exv10w1



 





EXHIBIT 10.1




December 27, 2006




Kevin Thimjon

11551 Ridge Valley Court

Zionsville, IN 46077




Dear Kevin:




Bell Industries Inc. (“Bell” or the “Company”) is pleased to make you the following offer of
employment for the salaried, exempt position of Chief Financial Officer of Bell. This offer letter
shall become effective on the Starting Date indicated below and will continue until the second
anniversary of the Starting Date, unless terminated earlier as described in the “Termination of
Employment” and “Resignation of Employment” paragraphs below (the “Initial Term”). The Initial
Term will be automatically extended for successive one-year periods from the second anniversary of
the Starting Date (each an “Extended Term”) unless either you or Bell gives the other written
notice of non-renewal at least ninety (90) days prior to the end of the Initial Term or any
Extended Term.



	 	 	 
	Position:

	 	Chief Financial Officer.
	 
	 	 
	Duties:

	 	Such duties as the Board of Directors of Bell shall
from time to time assign to you. You shall report
directly to the Chief Executive Officer of Bell. At
Bell’s request, you shall serve Bell and/or its
subsidiaries and affiliates in other offices and
capacities in addition to the foregoing. In the event
that you serve in any one or more of such additional
capacities, your compensation shall not be increased
beyond that specified below.
	 
	 	 
	Exclusivity:

	 	During the Initial Term, and the Extended Term, if
any, you agree to devote substantially all of your
business time, energy, skill and best efforts to the
performance of your duties hereunder in a manner that
will faithfully and diligently further the business
and interests of Bell. Without limiting the
foregoing, it is specifically agreed that you may
devote up to (5) hours per week as a paid consultant
performing Liquidating Agent duties for USOP
Liquidating, LLC, provided, however, that such work
shall not interfere with your duties to Bell, that
your duties and obligations to Bell shall take
precedence over such work and that the majority of
such work shall be performed during non-business
hours. You may serve on boards of directors of
companies or organizations not affiliated or in
competition with Bell only to the extent you receive
the prior written approval of Bell’s Board of
Directors.
	 
	 	 
	Base Annual Salary:

	 	$210,000. Paid bi-weekly in the amount of $8,076.92
gross, subject to applicable withholdings. Bell
issues paychecks bi-weekly.
	 
	 	 
	Starting Date:

	 	January 8, 2007






Incentive Compensation: In addition to your Base Annual Salary, you shall be eligible for an annual
bonus of up to 50% of your Base Annual Salary.



 









 





Stock Options: Bell will recommend that the Compensation Committee of the Board of Directors grant
you non-qualified stock options for 125,000 shares of Bell common stock. Such stock options shall
be granted at a per share exercise price as follows: (i) options to purchase 50,000 shares shall
be granted at a per share exercise price equal to the fair market value of the shares on the date
of grant, (ii) options to purchase 25,000 shares shall be granted at a per share exercise price of
$4.00, (iii) options to purchase 25,000 shares shall be granted at a per share exercise price of
$6.00, and (iv) options to purchase 25,000 shares shall be granted at a per share exercise price of
$8.00. Vesting will occur on the following schedule: 20% of options shall vest immediately, and
an additional 20% of options shall vest on each of the first, second, third and fourth
anniversaries of the date of grant until 100% of options are vested. You may be eligible for
future grants of options from time to time as recommended by the CEO and approved by the
Compensation Committee of Bell’s Board of Directors.



Termination of Employment: Bell may terminate your employment for Cause or without Cause. The
effective date of your termination will be the date specified by Bell in its written notice to you
of its decision to terminate your employment. For purposes of this employment agreement, “Cause”
shall mean the occurrence of any one or more of the following events : (i) your willful failure to
perform or gross negligence in performing the duties owed to Bell ; (ii) your commission of an act
of fraud or dishonesty in the performance of your duties ; (iii) your conviction of, or entry by
you of a guilty or no contest plea to, any felony or any misdemeanor involving moral turpitude,
dishonesty, breach of trust or unethical business conduct, or any crime involving Bell; (iv) any
breach of the non-disclosure, non-competition or non-solicitation provisions set forth below or the
unauthorized dissemination of Confidential Information, as defined below; (v) any failure or
refusal to perform any lawful directive of Bell’s Chief Executive Officer or the Board of Directors
; (vi) any breach of your fiduciary duty or duty of loyalty to Bell ; or (vii) your failure or
inability to perform your obligations to Bell for 60 consecutive days or for a total of 120 days in
any 12-month period as a result of disability or as a result of any other reason.



You may terminate your employment under this agreement and resign for Good Reason by notifying
Bell, in writing, of your resignation decision and specifying in detail as to the reasons that you
believe you may terminate this for Good Reason, including the specific provision below that is
applicable to your resignation. Your resignation notice will become effective fifteen (15) days
following the receipt of the notice by Bell.. “Good Reason” for this purpose means the occurrence
of any one or more of the following events, without your prior written consent (unless Bell cures
the circumstances constituting Good Reason prior to the termination or resignation date): (i) a
material reduction in your titles, duties, authority and responsibilities; (ii) Bell reduces your
annual Base Salary; (iii) Bell relocates your principal work location from Indianapolis, Indiana by
more than 50 miles.



If Bell terminates your employment or if you resign for Good Reason, you will be entitled to
Severance Compensation and benefits as follows:



          (1) Termination By Bell Without Cause or Resignation By You For Good Reason and Without Change
In Control. You will receive:





	 	•	 	A severance amount equal to six months of Base Annual Salary
payable in one lump-sum payment within thirty (30) days of the
termination date.
	 
	 	•	 	An additional 20% of any unvested stock option grant shall vest
and shall remain exercisable with respect to the vested portion for
a period of forty-five (45) days.
	 
	 	•	 	For the period of six months following the date of termination,
group health insurance coverage at least equal to that which would
have been provided to you if your employment had not been
terminated or, at Bell’s election, payments for the applicable
COBRA premium for such




 









 






	 	 	 	coverage, provided however, that if you obtain other employment
during this six month period, and if you are eligible to receive
group health coverage under another employer’s plan, this benefit
shall immediately cease.





You are not required to mitigate amounts payable to you under this paragraph by seeking other
employment or otherwise,



          (2) Termination By Bell Without Cause or Resignation By You For Good Reason Within 12 Months
Of A Change In Control. You will receive:





	 	•	 	A severance amount equal to one year of Base Annual Salary plus
full annual bonus, payable in one lump-sum payment within thirty
(30) days of the termination date.
	 
	 	•	 	All unvested stock options grants shall vest and shall remain
exercisable with respect to the vested portion for a period of
forty-five (45) days.
	 
	 	•	 	For the period of one year following the date of termination,
group health insurance coverage at least equal to that which would
have been provided to you if your employment had not been terminated
or, at Bell’s election, payments for the applicable COBRA premium
for such coverage, provided however, that if you obtain other
employment during this one year period, and if you are eligible to
receive group health coverage under another employer’s plan, this
benefit shall immediately cease.
	 
	 	•	 	You are not required to mitigate amounts payable to you under
this paragraph by seeking other employment or otherwise.





          For purposes of this employment agreement, a “Change In Control” shall be defined as set forth
on the last page of this letter.




          (3) Termination For Cause With or Without A Change In Control. You will not be entitled to
any severance compensation or other benefits.




Voluntary Resignation of Employment: You may voluntarily and without Good Reason resign your
employment with Bell by notifying Bell, in writing, of your resignation decision. Your resignation
notice will become effective sixty (60) days following the receipt of the notice by Bell, provided
however that Bell reserves the right, in its sole discretion, to accelerate your resignation date.
If Bell accelerates your resignation date, the date to which the resignation is accelerated shall
be the effective date of your resignation. On the effective date of your resignation, you shall be
entitled to all accrued salary and benefits, but shall not be entitled to any severance
compensation or other benefits, except as required by law. Upon such resignation by you any and
all equity interests that have been granted to you and that have not vested shall terminate and be
of no further force or effect.



Employee Benefits: During the Initial Term and any Extended Term while you are employed by Bell,
you will be entitled to receive the same benefits as Bell makes generally available from time to
time to Bell’s senior executives, as those benefits may be modified, reduced or eliminated from
time to time. Vacation, medical and dental insurance, profit sharing, and other rights
and benefit plans will be available to you as set forth in Bell’s Employee Handbook. Such rights,
programs and benefit plans may be revised from time to time at Bell’s sole discretion. Your
eligibility for medical and dental benefits is effective the first day of your employment. You
will be eligible for four (4) weeks of vacation, on accrual basis, during your first full year of
employment. With the exception of any contrary provision in this letter, or in any other document
or agreement between you and Bell, the terms of your employment are at all times subject
to the provisions of Bell’s Employee Handbook, as said Handbook may be changed from time to time by
Bell in its sole discretion.



 









 





Non-Disclosure of Confidential Information: You acknowledge that in your employment with Bell, you
will occupy a position of trust and confidence. You agree that during your employment with Bell
and at any time thereafter, except as may be required to perform your job duties for the benefit of
Bell or as required by applicable law, disclose to others or use, whether directly or indirectly,
any Confidential Information regarding Bell. “Confidential Information” shall mean any non-public
or proprietary information regarding Bell, its business and customers, in whatever form, tangible
or intangible, that is not disclosed publicly by Bell, including (without limitation) any
proprietary knowledge, trade secrets, designs, products, inventions, business practices, programs,
processes, techniques, know-how, management programs, methodology, financial information, pricing
and fee information, agreements and arrangements with affiliated companies, employee files,
personnel records, internal corporate records, corporate and business contacts and relationships,
corporate and business opportunities, telephone logs and messages, client, consultant and customer
lists and any and all other materials and information pertaining to Bell or its business to which
you have been exposed or have access to as a consequence of your employment with Bell. You
acknowledge that such Confidential Information is specialized, unique in nature and of great value
to Bell, and that such information gives Bell a competitive advantage. You agree to deliver or
return to Bell, at Bell’s request at any time or upon termination of your employment all
Confidential Information (and all copies thereof) furnished by Bell or prepared by you during your
employment with Bell.



Ownership of Rights: You acknowledge and confirm that Bell shall own, in perpetuity, throughout
the universe, all right, title and interest in and to the results and proceeds of your services to
Bell and all material produced and/or furnished by you, of any kind and nature whatsoever, it being
understood and agreed that Bell hereby acquires the maximum rights permitted to be obtained by Bell
in all proprietary rights and information. Any such materials and/or ideas submitted to Bell
hereunder automatically shall become the property of Company, and you hereby transfer and agree to
transfer and assign to Company all of said rights and materials (including, without limitation, all
copyrights and similar protections, renewals and extensions of copyright, and any and all causes of
action that may have accrued in your favor for infringement of copyright), it being understood that
you, for purposes of your employment with Bell, are acting entirely as Company’s executive for
hire. You agree that you will, at Company’s request, execute and deliver to Company or procure the
execution and delivery to Company of such documents or other instruments which Company may from
time to time deem reasonably necessary or desirable to evidence, maintain and protect its rights
hereunder and to carry out the intent and purposes of this Agreement and to convey to Company all
rights in and to the material supplied to Company by you in this employment agreement.



Non-Competition: You agree that you shall not, either alone or jointly, with or on behalf of
others, directly or indirectly, whether as principal, partner, agent, shareholder, director,
employee, consultant or otherwise, at any time during your employment with Bell, during which you
are providing any services to Bell, or during which you are receiving severance pay or other
compensation or benefits from Bell you shall not, directly or indirectly, without the prior written
consent of Bell, provide consultative services or otherwise provide services to, own, manage,
operate, join, control, participate in, or be connected with (as a stockholder, partner, or
otherwise), any business, individual, partner, firm, corporation, or other entity that is engaged
in any business that is a competitor to any of Bell’s businesses or the businesses of any
subsidiary or affiliate of Bell; provided, however, that the “beneficial ownership” by Executive,
either individually or as a member of a “group,” as such terms are used in Rule 13d of the General
Rules and Regulations under the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
of not more than five percent (5%) of the voting stock of any publicly traded corporation not shall
alone constitute a violation of this Agreement.



 









 





Non-Solicitation: You agree that you shall not, either alone or jointly, with or on behalf of
others, directly or indirectly, whether as principal, partner, agent, shareholder, director,
employee, consultant or otherwise, at any time during your employment and for a period of one (1)
year after end of your employment with Bell: (a) directly or indirectly solicit the employment or
engagement of, or otherwise induce or entice away from the employment or engagement of Bell or any
affiliated entity, either for your own benefit or for any other person or entity, any employee or
consultant who was employed or engaged by Bell or any such affiliated entity during the term of
your employment, whether or not such employee or consultant would commit any breach of his/her
contract of employment or consulting arrangement by reason of his/her leaving the service of Bell
or any affiliated entity; or (b) directly or indirectly solicit, induce or entice any client,
customer, contractor, licensor, agent, partner or other business relationship of Bell to terminate,
discontinue, renegotiate or otherwise cease or modify its or their relationship with Bell or any
affiliated entity. You expressly acknowledge and agree that the restrictions contained in this
paragraph are reasonably tailored to protect Bell’s Confidential Information and are reasonable in
all circumstances in scope, duration and all other respects. It is expressly agreed by the parties
that if for any reason whatsoever, any one or more of the restrictions in this paragraph shall
(either taken by itself or themselves together) be adjudged to go beyond what is reasonable in all
circumstances for the protection of the legitimate interests of Bell, the parties agree that the
prohibitions shall be in effect and upheld to the fullest extent permissible under applicable laws.



Acceptance: This offer is effective immediately and may be accepted by your signing and dating a
copy of this document and returning it to me on or before close of business on December 29, 2006.
If not so accepted by that time, this offer will be deemed withdrawn and will be no further in
force or effect. Any representations that may have been made to you concerning the terms or
conditions of employment, whether orally or in writing, are cancelled and superseded by this
letter. Any modifications to the terms of your employment must be confirmed to you in writing to
be valid and enforceable and your election to continue in Bell’s employ after such confirmation
will be deemed to be your agreement to such modifications. You will also be asked to bring to your
first day of work documents outlined on the attached “Employment Eligibility Verification”
document. This is necessary in order to complete your employment eligibility paperwork as required
by Federal law.



Governing Law: Your principal work location will be Indianapolis, Indiana, with travel as required
to perform the duties of your job. This Agreement will be governed by and construed in accordance
with the laws of the State of Indiana applicable to contracts made and performed in such State
without giving effect to the choice of law principles of such State that would require or permit
the application of the laws of another jurisdiction.



Arbitration: Any dispute or controversy arising out of or relating to any interpretation,
construction, performance, termination or breach of this Agreement, will be settled by final and
binding arbitration by a single arbitrator to be held in Indianapolis, Indiana, in accordance with
the American Arbitration Association national rules for resolution of employment disputes then in
effect, except as provided herein. The arbitrator selected shall have the authority to grant any
party all remedies otherwise available by law, including injunctions, but shall not have the power
to grant any remedy that would not be available in a state or federal court. The arbitrator shall
have the authority to hear and rule on dispositive motions (such as motions for summary
adjudication or summary judgment). The arbitrator shall have the powers granted by Indiana law and
the rules of the American Arbitration Association which conducts the arbitration, except as
modified or limited herein. Notwithstanding anything to the contrary in the rules of the American
Arbitration Association, the arbitration shall provide (i) for written discovery and depositions as
necessary to prosecute or defend the matter in the discretion of the arbitrator and (ii) for a
written decision by the arbitrator that includes the essential findings and conclusions upon which
the decision is based which shall be issued no later than thirty (30) days after a dispositive
motion is heard



 









 







and/or an arbitration hearing has completed. To the maximum extent allowed by law, each party to
the arbitration shall split equally the fees and administrative costs charged by the arbitrator and
American Arbitration Association. You and Bell shall have the same amount of time to file any
claim against the other as we would have if the claim had been filed in state or federal court.
In conducting the arbitration, the arbitrator will follow the rules of evidence of the State of
Indiana (including but not limited to all applicable privileges), and the award of the arbitrator
must follow Indiana and/or federal law, as applicable. The arbitrator will be selected by the
mutual agreement of the parties. If the parties cannot agree on an arbitrator, the parties shall
alternately strike names from a list provided by the American Arbitration Association until only
one name remains. The decision of the arbitrator will be final, conclusive and binding on the
parties to the arbitration. The prevailing party in the arbitration, as determined by the
arbitrator, shall be entitled to recover his or its reasonable attorneys’ fees and costs, including
the costs or fees charged by the arbitrator and the American Arbitration Association, to the extent
allowed by law. Judgment may be entered on the arbitrator’s decision in any court having
jurisdiction.



Kevin, we appreciate your interest in this opportunity at Bell Industries and we look forward to a
mutually rewarding relationship.



Employer:




Bell Industries, Inc.




	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ John Fellows 	 	 	 	Date: January 5, 2007	 	 
	 

	 	 

John Fellows, CEO
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Employee:

	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	/s/ Kevin Thimjon	 	 	 	Date: December 28, 2006	 	 
	 	 	 	 	 	 	 
	Kevin Thimjon	 	 	 	 	 	 






 









 






Employment Eligibility Verification




Employee offers One (1) of the following documents:





	•	 	U.S. Passport (expired or unexpired)






	•	 	Certificate of U.S. Citizenship






	•	 	Certificate of Naturalization






	•	 	Unexpired foreign passport with I-551 stamp or attached I-94






	•	 	Alien Registration Receipt Card with photograph






	•	 	Unexpired Temporary Resident Card






	•	 	Unexpired Employment Authorization Card






	•	 	Unexpired Reentry Permit






	•	 	Unexpired Refugee Travel Document






	•	 	Unexpired Employment Authorization Document issued by the INS with photograph





OR




Employee offers One (1) of the following documents:





	•	 	Driver’s license or ID card issued by a state with photograph






	•	 	ID card issued by federal, state or local government agencies with photograph






	•	 	School ID card with photograph






	•	 	Voter’s registration card






	•	 	U.S. Military Card or draft record






	•	 	Military dependent’s ID card






	•	 	U.S. Coast Guard Merchant Mariner Card






	•	 	Native American tribal document Driver’s license issued by a Canadian government





(Under 18 Only)





	•	 	School record or report card






	•	 	Clinic, doctor or hospital record






	•	 	Day-care or nursery school record





AND




Employee offers One (1) of the following documents:





	•	 	U.S. Social Security Card






	•	 	Certification of Birth Abroad






	•	 	Original or certified copy of a birth certificate






	•	 	Native American tribal document






	•	 	U.S. Citizen ID Card






	•	 	ID Card for use of Resident Citizen in the United States






	•	 	Unexpired Employment Authorization Document (other than I-688B)




 









 











CHANGE IN CONTROL




      (a) Any transaction or event resulting in the beneficial ownership of voting securities,
directly or indirectly, by any “person” or “group” (as those terms are defined in Sections
3(a)(9), 13(d), and 14(d) of the Exchange Act and the rules there under) having “beneficial
ownership” (as determined pursuant to Rule 13d-3 under the Exchange Act) of securities entitled to
vote generally in the election of directors (“voting securities”) of Bell that represent greater
than 35% of the combined voting power of Bell’s then outstanding voting securities, other than any
transaction or event resulting in the beneficial ownership of securities:




     (i) By a trustee or other fiduciary holding securities under any employee benefit plan
(or related trust) sponsored or maintained by Bell or any person controlled by Bell or by
any employee benefit plan (or related trust) sponsored or maintained by Bell or any person
controlled by Bell , or




     (ii) By Bell or a corporation owned, directly or indirectly, by the stockholders of
Bell in substantially the same proportions as their ownership of the stock of Bell, or




     (iii) Pursuant to a transaction described in clause (b) below that would not be a
Change in Control under clause (b), or




     (iv) The beneficial ownership of voting securities by Newcastle Capital Management,
L.P., or any Affiliate thereof, as defined in Rule 12b-2 of the Exchange Act; or



      (b) The consummation by Bell of (i) a merger, consolidation, reorganization, or business
combination or (ii) a sale or other disposition of all or substantially all of Bell’s assets (in a
single transaction to a single acquirer and not as a result of the sale, lease or other disposition
of one or more divisions or subsidiaries of Bell in separate transactions or a series of related
transactions) or (iii) the acquisition of assets or stock of another entity, in each case, other
than a transaction:




     (A) which results in Bell’s voting securities outstanding immediately before the
transaction continuing to represent (either by remaining outstanding or by being converted
into voting securities of Bell or the person that, as a result of the transaction, controls,
directly or indirectly, Bell or owns, directly or indirectly, all or substantially all of
Bell’s assets or otherwise succeeds to the business of Bell (Bell or such person, the
“Successor Entity”)) directly or indirectly, greater than 50% of the combined voting power
of the Successor Entity’s outstanding voting securities immediately after the transaction,
or




     (B) after which no person or group beneficially owns voting securities representing
greater than 50% of the combined voting power of the Successor Entity; provided, however,
that no person or group shall be treated for purposes of this clause (B) as beneficially
owning greater than 50% of the combined voting power of the Successor Entity solely as a
result of the voting power held in Bell prior to the consummation of the transaction.



For purposes of clause (a) above, the calculation of voting power shall be made as if the date of
the acquisition were a record date for a vote of Bell’s stockholders, and for purposes of clause
(b) above, the calculation of voting power shall be made as if the date of the consummation of the
transaction were a record date for a vote of Bell’s stockholders.