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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): OCTOBER 2, 2006
BELL MICROPRODUCTS INC.
(Exact name of registrant as specified in its charter)
CALIFORNIA
(State or Other Jurisdiction of Incorporation)
000-21528 NO. 94-3057566
(Commission File Number) (IRS Employer
Identification No.)
1941 RINGWOOD AVENUE
SAN JOSE, CALIFORNIA 95131-1721
(Address of Principal Executive Offices) (Zip Code)
(408) 451-9400
(Registrant's telephone number, including area code)
Not Applicable
(Former Name or Former Address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
The information provided in Item 2.01--Completion of Acquisition or
Disposition of Assets--is incorporated herein by reference.
ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS
On October 2, 2006, Bell Microproducts Inc. (the "Company") entered
into an Asset Purchase Agreement among the Company, New ProSys Corp., a Georgia
corporation ("Buyer"), ProSys Information Systems, Inc., a Georgia corporation
("Seller"), Michelle Clery, an individual resident in Georgia ("Clery"), and
Bruce Keenan, an individual resident in Georgia ("Keenan" and, collectively with
Clery, "Owners"). A copy of the Asset Purchase Agreement is filed as Exhibit 2.1
to this Form 8-K. The Owners own all of the issued and outstanding stock of
Seller. Buyer is a wholly-owned subsidiary of Bell Microproducts doing business
as ProSys Information Solutions.
Pursuant to the Asset Purchase Agreement, at the Closing thereunder
(which also occurred on October 2, 2006), Seller conveyed to Buyer all of
Seller's right, title and interest in and to select assets of Seller. Buyer also
entered a Stock Purchase Agreement (collectively with the Asset Purchase
Agreement, the "Agreements"), pursuant to which it agreed to purchase the
outstanding stock of Seller owned by Keenan. A copy of the Stock Purchase
Agreement is filed as Exhibit 2.2 to this 8-K. As a result of this Stock
Purchase Agreement, Buyer owns 48% and Clery owns 52% of Seller's outstanding
stock. Buyer's combined obligation, paid at Closing, under the Agreements
consisted of $32,500,000 in immediately available funds and 1,724,372 shares of
Bell Microproducts' common stock, valued at $8,500,000. A portion of the
consideration is being held in escrow pending resolution of the post-Closing
adjustments. Seller has distributed the consideration it received, net of
amounts allocated for employee bonuses and transaction costs, to the Owners as a
dividend.
In addition, the Asset Purchase Agreement also obligates Buyer to make
additional annual payments to Seller for three years if the Contribution during
the respective contingent consideration periods exceeds target amounts
identified in the Asset Purchase Agreement. These contingent payments may
consist of cash, shares of Bell Microproducts' common stock, or a combination
thereof. The amount of potential future payments that Buyer may be required to
make is $13,000,000, subject to a potential additional payment of 20% of the
profits in excess of $26,000,000 if the sum of Buyer's and Seller's profits
during the three annual contingent payment periods exceeds $26,000,000.
The financing necessary to consummate the transactions contemplated by
the Agreements was obtained through the issuance of 9% Senior Subordinated Notes
in the aggregate principal amount of $35,000,000 (the "Notes") to The Teachers'
Retirement System of Alabama and The Employees' Retirement System of Alabama
(collectively, the "Investor") pursuant to a Securities Purchase Agreement dated
October 2, 2006. A copy of the Securities Purchase Agreement is filed as Exhibit
10.1 to this Form 8-K. The terms of the Securities Purchase Agreement in Exhibit
10.1 are herein incorporated by reference. Copies of the Notes issued pursuant
to the Securities Purchase Agreement are filed as Exhibit 10.2 and Exhibit 10.3
to this Form 8-K. The terms of the Notes in Exhibits 10.2 and 10.3 are herein
incorporated by
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reference. Also in connection with the Securities Purchase Agreement, the
Investor received a warrant to purchase up to 125,000 shares of common stock of
Bell Microproducts at an exercise price of $5.15 per share (the "Warrant"). A
copy of the Warrant is filed as Exhibit 10.4 to this Form 8-K. The terms of the
Warrant in Exhibit 10.4 are herein incorporated by reference.
ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION
The information provided in Item 2.01--Completion of Acquisition or
Disposition of Assets--is incorporated herein by reference.
ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES
The information provided in Item 2.01--Completion of Acquisition or
Disposition of Assets--is incorporated herein by reference. Bell Microproducts
relied on Section 4(2) of the Securities Act of 1933 for exemption from
securities registration requirements in connection with the issuances of the
common stock and warrant to purchase common stock described in Item 2.01 above.
The issuance of common stock pursuant to the Agreements was issued to ProSys
Information Systems, Inc. and Bruce Keenan. The Warrants were issued to The
Teachers' Retirement System of Alabama and The Employees' Retirement System of
Alabama.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of businesses acquired: It would be
impracticable to provide the financial statements for the periods
specified in Rule 3-05(b) of Regulation S-X at the time of filing this
Form 8-K. The required financial statements will be filed as soon as
practicable, but not later than seventy-one (71) days after the date on
which this Form 8-K must be filed.
(b) Pro forma financial information: It would be impracticable to
provide the required pro forma financial information at the time of
filing this Form 8-K. The required pro forma financial information will
be filed by amendment as soon as practicable, but not later than
seventy-one (71) days after the date on which this Form 8-K must be
filed.
(c) Shell company transactions: None.
(d) Exhibits:
Exhibit 2.1 Asset Purchase Agreement among Bell Microproducts
Inc., dated October 2, 2006 among Bell Microproducts
Inc., New ProSys Corp., ProSys Information Systems,
Inc., Michelle Clery and Bruce Keenan. Pursuant to
Item 601(b)(2) of Regulation S-K, and subject to
claims of confidentiality pursuant to Rule 24B-2
under the Securities Exchange Act of 1934, upon the
request of the Commission, the Registrant undertakes
to furnish supplementally to the Commission a copy of
any schedule or exhibit to the Asset Purchase
Agreement as follows:
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<Table>
Exhibit 2.1(a) Description of Real Property
Exhibit 2.1(b) Description of Tangible Personal Property
Exhibit 2.1(e) Assumed Contracts
Exhibit 2.1(f) Governmental Authorizations
Exhibit 2.1(g) Records
Exhibit 2.1(h) Intellectual Property
Exhibit 2.1(j) Assigned Claims
Exhibit 2.1(k) Pre-paid Expenses
Exhibit 2.2 Excluded Assets
Exhibit 2.2(c) Retained Contracts
Exhibit 2.7(a)(i) Form of Bill of Sale
Exhibit 2.7(a)(ii) Form of Assignment and Assumption Agreement
Exhibit 2.7(a)(iii) Form of Assignment and Assumption of Lease
Exhibit 2.7(a)(iv) Form of Owners' Release
Exhibit 2.7(a)(v) Form of Employment Agreement
Exhibit 2.7(a)(vi) Form of Escrow Agreement
Exhibit 2.7(a)(vii) Form of Registration Rights Agreement
Exhibit 2.7(a)(xii) Form of Opinion of Company's and Owners'
Counsel
Exhibit 2.7(a)(xiii) Form of Waiver and Termination of
Shareholders' Agreement
Exhibit 2.7(b)(viii) Form of Opinion of Buyer's Counsel
Exhibit 2.8(e) Form of Lease
Exhibit 2.8(f) Personal Guarantees not Released at Closing
Exhibit 2.10(a) Contingent Payment Schedule
Exhibit 2.11 Excluded Employees
Schedule 2.1 Sample Tax True-Up Calculation
Schedule 4.2 Conflicts and Consents Required on Behalf
of Buyer
</Table>
Exhibit 2.2 Stock Purchase Agreement dated October 2, 2006 by and
between New ProSys Corp. and Bruce Keenan
Exhibit 10.1 Securities Purchase Agreement dated October 2, 2006
among Bell Microproducts Inc., The Teachers'
Retirement System of Alabama and The Employees'
Retirement System of Alabama
Exhibit 10.2 9% Senior Subordinated Note dated October 2, 2006 in
favor of The Teachers' Retirement System of Alabama
Exhibit 10.3 9% Senior Subordinated Note dated October 2, 2006 in
favor of The Employees' Retirement System of Alabama
Exhibit 10.4 Warrant to purchase 125,000 shares issued to The
Teachers' Retirement System of Alabama and The
Employees' Retirement System of Alabama
Exhibit 99.1 Press release dated October 4, 2006.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BELL MICROPRODUCTS INC.
By /s/ James E. Illson
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Date: October 4, 2006 James E. Illson
Chief Operating Officer, President
of the Americas and Chief
Financial Officer
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
BELL MICROPRODUCTS INC.
EXHIBIT INDEX TO FORM 8-K
Date of Report: Commission File No.:
October 2, 2006 000-21528
<Table>
<Caption>
EXHIBIT NO. ITEM
Exhibit 2.1 Asset Purchase Agreement among Bell Microproducts Inc., dated October 2, 2006 among Bell Microproducts
Inc., New ProSys Corp., ProSys Information Systems, Inc., Michelle Clery and Bruce Keenan. Pursuant to
Item 601(b)(2) of Regulation S-K, and subject to claims of confidentiality pursuant to Rule 24B-2 under
the Securities Exchange Act of 1934, upon the request of the Commission, the Registrant undertakes to
furnish supplementally to the Commission a copy of any schedule or exhibit to the Asset Purchase
Agreement as follows:
Exhibit 2.1(a) Description of Real Property
Exhibit 2.1(b) Description of Tangible Personal Property
Exhibit 2.1(e) Assumed Contracts
Exhibit 2.1(f) Governmental Authorizations
Exhibit 2.1(g) Records
Exhibit 2.1(h) Intellectual Property
Exhibit 2.1(j) Assigned Claims
Exhibit 2.1(k) Pre-paid Expenses
Exhibit 2.2 Excluded Assets
Exhibit 2.2(c) Retained Contracts
Exhibit 2.7(a)(i) Form of Bill of Sale
Exhibit 2.7(a)(ii) Form of Assignment and Assumption Agreement
Exhibit 2.7(a)(iii) Form of Assignment and Assumption of Lease
Exhibit 2.7(a)(iv) Form of Owners' Release
Exhibit 2.7(a)(v) Form of Employment Agreement
Exhibit 2.7(a)(vi) Form of Escrow Agreement
Exhibit 2.7(a)(vii) Form of Registration Rights Agreement
Exhibit 2.7(a)(xii) Form of Opinion of Company's and Owners' Counsel
Exhibit 2.7(a)(xiii) Form of Waiver and Termination of Shareholders' Agreement
Exhibit 2.7(b)(viii) Form of Opinion of Buyer's Counsel
Exhibit 2.8(e) Form of Lease
</Table>
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<Table>
Exhibit 2.8(f) Personal Guarantees not Released at Closing
Exhibit 2.10(a) Contingent Payment Schedule
Exhibit 2.11 Excluded Employees
Schedule 2.1 Sample Tax True-Up Calculation
Schedule 4.2 Conflicts and Consents Required on Behalf of Buyer
</Table>
Exhibit 2.2 Stock Purchase Agreement dated October 2, 2006 by and
between New ProSys Corp. and Bruce Keenan
Exhibit 10.1 Securities Purchase Agreement dated October 2, 2006
among Bell Microproducts Inc., The Teachers'
Retirement System of Alabana and The Employees'
Retirement System of Alabama
Exhibit 10.2 9% Senior Subordinated Note dated October 2, 2006 in
favor of The Teachers' Retirement System of Alabama
Exhibit 10.3 9% Senior Subordinated Note dated October 2, 2006 in
favor of The Employees' Retirement System of Alabama
Exhibit 10.4 Warrant to purchase 125,000 shares issued to The
Teachers' Retirement System of Alabama and The
Employees' Retirement System of Alabama
Exhibit 99.1 Press release dated October 4, 2006.
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