CREDIT AND SECURITY AGREEMENT
DATED AS OF SEPTEMBER 20, 2004
AMONG
BELL MICROPRODUCTS FUNDING CORPORATION, AS BORROWER,
BELL MICROPRODUCTS INC., AS SERVICER,
BLUE RIDGE ASSET FUNDING CORPORATION,
THE LIQUIDITY BANKS FROM TIME TO TIME PARTY HERETO
AND
WACHOVIA BANK, NATIONAL ASSOCIATION, AS AGENT
TABLE OF CONTENTS
Page
Article I The Advances........................................................1
Section 1.1 Credit Facility...............................................1
Section 1.2 Increases.....................................................2
Section 1.3 Decreases.....................................................3
Section 1.4 Deemed Collections; Borrowing Limit...........................3
Section 1.5 Payment Requirements..........................................4
Section 1.6 Ratable Loans; Funding Mechanics; Liquidity Fundings..........4
Article II Payments and Collections...........................................5
Section 2.1 Payments......................................................5
Section 2.2 Collections Prior to Amortization.............................5
Section 2.3 Collections Following Amortization............................6
Section 2.4 Payment Rescission............................................6
Section 2.5 Special Concentration Limit...................................7
Article III Blue Ridge Funding................................................7
Section 3.1 CP Costs......................................................7
Section 3.2 Calculation of CP Costs.......................................7
Section 3.3 CP Costs Payments.............................................7
Section 3.4 Default Rate..................................................7
Article IV Liquidity Bank Funding.............................................7
Section 4.1 Liquidity Bank Funding........................................7
Section 4.2 Interest Payments.............................................8
Section 4.3 Selection and Continuation of Interest Periods................8
Section 4.4 Liquidity Bank Interest Rates.................................8
Section 4.5 Suspension of the LIBO Rate...................................8
Section 4.6 Default Rate..................................................9
Article V Representations and Warranties......................................9
Section 5.1 Representations and Warranties of the Loan Parties............9
Article VI Conditions of Advances............................................13
Section 6.1 Conditions Precedent to Initial Advance......................13
Section 6.2 Conditions Precedent to All Advances.........................13
Article VII Covenants........................................................14
Section 7.1 Affirmative Covenants of the Loan Parties....................14
Section 7.2 Negative Covenants of the Loan Parties.......................21
Article VIII Administration and Collection...................................23
Section 8.1 Designation of Servicer......................................23
Section 8.2 Duties of Servicer...........................................23
Section 8.3 Collection Notices...........................................25
Section 8.4 Responsibilities of Borrower.................................25
Section 8.5 Reports......................................................25
Section 8.6 Servicing Fee................................................26
Article IX Amortization Events...............................................26
Section 9.1 Amortization Events..........................................26
Section 9.2 Remedies.....................................................28
i
Article X Indemnification....................................................29
Section 10.1 Indemnities by the Loan Parties.............................29
Section 10.2 Increased Cost and Reduced Return...........................31
Section 10.3 Other Costs and Expenses....................................32
Section 10.4 Allocations.................................................32
Article XI The Agent.........................................................33
Section 11.1 Authorization and Action....................................33
Section 11.2 Delegation of Duties........................................33
Section 11.3 Exculpatory Provisions......................................33
Section 11.4 Reliance by Agent...........................................34
Section 11.5 Non-Reliance on Agent and Other Lenders.....................34
Section 11.6 Reimbursement and Indemnification...........................34
Section 11.7 Agent in its Individual Capacity............................35
Section 11.8 Successor Agent.............................................35
Article XII Assignments; Participations......................................35
Section 12.1 Assignments.................................................35
Section 12.2 Participations..............................................36
Article XIII Security Interest...............................................37
Section 13.1 Grant of Security Interest..................................37
Section 13.2 Termination after Final Payout Date.........................37
Article XIV Miscellaneous....................................................37
Section 14.1 Waivers and Amendments......................................37
Section 14.2 Notices.....................................................38
Section 14.3 Ratable Payments............................................39
Section 14.4 Protection of Agent's Security Interest.....................39
Section 14.5 Confidentiality.............................................39
Section 14.6 Bankruptcy Petition.........................................40
Section 14.7 Limitation of Liability.....................................40
Section 14.8 CHOICE OF LAW...............................................40
Section 14.9 CONSENT TO JURISDICTION.....................................41
Section 14.10 WAIVER OF JURY TRIAL.......................................41
Section 14.11 Integration; Binding Effect; Survival of Terms.............41
Section 14.12 Counterparts; Severability; Section References.............42
Section 14.13 Wachovia Roles.............................................42
Section 14.14 Relationship of this Amendment to the Loan and
Security Agreement.........................................42
ii
Exhibits
Exhibit I Definitions
Exhibit II Form of Borrowing Notice
Exhibit III Places of Business of the Loan Parties; Locations of Records;
Federal Employer Identification Number(s)
Exhibit IV Names of Collection Banks; Collection Accounts
Exhibit V Form of Compliance Certificate
Exhibit VI Form of Collection Account Agreement
Exhibit VII Form of Assignment Agreement
Exhibit VIII Credit and Collection Policy Exhibit IX Form of Periodic
Report
Exhibit X Form of Contract(s)
Schedules
Schedule A Commitments
Schedule B Closing Documents
iii
CREDIT AND SECURITY AGREEMENT
This Credit and Security Agreement, dated as of September 20, 2004 is
entered into by and among:
(a) Bell Microproducts Funding Corporation, a Delaware corporation
("Borrower"),
(b) Bell Microproducts Inc., a California corporation ("Bell
Microproducts"), as initial Servicer (the Servicer together with Borrower, the
"Loan Parties" and each, a "Loan Party"),
(c) The entities listed on Schedule A to this Agreement (together
with any of their respective successors and assigns hereunder, the "Liquidity
Banks"),
(d) Blue Ridge Asset Funding Corporation, a Delaware corporation
("Blue Ridge"), and
(e) Wachovia Bank, National Association, as agent for the Lenders
hereunder or any successor agent hereunder (together with its successors and
assigns hereunder, the "Agent").
Unless defined elsewhere herein, capitalized terms used in this
Agreement shall have the meanings assigned to such terms in Exhibit I.
PRELIMINARY STATEMENTS
Borrower desires to borrow from the Lenders from time to time.
Blue Ridge may, in its absolute and sole discretion, make Advances to
the Borrower from time to time.
In the event that Blue Ridge declines to make any Advance, the
Liquidity Banks shall, at the request of Borrower, make Advances from time to
time.
Wachovia Bank, National Association has been requested and is willing
to act as Agent on behalf of Blue Ridge and the Liquidity Banks in accordance
with the terms hereof.
ARTICLE I
THE ADVANCES
SECTION 1.1 CREDIT FACILITY.
(a) Upon the terms and subject to the conditions hereof, from time to
time prior to the Facility Termination Date:
(i) Borrower may, at its option, request Advances from the
Lenders in an aggregate principal amount at any one time outstanding
not to exceed the lesser of the Aggregate Commitment and the
Borrowing Base (such lesser amount, the "Borrowing Limit"); and
(ii) Blue Ridge may, at its option, make the requested
Advance, or if Blue Ridge shall decline to make any Advance, except
as otherwise provided in Section 1.2, the Liquidity Banks severally
agree to make Loans in an aggregate principal amount equal to the
requested Advance.
Each of the Advances, and all other Obligations, shall be secured by
the Collateral as provided in Article XIII. It is the intent of Blue Ridge to
fund all Advances by the issuance of Commercial Paper.
(b) Borrower may, upon at least ten (10) days' notice to the Agent,
terminate in whole or reduce in part, ratably among the Liquidity Banks, the
unused portion of the Aggregate Commitment; provided that each partial reduction
of the Aggregate Commitment shall be in an amount equal to $10,000,000 (or a
larger integral multiple of $1,000,000 if in excess thereof) and shall reduce
the Commitments of the Liquidity Banks ratably in accordance with their
respective Pro Rata Shares.
(c) Agent may, in good faith, from time to time, upon not less than
ten (10) days' prior notice to Borrower, reduce the Borrowing Limit from the
amounts set forth in Section 1.1(a) to the extent that the Agent determines in
its good faith credit judgment that (i) the likelihood of collection of the
Receivables has decreased or there has been a deterioration in the performance
of the Receivables from historical levels or (ii) the quality, stress level,
concentration level or mix of the Receivables has deteriorated from historical
levels. In determining whether to reduce the Borrowing Limit, the Agent may
consider events, conditions, contingencies or risks which are also considered in
determining Eligible Receivables or in establishing the Net Pool Balance.
SECTION 1.2 INCREASES.
Borrower shall provide the Agent with at least two (2) Business Days'
prior notice in a form set forth as Exhibit II hereto of each Advance (each, a
"Borrowing Notice"). Each Borrowing Notice shall be subject to Section 6.2
hereof and, except as set forth below, shall be irrevocable and shall specify
the requested increase in Aggregate Principal (which shall not be less than
$1,000,000 or a larger integral multiple of $100,000) and the Borrowing Date
and, in the case of an Advance to be funded by the Liquidity Banks, the
requested Interest Rate and Interest Period; provided, however, that Borrower
shall not request, and the Lenders shall have no obligation to make, any Advance
either (x) more than six (6) times during any Settlement Period or (y) at any
time any Borrowing Notice is outstanding but the related Borrowing Date has not
yet occurred. Following receipt of a Borrowing Notice, the Agent will determine
whether Blue Ridge agrees to make the requested Advance. If Blue Ridge declines
to make a proposed Advance, Borrower may cancel the Borrowing Notice or, in the
absence of such a cancellation, the Advance will be made by the Liquidity Banks.
On the date of each Advance, upon satisfaction of the applicable conditions
precedent set forth in Article VI, Blue Ridge or the Liquidity Banks, as
applicable, shall deposit to the Facility Account, in immediately available
funds, no later than 2:00 p.m. (New York City time), an amount equal to (a) in
the case of Blue Ridge, the principal amount of the requested Advance or (b) in
the case of a Liquidity Bank, such Liquidity Bank's Pro Rata Share of the
principal amount of the requested Advance.
2
SECTION 1.3 DECREASES.
Except as provided in Section 1.4, Borrower shall provide the Agent
with prior written notice in conformity with the Required Notice Period (a
"Reduction Notice") of any proposed reduction of Aggregate Principal. Such
Reduction Notice shall designate (a) the date (the "Proposed Reduction Date")
upon which any such reduction of Aggregate Principal shall occur (which date
shall give effect to the applicable Required Notice Period), and (b) the amount
of Aggregate Principal to be reduced which shall be applied ratably to the Loans
of Blue Ridge and the Liquidity Banks in accordance with the amount of principal
(if any) owing to Blue Ridge, on the one hand, and the amount of principal (if
any) owing to the Liquidity Banks (ratably, based on their respective Pro Rata
Shares), on the other hand (the "Aggregate Reduction"). Only one (1) Reduction
Notice shall be outstanding at any time.
SECTION 1.4 DEEMED COLLECTIONS; BORROWING LIMIT.
(a) If on any day:
(i) the Outstanding Balance of any Receivable is reduced
as a result of any defective or rejected goods or services, any cash
discount or any other adjustment by the Originator or any Affiliate
thereof, or as a result of any tariff or other governmental or
regulatory action, or
(ii) the Outstanding Balance of any Receivable is reduced
or canceled as a result of a setoff in respect of any claim by the
Obligor thereof (whether such claim arises out of the same or a
related or an unrelated transaction), or
(iii) the Outstanding Balance of any Receivable is reduced
on account of the obligation of the Originator or any Affiliate
thereof to pay to the related Obligor any rebate or refund, or
(iv) the Outstanding Balance of any Receivable is less
than the amount included in calculating the Net Pool Balance for
purposes of any Periodic Report (for any reason other than such
Receivable becoming a Defaulted Receivable), or
(v) any of the representations or warranties of the
Borrower set forth in Section 5.1(i), (j), (r), (s), (t) or (u) were
not true when made with respect to any Receivable,
then, on such day, the Borrower shall be deemed to have received a Collection of
such Receivable (A) in the case of clauses (i)-(iv) above, in the amount of such
reduction or cancellation or the difference between the actual Outstanding
Balance and the amount included in calculating such Net Pool Balance, as
applicable; and (B) in the case of clause (v) above, in the amount of the
Outstanding Balance of such Receivable and, effective as of the date on which
the next succeeding Periodic Report is required to be delivered, the Borrowing
Base shall be reduced by the amount of such Deemed Collection.
3
(b) Borrower shall ensure that the Aggregate Principal at no time
exceeds the Borrowing Limit. If at any time the Aggregate Principal exceeds the
Borrowing Limit, Borrower shall pay to the Agent not later than the next
succeeding Settlement Date an amount to be applied to reduce the Aggregate
Principal (as allocated by the Agent), such that after giving effect to such
payment the Aggregate Principal is less than or equal to the Borrowing Limit.
SECTION 1.5 PAYMENT REQUIREMENTS.
All amounts to be paid or deposited by any Loan Party pursuant to any
provision of this Agreement shall be paid or deposited in accordance with the
terms hereof no later than 2:00 p.m. (New York City time) on the day when due in
immediately available funds, and if received after 2:00 p.m. (New York City
time) shall be deemed to be received on the next succeeding Business Day. If
such amounts are payable to a Lender they shall be paid to the Agent's Account,
for the account of such Lender, until otherwise notified by the Agent. Upon
notice to Borrower, the Agent may debit the Facility Account for all amounts due
and payable hereunder. All computations of CP Costs, Interest, per annum fees
calculated as part of any CP Costs, per annum fees hereunder and per annum fees
under the Fee Letter shall be made on the basis of a year of 360 days for the
actual number of days elapsed. If any amount hereunder shall be payable on a day
which is not a Business Day, such amount shall be payable on the next succeeding
Business Day.
SECTION 1.6 RATABLE LOANS; FUNDING MECHANICS; LIQUIDITY FUNDINGS.
(a) Each Advance hereunder shall consist of one or more Loans made by
Blue Ridge and/or the Liquidity Banks.
(b) Each Lender funding any Loan shall wire transfer the principal
amount of its Loan to the Agent in immediately available funds not later than
12:00 noon (New York City time) on the applicable Borrowing Date and, subject to
its receipt of such Loan proceeds, the Agent shall wire transfer such funds
received by it to the account specified by the Borrower in its Borrowing Request
not later than 2:00 p.m. (New York City time) on such Borrowing Date.
(c) While it is the intent of Blue Ridge to fund each requested
Advance through the issuance of its Commercial Paper, the parties acknowledge
that if Blue Ridge is unable, or determines that it is undesirable, to issue
Commercial Paper to fund all or any portion of its Loans, or is unable to repay
such Commercial Paper upon the maturity thereof, Blue Ridge may put all or any
portion of its Loans to the Liquidity Banks at any time pursuant to the
Liquidity Agreement to finance or refinance the necessary portion of its Loans
through a Liquidity Funding to the extent available. The Liquidity Fundings may
be Alternate Base Rate Loans or LIBO Rate Loans, or a combination thereof,
selected by the Borrower in accordance with Article IV. Regardless of whether a
Liquidity Funding constitutes the direct funding of a Loan, an assignment of a
Loan made by Blue Ridge or the sale of one or more participations in a Loan made
by Blue Ridge, each Liquidity Bank participating in a Liquidity Funding shall
have the rights of a "Lender" hereunder with the same force and effect as if it
had directly made a Loan to the Borrower in the amount of its Liquidity Funding.
(d) Nothing herein shall be deemed to commit Blue Ridge to make
Loans.
4
ARTICLE II
PAYMENTS AND COLLECTIONS
SECTION 2.1 PAYMENTS.
Borrower hereby promises to pay the following (collectively, the
"Obligations"):
(a) the Aggregate Principal on and after the Facility Termination
Date as and when Collections are received;
(b) the fees set forth in the Fee Letter on the dates specified
therein;
(c) all accrued and unpaid Interest on the Alternate Base Rate Loans
on each Settlement Date;
(d) all accrued and unpaid Interest on the LIBO Rate Loans on the
last day of each Interest Period applicable thereto;
(e) all accrued and unpaid CP Costs on the CP Rate Loans on each
Settlement Date; and
(f) all Broken Funding Costs and Indemnified Amounts upon demand.
SECTION 2.2 COLLECTIONS PRIOR TO AMORTIZATION.
On each Settlement Date prior to the Amortization Date, the Servicer
shall deposit to the Agent's Account, for distribution to the Lenders, a portion
of the Collections received by it during the preceding Settlement Period equal
to the sum of the following amounts for application to the Obligations in the
order specified:
first, ratably to the payment of all accrued and unpaid CP
Costs, Interest and Broken Funding Costs (if any) that are then due
and owing,
second, ratably to the payment of all accrued and unpaid
fees under the Fee Letter (if any) that are then due and owing,
third, to the accrued and unpaid Servicing Fee,
fourth, if required under Section 1.3 or 1.4, to the
ratable reduction of Aggregate Principal,
fifth, for the ratable payment of all other unpaid
Obligations, if any, that are then due and owing, and
sixth, the balance, if any, to Borrower or otherwise in
accordance with Borrower's instructions.
5
Collections applied to the payment of Obligations shall be distributed in
accordance with the aforementioned provisions, and, giving effect to each of the
priorities set forth above in this Section 2.2, shall be shared ratably (within
each priority) among the Agent and the Lenders in accordance with the amount of
such Obligations owing to each of them in respect of each such priority. If at
any time any Collections are received by the Servicer on and after the Initial
Funding Date and prior to the Facility Termination Date, Borrower hereby
requests, and each Lender and the Agent hereby agrees, that such funds may be
reinvested by Borrower by purchasing additional Eligible Receivables (each, a
"Reinvestment") such that after giving effect to such Reinvestment, the
Aggregate Principal is less than or equal to the Borrowing Limit.
SECTION 2.3 COLLECTIONS FOLLOWING AMORTIZATION.
On (a) each day on which any of the conditions precedent set forth in
Section 6.2 are not satisfied, (b) the Amortization Date and (c) each day
thereafter, the Servicer shall set aside and hold in trust, for the Secured
Parties, all Collections received on such day. On and after the Amortization
Date, the Servicer shall, on each Settlement Date and on each other Business Day
specified by the Agent (after deduction of any accrued and unpaid Servicing Fee
as of such date): (i) remit to the Agent's Account the amounts set aside
pursuant to the preceding two sentences, and (ii) apply such amounts to reduce
the Obligations as follows:
first, to the reimbursement of the Agent's costs of
collection and enforcement of this Agreement,
second, ratably to the payment of all accrued and unpaid
CP Costs, Interest and Broken Funding Costs,
third, ratably to the payment of all accrued and unpaid
fees under the Fee Letter,
fourth, to the ratable reduction of Aggregate Principal,
fifth, for the ratable payment of all other unpaid
Obligations, and
sixth, after the Obligations have been indefeasibly
reduced to zero, to Borrower.
Collections applied to the payment of Obligations shall be distributed in
accordance with the aforementioned provisions, and, giving effect to each of the
priorities set forth above in this Section 2.3, shall be shared ratably (within
each priority) among the Agent and the Lenders in accordance with the amount of
such Obligations owing to each of them in respect of each such priority.
SECTION 2.4 PAYMENT RESCISSION.
No payment of any of the Obligations shall be considered paid or applied
hereunder to the extent that, at any time, all or any portion of such payment or
application is rescinded by application of law or judicial authority, or must
otherwise be returned or refunded for any reason. Borrower shall remain
obligated for the amount of any payment or application so rescinded, returned or
refunded, and shall promptly pay to the Agent (for application to the Person or
Persons who suffered such rescission, return or refund) the full amount thereof,
plus Interest on such amount at the Default Rate from the date of any such
rescission, return or refunding.
6
SECTION 2.5 SPECIAL CONCENTRATION LIMIT.
Peakdata LLC and its Affiliates shall be subject to a Special Concentration
Limit of 7.0%, which Special Concentration Limit may be cancelled by the Agent
at any time upon not less than five (5) Business Days' written notice to the
Loan Parties.
ARTICLE III
BLUE RIDGE FUNDING
SECTION 3.1 CP COSTS.
Borrower shall pay CP Costs with respect to the principal balance of
Blue Ridge's Loans from time to time outstanding. Each Loan of Blue Ridge that
is funded substantially with Pooled Commercial Paper will accrue CP Costs each
day on a pro rata basis, based upon the percentage share that the principal in
respect of such Loan represents in relation to all assets held by Blue Ridge and
funded substantially with related Pooled Commercial Paper.
SECTION 3.2 CALCULATION OF CP COSTS.
Not later than the 3rd Business Day immediately preceding each
Periodic Reporting Date (as defined in clause (i) of the definition thereof),
Blue Ridge shall calculate the aggregate amount of CP Costs applicable to its CP
Rate Loans for the Calculation Period then most recently ended and shall notify
Borrower of such aggregate amount.
SECTION 3.3 CP COSTS PAYMENTS.
On each Settlement Date, Borrower shall pay to the Agent (for the
benefit of Blue Ridge) an aggregate amount equal to all accrued and unpaid CP
Costs in respect of the principal associated with all CP Rate Loans for the
Calculation Period then most recently ended in accordance with Article II.
SECTION 3.4 DEFAULT RATE.
From and after the occurrence of an Amortization Event, all Loans of
Blue Ridge shall accrue Interest at the Default Rate and shall cease to be CP
Rate Loans.
ARTICLE IV
LIQUIDITY BANK FUNDING
7
SECTION 4.1 LIQUIDITY BANK FUNDING.
Prior to the occurrence of an Amortization Event, the outstanding
principal balance of each Liquidity Funding shall accrue interest for each day
during its Interest Period at either the LIBO Rate or the Alternate Base Rate in
accordance with the terms and conditions hereof. Until Borrower gives notice to
the Agent of another Interest Rate in accordance with Section 4.4, the initial
Interest Rate for any Loan transferred to the Liquidity Banks by Blue Ridge
pursuant to the Liquidity Agreement shall be the Alternate Base Rate (unless the
Default Rate is then applicable). If the Liquidity Banks acquire by assignment
from Blue Ridge any Loan pursuant to the Liquidity Agreement, each Loan so
assigned shall each be deemed to have an Interest Period commencing on the date
of any such assignment.
SECTION 4.2 INTEREST PAYMENTS.
On the Settlement Date for each Liquidity Funding, Borrower shall pay
to the Agent (for the benefit of the Liquidity Banks) an aggregate amount equal
to the accrued and unpaid Interest for the entire Interest Period of each such
Liquidity Funding in accordance with Article II.
SECTION 4.3 SELECTION AND CONTINUATION OF INTEREST PERIODS.
(a) With consultation from (and approval by) the Agent, Borrower
shall from time to time request Interest Periods for the Liquidity Fundings,
provided that if at any time any Liquidity Funding is outstanding, Borrower
shall always request Interest Periods such that at least one Interest Period
shall end on the date specified in clause (i) of the definition of Settlement
Date.
(b) Borrower or the Agent, upon notice to and consent by the other
received at least three (3) Business Days prior to the end of an Interest Period
(the "Terminating Tranche") for any Liquidity Funding, may, effective on the
last day of the Terminating Tranche: (i) divide any such Liquidity Funding into
multiple Liquidity Fundings, (ii) combine any such Liquidity Funding with one or
more other Liquidity Fundings that have a Terminating Tranche ending on the same
day as such Terminating Tranche or (iii) combine any such Liquidity Funding with
a new Liquidity Funding to be made by the Liquidity Banks on the day such
Terminating Tranche ends.
SECTION 4.4 LIQUIDITY BANK INTEREST RATES.
Borrower may select the LIBO Rate or the Alternate Base Rate for each
Liquidity Funding. Borrower shall by 2:00 p.m. (New York City time): (a) at
least two (2) Business Days prior to the expiration of any Terminating Tranche
with respect to which the LIBO Rate is being requested as a new Interest Rate
and (b) at least one (1) Business Day prior to the expiration of any Terminating
Tranche with respect to which the Alternate Base Rate is being requested as a
new Interest Rate, give the Agent irrevocable notice of the new Interest Rate
for the Liquidity Funding associated with such Terminating Tranche. Until
Borrower gives notice to the Agent of another Interest Rate, the (i) initial
Interest Rate for any Loan transferred to the Liquidity Banks pursuant to the
Liquidity Agreement and (ii) the Interest Rate for any Terminating Tranche shall
be the Alternate Base Rate (unless the Default Rate is then applicable).
8
SECTION 4.5 SUSPENSION OF THE LIBO RATE.
(a) If any Liquidity Bank notifies the Agent that it has determined
that funding its Pro Rata Share of the Liquidity Fundings at a LIBO Rate would
violate any applicable law, rule, regulation, or directive of any governmental
or regulatory authority, whether or not having the force of law, or that (i)
deposits of a type and maturity appropriate to match fund its Liquidity Funding
at such LIBO Rate are not available or (ii) such LIBO Rate does not accurately
reflect the cost of acquiring or maintaining a Liquidity Funding at such LIBO
Rate, then the Agent shall suspend the availability of such LIBO Rate and
require Borrower to select the Alternate Base Rate for any Liquidity Funding
accruing Interest at such LIBO Rate.
(b) If less than all of the Liquidity Banks give a notice to the Agent pursuant
to Section 4.5(a), each Liquidity Bank which gave such a notice shall be
obliged, at the request of Borrower, Blue Ridge or the Agent, to assign all of
its rights and obligations hereunder to (i) another Liquidity Bank or (ii)
another funding entity nominated by Borrower or the Agent that is an Eligible
Assignee willing to participate in this Agreement through the Liquidity
Termination Date in the place of such notifying Liquidity Bank; provided that
(A) the notifying Liquidity Bank receives payment in full, pursuant to an
Assignment Agreement, of all Obligations owing to it (whether due or accrued),
and (B) the replacement Liquidity Bank otherwise satisfies the requirements of
Section 12.1(b).
SECTION 4.6 DEFAULT RATE.
From and after the occurrence of an Amortization Event, all Liquidity
Fundings shall accrue Interest at the Default Rate.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.1 REPRESENTATIONS AND WARRANTIES OF THE LOAN PARTIES.
Each Loan Party hereby represents and warrants to the Agent and the
Lenders, as to itself, as of the date hereof, as of the date of each Advance and
as of each Settlement Date that:
(a) Existence and Power. Such Loan Party's jurisdiction of
organization is correctly set forth in the preamble to this Agreement. Such Loan
Party is duly organized under the laws of that jurisdiction and no other state
or jurisdiction, and such jurisdiction must maintain a public record showing the
organization to have been organized. Such Loan Party is validly existing and in
good standing under the laws of its state of organization. Such Loan Party is
duly qualified to do business and is in good standing as a foreign entity, and
has and holds all organizational power and all governmental licenses,
authorizations, consents and approvals required to carry on its business in each
jurisdiction in which its business is conducted except where the failure to so
qualify or so hold could not reasonably be expected to have a Material Adverse
Effect.
(b) Power and Authority; Due Authorization, Execution and Delivery.
The execution and delivery by such Loan Party of this Agreement and each other
Transaction Document to which it is a party, and the performance of its
obligations hereunder and thereunder and, in the case of Borrower, Borrower's
use of the proceeds of Advances made hereunder, are within its corporate powers
and authority and have been duly authorized by all necessary corporate action on
its part. This Agreement and each other Transaction Document to which such Loan
Party is a party has been duly executed and delivered by such Loan Party.
9
(c) No Conflict. The execution and delivery by such Loan Party of
this Agreement and each other Transaction Document to which it is a party, and
the performance of its obligations hereunder and thereunder do not contravene or
violate (i) its certificate or articles of incorporation or by-laws, (ii) any
law, rule or regulation applicable to it, (iii) any restrictions under any
agreement, contract or instrument to which it is a party or by which it or any
of its property is bound, or (iv) any order, writ, judgment, award, injunction
or decree binding on or affecting it or its property, and do not result in the
creation or imposition of any Adverse Claim on assets of such Loan Party or its
Subsidiaries (except as created hereunder) except, in any case, where such
contravention or violation could not reasonably be expected to have a Material
Adverse Effect; and no transaction contemplated hereby requires compliance with
any bulk sales act or similar law.
(d) Governmental Authorization. Other than the filing of the
financing statements required hereunder, no authorization or approval or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution and delivery by such Loan
Party of this Agreement and each other Transaction Document to which it is a
party and the performance of its obligations hereunder and thereunder.
(e) Actions, Suits. There are no actions, suits or proceedings
pending, or to the best of such Loan Party's knowledge, threatened, against or
affecting such Loan Party, or any of its properties, in or before any court,
arbitrator or other body, that could reasonably be expected to have a Material
Adverse Effect. Such Loan Party is not in default with respect to any order of
any court, arbitrator or governmental body.
(f) Binding Effect. This Agreement and each other Transaction
Document to which such Loan Party is a party constitute the legal, valid and
binding obligations of such Loan Party enforceable against such Loan Party in
accordance with their respective terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, reorganization or other similar
laws relating to or limiting creditors' rights generally and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
(g) Accuracy of Information. All information heretofore furnished by
such Loan Party or any of its Affiliates to the Agent or the Lenders for
purposes of or in connection with this Agreement, any of the other Transaction
Documents or any transaction contemplated hereby or thereby is, and all such
information hereafter furnished by such Loan Party or any of its Affiliates to
the Agent or the Lenders will be, true and accurate in every material respect on
the date such information is stated or certified and does not and will not
contain any material misstatement of fact or omit to state a material fact or
any fact necessary to make the statements contained therein not misleading.
(h) Use of Proceeds. No proceeds of any Advance hereunder will be
used (i) for a purpose that violates, or would be inconsistent with, (A) Section
7.2(e) of this Agreement or (B) Regulation T, U or X promulgated by the Board of
Governors of the Federal Reserve System from time to time or (ii) to acquire any
security in any transaction which is subject to Section 12, 13 or 14 of the
Securities Exchange Act of 1934, as amended.
10
(i) Good Title. Borrower is the legal and beneficial owner of the
Receivables and Related Security with respect thereto, free and clear of any
Adverse Claim, except as created by the Transaction Documents. There have been
duly filed all financing statements or other similar instruments or documents
necessary under the UCC (or any comparable law) of all appropriate jurisdictions
to perfect Borrower's ownership interest in each Receivable, its Collections and
the Related Security.
(j) Perfection. This Agreement is effective to create a valid
security interest in favor of the Agent for the benefit of the Secured Parties
in the Collateral to secure payment of the Obligations, free and clear of any
Adverse Claim except as created by the Transactions Documents. There have been
duly filed all financing statements or other similar instruments or documents
necessary under the UCC (or any comparable law) of all appropriate jurisdictions
to perfect the Agent's (on behalf of the Secured Parties) security interest in
the Collateral. Such Loan Party's jurisdiction of organization is a jurisdiction
whose law generally requires information concerning the existence of a
nonpossessory security interest to be made generally available in a filing,
record or registration system as a condition or result of such a security
interest's obtaining priority over the rights of a lien creditor which respect
to collateral.
(k) Places of Business and Locations of Records. The principal places
of business and chief executive office of such Loan Party and the offices where
it keeps all of its Records are located at the address(es) listed on Exhibit III
or such other locations of which the Agent has been notified in accordance with
Section 7.2(a) in jurisdictions where all action required by Section 14.4(a) has
been taken and completed. Borrower's Federal Employer Identification Number is
correctly set forth on Exhibit III.
(l) Collections. The conditions and requirements set forth in Section
7.1(j) and Section 8.2 have at all times been satisfied and duly performed. The
names, addresses and jurisdictions of organization of all Collection Banks,
together with the account numbers of the Collection Accounts of Borrower at each
Collection Bank and the post office box number of each Lock-Box, are listed on
Exhibit IV. Borrower has not granted any Person, other than the Agent as
contemplated by this Agreement, dominion and control of any Lock-Box or
Collection Account, or the right to take dominion and control of any such
Lock-Box or Collection Account at a future time or upon the occurrence of a
future event.
(m) Material Adverse Effect. (i) The initial Servicer represents and
warrants that since June 30, 2004, no event has occurred that would have a
material adverse effect on the financial condition or operations of the initial
Servicer and its Subsidiaries or the ability of the initial Servicer to perform
its obligations under this Agreement, and (ii) Borrower represents and warrants
that since the date of this Agreement, no event has occurred that would have a
material adverse effect on (A) the financial condition or operations of
Borrower, (B) the ability of Borrower to perform its obligations under the
Transaction Documents, or (C) the collectibility of the Receivables generally or
any material portion of the Receivables.
(n) Names. The name in which Borrower has executed this Agreement is
identical to the name of Borrower as indicated on the public record of its state
of organization which shows Borrower to have been organized. In the past five
(5) years, Borrower has not used any corporate names, trade names or assumed
names other than the name in which it has executed this Agreement.
11
(o) Ownership of Borrower. Bell Microproducts owns, directly or
indirectly, 100% of the issued and outstanding capital stock of the Borrower,
free and clear of any Adverse Claim. Such capital stock is validly issued, fully
paid and nonassessable, and there are no options, warrants or other rights to
acquire securities of the Borrower.
(p) Not a Holding Company or an Investment Company. Such Loan Party
is not a "holding company" or a "subsidiary holding company" of a "holding
company" within the meaning of the Public Utility Holding Company Act of 1935,
as amended, or any successor statute. Such Loan Party is not an "investment
company" within the meaning of the Investment Company Act of 1940, as amended,
or any successor statute.
(q) Compliance with Law. Such Loan Party has complied in all respects
with all applicable laws, rules, regulations, orders, writs, judgments,
injunctions, decrees or awards to which it may be subject, except where the
failure to so comply could not reasonably be expected to have a Material Adverse
Effect. Each Receivable, together with the Contract related thereto, does not
contravene any laws, rules or regulations applicable thereto (including, without
limitation, laws, rules and regulations relating to truth in lending, fair
credit billing, fair credit reporting, equal credit opportunity, fair debt
collection practices and privacy, if applicable), and no part of such Contract
is in violation of any such law, rule or regulation, except where such
contravention or violation could not reasonably be expected to have a Material
Adverse Effect.
(r) Compliance with Credit and Collection Policy. Such Loan Party has
complied in all material respects with the Credit and Collection Policy with
regard to each Receivable and the related Contract, and has not made any change
to such Credit and Collection Policy, except such material change as to which
the Agent has been notified in accordance with Section 7.1(a)(ix).
(s) Payments to Originator. With respect to each Receivable
transferred to Borrower under the Receivables Sale Agreement, Borrower has given
reasonably equivalent value to the Originator in consideration therefor and such
transfer was not made for or on account of an antecedent debt. No transfer by
the Originator of any Receivable under the Receivables Sale Agreement is or may
be voidable under any section of the Bankruptcy Reform Act of 1978 (11 U.S.C.
ss.ss. 101 et seq.), as amended.
(t) Enforceability of Contracts. Each Contract with respect to each
Receivable is effective to create, and has created, a legal, valid and binding
obligation of the related Obligor to pay the Outstanding Balance of the
Receivable created thereunder and any accrued interest thereon, enforceable
against the Obligor in accordance with its terms, except as such enforcement may
be limited by applicable bankruptcy, insolvency, reorganization or other similar
laws relating to or limiting creditors' rights generally and by general
principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
(u) Eligible Receivables. Each Receivable included in the Net Pool
Balance as an Eligible Receivable on the date of any Periodic Report was an
Eligible Receivable on such date.
12
(v) Borrowing Limit. Immediately after giving effect to each Advance
and each settlement on any Settlement Date hereunder, the Aggregate Principal is
less than or equal to the Borrowing Limit.
(w) Accounting. The manner in which such Loan Party accounts for the
transactions contemplated by this Agreement and the Receivables Sale Agreement
does not jeopardize the true sale analysis.
ARTICLE VI
CONDITIONS OF ADVANCES
SECTION 6.1 CONDITIONS PRECEDENT TO INITIAL ADVANCE.
The initial Advance under this Agreement is subject to the conditions
precedent that (a) the Agent shall have received on or before the date of such
Advance those documents listed on Schedule A to the Receivables Sale Agreement
and those documents listed on Schedule B to this Agreement, (b) the Rating
Agency Condition shall have been satisfied, and (c) the Agent shall have
received all fees and expenses required to be paid on such date pursuant to the
terms of this Agreement and the Fee Letter.
SECTION 6.2 CONDITIONS PRECEDENT TO ALL ADVANCES.
Each Advance and each rollover or continuation of any Advance shall
be subject to the further conditions precedent that (a) the Servicer shall have
delivered to the Agent on or prior to the date thereof, in form and substance
satisfactory to the Agent, all Periodic Reports as and when due under Section
8.5; (b) the Facility Termination Date shall not have occurred; (c) the Agent
shall have received such other approvals, opinions or documents as it may
reasonably request; and (d) on the date thereof, the following statements shall
be true (and acceptance of the proceeds of such Advance shall be deemed a
representation and warranty by Borrower that such statements are then true):
(i) the representations and warranties set forth in
Section 5.1 are true and correct on and as of the date of such
Advance (or such Settlement Date, as the case may be), such
Reinvestment or rollover or continuation of any Advance as though
made on and as of such date;
(ii) no event has occurred and is continuing, or would
result from such Advance (or the continuation thereof), that will
constitute an Amortization Event, and no event has occurred and is
continuing, or would result from such Advance (or the continuation
thereof), such Reinvestment or rollover or continuation of any
Advance, that would constitute an Unmatured Amortization Event; and
(iii) after giving effect to such Advance such
Reinvestment or rollover or continuation of any Advance, the
Aggregate Principal will not exceed the Borrowing Limit.
13
ARTICLE VII
COVENANTS
SECTION 7.1 AFFIRMATIVE COVENANTS OF THE LOAN PARTIES.
Until the Final Payout Date, each Loan Party hereby covenants, as to
itself, as set forth below:
(a) Financial Reporting. Such Loan Party will (I) maintain, for
itself and each of its Subsidiaries, a system of accounting established and
administered in accordance with GAAP, in which system true and complete entries
shall be made of all dealings or transactions of or in relation to the
Receivables and the businesses of such Loan Party and its Subsidiaries and (II)
furnish or cause to be furnished to the Agent:
(i) Annual Reporting. Within ninety (90) days after the
close of each of its respective fiscal years, audited, unqualified
consolidated financial statements (which shall include balance
sheets, statements of income and retained earnings and a statement of
cash flows) for such Loan Party for such fiscal year, together with
the unqualified opinion of independent certified public accountants,
which accountants shall be an independent accounting firm selected by
such Loan Party and reasonably acceptable to the Agent, that such
audited financial statements have been prepared in accordance with
GAAP, and present fairly the results of operations and financial
condition of such Loan Party and its Subsidiaries as of the end of
and for the fiscal year then ended.
(ii) Quarterly Reporting. Within forty-five (45) days
after the close of the first three (3) quarterly periods of each of
its respective fiscal years, consolidated balance sheets of each of
the Loan Parties as at the close of each such period and statements
of income and retained earnings and a statement of cash flows for
each such Person for the period from the beginning of such fiscal
year to the end of such quarter, all certified by its respective
chief financial officer.
(iii) Monthly Reporting. Within thirty-five (35) days
after the end of each fiscal month, the monthly unaudited
consolidated and consolidating financial statements of such Loan
Party (including in each case balance sheets, statements of income
and loss, and statements of depreciation and amortization, capital
expenditures and debt reduction), all in reasonable detail, fairly
presenting the financial position and the results of the operations
of such Loan Party and its Subsidiaries as of the end of and through
such fiscal month, subject to normal year-end adjustments.
(iv) Compliance Certificate. Together with the financial
statements required hereunder, a compliance certificate in
substantially the form of Exhibit V signed by such Loan Party's
Authorized Officer and dated the date of such annual financial
statement or such quarterly financial statement, as the case may be.
(v) Shareholders Statements and Reports. Promptly upon the
furnishing thereof to the shareholders of such Loan Party copies of
all financial statements, reports and proxy statements so furnished.
14
(vi) Accountant Letters. Together with the financial
statements required hereunder, any reports or management letters
prepared by accountants or auditors on behalf of such Loan Party.
(vii) S.E.C. Filings. Promptly upon the filing thereof,
notify the Agent of the filing of all registration statements and
annual, quarterly, monthly or other regular reports which any Loan
Party or any of its Affiliates files with the Securities and Exchange
Commission.
(viii) Copies of Notices. Promptly upon its receipt of any
notice, request for consent, financial statements, certification,
report or other communication under or in connection with any
Transaction Document from any Person other than the Agent or any
Lender, copies of the same.
(ix) Change in Credit and Collection Policy. At least
thirty (30) days prior to the effectiveness of any material change in
or material amendment to the Credit and Collection Policy, a copy of
the Credit and Collection Policy then in effect and a notice (A)
indicating such change or amendment, and (B) if such proposed change
or amendment would be reasonably likely to adversely affect the
collectibility of the Receivables or decrease the credit quality of
any newly created Receivables, requesting the Agent's consent
thereto.
(x) Other Information. Promptly, from time to time, such
other information, documents, records or reports relating to the
Receivables or the condition or operations, financial or otherwise,
of such Loan Party as the Agent may from time to time reasonably
request in order to protect the interests of the Agent and the
Lenders under or as contemplated by this Agreement.
(b) Notices. Such Loan Party will notify the Agent in writing of any
of the following promptly upon learning of the occurrence thereof, describing
the same and, if applicable, the steps being taken with respect thereto:
(i) Amortization Events or Unmatured Amortization Events.
The occurrence of each Amortization Event and each Unmatured
Amortization Event, by a statement of an Authorized Officer of such
Loan Party.
(ii) Judgments and Proceedings. (A) (1) The entry of any
judgment or decree against the Servicer or any of its Subsidiaries if
the aggregate amount of all judgments and decrees then outstanding
against the Servicer and its Subsidiaries exceeds $1,000,000 after
deducting (I) the amount with respect to which the Servicer or any
such Subsidiary, as the case may be, is insured and with respect to
which the insurer has assumed responsibility in writing, and (II) the
amount for which the Servicer or any such Subsidiary is otherwise
indemnified if the terms of such indemnification are reasonably
satisfactory to the Agent, and (2) the institution of any litigation,
arbitration proceeding or governmental proceeding against the
Servicer which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect; and (B) the entry of any
judgment or decree or the institution of any litigation, arbitration
proceeding or governmental proceeding against Borrower.
15
(iii) Material Adverse Effect. The occurrence of any event
or condition that has had, or could reasonably be expected to have, a
Material Adverse Effect.
(iv) Termination Date. The occurrence of the "Termination
Date" under and as defined in the Receivables Sale Agreement.
(v) Defaults Under Other Agreements. The occurrence of a
default or an event of default under any other financing arrangement
pursuant to which such Loan Party is a debtor or an obligor.
(vi) Notices under Receivables Sale Agreement. Copies of
all notices delivered under the Receivables Sale Agreement.
(vii) Control. The exercise by any lender of dominion or
control over cash or other proceeds of collateral.
(viii) Reporting Modification. The occurrence
of a request by any other lender for reporting to occur on
less than a monthly basis and indicating the modified
reporting requirements.
(c) Compliance with Laws and Preservation of Corporate Existence.
Such Loan Party will comply in all respects with all applicable laws, rules,
regulations, orders, writs, judgments, injunctions, decrees or awards to which
it may be subject, except where the failure to so comply could not reasonably be
expected to have a Material Adverse Effect. Such Loan Party will preserve and
maintain its corporate existence, rights, franchises and privileges in the
jurisdiction of its incorporation, and qualify and remain qualified in good
standing as a foreign corporation in each jurisdiction where its business is
conducted, except where the failure to so preserve and maintain or qualify could
not reasonably be expected to have a Material Adverse Effect.
(d) Field Exams. Such Loan Party will furnish to the Agent from time
to time such information with respect to it and the Receivables as the Agent may
reasonably request. Such Loan Party will, from time to time during regular
business hours as requested by the Agent upon reasonable notice and at the sole
cost of such Loan Party, permit the Agent, or its agents or representatives (and
shall cause the Originator to permit the Agent or its agents or
representatives): (i) to examine and make copies of and abstracts from all
Records in the possession or under the control of such Person relating to the
Collateral, including, without limitation, the related Contracts, and (ii) to
visit the offices and properties of such Person for the purpose of examining
such materials described in clause (i) above, and to discuss matters relating to
such Person's financial condition or the Collateral or any Person's performance
under any of the Transaction Documents or any Person's performance under the
Contracts and, in each case, with any of the officers or employees of Borrower
or the Servicer having knowledge of such matters (each of the foregoing
examinations and visits, a "Review"); provided, however, that, so long as no
Amortization Event has occurred and is continuing, (A) the Loan Parties shall
only be responsible for the costs and expenses of three (3) Reviews in any one
calendar year, and (B) the Agent will not request more than four (4) Reviews in
any one calendar year.
16
(e) Keeping and Marking of Records and Books.
(i) The Servicer will (and will cause the Originator to)
maintain and implement administrative and operating procedures
(including, without limitation, an ability to recreate records
evidencing Receivables in the event of the destruction of the
originals thereof), and keep and maintain all documents, books,
records and other information reasonably necessary or advisable for
the collection of all Receivables (including, without limitation,
records adequate to permit the immediate identification of each new
Receivable and all Collections of and adjustments to each existing
Receivable). The Servicer will (and will cause the Originator to)
give the Agent notice of any material change in the administrative
and operating procedures referred to in the previous sentence.
(ii) Such Loan Party will (and will cause the Originator
to): (A) on or prior to the date hereof, mark its master data
processing records and other books and records relating to the Loans
with a legend, acceptable to the Agent, describing the Agent's
security interest in the Collateral and (B) upon the request of the
Agent following the occurrence of an Amortization Event: (1) mark
each Contract with a legend describing the Agent's security interest
and (2) deliver to the Agent all Contracts (including, without
limitation, all multiple originals of any such Contract constituting
an instrument, a certificated security or chattel paper) relating to
the Receivables.
(f) Compliance with Contracts and Credit and Collection Policy. Such
Loan Party will (and will cause the Originator to) timely and fully (i) perform
and comply with all provisions, covenants and other promises required to be
observed by it under the Contracts related to the Receivables, and (ii) comply
in all respects with the Credit and Collection Policy in regard to each
Receivable and the related Contract.
(g) Performance and Enforcement of Receivables Sale Agreement.
Borrower will, and will require the Originator to, perform each of their
respective obligations and undertakings under and pursuant to the Receivables
Sale Agreement, will purchase Receivables thereunder in strict compliance with
the terms thereof and will vigorously enforce the rights and remedies accorded
to Borrower under the Receivables Sale Agreement. Borrower will take all actions
to perfect and enforce its rights and interests (and the rights and interests of
the Agent and the Lenders as assignees of Borrower) under the Receivables Sale
Agreement as the Agent may from time to time reasonably request, including,
without limitation, making claims to which it may be entitled under any
indemnity, reimbursement or similar provision contained in the Receivables Sale
Agreement.
(h) Ownership. Borrower will (or will cause the Originator to) take
all necessary action to (i) vest legal and equitable title to the Collateral
purchased under the Receivables Sale Agreement irrevocably in Borrower, free and
clear of any Adverse Claims (other than Adverse Claims in favor of the Agent,
for the benefit of the Secured Parties) including, without limitation, the
filing of all financing statements or other similar instruments or documents
necessary under the UCC (or any comparable law) of all appropriate jurisdictions
17
to perfect Borrower's interest in such Collateral and such other action to
perfect, protect or more fully evidence the interest of Borrower therein as the
Agent may reasonably request), and (ii) establish and maintain, in favor of the
Agent, for the benefit of the Secured Parties, a valid and perfected first
priority security interest in all Collateral, free and clear of any Adverse
Claims, including, without limitation, the filing of all financing statements or
other similar instruments or documents necessary under the UCC (or any
comparable law) of all appropriate jurisdictions to perfect the Agent's (for the
benefit of the Secured Parties) security interest in the Collateral and such
other action to perfect, protect or more fully evidence the interest of the
Agent for the benefit of the Secured Parties as the Agent may reasonably
request.
(i) Lenders' Reliance. Borrower acknowledges that the Lenders are
entering into the transactions contemplated by this Agreement in reliance upon
Borrower's identity as a legal entity that is separate from the Originator.
Therefore, from and after the date of execution and delivery of this Agreement,
Borrower shall take all reasonable steps, including, without limitation, all
steps that the Agent or any Lender may from time to time reasonably request, to
maintain Borrower's identity as a separate legal entity and to make it manifest
to third parties that Borrower is an entity with assets and liabilities distinct
from those of the Originator and any Affiliates thereof (other than Borrower)
and not just a division of the Originator or any such Affiliate. Without
limiting the generality of the foregoing and in addition to the other covenants
set forth herein, Borrower will:
(i) conduct its own business in its own name and require
that all full-time employees of Borrower, if any, identify themselves
as such and not as employees of the Originator (including, without
limitation, by means of providing appropriate employees with business
or identification cards identifying such employees as Borrower's
employees);
(ii) compensate all employees, consultants and agents
directly, from Borrower's own funds, for services provided to
Borrower by such employees, consultants and agents and, to the extent
any employee, consultant or agent of Borrower is also an employee,
consultant or agent of the Originator or any Affiliate thereof,
allocate the compensation of such employee, consultant or agent
between Borrower and the Originator or such Affiliate, as applicable,
on a basis that reflects the services rendered to Borrower and the
Originator or such Affiliate, as applicable;
(iii) clearly identify its offices (by signage or
otherwise) as its offices and, if such office is located in the
offices of the Originator, Borrower shall lease such office at a fair
market rent;
(iv) have a separate telephone number, which will be
answered only in its name and separate stationery and checks in its
own name;
(v) conduct all transactions with the Originator and the
Servicer (including, without limitation, any delegation of its
obligations hereunder as Servicer) strictly on an arm's-length basis,
allocate all overhead expenses (including, without limitation,
telephone and other utility charges) for items shared between
Borrower and the Originator on the basis of actual use to the extent
practicable and, to the extent such allocation is not practicable, on
a basis reasonably related to actual use;
18
(vi) at all times have a Board of Directors consisting of
at least three members, at least one member of which is an
Independent Director;
(vii) observe all corporate formalities as a distinct
entity, and ensure that all corporate actions relating to (A) the
selection, maintenance or replacement of the Independent Director,
(B) the dissolution or liquidation of Borrower or (C) the initiation
of, participation in, acquiescence in or consent to any bankruptcy,
insolvency, reorganization or similar proceeding involving Borrower,
are duly authorized by unanimous vote of its Board of Directors
(including the Independent Director);
(viii) maintain Borrower's books and records separate from
those of the Originator and any Affiliate thereof and otherwise
readily identifiable as its own assets rather than assets of the
Originator or any Affiliate thereof;
(ix) prepare its financial statements separately from
those of the Originator and insure that any consolidated financial
statements of the Originator or any Affiliate thereof that include
Borrower and that are filed with the Securities and Exchange
Commission or any other governmental agency have notes clearly
stating that Borrower is a separate corporate entity and that its
assets will be available first and foremost to satisfy the claims of
the creditors of Borrower;
(x) except as herein specifically otherwise provided,
maintain the funds or other assets of Borrower separate from, and not
commingled with, those of the Originator or any Affiliate thereof and
only maintain bank accounts or other depository accounts to which
Borrower alone is the account party, into which Borrower alone makes
deposits and from which Borrower alone (or the Agent hereunder) has
the power to make withdrawals;
(xi) pay all of Borrower's operating expenses from
Borrower's own assets (except for certain payments by the Originator
or other Persons pursuant to allocation arrangements that comply with
the requirements of this Section 7.1(i));
(xii) operate its business and activities such that: it
does not engage in any business or activity of any kind, or enter
into any transaction or indenture, mortgage, instrument, agreement,
contract, lease or other undertaking, other than the transactions
contemplated and authorized by this Agreement and the Receivables
Sale Agreement; and does not create, incur, guarantee, assume or
suffer to exist any indebtedness or other liabilities, whether direct
or contingent, other than (A) as a result of the endorsement of
negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business, (B) the incurrence
of obligations under this Agreement, (C) the incurrence of
obligations, as expressly contemplated in the Receivables Sale
Agreement, to make payment to the Originator thereunder for the
purchase of Receivables from the Originator under the Receivables
Sale Agreement, and (D) the incurrence of operating expenses in the
ordinary course of business of the type otherwise contemplated by
this Agreement;
19
(xiii) maintain its corporate charter in conformity with
this Agreement, such that it does not amend, restate, supplement or
otherwise modify its Certificate of Incorporation or By-Laws in any
respect that would impair its ability to comply with the terms or
provisions of any of the Transaction Documents, including, without
limitation, Section 7.1(i) of this Agreement;
(xiv) maintain the effectiveness of, and continue to
perform under the Receivables Sale Agreement such that it does not
amend, restate, supplement, cancel, terminate or otherwise modify the
Receivables Sale Agreement, or give any consent, waiver, directive or
approval thereunder or waive any default, action, omission or breach
under the Receivables Sale Agreement or otherwise grant any
indulgence thereunder, without (in each case) the prior written
consent of the Agent;
(xv) maintain its corporate separateness such that it does
not merge or consolidate with or into, or convey, transfer, lease or
otherwise dispose of (whether in one transaction or in a series of
transactions, and except as otherwise contemplated herein) all or
substantially all of its assets (whether now owned or hereafter
acquired) to, or acquire all or substantially all of the assets of,
any Person, nor at any time create, have, acquire, maintain or hold
any interest in any Subsidiary;
(xvi) maintain at all times the Required Capital Amount
and refrain from making any dividend, distribution, redemption of
capital stock or payment of any subordinated indebtedness which would
cause the Required Capital Amount to cease to be so maintained; and
(xvii) take such other actions as are necessary on its
part to ensure that the facts and assumptions set forth in the
opinion issued by Fredrikson & Byron, P.A. as counsel for Borrower,
in connection with the closing or initial Advance under this
Agreement and relating to substantive consolidation issues, and in
the certificates accompanying such opinion, remain true and correct
in all material respects at all times.
(j) Collections.
(i) Such Loan Party will cause (A) all proceeds from all
Lock-Boxes to be directly deposited by a Collection Bank into a
Collection Account and (B) each Lock-Box and Collection Account (and
the Borrower shall cause the Facility Account) to be subject at all
times to a Collection Account Agreement that is in full force and
effect. In the event any payments relating to the Collateral are
remitted directly to Borrower or any Affiliate of Borrower, Borrower
will remit (or will cause all such payments to be remitted) directly
to a Collection Bank and deposited into a Collection Account within
two (2) Business Days following receipt thereof, and, at all times
prior to such remittance, Borrower will itself hold or, if
applicable, will cause such payments to be held in trust for the
exclusive benefit of the Agent and the Lenders. Borrower will
maintain exclusive ownership, dominion and control (subject to the
terms of this Agreement) of each Lock-Box and Collection Account and
shall not grant the right to take dominion and control of any
Lock-Box or Collection Account at a future time or upon the
occurrence of a future event to any Person, except to the Agent as
contemplated by this Agreement;
20
(ii) Borrower, or Servicer on behalf of Borrower, shall
cause evidence to be delivered to Agent showing that each Lock-Box
and each Collection Account is maintained in the name of Borrower;
and
(iii) Borrower and Servicer shall maintain all Collections
in a Collection Account or the Facility Account and shall not (A)
withdraw funds from any such account except for the purposes set
forth in, and to the extent permitted by, the Transaction Documents
or (B) permit or cause the Facility Account to be terminated except
with the prior consent of, and on terms and conditions acceptable to,
the Agent.
(k) Taxes. Such Loan Party will file all tax returns and reports
required by law to be filed by it and will promptly pay all taxes and
governmental charges at any time owing, except any such taxes which are not yet
delinquent or are being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP shall have
been set aside on its books. Borrower will pay when due any taxes payable in
connection with the Receivables, exclusive of taxes on or measured by income or
gross receipts of the Agent or any Lender.
(l) Payment to Originator. With respect to any Receivable purchased
by Borrower from the Originator, such sale shall be effected under, and in
strict compliance with the terms of, the Receivables Sale Agreement, including,
without limitation, the terms relating to the amount and timing of payments to
be made to the Originator in respect of the purchase price for such Receivable.
SECTION 7.2 NEGATIVE COVENANTS OF THE LOAN PARTIES.
Until the Final Payout Date, each Loan Party hereby covenants, as to
itself, that:
(a) Name Change, Offices and Records. Such Loan Party will not change
its name, identity or structure (within the meaning of any applicable enactment
of the UCC), relocate its chief executive office at any time while the location
of its chief executive office is relevant to perfection of the Agent's security
interest, for the benefit of the Secured Parties, in the Receivables, Related
Security and Collections, or change any office where Records are kept unless it
shall have: (i) given the Agent at least forty-five (45) days' prior written
notice thereof and (ii) delivered to the Agent all financing statements,
instruments and other documents requested by the Agent in connection with such
change or relocation.
(b) Change in Payment Instructions to Obligors. Except as may be
required by the Agent pursuant to Section 8.2(b), such Loan Party will not add
or terminate any bank as a Collection Bank, or make any change in the
instructions to Obligors regarding payments to be made to any Lock-Box or
Collection Account, unless the Agent shall have received, at least ten (10) days
before the proposed effective date therefor, (i) written notice of such
addition, termination or change and (ii) with respect to the addition of a
Collection Bank or a Collection Account or Lock-Box, an executed Collection
Account Agreement with respect to the new Collection Account or Lock-Box;
provided, however, that the Servicer may make changes in instructions to
Obligors regarding payments if such new instructions require such Obligor to
make payments to another existing Collection Account.
21
(c) Modifications to Contracts and Credit and Collection Policy. Such
Loan Party will not, and will not permit the Originator to, make any change to
the Credit and Collection Policy that could adversely affect the collectibility
of the Receivables or decrease the credit quality of any newly created
Receivables. Except as provided in Section 8.2(d), the Servicer will not, and
will not permit the Originator to, extend, amend or otherwise modify the terms
of any Receivable or any Contract related thereto other than in accordance with
the Credit and Collection Policy.
(d) Sales, Liens. Borrower will not sell, assign (by operation of law
or otherwise) or otherwise dispose of, or grant any option with respect to, or
create or suffer to exist any Adverse Claim upon (including, without limitation,
the filing of any financing statement) or with respect to, any of the
Collateral, or assign any right to receive income with respect thereto (other
than, in each case, the creation of a security interest therein in favor of the
Agent as provided for herein), and Borrower will defend the right, title and
interest of the Secured Parties in, to and under any of the foregoing property,
against all claims of third parties claiming through or under Borrower or the
Originator. Borrower will not create or suffer to exist any mortgage, pledge,
security interest, encumbrance, lien, charge or other similar arrangement on any
of its inventory.
(e) Use of Proceeds. Borrower will not use the proceeds of the
Advances for any purpose other than (i) paying for Receivables and Related
Security under and in accordance with the Receivables Sale Agreement, including
without limitation, making payments on the Subordinated Notes to the extent
permitted thereunder and under the Receivables Sale Agreement, (ii) paying its
ordinary and necessary operating expenses when and as due, and (iii) making
Restricted Junior Payments to the extent permitted under this Agreement.
(f) Termination Date Determination. Borrower will not designate the
Termination Date, or send any written notice to the Originator in respect
thereof, without the prior written consent of the Agent, except with respect to
the occurrence of such Termination Date arising pursuant to Section 5.1(e) of
the Receivables Sale Agreement.
(g) Restricted Junior Payments. Borrower will not make any Restricted
Junior Payment if after giving effect thereto, Borrower's Net Worth would be
less than the Required Capital Amount.
(h) Borrower Indebtedness. Borrower will not incur or permit to exist
any Indebtedness or liability on account of deposits except: (i) the
Obligations, (ii) the Subordinated Loans, and (iii) other current accounts
payable to Servicer, as servicer, and to Bell Microproducts under the
Administrative Support Agreement arising in the ordinary course of business and
not overdue.
22
(i) Prohibition on Additional Negative Pledges. No Loan Party will
enter into or assume any agreement (other than this Agreement and the other
Transaction Documents) prohibiting the creation or assumption of any Adverse
Claim upon the Collateral except as contemplated by the Transaction Documents,
or otherwise prohibiting or restricting any transaction contemplated hereby or
by the other Transaction Documents, and no Loan Party will enter into or assume
any agreement creating any Adverse Claim upon the Subordinated Notes.
ARTICLE VIII
ADMINISTRATION AND COLLECTION
SECTION 8.1 DESIGNATION OF SERVICER.
(a) The servicing, administration and collection of the Receivables
shall be conducted by such Person (the "Servicer") so designated from time to
time in accordance with this Section 8.1. Bell Microproducts is hereby
designated as, and hereby agrees to perform the duties and obligations of, the
Servicer pursuant to the terms of this Agreement. The Agent may at any time
designate as Servicer any Person to succeed Bell Microproducts or any successor
Servicer provided that the Rating Agency Condition is satisfied.
(b) So long as Bell Microproducts shall be and remain the Servicer,
then Bell Microproducts shall be primarily liable to the Agent and the Lenders
for the full and prompt performance of all duties and responsibilities of the
Servicer hereunder, (ii) the Agent and the Lenders shall be entitled to deal
exclusively with Bell Microproducts in matters relating to the discharge by the
Servicer of its duties and responsibilities hereunder and (iii) the Agent and
the Lenders shall not be required to give notice, demand or other communication
to any Person other than Bell Microproducts in order for communication to the
Servicer and its sub-servicer or other delegate with respect thereto to be
accomplished. Bell Microproducts, at all times that it is the Servicer, shall be
responsible for providing any sub-servicer or other delegate of the Servicer
with any notice given to the Servicer under this Agreement.
SECTION 8.2 DUTIES OF SERVICER.
(a) The Servicer shall take or cause to be taken all such actions as
may be necessary or advisable to collect each Receivable from time to time, all
in accordance with applicable laws, rules and regulations, with reasonable care
and diligence, and in accordance with the Credit and Collection Policy.
(b) The Servicer will instruct all Obligors to pay all Collections
directly to a Lock-Box or Collection Account. The Servicer shall effect a
Collection Account Agreement substantially in the form of Exhibit VI with each
bank party to a Collection Account at any time. In the case of any remittances
received in any Lock-Box or Collection Account that shall have been identified,
to the satisfaction of the Servicer, to not constitute Collections or other
proceeds of the Receivables or the Related Security, the Servicer shall promptly
remit such items to the Person identified to it as being the owner of such
remittances. From and after the date the Agent delivers to any Collection Bank a
Collection Notice pursuant to Section 8.3, the Agent may request that the
Servicer, and the Servicer thereupon promptly shall instruct all Obligors with
respect to the Receivables, to remit all payments thereon to a new depositary
account specified by the Agent and, at all times thereafter, Borrower and the
Servicer shall not deposit or otherwise credit, and shall not permit any other
Person to deposit or otherwise credit to such new depositary account any cash or
payment item other than Collections.
23
(c) The Servicer shall administer the Collections in accordance with
the procedures described herein and in Article II. All such Collections shall be
retained in the Facility Account pending disbursement in accordance with the
provisions of Article II and payment of the Purchase Price (as defined in the
Receivables Sale Agreement) of Receivables upon receipt by the Agent of a Daily
Purchase Report (as defined in the Receivables Sale Agreement) from Originator
in accordance with the provisions of the Receivables Sale Agreement, whereupon
the Servicer may, prior to the Amortization Date and provided that such date is
a date on which all of the conditions set forth in Section 6.2 have been
satisfied, and provided, further, that the Agent has not required the
segregation of Collections pursuant to the following sentence, withdraw amounts
from the Facility Account to pay the cash portion of the Purchase Price for
Receivables as shown on such Daily Purchase Report. The Servicer shall set aside
and hold in trust for the account of Borrower and the Lenders their respective
shares of the Collections in accordance with Article II. The Servicer shall,
upon the request of the Agent, segregate, in a manner acceptable to the Agent,
all cash, checks and other instruments received by it from time to time
constituting Collections from the general funds of the Servicer or Borrower
prior to the remittance thereof in accordance with Article II. If the Servicer
shall be required to segregate Collections pursuant to the preceding sentence,
the Servicer shall segregate and deposit with a bank designated by the Agent
such allocable share of Collections of Receivables set aside for the Lenders on
the first Business Day following receipt by the Servicer of such Collections,
duly endorsed or with duly executed instruments of transfer.
(d) The Servicer may, in accordance with the Credit and Collection
Policy, extend the maturity of any Receivable or adjust the Outstanding Balance
of any Receivable as the Servicer determines to be appropriate to maximize
Collections thereof; provided, however, that such extension or adjustment shall
not alter the status of such Receivable as a Delinquent Receivable or Defaulted
Receivable or limit the rights of the Agent or the Lenders under this Agreement.
Notwithstanding anything to the contrary contained herein, the Agent shall have
the absolute and unlimited right to direct the Servicer to commence or settle
any legal action with respect to any Receivable or to foreclose upon or
repossess any Related Security.
(e) The Servicer shall hold in trust for Borrower and the Lenders all
Records that (i) evidence or relate to the Receivables, the related Contracts
and Related Security or (ii) are otherwise necessary or desirable to collect the
Receivables and shall, as soon as practicable upon demand of the Agent, deliver
or make available to the Agent all such Records, at a place selected by the
Agent. The Servicer shall, as soon as practicable following receipt thereof turn
over to Borrower any cash collections or other cash proceeds in accordance with
Article II. The Servicer shall, from time to time at the request of any Lender,
furnish to the Lenders (promptly after any such request) a calculation of the
amounts set aside for the Lenders pursuant to Article II.
(f) Any payment by an Obligor in respect of any indebtedness owed by
it to Originator or Borrower shall, except as otherwise specified by such
Obligor or otherwise required by contract or law and unless otherwise instructed
by the Agent, be applied as a Collection of any Receivable of such Obligor
(starting with the oldest such Receivable) to the extent of any amounts then due
and payable thereunder before being applied to any other receivable or other
obligation of such Obligor.
24
(g) The Servicer will at all times (i) maintain systems and
procedures whereby all Returned Goods are at all times identified on their face
as Returned Goods and do not constitute inventory of the Originator or any of
its Affiliates (other than the Borrower), (ii) maintain an area for the storage
of all Returned Goods that is physically separated from the area in which the
inventory of the Originator or any of its Affiliates (other than the Borrower)
is located, in which separated area only Returned Goods are stored or located
and no other inventory shall at any time be stored or located and (iii)
physically segregate all Returned Goods from all other of the inventory of the
Originator and all of its Affiliates (other than the Borrower).
SECTION 8.3 COLLECTION NOTICES.
The Agent is authorized at any time to date and to deliver to the
Collection Banks the Collection Notices. Borrower hereby transfers to the Agent
for the benefit of the Lenders, effective when the Agent delivers such notice,
the exclusive ownership and control of each Lock-Box and the Collection
Accounts. In case any authorized signatory of Borrower whose signature appears
on a Collection Account Agreement shall cease to have such authority before the
delivery of such notice, such Collection Notice shall nevertheless be valid as
if such authority had remained in force. Borrower hereby authorizes the Agent,
and agrees that the Agent shall be entitled (a) at any time after delivery of
the Collection Notices, to endorse Borrower's name on checks and other
instruments representing Collections, (b) at any time after the occurrence of an
Amortization Event, to enforce the Receivables, the related Contracts and the
Related Security, and (c) at any time after the occurrence of an Amortization
Event, to take such action as shall be necessary or desirable to cause all cash,
checks and other instruments constituting Collections of Receivables to come
into the possession of the Agent rather than Borrower.
SECTION 8.4 RESPONSIBILITIES OF BORROWER.
Anything herein to the contrary notwithstanding, the exercise by the
Agent and the Lenders of their rights hereunder shall not release the Servicer,
the Originator or Borrower from any of their duties or obligations with respect
to any Receivables or under the related Contracts. The Lenders shall have no
obligation or liability with respect to any Receivables or related Contracts,
nor shall any of them be obligated to perform the obligations of Borrower.
SECTION 8.5 REPORTS.
(a) Periodic Reports. The Servicer shall prepare and forward to the
Agent (a) on each Periodic Reporting Date, a Periodic Report and an electronic
file of the data contained therein and (b) at such times as the Agent shall
request, a listing by Obligor of all Receivables together with an aging of such
Receivables.
(b) Receivables Reports. The Servicer agrees to provide to Agent
notice of: (i) any material delay in Originator's or Servicer's performance of
any of its obligations to any Obligor or the assertion of any material claims,
offsets, defenses or counterclaims by any Obligor, or any material disputes with
Obligors, or any material settlement, adjustment or compromise thereof, (ii) all
material adverse information known to the Servicer relating to the financial
condition of any Obligor and (iii) any event or circumstance which, to the
25
Servicer's knowledge, would be reasonably likely to cause Agent to consider any
then existing Receivable as no longer constituting an Eligible Receivable. No
credit, discount, allowance or extension, or agreement with respect to any
credit, discount, allowance or extension, shall be granted by the Servicer to
any Obligor without the Agent's consent, except in the ordinary course of the
Servicer's business consistent with the practices of the Servicer as of the date
hereof and as to any such agreement so long as the Agent shall have received
notice thereof to the extent required hereunder.
SECTION 8.6 SERVICING FEE.
As compensation for the Servicer's servicing activities on their
behalf, the Lenders hereby agree to pay the Servicer the Servicing Fee, which
fee shall be paid in arrears on each Settlement Date.
ARTICLE IX
AMORTIZATION EVENTS
SECTION 9.1 AMORTIZATION EVENTS.
The occurrence of any one or more of the following events shall
constitute an Amortization Event:
(a) Any Loan Party shall fail to make any payment or deposit required
to be made by it under the Transaction Documents when due and, for any such
payment or deposit which is not in respect of principal, such failure continues
for two (2) consecutive Business Days.
(b) Any representation, warranty, certification or statement made by
any Loan Party in any Transaction Document to which it is a party or in any
other document delivered pursuant thereto shall prove to have been incorrect
when made or deemed made.
(c) Any Loan Party shall fail to perform or observe any covenant
contained in Section 7.2 or 8.5 when due.
(d) Any Loan Party shall fail to perform or observe any other
covenant or agreement under any Transaction Documents and such failure shall
continue for ten (10) consecutive days.
(e) Failure of Borrower to pay any Indebtedness (other than the
Obligations) when due or the default by Borrower in the performance of any term,
provision or condition contained in any agreement under which any such
Indebtedness was created or is governed, the effect of which is to cause, or to
permit the holder or holders of such Indebtedness to cause, such Indebtedness to
become due prior to its stated maturity; or any such Indebtedness of Borrower
shall be declared to be due and payable or required to be prepaid (other than by
a regularly scheduled payment) prior to the date of maturity thereof.
(f) Failure of the Servicer or any of its Subsidiaries other than
Borrower to pay Indebtedness in excess of $1,000,000 in aggregate principal
amount (hereinafter, "Material Indebtedness") when due and such failure
continues beyond any applicable grace or cure period (other than any default
26
that is the subject of a Notice of Default as described in Section 9.1(s)); or
the default by the Servicer or any of its Subsidiaries other than Borrower in
the performance of any term, provision or condition contained in any agreement
under which any Material Indebtedness was created or is governed beyond any
applicable grace or cure period (other than any default that is the subject of a
Notice of Default as described in Section 9.1(s)), the effect of which is to
cause, or to permit the holder or holders of such Material Indebtedness to
cause, such Material Indebtedness to become due prior to its stated maturity; or
any Material Indebtedness of the Servicer or any of its Subsidiaries other than
Borrower shall be declared to be due and payable or required to be prepaid
(other than by a regularly scheduled payment) prior to the date of maturity
thereof.
(g) An Event of Bankruptcy shall occur with respect to any Loan Party
or any of their respective Subsidiaries.
(h) As at the end of any Calculation Period:
(i) the three-month rolling average Delinquency Ratio
shall exceed 5.25%,
(ii) the three-month rolling average Default Ratio shall
exceed 4.25%, or
(iii) the three-month rolling average Dilution Ratio shall
exceed 5.00%.
(i) A Change of Control shall occur with respect to any Loan Party.
(j) (i) One or more final judgments for the payment of money in an
aggregate amount of $10,000 or more shall be entered against Borrower, (ii) one
or more final judgments for the payment of money in an amount in excess of
$1,000,000 in any one case or in excess of $3,000,000 in the aggregate, shall be
entered against the Servicer or any of its Subsidiaries (other than Borrower) on
claims not covered by insurance or as to which the insurance carrier has denied
its responsibility, and such judgment shall continue unsatisfied and in effect
for thirty (30) consecutive days without a stay of execution or (iii) any
judgment other than for the payment of money, or injunction, attachment,
garnishment, or execution is rendered against any Loan Party or any of the
Collateral having a value in excess of $1,000,000.
(k) The "Termination Date" under and as defined in the Receivables
Sale Agreement shall occur under the Receivables Sale Agreement or the
Originator shall for any reason cease to transfer, or cease to have the legal
capacity to transfer, or otherwise be incapable of transferring, Receivables to
Borrower under the Receivables Sale Agreement.
(l) This Agreement shall terminate in whole or in part (except in
accordance with its terms), or shall cease to be effective or to be the legally
valid, binding and enforceable obligation of Borrower, or any Person shall
directly or indirectly contest in any manner such effectiveness, validity,
binding nature or enforceability, or the Agent for the benefit of the Lenders
shall cease to have a valid and perfected first priority security interest in
the Collateral.
(m) On any Settlement Date, after giving effect to the turnover of
Collections by the Servicer on such date and the application thereof to the
Obligations in accordance with this Agreement, the Aggregate Principal shall
exceed the Borrowing Limit.
27
(n) The Internal Revenue Service shall file notice of a lien pursuant
to Section 6323 of the Tax Code with regard to any of the Collateral and such
lien shall not have been released within seven (7) days, or the PBGC shall, or
shall indicate its intention to, file notice of a lien pursuant to Section 4068
of ERISA with regard to any of the Collateral.
(o) Any Plan of the Servicer or any of its ERISA Affiliates:
(i) shall fail to be funded in accordance with the minimum
funding standard required by applicable law, the terms of such Plan,
Section 412 of the Tax Code or Section 302 of ERISA for any plan year
or a waiver of such standard is sought or granted with respect to
such Plan under applicable law, the terms of such Plan or Section 412
of the Tax Code or Section 303 of ERISA; or
(ii) is being, or has been, terminated or the subject of
termination proceedings under applicable law or the terms of such
Plan; or
(iii) shall require the Servicer or any of its ERISA
Affiliates to provide security under applicable law, the terms of
such Plan, Section 401 or 412 of the Tax Code or Section 306 or 307
of ERISA; or
(iv) results in a liability to the Servicer or any of its
ERISA Affiliates under applicable law, the terms of such Plan, or
Title IV ERISA,
and there shall result from any such failure, waiver, termination or other event
a liability to the PBGC or a Plan that would have a Material Adverse Effect.
(p) Any event shall occur which (i) materially and adversely impairs
the ability of the Originator to originate Receivables of a credit quality that
is at least equal to the credit quality of the Receivables sold or contributed
to Borrower on the date of this Agreement or (ii) has, or could be reasonably
expected to have, a Material Adverse Effect.
(q) After any Settlement Date, the Net Pool Balance is less than the
sum of (i) the Aggregate Principal plus (ii) the Required Reserve.
(r) Congress Financial Corporation (Western), any of its Affiliates
or assignees shall deliver to the Agent written notice stating that the
Originator has sold inventory outside the ordinary course of business in
violation of Section 9.7 of the Originator's current Loan and Security
Agreement.
(s) The Agent shall receive a Notice of Default pursuant to the terms
of the Intercreditor Agreement.
SECTION 9.2 REMEDIES.
Upon the occurrence and during the continuation of an Amortization
Event, the Agent may, or upon the direction of the Required Liquidity Banks
shall, take any of the following actions: (a) replace the Person then acting as
Servicer if the Agent has not already done so, (b) declare the Amortization Date
to have occurred, whereupon the Aggregate Commitment shall immediately terminate
28
and the Amortization Date shall forthwith occur, all without demand, protest or
further notice of any kind, all of which are hereby expressly waived by each
Loan Party; provided, however, that upon the occurrence of an Event of
Bankruptcy with respect to any Loan Party, the receipt by the Agent of a notice
pursuant to Section 9.1(r) or the receipt by the Agent of a Notice of Default
pursuant to the Intercreditor Agreement, the Amortization Date shall
automatically occur, without demand, protest or any notice of any kind, all of
which are hereby expressly waived by each Loan Party, (c) deliver the Collection
Notices to the Collection Banks, (d) exercise all rights and remedies of a
secured party upon default under the UCC and other applicable laws, and (e)
notify Obligors of the Agent's security interest in the Receivables and other
Collateral. The aforementioned rights and remedies shall be without limitation,
and shall be in addition to all other rights and remedies of the Agent and the
Lenders otherwise available under any other provision of this Agreement, by
operation of law, at equity or otherwise, all of which are hereby expressly
preserved, including, without limitation, all rights and remedies provided under
the UCC, all of which rights shall be cumulative.
ARTICLE X
INDEMNIFICATION
SECTION 10.1 INDEMNITIES BY THE LOAN PARTIES.
Without limiting any other rights that the Agent or any Lender may
have hereunder or under applicable law, (a) Borrower hereby agrees to indemnify
(and pay upon demand to) the Agent, Blue Ridge, each of the Liquidity Banks and
each of the respective assigns, officers, directors, agents and employees of the
foregoing (each, an "Indemnified Party") from and against any and all damages,
losses, claims, taxes, liabilities, costs, expenses and for all other amounts
payable, including reasonable attorneys' fees (which attorneys may be employees
of the Agent or such Lender) and disbursements (all of the foregoing being
collectively referred to as "Indemnified Amounts") awarded against or incurred
by any of them arising out of or as a result of this Agreement or the
acquisition, either directly or indirectly, by a Lender of an interest in the
Receivables, and (b) the Servicer hereby agrees to indemnify (and pay upon
demand to) each Indemnified Party for Indemnified Amounts awarded against or
incurred by any of them arising out of the Servicer's activities as Servicer
hereunder excluding, however, in all of the foregoing instances under the
preceding clauses (a) and (b):
(i) Indemnified Amounts to the extent a final judgment of a
court of competent jurisdiction holds that such Indemnified Amounts
resulted from gross negligence or willful misconduct on the part of
the Indemnified Party seeking indemnification;
(ii) Indemnified Amounts to the extent the same includes
losses in respect of Receivables that are uncollectible on account of
the insolvency, bankruptcy or lack of creditworthiness of the related
Obligor; or
(iii) taxes imposed by the jurisdiction in which such
Indemnified Party's principal executive office is located, on or
measured by the overall net income of such Indemnified Party to the
extent that the computation of such taxes is consistent with the
characterization for income tax purposes of the acquisition by the
Lenders of Loans as a loan or loans by the Lenders to Borrower
secured by the Receivables, the Related Security, the Collection
Accounts and the Collections;
29
provided, however, that nothing contained in this sentence shall limit the
liability of any Loan Party or limit the recourse of the Lenders to any Loan
Party for amounts otherwise specifically provided to be paid by such Loan Party
under the terms of this Agreement. Without limiting the generality of the
foregoing indemnification, Borrower shall indemnify the Agent and the Lenders
for Indemnified Amounts (including, without limitation, losses in respect of
uncollectible receivables, regardless of whether reimbursement therefor would
constitute recourse to Borrower or if such reimbursement were provided by the
Servicer or the Originator, would constitute recourse to the Originator or the
Servicer) relating to or resulting from:
(i) any representation or warranty made by any Loan Party
or the Originator (or any officers of any such Person) under or in
connection with this Agreement, any other Transaction Document or any
other information or report delivered by any such Person pursuant
hereto or thereto, which shall have been false or incorrect when made
or deemed made;
(ii) the failure by Borrower, the Servicer or the
Originator to comply with any applicable law, rule or regulation with
respect to any Receivable or Contract related thereto, or the
nonconformity of any Receivable or Contract included therein with any
such applicable law, rule or regulation or any failure of the
Originator to keep or perform any of its obligations, express or
implied, with respect to any Contract;
(iii) any failure of Borrower, the Servicer or the
Originator to perform its duties, covenants or other obligations in
accordance with the provisions of this Agreement or any other
Transaction Document;
(iv) any products liability, personal injury or damage
suit, or other similar claim arising out of or in connection with
merchandise, insurance or services that are the subject of any
Contract or any Receivable;
(v) any dispute, claim, offset or defense (other than
discharge in bankruptcy of the Obligor) of the Obligor to the payment
of any Receivable (including, without limitation, a defense based on
such Receivable or the related Contract not being a legal, valid and
binding obligation of such Obligor enforceable against it in
accordance with its terms), or any other claim resulting from the
sale of the merchandise or service related to such Receivable or the
furnishing or failure to furnish such merchandise or services;
(vi) the commingling of Collections of Receivables at any
time with other funds;
(vii) any investigation, litigation or proceeding related
to or arising from this Agreement or any other Transaction Document,
the transactions contemplated hereby, the use of the proceeds of any
Advance, the Collateral or any other investigation, litigation or
proceeding relating to Borrower, the Servicer or the Originator in
which any Indemnified Party becomes involved as a result of any of
the transactions contemplated hereby;
30
(viii) any inability to litigate any claim against any
Obligor in respect of any Receivable as a result of such Obligor
being immune from civil and commercial law and suit on the grounds of
sovereignty or otherwise from any legal action, suit or proceeding;
(ix) any Amortization Event described in Section 9.1(g);
(x) any failure of Borrower to acquire and maintain legal
and equitable title to, and ownership of any of the Collateral from
the Originator, free and clear of any Adverse Claim (other than as
created hereunder); or any failure of Borrower to give reasonably
equivalent value to the Originator under the Receivables Sale
Agreement in consideration of the transfer by the Originator of any
Receivable, or any attempt by any Person to void such transfer under
statutory provisions or common law or equitable action;
(xi) any failure to vest and maintain vested in the Agent
for the benefit of the Lenders, or to transfer to the Agent for the
benefit of the Secured Parties, a valid first priority perfected
security interests in the Collateral, free and clear of any Adverse
Claim (except as created by the Transaction Documents);
(xii) the failure to have filed, or any delay in filing,
financing statements or other similar instruments or documents under
the UCC of any applicable jurisdiction or other applicable laws with
respect to any Collateral, and the proceeds thereof, whether at the
time of any Advance or at any subsequent time;
(xiii) any action or omission by any Loan Party which
reduces or impairs the rights of the Agent or the Lenders with
respect to any Collateral or the value of any Collateral;
(xiv) any attempt by any Person to void any Advance or the
Agent's security interest in the Collateral under statutory
provisions or common law or equitable action; and
(xv) the failure of any Receivable included in the
calculation of the Net Pool Balance as an Eligible Receivable to be
an Eligible Receivable at the time so included.
SECTION 10.2 INCREASED COST AND REDUCED RETURN.
If after the date hereof, any Funding Source shall be charged any
fee, expense or increased cost on account of the adoption of any applicable law,
rule or regulation (including any applicable law, rule or regulation regarding
capital adequacy) or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
with any request or directive (whether or not having the force of law) of any
such authority, central bank or comparable agency (a "Regulatory Change"): (a)
that subjects any Funding Source to any charge or withholding on or with respect
to any Funding Agreement or a Funding Source's obligations under a Funding
Agreement, or on or with respect to the Receivables, or changes the basis of
taxation of payments to any Funding Source of any amounts payable under any
Funding Agreement (except for changes in the rate of tax on the overall net
31
income of a Funding Source or taxes excluded by Section 10.1) or (b) that
imposes, modifies or deems applicable any reserve, assessment, insurance charge,
special deposit or similar requirement against assets of, deposits with or for
the account of a Funding Source, or credit extended by a Funding Source pursuant
to a Funding Agreement or (c) that imposes any other condition the result of
which is to increase the cost to a Funding Source of performing its obligations
under a Funding Agreement, or to reduce the rate of return on a Funding Source's
capital as a consequence of its obligations under a Funding Agreement, or to
reduce the amount of any sum received or receivable by a Funding Source under a
Funding Agreement or to require any payment calculated by reference to the
amount of interests or loans held or interest received by it, then, upon demand
by the Agent, Borrower shall pay to the Agent, for the benefit of the relevant
Funding Source, such amounts charged to such Funding Source or such amounts to
otherwise compensate such Funding Source for such increased cost or such
reduction (which demand shall include a description and calculation of such
increased cost or such reduction).
SECTION 10.3 OTHER COSTS AND EXPENSES.
Borrower shall pay to the Agent and Blue Ridge on demand all costs
and out-of-pocket expenses in connection with the preparation, execution,
delivery and administration of this Agreement, the transactions contemplated
hereby and the other documents to be delivered hereunder, including without
limitation, the cost of Blue Ridge's auditors auditing the books, records and
procedures of Borrower, reasonable fees and out-of-pocket expenses of legal
counsel for Blue Ridge and the Agent (which such counsel may be employees of
Blue Ridge or the Agent) with respect thereto and with respect to advising Blue
Ridge and the Agent as to their respective rights and remedies under this
Agreement. Borrower shall pay to the Agent on demand any and all costs and
expenses of the Agent and the Lenders, if any, including reasonable counsel fees
and expenses in connection with the enforcement of this Agreement and the other
documents delivered hereunder and in connection with any restructuring or
workout of this Agreement or such documents, or the administration of this
Agreement following an Amortization Event. Borrower shall reimburse Blue Ridge
on demand for all other costs and expenses incurred by Blue Ridge ("Other
Costs"), including, without limitation, the cost of auditing Blue Ridge's books
by certified public accountants, the cost of rating the Commercial Paper by
independent financial rating agencies, and the reasonable fees and out-of-pocket
expenses of counsel for Blue Ridge or any counsel for any shareholder of Blue
Ridge with respect to advising Blue Ridge or such shareholder as to matters
relating to Blue Ridge's operations.
SECTION 10.4 ALLOCATIONS.
Blue Ridge shall allocate the liability for Other Costs among
Borrower and other Persons with whom Blue Ridge has entered into agreements to
purchase interests in or finance receivables and other financial assets ("Other
Customers"). If any Other Costs are attributable to Borrower and not
attributable to any Other Customer, Borrower shall be solely liable for such
Other Costs. However, if Other Costs are attributable to Other Customers and not
attributable to Borrower, such Other Customer shall be solely liable for such
Other Costs. All allocations to be made pursuant to the foregoing provisions of
this Article X shall be made by Blue Ridge in its sole discretion (but in good
faith) and shall be binding on Borrower.
32
ARTICLE XI
THE AGENT
SECTION 11.1 AUTHORIZATION AND ACTION.
Each Lender hereby designates and appoints Wachovia to act as its
agent under the Transaction Documents and under the Liquidity Agreement, and
authorizes the Agent to take such actions as agent on its behalf and to exercise
such powers as are delegated to the Agent by the terms of the Liquidity
Agreement or the Transaction Documents, together with such powers as are
reasonably incidental thereto. The Agent shall not have any duties or
responsibilities, except those expressly set forth in the Liquidity Agreement or
in any Transaction Document, or any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities on the part of the Agent shall be read into the Liquidity Agreement
or any Transaction Document or otherwise exist for the Agent. In performing its
functions and duties under the Liquidity Agreement and the Transaction
Documents, the Agent shall act solely as agent for the Lenders and does not
assume nor shall be deemed to have assumed any obligation or relationship of
trust or agency with or for any Loan Party or any of such Loan Party's
successors or assigns. The Agent shall not be required to take any action that
exposes the Agent to personal liability or that is contrary to the Liquidity
Agreement or any Transaction Document or applicable law. The appointment and
authority of the Agent hereunder shall terminate upon the indefeasible payment
in full of all Obligations. Each Lender hereby authorizes the Agent to execute
each of the UCC financing statements, each Collection Account Agreement on
behalf of such Lender (the terms of which shall be binding on such Lender).
SECTION 11.2 DELEGATION OF DUTIES.
The Agent may execute any of its duties under the Liquidity Agreement
and each Transaction Document by or through agents or attorneys-in-fact and
shall be entitled to advice of counsel concerning all matters pertaining to such
duties. The Agent shall not be responsible for the negligence or misconduct of
any agents or attorneys-in-fact selected by it with reasonable care.
SECTION 11.3 EXCULPATORY PROVISIONS.
Neither the Agent nor any of its directors, officers, agents or
employees shall be (a) liable for any action lawfully taken or omitted to be
taken by it or them under or in connection with the Liquidity Agreement or any
Transaction Document (except for its, their or such Person's own gross
negligence or willful misconduct), or (b) responsible in any manner to any of
the Lenders for any recitals, statements, representations or warranties made by
any Loan Party contained in the Liquidity Agreement, any Transaction Document or
any certificate, report, statement or other document referred to or provided for
in, or received under or in connection with, any Transaction Document or for the
value, validity, effectiveness, genuineness, enforceability or sufficiency of
the Liquidity Agreement or any Transaction Document or any other document
furnished in connection therewith, or for any failure of any Loan Party to
perform its obligations under any Transaction Document, or for the satisfaction
of any condition specified in Article VI, or for the perfection, priority,
condition, value or sufficiency of any collateral pledged in connection
33
herewith. The Agent shall not be under any obligation to any Lender to ascertain
or to inquire as to the observance or performance of any of the agreements or
covenants contained in, or conditions of, any Transaction Document, or to
inspect the properties, books or records of the Loan Parties. The Agent shall
not be deemed to have knowledge of any Amortization Event or Unmatured
Amortization Event unless the Agent has received notice from a Loan Party or a
Lender.
SECTION 11.4 RELIANCE BY AGENT.
The Agent shall in all cases be entitled to rely, and shall be fully
protected in relying, upon any document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to Borrower), independent accountants and other experts
selected by the Agent. The Agent shall in all cases be fully justified in
failing or refusing to take any action under the Liquidity Agreement or any
Transaction Document unless it shall first receive such advice or concurrence of
Blue Ridge or the Required Liquidity Banks or all of the Lenders, as applicable,
as it deems appropriate and it shall first be indemnified to its satisfaction by
the Lenders, provided that unless and until the Agent shall have received such
advice, the Agent may take or refrain from taking any action, as the Agent shall
deem advisable and in the best interests of the Lenders. The Agent shall in all
cases be fully protected in acting, or in refraining from acting, in accordance
with a request of Blue Ridge or the Required Liquidity Banks or all of the
Lenders, as applicable, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders.
SECTION 11.5 NON-RELIANCE ON AGENT AND OTHER LENDERS.
Each Lender expressly acknowledges that neither the Agent, nor any of
its officers, directors, employees, agents, attorneys-in-fact or affiliates has
made any representations or warranties to it and that no act by the Agent
hereafter taken, including, without limitation, any review of the affairs of any
Loan Party, shall be deemed to constitute any representation or warranty by the
Agent. Each Lender represents and warrants to the Agent that it has and will,
independently and without reliance upon the Agent or any other Lender and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
prospects, financial and other conditions and creditworthiness of Borrower and
made its own decision to enter into the Liquidity Agreement, the Transaction
Documents and all other documents related thereto.
SECTION 11.6 REIMBURSEMENT AND INDEMNIFICATION.
The Liquidity Banks agree to reimburse and indemnify the Agent and
its officers, directors, employees, representatives and agents ratably according
to their Pro Rata Shares, to the extent not paid or reimbursed by the Loan
Parties (a) for any amounts for which the Agent, acting in its capacity as
Agent, is entitled to reimbursement by the Loan Parties hereunder and (b) for
any other expenses incurred by the Agent, in its capacity as Agent and acting on
behalf of the Lenders, in connection with the administration and enforcement of
the Liquidity Agreement and the Transaction Documents.
34
SECTION 11.7 AGENT IN ITS INDIVIDUAL CAPACITY.
The Agent and its Affiliates may make loans to, accept deposits from
and generally engage in any kind of business with Borrower or any Affiliate of
Borrower as though the Agent were not the Agent hereunder. With respect to the
making of Loans pursuant to this Agreement, the Agent shall have the same rights
and powers under the Liquidity Agreement and this Agreement in its individual
capacity as any Lender and may exercise the same as though it were not the
Agent, and the terms "Liquidity Bank," "Lender," "Liquidity Banks" and "Lenders"
shall include the Agent in its individual capacity.
SECTION 11.8 SUCCESSOR AGENT.
The Agent, upon five (5) days' notice to the Loan Parties and the
Lenders, may voluntarily resign and may be removed at any time, with or without
cause, by the Required Liquidity Lenders; provided, however, that Wachovia shall
not voluntarily resign as the Agent so long as any of the Liquidity Commitments
remain in effect or Blue Ridge has any outstanding Loans. If the Agent (other
than Wachovia) shall voluntarily resign or be removed as Agent under this
Agreement, then the Required Liquidity Lenders during such five-day period shall
appoint, from among the remaining Liquidity Banks, a successor Agent, whereupon
such successor Agent shall succeed to the rights, powers and duties of the Agent
and the term "Agent" shall mean such successor agent, effective upon its
appointment, and the former Agent's rights, powers and duties as Agent shall be
terminated, without any other or further act or deed on the part of such former
Agent or any of the parties to this Agreement. Upon resignation or replacement
of any Agent in accordance with this Section 11.8, the retiring Agent shall
execute such UCC-3 assignments and amendments, and assignments and amendments of
the Liquidity Agreement and the Transaction Documents, as may be necessary to
give effect to its replacement by a successor Agent. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Article XI and Article X
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement.
ARTICLE XII
ASSIGNMENTS; PARTICIPATIONS
SECTION 12.1 ASSIGNMENTS.
(a) Each of the Agent, the Loan Parties and the Liquidity Banks
hereby agrees and consents to the complete or partial assignment by Blue Ridge
of all or any portion of its rights under, interest in, title to and obligations
under this Agreement to the Liquidity Banks pursuant to the Liquidity Agreement.
(b) Any Liquidity Bank may at any time and from time to time assign
to one or more Eligible Assignees (each, a "Purchasing Liquidity Bank") all or
any part of its rights and obligations under this Agreement pursuant to an
assignment agreement substantially in the form set forth in Exhibit VII hereto
(an "Assignment Agreement") executed by such Purchasing Liquidity Bank and such
selling Liquidity Bank; provided, however, that any assignment of a Liquidity
Bank's rights and obligations hereunder shall include a pro rata assignment of
its rights and obligations under the Liquidity Agreement. The consent of Blue
35
Ridge shall be required prior to the effectiveness of any such assignment. Each
assignee of a Liquidity Bank must (i) be an Eligible Assignee and (ii) agree to
deliver to the Agent, promptly following any request therefor by the Agent or
Blue Ridge, an enforceability opinion in form and substance satisfactory to the
Agent and Blue Ridge. Upon delivery of an executed Assignment Agreement to the
Agent, such selling Liquidity Bank shall be released from its obligations
hereunder and under the Liquidity Agreement to the extent of such assignment.
Thereafter the Purchasing Liquidity Bank shall for all purposes be a Liquidity
Bank party to this Agreement and the Liquidity Agreement and shall have all the
rights and obligations of a Liquidity Bank hereunder and thereunder to the same
extent as if it were an original party hereto and thereto and no further consent
or action by Borrower, the Lenders or the Agent shall be required.
(c) Each of the Liquidity Banks agrees that in the event that it
shall suffer a Downgrading Event, such Downgraded Liquidity Bank shall be
obliged, at the request of Blue Ridge or the Agent, to (i) collateralize its
Commitment and its Liquidity Commitment in a manner acceptable to the Agent, or
(ii) assign all of its rights and obligations hereunder and under the Liquidity
Agreement to an Eligible Assignee nominated by the Agent or a Loan Party and
acceptable to Blue Ridge and willing to participate in this Agreement and the
Liquidity Agreement through the Liquidity Termination Date in the place of such
Downgraded Liquidity Bank; provided that the Downgraded Liquidity Bank receives
payment in full, pursuant to an Assignment Agreement, of an amount equal to such
Liquidity Bank's Pro Rata Share of the Obligations owing to the Liquidity Banks.
(d) No Loan Party may assign any of its rights or obligations under
this Agreement without the prior written consent of the Agent and each of the
Lenders and without satisfying the Rating Agency Condition.
SECTION 12.2 PARTICIPATIONS.
Any Liquidity Bank may, in the ordinary course of its business at any
time sell to one or more Persons (each, a "Participant") participating interests
in its Pro Rata Share of the Aggregate Commitment, its Loans, its Liquidity
Commitment or any other interest of such Liquidity Bank hereunder or under the
Liquidity Agreement. Notwithstanding any such sale by a Liquidity Bank of a
participating interest to a Participant, such Liquidity Bank's rights and
obligations under this Agreement and the Liquidity Agreement shall remain
unchanged, such Liquidity Bank shall remain solely responsible for the
performance of its obligations hereunder and under the Liquidity Agreement, and
the Loan Parties, Blue Ridge and the Agent shall continue to deal solely and
directly with such Liquidity Bank in connection with such Liquidity Bank's
rights and obligations under this Agreement and the Liquidity Agreement. Each
Liquidity Bank agrees that any agreement between such Liquidity Bank and any
such Participant in respect of such participating interest shall not restrict
such Liquidity Bank's right to agree to any amendment, supplement, waiver or
modification to this Agreement, except for any amendment, supplement, waiver or
modification described in Section 14.1(b)(i).
36
ARTICLE XIII
SECURITY INTEREST
SECTION 13.1 GRANT OF SECURITY INTEREST.
To secure the due and punctual payment of the Obligations, whether
now or hereafter existing, due or to become due, direct or indirect, or absolute
or contingent, including, without limitation, all Indemnified Amounts, in each
case pro rata according to the respective amounts thereof, Borrower hereby
grants to the Agent, for the benefit of the Secured Parties, a security interest
in, all assets of Borrower, including, without limitation, all of Borrower's
right, title and interest, whether now owned and existing or hereafter arising
in and to all of the Receivables, the Related Security, the Collections, each
Lock-Box and Collection Account and all proceeds of the foregoing (collectively,
the "Collateral").
SECTION 13.2 TERMINATION AFTER FINAL PAYOUT DATE.
Each of the Secured Parties hereby authorizes the Agent, and the
Agent hereby agrees, promptly after the Final Payout Date to execute and deliver
to the Borrower (or otherwise authorize the Borrower to file) such UCC
termination statements as may be necessary to terminate the Agent's security
interest in and Lien upon the Collateral, all at the Borrower's expense. Upon
the Final Payout Date, all right, title and interest of the Agent and the other
Secured Parties in and to the Collateral shall terminate.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 WAIVERS AND AMENDMENTS.
(a) No failure or delay on the part of the Agent or any Lender in
exercising any power, right or remedy under this Agreement shall operate as a
waiver thereof, nor shall any single or partial exercise of any such power,
right or remedy preclude any other further exercise thereof or the exercise of
any other power, right or remedy. The rights and remedies herein provided shall
be cumulative and nonexclusive of any rights or remedies provided by law. Any
waiver of this Agreement shall be effective only in the specific instance and
for the specific purpose for which given.
(b) No provision of this Agreement may be amended, supplemented,
modified or waived except in writing in accordance with the provisions of this
Section 14.1(b). Blue Ridge, Borrower and the Agent, at the direction of the
Required Liquidity Banks, may enter into written modifications or waivers of any
provisions of this Agreement, provided, however, that no such modification or
waiver shall:
(i) without the consent of each affected Lender, (A)
extend the Liquidity Termination Date or the date of any payment or
deposit of Collections by Borrower or the Servicer, (B) reduce the
rate or extend the time of payment of Interest or any CP Costs (or
any component of Interest or CP Costs), reduce any fee payable to the
Agent for the benefit of the Lenders, (C) except pursuant to Article
37
XII hereof, change the amount of the principal of any Lender, any
Liquidity Bank's Pro Rata Share or any Liquidity Bank's Commitment,
(D) amend, modify or waive any provision of the definition of
Required Liquidity Banks or this Section 14.1(b), (E) consent to or
permit the assignment or transfer by Borrower of any of its rights
and obligations under this Agreement, (F) change the definition of
"Eligible Receivable," "Loss Reserve," "Dilution Reserve," "Interest
Reserve," "Servicing Reserve," "Servicing Fee Rate," "Required
Reserve" or "Required Reserve Factor Floor" or (G) amend or modify
any defined term (or any defined term used directly or indirectly in
such defined term) used in clauses (A) through (F) above in a manner
that would circumvent the intention of the restrictions set forth in
such clauses; or
(ii) without the written consent of the then Agent, amend,
modify or waive any provision of this Agreement if the effect thereof
is to affect the rights or duties of such Agent,
and any material amendment, waiver or other modification of this Agreement shall
require satisfaction of the Rating Agency Condition. Notwithstanding the
foregoing, (A) without the consent of the Liquidity Banks, but with the consent
of Borrower, the Agent may amend this Agreement solely to add additional Persons
as Liquidity Banks hereunder and (B) the Agent, the Required Liquidity Banks and
Blue Ridge may enter into amendments to modify any of the terms or provisions of
Article XI, Article XII, or Section 14.13 without the consent of Borrower. Any
modification or waiver made in accordance with this Section 14.1 shall apply to
each of the Lenders equally and shall be binding upon Borrower, the Lenders and
the Agent.
SECTION 14.2 NOTICES.
Except as provided in this Section 14.2, all communications and
notices provided for hereunder shall be in writing (including bank wire,
telecopy or electronic facsimile transmission or similar writing) and shall be
given to the other parties hereto at their respective addresses or telecopy
numbers set forth on the signature pages hereof or at such other address or
telecopy number as such Person may hereafter specify for the purpose of notice
to each of the other parties hereto. Each such notice or other communication
shall be effective (a) if given by telecopy, upon the receipt thereof, (b) if
given by mail, three (3) Business Days after the time such communication is
deposited in the mail with first class postage prepaid or (c) if given by any
other means, when received at the address specified in this Section 14.2.
Borrower hereby authorizes the Agent to effect Advances and Interest Period and
Interest Rate selections based on telephonic notices made by any Person whom the
Agent in good faith believes to be acting on behalf of Borrower. Borrower agrees
to deliver promptly to the Agent a written confirmation of each telephonic
notice signed by an authorized officer of Borrower; provided, however, the
absence of such confirmation shall not affect the validity of such notice. If
the written confirmation differs from the action taken by the Agent, the records
of the Agent shall govern absent manifest error.
38
SECTION 14.3 RATABLE PAYMENTS.
If any Lender, whether by setoff or otherwise, has payment made to it
with respect to any portion of the Obligations owing to such Lender (other than
payments received pursuant to Section 10.2 or 10.3) in a greater proportion than
that received by any other Lender entitled to receive a ratable share of such
Obligations, such Lender agrees, promptly upon demand, to purchase for cash
without recourse or warranty a portion of such Obligations held by the other
Lenders so that after such purchase each Lender will hold its ratable proportion
of such Obligations; provided that if all or any portion of such excess amount
is thereafter recovered from such Lender, such purchase shall be rescinded and
the purchase price restored to the extent of such recovery, but without
interest.
SECTION 14.4 PROTECTION OF AGENT'S SECURITY INTEREST.
(a) Borrower agrees that from time to time, at its expense, it will
promptly execute and deliver all instruments and documents, and take all
actions, that may be necessary or desirable, or that the Agent may request, to
perfect, protect or more fully evidence the Agent's security interest in the
Collateral, or to enable the Agent or the Lenders to exercise and enforce their
rights and remedies hereunder. At any time, the Agent may, or the Agent may
direct Borrower or the Servicer to, notify the Obligors of Receivables, at
Borrower's expense, of the ownership or security interests of the Lenders under
this Agreement and may also direct that payments of all amounts due or that
become due under any or all Receivables be made directly to the Agent or its
designee. Borrower or the Servicer (as applicable) shall, at any Lender's
request, withhold the identity of such Lender in any such notification.
(b) If any Loan Party fails to perform any of its obligations
hereunder, the Agent or any Lender may (but shall not be required to) perform,
or cause performance of, such obligations, and the Agent's or such Lender's
costs and expenses incurred in connection therewith shall be payable by Borrower
as provided in Section 10.3. Each of the Loan Parties (i) hereby authorizes the
Agent to file financing statements and other filing or recording documents with
respect to the Receivables and Related Security (including any amendments
thereto, or continuation or termination statements thereof), without the
signature or other authorization of such Loan Party, in such form and in such
offices as the Agent reasonably determines appropriate to perfect or maintain
the perfection of the security interest of the Agent hereunder, (ii)
acknowledges and agrees that it is not authorized to, and will not, file
financing statements or other filing or recording documents with respect to the
Receivables or Related Security (including any amendments thereto, or
continuation or termination statements thereof), without the express prior
written approval by the Agent, consenting to the form and substance of such
filing or recording document, and (iii) approves, authorizes and ratifies any
filings or recordings made by or on behalf of the Agent in connection with the
perfection of the security interests in favor of Borrower or the Agent.
SECTION 14.5 CONFIDENTIALITY.
(a) Each Loan Party and each Lender shall maintain and shall cause
each of its employees and officers to maintain the confidentiality of this
Agreement and the other confidential or proprietary information with respect to
the Agent and Blue Ridge and their respective businesses obtained by it or them
39
in connection with the structuring, negotiating and execution of the
transactions contemplated herein, except that such Loan Party and such Lender
and its officers and employees may disclose such information to such Loan
Party's and such Lender's external accountants and attorneys and as required by
any applicable law or order of any judicial or administrative proceeding.
(b) Anything herein to the contrary notwithstanding, each Loan Party
hereby consents to the disclosure of any nonpublic information with respect to
it (i) to the Agent, the Liquidity Banks or Blue Ridge by each other, (ii) by
the Agent or the Lenders to any prospective or actual assignee or participant of
any of them and (iii) by the Agent to any rating agency, Commercial Paper dealer
or provider of a surety, guaranty or credit or liquidity enhancement to Blue
Ridge or any entity organized for the purpose of purchasing, or making loans
secured by, financial assets for which Wachovia acts as the administrative agent
and to any officers, directors, employees, outside accountants and attorneys of
any of the foregoing, provided that each such Person is informed of the
confidential nature of such information. In addition, the Lenders and the Agent
may disclose any such nonpublic information pursuant to any law, rule,
regulation, direction, request or order of any judicial, administrative or
regulatory authority or proceedings (whether or not having the force or effect
of law).
SECTION 14.6 BANKRUPTCY PETITION.
Borrower, the Servicer, the Agent and each Liquidity Bank hereby
covenants and agrees that, prior to the date that is one year and one day after
the payment in full of all outstanding senior indebtedness of Blue Ridge, it
will not institute against, or join any other Person in instituting against,
Blue Ridge any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or other similar proceeding under the laws of the United
States or any state of the United States.
SECTION 14.7 LIMITATION OF LIABILITY.
Except with respect to any claim arising out of the willful
misconduct or gross negligence of Blue Ridge, the Agent or any Liquidity Bank,
no claim may be made by any Loan Party or any other Person against Blue Ridge,
the Agent or any Liquidity Bank or their respective Affiliates, directors,
officers, employees, attorneys or agents for any special, indirect,
consequential or punitive damages in respect of any claim for breach of contract
or any other theory of liability arising out of or related to the transactions
contemplated by this Agreement, or any act, omission or event occurring in
connection therewith; and each Loan Party hereby waives, releases, and agrees
not to sue upon any claim for any such damages, whether or not accrued and
whether or not known or suspected to exist in its favor.
SECTION 14.8 CHOICE OF LAW.
THIS AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF
LAWS THEREOF OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW.
40
SECTION 14.9 CONSENT TO JURISDICTION.
EACH PARTY TO THIS AGREEMENT HEREBY IRREVOCABLY SUBMITS TO THE
NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT
SITTING IN NEW YORK, NEW YORK, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY SUCH PERSON PURSUANT TO
THIS AGREEMENT, AND EACH SUCH PARTY HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN
RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH
COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO
THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT
SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE
AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST ANY LOAN PARTY IN THE COURTS OF
ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY ANY LOAN PARTY AGAINST THE
AGENT OR ANY LENDER OR ANY AFFILIATE OF THE AGENT OR ANY LENDER INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR
CONNECTED WITH THIS AGREEMENT OR ANY DOCUMENT EXECUTED BY SUCH LOAN PARTY
PURSUANT TO THIS AGREEMENT SHALL BE BROUGHT ONLY IN A COURT IN NEW YORK, NEW
YORK.
SECTION 14.10 WAIVER OF JURY TRIAL.
EACH PARTY HERETO HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL
PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN
TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED
WITH THIS AGREEMENT, ANY DOCUMENT EXECUTED BY ANY LOAN PARTY PURSUANT TO THIS
AGREEMENT OR THE RELATIONSHIP ESTABLISHED HEREUNDER OR THEREUNDER.
SECTION 14.11 INTEGRATION; BINDING EFFECT; SURVIVAL OF TERMS.
(a) This Agreement and each other Transaction Document contain the
final and complete integration of all prior expressions by the parties hereto
with respect to the subject matter hereof and shall constitute the entire
agreement among the parties hereto with respect to the subject matter hereof
superseding all prior oral or written understandings.
(b) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns
(including any trustee in bankruptcy). This Agreement shall create and
constitute the continuing obligations of the parties hereto in accordance with
its terms and shall remain in full force and effect until terminated in
accordance with its terms; provided, however, that the rights and remedies with
respect to (i) any breach of any representation and warranty made by any Loan
Party pursuant to Article V, (ii) the indemnification and payment provisions of
Article X, and (iii) the provisions of Sections 14.5 and 14.6 shall be
continuing and shall survive any termination of this Agreement.
41
SECTION 14.12 COUNTERPARTS; SEVERABILITY; SECTION REFERENCES.
This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which when taken together
shall constitute one and the same Agreement. Any provisions of this Agreement
which are prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. Unless otherwise
expressly indicated, all references herein to "Article," "Section," "Schedule"
or "Exhibit" shall mean articles and sections of, and schedules and exhibits to,
this Agreement.
SECTION 14.13 WACHOVIA ROLES.
Each of the Liquidity Banks acknowledges that Wachovia acts, or may
in the future act: (a) as administrative agent for Blue Ridge or any Liquidity
Bank, (b) as an issuing and paying agent for the Commercial Paper, (c) to
provide credit or liquidity enhancement for the timely payment for the
Commercial Paper, and/or (d) to provide other services from time to time for
Blue Ridge or any Liquidity Bank (collectively, the "Wachovia Roles"). Without
limiting the generality of this Section 14.13, each Liquidity Bank hereby
acknowledges and consents to any and all Wachovia Roles and agrees that in
connection with any Wachovia Role, Wachovia may take, or refrain from taking,
any action that it, in its discretion, deems appropriate, including, without
limitation, in its role as administrative agent for Blue Ridge, and the giving
of notice of a mandatory purchase pursuant to the Liquidity Agreement.
SECTION 14.14 RELATIONSHIP OF THIS AMENDMENT TO THE LOAN AND SECURITY
AGREEMENT.
To the extent that any covenant, representation, warranty, default
provision or amendment or waiver fee arrangement in respect of any of the Loan
Parties at any time contained in the Loan and Security Agreement, any amendment,
modification, restatement, supplement or replacement thereof or thereto or in
any document, agreement, facility or securities entered into or issued by any
Loan Party or any of its Affiliates is more favorable to the creditors of any of
the Loan Parties or any of their Affiliates than any corresponding provision
hereunder is to Blue Ridge and Wachovia or any financial covenant is thereunder
made applicable to any Loan Party or any of its Affiliates, then this Amendment
shall be automatically (and without any action necessary on the part of any
party hereto) deemed to be amended to incorporate such more favorable covenant,
representation, warranty, default provision or amendment or waiver fee
arrangement or financial covenant for the benefit of Blue Ridge and Wachovia.
[signature pages follow]
42
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered by their duly authorized officers as of the date
hereof.
BELL MICROPRODUCTS FUNDING CORPORATION
By:____________________________________________
Name:__________________________________________
Title:_________________________________________
Address: Bell Microproducts Funding Corporation
1941 Ringwood Avenue
Suite A
San Jose, California 95131
Attention: Chief Financial Officer
Telephone: (408)467-2735
Fax: (408)467-2735
BELL MICROPRODUCTS INC.
By:____________________________________________
Name:__________________________________________
Title:_________________________________________
Address: Bell Microproducts Inc.
1941 Ringwood Avenue
San Jose, California 95131
Attention: Chief Financial Officer
Telephone: (408)451-9400
Fax: (408)451-1632
[additional signatures to follow]
BLUE RIDGE ASSET FUNDING CORPORATION
By: Wachovia Capital Markets, LLC,
as Attorney-In-Fact
By:____________________________________________
Name:__________________________________________
Title:_________________________________________
Address: Blue Ridge Asset Funding Corporation
c/o Wachovia Bank, National Association
301 South College Street, TW-10
Charlotte, North Carolina 28288
Attention: Doug Wilson
Telephone: 704-374-2520
Fax: 704-383-9579
WACHOVIA BANK, NATIONAL ASSOCIATION,
as a Liquidity Bank and as Agent
By:____________________________________________
Name:__________________________________________
Title:_________________________________________
Address: Wachovia Bank, National Association
191 Peachtree Street, N.E.
22nd Floor, Mail Code GA8088
Atlanta, Georgia 30303
Attention: Eero Maki
Telephone: (404) 332-5275
Fax: (404) 332-5152
[end of signatures]
EXHIBIT I
DEFINITIONS
As used in this Agreement, the following terms shall have the
following meanings (such meanings to be equally applicable to both the singular
and plural forms of the terms defined):
Adjusted Dilution Ratio: At any time, the rolling average of the Dilution Ratio
for the twelve (12) Calculation Periods then most recently ended.
Administrative Support Agreement: That certain Administrative Support Agreement,
dated as of September 20, 2004, between Bell Microproducts and Borrower, as the
same may be amended, restated or otherwise modified from time to time.
Advance: A borrowing hereunder consisting of the aggregate amount of the several
Loans made on the same Borrowing Date.
Adverse Claim: A lien, security interest, charge or encumbrance, or other right
or claim in, of or on any Person's assets or properties in favor of any other
Person.
Affiliate: With respect to any Person, any other Person directly or indirectly
controlling, controlled by, or under direct or indirect common control with,
such Person or any Subsidiary of such Person. A Person shall be deemed to
control another Person if the controlling Person owns 10% or more of any class
of voting securities of the controlled Person or possesses, directly or
indirectly, the power to direct or cause the direction of the management or
policies of the controlled Person, whether through ownership of stock, by
contract or otherwise.
Agent: As defined in the preamble to this Agreement.
Agent's Account: Account #8735-098787 at Wachovia Bank, National Association,
ABA #053100494.
Aggregate Commitment: On any date of determination, the aggregate amount of the
Liquidity Banks' Commitments to make Loans hereunder. As of the date hereof, the
Aggregate Commitment is $75,000,000.
Aggregate Principal: On any date of determination, the aggregate outstanding
principal amount of all Advances outstanding on such date.
Aggregate Reduction: As defined in Section 1.3.
Agreement: This Credit and Security Agreement, as it may be amended or modified
and in effect from time to time in accordance with the terms hereof.
Alternate Base Rate: For any day, the rate per annum equal to the higher as of
such day of (i) the Prime Rate, or (ii) one-half of one percent (0.50%) above
the Federal Funds Effective Rate. For purposes of determining the Alternate Base
Rate for any day, changes in the Prime Rate or the Federal Funds Effective Rate
shall be effective on the date of each such change.
Exhibit I-1
Alternate Base Rate Loan: A Loan which bears interest at the Alternate Base Rate
or the Default Rate.
Amortization Date: The earliest to occur of (i) the day on which any of the
conditions precedent set forth in Section 6.2 are not satisfied, (ii) the
Business Day immediately prior to the occurrence of an Event of Bankruptcy with
respect to any Loan Party, (iii) the Business Day specified in a written notice
from the Agent following the occurrence of any other Amortization Event, and
(iv) the date which is thirty (30) days after the Agent's receipt of written
notice from Borrower that it wishes to terminate the facility evidenced by this
Agreement.
Amortization Event: As defined in Article IX.
Assignment Agreement: As defined in Section 12.1(b).
Auction Notice: Any written notice sent to the Agent pursuant to the terms of
the Intercreditor Agreement to the effect that there has been a sale of
inventory outside the ordinary course of business in violation of the Loan and
Security Agreement will give rise to a Receivable.
Authorized Officer: With respect to any Person, its president, corporate
controller, treasurer or chief financial officer.
Blue Ridge: As defined in the preamble to this Agreement.
Borrower: As defined in the preamble to this Agreement.
Borrowing Base: On any date of determination, the Net Pool Balance minus the
Required Reserves, each calculated as of the last day of the period covered by
the most recent Periodic Report.
Borrowing Date: A Business Day on which an Advance is made hereunder.
Borrowing Limit: As defined in Section 1.1(a)(i).
Borrowing Notice: As defined in Section 1.2.
Broken Funding Costs: For any CP Rate Loan or LIBO Rate Loan which: (i) in the
case of a CP Rate Loan, has its principal reduced without compliance by Borrower
with the notice requirements hereunder, (ii) in the case of a CP Rate Loan or a
LIBO Rate Loan, does not become subject to an Aggregate Reduction following the
delivery of any Reduction Notice, (iii) in the case of a CP Rate Loan, is
assigned under the Liquidity Agreement, or (iv) in the case of a LIBO Rate Loan,
is terminated or reduced prior to the last day of its Interest Period, an amount
equal to the excess, if any, of (A) the CP Costs or Interest (as applicable)
that would have accrued during the remainder of the Interest Periods or the
tranche periods for Commercial Paper determined by the Agent to relate to such
Loan (as applicable) subsequent to the date of such reduction, assignment or
termination (or in respect of clause (ii) above, the date such Aggregate
Reduction was designated to occur pursuant to the Reduction Notice) of the
principal of such Loan if such reduction, assignment or termination had not
occurred or such Reduction Notice had not been delivered, over (B) the sum of
(1) to the extent all or a portion of such principal is allocated to another
Exhibit I-2
Loan, the amount of CP Costs or Interest actually accrued during the remainder
of such period on such principal for the new Loan, and (2) to the extent such
principal is not allocated to another Loan, the income, if any, actually
received during the remainder of such period by the holder of such Loan from
investing the portion of such principal not so allocated. In the event that the
amount referred to in clause (B) exceeds the amount referred to in clause (A),
the relevant Lender or Lenders agree to pay to Borrower the amount of such
excess. All Broken Funding Costs shall be due and payable hereunder upon demand.
Business Day: Any day on which banks are not authorized or required to close in
New York, New York or Atlanta, Georgia, and The Depository Trust Company of New
York is open for business, and, if the applicable Business Day relates to any
computation or payment to be made with respect to the LIBO Rate, any day on
which dealings in dollar deposits are carried on in the London interbank market.
Calculation Period: If the Periodic Reporting Date occurs (i) only once each
month, the calendar month immediately preceding the month in which such Periodic
Reporting Date occurs or (ii) more frequently than once each month, the period
of time selected by the Agent in its discretion.
Change of Control: The acquisition by any Person, or two or more Persons acting
in concert, of beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission under the Securities Exchange Act of 1934) of
20% or more of the outstanding shares of voting stock of any Loan Party.
Collateral: As defined in Section 13.1.
Collection Account: Each concentration account, depositary account, lock-box
account or similar account in which any Collections are collected or deposited.
Collection Account Agreement: An agreement substantially in the form of Exhibit
VI among an Originator, Bell Microproducts Inc., Borrower, the Agent and a
Collection Bank.
Collection Bank: At any time, any of the banks holding one or more Collection
Accounts.
Collection Notice: A notice, in substantially the form of Annex A to Exhibit VI,
from the Agent to a Collection Bank.
Collections: With respect to any Receivable, all cash collections and other cash
proceeds in respect of such Receivable, including, without limitation, all
Finance Charges or other related amounts accruing in respect thereof and all
cash proceeds of Related Security with respect to such Receivable.
Commercial Paper: Promissory notes of Blue Ridge issued by Blue Ridge in the
commercial paper market.
Commitment: For each Liquidity Bank, the commitment of such Liquidity Bank to
make Loans to Borrower hereunder in the event the Blue Ridge elects not to fund
any Advance in an aggregate principal amount at any one time outstanding not to
exceed the amount set forth opposite such Liquidity Bank's name on Schedule A to
this Agreement.
Exhibit I-3
Contingent Obligation: Of a Person means any agreement, undertaking or
arrangement by which such Person assumes, guarantees, endorses, contingently
agrees to purchase or provide funds for the payment of, or otherwise becomes or
is contingently liable upon, the obligation or liability of any other Person, or
agrees to maintain the net worth or working capital or other financial condition
of any other Person, or otherwise assures any creditor of such other Person
against loss, including, without limitation, any comfort letter, operating
agreement, take-or-pay contract or application for a letter of credit.
Consolidated Net Worth: With respect to any Person at any time, the remainder at
such time, determined on a consolidated basis, in accordance with GAAP, of (a)
the total assets of such Person and its Subsidiaries, minus (b) the total
liabilities of such Person and its Subsidiaries.
Contract: With respect to any Receivable, any and all instruments, agreements,
invoices or other writings pursuant to which such Receivable arises or which
evidences such Receivable.
CP Costs: For each day, the sum of (i) discount or interest accrued on Pooled
Commercial Paper on such day, plus (ii) any and all accrued commissions in
respect of placement agents and Commercial Paper dealers, and issuing and paying
agent fees incurred, in respect of such Pooled Commercial Paper for such day,
plus (iii) other costs associated with funding small or odd-lot amounts with
respect to all receivable purchase facilities which are funded by Pooled
Commercial Paper for such day, minus (iv) any accrual of income net of expenses
received on such day from investment of collections received under all
receivable purchase or financing facilities funded substantially with Pooled
Commercial Paper, minus (v) any payment received on such day net of expenses in
respect of Broken Funding Costs (or similar costs) related to the prepayment of
any investment of Blue Ridge pursuant to the terms of any receivable purchase or
financing facilities funded substantially with Pooled Commercial Paper. In
addition to the foregoing costs, if Borrower shall request any Advance during
any period of time determined by the Agent in its sole discretion to result in
incrementally higher CP Costs applicable to such Advance, the principal
associated with any such Advance shall, during such period, be deemed to be
funded by Blue Ridge in a special pool (which may include capital associated
with other receivable purchase or financing facilities) for purposes of
determining such additional CP Costs applicable only to such special pool and
charged each day during such period against such principal.
CP Rate Loan: For each Loan of Blue Ridge made to Borrower under the Agreement
prior to the time, if any, when (i) it is refinanced with a Liquidity Funding
pursuant to the Liquidity Agreement, or (ii) the occurrence of an Amortization
Event and the commencement of the accrual of Interest thereon at the Default
Rate.
Credit and Collection Policy: Borrower's credit and collection policies and
practices relating to Contracts and Receivables existing on the date hereof and
summarized in Exhibit VIII hereto, as modified from time to time in accordance
with this Agreement.
Cut-Off Date: The last day of a Calculation Period.
Days Sales Outstanding: As of any day, an amount equal to the product of (i) 91,
multiplied by (ii) the amount obtained by dividing (A) the aggregate outstanding
balance of Receivables as of the most recent Cut-Off Date, by (B) the aggregate
amount of Receivables created during the three (3) Calculation Periods including
and immediately preceding such Cut-Off Date.
Exhibit I-4
Deemed Collections: Collections deemed received by the Borrower under Section
1.4(a).
Default Horizon Ratio: As of any Cut-Off Date, (a) the ratio (expressed as a
decimal) computed by dividing (i) the aggregate sales generated by the
Originator during the three Calculation Periods ending on such Cut-Off Date, by
(ii) the Net Pool Balance as of such Cut-off Date or (b) such other formula as
the Agent may from time to time provide to the Borrower and the Servicer in
writing based upon results of any Review, any additional report and/or any
further analysis conducted at any time by or on behalf of the Agent in its sole
discretion.
Default Rate: A rate per annum equal to the sum of (i) the Alternate Base Rate
plus (ii) 2.00%, changing when and as the Alternate Base Rate changes.
Default Ratio: As of any Cut-Off Date, the ratio (expressed as a percentage)
computed by dividing (i) the total amount of Receivables which became Defaulted
Receivables during the Calculation Period that includes such Cut-Off Date, by
(ii) the aggregate sales generated by the Originator during the Calculation
Period occurring three months prior to the Calculation Period ending on such
Cut-Off Date.
Defaulted Receivable: A Receivable: (i) as to which the Obligor thereof has
suffered an Event of Bankruptcy; (ii) which, consistent with the Credit and
Collection Policy, would be written off Borrower's books as uncollectible; or
(iii) as to which any payment, or part thereof, remains unpaid for 61 days or
more from the original due date for such payment.
Delinquency Ratio: At any time, a percentage equal to (i) the aggregate
Outstanding Balance of all Receivables that were Delinquent Receivables at such
time divided by (ii) the aggregate Outstanding Balance of all Receivables at
such time.
Delinquent Receivable: A Receivable as to which any payment, or part thereof,
remains unpaid for 31-60 days from the original due date for such payment.
Designated Obligor: An Obligor indicated by the Agent to Borrower in writing.
Dilution: The amount of any reduction or cancellation of the Outstanding Balance
of a Receivable as described in Section 1.4(a).
Dilution Horizon Ratio: As of any Cut-off Date, a ratio (expressed as a
decimal), computed by dividing (i) the sum of (A) the aggregate sales generated
by the Originator during the Calculation Period ending on such Cut-Off Date and
(B) 0.63 times the aggregate sales generated by the Originator during the
Calculation Period immediately preceding the Calculation Period ending on such
Cut-Off Date, by (ii) the Net Pool Balance as of such Cut-Off Date or such other
formula the Agent may from time to time provide to the Borrower and the Servicer
in writing based upon results of any Review, any additional report and/or any
further analysis conducted at any time by or on behalf of the Agent in its sole
discretion.
Exhibit I-5
Dilution Ratio: As of any Cut-Off Date, (a) a ratio (expressed as a percentage),
computed by dividing (i) the total amount of decreases in Outstanding Balances
due to Dilutions during the Calculation Period ending on such Cut-Off Date, by
(ii) the aggregate sales generated by the Originator during the Calculation
Period prior to the Calculation Period ending on such Cut-Off Date or (b) such
other formula as may the Agent may from time to time provide to the Borrower and
the Servicer in writing based upon results of Reviews conducted by or on behalf
of the Agent.
Dilution Reserve: For any Calculation Period, the product (expressed as a
percentage) of:
(i) the sum of (A) two (2) times the Adjusted Dilution
Ratio as of the immediately preceding Cut-Off Date, plus (B) the
Dilution Volatility Component as of the immediately preceding Cut-Off
Date, times
(ii) the Dilution Horizon Ratio as of the immediately
preceding Cut-Off Date.
Dilution Volatility Component: The product (expressed as a percentage) of (i)
the difference between (A) the highest three (3)-month rolling average Dilution
Ratio over the past 12 Calculation Periods and (B) the Adjusted Dilution Ratio,
and (ii) a fraction, the numerator of which is equal to the amount calculated in
(i)(A) of this definition and the denominator of which is equal to the amount
calculated in (i)(B) of this definition.
Downgraded Liquidity Bank: A Liquidity Bank which has been the subject of a
Downgrading Event.
Downgrading Event: With respect to any Person means the lowering of the rating
with regard to the short-term securities of such Person to below (i) A-1 by S&P,
or (ii) P-1 by Moody's.
Eligible Assignee: A commercial bank having a combined capital and surplus of at
least $250,000,000 with a rating of its (or its holding company's) short-term
securities equal to or higher than (i) A-1 by S&P and (ii) P-1 by Moody's,
assignment to which has been consented to by the Borrower, such consent not to
be unreasonably withheld or delayed; provided, that no such consent of the
Borrower is required following the occurrence and during the continuation of an
Amortization Event or Unmatured Amortization Event.
Eligible Receivable: At any time, a Receivable:
(i) the Obligor of which (A) if a natural person, is a
resident of the United States or of Canada or, if a corporation or
other business organization, is organized under the laws of the
United States or Canada or any political subdivision of the foregoing
and has its chief executive office in the United States or Canada;
(B) is not an Affiliate of any of the parties hereto; (C) is not a
government or a governmental subdivision or agency; and (D) is not a
Designated Obligor,
(ii) the Obligor of which is not the Obligor of any
Defaulted Receivable,
Exhibit I-6
(iii) which is not owing from an Obligor as to which more
than 25% of the aggregate Outstanding Balance of all Receivables
owing from such Obligor are Defaulted Receivables,
(iv) which is not a Delinquent Receivable,
(v) which by its terms is due and payable within 90 days of
the original billing date therefor and has not had its payment terms
extended more than once; provided, however, that, no more than 10% of
the Receivables may have payment terms between 61 and 90 days;
(vi) which is an "account" or "chattel paper" within the
meaning of Section 9-102(a)(2) and Section 9-102(a)(11),
respectively, of the UCC of all applicable jurisdictions,
(vii) which is denominated and payable only in United
States dollars in the United States,
(viii) which arises under a Contract in substantially the
form of one of the form contracts set forth on Exhibit X hereto or
otherwise approved by the Agent in writing, which, together with such
Receivable, is in full force and effect and constitutes the legal,
valid and binding obligation of the related Obligor enforceable
against such Obligor in accordance with its terms subject to no
offset, counterclaim or other defense,
(ix) which arises under a Contract which (A) does not
require the Obligor under such Contract to consent to the transfer,
sale, pledge or assignment of the rights and duties of the Originator
or any of its assignees under such Contract and (B) does not contain
a confidentiality provision that purports to restrict the ability of
any Lender to exercise its rights under this Agreement, including,
without limitation, its right to review the Contract,
(x) which arises under a Contract that contains an
obligation to pay a specified sum of money, contingent only upon the
sale of goods or the provision of services by the Originator,
(xi) which, together with the Contract related thereto,
complies with all applicable laws and other legal requirements,
whether Federal, state or local, including, without limitation, to
the extent applicable, usury laws, the Federal Consumer Credit
Protection Act, the Fair Credit Billing Act, the Federal Truth in
Lending Act, and Regulation Z of the Board of Governors of the
Federal Reserve System and with respect to which no part of the
Contract related thereto is in violation of any such law, rule or
regulation,
(xii) which satisfies all applicable requirements of the
Credit and Collection Policy,
(xiii) which was generated in the ordinary course of the
Originator's business,
Exhibit I-7
(xiv) which arises solely from the sale of goods or the
provision of services to the related Obligor by the Originator, and
not by any other Person (in whole or in part),
(xv) as to which the Agent has not notified Borrower that
the Agent has determined that such Receivable or class of Receivables
is not acceptable as an Eligible Receivable, including, without
limitation, because such Receivable arises under a Contract that is
not acceptable to the Agent,
(xvi) which is not subject to any dispute, counterclaim,
right of rescission, set-off, counterclaim or any other defense
(including defenses arising out of violations of usury laws) of the
applicable Obligor against the Originator or any other Adverse Claim,
and the Obligor thereon holds no right as against the Originator to
cause the Originator to repurchase the goods or merchandise the sale
of which shall have given rise to such Receivable (except with
respect to sale discounts effected pursuant to the Contract, or
defective goods returned in accordance with the terms of the
Contract); provided, however, that if such dispute, offset,
counterclaim or defense affects only a portion of the Outstanding
Balance of such Receivable, then such Receivable may be deemed an
Eligible Receivable to the extent of the portion of such Outstanding
Balance which is not so affected, and provided, further, that
Receivables of any Obligor which has any accounts payable by the
Originator or by a wholly-owned Subsidiary of the Originator (thus
giving rise to a potential offset against such Receivables) may be
treated as Eligible Receivables to the extent that the Obligor of
such Receivables has agreed pursuant to a written agreement in form
and substance satisfactory to the Agent, that such Receivables shall
not be subject to such offset,
(xvii) as to which the Originator has satisfied and fully
performed all obligations on its part with respect to such Receivable
required to be fulfilled by it, and no further action is required to
be performed by any Person with respect thereto other than payment
thereon by the applicable Obligor,
(xviii) as to which each of the representations and
warranties contained in Sections 5.1(i), (j), (r), (s), (t) and (u)
is true and correct,
(xix) all right, title and interest to and in which has
been validly transferred by the Originator directly to Borrower under
and in accordance with the Receivables Sale Agreement, and Borrower
has good and marketable title thereto free and clear of any Adverse
Claim
(xx) as to which the Agent has not notified Borrower that
the Agent has determined that such Receivable or class of Receivables
is not acceptable as an Eligible Receivable, including, without
limitation, because such Receivable arises under a Contract that is
not acceptable to the Agent;
(xxi) that directs payment thereof to be sent to a
Lock-Box;
(xxii) the Obligor of which (i) is not the subject of a
current bankruptcy, insolvency or similar proceeding and (ii) has not
been the subject of a bankruptcy, insolvency or similar proceeding
during the prior 24 months unless otherwise agreed to in writing by
the Agent;
Exhibit I-8
(xxiii) that does not provide the Obligor with the right to
obtain any cash advance thereunder;
(xxiv) that has not been selected in a manner materially
adverse to any Lender;
(xxv) that is not payable in installments;
(xxvi) that is not evidenced by a promissory note; and
(xxvii) that has terms which have not been modified,
impaired, waived, altered, extended or renegotiated since the initial
sale or provision of service to an obligor in any way not provided
for in the Agreement.
ERISA: The Employee Retirement Income Security Act of 1974, as amended from time
to time, and any rule or regulation issued thereunder.
ERISA Affiliate: Any trade or business (whether or not incorporated) under
common control with Bell Mircroproducts within the meaning of Section 414(b) or
(c) of the Tax Code (and Sections 414(m) and (o) of the Tax Code for purposes of
provisions relating to Section 412 of the Tax Code).
Event of Bankruptcy: Shall occur, with respect to any specified Person, on the
date that (A) a petition, case or proceeding under the bankruptcy laws of the
United States of America or Canada or similar law of any foreign jurisdiction
now or hereafter in effect or under any insolvency, arrangement, reorganization,
receivership, moratorium, readjustment of debt, dissolution or liquidation law
or statute of any jurisdiction now or hereafter in effect (whether at law or in
equity) is filed or commenced against such Person or all or any part of its
properties and such petition or application is not dismissed within forty-five
(45) days after the date of its filing or such Person shall file any answer
admitting or not contesting such petition or application or indicates its
consent to, acquiescence in or approval of, any such action or proceeding or the
relief requested is granted sooner or (B) a petition, case or proceeding under
the bankruptcy laws of the United States of America or Canada now or hereafter
in effect or under any insolvency, arrangement, reorganization, receivership,
moratorium, readjustment of debt, dissolution or liquidation law or statute of
any jurisdiction now or hereafter in effect (whether at a law or equity) is
filed by such Person or for all or any part of its property including, without
limitation, if such Person shall: (i) apply for or consent to the appointment of
a receiver, trustee or liquidator of it or of all or a substantial part of its
property and assets; (ii) be unable, or admit in writing its inability, to pay
its debts as they mature, or commit any other act of bankruptcy; (iii) make a
general assignment for the benefit of creditors; (iv) file a voluntary petition
or assignment in bankruptcy or a proposal seeking a reorganization, compromise,
moratorium or arrangement with its creditors; (v) take advantage of any
insolvency or other similar law pertaining to arrangements, moratoriums,
compromises or reorganizations, or admit the material allegations of a petition
or application filed in respect of it in any bankruptcy, reorganization or
insolvency proceeding; or (vi) take any corporate action for the purpose of
effecting any of the foregoing.
Exhibit I-9
Facility Account: Borrower's account no. 14594-03034 at Bank of America.
Facility Termination Date: The earlier of (i) the Liquidity Termination Date
(ii) the business day prior to an Event of Bankruptcy with respect to any Loan
Party, (iii) the date specified by the Borrower upon not less than thirty
(30)business days' notice to the Agent, (iv) the date declared by the Agent
following the occurrence of an Amortization Event, (v) the date that is 3 years
from the date of the execution of the Receivables Sale Agreement and the Credit
and Security Agreement and (vi) the date the Agent receives any Auction Notice.
Federal Bankruptcy Code: Title 11 of the United States Code entitled
"Bankruptcy," as amended and any successor statute thereto.
Federal Funds Effective Rate: For any period, a fluctuating interest rate per
annum for each day during such period equal to (i) the weighted average of the
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the preceding Business Day) by the
Federal Reserve Bank of New York in the Composite Closing Quotations for U.S.
Government Securities; or (ii) if such rate is not so published for any day
which is a Business Day, the average of the quotations at approximately 11:30
a.m. (New York City time) for such day on such transactions received by the
Agent from three federal funds brokers of recognized standing selected by it.
Fee Letter: That certain letter agreement dated as of the date hereof among
Borrower, Bell Microproducts Inc. and the Agent, as it may be amended or
modified and in effect from time to time.
Final Payout Date: The date on which all Obligations have been paid in full and
the Aggregate Commitment has been terminated.
Finance Charges: With respect to a Contract, any finance, interest, late payment
charges or similar charges owing by an Obligor pursuant to such Contract.
Funding Agreement: (i) this Agreement, (ii) the Liquidity Agreement and (iii)
any other agreement or instrument executed by any Funding Source with or for the
benefit of Blue Ridge.
Funding Source: (i) any Liquidity Bank or (ii) any insurance company, bank or
other funding entity providing liquidity, credit enhancement or back-up purchase
support or facilities to Blue Ridge.
GAAP: At any time, generally accepted accounting principles in effect in the
United States of America at such time.
Indebtedness: Of a Person means such Person's (i) obligations for borrowed
money, (ii) obligations representing the deferred purchase price of property or
services (other than accounts payable arising in the ordinary course of such
Person's business payable on terms customary in the trade), (iii) obligations,
whether or not assumed, secured by liens or payable out of the proceeds or
production from property now or hereafter owned or acquired by such Person, (iv)
obligations which are evidenced by notes, acceptances, or other instruments, (v)
capitalized lease obligations, (iv) net liabilities under interest rate swap,
exchange or cap agreements, (vii) Contingent Obligations and (v) liabilities in
respect of unfunded vested benefits under plans covered by Title IV of ERISA.
Exhibit I-10
Independent Director: A member of the Board of Directors of Borrower who (A) at
the time of appointment, is not at such time, and has not been at any time
during the preceding five (5) years: (i) a creditor, supplier, director,
officer, employee, family member, manager or contractor of Bell Microproducts or
any of its Subsidiaries or Affiliates (other than Borrower), (ii) a direct or
indirect or beneficial owner, excluding de minimus ownership interests, (at the
time of such individual's appointment as an Independent Director or at any time
thereafter while serving as an Independent Director) of any of the outstanding
common shares of Borrower, Bell Microproducts or any of their respective
Subsidiaries or Affiliates, having general voting rights, or (iii) a person who
controls (whether directly, indirectly or otherwise) Bell Microproducts or any
of its Subsidiaries or Affiliates (other than Borrower) or any creditor,
supplier, employee, officer, director, manager or contractor of Bell
Microproducts or any of its Subsidiaries or Affiliates (other than Borrower),
and (B) shall have no less than five (5) years experience in serving as a
director for special purposes vehicles engaged in securitization activities
and/or structured finance transactions (e.g., AMACAR Group, L.L.C., Lord
Securities Corporation, Global Securities, and Organization Services, Inc., a
subsidiary of Wilmington Trust).
Intercreditor Agreement: That certain Intercreditor Agreement, dated as of
September 20, 2004, between the Agent and Congress Financial Corporation
(Western), as administrative agent for the lenders under the Loan and Security
Agreement.
Interest: For each respective Interest Period relating to Loans of the Liquidity
Banks, an amount equal to the product of the applicable Interest Rate for each
Loan multiplied by the principal of such Loan for each day elapsed during such
Interest Period, annualized on a 360 day basis.
Interest Period: With respect to any Loan held by a Liquidity Bank:
(i) if Interest for such Loan is calculated on the basis of
the LIBO Rate, a period of one, two, three or six months, or such
other period as may be mutually agreeable to the Agent and Borrower,
commencing on a Business Day selected by Borrower or the Agent
pursuant to this Agreement. Such Interest Period shall end on the day
in the applicable succeeding calendar month which corresponds
numerically to the beginning day of such Interest Period, provided,
however, that if there is no such numerically corresponding day in
such succeeding month, such Interest Period shall end on the last
Business Day of such succeeding month; or
(ii) if Interest for such Loan is calculated on the basis
of the Alternate Base Rate, a period commencing on a Business Day
selected by Borrower and agreed to by the Agent, provided that no
such period shall exceed one month.
If any Interest Period would end on a day which is not a
Business Day, such Interest Period shall end on the next succeeding
Business Day, provided, however, that in the case of Interest Periods
corresponding to the LIBO Rate, if such next succeeding Business Day
falls in a new month, such Interest Period shall end on the
immediately preceding Business Day. In the case of any Interest
Exhibit I-11
Period for any Loan which commences before the Amortization Date and
would otherwise end on a date occurring after the Amortization Date,
such Interest Period shall end on the Amortization Date. The duration
of each Interest Period which commences after the Amortization Date
shall be of such duration as selected by the Agent.
Interest Rate: With respect to each Loan of the Liquidity Banks, the LIBO Rate,
the Alternate Base Rate or the Default Rate, as applicable.
Interest Reserve: For any Calculation Period, the product (expressed as a
percentage) of (i) 1.5 times (ii) the Alternate Base Rate as of the immediately
preceding Cut-Off Date times (iii) a fraction the numerator of which is the
highest Days Sales Outstanding for the most recent 12 Calculation Periods and
the denominator of which is 360.
Lender: Blue Ridge and each Liquidity Bank.
LIBO Rate: For any Interest Period, the rate per annum determined on the basis
of the offered rate for deposits in U.S. dollars of amounts equal or comparable
to the principal amount of the related Loan offered for a term comparable to
such Interest Period, which rates appear on a Bloomberg L.P. terminal, displayed
under the address "US0001M (Index) Q (Go) " effective as of 11:00 A.M., London
time, two Business Days prior to the first day of such Interest Period, provided
that if no such offered rates appear on such page, the LIBO Rate for such
Interest Period will be the arithmetic average (rounded upwards, if necessary,
to the next higher 1/100th of 1%) of rates quoted by not less than two major
banks in New York, New York, selected by the Agent, at approximately 10:00
a.m.(New York City time), two (2) Business Days prior to the first day of such
Interest Period, for deposits in U.S. dollars offered by leading European banks
for a period comparable to such Interest Period in an amount comparable to the
principal amount of such Loan, divided by (i) one minus the maximum aggregate
reserve requirement (including all basic, supplemental, marginal or other
reserves) which is imposed against the Agent in respect of Eurocurrency
liabilities, as defined in Regulation D of the Board of Governors of the Federal
Reserve System as in effect from time to time (expressed as a decimal),
applicable to such Interest Period plus (ii) 1.50 % per annum. The LIBO Rate
shall be rounded, if necessary, to the next higher 1/16 of 1%.
LIBO Rate Loan: A Loan which bears interest at the LIBO Rate.
Liquidity Agreement: That certain Liquidity Asset Purchase Agreement dated as of
September 20, 2004, by and among Blue Ridge, the Agent and the Liquidity Banks
from time to time party thereto, as the same may be amended, restated and/or
otherwise modified from time to time in accordance with the terms thereof.
Liquidity Banks: As defined in the preamble in this Agreement.
Liquidity Commitment: As to each Liquidity Bank, its commitment under the
Liquidity Agreement (which shall equal 102% of its Commitment hereunder).
Exhibit I-12
Liquidity Funding: Any (i) purchase made by any Liquidity Bank pursuant to its
Liquidity Commitment of all or any portion of, or any undivided interest in, a
Blue Ridge Loan or (ii) Loan made by a Liquidity Bank in lieu of Blue Ridge
pursuant to Section 1.1.
Liquidity Termination Date: The earlier to occur of the following:
(i) the date on which the Liquidity Banks' Liquidity
Commitments expire, cease to be available to Blue Ridge or otherwise
cease to be in full force and effect; or
(ii) the date on which a Downgrading Event with respect to
a Liquidity Bank shall have occurred and been continuing for not less
than 30 days, and either (A) the Downgraded Liquidity Bank shall not
have been replaced by an Eligible Assignee pursuant to the Liquidity
Agreement, or (B) the Liquidity Commitment of such Downgraded
Liquidity Bank shall not have been funded or collateralized in such a
manner that will avoid a reduction in or withdrawal of the credit
rating applied to the Commercial Paper to which such Liquidity
Agreement applies by any of the rating agencies then rating such
Commercial Paper.
Loan: Any loan made by a Lender to the Borrower pursuant to this Agreement
(including, without limitation, any Liquidity Funding). Each Loan shall either
be a CP Rate Loan, an Alternate Base Rate Loan or a Eurodollar Rate Loan,
selected in accordance with the terms of this Agreement.
Loan and Security Agreement: That certain Loan and Security Agreement, dated as
of May 14, 2001, as amended, by and among Bell Microproducts Inc., Bell
Microproducts - Future Tech, Inc., Rorke Data, Inc., Bell Microproducts Canada -
Tenex Data ULC, Total Tec Systems, Inc., Bell Microproducts Canada Inc., Bell
Microproducts Mexico, S.A. de C.V., Bell Microproducts Mexico Shareholder, LLC,
and Congress Financial Corporation (Western), as administrative, collateral and
syndication agent, and other parties as lenders.
Loan Parties: As defined in the preamble to this Agreement.
Lock-Box: Each locked postal box with respect to which a bank who has executed a
Collection Account Agreement has been granted exclusive access for the purpose
of retrieving and processing payments made on the Receivables and which is
listed on Exhibit IV.
Loss Reserve: For any Calculation Period, the product (expressed as a
percentage) of (i) 2.0, times (ii) the highest three-month rolling average
Default Ratio during the 12 Calculation Periods ending on the immediately
preceding Cut-Off Date, times (iii) the Default Horizon Ratio as of the
immediately preceding Cut-Off Date.
Material Adverse Effect: With respect to any Loan Party and its Affiliates, a
material adverse effect on (a) the financial condition, business, performance,
operations or properties of any Loan Party or of the group taken as a whole; (b)
the legality, validity or enforceability as to any Loan Party of this Agreement
or any other Transaction Document; (c) the legality, validity, enforceability,
perfection or priority of the security interests and liens of the Agent or any
Lender upon the Collateral or any other property of any Loan Party or of the
group taken as a whole that is security for the Obligations, or the value of the
Collateral or such other property; (d) the ability of any Loan Party or of the
Exhibit I-13
group taken as a whole to repay the Obligations attributable to such Loan Party
or group or of any such Loan Party or of the group taken as a whole to perform
its respective obligations under this Agreement; (e) the Agent's security
interest, for the benefit of the Secured Parties, in the Receivables generally
or in any significant portion of the Receivables, the Related Security or the
Collections with respect thereto; or (f) the ability of the Agent or any Lender
to enforce the Obligations or realize upon the Collateral or otherwise with
respect to the rights and remedies of the Agent or any Lender under this
Agreement or any of the other Funding Agreements.
Material Indebtedness: As defined in Section 9.1(f).
Moody's: Moody's Investors Service, Inc.
Net Pool Balance: At any time, the aggregate Outstanding Balance of all Eligible
Receivables at such time reduced by the aggregate amount by which the
Outstanding Balance of all Eligible Receivables of each Obligor and its
Affiliates exceeds the Obligor Concentration Limit for such Obligor.
Net Worth: As defined in the Receivables Sale Agreement.
Notice of Default: As defined in the Intercreditor Agreement.
Obligations: As defined in Section 2.1.
Obligor: A Person obligated to make payments pursuant to a Contract.
Obligor Concentration Limit: At any time,
(a) in relation to the aggregate Outstanding Balance of
Receivables owed by any single Obligor and its Affiliates (if any),
the applicable concentration limit shall be determined as follows for
Obligors who have short term unsecured debt ratings currently
assigned to them by S&P and Moody's (or in the absence thereof, the
equivalent long term unsecured senior debt ratings), the applicable
concentration limit shall be determined according to the following
table:
Allowable % of Eligible
S&P Rating Moody's Rating Receivables
---------------------------------------- ---------------------------------- -----------------------------------
A-1+ P-1 10%
---------------------------------------- ---------------------------------- -----------------------------------
A-1 P-1 8%
---------------------------------------- ---------------------------------- -----------------------------------
A-2 P-2 6%
---------------------------------------- ---------------------------------- -----------------------------------
A-3 P-3 3%
---------------------------------------- ---------------------------------- -----------------------------------
Below A-3 or Not Rated by either S&P Below P-3 or Not Rated by either
or Moody's S&P or Moody's 3%
---------------------------------------- ---------------------------------- -----------------------------------
Exhibit I-14
provided, however, that (i) if any Obligor has a split rating, the
applicable rating will be the lower of the two, (ii) if any Obligor
is not rated by either S&P or Moody's, the applicable Obligor
Concentration Limit shall be the one set forth in the last line of
the table above, and (iii) subject to satisfaction of the Rating
Agency Condition and/or an increase in the percentage set forth in
clause (i)(A) of the definition of "Required Reserve," upon the
Borrower's request from time to time, the Agent may agree to a higher
percentage of Eligible Receivables for a particular Obligor and its
Affiliates (each such higher percentage, a "Special Concentration
Limit"), it being understood that any Special Concentration Limit may
be cancelled by the Agent upon not less than five (5) Business Days'
written notice to the Loan Parties; and
(b) in relation to the aggregate Outstanding Balance of
Receivables owed by all Obligors and their Affiliates (if any) that
are (i) natural persons resident in Canada or (ii) corporations or
other business organizations, organized under the laws of Canada or
any political subdivision thereof, the applicable concentration limit
in any such case shall be 5%.
Originator: Bell Microproducts Inc., in its capacity as a seller under the
Receivables Sale Agreement.
Outstanding Balance: Of any Receivable at any time means the then outstanding
principal balance thereof.
Participant: As defined in Section 12.2.
PBGC: The Pension Benefit Guaranty Corporation, or any successor thereto.
Pension Plan: A pension plan (as defined in Section 3(2) of ERISA) subject to
Title IV of ERISA which the Servicer sponsors or maintains, or to which it
makes, is making, or is obligated to make contributions, or in the case of a
multiple employer plan (as described in Section 4064(a) of ERISA) has made
contributions at any time during the immediately preceding five plan years.
Periodic Report: A report, in substantially the form of Exhibit IX hereto
(appropriately completed), furnished by the Servicer to the Agent pursuant to
Section 8.5.
Periodic Reporting Date: (i) the 10th Business Day of each month after the date
of this Agreement (or if any such day is not a Business Day, the next succeeding
Business Day thereafter) or (ii) such other day as may be requested by the Agent
in its discretion.
Person: An individual, partnership, corporation (including a business trust),
limited liability company, joint stock company, trust, unincorporated
association, joint venture or other entity, or a government or any political
subdivision or agency thereof.
Plan: An employee benefit plan (as defined in Section 3(3) of ERISA) which the
Servicer or any of its ERISA Affiliates sponsors or maintains or to which the
Servicer or any of its ERISA Affiliates makes, is making, or is obligated to
make contributions and includes any Pension Plan, other than a Plan maintained
outside the United States primarily for the benefit of Persons who are not U.S.
residents.
Exhibit I-15
Pooled Commercial Paper: Commercial Paper notes of Blue Ridge subject to any
particular pooling arrangement by Blue Ridge, but excluding Commercial Paper
issued by Blue Ridge for a tenor and in an amount specifically requested by any
Person in connection with any agreement effected by Blue Ridge.
Prime Rate: A rate per annum equal to the prime rate of interest announced from
time to time by Wachovia (which is not necessarily the lowest rate charged to
any customer), changing when and as said prime rate changes.
Pro Rata Share: For each Liquidity Bank, a percentage equal to the Commitment of
such Liquidity Bank, divided by the Aggregate Commitment.
Proposed Reduction Date: As defined in Section 1.3.
Purchasing Liquidity Bank: As defined in Section 12.1(b).
Rating Agency Condition: That Blue Ridge has received written notice from S&P
and Moody's that an amendment, a change or a waiver will not result in a
withdrawal or downgrade of the then current ratings on Blue Ridge's Commercial
Paper.
Receivable: All indebtedness and other obligations owed to Borrower or the
Originator (at the time it arises, and before giving effect to any transfer or
conveyance under the Receivables Sale Agreement) or in which Borrower or an
Originator has a security interest or other interest, in each case arising in
connection with the sale of goods or the rendering of services by an Originator,
including, without limitation, any such indebtedness, obligation or interest
constituting an account, chattel paper, instrument or general intangible, and
further includes, without limitation, the obligation to pay any Finance Charges
with respect thereto. Indebtedness and other rights and obligations arising from
any one transaction, including, without limitation, indebtedness and other
rights and obligations represented by an individual invoice, shall constitute a
Receivable separate from a Receivable consisting of the indebtedness and other
rights and obligations arising from any other transaction; provided further,
that any indebtedness, rights or obligations referred to in the immediately
preceding sentence shall be a Receivable regardless of whether the account
debtor or Borrower treats such indebtedness, rights or obligations as a separate
payment obligation.
Receivables Sale Agreement: That certain Receivables Sale Agreement, dated as of
September 20, 2004, among the Originator and Borrower, as the same may be
amended, restated or otherwise modified from time to time.
Records: With respect to any Receivable, all Contracts and other documents,
books, records and other information (including, without limitation, computer
programs, tapes, disks, punch cards, data processing software and related
property and rights) relating to such Receivable, any Related Security therefor
and the related Obligor.
Reduction Notice: As defined in Section 1.3.
Regulatory Change: As defined in Section 10.2(a).
Exhibit I-16
Reinvestment: As defined in Section 2.2.
Related Security: All of Borrower's right, title and interest in, to and under
the Receivables Sale Agreement and with respect to any Receivable:
(i) all of Borrower's interest in the inventory and goods
(including returned or repossessed inventory or goods), if any, the
sale of which by the Originator gave rise to such Receivable, and all
insurance contracts with respect thereto,
(ii) all other security interests or liens and property
subject thereto from time to time, if any, purporting to secure
payment of such Receivable, whether pursuant to the Contract related
to such Receivable or otherwise, together with all financing
statements and security agreements describing any collateral securing
such Receivable,
(iii) all guaranties, letters of credit, insurance and
other agreements or arrangements of whatever character from time to
time supporting or securing payment of such Receivable whether
pursuant to the Contract related to such Receivable or otherwise,
(iv) all service contracts and other contracts and
agreements associated with such Receivable,
(v) all Records related to such Receivable,
(vi) all of Borrower's right, title and interest in, to and
under the Receivables Sale Agreement in respect of such Receivable,
and
(vii) all proceeds of any of the foregoing.
Required Capital Amount: As defined in the Receivables Sale Agreement.
Required Liquidity Banks: At any time, Liquidity Banks with Commitments in
excess of 66-2/3% of the Aggregate Commitment.
Required Notice Period: The number of days required notice set forth below
applicable to the Aggregate Reduction indicated below:
Aggregate Reduction Required Notice Period
< 50% of the Aggregate Commitment 2 Business Days
50% or more of the Aggregate Commitment 5 Business Days
Required Reserve: On any day during a Calculation Period, the product of (i) the
greater of (A) the Required Reserve Factor Floor and (B) the sum of the Loss
Reserve, the Interest Reserve, the Dilution Reserve and the Servicing Reserve,
times (ii) the Net Pool Balance as of the Cut-Off Date immediately preceding
such Calculation Period.
Exhibit I-17
Required Reserve Factor Floor: For any Calculation Period, the sum (expressed as
a percentage) of (i) 16% plus (ii) the product of the Adjusted Dilution Ratio
and the Dilution Horizon Ratio, in each case, as of the immediately preceding
Cut-Off Date.
Restricted Junior Payment: (i) any dividend or other distribution, direct or
indirect, on account of any shares of any class of capital stock of Borrower now
or hereafter outstanding, except a dividend payable solely in shares of that
class of stock or in any junior class of stock of Borrower, (ii) any redemption,
retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any shares of any class of capital stock of
Borrower now or hereafter outstanding, (iii) any payment or prepayment of
principal of, premium, if any, or interest, fees or other charges on or with
respect to, and any redemption, purchase, retirement, defeasance, sinking fund
or similar payment and any claim for rescission with respect to the Subordinated
Loans, (iv) any payment made to redeem, purchase, repurchase or retire, or to
obtain the surrender of, any outstanding warrants, options or other rights to
acquire shares of any class of capital stock of Borrower now or hereafter
outstanding, and (v) any payment of management fees by Borrower (except for
reasonable management fees to the Originator or its Affiliates in reimbursement
of actual management services performed).
S&P: Standard and Poor's Ratings Services, a division of The McGraw Hill
Companies, Inc.
Secured Parties: The Indemnified Parties.
Servicer: At any time the Person (which may be the Agent) then authorized
pursuant to Article VIII to service, administer and collect Receivables.
Servicing Fee: For each day in a Calculation Period:
(i) an amount equal to (A) the Servicing Fee Rate (or, at
any time while Bell Microproducts or one of its Affiliates is the
Servicer, such lesser percentage as may be agreed between the
Borrower and the Servicer on an arms' length basis based on then
prevailing market terms for similar services), times (B) the
aggregate Outstanding Balance of all Receivables at the close of
business on the Cut-Off Date immediately preceding such Calculation
Period, times (C) 1/360; or
(ii) on and after the Servicer's reasonable request made at
any time when Bell Microproducts or one of its Affiliates is no
longer acting as Servicer hereunder, an alternative amount specified
by the successor Servicer not exceeding (A) 110% of such Servicer's
reasonable costs and expenses of performing its obligations under
this Agreement during the preceding Calculation Period, divided by
(B) the number of days in the current Calculation Period.
Servicing Fee Rate: 1.0% per annum.
Servicing Reserve: For any Calculation Period, the product (expressed as a
percentage) of (i) the Servicing Fee Rate, times (ii) a fraction, the numerator
of which is the highest Days Sales Outstanding for the most recent 12
Calculation Periods and the denominator of which is 360.
Exhibit I-18
Settlement Date: The (i) 2nd Business Day after each Periodic Reporting Date and
(ii) last day of the relevant Interest Period in respect of each Loan of the
Liquidity Banks.
Settlement Period: If the Periodic Reporting Date occurs (i) only once each
month, (A) in respect of each Loan of Blue Ridge, the immediately preceding
Calculation Period and (B) in respect of each Loan of the Liquidity Banks, the
entire Interest Period of such Loan or (ii) more frequently than once each
month, the period of time selected by the Agent in its discretion.
Subordinated Loan: As defined in the Receivables Sale Agreement.
Subordinated Note: As defined in the Receivables Sale Agreement.
Subsidiary: Of a Person means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Person or by one or more
of its Subsidiaries or by such Person and one or more of its Subsidiaries, or
(ii) any partnership, association, limited liability company, joint venture or
similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled.
Tax Code: The Internal Revenue Code of 1986, as the same may be amended from
time to time.
Termination Date: As defined in the Receivables Sale Agreement.
Terminating Tranche: As defined in Section 4.3(b).
Transaction Documents: Collectively, this Agreement, each Borrowing Notice, the
Receivables Sale Agreement, each Collection Account Agreement, the Fee Letter,
the Subordinated Note and all other instruments, documents and agreements
executed and delivered in connection herewith.
UCC: The Uniform Commercial Code as from time to time in effect in the specified
jurisdiction.
Unmatured Amortization Event: An event which, with the passage of time or the
giving of notice, or both, would constitute an Amortization Event.
Wachovia: Wachovia Bank, National Association in its individual capacity.
All accounting terms not specifically defined herein shall be construed in
accordance with GAAP. All terms used in Article 9 of the UCC in the State of New
York, and not specifically defined herein, are used herein as defined in such
Article 9.
Exhibit I-19
EXHIBIT II
FORM OF BORROWING NOTICE
---
[BELL MICROPRODUCTS FUNDING CORP]
BORROWING NOTICE
dated ______________, 20__
for Borrowing on ________________, 20__
Wachovia Bank, National Association, as Agent
191 Peachtree Street, N.E.
22nd Floor, Mail Code GA8088
Atlanta, Georgia 30303
Attention: Sherry McInturf, Fax No. (404)332-5152
Ladies and Gentlemen:
Reference is made to the Credit and Security Agreement dated as of
September 20, 2004 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement") among Bell Microproducts Funding Corporation (the
"Borrower"), Bell Microproducts Inc., as initial Servicer, Blue Ridge Asset
Funding Corporation, and Wachovia Bank National Association, individually and as
Agent. Capitalized terms defined in the Credit Agreement are used herein with
the same meanings.
1. The [SERVICER, ON BEHALF OF THE] Borrower hereby certifies,
represents and warrants to the Agent and the Lenders that on and as of the
Borrowing Date (as hereinafter defined):
(a) all applicable conditions precedent set forth in Article VI of
the Credit Agreement have been satisfied;
(b) each of its representations and warranties contained in Section
5.1 of the Credit Agreement will be true and correct, in all material respects,
as if made on and as of the Borrowing Date;
(c) no event will have occurred and is continuing, or would result
from the requested Purchase, that constitutes an Amortization Event or Unmatured
Amortization Event;
(d) the Facility Termination Date has not occurred; and
(e) after giving effect to the Loans comprising the Advance requested
below, the Aggregate Principal will not exceed the Borrowing Limit.
Exhibit II-1
2. The [SERVICER, ON BEHALF OF THE] Borrower hereby requests that
Blue Ridge (or their respective Liquidity Banks) make an Advance on ___________,
20__ (the "Borrowing Date") as follows:
(a) Aggregate Amount of Advance: $_____________.
(b) If the Advance is not funded by Blue Ridge, [SERVICER ON BEHALF
OF THE] Borrower requests that the Liquidity Banks make an Alternate Base Rate
Loan that converts into LIBO Rate Loan with an Interest Period of _____ months
on the third Business Day after the Borrowing Date).
3. Please disburse the proceeds of the Loans as follows:
[APPLY $________ TO PAYMENT OF PRINCIPAL AND INTEREST OF EXISTING
LOANS DUE ON THE BORROWING DATE]. [APPLY $______ TO PAYMENT OF FEES DUE ON THE
BORROWING DATE]. [WIRE TRANSFER $________ TO ACCOUNT NO. ________ AT ___________
BANK, IN [CITY, STATE], ABA NO. __________, REFERENCE: ________].
IN WITNESS WHEREOF, the [SERVICER, ON BEHALF OF THE] Borrower has
caused this Borrowing Request to be executed and delivered as of this ____ day
of ___________, _____.
[_______________________, AS SERVICER,
ON BEHALF OF:] ____________., as Borrower
By:_______________________________________
Name:_____________________________________
Title:____________________________________
Exhibit II-2
EXHIBIT III
PLACES OF BUSINESS OF THE LOAN PARTIES; LOCATIONS OF RECORDS;
FEDERAL EMPLOYER IDENTIFICATION NUMBER(S)
- --------------------------------------------------------------------------------------------------------------------------------
Loan Party Places of Business and Location of Records FEIN
- --------------------------------------------------------------------------------------------------------------------------------
Bell Microproducts Inc. 1941 Ringwood Avenue 94-3057566
San Jose, California 95131
- --------------------------------------------------------------------------------------------------------------------------------
Bell Microproducts Funding Corporation 1941 Ringwood Avenue 27-0101561
Suite A
San Jose, California 95131
- --------------------------------------------------------------------------------------------------------------------------------
Exhibit III - 1
EXHIBIT IV
NAMES OF COLLECTION BANKS; LOCK-BOXES & COLLECTION ACCOUNTS
- ---------------------------------------------------- -------------------------------------------------------------------
Lock-Box Related Collection Account
- ---------------------------------------------------- -------------------------------------------------------------------
File 57266 NAME OF CURRENT ACCOUNT HOLDER:
Los Angeles, CA 90074-7266 Bell Microproducts Funding Corporation
ACCOUNT NUMBER: 14594-03034
Bank of America, N.A.
ABA NUMBER: 121000358
CONTACT PERSON: Sarah Singh
CONTACT'S TEL: (714)850-6536
CONTACT'S FAX: (714)850-6586
- ---------------------------------------------------- -------------------------------------------------------------------
12778 Collections Center Drive NAME OF CURRENT ACCOUNT HOLDER:
Chicago, IL 60693 Bell Microproducts Funding Corporation
ACCOUNT NUMBER: 14594-03034
Bank of America, N.A.
ABA NUMBER: 121000358
CONTACT PERSON: Sarah Singh
CONTACT'S TEL: (714)850-6536
CONTACT'S FAX: (714)850-6586
- ---------------------------------------------------- -------------------------------------------------------------------
Exhibit IV - 1
EXHIBIT V
FORM OF COMPLIANCE CERTIFICATE
To: Wachovia Bank, National Association, as Agent
This Compliance Certificate is furnished pursuant to that certain
Credit and Security Agreement dated as of September 20, 2004 among Bell
Microproducts Funding Corporation (the "Borrower"), Bell Microproducts Inc. (the
"Servicer"), the Lenders party thereto and Wachovia Bank, National Association,
as agent for such Lenders (the "Agreement").
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected [CHIEF FINANCIAL OFFICER] of Borrower.
2. I have reviewed the terms of the Agreement and I have made, or
have caused to be made under my supervision, a detailed review of the
transactions and conditions of Borrower and its Subsidiaries during the
accounting period covered by the attached financial statements.
3. The examinations described in paragraph 2 did not disclose, and I
have no knowledge of, the existence of any condition or event which constitutes
an Amortization Event or Unmatured Amortization Event, as each such term is
defined under the Agreement, during or at the end of the accounting period
covered by the attached financial statements or as of the date of this
Certificate[, EXCEPT AS SET FORTH IN PARAGRAPH 5 BELOW].
4. Schedule I attached hereto sets forth financial data and
computations evidencing the compliance with certain covenants of the Agreement,
all of which data and computations are true, complete and correct.
[5. DESCRIBED BELOW ARE THE EXCEPTIONS, IF ANY, TO PARAGRAPH 3 BY
LISTING, IN DETAIL, THE NATURE OF THE CONDITION OR EVENT, THE PERIOD DURING
WHICH IT HAS EXISTED AND THE ACTION WHICH BORROWER HAS TAKEN, IS TAKING, OR
PROPOSES TO TAKE WITH RESPECT TO EACH SUCH CONDITION OR EVENT:
____________________]
Exhibit V-1
The foregoing certifications, together with the computations set
forth in Schedule I hereto and the financial statements delivered with this
Certificate in support hereof, are made and delivered as of ______________,
20__.
By:___________________________________
Name:_________________________________
Title:________________________________
Exhibit V-2
SCHEDULE I TO COMPLIANCE CERTIFICATE
A. Schedule of Compliance as of __________, ____ with Section ___ of
the Agreement. Unless otherwise defined herein, the terms used in this
Compliance Certificate have the meanings ascribed thereto in the Agreement.
This schedule relates to the month ended: _______________.
Exhibit V-3
EXHIBIT VI
DEPOSIT ACCOUNT CONTROL AGREEMENT
(LOCKBOX - WITH ACTIVATION)
================================================================================
This Agreement is entered into as of September 20, 2004, among Bell
Microproducts Funding Corporation ("Company"), Bell Microproducts Inc.
("Servicer"), Wachovia Bank, National Association ("Wachovia"), as agent for the
Lenders under the Credit and Security Agreement, dated as of September 20, 2004,
among the Company, Servicer, Wachovia, Blue Ridge Asset Funding Corporation and
the Liquidity Banks from time to time parties thereto ("Lender"), and Bank of
America, N.A. ("Bank") with respect to the following:
A. Bank has agreed to establish and maintain for Company the
following post office numbers (i) P.O. Box 57266, Los Angeles, California 90074
and (ii) P.O. Box 12778, Collections Centre Drive, Chicago, Illinois (each, a
"Lockbox Address") and deposit account number 14594-03034 (the "Account"). Bank
performs the services described in Exhibit A, which includes receiving mail at
each Lockbox Address, processing it and depositing checks and other payment
instructions ("Checks") into the Account (the "Lockbox Service").
B. Company has assigned to Lender a security interest in the Account
and in Checks mailed to each Lockbox Address.
C. Servicer will provide servicing, administration and collection
with respect to the Company's receivables, and in that capacity will have access
to the Account.
D. Company, Lender and Bank are entering into this Agreement to
evidence Lender's security interest in the Account and such Checks and to
provide for the disposition of net proceeds of Checks deposited in the Account.
Accordingly, Company, Lender and Bank agree as follows:
1. (a) This Agreement evidences Lender's control over the Account.
Notwithstanding anything to the contrary in the agreement between Bank and
Company governing the Account, Bank will comply with instructions originated by
Lender as set forth herein directing the disposition of funds in the Account
without further consent of the Company.
(b) Company represents and warrants to Lender and Bank that it has
not assigned or granted a security interest in the Account or any Check
deposited in the Account, except to Lender.
(c) Company will not permit the Account to become subject to any
other pledge, assignment, lien, charge or encumbrance of any kind, other than
Lender's security interest referred to herein.
Exhibit VI-1
2. During the Activation Period (as defined below), Bank shall prevent Company
and Servicer from making any withdrawals from the Account. Prior to the
Activation Period, Company may operate and transact business through the Account
in its normal fashion, including making withdrawals from the Account, but
covenants to Lender it will not close the Account. Bank shall have no liability
in the event Company breaches this covenant to Lender. A reasonable period of
time following the commencement of the Activation Period, and continuing on each
Business Day thereafter, Bank shall transfer all collected and available
balances in the Account to Lender at its account specified in the Notice (as
defined below). The "Activation Period" means the period which commences within
a reasonable period of time not to exceed two Business Days after Bank's receipt
of a written notice from Lender in the form of Exhibit B (the "Notice"), to
restrict the Account so no withdrawals may be made by Company or Servicer and
approximately four Business Days after Bank's receipt of a written notice from
Lender in the form of Exhibit B (the "Notice"), Bank shall commence the
transfers of all collected and available balances in the Account to the Lender's
account. A "Business Day" is each day except Saturdays, Sundays and Bank
holidays. Funds are not available if, in the reasonable determination of Bank,
they are subject to a hold, dispute or legal process preventing their
withdrawal.
3. Bank agrees it shall not offset, charge, deduct or otherwise withdraw funds
from the Account, except as permitted by Section 4, until it has been advised in
writing by Lender that all of Company's obligations that are secured by the
Checks and the Account are paid in full. Lender shall notify Bank promptly in
writing upon payment in full of Company's obligations.
4. Bank is permitted to charge the Account:
(a) for its fees and charges relating to the Account or associated
with the Lockbox Service and this Agreement; and
(b) in the event any Check deposited into the Account is returned
unpaid for any reason or for any breach of warranty claim.
5. (a) If the balances in the Account are not sufficient to compensate Bank for
any fees or charges due Bank in connection with the Account, the Lockbox Service
or this Agreement, Company agrees to pay Bank on demand the amount due Bank.
Company will have breached this Agreement if it has not paid Bank, within five
days after such demand, the amount due Bank.
(b) If the balances in the Account are not sufficient to compensate
Bank for any returned Check, Company agrees to pay Bank on demand the amount due
Bank. If Company fails to so pay Bank immediately upon demand, Lender agrees to
pay Bank within five days after Bank's demand to Lender to pay any amount
received by Lender with respect to such returned Check. The failure to so pay
Bank shall constitute a breach of this Agreement.
(c) Company hereby authorizes Bank, without prior notice, from time
to time to debit any other account Company may have with Bank for the amount or
amounts due Bank under subsection 5(a) or 5(b).
6. (a) Each Business Day, Bank will send any Checks not processed in accordance
with the Lockbox Service set-up documents as well as any other materials, such
as invoices, received at any Lockbox Address plus information regarding the
deposit for the day to the address specified below for Company or as otherwise
specified in writing by Company to Bank, and will send a copy of the deposit
advice to the address specified below for Lender.
Exhibit VI-2
(b) In addition to the original Bank statement provided to Company,
Bank will provide Lender with a duplicate of such statement.
7. (a) Bank will not be liable to Company or Lender for any expense, claim,
loss, damage or cost ("Damages") arising out of or relating to its performance
under this Agreement other than those Damages which result directly from its
acts or omissions constituting negligence or intentional misconduct.
(b) In no event will Bank be liable for any special, indirect,
exemplary or consequential damages, including but not limited to lost profits.
(c) Bank will be excused from failing to act or delay in acting, and
no such failure or delay shall constitute a breach of this Agreement or
otherwise give rise to any liability of Bank, if (i) such failure or delay is
caused by circumstances beyond Bank's reasonable control, including but not
limited to legal constraint, emergency conditions, action or inaction of
governmental, civil or military authority, fire, strike, lockout or other labor
dispute, war, riot, theft, flood, earthquake or other natural disaster,
breakdown of public or private or common carrier communications or transmission
facilities, equipment failure, or negligence or default of Company or Lender or
(ii) such failure or delay resulted from Bank's reasonable belief that the
action would have violated any guideline, rule or regulation of any governmental
authority.
(d) Bank shall have no duty to inquire or determine whether Company's
obligations to Lender are in default or whether Lender is entitled to provide
the Notice to Bank. Bank may rely on notices and communications it believes in
good faith to be genuine and given by the appropriate party.
(e) Notwithstanding any of the other provisions in this Agreement, in
the event of the commencement of a case pursuant to Title 11, United States
Code, filed by or against Company, or in the event of the commencement of any
similar case under then applicable federal or state law providing for the relief
of debtors or the protection of creditors by or against Company, Bank may act as
Bank deems necessary to comply with all applicable provisions of governing
statutes and shall not be in violation of this Agreement as a result.
(f) Bank shall be permitted to comply with any writ, levy order or
other similar judicial or regulatory order or process concerning any Lockbox
Address, the Account or any Check and shall not be in violation of this
Agreement for so doing.
8. Company and Servicer shall jointly and severally indemnify Bank against, and
hold it harmless from, any and all liabilities, claims, costs, expenses and
damages of any nature (including but not limited to allocated costs of staff
counsel, other reasonable attorney's fees and any fees and expenses) in any way
arising out of or relating to disputes or legal actions concerning Bank's
provision of the services described in this Agreement. This section does not
apply to any cost or damage attributable to the gross negligence or intentional
misconduct of Bank. Company's and Servicer's obligations under this section
shall survive termination of this Agreement.
Exhibit VI-3
9. Company and Servicer shall jointly and severally pay to Bank, upon receipt of
Bank's invoice, all costs, expenses and attorneys' fees (including allocated
costs for in-house legal services) incurred by Bank in connection with the
enforcement of this Agreement and any instrument or agreement required
hereunder, including but not limited to any such costs, expenses and fees
arising out of the resolution of any conflict, dispute, motion regarding
entitlement to rights or rights of action, or other action to enforce Bank's
rights in a case arising under Title 11, United States Code. Company agrees to
pay Bank, upon receipt of Bank's invoice, all costs, expenses and attorneys'
fees (including allocated costs for in-house legal services) incurred by Bank in
the preparation and administration of this Agreement (including any amendments
hereto or instruments or agreements required hereunder).
10. Termination and Assignment of this Agreement shall be as follows:
(a) Lender may terminate this Agreement by providing notice to
Company, Servicer and Bank that all of Company's obligations which are secured
by Checks and the Account are paid in full. Lender may also terminate or it may
assign this Agreement upon 30 day's prior written notice to Company, Servicer
and Bank. Bank may terminate this Agreement upon 30 days' prior written notice
to Company, Servicer and Lender. Neither Company nor Servicer may terminate this
Agreement or the Lockbox Service except with the written consent of Lender and
upon prior written notice to Bank.
(b) Notwithstanding subsection 10(a), Bank may terminate this
Agreement at any time by written notice to Company, Servicer and Lender if
either Company or Lender breaches any of the terms of this Agreement, or any
other agreement with Bank.
11. (a) Each party represents and warrants to the other parties that (i) this
Agreement constitutes its duly authorized, legal, valid, binding and enforceable
obligation; (ii) the performance of its obligations under this Agreement and the
consummation of the transactions contemplated hereunder will not (A) constitute
or result in a breach of its certificate or articles of incorporation, by-laws
or partnership agreement, as applicable, or the provisions of any material
contract to which it is a party or by which it is bound or (B) result in the
violation of any law, regulation, judgment, decree or governmental order
applicable to it; and (iii) all approvals and authorizations required to permit
the execution, delivery, performance and consummation of this Agreement and the
transactions contemplated hereunder have been obtained.
(b) The parties each agree that it shall be deemed to make and renew
each representation and warranty in subsection 11(a) on and as of each day on
which Company uses the services set forth in this Agreement.
12. (a) This Agreement may be amended only by a writing signed by Company,
Servicer, Lender and Bank; except that Bank's charges are subject to change by
Bank upon 30 days' prior written notice to Company.
(b) This Agreement may be executed in counterparts; all such
counterparts shall constitute but one and the same agreement.
(c) This Agreement controls in the event of any conflict between this
Agreement and any other document or written or oral statement. This Agreement
supersedes all prior understandings, writings, proposals, representations and
communications, oral or written, of any party relating to the subject matter
hereof.
Exhibit VI-4
(d) This Agreement shall be interpreted in accordance with North
Carolina law without reference to that state's principles of conflicts of law.
13. Any written notice or other written communication to be given under this
Agreement shall be addressed to each party at its address set forth on the
signature page of this Agreement or to such other address as a party may specify
in writing. Except as otherwise expressly provided herein, any such notice shall
be effective upon receipt.
14. Nothing contained in the Agreement shall create any agency, fiduciary, joint
venture or partnership relationship between Bank and Company, Servicer or
Lender.
Exhibit VI-5
In Witness Whereof, the parties hereto have executed this Agreement
by their duly authorized officers as of the day and year first above written.
BELL MICROPRODUCTS FUNDING CORPORATION
("COMPANY")
By:___________________________________ Address for notices:
Name:_________________________________ 1941 Ringwood Ave.
Title:________________________________ Suite A
San Jose, California 95131
Attention: Chief Financial Officer
Telephone: (408) 467-2735
Fax: (408) 467-2735
BELL MICROPRODUCTS INC.
("SERVICER")
By:___________________________________ Address for notices:
Name:_________________________________ 1941 Ringwood Ave.
Title:________________________________ San Jose, California 95131
Attention: Chief Financial Officer
Telephone: (408) 451-9400
Fax: (408) 451-1632
WACHOVIA BANK, NATIONAL ASSOCIATION
("LENDER")
By:___________________________________ Address for notices:
Name:_________________________________ Wachovia Securities, Inc.
Title:________________________________ 191 Peachtree Street, NE
Atlanta, GA 30303
Attention: Eero Maki
Telephone: (404)332-5275
Fax: (404)332-5152
Exhibit VI-6
BANK OF AMERICA, N.A.
("BANK")
By:___________________________________ Address for notices:
Name:_________________________________ South Coast Financial Center BC
Title:________________________________ 2nd Floor CA6-137-02-02
675 Anton Boulevard
Costa Mesa, California 92626-1919
Attention: Sarah Singh
Telephone: (714)850-6536
Fax: (714)850-6586
with a copy to:
Bank of America
14th Floor, CA5-704-14-01
315 Montgomery Street
San Francisco, California 94104-1866
Attention: Shirin Chee
Telephone: (415) 953-7085
Fax: (415)953-1502
Exhibit VI-7
EXHIBIT A
TO DEPOSIT ACCOUNT CONTROL AGREEMENT
STANDARD TERMS AND CONDITIONS
The Lockbox Service involves processing Checks that are received at a Lockbox
Address. With this Service, Company instructs its customers to mail checks it
wants to have processed under the Service to a Lockbox Address. Bank picks up
mail at each Lockbox Address according to its mail pick-up schedule. Bank will
have unrestricted and exclusive access to the mail directed to a Lockbox
Address. Bank will provide Company with the Lockbox Service for a Lockbox
Address when Company has completed and Bank has received Bank's then current
set-up documents for such Lockbox Address.
If Bank receives any mail containing Company's lockbox number at Bank's lockbox
operations location (instead of a Lockbox Address), Bank may handle the mail as
if it had been received at a Lockbox Address.
PROCESSING
Bank will handle Checks received at each Lockbox Address according to the
applicable deposit account agreement, as if the Checks were delivered by Company
to Bank for deposit to the Account, except as modified by these Terms and
Conditions.
Bank will open the envelopes picked up from each Lockbox Address and remove the
contents. For each Lockbox Address, Checks and other documents contained in the
envelopes will be inspected and handled in the manner specified in the Company's
set-up documents. Bank captures and reports information related to the lockbox
processing, where available, if Company has specified this option in the set-up
documents. Bank will endorse all Checks Bank processes on Company's behalf.
If Bank processes an unsigned check as instructed in the set-up documents, and
the check is paid, but the account owner does not authorize payment, Company
agrees to indemnify Bank, the drawee bank (which may include Bank) and any
intervening collecting bank for any liability or expense incurred by such
indemnitee due to the payment and collection of the check.
If Company instructs Bank not to process a check bearing a handwritten or typed
notation "Payment in Full" or words of similar import on the face of the check,
Company understands that Bank has adopted procedures designed to detect Checks
bearing such notations; however, Bank will not be liable to Company or any other
party for losses suffered if Bank fails to detect Checks bearing such notations.
RETURNED CHECK
Unless Company and Bank agree to another processing procedure, Bank will reclear
a Check once which has been returned and marked "Refer to Maker," "Not
Sufficient Funds" or "Uncollected Funds." If the Check is returned for any other
reason or if the Check is returned a second time, Bank will debit the Account
and return the Check to Company. Company agrees that Bank will not send a
returned item notice to Company for a returned Check unless Company and Bank
have agreed otherwise.
Exhibit VI-8
ACCEPTABLE PAYEES
For each Lockbox Address, Company will provide to Bank the names of Acceptable
Payees ("Acceptable Payee" means Company's name and any other payee name
provided to Bank by Company as an acceptable payee for Checks to be processed
under the Lockbox Service). Bank will process a check only if it is made payable
to an Acceptable Payee and if the check is otherwise processable. Company
warrants that each Acceptable Payee is either (i) a variation of Company's name
or (ii) is an affiliate of Company which has authorized Checks payable to it to
be credited to the Account. Bank may treat as an Acceptable Payee any variation
of any Acceptable Payee's name that Bank deems to be reasonable.
CHANGES TO PROCESSING INSTRUCTIONS
Company may request Bank orally or in writing to make changes to the processing
instructions (including changes to Acceptable Payees) for any Lockbox Address by
contacting its Bank representative, so long as such changes do not conflict with
the terms of the Deposit Account Control Agreement. Bank will not be obligated
to implement any requested changes until Bank has actually received the requests
and had a reasonable opportunity to act upon them. In making changes, Bank is
entitled to rely on instructions purporting to be from Company.
Exhibit VI-9
EXHIBIT B
DEPOSIT ACCOUNT CONTROL AGREEMENT
[Letterhead of Wachovia]
To: Bank of America, N.A.
South Coast Financial Center BC
2nd Floor CA6-137-02-02
675 Anton Boulevard
Costa Mesa, California 92626-1919
Attention: Sarah Singh
Bank of America
14th Floor, CA5-704-14-01
315 Montgomery Street
San Francisco, California 94104-1866
Attention: Shirin Chee
Re: Bell Microproducts Funding Corporation
Account No. 14594-03034
Ladies and Gentlemen:
Reference is made to the Deposit Account Control Agreement, dated
September 20, 2004 (the "Agreement"), among Bell Microproducts Funding
Corporation, us and you regarding the above-described account (the "Account").
In accordance with Section 2 of the Agreement, we hereby give you notice of our
exercise of control of the Account and we hereby instruct you to transfer funds
to our account as follows:
Bank Name: ___________________________
ABA No.: ___________________________
Account Name: ___________________________
Account No.: ___________________________
Very truly yours,
WACHOVIA BANK, NATIONAL ASSOCIATION,
as Lender
By:_________________________________
Name:_______________________________
Title:______________________________
Exhibit VI-10
EXHIBIT VII
FORM OF ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT (this "Assignment Agreement") is entered
into as of the ___ day of ____________, ____, by and between
_____________________ ("Assignor") and __________________ ("Assignee").
PRELIMINARY STATEMENTS
A. This Assignment Agreement is being executed and delivered in
accordance with Section 12.1(b) of that certain Credit and Security Agreement
dated as of September 20, 2004 by and among Bell Microproducts Funding
Corporation, as Borrower, Bell Microproducts Inc., as Servicer, Blue Ridge Asset
Funding Corporation, Wachovia Bank, National Association, as Agent, and the
Liquidity Banks party thereto (as amended, modified or restated from time to
time, the "Credit and Security Agreement") and that certain Liquidity Asset
Purchase Agreement dated as of September 20, 2004 by and among Blue Ridge, the
Liquidity Banks from time to time party thereto and Wachovia Bank, National
Association, as Agent (as amended, modified or restated from time to time, the
"Liquidity Agreement"). Capitalized terms used and not otherwise defined herein
are used with the meanings set forth or incorporated by reference in the Credit
and Security Agreement.
B. Assignor is a Liquidity Bank party to the Credit and Security
Agreement and the Liquidity Agreement, and Assignee wishes to become a Liquidity
Bank thereunder; and
C. Assignor is selling and assigning to Assignee an undivided
____________% (the "Transferred Percentage") interest in all of Assignor's
rights and obligations under the Transaction Documents and the Liquidity
Agreement, including, without limitation, Assignor's Commitment, Assignor's
Liquidity Commitment and (if applicable) Assignor's Loans as set forth herein.
AGREEMENT
The parties hereto hereby agree as follows:
(1) The sale, transfer and assignment effected by this Assignment
Agreement shall become effective (the "Effective Date") two (2) Business Days
(or such other date selected by the Agent in its sole discretion) following the
date on which a notice substantially in the form of Schedule II to this
Assignment Agreement ("Effective Notice") is delivered by the Agent to Blue
Ridge, Assignor and Assignee. From and after the Effective Date, Assignee shall
be a Liquidity Bank party to the Credit and Security Agreement for all purposes
thereof as if Assignee were an original party thereto and Assignee agrees to be
bound by all of the terms and provisions contained therein.
Exhibit VII-1
(2) If Assignor has no outstanding principal under the Credit and
Security Agreement or the Liquidity Agreement, on the Effective Date, Assignor
shall be deemed to have hereby transferred and assigned to Assignee, without
recourse, representation or warranty (except as provided in paragraph 6 below),
and the Assignee shall be deemed to have hereby irrevocably taken, received and
assumed from Assignor, the Transferred Percentage of Assignor's Commitment and
Liquidity Commitment and all rights and obligations associated therewith under
the terms of the Credit and Security Agreement and the Liquidity Agreement,
including, without limitation, the Transferred Percentage of Assignor's future
funding obligations under the Credit and Security Agreement and the Liquidity
Agreement.
(3) If Assignor has any outstanding principal under the Credit and
Security Agreement and Liquidity Agreement, at or before 12:00 noon, local time
of Assignor, on the Effective Date Assignee shall pay to Assignor, in
immediately available funds, an amount equal to the sum of (i) the Transferred
Percentage of the outstanding principal of Assignor's Loans and, without
duplication, Assignor's Percentage Interests (as defined in the Liquidity
Agreement) (such amount, being hereinafter referred to as the "Assignee's
Principal"); (ii) all accrued but unpaid (whether or not then due) Interest
attributable to Assignee's Principal; and (iii) accruing but unpaid fees and
other costs and expenses payable in respect of Assignee's Principal for the
period commencing upon each date such unpaid amounts commence accruing, to and
including the Effective Date (the "Assignee's Acquisition Cost"); whereupon,
Assignor shall be deemed to have sold, transferred and assigned to Assignee,
without recourse, representation or warranty (except as provided in paragraph 6
below), and Assignee shall be deemed to have hereby irrevocably taken, received
and assumed from Assignor, the Transferred Percentage of Assignor's Commitment,
Liquidity Commitment, Loans (if applicable) and Percentage Interests (if
applicable) and all related rights and obligations under the Transaction
Documents and the Liquidity Agreement, including, without limitation, the
Transferred Percentage of Assignor's future funding obligations under the Credit
and Security Agreement and the Liquidity Agreement.
(4) Concurrently with the execution and delivery hereof, Assignor
will provide to Assignee copies of all documents requested by Assignee which
were delivered to Assignor pursuant to the Credit and Security Agreement or the
Liquidity Agreement.
(5) Each of the parties to this Assignment Agreement agrees that at
any time and from time to time upon the written request of any other party, it
will execute and deliver such further documents and do such further acts and
things as such other party may reasonably request in order to effect the
purposes of this Assignment Agreement.
(6) By executing and delivering this Assignment Agreement, Assignor
and Assignee confirm to and agree with each other, the Agent and the Liquidity
Banks as follows: (a) other than the representation and warranty that it has not
created any Adverse Claim upon any interest being transferred hereunder,
Assignor makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made by any other
Person in or in connection with any of the Transaction Documents or the
Liquidity Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of Assignee, the Credit and Security
Agreement, the Liquidity Agreement or any other instrument or document furnished
pursuant thereto or the perfection, priority, condition, value or sufficiency of
any Collateral; (b) Assignor makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower, any
Obligor, any Affiliate of the Borrower or the performance or observance by the
Exhibit VII-2
Borrower, any Obligor, any Affiliate of the Borrower of any of their respective
obligations under the Transaction Documents or any other instrument or document
furnished pursuant thereto or in connection therewith; (c) Assignee confirms
that it has received a copy of each of the Transaction Documents and the
Liquidity Agreement, and other documents and information as it has requested and
deemed appropriate to make its own credit analysis and decision to enter into
this Assignment Agreement; (d) Assignee will, independently and without reliance
upon the Agent, Blue Ridge, the Borrower or any other Liquidity Bank or Lender
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Transaction Documents and the Liquidity Agreement; (e) Assignee
appoints and authorizes the Agent to take such action as agent on its behalf and
to exercise such powers under the Transaction Documents and the Liquidity
Agreement as are delegated to the Agent by the terms thereof, together with such
powers as are reasonably incidental thereto; and (f) Assignee agrees that it
will perform in accordance with their terms all of the obligations which, by the
terms of the Liquidity Agreement, the Credit and Security Agreement and the
other Transaction Documents, are required to be performed by it as a Liquidity
Bank or, when applicable, as a Lender.
(7) Each party hereto represents and warrants to and agrees with the
Agent that it is aware of and will comply with the provisions of the Credit and
Security Agreement, including, without limitation, Sections 14.5 and 14.6
thereof.
(8) Schedule I hereto sets forth the revised Commitment and Liquidity
Commitment of Assignor and the Commitment and Liquidity Commitment of Assignee,
as well as administrative information with respect to Assignee.
(9) THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
(10) Assignee hereby covenants and agrees that, prior to the date
which is one year and one day after the payment in full of all senior
indebtedness for borrowed money of Blue Ridge, it will not institute against, or
join any other Person in instituting against, Blue Ridge any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or other
similar proceeding under the laws of the United States or any state of the
United States.
Exhibit VII-3
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
Agreement to be executed by their respective duly authorized officers of the
date hereof.
[ASSIGNOR]
By:_________________________________
Name:_______________________________
Title:______________________________
[ASSIGNEE]
By:_________________________________
Name:_______________________________
Title:______________________________
Exhibit VII-4
SCHEDULE I
TO ASSIGNMENT AGREEMENT
LIST OF LENDING OFFICES, ADDRESSES
FOR NOTICES AND COMMITMENT AMOUNTS
Date: _____________, ______
Transferred Percentage: ____________%
- ----------------------------------------------------------------------------------------------------------------------------
A-1 A-2 B-1 B-2 C-1 C-2
- ----------------------------------------------------------------------------------------------------------------------------
Assignor Commitment (prior Commitment (after Outstanding Ratable Share of Liquidity Liquidity
to giving effect giving effect to principal (if any) Outstanding Commitment (prior Commitment (after
to the Assignment the Assignment principal to giving effect giving effect to
Agreement) Agreement) to the Assignment the Assignment
Agreement) Agreement)
- ----------------------------------------------------------------------------------------------------------------------------
A-1 A-2 B-1 B-2 C-1 C-2
- ----------------------------------------------------------------------------------------------------------------------------
Assignee Commitment (prior Commitment (after Outstanding Ratable Share of Liquidity Liquidity
to giving effect giving effect to principal (if any) Outstanding Commitment (prior Commitment (after
to the Assignment the Assignment principal to giving effect giving effect to
Agreement) Agreement) to the Assignment the Assignment
Agreement) Agreement)
- ----------------------------------------------------------------------------------------------------------------------------
Address for Notices
Attention:
Phone:
Fax:
Exhibit VII-5
SCHEDULE II
TO ASSIGNMENT AGREEMENT
EFFECTIVE NOTICE
TO: ________________________, Assignor
________________________
________________________
________________________
TO: ________________________, Assignee
________________________
________________________
________________________
The undersigned, as Agent under the Credit and Security Agreement
dated as of ______, ____ by and among ___________, a _________ corporation,
_________, as Servicer, Blue Ridge Asset Funding Corporation, Wachovia Bank,
National Association, as Agent, and the Liquidity Banks party thereto, hereby
acknowledges receipt of executed counterparts of a completed Assignment
Agreement dated as of ____________, 2004 between __________________, as
Assignor, and __________________, as Assignee. Terms defined in such Assignment
Agreement are used herein as therein defined.
1. Pursuant to such Assignment Agreement, you are advised that the
Effective Date will be ______________, ____.
2. Each of the undersigned hereby consents to the Assignment
Agreement as required by Section 12.1(b) of the Credit and Security Agreement.
[3. PURSUANT TO SUCH ASSIGNMENT AGREEMENT, THE ASSIGNEE IS REQUIRED
TO PAY $____________ TO ASSIGNOR AT OR BEFORE 12:00 NOON (LOCAL TIME OF
ASSIGNOR) ON THE EFFECTIVE DATE IN IMMEDIATELY AVAILABLE FUNDS.]
Very truly yours,
WACHOVIA BANK, NATIONAL ASSOCIATION,
as Agent
By:_________________________________
Name:_______________________________
Title:______________________________
Exhibit VII-6
BLUE RIDGE ASSET FUNDING CORPORATION
By: Wachovia Bank, National Association,
as attorney-in-fact
By:_____________________________________
Name:___________________________________
Title:__________________________________
****[THE BORROWER HEREBY CONSENTS TO THE FOREGOING ASSIGNMENT:
BELL MICROPRODUCTS FUNDING CORPORATION
BY:___________________________________
NAME:_________________________________
TITLE:________________________________]****
Exhibit VII-7
EXHIBIT VIII
CREDIT AND COLLECTION POLICY
See Exhibit V to Receivables Sale Agreement
Exhibit VIII-1
EXHIBIT IX
FORM OF PERIODIC REPORT
Bell Microproducts Funding Corporation Periodic Servicer Report
For the Month Ended
7/31/2004
(Page 1)
($)
Borrowing Base ______________
A/R ROLLFORWARD
Beginning of Month Balance (Total A/R Outstanding) ____________
Add: Gross Sales (Domestic ____________
Less: Total Collections ____________
Discounts & Allowances ______________
NC RMA Credits ______________
NN Net Credit Retail Credits ______________
Volume Purchase Rebates ______________
Vendor Pass Thru Credits ______________ Total Dilution:____________
Less: Contra Offset ____________
Less: Bad Debt Write-Offs ____________
Less: Misc. Contra Offsets ____________
Add: Recoveries ____________
Unidentified Misc. Adjustments ____________
Ending A/R Balance ____________
AGING SCHEDULE
& OF TOTAL AGING
-----------------------------------------------------------
CURRENT CURRENT MONTH 1 MONTH PRIOR 2 MONTHS PRIOR
------- ------------- ------------- --------------
Current _______ _____________ _____________ ______________
1-30 DPD _______ _____________ _____________ ______________
31-60 DPD _______ _____________ _____________ ______________
61-90 DPD _______ _____________ _____________ ______________
91+ DPD _______ _____________ _____________ ______________
Credit Balance
> 61 DPD _______ _____________ _____________ ______________
Total Aging _______ _____________ _____________ ______________
A/R RECONCILIATIONS
Calculated Ending A/R ____________
Reported Ending A/R ____________
Difference ____________
Calculated Ending A/R ____________
Total Aging ____________
Difference ____________
INELIGIBLES
Defaulted Receivables (Gross) ____________
Excess (>10% of EAR) Invoices w/terms 60-90 days ____________
Invoices w/terms over 91 days ____________
Foreign Excluding Canada <60 days past due ____________
Excess (>5% of EAR) A/R from customers in Canada (60days past due ____________
Crossage at 25% <60 days past due ____________
Contras <60 days PD (see misc.) ____________
Bankrupt & Positive collection balance <60 days past due ____________
Customer Deductions/Chargebacks <60 days PD ____________
Credit Balances over 60 days PD ____________
Intercompany/Employee A/R ____________
Misc. ____________
Total Ineligibles ____________
ELIGIBLE RECEIVABLES ____________
Exhibit IX-1
Bell Microproducts Funding Corporation Periodic Servicer Report
For the Month Ended
7/31/2004
(Page 2)
($)
CURRENT MONTH 1 MONTH PRIOR 2 MONTHS PRIOR
------------- ------------- --------------
EXCESS CARVEOUTS
Concentrations _____________ _____________ ______________
BORROWING BASE
Total A/R _____________ _____________ ______________
Less: Total Ineligibles _____________ _____________ ______________
Eligible Recievables _____________ _____________ ______________
Less: Total Excess Carveouts _____________ _____________ ______________
NET POOL BALANCE _____________ _____________ ______________
RESERVES
Loss Reserve _____________ _____________ ______________
Dilution Reserve _____________ _____________ ______________
Yield Reserve _____________ _____________ ______________
Servicing Reserve _____________ _____________ ______________
Total Dynamic Reserve _____________ _____________ ______________
Reserve Floor _____________ _____________ ______________
Required Reserve % _____________ _____________ ______________
Required Reserve $ (RR) _____________ _____________ ______________
FUNDING AVAILABILITY
Net Proof Balance (NPB) _____________ _____________ ______________
Less: Required Reserve _____________ _____________ ______________
BORROWING BASE _____________ _____________ ______________
Current CP Outstanding (CP) _____________ _____________ ______________
Purchase Availability or
Required Paydown _____________ _____________ ______________
Purchase or Paydown at
Settlement (INPUT)_____________ _____________ ______________
COMPLIANCE (TRIGGERS AND CAPITALIZATION)
COMPLIANCE TEST COMPLIANCE LEVEL
Acid Interest _____________ _____________ ______________
3M Delinquency Trigger _____________ _____________ ______________
3M Default Ratio _____________ _____________ ______________
3M Dilution Ratio _____________ _____________ ______________
Required Capital (INPUT)_____________ _____________ ______________
Subordinated Note (INPUT)_____________ _____________ ______________
EXCESS CONCENTRATIONS
Obligor Name Short Term Rating Allowable% Total Receivables %of Total Excess Receivables
1. ____________ _________________ __________ _________________ _________ ___________________
2. ____________ _________________ __________ _________________ _________ ___________________
3. ____________ _________________ __________ _________________ _________ ___________________
4. ____________ _________________ __________ _________________ _________ ___________________
5. ____________ _________________ __________ _________________ _________ ___________________
6. ____________ _________________ __________ _________________ _________ ___________________
7. ____________ _________________ __________ _________________ _________ ___________________
8. ____________ _________________ __________ _________________ _________ ___________________
9. ____________ _________________ __________ _________________ _________ ___________________
10. ____________ _________________ __________ _________________ _________ ___________________
TOTAL $0
-------------------
The undersigned hereby represents and warrants that the foregoing is a true and
accurate accounting with respect to outstanding receivables as of July 31, 2004
is in accordance with the Credit and Security Agreement dated August 31, 2004
and that all representations and warrants related to such Agreements are
restated and reaffirmed.
Signed:_______________________________ Date:______________
Exhibit IX-2
Bell Microproducts Funding Corporation Periodic Servicer Report
For the Month Ended
7/31/2004
(Page 2)
($)
CURRENT MONTH 1 MONTH PRIOR 2 MONTHS PRIOR
------------- ------------- --------------
EXCESS CARVEOUTS
Concentrations _____________ _____________ ______________
BORROWING BASE
Total A/R _____________ _____________ ______________
Less: Total Ineligibles _____________ _____________ ______________
Eligible Recievables _____________ _____________ ______________
Less: Total Excess Carveouts _____________ _____________ ______________
NET POOL BALANCE _____________ _____________ ______________
RESERVES
Loss Reserve _____________ _____________ ______________
Dilution Reserve _____________ _____________ ______________
Yield Reserve _____________ _____________ ______________
Servicing Reserve _____________ _____________ ______________
Total Dynamic Reserve _____________ _____________ ______________
Reserve Floor _____________ _____________ ______________
Required Reserve % _____________ _____________ ______________
Required Reserve $ (RR) _____________ _____________ ______________
FUNDING AVAILABILITY
Net Proof Balance (NPB) _____________ _____________ ______________
Less: Required Reserve _____________ _____________ ______________
BORROWING BASE _____________ _____________ ______________
Current CP Outstanding (CP) _____________ _____________ ______________
Purchase Availability or
Required Paydown _____________ _____________ ______________
Purchase or Paydown at
Settlement (INPUT)_____________ _____________ ______________
COMPLIANCE (TRIGGERS AND CAPITALIZATION)
COMPLIANCE TEST COMPLIANCE LEVEL
Acid Interest _____________ _____________ ______________
3M Delinquency Trigger _____________ _____________ ______________
3M Default Ratio _____________ _____________ ______________
3M Dilution Ratio _____________ _____________ ______________
Required Capital (INPUT)_____________ _____________ ______________
Subordinated Note (INPUT)_____________ _____________ ______________
EXCESS CONCENTRATIONS
Obligor Name Short Term Rating Allowable% Total Receivables %of Total Excess Receivables
1. ____________ _________________ __________ _________________ _________ ___________________
2. ____________ _________________ __________ _________________ _________ ___________________
3. ____________ _________________ __________ _________________ _________ ___________________
4. ____________ _________________ __________ _________________ _________ ___________________
5. ____________ _________________ __________ _________________ _________ ___________________
6. ____________ _________________ __________ _________________ _________ ___________________
7. ____________ _________________ __________ _________________ _________ ___________________
8. ____________ _________________ __________ _________________ _________ ___________________
9. ____________ _________________ __________ _________________ _________ ___________________
10. ____________ _________________ __________ _________________ _________ ___________________
TOTAL $0
-------------------
The undersigned hereby represents and warrants that the foregoing is a true and
accurate accounting with respect to outstanding receivables as of July 31, 2004
is in accordance with the Credit and Security Agreement dated August 31, 2004
and that all representations and warrants related to such Agreements are
restated and reaffirmed.
Signed:_______________________________ Date:______________
Exhibit IX-3
EXHIBIT X
FORM OF CONTRACT(S)
[See Attached]
Exhibit X-1
SCHEDULE A
COMMITMENTS OF LIQUIDITY BANKS
- --------------------------------------------------------------------------
LIQUIDITY BANK COMMITMENT
- --------------------------------------------------------------------------
Wachovia Bank, National Association $75,000,000
- --------------------------------------------------------------------------
Exhibit X-2
SCHEDULE B
DOCUMENTS TO BE DELIVERED TO THE AGENT
ON OR PRIOR TO THE INITIAL PURCHASE
1. Executed copies of the Credit and Security Agreement, duly
executed by the parties thereto.
2. Copy of the Resolutions of the Board of Directors of each Loan
Party and Performance Guarantor certified by its Secretary authorizing such
Person's execution, delivery and performance of this Agreement and the other
documents to be delivered by it hereunder.
3. Articles or Certificate of Incorporation of each Loan Party and
Performance Guarantor certified by the Secretary of State of its jurisdiction of
incorporation on or within thirty (30) days prior to the initial Advance.
4. Good Standing Certificate for each Loan Party and Performance
Guarantor issued by the Secretaries of State of its state of incorporation and
each jurisdiction where it has material operations, each of which is listed
below:
a. Borrower: Delaware
b. Servicer: Alabama
Arizona
California
Colorado
Delaware
Florida
Georgia
Illinois
Maryland
Massachusetts
Minnesota
New Jersey
New York
Oregon
Pennsylvania
Texas
Utah
5. A certificate of the Secretary of each Loan Party certifying (i)
the names and signatures of the officers authorized on its behalf to execute
this Agreement and any other documents to be delivered by it hereunder and (ii)
a copy of such Person's By-Laws.
6. Pre-filing state and federal tax lien, judgment lien and UCC lien
searches against each Loan Party from the following jurisdictions:
a. Borrower: Delaware
Exhibit X-3
b. Servicer: California
Alabama
Texas
Ohio
Colorado
Minnesota
Illinois
Florida
Pennsylvania
Delaware
Georgia
New York
Maryland
Virginia
7. Time stamped receipt copies of proper financing statements, duly
filed under the UCC on or before the date of the initial Advance in all
jurisdictions as may be necessary or, in the opinion of the Agent, desirable,
under the UCC of all appropriate jurisdictions or any comparable law in order to
perfect the ownership interests contemplated by this Agreement.
8. Time stamped receipt copies of proper UCC amendment statements
necessary to effect the release all security interests and other rights of any
Person in the Receivables, Contracts or Related Security previously granted by
Borrower, including, without limitation, UCC amendment statements relating to
the partial releases by each of Winthrop Resources Corporation, Mitsubishi
Electric & Electronics USA, Inc. and The Retirement Systems of Alabama.
9. Executed copies of Collection Account Agreements for each Lock-Box
and Collection Account.
10. A favorable opinion of legal counsel for the Loan Parties
reasonably acceptable to the Agent which addresses the following matters and
such other matters as the Agent may reasonably request:
(a) The Borrower is a corporation duly organized, validly
existing, and in good standing under the laws of the state of
Delaware and the Servicer is a corporation duly organized, validly
existing, and in good standing under the laws of the state of
California.
(b) Each of the Loan Parties has all requisite authority to
conduct its business in each jurisdiction where failure to be so
qualified would have a material adverse effect on such entity's
business.
(c) The execution and delivery by each of the Loan Parties
of the Transaction Document to which it is a party and its
performance of its obligations thereunder have been duly authorized
by all necessary organizational action and proceedings on the part of
such entity and will not:
Exhibit X-4
(i) require any action by or in respect of, or filing with,
any governmental body, agency or official (other than the filing of
UCC financing statements);
(ii) contravene, or constitute a default under, any
provision of applicable law or regulation or of its articles or
certificate of incorporation or bylaws or of any agreement, judgment,
injunction, order, decree or other instrument binding upon such
entity; or
(iii) result in the creation or imposition of any Adverse
Claim on assets of such entity or any of its Subsidiaries (except as
contemplated by the Transaction Documents).
(d) Each of the Transaction Documents to which each of the
Loan Parties and Performance Guarantor is a party has been duly
executed and delivered by such entity and constitutes the legally
valid, and binding obligation of such entity enforceable in
accordance with its terms, except to the extent the enforcement
thereof may be limited by bankruptcy, insolvency or similar laws
affecting the enforcement of creditors' rights generally and subject
also to the availability of equitable remedies if equitable remedies
are sought.
(e) The provisions of the Credit and Security Agreement are
effective to create valid security interests in favor of the Agent,
for the benefit of the Secured Parties, in all of Borrower's right,
title and interest in and to the Receivables and Related Security
described therein which constitute "accounts," "chattel paper" or
"general intangibles" (each as defined in the UCC) (collectively, the
"Opinion Collateral"), as security for the payment of the
Obligations.
(f) Each of the UCC-1 Financing Statements naming Borrower
as debtor, and Agent, as secured party, to be filed in the office of
the Secretary of State of Delaware, is in appropriate form for filing
therein. Upon filing of such UCC-1 Financing Statements in such
filing offices and payment of the required filing fees, the security
interest in favor of the Agent, for the benefit of the Secured
Parties, in the Opinion Collateral will be perfected.
(g) Based solely on our review of the [describe UCC Search
Reports], and assuming (i) the filing of the Financing Statements and
payment of the required filing fees in accordance with paragraph (f)
and (ii) the absence of any intervening filings between the date and
time of the Search Reports and the date and time of the filing of the
Financing Statements, the security interest of the Agent in the
Opinion Collateral is prior to any security interest granted in the
Opinion Collateral by Borrower, the priority of which is determined
solely by the filing of a financing statement in the office of the
Secretary of State of Delaware.
(h) Neither of the Loan Parties is a "holding company" or a
"subsidiary holding company" of a "holding company" within the
meaning of the Public Utility Holding Company Act of 1935, as
amended, or an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
11. A Compliance Certificate.
Exhibit X-5
12. The Fee Letter.
13. A Periodic Report as at _____________, 2004.
14. A pro forma balance sheet of Borrower as at _____________, 2004.
15. Executed copies of (i) all consents from and authorizations by
any Persons, including without limitation, the consents from The Retirement
Systems of Alabama and Congress Financial Corporation and (ii) all waivers and
amendments to existing credit facilities, that are necessary in connection with
this Agreement.
16. If applicable, a direction letter executed by each of the Loan
Parties authorizing the Agent and Blue Ridge, and directing warehousemen to
allow the Agent and Blue Ridge to inspect and make copies from such Loan Party's
books and records maintained at off-site data processing or storage facilities.
17. The Liquidity Agreement, duly executed by each of the parties
thereto.
18. If applicable, for each Lender that is not incorporated under the
laws of the United States of America, or a state thereof, two duly completed
copies of United States Internal Revenue Service Form W-8BEN or W-8ECI, as
applicable, certifying in either case that such Lender is entitled to receive
payments under the Agreement without deduction or withholding of any United
States federal income taxes.
19. Executed copies of the Partial Release by Winthrop Resources
Corporation.
20. Executed copies of the Partial Release by Mitsubishi Electric &
Electronics USA, Inc.
21. Executed copies of the Partial Release by The Retirement Systems
of Alabama.
22. The side letter with respect to sharing of information, duly
executed by each of eth parties thereto.
Exhibit X-6