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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
__________
FORM 8-B
FOR REGISTRATION OF SECURITIES OF
CERTAIN SUCCESSOR ISSUERS
FILED PURSUANT TO SECTION 12(B) OR 12(G) OF THE
SECURITIES EXCHANGE ACT OF 1934
CALIFORNIA BELL INDUSTRIES, INC.
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(Exact Name of Registrant as Specified in Its Charter)
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California 95-4530889
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(State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer
Identification No.)
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11812 San Vicente Blvd., Los Angeles, CA 90049-5069
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(Address of Principal Executive Offices) (Zip Code)
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Securities to be registered pursuant to Section 12(b) of the Act:
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Title of Each Class Name of Each Exchange on Which
to be so Registered Each Class is to be Registered
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Common Stock New York and Pacific Stock Exchanges
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Securities to be registered pursuant to Section 12(g) of the Act:
NONE
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(Title of Class)
NONE
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(Title of Class)
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INFORMATION REQUIRED IN REGISTRATION STATEMENT
ITEM 1. GENERAL INFORMATION.
(a) Registrant was incorporated, as a corporation, under the laws of
the State of California on May 10, 1995.
(b) Registrant's fiscal year ends on December 31st.
ITEM 2. TRANSACTION OF SUCCESSION.
(a) Bell Industries, Inc., a Delaware corporation.
(b) On May 9, 1995, the shareholders of Bell Industries, Inc., a
Delaware corporation ("Delaware Bell"), approved changing the jurisdiction of
its incorporation from Delaware to California. The reincorporation is to be
accomplished by merging Delaware Bell with and into registrant. It is
anticipated that the merger will become effective on June 15, 1995. Approval
of the shareholders of Delaware Bell was solicited pursuant to Regulation 14A.
The shares of common stock of Delaware Bell are listed on the New York and
Pacific Stock Exchanges and it is expected that the shares of registrant will
also be so listed. In the merger, each outstanding share of Delaware Bell's
common stock will be converted by operation of law into a share of common stock
of registrant. Further all outstanding stock options and warrants of Delaware
Bell will become equivalent stock options and warrants of registrant.
ITEM 3. SECURITIES TO BE REGISTERED.
As of March 17, 1995 (the record date for determining shareholders
entitled to vote on the reincorporation), there were issued and outstanding
6,498,105 shares of Delaware Bell's common stock. Registrant has 10,000,000
shares of common stock authorized and, upon the effectiveness of the merger of
Delaware Bell, will have approximately 6,823,010 shares outstanding (gives
effect to a 5% stock dividend declared by Delaware Bell payable June 7, 1995 to
its stockholders of record on May 26, 1995). Currently, there are one hundred
shares outstanding which are owned by Delaware Bell. Registrant will have no
shares of its common stock owned by it.
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ITEM 4. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
Holders of shares of common stock are entitled to one vote per share
on all matters to be voted on by the shareholders, except that holders are
entitled to cumulate their votes in the election of directors upon the giving
of notice by any shareholder to registrant prior to the vote. Holders of common
stock are entitled to receive such dividends as may be declared from time to
time by the Board of Directors, in its discretion, from funds legally available
therefor and subject to the prior dividend rights of holders of any outstanding
preferred stock. Holders of shares of common stock have no preemptive rights
and are not liable for further calls or assessments.
Registrant's Articles of Incorporation prohibits business combinations
between registrant and a person who owns 20% or more of the voting stock of
registrant (an "interested shareholders"), unless the business combination is
approved by 75% of the voting stock, and the majority of the voting stock other
than the voting stock of which the interested shareholder is a beneficial
owner. This prohibition does not apply if the business combination is approved
by registrant's Board of Directors prior to the person becoming an interested
shareholder, or, if a majority of the outstanding shares of stock of the
interested shareholder is owned by registrant.
ITEM 5. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements. As the capital structure and balance sheet
of registrant after the merger will be essentially the same as Delaware Bell,
its predecessor, no financial statements are being filed.
(b) Exhibits.
2.1 Agreement of Merger dated May 9, 1995 between Bell Industries,
Inc. and California Bell Industries, Inc.
3.1 Form of Restated Articles of Incorporation of registrant.
3.2 Form of Restated By-laws of registrant.
4.2 The Note Purchase Agreement dated February 1, 1991 among Bell* and
Insurance Companies named therein providing for the issuance of Bell's
$50,000,000 of 9.7% Senior Notes
__________________________________
*Bell Industries, Inc. (Commission File No. 1-7899), the predecessor of
Registrant.
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due February 1, 2001 is incorporated by reference to Exhibit 4.b of the Form
10-K dated June 30,,1991.
4.3 The First Amendment Agreement, including as exhibits thereto,
the Collateral Trust Indenture and Security Agreement, dated June 1, 1992,
among Bell* and Insurance Companies named therein providing for certain
amendments to the Note Purchase Agreement dated February 1, 1991 is
incorporated by reference to Exhibit 4.c of the Form 10-K dated June 30, 1992.
4.4 The Second Amendment Agreement dated September 15, 1993, among
Bell* and Insurance Companies named therein providing for certain amendments to
the Note Purchase Agreement dated February 1, 1991 is incorporated by reference
to Exhibit 4.d of the Form 10-K dated June 30, 1993.
4.5 Warrant Agreement dated September 15, 1993 including Form of
Warrant Certificate issued to the named Insurance Companies included in the
Note Purchase Agreement dated February 1, 1991, as amended, is incorporated by
reference to Exhibit 4.e of the Form 10-K dated June 30, 1993.
4.6 Amendment Agreement dated March 29, 1994, between Bell* and
the Security Trustee named therein providing for certain amendments to the
Collateral Trust Indenture and Security Agreement included with the First
Amendment Agreement dated June 1, 1992, is incorporated by reference to Exhibit
4.f of the Form 10-K dated June 30, 1994.
4.7 Letter Agreement dated May 17, 1994, among Bell* and Insurance
Companies named therein providing for certain amendments to the Warrant
Agreement dated September 15, 1993, is incorporated by reference to Exhibit 4.g
of the Form 10-K dated June 30, 1994.
10.1 The Employment and Deferred Compensation Agreements dated
January 1, 1979 and the Amendment thereto dated August 6, 1979 concerning
certain officers of Bell* are incorporated by reference to Exhibits 9A, 9C
and 9D to Amendment number 1 to Bell's* Form 8-B dated November 19, 1979.
10.2 The 1990 Stock Option and Incentive Plan is incorporated by
reference to Exhibit A of Bell's* definitive Proxy Statement (File No.
1-7899) filed in connection with the Annual Meeting of Shareholders held
November 2, 1993.
10.3 The 1993 Employee's Stock Purchase Plan is incorporated by
reference to Exhibit A of Bell's* definitive Proxy Statement (File No. 1-7899)
filed in connection with the Annual Meeting of Shareholders held November 2,
1993.
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10.4 The Amendment to Employment and Deferred Compensation Agreement
dated September 14, 1994 is incorporated by reference to Exhibit (10) of
Bell's* Quarterly Report on Form 10-Q dated September 30, 1994.
10.5 The Bell Industries, Inc. Directors' Retirement Plan for
Non-employees is incorporated by reference to Exhibit (99) of Bell's* Quarterly
Report on Form 10-Q dated September 30, 1994.
10.6 The 1994 Stock Option Plan is incorporated by reference to
Exhibit A of Bell's* definitive Proxy Statement (File No. 1-7899) filed in
connection with the Annual Meeting of Shareholders held on November 1, 1994.
10.7 Revised Employment and Deferred Compensation Agreement dated
February 15, 1995 between Bell* and Bruce M. Jaffe.
10.8 Revised Employment and Deferred Compensation Agreement dated
February 15, 1995 between Bell* and Paul F. Doucette.
10.9 Form of Severance Agreement between Bell* and its executive
officers, other than Messrs. Williams, Jaffe and Doucette.
10.10 Form of Indemnity Agreement between Bell* and its executive
officers and directors.
21. Subsidiaries of Bell* (will become subsidiaries of registrant
upon effectiveness of the merger) is incorporated by reference to Exhibit 22
to Bell* Form 10-K for the fiscal year ended June 30, 1994.
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, the registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereto duly authorized.
CALIFORNIA BELL INDUSTRIES, INC.
Dated: May 16, 1995
BY /s/ JOHN J. COST
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(John J. Cost, Secretary)
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EXHIBIT INDEX
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Exhibits Page
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2.1 Agreement of Merger dated May 9, 1995 between Bell Industries, Inc. and California Bell
Industries, Inc.
3.1 Form of Restated Articles of Incorporation of registrant.
3.2 Form of Restated By-laws of registrant.
4.2 The Note Purchase Agreement dated February 1, 1991 among Bell** and Insurance Companies named
therein providing for the issuance of Bell's $50,000,000 of 9.7% Senior Notes due February 1,
2001 is incorporated by reference to Exhibit 4.b of the Form 10-K dated June 30, 1991.
4.3 The First Amendment Agreement, including as exhibits thereto, the Collateral Trust Indenture
and Security Agreement, dated June 1, 1992, among Bell* and Insurance Companies named therein
providing for certain amendments to the Note Purchase Agreement dated February 1, 1991 is
incorporated by reference to Exhibit 4.c of the Form 10-K dated June 30, 1992.
4.4 The Second Amendment Agreement dated September 15, 1993, among Bell* and Insurance Companies
named therein providing for
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__________________________________
**Bell Industries, Inc. (Commission File No. 1-7899), the predecessor of
Registrant.
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Exhibits Page
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certain amendments to the Note Purchase Agreement dated February 1, 1991 is incorporated by reference to
Exhibit 4.d of the Form 10-K dated June 30, 1993.
4.5 Warrant Agreement dated September 15, 1993 including Form of Warrant Certificate issued to the named
Insurance Companies included in the Note Purchase Agreement dated February 1, 1991, as amended, is
incorporated by reference to Exhibit 4.e of the Form 10-K dated June 30, 1993.
4.6 Amendment Agreement dated March 29, 1994, between Bell* and the Security Trustee named therein providing
for certain amendments to the Collateral Trust Indenture and Security Agreement included with the First
Amendment Agreement dated June 1, 1992, is incorporated by reference to Exhibit 4.f of the Form 10-K
dated June 30, 1994.
4.7 Letter Agreement dated May 17, 1994, among Bell* and Insurance Companies named therein providing for
certain amendments to the Warrant Agreement dated September 15, 1993, is incorporated by reference to
Exhibit 4.g of the Form 10-K dated June 30, 1994.
10.1 The Employment and Deferred Compensation Agreements dated January 1, 1979 and the Amendment thereto
dated August 6, 1979 concerning certain officers of Bell* are incorporated by reference to
Exhibits 9A, 9C and 9D to Amendment number 1 to Bell's* Form 8-B dated November 19, 1979.
</TABLE>
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Exhibits Page
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10.2 The 1990 Stock Option and Incentive Plan is incorporated by reference to Exhibit A of
Bell's* definitive Proxy Statement (File No. 1-7899) filed in connection with
the Annual Meeting of Shareholders held November 2, 1993.
10.3 The 1993 Employee's Stock Purchase Plan is incorporated by reference to Exhibit A of Bell's*
definitive Proxy Statement (File No. 1-7899) filed in connection with the Annual Meeting of
Shareholders held November 2, 1993.
10.4 The Amendment to Employment and Deferred Compensation Agreement dated September 14, 1994 is
incorporated by reference to Exhibit (10) of Bell's* Quarterly Report on Form 10-Q dated
September 30, 1994.
10.5 The Bell Industries, Inc. Directors' Retirement Plan for Non-employees is incorporated by
reference to Exhibit (99) of Bell's* Quarterly Report on Form 10-Q dated September 30, 1994.
10.6 The 1994 Stock Option Plan is incorporated by reference to Exhibit A of Bell's* definitive
Proxy Statement (File No. 1-7899) filed in connection with the Annual Meeting of Shareholders
held on November 1, 1994.
10.7 Revised Employment and Deferred Compensation Agreement dated February 15, 1995 between Bell*
and Bruce M. Jaffe.
10.8 Revised Employment and Deferred Compensation Agreement dated February 15, 1995 between Bell*
and Paul F. Doucette.
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Exhibits Page
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10.9 Form of Severence Agreement between Bell* and its executive officers, other than Messrs.
Williams, Jaffe and Doucette.
10.10 Form of Indemnity Agreement between Bell* and its executive officers and directors.
21. Subsidiaries of Bell* incorporated by reference to Exhibit 22 of Bell* Form 10-K for the
fiscal year ended June 30, 1994 (will become subsidiaries of registrant upon effectiveness
of the merger).
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EXHIBIT 2.1
AGREEMENT OF MERGER
THIS AGREEMENT OF MERGER (this "Agreement") is made as of May 9, 1995
by and between BELL INDUSTRIES, INC., a Delaware corporation ("Bell Delaware"),
and CALIFORNIA BELL INDUSTRIES, INC., a California corporation and a
wholly-owned subsidiary of Bell Delaware ("Bell California").
R E C I T A L S:
A. The Board of Directors of Bell Delaware and the Board of
Directors of Bell California deem it advisable that Bell Delaware merge into
Bell California pursuant to the Laws of the states of California and Delaware,
and the Board of Directors of each such corporation has approved this
Agreement.
B. The Board of Directors of Bell Delaware has directed that this
Agreement be submitted to a vote of Bell Delaware shareholders at the 1995
Annual Meeting of Shareholders to be held on May 9, 1995, or any adjournment
thereof.
C. The Board of Directors of Bell California has directed that
this Agreement be submitted to its sole shareholder, Bell Delaware, and said
sole shareholder has adopted and approved this Agreement by written consent
dated as of May 9, 1995.
NOW, THEREFORE, the parties do hereby adopt the plan of reorganization
and merger encompassed by this Agreement and do hereby agree as follows:
1. Merger. Subject to the terms and conditions
hereinafter set forth, Bell Delaware shall be merged with and into
Bell California, and Bell California shall be the surviving
corporation (the "Merger"). The Merger shall become effective if and
when appropriate documents necessary to effectuate the Merger shall be
filed with the Secretary of State of the State of California and the
Secretary of State of the State of Delaware (the "Effective Date").
2. Effect of Merger. At the Effective Date, the
following shall be deemed simultaneously to have occurred, by reason
of the Merger and without any action required on the part of any
person:
(a) The separate corporate existence of Bell
Delaware shall cease, and the corporate existence of Bell
California as governed by the California Corporations Code,
shall continue unimpaired and unaffected by the Merger.
<PAGE> 2
(b) The shares of Bell California common stock
(the "California Common Stock") theretofore issued and
outstanding shall be retired and cancelled.
(c) Each share of Bell Delaware common stock,
$0.25 par value (the "Delaware Common Stock"), issued and
outstanding shall be converted by reason of the Merger and
without any action on the part of the holders thereof into and
become one share of California Common Stock. The shares of
Delaware Common Stock so converted shall cease to exist as
such and shall exist only as shares of California Common
Stock.
3. Stock Certificates. On and after the Effective Date,
all of the outstanding certificates which prior to that time
represented shares of the Delaware Common Stock shall be deemed for
all purposes to evidence ownership of and to represent the shares of
Bell California into which the shares of Bell Delaware represented by
such certificates have been converted as herein provided. The
registered owner on the books and records of Bell Delaware or its
transfer agent of any such outstanding stock certificate shall, until
such certificate shall have been surrendered for transfer or
conversion or otherwise accounted for to Bell California or its
transfer agent, have and be entitled to exercise any voting and other
rights with respect to and to receive any dividend and other
distributions upon the shares of Bell California evidenced by such
outstanding certificate as above provided.
4. Employee Option and Benefit Plans and Other Stock
Rights. Each option or other right to purchase or otherwise acquire
shares of Delaware Common Stock granted under (i) any employee option
or benefit plan of Bell Delaware (collectively, the "Plans"), or (ii)
any other option or stock right exercisable or convertible into shares
of Delaware Common Stock, which is outstanding immediately prior to
the Effective Date, shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into and become
an option or right to acquire (and Bell California hereby assumes the
obligation to deliver) the same number of shares of California Common
Stock at the same price per share, and upon the same terms and subject
to the same conditions, as set forth in each of such Plans and/or
rights as in effect at the Effective Date. The same number of shares
of California Common Stock shall be reserved for purposes of such
Plans and/or rights as is equal to the number of shares of Delaware
Common Stock so reserved as of the Effective Date. Bell California
hereby assumes, as of the Effective Date, (x) the Plans and all
obligations of
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Bell Delaware under the Plans, including the outstanding options or
awards or portions thereof granted pursuant to the Plans, and (y) all
obligations of Bell Delaware under all other benefit plans and
outstanding stock rights in effect as of the Effective Date with
respect to which employee rights or accrued benefits or other rights
are outstanding as of the Effective Date.
5. California Articles of Incorporation and Bylaws. The
Restated Articles of Incorporation of Bell California, as in effect at
the Effective Date, shall continue to be the Articles of Incorporation
of Bell California until further amended in accordance with the
provisions thereof and applicable law, except that upon effectiveness
of the Merger, Article ONE of the Restated Articles of Incorporation
of Bell California shall be amended to read as follows:
ONE: The name of this corporation is
Bell Industries, Inc.
The Bylaws of Bell California, as in effect on the Effective Date,
shall continue to be the Bylaws of Bell California without change or
amendment until further amended in accordance with the provisions
thereof and applicable law.
6. Officers and Directors. The officers and directors
of Bell Delaware immediately prior to the Effective Date shall become
the officers and directors of Bell California on the Effective Date.
7. Conditions to Merger. The consummation of the Merger
and the other transactions contemplated by this Agreement is subject
to the condition that the Merger and the principal terms of this
Agreement shall have been approved by the shareholders of Bell
Delaware, and that the California Common Stock to be issued or
reserved for issuance shall, upon official notice of issuance, be
listed on the New York Stock Exchange.
8. Further Assurances. From time to time, as and when
required by Bell California, or by its successors or assigns, there
shall be executed and delivered such deeds and other instruments, and
there shall be taken or caused to be taken all such further and other
action as shall be appropriate or necessary to vest, perfect, or
confirm, of record or otherwise, in Bell California the titled to and
possession of all property, interests, assets, rights, privileges,
immunities, powers, franchises and authority of Bell Delaware, and
otherwise to carry out the purposes of this Agreement; and the
officers and directors of Bell California are fully authorized in the
name and on behalf of Bell Delaware or otherwise, to take any and all
such
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action to execute and deliver any and all such deeds and instruments.
9. Amendment. The parties hereto, by mutual consent of
their respective Boards of Directors, may amend, modify or supplement
this Agreement at any time prior to the Effective Date; provided,
however, that no amendment shall be made subsequent to the adoption of
this Agreement by the stockholders of Bell Delaware which changes this
Agreement in a way which, in the judgment of the Board of Directors of
Bell Delaware, would have a material adverse effect on the
stockholders of Bell Delaware, unless such amendment is approved by
such stockholders.
10. Deferral. Consummation of the transactions herein
provided for may be deferred by the Board of Directors of Bell
Delaware for a reasonable period of time if such Board of Directors
determines that such deferral would be in the best interests of Bell
Delaware and its stockholders.
11. Termination. This Agreement may be terminated and
the Merger and other transactions herein provided for abandoned at any
time prior to the Effective Date, whether before or after approval of
this Agreement by the stockholders of Bell Delaware, by action of the
Board of Directors of Bell Delaware, if such Board of Directors
determines that the consummation of the transactions provided for
herein would not, for any reason, be in the best interests of Bell
Delaware and its stockholders,
12. Counterparts. This Agreement may be executed in one
or more counterparts, and each such counterpart hereof shall be deemed
to be an original instrument, but all such counterparts together shall
constitute but one agreement.
13. Descriptive Headings. The descriptive headings
herein are inserted for convenience of reference only and are not
intended to be part of or to affect the meaning or interpretation of
this Agreement.
14. Governing Law. This agreement shall be governed by,
and construed in accordance with the laws of the State of Delaware.
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed on behalf of each of said parties by their respective
duly authorized officers as of the date first above written.
BELL INDUSTRIES, INC.,
a Delaware corporation
By: /s/ JOHN J. COST
------------------------------
Name: John J. Cost
Its: Secretary
CALIFORNIA BELL INDUSTRIES, INC.,
a California corporation
By: /s/ JOHN J. COST
------------------------------
Name: John J. Cost
Its: Secretary
5
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EXHIBIT 3.1
RESTATED ARTICLES OF INCORPORATION
OF
CALIFORNIA BELL INDUSTRIES, INC.
ONE: The name of this corporation is CALIFORNIA BELL INDUSTRIES,
INC.
TWO: The purpose of this corporation is to engage in any lawful act
or activity for which a corporation may be organized under the General
Corporation Law of California other than the banking business, the trust
company business or the practice of a profession permitted to be incorporated
by the California Corporations Code.
THREE: This corporation is authorized to issue two classes of shares
designated, respectively, "Common Stock" and "Preferred Stock." The number of
shares of Common Stock authorized to be issued is ten million (10,000,000) and
the number of shares of Preferred Stock authorized to be issued is one million
(1,000,000).
The Preferred Stock may be divided into such number of series
as the Board of Directors may determine. The Board of Directors is authorized
to determine and alter the rights, preferences, privileges and restrictions
granted to and imposed upon any wholly unissued series of Preferred Stock, and
to fix the number of shares of any series of Preferred Stock and the
designation of any such series of Preferred Stock. The Board of Directors,
within the limits and restrictions stated in any resolution of the Board of
Directors originally fixing the number of shares constituting any series, may
increase or decrease (but not below the number of shares of such series then
outstanding) the number of shares of any series subsequent to the issue of
shares of that series.
FOUR: The liability of the directors of this corporation for
monetary damages shall be eliminated to the fullest extent permissible under
California law.
FIVE: This corporation is authorized to indemnify the directors and
officers of this corporation to the fullest extent permissible under California
law.
SIX: The bylaws shall set forth the number of directors
constituting the Board of Directors.
SEVEN: (1) Except as set forth in Section (2) of this Article Seven:
(a) any merger or consolidation of this
corporation or any of its subsidiaries with or into
any other corporation, or,
<PAGE> 2
(b) any sale, lease, exchange or other
disposition of all or substantially all of the
property and assets of this corporation or any of its
subsidiaries to or with any other corporation, person
or other entity, or
(c) any sale, lease, exchange or other
disposition to this corporation or any of its
subsidiaries of any assets, cash, securities or other
property of any other corporation, person or other
entity in exchange for securities of this corporation
or any of its subsidiaries,
shall require the affirmative vote of the holders of shares representing (i) at
least seventy-five percent (75%) of all classes of stock of this corporation
entitled to vote in the election of directors, considered for the purposes of
this Article Seven as one class, and (ii) at least a majority of all such
classes of stock of this corporation considered for the purposes of this
Article Seven as one class, which are not beneficially owned, directly or
indirectly, by such other corporation, person or other entity, if as of the
record date for the determination of shareholders entitled to notice thereof
and to vote thereon, such other corporation, person or entity, is the
beneficial owner, directly or indirectly, of shares possessing twenty percent
(20%) or more of the votes of the outstanding shares of stock of this
corporation entitled to vote in the election of directors, considered for the
purposes of this Article Seven as one class. Such other corporation, person or
other entity is hereafter sometimes referred to as a "related entity." Such
affirmative vote, as provided in this Article Seven, shall be in lieu of any
lesser vote of the holders of the stock of this corporation otherwise provided
by law or any agreement or contract to which this corporation is a party, and
shall be in addition to any class vote to which any class of stock of this
corporation may be entitled.
(2) The provisions of this Article Seven shall not apply
to any transaction described in clauses (a), (b) or (c) of Section (1) of this
Article Seven if:
(a) the Board of Directors of this
corporation shall have approved such transaction
prior to the time that such corporation, person or
other entity became a related entity, or
(b) a majority of the outstanding shares
of stock of such other corporation is owned of record
or beneficially, directly or indirectly, by this
corporation or its subsidiaries
(3) For the purposes of this Article Seven, and without
limiting the definition of "beneficial owner" or "beneficially own," any
corporation, person or other entity shall be deemed to be the "beneficial
owner" of or to "beneficially own" any share of stock of this corporation (a)
which it has the right to acquire either immediately or at some future date
pursuant to any agreement, or upon exercise of conversion rights, warrants or
options, or otherwise, or (b) which is "beneficially owned," directly or
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indirectly (including shares deemed owned through application of the foregoing
clause (a) of this Section (3), by any other corporation, person or other
entity either with which it or its "affiliate" or "associates" have any
apparent arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of stock of this corporation, or which is its "affiliate"
or "associate" as those terms are defined in Rule 12b-2 of the General Rules
and Regulations under the Securities Exchange Act of 1934 as in effect from
time to time or any successor provision. Also for purposes of this Article
Seven, the "outstanding" shares of any class of stock of this corporation shall
include shares deemed owned through application of the foregoing clauses (a)
and (b) of this Section (3), but shall not include any other shares which may
be issuable either immediately or at some future date pursuant to any
agreement, or upon exercise of conversion rights, warrants or options, or
otherwise; and the term "substantially all of the property and assets of this
corporation or any of its subsidiaries" shall mean those properties and assets
involved in any single transaction or series of related transactions having an
aggregate fair market value of more than a majority of the total consolidated
assets of this corporation and its subsidiaries.
The Board of Directors of this corporation shall have the
power and duty to determine for the purposes of this Article Seven, on the
basis of information known to this corporation, whether (i) any corporation,
person or other entity "beneficially owns", directly or indirectly, twenty
percent (20%) or more of the shares of stock of this corporation entitled to
vote in the election of directors, and (ii) any corporation, person or other
entity is an "affiliate" or "associate" of another. Any such determination
made in good faith shall be conclusive and binding for all purposes of this
Article Seven.
(4) No amendment to the Articles of Incorporation of this
corporation shall amend, alter, change or repeal any of the provisions of this
Article Seven unless the amendment effecting such amendment, alteration, change
or repeal shall receive the affirmative vote of (i) seventy-five percent (75%)
of all classes of stock of this corporation entitled to vote in the election of
directors, considered for the purposes of this Article Seven as one class, and
(ii) at least a majority of all such classes of stock of this corporation,
considered for the purposes of this Article Seven as one class, which are not
beneficially owned, directly or indirectly, by a related entity.
EIGHT: (1) The affirmative vote of the holders of shares of
voting stock of this corporation representing at least a majority of the
Disinterested Shares (as hereinafter defined) of this corporation shall be
required before this corporation may purchase any outstanding shares of stock
of this corporation at a price known by this corporation to be above Market
Price (as hereinafter defined) from a Person known by this corporation to be a
Selling Shareholder (as hereinafter defined), unless the purchase is made by
this corporation on the same terms and conditions and as a result of a duly
authorized offer to purchase to the holders of all shares of stock of this
corporation of the same class.
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(2) For purposes of this Article Eight:
(a) A Person is deemed to "Beneficially
Own" any shares of capital stock of this corporation
(i) which it has the right to acquire, hold or vote
pursuant to any agreement, arrangement or undertaking
or upon exercise of conversion rights, warrants,
options or otherwise, or (ii) which are beneficially
owned, directly or indirectly (including shares
deemed owned through application of the foregoing
clause (i)) by any other Person (x) with which it or
its Affiliate (as hereinafter defined) or Associate
(as hereinafter defined) has any agreement,
arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of shares of
capital stock of this corporation, or (y) which is
its Affiliate or Associate.
(b) "Disinterested Shares" means all
shares of capital stock of this corporation entitled
to be cast in the election of directors, considered
for purposes hereof as one class, which are not
Beneficially Owned by the Selling Shareholder
proposing to enter into a transaction described in
Section (1) above.
(c) "Market Price" for any share of
stock of this corporation means the highest closing
sale price of a share of such stock during the 30-day
period immediately preceding the relevant date, as
reported on the composite tape or similar reporting
system, for issues listed on such national securities
exchange upon which the stock is listed as may be
designated by the Board of Directors for the purposes
hereof or, if the stock is not listed on any national
securities exchange, the highest closing bid
quotation with respect to a share of such stock
during the 30-day period preceding the relevant date
in the over-the-counter market as reported by The
Nasdaq Stock Market, Inc., or if not so quoted, as
reported by National Quotation Bureau Incorporated or
a similar organization. When no price can be
determined in the foregoing manner for the stock, its
"Market Price" shall mean the price of such stock as
determined by the Board of Directors in its absolute
discretion.
(d) "Person" means any corporation,
individual, person, partnership or other person or
entity (including a "group" within the meaning of
Section 13(d) of the Securities Exchange Act of
1934).
(e) "Selling Shareholder" means any
Person which Beneficially Owns in the aggregate more
than five percent (5%) of the voting power of stock
of this corporation.
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<PAGE> 5
(f) "Affiliate" and "Associate" have the
respective meanings ascribed to such terms in Rule
12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934 as in effect from
time to time or under any successor provision.
(3) Nothing contained in this Article Eight shall be
construed to relieve any Selling Shareholder from any fiduciary obligation
imposed by law.
(4) The Board of Directors of this corporation shall have
the power to determine the application of or compliance with this Article
Eight, including without limitation (i) whether a Person is a Selling
Shareholder; (ii) whether a Person is an Affiliate or Associate of another;
(iii) whether Section (1) is or has become applicable with respect to a
proposed transaction; (iv) what is the Market Price and whether a price is
above Market Price; and (v) when or whether a purchase or agreement to purchase
any share of shares of stock of this corporation has occurred and when or
whether a Person has become a Beneficial Owner of any share or shares of stock
of this corporation. Any decision or action taken by the Board of Directors
arising out of or in connection with the construction, interpretation and
effect of this Article Eight shall lie within its absolute discretion and shall
be conclusive and binding except in circumstances involving bad faith.
(5) The affirmative vote of the holders of shares of
voting stock of this corporation representing at least a majority of the
Disinterested Shares, voting together as a single class, shall be required to
amend or repeal, or adopt any provision inconsistent with, this Article Eight.
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<PAGE> 1
EXHIBIT 3.2
RESTATED BYLAWS
for the regulation, except as
otherwise provided by statute or
the Articles of Incorporation, of
BELL INDUSTRIES, INC.
a California corporation
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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ARTICLE I. GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 1.01 Principal Executive Office . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02 Number of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II. SHARES AND SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2.01 Meetings of Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(a) Place of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(b) Annual Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
(c) Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(d) Notice of Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(e) Adjourned Meeting and Notice Thereof . . . . . . . . . . . . . . . . . . . 2
(f) Waiver of Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(g) Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(h) Notice Procedures for Proposals to be Presented
at an Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.02 Action Without a Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.03 Voting of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(a) In General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(b) Cumulative Voting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(c) Election by Ballot . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.04 Proxies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 2.05 Inspectors of Election . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(a) Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(b) Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.06 Record Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 2.07 Share Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(a) In General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
(b) Two or More Classes or Series . . . . . . . . . . . . . . . . . . . . . . . 7
(c) Special Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.08 Transfer of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.09 Lost Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
</TABLE>
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<TABLE>
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Section 2.10 Nominations by Shareholders . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III. DIRECTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.01 Powers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.02 Committees of the Board . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.03 Election and Term of Office . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.04 Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.05 Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.06 Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.07 Meetings of the Board of Directors and Committees . . . . . . . . . . . . . 11
(a) Regular Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(b) Organization Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(c) Special Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(d) Notices; Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(e) Adjournment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(f) Place of Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(g) Presence by Conference Telephone Call . . . . . . . . . . . . . . . . . . . 11
(h) Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.08 Action Without Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.09 Committee Meetings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.10 Loans to Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE IV. OFFICERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.01 Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.02 Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.03 Other Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.04 Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.05 Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.06 Vacancies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.07 Chairman of the Board . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.08 President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.09 Vice President . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.10 Secretary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.11 Chief Financial Officer . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.12 Treasurer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE V. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 5.01 Records and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
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<TABLE>
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(a) Books of Account and Proceedings . . . . . . . . . . . . . . . . . . . . . 14
(b) Annual Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(c) Shareholders' Requests for Financial Reports . . . . . . . . . . . . . . . 15
Section 5.02 Rights of Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(a) By Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(1) Record of Shareholders . . . . . . . . . . . . . . . . . . . . . . 15
(2) Corporate Records . . . . . . . . . . . . . . . . . . . . . . . . 16
(3) Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(b) By Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 5.03 Checks, Drafts, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 5.04 Representation of Shares of Other Corporations . . . . . . . . . . . . . . . 16
Section 5.05 Indemnification and Insurance . . . . . . . . . . . . . . . . . . . . . . . 17
(a) Right to Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . 17
(b) Right of Claimant to Bring Suit . . . . . . . . . . . . . . . . . . . . . . 17
(c) Non-Exclusivity of Rights . . . . . . . . . . . . . . . . . . . . . . . . . 18
(d) Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(e) Indemnification of Employees and Agents of the Corporation . . . . . . . . 18
Section 5.06 Employee Stock Purchase Plans . . . . . . . . . . . . . . . . . . . . . . . 19
Section 5.07 Construction and Definitions . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE VI. AMENDMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 6.01 Power of Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 6.02 Power of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
</TABLE>
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<PAGE> 5
BYLAWS
for the regulation, except as otherwise provided
by statute or the Articles of Incorporation,
of
BELL INDUSTRIES, INC.
a California corporation
ARTICLE I. GENERAL PROVISIONS
Section 1.01 Principal Executive Office. The principal executive office of
the corporation shall be located at 11812 San Vicente Boulevard, Los Angeles,
California 90049. The Board of Directors shall have the power to change the
principal office to another location and may fix and locate one or more
subsidiary offices within or without the State of California.
Section 1.02 Number of Directors. The number of directors of the corporation
shall be not less than six nor more than eleven with the initial number being
seven. The number of directors may be changed within the above parameters by a
bylaw amending this Section 1.02 duly adopted by the vote or written consent of
a majority of the outstanding shares entitled to vote or by a resolution
adopted by a majority of the total number of authorized directors; provided,
however, that a bylaw reducing the minimum number of directors to a number less
than five cannot be adopted if the votes cast against its adoption at a meeting
or the shares not consenting in the case of action by written consent are equal
to more than 16-2/3 percent of the outstanding shares entitled to vote.
ARTICLE II. SHARES AND SHAREHOLDERS
Section 2.01 Meetings of Shareholders.
(a) Place of Meetings. Meetings of shareholders shall be held at
any place within or without the State of California designated by the Board of
Directors. In the absence of any such designation, shareholders' meetings
shall be held at the principal executive office of the corporation.
(b) Annual Meetings. An annual meeting of the shareholders of the
corporation shall be held on the second Tuesday of May of each year at 10:00
a.m. or at such other date and time as may be designated by the Board of
Directors. Should said day fall upon a legal holiday, the annual meeting of
shareholders shall be held at the same time on the next day thereafter ensuing
which is a full business day. At each annual meeting directors shall be
elected, and any other proper business may be transacted.
<PAGE> 6
(c) Special Meetings. Special meetings of the shareholders may be
called by the Board of Directors, the chairman of the board, the president, or
by the holders of shares entitled to cast not less than ten percent of the
votes at the meeting. Upon request in writing to the chairman of the board,
the president, any vice president or the secretary by any person entitled to
call a special meeting of shareholders, the officer forthwith shall cause
notice to be given to the shareholders entitled to vote that a meeting will be
held at a time requested by the person or persons calling the meeting, not less
than 35 nor more than 60 days after the receipt of the request. If the notice
is not given within 20 days after receipt of the request, the persons entitled
to call the meeting may give the notice.
(d) Notice of Meetings. Notice of any shareholders' meeting shall
be given in accordance with Sections 601(a) and 601(b) of the California
General Corporation Law.
If action is proposed to be taken at any meeting of
shareholders, which action is within Sections 310, 902, 1201, 1900 or 2007 of
the California General Corporation Law, the notice shall also state the general
nature of that proposal.
(e) Adjourned Meeting and Notice Thereof. Any meeting of
shareholders may be adjourned from time to time by the vote of a majority of
the shares represented either in person or by proxy whether or not a quorum is
present. When a shareholders' meeting is adjourned to another time or place,
notice need not be given of the adjourned meeting if the time and place thereof
are announced at the meeting at which the adjournment is taken. At the
adjourned meeting the corporation may transact any business which might have
been transacted at the original meeting. However, if the adjournment is for
more than 45 days or if after the adjournment a new record date is fixed for
the adjourned meeting, a notice of the adjourned meeting shall be given to each
shareholder of record entitled to vote at the meeting.
(f) Waiver of Notice. The transactions of any meeting of
shareholders, however called and noticed, and wherever held, are as valid as
though had at a meeting duly held after regular call and notice, if a quorum is
present either in person or by proxy, and if, either before or after the
meeting, each of the persons entitled to vote, not present in person or by
proxy, signs a written waiver of notice or a consent to the holding of the
meeting or an approval of the minutes thereof. The waiver of notice or consent
need not specify either the business to be transacted or the purpose of any
annual or special meeting of shareholders, except that if action is taken or
proposed to be taken for approval of any of those matters specified in the
second paragraph of subparagraph (d) of Section 2.01 of this Article II, the
waiver of notice or consent shall state the general nature of the proposal.
All such waivers, consents and approvals shall be filed with the corporate
records or made a part of the minutes of the meeting.
(g) Quorum. The presence in person or by proxy of the persons
entitled to vote a majority of the shares entitled to vote at any meeting shall
constitute a quorum for the transaction of business. If a quorum is present,
the affirmative vote of the majority of the shares represented and voting at
the meeting (which shares voting affirmatively
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<PAGE> 7
also constitute at least a majority of the required quorum) shall be the act of
the shareholders, unless the vote of a greater number or voting by classes is
required by law or the Articles of Incorporation of the corporation.
The shareholders present at a duly called or held meeting at
which a quorum is present may continue to transact business until adjournment
notwithstanding the withdrawal of enough shareholders to leave less than a
quorum, provided that any action taken (other than adjournment) must be
approved by at least a majority of the shares required to constitute a quorum.
(h) Notice Procedures for Proposals to be Presented at an Annual
Meeting
(1) At an Annual Meeting, only such business shall be
conducted, and only such proposals shall be acted upon, as shall have been
brought before the Annual Meeting (i) by, or at the direction of, the Board of
Directors or (ii) by any shareholder of the corporation who complies with the
notice procedures set forth in this Section of these Bylaws. For a proposal to
be properly brought before an Annual Meeting by a shareholder, the shareholder
must have given timely notice thereof in writing to the Secretary of the
corporation. To be timely, a shareholder's notice must be delivered to, or
mailed and received at, the principal executive offices of the corporation not
less than 60 days nor more than 90 days prior to the scheduled Annual Meeting,
regardless of any postponements, deferrals or adjournments of that meeting to a
later date; provided, however, that if less than 70 days' notice or prior
public disclosure of the date of the scheduled Annual Meeting is given or made,
notice by the shareholder to be timely must be so delivered or received not
later than the close of business on the 10th day following the earlier of the
day on which such notice of the date of the scheduled Annual Meeting was mailed
or the day on which such public disclosure was made. A shareholder's notice to
the Secretary shall set forth as to each matter the shareholder proposes to
bring before the Annual Meeting (i) a brief description of the proposal desired
to be brought before the Annual Meeting, (ii) the name and address, as they
appear on the corporation's books, of the shareholder proposing such business
and any other shareholders known by such shareholder to be supporting such
proposal, (iii) the class and number of shares of the corporation's stock which
are beneficially owned by the shareholder on the date of such shareholder
notice and by any other shareholders known by such shareholder to be supporting
such proposal on the date of such shareholder notice, and (iv) any financial
interest of the shareholder in such proposal. In the event such proposal
includes the nomination of a person to become a director of the corporation
which nomination was not set forth in a proxy statement submitted to all
shareholders pursuant to Regulation 14(A) of the Securities Exchange Act of
1934, as amended, such proposal shall contain all the information specified by
Schedule 14B of said Act.
(2) If the presiding officer of the Annual Meeting determines
that a shareholder proposal was not made in accordance with the terms of this
Section, he shall so declare at the Annual Meeting and any such proposal shall
not be acted upon at the Annual Meeting.
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<PAGE> 8
(3) This provision shall not prevent the consideration and
approval or disapproval at the Annual Meeting of reports of officers, directors
and committees of the Board of Directors, but, in connection with such reports,
no business shall be acted upon at such Annual Meeting unless stated, filed and
received as herein provided.
Section 2.02 Action Without a Meeting. Any action which may be taken at any
annual or special meeting of shareholders may be taken without a meeting and
without prior notice, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding shares having not less
than the minimum number of votes that would be necessary to authorize or take
such action at a meeting at which all shares entitled to vote thereon were
present and voted. Notwithstanding the foregoing, directors may not be elected
by written consent except by unanimous written consent of all shares entitled
to vote for the election of directors, except as provided by Section 3.04
hereof.
Where the approval of shareholders is given without a meeting by less
than unanimous written consent, unless the consents of all shareholders
entitled to vote have been solicited in writing, the secretary shall give
prompt notice of the corporate action approved by the shareholders without a
meeting. In the case of approval of transactions pursuant to Section 310, 317,
1201 or 2007 of the General Corporation Law of the State of California, the
notice shall be given at least ten days before the consummation of any action
authorized by that approval. Such notice shall be given in the same manner as
notice of shareholders' meeting.
In order that the corporation may determine the shareholders entitled
to consent to corporate action in writing without a meeting, the Board of
Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which date shall not be more than ten days after the date upon
which the resolution fixing the record date is adopted by the Board of
Directors. Any shareholder of record seeking to have the shareholders
authorize or take corporate action by written consent shall, by written notice
to the Secretary, request the Board of Directors to fix a record date. The
Board of Directors shall promptly, but in all events within ten days after the
date on which such a request is received, adopt a resolution fixing the record
date. If no record date has been fixed by the Board of Directors within ten
days of the date on which such a request is received, the record date for
determining shareholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the Board of Directors is required
by applicable law, shall be the first date on which a signed written consent
setting forth the action taken or proposed to be taken is delivered to the
corporation by delivery to its registered office in the State of California,
its principal place of business, or any officer or agent of the corporation
having custody of the book in which proceedings of shareholders meetings are
recorded, to the attention of the Secretary of the corporation. Delivery shall
be by hand or by certified or registered mail, return receipt requested. If no
record date has been fixed by the Board of Directors and prior action by the
Board of Directors is required by applicable law, the record date for
determining shareholders entitled to consent to corporate action in writing
without a meeting shall be at the close
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<PAGE> 9
of business on the date on which the Board of Directors adopts the resolution
taking such prior action.
Section 2.03 Voting of Shares.
(a) In General. Except as otherwise provided in the Articles of
Incorporation and subject to subparagraph (b) hereof, each outstanding share,
regardless of class, shall be entitled to one vote on each matter submitted to
a vote of shareholders.
(b) Cumulative Voting. At any election of directors, every
shareholder complying with this paragraph (b) and entitled to vote may cumulate
his or her 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
shareholder's shares are entitled, or distribute the shareholder's votes on the
same principle among as many candidates as the shareholder thinks fit. No
shareholder shall be entitled to cumulate votes (i.e., cast for any one or more
candidates a number of votes greater than the number of votes which such
shareholder normally is entitled to cast) unless such candidate or candidates'
names have been placed in nomination prior to the voting and the shareholder
has given notice at the meeting prior to the voting of the shareholder's
intention to cumulate the shareholder's votes. If any one shareholder has
given such notice, all shareholders may cumulate their votes for candidates in
nomination. In any election of directors, the candidates receiving the highest
number of affirmative votes up to the number of directors to be elected by such
shares are elected; votes against a director and votes withheld shall have no
legal effect.
(c) Election by Ballot. Elections for directors need not be by
ballot unless a shareholder demands election by ballot at the meeting and
before the voting begins.
Section 2.04 Proxies. Every person entitled to vote shares may authorize
another person or persons to act by proxy with respect to such shares. No
proxy shall be valid after the expiration of 11 months from the date thereof
unless otherwise provided in the proxy. Every proxy continues in full force
and effect until revoked by the person executing it prior to the vote pursuant
thereto, except as otherwise herein provided. Such revocation may be effected
by a writing delivered to the corporation stating that the proxy is revoked or
by a subsequent proxy executed by the person executing the prior proxy and
presented to the meeting, or as to any meeting by attendance at such meeting
and voting in person by the person executing the proxy. The dates contained on
the forms of proxy presumptively determine the order of execution, regardless
of the postmark dates on the envelopes in which they are mailed. A proxy is
not revoked by the death or incapacity of the maker unless, before the vote is
counted, written notice of such death or incapacity is received by the
corporation. The revocability of a proxy that states on its face that it is
irrevocable shall be governed by the provisions of Sections 705(e) and 705(f)
of the California General Corporation Law.
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<PAGE> 10
Section 2.05 Inspectors of Election.
(a) Appointment. In advance of any meeting of shareholders the
Board may appoint inspectors of election to act at the meeting and any
adjournment thereof. If inspectors of election are not so appointed, or if any
persons so appointed fail to appear or refuse to act, the chairman of any
meeting of shareholders may, and on the request of any shareholder or a
shareholder's proxy shall, appoint inspectors of election (or persons to
replace those who so fail or refuse) at the meeting. The number of inspectors
shall be either one or three. If appointed at a meeting on the request of one
or more shareholders or proxies, the majority of shares represented in person
or by proxy shall determine whether one or three inspectors are to be
appointed.
(b) Duties. The inspectors of election shall determine the number
of shares outstanding and the voting power of each, the shares represented at
the meeting, the existence of a quorum and the authenticity, validity and
effect of proxies, receive votes, ballots or consents, hear and determine all
challenges and questions in any way arising in connection with the right to
vote, count and tabulate all votes or consents, determine when the polls shall
close, determine the result and do such acts as may be proper to conduct the
election or vote with fairness to all shareholders. The inspectors of election
shall perform their duties impartially, in good faith, to the best of their
ability and as expeditiously as is practical. If there are three inspectors of
election, the decision, act or certificate of a majority is effective in all
respects as the decision, act or certificate of all. Any report or certificate
made by the inspectors of election is prima facie evidence of the facts stated
therein.
Section 2.06 Record Date. In order that the corporation may determine the
shareholders entitled to notice of any meeting or to vote or entitled to
receive payment of any dividend or other distribution or allotment of any
rights or entitled to exercise any rights in respect of any other lawful
action, the Board may fix, in advance, a record date, which shall not be more
than 60 nor less than 10 days prior to the date of such meeting nor more than
60 days prior to any other action. If no record date is fixed:
(1) The record date for determining shareholders entitled
to notice of or to vote at a meeting of shareholders shall be at the close of
business on the business day next preceding the day on which notice is given
or, if notice is waived, at the close of business on the business day next
preceding the day on which the meeting is held.
(2) The record date for determining shareholders entitled
to give consent to corporate action in writing without a meeting, when no prior
action by the Board has been taken, shall be the day on which the first written
consent is given.
(3) The record date for determining shareholders for any
other purpose shall be at the close of business on the day on which the board
adopts the resolution relating thereto, or the 60th day prior to the date of
such other action, whichever is later.
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A determination of shareholders of record entitled to notice of or to vote at a
meeting of shareholders shall apply to any adjournment of the meeting unless
the board fixes a new record date for the adjourned meeting, but the board
shall fix a new record date if the meeting is adjourned for more than 45 days
from the date set for the original meeting.
Shareholders at the close of business on the record date are entitled
to notice and to vote or to receive the dividend, distribution or allotment of
rights or to exercise the rights, as the case may be, notwithstanding any
transfer of any shares on the books of the corporation after the record date,
except as otherwise provided in the Articles of Incorporation or by agreement
or in the California General Corporation Law.
Section 2.07 Share Certificates.
(a) In General. The corporation shall issue a certificate or
certificates representing shares of its capital stock. Each certificate so
issued shall be signed in the name of the corporation by the chairman or vice
chairman of the board or the president or a vice president and by the chief
financial officer or an assistant treasurer or the secretary or any assistant
secretary, shall state the name of the record owner thereof and shall certify
the number of shares and the class or series of shares represented thereby.
Any or all of the signatures on the certificate may be facsimile. In case any
officer, transfer agent or registrar who has signed or whose facsimile
signature has been placed upon a certificate has ceased to be such officer,
transfer agent or registrar before such certificate is issued, it may be issued
by the corporation with the same effect as if such person were an officer,
transfer agent or registrar at the date of issue.
(b) Two or More Classes or Series. If the shares of the
corporation are classified or if any class of shares has two or more series,
there shall appear on the certificate one of the following:
(1) A statement of the rights, preferences, privileges,
and restrictions granted to or imposed upon the respective classes or series of
shares authorized to be issued and upon the holders thereof; or
(2) A summary of such rights, preferences, privileges and
restrictions with reference to the provisions of the Articles of Incorporation
and any certificates of determination establishing the same; or
(3) A statement setting forth the office or agency of the
corporation from which shareholders may obtain upon request and without charge,
a copy of the statement referred to in subparagraph (1).
(c) Special Restrictions. There shall also appear on the
certificate (unless stated or summarized under subparagraph (1) or (2) of
subparagraph (b) above) the statements required by all of the following clauses
to the extent applicable:
(1) The fact that the shares are subject to restrictions
upon transfer.
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(2) If the shares are assessable, a statement that they
are assessable.
(3) If the shares are not fully paid, a statement of the
total consideration to be paid therefor and the amount paid thereon.
(4) The fact that the shares are subject to a voting
agreement or an irrevocable proxy or restrictions upon voting rights
contractually imposed by the corporation.
(5) The fact that the shares are redeemable.
(6) The fact that the shares are convertible and the
period for conversion.
Section 2.08 Transfer of Certificates. Where a certificate for shares is
presented to the corporation or its transfer clerk or transfer agent with a
request to register a transfer of shares, the corporation shall register the
transfer, cancel the certificate presented, and issue a new certificate if:
(a) the security is endorsed by the appropriate person or persons; (b)
reasonable assurance is given that those endorsements are genuine and
effective; (c) the corporation has no notice of adverse claims or has
discharged any duty to inquire into such adverse claims; (d) any applicable law
relating to the collection of taxes has been complied with; (e) the transfer is
not in violation of any federal or state securities law; and (f) the transfer
is in compliance with any applicable agreement governing the transfer of the
shares.
Section 2.09 Lost Certificates. Where a certificate has been lost, destroyed
or wrongfully taken, the corporation shall issue a new certificate in place of
the original if the owner: (a) so requests before the corporation has notice
that the certificate has been acquired by a bona fide purchaser; (b) files with
the corporation a sufficient indemnity bond, if so requested by the Board of
Directors; and (c) satisfies any other reasonable requirements as may be
imposed by the Board. Except as above provided, no new certificate for shares
shall be issued in lieu of an old certificate unless the corporation is ordered
to do so by a court in the judgment in an action brought under Section 419(b)
of the California General Corporation Law.
Section 2.10 Nominations by Shareholders. Any shareholder entitled to vote in
the election of directors generally may nominate one or more persons for
election as director at a meeting only if written notice of such shareholder's
intent to make such nomination or nominations has been given, either by
personal delivery or by United States mail, postage prepaid, to the secretary
of the corporation not later than (i) with respect to an election to be held at
an annual meeting of shareholders, 120 days in advance of such meeting, and
(ii) with respect to an election to be held at a special meeting of
shareholders for the election of directors, the close of business on the
seventh day following the date on which notice of such meeting is first given
to shareholders. Each such notice shall set forth: (a) the name and address
of the shareholder who intends to make the nomination and of the person or
persons to be nominated; (b) a representation
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that the shareholder is a holder of record of stock of the corporation entitled
to vote at such meeting and intends to appear in person or by proxy at the
meeting to nominate the person or persons specified in the notice; (c) a
description of all arrangements or understandings between the shareholder and
each nominee and any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made by the
shareholder; (d) such other information regarding each nominee proposed by such
shareholder as would be required to be included in a proxy statement filed
pursuant to the proxy rules of the Securities and Exchange Commission, had the
nominee been nominated, or intended to be nominated, by the board of directors;
and (e) the consent of each nominee to serve as a director of the corporation
if so elected. The chairman of the meeting may refuse to acknowledge the
nomination of any person not made in compliance with the foregoing procedures,
which nomination shall be void. Nothing in this section shall be deemed to
limit any voting rights arising upon the occurrence of any dividend arrearages
or otherwise provided to holders of any series of preferred stock then
outstanding.
ARTICLE III. DIRECTORS
Section 3.01 Powers. Subject to the provisions of the California General
Corporation Law and the Articles of Incorporation, the business and affairs of
the corporation shall be managed and all corporate powers shall be exercised by
or under the direction of the Board of Directors. The Board may delegate the
management of the day-to-day operations of the business of the corporation to a
management company or other person provided that the business and affairs of
the corporation shall be managed and all corporate powers shall be exercised
under the ultimate direction of the Board.
Section 3.02 Committees of the Board. The Board may, by resolution adopted by
a majority of the authorized number of directors, designate one or more
committees, each consisting of two or more directors, to serve at the pleasure
of the Board. The Board may designate one or more directors as alternate
members of any committee, who may replace any absent member at any meeting of
the committee. The appointment of members or alternate members of a committee
requires the vote of a majority of the authorized number of directors. Any
such committee, to the extent provided in the resolution of the Board, shall
have all the authority of the Board, except with respect to:
(1) The approval of any action which also requires, under
the California General Corporation Law, shareholders' approval or approval of
the outstanding shares;
(2) The filling of vacancies on the Board or in any
committee;
(3) The fixing of compensation of the directors for
serving on the Board or on any committee;
(4) The amendment or repeal of bylaws or the adoption of
new bylaws;
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(5) The amendment or repeal of any resolution of the
Board which by its express terms is not so amendable
or repealable;
(6) A distribution (within the meaning of the California
General Corporation Law) to the shareholders of the corporation, except at a
rate or in a periodic amount or within a price range determined by the Board;
and
(7) The appointment of other committees of the Board or
the members thereof.
Section 3.03 Election and Term of Office. The directors shall be elected at
each annual meeting of shareholders but, if any such annual meeting is not held
or the directors are not elected thereat, the directors may be elected at any
special meeting of shareholders held for that purpose. Each director,
including a director elected to fill a vacancy, shall hold office until the
expiration of the term for which elected and until a successor has been elected
and qualified.
Section 3.04 Vacancies. Except for a vacancy created by the removal of a
director, vacancies on the Board may be filled by approval of the Board or, if
the number of directors then in office is less than a quorum, by (a) the
unanimous written consent of the directors then in office, (b) the affirmative
vote of a majority of the directors then in office at a meeting held pursuant
to notice or waivers of notice under the California General Corporation Law, or
(c) a sole remaining director. The shareholders may elect a director or
directors at any time to fill any vacancy or vacancies not filled by the
directors, but any such election by written consent requires the consent of a
majority of the outstanding shares entitled to vote.
The Board of Directors shall have the power to declare vacant the
office of a director who has been declared of unsound mind by an order of
court, or convicted of a felony.
Section 3.05 Removal. Any or all of the directors may be removed without
cause if such removal is approved by the vote of a majority of the outstanding
shares entitled to vote, except that no director may be removed (unless the
entire board is removed) when the votes cast against removal, or not consenting
in writing to such removal, would be sufficient to elect such director if voted
cumulatively at an election at which the same total number of votes were cast
(or, if such action is taken by written consent, all shares entitled to vote
were voted) and the entire number of directors authorized at the time of the
director's most recent election were then being elected.
Section 3.06 Resignation. Any director may resign effective upon giving
written notice to the chairman of the board, the president, the secretary or
the Board of Directors of the corporation, unless the notice specifies a later
time for the effectiveness of such resignation. If the resignation is
effective at a future time, a successor may be elected to take office when the
resignation becomes effective.
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Section 3.07 Meetings of the Board of Directors and Committees.
(a) Regular Meetings. Regular meetings of the Board of Directors
may be held without notice at such time and place within or without the State
as may be designated from time to time by resolution of the Board or by written
consent of all members of the Board or in these Bylaws.
(b) Organization Meeting. Immediately following each annual
meeting of shareholders the Board of Directors shall hold a regular meeting for
the purpose of organization, election of officers, and the transaction of other
business. Notice of such meetings is hereby dispensed with.
(c) Special Meetings. Special meetings of the Board of Directors
for any purpose or purposes may be called at any time by the chairman of the
board or the president or, by any vice president or the secretary or any two
directors.
(d) Notices; Waivers. Special meetings shall be held upon four
days' notice by mail or 48 hours' notice delivered personally or by telephone
or telecopier. Notice of a meeting need not be given to any director who signs
a waiver of notice or a consent to holding the meeting or an approval of the
minutes thereof, whether before or after the meeting, or who attends the
meeting without protesting, prior thereto or at its commencement, the lack of
notice to such director. All such waivers, consents and approvals shall be
filed with the corporate records or made a part of the minutes of the meeting.
(e) Adjournment. A majority of the directors present, whether or
not a quorum is present, may adjourn any meeting to another time and place. If
the meeting is adjourned for more than 24 hours, notice of such adjournment to
another time and place shall be given prior to the time of the adjourned
meeting to the directors who were not present at the time of adjournment.
(f) Place of Meeting. Meetings of the Board may be held at any
place within or without the state which has been designated in the notice of
the meeting or, if not stated in the notice or there is no notice, then such
meeting shall be held at the principal executive office of the corporation, or
such other place designated by resolution of the Board.
(g) Presence by Conference Telephone Call. Members of the Board
may participate in a meeting through use of conference telephone or similar
communications equipment, so long as all members participating in such meeting
can hear one another. Such participation constitutes presence in person at
such meeting.
(h) Quorum. A majority of the authorized number of directors
constitutes a quorum of the Board for the transaction of business. Every act
or decision done or made by a majority of the directors present at a meeting
duly held at which a quorum is present is the act of the Board of Directors,
unless a greater number be required by law,
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by the Articles of Incorporation or by these Bylaws. A meeting at which a
quorum is initially present may continue to transact business notwithstanding
the withdrawal of directors, if any action taken is approved by at least a
majority of the required quorum for such meeting.
Section 3.08 Action Without Meeting. Any action required or permitted to be
taken by the Board of Directors, may be taken without a meeting if all members
of the Board shall individually or collectively consent in writing to such
action. Such written consent or consents shall be filed with the minutes of
the proceedings of the Board. Such action by written consent shall have the
same force and effect as a unanimous vote of such directors.
Section 3.09 Committee Meetings. The provisions of Sections 3.07 and 3.08 of
these Bylaws apply also to committees of the Board and action by such
committees, mutatis mutandis.
Section 3.10 Loans to Officers. This corporation may make any loan of money
or property to, or guarantee the obligation of, any officer of this corporation
upon the approval of the Board of Directors alone if the Board determines that
such a loan or guaranty may reasonably be expected to benefit this corporation,
provided that such approval is by a vote sufficient without counting the vote
of any interested director or directors.
ARTICLE IV. OFFICERS
Section 4.01 Officers. The officers of the corporation shall consist of a
chairman of the board or a president, or both, a secretary, a chief financial
officer, and such additional officers as may be elected or appointed in
accordance with Section 4.03 of these Bylaws and as may be necessary to enable
the corporation to sign instruments and share certificates. Any number of
offices may be held by the same person.
Section 4.02 Elections. All officers of the corporation, except such officers
as may be otherwise appointed in accordance with Section 4.03, shall be chosen
by the Board of Directors, and shall serve at the pleasure of the Board of
Directors, subject to the rights, if any, of an officer under any contract of
employment.
Section 4.03 Other Officers. The Board of Directors, the chairman of the
board, or the president at their or his discretion, may appoint one or more
vice presidents, one or more assistant secretaries, a treasurer, one or more
assistant treasurers, or such other officers as the business of the corporation
may require, each of whom shall hold office for such period, have such
authority and perform such duties as the Board of Directors, the chairman of
the board, or the president, as the case may be, may from time to time
determine.
Section 4.04 Removal. Subject to the rights, if any, of an officer under any
contract of employment, any officer may be removed, either with or without
cause, by the Board of
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Directors, or, except in case of an officer chosen by the Board of Directors,
by any officer upon whom such power of removal may be conferred by the Board of
Directors, without prejudice to the rights, if any, of the corporation under
any contract to which the officer is a party.
Section 4.05 Resignation. Any officer may resign at any time by giving
written notice to the Board of Directors or to the president, or to the
secretary of the corporation without prejudice to the rights, if any, of the
corporation under any contract to which the officer is a party. Any such
resignation shall take effect at the date of the receipt of such notice or at
any later time specified therein; and, unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
Section 4.06 Vacancies. A vacancy in any office because of death,
resignation, removal, disqualification or any other cause shall be filled in
the manner prescribed in these Bylaws for regular appointments to such office.
Section 4.07 Chairman of the Board. The chairman of the board, if there shall
be such an officer, shall, if present, preside at all meetings of the Board of
Directors and exercise and perform such other powers and duties as may be from
time to time assigned to him by the Board of Directors. If the president has
been designated as the corporation's chief operating officer, the chairman of
the board shall in addition be the chief executive officer of the corporation
and shall have the powers and duties prescribed in Section 4.08 below.
Section 4.08 President. Subject to such supervisory powers, if any, as may be
given by the Board of Directors to the chairman of the board, if there be such
an officer, the president shall (unless designated as the corporation's chief
operating officer by the Board of Directors) be general manager and chief
executive officer of the corporation and shall, subject to the control of the
Board of Directors, have general supervision, direction and control of the
business and affairs of the corporation. He shall preside at all meetings of
the shareholders and, in the absence of the chairman of the board, or if there
be none, at all meetings of the Board of Directors. He shall be ex-officio a
member of all the standing committees, including the executive committee, if
any, and shall have the general powers and duties of management usually vested
in the office of president of a corporation, and shall have such other powers
and duties as may be prescribed by the Board of Directors or these Bylaws.
Section 4.09 Vice President. In the absence of the president or in the event
of the president's inability or refusal to act, the vice president, or in the
event there be more than one vice president, the vice president designated by
the Board of Directors, or if no such designation is made, in order of their
election, shall perform the duties of president and when so acting, shall have
all the powers of and be subject to all the restrictions upon the president.
Any vice president shall perform such other duties as from time to time may be
assigned to such vice president by the president or the Board of Directors.
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Section 4.10 Secretary. The secretary shall keep or cause to be kept the
minutes of proceedings and record of shareholders, as provided for and in
accordance with Section 5.01(a) of these Bylaws.
The secretary shall give, or cause to be given, notice of all meetings
of the shareholders and of the Board of Directors required by these Bylaws or
by law to be given, and shall have such other powers and perform such other
duties as may be prescribed by the Board of Directors.
Section 4.11 Chief Financial Officer. The chief financial officer shall have
general supervision, direction and control of the financial affairs of the
corporation and shall have such other powers and duties as may be prescribed by
the Board of Directors or these Bylaws. In the absence of a named treasurer,
the chief financial officer shall also have the powers and duties of the
treasurer as hereinafter set forth and shall be authorized and empowered to
sign as treasurer in any case where such officer's signature is required.
Section 4.12 Treasurer. The treasurer shall keep or cause to be kept the
books and records of account as provided for and in accordance with Section
5.01(a) of these Bylaws. The books of account shall at all reasonable times be
open to inspection by any director.
The treasurer shall deposit all moneys and other valuables in the name
and to the credit of the corporation with such depositaries as may be
designated by the Board of Directors. He shall disburse the funds of the
corporation as may be ordered by the Board of Directors, shall render to the
president and directors, whenever they request it, an account of all of his
transactions as treasurer and of the financial condition of the corporation,
and shall have such other powers and perform such other duties as may be
prescribed by the Board of Directors or these Bylaws. In the absence of a
named chief financial officer, the treasurer shall be deemed to be the chief
financial officer and shall have the powers and duties of such office as
hereinabove set forth.
ARTICLE V. MISCELLANEOUS
Section 5.01 Records and Reports.
(a) Books of Account and Proceedings. The corporation shall keep
adequate and correct books and records of account and shall keep minutes of the
proceedings of its shareholders, Board and committees of the board and shall
keep at its principal executive office, or at the office of its transfer agent
or registrar, a record of its shareholders, giving the names and addresses of
all shareholders and the number and class of shares held by each. Such minutes
shall be kept in written form. Such other books and records shall be kept
either in written form or in any other form capable of being converted into
written form.
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(b) Annual Report. An annual report shall be sent to the
shareholders of the corporation not later than 120 days after the close of the
fiscal year and at least 15 (or, if sent by third-class mail, 35) days prior to
the annual meeting of shareholders to be held during the next fiscal year.
Such report shall contain a balance sheet as of the end of that fiscal year and
an income statement and statement of changes in financial position for such
fiscal year, accompanied by a report of independent accountants thereon, or if
there is no such report, the certificate of an authorized officer of the
corporation that such statements were prepared without audit from the books and
records of the corporation. Such report shall also include such further
statements required by law applicable to the corporation from time to time.
(c) Shareholders' Requests for Financial Reports. If no annual
report for the last fiscal year has been sent to shareholders, the corporation
shall, upon the written request of any shareholder made more than 120 days
after the close of that fiscal year, deliver or mail to the person making the
request within 30 days thereafter the financial statements for that year
required by Section 1501(a) of the California General Corporation Law. Any
shareholder or shareholders holding at least five percent of the outstanding
shares of any class of this corporation may make a written request to the
corporation for an income statement of the corporation for the three-month,
six-month or nine-month period of the current fiscal year ended more than 30
days prior to the date of the request and a balance sheet of the corporation as
of the end of such period, and the corporation shall deliver or mail the
statements to the person making the request within 30 days thereafter. A copy
of the statements shall be kept on file in the principal office of the
corporation for 12 months and they shall be exhibited at all reasonable times
to any shareholder demanding an examination of them or a copy shall be mailed
to such shareholder upon demand.
Section 5.02 Rights of Inspection.
(a) By Shareholders.
(1) Record of Shareholders. Any shareholder or
shareholders holding at least five percent in the aggregate of the outstanding
voting shares of the corporation or who hold at least one percent of such
voting shares and have filed a Schedule 14B with the United States Securities
and Exchange Commission relating to the election of directors of the
corporation shall have an absolute right to do either or both of the following:
(i) inspect and copy the record of shareholders' names and addresses and
shareholdings during usual business hours upon five business days' prior
written demand upon the corporation, or (ii) obtain from the transfer agent for
the corporation, upon written demand and upon the tender of its usual charges
for such a list (the amount of which charges shall be stated to the shareholder
by the transfer agent upon request), a list of the shareholders' names and
addresses, who are entitled to vote for the election of directors, and their
shareholdings, as of the most recent record date for which it has been compiled
or as of a date specified by the shareholder subsequent to the date of
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demand. The list shall be made available on or before the later of five
business days after demand is received or the date specified therein as the
date as of which the list is to be compiled.
The record of shareholders shall also be open to inspection
and copying by any shareholder or holder of a voting trust certificate at any
time during usual business hours upon written demand on the corporation, for a
purpose reasonably related to such holder's interests as a shareholder or
holder of a voting trust certificate.
(2) Corporate Records. The accounting books and records
and minutes of proceedings of the shareholders and the Board and committees of
the board shall be open to inspection upon the written demand on the
corporation of any shareholder or holder of a voting trust certificate at any
reasonable time during usual business hours, for a purpose reasonably related
to such holder's interests as a shareholder or as the holder of such voting
trust certificate. This right of inspection shall also extend to the records
of any subsidiary of the corporation.
(3) Bylaws. The corporation shall keep at its principal
executive office in this state, the original or a copy of its bylaws as amended
to date, which shall be open to inspection by the shareholders at all
reasonable times during office hours.
(b) By Directors. Every director shall have the absolute right at
any reasonable time to inspect and copy all books, records and documents of
every kind and to inspect the physical properties of the corporation of which
such person is a director and also of its subsidiary corporations, domestic or
foreign. Such inspection by a director may be made in person or by agent or
attorney and the right of inspection includes the right to copy and make
extracts.
Section 5.03 Checks, Drafts, Etc. All checks, drafts or other orders for
payment of money, notes or other evidences of indebtedness, issued in the name
of or payable to the corporation, shall be signed or endorsed by such person or
persons and in such manner as, from time to time, shall be determined by
resolution of the Board of Directors.
Section 5.04 Representation of Shares of Other Corporations. The chairman of
the board, if any, the president, any vice president or the secretary of this
corporation, or any other person authorized to do so by the chairman of the
board, the president or any vice president, is authorized to vote, represent
and exercise on behalf of this corporation all rights incident to any and all
shares of any other corporation or corporations standing in the name of this
corporation. The authority herein granted to said officers to vote or
represent on behalf of this corporation any and all shares held by this
corporation in any other corporation or corporations may be exercised either by
such officers in person or by any other person authorized so to do by proxy or
power of attorney duly executed by said officers.
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Section 5.05 Indemnification and Insurance.
(a) Right to Indemnification. Each person who was or is made a
party to or is threatened to be made a party to or is involuntarily involved in
any action, suit or proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "Proceeding"), by reason of the fact that he or
she, or a person of whom he or she is the legal representative, is or was a
director or officer of the corporation or is or was serving (during such
person's tenure as director or officer) at the request of the corporation, any
other corporation, partnership, joint venture, trust or other enterprise in any
capacity, whether the basis of a Proceeding is an alleged action in an official
capacity as a director or officer or in any other capacity while serving as a
director or officer, shall be indemnified and held harmless by the corporation
to the fullest extent authorized by California General Corporation Law, as the
same exists or may hereafter be amended (but, in the case of any such
amendment, only to the extent that such amendment permits the corporation to
provide broader indemnification rights than said law permitted the corporation
to provide prior to such amendment), against all expenses, liability and loss
(including attorneys' fees, judgments, fines, or penalties and amounts to be
paid in settlement) reasonably incurred or suffered by such person in
connection therewith. The right to indemnification conferred in this Section
shall be a contract right and shall include the right to be paid by the
corporation the expenses incurred in defending a Proceeding in advance of its
final disposition; provided, however, that, if California General Corporation
Law requires, the payment of such expenses in advance of the final disposition
of a Proceeding shall be made only upon receipt by the corporation of an
undertaking by or on behalf of such director or officer to repay all amounts so
advanced if it shall ultimately be determined that such director or officer is
not entitled to be indemnified under this Section or otherwise. No amendment
to or repeal of this Section 5.05 shall apply to or have any effect on any
right to indemnification provided hereunder with respect to any acts or
omissions occurring prior to such amendment or repeal.
(b) Right of Claimant to Bring Suit. If a claim for indemnity
under paragraph (a) of this Section is not paid in full by the corporation
within 90 days after a written claim has been received by the corporation, the
claimant may at any time thereafter bring suit against the corporation to
recover the unpaid amount of the claim and, if successful in whole or in part,
the claimant shall also be entitled to be paid the expense of prosecuting such
claim including reasonable attorneys' fees incurred in connection therewith.
It shall be a defense to any such action (other than an action brought to
enforce a claim for expenses incurred in defending a Proceeding in advance of
its final disposition where the required undertaking, if any is required, has
been tendered to the corporation) that the claimant has not met the standards
of conduct which make it permissible under California General Corporation Law
for the corporation to indemnify the claimant for the amount claimed, but the
burden of proving such defense shall be on the corporation. Neither the
failure of the corporation (including its Board of Directors, independent legal
counsel, or its shareholders) to have made a determination
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prior to the commencement of such action that indemnification of the claimant
is proper in the circumstances because he or she has met the applicable
standard of conduct set forth in California General Corporation Law, nor an
actual determination by the corporation (including its Board of Directors,
independent legal counsel, or its shareholders) that the claimant has not met
such applicable standard of conduct, shall be a defense to the action or create
a presumption that the claimant has not met the applicable standard of conduct.
(c) Non-Exclusivity of Rights. The rights conferred in this
Section shall not be exclusive of any other rights which any director, officer,
employee or agent may have or hereafter acquire under any statute, provision of
the Articles of Incorporation, bylaw, agreement, vote of shareholders or
disinterested directors or otherwise, to the extent the additional rights to
indemnification are authorized in the Articles of Incorporation of the
corporation.
(d) Insurance. In furtherance and not in limitation of the powers
conferred by statute:
(1) the corporation may purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent of
the corporation, or is serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise against any expense, liability or loss, whether or
not the corporation would have the power to indemnify the person against that
expense, liability or loss under the California General Corporation Law.
(2) the corporation may create a trust fund, grant a
security interest and/or use other means (including, without limitation,
letters of credit, surety bonds and/or other similar arrangements), as well as
enter into contracts providing indemnification to the full extent authorized or
permitted by law and including as part thereof provisions with respect to any
or all of the foregoing to ensure the payment of such amounts as may become
necessary to effect indemnification as provided therein, or elsewhere.
(e) Indemnification of Employees and Agents of the Corporation.
The corporation may, to the extent authorized from time to time by the Board of
Directors, grant rights to indemnification, including the right to be paid by
the corporation the expenses incurred in defending a Proceeding in advance of
its final disposition, to any employee or agent of the corporation to the
fullest extent of the provisions of this Section or otherwise with respect to
the indemnification and advancement of expenses of directors and officers of
the corporation.
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Section 5.06 Employee Stock Purchase Plans. The corporation may adopt and
carry out a stock purchase plan or agreement or stock option plan or agreement
providing for the issue and sale for such consideration as may be fixed of its
unissued shares, or of issued shares acquired or to be acquired, to one or more
of the employees or directors of the corporation or of a subsidiary or to a
trustee on their behalf and for the payment for such shares in installments or
at one time, and may provide for aiding any such persons in paying for such
shares by compensation for services rendered, promissory notes or otherwise.
A stock purchase plan or agreement or stock option plan or agreement
may include, among other features, the fixing of eligibility for participation
therein, the class and price of shares to be issued or sold under the plan or
agreement, the number of shares which may be subscribed for, the method of
payment therefor, the reservation of title until full payment therefor, the
effect of the termination of employment, an option or obligation on the part of
the corporation to repurchase the shares upon termination of employment,
subject to the provisions of the California General Corporation Law,
restrictions upon transfer of the shares and the time limits of and termination
of the plan.
Section 5.07 Construction and Definitions. Unless the context otherwise
requires, the general provisions, rules of construction and definitions
contained in the California General Corporation Law shall govern the
construction of these Bylaws. Without limiting the generality of the
foregoing, the masculine gender includes the feminine and neuter, the singular
number includes the plural and the plural number includes the singular, and the
term "person" includes a corporation as well as a natural person.
ARTICLE VI. AMENDMENTS
Section 6.01 Power of Shareholders. New bylaws may be adopted or these Bylaws
may be amended or repealed by the vote of shareholders entitled to exercise a
majority of the voting power of the corporation or by the written assent of
such shareholders, except as otherwise provided by law or by the Articles of
Incorporation.
Section 6.02 Power of Directors. Subject to the right of shareholders as
provided in Section 6.01 to adopt, amend or repeal bylaws, any bylaw may be
adopted, amended or repealed by the Board of Directors.
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EXHIBIT 10.7
EMPLOYMENT
AND
RETIREMENT COMPENSATION AGREEMENT
AGREEMENT made as of February 15, 1995, by and between BELL
INDUSTRIES, INC., a Delaware corporation (hereinafter referred to as
"COMPANY"), and BRUCE M. JAFFE (hereinafter referred to as "EMPLOYEE").
WHEREAS, EMPLOYEE has been employed by the COMPANY in a managerial
capacity for more than twenty-five (25) years and is currently its President
and Chief Operating Officer and it is anticipated that EMPLOYEE will be elected
to, and will assume, the office of Chief Executive Officer within the near
future, and
WHEREAS, the COMPANY desires to retain the services of EMPLOYEE and
EMPLOYEE is willing to remain in the employ of the COMPANY in accordance with
the provisions hereinafter set forth, and
WHEREAS, the COMPANY and EMPLOYEE also desire to establish retirement
benefits that will be payable to EMPLOYEE upon his retirement.
IT IS THEREFORE AGREED:
1. CONTINUATION OF EMPLOYMENT.
Subject to the other terms of this Agreement, EMPLOYEE shall continue
in the employ of the COMPANY, and the COMPANY shall continue to employ EMPLOYEE
until EMPLOYEE reaches age sixty-five (65), or such later date as shall be
mutually
<PAGE> 2
agreed upon; provided, however, EMPLOYEE may elect early retirement at age
sixty-two (62) pursuant to Section 3 hereof. Without first obtaining EMPLOYEE's
written consent, the COMPANY shall not reduce EMPLOYEE's compensation as set
forth in Section 2 hereof nor require EMPLOYEE to undertake responsibilities
not commensurate with, or change, his position as President and Chief Operating
or Executive Officer, as the case may be, nor shall he be required to perform
his duties hereunder if the performance thereof would require his maintenance
of a residence outside of the Greater Los Angeles area. In the event the
COMPANY should violate the foregoing provisions and by reason thereof EMPLOYEE
should terminate his employment under this Agreement, such termination shall be
deemed a termination of EMPLOYEE's employment by the COMPANY for all purposes
under this Agreement.
EMPLOYEE agrees to devote his full business time, attention, and
energies to the performance of the business of the COMPANY, and EMPLOYEE shall
not, directly or indirectly, alone or as a member of any partnership, or as an
officer, director or employee of any other corporation, partnership or other
organization, be engaged in any other duties which interfere with the
performance of his duties hereunder, or which, even if non-interfering, are
contrary to the best interests of the COMPANY. EMPLOYEE agrees that in the
performance of his duties hereunder he will comply with the
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<PAGE> 3
announced policies and directives of the COMPANY's Board of Directors.
2. REGULAR COMPENSATION.
During such time as EMPLOYEE is employed by the COMPANY, the COMPANY
shall pay to EMPLOYEE as compensation for his services hereunder a salary to be
fixed annually by the Board of Directors, but not less than Two Hundred
Eighty-five Thousand Dollars ($285,000) per year, payable in equal bi-weekly
installments. Additionally, EMPLOYEE shall participate in the COMPANY's bonus
program which, at the time, is made available to its principal corporate
officers.
3. ADDITIONAL COMPENSATION.
(a) Early Termination of Employment.
(i) In the event that employment is terminated by the
COMPANY, whether or not such termination was for "cause" (as hereafter
defined), or EMPLOYEE becomes totally disabled (as hereinafter defined), and
such termination or total disability is prior to age sixty-two (62) and not
pursuant to clause (iv) hereof, EMPLOYEE shall receive an amount, as
termination pay, equivalent to 75% of the amount payable to EMPLOYEE in salary,
and bonus (if any), during the twelve (12) month period immediately preceding
the month of termination for a further twelve (12) month period, payable over
twelve (12) months in equal bi-weekly installments, commencing on the date of
termination or total disability, as applicable. Unless employment was
terminated (a) for "cause", (b) pursuant to clause (iv) hereof, (c) due to
total disability, or (d)
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voluntarily by EMPLOYEE, after said twelve (12) month period EMPLOYEE shall be
entitled to receive an annual sum of seventy-five thousand dollars ($75,000)
payable until EMPLOYEE shall attain the age of sixty-two (62), in equal
bi-weekly installments, at which time he shall receive the same pay and
retirement benefits, as hereinafter provided, as if EMPLOYEE had elected early
retirement at age sixty-two (62) pursuant to Section 3(c), irrespective of
EMPLOYEE's age on the date of termination. If such termination was the result
of total disability, then EMPLOYEE shall be entitled to receive the same
retirement benefits as if EMPLOYEE had attained age sixty-two (62) and elected
early retirement, such early retirement payments shall commence twelve (12)
months following the date of total disability.
(ii) In the event that employment is terminated, whether
by the COMPANY or EMPLOYEE, or EMPLOYEE becomes totally disabled, and such
termination or total disability occurs between ages sixty-two (62) and
sixty-five (65), EMPLOYEE shall be entitled to receive the same pay and
retirement benefits, as hereinafter provided, as if EMPLOYEE had elected early
retirement at age sixty-two (62); provided, however, that the retirement pay
shall be increased upward by adding to 33-1/3% provided for in subsection (c)
hereof (i.e., the percentage of average annual income EMPLOYEE is entitled to
receive pursuant to said subsection (c)) a number (expressed as a percentage)
determined by dividing 16-2/3 by a fraction the numerator of which is 36 and
the denominator of
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which is the number of months employed after age sixty-two (62).
(iii) In the event that EMPLOYEE voluntarily terminates his
employment under this Agreement unless done for Good Reason (as hereafter
defined) after a Change in Control (as hereafter defined): (a) if such
termination is prior to the age of sixty-two (62), he shall receive no benefits
under this Agreement until he reaches age sixty-two (62), whereupon he shall
receive the same pay and benefits as if he elected early retirement at age
sixty-two (62); and (b) if such termination is between ages sixty-two (62) and
sixty-five (65), he shall receive the same pay and benefits as if he elected
early retirement at age sixty-two (62) subject to increase as provided in
clause (ii) above.
(iv) In the event that following a Change in Control, the COMPANY
terminates EMPLOYEE's employment under this Agreement other than for "cause" or
EMPLOYEE terminates his employment under this Agreement for Good Reason and
EMPLOYEE is under age sixty-five (65), then EMPLOYEE shall receive the same
benefits as if he retired at age sixty-five (65). Such payments shall commence
immediately following the date of such termination.
(v) If EMPLOYEE's employment is terminated under this Agreement
prior to age sixty two (62) (except termination by the COMPANY for "cause" or
voluntary termination by EMPLOYEE unless done for Good Reason after a Change in
Control) or if EMPLOYEE's employment is terminated for any
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<PAGE> 6
reason at or after age sixty-two (62), any unvested stock options held by
EMPLOYEE at the time shall become fully vested as of the date of termination.
(b) Regular Retirement. If EMPLOYEE elects to retire at age
sixty-five (65) or at any time thereafter, the COMPANY shall pay annually to
EMPLOYEE an amount equivalent to fifty percent (50%) of the average of the
highest three (3) years of salary and bonus paid to EMPLOYEE during the last
ten (10) years of his employment, for the balance of EMPLOYEE's lifetime, in
equal bi-weekly installments. A termination of EMPLOYEE's employment at any
time whether or not for "cause" after EMPLOYEE has reached age sixty-five (65)
shall be deemed an election by EMPLOYEE to retire. For all purposes of
calculating payments to EMPLOYEE under this Agreement, only years during which
he was employed will be used to determine the ten (10) year period.
(c) Early Retirement. If EMPLOYEE elects to retire at age
sixty-two (62), then the COMPANY shall annually pay EMPLOYEE an amount
equivalent to 33-1/3% of the average of the highest three (3) years of salary
and bonus paid to EMPLOYEE during the last ten (10) years of his employment,
for the balance of EMPLOYEE's lifetime, in bi-weekly installments subject to
increase as provided in clause (ii) of Section 3(a).
(d) Change of Control. For purposes of this Agreement, a Change
of Control of the COMPANY shall be deemed to have occurred if (i) there shall
be consummated (x) any
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<PAGE> 7
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, or (y) 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, other
than a sale, lease, exchange or other transfer of all, or substantially all, of
the assets of the COMPANY in which the holders of the COMPANY'S common stock
immediately prior thereto have at least seventy-five percent (75%) ownership of
the voting capital stock of the acquiring corporation immediately after such
sale, lease, exchange or other transfer, or (ii) the stockholders of the
COMPANY approve any plan or proposal for the liquidation or dissolution of the
COMPANY, or (iii) any person (as such term is used in Section 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), shall become the beneficial owner (within the meaning of Rule 13d-3
under the Exchange Act) of thirty percent (30%) or more of the COMPANY's
outstanding Common Stock, or (iv) 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
stockholders, of each new directors was approved by a vote of at least
two-thirds of
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<PAGE> 8
the directors then still in office who were directors at the beginning of the
period.
(e) Cause. For purposes of this Agreement, "cause" shall exist if
any one or more of the following should occur: EMPLOYEE's (A) a material
failure to perform his duties under, or a material breach of, this Agreement
after (i) first having received a written notice of such material failure or
material breach signed by at least a majority of the COMPANY'S Board of
Directors and (ii) EMPLOYEE having not taken reasonable steps to cure such
material failure or material breach within thirty (30) days of his actual
receipt of such notice, (B) a willful, material and knowing breach of his
fiduciary duty to the COMPANY, after written notice thereof signed by at least
a majority of the COMPANY'S Board of Directors, or (C) conviction by a court
of competent jurisdiction of a felony or other serious crime.
(f) Good Reason. For purposes of this Agreement, "Good Reason"
shall mean any of the following (done without EMPLOYEE's express written
consent):
(i) the assignment to EMPLOYEE of duties inconsistent with
EMPLOYEE's duties, responsibilities and status with the COMPANY immediately
prior to the Change in Control, or a change in EMPLOYEE's title or office , or
in the location of EMPLOYEE's workplace, as in effect immediately prior to the
Change in Control; or
(ii) a change in EMPLOYEE's base salary, bonus participation,
benefit plans and other compensation, taken as
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<PAGE> 9
a whole, with the result that such compensation package is less favorable to
EMPLOYEE, on an after tax basis, than that provided to EMPLOYEE immediately
prior to the Change in Control. Following a Change in Control, at any time
after the occurrence of an event which EMPLOYEE believes, in good faith,
constitutes Good Reason, EMPLOYEE may (but is not obligated to) give written
notice to the COMPANY setting forth in reasonable detail the facts and
circumstances claimed to be a basis for termination for Good Reason. If the
COMPANY disagrees that such facts and circumstances exist and/or do not
constitute Good Reason, the COMPANY shall so notify EMPLOYEE within thirty (30)
days of the giving of such notice of Good Reason. The COMPANY'S response shall
be in writing and shall set forth in reasonable detail the reasons why it
denies EMPLOYEE's Good Reason claim. Failure by the COMPANY to give EMPLOYEE a
responsive notice within such thirty (30) day period shall constitute an
irrevocable admission by the COMPANY that Good Reason does exist. If the
COMPANY gives a responsive notice within such thirty (30) day period, then the
parties disagreement shall be determined by legal proceedings, or, at the
election of either party, by using the procedure set forth in Section 9 hereof.
(g) Other Definitions and Assumptions. For purposes of this
Agreement, the term "years" upon which EMPLOYEE's pay and retirement benefits
will be based shall mean a calendar year running from January 1 through
December 31. For purposes of this Agreement, the term "total disability" shall
mean the
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<PAGE> 10
inability of EMPLOYEE, due to illness, accident or other physical or mental
incapacity, to perform his duties in a normal manner for a period of six (6)
consecutive months or for a total of twelve (12) months (whether or not
consecutive) in any twenty-four (24) month period.
4. TERM.
The term of employment shall be for the period beginning January 1,
1995 and ending upon EMPLOYEE attaining age sixty-five (65), or until such
later date as shall be mutually agreed upon. Subject to all of the other
provisions of this Agreement, either party may terminate EMPLOYEE's employment
under this Agreement upon thirty (30) days' written notice. Notwithstanding the
foregoing, nothing shall prevent EMPLOYEE from electing early retirement and
being entitled to receive the benefits set forth in Section 3 hereof.
5. RESTRICTIVE COVENANTS.
During the term of this Agreement and thereafter so long as EMPLOYEE
is receiving the retirement and/or termination benefits provided for hereunder,
EMPLOYEE will not, except as a shareholder, officer, employee or representative
of the COMPANY or any subsidiary thereof, directly or indirectly, own, manage,
operate, join, control or participate in the ownership, management, operation
or control of any business (either as a proprietor, partner, shareholder,
officer, director, agent, employee, consultant, trustee, affiliate or
otherwise), which business shall be engaged in the manufacture, distribution
and/or sale of any products that are
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directly competitive with products presently manufactured or sold or offered
for sale by the COMPANY; provided, however, nothing contained herein shall be
construed to prohibit EMPLOYEE from owning, as a passive investment, up to five
percent (5%) of the outstanding stock of a publicly held company engaged in any
of the above-mentioned activities.
Additionally, EMPLOYEE acknowledges that his employment by the COMPANY
has brought and shall continue to bring him into close contact with many
confidential affairs of the COMPANY, including information about costs,
profits, markets, sales, products, key personnel, pricing policies, operational
methods, technical processes, and other business affairs and methods and other
information not readily available to the public, as well as plans for future
development. EMPLOYEE further acknowledges that the services to be performed
under this Agreement are of a special, unique, unusual, extraordinary and
intellectual character. In recognition of the foregoing, EMPLOYEE hereby
agrees: (i) that he will keep secret all material confidential matters of the
COMPANY which are not otherwise in the public domain, and will not
intentionally disclose them to anyone outside of the COMPANY, either during or
after the term of this Agreement, except with the COMPANY'S prior written
consent; and (ii) that he will deliver promptly to the COMPANY upon termination
of this Agreement or at any other time as the COMPANY may so request, at its
expense, all memoranda, notes, records, reports, and other documents (and all
copies thereof) relating to the
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<PAGE> 12
COMPANY'S business, however or whenever obtained, which he may then possess or
have under his control.
If it is determined in a final judgment by a court of competent
jurisdiction or pursuant to Section 9 hereof that EMPLOYEE has materially
breached any provision of this Section 5 and such breach has caused, or will
cause, material monetary harm to the COMPANY, the COMPANY shall have no further
obligations to provide EMPLOYEE any pay or other benefits then or thereafter
due him under this Agreement, effective as of the date of any such breach and
all monies paid to EMPLOYEE pursuant to this Agreement between the date of such
breach and the date of determination shall be returned to the COMPANY within
thirty (30) days of the date of determination.
6. INSURANCE AND HEALTH BENEFITS.
The COMPANY shall maintain during the term of employment and for the
period in which EMPLOYEE is entitled to receive pay and benefits pursuant to
this Agreement the life insurance and health benefits currently provided to
EMPLOYEE at a cost to EMPLOYEE not exceeding such cost as of the date of
termination of his employment, or the date of total disability, as applicable.
7. REIMBURSEMENT FOR EXPENSES.
During the employment term of this Agreement, EMPLOYEE shall be
allowed reasonable traveling expenses and shall be furnished with an office and
accommodations suitable to the character of his position and adequate for the
performance of his duties.
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<PAGE> 13
8. LEGAL FEES.
Promptly upon demand by EMPLOYEE from time to time, the COMPANY shall
pay all legal fees (including any reasonable retainer), costs of litigation and
other expenses incurred in good faith by EMPLOYEE as a result of the COMPANY's
refusal to make any payment to which EMPLOYEE becomes entitled under this
Agreement, or as a result of the COMPANY's contesting the validity,
enforceability or interpretation of this Agreement or of EMPLOYEE's right to
benefits hereunder; provided, however, that if the COMPANY is the prevailing
party, it shall be obligated to pay only its own attorneys' fees and costs,
witness expenses and related costs.
9. ALTERNATIVE DISPUTE RESOLUTION.
Either party shall have the right and option to elect, which election
shall be binding on both parties, (in lieu of litigation) to have any dispute
or controversy arising under or in connection with this Agreement settled by
utilizing the procedure hereafter set forth:
(a) the parties shall have discussions designed to reconcile their
dispute and any resolution by them shall be final, binding and conclusive on
the parties; and
(b) if the parties are unable to reach a mutually satisfactory
resolution within ten (10) days following written notice by one party to the
other asserting the existence of a dispute hereunder and an election to utilize
the procedure set forth in this Section 9 ("Notice of Dispute"), the parties
shall within ten (10) days thereafter mutually select a
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<PAGE> 14
retired judge of the Superior Court for the State of California to whom they
shall submit for resolution the disputed matter(s). If the parties do not
agree upon such selection within such ten (10) day period, then and in such
event, EMPLOYEE, on the one hand, and the COMPANY, on the other, shall each
within ten (10) days thereafter select a retired judge of the Superior Court
for the State of California (the "Appointing Judge"). The Appointing Judges so
selected shall thereafter meet within fifteen (15) days and they in turn shall
within five (5) days thereafter mutually select a retired judge of the Superior
Court for the State of California (the "Deciding Judge") to decide such
dispute; provided that if either EMPLOYEE or the COMPANY fail to so select an
Appointing Judge, then the Appointing Judge selected by the other party shall
be and act as the Deciding Judge. Upon such selection of the Deciding Judge,
the obligations and duties of the Appointing Judges selected by the parties
hereto shall terminate and such Deciding Judge, in a proceeding held in Los
Angeles, California, shall act to resolve the disputed item(s). Such Deciding
Judge may resolve the disputed item(s) in any manner which he or she deems
appropriate and such determination shall be final and binding, may be entered
in any court having jurisdiction and shall not be appealable in any way.
10. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Anything in this Agreement to the contrary notwithstanding and except
as set forth below, in the event it
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<PAGE> 15
shall be determined that any payment or distribution by the COMPANY to or for
the benefit of EMPLOYEE (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this
Section 10) (a "Payment") would be subject to the excise tax imposed by Section
4999 of the Code or any interest or penalties are incurred by EMPLOYEE with
respect to such excise tax (such excise tax, together with any such interest
and penalties, are hereinafter collectively referred to as the "Excise Tax"),
then EMPLOYEE shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by EMPLOYEE of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
EMPLOYEE retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
(b) Subject to the provisions of Section 10(c), all determinations
required to be made under this Section 10, including whether and when a
Gross-Up Payment is required and the amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such determination, shall be
reasonably made in good faith by Price Waterhouse or such other certified
public accounting firm as is then auditing the financial records of the COMPANY
(the "Accounting Firm") which
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<PAGE> 16
shall provide detailed supporting calculations both to the COMPANY and EMPLOYEE
within 15 business days of the receipt of notice from EMPLOYEE that there has
been a Payment, or such earlier time as is requested by the COMPANY. All fees
and expenses of the Accounting Firm shall be borne solely by the COMPANY. Any
Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by
the COMPANY to EMPLOYEE within five days of the receipt of the Accounting
Firm's determination. Any determination by the Accounting Firm shall be
binding upon the COMPANY and EMPLOYEE. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the COMPANY should have been made
("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the COMPANY exhausts its remedies pursuant to
Section 10(c) and EMPLOYEE thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall reasonably and in good faith determine
the amount of the Underpayment that has occurred and any such Underpayment
shall be promptly paid by the COMPANY to or for the benefit of EMPLOYEE.
(c) EMPLOYEE shall notify the COMPANY in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment by
the COMPANY of the Gross-Up Payment. Such notification shall be given as soon
as practicable (but no later than ten (10) business days after
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<PAGE> 17
EMPLOYEE actually receives notice in writing of such claim) and shall apprise
the COMPANY of the nature of such claim and the date on which such claim is
requested to be paid. EMPLOYEE shall not pay such claim prior to the
expiration of the 30-day period following the date on which it gives such
notice to the COMPANY (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the COMPANY notifies
EMPLOYEE in writing prior to the expiration of such period that it desires to
contest such claim, EMPLOYEE shall:
i) give the COMPANY any information reasonably requested
by the COMPANY relating to such claim,
ii) take such action in connection with contesting such
claim as the COMPANY shall reasonably request in writing from time to
time, including, without limitation, accepting legal representation
with respect to such claim by an attorney reasonably selected by the
COMPANY,
iii) cooperate with the COMPANY in good faith in order
effectively to reasonably contest such claim, and
iv) permit the COMPANY to participate in any proceedings
relating to such claim;
provided, however, that the COMPANY shall bear and pay directly all costs and
expenses (including legal and accounting fees and additional interest and
penalties) incurred in connection with such contest and shall indemnify and
hold EMPLOYEE harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties
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with respect thereto) imposed as a result of such representation and payment of
costs and expenses. Without limitation on the foregoing provisions of this
Section 10(c), the COMPANY shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo any and all
administrative appeals, proceedings, hearings and conferences with the taxing
authority in respect of such claim and may, at its sole option, either direct
EMPLOYEE to pay the tax claimed and sue for a refund or to contest the claim in
any permissible manner, and EMPLOYEE agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the COMPANY shall
determine; provided, however, that if the COMPANY directs EMPLOYEE to pay such
claim and sue for a refund, the COMPANY shall pay (at its sole cost and
expense) all the legal and other costs and expenses relating to the cause of
action and the Company shall advance the amount of such tax payment to
EMPLOYEE, on an interest-free basis and shall indemnify and hold EMPLOYEE
harmless, on an after-tax basis, from any Excise Tax or income tax (including
interest or penalties with respect thereto), as incurred, imposed with respect
to such advance or with respect to any imputed income with respect to such
advance; and further provided that any extension of the statute of limitations
relating to payment of taxes for the taxable year of EMPLOYEE with respect to
which such contested amount is claimed to be due is limited solely to such
contested amount.
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Furthermore, the COMPANY's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable hereunder and
EMPLOYEE shall be entitled to settle or contest, as the case may be, any other
issue raised by the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by EMPLOYEE of an amount advanced by the
COMPANY pursuant to Section 10(c), EMPLOYEE becomes entitled to receive any
refund with respect to such claim, EMPLOYEE shall (subject to the COMPANY's
complying with the requirements of Section 10(c)) promptly pay to the COMPANY
the amount of such refund (together with any interest paid or credited thereon
after taxes applicable thereto) (provided Employee shall not be obligated to
pay the COMPANY an amount greater than the advance by the COMPANY). If, after
the receipt by EMPLOYEE of an amount advanced by the COMPANY pursuant to
Section 10(c), a determination is made that EMPLOYEE shall not be entitled to
any refund with respect to such claim and the COMPANY does not notify EMPLOYEE
in writing of its intent to contest such denial of refund prior to the
expiration of thirty (30) days after such determination, then such advance
shall be forgiven and shall not be required to be repaid and the adjusted
after-tax amount of such advance (i.e., after giving effect to EMPLOYEE's tax
liability due to and with respect to the debt forgiveness) shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid.
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11. APPLICABLE LAW.
This Agreement shall be governed by and construed in accordance with
the laws of the State of California (other than any laws of the State of
California which would require that the laws of any other jurisdiction be the
governing law).
12. BENEFIT.
This Agreement shall be binding upon and shall inure to the benefit of
EMPLOYEE and his respective heirs, executors, administrators and assigns and of
the COMPANY and its successors and assigns.
13. SEPARABILITY.
If any term or provision of this Agreement, or the application thereof
to any person or circumstance, shall to any extent be held invalid or
unenforceable by a court of competent jurisdiction, the remainder of the
Agreement, or the application of such term or provision to persons or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby, and each term and provision of the Agreement
shall be valid and enforced to the fullest extent permitted by law.
14. EFFECT ON OTHER EMPLOYEE BENEFITS.
Except as set forth in the following sentence, the existence of this
Agreement and the obligations of the COMPANY hereunder shall have no effect on
the COMPANY'S other EMPLOYEE Benefit Plans applicable to EMPLOYEE, including
without limitation, the Savings and Profit Sharing Plan and the EMPLOYEE
Deferred Income and Pension Plan. As of the date of
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this Agreement, the parties hereto agree that a certain Severance Compensation
Agreement between the COMPANY and EMPLOYEE dated as of October 24, 1991, as
amended May 3, 1993, is terminated and of no further force or effect.
IN WITNESS WHEREOF, the COMPANY has caused this Agreement to be
executed in its corporate name by its corporate officers thereunto duly
authorized and EMPLOYEE has executed this Agreement as of the day and year
first above written.
BELL INDUSTRIES, INC.
By: /s/ THEODORE WILLIAMS
----------------------------
Chairman and Chief Executive
Officer
By: /s/ JOHN J. COST
---------------------------
Secretary
"COMPANY"
/s/ BRUCE M. JAFFE
----------------------------
BRUCE M. JAFFE
"EMPLOYEE"
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EXHIBIT 10.8
EMPLOYMENT
AND
DEFERRED COMPENSATION AGREEMENT
AGREEMENT made as of February 15, 1995, by and between BELL
INDUSTRIES, INC., a Delaware corporation (hereinafter referred to as
"COMPANY"), and PAUL F. DOUCETTE (hereinafter referred to as "EMPLOYEE").
WHEREAS, EMPLOYEE is employed by the COMPANY as a Senior Vice
President and has managed such office in a capable and efficient manner
resulting in substantial profits to the COMPANY, and
WHEREAS, the COMPANY desires to retain the services of EMPLOYEE and
EMPLOYEE is willing to remain in the employ of the COMPANY in accordance with
the provisions hereinafter set forth, and
WHEREAS, the COMPANY and EMPLOYEE also desire to establish retirement
benefits that will be payable to EMPLOYEE upon his retirement.
IT IS THEREFORE AGREED:
1. CONTINUATION OF EMPLOYMENT.
Subject to the other terms of this Agreement, EMPLOYEE shall continue
in the employ of the COMPANY, and the COMPANY shall continue to employ EMPLOYEE
until EMPLOYEE reaches age sixty-five (65), or such later date as shall be
mutually agreed upon; provided, however, EMPLOYEE may elect early retirement at
age sixty-two (62) pursuant to Section 3 hereof.
<PAGE> 2
Without first obtaining EMPLOYEE's written consent, the COMPANY shall not
reduce EMPLOYEE's compensation as set forth in Section 2 hereof nor require
EMPLOYEE to undertake responsibilities not commensurate with, or change, his
position as a Senior Vice President nor shall he be required to perform his
duties hereunder if the performance thereof would require his maintenance of a
residence outside of the Greater Los Angeles area. In the event the COMPANY
should violate the foregoing provisions and by reason thereof EMPLOYEE should
terminate his employment under this Agreement, such termination shall be deemed
a termination of EMPLOYEE'S employment by the COMPANY for all purposes under
this Agreement.
EMPLOYEE agrees to devote his full business time, attention, and
energies to the performance of the business of the COMPANY, and EMPLOYEE shall
not, directly or indirectly, alone or as a member of any partnership, or as an
officer, director or employee of any other corporation, partnership or other
organization, be engaged in any other duties which interfere with the
performance of his duties hereunder, or which, even if non-interfering, are
contrary to the best interests of the COMPANY. EMPLOYEE agrees that in the
performance of his duties hereunder he will comply with the announced policies
and directives of the COMPANY's Board of Directors.
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2. REGULAR COMPENSATION.
During such time as EMPLOYEE is employed by the COMPANY, the COMPANY
shall pay to EMPLOYEE as compensation for his services hereunder a salary to be
fixed annually by the Board of Directors, but not less than Two Hundred Thirty
Thousand Dollars ($230,000) per year, payable in equal bi-weekly installments.
Additionally, EMPLOYEE shall participate in the COMPANY's bonus program which,
at the time, is made available to its principal corporate officers.
3. ADDITIONAL COMPENSATION.
(a) Early Termination of Employment.
(i) In the event that employment is terminated by the
COMPANY, whether or not such termination was for "cause" (as hereafter
defined), or EMPLOYEE becomes totally disabled (as hereinafter defined), and
such termination or total disability is prior to age sixty-two (62) and not
pursuant to clause (iv) hereof, EMPLOYEE shall receive an amount, as
termination pay, equivalent to 75% of the amount payable to EMPLOYEE in salary,
and bonus (if any), during the twelve (12) month period immediately preceding
the month of termination for a further twelve (12) month period, payable over
twelve (12) months in equal bi-weekly installments, commencing on the date of
termination or total disability, as applicable. Unless employment was
terminated (a) for "cause", (b) pursuant to clause (iv) hereof, (c) due to
total disability, or (d) voluntarily by EMPLOYEE, after said twelve (12) month
period EMPLOYEE shall be entitled to receive an annual sum of sixty
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thousand dollars ($60,000) payable until EMPLOYEE shall attain the age of
sixty-two (62), in equal bi-weekly installments, at which time he shall receive
the same pay and retirement benefits, as hereinafter provided, as if EMPLOYEE
had elected early retirement at age sixty-two (62) pursuant to Section 3(c),
irrespective of EMPLOYEE's age on the date of termination. If such termination
was the result of total disability, then EMPLOYEE shall be entitled to receive
the same retirement benefits as if EMPLOYEE had attained age sixty-two (62) and
elected early retirement, such early retirement payments shall commence twelve
(12) months following the date of total disability.
(ii) In the event that employment is terminated, whether
by the COMPANY or EMPLOYEE, or EMPLOYEE becomes totally disabled, and such
termination or total disability occurs between ages sixty-two (62) and
sixty-five (65), EMPLOYEE shall be entitled to receive the same pay and
retirement benefits, as hereinafter provided, as if EMPLOYEE had elected early
retirement at age sixty-two (62); provided, however, that the retirement pay
shall be increased upward by adding to 33-1/3% provided for in subsection (c)
hereof (i.e., the percentage of average annual income EMPLOYEE is entitled to
receive pursuant to said subsection (c)) a number (expressed as a percentage)
determined by dividing 16- 2/3 by a fraction the numerator of which is 36 and
the denominator of which is the number of months employed after age sixty-two
(62).
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(iii) In the event that EMPLOYEE voluntarily terminates
his employment under this Agreement unless done for Good Reason (as hereafter
defined) after a Change in Control (as hereafter defined): (a) if such
termination is prior to the age of sixty-two (62), he shall receive no benefits
under this Agreement until he reaches age sixty-two (62), whereupon he shall
receive the same pay and benefits as if he elected early retirement at age
sixty-two (62); and (b) if such termination is between ages sixty-two (62) and
sixty-five (65), he shall receive the same pay and benefits as if he elected
early retirement at age sixty-two (62) subject to increase as provided in
clause (ii) above.
(iv) In the event that following a Change in Control, the
COMPANY terminates EMPLOYEE'S employment under this Agreement other than for
"cause" or EMPLOYEE terminates his employment under this Agreement for Good
Reason and EMPLOYEE is under age sixty-five (65), then EMPLOYEE shall receive
the same benefits as if he retired at age sixty-five (65). Such payments shall
commence immediately following the date of such termination.
(v) If EMPLOYEE'S employment is terminated under this
Agreement prior to age sixty two (62) (except termination by the COMPANY for
"cause" or voluntary termination by EMPLOYEE unless done for Good Reason after
a Change in Control) or if EMPLOYEE'S employment is terminated for any reason
at or after age sixty-two (62), any unvested stock
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options held by EMPLOYEE at the time shall become fully vested as of the date
of termination.
(b) Regular Retirement. If EMPLOYEE elects to retire at age
sixty-five (65) or at any time thereafter, the COMPANY shall pay annually to
EMPLOYEE an amount equivalent to fifty percent (50%) of the average of the
highest three (3) years of salary and bonus paid to EMPLOYEE during the last
ten (10) years of his employment, for the balance of EMPLOYEE'S lifetime, in
equal bi-weekly installments. A termination of EMPLOYEE'S employment at any
time whether or not for "cause" after EMPLOYEE has reached age sixty-five (65)
shall be deemed an election by EMPLOYEE to retire. For all purposes of
calculating payments to EMPLOYEE under this Agreement, only years during which
he was employed will be used to determine the ten (10) year period.
(c) Early Retirement. If EMPLOYEE elects to retire at age
sixty-two (62), then the COMPANY shall annually pay EMPLOYEE an amount
equivalent to 33-1/3% of the average of the highest three (3) years of salary
and bonus paid to EMPLOYEE during the last ten (10) years of his employment,
for the balance of EMPLOYEE'S lifetime, in bi-weekly installments subject to
increase as provided in clause (ii) of Section 3(a).
(d) Change of Control. For purposes of this Agreement, a Change
of Control of the COMPANY shall be deemed to have occurred if (i) there shall
be consummated (x) any consolidation or merger of the COMPANY, other than a
merger of
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<PAGE> 7
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,
or (y) 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, other than a sale, lease, exchange or other transfer of all, or
substantially all, of the assets of the COMPANY in which the holders of the
COMPANY'S common stock immediately prior thereto have at least seventy-five
percent (75%) ownership of the voting capital stock of the acquiring
corporation immediately after such sale, lease, exchange or other transfer, or
(ii) the stockholders of the COMPANY approve any plan or proposal for the
liquidation or dissolution of the COMPANY, or (iii) any person (as such term is
used in Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), shall become the beneficial owner (within the
meaning of Rule 13d-3 under the Exchange Act) of thirty percent (30%) or more
of the COMPANY's outstanding Common Stock, or (iv) 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 stockholders, of each new directors was approved by a
vote of at least two-thirds of
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<PAGE> 8
the directors then still in office who were directors at the beginning of the
period.
(e) Cause. For purposes of this Agreement, "cause" shall exist if
any one or more of the following should occur: EMPLOYEE'S (A) a material
failure to perform his duties under, or a material breach of, this Agreement
after (i) first having received a written notice of such material failure or
material breach signed by at least a majority of the COMPANY'S Board of
Directors and (ii) EMPLOYEE having not taken reasonable steps to cure such
material failure or material breach within thirty (30) days of his actual
receipt of such notice, (B) a willful, material and knowing breach of his
fiduciary duty to the COMPANY, after written notice thereof signed by at least
a majority of the COMPANY'S Board of Directors, or (C) conviction by a court
of competent jurisdiction of a felony or other serious crime.
(f) Good Reason. For purposes of this Agreement, "Good Reason"
shall mean any of the following (done without EMPLOYEE'S express written
consent):
(i) the assignment to EMPLOYEE of duties inconsistent with
EMPLOYEE'S duties, responsibilities and status with the COMPANY immediately
prior to the Change in Control, or a change in EMPLOYEE'S title or office , or
in the location of EMPLOYEE's workplace, as in effect immediately prior to the
Change in Control; or
(ii) a change in EMPLOYEE'S base salary, bonus participation,
benefit plans and other compensation, taken as
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<PAGE> 9
a whole, with the result that such compensation package is less favorable to
EMPLOYEE, on an after tax basis, than that provided to EMPLOYEE immediately
prior to the Change in Control. Following a Change in Control, at any time
after the occurrence of an event which EMPLOYEE believes, in good faith,
constitutes Good Reason, EMPLOYEE may (but is not obligated to) give written
notice to the COMPANY setting forth in reasonable detail the facts and
circumstances claimed to be a basis for termination for Good Reason. If the
COMPANY disagrees that such facts and circumstances exist and/or do not
constitute Good Reason, the COMPANY shall so notify EMPLOYEE within thirty (30)
days of the giving of such notice of Good Reason. The COMPANY'S response shall
be in writing and shall set forth in reasonable detail the reasons why it
denies EMPLOYEE'S Good Reason claim. Failure by the COMPANY to give EMPLOYEE a
responsive notice within such thirty (30) day period shall constitute an
irrevocable admission by the COMPANY that Good Reason does exist. If the
COMPANY gives a responsive notice within such thirty (30) day period, then the
parties' disagreement shall be determined by legal proceedings, or, at the
election of either party, by using the procedure set forth in Section 9 hereof.
(g) Other Definitions and Assumptions. For purposes of this
Agreement, the term "years" upon which EMPLOYEE'S pay and retirement benefits
will be based shall mean a calendar year running from January 1 through
December 31. For purposes of this Agreement, the term "total disability" shall
mean the
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<PAGE> 10
inability of EMPLOYEE, due to illness, accident or other physical or mental
incapacity, to perform his duties in a normal manner for a period of six (6)
consecutive months or for a total of twelve (12) months (whether or not
consecutive) in any twenty-four (24) month period.
4. TERM.
The term of employment shall be for the period beginning January 1,
1995 and ending upon EMPLOYEE attaining age sixty-five (65), or until such
later date as shall be mutually agreed upon. Subject to all of the other
provisions of this Agreement, either party may terminate EMPLOYEE'S employment
under this Agreement upon thirty (30) days' written notice. Notwithstanding the
foregoing, nothing shall prevent EMPLOYEE from electing early retirement and
being entitled to receive the benefits set forth in Section 3 hereof.
5. RESTRICTIVE COVENANTS.
During the term of this Agreement and thereafter so long as EMPLOYEE
is receiving the retirement and/or termination benefits provided for hereunder,
EMPLOYEE will not, except as a shareholder, officer, employee or representative
of the COMPANY or any subsidiary thereof, directly or indirectly, own, manage,
operate, join, control or participate in the ownership, management, operation
or control of any business (either as a proprietor, partner, shareholder,
officer, director, agent, employee, consultant, trustee, affiliate or
otherwise), which business shall be engaged in the manufacture, distribution
and/or sale of any products that are
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directly competitive with products presently manufactured or sold or offered
for sale by the COMPANY; provided, however, nothing contained herein shall be
construed to prohibit EMPLOYEE from owning, as a passive investment, up to five
percent (5%) of the outstanding stock of a publicly held company engaged in any
of the above-mentioned activities.
Additionally, EMPLOYEE acknowledges that his employment by the COMPANY
has brought and shall continue to bring him into close contact with many
confidential affairs of the COMPANY, including information about costs,
profits, markets, sales, products, key personnel, pricing policies, operational
methods, technical processes, and other business affairs and methods and other
information not readily available to the public, as well as plans for future
development. EMPLOYEE further acknowledges that the services to be performed
under this Agreement are of a special, unique, unusual, extraordinary and
intellectual character. In recognition of the foregoing, EMPLOYEE hereby
agrees: (i) that he will keep secret all material confidential matters of the
COMPANY which are not otherwise in the public domain, and will not
intentionally disclose them to anyone outside of the COMPANY, either during or
after the term of this Agreement, except with the COMPANY'S prior written
consent; and (ii) that he will deliver promptly to the COMPANY upon termination
of this Agreement or at any other time as the COMPANY may so request, at its
expense, all memoranda, notes, records, reports, and other documents (and all
copies thereof) relating to the
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<PAGE> 12
COMPANY'S business, however or whenever obtained, which he may then possess or
have under his control.
If it is determined in a final judgment by a court of competent
jurisdiction or pursuant to Section 9 hereof that EMPLOYEE has materially
breached any provision of this Section 5 and such breach has caused, or will
cause, material monetary harm to the COMPANY, the COMPANY shall have no further
obligations to provide EMPLOYEE any pay or other benefits then or thereafter
due him under this Agreement, effective as of the date of any such breach and
all monies paid to EMPLOYEE pursuant to this Agreement between the date of such
breach and the date of determination shall be returned to the COMPANY within
thirty (30) days of the date of determination.
6. INSURANCE AND HEALTH BENEFITS.
The COMPANY shall maintain during the term of employment and for the
period in which EMPLOYEE is entitled to receive pay and benefits pursuant to
this Agreement the life insurance and health benefits currently provided to
EMPLOYEE at a cost to EMPLOYEE not exceeding such cost as of the date of
termination of his employment, or the date of total disability, as applicable.
7. REIMBURSEMENT FOR EXPENSES.
During the employment term of this Agreement, EMPLOYEE shall be
allowed reasonable traveling expenses and shall be furnished with an office and
accommodations suitable to the character of his position and adequate for the
performance of his duties.
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<PAGE> 13
8. LEGAL FEES.
Promptly upon demand by EMPLOYEE from time to time, the COMPANY shall
pay all legal fees (including any reasonable retainer), costs of litigation and
other expenses incurred in good faith by EMPLOYEE as a result of the COMPANY's
refusal to make any payment to which EMPLOYEE becomes entitled under this
Agreement, or as a result of the COMPANY's contesting the validity,
enforceability or interpretation of this Agreement or of EMPLOYEE'S right to
benefits hereunder; provided, however, that if the COMPANY is the prevailing
party, it shall be obligated to pay only its own attorneys' fees and costs,
witness expenses and related costs.
9. ALTERNATIVE DISPUTE RESOLUTION.
Either party shall have the right and option to elect, which election
shall be binding on both parties, (in lieu of litigation) to have any dispute
or controversy arising under or in connection with this Agreement settled by
utilizing the procedure hereafter set forth:
(a) the parties shall have discussions designed to reconcile their
dispute and any resolution by them shall be final, binding and conclusive on
the parties; and
(b) if the parties are unable to reach a mutually satisfactory
resolution within ten (10) days following written notice by one party to the
other asserting the existence of a dispute hereunder and an election to utilize
the procedure set forth in this Section 9 ("Notice of Dispute"), the parties
shall within ten (10) days thereafter mutually select a
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<PAGE> 14
retired judge of the Superior Court for the State of California to whom they
shall submit for resolution the disputed matter(s). If the parties do not
agree upon such selection within such ten (10) day period, then and in such
event, EMPLOYEE, on the one hand, and the COMPANY, on the other, shall each
within ten (10) days thereafter select a retired judge of the Superior Court
for the State of California (the "Appointing Judge"). The Appointing Judges so
selected shall thereafter meet within fifteen (15) days and they in turn shall
within five (5) days thereafter mutually select a retired judge of the Superior
Court for the State of California (the "Deciding Judge") to decide such
dispute; provided that if either EMPLOYEE or the COMPANY fail to so select an
Appointing Judge, then the Appointing Judge selected by the other party shall
be and act as the Deciding Judge. Upon such selection of the Deciding Judge,
the obligations and duties of the Appointing Judges selected by the parties
hereto shall terminate and such Deciding Judge, in a proceeding held in Los
Angeles, California, shall act to resolve the disputed item(s). Such Deciding
Judge may resolve the disputed item(s) in any manner which he or she deems
appropriate and such determination shall be final and binding, may be entered
in any court having jurisdiction and shall not be appealable in any way.
10. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Anything in this Agreement to the contrary notwithstanding and except
as set forth below, in the event it
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<PAGE> 15
shall be determined that any payment or distribution by the COMPANY to or for
the benefit of EMPLOYEE (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this
Section 10) (a "Payment") would be subject to the excise tax imposed by Section
4999 of the Code or any interest or penalties are incurred by EMPLOYEE with
respect to such excise tax (such excise tax, together with any such interest
and penalties, are hereinafter collectively referred to as the "Excise Tax"),
then EMPLOYEE shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by EMPLOYEE of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
EMPLOYEE retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
(b) Subject to the provisions of Section 10(c), all determinations
required to be made under this Section 10, including whether and when a
Gross-Up Payment is required and the amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such determination, shall be
reasonably made in good faith by Price Waterhouse or such other certified
public accounting firm as is then auditing the financial records of the COMPANY
(the "Accounting Firm") which
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shall provide detailed supporting calculations both to the COMPANY and EMPLOYEE
within 15 business days of the receipt of notice from EMPLOYEE that there has
been a Payment, or such earlier time as is requested by the COMPANY. All fees
and expenses of the Accounting Firm shall be borne solely by the COMPANY. Any
Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by
the COMPANY to EMPLOYEE within five days of the receipt of the Accounting
Firm's determination. Any determination by the Accounting Firm shall be
binding upon the COMPANY and EMPLOYEE. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the COMPANY should have been made
("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the COMPANY exhausts its remedies pursuant to
Section 10(c) and EMPLOYEE thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall reasonably and in good faith determine
the amount of the Underpayment that has occurred and any such Underpayment
shall be promptly paid by the COMPANY to or for the benefit of EMPLOYEE.
(c) EMPLOYEE shall notify the COMPANY in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
COMPANY of the Gross-Up Payment. Such notification shall be given as soon as
practicable (but no later than ten (10) business days after
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EMPLOYEE actually receives notice in writing of such claim) and shall apprise
the COMPANY of the nature of such claim and the date on which such claim is
requested to be paid. EMPLOYEE shall not pay such claim prior to the
expiration of the 30-day period following the date on which it gives such
notice to the COMPANY (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the COMPANY notifies
EMPLOYEE in writing prior to the expiration of such period that it desires to
contest such claim, EMPLOYEE shall:
i) give the COMPANY any information reasonably requested
by the COMPANY relating to such claim,
ii) take such action in connection with contesting such
claim as the COMPANY shall reasonably request in writing from
time to time, including, without limitation, accepting legal
representation with respect to such claim by an attorney reasonably
selected by the COMPANY,
iii) cooperate with the COMPANY in good faith in order
effectively to reasonably contest such claim, and
iv) permit the COMPANY to participate in any proceedings
relating to such claim; provided, however, that the COMPANY shall bear
and pay directly all costs and expenses (including legal and
accounting fees and additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold EMPLOYEE
harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties
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with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing
provisions of this Section 10(c), the COMPANY shall control all
proceedings taken in connection with such contest and, at its sole
option, may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in
respect of such claim and may, at its sole option, either direct
EMPLOYEE to pay the tax claimed and sue for a refund or to contest the
claim in any permissible manner, and EMPLOYEE agrees to prosecute such
contest to a determination before any administrative tribunal, in a
court of initial jurisdiction and in one or more appellate courts, as
the COMPANY shall determine; provided, however, that if the COMPANY
directs EMPLOYEE to pay such claim and sue for a refund, the COMPANY
shall pay (at its sole cost and expense) all the legal and other costs
and expenses relating to the cause of action and the Company shall
advance the amount of such tax payment to EMPLOYEE, on an
interest-free basis and shall indemnify and hold EMPLOYEE harmless, on
an after-tax basis, from any Excise Tax or income tax (including
interest or penalties with respect thereto), as incurred, imposed with
respect to such advance or with respect to any imputed income with
respect to such advance; and further provided that any extension of
the statute of limitations relating to payment of taxes for the
taxable year of EMPLOYEE with respect to which such contested amount
is claimed to be due is limited solely to such contested amount.
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Furthermore, the COMPANY's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable
hereunder and EMPLOYEE shall be entitled to settle or contest, as the
case may be, any other issue raised by the Internal Revenue Service or
any other taxing authority.
(d) If, after the receipt by EMPLOYEE of an amount advanced by the
COMPANY pursuant to Section 10(c), EMPLOYEE becomes entitled to receive any
refund with respect to such claim, EMPLOYEE shall (subject to the COMPANY's
complying with the requirements of Section 10(c)) promptly pay to the COMPANY
the amount of such refund (together with any interest paid or credited thereon
after taxes applicable thereto) (provided Employee shall not be obligated to
pay the COMPANY an amount greater than the advance by the COMPANY). If, after
the receipt by EMPLOYEE of an amount advanced by the COMPANY pursuant to
Section 10(c), a determination is made that EMPLOYEE shall not be entitled to
any refund with respect to such claim and the COMPANY does not notify EMPLOYEE
in writing of its intent to contest such denial of refund prior to the
expiration of thirty (30) days after such determination, then such advance
shall be forgiven and shall not be required to be repaid and the adjusted
after-tax amount of such advance (i.e., after giving effect to EMPLOYEE's tax
liability due to and with respect to the debt forgiveness) shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid.
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<PAGE> 20
11. APPLICABLE LAW.
This Agreement shall be governed by and construed in accordance with
the laws of the State of California (other than any laws of the State of
California which would require that the laws of any other jurisdiction be the
governing law).
12. BENEFIT.
This Agreement shall be binding upon and shall inure to the benefit of
EMPLOYEE and his respective heirs, executors, administrators and assigns and of
the COMPANY and its successors and assigns.
13. SEPARABILITY.
If any term or provision of this Agreement, or the application thereof
to any person or circumstance, shall to any extent be held invalid or
unenforceable by a court of competent jurisdiction, the remainder of the
Agreement, or the application of such term or provision to persons or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby, and each term and provision of the Agreement
shall be valid and enforced to the fullest extent permitted by law.
14. EFFECT ON OTHER EMPLOYEE BENEFITS.
Except as set forth in the following sentence, the existence of this
Agreement and the obligations of the COMPANY hereunder shall have no effect on
the COMPANY'S other EMPLOYEE Benefit Plans applicable to EMPLOYEE, including
without limitation, the Savings and Profit Sharing Plan and the EMPLOYEE
Deferred Income and Pension Plan. As of the date of
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<PAGE> 21
this Agreement, the parties hereto agree that a certain Severance Compensation
Agreement between the COMPANY and EMPLOYEE dated as of October 24, 1991, as
amended May 3, 1993, is terminated and of no further force or effect.
IN WITNESS WHEREOF, the COMPANY has caused this Agreement to be
executed in its corporate name by its corporate officers thereunto duly
authorized and EMPLOYEE has executed this Agreement as of the day and year
first above written.
BELL INDUSTRIES, INC.
By: /s/ THEODORE WILLIAMS
----------------------------
Chairman and Chief Executive
Officer
By: /s/ JOHN J. COST
----------------------------
Secretary
"COMPANY"
/s/ PAUL F. DOUCETTE
---------------------------
PAUL F. DOUCETTE
"EMPLOYEE"
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<PAGE> 1
EXHIBIT 10.9
SEVERANCE COMPENSATION AGREEMENT
dated as of October 24, 1991, between
Bell Industries, Inc. a Delaware corporation (the
"Company") and ______________ (the "Executive").
The Company's Board of Directors has determined that it is appropriate
to reinforce and encourage the continued attention and dedication of members of
the Company's management, including the Executive, to their assigned duties
without distraction in potentially disturbing circumstances arising from the
possibility of a change in control of the Company.
This Agreement sets forth the severance compensation which the Company
agrees it will pay to the Executive if the Executive's employment with the
Company terminates under one of the circumstances described herein following a
Change in Control of the Company (as defined herein).
1. Term. This Agreement shall terminate, except to the extent
that any obligation of the Company hereunder remains unpaid as of such time,
upon the termination of the Executive's employment with the Company based on
death, Disability (as defined in Section 4(a)), Retirement (as defined in
Section 4(b)) or Cause (as defined in Section 4(c)) or by the Executive other
than for Good Reason (as defined in Section 4(d)).
2. Change in Control. For purposes of this Agreement, a Change
in Control of the Company shall be deemed to have occurred if (i) there shall
be consummated (x) 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, or (y) 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, or (ii) the stockholders of the Company approve
any plan or proposal for the liquidation or dissolution of the Company, or
(iii) any person (as such term is used in Section 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")), shall become
the beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act)
of thirty percent (30%) or more of the Company's outstanding Common Stock, or
(iv) 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 stockholders, 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.
<PAGE> 2
For purposes of this Section 2, the occurence of two or more of the events
constituting a Change in Control which are the result of the same of related
transaction(s) shall be deemed a single Change in Control and its date shall be
the date the first such event occurred. For example, a merger in which former
shareholders of the Company received less than 75% of the voting capital stock
of the surviving corporation followed by a change in the Company's Board of
Directors falling within clause (iv) above and contemplated by said merger
shall be deemed a single Change in Control.
10. Severance Compensation upon Termination of Employment.
Following a Change in Control, if (a) the Company shall terminate the
Executive's employment other than by reason of death, Disability (as hereafter
defined), Retirement (as hereafter defined), or Cause (as hereafter defined) or
(b) the Executive shall terminate his employment for Good Reason (as hereafter
defined), then the Company shall pay to the Executive as severance pay in a
lump sum, in cash, on the fifth business day following the Date of Termination,
an amount equal to 295% of the average of the aggregate twelve month
compensation paid to the Executive by the Company and any of its subsidiaries
during the 60 calendar months (broken into 5 twelve month periods) immediately
preceding the month Executive's employment is terminated. Notwithstanding the
foregoing but subject to the last paragraph of Section 4(d) and Section 4(f),
no severance payment shall be made to the Executive unless his termination of
employment occurs within three years after the occurance of a Change in
Control. For purposes of this Section 3, "twelve month compensation paid"
shall include base salary, bonuses and the value of the "spread" between the
exercise price (purchase price, if restricted stock) and closing price on NYSE
of the Company's common stock on the date that, under the Company's 1981
Restricted Stock Purchase Plan and/or 1990 Stock Option and Incentive Plan, any
option was granted to, or shares of restricted stock were purchased by,
Executive times (i) the number of shares subject to such option which became
vested during any such 12 month period and/or (ii) the number of shares with
respect to which restrictions lapsed during any such 12 month period.
In the event that Executive becomes entitled to a severance payment
and any part of the severance payment will be subject to the tax (the "Excise
Tax") imposed by section 4999 of the Internal Revenue Code (the "Code"), the
Company shall pay to Executive at the time specified in preceding paragraph an
additional amount (the "Gross-Up Payment") such that the net amount retained by
Executive, after deduction of any Excise Tax on the severance payments and any
federal, state and local income tax and Excise Tax upon the payment provided
for by this paragraph, shall be equal to the severance payments. For purposes
of determining the amount of the Gross-Up Payments, Executive shall be deemed
to pay federal income
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<PAGE> 3
taxes at the highest marginal rate of federal income taxation in the calendar
year in which the Gross-Up Payment is to be made and state and local income
taxes at the highest marginal rates of taxation in the state and locality of
Executive's residence on the Date of Termination, net of the maximum reduction
in federal income taxes which could be obtained from deduction of such state
and local taxes. In the event that the Excise Tax is subsequently determined
to be less than the amount taken into account hereunder at the time of
termination of Executive's employment, Executive shall repay to the Company at
the time that the amount of such reduction in Excise Tax is finally determined
and not subject to further appeal the portion of the Gross-Up Payment
attributable to such reduction plus interest on the amount of such repayment at
the rate provided in section 1274(b)(2)(B) of the Code. In the event that the
Excise Tax is determined to exceed the amount taken into account hereunder at
the time of the termination of Executive's employment (including by reason of
any payment the existence or amount of which cannot be determined at the time
of the Gross-Up Payment), the Company shall make an additional Gross-up Payment
in respect of such excess (plus any interest payable with respect to such
excess) at the time that the amount of such excess is finally determined.
4. Certain Definitions.
a. Disability. The term "Disability" as used in this
Agreement shall mean as a result of the Executive's incapacity due to physical
or mental illness, the Executive shall have been absent from his duties with
the Company on a full-time basis for six consecutive months.
b. Retirement. The term "Retirement" as used in this
Agreement shall mean termination by the Company or the Executive of the
Executive's employment based on the Executive's having reached age 70 or such
other age as shall have been fixed in any arrangement established with the
Executive's consent with respect to the Executive.
c. Cause. For purposes of this Agreement, the term
"Cause" shall mean (i) the willful and continued failure by the Executive to
substantially perform his duties as an employee (other than any such failure
resulting from the Executive's incapacity due to physical or mental illness),
or (ii) the willful engaging by the Executive in misconduct which is materially
injurious to the Company, monetarily or otherwise. For purposes of the
foregoing sentence, no act, or failure to act, of the Executive's part shall
be considered "willful" unless done, or omitted to be done, by him not in good
faith and without reasonable belief that his act or omission was in the best
interest of the Company. Notwithstanding the foregoing even if facts exist
which constitute "Cause", the Executive may not be terminated for Cause unless
and until there shall have been delivered to the Executive a copy of a
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<PAGE> 4
resolution duly adopted by the affirmative vote of not less than three-quarters
of the entire membership of the Company's Board of Directors at a meeting of
the Board called and held for the purpose (after reasonable notice to the
Executive and an opportunity for the Executive, together with the Executive's
counsel, to be heard before the Board), finding that in the good faith opinion
of the Board the Executive was guilty of conduct set forth in the second
sentence of this Section 4(c) and specifying the particulars thereof in detail.
d. Good Reason. For purposes of this Agreement, "Good
Reason" shall mean any of the following (done without the Executive's express
written consent):
(a) the assignment to the Executive by the
Company of duties inconsistent with the Executive's position, duties,
responsibilities and status with the Company immediately prior to the latest
Change in Control of the Company, or a change in the Executive's titles or
offices as in effect immediately prior to the latest Change in Control of the
Company, or any removal of the Executive from or any failure to reelect the
Executive to any of such positions (duties performed, and titles at, a
subsidiary corporation shall be deemed inconsistent) except in connection with
the termination of his employment for Disability, Retirement or Cause or as a
result of the Executive's death or by the Executive other than for Good Reason;
(b) a reduction by the Company in the
Executive's base salary as in effect on the date of the latest Change in
Control or the Company's failure to increase (within 12 months of the
Executive's last increase in base salary) the Executive's base salary after the
latest Change in Control of the Company in an amount which at least equals, on
a percentage basis, the average annual percentage increase in base salary for
all officers of the Company effected in the preceding 48 months;
(c) any failure by the Company to provide to
Executive compensation and benefit plans, arrangements, policies and procedures
which, taken as a whole, are no less favorable (including on an after-tax
basis) than those, taken as a whole, provided by the Company immediately prior
to the latest Change in Control;
(d) the Executive's relocation to any place
other than the location at which the Executive performed the Executive's duties
prior to the latest Change in Control of the Company, except (a) for a
relocation of no more than twenty (20) miles and (b) for required travel by the
Executive on the Company's business to an extent substantially consistent with
the Executive's business travel obligations at the time of the latest Change in
Control of the Company;
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<PAGE> 5
(e) any failure by the Company to provide
the Executive with the number of paid vacation days to which the Executive is
entitled at the time of the latest Change in Control of the Company;
(f) any material breach by the Company of
any provision of this agreement;
(g) any failure by the Company to obtain the
assumption of this Agreement by any successor or assign of the Company (as
defined in Section 6(a)); and
(h) any purported termination of the
Executive's employment which is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 4(e), and for purposes of
this Agreement, no such purported termination shall be effective.
Following a Change in Control, at any time after the occurrence
of an event(s) which Executive believes, in good faith, constitutes Good
Reason, the Executive may (but is not obligated to) give written notice to the
Company setting forth in reasonable detail the facts and circumstances claimed
to be a basis for termination for Good Reason pursuant to Section 3. If the
Company disagrees that such facts and circumstances exist and/or do not
constitute Good Reason, the Company shall so notify Executive within thirty
(30) days of the giving of such notice of Good Reason. The Company's
responsive notice shall be in writing and shall also set forth in reasonable
detail the reasons why it denies Executive's Good Reason claim. Failure by the
Company to give Executive a responsive notice within such thirty (30) day
period shall constitute an admission by the Company that Good Reason does
exist. The giving of such notice of Good Reason by Executive tolls the three
year period referred to in the penultimate sentence of the first paragraph of
Section 3 until the earlier of (i) the date that Executive's employment is
terminated or (ii) the date that it is determined that Good Reason does not
exist by mutual agreement of the parties, award of the arbitration or a final
judgment of a court of competent jurisdiction (the time for appeal therefrom
having expired and no appeal having been perfected).
e. Notice of Termination. Any termination by the
Company pursuant to Section 4(a), 4(b) or 4(c) shall be communicated by a
Notice of Termination. For purposes of this Agreement, a "Notice of
Termination" shall mean a written notice which shall indicate those specific
termination provisions in this Agreement relied upon and which sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated.
For purposes of this Agreement, no such purported termination by the Company
shall be effective without such Notice of Termination.
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<PAGE> 6
f. Date of Termination. "Date of Termination"
shall mean (i) if this Agreement is terminated by the Company for Disability,
30 days after Notice of Termination is given to the Executive (provided that
the Executive shall not have returned to the performance of the Executive's
duties on a full-time basis during such 30-day period) or (ii) if the
Executive's employment is terminated for any other reason, the date on which a
Notice of Termination is given, provided that if within 30 days after any
Notice of Termination is given to the Executive by the Company, or to the
Company by the Executive, the Executive or the Company (as the case may be)
notifies the other that a dispute exists concerning the termination, the Date
of Termination shall be the date the dispute is finally determined, whether by
mutual agreement by the parties, award of the arbitrator, or upon final
judgment of a court of competent jurisdiction (the time for appeal therefrom
having expired and no appeal having been perfected). During the existence of
any dispute, the three year period referred to in the penultimate sentence of
the first paragraph of Section 3 shall be tolled.
5. No Obligation to Mitigate Damages; No Effect on Other
Contractual Rights.
a. The Executive shall not be required to mitigate
damages or the amount of any payment provided for under this Agreement by
seeking other employment or otherwise, nor shall the amount of any payment
provided for under this Agreement be reduced by any compensation earned by the
Executive as the result of employment by another employer after the Date of
Termination, or otherwise.
b. The provisions of this Agreement, and any
payment provided for hereunder, shall not reduce any amounts, otherwise
payable, or in any way diminish the Executive's existing rights, or rights
which would accrue solely as a result of the passage of time, under any
employment agreement or other contract, plan or arrangement except for existing
rights pursuant to that certain Executive Severance Agreement dated as of
August 8, 1986 between the Company and Executive, which Agreement shall be of
no further force or effect.
6. Successor to the Company.
a. The Company will require any successor or assign
(whether direct or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of the Company, by
agreement in form and substance satisfactory to the Executive, expressly,
absolutely and unconditionally to assume and agree to perform this Agreement in
the same manner and to the same extent that the Company would be required to
perform it if no such succession or assignment had taken place. Any failure of
the Company to obtain such agreement prior to the effectiveness of any such
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<PAGE> 7
succession or assignment shall be a material breach of this Agreement and shall
entitle the Executive to terminate the Executive's employment for Good Reason.
As used in this Agreement, "Company" shall mean the Company as hereinbefore
defined and any successor or assign to its business and/or assets as aforesaid
which executes and delivers the agreement provided for in this Section 6 or
which otherwise becomes bound by all the terms and provisions of this Agreement
by operation of law. If at any time during the term of this Agreement the
Executive is employed by any corporation a majority of the voting securities of
which is then owned by the Company, the term "Company" shall in addition
include such employer unless the context otherwise requires. In such event,
the Company agrees that it shall pay or shall cause such employer to pay any
amounts owed to the Executive pursuant to Section 3 hereof.
b. This Agreement shall inure to the benefit of and
be enforceable by the Executive's personal and legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die while any amounts are still payable to
him hereunder, all such amounts, unless otherwise provided herein, shall be
paid in accordance with the terms of this Agreement to the Executive's devisee,
legatee, or other designee or, if there be no such designee, to the Executive's
estate.
7. Other Severance Provisions. In addition to severance
payments under Section 3 above, Executive also will receive health and life
insurance following termination of his employment in the same plan as provided
to such Executive immediately prior to such Executive's termination or a
substantially similar plan initiated by the Company thereafter. Such health
and life insurance shall be paid for by the Company, provided that the
Executive shall pay for any portion at the same rates as would have been paid
as if he were still employed by the Company. Continuation coverage under this
Section 7 shall continue for a period of three years; provided, however, that
such continuation coverage shall end as of the date the Executive becomes
covered under any other group health and or life plan that is not maintained by
the Company and which provides substantially similiar benefits to the Company's
plan.
8. Legal Fees. The Company shall pay all legal fees, costs
of litigation and other expenses incurred in good faith by the Executive as a
result of the Company's refusal to make the severance payment to which the
Executive becomes entitled under this Agreement, or as a result of the
Company's contesting the validity, enforceability or interpretation of this
Agreement or of the Executive's right to benefits hereunder; provided, however,
that if the Company is the prevailing party, it shall be obligated to pay only
its own attorneys' fees and costs, witness expenses and court costs.
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<PAGE> 8
9. Arbitration. The Executive shall have the right and
option to elect (in lieu of litigation) to have any dispute or controversy
arising under or in connection with this Agreement settled by arbitration,
conducted before a panel of three arbitrators sitting in Los Angeles, in
accordance with rules of the American Arbitration Association then in effect.
Judgement may be entered on the award of the arbitrator in any court having
jurisdiction. All expenses of such arbitration, including the fees and
expenses of the counsel for the Executive, shall be borne by the Company;
provided, however, that if the Company is the prevailing party, it shall be
entitled to recover from the Executive one-half ( 1/2) of the arbitrators' and
transcript expenses and shall be obligated to pay only its own attorneys' fees
and costs, witness expenses and other costs.
10. Notice. For purposes of this Agreement, notices and all
other communications provided for in the Agreement shall be in writing and
shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid, as follows:
If to the Company:
Bell Industries, Inc.
11812 San Vicente Boulevard
Los Angeles, California 90049-5069
Attention: President
If to the Executive:
or such other address as either Party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
11. Miscellaneous. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Executive and the Company. No waiver by
either party hereto at any time of any breach by the other party hereto of, or
failure to comply with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time. No
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are
not set forth expressly in this Agreement.
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<PAGE> 9
This Agreement shall be governed by and construed in accordance with the laws
of the State of California.
12. Validity. The invalidity or unenforceability of any
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
13. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original but all of
which together will constitute one and the same instrument.
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<PAGE> 10
14. Confidentiality. The Executive shall retain in
confidence any and all confidential information known to the Executive
concerning the Company and its business so long as such information is not
otherwise publicly disclosed.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first above written.
Bell Industries, Inc.
By:____________________________
[Print Name], Executive
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<PAGE> 1
EXHIBIT 10.10
INDEMNITY AGREEMENT
This Agreement is made as of the 2nd day of November, 1993, by
and between Bell Industries, Inc., a Delaware corporation (the "Corporation"),
and Tracy A. Edwards (the "Indemnitee"), a Director and/or Officer of the
Corporation.
WHEREAS, it is essential to the Corporation to retain and
attract as Directors and Officers the most capable persons available, and
WHEREAS, the substantial increase in corporate litigation subjects
Directors and Officers to expensive litigation risks at the same time that the
availability of Directors' and officers' liability insurance has been severely
limited, and
WHEREAS, it is now and has always been the express policy of the
Corporation to indemnify its Directors and Officers so as to provide them with
the maximum possible protection permitted by law, and
WHEREAS, the Corporation does not regard the protection available to
Indemnitee as adequate in the present circumstances, and realizes that
Indemnitee may not be willing to serve as a Director or Officer without
adequate protection, and the Corporation desires Indemnitee to serve in such
capacity;
NOW, THEREFORE, in consideration of Indemnitee's service
as a Director or Officer after the date hereof the parties agree as follows:
1. Definitions. As used in this Agreement:
(a) The term "Proceeding" shall include any
threatened, pending or completed action, suit or proceeding,
whether brought by or in the right of the Corporation or
otherwise and whether of a civil, criminal, administrative or
investigative nature.
(b) The term "Expenses" shall include, but is not
limited to, expenses of investigations, judicial or
administrative proceedings or appeals, damages, judgments, fines,
amounts paid in settlement by or on behalf of Indemnitee,
attorneys' fees and disbursements and any expenses of
establishing a right to indemnification under this Agreement.
(c) The terms "Director" and "Officer" shall include
Indemnitee's service at the request of the Corporation as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or
<PAGE> 2
other enterprise as well as a Director and/or Officer of the
Corporation.
2. Indemnity of Director or Officer. Subject only to the
limitations set forth in Section 3, Corporation will pay on behalf of the
Indemnitee all Expenses actually and reasonably incurred by Indemnitee because
of any claim or claims made against him in a Proceeding by reason of the fact
that he is or was a Director and/or Officer.
3. Limitations on Indemnity. Corporation shall not be
obligated under this Agreement to make any payment of Expenses to the
Indemnitee
(a) which payment it is prohibited by applicable
law from paying as indemnity;
(b) for which payment is actually made to the
Indemnitee under an insurance policy, except in respect
of any excess beyond the amount of payment under such insurance;
(c) for which payment the Indemnitee is indemnified
by Corporation otherwise than pursuant to this Agreement;
(d) resulting from a claim decided in a Proceeding
adversely to the Indemnitee based upon or attributable to the
Indemnitee gaining in fact any personal profit or advantage to
which he was not legally entitled; and, if the Indemnitee is a
Director, based upon any of the exceptions set forth in clauses
(i) through (iv) of Article Tenth of this Corporation's
Certificate of Incorporation;
(e) resulting from a claim decided in a Proceeding
adversely to the Indemnitee for an accounting of profits made
from the purchase or sale by the Indemnitee of securities of
Corporation within the meaning of Section 16(b) or 16(c) of the
Securities Exchange Act of 1934 and amendments thereto or similar
provisions of any state statutory law or common law; or
(f) brought about or contributed to by the
dishonesty of the Indemnitee seeking payment hereunder; however,
notwithstanding the foregoing, the Indemnitee shall be
indemnified under this Agreement as to any claims upon which suit
may be brought against him by reason of any alleged dishonesty on
his part, unless it shall be decided in a Proceeding that he
committed (i) acts of active and deliberate dishonesty (ii) with
actual dishonest purpose and intent, and (iii) which acts were
material to the cause of action so adjudicated.
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<PAGE> 3
For purposes of Sections 3 and 4, the phrase "decided in a Proceeding"
shall mean a decision by a court, arbitrator(s), hearing officer or other
judicial agent having the requisite legal authority to make such a decision,
which decision has become final and from which no appeal or other review
proceeding is permissible.
4. Advance Payment of Costs. Expenses incurred by
Indemnitee in defending a claim against him in a Proceeding shall be paid by
the Corporation as incurred and in advance of the final disposition of such
Proceeding; provided, however, that Expenses of defense need not be paid as
incurred and in advance where the judicial agent of first impression has
decided the Indemnitee is not entitled to be indemnified pursuant to this
Agreement or otherwise. Indemnitee hereby agrees and undertakes to repay such
amounts advanced if it shall be decided in a Proceeding that he is not entitled
to be indemnified by the Corporation pursuant to this Agreement or otherwise.
5. Enforcement. If a claim under this Agreement is not paid
by Corporation, or on its behalf, within thirty days after a written claim has
been received by Corporation, the Indemnitee may at any time thereafter bring
suit against Corporation to recover the unpaid amount of the claim and if
successful in whole or in part, the Indemnitee shall be entitled to be paid
also the Expenses of prosecuting such claim.
6. Subrogation. In the event of payment under this
Agreement, Corporation shall be subrogated to the extent of such payment to all
of the rights of recovery of the Indemnitee, who shall execute all papers
required and shall do everything that may be necessary to secure such rights,
including the execution of such documents necessary to enable Corporation
effectively to bring suit to enforce such rights.
7. Notice. The Indemnitee, as a condition precedent to his
right to be indemnified under this Agreement, shall give to Corporation notice
in writing as soon as practicable of any claim made against him for which
indemnity will or could be sought under this Agreement. Notice to Corporation
shall be given at its principal office and shall be directed to the President
(or such other address as Corporation shall designate in writing to the
Indemnitee); notice shall be deemed received if sent by prepaid mail properly
addressed, the date of such notice being the date postmarked. In addition, the
Indemnitee shall give Corporation such information and cooperation as it may
reasonably require.
8. Saving Clause. If this Agreement or any portion thereof
shall be invalidated on any ground by any court of competent jurisdiction, the
Corporation shall nevertheless indemnify Indemnitee to the full extent
permitted by any
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<PAGE> 4
applicable portion of this Agreement that shall not have been invalidated or by
any other applicable law.
9. Indemnification Hereunder Not Exclusive. Nothing herein
shall be deemed to diminish or otherwise restrict the Indemnitee's right to
indemnification under any provision of the Certificate of Incorporation or
Bylaws of the Corporation or under Delaware law.
10. Applicable Law. This Agreement shall be governed by and
construed in accordance with Delaware law.
11. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall constitute the original.
12. Successors and Assigns. This Agreement shall be binding
upon the Corporation and its successors and assigns.
13. Continuation of Indemnification. The indemnification
under this Agreement shall continue as to Indemnitee even though he may have
ceased to be a Director and/or Officer and shall inure to the benefit of the
heirs and personal representatives of Indemnitee.
14. Coverage of Indemnification. The indemnification under
this Agreement shall cover Indemnitee's service as a Director and/or Officer
prior to or after the date of the Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and signed as of the day and year first above written.
<TABLE>
<S> <C>
INDEMNITEE CORPORATION
By:_______________________ By:___________________
</TABLE>
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