SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 3)1
Bell Industries, Inc.
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(Name of issuer)
COMMON STOCK
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(Title of class of securities)
078 107 109
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(CUSIP number)
STEVEN WOLOSKY, ESQ.
OLSHAN GRUNDMAN FROME & ROSENZWEIG LLP
505 Park Avenue
New York, New York 10022
(212) 753-7200
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(Name, address and telephone number of person
authorized to receive notices and communications)
January 5, 1999
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(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box
o.
Note. six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom copies
are to be sent.
(Continued on following pages)
(Page 1 of 28 Pages)
(Exhibit Index on Page 12)
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1 The remainder of this cover page shall be filled out for a
reporting person's initial filing on this form with respect to the subject class
of securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page
shall not be deemed to be "filed" for the purpose of Section 18 of the
Securities Exchange Act of 1934 or otherwise subject to the liabilities of that
section of the Act but shall be subject to all other provisions of the Act
(however, see the Notes).
<PAGE>
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CUSIP No. 078 107 109 13D Page 2 of 28 Pages
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================================================================================
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
STEEL PARTNERS II, L.P.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
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6 CITIZENSHIP OR PLACE OR ORGANIZATION
DELAWARE
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NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 1,110,210
OWNED BY --------------------------------------------------------------------
EACH 8 SHARED VOTING POWER
REPORTING
PERSON WITH -0-
--------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
1,110,210
--------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
1,110,210
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.7%
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14 TYPE OF REPORTING PERSON*
PN
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<PAGE>
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CUSIP No. 078 107 109 13D Page 3 of 28 Pages
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================================================================================
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
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WARREN LICHTENSTEIN
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
00
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
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6 CITIZENSHIP OR PLACE OR ORGANIZATION
USA
--------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 1,110,210
OWNED BY --------------------------------------------------------------------
EACH 8 SHARED VOTING POWER
REPORTING
PERSON WITH - 0 -
--------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
1,110,210
--------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
- 0 -
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
1,110,210
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.7%
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14 TYPE OF REPORTING PERSON*
IN
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<PAGE>
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CUSIP No. 078 107 109 13D Page 4 of 28 Pages
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================================================================================
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
SANDERA PARTNERS, L.P.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
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6 CITIZENSHIP OR PLACE OR ORGANIZATION
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TEXAS
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NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 100,000
OWNED BY ----------------------------------------------------------------
EACH
REPORTING
PERSON WITH
8 SHARED VOTING POWER
----------------------------------------------------------------
-0-
9 SOLE DISPOSITIVE POWER
100,000
----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
100,000
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.1%
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14 TYPE OF REPORTING PERSON*
PN
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<PAGE>
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CUSIP No. 078 107 109 13D Page 5 of 28 Pages
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================================================================================
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
NEWCASTLE PARTNERS, L.P.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
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6 CITIZENSHIP OR PLACE OR ORGANIZATION
TEXAS
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NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 3,000
OWNED BY ----------------------------------------------------------------
EACH
REPORTING
PERSON WITH
8 SHARED VOTING POWER
-0-
----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
3,000
----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
-0-
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
3,000
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
.03%
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14 TYPE OF REPORTING PERSON*
PN
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<PAGE>
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CUSIP No. 078 107 109 13D Page 6 of 28 Pages
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================================================================================
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
MARK E. SCHWARZ
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
00
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e) / /
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6 CITIZENSHIP OR PLACE OR ORGANIZATION
USA
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NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 103,000
OWNED BY ----------------------------------------------------------------
EACH
REPORTING
PERSON WITH
8 SHARED VOTING POWER
- 0 -
-----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
103,000
-----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
- 0 -
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
103,000
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.1%
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14 TYPE OF REPORTING PERSON*
IN
================================================================================
<PAGE>
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CUSIP No. 078 107 109 13D Page 7 of 28 Pages
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The following constitutes the Amendment No 3 to the Schedule 13D filed
by the undersigned (the "Amendment No. 3"). This Amendment No. 3 amends the
Schedule 13D as specifically set forth.
Item 2 is hereby amended and restated in its entirety as follows:
Item 2. Identity and Background.
(a) This Statement is filed by Steel Partners II, L.P., a
Delaware limited partnership ("Steel Partners II"), Warren G. Lichtenstein,
Sandera Partners, L.P., a Texas limited partnership ("Sandera"), Newcastle
Partners, L.P., a Texas limited partnership ("Newcastle") and Mark E. Schwarz.
Steel Partners, L.L.C., a Delaware limited liability company
("Partners LLC"), is the general partner of Steel Partners II. The sole
executive officer and managing member of Partners LLC is Warren G. Lichtenstein,
who is Chairman of the Board, Chief Executive Officer and Secretary.
Sandera Capital, L.L.C. ("Sandera L.L.C."), a Texas limited
liability company is the general partner of Sandera Capital Management, L.P.,
("SCM") a Texas limited partnership. SCM is the general partner of Sandera, a
Texas limited partnership. Newcastle is a Texas limited partnership. Mark E.
Schwarz is the general partner of Newcastle. The principal business of Sandera
L.L.C., SCM, Sandera and Newcastle is the purchase, sale, exchange, acquisition
and holding of investment securities. Mark E. Schwarz is the Vice President and
manager of Sandera L.L.C. and the sole general partner of Newcastle.
Each of the foregoing are referred to as a "Reporting Person"
and collectively as the "Reporting Persons". By virtue of his position with
Steel Partners II, Mr. Lichtenstein has the power to vote and dispose of the
Issuer's Shares owned by Steel Partners II. By virtue of his position with
Sandera and Newcastle, Mark E. Schwarz has the power to vote and dispose of the
Issuer's shares owned by Sandera and Newcastle. Accordingly, the Reporting
Persons are hereby filing a joint Schedule 13D.
(b) The principal business address of Steel Partners and
Warren Lichtenstein is 150 East 52nd Street, 21st Floor, New York, New York
10022.
The principal business address of Sandera L.L.C., SCM, Sandera
and Mark Schwarz is 1601 Elm Street, Suite 4000, Dallas, Texas 75201.
The principal business address of Newcastle is 4020 Windsor
Avenue, Dallas, Texas 75205.
(c) The principal business of Steel Partners II is investing
in the securities of microcap companies. The principal occupation of Mr.
Lichtenstein is investing in the securities of microcap companies.
The principal business of Sandera and Newcastle is
the purchase, sale, exchange, acquisition and holding of investment securities.
The principal occupation of Mr. Schwarz is the purchase, sale, exchange,
acquisition and holding of investment securities.
<PAGE>
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CUSIP No. 078 107 109 13D Page 8 of 28 Pages
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(d) No Reporting Person has, during the last five years, been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors).
(e) No Reporting Person has, during the last five years, been
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
(f) Mr. Lichtenstein and Mr. Schwarz are citizens of the
United States of America.
Item 3 is hereby amended and restated in its entirety as follows:
Item 3. Source and Amount of Funds.
The aggregate purchase price of the 1,110,210 Shares of Common Stock
owned by Steel Partners II is $11,861,384. The Shares of Common Stock owned by
Steel Partners II were acquired with partnership funds.
The aggregate purchase price of the 100,000 Shares of Common Stock
owned by Sandera is $1,095,449. The Shares of Common Stock owned by Sandera were
acquired with partnership funds.
The aggregate purchase price of the 3,000 Shares of Common Stock owned
by Newcastle is $34,493. The Shares of Common Stock owned by Newcastle were
acquired with partnership funds.
Item 4 is hereby amended to include the following:
Item 4. Purpose of Transaction.
On January 8, 1999 Steel Partners II delivered a letter to the Issuer,
a copy of which is attached hereto and incorporated herein by reference, to
nominate (the "Nomination Letter") Warren G. Lichtenstein, Robert Frankfurt,
Mark E. Schwarz and Steven Wolosky, as set forth therein, to the Issuer's Board
of Directors at the Annual Meeting of Shareholders of the Issuer scheduled to be
held on May 11, 1999.
On January 8, 1999, the Reporting Persons entered into a Joint Filing
Agreement, a copy of which is attached hereto and incorporated herein by
reference, reflecting their agreement to form a group and, among other things,
to seek to nominate the nominees set forth above to the Board of Directors of
the Issuer. On or about January 8, 1999, Steel Partners II served the Issuer
with the Nomination Letter, which the Reporting Persons believe satisfies the
notice requirements set forth in Section 2.10 of the Bylaws of the Issuer as to
the nomination of such persons for election to the Board of Directors. The
Reporting Persons may file a Preliminary Proxy Solicitation Statement with the
Securities and Exchange Commission in order to solicit proxies from the
shareholders of the Issuer in order elect its nominees to the Issuer's Board of
Directors at the 1999 Annual Meeting. A copy of each of the Joint Filing
<PAGE>
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CUSIP No. 078 107 109 13D Page 9 of 28 Pages
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Agreement and Nomination Letter are filed as exhibits to this Schedule 13D and
incorporated herein by reference.
Upon final approval from the Commission for its proxy solicitation
materials in the event such materials are filed, the Reporting Persons would
commence their solicitation of shareholders of the Issuer.
No Reporting Person has any present plan or proposal which would relate
to or result in any of the matters set forth in subparagraphs (a) - (j) of Item
4 of Schedule 13D except as set forth herein or such as would occur upon
completion of any of the actions discussed above. Depending on various factors
including, without limitation, the Issuer's financial position and investment
strategy, the price levels of the Common Stock, conditions in the securities
markets and general economic and industry conditions, each of the Reporting
Persons may in the future take such actions with respect to its investment in
the Issuer as it deems appropriate including, without limitation, purchasing
additional Shares of Common Stock or selling some or all of its Shares or to
change its intention with respect to any and all matters referred to in Item 4.
Except as set forth above, the Reporting Persons have no agreements or
understandings between themselves with respect to the voting or disposition of
the Common Stock of the Issuer.
Item 5 is hereby amended and restated in its entirety as follows:
Item 5. Interest in Securities of the Issuer.
(a) The aggregate percentage of shares of Common Stock
reported owned by each person named herein is based upon 9,488,306 shares
outstanding, which is the total number of shares of Common Stock outstanding as
reported in the Issuer's Quarterly Report on Form 10-Q for the fiscal quarter
ended September 30, 1998.
As of the close of business on January 8, 1998, Steel Partners
II beneficially owns 1,110,210 shares of Common Stock, constituting
approximately 11.7% of the shares of Common Stock outstanding. Mr. Lichtenstein
beneficially owns 1,110,210 shares of Common Stock, representing approximately
11.7% of the shares of Common Stock outstanding. Mr. Lichtenstein has sole
voting and dispositive power with respect to the 1,110,210 shares of Common
Stock owned by Steel Partners II by virtue of his authority to vote and dispose
of such shares. All of such shares of Common Stock were acquired in open-market
transactions.
As of the close of business on January 8, 1998, Sandera
beneficially owns 100,000 Shares of Common Stock, constituting approximately
1.1% of the shares outstanding, and Newcastle beneficially owns 3,00 Shares of
Common Stock, constituting approximately .03% of the shares outstanding. Mr.
Schwarz has sole voting and dispositive power with respect to the 103,000 Shares
owned by Sandera and Newcastle by virtue of his authority to vote and dispose of
such Shares. All of such Shares were acquired in open-market transactions.
(b) By virtue of his position with Steel Partners II, Mr.
Lichtenstein has the sole power to vote and dispose of the Shares reported in
this Schedule 13D and beneficially owned by Steel Partners II.
By virtue of his position with Sandera and Newcastle, Mr.
Schwarz has the sole power to vote and dispose of the Shares reported in this
Schedule 13D and beneficially owned by Sandera and Newcastle.
<PAGE>
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CUSIP No. 078 107 109 13D Page 10 of 28 Pages
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(c) Schedule A annexed hereto lists all transactions in the
Issuer's Common Stock in the last sixty days by the Reporting Persons unless
otherwise reported on a prior Schedule 13D.
(d) No person other than the Reporting Persons is known to
have the right to receive, or the power to direct the receipt of dividends from,
or proceeds from the sale of, such Shares of the Common Stock.
(e) Not applicable.
Item 6 is amended in its entirety to read as follows:
Item 6. Contracts, Arrangements, Understandings or Relationships With
Respect to Securities of the Issuer.
On January 8, 1999 the Reporting Persons entered into a Joint
Filing Agreement, reflecting their agreement to form a group and, among other
things, to seek to elect Warren G. Lichtenstein, Robert Frankfurt, Mark E.
Schwarz and Steven Wolosky to the Board of Directors of the Issuer. A copy of
the Joint Filing Agreement is filed as an exhibit to this Schedule 13D and
incorporated herein by reference.
Other than as described herein, there are no contracts,
arrangements or understandings among the Reporting Persons, or between the
Reporting Persons and any other Person, with respect to the securities of the
Issuer.
Item 7 is hereby amended in its entirety as follows:
Item 7. Material to be Filed as Exhibits.
1. Joint Filing Agreement between Steel Partners and
Warren G. Lichtenstein (previously filed).
2. Joint Filing Agreement between Steel Partners II,
L.P., Warren Lichtenstein, Sandera Partners, L.P.,
Newcastle Partners, L.P. and Mark E. Schwarz dated
January 8, 1999.
3. Director Nomination Letter from Steel Partners II,
L.P. to Bell Industries, Inc., dated January 8, 1999.
<PAGE>
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CUSIP No. 078 107 109 13D Page 11 of 28 Pages
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SIGNATURES
After reasonable inquiry and to the best of his knowledge and
belief, each of the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Dated: January 8, 1999 STEEL PARTNERS II, L.P.
By: Steel Partners, L.L.C. General
Partner
By:/s/ Warren G. Lichtenstein
--------------------------------------
Warren G. Lichtenstein
Chief Executive Officer
/s/ Warren G. Lichtenstein
-------------------------------------
WARREN G. LICHTENSTEIN
SANDERA PARTNERS, L.P.
By: Sandera Capital Management L.P.
General Partner
By: Sandera Capital, L.L.C.
General Partner
By: /s/ Mark E. Schwarz
-------------------------------------
Mark E. Schwarz
Vice President and Managing
Member
NEWCASTLE PARTNERS, L.P.
By: /s/ Mark E. Schwarz
-------------------------------------
Mark E. Schwarz
General Partner
/s/ Mark E. Schwarz
-----------------------------------------
Mark E. Schwarz
<PAGE>
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CUSIP No. 078 107 109 13D Page 12 of 28 Pages
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EXHIBIT INDEX
Exhibit Page
- ------- ----
1. Joint Filing Agreement (previously filed)
2. Joint Filing Agreement between Steel Partners, 13
Warren Lichtenstein, Sandera Partners, L.P.,
Newcastle Partners, L.P. and Mark E. Schwarz
dated January 8, 1999
3. Director Nomination Letter from Steel Partners 17
II, L.P. to Bell Industries, Inc. dated
January 8, 1999
<PAGE>
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CUSIP No. 078 107 109 13D Page 13 of 28 Pages
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JOINT FILING AGREEMENT
WHEREAS, certain of the undersigned are shareholders, direct
or beneficial, of Bell Industries, Inc. ("Bell"), a California corporation;
WHEREAS, Warren Lichtenstein and Mark E. Schwarz wish to form
a group (the "Group") in order to nominate a slate of directors to the Board of
Directors of Bell and may solicit written consents or votes to obtain a change
in the Board of Directors of Bell;
NOW, IT IS AGREED, this 8th day of January 1999, by the
parties hereto:
3. In accordance with Rule 13d-1(f)(1)(iii) under the
Securities Exchange Act of 1934, as amended, the persons named below agree to
the joint filing on behalf of each of them of statements on Schedule 13D with
respect to the Common Stock of Bell. 4. So long as this agreement is in effect,
each of the undersigned shall provide written notice to Olshan Grundman Frome
Rosenzweig & Wolosky LLP of (i) any of their purchases or sales of the Common
Stock of Bell; or (ii) any shares over which they acquire or dispose of
beneficial ownership. Notice shall be given no later than 24 hours after each
such transaction.
5. Each of Warren Lichtenstein and Mark E. Schwarz agrees to
serve as one of the Group's nominees to the Board of Directors of Bell and to
serve as a director if elected.
6. Steel Partners II, L.P. ("Steel") hereby agrees to bear all
expenses incurred in connection with the Group's nomination of persons to the
Board of Directors of Bell, including expenses incurred by any of the nominees
in a solicitation of written consents or votes by the Group. Notwithstanding the
foregoing, Steel shall not be required to reimburse any nominee or
<PAGE>
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CUSIP No. 078 107 109 13D Page 14 of 28 Pages
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party for (i) out-of-pocket expenses incurred by a nominee in the aggregate in
excess of $250 without Steel's prior written approval; (ii) the value of the
time of any nominee or party; (iii) legal fees incurred without Steel's prior
written approval; or (iv) the costs of any counsel, other than Steel's counsel,
employed in connection with any pending or threatened litigation.
7. The relationship of the parties hereto shall be limited to
carrying on the business of the Group in accordance with the terms of this
Agreement. Such relationship shall be construed and deemed to be for the sole
and limited purpose of carrying on such business as described herein. Nothing
herein shall be construed to authorize any party to act as an agent for any
other party, or to create a joint venture or partnership, or to constitute an
indemnification. Nothing herein shall restrict any party's right to purchase or
sell shares of Bell, as it deems appropriate, in its sole discretion. Nor shall
anything herein be construed to require any party to deliver a written consent
to the Group or to refrain from revoking any consent after it has been given.
8. This Agreement may be executed in counterparts, each of
which shall be deemed an original and all of which, taken together, shall
constitute but one and the same instrument, which may be sufficiently evidenced
by one counterpart.
9. In the event of any dispute arising out of the provisions
of this Agreement, the parties hereto consent and submit to the exclusive
jurisdiction of the Federal and State Courts in the State of New York.
10. Any party hereto may terminate his obligations under this
agreement at any time on 24 hours written notice to all other parties, with a
copy by fax to Steven Wolosky at Olshan Grundman Frome Rosenzweig & Wolosky LLP,
Fax No. 212 755-1467.
<PAGE>
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CUSIP No. 078 107 109 13D Page 15 of 28 Pages
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11. Each party acknowledges that Olshan Grundman Frome
Rosenzweig & Wolosky LLP shall act as counsel for both the Group and Steel.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first above written.
STEEL PARTNERS II, L.P.
150 East 52nd Street
New York, NY 10022
By: Steel Partners, L.L.C.
General Partner
By:/s/ Warren G. Lichtenstein
-------------------------------------------
Warren Lichtenstein, Managing Member
/s/ Warren G. Lichtenstein
----------------------------------------------
Warren G. Lichtenstein
<PAGE>
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CUSIP No. 078 107 109 13D Page 16 of 28 Pages
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/s/ Mark E. Schwarz
----------------------------------------------
Mark E. Schwarz
SANDERA PARTNERS, L.P.
1601 Elm Street, Suite 4000
Dallas, TX 75201
By: Sandera Capital Management, L.P.
General Partner
By: Sandera Capital, L.L.C.
General Partner
By:/s/ Mark. E. Schwarz
-------------------------------------------
Mark E. Schwarz, Vice President and
Managing Member
NEWCASTLE PARTNERS, L.P.
4020 Windsor Avenue
Dallas, TX 75205
By: /s/ Mark. E. Schwarz
-----------------------------------------
Mark E. Schwarz, General Partner
<PAGE>
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CUSIP No. 078 107 109 13D Page 17 of 28 Pages
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STEEL PARTNERS II, L.P.
150 East 52nd Street, 21st Floor
New York, New York 10022
January 8, 1999
Bell Industries, Inc.
2201 East El Segundo Boulevard
El Segundo, California 90245-4608
Attn: Corporate Secretary
Dear Sirs,
This letter shall serve to satisfy the notice requirements of
Section 2.10 of the Bylaws (the "Bylaws") of Bell Industries, Inc. (the
"Company") as to the nomination by Steel Partners II, L.P. of four nominees for
election to the Board of Directors of the Company at the Annual Meeting of
Shareholders of the Company scheduled to be held on May 11, 1999 (the "Annual
Meeting").
Steel Partners II, L.P. is the beneficial owner of at least
961,010 shares of Common Stock of the Company. We hereby nominate Warren G.
Lichtenstein, Robert Frankfurt, Steven Wolosky and Mark E. Schwarz as nominees
(the "Nominees") to be elected to the Board of Directors of the Company at the
Annual Meeting. To the extent the Company increases the size of the Board of
Directors above its existing size, we reserve the right to nominate additional
nominees to be elected to the Board of Directors of the Company at the Annual
Meeting. The information required by Section 2.10 of the Bylaws and the
Securities Exchange Act of 1934, as amended, follows:
1. Name and address of shareholder making the nomination:
Steel Partners II, L.P.
150 East 52nd Street, 21st Floor
New York, NY 10022
2. Names and addresses of the Nominees:
a) Warren G. Lichtenstein
c/o Steel Partners II, L.P.
150 East 52nd Street, 21st Floor
New York, NY 10022
b) Robert Frankfurt
c/o Steel Partners II, L.P.
150 East 52nd Street, 21st Floor
New York, NY 10022
<PAGE>
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CUSIP No. 078 107 109 13D Page 18 of 28 Pages
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c) Steven Wolosky, Esq.
Olshan Grundman Frome Rosenzweig & Wolosky LLP
505 Park Avenue
New York, NY 10022
d) Mark E. Schwarz
c/o Sandera Partners, L.P.
1601 Elm Street
Suite 4000
Dallas, TX 75201
3. Steel Partners II, L.P. hereby represents that it is the beneficial
owner of at least 961,010 shares of Common Stock of the Company
entitled to vote at the Annual Meeting. A representative or
representatives of Steel Partners II, L.P. intends to appear in person
or by proxy at the Annual Meeting to nominate the persons specified in
this notice for election to the Board of Directors of the Company.
4. On January 8, 1999, Steel Partners II, L.P., Sandera Partners, L.P.,
Newcastle Partners, L.P., and Messrs. Lichtenstein and Schwarz entered
into a Joint Filing Agreement, in which, among other things, (i) they
agreed to the joint filing on behalf of each of them of statements on
Schedule 13D with respect to the Common Stock of Bell, (ii) Messrs.
Lichtenstein and Schwarz formed a group to nominate a slate of
directors to the Board of Directors of Bell and may solicit written
consents or votes at the Annual Meeting for their slate of directors
for the Board of Directors of Bell, and (iii) Steel Partners II, L.P.
agreed to bear all expenses incurred in connection with such
committee's nomination of persons to the Board of Directors of Bell,
including approved expenses incurred by any of the nominees in the
solicitation of written consents or votes by such committee. The Joint
Filing Agreement is attached hereto and incorporated herein by
reference and all references contained herein are qualified in their
entirety by reference to such Joint Filing Agreement. Other than as
stated above, there are no arrangements or understandings between Steel
Partners II, L.P. and each nominee or any other person or person
pursuant to which the nominations described herein are to be made,
other than the consent by the nominees to serve as directors of the
Company if elected as such at the Annual Meeting, attached hereto and
incorporated herein by reference.
5. The information concerning the Nominees required by Regulation 14A of
the Exchange Act is as follows:
<PAGE>
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CUSIP No. 078 107 109 13D Page 19 of 28 Pages
- ----------------------------- ----------------------------
Warren G. Lichtenstein (33) is one of the nominees for director. Mr.
Lichtenstein has been the Chairman of the Board, Secretary and the Managing
Member of Steel Partners, L.L.C. ("Steel LLC"), the general partner of Steel
Partners II, L.P. since January 1, 1996. Prior to such time, Mr. Lichtenstein
was the Chairman and a director of Steel Partners, Ltd. ("Former General
Partner"), the general partner of Steel Partners Associates, L.P.
("Associates"), which was the general partner of Steel Partners II, L.P. since
1993 and prior to January 1, 1996. Mr. Lichtenstein is a director of the
following publicly held companies: Aydin Corporation, Gateway Industries, Inc.,
Rose's Holdings, Inc., PLM International, Inc. and Saratoga Beverage Group, Inc.
As of the date hereof, Mr. Lichtenstein beneficially owned at least 961,010
shares of the Common Stock of the Company, all of which were beneficially owned
by Steel Partners II, L.P. The business address of Mr. Lichtenstein is 150 E.
52nd Street, 21st Floor, New York, New York 10022. For information regarding Mr.
Lichtenstein's purchases and sales of shares of the Common Stock of the Company
during the past two years, see Appendix A.
In late 1995, Steel Partners II, L.P commenced a proxy solicitation to
replace the incumbent directors of Medical Imaging Centers of America, Inc.
("MICA"). Thereafter, MICA initiated an action against Steel Partners II, L.P.,
Warren Lichtenstein, and others in the United States District Court for the
Southern District of California, Medical Imaging Centers of America, Inc. v.
Lichtenstein, et al, Case No. 96-0039B. On February 29, 1996, the Court issued
an Order granting, in part, MICA's motion for a preliminary injunction on the
grounds that plaintiff had demonstrated a probability of success on the merits
of its assertion that defendants had violated Section 13 of the Securities
Exchange Act of 1934. Under the Court's preliminary injunction, defendants in
the action were enjoined from voting certain of their shares at MICA's annual
meeting of shareholders, except pursuant to a formula under which they would be
voted in the same proportion as other votes cast at the meeting. The Court
declined to adjourn the annual meeting of shareholders. At the meeting, Steel
Partners II, L.P. received sufficient votes to elect its nominees to the Board
of MICA, after giving effect to the Court's preliminary injunction. The parties
thereafter settled their differences pursuant to an agreement under which MICA
agreed to initiate an auction process which, if not concluded within a certain
time period, would end and thereafter the designees of Steel Partners II, L.P.
would assume control of the Board of MICA. MICA was ultimately sold for $11.75
per share, as contrasted with the price of $8.25 per share, representing the
closing price on the day prior to the initiation of Steel Partners II, L.P.'s
proxy solicitation.
Robert Frankfurt (33) is one of the nominees for director. Mr.
Frankfurt graduated from the Wharton School of Business in 1987 with a B.S. in
Economics. Mr. Frankfurt began his career as a financial analyst in the mergers
and acquisitions department of Bear, Stearns & Co., Inc. In 1989, Mr. Frankfurt
joined Hambro Bank America as an associate focused on micro-cap and cross-
border merger and acquisition transactions. In 1992, Mr. Frankfurt began
consulting with various entities on proposed international and domestic
transactions including a number of acquisition projects for Steel LLC. After
completing his MBA at the Anderson Graduate School of Management at UCLA, where
he was a Venture Capital Fellow, Mr. Frankfurt joined the Former General Partner
in 1995 and became a non-managing member of Steel LLC in 1996. As of the date
hereof Mr. Frankfurt does not beneficially own shares of the Common Stock of the
Company. The business address of Mr. Frankfurt is 150 E. 52nd Street, 21st
Floor, New York, New York 10022.
<PAGE>
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CUSIP No. 078 107 109 13D Page 20 of 28 Pages
- ----------------------------- ----------------------------
Mark E. Schwarz (38) is one of the nominees for director. Mr. Schwarz
has been Vice President of Sandera Capital, L.L.C. ("Sandera L.L.C."), a private
investment firm, since 1995, and Manager since 1996. Prior to such time Mr.
Schwarz was a securities analyst and portfolio manager for SCM Advisors, L.L.C.
a registered investment advisor, from 1993 to 1996. Mr Schwarz has also been the
sole general partner of Newcastle Partners, L.P. ("Newcastle"), a private
investment firm, since 1993. Mr. Schwarz is also a director of Aydin
Corporation, a NYSE listed company. As of the date hereof, Mr. Schwarz
beneficially owned 103,000 shares of the Common Stock of the Company. The
business address of Mr. Schwarz is c/o Sandera Partners, L.P., 1601 Elm Street,
Suite 4000, Dallas, Texas 75201. For information regarding Mr. Schwarz's
purchases and sales of shares of the Common Stock of the Company during the past
two years, see Appendix A.
Steven Wolosky (43) is one of the nominees for director. For more than
the past five years, Mr. Wolosky has been a partner of Olshan Grundman Frome
Rosenzweig and Wolosky LLP, counsel to Steel Partners II, L.P.. Mr. Wolosky is
also Assistant Secretary of WHX Corporation, a NYSE listed company and a
director of Uniflex, Inc., an AMEX listed company. As of the date hereof, Mr.
Wolosky did not beneficially own any shares of the Common Stock of the Company.
Mr. Wolosky has not purchased or sold any shares of the Common Stock of the
Company in the past two years. Mr. Wolosky's principal business address is 505
Park Avenue, New York, New York 10022.
6. Certain Information
The general partner of Steel Partners II, L.P. is Steel LLC, a Delaware
limited liability company. The principal business of Steel Partners II, L.P. is
investing in the securities of micro-cap companies. The principal business
address of Steel Partners II., L.P. and Steel LLC is 150 East 52nd Street, 21st
Floor, New York, New York 10022. Warren G. Lichtenstein is Chairman of the
Board, Secretary and the Managing Member of Steel LLC. Robert Frankfurt is an
employee and non- managing member of Steel LLC and an employee of Steel Partners
II, L.P. As of the date hereof, Steel Partners II, L.P. is the beneficial owner
of at least 961,010 shares of the Common Stock of the Company. Steel LLC does
not beneficially own any shares of the Common Stock of the Company on the date
hereof, except by virtue of its role in Steel Partners II, L.P. For information
regarding Steel Partners II, L.P. purchases and sales of shares of the Common
Stock of the Company during the past two years, see Appendix A.
Mr. Wolosky is Senior Partner of Olshan Grundman Frome Rosenzweig and
Wolosky LLP, counsel to Steel Partners II, L.P. Mr. Wolosky does not
beneficially own shares of Common Stock of the Company.
Sandera L.L.C. is the general partner of Sandera Capital Management,
L.P. ("SCM"), a Texas limited partnership. SCM is the general partner of Sandera
Partners, L.P. ("Sandera"), a Texas limited partnership. The principal business
of Sandera L.L.C., SCM, Sandera and Newcastle is the purchase, sale, exchange,
acquisition and holding of investment securities. The principal business address
of Sandera L.L.C., SCM and Sandera is 1601 Elm Street, Suite 4000, Dallas, Texas
75201. The principal business address of Newcastle is 4020 Windsor Avenue,
Dallas, Texas 75201. Mark E. Schwarz is the Vice President and manager of
Sandera L.L.C. and the sole general partner of Newcastle. As of the date hereof,
Sandera was the beneficial owner of 100,000 shares of Common
<PAGE>
- ----------------------------- ----------------------------
CUSIP No. 078 107 109 13D Page 21 of 28 Pages
- ----------------------------- ----------------------------
Stock of the Company and Newcastle was the beneficial owner of 3,000 shares of
Common Stock of the Company. Sandera L.L.C. does not beneficially own any
shares of the Common Stock of the Company on the date hereof, except by virtue
of its role in Sandera. For information regarding the purchases and sales of
shares of the Common Stock of the Company during the past two years by Sandera
and Newcastle, see Appendix A.
The Board of Directors of the Company has a single class of directors.
At each annual meeting of shareholders, the directors are elected to a one-year
term. The Nominees, if elected, would serve as directors for the term expiring
in 2000 or until the due election and qualification of their successors. Steel
Partners II, L.P. has no reason to believe any of the Nominees will be
disqualified or unable or unwilling to serve if elected.
Except as described herein, neither Steel Partners II, L.P., Sandera
Partners, L.P., Newcastle Partners, L.P. nor any of the Nominees (i) has engaged
in or has a direct or indirect interest in any transaction or series of
transactions since the beginning of the Company's last fiscal year or in any
currently proposed transaction, to which the Company or any of its subsidiaries
is a party where the amount involved was in excess of $60,000, (ii) is the
beneficial or record owner of any securities of the Company or any parent or
subsidiary thereof, (iii) is the record owner of any securities of the Company
of which it may not be deemed to be the beneficial owner, (iv) has been within
the past year, a party to any contract, arrangement or understanding with any
person with respect to any securities of the Company, (v) has any arrangements
or understandings with any Nominee pursuant to which such nominee was selected
as a nominee and there exist no such agreements or understandings between any
nominee and any other person, or (vi) has any agreement or
understanding with respect to future employment by the Company or any
arrangement or under standing with respect to any future transactions to which
the Company will or may be a party.
Sincerely,
STEEL PARTNERS II, L.P.
By: Steel Partners L.L.C., General Partner
By: /s/ Warren G. Lichtenstein
--------------------------------------
Warren G. Lichtenstein
Chief Executive Officer
<PAGE>
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CUSIP No. 078 107 109 13D Page 22 of 28 Pages
- ----------------------------- ----------------------------
ANNEX A
Transactions in the Shares of Bell Industries, Inc.
Shares of Common Price Per Date of
Stock Purchased/(Sold) Share Purchase/Sale
- ---------------------- ----- -------------
STEEL PARTNERS II, L.P.
18,400 10.00424 10/01/98
16,000 9.98250 10/02/98
7,400 9.69703 10/05/98
50,900 9.81400 10/07/98
7,300 9.38340 10/08/98
14,500 9.39610 10/09/98
2,600 9.42000 10/12/98
1,600 9.38875 10/13/98
11,800 9.64246 10/16/98
12,200 10.14131 10/27/98
4,000 10.17000 10/29/98
7,600 10.07954 10/30/98
3,200 10.04500 11/2/98
1,400 10.56000 11/4/98
1,100 10.56000 11/5/98
1,700 10.54500 11/9/98
9,200 10.54160 11/10/98
1,200 10.54500 11/11/98
900 10.54500 11/12/98
2,700 10.54500 11/18/98
22,800 10.53568 11/19/98
24,000 10.42625 11/20/98
1,400 10.42000 11/27/98
5,000 10.42000 11/30/98
4,000 10.42000 12/01/98
10,000 10.35750 12/03/98
11,500 10.39570 12/04/98
<PAGE>
- ----------------------------- ----------------------------
CUSIP No. 078 107 109 13D Page 23 of 28 Pages
- ----------------------------- ----------------------------
10,000 10.42000 12/07/98
13,600 10.40851 12/08/98
66,800 10.44701 12/09/98
53,600 10.42787 12/10/98
28,200 10.47142 12/11/98
15,000 10.41000 12/14/98
40,500 10.45790 12/15/98
5,400 10.39407 12/16/98
76,610 10.57506 12/17/98
1,200 10.51250 12/18/98
46,100 10.71802 12/22/98
30,900 11.07590 12/23/98
30,600 11.07500 12/24/98
239,900 11.07000 12/28/98
48,200 11.08300 12/31/98
149,200 11.25780 01/05/99
Shares of Common Price Per Date of
Stock Purchased/(Sold) Share Purchase/Sale
SANDERA PARTNERS, L.P.
37,800 10.59330 12/22/98
21,700 11.02319 12/28/98
5,000 11.02550 12/30/98
14,100 11.02356 12/31/98
21,400 11.46070 1/6/99
Shares of Common Price Per Date of
Stock Purchased/(Sold) Share Purchase/Sale
NEWCASTLE PARTNERS, L.P.
3,000 11.4975 1/7/99
<PAGE>
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CUSIP No. 078 107 109 13D Page 24 of 28 Pages
- ----------------------------- ----------------------------
Robert Frankfurt
150 East 52nd Street
New York, New York 10022
January 8, 1999
Bell Industries, Inc.
2201 East El Segundo Boulevard
El Segundo, California 90245-4608
Gentlemen:
I hereby consent to serve as a director of Bell Industries, Inc. if
elected.
Sincerely,
/s/ Robert Frankfurt
-----------------------------------
Robert Frankfurt
<PAGE>
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CUSIP No. 078 107 109 13D Page 25 of 28 Pages
- ----------------------------- ----------------------------
Warren G. Lichtenstein
150 East 52nd Street
New York, New York 10022
January 8, 1999
Bell Industries, Inc.
2201 East El Segundo Boulevard
El Segundo, California 90245-4608
Gentlemen:
I hereby consent to serve as a director of Bell Industries, Inc. if
elected.
Sincerely,
/s/ Warren G. Lichtenstein
---------------------------------------
Warren G. Lichtenstein
<PAGE>
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CUSIP No. 078 107 109 13D Page 26 of 28 Pages
- ----------------------------- ----------------------------
Mark E. Schwarz
1601 Elm Street
Suite 4000
Dallas, Texas 75201
January 7, 1999
Bell Industries, Inc.
2201 East El Segundo Boulevard
El Segundo, California 90245-4608
Gentlemen:
I hereby consent to serve as a director of Bell Industries, Inc. if
elected.
Sincerely,
/s/ Mark E. Schwarz
----------------------------------------
Mark E. Schwarz
<PAGE>
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CUSIP No. 078 107 109 13D Page 27 of 28 Pages
- ----------------------------- ----------------------------
Steven Wolosky
Olshan Grundman Frome Rosenzweig & Wolosky LLP
505 Park Avenue
New York, New York 10022
January 8, 1999
Bell Industries, Inc.
2201 East El Segundo Boulevard
El Segundo, California 90245-4608
Gentlemen:
I hereby consent to serve as a director of Bell Industries, Inc. if
elected.
Sincerely,
/s/ Steven Wolosky
----------------------------------------
Steven Wolosky
<PAGE>
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CUSIP No. 078 107 109 13D Page 28 of 28 Pages
- ----------------------------- ----------------------------
SCHEDULE A
Transactions in the Shares Within the Past 60 Days
Unless otherwise reported on a prior Schedule 13D
Shares of Common Price Per Date of
Stock Purchased/(Sold) Share Purchase/Sale
STEEL PARTNERS II, L.P.
149,200 11.25780 1/5/99
WARREN LICHTENSTEIN
None.
Shares of Common Price Per Date of
Stock Purchased/(Sold) Share Purchase/Sale
SANDERA PARTNERS, L.P.
37,800 10.59330 12/22/98
21,700 11.02319 12/28/98
5,000 11.02550 12/30/98
14,100 11.02356 12/31/98
21,400 11.46070 1/6/99
Shares of Common Price Per Date of
Stock Purchased/(Sold) Share Purchase/Sale
NEWCASTLE PARTNERS, L.P.
3,000 11.4975 1/7/99
MARK E. SCHWARZ
None.
