Exhibit 10.1
EMPLOYMENT
AGREEMENT
This Employment Agreement (“
Agreement ”) is made and entered into by and between
by and between W. Donald Bell (“ Bell ”) and
Bell Microproducts, Inc., a California corporation (“
Company ”), effective as of March 12, 2009 (“
Effective Date ”).
WITNESSETH:
WHEREAS, Bell has been serving and continues to
serve as the President and Chief Executive Officer of Company;
and
WHEREAS, Bell and Company were previously
parties to an amended “Employment Agreement” dated
July 1, 1999, which has expired in accordance with its terms;
and
WHEREAS, Bell and Company are currently party to
a “Supplemental Executive Retirement Plan,” dated
July 1, 2002, as amended on November 13, 2007 (“
SERP ”); and
WHEREAS, the parties wish to continue
Bell’s employment with Company and wish to set forth the
terms and conditions of that employment relationship in this
Agreement; and
WHEREAS, the parties do not intend for this
Agreement to supersede, modify, or otherwise affect Bell’s
rights under the SERP.
NOW, THEREFORE, in consideration of Bell’s
continued employment with Company, in consideration of the
respective representations and covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties do hereby agree and
contract as follows:
1. Term of
Employment . Company hereby agrees to employ Bell as
President and Chief Executive Officer for a two-year period
(“ Initial Term ”) commencing on the date set
forth above, and, upon the expiration of the Initial Term, for
successive one-year periods thereafter (each, a “ Renewal
Term ”), unless (i) written notice of non-renewal is
given no less than ninety (90) days prior to the expiration of the
applicable term by either party hereto; or (ii) Bell’s
employment is terminated earlier pursuant to Paragraph 4 of
this Agreement. If such written notice of non-renewal is
delivered from one party to the other, Bell’s employment will
terminate on the last day of the Initial Term or Renewal Term, as
applicable.
2. Duties
. Bell accepts employment with Company as its President
and Chief Executive Officer. Bell agrees to devote his
full time, attention and best efforts to the business and affairs
of Company. Bell shall perform all duties and
responsibilities commensurate with his position as President and
Chief Executive Officer and shall follow the reasonable direction
of the Board of Directors of Company (“ Board
”). Bell may serve on corporate, civic or
charitable boards or committees, fulfill speaking engagements and
manage personal investments, so long as the Board, in its sole
discretion, determines that such activities do not interfere,
compete with or otherwise pose a conflict of interest with respect
to the performance of Bell’s duties and responsibilities
under this Agreement. Bell shall comply with
Company’s written policies and procedures as in effect from
time to time applicable to other executive officers of
Company.
3. Compensation
and Benefits . During the term of this Agreement,
Bell shall receive the following compensation and
benefits:
a. Base Salary
. Bell shall receive a minimum base salary of six
hundred and thirty-two thousand five hundred dollars ($632,500) per
year, less applicable withholding, payable monthly or more
frequently in accordance with Company’s regular payroll
practices. The Compensation Committee of the Board
(“ Compensation Committee ”) shall review
Bell’s base salary at least annually and may, in its sole
discretion, increase the base salary under its normal compensation
policies for executive officers. Notwithstanding the
foregoing, the Board or the Compensation Committee may decrease
Bell’s base salary if it decreases the base salaries of other
executive officers of Company and, in such circumstance, decreases
Bell’s base salary in an amount substantially proportional to
the decreases in the base salaries of Company’s other
executive officers.
b. Annual
Incentive Compensation . Bell shall be eligible to
participate in annual incentive compensation plans, which may
include the Management Incentive Plan, that may be established from
time to time by the Board or the Compensation Committee for
Company’s other executive
officers. Notwithstanding the foregoing, neither the
Board nor the Compensation Committee may decrease Bell’s
target award opportunity under the Management Incentive Plan (or
any successor plan) to an amount less than his then-current base
salary unless it decreases the target award opportunities of other
executive officers of Company below their target award
opportunities as in effect on the Effective Date, and in such
circumstance, the Board or the Compensation Committee may only
decrease Bell’s target award opportunity in an amount
substantially proportional to the decreases in the target award
opportunities of Company’s other executive
officers. Bell hereby acknowledges that his actual
payment under the Management Incentive Plan will be determined by
the Board or the Compensation Committee in accordance with the
terms of the Management Incentive Plan then in effect and that his
actual payment may not be proportional to the actual payments made
to other executive officers of Company. In addition,
Bell hereby acknowledges that the Board or the Compensation
Committee may adjust the payments made to Bell with respect to any
incentive compensation plans, including the Management Incentive
Plan, as it deems appropriate, in its sole discretion, to address
the payments made to Bell under the Management Incentive Plan in
effect for the year ended December 31, 2006.
c. Long-Term
Disability Insurance . Company presently provides
Bell with, and pays 50% of the premiums for, long-term disability
insurance that provides Bell with certain disability
benefits. Company presently intends to continue to
provide Bell with this benefit; provided, however, that the
Compensation Committee may, in its sole discretion, determine not
to continue this benefit based on the cost of such policy or other
factors as it deems appropriate. Company may, in its
sole discretion, provide such long-term disability insurance under
its group policy.
d. Business
Expenses . Company will reimburse Bell for ordinary
and necessary travel and other out-of-pocket expenses incurred by
Bell in connection with the performance of his duties, provided
that Bell promptly submits to Company receipts
verifying such
expenses in accordance with Company’s policies and procedures
as in effect from time to time applicable to other executive
officers of Company.
e. Other Employee
Benefits . Bell shall be eligible to participate in
all other employee benefit plans and programs offered by Company
generally to its executive officers, or as approved by the Board or
Compensation Committee exclusively for Bell, from time to time,
including any medical, dental and life insurance coverage, stock
option plans or retirement plans, in accordance with the terms and
conditions of those benefit plans and programs.
f. Vacation and
Other Absences . Bell shall be entitled to paid
vacation each year in accordance with Company’s then-current
vacation policy for other executive officers. The rules
relating to other absences from regular duties for holidays, sick
or disability leave, leave of absence without pay, or for other
reasons, shall be the same as those provided to Company’s
other executive officers.
4. Termination
. Except for the provisions hereof which are intended to
survive for other periods of time as specified herein, including
Sections 5, 6, 7 and 8, this Agreement and Bell’s employment
shall terminate (a) at any time upon mutual written agreement of
the parties; (b) immediately upon Bell’s death or Disability
(as defined in Section 5.d. below); (c) by Company, immediately and
without prior notice, for “Cause” (as defined in
Section 5.d. below); or (d) by Bell or by Company for any reason
not otherwise covered by clauses (a), (b) or (c) herein, with at
least thirty (30) days’ prior written
notice. Except as otherwise provided in Section 5, upon
the termination of Bell’s employment for any reason during
the Initial Term or any Renewal Term (as applicable), Bell shall be
entitled to receive his base salary through his last date of
employment, any unpaid annual incentive compensation described in
Section 3.b. earned by Bell through his last date of employment,
any unreimbursed business expenses incurred prior to such
termination of employment, any accrued but unused vacation pay, and
such other employee benefits to the extent permitted by the
applicable policies or plan documents or as required by
law. For the avoidance of doubt, no amount subject to
the requirements of Section 409A of the Internal Revenue Code of
1986, as amended (“ Code ”), and its related
regulations shall become payable to Bell as a result of a
termination of employment that does not constitute a
“separation from service” within the meaning of Code
Section 409A(a)(2)(A)(i) and Section 1.409A-1(h) of the Treasury
Regulations.
a. Termination
Without Cause or Involuntary Termination . Subject
to Section 5.c., in the event of Company’s termination of
Bell’s employment without “Cause” or Bell’s
“Involuntary Termination” (each as defined in Section
5.d. below) at any time during the Initial Term or Renewal Term (as
applicable), Bell shall be entitled to the severance benefits
described below.
(i) Severance
Pay . Company shall pay Bell severance in the form
of salary continuation equal to two times his base salary in effect
on the date of his termination of employment, with such severance
payable in twelve (12) equal installments, payable monthly,
commencing on the later of (1) sixty (60) days
after the date
of Bell’s termination of employment, or (2) the earliest date
on which payment can be made under Section 13.a. below.
(ii) Benefits
. If available generally to other former U.S. employees
of Company, Bell shall be entitled to the continuation of benefits
pursuant to Title X of the Consolidated Budget Reconciliation Act
of 1985 (“ COBRA ”), provided that Bell shall
not be obligated to pay or reimburse Company for the cost of
providing such COBRA benefits for a period of eighteen (18) months
from the date of Bell’s termination of employment (“
Severance Period ”). Company’s
obligations to provide the benefits described herein shall cease if
Bell and his dependents become covered under another
employer’s group medical and health benefit plans that
provide Bell and his dependents with comparable benefits and levels
of coverage.
(iii) Financial
Planning Allowance . Company shall reimburse Bell up
to $15,000 for expenses actually incurred within twelve (12) months
from the date of Bell’s termination of employment related to
personal financial or tax planning.
(iv) Change in
Control Provisions . In the event of Company’s
termination of Bell’s employment without “Cause”
or Bell’s Involuntary Termination during the twelve (12)
month period following a Change in Control, the following
additional provisions shall be effective.
(A) The severance pay
described in Section 5.a.(i) above shall be payable in cash and in
full in a single lump sum on the later of (1) sixty (60) days after
the date of Bell’s termination of employment, or (2) the
earliest date on which payment can be made under Section 13.a.
below.
(B) One hundred
percent (100%) of the unvested portion of any stock option,
restricted stock and restricted stock units held by Bell upon his
termination date shall automatically be accelerated in full so as
to become completely vested.
b. Termination
Upon Disability . Subject to Section 5.c., if
Bell’s employment with Company is terminated on account of
Disability at any time during the Initial Term or Renewal Term (as
applicable), Bell shall be entitled to COBRA continuation benefits
if such benefits are available generally to other former U.S.
employees of Company, provided that Bell shall not be obligated to
pay or reimburse Company for the cost of providing such COBRA
benefits during the Severance Period. Company’s
obligations to provide the benefits described herein shall cease if
Bell and his dependents become covered under another
employer’s group medical and health benefit plans that
provide Bell and his dependents with comparable benefits and levels
of coverage.
c. Release of
Claims . Bell’s eligibility for severance
benefits pursuant to this Section 5 is conditioned on his
execution, delivery and non-revocation, within sixty
(60)
days following
his termination of employment, of a release agreement in the form
attached hereto as Exhibit A .
(i) Cause
. “Cause” shall mean (A) any act of personal
dishonesty taken by Bell in connection with his responsibilities as
an employee and intended to result in substantial personal
enrichment of Bell; (B) Bell’s conviction of a felony;
(C) a willful act by Bell which constitutes gross misconduct
and which is injurious to Company; or (D) following delivery to
Bell of a written demand for performance from Company which
described the basis for Company’s belief that Bell has not
substantially performed his duties, continued violations by Bell of
his obligations to Company which are demonstrably willful and
deliberate on Bell’s part.
(ii) Change of
Control . “Change of Control” means the occurrence
of any of the following events:
(A) a “change in
the ownership” of Company as determined in accordance with
Section 1.409A-3(i)(5)(v) of the Treasury Regulations;
(B) a “change in
effective control” of Company as determined in accordance
with Section 1.409A-3(i)(5)(vi) of the Treasury
Regulations; or
(C) a “change in
the ownership of a substantial portion of the assets” of
Company as determined in accordance with Section 1.409A-3(i)(5)
( vii) of the Treasury Regulations.
(iii) Disability
. “Disability” shall have the same meaning
set forth in the long-term disability insurance contract referred
to in Section 3.c. as in effect on the Effective
Date.
(iv) Involuntary
Termination . For purposes of this Agreement,
“Involuntary Termination” shall mean:
(A) Without
Bell’s express written consent, a significant reduction of
Bell’s duties, authority or responsibilities as President and
Chief Executive Officer of Company, relative to his duties,
authority or responsibilities as President and Chief Executive
Officer as in effect immediately prior to such reduction, or the
assignment to Bell of such reduced duties, authority or
responsibilities;
(B) Without
Bell’s express written consent, a substantial reduction,
without good business reasons, of the facilities and perquisites
(including office space and location) available to Bell immediately
prior to such reduction;
(C) A material
reduction by Company in Bell’s base salary as in effect
immediately prior to such reduction, except as permitted by Section
3.a.;
(D) The relocation of
Bell’s principal place of work to a location more than
thirty-five (35) miles from Bell’s then present location,
without Bell’s express written consent;
(E) Any purported
termination of Bell by Company during the Initial Term or Renewal
Term (as applicable) not effected for Disability or for Cause;
or
(F) The failure of
Company to obtain the assumption of this Agreement by any successor
contemplated in Section 9 below.
Bell’s termination of employment shall not
constitute an Involuntary Termination unless and until
(1) Bell provides written notice to Company of the existence
of one or more of the foregoing conditions within ninety (90) days
of its occurrence, (2) such condition or conditions have not
been cured within thirty (30) days after Company’s receipt of
such written notice from Bell and (3) Bell terminates his
employment with Company within thirty (30) days after
Company’s failure to cure such condition or conditions during
the time period set forth in clause (2).
6. Protection of
Confidential Information . Bell acknowledges that
during the course of his employment with Company he has received
and will continue to receive documents and other information
regarding the confidential and proprietary affairs of Company and
its subsidiaries and affiliates, including information about their
past, present and future financial condition, the markets for their
products, key personnel, past, present or future actual or
threatened litigation, trade secrets, current and prospective
suppliers and customers, operational methods, acquisition plans,
prospects, plans for future development and other business affairs
and information about Company and its subsidiaries and affiliates
not readily available to the public (collectively, “
Confidential Information ”). Bell further
acknowledges that the services to be performed under this Agreement
are of a special, unique, unusual, extraordinary and intellectual
character. In recognition of the foregoing, Bell
covenants and agrees as follows:
a. No Disclosure
or Use of Confidential Information . At no time
during his employment with Company or at any time thereafter shall
Bell divulge, disclose, or otherwise use any Confidential
Information, except as properly required in the ordinary course of
Company’s business, as directed and authorized by Company or
if such information is readily available in the public domain by
reason other than Bell’s disclosure or use thereof in
violation of the first sentence of this Section 6.a.
b. Return of
Company Property, Records and Files . Upon the later
of (1) the date of termination of Bell’s employment with
Company, and (2) the date of termination of Bell’s service on
the Board (such later event being the “Property Return
Event”), or at any other time the Board may so direct, Bell
shall promptly deliver to Company’s
headquarters
all of the property and equipment of Company and its subsidiaries
and affiliates (including any cell phones, pagers, credit cards,
personal computers, etc.) and any and all documents, records, and
files, including any notes, memoranda, customer lists, reports and
any and all other documents, including any copies thereof, whether
in hard copy form or on a computer disk or hard drive, that relate
to Company or its subsidiaries or affiliates or
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