SECONDAMENDMENT TO THE AMENDEDAND RESTATED CREDIT AGREEMENT

 

 

 

This Second Amendment to the Amended and Restated Credit Agreement (the “Second Amendment”), dated as of February 24, 2009, by and among The Teachers’ Retirement System of Alabama (“Teachers’ Retirement System”), The Employees’ Retirement System of Alabama (“Employees’ Retirement System”), Judicial Retirement Fund, PEIRAF-Deferred Compensation Plan, and Public Employees Individual Retirement Account Fund, (each, a “Lender” and collectively, the “Lenders”), Teacher’s Retirement System, as Agent for the Lenders (the “Agent”) and Bell Microproducts Inc., a California corporation (the “Borrower”).

 

 

A.           Borrower and the Lenders, including the Agent, are parties to that certain Amended and Restated Credit Agreement, dated as of June 30, 2008, as amended by the First Amendment thereto dated as of December 23, 2008 (the “Credit Agreement”).

 

B.           Borrower has requested that Lenders agree to modify certain terms contained in the Credit Agreement and Lenders are willing to do so, but only on the terms and subject to the 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 Second Amendment shall have the same meaning as used in the Credit Agreement.

 

2. Deletion of “Net Worth.”  The definition of the term “Net Worth” set forth in Section 1.1 of the Credit Agreement is hereby deleted in its entirety.

 

3. Additional Defined Terms.  The following defined terms shall be added to Section 1.1 of the Credit 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 Borrower 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.”

 

4. Modification of Affirmative Covenants.

 

(a) Section 6.1(a)(iii) of the Credit 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 Borrower, in form and substance and in such detail as the Agent may reasonably request which sets forth the calculations conducted to verify that the Borrower is in compliance with (A) the provisions of Section 6.2(g) hereof, and (B) the limitations on Indebtedness set forth in Sections 6.2 (a) and 6.2(h), 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 Borrower proposes to take with respect thereto;”

 

(b) Section 6.1(a)(vi) of the Credit Agreement is hereby amended to read, in its entirety, as follows:

 

“(vi)                      Notwithstanding any provision to the contrary contained in this Agreement, Borrower shall deliver to the Agent, for distribution to the Lenders, true, correct and complete copies of the items described in Section 6.1(a)(ii) hereof, (1) for the fiscal year ended December 31, 2006, on or prior to December 31, 2008, and (2) for the fiscal years ended December 31, 2007 and December 31, 2008, on or prior to June 30, 2009.”

 

5. Modification of Negative Covenants.  If and to the extent that Borrower violated Section 6.2(g) of the Credit Agreement, as in effect immediately prior to the execution of this Amendment, for the quarter ended December 31, 2008, the Lenders hereby waive such violation.  Section 6.2(g) of the Credit Agreement is hereby amended to read, in its entirety, as follows:

 

“(g)           Borrower and its Subsidiaries, on a consolidated basis, shall achieve, when measured for each fiscal period of Borrower set forth below, a Fixed Charge Coverage Ratio of not less than the ratio set forth opposite such fiscal period:

 

 

6. Amendment Fee.  On the date first stated above, Borrower shall pay an amendment fee to the Agent, for the ratable benefit of all of the Lenders, in the aggregate amount of $78,600.33 (the “Amendment Fee”).

 

7. Conditions to Effectiveness.  The effectiveness of the Lenders’ agreements contained in this Second Amendment are subject to the satisfaction of the following conditions:

 

(a) Executed Documents. Each of the Lenders and the Agent 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 Borrower shall have obtained, and provided to the Lenders and the Agent (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 Credit 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 Borrower shall have paid the Amendment Fee, together with the reasonable legal fees and expenses of the Lenders’ and Agent’s legal counsel incurred in connection with this Amendment.

 

(d) Pledge Agreements.  The Borrower shall have provided to the Agent, for the ratable benefit of the Lenders, a fully executed and completed stock pledge agreement, pledging to the Lenders, 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 Credit Agreement shall exist.

 

(f) Representations and Warranties; Performance of Covenants.  The representations and warranties of the Borrower contained herein and in the Credit Agreement shall be correct in all material respects and the Borrower shall have performed each of the covenants on its part to be performed under the Credit Agreement.

 

8. Representations and Warranties.  The Borrower hereby represents and warrants to and for the benefit of the Lenders and the Agent as follows:

 

(a) The execution, delivery and performance by the Borrower of this Amendment and the performance by the Borrower of the Credit Agreement, as amended hereby, (i) have been duly authorized by all requisite corporate action on the part of the Borrower, (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 Borrower, (B) any order of any court, administrative body or arbitrator or any rule regulation or order of any Governmental Authority binding upon the Borrower 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 Borrower 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 Credit Agreement and the Notes.

 

(c) This Amendment, and the Credit Agreement as amended hereby, constitute legal, valid and binding obligations of the Borrower, enforceable against the Borrower 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 Borrower shall pay all reasonable fees and expenses, including reasonable attorneys’ fees and expenses, incurred by the Agent or the Lenders in connection with the transactions contemplated by this Amendment.

 

(b) No term, covenant, agreement or condition of this Amendment or the Credit Agreement as amended hereby may be amended or waived unless such amendment or waiver is in writing and is signed by the Borrower, the Agent and each of the Lenders. No failure or delay by the Agent or any Lender in exercising any right hereunder, or under the Credit 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 Borrower, on the one hand, and the Agent and each of the Lenders, on the other hand.  This Amendment shall be construed together with and as part of the Credit Agreement and the Notes.  Except as expressly amended pursuant to this Amendment, the terms, covenants and conditions contained in the Credit Agreement and the Notes are hereby ratified and confirmed in all respects and each of the Notes and, as amended hereby, the Credit 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 Credit 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 Credit 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 Amendment 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.

 

 

 

IN WITNESS WHEREOF, the Borrower, the Agent and the Lenders have caused this Second Amendment to the Amended and Restated Credit Agreement to be executed as of the day and year first above written.

 

	JUDICIAL RETIREMENT FUND
	By:	/s/ David G. Bronner
		Name:	David G. Bronner
		Title:	Chief Executive Officer

	PEIRAF-DEFERRED COMPENSATION PLAN
	By:	/s/ David G. Bronner
		Name:	David G. Bronner
		Title:	Chief Executive Officer

	PUBLIC EMPLOYEES INDIVIDUAL RETIREMENT ACCOUNT FUND
	By:	/s/ David G. Bronner
		Name:	David G. Bronner
		Title:	Chief Executive Officer

 

EXHIBIT A