Exhibit 10.1
AMENDMENT NUMBER THREE TO CREDIT AGREEMENT
          THIS AMENDMENT NUMBER THREE TO CREDIT AGREEMENT (this “Amendment”),
dated as of April 11, 2008, is entered into by and among the lenders identified
on the signature pages hereof (such lenders, together with their respective
successors and permitted assigns, are referred to hereinafter each individually
as a “Lender” and collectively as the “Lenders”), WELLS FARGO FOOTHILL, INC., a
California corporation, as the arranger and administrative agent for the Lenders
(in such capacity, together with its successors and assigns in such capacity,
“Agent”), BELL INDUSTRIES, INC., a California corporation (“Parent”), and each
of Parent’s Subsidiaries identified on the signature pages hereof (such
Subsidiaries, together with Parent are referred to hereinafter each individually
as a “Borrower”, and individually and collectively, jointly and severally, as
the “Borrowers”), in light of the following:
WITNESSETH
          WHEREAS, the Borrowers, the Lenders, and Agent are parties to that
certain Credit Agreement, dated as of January 31, 2007 (as amended, restated,
supplemented, or otherwise modified from time to time, the “Credit Agreement”);
          WHEREAS, the Borrowers have informed Agent that Parent expects to sell
substantially all of the assets purchased by Parent in connection with the
SkyTel Acquisition or which are otherwise used by the SkyTel Group (the “SkyTel
Assets”);
          WHEREAS, the Borrowers have requested that the Agent and Lenders make
certain amendments to the Credit Agreement; and
          WHEREAS, upon the terms and conditions set forth herein, Agent and
Lenders are willing to accommodate the Borrowers’ requests.
          NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. Defined Terms. Capitalized terms used herein and not otherwise defined herein
shall have the meanings ascribed to them in the Credit Agreement, as amended
hereby.
2. Initial Amendments to Credit Agreement. Effective upon the satisfaction of
the conditions precedent set forth in Section 4 hereof:
     (a) Schedule 1.1 of the Credit Agreement hereby is amended and modified by
amending and restating, or adding (as applicable) the following definitions in
the appropriate alphabetical order:
          “Adjusted EBITDA” means, with respect to any fiscal period, Parent’s
and its’ Subsidiaries’ consolidated net earnings (or loss), minus extraordinary
gains and interest income, plus interest expense, income taxes, depreciation and
amortization, and all non-cash charges for such period, and excluding (x) any
SkyTel EBITDA included in the calculation thereof and (y)

 

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any gain or loss resulting from the consummation of the SkyTel Disposition in
the calculation thereof, in each case, determined on a consolidated basis in
accordance with GAAP.
          “Base Rate Margin” means (a) from the Closing Date through and
including April 30, 2008, 0.75 percentage points, and (b) from May 1, 2008 and
thereafter, 1.25 percentage points.
          “LIBOR Rate Margin” means (a) from the Closing Date through and
including April 30, 2008, 2.25 percentage points, and (b) from May 1, 2008 and
thereafter, 2.75 percentage points.
          “SkyTel Assets” means those assets acquired by Parent in connection
with the SkyTel Acquisition or which are otherwise used by the SkyTel Group.
          “SkyTel Disposition” means the sale by Parent of the SkyTel Assets on
terms and conditions acceptable to Agent on or before July 15, 2008.
          “SkyTel EBITDA” means, with respect to any fiscal period, Parent’s
consolidated net earnings (or loss), minus extraordinary gains and interest
income, plus interest expense, income taxes, depreciation and amortization, and
all non-cash charges for such period, in each case, to the extent attributable
to the results of operations of the SkyTel Group and determined on a
consolidated basis in accordance with GAAP.
     (b) Section 6.16(a) of the Credit Agreement hereby is amended and restated
in its entirety to read as follows:
          “(a) Minimum Adjusted EBITDA.
               Fail to achieve Adjusted EBITDA, measured on a quarter-end basis,
of at least the required amount set forth in the following table for the
applicable period set forth opposite thereto:

          Applicable Amount   Applicable Period $ (9,000,000 )  
For the 12 month period ending December 31, 2007
$ (1,234,000 )  
For the 3 month period ending March 31, 2008
$ (1,246,000 )  
For the 6 month period ending June 30, 2008
$ (200,000 )  
For the 9 month period ending September 30, 2008
$ (839,000 )  
For the 12 month period ending December 31, 2008
$ 10,000,000    
For the 12 month period ending March 31, 2009 and for each 12 month period
ending as of the last day of each fiscal quarter thereafter

 

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Notwithstanding the foregoing, should (i) the SkyTel Disposition not occur on or
before July 15, 2008 or (ii) Parent advise the Agent that the SkyTel Disposition
will not take place, then within 15 days of the earlier to occur of the events
described in subclauses (i) and (ii) above, Borrower shall execute and deliver
to Agent and the Lenders an amendment to the Credit Agreement that is
satisfactory to Agent in its sole discretion and that, among other things,
(A) replaces references to “Adjusted EBITDA” appearing in the heading and text
of this Section 6.16(a) with the word “EBITDA”, (B) amends this Section 6.16(a)
to re-set minimum EBITDA levels for (i) the 3 month period ending March 31,
2008, (ii) the 6 month period ending June 30, 2008, (iii) the 9 month period
ending September 30, 2008 and (iv) the 12 month period ending December 31, 2008,
based on levels that Agent determines in its sole discretion, and (C) requires
Borrowers to comply with such amended minimum EBITDA covenant for the periods
and at the levels described in subsection (B) above.”
     (c) Schedule 5.3 attached to the Credit Agreement hereby is amended by
adding the phrase “(and solely with respect to the 2007 fiscal year of Parent,
by no later than April 15, 2008)” immediately after the words “within 90 days
after the end of each of Parent’s fiscal years” appearing therein.
     (d) Schedule A-2 attached to the Credit Agreement hereby is replaced in its
entirety with Schedule A-2 attached hereto as Exhibit A.
3. Subsequent Amendment to Credit Agreement. Effective upon the satisfaction of
the conditions precedent set forth in Sections 4 and 5 hereof, Schedule 1.1 of
the Credit Agreement hereby is amended and modified by amending and restating
the following definition in its entirety to read as follows:
          “NY MDS Availability Block Amount” means (a) prior to the NY MDS Date,
$0, and (b) on and after the NY MDS Date, an amount equal to the greater of
(i) 50% of the NY MDS Net Cash Proceeds or (ii) (x) from the NY MDS Date through
and including July 31, 2008, $6,000,000, (y) from August 1, 2008 through and
including December 31, 2008, $3,500,000, and (z) from January 1, 2009 and
thereafter, $6,000,000.
4. Conditions Precedent to Amendment. The satisfaction of each of the following
shall constitute conditions precedent to the effectiveness of this Amendment and
each and every provision hereof:
     (a) Agent shall have received this Amendment, duly executed by the parties
hereto, and the same shall be in full force and effect.

 

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     (b) Agent shall have received an amendment to the Fee Letter, duly executed
and delivered by each party thereto and in form and substance reasonably
satisfactory to Agent, which shall be in full force and effect.
     (c) After giving effect to this Amendment, the representations and
warranties herein and in the Credit Agreement and the other Loan Documents shall
be true and correct in all respects on and as of the date hereof, as though made
on such date (except to the extent that such representations and warranties
relate solely to an earlier date).
     (d) No injunction, writ, restraining order, or other order of any nature
prohibiting, directly or indirectly, the consummation of the transactions
contemplated herein shall have been issued and remain in force by any
Governmental Authority against any Borrower, Agent, or any Lender.
     (e) After giving effect to this Amendment, no Default or Event of Default
shall have occurred and be continuing or shall result from the consummation of
the transactions contemplated herein.
     (f) The Borrowers shall pay concurrently with the closing of the
transactions evidenced by this Amendment, all fees, costs, expenses and taxes
then payable pursuant to Section 17.10 of the Credit Agreement.
5. Condition Precedent to Section 3 of Amendment. The satisfaction of the
following shall constitute the condition precedent to the effectiveness of the
provisions of Section 3 of this Amendment: on or before July 15, 2008, Agent
shall have received evidence satisfactory to it of the consummation of the
SkyTel Disposition on terms and conditions satisfactory to Agent in its
discretion.
6. Representations and Warranties. Each Borrower hereby represents and warrants
to Agent and the Lenders as follows:
     (a) After giving effect to this Amendment and subject to the effect of the
SkyTel Disposition and the sale of the SkyTel Assets, in each case on such terms
and conditions as may be satisfactory to Agent and the Lenders, the
representations and warranties in this Amendment, the Credit Agreement and the
other Loan Documents are true and correct in all respects on and as of the date
hereof, as though made on such date (except to the extent that such
representations and warranties relate solely to an earlier date).
     (b) The execution, delivery, and performance of this Amendment and of the
Credit Agreement, as amended by this Amendment, are within each Borrower’s
corporate powers, have been duly authorized by all necessary corporate action,
and are not in contravention of any law, rule, or regulation, or any order,
judgment, decree, writ, injunction, or award of any arbitrator, court, or
governmental authority, or of the terms of its charter or bylaws, or of any
contract or undertaking to which it is a party or by which any of its properties
may be bound or affected.

 

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     (c) This Amendment and the Credit Agreement, as amended by this Amendment,
constitute each Borrower’s legal, valid, and binding obligation, enforceable
against such Borrower in accordance with its terms.
     (d) This Amendment has been duly executed and delivered by each Borrower.
     (e) After giving effect to this Amendment, no Default or Event of Default
has occurred and is continuing on the date hereof or as of the date of the
effectiveness of this Amendment.
     (f) No injunction, writ, restraining order, or other order of any nature
prohibiting, directly or indirectly, the consummation of the transactions
contemplated herein has been issued and remains in force by any Governmental
Authority against any Borrower, Agent or any Lender.
     (g) This Amendment has been entered into without force or duress, of the
free will of each Borrower, and the decision of each Borrower to enter into this
Amendment is a fully informed decision and such Person is aware of all legal and
other ramifications of each decision.
     (h) It has read and understands this Amendment, has consulted with and been
represented by independent legal counsel of its own choosing in negotiations for
and the preparation of this Amendment, has read this Amendment in full and final
form, and has been advised by its counsel of its rights and obligations
hereunder.
7. Payment of Costs and Expenses. The Borrowers agree to pay all Lender Group
Expenses incurred in connection with the preparation, execution and delivery of
this Amendment and the review of all documents incidental thereto in accordance
with the terms of the Credit Agreement.
8. Choice of Law. This Amendment and the rights of the parties hereunder, shall
be governed by, and construed in accordance with, the laws of the State of
California applicable to contracts made and to be performed in the State of
California.
9. Amendments. This Amendment cannot be altered, amended, changed or modified in
any respect or particular unless each such alteration, amendment, change or
modification shall have been agreed to by each of the parties and reduced to
writing in its entirety and signed and delivered by each party.
10. Counterpart Execution. This Amendment may be executed in any number of
counterparts, all of which when taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Amendment by signing
any such counterpart. Delivery of an executed counterpart of this Amendment by
telefacsimile or electronic mail shall be equally as effective as delivery of an
original executed counterpart of this Amendment. Any party delivering an
executed counterpart of this Amendment by telefacsimile or electronic mail also
shall deliver an original executed counterpart of this Amendment, but the
failure to deliver

 

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an original executed counterpart shall not affect the validity, enforceability,
and binding effect of this Amendment.
11. Effect on Loan Documents.
     (a) The Credit Agreement, as amended hereby, and each of the other Loan
Documents shall be and remain in full force and effect in accordance with their
respective terms and hereby are ratified and confirmed in all respects. The
execution, delivery, and performance of this Amendment shall not operate, except
as expressly set forth herein, as a modification or waiver of any right, power,
or remedy of Agent or any Lender under the Credit Agreement or any other Loan
Document. The amendments set forth herein are limited to the specifics hereof,
shall not apply with respect to any facts or occurrences other than those on
which the same are based, and except as expressly set forth herein, shall
neither excuse any future non-compliance with the Loan Agreement, nor shall
operate as a waiver of any Default or Event of Default.
     (b) Upon and after the effectiveness of this Amendment, each reference in
the Credit Agreement to “this Agreement”, “hereunder”, “herein”, “hereof” or
words of like import referring to the Credit Agreement, and each reference in
the other Loan Documents to “the Credit Agreement”, “thereunder”, “therein”,
“thereof” or words of like import referring to the Credit Agreement, shall mean
and be a reference to the Credit Agreement as modified and amended hereby.
     (c) To the extent that any terms and conditions in any of the Loan
Documents shall contradict or be in conflict with any terms or conditions of the
Credit Agreement, after giving effect to this Amendment, such terms and
conditions are hereby deemed modified or amended accordingly to reflect the
terms and conditions of the Credit Agreement as modified or amended hereby.
     (d) This Amendment is a Loan Document.
     (e) Unless the context of this Amendment clearly requires otherwise,
references to the plural include the singular, references to the singular
include the plural, the terms “includes” and “including” are not limiting, and
the term “or” has, except where otherwise indicated, the inclusive meaning
represented by the phrase “and/or”.
12. Entire Agreement. This Amendment, and terms and provisions hereof, the
Credit Agreement and the other Loan Documents constitute the entire
understanding and agreement between the parties hereto with respect to the
subject matter hereof and supersedes any and all prior or contemporaneous
amendments or understandings with respect to the subject matter hereof, whether
express or implied, oral or written.
13. Integration. This Amendment, together with the other Loan Documents,
incorporates all negotiations of the parties hereto with respect to the subject
matter hereof and is the final expression and agreement of the parties hereto
with respect to the subject matter hereof.

 

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14. Ratification. Each Borrower hereby restates, ratifies and reaffirms each and
every term and condition set forth in the Credit Agreement and the Loan
Documents effective as of the date hereof and as amended hereby.
15. Severability. In case any provision in this Amendment shall be invalid,
illegal or unenforceable, such provision shall be severable from the remainder
of this Amendment and the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
[signature page follows]

 

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          IN WITNESS WHEREOF, the parties have entered into this Amendment as of
the date first above written.

            BELL INDUSTRIES, INC.,
a California corporation, as Borrower
      By:   /s/ Kevin J. Thimjon         Name:   Kevin J. Thimjon       
Title:   President and Chief Financial Officer        BELL INDUSTRIES, INC.,
a Minnesota corporation, as Borrower
      By:   /s/ Kevin J. Thimjon         Name:   Kevin J. Thimjon       
Title:   President and Chief Financial Officer   

[SIGNATURE PAGE TO AMENDMENT NUMBER THREE]

 

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            WELLS FARGO FOOTHILL, INC.,
a California corporation, as Agent and as a Lender
      By:   /s/ Daniel Whitwer         Name:   Daniel Whitwer        Title:  
Vice President     

[SIGNATURE PAGE TO AMENDMENT NUMBER THREE]

 

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Exhibit A
Schedule A-2
Authorized Persons
Clinton Coleman, Chief Executive Officer
Kevin Thimjon, Chief Financial Officer
Dan Johnson, Assistant Division Controller
Cathy George, Corporate Accounting Manager