bm20090226_8k-ex101.htm


    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