Document:

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                                                                    EXHIBIT 4.12

                      GUARANTEE OF WASHINGTON MUTUAL, INC.

     THIS GUARANTEE, dated as of October 1, 2005, is executed by Washington
Mutual, Inc., a Washington corporation (the "GUARANTOR"), in favor of the
beneficiaries set forth herein (this "GUARANTEE").

     WHEREAS, the Guarantor, New American Capital, Inc. ("NEW AMERICAN") which
is a direct, wholly owned subsidiary of the Guarantor, and Providian Financial
Corporation ("PROVIDIAN") have entered into an Agreement and Plan of Merger,
dated as of June 5, 2005, as amended and supplemented, that provides for the
merger (the "MERGER") of Providian with and into New American;

     WHEREAS, the Merger will become effective as set forth in the certificate
of merger which shall be filed with the Secretary of State of Delaware on or
before the Closing Date, as defined in the Agreement and Plan of Merger (the
time and date when the Merger becomes effective is referred to herein as the
"EFFECTIVE TIME");

     WHEREAS, at the Effective Time, the separate corporate existence of
Providian will cease and New American will continue as the surviving corporation
following the Merger;

     WHEREAS, in connection with the Merger, New American will, pursuant to the
Supplemental Indenture dated as of October 1, 2005 by and among New American,
Providian and The Bank of New York, as trustee named therein (the "INDENTURE
TRUSTEE"), assume the obligations of Providian under that certain Junior
Subordinated Indenture dated as of February 4, 1997 (as amended, the
"INDENTURE"), and under the Securities (as defined in the Indenture), with such
assumption of obligations to be effective as of the Effective Time;

     WHEREAS, in connection with the Merger, New American will, pursuant to the
Amendment to Guarantee Agreement dated as of October 1, 2005 by and among New
American, Providian and The Bank of New York, as the guarantee trustee named
therein (the "GUARANTEE TRUSTEE"), assume the obligations of Providian under
that certain Guarantee Agreement dated as of February 4, 1997 (as amended, the
"GUARANTEE AGREEMENT"), with such assumption of obligations to be effective as
of the Effective Time;

     WHEREAS, in connection with the Merger, New American will, pursuant to the
Amendment to Amended and Restated Trust Agreement dated as of October 1, 2005 by
and among New American, Providian and The Bank of New York, as the property
trustee named therein (the "PROPERTY TRUSTEE") and The Bank of New York
(Delaware), as the Delaware trustee named therein (the "DELAWARE TRUSTEE" and
together with the Property Trustee, the "TRUST TRUSTEES"), assume the
obligations of Providian under that certain Amended and Restated Trust Agreement
dated as of February 4, 1997 (as amended, the "TRUST AGREEMENT"), with such
assumption of obligations to be effective as of the Effective Time;

     WHEREAS, each of the Indenture Trustee, the Guarantee Trustee, the Property
Trustee and the Delaware Trustee are individually referred to herein as a
"TRUSTEE" and collectively as the "TRUSTEES";

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     WHEREAS, New American will, by operation of law upon the Merger, succeed to
the obligations of Providian under that certain Agreement as to Expenses and
Liabilities dated as of February 4, 1997 by and among Providian and Providian
Capital Trust I, a Delaware statutory business trust (as amended, the "EXPENSE
AGREEMENT");

     WHEREAS, Guarantor now wishes to guarantee the payment of the obligations
and liabilities of New American under the Indenture, the Securities issued
thereunder, the Guarantee Agreement, the Trust Agreement and the Expense
Agreement (collectively, the "COVERED AGREEMENTS") and to execute and deliver
this Guarantee; and

     WHEREAS, Guarantor will benefit, directly or indirectly, from the provision
of this Guarantee.

     NOW, THEREFORE, in consideration of the foregoing, and intending to be
legally bound hereby, Guarantor agrees as follows:

     Section 1. Guarantees.

          (a) Indenture Guarantee. Subject to Section 2(c), Guarantor hereby
irrevocably and unconditionally guarantees to each Holder of a Security
authenticated and delivered by the Indenture Trustee pursuant to the Indenture,
as amended or supplemented, and to the Indenture Trustee and its successors and
assigns, that: (i) the principal of, premium, if any, and interest on the
Securities promptly will be paid in full when due, whether at the Maturity, by
acceleration, call for redemption or otherwise, and interest on the overdue
principal, premium, if any, and interest, if any, of the Securities, if lawful,
and all other obligations of New American to the Holders and the Indenture
Trustee under the Indenture and the Securities, will be promptly paid in full or
performed, all in accordance with the applicable terms thereof, and (ii) in case
of any extension of time of payment or renewal of any Securities or any of such
other obligations, the same will be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, whether at Stated
Maturity, by acceleration or otherwise.

          (b) Guarantee Agreement Guarantee. Subject to Section 2(c), Guarantor
hereby irrevocably and unconditionally guarantees to the Holders of the Capital
Securities and to the Guarantee Trustee and its successors and assigns, the
payment and performance of all obligations of New American under the Guarantee
Agreement, in accordance with the terms thereof.

          (c) Trust Agreement Guarantee. Subject to Section 2(c), Guarantor
hereby irrevocably and unconditionally guarantees to the Trust Trustees and each
of their successors and assigns, and to all other beneficiaries of New
American's obligations under the Trust Agreement, the payment and performance of
all obligations of New American under the Trust Agreement, in accordance with
the terms thereof.

          (d) Expense Agreement Guarantee. Subject to Section 2(c), Guarantor
hereby irrevocably and unconditionally guarantees to the Beneficiaries the
payment and performance of all obligations of New American under the Expense
Agreement, in accordance with the terms thereof.

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          (e) The guaranteed obligations set forth in paragraphs (a) through (d)
of this Section 1 are referred to collectively herein as the "GUARANTEED
OBLIGATIONS."

          (f) Each capitalized term used in paragraphs (a) through (d) of this
Section 1 and not otherwise defined in this Guarantee has the meaning assigned
to it in the applicable Covered Agreement.

     Section 2. Additional Provisions.

          (a) Failing payment when due by New American of any Guaranteed
Obligation for whatever reason, Guarantor shall be obligated to pay the same
immediately. Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrespective of the validity, regularity or enforceability of
Indenture, the Securities, the Guarantee Agreement, the Trust Agreement or the
Expense Agreement, as applicable, the absence of any action to enforce the same,
any waiver or consent by any beneficiary of a Guaranteed Obligation with respect
to any provisions hereof or of the applicable Covered Agreement, the recovery of
any judgment against New American, any action to enforce the same or any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of a guarantor. Guarantor hereby waives diligence, presentment, demand
of payment, filing of claims with a court in the event of insolvency or
bankruptcy of New American, any right to require a proceeding first against New
American, protest, notice and all demands whatsoever and covenants that this
Guarantee shall not be discharged except by complete performance of the
obligations contained in the Covered Agreements.

          (b) If any beneficiary of a Guaranteed Obligation or a Trustee is
required by any court or otherwise to return to New American or any custodian,
Trustee, liquidator or other similar official acting in relation to New
American, any amount paid by New American to such Trustee or such beneficiary,
this Guarantee, to the extent theretofore discharged, shall be reinstated in
full force and effect.

          (c) It is the intention of Guarantor that the obligations of Guarantor
hereunder shall be, but not in excess of, the maximum amount permitted by
applicable law. Accordingly, if the obligations in respect of this Guarantee
would be annulled, avoided or subordinated to the creditors of Guarantor by a
court of competent jurisdiction in a proceeding actually pending before such
court as a result of a determination both that this Guarantee was made without
fair consideration and, immediately after giving effect thereto, Guarantor was
insolvent or unable to pay its debts as they mature or left with an unreasonably
small capital, then the obligations of Guarantor under this Guarantee shall be
reduced by such court if such reduction would result in the avoidance of such
annulment, avoidance or subordination; provided, however, that any reduction
pursuant to this paragraph shall be made in the smallest amount as is strictly
necessary to reach such result. For purposes of this paragraph, "fair
consideration," "insolvency," "unable to pay its debts as they mature,"
"unreasonably small capital" and the effective times of reductions, if any,
required by this paragraph shall be determined in accordance with applicable
law.

          (d) Guarantor shall be subrogated to all rights of the beneficiaries
of this Guarantee against New American in respect of any amounts paid by
Guarantor pursuant to the

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provisions of this Guarantee or the applicable Covered Agreement; provided,
however, that Guarantor shall not be entitled to enforce or exercise any right
that it may acquire by way of subrogation as a result of payment under this
Guarantee, if at the time of any such payment, any amounts are due and unpaid
under this Guarantee.

          (e) The obligation of Guarantor to make any payment hereunder may be
satisfied by causing New American to make such payment.

     Section 3. Ranking.

          (a) The Guaranteed Obligations of Guarantor with respect to the
Indenture will be junior and subordinated to the Guarantor Senior Debt on the
same basis as the Securities are junior and subordinated to Senior Indebtedness
(as defined in the Indenture). For the purposes of the foregoing sentence, the
Indenture Trustee and the Holders (as such terms are defined in the Indenture)
will have the right to receive and/or retain payments by Guarantor only at such
times as they may receive and/or retain payments in respect of the Securities
pursuant to the Indenture, including Article XIII thereof. The Guaranteed
Obligations of the Guarantor with respect to the Indenture do not constitute
Guarantor Senior Debt of the Guarantor.

          (b) The Guaranteed Obligations of Guarantor with respect to the
Guarantee Agreement will be junior and subordinated to the Guarantor Senior Debt
on the same basis as the Securities are junior and subordinated to Senior
Indebtedness (as defined in the Indenture). For the purposes of the foregoing
sentence, the Holders (as such term is defined in the Guarantee Agreement) will
have the right to receive and/or retain payments by Guarantor only at such times
as they may receive and/or retain payments from New American pursuant to the
Guarantee Agreement, including Section 6.1 thereof. The Guaranteed Obligations
of the Guarantor with respect to the Guarantee Agreement do not constitute
Guarantor Senior Debt of the Guarantor.

     Section 4. Release of Guarantor. Guarantor shall be released from all of
its obligations under this Guarantee if:

          (a) New American or Guarantor has transferred all or substantially all
of either of their properties and assets to any Person (whether by sale, merger
or consolidation or otherwise), or has merged into or consolidated with another
Person, pursuant to a transaction in compliance with the Covered Agreements and:

               (1) the corporation to whom all or substantially all of the
     properties and assets of New American or Guarantor are transferred, or with
     whom New American or Guarantor has merged or consolidated, has expressly
     assumed in writing all the obligations of the Guarantor under this
     Guarantee; and

               (2) immediately before and immediately after giving effect to
     such transaction, no event of default under any of the Covered Agreements,
     and no event or condition which, after notice or lapse of time or both,
     would become an event of default, shall have occurred and be continuing;

          (b) Guarantor liquidates (other than pursuant to any bankruptcy law),
provided that if a Person and its Affiliates, if any, shall acquire all or
substantially all of the

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assets of Guarantor upon such liquidation, Guarantor shall liquidate only if (i)
the Person and each such Affiliate (or the common corporate parent of such
Person and its Affiliates, if such Person and its Affiliates are wholly owned by
such parent) which acquire or will acquire all or a portion of the assets of
Guarantor shall expressly assume in writing all the obligations of Guarantor
under this Guarantee and (ii) such Person or any of such Affiliates (or such
parent) shall be a corporation organized and existing under the laws of the
United States or any State thereof or the District of Columbia and immediately
after giving effect to such transaction, no event of default under any of the
Covered Agreements, and no event or condition which, after notice or lapse of
time or both, would become an event of default, shall have occurred and be
continuing; or

          (c) New American ceases for any reason to be a "wholly owned
subsidiary" of Guarantor (as such term is defined in Rule 1-02(aa) of the
Regulation S-X promulgated by the SEC).

     Upon any assumption of this Guarantee by any Person pursuant to this
Section 4, such Person may exercise every right and power of Guarantor under
this Guarantee with the same effect as if such successor corporation had been
named as Guarantor herein, and all the obligations of Guarantor hereunder shall
terminate.

     Section 5. Additional Definitions.

          (a) "AFFILIATE" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.

          (b) "GUARANTOR DEBT" means with respect to Guarantor, whether recourse
is to all or a portion of the assets of Guarantor and whether or not contingent,
(i) every obligation of Guarantor for money borrowed; (ii) every obligation of
Guarantor evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of Guarantor with
respect to letters of credit, bankers' acceptances or similar facilities issued
for the account of Guarantor; (iv) every obligation of Guarantor issued or
assumed as the deferred purchase price of property or services (but excluding
trade accounts payable or accrued liabilities arising in the ordinary course of
business); (v) every capital lease obligation of Guarantor; (vi) all
indebtedness of Guarantor whether incurred on or prior to the date of this
Guarantee or thereafter incurred, for claims in respect of derivative products,
including interest rate, foreign exchange rate and commodity forward contracts,
options and swaps and similar arrangements; and (vii) every obligation of the
type referred to in clauses (i) through (vi) of another Person and all dividends
of another Person the payment of which, in either case, Guarantor has guaranteed
or is responsible or liable for, directly or indirectly, as obligor or
otherwise.

          (c) "GUARANTOR SENIOR DEBT" means the principal of (and premium, if
any) and interest, if any (including interest accruing on or after the filing of
any petition in bankruptcy

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or for reorganization relating to Guarantor whether or not such claim for
post-petition interest is allowed in such proceeding), on Guarantor Debt,
whether incurred on or prior to the date of this Guarantee or thereafter
incurred, unless, in the instrument creating or evidencing the same or pursuant
to which the same is outstanding, it is provided that such obligations are not
superior in right of payment to this Guarantee; provided, however, that
Guarantor Senior Debt shall not be deemed to include (i) any Guarantor Debt
which when incurred and without respect to any election under Section 1111(b) of
the United States Bankruptcy Code of 1978, as amended, was without recourse to
Guarantor, (ii) any Guarantor Debt to any of Guarantor's subsidiaries, (iii)
Guarantor Debt to any employee of Guarantor and (iv) any other guarantees issued
by Guarantor in connection with securities issued under the Indenture.

          (d) "PERSON" means any individual, corporation, partnership, joint
venture, trust, unincorporated organization or government or any agency or
political subdivision thereof or any other entity of whatever nature.

     Section 6. Miscellaneous.

          (a) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CHOICE
OF LAW PROVISIONS.

          (b) Interpretation. Except as otherwise set forth herein, capitalized
terms used herein without definition herein have the meanings ascribed thereto
in the applicable Covered Agreement.

          (c) Headings. The Section headings of this Guarantee have been
inserted for convenience of reference only, are not to be considered a part of
this Guarantee and shall in no way modify or restrict any of the terms or
provisions hereof.

                            [Signature Page Follows]

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     IN WITNESS WHEREOF, the undersigned has executed this Guarantee as of the
date and year first above written.

                                 GUARANTOR:

                                 WASHINGTON MUTUAL, INC.

                                 By: /s/ Kerry K. Killinger
                                     -------------------------------------------
                                     Name: Kerry K. Killinger
                                     Title: Chairman and Chief Executive Officer

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EXHIBIT 10.1

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (the “Agreement”) is entered into as of the 30th day of September,
2005 by and between Bell Industries, Inc., a California corporation (the “Company”), and John A.
Fellows (the “Executive”).

     WHEREAS, the Executive desires to provide the Company with his services and the Company
desires to employ the Executive in the capacity of President and Chief Executive Officer on the
terms and subject to the conditions set forth herein.

     NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein, and
for such other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree as follows:

     1. Employment of Executive and Duties. During the Term, the Executive shall serve as
President and Chief Executive Officer of the Company and shall perform such employment duties as
are usual and customary for such positions and such other duties as the Board of Directors of the
Company (the “Board”) shall from time to time assign to the Executive. The Executive shall report
directly to the Board. At the Company’s request, the Executive shall serve the Company and/or its
subsidiaries and affiliates in other offices and capacities in addition to the foregoing. In the
event that the Executive, during the Term, serves in any one or more of such additional capacities,
the Executive’s compensation shall not be increased beyond that specified in Section 4(a)
of this Agreement. In addition, in the event the Executive’s service in one or more of such
additional capacities is subsequently terminated, the Executive’s compensation, as specified in
Section 4(a) of this Agreement, shall not be diminished or reduced in any manner as a
result of such termination for so long as the Executive otherwise remains employed under the terms
of this Agreement.

     2. Performance of Services.

          (a) Exclusivity. During the Term, the Executive agrees to devote
substantially all of his business time, energy, skill and best efforts to the performance of his
duties hereunder in a manner that will faithfully and diligently further the business and interests
of the Company. Notwithstanding the foregoing, during the Term it shall not be a violation of this
Agreement for the Executive to serve on civic or charitable boards or committees (and with the
prior written consent of the Board corporate boards and committees) consistent with the Company’s
conflicts of interests policies and corporate governance guidelines in effect from time to time, so
long as such activities do not interfere with the performance of the Executive’s responsibilities
as an executive officer of the Company. Furthermore, upon any termination of the Executive’s
employment for any reason, he shall be deemed to have resigned from all positions at the Company
and each of its subsidiaries and affiliates, including, but not limited to, his position as a
director of the Company, and the Executive agrees to execute any documents requested by the Company
to evidence such resignations.

          (b) Location. During the Term, the Executive shall perform his duties at
the Company’s offices in the Indianapolis metropolitan area; provided, that he shall not be
required to conduct full-time work in such location until the date that is six (6) months following
the Effective Date, subject to extension in the sole discretion of the Board. The parties
acknowledge that the Executive may be required to travel extensively in connection with the
performance of his duties hereunder.

     3. Term. Subject to the provisions for earlier termination hereinafter provided, the
Executive’s employment hereunder shall be for a term (the “Term”) commencing on October 3, 2005
(the

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“Effective Date”) and ending on the third anniversary of the Effective Date (the “Initial Date of
Termination”); provided, however, that this Agreement shall be automatically extended for one
additional year on the Initial Date of Termination and on each subsequent anniversary of the
Initial Date of Termination, unless either the Executive or the Company elects not to so extend the
term of the Agreement by notifying the other party, in writing, of such election not less than
ninety (90) days prior to the last day of the Term as then in effect.

     4. Compensation. During the Term, Company shall pay to Executive, in full payment for
Executive’s services hereunder, the following compensation:

          (a) Base Salary. During the Term, the Executive shall receive a base salary
(the “Base Salary”) of $375,000 per annum, as the same may be increased thereafter. The Base Salary
shall be paid at such intervals as the Company pays executive salaries generally. During the Term,
the Base Salary shall be reviewed at least annually for possible increase (but not decrease) in the
Company’s sole discretion, as determined by the Company’s compensation committee. The term “Base
Salary” as utilized in this Agreement shall refer to Base Salary as so adjusted.

          (b) Performance Bonus. The Executive shall be eligible to earn, for each
fiscal year of the Company ending during the Term, an annual cash performance bonus (an “Annual
Bonus”) of up to 100% of the Executive’s then current Base Salary. The amount of the Annual Bonus
and the performance goals applicable to the Annual Bonus for any applicable period shall be
determined by the Company’s compensation committee in its sole discretion in accordance with the
terms and conditions of any bonus plan in effect for the Company’s senior executives from time to
time. Any Annual Bonus earned in the first year of the Term shall be pro-rated for the number of
days of the year that the Executive is employed by the Company.

          (c) Relocation Expense. The Company agrees to reimburse the Executive for
his reasonable and actual out-of-pocket relocation expenses incurred in moving his household goods
from Dallas, Texas to Indianapolis, Indiana, up to a maximum of $75,000. Such reimbursement will
be required to be approved by the Board in its good faith discretion upon presentation by the
Executive of satisfactory evidence of the payment by the Executive of such expenses. Such
reimbursement shall be limited to out of pocket expenses incurred solely for packing, shipping and
unpacking the Executive’s household goods, real estate brokerage sales commissions for the sale of
the Executive’s home in Dallas, air travel for the Executive and his family from Dallas to
Indianapolis, and temporary housing for the Executive and his family in Indianopolis for up to 60
days in a corporate housing facility. To be eligible for reimbursement, permanent relocation of
the Executive’s family must be completed by April 3, 2006. The Company shall also reimburse the
Executive, either directly or through payments to the appropriate taxing authority, any amounts
necessary to render the payments under this Section 4(c) “tax neutral” so that the
Executive shall not incur any tax liability in connection with the relocation expense reimbursement
made hereunder.

          (d) Stock Option Grant. The Company shall grant to the Executive the
following ten-year incentive stock options (the “Options”):

               (i) A stock option to purchase up to 250,000 shares of the Company’s common stock
under the Company’s stock option plan. Such options shall be granted at an exercise price per share
equal to the fair market value on the Effective Date.

               (ii) A stock option to purchase up to 250,000 shares of the Company’s common stock
under the Company’s stock option plan. Such options shall be granted at an exercise price of $4.00
per share.

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               (iii) A stock option to purchase up to 250,000 shares of the Company’s common stock
under the Company’s stock option plan. Such options shall be granted at an exercise price of $6.00
per share.

               (iv) A stock option to purchase up to 250,000 shares of the Company’s common stock
under the Company’s stock option plan at an exercise price of $8.00 per share.

Each of the Options shall be granted pursuant to the Company’s standard option agreement in effect
on the Effective Date and all of such Options shall vest as follows: 20% of the shares subject to
each Option shall vest upon the date of grant and 20% of the shares subject to each Option shall
vest on the first, second, third and fourth anniversaries of the date of grant. To the extent
permitted, such Options will be granted as incentive stock options, subject to the rules and
regulations set forth under Section 422 of the Internal Revenue Code of 1986, as amended (the
“Code”). The Executive acknowledges and agrees that the exercise of the Options and issuance of
shares pursuant to the Options is conditioned upon the approval, by the shareholders of the Company
at the next regular annual meeting of the Company’s shareholders, of adoption of a new equity
incentive plan under which the Options will be granted. To the extent such approval is not obtained
at the next regular annual meeting of the shareholders of the Company, the Company will grant the
Executive options to purchase an equivalent number of shares of the Company’s common stock
independent of the Company’s new equity incentive plan (the “Replacement Options”), which grants
will be made at the same exercise prices and with the same vesting dates as the Options. The
parties agree that upon such grant of the Replacement Options, the Options will terminate and be of
no further force or effect. The parties acknowledge that the issuance of shares under the
Replacement Options, if any, is a material inducement to the Executive entering into employment
with the Company. The Executive further acknowledges that any Replacement Options would not be
eligible to qualify as incentive stock options under Section 422 the Code. Upon the grant of the
Replacement Options, if any, the Company shall disclose in a press release the material terms of
the grant in accordance with NASD Rule 4350(i)(1)(A)(iv).

          (e) Incentive, Savings and Retirement Plans. During the Term, the Executive
shall be eligible to participate in all other incentive plans, practices, policies and programs,
and all savings and retirement plans, policies and programs, in each case that are applicable
generally to senior executives of the Company.

          (f) Welfare Benefit Plans. During the Term, the Executive and the
Executive’s eligible family members-shall be eligible for participation in the welfare benefit
plans, practices, policies and programs (including, if applicable, medical, dental, vision,
disability, employee life, group life and accidental death insurance plans and programs) maintained
by the Company for its senior executives.

          (g) Business Expenses. During the Term, the Executive shall be entitled to
receive prompt reimbursement for all reasonable business expenses incurred by the Executive in
accordance with the policies, practices and procedures of the Company provided to senior executives
of the Company.

          (h) Fringe Benefits. During the Term, the Executive shall be entitled to
such fringe benefits and perquisites as are provided by the Company to its senior executives from
time to time, in accordance with the policies, practices and procedures of the Company.

          (i) Vacation. During the Term, the Executive shall be entitled to paid
vacation of four weeks in each calendar year in accordance with the plans, policies, programs and
practices of the Company applicable to its senior executives. Any vacation that is unused in any
calendar year shall also be treated in accordance with such plans, policies, programs and
practices.

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          (j) Reservation. The Company reserves the right to modify, suspend or
discontinue any and all of the above referenced benefit plans, practices, policies and programs at
any time (whether before or after termination of employment) without notice to or recourse by the
Executive so long as such action is taken generally with respect to other similarly situated
persons and does not single out the Executive.

     5. Termination of Employment:

          (a) Death or Disability. The Executive’s employment shall terminate
automatically upon the Executive’s death or Disability during the Term. For purposes of this
Agreement, “Disability” means Executive’s inability by reason of physical or mental illness to
fulfill his obligations hereunder for 90 consecutive days or on a total of 120 days in any 12-month
period which, in the reasonable opinion of an independent physician selected by the Company or its
insurers, renders Executive unable to perform the essential functions of his job.

          (b) Cause. The Company may terminate the Executive’s employment during the
Term for Cause or without Cause. For purposes of this Agreement, “Cause” shall mean the occurrence
of any one or more of the following events: (i) the Executive’s willful failure to perform or
gross negligence in performing his duties owed to the Company; (ii) the Executive’s commission of
an act of fraud or dishonesty in the performance of his duties; (iii) the Executive’s conviction
of, or entry by the Executive of a guilty or no contest plea to, any felony or any felony or
misdemeanor involving moral turpitude; (iv) any breach by the Executive of his fiduciary duty or
duty of loyalty to the Company; (v) the Executive’s breach of any of the provisions of this
Agreement, which is not cured within fifteen (15) days following written notice thereof from the
Company; provided, that any breach by the Executive of Section 9 shall be deemed incurable
and shall constitute grounds for immediate termination.

          Executive shall not be deemed to have been terminated for Cause unless and until there shall
have been delivered to him a Notice of Termination (defined below) in accordance with subsection
(d) below that shall include a copy of a resolution duly adopted by the affirmative vote of a
majority of the Board (not counting Executive) at a meeting of the Board finding that in the good
faith opinion of the Board, Executive engaged in the conduct described herein; provided,
that if the Executive is a member of the Board, the Executive shall not participate in the
deliberations regarding such resolution, vote on such resolution, nor shall the Executive be
counted in determining a majority of the Board.

          (c) Good Reason. The Executive’s employment may be terminated by the
Executive for Good Reason or by the Executive without Good Reason. For purposes of this Agreement,
“Good Reason” shall mean the occurrence of any one or more of the following events without the
Executive’s prior written consent, unless the Company cures the circumstances constituting Good
Reason prior to the Date of Termination: (i) a material reduction in the Executive’s titles,
duties, authority and responsibilities; (ii) the Company’s reduction of the Executive’s annual
Base Salary where the Company is not making commensurate reductions to all executives of the
Company; or (iii) the Company’s failure to cure a material breach of its obligations under this
Agreement within fifteen (15) days following the receipt by the Company of written notice of such
breach from the Executive.

          (d) Notice of Termination. Any termination by the Company for Cause, or by
the Executive for Good Reason, shall be communicated by Notice of Termination to the other parties
hereto given in accordance with Section 12(f) of this Agreement. For purposes of this
Agreement, a “Notice of Termination” means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) to the extent applicable, 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 and (iii) if the Date of Termination (as
defined below) is other than the date of

4

 

receipt of such notice, specifies the Date of Termination. The failure by the Executive or
the Company to set forth in the Notice of Termination any fact or circumstance which contributes to
a showing of Good Reason or Cause shall not waive any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or the Company, respectively, from asserting such
fact or circumstance in enforcing the Executive’s or the Company’s rights hereunder.

          (e) Date of Termination. “Date of Termination” means if the Executive’s
employment is terminated (i) by the Company for Cause, the date of receipt of the Notice of
Termination or any later date specified therein (which date shall not be more than thirty (30) days
after the giving of such notice), (ii) by the Company other than for Cause or Disability, the date
on which the Company notifies the Executive of such termination, (iii) by the Executive for Good
Reason, the date that is fifteen (15) days after the receipt by the Company of the Notice of
Termination, (iv) by the Executive without Good Reason, the date that is ninety (90) days after the
date on which the Executive notifies the Company of such termination, and (v) by reason of death or
Disability, the date of death or the date of the delivery of the Notice of Termination by reason of
Disability of the Executive, as the case may be.

     6. Obligation of the Company Upon Termination.

          (a) Without Cause or For Good Reason. If, during the Term, the Company
terminates the Executive’s employment without Cause or the Executive terminates his employment for
Good Reason:

               (i) The Executive shall be paid: (A) the Executive’s earned but unpaid Base Salary and accrued
but unpaid vacation pay through the Date of Termination, and any Annual Bonus previously approved
by the Board or the Company’s compensation committee and which is required to be paid to the
Executive pursuant to Section 4(b) above for any fiscal year of the Company that ends on or
before the Date of Termination to the extent not previously paid (the “Accrued Obligations”), and
(B) the Severance Amount. For purposes of this Section 6(a)(i), the “Severance Amount”
shall equal one (1) times the Base Salary in effect on the Date of Termination. The Accrued
Obligations shall be paid when due under state law and the Severance Amount shall be paid no later
than 30 days after the Date of Termination.

               (ii) For one (1) year following the Date of Termination, the Company shall provide the
Executive and his eligible family members, at the Company’s expense, with group health insurance
coverage at least equal to that which would have been provided to them if the Executive’s
employment had not been terminated (or at the Company’s election, pay the applicable COBRA premium
for such coverage); provided, that if the Executive becomes re-employed with another
employer and is eligible to receive group health insurance coverage under another employer’s plans,
the Company’s obligations under this Section 6(a)(ii) shall be reduced to the extent
comparable coverage is actually available to the Executive and the Executive’s eligible family
members, and any such coverage shall be reported by the Executive to the Company;

               (iii) The Options shall be modified to reflect that an additional twenty percent 20% of the
total number of shares subject to the Options shall have vested and such vested shares, together
with any other shares subject to the Options that previously vested, shall remain exercisable with
respect to the vested portion thereof only for a period of one (1) year following the Date of
Termination. The Options shall otherwise cease vesting upon the Date of Termination and shall
terminate one (1) year following the Date of Termination.

               (iv) To the extent not theretofore paid or provided, the Company shall pay or provide to the
Executive any vested benefits and other amounts or benefits required to be paid or provided

5

 

or which the Executive is eligible to receive as of the Date of Termination under any plan,
program, policy or practice or contract or agreement of the Company and its affiliates (such other
amounts and benefits shall be hereinafter referred to as the “Other Benefits”). Notwithstanding
the foregoing, it shall be a condition to the Executive’s right to receive the amounts and benefits
provided for in Sections 6(a)(i)(B), 6(a)(ii) and 6(a)(iii) above that the
Executive execute, deliver to the Company and not revoke a release of claims in substantially the
form attached hereto as Exhibit A.

          (b) For Cause or Without Good Reason. If the Executive’s employment is
terminated by the Company for Cause or by the Executive without Good Reason during the Term, the
Company shall have no further obligations to the Executive under this Agreement other than the
obligation to pay to the Executive the Accrued Obligations, and to provide the Other Benefits. In
addition, the Option and any other equity incentive awards granted to the Executive shall
immediately cease vesting and (i) in the case of termination by the Company for Cause, shall
terminate and be of no further force or effect on the Date of Termination, and (ii) in the case of
termination by the Executive without Good Reason, shall terminate ninety (90) days following the
Date of Termination.

          (c) Death or Disability. If the Executive’s employment is terminated by
reason of the Executive’s death or Disability during the Term:

               (i) The Accrued Obligations shall be paid to the Executive’s estate or beneficiaries or to the
Executive, as applicable, in cash within 30 days of the Date of Termination.

               (ii) The Option and any other equity incentive awards granted to the Executive shall
immediately cease vesting and (A) in the case of termination by reason of the Executive’s death,
shall terminate one (1) year following the Date of Termination, and (B) in the case of termination
by reason of Disability, shall terminate ninety (90) days following the Date of Termination.

               (iii) The Other Benefits shall be paid or provided to the Executive or to his estate or
beneficiaries, as applicable, on a timely basis.

     7. Termination Upon a Change in Control. If a Change in Control (as defined herein)
occurs during the Term (including any extensions thereof pursuant to the terms hereof), and the
Executive’s employment is terminated by the Company without Cause or by the Executive for Good
Reason, in each case within one (1) year after the effective date of the Change in Control, then
the Executive shall be entitled to the payments and benefits provided in Section 6(a),
subject to the terms and conditions thereof; provided, that for purposes of this Section 7,
the Severance Amount shall equal an amount equal to two (2) times the sum of: (x) the Base Salary
in effect on the Date of Termination plus (y) the Annual Bonus that the Executive was paid in the
prior fiscal year (annualized to the extent the Annual Bonus for the prior fiscal year was paid for
a partial year). In addition, in the event of such a termination of the Executive’s employment,
all outstanding stock options, restricted stock units and other equity awards granted to the
Executive under any, or independent of, the Company’s equity incentive plans (or awards substituted
therefore covering the securities of a successor company) shall become immediately vested and
exercisable in full and, to the extent such options are assumed by the acquiring party in the
Change in Control transaction, shall not terminate until the earlier to occur of (a) three (3)
years following the Date of Termination, and (b) the expiration date set forth in the applicable
stock option agreement. For purposes of this Agreement, “Change in Control” shall mean the
occurrence of any of the events set forth on Exhibit B.

     8. No Mitigation Required. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable to the Executive
under

6

 

any of the provisions of this Agreement and except as expressly provided, such amounts shall
not be reduced whether or not the Executive obtains other employment.

     9. Confidential Information And Non-Competition. 

          (a) Confidentiality. The Executive acknowledges that in his employment
hereunder, he has occupied and will continue to occupy a position of trust and confidence. The
Executive shall not during the term of his employment and at any time thereafter, except as may be
required to perform his duties hereunder or as required by applicable law, without limitation in
time or until such information shall have become public other than by Executive’s unauthorized
disclosure, disclose to others or use, whether directly or indirectly, any Confidential Information
regarding the Company. “Confidential Information” shall mean any non-public or proprietary
information regarding the Company, its business and customers, in whatever form, tangible or
intangible, that is not disclosed publicly by the Company, 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, correspondence and memoranda, corporate and business
contacts and relationships, corporate and business opportunities, telephone logs and messages,
video and audio tapes and discs, data, formulae, information and client, consultant and customer
lists, papers, resumes, records, photographs, film and slides, computer disks and files, software,
information stored on the Company’s computers, addresses and telephone numbers, contracts,
releases, other writings of any kind, and any and all other materials and information pertaining to
the Company or its business to which Executive is exposed or has access as a consequence of his
employment by the Company. Executive acknowledges that such Confidential Information is
specialized, unique in nature and of great value to the Company, and that such information gives
the Company a competitive advantage. The Executive agrees to deliver or return to the Company, at
the Company’s request at any time or upon termination or expiration of his employment or as soon
thereafter as possible, all documents, computer tapes and disks, records, lists, data, drawings,
prints, notes and written information (and all copies thereof) furnished by the Company or prepared
by the Executive during the term of his employment by the Company.

          (b) Ownership of Rights. The Company and the Executive acknowledge and
confirm that the Company shall own, in perpetuity, throughout the universe, all right, title and
interest in and to the results and proceeds of the Executive’s services hereunder and all material
produced and/or furnished by the Executive, of any kind and nature whatsoever, it being understood
and agreed that the Company hereby acquires the maximum rights permitted to be obtained by the
Company in all proprietary rights and information. Any such materials and/or ideas submitted to the
Company hereunder automatically shall become the property of Company, and the Executive hereby
transfers and agrees 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 heretofore to the Executive’s favor for
infringement of copyright), it being understood that the Executive, for purposes hereof, is acting
entirely as Company’s executive-for-hire. The Executive, shall, 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
Executive hereunder.

          (c) Non-Competition. During the period in which he is employed by the
Company, (and, in the event Executive terminates his employment hereunder other than for Good
Reason or Executives’ employment is terminated by the Company for Cause, for a period of one (1)
year beyond the

7

 

expiration of the Term), Executive shall not, directly or indirectly, without the prior
written consent of the Company, provide consultative services or otherwise provide services to
(whether as an Executive or a consultant, with or without pay), 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 the following
businesses: technology solutions, recreational products distribution and electronic components and
is then a direct competitor to any of the Company’s businesses or the businesses of any subsidiary
or affiliate of the Company; 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.

          (d) Non-Solicitation. During the period in which he is employed by the
Company (and, in the event Executive terminates his employment hereunder other than for Good Reason
or Executive’s employment is terminated by the Company for Cause, for a period of one (1) year
beyond the expiration of the Term), Executive shall not, directly or indirectly, influence or
attempt to influence customers or suppliers of the Company to divert their business away from the
Company to any other company. Furthermore, Executive recognizes that he possesses and will possess
Confidential Information about other Executives of the Company relating to their education,
experience, skills, compensation and benefits, and interpersonal relationships with customers of
the Company. Executive recognizes that the information he possesses and will possess about these
other Executives generally is not known, is of substantial value to the Company in developing its
business and in securing and retaining customers, and has been and will be acquired by him because
of his business position with the Company. Executive agrees that, during the period in which he is
employed by the Company (and, in the event Executive terminates his employment hereunder other than
for Good Reason or Executive’s employment is terminated by the Company for Cause, for a period of
one (1) year beyond the expiration of the Term), he will not, directly or indirectly, solicit or
recruit any employee of the Company for the purpose of being employed by him or by any other
company on whose behalf he is acting as an agent, representative or Executive and that he will not
convey any such Confidential Information or trade secrets about other Executives of the Company to
any other person.

          (e) Injunctive Relief. Executive hereby acknowledges and agrees that it
would be difficult to fully compensate the Company for damages resulting from the breach or
threatened breach of Sections 9(a), 9(b), 9(c) and (d) herein, and,
accordingly that the Company shall be entitled to temporary and injunctive relief, including
temporary restraining orders, preliminary injunctions and permanent injunctions, to enforce such
Sections without the necessity of proving actual damages or the posting of a bond in connection
therewith. This provision with respect to injunctive relief shall not, however, diminish the
Company’s right to claim and recover damages or enforce any other of its legal and/or equitable
rights or defenses.

     10. Miscellaneous.

          (a) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas, without reference to principles of conflict of
laws.

          (b) Headings. The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect.

          (c) Amendment. This Agreement may not be amended or modified otherwise than
by a written agreement executed by the parties hereto or their respective successors and legal
representatives.

8

 

          (d) Limitation on Benefits. Notwithstanding any other provision of this
Agreement, in no event shall Employee receive or be entitled to receive any amount in the aggregate
under this Agreement and all other agreements with Employer upon or in connection with a change in
control that constitutes or would constitute an “excess parachute payment” (as that term is defined
in Section 280G of the Internal Revenue Code of 1986, as amended).

          (e) Arbitration. To the fullest extent allowed by law, any controversy,
claim or dispute between Executive and the Company (and/or any of its owners, directors, officers,
employees, affiliates, or agents) relating to or arising out of Executive’s employment or the
cessation of that employment will be submitted to final and binding arbitration in the county in
which Executive work(ed) for determination in accordance with the American Arbitration
Association’s (“AAA”) National Rules for the Resolution of Employment Disputes, as the exclusive
remedy for such controversy, claim or dispute. In any such arbitration, the parties may conduct
discovery in accordance with the applicable rules of the arbitration forum, except that the
arbitrator shall have the authority to order and permit discovery as the arbitrator may deem
necessary and appropriate in accordance with applicable state or federal discovery statutes. The
arbitrator shall issue a reasoned, written decision, and shall have full authority to award all
remedies which would be available in court. The parties shall share the filing fees required for
the arbitration, provided that Executive shall not be required to pay an amount in excess of the
filing fees required by a federal or state court with jurisdiction. The Company shall pay the
arbitrator’s fees and any AAA administrative expenses. Any judgment upon the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof. Possible disputes covered by
the above include (but are not limited to) unpaid wages, breach of contract, torts, violation of
public policy, discrimination, harassment, or any other employment-related claims under laws
including but not limited to, Title VII of the Civil Rights Act of 1964, the Americans With
Disabilities Act, the Age Discrimination in Employment Act, the California Fair Employment and
Housing Act, the California Labor Code, and any other statutes or laws relating to an employee’s
relationship with his/her employer, regardless of whether such dispute is initiated by the employee
or the Company. Thus, this bilateral arbitration agreement applies to any and all claims that the
Company may have against an employee, including but not limited to, claims for misappropriation of
Company property, disclosure of proprietary information or trade secrets, interference with
contract, trade libel, gross negligence, or any other claim for alleged wrongful conduct or breach
of the duty of loyalty by an employee. However, notwithstanding anything to the contrary contained
herein, Company and Executive shall have their respective rights to seek and obtain injunctive
relief with respect to any controversy, claim or dispute to the extent permitted by law. Claims for
workers’ compensation benefits and unemployment insurance (or any other claims where mandatory
arbitration is prohibited by law) are not covered by this arbitration agreement, and such claims
may be presented by either Executive or the Company to the appropriate court or government agency.
This arbitration agreement is to be construed as broadly as is permissible under applicable law.

          (f) Notices. All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered or certified mail,
return receipt requested, postage prepaid, addressed as follows:

9

 

If to the Executive: at the Executive’s most recent address on the records of the Company,

with a copy to:

Fulbright & Jaworski

Fulbright Tower

1301 McKinney, Suite 5100

Houston, TX 77010-3095

Attn: Christopher R. Hart, Esq.

If to the Company:

Bell Industries, Inc.

c/o Newcastle Capital Management, L.P.

300 Crescent Court

Suite 1110

Dallas, TX 75201

Attn: Mark Schwarz

with a copy to:

Manatt, Phelps & Phillips, LLP

11355 W. Olympic Blvd.

Los Angeles, CA 90064

Attn: Mark J. Kelson, Esq.

or to such other address as either party shall have furnished to the other in writing in accordance
herewith. Notice and communications shall be effective when actually received by the addressee.

          (g) Severability. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other provision of this
Agreement. If any provision or term hereof is deemed to have exceeded applicable legal authority
or shall be in conflict with applicable legal limitations, such provision shall be reformed and
rewritten as necessary to achieve consistency with such applicable law.

          (h) Withholding. The Company may withhold from any amounts payable under
this Agreement such Federal, state, local or foreign taxes as shall be required to be withheld
pursuant to any applicable law or regulation.

          (i) Successors. This Agreement is personal to the Executive and without the
prior written consent of the Company shall not be assignable by the Executive otherwise than by
will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive’s legal representatives. This Agreement shall inure to the benefit of
and be binding upon the Company and its successors and assigns. The Company will require any
successor (whether direct or indirect, by purchase merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company 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 had taken place. As used in this Agreement, “Company” shall mean the
company as hereinbefore defined and any successor to its business and/or assets as aforesaid which
assumes and agrees to perform this Agreement by operation of law, or otherwise.

10

 

          (j) Entire Agreement. This Agreement constitutes the final, complete and
exclusive agreement between the Executive and the Company with respect to the subject matter hereof
and replaces and supersedes any and all other agreements, offers or promises, whether oral or
written, made to Executive by the Company or representative thereof.

          (k) Consultation with Counsel. The Executive acknowledges that he has had a
full and complete opportunity to consult with counsel and other advisors of his own choosing
concerning the terms, enforceability and implications of this Agreement, and that the Company has
not made any representations or warranties to the Executive concerning the terms, enforceability or
implications of this Agreement other than as reflected in this Agreement.

          (l) Counterparts. This Agreement may be executed simultaneously in two
counterparts, each of which shall be deemed an original but which together shall constitute one and
the same instrument.

[signatures follow next page]

11

 

     IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and, pursuant to the
authorization from the Board, the Company has caused these presents to be executed in its name on
its behalf, all as of the day and year first above written.

	 	 	 	 	 	 	 
	 	 	“COMPANY”	 	 
	 
	 	 	 	 	 	 
	 	 	BELL INDUSTRIES, INC.,

a California corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Mark Schwarz	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Mark Schwarz	 	 
	 

	 	 	 	Its: Chairman of the Board	 	 
	 
	 	 	 	 	 	 
	 	 	“EXECUTIVE”	 	 
	 
	 	 	 	 	 	 
	 	 	/s/ John A. Fellows	 	 
	 	 	 	 	 
	 	 	Name: John A. Fellows	 	 

12

 

EXHIBIT A

TO EMPLOYMENT AGREEMENT

GENERAL RELEASE

     For a valuable consideration, the receipt and adequacy of which are hereby acknowledged, the
undersigned does hereby release and forever discharge the “Releasees” hereunder, consisting of Bell
Industries, Inc., a California corporation (the “Company”) and each of its partners, subsidiaries,
associates, affiliates, successors, heirs, assigns, agents, directors, officers, employees,
representatives, lawyers, insurers, and all persons acting by, through, under or in concert with
them, or any of them, of and from any and all manner of action or actions, cause or causes of
action, in law or in equity, suits, debts, liens, contracts, agreements, promises, liability,
claims, demands, damages, losses, costs, attorneys’ fees or expenses, of any nature whatsoever,
known or unknown, fixed or contingent (hereinafter called “Claims”), which the undersigned now has
or may hereafter have against the Releasees, or any of them, by reason of any matter, cause, or
thing whatsoever from the beginning of time to the date hereof. The Claims released herein include,
without limiting the generality of the foregoing, any Claims in any way arising out of, based upon,
or related to the employment or termination of employment of the undersigned by the Releasees, or
any of them; any alleged breach of any express or implied contract of employment; any alleged torts
or other alleged legal restrictions on Releasee’s right to terminate the employment of the
undersigned; and any alleged violation of any federal, state or local statute or ordinance
including, without limitation, Title VII of the Civil Rights Act of 1964, the Age Discrimination In
Employment Act, the Americans With Disabilities Act, and the California Fair Employment and Housing
Act.

     THE UNDERSIGNED ACKNOWLEDGES THAT HE HAS BEEN ADVISED BY LEGAL COUNSEL AND IS FAMILIAR WITH
THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES AS FOLLOWS:

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN
BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.”

THE UNDERSIGNED, BEING AWARE OF SAID CODE SECTION, HEREBY EXPRESSLY WAIVES ANY RIGHTS HE MAY HAVE
THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTES OR COMMON LAW PRINCIPLES OF SIMILAR EFFECT.

     IN ACCORDANCE WITH THE OLDER WORKERS BENEFIT PROTECTION ACT OF 1990, THE UNDERSIGNED IS HEREBY
ADVISED AS FOLLOWS:

     (A) HE HAS THE RIGHT TO CONSULT WITH AN ATTORNEY BEFORE SIGNING THIS RELEASE;

     (B) HE HAS TWENTY-ONE (21) DAYS TO CONSIDER THIS RELEASE BEFORE SIGNING IT; AND

     (C) HE HAS SEVEN (7) DAYS AFTER SIGNING THIS RELEASE TO REVOKE THIS RELEASE, AND THIS
RELEASE WILL BECOME EFFECTIVE UPON THE EXPIRATION OF THAT REVOCATION PERIOD.

     The undersigned represents and warrants that there has been no assignment or other transfer of
any interest in any Claim which he may have against Releasees, or any of them, and the undersigned

 

 

agrees to indemnify and hold Releasees, and each of them, harmless from any liability, Claims,
demands, damages, costs, expenses and attorneys’ fees incurred by Releasees, or any of them, as the
result of any such assignment or transfer or any rights or Claims under any such assignment or
transfer. It is the intention of the parties that this indemnity does not require payment as a
condition precedent to recovery by the Releasees against the undersigned under this indemnity.

     The undersigned agrees that if he hereafter commences any suit arising out of, based upon, or
relating to any of the Claims released hereunder or in any manner asserts against Releasees, or any
of them, any of the Claims released hereunder, then the undersigned agrees to pay to Releasees, and
each of them, in addition to any other damages caused to Releasees thereby, all attorneys’ fees
incurred by Releasees in defending or otherwise responding to said suit or Claim.

     The undersigned is executing this Release in consideration of, among other things, the
Company’s obligation to pay him amounts pursuant to Sections 6(a)(i)(B), 6(a)(ii)
and 6(a)(iii) of the undersigned’s employment agreement with the Company dated as of
September           , 2005.

     The undersigned further understands and agrees that neither the payment of any sum of money
nor the execution of this Release shall constitute or be construed as an admission of any liability
whatsoever by the Releasees, or any of them, who have consistently taken the position that they
have no liability whatsoever to the undersigned.

     IN WITNESS WHEREOF, the undersigned has executed this Release this                     day of                                         ,
20___.

	 	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 

 

 

EXHIBIT B

TO EMPLOYMENT AGREEMENT

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 thereunder) 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 the Company that represent
greater than 35% of the combined voting power of the Company’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 the Company or any person controlled by the
Company or by any employee benefit plan (or related trust) sponsored or maintained by the
Company or any person controlled by the Company , or

     (ii) By the Company or a corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportions as their ownership of the stock of the
Company, 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 the Company of (i) a merger, consolidation, reorganization, or
business combination or (ii) a sale or other disposition of all or substantially all of the
Company’s assets (in a single transaction to a single acquiror and not as a result of the sale,
lease or other disposition of one or more divisions or subsidiaries of the Company 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 the Company’s voting securities outstanding immediately before the
transaction continuing to represent (either by remaining outstanding or by being converted
into voting securities of the Company or the person that, as a result of the transaction,
controls, directly or indirectly, the Company or owns, directly or indirectly, all or
substantially all of the Company’s assets or otherwise succeeds to the business of the
Company (the Company 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 the Company 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 the Company’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 the Company’s stockholders.

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