-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, B8959+FIrvLCLJqvzd/Wqx/1DKYHkTFYdVjPI2PwhzgsVDWXRUpFfPwfy5LTjrP6 stLN11rb46uvtfpWx8P45Q== 0000950008-97-000234.txt : 19970708 0000950008-97-000234.hdr.sgml : 19970708 ACCESSION NUMBER: 0000950008-97-000234 CONFORMED SUBMISSION TYPE: S-8 PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 19970703 EFFECTIVENESS DATE: 19970703 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: WESTERN MICRO TECHNOLOGY INC CENTRAL INDEX KEY: 0000715842 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-ELECTRONIC PARTS & EQUIPMENT, NEC [5065] IRS NUMBER: 942414428 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-8 SEC ACT: 1933 Act SEC FILE NUMBER: 333-30825 FILM NUMBER: 97636637 BUSINESS ADDRESS: STREET 1: 254 E HACIENDA AVENUE CITY: CAMPBELL STATE: CA ZIP: 95008 BUSINESS PHONE: 4083790177 S-8 1 WESTERN MICRO FORM S-8 As filed with the Securities and Exchange Commission on July 3, 1997 Registration No. 333- =============================================================================== SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form S-8 REGISTRATION STATEMENT Under THE SECURITIES ACT OF 1933 WESTERN MICRO TECHNOLOGY, INC. (Exact name of registrant as specified in its charter) California 94-2414428 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 254 E. Hacienda Avenue Campbell, California 95008 (Address of Principal Executive Offices) (Zip Code) WESTERN MICRO TECHNOLOGY, INC. 1994 STOCK OPTION PLAN (700,000 Shares) NONSTATUTORY STOCK OPTION AGREEMENT FOR OUTSIDE DIRECTORS (10,000 Shares) EMPLOYMENT AGREEMENTS (140,000 Shares) (Full title of the plan) JAMES W. DORST Copy to: Chief Financial Officer KATHARINE A. MARTIN, ESQ. Western Micro Technology, Inc. Pillsbury Madison & Sutro LLP 254 E. Hacienda Avenue 2700 Sand Hill Road Campbell, California 95008 Menlo Park, CA 94025 (408) 379-0177 (415) 233-4500 (Name, address and telephone number, including area code, of agent for service) Calculation of Registration Fee
==================================================================================================================================== Title of securities Amount to be Proposed maximum Proposed maximum Amount of to be registered registered(1) offering price per share(2) aggregate offering price(1) registration fee(3) - ------------------------------------------------------------------------------------------------------------------------------------ Common Stock, without par value.......... 850,000 $11.00 $9,350,000 $2,833.34 ==================================================================================================================================== (1) Calculated pursuant to General Instruction E of Form S-8. (2) Estimated solely for the purpose of calculating the registration fee on the basis of the average of the high and low prices as reported on the Nasdaq National Market on June 27, 1997. (3) The Registration Fee has been calculated pursuant to Rule 457(h).
Explanatory Note: This Registration Statement on Form S-8 relates to the registration of 140,000 shares of the Company's Common Stock to be issued from time to time to officers, consultants and advisors for the Company. None of the shares will be issued to any consultants and/or advisors who are broker/dealers, investment bankers or financial public relations firms or who are associated, either directly or indirectly, in any transactions relating to capital raising. ----------------- The Registration Statement shall become effective upon filing in accordance with Rule 462 under the Securities Act of 1933, as amended. PART I INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS Item 1. Plan Information.* - ------ ---------------- Item 2. Registrant Information and Employee Plan Annual Information.* - ------ ----------------------------------------------------------- * Information required by Part I to be contained in the Section 10(a) prospectus is omitted from this Registration Statement in accordance with Rule 428 under the Securities Act of 1933, as amended, and the Note to Part I of Form S-8. PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT Item 3. Incorporation of Certain Documents By Reference. - ------ ----------------------------------------------- The following documents, filed with the Securities and Exchange Commission (the "Commission") by the Registrant, are hereby incorporated by reference in this Registration Statement: (i) The Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1996; (ii) The Registrant's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 1997; and (iii) The information with regard to the Registrant's capital stock contained in the Registrant's Registration Statement on Form 10, filed with the Commission pursuant to section 12 of the Securities Exchange Act of 1934, including any subsequent amendment or report filed for the purpose of updating such information. In addition, all documents subsequently filed by the Registrant pursuant to sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference in this Registration Statement and to be a part hereof from the date of filing of such documents. Item 4. Description of Securities. - ------ ------------------------- Not Applicable. -2- Item 5. Interests of Named Experts and Counsel. - ------ -------------------------------------- Not Applicable. Item 6. Indemnification of Officers and Directors. - ------ ----------------------------------------- Sections 204 and 317 of the General Corporation Law of the State of California (the "General Law") empower a corporation to indemnify its directors, officers, employees and agents (collectively "Agents") under certain circumstances. Article Sixth of the Registrant's Certificate of Amendment of Articles of Incorporation, as amended, authorizes the Registrant to indemnify its Agents in excess of the indemnification otherwise permitted by Section 317 of the General Law, subject to applicable limits set forth in Section 204 of the General Law with respect to actions for breach of duty to the Registrant and its shareholders. Article IX of the Registrant's Bylaws provides for mandatory indemnification of each director of the Registrant, except as prohibited by law. The Registrant has also entered into agreements with its directors and certain officers to provide indemnity to such persons against certain liabilities and expenses by reason of their being or having been directors or officers to the maximum extent permitted by applicable laws. The directors and officers of the Registrant have a policy of insurance under which they are insured, within limits and subject to limitations, against certain expenses in connection with the defense of actions, suits or proceedings, and certain liabilities which might be imposed as a result of such actions, suits or proceedings, in which they are parties by reason of their being or having been directors or officers. Item 7. Exemption from Registration Claimed. - ------ ----------------------------------- Not Applicable. Item 8. Exhibits. - ------ -------- See Index to Exhibits on page 8. Item 9. Undertakings. - ------ ------------ (a) The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: (i) To include any prospectus required by section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of this Registration Statement (or the most recent post- -3- effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in this Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in this Registration Statement; Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the Registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in this Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The undersigned Registrant hereby further undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant's annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in this Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, -4- suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. -5- SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8, and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Campbell, State of California, on June 30, 1997. WESTERN MICRO TECHNOLOGY, INC. By /s/ P. SCOTT MUNRO -------------------------------------- P. Scott Munro President, Chief Executive Officer, Secretary and Director By /s/ JAMES W. DORST -------------------------------------- James W. Dorst Chief Financial Officer (Principal Financial and Accounting Officer) -6- POWER OF ATTORNEY ----------------- KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints P. Scott Munro and James W. Dorst, and each of them, his true and lawful attorneys-in-fact and agents, each with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments, including post-effective amendments, to this Registration Statement, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that each of said attorneys-in-fact and agents or his substitute or substitutes may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the date indicated: Signature Title Date --------- ----- ---- /s/ P. SCOTT MUNRO President, Chief Executive Officer June 30, 1997 - ------------------------- Secretary and Director (Principal P. Scott Munro Executive Officer) /s/ JAMES W. DORST Chief Financial Officer (Principal June 30, 1997 - ------------------------- Financial and Accounting Officer) James W. Dorst /s/ JAMES J. HEFFERNAN Director June 30, 1997 - ------------------------- James J. Heffernan /s/ JEROME A. MARTIN Director June 30, 1997 - ------------------------- Jerome A. Martin /s/ K. WILLIAM SICKLER Director June 30, 1997 - ------------------------- K. William Sickler /s/ J. LARRY SMART Director June 30, 1997 - ------------------------- J. Larry Smart /s/ WILLIAM H. WELLING Director June 30, 1997 - ------------------------- William H. Welling -7- INDEX TO EXHIBITS ----------------- Exhibit Number Exhibit - ------- ------- 5.1 Opinion regarding legality of securities to be offered. 10.1 The 1994 Stock Option Plan of Western Micro Technology, Inc., as amended and restated on May 18, 1997, filed as Exhibit A to the Company's Definitive Proxy Statement as filed with the Commission on June 27, 1997, is hereby incorporated by reference. 10.2 Employment Agreement (with Exhibit) between the Company and Michael R. Duhaime dated November 29, 1996. 10.3 Employment Agreement (with Exhibit) between the Company and Alan M. Bynder dated November 29, 1996. 10.4 Nonstatutory Stock Option Agreement for Outside Directors between the Company and William H. Welling dated January 18, 1996. 10.5 Nonstatutory Stock Option Agreement for Outside Directors between the Company and K. William Sickler dated January 18, 1996. 23.1 Consent of Coopers & Lybrand LLP. 23.2 Consent of Pillsbury Madison & Sutro LLP (included in Exhibit 5.1). 24.1 Power of Attorney (see page 7 of this Form S-8). EX-5.1 2 OPINION LETTER Exhibit 5.1 [Letterhead of Pillsbury Madison & Sutro LLP] June 30, 1997 Western Micro Technology, Inc. 254 E. Hacienda Avenue Campbell, CA 95008 Re: Registration Statement on Form S-8 Ladies and Gentlemen: With reference to the Registration Statement on Form S-8 to be filed by Western Micro Technology, Inc., a California corporation (the "Company"), with the Securities and Exchange Commission under the Securities Act of 1933, as amended, relating to 850,000 shares of the Company's common stock, without par value (the "Common Stock") of which (i) 700,000 shares are issuable pursuant to the Company's 1994 Stock Option Plan, as amended and restated (the "Plan"), (ii) 140,000 shares in the aggregate pursuant to certain Employment Agreements with the Company and Alan M. Bynder and Michael R. Duhaime (the "Employment Agreements") and (iii) 10,000 shares in the aggregate pursuant to certain Nonstatutory Stock Option Agreements with Outside Directors with the Company and William H. Welling and K. William Sickler (the "Option Agreements"), it is our opinion that the Common Stock, when issued and sold in accordance with the Plan, the Employment Agreements and the Option Agreements will be legally issued, fully paid and nonassessable. We hereby consent to the filing of this opinion with the Securities and Exchange Commission as Exhibit 5.1 to the Registration Statement. Very truly yours, /s/ Pillsbury Madison & Sutro LLP E-5573 EX-10.2 3 MATERIAL CONTRACT Western Micro Technology, Inc. 254 East Hacienda Avenue Campbell, California 95008 November 29, 1996 Mr. Michael R. Duhaime International Data Products, LLC 25 Mauchly, Suite 316 Irvine, California 92618 Dear Mike: This letter agreement sets forth the terms and conditions of your employment with Western Micro Technology, Inc. (the "Company"). In consideration of the mutual covenants and promises made in this letter agreement, you and the Company agree as follows: 1. Employment. Commencing as of November 29, 1996 (the "Effective ---------- Date"), you will be responsible for sales and marketing with the International Data Products division of the Company. You will be given such duties, responsibilities and authority as are appropriate to such position. Throughout the term of your employment, you will devote such business time and energies to the business and affairs of the Company as needed to carry out your sales and marketing duties and responsibilities with the International Data Products division of the Company, subject to the overall supervision and direction of the President and Chief Executive Officer and of the Board of Directors of the Company (the "Board"). 2. Term. Commencing as of the Effective Date and ending on December 31, ---- 1998 (the "Term"), your employment with the Company will be subject to the terms of this Agreement. Either you or the Company can terminate your employment at any time and for any reason, with or without cause and with or without notice, in each case subject to the terms and provisions of paragraph 7 below. 3. Salary. For your services to the Company, you will be ------ paid a base salary, payable semi-monthly during each month of employment, at a rate of eighty-one thousand dollars ($81,000) per year. 4. Commissions. You will be eligible to receive commis- ----------- sions at a rate of twelve percent (12%) on gross profit on sales Mr. Michael R. Duhaime November 29, 1996 Page 2 up to and including three hundred thousand dollars ($300,000), at a rate of sixteen percent (16%) on gross profit on sales between three hundred thousand one dollars ($300,001) and five hundred thousand dollars ($500,000), and at a rate of twenty percent (20%) on gross profit on sales over five hundred thousand dollars ($500,000). The commissions shall be due and payable within a reasonable time after completion of the commissioned sales but no later than one (1) month after such sale. In no event shall the Company be obligated to pay commissions in excess of two hundred thousand dollars ($200,000) per annum. The commissions will not be payable to sales prior to the effective time of the sale and purchase of the assets of International Data Products, LLC ("IDP") pursuant to the Asset Purchase Agreement (the "Purchase Agreement"), dated as of November 29, 1996, by and among the Company, IDP and certain members of IDP. "Gross profit on sales" shall mean gross sales net of returns and customary allowances less the actual (specifically identifiable) product cost determined in accordance with company-wide accounting principles of the Company and generally accepted accounting principles whether or not consistent with IDP's past accounting practices. 5. Earn-Out. You will be eligible to receive earn-out -------- payments calculated and payable pursuant to Exhibit A hereto. The Earn-Out will be subject to the Company's right of set-off provided under section 7.4 of the Purchase Agreement. 6. Employee Benefit Programs. During the term of your employment, you ------------------------- will be entitled to participate in all employee benefit programs of the Company at the time or thereafter made available to the Company's executives or salaried employees generally, including, without limitation, pension and other retirement plans, profit sharing plans, group life insurance, accidental death and dismemberment insurance, hospitalization, surgical, major medical and dental coverage, sick leave (including salary continuation arrangements), long-term disability, vacations, holidays and other employee benefit programs sponsored by the Company. You shall also receive a car allowance of $325 per month. 7. Consequences of Termination of Employment. ----------------------------------------- (a) For Cause. Following the Effective Date, the Company may terminate --------- your employment for "Cause." "Cause" will exist in the event you are convicted of a felony or, in carrying out your duties, you are guilty of gross negligence or gross misconduct resulting, in either case, in material harm to the Company. In the event your employment is terminated for Cause, you will be entitled to any unpaid salary, commissions and earn- Mr. Michael R. Duhaime November 29, 1996 Page 3 out due you pursuant to paragraphs 3, 4 and 5 above through the date of termination, and you will be entitled to no other compensation from the Company. (b) Without Cause. Following the Effective Date, the Company may ------------- terminate your employment without Cause. In such event, you will be entitled to continue to receive the lesser of your base salary for the Term of this letter agreement or twelve (12) months of your base salary. (c) Change in Responsibilities Following a Change in Control. Following -------------------------------------------------------- the Effective Date, in the event your duties and responsibilities regarding sales and marketing are substantially reduced in the International Data Products division of the Company, without Cause, within twelve (12) months following a Change of Control (defined below) of the Company, your resulting resignation of employment will be treated as a termination of employment by the Company without Cause in accordance with subparagraph 7(b) above. "Change of Control" as used herein shall be defined as the occurrence of any of the following events: (i) The shareholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or (ii) The shareholders of the Company approve (A) a plan of complete liquidation of the Company or (B) an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets; or (iii) Any "person" (as defined in sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company's then outstanding voting securities. Mr. Michael R. Duhaime November 29, 1996 Page 4 (d) Voluntary Termination. In the event you terminate your employment --------------------- with the Company of your own volition, such termination will have the same consequences as a termination for Cause under subparagraph 7(a) above. 8. Assignability; Binding Nature. Commencing on the Effective Date, ----------------------------- this letter agreement will be binding upon you and the Company and your respective successors, heirs, and assigns. This letter agreement may not be assigned by you except that your rights to compensation and benefits hereunder, subject to the limitations of this letter agreement, may be transferred by will or operation of law. No rights or obligations of the Company under this letter agreement may be assigned or transferred except by operation of law in the event of a merger or consolidation in which the Company is not the continuing entity, or the sale or liquidation of all or substantially all of the assets of the Company provided that the assignee or transferee is the successor to all or substantially all of the assets of the Company and assumes the Company's obligations under this letter agreement contractually or as a matter of law. 9. Governing Law; Arbitration. This letter agreement will be deemed a -------------------------- contract made under, and for all purposes shall be construed in accordance with, the laws of California. Any controversy or claim relating to this letter agreement any breach thereof, and any claims you may have against the Company or any officer, director or employee of the Company or arising from or relating to your employment with the Company, will be settled solely and finally by arbitration in accordance with the rules of the American Arbitration Association ("AAA") then in effect in the State of California, and judgment upon such award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. The arbitrator may provide that the cost of the arbitration (including reasonable legal fees) incurred by you or the Company will be borne by the non-prevailing party. 10. Withholding. Anything to the contrary notwithstanding, following ----------- the Effective Date all payments made by the Company hereunder to you or your estate or beneficiaries will be subject to tax withholding pursuant to any applicable laws or regulations. In lieu of withholding, the Company may, in its sole discretion, accept other provision for payment of taxes as required by law, provided it is satisfied that all requirements of law affecting its responsibilities to withhold such taxes have been satisfied. 11. Entire Agreement. Except as otherwise specifically ---------------- provided in this Agreement, this letter agreement contains all the legally binding understandings and agreements between you Mr. Michael R. Duhaime November 29, 1996 Page 5 and the Company pertaining to the subject matter of this letter agreement and supersedes all such agreements, whether oral or in writing, previously entered into between the parties. 12. Miscellaneous. No provision of this letter agreement may be amended ------------- or waived unless such amendment or waiver is agreed to by you and the Board in writing. No waiver by you or the Company of the breach of any condition or provision of this letter agreement will be deemed a waiver of a similar or dissimilar provision or condition at the same or any prior or subsequent time. In the event any portion of this letter agreement is determined to be invalid or unenforceable for any reason, the remaining portions shall be unaffected thereby and will remain in full force and effect to the fullest extent permitted by law. Please acknowledge your acceptance and understanding of this letter agreement by signing below. Sincerely, ____________________________________ ACKNOWLEDGED AND AGREED: ______________________________ Dated: November 29, 1996 EXHIBIT A --------- EARN-OUT -------- 1. Within thirty (30) days after the period ending December 31, 1998, Western Micro Technology, Inc. ("WMT") shall calculate, and deliver notice of such calculation (the "Calculation") to Alan M. Bynder ("Bynder") and Michael R. Duhaime ("Duhaime"), an earn-out payment to be paid to Bynder and Duhaime if the Gross Profit Dollars (as defined in paragraph 2) of the International Data Products division of WMT during such period exceeds $2.4 million (the "Earn-Out Payment"). The Earn-Out Payment shall be paid in shares of Common Stock, no par value (the "Shares"), of WMT. The value of the Shares will be calculated based on the ten (10) day simple average of the closing prices of the Shares in the last ten (10) trading days prior to December 31, 1998. WMT shall pay the Earn-Out Payment based on a calculation of sixty percent (60%) of the Shares to Bynder and forty percent (40%) of the Shares to Duhaime. The Shares shall be rounded to the nearest whole number and no fractional shares will be issued. The Earn-Out Payment shall equal the following amount: Gross Profit Dollars Earn-Out Payment -------------------- ---------------- $0 - $2,400,000 0 Shares $2,400,000 - $2,799,999 40,000 Shares $2,800,000 - $3,199,999 55,000 Shares $3,200,000 - $3,599,999 70,000 Shares $3,600,000 - $3,999,999 85,000 Shares $4,000,000 - $4,999,999 100,000 Shares Greater than $5,000,000 140,000 Shares 2. Gross Profit Dollars shall be calculated on the following sales (the "Sales"): (a) Sales by the International Data Products division of WMT to customers identified in the Asset Purchase Agreement (the "Asset Purchase Agreement"), dated as of November 29, 1996, by and among WMT, IDP and certain members of IDP; and (b) Sales by the International Data Products division of WMT customers that are recruited after the Closing Date as customers for WMT by any of the International Data Products employees identified in the Asset Purchase Agreement or by an employees hired in the International Data Products division of WMT. "Gross Profit Dollars" shall mean gross Sales net of returns and customary allowances less the actual (specifically identifiable) product cost (the "Costs") determined in A-1 accordance with generally accepted accounting principles whether or not consistent with IDP's past accounting practices. For the purpose of calculating the Earn-Out Payment, separate books and records shall be maintained by WMT with respect to the Sales and Costs. Such books and records shall be maintained in accordance with WMT's company-wide accounting principles and generally accepted accounting principles whether or not consistent with IDP's past accounting practices. Bynder and Duhaime will be entitled to reasonable rights to audit the Earn-Out Payment. Upon receipt of the Calculation from WMT, Bynder and Duhaime shall have ten (10) business days in which to request in writing that WMT deliver within thirty (30) business days of such request the books and records, and back up invoices and schedules, to Bynder and Duhaime or their accountants to confirm the calculation. If, within ten (10) business days, Bynder and Duhaime do not request such books and records or if within ten (10) business days after receipt of such books and records Bynder and Duhaime do not object to such Calculation, WMT shall deliver instructions to its transfer agent to issue and deliver to Bynder and Duhaime the Shares of WMT Common as soon as reasonably practicable. If Bynder and Duhaime request such books and records and within ten (10) business days after receipt of such books and records, Bynder and Duhaime object in writing to WMT of the Calculation, WMT, Bynder and Duhaime shall work together in good faith to see if they can reach an agreement on the appropriate Earn-Out Payment. If within fourteen (14) days the parties have not reached an agreement, the parties shall choose a nationally recognized accounting firm mutually agreed upon by WMT, Bynder and Duhaime who shall calculate the amount, or if no such agreement can be reached, then each of WMT, Bynder and Duhaime shall appoint one nationally recognized accounting firm, which accounting firms shall pick an additional nationally recognized accounting firm to which such disputes shall be referred. In the event that either WMT, Bynder or Duhaime shall fail to select a nationally recognized firm in accordance with the provisions of this subsection within thirty (30) days after notice by the other party that such selection should be made, and such other party has selected a nationally recognized accounting firm pursuant to the provisions hereof, such dispute shall be referred to the nationally recognized accounting firm selected by such party. The decision of such nationally recognized accounting firm shall be conclusive and binding on both parties. Each of WMT, Bynder and Duhaime shall pay the costs and expenses of its own accountant and Bynder and Duhaime shall pay the costs of the nationally recognized accounting firm selected by both parties or their representatives (the "Independent Accountant); provided, however, that if a dispute arises that is resolved by the Independent Accountant and the amount of the Earn-Out Payment as calculated by the Independent Accountant exceeds by more than ten percent (10%) the Calculation, WMT shall pay the A-2 costs and expenses of Bynder's and Duhaime's and the Independent Accountant's costs and expenses. 3. During the period subsequent to Closing and ending on December 31, 1998, (a) WMT shall conduct its business in conformity with sound business practices and consistent with past practices and (b) WMT shall not take any voluntary action for the purpose of preventing Bynder or Duhaime from being able to earn the Earn-Out Payment or avoiding or seeking to avoid the observance or performance of any of the terms under this Exhibit A, and shall at all times in good faith assist in carrying out all such action as may be reasonably necessary or appropriate in order to protect the rights of Bynder and Duhaime with respect to its ability to earn the Earn-Out Payment against impairment. Notwithstanding this paragraph 3, nothing contained herein shall require the officers and directors of WMT to maintain WMT's business in a manner or take actions that would violate their fiduciary duties to WMT and its shareholders. 4. If between the date hereof and December 31, 1998, WMT commences a voluntary case under the federal bankruptcy laws or a petition is filed against WMT under the federal bankruptcy laws and is not dismissed within ninety (90) days, Bynder and Duhaime shall be entitled to seek recovery of the Earn-Out Payment due as an unsecured creditor of WMT in the related bankruptcy proceedings. A-3 EX-10.3 4 MATERIAL CONTRACT Western Micro Technology, Inc. 254 East Hacienda Avenue Campbell, California 95008 November 29, 1996 Mr. Alan M. Bynder International Data Products, LLC 25 Mauchly, Suite 316 Irvine, California 92618 Dear Alan: This letter agreement sets forth the terms and conditions of your employment with Western Micro Technology, Inc. (the "Company"). In consideration of the mutual covenants and promises made in this letter agreement, you and the Company agree as follows: 1. Employment. Commencing as of November 29, 1996 (the "Effective ---------- Date"), you will be responsible for sales and marketing with the International Data Products division of the Company. You will be given such duties, responsibilities and authority as are appropriate to such position. Throughout the term of your employment, you will devote such business time and energies to the business and affairs of the Company as needed to carry out your sales and marketing duties and responsibilities with the International Data Products division of the Company, subject to the overall supervision and direction of the President and Chief Executive Officer and of the Board of Directors of the Company (the "Board"). 2. Term. Commencing as of the Effective Date and ending on December 31, ---- 1998 (the "Term"), your employment with the Company will be subject to the terms of this Agreement. Either you or the Company can terminate your employment at any time and for any reason, with or without cause and with or without notice, in each case subject to the terms and provisions of paragraph 7 below. 3. Salary. For your services to the Company, you will be ------ paid a base salary, payable semi-monthly during each month of employment, at a rate of eighty-one thousand dollars ($81,000) per year. 4. Commissions. You will be eligible to receive commis- ----------- sions at a rate of twelve percent (12%) on gross profit on sales up to and including three hundred thousand dollars ($300,000), at a rate of sixteen percent (16%) on gross profit on sales Mr. Alan M. Bynder November 29, 1996 Page 2 between three hundred thousand one dollars ($300,001) and five hundred thousand dollars ($500,000), and at a rate of twenty percent (20%) on gross profit on sales over five hundred thousand dollars ($500,000). The commissions shall be due and payable within a reasonable time after completion of the commissioned sales but no later than one (1) month after such sale. In no event shall the Company be obligated to pay commissions in excess of two hundred thousand dollars ($200,000) per annum. The commissions will not be payable to sales prior to the effective time of the sale and purchase of the assets of International Data Products, LLC ("IDP") pursuant to the Asset Purchase Agreement (the "Purchase Agreement"), dated as of November 29, 1996, by and among the Company, IDP and certain members of IDP. "Gross profit on sales" shall mean gross sales net of returns and customary allowances less the actual (specifically identifiable) product cost determined in accordance with company-wide accounting principles of the Company and generally accepted accounting principles whether or not consistent with IDP's past accounting practices. 5. Earn-Out. You will be eligible to receive earn-out -------- payments calculated and payable pursuant to Exhibit A hereto. The Earn-Out will be subject to the Company's right of set-off provided under section 7.4 of the Purchase Agreement. 6. Employee Benefit Programs. During the term of your employment, you ------------------------- will be entitled to participate in all employee benefit programs of the Company at the time or thereafter made available to the Company's executives or salaried employees generally, including, without limitation, pension and other retirement plans, profit sharing plans, group life insurance, accidental death and dismemberment insurance, hospitalization, surgical, major medical and dental coverage, sick leave (including salary continuation arrangements), long-term disability, vacations, holidays and other employee benefit programs sponsored by the Company. You shall also receive a car allowance of $325 per month. 7. Consequences of Termination of Employment. ----------------------------------------- (a) For Cause. Following the Effective Date, the Company may terminate --------- your employment for "Cause." "Cause" will exist in the event you are convicted of a felony or, in carrying out your duties, you are guilty of gross negligence or gross misconduct resulting, in either case, in material harm to the Company. In the event your employment is terminated for Cause, you will be entitled to any unpaid salary, commissions and earn- Mr. Alan M. Bynder November 29, 1996 Page 3 out due you pursuant to paragraphs 3, 4 and 5 above through the date of termination, and you will be entitled to no other compensation from the Company. (b) Without Cause. Following the Effective Date, the Company may ------------- terminate your employment without Cause. In such event, you will be entitled to continue to receive the lesser of your base salary for the Term of this letter agreement or twelve (12) months of your base salary. (c) Change in Responsibilities Following a Change in Control. Following -------------------------------------------------------- the Effective Date, in the event your duties and responsibilities regarding sales and marketing are substantially reduced in the International Data Products division of the Company, without Cause, within twelve (12) months following a Change of Control (defined below) of the Company, your resulting resignation of employment will be treated as a termination of employment by the Company without Cause in accordance with subparagraph 7(b) above. "Change of Control" as used herein shall be defined as the occurrence of any of the following events: (i) The shareholders of the Company approve a merger or consolidation of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or (ii) The shareholders of the Company approve (A) a plan of complete liquidation of the Company or (B) an agreement for the sale or disposition by the Company of all or substantially all of the Company's assets; or (iii) Any "person" (as defined in sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the total voting power represented by the Company's then outstanding voting securities. Mr. Alan M. Bynder November 29, 1996 Page 4 (d) Voluntary Termination. In the event you terminate your employment --------------------- with the Company of your own volition, such termination will have the same consequences as a termination for Cause under subparagraph 7(a) above. 8. Assignability; Binding Nature. Commencing on the Effective Date, ----------------------------- this letter agreement will be binding upon you and the Company and your respective successors, heirs, and assigns. This letter agreement may not be assigned by you except that your rights to compensation and benefits hereunder, subject to the limitations of this letter agreement, may be transferred by will or operation of law. No rights or obligations of the Company under this letter agreement may be assigned or transferred except by operation of law in the event of a merger or consolidation in which the Company is not the continuing entity, or the sale or liquidation of all or substantially all of the assets of the Company provided that the assignee or transferee is the successor to all or substantially all of the assets of the Company and assumes the Company's obligations under this letter agreement contractually or as a matter of law. 9. Governing Law; Arbitration. This letter agreement will be deemed a -------------------------- contract made under, and for all purposes shall be construed in accordance with, the laws of California. Any controversy or claim relating to this letter agreement any breach thereof, and any claims you may have against the Company or any officer, director or employee of the Company or arising from or relating to your employment with the Company, will be settled solely and finally by arbitration in accordance with the rules of the American Arbitration Association ("AAA") then in effect in the State of California, and judgment upon such award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. The arbitrator may provide that the cost of the arbitration (including reasonable legal fees) incurred by you or the Company will be borne by the non-prevailing party. 10. Withholding. Anything to the contrary notwithstanding, following ----------- the Effective Date all payments made by the Company hereunder to you or your estate or beneficiaries will be subject to tax withholding pursuant to any applicable laws or regulations. In lieu of withholding, the Company may, in its sole discretion, accept other provision for payment of taxes as required by law, provided it is satisfied that all requirements of law affecting its responsibilities to withhold such taxes have been satisfied. 11. Entire Agreement. Except as otherwise specifically ---------------- provided in this Agreement, this letter agreement contains all the legally binding understandings and agreements between you Mr. Alan M. Bynder November 29, 1996 Page 5 and the Company pertaining to the subject matter of this letter agreement and supersedes all such agreements, whether oral or in writing, previously entered into between the parties. 12. Miscellaneous. No provision of this letter agreement may be amended ------------- or waived unless such amendment or waiver is agreed to by you and the Board in writing. No waiver by you or the Company of the breach of any condition or provision of this letter agreement will be deemed a waiver of a similar or dissimilar provision or condition at the same or any prior or subsequent time. In the event any portion of this letter agreement is determined to be invalid or unenforceable for any reason, the remaining portions shall be unaffected thereby and will remain in full force and effect to the fullest extent permitted by law. Please acknowledge your acceptance and understanding of this letter agreement by signing below. Sincerely, ______________________________________ ACKNOWLEDGED AND AGREED: ________________________________ Dated: November 29, 1996 EXHIBIT A --------- EARN-OUT -------- 1. Within thirty (30) days after the period ending December 31, 1998, Western Micro Technology, Inc. ("WMT") shall calculate, and deliver notice of such calculation (the "Calculation") to Alan M. Bynder ("Bynder") and Michael R. Duhaime ("Duhaime"), an earn-out payment to be paid to Bynder and Duhaime if the Gross Profit Dollars (as defined in paragraph 2) of the International Data Products division of WMT during such period exceeds $2.4 million (the "Earn-Out Payment"). The Earn-Out Payment shall be paid in shares of Common Stock, no par value (the "Shares"), of WMT. The value of the Shares will be calculated based on the ten (10) day simple average of the closing prices of the Shares in the last ten (10) trading days prior to December 31, 1998. WMT shall pay the Earn-Out Payment based on a calculation of sixty percent (60%) of the Shares to Bynder and forty percent (40%) of the Shares to Duhaime. The Shares shall be rounded to the nearest whole number and no fractional shares will be issued. The Earn-Out Payment shall equal the following amount: Gross Profit Dollars Earn-Out Payment -------------------- ---------------- $0 - $2,400,000 0 Shares $2,400,000 - $2,799,999 40,000 Shares $2,800,000 - $3,199,999 55,000 Shares $3,200,000 - $3,599,999 70,000 Shares $3,600,000 - $3,999,999 85,000 Shares $4,000,000 - $4,999,999 100,000 Shares Greather than $5,000,000 140,000 Shares 2. Gross Profit Dollars shall be calculated on the following sales (the "Sales"): (a) Sales by the International Data Products division of WMT to customers identified in the Asset Purchase Agreement (the "Asset Purchase Agreement"), dated as of November 29, 1996, by and among WMT, IDP and certain members of IDP; and (b) Sales by the International Data Products division of WMT customers that are recruited after the Closing Date as customers for WMT by any of the International Data Products employees identified in the Asset Purchase Agreement or by an employees hired in the International Data Products division of WMT. "Gross Profit Dollars" shall mean gross Sales net of returns and customary allowances less the actual (specifically identifiable) product cost (the "Costs") determined in A-1 accordance with generally accepted accounting principles whether or not consistent with IDP's past accounting practices. For the purpose of calculating the Earn-Out Payment, separate books and records shall be maintained by WMT with respect to the Sales and Costs. Such books and records shall be maintained in accordance with WMT's company-wide accounting principles and generally accepted accounting principles whether or not consistent with IDP's past accounting practices. Bynder and Duhaime will be entitled to reasonable rights to audit the Earn-Out Payment. Upon receipt of the Calculation from WMT, Bynder and Duhaime shall have ten (10) business days in which to request in writing that WMT deliver within thirty (30) business days of such request the books and records, and back up invoices and schedules, to Bynder and Duhaime or their accountants to confirm the calculation. If, within ten (10) business days, Bynder and Duhaime do not request such books and records or if within ten (10) business days after receipt of such books and records Bynder and Duhaime do not object to such Calculation, WMT shall deliver instructions to its transfer agent to issue and deliver to Bynder and Duhaime the Shares of WMT Common as soon as reasonably practicable. If Bynder and Duhaime request such books and records and within ten (10) business days after receipt of such books and records, Bynder and Duhaime object in writing to WMT of the Calculation, WMT, Bynder and Duhaime shall work together in good faith to see if they can reach an agreement on the appropriate Earn-Out Payment. If within fourteen (14) days the parties have not reached an agreement, the parties shall choose a nationally recognized accounting firm mutually agreed upon by WMT, Bynder and Duhaime who shall calculate the amount, or if no such agreement can be reached, then each of WMT, Bynder and Duhaime shall appoint one nationally recognized accounting firm, which accounting firms shall pick an additional nationally recognized accounting firm to which such disputes shall be referred. In the event that either WMT, Bynder or Duhaime shall fail to select a nationally recognized firm in accordance with the provisions of this subsection within thirty (30) days after notice by the other party that such selection should be made, and such other party has selected a nationally recognized accounting firm pursuant to the provisions hereof, such dispute shall be referred to the nationally recognized accounting firm selected by such party. The decision of such nationally recognized accounting firm shall be conclusive and binding on both parties. Each of WMT, Bynder and Duhaime shall pay the costs and expenses of its own accountant and Bynder and Duhaime shall pay the costs of the nationally recognized accounting firm selected by both parties or their representatives (the "Independent Accountant); provided, however, that if a dispute arises that is resolved by the Independent Accountant and the amount of the Earn-Out Payment as calculated by the Independent Accountant exceeds by more than ten percent (10%) the Calculation, WMT shall pay the A-2 costs and expenses of Bynder's and Duhaime's and the Independent Accountant's costs and expenses. 3. During the period subsequent to Closing and ending on December 31, 1998, (a) WMT shall conduct its business in conformity with sound business practices and consistent with past practices and (b) WMT shall not take any voluntary action for the purpose of preventing Bynder or Duhaime from being able to earn the Earn-Out Payment or avoiding or seeking to avoid the observance or performance of any of the terms under this Exhibit A, and shall at all times in good faith assist in carrying out all such action as may be reasonably necessary or appropriate in order to protect the rights of Bynder and Duhaime with respect to its ability to earn the Earn-Out Payment against impairment. Notwithstanding this paragraph 3, nothing contained herein shall require the officers and directors of WMT to maintain WMT's business in a manner or take actions that would violate their fiduciary duties to WMT and its shareholders. 4. If between the date hereof and December 31, 1998, WMT commences a voluntary case under the federal bankruptcy laws or a petition is filed against WMT under the federal bankruptcy laws and is not dismissed within ninety (90) days, Bynder and Duhaime shall be entitled to seek recovery of the Earn-Out Payment due as an unsecured creditor of WMT in the related bankruptcy proceedings. A-3 EX-10.4 5 MATERIAL CONTRACT WESTERN MICRO TECHNOLOGY, INC. NONSTATUTORY STOCK OPTION AGREEMENT FOR OUTSIDE DIRECTORS Western Micro Technology, Inc., a California corporation (the "Company"), hereby grants an option to purchase 5,000 Shares of its common stock to the optionee named below. The terms and conditions of this option are set forth in this Nonstatutory Stock Option Agreement for Outside Directors (the "Agreement"). Any rights optionee may have are subject to the terms of this Agreement. Date of Option Grant: January 18, 1996 Name of Optionee: William H. Welling Exercise Price per Share (100% of fair market value): $5.00 * * * * * WESTERN MICRO TECHNOLOGY, INC. _______________________________________ Signature _______________________________________ Date -1- WESTERN MICRO TECHNOLOGY, INC. NONSTATUTORY STOCK OPTION AGREEMENT FOR OUTSIDE DIRECTORS Nonstatutory Stock Option This option is not intended to be an incentive stock option under section 422 of the Internal Revenue Code and will be interpreted accordingly. Vesting/Exercisability Your right to exercise 2,500 Shares of this option vests immediately and the remaining 2,500 Shares vest at a rate of fifty percent (50%) upon each one-year anniversary of the Date of Option Grant. In addition, your right to exercise this option shall vest in full if (1) your service as an Outside Director of the Company terminates because of death or Total and Permanent Disability or (2) there is a Change in Control of the Company (as defined in the Company's 1994 Stock Option Plan as amended and restated). However, no Shares will vest after your service as an Outside Director of the Company has terminated for any reason. Term Your option will expire at Company headquarters on the 10th anniversary of the Date of Option Grant, as shown on the cover sheet. (It will expire earlier if your service as an Outside Director of the Company terminates, as described below.) Termination If your service as an Outside Director of the Company terminates for any reason except death, Total and Permanent Disability or voluntary retirement from the Board of Directors after age 60 (as described below), then your option will expire at the close of business at Company headquarters on the 90th day after your service as an Outside Director terminates. Death If you die while an Outside Director of the Company, then your option will expire at the close of business at Company headquarters on the date twelve (12) months after the date of death. During that twelve (12) month period, your estate or heirs may exercise your entire option. Total and Permanent If your service as an Outside Director of the Company Disability terminates because of your Total and Permanent Disability, then your option will expire at the close of business at Company headquarters on the date twelve (12) months after your service as an Outside Director of the Company terminates. "Total and Permanent Disability" means that you are unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted, or can be expected to last, for a continuous period of not less than twelve (12) months. -2- Voluntary Retirement If your service as an Outside Director of the Company terminates due to your voluntary retirement from the Board of Directors at or after age 60, then your option will expire at the close of business at Company headquarters on the date twelve (12) months after your service as an Outside Director of the Company terminates. Restrictions on The Company will not permit you to exercise this Exercise option if the issuance of Shares at that time would violate any law or regulation. Notice of Exercise When you wish to exercise this option, you must notify the Company by filing the Company's "Notice of Exercise" form at the address given on the form. Your notice must specify how many Shares you wish to purchase. Your notice must also specify how your Shares should be registered (whether in your name only, or in your and your spouse's names as community property or as joint tenants with right of survivorship). The notice will be effective when it is received by the Company. If someone else wants to exercise this option after your death, that person must prove to the Company's satisfaction that he or she is entitled to do so. Form of Payment When you submit your Notice of Exercise, you must include payment of the option price for the Shares you are purchasing. Payment may be made in one (or a combination) of the following forms: o Your personal check, a cashier's check or a money order. o Shares which have already been owned by you for more than six (6) months and which are surrendered to the Company. The value of the Shares, determined as of the effective date of the option exercise, will be applied to the option price. o By delivery of an irrevocable direction to a securities broker to sell Shares and to deliver all or part of the sale proceeds to the Company in payment of the aggregate Exercise Price. Restrictions on Resale You may not sell any Shares received upon the exercise of this option at a time when applicable laws, regulations or when Company or underwriter trading policies prohibit a sale. -3- Transfer of Option Prior to your death, you may only exercise this option. You cannot transfer or assign this option. For instance, you may not sell this option or use it as security for a loan. If you attempt to do any of these things, this option will immediately become invalid. You may, however, dispose of this option in your will. Regardless of any marital property settlement agreement, the Company is not obligated to honor a Notice of Exercise from your spouse, nor is the Company obligated to recognize your spouse's interest in your option in any other way. Shares Shares means the common stock, no par value, of the Company. Shareholder Rights You, your estate and/or your heirs, have no rights as a shareholder of the Company until a certificate for your Shares has been issued. No adjustments are made for dividends or other rights if the applicable record date occurs before your stock certificate is issued, except as described in this Agreement. Adjustments In the event of a stock split, a stock dividend or a similar change in the Company stock, the number of Shares covered by this option and the exercise price per share may be adjusted. Your option shall be subject to the terms of the agreement of merger, liquidation or reorganization in the event the Company is subject to such corporate activity. Any fractional number of Shares available under the option shall be rounded to the nearest whole number. Applicable Law This option will be interpreted and enforced under the laws of the State of California. Other Agreements This Agreement constitutes the entire understanding between you and the Company regarding this option. Any prior agreements, commitments or negotiations concerning this option are superseded. -4- NOTICE OF EXERCISE OF STOCK OPTION Western Micro Technology, Inc. 254 E. Hacienda Avenue Campbell, CA 95008 Attn: Chief Financial Officer Re: Exercise of Stock Option to Purchase Shares of Company Common Stock Ladies and Gentlemen: Pursuant to the Nonstatutory Stock Option Agreement for Outside Directors dated January 18, 1996 (the "Option Agreement"), between Western Micro Technology, Inc., a California corporation (the "Company"), and the undersigned, I hereby elect to purchase _________ shares of the common stock of the Company (the "Shares"), at the price of $5.00 per Share. My check in the amount of $_________ is enclosed. The Shares are to be issued in _________ certificate(s) and registered in the name(s) of: __________________________ (Print Name) __________________________ (Print Name, if any) The undersigned understands that there may be tax consequences as a result of the purchase or disposition of the Shares. The undersigned represents that he or she has consulted with any tax consultants he or she deems advisable in connection with the purchase or disposition of the Shares and the undersigned is not relying on the Company for any tax advice. The undersigned acknowledges that he or she has received, read and understood the Option Agreement and agrees to abide by and be bound by its terms and conditions. The undersigned represents that the Shares are being acquired solely for his or her own account and not as a nominee for any other party, or for investment, and that the undersigned purchaser will not offer, sell or otherwise dispose of any such Shares except under circumstances that will not result in a violation of the Securities Act of 1933, as amended, or any state securities laws. Dated: _____________________ ___________________________________________ (Signature) ___________________________________________ (Please Print Name) Social Security No. _______________________ ___________________________________________ ___________________________________________ -5- EX-10.5 6 MATERIAL CONTRACT WESTERN MICRO TECHNOLOGY, INC. NONSTATUTORY STOCK OPTION AGREEMENT FOR OUTSIDE DIRECTORS Western Micro Technology, Inc., a California corporation (the "Company"), hereby grants an option to purchase 5,000 Shares of its common stock to the optionee named below. The terms and conditions of this option are set forth in this Nonstatutory Stock Option Agreement for Outside Directors (the "Agreement"). Any rights optionee may have are subject to the terms of this Agreement. Date of Option Grant: January 18, 1996 Name of Optionee: K. William Sickler Exercise Price per Share (100% of fair market value): $5.00 * * * * * WESTERN MICRO TECHNOLOGY, INC. _______________________________________ Signature _______________________________________ Date -1- WESTERN MICRO TECHNOLOGY, INC. NONSTATUTORY STOCK OPTION AGREEMENT FOR OUTSIDE DIRECTORS Nonstatutory Stock This option is not intended to be an incentive stock Option option under section 422 of the Internal Revenue Code and will be interpreted accordingly. Vesting/Exercisability Your right to exercise 2,500 Shares of this option vests immediately and the remaining 2,500 Shares vest at a rate of fifty percent (50%) upon each one-year anniversary of the Date of Option Grant. In addition, your right to exercise this option shall vest in full if (1) your service as an Outside Director of the Company terminates because of death or Total and Permanent Disability or (2) there is a Change in Control of the Company (as defined in the Company's 1994 Stock Option Plan as amended and restated). However, no Shares will vest after your service as an Outside Director of the Company has terminated for any reason. Term Your option will expire at Company headquarters on the 10th anniversary of the Date of Option Grant, as shown on the cover sheet. (It will expire earlier if your service as an Outside Director of the Company terminates, as described below.) Termination If your service as an Outside Director of the Company terminates for any reason except death, Total and Permanent Disability or voluntary retirement from the Board of Directors after age 60 (as described below), then your option will expire at the close of business at Company headquarters on the 90th day after your service as an Outside Director terminates. Death If you die while an Outside Director of the Company, then your option will expire at the close of business at Company headquarters on the date twelve (12) months after the date of death. During that twelve (12) month period, your estate or heirs may exercise your entire option. Total and Permanent If your service as an Outside Director of the Company Disability terminates because of your Total and Permanent Disability, then your option will expire at the close of business at Company headquarters on the date twelve (12) months after your service as an Outside Director of the Company terminates. "Total and Permanent Disability" means that you are unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted, or can be expected to last, for a continuous period of not less than twelve (12) months. -2- Voluntary Retirement If your service as an Outside Director of the Company terminates due to your voluntary retirement from the Board of Directors at or after age 60, then your option will expire at the close of business at Company headquarters on the date twelve (12) months after your service as an Outside Director of the Company terminates. Restrictions on The Company will not permit you to exercise this Exercise option if the issuance of Shares at that time would violate any law or regulation. Notice of Exercise When you wish to exercise this option, you must notify the Company by filing the Company's "Notice of Exercise" form at the address given on the form. Your notice must specify how many Shares you wish to purchase. Your notice must also specify how your Shares should be registered (whether in your name only, or in your and your spouse's names as community property or as joint tenants with right of survivorship). The notice will be effective when it is received by the Company. If someone else wants to exercise this option after your death, that person must prove to the Company's satisfaction that he or she is entitled to do so. Form of Payment When you submit your Notice of Exercise, you must include payment of the option price for the Shares you are purchasing. Payment may be made in one (or a combination) of the following forms: o Your personal check, a cashier's check or a money order. o Shares which have already been owned by you for more than six (6) months and which are surrendered to the Company. The value of the Shares, determined as of the effective date of the option exercise, will be applied to the option price. o By delivery of an irrevocable direction to a securities broker to sell Shares and to deliver all or part of the sale proceeds to the Company in payment of the aggregate Exercise Price. Restrictions on Resale You may not sell any Shares received upon the exercise of this option at a time when applicable laws, regulations or when Company or underwriter trading policies prohibit a sale. -3- Transfer of Option Prior to your death, you may only exercise this option. You cannot transfer or assign this option. For instance, you may not sell this option or use it as security for a loan. If you attempt to do any of these things, this option will immediately become invalid. You may, however, dispose of this option in your will. Regardless of any marital property settlement agreement, the Company is not obligated to honor a Notice of Exercise from your spouse, nor is the Company obligated to recognize your spouse's interest in your option in any other way. Shares Shares means the common stock, no par value, of the Company. Shareholder Rights You, your estate and/or your heirs, have no rights as a shareholder of the Company until a certificate for your Shares has been issued. No adjustments are made for dividends or other rights if the applicable record date occurs before your stock certificate is issued, except as described in this Agreement. Adjustments In the event of a stock split, a stock dividend or a similar change in the Company stock, the number of Shares covered by this option and the exercise price per share may be adjusted. Your option shall be subject to the terms of the agreement of merger, liquidation or reorganization in the event the Company is subject to such corporate activity. Any fractional number of Shares available under the option shall be rounded to the nearest whole number. Applicable Law This option will be interpreted and enforced under the laws of the State of California. Other Agreements This Agreement constitutes the entire understanding between you and the Company regarding this option. Any prior agreements, commitments or negotiations concerning this option are superseded. -4- NOTICE OF EXERCISE OF STOCK OPTION Western Micro Technology, Inc. 254 E. Hacienda Avenue Campbell, CA 95008 Attn: Chief Financial Officer Re: Exercise of Stock Option to Purchase Shares of Company Common Stock Ladies and Gentlemen: Pursuant to the Nonstatutory Stock Option Agreement for Outside Directors dated January 18, 1996 (the "Option Agreement"), between Western Micro Technology, Inc., a California corporation (the "Company"), and the undersigned, I hereby elect to purchase _________ shares of the common stock of the Company (the "Shares"), at the price of $5.00 per Share. My check in the amount of $_________ is enclosed. The Shares are to be issued in _________ certificate(s) and registered in the name(s) of: __________________________ (Print Name) __________________________ (Print Name, if any) The undersigned understands that there may be tax consequences as a result of the purchase or disposition of the Shares. The undersigned represents that he or she has consulted with any tax consultants he or she deems advisable in connection with the purchase or disposition of the Shares and the undersigned is not relying on the Company for any tax advice. The undersigned acknowledges that he or she has received, read and understood the Option Agreement and agrees to abide by and be bound by its terms and conditions. The undersigned represents that the Shares are being acquired solely for his or her own account and not as a nominee for any other party, or for investment, and that the undersigned purchaser will not offer, sell or otherwise dispose of any such Shares except under circumstances that will not result in a violation of the Securities Act of 1933, as amended, or any state securities laws. Dated: _____________________ ___________________________________________ (Signature) ___________________________________________ (Please Print Name) Social Security No. _______________________ ___________________________________________ ___________________________________________ -5- EX-23.1 7 CONSENT OF INDEPENDENT ACCOUNTANT Exhibit 23.1 CONSENT OF COOPERS & LYBRAND LLP We consent to the incorporation by reference in this registration statement on Form S-8 (File No. 333-__________) of our reports dated January 31, 1997 on our audits of the consolidated financial statements and financial statement schedules of Western Micro Technology, Inc. /s/ COOPERS & LYBRAND LLP San Jose, CA June 30, 1997 -----END PRIVACY-ENHANCED MESSAGE-----