THIRD AMENDMENT
TO LOAN AND SECURITY AGREEMENT
This Third Amendment To Loan And Security Agreement (the "Third
Amendment") dated as of September 13, 2004, is entered into by and among Bell
Microproducts Inc., a California corporation ("Borrower Agent"), Bell
Microproducts - Future Tech, Inc., a California corporation ("Future Tech"),
Rorke Data, Inc., a Minnesota corporation ("Rorke"), Bell Microproducts Canada -
Tenex Data ULC, a Nova Scotia unlimited liability company ("Tenex"), Total Tec
Systems, Inc., a New Jersey corporation ("Total Tec", and together with Borrower
Agent, Future-Tech, Tenex and Rorke individually, a "Borrower" and collectively,
"Borrowers"), Bell Microproducts Canada Inc., a California corporation ("Bell
Micro Canada"), Bell Microproducts Mexico, S.A. de C.V., a Mexican corporation
("Bell Micro Mexico"), Bell Microproducts Mexico Shareholder, LLC, a Florida
limited liability company ("Mexico Shareholder"), Congress Financial Corporation
(Western) in its capacity as administrative, collateral and syndication agent
for the financial institutions from time to time parties to the Loan Agreement
(as defined below) as lenders (each individually, a "Lender" and collectively,
"Lenders") (in such capacity, "Administrative Agent"), Wachovia Bank, National
Association, as Principal Agent, Congress Financial Corporation (Western) and
Bank of America, N.A., as Co-Agents, and each of the Lenders other than PNC
Bank, National Association (the "Continuing Lenders"), with reference to the
following facts:
RECITALS
A. Lenders are extending various secured financial accommodations to
Borrowers upon the terms of that certain Loan and Security Agreement dated as of
May 14, 2001 (as amended, supplemented or modified from time to time, the "Loan
Agreement").
B. PNC Bank, National Association ("PNC") has objected to the terms and
conditions of this Third Amendment and has advised Administrative Agent that it
would not agree to such terms and provisions.
C. Borrowers, Continuing Lenders and Administrative Agent desire to amend
the Loan Agreement upon the terms and conditions set forth herein.
AMENDMENT
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged by each party hereto, Borrowers, Continuing Lenders and
Administrative Agent hereby agree as follows:
1. Defined Terms. Unless otherwise specified herein, any capitalized terms
defined in the Loan Agreement shall have the same respective meanings as used
herein.
2. PNC. Pursuant to Section 11.3(c) of the Loan Agreement, upon the effective
date of this Third Amendment, (i) PNC's Commitment shall be terminated, (ii) the
Commitment of each Continuing Lender shall be the principal amount set forth
below such Continuing Lender's signature on the signature page(s) hereto
opposite the phrase "Current Commitment"; provided, however, that upon the
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closing and funding of the Permitted Receivables Financing, the Commitment of
each Continuing Lender shall be the principal amount set forth below such
Continuing Lender's signature on the signature page(s) hereto opposite the
phrase "Post-Securitization Commitment", (iii) each Continuing Lender whose
Commitment is increased by the foregoing clause (ii) shall fund such Loans as
may be necessary so that the total outstanding sum of its funding of the Loans
equals its Pro Rata Share of the Loans then outstanding, and shall fund all
interest, fees and other Obligations payable or accrued in favor of PNC on
account of the Loans so funded by such Continuing Lender, and (iv)
Administrative Agent shall pay PNC the total outstanding sum of its funding of
Loans and all interest, fees and other Obligations payable or accrued in favor
of PNC as of the effective date of this Third Amendment. As of the effective
date of this Third Amendment, PNC shall no longer be deemed a Lender under the
Loan Agreement.
3. Amendments to Loan Agreement.
(a) The following definitions are hereby added in alphabetical order to
Section 1 of the Loan Agreement:
" 'Bell Micro Europe' shall mean Bell Microproducts Europe, Inc., a
California corporation."
" 'Ideal Hardware' shall mean Ideal Hardware Limited, a company
organized under the laws of England and Wales."
" 'Indenture' shall mean that certain Indenture, dated as of March
5, 2004, between Borrower Agent and Wells Fargo Bank, National
Association, as trustee."
" 'Permitted Receivables Financing' shall mean a securitization
facility provided by Blue Ridge Asset Funding Corporation, as lender
or purchaser, and Wachovia Bank, National Association, as agent, to
Borrower Agent and the Securitization Vehicle pursuant to the
Receivables Financing Documents."
" 'Receivables Financing Documents' shall mean the Securitization
Receivables Sale Agreement, the Securitization Credit Agreement, and
all other agreements, documents and instruments, each in form and
substance satisfactory to Administrative Agent in its sole
discretion, entered into by and among any of Blue Ridge Asset
Funding Corporation, Wachovia Bank, National Association, Borrower
Agent, the Securitization Vehicle, and the liquidity banks from time
to time party thereto, which provide, among other things, for the
sale of Borrower Agent's Accounts to the Securitization Vehicle,
collectively with substantially the terms set forth in that certain
term sheet attached hereto as Exhibit D, provided the final versions
of such agreements, documents and instruments are to be approved by
Administrative Agent in its sole discretion."
" 'Securities' shall mean the 3 3/4% Convertible Notes due 2024 or
any of them, as amended or supplemented from time to time, that are
issued under the Indenture, in an aggregate amount of up to
$110,000,000."
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" 'Securitization Credit Agreement' shall mean that certain Credit
and Security Agreement, by and among the Securitization Vehicle, as
Borrower, Borrower Agent, as Servicer, Blue Ridge Asset Funding
Corporation, Wachovia Bank, National Association, as Agent, and the
liquidity banks from time to time party thereto, the final version
of which shall be in form and substance satisfactory to
Administrative Agent in its sole discretion."
" 'Securitization Intercreditor Agreement' shall mean that certain
Intercreditor Agreement, in form and substance satisfactory to
Administrative Agent in its sole discretion, to be entered into by
and between Wachovia Bank, National Association and Administrative
Agent, and acknowledged by Borrower Agent, substantially in the form
attached hereto as Exhibit E."
" 'Securitization Receivables Sale Agreement' shall mean that
certain Receivables Sale Agreement, by and between Borrower Agent,
as Originator, and the Securitization Vehicle, as Buyer, the final
version of which shall be in form and substance satisfactory to
Administrative Agent in its sole discretion."
" 'Securitization Vehicle' shall mean Bell Microproducts Funding
Corporation, a Delaware corporation."
(b) The definition of "Borrowing Base" as set forth in Section 1.13 of
the Loan Agreement is hereby amended and restated in its entirety to read as
follows:
" 'Borrowing Base' shall mean at any time:
(a) the sum of:
(i) eighty-five percent (85%) of the Net Amount of the
Eligible Accounts of Borrowers, provided that Revolving Loans
made in respect of Eligible Accounts that are Foreign Accounts
shall not exceed $20,000,000, plus
(ii) the lesser of
(A) the lesser of (1) fifty percent (50%) multiplied
by the Value of Eligible Inventory of Borrowers, or (2)
eighty-five percent (85%) of the Net Recovery Percentage
multiplied by the Value of the Eligible Inventory of
Borrowers, or
(B) the Inventory Loan Limit, minus
(b) reserves to reflect outstanding Letter of Credit
Accommodations as provided in Section 2.2 hereof, minus
(c) the Dilution Reserve, minus
(d) the Priority Payables Reserve, minus
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(e) the Bank Products Reserve, minus
(f) all other reserves (including, without limitation, reserves
with respect to security interests or liens of third parties
permitted hereunder or in connection with litigation) which
Administrative Agent may, in good faith, deem necessary or desirable
to maintain, including, without limitation, reserves for any amounts
which Administrative Agent or any Lender may need to pay in the
future for the account of any Borrower or Guarantor. Without
limiting the reserves Administrative Agent may establish,
Administrative Agent may establish reserves for (u) payments owing
to RSA and its Affiliates, whether under the RSA Note or otherwise,
(v) payments that may become due and payable by any Borrower under
any foreign exchange contract upon the commencement of any foreign
exchange contracts, (w) any exposure of any Borrower on account of
settlements on foreign exchanges, (x) daylight overdrafts on foreign
exchanges, (y) past due trade payables, and (z) book overdrafts and
held checks."
(c) The definition of "Eurodollar Rate Margin" as set forth in Section
1.43 of the Loan Agreement is hereby amended and restated in its entirety to
read as follows:
" 'Eurodollar Rate Margin' shall mean (a) one and one-half percent
(1.50%) if the average daily Excess Availability during the
immediately preceding calendar month is greater than $50,000,000,
(b) one and three-quarters percent (1.75%) if the average daily
Excess Availability during such period is in excess of $25,000,000
but less than or equal to $50,000,000, and (c) two percent (2.00%)
if the average daily Excess Availability during such period is less
than or equal to $25,000,000."
(d) The following proviso is hereby added at the end of the definition
of "Excess Availability" as set forth in Section 1.44 of the Loan Agreement:
"; provided, that, for the purposes of determining the Eurodollar
Rate Margin and the Prime Rate Margin, 'Excess Availability' shall
mean the amount, as determined by Administrative Agent, calculated
at any time, equal to: (c) the lesser of the Borrowing Base and the
Revolving Loan Limit, minus, (d) the amount of all then outstanding
and unpaid Obligations"
(e) The definition of "Final Maturity Date" as set forth in Section 1.49
of the Loan Agreement is hereby amended and restated in its entirety to read as
follows:
" 'Final Maturity Date' shall mean July 31, 2007."
(f) The Securitization Intercreditor Agreement is hereby included in the
definition of "Financing Agreements" as set forth in Section 1.50 of the Loan
Agreement.
(g) The definition of "Inventory Loan Limit" as set forth in Section
1.62 of the Loan Agreement is hereby amended and restated in its entirety to
read as follows:
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" 'Inventory Loan Limit' shall mean $80,000,000; provided, however,
that if, as of any date of determination, the last appraisal as to
the Inventory provided by Borrowers to Administrative Agent pursuant
to Section 7.3(d) or Section 7.3(e) hereof is more than six months
old, Inventory Loan Limit shall mean the lesser of (a) $15,000,000,
or (b) an amount equal to twenty-five percent (25%) of the amount
calculated under Clause (a)(ii)(A) of the definition of the
Borrowing Base."
(h) The definition of "Prime Rate Margin" as set forth in Section 1.78
of the Loan Agreement is hereby amended and restated in its entirety to read as
follows:
" 'Prime Rate Margin' shall mean (a) zero percent (0%) if the
average daily Excess Availability during the immediately preceding
calendar month is greater than $50,000,000, (b) one-quarter of one
percent (0.25%) if the average daily Excess Availability during such
period is in excess of $25,000,000 but less than or equal to
$50,000,000, and (c) one-half of one percent (0.5%) if the average
daily Excess Availability during such period is less than or equal
to $25,000,000."
(i) The definition of "Required Lenders" as set forth in Section 1.86 of
the Loan Agreement is hereby amended and restated in its entirety to read as
follows:
" 'Required Lenders' shall mean, at any time, those Lenders whose
Pro Rata Shares based on their respective Commitments aggregate
fifty-five percent (55%) or more of the aggregate of the Commitments
of all Lenders, or if the Commitments shall have been terminated,
Lenders to whom at least fifty-five percent (55%) of the then
outstanding Obligations are owing."
(j) The definition of "Revolving Loan Limit" as set forth in Section
1.89 of the Loan Agreement is hereby amended and restated in its entirety to
read as follows:
" 'Revolving Loan Limit' shall mean $160,000,000; provided, that,
upon the closing and funding of the Permitted Receivables Financing
in accordance with the terms of the Financing Agreements, such
amount shall be decreased to $125,000,000."
(k) The definition of "Subject Subsidiary" as set forth in Section 1.96
of the Loan Agreement is hereby amended and restated in its entirety to read as
follows:
" 'Subject Subsidiary' shall mean all Subsidiaries of the Borrowers
organized under the laws of any state in the United States, any
province of Canada or any political jurisdiction of any country in
South America, except for (i) any Subsidiary that is itself a
Borrower or Guarantor, (ii) Bell Micro Europe, and (iii) the
Securitization Vehicle."
(l) Section 2.3(d) of the Loan Agreement is hereby amended and restated
in its entirety to read as follows:
"(d) The total amount of payments by Borrowers in connection with
the acquisitions of Targets (other than Bell Micro Mexico and Total
Tec) shall not exceed $100,000,000 in the aggregate during the term
of this Agreement or $50,000,000 in any one acquisition or series of
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related acquisitions, unless otherwise consented to by
Administrative Agent and Required Lenders (provided such consent
shall not be unreasonably withheld, delayed or conditioned);"
(m) Section 3.3(c) of the Loan Agreement is hereby amended and restated
in its entirety to read as follows:
"(c) Borrowers shall pay to Administrative Agent, for the benefit of
Lenders based upon their respective Pro Rata Shares, a monthly
unused line fee equal to three-eighths of one percent (0.375%) of
the amount by which Eighty Million Dollars ($80,000,000) exceeds the
average daily principal balance of the outstanding Revolving Loans
and Letter of Credit Accommodations during the immediately preceding
month while this Agreement is in effect and for so long thereafter
as any of the Obligations are outstanding, which fee shall be
payable on the first day of each month in arrears; provided, that,
if at any time the amount of outstanding and unpaid Obligations
exceeds Eighty Million Dollars ($80,000,000), then effective six (6)
months prior to such date and continuing for so long thereafter as
any of the Obligations are outstanding, such monthly unused line fee
shall be equal to three-eighths of one percent (0.375%) of the
amount by which the Revolving Loan Limit exceeds the average daily
principal balance of the outstanding Revolving Loans and Letter of
Credit Accommodations during the immediately preceding month. Any
unpaid portion of the unused line fee with respect to the six (6)
months preceding the date the outstanding and unpaid Obligations
first exceeded Eighty Million Dollars ($80,000,000) shall be due and
payable on such date the outstanding unpaid Obligations first
exceeded Eighty Million Dollars ($80,000,000)."
(n) Section 3.3(d) of the Loan Agreement is hereby amended and restated
in its entirety to read as follows:
"(d) If for any reason this Agreement is terminated prior to the
Final Maturity Date, in view of the impracticality and extreme
difficulty of ascertaining actual damages and by mutual agreement of
the parties as to a reasonable calculation of Administrative Agent's
and Lenders' lost profits as a result thereof, Borrowers agree to
pay to Administrative Agent, for the benefit of Lenders based upon
their respective Pro Rata Shares, upon the effective date of such
termination an early termination fee equal to (i) three-quarters of
one percent (0.75%) of the Revolving Loan Limit if the effective
date of such termination is prior to July 31, 2005, (ii) thirty-five
one hundreds of one percent (0.35%) of the Revolving Loan Limit if
the effective date of such termination is on or after July 31, 2005
but before July 31, 2006, and (iii) fifteen one hundreds of one
percent (0.15%) of the Revolving Loan Limit if the effective date of
such termination is on or after July 31, 2006 but before January 31,
2007. Such early termination fee shall be presumed to be the amount
of damages sustained by Administrative Agent and Lenders as a result
of such early termination and Borrowers agree that it is reasonable
under the circumstances currently existing. Administrative Agent and
Lenders shall be entitled to such early termination fee upon the
occurrence of any Event of Default described in Sections 10.1(g) and
10.1(h) hereof, even if Administrative Agent and Lenders do not
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exercise their right to terminate this Agreement, but elect, at
their option, to provide financing to Borrowers or permit the use of
cash collateral under the United States Bankruptcy Code or other
insolvency law. Such early termination fee shall be deemed included
in the Obligations. Such early termination fee shall be waived if
the Obligations are paid in full from (1) the proceeds of unsecured
loans to Borrowers, (2) the proceeds of the issuance of Capital
Stock of Borrower Agent that is not currently outstanding, (3) a
sale of all or substantially all of the assets or Capital Stock of
Borrowers in an arms-length transaction, or (4) a refinancing led
principally by Wachovia Bank, National Association or one of its
Affiliates other than Congress Financial Corporation (Western)."
(o) The following is hereby added to Section 3.3 of the Loan Agreement:
"(e) If at any time the amount of outstanding and unpaid Obligations
exceeds Eighty Million Dollars ($80,000,000), Borrowers shall pay to
Administrative Agent, for the benefit of the Lenders based upon
their respective Pro Rata Shares, a one-time fee equal to one
quarter of one percent (0.25%) of the difference between (a) the
Revolving Loan Limit, and (b) $80,000,000, which fee shall be due
and payable on such date the outstanding and unpaid Obligations
exceed Eighty Million Dollars ($80,000,000)."
(p) The following is hereby added to the last paragraph of Section 5.1
of the Loan Agreement:
"In addition, Administrative Agent shall be deemed to have released
its security interest in and liens upon all of Borrower Agent's
Accounts and related Collateral to the extent and upon the terms and
conditions set forth in the Securitization Intercreditor Agreement."
(q) Section 6.3(a) of the Loan Agreement is hereby amended and restated
in its entirety to read as follows:
"(a) Each Borrower shall establish and maintain, at its expense,
blocked accounts or lockboxes and related blocked accounts (in
either case, "Blocked Accounts"), as Administrative Agent may
specify, with such banks as are reasonably acceptable to
Administrative Agent into which Borrowers shall promptly deposit and
direct their respective account debtors to directly remit all
payments on Accounts and all payments constituting proceeds of
Inventory or other Collateral in the identical form in which such
payments are made, whether by cash, check or other manner; provided,
however, that upon consummation of the Permitted Receivables
Financing in accordance with the terms of the Financing Agreements
and the Receivables Financing Documents, the Blocked Account of
Borrower Agent maintained with Bank of America, N.A. with the
account number: 14594-03034 and with the lockbox addresses: Bell
Microproducts, Inc., File 57266, Los Angeles, California 90074 and
Bell Microproducts, Inc., File 12778 Collections Center Drive,
Chicago, Illinois 60693, may be transferred to the Securitization
Vehicle so long as Borrower Agent has established or already
maintains a separate Blocked Account into which all proceeds of
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Collateral are deposited as required herein. The banks at which the
Blocked Accounts are established shall enter into an agreement, in
form and substance reasonably satisfactory to Administrative Agent,
providing that all items received or deposited in the Blocked
Accounts are the property of Administrative Agent, that the
depository bank has no lien upon, or right to setoff against, the
Blocked Accounts, the items received for deposit therein, or the
funds from time to time on deposit therein and that with respect to
the Blocked Accounts, the depository bank will wire, or otherwise
transfer, in immediately available funds, on a daily basis, all
funds received or deposited into such Blocked Accounts to such bank
account of Administrative Agent as Administrative Agent may from
time to time designate for such purpose ("Payment Account");
provided, however, that so long as the Excess Availability of
Borrowers is equal to at least the greater of (i) fifteen percent
(15%) of Borrowing Base or (ii) $15,000,000, and no Event of Default
has occurred and is continuing, such funds will not be transferred
to the Payment Account and the Borrower owning any such funds will
be entitled to withdraw those funds from the Blocked Accounts for
its own account. Each Borrower agrees that if the Excess
Availability of Borrowers is less than the greater of (i) fifteen
percent (15%) of Borrowing Base or (ii) $15,000,000, or an Event of
Default has occurred and is continuing, then with respect to all
Borrowers other than Borrower Agent, and with respect to Borrower
Agent in Administrative Agent's sole discretion, all payments made
to such Blocked Accounts or other funds received and collected by
Administrative Agent or any Lender, whether in respect of the
Accounts, as proceeds of Inventory or other Collateral or otherwise
shall be treated as payments to Administrative Agent and Lenders in
respect of the Obligations and therefore shall constitute the
property of Administrative Agent and Lenders to the extent of the
then outstanding Obligations."
(r) The first sentence of Section 6.3(c) of the Loan Agreement is hereby
amended and restated in its entirety to read as follows:
"(c) If the Excess Availability of Borrowers is less than the
greater of (i) fifteen percent (15%) of Borrowing Base or (ii)
$15,000,000, or if an Event of Default has occurred and is
continuing (and without limiting Administrative Agent's and Lenders'
other rights and remedies on account of such Event of Default), each
Borrower (other than Borrower Agent except in Administrative Agent's
sole discretion) and all of its directors, employees, agents,
Subsidiaries and other Affiliates shall, acting as trustee for
Administrative Agent and Lenders, receive, as the property of
Administrative Agent and Lenders, any monies, checks, notes, drafts
or any other payment relating to and/or proceeds of Collateral which
come into their possession or under their control and immediately
upon receipt thereof, shall deposit or cause the same to be
deposited in the Blocked Accounts, or remit the same or cause the
same to be remitted, in kind, to Administrative Agent and in no
event shall the same be commingled with a Borrower's own funds."
(s) Section 7.1(a)(i) of the Loan Agreement is hereby amended and
restated in its entirety to read as follows:
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"(i) on a monthly basis, on or before the tenth (10th) Business Day
of the month, for the immediately preceding month, a schedule of
sales made, credits issued and cash received and a schedule of
Inventory (separately showing Inventory covered by non-cancelable,
non-returnable purchase orders and "end of life" Inventory, and the
sales of such Inventory); provided that such schedules will be
provided twice a month or more frequently as Administrative Agent
may request if either (1) an Event of Default has occurred and is
continuing, or (2) the Excess Availability as of any date of
determination is less than the greater of (y) fifteen percent (15%)
of the then current Borrowing Base or (z) $15,000,000;"
(t) The following is hereby added to Section 7.1(a) of the Loan
Agreement:
"(v) In connection with any sale by Borrower Agent of Inventory with
an aggregate fair market value in excess of Five Million Dollars
($5,000,000), Borrower Agent shall use its best efforts to provide
Administrative Agent with written notice of such sale at least one
(1) week prior to the consummation of such sale, but shall in any
event provide Administrative Agent with such notice no later than
two (2) Business Days after the consummation of such sale."
(u) The following is hereby added as Section 7.2(g) of the Loan
Agreement:
"(g) Notwithstanding anything contained in this Section 7.2 to the
contrary, this Section 7.2 shall not apply to any of Borrower
Agent's Accounts sold to the Securitization Vehicle pursuant to the
Permitted Receivables Financing so long as the Securitization
Vehicle shall have any interest therein."
(v) Clauses (d) and (e) of Section 7.3 of the Loan Agreement are hereby
amended and restated in their entirety to read as follows:
"(d) upon Administrative Agent's request, Borrowers shall, at their
expense, no more than one time in any twelve (12) month period,
deliver or cause to be delivered to Administrative Agent full
written reports or appraisals as to the Inventory in form, scope and
methodology reasonably acceptable to Administrative Agent and by an
appraiser reasonably acceptable to Administrative Agent, addressed
to Administrative Agent and Lenders, and upon which Administrative
Agent and Lenders are expressly permitted to rely, which appraisals
shall employ the same methodology as in prior appraisals unless the
appraiser justifies to Administrative Agent, in its sole discretion,
the need to employ a different methodology; provided, however, that
if Administrative Agent determines, in its sole discretion, that the
amount of outstanding Revolving Loans and Letter of Credit
Accommodations which are attributable to Clause (a)(ii) of the
definition of Borrowing Base (in determining the actual amounts of
such outstanding Revolving Loans and Letter of Credit Accommodations
which are attributable to Clause (a)(ii) of the definition of
Borrowing Base, the outstanding Revolving Loans and Letter of Credit
Accommodations shall be attributed first to any other components of
the definition of Borrowing Base before being attributed to Clause
(a)(ii) thereof) is consistently greater than the greater of (i)
twenty-five percent (25%) of the amount calculated under Clause
(a)(ii)(A) of the definition of the Borrowing Base or (ii)
$15,000,000, Borrowers shall, at their expense, on a quarterly
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basis, deliver or cause to be delivered to Administrative Agent
appraisals as to Inventory in form, scope and methodology acceptable
to Administrative Agent in its sole discretion; provided, further,
that notwithstanding anything contained in this Section 7.3(d) to
the contrary, Borrowers shall, at their expense, deliver or cause to
be delivered to Administrative Agent appraisals as to Inventory in
form, scope and methodology acceptable to Administrative Agent in
its sole discretion, at any time or times as Administrative Agent
may request on or after an Event of Default; (e) with respect to the
appraisals required pursuant to Section 7.3(d) herein,
Administrative Agent will make reasonable efforts to discuss any
proposed change in methodology with Borrower Agent prior to its
implementation, provided, that the failure to discuss such proposed
change shall not invalidate such appraisal or limit the rights of
Administrative Agent and Lenders to rely on such appraisal;"
(w) The following is hereby added to Section 7.5 of the Loan Agreement:
"Notwithstanding anything contained in this Section 7.5 to the
contrary, this Section 7.5 shall not apply to any of Borrower
Agent's Accounts sold to the Securitization Vehicle pursuant to the
Permitted Receivables Financing so long as the Securitization
Vehicle shall have any interest therein."
(x) A new Section 7.9 is hereby added to the Loan Agreement as follows:
"7.9 Receivables Financing Documents. Borrower Agent shall provide
Administrative Agent with copies of any amendments, waivers or other
modifications to any of the Receivables Financing Documents promptly
after execution thereof, and if requested by any Lender in writing,
Administrative Agent shall provide such Lender with copies of such
documents promptly after its receipt thereof. Borrower Agent shall
provide Administrative Agent with written notice promptly upon the
occurrence of: (i) any 'Amortization Event' as defined in the
Securitization Credit Agreement, and (ii) any 'Termination Event' as
defined in the Securitization Receivables Sale Agreement."
(y) Section 9.7(b)(iv) of the Loan Agreement is hereby amended by
replacing the words "Common Stock" contained therein with the words "Capital
Stock".
(z) The following is hereby added to Section 9.7(b) of the Loan
Agreement:
"(v) sales by Borrower Agent of its Accounts to the Securitization
Vehicle pursuant to the Permitted Receivables Financing, so long as
(A) Administrative Agent has received an original fully executed
copy of the Securitization Intercreditor Agreement, (B)
Administrative Agent has received fully executed copies of the
Receivables Financing Documents, (C) the closing and funding of the
Permitted Receivables Financing occurs on or prior to August 31,
2004, or such later date as determined by Administrative Agent in
its sole discretion, and (D) such Accounts do not arise from a sale
of Borrower Agent's Inventory out of the ordinary course of Borrower
Agent's business, including, without limitation, a bulk sale, an
auction sale or a sale by a liquidator; or"
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(aa) The following is hereby added to Section 9.8 of the Loan Agreement:
"(k) so long as the Permitted Receivables Financing is consummated
in accordance with the terms of the Financing Agreements and the
Receivables Financing Documents, the liens or security interests on
those of Borrower Agent's Accounts and related assets which are
transferred to the Securitization Vehicle pursuant to the
Receivables Financing Documents."
(bb) Section 9.9(c)(iv) of the Loan Agreement is hereby amended and
restated in its entirety to read as follows:
"Borrowers and Guarantors shall not, directly or indirectly, make,
or be required to make, any payments in respect of such
Indebtedness, except that (1) Borrowers and Guarantors may make
payments to the extent expressly permitted in the Subordination
Agreement among Borrowers, Guarantors, Administrative Agent and the
RSA, (2) Borrowers and Guarantors may make payments with the
proceeds of sales of assets of Borrowers and Guarantors outside the
ordinary course of business to the extent Administrative Agent and
Required Lenders may so agree, and (3) Borrower Agent may make
prepayments in respect of the RSA Note in an amount of up to
$20,000,000 so long as all such prepayments are made no earlier than
March 9, 2004,"
(cc) The following is hereby added to Section 9.9(c) of the Loan
Agreement:
"(vii) Notwithstanding anything contained in this Section 9.9(c) to
the contrary, Borrowers and Guarantors may refinance the
Indebtedness owed by them to the RSA and its Affiliates so long as
the terms and conditions of the replacement Indebtedness are no more
onerous than the terms and conditions of the existing Indebtedness,
as determined by Administrative Agent in its sole discretion. Such
replacement Indebtedness shall be subject to the terms and
conditions of this Section 9.9(c)."
(dd) Section 9.9(i) of the Loan Agreement is hereby amended and restated
in its entirety to read as follows:
"(i) Indebtedness of Borrower Agent evidenced by the Securities so
long as the Securities were issued in compliance with the terms of
this Agreement and the Indenture;"
(ee) The following is hereby added to Section 9.9 of the Loan Agreement:
"(k) So long as the Permitted Receivables Financing is consummated
in accordance with the terms of the Financing Agreements and the
Receivables Financing Documents, (i) Indebtedness of Borrower Agent
as Servicer under the Securitization Credit Agreement, and (ii)
Indebtedness of Borrower Agent arising under the Receivables
Financing Documents to the extent the sale of Borrower Agent's
Accounts thereunder are not deemed true sales and Securitization
Vehicle is deemed to have made a loan to Borrower Agent for the
purchase price of such Accounts; and
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(l) Other Indebtedness not exceeding $100,000,000 in the aggregate
outstanding at any time, so long as (i) such Indebtedness is
unsecured, and (ii) such Indebtedness is subordinated for the
Lenders benefit on terms and conditions acceptable to the Required
Lenders."
(ff) Section 9.10(n) of the Loan Agreement is hereby amended and restated
in its entirety to read as follows:
"(n) intercompany receivables owed by any Affiliate of a Borrower
that is not a "Borrower" hereunder (other than the Securitization
Vehicle) to any Borrower, so long as (i) no Event of Default exists
and is continuing or would result from the existence of such
receivable, and (ii) the amount of such intercompany receivables do
not exceed $15,000,000 at any one time outstanding;"
(gg) Section 9.10(o) of the Loan Agreement is hereby amended and restated
in its entirety to read as follows:
"(o) Intentionally Omitted;"
(hh) The following is hereby added to Section 9.10 of the Loan Agreement:
"(p) a one time equity investment by Borrower Agent in Bell Micro
Europe in an amount of up to $30,000,000 so long as (i) as of the
date of such investment and after giving effect thereto, no Event of
Default, or act, condition or event which with notice or passage of
time or both would constitute an Event of Default shall exist, and
(ii) such investment is made on or before April 30, 2004;
(q) revolving loans by Borrower Agent to Ideal Hardware not to
exceed the principal amount of $20,000,000 in the aggregate
outstanding at any one time so long as (i) as of the date any such
loan is made and after giving effect thereto, no Event of Default,
or act, condition or event which with notice or passage of time or
both would constitute an Event of Default shall exist; (ii) as of
the date any such loan is made and after giving effect thereto, no
event of default, or act, condition or event which with notice or
passage of time or both would constitute an event of default shall
exist with respect to any of the loan facilities to which Ideal
Hardware is presently or any time in the future a party; (iii) if
such loans are evidenced by promissory notes or other instruments,
such notes or other instruments are delivered to Administrative
Agent as part of the Collateral, with such endorsements and/or
assignments to Administrative Agent by the payee of such notes or
other instruments as Administrative Agent may require; (iv) each
month Borrower Agent provides to Administrative Agent a report in
form and substance satisfactory to Administrative Agent indicating
the amount of such loans made in the immediately preceding month and
any repayments in connection therewith; (v) Ideal Hardware is not
restricted in any way by any other Person from repaying such
revolving loan pursuant to a contract or otherwise; (vi) Ideal
Hardware is not required by any other Person pursuant to a contract
or otherwise, to have the repayment of such revolving loan in any
way subordinated; and (vii) Bank of America, N.A. executes an
agreement, in form and substance satisfactory to Administrative
Agent in its sole discretion, whereby Bank of America, N.A.
acknowledges and agrees, among other things, that there are no
restrictions on Ideal Hardware or any of its Affiliates from
repaying such revolving loan; and
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(r) the creation of the Securitization Vehicle by Borrower Agent and
the initial capitalization by Borrower Agent of the Securitization
Vehicle with cash in an amount not to exceed One Thousand Dollars
($1,000) and/or Borrower Agent's Accounts (in amounts to be approved
by Administrative Agent in its sole discretion) and the revolving
subordinated loans made by Borrower Agent to the Securitization
Vehicle in accordance with the terms of the Receivables Financing
Documents."
(ii) Section 9.12(a) of the Loan Agreement is hereby amended and restated
in its entirety to read as follows:
"(a) purchase, acquire or lease any property from, or sell, transfer
or lease any property to, any officer, employee, shareholder,
director, agent or any other Affiliate, except (i) in the ordinary
course of and pursuant to the reasonable requirements of such
Borrower's, Guarantor's or Subject Subsidiary's (as the case may be)
business and upon fair and reasonable terms no less favorable to
such Borrower, Guarantor or Subject Subsidiary than it would obtain
in a comparable arm's length transaction with a person who is not an
Affiliate, and (ii) in connection with the Permitted Receivables
Financing so long as the Permitted Receivables Financing is
consummated in accordance with the terms of the Financing Agreements
and the Receivables Financing Documents; or"
(jj) A new Section 9.22 is hereby added to the Loan Agreement as follows:
"9.22 Indenture Covenants. Borrower Agent shall not (i) call any of
the Securities prior to the Final Maturity Date (except for
conversions to Capital Stock of Borrower Agent or call options
exercised using solely the net proceeds of the issuance of Capital
Stock of Borrower Agent that is not currently outstanding) without
the consent of Lenders, (ii) permit or agree to any provision in the
Indenture that allows any put options to be exercised with respect
to such Securities prior to the Final Maturity Date (except for
conversions to Capital Stock of Borrower Agent or put options
exercised using solely the net proceeds of the issuance of Capital
Stock of Borrower Agent that is not currently outstanding) or (iii)
permit the Capital Stock issued in connection with the exercise of
any rights with respect to such Securities to have any dividend
rights, liquidation preferences or other rights, privileges or
preferences superior to the existing Capital Stock of any Borrower
or any Guarantor as of the date of the issuance of such Securities."
(kk) Section 10.1(a)(ii) of the Loan Agreement is hereby amended by
deleting the reference to "or 9.20 of this Agreement" and replacing it with ",
9.20 or 9.22 of this Agreement".
(ll) Section 10.1(i)(ii) of the Loan Agreement is hereby amended by
adding the words "including, without limitation, the Indenture, the
Securitization Intercreditor Agreement, and the Receivables Financing Documents"
immediately after the reference to "under any material contract, lease, license
or other obligation to any person other than any Administrative Agent or
Lender".
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(mm) The following is hereby added to Section 10.1 of the Loan Agreement:
"(o) the occurrence of a 'Termination Event' as defined in the
Securitization Receivables Sale Agreement; and
(p) the occurrence of an 'Amortization Event' as defined in the
Securitization Credit Agreement."
(nn) A new Section 14.11 is hereby added to the Loan Agreement as
follows:
"14.11 Acknowledgment and Agreement. The parties hereto hereby
acknowledge and agree that the Loans and other financial
accommodations provided under the Loan Agreement shall be deemed
Designated Senior Indebtedness (as such term is defined in the
Indenture)."
(oo) Exhibit D hereto is hereby added to the Loan Agreement as Exhibit D
thereto.
(pp) Exhibit E hereto is hereby added to the Loan Agreement as Exhibit E
thereto.
4. Consent to Open New Blocked Account. Pursuant to Section 9.17 of the Loan
Agreement, Administrative Agent hereby consents to Borrowers opening up a new
Blocked Account number 14593-24221 with Bank of America, N.A., so long as Bank
of America, N.A. executes a Deposit Account Control Agreement in form and
substance satisfactory to Administrative Agent.
5. Extension Fee. In consideration of the Lenders executing this Amendment,
Borrowers shall pay to Administrative Agent, for the benefit of the Lenders
based upon their respective Pro Rata Shares as of the effective date of this
Amendment, a non-refundable extension fee (the "Extension Fee") in an amount
equal to Two Hundred Thousand Dollars ($200,000), which is fully earned as of
and due and payable on the date hereof.
6. Conditions to Effectiveness. The effectiveness of this Third Amendment is
subject to the receipt by Administrative Agent or the completion by Borrowers of
the following:
(a) Counterparts of this Third Amendment, executed by each of the
parties hereto;
(b) The Extension Fee;
(c) No Default or Event of Default shall exist;
(d) The representations and warranties set forth herein and in the Loan
Agreement must be true and correct; and
(e) All other documents and legal matters in connection with the
transactions contemplated by this Amendment shall have been delivered or
executed or recorded and shall be in form and substance satisfactory to
Administrative Agent.
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7. Waiver Letter. To the extent any of the terms and conditions of this Third
Amendment are inconsistent with the terms and conditions of that certain Waiver
Letter re Bond Offering dated as of February 27, 2004, the terms and conditions
of this Third Amendment shall control.
8. Guarantor's Acknowledgement. Bell Micro Canada, Bell Micro Mexico and
Mexico Shareholder each hereby acknowledge and consent to the terms, conditions
and provisions of this Third Amendment and to the transactions contemplated
hereby. Bell Micro Canada hereby reaffirms its obligations under its Guarantee,
dated as of May 14, 2001, delivered to Lender in connection with the Loan
Agreement, and agrees that it is and shall remain responsible for the
obligations of Borrowers under the Loan Agreement as amended by this Third
Amendment. Bell Micro Mexico and Mexico Shareholder each hereby reaffirm their
obligations under their respective Guarantees, each dated as of October 9, 2003,
delivered to Lender in connection with the Second Amendment to Loan and Security
Agreement and Waiver, dated as of October 9, 2003, and each agrees that it is
and shall remain responsible for the obligations of Borrowers under the Loan
Agreement as amended by this Third Amendment.
9. Representations and Warranties. Each Borrower reaffirms that the
representations and warranties made to Lenders and Administrative Agent in the
Loan Agreement and other Financing Agreements are true and correct in all
material respects as of the date of this Third Amendment as though made as of
such date and after giving effect to this Third Amendment. In addition, each
Borrower makes the following representations and warranties to Lenders and
Administrative Agent, which shall survive the execution of this Third Amendment.
(a) The execution, delivery and performance of this Third Amendment are
within each Borrower's powers, have been duly authorized by all necessary
actions, have received all necessary governmental approvals, if any, and do not
contravene any law or any contractual restrictions binding on each Borrower.
(b) This Third Amendment is the legal, valid and binding obligation of
each Borrower enforceable against each Borrower in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency, moratorium and
other similar laws affecting the rights of creditors generally.
(c) No event has occurred and is continuing, after giving effect to this
Third Amendment, which constitutes an Event of Default under the Loan Agreement
or any other of the Financing Agreements, or would constitute such an Event of
Default but for the requirement that notice be given or time elapse or both.
10. Continuing Effect of Financing Agreements. To the extent of any
inconsistencies between the terms of this Third Amendment and the Loan
Agreement, this Third Amendment shall govern. In all other respects, the Loan
Agreement and other Financing Agreements shall remain in full force and effect
and are hereby ratified and confirmed.
11. References. Upon the effectiveness of this Third Amendment, each reference
in any Financing Agreements to "the Agreement", "hereunder," "herein," "hereof,"
or of like import referring to the Loan Agreement shall mean and be a reference
to the Loan Agreement as amended hereby.
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12. Governing Laws. This Third Amendment, upon becoming effective, shall be
deemed to be a contract made under, governed by, and subject to, and shall be
construed in accordance with, the internal laws of the State of California.
[remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound hereby,
have executed this Amendment as of the date first set forth above, to become
effective in the manner set forth above.
"BORROWERS" "GUARANTORS"
BELL MICROPRODUCTS INC. BELL MICROPRODUCTS CANADA INC.
By:_________________________________ By:__________________________________
Name:_______________________________ Name:________________________________
Title:______________________________ Title:_______________________________
TOTAL TEC SYSTEMS, INC. BELL MICROPRODUCTS MEXICO
SHAREHOLDER, LLC
By:_________________________________ By:__________________________________
Name:_______________________________ Name:________________________________
Title:______________________________ Title:_______________________________
BELL MICROPRODUCTS-FUTURE TECH, INC. BELL MICROPRODUCTS MEXICO, S.A. de
C.V.
By:_________________________________ By:__________________________________
Name:_______________________________ Name:________________________________
Title:______________________________ Title:_______________________________
RORKE DATA, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
BELL MICROPRODUCTS CANADA-TENEX DATA
ULC
By:_________________________________
Name:_______________________________
Title:______________________________
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"ADMINISTRATIVE AGENT"
CONGRESS FINANCIAL CORPORATION
(WESTERN)
By:_________________________________
Name:_______________________________
Title:______________________________
"LENDERS"
BANK OF AMERICA, N.A.
By:_________________________________
Name:_______________________________
Title:______________________________
Current Commitment: $30,000,000
Post-Securitization
Commitment: $30,000,000
THE CIT GROUP/BUSINESS CREDIT, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
Current Commitment: $30,000,000
Post-Securitization
Commitment: $30,000,000
CONGRESS FINANCIAL CORPORATION
(WESTERN)
By:_________________________________
Name:_______________________________
Title:______________________________
Current Commitment: $75,000,000
Post-Securitization
Commitment: $45,468,750
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LASALLE BUSINESS CREDIT, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
Current Commitment: $25,000,000
Post-Securitization
Commitment: $19,531,250
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EXHIBIT D
See attached.
20
EXHIBIT E
See attached.
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