EXHIBIT 10.41
DATED________________________
BELL MICROPRODUCTS LIMITED
AND
NATIONAL WESTMINSTER BANK PLC
AND
BANK OF AMERICA, NATIONAL ASSOCIATION
-----------------------
PRIORITY AGREEMENT
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BARLOW LYDE & GILBERT
BEAUFORT HOUSE 15 ST BOTOLPH STREET LONDON EC3A 7NJ
TELEPHONE +44 [0] 20 7247 2277 FAX +44 [0] 20 7071 9000
WEBSITE WWW.BLG.CO.UK DX 155 LONDON CDE
CONTENTS
CLAUSE PAGE
1 DEFINITIONS............................................................................ 1
2 PURPOSE................................................................................ 3
3 UNDERTAKINGS OF THE COMPANY............................................................ 4
4 CREDITORS' UNDERTAKINGS................................................................ 4
5 TURNOVER OF NON-PERMITTED RECOVERIES................................................... 7
6 PRIORITY OF SECURITY................................................................... 7
7 PROCEEDS OF ENFORCEMENT................................................................ 7
8 STATUS OF THE COMPANY.................................................................. 8
9 REPRESENTATIONS AND WARRANTIES......................................................... 8
10 ACKNOWLEDGEMENTS....................................................................... 9
11 CHANGES TO THE PARTIES................................................................. 9
12 GENERAL................................................................................ 10
13 NOTICES................................................................................ 11
14 GOVERNING LAW.......................................................................... 12
THIS PRIORITY AGREEMENT is dated
BETWEEN:
(1) BELL MICROPRODUCTS LIMITED (Registered in England and Wales No.
04079671) (the "COMPANY");
(2) NATIONAL WESTMINSTER BANK PLC ("NATWEST"); and
(3) BANK OF AMERICA, NATIONAL ASSOCIATION as security trustee ("BOFA").
1 DEFINITIONS
1.1 TERMS DEFINED
In this Agreement,
CHARGE: the BofA Debenture or the NatWest Charge;
BOFA DEBENTURE: the composite guarantee and debenture dated on or about
the date hereof between (1) the companies set out in the schedule to
such guarantee and debenture (including the Company) as original
charging companies and (2) BofA as security trustee (as amended,
supplemented or restated from time to time);
BOFA CREDIT AGREEMENT: the credit agreement dated on or about the date
hereof between (1) Bell Microproducts Europe Export Limited and Ideal
Hardware Limited ("Ideal") as original borrowers,(2) BM Europe
Partners C.V., (3) Bell Microproducts Europe B.V.,(4) BofA as
arranger, agent, swingline lender, issuer and security trustee and (5)
certain banks and financial institutions set out in schedule 1 to such
credit agreement as original lenders (as amended, supplemented, novated
and/or restated from time to time);
BOFA DEBT: all present and future liabilities (actual or contingent)
payable or owing under the BofA Finance Documents whether or not
matured and whether or not liquidated together with (without
limitation):
(i) any refinancing, novation, refunding, deferral or extension of
any of those liabilities:
(ii) any advance which may be made to the Company under any
agreement supplemental to a BofA Finance Document plus all
interest, fees and costs in connection therewith;
(iii) any claim for damages or restitution in the event of
rescission of any of those liabilities or otherwise in
connection with any BofA Finance Document;
(iv) any claim against the Company flowing from any recovery by the
Company of a payment or discharge in respect of those
liabilities on grounds of preference or otherwise; and
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(v) any amounts (such as post-insolvency interest) which would be
included in any of the above but for any discharge,
non-provability, unenforceability or non-allowability of the
same in any insolvency or other proceedings;
BOFA DISCHARGE DATE: a date on which all BofA Debt has been irrevocably
repaid and discharged in full;
BOFA FINANCE DOCUMENT: each of the BofA Credit Agreement, the BofA
Debenture or any present and future documents and agreements relating
to the BofA Debt;
BOFA SECURED ASSET: any asset of the Company over which BofA has a
Security Interest created by the BofA Debenture;
CREDITOR: NatWest or BofA;
DEBT: the NatWest Debt or the BofA Debt;
GROUP: the group consisting of Bell Microproducts Inc. and its
subsidiaries;
NATWEST CHARGE: the legal mortgage dated 31 October 2000 between (1)
the Company and (2) NatWest;
NATWEST CREDIT AGREEMENT: the medium term LIBOR loan agreement dated 31
October 2000 between (1) the Company and (2) NatWest;
NATWEST DEBT: all present or future monies, obligations and liabilities
(actual or contingent) payable or owing by the Company to NatWest on
any account whatsoever and howsoever arising whether or not matured and
whether or not liquidated together with (without limitation):
(i) (if, but only to the extent, specifically agreed to by BofA),
any refinancing, novation, refunding, deferral or extension of
any of those liabilities:
(ii) any claim for damages or restitution in the event of
rescission of any of those liabilities or otherwise in
connection with the NatWest Credit Agreement;
(iii) any claim against the Company flowing from any recovery by the
Company of a payment or discharge in respect of those
liabilities on grounds of preference of otherwise; and
(iv) any amounts (such as post-insolvency interest) which would be
included in any of the above but for any discharge,
non-provability, unenforceability or non-allowability of the
same in any insolvency or other proceedings
NATWEST DISCHARGE DATE: the date on which all the NatWest Debt has been
irrevocably repaid and discharged in full;
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NATWEST PRIORITY ASSET: the Property and the rental income payable in
respect of any lease thereof;
PROPERTY: all that freehold property known as Fountain Court, Cox Lane,
Chessington registered at HM Land registry under title number
SGL638201;
SECURITY INTEREST: any mortgage, pledge, lien, charge, assignment,
hypothecation or security interest or any other agreement or
arrangement having the effect of conferring security;
SECURITY PERIOD: the period starting on the date of this Agreement and
ending on the first to occur of the BofA Discharge Date and the NatWest
Discharge Date.
1.2 CONSTRUCTION
1.2.1 In this Agreement, unless the contrary intention appears, a
reference to:
(a) an "AMENDMENT" includes a supplement, novation or
re-enactment and "AMENDED" is to be construed
accordingly;
(b) "ASSETS" includes present and future properties,
revenues and rights of every description;
(c) "RELATED SECURITY" is a reference to that term as
defined in Clause 4.1.2;
(d) "SUBSIDIARY" means a subsidiary undertaking (as
defined by Section 258 Companies Act 1985) from time
to time;
(e) a provision of law is a reference to that provision
as amended or re-enacted;
(f) a clause or a Schedule is a reference to a clause of
or a schedule to this Agreement;
(g) a person includes its successors and assigns; and
(h) a document is a reference to that document as
amended, restated, novated and/or supplemented.
1.2.2 The headings in this Agreement are for convenience only and
are to be ignored in construing this Agreement.
2 PURPOSE
The purpose of this Agreement is to set out that each of BofA and
NatWest consent to the creation and continuance in force of each of the
BofA Finance Documents and the NatWest Charge and that:
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2.1 any Security Interest created by the NatWest Charge over an
asset which is not the NatWest Priority Asset will rank behind
any Security Interest over that asset created under the BofA
Debenture;
2.2 any fixed Security Interest over the NatWest Priority Asset
will rank in priority to any Security Interest in favour of
BofA; and
2.3 subject to paragraph 2.2 above, any Security Interest granted
by the Company in favour of BofA will rank in priority to any
Security Interest granted by the Company in favour of NatWest.
3 UNDERTAKINGS OF THE COMPANY
During the continuance of this Agreement, the Company will not:
3.1 permit any person to purchase or acquire any NatWest Debt or
BofA Debt unless or until the prospective purchaser of such
Debt has first agreed to be bound by the terms of this
Agreement;
3.2 create or permit to subsist any Security Interest over any of
its assets except:
3.2.1 Security Interests created under the NatWest Charge;
or
3.2.2 Security Interests created under the BofA Debenture
or as permitted under the BofA Credit Agreement or
otherwise in favour of BofA;
3.3 take any action contrary to the arrangements contemplated by
this Agreement.
4 CREDITORS' UNDERTAKINGS
4.1 UNDERTAKING OF NATWEST
Until the earlier of the NatWest Discharge Date and the BofA Discharge
Date, NatWest will:
4.1.1 not create or permit to subsist or receive any Security
Interest created by the Company for all or any part of the
NatWest Debt except for the Security Interest created or
purported to be created by the NatWest Charge;
4.1.2 require or permit to be granted in its favour any other
Security Interest or guarantee or other assurance against loss
to be held as security for the payment, performance or
discharge of the liabilities of the Company under the NatWest
Charge (any such Security Interest, guarantee or other
assurance together referred to in this Agreement as "related
security") from any member of the Group save for any such
related security as is in effect at the date hereof.
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4.2 NO VARIATION TO NATWEST CHARGE
NatWest hereby covenants with BofA that during the continuance of this
Agreement it will notify BofA of any default or event of default under
the NatWest Credit Agreement and that it will not, except with the
prior written consent of BofA:
4.2.1 make or seek to make any amendment or variation of the NatWest
Charge or obtain any collateral, additional or substituted
securities from the Company in respect of all or any part of
the NatWest Debt;
4.2.2 make or seek to make any agreement to amend, vary, extend,
novate, supplement or replace the NatWest Credit Agreement
except as anticipated in this Agreement;
4.2.3 require or permit the NatWest Debt to be repaid except for
scheduled repayments or any repayment made pursuant to the
proposed refinancing with Bank of Scotland;
4.2.4 enforce any of its rights under the NatWest Charge other than
in accordance with the provisions of Clause 4.4.
4.3 PERMITTED PAYMENTS AND PERMITTED ENFORCEMENT
4.3.1 Payments may be made by the Company to NatWest in accordance
with the NatWest Credit Agreement in respect of the NatWest
Debt during the Security Period.
4.3.2 Payments may be made by the Company to BofA in accordance with
the BofA Credit Agreement in respect of the BofA Debt during
the Security Period.
4.3.3 The Company, Ideal and any of their respective subsidiaries
may:
(a) create, extend, or increase or permit to subsist a
Security Interest over any part of its undertaking,
property or assets as security for repayment of the
BofA Debt; and
(b) pay or provide a dividend or other distribution,
intercompany loan or guarantee to any other Group
company,
in each case to the extent permitted under the BofA Finance
Documents.
4.4 ENFORCEMENT
4.4.1 NatWest shall not appoint an administrative receiver pursuant
to the NatWest Charge without the prior written consent of
BofA. If NatWest wishes to appoint any other receiver,
administrator or
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liquidator (or like officer) or to exercise its power of sale
or otherwise enforce its Charge, it shall forthwith inform
BofA of its intention. Prior to any appointment being made by
NatWest, the Creditors shall, for a period of not less than 10
business days, endeavour to agree on the method by which their
respective Charges shall be enforced, and where appropriate
upon a suitable person to be appointed as such receiver,
administrator or liquidator (or like officer)
4.4.2 If BofA wishes to appoint a receiver (including an
administrative receiver), administrator or liquidator (or like
officer) or to exercise its power of sale or otherwise enforce
its Charge, it shall forthwith inform NatWest of its
intention. Prior to any appointment being made by BofA, the
Creditors shall, for a period of not less than 2 business
days, endeavour to agree on the method by which their
respective Charges shall be enforced, and where appropriate
upon a suitable person to be appointed as such receiver,
administrator or liquidator (or like officer). Notwithstanding
the foregoing provisions of this clause 4.4.2, BofA may
appoint a receiver (or other such officer) of the Company
forthwith without notice to NatWest where BofA believes that
the immediate appointment of such receiver or other officer is
necessary to protect its interests.
4.4.3 The Creditors shall co-operate with each other in realising
the security (which shall include, without limitation
releasing their respective Charges, in whole or in part, to
enable any sale of assets pursuant to the enforcement of any
Charge to take place) and in ensuring that the net proceeds,
after deduction of the expenses of realisation, are paid in
accordance with the provisions of this Agreement.
4.5 The Company consents to the disclosure of information by NatWest and
BofA to each other in relation to the Company and its affairs and in
relation to the NatWest Charge and the BofA Finance Documents as they
may from time to time think fit.
4.6 Following the enforcement of the NatWest Charge and pending any sale of
the Property, NatWest shall, on reasonable notice and during normal
business hours, permit BofA or any receiver or other officer appointed
by it under any BofA Finance Document (each an "appointee"), any
servants, agents or employees of BofA, such appointee or the Company
and any other person authorised by BofA or such appointee, access to
the Property for such purposes as BofA or such appointee may reasonably
require to enable the business to be carried on from the Property or
otherwise to safeguard the security granted in favour of BofA under the
BofA Finance Documents, including for the purposes of inspecting the
books and records of the Company.
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5 TURNOVER OF NON-PERMITTED RECOVERIES
5.1 NON-PERMITTED PAYMENT TO NATWEST
If, before the BofA Discharge Date:
5.1.1 NatWest receives the proceeds of any enforcement of any
Security Interest created by the NatWest Charge other than
from the proceeds of enforcement of any Security Interest over
the NatWest Priority Asset;
5.1.2 NatWest receives, after the NatWest Discharge Date, any
payment purported to be in discharge of any NatWest Debt,
NatWest will promptly distribute that amount to BofA for application
towards the BofA Debt until the BofA Debt is irrevocably paid in full.
5.2 NON-PERMITTED PAYMENT TO BOFA
If:
5.2.1 BofA receives the proceeds of any enforcement of any Security
Interest over the NatWest Priority Asset; or
5.2.2 BofA receives, after the BofA Discharge Date, any payment
purported to be in discharge of the BofA Debt,
BofA will promptly pay and distribute that amount to NatWest for
application towards the NatWest Debt until the NatWest Debt is
irrevocably paid in full.
6 PRIORITY OF SECURITY
6.1 Any Security Interest over the NatWest Priority Asset will rank in all
respects prior to any Security Interest granted by the Company in
favour of BofA regardless of order of registration, notice, execution
or otherwise.
6.2 Subject to paragraph 6.1 above, any Security Interest created in favour
of BofA will rank in all respects prior to any Security Interest
granted by the Company in favour of NatWest regardless of order of
registration, notice, execution or otherwise.
7 PROCEEDS OF ENFORCEMENT
7.1 The net proceeds of enforcement of any Security Interest over any
NatWest Priority Asset shall be applied in the following order:
FIRST in payment to NatWest for application towards the NatWest
Debt;
SECOND in payment to BofA for application towards the BofA Debt in
such order as BofA may decide;
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THIRD in payment of the surplus (if any) to the Company or other
person entitled thereto.
7.2 The net proceeds of enforcement of any Security Interest over any asset
of the Company which is not the NatWest Priority Asset shall be applied
in the following order:
FIRST in payment to BofA for application towards the BofA Debt;
SECOND in payment to NatWest for application towards the NatWest
Debt;
THIRD in payment of the surplus (if any) to the Company or any other
person entitled thereto.
8 STATUS OF THE COMPANY
8.1 PURPOSE
The Company joins in this Agreement for the purpose of acknowledging
the priorities, rights and obligations recorded in this Agreement and
undertakes with each of the other parties to this Agreement to observe
the provisions of this Agreement at all times and not in any way to
prejudice or affect the enforcement of such provisions or do or suffer
anything which would be inconsistent with the terms of this Agreement.
8.2 NO RIGHTS
The Company shall not have any rights under this Agreement and none of
the undertakings herein contained on the part of the Creditors are
given (or shall be deemed to have been given) to, or for the benefit
of, the Company.
9 REPRESENTATIONS AND WARRANTIES
9.1 REPRESENTATIONS AND WARRANTIES
9.1.1 BofA makes the representations and warranties set out in this
clause 9 to NatWest.
9.1.2 NatWest makes the representations and warranties set out in
this clause 9 to BofA.
9.2 POWER AND AUTHORITY
It has the power to enter into, perform and deliver, and has taken all
necessary action to authorise the entry into, performance and delivery
of, this Agreement.
9.3 LEGAL VALIDITY
This Agreement constitutes, or when executed in accordance with its
term will constitute, its legal, valid and binding obligation,
enforceable in accordance with its terms.
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9.4 AUTHORISATIONS
All authorisations required in connection with the entry into,
performance, validity and enforceability of, and the transactions
contemplated by this Agreement, have been obtained or effected (as
appropriate) and are in full force and effect.
9.5 TIMES FOR MAKING REPRESENTATIONS AND WARRANTIES
The representations and warranties set out in this clause 9 are made by
each Creditor on the date it becomes a party to this Agreement.
10 ACKNOWLEDGEMENTS
10.1 The Creditors agree that all deeds and documents relating to the
Priority Assets which are required to be deposited with either of them
by the Company under the provisions of the Charges shall be held and
deposited with NatWest during the subsistence of the NatWest Charge.
NatWest acknowledges and declares that it holds all deeds and documents
relating to the Property now or hereafter deposited with it by the
Company under the Charges on trust for the Creditors to the intent that
the security thereby constituted shall be available for all the
Creditors in accordance with the provisions of this Agreement. NatWest
undertakes that on discharge of the NatWest Charge all such deeds and
documents then held by it will be delivered to BofA or, in the case of
any refinancing by Bank of Scotland of the Property as contemplated in
clause 4.2.3, to Bank of Scotland.
10.2 NatWest confirms that as of the date of this Agreement, the floating
charges contained in the NatWest Charge have not crystallised.
10.3 The Company joins in this Agreement for the purpose of acknowledging
the priorities recorded in this Agreement and undertakes with each
Creditor to observe the provisions of this Agreement at all times and
not in any way to prejudice or affect the enforcement of such
provisions or to do or suffer anything which would be a breach of the
terms of this Agreement.
10.4 Each Creditor agrees to endorse a memorandum of this Agreement on the
Charges which have been created in its favour and acknowledges the
right of the other Creditor to production and to delivery of copies of
such Charges and of the documents of title to the Property.
11 CHANGES TO THE PARTIES
11.1 SUCCESSORS AND ASSIGNS
This Agreement is binding on the successors and assigns of the parties
to this Agreement.
11.2 COMPANY
The Company may not assign or transfer any of its rights or obligations
under this Agreement.
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11.3 CREDITORS
Neither NatWest nor BofA shall assign, transfer, charge or otherwise
dispose of the NatWest Charge or the BofA Debenture, as the case may
be, or any of its respective rights or obligations thereunder to any
person (a "Transferee") unless that Transferee shall have first agreed
with the parties to this Agreement that he is bound by all the terms of
this Agreement.
12 GENERAL
12.1 WAIVERS, REMEDIES CUMULATIVE
The rights of each party under this Agreement:
12.1.1 are cumulative and not exclusive of its rights under the
general law; and
12.1.2 may be waived only in writing and specifically.
Delay in exercising or non-exercise of any such right is not a waiver
of that right.
12.2 COUNTERPARTS
This Agreement may be executed in any number of counterparts, and this
has the same effect as if the signatures on the counterparts were on a
single copy of this Agreement.
12.3 CONTRACTS (RIGHTS OF THIRD PARTIES) ACT
Only the parties to this Agreement from time to time may enforce any
provision of this Agreement under the Contracts (Rights of Third
Parties) Act 1999.
12.4 CONTINUING AGREEMENT
This Agreement shall apply in respect of the NatWest Debt or the BofA
Debt irrespective of any intermediate payment in whole or in part of
any of the NatWest Debt or the BofA Debt and shall apply to the
ultimate balance of the NatWest Debt or the BofA Debt.
12.5 LAND REGISTRY
The parties to this Agreement apply to the Registrar to note, in the
appropriate manner, at HM Land Registry the priority arrangements
agreed in this Agreement insofar as the same affect any registered land
comprised in the Charges.
12.6 TERMINATION
This Agreement shall cease to have effect when the NatWest Debt or BofA
Debt shall have been repaid in full.
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13 NOTICES
13.1 SERVICE OF NOTICES
All notices under, or in connection with, this Agreement shall be given
in writing or by fax. If correctly addressed, any such notice is deemed
to be given at the following times:
13.1.1 if in writing when delivered; and
13.1.2 if by fax when received;
However, a notice given in accordance with the above but received on a
non-working day or after business hours in the place of receipt is
deemed to be given on the next working day in that place.
13.2 ADDRESSES FOR NOTICES
The address and fax number of each party hereto for all notices under,
or in connection with this Agreement are:
13.2.1 the Company:
Fountain Court
Cox Lane
Chessington
Surrey KT9 1SJ
Attention: Nick Lee
Fax: 020 8410 7858
13.2.2 NatWest
National Westminster Bank plc
10th Floor
280 Bishopsgate
London EC2M 4RB
Attention: John Cresswell, Specialised Lending Services
Fax: 020 7672 0323
13.2.3 BofA:
New Broad Street House
35 New Broad Street
London EC2M 1NH
Attention: Graham Moffitt/Carmen Bernardis (Business Credit)
Fax: 020 7809 5807
A party may change the above by prior written notice to the other
parties.
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14 GOVERNING LAW
This Agreement is governed by English law.
THIS AGREEMENT has been entered into on the date stated at the beginning of this
Agreement.
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SIGNATORIES
THE COMPANY
SIGNED for and on behalf of )
BELL MICROPRODUCTS LIMITED )
acting by: )
Director
Director/Secretary
NATWEST
SIGNED for and on behalf of )
NATIONAL WESTMINSTER )
BANK PLC acting by: )
and
acting under the authority of that )
company in the presence of: )
Witness'
Signature: ........................
Name: ........................
Address: ........................
........................
........................
BOFA
SIGNED for and on behalf of )
BANK OF AMERICA, NATIONAL )
ASSOCIATION, as security trustee )
Acting by: )
and
acting under the authority of that )
company in the presence of: )
Witness'
Signature: ........................
Name: ........................
Address: ........................
........................
........................
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