Copy Asset Purchase Agreement

EXHIBIT 10.1EXECUTION COPY ASSET PURCHASE AGREEMENT by and between BELL INDUSTRIES, INC. and BOURNS, INC. DATED AS OF APRIL 28, 2006


TABLE OF CONTENTS Page ARTICLE I DEFINITIONS 2 ARTICLE II PURCHASE AND SALE OF ASSETS 10 2.1 Sale and Transfer of Assets by the Seller 10 2.2 Retained Assets 12 2.3 Non-Assignable Contracts 13 ARTICLE III LIABILITIES 14 3.1 Lien Free; Assumption of Liabilities 14 3.2 Buyer to Pay but not Assume Certain Liabilities of the Seller 15 3.3 Retained Liabilities 15 3.4 Group Health Benefits 18 ARTICLE IV PURCHASE PRICE 18 4.1 Purchase Price and Closing Payment 18 4.2 Additional Cash Consideration Amount 19 4.3 Purchase Price Allocation and Sales Tax 19 4.4 Purchase Price Adjustment 19 ARTICLE V CLOSING AND DELIVERIES 21 5.1 Closing 21 5.2 To be Delivered by the Seller 22 5.3 To be Delivered by Buyer 23 ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE SELLER 24 6.1 Organization and Standing 24 6.2 Articles of Incorporation and Bylaws; Organizational Documents 24 6.3 Authorization, Validity and Effect 24 6.4 No Conflict; Required Filings and Consents 24 6.5 Financial Statements; Books of Account 25 6.6 Taxes 26 6.7 Title 27 6.8 Customer-Owned Property 27 6.9 Gardena Facility 27

-i-


Page 6.10 Compliance with Laws 28 6.11 Permits 28 6.12 Material Contracts 28 6.13 Legal Proceedings 29 6.14 Product Warranty; Product Defects; Product Liability 29 6.15 Intellectual Property 30 6.16 Insurance 31 6.17 Personnel 31 6.18 Environmental Matters 32 6.19 Conduct of Business in Ordinary Course 32 6.20 Customers and Suppliers 33 6.21 No Brokers 34 6.22 Bulk Sales 34 6.23 Affiliates; Sufficiency of the Acquired Assets 34 6.24 Accounts Receivable 34 6.25 PP&E 34 6.26 Inventory 34 6.27 Power of Attorney 34 6.28 Guaranties 35 6.29 Disclosure 35 6.30 Foreign Corrupt Practices Act and Export Restrictions 35 6.31 No Undisclosed Liabilities 35 6.32 2005 Annual Employee Incentive Plan 35 ARTICLE VII REPRESENTATIONS AND WARRANTIES OF BUYER 35 7.1 Organization and Standing 35 7.2 Authorization, Validity and Effect 35 7.3 No Conflict; Required Filings and Consents 36 7.4 Financing 36 7.5 No Brokers 36 7.6 Litigation 36

-ii-


Page 7.7 No Implied Warranties 36 ARTICLE VIII COVENANTS AND AGREEMENTS 37 8.1 Notice and Consents 37 8.2 Confidentiality 37 8.3 Transfer Taxes 37 8.4 Publicity 37 8.5 Records; Retention Policy and Access 37 8.6 Employee Matters 38 8.7 Disposition of Certain Acquired Assets 38 8.8 Update of Section 2.1 and Section 3.1 Schedules 38 8.9 J.W. Miller Company 39 ARTICLE IX CONDITIONS TO CLOSING 39 9.1 Conditions to Obligations of the Parties 39 9.2 Conditions to Obligations of the Seller 39 9.3 Conditions to Obligations of Buyer 39 ARTICLE X REMEDIES 40 10.1 Survival 40 10.2 Indemnification by Buyer 41 10.3 Indemnification by the Seller 41 10.4 Additional Remedy 42 10.5 Indemnification Payments 42 10.6 Procedures 43 10.7 Specific Performance 45 10.8 Subrogation 45 10.9 Adjustment to Purchase Price 45 ARTICLE XI TAX MATTERS 45 11.1 Cooperation; Audits 45 ARTICLE XII MISCELLANEOUS AND GENERAL 46 12.1 Risk of Loss 46 12.2 Expenses 46

-iii-


Page 12.3 Successors and Assigns 46 12.4 Third Party Beneficiaries 47 12.5 Notices 47 12.6 Complete Agreement 48 12.7 Incorporation of Exhibits and Schedules 48 12.8 Captions 48 12.9 Amendment 48 12.10 Governing Law; Submission to Jurisdiction 48 12.11 Severability 48 12.12 Counterparts 48 Exhibit A-1 - Form of Fixed Term Employment Offer
Exhibit A-2 - Form of At-Will Employment Offer
Exhibit B - Form of Seller Non-Competition Agreement
Exhibit C - Form of Transitional Services Agreement
Exhibit D - Form of Bill of Sale
Exhibit E - Form of Notice of Sale
Exhibit F - Form of Assignment and Assumption
Exhibit G - Form of Trademark Assignment

-iv-


ASSET PURCHASE AGREEMENT This ASSET PURCHASE AGREEMENT (this " Agreement" ), dated as of April 28, 2006, is by and between Bell Industries, Inc. a California corporation (the " Seller" ) and Bourns, Inc., a California corporation (the " Buyer" ). RECITALS A. The Seller engages through its J.W. Miller Magnetics division in the Business (as defined below) and also engages in the Excluded Business (as defined below). B. Subject to the terms and conditions set forth herein, the Seller desires to sell substantially all of its assets, properties, rights and interests relating to the Business to Buyer and Buyer desires to purchase and acquire such assets, properties, rights and interests for the consideration and the assumption by Buyer of certain specified liabilities relating to the Business set forth in this Agreement. C. As a condition and an inducement to the willingness of the Seller to enter into this Agreement, Buyer will offer temporary employment to all existing employees of the Seller employed in the Business (except for Chuck Troy) for a fixed term of up to ninety (90) days, such written offers substantially in the form attached hereto as Exhibit A-1 (each, the " Fixed Term Temporary Employment Offer" ) and Buyer may offer regular at-will employment to certain key employees of the Seller, such written offers substantially in the form attached hereto as Exhibit A-2 (each, the " At-Will Employment Offer" ). D. As a condition and an inducement to the willingness of Buyer to enter into this Agreement, the Seller and the Buyer will enter into a non-competition agreement substantially in the form attached hereto as Exhibit B (the " Seller Non-Competition Agreement" ). E. As a condition and an inducement to the willingness of Buyer to enter into this Agreement, the Seller and the Buyer will enter into a transitional services agreement substantially in the form attached hereto as Exhibit C , pursuant to which the Seller will provide to the Buyer, for the amount of consideration set forth therein, certain transitional services in respect of the Business, including, without limitation, temporary use of the Gardena Facility (as defined below) (the " Transitional Services Agreement" ). NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth herein, and subject to the terms and conditions set forth herein, the Seller and the Buyer hereby agree as follows: ARTICLE I
DEFINITIONS For purposes of this Agreement: " 2005 Annual Employee Incentive Plan" means 2005 annual employee incentive plan of the Seller.

-2-


" 2005 Financial Statements" has the meaning set forth in Section 6.5(a) . " Accounts Receivable" has the meaning set forth in Section 2.1(b) . " Acquired Assets" has the meaning set forth in the preamble to Section 2.1 . " Actions" means any suit, claim, audit, charge, complaint, legal proceeding, administrative enforcement proceeding or arbitration proceeding before any Governmental Authority. " Adjusted Working Capital" means, with respect to the Business, (a) total current assets, less cash and cash equivalents minus (b) total current liabilities. The Adjusted Working Capital will be computed in accordance with GAAP consistently applied. For purposes of the Adjusted Working Capital adjustment to the Purchase Price, " current liabilities" shall not include (i) any amount payable to Imperial Capital, LLC or other providers of transaction related services to the Seller and (ii) the 2005 Annual Employee Incentive Plan payments and related payroll Taxes and other Taxes and withholding related to or arising out of the 2005 Annual Employee Incentive Plan. " Additional Cash Consideration Amount" has the meaning set forth in Section 3.2 . " Affiliate" means with respect to any Person, any person or entity (or any relative of any person) that directly or indirectly owns or controls, is owned or controlled by, or is under common control with, such person or entity, or any person (or any relative of such person) who is an officer or director of such entity, or any entity that is owned or controlled by, or under common control with any entity owned or controlled by, any officer or director of such entity (or any relative of such person). " Agreement" has the meaning set forth in the preamble. " Assignment and Assumption Agreement" has the meaning set forth in Section 5.2(h) . " Assumed Contracts" has the meaning set forth in Section 2.1(h) . " Assumed Liabilities" has the meaning set forth in the preamble to Section 3.1 . " At-Will Employment Offer" has the meaning set forth in Recital C. " Balance Sheet" has the meaning set forth in Section 6.5(a) . " Balance Sheet Date" has the meaning set forth in Section 6.5(a) . " Bill of Sale" has the meaning set forth in preamble to Section 2.1 . " Business" means business historically and as of the date of this Agreement conducted by the J.W. Miller Magnetics division of the Seller, including, without limitation, design,

-3-


manufacturing and distribution of custom and magnetic components such as high-quality coils, chokes, inductors and transformers in both surface and through-hole configurations. " Business Day" means any day other than a Saturday, Sunday or a day on which banks in Los Angeles, California are authorized or obligated by Law or executive order to close. " Buyer" has the meaning set forth in the preamble. " Buyer Indemnitees" has the meaning set forth in Section 10.3 . " CA-WARN Act" has the meaning set forth in Section 3.3(h) . " Claim" has the meaning set forth in Section 10.6(a) . " Claim Response" has the meaning set forth in Section 10.6(a) . " Claims Notice" has the meaning set forth in Section 10.6(a) . " Closing" has the meaning set forth in Section 5.1 . " Closing Date" has the meaning set forth in Section 5.1 . " COBRA" has the meaning set forth in Section 3.3(h) . " Code" means the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder. " Confidentiality Agreement" has the meaning set forth in Section 8.2(a) . " Consent" means any consent, approval, authorization, qualification, waiver, registration or notification required to be obtained from, filed with or delivered to a Governmental Authority or any other Person in connection with the consummation of the transactions provided for herein. " Contracts" means all written contracts and agreements and other arrangements, including, but not limited to, open sales orders, open purchase orders, distribution and sales representative agreements, leases, licenses, and other agreements (including any amendments and other modifications thereto), to which the Seller is a party or by which the Acquired Assets are bound. " Copyrights" means United States and foreign copyrights, copyrightable works, and mask works, whether registered or unregistered, and registrations and pending applications to register the same and any renewals or extensions thereof. " Customer-Owned Property" has the meaning set forth in Section 6.8 . " Dispute Auditor" means Gumbiner Savett or such certified public accounting firm as may be mutually agreed upon by the Seller and Buyer.

-4-


" Employee Plans" means, collectively, all " employee benefit plans" as defined in Section 3(3) of ERISA, all other severance pay, salary continuation, bonus, incentive, stock option, retirement, pension, profit sharing or deferred compensation plans, contracts, programs, funds or arrangements of any kind and all other employee benefit plans, contacts, programs, funds, or arrangements in respect of any employees of the Seller that are sponsored by the Seller. " Environment" means soil, surface waters, groundwater, land, stream, sediments, surface or subsurface strata or media, ambient air, indoor air or indoor air quality, including, without limitation, any material or substance used or contained in the physical structure of any building or improvement. " Environmental Condition" means any condition of the Environment with respect to the Gardena Facility arising from activities on or near the Gardena Facility, or with respect to any other real property at which any Hazardous Material generated by the operation of the Business prior to the date of this Agreement has been treated, stored or disposed of, which violates any Environmental Law, or even though not violative of any Environmental Law, nevertheless results in any Release, or Threat of Release, loss, liability or Order imposed by any Person (including, without limitation, any Governmental Authority). " Environmental Law" means any Law relating to the protection of human health, protection of the Environment, or Hazardous Materials, as well as common law theories of liability related thereto (including without limitation, nuisance, trespass and negligence). " ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder. " Excluded Business" means the businesses conducted as of the date of this Agreement solely by divisions of the Seller other than the J.W. Miller Magnetics division. " Final Adjusted Working Capital" has the meaning set forth in Section 4.4(b) . " Final Adjusted Working Capital Statement" has the meaning set forth in Section 4.4(b) . " Final Balance Sheet" has the meaning set forth in Section 4.4(b) . " Fixed Term Temporary Employment Offer" has the meaning set forth in Recital C. " GAAP" means United States generally accepted accounting principles as in effect from time to time, applied on a consistent basis. " Gardena Facility" has the meaning set forth in Section 2.2(e) . " General Enforceability Exceptions" means, collectively, applicable bankruptcy, reorganization, insolvency, moratorium or other similar Laws affecting the enforcement of creditors' rights generally from time to time in effect and the availability of equitable remedies (regardless of whether enforceability is considered in a proceeding at law or in equity) .

-5-


" Governmental Authority" means (i) any government or political subdivision, whether federal, state, local or foreign, or (ii) any agency or instrumentality of any such government or political subdivision, or (iii) any federal, state, local or foreign court or (iv) any arbitration tribunal, panel or body. " Hazardous Material" means any substance, material, contaminant or waste, including, but not limited to, any pollutant, toxic substance, asbestos and asbestos-containing materials, hazardous waste, hazardous material, hazardous substance, petroleum, or petroleum-containing materials, radiation and radioactive materials and polychlorinated biphyenyls as defined in, or which could give rise to liability under, any Environmental Law, or which are regulated pursuant to CERCLA, the Clean Air Act, the Clean Water Act, the Toxic Substances Control Act, the Resource Conservation and Recovery Act, and all state and local counterparts thereto, and such other substances, materials, pollutants, contaminants and wastes as are or become regulated or subject to cleanup authority under any Environmental Law. " Indemnification Threshold" has the meaning set forth in Section 10.5(a) . " Indemnifying Party" has the meaning set forth in Section 10.6(b) . " Indemnitees" has the meaning set forth in Section 10.3 . " Intellectual Property" means any of the following types of intellectual property of the Business and has been reduced to writing, including, without limitation, in electronic form and any other form, in any jurisdiction throughout the world: (a) Patent Rights; (b) Trademarks, Internet domain names and rights in telephone numbers; (c) Copyrights; (d) trade secrets and confidential business information (including ideas, processes, formulae, designs, models, industrial designs, know-how, proprietary information and research and development, manufacturing and production processes and techniques, technical data, drawings, specifications, customer and supplier lists, pricing and cost information, business and marketing plans and proposals and documentation relating to quality); (e) Software (including, but not limited to, source code, executable code, data, databases, and related documentation), website content and computer software; (f) advertisings and promotional materials; (g) other proprietary information, and (h) copies and tangible embodiments thereof (in whatever form or medium). " Interdivision Loans" means all amounts owed by various divisions of the Seller to each other. " Interim Financial Statements" has the meaning set forth in Section 6.5(a) . " IRS" means the Internal Revenue Service. " Inventory" has the meaning set forth in Section 2.1(c) . " Labor Law" means all labor and employment laws, including without limitation federal, state, local, municipal, foreign and other applicable laws, rules, regulations, ordinances, orders and decrees concerning collective bargaining, unfair labor practices, payments of employment taxes, occupational safety and health, worker' s compensation, the payment of wages and overtime, and equal employment opportunity.

-6-


" Law" means any law, statute, code, ordinance, regulation or rule of any Governmental Authority. " Lien" means any mortgage, lien, deeds of trust, security interest, pledges, restrictions, prior assignments, charges, claims, defects in title and encumbrances of any kind or type whatsoever. " Lien Discharge Payment Amount" has the meaning set forth in Section 4.1(c) . " Losses" has the meaning set forth in Section 10.2 . " Material Adverse Effect" means any material adverse effect or material adverse change, either individually or in the aggregate with other material adverse effects or material adverse changes, in the general affairs, condition (financial or otherwise), business, properties, results of operations, assets, liabilities, net worth or operations of the Business or, in the case of Seller, on the ability of Seller to consummate the transactions contemplated hereby, whether or not Buyer has knowledge of such effect or change on the date hereof). Notwithstanding the foregoing, none of the following shall be deemed (either alone or in combination) to constitute, and none of the following shall be taken into account in determining whether there has been or will be a Material Adverse Effect with respect to the Business or Seller: any adverse change or effect (including any loss of employees, reductions in revenues or income or disruption of business relationships) arising from or attributable or relating to the announcement or pendency of the transactions contemplated by this Agreement, or conditions affecting the industry or industry sector in which Seller participates, or the U.S. economy as a whole. " Material Contracts" has the meaning set forth in Section 6.12 . " Material Customers" has the meaning set forth in Section 6.20(a) . " Material Suppliers" has the meaning set forth in Section 6.20(b) . " Non-Assignable Contracts" has the meaning set forth in Section 2.3 . " Non-Assigned Contracts" has the meaning set forth in Section 2.2(b) . " Notice of Sale" has the meaning set forth in Section 5.2(g) . " Order" means any order, judgment, ruling, injunction, assessment, award, decree or writ of any Governmental Authority. " Ordinary Course of Business" means the ordinary course of business consistent with past custom and practice (including with respect to quantity and frequency) " Organizational Documents" has the meaning set forth in Section 6.2 . " Patent Rights" means United States and foreign patents, patent applications, continuations, continuations-in-part, divisions, extensions, re-examinations, equivalents,

-7-


counterparts, reissues, patent disclosures, inventions (whether or not patentable or reduced to practice) and improvements thereto. " Permits" means any license, permit, authorization, certificate of authority, qualification or similar document or authority that has been issued or granted by any Governmental Authority. " Person" means any individual, sole proprietorship, partnership, corporation, limited liability company, joint venture, unincorporated society or association, trust or other legal entity or Governmental Authority. " PP&E" has the meaning set forth in Section 2.1(e) . " Preliminary Adjusted Working Capital" has the meaning set forth in Section 4.4(a) . " Preliminary Adjusted Working Capital Statement" has the meaning set forth in Section 4.4(a) . " Prepaids" has the meaning set forth in Section 2.1(d) . " Purchase Price" means eight million five hundred thousand dollars and no/cents ($8,500,000.00). " Purchased Intellectual Property" has the meaning set forth in Section 2.1(f) . " Purchased Permits" has the meaning set forth in Section 2.1(i) . " Release" means any releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, disposing or dumping of a Hazardous Material into the Environment. " Response Period" has the meaning set forth in Section 10.6(a) . " Responsible Party" has the meaning set forth in Section 10.6(b) . " Retained Assets" has the meaning set forth in the preamble to Section 2.2 . " Retained Liabilities" has the meaning set forth in the preamble to Section 3.3 . " Seller" has the meaning set forth in the preamble. " Seller Disclosure Schedules" has the meaning set forth in preamble to Article VI . " Seller Financial Statements" has the meaning set forth in Section 6.5(a) . " Seller Indemnitees" has the meaning set forth in Section 10.2 . " Seller Non-Competition Agreement" has the meaning set forth in Recital D.

-8-


" Seller' s Knowledge" means the actual knowledge after reasonable investigation of Chuck Troy, Michell I. Rosen, Andy Chow and Laura L. Palmer. " Software" means a collection of program code, data and instructions in source code or object code and or any other media, including without limitation, system software, application software, firmware or software embedded in the industrial process or equipment, products and/or technology, excluding the non-transferable general commercial non-customized shrink-wrap software licensed by Seller in connection with the Business and the Excluded Business under a master corporate license. " Tax" means any net income, alternative or add-on minimum tax, gross income, gross receipts, sales, use, ad valorem, value added, transfer, franchise, profits, license, withholding, payroll, employment, excise, severance, stamp, occupation, premium, property, environmental or windfall profit tax, social security, business license, customs fee, duty or other tax, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest, penalties, additions to tax or additional amounts imposed by any Taxing Authority, whether disputed or not and including any obligation to indemnify or otherwise assume or succeed to the Tax liability of any other Person. " Tax Returns" means any return, declaration, report, manifest, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof. " Taxing Authority" means any Governmental Authority responsible for the administration or imposition of any Tax. " Total Consideration" has the meaning set forth in Section 4.1(a) . " Threat of Release" means a likelihood of a Release that requires action to prevent or mitigate damage to the Environment that might result from such Release. " Trademark Assignment" has the meaning set forth in Section 5.2(i) . " Trademarks" means United States, state and foreign trademarks, service marks, logos, trade dress, Internet domain names, corporate names, slogans, brand names, trade dress, and trade names (including all assumed or fictitious names under which any Person is conducting business or has within the previous five (5) years conducted business), whether registered or unregistered, and translations, adoptions, derivations and combinations thereof, registrations and pending applications to register the foregoing and equivalents, renewals and counterparts for any of the foregoing, and the goodwill of the Business associated with each of the foregoing. " Transactional Documents" means this Agreement, the Seller Disclosure Schedules, Bill of Sale, Assignment and Assumption Agreement, Fixed Term Temporary Employment Offer, At-Will Employment Offer, Seller Non-Competition Agreement and Transitional Services Agreement. " Transitional Services Agreement" has the meaning set forth in Recital E.

-9-


" Transfer Taxes" has the meaning set forth in Section 8.3 . " Unwanted Assets" has the meaning set forth in Section 8.7 . " WARN Act" has the meaning set forth in Section 3.3(h) " Warranty" has the meaning set forth in Section 6.14(e) .As used in this Agreement, the meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms. The words " hereof" , " herein" and " hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. ARTICLE II
PURCHASE AND SALE OF ASSETS 2.1 Sale and Transfer of Assets by the Seller . On the terms and subject to the conditions set forth in this Agreement, at the Closing, the Buyer shall purchase and acquire from the Seller, and the Seller shall sell, transfer, convey, assign and deliver to Buyer by bill of sale, in the form attached hereto as Exhibit D (" Bill of Sale" ), all of the assets, properties, rights and interests of any nature whatsoever owned or held by the Seller as of the Closing and used directly or indirectly in the operation of the Business other than the Retained Assets (collectively, the " Acquired Assets" ), including, but not limited to, the following (without duplication): (a) Balance Sheet . All assets, properties, rights and interests of the Business set forth or which properly ought to be set forth on the Final Balance Sheet (except the Retained Assets); (b) Accounts Receivable . All accounts receivable and any evidence thereof relating to or arising out of the Business and operation thereof and any payments received with respect thereto after the Closing Date (including cash or check payments in transit on the Closing Date) (collectively, " Accounts Receivable" ). An itemized list of the Accounts Receivable as of March 31, 2006, identifying such Accounts Receivable by customer' s name, aging and amount, is set forth in Schedule 2.1(b) ; (c) Inventory . The inventories of raw materials, supplies, work-in-progress and finished goods relating to the Business (collectively, " Inventory" ). An itemized list of the Inventory as of March 31, 2006, identifying such Inventory by type and location, is set forth in Schedule 2.1(c) ; (d) Prepaids . Except as otherwise set forth herein, all prepaid expenses, advance payments, deposits, surety accounts and other similar assets, including prepaid deposits with suppliers and utilities (" Prepaids" ). An itemized list of the Prepaids as of March 31, 2006, identifying such Prepaids by type and amount, is set forth in Schedule 2.1(d) ;

-10-


(e) Property, Plant and Equipment . All equipment, assets in construction, office furniture and fixtures, computer equipment, office equipment, other furnishings, trucks, automobiles and other vehicles, and other tangible personal property of every kind and description, including tooling, wherever located (collectively, " PP&E" ). An itemized list of PP&E as of March 31, 2006, identifying such items by type and location, is set forth in Schedule 2.1(e) ; (f) Intellectual Property Rights . All Intellectual Property related to the Business, including, without limitation, (i) the names set forth on Schedule 2.1(f) and all related Trademarks, (ii) trade secrets and confidential business information, whether or not reduced to practice and whether patentable or nonpatentable that have been reduced to writing, (iii) know-how, manufacturing and product processes and techniques, research and development information that have been reduced to writing, (iv) customer and supplier lists, and (v) the Intellectual Property required to be des ...