Document:

exv10w9

 

EXHIBIT 10.9

EMPLOYMENT AGREEMENT

     This
Employment Agreement (the “Agreement”) entered into this
17th day of
March 2004 (the “Effective Date”), is by and between Caneum, Inc., a
corporation formed under the laws of the State of Nevada with its principal
place of business at 170 Newport Center Drive, Suite 220, Newport Beach, CA
92660 (“Caneum”), and Gary Allhusen (“the Employee”).

Recitals:

     Whereas, Caneum desires to engage the services of the Employee as
Executive Vice President, and the Employee is willing to render such services
to Caneum in consideration of the terms and conditions agreed to by the
parties; and

     Whereas, the Board of Directors of Caneum (the “Board”) has approved the
employment of the Employee on the terms and conditions set forth in this
Agreement;

     Now therefore, in consideration of the mutual covenants and promises
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, Caneum
agrees to employ the Employee, and the Employee agrees to perform services for
Caneum as an employee, upon the terms and conditions set forth herein.

	1.	 	Term.

     The initial term of this Agreement shall begin on March 29, 2004, and be
for a period of three (3) years, unless it is terminated earlier as provided
herein. Beginning on that date, and on each anniversary thereafter, unless it
is terminated earlier as provided herein or Caneum delivers written notice to
the Employee of its intention not to extend the Agreement at least ninety (90)
days before such anniversary date, the term of this Agreement shall
automatically be extended for one additional year. The restrictive covenants
in Section 9 hereof shall survive the termination of this Agreement.

	2.	 	Title and Duties.

     The Employee shall be employed as Executive Vice President of Caneum. The
Employee shall perform such services consistent with his position as might be
assigned to him from time to time and are consistent with the bylaws of Caneum.
The Board has appointed the Employee to serve as the Executive Vice President
and Employee shall have such responsibilities and authority as is commensurate
with such offices and as may be prescribed by the Board and bylaws of Caneum.
The Board shall have the right to review and change the responsibilities of
Employee from time to time as it may deem necessary or appropriate, provided,
however, that such responsibilities shall not be inconsistent with the
Employee’s position as Executive Vice President.

 

 

	3.	 	Location.

     The Employee’s place of employment shall be the offices of Caneum
described above, or at such other location as mutually agreed between Caneum
and the Board, but in no event outside Orange or San Diego counties.

	4.	 	Extent of Services.

	a.	 	Duty to Perform Services.

          The Employee agrees not to engage in any business activities during the
term of this Agreement except those that are for the benefit of Caneum and its
subsidiaries, and to devote 100% of his entire business time, attention, skill,
and effort to the performance of his duties under this Agreement for Caneum and
any corporation controlled by Caneum now or during the term of this Agreement.
Notwithstanding the foregoing, the Employee may engage in charitable,
professional and civic activities that do not impair the performance of his
duties to Caneum, as the same may be changed from time to time. While employed
by Caneum, Employee may not serve on the board of directors of any other
company. Nothing contained herein shall prevent the Employee from managing his
own personal investments and affairs, including, but not limited to, investing
his assets in the securities of publicly traded companies; provided, however,
that the Employee’s activities do not constitute a conflict of interest,
violate securities laws, or otherwise interfere with the performance of his
duties and responsibilities as described herein. The Employee agrees to adhere
to Caneum’s published policies and procedures, as adopted from time to time,
affecting directors, officers, employees, and agents and shall use his best
efforts to promote Caneum’s interest, reputation, business and welfare.

	b.	 	Corporate Opportunities.

          The Employee agrees that he will not take personal advantage of any Caneum
business opportunities that arise during his employment with Caneum and that
might be of benefit to Caneum. All material facts regarding such opportunities
must be promptly reported to the Board for consideration by Caneum.

	5.	 	Compensation and Benefits.

	a.	 	Base Salary.

          The Employee’s annual base salary shall be $120,000. The base salary
shall be payable in equal installments in accordance with Caneum’s standard
payroll practices. The Employee’s annual base salary shall be further reviewed
no less frequently than annually for increases in the discretion of the Caneum
Compensation Committee and/or Board, taking into account the compensation level
for employees with similar skills and responsibilities at companies comparable
to Caneum, the financial condition of Caneum, and the Employee’s value to
Caneum relative to other members of the executive management of Caneum;
provided, however, that at no time during the term of this Agreement shall the
Employee’s base salary be decreased from the base salary then in effect except
as part of an general program of salary adjustment by Caneum applicable to all
vice presidents and above.

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	b.	 	Stock Options

          Upon execution of this Agreement, Employee will be granted 500,000 ISO
options as a base option plan priced at 100% of the then fair market value of
Caneum common stock, as determined by the Compensation Committee on the date of
Employee’s hire. Vesting for the 500,000 ISO base options will follow the
following schedule and include an early exercise provision should Employee wish
to exercise it: (1) 1/12th instantly as a sign-on
bonus, (2) 1/12th per quarter
for each quarter of Caneum revenue exceeding the previous quarter of revenue
since Employee’s date of hire, independent of whether the revenue is generated
from acquisition or non-acquisition business activities, (3) 1/12th for each
$250K in aggregate revenues Caneum achieves from non-acquisition generated
revenues from the day Employee commences work at Caneum, and/or (4) at the 3
year 6 month anniversary of Employee’s employment with Caneum.

          Upon execution of this Agreement, Employee will also be granted an
additional 250,000 ISO options as a bonus/incentive plan priced at 100% of the
then fair market value of Caneum common stock. Vesting for the 250,000 ISO
performance options cited would follow the following schedule, would be based
on the new revenues and book of business that Employee delivers for Caneum and
would include an early exercise provision should Employee wish to exercise it:
(1) 6,250 per $125,000 of new top line revenue that Employee delivers to
Caneum, with the lone requirement that it be profitable revenue in accordance
with Caneum policies/guidelines, or (2) at the 3 year 6 month anniversary of
Employee’s employment with Caneum.

          All options will be subject to the terms, definitions and provisions of
Caneum’s 2002 Stock Option/Stock Issuances Plan (the “Option Plan”) which
document is incorporated herein by reference.

	c.	 	Performance Compensation

          Employee will be eligible to receive an annual bonus, less applicable
withholding taxes, upon achievement of annual performance objectives to be
determined by the Board and Employee, which such objectives for the first year
of this Agreement will be established within thirty (30) days of the Effective
Date. Objectives for subsequent years will be determined as set forth herein
within thirty (30) days of each anniversary of this Agreement.

	d.	 	Other Benefits.

          During the Employment Term, Employee will be entitled to participate in
the employee benefit plans currently and hereafter maintained by Caneum of
general applicability to other senior executives of Caneum, including, without
limitation, Caneum’s group medical, dental, vision, disability, life insurance,
flexible-spending account, 401(k) and other plans. Failure to provide full
medical, dental and vision coverage under a PPO or equivalent plan to Employee
that will fully cover Employee, Employee’s spouse and all Employee’s
dependents, during the Employment Term, will constitute a material breach of
this Agreement.

	e.	 	Vacation.

          Employee will be entitled to paid vacation of four (4) weeks per year in
accordance with Caneum’s vacation policy, with the timing and duration of
specific vacations mutually and reasonably agreed to by the parties hereto.

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	f.	 	Reimbursement of Business Expenses.

          Caneum shall promptly reimburse the Employee for all reasonable travel,
entertainment and other expenses incurred or paid by the Employee in connection
with, or related to, the performance of his duties, responsibilities or
services under this Agreement, upon presentation by the Employee of such
supporting information and documentation as Caneum may reasonably request in
accordance with company policy and the requirements of the Internal Revenue
Code.

	6.	 	Termination of Employment.

	a.	 	Termination Due to Death.

          The Employee’s employment and this Agreement shall terminate immediately
upon his death. If the Employee’s employment is terminated due to his death,
his estate or his beneficiaries, as the case may be, shall be entitled to:

     (i) payment of any unpaid portion of his base salary through
the date of such termination;

     (ii) reimbursement for any outstanding reasonable business
expenses he incurred in performing his duties hereunder;

     (iii) the right to elect continuation coverage of insurance
benefits to the extent required by law;

     (iv) full and immediate vesting of any unexercised stock
options;

     (v) any pension survivor benefits that may become due pursuant
to any employee benefit plan or program of Caneum; and

     (vi) payment of any accrued but unpaid benefits, and any other
rights, as required by the terms of any employee benefit plan or
program of Caneum, this Agreement, or any other agreement between
Caneum and the Employee.

	b.	 	Termination Due to Disability.

          Caneum may terminate the Employee’s employment at any time if the Employee
becomes disabled, upon written notice by Caneum to the Employee. For all
purposes under this Agreement, “Disability” shall mean that the Employee, at
the time the notice is given, has been unable to perform his duties under this
Agreement for a period of not less than ninety (90) days during any 180-day
period as a result of the Employee’s incapacity due to physical or mental
illness. If the Employee’s employment is terminated due to his disability, he
shall be entitled to:

     (i) payment of any unpaid portion of his base salary through
the date of such termination;

     (ii) reimbursement for any outstanding reasonable business
expenses he has incurred in performing his duties hereunder;

     (iii) the right to elect continuation coverage of insurance
benefits to the extent required by law;

     (iv) full and immediate vesting of any unexercised stock
options; and

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     (v) payment of any accrued but unpaid benefits, and any other
rights, as required by the terms of any employee benefit plan or
program of Caneum, this Agreement, or any other agreement between
Caneum and the Employee.

          As soon as administratively possible following the Effective Date, Caneum
shall make available to the Employee, and other similarly-situated employees, a
disability benefit plan, paid by Caneum, that provides monthly payments to
Employee equal to at least two thirds (2/3) of the highest monthly base salary
Employee receives pursuant to this Agreement, which payment will continue for
as long as Employee remains disabled.

	c.	 	Termination for Cause.

          Caneum may terminate the Employee’s employment at any time for Cause,
provided that it gives written notice of termination to the Employee as set
forth below. If the Employee’s employment is terminated for Cause, as defined
below, he shall be entitled to:

     (i) payment of any unpaid portion of his base salary through
the date of such termination;

     (ii) reimbursement for any outstanding reasonable business
expenses he incurred in performing his duties hereunder;

     (iii) the right to elect continuation coverage of insurance
benefits to the extent required by law; and

     (iv) payment of any accrued but unpaid benefits, and any other
rights, as required by the terms of any employee benefit plan or
program of Caneum, this Agreement, or any other agreement between
Caneum and the Employee.

          For purposes of this Agreement, a termination for “Cause” shall mean: (i)
the final conviction of Employee of, or Employee’s plea of guilty or nolo
contendere, to any felony involving moral turpitude, (ii) fraud,
misappropriation or embezzlement by Employee in connection with Employee’s
duties to Caneum, or (iii) Employee’s willful failure or gross misconduct in
the performance of his duties to Caneum.

          If Caneum exercises its right to terminate the Employee for Cause, Caneum
shall: (1) give the Employee written notice of termination at least twenty (20)
days before the date of such termination specifying in detail the conduct
constituting such Cause, and (2) deliver to the Employee a copy of a resolution
duly adopted by a majority of the entire membership of the Board, excluding
interested directors, after reasonable notice to the Employee and an
opportunity for the Employee to be heard in person by members of the Board,
finding that the Employee has engaged in such conduct.

	d.	 	Termination Without Cause or Constructive Termination Without Cause.

          Caneum may terminate the Employee’s employment at any time without Cause,
provided that it gives written notice of termination at least ninety (90) days
before the date of such termination. If the Employee’s employment is
terminated without Cause, or if there is a constructive termination without
Cause, as defined below, the Employee shall be entitled to receive from Caneum
the following:

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     (i) payment of any unpaid portion of his base salary through
the date of such termination;

     (ii) reimbursement for any outstanding reasonable business
expenses he incurred in performing his duties hereunder;

     (iii) the right to elect continuation coverage of insurance
benefits to the extent required by law;

     (iv) full and immediate vesting of one-half (50%) of any
unexercised stock options;

     (v)  payment of any accrued but unpaid benefits, and any other
rights, as required by the terms of any employee benefit plan or
program of Caneum, this Agreement, or any other agreement between
Caneum and the Employee;

     (vi) payment of amounts equal to any premiums for health
insurance continuation coverage under any Caneum health plan that
is elected by the Employee or his beneficiaries pursuant to Section
4980B of the Internal Revenue Code, at a time or times mutually
agreed to by the parties, but only so long as the Employee is not
eligible for coverage under a health plan of another employer
(whether or not he elects to receive coverage under that plan); and

     (vii) subject to limitations set forth below, a severance
benefit in an amount equal to one and one half (1.5) times the
largest annual base salary received by Employee under the Agreement
if such termination occurs on or before March 29, 2005, and one (1)
time the largest annual base salary received by Employee under the
Agreement if such termination occurs after March 29, 2005, but only
if (x) Employee executes an agreement releasing Caneum from any
further liability under this Agreement, (y) the period for revoking
such release has expired, and (z) Employee has not materially
breached the Confidential Information Agreement.

          The Employee shall be deemed to have earned and Caneum shall pay to
Employee 75% of the total severance benefit in Section 6(d)(vii) above within
thirty (30) days after all of the applicable conditions are satisfied. The
remaining 25% of the severance benefit will be deemed earned by Employee, and
Caneum shall pay to Employee such remaining 25% of the severance benefit within
thirty (30) days following the first anniversary of the Employee’s termination
date unless the Employee materially breaches the Confidential Information
Agreement during the one year period following the Employee’s termination date,
in which case such remaining 25% of the severance benefit will be deemed
unearned and will not be paid. All severance benefits paid to the Employee
shall be paid subject to all legally required payroll deductions and
withholdings for sums owed by Caneum to the Employee.

          For purposes of this Agreement, constructive termination without Cause
shall mean a termination of the Employee at his own initiative following the
occurrence, without the Employee’s prior written consent, of one or more of the
following events not on account of Cause:

     (1) a reduction in the Employee’s then current base salary, or a
significant reduction by Caneum in Employee’s opportunities for earnings
under any incentive

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compensation plans or bonus opportunity, or the termination or
significant reduction of any benefit or perquisite enjoyed by Employee;

     (2) any relocation of Caneum’s office more than 10 miles from its
location as of the Effective Date;

     (3) the failure of Caneum to obtain an assumption in writing of its
obligation to perform under this Agreement by any successor to all or
substantially all of the assets of Caneum in connection with any merger,
consolidation, sale or similar transaction; or

     (4) any material breach of this Agreement by Caneum.

          In the event the Employee is terminated without Cause or there is a
constructive termination without Cause, each party shall provide the other with
written notice not less than thirty (30) days before the effective date of the
termination of employment.

	e.	 	Voluntary Termination.

          If the Employee voluntarily terminates his employment on his own
initiative for reasons other than his death, disability, or constructive
termination without Cause, he shall be entitled to:

     (i) payment of any unpaid portion of his base salary through
the effective date of such termination;

     (ii) reimbursement for any outstanding reasonable business
expenses he has incurred in performing his duties hereunder;

     (iii) the right to elect continuation coverage of insurance
benefits to the extent required by law; and

     (iv) payment of any accrued but unpaid benefits, and any other
rights, as required by the terms of any employee benefit plan or
program of Caneum, this Agreement, or any other agreement between
Caneum and the Employee.

          A voluntary termination under this paragraph shall be effective upon
fifteen (15) days’ prior written notice to Caneum unless the parties mutually
agree to extend the effective date.

	7.	 	Mitigation and Offset.

     If the Employee’s employment is terminated during the term of this
Agreement pursuant to the provisions of paragraph 6(d), above, the Employee
shall be under no duty or obligation to seek or accept other employment, and no
payment or benefits of any kind due him under this Agreement shall be reduced,
suspended or in any way offset by any subsequent employment. The obligation of
Caneum to make the payments provided for in this Agreement shall not be
affected by any circumstance including, by way of example rather than
limitation, any set-off, counterclaim, recoupment, defense, or other right that
Caneum may assert, or due to any other employment or source of income obtained
by the Employee.

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	8.	 	Entitlement to Other Benefits.

     Except as expressly provided herein, this Agreement shall not be construed
as limiting in any way any rights or benefits the Employee, his spouse,
dependents or beneficiaries may have pursuant to any other employee benefits
plans or programs.

	9.	 	Confidentiality.

     Employee agrees to enter into the form of Confidential Information and
Invention Assignment Agreement attached hereto as Exhibit A (the “Confidential
Information Agreement”) upon commencing employment hereunder.

	10.	 	Arbitration.

     Any dispute or controversy arising under or in connection with this
Agreement shall, if Caneum or the Employee so elects, be settled by
arbitration, in accordance with the Commercial Arbitration Rules procedures of
the American Arbitration Association. Arbitration shall occur before a single
arbitrator, provided, however, that if the parties cannot agree on the
selection of such arbitrator within thirty (30) days after the matter is
referred to arbitration, each party shall select one arbitrator and those
arbitrators shall jointly designate a third arbitrator to comprise a panel of
three arbitrators. The decision of the arbitrator shall be rendered in
writing, shall be final, and may be entered as a judgment in any court in the
State of California. Caneum and the Employee each irrevocably consent to the
jurisdiction of the federal and state courts located in State of California for
this purpose. The arbitrator shall be authorized to allocate the costs of
arbitration between the parties. Notwithstanding the foregoing, Caneum, in its
sole discretion, may bring an action in any court of competent jurisdiction to
seek injunctive relief in order to avoid irreparable harm and such other relief
as Caneum shall elect to enforce the Employee’s covenants in Section 9.

	11.	 	Legal Expenses.

     Except as provided in Section 10 hereof, if any legal action or other
proceeding is brought for the enforcement of this Agreement, or because of an
alleged dispute, breach, default, or misrepresentation in connection with any
of the provisions of this Agreement, the successful or prevailing party or
parties will be entitled to recover reasonable attorneys’ fees and other costs
incurred in that action or proceeding, in addition to any other relief to which
it or they may be entitled.

	12.	 	Indemnification.

     Caneum agrees that if the Employee is made a party, or is threatened to be
made a party, to any action, suit or proceeding, whether civil, criminal,
administrative, or investigative (a “Proceeding”), by reason of the fact that
he is or was a director, officer or employee or Caneum, or is, or was, serving
at the request of Caneum as a director, officer, member, employee or agent of
another corporation, partnership, limited liability company, joint venture,
trust or other enterprise, including service with respect to employee benefit
plans, whether or not the basis of such Proceeding is the Employee’s alleged
action in an official capacity while serving as a director, officer, member,
employee or agent, the Employee shall be Indemnified and held harmless by
Caneum to the fullest extent permitted or authorized by Caneum’s articles of

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incorporation and bylaws. To the extent consistent with the foregoing,
this obligation to indemnify the Employee and hold him harmless shall continue
even if he has ceased to be a director, officer, member, employee or agent of
Caneum or other such entity described above, and shall inure to the benefit of
the Employee’s heirs, executors and administrators. Caneum shall advance to
the Employee all reasonable costs and expenses incurred by him in connection
with a Proceeding within twenty (20) days after receipt by Caneum of a written
request for such advance. Such request shall include an undertaking by the
Employee to repay the amount of such advance if it shall ultimately be
determined that the Employee is not entitled to be indemnified against such
costs and expenses.

     Neither the failure of Caneum (including its Board, independent legal
counsel or stockholders) to have made a determination before such Proceeding
concerning payment of amounts claimed by the Employee under the paragraph above
that indemnification of the Employee is proper because he has met the
applicable standards of conduct, nor a determination by Caneum (including its
Board, independent legal counsel or stockholders) that the Employee has not met
such applicable standards of conduct, shall create a presumption that the
Employee has not met the applicable standards of conduct.

     Employee understands and acknowledges that Caneum may be required in the
future to undertake with the Securities and Exchange Commission to submit in
certain circumstances the question of indemnification to a court for a
determination of Caneum’s right under public policy to indemnify Employee.

	13.	 	Assignability and Binding Nature.

     This Agreement shall be binding upon and inure to the benefit of the
parties and their respective successors, heirs (in the case of the Employee)
and assigns. No rights or obligations may be assigned or transferred by Caneum
except that such rights or obligations may be assigned or transferred pursuant
to a merger or consolidation in which Caneum is not the continuing entity, or
the sale or liquidation of all or substantially all of the assets of Caneum,
provided that the assignee or transferee is the successor to all or
substantially all of the assets of Caneum and such assignee or transferee
assumes the liabilities, obligations, and duties of Caneum, as contained in
this Agreement, either contractually or as a matter of law. Caneum further
agrees, that in the event of a sale of assets or liquidation as described in
the foregoing sentence, it shall take whatever action it is legally entitled to
take in order to Cause the assignee or transferee to expressly assume the
liabilities, obligations, and duties of Caneum under this Agreement.
Notwithstanding any such assignment, Caneum shall not be relieved from
liability under this Agreement. No rights or obligations of the Employee under
this Agreement may be assigned or transferred by the Employee, other than his
right to receive compensation and benefits, provided such assignment or
transfer is otherwise permitted by law.

	14.	 	Notices.

     All notices required or permitted hereunder shall be in writing and shall
be deemed effective: (1) upon personal delivery; (2) upon deposit with the
United States Postal Service, by registered or certified mail, postage prepaid;
or (3) in the case of delivery by nationally recognized overnight delivery
service, when received, addressed as follows:

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          If to Caneum to:

170 Newport Center Drive

Suite 220

Newport Beach, CA 92660

          With a copy (which shall not constitute notice) to:

Ronald N. Vance

Attorney at Law

57 West 200 South, Suite 310

Salt Lake City, UT 84101

          If to the Employee, to:

424 7th Street

Huntington Beach, CA 92648

or to such other address or addresses as either party shall designate to the
other in writing from time to time by like notice.

	15.	 	Amendment.

     This agreement may be amended or modified only by a written instrument
executed by both Caneum and the Employee.

	16.	 	Pronouns.

     Whenever the context might require, any pronouns used herein shall include
the corresponding masculine, feminine or neuter forms, and the singular forms
of nouns and pronouns shall include the plural, and vice versa.

	17.	 	Captions.

     The captions appearing herein are for convenience of reference only and in
no way define, limit or affect the scope or substance of any section hereof.

	18.	 	Time.

     All references herein to periods of days are to calendar days, unless
expressly provided otherwise. Where the time period specified herein would end
on a weekend or holiday, the time period shall be deemed to end on the next
business day.

	19.	 	Entire Agreement.

     This Agreement constitutes the entire agreement between Caneum and the
Employee and supersedes all prior agreements and understandings, whether
written or oral relating to the subject matter hereof.

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	20.	 	Severability.

     In case any provision hereof shall be held by a court or arbitrator with
jurisdiction over Caneum or the Employee to be invalid, illegal, or otherwise
unenforceable, such provision shall be restated to reflect as nearly as
possible the original intentions of Caneum and the Employee in accordance with
applicable law, and the validity, legality, and enforceability of the remaining
provisions shall in not way be affected or impaired thereby.

	21.	 	Waiver.

     No delays or omission by Caneum or the Employee in exercising any right
hereunder shall operate as a waiver of that or any other right. A waiver or
consent given by Caneum or the Employee or any one occasion shall be effective
only in that instance and shall not be construed as a bar or waiver of any
right on any other occasion.

	22.	 	Governing Law.

     This Agreement shall be construed, interpreted, and enforced in accordance
with the laws of the State of California, without regard to its conflicts of
laws principles.

	23.	 	Successors and Assigns.

     This Agreement shall be binding upon and inure to the benefit of both
Caneum and the Employee and their respective successors and assigns, including
any entity with which or into which Caneum might be merged or that might
succeed to its assets or business or any entity to which Caneum might assign
its rights and obligations hereunder; provided, however, that the obligations
of the Employee are personal and shall not be assigned or delegated by him.

	24.	 	Withholding.

     Caneum may make any appropriate arrangements to deduct from all benefits
provided hereunder any taxes reasonably determined to be required to be
withheld by any government or government agency. The Employee shall bear all
taxes on benefits provided hereunder to the extent that no taxes are withheld,
irrespective of whether withholding is required.

	25.	 	Counterparts.

     This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original but all of which together shall constitute one and
the same instrument.

	26.	 	Full Knowledge.

     By their signatures, the parties acknowledge that they have carefully read
and fully understand the terms and conditions of this Agreement, that each
party has had the benefit of separate counsel, or has been advised to obtain
separate counsel, and that each party has freely agreed to be bound by the
terms and conditions of this Agreement.

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     In Witness Whereof, Caneum and the Employee have executed this Agreement
effective as of the day and year first written above.

	 	 	 	 	 
	CANEUM:	Caneum, Inc.

 	 
	Date:  March 17, 2004 	By:  	/s/ Jason Daggett
 	 
	 	 	Jason Daggett, 	 
	 	 	Chairman Compensation Committee 	 
	 

EMPLOYEE:

	 	 	 	 	 
	 	 	 
	Date:  March 17, 2004 	/s/ Gary Allhusen
 	 
	 	Gary Allhusen 	 
	 	 	 

12exv10wx

 

Exhibit 10.x

THIRD AMENDMENT TO

CREDIT AGREEMENT

     THIS THIRD AMENDMENT TO CREDIT AGREEMENT (this “Third Amendment”) dated as
of April 30, 2003, is made and entered into by and between BELL INDUSTRIES,
INC., a California corporation (“Company”), and UNION BANK OF CALIFORNIA, N.A.,
a national banking association (“Bank”).

RECITALS:

     A. Company and Bank are parties to that certain Credit Agreement dated as
of April 14, 1999, as amended by that certain First Amendment dated as of April
26, 2000 and by that certain Second Amendment dated as of March 27, 2002 (as so
amended, the “Agreement”), pursuant to which Bank agreed to extend credit to
Company in the amounts provided for therein.

     B. Company and Bank desire to amend the Agreement, but subject to the
terms and conditions of this Third Amendment.

AGREEMENT:

     In consideration of the above recitals and of the mutual covenants and
conditions contained herein, Company and Bank agree as follows:

     1. Defined Terms. Initially capitalized terms used herein which are not
otherwise defined shall have the meanings assigned thereto in the Agreement.

     2. Amendment to the Agreement. Subsection 7.68 of the Agreement is hereby
amended to read in full as follows:

     “B. Minimum Consolidated Tangible Net Worth. Company shall not permit the
Consolidated Tangible Net Worth of Company and its Subsidiaries, as of the last
day of each fiscal quarter, commencing with the fiscal quarter ending March 31,
2003., to be less than the sum of (i) $24,000,000 plus (ii) 75% of the positive
cumulative Consolidated Net Income of Company and its Subsidiaries for such
fiscal quarter.”

     3. Effectiveness of this Third Amendment. This Third Amendment shall
become effective as of the date hereof when, and only when, Bank shall have
received all of the following, in form and substance satisfactory to Bank:

     (a) A counterpart of this Third Amendment, duly executed by Company;

     (b) A fee in connection with the preparation of this Third Amendment in
the sum of Five Hundred Dollars ($500); and

 

 

     (c) Such other documents, instruments or agreements as Bank may reasonably
deem necessary.

4. Ratification.

     (a) Except as specifically amended hereinabove, the Agreement shall remain
in full force and effect and is hereby ratified and confirmed; and

     (b) Upon the effectiveness of this Third Amendment, each reference in the
Agreement to “this Agreement”, “hereunder”, “herein”, “hereof’ or words of like
import referring to the Agreement shall mean and be a reference to the
Agreement as amended by this Third Amendment.

5. Representations
and Warranties. Company represents and warrants as follows:

     (a) Each of the representations and warranties contained in Section 5 of
the Agreement, as amended hereby, is hereby reaffirmed as of the date hereof,
each as if set forth herein;

     (b) The execution, delivery and performance of this Third Amendment are
within Company’s corporate powers, have been duly authorized by all necessary
corporate action, have received all necessary approvals, if any, and do not
contravene any law or any contractual restriction binding on Company;

     (c) This Third Amendment is the legal, valid and binding obligation of
Company, enforceable against Company in accordance with its terms; and

     (d) No event has occurred and is continuing or would result from this
Third Amendment which constitutes an Event of Default under the Agreement, or
would constitute an Event of Default but for the requirement that notice be
given or time elapse or both.

6. Governing
Law. This Third Amendment shall be deemed a contract under and
subject to, and shall be construed for all purposes and in accordance with, the
laws of the State of California.

7. Counterparts. This Third Amendment may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.

2

 

     WITNESS the due execution hereof as of the date first above
written.

“Company”

BELL INDUSTRIES, INC.

By: /s/ Mitchell Rosen

Title: V/P —
Corporate Controller

 

“Bank”

UNION BANK OF CALIFORNIA, N.A.

By: /s/ Peter Thompson

Title: Peter Thompson,
Vice President

3

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