<PAGE> 1
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 than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
BELL INDUSTRIES, INC.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
JOHN J. COST, SECRETARY
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $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:
------------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
Set forth the amount on which the filing fee is calculated and state how it
was determined.
/ / 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 Statement No.:
------------------------------------------------------------------------
3) Filing Party:
------------------------------------------------------------------------
4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
BELL INDUSTRIES, INC.
11812 SAN VICENTE BOULEVARD
LOS ANGELES, CALIFORNIA 90049-5069
Dear Shareholder:
This year's Annual Meeting of Shareholders will be held on Tuesday,
November 1, 1994 at 10:00 A.M., at the Company's Corporate Office, 11812 San
Vicente Boulevard, Los Angeles, California. Management hopes that you will come
to the meeting and give us an opportunity to meet you and discuss any questions
you may have.
The formal notice of meeting and the Proxy Statement follow. The only
formal actions to be taken at the meeting are (1) the election of the Board of
Directors for the ensuing year; and (2) the consideration of the 1994 Stock
Option Plan. I urge you to review the Proxy Statement carefully and, at your
earliest convenience, sign, date and mail the enclosed proxy card so that your
shares will be represented at the meeting. A prepaid return envelope is provided
for this purpose.
Sincerely yours,
THEODORE WILLIAMS
President
September 19, 1994
<PAGE> 3
BELL INDUSTRIES, INC.
11812 SAN VICENTE BOULEVARD
LOS ANGELES, CALIFORNIA 90049-5069
------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
NOVEMBER 1, 1994
------------------------
The Annual Meeting of Shareholders of Bell Industries, Inc., a Delaware
corporation, will be held at the Company's Corporate Office, 11812 San Vicente
Boulevard, Los Angeles, California, on Tuesday, November 1, 1994 at 10:00 A.M.
The purposes of the meeting are:
(1) To elect seven directors to hold office until the next Annual
Meeting of Shareholders and thereafter until their successors are elected;
(2) to vote upon the adoption of the 1994 Stock Option Plan; and
(3) to transact any other business that may properly come before the
meeting or any adjournments thereof.
The Board of Directors has fixed the close of business on Friday, September
16, 1994 as the record date for the determination of shareholders entitled to
receive notice of, and to vote at, said meeting and any adjournment or
adjournments thereof.
By Order of the Board of Directors
JOHN J. COST
Secretary
September 19, 1994
YOUR VOTE IS IMPORTANT. IF YOU DO NOT EXPECT TO ATTEND THE ANNUAL MEETING
OF SHAREHOLDERS, OR IF YOU DO PLAN TO ATTEND AND WISH TO VOTE BY PROXY, PLEASE
DATE, SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY CARD, FOR WHICH A RETURN,
STAMPED ENVELOPE IS PROVIDED. YOUR PROMPT RETURN OF THE PROXY CARD WILL HELP THE
COMPANY AVOID THE ADDITIONAL EXPENSE OF FURTHER SOLICITATION TO ASSURE A QUORUM
AT THE MEETING.
<PAGE> 4
PROXY STATEMENT
------------------------
ANNUAL MEETING OF SHAREHOLDERS
OF BELL INDUSTRIES, INC.
NOVEMBER 1, 1994
------------------------
INTRODUCTION
This Proxy Statement is being mailed on or about September 19, 1994 to
shareholders of Bell Industries, Inc. (the "Company") in connection with the
solicitation of Proxies by the Company's Board of Directors for use at the
Company's Annual Meeting of Shareholders to be held on November 1, 1994, or any
adjournments thereof, for the purposes set forth herein and in the accompanying
Notice of Annual Meeting of Shareholders. Expenses relating to the proxy
statement, the proxy and the solicitation thereof will be paid by the Company.
The persons named in the accompanying proxy have advised the Company that
they intend to vote the proxies received by them in their discretion for as many
director nominees as the votes represented by such proxies are entitled to elect
(see "Election of Directors") and FOR the adoption of the 1994 Stock Option
Plan. Any shareholder may revoke his or her proxy at any time prior to its use
by filing with the Secretary of the Company a written notice of revocation or a
duly executed proxy bearing a later date.
Only shareholders of record at the close of business on Friday, September
16, 1994, will be entitled to notice of, and to vote at, the meeting or any
adjournments thereof. At such record date, there were outstanding and entitled
to vote 6,148,923 shares of common stock. Each of the foregoing shares is
entitled to one vote on all matters other than the election of directors. In
connection with the election of directors, each shareholder is entitled to
cumulate votes. For all other matters to be voted upon at the meeting, the
affirmative vote of a majority of shares present in person or represented by
proxy, and entitled to vote on the matter, is necessary for approval. For
purposes of determining the number of shares present in person or represented by
proxy on a voting matter, all votes cast "for," "against" or "abstain" are
included. "Broker non-votes," which occur when brokers or other nominees are
prohibited from exercising discretionary voting authority for beneficial owners
who have not provided voting instructions, are not counted for the purpose of
determining the number of shares present in person or represented by proxy on a
voting matter.
ELECTION OF DIRECTORS
In voting for directors of the Company, each shareholder has the right to
cumulate votes and give one candidate a number of votes equal to the number of
directors to be elected, multiplied by the number of votes to which the shares
are entitled, or to distribute the votes on the same principle among as many
candidates as the shareholder chooses. The candidates receiving the highest
number of votes, up to the number of directors to be elected, shall be elected.
For a shareholder to exercise cumulative voting rights, such shareholder must
give notice of intent to cumulate votes prior to the vote at the meeting.
The Company recently changed its fiscal year for accounting purposes from a
year ended June 30th to a year ended December 31st. As a result, the next Annual
Meeting of Shareholders will be held in May 1995 and proxies will be solicited
for the elections of directors at that meeting.
The Company's Board of Directors presently consists of seven directors. The
persons who are elected directors will hold office until the next Annual Meeting
of Shareholders and thereafter until their successors
1
<PAGE> 5
are elected. All of the seven director nominees are currently directors of the
Company. The names and principal occupations of the nominees for election as
directors, and the respective numbers of shares of voting stock of the Company
beneficially owned, directly or indirectly, by each nominee are set forth below.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
YEAR FIRST OWNED AS OF PERCENT
NAME AND PRINCIPAL OCCUPATION AGE ELECTED AUGUST 31, 1994 OF CLASS
- - --------------------------------------------------------- --- ----------- --------------------- --------
<S> <C> <C> <C> <C>
John J. Cost(1)(3)....................................... 59 1971 1,949(4) (5)
Secretary and Partner, Irell & Manella, Attorneys
Anthony L. Craig(3)...................................... 49 1993 100 (5)
Vice President, Digital Equipment Corporation
Gordon M. Graham......................................... 59 N/A 13,624(6) (5)
Senior Vice President
Bruce M. Jaffe(2)........................................ 50 1981 24,752(7) (5)
Executive Vice President and Chief Operating Officer
Charles S. Troy(1)(3).................................... 51 1993 300 (5)
President, E&S Ring Management Corporation
Milton Rosenberg(1)(3)................................... 72 1975 3,744 (5)
Private investor and consultant to high technology
companies
Theodore Williams(2)..................................... 74 1969 264,113(4) 4.3%
President and Chief Executive Officer
</TABLE>
- - ---------------
(1) Member of Audit and Nominating Committees.
(2) Member of Executive Committee.
(3) Member of Compensation Committee.
(4) Includes 296 shares and 1,497 shares held by Messrs. Cost and Williams,
respectively, as custodians for their children.
(5) Less 1% of total outstanding shares.
(6) Includes 728 shares issuable pursuant to currently exercisable stock
options.
(7) Includes 2,288 shares issuable pursuant to currently exercisable stock
options.
Mr. Williams has been employed by the Company in his current position for
more than the past five years. Mr. Jaffe had been Senior Vice President of the
Company for more than five years prior to his appointment as Executive Vice
President in 1989. He assumed the additional responsibility of Chief Operating
Officer in 1990. Mr. Cost has been a partner in the law firm of Irell & Manella,
Los Angeles, California, since 1969. He was elected Secretary in 1987. Irell &
Manella acts as general counsel to the Company. For more than the past five
years, Mr. Rosenberg has been self-employed as an investor in, and consultant
to, high technology companies. Mr. Rosenberg also serves as a director of M.R.V.
Communications, a laser communications firm, based in Woodland Hills,
California.
Since November 1993, Mr. Craig has been a Vice President of Digital
Equipment Corporation, a New York Stock Exchange Company, located in Mayward,
Massachusetts, engaged in the manufacture of computer equipment. From June 1992
until July 1993, he was a Senior Vice President of Oracle Systems Corp., a
publicly traded data base and consulting company with annual revenues of over $1
billion. From June 1990 through February 1992, he was President and Chief
Executive Officer of C3 Inc., a private company involved in systems integration
for the U.S. Government. From October 1988 through September 1989, Mr. Craig was
the Chief Executive Officer of Prime Computer, a publicly traded computer
manufacturer. Mr. Craig is also a director of Iomega Corporation, a computer
disc storage firm located in Roy, Utah.
2
<PAGE> 6
For more than the past five years, Mr. Graham has been employed by the
Company in an executive capacity. Since 1989, Mr. Graham has been a Senior Vice
President of the Company with overall responsibility for its microcomputer
distribution and services division. For more than five years prior to that time,
Mr. Graham was a corporate Vice President of the Company. In January 1994, Mr.
Graham was appointed to the Board of Directors by the Board to fill a vacancy
created by the death of an incumbent director.
For more than the last five years, Mr. Troy has been President and Chief
Executive Officer of E&S Ring Management Corporation, Culver City, California.
E&S Ring Management is a regional property management firm, specializing in
multi-family and commercial properties.
If for any reason one or more of the nominees named above should not be
available as a candidate for director, an event that the Board of Directors does
not anticipate, the persons named in the enclosed proxy will vote for such other
candidate or candidates as may be nominated by the Board and discretionary
authority to do so is included in the Proxy.
Directors who are employees receive no additional compensation for serving
on the Board of Directors. Non-employee directors receive an annual retainer of
$30,000, plus $1,000 for each attendance at a meeting of the Board or a
committee thereof which does not immediately precede or follow a meeting of the
Board. During 1994, the Company established a directors' retirement plan for
non-employee directors. Under the plan, directors having served at least ten
years as a director after reaching the age of 65 are entitled to receive an
annual retirement benefit equal to 50% of the annual retainer fee in effect at
the time of retirement, increasing 10% for each year of service after the tenth
year. Such payments will be made for the number of years equal to the number of
years served as a director or until his or her death; provided, that a surviving
spouse is entitled for a period of five years after the death of a director to
continue to receive the same benefits that such director would have been so
entitled to receive. If a director has reached age 60 and ceases to serve as a
director at the request of the Company, he will be entitled to the same
retirement benefits as if he retired at age 65. In the event of a change in
control, a director leaving the Board would be entitled to receive an immediate
lump sum payment of the present value of his accrued retirement benefit.
3
<PAGE> 7
INFORMATION REGARDING SHAREHOLDERS
PRINCIPAL SECURITY HOLDERS
To the Company's knowledge, except as hereinafter described, no single
shareholder owned of record or beneficially as of August 18, 1994, more than 5%
of the Company's common stock. As of August 18, 1994, Cede & Co., a nominee of
securities depositories for various segments of the financial industry, held
5,119,138 shares, representing 83% of the Company's outstanding common stock,
none of which was owned beneficially by such organization. Based upon reports
filed through June 30, 1994 with the Securities and Exchange Commission, the
Company believes that each of the companies named below beneficially owns five
percent (5.0%) or more of the Company's common stock:
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE PERCENT
OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP OF CLASS
------------------- ----------------------- --------
<S> <C> <C>
Newsouth Capital Management.............. 567,015 9.2%
755 Crossover Lane (Direct)
Memphis, Tennessee 38117
TCW Management Company................... 371,644 6.0%
865 S. Figueroa Street (Direct)
Los Angeles, California 90017
</TABLE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table shows the beneficial ownership of the Company's common
stock of those executive officers of the Company listed in the "Summary
Compensation Table" under EXECUTIVE COMPENSATION, who are not directors, as well
as the beneficial ownership of common stock of all nominees for directors and
executive officers of the Company as a group as of August 31, 1994. Information
regarding the stock ownership of director nominees is contained in the prior
table under ELECTION OF DIRECTORS.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT AND NATURE PERCENT
OF BENEFICIAL OWNER OF BENEFICIAL OWNERSHIP OF CLASS
------------------- ----------------------- --------
<S> <C> <C>
Paul F. Doucette................................ 40,429 (1)
Senior Vice President (Direct)
D.J. Hough...................................... 31,784 (1)
Vice President and Chief Information Officer (Direct)
Tracy A. Edwards................................ 2,956 (1)
Vice President and Chief Financial Officer (Direct)
All directors and executive officers
as a group (11)............................... 385,129(2) 6.3%
</TABLE>
- - ---------------
(1) Less than 1% of the outstanding.
(2) Includes 8,944 shares issuable pursuant to currently exercisable stock
options.
4
<PAGE> 8
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN (A)
OF COMPANY TO PEER GROUP (B) AND BROAD MARKET INDEX (C)
<TABLE>
<CAPTION>
MEASUREMENT PERIOD BELL IND.
(FISCAL YEAR COVERED) INC. PEER GROUP BROAD MARKET
<S> <C> <C> <C>
1989 $100 $100 $100
1990 $127 $140 $115
1991 $ 94 $142 $122
1992 $103 $166 $139
1993 $131 $221 $158
1994 $164 $185 $163
</TABLE>
(A) Assumes $100 invested on July 1, 1989 and dividends reinvested
(B) The Peer Group consists of the following electronic and industrial
distribution companies:
Anthem Electronics Inc.
Milgray Electronics Inc.
Arrow Electronics Inc.
Pioneer Standard Electronics
Avnet Inc.
Premier Industrial Corp.
Jaco Electronics Inc.
Sterling Electronics Corp.
Kent Electronics Corp.
Wyle Laboratories Inc.
Marshall Industries
(C) The Broad Market Index chosen was New York Stock Exchange Market Index
5
<PAGE> 9
EXECUTIVE COMPENSATION
The following table shows all cash compensation and certain other
compensation paid to (i) the chief executive officer and (ii) the other four
most highly compensated executive officers (the Named Officers) for each of the
last three fiscal years of the Company for services rendered in all capacities
to the Company and its subsidiaries:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
-------------
ANNUAL COMPENSATION OPTIONS
------------------------------- (NUMBER OF
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OTHER(1) SHARES)
----------------------------------- ----- -------- -------- ------- -------------
<S> <C> <C> <C> <C> <C>
Theodore Williams.................. 1994 $400,000 $172,788 $20,407 0
President and Chief 1993 356,300 0 446 0
Executive Officer 1992 364,000 0 0 0
Bruce M. Jaffe..................... 1994 $285,000 $123,111 $14,799 0
Executive Vice President 1993 260,000 0 446 10,400
and Chief Operating Officer 1992 260,000 0 0 0
Paul F. Doucette(2)................ 1994 $230,000 $ 99,353 $12,117 0
Senior Vice President 1993 230,000 0 446 10,400
1992 221,000 0 0 0
D.J. Hough......................... 1994 $202,800 $ 87,603 $10,790 0
Vice President and Chief 1993 202,800 0 446 6,240
Information Officer 1992 202,800 0 0 0
Tracy A. Edwards................... 1994 $145,520 $ 62,860 $ 7,997 0
Vice President and Chief 1993 124,500 0 446 6,240
Financial Officer 1992 113,100 0 0 0
</TABLE>
- - ---------------
Certain columns have not been included in this table because the information
called for therein is not applicable to the Company or the individuals named
above for the periods indicated.
(1) Consists of amounts contributed by the Company on behalf of the named
individual under the Company's Savings and Profit Sharing Plan and Executive
Deferred Income and Pension Plan.
(2) Mr. Doucette is married to a niece of Mr. Williams.
STOCK OPTIONS
During the Company's last fiscal year, there were no grants of stock
options under the Company's Employee Stock Option Plan to the chief executive
officer or any of the Named Officers.
6
<PAGE> 10
OPTION EXERCISES AND HOLDINGS
The following table sets forth information with respect to the chief
executive officer and the Named Officers, concerning the exercise of options
during the last fiscal year and unexercised options held as of the end of the
fiscal year:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
VALUE REALIZED NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
(MARKET PRICE OPTIONS AT OPTIONS AT JUNE 30, 1994(1)
SHARES AT EXERCISE JUNE 30, 1994
ACQUIRED LESS --------------------------- ---------------------------
NAME ON EXERCISE EXERCISE PRICE) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- - --------------------------- ----------- --------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Theodore Williams.......... 0 0 0 0 0 0
President and Chief
Executive Officer
Bruce M. Jaffe............. 0 0 2,288 8,112 $12,415 $44,016
Executive Vice President
and
Chief Operating Officer
Paul F. Doucette........... 0 0 2,288 8,112 $12,415 $44,016
Senior Vice President
D.J. Hough................. 0 0 1,456 4,784 $ 8,226 $27,030
Vice President and Chief
Information Officer
Tracy A. Edwards........... 0 0 1,456 4,784 $ 8,226 $27,030
Vice President and Chief
Financial Officer
</TABLE>
- - ---------------
(1) Based upon the closing price on the New York Stock Exchange on that date
($16.63).
EMPLOYMENT AGREEMENTS
In January 1979, the Company entered into employment agreements with Mr.
Williams, the Company's President, and two former executives of the Company. Mr.
Williams' agreement provides for an annual salary of not less than $179,400. He
is to be employed as President until retirement. Upon retirement, Mr. Williams
is entitled to receive for his lifetime an annual amount equal to one-half of
the average of the highest three years of salary plus bonus paid during his last
ten years of employment. Also, the Company is required to maintain during
employment, and thereafter until death, life and medical insurance benefits at
least equal to those in effect at the time of retirement. In August 1994, Mr.
Williams' agreement was amended so as to fix his retirement benefits to those
accrued through June 30, 1994. As amended, Mr. Williams' employment agreement
provides that upon his retirement or death prior to retirement, he or his estate
will receive approximately $2,187,000, which amount represents the present value
of the estimated future payments payable under his employment agreement as at
June 30, 1994 as determined by recognized actuarial standards.
The Company has severance agreements with its executive officers, including
Messrs. Jaffe, Doucette, Graham, Hough and Edwards but not Mr. Williams. Each of
these contracts provides, in essence, that should there be a "change in control"
(as defined), and the officer's employment is terminated either (i)
involuntarily, without just cause, or (ii) voluntarily, if the officer has
determined in good faith that his duties have been altered in a material respect
or there has been a reduction in his compensation or employee benefits, then
upon termination, the officer would be entitled to receive a payment in the
amount of 295% of
7
<PAGE> 11
the officer's "base amount" (generally equivalent to the average of his last
three years compensation) as determined in accordance with Section 280G of the
Internal Revenue Code. A "change of control" of the Company is generally defined
as (i) any consolidation or merger of the Company, other than a merger of the
Company in which the holders of the Company's common stock immediately prior to
the merger have at least seventy-five percent (75%) ownership of the voting
capital stock of the surviving corporation immediately after the merger, (ii)
any sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of the assets of the
Company, (iii) the shareholders of the Company approve any plan or proposal for
the liquidation or dissolution of the Company, (iv) any person shall become the
beneficial owner of thirty percent (30%) or more of the Company's outstanding
common stock, or (v) during any period of two consecutive years, individuals who
at the beginning of such period constitute the entire Board of Directors shall
cease for any reason (except death) to constitute a majority thereof unless the
election, or the nomination for election by the Company's shareholders, of each
new director was approved by a vote of at least two-thirds of the directors then
still in office who were directors at the beginning of the period.
The Company has entered into Indemnity Agreements with all directors and
all executive officers of the Company after having received shareholder approval
at the Company's 1986 Annual Meeting. The Indemnity Agreements provide for
indemnification of directors and officers in cases where indemnification might
not otherwise have been available.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Cost, who is also a member of the Compensation Committee, is the
Secretary of the Company but not an employee. He receives no direct compensation
for his services as Secretary.
COMPENSATION STRUCTURE AND COMMITTEE RESPONSIBILITIES
The Company compensates its executive officers with two basic forms of
compensation: cash (salary and incentive bonus) and stock options. Although no
bonuses were awarded for fiscal 1992 and 1993, significant bonuses were granted
for fiscal 1994 based upon the formula described hereafter. Further, in
September 1994, executives were awarded substantial stock options under Bell's
stock option plans at an exercise price equal to the fair market value of the
underlying shares on the date of grant.
The Company Compensation Committee currently consists of Messrs. Cost,
Craig, Troy and Rosenberg. The duties of the Compensation Committee are to
determine the overall compensation policy for the Company's executive officers,
including specifically fixing the compensation of the chief executive and chief
operating officers.
The following report is submitted by the Compensation Committee as it
relates to both cash compensation of, and stock options granted to, executive
officers of the Company. This report is not deemed "filed" with the Securities
and Exchange Commission and is therefore not intended to be incorporated by
reference in any other document filed by the Company with the Commission.
8
<PAGE> 12
Report of the Compensation Committee
The Company's compensation philosophy is based upon the belief that the
Company's success is the result of the coordinated efforts of all employees
working towards common objectives. Its executive officer compensation program is
composed of base salary, annual incentive cash bonuses and long-term incentive
compensation in the form of stock options.
BASE SALARY
The Committee attempts to set the base salary levels competitively with
those paid by others in the electronic distribution business and other
comparable companies. In determining salaries, the Committee also takes into
account individual experience and performance, past salary history and specific
issues particular to the Company.
ANNUAL INCENTIVE BONUS
Prior to fiscal 1994, cash bonuses were considered annually and awarded
generally upon a subjective evaluation of the particular officer's performance
during the year and were dependent upon the overall financial achievement of the
Company during the year. For example, bonuses usually were not given in years
where the Company's growth was nominal. Thus, no incentive cash bonuses were
awarded for fiscal 1992 and 1993. For the fiscal year ended June 30, 1994, the
Committee established specific goals for Company performance and based incentive
awards for the 1994 fiscal year upon the degree to which such goals were
achieved. Individual performance may also be taken into consideration in
determining bonuses. The Committee has established specific goals for Company
performance for the current fiscal period upon which bonuses will be awarded.
LONG-TERM INCENTIVE PROGRAM
Currently, the Company's long-term incentive program consists of the award
of stock options to executive officers and other key employees at current market
prices. The grant of options with exercise prices at prevailing market prices is
designed to align executive compensation and shareholder long-term interests by
creating a direct link between long-term executive compensation and shareholder
return as evidenced by increased stock market value.
The Compensation Committee's current policy is to award significant amounts
of stock options to executive officers and other key employees. Exercise prices
are established equal to the fair market value of Bell's common stock on the
date of grant. Options are usually for a term of 5 years and become vested over
a period of four years dependent upon continued employment. The number of stock
options granted to executive officers is based upon an evaluation of the
particular officer's deemed ability to influence the long-term growth and
profitability of the Company. Stock options were granted to the Company's
executive officers in September 1994 with exercise prices equal to fair market
value at the time of grant.
CHIEF EXECUTIVE AND OPERATING OFFICERS' COMPENSATION
Mr. Williams has been the Company's Chief Executive Officer for over twenty
years. His base salary for 1993 was $356,300 and for 1994 was $400,000.
Additionally, Mr. Williams was awarded a cash bonus of $172,788 for fiscal 1994
based upon predetermined achievements of specific goals for Company performance.
The Committee has fixed Mr. Williams' base salary for the current fiscal period
at an annual rate of $400,000. Due to his substantial stock ownership, the
Committee decided that it was not necessary to provide Mr. Williams with
additional long-term incentive through the grant of stock options.
9
<PAGE> 13
Mr. Jaffe has been Chief Operating Officer since 1990. For many years
prior, he had been the Company's Chief Financial Officer. His base salary for
1994 was $285,000 and he received a cash bonus of $123,111 also based upon
predetermined achievements of specific goals for Company performance.
Additionally in September 1994, Mr. Jaffe was granted a stock option, as
long-term incentive, covering 65,000 shares at an exercise price equal to fair
market value at date of grant. The Committee has fixed Mr. Jaffe's base salary
for the current fiscal period at $285,000.
The Committee believes that both Mr. Williams and Mr. Jaffe have managed
the Company exceptionally well during the past few years in the face of a very
challenging business environment. Due to the substantial improvement in the
Company's operating results during fiscal 1994, each was awarded a cash bonus
for that year based upon predetermined achievement of performance goals.
Submitted By: John J. Cost (Chairman),
Anthony Craig,
Charles Troy and Milton
Rosenberg
OTHER COMPENSATION
SAVINGS AND PROFIT SHARING PLAN
The Company established the Bell Industries' Employees' Savings and Profit
Sharing Plan (the "PSP") in 1973 under which both employees and the Company may
make contributions. The PSP will continue until terminated by the Board of
Directors. Employees must contribute at least 1% of their annual compensation to
participate in the PSP. The Company's contribution to the PSP is determined by
the Board of Directors in its discretion. During the fiscal year ended June 30,
1994, the Company contributed $500,000 to the PSP.
EXECUTIVE DEFERRED INCOME AND PENSION PLAN
In July 1993, the Company adopted an Executive Deferred Income and Pension
Plan (the "EDP"). Under the EDP, each officer and such other highly compensated
employees as the Board may designate are eligible to participate. Each
participant may elect a percentage (not more than 10%) of his salary that he
wishes to defer. The Company matches the amount of the chosen deferral. Such
deferred sums bear an assumed interest at a rate equal to the Lehman Brothers
Long T-Bond index.
In the event of an unforeseen emergency, a participant may withdraw his
deferred salary plus accrued interest but no portion of the matching funds
contributed by the Company. In such an event, the participant would be
ineligible from participating in the EDP for a period of two years. After
reaching age 62 and retiring, a participant may elect to have his benefit paid
in a lump sum or payable over a period of 5 to 15 years.
If a participant voluntarily resigns before age 62, he will be entitled to
receive at age 62 only a pro-rata portion of Company matching funds through the
date of his termination. That proration is based upon the period of EDP
participation compared with the participant's age at the time of resignation. If
a participant dies while employed, his beneficiary would receive a lump sum
payment equal to all amounts that have accrued for his benefit through date of
death. If a participant's employment is terminated without cause or after a
change in control, he will receive the same benefit as he would have received if
his employment had been terminated due to death. If a participant is terminated
for cause, or if the Board determines within one year after termination that
cause existed at the time of termination, he will be entitled to receive in a
lump sum payment only the amount attributable to his deferred salary plus
accrued interest.
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APPROVAL OF THE 1994 STOCK OPTION PLAN
GENERAL
On July 21, 1994, the Board of Directors adopted the 1994 Stock Option Plan
(the "Plan"), the full text of which is attached to this proxy statement as
Exhibit A. The Plan is subject to approval by the affirmative vote of the
holders of a majority of the shares of the Company's common stock voting on the
proposal. The essential features of the Plan are discussed below, but such
description is subject to, and qualified in its entirety by, the full text of
the Plan.
The purposes of the Plan are to provide a means to attract and retain
competent personnel and to provide to participating directors, officers, key
employees, and other persons long-term incentives for high levels of performance
and unusual efforts to improve the financial performance of the Company.
Any director, key employee of the Company or its subsidiaries and other
persons designated by the Committee (see "Administration" below) (other than
directors who are members of the Committee) is eligible to receive Awards under
the Plan. Restricted common stock ("Restricted Stock") of the Company may be
purchased, or purchases of common stock may be made pursuant to "non-incentive"
or "non-qualified" stock options and options that qualify as "incentive stock
options" under Section 422A of the Internal Revenue Code, as amended (the
"Code"). Any of such persons may receive shares of Company common stock pursuant
to stock option rights granted in tandem with such options. There is no minimum
or maximum number of options that may be granted to a participant.
Subject to adjustment, the aggregate number of shares of common stock that
may be issued pursuant to the Awards under the Plan will not exceed 500,000
shares of common stock. Shares related to grants that are forfeited, terminated,
cancelled, expire unexercised, or in such manner that some or all of the shares
covered by a grant are not issued, will immediately again be available for grant
under the Plan.
The common stock to be issued under the Plan will be made available, at the
discretion of the Committee, from authorized but unissued shares of common
stock. If any option granted under the Plan expires or terminates for any
reason, the unpurchased shares shall again be available for the options to be
granted under the Plan.
ADMINISTRATION
The Plan will be administered by the Compensation Committee (the
"Committee"), appointed by the Board of Directors of the Company. The members of
that Committee currently are Messrs. Cost, Craig, Troy and Rosenberg, each of
whom is a "disinterested person" within the meaning of Rule 16b-3 of the
Securities Exchange Act of 1934. The Committee shall have the power to do the
following: (i) to construe and interpret the Plan, (ii) to define the terms used
therein, (iii) to prescribe, amend and rescind rules and regulations relating to
the Plan, (iv) to determine the individuals to whom and the time or times at
which options shall be granted, whether such options will be incentive stock
options or non-qualified stock options, the number of shares to be subject to
each option, the option price, the number of installments, if any, in which each
option may be exercised, and the duration of each option, (v) to determine who
shall receive Restricted Stock and the number of shares of Restricted Stock
offered to any participant, (vi) to approve and determine the duration of leaves
of absence that may be granted to participants without constituting a
termination of their employment under the Plan, and (vii) to make all other
determinations necessary or advisable for the administration of the Plan.
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<PAGE> 15
STOCK OPTIONS
The Committee may grant both incentive stock options and non-qualified
stock options (referred to collectively as "Options") to participants under the
Plan. The purchase price for each share of common stock issued in connection
with the Options granted pursuant to the Plan will be determined by the
Committee, but in the case of incentive stock options, shall not be less than
100% of fair market value on the date the incentive stock option is granted.
Options generally will be exercisable in such installments and at such
times as the Committee may determine. In no event, however, will an Option be
exercisable for at least six months after grant except in the case of the death
or permanent disability of the option holder. The purchase price of any shares
purchased must be paid in full on the date of exercise of the option either in
cash or, to the extent provided in the option agreement, with shares of common
stock valued at their fair market value on the date of exercise of the Option
and may include shares issued upon exercise of the Option.
In the event an incentive stock option is terminated due to the cessation
of a holder's employment with the Company for any reason other than death or
permanent disability, the holder's incentive stock option will be exercisable
for a period of three (3) months after the date the holder ceases to be an
employee of the Company or a Company subsidiary (unless by its terms it sooner
expires) to the extent exercisable on the date of such cessation of employment
and shall thereafter expire and be void and of no further force or effect.
Termination of employment or other relationship with the Company by the holder
of a non-qualified stock option will have the effect specified in the individual
option agreement, as determined by the Committee.
If the holder of an incentive stock option dies or becomes permanently
disabled while the option holder is employed by the Company or one of its
subsidiaries, the option holder's option shall expire one (1) year after the
date of such death or permanent disability unless by its terms it sooner
expires. During such period after death, such option may, to the extent that it
remained unexercised (but exercisable by the option holder according to such
option's terms) on the date of such death, be exercised by the person or persons
to whom the option holder's rights under the option shall pass by option
holder's will or by the laws of descent and distribution. The death or
disability of a holder of a non-qualified stock option will have the effect
specified in the individual option agreement as determined by the Committee.
RESTRICTED STOCK
The Committee is authorized to sell Restricted Stock to participants.
Restricted Stock consists of shares of the Company's common stock and will be
sold at a price determined by the Committee, which may be substantially below
the market value of the common stock but may not, in any event, be less than the
par value of the Company's common stock. Restricted Stock will be
nontransferable and subject to a risk of forfeiture until the satisfaction of
specific conditions. The conditions will be imposed by the Committee and may be
based upon continuing employment of the participant or achievement of
pre-established performance objectives. Subject to the foregoing restrictions,
participants holding Restricted Stock will possess all rights of a stockholder
with respect to such stock. Unless the Committee determines otherwise, upon a
participant's termination of employment with the Company for any reason, all of
the participant's Restricted Stock still subject to restrictions on the date of
such termination of employment will be repurchased by the Company for the price
paid by the participant for such stock.
ADJUSTMENTS
Adjustments in the number and kind of shares issuable pursuant to Options
and the price for each share or other unit of any securities subject to
outstanding Options will be made in the event the Company's outstanding shares
of common stock are increased, decreased or exchanged for a different number or
kind of
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<PAGE> 16
shares or other securities or if additional shares of new or different shares
are distributed with respect to such shares of common stock whether through
merger, consolidation, the sale of all or substantially all of the property or
assets of the Company, recapitalization, reorganization, reclassification, stock
dividend, stock split, reverse stock split or other distribution. The Committee
has discretion under the Plan to include provisions in any Options that upon the
occurrence of certain events, including a change in control (as defined by the
Committee), any outstanding Options, not previously exercisable, shall
immediately become exercisable in their entirety, notwithstanding any of the
other provisions of the option. Similar discretion is given to the Committee
respecting the termination of restrictions applying to the grant of Restricted
Stock.
AMENDMENT
The Committee may at any time amend, suspend or terminate the Plan,
provided that such amendment, suspension or termination complies with all
applicable state and federal requirements and requirements of any stock exchange
on which the stock is then listed, including any applicable requirement that the
Plan or an amendment to the Plan be approved by the shareholders of the Company.
No such amendment or revision shall, unless appropriate shareholder approval of
such amendment or revision is obtained, increase the maximum number of shares in
the aggregate that may be sold pursuant to Options granted under the Plan,
except as permitted under the Plan, or change the minimum purchase price of
incentive stock options set forth in the Plan, or increase the maximum term of
incentive stock options provided for in the Plan, or permit Options to be
granted to anyone other than as provided in the Plan. The Committee cannot
amend, suspend or terminate the Plan without the consent of the affected
participants if such action would adversely affect outstanding Options.
FEDERAL INCOME TAX CONSEQUENCES
NON-QUALIFIED STOCK OPTIONS
A participant receiving a non-qualified option under the Plan does not
recognize taxable income on the date the option is granted, assuming (as is
usually the case with options of this type) that the option does not have a
readily ascertainable fair market value at the time it is granted. However, the
participant must generally recognize ordinary income at the time the
non-qualified option is exercised in the amount of the difference between the
option exercise price and the fair market value of the common stock on the
exercise date (special rules apply if the sale of such stock would subject the
participant to potential liability under Section 16(b) of the Securities
Exchange Act of 1934, as amended). The amount of ordinary income recognized by a
participant is deductible by the Company in the year that the income is
recognized and will be subject to income tax withholding.
INCENTIVE STOCK OPTIONS
A participant who purchases incentive stock options under the Plan does not
recognize taxable income on the date the option is granted or exercised.
Generally, the participant will be taxed at the capital gains rate when the
acquired stock is sold and the Company is not allowed any deduction for
compensation paid. However, if the option holder disposes of shares of common
stock acquired pursuant to the exercise of an incentive stock option granted
pursuant to the Plan within two years of the granting of the incentive stock
option or within one year of the exercise of the incentive stock option, the
amount of ordinary income recognized by the participant is deductible by the
Company in the year the income is recognized and will be subject to income tax
withholding.
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<PAGE> 17
RESTRICTED STOCK
A participant who purchases Restricted Stock will generally recognize
ordinary income at the time the Restricted Stock is no longer subject to a
substantial risk of forfeiture or becomes transferable free of such risk,
whichever occurs earlier. Nevertheless, a participant may elect within thirty
(30) days of purchasing the Restricted Stock to recognize ordinary income as of
the date of such purchase. The amount includable in income is equal to the
excess of the fair market value of the Restricted Stock as of the date ordinary
income is recognized over the amount paid for the Restricted Stock. This amount
is taxable to the participant as compensation income, is deductible by the
Company in the year the income is recognized and will be subject to income tax
withholding.
REQUIRED APPROVAL
The affirmative vote of the holders of a majority of the shares of common
stock of the Company present and voting at the meeting is required to approve
the Plan. The Board proxy holders will vote all proxies received to approve the
Plan, unless otherwise instructed. The Board of Directors recommends that
shareholders vote FOR the approval of the Plan.
COMMITTEES AND MEETINGS OF THE BOARD OF DIRECTORS
The Company's Board of Directors held six meetings during fiscal 1994. Each
director attended at least 80% of the meetings of the Board of Directors and the
committees on which he served except for Mr. Craig who attended four of the six
Board of Directors' meetings and one of the two meetings of the Compensation
Committee.
The Board of Directors also has standing committees: an Executive
Committee, an Audit Committee, a Compensation Committee, and a Nominating
Committee. The Executive Committee is composed of Messrs. Williams and Jaffe and
held twelve meetings during fiscal 1994. The Executive Committee exercises to a
limited extent the authority of the Board of Directors between meetings of the
Board. The Audit Committee consists of Messrs. Cost, Troy and Rosenberg and held
two meetings during fiscal 1994. The Audit Committee reviews periodic financial
statements of the Company, reviews the independent accountants' scope of
engagement, performance and fees, and reviews the adequacy of the Company's
financial control procedures. The Compensation Committee is composed of Messrs.
Cost, Craig, Troy and Rosenberg and during fiscal 1994 held two meetings. Its
function is to review and recommend remuneration arrangements for various key
executives and various benefit plans, including the stock option plans, in which
officers and employees may participate. Messrs. Cost, Troy and Rosenberg are
members of the Nominating Committee which was established in March 1993. The
Nominating Committee held no meetings during fiscal 1994. Its function is to
recommend individuals to be members of the Board of Directors.
ANNUAL REPORT ON FORM 10-K
The Company will provide, without charge, a copy of the Company's Annual
Report on Form 10-K filed with the Securities and Exchange Commission for the
year ended June 30, 1994 upon the written request of any shareholder. This
request should be directed to Mr. Tracy A. Edwards, Vice President and Chief
Financial Officer, Bell Industries, Inc., 11812 San Vicente Boulevard, Los
Angeles, California 90049-5069.
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<PAGE> 18
SHAREHOLDER PROPOSALS
If a shareholder wishes to have a proposal printed in the Proxy Statement
to be used in connection with the Company's next Annual Meeting of Shareholders,
tentatively scheduled for May 2, 1995, such a proposal must be received by the
Company at its corporate office prior to December 22, 1994.
MISCELLANEOUS
Price Waterhouse has been the Company's independent accountants for a
number of years and has been selected to continue in such capacity for the
current fiscal year. It is anticipated that a representative from Price
Waterhouse will attend the Annual Meeting of Shareholders, will be available to
answer questions, and will be afforded the opportunity to make any statements
the representative desires to make.
The Board of Directors knows of no other matters that are likely to come
before the meeting. If any such matters should properly come before the meeting,
however, it is intended that the persons named in the accompanying form of proxy
will vote such proxy in accordance with their best judgment on such matters. The
Company's Bylaws require that, for other business to be properly brought before
an annual meeting by a shareholder, the Company must have received written
notice thereof not less than 60 nor more than 90 days prior to the annual
meeting (or, if less than 70 days notice or other public disclosure of the date
of the annual meeting is given, not later than 10 days after the earlier of the
date notice was mailed or public disclosure of the date was made). The notice
must set forth (a) a brief description of the business proposed to be brought
before the annual meeting, (b) the shareholder's name and address, (c) the
number of shares beneficially owned by such shareholder as of the date of the
shareholder's Notice, and (d) any financial interest of such shareholder in the
proposal. Similar information is required with respect to any other shareholder,
known by the shareholder giving notice, supporting the proposal. Further, if the
proposal includes the nomination of a person to become a director which person
was not set forth in a proxy statement submitted to all shareholders pursuant to
the federal proxy rules, such proposal shall contain all the information
specified by such rules.
By Order of the Board of Directors
JOHN J. COST
Secretary
September 19, 1994
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<PAGE> 19
BELL INDUSTRIES, INC.
1994 STOCK OPTION PLAN
1. PURPOSE
The purpose of this 1994 Stock Option Plan (the "Plan") of Bell Industries,
Inc. a Delaware corporation (the "Company"), is to secure for the Company and
its shareholders the benefits arising from stock ownership by selected
executives and other key employees of the Company or its subsidiaries and such
other persons (other than Directors who are members of the Compensation
Committee) as the Compensation Committee (see "Administration" below), may from
time to time determine. The Plan will provide a means whereby (i) such employees
may purchase shares of the Common Stock of the Company pursuant to options that
will qualify as "incentive stock options" under Section 422A of the Internal
Revenue Code of 1986, as amended (the "Code"), (ii) such employees or other
persons (other than the Directors who are members of the Compensation Committee)
may purchase shares of the Common Stock of the Company pursuant to
"non-incentive" or "non-qualified" stock options, and (iii) such employees may
purchase restricted Common Stock ("Restricted Stock") of the Company issued
pursuant to the Plan.
2. ADMINISTRATION
The Plan shall be administered by the Compensation Committee (the
"Committee") appointed by the Board of Directors of the Company consisting of
three of more directors of the Company, all of whom shall be "disinterested
persons" (within the meaning of Rule 16b-3 of the Securities Exchange Act of
1934, as amended (the "Exchange Act")), to whom administration of the Plan has
been duly delegated. No member of the Committee shall be eligible for grants or
allocations to acquire equity securities of the Company under the Plan or any
other plan of the Company or its affiliates for a period of one year before or
for one year after membership on the Committee (or for such other period as may
be required from time to time by Rule 16b-3 of the Exchange Act). Any action of
the Committee with respect to administration of the Plan shall be taken by a
majority votes or written consent of its members.
Subject to the provisions of the Plan, the Committee shall have authority
to interpret the Plan, (ii) to define the terms used herein, (iii) to prescribe,
amend and rescind rules and regulations relating to the Plan, (iv) to determine
the individuals to whom and the time or times at which options shall be granted,
whether such options will be incentive stock options or non-qualified stock
options, the number of shares to be subject to each option, the option price,
the number of installments, if any, in which each option may be exercised, and
the duration of each option, (v) to determine who shall receive Restricted Stock
and the number of shares of Restricted Stock offered to any participant, (vi) to
approve and determine the duration of leaves of absence that may be granted to
participants without constituting a termination of their employment under the
Plan, and (vii) to make all other determinations necessary or advisable for the
administration of the Plan. All determinations and interpretations made by the
Committee shall be binding and conclusive on all participants in the Plan and
their legal representatives and beneficiaries.
3. SHARES SUBJECT TO THE PLAN
Subject to adjustment as provided in paragraph 16 hereof, the shares to be
offered under the Plan shall consist of the Company's authorized but unissued
Common Stock, and the aggregate amount of such stock that may be issued upon
exercise of all options or may be issued as Restricted Stock under the Plan
shall not exceed 500,000 shares. If any option granted under the Plan shall
expire or terminate for any reason without having been exercised in full, the
unpurchased shares subject thereto, and any shares of Restricted Stock that
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shall be repurchased by the Company prior to the lapse of the related
restrictions, shall again be available for options to be granted, and shares to
be issued as Restricted Stock, under the Plan.
4. ELIGIBILITY AND PARTICIPATION
All executive and other key employees of the Company or of any subsidiary
corporation (as defined in Section 425(f) of the Code) shall be eligible for
selection to participate in the Plan. Other non-employees (excluding Committee
members for the periods specified in paragraph 2 hereof but including
non-Committee member directors who are not regular employees of the Company),
may participate in the Plan with respect to non-qualified stock options, but
only selected executive and other key employees of the Company or a subsidiary
may receive incentive stock options under the Plan. An individual who has been
granted an option may, if such individual is otherwise eligible, be granted an
additional option or options if the Committee shall so determine, subject to the
other provisions of the Plan. No incentive stock option may be granted to any
person who, at the time the incentive stock option is granted, owns shares of
the Company's outstanding Common Stock possessing more than ten percent (10%) of
the total combined voting power of all classes of stock of the Company (and of
its affiliates if applicable), unless the exercise price of such option is at
least 110 percent (110%) of the fair market value of the stock subject to the
option and such option by its terms is not exercisable after the expiration of
five years from the date such option is granted.
The aggregate fair market value (determined at the time the Option is
granted) of the stock with respect to which incentive stock options (whenever
granted and including the Substitute Options) are exercisable for the first time
by an Optionee during any calendar year (under all incentive stock option plans
of the Company and its subsidiaries) shall not exceed $100,000.
All options granted under the Plan shall be granted within ten years from
November 1, 1994.
5. DURATION OF OPTIONS
Each option and all rights associated therewith shall expire on such date
as the Committee may determine, and shall be subject to earlier termination as
provided herein; provided, however, that in the case of incentive stock options,
each incentive stock option and all rights associated therewith shall expire in
any event within ten (10) years of the date on which such incentive stock option
is granted.
6. PURCHASE PRICE
The purchase price of the stock covered by each option shall be determined
by the Committee, but in the case of incentive stock options, shall not be less
than one hundred percent (100%) of the fair market value of such stock on the
date the incentive stock option is granted. The purchase price of the shares
upon exercise of an option shall be paid in full at the time of exercise (i) in
cash or by check payable to the order of the Company, or (ii) by delivery of
shares of Common Stock of the Company owned by (including shares issued upon
exercise of the option) the option holder, or any combination thereof. Shares of
Common Stock used to satisfy the exercise price of an option shall be valued at
their fair market value determined (in accordance with paragraph 8 hereof) as of
the close of business on the date of exercise (or if such date is not a business
day, as of the close of the business day immediately preceding such date).
7. EXERCISE OF OPTIONS
Each option granted under this Plan shall be exercisable in such
installments during the period prior to its expiration date as the Committee
shall determine, but in no event shall any option be exercisable for at least
six months after grant except in the case of the death or disability of the
option holder; provided that, unless otherwise determined by the Committee, if
the option holder shall not in any given installment period
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purchase all of the shares that the option holder is entitled to purchase in
such installment period, then the option holder's right to purchase any shares
not purchased in such installment period shall continue until the expiration
date or sooner termination of the option holder's option. No option may be
exercised for a fraction of a share and no partial exercise of any option may be
for less than one hundred (100) shares.
8. FAIR MARKET VALUE OF COMMON STOCK
The fair market value of a share of Company Common Stock shall be
determined under the Plan by reference to the closing price on the New York
Stock Exchange (or other principal stock exchange on which such shares are then
listed) or, if such shares are not then listed on such exchange (or other
principal stock exchange), by reference to the closing price (if a National
Market Issue) or the mean between the bid and asked price (if other
over-the-counter issue) of a share as supplied by the National Association of
Securities Dealers through NASDAQ (or its successor in function), in each case
as reported by The Wall Street Journal, for the date on which the option is
granted, or if such date is not a business day, for the business day immediately
preceding such date (or, if for any reason no such price is available, in such
other manner as the Committee may deem appropriate to reflect the then fair
market value thereof).
9. WITHHOLDING TAX
Upon (i) the disposition by an employee or other person of shares of Common
Stock acquired pursuant to the exercise of an incentive stock option granted
pursuant to the Plan within two years of the granting of the incentive stock
option or within one year after exercise of the incentive stock option, or (ii)
the exercise of "non-incentive" or "non-qualified" option, the Company shall
have the right to require such employee or such other person to pay the Company
the amount of any taxes that the Company may be required to withhold with
respect to such shares.
10. NONTRANSFERABILITY
An option granted under the Plan shall, by its terms, be nontransferable by
the option holder, either voluntarily or by operation of law, otherwise than by
will or the laws of descent and distribution, and shall be exercisable during
option holder's lifetime only by the option holder, regardless of any community
property interest therein of the spouse of the option holder, or such spouse's
successors in interest. If the spouse of the option holder shall have acquired a
community property interest in such option, the option holder, or the option
holders permitted successors in interest, may exercise the option on behalf of
the spouse of the option holder or such spouse's successors in interest.
11. HOLDING STOCK AFTER EXERCISING OPTION
At the discretion of the Committee, any option may provide that the option
holder, by accepting such option, represents and agrees, for the option holder
and the option holder's permitted transferees (by will or the laws of descent
and distribution), that none of the shares purchased upon exercise of the option
will be acquired with a view to any sale, transfer or distribution of said
shares in violation of the Securities Act of 1933, as amended (the "Act"), and
the rules and regulations promulgated thereunder, or any applicable state "blue
sky" laws, and the person entitled to exercise the same shall furnish evidence
satisfactory to the Company (including a written and signed representation) to
that effect in form and substance satisfactory to the Company, including an
indemnification of the Company in the event of any violation of the Act or state
blue sky law by such person.
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12. TERMINATION OF EMPLOYMENT
If a holder of an incentive stock option ceases to be employed by the
Company or one of its subsidiaries for any reason other than the option holder's
death or permanent disability (within the meaning of Section 105(d)(4) of the
Code), the option holder's incentive stock option shall be exercisable for a
period of three (3) months after the date option holder ceases to be an employee
of the Company or such subsidiary (unless by its terms it sooner expires) to the
extent exercisable on the date of such cessation of employment and shall
thereafter expire and be void and of no further force or effect. A leave of
absence approved in writing by the Committee shall not be deemed a termination
of employment for the purposes of this paragraph 12, but no option may be
exercised during any such leave of absence, except during the first three (3)
months thereof. Termination of employment or other relationship with the Company
by the holder of a non-qualified stock option will have the effect specified in
the individual option agreement, as determined by the Committee.
13. DEATH OR PERMANENT DISABILITY OF OPTION HOLDER
If the holder of an incentive stock option dies or becomes permanently
disabled while option holder is employed by the Company or one of its
subsidiaries, option holder's option shall expire one (1) year after the date of
such death or permanent disability unless by its terms it sooner expires. During
such period after death, such option may, to the extent that it remained
unexercised (but exercisable by the option holder according to such option's
terms) on the date of such death, be exercised by the person or persons to whom
the option holder's rights under the option shall pass by option holder's will
or by the laws of descent and distribution. The death or disability of a holder
of a non-qualified stock option will have the effect specified in the individual
option agreement as determined by the Committee.
14. RESTRICTED STOCK
(1) Award of Restricted Stock
The Committee may grant awards of Restricted Stock Common Stock of the
Company which is nontransferable and subject to risks of forfeiture (as defined
below) to employees. The Committee shall determine the purchase price, the terms
of payment of the purchase price, the restrictions upon the Restricted Stock,
and when such restrictions shall lapse. The terms and conditions of the
Restricted Stock shall be set forth in a written instrument.
(2) Conditions of Restricted Stock
All shares of Restricted Stock (including shares received as a result of
stock dividends, stock splits or other forms of recapitalization) sold pursuant
to the Plan will be subject to the following conditions:
(i) The shares may not be sold, transferred or otherwise alienated or
hypothecated until the restrictions are removed or expire.
(ii) The holders of Restricted Stock shall enter into an escrow
agreement providing that the certificates representing Restricted Stock
sold to such holder pursuant to the Plan will remain in the physical
custody of an escrow holder until all restrictions are removed or expire.
(iii) Each certificate representing Restricted Stock sold to the
holder of such stock pursuant to the Plan will bear a legend making
appropriate reference to the restrictions imposed.
(iv) Such other conditions as the Committee may deem advisable,
including, without limitation, restrictions under the Act.
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(3) Lapse of Restrictions
The restrictions imposed upon Restricted Stock under Section 14(2) above
will lapse in accordance with such conditions as are determined by the Committee
and set forth in a written instrument describing the terms of the sale of the
Restricted Stock.
(4) Rights of Option Holder
Subject to the provisions of Section (14)2 above, the holder of Restricted
Stock will have all rights of a stockholder with respect to the Restricted Stock
sold to such a holder, including the right to vote the shares and receive all
dividends and other distributions paid or made with respect thereto.
(5) Termination of Employment
Unless the Committee in its discretion determines otherwise, upon an
employee's termination of employment for any reason, all of the employee's
Restricted Stock, if any, remaining subject to restrictions on the date of such
termination of employment shall be repurchased by the Company at the purchase
price.
15. PRIVILEGES OF STOCK OWNERSHIP
No person entitled to exercise any option granted under the Plan shall have
any of the rights or privileges of a shareholder of the Company in respect of
any shares of stock issuable upon exercise of such option until certificates
representing such shares shall have been issued and delivered. No shares shall
be issued and delivered upon the exercise of any option unless and until there
shall have been full compliance with all applicable requirements of the Act
(whether by registration or satisfaction of exemption conditions), all
applicable listing requirements of any national securities exchange on which
shares of the same class are then listed and any other requirements of law or of
any regulatory bodies having jurisdiction over such issuance and delivery.
16. ADJUSTMENTS
If the outstanding shares of the Common Stock of the Company are increased,
decreased, changed into or exchanged for a different number or kind of shares or
securities of the Company through reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split or other
similar transaction, an appropriate and proportionate adjustment shall be made
in the maximum number and kind of shares as to which options may be granted
under this Plan. A corresponding adjustment changing the number or kind of
shares allocated to unexercised options or portions thereof, which shall have
been granted prior to any such change, shall likewise be made. Any such
adjustment in the outstanding options shall be made without change in the
aggregate purchase price applicable to the unexercised portion of the option but
with a corresponding adjustment in the price for each share or other unit of any
security covered by the option.
Upon the dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation of the Company with one or more
corporations as a result of which the Company is not the surviving corporation,
or upon a sale of substantially all the property of the Company, the Plan shall
terminate, and all options and stock appreciation rights theretofore granted
hereunder shall terminate; provided, however, that notwithstanding the
foregoing, the Committee shall provide in writing in connection with such
transaction for any or all of the following alternatives (separately or in
combinations): (i) for the options theretofore granted more than six months
before such transaction to become immediately exercisable notwithstanding the
provisions of paragraph 7 hereof, except the last sentence thereof; (ii) for the
assumption by the successor corporation of the options theretofore granted or
the substitution by such corporation for such options of new options covering
the stock of the successor corporation, or a parent or subsidiary thereof, with
appropriate adjustments as to the
A-5
<PAGE> 24
number and kind of shares and prices; (iii) for the continuance of the Plan by
such successor corporation in which event the Plan and the options theretofore
granted shall continue in the manner and under the terms so provided; or (iv)
for the payment in cash or stock in lieu of and in complete satisfaction of such
options.
Adjustments under this paragraph 16 shall be made by the Committee, whose
determination as to what adjustments shall be made, and the extent thereof,
shall be final, binding and conclusive. No fractional shares of stock shall be
issued under the Plan on any such adjustment.
At the discretion of the Committee, any option may contain provisions to
the effect that upon the happening of certain events, including a change in
control (as defined by the Committee in the option) of the Company, any
outstanding options not theretofore exercisable shall immediately become
exercisable in their entirety, notwithstanding any of the other provisions of
the option.
17. AMENDMENT AND TERMINATION OF PLAN
The Committee may at any time suspend or terminate the Plan. The Committee
may also at any time amend or revise the terms of the Plan, provided that no
such amendment or revision shall, unless appropriate shareholder approval of
such amendment or revision is obtained, increase the maximum number of shares in
the aggregate that may be sold pursuant to options granted under the Plan,
except as permitted under the provisions of paragraph 16, or change the minimum
purchase price of incentive stock options set forth in paragraph 6, or increase
the maximum term of incentive stock options provided for in paragraph 5, or
permit the granting of options to anyone other than as provided in paragraph 4.
Notwithstanding the foregoing, no amendment, suspension or termination of
the Plan shall, without specific action of the Committee and the consent of the
option holder, in any adverse way modify, amend, alter or impair any rights or
obligations under any option theretofore granted under the Plan.
18. EFFECTIVE DATE OF PLAN
Effectiveness of the Plan is subject to (i) listing of the Common Stock
subject to the Plan on the New York Stock Exchange and (ii) approval by the
holders of the outstanding voting stock of the Company as hereinafter provided
within twelve months from the date the Plan is adopted by the Board of
Directors. The Plan shall be deemed approved by the holders of the outstanding
voting stock of the Company by (i) the affirmative vote of the holders of a
majority of the voting shares of the Company represented and voting at a duly
held meeting at which a quorum is present or (ii) the written consent of the
holders of a majority of the outstanding voting shares of the Company. Any
options granted under the Plan prior to obtaining such shareholder approval or
listing of the Common Stock on said stock exchange shall be granted under the
conditions that the options so granted: (1) shall not be exercisable prior to
such approval and listing, and (2) shall become null and void if such
shareholder approval and listing are not obtained.
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<PAGE> 25
PROXY BELL INDUSTRIES, INC.
11812 SAN VINCENTE BOULEVARD
LOS ANGELES, CALIFORNIA 90049
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Theodore Williams and Bruce M. Jaffe, and each
of them, as Proxies, each with the power to appoint his substitute, and hereby
authorizes each of them to represent and to vote as designated below, all the
shares of common stock of Bell Industries, Inc. held of record by the
undersigned on September 16, 1994, at the Annual Meeting of Shareholders to be
held on November 1, 1994 or any adjournment thereof.
Please mark, sign, date and return the proxy
card promptly using the enclosed envelope.
<PAGE> 26
<TABLE>
<CAPTION>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE LISTED PROPOSALS.
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY. / /
___________________________________________________________________________________________________________________________________
<S> <C> <C> <C>
FOR WITHHOLD
1. ELECTION OF DIRECTORS: all nominees AUTHORITY
J. Cost, A. Craig, listed below to vote
G. Graham, B. Jaffe, (except as for all
C. Troy, M. Rosenberg, marked nominees For Against Abstain
T. Williams to the / / 2. The adoption of the 1994 Stock Option Plan. / / / / / /
(INSTRUCTION: To withhold contrary
authority to vote for an below) 3. In their discretion, the Proxies are authorized to vote upon
individual nominee, write / / such other business as may properly come before the meeting.
that nominee's name on the
space provided below.) This proxy when properly executed will be voted in the manner
_____________________________ directed herein by the undersigned shareholder. If no direction
is made, the proxy will be voted for the election of all
nominees as directors and for the adoption of the 1994 Stock
Option Plan.
When shares are held by joint tenants, both should sign. When
signing as attorney, executor, administrator, trustee or
guardian, please give full title as such. If a corporation,
please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership
name by authorized person.
Dated: ____________________________________________________, 1994
_________________________________________________________________
Signature
_________________________________________________________________
Signature (if held jointly)
Please sign exactly as name appears hereon.
</TABLE>
