SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Act of 1934
November 13, 1998
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Date of Report (Date of earliest event reported)
Bell Microproducts Inc.
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(Exact name of Registrant as specified in its charter)
California
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(State or other jurisdiction of incorporation)
005-43709 94-3057566
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(Commission File No.) (IRS Employer Identification Number)
1941 Ringwood Avenue
San Jose, California 95131-1721
(408) 451-9400
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(Address of Principal Executive Offices)
Not Applicable
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(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets
On November 13, 1998 (the "Closing Date"), Bell Microproducts Inc., a
California corporation (the "Company"), completed its acquisition of the
Computer Products Division (the "CPD Division") of Almo Corporation ("Almo")
pursuant to an Asset Purchase Agreement (the "Agreement") dated November 5, 1998
by and between the Company, Almo, Almo Distributing Pennsylvania, Inc., Almo
Distributing Maryland, Inc., Almo Distributing Minnesota, Inc., Almo
Distributing Wisconsin, Inc. and Almo Distributing Inc.
The acquisition was accounted for as a purchase. The consideration paid
by the Company to Almo for the CPD Division was approximately $20.3 million, a
five-year warrant for 350,000 shares of the Company's common stock exercisable
at $12.00 per share and the assumption of certain liabilities. The Company
financed the acquisition by increasing its bank line as more fully described in
Item 5 below. In accordance with the Agreement, Almo was granted certain rights
to register the stock that can be acquired upon exercise of the warrant as
described in a registration rights agreement entered into between the Company
and Almo.
The CPD Division is a leading distributor of disk drives, monitors,
computers and additional products used by value-added resellers and systems
integrators. The CPD Division also operates two facilities that manufacture
private-labeled personal computers sold to value-added resellers. Its revenues
were approximately $146 million for the fiscal year ending April 30, 1998.
Item 5. Other Events
The Company entered into a Third Amended and Restated Credit Agreement
(the "Credit Agreement") dated as of November 12, 1998, with the financial
institutions party thereto (the "Banks"), California Bank & Trust (f/k/a
Sumitomo Bank of California), as agent for the Banks (the "Administrative
Agent"), and Union Bank of California, N.A. and Comerica Bank-California, as
co-agents for the Banks (the "Co-Agents" and together with the Administrative
Agent, the "Agents"). The Credit Agreement amends and restates the Second
Amended and Restated Credit Agreement dated as of May 23, 1995 (as amended, the
"Original Credit Agreement"), among the Company, the Banks and the
Administrative Agent, and provides for, among other things, (i) an increase in
the principal amount of the revolving line of credit from a principal amount of
up to one hundred million dollars ($100,000,000) to a principal amount of up to
one hundred thirty million dollars ($130,000,000), (ii) the elimination of the
letter of credit sub-facility existing under the Original Credit Agreement,
(iii) certain modifications to the interest provisions of the Credit Agreement,
(iv) the addition of certain definitions contained therein, (v) certain
modifications to the financial covenants contained therein and (vi) certain
other changes.
Item 7. Financial Statements and Exhibits
(a) The purchase of the CPD Division does not meet the materiality
threshold of Regulation S-K and therefore the Company will not present audited
financial statements nor pro forma financial information related thereto.
(b) Not applicable
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(c) Exhibits
2.3 Asset Purchase Agreement by and between the Company, Almo,
Almo Distributing Pennsylvania, Inc., Almo Distributing Maryland, Inc., Almo
Distributing Minnesota, Inc., Almo Distributing Wisconsin, Inc. and Almo
Distributing Inc. dated November 5, 1998.
Certain exhibits and schedules to the Agreement are listed on
pages (iv) and (v) thereto and the Registrant agrees to furnish them
supplementally to the Securities and Exchange Commission upon request.
10.24 Third Amended and Restated Credit Agreement dated as of
November 12, 1998 by and among the Company and certain banking institutions
named therein.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Bell Microproducts Inc.
By: /s/ Bruce M. Jaffe
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Senior Vice President
and CFO
Dated: November 30, 1998
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
EXHIBITS
TO
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF
THE SECURITIES EXCHANGE ACT OF 1934
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Bell Microproducts Inc.
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November 13, 1998
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<PAGE>
INDEX TO EXHIBITS
Sequentially
Exhibit Numbered
Number Description Page
- ------ ----------- ----
2.3 Asset Purchase Agreement by and between the 8
Company, Almo, Almo Distributing Pennsylvania,
Inc., Almo Distributing Maryland, Inc., Almo
Distributing Minnesota, Inc., Almo Distributing
Wisconsin, Inc. and Almo Distributing Inc.
dated November 5, 1998.
10.24 Third Amended and Restated Credit Agreement 62
dated as of November 12, 1998 by and among the
Company and certain banking institutions named
therein.
ASSET PURCHASE AGREEMENT
among
BELL MICROPRODUCTS INC.,
ALMO CORPORATION,
Almo Distributing Pennsylvania, Inc.
Almo Distributing Maryland, Inc.
Almo Distributing Minnesota, Inc.
Almo Distributing Wisconsin, Inc.
and
Almo Distributing Inc.
November 5, 1998
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I SALE AND PURCHASE OF ASSETS.........................................1
1.1 Sale and Purchase of Assets.................................1
1.2 Assets to be Transferred....................................1
1.3 Assumption of Liabilities...................................3
1.4 All Other Liabilities Not Assumed...........................4
ARTICLE II PURCHASE PRICE; CLOSING............................................4
2.1 Purchase Price..............................................4
2.2 Closing.....................................................6
2.3 Transaction Taxes...........................................6
2.4 Allocation of Consideration.................................7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF ALMO AND THE SELLERS............7
3.1 Organization of the Seller..................................7
3.2 Authority...................................................7
3.3 Division Financial Statements...............................8
3.4 Absence of Changes..........................................8
3.5 Absence of Undisclosed Liabilities.........................10
3.6 Legal and Other Compliance.................................10
3.7 Taxes......................................................10
3.8 Restrictions on Business Activities........................10
3.9 Title to Properties; Absence of Liens; Condition of
Equipment................................................11
3.10 Intellectual Property......................................11
3.11 Agreements, Contracts and Commitments......................13
3.12 Powers of Attorney.........................................14
3.13 Litigation.................................................14
3.14 Insurance..................................................15
3.15 Environmental, Health, and Safety Matters..................15
3.16 Employee Benefit Plans and Compensation....................16
3.17 Insolvency.................................................21
3.18 Consents...................................................21
3.19 Books and Records..........................................21
3.20 Year 2000 Compliance.......................................21
3.21 Product Warranties; Product Returns; Defects;
Liabilities..............................................21
3.22 Inventory..................................................22
3.23 Accounts Receivable........................................22
3.24 Representations Complete...................................22
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3.25 Brokers' and Finders' Fees; Third-Party Expenses...........22
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER...........................23
4.1 Organization of Buyer......................................23
4.2 Authority..................................................23
4.3 No Conflicts...............................................23
4.4 Warrant Shares.............................................23
4.5 SEC Documents; Buyer Financial Statements..................23
4.6 No Material Adverse Change.................................24
4.7 Litigation.................................................24
4.8 Brokers' and Finders' Fees; Third-Party Expenses...........24
ARTICLE V SECURITIES ACT COMPLIANCE; REGISTRATION............................24
5.1 Securities Act Exemption...................................24
5.2 Stock Restrictions.........................................25
5.3 Representations Regarding Securities Law Matters...........25
5.4 Registration Rights........................................25
ARTICLE VI CONDUCT PRIOR TO THE CLOSING DATE.................................26
6.1 Conduct of Business of each of Almo and the Sellers........26
ARTICLE VII ADDITIONAL AGREEMENTS............................................27
7.1 Approval...................................................27
7.2 Access to Information......................................28
7.3 Access to Records After Closing............................28
7.4 Confidentiality............................................28
7.5 Public Disclosure..........................................28
7.6 Contractual Consents.......................................29
7.7 Legal Conditions to Acquisition............................29
7.8 Best Efforts; Additional Documents and Further
Assurances...............................................29
7.9 Notification of Certain Matters............................29
7.10 Payment of Trade and Other Creditors.......................30
7.11 No Solicitation............................................30
7.12 Facilities.................................................30
7.13 Post-Closing Collection Practices for Accounts
Receivable...............................................31
7.14 Year 2000 Preventative Measures............................31
7.15 Use of Almo Name...........................................31
7.16 Reports on Warranty Claims.................................31
7.17 Release of Liens, Etc......................................32
7.18 Physical Inventory.........................................32
7.19 Payment of HSR Act Filing Fee..............................32
7.20 Software License Agreement.................................32
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ARTICLE VIII CONDITIONS TO OBLIGATIONS TO CLOSE..............................32
8.1 Conditions to Obligations of each Party....................32
8.2 Additional Conditions to Obligations of each of Almo
and the Sellers..........................................33
8.3 Additional Conditions to the Obligations of Buyer..........33
ARTICLE IX NONCOMPETITION AGREEMENTS.........................................34
9.1 Agreement of Seller........................................34
9.2 Nonsolicitation............................................34
9.3 Restriction Period.........................................35
9.4 Permitted Investments......................................35
9.5 Remedies for Breach........................................35
ARTICLE X SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION........35
10.1 Indemnification............................................35
10.2 Arbitration................................................40
ARTICLE XI TERMINATION, AMENDMENT AND WAIVER.................................41
11.1 Termination................................................41
11.2 Effect of Termination......................................42
11.3 Amendment..................................................42
11.4 Extension; Waiver..........................................42
ARTICLE XII GENERAL PROVISIONS...............................................42
12.1 Notices....................................................42
12.2 Expenses...................................................43
12.3 Interpretation.............................................43
12.4 Counterparts...............................................44
12.5 Entire Agreement; Assignment...............................44
12.6 Severability...............................................44
12.7 Other Remedies.............................................44
12.8 Governing Law; Arbitration.................................44
12.9 Rules of Construction......................................45
12.10 No Third Party Beneficiaries...............................45
12.11 Specific Performance.......................................45
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INDEX OF EXHIBITS
Exhibit Description
------- -----------
Exhibit A HyperText Link Agreement
Exhibit B Trade Name Assignment Agreement
Exhibit C Warrant
Exhibit D Bill of Sale and General Assignment
Exhibit E Domain Name Transfer Agreement
Exhibit F Investment Representation Statement
Exhibit G Declaration of Registration Rights
Exhibit H-1 Philadelphia Facility Agreement
Exhibit H-2 Philadelphia Warehouse and Employee Leasing Agreement
Exhibit H-3 Minnesota Facility Agreement
Exhibit H-4 Maryland Facility Agreement
Exhibit H-5 Massachusetts Assignment and Assumption Agreement
Exhibit I Trade Name License Agreement
Exhibit J Software License Agreement
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INDEX OF SCHEDULES
Schedule Description
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1.2(a) Inventory
1.2(b) Accounts Receivable
1.2(c) Contracts; Specific Obligations to be Performed
Post-Closing
1.2(d) Equipment and Tangible Assets
1.2(g) Telephone Numbers
1.2(h) Prepaid Expenses and Other Assets
1.3(b) Schedule of Assumed Accounts Payable, Payables Arising
in Connection with Goods in Transit, Placed Orders.
1.3(c) TradeMark Computer Warranty Reserve
1.3(d) Vacation Pay Accrued
1.3(e) Inventory Reserve Procedure
1.3(f) Accrued Expenses
2.1 Book or Agreed Value of Acquired Assets; Book or Agreed
Value of Assumed Liabilities
2.4 Allocation Schedule
3.2 Authority
3.3(c) Division Financial Statements
3.4 Absence of Charges
3.4(i) Key Employees
3.4(ii) Revaluation of Assets
3.10(a) Schedule of Seller Registered Intellectual Property
3.10(b) Title Exceptions: Seller Registered Intellectual Property
3.10(c) Seller Registered Intellectual Property Licenses
3.10(d) Seller Intellectual Property Contracts, Licenses and
Agreements
3.10(e) Intellectual Property Infringement
3.11 Agreements, Contracts and Commitments Exception
3.13 Litigation
3.14 Insurance
3.15 Environmental Permits, Licenses and Other Authorizations
3.16(b)(a) Employee Plans
3.16(e) Pension Plan Matters
3.16(j) Employment Matters
3.16(o) Transferred Employees Title and Base Salary
3.18 Required Consents
3.21 Terms of Sale; License
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3.25 Brokers and Finders
6.1 Conduct of Business Exceptions
7.13 Post-Closing Accounts Receivable and Accounts Payable
Practices
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of November 5, 1998 among Bell Microproducts Inc., a California
corporation (the "Buyer"), Almo Corporation, a Pennsylvania corporation
("Almo"), Almo Distributing Pennsylvania, Inc., a Pennsylvania corporation, Almo
Distributing Maryland, Inc., a Maryland corporation, Almo Distributing
Minnesota, Inc., a Minnesota corporation, Almo Distributing Wisconsin, Inc. an
Illinois corporation, and Almo Distributing, Inc., a Pennsylvania corporation.
Almo Distributing Pennsylvania, Inc., Almo Distributing Maryland, Inc., Almo
Distributing Minnesota, Inc., Almo Distributing Wisconsin, Inc., and Almo
Distributing, Inc. are collectively referred to herein as the "Sellers."
RECITALS
WHEREAS, Almo and Sellers maintain a division of their corporations
known as the Computer Products division which distributes computer products (the
"Business");
WHEREAS, pursuant to this Agreement, the Buyer (directly or through one
of its wholly owned subsidiaries) wishes to purchase from Almo and the Sellers,
and Almo and the Sellers wish to sell to the Buyer, all the Acquired Assets (as
defined herein);
NOW, THEREFORE, in consideration of the covenants, promises, and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
ARTICLE I
SALE AND PURCHASE OF ASSETS
1.1 Sale and Purchase of Assets. Subject to the terms and conditions
contained in this Agreement, Almo and the Sellers agree to sell, assign,
transfer, and deliver to the Buyer all of Almo's and the Sellers' right, title,
and interest in and to each of the Acquired Assets (defined below), and Buyer
agrees to purchase such assets on the Closing Date.
1.2 Assets to be Transferred. At the Closing, Almo and the Sellers
shall collectively sell and deliver to Buyer (or a wholly owned subsidiary of
Buyer to be designated by Buyer), and Buyer (either directly or through a wholly
owned subsidiary of Buyer to be designated by Buyer) shall purchase and accept
from Almo and the Sellers, certain of the assets related to the Business (the
"Acquired Assets"), including:
(a) Inventory. All of Sellers' inventory relating to the
Business as shall be identified in Schedule 1.2(a) to be based on the physical
inventory taken by the parties hereto and attached hereto immediately after the
Closing (including goods which have been ordered but not yet
<PAGE>
received by Sellers and goods in transit, but excluding any items manufactured
or sold by Micropolis and Maxtor).
(b) Accounts Receivable. All of Seller's rights to receive
payments owed to the Seller by its customers (except receivables related to
"floor plan" financing arrangements, receivables owing by customers where all
receivables owing from any single customer are older than 90 days, certain
credit balances relating to, among other things, inactive customers, employee
loans, and receivables from customers where the payment was effected by C.O.D.)
as shall be identified in Schedule 1.2(b) to be attached hereto immediately
after Closing.
(c) Rights Under Contracts. All of Sellers' rights under any
equipment lease, real property lease, contract, agreement, plan or arrangement
identified in Schedule 1.2(c) to be agreed to by the parties and attached hereto
at Closing. It is the intent of the parties hereto that all of the Acquired
Assets and all of Sellers' backlog, if any, arising out of the operation of the
Business be transferred to Buyer. Accordingly, the parties agree to use their
reasonable best efforts to facilitate such transfer of customers at the Closing.
Included on Schedule 1.2(c) will be (i) a list of all outstanding written
customer orders, purchase orders, and other customer commitments from Sellers'
current customers of the Business in effect on the Closing Date, and (ii) the
names of all current customers of the Business.
(d) Equipment; Tangible Assets. Certain fixed assets,
equipment, and other tangible assets along with the prices that Buyer will pay
for such fixed assets, equipment, and tangible assets used in the Business
identified in Schedule 1.2(d) to be agreed to by the parties and attached hereto
at Closing (excluding, among other things, assets listed as "Almo Retained
Assets" on Schedule 1.2(d).
(e) Books and Records. All transferable books and records
related to any Acquired Assets, including, without limitation, all financial
records, books, ledgers, supplier lists, customer and marketing lists or
databases, marketing plans, management plans, distribution and reseller methods,
advertising materials, manuals, and other materials of the Seller.
(f) Domain Name and Link. The domain name
trademarkcomputers.com and a link from Almo's web site to the Buyer's site,
which link is more fully described in the HyperText Link Agreement attached
hereto as Exhibit A.
(g) Phone Numbers. The phone numbers used in the Business
identified in Schedule 1.2(g).
(h) Prepaid Expenses and Other Assets. The prepaid expenses
and other assets listed on Schedule 1.2(h) to be agreed to by the parties and
attached hereto as of the Closing Date.
(i) Rights Under Leases. All of Sellers' rights under the real
property lease agreements identified in Schedule 1.2(c) (the "Assumed Leases").
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(j) Other Assets. All of Sellers' claims against any parties
relating exclusively or primarily to any Acquired Asset, the Business or any
contract rights assigned to Buyer, including without limitation, unliquidated
rights under manufacturers' or vendors' warranties or guarantees.
(k) Trade Name Assignment. The registered trade name
"TradeMark" will be assigned to Buyer pursuant to a Trade Name Assignment
Agreement attached hereto as Exhibit B.
(l) To the extent delivery of the Acquired Assets involves
physical delivery, Sellers shall be required to so deliver the Acquired Assets
at the Closing (as defined below) in place unless otherwise directed by Buyer,
in which case Buyer will bear the costs of moving any Acquired Assets to the
chosen location.
1.3 Assumption of Liabilities. On the terms and subject to the
conditions set forth herein, from and after the Closing, the Buyer will assume
and satisfy or perform when due only the following specified liabilities of the
Sellers (the "Assumed Liabilities"):
(a) Sellers' obligations to be performed after the Closing
Date (as defined below) under the contracts or agreements identified in Schedule
1.2(c); and
(b) Certain accounts payable, payables arising in connection
with goods in transit, placed orders (including products received from Seller's
vendors but not yet invoiced by Seller's vendors at closing), in each case only
as set forth on Schedule 1.3(b) (such Schedule to include any credits in favor
of Sellers owing to Sellers by Sellers' vendors but excluding any payables
related to goods delivered from Micropolis, Maxtor, Maxtech and excluding any
payables owing to discontinued vendors), to be attached hereto immediately after
the Closing Date; and
(c) Warranty liability related only to the TradeMark computers
in an amount set forth on Schedule 1.3(c) to be agreed upon by the parties and
attached hereto at Closing for only TradeMark Computer warranty returns and
replacements after the Closing; and
(d) Vacation pay accrued in an amount set forth on Schedule
1.3(d) to be agreed upon by the parties and attached hereto at Closing; and
(e) The reserve for inventory in an amount set forth on
Schedule 1.3(e) to be agreed upon by the parties and attached hereto at Closing;
and
(f) Accrued Expenses. The pro rata portion of the accrued
expenses for goods or services to be provided to the Business after the Closing
Data (as defined below) identified in Schedule 1.3(f) to be agreed to by the
parties and attached hereto at Closing; and
(g) obligations, without liability to Buyer, to customers of
the Business only to send to the proper manufacturer, products sold prior to the
Closing that are returned to the Business for a refund or credit because they
are defective and under manufacturer's warranties; provided that Buyer shall
have no other obligation or liability whatsoever with respect to these returns
other than to return the product to the manufacturer for such credit, refund, or
replacement;
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<PAGE>
provided, however, that Buyer shall have no obligation pursuant to any contract
or agreement of Seller identified in Schedule 1.2(c) hereof which by its terms
requires a consent to assignment unless a written consent thereto has been
obtained or, with respect to any such contract or agreement, or the Buyer and
the counterparty to the contract or agreement continue to perform pursuant to
the terms of such agreement or contract in the absence of a consent.
1.4 All Other Liabilities Not Assumed. Other than the Assumed
Liabilities set forth in Section 1.3 above, it is expressly agreed that, except
as set forth in Section 2.3 hereof to pay one-half of the sales or use taxes
arising out of this transaction, Buyer shall not assume or perform any other
liabilities or obligations of any kind or amount, including but not limited to
those for employment, income, sales, property or other taxes of any kind or
amount, including taxes if any attributable to the Acquired Assets.
ARTICLE II
PURCHASE PRICE; CLOSING
2.1 Purchase Price.
(a) Payment of Purchase Price. As consideration for the sale,
assignment, transfer, and delivery by Almo and the Sellers to the Buyer (or a
wholly owned subsidiary of Buyer to be designated by Buyer) of the Acquired
Assets, Buyer, on the terms and conditions set forth herein, shall deliver to
Almo or the Sellers by wire transfer in immediately available funds at the
Closing a dollar amount equal to the book or agreed value of the Acquired Assets
as reflected on Schedule 2.1 prepared by Almo and the Sellers as of the Friday
preceding the Closing Date and agreed to by Buyer minus the book or agreed value
or amount of the Assumed Liabilities as reflected on Schedule 2.1, plus
$2,500,000, subject to adjustment as provided below (the "Purchase Price"). In
addition, Buyer will issue to Almo a warrant (the "Warrant") exercisable until
the fifth anniversary of the Closing Date, to purchase 350,000 shares of
Seller's Common Stock at $12 per share (the "Warrant Shares") as consideration
for the covenant not to compete set forth in Article IX hereof, such warrant to
be in substantially the form attached hereto as Exhibit C.
(b) Post-Closing Adjustment
(a) Within 30 calendar days after the Closing Date,
Buyer, with the assistance of any necessary Almo and Seller personnel at no cost
to Buyer, will prepare and deliver to the Sellers a draft Closing Date Schedule
2.1 (the "Draft Closing Date Schedule") for the Business as of the close of
business on the Closing Date. The Draft Closing Date Schedule will be prepared
in the same manner as Schedule 2.1, with the inventory reserve to be as set
forth on 1.3(e) and the equipment value to be as set forth on Schedule 1.2(d).
(b) If the Sellers have any objections to the Draft
Closing Date Schedule, they will deliver a detailed statement describing their
objections to the Buyer within ten business days after receiving the Draft
Closing Date Schedule. The Buyer and the Sellers will use reasonable
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efforts to resolve any such objections themselves. If the parties do not obtain
a final resolution within ten calendar days from the delivery of Sellers'
objections, the objections to the Draft Closing Date Schedule will be submitted
to Deloitte & Touche within seven days of the termination of the ten-day
resolution period referred to above for binding resolution. The Buyer will bear
one-half of the fees and expenses of the accounting firm, and the Sellers will
bear the other one-half of the fees. Both parties will make their work papers
and other materials available to the accounting firm. The determination of the
accounting firm shall be made within 30 days after the submission of the
objections for resolutions, and the determination shall be conclusive, final,
and binding on the parties.
(c) The Purchase Price will be adjusted as follows:
1. If the book or agreed value of the
Acquired Assets minus the book or agreed value of the Assumed Liabilities, as
reflected on the agreed to (or resolved or determined) Draft Closing Date
Schedule (the "Closing Date Schedule") plus $2,500,000, is less than the cash
amount paid by Buyer at the Closing, then Almo or the Sellers will pay to the
Buyer within three days of the agreement to the Closing Date Schedule (or within
three days of resolution, or determination by the accounting firm, of any
objections thereto) an amount equal to the difference between (A) the cash
amount paid by Buyer minus $2,500,000 and (B) the actual book or agreed value of
the Acquired Assets minus the actual book or agreed value of the Assumed
Liabilities as reflected on the agreed to (or resolved or determined) Draft
Closing Date Schedule.
2. If the book or agreed value of the
Acquired Assets minus the book or agreed value of the Assumed Liabilities, as
reflected on the agreed to (or resolved or determined) Closing Date Schedule
plus $2,500,000, is more than the cash amount paid by Buyer at the Closing then
the Buyer will pay to the Sellers within three days of the agreement to the
Closing Date Schedule (or within three days of resolution, or determination by
the accounting firm, of any objections thereto) an amount equal to the
difference between (A) the book or agreed value of the Acquired Assets minus the
book or agreed value of the Assumed Liabilities as reflected on the agreed to
(or resolved or determined) Closing Date Schedule and (B) the cash amount paid
by Buyer minus $2,500,000.
3. If the book or agreed value of the
Acquired Assets minus the book or agreed value of the Assumed Liabilities, as
reflected on the agreed to (or resolved or determined) Closing Date Schedule, is
equal to the amount paid by Buyer minus $2,500,000 then there will be no
adjustment to the Purchase Price.
(d) Any amounts required to be paid pursuant to
Sections 2.1(c) 1 or 2 above shall be paid by wire transfer in immediately
available funds.
(c) Adjustments to Warrant Shares. The number of Warrant
Shares to be issued at the Closing shall be adjusted to reflect fully the effect
of any stock split, reverse split, stock dividend (including any dividend or
distribution of securities convertible into Buyer's Common
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Stock), reorganization, recapitalization or other like change with respect to
Buyer's Common Stock occurring after the date hereof and prior to the Closing
Date.
2.2 Closing.
(a) Delivery. The closing of the purchase and sale of the
Acquired Assets and the transfer of the Assumed Liabilities hereunder shall be
held at the offices of Wilson Sonsini Goodrich & Rosati, P.C., 650 Page Mill
Road, Palo Alto, California 94304-1050, at 10:00 a.m. (local time), on November
13, 1998 (the "Closing") or at such other time and place upon which the Buyer
and Almo or the Sellers shall agree in writing (the date of the Closing is
hereinafter referred to herein as the "Closing Date"). The Closing will be
deemed effective as of the close of business on the Closing Date.
(b) Closing Deliveries. At the Closing, Buyer shall deliver
the Purchase Price and the Warrant against delivery by Almo and the Sellers of
such transfer documents relating to the sale and transfer of the Acquired Assets
as the Buyer shall reasonably request, including, without limitation, (i) the
Bill of Sale and General Assignment of Assets in the form attached hereto as
Exhibit D, and (ii) the Domain Name Transfer Agreement in the form attached
hereto as Exhibit E. At the Closing, Almo and the Sellers shall put Buyer into
full possession and enjoyment of all the Acquired Assets.
At any time and from time to time after the Closing,
at the request of the Buyer and without further consideration, Almo and the
Sellers shall execute and deliver such further instruments of sale, transfer,
conveyance, assignment, and confirmation and take such actions as Buyer may
reasonably determine necessary to transfer, convey, and assign to the Buyer (or
such wholly owned subsidiary as Buyer may designate), and to confirm Buyer's
title to or interest in, the Acquired Assets, to put Buyer in actual possession
and operating control thereof, and to assist Buyer in exercising all rights with
respect thereto.
2.3 Transaction Taxes. Almo and the Sellers will pay and promptly
discharge when due all Taxes (as defined below) and recording fees imposed or
levied by reason of, in connection with or attributable to this Agreement, the
transactions contemplated hereby, and the sale of the Acquired Assets to Buyer;
provided, however, with respect to sales or use taxes arising out of this
transaction, Almo and the Sellers on the one hand, and Buyer, on the other, will
each pay one-half of such taxes. For the purposes of this Agreement, a reference
to "Tax" or, collectively, "Taxes," means any and all federal, state, local and
foreign taxes, assessments and other governmental charges, duties, impositions
and liabilities, including taxes based upon or measured by gross receipts,
income, profits, sales, use and occupation, and value added, ad valorem,
transfer, franchise, withholding, payroll, recapture, employment, excise and
property taxes, together with all interest, penalties and additions imposed with
respect to such amounts and any obligations under any agreements or arrangements
with any other person with respect to such amounts and including any liability
for taxes of a predecessor entity. The parties agree to prepare, execute,
deliver to the other party and maintain on file all required sales tax exemption
certificates in connection with the Acquired Assets.
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Any personal property taxes attributable to the Acquired Assets shall be pro
rated through the Closing.
2.4 Allocation of Consideration. Buyer, Almo, and Sellers will allocate
the Purchase Price and the Warrant (the "Consideration") among the Acquired
Assets and the covenant not to compete set forth in Article IX (the
"Allocation") in accordance with Schedule 2.4 to be attached to this Agreement
at or prior to the Closing in a form and substance mutually agreeable to the
parties. No party will take a position on any federal or state tax return,
before any governmental agency charged with the collection of any income tax, or
in any judicial proceeding that is in any way inconsistent with the (i)
allocation of both the type and the amount of the components of the
Consideration specified in the Allocation; or (ii) the tax treatment of the
components of the Consideration specified in the Allocation. To the extent
required by Section 1060 of the Code and any regulations promulgated thereunder,
the Allocation will be revised for any adjustment of the Consideration pursuant
to Section 2.1. The parties shall each prepare Internal Revenue Service Form
8594 and send to each other a copy of such form prior to filing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ALMO AND THE SELLERS
Almo and the Sellers hereby jointly and severally represent and warrant
to Buyer subject to the specific exceptions disclosed in the specified schedules
(each referencing the appropriate section numbers of this Article III as to
which an exception exists) delivered by Almo and the Sellers to Buyer, and dated
as of the date hereof, as follows:
3.1 Organization of the Seller . Each of Almo and the Sellers is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation. Each has the corporate power and authority
to own, lease, and operate its assets and property and to carry on its business
as now being conducted and as proposed to be conducted and is duly qualified or
licensed to do business and is in good standing in each jurisdiction where the
character of the properties owned, leased, or operated by it or the nature of
its activities makes such qualification or licensing necessary, except where the
failure to be so qualified would not have a material adverse effect on the
Business. Almo and the Sellers have made available to Buyer a true and correct
copy of the constituent documents (articles or certificate of incorporation and
bylaws) of Almo and the Sellers, each as amended to date, and each such
instrument is in full force and effect.
3.2 Authority. Each of Almo and the Sellers has all requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action. This Agreement has been duly
executed and delivered by each of Almo and the Sellers and constitutes the valid
and binding obligation of each of them enforceable against them in accordance
with its terms. Except as disclosed in Schedule 3.2, the execution and delivery
of this Agreement by Almo and the Sellers does not, and, as of the Closing Date,
the consummation of the transactions contemplated hereby and
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thereby will not, conflict with, or result in any violation of, or default under
(with or without notice or lapse of time, or both), or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of any
benefit under (any such event, a "Conflict") (i) any provision of the
constituent documents of the Seller or (ii) any mortgage, indenture, lease,
contract or other agreement or instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Almo or the Sellers or any of its properties or assets. No
consent, waiver, approval, order, or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission or
other federal, state, county or local governmental authority, instrumentality,
agency or commission (any of the foregoing authorities, instrumentalities,
agencies, or commissions, a "Governmental Entity") or any third party (so as not
to trigger any Conflict), except such filing required under the
Hart-Scott-Rodino AntiTrust Improvements Act of 1976, as amended (the "HSR Act")
is required by or with respect to Almo or the Sellers in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby and thereby, including any other assignment or instrument of
transfer to be delivered by Almo or the Sellers at the Closing pursuant to
Section 2.2(b).
3.3 Division Financial Statements. (a) The statements of income of the
Business for each of the fiscal years ended April 30, 1998, 1997, and 1996, (ii)
the balance sheets of the Business for each such fiscal year, (iii) the
unaudited statements of income of the Business for the three months ended
September 30, 1998, and (iv) the unaudited balance sheet of the Business as of
September 30 have been prepared in good faith and fairly present the financial
position of the Business, as of the respective dates and for the respective
periods indicated. The Business' balance sheet at September 30, 1998 is
hereinafter referred to as the "Division Balance Sheet," and all such financial
statements are hereinafter referred to as the "Division Financial Statements."
(b) The Business has no liability, indebtedness, obligation,
expense, claim, deficiency, guaranty or endorsement of any type, whether
accrued, absolute, contingent, matured, unmatured or other which (i) has not
been reflected in the Division Balance Sheet, or (ii) has not arisen in the
ordinary course of business since September 30, 1998 consistent in nature and
amount with past practices and which does not exceed $15,000 individually or
$35,000 in the aggregate, or (iii) is not listed in Schedule 1.3(b), or does not
arise under a contract listed in Schedule 1.2(c).
(c) A true and correct copy of the Division Financial
Statements is attached to the Seller Schedules as Schedule 3.3(c).
3.4 Absence of Changes. Except as set forth in Schedule 3.4, since the
date of the Division Balance Sheet (or such other date specifically set forth
herein), Almo and the Sellers have conducted the business of the Computer
Products Division only in the ordinary course of business and, except to the
extent the following has occurred in the ordinary course of Business:
(a) There has not been any material adverse change in the
business, financial condition, operations, or results of operations of the
Business;
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(b) The Sellers have not sold, leased, licensed, or disposed
of any of its assets relating to the Business (whether by way of merger,
purchase, or otherwise);
(c) The Sellers have not accelerated, terminated, modified or
cancelled any agreement, contract, lease, or license (or series of related
agreements, contracts, leases, and licenses) which relates to the Acquired
Assets;
(d) The Sellers have not delayed or postponed the payment of
material accounts payable and other liabilities relating to the Acquired Assets
beyond their due date, except with respect to accounts or liabilities that are
subject to dispute in good faith by a Seller;
(e) The Sellers have not cancelled, compromised, waived, or
released any right or claim (or series of related rights and claims) relating to
any Acquired Asset involving payments of more than $10,000 in the aggregate;
(f) To Almo's and the Sellers' knowledge, Sellers have no
reason to believe that any vendors, licensors, licensees, distributors, or
customers related to any Acquired Asset intends to discontinue with the Buyer a
business relationship any such vendor licensor, licensee, distributor, or
customer currently has with the Sellers;
(g) No Acquired Asset has been materially damaged, destroyed,
or lost (whether or not covered by insurance), and no material customer (a
customer accounting for 5% or more of the revenues of the Business in the last
twelve month-period) of the Sellers has been lost;
(h) The Sellers have not entered into any employment contract
or collective bargaining agreement, or modified the terms of any existing
employment contract or collective bargaining agreement, relating to the Acquired
Assets;
(i) The Sellers have not changed employment or compensation
terms for any employee specified on Schedule 3.4(i) hereto ("Key Employees");
(j) To Almo's and the Sellers' knowledge, Sellers have not
taken any action involving the Acquired Assets, or failed to act with respect to
the Acquired Assets, in a manner which would have a material adverse effect on
the Acquired Assets and the business associated therewith;
(k) Neither Almo nor the Sellers have entered into any capital
commitments in relation to any of the Acquired Assets or the business associated
therewith;
(l) Neither Almo nor the Sellers have accelerated the
collection or conversion of accounts receivable or notes receivable relating to
the Acquired Assets by offering any incentive for such acceleration, including
but not limited to prepayment discounts, allowances, or enhancements;
(m) Except as set forth in Schedule 3.4(m), neither Almo nor
the Sellers have revalued any of the assets of the Business;
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(n) Neither Almo nor the Sellers have effected any change in
its accounting methods or policies (including any change in depreciation or
amortization policies or rates);
(o) Neither Almo nor the Sellers have received notice of any
claim or potential claim of ownership of the Acquired Assets by any person, and
to the best knowledge of the Sellers, no basis exists for any such claim of
ownership;
(p) Neither Almo nor the Sellers have received notice of any
claim or potential claim, and to the best knowledge of Almo and the Sellers, no
basis exists for any claim or potential claim that the Sellers have infringed
the intellectual property rights of any person or entity; and
(q) Neither Almo nor the Sellers have negotiated with respect
to or otherwise committed or agreed to do any of the foregoing (other than
negotiations with Buyer and its representatives regarding the transactions
contemplated by this Agreement).
3.5 Absence of Undisclosed Liabilities. Except as set forth in the
Division Financial Statements or in Schedule 1.3(b) or obligations specified in
the contracts listed in Schedule 1.2(c), there is no liability and, to the best
knowledge of the Sellers, no threatened action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand, which could give rise to any
liability with respect to any Acquired Asset.
3.6 Legal and Other Compliance. Almo and the Sellers are in material
compliance with all applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges thereunder) of
federal, state and local governments (and all agencies thereof), the violation
of which would have a material adverse effect on the Acquired Assets or the
business of Almo and Sellers associated with the Acquired Assets or on the
ability of Almo or the Sellers to consummate the transactions contemplated by
this Agreement.
3.7 Taxes. To the extent a failure to do so would adversely affect
Buyer, any Acquired Asset, or Buyer's use of any Acquired Asset, Almo and the
Sellers have (i) timely filed within the time period for filing or any extension
granted with respect thereto all Tax returns which it is required to file
relating to or pertaining to any and all Taxes attributable or levied upon any
Acquired Asset and (ii) paid any all Taxes it is required to pay in connection
with the periods to which such Tax returns relate. There are (and immediately
following the Closing there will be) no liens on any Acquired Asset relating to
or pertaining to Taxes, except with respect to Taxes not yet due and payable. No
basis exists or will exist for the assertion of any claim which, if adversely
determined, would result in a lien on any Acquired Asset or otherwise adversely
affect Buyer, any Acquired Asset, or Buyer's use of any Acquired Asset.
3.8 Restrictions on Business Activities. Except as set forth in Section
3.8 of the Disclosure Schedule, there is no agreement (noncompetition, field of
use, or otherwise), judgment, injunction, order or decree which has or
reasonably could be expected to have the effect of prohibiting or impairing any
business practice utilizing any Acquired Asset. Without limiting the foregoing,
neither Almo nor the Sellers have not entered into any agreement which restricts
the sale,
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license, or distribution of any product, service, or technology to any class of
customers, in any geographic area, during any period of time or in any segment
of the market.
3.9 Title to Properties; Absence of Liens; Condition of Equipment. (a)
The Seller does not own any real property that is used in the Business. Almo and
the Sellers have delivered to the Buyer a true and correct copy of each Assumed
Lease. The Assumed Leases are in full force and effect, are valid and effective
in accordance with its terms, and there is not, under any of such leases, any
material existing default or event of default of Sellers (or event which with
notice or lapse of time, or both, would constitute a material default). To the
best knowledge of the Sellers, neither the business operations conducted on the
real property owned by Almo and the Sellers, or conducted by Seller on any other
real property, nor the real property owned by Almo and the Sellers, including
improvements thereon, violate any applicable law, building code, zoning
requirement, or classification, or pollution control ordinance or statute
relating to the particular property or such operations, and such non-violation
is not dependent, in any instance, on so-called non-conforming use exceptions.
To the best knowledge of the Sellers, all approvals of governmental authorities
(including licenses and permits) required in connection with the operation of
the Business on such real property have been obtained.
(b) Almo or the Sellers have good and valid title to, or, in
the case of leased properties and assets, valid leasehold interests in, each
Acquired Asset being transferred to the Buyer, free and clear of any liens,
except as reflected in the Division Financial Statements or on Schedule 3.9.
(c) Sellers and Almo know of no material defect in each item
of equipment, and to their knowledge, each item of equipment is reasonably fit
and usable for the purposes for which it is presently being used.
(d) The Sellers are in custody and control of all the Acquired
Assets being sold and transferred to the Buyer pursuant to this Agreement or any
assignments or other instruments of transfer delivered or to be delivered to
Buyer pursuant hereto or thereto.
3.10 Intellectual Property.
(a) Schedule 3.10(a) lists all registered intellectual
property owned by, or filed in the name of, Almo and the Sellers and included in
the Acquired Assets (the "Seller Registered Intellectual Property") and lists
any proceedings or actions before any court, tribunal (including the United
States Patent and TradeMark Office (the "PTO") or equivalent authority anywhere
in the world) related to any of the Seller Registered Intellectual Property.
Schedule 3.10(a) also lists all of Almo's and the Seller's unregistered
copyrights, trade marks, and trade names used in the Business.
(b) Sellers are the exclusive owner of, and have good title
to, the Seller Registered Intellectual Property.
(c) Schedule 3.10(c) sets forth a complete list of all
licenses, sublicenses, and other agreements pursuant to which any person is
authorized to use the Seller Registered Intellectual
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Property or any of Almo's or Sellers' trade secrets material to the Acquired
Assets, and includes the identity of all parties thereto, a description of the
nature and subject matter thereof, the applicable royalty, and the term thereof.
The execution and delivery of this Agreement by Almo and the Sellers, and the
consummation of the transactions contemplated hereby, will not cause any such
license, sublicense, or agreement to terminate, nor entitle any other party to
any such license, sublicense, or agreement to terminate or modify such license,
sublicense, or agreement.
(d) The contracts, licenses and agreements listed in Section
3.10(d) of the Disclosure Schedule constitute all contracts, licenses and
agreements (other than those set forth in Schedule 1.2(c)) to which Almo or the
Sellers are a party with respect to any intellectual property included in the
Acquired Assets.
(e) Except as set forth in Schedule 3.10(e), the operation of
the Business as currently conducted by the Seller or as reasonably contemplated
to be conducted (including but not limited to the design, development,
distribution, marketing, use, import, manufacture, license and sale of the
products, technology or services (including products, technology or services
currently under development) of Almo and the Sellers) has not, does not and will
not infringe or misappropriate the intellectual property of any person, violate
the rights of any person (including rights to privacy or publicity), or
constitute unfair competition or trade practices under the laws of any
jurisdiction. Almo and the Sellers have not received notice nor have any claims
been asserted or threatened against any of them or any of their customers, from
any person claiming that such operation or any act, product, technology or
service (including products, technology or services currently under development)
of Almo or the Sellers infringes or misappropriates the intellectual property of
any person or that the Seller has engaged in unfair competition or trade
practices under the laws of any jurisdiction (nor to the best knowledge of the
Seller is there any basis therefor).
(f) All necessary registration, maintenance and renewal fees
in connection with the Seller Registered Intellectual Property have been paid
and all necessary documents and certificates in connection with Seller
Registered Intellectual Property have been filed with the relevant patent,
copyright, trademark or other authorities in the United States or foreign
jurisdictions, as the case may be, for the purposes of maintaining such Seller
Registered Intellectual Property.
(g) Neither Almo nor the Sellers have any currently pending
claim against any person for infringing or misappropriating the Seller
Registered Intellectual Property.
(h) No Seller Registered Intellectual Property of Almo or the
Sellers is subject to any proceeding or outstanding decree, order, judgment,
agreement or stipulation that restricts in any manner the use, transfer or
licensing thereof by Almo or the Sellers or may affect the validity, use or
enforceability of the Seller Registered Intellectual Property.
(i) No (i) product, technology, service or publication of the
Business or (ii) material published or distributed by Almo or the Sellers in
connection with the Business is obscene, defamatory, or constitutes false
advertising or otherwise violates any law or regulation.
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3.11 Agreements, Contracts and Commitments. Except as contemplated by
this Agreement or as set forth on Schedule 3.11, neither Almo nor the Sellers
currently has or is a party to, or bound by with respect to any Acquired Asset
or Key Employee (as defined in Section 3.4(i) hereof):
(a) any collective bargaining agreements;
(b) any agreements or arrangements that contain any severance
pay or post-employment liabilities or obligations;
(c) any stock option, stock purchase, stock appreciation,
bonus, deferred compensation, pension, severance, profit sharing or retirement
plans, or any other employee benefit plans or arrangements;
(d) any agreement, contract, or commitment relating to the
disposition or acquisition of assets or any interest in any business enterprise
except in the ordinary course of business;
(e) any employment or consulting agreement with an employee or
individual consultant or salesperson or consulting or sales agreement;
(f) any agreement (or group of related agreements) for the
lease of personal property to or from any person or entity having a value
individually in excess of $10,000;
(g) any agreement of indemnification or guaranty;
(h) any agreement entered otherwise than in the ordinary
course of business;
(i) to Almo and the Sellers' knowledge, any agreement that is
likely to result in a loss in excess of $25,000 on completion of performance;
(j) any agreement (or group of related agreements) containing
any covenant limiting the freedom of Almo or the Sellers to engage in any line
of business or to compete with any person or entity that could reasonably be
expected to impair or encumber the Acquired Assets (including, without
limitation, any restrictions on the marketing, license, and distribution of the
Seller Registered Intellectual Property);
(k) any agreement (or group of related agreements) relating to
capital expenditures and involving future payments in excess of $15,000;
(l) any agreement (or group of related agreements) under which
payment in excess of $1,000 has already been received by Almo or the Sellers
(whether in whole or in part) but which requires the performance of services
after the Closing Date, except for credit balances included in Schedule 1.2(b);
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(m) any fidelity or surety bond or completion bond;
(n) any agreement pursuant to which Almo or the Sellers have
advanced or loaned any amount to any director, officer, employee, or consultant
other than business travel advances in the ordinary course of business;
(o) any mortgages, indentures, loans or credit agreements,
security agreements or other agreements or instruments relating to the borrowing
of money by Almo or the Sellers or extension of credit to Almo or the Sellers
exclusive of routine trade payables, involving obligations in excess of $5,000
or under which Almo or the Sellers have imposed any lien on any of the Acquired
Assets;
(p) any purchase order or contract for the purchase of
materials (excluding capital expenditures) involving $15,000 or more;
(q) any agreement concerning confidentiality, except in the
ordinary course;
(r) any construction contracts;
(s) any distribution, joint marketing, development, or
partnership or joint venture agreement;
(t) any agreement pursuant to which Almo or the Sellers has
granted, or may grant in the future, to any party a source-code license or
option or other right to use or acquire source-code; or
(u) any other agreement, contract, lease, or license (or
series of related agreements, contracts, leases, and licenses) that involves
payment of $10,000 or more.
Almo and the Sellers have delivered to the Buyer a correct and complete
copy of each written agreement listed in Schedule 3.11. Neither Almo nor the
Sellers have breached, violated, or defaulted under, or received notice that any
of them have breached, violated, or defaulted under, any of the terms of or
conditions of any agreement, contract, or commitment required to be identified
in Schedule 1.2(c) (any such agreement, contract, or commitment, a "Contract").
Each Contract is in full force and effect and, except as otherwise disclosed in
Schedule 3.11, is not subject to any default thereunder of which Almo or the
Sellers have knowledge by any party obligated to Almo or a Seller pursuant
thereto.
3.12 Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of Almo or the Sellers in respect of any Acquired Asset.
3.13 Litigation. Except as set forth in Schedule 3.13, there is no
action, suit, proceeding, claim, arbitration, or investigation pending before
any court or administrative agency against Almo or the Sellers or any officer or
director thereof in their capacity as such that may result in any adverse
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change in the Business or to the Acquired Assets or that questions the validity
of this Agreement or of any action taken to or to be taken pursuant to or in
connection with this Agreement. To the best knowledge of Almo and the Sellers,
no such action, proceeding, claim, arbitration, or investigation has been
threatened. There are no judgments, orders, decrees, citations, fines, or
penalties heretofore assessed against Almo or the Sellers affecting the Business
or the Acquired Assets under any federal, state or local law. No governmental
entity has at any time challenged or questioned the legal right of Almo or
Sellers to manufacture, offer, or sell any product related to the Acquired
Assets in the present manner or style thereof.
3.14 Insurance. Schedule 3.14 lists all material insurance policies
covering the Business and the Acquired Assets. There is no claim by Almo or the
Sellers pending under any of such policies or bonds as to which coverage has
been questioned, denied, or disputed by the underwriters of such policies or
bonds. All premiums payable under all such policies and bonds have been paid,
and Almo and the Sellers are otherwise in compliance with the terms of such
policies and bonds.
3.15 Environmental, Health, and Safety Matters.
(a) Almo and Sellers have complied and are in compliance with
all Environmental, Health, and Safety Requirements except where the failure to
comply does not result in a material adverse effect on the Business.
(b) Without limiting the generality of the foregoing, Almo and
Sellers have obtained and complied with, and are in compliance with, all
permits, licenses and other authorizations that are required pursuant to
Environmental, Health, and Safety Requirements (as defined below) for the
occupation of its facilities and the operation of its business; a list of all
such permits, licenses and other authorizations is set forth on the attached
Schedule 3.15 except where the failure to comply does not result in a material
adverse effect on the Business.
(c) Almo and Sellers have not received any written or oral
notice, report or other information regarding any actual or alleged violation of
Environmental, Health, and Safety Requirements, or any liabilities or potential
liabilities (whether accrued, absolute, contingent, unliquidated or otherwise),
including any investigatory, remedial or corrective obligations, relating to any
of them or its facilities arising under Environmental, Health, and Safety
Requirements.
(d) Except as set forth on Schedule 3.15, to Almo and the
Sellers' knowledge, none of the following exists at any property or facility
owned or operated by Almo or Sellers: (1) underground storage tanks, (2)
asbestos-containing material in any form or condition, (3) materials or
equipment containing polychlorinated biphenyls, or (4) landfills, surface
impoundments, or disposal areas.
(e) Except as set forth on Schedule 3.15, Almo and Sellers
have not treated, stored, disposed of, arranged for or permitted the disposal
of, transported, handled, or released any substance, including without
limitation any hazardous substance, or owned or operated any property or
facility in a manner that has given or would give rise to liabilities, including
any liability for
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response costs, corrective action costs, personal injury, property damage,
natural resources damages or attorney fees, pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), the Solid Waste Disposal Act, as amended ("SWDA") or any other
Environmental, Health, and Safety Requirements.
(f) Neither this Agreement nor the consummation of the
transaction that is the subject of this Agreement will result in any obligations
for site investigation or cleanup, or notification to or consent of government
agencies or third parties, pursuant to any of the so-called
"transaction-triggered" or "responsible property transfer" Environmental,
Health, and Safety Requirements.
(g) Almo and Sellers have not either expressly or by operation
of law, assumed or undertaken any liability, including without limitation any
obligation for corrective or remedial action, of any other Person relating to
Environmental, Health, and Safety Requirements.
(h) No facts, events or conditions involving Almo or the
Sellers and relating to the past or present facilities, properties or operations
of Almo or the Sellers will prevent, hinder or limit continued compliance with
Environmental, Health, and Safety Requirements, give rise to any investigatory,
remedial or corrective obligations pursuant to Environmental, Health, and Safety
Requirements, or give rise to any other liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise) pursuant to Environmental, Health, and
Safety Requirements, including without limitation any relating to onsite or
offsite releases or threatened releases of hazardous materials, substances or
wastes, personal injury, property damage or natural resources damage.
(a) "Environmental, Health, and Safety Requirements"
shall mean for purposes of this Section 3.15 all federal, state, local and
foreign statutes, regulations, ordinances and other provisions having the force
or effect of law, all judicial and administrative orders and determinations, all
contractual obligations and all common law concerning public health and safety,
worker health and safety, and pollution or protection of the environment,
including without limitation all those relating to the presence, use,
production, generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, release, threatened
release, control, or cleanup of any hazardous materials, substances or wastes,
chemical substances or mixtures, pesticides, pollutants, contaminants, toxic
chemicals, petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise or radiation, each as amended and as now or hereafter in
effect.
3.16 Employee Benefit Plans and Compensation.
(a) Definitions. For purposes of this Section 3.16, the
following terms shall have the meanings set forth below:
(a) "Affiliate" means any other person or entity
under common control with the Seller within the meaning of Section 414(b), (c),
(m) or (o) of the Code and the regulations thereunder.
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(b) "Employee Plan" shall refer to any plan, program,
policy, practice, contract, agreement or other arrangement providing for
bonuses, severance, termination pay, deferred compensation, pensions, profit
sharing, performance awards, stock or stock-related awards, fringe benefits or
other employee benefits or remuneration of any kind, whether formal or informal,
written or otherwise, funded or unfunded and whether or not legally binding,
including without limitation, each plan (each an "employee benefit plan" within
the meaning of Section 3(3) of ERISA) which is or has been maintained,
contributed to, or required to be contributed to, by the Seller for the benefit
of any Key Employee, and pursuant to which the Seller has or may have any
material liability, contingent or otherwise.
(c) "Key Employee" means those employees listed on
Schedule 3.4(i) hereto.
(d) "Employee Agreement" shall refer to each
employment, severance, consulting or similar agreement or contract and any
amendments thereto, whether written or oral and whether or not legally binding,
between Almo or the Sellers and any Key Employee.
(b) Schedules.
(a) Schedule 3.16(b)(a) contains an accurate and
complete list of each Employee Plan applicable to the Key Employees and each
Employee Agreement, together with a schedule of all liabilities under each such
Employee Plan applicable to the Key Employees. Except as set forth in Schedule
3.16(b)(a), Almo or Sellers do not have any plan or commitment, whether legally
binding or not, to establish any new Employee Plan applicable to the Key
Employees or Employee Agreement, to modify any Employee Plan applicable to the
Key Employees or Employee Agreement (except to the extent required by law or to
conform any such Employee Plan applicable to the Key Employee or Employee
Agreement to the requirements of any applicable law, in each case as previously
disclosed to Buyer in writing, or as required by this Agreement), or to enter
into any Employee Plan applicable to the Key Employees or Employee Agreement,
nor does it have any intention or commitment to do any of the foregoing.
(b) The names of all Key Employees involved in the
Business are set forth on Schedule 3.4(i).
(c) Documents. Almo and Sellers have provided to Buyer (i)
correct and complete copies of all documents embodying each Employee Plan and
each Employee Agreement including all amendments thereto and copies of all forms
of agreement and enrollment used therewith; (ii) the most recent annual
actuarial valuations, if any, prepared for each Employee Plan; (iii) all taxing
or other governmental authority opinion, notification or determination letters
and rulings relating to Employee Plans and copies of all applications and
correspondence to or from any taxing or other governmental authority with
respect to any Employee Plan; (iv) if the Employee Plan is funded, the three
most recent years of annual and periodic accounting of Employee Plan assets; (v)
all material agreements and contracts relating to each Employee Plan, including
but not limited to, administrative service agreements, group annuity contracts
and group insurance contracts; and
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(vi) all communications material to any Key Employee relating to any Employee
Plan and any proposed Employee Plans, in each case, relating to any amendments,
terminations, establishments, increases or decreases in benefits, acceleration
of payments or vesting schedules or other events which would result in any
liability to Almo or the Sellers.
(d) Employee Plan Compliance. (i) Each of Almo and the Sellers
has performed all obligations required to be performed by it under each Employee
Plan, each Employee Agreement and with respect to its workers' representative
committee, and each Employee Plan and each Employee Agreement; (ii) there are no
actions, suits or claims pending, or, to the best knowledge of each of Almo and
the Sellers threatened or anticipated (other than routine claims for benefits)
against any Employee Plan or against the assets of any Employee Plan or under
any Employee Agreement or relating to the workers' representative committee;
(iii) each Employee Plan can be amended, terminated or otherwise discontinued
after the Closing in accordance with its terms, without liability to Buyer
(other than ordinary administration expenses typically incurred in a termination
event); (iv) there are no inquiries or proceedings pending or, to the best
knowledge of each of Almo and the Sellers, threatened by any governmental
authority with respect to any Employee Plan or any Employee Agreement; (v) each
of Almo and the Sellers is not subject to any penalty or tax with respect to any
Employee Plan or any Employee Agreement; (vi) no prohibited transaction within
the meaning of Section 4975 of the Code or Section 406 or 407 of ERISA, and not
otherwise exempt under Section 408 of ERISA or Section 4975 of the Code, has
occurred with respect to any Employee Plan; and (vii) each Employee Plan
intended to qualify under Section 401(a) of the Code and each trust intended to
qualify under Section 501(a) of the Code has either received a favorable
determination letter with respect to each such Employee Plan from the United
States Internal Revenue Service or has remaining a period of time under
applicable Treasury regulations or IRS pronouncements in which to apply for such
determination letter and make any amendments necessary to obtain a favorable
determination, and nothing has occurred since the date of such letter that could
reasonably be expected to affect the qualified status of such Employee Plan.
(e) Pension Plans. Except as set forth in Schedule 3.16(e),
each of Almo and the Sellers does not now have, nor has it ever, maintained,
established, sponsored, participated in, or contributed to, any pension plan
which is subject to Part 3 of Subtitle B of Title I of ERISA, Title IV of ERISA
or Section 412 of the Code. The Seller does not have any retirement or pension
plans other than as set forth on Schedule 3.16(e).
(f) Multiemployer Plans. Buyer shall have no liability under
any of Almo's or Sellers' "multiemployer plans" (as such term is defined in
Section 3(37) of ERISA.
(g) No Post-Employment Obligations. No Employee Plan provides,
or imposes any obligation to provide life insurance, health or other employee
benefits to any Employee upon his or her retirement or termination of employment
for any reason, except as may be required by applicable law, and each of Almo
and the Sellers has not represented, promised or contracted (whether in oral or
written form) to any Employee (either individually or to Employees as a group)
that such Employee(s) would be provided with life insurance, health or other
employee welfare benefits upon their retirement or termination of employment,
except to the extent required by
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applicable law. Except to the extent (if any) to which provision or allowance
has been made in the Division Financial Statements or is otherwise required in
connection with the transactions contemplated by this Agreement, no liability
has been incurred by each of Almo and the Sellers to make any redundancy
payments or any protective awards or to pay damages or compensation (or wrongful
or unfair dismissal or for failure to comply with any order for the
reinstatement or re-engagement of any employee) and no gratuitous payments has
been made or promised by each of Almo and the Sellers in connection with the
actual or proposed termination or suspension of employment or variation or any
contract of employment of any present or former director or employee.
(h) No Violations. Each of Almo and the Sellers has not, prior
to the Closing and in any material respect, violated any of the health care
continuation requirements of Section 4980B(f) of the Code (and Sections 600-608
of ERISA) or any similar provisions of U.S. state law applicable to its
Employees. Each of Almo and the Sellers has complied in all respects with ERISA
and all applicable laws relating to the Employees or the Employee Plans, and
there are no outstanding claims against or payments due from each of Almo and
the Sellers thereunder.
(i) Effect of Transaction. The execution of this Agreement and
the consummation of the transactions contemplated hereby will not cause or
create any liability to Buyer (either alone or upon the occurrence of any
additional or subsequent events) under any Employee Plan, Employee Agreement,
trust or loan, or constitute an event that will or may result in any payment
(whether of severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligation to fund
benefits with respect to any Employee.
(j) Employment Matters. Except as set forth on Schedule
3.16(j), each of Almo and the Sellers (i) is in compliance with all applicable
laws respecting employment and employment practices, including without
limitation, those relating to discrimination in employment, terms and conditions
of employment, election of employee representatives (where applicable),
obligations to consult with and inform employee representatives, calculations
and accruals of vacations and of other accruals, seniority bonuses (if any), and
wages and hours; (ii) is in compliance with all applicable safety laws, except
where failure to so comply would not materially adversely affect the Business;
(iii) has withheld all amounts required by law or by agreement to be withheld
from the wages, salaries and other payments to Employees or other persons who by
virtue of their activities performed on behalf of each of Almo and the Sellers
may be deemed employees within the meaning of applicable law; (iv) is not liable
for any arrears of wages or any taxes or any penalty for failure to comply with
any of the foregoing; and (v) is not liable for any payment to any trust or
other fund or to any governmental or administrative authority, with respect to
unemployment compensation benefits, social security or other benefits or
obligations for Employees or other persons who by virtue of their activities
performed on behalf of each of Almo and the Sellers may be deemed employees
within the meaning of applicable law (other than routine payments to be made in
the normal course of business and consistent with past practice).
(k) Labor. No work stoppage or labor strike against each of
Almo and the Sellers is pending, nor to the best knowledge of each of Almo and
the Sellers, threatened. Each of Almo
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and the Sellers is not involved in nor has been threatened with any labor
dispute, grievance, or litigation relating to labor, safety or discrimination
matters involving any Employee, including, without limitation, charges of unfair
labor practices or discrimination complaints, which, if adversely determined,
would, individually or in the aggregate, result in Liability to each of Almo and
the Sellers or Buyer. Each of Almo and the Sellers has not engaged in any unfair
labor practices which could, individually or in the aggregate, directly or
indirectly result in a liability to each of Almo and the Sellers. Each of Almo
and the Sellers is not presently, nor has it in the past, been a party to, or
bound by, any agreement negotiated with its Employees and no collective
bargaining agreement is being negotiated by each of Almo and the Sellers.
(l) No Interference or Conflict. To the Knowledge of each of
Almo and the Sellers, no shareholder, officer, employee or consultant of each of
Almo and the Sellers is obligated under any contract or agreement or is subject
to any judgement, decree or order of any court or administrative agency, that
would interfere with such person's efforts to promote the interests of each of
Almo and the Sellers or that would interfere with the Business. Neither the
execution nor delivery of this Agreement, nor the carrying on of the Business
nor any activity of such officers, directors, employees or consultants in
connection with the carrying on of the Business as presently conducted or
proposed to be conducted, will, to each of Almo and the Sellers' knowledge,
conflict with or result in a breach of the terms, conditions or provisions of,
or constitute a default under, any contract or agreement under which any of such
officer's, directors, employees or consultants is now bound.
(m) Fixed Term Agreements. There is no existing or previous
employee of each of Almo and the Sellers under a fixed term employment contract
who could make a valid claim that he or she has an agreement of indefinite
duration.
(n) No Liability. Buyer will not have any liability for making
payments or providing benefits of any kind to any Employee or former Employee of
each of Almo and the Sellers who does not become an Employee of Buyer including,
without limitation, (A) as a result of the sale of the Acquired Assets or as a
result of the termination by each of Almo and the Sellers of any Employees or
decision by the Buyer not to hire any such Employee, (B) any obligation to
provide former Employees of each of Almo and the Sellers (including individuals
who become former Employees by reason of the consummation of the transactions
contemplated by this Agreement) so-called COBRA continuation coverage (with
respect to U.S. Employees of Seller), (C) any liability in respect of medical
and other benefits for existing and future retirees of each of Almo and the
Sellers and for claims made after Closing in respect of costs and expenses
incurred prior to Closing, (D) any liability in respect of work-related employee
injuries or worker's compensation claims by employees or former employees of
each of Almo and the Sellers, and (E) any liability in respect of employee
bonuses payable to former employees of each of Almo and the Sellers.
(o) Transferred Employees. Schedule 3.16(o) sets forth the
current job title and the annual base salary of certain employees identified by
Buyer to whom Buyer expects to make an offer of either at-will or term
employment.
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3.17 Insolvency. No insolvency proceedings of any character, including
bankruptcy, receivership, reorganization, winding up, or arrangement with
creditors, voluntary or involuntary, affecting any of the Acquired Assets are
pending or, to the best knowledge of each of Almo and the Sellers, are
threatened, and each of Almo and the Sellers has not made any assignment for the
benefit of creditors, nor taken any other action which would constitute the
basis for the institution of such insolvency proceedings.
3.18 Consents. Schedule 3.18 sets forth a true, correct, and complete
list of the identities of any person or entity (including a governmental entity)
whose consent or approval is required, and the matter, agreement, or contract to
which such consent relates, in connection with the transfer, assignment or
conveyance by each of Almo and the Sellers of any Acquired Asset.
3.19 Books and Records. The books and records of each of Almo and the
Sellers related to the businesses associated with the Acquired Assets (i) have
been fully and accurately maintained in accordance with applicable laws and with
generally accepted practices and standards in the jurisdiction(s) in which each
of Almo and the Sellers operates and (ii) are in each of Almo and the Sellers'
possession or under its control. The Acquired Assets include all such records,
although Seller is not transferring to Buyer any rights to continue to maintain
such records on Seller's computer systems or databases.
3.20 Year 2000 Compliance. Provided the Buyer complies with the
covenant set forth in Section 7.15 hereof, Almo and the Sellers represent and
warrant that all TradeMark computers sold for which Almo or the Sellers have
warranty or other liability are designed to be used prior to, during, and after
the calendar year 2000 A.D. and that TradeMark Computers will operate during
each such time period without error relating to date data, specifically
including any error relating to, or the product of, date data which represents
or references different centuries or more than a century. This warranty relating
to Year 2000 compliance shall apply only to computer hardware (including the
BIOS and any firmware, microcode, or chip-resident software resident on the
hardware) and does not include software installed on such computers, including
but not limited to, any operating systems and applications software. Without
limiting the generality of the foregoing, each of Almo and the Sellers further
represents and warrants that such TradeMark computers (i) will not abnormally
end or provide invalid or incorrect results as a result of date data,
specifically including date data which represents or references different
centuries or more than one century; and (ii) has been designed to ensure year
2000 compatibility, including, but not limited to, date data century
recognition, calculations which accommodate same century and multi-century
formulas and date values, and date data interface values that reflect the
century.
3.21 Product Warranties; Product Returns; Defects; Liabilities. Each
product manufactured, sold, licensed, leased, or delivered by each of Almo and
the Sellers in the Business has been in conformity with all applicable
contractual commitments and all express and implied warranties. Except as
reflected in the reserve for warranty claims for the TradeMark computers on the
Division Balance Sheet each of Almo and the Sellers has no liability (and to the
best knowledge of each of Almo and the Sellers, there is no basis for any
present or future action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand against each of Almo and the Sellers
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giving rise to any liability) for replacement or repair thereof or other damages
in connection therewith where such liability is not collectible in full from the
applicable vendor. The qualifications as to best knowledge of Almo and the
Sellers in the parenthetical in the previous sentence shall not apply to
TradeMark computers. No product manufactured, sold, licensed, leased, or
delivered by each of Almo and the Sellers in the Business is subject to any
guaranty, warranty, return right, or other indemnity beyond the applicable
standard terms and conditions of sale, license, or lease or beyond that implied
or imposed by applicable law. Schedule 3.21 includes a copy of the standard
terms and conditions of sale, license, or lease of each of Almo and the Sellers.
3.22 Inventory. The inventory of the Business as reflected on the
Division Balance Sheet consists of raw materials and supplies, manufactured and
purchased parts, goods in process, and finished goods, all of which is
merchantable and fit for the purpose for which it was procured or manufactured
all of which is reflected on such balance sheet at the lower of cost or market
value. All items of inventory included in the Acquired Assets are subject to an
agreement with the supplier of such items regarding the return of such items.
Copies of such agreements have been provided to Buyer and indexed to the items
of inventory.
3.23 Accounts Receivable. Each of Almo and the Sellers has delivered to
Buyer a complete and accurate aging of all accounts receivable of the Company as
of a week prior to Closing. No account receivable reflected on Schedule 1.2(b)
and in the Division Balance Sheet and no account receivable arising after the
date of the Division Balance Sheet and reflected on the books of the Company and
the Closing Date Schedule is uncollectible, subject to counterclaim or offset,
except to the extent reserved against thereon, and all accounts receivable will
be collected within 90 days of the Closing. Except as set forth in Section 3.23
of the Disclosure Schedule, no such accounts receivable are subject to discount
on volume or rebate or any other reduction. All accounts receivable have been
generated in the ordinary course of business and reflect a bona fide obligation
for the payment of goods or services provided by the Company.
3.24 Representations Complete. To the knowledge of Almo and Sellers,
none of the representations or warranties made by each of Almo and the Sellers
(as modified by each of Almo and the Sellers Schedules), nor any statement made
in any schedule or certificate furnished by each of Almo and the Sellers
pursuant to this Agreement contains or will contain at the Closing Date, any
untrue statement of a material fact, or omits or will omit at the Closing Date
to state any material fact necessary in order to make the statements contained
herein or therein, in the light of the circumstances under which they were made,
not misleading.
3.25 Brokers' and Finders' Fees; Third-Party Expenses. Except as set
forth in Schedule 3.25, Almo and Sellers have not incurred, nor will it incur,
directly or indirectly, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with this Agreement or any
transaction contemplated hereby.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to each of Almo and the Sellers as
follows:
4.1 Organization of Buyer. Buyer is a corporation duly organized,
validly existing, and in good standing under the laws of the State of
California. Buyer has the corporate power to own its properties and to carry on
its business as now being conducted.
4.2 Authority. Buyer has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Buyer. This Agreement has been duly executed and
delivered by Buyer and constitutes the valid and binding obligation of Buyer,
enforceable in accordance with its terms.
4.3 No Conflicts. The execution and delivery of this Agreement by the
Buyer does not, and, as of the Closing Date, the consummation of the
transactions contemplated hereby and thereby will not, conflict with, or result
in any violation of, or default under (with or without notice or lapse of time,
or both), or give rise to a right of termination, cancellation or acceleration
of any obligation or loss of any benefit under (any such event, a "Conflict")
(i) any provision of the constituent documents of the Buyer or (ii) any
mortgage, indenture, lease, contract or other agreement or instrument, permit,
concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Buyer or any of its properties
or assets. No consent, waiver, approval, order, or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other federal, state, county or local governmental authority,
instrumentality, agency or commission except under the HSR Act (any of the
foregoing authorities, instrumentalities, agencies, or commissions, a
"Governmental Entity") or any third party (so as not to trigger any Conflict),
is required by or with respect to the Buyer in connection with the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby and thereby, including any other assignment or instrument of transfer to
be delivered by the Buyer at the Closing pursuant to Section 2.2(b).
4.4 Warrant Shares. The Warrant Shares to be issued upon exercise of
the Warrant pursuant to this Agreement will, when issued and delivered in
accordance with this Warrant, be duly authorized, validly issued, fully paid,
and non-assessable; provided, however, that the Warrant Shares to be issued
hereunder will be subject to restrictions on transfer under applicable federal
and state securities laws in the United States.
4.5 SEC Documents; Buyer Financial Statements. Buyer has filed all
forms, reports, and documents required to be filed by Buyer with the Securities
and Exchange Commission (the "SEC") and has furnished or made available to each
of Almo and the Sellers true and complete copies of its Annual Report on Form
10-K for the fiscal year ended December 31, 1998 and its Quarterly Report
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on Form 10-Q for the quarter ended June 30, 1998 (collectively, the "SEC
Documents"), which Buyer has filed with the SEC under the Exchange Act. As of
their respective filing dates, the SEC Documents complied in all material
respects with the requirements of the Exchange Act, and none of the SEC
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances in which they were made,
not misleading, except to the extent corrected by a document subsequently filed
with the SEC. The consolidated financial statements of Buyer, including the
notes thereto, included in the SEC Documents (the "Buyer Financial Statements")
comply as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods indicated (except as may be indicated in
the notes thereto or, in the case of unaudited statements, as permitted by Form
10-Q of the SEC), and fairly present the consolidated financial position of
Buyer and the results of its operations and cash flows as of the respective
dates and for the periods indicated therein (subject, in the case of unaudited
statements, to normal audit adjustments). There has been no change in Buyer's
accounting policies except as described in the notes to the Buyer Financial
Statements.
4.6 No Material Adverse Change. Since the date of the most recent SEC
Documents, there has not been any material adverse change in the Buyer's
business, results of operations, or financial condition.
4.7 Litigation. There is no action, suit or proceeding of any nature
pending or, to Buyer's knowledge, threatened against Buyer that could reasonably
be expected to interfere with the consummation of the transactions contemplated
by this Agreement or that questions the validity of this Agreement or of any
action taken or to be taken pursuant to or in connection with the provisions of
this Agreement.
4.8 Brokers' and Finders' Fees; Third-Party Expenses. Buyer has not
incurred, nor will it incur, directly or indirectly, any liability for brokerage
or finders' fees or agents' commissions or any similar charges in connection
with this Agreement or any transaction contemplated hereby.
ARTICLE V
SECURITIES ACT COMPLIANCE; REGISTRATION
5.1 Securities Act Exemption. The Warrant Shares to be issued pursuant
to exercise of the Warrant will not be registered under the Securities Act in
reliance on the exemptions from the registration requirements of Section 5 of
the Securities Act set forth in Section 4(2) thereof. Simultaneous with the
execution and delivery of this Agreement, each of Almo and the Sellers has
delivered to Buyer an investment representation statement in the form attached
hereto as Exhibit F. Prior to the Closing Date, each of Almo and the Sellers
shall have provided Buyer such additional representations, warranties,
certifications, and additional information as Buyer may reasonably request to
ensure the availability of an exemption from the registration requirements of
the Securities Act.
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5.2 Stock Restrictions. In addition to any legend imposed by applicable
state securities laws or by any contract which continues in effect after the
Closing Date, the Warrant issued pursuant to this Agreement, and any Warrant
Shares issued upon exercise of the Warrant shall bear a restrictive legend (and
stop transfer orders shall be placed against the transfer thereof with Buyer's
transfer agent), stating substantially as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"). THEY MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO, OR AN OPINION OF
COUNSEL, SATISFACTORY TO THE COMPANY, THAT SUCH REGISTRATION
IS NOT REQUIRED UNDER THE ACT, OR A NO-ACTION LETTER FROM THE
SECURITIES AND EXCHANGE COMMISSION. THIS CERTIFICATE MUST BE
SURRENDERED TO THE COMPANY OR ITS TRANSFER AGENT PRIOR TO ANY
TRANSFER OF ANY INTEREST IN THE SECURITIES REPRESENTED
HEREBY.
5.3 Representations Regarding Securities Law Matters. Each of Almo and
the Sellers shall be bound by the following provisions:
(a) Each of Almo and the Sellers will not offer, sell, or
otherwise dispose of any Warrant Shares except in compliance with the Securities
Act and the rules and regulations thereunder.
(b) Each of Almo and the Sellers will not sell, transfer or
otherwise dispose of any Warrant Shares unless (i) such sale, transfer or other
disposition is within the limitations of and in compliance with Rule 144
promulgated by the SEC under the Securities Act and each of Almo and the Sellers
furnishes Buyer with reasonable proof of compliance with such Rule, (ii) in the
opinion of counsel, reasonably satisfactory to Buyer and its counsel, some other
exemption from registration under the Securities Act is available with respect
to any such proposed sale, transfer, or other disposition of Buyer Shares, or
(iii) the offer and sale of the Warrant Shares is registered under the
Securities Act.
5.4 Registration Rights. Buyer agrees that the recipients of the
Warrant Shares shall be entitled to the registration rights set forth in the
Declaration of Registration Rights of even date herewith in the form attached
hereto as Exhibit G.
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ARTICLE VI
CONDUCT PRIOR TO THE CLOSING DATE
6.1 Conduct of Business of each of Almo and the Sellers. During the
period from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Closing, each of Almo and the Sellers
agrees (except to the extent that Buyer shall otherwise consent in writing) to
carry on its Computer Products Division business in the usual, regular and
ordinary course in substantially the same manner as heretofore conducted, to pay
all debts and taxes when due, to pay or perform other obligations when due, and,
to the extent consistent with such actions, to use all reasonable efforts
consistent with past practice and policies to preserve intact its present
business organization, keep available the services of Key Employees and preserve
its relationships with customers, suppliers, distributors, licensors, licensees,
and others having business dealings with it, all with the goal of preserving
unimpaired the goodwill and ongoing businesses associated with the Acquired
Assets on the Closing Date. Each of Almo and the Sellers shall promptly notify
Buyer of any event which materially adversely effects the Business or any
Acquired Assets. Except as expressly contemplated by this Agreement or disclosed
in Schedule 6.1, each of Almo and the Sellers will not, without the prior
written consent of Buyer:
(a) Enter into any commitment or transaction related to any
Acquired Asset not in the ordinary course of business;
(b) Transfer to any person or entity any rights to the Seller
Registered Intellectual Property or Almo's or any of the Seller's trade secrets
applicable to the Business (other than end-user licenses for software granted to
customers of each of Almo and the Sellers in the ordinary course of business);
(c) Enter into any license agreement with respect to the
intellectual property of any person or entity affecting the Business, except in
the ordinary course of business;
(d) Enter into or amend any agreements pursuant to which any
other party is granted marketing, distribution, or similar rights of any type or
scope with respect to any products or technology of the Computer Products
Division, except in the ordinary course of business;
(e) Amend or otherwise modify (or agree to do so), except in
the ordinary course of business, or violate the terms of, any of the agreements
set forth or described in each of Almo and the Sellers schedules;
(f) Commence or settle any litigation, except to enforce its
rights under or to interpret this Agreement or any other agreement, obligation
or arrangement contemplated hereby or entered into or established in connection
herewith which affects the Business, except in the ordinary course of business;
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(g) Sell, lease, license, pledge, or otherwise dispose of any
Acquired Asset, (other than end-user licenses for software granted to customers
of each of Almo and the Sellers in the ordinary course of business and other
than sales of inventory in the ordinary course of business);
(h) Cause or permit any amendments to its charter documents,
bylaws, membership agreements, partnership agreements, or like documents which
would materially affect the Business or any Acquired Asset;
(i) Acquire or agree to acquire by merging or consolidating
with, or by purchasing any assets or equity securities of, or by any other
manner, any business or any corporation, partnership, association, or other
business organization or division thereof, or otherwise acquire or agree to
acquire any assets which are material, individually or in the aggregate, to the
business of each of Almo and the Sellers in each case to the extent any such
action would impair Buyer's rights to acquire the Acquired Assets under this
Agreement;
(j) Revalue any of the Acquired Assets, including without
limitation writing down the value of inventory or writing off notes and accounts
receivable other than in the ordinary course of business;
(k) Adopt or amend any Employee Plan, or enter into any
written employment contract with a Key Employee, pay or agree to pay any special
bonus or special remuneration to any Key Employee, or increase the salaries or
wage rates of any Key Employee.
(l) Effect or agree to effect, including by way of hiring or
involuntary termination, any change in the Key Employees other than in the
ordinary course of business;
(m) Enter into any strategic alliance, joint development or
joint marketing agreement affecting the Business or any Acquired Asset; or
(n) Take, or agree in writing or otherwise to take, any of the
actions described in Sections 6.1(a) through (m) above, or any other action that
would prevent each of Almo and the Sellers from performing or cause each of Almo
and the Sellers not to perform its covenants hereunder.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Approval. Each of Almo and the Sellers shall promptly after the
date hereof take all action necessary in accordance with applicable law and the
constituent documents of each of Almo and the Sellers to obtain all requisite
corporate, membership, or partnership approvals, as the case may be, of this
Agreement and the transactions contemplated hereby. Each of Almo and the Sellers
agrees to use its best efforts to take all action necessary or advisable to
secure the necessary votes or consents required to approve this Agreement and
the transactions contemplated hereby.
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7.2 Access to Information. Each of Almo and the Sellers shall afford
Buyer and its accountants, legal counsel, and other representatives reasonable
access during normal business hours during the period prior to the Closing Date
to (i) all of the properties, books, inventory, contracts, commitments, and
records of each of Almo and the Sellers relating to the Acquired Assets and (ii)
all other information concerning the Business, properties, and personnel of each
of Almo and the Sellers which are associated with the Acquired Assets as Buyer
may reasonably request. Each of Almo and the Sellers agrees to provide Buyer and
its accountants, legal counsel, and other representatives copies of internal
financial statements promptly upon request. No information or knowledge obtained
in any investigation pursuant to this Section 7.2 shall affect or be deemed to
modify any representation or warranty contained herein (or the indemnification
obligations of Seller) or the conditions to the obligations of the parties to
consummate the transactions contemplated hereby.
7.3 Access to Records After Closing. For a period of three years after
the Closing Date, each of Almo and the Sellers and its representatives, on the
one hand, and the Buyer and its representatives, on the other hand, shall have
reasonable access to any books, records, documents, files, and correspondence to
the extent that such access may reasonably be required in connection with
matters relating to or affected by the operation of the businesses conducted
with the Acquired Assets, in the case of each of Almo and the Sellers prior to
the Closing Date and, in the case of the Buyer, after the Closing Date. Such
access shall be afforded upon reasonable advance written notice, during normal
business hours and at the expense of the party seeking access.
7.4 Confidentiality. From the date hereof to and including the Closing
Date, the parties hereto shall maintain, and cause their directors, employees,
agents, and advisors to maintain, in confidence and not to disclose or use for
any purpose, except for the evaluation of the transactions contemplated hereby
and the accuracy of the respective representations and warranties of the parties
contained herein, information concerning the other parties hereto and obtained
directly or indirectly from such parties, or their directors, employees, agents,
or advisors, except such information as is or becomes (i) available to the
non-disclosing party from third parties not subject to an undertaking of
confidentiality; (ii) generally available to the public other than as a result
of a breach by the non-disclosing party hereunder; or (iii) required to be
disclosed under applicable law; and except such information as was in the
possession of such party prior to obtaining such information from such other
party as to which the fact of prior possession such possessing party shall have
the burden of proof. In the event that the transactions contemplated hereby
shall not be consummated, all such information which shall be in writing shall
be returned to the party furnishing the same, including to the extent reasonably
practicable, copies or reproductions thereof which may have been prepared.
7.5 Public Disclosure. Unless otherwise required by law (including,
without limitation, applicable securities laws) or, as to Buyer, by the rules
and regulations of the Nasdaq National Market, prior to the Closing Date, no
disclosure (whether or not in response to an inquiry) of the subject matter of
this Agreement shall be made by any party hereto unless approved by both parties
prior to release, provided that such approval shall not be unreasonably
withheld.
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7.6 Contractual Consents.
(a) Buyer will use reasonable commercial efforts to obtain the
consents to the assignments of the agreements with Viewsonic, CTX, and Seagate.
Almo and the Sellers will reasonably assist Buyer in obtaining prior to the
Closing the consent of Seagate, Viewsonic and CTX to an assignment of their
contracts with Almo or the Sellers to Buyer. Almo and the Sellers will
reasonably assist Buyer in applying for or otherwise seeking all other consents
and approvals desired by Buyer to be obtained for the consummation of the
transactions contemplated hereby. Almo and the Sellers will list all of the
supplier and similar agreements (including any franchise agreements) that the
Business currently has in force on the date of this Agreement, and Almo and
Sellers will use reasonable commercial efforts to assist Buyer in effecting
assignments of all such agreements, except those identified in writing by Buyer
as not material to the Business.
(b) Buyer will use its reasonable commercial efforts to obtain
all consents and approvals required to be obtained it for the consummation of
the transactions contemplated hereby.
7.7 Legal Conditions to Acquisition. The Buyer and each of Almo and the
Sellers shall take all reasonable actions necessary to comply promptly with all
legal requirements which may be imposed on such party with respect to this
Agreement and the transactions contemplated hereby and will promptly cooperate
with and furnish information to any other party hereto in connection with any
such requirements imposed upon such other party in connection herewith. Each
party will take all reasonable actions to obtain (and will cooperate with the
other parties in obtaining) any consent, authorization, order or approval of, or
any registration, declaration, or filing (including any filing required under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the
regulations promulgated thereunder (the "HSR Act")) with, or an exemption by,
any governmental entity, or other third party, required to be obtained or made
by such party or its subsidiaries in connection with this Agreement and
consummating the transactions contemplated hereby or the taking of any action
contemplated thereby or by this Agreement.
7.8 Best Efforts; Additional Documents and Further Assurances. Each of
the parties to this Agreement shall use its best efforts to effectuate the
transactions contemplated hereby and to fulfill and cause to be fulfilled the
conditions to closing under this Agreement. Each party hereto, at the request of
another party hereto, shall execute and deliver such other instruments and do
and perform such other acts and things as may be reasonably necessary or
desirable for effecting completely the consummation of the transactions
contemplated by this Agreement.
7.9 Notification of Certain Matters. Each of Almo and the Sellers shall
give prompt notice to Buyer, and Buyer shall give prompt notice to each of Almo
and the Sellers, of (i) the occurrence or non-occurrence of any event, the
occurrence or non-occurrence of which is likely to cause any representation or
warranty of each of Almo and the Sellers or the Buyer, as the case may be,
contained in this Agreement to be untrue or inaccurate in any material respect
at or prior to the Closing Date except as contemplated by this Agreement
(including each of Almo and the Sellers Schedules) and (ii) any failure of each
of Almo and the Sellers or Buyer, as the case may be, to comply with or satisfy
in any material respect any covenant, condition or agreement to be complied
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with or satisfied by it hereunder; provided, however, that the delivery of any
notice pursuant to this Section 7.9 shall not limit or otherwise affect any
remedies available to the party receiving such notice.
7.10 Payment of Trade and Other Creditors. Each of Almo and the Sellers
shall comply with its obligation to satisfy amounts due to trade and other
creditors of each of Almo and the Sellers to the extent required prior to
Closing consistent with past practice and consistent with maintaining the
relationships for the Buyer. Each of Almo and the Sellers shall continue to pay
on a current basis and shall be responsible for all obligations included in the
Assumed Liabilities up to the Closing Date. The accounts payable agreed upon
among the parties and to be attached hereto as Schedule 1.3(b) shall be included
in the Assumed Liabilities.
7.11 No Solicitation. From and after the date of this Agreement until
the earlier to occur of the Closing Date or termination of this Agreement
pursuant to its terms, Seller will not, and each of Almo and the Sellers will
instruct their respective directors, officers, employees, representatives,
investment bankers, agents, and affiliates not to, directly or indirectly (i)
solicit or encourage submission of any Acquisition Proposal (as defined herein)
by any person, entity, or group (other than Buyer and its Affiliates (as defined
herein), agents, and representatives) or (ii) participate in any discussions or
negotiations with, or disclose any non-public information concerning any of each
of Almo and the Sellers to, or afford access to the properties, books, or
records of each of Almo and the Sellers to, or otherwise assist or facilitate,
or enter into any agreement or understanding with, any person, entity, or group
(other than Buyer and its Affiliates, agents, and representatives) in connection
with any Acquisition Proposal with respect to each of Almo and the Sellers. For
purposes of this Agreement, an "Acquisition Proposal" means any proposal or
offer relating to any merger, consolidation, sale or license of substantial
assets or similar transactions involving the Business or the Acquired Assets
(other than sales or licenses of software in the ordinary course of business or
as permitted by this Agreement). Each of Almo and the Sellers will immediately
cease any and all existing activities, discussion, or negotiations with any
parties conducted heretofore with respect to the foregoing. Each of Almo and the
Sellers will promptly (i) notify Buyer if it receives any proposal or written
inquiry or written request for information in connection with an Acquisition
Proposal or potential Acquisition Proposal and (ii) notify Buyer of all terms
and conditions of any such Acquisition Proposal. In addition, from and after the
date of this Agreement, until the earlier to occur of the Closing Date or
termination of this Agreement pursuant to its terms, each of Almo and the
Sellers will not, and will instruct its respective directors, officers,
employees, representatives, investment bankers, agents, and affiliates not to,
directly or indirectly, make or authorize any public statement, recommendation,
or solicitation in support of any Acquisition Proposal made by any person,
entity, or group other than Buyer.
For purposes of this Agreement, an "Affiliate" means any entity or
person that, directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with the particular
party.
7.12 Facilities. Seller and Buyer will enter into a Facility Agreement
in substantially the form attached hereto as Exhibit H-1 pursuant to which Buyer
will utilize a portion Seller's
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Philadelphia office facility for the conduct of the Business for a period of up
to six months after the Closing, and Seller will provide certain facility
services to Buyer's operations in such facility; provided, however, that if
Buyer requires the space for additional time not to exceed an additional 90
days, the parties will negotiate in good faith an extension of the Facility
Agreement for this period. In addition, Almo and Buyer will enter into a
warehouse and employee-leasing agreement attached hereto as Exhibit H-2 relating
to Buyer's use of Almo's warehouse facility and warehouse employees in
Philadelphia, which agreement shall terminate on or before April 30, 1999.
Seller and Buyer will also (i) enter into a facility agreement attached hereto
as Exhibit H-3 with respect to a portion of Seller's Minnesota facility, the
term of which shall be coterminous with Sellers' lease of such facility, and
(ii) enter into an office facility agreement attached hereto as Exhibit H-4 with
respect to a portion of Sellers' Maryland facility for a term coterminous with
Sellers' lease of such facility. In addition, pursuant to an Assignment and
Assumption Agreement attached hereto as Exhibit H-5, Almo and Sellers will
assign to Buyer the rights and obligations under their lease for the
Massachusetts facility, and Buyer will assume the obligations under such lease,
and Almo and Sellers will be released from such obligations.
7.13 Post-Closing Collection Practices for Accounts Receivable. After
the Closing, the Buyer and Almo and the Sellers will deal with the accounts
receivable listed on Schedule 1.2(b) and the accounts payable listed in Schedule
1.3(b) in accordance with the procedures listed in Schedule 7.13.
7.14 Year 2000 Preventative Measures. Buyer agrees to take only those
measures detailed by Almo and Sellers on Schedule 7.14 with respect to making
the TradeMark computers year 2000 compliant together with such additional
commercially reasonable modifications to such measures, which shall be
communicated to the Buyer from time to time by Almo and the Sellers. The cost of
all such measures described above and any additional modifications shall be
borne by Almo and the Sellers.
7.15 Use of Almo Name. Almo and Sellers agree that Buyer shall be
permitted to use the name "Bell Almo" either alone or as "Bell Almo Computer
Products" in the Business in any and all media (including but not limited to the
Internet) without charge to the Buyer until the first anniversary of the Closing
pursuant to the Trade Name License Agreement attached hereto as Exhibit I.
7.16 Reports on Warranty Claims. Until the third anniversary of the
Closing, Buyer agrees to provide to Almo and Sellers monthly reports on the
number of warranty returns and the cost incurred by Buyer relating to such
warranty claims for the TradeMark computers whether such computers were sold
before or after Closing. The costs incurred shall include only freight,
replacement parts, and direct labor, and shall not include any allocation of
overhead. Almo and the Sellers will have the right to review these reports and
the supporting documentation from which the reports were prepared. The reports
and their associated information and documentation, and the review rights, will
not affect Buyer's rights to indemnification under this Agreement.
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7.17 Release of Liens, Etc. At the Closing, Almo and Sellers will have
all liens, security interests, and encumbrances on the Acquired Assets released,
and will deliver at Closing signed agreements necessary to evidence the complete
release of any Acquired Assets from liens, security interests, and encumbrances
from all of Almo's or Sellers' lenders who have imposed such liens, security
interests, and encumbrances. In addition, to the extent reasonably requested by
the Buyer, Almo and Sellers will deliver any and all signed termination
statements or forms, completed and prepared for filing with the proper state and
local Governmental Agencies, necessary under the applicable state Uniform
Commercial Codes to terminate any financing statements filed that gave public
notice of the existence of such liens, security interests and encumbrances.
7.18 Physical Inventory. On the Closing Date or immediately thereafter,
the parties hereto agree that Sellers' representative, Buyer and Buyer's
accountants will jointly take a physical inventory, with the results thereof
being final for the purpose of the Closing Date Schedule. Almo and Sellers will
allow Buyer and its accountants access to the inventory during regular business
hours and at other reasonably necessary times for the purpose of taking the
physical inventory of the Acquired Assets.
7.19 Payment of HSR Act Filing Fee. Buyer will pay the HSR Act filing
fee of $45,000.
7.20 Software License Agreement. On the Closing Date, Buyer and Almo
will enter into a Software License Agreement, substantially in the form attached
hereto as Exhibit J pursuant to which Almo will license to Buyer the right to
access its web page, Almo's web configurator software and other related
proprietary software and the PC order entry system of Almo.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS TO CLOSE
8.1 Conditions to Obligations of each Party. The respective obligations
of each party to this Agreement shall be subject to the satisfaction at or prior
to the Closing of the following conditions:
(a) Government Approvals. All applicable waiting periods (and
any extensions thereof) under the HSR Act shall have expired or otherwise been
terminated, and all authorizations, consents, orders, or approvals of, or
declarations or filings with, or expiration of waiting periods imposed by, any
governmental entity necessary for the consummation of the transactions
contemplated by this Agreement, including the issuance of the Warrant, shall
have been obtained.
(b) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal or regulatory restraint or
prohibition preventing the consummation of the transactions contemplated hereby
shall be in effect.
(c) All Schedules and Exhibits to be attached hereto shall be
acceptable to both parties in form and substance, and to the extent any document
identical in form and substance to any
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Exhibit requires execution by any party, such document shall be so executed and
delivered to the other parties to such document.
8.2 Additional Conditions to Obligations of each of Almo and the
Sellers. The obligations of each of Almo and the Sellers to consummate the
transactions contemplated by this Agreement shall be subject to the satisfaction
at or prior to the Closing of each of the following conditions, any of which may
be waived, in writing, exclusively by each of Almo and the Sellers:
(a) Representations, Warranties, and Covenants. The
representations and warranties of Buyer contained in this Agreement shall be
true and correct in all material respects on the date of this Agreement and on
the Closing Date, except for changes contemplated by this Agreement, and except
to the extent such representations and warranties address matters only as of a
particular date (which shall remain true and correct as of such date), with the
same force and effect as if made on and as of the Closing Date, and the Buyer
shall have performed and complied in all material respects with all covenants
including the payment of the Consideration, obligations, and conditions of this
Agreement required to be performed and complied with by it as of the Closing
Date.
(b) Certificate of Buyer. The Buyer shall have provided each
of Almo and the Sellers with a certificate executed on behalf of Buyer by its
President, or any Vice President, and its Chief Financial Officer to the effect
that as of the Closing Date:
(a) all representations and warranties made by the
Buyer under this Agreement are true and complete; and
(b) all covenants, obligations, and conditions of
this Agreement to be performed by the Buyer on or before such date have been so
performed in all material respects.
(c) Registration Rights Agreement. The Buyer shall have
executed and delivered the Declaration of Registration Rights.
8.3 Additional Conditions to the Obligations of Buyer. The obligations
of Buyer to consummate the transactions contemplated by this Agreement shall be
subject to the satisfaction at or prior to the Closing of each of the following
conditions, any of which may be waived, in writing, exclusively by Buyer:
(a) Representations, Warranties, and Covenants. The
representations and warranties of each of Almo and the Sellers contained in this
Agreement shall be true and correct in all material respects on the date of this
Agreement and on the Closing Date, except for changes contemplated by this
Agreement, and except to the extent such representations and warranties address
matters only as of a particular date (which shall remain true and correct as of
such date), with the same force and effect as if made on and as of the Closing
Date, and each of Almo and the Sellers shall have performed and complied in all
material respects with all covenants, obligations, and conditions of this
Agreement required to be performed and complied with by it as of the Closing
Date.
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(b) Certificate of each of Almo and the Sellers. Buyer shall
have been provided with certificates executed on behalf of each of Almo and the
Sellers by its respective President and Chief Financial Officer to the effect
that as of the Closing Date:
(a) all representations and warranties made by such
entity under this Agreement are true and complete; and
(b) all covenants, obligations, and conditions of
this Agreement to be performed by such entity on or before such date have been
so performed.
(c) Third Party Consents. Any and all consents, waivers, and
approvals required from third parties relating to the contracts, licenses,
leases, and other agreements and instruments of each of Almo and the Sellers
shall have been obtained.
(d) Satisfactory Form of Legal and Accounting Matters. There
shall have been no material adverse change in the Business, Buyer shall have had
the opportunity to conclude the audit of the Business, and the Seagate,
Viewsonic, CTX agreements shall have been assigned to Buyer with the consent of
such suppliers.
ARTICLE IX
NONCOMPETITION AGREEMENTS
9.1 Agreement of Seller. In consideration of the issuance of the
Warrant, and for other good and valuable consideration, each of Almo and the
Sellers agrees, for itself and its successors, assigns, and any entity which it
controls that, in consideration of Buyer's purchase of the Acquired Assets, it
will not during the Restriction Period:
(a) engage anywhere in the world in any capacity (whether as
an employee, agent, consultant, investor, advisor, independent contractor,
proprietor, partner, officer, director, or otherwise) in selling computer
products similar to those currently sold or distributed in the Business to
current customers of the Business; or
(b) sell, license, market, distribute, or otherwise provide
any service, support, product or technology (including any hypertext link) to
any person or entity, or directly or indirectly engage in, run, own, manage,
operate, control or invest in any business venture or activity, if such service,
support, product, technology, business, venture or activity involves or relates
to selling computer products similar to those currently sold or distributed in
the Business to current customers of the Business anywhere in the world.
9.2 Nonsolicitation. In consideration of the issuance of the Warrant,
and for other good and valuable consideration, Buyer and Seller further agree
that they will not during the Restriction Period (as defined below):
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(a) personally or through others, encourage, induce, attempt
to induce, solicit or attempt to solicit (on its own behalf or on behalf of any
other person or entity) any employee of the other's or any of the other's
subsidiaries to leave his or her employment with the other party or any of the
other party's subsidiaries; or
(b) personally or through others, interfere or attempt to
interfere with the relationship or prospective relationship of the other party
or any of the other party's subsidiaries with any person or entity that is, was
or is expected to become a customer or client of the other party or any of the
other party's subsidiaries.
9.3 Restriction Period. The "Restriction Period" means the period
beginning on the Closing Date and ending on the fifth anniversary of the Closing
Date.
9.4 Permitted Investments. Nothing in this ARTICLE IX shall prevent
each of Almo and the Sellers or any of Seller's Affiliates from owning as a
passive investment less than 1% of the outstanding shares of capital stock of a
publicly held company if (i) such shares are actively traded on an established
national securities market in the United States or on The Nasdaq Stock Market
and (ii) each of Almo and the Sellers is not otherwise associated directly or
indirectly with such corporation or any Affiliate of such corporation.
9.5 Remedies for Breach. Notwithstanding any other provision of this
Agreement, for purposes of this ARTICLE IX, the parties shall be entitled (in
addition to any other remedy that may be available to the parties) to the extent
permitted by applicable law (a) a decree or order of specific performance to
enforce the observance and performance of the covenants, obligations, or other
provisions, and (b) an injunction restraining such breach or threatened breach.
The rights and remedies of the parties hereunder are not exclusive of or limited
by any other rights or remedies which the parties may have, whether at law, in
equity, by contract or otherwise, all of which shall be cumulative (and not
alternative). Without limiting the generality of the foregoing, the rights and
remedies of the parties hereunder, and the obligations and liabilities of each
of the parties hereunder, are in addition to their respective rights, remedies,
obligations and liabilities under the law of unfair competition,
misappropriation of trade secrets and the like.
ARTICLE X
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
10.1 Indemnification.
(a) Indemnification by each of Almo and the Sellers. Subject
to the qualifications and limitations in this Section 10.1, if the Closing is
consummated, Almo and each Seller jointly and severally shall indemnify and
defend and hold Buyer, its subsidiaries, directors, officers, agents, and other
Affiliates harmless against and with respect to, any and all Damages (as defined
in subsection 10.1(c) below) incurred by Buyer, its subsidiaries, directors,
officers, agents or other Affiliates as a result of any of the following:
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(a) any inaccuracy or misrepresentation in, or breach
of any representation or warranty of, Almo or the Sellers in this Agreement or
the related documents executed and delivered by Almo or the Sellers in
connection with this Agreement (the "Operative Documents");
(b) any breach or failure by Almo or the Sellers to
perform any of their covenants or agreements under this Agreement or any of the
other Operative Documents;
(c) any liability not identified in Section 1.3 and
not expressly being assumed by Buyer hereunder; and
(d) except for the Assumed Liabilities, any liability
or obligation with respect to the Business or the Acquired Assets with respect
to acts occurring or taken or conditions existing on or prior to the Closing
Date (including any liability or obligation arising by virtue of successor
liability).
(b) Indemnification by Buyer. Subject to the qualifications
and limitations in this Section 10.1, if the Closing is consummated, Buyer shall
indemnify and defend and hold Almo and the Sellers and their directors,
officers, agents, and other Affiliates harmless against and with respect to, any
and all Damages (as defined in subsection 10.1(c) below) incurred by each of
Almo or the Sellers or any of its directors, officers, agents or other
Affiliates as a result of any of the following:
(a) any inaccuracy or misrepresentation in, or breach
of any representation or warranty of Buyer in this Agreement or the other
Operative Documents;
(b) any breach or failure by Buyer to perform any of
its covenants or agreements under this Agreement or any of the other Operative
Documents;
(c) any Assumed Liabilities; and
(d) any liability or obligation with respect to the
Buyer's use of the Acquired Assets or its conduct of the Business after the
Closing Date.
(c) Damages. For purposes of this Section 10.1, "Damages"
means all demands, claims, claims for reimbursement, actions or causes of
action, assessments, losses, damages, costs, expenses, liabilities,
deficiencies, judgments, awards, fines, sanctions, penalties, charges and
amounts paid in settlement, whether civil, criminal or administrative in nature,
including the reasonable costs, fees and expenses of attorneys, experts,
accountants, appraisers, consultants, witnesses, investigators and agents and
all such costs, fees and expenses incurred in defending against any of the
foregoing or in enforcing this Agreement or the Operative Documents.
Notwithstanding the foregoing definition, when used with reference to amounts
recoverable as the result of any breach of a representation, warranty or
covenant contained in this Agreement or any other Operative Document, Damages
shall not include amounts recoverable solely as lost profits or based on a
multiple of earnings, incidental damages, indirect damages, special damages,
punitive damages or consequential damages unless such damages arise from a
third-party claim.
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(d) Procedure for Indemnification. The procedure for
indemnification shall be as follows:
(a) The party claiming indemnification ("Claimant")
shall, within thirty (30) days after its discovery of any claim for which
indemnification will be sought as provided in this Agreement (the "Claim"), give
notice to the party from whom indemnification is sought ("Indemnitor") of its
Claim, specifying in reasonable detail the factual basis for the Claim and, to
the extent known, the amount of the Claim. Notwithstanding the foregoing, the
failure by Claimant to provide notice of any Claim within the period specified,
or any delay in providing such notice, shall not affect or impair the
obligations of Indemnitor hereunder, except and only to the extent that
Indemnitor has been adversely affected by such failure or delay.
(b) With respect to Claims between the parties,
following receipt of notice from Claimant of a Claim, Indemnitor shall have
sixty (60) days to make any investigation that Indemnitor deems necessary or
desirable of the Claim. For purposes of this investigation, Claimant agrees to
make available to Indemnitor and its authorized representatives the information
relied upon by Claimant to substantiate the Claim. If Claimant and Indemnitor
cannot agree as to the validity and amount of the Claim within the sixty (60)
day period (or any mutually agreed upon extension thereof), Claimant may seek
appropriate legal remedy, subject to the provisions of Section 10.2.
(c) With respect to any Claim by a third party as to
which Claimant is entitled to indemnification hereunder, Indemnitor shall have
the right, exercisable by written notice to Claimant within 30 days after
receipt of written notice from Claimant of the commencement or assertion of any
such Claim, at its own expense to participate in or assume control of the
defense of the Claim, and Claimant shall cooperate fully with Indemnitor, with
the right to reimbursement for actual out-of-pocket expenses incurred by
Claimant as a result of any such request by the Indemnitor for Claimant's
cooperation. If Indemnitor does not elect to assume control or otherwise
participate in the defense of any third party Claim within thirty (30) days of
its receipt of notice of the Claim (or any extended period mutually agreed upon
in writing by the parties), Claimant shall have the right to undertake the
defense, compromise or settlement of the Claim for the account of Indemnitor
subject to the right of Indemnitor, at its expense, to assume the defense of the
Claim at any time prior to final settlement, compromise or determination
thereof. In no event shall Indemnitor be liable or otherwise have any obligation
with respect to any settlement, compromise or determination of any Claim agreed
to by Claimant without the prior written consent of Indemnitor (which consent
will not be withheld unreasonably).
(d) The defending party shall have reasonable access
to the books, records and personnel which are pertinent to the defense and which
are in control of the other party. The parties agree to furnish such records,
information and testimony, and attend such conferences, discovery proceedings,
hearings, trials and appeals, as may be reasonably requested by the other party
in connection with defending any third party Claim.
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(e) Limitations and Conditions Applicable to Buyer. The right
of Buyer to obtain indemnification from Almo and the Sellers pursuant to Section
10.1(a) of this Agreement is subject to the following limitations:
(a) Buyer shall not be entitled to indemnification
from Almo and the Sellers pursuant to Section 10.1(a) until the aggregate
Damages for which Almo and the Sellers are liable under Section 10.1(a) exceed
$50,000, whereupon Buyer shall be entitled to indemnification by Almo and the
Sellers for all Damages in excess the first $50,000; provided that for
liabilities arising under or related to those matters referred to in Sections
10.1(a)(c), or 10.1(a)(d), or 10.1(a) but only with respect to matters
represented and warranted in Section 3.23 or as set forth in Section 10(e)(g)
below, , this $50,000 deductible shall not apply, and Buyer would be entitled to
indemnification from the first penny of damages.
(b) Buyer shall not be entitled to indemnification
from Almo and the Sellers pursuant to Section 10.1(a) for that amount of Buyer's
aggregate Damages arising from Claims between the parties for which Almo and the
Sellers are liable under Section 10.1(a) which is in excess of $2,000,000;
provided, however, that this limitation shall not apply with respect to (a) all
third-party Claims, (b) Claims between the parties that arise from or relate to
third-party Claims, (c) Claims arising from or relating to those matters
referred to in Section 10.1(a)(c) or 10.1(a)(d), (d) Claims arising from or
related to matters represented and warranted to Buyer in Section 3.9(b) and (d)
of the Agreement, and (e) Claims arising from or related to matters represented
and warranted to Buyer in Sections 3.21 (as such Section relates to the
TradeMark Computer business only), 3.23, and 3.22, which are governed,
respectively, by the provisions of Sections 10.1(e)(g), 10.1(e)(e) and
10.1(e)(f) below.
(c) No Claim shall be brought by Buyer against Almo
and the Sellers under Section 10.1(a) unless notice in writing of such Claim
shall have been given to Almo (which notice shall be deemed given to the
Sellers) on or prior to 5:00 p.m. Pacific Standard Time on June 30, 2000, except
for Claims related to Tax or Tax Returns, Employee Benefit Matters,
Environmental, Health and Safety Matters, and Claims arising under or related to
those matters referred to in Section 10.1(a)(c) or 10.1(a)(d), for which Claims
may be brought against Almo and the Sellers at any time prior to expiration of
the applicable statutes of limitations or extensions thereof, and Claims arising
from or related to matters represented and warranted to Buyer in Section 3.21
(as such Section relates to the TradeMark Computer business only), which Claims
may be brought against Almo and Sellers at any time on or prior to 5:00 p.m.
Pacific Standard Time on or prior to the third anniversary of the Closing Date.
Claims may be brought against Almo and the Sellers as to any Damages (or any
potential claim by an appropriate party) for which notice has been provided to
Almo prior to such dates.
(d) Buyer shall not be entitled to recover Damages in
respect of any Claim or otherwise obtain reimbursement or restitution more than
once with respect to any Claim hereunder. An adjustment of the Purchase Price
pursuant to Section 2.1(b) shall be deemed to be reimbursement for any matter
(to the extent of the dollar amount of such adjustment) for which the Purchase
Price was adjusted.
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(e) With respect to Claims arising from or related to
matters represented and warranted to Buyer in Section 3.23, Almo and the Sellers
guarantee that all the accounts receivable listed in the closing accounts
receivable schedule (Schedule 1.2 (b)) will be collected in full by Buyer within
90 days of the Closing Date without any discount, rebate or other similar
reduction; and upon payment made to Buyer by Almo and the Sellers the right to
receive payment with respect to each such unpaid account is receivable shall be
assigned without any further action on the part of Buyer or Almo and the
Sellers, to Almo and the Sellers.
(f) With respect to Claims arising from or related to
matters represented and warranted to Buyer in Section 3.22, Buyer will not be
entitled to indemnification.
(g) With respect to Claims arising from or related to
matters represented and warranted to Buyer in Section 3.21 with respect to the
TradeMark Computer business only, Buyer will not be entitled to indemnification
until the aggregate amount of all Damages incurred from such Claims exceeds 125%
of the reserve for returns, warranty claims, and the like for the TradeMark
Computers business reflected on the Closing Schedule at which point Buyer will
be entitled to indemnification for all amounts in excess of 125% of such
reserve; provided, however, that if Damages incurred from the above-referenced
Claims exceed 200% of such reserve, then Buyer will be entitled to
indemnification for all amounts in excess of such reserve. Any payments which
Almo and the Sellers are required to make under this Section 10(e)(g) will not
be subject to the $50,000 deductible set forth in Section 10(e)(a) above.
(f) Limitations and Conditions Applicable to each of Almo and
the Sellers. The right of Almo and the Sellers to obtain indemnification from
Buyer pursuant to Section 10.1(b) of this Agreement is subject to the following
limitations:
(a) Each of Almo and the Sellers shall not be
entitled to indemnification from Buyer pursuant to Section 10.1(b) until the
aggregate Damages for which Buyer is liable under Section 10.1(b) exceed
$50,000, whereupon the party or parties incurring the Damages shall be entitled
to indemnification by Buyer for all such Damages in excess of the first $50,000;
provided, however, that this $50,000 deductible will not apply for failure of
Buyer to pay the Consideration or for failure of Buyer to pay any Assumed
Liabilities, in which case Almo and the Sellers would be entitled to
indemnification from the first penny of damages.
(b) Almo and the Sellers shall not be entitled to
indemnification from Buyer pursuant to Section 10.1(b) for that amount of its
aggregate Damages for which Buyer is liable under Section 10.1(b) which is in
excess of $2,000,000; provided, however, that the above limitation shall not
apply as to (i) Damages arising from failure by the Buyer to pay the
Consideration, and (ii) all third party Claims.
(c) No Claim shall be brought by Seller against Buyer
under Section 10.1(b) unless notice in writing of such Claim shall have been
given to Buyer on or prior to 5:00 p.m. Pacific Standard Time on June 30, 2000,
but Claims may be brought against Buyer as to any Damages (or a potential Claim
by an appropriate party) for which notice has been provided to
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<PAGE>
Buyer prior to such date, except for Claims arising under or related to those
matters referred to in Section 10.1(b)(c) or 10.1(b)(d), which Claims may be
brought against Buyer at any time prior to the expiration of the applicable
statutes of limitations or extensions thereof.
(d) Seller shall not be entitled to recover Damages
in respect of any Claim or otherwise obtain reimbursement or restitution more
than once with respect to any Claim hereunder. An adjustment of the Purchase
Price pursuant to Section 2.3 shall be deemed to be reimbursement for any matter
(to the extent of the dollar amount of such adjustment) for which the Purchase
Price was adjusted.
(g) Remedies Exclusive. Except for equitable relief available
for breaches of Sections 7.4, 9.1, and 9.2, the remedies provided in this
Section 10.1 shall be exclusive as to any Claims by a party under this Agreement
or any other Operative Document or arising out of the transactions provided for
herein and therein and shall preclude assertion by any party of any other rights
or the seeking of any other remedies against another party; provided, however,
that nothing in this Section 10.1(g) shall limit rights or remedies expressly
provided for in this Agreement or any other Operative Document for fraud,
deceit, or intentional non-disclosure, or rights or remedies which, as a matter
of applicable law or public policy, cannot be limited or waived.
(h) Interpretation. Solely for purposes of this Section 10.1,
the existence and extent of any breach of any representation or warranty under
Article III and Article IV referred to in Section 10(a)(i) or Section 10(b)(i)
shall be determined by reading such representation or warranty as if all
materiality standards contained in such representation or warranty (i.e.,
without reference to the qualifier "material," "materially," "material to the
Business as a whole," "in all material aspects," "in any material respect,"
"material adverse effect" or similar qualifiers), have been deleted from such
representation or warranty in its entirety.
10.2 Arbitration. Any controversy involving a Claim by an indemnified
party pursuant to this Article X shall be finally settled by arbitration in
Santa Clara, California in accordance with the then current Commercial
Arbitration Rules of the American Arbitration Association; and judgment upon the
award rendered by the arbitrator may be entered in any court having jurisdiction
thereof. Such arbitration shall be conducted by an arbitrator chosen by mutual
agreement of Buyer, on the one hand, and Almo and the Sellers on the other.
Failing such agreement, the arbitration shall be conducted by three independent
arbitrators, none of whom shall have any competitive interests with Buyer or
Almo and the Sellers. Buyer shall choose one such arbitrator, Almo and the
Sellers shall choose one such arbitrator, and such two arbitrators shall
mutually select a third arbitrator. Any decision of two such arbitrators shall
be binding on Buyer and Almo and the Sellers. Each party shall pay its own costs
and expenses (including counsel fees) of any such arbitration except that the
arbitrator can compel one party to pay all or a portion of the other party's
costs and expenses.
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<PAGE>
ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER
11.1 Termination. Except as provided in Section 11.2 below, this
Agreement may be terminated at any time prior to the Closing Date:
(a) by mutual consent of Buyer and each of Almo and the
Sellers;
(b) by Buyer or each of Almo and the Sellers if (i) the
Closing Date has not occurred by December 31, 1998 (provided that the right to
terminate this Agreement under this clause 11.1(b)(i) shall not be available to
any party whose willful failure to fulfill any obligation hereunder has been the
cause of, or resulted in, the failure of the Closing Date to occur on or before
such date); (ii) there shall be a final nonappealable order of a federal, state,
or foreign court in effect preventing consummation of the transactions
contemplated hereby; or (iii) there shall be any statute, rule, regulation or
order enacted, promulgated or issued or deemed applicable hereto by any
Governmental Entity that would make consummation of the transactions
contemplated hereby illegal;
(c) by Buyer if there shall be any action taken, or any
statute, rule, regulation or order enacted, promulgated or issued or deemed
applicable hereto, by any Governmental Entity, which would (i) prohibit Buyer's
ownership or operation of any portion of the business associated with the
Acquired Assets or (ii) compel Buyer to dispose of or hold separate, as a result
of the transactions contemplated hereby, any portion of the business or assets
of the Buyer, in either case, the unavailability of which assets or business
would have a material adverse effect on Buyer's business, financial condition,
or results of operations or would reasonably be expected to have a material
adverse effect on Buyer's ability to realize the benefits expected from
acquisition of the Acquired Assets.
(d) by Buyer if it is not in material breach of its
obligations under this Agreement and there has been a material breach of any
representation, warranty, covenant or agreement contained in this Agreement on
the part of each of Almo and the Sellers; provided, however, that if such breach
is curable by each of Almo and the Sellers within ten days through the exercise
of their reasonable best efforts, then for so long as each of Almo and the
Sellers continues to exercise such reasonable best efforts Buyer may not
terminate this Agreement under this Section 11.1(d) unless such breach is not
cured within ten days (but no cure period shall be required for a breach which
by its nature cannot be cured);
(e) by Buyer if there has been a material adverse change in
the Business, or if Buyer and its accountants determine in the course of due
diligence that a representation or warranty is materially untrue or incorrect,
or if any of the Seagate, CTX, or Viewsonic agreements shall have not been
assigned with the consent of the supplier or other party where such consent is
required for such assignment;
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<PAGE>
(f) by each of Almo and the Sellers if none of them are in
material breach of their obligations under this Agreement and there has been a
material breach of any representation, warranty, covenant or agreement contained
in this Agreement on the part of Buyer; provided, however, that if such breach
is curable by Buyer within ten days through the exercise of its reasonable best
efforts, then for so long as Buyer continues to exercise such reasonable best
efforts each of Almo and the Sellers may not terminate this Agreement under this
Section 11.1(f) unless such breach is not cured within ten days (but no cure
period shall be required for a breach which by its nature cannot be cured);
11.2 Effect of Termination. In the event of termination of this
Agreement as provided in Section 11.1(b), this Agreement shall forthwith become
void and, there shall be no liability or obligation on the part of Buyer or each
of Almo and the Sellers, or their respective officers, directors or
stockholders, provided that (i) the provisions of Section 7.4 (Confidentiality)
and this Article XI shall remain in full force and effect and survive any
termination of this Agreement, and (ii) the termination of this Agreement shall
not relieve any party from any liability for any willful and knowing breach of
this Agreement.
11.3 Amendment. Except as is otherwise required by applicable law,
prior to the Closing, this Agreement may be amended by the parties hereto at any
time by execution of an instrument in writing signed by the Buyer and each of
Almo and the Sellers. Except as is otherwise required by applicable law, after
the Closing, this Agreement may be amended by the parties hereto at any time by
execution of an instrument in writing signed by Buyer and each of Almo and the
Sellers.
11.4 Extension; Waiver. At any time prior to the Closing, Buyer and
each of Almo and the Sellers may, to the extent legally allowed, (i) extend the
time for the performance of any of the obligations of the other party hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto, and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
ARTICLE XII
GENERAL PROVISIONS
12.1 Notices. Any request, communication, or other notice required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if sent by facsimile or delivered by recognized overnight or international
courier service or personal delivery (as the situation may require) at the
respective address or facsimile number of the party receiving notice as set
forth below. Any party hereto may by notice so given change its address or
facsimile number for future notice hereunder. All such notices and other
communications hereunder shall be deemed given (i) upon confirmation of
delivery, if sent by facsimile and (ii) upon delivery, if sent by recognized
overnight or international courier service or personal delivery.
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<PAGE>
(a) if to Buyer, to:
Bell Microproducts Inc.
1941 Ringwood Avenue
San Jose, California 95131-1721
Attn: Bruce M. Jaffe, Chief Financial Officer
Telephone No.: (408) 451-1685
with a copy (which shall not constitute notice) to:
Wilson Sonsini Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, California 94304-1050
Attn: Larry W. Sonsini, Esq. And Thomas C. Klein, Esq.
Telephone No.: (650) 493-9300
Facsimile No.: (650) 493-6811
(b) if to each of Almo and the Sellers, to:
Almo Corporation
9815 Roosevelt Boulevard
Philadelphia, PA 19114
Attn: Eugene Chaiken, President
Telephone No.: (215) 698-4012
Facsimile No.: (215) 698-4080
with a copy (which shall not constitute notice) to:
George J. Hartnett, Esq.
White and Williams L.L.P.
1800 One Liberty Place
Philadelphia, PA 19103-7395
Telephone No.: (215) 864-7065
Facsimile No.: (215) 864-7123
12.2 Expenses. All fees and expenses incurred in connection with this
Agreement including, without limitation, all legal, accounting, financial
advisory, consulting and all other fees and expenses of third parties incurred
by a party hereto, in connection with the negotiation and effectuation of the
terms and conditions of this Agreement and the transactions contemplated hereby,
shall be the obligation of the respective party incurring such fees and
expenses.
12.3 Interpretation. The words "include," "includes" and "including"
when used herein shall be deemed in each case to be followed by the words
"without limitation." The word "agreement" when used herein shall be deemed in
each case to mean any contract, commitment or other agreement, whether oral or
written, that is legally binding. The table of contents and headings contained
in this Agreement are for reference purposes only and shall not affect in any
way the
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<PAGE>
meaning or interpretation of this Agreement. The possessive form "Sellers"
refers to the Sellers individually and together, and the plural Sellers refers
to the Sellers individually and together. "To Almo's and the Sellers' knowledge"
refers to the actual collective knowledge of Eugene Chaiken, Warren Chaiken,
Matthew Elkes, Edward Gibbons, and Arthur Ross, and "to the best of Almo's and
Sellers' knowledge" refers to the collective knowledge of such individuals after
reasonable investigation.
12.4 Counterparts. This Agreement may be executed in counterparts, both
of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each of the parties and
delivered to the other party.
12.5 Entire Agreement; Assignment. Except for that certain
Confidentiality Letter between Legg Mason Wood Walker Incorporated and Buyer
dated April 24, 1998, this Agreement, the schedules and exhibits hereto, and the
documents and instruments and other agreements among the parties hereto
referenced herein: (a) constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof; (b) are not intended to confer upon any other person any
rights or remedies hereunder; and (c) shall not be assigned by operation of law
or otherwise except as otherwise specifically provided.
12.6 Severability. In the event that any provision of this Agreement or
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
12.7 Other Remedies. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative with
and not exclusive of any other remedy conferred hereby, or by law or equity upon
such party, and the exercise by a party of any one remedy will not preclude the
exercise of any other remedy.
12.8 Governing Law; Arbitration. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of California,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof. Except for the equitable remedies provided by
Section 10.1(g) hereof, any claim or dispute arising out of or related to this
Agreement, or the interpretation, making, performance, breach or termination
thereof, shall be finally and exclusively settled by binding arbitration in San
Jose, California under the AAA Commercial Arbitration Rules and Supplemental
Procedures for Large Complex Disputes by a single arbitrator mutually agreeable
to the Buyer and each of Almo and the Sellers. In the event that within 45 days
after the submission of any dispute to arbitration, the Buyer and each of Almo
and the Sellers cannot mutually agree on a single arbitrator, the Buyer and each
of Almo and the Sellers shall each select
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<PAGE>
one arbitrator and the AAA shall select a third arbitrator. The arbitrator(s)
shall have the authority to grant any equitable and legal remedies that would be
available in any judicial proceeding instituted under California substantive law
to resolve a dispute. Judgment on the award rendered by the arbitrators may be
entered in any court having jurisdiction thereof. The arbitrator(s) may award to
the prevailing party, if any, as determined by the arbitrator(s), all of its
costs and fees, including, without limitation, AAA administrative fees,
arbitrator fees, attorneys' fees, expert fees, witness fees, travel expenses and
out-of-pocket expenses (including, without limitation, such expenses as copying,
telephone, facsimile, postage and courier fees). The parties agree that, any
provision of applicable law notwithstanding, they will not request, and the
arbitrator(s) shall have no authority to award, punitive or exemplary damages
against any party.
12.9 Rules of Construction. The parties hereto agree that they have
been represented by counsel during the negotiation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
12.10 No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any person or entity other than the parties hereto and
their respective successors and permitted assigns.
12.11 Specific Performance. The parties hereto agree that irreparable
damage will occur in the event that any of the provisions of this Agreement are
not performed in accordance with their specific terms or are otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity.
[Remainder of Page Intentionally Left Blank]
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<PAGE>
IN WITNESS WHEREOF, the Buyer and each of Almo and the Sellers have
caused this Asset Purchase Agreement to be signed as of the date first written
above.
"BUYER" BELL MICROPRODUCTS INC.
a California corporation
By: /s/ W. Donald Bell
--------------------------
Name: W. Donald Bell
--------------------------
Title: President and CEO
--------------------------
"ALMO" ALMO CORPORATION
a Pennsylvania corporation
By: /s/ Eugene B. Chaiken
--------------------------
Name: Eugene B. Chaiken
--------------------------
Title: CEO
--------------------------
"SELLERS" ALMO DISTRIBUTING PENNSYLVANIA,
INC.
A Pennsylvania corporation
By: /s/ Eugene B. Chaiken
--------------------------
Name: Eugene B. Chaiken
--------------------------
Title: CEO
--------------------------
ALMO DISTRIBUTING MARYLAND, INC.
A Maryland corporation
By: /s/ Eugene B. Chaiken
--------------------------
Name: Eugene B. Chaiken
--------------------------
Title: CEO
--------------------------
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<PAGE>
ALMO DISTRIBUTING MINNESOTA, INC.
A Minnesota corporation
By: /s/ Eugene B. Chaiken
--------------------------
Name: Eugene B. Chaiken
--------------------------
Title: CEO
--------------------------
ALMO DISTRIBUTING WISCONSIN, INC.
an Illinois corporation
By: /s/ Eugene B. Chaiken
--------------------------
Name: Eugene B. Chaiken
--------------------------
Title: CEO
--------------------------
ALMO DISTRIBUTING, INC.
A Pennsylvania corporation
By: /s/ Eugene B. Chaiken
--------------------------
Name: Eugene B. Chaiken
--------------------------
Title: CEO
--------------------------
[Signature Page to Asset Purchase Agreement]
-47-
EXECUTION VERSION
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THIRD AMENDED AND RESTATED
CREDIT AGREEMENT
among
BELL MICROPRODUCTS INC.
and
THE BANKS NAMED HEREIN
and
CALIFORNIA BANK & TRUST,
as Administrative Agent for the Banks
November 12, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
CREDIT AGREEMENT
Table Of Contents
Page
SECTION I. INTERPRETATION..........................................1
1.01. Definitions.................................................1
1.02. GAAP........................................................2
1.03. Headings....................................................2
1.04. Plural Terms................................................2
1.05. Time........................................................2
1.06. Governing Law...............................................2
1.07. Construction................................................2
1.08. Calculation of Interest and Fees............................2
1.09. Other Interpretive Provisions...............................2
SECTION II. CREDIT FACILITIES.......................................3
2.01. Revolving Loan Facility.....................................3
2.02. Amount Limitations, Commitment Reductions, Etc..............6
2.03. Fees........................................................7
2.04. Prepayments.................................................8
2.05. Other Payment Terms.........................................9
2.06. Notes and Interest Account.................................10
2.07. Loan Funding...............................................10
2.08. Pro Rata Treatment.........................................11
2.09. Change of Circumstances....................................12
2.10. Taxes on Payments..........................................14
2.11. Funding Loss Indemnification...............................16
2.12. Security...................................................16
SECTION III. CONDITIONS PRECEDENT...................................17
3.01. Conditions Precedent to Initial Revolving Loans............17
3.02. Conditions Precedent to Each Credit Event..................17
3.03. Covenant to Deliver........................................18
SECTION IV. REPRESENTATIONS AND WARRANTIES.........................18
4.01. Borrower's Representations and Warranties..................18
4.02. Reaffirmation..............................................23
SECTION V. COVENANTS..............................................23
5.01. Affirmative Covenants......................................23
5.02. Negative Covenants.........................................26
-i-
<PAGE>
Table Of Contents
(continued)
Page
SECTION VI. DEFAULT................................................29
6.01. Events of Default..........................................29
6.02. Remedies...................................................30
SECTION VII. THE ADMINISTRATIVE AGENT AND RELATIONS AMONG BANKS.....31
7.01. Appointment, Powers and Immunities.........................31
7.02. Reliance by Administrative Agent...........................31
7.03. Defaults...................................................32
7.04. Indemnification............................................32
7.05. Non-Reliance...............................................32
7.06. Resignation or Removal of Administrative Agent.............33
7.07. Administrative Agent in its Individual Capacity............33
7.08. Co-Agents..................................................33
SECTION VIII. MISCELLANEOUS..........................................33
8.01. Notices....................................................33
8.02. Expenses...................................................34
8.03. Indemnification............................................35
8.04. Waivers; Amendments........................................35
8.05. Successors and Assigns.....................................36
8.06. Setoff; Security Interest..................................39
8.07. No Third Party Rights......................................39
8.08. Partial Invalidity.........................................40
8.09. Arbitration................................................40
8.10. Jury Trial.................................................41
8.11. Counterparts...............................................41
SECTION IX. EFFECTIVE DATE OF RESTATED CREDIT AGREEMENT............42
9.01. Effective Date.............................................42
9.02. Loans Under Existing Credit Agreement......................42
9.03. Effect.....................................................42
-ii-
<PAGE>
Table Of Contents
(continued)
Page
SCHEDULES
- ---------
I Banks (Preamble) I-1
II Pricing Grid II-1
1.01 Definitions (1.01) 1.01-1
3.01 Effective Date Conditions Precedent 3.01-1
4.01(g) Material Litigation 4.01(g)-1
4.01(q) Subsidiaries 4.01(q)-1
5.01(j) Documents to be Delivered by Borrower on or Prior 5.01(j)-1
to the Tenex Data Acquisition Effective Date
EXHIBITS
- --------
A Notice of Revolving Loan Borrowing (2.01(b)) A-1
B Notice of Revolving Loan Conversion (2.01(d)) B-1
C Notice of Revolving Loan Interest Period Selection (2.01(e)) C-1
D Revolving Loan Note (2.07(a)) D-1
E Third Amended and Restated Security Agreement (2.13(a), 9.03) E-1
F Third Amended and Restated Pledge Agreement (2.13(a), 9.03) F-1
G Bell Canada Guaranty (2.13(a)) G-1
H Bell Canadian Pledge Agreement (2.13(b)) H-1
I Bell-Tenex Guaranty (2.13(b)) I-1*
J Bell-Tenex Security Agreement (2.13(b)) J-1
K Borrowing Base Certificate (5.01(a)) K-1
L Assignment Agreement (8.05(c)) L-1
-iii-
* Will be presented in forthcoming Amendment No. 1 to Form 8-K.
<PAGE>
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
THIS THIRD AMENDED AND RESTATED CREDIT AGREEMENT (this "Restated Credit
Agreement"), dated as of November 12, 1998, is entered into by and among:
(1) BELL MICROPRODUCTS INC., a California corporation
("Borrower");
(2) Each of the financial institutions from time to time
listed in Schedule I hereto, as amended from time to time (such
financial institutions to be referred to herein collectively as the
"Banks");
(3) CALIFORNIA BANK & TRUST (formerly known as Sumitomo Bank
of California), a California banking corporation ("CB&T"), as
administrative agent for the Banks (in such capacity, "Administrative
Agent"); and
(4) UNION BANK OF CALIFORNIA, N.A., a national banking
association, and COMERICA BANK-CALIFORNIA, a California banking
corporation, as co-agents for the Banks.
RECITALS
A. Borrower, Administrative Agent and the Banks are parties to a Second
Amended and Restated Credit Agreement dated as of May 23, 1995 (as amended to
the date hereof, the "Existing Credit Agreement"), pursuant to which the Banks
have provided to Borrower (i) a revolving line of credit facility in the
principal amount of $100,000,000 and (ii) a letter of credit sub-facility in the
amount of $10,000,000 (collectively, the "Existing Credit Facility").
B. Borrower has requested Administrative Agent and the Banks to amend
the Existing Credit Agreement so as to (i) increase the revolving line of credit
facility, (ii) eliminate the letter of credit sub-facility and (iii) make
certain other changes.
C. Administrative Agent and the Banks are willing so to amend the
Existing Credit Agreement upon the terms and subject to the conditions set forth
herein. For convenience of reference, the parties hereto wish to restate the
Existing Credit Agreement as so amended in its entirety.
AGREEMENT
NOW, THEREFORE, in consideration of the above Recitals and the mutual
covenants contained herein, the parties hereto hereby agree that the Existing
Credit Agreement shall be amended and restated as of the date hereof to read in
its entirety as follows:
SECTION I. INTERPRETATION.
1.01. Definitions. Unless otherwise indicated in this Restated Credit Agreement
or any other Credit Document, each term set forth in Schedule 1.01, when used in
this Restated Credit Agreement or any other Credit Document, shall have the
respective meaning given to that term
<PAGE>
in Schedule 1.01 or in the provision of this Restated Credit Agreement or other
Credit Document referenced in Schedule 1.01.
1.02. GAAP. Unless otherwise indicated in this Restated Credit
Agreement or any other Credit Document, all accounting terms used in this
Restated Credit Agreement or any other Credit Document shall be construed, and
all accounting and financial computations hereunder or thereunder shall be
computed, in accordance with GAAP. If GAAP changes during the term of this
Restated Credit Agreement such that any covenants contained herein would then be
calculated in a different manner or with different components, Borrower, the
Banks and Administrative Agent agree to negotiate in good faith to amend this
Restated Credit Agreement in such respects as are necessary to conform those
covenants as criteria for evaluating Borrower's financial condition to
substantially the same criteria as were effective prior to such change in GAAP;
provided, however, that, until Borrower, the Banks and Administrative Agent so
amend this Restated Credit Agreement, all such covenants shall be calculated in
accordance with GAAP as in effect immediately prior to such change.
1.03. Headings. Headings in this Restated Credit Agreement and each of
the other Credit Documents are for convenience of reference only and are not
part of the substance hereof or thereof.
1.04. Plural Terms. All terms defined in this Restated Credit Agreement
or any other Credit Document in the singular form shall have comparable meanings
when used in the plural form and vice versa.
1.05. Time. All references in this Restated Credit Agreement and each
of the other Credit Documents to a time of day shall mean San Francisco,
California time, unless otherwise indicated.
1.06. Governing Law. This Restated Credit Agreement and each of the
other Credit Documents shall be governed by and construed in accordance with the
laws of the State of California without reference to conflicts of law rules.
1.07. Construction. This Restated Credit Agreement is the result of
negotiations among, and has been reviewed by, Borrower, each Bank,
Administrative Agent and their respective counsel. Accordingly, this Restated
Credit Agreement shall be deemed to be the product of all parties hereto, and no
ambiguity shall be construed in favor of or against Borrower, any Bank or
Administrative Agent.
1.08. Calculation of Interest and Fees. All calculations of interest
and fees under this Restated Credit Agreement and the other Credit Documents for
any period (a) shall include the first day of such period and exclude the last
day of such period and (b) shall be calculated on the basis of a year of 360
days for actual days elapsed.
1.09. Other Interpretive Provisions. References in this Restated Credit
Agreement to "Recitals," "Sections," "Paragraphs," "Subparagraphs," "Exhibits"
and "Schedules" are to recitals, sections, paragraphs, subparagraphs, exhibits
and schedules herein and hereto unless otherwise indicated. References in this
Restated Credit Agreement and each of the other Credit Documents to any
document, instrument or agreement (a) shall include all exhibits, schedules
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and other attachments thereto, (b) shall include all documents, instruments or
agreements issued or executed in replacement thereof, and (c) shall mean such
document, instrument or agreement, or replacement or predecessor thereto, as
amended, modified and supplemented from time to time and in effect at any given
time. The words "hereof," "herein" and "hereunder" and words of similar import
when used in this Restated Credit Agreement or any other Credit Document shall
refer to this Restated Credit Agreement or such other Credit Document, as the
case may be, as a whole and not to any particular provision of this Restated
Credit Agreement or such other Credit Document, as the case may be. The words
"include" and "including" and words of similar import when used in this Restated
Credit Agreement or any other Credit Document shall not be construed to be
limiting or exclusive.
SECTION II. CREDIT FACILITIES.
2.01. Revolving Loan Facility.
(a) Revolving Loan Availability. Subject to the terms and
conditions of this Restated Credit Agreement (including the amount
limitations set forth in Paragraph 2.02 and the conditions set forth in
Section III), each Bank severally agrees to advance to Borrower from
time to time during the period beginning on the Effective Date and
ending on May 31, 2000 (the "Revolving Loan Maturity Date") such loans
as Borrower may request under this Paragraph 2.01 (individually, a
"Revolving Loan"); provided, however, that the (i) aggregate principal
amount of all Revolving Loans made by such Bank at any time outstanding
shall not exceed the amount set forth opposite the name of such Bank in
Schedule I under the column headed "Revolving Loan Commitment" (as
reduced from time to time pursuant to Paragraph 2.02, the "Revolving
Loan Commitment" of such Bank) and (ii) the aggregate principal amount
of all Revolving Loans made by all Banks at any time outstanding shall
not exceed the Total Revolving Loan Commitment at such time. All
Revolving Loans shall be made on a pro rata basis by the Banks in
accordance with their respective Proportionate Shares, with each
Revolving Loan Borrowing to be comprised of a Revolving Loan by each
Bank equal to such Bank's Proportionate Share of such Revolving Loan
Borrowing. Except as otherwise provided herein, Borrower may borrow,
repay and reborrow Revolving Loans until the Revolving Loan Maturity
Date.
(b) Notice of Revolving Loan Borrowing. Borrower shall request
each Revolving Loan Borrowing by delivering to Administrative Agent an
irrevocable written notice in the form of Exhibit A, appropriately
completed (a "Notice of Revolving Loan Borrowing"), which specifies,
among other things:
(i) The principal amount of the requested Revolving
Loan Borrowing;
(ii) Whether the requested Revolving Loan Borrowing
is to consist of (A) Revolving Loans which bear interest as
provided in clause (i) of Subparagraph 2.01(c) (individually,
a "Revolving Prime Rate Loan") or (B) Revolving Loans which
bear interest as provided in clause (ii) of Subparagraph
2.01(c) (individually, a "Revolving LIBOR Loan");
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(iii) If the requested Revolving Loan Borrowing is to
consist of Revolving LIBOR Loans, the initial Interest Period
selected by Borrower for such Revolving Loans in accordance
with Subparagraph 2.01(e); and
(iv) The date of the requested Revolving Loan
Borrowing, which shall be a Business Day.
Borrower shall give each Notice of Revolving Loan Borrowing to
Administrative Agent at least three (3) Business Days before the date
of the requested Revolving Loan Borrowing in the case of a Revolving
Loan Borrowing consisting of Revolving LIBOR Loans and at least one (1)
Business Day before the date of the requested Revolving Loan Borrowing
in the case of a Revolving Loan Borrowing consisting of Revolving Prime
Rate Loans. Each Notice of Revolving Loan Borrowing shall be delivered
by first-class mail or facsimile to Administrative Agent at the office
or facsimile number and during the hours specified in Paragraph 8.01;
provided, however, that Borrower shall promptly deliver to
Administrative Agent the original of any Notice of Revolving Loan
Borrowing initially delivered by facsimile. Each Revolving Loan
Borrowing consisting of Revolving Prime Rate Loans shall be in the
minimum amount of $100,000 or an integral multiple of $100,000 in
excess thereof. Each Revolving Loan Borrowing consisting of Revolving
LIBOR Loans shall be in the minimum amount of $500,000 or an integral
multiple of $100,000 in excess thereof. Administrative Agent shall
notify each Bank no later than 5:00 p.m. California time on the date of
receipt of each such Notice of Revolving Loan Borrowing of the contents
thereof and of the amount and Type of each Revolving Loan to be made by
such Bank as part of the requested Revolving Loan Borrowing.
(c) Revolving Loan Interest Rates. Borrower shall pay interest
on the unpaid principal amount of each Revolving Loan from the date of
such Revolving Loan until the maturity thereof, at one of the following
rates per annum:
(i) During such periods as such Revolving Loan is a
Revolving Prime Rate Loan, at a rate per annum equal to the
Prime Rate, such rate to change from time to time as the Prime
Rate shall change; and
(ii) During such periods as such Revolving Loan is a
Revolving LIBOR Loan, at a rate per annum equal at all times
during each Interest Period for such Revolving Loan to the
LIBO Rate for such Interest Period plus the Applicable Margin
therefor, such rate to change from time to time during such
Interest Period as the Applicable Margin shall change;
provided, however, that each of the rates set forth in clauses (i) and
(ii) of this Subparagraph 2.01(c) shall be increased by one percent
(1.00%) per annum on the date an Event of Default occurs and shall
continue at such increased rate unless and until such Event of Default
is waived in accordance with this Restated Credit Agreement. All
Revolving Loans in each Revolving Loan Borrowing shall, at any given
time prior to maturity, bear interest at one, and only one, of the
above rates.
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(d) Conversion of Revolving Loans. Borrower may convert all
Revolving Loans in any Revolving Loan Borrowing consisting of Revolving
Prime Rate Loans into Revolving LIBOR Loans and all Revolving Loans in
any Revolving Loan Borrowing consisting of Revolving LIBOR Loans into
Revolving Prime Rate Loans; provided, however, that any conversion of
Revolving LIBOR Loans into Revolving Prime Rate Loans shall be made on,
and only on, the last day of an Interest Period for such Revolving
LIBOR Loans. Borrower shall request such a conversion by an irrevocable
written notice to Administrative Agent in the form of Exhibit B,
appropriately completed (a "Notice of Revolving Loan Conversion"),
which specifies, among other things:
(i) The Revolving Loan Borrowing which is to be
converted;
(ii) The Type of Loans into which such Revolving
Loans are to be converted;
(iii) If such Revolving Loans are to be converted
into Revolving LIBOR Loans, the initial Interest Period
selected by Borrower for such Revolving Loans in accordance
with Subparagraph 2.01(e); and
(iv) The date of the requested conversion, which
shall be a Business Day.
Borrower shall give each Notice of Revolving Loan Conversion to
Administrative Agent at least three (3) Business Days before the date
of the requested conversion in the case of a conversion into Revolving
LIBOR Loans and at least one (1) Business Day before the date of the
requested conversion in the case of a conversion into Revolving Prime
Rate Loans. Each Notice of Revolving Loan Conversion shall be delivered
by first-class mail or facsimile to Administrative Agent at the office
or to the facsimile number and during the hours specified in Paragraph
8.01; provided, however, that Borrower shall promptly deliver to
Administrative Agent the original of any Notice of Revolving Loan
Conversion initially delivered by facsimile. Administrative Agent shall
notify each Bank no later than 5:00 p.m. California time on the date of
receipt of each such Notice of Revolving Loan Conversion of the
contents thereof and of the amount and Type of each Revolving Loan to
be converted by such Bank as part of the requested Revolving Loan
Conversion.
(e) Revolving LIBOR Loan Interest Periods.
(i) The initial and each subsequent Interest Period
selected by Borrower for a Revolving LIBOR Loan shall be one
(1), two (2), three (3) or six (6) months; provided, however,
that (A) any Interest Period which would otherwise end on a
day which is not a Business Day shall be extended to the next
succeeding Business Day unless such next Business Day falls in
another calendar month, in which case such Interest Period
shall end on the immediately preceding Business Day; (B) any
Interest Period which begins on the last Business Day of a
calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such
Interest Period) shall end on the last
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Business Day of a calendar month; and (C) no Interest Period
shall end after the Revolving Loan Maturity Date.
(ii) Borrower shall notify Administrative Agent by an
irrevocable written notice in the form of Exhibit C,
appropriately completed (a "Notice of Revolving Loan Interest
Period Selection"), at least three (3) Business Days prior to
the last day of each Interest Period for Revolving LIBOR Loans
of the Interest Period selected by Borrower for the next
succeeding Interest Period for such Revolving LIBOR Loans.
Each Notice of Revolving Loan Interest Period Selection shall
be given by first-class mail or facsimile to the office or the
facsimile number and during the hours specified in Paragraph
8.01; provided, however, that Borrower shall promptly deliver
to Administrative Agent the original of any Notice of
Revolving Loan Interest Period Selection initially delivered
by facsimile. If Borrower fails to notify Administrative Agent
of the next Interest Period for Revolving LIBOR Loans in
accordance with this Subparagraph 2.01(e), such Revolving
Loans shall automatically convert to Revolving Prime Rate
Loans on the last day of the current Interest Period therefor.
Administrative Agent shall notify each Bank no later than 5:00
p.m. California time on the date of receipt of each such
Notice of Revolving Loan Interest Period Selection of the
contents thereof and of the Interest Period selected for each
Revolving Loan.
(f) Scheduled Revolving Loan Payments. Borrower shall repay to
each Bank on the Revolving Loan Maturity Date the unpaid principal
amount of each Revolving Loan made by such Bank. Borrower shall pay
accrued interest on the unpaid principal amount of each Revolving Loan
(A) in the case of a Revolving Prime Rate Loan, on the last Business
Day in each month, (B) in the case of a Revolving LIBOR Loan, on the
last day of each Interest Period therefor (and, if any such Interest
Period is longer than three (3) months, every three (3) months); and
(C) in the case of all Revolving Loans, upon prepayment (to the extent
thereof) and at maturity.
(g) Purpose. Borrower shall use the proceeds of the Revolving
Loans made by the Banks on or after the Effective Date (i) to refinance
the loans outstanding under the Existing Credit Agreement on the
Effective Date and (ii) for Borrower's working capital and general
corporate needs (including acquisitions approved by the Banks from time
to time in their sole discretion).
2.02. Amount Limitations, Commitment Reductions, Etc.
(a) Borrowing Base.
(i) The aggregate principal amount of all Revolving
Loans outstanding at any time shall not exceed an amount (the
"Borrowing Base") equal to the lesser of:
(A) The Total Revolving Loan Commitment at
such time; and
(B) The sum at such time of:
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(1) eighty percent (80%) of Eligible
Accounts; and
(2) The lesser of (y) thirty five
percent (35%) of Eligible Inventory and (z)
$40,000,000.
(ii) For the purposes of this Restated Credit
Agreement, the Borrowing Base on any date of determination
shall be presumed to be the Borrowing Base determined pursuant
to the most recent of (A) the latest Borrowing Base
Certificate delivered by Borrower prior to such date of
determination and (B) the latest audit conducted by or on
behalf of Administrative Agent or any Bank prior to such date
of determination.
(b) Reduction or Cancellation of Commitments. Borrower may,
upon three (3) Business Days written notice to Administrative Agent,
permanently reduce the Total Revolving Loan Commitment by the amount of
One Million Dollars ($1,000,000) or an integral multiple of One Million
Dollars ($1,000,000) in excess thereof or cancel the Total Revolving
Loan Commitment in its entirety; provided, however, that:
(i) Borrower may not reduce the Total Revolving Loan
Commitment prior to the Revolving Loan Maturity Date, if,
after giving effect to such reduction, the aggregate principal
amount of all Revolving Loans then outstanding would exceed
the Total Revolving Loan Commitment; and
(ii) Borrower may not cancel the Total Revolving Loan
Commitment prior to the Revolving Loan Maturity Date, if,
after giving effect to such cancellation, any Revolving Loans
would then remain outstanding.
(c) Effect of Commitment Reductions. From the effective date
of any reduction of the Total Revolving Loan Commitment, the Revolving
Loan Commitment Fees payable pursuant to Subparagraph 2.03(b) shall be
computed on the basis of the Total Revolving Loan Commitment as so
reduced. Once reduced or cancelled, the Total Revolving Loan Commitment
may not be increased or reinstated without the prior written consent of
all Banks. Any reduction of the Total Revolving Loan Commitment
pursuant to this Paragraph 2.02 shall be applied to reduce the Banks'
respective Revolving Loan Commitments pro rata according to their
respective Proportionate Shares at the time of such reduction, and any
reduction of any Bank's Revolving Loan Commitment by any amount prior
to the Commitment Adjustment Date shall reduce such Bank's Revolving
Loan Commitment after the Commitment Adjustment Date by the same
amount.
2.03. Fees
(a) Agent's Fee. Borrower shall pay to Administrative Agent
and the co-agents, for their own account, agent's fees in the amounts
and at the times set forth in the Agent's Fee Letter.
(b) Revolving Loan Commitment Fees. Borrower shall pay to
Administrative Agent, for the benefit of the Banks as provided in
clause (iii) of Subparagraph 2.08(a), nonrefundable commitment fees
(the "Revolving Loan Commitment Fees") of seventeen
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and one-half basis points (0.175%) per annum on the daily average Total
Unused Revolving Loan Commitment for the period beginning on the
Effective Date and ending on the Revolving Loan Maturity Date. Borrower
shall pay the Revolving Loan Commitment Fees in arrears on the last
Business Day in each February, May, August and November (commencing
November 30, 1998) and on the Revolving Loan Maturity Date (or if the
Total Revolving Loan Commitment is cancelled on a date prior to the
Revolving Loan Maturity Date, on such prior date).
(c) Fee on Increased Commitment. Borrower shall pay to
Administrative Agent, for the benefit of the Banks as provided in
clause (iii) of Subparagraph 2.08(a), a one time nonrefundable fee on
the increased commitment of $75,000 (the "Fee on Increased
Commitment"). Borrower shall pay the Fee on Increased Commitment on the
Effective Date.
2.04. Prepayments
(a) Terms of all Prepayments. Upon the prepayment of any
Revolving Loan (whether such prepayment is an optional prepayment under
Subparagraph 2.04(b), a mandatory prepayment required by Subparagraph
2.04(c) or a mandatory prepayment required by any other provision of
this Restated Credit Agreement or the other Credit Documents,
including, without limitation, a prepayment upon acceleration),
Borrower shall pay to the Bank which made such Revolving Loan (i) all
accrued interest to the date of such prepayment on the amount prepaid,
and (ii) if such prepayment is the prepayment of a Revolving LIBOR Loan
on a day other than the last day of an Interest Period for such
Revolving LIBOR Loan, all amounts payable to such Bank pursuant to
Paragraph 2.11.
(b) Optional Prepayments. At its option, Borrower may, upon
one (1) Business Day notice to Administrative Agent, prepay the
Revolving Loans in any Revolving Loan Borrowing in part, in an
aggregate principal amount of $100,000 or more, or in whole.
(c) Mandatory Prepayments. If, at any time, the aggregate
principal amount of all Revolving Loans then outstanding exceeds the
Borrowing Base at such time, Borrower shall immediately prepay
Revolving Loans in an aggregate principal amount equal to such excess.
(d) Application of Principal Prepayments. If no Event of
Default has occurred and is continuing, all prepayments which are
applied to reduce the principal amount of Revolving Loans shall be
applied to Revolving Loans as directed by Borrower. If Borrower fails
to direct the application of any such principal prepayments or if an
Event of Default has occurred and is continuing, such principal
prepayments shall be applied first to Revolving Loan Borrowings
consisting of Revolving Prime Rate Loans and then to Revolving Loan
Borrowings consisting of Revolving LIBOR in chronological order of
maturity.
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2.05. Other Payment Terms
(a) Place and Manner. Borrower shall make all payments due to
each Bank hereunder by payments to Administrative Agent, for the
account of such Bank and such Bank's Applicable Lending Office, at
Administrative Agent's office, located at the address specified in
Subparagraph 8.01(a), in lawful money of the United States and in same
day or immediately available funds not later than 10:00 a.m. on the
date due. Amounts received after 10:00 a.m. shall be deemed to have
been received on the next Business Day. Administrative Agent shall
promptly disburse to each Bank no later than 1:00 p.m. California time
on the date of such receipt each such payment received by
Administrative Agent for such Bank. Borrower hereby requests, directs
and authorizes Administrative Agent to effect the payment of all
regularly scheduled principal, interest and fee payments payable by
Borrower under this Restated Credit Agreement or any other Credit
Document and all fees and expenses payable by Borrower pursuant to
Paragraph 8.02 by debiting any deposit account maintained by Borrower
with CB&T for the amounts thereof when due.
(b) Date. Whenever any payment due hereunder shall fall due on
a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall be included
in the computation of interest or fees, as the case may be.
(c) Late Payments. If any amounts required to be paid by
Borrower under this Restated Credit Agreement or the other Credit
Documents (including, without limitation, principal or interest payable
on any Revolving Loan, any fees or other amounts) remain unpaid after
such amounts are due, Borrower shall pay interest on the aggregate,
outstanding balance of such amounts from the date due until those
amounts are paid in full at a per annum rate equal to the Prime Rate
plus two percent (2.00%), such rate to change from time to time as the
Prime Rate shall change.
(d) Application of Payments. All payments hereunder shall be
applied first to unpaid fees, costs and expenses then due and payable
under this Restated Credit Agreement or the other Credit Documents,
second to accrued interest then due and payable under this Restated
Credit Agreement or the other Credit Documents and finally to reduce
the principal amount of outstanding Revolving Loans.
(e) Failure to Pay Administrative Agent. Unless Administrative
Agent shall have received notice from Borrower at least one (1)
Business Day prior to the date on which any payment is due to the Banks
hereunder that Borrower will not make such payment in full,
Administrative Agent may assume that Borrower has made such payment in
full to Administrative Agent on such date and Administrative Agent may,
in reliance upon such assumption, cause to be distributed to each Bank
on such due date an amount equal to the amount then due such Bank. If
and to the extent Borrower shall not have so made such payment in full
to Administrative Agent, such Bank shall repay to Administrative Agent
forthwith on demand such amount distributed to such Bank together with
interest thereon, for each day from the date such amount is distributed
to such Bank until the date such Bank repays such amount to
Administrative Agent, at the Federal Funds Rate. A
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certificate of Administrative Agent submitted to any Bank with respect
to any amounts owing by such Bank under this Subparagraph 2.05(e) shall
be conclusive absent manifest error.
2.06. Notes and Interest Account.
(a) Revolving Loan Notes. The obligation of Borrower to repay
the Revolving Loans made by each Bank and to pay interest thereon at
the rates provided herein shall be evidenced by a promissory note in
the form of Exhibit D (individually, a "Revolving Loan Note") which
note shall be (i) payable to the order of such Bank, (ii) in the amount
of such Bank's Revolving Loan Commitment, (iii) dated the Effective
Date and (iv) otherwise appropriately completed. Borrower authorizes
each Bank to record on the schedule annexed to such Bank's Revolving
Loan Note the date and amount of each Revolving Loan made by such Bank
and of each payment or prepayment of principal thereon made by
Borrower, and agrees that all such notations shall constitute prima
facie evidence of the matters noted, provided that a failure to so
record shall not affect Borrower's obligations to repay each Revolving
Loan, interest thereon and all other amounts payable hereunder, under
such Revolving Loan Note or under any other Credit Document. Borrower
further authorizes each Bank to attach to and make a part of such
Bank's Revolving Loan Note continuations of the schedule attached
thereto as necessary.
(b) Interest Account. Borrower authorizes Administrative Agent
to record in an account or accounts maintained by Administrative Agent
on its books (the "Interest Account") (i) the interest rates applicable
to all Revolving Loans and the effective dates of all changes thereto,
(ii) the Interest Period for each Revolving LIBOR Loan, (iii) the date
and amount of each principal and interest payment on each Revolving
Loan and (iv) such other information as Administrative Agent may
determine is necessary for the computation of interest payable by
Borrower hereunder.
2.07. Loan Funding.
(a) Bank Funding and Disbursement to Borrower. Each Bank
shall, before 11:00 a.m. on the date of each Revolving Loan Borrowing,
make available to Administrative Agent at its office specified in
Paragraph 8.01, in same day or immediately available funds, such Bank's
Proportionate Share of such Revolving Loan Borrowing. After
Administrative Agent's receipt of such funds and upon fulfillment of
the applicable conditions set forth in Section III, Administrative
Agent will promptly disburse such funds in same day or immediately
available funds to Borrower. Unless otherwise directed by Borrower,
Administrative Agent shall disburse the proceeds of each Revolving Loan
Borrowing to Borrower by disbursement to the account or accounts
specified in the applicable Notice of Revolving Loan Borrowing.
(b) Bank Failure to Fund. Unless Administrative Agent shall
have received notice from a Bank prior to the date of any Revolving
Loan Borrowing that such Bank will not make available to Administrative
Agent such Bank's Proportionate Share of such Revolving Loan Borrowing,
Administrative Agent may assume that such Bank has made such portion
available to Administrative Agent on the date of such Revolving Loan
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Borrowing in accordance with Subparagraph 2.07(a), and Administrative
Agent may, in reliance upon such assumption, make available to Borrower
(or otherwise disburse) on such date a corresponding amount. If any
Bank does not make the amount of its Proportionate Share of any
Revolving Loan Borrowing available to Administrative Agent on or prior
to the date of such Revolving Loan Borrowing, such Bank shall pay to
Administrative Agent, on demand, interest which shall accrue on such
amount until made available to Administrative Agent at rates equal to
(i) the daily Federal Funds Rate during the period from the date of
such Revolving Loan Borrowing through the third Business Day thereafter
and (ii) the Prime Rate thereafter. A certificate of Administrative
Agent submitted to any Bank with respect to any amounts owing under
this Subparagraph 2.07(b) shall be conclusive absent manifest error. If
any Bank's Proportionate Share of any Revolving Loan Borrowing is not
in fact made available to Administrative Agent by such Bank within
three (3) Business Days after the date of such Revolving Loan
Borrowing, Borrower shall pay to Administrative Agent, on demand, an
amount equal to such Proportionate Share together with interest
thereon, for each day from the date such amount was made available to
Borrower until the date such amount is repaid to Administrative Agent,
at the interest rate applicable at the time to the Revolving Loans
comprising such Revolving Loan Borrowing.
(c) Banks' Obligations Several. The failure of any Bank to
make the Revolving Loan to be made by it as part of any Revolving Loan
Borrowing shall not relieve any other Bank of its obligation hereunder
to make its Revolving Loan on the date of such Revolving Loan
Borrowing, but no Bank shall be responsible for the failure of any
other Bank to make the Revolving Loan to be made by such other Bank on
the date of any Revolving Loan Borrowing.
2.08. Pro Rata Treatment.
(a) Borrowings, Commitment Reductions, Etc. Except as
otherwise provided herein:
(i) Each Revolving Loan Borrowing shall be made by
the Banks pro rata according to their respective Proportionate
Shares at the time of such Revolving Loan Borrowing;
(ii) Each reduction of the Total Revolving Loan
Commitment shall be applied to reduce the respective Revolving
Loan Commitments of the Banks as provided in Subparagraph
2.02(c);
(iii) Each payment of principal of and interest on
Revolving Loans in any Revolving Loan Borrowing shall be made
or shared among the Banks holding Revolving Loans in such
Revolving Loan Borrowing pro rata according to the respective
unpaid principal amounts of such Revolving Loans held by such
Banks;
(iv) Each payment of Revolving Loan Commitment Fees
and the Fee on Increased Commitment shall be shared among the
Banks pro rata according to
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their respective Proportionate Shares provided that in the
case of each Bank which becomes a Bank hereunder after the
date hereof, the Revolving Loan Commitment Fees shall be
shared with such Bank commencing on the date upon which such
Bank so became a Bank; and
(v) All other payments under this Restated Credit
Agreement and the other Credit Documents shall be for the
benefit of the Person or Persons specified.
(b) Sharing of Payments, Etc.
(i) If any Bank shall obtain any payment (whether
voluntary, involuntary, through the exercise of any right of
setoff, or otherwise) on account of Revolving Loans owed to it
in excess of its ratable share of payments on account of such
Revolving Loans obtained by all Banks entitled to such
payments, such Bank shall forthwith purchase an assignment
from the other Banks entitled to such excess payments in the
Revolving Loans as shall be necessary to cause such purchasing
Bank to share the excess payment ratably with each of them;
provided, however, that if all or any portion of such excess
payment is thereafter recovered from such purchasing Bank,
such purchase shall be rescinded and each other Bank shall
repay to the purchasing Bank the purchase price to the extent
of such recovery together with an amount equal to such other
Bank's ratable share (according to the proportion of (i) the
amount of such other Bank's required repayment to (ii) the
total amount so recovered from the purchasing Bank) of any
interest or other amount paid or payable by the purchasing
Bank in respect of the total amount so recovered.
(ii) Borrower agrees that any Bank so purchasing an
assignment from another Bank pursuant to this Subparagraph
2.08(b) may, to the fullest extent permitted by law, exercise
all its rights of payment (including the right of setoff) with
respect to such assignment as fully as if such Bank were the
direct creditor of Borrower in the amount of such assignment.
2.09. Change of Circumstances.
(a) Inability to Determine Rates. If, on or before the first
day of any Interest Period for any Revolving LIBOR Loan, (i) any Bank
shall advise Administrative Agent that the LIBO Rate for such Interest
Period cannot be adequately and reasonably determined due to the
unavailability of funds in or other circumstances affecting the London
interbank market or (ii) any Bank shall advise Administrative Agent
that the rates of interest for such Revolving LIBOR Loans do not
adequately and fairly reflect the cost to such Bank of making or
maintaining such Revolving LIBOR Loans, Administrative Agent shall
immediately give notice of such condition to Borrower. After the giving
of any such notice and until Administrative Agent shall otherwise
notify Borrower that the circumstances giving rise to such condition no
longer exist, Borrower's right to request the making of or conversion
to, and the Banks' obligations to make or convert to Revolving LIBOR
Loans shall be suspended. Any Revolving LIBOR Loans outstanding at the
commencement of any such suspension shall be converted at the end of
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the then current Interest Period for such Revolving LIBOR Loans into
Revolving Prime Rate Loans unless such suspension has then ended.
(b) Illegality. If, after the date of this Restated Credit
Agreement the adoption of any Governmental Rule, any change in any
Governmental Rule or the application or requirements thereof (whether
such change occurs in accordance with the terms of such Governmental
Rule as enacted, as a result of amendment or otherwise), any change in
the interpretation or administration of any Governmental Rule by any
Governmental Authority, or compliance by any Bank with any request or
directive (whether or not having the force of law)of any Governmental
Authority (a "Change of Law") shall make it unlawful or impossible for
any Bank to make or maintain any Revolving LIBOR Loan, such Bank shall
immediately notify Agent and Borrower of such Change of Law. Upon
receipt of such notice, (i) Borrower's right to request the making of
or conversion to, and the Banks' obligations to make or convert to,
Revolving LIBOR Loans shall be terminated, and (ii) Borrower shall, at
the request of any Bank, either (A) pursuant to Subparagraph 2.01(d)
convert any such then outstanding Revolving LIBOR Loans into Revolving
Prime Rate Loans at the end of the current Interest Period for such
Revolving LIBOR Loans, or (B) immediately repay or convert any such
Revolving LIBOR Loans if any Bank shall notify Borrower that the such
Bank may not lawfully continue to fund and maintain such Revolving
LIBOR Loans. Any conversion or prepayment of Revolving LIBOR Loans made
pursuant to the preceding sentence prior to the last day of an Interest
Period for such Revolving LIBOR Loans shall be deemed a prepayment
thereof for purposes of Paragraph 2.11.
(c) Increased Costs. If, after the date of this Restated
Credit Agreement, any Change of Law:
(i) Shall subject any Bank to any tax, duty or other
charge with respect to any Revolving LIBOR Loan, or shall
change the basis of taxation of payments by Borrower to any
Bank on such a Revolving LIBOR Loan or in respect to such a
Revolving LIBOR Loan under this Restated Credit Agreement
(except for changes in the rate of taxation on the overall net
income of any Bank); or
(ii) Shall impose, modify or hold applicable any
reserve, special deposit or similar requirement against assets
held by, deposits or other liabilities in or for the account
of, advances or loans by, or any other acquisition of funds by
any Bank for any Revolving LIBOR Loan; or
(iii) Shall impose on any Bank any other condition
related to any Revolving LIBOR Loan or its Revolving Loan
Commitment;
And the effect of any of the foregoing is to increase the cost to such
Bank of making, renewing, or maintaining any such Revolving LIBOR Loan
or its Revolving Loan Commitment or to reduce any amount receivable by
such Bank hereunder (and, in the case of a Revolving LIBOR Loan, such
increased cost or reduced amount is not fully reflected in the LIBO
Rate applicable to such Revolving LIBOR Loan); then Borrower
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shall from time to time, upon demand by such Bank, pay to such Bank
additional amounts sufficient to reimburse such Bank for such increased
costs or to compensate such Bank for such reduced amounts. A Bank shall
demand such additional amounts by delivering to Borrower a written
certificate which sets forth in reasonable detail the allocation of the
increased costs or reduced amounts to such Bank's Revolving LIBOR Loans
or Revolving Loan Commitment, as the case may be, and the calculations
from which such costs or amounts were derived, which certificate shall
constitute prima facie evidence of such increased costs or reduced
amounts.
(d) Capital Requirements. If, after the date of this Restated
Credit Agreement, any Bank determines that (i) any Change of Law
affects the amount of capital required or expected to be maintained by
such Bank or any Person controlling such Bank (a "Capital Adequacy
Requirement"), (ii) the amount of capital maintained by such Bank or
such Person which is attributable to or based upon the Revolving Loans,
the Revolving Loan Commitments or this Restated Credit Agreement must
be increased as a result of such Capital Adequacy Requirement (taking
into account such Bank's or such Person's policies with respect to
capital adequacy) and (iii) in the case of increased capital
attributable to or based upon the Revolving Loans, the increased costs
to such Bank or such Person of such increased capital is not fully
reflected in the interest rates applicable to the Revolving Loans
hereunder and such Bank or such Person's capital as a consequence of
its Revolving Loan Commitments or the Revolving Loans made by such Bank
or such Person is reduced to a level below that which such Bank or such
Person, as the case may be, could have achieved but for the occurrence
of any such circumstance; then Borrower shall pay to such Bank or such
Person, upon demand of such Bank, such amounts as such Bank or such
Person shall determine are necessary to compensate such Bank or such
Person for the increased costs to such Bank or such Person of such
increased capital and for such reduction in rate of return. A Bank
shall demand such amounts by delivering to Borrower a written
certificate which sets forth in reasonable detail the allocation of the
increased costs to such Bank's Revolving Loans, Revolving Loan
Commitment or this Restated Credit Agreement, as the case may be, and
the calculations from which such costs were derived, which certificate
shall constitute prima facie evidence of such increased costs.
2.10. Taxes on Payments.
(a) Payments Free of Taxes. All payments made by Borrower
under this Restated Credit Agreement and the other Credit Documents
shall be made free and clear of, and without deduction or withholding
for or on account of, any present or future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or
assessed by any Governmental Authority (except net income taxes and
franchise taxes in lieu of net income taxes imposed on Administrative
Agent or a Bank as a result of a present or former connection between
the jurisdiction of the Governmental Authority imposing such tax and
Administrative Agent or such Bank, excluding a connection arising
solely from Administrative Agent or such Bank having executed,
delivered or performed its obligations or received a payment under, or
enforced, this Restated Credit Agreement or the other Credit Documents)
(all such non-excluded taxes, levies, imposts, duties,
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charges, fees, deductions and withholdings being hereinafter called
"Taxes"). If any Taxes are required to be withheld from any amounts
payable to Administrative Agent or any Bank hereunder or under the
other Credit Documents, the amounts so payable to Administrative Agent
or such Bank shall be increased to the extent necessary to yield to
Administrative Agent or such Bank (after payment of all Taxes) interest
or any such other amounts payable hereunder at the rates or in the
amounts specified in this Restated Credit Agreement and the other
Credit Documents. Whenever any Taxes are payable by Borrower, as
promptly as possible thereafter, Borrower shall send to Administrative
Agent for its own account or for the account of such Bank, as the case
may be, a certified copy of an original official receipt received by
Borrower showing payment thereof. If Borrower fails to pay any Taxes
when due to the appropriate taxing authority or fails to remit to
Administrative Agent the required receipts or other required
documentary evidence, Borrower shall indemnify Administrative Agent and
the Banks for any incremental taxes, interest or penalties that may
become payable by Administrative Agent or any Bank as a result of any
such failure. The agreements in this Subparagraph 2.10(a) shall survive
the termination of this Restated Credit Agreement.
(b) Withholding Exemption Certificates. On or prior to the
Effective Date (or the Assignment Effective Date in the case of any
Bank which becomes a Bank hereunder after the Effective Date), each
Bank which is not incorporated under the laws of the United States of
America or a state thereof shall deliver to Borrower and Administrative
Agent two duly completed copies of United States Internal Revenue
Service Form 1001 or 4224 (or successor applicable form), as the case
may be, certifying in each case that such Bank is entitled to receive
payments under this Restated Credit Agreement without deduction or
withholding of any United States federal income taxes. Each Bank which
delivers to Borrower and Administrative Agent a Form 1001 or 4224
pursuant to the immediately preceding sentence further undertakes to
deliver to Borrower and Administrative Agent two further copies of the
said letter and Form 1001 or 4224 (or successor applicable forms), or
other manner of certification or procedure, as the case may be, on or
before the date that any such letter or form expires or becomes
obsolete or after the occurrence of any event requiring a change in the
most recent letter and form previously delivered by it to Borrower and
Administrative Agent, and such extensions or renewals thereof as may
reasonably be requested by Borrower or Administrative Agent, certifying
in the case of a Form 1001 or 4224 that such Bank is entitled to
receive payments under this Restated Credit Agreement without deduction
or withholding of any United States federal income taxes, unless in any
such cases an event (including without limitation any change in treaty,
law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms
inapplicable or which would prevent a Bank from duly completing and
delivering any such letter or form with respect to it and such Bank
advises Borrower and Administrative Agent that it is not capable of
receiving payments without any deduction or withholding of United
States federal income tax. Borrower shall not be required to pay any
additional amounts to Administrative Agent or any Bank hereunder to the
extent that the obligation to pay such additional amounts would not
have arisen but for a failure by Administrative Agent or such Bank to
comply with the provisions of this Subparagraph 2.10(b) or the last
sentence of Subparagraph 8.05(c).
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2.11. Funding Loss Indemnification. If Borrower shall (a) repay or
prepay any Revolving LIBOR Loan on any day other than the last day of an
Interest Period therefor (whether an optional prepayment, a mandatory
prepayment, a payment upon acceleration or otherwise), (b) fail to borrow any
Revolving LIBOR Loan for which a Notice of Revolving Loan Borrowing has been
delivered to Administrative Agent (whether as a result of the failure to satisfy
any applicable conditions or otherwise) or (c) fail to convert any Revolving
Prime Rate Loans into Revolving LIBOR Loans in accordance with a Notice of
Revolving Loan Conversion delivered to Administrative Agent (whether as a result
of the failure to satisfy any applicable conditions or otherwise), Borrower
shall, upon demand by any Bank, reimburse such Bank and hold such Bank harmless
for all costs and losses actually incurred by such Bank as a result of such
repayment, prepayment or failure. Borrower understands that such costs and
losses may include, without limitation, losses incurred by a Bank as a result of
funding and other contracts entered into by such Bank to fund or in connection
with the funding of a Revolving LIBOR Loan. A Bank shall demand such
reimbursement by delivering to Borrower a written certificate which sets forth
in reasonable detail the allocation of the costs and losses to such Bank's
Revolving Loans and the calculations from which such costs and losses were
derived, which certificate shall constitute prima facie evidence of such costs
and losses.
2.12. Security
(a) Security Agreements; Guaranties; Etc. on Effective Date On
the Effective Date, the Obligations shall be secured by the following:
(i) A Third Amended and Restated Security Agreement
in the form of Exhibit E, duly executed by Borrower (the
"Borrower Security Agreement");
(ii) A Third Amended and Restated Pledge Agreement in
the form of Exhibit F, duly executed by Borrower (the
"Borrower Pledge Agreement"); and
(iii) A Guaranty in the form of Exhibit G, duly
executed by Bell Canada (the "Bell Canada Guaranty").
(b) Additional Security Agreements; Guaranties; Etc. on the
Tenex Data Acquisition Effective Date On and after the Tenex Data
Acquisition Effective Date, the Obligations shall also be secured by
the following:
(i) A Pledge Agreement substantially in the form of
Exhibit H, duly executed by Bell Canada (the "Bell Canada
Pledge Agreement").
(ii) A Guaranty substantially in the form of Exhibit
I, duly executed by Bell-Tenex (the "Bell-Tenex Guaranty");
(iii) A Security Agreement substantially in the form
of Exhibit J, duly executed by Bell-Tenex (the "Bell-Tenex
Security Agreement"); and
(iv) One or more additional security agreements,
pledge agreements, guaranties and other instruments,
agreements, certificates, opinions and documents
(collectively, the "Bell-Tenex Canadian Security Documents")
as
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Administrative Agent may request to grant, perfect, maintain,
protect and evidence security interests in favor of
Administrative Agent, for the benefit of the Banks, in any or
all present and future personal property of Bell-Tenex located
in Canada prior to the Liens (other than Permitted Liens) or
other interests of any Person.
(c) Further Assurances. Borrower shall deliver to
Administrative Agent, and shall cause each of Bell Canada and
Bell-Tenex to deliver, such additional security agreements, pledge
agreements, guaranties and other instruments, agreements, certificates,
opinions and documents (including Uniform Commercial Code financing
statements and fixture filings and landlord waivers) as Administrative
Agent may request to:
(i) Grant, perfect, maintain, protect and evidence
security interests in favor of Administrative Agent, for the
benefit of the Banks, in any or all present and future
personal property of Borrower and its Subsidiaries prior to
the Liens or other interests of any Person; or
(ii) Otherwise establish, maintain, protect and
evidence the rights provided to Administrative Agent and the
Banks pursuant to the Security Documents.
Borrower shall fully cooperate with Administrative Agent and perform
all additional acts reasonably requested by Administrative Agent to
effect the purposes of this Paragraph 2.12.
SECTION III. CONDITIONS PRECEDENT.
3.01. Conditions Precedent to Initial Revolving Loans. The obligations
of the Banks to make the Revolving Loans in the initial Revolving Loan Borrowing
on or after the Effective Date are subject to receipt by Administrative Agent,
on or prior to the Effective Date, of (a) the Notice of Revolving Loan Borrowing
requesting such Revolving Loan Borrowing delivered in accordance with this
Restated Credit Agreement and (b) each item listed in Schedule 3.01, each in
form and substance satisfactory to Administrative Agent, and with sufficient
copies for, Administrative Agent and each Bank.
3.02. Conditions Precedent to Each Credit Event. The occurrence of each
Credit Event, including the initial Revolving Loan Borrowing on or after the
Effective Date, is subject to the further conditions that on the date such
Credit Event is to occur and after giving effect to such Credit Event, the
following shall be true and correct:
(a) The representations and warranties set forth in Paragraph
4.01 are true and correct in all material respects as if made on such
date;
(b) No Default or Event of Default has occurred and is
continuing or will result from such Credit Event;
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(c) Each of the Credit Documents required to be delivered to
Administrative Agent or any Bank on or prior to such date remains in
full force and effect (except as otherwise agreed by Administrative
Agent in writing); and
(d) In the case of Credit Events with respect to Revolving
Loan Borrowings, no material adverse change in the Eligible Accounts or
Eligible Inventory which comprises the Borrowing Base shall have
occurred since the later date of (i) the latest audit conducted by or
on behalf of Administrative Agent or any Bank, and (ii) the most recent
Borrowing Base Certificate.
The submission by Borrower to Administrative Agent of each Notice of Revolving
Loan Borrowing, each Notice of Revolving Loan Conversion and each Notice of
Revolving Loan Interest Period Selection shall be deemed to be a representation
and warranty by Borrower as of the date thereon as to the above.
3.03. Covenant to Deliver. Borrower agrees (not as a condition but as a
covenant) to deliver to Administrative Agent each item required to be delivered
to Administrative Agent as a condition to the occurrence of any Credit Event if
such Credit Event occurs. Borrower expressly agrees that the occurrence of any
such Credit Event prior to the receipt by Administrative Agent of any such item
shall not constitute a waiver by Administrative Agent or any Bank of Borrower's
obligation to deliver such item.
SECTION IV. REPRESENTATIONS AND WARRANTIES.
4.01. Borrower's Representations and Warranties. In order to induce
Administrative Agent and the Banks to enter into this Restated Credit Agreement,
Borrower hereby represents and warrants to Administrative Agent and the Banks as
follows:
(a) Due Incorporation, Qualification, etc. Each of Borrower
and its Subsidiaries (i) is a corporation duly organized, validly
existing and in good standing under the laws of its state of
incorporation; (ii) has the power and authority to own, lease and
operate its properties and carry on its business as now conducted; and
(iii) is duly qualified, licensed to do business and in good standing
as a foreign corporation in each jurisdiction where the failure to be
so qualified or licensed might have a Material Adverse Effect.
(b) Authority. The execution, delivery and performance by each
of Borrower and its Subsidiaries of each Credit Document executed, or
to be executed, by such Person and the consummation of the transactions
contemplated thereby (i) are within the power of such Person and (ii)
have been duly authorized by all necessary actions on the part of such
Person.
(c) Enforceability. Each Credit Document executed, or to be
executed, by each of Borrower and its Subsidiaries has been, or will
be, duly executed and delivered by such Person and constitutes, or will
constitute, a legal, valid and binding obligation of such Person,
enforceable against such Person in accordance with its terms, except as
limited by bankruptcy, insolvency or other laws of general application
relating to or affecting the enforcement of creditors' rights generally
and general principles of equity.
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(d) Non-Contravention. The execution and delivery by each of
Borrower and its Subsidiaries of the Credit Documents executed, or to
be executed, by such Person and the performance and consummation of the
transactions contemplated thereby do not (i) violate any Requirement of
Law applicable to such Person; (ii) violate any provision of, or result
in the breach or the acceleration of, or entitle any other Person to
accelerate (whether after the giving of notice or lapse of time or
both), any Contractual Obligation of such Person; or (iii) result in
the creation or imposition of any Lien upon any property, asset or
revenue of such Person (except such Liens as may be created in favor of
Bank pursuant to this Restated Credit Agreement or the other Credit
Documents).
(e) Approvals. No consent, approval, order or authorization
of, or registration, declaration or filing with, any Governmental
Authority or other Person (including, without limitation, the
shareholders of any Person) is required in connection with the
execution and delivery of the Credit Documents executed by Borrower or
its Subsidiaries and the performance and consummation of the
transactions contemplated thereby.
(f) No Violation or Default. Neither Borrower nor any of its
Subsidiaries is in violation of or in default with respect to (i) any
Requirement of Law applicable to such Person; (ii) any Contractual
Obligation of such Person (nor is there any waiver in effect which, if
not in effect, would result in such a violation or default), where, in
each case, such violation or default could have a Material Adverse
Effect. Without limiting the generality of the foregoing, neither
Borrower nor any of its Subsidiaries (A) has violated any Environmental
Laws, (B) has any liability under any Environmental Laws or (C) has
received notice or other communication of an investigation or is under
investigation by any Governmental Authority having authority to enforce
Environmental Laws, where such violation, liability or investigation
could have a Material Adverse Effect. No Event of Default or Default
has occurred and is continuing.
(g) Litigation. Except as set forth (with the dollar amounts
claimed) in Schedule 4.01(g), no actions (including, without
limitation, derivative actions), suits, proceedings or investigations
are pending or, to the knowledge of Borrower, threatened against
Borrower or any of its Subsidiaries at law or in equity in any court or
before any other Governmental Authority which (i) could (alone or in
the aggregate) have a Material Adverse Effect or (ii) seeks to enjoin,
either directly or indirectly, the execution, delivery or performance
by Borrower or any of its Subsidiaries of the Credit Documents or the
transactions contemplated thereby.
(h) Title. Borrower and its Subsidiaries own and have good and
marketable title in fee simple absolute to, or a valid leasehold
interest in, all their respective real properties and good title to
their other respective assets and properties as reflected in the most
recent Financial Statements delivered to Bank (except those assets and
properties disposed of in the ordinary course of business or otherwise
in compliance with this Restated Credit Agreement since the date of
such Financial Statements) and all respective assets and properties
acquired by Borrower and its Subsidiaries since such date (except those
disposed of in the ordinary course of business or otherwise in
compliance with this Restated Credit Agreement). Such assets and
properties are subject to no Lien, except for Permitted Liens.
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(i) Financial Statements. The Financial Statements of Borrower
and its Subsidiaries which have been delivered to Bank, (i) are in
accordance with the books and records of Borrower and its Subsidiaries,
which have been maintained in accordance with good business practice;
(ii) have been prepared in conformity with GAAP; and (iii) fairly
present the respective financial positions of Borrower and its
Subsidiaries at such date. Neither Borrower nor any of its Subsidiaries
has any contingent obligations, liability for taxes or other
outstanding obligations which are material in the aggregate, except as
disclosed in the audited Financial Statements of Borrower dated
December 31, 1997, furnished by Borrower to Bank prior to the date
hereof, or in the Financial Statements delivered to Bank pursuant to
Subparagraph 5.01(a)(ii) or (iii).
(j) Equity Securities. The authorized Equity Securities of
Borrower consist of (i) 20,000,000 shares of common stock of which
approximately 8,832,665 shares are duly issued and outstanding, (ii)
10,000,000 shares of preferred stock none of which shares are duly
issued and outstanding, (iii) no warrants to purchase shares of common
stock are issued and outstanding, (iv) the Almo Warrant, (v) options to
purchase 1,720,785 shares of common stock, pursuant to the 1998 Stock
Option Plan, of which approximately 1,395,113 options are outstanding
and (vi) 251,674 shares of common stock reserved pursuant to the
Company's Employee Stock Purchase Plan. All outstanding Equity
Securities (except for the option to purchase common stock) of Borrower
are duly authorized, validly issued, fully paid and non-assessable.
There are no other outstanding subscriptions, options, conversion
rights, warrants or other agreements or commitments of any nature
whatsoever (firm or conditional) obligating Borrower to issue, deliver
or sell, or cause to be issued, delivered or sold, any additional
Equity Securities of Borrower, or obligating Borrower to grant, extend
or enter into any such agreement or commitment. All Equity Securities
of Borrower have been offered and sold in compliance with all federal
and state securities laws and all other Requirements of Law.
(k) No Agreements to Sell Assets. Neither Borrower nor any of
its Subsidiaries has any legal obligation, absolute or contingent, to
any Person to sell all or a substantial portion of the assets of
Borrower or its Subsidiaries (other than sales in the ordinary course
of business), or to effect any merger, consolidation or other
reorganization of Borrower or any of its Subsidiaries or to enter into
any agreement with respect thereto.
(l) Employee Benefit Plans.
(i) Based upon the latest valuation of each "employee
pension benefit plan" (within the meaning of section 3(2) of
ERISA) that either Borrower or any ERISA Affiliate maintains
or contributes to, or has any obligation under (which
valuation occurred within twelve months of the date of this
representation), the aggregate benefit liabilities of such
plan within the meaning of Section 4001 of ERISA did not
exceed the aggregate value of the assets of such plan. Neither
Borrower nor any ERISA Affiliate has any liability with
respect to any post-retirement benefit under any Employee
Benefit Plan which is a welfare plan (as defined in section
3(1) of ERISA), other than liability for health plan
continuation coverage described in Part 6 of Title I(B) of
ERISA, which liability for health plan contribution coverage
will not have a Material Adverse Effect.
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(ii) Each Employee Benefit Plan complies, in both
form and operation, in all material respects, with its terms,
ERISA and the Code, and no condition exists or event has
occurred with respect to any such plan which would result in
the incurrence by either Borrower or any ERISA Affiliate of
any material liability, fine or penalty. Each Employee Benefit
Plan, related trust agreement, arrangement and commitment of
Borrower or any ERISA Affiliate is legally valid and binding
and in full force and effect. No Employee Benefit Plan is
being audited or investigated by any government agency or is
subject to any pending or threatened claim or suit. Neither
Borrower nor any ERISA Affiliate nor any fiduciary of any
Employee Benefit Plan has engaged in a prohibited transaction
under section 406 of ERISA or section 4975 of the Code.
(iii) Neither Borrower nor any ERISA Affiliate
contributes to any Multiemployer Plan. Neither Borrower nor
any ERISA Affiliate has incurred any material liability
(including secondary liability) to any Multiemployer Plan as a
result of a complete or partial withdrawal from such
Multiemployer Plan under Section 4201 of ERISA or as a result
of a sale of assets described in Section 4204 of ERISA.
Neither Borrower nor any ERISA Affiliate has been notified
that any Multiemployer Plan is in reorganization or insolvent
under and within the meaning of Section 4241 or Section 4245
of ERISA or that any Multiemployer Plan intends to terminate
or has been terminated under Section 4041A of ERISA.
(m) Other Regulations. Neither Borrower nor any of its
Subsidiaries is subject to regulation under the Investment Company Act
of 1940, the Public Utility Holding Company Act of 1935, the Federal
Power Act, any state public utilities code or to any federal or state
statute or regulatory scheme which would limit its ability execute,
deliver and perform any of the Credit Documents executed or to be
executed by it.
(n) Patent and Other Rights. Borrower and its Subsidiaries
own, and have the full right to license without the consent of any
other Person, all patents, licenses, trademarks, trade names, trade
secrets, service marks, copyrights and all rights with respect thereto,
which are required to conduct their businesses as now conducted.
(o) Governmental Charges and Other Indebtedness. Borrower and
its Subsidiaries have filed or caused to be filed all tax returns which
are required to be filed by them. Borrower and its Subsidiaries have
paid, or made provision for the payment of, all taxes and other
Governmental Charges which have or may have become due pursuant to said
returns or otherwise and all other Indebtedness, except such
Governmental Charges or Indebtedness, if any, which are being contested
in good faith and as to which adequate reserves (determined in
accordance with GAAP) have been provided or which could not have a
Material Adverse Effect if unpaid.
(p) Margin Stock. Borrower owns no Margin Stock which, in the
aggregate, would constitute a substantial part of the assets of
Borrower, and no proceeds of any Revolving Loan will be used to
purchase or carry, directly or indirectly, any Margin Stock or to
extend credit, directly or indirectly, to any Person for the purpose of
purchasing or carrying any Margin Stock.
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(q) Subsidiaries, etc. Set forth in Schedule 4.01(q) is a
complete list of all of Borrower's Subsidiaries, the jurisdiction of
incorporation of each, the classes of Equity Securities of each and the
number of shares and percentages of shares of each such class owned
directly or indirectly by Borrower. Except for such Subsidiaries,
Borrower has no Subsidiaries, is not a partner in any partnership or a
joint venturer in any joint venture.
(r) Solvency, Etc. Borrower and each of its Subsidiaries is
Solvent and, after the execution and delivery of the Credit Documents
and the consummation of the transactions contemplated thereby, will be
Solvent.
(s) Catastrophic Events. Neither Borrower nor any of its
Subsidiaries and none of their properties is or has been affected by
any fire, explosion, accident, strike, lockout or other labor dispute,
drought, storm, hail, earthquake, embargo, act of God or other casualty
that could have a Material Adverse Effect. There are no disputes
presently subject to grievance procedure, arbitration or litigation
under any of the collective bargaining agreements, employment contracts
or employee welfare or incentive plans to which Borrower or any of its
Subsidiaries is a party, and there are no strikes, lockouts, work
stoppages or slowdowns, or, to the best knowledge of Borrower,
jurisdictional disputes or organizing activity occurring or threatened
which could have a Material Adverse Effect.
(t) Burdensome Contractual Obligations, Etc. Neither Borrower
nor any of its Subsidiaries and none of their properties is subject to
any Contractual Obligation or Requirement of Law which could have a
Material Adverse Effect.
(u) No Material Adverse Effect. No event has occurred and no
condition exists which could reasonably be expected to have a Material
Adverse Effect.
(v) Year 2000 Compatibility. Borrower and its Subsidiaries
have reviewed the areas within their business and operations which
could be materially adversely affected by, and are taking all steps
Borrower and its Subsidiaries consider reasonably necessary to address
on a timely basis, the "Year 2000 Problem" (that is, the risk that
computer applications used by Borrower and its Subsidiaries may be
unable to recognize and perform properly date-sensitive functions
involving certain dates prior to and any date on or after December 31,
1999), and have made related appropriate inquiry of material suppliers
and vendors. Based upon such review and program, Borrower believes that
the "Year 2000 Problem" will not have a Material Adverse Effect.
(w) Accuracy of Information Furnished. None of the Credit
Documents and none of the other certificates, statements or information
furnished to Administrative Agent or any Bank by or on behalf of
Borrower or any of its Subsidiaries in connection with the Credit
Documents or the transactions contemplated thereby contains or will
contain any untrue statement of a material fact or omits or will omit
to state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
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4.02. Reaffirmation. Borrower shall be deemed to have reaffirmed, for
the benefit of the Banks and Administrative Agent, each representation and
warranty contained in Paragraph 4.01 on and as of the date of each Credit Event.
SECTION V. COVENANTS.
5.01. Affirmative Covenants. Until the termination of this Restated
Credit Agreement and the satisfaction in full by Borrower of all Obligations,
Borrower will comply, and will cause compliance, with the following affirmative
covenants, unless Required Banks shall otherwise consent in writing:
(a) Financial Statements, Reports, etc. Borrower shall furnish
to Administrative Agent (with a copy for each Bank to be forwarded by
Administrative Agent) the following, each in such form and such detail
as Administrative Agent shall reasonably request:
(i) Within fifty (50) days after the last day of each
fiscal quarter of Borrower, (A) a copy of the Financial
Statements of Borrower for such quarter and for the fiscal
year to date (including consolidated Financial Statements for
Borrower and its Subsidiaries), certified by the president or
chief financial officer of Borrower to present fairly the
financial condition, results of operations and other
information reflected therein and to have been prepared in
accordance with GAAP (subject to year-end audit adjustments)
and (B) the Form 10-Q Report filed by Borrower with the
Securities and Exchange Commission for such quarter;
(ii) Within ninety-five (95) days after the close of
each fiscal year of Borrower, (A) copies of the audited
Financial Statements of Borrower for such year (including
consolidated Financial Statements for Borrower and its
Subsidiaries), prepared by independent certified public
accountants acceptable to Bank, (B) copies of the unqualified
opinions (or qualified opinions reasonably acceptable to the
Banks) and management letters delivered by such accountants in
connection with all such Financial Statements, (C)
certificates of all such accountants to Bank stating that in
making the examination necessary for their opinion they have
obtained no knowledge of any Event of Default or Default which
has occurred and is continuing, or if, in the opinion of such
accountants, an Event of Default or Default has occurred and
is continuing, a statement as to the nature thereof (or other
certificates of such accountants reasonably acceptable to
Required Banks) and (D) the Form 10-K Report filed by Borrower
with the Securities and Exchange Commission for such year;
(iii) Contemporaneously with the quarterly and
year-end financial statements required by the foregoing
clauses (i) and (ii), a certificate of the president or chief
financial officer of Borrower in such detail as Administrative
Agent may reasonably request which (A) sets forth the
calculations conducted to verify that Borrower is in
compliance with each of the financial covenants set forth in
Paragraph 5.02(m) and stating that no Event of Default and no
Default has occurred and is continuing, or, if any such Event
of Default or Default has
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occurred and is continuing, a statement as to the nature
thereof and what action Borrower proposes to take with respect
thereto, (B) states that the Year 2000 remediation efforts of
Borrower and its Subsidiaries are proceeding as scheduled, and
(C) indicates whether an auditor, regulator or third party
consultant has issued a management letter or other
communication regarding any Material Adverse Effect the Year
2000 exposure, program or progress could have on Borrower and
its Subsidiaries taken as a whole;
(iv) As soon as available and in no event later than
fifteen (15) days after the last day of each fiscal month, (A)
agings of Borrower's and its Subsidiaries' accounts receivable
and accounts payable as of the last day of each month, (B) a
report of Borrower's and its Subsidiaries' inventory as of the
last day of such month, and (C) a certificate in the form of
Exhibit K (or other form acceptable to Administrative Agent),
appropriately completed (a "Borrowing Base Certificate"),
which sets forth the calculation of the Borrowing Base as of
such last day of such month, certified by the chief financial
officer or treasurer of Borrower;
(v) As soon as possible and in no event later than
five (5) Business Days after any officer of Borrower knows of
the occurrence or existence of (A) any Reportable Event under
any Employee Benefit Plan or Multiemployer Plan; (B) any
actual or threatened litigation, suits, claims or disputes
against Borrower or any of its Subsidiaries involving
potential monetary damages payable by Borrower or any of its
Subsidiaries of $1,000,000 or more (alone or in the
aggregate); (C) any other event or condition which could
reasonably be expected to have a Material Adverse Effect; or
(D) any Event of Default or Default; the statement of the
president or chief financial officer of Borrower setting forth
details of such event, condition, Event of Default or Default
and the action which Borrower proposes to take with respect
thereto;
(vi) As soon as possible and in no event later than
five (5) Business Days after they are sent, made available or
filed, copies of all registration statements and reports filed
by Borrower with the Securities and Exchange Commission
(including 8Q reports) and all reports, proxy statements and
financial statements sent or made available by Borrower to its
shareholders generally;
(vii) As soon as possible and in no event later than
five (5) Business Days after they are filed, copies of all IRS
Form 5500 reports for all Employee Benefit Plans required to
file such form; and
(viii) Such other instruments, agreements,
certificates, opinions, statements, documents and information
relating to the operations or condition (financial or
otherwise) of Borrower or any of its Subsidiaries, and
compliance by Borrower and its Subsidiaries with the terms of
this Restated Credit Agreement and the other Credit Documents
as Administrative Agent may from time to time reasonably
request.
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(b) Books and Records. Borrower and its Subsidiaries shall at
all times keep proper books of record and account in which full, true
and correct entries will be made of their transactions in accordance
with GAAP.
(c) Inspections. Borrower and its Subsidiaries shall permit
any Person designated by Administrative Agent in its sole discretion
(including without limitation any Bank that so requests, which request
shall not be unreasonably denied), upon reasonable notice and during
normal business hours, to visit and inspect any of the properties and
offices of Borrower and its Subsidiaries, to conduct audits of any or
all of the Collateral at Borrower's expense, to examine the books of
account of Borrower and its Subsidiaries and to discuss the affairs,
finances and accounts of Borrower and its Subsidiaries with, and to be
advised as to the same by, their officers, auditors and accountants,
all at such times and intervals as Administrative Agent may reasonably
request, including, without limitation, an annual audit of the accounts
and inventory of Borrower and its Subsidiaries, the fees and expenses
of which shall be payable by Borrower pursuant to Subparagraph 8.02(b).
(d) Insurance. Each of Borrower and its Subsidiaries shall (i)
insure its inventory against such risks, in such amounts and with such
insurers satisfactory to the Banks; (ii) carry and maintain additional
insurance of the types and in the amounts customarily carried from time
to time during the term of this Restated Credit Agreement by others
engaged in substantially the same business as such Person and operating
in the same geographic area as such Person, including fire, public
liability, property damage and worker's compensation, such insurance to
be carried with companies and in amounts satisfactory to the Banks;
(iii) name Administrative Agent as additional insured or loss payee, as
appropriate, on all such insurance; and (iv) deliver to Administrative
Agent from time to time, as Administrative Agent may request, schedules
setting forth all insurance then in effect and policy endorsements for
such insurance naming Administrative Agent as additional insured or
loss payee.
(e) Governmental Charges and Other Indebtedness. Borrower and
its Subsidiaries shall promptly pay and discharge before delinquent (i)
all taxes and other Governmental Charges prior to the date upon which
penalties accrue thereon, except such Governmental Charges as may in
good faith be contested or disputed by appropriate proceedings,
provided that in each such case appropriate reserves are maintained in
accordance with GAAP, (ii) all Indebtedness which, if unpaid, could
become a Lien upon the property of Borrower or its Subsidiaries and
(iii) all other Indebtedness which, if unpaid, could have a Material
Adverse Effect, except such Indebtedness as may in good faith be
contested or disputed by appropriate proceedings, or for which
arrangements for deferred payment have been made, provided that in each
such case appropriate reserves are maintained in accordance with GAAP.
(f) Use of Proceeds. Borrower shall use the proceeds of the
Revolving Loans only for the purposes set forth in Subparagraph
2.01(g). Borrower shall not use any part of the proceeds of any
Revolving Loan, directly or indirectly, for the purpose of purchasing
or carrying any Margin Stock or for the purpose of purchasing or
carrying or
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trading in any securities under such circumstances as to involve
Borrower or Bank in a violation of Regulations T, U or X issued by the
Federal Reserve Board.
(g) General Business Operations. Each of Borrower and its
Subsidiaries shall (i) preserve and maintain its corporate existence
and all of its rights, privileges and franchises reasonably necessary
to the conduct of its business, (ii) conduct its business activities in
compliance with all Requirements of Law and Contractual Obligations
applicable to such Person, the violation of which could have a Material
Adverse Effect, (iii) keep all property useful and necessary in its
business in good working order and condition, ordinary wear and tear
excepted, and (iv) not change its chief executive office and principal
place of business from San Jose, California without ninety (90) days
prior written notice to Administrative Agent.
(h) Landlord Waivers and Consents. Borrower shall use its best
efforts to obtain such landlord waivers and consents, in form and
substance satisfactory to Administrative Agent, as Administrative Agent
may from time to time request pursuant to which each such landlord
shall acknowledge Administrative Agent's and the Banks' senior security
interest in all of Borrower's and its Subsidiaries' inventory stored at
such locations, disclaim any interest in such inventory and agree to
provide Administrative Agent on behalf of the Banks access to remove
such inventory.
(i) Year 2000 Compatibility. Borrower and its Subsidiaries
shall take all acts reasonably necessary to ensure that all software,
hardware, firmware, equipment, goods and systems utilized by or
material to their business, operations or financial condition will
properly perform date sensitive functions before, during and after the
year 2000. At the request of Administrative Agent, Borrower shall
provide to Administrative Agent such certifications or other evidence
of compliance with this Subparagraph 5.01(i) as Administrative Agent
may from time to time require.
(j) Tenex-Data Acquisition. On or prior to the Tenex Data
Acquisition Effective Date, Borrower shall obtain and deliver to
Administrative Agent each item listed in Schedule 5.01(j), each in form
and substance reasonably satisfactory to Administrative Agent, and with
sufficient copies for, Administrative Agent and each Bank.
5.02. Negative Covenants. Until the termination of this Restated Credit
Agreement and the satisfaction in full by Borrower of all Obligations, Borrower
will comply, and will cause compliance, with the following negative covenants,
unless Required Banks or Banks, as the case may be, shall otherwise consent in
writing:
(a) Indebtedness. Neither Borrower nor any of its Subsidiaries
shall create, incur, assume or permit to exist any Indebtedness except
for Permitted Indebtedness.
(b) Liens. Neither Borrower nor any of its Subsidiaries shall
create, incur, assume or permit to exist any Lien on or with respect to
any of its assets or property of any character, whether now owned or
hereafter acquired, except for Permitted Liens.
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(c) Asset Dispositions. Neither Borrower nor any of its
Subsidiaries shall sell, lease, transfer or otherwise dispose of any of
its assets or property, whether now owned or hereafter acquired, except
in the ordinary course of its business.
(d) Mergers, Acquisitions, Etc. Neither Borrower nor any of
its Subsidiaries shall consolidate with or merge into any other Person
or permit any other Person to merge into it, or acquire all or
substantially all of the assets of any other Person, except that any
wholly-owned Subsidiary of Borrower may merge into Borrower or any
other wholly-owned Subsidiary of Borrower.
(e) Investments. Neither Borrower nor any of its Subsidiaries
shall make any Investment except for Permitted Investments.
(f) Dividends, Redemptions, Etc. Borrower shall not (i) pay
any dividends or make any distributions on its Equity Securities; (ii)
purchase, redeem, retire, defease or otherwise acquire for value any of
its Equity Securities; (iii) return any capital to any holder of its
Equity Securities as such; (iv) make any distribution of assets, Equity
Securities, obligations or securities to any holder of its Equity
Securities as such; or (v) set apart any sum for any such purpose;
except that Borrower may pay Permitted Dividends.
(g) Capital Expenditures. Borrower and its Subsidiaries shall
not pay or incur Capital Expenditures which exceed in aggregate in any
fiscal year $5,000,000.
(h) Change in Business. Neither Borrower nor any of its
Subsidiaries shall engage, either directly or indirectly through
Affiliates, in any business substantially different from and not
incidental to its present business.
(i) Indebtedness Payments. Neither Borrower nor any of its
Subsidiaries shall (i) make any payment on the Subordinated
Indebtedness; (ii) prepay, redeem, purchase, defease or otherwise
satisfy in any manner prior to the scheduled repayment thereof any
other Indebtedness for borrowed money (other than the Obligations) or
lease obligations; (iii) amend, modify or otherwise change the
subordination provisions of any Subordinated Indebtedness; or (iv)
amend, modify or otherwise change the terms of any Subordinated
Indebtedness or any other Indebtedness for borrowed money (other than
the Obligations) or lease obligations so as to accelerate the scheduled
repayment thereof.
(j) ERISA. Neither Borrower nor any ERISA Affiliate shall (i)
adopt or institute any Employee Benefit Plan that is an employee
pension benefit plan within the meaning of Section 3(2) of ERISA, (ii)
take any action which will result in the partial or complete
withdrawal, within the meanings of sections 4203 and 4205 of ERISA,
from a Multiemployer Plan, (iii) engage or permit any Person to engage
in any transaction prohibited by section 406 of ERISA or section 4975
of the Code involving any Employee Benefit Plan or Multiemployer Plan
which would subject either Borrower or any ERISA Affiliate to any tax,
penalty or other liability including a liability to indemnify, (iv)
incur or allow to exist any accumulated funding deficiency (within the
meaning of section 412 of the Code or section 302 of ERISA), (v) fail
to make full payment when due of all
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amounts due as contributions to any Employee Benefit Plan or
Multiemployer Plan, (vi) fail to comply with the requirements of
section 4980B of the Code or Part 6 of Title I(B) of ERISA, or (vii)
adopt any amendment to any Employee Benefit Plan which would require
the posting of security pursuant to section 401(a)(29) of the Code,
where singly or cumulatively, the above would have a Material Adverse
Effect.
(k) Transactions With Affiliates. Neither Borrower nor any of
its Subsidiaries shall enter into any Contractual Obligation with any
Affiliate or engage in any other transaction with any Affiliate except
that Borrower and its Subsidiaries may (i) sell assets to each other
for fair value and (ii) engage in other transactions with each other or
with Affiliates upon terms at least as favorable to Borrower and its
Subsidiaries as arms-length transactions with unaffiliated Persons.
(l) Accounting Changes. Neither Borrower nor any of its
Subsidiaries shall change (i) its fiscal year (currently January 1
through December 31) or (ii) its accounting practices except as
required by GAAP.
(m) Financial Covenants. Borrower shall not permit:
(i) Its Quick Ratio to be less than 0.50 to 1.00 at
any time;
(ii) Its Working Capital to be less than $60,000,000
at any time;
(iii) Its Tangible Net Worth to be less than the sum
on any date of determination of (1) $70,000,000 plus (2) fifty
percent (50%) of the sum of Borrower's Net Income After Tax
for each quarter (excluding any quarter in which such amount
was negative) beginning with the quarter ending June 30, 1998
plus (3) one hundred percent (100%) of the Net Proceeds
derived from any issuance by Borrower of Equity Securities
minus (4) the net book value assigned to the Almo Warrants in
accordance with GAAP;
(iv) Its Leverage Ratio to be greater than 3.00 to
1.00 at any time;
(v) Commencing on the earlier to occur of (A) March
31, 2000 or (B) the last day of the fiscal quarter during
which a Capital Event occurs, its Senior Leverage Ratio to be
greater than 2.50 to 1.00 at any time;
(vi) Its Interest Coverage Ratio (A) for the three
quarter period beginning on April 1, 1998 and ending on
December 31, 1998 to be less than 2.00 to 1.00; and (B) for
any consecutive four-quarter period thereafter to be less than
2:00 to 1:00; or
(vii) Its Net Operating Income or Net Income After
Tax to be (1) a loss in excess of $350,000 for any quarter or
(2) a loss of any amount for any consecutive two-quarter
period.
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SECTION VI. DEFAULT.
6.01. Events of Default. The occurrence or existence of any one or more
of the following shall constitute an "Event of Default" hereunder:
(a) Borrower shall fail to pay when due any principal,
interest or other payment required under the terms of this Restated
Credit Agreement or any of the other Credit Documents; or
(b) Borrower or any of its Subsidiaries shall fail to observe
or perform any covenant, obligation, condition or agreement set forth
in clause (v)(D) of Subparagraph 5.01(a), Subparagraph 5.01(c) (but
only to the extent Borrower denies such right to conduct inspections to
Administrative Agent acting on behalf of the Banks), Subparagraph
5.01(d) or Paragraph 5.02; or
(c) Borrower or any of its Subsidiaries shall fail to observe
or perform any other covenant, obligation, condition or agreement
contained in this Restated Credit Agreement or the other Credit
Documents and such failure shall continue for ten (10) days; or
(d) Any representation, warranty, certificate, or other
statement (financial or otherwise) made or furnished by or on behalf of
Borrower or any of its Subsidiaries to Administrative Agent or any Bank
in or in connection with this Restated Credit Agreement or any of the
other Credit Documents, or as an inducement to Administrative Agent or
any Bank to enter into this Restated Credit Agreement, shall be false,
incorrect, incomplete or misleading in any material respect when made
or furnished; or
(e) Borrower or any of its Subsidiaries shall fail to make any
payment when due under the terms of any bond, debenture, note or other
evidence of Indebtedness to be paid by such Person (excluding this
Restated Credit Agreement and the other Credit Documents but including
any other evidence of Indebtedness of Borrower or any of its
Subsidiaries to any Bank) and such failure shall continue beyond any
period of grace provided with respect thereto, or shall default in the
observance or performance of any other agreement, term or condition
contained in any such bond, debenture, note or other evidence of
Indebtedness, and the effect of such failure or default is to cause, or
permit the holder or holders thereof to cause Indebtedness in an
aggregate amount of $200,000 or more to become due prior to its stated
date of maturity; or
(f) Borrower or any of its Subsidiaries shall (i) apply for or
consent to the appointment of a receiver, trustee, liquidator or
custodian of itself or of all or a substantial part of its property,
(ii) be unable, or admit in writing its inability, to pay its debts
generally as they mature, (iii) make a general assignment for the
benefit of its or any of its creditors, (iv) be dissolved or liquidated
in full or in part, (v) become insolvent (as such term may be defined
or interpreted under any applicable statute), (vi) commence a voluntary
case or other proceeding seeking liquidation, reorganization or other
relief with respect to itself or its debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or consent
to any such relief or to the appointment of or taking possession of its
property by any official in an involuntary case or other proceeding
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commenced against it, or (vi) take any action for the purpose of
affecting any of the foregoing; or
(g) Proceedings for the appointment of a receiver, trustee,
liquidator or custodian of Borrower or any of its Subsidiaries or of
all or a substantial part of the property thereof, or an involuntary
case or other proceedings seeking liquidation, reorganization or other
relief with respect to Borrower or any of its Subsidiaries or the debts
thereof under any bankruptcy, insolvency or other similar law now or
hereafter in effect shall be commenced and an order for relief entered
or such proceeding shall not be dismissed or discharged within sixty
(60) days of commencement; or
(h) A final judgment or order for the payment of money in
excess of $200,000 (exclusive of amounts covered by insurance issued by
an insurer not an Affiliate of Borrower) shall be rendered against
Borrower or any of its Subsidiaries and the same shall remain
undischarged and unpaid for a period of thirty (30) days during which
execution shall not be effectively stayed, or any judgment, writ,
assessment, warrant of attachment, or execution or similar process
shall be issued or levied against a substantial part of the property of
Borrower or any of its Subsidiaries and such judgment, writ, or similar
process shall not be released, stayed, vacated or otherwise dismissed
within thirty (30) days after issue or levy; or
(i) Any Credit Document or any material term thereof shall
cease to be, or be asserted by Borrower or any of its Subsidiaries not
to be, a legal, valid and binding obligation of Borrower or its
Subsidiaries enforceable in accordance with its terms; or
(j) Any Reportable Event occurs which constitutes grounds for
the termination of any Employee Benefit Plan by the PBGC or for the
appointment of a trustee to administer any Employee Benefit Plan, or
any Employee Benefit Plan shall be terminated within the meaning of
Title IV of ERISA or a trustee shall be appointed to administer any
Employee Benefit Plan; or
(k) One or more conditions exist or events have occurred which
might reasonably indicate, or reasonably result in, a Material Adverse
Effect.
6.02. Remedies. Upon the occurrence or existence of any Event of
Default (other than an Event of Default referred to in Subparagraph 6.01(f) or
6.01(g)) and at any time thereafter during the continuance of such Event of
Default, Agent may, with the consent of the Required Banks, or shall, upon
instructions from the Required Banks, by written notice to Borrower, (a)
terminate the Revolving Loan Commitments and the obligations of the Banks to
make Revolving Loans, and/or (b) declare all outstanding Obligations payable by
Borrower hereunder to be immediately due and payable without presentment,
demand, protest or any other notice of any kind, all of which are hereby
expressly waived, anything contained herein or in the Notes to the contrary
notwithstanding. Upon the occurrence or existence of any Event of Default
described in Subparagraph 6.01(f) or 6.01(g), immediately and without notice,
(1) the Revolving Loan Commitments and the obligations of the Banks and Issuing
Bank to make Revolving Loans shall automatically terminate and (2) all
outstanding Obligations payable by Borrower hereunder shall automatically become
immediately due and payable, without presentment, demand, protest or
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any other notice of any kind, all of which are hereby expressly waived, anything
contained herein or in the Notes to the contrary notwithstanding. In addition to
the foregoing remedies, upon the occurrence or existence of any Event of
Default, Agent may exercise any right, power or remedy permitted to it by law,
either by suit in equity or by action at law, or both. Immediately after taking
any action under this Paragraph 6.02, Agent shall notify each Bank of such
action.
SECTION VII. THE ADMINISTRATIVE AGENT AND RELATIONS AMONG BANKS.
7.01. Appointment, Powers and Immunities. Each Bank hereby appoints and
authorizes Administrative Agent to act as its agent hereunder and under the
other Credit Documents with such powers as are expressly delegated to
Administrative Agent by the terms of this Restated Credit Agreement and the
other Credit Documents, together with such other powers as are reasonably
incidental thereto. Administrative Agent shall not have any duties or
responsibilities except those expressly set forth in this Restated Credit
Agreement or in any other Credit Document, be a trustee for any Bank or have any
fiduciary duty to any Bank. Notwithstanding anything to the contrary contained
herein Administrative Agent shall not be required to take any action which is
contrary to this Restated Credit Agreement or any other Credit Document or
applicable law. Neither Administrative Agent nor any Bank shall be responsible
to any other Bank for any recitals, statements, representations or warranties
made by Borrower or any Subsidiary contained in this Restated Credit Agreement
or in any other Credit Document, for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Restated Credit Agreement, or
any other Credit Document or for any failure by Borrower or any Subsidiary to
perform their respective obligations hereunder or thereunder. Administrative
Agent may employ agents and attorneys-in-fact and shall not be responsible to
any Bank for the negligence or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. Neither Administrative
Agent nor any of its directors, officers, employees or agents shall be
responsible to any Bank for any action taken or omitted to be taken by it or
them hereunder or under any other Credit Document or in connection herewith or
therewith, except for its or their own gross negligence or willful misconduct.
Except as otherwise provided under this Restated Credit Agreement,
Administrative Agent shall take such action with respect to the Credit Documents
as shall be directed by the Required Banks.
7.02. Reliance by Administrative Agent. Administrative Agent shall be
entitled to rely upon any certificate, notice or other document (including any
cable, telegram, facsimile or telex) reasonably believed by it in good faith to
be genuine and correct and to have been signed or sent by or on behalf of the
proper Person or Persons, and upon advice and statements of legal counsel,
independent accountants and other experts selected by Administrative Agent with
reasonable care. As to any other matters not expressly provided for by this
Restated Credit Agreement, Administrative Agent shall not be required to take
any action or exercise any discretion, but shall be required to act or to
refrain from acting upon instructions of the Required Banks and shall in all
cases be fully protected by the Banks in acting, or in refraining from acting,
hereunder or under any other Credit Document in accordance with the instructions
of the Required Banks, and such instructions of the Required Banks and any
action taken or failure to act pursuant thereto shall be binding on all of the
Banks.
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7.03. Defaults. Administrative Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default unless
Administrative Agent has received a notice from a Bank or Borrower, referring to
this Restated Credit Agreement, describing such Default or Event of Default and
stating that such notice is a "Notice of Default". If Administrative Agent
receives such a notice of the occurrence of a Default or Event of Default,
Administrative Agent shall give prompt notice thereof to the Banks.
Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Banks or all of
the Banks if unanimity is required; provided, however, that until Administrative
Agent shall have received such directions, Administrative Agent may (but shall
not be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable in the
best interest of the Banks.
7.04. Indemnification. Without limiting the Obligations of Borrower
hereunder, each Bank agrees to indemnify Administrative Agent, ratably in
accordance with their Proportionate Shares, for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may at any time
be imposed on, incurred by or asserted against Administrative Agent in any way
relating to or arising out of this Restated Credit Agreement or any documents
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or the enforcement of any of the terms hereof or
thereof or of any such other documents; provided, however, that no Bank shall be
liable for any of the foregoing to the extent they arise from Administrative
Agent's gross negligence or willful misconduct. Administrative Agent shall be
fully justified in refusing to take or to continue to take any action hereunder
unless it shall first be indemnified to its satisfaction by the Banks against
any and all liability and expense which may be incurred by it by reason of
taking or continuing to take any such action.
7.05. Non-Reliance. Each Bank represents that it has, independently and
without reliance on Administrative Agent, or any other Bank, and based on such
documents and information as it has deemed appropriate, made its own appraisal
of the financial condition and affairs of Borrower and the Subsidiaries and
decision to enter into this Restated Credit Agreement and agrees that it will,
independently and without reliance upon Administrative Agent or any other Bank,
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own appraisals and decisions in taking or not taking
action under this Restated Credit Agreement. Neither Administrative Agent nor
any Bank shall be required to keep informed as to the performance or observance
by Borrower or any Subsidiary of the obligations under this Restated Credit
Agreement or any other document referred to or provided for herein or to make
inquiry of, or to inspect the properties or books of Borrower or any Subsidiary.
Except for notices, reports and other documents and information expressly
required to be furnished to the Banks by Administrative Agent hereunder, neither
Administrative Agent nor any Bank shall have any duty or responsibility to
provide any Bank with any credit or other information concerning Borrower or any
Subsidiary, which may come into the possession of Administrative Agent, or such
Bank or any of its or their Affiliates. Administrative Agent shall provide each
Bank with copies of any Credit Documents and any other documents, instruments
and agreements delivered to Administrative Agent in connection therewith
requested by such Bank.
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7.06. Resignation or Removal of Administrative Agent. Subject to the
appointment and acceptance of a successor Administrative Agent as provided
below, Administrative Agent may resign at any time by giving notice thereof to
the Banks, and Administrative Agent may be removed at any time with or without
cause by the Required Banks. Upon any such resignation or removal, the Required
Banks shall have the right to appoint a successor Administrative Agent, which
Administrative Agent shall be reasonably acceptable to Borrower. If no successor
Administrative Agent shall have been appointed by the Required Banks and shall
have accepted such appointment within thirty (30) days after the retiring
Administrative Agent's giving of notice of resignation or the Required Banks'
removal of the retiring Administrative Agent, then the retiring Administrative
Agent may, on behalf of the Banks, appoint a successor Administrative Agent,
which shall be a bank having a combined capital, surplus and retained earnings
of not less than U.S. $250,000,000 and which shall be reasonably acceptable to
Borrower. Upon the acceptance of any appointment as Administrative Agent
hereunder by a successor Administrative Agent, such successor Administrative
Agent shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder. After any retiring Administrative Agent's resignation or removal
hereunder as Administrative Agent, the provisions of this Section VII shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as Administrative Agent.
7.07. Administrative Agent in its Individual Capacity. Administrative
Agent and its affiliates may make loans to, accept deposits from and generally
engage in any kind of business with Borrower and its Subsidiaries and affiliates
as though Administrative Agent were not Administrative Agent hereunder. With
respect to Revolving Loans made, if any, by CB&T as a Bank, CB&T shall have the
same rights and powers under this Restated Credit Agreement and the other Credit
Documents as any other Bank and may exercise the same as though it were not
Administrative Agent, and the terms "Bank" or "Banks" shall include CB&T in its
individual capacity.
7.08. Co-Agents. None of the Banks identified herein as a "co-agent"
shall have any right, power, obligation, liability, responsibility or duty under
this Restated Credit Agreement or any other Credit Document other than those
applicable to all Banks as such. Without limiting the foregoing, none of the
Banks so identified as a "co-agent" shall have or be deemed to have any
fiduciary relationship with any Bank. Each Bank acknowledges that it has not
relied, and will not rely, on any of the Banks identified as a "co-agent" in
deciding to enter into this Restated Credit Agreement or in taking or not taking
action hereunder.
SECTION VIII. MISCELLANEOUS.
8.01. Notices. Except as otherwise provided herein, all notices,
requests, demands, consents, instructions or other communications to or upon
Borrower, any Bank or Administrative Agent under this Restated Credit Agreement
or the other Credit Documents shall be in writing and faxed, mailed or
delivered, if to Borrower or Administrative Agent, at its respective facsimile
number or address set forth below, if to any Bank, at the address or facsimile
number specified beneath the heading "Address for Notices" under the name of
such Bank in Schedule I (or to such other facsimile number or address for any
party as indicated in any notice given by
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<PAGE>
that party to the other party). All such notices and communications shall be
effective (a) when sent by Federal Express or other overnight service of
recognized standing, on the Business Day following the deposit with such
service; (b) when mailed, first class postage prepaid and addressed as aforesaid
through the United States Postal Service, upon receipt; (c) when delivered by
hand, upon delivery; and (d) when sent by facsimile, upon confirmation of
receipt; provided, however, that any notice delivered to Administrative Agent
under Section II shall not be effective until received by Administrative Agent.
Administrative Agent: California Bank & Trust
320 California Street, Suite 600
San Francisco, CA 94104
Attn: Relationship Manager - Bell
Microproducts
Telephone: (415) 445-8725
Facsimile: (415) 296-9617
Borrower: Bell Microproducts Inc.
1941 Ringwood Avenue
San Jose, California 95131
Attention: Mr. Bruce Jaffe
Senior Vice President
Telephone: (408) 451-1685
Facsimile: (408) 451-1694
Each Notice of Revolving Loan Borrowing, Notice of Revolving Loan Conversion or
Notice of Revolving Loan Interest Period Selection (or copy thereof, as the case
may be) shall be given by Borrower to Administrative Agent's office located at
the address referred to above during Administrative Agent's normal business
hours; provided, however, that any such notice received by Administrative Agent
after 12:00 noon on any Business Day shall be deemed received by Administrative
Agent on the next Business Day. In any case where this Restated Credit Agreement
authorizes notices, requests, demands or other communications by Borrower to
Administrative Agent to be made by telephone or facsimile, Administrative Agent
may conclusively presume that anyone purporting to be a person designated in any
incumbency certificate or other similar document received by Administrative
Agent is such a person.
8.02. Expenses. Borrower shall pay within thirty (30) days of a written
demand therefor, whether or not any Revolving Loan is made hereunder, (a) all
reasonable fees and expenses, including reasonable attorneys' fees and expenses,
incurred by Administrative Agent in connection with the preparation, execution
and delivery of, and the exercise of its duties under, this Restated Credit
Agreement and the other Credit Documents, and the preparation, execution and
delivery of amendments and waivers hereunder and thereunder, (b) all reasonable
fees and expenses, including reasonable attorneys' fees and expenses, incurred
by Administrative Agent in connection with the exercise of its duties (including
permitted audits and inspections) under this Restated Credit Agreement and the
other Credit Documents, and (c) all reasonable fees and expenses, including
reasonable attorneys' fees and expenses, incurred by Administrative Agent and
the Banks in the enforcement or attempted enforcement of any of the Obligations
or in preserving any of Administrative Agent's or the Banks' rights and remedies
(including, without
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<PAGE>
limitation, all such fees and expenses incurred in connection with any "workout"
or restructuring affecting the Credit Documents or the Obligations or any
bankruptcy or similar proceeding involving Borrower or any of its Subsidiaries).
As used herein, the term "reasonable attorneys' fees and expenses" shall
include, without limitation, allocable costs and expenses of Administrative
Agent's and each Bank's in-house legal counsel and staff.
8.03. Indemnification. To the fullest extent permitted by law, Borrower
agrees to protect, indemnify, defend and hold harmless Administrative Agent and
the Banks and their respective directors, officers, employees, agents and any
affiliate thereof ("Indemnitees") from and against any liabilities, losses,
damages or expenses of any kind or nature and from any suits, claims or demands
(including in respect of or for reasonable attorney's fees and other expenses)
arising on account of or in connection with any matter or thing or action or
failure to act by Indemnitees, or any of them, arising out of or relating to the
Credit Documents, including without limitation any use by Borrower of any
proceeds of the Revolving Loans, except to the extent such liability arises from
the willful misconduct or gross negligence of (a) Administrative Agent acting on
behalf of the Banks or (b) such Indemnitee. Upon receiving knowledge of any
suit, claim or demand asserted by a third party that Administrative Agent or any
Bank believes is covered by this indemnity, Administrative Agent or such Bank
shall give Borrower notice of the matter and an opportunity to defend it, at
Borrower's sole cost and expense, with legal counsel satisfactory to
Administrative Agent or such Bank, as the case may be. Administrative Agent or
such Bank may also require Borrower to defend the matter. Any failure or delay
of Administrative Agent or any Bank to notify Borrower of any such suit, claim
or demand shall not relieve Borrower of its obligations under this Paragraph
8.03 but shall reduce such obligations to the extent of any increase in those
obligations caused solely by an such unreasonable failure or delay. The
obligations of Borrower under this Paragraph 8.03 shall survive the payment and
performance of the Obligations.
8.04. Waivers; Amendments. Any term, covenant, agreement or condition
of this Restated Credit Agreement or any other Credit Document may be amended or
waived if such amendment or waiver is in writing and is signed by Borrower and
the Required Banks; provided, however that:
(a) Any amendment, waiver or consent which (i) increases the
Total Revolving Loan Commitment, (ii) extends the Revolving Loan
Maturity Date, (iii) reduces the principal of or interest on any
Revolving Loan or any fees or other amounts payable for the account of
the Banks hereunder, (iv) postpones any date fixed for any payment of
the principal of or interest on any Revolving Loans or any fees or
other amounts payable for the account of the Banks hereunder or
thereunder, (v) amends this Paragraph 8.04, (vi) amends the definition
of Borrowing Base, Eligible Accounts, Eligible Inventory or Required
Banks, (vii) releases any part of the Collateral other than an
immaterial part of the Collateral, (viii) releases any Guarantor from
its Guaranty or decreases the amount of the obligations guaranteed by
such Guarantor under its Guaranty, or (ix) amends Subparagraph 5.02(m)
must be in writing and signed by all Banks;
(b) Any amendment, waiver or consent which increases or
decreases the Revolving Loan Commitment or Proportionate Share of any
Bank must be in writing and signed by such Bank; and
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<PAGE>
(c) Any amendment, waiver or consent which affects the rights
of Administrative Agent must be in writing and signed by Administrative
Agent.
No failure or delay by Administrative Agent or any Bank in exercising any right
hereunder shall operate as a waiver thereof or of any other right nor shall any
single or partial exercise of any such right preclude any other further exercise
thereof or of any other right. Unless otherwise specified in such waiver or
consent, a waiver or consent given hereunder shall be effective only in the
specific instance and for the specific purpose for which given.
8.05. Successors and Assigns.
(a) Binding Effect. This Restated Credit Agreement and the
other Credit Documents shall be binding upon and inure to the benefit
of Borrower, the Banks, Administrative Agent, all future holders of the
Revolving Loan Notes and their respective successors and permitted
assigns, except that Borrower may not assign or transfer any of its
rights or obligations under any Credit Document without the prior
written consent of Administrative Agent and each Bank. All references
in this Restated Credit Agreement to any Person shall be deemed to
include all successors and assigns of such Person.
(b) Participations. Any Bank may, in the ordinary course of
its commercial banking business and in accordance with applicable law,
at any time sell to one or more banks or other financial institutions
("Participants") participating interests in any Revolving Loan owing to
such Bank, any Revolving Loan Note held by such Bank, any Revolving
Loan Commitment of such Bank or any other interest of such Bank under
this Restated Credit Agreement and the other Credit Documents without
the consent of any other party hereto; provided, however, that a Bank
may not sell a participation which would increase the Taxes payable by
Borrower under Paragraph 2.10 without the consent of Borrower. In the
event of any such sale by a Bank of participating interests to a
Participant, such Bank's obligations under this Restated Credit
Agreement to the other parties to this Restated Credit Agreement shall
remain unchanged, such Bank shall remain solely responsible for the
performance thereof, such Bank shall remain the holder of any such
Revolving Loan Note for all purposes under this Restated Credit
Agreement and Borrower and Administrative Agent shall continue to deal
solely and directly with such Bank in connection with such Bank's
rights and obligations under this Restated Credit Agreement; provided,
however, that any agreement pursuant to which any Bank sells a
participating interest to a Participant may require the selling Bank to
obtain the consent of such Participant in order for such Bank to agree
in writing to any amendment of a type specified in clause (a)(i),
(a)(ii), (a)(iii) or (a)(iv) of Paragraph 8.04. Borrower also agrees
that any Bank which has transferred all or part of its interests in the
Revolving Loan Commitments and the Revolving Loans to one or more
Participants shall, notwithstanding any such transfer, be entitled to
the full benefits accorded such Bank under Paragraph 2.09, Paragraph
2.10, and Paragraph 2.11, as if such Bank had not made such transfer.
(c) Assignments. Any Bank may, in the ordinary course of its
commercial banking business and in accordance with applicable law, at
any time, sell and assign to any Bank, any affiliate of a Bank or any
other bank or financial institution (individually,
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<PAGE>
an "Assignee Bank") all or a portion of its rights and obligations
under this Restated Credit Agreement and the other Credit Documents
(such a sale and assignment to be referred to herein as an
"Assignment") pursuant to an assignment agreement in the form of
Exhibit L (an "Assignment Agreement"), executed by each Assignee Bank
and such assignor Bank (an "Assignor Bank") and delivered to
Administrative Agent for its acceptance and recording in the Register;
provided, however, that:
(i) Without the written consent of Borrower and
Administrative Agent (which consent of Borrower and
Administrative Agent shall not be unreasonably withheld), no
Bank may make any Assignment to any Assignee Bank which is
not, immediately prior to such Assignment, a Bank hereunder or
an affiliate which controls, is controlled by or is under
common control with a Bank hereunder;
(ii) Without the written consent of Borrower and
Administrative Agent (which consent of Borrower and
Administrative Agent shall not be unreasonably withheld), no
Bank may make any Assignment to any Assignee Bank unless,
after giving effect to such Assignment (both before and after
the Commitment Adjustment Date), (A) the Revolving Loan
Commitment of the Assignee Bank is $5,000,000 or an integral
multiple thereof and (B) the Revolving Loan Commitment of the
Assignor Bank is either (1) $0, if the Assignor Bank has
assigned its entire Revolving Loan Commitment, or (2)
$5,000,000 or an integral multiple thereof, if the Assignor
Bank has assigned less than its entire Revolving Loan
Commitment; and
(iii) No Bank may make any Assignment which does not
assign and delegate an equal pro rata interest in such Bank's
Revolving Loans, Revolving Loan Commitment and all other
rights, duties and obligations of such Bank under this
Restated Credit Agreement and the other Credit Documents.
Upon such execution, delivery, acceptance and recording of each
Assignment Agreement, from and after the Assignment Effective Date
determined pursuant to such Assignment Agreement, (A) each Assignee
Bank thereunder shall be a Bank hereunder with a Revolving Loan
Commitment as set forth on Attachment 1 to such Assignment Agreement
and shall have the rights, duties and obligations of such a Bank under
this Restated Credit Agreement and the other Credit Documents, and (B)
the Assignor Bank thereunder shall be a Bank with a Revolving Loan
Commitment as set forth on Attachment 1 to such Assignment Agreement,
or, if the Revolving Loan Commitment of the Assignor Bank has been
reduced to $0, the Assignor Bank shall cease to be a Bank; provided,
however, that any such Assignor Bank which ceases to be a Bank shall
continue to be entitled to the benefits of any provision of this
Restated Credit Agreement which by its terms survives the termination
of this Restated Credit Agreement. Each Assignment Agreement shall be
deemed to amend Schedule I to the extent, and only to the extent,
necessary to reflect the addition of each Assignee Bank, the deletion
of each Assignor Bank which reduces its Revolving Loan Commitment to
$0, and the resulting adjustment of Revolving Loan Commitments arising
from the purchase by each Assignee Bank of all or a portion of the
rights and obligations of an Assignor Bank under this Restated Credit
Agreement and the other Credit Documents. On or prior to the
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<PAGE>
Assignment Effective Date determined pursuant to each Assignment
Agreement, Borrower, at Assignor Bank's expense, shall execute and
deliver to Administrative Agent, in exchange for the surrendered
Revolving Loan Note of the Assignor Bank thereunder, a new Revolving
Loan Note to the order of each Assignee Bank thereunder (with each new
Revolving Loan Note to be in an amount equal to the Revolving Loan
Commitment assumed by such Assignee Bank) and, if the Assignor Bank is
continuing as a Bank hereunder, a new Revolving Loan Note to the order
of the Assignor Bank (with the new Revolving Loan Note to be in an
amount equal to the Revolving Loan Commitment retained by it). Each
such new Revolving Loan Note shall be dated the Effective Date and
otherwise be in the form of the Revolving Loan Note replaced thereby
(provided that Borrower shall not be obligated to pay any additional
interest to any Assignee Bank in respect of any principal payments made
prior to the Effective Date of the Assignment to such Assignee Bank).
The Revolving Loan Notes surrendered by the Assignor Bank shall be
returned by Administrative Agent to Borrower marked "replaced". Each
Assignee Bank which was not previously a Bank hereunder and which is
not incorporated under the laws of the United States of America or a
state thereof shall, within three (3) Business Days of becoming a Bank,
deliver to Borrower and Administrative Agent two duly completed copies
of United States Internal Revenue Service Form 1001 or 4224 (or
successor applicable form), as the case may be, certifying in each case
that such Bank is entitled to receive payments under this Restated
Credit Agreement without deduction or withholding of any United States
federal income taxes.
(d) Register. Administrative Agent shall maintain at its
address referred to in Paragraph 8.01 a copy of each Assignment
Agreement delivered to it and a register (the "Register") for the
recordation of the names and addresses of the Banks and the Revolving
Loan Commitments of each Bank from time to time. The entries in the
Register shall be conclusive in the absence of manifest error, and
Borrower, Administrative Agent and the Banks may treat each Person
whose name is recorded in the Register as the owner of the Revolving
Loans recorded therein for all purposes of this Restated Credit
Agreement. The Register shall be available for inspection by Borrower
or any Bank at any reasonable time and from time to time upon
reasonable prior notice.
(e) Registration. Upon its receipt of an Assignment Agreement
executed by an Assignor Bank and an Assignee Bank (and, to the extent
required by Subparagraph 8.05(c), by Borrower and Administrative
Agent), together with payment to Administrative Agent by the Assignor
Bank of a registration and processing fee of $2,500, Administrative
Agent shall (i) promptly accept such Assignment Agreement and (ii) on
the Effective Date of the Assignment determined pursuant thereto record
the information contained therein in the Register and give notice of
such acceptance and recordation to the Banks and Borrower.
Administrative Agent may, from time to time at its election, prepare
and deliver to the Banks and Borrower a revised Schedule I reflecting
the names, addresses and respective Revolving Loan Commitments of all
Banks then parties hereto.
(f) Collateral Security. Notwithstanding any other provision
contained in this Restated Credit Agreement and any other Credit
Document to the contrary, any Bank may assign all or any portion of the
Revolving Loans held by it to any Federal Reserve
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<PAGE>
Bank or the United States Treasury as collateral security, provided
that any payment in respect of such assigned Revolving Loan made by
Borrower to or for the account of the assigning or pledging Bank in
accordance with the terms of this Restated Credit Agreement shall
satisfy Borrower's obligations hereunder in respect of such assigned
Revolving Loans to the extent of such payment. No such assignment shall
release the assigning Bank from its obligations hereunder.
(g) Confidentiality. Administrative Agent and the Banks may
disclose the Credit Documents and any financial or other information
relating to Borrower or any Subsidiary to each other or to any
Participant or Assignee Bank or potential Participant or Assignee Bank
which is not a direct competitor of Borrower and which agrees in
writing to maintain the confidentiality thereof in accordance with safe
and sound banking practices.
8.06. Setoff; Security Interest.
(a) Setoff. In addition to any rights and remedies of the
Banks provided by law, each Bank shall have the right without prior
notice to Borrower, any such notice being expressly waived by Borrower
to the extent permitted by applicable law, upon the occurrence and
during the continuance of a Default or an Event of Default, to set-off
and apply against any Obligations of Borrower to such Bank which are
then due and payable, any amount owing from such Bank to Borrower, at
or at any time after, the happening of any of the above mentioned
events, and as security for such Obligations, Borrower hereby grants to
each Bank a continuing security interest in any and all deposits,
accounts or moneys of Borrower then or thereafter maintained with such
Bank, subject in each case to Subparagraph 2.08(b). The aforesaid right
of set-off may be exercised by such Bank against Borrower or against
any trustee in bankruptcy, debtor in possession, assignee for the
benefit of creditors, receiver or execution, judgment or attachment
creditor of Borrower or against anyone else claiming through or against
Borrower or such trustee in bankruptcy, debtor in possession, assignee
for the benefit of creditors, receiver, or execution, judgment or
attachment creditor, notwithstanding the fact that such right of
set-off shall not have been exercised by such Bank prior to the
occurrence of a Default or an Event of Default. Each Bank agrees
promptly to notify Borrower after any such set-off and application made
by such Bank, provided that the failure to give such notice shall not
affect the validity of such set-off and application.
(b) Security Interest. As security for the Obligations,
Borrower hereby grants to each Bank, for the benefit of all Banks, a
continuing security interest in any and all deposit accounts or moneys
of Borrower now or hereafter maintained with such Bank. Each Bank shall
have all of the rights of a secured party with respect to such security
interest.
8.07. No Third Party Rights. Nothing expressed in or to be implied from
this Restated Credit Agreement is intended to give, or shall be construed to
give, any Person, other than the parties hereto and their permitted successors
and assigns hereunder, any benefit or legal or equitable right, remedy or claim
under or by virtue of this Restated Credit Agreement or under or by virtue of
any provision herein.
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8.08. Partial Invalidity. If at any time any provision of this Restated
Credit Agreement is or becomes illegal, invalid or unenforceable in any respect
under the law or any jurisdiction, neither the legality, validity or
enforceability of the remaining provisions of this Restated Credit Agreement nor
the legality, validity or enforceability of such provision under the law of any
other jurisdiction shall in any way be affected or impaired thereby.
8.09. Arbitration.
(a) This Paragraph 8.09 concerns the resolution of any
controversies or claims between or among Borrower, any Bank and
Administrative Agent, including but not limited to those that arise
from:
(i) This Restated Credit Agreement or any other
Credit Document;
(ii) Any violation of this Restated Credit Agreement
or any other Credit Document; or
(iii) Any claims for damages resulting from any
business conducted between Borrower and any Bank or
Administrative Agent, including claims for injury to persons,
property or business interests.
(b) At the request of Borrower, any Bank or Administrative
Agent, any controversies or claims will be settled by arbitration in
accordance with the United States Arbitration Act. The United States
Arbitration Act will apply even though this Restated Credit Agreement
provides that it is governed by California law.
(c) Arbitration proceedings will be administered by the
American Arbitration Association and will be subject to its commercial
rules of arbitration. The arbitration will be conducted within the
California county of San Francisco. Borrower, the Banks and
Administrative Agent expressly agree that the arbitrator(s) (i) shall
apply contract law and (ii) shall not be empowered to make any award
which a California court is not empowered to make or any award for
punitive damages.
(d) For purposes of the application of the statute of
limitations, the filing of an arbitration pursuant to this paragraph is
the equivalent of the filing of a lawsuit, and any claim or controversy
which may be arbitrated under this paragraph is subject to any
applicable statute of limitations. The arbitrators will have the
authority to decide whether any such claim or controversy is barred by
the statute of limitations and if so to dismiss the arbitration on that
basis.
(e) If there is a dispute as to whether an issue is
arbitrable, the arbitrators will have the authority to resolve any such
dispute.
(f) The decision that results from an arbitration proceeding
may be submitted to any authorized court of law to be confirmed and
enforced.
(g) The procedure described above will not apply if the
controversy or claim, at the time of the proposed submission to
arbitration arises from or relates to an obligation
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to Bank secured by real property located in California. If the
obligation is secured by real property, Borrower, each Bank and
Administrative Agent must consent to submission of the claim or
controversy to arbitration. If all parties do not consent to
arbitration, the controversy or claim will be settled as follows:
(i) Borrower, the Banks and Administrative Agent will
designate a referee (or a panel of referees) selected under
the auspices of the American Arbitration Association in the
same manner as arbitrators are selected in
Association-sponsored proceedings;
(ii) The designated referee (or the panel of
referees) will be appointed by a court as provided in
California Code of Civil Procedure Section 638 and the
following related sections;
(iii) The referee (or the presiding referee of the
panel) will be an active attorney or a retired judge; and
(iv) The award that results from the decision of the
referee (or the panel) will be entered as a judgment in the
court that appointed the referee, in accordance with the
provisions of California Code of Civil Procedure Sections 644
and 645.
(h) This Paragraph 8.09 does not limit the right of Borrower,
any Bank or Administrative Agent to:
(i) Exercise self-help remedies such as setoff;
(ii) Foreclose against or sell any real or personal
property collateral; or
(iii) Take action in a court of law, before, during
or after the arbitration proceeding to obtain an interim
remedy or additional or supplementary remedies.
(i) The pursuit of or a decision in an action for interim,
additional or supplementary remedies, or the filing of a court action,
does not constitute a waiver of the right of Borrower, any Bank or
Administrative Agent, including the suing party, to submit the
controversy or claim to arbitration.
8.10. Jury Trial. EACH OF BORROWER, THE BANKS AND ADMINISTRATIVE AGENT,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO TRIAL BY JURY AS TO ANY ISSUE RELATING HERETO IN ANY ACTION,
PROCEEDING, OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS RESTATED CREDIT
AGREEMENT OR ANY OTHER CREDIT DOCUMENT NOT RESOLVED PURSUANT TO PARAGRAPH 8.09.
8.11. Counterparts. This Restated Credit Agreement may be executed in
any number of identical counterparts, any set of which signed by all the parties
hereto shall be deemed to constitute a complete, executed original for all
purposes.
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SECTION IX. EFFECTIVE DATE OF RESTATED CREDIT AGREEMENT.
9.01. Effective Date. This Restated Credit Agreement shall become
effective on a Business Day on or prior to November 12, 1998 as designated by
Borrower in a written notice to Administrative Agent (the "Effective Date"),
subject to receipt by Administrative Agent (a) at least three (3) Business days
prior to the Effective Date of Borrower's written notice designating the
Effective Date and (b) on or prior to the Effective Date, of each item listed in
Schedule 3.01, each in form and substance reasonably satisfactory to the Banks,
and with sufficient copies for, Administrative Agent and each Bank.
9.02. Loans Under Existing Credit Agreement. On the Effective Date, all
loans outstanding under the Existing Credit Agreement shall be deemed to be
Revolving Loans made by each of the Banks under this Restated Credit Agreement,
and all accrued unpaid interest thereon shall begin to accrue interest at the
rates set forth in this Restated Credit Agreement.
9.03. Effect. On and after the Effective Date, this Restated Credit
Agreement, the Borrower Security Agreement and the Borrower Pledge Agreement
shall amend, restate in their entirety and replace, without novation, the
Existing Credit Agreement, the Amended and Restated Security Agreement dated as
of May 23, 1995 executed by Borrower in favor of Administrative Agent (the
"Existing Borrower Security Agreement") and the Amended and Restated Pledge
Agreement dated as of May 23, 1995 executed by Borrower in favor of
Administrative Agent (the "Existing Borrower Pledge Agreement"), respectively;
provided, however, that the execution and delivery of this Restated Credit
Agreement, the Borrower Security Agreement and the Borrower Pledge Agreement and
the other Credit Documents shall not (a) operate as a waiver of any right, power
or remedy of the Banks under the Existing Credit Agreement, the Existing
Security Agreement or the Existing Pledge Agreement, except to the extent
expressly waived in this Restated Credit Agreement, the Borrower Security
Agreement, the Borrower Pledge Agreement or the other Credit Documents, or (b)
extinguish or impair any obligations of Borrower under the Existing Credit
Agreement, the Existing Security Agreement or the Existing Pledge Agreement
except to the extent any such obligation is actually satisfied by Borrower.
[The next page is the signature page]
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IN WITNESS WHEREOF, Borrower, the Banks and Administrative Agent have
caused this Restated Credit Agreement to be executed as of the day and year
first above written.
BORROWER: BELL MICROPRODUCTS INC.
By: /s/ Bruce M. Jaffe
----------------------------------
Name: Bruce M. Jaffe
Title: Senior Vice President
and CFO
ADMINISTRATIVE AGENT: CALIFORNIA BANK & TRUST,
As Administrative Agent
By: /s/ Steve Bellicini
----------------------------------
Name: Steve Bellicini
Title: Vice President
By: /s/ F. Clark Warden
----------------------------------
Name: F. Clark Warden
Title: Senior Vice President
BANKS: CALIFORNIA BANK & TRUST,
As a Bank
By: /s/ F. Clark Warden
----------------------------------
Name: F. Clark Warden
Title: Senior Vice President
By: /s/ F. Clark Warden
----------------------------------
Name: F. Clark Warden
Title: Senior Vice President
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UNION BANK OF CALIFORNIA, N.A.
By: /s/ Lebbeus S. Case, Jr.
----------------------------------
Name: Lebbeus S. Case, Jr.
Title: Vice President
SANWA BANK CALIFORNIA,
As a Bank
By: /s/ Clifford M. Wallace
----------------------------------
Name: Clifford M. Wallace
Title: Vice President
COMERICA BANK-CALIFORNIA,
As a Bank
By: /s/ Scott T. Smith
----------------------------------
Name: Scott T. Smith
Title: Vice President
U.S. BANK NATIONAL ASSOCIATION,
As a Bank
By: /s/ David T. Marron
----------------------------------
Name: David T. Marron
Title: Vice President
By: __________________________________
Name:
Title:
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SCHEDULE I
BANKS
Revolving
Loan
Bank Commitment
---- ----------
CALIFORNIA BANK & TRUST $30,000,000
Applicable Lending Office:
320 California Street, Suite 600
San Francisco, CA 94104
Address for Notices:
320 California Street, Suite 600
San Francisco, CA 94104
Attn: Relationship Manager
Bell Microproducts
Telephone: (415) 445-8725
Facsimile: (415) 296-9617
UNION BANK OF CALIFORNIA, N.A. $30,000,000
Applicable Lending Office:
99 Almaden Boulevard, 2nd Floor
San Jose, CA 95133
Address for Notices:
99 Almaden Boulevard, 2nd Floor
San Jose, CA 95133
Attn: Frank B. Gwynn
Telephone: (408) 279-7738
Facsimile: (408) 280-7163
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COMERICA BANK - CALIFORNIA $30,000,000
Applicable Lending Office:
California Corporate Banking
155 Grand Avenue, Suite 402
Oakland, CA 94612
Address for Notices:
California Corporate Banking
155 Grand Avenue, Suite 402
Oakland, CA 94612
Attn: Scott Smith
Telephone: (510) 645-2202
Facsimile: (510) 645-2220
SANWA BANK CALIFORNIA $20,000,000
Applicable Lending Office:
San Jose CBC
220 Almaden Boulevard
San Jose, CA 95113-2003
Address for Notices:
220 Almaden Boulevard
San Jose, CA 95113-2003
Attn: Clifford M. Wallace
Telephone: (408) 297-6500
Facsimile: (408) 292-4092
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U.S. BANK NATIONAL ASSOCIATION $20,000,000
Applicable Lending Office:
U.S. Bank National Association
Corporate Banking Center
2890 North Main Street
Walnut Creek, CA 94596
Address for Notices:
U.S. Bank National Association
California Corporate Banking
2890 North Main Street
Walnut Creek, CA 94596
Attn: David Marron
Telephone: (925) 942-9489
Facsimile: (925) 945-6919
I-3
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SCHEDULE II
PRICING GRID
LEVEL 1 LEVEL 2 LEVEL 3
PERIOD PERIOD PERIOD
APPLICABLE MARGINS: 1.45% 1.65% 1.85%
EXPLANATION
1. The Applicable Margin for each Revolving LIBOR Loan will be set for
each Pricing Period and will vary depending upon whether such period is
a Level 1 Period, a Level 2 Period or a Level 3 Period.
2. The first Pricing Period, which commences on the Effective Date and
ends on February 28, 1999, will be a Level 3 Period.
3. Each Pricing Period thereafter will be a Level 1 Period, a Level 2
Period or a Level 3 Period depending upon Borrower's Leverage Ratio (as
calculated pursuant to the definition of "Leverage Ratio" set forth in
Schedule 1.01) for the most recent fiscal quarter period ending prior
to the first day of such Pricing Period as follows:
(a) If, during any Pricing Period, Borrower's Leverage Ratio is
less than 2.00 to 1.00, Borrower's pricing will be a Level 1
Period.
(b) If, during any Pricing Period, Borrower's Leverage Ratio is
greater than or equal to 2.00 to 1.00 but less than or equal
to 2.50 to 1.00, Borrower's pricing will be a Level 2 Period.
(c) If, during any Pricing Period, Borrower's Leverage Ratio is
greater than 2.50 to 1.00, Borrower's pricing will be a Level
3 Period.
II-1
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SCHEDULE 1.01
DEFINITIONS
"Adjusted Net Income" shall mean, with respect to any Person for any
period, the sum, determined on a consolidated basis in accordance with GAAP, of
the following:
(a) The net income or net loss of such Person and its
Subsidiaries for such period before provision for income taxes or
interest;
minus
(b) The sum of (i) all extraordinary and non-recurring income
of such Person and its Subsidiaries accruing during such period (to the
extent added in calculating net income or loss in clause (a) above) and
(ii) all dividends paid or declared by such Person and its Subsidiaries
during such period (except for dividends paid or payable to such Person
or any of its wholly-owned Subsidiaries).
"Adjusted Total Liabilities" shall mean, with respect to any Person for
any period, the sum of the following:
(a) The total liabilities of such Person and its Subsidiaries
(determined on a consolidated basis in accordance with GAAP);
plus
(b) To the extent not included in clause (a) above, all
liabilities of such Person and its Subsidiaries under or with respect
to (i) Synthetic Leases and (ii) letters of credit, banker's
acceptances or other similar facilities.
"Administrative Agent" shall have the meaning given to that term in
clause (3) of the introductory paragraph hereof.
"Affiliate" shall mean, with respect to any Person, (a) each Person
that, directly or indirectly, owns or controls, whether beneficially or as a
trustee, guardian or other fiduciary, five percent (5%) or more of any class of
Equity Securities of such Person, (b) each Person that controls, is controlled
by or is under common control with such Person or any Affiliate of such Person
or (c) each of such Person's employees, officers, directors, joint venturers and
partners; provided, however, that in no case shall Administrative Agent or any
Bank be deemed to be an Affiliate of Borrower or any of its Subsidiaries for
purposes of this Restated Credit Agreement. For the purpose of this definition,
"control" of a Person shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of its management or policies, whether
through the ownership of voting securities, by contract or otherwise.
"Agent's Fee Letter" shall mean the letter agreement dated as of the
date hereof among Borrower, Administrative Agent and the co-agents.
"Almo" shall mean Almo corporation, a Pennsylvania corporation.
1.01-1
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"Almo Warrant" shall mean, collectively, the warrants issued by
Borrower to Almo in connection with Borrower's acquisition of substantially all
of the assets of Almo's computer products division entitling Almo or any
subsequent holder thereof to convert such warrants into no more than 350,000
shares of Equity Securities issued by Borrower.
"Applicable Lending Office" shall mean, with respect to any Bank, (a)
initially, its office designated as such in Schedule I (or, in the case of any
Bank which becomes a Bank by an Assignment pursuant to Subparagraph 8.05(c), its
office designated as such in the applicable Assignment Agreement) and (b)
subsequently, such other office or offices of such Bank may designate to
Administrative Agent as the office at which such Bank's Revolving Loans will
thereafter be maintained and for the account of which all payments of principal
of, and interest on, such Bank's Revolving Loans will thereafter be made.
"Applicable Margin" shall mean, with respect to any Revolving LIBOR
Loan at any time, the per annum margin which is determined pursuant to the
Pricing Grid and added to the LIBO Rate for such Revolving LIBOR Loan. The
Applicable Margins shall be determined as provided in the Pricing Grid and may
change for each Pricing Period.
"Assignee Bank" shall have the meaning given to that term in
Subparagraph 8.05(c).
"Assignment" shall have the meaning given to that term in Subparagraph
8.05(c).
"Assignment Agreement" shall have the meaning given to that term in
Subparagraph 8.05(c).
"Assignment Effective Date" shall have, with respect to each Assignment
Agreement, the meaning set forth therein.
"Assignor Bank" shall have the meaning given to that term in
Subparagraph 8.05(c).
"Banks" shall have the meaning given to that term in clause (2) of the
introductory paragraph hereof.
"Bell Canada" shall mean Bell Microproducts Canada Inc., a California
corporation and a wholly-owned Subsidiary of Borrower.
"Bell Canada Guaranty" shall have the meaning given to that term in
Subparagraph 2.12(a).
"Bell Canada Pledge Agreement" shall have the meaning given to that
term in Subparagraph 2.12(b).
"Bell-Tenex" shall mean Bell Microproducts Canada-Tenex Data ULC, a
Nova Scotia, Canada unlimited liability company and a wholly-owned Subsidiary of
Bell Canada.
"Bell-Tenex Canadian Security Documents" shall have the meaning given
to that term in Subparagraph 2.12(b).
1.01-2
<PAGE>
"Bell-Tenex Guaranty" shall have the meaning given to that term in
Subparagraph 2.12(b).
"Bell-Tenex Security Agreement" shall have the meaning given to that
term in Subparagraph 2.12(b).
"Borrower" shall have the meaning given to that term in clause (1) of
the introductory paragraph hereof.
"Borrower Pledge Agreement" shall have the meaning given to that term
in Subparagraph 2.12(a).
"Borrower Security Agreement" shall have the meaning given to that term
in Subparagraph 2.12(a).
"Borrowing Base" shall have the meaning given to that term in
Subparagraph 2.02(a).
"Borrowing Base Certificate" shall have the meaning given to that term
in Subparagraph 5.01(a).
"Business Day" shall mean any day on which (a) commercial banks are not
authorized or required to close in San Francisco, California or New York, New
York and (b) if such Business Day is related to a Revolving LIBOR Loan, dealings
in Dollar deposits are carried out in the London interbank market.
"Capital Adequacy Requirement" shall have the meaning given to that
term in Subparagraph 2.09(d).
"Capital Asset" shall mean, with respect to any Person, tangible
property owned or leased (in the case of a Capital Lease) by such Person, or any
expense incurred by any Person that is required by GAAP to be reported as an
asset on such Person's balance sheet.
"Capital Event" shall mean the sale or issuance by Borrower of
Borrower's Equity Securities or Subordinated Indebtedness in one transaction or
a series of related transaction (other than in connection with the conversion of
the Almo Warrant or any stock option or similar plan of Borrower created in the
normal course of Borrower's business).
"Capital Expenditures" shall mean, with respect to any Person and any
period, all amounts expended and Indebtedness incurred or assumed by such Person
during such period for the acquisition of real property and other Capital Assets
(including amounts expended and Indebtedness incurred or assumed in connection
with Capital Leases).
"Capital Leases" shall mean any and all lease obligations that, in
accordance with GAAP, are required to be capitalized on the books of a lessee.
"CB&T" shall have the meaning given to that term in Recital A.
"Change of Law" shall have the meaning given to that term in
Subparagraph 2.09(b).
1.01-3
<PAGE>
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral" shall mean all property in which Administrative Agent or
any Bank has a Lien to secure the Obligations.
"Contractual Obligation" of any Person shall mean, any indenture, note,
security, deed of trust, mortgage, security agreement, lease, guaranty,
instrument, contract, agreement or other form of obligation to which such Person
is a party or by which such Person or any of its property is bound.
"Credit Documents" shall mean and include this Restated Credit
Agreement, the Revolving Loan Notes, the Security Documents, all amendments
hereof and thereof, all waivers and consents hereunder and thereunder and all
other documents, instruments and agreements delivered by Borrower or any of its
Subsidiaries to Administrative Agent or any Bank in connection with this
Restated Credit Agreement.
"Credit Event" shall mean the making of any Revolving Loan, the
conversion of any Revolving Loan from one Type of Revolving Loan to another Type
or the selection of a new Interest Period for any Revolving LIBOR Loan.
"Default" shall mean any event or circumstance not yet constituting an
Event of Default which with the giving of any notice or the lapse of any period
of time or both, would become an Event of Default.
"Dollars" and "$" shall mean the lawful currency of the United States
of America and, in relation to any payment under this Restated Credit Agreement,
same day or immediately available funds.
"EBITDA" shall mean, with respect to any Person for any period, the sum
of the following, determined on a consolidated basis in accordance with GAAP
where applicable:
(a) The net income or net loss of such Person and its
Subsidiaries for such period before provision for income taxes;
plus
(b) The sum (to the extent deducted in calculating net income
or loss in clause (a) above) of (i) all Interest Expenses of such
Person and its Subsidiaries accruing during such period and (ii) all
depreciation and amortization of such Person and its Subsidiaries
accruing during such period.
"Effective Date" shall have the meaning given to that term in Paragraph
9.01.
"Eligible Accounts" shall mean, with respect to Borrower and, after the
Tenex Data Acquisition and the delivery to Administrative Agent of each of the
items listed on Schedule 5.01(j), Bell-Tenex, the aggregate net amount of all
accounts (as defined in the California Uniform Commercial Code) of Borrower and
Bell-Tenex, except, to the extent not already deducted, the following:
1.01-4
<PAGE>
(a) Any account which does not arise from the sale or lease of
goods or services rendered to the account debtor thereon in the
ordinary course of Borrower's or the Canadian Subsidiaries' business,
or which arises from a sale, lease or service which has not been fully
performed by Borrower or Bell-Tenex;
(b) Any account or portion thereof to the extent the same is
subject to any right of discount, credit, allowance, rescission,
setoff, claim or defense or which is otherwise not valid and
enforceable against the account debtor thereon;
(c) Any account which is not subject to a first priority
perfected security interest in favor of Administrative Agent for the
benefit of Administrative Agent and the Banks;
(d) Any account which is not owned by Borrower or Bell-Tenex
free and clear of all Liens, rights and interests of all other Persons
except for Permitted Liens;
(e) Any account which is unpaid more than ninety (90) days
after the invoice date therefor;
(f) Any account arising from a consignment by Borrower or
Bell-Tenex as consignee or a COD shipment;
(g) Any account payable by (i) the United States government or
any department, agency or other subdivision thereof (except to the
extent Borrower complies with the Federal Assignment of Claims Act of
1940, as amended), (ii) a Person located in any jurisdiction outside
the United States or Canada, except to the extent secured by a letter
of credit acceptable to Administrative Agent, or (iii) an Affiliate of
Borrower;
(h) Any account payable by an account debtor (i) which is the
subject of any bankruptcy, insolvency, liquidation or similar
proceeding, (ii) which has made an assignment for the benefit of its
creditors, (iii) for which a receiver has been appointed or (iv) which
has admitted in writing its inability to pay its debts as such debts
become due;
(i) All accounts payable by an account debtor which has failed
to pay twenty percent (20%) or more of its total accounts payable owed
to Borrower and/or Bell-Tenex within ninety (90) days of their invoice
date; and
(j) Any other account which Administrative Agent reasonably
determines is unlikely to be paid in full within ninety (90) days after
the invoice date.
(As used in clauses (a)-(j) of this definition, the term "account" when
used in the singular form shall mean an account arising from a single
invoice.)
"Eligible Inventory" shall mean, with respect to Borrower and, after
the Tenex Data Acquisition and the delivery to Administrative Agent of each of
the items listed on Schedule 5.01(j), Bell-Tenex, the net book value of all
inventory (as defined in the California Uniform Commercial Code) of Borrower and
Bell-Tenex, except the following:
1.01-5
<PAGE>
(a) Any inventory which is not held by or on behalf of
Borrower or Bell-Tenex for sale or lease in the ordinary course of its
business;
(b) Any inventory consisting of work-in-process;
(c) Any inventory which is not subject to a first priority
perfected security interest in favor of Administrative Agent for the
benefit of Administrative Agent and the Banks;
(d) Any inventory located in any jurisdiction other than the
United States or Canada (excluding the provinces of Newfoundland, Nova
Scotia, Prince Edward Island, New Brunswick, Manitoba, Saskatchewan,
Alberta and Yukon Territory);
(e) Any inventory which is not owned by Borrower or Bell-Tenex
free and clear of all Liens, rights and interests of all other Persons
except for Permitted Liens;
(f) Any inventory which is obsolete, unsalable or damaged;
(g) Any inventory which has been consigned by Borrower or
Bell-Tenex (except for such inventory on consignment approved from time
to time by Administrative Agent);
(h) The portion of any inventory shown on the books of
Borrower or Bell-Tenex representing any purchase price discount earned
by Borrower or Bell-Tenex; and
(i) Any other inventory which Administrative Agent reasonably
determines is unlikely to be sold at or above its net book value.
"Employee Benefit Plan" shall mean any employee benefit plan within the
meaning of section 3(3) of ERISA maintained or contributed to by Borrower or any
ERISA Affiliate, other than a Multiemployer Plan.
"Environmental Laws" means all Requirements of Law relating to the
protection of human health or the environment, including, without limitation,
(a) all Requirements of Law, pertaining to reporting, licensing, permitting,
investigation, and remediation of emissions, discharges, releases, or threatened
releases of hazardous materials, chemical substances, pollutants, contaminants,
or hazardous or toxic substances, materials or wastes whether solid, liquid, or
gaseous in nature, into the air, surface water, groundwater, or land, or
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of chemical substances, pollutants,
contaminants, or hazardous or toxic substances, materials, or wastes, whether
solid, liquid, or gaseous in nature; and (b) all Requirements of Law pertaining
to the protection of the health and safety of employees or the public.
"Equity Securities" of any Person shall mean (a) all common stock,
preferred stock, participations, shares, partnership interests or other equity
interests in and of such Person (regardless of how designated and whether or not
voting or non-voting) and (b) all warrants, options and other rights to acquire
any of the foregoing.
1.01-6
<PAGE>
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as the same may from time to time be amended or supplemented, including any
rules or regulations issued in connection therewith.
"ERISA Affiliate" shall mean any Person which is treated as a single
employer with Borrower under Section 414 of the Code.
"Event of Default" shall have the meaning given to that term in
Paragraph 6.01.
"Excluded Collateral" shall have the meaning given to that term in the
Borrower Security Agreement.
"Existing Borrower Pledge Agreement" shall have the meaning given to
that term in Paragraph 9.03.
"Existing Borrower Security Agreement" shall have the meaning given to
that term in Paragraph 9.03.
"Existing Credit Agreement" shall have the meaning given to that term
in Recital A.
"Federal Funds Rate" shall mean, for any day, the weighted average of
the per annum rates on overnight Federal funds transactions with member banks of
the Federal Reserve System arranged by Federal funds brokers as published by the
Federal Reserve Bank of New York for such day, (or, if such rate is not so
published for any day, the average rate quoted to Administrative Agent on such
day by three (3) Federal funds brokers of recognized standing selected by
Administrative Agent).
"Federal Reserve Board" shall mean the Board of Governors of the
Federal Reserve System.
"Fee on Increased Commitment" shall have the meaning given to that term
in Subparagraph 2.03(c).
"Financial Statements" shall mean, with respect to any accounting
period for any Person, statements of income and of changes in cash flow of such
Person for such period, and balance sheets of such Person as of the end of such
period, setting forth in each case in comparative form figures for the
corresponding period in the preceding fiscal year if such period is less than a
full fiscal year or, if such period is a full fiscal year, corresponding figures
from the preceding annual audit, all prepared in reasonable detail and in
accordance with GAAP.
"GAAP" shall mean generally accepted accounting principles and
practices as in effect in the United States of America from time to time,
consistently applied, provided, however, that with respect to Borrower, the
definition of "current liabilities" as set forth in GAAP shall include the
Obligations.
"Governmental Authority" shall mean any domestic or foreign national,
state or local government, any political subdivision thereof, any department,
agency, authority or bureau of any of the foregoing, or any other entity
exercising executive, legislative, judicial, regulatory or
1.01-7
<PAGE>
administrative functions of or pertaining to government, including, without
limitation, the Federal Deposit Insurance Corporation, the Federal Reserve
Board, the Comptroller of the Currency, any central bank or any comparable
authority.
"Governmental Charges" shall mean all levies, assessments, fees, claims
or other charges imposed by any Governmental Authority upon or relating to (i)
Borrower or any of its Subsidiaries, (ii) the Revolving Loans, (iii) employees,
payroll, income or gross receipts of Borrower or any of its Subsidiaries, (iv)
the ownership or use of any of its assets by Borrower or any of its Subsidiaries
or (v) any other aspect of the business of Borrower or any of its Subsidiaries.
"Governmental Rule" shall mean any law, rule, regulation, ordinance,
order, code interpretation, judgment, decree, directive, guidelines, policy or
similar form of decision of any Governmental Authority.
"Guaranty" shall mean, collectively, the Bell Canada Guaranty and the
Bell-Tenex Guaranty.
"Indebtedness" of any Person shall mean and include (a) all items of
indebtedness and liabilities which, in accordance with GAAP, would be included
in determining liabilities that are shown on the liability side of the balance
sheet of such Person, (b) all indebtedness and liabilities of other Persons
assumed or guaranteed by such Person or in respect of which such Person is
secondarily or contingently liable whether by any agreement to acquire
indebtedness and liabilities or to supply or advance funds or otherwise, and (c)
all indebtedness and liabilities of other Persons secured by any Lien in any
property of such Person (including without limitation Capital Leases).
"Indemnitees" shall have the meaning given to that term in Paragraph
8.03.
"Interest Account" shall have the meaning given to that term in
Subparagraph 2.06(b).
"Interest Coverage Ratio" shall mean, with respect to any Person for
any period, the ratio, determined on a consolidated basis in accordance with
GAAP, of (a) the sum of the Adjusted Net Income and Interest Expenses of such
Person and its Subsidiaries for such period to (b) the Interest Expenses of such
Person and its Subsidiaries for such period.
"Interest Expenses" shall mean, with respect to any Person for any
period, the sum, determined on a consolidated basis in accordance with GAAP, of
(a) all interest expenses of such Person and its Subsidiaries during such period
(including, without limitation, (i) the amortization of debt discounts, (ii) the
amortization of all fees payable in connection with the incurrence of
Indebtedness to the extent included in interest expense and (iii) the portion of
any Capitalized Lease Obligations allocable to interest expense and financing
charges attributable to Synthetic Leases whether calculated as interest expense
or rental expense) plus (b) all letter of credit fees payable by such Person
accruing during such period.
"Interest Period" shall mean, with respect to any Revolving LIBOR Loan,
the time periods selected by Borrower pursuant to Subparagraph 2.01(b) or
Subparagraph 2.01(d) which commences on the first day of such Revolving Loan or
the effective date of any conversion and
1.01-8
<PAGE>
ends on the last day of such time period, and thereafter, each subsequent time
period selected by Borrower pursuant to Subparagraph 2.01(e) which commences on
the last day of the immediately preceding time period and ends on the last day
of that time period.
"Investment" of any Person shall mean any loan or advance of funds by
such Person to any other Person (other than advances to employees of such Person
for moving and travel expense, drawing accounts and similar expenditures in the
ordinary course of business), any purchase or other acquisition of any Equity
Securities or Indebtedness of any other Person, any capital contribution by such
Person to or any other investment by such Person in any other Person (including,
without limitation, any Indebtedness incurred by such Person of the type
described in clauses (b) and (c) of the definition of "Indebtedness" on behalf
of any other Person); provided, however, that Investments shall not include
accounts receivable or other indebtedness owed by customers of such Person which
are current assets and arose from sales in the ordinary course of such Person's
business.
"Leverage Ratio" shall mean, with respect to any Person at any time,
the ratio, determined on a consolidated basis in accordance with GAAP, of (a)
the Adjusted Total Liabilities of such Person and its Subsidiaries at such time
to (b) the Tangible Net Worth of such Person and its Subsidiaries at such time.
"LIBO Rate" shall mean, with respect to any Interest Period for the
Revolving LIBOR Loans in any Revolving Loan Borrowing consisting of Revolving
LIBOR Loans, a rate per annum equal to the quotient of (a) the rate per annum at
which Dollar deposits are offered to CB&T in the London interbank eurodollar
currency market on the second Business Day prior to the commencement of such
Interest Period at or about 11:00 A.M. (London time) (for delivery on the first
day of such Interest Period) for a term comparable to such Interest Period and
in an amount approximately equal to the amount of the Revolving Loan to be made
by CB&T as part of such Revolving Loan Borrowing, divided by (b) one minus the
Reserve Requirement for such Revolving Loans in effect from time to time. The
LIBO Rate applicable to any Revolving Loan for any Interest Period shall be
automatically adjusted during such Interest Period to reflect any change in the
applicable Reserve Requirement.
"Lien" shall mean, with respect to any property, any security interest,
mortgage, pledge, lien, claim, charge or other encumbrance in, of, or on such
property or the income therefrom, including, without limitation, the interest of
a vendor or lessor under a conditional sale agreement, Capital Lease or other
title retention agreement, or any agreement to provide any of the foregoing, and
the filing of any financing statement or similar instrument under the Uniform
Commercial Code or comparable law of any jurisdiction.
"Margin Stock" shall have the meaning given to that term in Regulation
U issued by the Federal Reserve Board, as amended from time to time, and any
successor regulation thereto.
"Material Adverse Effect" shall mean a material adverse effect on (a)
the business, assets, operations, prospects or financial or other condition of
Borrower or any of its Subsidiaries; (b) the ability of Borrower or any of its
Subsidiaries to pay or perform the Obligations in accordance with the terms of
this Restated Credit Agreement and the other Credit Documents; (c) the rights
and remedies of Administrative Agent or any Bank under this Restated Credit
Agreement, the
1.01-9
<PAGE>
other Credit Documents or any related document, instrument or agreement or (d)
the value of the Collateral, Administrative Agent's or Banks' security interests
in the Collateral or the perfection or priority of such security interests.
"maturity" shall mean, with respect to any Revolving Loan, interest,
fees or other amount payable by Borrower under this Restated Credit Agreement or
the other Credit Documents, the date such Revolving Loan, interest, fee or other
amount becomes due, whether upon the stated maturity or due date, upon
acceleration or otherwise.
"Multiemployer Plan" shall mean any multiemployer plan within the
meaning of section 3(37) of ERISA maintained or contributed to by Borrower or
any ERISA Affiliate.
"Net Income After Tax" shall mean, with respect to any Person for any
period, the net income or net loss of such Person and its Subsidiaries for such
period (after provision for income taxes), determined on a consolidated basis in
accordance with GAAP.
"Net Operating Income" shall mean, with respect to any Person for any
period, the sum, determined on a consolidated basis in accordance with GAAP, of
the following:
(c) The net income or net loss of such Person and its
Subsidiaries for such period (before provision for income taxes);
plus
(d) The sum (to the extent deducted in calculating net income
or loss in clause (a) above) of all extraordinary and non-recurring
expenses of such Person and its Subsidiaries accruing during such
period;
minus
(e) The sum (to the extent added in calculating net income or
loss in clause (a) above) of all extraordinary and non-recurring income
of such Person and its Subsidiaries accruing during such period.
"Net Proceeds" shall mean with respect to the sale or issuance of any
Indebtedness, any Equity Security or any other security by any Person, the
aggregate consideration received by such Person from such sale or issuance less
the sum of the actual amount of the reasonable fees and commissions payable to
Persons other than such Person or any Affiliate of such Person, the reasonable
legal and other professional expenses and the other reasonable expenses directly
related to such sale or issuance that are to be paid by such Person.
"Notice of Revolving Loan Borrowing" shall have the meaning given to
that term in Subparagraph 2.01(b).
"Notice of Revolving Loan Conversion" shall have the meaning given to
that term in Subparagraph 2.01(d).
1.01-10
<PAGE>
"Notice of Revolving Loan Interest Period Selection" shall have the
meaning given to that term in Subparagraph 2.01(e).
"Obligations" shall mean and include, with respect to Borrower, all
loans, advances, debts, liabilities, and obligations, howsoever arising, owed by
Borrower to Administrative Agent or the Banks of every kind and description
(whether or not evidenced by any note or instrument and whether or not for the
payment of money), direct or indirect, absolute or contingent, due or to become
due, now existing or hereafter arising pursuant to the terms of this Restated
Credit Agreement or any of the other Credit Documents, including without
limitation all interest, fees, charges, expenses, attorneys' fees and
accountants' fees chargeable to Borrower or payable by Borrower hereunder or
thereunder.
"Participant" shall have the meaning given to that term in Subparagraph
8.05(b).
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor thereto.
"Permitted Dividend" shall mean and include:
(a) Dividends payable solely in the common stock of Borrower;
(b) Dividends payable by any wholly-owned Subsidiary solely to
Borrower; and
(c) Repurchases of employee stock pursuant to repurchase
agreements.
"Permitted Indebtedness" shall mean and include:
(d) Indebtedness to subcontractors and trade creditors
incurred in the ordinary course of business;
(e) Indebtedness of Borrower to the Banks and Administrative
Agent under this Restated Credit Agreement and the other Credit
Documents;
(f) Unsecured Indebtedness of Borrower, provided that (A) the
Obligations shall at all times rank senior in right of payment with
such unsecured Indebtedness, (B) such unsecured Indebtedness does not
contain material provisions that are more restrictive to Borrower and
its Subsidiaries than the material provisions contained in this
Restated Credit Agreement, (C) no principal payable in connection with
such unsecured Indebtedness is scheduled for payment on or prior to the
Maturity Date, and (D) such unsecured Indebtedness is otherwise
acceptable to the Banks in their sole discretion;
(g) Purchase money Indebtedness incurred to acquire a Capital
Asset provided that (i) such Indebtedness does not exceed the purchase
price of such Capital Asset, (ii) such Indebtedness is incurred not
later than thirty (30) days after the acquisition of such asset and
(iii) the sum of all payments due on such purchase money Indebtedness
and Capital Leases and operating leases referred to in the following
clause (e) shall not exceed in the aggregate $500,000 in any fiscal
year;
1.01-11
<PAGE>
(h) Indebtedness under Capital Leases and operating leases
provided that the sum of all payments due on such Capital Leases and
operating leases and purchase money Indebtedness referred to in the
preceding clause (d) shall not exceed in the aggregate $500,000 in any
fiscal year;
(i) Indebtedness of any wholly-owned Subsidiary of Borrower to
Borrower arising from the extension by Borrower to such Subsidiary of
working capital financing in the ordinary course of Borrower's and such
Subsidiary's businesses, provided that, to the extent requested by
Administrative Agent, such Subsidiary has taken all steps necessary to
grant to Borrower and perfect security interests in the assets of such
Subsidiary as security for such Indebtedness;
(j) Indebtedness arising from the endorsement of instruments
in the ordinary course of business;
(k) Indebtedness of Borrower and its Subsidiaries to any Bank
under Rate Contracts, provided, that (A) all such arrangements are
entered into in connection with bona fide hedging operations and not
for speculation and (B) the aggregate net amount owed by Borrower and
its Subsidiaries under, on account of or otherwise in connection with
such Rate Contracts does not exceed $50,000,000 (marked to market) at
any time; and
(l) Other Indebtedness not exceeding $100,000 at any time.
"Permitted Investments" shall mean and include:
(m) Deposits with commercial banks organized under the laws of
the United States or a state thereof to the extent such deposits are
fully insured by the Federal Deposit Insurance Corporation;
(n) Investments in marketable obligations issued or fully
guaranteed by the United States and maturing not more than ninety (90)
days from the date of issuance;
(o) Investments (including debt obligations) received in
connection with the bankruptcy or reorganization of customers or
suppliers and in settlement of delinquent obligations of, and other
disputes with, customers or suppliers;
(p) Investments arising under Rate Contracts otherwise
permitted pursuant to clause (h) of the definition of "Permitted
Indebtedness"; and
(q) Investments not otherwise permitted hereby not exceeding
in the aggregate $50,000 at any time outstanding.
"Permitted Liens" shall mean and include:
(r) Liens for taxes or other governmental charges not at the
time delinquent or thereafter payable without penalty or being
contested in good faith, provided provision is
1.01-12
<PAGE>
made to the reasonable satisfaction of Administrative Agent for the
eventual payment thereof if subsequently found payable;
(s) Liens of carriers, warehousemen, mechanics, materialmen,
vendors, and landlords incurred in the ordinary course of business for
sums not overdue or being contested in good faith, provided provision
is made to the reasonable satisfaction of Administrative Agent for the
eventual payment thereof if subsequently found payable;
(t) Deposits under workers' compensation, unemployment
insurance and social security laws or to secure the performance of
bids, tenders, contracts (other than for the repayment of borrowed
money) or leases, or to secure statutory obligations of surety or
appeal bonds or to secure indemnity, performance or other similar bonds
in the ordinary course of business;
(u) Liens arising out of a judgment or award not exceeding
$100,000 (exclusive of any amounts covered by insurance issued by a
Person not an Affiliate of Borrower) with respect to which an appeal is
being prosecuted, a stay of execution pending appeal having been
secured;
(v) Liens securing purchase money indebtedness if such
indebtedness is Permitted Indebtedness pursuant to clause (d) of the
definition thereof and such Liens do not extend to property other than
the property financed with such indebtedness;
(w) Liens securing obligations under a Capital Lease if such
lease is Permitted Indebtedness pursuant to clause (e) of the
definition thereof and such Liens do not extend to property other than
the property leased under such Capital Lease;
(x) Liens in favor of Administrative Agent to secure the
Obligations;
(y) Leases, subleases, licenses and sublicenses granted to
Borrower the granting of which is not prohibited pursuant to the
definition of Permitted Indebtedness;
(z) Liens in favor of customs and revenue authorities which
secure payment of duties in connection with the importation of goods;
(aa) Liens existing on property acquired by Borrower or any of
its Subsidiaries at the time of such acquisition (including Liens on
the assets of any Person at the time such Person becomes a Subsidiary
of Borrower), unless such Liens were created in contemplation of such
acquisition;
(bb) Liens on insurance policies and the proceeds thereof
incurred solely to secure the financing of premiums owing with respect
thereto;
(cc) Liens in favor of Borrower; and
(dd) Such minor defects, irregularities, encumbrances,
easements, rights of way, and clouds on title as normally exist on
similar properties which do not, individually or in the aggregate,
materially impair the property affected thereby or the use thereof.
1.01-13
<PAGE>
"Person" shall mean and include an individual, a partnership, a
corporation (including a business trust), a joint stock company, an
unincorporated association, a limited liability company, a joint venture, a
trust or other entity or a Governmental Authority.
"Pricing Grid" shall mean Schedule II.
"Pricing Period" shall mean (a) the period commencing on the Effective
Date and ending on February 28, 1999, (b) the period commencing on March 1, 1999
and ending on May 31, 1999, and (c) each consecutive three-calendar month period
thereafter which commences on the day following the last day of the immediately
preceding three-calendar month period and ends on the last day of that time
period as follows:
(i) December 1st through February 28th or February 29th
(as applicable);
(ii) March 1st through May 31st;
(iii) June 1st through August 31st; and
(iv) September 1st through November 30th.
"Prime Rate" shall mean the per annum rate publicly announced by CB&T
from time to time at its head office as its prime rate. The Prime Rate is
determined by CB&T from time to time as a means of pricing credit extensions to
some customers and is neither directly tied to any external rate of interest or
index nor necessarily the lowest rate of interest charged by CB&T at any given
time for any particular class of customers or credit extensions.
"Proportionate Share" shall mean, with respect to any Bank at any time,
a fraction (expressed as a percentage), the numerator of which is such Bank's
Revolving Loan Commitment at such time and the denominator of which is the Total
Revolving Loan Commitment at such time.
"Quick Ratio" shall mean, with respect to any Person at any time, the
ratio, determined on a consolidated basis in accordance with GAAP, of (a) the
cash and trade accounts receivable of such Person and its Subsidiaries at such
time to (b) the current liabilities of such Person and its Subsidiaries at such
time.
"Rate Contracts" shall mean swap agreements (as that term is defined in
Section 101 of the Federal Bankruptcy Reform Act of 1978, as amended) and any
other agreements or arrangements designed to provide protection against
fluctuations in interest or currency exchange rates.
"Reportable Event" shall have the meaning given to that term in ERISA
and applicable regulations thereunder.
"Required Banks" shall mean (a) at any time Revolving Loans are
outstanding, Banks holding sixty-six and two-thirds percent (66 2/3%) or more of
the aggregate principal amount of such Revolving Loans and (b) at any time no
Revolving Loans are outstanding, Banks whose Proportionate Shares equal or
exceed sixty-six and two-thirds percent (66 2/3%).
1.01-14
<PAGE>
"Requirement of Law" applicable to any Person shall mean (a) the
Articles or Certificate of Incorporation and By-laws, Partnership Agreement or
other organizational or governing documents of such Person, (b) any Governmental
Rule applicable to such Person, (c) any license, permit, approval or other
authorization granted by any Governmental Authority to or for the benefit of
such Person and (d) any judgment, decision or determination of any Governmental
Authority or arbitrator, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is
subject.
"Reserve Requirement" shall mean, with respect to any day in an
Interest Period for a Revolving LIBOR Loan, the aggregate of the reserve
requirement rates (expressed as a decimal) in effect on such day for
eurocurrency funding (currently referred to as "Eurocurrency liabilities" in
Regulation D of the Federal Reserve Board) required to be maintained by a member
bank of the Federal Reserve System. As used herein, the term "reserve
requirement" shall include, without limitation, any basic, supplemental or
emergency reserve requirements imposed on Bank by any Governmental Authority.
"Restated Credit Agreement" shall have the meaning given to that term
in the introductory paragraph hereof.
"Restated Borrower Pledge Agreement" shall have the meaning given to
that term in Paragraph 9.03.
"Restated Borrower Security Agreement" shall have the meaning given to
that term in Paragraph 9.03.
"Revolving LIBOR Loan" shall have the meaning given to that term in
Subparagraph 2.01(b).
"Revolving Loan" shall have the meaning given to that term in
Subparagraph 2.01(a).
"Revolving Loan Borrowing" shall mean a borrowing by Borrower
consisting of a Revolving Loan made by each Bank on the same date and of the
same Type pursuant to a single Notice of Revolving Loan Borrowing.
"Revolving Loan Commitment" shall mean, with respect to any Bank at any
time, such Bank's Initial Revolving Loan Commitment at such time or, if the
conditions to the increase in the Revolving Loan Commitments set forth in
Section III are satisfied on the Commitment Adjustment Date, such Bank's
Increased Revolving Loan Commitment at such time if such time is after the
Commitment Adjustment Date.
"Revolving Loan Commitment Fees" shall have the meaning given to that
term in Subparagraph 2.03(b).
"Revolving Loan Maturity Date" shall have the meaning given to that
term in Subparagraph 2.01(a).
"Revolving Loan Note" shall have the meaning given to that term in
Subparagraph 2.06(a).
1.01-15
<PAGE>
"Revolving Prime Rate Loan" shall have the meaning given to that term
in Subparagraph 2.01(b).
"Security Documents" shall mean and include (i) prior to the Tenex Data
Acquisition Effective Date, the Borrower Security Agreement, the Borrower Pledge
Agreement, the Bell Canada Guaranty, and all other documents, instruments and
agreements delivered to Administrative Agent or any Bank to secure the
Obligations or in connection with the Collateral; and (ii) on and after the
Tenex Data Acquisition Effective Date, each of the items listed in clause (i)
above, the Bell Canada Pledge Agreement, the Bell-Tenex Guaranty, the Bell-Tenex
Security Agreement, the Bell-Tenex Canadian Security Documents, and all other
documents, instruments and agreements delivered to Administrative Agent or any
Bank to secure the Obligations or in connection with the Collateral.
"Senior Adjusted Total Liabilities" shall mean, with respect to
Borrower at any time, the difference of the following:
(a) The Adjusted Total Liabilities of Borrower and its
Subsidiaries at such time;
minus
(b) The aggregate principal amount of all Subordinated
Indebtedness of Borrower permitted pursuant to Subparagraph 5.02(b) and
clause (c) of the definition of "Permitted Indebtedness".
"Senior Leverage Ratio" shall mean, with respect to Borrower at any
time, the ratio of (a) the Senior Adjusted Total Liabilities of Borrower and its
Subsidiaries at such time to (b) the Tangible Net Worth of Borrower and its
Subsidiaries at such time.
"Solvent" shall mean, with respect to any Person on any date, that on
such date (a) the fair value of the property of such Person is greater than the
fair value of the liabilities (including, without limitation, contingent
liabilities) of such Person, (b) the present fair saleable value of the assets
of such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person's ability to pay as such debts and
liabilities mature and (d) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which
such Person's property would constitute an unreasonably small amount of capital.
"Subordinated Indebtedness" shall mean the unsecured subordinated
Indebtedness of Borrower permitted pursuant to Subparagraph 5.02(b) and clause
(c) of the definition of "Permitted Indebtedness".
"Subsidiary" of any Person shall mean (a) any corporation of which more
than 50% of the issued and outstanding Equity Securities having ordinary voting
power to elect a majority of the Board of Directors of such corporation
(irrespective of whether at the time capital stock of any other class or classes
of such corporation shall or might have voting power upon the occurrence of any
contingency) is at the time directly or indirectly owned or controlled by such
1.01-16
<PAGE>
Person, by such Person and one or more of its other Subsidiaries or by one or
more of such Person's other Subsidiaries, (b) any partnership, joint venture,
limited liability company or other association of which more than 50% of the
equity interest having the power to vote, direct or control the management of
such partnership, joint venture or other association is at the time owned and
controlled by such Person, by such Person and one or more of the other
Subsidiaries or by one or more of such Person's other subsidiaries and (c) any
other Person included in the Financial Statements of such Person on a
consolidated basis.
"Synthetic Lease" shall mean an off-balance sheet financing arrangement
for equipment or real estate which is treated as an operating lease under GAAP
but pursuant to which the lessee of such equipment or real estate has the
benefits and burdens of ownership of the leased equipment or real estate for
U.S. tax purposes.
"Tangible Net Worth" shall mean, 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 sum (without limitation and without duplication of
deductions) of (i) the total liabilities of such Person and its Subsidiaries,
(ii) all reserves established by such Person and its Subsidiaries for
anticipated losses and expenses (to the extent not deducted in calculating total
assets in clause (a) above), (iii) all intangible assets of such Person and its
Subsidiaries (to the extent included in calculating total assets in clause (a)
above), including, without limitation, goodwill (including any amounts, however
designated on the balance sheet, representing the cost of acquisition of
businesses and investments in excess of underlying tangible assets), trademarks,
trademark rights, trade name rights, copyrights, patents, patent rights,
licenses, unamortized debt discount, marketing expenses, organizational
expenses, non-compete agreements and deferred research and development and (iv)
the amount, if any, by which the aggregate intercompany receivables owed to such
Person by its Affiliates exceeds the aggregate intercompany receivables payable
by such Person to its Affiliates.
"Taxes" shall have the meaning given to such term in Paragraph 2.10.
"Tenex Data Acquisition" shall mean the acquisition by Bell-Tenex of
substantially all of the assets of the Tenex Data Division of Axidata, Inc., a
Canadian corporation and a Subsidiary of Abitibi, Inc., a Canadian corporation.
"Tenex Data Acquisition Effective Date" shall mean the date that the
Tenex Data Acquisition is consummated.
"Total Revolving Loan Commitment" shall mean, at any time, One Hundred
Thirty Million Dollars ($130,000,000) or, if such amount is reduced pursuant to
Subparagraph 2.02(b), the amount to which so reduced and in effect at such time.
"Total Unused Revolving Loan Commitment" shall mean, at any time, the
remainder of (a) the Total Revolving Loan Commitment at such time minus (b) the
aggregate principal amount of all Revolving Loans outstanding at such time.
"Type" shall mean, with respect to any Revolving Loan or Revolving Loan
Borrowing at any time, the classification of such Revolving Loan or Revolving
Loan Borrowing by the type of interest rate it then bears, whether an interest
rate based on the Prime Rate or the LIBO Rate.
1.01-17
<PAGE>
"Working Capital" shall mean, with respect to any Person at any time,
the working capital of such Person and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP.
1.01-18
<PAGE>
SCHEDULE 3.01
EFFECTIVE DATE CONDITIONS PRECEDENT
A. PRINCIPAL CREDIT DOCUMENTS.
(1) The Third Amended and Restated Credit Agreement, duly
executed by Borrower, each Bank and Administrative Agent;
(2) The Revolving Loan Note payable to each Bank, duly
executed by Borrower;
(3) The Borrower Security Agreement, duly executed by
Borrower;
(4) The Borrower Pledge Agreement, duly executed by Borrower;
and
(5) The Bell Canada Guaranty, duly executed by Bell Canada;
B. FINANCIAL STATEMENTS, FINANCIAL CONDITION, ETC.
(1) Copies of (a) the audited Financial Statements of Borrower
and its Subsidiaries for the fiscal year ended December 31, 1997,
prepared by PricewaterhouseCoopers, LLP., and (b) the unqualified
opinion (or qualified opinion reasonably acceptable to the Banks) and
management letter (if any) delivered by such accountants in connection
with such Financial Statements; and
(2) A Borrowing Base Certificate dated the Effective Date
which sets forth the calculation of the Borrowing Base as of September
30, 1998, certified by the Chief Financial Officer of Borrower.
C. BORROWER CORPORATE DOCUMENTS.
(1) The Articles of Incorporation of Borrower, certified as of
a recent date prior to the Effective Date by the Secretary of State of
California;
(2) A Certificate of Good Standing (or comparable certificate)
for Borrower, certified as of a recent date prior to the Effective Date
by the Secretary of State of California;
(3) A certificate of the Secretary of Borrower, dated as of
the date of this Restated Credit Agreement, certifying (a) that the
Articles of Incorporation of Borrower, in the form certified by the
Secretary of State of California and delivered to Administrative Agent
pursuant to item C(1) hereof, is in full force and effect and has not
been amended, supplemented, revoked or repealed since the date of such
certification; (b) that attached thereto is a true and correct copy of
the Bylaws of Borrower as in effect on the Effective Date; (c) that
attached thereto are true and correct copies of resolutions duly
adopted by the Board of Directors of Borrower and continuing in effect,
which authorize the execution, delivery and performance by Borrower of
this Restated Credit Agreement
3.01-1
<PAGE>
and the other Credit Documents executed or to be executed by Borrower
and the consummation of the transactions contemplated hereby and
thereby; and (d) that there are no proceedings for the dissolution or
liquidation of Borrower (commenced or threatened);
(4) A certificate of the Secretary of Borrower, dated as of
the date of this Restated Credit Agreement, certifying the incumbency,
signatures and authority of the officers of Borrower authorized to
execute, deliver and perform this Restated Credit Agreement and the
other applicable Credit Documents on behalf of Borrower; and
(5) A Certificate of Good Standing (or comparable certificate)
for each Subsidiary of Borrower, certified as of a recent date prior to
the Effective Date by the Secretary of State (or comparable public
official) of such Subsidiary's jurisdiction of incorporation (or, in
the case of a foreign subsidiary, an opinion of counsel acceptable to
Administrative Agent to such effect).
D. BELL CANADA CORPORATE DOCUMENTS.
(1) The Certificate of Incorporation of Bell Canada, certified
as of a recent date prior to the Effective Date by the California
Secretary of State;
(2) A Certificate of Good Standing (or comparable certificate)
for Bell Canada, certified as of a recent date prior to the Effective
Date by the California Secretary of State;
(3) A certificate of the Secretary of Bell-Canada, dated the
Effective Date, certifying (a) that the Certificate of Incorporation of
Bell-Canada, in the form certified by the California Secretary of State
and delivered to Administrative Agent pursuant to item D(1) hereof, is
in full force and effect and has not been amended, supplemented,
revoked or repealed since the date of such certification; (b) that
attached thereto is a true and correct copy of the Bylaws of Bell
Canada as in effect on the Effective Date; (c) that attached thereto
are true and correct copies of resolutions duly adopted by the Board of
Directors of Bell Canada and continuing in effect, which authorize the
execution, delivery and performance by Bell Canada of the Credit
Documents executed or to be executed by Bell Canada and the
consummation of the transactions contemplated hereby and thereby; and
(d) that there are no proceedings for the dissolution or liquidation of
Bell Canada (commenced or threatened); and
(4) A certificate of the Secretary of Bell Canada, dated the
Effective Date, certifying the incumbency, signatures and authority of
the officers of Bell Canada authorized to execute, deliver and perform
the applicable Credit Documents on behalf of Bell Canada.
3.01-2
<PAGE>
E. SECURITY DOCUMENTS.
(1) All Uniform Commercial Code financing statements
(including amendments and fixture filings) and other documents,
instruments and agreements reasonably requested by Administrative Agent
to perfect the security interests, liens and assignments granted to
Administrative Agent by Borrower in connection herewith, appropriately
completed and duly executed by the appropriate parties;
(2) Uniform Commercial Code search certificates evidencing the
filing of the financing statements necessary to perfect the security
interests granted to Administrative Agent by Borrower pursuant to the
Credit Documents prior to the financing statements of all other
Persons;
(3) The certificates representing the stock pledged to
Administrative Agent pursuant to the Borrower Pledge Agreement,
together with blank stock powers for each such certificate duly
executed by Borrower.
(4) Such other documents, instruments and agreements as
Administrative Agent may reasonably request to establish and perfect
the Liens granted to Administrative Agent or any Bank in this
Agreement, the Security Documents and the other Credit Documents.
F. OPINIONS.
(1) A written opinion of Wilson, Sonsini, Goodrich & Rosati,
outside counsel to Borrower, dated as of the Effective Date and
addressed to Administrative Agent and each Bank, covering such legal
matters as Administrative Agent may reasonably request and otherwise in
form and substance satisfactory to Administrative Agent.
G. OTHER ITEMS.
(1) A duly completed and timely delivered Notice of Borrowing.
(2) A certificate of the President, a Vice President or Chief
Financial Officer of Borrower, addressed to Administrative Agent and
the Banks and dated as of the Effective Date, certifying that:
(a) The representations and warranties set forth in
Paragraph 4.01 are true and correct as of such date;
(b) No Event of Default or Default has occurred and
is continuing as of such date; and
(c) Each of the Credit Documents required to be
delivered to Administrative Agent or any Bank on or prior to
the Effective Date is in full force and effect as of such
date;
3.01-3
<PAGE>
(3) Certificates of insurance in forms acceptable to
Administrative Agent, naming Administrative Agent as additional insured
or as loss payee;
(4) All fees payable to Administrative Agent and the Banks on
or prior to the Effective Date;
(5) All fees and expenses of Administrative Agent's counsel
through the Effective Date; and
(6) Such other evidence as any Bank may reasonably request to
establish the accuracy and completeness of the representations and
warranties and the compliance with the terms and conditions contained
in this Restated Credit Agreement and the other Credit Documents.
3.01-4
<PAGE>
SCHEDULE 4.01(g)
MATERIAL LITIGATION
None
4.01(g)-1
<PAGE>
SCHEDULE 4.01(q)
SUBSIDIARIES
<TABLE>
<CAPTION>
Jurisdiction Classes
of of Outstanding Percent
Name Incorporation Stock Shares Owned
- ---- ------------- ----- ------ -----
<S> <C> <C> <C> <C>
Bell Microproducts Canada, Inc. California Common 100 100%
</TABLE>
4.01(q)-1
<PAGE>
SCHEDULE 5.01(j)
DOCUMENTS TO BE DELIVERED BY BORROWER
ON OR PRIOR TO THE TENEX DATA ACQUISITION EFFECTIVE DATE
A. PRINCIPAL BELL CANADA AND BELL-TENEX CREDIT DOCUMENTS.
(1) The Bell Canada Pledge Agreement, duly executed by Bell
Canada;
(2) The Bell-Tenex Guaranty, duly executed by Bell-Tenex;
(3) The Bell-Tenex Security Agreement, duly executed by
Bell-Tenex; and
(4) The Bell-Tenex Canadian Security Documents, duly executed
by Bell-Tenex.
B. BELL-TENEX CORPORATE DOCUMENTS.
(1) The Certificate of Incorporation of Bell-Tenex, certified
as of a recent date prior to the Tenex Data Acquisition Effective Date
by the Deputy Registrar of Joint Stock Companies of Nova Scotia;
(2) A Certificate of Good Standing (or comparable certificate)
for Bell-Tenex, certified as of a recent date prior to the Tenex Data
Acquisition Effective Date by the Deputy Registrar of Joint Stock
Companies of Nova Scotia;
(3) A certificate of the Secretary of Bell-Tenex, dated the
Tenex Data Acquisition Effective Date, certifying (a) that the
Certificate of Incorporation of Bell-Tenex, in the form certified by
the Deputy Registrar of Joint Stock Companies of Nova Scotia and
delivered to Administrative pursuant to item B(1) hereof, is in full
force and effect and has not been amended, supplemented, revoked or
repealed since the date of such certification; (b) that attached
thereto is a true and correct copy of the Memorandum and Articles of
Association of Bell-Tenex as in effect on the Tenex Data Acquisition
Effective Date; (c) that attached thereto are true and correct copies
of resolutions duly adopted by the Board of Directors of Bell-Tenex and
continuing in effect, which authorize the execution, delivery and
performance by Bell-Tenex of the Credit Documents executed or to be
executed by Bell-Tenex and the consummation of the transactions
contemplated hereby and thereby; and (d) that there are no proceedings
for the dissolution or liquidation of Bell-Tenex (commenced or
threatened); and
(4) A certificate of the Secretary of Bell-Tenex, dated the
Tenex Data Acquisition Effective Date, certifying the incumbency,
signatures and authority of the officers of Bell-Tenex authorized to
execute, deliver and perform the applicable Credit Documents on behalf
of Bell-Tenex.
5.01(j)-1
<PAGE>
C. SECURITY DOCUMENTS.
(1) All Uniform Commercial Code financing statements and other
documents, instruments and agreements reasonably requested by
Administrative Agent to perfect the security interests, liens and
assignments granted to Administrative Agent by Bell Canada and
Bell-Tenex in connection herewith, appropriately completed and duly
executed by the appropriate parties;
(2) Search certificates or similar documentation evidencing
the filing of the financing statements necessary to perfect the
security interests granted to Administrative Agent by Bell Canada and
Bell-Tenex pursuant to the Credit Documents will be prior to the
financing statements of all other Persons;
(3) The certificates representing the stock pledged to
Administrative Agent pursuant to the Bell Canada Pledge Agreement,
together with blank stock powers for each such certificate duly
executed by Borrower.
(4) Such other documents, instruments and agreements as
Administrative Agent may reasonably request to establish and perfect
the Liens granted to Administrative Agent or any Bank in this
Agreement, the Security Documents and the other Credit Documents.
D. OPINIONS.
(1) A written opinion of Wilson, Sonsini, Goodrich & Rosati,
outside counsel to Borrower, dated as of the Tenex Data Acquisition
Effective Date and addressed to Administrative Agent and each Bank,
covering such legal matters as Administrative Agent may reasonably
request and otherwise in form and substance satisfactory to
Administrative Agent.
(2) Written opinions of Blake, Cassels & Graydon and Stewart
McKelvey Stirling Scales, outside counsel to Bell-Tenex, dated as of
the Tenex Data Acquisition Effective Date and addressed to
Administrative Agent and each Bank, covering such legal matters as
Administrative Agent may reasonably request and otherwise in form and
substance satisfactory to Administrative Agent.
E. OTHER ITEMS.
(1) A certificate of the President, a Vice President or Chief
Financial Officer of Borrower, addressed to Administrative Agent and
the Banks and dated as of the Tenex Data Acquisition Effective Date,
certifying that:
(a) The representations and warranties set forth in
Paragraph 4.01 are true and correct as of such date;
(b) No Event of Default or Default has occurred and
is continuing as of such date; and
5.01(j)-2
<PAGE>
(c) Each of the Credit Documents required to be
delivered to Administrative Agent or any Bank on or prior to
the Tenex Data Acquisition Effective Date is in full force and
effect as of such date;
(3) Certificates of insurance in forms acceptable to
Administrative Agent, naming Administrative Agent as additional insured
or as loss payee with respect to the assets of Bell-Tenex secured
pursuant to the Bell-Tenex Security Agreement and the Bell-Tenex
Canadian Security Documents;
(4) Such other evidence as any Bank may reasonably request to
establish the accuracy and completeness of the representations and
warranties and the compliance with the terms and conditions contained
in this Restated Credit Agreement and the other Credit Documents.
5.01(j)-3
<PAGE>
EXHIBIT A
NOTICE OF REVOLVING LOAN BORROWING
[Date]
California Bank & Trust
320 California Street, Suite 600
San Francisco, CA 94104
Attn: Relationship Manager -
Bell Microproducts
1. Reference is made to that certain Third Amended and Restated Credit
Agreement, dated as of November 12, 1998 (the "Restated Credit Agreement"),
among Bell Microproducts Inc. ("Borrower"), the financial institutions listed in
Schedule I to the Restated Credit Agreement (the "Banks") and California Bank &
Trust, as agent for the Banks (in such capacity, "Administrative Agent"). Unless
otherwise indicated, all terms defined in the Restated Credit Agreement have the
same respective meanings when used herein.
2. Pursuant to Subparagraph 2.01(b) of the Restated Credit Agreement,
Borrower hereby requests a Revolving Loan Borrowing upon the following terms:
(a) The principal amount of the requested Revolving Loan
Borrowing is to be $__________;
(b) The requested Revolving Loan Borrowing is to consist of
Revolving ["Prime Rate" or "LIBOR"] Loans;
(c) If the requested Revolving Loan Borrowing is to consist of
Revolving LIBOR Loans, the initial Interest Period for such Revolving
Loans will be __________ months; and
(d) The date of the requested Revolving Loan Borrowing is to
be __________, [19] [20] __.
3. Borrower hereby certifies to Administrative Agent and the Banks
that, on the date of this Notice of Revolving Loan Borrowing and after giving
effect to the requested Revolving Loan Borrowing:
(a) The representations and warranties set forth in Paragraph
4.01 of the Restated Credit Agreement are true and correct as if made
on such date;
(b) No Event of Default or Default has occurred and is
continuing;
(c) Each of the Credit Documents remains in full force and
effect; and
(d) No material adverse change in the Eligible Accounts or
Eligible Inventory which comprises the Borrowing Base has occurred
since the later date of (i) the latest audit conducted by or on behalf
of Administrative Agent or any Bank, and (ii) the most
A-1
<PAGE>
recent Borrowing Base Certificate.
4. Please disburse the proceeds of the requested Revolving Loan
Borrowing to ___________________________________________________________________
________________________________________________________________.
IN WITNESS WHEREOF, Borrower has executed this Notice of Revolving Loan
Borrowing on the date set forth above.
BELL MICROPRODUCTS INC.
By: ________________________________
Name: __________________________
Title: _________________________
A-2
<PAGE>
EXHIBIT B
NOTICE OF REVOLVING LOAN CONVERSION
[Date]
California Bank & Trust
320 California Street, Suite 600
San Francisco, CA 94104
Attn: Relationship Manager -
Bell Microproducts
1. Reference is made to that certain Third Amended and Restated Credit
Agreement, dated as of November 12, 1998 (the "Restated Credit Agreement"),
among Bell Microproducts Inc. ("Borrower"), the financial institutions listed in
Schedule I to the Restated Credit Agreement (the "Banks") and California Bank &
Trust, as agent for the Banks (in such capacity, "Administrative Agent"). Unless
otherwise indicated, all terms defined in the Restated Credit Agreement have the
same respective meanings when used herein.
2. Pursuant to Subparagraph 2.01(d) of the Restated Credit Agreement,
Borrower hereby requests to convert a Revolving Loan Borrowing as follows:
(a) The Revolving Loan Borrowing to be converted consists of
Revolving ["Prime Rate" or "LIBOR"] Loans in the aggregate principal
amount of $__________ which were initially advanced to Borrower on
__________, [19] [20] __;
(b) The Revolving Loans in the Revolving Loan Borrowing are to
be converted to Revolving ["Prime Rate" or "LIBOR"] Loans;
(c) If such Revolving Loans are to be converted into Revolving
LIBOR Loans, the initial Interest Period for such Loans commencing upon
conversion will be __________ months; and
(d) The date of the requested conversion is to be __________,
[19] [20] __.
3. Borrower hereby certifies to Administrative Agent and the Banks
that, on the date of this Notice of Revolving Loan Conversion, and after giving
effect to the requested conversion:
(a) The representations and warranties set forth in Paragraph
4.01 of the Restated Credit Agreement are true and correct on such date
as if made on such date;
(b) No Event of Default or Default has occurred and is
continuing; and
(c) Each of the Credit Documents remains in full force and
effect.
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<PAGE>
IN WITNESS WHEREOF, Borrower has executed this Notice of Revolving Loan
Conversion on the date set forth above.
BELL MICROPRODUCTS INC.
By: ________________________________
Name: __________________________
Title: _________________________
B-2
<PAGE>
EXHIBIT C
NOTICE OF REVOLVING LOAN INTEREST PERIOD SELECTION
[Date]
California Bank & Trust
320 California Street, Suite 600
San Francisco, CA 94104
Attn: Relationship Manager -
Bell Microproducts
1. Reference is made to that certain Third Amended and Restated Credit
Agreement, dated as of November 12, 1998 (the "Restated Credit Agreement"),
among Bell Microproducts Inc. ("Borrower"), the financial institutions listed in
Schedule I to the Restated Credit Agreement (the "Banks") and California Bank &
Trust, as agent for the Banks (in such capacity, "Administrative Agent"). Unless
otherwise indicated, all terms defined in the Restated Credit Agreement have the
same respective meanings when used herein.
2. Pursuant to Subparagraph 2.01(e) of the Restated Credit Agreement,
Borrower hereby selects a new Interest Period for a Revolving Loan Borrowing as
follows:
(a) The Revolving Loan Borrowing for which a new Interest
Period is to be selected consists of Revolving LIBOR Loans in the
aggregate principal amount of $_________ which were initially advanced
to Borrower on ____________, [19] [20] __;
(b) The last day of the current Interest Period for such
Revolving Loans is ________, [19] [20] __; and
(c) The next Interest Period for such Revolving Loans
commencing upon the last day of the current Interest Period is to be
_________ months.
3. Borrower hereby certifies to Bank that, on the date of this Notice
of Revolving Loan Interest Period Selection and after giving effect to the
selection made herein:
(a) The representations and warranties set forth in Paragraph
4.01 of the Restated Credit Agreement are true and correct as if made
on such date;
(b) No Event of Default or Default has occurred and is
continuing; and
(c) Each of the Credit Documents remains in full force and
effect.
C-1
<PAGE>
IN WITNESS WHEREOF, Borrower has executed this Notice of Revolving Loan
Interest Period Selection on the date set forth above.
BELL MICROPRODUCTS INC.
By: ________________________________
Name: __________________________
Title: _________________________
C-2
<PAGE>
EXHIBIT D
REVOLVING LOAN NOTE
$______________ ____________________, California
November 12, 1998
FOR VALUE RECEIVED, BELL MICROPRODUCTS INC., a California corporation
("Borrower"), hereby promises to pay to the order of ____________________, a
____________________ ("Bank"), the principal sum of
______________________________ DOLLARS ($__________) or such lesser amount as
shall equal the aggregate outstanding principal balance of the Revolving Loans
made by Bank to Borrower pursuant to the Restated Credit Agreement referred to
below (as amended from time to time, the "Restated Credit Agreement"), on or
before the Revolving Loan Maturity Date specified in the Restated Credit
Agreement; and to pay interest on said sum, or such lesser amount, at the rates
and on the dates provided in the Restated Credit Agreement.
Borrower shall make all payments hereunder, for the account of Bank's
Applicable Lending Office, to Administrative Agent as indicated in the Restated
Credit Agreement, in lawful money of the United States and in same day or
immediately available funds.
Borrower hereby authorizes Bank to record on the schedule(s) annexed to
this note the date and amount of each Revolving Loan and of each payment or
prepayment of principal made by Borrower and agrees that all such notations
shall constitute prima facie evidence of the matters noted, provided that any
failure by Bank to so record shall not affect the obligations of Borrower
hereunder or under the Restated Credit Agreement.
This note is one of the Revolving Loan Notes referred to in the Third
Amended and Restated Credit Agreement, dated as of November 12, 1998, among
Borrower, Bank and the other financial institutions from time to time parties
thereto (collectively, the "Banks") and California Bank & Trust acting as agent
for the Banks. This note is subject to the terms of the Restated Credit
Agreement, including the rights of prepayment and the rights of acceleration of
maturity. Terms used herein have the meanings assigned to those terms in the
Restated Credit Agreement, unless otherwise defined herein.
The transfer, sale or assignment of any rights under or interest in
this note is subject to certain restrictions contained in the Restated Credit
Agreement, including Paragraph 8.05 thereof.
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<PAGE>
Borrower shall pay all reasonable fees and expenses, including
reasonable attorneys' fees, incurred by Bank in the enforcement or attempt to
enforce any of Borrower's obligations hereunder not performed when due. Borrower
hereby waives notice of presentment, demand, protest or notice of any other
kind. This note shall be governed by and construed in accordance with the laws
of the State of California.
BELL MICROPRODUCTS INC.
By: ________________________________
Name: __________________________
Title: _________________________
D-2
<PAGE>
<TABLE>
LOANS AND PAYMENTS OF PRINCIPAL
<CAPTION>
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Amount of Unpaid
Interest Principal Paid Principal Notation
Date Type of Loan Amount of Loan Period or Prepaid Balance Made By
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
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- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
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- ------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
D-3
</TABLE>
<PAGE>
EXHIBIT E
THIRD AMENDED AND RESTATED SECURITY AGREEMENT
THIS THIRD AMENDED AND RESTATED SECURITY AGREEMENT, dated as of
November 12, 1998, is executed by BELL MICROPRODUCTS INC., a California
corporation ("Borrower"), in favor of CALIFORNIA BANK & TRUST, a California
banking corporation, acting as agent (in such capacity, "Administrative Agent")
for the financial institutions which are from time to time parties to the
Restated Credit Agreement defined in Recital B below (collectively, the
"Banks").
RECITALS
A. Pursuant to a Second Amended and Restated Credit Agreement dated as
of May 23, 1995 (as amended to the date hereof, the "Existing Credit Agreement")
among Borrower, the Banks and Administrative Agent, the Banks agreed to provide
to Borrower a certain credit facility. The availability of the credit facility
under the Existing Credit Agreement was subject, among other conditions, to the
execution and delivery by Borrower of a Second Amended and Restated Security
Agreement dated as of May 23, 1995 (as amended to the date hereof, the "Existing
Security Agreement").
B. Borrower has requested the Banks to amend the Existing Credit
Agreement to increase the amount of the credit facility provided for therein and
to make certain other changes. Pursuant to a Third Amended and Restated Credit
Agreement, dated as of November 12, 1998 (the "Restated Credit Agreement"),
among Borrower, the Banks and Administrative Agent, the Banks have agreed so to
amend the Existing Credit Agreement upon the terms and subject to the conditions
set forth in the Restated Credit Agreement including, without limitation, the
execution and delivery by Borrower of this Third Amended and Restated Security
Agreement (this "Restated Security Agreement") which amends and, for convenience
of reference, restates the Existing Security Agreement as so amended in its
entirety.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Borrower hereby agrees with Administrative Agent, for the ratable
benefit of the Banks and Administrative Agent, that the Existing Security
Agreement shall be amended and restated to read in its entirety as follows:
1. Definitions and Interpretation. When used in this Restated Security
Agreement, the following terms shall have the following respective meanings:
"Account Debtor" shall have the meaning given to that term in
subparagraph 3(g) hereof.
"Administrative Agent" shall have the meaning given to that
term in the introductory paragraph hereof.
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<PAGE>
"Banks" shall have the meaning given to that term in the
introductory paragraph hereof.
"Borrower" shall have the meaning given to that term in the
introductory paragraph hereof.
"Collateral" shall have the meaning given to that term in
paragraph 2 hereof.
"Depositary Bank" shall have the meaning given to that term in
subparagraph 4(e) hereof.
"Equipment" shall have the meaning given to that term in
Attachment 1 hereto.
"Excluded Collateral" shall mean Collateral consisting of
Equipment, Inventory or other goods located at an address not specified
in item 8 of Attachment 2 hereto and having a value not to exceed
$10,000 in the aggregate for each such unspecified location or $100,000
in the aggregate for all such unspecified locations.
"Existing Credit Agreement" shall have the meaning given to
that term in Recital A hereof.
"Existing Security Agreement" shall have the meaning given to
that term in Recital A hereof.
"Intermediary" shall have the meaning given to that term in
Subparagraph 4(f) hereof.
"Inventory" shall have the meaning given to that term in
Attachment 1 hereto.
"Obligations" shall mean and include all loans, advances,
debts, liabilities and obligations, howsoever arising, owed by Borrower
to any Bank or Administrative Agent of every kind and description
(whether or not evidenced by any note or instrument and whether or not
for the payment of money), direct or indirect, absolute or contingent,
due or to become due, now existing or hereafter arising pursuant to the
terms of the Restated Credit Agreement or any of the other Credit
Documents, including without limitation all interest, fees, charges,
expenses, attorneys' fees and accountants' fees chargeable to Borrower
or payable by Borrower thereunder.
"Receivables" shall have the meaning given to that term in
Attachment 1 hereto.
"Related Contracts" shall have the meaning given to that term
in Attachment 1 hereto.
E-2
<PAGE>
"Restated Credit Agreement" shall have the meaning given to
that term in Recital B hereof as further amended, modified,
supplemented or replaced from time to time.
"Restated Security Agreement" shall have the meaning given to
that term in Recital B hereof as further amended, modified,
supplemented or replaced from time to time.
"UCC" shall mean the Uniform Commercial Code as in effect in
the State of California from time to time.
Unless otherwise defined herein, all other capitalized terms used herein and
defined in the Restated Credit Agreement shall have the respective meanings
given to those terms in the Restated Credit Agreement, and all terms defined in
the UCC shall have the respective meanings given to those terms in the UCC. The
rules of construction set forth in Section I of the Restated Credit Agreement
shall, to the extent not inconsistent with the terms of this Restated Security
Agreement, apply to this Restated Security Agreement and are hereby incorporated
by reference.
2. Grant of Security Interest. As security for the Obligations,
Borrower hereby pledges and assigns to Administrative Agent (for the ratable
benefit of the Banks and Administrative Agent) and grants to Administrative
Agent (for the ratable benefit of the Banks and Administrative Agent) a security
interest in all right, title and interest of Borrower in and to the property
described in Attachment 1 hereto, whether now owned or hereafter acquired
(collectively and severally, the "Collateral"), which Attachment 1 is
incorporated herein by this reference.
3. Representations and Warranties. Borrower represents and warrants to
the Banks and Administrative Agent as follows:
(a) Borrower is the legal and beneficial owner of the
Collateral (or, in the case of after-acquired Collateral, at the time
Borrower acquires rights in the Collateral, will be the legal and
beneficial owner thereof). No other Person has (or, in the case of
after-acquired Collateral, at the time Borrower acquires rights
therein, will have) any right, title, claim or interest (by way of
Lien, purchase option or otherwise) in, against or to the Collateral,
other than Permitted Liens.
(b) Administrative Agent has (or in the case of after-acquired
Collateral, at the time Borrower acquires rights therein, will have) a
first priority perfected security interest in the Collateral.
(c) All Equipment and Inventory (except for Excluded
Collateral) are (i) located at the locations indicated in item 8 of
Attachment 2 hereto, (ii) in transit to such locations or (iii) in
transit to a third party purchaser which will become obligated on a
Receivable to Borrower upon receipt. Except for Equipment and Inventory
referred to in clauses (ii) and (iii) of the preceding sentence,
Borrower has exclusive possession and control of the Inventory and
Equipment.
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<PAGE>
(d) All Inventory has been (or, in the case of hereafter
produced Inventory, will be) produced in compliance with all applicable
Governmental Rules, including the Fair Labor Standards Act (if
applicable).
(e) Borrower keeps all records concerning the Receivables and
the originals of all Related Contracts at its chief executive office
located at the address set forth in item 2 of Attachment 2 hereto.
(f) Borrower has delivered to Administrative Agent, together
with all necessary stock powers, endorsements, assignments and other
necessary instruments of transfer, the original of each Receivable
which is an instrument or chattel paper having a face value in excess
of $100,000 and the originals of all certificated securities owed
directly by Borrower.
(g) Each Receivable is genuine and enforceable against the
party obligated to pay the same (an "Account Debtor") free from any
right of rescission, defense, setoff or discount.
(h) Each insurance policy maintained by Borrower is validly
existing and is in full force and effect. Borrower is not in default in
any material respect under the provisions of any insurance policy, and
there are no facts which, with the giving of notice or passage of time
(or both), would result in such a default under any provision of any
such insurance policy.
4. Covenants. Borrower hereby agrees as follows:
(a) Borrower, at Borrower's expense, shall promptly procure,
execute and deliver to Administrative Agent all documents, instruments
and agreements and perform all acts which are necessary or desirable,
or which Administrative Agent may reasonably request, to establish,
maintain, preserve, protect and perfect the Collateral, the Lien
granted to Administrative Agent therein and the first priority of such
Lien or to enable Administrative Agent to exercise and enforce its
rights and remedies hereunder with respect to any Collateral. Without
limiting the generality of the preceding sentence, Borrower shall (i)
procure, execute and deliver to Administrative Agent all stock powers,
endorsements, assignments, financing statements and other instruments
of transfer requested by Administrative Agent, (ii) deliver to
Administrative Agent promptly upon receipt the original of all
Collateral which is an instrument, document or chattel paper having a
face value in excess of $100,000 and letters of credit and certificated
securities and (iii) take such actions as may be necessary to perfect
the Lien of Administrative Agent in any Collateral consisting of
investment property (including taking the actions required by
Subparagraph 4(f) hereof and, in those jurisdictions where appropriate,
causing such Liens to be recorded or registered in the books of any
financial intermediary or clearing corporation requested by
Administrative Agent).
E-4
<PAGE>
(b) Borrower shall not use or permit any Collateral to be used
in violation of (i) any provision of the Restated Credit Agreement,
this Restated Security Agreement or any other Credit Document, (ii) any
applicable Governmental Rule where such use might have a Material
Adverse Effect, or (iii) any policy of insurance covering the
Collateral.
(c) Borrower shall pay promptly when due all taxes and other
Governmental Charges, all Liens and all other charges now or hereafter
imposed upon, relating to or affecting any Collateral, except such
Governmental Charges, Liens and other charges as may in good faith be
contested or disputed by appropriate proceedings, provided that in each
such case appropriate reserves are maintained in accordance with GAAP.
(d) Without ninety (90) days' prior written notice to
Administrative Agent, Borrower shall not (i) change Borrower's name or
place of business (or, if Borrower has more than one place of business,
its chief executive office), or the office in which Borrower's records
relating to Receivables or the originals of Related Contracts are kept,
(ii) keep Collateral consisting of chattel paper and documents at any
location other than its chief executive office set forth in item 2 of
Attachment 2 hereto, or (iii) keep Collateral consisting of Equipment,
Inventory or other goods (except for Excluded Collateral) at any
location other than the locations set forth in item 8 of Attachment 2
hereto.
(e) For each deposit account maintained by Borrower, Borrower
shall (i) execute and deliver to the bank or other depository
institution at which such deposit account is maintained (the
"Depositary Bank") a Notice of Security Interest in the form of
Attachment 3 hereto (or in any other form acceptable to Administrative
Agent in its sole discretion) and (ii) use its best efforts to cause
the Depositary Bank to execute and deliver to Administrative Agent an
Acknowledgment and Agreement in the form set forth in such Notice of
Security Interest. Without ten (10) days prior written notice to
Administrative Agent, Borrower shall not establish any deposit account
not set forth in item 16 of Attachment 2 hereto.
(f) For each securities account and commodity account
maintained by Borrower, Borrower shall (i) complete, execute and
deliver to the bank, broker or other Person at which such account is
maintained (the "Intermediary") a Notice of Security Interest in the
form of Attachment 4 hereto and (ii) use its best efforts to cause the
Intermediary to execute and deliver to Administrative Agent an
Acknowledgment and Agreement in the form set forth in such Notice of
Security Interest (or in any other form acceptable to Administrative
Agent in its sole discretion). Without thirty (30) days prior written
notice to Administrative Agent, Borrower shall not establish any
securities account or commodity account not set forth in item 14 of
Attachment 2 hereto.
(g) Borrower shall deposit, or cause to be deposited, all
remittances, checks and other funds (in whatever form) received with
respect to Receivables to a deposit account for which Borrower has
complied with subparagraph 4(e) above and in which Administrative Agent
has a first priority perfected security interest, subject only to the
banker's lien of the Depositary Bank covering its customary account
maintenance charges and fees.
E-5
<PAGE>
(h) Borrower shall appear in and defend any action or
proceeding which may affect its title to or Administrative Agent's
interest in the Collateral.
(i) If Administrative Agent gives value to enable Borrower to
acquire rights in or the use of any Collateral, Borrower shall use such
value for such purpose.
(j) Borrower shall keep separate, accurate and complete
records of the Collateral and shall provide Administrative Agent with
such records and such other reports and information relating to the
Collateral as Administrative Agent may reasonably request from time to
time.
(k) Borrower shall not surrender or lose possession of (other
than to Administrative Agent), sell, encumber, lease, rent, option, or
otherwise dispose of or transfer any Collateral or right or interest
therein except as permitted in the Restated Credit Agreement, and,
notwithstanding any provision of the Restated Credit Agreement,
Borrower shall keep the Collateral free of all Liens except Permitted
Liens.
(l) Borrower shall type, print or stamp conspicuously on the
face of all original copies of all Collateral consisting of chattel
paper and documents not in the possession of Administrative Agent a
legend satisfactory to Administrative Agent indicating that such
chattel paper is subject to the security interest granted hereby.
(m) Borrower shall collect, enforce and receive delivery of
the Receivables in accordance with past practice unless otherwise
notified by Administrative Agent after the occurrence and during the
continuance of an Event of Default.
(n) Borrower shall comply with all material Requirements of
Law applicable to Borrower which relate to the production, possession,
operation, maintenance and control of the Collateral (including,
without limitation, the Fair Labor Standards Act).
(o) Borrower shall (i) maintain and keep in force insurance of
the types and in amounts customarily carried from time to time during
the term of this Restated Security Agreement in its lines of business,
including fire, public liability, property damage and worker's
compensation, such insurance to be carried with companies and in
amounts satisfactory to Administrative Agent, (ii) deliver to
Administrative Agent from time to time, as Administrative Agent may
request, schedules setting forth all insurance then in effect, and
(iii) deliver to Administrative Agent copies of each policy of
insurance which replaces, or evidences the renewal of, each existing
policy of insurance at least fifteen (15) days prior to the expiration
of such policy. Administrative Agent shall be named as additional
insured or additional loss payee, as appropriate, on all liability and
property insurance of Borrower and such policies shall contain such
additional endorsements as shall be required by Administrative Agent,
including the endorsements specified in Attachment 5 hereto. Prior to
the occurrence and the continuance of an Event of Default, all proceeds
of any property insurance paid as a result of any event or occurrence
shall be paid to Borrower. All proceeds of any property insurance paid
after the occurrence and during the continuance of an Event of Default
shall be paid to Administrative Agent to be held as Collateral and
applied as provided in the Restated Credit Agreement or, at the
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<PAGE>
election of the Required Banks, returned to Borrower.
5. Authorized Action by Administrative Agent. Borrower hereby
irrevocably appoints Administrative Agent as its attorney-in-fact and agrees
that Administrative Agent may perform (but Administrative Agent shall not be
obligated to and shall incur no liability to Borrower or any third party for
failure so to do) any act which Borrower is obligated by this Restated Security
Agreement to perform, and to exercise such rights and powers as Borrower might
exercise with respect to the Collateral, including, without limitation, the
right to (a) collect by legal proceedings or otherwise and endorse, receive and
receipt for all dividends, interest, payments, proceeds and other sums and
property now or hereafter payable on or on account of the Collateral; (b) enter
into any extension, reorganization, deposit, merger, consolidation or other
agreement pertaining to, or deposit, surrender, accept, hold or apply other
property in exchange for the Collateral; (c) insure, process, preserve and
enforce the Collateral; (d) make any compromise or settlement, and take any
action it deems advisable, with respect to the Collateral; (e) pay any
Indebtedness of Borrower relating to the Collateral; and (f) execute UCC
financing statements and other documents, instruments and agreements required
hereunder; provided, however, that Administrative Agent may exercise such powers
only after the occurrence and during the continuance of an Event of Default.
Borrower agrees to reimburse Administrative Agent upon demand for all reasonable
costs and expenses, including attorneys' fees, Administrative Agent may incur
while acting as Borrower's attorney-in-fact hereunder, all of which costs and
expenses are included in the Obligations. Borrower agrees that such care as
Administrative Agent gives to the safekeeping of its own property of like kind
shall constitute reasonable care of the Collateral when in Administrative
Agent's possession; provided, however, that Administrative Agent shall not be
required to make any presentment, demand or protest, or give any notice and need
not take any action to preserve any rights against any prior party or any other
Person in connection with the Obligations or with respect to the Collateral.
6. Default and Remedies. Borrower shall be deemed in default under this
Restated Security Agreement upon the occurrence and during the continuance of an
Event of Default, as that term is defined in the Restated Credit Agreement. In
addition to all other rights and remedies granted to Administrative Agent by
this Restated Security Agreement, the Restated Credit Agreement, the other
Credit Documents, the UCC and other applicable Governmental Rules,
Administrative Agent may, upon the occurrence and during the continuance of any
Event of Default, exercise any one or more of the following rights and remedies:
(a) collect, receive, appropriate or realize upon the Collateral or otherwise
foreclose or enforce Administrative Agent's security interests in any or all
Collateral in any manner permitted by applicable Governmental Rules or in this
Restated Security Agreement; (b) notify any or all Account Debtors to make
payments on Receivables directly to Administrative Agent; (c) direct any
Depositary Bank or Intermediary to liquidate the account(s) maintained by it,
pay all amounts payable in connection therewith to Administrative Agent and/or
deliver any proceeds thereof to Administrative Agent; (d) sell or otherwise
dispose of any or all Collateral at one or more public or private sales, whether
or not such Collateral is present at the place of sale, for cash or credit or
future delivery, on such terms and in such manner as Administrative Agent may
determine; (e) require Borrower to assemble the Collateral and make it available
to Administrative Agent at a place to be designated by Administrative Agent; (f)
enter onto any property where any Collateral is located and take possession
thereof with or without judicial process; and (g) prior to the disposition of
the Collateral, store, process, repair or recondition any Collateral consisting
of
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<PAGE>
goods, perform any obligations and enforce any rights of Borrower under any
Related Contracts or otherwise prepare and preserve Collateral for disposition
in any manner and to the extent Administrative Agent deems appropriate. In
furtherance of Administrative Agent's rights hereunder, Borrower hereby grants
to Administrative Agent an irrevocable, non-exclusive license (exercisable
without royalty or other payment by Administrative Agent) to use, license or
sublicense any patent, trademark, tradename, copyright or other intellectual
property in which Borrower now or hereafter has any right, title or interest,
together with the right of access to all media in which any of the foregoing may
be recorded or stored. In any case where notice of any sale or disposition of
any Collateral is required, Borrower hereby agrees that seven (7) days notice of
such sale or disposition is reasonable.
7. Miscellaneous.
(a) Notices. Except as otherwise specified herein, all
notices, requests, demands, consents, instructions or other
communications to or upon Borrower or Administrative Agent under this
Restated Security Agreement shall be given as provided in Paragraph
8.01 of the Restated Credit Agreement.
(b) Waivers; Amendments. Any term, covenant, agreement or
condition of this Restated Security Agreement may be amended or waived
only as provided in the Restated Credit Agreement. No failure or delay
by Administrative Agent or any Bank in exercising any right hereunder
shall operate as a waiver thereof or of any other right nor shall any
single or partial exercise of any such right preclude any other further
exercise thereof or of any other right. Unless otherwise specified in
any such waiver or consent, a waiver or consent given hereunder shall
be effective only in the specific instance and for the specific purpose
for which given.
(c) Successors and Assigns. This Restated Security Agreement
shall be binding upon and inure to the benefit of Administrative Agent,
the Banks and Borrower and their respective successors and assigns;
provided, however, that Administrative Agent, the Banks and Borrower
may sell, assign and delegate their respective rights and obligations
hereunder only as permitted by the Restated Credit Agreement.
Administrative Agent may disclose this Restated Security Agreement as
provided in the Restated Credit Agreement.
(d) Partial Invalidity. If at any time any provision of this
Restated Security Agreement is or becomes illegal, invalid or
unenforceable in any respect under the law or any jurisdiction, neither
the legality, validity or enforceability of the remaining provisions of
this Restated Security Agreement nor the legality, validity or
enforceability of such provision under the law of any other
jurisdiction shall in any way be affected or impaired thereby.
(e) Cumulative Rights, Etc. The rights, powers and remedies of
Administrative Agent and the Banks under this Restated Security
Agreement shall be in addition to all rights, powers and remedies given
to Administrative Agent and the Banks by virtue of any applicable
Governmental Rule, the Restated Credit Agreement, any other Credit
Document or any other agreement, all of which rights, powers, and
remedies shall
E-8
<PAGE>
be cumulative and may be exercised successively or concurrently without
impairing Administrative Agent's rights hereunder. Borrower waives any
right of marshalling or to require Administrative Agent or any Bank to
proceed against any Person or to exhaust any Collateral or to pursue
any remedy in Administrative Agent's or such Bank's power.
(f) Payments Free of Taxes, Etc. All payments made by Borrower
under this Restated Security Agreement shall be made by Borrower free
and clear of and without deduction for any and all present and future
taxes, levies, charges, deductions and withholdings. In addition,
Borrower shall pay upon demand any stamp or other taxes, levies or
charges of any jurisdiction with respect to the execution, delivery,
registration, performance and enforcement of this Restated Security
Agreement. Upon request by Administrative Agent, Borrower shall furnish
evidence satisfactory to Administrative Agent that all requisite
authorizations and approvals by, and notices to and filings with,
governmental authorities and regulatory bodies have been obtained and
made and that all requisite taxes, levies and charges have been paid.
(g) Borrower's Continuing Liability. Notwithstanding any
provision of this Restated Security Agreement or any other Credit
Document or any exercise by Administrative Agent of any of its rights
hereunder or thereunder (including, without limitation, any right to
collect or enforce any Collateral), (i) Borrower shall remain liable to
perform its obligations and duties in connection with the Collateral
(including, without limitation, the Related Contracts and all other
agreements relating to the Collateral) and (ii) neither Administrative
Agent nor any Bank shall assume any liability to perform such
obligations and duties or to enforce any of Borrower's rights in
connection with the Collateral (including, without limitation, the
Related Contracts and all other agreements relating to the Collateral).
(h) Governing Law. This Restated Security Agreement shall be
governed by and construed in accordance with the laws of the State of
California without reference to conflicts of law rules (except to the
extent otherwise provided in the UCC).
E-9
<PAGE>
IN WITNESS WHEREOF, Borrower has caused this Restated Security
Agreement to be executed as of the day and year first above written.
BELL MICROPRODUCTS INC.
By: ________________________________
Name: __________________________
Title: _________________________
E-10
<PAGE>
ATTACHMENT 1
TO RESTATED SECURITY AGREEMENT
All right, title and interest of Borrower, whether now owned or
hereafter acquired, in and to the following:
(a) All equipment and fixtures (including, without limitation,
manufacturing equipment, furniture, vehicles and other machinery and office
equipment), together with all additions and accessions thereto and replacements
therefor (collectively, the "Equipment");
(b) All inventory (including, without limitation, (i) all
computers, semiconductor devices, integrated circuits, disc drives, computer
peripheral equipment, monitors, other computer-related equipment, other
electronic equipment, and all other raw materials, work in process and finished
goods and (ii) all such goods which are returned to or repossessed by Borrower),
together with all additions and accessions thereto, replacements therefor,
products thereof and documents therefor (collectively, the "Inventory");
(c) All accounts, chattel paper, instruments, deposit accounts
and other rights to the payment of money (including, without limitation, general
intangibles and contract rights) (collectively, the "Receivables") and all
contracts, security agreements, leases, guaranties and other agreements
evidencing, securing or otherwise relating to the Receivables (collectively, the
"Related Contracts");
(d) All certificated and uncertificated securities, security
entitlements, securities accounts, commodity contracts, commodity accounts and
other investment property;
(e) All other general intangibles and contract rights not
otherwise described above (including, without limitation, (i) customer and
supplier lists and contracts, books and records, insurance policies, tax
refunds, contracts for the purchase of real or personal property; (ii) all
patents, copyrights, trademarks, tradenames and service marks, (iii) all
licenses to use, applications for, and other rights to, such patents,
copyrights, trademarks, tradenames and service marks, and (iv) all goodwill of
Borrower);
(f) All other property not otherwise described above
(including, without limitation, all money, letters of credit, documents and
goods); and
(g) All proceeds of the foregoing (including, without
limitation, whatever is receivable or received when Collateral or proceeds is
sold, collected, exchanged, returned, substituted or otherwise disposed of,
whether such disposition is voluntary or involuntary, including rights to
payment and return premiums and insurance proceeds under insurance with respect
to any Collateral, and all rights to payment with respect to any cause of action
affecting or relating to the Collateral).
E-[1]-1
<PAGE>
ATTACHMENT 2
TO RESTATED SECURITY AGREEMENT
BORROWER PROFILE
Bell Microproducts Inc.
("Borrower")
1. The current legal name of Borrower is Bell Microproducts
Inc.
2. Borrower's chief executive office is located at 1941
Ringwood Avenue, San Jose, CA 95131. Borrower's federal employer I.D. no. is
94-3057566.
3. Borrower was incorporated on October 23, 1987 in the state
of California. Since its incorporation, Borrower has had no other legal name
(other than its current legal name) except for the following (provide name and
date of change):
Prior Name Date Name
Changed
----------------------------- --------------------------
None
4. Borrower does not do business under any trade name except
for the following (provide name and indicate whether registered):
Trade Name Registered?
----------------------------- --------------------------
None
5. Since Borrower's incorporation, no other corporation has
been merged into Borrower except for the following (provide names, dates and
brief description of transactions):
Name of Date of Description of
Corporation Merger Transaction
- --------------------------- --------------------------- --------------------
Vantage Components February 2, 1994 Agreement and Plan
of Reorganization,
as amended
E-[2]-1
<PAGE>
<TABLE>
6. Borrower has not acquired any of its assets in a bulk sale
or any other transaction not in the ordinary course of business of the seller
except for the following (provide description of assets, date and description of
transaction and name of seller):
<CAPTION>
Description of Date of Description of Seller
Assets Acquisition Transaction
- ---------------------- -------------------------- --------------------------- ------------------
<S> <C> <C> <C>
Equipment, April 1, 1993 Cash, notes and ATMC
accounts, cancellation of
inventory indebtedness
</TABLE>
7. The following is a complete list of all states and other
jurisdictions in which Borrower is qualified to do business:
State or Jurisdiction*
----------------------
Arizona
California
Georgia
Illinois
Maryland
Massachusetts
Minnesota
New Jersey
New York
Oregon
Pennsylvania
Texas
Virginia
Washington
*Company sells to all states, but has offices in the listed
states.
<TABLE>
8. The following is a complete list of all offices and other
places of business at which Borrower currently conducts or has within the last
four months conducted business (provide address, owner of site and brief
description of assets located there):
<CAPTION>
Address Brief Description
Owner of Site of Assets
---------------------------------- ---------------------------------- --------------------------------
<S> <C> <C>
1941 Ringwood Ave. ACBEL Technologies Office equipment,
San Jose, CA furniture, inventory
95131-1721
(Sales and Marketing)
E-[2]-2
<PAGE>
4926 E. McDowell, Ste 102 Tammel Crow Company Office equipment, furniture,
Phoenix, AZ 85008 inventory
30 Fairbanks, Ste 114 TIC--Tripointe Office equipment, furniture,
Irvine, CA 92618 inventory
6885 Flanders Dr., Ste. G Speiker Properties Inc. Office equipment, furniture,
San Diego, CA 92121 inventory
1911 Ringwood Ave. Emcon Office equipment, furniture,
San Jose, CA 95131 inventory
(corporate office)
2110 Zanker Rd. AMB Zanker/Charcot Industrial Office equipment, furniture,
San Jose, CA 95131 Park inventory
2020 South 10th Street DiNapoli, DiNapoli & Mulcaby Office equipment, furniture,
San Jose, CA 95112 inventory
29800 W. Agoura Rd., Frontier II Properties Ltd Office equipment, furniture,
Ste 150 inventory
Agoura Hills, CA 91362
4600 South Ulster Street, Optima/Denver OTC Office equipment, furniture,
Ste. 240 inventory
Denver, CO 80237
1110 Douglas Ave., Life Insurance Co. of the Office equipment, furniture,
Ste. 1018 Southwest inventory
Altmonte Springs, FL 32714
9220 Bonita Beach Rd. Wynn Property Office equipment, furniture,
Ste. 221 inventory
Bonita Springs, FL 34135
17431 S.W. 18th St. No rent Office equipment, furniture,
Miramar, FL 33029 inventory
1950 Spectrum Circle, Business Suites Office equipment, furniture,
Ste. 400 inventory
Marietta, GA 30067
E-[2]-3
<PAGE>
953 N. Plum Grove Rd., Owen Wagener & Co. Office equipment, furniture,
Ste. B inventory
Schaumburg, IL 60173
2A Gill Street Cummings Property Office equipment, furniture,
Woburn, MA 01801 inventory
6925 R. Oakland Mills Rd. Nottingham Management Office equipment, furniture,
Columbia, MD 21045 inventory
20404 Highview Ct. No Rent Office equipment, furniture,
Hagerstown, MD 21740 inventory
6442 City/West Pkwy United Properties Brokerage Office equipment, furniture,
Eden Prairie, MN 55344 inventory
55 US Highway 46 E., Caleast Industrial Business Office equipment, furniture,
Unit #403 Center inventory
Pine Brook, NJ 07058
1056 W. Jericho Turnpike 1056 Jericho Turnpike Office equipment, furniture,
Smithtown, NY 11787 inventory
19346 Bradford Ct. No rent Office equipment, furniture,
Strongsville, OH 44136 inventory
14780 SW Osprey Dr., Shared Secretarial Service Office equipment, furniture,
Ste. 240 inventory
Beaverton, OR 97007
12710 Research Blvd., Briarcroft Building LP Office equipment, furniture,
Ste. 360 inventory
Austin, TX 78759
833 E. Arapaho, Ste. 209 Giarvon Inc. Office equipment, furniture,
Richardson, TX 75081 inventory
2900 Wilcrest, Ste. 138 Zenith Real Estate Services Office equipment, furniture,
Houston, TX 77042 inventory
384 North Main Parrish Lane Plaza Assoc. Office equipment, furniture,
Centerville, UT 84014 inventory
1039 Sterling Rd., Ste.20E Ronald E. Polichnowski Office equipment, furniture,
Herndon, VA 22070 inventory
E-[2]-4
<PAGE>
40 Lake Bellevue, Ste. 100 No rent Office equipment, furniture,
Bellevue, WA 98005 inventory
</TABLE>
<TABLE>
9. The following is a complete list of all persons and
entities (other than Borrower) who at any time have possession of any assets of
Borrower (provide name, address where located and description of assets located
there):
<CAPTION>
Person or Address Brief Description of Assets
Entity
--------------------------- ---------------------------------- -----------------------------------
<S> <C> <C>
Necom 46560 Fremont Blvd. Electronic components,
Fremont, CA 94538 P/C boards
SMT Dynamics 1551 S. Harris Ct. Electronic components,
Anaheim, CA 92806 P/C boards
Multitech 3171 Jay Street Electronic components,
Santa Clara, CA 95054 P/C boards
American Reliability 150 Charles Street Electronic components,
Malden, MA 02148 P/C boards
Bell Technologies Testing 2320 W. Peoria Ave., Electronic components,
Division Bldg. D-133 P/C boards
Cofer Component Processing 214 Devcon Drive Electronic components,
San Jose, CA 95112 P/C boards
Logistix 48021 Warm Springs Blvd. Electronic components,
Fremont, CA 94539 P/C boards
NJ Met 1240 Main Ave. Electronic components,
Clifton, NJ 07011 P/C boards
Testing Lab of North 22 Sixth Road Electronic components,
America Woburn, MA 01801 P/C boards
Vivid Inc. 1250 Memorex Dr. Electronic components,
Santa Clara, CA 95050 P/C boards
Pacific Business Systems 7 Hammond Computer components
Irvine, CA 92618
E-[2]-5
<PAGE>
Artecon Inc. 6305 El Camino Real Computer components
Carlsbad, CA 92009
Andataco 10140 Mesa Rim Road Computer components
San Diego, CA 92121
Micro Standard 18133 NE 68th D100 Computer components
Distributors Redmond, WA 98052
Dolch Computer 3178 Laurelview Ct. Computer components
Fremont, CA 94538
Rare Systems Special handling #165 Computer components
13745 Neutron Road
Dallas, TX 75244
Xiotech Corporation 6509 Flying Cloud Drive Computer components
Eden Prairie, MN 55346
Media 100 Inc. 290 Donald Lynch Blvd. Computer components
Marlboro, MA 01752
Partech Inc. 8383 Seneca Turnpike Computer components
New Hartford, NY 13413
RM Schultz & Associates 1809 S. State Route 13 Computer components
McHenry, IL 60050
Gemini Digital Products 701 S. 5th Street Computer components
Hopkins, MN 55343
Encore Technology Group 422 E. Ramsey Computer components
San Antonio, TX 78216
Pinnacle Data Systems, 2155 Dublin Road Computer components
Inc. Columbus, OH 43228
</TABLE>
Of the persons and entities listed above in this item 9;
a. The following persons and entities are warehouses which
issue warehouse receipts:
Person or
Entity
-----------------------------
None
E-[2]-6
<PAGE>
b. The following persons and entities process or finish
inventory or other goods for Borrower:
Person or
Entity
-----------------------------
None
c. The following persons and entities hold inventory or other
goods on consignment for Borrower:
Person or
Entity
-----------------------------
American Reliability
Bell Technologies
Testing Division
Cofer Component
Processing
Logistix
Multitech
Necom
NJ Met
SMT Dynamics
Testing Lab of North
America
Vivid Inc.
Pacific Business
Systems
Artecon Inc.
Andataco
Micro Standard
Distributors
Dolch Computer
Rare Systems
Xiotech Corporation
Media 100
Partech Inc.
RM Schultz &
Associates
Gemini Digital
Products
Encore Technology
Group
Pinnacle Data
Systems, Inc.
E-[2]-7
<PAGE>
d. The following other persons and entities have possession of
assets of Borrower for the purposes indicated:
Person or Purpose
Entity
-------------------------- -----------------------------
None
10. The following is a complete list of all motor vehicles
owned by Borrower (describe each vehicle by make, model and year and indicate
for each the state in which registered and the state in which based):
State of State in which
Vehicle Registration Based
----------------------- ----------------------- -----------------
Van, Ford 1990 CA CA
Suburban, CA CA
Chevrolet, 1979
Ram 250, CA CA
Van-Dodge 1987
Truck, GMC 1994 CA CA
Astro Van, CA CA
Chevrolet
1996
Astro Van, CA CA
Chevrolet 1996
11. The following is a complete list of all aircraft and boats
and all other inventory, equipment and other goods of Borrower which are subject
to any certificate of title or other registration statute of the United States,
any state or any other jurisdiction (provide description of covered goods and
indicate registration system and jurisdiction):
Registration
Goods System Jurisdiction
- ----------------------- ----------------------------- ------------------------
None
12. The following is a complete list of all patents,
copyrights, trademarks, tradenames and service marks registered in the name of
Borrower:
a. Patents Registration No.
--------------------------------------- ----------------------
None
b. Copyrights Registration No.
--------------------------------------- ----------------------
None
E-[2]-8
<PAGE>
c. Trademarks,
Trade Names and
Service Marks Registration No.
--------------------------------------- ----------------------
None
<TABLE>
13. The following is a complete list of all subsidiaries of
Borrower (provide name of subsidiary, jurisdiction of incorporation, outstanding
shares and shares owned by Borrower):
<CAPTION>
Subsidiary Jurisdiction Shares Shares Owned
Outstanding by Borrower
-------------------------- --------------------- ---------------------- ------------------------
<S> <C> <C> <C>
Bell Microproducts California 100 100
Canada Inc.
</TABLE>
<TABLE>
14. The following is a complete list of all securities
accounts maintained by Borrower (provide name and address of securities
intermediary at which maintained, type of account and account number):
<CAPTION>
Securities Intermediary Type of Account Number
Intermediary Address Account
---------------------------- ----------------------- ------------------------------ -------------------
---------------------------- ----------------------- ------------------------------ -------------------
<S> <C> <C> <C>
None
---------------------------- ----------------------- ------------------------------ -------------------
</TABLE>
15. The following is a complete list of all other stock (other
than the stock of subsidiaries described in item 13 above or held indirectly
through securities accounts described in item 14 above), bonds, debentures,
notes and other securities owned by Borrower which have a value (higher of cost
or market value) of $________ or more (provide name of issuer, a description of
security and value):
Description of
Issuer Security Value
---------------------- -------------------------- -------------------
---------------------- -------------------------- -------------------
None.
---------------------- -------------------------- -------------------
E-[2]-9
<PAGE>
16. The following is a complete list of all notes payable to
Borrower not otherwise listed in item 14 above (provide name of obligor, date,
original principal amount and current principal balance):
Obligor Date Original Current
Amount Balance
- --------------------- ---------------- ----------------- -----------------
Lyte Optronics Inc. May 1, 1998 $429,000 $428,886
<TABLE>
17. The following is a complete list of all bank accounts
maintained by Borrower (provide name and address of depository bank, type of
account and account number):
<CAPTION>
Depository Bank Type of Account
Bank Address Account Number
-------------------------- -------------------------- ----------------------- -------------------------
<S> <C> <C> <C>
CB&T Bank Checking--Flexible 017 00006270
CB&T Bank San Francisco, CA Checking--Payroll 017 00217170
CB&T Bank San Francisco, CA Checking 017 00039970
First Tennessee Johnson City, TN Checking 8867453
Bank
First Chicago Chicago, IL Lock Box 5287790
Bank
CB&T San Francisco, CA Checking 017 00042370
(Quadrus)
First Tennessee Johnson City, TN Checking 8867445
Bank (Quadrus)
CB&T Bank San Francisco, CA Checking--Maryland 017 00209870
</TABLE>
18. Does Borrower regularly receive letters of credit from
customers to secure payments of sums owed to Borrower?
Yes _____. No __x__.
19. Does Borrower regularly have accounts receivable due from,
or contracts with, the United States government or any agency or department
thereof?
Yes _____. No __x__.
If yes, indicate the percentage of Borrower's total
outstanding accounts receivable that are due from the United States government
and agencies and departments thereof: ________%
E-[2]-10
<PAGE>
20. Does Borrower regularly receive advance deposits from
customers for goods not yet delivered to such customers?
Yes _____. No __x__.
21. Does Borrower regularly import goods from outside the
United States?
Yes _____. No __x__.
22. The following is a complete list of all third parties who
perform data processing services for Borrower or maintain records with respect
to Borrower's accounts receivable (provide name and address of third party and
describe services performed and/or records maintained):
Name Address Description of Services
and/or Records
------------------- --------------------- ------------------------
None
23. The following is a complete list of all data processing
equipment of Borrower which is leased (provide description of equipment and name
and address of lessor):
Lessor
Description of Equipment Lessor Address
- -------------------------- ------------------------ --------------------------
None
24. The following is a complete list of all data processing
equipment of Borrower which is subject to security interests of persons other
than Bank (provide description of equipment and name and address of secured
party):
Description of Equipment Secured Party Secured Party
Address
- -------------------------------- ------------------------- -------------------
None
25. The most recent federal income tax returns of Borrower
that have been audited by the IRS are for the fiscal year ended December 31,
1992.
26. Neither Borrower nor any of its property is subject to any
tax assessments which are currently outstanding and unpaid except for the
following (provide name of assessing authority and amount and description of
assessment):
Assessing Authority Amount Description
- ------------------------- ------------------------ ---------------------------
None
E-[2]-11
<PAGE>
27. Neither Borrower nor any of its property is subject to any
judgment lien, attachment, assessment (other than any tax assessments set forth
in item 25 above) or any other similar process which is currently outstanding
and unpaid except for the following (provide name of party asserting lien, etc.,
amount and description of lien, etc.):
Asserting Authority Amount Description
- --------------------------- ------------------------- ----------------------
None
28. The following is a complete list of all pending and
threatened litigation or claims involving amounts claimed against Borrower in
excess of $1,000,000 (provide name of claimant, amount of claim and brief
description of claim):
Claimant Amount Description
- ------------------------------ ---------------------- ------------------------
None
E-[2]-12
<PAGE>
ATTACHMENT 3
TO RESTATED SECURITY AGREEMENT
NOTICE OF SECURITY INTEREST
IN
DEPOSIT ACCOUNT
___________ __, [19][20]_
[Name of Depositary Bank]
[Address of Depositary Bank]
________________________________
________________________________
BELL MICROPRODUCTS INC., a California corporation ("Borrower") and
CALIFORNIA BANK & TRUST, a California banking corporation, acting as agent for
certain financial institutions (in such capacity, "Administrative Agent"), under
that certain Third Amended and Restated Credit Agreement dated as of November
12, 1998 (the "Restated Credit Agreement"), hereby notify you that Borrower has
granted to Administrative Agent a security interest in all deposit accounts
maintained by Borrower with you including, without limitation, the deposit
accounts described below:
Account Depositor's Account
Number Name Type
- --------------------- ----------------------------- ---------------------
- --------------------- ----------------------------- ---------------------
- --------------------- ----------------------------- ---------------------
- --------------------- ----------------------------- ---------------------
Borrower and Administrative Agent authorize you to continue to allow Borrower to
make deposits to, draw checks upon and otherwise withdraw funds from such
deposit accounts (the "Deposit Accounts") without the consent of Administrative
Agent until Administrative Agent shall instruct you otherwise.
E-[3]-1
<PAGE>
Borrower has irrevocably authorized Administrative Agent to inform you
when an Event of Default (as defined in the Restated Credit Agreement) has
occurred and is continuing and at such time instruct you to cease to permit any
further payments or withdrawals from the Deposit Accounts by Borrower and/or to
pay any or all amounts in the Deposit Accounts to Administrative Agent. Borrower
irrevocably authorizes and directs you to comply with all such instructions
received by you from Administrative Agent without further inquiry on your part
and hereby agrees to indemnify and hold harmless you and your officers,
directors and employees from and for any compliance by you with such
instructions.
BELL MICROPRODUCTS INC.
By: ________________________________
Name: __________________________
Title: _________________________
CALIFORNIA BANK & TRUST,
as Administrative Agent
By: ________________________________
Name: __________________________
Title: _________________________
E-[3]-2
<PAGE>
ACKNOWLEDGEMENT AND AGREEMENT
OF DEPOSITARY BANK
The undersigned depositary bank hereby acknowledges receipt of the
above notice and agrees with Borrower and Administrative Agent to comply with
any instruction it may receive from Administrative Agent in accordance
therewith. The undersigned confirms to Administrative Agent that the information
set forth above regarding the Deposit Accounts is accurate, that such Deposit
Accounts are currently open and that the undersigned has no prior notice of any
other security interest, lien or interest in such Deposit Accounts. The
undersigned waives any right of setoff except for its right or recoupment for
returned items.
____________________________________
By: ________________________________
Name: __________________________
Title: _________________________
E-[3]-3
<PAGE>
ATTACHMENT 4
TO RESTATED SECURITY AGREEMENT
NOTICE OF SECURITY INTEREST
IN
[SECURITIES][COMMODITY] ACCOUNT
__________ __, [19] [20] __
[Name of Intermediary]
[Address of Intermediary]
__________________________
__________________________
BELL MICROPRODUCTS INC., a California corporation ("Borrower") and
CALIFORNIA BANK & TRUST, a California banking corporation, acting as agent for
certain financial institutions (in such capacity, "Administrative Agent"), under
that certain Third Amended and Restated Credit Agreement dated as of November
12, 1998 (the "Restated Credit Agreement"), hereby notify you that Borrower has
granted to Administrative Agent a security interest in all
[securities][commodity] accounts maintained by Borrower with you including,
without limitation, the accounts described below:
Account Account Holder's Account
Number Name Type
---------------- ---------------- ----------------
---------------- ---------------- ----------------
---------------- ---------------- ----------------
Until Administrative Agent shall instruct you otherwise pursuant to the
following paragraph, Borrower and Administrative Agent authorize you, without
the consent of Administrative Agent, to continue to comply with all directions
of Borrower regarding the purchase, sale, transfer or redemption of all
securities, security entitlements, other investment property and other financial
assets for and in such accounts (the "Accounts").
Borrower has authorized Administrative Agent to inform you when an
Event of Default (as defined in the Restated Credit Agreement) has occurred and
is continuing and at such time direct you to cease to comply with any further
directions of Borrower with respect to the Accounts. After your receipt of any
such notice, Borrower authorizes and directs you, without the consent of
Borrower or further inquiry on your part, to comply with all directions of
Administrative Agent regarding the Accounts, including, without limitation, any
direction to (a) purchase, sell, transfer or redeem any or of all securities,
security entitlements, other investment
E-[4]-1
<PAGE>
property or other financial assets for and in the Accounts, (b) withdraw any or
all funds from the Accounts and pay such funds to Administrative Agent or any
person designated by Administrative Agent or (c) transfer any or all of the
Accounts to the name of Administrative Agent or any person designated by
Administrative Agent. Borrower hereby agrees to indemnify and hold harmless you
and your officers, directors and employees from and for any compliance by you
with such directions of Administrative Agent.
BELL MICROPRODUCTS INC.
By: ________________________________
Name: __________________________
Title: _________________________
CALIFORNIA BANK & TRUST,
as Administrative Agent
By: ________________________________
Name: __________________________
Title: _________________________
E-[4]-2
<PAGE>
ACKNOWLEDGEMENT AND AGREEMENT
OF INTERMEDIARY
The undersigned institution hereby acknowledges receipt of the above
notice and agrees with Borrower and Administrative Agent to comply with any
direction it may receive from Administrative Agent in accordance therewith
without the consent of Borrower or further inquiry. The undersigned confirms to
Administrative Agent that the information set forth above regarding the Accounts
is accurate, that such Accounts are currently open and that the undersigned has
no prior notice of any other security interest, lien or interest in such
Accounts. The undersigned agrees that any lien or right of setoff it may have in
or against the accounts is subordinate to the security interest of
Administrative Agent therein.
____________________________________
By: ________________________________
Name: __________________________
Title: _________________________
E-[4]-1
<PAGE>
ATTACHMENT 5
TO RESTATED SECURITY AGREEMENT
INSURANCE ENDORSEMENTS
1. Property Insurance. Each of the property insurance policies of
Borrower shall contain substantially the following endorsements:
(a) CALIFORNIA BANK & TRUST, as agent ("Administrative
Agent"), shall be named as additional loss payee.
(b) In respect of the interests of Administrative Agent in the
policies, the insurance shall not be invalidated by any action or by
inaction of Borrower or by any Person having temporary possession of
the property covered thereby (the "Property") while under contract with
Borrower to perform maintenance, repair, alteration or similar work on
the Property, and shall insure the interests of Administrative Agent
regardless of any breach or violation of any warranty, declaration or
condition contained in the insurance policy by Borrower or
Administrative Agent or any other additional insured (other than by
such additional insured, as to such additional insured) or by any
Person having temporary possession of the Property while under contract
with Borrower to perform maintenance, repair, alteration or similar
work on the Property.
(c) If the insurance policy is cancelled for any reason
whatsoever, or substantial change is made in the coverage that affects
the interests of Administrative Agent, or if the insurance coverage is
allowed to lapse for non-payment of premium, such cancellation, change
or lapse shall not be effective as to Administrative Agent for 30 days
(or 10 days in the case of non-payment of premium) after receipt by
Administrative Agent of written notice from the insurers of such
cancellation, change or lapse.
(d) Neither Administrative Agent nor any Bank shall have any
obligation or liability for premiums, commissions, assessments, or
calls in connection with the insurance.
(e) The insurer shall waive any rights of set-off or
counterclaim or any other deduction, whether by attachment or
otherwise, that it may have against Administrative Agent and each Bank.
(f) The insurance shall be primary without right of
contribution from any other insurance that may be carried by
Administrative Agent or any of the Banks with respect to its or their
interest in the Property.
(g) The insurer shall waive any right of subrogation against
Administrative Agent and each Bank.
(h) All provisions of the insurance, except the limits of
liability, shall operate in the same manner as if there were a separate
policy covering each insured party.
E-[5]-1
<PAGE>
2. Liability Insurance. Each of the liability insurance policies of
Borrower shall contain substantially the following endorsements:
(a) Administrative Agent shall be named as additional insured.
(b) In respect of the interests of Administrative Agent in the
policies, the insurance shall not be invalidated by any action or by
inaction of Borrower or by any Person having temporary possession of
the property covered thereby (the "Property") while under contract with
Borrower to perform maintenance, repair, alteration or similar work on
the Property, and shall insure the interests of Administrative Agent
regardless of any breach or violation of any warranty, declaration or
condition contained in the insurance policy by Borrower or
Administrative Agent or any other additional insured (other than by
such additional insured, as to such additional insured) or by any
Person having temporary possession of the Property while under contract
with Borrower to perform maintenance, repair, alteration or similar
work on the Property.
(c) If the insurance policy is cancelled for any reason
whatsoever, or substantial change is made in the coverage that affects
the interests of Administrative Agent, or if the insurance coverage is
allowed to lapse for non-payment of premium, such cancellation, change
or lapse shall not be effective as to Administrative Agent for 30 days
(or 10 days in the case of non-payment of premium) after receipt by
Administrative Agent of written notice from the insurer of such
cancellation, change or lapse.
(d) Neither Administrative Agent nor any Bank shall have any
obligation or liability for premiums, commissions, assessments, or
calls in connection with the insurance.
(e) The insurer shall waive any rights of set-off or
counterclaim or any other deduction, whether by attachment or
otherwise, that it may have against Administrative Agent and each Bank.
(f) The insurance shall be primary without right of
contribution from any other insurance that may be carried by
Administrative Agent or any of the Banks with respect to their
interests in the Property.
(g) The insurer shall waive any right of subrogation against
Administrative Agent and each Bank.
(h) All provisions of the insurance, except the limits of
liability, shall operate in the same manner as if there were a separate
policy covering each insured party.
E-[5]-2
<PAGE>
EXHIBIT F
THIRD AMENDED AND RESTATED PLEDGE AGREEMENT
THIS THIRD AMENDED AND RESTATED PLEDGE AGREEMENT, dated as of November
12, 1998, is executed by BELL MICROPRODUCTS INC., a California corporation
("Borrower"), in favor of CALIFORNIA BANK & TRUST, a California banking
corporation, acting as agent (in such capacity, "Administrative Agent") for the
financial institutions which are from time to time parties to the Restated
Credit Agreement defined in Recital B below (collectively, the "Banks").
RECITALS
A. Pursuant to a Second Amended and Restated Credit Agreement dated as
of May 23, 1995 (as amended to the date hereof, the "Existing Credit Agreement")
among Borrower, the Banks, and Administrative Agent, the Banks agreed to provide
to Borrower a certain credit facility. The availability of the credit facility
under the Existing Credit Agreement was subject, among other conditions, to the
execution and delivery by Borrower of a Second Amended and Restated Pledge
Agreement dated as of May 23, 1994 (as amended to the date hereof, the "Existing
Pledge Agreement").
B. Borrower has requested the Banks to amend the Existing Credit
Agreement to increase the amount of the credit facility provided for therein and
to make certain other changes. Pursuant to a Third Amended and Restated Credit
Agreement, dated as of November 12, 1998 (the "Restated Credit Agreement"),
among Borrower, the Banks and Administrative Agent, the Banks have agreed so to
amend the Existing Credit Agreement upon the terms and subject to the conditions
set forth in the Restated Credit Agreement including, without limitation, the
execution and delivery by Borrower of this Third Amended and Restated Pledge
Agreement (this "Restated Pledge Agreement") which amends and, for convenience
of reference, restates the Existing Pledge Agreement as so amended in its
entirety.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Borrower hereby agrees with Administrative Agent, for the ratable
benefit of the Banks and Administrative Agent, that the Existing Pledge
Agreement shall be amended and restated to read in its entirety as follows:
1. Definitions and Interpretation. When used in this Restated Pledge
Agreement, the following terms shall have the following respective meanings:
"Administrative Agent" shall have the meaning given to that
term in the introductory paragraph hereof.
"Banks" shall have the meaning given to that term in the
introductory paragraph hereof.
F-1
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"Borrower" shall have the meaning given to that term in the
introductory paragraph hereof.
"Collateral" shall have the meaning given to that term in
paragraph 2 hereof.
"Existing Credit Agreement" shall have the meaning given to
that term in Recital A hereof.
"Existing Pledge Agreement" shall have the meaning given to
that term in Recital A hereof.
"Obligations" shall mean and include all loans, advances,
debts, liabilities and obligations, howsoever arising, owed by Borrower
to any Bank or Administrative Agent of every kind and description
(whether or not evidenced by any note or instrument and whether or not
for the payment of money), direct or indirect, absolute or contingent,
due or to become due, now existing or hereafter arising pursuant to the
terms of the Restated Credit Agreement or any of the other Credit
Documents, including without limitation all interest, fees, charges,
expenses, attorneys' fees and accountants' fees chargeable to Borrower
or payable by Borrower thereunder.
"Pledged Shares" shall have the meaning given to that term in
paragraph 2 hereof.
"Restated Credit Agreement" shall have the meaning given to
that term in Recital B hereof.
"Restated Pledge Agreement" shall have the meaning given to
that term in Recital B hereof as further amended, modified,
supplemented or replaced from time to time.
"UCC" shall mean the Uniform Commercial Code as in effect in
the State of California from time to time.
Unless otherwise defined herein, all other capitalized terms used herein and
defined in the Restated Credit Agreement shall have the respective meanings
given to those terms in the Restated Credit Agreement, and all terms defined in
the UCC shall have the respective meanings given to those terms in the UCC. The
rules of construction set forth in Section I of the Restated Credit Agreement
shall, to the extent not inconsistent with the terms of this Restated Pledge
Agreement, apply to this Restated Pledge Agreement and are hereby incorporated
by reference.
2. Pledge. As security for the Obligations, Borrower hereby pledges and
assigns to Administrative Agent (for the ratable benefit of the Banks and
Administrative Agent) and grants to Administrative Agent (for the ratable
benefit of the Banks and Administrative Agent) a security interest in all right,
title and interest of Borrower in and to the property described in subparagraphs
(a) - (f) below, whether now owned or hereafter acquired (collectively and
severally, the "Collateral"):
(a) All shares of stock issued by any corporation or other
entity, including the shares of stock described in Attachment 1 hereto
(all such shares, whether now owned or hereafter acquired, whether
certificated or uncertificated and whether or not described in
F-2
<PAGE>
Attachment 1, to be referred to herein collectively as the "Pledged
Shares");
(b) All other certificated and uncertificated securities;
(c) All dividends, cash, instruments and other property from
time to time received, receivable or otherwise distributed or
distributable in respect of or in exchange for any of the property
described in subparagraph (a) or (b) above; and
(f) All proceeds of the foregoing.
3. Representations and Warranties. Borrower represents and warrants to
Administrative Agent and the Secured Creditors as follows:
(a) Borrower is the record legal and beneficial owner of the
Collateral (or, in the case of after-acquired Collateral, at the time
Borrower acquires rights in the Collateral, will be the record legal
and beneficial owner thereof). No other Person has (or, in the case of
after-acquired Collateral, at the time Borrower acquires rights
therein, will have) any right, title, claim or interest (by way of
Lien, purchase option or otherwise) in, against or to the Collateral.
(b) Administrative Agent has (or in the case of after-acquired
Collateral, at the time Borrower acquires rights therein, will have) a
first priority perfected security interest in the Collateral.
(c) All Pledged Shares have been (or in the case of
after-acquired Pledged Shares, at the time Borrower acquires rights
therein, will have been) duly authorized, validly issued and fully paid
and are (or in the case of after-acquired Pledged Shares, at the time
Borrower acquires rights therein, will be) non-assessable.
(d) No portion of the Pledged Shares consists of
uncertificated securities.
(e) Borrower has delivered to Administrative Agent, together
with all necessary stock powers, endorsements, assignments and other
necessary instruments of transfer, the originals of all Pledged Shares,
other certificated securities, other Collateral and all certificates,
instruments and other writings evidencing the same.
(f) Set forth in Attachment 1 hereto is a true, complete and
accurate list of all shares of stock issued by Borrower's Subsidiaries
and all other securities owned by Borrower. All information set forth
in Attachment 1 is true, complete and accurate.
4. Covenants. Borrower hereby agrees as follows:
(a) Borrower, at Borrower's expense, shall promptly procure,
execute and deliver to Administrative Agent all documents, instruments
and agreements and perform all acts which are necessary or desirable,
or which Administrative Agent may reasonably request, to establish,
maintain, preserve, protect and perfect the Collateral, the Lien
granted to Administrative Agent therein and the first priority of such
Lien or to enable Administrative Agent to exercise and enforce its
rights and remedies hereunder with
F-3
<PAGE>
respect to any Collateral. Without limiting the generality of the
preceding sentence, Borrower shall (i) procure, execute and deliver to
Administrative Agent all stock powers, endorsements, assignments,
financing statements and other instruments of transfer requested by
Administrative Agent, (ii) deliver to Administrative Agent promptly
upon receipt the originals of all Pledged Shares, other certificated
securities, other Collateral and all certificates, instruments and
other writings evidencing the same and (iii) cause the Lien of
Administrative Agent to be recorded or registered in the books of any
financial intermediary or clearing corporation reasonably requested by
Administrative Agent.
(b) Borrower shall pay promptly when due all taxes and other
Governmental Charges, all Liens and all other charges now or hereafter
imposed upon, relating to or affecting any Collateral, except to the
extent that Borrower is contesting such taxes or other Governmental
Charges in good faith by appropriate proceedings with adequate reserves
established therefor in accordance with GAAP.
(c) Borrower shall deposit, or cause to be deposited, all
remittances, checks and other funds (in whatever form) received with
respect to Collateral to a deposit account for which Borrower has
complied with subparagraph 4(e) of the Restated Security Agreement and
in which Administrative Agent has a first priority perfected security
interest.
(d) Borrower shall appear in and defend any action or
proceeding which may affect its title to or Administrative Agent's
interest in the Collateral.
(e) Borrower shall not surrender or lose possession of (other
than to Administrative Agent), sell, encumber, lease, rent, option, or
otherwise dispose of or transfer any Collateral or right or interest
therein except as permitted in the Restated Credit Agreement, and,
notwithstanding any provision of the Restated Credit Agreement,
Borrower shall keep the Collateral free of all Liens.
5. Voting Rights and Dividends Prior to Payment Default. Unless an
Event of Default under Subparagraph 6.01(a) of the Restated Credit Agreement
(whether resulting from the failure of Borrower to make a scheduled payment, a
payment due upon acceleration or otherwise) has occurred and is continuing:
(a) Borrower may exercise or refrain from exercising any and
all voting and other consensual rights pertaining to the Pledged Shares
or any part thereof; provided, however, that Borrower shall not
exercise or refrain from exercising any such rights where the
consequence of such action or inaction would be (i) to impair any
Collateral, the Lien granted to Administrative Agent therein, the first
priority of such Lien or Administrative Agent's rights and remedies
hereunder with respect to any Collateral or (ii) otherwise inconsistent
with the terms of this Restated Pledge Agreement and the other Credit
Documents.
(b) Borrower may receive and retain all dividends and interest
paid in cash in respect of the Pledged Shares, except for any such
dividends and interest paid in connection with a partial or total
liquidation or dissolution or in connection with a
F-4
<PAGE>
reduction of capital, capital surplus or paid-in-surplus. Borrower
shall promptly deliver to Administrative Agent to hold as Collateral
all dividends and interest which Borrower is not entitled to receive
and retain pursuant to the preceding sentence, in the same form as so
received (with any necessary endorsement), and, until so delivered,
shall hold such dividends and interest in trust for the benefit of
Administrative Agent, segregated from the other property or funds of
Borrower.
6. Authorized Action by Administrative Agent. Borrower hereby
irrevocably appoints Administrative Agent as its attorney-in-fact and agrees
that Administrative Agent may perform (but Administrative Agent shall not be
obligated to and shall incur no liability to Borrower or any third party for
failure so to do) any act which Borrower is obligated by this Restated Pledge
Agreement to perform, and to exercise such rights and powers as Borrower might
exercise with respect to the Collateral, including, without limitation, the
right to (a) collect by legal proceedings or otherwise and endorse, receive and
receipt for all dividends, interest, payments, proceeds and other sums and
property now or hereafter payable on or on account of the Collateral; (b) enter
into any extension, reorganization, deposit, merger, consolidation or other
agreement pertaining to, or deposit, surrender, accept, hold or apply other
property in exchange for the Collateral; (c) insure, process, preserve and
enforce the Collateral; (d) make any compromise or settlement, and take any
action it deems advisable, with respect to the Collateral; (e) pay any
Indebtedness of Borrower relating to the Collateral; and (f) execute UCC
financing statements and other documents, instruments and agreements required
hereunder; provided, however, that Administrative Agent may exercise such powers
only after the occurrence and during the continuance of an Event of Default.
Borrower agrees to reimburse Administrative Agent within thirty (30) days after
written demand for all reasonable costs and expenses, including attorneys' fees,
Administrative Agent may incur while acting as Borrower's attorney-in-fact
hereunder, all of which costs and expenses are included in the Obligations.
Borrower agrees that such care as Administrative Agent gives to the safekeeping
of its own property of like kind shall constitute reasonable care of the
Collateral when in Administrative Agent's possession; provided, however, that
Administrative Agent shall not be required to make any presentment, demand or
protest, or give any notice and need not take any action to preserve any rights
against any prior party or any other Person in connection with the Obligations
or with respect to the Collateral.
F-5
<PAGE>
7. Events of Default.
(a) Event of Default. Borrower shall be deemed in default
under this Restated Pledge Agreement upon the occurrence and during the
continuance of an Event of Default, as that term is defined in the
Restated Credit Agreement.
(b) Voting Rights and Dividends. Upon the occurrence and
during the continuance of an Event of Default under Subparagraph
6.01(a) of the Restated Credit Agreement (whether resulting from the
failure of Borrower to make a scheduled payment, a payment due upon
acceleration or otherwise):
(i) All rights of Borrower to exercise the voting and
other consensual rights which it would otherwise be entitled
to exercise pursuant to subparagraph 5(a) hereof and to
receive the dividends and interest payments which it would
otherwise be authorized to receive and retain pursuant to
subparagraph 5(a) hereof shall cease and all such rights shall
thereupon become vested in Administrative Agent which shall
thereupon have the sole right, but not the obligation, to
exercise such voting and other consensual rights and to
receive and hold as Collateral such dividends and interest
payments.
(ii) Borrower shall promptly deliver to
Administrative Agent to hold as Collateral all dividends and
interest received by Borrower in the same form as so received
(with any necessary endorsement), and, until so delivered,
shall hold such dividends and interest in trust for the
benefit of Administrative Agent, segregated from the other
property or funds of Borrower.
(c) Other Rights and Remedies. In addition to all other rights
and remedies granted to Administrative Agent by this Restated Pledge
Agreement, the Restated Credit Agreement, the other Credit Documents,
the UCC and other applicable Governmental Rules, Administrative Agent
may, upon the occurrence and during the continuance of any Event of
Default, exercise any one or more of the following rights and remedies:
(i) collect, receive, appropriate or realize upon the Collateral or
otherwise foreclose or enforce Administrative Agent's security
interests in any or all Collateral in any manner permitted by
applicable Governmental Rules or in this Restated Pledge Agreement;
(ii) notify any or all issuers of or transfer or paying agents for the
Collateral or any applicable clearing corporation, financial
intermediary or other Person to register the Collateral in the name of
Administrative Agent or its nominee and/or to pay all dividends,
interest and other amounts payable in respect of the Collateral
directly to Administrative Agent; (iii) sell or otherwise dispose of
any or all Collateral at one or more public or private sales, whether
or not such Collateral is present at the place of sale, for cash or
credit or future delivery, on such terms and in such manner as
Administrative Agent may determine; and (iv) require Borrower to
assemble all records and information relating to the Collateral and
make it available to Administrative Agent at a place to be designated
by Administrative Agent. In any case where notice of any sale or
disposition of any Collateral is required, Borrower hereby agrees that
seven (7) days notice of such sale or disposition is reasonable.
F-6
<PAGE>
(d) Securities Laws.
(i) Borrower acknowledges and recognizes that
Administrative Agent may be unable to effect a public sale of
all or a part of the Pledged Shares and may be compelled to
resort to one or more private sales to a restricted group of
purchasers who will be obligated to agree, among other things,
to acquire the Pledged Shares for their own account, for
investment and not with a view to the distribution or resale
thereof. Borrower acknowledges that any such private sales may
be at prices and on terms less favorable to Administrative
Agent than those of public sales, and agrees that such private
sales shall be deemed to have been made in a commercially
reasonable manner and that Administrative Agent has no
obligation to delay sale of any Pledged Shares to permit the
issuer thereof to register it for public sale under the
Securities Act of 1933, as amended, or under any state
securities law.
(ii) Upon the occurrence of an Event of Default and
at Administrative Agent's request, Borrower shall, and shall
cause all issuers of Collateral and all officers and directors
thereof and all other necessary Persons to, execute and
deliver all documents, instruments and agreements and perform
all other acts necessary or, in the opinion of Administrative
Agent, advisable to sell the Collateral in any public or
private sale, including any acts requested by Administrative
Agent to (A) register any Collateral under the Securities Act
of 1933, (B) qualify any Collateral under any state securities
or "Blue Sky" laws or (C) otherwise permit any such sale to be
made in full compliance with all applicable Governmental
Rules.
8. Miscellaneous.
(a) Notices. Except as otherwise specified herein, all
notices, requests, demands, consents, instructions or other
communications to or upon Borrower or Administrative Agent under this
Restated Pledge Agreement shall be given as provided in Paragraph 8.01
of the Restated Credit Agreement.
(b) Waivers; Amendments. Any term, covenant, agreement or
condition of this Restated Pledge Agreement may be amended or waived
only as provided in the Restated Credit Agreement. No failure or delay
by Administrative Agent or any Bank in exercising any right hereunder
shall operate as a waiver thereof or of any other right nor shall any
single or partial exercise of any such right preclude any other further
exercise thereof or of any other right. Unless otherwise specified in
any such waiver or consent, a waiver or consent given hereunder shall
be effective only in the specific instance and for the specific purpose
for which given.
(c) Successors and Assigns. This Restated Pledge Agreement
shall be binding upon and inure to the benefit of Administrative Agent,
the Banks and Borrower and their respective successors and assigns;
provided, however, that Administrative Agent, the Banks and Borrower
may sell, assign and delegate their respective rights and obligations
hereunder only as permitted by the Restated Credit Agreement.
F-7
<PAGE>
Administrative Agent and the Banks may disclose this Restated Pledge
Agreement as provided in the Restated Credit Agreement.
(d) Partial Invalidity. If at any time any provision of this
Restated Pledge Agreement is or becomes illegal, invalid or
unenforceable in any respect under the law of any jurisdiction, neither
the legality, validity or enforceability of the remaining provisions of
this Restated Pledge Agreement nor the legality, validity or
enforceability of such provision under the law of any other
jurisdiction shall in any way be affected or impaired thereby.
(e) Cumulative Rights, etc. The rights, powers and remedies of
Administrative Agent and the Banks under this Restated Pledge Agreement
shall be in addition to all rights, powers and remedies given to
Administrative Agent and the Banks by virtue of any applicable
Governmental Rule, the Restated Credit Agreement, any other Credit
Document or any other agreement, all of which rights, powers, and
remedies shall be cumulative and may be exercised successively or
concurrently without impairing Administrative Agent's rights hereunder.
Borrower waives any right to require Administrative Agent or any Bank
to proceed against any Person or to exhaust any Collateral or to pursue
any remedy in Administrative Agent's or such Bank's power.
(f) Payments Free of Taxes, Etc. All payments made by Borrower
under this Restated Pledge Agreement shall be made by Borrower free and
clear of and without deduction for any and all present and future
taxes, levies, charges, deductions and withholdings. In addition,
Borrower shall pay upon demand any stamp or other taxes, levies or
charges of any jurisdiction with respect to the execution, delivery,
registration, performance and enforcement of this Restated Pledge
Agreement. Upon request by Administrative Agent, Borrower shall furnish
evidence satisfactory to Administrative Agent that all requisite
authorizations and approvals by, and notices to and filings with,
governmental authorities and regulatory bodies have been obtained and
made and that all requisite taxes, levies and charges have been paid.
(g) Governing Law. This Restated Pledge Agreement shall be
governed by and construed in accordance with the laws of the State of
California without reference to conflicts of law rules (except to the
extent otherwise provided in the UCC).
IN WITNESS WHEREOF, Borrower has caused this Restated Pledge
Agreement to be executed as of the day and year first above written.
BELL MICROPRODUCTS INC.
By: ________________________________
Name: __________________________
Title: _________________________
F-8
<PAGE>
ATTACHMENT 1
TO RESTATED PLEDGE AGREEMENT
<TABLE>
PLEDGED SHARES
<CAPTION>
Shares Owned Shares Owned
Class Outstanding Directly Indirectly
Issuer of Stock Shares by Borrower by Borrower
------ -------- ------ ----------- -----------
<S> <C> <C> <C> <C>
Bell Microproducts Common 100 100 0
Canada, Inc.
</TABLE>
F[1]-1
<PAGE>
EXHIBIT G
BELL CANADA GUARANTY
THIS GUARANTY, dated as of November 12, 1998 is executed by BELL
MICROPRODUCTS CANADA INC., a California corporation ("Guarantor"), in favor of
CALIFORNIA BANK & TRUST, a California banking corporation, acting as
administrative agent (in such capacity, and each successor thereto in such
capacity, "Administrative Agent") for the financial institutions which are from
time to time parties to the Restated Credit Agreement referred to in Recital A
below (collectively, the "Banks").
RECITALS
A. Pursuant to a Third Amended and Restated Credit Agreement dated as
of November 12, 1998 (as amended from time to time, the "Restated Credit
Agreement"), among Bell Microproducts Inc., a California corporation
("Borrower"), the Banks and Administrative Agent, the Banks have agreed to amend
and restate an existing credit agreement with Borrower and to increase such
credit facility upon the terms and subject to the conditions set forth therein.
B. The Banks' obligations to amend and restate such existing credit
agreement and to increase such credit facility under the Restated Credit
Agreement is subject, among other conditions, to receipt by Administrative Agent
of this Guaranty, duly executed by Guarantor. Guarantor expects to derive
substantial direct and indirect benefit from the transactions contemplated by
the Restated Credit Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Guarantor hereby agrees with Administrative Agent, for the ratable
benefit of the Banks and Administrative Agent, as follows:
1. Definitions and Interpretation.
(a) Definitions. When used in this Guaranty, the following
terms shall have the following respective meanings:
"Adjusted Net Worth" shall mean, with respect to
Guarantor at any time, the remainder of (i) the fair value of
the assets of Guarantor as of such date, minus (ii) the fair
value of the liabilities of Guarantor as of such date
(excluding, however, any liability of Guarantor hereunder),
such assets and liabilities to be determined in accordance
with any state or federal fraudulent conveyance or transfer
law which is applicable to this Guaranty.
"Administrative Agent" shall have the meaning given
to that term in the introductory paragraph hereof.
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"Banks" shall have the meaning given to that term in
the introductory paragraph hereof.
"Borrower" shall have the meaning given to that term
in the Recital A hereof.
"Disallowed Post-Commencement Interest and Expenses"
shall mean interest computed at the rate provided in the
Restated Credit Agreement and claims for reimbursement, costs,
expenses or indemnities under the terms of any of the Credit
Documents accruing or claimed at any time after the
commencement of any Insolvency Proceeding, if the claim for
such interest, reimbursement, costs, expenses or indemnities
is not allowable, allowed or enforceable against Borrower in
such Insolvency Proceeding.
"Guaranteed Obligations" shall mean all loans,
advances, debts, liabilities and obligations, howsoever
arising, owed by Borrower to Administrative Agent or any Bank
of every kind and description (whether or not evidenced by any
note or instrument and whether or not for the payment of
money), direct or indirect, absolute or contingent, due or to
become due, now existing or hereafter arising pursuant to the
terms of the Restated Credit Agreement or any of the other
Credit Documents, including, without limitation, all
principal, interest, rent, fees, taxes, charges, expenses,
attorneys' fees and accountants' fees chargeable to Borrower
or payable by Borrower thereunder.
"Guarantor" shall have the meaning given to that term
in the introductory paragraph hereof.
"Guarantor Documents" shall have the meaning given to
that term in paragraph 3 hereof.
"Insolvency Proceeding" shall mean any case or
proceeding under the United States Bankruptcy Code or any
other similar law, rule or regulation of the United States or
any jurisdiction or any other action or proceeding for the
reorganization, liquidation, appointment of a receiver,
rearrangement of debts, marshalling of assets or similar
action relating to Borrower or Guarantor, their respective
creditors or any substantial part of their respective assets,
whether or not any such case, proceeding or action is
voluntary or involuntary.
"Maximum Guaranty Amount" shall mean, at any time,
the greatest of (i) ninety-five percent (95%) of the Adjusted
Net Worth of Guarantor at such time, (ii) ninety-five percent
(95%) of the Adjusted Net Worth of Guarantor on the date
hereof and (iii) the value derived by Guarantor from the
Guaranteed Obligations incurred at or prior to such time.
"Restated Credit Agreement" shall have the meaning
given to that term in the Recital A hereof.
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<PAGE>
Unless otherwise defined herein, all other capitalized terms used
herein and defined in the Restated Credit Agreement shall have the
respective meanings given to those terms in the Restated Credit
Agreement.
(b) Other Interpretive Provisions. The rules of construction
set forth in Section I of the Restated Credit Agreement shall, to the
extent not inconsistent with the terms of this Guaranty, apply to this
Guaranty and are hereby incorporated by reference. Guarantor
acknowledges receipt of copies of the Restated Credit Agreement and the
other Credit Documents.
2. Guaranty.
(a) Payment Guaranty. Guarantor unconditionally guarantees and
promises to pay and perform as and when due, whether at stated
maturity, upon acceleration or otherwise, any and all of the Guaranteed
Obligations. If any Insolvency Proceeding relating to Borrower is
commenced, Guarantor further unconditionally guarantees and promises to
pay and perform, upon the demand of Administrative Agent, any and all
of the Guaranteed Obligations (including any and all Disallowed
Post-Commencement Interest and Expenses) in accordance with the terms
of the Credit Documents, whether or not such obligations are then due
and payable by Borrower and whether or not such obligations are
modified, reduced or discharged in such Insolvency Proceeding. This
Guaranty is a guaranty of payment and not of collection.
(b) Continuing Guaranty. This Guaranty is an irrevocable
continuing guaranty of the Guaranteed Obligations which shall continue
in effect until all obligations of the Banks to extend credit to
Borrower have terminated and all of the Guaranteed Obligations have
been fully, finally and indefeasibly paid. If any payment on any
Guaranteed Obligation is set aside, avoided or rescinded or otherwise
recovered from Administrative Agent or any Bank, such recovered payment
shall constitute a Guaranteed Obligation hereunder and, if this
Guaranty was previously released or terminated, it automatically shall
be fully reinstated, as if such payment was never made.
(c) Independent Obligation. The liability of Guarantor
hereunder is independent of the Guaranteed Obligations, and a separate
action or actions may be brought and prosecuted against Guarantor
irrespective of whether action is brought against Borrower or any other
guarantor of the Guaranteed Obligations or whether Borrower or any
other guarantor of the Guaranteed Obligations is joined in any such
action or actions.
(d) Maximum Guaranty Amount. The liability of Guarantor under
this Guaranty shall not at any time exceed the Maximum Guaranty Amount;
provided, however, that Administrative Agent and the Banks may permit
the Guaranteed Obligations to exceed the foregoing limitation without
affecting Guarantor's liability hereunder.
(e) Termination. This Guaranty shall continue to be in full
force and effect and applicable to any Guaranteed Obligations arising
thereafter which arise because prior
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payments of Guaranteed Obligations are rescinded or otherwise required
to be surrendered by Administrative Agent or any Bank after receipt.
3. Representations and Warranties. Guarantor represents and warrants to
Administrative Agent and the Banks that (a) Guarantor is a corporation duly
organized, validly, existing and in good standing under the laws of its state of
incorporation and is duly qualified and in good standing in each jurisdiction
where the nature of its business or properties requires such qualification,
except where the failure to qualify could not have a Material Adverse Effect;
(b) the execution, delivery and performance by Guarantor of this Guaranty and
the other Credit Documents executed or to be executed by Guarantor
(collectively, the "Guarantor Documents") are within the power of Guarantor and
have been duly authorized by all necessary actions on the part of Guarantor; (c)
this Guaranty and the other Guarantor Documents have been duly executed and
delivered by Guarantor and constitute legal, valid and binding obligations of
Guarantor, enforceable against it in accordance with their terms, except as
limited by bankruptcy, insolvency or other laws of general application relating
to or affecting the enforcement of creditors' rights generally; (d) the
execution, delivery and performance of this Guaranty and the other Guarantor
Documents do not (i) violate any Requirement of Law applicable to Guarantor,
(ii) contravene any material Contractual Obligation of Guarantor, or (iii)
result in the creation or imposition of any Lien upon any property, asset or
revenue of Guarantor except Permitted Liens; (e) no consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Authority or other Person (including, without limitation, the shareholders of
any Person) is required in connection with the execution, delivery and
performance by Guarantor of this Guaranty and the other Guarantor Documents,
except such consents, approvals, orders, authorizations, registrations,
declarations and filings that are so required and which have been obtained and
are in full force and effect; (f) Guarantor has paid all taxes and other charges
imposed by any Governmental Authority due and payable by Guarantor other than
those which are being challenged in good faith by appropriate proceedings and
for which adequate reserves have been established; (g) Guarantor is not in
violation of any Requirement of Law or Contractual Obligation applicable to
Guarantor other than those the consequences of which could not have a Material
Adverse Effect; (h) Guarantor is neither an investment company (as defined in
the Investment Company Act of 1940) nor controlled by an investment company; and
(i) no litigation, investigation or proceeding of any Governmental Authority is
pending or, to the knowledge of Guarantor, threatened against Guarantor which,
if adversely determined, could have a Material Adverse Effect.
4. Covenants. Guarantor hereby agrees (a) to deliver to Administrative
Agent (i) promptly after Guarantor becomes aware of any Default or Event of
Default or of any other event or condition which could have a Material Adverse
Effect, notice thereof, and (ii) such other information regarding the business,
operations or financial or other condition of Guarantor as Administrative Agent
may reasonably request; (b) to the extent failure to do so could have a Material
Adverse Effect, to pay all taxes and other charges imposed by any Government
Authority upon Guarantor or its property as and when they become due; (c) to the
extent failure to do so could have a Material Adverse Effect, to comply with all
Requirements of Law and Contractual Obligations applicable to Guarantor; (d) to
maintain its corporate existence and all rights, privileges and franchises
necessary for the conduct of its business; (e) to maintain with financially
sound and reputable insurance carriers insurance in such amounts, with such
deductibles and covering such risks as is customary for companies engaged in
similar businesses
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in the same geographic areas as Guarantor; and (f) to the extent covenants set
forth in the Restated Credit Agreement apply to Subsidiaries of Borrower, to
comply with such covenants.
5. Authorizations. Guarantor authorizes the Banks and Administrative
Agent, in their discretion, without notice to Guarantor, irrespective of any
change in the financial condition of Borrower, Guarantor or any other guarantor
of the Guaranteed Obligations since the date hereof, and without affecting or
impairing in any way the liability of Guarantor hereunder, from time to time to
(a) create new Guaranteed Obligations, and, either before or after receipt of
notice of revocation, renew, compromise, extend, accelerate or otherwise change
the time for payment or performance of, or otherwise change the terms of the
Guaranteed Obligations or any part thereof, including increase or decrease of
the rate of interest thereon; (b) take and hold security for the payment or
performance of the Guaranteed Obligations and exchange, enforce, waive or
release any such security; (c) apply such security and direct the order or
manner of sale thereof; (d) purchase such security at public or private sale;
(e) otherwise exercise any right or remedy it may have against Borrower,
Guarantor, any other guarantor of the Guaranteed Obligations or any security,
including, without limitation, the right to foreclose upon any such security by
judicial or nonjudicial sale; (f) settle, compromise with, release or substitute
any one or more makers, endorsers or guarantors of the Guaranteed Obligations or
any Collateral; and (g) assign the Guaranteed Obligations, this Guaranty, or the
other Credit Documents in whole or in part.
6. Waivers. Guarantor waives (a) any right to require the Banks or
Administrative Agent to (i) proceed against Borrower or any other guarantor of
the Guaranteed Obligations, (ii) proceed against or exhaust any security
received from Borrower or any other guarantor of the Guaranteed Obligations, or
(iii) pursue any other remedy in the Banks' or Administrative Agent's power
whatsoever; (b) any defense arising by reason of the application by Borrower of
the proceeds of any borrowing; (c) any defense resulting from the absence,
impairment or loss of any right of reimbursement, subrogation, contribution or
other right or remedy of Guarantor against Borrower, any other guarantor of the
Guaranteed Obligations or any security, whether resulting from an election by
Administrative Agent or the Banks to foreclose upon security by nonjudicial
sale, or otherwise; (d) any setoff or counterclaim of Borrower or any defense
which results from any disability or other defense of Borrower or the cessation
or stay of enforcement from any cause whatsoever of the liability of Borrower
(including, without limitation, the lack of validity or enforceability of any
Credit Document); (e) any right to exoneration of sureties which would otherwise
be applicable; (f) until all obligations of the Banks to extend credit under the
Restated Credit Agreement are terminated and all Guaranteed Obligations of
Borrower are satisfied in full, any right of subrogation or reimbursement and,
if there are any other guarantors of the Guaranteed Obligations, any right of
contribution, and right to enforce any remedy which Administrative Agent or any
Bank now has or may hereafter have against Borrower, and any benefit of, and any
right to participate in, any security now or hereafter received by
Administrative Agent or the Banks; (g) all presentments, demands for
performance, notices of non-performance, notices delivered under the Restated
Credit Agreement or any Credit Document, protests, notice of dishonor, and
notices of acceptance of this Guaranty and of the existence, creation or
incurring of new or additional Guaranteed Obligations and notices of any public
or private foreclosure sale; (h) the benefit of any statute of limitations to
the extent permitted by law; (i) any appraisement, valuation, stay, extension,
moratorium, redemption or similar law or similar rights for marshalling; and (j)
any right to be informed by Administrative Agent or any Bank of the financial
condition of Borrower or any other guarantor of the
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Guaranteed Obligations or any change therein or any other circumstances bearing
upon the risk of nonpayment or nonperformance of the Guaranteed Obligations.
Guarantor has the ability and assumes the responsibility for keeping informed of
the financial condition of Borrower and any other guarantors of the Guaranteed
Obligations and of other circumstances affecting such nonpayment and
nonperformance risks. Without limiting the generality of any of the foregoing,
Guarantor hereby waives (i) all rights and defenses arising out of an election
of remedies by Administrative Agent or any Bank, even though that election of
remedies, such as a nonjudicial foreclosure with respect to security for an
obligation, has destroyed such Guarantor's rights of subrogation and
reimbursement against Borrower by the operation of Section 580d of the Code of
Civil Procedure or otherwise, (ii) all rights and defenses Guarantor may have by
reason of protection afforded to Borrower with respect to the Guaranteed
Obligations pursuant to the antideficiency or other laws of California limiting
or discharging the Guaranty, including, without limitation, Section 580a, 580b,
580d, or 726 of the California Code of Civil Procedure, and (iii) all other
rights and defenses available to Guarantor by reason of Sections 2787 to 2855,
inclusive, of the California Civil Code.
7. Subordination. Guarantor hereby subordinates any Indebtedness of
Borrower to Guarantor to the Guaranteed Obligations. Guarantor agrees that after
the occurrence and during the continuance of any Default or Event of Default the
Banks and Administrative Agent shall be entitled to receive payment of all
Guaranteed Obligations before Guarantor receives payment of any Indebtedness of
Borrower to Guarantor. Any payments on such Indebtedness of Borrower to
Guarantor made after the occurrence and during the continuance of any Default or
Event of Default, if Administrative Agent so requests, shall be collected,
enforced and received by Guarantor as trustee for Administrative Agent and be
paid over to Administrative Agent on account of the Guaranteed Obligations, but
without reducing or affecting in any manner the liability of Guarantor under the
other provisions of this Guaranty. After the occurrence and during the
continuance of any Default or Event of Default, Administrative Agent is
authorized and empowered (but without any obligation to so do), in its
discretion, (a) in the name of Guarantor, to collect and enforce, and to submit
claims in respect of, Indebtedness of Borrower to Guarantor and to apply any
amounts received thereon to the Guaranteed Obligations, and (b) to require
Guarantor (i) to collect and enforce, and to submit claims in respect of,
Indebtedness of Borrower to Guarantor, and (ii) to pay any amounts received on
such Indebtedness to Administrative Agent for application to the Guaranteed
Obligations.
8. General Pledge; Setoff.
(a) Pledge. In addition to all liens upon and rights of setoff
against the property of Guarantor given to Administrative Agent or any
Bank by law or separate agreement to secure the liabilities of
Guarantor hereunder, to the extent permitted by law, Guarantor hereby
grants to Administrative Agent, for the benefit of the Banks and
Administrative Agent, a security interest in all monies, deposit
accounts, securities and other property of Guarantor now or hereafter
in the possession of or on deposit with Administrative Agent or any
Bank, whether held in a general or special account or deposit, or for
safekeeping or otherwise; and Administrative Agent and the Banks shall
have all rights and remedies of a secured party with respect to such
property.
(b) Setoff. In addition to any rights and remedies of
Administrative Agent
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and the Banks provided by law, Administrative Agent and the Banks shall
have the right, without prior notice to Guarantor, any such notice
being expressly waived by Guarantor to the extent permitted by
applicable law, upon the occurrence and during the continuance of a
Default or an Event of Default, to set-off and apply against the
Guaranteed Obligations then due any amount owing from any Bank or
Administrative Agent to Guarantor, including all deposits, accounts and
moneys of Guarantor then or thereafter maintained with any Bank or
Administrative Agent, at or at any time after, the happening of any of
the above mentioned events.
(c) Nonwaiver. No security interest or right of setoff shall
be deemed to have been waived by any act or conduct on the part of any
Bank or Administrative Agent or by any failure to exercise such right
of setoff or to enforce such security interest, or by any delay in so
doing; and every right of setoff and security interest shall continue
in full force and effect until such right of setoff or security
interest is specifically waived or released by an instrument in writing
executed by Administrative Agent.
9. Miscellaneous.
(a) Notices. Except as otherwise provided herein, all notices,
requests, demands, consents, instructions or other communications to or
upon Administrative Agent or Guarantor under this Guaranty shall be by
facsimile or in writing and faxed, mailed, telexed or delivered to each
party at its facsimile number or its address set forth below. All such
notices and communications: when sent by Federal Express or other
overnight service, shall be effective on the Business Day following the
deposit with such service; when mailed, first class postage prepaid and
addressed as aforesaid in the mails, shall be effective upon receipt;
when telexed, shall be effective upon receipt of answerback; when
delivered by hand, shall be effective upon delivery; and when faxed,
shall be effective upon confirmation of receipt.
Administrative Agent: California Bank & Trust
320 California Street, Suite 600
San Francisco, CA 94104
Attn: Relationship Manager -
Bell Microproducts
Telephone: (415) 445-8725
Facsimile: (415) 296-9617
Guarantor: Bell Microproducts Canada, Inc.
c/o Bell Microproducts, Inc.
1941 Ringwood Avenue
San Jose, CA 95131
Attn: Mr. Don W. Bell
President
Telephone: (408) 451-1635
Facsimile: (408) 451-1694
(b) Waivers; Amendments. This Guaranty may not be amended or
modified,
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<PAGE>
nor may any of its terms be waived, except by written instruments
signed by Guarantor and Administrative Agent. Each waiver or consent
under any provision hereof shall be effective only in the specific
instances and for the purpose for which given. No failure or delay by
Administrative Agent or any Bank in exercising any right hereunder
shall operate as a waiver thereof or of any other right nor shall any
single or partial exercise of any such right preclude any other further
exercise thereof or of any other right. Unless otherwise specified in
any such waiver or consent, a waiver or consent given hereunder shall
be effective only in the specific instance and for the specific purpose
for which given.
(c) Successors and Assigns. This Guaranty shall be binding
upon and inure to the benefit of Administrative Agent, the Banks and
Guarantor and their respective successors and assigns; provided,
however, that Administrative Agent, the Banks and Guarantor may sell,
assign and delegate their respective rights and obligations hereunder
only as permitted by the Restated Credit Agreement. Administrative
Agent may disclose this Guaranty as provided in the Restated Credit
Agreement.
(d) Partial Invalidity. If at any time any provision of this
Guaranty is or becomes illegal, invalid or unenforceable in any respect
under the law of any jurisdiction, neither the legality, validity or
enforceability of the remaining provisions of this Guaranty nor the
legality, validity or enforceability of such provision under the law of
any other jurisdiction shall in any way be affected or impaired
thereby.
(e) Cumulative Rights, etc. The rights, powers and remedies of
Administrative Agent and the Banks under this Guaranty shall be in
addition to all rights, powers and remedies given to Administrative
Agent and the Banks by virtue of any applicable Governmental Rule, the
Restated Credit Agreement, any other Credit Document or any other
agreement, all of which rights, powers, and remedies shall be
cumulative and may be exercised successively or concurrently without
impairing Administrative Agent's or the Bank's rights hereunder.
(f) Payments Free of Taxes, Etc. All payments made by
Guarantor under this Guaranty shall be made by Guarantor free and clear
of and without deduction for any and all present and future taxes,
levies, charges, deductions and withholdings. In addition, Guarantor
shall pay upon demand any stamp or other taxes, levies or charges of
any jurisdiction with respect to the execution, delivery, registration,
performance and enforcement of this Guaranty. Upon request by
Administrative Agent, Guarantor shall furnish evidence satisfactory to
Administrative Agent that all requisite authorizations and approvals
by, and notices to and filings with, governmental authorities and
regulatory bodies have been obtained and made and that all requisite
taxes, levies and charges have been paid.
(g) Governing Law and Jurisdiction. This Guaranty shall be
governed by and construed in accordance with the laws of the State of
California without reference to conflicts of law rules. Any legal
action or proceeding with respect to this Guaranty may be brought in
the courts of the State of California or of the United States for the
Northern District of California, and by execution and delivery of this
Guaranty, Guarantor
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<PAGE>
consents, for itself and in respect of its property, to the
non-exclusive jurisdiction of those courts. Guarantor irrevocably
waives any objection, including any objection to the laying of venue or
based on the grounds of forum non conveniens, which it may now or
hereafter have to the bringing of any action or proceeding in such
jurisdiction in respect of this Guaranty. Guarantor waives personal
service of any summons, complaint or other process, which may be made
by any other means permitted by California law.
(h) Arbitration.
(i) This subparagraph 9(h) concerns the resolution of
any controversies or claims between or among Guarantor, any
Bank and Administrative Agent, including but not limited to
those that arise from:
(A) This Guaranty or any other Guarantor
Document;
(B) Any violation of this Guaranty or any
other Guarantor Document; or
(C) Any claims for damages resulting from
any business conducted between Guarantor and any Bank
or Administrative Agent, including claims for injury
to persons, property or business interests.
(ii) At the request of Guarantor, any Bank or
Administrative Agent, any controversies or claims will be
settled by arbitration in accordance with the United States
Arbitration Act. The United States Arbitration Act will apply
even though this Agreement provides that it is governed by
California law.
(iii) Arbitration proceedings will be administered by
the American Arbitration Association and will be subject to
its commercial rules of arbitration. The arbitration will be
conducted within the California county of San Francisco.
(iv) For purposes of the application of the statute
of limitation, the filing of an arbitration pursuant to this
subparagraph is the equivalent of the filing of a lawsuit, and
any claim or controversy which may be arbitrated under this
subparagraph is subject to any applicable statute of
limitations. The arbitrators will have the authority to decide
whether any such claim or controversy is barred by the statute
of limitations and if so to dismiss the arbitration on that
basis.
(v) If there is a dispute as to whether an issue is
arbitrable, the arbitrators will have the authority to resolve
any such dispute.
(vi) The decision that results from an arbitration
proceeding may be submitted to any authorized court of law to
be confirmed and enforced.
(vii) The procedure described above will not apply if
the controversy or claim, at the time of the proposed
submission to arbitration arises from or relates to an
obligation to Bank secured by real property located in
California. If the obligation is secured by real property,
Guarantor, each Bank and Administrative
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<PAGE>
Agent must consent to submission of the claim or controversy
to arbitration. If all parties do not consent to arbitration,
the controversy or claim will be settled as follows:
(A) Guarantor, the Banks and Administrative
Agent will designate a referee (or a panel of
referees) selected under the auspices of the American
Arbitration Association in the same manner as
arbitrators are selected in Association-sponsored
proceedings;
(B) The designated referee (or the panel of
referees) will be appointed by a court as provided in
California Code of Civil Procedure Section 638 and
the following related sections;
(C) The referee (or the presiding referee of
the panel) will be an active attorney or a retired
judge; and
(D) The award that results from the decision
of the referee (or the panel) will be entered as a
judgment in the court that appointed the referee, in
accordance with the provisions of California Code of
Civil Procedure Sections 644 and 645.
(viii) This subparagraph 9(h) does not limit the
right of Guarantor, any Bank or Administrative Agent to:
(A) Exercise self-help remedies such as
setoff;
(B) Foreclose against or sell any real or
personal property collateral; or
(C) Take action in a court of law, before,
during or after the arbitration proceeding to obtain
an interim remedy or additional or supplementary
remedies.
(ix) The pursuit of or a decision in an action for
interim, additional or supplementary remedies, or the filing
of a court action, does not constitute a waiver of the right
of Guarantor, any Bank or Administrative Agent, including the
suing party, to submit the controversy or claim to
arbitration.
(i) JURY TRIAL. EACH OF GUARANTOR, THE BANKS AND
ADMINISTRATIVE AGENT, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY AS TO ANY
ISSUE RELATING HERETO IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY OTHER CREDIT
DOCUMENT NOT RESOLVED PURSUANT TO SUBPARAGRAPH 9(h) HEREOF.
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IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be executed
as of the day and year first above written.
BELL MICROPRODUCTS CANADA INC.
By: ________________________________
Name: __________________________
Title: _________________________
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EXHIBIT H
BELL CANADA PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT, dated as of November 20, 1998, is executed by
BELL MICROPRODUCTS CANADA INC., a California corporation ("Bell Canada"), in
favor of CALIFORNIA BANK & TRUST, a California banking corporation, acting as
agent (in such capacity, "Administrative Agent") for the financial institutions
which are from time to time parties to the Restated Credit Agreement defined in
Recital A below (collectively, the "Banks").
RECITALS
A. Pursuant to a Third Amended and Restated Credit Agreement dated as
of November 12, 1998 (as amended from time to time, the "Restated Credit
Agreement"), among Bell Microproducts Inc., a California corporation
("Borrower"), the Banks and Administrative Agent, the Banks have agreed to amend
and restate an existing credit agreement with Borrower and to increase such
credit facility upon the terms and subject to the conditions set forth therein.
B. The Banks' obligations to amend and restate such existing credit
agreement and to increase such credit facility under the Restated Credit
Agreement is subject, among other conditions, to receipt by Administrative Agent
of this Pledge Agreement, duly executed by Bell Canada. Bell Canada expects to
derive substantial direct and indirect benefit from the transactions
contemplated by the Restated Credit Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Bell Canada hereby agrees with Administrative Agent, for the
ratable benefit of the Banks and Administrative Agent, as follows:
1. Definitions and Interpretation. When used in this Pledge Agreement,
the following terms shall have the following respective meanings:
"Administrative Agent" shall have the meaning given to that
term in the introductory paragraph hereof.
"Banks" shall have the meaning given to that term in the
introductory paragraph hereof.
"Bell Canada" shall have the meaning given to that term in the
introductory paragraph hereof.
"Borrower" shall have the meaning given to that term in
Recital A hereof.
"Collateral" shall have the meaning given to that term in
paragraph 2 hereof.
"Domestic Subsidiary" shall mean, with respect to any Person,
any Subsidiary of such Person which is created or organized in the
United States under the laws of the
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United States or any state of the United States, and with respect to
Bell Canada, shall include, without limitation, as of the date hereof,
each of the Subsidiaries listed on Part A of Attachment 1 hereto.
"Domestic Subsidiary Membership Interests" shall mean all
Subsidiary Membership Interests in Domestic Subsidiaries.
"Domestic Subsidiary Shares" shall mean all Subsidiary Shares
in Domestic Subsidiaries.
"Foreign Subsidiary" shall mean, with respect to any Person,
any Subsidiary of such Person which is not a Domestic Subsidiary, and
with respect to Bell Canada, shall include, without limitation, as of
the date hereof, each of the Subsidiaries listed on Part B of
Attachment 1 hereto.
"Foreign Subsidiary Membership Interests" shall mean all
Subsidiary Membership Interests in Foreign Subsidiaries.
"Foreign Subsidiary Shares" shall mean all Subsidiary Shares
in Foreign Subsidiaries.
"Governance Agreements" shall mean, with respect to any entity
which is not a corporation, the operating agreement and the other
organizational or governing documents of such entity.
"Membership Interests" shall mean, with respect to any entity
that is not a corporation, all membership interests issued by such
entity, together with (a) all interest in the property and assets of
such entity; (b) all interest in and to all capital and other accounts
maintained by such entity; (c) all rights and interests in the
Governance Agreements of such entity, including any and all enforcement
and cure rights thereunder, and all income, gain, loss, deductions,
credits, capital contributions, distributions, and refunds of capital
of any nature and the proceeds of any of the foregoing; and (d) all
rights to exercise and enforce every right, power, remedy, authority,
option and privilege relating to such entity, including without
limitation, any power to dissolve such entity or terminate, cancel or
modify any of the Governance Agreements, to exercise any right of first
refusal or option to acquire any membership interest in such entity and
the right to acquire or offer to third parties the membership interests
of such entity pursuant to its Governance Agreements.
"Obligations" shall mean and include all loans, advances,
debts, liabilities and obligations, howsoever arising, owed by Borrower
to any Bank or Administrative Agent of every kind and description
(whether or not evidenced by any note or instrument and whether or not
for the payment of money), direct or indirect, absolute or contingent,
due or to become due, now existing or hereafter arising pursuant to the
terms of the Restated Credit Agreement or any of the other Credit
Documents, including without limitation all interest, fees, charges,
expenses, attorneys' fees and accountants' fees chargeable to Borrower
or payable by Borrower thereunder.
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<PAGE>
"Pledge Agreement" shall mean this Pledge Agreement as further
amended, modified, supplemented or replaced from time to time.
"Pledged Membership Interests" shall mean the Subsidiary
Membership Interests described in subparagraphs 2(b) and 2(d) hereof,
whether now owned or hereafter acquired, whether certificated or
uncertificated and whether or not described in Attachment 1.
"Pledged Shares" shall mean the Subsidiary Shares described in
subparagraphs 2(a) and 2(c) hereof, whether now owned or hereafter
acquired, whether certificated or uncertificated and whether or not
described in Attachment 1.
"Restated Credit Agreement" shall have the meaning given to
that term in Recital A hereof as further amended, modified,
supplemented or replaced from time to time.
"Subsidiary Membership Interests" shall mean, with respect to
any Subsidiary of Bell Canada the ownership interest of which is not
represented by certificated or uncertificated securities, all
Membership Interests issued by such Subsidiary.
"Subsidiary Shares" shall mean, with respect to any Subsidiary
of Bell Canada, all Equity Securities issued by such Subsidiary.
"UCC" shall mean the Uniform Commercial Code as in effect in
the State of California from time to time.
Unless otherwise defined herein, all other capitalized terms used herein and
defined in the Restated Credit Agreement shall have the respective meanings
given to those terms in the Restated Credit Agreement, and all terms defined in
the UCC shall have the respective meanings given to those terms in the UCC. The
rules of construction set forth in Section I of the Restated Credit Agreement
shall, to the extent not inconsistent with the terms of this Pledge Agreement,
apply to this Pledge Agreement and are hereby incorporated by reference.
2. Pledge. As security for the Obligations, Bell Canada hereby pledges
and assigns to Administrative Agent (for the ratable benefit of the Banks and
Administrative Agent) and grants to Administrative Agent (for the ratable
benefit of the Banks and Administrative Agent) a security interest in all right,
title and interest of Bell Canada in and to the property described in
subparagraphs (a) - (f) below, whether now owned or hereafter acquired
(collectively and severally, the "Collateral"):
(a) All Domestic Subsidiary Shares;
(b) All Domestic Subsidiary Membership Interests;
(c) All Foreign Subsidiary Shares;
(d) All Foreign Subsidiary Membership Interests;
(e) All other certificated and uncertificated securities;
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<PAGE>
(f) All dividends, cash, instruments and other property from
time to time received, receivable or otherwise distributed or
distributable in respect of or in exchange for any of the property
described in subparagraph (a) through (e) above; and
(g) All proceeds of the foregoing.
3. Representations and Warranties. Bell Canada represents and warrants
to Administrative Agent and the Banks as follows:
(a) Bell Canada is the record legal and beneficial owner of
the Collateral (or, in the case of after-acquired Collateral, at the
time Bell Canada acquires rights in the Collateral, will be the record
legal and beneficial owner thereof). No other Person has (or, in the
case of after-acquired Collateral, at the time Bell Canada acquires
rights therein, will have) any right, title, claim or interest (by way
of Lien (other than Permitted Liens), purchase option or otherwise) in,
against or to the Collateral.
(b) Administrative Agent has (or in the case of after-acquired
Collateral, at the time Bell Canada acquires rights therein, will have)
a first priority perfected security interest in the Collateral.
(c) All Pledged Shares and all Pledged Membership Interests
have been (or in the case of after-acquired Pledged Shares or Pledged
Membership Interests, at the time Bell Canada acquires rights therein,
will have been) duly authorized, validly issued and fully paid and are
(or in the case of after-acquired Pledged Shares or Pledged Membership
Interests, at the time Bell Canada acquires rights therein, will be)
non-assessable.
(d) No portion of the Pledged Shares consists of
uncertificated securities.
(e) Bell Canada has delivered to Administrative Agent,
together with all necessary stock powers, endorsements, assignments and
other necessary instruments of transfer, the originals of all Pledged
Shares, other certificated securities, other Collateral and all
certificates, instruments and other writings evidencing the same.
(f) Bell Canada keeps all records concerning the Pledged
Membership Interests, the other Collateral and all certificates,
instruments and other writings evidencing the same at its chief
executive office located at 1941 Ringwood Avenue, San Jose, California
95131;
(g) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Authority or
other Person (including, without limitation, the shareholders or
members of any Person) is required in connection with the execution,
delivery and performance by Bell Canada of this Pledge Agreement,
except such consents, approvals, orders, authorizations, registrations,
declarations and filings that are so required and which have been
obtained and are in full force and effect;
(h) Set forth in Attachment 1 hereto is a true, complete and
accurate list of all Equity Securities and Membership Interests issued
by Bell Canada's Subsidiaries and all
H-4
<PAGE>
other Equity Securities and Membership Interests owned by Bell Canada.
All information set forth in Attachment 1 is true, complete and
accurate.
4. Covenants. Bell Canada hereby agrees as follows:
(a) Bell Canada, at Bell Canada's expense, shall promptly
procure, execute and deliver to Administrative Agent all documents,
instruments and agreements and perform all acts which are necessary or
desirable, or which Administrative Agent may reasonably request, to
establish, maintain, preserve, protect and perfect the Collateral, the
Lien granted to Administrative Agent therein and the first priority of
such Lien or to enable Administrative Agent to exercise and enforce its
rights and remedies hereunder with respect to any Collateral. Without
limiting the generality of the preceding sentence, Bell Canada shall
(i) procure, execute and deliver to Administrative Agent all stock
powers, endorsements, assignments, financing statements and other
instruments of transfer requested by Administrative Agent, (ii) deliver
to Administrative Agent promptly upon receipt the originals of all
Pledged Shares, other certificated securities, other Collateral and all
certificates, instruments and other writings evidencing the same and
(iii) cause the Lien of Administrative Agent to be recorded or
registered in the books of any financial intermediary or clearing
corporation reasonably requested by Administrative Agent.
(b) Bell Canada shall pay promptly when due all taxes and
other Governmental Charges, all Liens and all other charges now or
hereafter imposed upon, relating to or affecting any Collateral, except
to the extent that Bell Canada is contesting such taxes or other
Governmental Charges in good faith by appropriate proceedings with
adequate reserves established therefor in accordance with GAAP.
(c) With respect to Pledged Membership Interests, Bell Canada
shall not (i) admit any person or entity as an additional or substitute
member of such entity without Administrative Agent's prior written
consent, which Administrative Agent may give or withhold in
Administrative Agent's sole discretion; or (ii) alter, amend or modify
the Governance Agreements without Administrative Agent's prior written
consent, which Administrative Agent shall not unreasonably withhold;
provided, however, that Agent's prior written consent shall not be
required for technical amendments to the Governance Agreements which
(A) in no way materially affect Assignor's rights or obligations under
the Governance Agreements or (B) in no way affect the Borrower's rights
or obligations or affect the Borrower's ability to perform its
obligations or exercise its rights under the Credit Documents; provided
further that technical amendments shall not include amendments to the
Governance Agreements that affect voting or consent rights.
(d) Without ninety (90) days' prior written notice to
Administrative Agent, Bell Canada shall not change its name or place of
business (or, if Bell Canada has more than one place of business, its
chief executive office), or the office in which Bell Canada's records
relating to the Pledged Membership Interests are kept.
(e) Bell Canada shall deposit, or cause to be deposited, all
remittances, checks and other funds (in whatever form) received with
respect to Collateral to a deposit
H-5
<PAGE>
account in which Administrative Agent has a first priority perfected
security interest.
(f) Bell Canada shall appear in and defend any action or
proceeding which may affect its title to or Administrative Agent's
interest in the Collateral.
(g) Bell Canada shall not surrender or lose possession of
(other than to Administrative Agent), sell, encumber, lease, rent,
option, or otherwise dispose of or transfer any Collateral or right or
interest therein except as permitted in the Restated Credit Agreement.
5. Voting Rights and Dividends Prior to Payment Default. Unless an
Event of Default under Subparagraph 6.01(a) of the Restated Credit Agreement
(whether resulting from the failure of Bell Canada to make a scheduled payment,
a payment due upon acceleration or otherwise) has occurred and is continuing and
Bell Canada has not made the appropriate payments under the Bell Canada Guaranty
in connection therewith:
(a) Bell Canada may exercise or refrain from exercising any
and all voting and other consensual rights pertaining to the Pledged
Shares and the Pledged Membership Interests or any part thereof;
provided, however, that Bell Canada shall not exercise or refrain from
exercising any such rights where the consequence of such action or
inaction would be (i) to impair any Collateral, the Lien granted to
Administrative Agent therein, the first priority of such Lien or
Administrative Agent's rights and remedies hereunder with respect to
any Collateral or (ii) otherwise inconsistent with the terms of this
Pledge Agreement and the other Credit Documents.
(b) Bell Canada may receive and retain all dividends and
interest paid in cash in respect of the Pledged Shares and the Pledged
Membership Interests, except for any such dividends and interest paid
in connection with a partial or total liquidation or dissolution or in
connection with a reduction of capital, capital surplus or
paid-in-surplus. Bell Canada shall promptly deliver to Administrative
Agent to hold as Collateral all dividends and interest which Bell
Canada is not entitled to receive and retain pursuant to the preceding
sentence, in the same form as so received (with any necessary
endorsement), and, until so delivered, shall hold such dividends and
interest in trust for the benefit of Administrative Agent, segregated
from the other property or funds of Bell Canada.
6. Authorized Action by Administrative Agent. Bell Canada hereby
irrevocably appoints Administrative Agent as its attorney-in-fact and agrees
that Administrative Agent may perform (but Administrative Agent shall not be
obligated to and shall incur no liability to Bell Canada or any third party for
failure so to do) any act which Bell Canada is obligated by this Pledge
Agreement to perform, and to exercise such rights and powers as Bell Canada
might exercise with respect to the Collateral, including, without limitation,
the right to (a) collect by legal proceedings or otherwise and endorse, receive
and receipt for all dividends, interest, payments, proceeds and other sums and
property now or hereafter payable on or on account of the Collateral; (b) enter
into any extension, reorganization, deposit, merger, consolidation or other
agreement pertaining to, or deposit, surrender, accept, hold or apply other
property in exchange for the Collateral; (c) insure, process, preserve and
enforce the Collateral; (d) make any
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<PAGE>
compromise or settlement, and take any action it deems advisable, with respect
to the Collateral; (e) pay any Indebtedness of Bell Canada relating to the
Collateral; and (f) execute UCC financing statements and other documents,
instruments and agreements required hereunder; provided, however, that
Administrative Agent may exercise such powers only after the occurrence and
during the continuance of an Event of Default. Bell Canada agrees to reimburse
Administrative Agent within thirty (30) days after written demand for all
reasonable costs and expenses, including attorneys' fees, Administrative Agent
may incur while acting as Bell Canada's attorney-in-fact hereunder, all of which
costs and expenses are included in the Obligations. Bell Canada agrees that such
care as Administrative Agent gives to the safekeeping of its own property of
like kind shall constitute reasonable care of the Collateral when in
Administrative Agent's possession; provided, however, that Administrative Agent
shall not be required to make any presentment, demand or protest, or give any
notice and need not take any action to preserve any rights against any prior
party or any other Person in connection with the Obligations or with respect to
the Collateral.
7. Events of Default.
(a) Event of Default. Bell Canada shall be deemed in default
under this Pledge Agreement upon the occurrence and during the
continuance of an Event of Default, as that term is defined in the
Restated Credit Agreement, which Bell Canada has not otherwise cured
under the Bell Canada Guaranty.
(b) Voting Rights and Dividends. Upon the occurrence and
during the continuance of an Event of Default under Subparagraph
6.01(a) of the Restated Credit Agreement (whether resulting from the
failure of Borrower to make a scheduled payment, a payment due upon
acceleration or otherwise, or Bell Canada to make the appropriate
payments under the Bell Canada Guaranty):
(i) All rights of Bell Canada to exercise the voting
and other consensual rights which it would otherwise be
entitled to exercise pursuant to subparagraph 5(a) hereof and
to receive the dividends and interest payments which it would
otherwise be authorized to receive and retain pursuant to
subparagraph 5(a) hereof shall cease and all such rights shall
thereupon become vested in Administrative Agent which shall
thereupon have the sole right, but not the obligation, to
exercise such voting and other consensual rights and to
receive and hold as Collateral such dividends and interest
payments.
(ii) Bell Canada shall promptly deliver to
Administrative Agent to hold as Collateral all dividends and
interest received by Bell Canada in the same form as so
received (with any necessary endorsement), and, until so
delivered, shall hold such dividends and interest in trust for
the benefit of Administrative Agent, segregated from the other
property or funds of Bell Canada.
(c) Other Rights and Remedies. In addition to all other rights
and remedies granted to Administrative Agent by this Pledge Agreement,
the Restated Credit Agreement, the other Credit Documents, the UCC and
other applicable Governmental Rules, Administrative Agent may, upon the
occurrence and during the continuance of any
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<PAGE>
Event of Default, which Bell Canada has not otherwise cured under the
Bell Canada Guaranty, exercise any one or more of the following rights
and remedies: (i) collect, receive, appropriate or realize upon the
Collateral or otherwise foreclose or enforce Administrative Agent's
security interests in any or all Collateral in any manner permitted by
applicable Governmental Rules or in this Pledge Agreement; (ii) notify
any or all issuers of or transfer or paying agents for the Collateral
or any applicable clearing corporation, financial intermediary or other
Person to register the Collateral in the name of Administrative Agent
or its nominee and/or to pay all dividends, interest and other amounts
payable in respect of the Collateral directly to Administrative Agent;
(iii) subject to applicable law, sell or otherwise dispose of any or
all Collateral at one or more public or private sales, whether or not
such Collateral is present at the place of sale, for cash or credit or
future delivery, on such terms and in such manner as Administrative
Agent may determine; and (iv) require Bell Canada to assemble all
records and information relating to the Collateral and make it
available to Administrative Agent at a place to be designated by
Administrative Agent. In any case where notice of any sale or
disposition of any Collateral is required, Bell Canada hereby agrees
that seven (7) days notice of such sale or disposition is reasonable.
(d) Securities Laws.
(i) Bell Canada acknowledges and recognizes that
Administrative Agent may be unable to effect a public sale of
all or a part of the Pledged Shares and may be compelled to
resort to one or more private sales to a restricted group of
purchasers who will be obligated to agree, among other things,
to acquire the Pledged Shares for their own account, for
investment and not with a view to the distribution or resale
thereof. Bell Canada acknowledges that any such private sales
may be at prices and on terms less favorable to Administrative
Agent than those of public sales, and agrees that such private
sales shall be deemed to have been made in a commercially
reasonable manner and that Administrative Agent has no
obligation to delay sale of any Pledged Shares to permit the
issuer thereof to qualify the Pledged Shares for distribution
by prospectus under applicable Canadian securities laws, or
register it for public sale under the Securities Act of 1933,
as amended, or under any state securities law.
(ii) Upon the occurrence of an Event of Default, not
otherwise cured by Bell Canada under the Bell Canada Guaranty
and at Administrative Agent's request, Bell Canada shall, and
shall cause all issuers of Collateral and all officers and
directors thereof and all other necessary Persons to, execute
and deliver all documents, instruments and agreements and
perform all other acts necessary or, in the opinion of
Administrative Agent, advisable to sell the Collateral in any
public or private sale, including any acts requested by
Administrative Agent to (A) register any Collateral under the
Securities Act of 1933, (B) qualify any Collateral under any
state securities or "Blue Sky" laws or (C) otherwise permit
any such sale to be made in full compliance with all
applicable Governmental Rules.
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<PAGE>
8. Authorizations. Bell Canada authorizes the Banks and Administrative
Agent, in their discretion, without notice to Bell Canada, irrespective of any
change in the financial condition of Borrower, Bell Canada or any other
guarantor of the Obligations since the date hereof, and without affecting or
impairing in any way the liability of Bell Canada hereunder, from time to time
to (a) create new Obligations, and, either before or after receipt of notice of
revocation, renew, compromise, extend, accelerate or otherwise change the time
for payment or performance of, or otherwise change the terms of the Obligations
or any part thereof, including increase or decrease of the rate of interest
thereon; (b) take and hold security for the payment or performance of the
Obligations and exchange, enforce, waive or release any such security; (c) apply
such security and direct the order or manner of sale thereof; (d) purchase such
security at public or private sale; (e) otherwise exercise any right or remedy
it may have against Borrower, Bell Canada, any other guarantor of the
Obligations or any security, including, without limitation, the right to
foreclose upon any such security by judicial or nonjudicial sale; (f) settle,
compromise with, release or substitute any one or more makers, endorsers or
guarantors of the Obligations or any Collateral; and (g) assign the Obligations,
this Pledge Agreement, or the other Credit Documents in whole or in part.
9. Waivers. Bell Canada waives (a) any right to require the Banks or
Administrative Agent to (i) proceed against Borrower or any other guarantor of
the Obligations, (ii) proceed against or exhaust any security received from
Borrower or any other guarantor of the Obligations, or (iii) pursue any other
remedy in the Banks' or Administrative Agent's power whatsoever; (b) any defense
arising by reason of the application by Borrower of the proceeds of any
borrowing; (c) any defense resulting from the absence, impairment or loss of any
right of reimbursement, subrogation, contribution or other right or remedy of
Bell Canada against Borrower, any other guarantor of the Obligations or any
security, whether resulting from an election by Administrative Agent or the
Banks to foreclose upon security by nonjudicial sale, or otherwise; (d) any
setoff or counterclaim of Borrower or any defense which results from any
disability or other defense of Borrower or the cessation or stay of enforcement
from any cause whatsoever of the liability of Borrower (including, without
limitation, the lack of validity or enforceability of any Credit Document); (e)
any right to exoneration of sureties which would otherwise be applicable; (f)
until all obligations of the Banks to extend credit under the Restated Credit
Agreement are terminated and all Obligations of Borrower are satisfied in full,
any right of subrogation or reimbursement and, if there are any other guarantors
of the Obligations, any right of contribution, and right to enforce any remedy
which Administrative Agent or any Bank now has or may hereafter have against
Borrower, and any benefit of, and any right to participate in, any security now
or hereafter received by Administrative Agent or the Banks; (g) all
presentments, demands for performance, notices of non-performance, notices
delivered under the Restated Credit Agreement or any Credit Document, protests,
notice of dishonor, and notices of acceptance of this Pledge Agreement and of
the existence, creation or incurring of new or additional Obligations and
notices of any public or private foreclosure sale; (h) the benefit of any
statute of limitations to the extent permitted by law; (i) any appraisement,
valuation, stay, extension, moratorium, redemption or similar law or similar
rights for marshalling; and (j) any right to be informed by Administrative Agent
or any Bank of the financial condition of Borrower or any other guarantor of the
Obligations or any change therein or any other circumstances bearing upon the
risk of nonpayment or nonperformance of the Obligations. Bell Canada has the
ability and assumes the responsibility for keeping informed of the financial
condition of Borrower and any other guarantors of the Obligations and of other
circumstances affecting such
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nonpayment and nonperformance risks. Without limiting the generality of any of
the foregoing, Bell Canada hereby waives (i) all rights and defenses arising out
of an election of remedies by Administrative Agent or any Bank, even though that
election of remedies, such as a nonjudicial foreclosure with respect to security
for an obligation, has destroyed Bell Canada's rights of subrogation and
reimbursement against Borrower by the operation of Section 580d of the Code of
Civil Procedure or otherwise, (ii) all rights and defenses Bell Canada may have
by reason of protection afforded to Borrower with respect to the Obligations
pursuant to the antideficiency or other laws of California limiting or
discharging the Pledge Agreement, including, without limitation, Section 580a,
580b, 580d, or 726 of the California Code of Civil Procedure, and (iii) all
other rights and defenses available to Bell Canada by reason of Sections 2787 to
2855, inclusive, of the California Civil Code.
10. Miscellaneous.
(a) Notices. Except as otherwise provided herein, all
notices, requests, demands, consents, instructions or other
communications to or upon Administrative Agent or Bell Canada under
this Pledge Agreement shall be by facsimile or in writing and faxed,
mailed, telexed or delivered to each party at its facsimile number or
its address set forth below. All such notices and communications: when
sent by Federal Express or other overnight service, shall be effective
on the Business Day following the deposit with such service; when
mailed, first class postage prepaid and addressed as aforesaid in the
mails, shall be effective upon receipt; when telexed, shall be
effective upon receipt of answerback; when delivered by hand, shall be
effective upon delivery; and when faxed, shall be effective upon
confirmation of receipt.
Administrative Agent: California Bank & Trust
320 California Street, Suite 600
San Francisco, CA 94104
Attn: Relationship Manager -
Bell Microproducts
Telephone: (415) 445-8725
Facsimile: (415) 296-9617
Bell Canada: Bell Microproducts Canada, Inc.
c/o Bell Microproducts, Inc.
1941 Ringwood Avenue
San Jose, CA 95131
Attn: Mr. Don W. Bell
President
Telephone: (408) 451-1635
Facsimile: (408) 451-1694
(b) Waivers; Amendments. Any term, covenant, agreement or
condition of this Pledge Agreement may be amended or waived by written
instruments signed by Guarantor and Agent.. No failure or delay by
Administrative Agent or any Bank in exercising any right hereunder
shall operate as a waiver thereof or of any other right nor shall any
single or partial exercise of any such right preclude any other further
exercise
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<PAGE>
thereof or of any other right. Unless otherwise specified in any such
waiver or consent, a waiver or consent given hereunder shall be
effective only in the specific instance and for the specific purpose
for which given.
(c) Successors and Assigns. This Pledge Agreement shall be
binding upon and inure to the benefit of Administrative Agent, the
Banks and Bell Canada and their respective successors and assigns;
provided, however, that Administrative Agent, the Banks and Bell Canada
may sell, assign and delegate their respective rights and obligations
hereunder only as permitted by the Restated Credit Agreement.
Administrative Agent and the Banks may disclose this Pledge Agreement
as provided in the Restated Credit Agreement.
(d) Partial Invalidity. If at any time any provision of this
Pledge Agreement is or becomes illegal, invalid or unenforceable in any
respect under the law of any jurisdiction, neither the legality,
validity or enforceability of the remaining provisions of this Pledge
Agreement nor the legality, validity or enforceability of such
provision under the law of any other jurisdiction shall in any way be
affected or impaired thereby.
(e) Cumulative Rights, etc. The rights, powers and remedies of
Administrative Agent and the Banks under this Pledge Agreement shall be
in addition to all rights, powers and remedies given to Administrative
Agent and the Banks by virtue of any applicable Governmental Rule, the
Restated Credit Agreement, any other Credit Document or any other
agreement, all of which rights, powers, and remedies shall be
cumulative and may be exercised successively or concurrently without
impairing Administrative Agent's rights hereunder. Bell Canada waives
any right to require Administrative Agent or any Bank to proceed
against any Person or to exhaust any Collateral or to pursue any remedy
in Administrative Agent's or such Bank's power.
(f) Payments Free of Taxes, Etc. All payments made by Bell
Canada under this Pledge Agreement shall be made by Bell Canada free
and clear of and without deduction for any and all present and future
taxes, levies, charges, deductions and withholdings. In addition, Bell
Canada shall pay promptly when due any stamp or other taxes, levies or
charges of any jurisdiction with respect to the execution, delivery,
registration, performance and enforcement of this Pledge Agreement.
Upon request by Administrative Agent, Bell Canada shall furnish
evidence satisfactory to Administrative Agent that all requisite
authorizations and approvals by, and notices to and filings with,
governmental authorities and regulatory bodies have been obtained and
made and that all requisite taxes, levies and charges have been paid.
(g) Governing Law and Jurisdiction. This Pledge Agreement
shall be governed by and construed in accordance with the laws of the
State of California without reference to conflicts of law rules. Any
legal action or proceeding with respect to this Pledge Agreement may be
brought in the courts of the State of California or of the United
States for the Northern District of California, and by execution and
delivery of this Pledge Agreement, Bell Canada consents, for itself and
in respect of its property, to the non-exclusive jurisdiction of those
courts. Bell Canada irrevocably waives any objection, including any
objection to the laying of venue or based on the grounds of forum non
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<PAGE>
conveniens, which it may now or hereafter have to the bringing of any
action or proceeding in such jurisdiction in respect of this Pledge
Agreement. Bell Canada waives personal service of any summons,
complaint or other process, which may be made by any other means
permitted by California law.
(h) Arbitration.
(i) This subparagraph 10(h) concerns the resolution
of any controversies or claims between or among Bell Canada,
any Bank and Administrative Agent, including but not limited
to those that arise from:
(A) This Pledge Agreement or any other
Credit Document to which Bell Canada is a party;
(B) Any violation of this Pledge Agreement
or any other Credit Document to which Bell Canada is
a party; or
(C) Any claims for damages resulting from
any business conducted between Bell Canada and any
Bank or Administrative Agent, including claims for
injury to persons, property or business interests.
(ii) At the request of Bell Canada, any Bank or
Administrative Agent, any controversies or claims will be
settled by arbitration in accordance with the United States
Arbitration Act. The United States Arbitration Act will apply
even though this Agreement provides that it is governed by
California law.
(iii) Arbitration proceedings will be administered by
the American Arbitration Association and will be subject to
its commercial rules of arbitration. The arbitration will be
conducted within the California county of San Francisco.
(iv) For purposes of the application of the statute
of limitation, the filing of an arbitration pursuant to this
subparagraph is the equivalent of the filing of a lawsuit, and
any claim or controversy which may be arbitrated under this
subparagraph is subject to any applicable statute of
limitations. The arbitrators will have the authority to decide
whether any such claim or controversy is barred by the statute
of limitations and if so to dismiss the arbitration on that
basis.
(v) If there is a dispute as to whether an issue is
arbitrable, the arbitrators will have the authority to resolve
any such dispute.
(vi) The decision that results from an arbitration
proceeding may be submitted to any authorized court of law to
be confirmed and enforced.
(vii) The procedure described above will not apply if
the controversy or claim, at the time of the proposed
submission to arbitration arises from or relates to an
obligation to Bank secured by real property located in
California. If the obligation is secured by real property,
Bell Canada, each Bank and Administrative Agent must consent
to submission of the claim or controversy to arbitration. If
all
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<PAGE>
parties do not consent to arbitration, the controversy or
claim will be settled as follows:
(A) Bell Canada, the Banks and
Administrative Agent will designate a referee (or a
panel of referees) selected under the auspices of the
American Arbitration Association in the same manner
as arbitrators are selected in Association-sponsored
proceedings;
(B) The designated referee (or the panel of
referees) will be appointed by a court as provided in
California Code of Civil Procedure Section 638 and
the following related sections;
(C) The referee (or the presiding referee of
the panel) will be an active attorney or a retired
judge; and
(D) The award that results from the decision
of the referee (or the panel) will be entered as a
judgment in the court that appointed the referee, in
accordance with the provisions of California Code of
Civil Procedure Sections 644 and 645.
(viii) This subparagraph 10(h) does not limit the
right of Bell Canada, any Bank or Administrative Agent to:
(A) Exercise self-help remedies such as
setoff;
(B) Foreclose against or sell any real or
personal property collateral; or
(C) Take action in a court of law, before,
during or after the arbitration proceeding to obtain
an interim remedy or additional or supplementary
remedies.
(ix) The pursuit of or a decision in an action for
interim, additional or supplementary remedies, or the filing
of a court action, does not constitute a waiver of the right
of Bell Canada, any Bank or Administrative Agent, including
the suing party, to submit the controversy or claim to
arbitration.
(i) JURY TRIAL. EACH OF BELL CANADA, THE BANKS AND
ADMINISTRATIVE AGENT, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY AS TO ANY
ISSUE RELATING HERETO IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS PLEDGE AGREEMENT OR ANY OTHER CREDIT
DOCUMENT NOT RESOLVED PURSUANT TO SUBPARAGRAPH 10(h) HEREOF.
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<PAGE>
IN WITNESS WHEREOF, Bell Canada has caused this Pledge
Agreement to be executed as of the day and year first above written.
BELL MICROPRODUCTS INC.
By: ________________________________
Name: __________________________
Title: _________________________
CALIFORNIA BANK & TRUST,
as Administrative Agent
By: ________________________________
Name: __________________________
Title: _________________________
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ATTACHMENT 1
TO PLEDGE AGREEMENT
Part A
<TABLE>
Domestic Subsidiary Shares and Domestic Subsidiary Membership Interests
<CAPTION>
Shares or Membership Shares or Membership
Outstanding Interests Owned Interests Owned
Class Shares or Membership Directly Indirectly
Issuer of Stock Interests by Bell Canada by Bell Canada
------ -------- ---------- -------------- --------------
<S> <C> <C> <C> <C>
Not Applicable
No domestic subsidiaries
</TABLE>
H-[1]-1
<PAGE>
ATTACHMENT 1
TO PLEDGE AGREEMENT
Part B
<TABLE>
Foreign Subsidiary Shares and Foreign Subsidiary Membership Interests
<CAPTION>
Outstanding Shares or Membership Shares or Membership
Shares or Interests Owned Interests Owned
Class Membership Directly Indirectly
Issuer of Stock(1) Interests(2) by Bell Canada by Bell Canada
------ ----------- ------------ -------------- --------------
<S> <C> <C> <C> <C>
Bell Microproducts Canada-Tenex Common 101 101 0
Data ULC
<FN>
- ------------------
(1) Astericks indicate non-voting. Otherwise all listed are voting.
(2) There are no Membership Interests in Bell-Tenex.
</FN>
</TABLE>
H-[1]-2
<PAGE>
EXHIBIT I
BELL-TENEX GUARANTY
THIS GUARANTY, dated as of November 20, 1998 is executed by BELL
MICROPRODUCTS CANADA -TENEX DATA ULC, a Nova Scotia, Canada unlimited liability
company ("Guarantor"), in favor of CALIFORNIA BANK & TRUST, a California banking
corporation, acting as administrative agent (in such capacity, and each
successor thereto in such capacity, "Administrative Agent") for the financial
institutions which are from time to time parties to the Restated Credit
Agreement referred to in Recital A below (collectively, the "Banks").
RECITALS
A. Pursuant to a Third Amended and Restated Credit Agreement dated as
of November 12, 1998 (as amended from time to time, the "Restated Credit
Agreement"), among Bell Microproducts Inc., a California corporation
("Borrower"), the Banks and Administrative Agent, the Banks have agreed to amend
and restate an existing credit agreement with Borrower and to increase such
credit facility upon the terms and subject to the conditions set forth therein.
B. The Banks' obligations to amend and restate such existing credit
agreement and to increase such credit facility under the Restated Credit
Agreement is subject, among other conditions, to receipt by Administrative Agent
of this Guaranty, duly executed by Guarantor. Guarantor expects to derive
substantial direct and indirect benefit from the transactions contemplated by
the Restated Credit Agreement.
C. The Guarantor is a wholly-owned Subsidiary of Bell Microproducts
Canada Inc., a California corporation ("Bell Canada"), and Bell Canada is a
wholly-owned Subsidiary of Borrower.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Guarantor hereby agrees with Administrative Agent, for the ratable
benefit of the Banks and Administrative Agent, as follows:
1. Definitions and Interpretation.
(a) Definitions. When used in this Guaranty, the following
terms shall have the following respective meanings:
"Administrative Agent" shall have the meaning given
to that term in the introductory paragraph hereof.
"Banks" shall have the meaning given to that term in
the introductory paragraph hereof.
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"Bell Canada" shall have the meaning given to that
term in Recital C hereof.
"Borrower" shall have the meaning given to that term
in the Recital A hereof.
"Disallowed Post-Commencement Interest and Expenses"
shall mean interest computed at the rate provided in the
Restated Credit Agreement and claims for reimbursement, costs,
expenses or indemnities under the terms of any of the Credit
Documents accruing or claimed at any time after the
commencement of any Insolvency Proceeding, if the claim for
such interest, reimbursement, costs, expenses or indemnities
is not allowable, allowed or enforceable against Borrower in
such Insolvency Proceeding.
"Guaranteed Obligations" shall mean all loans,
advances, debts, liabilities and obligations, howsoever
arising, owed by Borrower to Administrative Agent or any Bank
of every kind and description (whether or not evidenced by any
note or instrument and whether or not for the payment of
money), direct or indirect, absolute or contingent, due or to
become due, now existing or hereafter arising pursuant to the
terms of the Restated Credit Agreement or any of the other
Credit Documents, including, without limitation, all
principal, interest, rent, fees, taxes, charges, expenses,
attorneys' fees and accountants' fees chargeable to Borrower
or payable by Borrower thereunder.
"Guarantor" shall have the meaning given to that term
in the introductory paragraph hereof.
"Guarantor Documents" shall have the meaning given to
that term in paragraph 3 hereof.
"Insolvency Proceeding" shall mean any case or
proceeding under the United States Bankruptcy Code or any
other similar law, rule or regulation of the United States or
any jurisdiction or any other action or proceeding for the
reorganization, liquidation, appointment of a receiver,
rearrangement of debts, marshalling of assets or similar
action relating to Borrower or Guarantor, their respective
creditors or any substantial part of their respective assets,
whether or not any such case, proceeding or action is
voluntary or involuntary.
"Restated Credit Agreement" shall have the meaning
given to that term in the Recital A hereof.
Unless otherwise defined herein, all other capitalized terms used
herein and defined in the Restated Credit Agreement shall have the
respective meanings given to those terms in the Restated Credit
Agreement.
(b) Other Interpretive Provisions. The rules of construction
set forth in Section I of the Restated Credit Agreement shall, to the
extent not inconsistent with the terms of this Guaranty, apply to this
Guaranty and are hereby incorporated by reference.
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Guarantor acknowledges receipt of copies of the Restated Credit
Agreement and the other Credit Documents.
2. Guaranty.
(a) Payment Guaranty. Guarantor unconditionally guarantees and
promises to pay and perform as and when due, whether at stated
maturity, upon acceleration or otherwise, any and all of the Guaranteed
Obligations. If any Insolvency Proceeding relating to Borrower is
commenced, Guarantor further unconditionally guarantees and promises to
pay and perform, upon the demand of Administrative Agent, any and all
of the Guaranteed Obligations (including any and all Disallowed
Post-Commencement Interest and Expenses) in accordance with the terms
of the Credit Documents, whether or not such obligations are then due
and payable by Borrower and whether or not such obligations are
modified, reduced or discharged in such Insolvency Proceeding. This
Guaranty is a guaranty of payment and not of collection.
(b) Continuing Guaranty. This Guaranty is an irrevocable
continuing guaranty of the Guaranteed Obligations which shall continue
in effect until all obligations of the Banks to extend credit to
Borrower have terminated and all of the Guaranteed Obligations have
been fully, finally and indefeasibly paid. If any payment on any
Guaranteed Obligation is set aside, avoided or rescinded or otherwise
recovered from Administrative Agent or any Bank, such recovered payment
shall constitute a Guaranteed Obligation hereunder and, if this
Guaranty was previously released or terminated, it automatically shall
be fully reinstated, as if such payment was never made.
(c) Independent Obligation. The liability of Guarantor
hereunder is independent of the Guaranteed Obligations, and a separate
action or actions may be brought and prosecuted against Guarantor
irrespective of whether action is brought against Borrower or any other
guarantor of the Guaranteed Obligations or whether Borrower or any
other guarantor of the Guaranteed Obligations is joined in any such
action or actions.
(d) Termination. This Guaranty shall continue to be in full
force and effect and applicable to any Guaranteed Obligations arising
thereafter which arise because prior payments of Guaranteed Obligations
are rescinded or otherwise required to be surrendered by Administrative
Agent or any Bank after receipt.
3. Representations and Warranties. Guarantor represents and warrants to
Administrative Agent and the Banks that (a) Guarantor is an unlimited liability
company duly organized, validly, existing and in good standing under the laws of
its state of organization and is duly qualified and in good standing in each
jurisdiction where the nature of its business or properties requires such
qualification, except where the failure to qualify could not have a Material
Adverse Effect; (b) the authorized capital of Guarantor consists of 1000 common
shares of which 101 (and no more) have been issued and are outstanding as fully
paid and are non-assessable, and Bell Canada is the registered and beneficial
owner of 101 of the issued and outstanding shares of Guarantor; (c) the
authorized capital stock of Bell Canada consists of 100 shares of common stock
of which 100 have been duly authorized, validly issued, fully paid and
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are non-assessable, and Borrower is the record legal and beneficial owner of all
such shares; (d) the execution, delivery and performance by Guarantor of this
Guaranty and the other Credit Documents executed or to be executed by Guarantor
(collectively, the "Guarantor Documents") are within the power of Guarantor and
have been duly authorized by all necessary actions on the part of Guarantor; (e)
this Guaranty and the other Guarantor Documents have been duly executed and
delivered by Guarantor and constitute legal, valid and binding obligations of
Guarantor, enforceable against it in accordance with their terms, except as
limited by bankruptcy, insolvency or other laws of general application relating
to or affecting the enforcement of creditors' rights generally; (f) the
execution, delivery and performance of this Guaranty and the other Guarantor
Documents do not (i) violate any Requirement of Law applicable to Guarantor,
(ii) contravene any material Contractual Obligation of Guarantor, or (iii)
result in the creation or imposition of any Lien upon any property, asset or
revenue of Guarantor except Permitted Liens; (g) no consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Authority or other Person (including, without limitation, the shareholders of
any Person) is required in connection with the execution, delivery and
performance by Guarantor of this Guaranty and the other Guarantor Documents,
except such consents, approvals, orders, authorizations, registrations,
declarations and filings that are so required and which have been obtained and
are in full force and effect; (h) Guarantor has paid all taxes and other charges
imposed by any Governmental Authority due and payable by Guarantor other than
those which are being challenged in good faith by appropriate proceedings and
for which adequate reserves have been established; (i) Guarantor is not in
violation of any Requirement of Law or Contractual Obligation applicable to
Guarantor other than those the consequences of which could not have a Material
Adverse Effect; (j) Guarantor is neither an investment company (as defined in
the Investment Company Act of 1940) nor controlled by an investment company; and
(k) no litigation, investigation or proceeding of any Governmental Authority is
pending or, to the knowledge of Guarantor, threatened against Guarantor which,
if adversely determined, could have a Material Adverse Effect.
4. Covenants. Guarantor hereby agrees (a) to deliver to Administrative
Agent (i) promptly after Guarantor becomes aware of any Default or Event of
Default or of any other event or condition which could have a Material Adverse
Effect, notice thereof, and (ii) such other information regarding the business,
operations or financial or other condition of Guarantor as Administrative Agent
may reasonably request; (b) to the extent failure to do so could have a Material
Adverse Effect, to pay all taxes and other charges imposed by any Governmental
Authority, as defined in the Restated Credit Agreement, upon Guarantor or its
property as and when they become due; (c) to the extent failure to do so could
have a Material Adverse Effect, to comply with all Requirements of Law and
Contractual Obligations applicable to Guarantor; (d) to maintain its existence
and all rights, privileges and franchises necessary for the conduct of its
business; (e) to maintain with financially sound and reputable insurance
carriers insurance in such amounts, with such deductibles and covering such
risks as is customary for companies engaged in similar businesses in the same
geographic areas as Guarantor; and (f) to the extent covenants set forth in the
Restated Credit Agreement apply to Subsidiaries of Borrower, to comply with such
covenants.
5. Authorizations. Guarantor authorizes the Banks and Administrative
Agent, in their discretion, without notice to Guarantor, irrespective of any
change in the financial condition of Borrower, Guarantor or any other guarantor
of the Guaranteed Obligations since the date
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hereof, and without affecting or impairing in any way the liability of Guarantor
hereunder, from time to time to (a) create new Guaranteed Obligations, and,
either before or after receipt of notice of revocation, renew, compromise,
extend, accelerate or otherwise change the time for payment or performance of,
or otherwise change the terms of the Guaranteed Obligations or any part thereof,
including increase or decrease of the rate of interest thereon; (b) take and
hold security for the payment or performance of the Guaranteed Obligations and
exchange, enforce, waive or release any such security; (c) apply such security
and direct the order or manner of sale thereof; (d) purchase such security at
public or private sale; (e) otherwise exercise any right or remedy it may have
against Borrower, Guarantor, any other guarantor of the Guaranteed Obligations
or any security, including, without limitation, the right to foreclose upon any
such security by judicial or nonjudicial sale; (f) settle, compromise with,
release or substitute any one or more makers, endorsers or guarantors of the
Guaranteed Obligations or any Collateral; and (g) assign the Guaranteed
Obligations, this Guaranty, or the other Credit Documents in whole or in part.
6. Waivers. Guarantor waives (a) any right to require the Banks or
Administrative Agent to (i) proceed against Borrower or any other guarantor of
the Guaranteed Obligations, (ii) proceed against or exhaust any security
received from Borrower or any other guarantor of the Guaranteed Obligations, or
(iii) pursue any other remedy in the Banks' or Administrative Agent's power
whatsoever; (b) any defense arising by reason of the application by Borrower of
the proceeds of any borrowing; (c) any defense resulting from the absence,
impairment or loss of any right of reimbursement, subrogation, contribution or
other right or remedy of Guarantor against Borrower, any other guarantor of the
Guaranteed Obligations or any security, whether resulting from an election by
Administrative Agent or the Banks to foreclose upon security by nonjudicial
sale, or otherwise; (d) any setoff or counterclaim of Borrower or any defense
which results from any disability or other defense of Borrower or the cessation
or stay of enforcement from any cause whatsoever of the liability of Borrower
(including, without limitation, the lack of validity or enforceability of any
Credit Document); (e) any right to exoneration of sureties which would otherwise
be applicable; (f) until all obligations of the Banks to extend credit under the
Restated Credit Agreement are terminated and all Guaranteed Obligations of
Borrower are satisfied in full, any right of subrogation or reimbursement and,
if there are any other guarantors of the Guaranteed Obligations, any right of
contribution, and right to enforce any remedy which Administrative Agent or any
Bank now has or may hereafter have against Borrower, and any benefit of, and any
right to participate in, any security now or hereafter received by
Administrative Agent or the Banks; (g) all presentments, demands for
performance, notices of non-performance, notices delivered under the Restated
Credit Agreement or any Credit Document, protests, notice of dishonor, and
notices of acceptance of this Guaranty and of the existence, creation or
incurring of new or additional Guaranteed Obligations and notices of any public
or private foreclosure sale; (h) the benefit of any statute of limitations to
the extent permitted by law; (i) any appraisement, valuation, stay, extension,
moratorium, redemption or similar law or similar rights for marshalling; and (j)
any right to be informed by Administrative Agent or any Bank of the financial
condition of Borrower or any other guarantor of the Guaranteed Obligations or
any change therein or any other circumstances bearing upon the risk of
nonpayment or nonperformance of the Guaranteed Obligations. Guarantor has the
ability and assumes the responsibility for keeping informed of the financial
condition of Borrower and any other guarantors of the Guaranteed Obligations and
of other circumstances affecting such nonpayment and nonperformance risks.
Without limiting the generality of any of the foregoing, Guarantor hereby waives
(i) all rights and defenses arising out of an election of remedies by
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Administrative Agent or any Bank, even though that election of remedies, such as
a nonjudicial foreclosure with respect to security for an obligation, has
destroyed such Guarantor's rights of subrogation and reimbursement against
Borrower by the operation of Section 580d of the Code of Civil Procedure or
otherwise, (ii) all rights and defenses Guarantor may have by reason of
protection afforded to Borrower with respect to the Guaranteed Obligations
pursuant to the antideficiency or other laws of California limiting or
discharging the Guaranty, including, without limitation, Section 580a, 580b,
580d, or 726 of the California Code of Civil Procedure, and (iii) all other
rights and defenses available to Guarantor by reason of Sections 2787 to 2855,
inclusive, of the California Civil Code.
7. Subordination. Guarantor hereby subordinates any Indebtedness of
Borrower to Guarantor to the Guaranteed Obligations. Guarantor agrees that after
the occurrence and during the continuance of any Default or Event of Default the
Banks and Administrative Agent shall be entitled to receive payment of all
Guaranteed Obligations before Guarantor receives payment of any Indebtedness of
Borrower to Guarantor. Any payments on such Indebtedness of Borrower to
Guarantor made after the occurrence and during the continuance of any Default or
Event of Default, if Administrative Agent so requests, shall be collected,
enforced and received by Guarantor as trustee for Administrative Agent and be
paid over to Administrative Agent on account of the Guaranteed Obligations, but
without reducing or affecting in any manner the liability of Guarantor under the
other provisions of this Guaranty. After the occurrence and during the
continuance of any Default or Event of Default, Administrative Agent is
authorized and empowered (but without any obligation to so do), in its
discretion, (a) in the name of Guarantor, to collect and enforce, and to submit
claims in respect of, Indebtedness of Borrower to Guarantor and to apply any
amounts received thereon to the Guaranteed Obligations, and (b) to require
Guarantor (i) to collect and enforce, and to submit claims in respect of,
Indebtedness of Borrower to Guarantor, and (ii) to pay any amounts received on
such Indebtedness to Administrative Agent for application to the Guaranteed
Obligations.
8. General Pledge; Setoff.
(a) Pledge. In addition to all liens upon and rights of setoff
against the property of Guarantor given to Administrative Agent or any
Bank by law or separate agreement to secure the liabilities of
Guarantor hereunder, to the extent permitted by law, Guarantor hereby
grants to Administrative Agent, for the benefit of the Banks and
Administrative Agent, a security interest in all monies, deposit
accounts, securities and other property of Guarantor now or hereafter
in the possession of or on deposit with Administrative Agent or any
Bank, whether held in a general or special account or deposit, or for
safekeeping or otherwise; and Administrative Agent and the Banks shall
have all rights and remedies of a secured party with respect to such
property.
(b) Setoff. In addition to any rights and remedies of
Administrative Agent and the Banks provided by law, Administrative
Agent and the Banks shall have the right, without prior notice to
Guarantor, any such notice being expressly waived by Guarantor to the
extent permitted by applicable law, upon the occurrence and during the
continuance of a Default or an Event of Default, to set-off and apply
against the Guaranteed Obligations then due any amount owing from any
Bank or Administrative Agent to Guarantor, including all deposits,
accounts and moneys of Guarantor then or
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thereafter maintained with any Bank or Administrative Agent, at or at
any time after, the happening of any of the above mentioned events.
(c) Nonwaiver. No security interest or right of setoff shall
be deemed to have been waived by any act or conduct on the part of any
Bank or Administrative Agent or by any failure to exercise such right
of setoff or to enforce such security interest, or by any delay in so
doing; and every right of setoff and security interest shall continue
in full force and effect until such right of setoff or security
interest is specifically waived or released by an instrument in writing
executed by Administrative Agent.
9. Miscellaneous.
(a) Notices. Except as otherwise provided herein, all notices,
requests, demands, consents, instructions or other communications to or
upon Administrative Agent or Guarantor under this Guaranty shall be by
facsimile or in writing and faxed, mailed, telexed or delivered to each
party at its facsimile number or its address set forth below. All such
notices and communications: when sent by Federal Express or other
overnight service, shall be effective on the Business Day following the
deposit with such service; when mailed, first class postage prepaid and
addressed as aforesaid in the mails, shall be effective upon receipt;
when telexed, shall be effective upon receipt of answerback; when
delivered by hand, shall be effective upon delivery; and when faxed,
shall be effective upon confirmation of receipt.
Administrative Agent: California Bank & Trust
320 California Street, Suite 600
San Francisco, CA 94104
Attn: Relationship Manager -
Bell Microproducts
Telephone: (415) 445-8725
Facsimile: (415) 296-9617
Guarantor: Bell Microproducts Canada-Tenex Data ULC
c/o Bell Microproducts, Inc.
1941 Ringwood Avenue
San Jose, CA 95131
Attn: Mr. Don W. Bell
President
Telephone: (408) 451-1635
Facsimile: (408) 451-1694
(b) Waivers; Amendments. This Guaranty may not be amended or
modified, nor may any of its terms be waived, except by written
instruments signed by Guarantor and Administrative Agent. Each waiver
or consent under any provision hereof shall be effective only in the
specific instances and for the purpose for which given. No failure or
delay by Administrative Agent or any Bank in exercising any right
hereunder shall operate as a waiver thereof or of any other right nor
shall any single or partial exercise of any such right preclude any
other further exercise thereof or of any other right. Unless
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otherwise specified in any such waiver or consent, a waiver or consent
given hereunder shall be effective only in the specific instance and
for the specific purpose for which given.
(c) Successors and Assigns. This Guaranty shall be binding
upon and inure to the benefit of Administrative Agent, the Banks and
Guarantor and their respective successors and assigns; provided,
however, that Administrative Agent, the Banks and Guarantor may sell,
assign and delegate their respective rights and obligations hereunder
only as permitted by the Restated Credit Agreement. Administrative
Agent may disclose this Guaranty as provided in the Restated Credit
Agreement.
(d) Partial Invalidity. If at any time any provision of this
Guaranty is or becomes illegal, invalid or unenforceable in any respect
under the law of any jurisdiction, neither the legality, validity or
enforceability of the remaining provisions of this Guaranty nor the
legality, validity or enforceability of such provision under the law of
any other jurisdiction shall in any way be affected or impaired
thereby.
(e) Cumulative Rights, etc. The rights, powers and remedies of
Administrative Agent and the Banks under this Guaranty shall be in
addition to all rights, powers and remedies given to Administrative
Agent and the Banks by virtue of any applicable Governmental Rule, the
Restated Credit Agreement, any other Credit Document or any other
agreement, all of which rights, powers, and remedies shall be
cumulative and may be exercised successively or concurrently without
impairing Administrative Agent's or the Bank's rights hereunder.
(f) [TO BE FINALISED]Taxes and Other Taxes.
(i) All payments to the Banks and the Administrative
Agent by the Guarantor under this Guaranty or under any of the
Guarantor Documents shall be made free and clear of and
without deduction or withholding for any and all taxes,
levies, imposts, deductions, charges or withholdings and all
related liabilities (all such taxes, levies, imposts,
deductions, charges, withholdings and liabilities being
referred to as "Taxes") imposed by any jurisdiction (or any
political subdivision or taxing authority of it), unless such
Taxes are required by applicable law to be deducted or
withheld. If the Guarantor shall be required by applicable law
to deduct or withhold any such Taxes from or in respect of any
amount payable under this Guaranty or under any of the
Guarantor Documents, (i) the amount payable shall be increased
(and for greater certainty, in the case of interest, the
amount of interest shall be increased) as may be necessary so
that after making all required deductions or withholdings
(including deductions or withholdings applicable to any
additional amounts paid under this subparagraph 9(f)), the
Banks and the Administrative Agent receive an amount equal to
the amount they would have received if no such deduction or
withholding had been made, (ii) the Guarantor shall make such
deductions or withholdings, and (iii) the Guarantor shall
immediately pay the full amount deducted or withheld to the
relevant taxation or other authority in accordance with
applicable law.
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(ii) The Guarantor agrees to immediately pay any
present or future stamp or documentary taxes or any other
excise or property taxes, charges, financial institutions
duties, debits taxes or similar levies (all such taxes,
charges, duties and levies being referred to as "Other Taxes")
which arise from any payment made by the Guarantor under this
Guaranty or under any of the Guarantor Documents or from the
execution, delivery or registration of, or otherwise with
respect to, this Guaranty or any of the Guarantor Documents.
(iii) The Guarantor shall indemnify the Banks and
the Administrative Agent for the full amount of Taxes or Other
Taxes (including any Taxes or Other Taxes imposed by any
jurisdiction on amounts payable by the Guarantor under this
subparagraph 9(f)) paid by the Banks or the Administrative
Agent and any liability (including penalties, interest and
expenses) arising from or with respect to such Taxes or Other
Taxes, whether or not they were correctly or legally asserted,
excluding, in the case of any Bank and the Administrative
Agent, and subject to the next following sentence, Taxes
imposed on its net income or capital taxes or receipts or
franchise taxes, doing business taxes or minimum taxes or
transfer, stamp or documentary taxes resulting from a transfer
(other than foreclosure) by such Bank or Agent of its
interests in any of the Credit Documents, as defined in the
Restated Credit Agreement. If any Taxes on the worldwide net
income, profits or gains of any Bank or the Administrative
Agent are asserted, imposed, levied or assessed against such
Bank or the Administrative Agent in respect of any amount
payable pursuant to this subparagraph 9(f), the Guarantor will
indemnify such Bank or the Administrative Agent, as the case
may be, against such payment or liability together with any
interest, penalties and expenses payable or incurred in
connection therewith. Payment under this indemnification shall
be made within 30 days from the date the Administrative Agent
or the relevant Bank, as the case may be, make written demand
for it. A certificate as to the amount of such Taxes or Other
Taxes submitted to the Guarantor by the Administrative Agent
or the relevant Bank shall be conclusive evidence, absent
manifest error, of the amount due from the Guarantor to the
Administrative Agent or the Banks, as the case may be.
(iv) The Guarantor shall furnish to the
Administrative Agent and the Banks the original or a certified
copy of a receipt evidencing payment of Taxes or Other Taxes
made by the Guarantor within 30 days, or if such receipt
cannot be obtained by the Guarantor within such 30 days, as
soon as practicable, after the date of any payment of Taxes or
Other Taxes.
(v) If a Bank or the Administrative Agent is, in its
sole opinion, entitled to claim a refund or able to apply for
or otherwise take advantage of any tax credit, tax deduction
or similar benefit by reason of any withholding or deduction
made by the Guarantor in respect of a payment made by it under
this Guaranty, which payment shall have been increased
pursuant to this subparagraph 9(f), then such Bank or the
Administrative Agent, as the case may be, will use reasonable
effort to obtain the refund, credit, deduction or benefit and
upon credit or receipt of it will pay to the Guarantor, the
amount (if any) not exceeding the increased amount
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paid by the Guarantor, as equals the net after-tax value to
such Guarantor of that part of the refund, credit, deduction
or benefit as it considers is allocable to such withholding or
deduction having regard to all of its dealings giving rise to
similar credits, deductions or benefits in relation to the
same tax period and to the cost of obtaining the same. Nothing
contained in this subparagraph 9(f) shall interfere with the
right of the Bank or the Administrative Agent to arrange its
tax affairs in whatever manner it deems fit and in particular,
neither any Bank nor the Administrative Agent shall be under
any obligation to claim relief from its corporate profits or
similar tax liability in respect of any deduction or
withholding in priority to any other relief, claims, credits
or deductions available to it and neither any Bank nor the
Administrative Agent shall be obligated to disclose to the
Guarantor any information regarding its tax affairs, tax
computations or otherwise.
(g) [TO BE FINALISED]Withholding Exemption Certificates. Any
Bank or Administrative Agent which becomes a party hereto after the
date hereof shall comply with subparagraph 2.10(b) of the Restated
Credit Agreement.
(h) Governing Law and Jurisdiction. This Guaranty shall be
governed by and construed in accordance with the laws of the Province
of Ontario and the laws of Canada applicable therein, without reference
to conflicts of law rules.
(i) Arbitration.
(i) This subparagraph 9(i) concerns the resolution of
any controversies or claims between or among Guarantor, any
Bank and Administrative Agent, including but not limited to
those that arise from:
(A) This Guaranty or any other Guarantor
Document;
(B) Any violation of this Guaranty or any
other Guarantor Document; or
(C) Any claims for damages resulting from
any business conducted between Guarantor and any Bank
or Administrative Agent, including claims for injury
to persons, property or business interests.
(ii) At the request of Guarantor, any Bank or
Administrative Agent, any controversies or claims will be
settled by arbitration in accordance with the United States
Arbitration Act. The United States Arbitration Act will apply
even though this Agreement provides that it is governed by the
laws of the Province of Ontario and the laws of Canada
applicable therein.
(iii) Arbitration proceedings will be administered by
the American Arbitration Association and will be subject to
its commercial rules of arbitration. The arbitration will be
conducted within the California county of San Francisco.
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(iv) For purposes of the application of the statute
of limitation, the filing of an arbitration pursuant to this
subparagraph is the equivalent of the filing of a lawsuit, and
any claim or controversy which may be arbitrated under this
subparagraph is subject to any applicable statute of
limitations. The arbitrators will have the authority to decide
whether any such claim or controversy is barred by the statute
of limitations and if so to dismiss the arbitration on that
basis.
(v) If there is a dispute as to whether an issue is
arbitrable, the arbitrators will have the authority to resolve
any such dispute.
(vi) The decision that results from an arbitration
proceeding may be submitted to any authorized court of law to
be confirmed and enforced.
(vii) The procedure described above will not apply if
the controversy or claim, at the time of the proposed
submission to arbitration arises from or relates to an
obligation to Bank secured by real property located in
California. If the obligation is secured by real property,
Guarantor, each Bank and Administrative Agent must consent to
submission of the claim or controversy to arbitration. If all
parties do not consent to arbitration, the controversy or
claim will be settled as follows:
(A) Guarantor, the Banks and Administrative
Agent will designate a referee (or a panel of
referees) selected under the auspices of the American
Arbitration Association in the same manner as
arbitrators are selected in Association-sponsored
proceedings;
(B) The designated referee (or the panel of
referees) will be appointed by a court as provided in
California Code of Civil Procedure Section 638 and
the following related sections;
(C) The referee (or the presiding referee of
the panel) will be an active attorney or a retired
judge; and
(D) The award that results from the decision
of the referee (or the panel) will be entered as a
judgment in the court that appointed the referee, in
accordance with the provisions of California Code of
Civil Procedure Sections 644 and 645.
(viii) This subparagraph 9(i) does not limit the
right of Guarantor, any Bank or Administrative Agent to:
(A) Exercise self-help remedies such as
setoff;
(B) Foreclose against or sell any real or
personal property collateral; or
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(C) Take action in a court of law, before,
during or after the arbitration proceeding to obtain
an interim remedy or additional or supplementary
remedies.
(ix) The pursuit of or a decision in an action for
interim, additional or supplementary remedies, or the filing
of a court action, does not constitute a waiver of the right
of Guarantor, any Bank or Administrative Agent, including the
suing party, to submit the controversy or claim to
arbitration.
(i) JURY TRIAL. EACH OF GUARANTOR, THE BANKS AND
ADMINISTRATIVE AGENT, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY AS TO ANY
ISSUE RELATING HERETO IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS GUARANTY OR ANY OTHER CREDIT
DOCUMENT NOT RESOLVED PURSUANT TO SUBPARAGRAPH 9(i) HEREOF.
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IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be executed
as of the day and year first above written.
BELL MICROPRODUCTS CANADA-TENEX DATA ULC
By: ____________________________________
Name: ______________________________
Title: _____________________________
CALIFORNIA BANK & TRUST,
as Administrative Agent
By: ____________________________________
Name: ______________________________
Title: _____________________________
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EXHIBIT J
BELL-TENEX SECURITY AGREEMENT
THIS SECURITY AGREEMENT, dated as of November 20, 1998, is executed by
BELL MICROPRODUCTS CANADA -TENEX DATA ULC, a Nova Scotia, Canada unlimited
liability corporation ("Bell-Tenex"), in favor of CALIFORNIA BANK & TRUST, a
California banking corporation, acting as agent (in such capacity,
"Administrative Agent") for the financial institutions which are from time to
time parties to the Restated Credit Agreement defined in Recital A below
(collectively, the "Banks").
RECITALS
A. Pursuant to a Third Amended and Restated Credit Agreement dated as
of November 12, 1998 (as amended from time to time, the "Restated Credit
Agreement"), among Bell Microproducts Inc., a California corporation
("Borrower"), the Banks and Administrative Agent, the Banks have agreed to amend
and restate an existing credit agreement with Borrower and to increase such
credit facility upon the terms and subject to the conditions set forth therein.
B. The Banks' obligations to amend and restate such existing credit
agreement and to increase such credit facility under the Restated Credit
Agreement is subject, among other conditions, to receipt by Administrative Agent
of this Security Agreement, duly executed by Bell-Tenex. Bell-Tenex expects to
derive substantial direct and indirect benefit from the transactions
contemplated by the Restated Credit Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the above recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Bell-Tenex hereby agrees with Administrative Agent, for the
ratable benefit of the Banks and Administrative Agent, as follows:
1. Definitions and Interpretation. When used in this Security
Agreement, the following terms shall have the following respective meanings:
"Account Debtor" shall have the meaning given to that term in
subparagraph 3(g) hereof.
"Administrative Agent" shall have the meaning given to that
term in the introductory paragraph hereof.
"Banks" shall have the meaning given to that term in the
introductory paragraph hereof.
"Bell-Tenex" shall have the meaning given to that term in the
introductory paragraph hereof.
"Borrower" shall have the meaning given to that term in
Recital A hereof.
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"Collateral" shall have the meaning given to that term in
paragraph 2 hereof.
"Depositary Bank" shall have the meaning given to that term in
subparagraph 4(e) hereof.
"Equipment" shall have the meaning given to that term in
Attachment 1 hereto.
"Excluded Collateral" shall mean Collateral consisting of
Equipment, Inventory or other goods located at an address not specified
in item 8 of Attachment 2 hereto and having a value not to exceed
$10,000 in the aggregate for each such unspecified location or $100,000
in the aggregate for all such unspecified locations.
"Intermediary" shall have the meaning given to that term in
Subparagraph 4(f) hereof.
"Inventory" shall have the meaning given to that term in
Attachment 1 hereto.
"Obligations" shall mean and include all loans, advances,
debts, liabilities and obligations, howsoever arising, owed by Borrower
to any Bank or Administrative Agent of every kind and description
(whether or not evidenced by any note or instrument and whether or not
for the payment of money), direct or indirect, absolute or contingent,
due or to become due, now existing or hereafter arising pursuant to the
terms of the Restated Credit Agreement or any of the other Credit
Documents, including without limitation all interest, fees, charges,
expenses, attorneys' fees and accountants' fees chargeable to Borrower
or payable by Borrower thereunder.
"Receivables" shall have the meaning given to that term in
Attachment 1 hereto.
"Related Contracts" shall have the meaning given to that term
in Attachment 1 hereto.
"Restated Credit Agreement" shall have the meaning given to
that term in Recital A hereof.
"Security Agreement" shall mean this Security Agreement as
further amended, modified, supplemented or replaced from time to time.
"UCC" shall mean the Uniform Commercial Code as in effect in
the State of California from time to time.
Unless otherwise defined herein, all other capitalized terms used herein and
defined in the Restated Credit Agreement shall have the respective meanings
given to those terms in the Restated Credit Agreement, and all terms defined in
the UCC shall have the respective meanings given to those terms in the UCC. The
rules of construction set forth in Section I of the Restated Credit Agreement
shall, to the extent not inconsistent with the terms of this Security Agreement,
apply to this Security Agreement and are hereby incorporated by reference.
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2. Grant of Security Interest. As security for the Obligations,
Bell-Tenex hereby pledges and assigns to Administrative Agent (for the ratable
benefit of the Banks and Administrative Agent) and grants to Administrative
Agent (for the ratable benefit of the Banks and Administrative Agent) a security
interest in all right, title and interest of Bell-Tenex in and to the property
described in Attachment 1 hereto, whether now owned or hereafter acquired
(collectively and severally, the "Collateral"), which Attachment 1 is
incorporated herein by this reference.
3. Representations and Warranties. Bell-Tenex represents and warrants
to the Banks and Administrative Agent as follows:
(a) Bell-Tenex is the legal and beneficial owner of the
Collateral (or, in the case of after-acquired Collateral, at the time
Bell-Tenex acquires rights in the Collateral, will be the legal and
beneficial owner thereof). No other Person has (or, in the case of
after-acquired Collateral, at the time Bell-Tenex acquires rights
therein, will have) any right, title, claim or interest (by way of
Lien, purchase option or otherwise) in, against or to the Collateral,
other than Permitted Liens.
(b) Administrative Agent has (or in the case of after-acquired
Collateral, at the time Bell-Tenex acquires rights therein, will have)
a first priority perfected security interest in the Collateral.
(c) All Equipment and Inventory (except for Excluded
Collateral) are (i) located at the locations indicated in item 8 of
Attachment 2 hereto, (ii) in transit to such locations or (iii) in
transit to a third party purchaser which will become obligated on a
Receivable to Bell-Tenex upon receipt. Except for Equipment and
Inventory referred to in clauses (ii) and (iii) of the preceding
sentence, Bell-Tenex has exclusive possession and control of the
Inventory and Equipment.
(d) All Inventory has been (or, in the case of hereafter
produced Inventory, will be) produced in compliance with all applicable
Governmental Rules, including the Fair Labor Standards Act (if
applicable).
(e) Bell-Tenex keeps all records concerning the Receivables
and the originals of all Related Contracts at its chief executive
office located at the address set forth in item 2 of Attachment 2
hereto.
(f) Bell-Tenex has delivered to Administrative Agent, together
with all necessary stock powers, endorsements, assignments and other
necessary instruments of transfer, the original of each Receivable
which is an instrument or chattel paper having a face value in excess
of $100,000 and the originals of all certificated securities owed
directly by Bell-Tenex.
(g) Each Receivable is genuine and enforceable against the
party obligated to pay the same (an "Account Debtor") free from any
right of rescission, defense, setoff or discount.
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(h) Each insurance policy maintained by Bell-Tenex is validly
existing and is in full force and effect. Bell-Tenex is not in default
in any material respect under the provisions of any insurance policy,
and there are no facts which, with the giving of notice or passage of
time (or both), would result in such a default under any provision of
any such insurance policy.
4. Covenants. Bell-Tenex hereby agrees as follows:
(a) Bell-Tenex, at Bell-Tenex's expense, shall promptly
procure, execute and deliver to Administrative Agent all documents,
instruments and agreements and perform all acts which are necessary or
desirable, or which Administrative Agent may reasonably request, to
establish, maintain, preserve, protect and perfect the Collateral, the
Lien granted to Administrative Agent therein and the first priority of
such Lien or to enable Administrative Agent to exercise and enforce its
rights and remedies hereunder with respect to any Collateral. Without
limiting the generality of the preceding sentence, Bell-Tenex shall (i)
procure, execute and deliver to Administrative Agent all stock powers,
endorsements, assignments, financing statements and other instruments
of transfer requested by Administrative Agent, (ii) deliver to
Administrative Agent promptly upon receipt the original of all
Collateral which is an instrument, document or chattel paper having a
face value in excess of $100,000 and letters of credit and certificated
securities and (iii) take such actions as may be necessary to perfect
the Lien of Administrative Agent in any Collateral consisting of
investment property (including taking the actions required by
Subparagraph 4(f) hereof and, in those jurisdictions where appropriate,
causing such Liens to be recorded or registered in the books of any
financial intermediary or clearing corporation requested by
Administrative Agent).
(b) Bell-Tenex shall not use or permit any Collateral to be
used in violation of (i) any provision of the Restated Credit
Agreement, this Security Agreement or any other Credit Document, (ii)
any applicable Governmental Rule where such use might have a Material
Adverse Effect, or (iii) any policy of insurance covering the
Collateral.
(c) Bell-Tenex shall pay promptly when due all taxes and other
Governmental Charges, all Liens and all other charges now or hereafter
imposed upon, relating to or affecting any Collateral, except such
Governmental Charges, Liens and other charges as may in good faith be
contested or disputed by appropriate proceedings, provided that in each
such case appropriate reserves are maintained in accordance with GAAP.
(d) Without ninety (90) days' prior written notice to
Administrative Agent, Bell-Tenex shall not (i) change Bell-Tenex's name
or place of business (or, if Bell-Tenex has more than one place of
business, its chief executive office), or the office in which
Bell-Tenex's records relating to Receivables or the originals of
Related Contracts are kept, (ii) keep Collateral consisting of chattel
paper and documents at any location other than its chief executive
office set forth in item 2 of Attachment 2 hereto, or (iii) keep
Collateral consisting of Equipment, Inventory or other goods (except
for Excluded Collateral) at any location other than the locations set
forth in item 8 of Attachment 2 hereto.
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(e) For each deposit account maintained by Bell-Tenex,
Bell-Tenex shall (i) execute and deliver to the bank or other
depository institution at which such deposit account is maintained (the
"Depositary Bank") a Notice of Security Interest in the form of
Attachment 3 hereto (or in any other form acceptable to Administrative
Agent in its sole discretion) and (ii) cause the Depositary Bank to
execute and deliver to Administrative Agent an Acknowledgment and
Agreement in the form set forth in such Notice of Security Interest.
Without ten (10) days prior written notice to Administrative Agent,
Bell-Tenex shall not establish any deposit account not set forth in
item 16 of Attachment 2 hereto.
(f) For each securities account and commodity account
maintained by Bell-Tenex, Bell-Tenex shall (i) complete, execute and
deliver to the bank, broker or other Person at which such account is
maintained (the "Intermediary") a Notice of Security Interest in the
form of Attachment 4 hereto and (ii) cause the Intermediary to execute
and deliver to Administrative Agent an Acknowledgment and Agreement in
the form set forth in such Notice of Security Interest (or in any other
form acceptable to Administrative Agent in its sole discretion).
Without thirty (30) days prior written notice to Administrative Agent,
Bell-Tenex shall not establish any securities account or commodity
account not set forth in item 14 of Attachment 2 hereto.
(g) Bell-Tenex shall deposit, or cause to be deposited, all
remittances, checks and other funds (in whatever form) received with
respect to Receivables to a deposit account for which Bell-Tenex has
complied with subparagraph 4(e) above and in which Administrative Agent
has a first priority perfected security interest, subject only to the
banker's lien of the Depositary Bank covering its customary account
maintenance charges and fees.
(h) Bell-Tenex shall appear in and defend any action or
proceeding which may affect its title to or Administrative Agent's
interest in the Collateral.
(i) If Administrative Agent gives value to enable Bell-Tenex
to acquire rights in or the use of any Collateral, Bell-Tenex shall use
such value for such purpose.
(j) Bell-Tenex shall keep separate, accurate and complete
records of the Collateral and shall provide Administrative Agent with
such records and such other reports and information relating to the
Collateral as Administrative Agent may reasonably request from time to
time.
(k) Bell-Tenex shall not surrender or lose possession of
(other than to Administrative Agent), sell, encumber, lease, rent,
option, or otherwise dispose of or transfer any Collateral or right or
interest therein except as permitted in the Restated Credit Agreement,
and, notwithstanding any provision of the Restated Credit Agreement,
Bell-Tenex shall keep the Collateral free of all Liens except Permitted
Liens.
(l) Bell-Tenex shall type, print or stamp conspicuously on the
face of all original copies of all Collateral consisting of chattel
paper and documents not in the possession of Administrative Agent a
legend satisfactory to Administrative Agent
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<PAGE>
indicating that such chattel paper is subject to the security interest
granted hereby.
(m) Bell-Tenex shall collect, enforce and receive delivery of
the Receivables in accordance with past practice unless otherwise
notified by Administrative Agent after the occurrence and during the
continuance of an Event of Default.
(n) Bell-Tenex shall comply with all material Requirements of
Law applicable to Bell-Tenex which relate to the production,
possession, operation, maintenance and control of the Collateral
(including, without limitation, the Fair Labor Standards Act).
(o) Bell-Tenex shall (i) maintain and keep in force insurance
of the types and in amounts customarily carried from time to time
during the term of this Security Agreement in its lines of business,
including fire, public liability, property damage and worker's
compensation, such insurance to be carried with companies and in
amounts satisfactory to Administrative Agent, (ii) deliver to
Administrative Agent from time to time, as Administrative Agent may
request, schedules setting forth all insurance then in effect, and
(iii) deliver to Administrative Agent copies of each policy of
insurance which replaces, or evidences the renewal of, each existing
policy of insurance at least fifteen (15) days prior to the expiration
of such policy. Administrative Agent shall be named as additional
insured or additional loss payee, as appropriate, on all liability and
property insurance of Bell-Tenex and such policies shall contain such
additional endorsements as shall be required by Administrative Agent,
including the endorsements specified in Attachment 5 hereto. Prior to
the occurrence and the continuance of an Event of Default, all proceeds
of any property insurance paid as a result of any event or occurrence
shall be paid to Bell-Tenex. All proceeds of any property insurance
paid after the occurrence and during the continuance of an Event of
Default shall be paid to Administrative Agent to be held as Collateral
and applied as provided in the Restated Credit Agreement or, at the
election of the Required Banks, returned to Bell-Tenex.
5. Authorized Action by Administrative Agent. Bell-Tenex hereby
irrevocably appoints Administrative Agent as its attorney-in-fact and agrees
that Administrative Agent may perform (but Administrative Agent shall not be
obligated to and shall incur no liability to Bell-Tenex or any third party for
failure so to do) any act which Bell-Tenex is obligated by this Security
Agreement to perform, and to exercise such rights and powers as Bell-Tenex might
exercise with respect to the Collateral, including, without limitation, the
right to (a) collect by legal proceedings or otherwise and endorse, receive and
receipt for all dividends, interest, payments, proceeds and other sums and
property now or hereafter payable on or on account of the Collateral; (b) enter
into any extension, reorganization, deposit, merger, consolidation or other
agreement pertaining to, or deposit, surrender, accept, hold or apply other
property in exchange for the Collateral; (c) insure, process, preserve and
enforce the Collateral; (d) make any compromise or settlement, and take any
action it deems advisable, with respect to the Collateral; (e) pay any
Indebtedness of Bell-Tenex relating to the Collateral; and (f) execute UCC
financing statements and other documents, instruments and agreements required
hereunder; provided, however, that Administrative Agent may exercise such powers
only after the occurrence and during the continuance of an Event of Default.
Bell-Tenex agrees to reimburse Administrative Agent upon demand for all
reasonable costs and expenses, including attorneys' fees, Administrative Agent
may incur while acting as Bell-Tenex's attorney-in-fact hereunder, all of
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which costs and expenses are included in the Obligations. Bell-Tenex agrees that
such care as Administrative Agent gives to the safekeeping of its own property
of like kind shall constitute reasonable care of the Collateral when in
Administrative Agent's possession; provided, however, that Administrative Agent
shall not be required to make any presentment, demand or protest, or give any
notice and need not take any action to preserve any rights against any prior
party or any other Person in connection with the Obligations or with respect to
the Collateral.
6. Default and Remedies. Bell-Tenex shall be deemed in default under
this Security Agreement upon the occurrence and during the continuance of an
Event of Default, as that term is defined in the Restated Credit Agreement. In
addition to all other rights and remedies granted to Administrative Agent by
this Security Agreement, the Restated Credit Agreement, the other Credit
Documents, the UCC and other applicable Governmental Rules, Administrative Agent
may, upon the occurrence and during the continuance of any Event of Default,
exercise any one or more of the following rights and remedies: (a) collect,
receive, appropriate or realize upon the Collateral or otherwise foreclose or
enforce Administrative Agent's security interests in any or all Collateral in
any manner permitted by applicable Governmental Rules or in this Security
Agreement; (b) notify any or all Account Debtors to make payments on Receivables
directly to Administrative Agent; (c) direct any Depositary Bank or Intermediary
to liquidate the account(s) maintained by it, pay all amounts payable in
connection therewith to Administrative Agent and/or deliver any proceeds thereof
to Administrative Agent; (d) sell or otherwise dispose of any or all Collateral
at one or more public or private sales, whether or not such Collateral is
present at the place of sale, for cash or credit or future delivery, on such
terms and in such manner as Administrative Agent may determine; (e) require
Bell-Tenex to assemble the Collateral and make it available to Administrative
Agent at a place to be designated by Administrative Agent; (f) enter onto any
property where any Collateral is located and take possession thereof with or
without judicial process; and (g) prior to the disposition of the Collateral,
store, process, repair or recondition any Collateral consisting of goods,
perform any obligations and enforce any rights of Bell-Tenex under any Related
Contracts or otherwise prepare and preserve Collateral for disposition in any
manner and to the extent Administrative Agent deems appropriate. In furtherance
of Administrative Agent's rights hereunder, Bell-Tenex hereby grants to
Administrative Agent an irrevocable, non-exclusive license (exercisable without
royalty or other payment by Administrative Agent) to use, license or sublicense
any patent, trademark, tradename, copyright or other intellectual property in
which Bell-Tenex now or hereafter has any right, title or interest, together
with the right of access to all media in which any of the foregoing may be
recorded or stored. In any case where notice of any sale or disposition of any
Collateral is required, Bell-Tenex hereby agrees that seven (7) days notice of
such sale or disposition is reasonable.
7. Miscellaneous.
(a) Notices. Except as otherwise provided herein, all notices,
requests, demands, consents, instructions or other communications to or
upon Administrative Agent or Bell-Tenex under this Security Agreement
shall be by facsimile or in writing and faxed, mailed, telexed or
delivered to each party at its facsimile number or its address set
forth below. All such notices and communications: when sent by Federal
Express or other overnight service, shall be effective on the Business
Day following the deposit with such service; when mailed, first class
postage prepaid and addressed as aforesaid in the
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mails, shall be effective upon receipt; when telexed, shall be
effective upon receipt of answerback; when delivered by hand, shall be
effective upon delivery; and when faxed, shall be effective upon
confirmation of receipt.
Administrative Agent: California Bank & Trust
320 California Street, Suite 600
San Francisco, CA 94104
Attn: Relationship Manager -
Bell Microproducts
Telephone: (415) 445-8725
Facsimile: (415) 296-9617
Bell-Tenex: Bell Microproducts Canada-Tenex Data ULC
c/o Bell Microproducts, Inc.
1941 Ringwood Avenue
San Jose, CA 95131
Attn: Mr. Don W. Bell
President
Telephone: (408) 451-1635
Facsimile: (408) 451-1694
(b) Waivers; Amendments. Any term, covenant, agreement or
condition of this Security Agreement may be amended or waived only as
provided in the Restated Credit Agreement. No failure or delay by
Administrative Agent or any Bank in exercising any right hereunder
shall operate as a waiver thereof or of any other right nor shall any
single or partial exercise of any such right preclude any other further
exercise thereof or of any other right. Unless otherwise specified in
any such waiver or consent, a waiver or consent given hereunder shall
be effective only in the specific instance and for the specific purpose
for which given.
(c) Successors and Assigns. This Security Agreement shall be
binding upon and inure to the benefit of Administrative Agent, the
Banks and Bell-Tenex and their respective successors and assigns;
provided, however, that Administrative Agent, the Banks and Bell-Tenex
may sell, assign and delegate their respective rights and obligations
hereunder only as permitted by the Restated Credit Agreement.
Administrative Agent may disclose this Security Agreement as provided
in the Restated Credit Agreement.
(d) Partial Invalidity. If at any time any provision of this
Security Agreement is or becomes illegal, invalid or unenforceable in
any respect under the law or any jurisdiction, neither the legality,
validity or enforceability of the remaining provisions of this Security
Agreement nor the legality, validity or enforceability of such
provision under the law of any other jurisdiction shall in any way be
affected or impaired thereby.
(e) Cumulative Rights, Etc. The rights, powers and remedies of
Administrative Agent and the Banks under this Security Agreement shall
be in addition to all rights, powers and remedies given to
Administrative Agent and the Banks by virtue
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of any applicable Governmental Rule, the Restated Credit Agreement, any
other Credit Document or any other agreement, all of which rights,
powers, and remedies shall be cumulative and may be exercised
successively or concurrently without impairing Administrative Agent's
rights hereunder. Bell-Tenex waives any right of marshalling or to
require Administrative Agent or any Bank to proceed against any Person
or to exhaust any Collateral or to pursue any remedy in Administrative
Agent's or such Bank's power.
(f) Payments Free of Taxes, Etc. All payments made by
Bell-Tenex under this Security Agreement shall be made by Bell-Tenex
free and clear of and without deduction for any and all present and
future taxes, levies, charges, deductions and withholdings. In
addition, Bell-Tenex shall pay upon demand any stamp or other taxes,
levies or charges of any jurisdiction with respect to the execution,
delivery, registration, performance and enforcement of this Security
Agreement. Upon request by Administrative Agent, Bell-Tenex shall
furnish evidence satisfactory to Administrative Agent that all
requisite authorizations and approvals by, and notices to and filings
with, governmental authorities and regulatory bodies have been obtained
and made and that all requisite taxes, levies and charges have been
paid.
(g) Bell-Tenex's Continuing Liability. Notwithstanding any
provision of this Security Agreement or any other Credit Document or
any exercise by Administrative Agent of any of its rights hereunder or
thereunder (including, without limitation, any right to collect or
enforce any Collateral), (i) Bell-Tenex shall remain liable to perform
its obligations and duties in connection with the Collateral
(including, without limitation, the Related Contracts and all other
agreements relating to the Collateral) and (ii) neither Administrative
Agent nor any Bank shall assume any liability to perform such
obligations and duties or to enforce any of Bell-Tenex's rights in
connection with the Collateral (including, without limitation, the
Related Contracts and all other agreements relating to the Collateral).
(h) Governing Law and Jurisdiction. This Security Agreement
shall be governed by and construed in accordance with the laws of the
State of California without reference to conflicts of law rules. Any
legal action or proceeding with respect to this Security Agreement may
be brought in the courts of the State of California or of the United
States for the Northern District of California, and by execution and
delivery of this Security Agreement, Bell-Tenex consents, for itself
and in respect of its property, to the non-exclusive jurisdiction of
those courts. Bell-Tenex irrevocably waives any objection, including
any objection to the laying of venue or based on the grounds of forum
non conveniens, which it may now or hereafter have to the bringing of
any action or proceeding in such jurisdiction in respect of this
Security Agreement. Bell-Tenex waives personal service of any summons,
complaint or other process, which may be made by any other means
permitted by California law.
(i) Arbitration.
(i) This subparagraph 9(i) concerns the resolution of
any controversies or claims between or among Bell-Tenex, any
Bank and Administrative Agent, including but not limited to
those that arise from:
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(A) This Security Agreement or any other
Credit Document to which Bell-Tenex is a party;
(B) Any violation of this Security Agreement
or any other Credit Document to which Bell-Tenex is a
party; or
(C) Any claims for damages resulting from
any business conducted between Bell-Tenex and any
Bank or Administrative Agent, including claims for
injury to persons, property or business interests.
(ii) At the request of Bell-Tenex, any Bank or
Administrative Agent, any controversies or claims will be
settled by arbitration in accordance with the United States
Arbitration Act. The United States Arbitration Act will apply
even though this Agreement provides that it is governed by
California law.
(iii) Arbitration proceedings will be administered by
the American Arbitration Association and will be subject to
its commercial rules of arbitration. The arbitration will be
conducted within the California county of San Francisco.
(iv) For purposes of the application of the statute
of limitation, the filing of an arbitration pursuant to this
subparagraph is the equivalent of the filing of a lawsuit, and
any claim or controversy which may be arbitrated under this
subparagraph is subject to any applicable statute of
limitations. The arbitrators will have the authority to decide
whether any such claim or controversy is barred by the statute
of limitations and if so to dismiss the arbitration on that
basis.
(v) If there is a dispute as to whether an issue is
arbitrable, the arbitrators will have the authority to resolve
any such dispute.
(vi) The decision that results from an arbitration
proceeding may be submitted to any authorized court of law to
be confirmed and enforced.
(vii) The procedure described above will not apply if
the controversy or claim, at the time of the proposed
submission to arbitration arises from or relates to an
obligation to Bank secured by real property located in
California. If the obligation is secured by real property,
Bell-Tenex, each Bank and Administrative Agent must consent to
submission of the claim or controversy to arbitration. If all
parties do not consent to arbitration, the controversy or
claim will be settled as follows:
(A) Bell-Tenex, the Banks and Administrative
Agent will designate a referee (or a panel of
referees) selected under the auspices of the American
Arbitration Association in the same manner as
arbitrators are selected in Association-sponsored
proceedings;
(B) The designated referee (or the panel of
referees) will be appointed by a court as provided in
California Code of Civil Procedure Section 638 and
the following related sections;
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(C) The referee (or the presiding referee of
the panel) will be an active attorney or a retired
judge; and
(D) The award that results from the decision
of the referee (or the panel) will be entered as a
judgment in the court that appointed the referee, in
accordance with the provisions of California Code of
Civil Procedure Sections 644 and 645.
(viii) This subparagraph 9(i) does not limit the
right of Bell-Tenex, any Bank or Administrative Agent to:
(A) Exercise self-help remedies such as
setoff;
(B) Foreclose against or sell any real or
personal property collateral; or
(C) Take action in a court of law, before,
during or after the arbitration proceeding to obtain
an interim remedy or additional or supplementary
remedies.
(ix) The pursuit of or a decision in an action for
interim, additional or supplementary remedies, or the filing
of a court action, does not constitute a waiver of the right
of Bell-Tenex, any Bank or Administrative Agent, including the
suing party, to submit the controversy or claim to
arbitration.
(j) JURY TRIAL. EACH OF BELL-TENEX, THE BANKS AND
ADMINISTRATIVE AGENT, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY AS TO ANY
ISSUE RELATING HERETO IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT NOT RESOLVED
PURSUANT TO SUBPARAGRAPH 9(i) HEREOF.
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IN WITNESS WHEREOF, Bell-Tenex has caused this Security
Agreement to be executed as of the day and year first above written.
BELL MICROPRODUCTS CANADA-TENEX DATA ULC
By: ____________________________________
Name: ______________________________
Title: _____________________________
CALIFORNIA BANK & TRUST,
as Administrative Agent
By: ____________________________________
Name: ______________________________
Title: _____________________________
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ATTACHMENT 1
TO SECURITY AGREEMENT
All right, title and interest of Bell-Tenex, whether now owned or
hereafter acquired, in and to the following:
(a) All equipment and fixtures (including, without limitation,
manufacturing equipment, furniture, vehicles and other machinery and office
equipment), together with all additions and accessions thereto and replacements
therefor (collectively, the "Equipment");
(b) All inventory (including, without limitation, (i) all
computers, semiconductor devices, integrated circuits, disc drives, computer
peripheral equipment, monitors, other computer-related equipment, other
electronic equipment, and all other raw materials, work in process and finished
goods and (ii) all such goods which are returned to or repossessed by
Bell-Tenex), together with all additions and accessions thereto, replacements
therefor, products thereof and documents therefor (collectively, the
"Inventory");
(c) All accounts, chattel paper, instruments, deposit accounts
and other rights to the payment of money (including, without limitation, general
intangibles and contract rights) (collectively, the "Receivables") and all
contracts, security agreements, leases, guaranties and other agreements
evidencing, securing or otherwise relating to the Receivables (collectively, the
"Related Contracts");
(d) All certificated and uncertificated securities, security
entitlements, securities accounts, commodity contracts, commodity accounts and
other investment property;
(e) All other general intangibles and contract rights not
otherwise described above (including, without limitation, (i) customer and
supplier lists and contracts, books and records, insurance policies, tax
refunds, contracts for the purchase of real or personal property; (ii) all
patents, copyrights, trademarks, tradenames and service marks, (iii) all
licenses to use, applications for, and other rights to, such patents,
copyrights, trademarks, tradenames and service marks, and (iv) all goodwill of
Bell-Tenex);
(f) All other property not otherwise described above
(including, without limitation, all money, letters of credit, documents and
goods); and
(g) All proceeds of the foregoing (including, without
limitation, whatever is receivable or received when Collateral or proceeds is
sold, collected, exchanged, returned, substituted or otherwise disposed of,
whether such disposition is voluntary or involuntary, including rights to
payment and return premiums and insurance proceeds under insurance with respect
to any Collateral, and all rights to payment with respect to any cause of action
affecting or relating to the Collateral).
J-[1]-1
<PAGE>
ATTACHMENT 2
TO SECURITY AGREEMENT
BELL-TENEX PROFILE
Bell Microproducts Canada-Tenex Data ULC
("Bell-Tenex")
1. The current legal name of Bell-Tenex is Bell Microproducts
Canada-Tenex Data ULC, a Nova Scotia, Canada, an unlimited liability company.
2. Bell-Tenex's chief executive office is located at 1941
Ringwood Avenue, San Jose, CA 95131.
3. Bell-Tenex was organized on November 4, 1998 in the
province of Nova Scotia, Canada. Since its organization, Bell-Tenex has had no
other legal name (other than its current legal name) except for the following
(provide name and date of change):
Prior Name Date Name
Changed
----------------------------- --------------------------
None.
4. Bell-Tenex does not do business under any trade name except
for the following (provide name and indicate whether registered):
Trade Name Registered?
----------------------------- --------------------------
Bell Microproducts--Tenex No.
Data
Bell Micro--Tenex Data No.
5. Since Bell-Tenex's organization, no other corporation has
been merged into Bell-Tenex except for the following (provide names, dates and
brief description of transactions):
Name of Date of Description of
Corporation Merger Transaction
- ----------------------------- --------------------------- ------------------
None.
J-[2]-1
<PAGE>
<TABLE>
6. Bell-Tenex has not acquired any of its assets in a bulk
sale or any other transaction not in the ordinary course of business of the
seller except for the following (provide description of assets, date and
description of transaction and name of seller):
<CAPTION>
Description of Date of Description of Seller
Assets Acquisition Transaction
- ---------------------- -------------------------- --------------------------- ------------------
<S> <C> <C> <C>
Inventory and November 20, 1998 Business Acquisition Axidata Inc.
Miscellaneous Fixed
Assets
</TABLE>
7. The following is a complete list of all provinces and other
jurisdictions in which Bell-Tenex is qualified to do business:
Province or Jurisdiction
------------------------
Ontario
British Columbia
Quebec
<TABLE>
8. The following is a complete list of all offices and other
places of business at which Bell-Tenex currently conducts or has within the last
four months conducted business (provide address, owner of site and brief
description of assets located there):
<CAPTION>
Address Brief Description
Owner of Site of Assets
---------------------------------- ---------------------------------- --------------------------------
<S> <C> <C>
45 Commander Blvd. Axidata, Inc. Inventory, Office Furniture
Scarborough, Ontario
1269 Saint-Amour Axidata, Inc. Office Furniture
St. Laurent, Quebec
13140 Delf Place Axidata, Inc. Office Furniture
Richmond, British Columbia
</TABLE>
<TABLE>
9. The following is a complete list of all persons and
entities (other than Bell-Tenex) who at any time have possession of any assets
of Bell-Tenex (provide name, address where located and description of assets
located there):
<CAPTION>
Person or Address Brief Description of Assets
Entity
--------------------------- ---------------------------------- -----------------------------------
<S> <C> <C>
None.
</TABLE>
J-[2]-2
<PAGE>
Of the persons and entities listed above in this item 9;
a. The following persons and entities are warehouses which
issue warehouse receipts:
Person or
Entity
-----------------------------
None.
b. The following persons and entities process or finish
inventory or other goods for Bell-Tenex:
Person or
Entity
-----------------------------
None.
c. The following persons and entities hold inventory or other
goods on consignment for Bell-Tenex:
Person or
Entity
-----------------------------
None.
d. The following other persons and entities have possession
of assets of Bell-Tenex for the purposes indicated:
Person or Purpose
Entity
-------------------------- ---------------------
None.
<TABLE>
10. The following is a complete list of all motor vehicles
owned by Bell-Tenex (describe each vehicle by make, model and year and indicate
for each the state in which registered and the state in which based):
<CAPTION>
State of State in which
Vehicle Registration Based
------------------------------- ----------------------- ---------------------------
<S> <C> <C>
None.
</TABLE>
J-[2]-3
<PAGE>
<TABLE>
11. The following is a complete list of all aircraft and boats
and all other inventory, equipment and other goods of Bell-Tenex which are
subject to any certificate of title or other registration statute of the United
States, any state or any other jurisdiction (provide description of covered
goods and indicate registration system and jurisdiction):
<CAPTION>
Registration
Goods System Jurisdiction
--------------------------- ------------------------------------- --------------------------------
<S> <C> <C>
None.
</TABLE>
<TABLE>
12. The following is a complete list of all patents,
copyrights, trademarks, tradenames and service marks registered in the name of
Bell-Tenex:
<CAPTION>
a. Patents Registration No.
--------------------------------------- ------------------------------
<S> <C>
None.
b. Copyrights Registration No.
--------------------------------------- ------------------------------
None.
c. Trademarks,
Trade Names and
Service Marks Registration No.
--------------------------------------- ------------------------------
None.
</TABLE>
<TABLE>
13. The following is a complete list of all subsidiaries of
Bell-Tenex (provide name of subsidiary, jurisdiction of incorporation,
outstanding shares and shares owned by Bell-Tenex):
<CAPTION>
Subsidiary Jurisdiction Shares Shares Owned
Outstanding by Bell-Tenex
-------------------------- --------------------- ---------------------- ------------------------
<S> <C> <C> <C>
None.
</TABLE>
<TABLE>
14. The following is a complete list of all securities
accounts maintained by Bell-Tenex (provide name and address of securities
intermediary at which maintained, type of account and account number):
<CAPTION>
Securities Intermediary Type of Account Number
Intermediary Address Account
---------------------------- ----------------------- ------------------------------ -------------------
<S> <C> <C> <C>
---------------------------- ----------------------- ------------------------------ -------------------
None.
---------------------------- ----------------------- ------------------------------ -------------------
---------------------------- ----------------------- ------------------------------ -------------------
---------------------------- ----------------------- ------------------------------ -------------------
</TABLE>
J-[2]-4
<PAGE>
<TABLE>
15. The following is a complete list of all other stock (other than the stock of
subsidiaries described in item 13 above or held indirectly through securities
accounts described in item 14 above), bonds, debentures, notes and other
securities owned by Bell-Tenex which have a value (higher of cost or market
value) of $________ or more (provide name of issuer, a description of security
and value):
<CAPTION>
Description of
Issuer Security Value
---------------------------- ------------------------------------------------ -------------------------
<S> <C> <C>
None.
---------------------------- ------------------------------------------------ -------------------------
</TABLE>
<TABLE>
16. The following is a complete list of all notes payable to
Bell-Tenex not otherwise listed in item 14 above (provide name of obligor, date,
original principal amount and current principal balance):
<CAPTION>
Obligor Date Original Current
Amount Balance
- ------------------------- --------------------- --------------------- ------------------------
<S> <C> <C> <C>
None.
</TABLE>
<TABLE>
17. The following is a complete list of all bank accounts
maintained by Bell-Tenex (provide name and address of depository bank, type of
account and account number):
<CAPTION>
Depository Bank Type of Account
Bank Address Account Number
-------------------------- -------------------------- ----------------------- -------------------------
<S> <C> <C> <C>
Bank of Montreal First Canadian Pl. Canadian Checking 1332-039
Toronto, Ontario M5X 1A3
Bank of Montreal First Canadian Pl. US Checking 4650-728
Toronto, Ontario
M5X 1A3
Bank of Montreal First Canadian Pl. Mastercard 1331-802
Toronto, Ontario
M5X 1A3
</TABLE>
18. Does Bell-Tenex regularly receive letters of credit from
customers to secure payments of sums owed to Bell-Tenex?
Yes _____. No __x__.
19. Does Bell-Tenex regularly have accounts receivable due
from, or contracts with, the United States government or any agency or
department thereof?
Yes _____. No __x__.
J-[2]-5
<PAGE>
If yes, indicate the percentage of Bell-Tenex's total
outstanding accounts receivable that are due from the United States government
and agencies and departments thereof: ________%
20. Does Bell-Tenex regularly receive advance deposits from
customers for goods not yet delivered to such customers?
Yes _____. No __x__.
21. Does Bell-Tenex regularly import goods from outside the
United States?
Not Applicable.
<TABLE>
22. The following is a complete list of all third parties who
perform data processing services for Bell-Tenex or maintain records with respect
to Bell-Tenex's accounts receivable (provide name and address of third party and
describe services performed and/or records maintained):
<CAPTION>
Name Address Description of Services
and/or Records
---------------------------- --------------------------------- ---------------------------------
<S> <C> <C>
Axidata, Inc. 45 Commander Blvd.
Scarborough, Ontario
</TABLE>
23. The following is a complete list of all data processing
equipment of Bell-Tenex which is leased (provide description of equipment and
name and address of lessor):
Lessor
Description of Equipment Lessor Address
- ---------------------------- ------------------------ ------------------------
None.
24. The following is a complete list of all data processing
equipment of Bell-Tenex which is subject to security interests of persons other
than Bank (provide description of equipment and name and address of secured
party):
Description of Equipment Secured Party Secured Party
Address
- ---------------------------- ------------------------- -----------------------
None.
25. The most recent federal income tax returns of Bell-Tenex
that have been audited by the IRS are: Not Applicable.
26. Neither Bell-Tenex nor any of its property is subject to
any tax assessments which are currently outstanding and unpaid except for the
following (provide name of assessing authority and amount and description of
assessment):
J-[2]-6
<PAGE>
Assessing Authority Amount Description
---------------------- ------------------- --------------------------
None.
27. Neither Bell-Tenex nor any of its property is subject to
any judgment lien, attachment, assessment (other than any tax assessments set
forth in item 25 above) or any other similar process which is currently
outstanding and unpaid except for the following (provide name of party asserting
lien, etc., amount and description of lien, etc.):
Assessing Authority Amount Description
---------------------- ------------------- --------------------------
None.
28. The following is a complete list of all pending and
threatened litigation or claims involving amounts claimed against Bell-Tenex in
excess of $1,000,000 (provide name of claimant, amount of claim and brief
description of claim):
Claimant Amount Description
---------------------- ------------------- --------------------------
None.
J-[2]-7
<PAGE>
ATTACHMENT 3
TO SECURITY AGREEMENT
NOTICE OF SECURITY INTEREST
IN
DEPOSIT ACCOUNT
___________ __, [19][20]_
[Name of Depositary Bank]
[Address of Depositary Bank]
___________________________________
___________________________________
<TABLE>
BELL MICROPRODUCTS CANADA-TENEX DATA ULC, a Nova Scotia, Canada
unlimited liability company ("Bell-Tenex") and CALIFORNIA BANK & TRUST, a
California banking corporation, acting as agent for certain financial
institutions (in such capacity, "Administrative Agent"), under that certain
Security Agreement dated as of November 20, 1998 (the "Security Agreement"),
hereby notify you that Bell-Tenex has granted to Administrative Agent a security
interest in all deposit accounts maintained by Bell-Tenex with you including,
without limitation, the deposit accounts described below:
<CAPTION>
Account Depositor's Account
Number Name Type
------------------------- ---------------------------------- --------------------------
<S> <C> <C>
------------------------- ---------------------------------- --------------------------
------------------------- ---------------------------------- --------------------------
------------------------- ---------------------------------- --------------------------
</TABLE>
Bell-Tenex and Administrative Agent authorize you to continue to allow
Bell-Tenex to make deposits to, draw checks upon and otherwise withdraw funds
from such deposit accounts (the "Deposit Accounts") without the consent of
Administrative Agent until Administrative Agent shall instruct you otherwise.
J-[3]-1
<PAGE>
Bell-Tenex has irrevocably authorized Administrative Agent to inform
you when an Event of Default (as defined in the Restated Credit Agreement) has
occurred and is continuing and at such time instruct you to cease to permit any
further payments or withdrawals from the Deposit Accounts by Bell-Tenex and/or
to pay any or all amounts in the Deposit Accounts to Administrative Agent.
Bell-Tenex irrevocably authorizes and directs you to comply with all such
instructions received by you from Administrative Agent without further inquiry
on your part and hereby agrees to indemnify and hold harmless you and your
officers, directors and employees from and for any compliance by you with such
instructions.
BELL MICROPRODUCTS CANADA-TENEX DATA ULC
By: ____________________________________
Name: ______________________________
Title: _____________________________
CALIFORNIA BANK & TRUST,
as Administrative Agent
By: ____________________________________
Name: ______________________________
Title: _____________________________
J-[3]-2
<PAGE>
ACKNOWLEDGEMENT AND AGREEMENT
OF DEPOSITARY BANK
The undersigned depositary bank hereby acknowledges receipt of the
above notice and agrees with Bell-Tenex and Administrative Agent to comply with
any instruction it may receive from Administrative Agent in accordance
therewith. The undersigned confirms to Administrative Agent that the information
set forth above regarding the Deposit Accounts is accurate, that such Deposit
Accounts are currently open and that the undersigned has no prior notice of any
other security interest, lien or interest in such Deposit Accounts. The
undersigned waives any right of setoff except for its right or recoupment for
returned items.
________________________________________
By: ____________________________________
Name: ______________________________
Title: _____________________________
J-[3]-3
<PAGE>
ATTACHMENT 4
TO SECURITY AGREEMENT
NOTICE OF SECURITY INTEREST
IN
[SECURITIES][COMMODITY] ACCOUNT
__________ __, [19][20]__
[Name of Intermediary]
[Address of Intermediary]
_________________________________
_________________________________
<TABLE>
BELL MICROPRODUCTS CANADA-TENEX DATA ULC, a Nova Scotia, Canada
unlimited liability company ("Bell-Tenex") and CALIFORNIA BANK & TRUST, a
California banking corporation, acting as agent for certain financial
institutions (in such capacity, "Administrative Agent"), under that certain
Security Agreement dated as of November 20, 1998 (the "Security Agreement"),
hereby notify you that Bell-Tenex has granted to Administrative Agent a security
interest in all [securities][commodity] accounts maintained by Bell-Tenex with
you including, without limitation, the accounts described below:
<CAPTION>
Account Account Holder's Account
Number Name Type
------------------------- ---------------------------------- --------------------------
<S> <C> <C>
------------------------- ---------------------------------- --------------------------
------------------------- ---------------------------------- --------------------------
------------------------- ---------------------------------- --------------------------
</TABLE>
Until Administrative Agent shall instruct you otherwise pursuant to the
following paragraph, Bell-Tenex and Administrative Agent authorize you, without
the consent of Administrative Agent, to continue to comply with all directions
of Bell-Tenex regarding the purchase, sale, transfer or redemption of all
securities, security entitlements, other investment property and other financial
assets for and in such accounts (the "Accounts").
Bell-Tenex has authorized Administrative Agent to inform you when an
Event of Default (as defined in the Restated Credit Agreement) has occurred and
is continuing and at such time direct you to cease to comply with any further
directions of Bell-Tenex with respect to the Accounts. After your receipt of any
such notice, Bell-Tenex authorizes and directs you, without the consent of
Bell-Tenex or further inquiry on your part, to comply with all directions of
Administrative Agent regarding the Accounts, including, without limitation, any
direction to (a) purchase, sell, transfer or redeem any or of all securities,
security entitlements, other investment
J-[4]-1
<PAGE>
property or other financial assets for and in the Accounts, (b) withdraw any or
all funds from the Accounts and pay such funds to Administrative Agent or any
person designated by Administrative Agent or (c) transfer any or all of the
Accounts to the name of Administrative Agent or any person designated by
Administrative Agent. Bell-Tenex hereby agrees to indemnify and hold harmless
you and your officers, directors and employees from and for any compliance by
you with such directions of Administrative Agent.
BELL MICROPRODUCTS CANADA-TENEX DATA ULC
By: ____________________________________
Name: ______________________________
Title: _____________________________
CALIFORNIA BANK & TRUST,
as Administrative Agent
By: ____________________________________
Name: ______________________________
Title: _____________________________
J-[4]-2
<PAGE>
ACKNOWLEDGEMENT AND AGREEMENT
OF INTERMEDIARY
The undersigned institution hereby acknowledges receipt of the above
notice and agrees with Bell-Tenex and Administrative Agent to comply with any
direction it may receive from Administrative Agent in accordance therewith
without the consent of Bell-Tenex or further inquiry. The undersigned confirms
to Administrative Agent that the information set forth above regarding the
Accounts is accurate, that such Accounts are currently open and that the
undersigned has no prior notice of any other security interest, lien or interest
in such Accounts. The undersigned agrees that any lien or right of setoff it may
have in or against the accounts is subordinate to the security interest of
Administrative Agent therein.
________________________________________
By: ____________________________________
Name: ______________________________
Title: _____________________________
J-[4]-1
<PAGE>
ATTACHMENT 5
TO SECURITY AGREEMENT
INSURANCE ENDORSEMENTS
1. Property Insurance. Each of the property insurance policies of
Bell-Tenex shall contain substantially the following endorsements:
(a) CALIFORNIA BANK & TRUST, as agent ("Administrative
Agent"), shall be named as additional loss payee.
(b) In respect of the interests of Administrative Agent in the
policies, the insurance shall not be invalidated by any action or by
inaction of Bell-Tenex or by any Person having temporary possession of
the property covered thereby (the "Property") while under contract with
Bell-Tenex to perform maintenance, repair, alteration or similar work
on the Property, and shall insure the interests of Administrative Agent
regardless of any breach or violation of any warranty, declaration or
condition contained in the insurance policy by Bell-Tenex or
Administrative Agent or any other additional insured (other than by
such additional insured, as to such additional insured) or by any
Person having temporary possession of the Property while under contract
with Bell-Tenex to perform maintenance, repair, alteration or similar
work on the Property.
(c) If the insurance policy is cancelled for any reason
whatsoever, or substantial change is made in the coverage that affects
the interests of Administrative Agent, or if the insurance coverage is
allowed to lapse for non-payment of premium, such cancellation, change
or lapse shall not be effective as to Administrative Agent for 30 days
(or 10 days in the case of non-payment of premium) after receipt by
Administrative Agent of written notice from the insurers of such
cancellation, change or lapse.
(d) Neither Administrative Agent nor any Bank shall have any
obligation or liability for premiums, commissions, assessments, or
calls in connection with the insurance.
(e) The insurer shall waive any rights of set-off or
counterclaim or any other deduction, whether by attachment or
otherwise, that it may have against Administrative Agent and each Bank.
(f) The insurance shall be primary without right of
contribution from any other insurance that may be carried by
Administrative Agent or any of the Banks with respect to its or their
interest in the Property.
(g) The insurer shall waive any right of subrogation against
Administrative Agent and each Bank.
(h) All provisions of the insurance, except the limits of
liability, shall operate in the same manner as if there were a separate
policy covering each insured party.
J-[5]-1
<PAGE>
2. Liability Insurance. Each of the liability insurance policies of
Bell-Tenex shall contain substantially the following endorsements:
(a) Administrative Agent shall be named as additional insured.
(b) In respect of the interests of Administrative Agent in the
policies, the insurance shall not be invalidated by any action or by
inaction of Bell-Tenex or by any Person having temporary possession of
the property covered thereby (the "Property") while under contract with
Bell-Tenex to perform maintenance, repair, alteration or similar work
on the Property, and shall insure the interests of Administrative Agent
regardless of any breach or violation of any warranty, declaration or
condition contained in the insurance policy by Bell-Tenex or
Administrative Agent or any other additional insured (other than by
such additional insured, as to such additional insured) or by any
Person having temporary possession of the Property while under contract
with Bell-Tenex to perform maintenance, repair, alteration or similar
work on the Property.
(c) If the insurance policy is cancelled for any reason
whatsoever, or substantial change is made in the coverage that affects
the interests of Administrative Agent, or if the insurance coverage is
allowed to lapse for non-payment of premium, such cancellation, change
or lapse shall not be effective as to Administrative Agent for 30 days
(or 10 days in the case of non-payment of premium) after receipt by
Administrative Agent of written notice from the insurer of such
cancellation, change or lapse.
(d) Neither Administrative Agent nor any Bank shall have any
obligation or liability for premiums, commissions, assessments, or
calls in connection with the insurance.
(e) The insurer shall waive any rights of set-off or
counterclaim or any other deduction, whether by attachment or
otherwise, that it may have against Administrative Agent and each Bank.
(f) The insurance shall be primary without right of
contribution from any other insurance that may be carried by
Administrative Agent or any of the Banks with respect to their
interests in the Property.
(g) The insurer shall waive any right of subrogation against
Administrative Agent and each Bank.
(h) All provisions of the insurance, except the limits of
liability, shall operate in the same manner as if there were a separate
policy covering each insured party.
J-[5]-2
<PAGE>
EXHIBIT K
BORROWING BASE CERTIFICATE
[Date]
California Bank & Trust
320 California Street, Suite 600
San Francisco, CA 94104
Attn: Relationship Manager -
Bell Microproducts
1. Reference is made to that certain Third Amended and Restated Credit
Agreement, dated as of November 12, 1998 (the "Restated Credit Agreement"),
among Bell Microproducts Inc. ("Borrower"), the financial institutions listed in
Schedule I to the Restated Credit Agreement (the "Banks") and California Bank &
Trust, as agent for the Banks (in such capacity, "Administrative Agent"). Unless
otherwise indicated, all terms defined in the Restated Credit Agreement have the
same respective meanings when used herein.
2. Borrower hereby certifies to Administrative Agent and the Banks
that, as of [insert date of determination of Borrowing Base], the Borrowing Base
was $________________, calculated as set forth in Attachment 1 hereto.
IN WITNESS WHEREOF, Borrower has executed this Borrowing Base
Certificate on the date set forth above.
BELL MICROPRODUCTS INC.
By: ________________________________
Name: __________________________
Title: _________________________
K-1
<PAGE>
<TABLE>
ATTACHMENT 1
TO BORROWING BASE CERTIFICATE
Calculation of Borrowing Base
As of ________, __ (the "Determination Date")
<CAPTION>
- --------------------------------------------------------------------------- ------------------- --------------------
A. Eligible Accounts as of the Determination Date:
- --------------------------------------------------------------------------- ------------------- --------------------
<S> <C> <C>
1. Aggregate net amount of all accounts of Borrower $__________
and Bell-Tenex
- --------------------------------------------------------------------------- ------------------- --------------------
2. Deductions:
- --------------------------------------------------------------------------- ------------------- --------------------
(a) Accounts which do not arise from the sale or lease of goods or $___________
services rendered to the account debtor thereon in the ordinary course
of Borrower's or Bell-Tenex's business, or which arise from a sale,
lease or service which has not been fully performed by Borrower or
Bell-Tenex
- --------------------------------------------------------------------------- ------------------- --------------------
(b) Accounts and portions thereof to the extent the same are subject $___________
to any right of discount, credit, allowance, rescission, setoff, claim
or defense or which are otherwise not valid and enforceable against
the account debtor thereon
- --------------------------------------------------------------------------- ------------------- --------------------
(c) Accounts which are not subject to a first priority perfected $___________
security interest in favor of Administrative Agent for the benefit of
Administrative Agent and the Banks
- --------------------------------------------------------------------------- ------------------- --------------------
(d) Accounts which are not owned by Borrower or Bell-Tenex free and $___________
clear of all Liens, rights and interests of all other Persons except
for Permitted Liens
- --------------------------------------------------------------------------- ------------------- --------------------
(e) Accounts which are unpaid more than ninety (90) days after the $___________
invoice date therefor
- --------------------------------------------------------------------------- ------------------- --------------------
(f) Accounts arising from consignments by Borrower or Bell-Tenex as $___________
consignee and COD shipments
- --------------------------------------------------------------------------- ------------------- --------------------
(g) Accounts payable by (i) the United States government or any $___________
department, agency or other subdivision thereof (except to the extent
Borrower has complied with the Federal Assignment of Claims Act of
1940, as amended), (ii) Persons located in any jurisdiction outside
the Untied States or Canada (except to the extent secured by letters
of credit acceptable to Administrative Agent) or (iii) an Affiliate of
Borrower
- --------------------------------------------------------------------------- ------------------- --------------------
K-[1]-1
<PAGE>
- --------------------------------------------------------------------------- ------------------- --------------------
(h) Accounts payable by account debtors (i) which are the subject of $___________
any bankruptcy, insolvency, liquidation or similar proceeding, (ii)
which have made assignments for the benefit of their creditors, (iii)
for which receivers have been appointed or (iv) which have admitted in
writing their inability to pay their debts as such debts become due
- --------------------------------------------------------------------------- ------------------- --------------------
(i) Accounts payable by account debtors which have failed to pay $___________
twenty percent (20%) or more of their total accounts payable owed to
Borrower or Bell-Tenex within ninety (90) days of their invoice date
- --------------------------------------------------------------------------- ------------------- --------------------
(j) Other accounts which Administrative Agent has reasonably $___________
determined are not likely to be paid in full within 90 days after the
invoice date
- --------------------------------------------------------------------------- ------------------- --------------------
Total deductions (sum of A.2.(a)-(j) $__________
- --------------------------------------------------------------------------- ------------------- --------------------
- --------------------------------------------------------------------------- ------------------- --------------------
3. Total Eligible Accounts (A.1 minus A.2) $__________
- --------------------------------------------------------------------------- ------------------- --------------------
- --------------------------------------------------------------------------- ------------------- --------------------
B. Eligible Inventory as of the Determination Date:
- --------------------------------------------------------------------------- ------------------- --------------------
1. Aggregate net book value of all inventory of $__________
Borrower and Bell-Tenex
- --------------------------------------------------------------------------- ------------------- --------------------
(Date of most recent revaluation of inventory __________, [19] [20]__)
- --------------------------------------------------------------------------- ------------------- --------------------
2. Deductions:
- --------------------------------------------------------------------------- ------------------- --------------------
(a) Inventory which is not held by or on behalf of Borrower or $___________
Bell-Tenex for sale or lease in the ordinary course of its business
- --------------------------------------------------------------------------- ------------------- --------------------
(b) Inventory consisting of work-in-process. $___________
- --------------------------------------------------------------------------- ------------------- --------------------
(c) Inventory which is not subject to a first priority perfected $___________
security interest in favor of Administrative Agent for the benefit of
Administrative Agent and Banks
- --------------------------------------------------------------------------- ------------------- --------------------
(d) Inventory located in any jurisdiction other than the United States $___________
or Canada (excluding the provinces of New Foundland, Nova Scotia,
Prince Edward Island, new Brunswick, Manitoba, Saskatchewan, Alberta
and Yukon Territory.
- --------------------------------------------------------------------------- ------------------- --------------------
K-[1]-2
<PAGE>
- --------------------------------------------------------------------------- ------------------- --------------------
(e) Inventory which is not owned by Borrower or Bell-Tenex free and $___________
clear of all Liens, rights and interests of all other Persons except
for Permitted Liens
- --------------------------------------------------------------------------- ------------------- --------------------
(f) Inventory which is obsolete, unsalable or damaged $__________
- --------------------------------------------------------------------------- ------------------- --------------------
(g) Inventory which has been consigned by Borrower or Bell-Tenex $___________
(except for such inventory on consignment approved from time to time
by Administrative Agent)
- --------------------------------------------------------------------------- ------------------- --------------------
(h) The aggregate portion of any inventory shown on the books of $___________
Borrower representing any purchase price discount earned by Borrower
or Bell-Tenex
- --------------------------------------------------------------------------- ------------------- --------------------
Total deductions (sum of B.2.(a)-(h)) $__________
- --------------------------------------------------------------------------- ------------------- --------------------
- --------------------------------------------------------------------------- ------------------- --------------------
3. Total Eligible Borrower Inventory (B.1 minus B.2) $__________
- --------------------------------------------------------------------------- ------------------- --------------------
- --------------------------------------------------------------------------- ------------------- --------------------
C. Borrowing Base as of the Determination Date:
- --------------------------------------------------------------------------- ------------------- --------------------
1. Total Revolving Loan Commitment $__________
- --------------------------------------------------------------------------- ------------------- --------------------
2. Total Eligible Accounts (A.3.) times .80 $__________
- --------------------------------------------------------------------------- ------------------- --------------------
3. Lesser of (a) Total Eligible Borrower Inventory (B.3.) times .35 $__________
($__________) and (b) $40,000,000
- --------------------------------------------------------------------------- ------------------- --------------------
4. Sum of C.2 and C.3 $__________
- --------------------------------------------------------------------------- ------------------- --------------------
5. Borrowing Base (lesser of C.1 and C.4) $__________
- --------------------------------------------------------------------------- ------------------- --------------------
- --------------------------------------------------------------------------- ------------------- --------------------
D. Availability as of the Determination Date:
- --------------------------------------------------------------------------- ------------------- --------------------
1. Aggregate Revolving Loans Outstanding as of the Determination $__________
Date
- --------------------------------------------------------------------------- ------------------- --------------------
2. Borrowing Base $__________
- --------------------------------------------------------------------------- ------------------- --------------------
3. D.1 minus D.2 $__________
- --------------------------------------------------------------------------- ------------------- --------------------
4. Availability as of Determination Date $__________
- --------------------------------------------------------------------------- ------------------- --------------------
</TABLE>
K-[1]-3
<PAGE>
EXHIBIT L
ASSIGNMENT AGREEMENT
THIS ASSIGNMENT AGREEMENT, dated as of the date set forth at the top of
Attachment 1 hereto, by and among:
(1) The bank designated under item A of Attachment 1 hereto as
the Assignor Bank ("Assignor Bank"); and
(2) Each bank designated under item B of Attachment 1 hereto
as an Assignee Bank (individually, an "Assignee Bank").
RECITALS
A. Assignor Bank is one of the banks which is a party to the Third
Amended and Restated Credit Agreement dated as of November 12, 1998, by and
among Bell Microproducts Inc., a California corporation ("Borrower"), Assignor
Bank and the other financial institutions parties thereto (collectively, the
"Banks"), and California Bank & Trust, as agent for the Banks (in such capacity,
"Agent"). (Such Restated Credit Agreement, as amended, supplemented or otherwise
modified in accordance with its terms from time to time to be referred to herein
as the "Restated Credit Agreement").
B. Assignor Bank wishes to sell, and Assignee Bank wishes to purchase,
a portion of Assignor Bank's rights under the Restated Credit Agreement pursuant
to Subparagraph 8.05(c) of the Restated Credit Agreement.
AGREEMENT
Now, therefore, the parties hereto hereby agree as follows:
1. Definitions. Except as otherwise defined in this Assignment
Agreement, all capitalized terms used herein and defined in the Restated Credit
Agreement have the respective meanings given to those terms in the Restated
Credit Agreement.
2. Sale and Assignment. Subject to the terms and conditions of this
Assignment Agreement, Assignor Bank hereby agrees to sell, assign and delegate
to each Assignee Bank and each Assignee Bank hereby agrees to purchase, accept
and assume an undivided interest in and share of Assignor Bank's rights,
obligations and duties under the Restated Credit Agreement and the other Credit
Documents equal to the Revolving Loan Commitments set forth under the captions
"Initial Revolving Loan Commitment" and "Increased Revolving Loan Commitment"
opposite such Assignee Bank's name on Attachment 1 hereto and the corresponding
Proportionate Shares resulting from such Revolving Loan Commitments.
3. Assignment Effective Upon Notice. Upon (a) receipt by Agent of five
(5) counterparts of this Assignment Agreement (to each of which is attached a
fully completed Attachment 1), each of which has been executed by Assignor Bank
and each Assignee Bank (and, if any Assignee Bank is not then a Bank or an
affiliate of a Bank, by Borrower and
L-1
<PAGE>
Agent) and (b) payment to Agent of the registration and processing fee specified
in Subparagraph 8.05(e) by Assignor Bank, Agent will transmit to Borrower,
Assignor Bank and each Assignee Bank an Assignment Effective Notice
substantially in the form of Attachment 2 hereto (an "Assignment Effective
Notice"). Such Assignment Effective Notice shall set forth the date on which the
assignment affected by this Assignment Agreement shall become effective (the
"Assignment Effective Date"), which date shall be the fifth Business Day
following the date of such Assignment Effective Notice.
4. Assignment Effective Date. At or before 12:00 noon (local time of
Assignor Bank) on the Assignment Effective Date, each Assignee Bank shall pay to
Assignor Bank, in immediately available or same day funds, an amount equal to
the purchase price, as agreed between Assignor Bank and such Assignee Bank (the
"Purchase Price"), for the Revolving Loan Commitments and Proportionate Shares
purchased by such Assignee Bank hereunder. Effective upon receipt by Assignor
Bank of the Purchase Price payable by each Assignee Bank, the sale, assignment
and delegation to such Assignee Bank of such Revolving Loan Commitments and
Proportionate Shares as described in Paragraph 2 hereof shall become effective.
5. Payments After the Assignment Effective Date. Assignor Bank and each
Assignee Bank hereby agree that Agent shall, and hereby authorize and direct
Agent to, allocate amounts payable under the Restated Credit Agreement and the
other Credit Documents to Assignor Bank and each Assignee Bank as provided in
the Restated Credit Agreement in accordance with their appropriate Proportionate
Shares. Assignor Bank and each Assignee Bank have made separate arrangements for
(i) the payment by Assignor Bank to such Assignee Bank of any principal,
interest, fees or other amounts previously received or otherwise payable to
Assignor Bank hereunder if Assignor Bank and such Assignee Bank have otherwise
agreed that such Assignee Bank is entitled to receive any such amounts and (ii)
the payment by such Assignee Bank to Assignor Bank of any principal, interest,
fees or other amounts payable to such Assignee Bank hereunder if Assignor Bank
and such Assignee Bank have otherwise agreed that Assignor Bank is entitled to
receive any such amounts.
6. Delivery of Notes. On or prior to the Assignment Effective Date,
Assignor Bank will deliver to Agent the Revolving Loan Note payable to Assignor
Bank. On or prior to the Assignment Effective Date, Borrower will deliver to
Agent Revolving Loan Notes for each Assignee Bank and Assignor Bank, in each
case in principal amounts reflecting, in accordance with the Restated Credit
Agreement, their respective Revolving Loan Commitments (as adjusted pursuant to
this Assignment Agreement). As provided in Subparagraph 8.05(c) of the Restated
Credit Agreement, each such new Revolving Loan Note shall be dated the Effective
Date of the Restated Credit Agreement and otherwise be in the form of Revolving
Loan Note replaced thereby (provided that Borrower shall not be obligated to pay
any principal paid or interest accrued prior to the effective date of this
assignment to the Assignee Bank). Promptly after the Assignment Effective Date,
Agent will send to each of Assignor Bank and the Assignee Banks its new
Revolving Loan Notes and will send to Borrower the superseded Revolving Loan
Notes of Assignor Bank, marked "replaced."
7. Delivery of Copies of Credit Documents. Concurrently with the
execution and
L-2
<PAGE>
delivery hereof, Assignor Bank will provide to each Assignee Bank (if it is not
already a Bank party to the Restated Credit Agreement) conformed copies of all
documents delivered to Assignor Bank on or prior to the Closing Date in
satisfaction of the conditions precedent set forth in the Restated Credit
Agreement.
8. Further Assurances. 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.
9. Further Representations, Warranties and Covenants. Assignor Bank and
each Assignee Bank further represent and warrant to and covenant with each
other, Agent and the Banks as follows:
(a) Other than the representation and warranty that it is the
legal and beneficial owner of the interest being assigned hereby free
and clear of any adverse claim, Assignor Bank makes no representation
or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with
the Restated Credit Agreement or the other Credit Documents or the
execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Restated Credit Agreement or the other Credit Documents
furnished.
(b) Assignor Bank makes no representation or warranty and
assumes no responsibility with respect to the financial condition of
Borrower or any of its obligations under the Restated Credit Agreement
or any other Credit Documents.
(c) Each Assignee Bank confirms that it has received a copy of
the Restated Credit Agreement and such other documents and information
as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment Agreement.
(d) Each Assignee Bank will, independently and without
reliance upon any Agent, Assignor Bank or any other Bank and based upon
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 Restated Credit Agreement and the other Credit
Documents.
(e) Each Assignee Bank appoints and authorizes Agent to take
such action as Agent on its behalf and to exercise such powers under
the Restated Credit Agreement and the other Credit Documents as are
delegated to Agent by the terms thereof, together with such powers as
are reasonably incidental thereto, all in accordance with Section VII
of the Restated Credit Agreement.
(f) Each Assignee Bank agrees that it will perform in
accordance with their terms all of the obligations which by the terms
of the Restated Credit Agreement and the other Credit Documents are
required to be performed by it as a Bank.
(g) Attachment 1 hereto sets forth the revised Revolving Loan
L-3
<PAGE>
Commitments of Assignor Bank and each Assignee Bank as well as
administrative information with respect to each Assignee Bank.
10. Effect of this Assignment Agreement. On and after the Assignment
Effective Date, (a) each Assignee Bank shall be a Bank with Revolving Loan
Commitments as set forth on Attachment 1 hereto and shall have the rights,
duties and obligations of such a Bank under the Restated Credit Agreement and
the other Credit Documents and (b) Assignor Bank shall be a Bank with Revolving
Loan Commitments as set forth on Attachment 1 hereto, or, if the Revolving Loan
Commitments of Assignor Bank have been reduced to $0, Assignor Bank shall cease
to be a Bank.
11. Miscellaneous. This Assignment Agreement shall be governed by, and
construed in accordance with, the laws of the State of California. Paragraph
headings in this Assignment Agreement are for convenience of reference only and
are not part of the substance hereof.
L-4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
Agreement to be executed by their respective duly authorized officers as of the
date set forth in Attachment 1 hereto.
__________________________,
as Assignor Bank
By: _______________________
Name: _________________
Title: ________________
__________________________,
as Assignor Bank
By: _______________________
Name: _________________
Title: ________________
__________________________,
as Assignor Bank
By: _______________________
Name: _________________
Title: ________________
__________________________,
as Assignor Bank
By: _______________________
Name: _________________
Title: ________________
L-5
<PAGE>
CONSENTED TO AND ACKNOWLEDGED BY:
BELL MICROPRODUCTS INC.
By: _______________________
Name: _________________
Title: ________________
CALIFORNIA BANK & TRUST,
As Agent
By: _______________________
Name: _________________
Title: ________________
ACCEPTED FOR RECORDATION
IN REGISTER:
CALIFORNIA BANK & TRUST,,
As Agent
By: _______________________
Name: _________________
Title: ________________
L-6
<PAGE>
ATTACHMENT 1
TO ASSIGNMENT AGREEMENT
<TABLE>
NAMES, ADDRESSES AND REVOLVING LOAN COMMITMENTS
OF ASSIGNOR BANK AND ASSIGNEE BANKS AFTER ASSIGNMENT
--------------, ----
<CAPTION>
Initial Increased
Revolving Revolving
Loan Loan
A. ASSIGNOR BANK Commitment Commitment
-------------------------------- --------------------------
<S> <C> <C>
------------------------------------------------- $__,___,___ $__,___,___
Applicable Lending Office:
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
Address for notices:
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
Telephone No: _________________________
Facsimile No: _________________________
Wiring Instructions:
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
L-[1]-1
<PAGE>
Initial Increased
Revolving Revolving
Loan Loan
B. ASSIGNEE BANK Commitment Commitment
-------------------------------- --------------------------
------------------------------------------------- $__,___,___ $__,___,___
Applicable Lending Office:
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
Address for notices:
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
Telephone No: _________________________
Facsimile No: _________________________
Wiring Instructions:
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
</TABLE>
L-[1]-2
<PAGE>
ATTACHMENT 2
TO ASSIGNMENT AGREEMENT
FORM OF
ASSIGNMENT EFFECTIVE NOTICE
The undersigned, as agent for the banks under the Third Amended and
Restated Credit Agreement, dated as of November 12, 1998, among Bell
Microproducts Inc. ("Borrower"), the financial institutions parties thereto (the
"Banks") and California Bank & Trust, as agent for the Banks (in such capacity,
"Agent"), acknowledges receipt of five executed counterparts of a completed
Assignment Agreement, a copy of which is attached hereto. [Note: Attach copy of
Assignment Agreement.] Terms defined in such Assignment Agreement are used
herein as therein defined.
1. Pursuant to such Assignment Agreement, you are advised that the
Assignment Effective Date will be __________ [Insert fifth business day
following date of Assignment Effective Notice].
2. Pursuant to such Assignment Agreement, Assignor Bank is required to
deliver to Agent on or before the Assignment Effective Date the Revolving Loan
Note payable to Assignor Bank.
3. Pursuant to such Assignment Agreement, Borrower is required to
deliver to Agent on or before the Assignment Effective Date the following
Revolving Loan Notes, each dated _________________ [Insert appropriate date]:
[Describe each new Revolving Loan Note for Assignor Bank and each
Assignee Bank as to principal amount.]
4. Pursuant to such Assignment Agreement, each Assignee Bank is
required to pay its Purchase Price to Assignor Bank at or before 12:00 Noon
(local time of Assignor Bank) on the Assignment Effective Date in immediately
available funds.
Very truly yours,
CALIFORNIA BANK & TRUST,
as Agent
By: _______________________
Name: _________________
Title: ________________
