66 Director
</TABLE>
<PAGE>
The business experience, principal occupations and employment during at
least the last five years of each of the nominees for election as Class II
directors and each of the Class I and III directors, together with their periods
of service as directors and officers of the Company, as applicable, are set
forth below.
Dwight A. Steffensen. Mr. Steffensen was elected as Chief Executive
Officer and Chairman of the Board of the Company in February 1996 and also
served as President from March 1998 to August 1998. 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
of Bergen. In January 1996, he resigned from Bergen's Board of Directors.
James E. Illson. Mr. Illson has been a member of the Board of Directors
since December 1997. Mr. Illson joined the Company in August 1996 as Senior Vice
President and Chief Financial Officer, became Executive Vice President -
Operations and Finance in March 1998 and became President and Chief Operating
Officer in August 1998. Prior to joining Merisel, Mr. Illson served as Senior
Vice President and Chief Financial Officer for Bristol Farms, a Southern
California-based grocery chain, where he was responsible for managing all
financial operations, including implementing business plans, reporting and
control systems, and developing short-term and long-term capital strategies. He
joined Bristol Farms in 1995. From 1992 to 1995, Mr. Illson was a partner with
Kidd, Kamm & Co., a private equity investment firm where he was responsible for
activities relating to the acquisition and expansion of portfolio companies.
Prior to that, Mr. Illson spent more than 13 years with Deloitte & Touche's
reorganization advisory services group.
Albert J. Fitzgibbons III. Mr. Fitzgibbons has been a member of
the Board of Directors since December 1997. Mr. Fitzgibbons is a Partner and a
Director of Stonington Partners, Inc. ("Stonington"), a position that he has
held since 1993, and a Partner and a Director of Stonington Partners, Inc., II
("Stonington II"). He has also been a Director of Merrill Lynch Capital
Partners, Inc. ("MLCP"), a private investment firm associated with Merrill Lynch
& Co. ("ML&C"), since 1988 and a Consultant to MLCP since 1994. He was a Partner
of MLCP from 1993 to 1994 and Executive Vice President of MLCP from 1988 to
1993. Mr. Fitzgibbons was also a Managing Director of the Investment Banking
Division of ML&C from 1978 to July 1994. Mr. Fitzgibbons is also a director of
Borg-Warner Security Corporation, Dictaphone Corporation and United Artists
Theater Circuit, Inc.
Bradley J. Hoecker. Mr. Hoecker has been a member of the Board of
Directors since December 1997. Mr. Hoecker is a Partner and Director of
Stonington and a Partner and Director of Stonington II. Prior to being named
partner in 1997, Mr. Hoecker was a Principal of Stonington since 1993. He has
been a Consultant to MLCP since 1994 and was an Associate in the Investment
Banking Division of MLCP from 1989 to 1993. From 1984 to 1987, Mr. Hoecker was
employed by Bankers Trust Company. Mr. Hoecker is also a director of Packard
BioScience Company.
Dr. Arnold Miller. Dr. Miller was elected to the Board of Directors in
August 1989. 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
forming Technology Strategy Group, Dr. Miller was employed at Xerox Corporation,
a computer products and information services company, for 14 years, where his
most recent position was Corporate Vice President with responsibility for
worldwide electronics operations.
Thomas P. Mullaney. Mr. Mullaney has been a member of the Board of
Directors since December 1997. Mr. Mullaney served as the President and a
Director of Merisel, Inc. (under its former name, Softsel Computer Products,
Inc.) from 1985 to 1986. For the past five years, Mr. Mullaney has functioned as
an investment partner in and/or advisor to a variety of public and private
businesses, none of which are subsidiaries of or otherwise related to the
Company in any material way. In addition, Mr. Mullaney currently serves as a
director of Ducommon Inc.
Lawrence J. Schoenberg. Mr. Schoenberg was elected to the Board of
Directors following the acquisition by the Company of Microamerica, Inc.
("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
Computers, Inc. ("AGS"), a computer software company. From January to December
<PAGE>
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., Government
Technology Services, Inc. and Cellular Technology Services, Inc.
Committees and Meetings of the Board of Directors
The Company's Board of Directors met eight times during 1998. Each
incumbent director attended at least 75% of the aggregate of (i) the total
number of meetings held by the Board of Directors and (ii) the total number of
meetings held by all Committees of the Board of Directors on which he served
that occurred during the portion of 1998 that such individual served as a
director.
The Board of Directors maintains an Audit Committee, which is currently
comprised of Dr. Miller and Mr. Hoecker. The Audit Committee met six times in
1998. The duties of the Audit Committee include, among other things, reviewing
the Company's annual financial statements and the results of each audit by the
Company's independent accountants, consulting and meeting with the Company's
independent accountants, auditors and Chief Financial Officer and other finance
and accounting personnel concerning various matters, including the adequacy of
internal controls, reviewing potential conflict of interest situations, where
appropriate, and reporting and making recommendations to the full Board of
Directors regarding such matters.
The Board of Directors maintains a Compensation Committee, which is
currently comprised of Messrs. Fitzgibbons and Mullaney. The Compensation
Committee met six times in 1998. The Compensation Committee's primary purposes
are to establish policies relating to the compensation of the Company's
executive officers and other key employees, administer the Company's
compensation plans, including employee stock options plans, and consider and
make recommendations to the Board of Directors concerning other compensation
matters. The Compensation Committee is authorized to make recommendations to the
Board of Directors concerning the compensation of the Company's Chief Executive
Officer, to determine the compensation of the Company's President, Chief
Operating Officer, Chief Financial Officer and other executive officers, to
approve on an annual basis the Company's management bonus plan and to make
grants of stock options and other stock related incentive compensation awards.
The Board of Directors maintains a Nominating Committee, which is
currently comprised of Messrs. Schoenberg, Fitzgibbons and Hoecker. The purposes
of the Nominating Committee are to recommend persons for membership on the Board
and to establish criteria and procedures for the selection of new directors.
There are no procedures established to accept nominees recommended by the
Company's stockholders. The Nominating Committee did not meet during 1998.
Director Compensation
Each nonemployee director is entitled to receive an annual retainer fee
of $24,000, $1,000 for each Board of Directors meeting attended ($500 for
meetings held telephonically), $1,000 quarterly for acting as the chairman of a
committee of the Board of Directors and $500 for each committee meeting attended
plus reimbursement for travel expenses incurred in attending Board of Directors
and committee meetings. Messrs. Fitzgibbons and Hoecker have waived their rights
to receive any compensation for services as directors other than reimbursement
of travel expenses. Since the beginning of 1998, Dr. Miller has also received
$52,000 in fees for consulting services, including services provided by him in
his role as governance director, a position he held from 1995 through May 1998.
The Company's 1992 Stock Option Plan for Nonemployee Directors (the
"Nonemployee Director Plan") provides for annual grants of nonqualified stock
options to purchase 1,000 shares of Common Stock 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. No stock options were granted under the
Nonemployee Director Plan during 1997 or 1998, and in March 1998 the Board of
Directors voted to suspend the Plan. Beginning in 1998, nonemployee directors
<PAGE>
were able to elect on a annual basis to take up to 25 percent of their annual
retainer fee in shares of Common Stock in lieu of cash, based on the market
price of the Common Stock on the first day of the quarter following each annual
meeting of stockholders.
Ownership Of Common Stock
The following table sets forth as of March 31, 1999 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 the outstanding Common
Stock as of such date, each director, each executive officer or former executive
officer of the Company named below under the caption "Executive Compensation -
Summary Compensation Table," and all directors and executive officers (including
such former 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>
Amount and Nature of Beneficial Percent of
Name and Address Ownership Shares Owned
---------------- --------- ------------
<S> <C> <C>
Albert J. Fitzgibbons III................... -0- (1) *
Bradley J. Hoecker.......................... -0- (1) *
James E. Illson............................. 223,015 (2)(3) *
Timothy N. Jenson........................... 109,424 (3)(4) *
Robert J. McInerney......................... 185,000 (5) *
Dr. Arnold Miller........................... 7,000 (6) *
Thomas P. Mullaney.......................... 4,042 (7) *
Phoenix Acquisition Company II, L.L.C....... 50,000,000 (8) 62.28%
767 5th Avenue, 48th Floor
New York, New York 10153
Kristin M. Rogers........................... 39,600 (3)(9) *
Lawrence J. Schoenberg...................... 365,584 (6) *
Dwight A. Steffensen........................ 900,000 (10) 1.11%
Karen A. Tallman............................ 74,220 (3)(11) *
All Directors and Executive Officers........ 1,912,867 (3)(12) 2.34%
as a Group (12 Persons)
</TABLE>
*Less than 1%
(1) Each of Messrs. Fitzgibbons and Hoecker is a director or partner of certain
affiliates of Phoenix Acquisition Company II, L.L.C. ("Phoenix") and,
therefore, may be deemed to beneficially own the 50,000,000 shares of
Common Stock beneficially owned by Phoenix. Each of Messrs. Fitzgibbons and
Hoecker disclaims such beneficial ownership. The address of each of Messrs.
Fitzgibbons and Hoecker is the same as that given for Phoenix.
(2) Includes 213,500 shares issuable with respect to stock options exercisable
within 60 days after March 31, 1999.
(3) Includes shares held in the Company's 401(k) Plan for the accounts of the
following individuals: Mr. Illson - 515; Mr. Jenson - 624; Ms. Rogers -
2,100; and Ms. Tallman - 6,720.
(4) Includes 64,200 shares issuable with respect to stock options exercisable
within 60 days after March 31, 1999.
(5) Consists solely of shares issuable with respect to stock options
exercisable within 60 days after March 31, 1999.
(6) Includes 5,000 shares issuable with respect to stock options exercisable
within 60 days after March 31, 1999.
(7) Includes 2,042 shares issued in the name of Thomas P. Mullaney and Carol
Ann Mullaney, trustees of the Mullaney Family Trust.
(8) All information regarding share ownership is taken from and furnished in
reliance upon the Schedule 13D filed by Phoenix pursuant to Section 13(d) of
the Securities Exchange Act of 1934. Stonington Capital Appreciation
1994 Fund, L.P. (the "Fund") is the sole member of Phoenix. Stonington
Partners, L.P. ("Stonington LP") is the general partner of the Fund, and
Stonington Partners, Inc. II ("Stonington II") is the general partner of
Stonington LP. The Fund is managed by Stonington. The following individuals
<PAGE>
are the directors and/or officers of Stonington and Stonington II and have
shared voting and dispositive powers with respect to the Common Stock held
by Phoenix: Alexis P. Michas; James J. Burke, Jr.; Robert F. End; Albert
J. Fitzgibbons III; Bradley J. Hoecker; and Scott M. Shaw. Stonington LP,
Stonington II, Stonington and each of the directors and officers of
Stonington II and Stonington disclaim beneficial ownership of these shares.
(9) Includes 37,500 shares issuable with respect to stock options exercisable
within 60 days after March 31, 1999.
(10)Includes 700,000 shares issuable with respect to stock options exercisable
within 60 days after March 31, 1999.
(11)Includes 67,500 shares issuable with respect to stock options exercisable
within 60 days after March 31, 1999.
(12)Includes 625,208 shares issuable with respect to stock options exercisable
within 60 days after March 31, 1999.
Executive Officers
Set forth in the table below are the names, ages and offices held by
all executive officers of the Company.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Dwight A. Steffensen............... 55 Chairman of the Board of Director
and Chief Executive Officer
James E. Illson.................... 46 President, Chief Operating Officer and Assistant
Secretary
Timothy N. Jenson.................. 40 Chief Financial Officer, Senior Vice President,
Finance, and Assistant Secretary
Kristin M. Rogers.................. 41 Senior Vice President, General Manager,
U.S. Distribution
Ronald S. Smith.................... 58 President, Merisel Canada Inc.
Karen A. Tallman................... 42 Vice President, General Counsel and Secretary
</TABLE>
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 Mr. Steffensen and Mr. Illson, see "Information Regarding Nominees
and the Board of Directors" above.
Timothy N. Jenson. Mr. Jenson joined the Company in 1993 as Vice President
and Treasurer and became Senior Vice President Finance and Treasurer in 1998.
From 1989 to 1993, Mr. Jenson served as Vice President at Citicorp North
America, Inc. where he provided financial services, banking products and
advisory services to multinational corporations, including the Company
Previously, Mr. Jenson served as Vice President of Corporate Banking at Bank of
America for five years where he provided mid-size companies with lines of
credit, term loans and cash management products.
Kristin M. Rogers. Ms. Rogers rejoined Merisel in May 1998 as Senior Vice
President and General Manager, U.S. Distribution. From 1997 to 1998 Ms. Rogers
served as Executive Vice President and General Manager, U.S. at MicroWarehouse,
a reseller of computer products. From 1980 to 1997, Ms. Rogers was employed by
Merisel, Inc. in several positions, most recently as Senior Vice President of
Product and Inventory Management.
Ronald S. Smith. Mr. Smith joined the Company in June 1998 as President of
Merisel Canada Inc., the Company's Canadian subsidiary. From October 1997 to
June 1998, Mr. Smith was employed by Dynatek and Cygnet as President and Chief
Executive Officer. From November 1994 to September 1997, Mr. Smith served as
President and Chief Executive Officer of NCR Canada Ltd., a computer
manufacturer. Previously, Mr. Smith served as President of Amdahl Canada Ltd., a
manufacturer of mainframes.
Karen A. Tallman. Ms. Tallman joined the Company in 1997 as Vice President,
General Counsel and Secretary. From 1992 to 1997, Ms. Tallman was employed by CB
Commercial Real Estate Group, Inc., most recently in the positions of Vice
President, Secretary and Senior Counsel. Previously, Ms. Tallman was a corporate
attorney for nine years at the law firm of Skadden, Arps, Slate, Meagher & Flom
LLP.
<PAGE>
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 Chief
Executive Officer, the four other most highly compensated executive officers of
the Company in 1998 and one former executive officer of the Company for whom
disclosure would have been provided had he been an executive officer of the
Company as of December 31, 1998.
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compensation Awards(2) All Other
Name and Principal Position Year Salary($)(1) Bonus($)(1) SARs/Options(#) Compensation($)(3)
<S> <C> <C> <C> <C> <C>
Dwight A. Steffensen 1998 505,000 378,750 -0- 2,365
Chairman of the Board 1997 505,000 378,750 500,000 1,805,760
of Directors and Chief 1996(4) 435,077 313,625 500,000 3,360
Executive Officer
Officer
James E. Illson 1998 300,000 132,952 -0- 6,510
President and Chief 1997 225,000 109,375 425,000 128,914
Operating Officer 1996(4) 82,200 19,310 75,000 -0-
Timothy N. Jenson 1998 199,423 70,625 -0- 4,800
Senior Vice President - 1997 187,370 84,687 138,000 3,200
Finance and Chief 1996 173,870 82,810 12,000 -0-
Financial Officer
Kristin M. Rogers 1998(4) 153,850 48,420 150,000 17,862
Senior Vice President 1997(5) 109,397 47,500 -0- 61,641
and General Manager, 1996 173,385 68,750 50,000 25,000
U.S. Distribution
Karen A. Tallman 1998 160,000 35,000 -0- 2,815
Vice President, General 1997(4) 80,000 10,879 150,000 -0-
Counsel and Secretary 1996 -0- -0- -0- -0-
Robert J. McInerney 1998 204,231 75,000 -0- -0-
Former President and Chief 1997(4)(5) 265,380 107,690 500,000 49,548
Operating Officer 1996 -0- -0- -0- -0-
</TABLE>
(1) 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.
(2) At December 31, 1997, the only long-term compensatory arrangement the
Company had for its executive officers was its stock-based incentive plans,
grants under which are listed in the Summary Compensation Table. For Mr.
Steffensen, the amount listed for 1996 consists of stock appreciation
rights covering 500,000 hypothetical shares of Common Stock, which in
December 1997 Mr. Steffensen, pursuant to his employment agreement, elected
to convert to an option to purchase an equivalent number of shares. On
December 22, 1997 the Board of Directors granted stock options under the
Company's 1997 Stock Award and Incentive Plan, including stock options in
exchange for previously granted employee stock options that were then
outstanding and that had an exercise price greater than the then market
<PAGE>
price of the Common Stock, subject to the agreement of each optionee to
cancel the outstanding options. The amounts listed for 1997 include options
for the following number of shares issued in exchange for canceled options
to the following individuals: Mr. Steffensen - 4,000; and Mr. Jenson -
27,500.
(3) Includes premiums paid by the Company on behalf of Messrs. Steffensen and
Illson for term life insurance coverage pursuant to their respective
employment agreements with the Company as follows: Mr. Steffensen - $2,365
in 1998, $5,760 in 1997 and $3,360 in 1996; and Mr. Illson - $1,710 in 1998
and $714 in 1997. Includes amounts contributed by the Company to the
Company's 401(k) plan as follows: Mr. Illson - $4,800 in 1998 and $3,200 in
1997; Mr. Jenson - $4,800 in 1998 and $3,200 in 1997; Ms. Rogers - $2,355
in 1998; and Ms. Tallman - $2,815 in 1998. For Messrs. Steffensen and
Illson, the amounts listed for 1997 include payments made in the first
quarter of 1998 of $1,800,000 to Mr. Steffensen and $125,000 to Mr. Illson
pursuant to the terms of their respective employment agreements with the
Company, which amounts were payable by reason of the change of control that
occurred in December 1997. For Mr. McInerney the amount listed for 1997
consists of relocation expenses. For Ms. Rogers, the amount listed for 1998
includes $15,507 of relocation expenses; the amount listed for 1997
includes $25,000 in loan forgiveness and $36,641 for a related tax gross-up
payment; and the amount listed for 1996 consists of loan forgiveness.
(4) The employment of Mr. Steffensen, Mr. Illson, Ms. Rogers, Ms. Tallman and
Mr. McInerney commenced on February 12, 1996, August 12, 1996, May 11,
1998, June 23, 1997 and February 3, 1997, respectively.
(5) The resignations of Ms. Rogers and Mr. McInerney were effective on April 1,
1997 and March 11, 1998, respectively.
Options in 1998
The following tables summarize stock option grants and exercises during
1998 to or by the persons named under "Summary Compensation Table" above and the
value of the options held by such persons at the end of 1998.
<TABLE>
<CAPTION>
Stock Option Grants in 1998
Individual Grants
--------------------------------------------------------
Number of Percent of Potential Realizable Value
Securities Total Options at Assumed Annual Rates of
Underlying Granted to Per Share Stock Price Appreciation for
Options Employees Exercise Expiration Option Term($)(1)
Name Granted(#) in 1998(%) Price($) Date 5%($) 10%($)
<S> <C> <C> <C> <C> <C> <C>
Dwight A. Steffensen............ -0- --- --- --- --- ---
James E. Illson................. -0- --- --- --- --- ---
Timothy N. Jenson............... -0- --- --- --- --- ---
Kristin M. Rogers............... 150,000 25.71% 3.1875 5/11/08 330,740 762,131
Karen A. Tallman................ -0- --- --- --- --- ---
Robert J. McInerney............. -0- --- --- --- --- ---
</TABLE>
(1) Potential realizable value for each grant is determined by taking the
market value per share at the time of the grant (which in each case is
equal to the exercise price) and applying the stated annual appreciation
rate compounded annually for the remaining term of the option, subtracting
the exercise price at the end of that period and multiplying that number by
the number of options granted. Actual gains, if any, recognized by any
individual are dependent on the future performance of the Common Stock and
on overall market conditions. There can be no assurance that the potential
realizable values reflected in this table will be achieved.
<PAGE>
<TABLE>
<CAPTION>
Aggregated Option Exercises in 1998
and Value of Options at 1998 Year End
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money Options at
Acquired on Value Options at Fiscal Year End (#) Fiscal Year End ($) (1)
-----------------------
Name Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Dwight A. Steffensen..... -0- --- 700,000 300,000 --- ---
James E. Illson.......... -0- --- 213,500 286,500 650 ---
Timothy N. Jenson........ -0- --- 64,200 85,800 2,953 2,628
Kristin M. Rogers........ -0- --- --- 150,000 --- ---
Karen A. Tallman......... -0- --- 48,750 101,250 14,062 42,187
Robert J. McInerney...... 29,000 26,750 141,000 50,000 7,875 18,750
- ----------
</TABLE>
(1) Value is determined by subtracting the exercise price of each option held
by the named person from $2.375, the fair market value of the Common Stock
as of December 31, 1998, and multiplying the resulting number by the number
of underlying shares of Common Stock.
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee of the Board of Directors,
who are appointed by the Board of Directors, are Messrs. Fitzgibbons and
Mullaney.
Compensation Committee Report on 1998 Executive Compensation
The Compensation Committee (the "Committee") of the Board of Directors
is currently comprised of Messrs. Fitzgibbons and Mullaney. The Committee is
authorized to make recommendations to the Board of Directors concerning the
compensation of the Company's Chief Executive Officer, to determine the
compensation of the Company's President, Chief Operating Officer, Chief
Financial Officer and other executive officers, to approve on an annual basis
the Company's management bonus plan and to make grants of stock options and
other stock related incentive compensation awards. In 1998, the Board of
Directors approved 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 addressing the compensation of the Company's executive officers for 1998.
Compensation Policy. The Company'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) stock options or other stock-based incentive awards
through the Company's stock option and similar 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 or other stock-based awards
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 and Bonuses. The base salary levels of executive officers
in 1998 were not increased as part of an across-the-board salary increase,
however, certain executives received salary increases that primarily consisted
of merit increases, increases in connection with a promotion or increases based
<PAGE>
on a review of salaries being paid for similar positions in the industry. The
compensation of newly hired executives is generally determined based upon the
individual's previous experience and industry standards for compensation paid to
employees with comparable responsibilities.
In March 1998, the Committee approved the Merisel, Inc. 1998 Management
Incentive Plan (the "Incentive Plan"). The Incentive Plan is an annual plan that
provides for quarterly payments based on quarterly financial results. Payments
are based primarily on achievement of operating plan objectives, which consist
of both consolidated pre-tax net income objectives and profit contribution
objectives for each business segment. An individual's bonus may be based on one
or both of those objectives. Payment of bonuses based on the profit contribution
of a business segment is contingent on achievement of a minimum consolidated
pre-tax net income. The Company achieved its consolidated pre-tax net income
objectives for the first three quarters of 1998 and did not achieve it for the
fourth quarter. Accordingly, individuals whose bonuses were based entirely on
consolidated pre-tax net income, which included Messrs. Steffensen, Illson and
Jenson and Ms. Tallman, received 100% of their target bonus amounts for the
first three quarters and no bonus for the fourth quarter.
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 goals, as measured by the
market value of the Common Stock. In determining the amount of option grants to
an individual, the Committee considers, among other things, the level of
responsibility, position, contribution and anticipated performance requirements
of such individual as well as prior grants to such individual and grants to
individuals in comparable positions. Because of the substantial stock option
grants made in 1997, no stock option or other stock-based incentive awards were
granted to any executive officers in 1998, other than to Ms. Rogers and Mr.
Smith upon commencement of their employment in 1998.
Compensation of Chief Executive Officer. Dwight A. Steffensen joined
the Company in February 1996 as its Chief Executive Officer. The salary earned
by Mr. Steffensen for 1998 and 1997 was $505,000 and for 1996 was $435,077 (the
prorated amount based on an annual salary of $505,000), which is comparable to
the compensation package of Mr. Pickett, the Company's former Chief Executive
Officer. Mr. Steffensen's base salary was based upon Mr. Steffensen's 12 years
of experience at Bergen Brunswig Corporation and the Committee's belief that Mr.
Steffensen's experience would be instrumental in effecting the restructuring of
the Company's operational and capital structure and in helping to bring the
Company back to profitability. In addition, prior to entering into an employment
agreement with Mr. Steffensen, the Company engaged an executive compensation
consultant to conduct a study to assess the entire compensation package offered
to Mr. Steffensen and to determine if the compensation package was reasonable
and competitive with current industry standards for executives in similar
positions. In assessing Mr. Steffensen's compensation package, the executive
compensation consultant engaged by the Company reviewed the compensation of
chief executive officers of a peer group of six public companies as disclosed in
such companies' proxy statements and a published industry survey of executive
compensation in the technology industry.
Pursuant to the terms of his employment agreement with the Company, Mr.
Steffensen received bonuses during 1998 based on the Company's actual financial
performance in relation to objectives set forth in the Board approved operating
plan.
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.
Albert J. Fitzgibbons III
Thomas P. Mullaney
<PAGE>
Stock Price Performance Graph
The following graph compares the total cumulative stockholder return on
the Common Stock from December 31, 1993 to December 31, 1998 to that of the
Standard & Poor's MidCap Index, an index that includes 400 companies with a
total capitalization of $878 billion as of December 31, 1998, and (b) a
combination, assuming investment on a weighted average basis, of the Standard &
Poor's Computer Systems Index and the Standard & Poor's Computer Software &
Services Index over the same period. The graph assumes that the value of an
investment in Common Stock and in each such index was $100 on December 31, 1993,
and that all dividends have been reinvested. Cumulative total stockholder return
consists of change in stock price and cumulative dividends, assuming dividend
reinvestment.
COMPARISON OF CUMULATIVE TOTAL RETURN
OF COMPANY, PEER GROUP AND BROAD MARKET
[PERFORMANCE GRAPH APPEARS HERE]
Measurement Period BROAD
(Fiscal Year Covered) MERISEL, INC. PEER GROUP MARKET
- ----------------------- ------------- ---------- -----------
Measurement Pt - 1993 $100 $100 $100
FYE 1994 $ 43.54 $133.72 $ 96.42
FYE 1995 $ 23.81 $187.29 $124.04
FYE 1996 $ 9.01 $281.22 $147.86
FYE 1997 $ 23.81 $400.22 $195.55
FYE 1998 $ 12.93 $728.26 $223.76
Employment and Change of Control Arrangements
On February 3, 1997, the Board of Directors of the Company approved the
terms of an employment agreement between the Company and Mr. Steffensen. The
agreement is effective as of February 12, 1997 and has a three-year term (unless
earlier terminated pursuant thereto).
Pursuant to his employment agreement, Mr. Steffensen will serve as
Chairman of the Board and Chief Executive Officer of the Company with an annual
salary of $505,000 (subject to such discretionary meritorious increases as the
Board determines), and a quarterly bonus based on the Company's financial
performance up to a maximum of $126,250 per quarter (a minimum bonus of $75,750
for the first quarter of 1997 was payable if the Company met certain performance
goals and realized net income in any subsequent quarter). Mr. Steffensen is also
entitled to receive certain other benefits, including specified fees for legal
and accounting services, the payment of business and automobile expenses, and
term life insurance coverage in the amount of $1,000,000.
The agreement entitles Mr. Steffensen to continue to vest, on a
deferred basis, in 500,000 stock appreciation rights ("SARs") granted to him
under his former employment contract. The SARs had an exercise price of $2.8175
per share and, pursuant to the agreement, became fully vested in the event of a
"Sale of the Company" (as defined in the agreement). The change of control that
occurred in December 1997 resulted in a Sale of the Company on December 19,
1997, at which time Mr. Steffensen, pursuant to his employment agreement,
elected to convert his SARs (which were fully vested) into options to purchase
an equivalent number of shares for the same exercise price. The agreement also
provides Mr. Steffensen with a lump-sum bonus of $790,000 in the event of the
Sale of the Company during the term of the agreement, provided that the right to
receive this payment will not survive the first anniversary of such term unless
approved by the Board. Also pursuant to his employment agreement, in the event
<PAGE>
of the Sale of the Company, Mr. Steffensen is subject to specified covenants of
noncompetition, nonsolicitation and confidentiality, and is entitled to receive
a lump sum payment of $1,010,000 in consideration for his compliance with such
covenants. Because the change of control that occurred in December 1997 resulted
in a Sale of the Company, payments totaling $1,800,000 were made to Mr.
Steffensen.
If his employment is terminated by the Company during the term of the
agreement, other than for "Cause" (as defined in the agreement), Mr. Steffensen
will be entitled to receive his base salary for the remainder of such term and a
pro rata share of any performance bonus payable for the quarter in which the
termination occurs. If any payment to Mr. Steffensen becomes subject to an
excise tax under Section 4999 of the Internal Revenue Code, he will receive a
gross-up payment from the Company equal to 75% of such tax.
In August 1996 the Company entered into an employment agreement with
Mr. Illson providing for his service as the Company's Chief Financial Officer
and Senior Vice President for a three-year period with an annual salary of
$225,000, subject to such discretionary meritorious increases as the Board
determines, and an annual bonus of up to $125,000, one quarter of which is to be
earned and paid quarterly based on achievement of financial and performance
objectives. Mr. Illson is also entitled to receive certain other benefits,
including term life insurance coverage in the amount of $1,000,000. Mr. Illson's
agreement, as amended, also provides for him to receive a bonus of $125,000 upon
the successful restructuring (as defined) of the Company's outstanding
indebtedness or upon a Sale of the Company (as defined). Because the change of
control that occurred in December 1997 resulted in a Sale of the Company, a
payment of $125,000 was made to Mr. Illson.
Under his employment agreement, if Mr. Illson's employment is
terminated other than as a result of (i) "Termination for Cause" (as defined in
the agreement), (ii) his death or permanent disability or (iii) his resignation
without "Good Reason" (as defined in the agreement), then the Company will pay
Mr. Illson in a lump sum an amount equal to his annual base salary plus the
average of the annual bonus received by him over the prior three-year period
(excluding bonus amounts guaranteed but not otherwise earned by performance), as
well as reimbursement for any COBRA continuation payments he makes under the
Company's health plans (including a gross-up to account for any taxes payable
with respect to such reimbursement) for a twelve month period following his
termination. If Mr. Illson's employment is terminated within one year following
a Sale of the Company other than for the reasons described in the preceding
sentence, then the Company will pay Mr. Illson in a lump sum an amount equal to
one and one-half times his annual base salary plus one and one-half times the
average of the annual bonus received by him over the prior three-year period
(excluding bonus amounts guaranteed but not otherwise earned by performance), as
well as reimbursement for COBRA continuation payments (plus a gross up for
applicable taxes) for an eighteen month period following his termination, and
the Company shall recommend to the Compensation Committee of the Board of
Directors to cause all remaining unvested options previously granted to Mr.
Illson to vest.
The Company has entered into a change of control agreement with Mr.
Jenson which provides that if, within one year of a Change of Control of the
Company (as defined in the agreement), Mr. Jenson's employment is terminated
other than as a result of (i) "Termination for Cause" (as defined in the
agreement), (ii) his death or permanent disability or (iii) his resignation
without "Good Reason" (as defined in the agreement), the Company will make a
lump-sum payment to Mr. Jenson equal to one year's base salary plus an amount
equal to his annual performance bonus for the prior year and reimburse Mr.
Jenson for any COBRA continuation payments he makes under the Company's health
plans (including a gross-up to account for any taxes payable with respect to
such reimbursement) for the one year following his termination.
The Company has entered into a change of control agreement with Ms.
Rogers which provides that if, within one year of a Change of Control of the
Company (as defined in the agreement), Ms. Rogers' employment is terminated
other than as a result of (i) "Termination for Cause" (as defined in the
agreement), (ii) her death or permanent disability or (iii) her resignation
without "Good Reason" (as defined in the agreement), or if Ms. Rogers resigns
within six months after there has been a material reduction in her job
responsibilities from those that existed immediately prior to the reduction, the
Company will make a lump-sum payment to Ms. Rogers equal to one year's base
salary, reimburse Ms. Rogers for any COBRA continuation payments she makes under
<PAGE>
the Company's health plans (including a gross-up to account for any taxes
payable with respect to such reimbursement) for the one year following her
termination or resignation and forgive the outstanding principal amount of the
$150,000 housing loan made to Ms. Rogers in connection with her employment.
The Company has entered into a change of control agreement with Ms.
Tallman which provides that if, within one year of a Change of Control of the
Company (as defined in the agreement), Ms.Tallman's employment is terminated
other than as a result of (i) "Termination for Cause" (as defined in the
agreement), (ii) her death or permanent disability or (iii) her resignation
without "Good Reason" (as defined in the agreement), the Company will make a
lump-sum payment to Ms. Tallman equal to one year's base salary plus an amount
equal to her annual performance bonus for the prior year and reimburse Ms.
Tallman for any COBRA continuation payments she makes under the Company's health
plans (including a gross-up to account for any taxes payable with respect to
such reimbursement) for the one year following her termination.
Upon Mr. McInerney's resignation in March 1998, the Company entered
into an agreement with Mr. McInerney under which the Company agreed to: (i)
retain Mr. McInerney as an employee consultant for the period of May 1, 1998
through February 3, 1999 at a monthly salary of $12,500; (ii) continue health
benefit coverage for Mr. McInerney until February 3, 1999; (iii) pay an amount
equal to the bonus Mr. McInerney was entitled to receive for the first quarter
of 1998; and (iv) reimburse Mr. McInerney for any business expenses incurred as
a result of the consulting services provided by Mr. McInerney to the Company.
Certain Relationships and Related Transactions
Merisel has entered into Indemnity Agreements with each of its
directors and executive 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.
Under the terms of Ms. Rogers' employment by the Company as its Senior
Vice President and General Manager of U.S. Distribution, the Company agreed to
make a housing loan to Ms. Rogers in the amount of $150,000. The principal of
such loan will be forgiven based on the number of years Ms. Rogers has been
employed by the Company from her date of employment in 1998 as follows: two
years - 10%; three years - 20%; four years - 30%; and five years - 40%. In
addition, the Company will forgive the principal amount of the loan in its
entirety under certain circumstances as set forth in a change of control
agreement between Ms. Rogers and the Company. See "Employment and Change of
Control Arrangements" above. The interest rate on such loan is 7.5% per annum
and is payable quarterly. The loan has not yet been made.
The Company made a loan to Mr. Jenson in the amount of $65,000 for the
sole purpose of purchasing shares of the Company's common stock. The loan is
interest free and the entire principal amount will be forgiven on the earlier of
(i) the date the Company releases its earnings for fiscal year 1999, provided
that the Company's pre-tax net income equals at least a specified amount, and
(ii) March 2, 2001. In addition, the entire principal amount of the loan will be
forgiven upon termination of Mr. Jenson's employment by the Company other than
as a result of Termination for Cause or resignation by Mr. Jenson without Good
Reason (as defined in the change of control agreement between the Company and
Mr. Jenson). The entire principal amount of the loan will be due and payable 90
days after termination of Mr. Jenson's employment by the Company for reasons
other than as described herein.
The Revolving Credit Agreement and Convertible Promissory Note (the "BT
Note") entered into in January 1998 by the Company and Merisel Americas, Inc.
("Merisel Americas") with Bankers Trust Company ("BT") expired in accordance
with its terms on July 2, 1998. No amounts were outstanding under the BT Note on
the expiration date. The BT Note permitted borrowings thereunder by Merisel
Americas of up to $46,500,000 outstanding at any one time. In order to induce BT
to enter into the BT Note, Stonington Capital Appreciation 1994 Fund, L.P. (the
"Fund"), the sole owner of Phoenix, which owns approximately 62.3% of the
outstanding shares of Common Stock, caused its wholly owned subsidiary
Stonington Financing Inc. ("SFI") to enter into a note put agreement (the "Note
<PAGE>
Put Agreement") with BT. Pursuant to the Note Put Agreement, BT had the right to
require SFI to purchase the BT Note in the event of a default by Merisel
Americas, including failure to pay the BT Note at maturity. In the event SFI
purchased the BT Note pursuant to the Note Put Agreement, the BT Note was
convertible into shares of Common Stock at the option of SFI at a conversion
rate equal to the average closing price of the Common Stock on NASDAQ for the
fifteen trading days immediately preceding the conversion.
Section 16(a) Beneficial Ownership Reporting Compliance
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 to furnish the Company with
copies of all such reports they file. Based on its review of the copies of such
reports received by it and on written representations from such persons, the
Company believes that, during 1998, all filing requirements applicable to its
directors and executive officers were complied with except that a Form 4
reporting the acquisition of Common Stock of the Company was inadvertently filed
late by Mr. Smith.
RELATIONSHIP WITH
INDEPENDENT PUBLIC ACCOUNTANTS
The Company has appointed Deloitte & Touche LLP, certified public
accountants, to continue as the Company's auditors and to audit the books of
account and other records of the Company for the fiscal year ending December 31,
1998. Deloitte & Touche LLP has audited the Company's financial statements since
1981. A representative of that firm is expected to be present at the Annual
Meeting with the opportunity to make a statement if such representative desires
to do so and is expected to be available to respond to appropriate questions.
The Company has been advised that neither such firm, nor any of its partners or
associates, has any direct or indirect financial interest in or any connection
with the Company other than as accountants and auditors.
OTHER MATTERS
Management does not know of any other matters to be presented at the
Annual Meeting. If other matters do properly come before the Annual Meeting, it
is intended that the persons named in the proxy will vote on them in discretion.
In order to be included in the proxy statement and proxy card relating
to the Company's 2000 Annual Meeting of Stockholders, stockholder proposals must
be received at the Company's executive offices at 200 Continental Boulevard, El
Segundo, California 90245, addressed to the attention of the General Counsel, by
December 14, 1999. Any stockholder proposal submitted after February 26, 2000
will be considered filed untimely with the Company under Rule 14a-4(c)(i)
promulgated by the Securities and Exchange Commission. For proposals that are
not received in a timely manner, the proxies solicited by the Board of Directors
will confer discretionary authority to vote on any such proposal.
By Order of the Board of Directors
Karen A. Tallman
Secretary
El Segundo, California
April 7, 1999
<PAGE>
APPENDIX
PROXY FORM
MERISEL, INC.
200 Continental Boulevard
El Segundo, California
This Proxy is Solicited on Behalf of the Board of Directors of MERISEL, INC.
The undersigned stockholder of Merisel, Inc., a Delaware corporation,
acting under the Delaware General Corporation Law, hereby constitutes and
appoints James E. Illson and Karen A. Tallman, and each of them, the attorneys
and proxies of the undersigned, each with the power of substitution, to attend
and act for the undersigned at the Annual Meeting of Stockholders of said
corporation to be held on May 19, 1999 8:00 a.m. at 200 Continental Boulevard,
El Segundo, California, and at any adjournments thereof, and to vote, as
follows:
The Board of Directors recommends a vote FOR all nominees listed in Proposal
No. 1.
PROPOSAL NO. 1: To elect three Class II directors to the Board of Directors for
terms expiring in 2002.
/X/ FOR ALL NOMINEES LISTED BELOW / / WITHHOLD AUTHORITY TO VOTE
(EXCEPT AS INDICATED BELOW) FOR ALL NOMINEES LISTED BELOW
Bradley J. Hoecker
Dr. Arnold Miller
Instructions: To withhold authority to vote for any individual nominee write in
that nominee's name in the space provided:
Said attorneys and proxies, and each of them, shall have the powers
which the undersigned would have if acting in person. The undersigned hereby
revokes any other proxy to vote at such Meeting and hereby ratifies and confirms
all that said attorneys and proxies, and each of them, may lawfully do by virtue
hereof. Said proxies, without hereby limiting their general authority, are
specifically authorized to vote in accordance with their best judgment with
respect to matters incident to the conduct of the Meeting; matters presented at
the Meeting but which are not known to the Board of Directors at the time of the
solicitation of this Proxy; and with respect to the election of any person as a
director if a bona fide nominee for that office is named in the Proxy Statement
and such nominee is unable to serve or for good cause will not serve.
--------------------------------------------------------------------------
A majority of the above-named proxies present at said Meeting, either
in person or by substitute (or if only thereof shall be present and acting, then
that one), shall have and exercise all powers of said proxies hereunder. This
proxy will be voted in accordance with the choices specified by the undersigned
on the other side of this proxy. IF NO INSTRUCTIONS TO THE CONTRARY ARE
INDICATED HEREON, THIS PROXY WILL BE TREATED AS A GRANT OF AUTHORITY TO VOTE FOR
THE ELECTION OF THE NOMINEES LISTED IN PROPOSAL NO. 1.
<PAGE>
The undersigned acknowledges receipt of a copy of the Notice of Annual
Meeting and Proxy Statement relating to the Meeting and a copy of the Company's
Annual Report on Form 10-K.
Signature of Stockholder
Dated: , 1999
Signature of Stockholder
Dated: , 1999
- ------------------------------------------------
Important: In signing this proxy, please sign
your names on the signature lines in the same
way as it is stenciled on this proxy. When
signing as an attorney, executor,
administrator, trustee or guardian, please
give your full title as such.
EACH JOINT TENANT SHOULD SIGN.
- ------------------------------------------------
