AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

Exhibit 10.1

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

by and among

BELL MICROPRODUCTS INC.
BELL MICROPRODUCTS — FUTURE TECH, INC.
RORKE DATA, INC.
BELL MICROPRODUCTS CANADA — TENEX DATA ULC
TOTAL TEC SYSTEMS, INC.
FOREFRONT GRAPHICS US INC.

as Borrowers

BELL MICROPRODUCTS CANADA INC.
BELL MICROPRODUCTS MEXICO SHAREHOLDER, LLC

as Guarantors

WACHOVIA CAPITAL FINANCE CORPORATION (WESTERN)

as Administrative Agent

WACHOVIA CAPITAL MARKETS, LLC

as Lead Arranger and Sole Bookrunner

BANK OF AMERICA, N.A.

as Co-Agent

and

THE FINANCIAL INSTITUTIONS NAMED HEREIN

as Lenders

Dated as of September 29, 2008

AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

     This Amended and Restated Loan and Security Agreement, dated as of September 29, 2008, is entered into by and among Bell Microproducts Inc., a California corporation (“ Administrative Borrower ”), Bell Microproducts — Future Tech, Inc., a California corporation (“ Future Tech ”), Rorke Data, Inc., a Minnesota corporation (“ Rorke ”), Bell Microproducts Canada — Tenex Data ULC, a Nova Scotia unlimited liability company (“ Tenex ”), Total Tec Systems, Inc., a New Jersey corporation (“ Total Tec ”), Forefront Graphics US Inc., an Ontario corporation (“ Forefront ” and together with Administrative Borrower, Future-Tech, Rorke, Tenex and Total Tec, individually, a “ Borrower ” and collectively, “ Borrowers ”), Bell Microproducts Canada Inc., a California corporation (“ Bell Micro Canada ”), Bell Microproducts Mexico Shareholder, LLC, a Florida limited liability company (“ Mexico Shareholder ”, and together with Bell Micro Canada, individually a “ Guarantor ” and collectively, “ Guarantors ”), the financial institutions from time to time parties hereto as lenders, whether by execution of this Agreement or an Assignment and Acceptance (each individually, a “ Lender ” and collectively, “ Lenders ”), Wachovia Capital Markets, LLC in its capacity as lead arranger and sole bookrunner, Wachovia Capital Finance Corporation (Western) in its capacity as administrative agent for Lenders (“ Wachovia ”, and in such capacity, “ Agent ”) and Bank of America, N.A. in its capacity as co-agent (“ Co-Agent ”).

W I T N E S S E T H:

     WHEREAS, Congress Financial Corporation (Western), now known as Wachovia Capital Finance Corporation (Western), Borrowers and Guarantors previously have entered into that certain Loan and Security Agreement dated as of May 14, 2001, as amended by that certain First Amendment to Loan and Security Agreement dated as of December 31, 2002, Second Amendment to Loan and Security Agreement and Waiver dated as of October 9, 2003, Third Amendment to Loan and Security Agreement dated as of September 13, 2004, Fourth Amendment to Loan and Security Agreement dated as of November 12, 2004, Fifth Amendment to Loan and Security Agreement dated as of March 4, 2005 and as amended and restated on April 29, 2005, Sixth Amendment to Loan and Security Agreement dated as of June 29, 2005, Seventh Amendment to Loan and Security Agreement dated as of October 2, 2006, Eighth Amendment to Loan and Security Agreement dated as of November 2006, Amendment and Consent Letter dated as of January 26, 2007, and Ninth Amendment to Loan and Security Agreement dated as of September 27, 2007 (as amended, the “ Original Loan Agreement ”), pursuant to which Congress Financial Corporation (Western), now known as Wachovia Capital Finance Corporation (Western), has provided loans and certain other financial accommodations to Borrowers; and

     WHEREAS, the parties hereto have agreed to amend and restate in their entirety the agreements contained in the Original Loan Agreement as amongst themselves; and

     WHEREAS, Administrative Borrower directly or indirectly owns all of the issued and outstanding Capital Stock (as defined below) of the other Borrowers and of Guarantors; and

     WHEREAS, Borrowers and Guarantors operate as an integrated business unit, and the financial success of each of them is dependent upon the financial success of each other; and

     WHEREAS, Borrowers and Guarantors have requested that Agent and Lenders enter into certain financing arrangements with Borrowers pursuant to which Lenders may make loans and provide other financial accommodations to Borrowers; and

     WHEREAS, each Lender is willing to agree (severally and not jointly) to make such loans and provide such financial accommodations to Borrowers on a pro rata basis according to its Commitment (as defined below) on the terms and conditions set forth herein, and Agent is willing to act as administrative agent for Lenders, all on the terms and conditions set forth herein and in the other Financing Agreements; and

     WHEREAS, each Borrower hereby restates, ratifies and reaffirms each and every term and condition set forth in the Original Loan Agreement, as amended and restated hereby, and the other Financing Agreements effective as of the date hereof;

     NOW, THEREFORE, in consideration of the mutual conditions and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

SECTION 1. DEFINITIONS

     For purposes of this Agreement, the following terms shall have the respective meanings given to them below:

     1.1 “ Accounts ” shall mean, as to each Borrower and each Guarantor, all present and future rights of such Borrower and such Guarantor to payment of a monetary obligation, whether or not earned by performance, which is not evidenced by chattel paper or an instrument, (a) for property that has been or is to be sold, leased, licensed, assigned, or otherwise disposed of by such Borrower or Guarantor, (b) for services rendered or to be rendered by such Borrower or Guarantor, (c) for a secondary obligation incurred or to be incurred to such Borrower or Guarantor, or (d) any of such Borrower’s or Guarantor’s right to payment arising out of the use of a credit or charge card or information contained on or for use with the card.

     1.2 “ Acquisition Loans ” shall have the meaning set forth in Section 2.3 of this Agreement.

     1.3 “ Adjusted Eurodollar Rate ” shall mean, with respect to each Interest Period for any Eurodollar Rate Loan comprising part of the same borrowing (including conversions, extensions and renewals), the rate per annum determined by dividing (a) the London Interbank Offered Rate for such Interest Period by (b) a percentage equal to: (i) one (1) minus (ii) the Reserve Percentage. For purposes hereof, “Reserve Percentage” shall mean for any day, that percentage (expressed as a decimal) which is in effect from time to time under Regulation D of the Board of Governors of the Federal Reserve System (or any successor), as such regulation may be amended from time to time or any successor regulation, as the maximum reserve requirement (including, without limitation, any basic, supplemental, emergency, special, or marginal reserves) applicable with respect to Eurocurrency liabilities as that term is defined in

Regulation D (or against any other category of liabilities that includes deposits by reference to which the interest rate of Eurodollar Rate Loans is determined), whether or not any Lender has any Eurocurrency liabilities subject to such reserve requirement at that time. Eurodollar Rate Loans shall be deemed to constitute Eurocurrency liabilities and as such shall be deemed subject to reserve requirements without benefits of credits for proration, exceptions or offsets that may be available from time to time to a Lender. The Adjusted Eurodollar Rate shall be adjusted automatically on and as of the effective date of any change in the Reserve Percentage.

     1.4 “ Administrative Borrower ” shall mean Bell Microproducts Inc., a California corporation in its capacity as Administrative Borrower on behalf of itself and the other Borrowers pursuant to Section 6.7 hereof and it successors and assigns in such capacity.

     1.5 “ Affiliate ” shall mean, with respect to a specified Person, any other Person which directly or indirectly, through one or more intermediaries, controls or is controlled by or is under common control with such Person, and without limiting the generality of the foregoing, includes (a) any Person which beneficially owns or holds five (5%) percent or more of any class of Voting Stock of such Person or other equity interests in such Person, (b) any Person of which such Person beneficially owns or holds five (5%) percent or more of any class of Voting Stock or in which such Person beneficially owns or holds five (5%) percent or more of the equity interests and (c) any director or executive officer of such Person. For the purposes of this definition, the term “control” (including with correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of Voting Stock, by agreement or otherwise.

     1.6 “ Agent ” shall have the meaning set forth in the introductory paragraph hereof.

     1.7 “ Assignment and Acceptance ” shall mean an Assignment and Acceptance substantially in the form of Exhibit A attached hereto (with blanks appropriately completed) delivered to Agent in connection with an assignment of a Lender’s interest hereunder in accordance with the provisions of Section 13.6 hereof.

     1.8 “ Bank Product Provider ” shall mean Agent and Co-Agent, together with their Affiliates, and any other Lender, together with its Affiliates, or other financial institution (in each case as to any such other Lender, its Affiliates or other financial institution to the extent approved by Agent) that provides any Bank Products to Borrowers or Guarantors.

     1.9 “ Bank Products ” shall mean any one or more of the following types or services or facilities provided to a Borrower by a Bank Product Provider: (a) credit cards or stored value cards or (b) cash management or related services, including (i) the automated clearinghouse transfer of funds for the account of a Borrower pursuant to agreement or overdraft for any accounts of Borrowers maintained at Agent or any Bank Product Provider that are subject to the control of Agent pursuant to any deposit account control agreement to which Agent or such Bank Product Provider is a party, as applicable, and (ii) controlled disbursement services and (c) Hedge Agreements if and to the extent permitted hereunder. Any of the foregoing shall only be included in the definition of the term “Bank Products” to the extent that the Bank Product Provider has been approved by Agent.

     1.10 “ Bell Micro Canada ” shall have the meaning set forth in the introductory paragraph hereof.

     1.11 “ Bell Micro Europe ” shall mean Bell Microproducts Europe, Inc., a California corporation.

     1.12 “ Bell Micro Mexico ” shall mean Bell Microproducts Mexico, S.A. de C.V., a Mexican corporation.

     1.13 “ Bell Micro Mexico Pledge Agreement ” shall mean the Stock Pledge Agreement dated as of October 9, 2003 executed and delivered by Future Tech and Mexico Shareholder, to Agent, for the benefit of Lenders, with respect to 100% of the stock of Bell Micro Mexico owned by Future Tech and Mexico Shareholder.

     1.14 “ Bell UK ” shall mean Bell Microproducts Limited, a company organized under the laws of England and Wales.

     1.15 “ Blocked Accounts ” shall have the meaning set forth in Section 6.3 hereof.

     1.16 “ Bonded Inventory ” means Inventory held for a specific customer, which customer is deemed credit-worthy by Agent in its reasonable discretion, and is subject to binding customer purchase orders that may not be cancelled and that provide that the Inventory may not be returned.

     1.17 “ Borrower ” shall have the meaning set forth in the introductory paragraph hereof.

     1.18 “ Borrowing Base ” shall mean at any time:

          (a) the sum of:

(i) eighty-five percent (85%) of the Net Amount of Eligible Accounts of Borrowers, provided , that , Revolving Loans made in respect of Eligible Accounts that are Foreign Accounts shall not exceed $25,000,000, plus

(ii) the lesser of

(A) the lesser of (1) fifty percent (50%) multiplied by the Value of Eligible Inventory of Borrowers, or (2) eighty-five percent (85%) of the Net Recovery Percentage multiplied by the Value of the Eligible Inventory of Borrowers, or

(B) the Inventory Loan Limit, or

(C) the amount available under clause (a)(i) above based upon Eligible Accounts, minus

          (b) Reserves attributable to Borrowers.

For purposes only of applying the Inventory Loan Limit, Agent may treat the then undrawn amounts of outstanding Letters of Credit for the purpose of purchasing Eligible Inventory as Revolving Loans to the extent Agent is in effect basing the issuance of the Letter of Credit on the Value of the Eligible Inventory being purchased with such Letter of Credit. In determining the actual amounts of such Letter of Credit to be so treated for purposes of the sublimit, the outstanding Revolving Loans and Reserves shall be attributed first to any components of the lending formulas set forth above that are not subject to such sublimit, before being attributed to the components of the lending formulas subject to such sublimit. The amounts of Eligible Inventory of any Borrower shall, at Agent’s option, be determined based on the lesser of the amount of Inventory set forth in the general ledger of such Borrower or the perpetual inventory record maintained by such Borrower.

     1.19 “ Brazil Holdings ” shall have the meaning set forth in Section 9.10 hereof.

     1.20 “ Business Day ” shall mean any day other than a Saturday, Sunday, or other day on which commercial banks are authorized or required to close under the laws of the State of New York, the State of California or the State of North Carolina, and a day on which Agent and each Lender is open for the transaction of business, except that if a determination of a Business Day shall relate to any Eurodollar Rate Loans, the term Business Day shall also exclude any day on which banks are closed for dealings in dollar deposits in the London interbank market or other applicable London Interbank Offered Rate market.

     1.21 “ Canadian Pension Plans ” shall have the meaning set forth in Section 8.9 hereof.

     1.22 “ Capitalized Lease Obligations ” shall mean any obligation to pay rent or other amounts under a lease of (or other agreement conveying the right to use) any property (whether real, personal or mixed) that is required to be classified and accounted for as a capital lease obligation under GAAP, and, for the purposes of this Agreement, the amount of such obligation at any date shall be capitalized amount thereof at such date, determined in accordance with GAAP.

     1.23 “ Capital Stock ” shall mean, with respect to any Person, any and all shares, interests, participations, limited liability company interests or other equivalents (however designated) of such Person’s capital stock at any time outstanding, and any and all rights, warrants or options exchangeable for or convertible into such capital stock or interests (but excluding any debt security that is exchangeable for or convertible into such capital stock).

     1.24 “ Cash Equivalents ” shall mean, at any time, (a) any evidence of Indebtedness with a maturity date of ninety (90) days or less issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof; provided , that , the full faith and credit of the United States of America is pledged in support thereof; (b) certificates of deposit or bankers’ acceptances with a maturity of ninety (90) days or less of any financial institution that is a member of the Federal Reserve System having combined capital and surplus and undivided profits of not less than $1,000,000,000; (c) commercial paper (including variable rate demand notes) with a maturity of ninety (90) days or less issued by a corporation (except an Affiliate of any Borrower or any Guarantor) organized under the laws of any State of the United States of America or the District of Columbia and rated at least A-1 by Standard & Poor’s

Ratings Service, a division of The McGraw-Hill Companies, Inc. or at least P-1 by Moody’s Investors Service, Inc.; (d) repurchase obligations with a term of not more than thirty (30) days for underlying securities of the types described in clause (a) above entered into with any financial institution having combined capital and surplus and undivided profits of not less than $1,000,000,000; (e) repurchase agreements and reverse repurchase agreements relating to marketable direct obligations issued or unconditionally guaranteed by the United States of America or issued by any governmental agency thereof and backed by the full faith and credit of the United States of America, in each case maturing within ninety (90) days or less from the date of acquisition; provided , that , the terms of such agreements comply with the guidelines set forth in the Federal Financial Agreements of Depository Institutions with Securities Dealers and Others, as adopted by the Comptroller of the Currency on October 31, 1985; and (f) investments in money market funds and mutual funds which invest substantially all of their assets in securities of the types described in clauses (a) through (e) above.

     1.25 “ Change of Control ” shall mean (a) the transfer (in one transaction or a series of transactions) of all or substantially all of the assets of any Borrower or any Guarantor to any Person or group (as such term is used in Section 13(d)(3) of the Exchange Act), other than as permitted in Section 9.7 hereof; (b) the liquidation or dissolution of any Borrower or any Guarantor or the adoption of a plan by the stockholders of any Borrower or any Guarantor relating to the dissolution or liquidation of such Borrower or such Guarantor, other than as permitted in Section 9.7 hereof; (c) the acquisition by any Person or group (as such term is used in Section 13(d)(3) of the Exchange Act) of beneficial ownership, directly or indirectly, of a majority of the voting power of the total outstanding Voting Stock of any Borrower or any Guarantor or the Board of Directors of any Borrower or any Guarantor; (d) during any period of two (2) consecutive years, individuals who at the beginning of such period constituted the Board of Directors of Administrative Borrower (together with any new directors whose nomination for election by the stockholders of Administrative Borrower, was approved by a vote of at least sixty-six and two-thirds (66 2/3%) percent of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of Administrative Borrower then still in office; and (e) the failure of Administrative Borrower to own, directly or indirectly, fifty one (51%) percent of the voting power of the total outstanding Voting Stock of each other Borrower or Guarantor, other than pursuant to a transfer of such outstanding Voting Stock to any Borrower or any Guarantor and other than pursuant to a sale of the Voting Stock of any Borrower or any Guarantor consented to by the Agent and Required Lenders.

     1.26 “ Closing Date ” shall mean the first date all the conditions precedent in Section 4.1 are satisfied or waived in accordance with Section 11.3 .

     1.27 “ Code ” shall mean the Internal Revenue Code of 1986, as the same now exists or may from time to time hereafter be amended, modified, recodified or supplemented, together with all rules, regulations and interpretations thereunder or related thereto.

     1.28 “ Collateral ” shall have the meaning set forth in Section 5.1 hereof.

     1.29 “ Collateral Access Agreement ” shall mean an agreement in writing, in form and substance satisfactory to Agent, from any lessor of premises to any Borrower or any other person to whom any Collateral (including Inventory, Equipment, bills of lading or other documents of title) is consigned or who has custody, control or possession of any such Collateral or is otherwise the owner or operator of any premises on which any of such Collateral is located, pursuant to which such lessor, consignee or other person, inter alia, acknowledges the first priority security interest of Agent in such Collateral, agrees to waive any and all claims such lessor, consignee or other person may, at any time, have against such Collateral, whether for processing, storage or otherwise, and agrees to permit Agent access to, and the right to remain on, the premises of such lessor, consignee or other person so as to exercise Agent’s rights and remedies and otherwise deal with such Collateral and in the case of any person who at any time has custody, control or possession of any bills of lading or other documents of title, agrees to hold such bills of lading or other documents as bailee for Agent and to follow all instructions of Agent with respect thereto.

     1.30 “ Commitment ” shall mean, as to any Lender, the Revolving Loan Commitment of such Lender.

     1.31 “ 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 Administrative 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.

     1.32 “ Credit Facility ” shall mean the Revolving Credit Facility.

     1.33 “ Customs Broker ” shall mean any person selected by any Borrower after written notice by such Borrower to Agent who is reasonably acceptable to Agent to perform port of entry services to process Inventory imported by such Borrower from outside the United States of America and to supply facilities, labor and materials to such Borrower in connection therewith, provided , that , as to each such person (a) Agent shall have received a Collateral Access Agreement duly authorized, executed and delivered by such person, (b) such agreement is in full force and effect and (c) such person shall be in compliance in all material respects with the terms thereof.

     1.34 “ Defaulting Lender ” shall have the meaning set forth in Section 6.12 hereof.

     1.35 “ Disqualified Borrower ” shall mean any Borrower with respect to which an event has occurred or a condition exists that has had or can reasonably be expected to have a Material Adverse Effect on such Borrower.

     1.36 “ Dollars ” or “ $ ” shall mean United States dollars.

     1.37 “ Domestic Subsidiary ” shall mean any Subsidiary that is organized under the laws of any political subdivision of the United States.

     1.38 “ Dominion Trigger Event ” shall have the meaning set forth in Section 6.3 hereof.

     1.39 “ Eligible Accounts ” shall mean, as to each Borrower, Accounts created by such Borrower which are and continue to be acceptable to Agent (in the exercise of its good faith commercial judgment) based on the criteria set forth below. In general, Accounts shall be Eligible Accounts if:

          (a) such Accounts arise from the actual and bona fide sale and delivery of goods by such Borrower or rendition of services by such Borrower in the ordinary course of its business which transactions are completed in accordance with the terms and provisions contained in any documents related thereto;

          (b) such Accounts do not remain unpaid more than sixty (60) days after the original due date thereof or more than ninety (90) days after the original invoice date thereof;

          (c) such Accounts are owed by an account debtor where less than fifty percent (50%) of the total Accounts owed by that account debtor and its Affiliates remain unpaid more than the number of days specified in clause (b) above;

          (d) such Accounts comply with the terms and conditions contained in Section 7.2(c) of this Agreement;

          (e) such Accounts do not arise from sales on consignment, guaranteed sale, sale and return, sale on approval, sale on evaluation, sale of replacement parts, or other terms under which payment by the account debtor may be conditioned or contingent;

          (f) the chief executive office or other principal office of the account debtor with respect to such Accounts is located in the United States of America or Canada ( provided , that , at any time promptly upon Agent’s request, such Borrower shall execute and deliver, or cause to be executed and delivered, such other agreements, documents and instruments as may be reasonably required by Agent to perfect the security interests of Agent in those Accounts of an account debtor with its chief executive office or principal place of business in Canada in accordance with the applicable laws of the Province of Canada in which such chief executive office or principal place of business is located and take or cause to be taken such other and further actions as Agent may reasonably request to enable Agent as secured party with respect thereto to collect such Accounts under the applicable Federal or Provincial laws of Canada), or the Account is a Foreign Account and at least one of the following facts is true: (A) the account debtor has delivered to such Borrower an irrevocable letter of credit issued or confirmed by a bank reasonably satisfactory to Agent and payable only in the United States of America and in

U.S. dollars, sufficient to cover such Account, in form and substance reasonably satisfactory to Agent and if required by Agent, the original of such letter of credit has been delivered to Agent or Agent’s agent and the issuer thereof notified of the assignment of the proceeds of such letter of credit to Agent, or (B) such Account is subject to credit insurance payable to Agent issued by an insurer and on terms and in an amount acceptable to Agent, or (C) such Account is otherwise acceptable in all respects to Agent (subject to such lending formula with respect thereto as Agent may determine);

          (g) the account debtor with respect to such Accounts has not asserted a counterclaim, defense or dispute and does not have, and does not engage in transactions which may give rise to, any right of setoff against such Accounts, except the portion of the Accounts of such account debtor in excess of the amount at any time and from time to time owed by such Borrower to such account debtor or claimed owed by such account debtor may be deemed Eligible Accounts;

          (h) there are no facts, events or occurrences which would impair the validity, enforceability or collectability of an Account or reduce the amount payable or delay payment thereunder;

          (i) such Accounts are subject to the first priority, valid and perfected security interest of Agent (for itself and the ratable benefit of Lenders) and any goods giving rise thereto are not, and were not at the time of the sale thereof, subject to any liens except those permitted in this Agreement;

          (j) neither the account debtor nor any officer or employee of the account debtor with respect to such Accounts is an Affiliate of any Borrower or any Guarantor;

          (k) the account debtors with respect to such Accounts are not any foreign government, the United States of America, the federal government of Canada, any State or Province, political subdivision, department, agency or instrumentality thereof, unless, if the account debtor is the United States of America, the federal government of Canada, any State or Province, political subdivision, department, agency or instrumentality thereof, upon Agent’s request, the Federal Assignment of Claims Act of 1940, as amended, if applicable, the Financial Administration Act (Canada), if applicable, or any similar State, provincial or local law, if applicable, has been complied with in a manner satisfactory to Agent;

          (l) there are no proceedings or actions which are threatened or pending against the account debtors with respect to such Accounts which might result in any material adverse change in any such account debtor’s financial condition;

          (m) such Accounts of a single account debtor or its affiliates do not constitute more than fifteen percent (15%) of all otherwise Eligible Accounts (but the portion of the Accounts not in excess of such percentage may be deemed Eligible Accounts);

          (n) such Accounts are not evidenced by any instrument or chattel paper;

          (o) such Accounts are owed by account debtors whose total indebtedness to such Borrower does not exceed the credit limit with respect to such account debtors as

determined by such Borrower from time to time in the ordinary course of business, to the extent such credit limits are reasonably satisfactory to Agent (but the portion of the Accounts not in excess of such credit limit which is reasonably satisfactory to Agent may be deemed Eligible Accounts);

          (p) cash on delivery and credit card Accounts;

          (q) such Accounts do not consist of progress billings, bill and hold invoices or retainage invoices, except as to bill and hold invoices, if Agent shall have received a written agreement duly executed and delivered by the account debtor in form and substance reasonably satisfactory to Agent, confirming the unconditional obligation of the account debtor to take the goods related thereto and pay such invoice; and

          (r) such Accounts are owed by account debtors deemed creditworthy at all times by Agent, as determined by Agent in good faith.

General criteria for Eligible Accounts may be established and revised from time to time by Agent in its good faith judgment, based on an event, condition or other circumstance arising after the date hereof, or existing on the date hereof to the extent Agent has no written notice thereof from a Borrower, which adversely affects or could reasonably be expected to adversely affect the Accounts in the good faith determination of Agent. Any Accounts which are not Eligible Accounts shall nevertheless be part of the Collateral.

     1.40 “ Eligible Inventory ” shall mean, as to each Borrower, such Borrower’s Inventory consisting of raw materials held for resale or finished goods held in the United States of America or Canada for resale in the ordinary course of the business of such Borrower which are reasonably acceptable to Agent based on the criteria set forth below, and subject to such reserves as Agent may from time to time in the exercise of its commercially reasonable judgment establish, including without limitation reserves for cost test variances, shrinkage, warranties, royalties and labor and miscellaneous costs. In general, Eligible Inventory shall not include (a) work-in-process; (b) raw materials (other than raw materials held for resale); (c) components which are not part of finished goods; (d) spare parts for equipment; (e) packaging and shipping materials; (f) supplies used or consumed in such Borrower’s business; (g) Inventory at premises other than those owned and controlled by such Borrower, except (i) any Inventory which would otherwise be deemed Eligible Inventory at locations in the United States of America or Canada which are not owned and operated by such Borrower may nevertheless be considered Eligible Inventory: (A) as to locations which are leased by such Borrower if Agent shall have received a Collateral Access Agreement from the owner and lessor of such location, duly authorized, executed and delivered by such owner and lessor, and (B) as to locations owned and operated by a third person, if Agent shall have received a Collateral Access Agreement from such owner and operator with respect to such location, duly authorized, executed and delivered by such owner and operator and, in addition, if required by Agent: (1) UCC or PPSA financing statements between the owner and operator, as consignee or bailee and such Borrower, as consignor or bailor, in form and substance reasonably satisfactory to Agent, which are duly assigned to Agent and (2) a written notice to any lender to the owner and operator of the first priority security interest in such Inventory of Agent and (ii) Inventory which would otherwise be Eligible Inventory located outside the United States of America or Canada which is in transit to either the

premises of a Customs Broker in the United States of America or Canada or premises of a Borrower in the United States of America or Canada, as the case may be, which are either owned and controlled by such Borrower or leased by such Borrower (but only if Agent has received a Collateral Access Agreement duly authorized, executed and delivered by such Customs Broker or the owner and lessor of such leased premises, as the case may be), provided , that , (A) Agent has a first priority perfected security interest in and lien and hypothec upon, and control and possession of, all originals of documents of title with respect to such Inventory, (B) Agent has received (1) a Collateral Access Agreement, duly authorized, executed and delivered by the Customs Broker handling the shipping and delivery of such Inventory, (2) a copy of the certificate of marine cargo insurance in connection therewith in which it has been named as an additional insured and loss payee in a manner acceptable to Agent and (3) a copy of the invoice and manifest with respect thereto, and (C) such Inventory is not subject to any Letter of Credit Accommodation; (h) Inventory subject to a security interest, lien or hypothec in favor of any person other than Agent except those permitted in this Agreement; (i) bill and hold goods; (j) unserviceable Inventory or Inventory that is obsolete or slow moving in accordance with such Borrower’s historical practices ( provided , that , any Inventory that is held by any Borrower for more than 90 days shall be considered slow-moving; but provided that for purposes of the advance rate based on the Net Recovery Percentage multiplied by the Value of the Inventory of Borrowers specified in the definition of “Borrowing Base” in Section 1 of this Agreement, such Inventory held by any Borrower for more than 90 days shall not be excluded from the Value of Inventory to the extent it has been taken into account as slow moving in the appraisal on which the Net Recovery Percentage is based), unless such Inventory is Bonded Inventory or is subject to price protection or stock rotation arrangements with the vendor of the Inventory; (k) Inventory which is not subject to the first priority, valid and perfected security interest, lien or hypothec of Agent; (l) returned, evaluation, damaged and/or defective Inventory; (m) Inventory purchased or sold on consignment; (n) drop shipped Inventory; (o) Inventory with field technicians; (p) Inventory returned to vendors; and (q) showroom and production Inventory. General criteria for Eligible Inventory may be established and revised from time to time by Agent in its good faith judgment, based on an event, condition or other circumstance arising after the date hereof, or existing on the date hereof to the extent Agent has no written notice thereof from a Borrower, which adversely affects or could reasonably be expected to adversely affect the Inventory in the good faith determination of Agent. Any Inventory which is not Eligible Inventory shall nevertheless be part of the Collateral.

     1.41 “ Eligible Transferee ” shall mean (a) any Lender; (b) the parent company of any Lender and/or any Affiliate of such Lender which is at least fifty (50%) percent owned by such Lender or its parent company; (c) any person (whether a corporation, partnership, trust or otherwise) that is engaged in the business of making, purchasing, holding or otherwise investing in bank loans and similar extensions of credit in the ordinary course of its business and is administered or managed by a Lender or with respect to any Lender that is a fund which invests in bank loans and similar extensions of credit, any other fund that invests in bank loans and similar extensions of credit and is managed by the same investment advisor as such Lender or by an Affiliate of such investment advisor, and in each case is approved by Agent; and (d) any other commercial bank, financial institution or “accredited investor” (as defined in Regulation D under the Securities Act of 1933) approved by Agent, provided , that , (i) neither any Borrower nor any Guarantor or any Affiliate of any Borrower or any Guarantor shall qualify as an Eligible Transferee and (ii) no Person to whom any Indebtedness which is in any way subordinated in

right of payment to any other Indebtedness of any Borrower or any Guarantor shall qualify as an Eligible Transferee, except as Agent may otherwise specifically agree.

     1.42 “ Environmental Laws ” shall mean all foreign, Federal (United States or Canada), State, provincial and local laws (including common law), legislation, rules, codes, licenses, permits (including any conditions imposed therein), authorizations, judicial or administrative decisions, injunctions or agreements between any Borrower or any Guarantor and any Governmental Authority, (a) relating to pollution and the protection, preservation or restoration of the environment (including air, water vapor, surface water, ground water, drinking water, drinking water supply, surface land, subsurface land, plant and animal life or any other natural resource), or to human health or safety, (b) relating to the exposure to, or the use, storage, recycling, treatment, generation, manufacture, processing, distribution, transportation, handling, labeling, production, release or disposal, or threatened release, of Hazardous Materials, or (c) relating to all laws with regard to recordkeeping, notification, disclosure and reporting requirements respecting Hazardous Materials. The term “Environmental Laws” includes (i) the Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, the Federal Superfund Amendments and Reauthorization Act, the Federal Water Pollution Control Act of 1972, the Federal Clean Water Act, the Federal Clean Air Act, the Federal Resource Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste Amendments thereto), the Federal Solid Waste Disposal and the Federal Toxic Substances Control Act, the Federal Insecticide, Fungicide and Rodenticide Act, the Federal Safe Drinking Water Act of 1974, and the Canadian Environmental Protection Act 1999, (ii) applicable state counterparts to such laws, and (iii) any common law or equitable doctrine that may impose liability or obligations for injuries or damages due to, or threatened as a result of, the presence of or exposure to any Hazardous Materials.

     1.43 “ Equipment ” shall mean, as to each Borrower, all of such Borrower’s now owned and hereafter acquired equipment, machinery, computers and computer hardware and software (whether owned or licensed), vehicles, tools, furniture, fixtures, all attachments, accessions and property now or hereafter affixed thereto or used in connection therewith, and substitutions and replacements thereof, wherever located.

     1.44 “ ERISA ” shall mean the United States Employee Retirement Income Security Act of 1974, as the same now exists or may hereafter from time to time be amended, modified, recodified or supplemented, together with all rules, regulations and interpretations thereunder or related thereto.

     1.45 “ ERISA Affiliate ” shall mean any person required to be aggregated with Borrower or any of its Subsidiaries under Sections 414(b), 414(c), 414(m) or 414(o) of the Code.

     1.46 “ ERISA Event ” shall mean (a) any “reportable event”, as defined in Section 4043(c) of ERISA or the regulations issued thereunder, with respect to a Pension Plan, other than events as to which the requirement of notice has been waived in regulations by the Pension Benefit Guaranty Corporation; (b) the adoption of any amendment to a Pension Plan that would require the provision of security pursuant to Section 401(a)(29) of the Code or Section 307 of ERISA; (c) a complete or partial withdrawal by any Borrower, any Guarantor or any ERISA Affiliate from a Multiemployer Plan or a cessation of operations which is treated as such a

withdrawal or notification that a Multiemployer Plan is in reorganization; (d) the filing of a notice of intent to terminate, the treatment of a Pension Plan amendment as a termination under Section 4041 or 4041A of ERISA, or the commencement of proceedings by the Pension Benefit Guaranty Corporation to terminate a Pension Plan; (e) an event or condition which might reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; and (f) the imposition of any liability under Title IV of ERISA, other than the Pension Benefit Guaranty Corporation premiums due but not delinquent under Section 4007 of ERISA, upon any Borrower, any Guarantor or any ERISA Affiliate in excess of $5,000,000.

     1.47 “ Eurodollar Rate Loans ” shall mean any Loans or portion thereof on which interest is payable based on the Adjusted Eurodollar Rate in accordance with the terms hereof.

     1.48 “ Eurodollar Rate Margin ” shall mean:

          (a) two and one-half percent (2.50%) if the average daily Excess Availability during the immediately preceding calendar month is greater than or equal to $35,000,000,

          (b) two and three-quarters percent (2.75%) if the average daily Excess Availability during such period is less than $35,000,000 but greater than or equal to $27,500,000, and

          (c) three percent (3.00%) if the average daily Excess Availability during such period is less than $27,500,000;

provided , that , until April 1, 2009 the “Eurodollar Rate Margin” shall be deemed to be the percentage calculated in Clause (b) hereof.

     1.49 “ Excess ” shall have the meaning set forth in Section 3.1(e) of this Agreement.

     1.50 “ Excess Availability ” shall mean the amount, as determined by Agent, calculated at any date, equal to: (a) the lesser of: (i) the Borrowing Base and (ii) the Revolving Loan Limit (in each case under (i) or (ii) after giving effect to any Reserves other than any Reserves in respect of Letter of Credit Accommodations), minus (b) the sum of: (i) the amount of all then outstanding and unpaid Obligations of Borrowers, plus (ii) the amount of all Reserves then established in respect of Letter of Credit Accommodations, plus (iii) the aggregate amount of all then outstanding and unpaid trade payables and other obligations of such Borrower which are outstanding more than sixty (60) days past due as of the end of the immediately preceding month or at Agent’s option, as of a more recent date based on such reports as Agent may from time to time specify (other than trade payables or other obligations being contested or disputed by such Borrower in good faith), plus (iv) without duplication, the amount of checks issued by such Borrower to pay trade payables and other obligations which are more than sixty (60) days past due as of the end of the immediately preceding month or at Agent’s option, as of a more recent date based on such reports as Agent may from time to time specify (other than trade payables or other obligations being contested or disputed by such Borrower in good faith), but not yet sent; provided , that , for the purposes of determining the Eurodollar Rate Margin and the Prime Rate Margin and for the purposes of Section 9.14 hereof, “Excess Availability” shall mean the amount, as determined by Agent, calculated at any time, equal to: (c) the lesser of the Borrowing

Base and the Revolving Loan Limit, minus , (d) the amount of all then outstanding and unpaid Obligations.

     1.51 “ Exchange Act ” shall mean the Securities Exchange Act of 1934, together with all rules, regulations and interpretations thereunder or related thereto.

     1.52 “ Event of Default ” shall mean the occurrence or existence of any event or condition described in Section 10.1 hereof.

     1.53 “ Fee Letter ” shall have the meaning set forth in Section 3.3(a) hereof.

     1.54 “ Final Maturity Date ” shall mean September 20, 2010, as such date may be extended pursuant to Section 13.1(a) hereof.

     1.55 “ Financing Agreements ” shall mean, collectively, this Agreement , the Fee Letter and all notes, guarantees, security agreements, deposit account control agreements, investment property control agreements, hypothecs, intercreditor agreements, the Bell Micro Mexico Pledge Agreement, and all other agreements, documents and instruments now or at any time hereafter executed and/or delivered by any Borrower or Obligor in connection with this Agreement; provided , that , in no event shall the term “Financing Agreements” be deemed to include any Hedge Agreement.

     1.56 “ 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 Capitalized Lease Obligations incurred), as determined in accordance with GAAP, and (iv) principal payments made or required to be made by such Person or its Subsidiaries during such period on account of any Indebtedness.

     1.57 “ Forefront ” shall have the meaning set forth in the introductory paragraph hereto.

     1.58 “ Foreign Accounts ” are Accounts with respect to which the chief executive office or other principal office of the account debtor with respect to such Accounts is not located in the United States of America or Canada.

     1.59 “ Foreign Lender ” shall mean any Lender that is organized under the laws of a jurisdiction other than that in which a Borrower is resident for tax purposes. For purposes of this definition, the United States of America, each State thereof and the District of Columbia shall be deemed to constitute a single jurisdiction.

     1.60 “ Foreign Subsidiary ” means any Subsidiary that is not a Domestic Subsidiary.

     1.61 “ Funding Bank ” shall have the meaning set forth in Section 3.3 hereof.

     1.62 “ GAAP ” shall mean generally accepted accounting principles in the United States of America as in effect from time to time as set forth in the opinions and pronouncements of the

Accounting Principles Board and the American Institute of Certified Public Accountants and the statements and pronouncements of the Financial Accounting Standards Board which are applicable to the circumstances as of the date of determination consistently applied, except that, for purposes of Section 9.13 hereof, GAAP shall be determined on the basis of such principles in effect on the date hereof and consistent with those used in the preparation of the most recent audited financial statements delivered to Agent prior to the date hereof.

     1.63 “ GE Finance ” shall mean GE Commercial Distribution Finance Corporation, or any of its successors and assigns.

     1.64 “ Governmental Authority ” shall mean any nation or government, any state, province, or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing.

     1.65 “ Guarantor ” shall mean each of the Guarantors set forth in the introductory paragraph hereof, and any other guarantor, endorser, acceptor, surety or other Person liable on or with respect to the Obligations or who is the owner of any property which is security for the Obligations, other than Borrowers.

     1.66 “ Hazardous Materials ” shall mean any hazardous, toxic or dangerous substances, materials and wastes, including hydrocarbons (including naturally occurring or man-made petroleum and hydrocarbons), flammable explosives, asbestos, urea formaldehyde insulation, radioactive materials, biological substances, polychlorinated biphenyls, pesticides, herbicides and any other kind and/or type of pollutants or contaminants (including materials which include hazardous constituents), sewage, sludge, industrial slag, solvents and/or any other similar substances, materials, or wastes and including any other substances, materials or wastes that are or become regulated under any Environmental Law (including any that are or become classified as hazardous or toxic under any Environmental Law).

     1.67 “ Hedge Agreement ” shall mean an agreement between any Borrower or any Guarantor and Agent or any Bank Product Provider that is a swap agreement as such term is defined in 11 U.S.C. Section 101, and including any rate swap agreement, basis swap, forward rate agreement, commodity swap, interest rate option, forward foreign exchange agreement, spot foreign exchange agreement, rate cap agreement rate, floor agreement, rate collar agreement, currency swap agreement, cross-currency rate swap agreement, currency option, any other similar agreement (including any option to enter into any of the foregoing or a master agreement for any the foregoing together with all supplements thereto) for the purpose of protecting against or managing exposure to fluctuations in interest or exchange rates, currency valuations or commodity prices; sometimes being collectively referred to herein as “Hedge Agreements”.

     1.68 “ Indebtedness ” shall mean, with respect to any Person, any liability (a) in respect of borrowed money (whether or not the recourse of the lender is to the whole of the assets of such Person or only to a portion thereof) or evidenced by bonds, notes, indentures or similar instruments; (b) representing the balance deferred and unpaid of the purchase price of any property or services (except any such balance that constitutes an account payable to a trade

supplier in the ordinary course of business of such Person in connection with obtaining goods, materials or services, to the extent such balance is not more than ninety (90) days past due); (c) all Capitalized Lease Obligations; (d) any contractual obligations, contingent or otherwise, of such Person to pay or be liable for the payment of any indebtedness described in this definition of another Person, including, without limitation, any such indebtedness, directly or indirectly guaranteed, endorsed (other than for collection or deposit in the ordinary course of business), co-made or discounted or sold with recourse by such Person, or in respect of which such Person is otherwise directly or indirectly liable, including contractual obligations (contingent or otherwise) arising through any agreement to purchase, repurchase, or otherwise acquire such indebtedness, obligation or liability or any security therefor, or to provide funds for the payment or discharge thereof (whether in the form of loans, advances, stock purchases, capital contributions or otherwise), or to maintain solvency, assets, level of income, or other financial condition, or to make payment other than for value received; (e) all obligations with respect to redeemable stock and redemption or repurchase obligations under any Capital Stock or other equity securities issued by such Person; (f) all reimbursement obligations and other liabilities, contingent or otherwise, of such Person with respect to bonds, letters of credit, banker’s acceptances or similar documents or instruments issued for such Person’s account; (g) all indebtedness of such Person in respect of indebtedness of another Person for borrowed money or indebtedness of another Person otherwise described in this definition which is secured by any security interest in, or mortgage or lien upon the interest in any asset of such Person, whether or not such obligations, liabilities or indebtedness are assumed by or are a personal liability of such Person, all as of such time; and (h) all obligations, liabilities and indebtedness of such Person (marked to market) arising under swap agreements, cap agreements and collar agreements and other agreements or arrangements designed to protect such Person against fluctuations in interest rates or currency or commodity values.

     1.69 “ Indemnified Parties ” shall have the meaning set forth in Section 9.3 hereof.

     1.70 “ Indenture ” shall mean that certain Indenture, dated as of March 5, 2004, between Administrative Borrower and Wells Fargo Bank, National Association, as trustee.

     1.71 “ Information Certificate ” shall mean the Information Certificate of Borrowers and Guarantors attached hereto as Exhibit C .

     1.72 “ Intellectual Property ” shall mean, as to each Borrower and each Guarantor, such Borrower’s and such Guarantor’s now owned and hereafter arising or acquired: patents, patent rights, patent applications, copyrights, works which are the subject matter of copyrights, copyright applications, copyright registrations, trademarks, servicemarks, trade names, trade styles, trademark and service mark applications, and licenses and rights to use any of the foregoing and all applications, registrations and recordings relating to any of the foregoing as may be filed in the United States Copyright Office, the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof, any political subdivision thereof or in any other country or jurisdiction, together with all rights and privileges arising under applicable law with respect to any Borrower’s or any Guarantor’s use of any of the foregoing; all extensions, renewals, reissues, divisions, continuations, and continuations-in-part of any of the foregoing; all rights to sue for past, present and future infringement of any of the foregoing; inventions, trade secrets, formulae, processes, compounds, drawings, designs,

blueprints, surveys, reports, manuals, and operating standards; goodwill (including any goodwill associated with any trademark or servicemark, or the license of any trademark or servicemark); customer and other lists in whatever form maintained; trade secret rights, copyright rights, rights in works of authorship, domain names and domain name registration; software and contract rights relating to computer software programs, in whatever form created or maintained.

     1.73 “ 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 Capitalized Lease Obligations 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.

     1.74 “ Interest Period ” shall mean for any Eurodollar Rate Loan, a period of approximately one (1), two (2), three (3), or six (6) months duration as a Borrower (or Administrative Borrower on behalf of such Borrower) may elect, the exact duration to be determined in accordance with the customary practice in the applicable London Interbank Offered Rate market; provided , that , no Borrower (and Administrative Borrower on behalf of such Borrower) may elect an Interest Period which will end after the last day of the then-current term of this Agreement.

     1.75 “ Interest Rate ” shall mean:

          (a) Subject to clause (b) below, (i) as to Prime Rate Loans, a rate per annum equal to the applicable Prime Rate Margin plus the Prime Rate, and (ii) as to Eurodollar Rate Loans, a rate per annum equal to the applicable Eurodollar Rate Margin plus the Adjusted Eurodollar Rate (based on the London Interbank Offered Rate applicable for the Interest Period selected by a Borrower (or on its behalf by Administrative Borrower) as in effect three (3) Business Days after the date of receipt by Agent of the request by or on behalf of such Borrower for such Eurodollar Rate Loans in accordance with the terms hereof, whether such rate is higher or lower than any rate previously quoted to such Borrower or Administrative Borrower).

          (b) Notwithstanding anything to the contrary contained in clause (a) above, the Interest Rate shall mean, at Agent’s option, the rate two percent (2%) more than would otherwise be payable pursuant to clause (a) above, without notice, (i) for the period (A) from and after the date of termination hereof until Agent and Lenders have received full and final payment of all Obligations (notwithstanding entry of a judgment against any Borrower) and (B) from and after the date of the occurrence of an Event of Default for so long as such Event of Default is continuing as determined by Agent, and (ii) on the Revolving Loans to any Borrower at any time outstanding in excess of the Borrowing Base of such Borrower (whether or not such excess(es), arise or are made with or without Agent’s or any Lender’s knowledge or consent and whether made before or after an Event of Default).

     1.76 “ Inventory ” shall mean, as to each Borrower and each Guarantor, all of such Borrower’s and such Guarantor’s now owned and hereafter existing or acquired goods, wherever located, which (a) are leased by such Borrower or such Guarantor as lessor; (b) are held by such Borrower or such Guarantor for sale or lease or to be furnished under a contract of service; (c)

are furnished by such Borrower or such Guarantor under a contract of service; or (d) consist of raw materials, work in process, finished goods or materials used or consumed in its business.

     1.77 “ Inventory Loan Limit ” shall mean $100,000,000; provided , however , that if, as of any date of determination, the last appraisal as to the Inventory provided by Borrowers to Agent pursuant to Section 7.3(d) or Section 7.3(e) hereof is more than six months old, Inventory Loan Limit shall mean the lesser of (a) $25,000,000, or (b) an amount equal to twenty-five percent (25%) of the amount calculated under Clause (a)(ii) of the definition of the Borrowing Base.

     1.78 “ Issuing Bank ” shall mean Wachovia or any Lender that is approved by Agent that shall issue a Letter of Credit for the account of a Borrower and have agreed in a manner satisfactory to Agent to be subject to the terms hereof as an Issuing Bank.

     1.79 “ Lenders ” shall mean the financial institutions who are signatories hereto as lenders and other persons made a party to this Agreement as Lenders in accordance with Section 13.6 hereof, and their respective successors and assigns.

     1.80 “ Letter of Credit Accommodations ” shall mean the letters of credit, merchandise purchase or other guaranties which are from time to time either (a) issued or opened by Agent or any Lender for the account of any Borrower or Obligor or (b) with respect to which Agent on behalf of Lenders has agreed to indemnify the issuer or guaranteed to the issuer the performance by any Borrower or Obligor of its obligations to such issuer; sometimes being referred to herein individually as a “Letter of Credit Accommodation.”

     1.81 “ Letter of Credit Documents ” shall mean, with respect to any Letter of Credit, such Letter of Credit, any amendments thereto, any documents delivered in connection therewith, any application therefor, and any agreements, instruments, guarantees or other documents (whether general in application or applicable only to such Letter of Credit) governing or providing for (a) the rights and obligations of the parties concerned or at risk or (b) any collateral security for such obligations.

     1.82 “ Letters of Credit ” shall mean all letters of credit (whether documentary or stand-by and whether for the purchase of inventory, equipment or otherwise) issued by an Issuing Bank for the account of any Borrower pursuant to this Agreement, and all amendments, renewals, extensions or replacements thereof.

     1.83 “ London Interbank Offered Rate ” shall mean, with respect to any Eurodollar Rate Loan for the Interest Period applicable thereto, the rate of interest per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Telerate Page 3750 (or any successor page) as the London interbank offered rate for deposits in Dollars at approximately 11:00 A.M. (London time) two (2) Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period; provided , that , if more than one rate is specified on Telerate Page 3750, the applicable rate shall be the arithmetic mean of all such rates. If, for any reason, such rate is not available, the term “London Interbank Offered Rate” shall mean, with respect to any Eurodollar Rate Loan for the Interest Period applicable thereto, the rate of interest per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO

Page as the London interbank offered rate for deposits in Dollars at approximately 11:00 A.M. (London time) two (2) Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period; provided , however , if more than one rate is specified on Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean of all such rates.

     1.84 “ Material Adverse Effect ” shall mean, with respect to any Person or any group, a material adverse effect on (a) the financial condition, business, performance, operations or properties of such Person or of the group taken as a whole; (b) the legality, validity or enforceability as to such Person or such group of this Agreement or any of the other Financing Agreements; (c) the legality, validity, enforceability, perfection or priority of the security interests and liens of Agent or any Lender upon the Collateral or any other property of such Person or of the group (taken as a whole) that is security for the Obligations, or the value of the Collateral or such other property; (d) the ability of such Person or of the group taken as a whole to repay the Obligations attributable to such Person or group or of any such Person or of the group taken as a whole to perform its respective obligations under this Agreement or any of the other Financing Agreements; or (e) the ability of Agent or any Lender to enforce the Obligations or realize upon the Collateral or otherwise with respect to the rights and remedies of Agent or any Lender under this Agreement or any of the other Financing Agreements.

     1.85 “ Maximum Interest Rate ” shall mean the maximum non-usurious rate of interest under applicable Federal (United States or Canada) or State or provincial law as in effect from time to time that may be contracted for, taken, reserved, charged or received in respect of the Obligations.

     1.86 “ Mexico Shareholder ” shall have the meaning set forth in the introductory paragraph hereof.

     1.87 “ Multiemployer Plan ” shall mean any benefit plan of the type described in Section 4001(a)(3) of ERISA, to which any Borrower or Guarantor makes or is obligated to make contributions, or during the preceding five (5) Plan years, has made or was obligated to make contributions.

     1.88 “ Net Amount of Eligible Accounts ” shall mean the gross amount of Eligible Accounts less (a) sales, excise or similar taxes included in the amount thereof and (b) returns, discounts, claims, credit and allowances of any nature at any time issued, owing, granted, outstanding or claimed with respect thereto.

     1.89 “ Net Recovery Percentage ” shall mean the fraction, expressed as a percentage, (a) the numerator of which is the amount equal to the amount of the recovery in respect of the Inventory at such time on an orderly liquidation value basis as set forth in the most recent acceptable appraisal of Inventory received by Agent in accordance with Section 7.3 , net of operating expenses, liquidation expenses and commissions, and (b) the denominator of which is the original cost of the aggregate amount of the Inventory subject to such appraisal.

     1.90 “ 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.

     1.91 “ Net Storage ” shall have the meaning set forth in Section 9.10 hereof.

     1.92 “ New ProSys ” shall mean New ProSys Corp., a Georgia corporation.

     1.93 “ Obligations ” shall mean (a) any and all Loans, Letter of Credit Accommodations and all other obligations, liabilities and indebtedness of every kind, nature and description owing by any or all of Borrowers to Agent or any Lender and/or any of their Affiliates, including principal, interest, charges, fees, costs and expenses, however evidenced, whether as principal, surety, endorser, guarantor or otherwise, arising under this Agreement or any of the other Financing Agreements or arising under or in connection with any Bank Products, whether now existing or hereafter arising, whether arising before, during or after the initial or any renewal term of this Agreement or after the commencement of any case or proceeding with respect to any Borrower under the United States Bankruptcy Code, the Bankruptcy and Insolvency Act (Canada), the Companies’ Creditors Arrangement Act (Canada), or any similar statute (including, without limitation, the payment of interest and other amounts which would accrue and become due but for the commencement of such case or proceeding, whether or not such amounts are allowed or allowable in whole or in part in such case or proceeding), whether direct or indirect, absolute or contingent, joint or several, due or not due, primary or secondary, liquidated or unliquidated, or secured or unsecured and (b) for purposes only of Section 5.1 hereof and subject to the priority in right of payment set forth in Section 6.4 hereof, all obligations, liabilities and indebtedness of every kind, nature and description owing by any or all of Borrowers or Guarantors to Agent or any Bank Product Provider arising under or pursuant to any Bank Products, whether now existing or hereafter arising, provided , that , (i) as to any such obligations, liabilities and indebtedness arising under or pursuant to a Hedge Agreement, the same shall only be included within the Obligations if upon Agent’s request, Agent shall have entered into an agreement, in form and substance satisfactory to Agent, with the Bank Product Provider that is a counterparty to such Hedge Agreement, as acknowledged and agreed to by Borrowers and Guarantors, providing for the delivery to Agent by such counterparty of information with respect to the amount of such obligations and providing for the other rights of Agent and such Bank Product Provider in connection with such arrangements, provided , however , that Hedge Agreements under or in respect of which Co-Agent or its Affiliates are the counterparty shall be included within the Obligations without the requirement for any such agreement, (ii) any Bank Product Provider, other than Wachovia and its Affiliates or Co-Agent and its Affiliates, shall have delivered written notice to Agent that (A) such Bank Product

Provider has entered into a transaction to provide Bank Products to Borrowers and Guarantors and (B) the obligations arising pursuant to such Bank Products provided to Borrowers and Guarantors constitute Obligations entitled to the benefits of the security interest of Agent granted hereunder, and Agent shall have accepted such notice in writing and (iii) in no event shall any Bank Product Provider acting in such capacity to whom such obligations, liabilities or indebtedness are owing be deemed a Lender for purposes hereof to the extent of and as to such obligations, liabilities or indebtedness except that each reference to the term “Lender” in Sections 12.1 , 12.2 , 12.3(b) , 12.6 , 12.7 , 12.9 , 12.12 and 13.6 hereof shall be deemed to include such Bank Product Provider and in no event shall the approval of any such person in its capacity as Bank Product Provider be required in connection with the release or termination of any security interest or lien of Agent.

     1.94 “ Obligor ” shall mean any guarantor, endorser, acceptor, surety or other person liable on or with respect to the Obligations or who is the owner of any property which is security for the Obligations (including, without limitation, the Guarantors), other than a Borrower.

     1.95 “ Old ProSys ” shall mean ProSys Information Systems, Inc., a Georgia corporation.

     1.96 “ Original Loan Agreement ” shall have the meaning set forth in the preliminary statements of this Agreement.

     1.97 “ Other Taxes ” shall have the meaning set forth in Section 6.5 hereof.

     1.98 “ Participant ” shall mean any financial institution that acquires and holds a participation in the interest of any Lender in any of the Loans and Letter of Credit Accommodations in conformity with the provisions of Section 13.6 of this Agreement governing participations.

     1.99 “ Payment Account ” shall have the meaning set forth in Section 6.3 hereof.

     1.100 “ Pension Plan ” shall mean a pension plan (as defined in Section 3(2) of ERISA) subject to Title IV of ERISA which any Borrower or any Guarantor sponsors, maintains, or to which any Borrower, any Guarantor or any ERISA Affiliate makes, is making, or is obligated to make contributions, other than a Multiemployer Plan.

     1.101 “ Permitted Discretion ” means a determination made in good faith and in the exercise of commercially reasonable business judgment.

     1.102 “ Permits ” shall have the meaning set forth in Section 8.7 hereof.

     1.103 “ Person ” or “ person ” shall mean any individual, sole proprietorship, partnership, corporation (including, without limitation, any corporation which elects subchapter S status under the Code), limited liability company, limited liability partnership, business trust, unincorporated association, joint stock corporation, trust, joint venture or other entity or any government or any agency or instrumentality or political subdivision thereof.

     1.104 “ Plan ” shall mean an employee benefit plan (as defined in Section 3(3) of ERISA) which any Borrower or any Guarantor sponsors, maintains, or to which it makes, is making, or is obligated to make contributions, or in the case of a Multiemployer Plan has made contributions at any time during the immediately preceding six (6) plan years or with respect to which any Borrower or any Guarantor may incur liability.

     1.105 “ PPSA ” shall mean the Personal Property Security Act (Ontario), the Personal Property Security Act (Nova Scotia), the Civil Code of Quebec and any other applicable Canadian or provincial personal property security legislation as all such legislation now exists or may from time to time hereafter be amended, modified, recodified, supplemented or replaced, together with all rules, regulations and interpretations thereunder or related thereto.

     1.106 “ Prime Rate ” shall mean the higher of the rate from time to time publicly announced by Wachovia, or its successors, as its prime rate, whether or not such announced rate is the best rate available at such bank or the Federal Funds Effective Rate from time to time plus one-half ( ¹ / 2 %) percent. The term “Federal Funds Effective Rate” shall mean, for any period, a fluctuating interest rate per annum equal, for each day during such period, to the weighted average of the rates on overnight Federal Funds transactions with members of the Federal Reserve System arranged by Federal Funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for such day on such transactions received by Agent from three Federal Funds brokers of recognized standing selected by it.

     1.107 “ Prime Rate Loans ” shall mean any Revolving Loans or portion thereof on which interest is payable based on the Prime Rate in accordance with the terms thereof.

     1.108 “ Prime Rate Margin ” shall mean:

          (a) one-quarter of one percent (0.25%) if the average daily Excess Availability during the immediately preceding calendar month is greater than or equal to $35,000,000,

          (b) one-half of one percent (0.50%) if the average daily Excess Availability during such period is less than $35,000,000 but greater than or equal to $27,500,000, and

          (c) three-quarters of one percent (0.75%) if the average daily Excess Availability during such period is less than $27,500,000;

provided , that , until April 1, 2009 the “Prime Rate Margin” shall be deemed to be the percentage calculated in Clause (b) hereof.

     1.109 “ Priority Payables Reserve ” shall mean, at any time, the full amount of the liabilities at such time which have a trust imposed to provide for payment or security interest, lien or charge ranking or capable of ranking senior to or pari passu with security interests, liens or charges securing the Obligations on any of the Collateral under federal, provincial, state, county, municipal, or local law including, but not limited, to claims for unremitted and accelerated rents, taxes, wages, workers’ compensation obligations, vacation pay, government

royalties or pension fund obligations, together with the aggregate value, determined in accordance with GAAP, of all Eligible Inventory which Agent considers may be or may become subject to a right of a supplier to recover possession thereof under any federal, state or provincial law, where such supplier’s right may have priority over the security interests, liens or charges securing the Obligations including, without limitation, Eligible Inventory subject to a right of a supplier to repossess goods pursuant to Section 81.1 of the Bankruptcy and Insolvency Act (Canada).

     1.110 “ Pro Rata Share ” shall mean the fraction (expressed as a percentage) the numerator of which is such Lender’s Revolving Loan Commitment and the denominator of which is the aggregate amount of all of the Revolving Loan Commitments as adjusted from time to time in accordance with the provisions of Section 13.6 hereof; provided , that , if the Revolving Loan Commitments have been terminated, the numerator shall be the unpaid amount of such Lender’s Revolving Loans and its interest in the Letter of Credit Accommodations and the denominator shall be the aggregate amount of all unpaid Revolving Loans and Letter of Credit Accommodations.

     1.111 “ Real Property ” shall mean, as to each Borrower, all now owned and hereafter acquired real property of such Borrower, including leasehold interests, together with all buildings, structures, and other improvements located thereon and all licenses, easements and appurtenances relating thereto, wherever located.

     1.112 “ Receivables ” shall mean all of the following now owned or hereafter arising or acquired property of each Borrower and each Guarantor: (a) all Accounts; (b) all interest, fees, late charges, penalties, collection fees and other amounts due or to become due or otherwise payable in connection with any Account; (c) all payment intangibles of such Borrower or such Guarantor; (d) letters of credit, indemnities, guarantees, security or other deposits and proceeds thereof issued payable to any Borrower or any Guarantor or otherwise in favor of or delivered to any Borrower or any Guarantor in connection with any Account; or (e) all other accounts, contract rights, chattel paper, instruments, notes, general intangibles and other forms of obligations owing to any Borrower or any Guarantor, whether from the sale and lease of goods or other property, licensing of any property (including Intellectual Property or other general intangibles), rendition of services or from loans or advances by any Borrower or any Guarantor or to or for the benefit of any third person (including loans or advances to any Affiliates or Subsidiaries of any Borrower or any Guarantor) or otherwise associated with any Accounts, Inventory or general intangibles of any Borrower or any Guarantor (including, without limitation, choses in action, causes of action, tax refunds, tax refund claims, any funds which may become payable to any Borrower or any Guarantor in connection with the termination of any Plan or other employee benefit plan and any other amounts payable to any Borrower or any Guarantor from any Plan or other employee benefit plan, rights and claims against carriers and shippers, rights to indemnification, business interruption insurance and proceeds thereof, casualty or any similar types of insurance and any proceeds thereof and proceeds of insurance covering the lives of employees on which any Borrower or any Guarantor is a beneficiary).

     1.113 “ Records ” shall mean, as to each Borrower, all of such Borrower’s present and future books of account of every kind or nature, purchase and sale agreements, invoices, ledger cards, bills of lading and other shipping evidence, statements, correspondence, memoranda,

credit files and other data relating to the Collateral or any account debtor, together with the tapes, disks, diskettes and other data and software storage media and devices, file cabinets or containers in or on which the foregoing are stored (including any rights of such Borrower with respect to the foregoing maintained with or by any other person).

     1.114 “ Register ” shall have the meaning set forth in Section 13.6 hereof.

     1.115 “ Required Lenders ” shall mean, at any time, those Lenders whose Pro Rata Shares based on their respective Commitments aggregate sixty-three percent (63%) or more of the aggregate of the Commitments of all Lenders, or if the Commitments shall have been terminated, Lenders to whom at least sixty-three percent (63%) of the then outstanding Obligations are owing.

     1.116 “ Reserves ” shall mean as of any date of determination, such amounts as Agent may from time to time deem necessary to establish and revise in its Permitted Discretion reducing the amount of Loans and Letters of Credit that would otherwise be available to any Borrower under the lending formula(s) provided for herein: (a) to reflect events, conditions, contingencies or risks which, as determined by Agent in good faith, adversely affect, or would have a reasonable likelihood of adversely affecting, either (i) the Collateral or any other property which is security for the Obligations or its value or (ii) the assets, business or prospects of any Borrower or Obligor or (iii) the security interests and other rights of Agent or any Lender in the Collateral (including the enforceability, perfection and priority thereof) or (b) to reflect Agent’s good faith belief in its commercially reasonable business judgment that any collateral report or financial information furnished by or on behalf of any Borrower or Obligor to Agent is or may have been incomplete, inaccurate or misleading in any material respect or (c) to reflect outstanding Letter of Credit Accommodations as provided in Section 2.2 hereof or (d) in respect of any state of facts which Agent determines in its Permitted Discretion constitutes a Default or an Event of Default. Without limiting the generality of the foregoing, Reserves may, at Agent’s option, be established to reflect (without duplication): (i) dilution with respect to Accounts (based on the ratio of the aggregate amount of non-cash reductions in Accounts for any period to the aggregate dollar amount of the sales of such Borrower for such period) as calculated by Agent for any period is or is reasonably anticipated to be greater than five (5.0%) percent (it being understood and agreed that Agent shall not eliminate or reduce this Reserve for dilution without the consent of Required Lenders); (ii) returns, discounts, claims, credits and allowances of any nature that are not paid pursuant to the reduction of Accounts; (iii) sales, excise or similar taxes included in the amount of any Accounts reported to Agent; (iv) a change in the turnover, age or mix of the categories of Inventory that adversely affects the aggregate value of all Inventory; (v) amounts due or to become due to owners and lessors of premises where any Collateral is located, other than for those locations where Agent has received a Collateral Access Agreement that Agent has accepted in writing; (vi) amounts due or to become due to owners and licensors of trademarks and other Intellectual Property used by any Borrower; (vii) obligations, liabilities or indebtedness (contingent or otherwise) of Borrowers or Guarantors to Agent or any Bank Product Provider arising under or in connection with any Bank Products or as Agent or any Bank Product Provider may otherwise require in connection therewith to the extent that such obligations, liabilities or indebtedness constitute Obligations as such term is defined herein or otherwise receive the benefit of the security interest of Agent in any Collateral; (viii) payments owing to the RSA and its Affiliates, whether under the RSA Notes or otherwise; (ix) payments

that may become due and payable by any Borrower under any foreign exchange contract upon the commencement of any foreign exchange contracts; (x) any exposure of any Borrower on account of settlements on foreign exchanges; (xi) daylight overdrafts on foreign exchanges; (xii) past due trade payables; (xiii) book overdrafts and held checks; and (xiv) the Priority Payables Reserve. The amount of any Reserve established by Agent shall have a reasonable relationship to the event, condition or other matter which is the basis for such reserve as determined by Agent in its Permitted Discretion and to the extent that such Reserve is in respect of amounts that may be payable to third parties Agent may, at its option, deduct such Reserve from the Revolving Loan Limit, at any time that such limit is less than the amount of the Borrowing Base.

     1.117 “ Revolving Credit Facility ” shall mean the Revolving Loans and Letter of Credit Accommodations provided to any Borrower pursuant to Sections 2.1 , 2.2 and 2.3 hereof.

     1.118 “ Revolving Loan Commitment ” shall mean, at any time, as to each Lender, the principal amount set forth below designated as the Revolving Loan Commitment or on Schedule 1 to the Assignment and Acceptance Agreement pursuant to which such Lender became a Lender hereunder in accordance with the provisions of Section 13.6 hereof, as the same may be adjusted from time to time in accordance with the terms hereof; sometimes being collectively referred to herein as “Revolving Loan Commitments”:

     1.119 “ Revolving Loan Limit ” shall mean $204,000,000.

     1.120 “ Revolving Loans ” or “Loans” shall mean the loans made to or for the benefit of any Borrower by or on behalf of any Lender or by Agent for the ratable account of a Lender, on a revolving basis pursuant to the Revolving Credit Facility (involving advances, repayments and readvances) as set forth in Section 2.1 hereof.

     1.121 “ RSA ” shall mean collectively the Teachers’ Retirement Systems of Alabama, the Employees’ Retirement Systems of Alabama, the Judicial Retirement Fund, the PEIRAF-Deferred Compensation Plan, the Public Employees Individual Retirement Account Fund and the State Employees’ Health Insurance Fund.

     1.122 “ RSA Debt Agreements ” shall mean, collectively, that certain Securities Purchase Agreement dated as of October 2, 2006 between Administrative Borrower and the RSA executed in connection with the October 2, 2006 RSA Notes and that certain Amended and Restated

Credit Agreement dated as of June 30, 2008 between Administrative Borrower and the RSA executed in connection with the June 30, 2008 RSA Notes.

     1.123 “ RSA Notes ” shall mean, collectively, those certain senior subordinated notes dated June 30, 2008 executed by Administrative Borrower to the order of RSA in the original aggregate principal sum of $56,500,000 and those certain senior subordinated notes dated October 2, 2006 executed by Administrative Borrower to the order of RSA in the original aggregate principal sum of $35,000,000, in each case as the same may be amended from time to time.

     1.124 “ Securities ” shall mean the 3.75% Convertible Notes due 2024 or any of them, as amended or supplemented from time to time, that are issued under the Indenture, in an aggregate amount of up to $110,000,000.

     1.125 “ Securitization Credit Agreement ” shall mean that certain Second Amended and Restated Credit and Security Agreement, dated May 14, 2007, by and among Bell Microproducts Funding Corporation, a Delaware corporation, as borrower, Administrative Borrower, as Servicer, Blue Ridge Asset Funding Corporation, Wachovia Bank, National Association, as Agent, and the liquidity banks from time to time party thereto.

     1.126 “ Series B Indenture ” shall mean the Indenture, dated December 20, 2006, between Administrative Borrower and Wells Fargo Bank, National Association, as trustee, regarding the issuance by Administrative Borrower of the Series B Securities.

     1.127 “ Series B Securities ” shall mean the Series B 3.75% Convertible Subordinated Notes due 2024 in the aggregate principal amount of up to $110,000,000, issued by Administrative Borrower in exchange for some or all of the Securities pursuant to the Series B Indenture.

     1.128 “ Settlement Period ” shall have the meaning set forth in Section 6.12 .

     1.129 “ Solvent ” shall mean, at any time with respect to any Person, that at such time such Person (a) is able to pay its debts as they mature and has (and has a reasonable basis to believe it will continue to have) sufficient capital (and not unreasonably small capital) to carry on its business consistent with its practices as of the date hereof, and (b) the assets and properties of such Person at a fair valuation (and including as assets for this purpose at a fair valuation all rights of subrogation, contribution or indemnification arising pursuant to any guarantees given by such Person) are greater than the Indebtedness of such Person, and including subordinated and contingent liabilities computed at the amount which, such person has a reasonable basis to believe, represents an amount which can reasonably be expected to become an actual or matured liability (and including as to contingent liabilities arising pursuant to any guarantee the face amount of such liability as reduced to reflect the probability of it becoming a matured liability).

     1.130 “ Special Agent Advances ” shall have the meaning set forth in Section 12.11 hereof.

     1.131 “ Subject Subsidiary ” shall mean all Subsidiaries of Borrowers organized under the laws of any state in the United States, any province of Canada or any political jurisdiction of

any country in South America, except for (i) any Subsidiary that is itself a Borrower or Guarantor, and (ii) Bell Micro Europe.

     1.132 “ Subsidiary ” shall mean, with respect to any Person, any corporation, limited or general partnership, trust, association or other business entity of which an aggregate of at least a majority of the outstanding Capital Stock or other interests entitled to vote in the election 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 have or might have voting power by reason of the happening of any contingency), managers, trustees or other controlling persons, or an equivalent controlling interest therein, of such Person is, at the time, directly or indirectly, owned by such Person and/or one or more Subsidiaries of such Person.

     1.133 “ Target ” shall have the meaning set forth in Section 2.3 of this Agreement.

     1.134 “ Taxes ” shall have the meaning set forth in Section 6.5 of this Agreement.

     1.135 “ Total Tec ” shall have the meaning set forth in the introductory paragraph hereof.

     1.136 “ UCC ” shall mean the Uniform Commercial Code as in effect in the State of California as of the date hereof.

     1.137 “ Value ” shall mean, with respect to Inventory of each Borrower, the lower of (a) cost computed on a first-in-first-out cost basis in accordance with the historical practices of such Borrower previously disclosed to Agent and in accordance with GAAP or (b) market value in accordance with GAAP, as determined by such Borrower in its good faith judgment so long as the final determination is acceptable to Agent in its commercially reasonable judgment, provided , that , for purposes of the calculation of the Borrowing Base, (i) the Value of the Inventory shall not include: (A) the portion of the value of Inventory equal to the profit earned by any Affiliate on the sale thereof to any Borrower or (B) write-ups or write-downs in value with respect to currency exchange rates and (ii) notwithstanding anything to the contrary contained herein, the cost of the Inventory shall be computed in the same manner and consistent with the most recent appraisal of the Inventory received and accepted by Agent prior to the date hereof, if any.

     1.138 “ Voting Stock ” shall mean with respect to any Person, (a) one (1) or more classes of Capital Stock of such Person having general voting powers to elect at least a majority of the board of directors, managers or trustees of such Person, irrespective of whether at the time Capital Stock of any other class or classes have or might have voting power by reason of the happening of any contingency, and (b) any Capital Stock of such Person convertible or exchangeable without restriction at the option of the holder thereof into Capital Stock of such Person described in clause (a) of this definition

SECTION 2. CREDIT FACILITIES

     2.1 Revolving Loan Facility . Subject to and upon the terms and conditions contained herein, each Lender severally (and not jointly) agrees to fund its Pro Rata Share of Revolving Loans to Borrowers, other than a Disqualified Borrower, from time to time in amounts requested

by any Borrower other than a Disqualified Borrower (or on its behalf by Administrative Borrower), up to the amount at any time outstanding equal to the Borrowing Base.

     2.2 Letter of Credit Accommodations .

          (a) Subject to, and upon the terms and conditions contained herein, at the request of a Borrower other than a Disqualified Borrower (or Administrative Borrower on behalf of such Borrower), Agent agrees, for the ratable risk of each Lender according to its Pro Rata Share, to provide or arrange for Letter of Credit Accommodations for the account of such Borrower containing terms and conditions acceptable to Agent and the issuer thereof. Any payments made by Agent or any Lender to any issuer thereof and/or related parties in connection with the Letter of Credit Accommodations shall constitute additional Revolving Loans to such Borrower pursuant to this Section 2.

          (b) The Borrower requesting such Letter of Credit (or Administrative Borrower on behalf of such Borrower) shall give Agent and Issuing Bank three (3) Business Days’ prior written notice of such Borrower’s request for the issuance of a Letter of Credit. Such notice shall be irrevocable and shall specify the original face amount of the Letter of Credit requested, the effective date (which date shall be a Business Day and in no event shall be a date less than ten (10) days prior to the end of the then current term of this Agreement) of issuance of such requested Letter of Credit, whether such Letter of Credit may be drawn in a single or in partial draws, the date on which such requested Letter of Credit is to expire (which date shall be a Business Day and shall not be more than one year from the date of issuance), the purpose for which such Letter of Credit is to be issued, and the beneficiary of the requested Letter of Credit. The Borrower requesting the Letter of Credit (or Administrative Borrower on behalf of such Borrower) shall attach to such notice the proposed terms of the Letter of Credit. The renewal or extension of any Letter of Credit shall, for purposes hereof be treated in all respects the same as the issuance of a new Letter of Credit hereunder.

          (c) In addition to being subject to the satisfaction of the applicable conditions precedent contained in Section 4 hereof and the other terms and conditions contained herein, no Letter of Credit Accommodations shall be available unless each of the following conditions precedent have been satisfied in a manner satisfactory to Agent: (i) the Borrower requesting such Letter of Credit Accommodation shall have delivered to the proposed issuer of such Letter of Credit Accommodation at such times and in such manner as such proposed issuer may require, an application in form and substance satisfactory to such proposed issuer and Agent for the issuance of the Letter of Credit Accommodation and such other documents as may be required pursuant to the terms thereof, and the form and terms of the proposed Letter of Credit Accommodation shall be satisfactory to Agent and such proposed issuer, (ii) as of the date of issuance, no order of any court, arbitrator or other Governmental Authority shall purport by its terms to enjoin or restrain money center banks generally from issuing letters of credit of the type and in the amount of the proposed Letter of Credit Accommodation, and no law, rule or regulation applicable to money center banks generally and no request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over money center banks generally shall prohibit, or request that the proposed issuer of such Letter of Credit Accommodation refrain from, the issuance of letters of credit generally or the issuance of such Letters of Credit Accommodation; and (iii) the Excess Availability, prior to giving effect to any

Reserves with respect to such Letter of Credit Accommodations, on the date of the proposed issuance of any Letter of Credit Accommodations, shall be equal to or greater than: (A) if the proposed Letter of Credit Accommodation is for the purpose of purchasing Eligible Inventory and the documents of title with respect thereto are consigned to or endorsed in favor of Agent or its designee, the sum of (1) the percentage equal to one hundred percent (100%) minus the then applicable percentage for Eligible Inventory set forth in the definition of the Borrowing Base multiplied by the Value of such Eligible Inventory, plus (2) freight, taxes, duty and other amounts which Agent estimates in good faith must be paid in connection with such Inventory upon arrival and for delivery to one of such Borrower’s locations for Eligible Inventory within the United States of America or Canada and (B) if the proposed Letter of Credit Accommodation is for any other purpose or the documents of title are not consigned to the issuer in connection with a Letter of Credit Accommodation for the purpose of purchasing Eligible Inventory, an amount equal to one hundred percent (100%) of the face amount thereof and all other commitments and obligations made or incurred by Agent and Lenders with respect thereto. Effective on the issuance of each Letter of Credit Accommodation, a reserve shall be established in the applicable amount set forth in Section 2.2(c)(iii) above.

          (d) Except in Agent’s discretion, the amount of all outstanding Letter of Credit Accommodations and all other commitments and obligations made or incurred by Agent or any Lender in connection therewith, shall not at any time exceed $50,000,000. At any time an Event of Default exists or has occurred and is continuing, upon the request of Agent, Borrowers will either furnish cash collateral to secure the reimbursement obligations to the issuer in connection with any Letter of Credit Accommodations or furnish cash collateral to Agent, for the ratable benefit of Lenders, for the Letter of Credit Accommodations.

          (e) Each Borrower shall reimburse immediately Issuing Bank for any draw under any Letter of Credit issued for the account of such Borrower and pay Issuing Bank the amount of all other charges and fees payable to Issuing Bank in connection with any Letter of Credit issued for the account of such Borrower immediately when due, irrespective of any claim, setoff, defense or other right which such Borrower may have at any time against Issuing Bank or any other Person. Each drawing under any Letter of Credit or other amount payable in connection therewith when due shall constitute a request by the Borrower for whose account such Letter of Credit was issued to Agent for a Prime Rate Loan in the amount of such drawing or other amount then due, and shall be made by Agent on behalf of Lenders as a Revolving Loan (or Special Agent Advance, as the case may be). The date of such Loan shall be the date of the drawing or as to other amounts, the due date therefor. Any payments made by or on behalf of Agent or any Lender to Issuing Bank and/or related parties in connection with any Letter of Credit shall constitute additional Revolving Loans to such Borrower pursuant to this Section 2 (or Special Agent Advances as the case may be).

          (f) Borrowers shall indemnify and hold Agent and Lenders harmless from and against any and all losses, claims, damages, liabilities, costs and expenses which Agent or any Lender may suffer or incur in connection with any Letter of Credit Accommodations and any documents, drafts or acceptances relating thereto, including, but not limited to, any losses, claims, damages, liabilities, costs and expenses due to any action taken by any issuer (other than Agent or any Lender) or correspondent with respect to any Letter of Credit Accommodation. Each Borrower assumes all risks with respect to the acts or omissions of the drawer under or

beneficiary of any Letter of Credit Accommodation and for such purposes the drawer or beneficiary shall be deemed such Borrower’s agent. Each Borrower assumes all risks for, and agrees to pay, all foreign, Federal, State, provincial and local taxes, duties and levies relating to any goods subject to any Letter of Credit Accommodations or any documents, drafts or acceptances thereunder. Each Borrower hereby releases and holds Agent and Lenders harmless from and against any acts, waivers, errors, delays or omissions, whether caused by such Borrower, by any issuer or correspondent or otherwise with respect to or relating to any Letter of Credit Accommodation, except for any losses, claims, damages, liabilities, costs and expenses suffered by such Borrower as a result of the gross negligence or willful misconduct of Agent and Lenders as determined pursuant to final non-appealable order of a court of competent jurisdiction. The provisions of this Section 2.2(f) shall survive the payment of Obligations and the termination of this Agreement.

          (g) In connection with Inventory purchased pursuant to any Letter of Credit, Borrowers shall, at Agent’s request, instruct all suppliers, carriers, forwarders, customs brokers, warehouses or others receiving or holding cash, checks, Inventory, documents or instruments in which Agent holds a security interest that upon Agent’s request, such items are to be delivered to Agent and/or subject to Agent’s order, and if they shall come into such Borrower’s possession, to deliver them, upon Agent’s request, to Agent in their original form. Except as otherwise provided herein, Agent shall not exercise such right to request such items unless an Event of Default shall exist or have occurred and be continuing. Except as Agent may otherwise specify, Borrowers shall designate Issuing Bank as the consignee on all bills of lading and other negotiable and non-negotiable documents.

          (h) Each Borrower hereby irrevocably authorizes and directs Issuing Bank to name such Borrower as the account party therein and to deliver to Agent all instruments, documents and other writings and property received by Issuing Bank pursuant to the Letter of Credit and to accept and rely upon Agent’s instructions and agreements with respect to all matters arising in connection with the Letter of Credit or the Letter of Credit Documents with respect thereto. Nothing contained herein shall be deemed or construed to grant any Borrower any right or authority to pledge the credit of Agent or Lenders in any manner. Agent and Lenders shall have no liability of any kind with respect to any Letter of Credit Accommodation provided by an issuer other than Agent or such Lender unless Agent or such Lender has duly executed and delivered to such issuer the application or a guarantee or indemnification in writing with respect to such Letter of Credit Accommodation. Each Borrower shall be bound by any interpretation made in good faith by Agent, or any other issuer or correspondent under or in connection with any Letter of Credit Accommodation or any documents, drafts or acceptances thereunder, notwithstanding that such interpretation may be inconsistent with any instructions of any Borrower. Agent shall have the sole and exclusive right and authority to, and Borrowers shall not at any time an Event of Default exists or has occurred and is continuing, (A) approve or resolve any questions of non-compliance of documents, (B) give any instructions as to acceptance or rejection of any documents or goods, (C) execute any and all applications for steamship or airway guaranties, indemnities or delivery orders, (D) grant any extensions of the maturity of, time of payment for, or time of presentation of, any drafts, acceptances, or documents, or (E) agree to any amendments, renewals, extensions, modifications, changes or cancellations of any of the terms or conditions of any of the applications, Letter of Credit Accommodations, or documents, drafts or acceptances thereunder or any letters of credit

included in the Collateral. Agent may take such actions either in its own name or in any Borrower’s name.

          (i) Immediately upon the issuance or amendment of any Letter of Credit, each Lender shall be deemed to have irrevocably and unconditionally purchased and received, without recourse or warranty, an undivided interest and participation to the extent of such Lender’s Pro Rata Share of the liability with respect to such Letter of Credit and the obligations of Borrowers with respect thereto (including obligations under all Letter of Credit Accommodations with respect thereto). Each Lender shall absolutely, unconditionally and irrevocably assume, as primary obligor and not as surety, and be obligated to pay to Issuing Bank therefor and discharge when due, its Pro Rata Share of all of such obligations arising under such Letter of Credit. Without limiting the scope and nature of each Lender’s participation in any Letter of Credit, to the extent that Issuing Bank has not been reimbursed or otherwise paid as required hereunder or under any such Letter of Credit, each such Lender shall pay to Issuing Bank its Pro Rata Share of such unreimbursed drawing or other amounts then due to Issuing Bank in connection therewith.

          (j) The obligations of Borrowers to pay amounts due under all Letter of Credit Accommodations and the obligations of Lenders to make payments to Agent for the account of Issuing Bank with respect to the Letter of Credit Accommodations shall be absolute, unconditional and irrevocable and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances, whatsoever, notwithstanding the occurrence or continuance of any Default, Event of Default, the failure to satisfy any other condition set forth in Section 4 or any other event or circumstance. If such amount is not made available by a Lender when due, Agent shall be entitled to recover such amount on demand from such Lender with interest thereon, for each day from the date such amount was due until the date such amount is paid to Agent at the interest rate then payable by any Borrower in respect of Loans that are Prime Rate Loans. Any such reimbursement shall not relieve or otherwise impair the obligation of Borrowers to reimburse Issuing Bank under any Letter of Credit or make any other payment in connection therewith.

     2.3 Acquisition Loans . Subject to and upon the terms and conditions contained herein with respect to Revolving Loans, each Lender severally (and not jointly) agrees to fund its Pro Rata Share of Revolving Loans to a Borrower, other than a Disqualified Borrower (the “ Acquisition Loans ”), from time to time in amounts requested by such Borrower (or on its behalf by Administrative Borrower) upon not less than thirty (30) days prior written notice to Agent, to pay the purchase price for the acquisition by such Borrower of all of the issued and outstanding Capital Stock of another Person, or of all or substantially all of the assets of another Person or of a division of another Person (each, a “ Target ”). The Acquisition Loans shall further be subject to the prior satisfaction of the following conditions in a manner reasonably acceptable to Agent:

          (a) The subject Target is substantially consistent with the business of Borrowers as currently conducted, or as then conducted by Borrowers and Targets previously acquired in accordance with this Agreement;

          (b) Agent shall have received true and correct copies of the acquisition agreement and related documents and such financial and other information regarding the subject Target as it may reasonably request;

          (c) The Target and its Capital Stock (if applicable) is (or will be upon completion of the acquisition) free and clear of any security interest, mortgage, pledge, lien, charge or other encumbrance, except as permitted in Section 9.8 of this Agreement;

          (d) The total amount of payments by Borrowers in connection with the acquisitions of Targets shall not exceed $100,000,000 in the aggregate during the term of this Agreement or $50,000,000 in any one acquisition or series of related acquisitions, unless otherwise consented to by Agent and Required Lenders (provided such consent shall not be unreasonably withheld, delayed or conditioned);

          (e) During each of the sixty (60) days immediately preceding the acquisition of the subject Target, and as of the acquisition, and after giving effect to the acquisition and related payments, the Excess Availability of Borrowers and the subject Target on a pro forma combined basis would not have been less than $25,000,000;

          (f) Agent shall have received pro forma balance sheets, income statements, statements of cash flow and availability and other projections with respect to the acquisition of the subject Target, in form and substance reasonably satisfactory to Agent;

          (g) No event shall have occurred and be continuing or would result from the acquisition of the subject Target or related payments that could reasonably be expected to cause a Material Adverse Effect on the Borrower making the acquisition;

          (h) No event shall have occurred and be continuing or would result from the acquisition of the subject Target or related payments that would constitute an Event of Default; and

          (i) Agent shall have received such agreements, documents and instruments from Borrowers, Guarantors and the subject Target as set forth in Section 9.24 of this Agreement. The subject Target shall, at the election of Agent, become a Borrower or a Guarantor under this Agreement, and Agent shall have received all agreements, documents and instruments it deems necessary or desirable to effect the foregoing. The subject Target, if located wholly within the United States of America or Canada, may be added as a Borrower hereunder and its Accounts and Inventory included in Eligible Accounts and Eligible Inventory, respectively, subject to (i) the approval of Agent and Required Lenders (which approval shall not be unreasonably withheld, delayed or conditioned); (ii) Agent’s receipt and approval of full written appraisals as to the Inventory of the subject Target in form, scope and methodology reasonable acceptable to Agent and by an appraiser reasonably acceptable to Agent, addressed to Agent and Lenders, and upon which Agent and Lenders are expressly permitted to rely, (iii) the completion of a field examination by Agent of the subject Target with results reasonably satisfactory to Agent, and (iv) such additional terms and conditions substantially consistent with the terms and conditions hereof as Agent may reasonably require.

     2.4 Commitments . The aggregate amount of each Lender’s Pro Rata Share of the Revolving Loans and Letter of Credit Accommodations shall not exceed the amount of such Lender’s Revolving Loan Commitment, as the same may from time to time be amended with the written acknowledgment of Agent and the Administrative Borrower.

     2.5 Revolving Loan Limit . Except in Agent’s discretion, with the consent of all of the Lenders, the aggregate amount of the Revolving Loans and the Letter of Credit Accommodations outstanding at any time shall not exceed the Revolving Loan Limit.

SECTION 3. INTEREST AND FEES

     3.1 Interest .

          (a) Borrowers shall pay to Agent, for the benefit of Lenders, interest on the outstanding principal amount of the Loans at the Interest Rate. All interest accruing hereunder on and after the date of and during the continuance of any Event of Default or termination hereof shall be payable on demand.

          (b) Borrowers other than a Disqualified Borrower (or Administrative Borrower on behalf of such Borrowers) may from time to time request Eurodollar Rate Loans or that Prime Rate Loans be converted to Eurodollar Rate Loans or that any existing Eurodollar Rate Loans continue for an additional Interest Period. Such request from or on behalf of a Borrower shall specify the amount of the Prime Rate Loans which will constitute Eurodollar Rate Loans (subject to the limits set forth below) and the Interest Period to be applicable to such Eurodollar Rate Loans. Subject to the terms and conditions contained herein, three (3) Business Days after receipt by Agent of such a request from or on behalf of a Borrower, such Eurodollar Rate Loans shall be made or Prime Rate Loans shall be converted to Eurodollar Rate Loans or such Eurodollar Rate Loans shall continue, as the case may be, provided , that , (i) no Event of Default, or act, condition or event which with notice or passage of time or both would constitute an Event of Default exists or has occurred and is continuing, (ii) Borrowers shall have complied with such generally applicable customary procedures as are established by Agent and specified by Agent to a Borrower (or Administrative Borrower) from time to time for requests by Borrowers for Eurodollar Rate Loans, (iii) no more than four (4) Interest Periods may be in effect at any one time, (iv) the aggregate amount of the Eurodollar Rate Loans to any Borrower must be in an amount not less than $1,000,000 or an integral multiple thereof, provided , that , the first Eurodollar Rate Loan under this Agreement must be made to a single Borrower in an amount not less than $5,000,000 or an integral multiple of $1,000,000 in excess thereof, and (v) Agent and Lenders shall have determined that the Interest Period or Adjusted Eurodollar Rate is available to such Lender and can be readily determined as of the date of the request for such Eurodollar Rate Loan by a Borrower (or on its behalf by Administrative Borrower). Any request by a Borrower (or by Administrative Borrower on behalf of such Borrower) for any Eurodollar Rate Loans or to convert Prime Rate Loans to Eurodollar Rate Loans or to continue any existing Eurodollar Rate Loans shall be irrevocable. Notwithstanding anything to the contrary contained herein, Agent, Lenders and Wachovia shall not be required to purchase United States Dollar deposits in the London interbank market or other applicable London Interbank Offered Rate market to fund any Eurodollar Rate Loans, but the provisions hereof shall be deemed to apply as if Agent, Lenders and Wachovia had purchased such deposits to fund the Eurodollar Rate Loans.

          (c) Any Eurodollar Rate Loans shall automatically convert to Prime Rate Loans upon the last day of the applicable Interest Period, unless Agent has received and approved a request to continue such Eurodollar Rate Loan at

least three (3) Business Days prior to such last day in accordance with the terms hereof. Any Eurodollar Rate Loans shall, at Agent’s option, upon notice by Agent to Administrative Borrower, convert to Prime Rate Loans in the event that this Agreement shall terminate. Borrowers shall pay to Agent, for the benefit of Lenders, upon demand by Agent (or Agent may, at its option, charge any loan account of any Borrower) any amounts required to compensate any Lender or any Participant with any Lender for any loss (including loss of anticipated profits), cost or expense incurred by such person, as a result of the conversion of Eurodollar Rate Loans to Prime Rate Loans prior to the expiration of the applicable Interest Period pursuant to any of the foregoing.

          (d) Interest shall be payable by Borrowers to Agent, for the benefit of Lenders, monthly in arrears not later than the first day of each calendar month and shall be calculated on the basis of a three hundred sixty (360) day year and actual days elapsed. The interest rate on non-contingent Obligations (other than Eurodollar Rate Loans) shall increase or decrease by an amount equal to each increase or decrease in the Prime Rate effective on the first day of the month after any change in such Prime Rate is announced based on the Prime Rate in effect on the last day of the month in which any such change occurs. In accordance with Section 3.1(e) hereof, in no event shall charges constituting interest payable by Borrowers to Agent and Lenders exceed the maximum amount or the rate permitted under any applicable law or regulation, and if any such part or provision of this Agreement is in contravention of any such law or regulation, such part or provision shall be deemed amended to conform thereto.

          (e) No agreements, conditions, provisions or stipulations contained in this Agreement or any of the other Financing Agreements or any Event of Default, or the exercise by Agent or any Lender of the right to accelerate the payment or the maturity of all or any portion of the Obligations, or the exercise by Agent or any Lender of any option whatsoever contained in this Agreement or any of the other Financing Agreements, or the prepayment by any Borrower of any of the Obligations, or the occurrence of any event or contingency whatsoever, shall entitle Agent and Lenders to contract for, charge or receive, in any event, interest exceeding the Maximum Interest Rate. In no event shall Borrowers be obligated to pay interest exceeding such Maximum Interest Rate. All agreements, conditions or stipulations, if any, which may in any event or contingency whatsoever operate to bind, obligate or compel Borrowers to pay a rate of interest exceeding the Maximum Interest Rate shall be without binding force or effect, at law or in equity, to the extent of the excess of interest over such Maximum Interest Rate. In the event any interest is contracted for, charged or received in excess of the Maximum Interest Rate (“ Excess ”), each Borrower acknowledges and stipulates that any such contract, charge or receipt shall be the result of an accident and bona fide error, and that any Excess received by Agent or any Lender shall be applied, first, to the payment of the then outstanding and unpaid principal hereunder; second, to the payment of the other Obligations then outstanding and unpaid; and third, returned to such Borrower, it being the intent of the parties hereto not to enter at any time into a usurious or otherwise illegal relationship. Each Borrower recognizes that, with fluctuations in the rate of interest set forth in this Section 3.1 of this Agreement and the Maximum Interest Rate, such an unintentional result could inadvertently occur. By the execution of this Agreement, each Borrower agrees that (i) the credit or return of any Excess shall constitute the acceptance by such Borrower of such Excess, and (ii) no Borrower shall seek or pursue any other remedy, legal or equitable, against Agent or any Lender, based in whole or in part upon contracting for, charging or receiving of any interest in excess of the Maximum Interest Rate. For the purpose of determining whether or not any Excess has been contracted for, charged or

received by Agent or any Lender, all interest at any time contracted for, charged or received by Agent or any Lender in connection with this Agreement or any of the other Financing Agreements shall be amortized, prorated, allocated and spread during the entire term of this Agreement in accordance with the amounts outstanding from time to time hereunder and the Maximum Interest Rate from time to time in effect in order to lawfully charge the maximum amount of interest permitted under applicable law.

          (f) Notwithstanding the provisions of this Section 3.1 , or any other provision of this Agreement, in no event shall the aggregate “interest” (as that term is defined in Section 347 of the Criminal Code (Canada)) exceed the effective annual rate of interest on the “credit advanced” (as defined therein) lawfully permitted under Section 347 of the Criminal Code (Canada), if applicable. The effective annual rate of interest shall be determined in accordance with generally accepted actuarial practices and principles over the term of the applicable Loan, and in the event of a dispute, a certificate of a Fellow of the Canadian Institute of Actuaries appointed by Agent will be conclusive for the purposes of such determination.

          (g) For greater certainty, whenever any amount is payable under this Agreement or any Financing Agreement by a Borrower as interest or as a fee which requires the calculation of an amount using a percentage per annum, each party to this Agreement acknowledges and agrees that such amount shall be calculated as of the date payment is due without application of the “deemed reinvestment principle” or the “effective yield method”. As an example, when interest is calculated and payable monthly, the rate of interest payable per month is 1/12 of the stated rate of interest per annum.

     3.2 Changes in Laws and Increased Costs of Loans .

          (a) If after the date hereof, either (i) any change in, or in the interpretation of, any law or regulation is introduced, including, without limitation, with respect to reserve requirements, applicable to any Lender or any banking or financial institution from whom any Lender borrows funds or obtains credit (a “ Funding Bank ”), or (ii) a Funding Bank or any Lender complies with any future guideline or request from any central bank or other Governmental Authority or (iii) a Funding Bank, any Lender or Issuing Bank determines that the adoption of any applicable law, rule or regulation regarding capital adequacy, or any change therein, or any change in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof has or would have the effect described below, or a Funding Bank, any Lender or Issuing Bank complies with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, and in the case of any event set forth in this clause (iii), such adoption, change or compliance has or would have the direct or indirect effect of reducing the rate of return on any Lender’s or Issuing Bank’s capital as a consequence of its obligations hereunder to a level below that which such Lender or Issuing Bank could have achieved but for such adoption, change or compliance (taking into consideration the Funding Bank’s or Lender’s or Issuing Bank’s policies with respect to capital adequacy) by an amount deemed by such Lender or Issuing Bank to be material, and the result of any of the foregoing events described in clauses (i), (ii) or (iii) is or results in an increase in the cost to any Lender or Issuing Bank of funding or maintaining the Loans, the Letters of Credit or its Commitment, then Borrowers and Guarantors shall from time to time upon demand by Agent pay to Agent additional amounts sufficient to indemnify such Lender or Issuing Bank, as the case

may be, against such increased cost on an after-tax basis (after taking into account applicable deductions and credits in respect of the amount indemnified). A certificate as to the amount of such increased cost shall be submitted to Administrative Borrower by Agent or the applicable Lender and shall be conclusive, absent manifest error.

          (b) If prior to the first day of any Interest Period, (i) Agent shall have determined in good faith (which determination shall be conclusive and binding upon Borrowers and Guarantors) that, by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the Adjusted Eurodollar Rate for such Interest Period, (ii) Agent has received notice from the Required Lenders that the Adjusted Eurodollar Rate determined or to be determined for such Interest Period will not adequately and fairly reflect the cost to Lenders of making or maintaining Eurodollar Rate Loans during such Interest Period, or (iii) Dollar deposits in the principal amounts of the Eurodollar Rate Loans to which such Interest Period is to be applicable are not generally available in the London interbank market, Agent shall give telecopy or telephonic notice thereof to Administrative Borrower as soon as practicable thereafter, and will also give prompt written notice to Administrative Borrower when such conditions no longer exist. If such notice is given (A) any Eurodollar Rate Loans requested to be made on the first day of such Interest Period shall be made as Prime Rate Loans, (B) any Loans that were to have been converted on the first day of such Interest Period to or continued as Eurodollar Rate Loans shall be converted to or continued as Prime Rate Loans and (C) each outstanding Eurodollar Rate Loan shall be converted, on the last day of the then- current Interest Period thereof, to Prime Rate Loans. Until such notice has been withdrawn by Agent, no further Eurodollar Rate Loans shall be made or continued as such, nor shall any Borrower (or Administrative Borrower on behalf of any Borrower) have the right to convert Prime Rate Loans to Eurodollar Rate Loans.

          (c) Notwithstanding any other provision herein, if the adoption of or any change in any law, treaty, rule or regulation or final, non-appealable determination of an arbitrator or a court or other Governmental Authority or in the interpretation or application thereof occurring after the date hereof shall make it unlawful for Agent or any Lender to make or maintain Eurodollar Rate Loans as contemplated by this Agreement, (i) Agent or such Lender shall promptly give written notice of such circumstances to Administrative Borrower (which notice shall be withdrawn whenever such circumstances no longer exist), (ii) the commitment of such Lender hereunder to make Eurodollar Rate Loans, continue Eurodollar Rate Loans as such and convert Prime Rate Loans to Eurodollar Rate Loans shall forthwith be cancelled and, until such time as it shall no longer be unlawful for such Lender to make or maintain Eurodollar Rate Loans, such Lender shall then have a commitment only to make a Prime Rate Loan when a Eurodollar Rate Loan is requested and (iii) such Lender’s Loans then outstanding as Eurodollar Rate Loans, if any, shall be converted automatically to Prime Rate Loans on the respective last days of the then current Interest Periods with respect to such Loans or within such earlier period as required by law. If any such conversion of a Eurodollar Rate Loan occurs on a day which is not the last day of the then current Interest Period with respect thereto, Borrowers and Guarantors shall pay to such Lender such amounts, if any, as may be required pursuant to Section 3.2(d) below.

          (d) Borrowers and Guarantors shall indemnify Agent and each Lender and to hold Agent and each Lender harmless from any loss or expense which Agent or such Lender may

sustain or incur as a consequence of (i) default by Borrower in making a borrowing of, conversion into or extension of Eurodollar Rate Loans after such Borrower (or Administrative Borrower on behalf of such Borrower) has given a notice requesting the same in accordance with the provisions of this Loan Agreement, (ii) default by any Borrower in making any prepayment of a Eurodollar Rate Loan after such Borrower has given a notice thereof in accordance with the provisions of this Agreement, and (iii) the making of a prepayment of Eurodollar Rate Loans on a day which is not the last day of an Interest Period with respect thereto. With respect to Eurodollar Rate Loans, such indemnification may include an amount equal to the excess, if any, of (A) the amount of interest which would have accrued on the amount so prepaid, or not so borrowed, converted or extended, for the period from the date of such prepayment or of such failure to borrow, convert or extend to the last day of the applicable Interest Period (or, in the case of a failure to borrow, convert or extend, the Interest Period that would have commenced on the date of such failure) in each case at the applicable rate of interest for such Eurodollar Rate Loans provided for herein over (B) the amount of interest (as determined by such Agent or such Lender) which would have accrued to Agent or such Lender on such amount by placing such amount on deposit for a comparable period with leading banks in the interbank Eurodollar market. This covenant shall survive the termination or non-renewal of this Agreement and the payment of the Obligations.

     3.3 Fees.

          (a) Borrowers shall pay to Agent, when due, all of the fees due on the Closing Date and from time to time thereafter as set forth in a letter agreement regarding fees of even date herewith between Borrowers, Guarantors and Agent (the “ Fee Letter ”).

          (b) Borrowers shall pay to Agent, for the benefit of Lenders based upon their respective Pro Rata Shares, a monthly unused line fee equal to one-quarter of one percent (0.25%) of the amount by which the Revolving Loan Limit exceeds the average daily principal balance of the outstanding Revolving Loans and Letter of Credit Accommodations during the immediately preceding month while this Agreement is in effect and for so long thereafter as any of the Obligations are outstanding, which fee shall be payable on the first day of each month in arrears.

          (c) Borrowers shall pay to Agent, for the benefit of Lenders based upon their respective Pro Rata Shares, a fee at the then-applicable Eurodollar Rate Margin on the average daily maximum amount available to be drawn under all of such Letters of Credit for the immediately preceding month (or part thereof), payable in arrears as of the first day of each succeeding month, computed for each day from the date of issuance to the date of expiration; except that Borrowers shall pay, at Agent’s option, without notice, such fee at a rate two (2%) percent greater than the otherwise applicable rate on such average daily maximum amount for: (a) the period from and after the date of termination hereof until Agent has received full and final payment of all Obligations (notwithstanding entry of a judgment against any Borrower) and (b) the period from and after the date of the occurrence of an Event of Default for so long as such Event of Default is continuing as determined by Agent. Such letter of credit fees shall be calculated on the basis of a three hundred sixty (360) day year and actual days elapsed and the obligation of Borrowers to pay such fee shall survive the termination or non-renewal of this Agreement. In addition to the letter of credit fees provided above, Borrowers shall pay to Issuing

Bank the letter of credit fronting and negotiation fees agreed to by Borrowers and such issuer from time to time and the customary charges from time to time of such issuer with respect to the issuance, amendment, transfer, administration, cancellation and conversion of, and drawings under, such Letters of Credit.

          (d) If for any reason this Agreement is terminated prior to September 30, 2009, in view of the impracticality and extreme difficulty of ascertaining actual damages and by mutual agreement of the parties as to a reasonable calculation of Agent’s and Lenders’ lost profits as a result thereof, Borrowers agree to pay to Agent, for the benefit of Lenders based upon their respective Pro Rata Shares, upon the effective date of such termination an early termination fee equal to three-eighths of one percent (0.375%) of the Revolving Loan Limit. Such early termination fee shall be presumed to be the amount of damages sustained by Agent and Lenders as a result of such early termination and Borrowers agree that it is reasonable under the circumstances currently existing. Agent and Lenders shall be entitled to such early termination fee upon the occurrence of any Event of Default described in Sections 10.1(g) and 10.1(h) hereof, even if Agent and Lenders do not exercise their right to terminate this Agreement, but elect, at their option, to provide financing to Borrowers or permit the use of cash collateral under the United States Bankruptcy Code or other insolvency law. Such early termination fee shall be deemed included in the Obligations. Such early termination fee shall be waived if the Obligations are paid in full from (1) the proceeds of unsecured loans to Borrowers, (2) the proceeds of the issuance of Capital Stock of Administrative Borrower that is not currently outstanding, (3) a sale of all or substantially all of the assets or Capital Stock of Borrowers in an arms-length transaction, or (4) a refinancing led principally by Wachovia Bank, National Association or one of its Affiliates.

SECTION 4. CONDITIONS PRECEDENT

     4.1 Conditions Precedent to this Agreement . Each of the following is a condition precedent to the effectiveness of this Agreement and to this Agreement amending and restating the Original Loan Agreement in its entirety:

          (a) Agent shall have received, in form and substance satisfactory to Agent, all releases, terminations and such other documents as Agent may request to evidence and effectuate the termination of the Securitization Credit Agreement and the termination and release by Wachovia Bank, National Association, as agent thereunder, of any interest in and to any assets and properties of Administrative Borrower, duly authorized, executed and delivered by it, including, but not limited to UCC termination statements for all UCC financing statements previously filed by it, as secured party against Administrative Borrower, as debtor, together with the transfer by Bell Microproducts Funding Corporation, a Delaware corporation, of all of its assets and properties to Administrative Borrower;

          (b) all requisite corporate action and proceedings in connection with this Agreement and the other Financing Agreements shall be reasonably satisfactory in form and substance to Agent, and Agent shall have received all information and copies of all documents, including, without limitation, records of requisite corporate action and proceedings which Agent may have requested in connection therewith, such documents where requested by Agent or its

counsel to be certified by appropriate corporate officers or governmental authorities, in each case to the extent Agent has previously advised Borrowers that it would require such documents;

          (c) no material adverse change shall have occurred in the assets, business or prospects of any Borrower or any Guarantor since the date of Agent’s latest field examination and no change or event shall have occurred which would impair the ability of any Borrower or Obligor to perform its obligations hereunder or under any of the other Financing Agreements to which it is a party or of Agent or Lenders to enforce the Obligations or realize upon the Collateral;

          (d) Agent shall have received, in each case in form and substance reasonably satisfactory to the Agent, (i) a pledge agreement duly executed by New ProSys covering the Capital Stock of Total Tec, together with the original certificate(s) evidencing such Capital Stock and stock powers therefor duly executed in blank, and (ii) evidence that GE Finance shall have, in writing, consented to the foregoing transactions and released any and all of its security interests in the Capital Stock of Total Tec; and

          (e) Agent shall have received, in form and substance reasonably satisfactory to Agent, the duly executed Information Certificate, and such other documentation or information related thereto as Agent may reasonably request.

     4.2 Conditions Precedent to All Loans and Letter of Credit Accommodations . Each of the following is an additional condition precedent to Loans and Letters of Credit Accommodation to Borrowers, including the initial Loans and Letter of Credit Accommodations and any future Loans and Letter of Credit Accommodations:

          (a) all representations and warranties contained herein and in the other Financing Agreements shall be true and correct in all material respects with the same effect as through such representations and warranties had been made on and as of the date of the making of each such Loan or providing each such Letter of Credit Accommodations and after giving effect thereto, except to the extent that such representations and warranties expressly related solely to an earlier date (in which case such representations and warranties shall have been true and accurate on and as of such earlier date);

          (b) no law, regulation, order, judgment or decree of any Governmental Authority shall exist, and neither Agent nor any Lender shall have received any notice that any action, suit, investigation, litigation or proceeding is pending or threatened in any court or before any arbitrator or Governmental Authority, which (i) purports to enjoin, prohibit, restrain or otherwise affect (A) the making of the Loans or (B) the consummation of the transactions contemplated pursuant to the terms hereof and of the other Financing Agreements or (ii) has or could reasonably be expected to have a Material Adverse Effect on the Borrower requesting the Loan or Letter of Credit Accommodation; and

          (c) no Event of Default and no act, condition or event which, with notice or passage of time or both, would constitute an Event of Default, shall exist or have occurred and be continuing on and as of the date of the making of such Loan or providing each such Letter of Credit Accommodations and after giving effect thereto.

SECTION 5. SECURITY INTEREST

     5.1 Grant of Security Interests . To secure payment and performance of all Obligations, each Borrower hereby grants to Agent, for itself and the ratable benefit of Lenders, a continuing security interest in, a lien upon, and a right of set off against, and hereby assigns to Agent, for itself and the ratable benefit of Lenders, as security, the following property and interests in property of such Borrower, whether now owned or hereafter acquired or existing, and wherever located (together with all other collateral security for the Obligations at any time granted to or held by Agent or any Lender, collectively, the “ Collateral ”):

          (a) Accounts;

          (b) all present and future contract rights, general intangibles (including, but not limited to, commercial tort claims, payment intangibles (as each term is defined by the UCC), tax and duty refunds, registered and unregistered patents, trademarks, service marks, copyrights, trade names, applications for the foregoing, trade secrets, goodwill, processes, drawings, blueprints, customer lists, licenses, whether as licensor or licensee, choses in action and other claims and existing and future leasehold interests in equipment, real estate and fixtures), chattel paper, documents (whether negotiable or non-negotiable), instruments, securities, investment property, letters of credit, proceeds of letters of credit, bankers’ acceptances and guaranties;

          (c) all present and future monies, credit balances, deposits, deposit accounts and other property of such Borrower now or hereafter held or received by or in transit to Agent, any Lender or its Affiliates or at any other depository or other institution from or for the account of such Borrower, whether for safekeeping, pledge, custody, transmission, collection or otherwise, and all present and future liens, security interests, rights, remedies, title and interest in, to and in respect of Accounts and other Collateral, including, without limitation, (i) rights and remedies under or relating to guaranties, contracts of suretyship, letters of credit and credit and other insurance related to the Collateral, (ii) rights of stoppage in transit, replevin, repossession, reclamation and other rights and remedies of an unpaid vendor, lienor or secured party, (iii) goods described in invoices, documents, contracts or instruments with respect to, or otherwise representing or evidencing, Accounts or other Collateral, including, without limitation, returned, repossessed and reclaimed goods, and (iv) deposits by and property of account debtors or other persons securing the obligations of account debtors;

          (d) Inventory;

          (e) Equipment;

          (f) Real Property;

          (g) Records; and

          (h) all products and proceeds of the foregoing, in any form, including, without limitation, insurance proceeds and all claims against third parties for loss or damage to or destruction of any or all of the foregoing.

Notwithstanding the foregoing, Collateral shall not include (a) the last day of the term of any lease governed by the laws of any Province of Canada (but upon the enforcement of Agent’s rights hereunder, Agent shall stand possessed of such last day in trust to assign the same to any person acquiring such term), (b) for the purposes of Collateral located in Canada, any Consumer Goods (as such term is defined in the PPSA), or (c) any shares of stock or other interest in, or any assets of, any Foreign Subsidiary that is not a Borrower, a Guarantor or a Subject Subsidiary.

     5.2 Excepted Collateral . Notwithstanding anything to the contrary contained in Section 5.1 above, the types or items of Collateral described in such Section shall not include any rights or interest in any contract, lease, permit, license, charter or license agreement covering real or personal property of a Borrower, as such, if under the terms of such contract, lease, permit, license, charter or license agreement, or applicable law with respect thereto, the valid grant of a security interest or lien therein to Agent is prohibited and such prohibition has not been or is not waived or the consent of the other party to such contract, lease, permit, license, charter or license agreement has not been or is not otherwise obtained; provided that the foregoing exclusion shall in no way be construed (a) to apply if any such prohibition is unenforceable under Section 9-318 of the UCC or other applicable law or (b) so as to limit, impair or otherwise affect Agent’s unconditional continuing security interests in and liens upon any rights or interests of such Borrower in or to monies due or to become due under any such contract, lease, permit, license, charter or license agreement (including any Accounts). Additionally, the Collateral shall not include more than 65% of the Capital Stock of a Foreign Subsidiary that is directly owned by any Borrower and shall not include any Capital Stock of any other Foreign Subsidiary.

     5.3 Release of Bell Micro Mexico . Bell Micro Mexico is hereby released from its obligations and liabilities under its Guarantee dated October 9, 2003 in favor of Agent and Lenders, which Guarantee shall be of no further force or effect. Additionally, the Capital Stock of Bell Micro Mexico pledged pursuant to the Bell Micro Mexico Pledge Agreement shall be limited to 65% of the issued and outstanding shares of the Capital Stock of Bell Micro Mexico, and any Capital Stock of Bell Micro Mexico in excess of 65% of such issued and outstanding shares is hereby released.

     5.4 Perfection of Security Interests .

          (a) Each Borrower irrevocably and unconditionally authorizes Agent (or its agent) to file at any time and from time to time such financing statements with respect to the Collateral naming Agent or its designee as the secured party and such Borrower as debtor, as Agent may require to perfect its security interest in the Collateral, which financing statements shall include any other information with respect to such Borrower required by part 5 of Article 9 of the Uniform Commercial Code of each jurisdiction in which the filing of a financing statement can perfect a security interest in the relevant Collateral, together with any amendment and continuations with respect thereto. Each Borrower hereby ratifies and approves all financing statements naming Agent or its designee as secured party and such Borrower, as debtor with respect to the Collateral (and any amendments with respect to such financing statements) filed by or on behalf of Agent prior to the date hereof and ratifies and confirms the authorization of Agent to file such financing statements (and amendments, if any). Each Borrower hereby authorizes Agent to adopt on behalf of such Borrower any symbol required for authenticating any electronic filing. In the event that the description of the collateral in any financing statement

naming Agent or its designee as the secured party and any Borrower as debtor includes assets and properties of such Borrower that do not at any time constitute Collateral, whether hereunder, under any of the other Financing Agreements or otherwise, the filing of such financing statement shall nonetheless be deemed authorized by such Borrower to the extent of the Collateral included in such description and it shall not render the financing statement ineffective as to any of the Collateral or otherwise affect the financing statement as it applies to any of the Collateral. In no event shall any Borrower at any time file, or permit or cause to be filed, any correction statement or termination statement with respect to any financing statement (or amendment or continuation with respect thereto) naming Agent or its designee as secured party and such Borrower as debtor, without Agent’s prior written consent.

          (b) Each Borrower does not have any chattel paper (whether tangible or electronic) or instruments as of the date hereof, except as set forth in the Information Certificate. In the event that any Borrower shall be entitled to or shall receive any chattel paper or instrument (as such terms are defined in the UCC) after the date hereof, Borrowers shall promptly notify Agent thereof in writing. Promptly upon the receipt thereof by or on behalf of any Borrower (including by any agent or representative), such Borrower shall deliver, or cause to be delivered to Agent, all tangible chattel paper and instruments that such Borrower has or may at any time acquire, accompanied by such instruments of transfer or assignment duly executed in blank as Agent may from time to time specify, in each case except as Agent may otherwise agree. At Agent’s option, each Borrower shall, or Agent may at any time on behalf of any Borrower, cause the original of any such instrument or chattel paper to be conspicuously marked in a form and manner acceptable to Agent with the following legend referring to chattel paper or instruments as applicable: “This [chattel paper][instrument] is subject to the security interest of Wachovia Capital Finance Corporation (Western) and any sale, transfer, assignment or encumbrance of this [chattel paper][instrument] violates the rights of such secured party.” Notwithstanding the generality of the foregoing, the foregoing covenants regarding notifying Agent, delivering and transferring or assigning chattel paper and instruments to Agent, and marking chattel paper and instruments, shall apply only if the aggregate outstanding sum of the chattel paper and instruments of Borrowers is greater than $250,000 or if an Event of Default has occurred and is continuing.

          (c) In the event that any Borrower shall at any time hold or acquire an interest in any electronic chattel paper or any “transferable record” (as such term is defined in Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or in Section 16 of the Uniform Electronic Transactions Act as in effect in any relevant jurisdiction), such Borrower shall promptly notify Agent thereof in writing. Promptly upon Agent’s request, such Borrower shall take, or cause to be taken, such actions as Agent may request to give Agent control of such electronic chattel paper under Section 9-105 of the UCC and control of such transferable record under Section 201 of the Federal Electronic Signatures in Global and National Commerce Act or, as the case may be, Section 16 of the Uniform Electronic Transactions Act, as in effect in such jurisdiction. Notwithstanding the generality of the foregoing, the foregoing covenants shall apply only if the aggregate outstanding sum of the chattel paper and instruments of Borrowers is greater than $250,000 or if an Event of Default has occurred and is continuing.

          (d) Each Borrower does not have any deposit accounts as of the date hereof, except as set forth in the Information Certificate. Borrowers shall not, directly or indirectly, after the date hereof open, establish or maintain any deposit account unless each of the following conditions is satisfied: (i) Agent shall have received not less than five (5) Business Days prior written notice of the intention of any Borrower to open or establish such account and Agent shall have received such information regarding such Account as it may reasonably request, (ii) the bank where such account is opened or maintained shall be reasonably acceptable to Agent, and (iii) on or before the opening of such deposit account, such Borrower shall as Agent may specify either (A) deliver to Agent a deposit account control agreement with respect to such deposit account duly authorized, executed and delivered by such Borrower and the bank at which such deposit account is opened and maintained or (B) arrange for Agent to become the customer of the bank with respect to the deposit account on terms and conditions acceptable to Agent. The terms of this subsection (d) shall not apply to deposit accounts specifically and exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of any Borrower’s salaried employees.

          (e) No Borrower owns or holds, directly or indirectly, beneficially or as record owner or both, any investment property, as of the date hereof, or have any investment account, securities account, commodity account or other similar account with any bank or other financial institution or other securities intermediary or commodity intermediary as of the date hereof, in each case except as set forth in the Information Certificate.

               (i) In the event that any Borrower shall be entitled to or shall at any time after the date hereof hold or acquire any certificated securities, such Borrower shall promptly endorse, assign and deliver the same to Agent, accompanied by such instruments of transfer or assignment duly executed in blank as Agent may reasonably require in order to perfect its security interest therein. If any securities, now or hereafter acquired by any Borrower are uncertificated and are issued to such Borrower or its nominee directly by the issuer thereof, such Borrower shall immediately notify Agent thereof and shall as Agent may specify, either (A) cause the issuer to agree to comply with instructions from Agent as to such securities, without further consent of any Borrower or such nominee, or (B) arrange for Agent to become the registered owner of the securities.

               (ii) Borrowers shall not, directly or indirectly, after the date hereof open, establish or maintain any investment account, securities account, commodity account or any other similar account (other than a deposit account) with any securities intermediary or commodity intermediary unless each of the following conditions is satisfied: (A) Agent shall have received not less than five (5) Business Days prior written notice of the intention of such Borrower to open or establish such account and Agent shall have received such information regarding such account as it may reasonably request, (B) the securities intermediary or commodity intermediary (as the case may be) where such account is opened or maintained shall be reasonably acceptable to Agent, and (C) on or before the opening of such investment account, securities account or other similar account with a securities intermediary or commodity intermediary, such Borrower shall as Agent may specify either (i) execute and deliver, and cause to be executed and delivered to Agent, an Investment Property Control Agreement with respect thereto duly authorized, executed and delivered by such Borrower and such securities

intermediary or commodity intermediary or (ii) arrange for Agent to become the entitlement holder with respect to such investment property on terms and conditions acceptable to Agent.

          (f) Borrowers are not the beneficiary or otherwise entitled to any right to payment under any letter of credit, banker’s acceptance or similar instrument as of the date hereof, except as set forth in the Information Certificate. In the event that any Borrower shall be entitled to or shall receive any right to payment under any letter of credit, banker’s acceptance or any similar instrument, whether as beneficiary thereof or otherwise after the date hereof, such Borrower shall promptly notify Agent thereof in writing. Such Borrower shall immediately, as Agent may reasonably require in order to perfect its security interest therein, either (i) deliver, or cause to be delivered to Agent, with respect to any such letter of credit, banker’s acceptance or similar instrument, the written agreement of the issuer and any other nominated person obligated to make any payment in respect thereof (including any confirming or negotiating bank), in form and substance satisfactory to Agent, consenting to the assignment of the proceeds of the letter of credit to Agent by such Borrower and agreeing to make all payments thereon directly to Agent or as Agent may otherwise direct or (ii) cause Agent to become, at Borrowers’ expense, the transferee beneficiary of the letter of credit, banker’s acceptance or similar instrument (as the case may be).

          (g) Borrowers do not have any commercial tort claims as of the date hereof, except as set forth in the Information Certificate. In the event that any Borrower shall at any time after the date hereof have any commercial tort claims, such Borrower shall promptly notify Agent thereof in writing, which notice shall (i) set forth in reasonable detail the basis for and nature of such commercial tort claim and (ii) include the express grant by such Borrower to Agent of a security interest in such commercial tort claim (and the proceeds thereof). In the event that such notice does not include such grant of a security interest, the sending thereof by such Borrower to Agent shall be deemed to constitute such grant to Agent. Upon the sending of such notice, any commercial tort claim described therein shall constitute part of the Collateral and shall be deemed included therein. Without limiting the authorization of Agent provided in Section 5.3(a) hereof or otherwise arising by the execution by such Borrower of this Agreement or any of the other Financing Agreements, Agent is hereby irrevocably authorized from time to time and at any time to file such financing statements naming Agent or its designee as secured party and such Borrower as debtor, or any amendments to any financing statements, covering any such commercial tort claim as Collateral. In addition, each Borrower shall promptly upon Agent’s request, execute and deliver, or cause to be executed and delivered, to Agent such other agreements, documents and instruments as Agent may require in connection with such commercial tort claim.

          (h) Borrowers do not have any goods, documents of title or other Collateral in the custody, control or possession of a third party as of the date hereof, except as set forth in the Information Certificate and except for goods located in the United States in transit to a location of a Borrower permitted herein in the ordinary course of business of such Borrower in the possession of the carrier transporting such goods. In the event that any goods, documents of title or other Collateral are at any time after the date hereof in the custody, control or possession of any other person not referred to in the Information Certificate or such carriers, Borrowers shall promptly notify Agent thereof in writing. Promptly upon Agent’s request, Borrowers shall use their reasonable commercial efforts to deliver to Agent a Collateral Access Agreement duly

authorized, executed and delivered by such person and the Borrower that is the owner of such Collateral.

          (i) Borrowers shall take any other actions reasonably requested by Agent from time to time to cause the attachment, perfection and first priority of, and the ability of Agent to enforce, the security interest of Agent in any and all of the Collateral, including, without limitation, (i) executing, delivering and, where appropriate, filing financing statements and amendments relating thereto under the UCC or other applicable law, to the extent, if any, that any Borrower’s signature thereon is required therefor, (ii) causing Agent’s name to be noted as secured party on any certificate of title for a titled good if such notation is a condition to attachment, perfection or priority of, or ability of Agent to enforce, the security interest of Agent in such Collateral, (iii) complying with any provision of any statute, regulation or treaty of the United States as to any Collateral if compliance with such provision is a condition to attachment, perfection or priority of, or ability of Agent to enforce, the security interest of Agent in such Collateral, (iv) obtaining the consents and approvals of any Governmental Authority or third party, including, without limitation, any consent of any licensor, lessor or other person obligated on Collateral, and taking all actions required by any earlier versions of the UCC or by other law, as applicable in any relevant jurisdiction.

SECTION 6. COLLECTION AND ADMINISTRATION

     6.1 Borrowers’ Loan Account . Agent shall maintain one or more loan account(s) on its books in which shall be recorded (a) all Loans, Letter of Credit Accommodations and other Obligations and the Collateral, (b) all payments made by or on behalf of any Borrower or any Guarantor and (c) all other appropriate debits and credits as provided in this Agreement, including, without limitation, fees, charges, costs, expenses and interest. All entries in the loan account(s) shall be made in accordance with Agent’s generally applicable customary practices as in effect from time to time.

     6.2 Statements . Agent shall render to Administrative Borrower each month a statement setting forth the balance of Borrowers’ loan account(s) maintained by Agent for Borrowers pursuant to the provisions of this Agreement, including principal, interest, fees, costs and expenses. Each such statement shall be subject to subsequent adjustment by Agent but shall, absent manifest errors or omissions, be considered correct and deemed accepted by Borrowers and Guarantors and conclusively binding upon Borrowers and Guarantors as an account stated except to the extent that Agent receives a written notice from Administrative Borrower of any specific exceptions of Administrative Borrower thereto within thirty (30) days after the date such statement has been mailed by Agent. Until such time as Agent shall have rendered to Administrative Borrower a written statement as provided above, the balance in Borrowers’ loan account(s) shall be presumptive but rebuttable evidence of the amounts due and owing to Agent and Lenders by Borrowers and Guarantors.

     6.3 Collection of Accounts .

          (a) Each Borrower shall establish and maintain, at its expense, blocked accounts or lockboxes and related blocked accounts (in either case, “ Blocked Accounts ”), as Agent may specify, with such banks as are reasonably acceptable to Agent into which Borrowers

shall promptly deposit and direct their respective account debtors to directly remit all payments on Accounts and all payments constituting proceeds of Inventory or other Collateral in the identical form in which such payments are made, whether by cash, check or other manner. The banks at which the Blocked Accounts are established shall enter into an agreement, in form and substance reasonably satisfactory to Agent, providing that all items received or deposited in the Blocked Accounts are the property of Agent, that the depository bank has no lien upon, or right to setoff against, the Blocked Accounts, the items received for deposit therein, or the funds from time to time on deposit therein and that with respect to the Blocked Accounts, the depository bank will wire, or otherwise transfer, in immediately available funds, on a daily basis, all funds received or deposited into such Blocked Accounts to such bank account of Agent as Agent may from time to time designate for such purpose (“ Payment Account ”); provided , however , that such funds will not be transferred to the Payment Account and the Borrower owning any such funds will be entitled to withdraw those funds from the Blocked Accounts for its own account, until any such time as the Excess Availability is less than either $15,000,000 or fifteen percent (15%) of the Borrowing Base or an Event of Default occurs (“ Dominion Trigger Event ”); and provided , further , that notwithstanding the occurrence of a Dominion Trigger Event, if thereafter the Excess Availability is equal to at least the greater of $15,000,000 and fifteen percent (15%) of the Borrowing Base and no Event of Default has occurred and is continuing for a period of one hundred twenty (120) consecutive days, then after such period, the foregoing funds will not be transferred to the Payment Account and the Borrower owning such funds will be entitled to withdraw those funds from the Blocked Accounts for its own account so long as no new Dominion Trigger Event occurs after such period; and provided , further , that unless Agent otherwise agrees in writing, Borrowers may not regain dominion of funds pursuant to the immediately preceding proviso if Borrowers previously regained dominion of funds pursuant thereto and a Dominion Trigger Event occurred within one (1) year of Borrowers so regaining dominion. Each Borrower agrees that upon a Dominion Trigger Event (subject to the second proviso set forth above), all payments made to such Blocked Accounts or other funds received and collected by Agent or any Lender, whether in respect of the Accounts, as proceeds of Inventory or other Collateral or otherwise shall be treated as payments to Agent and Lenders in respect of the Obligations and therefore shall constitute the property of Agent and Lenders to the extent of the then outstanding Obligations.

          (b) For purposes of calculating the amount of the Revolving Loans available to Borrowers, such payments will be applied (conditional upon final collection) to the Obligations on the Business Day of receipt by Agent of immediately available funds in the Payment Account provided such payments and notice thereof are received in accordance with Agent’s usual and customary practices as in effect from time to time and within sufficient time to credit such Borrower’s loan account on such day, and if not, then on the next Business Day.

          (c) At any time when funds in the Blocked Accounts are required to be remitted to the Payment Account pursuant to Section 6.3(a) above (and without limiting Agent’s and Lenders’ other rights and remedies on account of any Event of Default), each Borrower and all of its directors, employees, agents, Subsidiaries and other Affiliates shall, acting as trustee for Agent and Lenders, receive, as the property of Agent and Lenders, any monies, checks, notes, drafts or any other payment relating to and/or proceeds of Collateral which come into their possession or under their control and immediately upon receipt thereof, shall deposit or cause the same to be deposited in the Blocked Accounts, or remit the same or cause the same to be

remitted, in kind, to Agent and in no event shall the same be commingled with a Borrower’s own funds. Each Borrower agrees to reimburse Agent and Lenders on demand for any amounts owed or paid to any bank at which a Blocked Account is established or any other bank or person involved in the transfer of funds to or from the Blocked Accounts arising out of Agent or any Lender’s payments to or indemnification of such bank or person in connection with such Blocked Account or any amounts received therein or transferred therefrom in accordance with any Blocked Account Agreement. The obligation of Borrowers to reimburse Agent and Lenders for such amounts pursuant to this Section 6.3 shall survive the termination of this Agreement.

     6.4 Payments .

          (a) All Obligations shall be payable to the Payment Account as provided in Section 6.3 or such other place as Agent may designate from time to time. Subject to Section 6.4(b) below, Agent shall apply payments received or collected from any Borrower or any Guarantor or for the account of any Borrower or any Guarantor that constitute payment of specific fees to the payment of such fees. Subject to Section 6.4(b) below, Agent shall apply payments received or collected from any Borrower or any Guarantor or for the account of any Borrower or any Guarantor (including, without limitation, the monetary proceeds of collections or of realization upon any Collateral) that do not relate to the payment of specific fees to the Obligations, whether or not then due, in the following order: first , to pay any fees, indemnities or expense reimbursements then due to the Agent from Borrowers or Guarantors; second , to pay any fees, indemnities or expense reimbursements then due to the Lenders from Borrowers or Guarantors; third , to pay interest due in respect of all Revolving Loans, including any Special Agent Advances; fourth , to pay or prepay principal of the Special Agent Advances, other than Special Agent Advances made pursuant to Section 12.11(a) hereof to the extent the aggregate outstanding principal sum of Special Agent Advances and Loans exceed the Revolving Loan Limit; fifth , to pay or prepay principal of the Revolving Loans (other than Special Agent Advances); sixth , to pay Special Agent Advances excluded from clause fourth above; seventh , to pay any amounts (including fees and indemnities) owing with respect to Bank Products; and eighth , to the payment of any other Obligation due to the Agent or any Lender by Borrowers or the Guarantors. Notwithstanding anything to the contrary contained in this Agreement, unless so directed by the Administrative Borrower, or unless an Event of Default exists, neither Agent nor any Lender shall apply any payments that it receives to any Eurodollar Rate Loans except on the expiration date of the Interest Period applicable to such Eurodollar Rate Loan, or in the event, and only to the extent, that there are no outstanding Prime Rate Loans. Payments and collections received in any currency other than the currency in which any outstanding Obligations are denominated will be accepted and applied at the discretion of Agent. At Agent’s option, all principal, interest, fees, costs, expenses and other charges provided for in this Agreement or the other Financing Agreements may be charged directly to the loan account(s) of any Borrower. If after receipt of any payment of, or proceeds of Collateral applied to the payment of, any of the Obligations, Agent or any Lender is required to surrender or return such payment or proceeds to any Person for any reason, then the Obligations intended to be satisfied by such payment or proceeds shall be reinstated and continue and this Agreement shall continue in full force and effect as if such payment or proceeds had not been received by Agent and such Lender. Each Borrower shall be liable to pay to Agent and Lenders, and does hereby indemnify and hold Agent or such Lenders harmless for the amount of any payments or proceeds surrendered or returned. This Section 6.4 shall remain effective notwithstanding any contrary action which may

be taken by Agent or any Lender in reliance upon such payment or proceeds. This Section 6.4 shall survive the payment of the Obligations and the termination of this Agreement.

          (b) Except as otherwise provided with respect to Defaulting Lenders, aggregate principal payments and interest payments shall be apportioned ratably among the Lenders (according to their applicable Pro Rata Shares) and payments of the fees (other than fees designated for Agent’s sole account) shall, as applicable, be apportioned ratably among the Lenders.

     6.5 Taxes .

          (a) Any and all payments by or on account of any of the Obligations shall be made free and clear of and without deduction or withholding for or on account of duties, taxes, levies, imposts, fees, deductions,