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EXHIBIT 10.T
CONSULTING AGREEMENT
This Agreement is made as of the 15th day of February, 1999, by and
between BELL INDUSTRIES, INC., a California corporation (the "COMPANY"), and
GORDON GRAHAM ("GRAHAM"), with reference to the following facts:
A. Prior to his retirement effective February 15, 1999, Graham had been
an Executive Officer of the Company for over ten years;
B. Because of Graham's valuable knowledge and experience concerning the
Company's business resulting from the positions he has held with the Company,
the Company wishes to retain Graham as a consultant subject to the terms and
conditions of this Agreement; and
C. Graham wishes to be so retained.
NOW, THEREFORE, in consideration of these premises and mutual covenants
herein set forth, the parties agree as follows:
1. Term of Service. The term of this Agreement shall be for a period of
three calendar years, commencing as of March 1, 1999 (the "CONSULTING PERIOD").
2. Consulting Services. During the Consulting Period, Graham shall
provide, in an executive capacity, such consultative and advisory services
concerning the business affairs and management of the Company as may be
requested by the Company from time to time. Graham shall not be required to
devote to such services more than twenty (20) hours in any month (which time may
be provided in person or via telephonic or other electronic mode of
communication), it being the intention of the parties to this Agreement that
Graham shall at all times be free to devote substantial amounts of time to
occupations other than provided for in this Agreement so long as he does not
breach the provisions of Sections 6, 7 or 8 of this Agreement and other-wise
performs in accordance with this Agreement.
All services to be rendered by Graham hereunder to the Company
shall be rendered upon reasonable notice from the Company, during normal
business hours, via telephonic or other electronic mode of communication or at
such place as the parties may agree, and subject to Graham's reasonable
availability, taking into consideration factors including, but not limited to,
vacation periods and his physical condition subject to Section 5.1.2.
3. Compensation.
3.1 Consulting Fee. As compensation for the performance by
Graham of all his obligations hereunder (regardless of whether Graham actually
performs consulting services unless Graham is requested to do so and refuses and
such refusal constitutes a material breach of this Agreement under Section 2),
the Company shall pay Graham during the Consulting Period the annual sum of two
hundred and fifty thousand dollars ($250,000) (the "CONSULTING FEE"). The annual
Consulting Fee is payable on February 29, 2000, February 28, 2001 and February
28, 2002. Graham hereby agrees that if, in the opinion of the Company's counsel,
he shall be considered by any governmental agency or agencies
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having jurisdiction over the matter, to be an employee, of the Company and not
an independent contractor, the Company shall have the right to withhold any
applicable taxes, whether prospective or retroactive from the above amounts, in
accordance with any W-4 form delivered by Graham to the Company. The Company
shall notify Graham of the nature of any withholding pursuant to this Section
3.1. Graham agrees that the Company shall not pay him any director fees, or
grant him any director stock options, for his services as a director of the
Company.
3.2 Benefits. Nothing herein contained shall modify or change
any of the benefits Graham is entitled to as a retiring executive of the
Company. In addition, the Company agrees to provide Graham coverage as a
director under its Directors and Officers insurance policy at the same level and
type of coverage available to other directors so long as he remains a director
of the Company. In addition, if available under the Company's current Directors
and Officers insurance policy, the Company also agrees to provide Graham
coverage for his consulting activities hereunder at the same level and type of
coverage available to other consultants of the Company so long as he is a
consultant pursuant to this agreement.
4. Reimbursement of Expenses. The Company will reimburse all expenses
incurred by Graham if Graham complies with reasonable Company policy for
reimbursement of expenses as may from time to time be in effect.
5. Termination.
5.1 Employer's Right to Terminate. The Company shall have the
right, at its election, to terminate Graham's employment during the Consulting
Period in the event of Graham's:
5.1.1 Death; or
5.1.2 Determination by at least two-thirds (2/3) of
the Board of Directors of the Company that
Graham has materially breached this Agreement (a
"Material Breach").
5.2 Graham's Right to Terminate. Graham shall have the right, at
his election, to terminate his employment as a consultant during the Consulting
Period at any time, upon sixty (60) days written notice, for any reason or for
no reason, including in the event of any Change Of Control (as defined below).
5.3 Payment Upon Termination. In the event of Graham'
termination pursuant to Section 5.1.1, the Company shall pay to his estate the
aggregate of all Consulting Fees which Graham would have earned during the term
of this Agreement calculated from the date of the last Consulting Fee payment,
and which have not been already paid to him. In the event of Graham's
termination pursuant to Section 5.1.2 or 5.2, the Company shall only be
obligated to pay any Consulting Fees due and owing for the year in which the
Material Breach occurred, provided, however, that if Graham terminates pursuant
to Section 5.2 following a Change Of Control, the Company shall make the same
payment to Graham that it would be obligated to make had the Company terminated
Graham pursuant to Section 5.1.1.
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A "CHANGE OF CONTROL" shall be deemed to have occurred if (i)
there shall be consummated (x) any consolidation or merger of the Company, other
than a merger or consolidation of the Company in which the holders of the
Company's common stock immediately prior to the merger or consolidation have at
least seventy-five percent (75%) ownership of the voting capital stock of the
surviving corporation immediately after the merger or consolidation, or (y) any
sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of the assets of the
Company, or (ii) the shareholders of the Company approve any plan or proposal
for the liquidation or dissolution of the Company, or (iii) any person (as such
term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT")), shall become the beneficial owner
(within the meaning of Rule 13d-3 under the Exchange Act) of thirty percent
(30%) or more of the Company's outstanding Common Stock, or (iv) during any
period of two consecutive years, individuals who at the beginning of such period
constitute the entire Board shall cease for any reason (except death) to
constitute a majority thereof unless the election, or the nomination for
election by the Company's shareholders, of each new director was approved by a
vote of at least two-thirds of the directors then still in office who were
directors at the beginning of the period. For purposes of this Section 5.3, the
occurrence of two or more of the events constituting a Change Of Control which
are the result of the same of related transaction(s) shall be deemed a single
Change Of Control and its date shall be the date the first such event occurred.
For example, a merger in which former shareholders of the Company received less
than 75% of the voting capital stock of the surviving corporation followed by a
change in the Company's Board falling within clause (iv) above and contemplated
by said merger shall be deemed a single Change Of Control as of the date of said
merger.
5.4 Time of Termination. Termination pursuant to Section 5.1.1
shall be effective upon the happening of the event. The Company may terminate
this Agreement pursuant to Section 5.1.2 upon Graham's failure to cure the
material breach within sixty days following the providing of notice of such
material breach pursuant to Section 11.1.
6. Confidentiality. During the Consulting Period and thereafter, Graham
shall take all reasonable steps consistent with normal business practices to
keep in confidence and not use for the benefit of himself or others, or divulge
to others, any secret or confidential information, knowledge, data or plans of
the Company gained in his capacity as an employee and officer of the Company,
unless authorized by the Company. All records, files, drawings, documents,
models, equipment, and the like relating to the Company's business, which Graham
shall prepare, or use, or come into contact with shall not be removed from the
Company's premises without its written consent except as reasonably required in
the course of Graham's employment during the Consulting Period, and shall be
returned to the Company upon the termination of Graham's employment hereunder.
7. Competitive Activities.
7.1 No Conflict of Interest. Notwithstanding anything to the
contrary provided in Section 2 but subject to Section 7.2, in order for the
Company to reasonably protect its interest against the competitive use of any
confidential information, knowledge, data or plans of the Company to which
Graham has access during the Consulting Period or
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gained access in his capacity as an employee and officer, Graham shall not,
during the Consulting Period, directly or indirectly:
7.1.1 Enter into the employ of or render any services to
any person, firm or corporation engaged in any Competitive Business (as defined
in Section 7.3);
7.1.2 Engage in any Competitive Business for his own
account; or
7.1.3 Obtain an interest in any Competitive Business as
an individual, partner, shareholder, creditor, director, officer, principal,
agent, employee, trustee, consultant, advisor or in any other relationship or
capacity.
7.2 Exception. Notwithstanding anything to the contrary provided
in Section 7.1, Graham may acquire ownership of up to five percent (5%) of the
issued and outstanding capital stock of a publicly-held corporation that may
carry on such Competitive Business, so long as Graham does not take an active
part in the management or direction thereof and does not act as consultant or in
any way render services thereto.
7.3 Competitive Business. Competitive Business as used in this
Agreement shall mean any line of business that is the same as
7.3.1 Any business engaged in or conducted by the
Company on the date the Consulting Period commences; or
7.3.2 Any business engaged in or conducted by the
Company during the Consulting Period of which Graham has knowledge.
8. Ideas and Work Product. The Company shall be entitled to receive,
without further fees or royalties, all rights and title to any manuals, books,
brochures, plans, programs, procedures, studies, scripts, concepts, or other
similar matters conceived or developed by Graham in connection with his
consulting services which incorporate, in whole or in part, a substantial amount
of Company information. All written or electronically recorded materials,
records, and documents made by Graham or coming into his possession during the
Consulting Period concerning such aforesaid materials or concepts used,
developed, or considered by the Company shall be the property of the Company.
This Agreement does not include any invention within the purview of California
Labor Code Section 2870.
9. Exclusivity of Arbitration; Attorneys' Fees and Costs. Any
controversy or claim arising out of or relating to .this Agreement, including,
but not limited to, any claim relating to its validity, interpretation,
enforceability or breach, and/or any other claim or controversy arising out of
the consulting relationship or the commencement or termination of that
relationship, including, but not limited to, claims for breach of covenant,
breach of an implied covenant or intentional infliction of emotional distress,
which are not settled by agreement between the parties, shall be settled by
arbitration in Los Angeles, California before a board of three arbitrators, one
to be selected by the Company, one by Graham and the other by the two persons so
selected, all in accordance with the labor arbitration rules of the American
Arbitration Association then in effect. In the event that the arbitrator
selected by the Company and the arbitrator selected by Graham are unable to
agree upon a third
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arbitrator, then the third arbitrator shall be selected from the list provided
by the American Arbitration Association with the parties' striking names in
order and the party striking first to be determined by the flip of a coin. In
consideration of each party's agreement to submit to arbitration all disputes
with regard to this Agreement and/or with regard to any alleged contract or tort
or other claim arising out of the consulting relationship or the commencement or
termination of that consulting relationship and in consideration of the
anticipated expediting and minimizing of expense resulting from this arbitration
remedy, each agrees that the arbitration provisions of this Agreement shall
provide it with its exclusive remedy and each party expressly waives any right
it might have to seek redress in any other forum except as provided herein. The
parties further agree that the arbitrators acting hereunder shall be empowered
to assess any legal or equitable remedy, subject to the liquidated damages
provision under Section 10.
Any decision and award or order of the majority of the
arbitrators shall be binding upon the parties hereto and judgment thereon may be
entered in the Superior Court of the State of California or any other court
having jurisdiction.
The expenses of the arbitrators and of a transcript of any
arbitration proceeding, all attorneys' fees and costs, witness expenses and all
court costs in connection with any proceeding brought by any party with respect
to this Agreement shall be paid by the Company; provided, however, that if the
Company is the prevailing party, it shall be entitled to recover from Graham
one-half of the arbitrator's and transcript expenses and shall be obligated to
pay only its own attorneys' fees and costs, witness expenses and court costs.
10. Liquidated Damages. The parties agree that it would be speculative,
impractical and extremely difficult to determine or estimate any damages which
might be suffered by Graham if the Company is in material breach (which damages
may include, without limitation, substantial cash expenditures, the loss of
anticipated fees, effect on reputation and other consequential damages) of
Sections 1, 2 or 3 of this Agreement. Accordingly, the parties have discussed
and negotiated this provision for liquidated damages which shall apply and be
recoverable in the event of any such material breach. The parties hereby agree
that a reasonable estimate of the total net detriment that Graham would suffer,
and as such the amount that the Company shall pay to Graham as liquidated
damages for any such material breach, shall be an amount equal to the aggregate
amount of unpaid Consulting Fees that would otherwise be owing to Graham under
Section 3 for the remainder of the Consulting Period following such breach,
which amount shall be in full and complete satisfaction of any and all claims
Graham might have in the event of such breach by the Company; provided, however,
that this liquidated damages provision shall not limit and shall be in addition
to Graham's rights to obtain equitable relief, including punitive damages,
against the Company. Graham acknowledges that he shall have no further claim for
damages against the Company, even if he can establish substantial actual damages
in excess of the amount specified herein. The parties further agree that in the
event of a Material Breach by Graham, the Company's only legal or equitable
remedy under this Agreement is to terminate Graham, and/or seek injunctive
relief, the appropriateness of injunctive relief being specifically agreed upon
in the event of a Material Breach by Graham of Sections 6, 7 or 8. In placing
their initials in the place provided, each party specifically confirms the
accuracy of the statements made herein.
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INITIAL HERE: Company:____________ Graham:____________
11. Miscellaneous.
11.1 Notice. Notices authorized or required to be sent pursuant
to this Agreement shall be in writing and shall be considered given when mailed,
by certified or registered mail, return receipt requested, to the parties at the
following addresses:
If to the Company, to it at:
2201 East El Segundo Blvd.
El Segundo, CA 90245
Attn: President
If to Graham, to him at:
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11.2 Construction and Assignment. This Agreement and the
performance hereof shall be governed, interpreted, construed and regulated by
the laws of the State of California without giving effect to the conflicts of
law provisions thereof. This Agreement shall not be assignable by Graham. The
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon any successor to the business of the Company.
11.3 Waiver. The waiver by either party of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach of this Agreement.
11.4 Severability. If any terms, covenant, condition or
provision of this Agreement, or the application thereof to any person or
circumstance, shall at any time or to any extent be invalid or unenforceable,
the remainder of this Agreement, or the application of such term or provision to
persons or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby and each term, covenant, condition
and provision of this Agreement shall be valid and enforced to the fullest
extent permitted by law.
11.5 Entire Agreement. This Agreement constitutes the entire
agreement and understanding of the parties with respect to the transactions
contemplated herein, and supersedes all prior agreements, arrangements and
understandings related to the subject matter thereof. No representation,
promise, inducement or statement of intention has been made by any of the
parties not embodied in this Agreement or in the documents referred to herein,
and no party shall be bound by or liable for any alleged representation,
promise, inducement, or statements of intention not set forth or referred to
herein.
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11.6 Headings. The headings of the sections and paragraphs of
this Agreement are inserted for convenience only and shall not be deemed to
constitute a part of this Agreement.
11.7 Due Authorization. The Company represents that the
execution, delivery and performance of this agreement has been authorized by all
necessary corporate action on the part of the Company, and that a record of such
authorization has been duly noted in the minute book of the Company in
accordance with its usual practice.
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IN WITNESS WHEREOF, the Company and Graham have executed this Agreement
as of the day and year first above written.
BELL INDUSTRIES, INC.
By:_________________________________
Its:________________________________
____________________________________
GORDON GRAHAM
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