EXHIBIT 99
BELL INDUSTRIES, INC.
STOCK OPTION PLAN
1. PURPOSE
The purpose of this 2001 Stock Option Plan (the "Plan) of Bell Industries, Inc.
a California corporation (the "Company"), is to secure for the Company and its
shareholders the benefits arising from stock ownership by directors, selected
executives and other key employees of the Company or its subsidiaries and such
other persons as the Compensation Committee (see "Administration" below), may
from time to time determine. The Plan will provide a means whereby (i) such
individuals may purchase shares of the Common Stock of the Company pursuant to
options that will qualify as "incentive stock options" under Section 422A of the
Internal Revenue Code of 1986, as amended (the "Code"), (ii) such individuals
may purchase shares of the Common Stock of the Company pursuant to
"non-incentive" or "non-qualified" stock options, and (iii) such individuals may
purchase restricted Common Stock ("Restricted Stock") of the Company issued
pursuant to the Plan.
2. ADMINISTRATION
The Plan shall be administrated by the Compensation Committee (the "Committee")
appointed by the Board of Directors of the Company consisting of three of more
directors of the Company. Any action of the Committee with respect to
administration of the Plan shall be taken by a majority vote or written consent
of its members. Subject to the provisions of the Plan, the Committee shall have
authority to interpret the Plan, (ii) to define the terms used herein, (iii) to
prescribe, amend and rescind rules and regulations relating to the Plan, (iv) to
determine the individuals to whom and the time or times at which options shall
be granted, whether such options will be incentive stock options or
non-qualified stock options, the number of shares to be subject to each option,
the option price, the number of installments, if any, in which each option may
be exercised, and the duration of each option, (v) to determine who shall
receive Restricted Stock and the number of shares of Restricted Stock offered to
any participant, (vi) to approve and determine the duration of leaves of absence
that may be granted to participants without constituting a termination of their
employment under the Plan, and (vii) to make all other determinations necessary
or advisable for the administration of the Plan. All determinations and
interpretations made by the Committee shall be binding and conclusive on all
participants in the Plan and their legal representatives and beneficiaries.
3. SHARES SUBJECT TO THE PLAN
Subject to adjustments as provided in paragraph 16 hereof, the shares to be
offered under the Plan shall consist of the Company's authorized but unissued
Common Stock, and the aggregate amount of such that may be issued upon exercise
of all options or may be issued as Restricted Stock under the Plan shall not
exceed (500,000) shares; provided that in no event may the number of shares
issued during any twelve month period pursuant to options granted hereunder or
pursuant to any other incentive compensation plan or arrangement under which
officers, directors or key employees participate exceed five percent (5%) of the
Company's outstanding shares of Common Stock nor, at
1
any time during any five year period, may the number of shares authorized for
issuance hereunder when aggregate with any other shares authorized for issuance
under any other such plan or arrangement not approved by the Company's
shareholders exceed ten percent (10%) of the Company's outstanding shares of
Common Stock." If any option granted under the Plan shall expire or terminate
for any reason without having been exercised in full, the unpurchased shares
subject thereto, and any shares of Restricted Stock that shall be repurchased by
the Company prior to the lapse of the related restrictions, shall again be
available for options to be granted, and shares to be issued as Restricted
Stock, under the Plan.
4. ELIGIBILITY AND PARTICIPANTS
All directors, executive and other key employees of the Company or of any
subsidiaries corporation (as defined in Section 425(f) of the Code) shall be
eligible for selection to participate in the plan; however, only selected
executive and other key employees of the Company or a subsidiary may receive
incentive stock options under the Plan. An individual who has been granted an
option may, if such individual is otherwise eligible, be granted an additional
option or options if the Committee shall so determine, subject to the other
provisions of the Plan. No incentive stock option may be granted to any person
who, at the time the incentive stock option is granted, owns shares of the
Company's outstanding Common Stock possessing more than ten percent (10%) of the
total combined voting power of all classes of stock of the Company (and its
affiliates if applicable), unless the exercise price of such option is at least
110 percent (110%) of the fair market value of the stock subject to the option
and such option by its terms is not exercisable after the expiration of five
years from the date such option is granted.
The aggregate fair market value (determined at the time the Option is granted)
of the stock with respect to which incentive stock options (whenever granted and
including the Substitute Options) are exercisable for the first time by an
Optionee during any calendar year (under all incentive stock option plans of the
Company and its subsidiaries) shall not exceed $100,000.
All options granted under the Plan shall be granted within ten years from
February 7, 2001.
5. DURATION OF OPTIONS
Each option and all rights associated therewith shall expire on such date as the
Committee may determine, and shall be subject to earlier termination as provided
herein; provided, however, that in the case of incentive stock options, each
incentive stock option and all rights associated therewith shall expire in any
event within ten (10) years of the date on which such incentive stock option is
granted.
2
6. PURCHASE PRICE
The purchase price of the stock covered by each option shall be determined by
the Committee, but in the case of incentive stock options, shall not be less
than one hundred percent (100%) of the fair market value of such stock on the
date the incentive stock option is granted. The purchase price of the shares
upon exercise of an option shall be paid in full at the time of exercise (i) in
cash or by check payable to the order of the Company, or (ii) by delivery of
shares of Common Stock of the Company owned by (including shares issued upon
exercise of the option) the option holder, or nay combination thereof. Shares of
Common Stock used to satisfy the exercise price of an option shall be valued at
their fair market value determined (in accordance with paragraph 8 hereof) as of
the close of business on the date of exercise (or if such date is not a business
day), as of the close of the business day immediately preceding such date).
7. EXERCISE OF OPTIONS
Each option granted under this Plan shall be exercisable in such installments
during the period prior to its expiration date as the Committee shall determine,
but in no event shall any option be exercisable for at least six months after
grant except in the case of the death or disability of the option holder;
provided that, unless otherwise determined by the Committee, if the option
holder shall not in any given installment period purchase all of the shares that
the option holder is entitled to purchase in such installment period, then the
option holder's right to purchase any shares not purchased in such installment
period shall continue until the expiration date or sooner termination of the
option holder's option. No option may be exercised for a fraction of a share and
no partial exercise of any option may be for less than one hundred (100) shares.
8. FAIR MARKET VALUE OF COMMON STOCK
The fair market value of a share of company Common Stock shall be determined
under the Plan by reference to the closing price on the American Stock Exchange
(or other principal stock exchange on which such shares are than listed) or, if
such shares are not then listed on such exchange (or other principal stock
exchange), by reference to the closing price (if a National Market Issue) or the
mean between the bid and asked price (if other over-the-counter issue) of a
share as supplied by the National Association of Securities Dealers through
NASDAQ (or its successor in function), in each case as reported by The Wall
Street Journal, for the date on which the option is granted, or is such date is
not a business day, for the business day immediately preceding such date (or, if
for any reason no such price is available, in such other manner as the Committee
may deem appropriate to reflect the then fair market value thereof).
9. WITHHOLDING TAX
Upon (i) the disposition by an employee or other person of shares of Common
Stock acquired pursuant to the exercise of an inventive stock option granted
pursuant to the Plan within two years of the granting of the incentive stock
option or within one year after exercise of the incentive stock option, or (ii)
the exercise of "non-incentive" or "non-qualified" option, the Company shall
have the right to require such employee to withhold with respect to such shares.
3
10. NONTRANSFERABILITY
An option granted under the Plan shall, by its terms, be nontransferable by the
option holder, either voluntarily or by option of law, otherwise than by will or
the laws of descent and distribution, and shall be exercisable during option
holder's lifetime only by the option holder, regardless of any community
property interest therein of the spouse of the option holder, or such spouse's
successors in interest. If the spouse of the option holder shall have acquired a
community property interest in such option, the option holder, or the option
holders permitted successors in interest, may exercise the option on behalf of
the spouse of the option holder or such spouse's successors in interest.
11. HOLDING STOCK AFTER EXERCISING OPTION
At the discretion of the Committee, any option may provide that the option
holder, by accepting such option, represents and agrees, for the option holder
and the option holder's permitted transferees (by will or the laws of descent
and distribution), that none of the shares purchased upon exercise of the option
will be acquired with a view to any sale, transfer or distribution of said
shares in violation of the Securities Act of 1933, as amended (the "Act"), and
the rules and regulations promulgated thereunder, or any applicable state "blue
sky" laws, and the person entitled to exercise the same shall furnish evidence
satisfactory to the Company (including a written and signed representation) to
that effect in form and substance satisfactory to the Company, including an
indemnification of the Company in the event of any violation of the Act or state
blue sky law by such person.
12. TERMINATION OF EMPLOYMENT
If a holder of an incentive stock option ceases to be employed by the Company or
one of its subsidiaries for any reason other than the option holder's death or
permanent disability (within the meaning of Section 105(d)(4) of the Code), the
option holder's incentive stock option shall be exercisable for a period of
three (3) months after the date option holder ceases to be an employee of the
Company or such subsidiary (unless by its terms it sooner expires) to the extent
exercisable on the date of such cessation of employment and shall thereafter
expire and be void and of no further force or effect. A leave of absence
approved in writing by the Committee shall not be deemed a termination of
employment for the purposes of this paragraph 12, but no option may be exercised
during any such leave of absence, except during the first three (3) months
thereof, Termination of employment or other relationship with the Company by the
holder of a non-qualified stock option will have the effect specified in the
individual option agreement, as determined by the Committee.
13. DEATH OR PERMANENT DISABILITY OF OPTION HOLDER
If the holder of an incentive stock option dies or becomes permanently disabled
while option holder is employed by the Company or one of its subsidiaries,
option holder's option shall expire one (1) year after the date of such death or
permanent disability unless by its terms it sooner expires. During such period
after death, such option may, to the extent that it remained unexercised (but
exercisable by the option holder according to such option's terms) on the date
of such death, be exercised by the person or persons to whom the option holder's
rights under the option shall pass by
4
option holder's will or by the laws of descent and distribution. The death or
disability of a holder of a non-qualified stock option will have the effect
specified in the individual option agreement as determined by the Committee.
14. Restricted Stock
(1) Award of Restricted Stock
The Committee may grant awards of Restricted Stock Common Stock of the company
which is nontransferable and subject to risks of forfeiture (as defined below)
to employees. The Committee shall determine the purchase price, the terms of
payment of the purchase price, the restrictions upon the Restricted Stock, and
when such restrictions shall lapse. The terms and conditions of the Restricted
Stock shall be set forth in a written instrument.
(2) Conditions of Restricted Stock
All shares of Restricted Stock (including shares received as a result of stock
dividends, stock splits or other forms of recapitalization) sold pursuant to the
Plan will be subject to the following conditions:
(i) The shares may not be sold, transferred or
otherwise alienated or hypothecated until the
restrictions are removed or expire.
(ii) The holders of Restricted Stock shall enter into
an escrow agreement providing that the
certificates representing Restricted Stock sold
to such holder pursuant to the Plan will remain
in the physical custody of an escrow holder
until all restrictions are removed or expire.
(iii) Each certificate representing Restricted Stock
sold to the holder of such stock pursuant to the
Plan will bear a legend making appropriate
reference to the restrictions imposed.
(iv) Such other conditions as the Committee may deem
advisable, including, without limitation,
restrictions under the Act.
(3) Lapse of Restrictions
The restrictions imposed upon Restricted Stock under Section 14(2) above will
lapse in accordance with such conditions as are determined by the Committee and
set forth in a written instrument describing the terms of the sale of the
Restricted Stock.
(4) Rights of Option Holder
Subject to the provisions of Section (14) 2 above, the holder of Restricted
Stock will have all rights of a stockholder with respect to the Restricted Stock
sold to such a holder, including the right to vote the shares and receive all
dividends and other distributions paid or made with respect thereto.
5
(5) Termination of Employment
Unless the Committee in its discretion determines otherwise, upon an employee's
termination of employment for any reason, all of the employee's Restricted
Stock, if any, remaining subject to restrictions on the date of such termination
of employment shall be repurchased by the Company at the purchase price.
15. PRIVILEGES OF STOCK OWNERSHIP
No person entitled to exercise any option granted under the Plan shall have any
of the rights or privileges of a shareholder of the Company in respect of any
shares of stock issuable upon exercise of such option until certificates
representing such shares shall have been issued and delivered. No shares shall
be issued and delivered upon the exercise of any option unless and until there
shall have been full compliance with all applicable requirements of the Act
(whether by registration or satisfaction of exemption conditions), all
applicable listing requirements of any national securities exchange on which
shares of the same class are then listed and any other requirements of law or of
any regulatory bodies having jurisdiction over such issuance and delivery.
16. ADJUSTMENTS
If the outstanding shares of the Common Stock of the Company are increased,
decreased, changed into or exchanged for a different number or kind of shares or
securities of the Company through reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split or other
similar transaction, an appropriate and proportionate adjustment shall be made
in the maximum number and kind of shares as to which options may be granted
under this Plan. A corresponding adjustment changing the number or kind of
shares allocated to unexercised options or portions thereof, which shall have
been granted prior to any such change, shall likewise be made. Any such
adjustment in the outstanding options shall be made without change in the
aggregate purchase price applicable to the unexercised portion of the option but
with a corresponding adjustment in the price for each share or other unit of any
security covered by the option.
Upon the dissolution or liquidation of the Company, or upon a reorganization,
merger or consolidation of the Company with one or more corporation as a result
of which the Company is not the surviving corporation, or upon a sale of
substantially all the property of the Company, the Plan shall terminate, and all
options and stock appreciation rights theretofore granted hereunder shall
terminate; provided, however, that notwithstanding the foregoing, the Committee
shall provide in writing in connection with such transaction for any or all of
the following alternatives (separately or in combinations): (i) for the options
therefore granted more than six months before such transaction to become
immediately exercisable notwithstanding the provisions of paragraph 7 hereof,
except the last sentence thereof; (ii) for the assumption by the successor
corporation of the options theretofore granted or the substitution by such
corporation for such options of new options covering the stock of the successor
corporation, or a patent or subsidiary thereof, with appropriate adjustments as
to the number and kind of shares and prices; (iii) for the continuance of the
Plan by such successor corporation in which event the Plan and the options
theretofore granted shall continue in the manner
6
and under the terms so provided; or (iv) for the payment in cash or stock in
lieu of an din complete satisfaction of such options.
Adjustments under this paragraph 16 shall be made by the Committee, whose
determination as to what adjustments shall be made, and the extent thereof,
shall be final, binding and conclusive. No fractional shares of stock shall be
issued under the Plan on any such adjustment.
At the discretion of the Committee, any option may contain provisions to the
effect that upon the happening of certain events, including a change in control
(as defined by the Committee in the option) of the Company, any outstanding
options not theretofore exercisable shall immediately become exercisable in
their entirety, notwithstanding any of the other provisions of the option.
17. AMENDMENT AND TERMINATION OF PLAN
The Committee may at any time suspend or terminate the Plan. The Committee may
also at any time amend or revise the terms of the Plan, provided that no such
amendment or revision shall, unless appropriate shareholder approval of such
amendment or revision is obtained, increase the maximum number of shares in the
aggregate that may be sold pursuant to options granted under the Plan, except as
permitted under the provisions of paragraph 16, or change the minimum purchase
price of incentive stock options set forth in paragraph 6, or increase the
maximum term of incentive stock options provided for in paragraph 5, or permit
the granting of options to anyone other than as provided in paragraph 4.
Notwithstanding the foregoing, no amendment, suspension or termination of the
Plan shall, without specific action of the Committee and the consent of the
option holder, in any adverse way modify, amend, alter or impair any rights or
obligations under any option theretofore granted under the Plan.
7