FIRST AMENDMENT TO THE
 
SECURITIES PURCHASE  AGREEMENT
 

 
This First Amendment to the Securities Purchase Agreement (the “First
Amendment”), dated as of February 24, 2009, by and among The Teachers’
Retirement System of Alabama (“Teachers’ Retirement System”), and The Employees’
Retirement System of Alabama (“Employees’ Retirement System”), (each, an
“Investor” and collectively, the “Investor”), and Bell Microproducts Inc., a
California corporation (the “Company”).
 
R E C I T A L S
 
A.           Company and the Investors are parties to that certain Securities
Purchase Agreement, dated as of October 2, 2006 (the “Securities Purchase
Agreement”), pursuant to which the Investors purchased senior subordinated notes
in the aggregate original principal amount of $35,000,000 from the Company.
 
B.           Investors are willing to modify certain terms with respect to the
Securities Purchase Agreement in the manner requested by Company, subject,
however, to the terms, conditions and limitations set forth herein.
 
C.           The parties have had the opportunity to consult with, and obtain
the representation and advice of, their respective legal counsel with regard to
the terms and conditions of this Agreement, and each party has had the
opportunity to participate fully in the drafting of this Agreement.
 
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, and intending to be legally bound, the parties
hereto agree as follows:
 
1. Defined Terms.  All terms used in this First Amendment shall have the same
meaning as used in the Securities Purchase Agreement.
 
2. Deletion of “Net Worth.”  The definition of the term “Net Worth” set forth in
Section 1.1 of the Securities Purchase Agreement is hereby deleted in its
entirety.
 
3. Additional Defined Terms.  The following defined terms shall be added to
Section 1.1 of the Securities Purchase Agreement:
 
“‘Consolidated EBITDA’ shall mean, as to any Person, with respect to any period,
an amount equal to:  (a) the Net Income of such Person and its Subsidiaries for
such period on a consolidated basis determined in accordance with GAAP, plus (b)
depreciation, amortization and other non-cash charges (including, but not
limited to, imputed interest and deferred compensation) of such Person and its
Subsidiaries for such period (to the extent deducted in the computation of Net
Income), all in accordance with GAAP, plus (c) Interest Expense of such Person
and its Subsidiaries for such period (to the extent deducted in the computation
of Net Income), plus (d) the provision for Federal, State, local and foreign
income taxes payable by such Person or its Subsidiaries for such period (to the
extent deducted in the computation of Net Income), plus (e) restructuring
charges for the downsizing of the business of Company and its Subsidiaries in an
aggregate sum not to exceed (i) $3,000,000 for periods ending on or before
September 30, 2009, or (ii) for periods ending after September 30, 2009, the sum
of $3,000,000 minus the amount of such restructuring charges incurred after
September 30, 2008, but prior to the beginning of such period.
 
“‘Fixed Charge Coverage Ratio’ shall mean, as to any Person for any period, the
ratio of (a) the Consolidated EBITDA of such Person during such period, divided
by (b) the sum of (i) taxes paid or required to be paid in cash by such Person
or its Subsidiaries during such period, (ii) Interest Expense paid or required
to be paid in cash by such Person or its Subsidiaries during such period,
(iii) capital expenditures made by such Person or its Subsidiaries during such
period (including obligations incurred during such period under Capital Leases),
as determined in accordance with GAAP, and (iv) principal payments made or
required to be made by such Person or its U.S.-based Subsidiaries during such
period on account of any Indebtedness.
 
“‘Interest Expense’ shall mean, for any period, as to any Person and its
Subsidiaries, all of the following as determined in accordance with GAAP, total
interest expense, whether paid or accrued (including the interest component of
any obligations under Capital Leases for such period), including, without
limitation, all bank fees, commissions, discounts and other fees and charges
owed with respect to letters of credit, banker’s acceptances or similar
instruments.
 
“‘Net Income’ shall mean, with respect to any Person, for any period, the
aggregate of the net income (loss) of such Person and its Subsidiaries, on a
consolidated basis, for such period (excluding to the extent included therein
any extraordinary or one-time gains or losses) after deducting all charges which
should be deducted before arriving at the net income (loss) for such period and
after deducting taxes for such period, all as determined in accordance with
GAAP, provided, that, (a) the net income of any Person that is not a
wholly-owned Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid or payable to such Person or a wholly-owned Subsidiary of
such Person; (b) the effect of any change in accounting principles adopted by
such Person or its Subsidiaries after the date hereof shall be excluded; and (c)
the net income (if positive) of any wholly-owned Subsidiary to the extent that
the declaration or payment of dividends or similar distributions by such
wholly-owned Subsidiary to such Person or to any other wholly-owned Subsidiary
of such Person is not at the time permitted by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule of
government regulation applicable to such wholly-owned Subsidiary shall be
excluded.”
 
“New Senior Credit Agreement” means that certain Amended and Restated Loan and
Security Agreement among the Company, Bell Microproducts – Future Tech, Inc.,
Rorke Data, Inc., Bell Microproducts Canada – Tenex Data ULC, Total Tec Systems,
Inc. and Forefront Graphics US Inc., as borrowers, Bell Microproducts Canada
Inc., and Bell Microproducts Mexico Shareholder, LLC, as guarantors, Wachovia
Capital Finance Corporation (Western) (“Wachovia Capital Finance”), as
Administrative Agent, Bank of America, N.A., as Co-Agent (together with Wachovia
Capital Finance, the “Senior Bank Agents”), and the other lenders named therein,
dated as of September 29, 2008, as the same may be amended from time to time.
 
4. Modification of Affirmative Covenants.  Section 6.1(a)(iii) of the Securities
Purchase Agreement is hereby amended to read, in its entirety, as follows:
 
“(iii)                      Contemporaneously with the quarterly and year-end
financial statements required by the foregoing clauses (i) and (ii), a
certificate of the president or chief financial officer of the Company, in form
and substance and in such detail as the Investor may reasonably request which
sets forth the calculations conducted to verify that the Company is in
compliance with the provisions of Section 6.2(g) hereof, and stating that no
Event of Default and no Default has occurred and is continuing, or, if any such
Event of Default or Default has occurred and is continuing, a statement as to
the nature thereof and what action the Company proposes to take with respect
thereto;”
 
5. Modification of Negative Covenants.  If and to the extent that the Company
violated Section 6.2(g) of the Securities Purchase Agreement, as in effect
immediately prior to the execution of this Amendment, for the quarter ended
December 31, 2008, the Investors hereby waive such violation.  Section 6.2(g) of
the Securities Purchase Agreement is hereby amended to read, in its entirety, as
follows:
 
“(g)           Company and its Subsidiaries, on a consolidated basis, shall
achieve, when measured for each fiscal period of Company set forth below, a
Fixed Charge Coverage Ratio of not less than the ratio set forth opposite such
fiscal period:
 

 
Fiscal Period
Minimum
Fixed Charge Coverage Ratio
For the 3 month period ending March 31, 2009
0.35 to one
For the 3 month period ending June 30, 2009
0.75 to one
For the 3 month period ending September 30, 2009
1.10 to one
For the 6 month period ending December 31, 2009
1.10 to one
For the 9 month period ending March 31, 2010
1.10 to one
For each 12 month period ending on the last day of each fiscal quarter after
March 31, 2010
1.10 to one”

6. Amendment Fee.  On the date first stated above, the Company shall pay an
amendment fee to the Investors, in the aggregate amount of $46,499.67 (the
“Amendment Fee”).
 
7. Conditions to Effectiveness.  The effectiveness of the Investors’ agreements
contained in this First Amendment are subject to the satisfaction of the
following conditions:
 
(a) Executed Documents. Each of the Investors shall have received fully executed
copies of this Amendment, in form and substance satisfactory to it and its
counsel.
 
(b) Consent of Holders of Senior Indebtedness. The Company shall have obtained,
and provided to the Investors (i) the consent of the holders of the Senior
Indebtedness outstanding under the New Senior Credit Agreement (or, if
authorized to do so, the Senior Agents) to the amendment of the Securities
Purchase Agreement in the manner contemplated herein, and (ii) the waiver of the
prohibitions and restrictions applicable to this Amendment contained in the New
Senior Credit Agreement (including, without limitation, the provisions of
Section 9.9(c)(v) thereof).
 
(c) Payment of Fees and Expenses. The Company shall have paid the Amendment Fee,
together with the reasonable legal fees and expenses of the Investors’ legal
counsel incurred in connection with this Amendment.
 
(d) Pledge Agreements.  The Company shall have provided to the Investors a fully
executed and completed stock pledge agreement, pledging to the Investors, as
additional security for the Obligations, a second priority lien (subject only to
the holders of Senior Indebtedness) in and to all of the issued and outstanding
capital stock now owned by Borrower in each of the Subsidiaries listed on
Exhibit A attached hereto (the “Pledge Agreement”).
 
(e) No Default.  No Default or Event of Default under the Securities Purchase
Agreement shall exist.
 
(f) Representations and Warranties; Performance of Covenants.  The
representations and warranties of the Company contained herein and in the
Securities Purchase Agreement shall be correct in all material respects and the
Company shall have performed each of the covenants on its part to be performed
under the Securities Purchase Agreement.
 
8. Representations and Warranties.  The Company hereby represents and warrants
to and for the benefit of the Investors as follows:
 
(a) The execution, delivery and performance by the Company of this Amendment and
the performance by the Company of the Securities Purchase Agreement, as amended
hereby, (i) have been duly authorized by all requisite corporate action on the
part of the Company, (ii) do not require the consent or approval of any
Governmental Authority or any third party, (iii) do not and will not violate (A)
any provision of any law, statute, rule or regulation or the certificate of
incorporation or by-laws of the Company, (B) any order of any court,
administrative body or arbitrator or any rule regulation or order of any
Governmental Authority binding upon the Company or any of its Subsidiaries, or
any of their respective properties, or (C) any provision of any loan or credit
agreement, indenture, mortgage or other agreement or instrument to which the
Company or any of its Subsidiaries is a party or by which any of them or any of
their respective properties are or may be bound, and (iv) do not and will not
result in any breach of, constitute (alone or with notice or lapse of time or
both) a default under or trigger to any right of acceleration under, any such
loan or credit agreement, indenture, mortgage or other agreement or instrument.
 
(b) As of the date hereof, and after giving effect to this Amendment, no Default
or Event of Default has occurred and is continuing under the Securities Purchase
Agreement and the Notes.
 
(c) This Amendment, and the Securities Purchase Agreement as amended hereby,
constitute legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, except such enforceability
may be limited by (i) applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors’ rights
generally and (ii) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
 
9. Miscellaneous.
 
(a) The Company shall pay all reasonable fees and expenses, including reasonable
attorneys’ fees and expenses, incurred by the Investors in connection with the
transactions contemplated by this Amendment.
 
(b) No term, covenant, agreement or condition of this Amendment or the
Securities Purchase Agreement as amended hereby may be amended or waived unless
such amendment or waiver is in writing and is signed by the Company and each of
the Investors. No failure or delay by any Investor in exercising any right
hereunder, or under the Securities Purchase Agreement as amended hereby, shall
operate as a waiver thereof or of any other right nor shall any single or
partial exercise of any such right preclude any other further exercise thereof
or of any other right. Unless otherwise specified in such waiver or consent, a
waiver or consent given hereunder shall be effective only in the specific
instance and for the specific purpose for which given.
 
(c) This Amendment is intended as a separate agreement between the Company, on
the one hand, and each of the Investors, on the other hand.  This Amendment
shall be construed together with and as part of the Securities Purchase
Agreement and the Notes.  Except as expressly amended pursuant to this
Amendment, the terms, covenants and conditions contained in the Securities
Purchase Agreement and the Notes are hereby ratified and confirmed in all
respects and each of the Notes and, as amended hereby, the Securities Purchase
Agreement, shall remain in full force and effect.  Any and all notices,
requests, certificates and other instruments executed and delivered subsequent
to the date of the effectiveness of this Amendment may refer to the Securities
Purchase Agreement without making specific reference to this Amendment, and all
such references nevertheless shall be deemed to include, unless the context
otherwise requires, this Amendment.
 
(d) This Amendment, and the Securities Purchase Agreement as amended hereby,
shall be governed by and construed in accordance with the laws of the State of
Alabama, without regard to its conflicts of laws principles.
 
(e) This Agreement may be executed in any number of identical counterparts, any
set of which signed by all the parties hereto shall be deemed to constitute a
complete, executed original for all purposes.
 

 
(The signature page follows)
 

 
 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the Company and the Investors have caused this First
Amendment to the Securities Purchase Agreement to be executed as of the day and
year first above written.
 
 

 THE COMPANY:   BELL MICROPRODUCTS INC.          
 
By:
/s/ W. Donald Bell         Name: W. Donald Bell        Title:  President and
Chief Executive Officer          

 THE INVESTORS:
THE TEACHERS’ RETIREMENT SYSTEM OF ALABAMA
         
 
By:
/s/ David G. Bronner        Name: David G. Bronner        Title:  Chief
Executive Officer          

 
THE EMPLOYEES’ RETIREMENT SYSTEM OF ALABAMA
         
 
By:
/s/ David G. Bronner        Name:  David G. Bronner        Title: Chief
Executive Officer          

 
 

--------------------------------------------------------------------------------

 
Exhibit A
 
Subsidiaries of the Company
 
Name
Jurisdiction of Organization
 Bell Microproducts Brazil Holdings, LLC
Minnesota
Bell Microproducts Canada Inc.
California
Bell Microproducts Canada – Tenex Data ULC
Nova Scotia
Bell Microproducts Europe Inc.
California
Bell Microproducts Funding Corporation
Delaware
Bell Microproducts – Future Tech, Inc.
California
Bell Microproducts Mexico Shareholder, LLC
Florida
Forefront Graphics US Inc.
Ontario
New ProSys Corp.
Georgia
Now Direct, Inc.
Nevada
ProSys Information Systems, Inc.
Georgia
Rorke Data, Inc.
Minnesota
Total Tec Systems, Inc.
New Jersey