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EXHIBIT 10.1
SECURITIES PURCHASE AGREEMENT
AMONG
BELL MICROPRODUCTS INC.
THE TEACHERS' RETIREMENT SYSTEM OF ALABAMA
AND
THE EMPLOYEES' RETIREMENT SYSTEM OF ALABAMA
OCTOBER 2, 2006
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TABLE OF CONTENTS
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ARTICLE 1
DEFINITIONS AND ACCOUNTING
TERMS................................................................1
1.1.
Defined
Terms...................................................................................1
1.2.
GAAP............................................................................................8
1.3.
Headings........................................................................................8
1.4.
Plural
Terms....................................................................................8
1.5.
Time............................................................................................8
1.6.
Governing
Law...................................................................................8
1.7.
Construction....................................................................................8
1.8.
Calculation of Interest and
Fees................................................................8
1.9.
Other Interpretive
Provisions...................................................................9
ARTICLE 2
PURCHASE AND SALE OF THE
NOTES..................................................................9
2.1.
Purchase and Sale of the
Notes..................................................................9
ARTICLE 3
PROVISIONS OF THE NOTES AND THE
WARRANT.........................................................9
3.1.
General Provisions As To
Payments...............................................................9
3.2.
Interest.......................................................................................10
3.3.
Principal
Repayment............................................................................10
3.4.
Optional
Prepayments...........................................................................10
3.5
Late
Fees......................................................................................11
ARTICLE 4
CONDITIONS
PRECEDENT...........................................................................11
4.1.
Conditions to Purchase and Sale of
Notes.......................................................11
ARTICLE 5
REPRESENTATIONS AND
WARRANTIES.................................................................12
5.1.
The Company's Representations and
Warranties...................................................12
ARTICLE 6
COVENANTS......................................................................................15
6.1.
Affirmative
Covenants..........................................................................15
6.2.
Negative
Covenants.............................................................................17
ARTICLE 7
DEFAULT........................................................................................18
7.1.
Events of
Default..............................................................................18
7.2.
Remedies.......................................................................................19
ARTICLE 8
REPRESENTATIONS AND WARRANTIES OF
INVESTOR.....................................................19
8.1.
Representations and Warranties of the
Investor.................................................19
ARTICLE 9
SUBORDINATION OF
NOTES.........................................................................20
9.1.
Notes and Liens Subordinate to Senior
Indebtedness.............................................20
9.2.
Liens Subordinate to Senior Lenders'
Liens.....................................................20
ARTICLE 10
TRANSFER OF
SECURITIES.........................................................................20
10.1.
Restriction on
Transfer........................................................................20
10.2.
Restrictive
Legends............................................................................20
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10.3.
Notice of
Transfer.............................................................................21
ARTICLE 11
MISCELLANEOUS..................................................................................22
11.1.
Notices........................................................................................22
11.2.
Expenses.......................................................................................23
11.3.
Indemnification................................................................................23
11.4.
Waivers;
Amendments............................................................................23
11.5.
Successors and
Assigns.........................................................................23
11.6.
No Third Party
Rights..........................................................................24
11.7.
Partial
Invalidity.............................................................................24
11.8.
Counterparts...................................................................................24
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SECURITIES PURCHASE AGREEMENT
DATE October 2,
2006
PARTIES Bell
Microproducts Inc.
1491 Ringwood Avenue
San Jose, CA 95131
(the "Company")
The Teachers' Retirement System of Alabama, and
The Employees' Retirement System of Alabama
P.O. Box
302150
135 South Union Street, Ste. 570
Montgomery, AL 36130
(collectively, the "Investor")
RECITALS
A. The Company desires to issue to the Investor, and the
Investor
desires to purchase from the Company, senior subordinated notes in
the aggregate
principal amount of $35,000,000 (the "Notes"), on the terms and for
the
consideration provided herein.
B. The proceeds of the Notes shall be used (i) to capitalize a
newly
created wholly-owned subsidiary of the Company, New ProSys Corp., a
Georgia
corporation ("New ProSys"), (ii) to fund a portion of the purchase
price to
acquire certain assets from, and a portion of the capital stock of,
ProSys
Information Systems, Inc., a Georgia corporation ("Old ProSys"),
(iii) to use
for Old ProSys's and New ProSys's working capital, and (iv) to pay
the costs and
expenses of this transaction.
C. In consideration of the Investor's agreement to purchase the
Notes,
the Company desires to issue to the Investor, and the Investor
desires to
purchase from the Company, a warrant to purchase shares of the
common stock of
the Company, subject to the terms and conditions contained in this
Agreement and
the Warrant (as defined below).
AGREEMENT
IN CONSIDERATION of the foregoing premises, and the mutual
covenants
set forth herein, the parties agree as follows:
ARTICLE 1 DEFINITIONS AND ACCOUNTING TERMS
1.1. DEFINED TERMS. In addition to the terms defined elsewhere in
this
Agreement, the following terms shall have the meanings set out
respectively
after each:
"Affiliate" shall mean, with respect to any Person, (a) each
Person
that, directly or indirectly, owns or controls, whether
beneficially or as a
trustee, guardian or other fiduciary, five percent (5%) or more of
any class of
capital stock of such Person, (b) each Person that controls, is
controlled by or
is under common control with such Person or any Affiliate of such
Person or
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(c) each of such Person's employees, officers, directors, joint
venturers and
partners; provided, however, that in no case shall the Investor be
deemed to be
an Affiliate of the Company for purposes of this Agreement. For the
purpose of
this definition, "control" of a Person shall mean the possession,
directly or
indirectly, of the power to direct or cause the direction of its
management or
policies, whether through the ownership of voting securities, by
contract or
otherwise.
"Business Day" shall mean any day (a) which is not a Saturday
or
Sunday, and (b) on which commercial banks are not authorized or
required to
close in San Francisco, California or Montgomery, Alabama.
"Capital Asset" shall mean, with respect to any Person,
tangible
property owned or leased (in the case of a Capital Lease) by such
Person, or any
expense incurred by any Person that is required by GAAP to be
reported as an
asset on such Person's balance sheet.
"Capital Leases" shall mean any and all lease obligations that,
in
accordance with GAAP, are required to be capitalized on the books
of a lessee.
"Code" shall mean the Internal Revenue Code of 1986, as amended
from
time to time.
"Collateral" shall mean all property in which the Investor has a
Lien
to secure the Obligations, pursuant to the Security Agreements and
the Pledge
Agreements.
"Company" shall have the meaning given to that term in the
introductory
Section hereof entitled PARTIES.
"Contractual Obligation" of any Person shall mean, any material
indenture, note, security, deed of trust, mortgage, security
agreement, lease,
guaranty, instrument, contract, agreement or other form of
obligation to which
such Person is a party or by which such Person or any of its
property is bound.
"Default" shall mean any event or circumstance not yet constituting
an
Event of Default which with the giving of any notice or the lapse
of any period
of time or both, would become an Event of Default.
"Dollars" and "$" shall mean the lawful currency of the United
States
of America and, in relation to any payment under this Agreement,
same day or
immediately available funds.
"Environmental Laws" means all Requirements of Law relating to
the
protection of human health or the environment, including, without
limitation,
(a) all Requirements of Law pertaining to reporting, licensing,
permitting,
investigation, and remediation of emissions, discharges, releases,
or threatened
releases of hazardous materials, chemical substances, pollutants,
contaminants,
or hazardous or toxic substances, materials or wastes whether
solid, liquid, or
gaseous in nature, into the air, surface water, groundwater, or
land, or
relating to the manufacture, processing, distribution, use,
treatment, storage,
disposal, transport, or handling of chemical substances,
pollutants,
contaminants, or hazardous or toxic substances, materials, or
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wastes, whether solid, liquid, or gaseous in nature; and (b) all
Requirements of
Law pertaining to the protection of the health and safety of
employees or the
public.
"Event of Default" shall have the meaning given to that term in
Section
7.1.
"Federal Reserve Board" shall mean the Board of Governors of
the
Federal Reserve System.
"Final Maturity Date" shall mean August 1, 2013.
"Financial Statements" shall mean, with respect to any
accounting
period for any Person, statements of income and of changes in cash
flow of such
Person for such period, and balance sheets of such Person as of the
end of such
period, setting forth in each case in comparative form figures for
the
corresponding period in the preceding fiscal year if such period is
less than a
full fiscal year or, if such period is a full fiscal year,
corresponding figures
from the preceding annual audit, all prepared in reasonable detail
and in
accordance with GAAP.
"GAAP" shall mean generally accepted accounting principles and
practices as in effect in the United States of America from time to
time,
consistently applied.
"Governmental Authority" shall mean any domestic or foreign
national,
state or local government, any political subdivision thereof, any
department,
agency, authority or bureau of any of the foregoing, or any other
entity
exercising executive, legislative, judicial, regulatory or
administrative
functions of or pertaining to government.
"Governmental Charges" shall mean all levies, assessments, fees,
claims
or other charges imposed by any Governmental Authority upon or
relating to (i)
the Company, (ii) employees, payroll, income or gross receipts of
the Company,
(iii) the ownership or use of any of its assets by the Company or
(iv) any other
aspect of the business of the Company.
"Governmental Rule" shall mean any material law, rule,
regulation,
ordinance, order, code interpretation, judgment, decree, directive,
guidelines,
policy or similar form of decision of any Governmental
Authority.
"Indebtedness" of any Person shall mean and include (a) all items
of
indebtedness and liabilities which, in accordance with GAAP, would
be included
in determining liabilities that are shown on the liability side of
the balance
sheet of such Person, (b) all indebtedness and liabilities of other
Persons
assumed or guaranteed by such Person or in respect of which such
Person is
secondarily or contingently liable whether by any agreement to
acquire
indebtedness and liabilities or to supply or advance funds or
otherwise, and (c)
all indebtedness and liabilities of other Persons secured by any
Lien in any
property of such Person (including without limitation Capital
Leases).
"Indemnitees" shall have the meaning given to that term in
Section
11.3.
"Interest Rate" shall mean the fixed rate of interest equal to 9%
per
annum.
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"Investor" shall have the meaning given to that term in the
introductory Section hereof entitled PARTIES.
"Lien" shall mean, with respect to any property, any security
interest,
mortgage, pledge, lien, claim, charge or other encumbrance in, of,
or on such
property or the income therefrom, including, without limitation,
the interest of
a vendor or lessor under a conditional sale agreement, Capital
Lease or other
title retention agreement, or any agreement to provide any of the
foregoing, and
the filing of any financing statement or similar instrument under
the Uniform
Commercial Code or comparable law of any jurisdiction.
"Margin Stock" shall have the meaning given to that term in
Regulation
U issued by the Federal Reserve Board, as amended from time to
time, and any
successor regulation thereto.
"Material Adverse
Effect" shall mean a material adverse effect on (a)
the business, assets, operations, prospects or financial or other
condition of
the Company; (b) the ability of the Company to pay or perform the
Obligations in
accordance with the terms of this Agreement and the other
Transaction Documents;
or (c) the rights and remedies of the Investor under this
Agreement, the other
Transaction Documents or any related document, instrument or
agreement.
"Net Worth" shall mean, with respect to any Person at any time,
the
remainder at such time, determined on a consolidated basis in
accordance with
GAAP, of (a) the total assets of such Person and its Subsidiaries
minus (b) the
total liabilities of such Person and its Subsidiaries.
"New ProSys" shall have the meaning given to that term in Recital
B.
"Notes" shall mean the 9% Senior Subordinated Notes issued by
the
Company to the Investor dated the date hereof in the aggregate
original
principal amount of $35,000,000, as follows: (i) $23,000,000
payable to The
Teachers' Retirement System of Alabama, and (ii) $12,000,000
payable to The
Employees' Retirement System of Alabama.
"Obligations" shall mean and include, with respect to the Company,
all
obligations owed by the Company to the Investor under the Notes,
and all amounts
arising pursuant to the terms of this Agreement or any of the other
Transaction
Documents, including without limitation all interest, fees,
charges, expenses,
attorneys' fees and accountants' fees chargeable to the Company or
payable by
the Company hereunder or thereunder.
"Old ProSys" shall have the meaning given to that term in Recital
B.
"Permitted Dividend" shall mean and include:
(a) Dividends payable solely in the common stock of the
Company (and cash paid in lieu of fractional shares in
connection
therewith); and
(b) Repurchases of employee stock pursuant to repurchase
agreements.
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"Permitted Indebtedness" shall mean and include:
(a) Senior Indebtedness;
(b) the Obligations;
(c) other amounts owed by the Company to the Investor or the
Investor's affiliates;
(d) Indebtedness to subcontractors and trade creditors
incurred in the ordinary course of business;
(e) Unsecured Indebtedness of the Company;
(f) Purchase money Indebtedness incurred to acquire a Capital
Asset provided that such Indebtedness does not exceed the
purchase
price of such Capital Asset;
(g) Indebtedness under Capital Leases and operating leases;
(h) Indebtedness of any Subsidiary of the Company to the
Company arising from the extension by the Company to such
Subsidiary of
working capital financing;
(i) Indebtedness arising from the endorsement of instruments
in the ordinary course of business;
(j) Indebtedness of the Company under Rate Contracts,
provided, that (A) all such arrangements are entered into in
connection
with bona fide hedging operations and not for speculation and (B)
the
aggregate net amount owed by the Company under, on account of
or
otherwise in connection with such Rate Contracts does not
exceed
$50,000,000 (marked to market) at any time; and
(k) Other Indebtedness not exceeding $1,000,000 at any time.
"Permitted Liens" shall mean and include:
(a) Liens for taxes or other governmental charges not at the
time delinquent or thereafter payable without penalty or being
contested in good faith, provided provision is made to the
reasonable
satisfaction of the Investor for the eventual payment thereof
if
subsequently found payable;
(b) Liens of carriers, warehousemen, mechanics, materialmen,
vendors, and landlords incurred in the ordinary course of business
for
sums not overdue or being contested in good faith;
(c) Deposits under workers' compensation, unemployment
insurance and social security laws or to secure the performance
of
bids, tenders, contracts (other than for the repayment of
borrowed
money) or leases, or to secure statutory obligations of
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surety or appeal bonds or to secure indemnity, performance or
other
similar bonds in the ordinary course of business;
(d) Liens arising out of a judgment or award not exceeding
$500,000 (exclusive of any amounts covered by insurance issued by
a
Person not an Affiliate of the Company) with respect to which an
appeal
is being prosecuted, a stay of execution pending appeal having
been
secured;
(e) Liens securing purchase money Indebtedness if such
Indebtedness is Permitted Indebtedness pursuant to clause (f) of
the
definition thereof and such Liens do not extend to property other
than
the property financed with such Indebtedness;
(f) Liens securing obligations under a Capital Lease if such
lease is Permitted Indebtedness pursuant to clause (g) of the
definition thereof and such Liens do not extend to property other
than
the property leased under such Capital Lease;
(g) Liens securing Senior Indebtedness;
(h) Leases, subleases, licenses and sublicenses granted to the
Company the granting of which is not prohibited pursuant to the
definition of Permitted Indebtedness;
(i) Liens in favor of customs and revenue authorities which
secure payment of duties in connection with the importation of
goods;
(j) Liens existing on property acquired by the Company or any
of its Subsidiaries at the time of such acquisition (including
Liens on
the assets of any Person at the time such Person becomes a
Subsidiary
of the Company);
(k) Liens on insurance policies and the proceeds thereof
incurred solely to secure the financing of premiums owing with
respect
thereto;
(l) Liens in favor of the Company;
(m) Liens in favor of the Investor and/or the Investor's
affiliates; and
(n) Such minor defects, irregularities, encumbrances,
easements, rights of way, and clouds on title as normally exist
on
similar properties which do not, individually or in the
aggregate,
materially impair the property affected thereby or the use
thereof.
"Person" shall mean and include an individual, a partnership, a
corporation (including a business trust), a joint stock company,
an
unincorporated association, a limited liability company, a joint
venture, a
trust or other entity.
"Pledge Agreement(s)" shall mean the Pledge Agreement dated the
date
hereof between the Company and the Investor, as amended,
supplemented or
otherwise modified from time to
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time, and/or the Pledge Agreement dated the date hereof between New
ProSys and
the Investor, as amended, supplemented or otherwise modified from
time to time.
"Rate Contracts" shall mean swap agreements (as that term is
defined in
Section 101 of the Federal Bankruptcy Reform Act of 1978, as
amended) and any
other agreements or arrangements designed to provide protection
against
fluctuations in interest or currency exchange rates.
"Requirement of Law" applicable to any Person shall mean (a)
the
Articles or Certificate of Incorporation and Bylaws, Partnership
Agreement or
other organizational or governing documents of such Person, (b) any
Governmental
Rule applicable to such Person, (c) any material license, permit,
approval or
other authorization granted by any Governmental Authority to or for
the benefit
of such Person and (d) any material judgment, decision or
determination of any
Governmental Authority or arbitrator, in each case applicable to or
binding upon
such Person or any of its property or to which such Person or any
of its
property is subject.
"Restricted Securities" means the Notes, the Warrant, and the
common
stock of the Company to be issued under the Warrant, to the extent
the Notes,
the Warrant and such common stock have not then been sold to the
public pursuant
to (a) registration under the Securities Act or (b) Rule 144 (or
similar or
successor rule) promulgated under the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Agreement(s)" shall mean the Security Agreement dated
the
date hereof between New ProSys and the Investor, as amended,
supplemented or
otherwise modified from time to time, and/or the Security Agreement
dated the
date hereof between Old ProSys and the Investor, as amended,
supplemented or
otherwise modified from time to time.
"Senior Indebtedness" means all indebtedness, liabilities and
obligations of the Company and its Subsidiaries incurred for
general corporate
purposes (including, without limitation, for acquisitions and
letters of credit,
and including indebtedness arising in connection with
securitization programs)
howsoever created, arising or evidenced, whether direct or
indirect, absolute or
contingent, due or to become due, now existing or hereafter created
or incurred
and whether it is sole, joint, several or joint and several.
"Senior Lenders" shall mean any lenders (whether one or more) who
are
providing Senior Indebtedness.
"Subsidiary" of any Person shall mean (a) any corporation of which
more
than 50% of the issued and outstanding capital stock having
ordinary voting
power to elect a majority of the Board of Directors of such
corporation
(irrespective of whether at the time capital stock of any other
class or classes
of such corporation shall or might have voting power upon the
occurrence of any
contingency) is at the time directly or indirectly owned or
controlled by such
Person, by such Person and one or more of its other Subsidiaries or
by one or
more of such Person's other Subsidiaries, (b) any partnership,
joint venture,
limited liability company or other association of which more than
50% of the
equity interest having the power to vote, direct or control the
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management of such partnership, joint venture or other association
is at the
time owned and controlled by such Person, by such Person and one or
more of the
other Subsidiaries or by one or more of such Person's other
Subsidiaries and (c)
any other Person included in the Financial Statements of such
Person on a
consolidated basis.
"Transaction Documents" shall mean this Agreement, the Notes,
the
Warrant, the Pledge Agreements and the Security Agreements.
"Transfer" shall mean any sale, transfer, assignment, or other
disposition with or without consideration of any interest in any
security,
including any disposition of any securities or of any interest
therein which
would constitute a sale thereof within the meaning of the
Securities Act.
"Warrant" shall mean the Warrant of Bell Microproducts Inc., dated
the
date hereof, given by the Company to the Investor, as amended,
supplemented or
otherwise modified from time to time, as more fully described in
Section 4.1(g).
1.2. GAAP.
Unless otherwise indicated in this Agreement, all accounting
terms used in this Agreement shall be construed, and all accounting
and
financial computations hereunder shall be computed, in accordance
with GAAP. If
GAAP changes during the term of this Agreement such that any
covenants contained
herein would then be calculated in a different manner or with
different
components, the Company and the Investor agree to negotiate in good
faith to
amend this Agreement in such respects as is necessary to conform
those covenants
as criteria for evaluating the Company's financial condition to
substantially
the same criteria as were effective prior to such change in GAAP;
provided,
however, that, until the Company and the Investor so amend this
Agreement, all
such covenants shall be calculated in accordance with GAAP as in
effect
immediately prior to such change.
1.3. HEADINGS. Headings in this Agreement are for convenience
of
reference only and are not part of the substance hereof.
1.4. PLURAL TERMS. All terms defined in this Agreement in the
singular
form shall have comparable meanings when used in the plural form
and vice versa.
1.5. TIME. All references in this Agreement to a time of day shall
mean
Montgomery, Alabama time, unless otherwise indicated.
1.6. GOVERNING LAW. This Agreement shall be governed by and
construed
in accordance with the laws of the State of Alabama without
reference to
conflicts of law rules.
1.7. CONSTRUCTION. This Agreement is the result of negotiations
among,
and has been reviewed by, the Company and the Investor and their
respective
counsel. Accordingly, this Agreement shall be deemed to be the
product of all
parties hereto, and no ambiguity shall be construed in favor of or
against the
Company or the Investor.
1.8. CALCULATION OF INTEREST AND FEES. All calculations of interest
and
fees under this Agreement for any period (a) shall include the
first day of such
period and exclude the last day of
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such period and (b) shall be calculated on the basis of a 360 day
year
consisting of twelve (12) thirty (30) day months.
1.9.
OTHER INTERPRETIVE PROVISIONS. References in this Agreement to
"Recitals," "Articles," "Sections," "Paragraphs," Subparagraphs,"
"Exhibits" and
"Schedules" are to recitals, articles, sections, paragraphs,
subparagraphs,
exhibits and schedules herein and hereto unless otherwise
indicated. References
in this Agreement to any document, instrument or agreement (a)
shall include all
exhibits, schedules and other attachments thereto, (b) shall
include all
documents, instruments or agreements issued or executed in
replacement thereof,
and (c) shall mean such document, instrument or agreement, or
replacement or
predecessor thereto, as amended, modified and supplemented from
time to time and
in effect at any given time. The words "hereof," "herein" and
"hereunder" and
words of similar import when used in this Agreement shall refer to
this
Agreement as a whole and not to any particular provision of this
Agreement. The
words "include" and "including" and words of similar import when
used in this
Agreement shall not be construed to be limiting or exclusive.
ARTICLE 2 PURCHASE AND SALE OF THE NOTES
2.1.
PURCHASE AND SALE OF THE NOTES. Upon satisfaction of the
conditions set forth in Section 4.1, at such time and location as
the Company
and the Investor may agree, the Company shall sell the Notes to the
Investor and
the Investor shall purchase the Notes from the Company and deliver
to the
Company $35,000,000 in cash by wire transfer of immediately
available funds to
one or more accounts designated by the Company.
ARTICLE 3 PROVISIONS OF THE NOTES AND THE WARRANT
3.1.
GENERAL PROVISIONS AS TO PAYMENTS.
(a) The Company shall make each payment in respect of the
principal of and accrued interest on the Notes, or any other amount
due
to the Investor under this Agreement or any other Transaction
Document,
not later than 3:00 p.m., on the day when due, to the Investor
as
provided in the Notes, or in such manner as instructed from time
to
time in writing by the Investor. All payments hereunder shall be
made
in United States Dollars by wire transfer of immediately
available
funds.
(b) Whenever any payment (including principal of or interest
on the Notes or other amount) hereunder or under any other
Transaction
Document shall become due, or otherwise would occur, on a day that
is
not a Business Day, such payment shall be made on the next
succeeding
Business Day, and such extension of time shall in such case be
included
in the
computation of such interest, or other amount, if applicable.
(c) The Company hereby authorizes the Investor to make
appropriate notations on any grid attached to the Notes, including
the
date, outstanding principal amount and any prepayment thereof,
which
notations shall be conclusive absent manifest error; provided,
however,
that the failure of the Investor to make such notation or any error
on
the Notes shall not affect the obligation of the Company to repay,
in
accordance
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with the terms of the Notes and this Agreement, the principal
amount of
the Notes together with all interest and other amounts due
hereunder.
3.2.
INTEREST.
(a) Interest shall be payable on the principal amount of the
Notes outstanding from time to time at the
