SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K-A
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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EXPLANATORY NOTE
This Report on Form 8-K-A is being filed to amend (i) Item 5 of the
Form 8-K filed by the Registrant on November 30, 1998 and (ii) Exhibits G, I,
and J attached to Exhibit 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) of the Form 8-K filed by the Registrant on November
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) an extension of the
maturity date to May 31, 2000, (iii) the elimination of the letter of credit
sub-facility existing under the Original Credit Agreement, (iv) certain
modifications to the interest provisions of the Credit Agreement, (v) the
addition of certain definitions contained therein, (vi) certain modifications to
the financial covenants contained therein and (vii) certain other changes.
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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: December 11, 1998
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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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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.
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(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 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
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(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 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
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District of California, and by execution and delivery of this Guaranty,
Guarantor 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
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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(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 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) 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. 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 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
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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) 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.
(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 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.
(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.
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(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(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.
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<PAGE>
(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.
I-12
<PAGE>
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: _____________________________
I-13
<PAGE>
EXHIBIT J-I
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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<PAGE>
"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.
J-I-2
<PAGE>
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.
J-I-3
<PAGE>
(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.
J-I-4
<PAGE>
(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
J-I-5
<PAGE>
possession of Administrative Agent a legend satisfactory to
Administrative Agent 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.
J-I-6
<PAGE>
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 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.
J-I-7
<PAGE>
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 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.
J-I-8
<PAGE>
(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 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
J-I-9
<PAGE>
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:
(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
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<PAGE>
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;
(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.
J-I-11
<PAGE>
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: _____________________________
J-I-12
<PAGE>
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-I-[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-- No.
Tenex 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-I-[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-I-[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-I-[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>
12. The following is a complete list of all patents,
copyrights, trademarks, tradenames and service marks registered in the name of
Bell-Tenex:
a. Patents Registration No.
--------------------------------------- -----------------------
None.
b. Copyrights Registration No.
--------------------------------------- -----------------------
None.
c. Trademarks,
Trade Names and
Service Marks Registration No.
--------------------------------------- -----------------------
None.
<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-I-[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-I-[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>
<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):
<CAPTION>
Lessor
Description of Equipment Lessor Address
----------------------------------- ------------------------------- -----------------------------
<S> <C> <C>
None.
</TABLE>
<TABLE>
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):
<CAPTION>
Description of Equipment Secured Party Secured Party
Address
----------------------------------- ------------------------------- ------------------------------
<S> <C> <C>
None.
</TABLE>
25. The most recent federal income tax returns of Bell-Tenex
that have been audited by the IRS are: Not Applicable.
<TABLE>
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-I-[2]-6
<PAGE>
<CAPTION>
Assessing Authority Amount Description
-------------------------------- ------------------------------ ---------------------------------
<S> <C> <C>
None.
</TABLE>
<TABLE>
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.):
<CAPTION>
Asserting Authority Amount Description
-------------------------------- ----------------------------- ---------------------------------
<S> <C> <C>
None.
</TABLE>
<TABLE>
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):
<CAPTION>
Claimant Amount Description
-------------------------------- ------------------------------ ---------------------------------
<S> <C> <C>
None.
</TABLE>
J-I-[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, and that this
security interest supercedes any previous security interest granted to
Administrative Agent in any deposit accounts maintained by the Borrower
with you:
<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-I-[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-I-[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-I-[3]-3
<PAGE>
ATTACHMENT 4
TO SECURITY AGREEMENT
NOTICE OF SECURITY INTEREST
IN
[SECURITIES][COMMODITY] ACCOUNT
__________ __, [19][20]__
[Name of Intermediary]
[Address of Intermediary]
___________________________
___________________________
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:
Account Account Holder's Account
Number Name Type
---------------- ---------------- ----------------
---------------- ---------------- ----------------
---------------- ---------------- ----------------
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-I-[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-I-[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-I-[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-I-[5]-2
<PAGE>
EXHIBIT J-II
BELL MICROPRODUCTS CANADA - TENEX DATA ULC
as Obligor
- and -
CALIFORNIA BANK & TRUST
as Collateral Agent
SECURITY AGREEMENT
Dated as of ______ November, 1998
<PAGE>
SECURITY AGREEMENT
Security agreement dated as of the ______ day of November, 1998, made
by BELL MICROPRODUCTS CANADA -TENEX DATA ULC, an unlimited liability corporation
incorporated and existing under the laws of the Province of Nova Scotia, to and
in favour of California Bank & Trust, as Collateral Agent for the Secured
Creditors.
WHEREAS:
(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 (the
"Borrower"), the Banks and Collateral 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 Obligor has entered into the Guaranty pursuant to which the
Obligor has agreed to guaranty the Obligations of the Borrower under the
Restated Credit Agreement;
(C) the Obligor expects to derive substantial direct and indirect
benefit from the transactions contemplated by the Restated Credit Agreement; and
(D) it is a condition under the Restated Credit Agreement that the
Obligor execute and deliver this security agreement to and in favour of the
Collateral Agent for the benefit of the Secured Creditors as security for the
payment and performance of all debts, liabilities and obligations, present or
future, direct or indirect, absolute or contingent, matured or unmatured, at any
time or from time to time due or accruing due and owing by or otherwise payable
by the Obligor to the Secured Creditors, in any currency, and whether incurred
by the Obligor alone or with another or others, arising out of, in connection
with or pursuant to the Restated Credit Agreement, the Guaranty and the other
Credit Documents.
NOW THEREFORE, in consideration of the foregoing premises, the sum of
Cdn.$10.00 in lawful money of Canada now paid by the Collateral Agent to the
Obligor and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Obligor agrees as follows:
ARTICLE 1
INTERPRETATION
Section 1.1. Defined Terms. As used in this security agreement and the
recitals hereto, the following terms have the following meanings:
"Banks" means, collectively, California Bank & Trust and the other
financial institutions party from time to time to the Restated Credit Agreement
and their respective successors and assigns.
J-II-1
<PAGE>
"Borrower" means, Bell Microproducts Inc., a California corporation and
its successors and assigns.
"Collateral Agent" means California Bank & Trust, a California banking
corporation, in its capacity as Administrative Agent under the Restated Credit
Agreement or any successor administrative agent appointed pursuant thereto or
any collateral agent appointed pursuant to the Restated Credit Agreement for the
purpose of acting as collateral agent hereunder or any successor collateral
agents appointed pursuant thereto.
"Credit Documents" means, collectively, the Restated Credit Agreement,
the Guaranty and all other Credit Documents (as such term is defined in the
Restated Credit Agreement).
"Excluded Collateral" means Collateral consisting of Equipment,
Inventory or other goods located at an address not specified in item 8 of
Attachment 1 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.
"Governmental Entity" means any (i) multinational, federal, provincial,
state, municipal, local or other government, governmental or public department,
central bank, court, commission, board, bureau, agency or instrumentality,
domestic or foreign, (ii) any subdivision or authority of any of the foregoing,
or (iii) any quasi-governmental or private body exercising any regulatory,
expropriation or taxing authority under or for the account of any of the above.
"Guaranty" means the guaranty dated as of the date hereof, or as
amended supplemented or restated from time to time, made by the Obligor to and
in favour of the Secured Creditors in respect of the Obligations.
"Obligations" has the meaning ascribed thereto under the Restated
Credit Agreement.
"Obligor" means Bell Microproducts Canada-Tenex Data ULC, an unlimited
liability corporation incorporated and existing under the laws of the Province
of Nova Scotia and its successors and assigns.
"Person" means a natural person, partnership, corporation, joint stock
company, trust, unincorporated association, joint venture or other entity or
Governmental Entity, and pronouns have a similarly extended meaning.
"Restated Credit Agreement" means the Third Amended and Restated Credit
Agreement dated as of November 12, 1998 as amended from time to time among the
Borrower, California Bank & Trust and the other lending institutions listed on
Schedule 1 thereto, and the Collateral Agent, as the same may be amended,
modified, extended, renewed, replaced, restated, supplemented or refinanced from
time to time and including any agreement extending the maturity of, refinancing
or restructuring (including the inclusion of additional borrowers thereunder or
any increase in the amount borrowed) all or any portion of, the indebtedness
under such agreement or any successor agreements.
"Secured Creditors" means, collectively, the Administrative Agent and
the Banks.
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Section 1.2. Terms Incorporated by Reference. 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, terms defined in the Personal Property Security Act
(Ontario) (as amended from time to time, the "PPSA") and used but not otherwise
defined in this security agreement shall have the same meanings.
Section 1.3. Certain Phrases, etc. In this security agreement the words
"including" and "includes" mean "including (or includes) without limitation".
Section 1.4. Gender and Number. Any reference in this security
agreement to gender shall include all genders and words importing the singular
number only shall include the plural and vice versa.
Section 1.5. Headings, etc. The division of this security agreement
into Articles and Sections and the insertion of headings are for convenient
reference only and are not to affect its interpretation.
Section 1.6. Schedules. The Schedule and Attachments attached to this
security agreement shall, for all purposes of this security agreement, form an
integral part of it.
ARTICLE 2
SECURITY
Section 2.1. Grant of Security. Subject to Section 2.4, the Obligor
grants to the Collateral Agent, for the benefit of the Secured Creditors, a
security interest in all the Obligor's right, title and interest in and to the
personal property and undertaking of the Obligor now owned or hereafter acquired
(collectively, the "Collateral") including any and all of the Obligor's:
(a) equipment and fixtures (including manufacturing equipment,
furniture, vehicles and other machinery and office equipment),
together with all additions and accessions thereto and
replacements therefor (collectively, the "Equipment");
(b) inventory (including (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 the Obligor), together with all
additions and accessions thereto, replacements therefor,
products thereof and documents therefor (collectively, the
"Inventory");
(c) accounts, chattel paper, instruments, deposit accounts and
other rights to the payment of money (including 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");
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(d) certificated and uncertificated securities, security
entitlements, securities accounts, commodity contracts,
commodity accounts and other investment property;
(e) other general intangibles and contract rights not otherwise
described above (including (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 and all licenses to use, applications for , and other
rights to, such patents, copyrights, trademarks, tradenames
and service marks, (collectively, the "Intellectual Property")
and (iii) all goodwill of the Obligor);
(f) other property not otherwise described above (including all
money, letters of credit, documents, goods and other personal
property); and
(g) proceeds of the foregoing (including 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).
Section 2.2. Secured Obligations Secured. (1) The security interest
granted hereby (the "Security Interest") secures the payment and performance of
all debts, liabilities and obligations, present or future, direct or indirect,
absolute or contingent, matured or unmatured, at any time or from time to time
due or accruing due and owing by or otherwise payable by the Obligor to the
Collateral Agent or any Secured Creditor, in any currency, and whether incurred
by the Obligor alone or with another or others, arising out of, in connection
with or pursuant to the Restated Credit Agreement, the Guaranty and the other
Credit Documents (collectively, and together with the expenses, costs and
charges set out in Section 2.2(1) , the "Secured Obligations").
(2) All expenses, costs and charges incurred by or on behalf of the
Collateral Agent and the Secured Creditors in connection with this security
agreement, the Security Interest or the Collateral, including all reasonable
legal fees, court costs, receiver's or Collateral Agent's remuneration and other
expenses of taking possession of, repairing, protecting, insuring, preparing for
disposition, realizing, collecting, selling, transferring, delivering or
obtaining payment for the Collateral, and of taking, defending or participating
in any action or proceeding in connection with any of the foregoing matters or
otherwise in connection with the Collateral Agent's or any Secured Creditor's
interest in any Collateral, whether or not directly relating to the enforcement
of this security agreement or any other Loan Document, shall be added to and
form a part of the Secured Obligations.
Section 2.3. Attachment. (1) The Obligor acknowledges that (i) value
has been given, (ii) it has rights in the Collateral (other than after-acquired
Collateral), (iii) it has not agreed to postpone the time of attachment of the
Security Interest, and (iv) it has received a duplicate original copy of this
security agreement.
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(2) If the Obligor acquires any chattel paper, instrument, security or
negotiable document of title (collectively, "Negotiable Collateral") having a
face value in excess of $50,000, the Obligor will, immediately upon receipt,
deliver to the Collateral Agent the Negotiable Collateral and shall, at the
request of the Collateral Agent (i) cause the transfer of the Negotiable
Collateral to the Collateral Agent to be registered wherever, in the opinion of
the Collateral Agent, such registration may be required or advisable, (ii) duly
endorse the same for transfer in blank or as the Collateral Agent may direct,
and (iii) immediately deliver to the Collateral Agent any and all consents or
other documents which may be necessary to effect the transfer of the Negotiable
Collateral to the Collateral Agent or any third party.
(3) The Obligor will promptly inform the Collateral Agent in writing of
the acquisition by the Obligor of any personal property which is not adequately
described in Section 2.1, and the Obligor will execute and deliver, at its own
expense, from time to time, amendments to this security agreement and its
schedules or additional security agreements or schedules as may be required by
the Collateral Agent.
Section 2.4. Scope of Security Interest. (1) To the extent that the
creation of the Security Interest would constitute a breach or permit the
acceleration or termination of any agreement, right, licence or permit of the
Obligor (each, a "Restricted Asset"), the Security Interest shall not attach to
the Restricted Asset but the Obligor shall hold its interest in the Restricted
Asset in trust for the Collateral Agent and the Secured Creditors, and shall,
upon the reasonable request therefor from the Collateral Agent, assign such
Restricted Asset to the Collateral Agent or as it may direct immediately upon
obtaining the consent of the other party.
(2) Until the Security Interest shall have become enforceable, the
grant of the Security Interest in the Intellectual Property shall not affect in
any way the Obligor's rights to commercially exploit the Intellectual Property,
defend it, enforce the Obligor's rights in it or with respect to it against
third parties in any court or claim and be entitled to receive any damages with
respect to any infringement of it.
(3) The Security Interest shall not extend to consumer goods.
(4) The Security Interest shall not extend or apply to the last day of
the term of any lease or sublease or any agreement for a lease or sublease, now
held or hereafter acquired by the Obligor in respect of real property, but the
Obligor shall stand possessed of any such last day upon trust to assign and
dispose of it as the Collateral Agent may direct.
Section 2.5. Grant of Licence to Use Intellectual Property. For
purposes of enabling the Collateral Agent to exercise its rights and remedies
pursuant to Article 3, at such time as the Collateral Agent shall be lawfully
entitled to exercise its rights and remedies and for no other purpose, the
Obligor hereby grants to the Collateral Agent an irrevocable, nonexclusive
licence (exercisable without payment of royalty or other compensation to the
Obligor) to use, assign or sublicense any of the Intellectual Property wherever
the same may be located, including in such licence access to (i) all media in
which any of the licensed items may be recorded or stored, and (ii) all computer
programs used for compilation or print-out.
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Section 2.6. Care and Custody of Collateral. (1) The Collateral Agent
and the Secured Creditors shall have no obligation to keep Collateral in their
possession identifiable.
(2) The Collateral Agent may, after the Security Interest shall have
become enforceable, (i) notify any person obligated on an account or on chattel
paper or any obligor on an instrument to make payments to the Collateral Agent,
whether or not the Obligor was previously making collections on such accounts,
chattel paper, or instruments, and (ii) assume control of any proceeds arising
from the Collateral.
ARTICLE 3
ENFORCEMENT
Section 3.1. Enforcement. The Security Interest shall be and become
enforceable against the Obligor if and when the Obligor shall fail to pay or
perform any of the Secured Obligations when due and payable or to be performed,
as the case may be.
Section 3.2. Remedies. Whenever the Security Interest has become
enforceable, the Collateral Agent may realize upon the Collateral and enforce
the rights of the Collateral Agent and the Secured Creditors by:
(a) entry onto any premises where Collateral consisting of
tangible personal property may be located;
(b) entry into possession of the Collateral by any method
permitted by law;
(c) sale or lease of all or any part of the Collateral;
(d) collection of any proceeds arising in respect of the
Collateral;
(e) collection, realization or sale of, or other dealing with, the
accounts;
(f) license or sublicense, whether on an exclusive or nonexclusive
basis, any Intellectual Property for such term and on such
conditions and in such manner as the Collateral Agent shall in
its sole judgment determine (taking into account such
provisions as may be necessary to protect and preserve such
Intellectual Property);
(g) appointment by instrument in writing of a receiver (which term
as used in this security agreement includes a receiver and
manager) or Collateral Agent of all or any part of the
Collateral and removal or replacement from time to time of any
receiver or Collateral Agent;
(h) institution of proceedings in any court of competent
jurisdiction for the appointment of a receiver of all or any
part of the Collateral;
(i) institution of proceedings in any court of competent
jurisdiction for sale or foreclosure of all or any part of the
Collateral;
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(j) filing of proofs of claim and other documents to establish
claims to the Collateral in any proceeding relating to the
Obligor; and
(k) any other remedy or proceeding authorized or permitted under
the PPSA or otherwise by law or equity.
Such remedies may be exercised from time to time separately or in
combination and are in addition to, and not in substitution for, any
other rights of the Collateral Agent and the Secured Creditors however
created. The Collateral Agent shall not be bound to exercise any right
or remedy, and the exercise of rights and remedies shall be without
prejudice to the rights of the Collateral Agent and the Secured
Creditors in respect of the Secured Obligations including the right to
claim for any deficiency.
Section 3.3. Additional Rights. In addition to the remedies set forth
in Section 3.2, the Collateral Agent may, whenever the Security Interest has
become enforceable:
(a) require the Obligor, at the Obligor's expense, to assemble the
Collateral at a place or places designated by notice in
writing and the Obligor agrees to so assemble the Collateral;
(b) require the Obligor, by notice in writing, to disclose to the
Collateral Agent the location or locations of the Collateral
and the Obligor agrees to make such disclosure when so
required;
(c) repair, process, modify, complete or otherwise deal with the
Collateral and prepare for the disposition of the Collateral,
whether on the premises of the Obligor or otherwise;
(d) carry on all or any part of the business of the Obligor and,
to the exclusion of all others including the Obligor, enter
upon, occupy and use all or any of the premises, buildings,
and other property of or used by the Obligor for such time as
the Collateral Agent sees fit, free of charge, and the
Collateral Agent and the Secured Creditors shall not be liable
to the Obligor for any act, omission or negligence in so doing
or for any rent, charges, depreciation or damages incurred in
connection with or resulting from such action;
(e) borrow for the purpose of carrying on the business of the
Obligor or for the maintenance, preservation or protection of
the Collateral and grant a security interest in the
Collateral, whether or not in priority to the Security
Interest, to secure repayment; and
(f) commence, continue or defend any judicial or Collateral
proceedings for the purpose of protecting, seizing,
collecting, realizing or obtaining possession or payment of
the Collateral, and give good and valid receipts and
discharges in respect of the Collateral and compromise or give
time for the payment or performance of all or any part of the
accounts or any other obligation of any third party to the
Obligor.
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Section 3.4. Receiver's Powers. (1) Any receiver appointed by the
Collateral Agent shall be vested with the rights and remedies which could have
been exercised by the Collateral Agent in respect of the Obligor or the
Collateral and such other powers and discretions as are granted in the
instrument of appointment and any supplemental instruments. The identity of the
receiver, its replacement and its remuneration shall be within the sole and
unfettered discretion of the Collateral Agent.
(2) Any receiver appointed by the Collateral Agent shall act as agent
for the Collateral Agent for the purposes of taking possession of the
Collateral, but otherwise and for all other purposes (except as provided below),
as agent for the Obligor. The receiver may sell, lease, or otherwise dispose of
Collateral as agent for the Obligor or as agent for the Collateral Agent as the
Collateral Agent may determine in its discretion. The Obligor agrees to ratify
and confirm all actions of the receiver acting as agent for the Obligor, and to
release and indemnify the receiver in respect of all such actions.
(3) The Collateral Agent, in appointing or refraining from appointing
any receiver, shall not incur liability to the receiver, the Obligor or
otherwise and shall not be responsible for any misconduct or negligence of such
receiver.
Section 3.5. Appointment of Attorney. The Obligor hereby irrevocably
appoints the Collateral Agent (and any officer thereof) as attorney of the
Obligor (with full power of substitution) to exercise in the name of and on
behalf of the Obligor whenever the Security Interest has become enforceable any
of the Obligor's right (including the right of disposal), title and interest in
and to the Collateral including the execution, endorsement, delivery and
transfer of the Collateral to the Collateral Agent, its nominees or transferees,
and the Collateral Agent and its nominees or transferees are hereby empowered
whenever the Security Interest has become enforceable to exercise all rights and
powers and to perform all acts of ownership with respect to the Collateral to
the same extent as the Obligor might do. All acts of the attorney are ratified
and approved, and the attorney shall not be liable for any act, failure to act
or any other matter or thing, except for its own gross negligence or wilful
misconduct. This appointment and power of substitution, being coupled with an
interest, are irrevocable and shall not terminate upon the bankruptcy,
dissolution, winding up or insolvency of the Obligor.
Section 3.6. Dealing with the Collateral. (1) The Collateral Agent and
the Secured Creditors shall not be obliged to exhaust their recourse against the
Obligor or any other person or against any other security they may hold in
respect of the Secured Obligations before realizing upon or otherwise dealing
with the Collateral in such manner as the Collateral Agent may consider
desirable.
(2) The Collateral Agent and the Secured Creditors may grant extensions
or other indulgences, take and give up securities, accept compositions, grant
releases and discharges and otherwise deal with the Obligor and with other
persons, sureties or securities as they may see fit without prejudice to the
Secured Obligations, the liability of the Obligor or the rights of the
Collateral Agent and the Secured Creditors in respect of the Collateral.
(3) Except as otherwise provided by law or this security agreement, the
Collateral Agent and the Secured Creditors shall not be (i) liable or
accountable for any failure to collect,
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realize or obtain payment in respect of the Collateral, (ii) bound to institute
proceedings for the purpose of collecting, enforcing, realizing or obtaining
payment of the Collateral or for the purpose of preserving any rights of any
persons in respect of the Collateral, (iii) responsible for any loss occasioned
by any sale or other dealing with the Collateral or by the retention of or
failure to sell or otherwise deal with the Collateral, or (iv) bound to protect
the Collateral from depreciating in value or becoming worthless.
Section 3.7. Standards of Sale. Without prejudice to the ability of the
Collateral Agent to dispose of the Collateral in any manner which is
commercially reasonable, the Obligor acknowledges that:
(a) Collateral may be disposed of in whole or in part;
(b) Collateral may be disposed of by public auction, public tender
or private contract, with or without advertising and without
any other formality;
(c) any assignee of such Collateral may be the Collateral Agent, a
Secured Creditor or a customer of such person;
(d) a disposition of Collateral may be on such terms and
conditions as to credit or otherwise as the Collateral Agent,
in its sole discretion, may deem advantageous; and
(e) the Collateral Agent may establish an upset or reserve bid or
price in respect of Collateral.
Section 3.8. Dealings by Third Parties. (1) No person dealing with the
Collateral Agent, any of the Secured Creditors or an agent or receiver shall be
required to determine (i) whether the Security Interest has become enforceable,
(ii) whether the powers which such person is purporting to exercise have become
exercisable, (iii) whether any money remains due to the Collateral Agent or the
Secured Creditors by the Obligor, (iv) the necessity or expediency of the
stipulations and conditions subject to which any sale or lease is made, (v) the
propriety or regularity of any sale or other dealing by the Collateral Agent or
any Secured Creditor with the Collateral, or (vi) how any money paid to the
Collateral Agent or the Secured Creditors has been applied.
(2) Any purchaser of all or any part of the Collateral from the
Collateral Agent or any receiver or Collateral Agent shall hold the Collateral
absolutely, free from any claim or right of whatever kind, including any equity
of redemption, of the Obligor, which it specifically waives (to the fullest
extent permitted by law) as against any such purchaser together with all rights
of redemption, stay or appraisal which the Obligor has or may have under any
rule of law or statute now existing or hereafter adopted.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
Section 4.1. Representations and Warranties. The Obligor hereby
represents and warrants to and in favour of the Collateral Agent and the Secured
Creditors, acknowledging and
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confirming that each Secured Creditor is relying thereon without independent
inquiry in connection with the acceptance of this security agreement that:
(a) The Obligor is the legal and beneficial owner of the
Collateral (or, in the case of after-acquired Collateral, at
the time the Obligor 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
the Obligor 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) Collateral Agent has (or in the case of after -acquired
Collateral, at the time the Obligor 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 the
Attachment 1 hereto, (ii) in transit to such locations or
(iii) in transit to a third party purchaser which will become
obligated on a Receivable to the Obligor upon receipt. Except
for Equipment and Inventory referred to in clauses (ii) and
(iii) of the preceding sentence, the Obligor 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.
(e) The Obligor 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 the
Attachment 1 hereto.
(f) The Obligor has delivered to Collateral 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 the Obligor.
(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 the Obligor is validly
existing and is in full force and effect. The Obligor 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.
ARTICLE 5
COVENANTS
Section 5.1. Covenants. The Obligor hereby covenants and agrees that:
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(a) The Obligor, at the Obligor's expense, shall promptly procure,
execute and deliver to Collateral Agent all documents,
instruments and agreements and perform all acts which are
necessary or desirable , or which Collateral Agent may
reasonable request, to establish, maintain, preserve, protect
and perfect the Collateral, the Lien granted to Collateral
Agent therein and the first priority of such Lien or to enable
Collateral Agent to exercise and enforce its rights and
remedies hereunder with respect to any Collateral. Without
limiting the generality of the preceding sentence, the Obligor
shall (i) procure, execute and deliver to Collateral Agent all
stock powers, endorsements, assignments, financing statements
and other instruments of transfer requested by Collateral
Agent, (ii) deliver to Collateral 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 Collateral Agent in any Collateral consisting of
investment property (including taking the actions required by
subparagraph 5.1(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 Collateral Agent).
(b) The Obligor 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.
(c) Without ninety (90) days' prior written notice to Collateral
Agent, the Obligor shall not (i) change the Obligor's name or
place of business (or, if the Obligor has more than one place
of business, its chief executive office), or the office in
which the Obligor'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 offices set forth in item 2 of
Attachment 1 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 1.
(d) For each deposit account maintained by the Obligor, the
Obligor 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 2 hereto (or in any other
form acceptable to Collateral Agent in its sole discretion)
and (ii) shall use its best efforts to cause the Depositary
Bank to execute and deliver to Collateral Agent an
Acknowledgement and Agreement in the form set forth in such
Notice of Security Interest. Without ten (10) days prior
written notice to Collateral Agent, the Obligor shall not
establish any deposit account not set forth in item 16 of
Attachment 1 hereto.
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(e) For each securities account and commodity account maintained
by the Obligor, the Obligor 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 3 hereto and (ii)
cause the Intermediary to execute and deliver to Collateral
Agent an Acknowledgement and Agreement in the form set forth
in such Notice of Security Interest (or in any other form
acceptable to Collateral Agent in its sole discretion).
Without thirty (30) days prior written notice to Collateral
Agent, the Obligor shall not establish any securities account
or commodity account not set forth in item 14 of Attachment 1
hereto.
(f) The Obligor shall deposit, or cause to be deposited, all
remittances, cheques and other funds (in whatever form)
received with respect to Receivables to a deposit account for
which the Obligor has compiled with subparagraph 5(e) above
and in which Collateral 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.
(g) The Obligor shall appear in and defend any action or
proceeding which may affect its title to or Collateral Agent's
interest in the Collateral.
(h) If Collateral Agent gives value to enable the Obligor to
acquire rights in or the use of any Collateral, shall use such
value for such purpose.
(i) The Obligor shall keep separate, accurate and complete records
of the Collateral and shall provide Collateral Agent with such
records and such other reports and information relating to the
Collateral as Collateral Agent may reasonably request from
time to time.
(j) The Obligor shall not surrender or lose possession of (other
than to Collateral 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, not withstanding any provision of the
Restated Credit Agreement, the Obligor shall keep the
Collateral free of all Liens except Permitted Liens.
(k) The Obligor shall type, print or stamp conspicuously on the
fact of all original copies of all Collateral consisting of
chattel paper and documents not in the possession of
Collateral Agent a legend satisfactory to Collateral Agent
indicating that such chattel paper is subject to the security
interest granted hereby.
(l) The Obligor shall collect, enforce and receive delivery of the
Receivables in accordance with past practice unless otherwise
notified by Collateral Agent after the occurrence and during
the continuance of an Event of Default.
(m) The Obligor shall comply with all material Requirements of Law
applicable to the Obligor which relate to the production,
possession, operation, maintenance and control of the
Collateral.
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(n) The Obligor shall (i) maintain and keep in force insurance of
the types and in amounts customarily carried from time to time
while any obligations remain outstanding in its line of
business, including fire, public liability, property damage
and worker's compensation, such insurance to be carried with
companies and in amounts satisfactory to Collateral Agent,
(ii) deliver to Collateral Agent from time to time, as
Collateral Agent may request, schedules setting forth all
insurance then in effect, and (iii) deliver to Collateral
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. Collateral Agent shall be named as additional insured
or additional loss payee, as appropriate, on all liability and
property insurance of the Obligor and such policies shall
contain such additional endorsements specified in Attachment 4
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 the
Obligor. All proceeds of any property insurance paid after the
occurrence and during the continuance of an Event of Default
shall be paid to Collateral 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 the Obligor.
(o) The Obligor will keep its Collateral in good order and repair,
ordinary wear and tear excepted, and will not use the same in
violation of law or any policy of insurance therein. The
Collateral Agent, or its designee, may inspect the Collateral
at any reasonable time, wherever located. The Obligor will pay
promptly when due all taxes, assessments, governmental charges
and levies upon the Collateral or incurred in connection with
the use or operation of such Collateral or incurred in
connection with this security agreement except to the extent
otherwise expressly permitted by the Restated Credit
Agreement. The Obligor operates and will continue to operate
its business in compliance with all applicable provisions of
federal, provincial and local statutes and regulations dealing
with the control, shipment, storage or disposal of hazardous
materials or substances, except where a failure to so comply
would not have a Material Adverse Effect (as defined in the
Restated Credit Agreement).
(p) The Obligor will grant to the Collateral Agent, for the
benefit of the Secured Creditors, security interests and
mortgages in such assets and properties of the Obligor as are
not covered hereunder or as may be requested from time to time
by the Collateral Agent pursuant to documentation reasonably
satisfactory in form and substance to the Collateral Agent
constituting valid and enforceable perfected security
interests superior to and prior to the rights of all third
persons and subject to no other liens. Immediately upon the
request of the Collateral Agent, the Obligor shall furnish the
Collateral Agent in writing the description of all
Intellectual Property or applications for Intellectual
Property of the Obligor. In addition, the Obligor shall
deliver to the Collateral Agent a copy of the certificate of
registration of, or application for, such Intellectual
Property with a Confirmation of Security Interest in the form
of Schedule "A" in respect of such Intellectual Property
confirming the assignment for security of such Intellectual
J-II-13
<PAGE>
Property to the Collateral Agent hereunder and shall
immediately make all such filings, registrations and
recordings as are necessary or appropriate to perfect the
Security Interest granted to the Collateral Agent in the
Intellectual Property.
(q) The Obligor will make, execute, endorse, acknowledge, file
and/or deliver, or cause to be made, executed, endorsed,
acknowledged, filed or delivered, to the Collateral Agent from
time to time such vouchers, invoices, scheduled, confirmatory
assignments, conveyances, financing statements, transfer
endorsements, powers of attorney, certificates, real property
surveys, reports and other assurances or instruments and take
such further steps relating to the Collateral or any other
property or assets of the Obligor as the Collateral Agent may
reasonably require. The Obligor will cause to be delivered to
the Collateral Agent such opinions of counsel, title insurance
and other related documents as may be reasonable requested by
the Collateral Agent to assure themselves that this Section
5.1 has been complied with.
ARTICLE 6
GENERAL
Section 6.1. Notices. Except as otherwise provided herein, all notices,
requests, demands, consents, instructions or other communications to or upon the
Collateral Agent or the Obligor 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 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:
Collateral 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
Obligor: 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
J-II-14
<PAGE>
Section 6.2. Discharge. The Security Interest shall be discharged upon,
but only upon, (i) full payment and performance of the Secured Obligations, and
(ii) the Collateral Agent and the Secured Creditors having no obligations under
the Credit Documents. Upon discharge of the Security Interest and at the request
and expense of the Obligor, the Collateral Agent shall execute and deliver to
the Obligor such releases and discharges as the Obligor may reasonably require
and the Collateral Agent shall redeliver to the Obligor, or as the Obligor may
otherwise direct the Collateral Agent, any Collateral in its possession.
Section 6.3. No Merger. This security agreement shall not operate by
way of merger of any of the Secured Obligations and no judgment recovered by the
Collateral Agent or any of the Secured Creditors shall operate by way of merger
of, or in any way affect, the Security Interest, which is in addition to, and
not in substitution for, any other security now or hereafter held by the
Collateral Agent and the Secured Creditors in respect of the Secured
Obligations.
Section 6.4. Further Assurances. The Obligor shall from time to time,
whether before or after the Security Interest shall have become enforceable, do
all acts and things and execute and deliver all transfers, assignments and
instruments as the Collateral Agent may reasonably require for (i) protecting
the Collateral, (ii) perfecting the Security Interest, and (iii) exercising all
powers, authorities and discretions conferred upon the Collateral Agent. The
Obligor shall, from time to time after the Security Interest has become
enforceable, do all acts and things and execute and deliver all transfers,
assignments and instruments as the Collateral Agent may require for facilitating
the sale or other disposition of the Collateral in connection with its
realization.
Section 6.5. Supplemental Security. This security agreement is in
addition and without prejudice to and supplemental to all other security now
held or which may hereafter be held by the Collateral Agent or the Secured
Creditors.
Section 6.6. Overdue Amounts. Until paid, all amounts due and payable
by the Obligor hereunder shall be a debt secured by the Collateral and shall
bear, whether before or after judgment, interest at the rate of interest for
overdue principal set forth in the Restated Credit Agreement.
Section 6.7. Successors and Assigns. This security agreement shall be
binding upon the Obligor, its successors and assigns, and shall enure to the
benefit of the Collateral Agent, the Secured Creditors and their respective
successors and assigns. All rights of the Collateral Agent shall be assignable
and in any action brought by an assignee to enforce any such right, the Obligor
shall not assert against the assignee any claim or defence which the Obligor now
has or hereafter may have against the Collateral Agent or any of the Secured
Creditors.
Section 6.8. Severability. If any provision of this security agreement
is deemed by any court of competent jurisdiction to be invalid or void, the
remaining provisions shall remain in full force and effect.
Section 6.9. Waivers, etc. No amendment of this security agreement and
no consent or waiver by the Collateral Agent or the Secured Creditors in respect
hereof shall be effective unless made in writing and signed by an authorized
officer of the Collateral Agent and then such
J-II-15
<PAGE>
amendment, consent or waiver shall be effective only in the specific instance
and for the specific purpose for which given. Any such amendment shall be
effective only if also signed by the Obligor. No failure or delay on the part of
the Collateral Agent or the Secured Creditors in exercising a right under this
security agreement shall operate as a waiver of, or impair, any right of the
Collateral Agent or the Secured Creditors however created. No single or partial
exercise of a right shall preclude any further exercise of such right or the
exercise of any other right.
Section 6.10. Governing Law. This security agreement shall be governed
by and interpreted and enforced in accordance with the laws of the Province of
Ontario and the federal laws of Canada applicable therein.
Section 6.11. Arbitration. (i) This Section 6.11 concerns the
resolutions of any controversies or claims between or among the Obligor, any
Bank and the Collateral Agent, including but not limited to those that arise
from:
(A) This security agreement or any other Credit Document
to which the Obligor is a party;
(B) Any violation of this security agreement or any other
Credit Document to which the Obligor is a party; or
(C) Any claims for damages resulting from any business
conducted between the Obligor and any Bank or the
Collateral Agent, including claims for injury to
persons, property or business interests.
(i) At the request of the Obligor, any Bank or the Collateral 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.
(ii) 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.
(iii) 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.
(iv) If there is a dispute as to whether an issue is arbitrable, the
arbitrators will have the authority to resolve any such dispute.
(v) The decision that results from an arbitration proceeding may be
submitted to any authorized court of law to be confirmed and enforced.
J-II-16
<PAGE>
(vi) 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,
the Obligor, each Bank and the Collateral 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) The Obligor, the Banks and the Collateral 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 the California Code
of Civil Procedure Sections 644 and 645.
(vii) This Section 6.11 does not limit the right of the Obligor, any
Bank or the Collateral 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.
J-II-17
<PAGE>
(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 the Obligor, any Bank or the
Collateral Agent, including the suing party, to submit the controversy
or claim to arbitration.
IN WITNESS WHEREOF the Obligor and the Collateral Agent have caused
this security agreement to be executed by their duly authorized
officers as of the date first above written.
BELL MICROPRODUCTS CANADA-
TENEX DATA ULC
By: ___________________________________
Authorized Signing Officer
CALIFORNIA BANK & TRUST as
Collateral Agent
By: ___________________________________
Authorized Signing Officer
J-II-18
<PAGE>
SCHEDULE A
FORM OF CONFIRMATION OF SECURITY INTEREST IN
INTELLECTUAL PROPERTY
WHEREAS:
(A) Bell Microproducts Canada-Tenex ULC (the "Debtor"), a corporation
incorporated and existing under the laws of the Province of Nova Scotia
with offices at o, is the owner of the
[trade-marks/patents/copyrights/industrial designs] set forth in
Exhibit A hereto, the registrations and applications for the
[trade-marks/patents/copyrights/industrial designs] identified therein
and the underlying goodwill associated with such
[trade-marks/patents/copyrights/industrial designs] (collectively, the
"[Trade-Marks/ Patents/Copyrights/Industrial Designs]"); and
(B) California Bank & Trust, as Collateral Agent for certain lending
institutions (the "Collateral Agent"), a national banking association
with offices at o, has entered into an agreement with the Debtor, as
reflected by a separate document entitled the "Security Agreement"
dated as of the ______ day of April, 1998 by which the Debtor granted
to the Collateral Agent, a security interest in certain property,
including the [Trade-Marks/Patents/Copyrights/Industrial Designs], in
consideration of the provision of certain credit facilities to the
Debtor;
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are acknowledged and in accordance with
the terms and obligations set forth in the Security Agreement,
the Debtor confirms the grant to the Collateral Agent of a
security interest in and to the
[Trade-Marks/Patents/Copyrights/Industrial Designs].
DATED at Boston on this ______ day of November, 1998.
BELL MICROPRODUCTS
CANADA-TENEX DATA ULC
By: ___________________________________
Authorized Signing Officer
DATED at _________________on this ______ day of ______, 1998, before me
appeared and the person who signed this instrument, who acknowledged
that he signed it as a free act on his behalf or on behalf of the
corporation identified and referred to herein as the Debtor.
_____________________________________________________
Signature of Notary Public
J-II-[A]-1
<PAGE>
ATTACHMENT 1
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-- No.
Tenex 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-II-[1]-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-II-[1]-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.
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):
State of State in which
Vehicle Registration Based
-------------------- ------------------ ----------------------
None.
J-II-[1]-3
<PAGE>
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):
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
Bell-Tenex:
a. Patents Registration No.
------------------------------- ------------------------------
None.
b. Copyrights Registration No.
------------------------------- ------------------------------
None.
c. Trademarks,
Trade Names and
Service Marks Registration No.
------------------------------- --------------------------
None.
<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-II-[1]-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-II-[1]-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>
<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):
<CAPTION>
Lessor
Description of Equipment Lessor Address
----------------------------------- ------------------------------- -----------------------------
<S> <C> <C>
None.
</TABLE>
<TABLE>
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):
<CAPTION>
Description of Equipment Secured Party Secured Party
Address
----------------------------------- ------------------------------- ------------------------------
<S> <C> <C>
None.
</TABLE>
25. The most recent federal income tax returns of Bell-Tenex
that have been audited by the IRS are: Not Applicable.
<TABLE>
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-II-[1]-6
<PAGE>
<CAPTION>
Assessing Authority Amount Description
-------------------------------- ------------------------------ ---------------------------------
<S> <C> <C>
None.
</TABLE>
<TABLE>
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.):
<CAPTION>
Asserting Authority Amount Description
-------------------------------- ----------------------------- ---------------------------------
<S> <C> <C>
None.
</TABLE>
<TABLE>
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):
<CAPTION>
Claimant Amount Description
-------------------------------- ------------------------------ ---------------------------------
<S> <C> <C>
None.
</TABLE>
J-II-[1]-7
<PAGE>
ATTACHMENT 2
TO SECURITY AGREEMENT
NOTICE OF SECURITY INTEREST
IN
DEPOSIT ACCOUNT
___________ __, [19][20]_
[Name of Depositary Bank]
[Address of Depositary Bank]
___________________________________
___________________________________
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, and that this security
interest supercedes any previous security interest granted to Administrative
Agent in any deposit accounts maintained by the Borrower with you:
Account Depositor's Account
Number Name Type
---------------- ---------------- ----------------
---------------- ---------------- ----------------
---------------- ---------------- ----------------
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-II-[2]-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-II-[2]-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-II-[2]-3
<PAGE>
ATTACHMENT 3
TO SECURITY AGREEMENT
NOTICE OF SECURITY INTEREST
IN
[SECURITIES][COMMODITY] ACCOUNT
__________ __, [19][20]__
[Name of Intermediary]
[Address of Intermediary]
_____________________________
_____________________________
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:
Account Account Holder's Account
Number Name Type
------ ---- ----
---------------- ---------------- ----------------
---------------- ---------------- ----------------
---------------- ---------------- ----------------
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-II-[3]-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: _____________________________
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<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: _____________________________
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<PAGE>
ATTACHMENT 4
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-II-[4]-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-II-[4]-2
