Document:

exhibit10-1.htm

EXHIBIT 10.1

 

 

	
Wells Fargo Bank, N.A.

	
London Branch

	
One Plantation Place

	
30 Fenchurch Street

	
London  EC3M 3BD

	
United Kingdom

	
Tel:   +44 (0)20 7149 8100

	
Fax:  +44 (0)20 7149 7220

STERLING REVOLVING CREDIT FACILITY

(secured by the US Guarantee and the English Guarantee) 

available by way of cash advances only 

The Directors

Centaur Services Ltd

Centaur House

Torbay Road

Castle Cary

Somerset

BA7 7EU

Date:             5 November 2010 

Dear Sirs,

We are pleased to advise you that Wells Fargo Bank, National Association, London Branch (the "Bank") (which expression shall include its successors, transferees and assigns) is agreeable to making available to Centaur Services Limited, a company incorporated in England and Wales under registered number 00787385 (the "Borrower") and whose registered office is at Centaur House, Torbay Road, Castle Cary, Somerset BA7 7EU a revolving credit facility in a principal amount of up to £12,500,000 by way of short term cash advances on the following terms and subject to the following conditions:

	
1.  

	
DEFINITIONS 

 

	
1.1  

	
In this Agreement:

 

"Advance" means the principal amount of each advance made or to be made to the Borrower under the Revolving Credit Facility;

 

"Agreement" means the agreement resulting from the Borrower countersigning this letter;

 

“Associate Bank” means any bank or corporation which is wholly owned by the ultimate holding corporation of the Bank;

 

"Bank Basis" means a calculation made on the basis of the actual number of days elapsed or, as the case may be, to elapse and a 365 day year;

 

"Borrowed Money" means Indebtedness incurred in respect of (i) money borrowed or raised, (ii) any bond, note, loan stock, debenture, bill of exchange, commercial paper or similar instrument (including share capital carrying a right to a preferential dividend or redeemable at the option of shareholders or the issuer thereof at any time), (iii) acceptance or documentary credit facilities, (iv) rental payments under leases and hire-purchase agreements (excluding any amounts applicable to finance charges) (in all cases whether in respect of land, buildings, machinery, equipment or otherwise) entered into primarily as a method of raising finance or of financing the acquisition of the asset the subject thereof, (v) interest rate swaps, currency swaps, financial options, futures contracts or other similar instruments, (vi) guarantees, bonds, stand-by letters of credit or other instruments issued in connection with the performance of contracts, (vii) obligations under conditional or instalment sale agreements or any other obligation to pay the deferred purchase or construction price of assets or services, except trade accounts arising in the normal course of day-to-day trading, (viii) guarantees or other assurances against financial loss in respect of Indebtedness of any person falling within any of (i) to (vii) above and (ix) all other Indebtedness under any arrangement entered into primarily as a method of raising finance (and not in the normal course of, and as part of, day-to-day trading) and which is not referred to in the foregoing paragraphs of this definition;

 

"Business Day" means a day (other than a Saturday or a Sunday) on which dealings are carried on in the London Interbank Sterling market and on which commercial banks are open for business in London for transactions of the type contemplated by this Agreement;

 

“Current Account Mandate” means the Bank’s form of Mandate in connection with the opening of current account(s) at the Bank, together with the Bank’s form of Certified Resolutions;

 

“Current Account Terms and Conditions” means the Bank’s terms and conditions governing current accounts at the Bank, as the same may be amended or modified from time to time;

 

 “Disruption Event” means either or both of 

	
(a)  

	
a material disruption to those payment or communications systems or to those financial markets which are, in each case, required to operate in order for payments to be made in connection with this Revolving Credit Facility (or otherwise in order for the transactions contemplated by the Finance Documents to be carried out) which disruption is not caused by, and is beyond the control of, the Bank or the Borrower; or

	
(b)  

	
the occurrence of any other event which results in a disruption (of a technical or systems-related nature) to the treasury or payments operations of the Bank or the Borrower preventing it:

	
(i)  

	
from performing its payment obligations under the Finance Documents; or

	
(ii)  

	
from communicating with the other in accordance with the terms of the Finance Documents;

and which (in either such case) is not caused by, and is beyond the control of, the Bank or (as the case may be) the Borrower;

	
(i)  

	 

 

	
  

	
"English Guarantor" means Labpak.

 

	
  

	
"English Guarantee" means the document referred to in paragraph (b) of the definition of "Guarantees". 

 

	
  

	
“Environment” means living organisms including the ecological systems of which they form part and all or any of the following media:  the air (including, without limitation, the air within buildings and the air within other natural or man-made structures, whether above or below ground), water (including, without limitation, ground and surface water) and land (including, without limitation surface and sub-surface soil and land under water);

 

	
  

	
“Environmental Claim” has the meaning given to that term in Clause 10.1 (i);

 

"Environmental Law" means any law or regulation which relates to:

 

	
(a)  

	
harm to or the protection of human health or the health of animals or plants; or

 

	
(b)  

	
the conditions of the workplace; or

 

	
(c)  

	
the pollution or protection of the Environment; or

 

	
(d)  

	
any emission or substance capable of causing harm to any living organism or the Environment;

 

"Environmental Permits" means any permit,  authorisation, consent resolution, licence, exemption, filing, notarisation, registration or other approval and the filing of any notification, report or assessment  required under any Environmental Law for the operation of the business of the Borrower;

 

"Event of Default" means any one of the events specified in Clause 12 or any event which with the passing of time or the giving of notice or the making of any determination, formation of any opinion or fulfilment of any other condition would constitute such an event; 

 

"Final Repayment Date" means as that term is defined in the definition of "Repayment Date";

 

"Finance Documents" means this Agreement, the Guarantees, any certificates or notices given pursuant to this Agreement and any other document designated as such by the Bank;

 

“Financial Covenant Schedule” means the Schedule A setting forth the financial covenants with which Borrower must comply under this Agreement;

 

"Guarantees" means:

 

(a)the guarantee in form and substance satisfactory to the Bank dated on or about the date hereof and made by the US Guarantor (as guarantor) in favour of the Bank; and

 

(b)the guarantee in form and substance satisfactory to the Bank dated on or about the date hereof and made by the English Guarantor in favour of the Bank,

 

each as security for the Borrower’s obligations to the Bank and shall include any other guarantee or security given to the Bank by any Guarantor as security for the performance of the Borrower’s obligations to the Bank and "Guarantee" means any of them;

 

"Guarantors" means the US Guarantor and the English Guarantor and "Guarantor" means any of them.

 

"Indebtedness" includes any obligation whether as principal or as surety for the payment or repayment of money, whether present or future, actual or contingent;

 

"Interbank Rate" means in relation to any Interest Period or other period the rate (rounded upwards if necessary to 4 decimal places) at which the Bank is offered deposits of Sterling by leading banks in the London Interbank Market at or about 10.00 a.m. (London time) on the first day of such Interest Period or other period for a period equal to such Interest Period or other period and in an amount comparable with the amount to be outstanding during such Interest Period or other period;

 

"Interest Period" means, in relation to an Advance, the period of such Advance being 30 days, 60 days or 90 days as selected by the Borrower (or such other period as the Bank and the Borrower may agree) and in the absence of such selection 30 days and provided that:

 

	
(a)  

	
if any Interest Period relating to any Advance would otherwise end on a day which is not a Business Day, that Interest Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such Interest Period over into another calendar month in which event such Interest Period shall end on the last preceding Business Day;

 

	
(b)  

	
any Interest Period which commences on the last day of a calendar month and any Interest Period which commences on a day for which there is no numerically corresponding day in the calendar month which is the relevant number of months after the commencement of such Interest Period shall end on the last Business Day of the calendar month which is the relevant number of months after the commencement of such Interest Period; and

 

	
  

	
(c)no Interest Period selected or deemed to have been selected by the Borrower shall end after the Final Repayment Date;

 

"Labpak" means Labpak Limited, a company incorporated in England and Wales (registered number 01264218) whose registered office as at the date of this Agreement is at Torby Road, Castle Cary, Somerset BA7 7EU.

 

"Mandatory Costs Rate" means in relation to any Interest Period or other period, the cost to the Bank of complying with all reserve, special deposit, capital adequacy, solvency, liquidity ratios, fees or other requirements of or imposed by the Bank of England, the Financial Services Authority, the European Central Bank or any other governmental or regulatory authority for the time being attributable to each Advance or any unpaid sum hereunder (rounded up if necessary to 4 decimal places) as conclusively determined by the Bank;

 

"Margin" means in relation to an Advance for an Interest Period the percentage per  annum specified in column 2 below set out opposite the Pricing Level in column 1 below  applying on the date the Advance is made: 

 

	
Column 1

Pricing Level

	
Column 2

% per annum +

	
1

	
1.05%

	
2

	
1.45%

	
3

	
1.90%

 

and for this purpose the "Pricing Level" on any day means the Pricing Level 1, 2 or 3 which would apply to the calculation of an Applicable Rate on that day under the US Facility provided that if either:

 

 

 (i) any relevant amendment is made to the pricing level in the US Facility; or 

 

(ii) the pricing level ceases to be set in the US Facility, 

 

the Bank and the Borrower shall negotiate in good faith a replacement to reflect the previous determination of the Pricing Level and unless and until the replacement pricing mechanism has been agreed by both parties the then current Pricing Level shall apply.

 

"Material Adverse Effect” means, in the reasonable opinion of the Bank, a material adverse effect on the business, operations, property, condition (financial or otherwise) or prospects of the Borrower or the ability of the Borrower to perform and comply with its obligations under any of the Finance Documents or the validity or enforceability of or rights or remedies of the Bank under any of the Finance Documents;

 

"Notice of Utilisation" means the notice substantially in the form set out in Schedule B;

 

"Permitted Encumbrance" means any Security Interest (or in the case of (b) only, any lien):

 

	
  

	
(a)created or outstanding with the prior written consent of the Bank;

 

	
  

	
(b)any lien arising by operation of law and in the ordinary course of trading (and not as a result of any default or omission by the Borrower) and securing obligations which are either not more than three months overdue or are being contested in good faith and with respect to which, in either case, adequate reserves are being maintained; 

 

	
  

	
(c)any Security Interest arising under any retention of title, hire purchase or conditional sale arrangement or arrangements having similar effect in respect of goods supplied to the Borrower in the ordinary course of trading and on the supplier’s standard or usual terms and not arising as a result of any default or omission by the Borrower; and

 

	
  

	
(d) any Security Interest over goods and products, or over the documents or insurance policies relating to such goods and products, arising in the ordinary course of trading in connection with documentary credit transactions, provided that any such Security Interest secures only so much of the acquisition cost or selling price of such goods and products (and amounts incidental to any such cost or price) which is required to be paid within 180 days after the date upon which the same was first incurred; 

 

“Permitted Leases” means:

 

(a)the vehicle hire agreement between (1) Trowbridge Vehicle Rentals Ltd and (2) the Borrower (agreement number CEN001) dated 14 April 1997; and

 

(b)the purchase fixed agreement between (1) Fortis Lease UK Limited and (2) the Borrower dated 25 September 2007 in respect of Project Kurbis warehouse automation.

 

	
  

	
"Permitted Transactions" means:

 

	
  

	
(a)any interest rate or other exchange or hedging agreements to which the Bank has given its prior written consent;

 

	
  

	
(b) any lease arising in the ordinary course of business which requires the Borrower or the English Guarantor to make payments totalling less than £150,000 in aggregate per annum;

 

	
  

	
(c)any lease arising in the ordinary course of business which requires the Borrower or the English Guarantor to make payments totalling more than £150,000 in aggregate per annum and to which the Bank has given its prior written consent; and

 

	
  

	
(d)the Permitted Leases.

 

"Pricing Level" means as that term is defined in the definition of "Margin";

 

"Repayment Date" means, in relation to an Advance, the last day of the Interest Period relating thereto for which such Advance was made and the "Final Repayment Date" shall mean the date falling 3 years after the date of this Agreement;

 

"Revolving Credit Facility" means the revolving credit facility of up to £12,500,000            to be made available by the Bank to the Borrower in accordance with the provisions of this Agreement;

 

"Security Interest" means any mortgage, charge, pledge, lien, encumbrance, conditional sale or other title retention agreement, trust arrangement, preferential right or other agreement or arrangement the economic or commercial effect of which is similar to security or any other security interest whatsoever, howsoever created or arising;

 

"Structure Note" means as that term is defined in Clause 4.1(i);

 

"Sterling" or "£" means the lawful currency of the United Kingdom;

 

"subsidiary" and "subsidiary undertaking" shall have the meanings given to them by Sections 1159 and 1162 (respectively) of the Companies Act 2006 (as amended);

 

"Service Agent" means as that term is defined in  Clause 23.5.

 

"Treaty" means the treaty establishing the European Community being the Treaty of Rome of 25th March 1957, as amended by the Single European Act 1986 and the Maastricht Treaty (which was signed at Maastricht on 7th February 1992 and came into force on 1st November 1993), as further amended from time to time; and

 

"Unutilised Amount" means, at any time, the maximum aggregate amount of the Revolving Credit Facility available under this Agreement (as the same may from time to time be reduced or cancelled in accordance with the provisions hereof) less the aggregate amount of Advances made and not prepaid or repaid at such time.

 

"USD" means the lawful currency of the United States of America.

 

"US Facility" means the Credit Agreement dated 13 December 2006 between (1) MWI Veterinary Supply Co. as borrower; (2) MWI Veterinary Supply, Inc. and Memorial Pet Care, Inc. as guarantors, (3) Bank of America, N.A. and Wells Fargo Bank, N.A. as Lenders, and (4) Bank of America, N.A. as Agent and L/C Issuer, as amended by the first amendment to credit agreement dated 8 February 2010 and by the second amendment to credit agreement dated 9 August 2010, as further supplemented, otherwise amended, replaced or novated from time to time.

 

"US Guarantee" means the document referred to in paragraph (a) of the definition of "Guarantees".

 

"US Guarantor" means MWI Veterinary Supply Co. incorporated in Idaho, United States of America.

 

	
1.2  

	
Headings in this Agreement are inserted for convenience only and shall be ignored in construing this Agreement.  Expressions hereinbefore defined shall have the same meanings herein.  Unless the context otherwise requires, words denoting the singular number only shall include the plural and vice versa and words denoting persons shall include companies, corporations and partnerships and vice versa.

 

	
1.3  

	
Any reference in this Agreement to:

 

"accounts" are references to the balance sheet and profit and loss account and cash flow statement of the Borrower together with all relevant notes thereto or reports thereon, whether required by law or regulation or otherwise (and, if applicable, both on a consolidated and an unconsolidated basis);

 

the "assets" of any person shall include the undertaking, property, revenues and assets (present and future) of whatsoever nature of such person;

 

a "Clause" or a "Schedule" are, unless otherwise provided, references to clauses of and schedules to this Agreement;

 

"euros" is a reference to the single currency of participating member states;

 

"fees" shall, subject to any contrary indication, be construed so as to include (where applicable) disbursements and any VAT on such fees and/or disbursements required to be charged;

 

"generally accepted accounting principles and bases" means in relation to a company the generally accepted accounting principles and bases of the jurisdiction in which such company is incorporated;

 

"month" is a reference to a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month save that where any such period would otherwise end on a day which is not a Business Day, it shall end on the next Business Day provided that, if a period starts on the last day of a calendar month or there is no numerically corresponding day in the month in which that period ends, that period shall end on the last Business Day in that later month (and references to "months" shall be construed accordingly);

 

"national currency unit" means the unit of currency (other than the euro) of a participating member state;

 

"participating member states" is a reference to the member states of the European Union which adopt or have adopted a single currency in accordance with the Treaty;

 

a "person" shall be construed as a reference to any person, firm, company, partnership, corporation or unincorporated body of persons or any State or Government or any agency thereof;

 

"tax" shall be construed so as to include any present or future tax, levy, impost, duty, fee, deduction or withholding or other charge of a similar nature (including, without limitation, any penalty or interest payable in connection with any failure to pay or any delay in paying out any of the same) and "taxes" and "taxation" shall be construed accordingly;

 

an amount denominated in “£” (pounds sterling) shall, where appropriate in Clauses 10, 11 and 12, refer to the equivalent of such amount in any other currency; and

 

a time of day is a reference to London time.

 

	
1.4  

	
Any reference in this Agreement to an agreement or document shall be construed as a reference to that agreement or document as the same may have been, or may from time to time be, varied, amended, supplemented, substituted, novated or assigned.

 

	
1.5  

	
References in this Agreement to statutes and/or statutory provisions shall be construed as referring to such statutes or statutory provisions as respectively replaced, amended, extended, consolidated or re-enacted from time to time and shall include any order, regulation, instrument or other subordinate legislation made under the relevant statute or statutory provisions. 

 

	
1.6  

	
 Where there is any conflict between the Current Account Terms and Conditions and the provisions of this Agreement, the terms of this Agreement shall prevail.

 

	
1.7  

	
Nothing in this Agreement is intended to confer on any person any right to enforce any provision of this Agreement which that person would not have had but for the Contracts (Rights of Third Parties) Act 1999.

 

	
2.  

	
PURPOSE

 

The Borrower undertakes to the Bank that each Advance shall be applied solely in and towards its working capital requirements and for general corporate purposes.

 

	
3.  

	
AMOUNT

 

Subject to the terms and conditions of this Agreement, the Bank agrees to make available to the Borrower a revolving credit facility in an aggregate amount at any one time of up to £12,500,000 by way of short term cash advances. 

 

	
4.  

	
CONDITIONS PRECEDENT

 

	
4.1  

	
The rights of the Borrower under this Agreement to utilise the Revolving Credit Facility for the first Advance are conditional upon the Bank having received, in form and substance satisfactory to it, all of the following by 8 November 2010 and in the event that this does not occur the Revolving Credit Facility and the Bank's obligations in relation to the provision of the Revolving Credit Facility shall be cancelled and reduced to zero:

 

(a)in relation to the Borrower:

 

	
  

	
(i)a copy, certified by a director of the Borrower (or and officer in the case of the US Guarantor) to be true, complete and up to date, of the memorandum and articles of association, certificate of incorporation and any certificates of incorporation on change of name of the Borrower;

 

	
  

	
(ii)a copy, certified as aforesaid, of a written resolution of the board of directors of the Borrower at which valid resolutions were adopted approving the Finance Documents to which it is a party and all the other documents relating thereto and authorising a person or persons to sign and deliver (or execute as a deed, if appropriate) the Finance Documents to which it is a party and to sign and deliver or despatch all other such documents, notices or communications to be given by it pursuant to or in connection with such Finance Documents;

 

	
  

	
(iii)a list of names and specimen signatures, certified as aforesaid, of each of the persons referred to in sub-paragraph (ii) above; and

 

	
  

	
(iv)a certificate signed by a director of the Borrower stating, inter alia, that the signing and/or execution of the Finance Documents to which it is a party and the exercise of its rights and the performance of its obligations thereunder is within its corporate powers and will not cause any limitation on its borrowing or other powers or on the right of its directors to exercise any such powers (whether contained in its constitutional documentation or in any agreement or instrument or imposed by statute or regulation or otherwise) to be exceeded;

 

(b)in relation to each Guarantor:

 

	
  

	
(i)a copy, certified by a Director of the Guarantor (or an officer in the case of the US Guarantor), to be true, complete and up-to­ date, of the constitutional documentation of the Guarantor together, with respect to the US Guarantor only, with a copy of the US Guarantor's certificate of good standing issued by the secretary of State in the State in which the US Guarantor is formed and dated as of a recent date;

 

	
  

	
(ii)a copy, certified as aforesaid, of a written resolution of the Board of Directors of the English Guarantor at which valid resolutions were adopted approving the Finance Documents to which it is a party and all of the documents relating thereto and authorising a person or persons to sign and deliver (or execute as a deed, if appropriate) the Finance Documents to which it is a party and to sign and deliver or despatch all other such documents, notices or communications to be given by it pursuant to or in connection with such Finance Documents;

 

	
  

	
(iii)a list of names and specimen signatures, certified as aforesaid, of each of the persons referred to in sub-paragraph (ii) above; and

 

	
  

	
(iv)a certificate signed by a Director of any Guarantor (or an officer in the case of the US Guarantor) stating, inter alia, that the signing and/or execution of the Finance Documents to which it is a party and the performance of its obligations thereunder is within its corporate powers and will not cause any limitation upon its borrowing or other powers or on the right of its Directors (or its officers in the case of the US Guarantor) to exercise any such powers (whether contained in its constitutional documentation or in any agreement or instrument or imposed by statute or regulation or otherwise) to be exceeded;

 

	
  

	
(c)the:

 

	
  

	
(i)US Guarantee duly executed by the parties thereto; and

 

	
  

	
(ii)the English Guarantee duly executed by the parties thereto.

 

	
  

	
(d)evidence that there have been granted (either unconditionally or with such conditions as are acceptable to the Bank) and are in full force and effect, all approvals, registrations, licences and consents necessary for the Borrower and each Guarantor to execute and deliver the Finance Documents to which it is a party and all other documents referred to therein and to perform their respective obligations thereunder;

 

	
  

	
(e)the Current Account Mandate duly completed by the Borrower, and the Borrower shall have opened its primary operating accounts with the Bank in accordance with the Current Terms and Conditions and otherwise be in compliance with the requirements of Section 11.1(i) hereof;

 

	
  

	
(f)details of all banking and credit facilities and any similar arrangements provided to the Borrower and each Guarantor by any bank or other financial institution and/or any Guarantor and the terms of and the basis for continuation of such facilities and arrangements to the extent that they are to be maintained following the initial utilisation of the Revolving Credit Facility;

 

	
  

	
(g)the initial fee payable pursuant to Clause 13.1;

 

	
  

	
(h)       deliver to the Bank the following:

 

	
(i)  

	
a deed of release signed by Fortis Commercial Finance Limited and the Borrower confirming the release of all past, present and future liabilities in relation to the debenture in favour of Fortis Commercial Finance Limited dated 7 May 2002, together with the relevant MG02 form completed, signed and dated;

 

	
(ii)  

	
a deed of release signed by Fortis Bank SA-NV UK Branch and the Borrower confirming the release of all past, present and future liabilities in relation the legal charge in favour of Fortis Bank SA-NV UK Branch dated 31 May 2005, together with the relevant MG02 form and the Land Registry Form DS1, each completed, signed and dated; and

 

	
(iii)  

	
a deed of release signed by Fortis Bank SA-NV UK Branch and the Borrower confirming the release of all past, present and future liabilities in relation to the legal charge in favour of Fortis Bank SA-NV UK Branch dated 23 October 2006, together with the relevant MG02 form and the Land Registry form DS1, each completed, signed and dated;

 

	
  

	
(i)a note or diagram setting out the legal and beneficial ownership of the Borrower and the Guarantors and the relationship between them (the "Structure Note"); and

 

	
  

	
(j)such other documents and information as the Bank may reasonably require.

 

	
5.  

	
UTILISATION OF THE REVOLVING CREDIT FACILITY

 

	
5.1  

	
As to Advances, subject as provided below and to:

 

	
  

	
(a)with respect to the first Advance only, the conditions set out in Clause 4 having been fulfilled by no later than 11.00 a.m. on the second Business Day preceding the date on which the first Advance is to be made hereunder;

 

	
  

	
(b)no Event of Default having occurred; and

 

	
  

	
(c)the Bank having received a Notice of Utilisation by no later than 10.00 a.m. on the Business Day of the proposed date on which the relevant Advance is requested to be made, duly completed and signed by the Borrower and specifying:

 

	
  

	
(i)the date on which the proposed Advance is to be made (which shall be a Business Day);

	
  

	
(ii)the duration of the Interest Period which shall commence on the date on which the proposed Advance is to be made and end on or before the Final Repayment Date;

	
  

	
(iii)the amount of the proposed Advance, which shall be:

	
  

	
(a)equal to, or less than, the Unutilised Amount on the proposed date on which the Advance is to be made, (adjusted for this purpose, in accordance with Clause 5.2); and

	
  

	
(b)if less than the Unutilised Amount on the date on which the proposed Advance is to be made, a minimum amount of £500,000 or, if more, in integral multiples of £100,000 or such other amount as may be agreed by the Bank,

 

together with evidence showing that such Advance will be used for its agreed purposes in form and substance satisfactory to the Bank,

 

the Bank shall, upon and subject to the terms and conditions of this Agreement, make available such Advance to the Borrower on the day specified in and in accordance with the Notice of Utilisation, or if such day is not a Business Day on the next succeeding Business Day provided that:

 

	
  

	
(a)no Advances shall be made available hereunder after the date falling one month prior to the Final Repayment Date and accordingly the obligations of the Bank to make the Revolving Credit Facility available shall be cancelled on such date; and

 

	
  

	
(b)there shall never be more than 7 Advances made during any calendar month and never be more than 7 Advances in total outstanding at any time.

 

	
  

	
5.2For the purpose of determining the maximum amount of a proposed Advance, the Unutilised Amount shall be:

	
  

	
(i)increased by the aggregate principal amount of outstanding Advances which will become repayable on or before the date on which the proposed Advance is to be made; and

	
  

	
(ii)reduced to take account of any other Advance to be made on or before the proposed date on which such Advance is to be made and any reduction in the Revolving Credit Facility which it is known will occur during the proposed Interest Period as a result of a reduction in, or cancellation of part of the Revolving Credit Facility pursuant to this Agreement.

 

	
6.  

	
INTEREST

 

	
6.1 

 

	
(a)

	
The rate of interest applicable to each Advance for the Interest Period selected or deemed to be selected for such Advance shall be the rate per annum determined by the Bank to be the aggregate of (i) the Margin, (ii) the Interbank Rate and (iii) the Mandatory Costs Rate; and

	
  

	
(b)Interest on each Advance at the rate aforesaid shall be calculated for the Interest Period for which such Advance was made on the Bank Basis, shall accrue from day to day and be paid on the Repayment Date for such Advance. 

 

	
6.2  

	
If any sum due and payable by the Borrower hereunder is not paid on the due date therefor or if any sum due and payable by the Borrower under any judgment of any court in connection herewith is not paid on the date of such judgment, such unpaid sum shall bear interest until the obligation of the Borrower to pay any such sum is discharged in full at the rate per annum which is determined by the Bank to be the aggregate of (1) the Margin, (2) whichever is the higher of (a) the aggregate of the Interbank Rate and the Mandatory Costs Rate for such periods as the Bank may reasonably select and (b) the Bank's base rate for advances in Sterling, determined by the Bank in accordance with its established methodology for such currency and (3) three per cent (3%) with such interest being compounded at the end of each period selected by the Bank if such interest is to be calculated by reference to the Interbank Rate or monthly in arrear on the last day of each calendar month if such interest is to be calculated by reference to base rate.

 

	
7.  

	
ALTERNATIVE INTEREST RATES

 

	
7.1  

	
Notwithstanding anything to the contrary herein contained, if prior to the commencement of any Interest Period or other period selected for or deemed selected for any Advance the Bank shall have determined that:

 

	
  

	
(a)by reason of circumstances affecting the London Interbank Market adequate and fair means do not exist for ascertaining the Interbank Rate applicable to such Interest Period pursuant to Clause 6.1 or other period pursuant to 6.2;  or

 

	
  

	
(b)deposits in Sterling are not or will not be available to the Bank in the London Interbank Market in sufficient amounts in the ordinary course of business to fund any Advance for such Interest Period or other period,

 

then the Bank shall as soon as practicable give written notice of such determination or notice to the Borrower.

 

	
7.2  

	
In the case of Clause 7.1 if any Advance has not yet been made it shall not be so made subject to the other provisions of this Clause.

 

	
7.3  

	
During the period of thirty days from the date of any such notice given pursuant to Clause 7.1 the Bank shall establish (in consultation with the Borrower) an alternative basis (in this Clause  7.3 referred to as the "Substitute Basis") for funding further Advances (including but without limiting the generality hereof, agreeing suitable alternative lengths of Interest Periods and agreeing the fixing of an alternative interest rate to be substituted for the rate which would otherwise have been fixed pursuant to Clause 6).  The Substitute Basis shall reflect all costs to the Bank of making available and maintaining any Advance and the Margin and shall be computed in a manner and for a period as similar to those provided in Clause 6.1 as is reasonably possible.

 

	
7.4  

	
If the Bank shall agree such Substitute Basis with the Borrower it shall again be open to the Borrower (subject to all the other terms of this Agreement) to request that Advances be made and the Borrower shall, until the circumstances specified above no longer exist, pay interest on new Advances on such Substitute Basis.  In default of agreement upon a mutually acceptable Substitute Basis within 30 days of the notice referred to in Clause 7.1 the Bank shall be discharged from any obligation to make available further Advances until in the Bank's opinion the circumstances specified above no longer exist.

 

	
7.5  

	
The certificates, confirmations and determinations of the Bank as to any of the matters referred to in this Clause 7 shall, save for manifest error, be conclusive and binding on the Borrower.

 

	
8.  

	
REPAYMENT

 

	
8.1  

	
Subject to the other provisions of this Agreement, each Advance shall be repaid in full by the Borrower to the Bank on its Repayment Date and the Borrower shall ensure that all Advances, together with all interest accrued thereon, are repaid in full on or before the Final Repayment Date.

 

	
8.2  

	
If on the date which any Advance is to be made (a "New Advance") the repayment of any outstanding Advance(s) is due to the Bank pursuant to Clause 8.1 (an "Old Advance"), then the Bank shall (without prejudice to the obligations of the Borrower under Clause 8.1) apply the whole or such part of the New Advance in or towards satisfaction of the repayment of the Old Advance pursuant to Clause 8.1.  The Bank shall advise the Borrower of the net amount if any due from one party to the other after the application of funds as aforesaid and such net amount due shall be paid by the Borrower or the Bank, as the case may be, on such date.

 

	
8.3  

	
Any amount repaid by the Borrower pursuant to this Clause shall, in accordance with the provisions of this Agreement, be available to be redrawn.

 

	
9.  

	
CANCELLATION

 

	
9.1  

	
The Borrower may, by giving to the Bank not less than fourteen (14) days prior written notice to expire at any time after the date of this Agreement cancel (without premium or penalty) with effect from the expiry of such notice the whole of the portion of the Revolving Credit Facility which is not then being or will not then be utilised or any part thereof (provided that in the case of any cancellation of part of the Revolving Credit Facility, the part of the Revolving Credit Facility so cancelled shall be a minimum amount of £2,000,000 or, if more, in integral multiples of £1,000,000) in which event the Revolving Credit Facility, and the commitment of the Bank to provide the same shall be cancelled or (as the case may be) appropriately reduced.  If the Borrower shall so cancel the whole or any part of such portion of the Revolving Credit Facility which is not then being or will not then be utilised, then on the date of such cancellation the Borrower shall pay to the Bank any accrued commitment fee on the commitment of the Bank to provide the Revolving Credit Facility so cancelled.  Once notice of cancellation of the whole or any part of the Revolving Credit Facility has been given by the Borrower, it shall not be open to the Borrower to withdraw or revoke such notice or to utilise the whole or any part of the Revolving Credit Facility which is the subject of such notice.

 

	
9.2  

	
The Borrower shall not be entitled to cancel any part of the Revolving Credit Facility otherwise than in accordance with this Clause and no amount cancelled may thereafter be utilised.

 

	
10.  

	
REPRESENTATIONS AND WARRANTIES

 

	
10.1  

	
The Borrower represents and warrants to the Bank on each date that any Advance or other amount remains outstanding, or capable of being made or drawn down, under any of the Finance Documents as follows:

 

	
  

	
(a)it is duly incorporated and validly existing under the laws of the jurisdiction in which it is incorporated as a limited liability company and is duly authorised and empowered under the said laws to own its assets and to carry on its business and it has the power to execute, deliver and perform and has taken all necessary corporate action to authorise the execution and delivery of and the performance of its obligations under the Finance Documents to which it is a party and all other documents referred to herein or therein to which it is a party;

 

	
  

	
(b)each of the Finance Documents to which it is a party has been duly executed on its behalf and constitutes its legal, valid and binding obligations enforceable in accordance with its terms (but excluding clause 1.04.4 of the English Guarantee) and the execution and performance of all of such documents will not breach, conflict with or contravene any provisions of any law, statute, rule, regulation, agreement, indenture, undertaking, memorandum and articles of association or other constitutional documentation or any other instrument binding upon it or on any of its assets or give cause for acceleration of any of its Indebtedness or result in the existence of or oblige it to create any Security Interest over all or any of its present or future revenues, assets or properties;

 

	
  

	
(c)it is not in material default under any agreement, instrument, arrangement, obligation or duty to which it is a party or by which it is or may be bound and there is no action, litigation, lawsuit or proceeding taking place or pending or threatened against or affecting it before any court, judicial, administrative, arbitral or governmental body or agency which in any such case could have a Material Adverse Effect;

 

	
  

	
(d)all actions, licences, consents, exemptions and registrations (including, without limitation filings with all governmental or any other regulatory body, authority, bureau or agency and any consents or approvals required for the execution of, or the performance by the Borrower of its obligations under, the Finance Documents to which it is a party) required for the validity and enforceability of the Finance Documents to which it is a party have been obtained and are in full force and effect and any condition contained therein or otherwise applicable thereto has been fulfilled or complied with;

 

	
  

	
(e)all its obligations and liabilities under the Finance Documents to which it is a party constitute its direct, unconditional and general obligations and rank at least pari passu with all its other present and future Indebtedness and liabilities other than in respect of Permitted Encumbrances;

 

	
  

	
(f)at the date hereof all the information provided by it, any of its officers or any person on its behalf to the Bank in connection with this Agreement is true and accurate in all material respects and it is not aware of any material facts or circumstances that have not been disclosed to the Bank and which, if disclosed, could adversely affect the decision of a person considering whether or not to provide finance to the Borrower on the terms and subject to the conditions of this Agreement;

 

	
  

	
(g)its latest audited accounts give a true and fair view of its financial condition as at the date to which such accounts are made up and there has been no material adverse change in its financial condition, business or operations since such date;

 

	
  

	
(h)it is in compliance with Clause 11.1(d) related to compliance with all applicable laws and regulations, including without limitation compliance with Environmental Laws, and related to obtaining, maintaining and complying with all necessary consents, approvals, authorisations, licences and permits, including without limitation all Environmental Permits, and/or exemptions, and to the best of its knowledge and belief (having made due and careful enquiry) no circumstances have occurred which would prevent such compliance in a manner or to an extent that might reasonably be expected to have a Material Adverse Effect;

 

	
  

	
(i)no claim, proceeding, formal notice or investigation by any person in respect of any Environmental Law (“Environmental Claim”) has been commenced or (to the best of its knowledge and belief having made due and careful enquiry) is threatened against the Borrower where that Environmental Claim, if determined against the Borrower, might reasonably be expected to have a Material Adverse Effect.

 

	
  

	
(j)it has no subsidiaries or subsidiary undertakings other than those (if any) disclosed in writing to the Bank prior to the date hereof;

 

	
  

	
(k)there are no Security Interests over or in respect of the whole or any part of its assets other than Permitted Encumbrances, if any; and

 

	
  

	
(l)no Event of Default has occurred.

 

	
11.  

	
COVENANTS AND UNDERTAKINGS

 

	
11.1  

	
Positive Covenants:

 

The Borrower and the English Guarantor each covenant and undertake with the Bank that so long as any Advance or other amount remains outstanding, or capable of being made or drawn down or any liability to the Bank subsists, under any of the Finance Documents it shall:

 

	
  

	
(a)(i) with respect to the Borrower only ensure that each of its financial years ends on 30th September; and

 

	
  

	
(ii) with respect to the Borrower, furnish to the Bank as soon as the same become available and in any event within 120 days of the end of each of its financial years a copy of its audited accounts prepared in accordance with generally accepted accounting principles and bases consistently applied, audited by a firm of auditors acceptable to the Bank and representing a true and fair view of its financial position at the date of such accounts and the results of the Borrower's operations for the period ended on such date together with, a certificate confirming that the Borrower is in compliance with the covenant contained in the Financial Covenant Schedule;

 

	
  

	
(b)with respect to the Borrower only furnish to the Bank within 45 days of the end of each financial quarter a copy of its quarterly management accounts representing a true and fair view of its financial position at the date of such accounts and the results of its operations for the quarter ended on such date to include details satisfactory to the Bank to allow the Bank to assess the financial performance of the Borrower;

	
  

	
(c)promptly furnish to the Bank such additional financial or other information as the Bank may from time to time reasonably require;

 

	
  

	
(d)comply with all applicable laws (including all Environmental Laws) and regulations of all governmental and regulatory authorities relating to or affecting any of it’s assets and/or its business and will obtain and promptly renew from time to time and comply with the terms of all consents, approvals, authorisations, licences and permits (including all Environmental Permits) and/or exemptions which may be necessary to enable it properly to operate its business and to carry out its obligations under each of the Finance Documents;

 

	
  

	
(e)with respect to the Borrower only notify the Bank in writing immediately on becoming aware of any Event of Default with a description of any steps which it is taking or considering taking in order to remedy or mitigate the effect of the Event of Default or otherwise in connection with it;

 

	
  

	
(f)notify the Bank promptly, and in any event within 14 Business Days of its becoming aware of the same, in writing of any litigation or proceeding (including any Environmental Claim) which is commenced, pending or threatened: 

 

	
  

	
(i)in respect of the Borrower, where the litigation concerned could result in a liability, fine or assessment of more than £150,000 on the part of the Borrower or any claim, notice or other communication is served on it in respect of any modification, suspension or revocation of any Environmental Permit; and

 

	
  

	
(ii)in respect of the English Guarantor, where the litigation concerned could result in a liability, fine or assessment of more than £150,000 on the part of that Guarantor or any claim, notice or other communication is served on it in respect of any modification, suspension or revocation of any Environmental Permit; 

 

	
  

	
(g)ensure that at all times it is able to pay its debts as they fall due and that any obligation owed to any of its creditors is met on the due date therefor or within any applicable originally agreed credit period;

 

	
  

	
(h) take out and fully maintain insurances for such risks, perils and contingencies and for such amounts and on such terms as are, in each case, normally insured against by prudent persons carrying on the same class (or classes) of business as that carried on by it (including, in any event, cover in respect of loss of profit);  

	
  

	
 (i)in the case of the Borrower only, open and maintain with the Bank bank accounts, which shall be and at all times shall remain its primary operating accounts, 

	
  

	
(j)in the case of the Borrower only, the Borrower shall ensure that the Bank has notification of and an opportunity to pitch for all the Borrower's future banking transactions (including full cash management, foreign exchange, trade services and other services where applicable and if agreed by the Bank) together with the opportunity to process such banking transactions through such operating accounts, including where this would mean that a third party could be obliged to make payments into the Borrower's operating accounts with the Bank from time to time. For the avoidance of doubt the Borrower is not obliged to award future banking transactions to the Bank; and

	
  

	
(k) comply with the financial covenants as required by the Financial Covenants Schedule.

	
11.2  

	
Negative Covenants

 

The Borrower and the English Guarantor each covenant and undertake with the Bank that so long as any Advance or other amount remains outstanding, or capable of being made or drawn down or any liability to the Bank subsists, under any of the Finance Documents it shall not:

 

	
  

	
(a)without the prior written consent of the Bank, create or attempt to create or permit to subsist any Security Interest of any kind, other than any Permitted Encumbrances, over the whole or any part of its respective undertaking, property, assets or revenues;

 

	
  

	
(b)carry out any business other than the business it presently carries out at the date hereof, nor shall it make or permit any change in the scope or nature of its business or cease to carry on its business;

 

	
  

	
(c)sell, transfer, assign, lease, charter, lend or otherwise dispose of or part with possession or the ownership of or any interest in any of its property, assets, revenues or undertaking or any part thereof save in the ordinary course of business and shall not enter into or undertake any invoice discounting or factoring arrangements;

 

	
  

	
(d)issue any shares, debentures or other securities without the prior written consent of the Bank;

 

	
  

	
(e)enter into banking or other credit facility arrangements of whatsoever nature (except for any Permitted Transaction), other than with the Bank or otherwise incur any Borrowed Money obligations (other than under the Finance Documents or as have been notified to the Bank pursuant to Clause 4.1(f) and approved by the Bank in writing);

 

	
  

	
(f)acquire, establish or permit to subsist any subsidiary or subsidiary undertaking or acquire any interest in, enter into or form any partnership or joint venture without the prior written consent of the Bank and shall not permit any dormant subsidiary or subsidiary undertaking (as evidenced by filings at Companies House) to carry out any activity or take any action which would result in such subsidiary or subsidiary undertaking ceasing to be dormant;

 

	
  

	
(g)amend its memorandum or articles of association in any way or amend its accounting reference date without the prior written notification to the Bank;

 

	
  

	
(h) without the prior written consent of the Bank, sell, transfer, assign or otherwise dispose of any interest in any subsidiary or subsidiary undertaking;

 

	
  

	
(i)make any loans to, grant credit to, grant indemnities in respect of, or guarantees in support of, or invest in, any third party other than to the Borrower's or the English Guarantor's officers, directors or employees in a combined aggregate amount not to exceed £150,000 for travel, entertainment, relocation and analogous ordinary business expenses or purposes; or

 

	
  

	
(j)deal with its book or other debts or accounts receivable (however the same shall be described) otherwise than in the ordinary course of getting in and realising the same, which expression shall not include or extend to the selling or assigning or in any other way factoring or discounting of any such debts or accounts receivable or otherwise.

 

	
12.  

	
EVENTS OF DEFAULT

 

	
12.1  

	
In the event that:

 

	
  

	
(a)the Borrower shall fail to pay any sum required to be paid under any Finance Document in the case of principal or interest on the due date therefor or in the case of any other payment within 3 Business Days of the due date therefor; or

 

	
  

	
(b)the Borrower shall default in the due performance or observance of any other covenant, undertaking, condition or provision on its part contained in any Finance Document and such default is not capable of remedy, or if in the opinion of the Bank capable of remedy, shall not have been remedied to the satisfaction of the Bank within 14 Business Days of the earlier of the Bank serving notice on the Borrower requiring the same to be remedied and the Borrower becoming aware of the same; or

 

	
  

	
(c)any representation, warranty or statement made or deemed to be made by the Borrower in or pursuant to any Finance Document to which it is a party (including in any certificate or notice made or delivered pursuant thereto) and which the Bank considers to be material shall be untrue or incorrect in any material respect when made or repeated or if any event occurs as a result of which any such representation, warranty or statement if repeated at any time hereafter with reference to the facts subsisting at the time of such repetition, would be untrue or incorrect in any material respect; or

 

	
  

	
(d)any other Borrowed Money exceeding £150,000 in aggregate of the Borrower shall by reason of breach or default become due and payable or capable of being declared due and payable prior to its stated maturity or due date or if any such Borrowed Money is not paid at the maturity thereof or due date therefor (or within any originally stated applicable grace period) or, if payable on demand, is not paid on demand or if the Borrower fails to pay when due any amount payable by it under any present or future guarantee or indemnity in respect of Borrowed Money or if any Security Interest in respect of Borrowed Money created by it becomes enforceable and steps are taken to enforce the same; or

 

	
  

	
(e)the Borrower becomes insolvent or applies for or consents to or suffers the appointment of a liquidator, administrator, receiver, administrative receiver, encumbrancer, trustee in bankruptcy or similar official of the whole or any part of its assets, business, property, revenues or undertaking or a petition for the appointment of an administrator of the Borrower is presented or the Borrower takes any proceedings under any law, regulation or procedure for adjustment, deferment or rescheduling of its indebtedness or any part thereof or makes or enters into a general assignment or arrangement or composition with or for the benefit of its creditors or a moratorium shall be declared on any of its indebtedness or any creditor of the Borrower exercises a contractual right to take over the financial management of the Borrower (as applicable) or the Borrower is unable to pay its debts as defined in section 123 Insolvency Act 1986 or the Borrower fails generally to pay its debts as and when they fall due or if proceedings are commenced or threatened against the Borrower which, if adversely determined, would result in a liability on the part of the Borrower (as applicable) in excess of £150,000 or any similar event or occurrence shall take place under the laws of any other jurisdiction applicable to the Borrower; or

 

	
  

	
(f) any judgment or order in an amount exceeding £150,000 made against the Borrower is not stayed or complied with within 30 Business Days or a creditor attaches or takes possession of, or a distress, execution, sequestration or other process is levied or enforced upon or sued out against, a material part of the undertakings, assets, rights or revenues of the Borrower and is not discharged within 30 Business Days; or

 

	
  

	
(g)an order is made or resolution is passed for the winding-up, liquidation or dissolution of the Borrower or analogous proceedings are taken or the Borrower stops or threatens to stop payments generally or the Borrower ceases or threatens to cease to carry on its business or any part thereof or the Borrower merges, consolidates or amalgamates with or into any other company, corporation or entity or there is any change in ownership of any of the issued ordinary shares of the Borrower which results in any single person or group of persons acting in concert (as defined in the City Code on Takeovers and Mergers) acquiring control (as defined in Section 995 of the Income Tax Act 2007) of the Borrower, without the prior written consent of the Bank; or

 

	
  

	
(h)it becomes unlawful or impossible or contrary to the terms of any consent, authority or other permission for the Borrower to perform or to continue to perform any of its obligations under any of the Finance Documents to which it is a party or if any of such documents ceases to be in full force and effect or ceases to constitute the legal, valid and binding obligations of the Borrower enforceable in accordance with its respective terms; or

 

	
  

	
 (i)any governmental authority or any person or entity acting or purporting to act under any governmental authority shall have taken any action in order to condemn, seize or appropriate, or to assume custody or control of the Borrower or of all or any substantial part of the property or assets of the Borrower or shall have taken any action to curtail the authority in the overall conduct of its business or operations of the Borrower; or

 

	
  

	
(j)the audited accounts of the Borrower delivered pursuant to Clause 11.1(a) are qualified to the effect that they do not or may not give a true and fair view of the financial position of the Borrower; or

 

	
  

	
(k)it becomes unlawful or impossible for any Guarantor to perform or to continue to perform any of its obligations under the Finance Documents to which it is a party or any Guarantor shall default in the due performance or observance of any covenant, undertaking or provision on its part contained in the relevant Guarantee or the security constituted by the relevant Guarantee ceases to be continuing or in full force or effect or any Guarantee shall be terminated or the validity or applicability thereof to any sums due or to become due hereunder is disaffirmed by or on behalf of the relevant Guarantor; or

 

	
  

	
(l)any Borrowed Money of any Guarantor exceeding £150,000 in aggregate shall by reason of breach or default become due and payable or capable of being declared due and payable prior to its stated maturity or due date therefor or if any such Borrowed Money is not paid at the maturity thereof or due date therefor (or within any originally stated applicable grace period) or, if payable on demand, is not paid on demand or if any Guarantor fails to pay when due any amount payable by it under any present or future guarantee or indemnity in respect of Borrowed Money or if any security interest in respect of Borrowed Money created by it becomes enforceable and steps are taken to enforce the same; or

 

	
  

	
(m) any other event or series of events shall occur which has or, in the reasonable opinion of the Bank, might reasonably be expected to have a Material Adverse Effect; or

 

	
  

	
(n)an "Event of Default" (as that term is defined in the US Facility) occurs in respect of the US Facility;

 

then in any such case and at any time thereafter while such event is continuing, the Bank may by written notice to the Borrower:

 

	
  

	
(1)declare that the obligations of the Bank to make or, as the case may be, maintain the Advances shall be cancelled, whereupon the same shall be cancelled; and/or

 

	
  

	
(2)declare the principal amount of and all interest relating to each outstanding Advance and any other sums payable under the Finance Documents to be due and payable, whereupon the same shall become immediately due and payable together with accrued interest thereon to the date of actual payment; and/or

 

	
  

	
(3)declare that all or any part of the sums referred to in paragraph (2) above shall henceforth be repayable on demand; and/or

 

	
  

	
(4)direct enforcement of, or take any other action in relation to, the US Guarantee and/or the English Guarantee; and/or

 

	
  

	
(5)apply the rate of interest referred to in Clause 6.2 to all or any part of the principal amount of each outstanding Advance, any accrued interest and any other sums payable under the Finance Documents; and/or

 

	
  

	
(6)waive the Event of Default.

 

	
13.  

	
FEES AND EXPENSES

 

	
13.1  

	
The Borrower will pay to the Bank on the date the Borrower countersigns this letter a fee of £ 12,500 by the date the Revolving Credit Facility becomes available under Clause 5.1.

 

	
13.2  

	
The Borrower shall reimburse the Bank promptly on demand (and without prejudice to such obligations and notwithstanding the other provisions of this Agreement authorises the Bank to deduct the same from any account of the Borrower with the Bank from time to time to the extent that any of the following are outstanding) and on a full indemnity basis, for all fees and all expenses (including but not limited to all legal, travel and other out-of-pocket expenses and all VAT thereon) incurred by the Bank in connection with the preparation, negotiation, completion, execution and, where applicable, registration and filing of the Finance Documents and all documents in connection therewith and shall reimburse the Bank for all expenses (including but not limited to management time and all legal, travel and other out-of-pocket expenses and VAT thereon) incurred in connection with granting any waivers under or agreeing amendments to or variations in any of the same or in protecting any of its rights hereunder or thereunder or in suing for or recovering any sums due to it or in the preservation or enforcement of any of its rights hereunder or thereunder.

 

	
13.3  

	
The Borrower shall reimburse the Bank on demand in respect of liability to all stamp, registration and other like duties and taxes (including all VAT), if any, in each case payable in connection with the execution, delivery and performance of the Finance Documents and all other documents in connection therewith whether by the Borrower or the Bank or any other party thereto and whether arising as a result of an election or otherwise or in connection with the enforcement of any of the Finance Documents and all such other documents and will indemnify the Bank from any and all liabilities with respect to or resulting from any delay or omission to pay such duties or taxes.

 

	
13.4  

	
Upon the occurrence of any Event of Default the Borrower shall reimburse the Bank for any subsequent operating and/or management charges or costs of the Bank relating to the Finance Documents (including the subsequent operation and management of the Revolving Credit Facility), the matters contemplated thereby and the outstanding Advances, as determined by the Bank.

 

	
14.  

	
CHANGES IN CIRCUMSTANCES

 

	
14.1  

	
If after the date of this Agreement by reason of (1) the introduction of or any change in law or in its interpretation, administration or application and/or (2) compliance with any new request, directive or requirement of whatsoever nature, from or requirement of any central bank or other fiscal, monetary or competent authority (whether or not having the force of law):

 

	
  

	
(a)there is any increase in the cost to the Bank of agreeing to make, fund or maintain or of making, funding or maintaining all or any part of the Revolving Credit Facility or any Advance or any unpaid sums due to it under any of the Finance Documents;  or

 

	
  

	
(b)the Bank suffers a reduction in the amount of any payment received or receivable by it or forgoes any interest or other return on or in relation to the Revolving Credit Facility or any Advance or suffers a reduction in return on capital as a result of having entered into any of the Finance Documents and assumed or performed its obligations thereunder; or

 

	
  

	
(c)the Bank becomes liable to make any payment on or calculated by reference to the amount of any sum received or receivable by it or owed to it under any of the Finance Documents (other than tax on its overall net income or profits),

 

then the Borrower shall from time to time promptly on demand pay to the Bank amounts sufficient to indemnify the Bank against, as the case may be, any such cost, reduction, forgoing or liability provided always and it is hereby agreed that:

 

	
  

	
(i)the Bank shall promptly notify the Borrower of the happening of such event; and

 

	
  

	
(ii)at any time after receipt of notice under paragraph (i) and so long as the circumstances giving rise to such cost, reduction, forgoing or liability continue, the Borrower may on giving the Bank not less than five Business Days’ irrevocable notice, cancel the Bank’s obligation to maintain the Revolving Credit Facility (whereupon the Revolving Credit Facility and the Bank's obligations thereunder shall be cancelled and reduced to zero) and repay the whole (but not part only) of all outstanding Advances together with all interest and other sums payable by the Borrower to the Bank pursuant to any of the Finance Documents.

 

	
14.2  

	
In the event that by reason of any change in applicable law, regulation or regulatory requirement or in the interpretation or application thereof after the date hereof the Bank shall be of the opinion that it has become unlawful, illegal or otherwise prohibited for the Bank to maintain or give effect to all or any of its obligations as contemplated by any of the Finance Documents, the Bank shall give notice to the Borrower to that effect and thereupon, the liability of the Bank to make or, as the case may be, to maintain the Revolving Credit Facility shall cease, the Revolving Credit Facility and the Bank's obligations in relation thereto shall be cancelled and reduced to zero and the Borrower shall repay to the Bank on or before the latest day (being, if possible, the last Repayment Date of any outstanding Advance) permitted by such law, regulation or regulatory requirement all outstanding Advances, together with all interest and other sums outstanding and/or payable by the Borrower to the Bank pursuant to any of the Finance Documents.

 

	
15.  

	
PAYMENTS

 

	
15.1  

	
For the purposes of this Agreement, any payment to be made by the Borrower shall be made in Sterling in cleared immediately available funds not later than 11.00 a.m. on the due date to the account of the Bank at Wells Fargo Bank, National Association, London Branch (or to any other account at such bank and place which the Bank may from time to time specify). 

 

	
15.2  

	
If the United Kingdom at any time participates in Economic and Monetary Union ("EMU") in accordance with Article 109j of the Treaty, then:

 

	
15.2.1  

	
any amount expressed to be payable under this Agreement in Sterling shall be made in euros; and

 

	
15.2.2  

	
any amount so required to be paid in euros shall be converted from Sterling at the rate stipulated pursuant to Article 109l(4) of the Treaty and payment of the amount in euros derived from such conversion shall discharge the obligation of the relevant party to pay such Sterling amount in accordance with, and subject to, the regulations made pursuant to Article 109l(4). 

 

	
15.3  

	
If a change in any currency of a country occurs (including those contemplated by Clause 15.2 above) (a "currency change"), this Agreement will be amended to the extent that the Bank specifies to be necessary to reflect the change in currency and to put the Bank in the same position, so far as possible, as it would have been in if no change in currency had occurred.

 

	
15.4  

	
Without prejudice to Clause 15.3 above, any references in this Agreement to any convention (whether for the calculation of interest, determination of payment dates or otherwise) will be amended, with effect from or at any time after a currency change, to the extent that the Bank specifies to be necessary, to comply with, or otherwise reflect or accommodate, any generally accepted conventions and market practice applicable to obligations in the relevant currency in the London Interbank Market.

 

	
15.5  

	
The Bank shall promptly notify the Borrower of any amendment effected under Clauses 15.3 and 15.4 and any such amendment shall be binding on the Bank and the Borrower.

 

	
15.6  

	
Without prejudice and in addition to any method of conversion or rounding prescribed by any EMU legislation, each reference in this Agreement to a minimum amount (or an integral multiple thereof) in a national currency unit to be paid to or by the Bank shall be replaced by a reference to such reasonably comparable and convenient amount (or an integral multiple thereof) in the euro as the Bank may from time to time specify.

 

	
15.7  

	
All sums received by the Bank under any of the Finance Documents, whether in respect of principal, interest, fees, costs or otherwise, shall be received in full without any set-off or counter-claim by the Borrower free and clear of and without any deduction or withholding for or on account of any present or future income or other taxes, levies, imposts, duties, charges or withholdings of any nature whatsoever.  In the event that any such deduction or withholding from any payment for the account of the Bank under any of the Finance Documents shall be required or in the event that any payment on or in relation to any amount received by the Bank on account of tax or otherwise shall be required to be made, in each case under any present or future law, directive, regulation or practice, then the Borrower shall forthwith pay to the Bank such additional amounts as will result (after the making of such deduction, withholding or payment) in the receipt and retention by the Bank of the same amount which would otherwise have been received and retained by it pursuant to such Finance Document had no such deduction, withholding or payment been made.

 

	
15.8  

	
If any sum becomes due for payment pursuant to any Finance Document on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day unless such Business Day falls in a new calendar month in which event such payment shall be made on the immediately preceding Business Day and the amount of any interest or other fee shall, if not already taken into account, be adjusted accordingly.

 

	
15.9  

	
In the case of a partial payment under any Finance Document, the Bank may appropriate such amount in satisfaction of the obligations of the Borrower in such order as it shall in its absolute discretion think fit and any such appropriation shall override any appropriation made by the Borrower or any Guarantor.

 

	
15.10  

	
If the Borrower pays any increased amount under Clause 15.7 and the Bank actually receives or is granted a credit against or remission for any income or corporation tax payable by it, the Bank shall, to the extent that it can do so without prejudice to the retention of the full amount of such credit or remission, reimburse to the Borrower such amount of such credit or remission as the Bank shall in its sole opinion have concluded to be applicable to such deduction or withholding.  Nothing herein contained shall affect the right of the Bank to arrange its tax affairs as it thinks fit and in particular, the Bank shall be under no obligation to claim relief from any tax on its corporate profits or similar tax liability in respect of the imposition of such tax and, if the Bank does claim any such relief, it shall be under no obligation to claim the same in priority to any other claims, reliefs, credits or deductions available to it and shall not in any event be obliged to disclose any matter relating to its tax affairs or computations to any person.

 

	
15.11  

	
If the Borrower is or becomes bound to pay any increased amount under Clause 15.7 then, so long as such obligation continues, it shall be entitled at any time on giving to the Bank not less than five Business Days’ irrevocable notice to prepay the whole (but not part only) of all outstanding Advances together with all accrued interest and other amounts payable by the Borrower to the Bank pursuant to any of the Finance Documents and to cancel the whole (but not part only) of the Revolving Credit Facility whereupon the Revolving Credit Facility and the Bank's obligations in relation thereto shall be cancelled and reduced to zero. 

 

	
15.12.  

	
If either the Bank determines (in its discretion) that a Disruption Event has occurred or the Bank is notified by the Borrower that a Disruption Event has occurred: 

 

	
  

	
 (a)       the Bank may, and shall if requested to do so by the Borrower, consult with the Borrower with a view to agreeing with the Borrower such changes to the operation or administration of the Revolving Credit Facility as the Bank may deem necessary in the circumstances; 

 

	
  

	
(b)the Bank shall not be obliged to consult with the Borrower in relation to any changes mentioned in clause (a) above if, in its opinion, it is not practicable to do so in the circumstances and, in any event, shall have no obligation to agree to such changes; and 

 

	
  

	
(c)       any such changes agreed upon by the Bank and the Borrower shall (whether or not it is finally determined that a Disruption Event has occurred) be binding upon them as an amendment to (or, as the case may be, waiver of) the terms of the Finance Documents notwithstanding the provisions of Clause 19.

 

	
16.  

	
INDEMNITIES

 

	
16.1  

	
The Borrower shall on demand by the Bank indemnify the Bank for all amounts as the Bank may certify to be necessary to compensate it for all costs, expenses, liabilities and losses sustained or incurred by it as a result of (1) any default in payment by the Borrower of any sum under any of the Finance Documents when due, (2) any failure (by reason of any breach or default of the Borrower) to borrow in accordance with Clause 5, (3) the happening of any Event of Default and/or (4) any repayment or prepayment of any Advance or any part thereof otherwise than in accordance with Clause 8.1 (including in each case but not limited to any losses or expenses sustained or incurred in liquidating or re-deploying deposits from third parties acquired to effect or maintain any amounts paid or carried by the Bank, loss of interest and/or loss of Margin).  The certificate of the Bank as to the aforesaid amounts shall, save for any manifest error, be conclusive.

 

	
16.2  

	
Any payment or payments made to the Bank in a currency (the currency in which the relevant payment is being made is hereinafter referred to as the "Relevant Currency") other than the currency in which it is expressed to be due hereunder (the "Due Currency") shall only constitute a discharge to the Borrower to the extent of the Due Currency amount which the Bank is able, on the date or dates of receipt by the Bank of such payment or payments in the Relevant Currency (or, in the case of any such date which is not a Business Day, on the next succeeding Business Day) to purchase with the amounts so received by the Bank on such date or dates.   If the amount of Due Currency which the Bank is so able to purchase falls short of the Due Currency amount originally due to the Bank under this Agreement the Borrower shall immediately reimburse the Bank in the Due Currency any such shortfall and shall indemnify the Bank against any direct loss or damage arising as a result of a failure to make such reimbursement.   This indemnity shall constitute a separate and independent obligation from the other obligations contained in this Agreement.  

 

	
16.3  

	
The Borrower shall on demand by the Bank indemnify the Bank and any receiver or other similar official appointed by the Bank and their respective officers, employees, agents and delegates (together the "Indemnified Parties") against any cost or expense suffered or incurred by them or any of them which:

 

	
  

	
(i)arises by virtue of any actual or alleged breach of any Environmental Law (whether by the Borrower, an Indemnified Party or any other person); or

 

	
  

	
(ii)would not have arisen if this Agreement or the other Finance Documents had not been executed; and

 

	
  

	
(iii)was not caused by the negligence or wilful default of the relevant Indemnified Party.

 

	
17.  

	
SET-OFF

 

The Borrower hereby authorises the Bank to apply any credit balance (whether matured or unmatured) to which it is entitled on any of its accounts with the Bank in or towards satisfaction of any sum due to the Bank by the Borrower under any of the Finance Documents.  For this purpose, the Bank is hereby authorised in the name of the Borrower to do all acts (including breaking time deposits and purchasing one currency with another) and to sign all documents as may be required to effect such application.  The Bank shall not be obliged to exercise any right conferred or acknowledged by this Clause 17 and nothing expressed or implied in any of the Finance Documents shall in any way affect any rights which the Bank may have under applicable law.

 

	
18.  

	
ACCOUNTS AND CERTIFICATES

 

	
18.1  

	
The Bank shall open and maintain on its books in accordance with its normal practice a loan account evidencing the amounts from time to time advanced by and owing to it hereunder which loan account shall be prima facie evidence of such amounts.

 

	
18.2  

	
Each certificate issued and determination made by the Bank under this Agreement of a rate of interest, calculation of fees, costs, expenses, liabilities, losses or otherwise shall, in the absence of manifest error, be conclusive.

 

	
19.  

	
AMENDMENTS AND WAIVERS

 

Any amendment, waiver or consent by the Bank pursuant to this Agreement must be in writing and may be given subject to any conditions thought fit by the Bank.  Any waiver or consent shall be effective only in the instance and for the purpose for which it is given.  No delay or omission of the Bank in exercising any right, power or privilege under any of the Finance Documents shall operate to impair such right, power or privilege or be construed as a waiver thereof and any single or partial exercise of any such right, power or privilege shall not preclude any other or future exercise thereof or the exercise of any other right, power or privilege.  The rights and remedies provided under any of the Finance Documents are cumulative and not exclusive of any rights or remedies provided by law.

 

	
20.  

	
ASSIGNMENT

 

	
20.1  

	
This Agreement shall be binding upon and enure for the benefit of the Borrower, the Bank and their respective successors.

 

	
20.2  

	
The Borrower shall not assign or transfer any of its rights and/or obligations under any of the Finance Documents.

 

	
20.3  

	
The Bank at any time may transfer all or any part of its rights, benefits and obligations under the Finance Documents by assigning to any one or more other banks (each of which is hereinafter in this Clause 20 called an "Assignee Bank") all or any part of the Bank’s rights and benefits thereunder provided that (1) the Bank shall consult with the Borrower prior to any such transfer, (2) such Assignee Bank shall agree to perform that percentage of the Bank’s obligations hereunder as corresponds to that percentage of the Bank’s rights and benefits so assigned to the Assignee Bank and (3) such Assignee Bank shall, by delivery of such undertaking or agreement as the Bank may approve, have become bound by the terms of the Finance Documents, and in such circumstances the Bank may, if it so determines, act as agent for itself and the Assignee Bank for the purposes of the Finance Documents subject to receipt of appropriate indemnities and the Assignee Bank and the Borrower entering into such appropriate documentation with the Bank as the Bank may require.  Notice of any such transfer shall promptly be given to the Borrower and the Borrower shall execute such documents as the Bank shall require in order to give effect to any such transfer.  For this purpose and for the purpose of entering into any contractual arrangements with any person in relation to the Revolving Credit Facility or any matters contemplated by this Agreement the Bank may disclose to a potential Assignee Bank or any such person such information about the Borrower and its assets and condition as the Borrower shall have made available to the Bank hereunder or as shall be known to the Bank otherwise howsoever.  

 

	
20.4  

	
If the Bank transfers its right, benefits and obligations under the Finance Documents as provided in Clause 20.3, all references in the Finance Documents to the Bank shall thereafter be construed as references to the Bank and its Assignee Bank(s) to the extent of their respective participations, if any, and the Borrower shall thereafter look only to the Assignee Bank(s) (to the exclusion of the Bank) in respect of that proportion of the Bank’s obligations hereunder as corresponds to such Assignee Bank’s respective participation therein and accordingly such Bank’s maximum liability hereunder shall be appropriately reduced and the Assignee Bank shall proportionately assume a maximum liability equivalent to such reduction in such Bank’s maximum liability.

 

	
21.  

	
NOTICES

 

	
21.1  

	
Save as otherwise provided herein, each notice, request, demand or other communication to be given or made under this Agreement shall be given in writing delivered personally or by letter by first class mail, or facsimile to the address or facsimile number of the addressee set out below:

 

	
  

	
(1)in the case of the Bank, if by facsimile to it at 0207 929 4645 and if delivered personally or by letter to it at London Branch, 1 Plantation Place, 30 Fenchurch Street, London, EC3M 3BD, in each case marked for the attention of Loans Administration Team Ian King;

	
  

	
(2)in the case of the Borrower, if by facsimile to it at 01963 351161 and if delivered personally or by letter to it at Centaur House, Torbay Road, Castle Cary, Somerset, BA7 7EU, in each case marked for the attention of Adam Wiszniewski, Finance Director,

 

or at any other numbers or addresses or marked for the attention of such other person as the parties hereto may from time to time notify to each other.

 

	
21.2  

	
Any notice, request, demand or other communication to be given or made under this Agreement shall be deemed to have been delivered, in the case of any notice, request, demand or other communication given or made by personal delivery or facsimile, on delivery to the correct address or on despatch to the correct facsimile number unless delivered or despatched outside normal business hours when it shall be deemed to be delivered or despatched on the next Business Day and, in the case of any notice, request, demand or other communication given or made by letter, two Business Days after being posted by first class mail, provided that each Notice of Utilisation and any notice given to the Bank pursuant to Clause 6.2 shall only be effective when received by the Bank.

 

	
22.  

	
PARTIAL INVALIDITY

 

In the case that one or more of the provisions contained in this Agreement should prove to be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby.

 

	
23.  

	
APPLICABLE LAW

 

	
23.1  

	
The law of England is the law applicable to this Agreement.

	
23.2  

	
For the exclusive benefit of the Bank, the Borrower and the English Guarantor irrevocably agree that the courts of England are to have jurisdiction to hear and settle any dispute, suit, action or proceeding which arises out of or in connection with this Agreement (together in this Clause 23 referred to as "Proceedings") save that nothing contained in this Clause 23 shall limit the right of the Bank to take Proceedings against the Borrower or any Guarantor in any other court of competent jurisdiction.  The Borrower and the English Guarantor irrevocably agree only to bring Proceedings in the courts of England.

 

	
23.3  

	
The Borrower and English Guarantor irrevocably waive:

 

	
  

	
(a)any right it may have to the trial by jury of Proceedings in any such court as is referred to in this Clause 23;

	
  

	
(b)any objection which it may have now or hereafter to the commencement, or to the venue, of any Proceedings in any such court; and

	
  

	
(c)any claim that any such proceedings should be brought in a more convenient forum,

	
  

	
and further irrevocably agrees that a judgment in any Proceedings brought in any competent court shall be conclusive and binding upon it and may be enforced in the courts of any other jurisdiction.

	
23.4  

	
The provisions of clause 23.2 shall not prevent the Bank from taking Proceedings in any other courts with jurisdiction. To the extent allowed by law, the Bank may take concurrent proceedings in any number of jurisdictions.

 

	
  

	
23.5The Borrower and the English Guarantor agree that any legal process issued in England in any Proceedings against the Borrower or its assets or the English Guarantor and any of their assets shall be sufficiently served on the Borrower or the English Guarantor (as applicable) if delivered to it its principal place of business in England or such other address in England as the Borrower or the English Guarantor (as applicable) may have notified to the Bank for such purpose. If at any time the Borrower or the English Guarantor ceases to have an office located in England, the Borrower or the English Guarantor (as applicable) shall promptly appoint an agent for service of process in respect of Proceedings in England acceptable to the Bank for this purpose, having an address for service of process in England, and shall promptly notify the Bank accordingly.  Failing such appointment within seven days after being required by the Bank to make the same, the Bank shall be irrevocably authorised to appoint any person, on such person’s standard or usual terms for acceptance of such an appointment (if any), on behalf of the Borrower or the English Guarantor (as applicable).  By way of security, the Borrower and the English Guarantor hereby irrevocably appoints the Bank as its attorney to effect any such appointment.

 

 

 

 

 

Wells Fargo Bank, National Association ("WFBNA") is a national banking association organised under the laws of the United States with its head office at 420 Montgomery Street, San Francisco, CA 94104, USA. WFBNA is registered with the U.S. Office of the Comptroller of the Currency under charter number 1. WFBNA is registered with the UK’s Companies House under number FC026633 and is authorised and regulated in the UK by the Financial Services Authority.

 

  

  

  

Please confirm your agreement to and acceptance of the terms and conditions set out above on the attached copy of this letter.  The offer of the Revolving Credit Facility shall lapse and shall be deemed to have been withdrawn if the Borrower and the English Guarantor do not agree and accept the terms hereof within 10 Business Days of the date of this letter.

Yours faithfully,

/s/ Gillian White

For and on behalf of

WELLS FARGO BANK, NATIONAL ASSOCIATION,

LONDON BRANCH

as Bank

We hereby acknowledge our agreement to and acceptance of the terms and conditions set out in the letter of which the above is a true copy.

/s/ Mary Pat Thompson

duly authorised for and on behalf of

CENTAUR SERVICES LIMITED as Borrower

/s/ Mary Pat Thompson

duly authorised for and on behalf of

LABPAK LIMITED as the English Guarantor

- -

  

  

  

SCHEDULE A

FINANCIAL COVENANTS

	
  

	
Covenant

 

The Borrower shall ensure that its Tangible Net Worth shall not at any time be less than £3,000,000. 

 

"Tangible Net Worth" means the aggregate of the amounts paid-up or credited as paid-up on the Borrower’s issued share capital and the amount of the capital and revenue reserves of the Borrower (including any share premium account, merger reserve, capital redemption reserve, revaluation reserve and retained earnings) and any credit balance on the Borrower’s profit and loss account all as shown by the relevant accounts of the Borrower delivered pursuant to this Agreement from time to time but after:

 

	
  

	
(i)deducting any debit balance on such profit and loss account;

 

	
  

	
(ii)deducting any amount shown in respect of goodwill (including goodwill arising on consolidation), patents, trade marks, copyrights, brands, research and development expenditure and other intangible assets;

 

	
  

	
(iii)deducting any amounts distributed or proposed to be distributed out of the profits accrued prior to the date of such accounts to the extent that such distribution is not provided for therein;

 

	
  

	
(iv)excluding any sums set aside or otherwise reserved or provided for losses, taxation or expenses; 

 

	
  

	
(v)excluding any amounts as in the opinion of the auditors of the Borrower for the time being are attributable to any write ups of fixed assets in the books of the Borrower made after the date hereof; and

 

	
  

	
(vi)making such adjustments to reflect any variations which shall have occurred since the date of such accounts:

 

	
  

	
(a)in the amounts paid up or credited as paid up on the issued share capital of the Borrower (including any share premium account, merger reserve, capital redemption reserve, revaluation reserve and retained earnings);

 

	
  

	
(b)to reflect any changes in generally accepted accounting principles and bases and the application of standards and practices since then as may be appropriate in the opinion of the auditors for the time being of the Borrower; and

 

	
  

	
(c)by deducting any amounts of goodwill arising as a result of acquisitions and/or other transactions effected by the Borrower since such date.

 

  

  

  

SCHEDULE B

Notice of Utilisation

[On the headed notepaper of Centaur Services Limited]

	
  

	
To:Wells Fargo Bank, National Association, London Branch

	
  

	
1 Plantation Place,

30 Fenchurch Street

London EC3M 3BD

Dear Sirs,

	
  

	
1.We refer to the facility agreement (as from time to time amended, varied, novated or supplemented) (the "Facility Agreement") dated                  2010 and made between Centaur Services Limited as Borrower and Wells Fargo Bank, National Association, London Branch as Bank.  Terms used herein shall have the meanings ascribed to them in the Facility Agreement unless the context otherwise requires.

	
  

	
2.We hereby give you notice that, pursuant to the Facility Agreement and on [date of proposed Advance], we wish to draw an Advance in the principal amount of 

	
  

	
[               ] (£[          ]) for an Interest Period of [          ] upon the terms and subject to the conditions contained therein.

	
  

	
3.We hereby certify that the Advance is to be used for the purposes set out in Clause 2 of the Facility Agreement.

	
  

	
4.The Advance should be credited to the account of [specify account(s) into which such amount is to be transferred] for value on [date of proposed drawdown].

	
  

	
5.We confirm that, at the date hereof, the representations and warranties set out in Clause 10 of the Facility Agreement are true and no Event of Default has occurred.

Yours faithfully,

......................................

for and on behalf of

Centaur Services Limitedexhibit10-2.htm

EXHIBIT 10.2

 

CONTINUING GUARANTY

 

TO:               WELLS FARGO BANK, NATIONAL ASSOCIATION

 

1. GUARANTY; DEFINITIONS.  In consideration of those certain credit or other financial accommodation heretofore, now or hereafter extended or made to CENTAUR SERVICES LIMITED, a corporation incorporated in England and Wales under registered number 00787385 (“Borrower”), by WELLS FARGO BANK, NATIONAL ASSOCIATION, London Branch (the “London Branch”), including without limitation, Wells Fargo Bank, National Association, (collectively together with the London Branch, hereinafter referred to as “Bank”), pursuant to the terms and conditions of that certain loan agreement dated as of even date herewith (the “Sterling Revolving Facility Loan Agreement”), entered into by and among Borrower, Bank and such other signatory parties as reflected in the Sterling Revolving Facility Loan Agreement (hereinafter referred to as the “Sterling Revolving Facility”), and such other documents as executed and delivered in connection therewith, and for other valuable consideration, the undersigned MWI VETERINARY SUPPLY CO., an Idaho corporation (“Guarantor”), unconditionally guarantees and promises to pay to Bank, or order, on demand in lawful money of the United States of America and in immediately available funds, any and all Indebtedness of Borrower to Bank.  The term “Indebtedness” is used herein in its most comprehensive sense and includes any and all advances, debts, obligations and liabilities of Borrower under the Sterling Revolving Facility, and such other debts, obligations and/or liabilities of Borrower heretofore, now or hereafter made, incurred or created, whether voluntary or involuntary and however arising, whether due or not due, absolute or contingent, liquidated or unliquidated, determined or undetermined, including under any foreign exchange, deposit, treasury management, commercial card, or other similar transaction or arrangement, including without limitation, any and all indebtedness arising out of direct debit transactions and arrangements pursuant to that certain Direct Debit Agreement to be entered into by and between Borrower and Bank (“Direct Debit Arrangement”), and any and all charge backs and/or indemnity obligations incurred or may be incurred by, or imposed upon, Bank pursuant to any direct debit guarantees and/or indemnities provided by Bank in connection with such Direct Debit, and whether Borrower may be liable individually or jointly with others, or whether recovery upon such Indebtedness may be or hereafter becomes unenforceable.  This Guaranty is a guaranty of payment and not collection.

 

2. MAXIMUM LIABILITY; SUCCESSIVE TRANSACTIONS; REVOCATION; OBLIGATION UNDER OTHER GUARANTIES.  This is a continuing guaranty and all rights, powers and remedies hereunder shall apply to all past, present and future Indebtedness of Borrower to Bank, including any such Indebtedness arising under successive transactions which shall either continue the Indebtedness, increase or decrease it, or from time to time create new Indebtedness after all or any prior Indebtedness has been satisfied, and notwithstanding the death, incapacity, dissolution, liquidation or bankruptcy of Borrower or Guarantor or any other event or proceeding affecting Borrower or Guarantor.  This Guaranty shall not apply to any new Indebtedness created after actual receipt by Bank of written notice of its revocation as to such new Indebtedness; provided however, that loans or advances made by Bank to Borrower after revocation under commitments existing prior to receipt by Bank of such revocation, and extensions, renewals or modifications, of any kind, of Indebtedness incurred by Borrower or committed by Bank prior to receipt by Bank of such revocation, shall not be considered new Indebtedness.  Any such notice must be sent to Bank by registered mail, postage prepaid, addressed to each of its offices at Idaho RCBO, 877 West Main Street, 3rd Floor, Boise, Idaho 83702, marked to the attention of Regional Vice President, and the London Branch at 1 Plantation Place, 30 Fenchurch Street, London EC3M 3BD, marked to the attention of Loans Administration Team, Ian King, or at such other addresses, or to the attention of such other person or persons, as Bank shall from time to time designate.  Any payment by Guarantor shall not reduce Guarantor’s maximum obligation hereunder unless written notice to that effect is actually received by Bank at or prior to the time of such payment.  The obligations of Guarantor hereunder shall be in addition to any obligations of Guarantor under any other guaranties of any liabilities or obligations of Borrower or any other persons heretofore or hereafter given to Bank unless said other guaranties are expressly modified or revoked in writing; and this Guaranty shall not, unless expressly herein provided, affect or invalidate any such other guaranties.

 

3. OBLIGATIONS JOINT AND SEVERAL; SEPARATE ACTIONS; WAIVER OF STATUTE OF LIMITATIONS; REINSTATEMENT OF LIABILITY.  The obligations hereunder are joint and several and independent of the obligations of Borrower, and a separate action or actions may be brought and prosecuted against Guarantor whether action is brought against Borrower or any other person, or whether Borrower or any other person is joined in any such action or actions.  Guarantor acknowledges that this Guaranty is absolute and unconditional, there are no conditions precedent to the effectiveness of this Guaranty, and this Guaranty is in full force and effect and is binding on Guarantor as of the date written below, regardless of whether Bank obtains collateral or any guaranties from others or takes any other action contemplated by Guarantor.  Guarantor waives the benefit of any statute of limitations affecting Guarantor’s liability hereunder or the enforcement thereof, and Guarantor agrees that any payment of any Indebtedness or other act which shall toll any statute of limitations applicable thereto shall similarly operate to toll such statute of limitations applicable to Guarantor’s liability hereunder.  The liability of Guarantor hereunder shall be reinstated and revived and the rights of Bank shall continue if and to the extent for any reason any amount at any time paid on account of any Indebtedness guaranteed hereby is rescinded or must otherwise be restored by Bank, whether as a result of any proceedings in bankruptcy or reorganization or otherwise, all as though such amount had not been paid.  The determination as to whether any amount so paid must be rescinded or restored shall be made by Bank in its sole discretion; provided however, that if Bank chooses to contest any such matter at the request of Guarantor, Guarantor agrees to indemnify and hold Bank harmless from and against all costs and expenses, including reasonable attorneys’ fees, expended or incurred by Bank in connection therewith, including without limitation, in any litigation with respect thereto.

 

4. AUTHORIZATIONS TO BANK.  Guarantor authorizes Bank either before or after revocation hereof, without notice to or demand on Guarantor, and without affecting Guarantor’s liability hereunder, from time to time to:  (a) alter, compromise, renew, extend, accelerate or otherwise change the time for payment of, or otherwise change the terms of the Indebtedness or any portion thereof, including increase or decrease of the rate of interest thereon; (b) take and hold security for the payment of this Guaranty or the Indebtedness or any portion thereof, and exchange, enforce, waive, subordinate or release any such security; (c) apply such security and direct the order or manner of sale thereof, including without limitation, a non-judicial sale permitted by the terms of the controlling security agreement, mortgage or deed of trust, as Bank in its discretion may determine; (d) release or substitute any one or more of the endorsers or any other guarantors of the Indebtedness, or any portion thereof, or any other party thereto; and (e) apply payments received by Bank from Borrower to any Indebtedness of Borrower to Bank, in such order as Bank shall determine in its sole discretion, whether or not such Indebtedness is covered by this Guaranty, and Guarantor hereby waives any provision of law regarding application of payments which specifies otherwise.  Bank may without notice assign this Guaranty in whole or in part.  In addition to, and without limiting anything contained herein, upon Bank’s request, Guarantor agrees to provide to Bank copies of Guarantor’s financial statements.

 

5. REPRESENTATIONS AND WARRANTIES.  Guarantor represents and warrants to Bank as of the date hereof that:

 

(a) this Guaranty is executed at Borrower’s request and Guarantor receives substantial benefit from the credit accommodations which have been, and will be, granted to Borrower by Bank from time to time, pursuant to the Sterling Revolving Facility Loan Agreement , as amended from time to time, and such other contracts, agreements, instruments and documents (collectively, “Loan Documents”), as executed, and as may from time to time hereafter be executed and delivered to Bank by Borrower and/or such other parties thereto, including without limitation, that certain Corporate Credit Card Agreement to be entered into by and between Borrower and Bank (“Corporate Credit Card Agreement”), which credit accommodations are guaranteed by this Guaranty;

 

(b) Guarantor is a corporation, duly incorporated and validly existing and in good standing under the laws of Idaho, U.S.A, and is qualified or licensed to do business (and is in good standing as a foreign corporation, if applicable) in all jurisdictions in which such qualification or licensing is required or in which the failure to so qualify or to be so licensed could have a material adverse effect on Guarantor;

 

(c) the execution and performance of this Guaranty has been properly approved and authorized by resolutions of Guarantor’s directors and sole shareholder to the extent as may be required by applicable law and Guarantor’s corporate governing and authorization documents, and does not contravene the articles of incorporation and/or the bylaws (or the equivalent corporate documents) of the Guarantor or any provision of any applicable law, statute, decree, rule or regulation or any order, judgment, injunction, resolution, determination or award of any court, or any judicial, administrative or governmental authority or organization or any provision of any agreement or document to which Guarantor is a party or obligation which is binding on Guarantor or any of Guarantor’s assets;

 

(d) this Guaranty and each and every other document executed by Guarantor in connection therewith have been duly executed on Guarantor’s behalf and constitute legal, valid and binding obligations of Guarantor enforceable in accordance with its terms, and the execution and performance of all of such documents will not breach, conflict with or contravene any provisions of any law, statute, rule, regulation, agreement, indenture, undertaking, articles of incorporation, bylaws or other constitutional documentation or any other instrument binding upon Guarantor or on any of Guarantor’s assets or give cause for acceleration of any Indebtedness or result in the existence of or oblige Guarantor to create any lien or other security interest over all or any of its present or future revenues, assets or properties;

 

(e) Guarantor has the power to execute this Guaranty and to perform and discharge all duties and liabilities hereunder, and no limitation on Guarantor’s powers to borrow or guaranty will be exceeded as a result of providing this Guaranty and the obligations and liabilities of the Guarantor hereunder constitute the direct, unconditional and general obligations of the Guarantor and rank at least pari passu and rateably with all other present and future unsecured and unsubordinated obligations and liabilities of the Guarantor except obligations and liabilities that are mandatorily preferred by law;

 

(f) Guarantor is not insolvent under any applicable insolvency laws and is able to pay and discharge all debts and other obligations when due;

 

(g) all licenses, consents and approvals of public, governmental and judicial authorities and agencies necessary for the Guarantor to enter into and perform and discharge its duties and liabilities under this Guaranty have been obtained and are in full force and effect, there has been no default in the compliance with the conditions or restrictions (if any) in connection therewith, as of the date of this Guaranty no further licenses, consents or approvals are required or necessary in relation thereto, and no approval, consent or authorization of, order, registration or license by, filing with, giving notice to, or taking any other action by or in respect of any governmental or regulatory authority or central bank or other fiscal, monetary or other authority is required in connection with the execution and delivery of, or performance of Guarantor’s obligations under, this Guaranty or for the validity, enforceability or admissibility in evidence of this Guaranty;

 

(h) no actions, claims, investigations, suits or proceedings by or before any governmental authority, arbitrator, court, tribunal or administrative agency which could or might have a material adverse effect on the financial condition or operation of Guarantor is pending, or threatened against Guarantor or any of its assets, other than those disclosed to Bank in writing prior to the date hereof;

 

(i) Guarantor is not in default or in material breach under any provision, term or condition of any contract, agreement, or instrument to which Guarantor is a party, and there exists no condition, event or act which with the giving of notice or the passage of time or both would constitute such an event of default;

 

(j) the annual financial statement and audited consolidated financial statements of Guarantor dated September 30, 2009, and all interim financial statements delivered to Bank since said date, true copies of which have been delivered to Bank prior to the date hereof, (i) are complete and correct and present fairly the financial condition of Guarantor (ii) disclose all liabilities of Guarantor  that are required to be reflected or reserved against under generally accepted accounting principles, whether liquidated or unliquidated, fixed or contingent, and (iii) have been prepared in accordance with generally accepted accounting principles consistently applied.  Since the dates of such financial statements there has been no material adverse change in the financial condition of Guarantor, or in any of the business or assets of the Guarantor or any of its subsidiaries since the date of such accounts, nor has Guarantor mortgaged, pledged, granted a security interest in or otherwise encumbered any of its assets or properties except in favor of Bank or as otherwise permitted by Bank in writing;

 

(k) all other financial and other information provided by Guarantor to the Bank is true and accurate in all material respects and is not misleading;

 

(l) this Guaranty is not subject to any registration, stamp, documentary or similar tax, and it is not necessary that this Guaranty be filed, recorded, registered or enrolled with any public, governmental or judicial authority or agency to ensure the legality, validity, enforceability or admissibility in evidence of this Guaranty;

 

(m) this Guaranty is in proper form for its enforcement in the State of Idaho and constitutes legally binding obligations, duties and liabilities of Guarantor enforceable in accordance with its terms;

 

(n) neither Guarantor nor any of Guarantor’s assets has any right to claim any immunity in relation to itself or its assets under any law or in any jurisdiction in connection with any legal proceedings, set-off or counterclaim relating to this Guaranty, or in connection with the enforcement of any judgment or order arising from such proceedings;

 

(o) Guarantor is not entering into this Guaranty with intent to hinder, delay, or defraud any creditor of Guarantor.  Guarantor is not engaged in, or about to be engaged in, a business or a transaction for which Guarantor’s assets are unreasonably small in relation to such business or transaction.  Guarantor does not intend to incur, nor does Guarantor have any reason to believe that by entering into this Guaranty, it is incurring, debts beyond its ability to pay as they become due;

 

(p) there are no legal, administrative or regulatory requirements or restrictions which would limit the availability or transfer of foreign exchange for the payment by Guarantor to Bank of any amounts that may become due under this Guaranty;

 

(q) Bank has made no representation to Guarantor as to the creditworthiness of Borrower;

 

(r) Guarantor has established adequate means of obtaining from Borrower on a continuing basis financial and other information pertaining to Borrower’s financial condition; and

 

(s) Guarantor agrees to keep adequately informed from such means of any facts, events or circumstances which might in any way affect Guarantor’s risks hereunder, and Guarantor further agrees that Bank shall have no obligation to disclose to Guarantor any information or material about Borrower which is acquired by Bank in any manner.

 

6. AFFIRMATIVE COVENANTS.  Without limiting anything contained herein, Guarantor hereby expressly acknowledges and agrees that each and every affirmative covenant as contained and set forth in that certain Credit Agreement dated as of December 13, 2006, entered into by and among MWI Veterinary Supply Co., as borrower thereunder, Guarantor, and Memorial Pet Care, Inc, as guarantors thereunder, and Bank of America, N.A. and Wells Fargo Bank, N.A., as lender parties thereto (hereinafter referred to as the “Syndication Credit Agreement”), as the same may be amended, revised, amended and restated, replaced, supplemented or otherwise modified from time to time, and more specifically under Article VI thereof, and in the form and substance as such covenants appear in the Syndication Credit Agreement as of date hereof without any amendment or revision thereto, shall (as modified only to the extent necessary for applicability hereto), apply mutatis mutandis to this Guaranty, all of which affirmative covenants are hereby incorporated herein by this reference as if restated in the entirety, and Guarantor hereby repeats and adopts the same.  Guarantor covenants, agrees and undertakes that so long as Bank remains committed to extend credit to Borrower pursuant to the Sterling Revolving Facility Loan Agreement, the Loan Documents, and the Corporate Credit Card Agreement, or any liabilities (whether direct or contingent, liquidated or unliquidated) of Borrower to Bank under the Sterling Revolving Facility Loan Agreement, the Loan Documents, Corporate Credit Card Agreement and/or any other agreement, contract, instrument or document executed in connection therewith, remain outstanding, and until payment in full of all obligations of Borrower subject thereto, all of the affirmative covenants as contained in Article VI of the Syndication Credit Agreement and incorporated herein by reference as aforementioned shall remain valid, binding and enforceable against Guarantor hereunder and shall survive any termination or cancellation of the Syndication Credit Agreement notwithstanding any termination or cancellation thereof; provided however, that, for purposes of this Guaranty, all references to five (5)-day periods in the Syndication Credit Agreement with respect to financial reporting requirements shall mean and be ten (10)-day periods.  For all intents and purposes of this Guaranty, any reference to “Loan Party” in the Syndication Credit Agreement shall mean and refer to the Guarantor referenced hereunder.

 

7. NEGATIVE COVENANTS.  Without limiting anything contained herein, Guarantor hereby expressly acknowledges and agrees that each and every negative covenant as contained and set forth in the Syndication Credit Agreement, and more specifically under Article VII thereof, and in the form and substance as such covenants appear in the Syndication Credit Agreement as of date hereof without any amendment or revision thereto, shall (as modified only to the extent necessary for applicability hereto), apply mutatis mutandis to this Guaranty, all of which negative covenants are hereby incorporated herein by this reference as if restated in the entirety, and Guarantor hereby repeats and adopts the same.  Guarantor covenants, agrees and undertakes that so long as Bank remains committed to extend credit to Borrower pursuant to the Sterling Revolving Facility Loan Agreement, the Loan Documents, and the Corporate Credit Card Agreement, or any liabilities (whether direct or contingent, liquidated or unliquidated) of Borrower to Bank under the Sterling Revolving Facility Loan Agreement, the Loan Documents, Corporate Credit Card Agreement and/or any other agreement, contract, instrument or document executed in connection therewith, remain outstanding, and until payment in full of all obligations of Borrower subject thereto, all of the negative covenants as contained in Article VII of the Syndication Credit Agreement and incorporated herein by reference as aforementioned shall remain valid, binding and enforceable against Guarantor hereunder and shall survive any termination or cancellation of the Syndication Credit Agreement notwithstanding any termination or cancellation thereof.

 

8. GUARANTOR’S WAIVERS.

 

(a) Guarantor waives any right to require Bank to: (i) proceed against Borrower or any other person; (ii) marshal assets or proceed against or exhaust any security held from Borrower or any other person; (iii) give notice of the terms, time and place of any public or private sale or other disposition of personal property security held from Borrower or any other person; (iv) take any other action or pursue any other remedy in Bank’s power; or (v) make any presentment or demand for performance, or give any notice of nonperformance, protest, notice of protest or notice of dishonor hereunder or in connection with any obligations or evidences of indebtedness held by Bank as security for or which constitute in whole or in part the Indebtedness guaranteed hereunder, or in connection with the creation of new or additional Indebtedness.

 

(b) Guarantor waives any defense to its obligations hereunder based upon or arising by reason of: (i) any disability or other defense of Borrower or any other person; (ii) the cessation or limitation from any cause whatsoever, other than payment in full, of the Indebtedness of Borrower or any other person; (iii) any lack of authority of any officer, director, partner, agent or any other person acting or purporting to act on behalf of Borrower which is a corporation, partnership or other type of entity, or any defect in the formation of any such Borrower; (iv) the application by Borrower of the proceeds of any Indebtedness for purposes other than the purposes represented by Borrower to, or intended or understood by, Bank or Guarantor; (v) any act or omission by Bank which directly or indirectly results in or aids the discharge of Borrower or any portion of the Indebtedness by operation of law or otherwise, or which in any way impairs or suspends any rights or remedies of Bank against Borrower; (vi) any impairment of the value of any interest in any security for the Indebtedness or any portion thereof, including without limitation, the failure to obtain or maintain perfection or recordation of any interest in any such security, the release of any such security without substitution, and/or the failure to preserve the value of, or to comply with applicable law in disposing of, any such security; (vii) any modification of the Indebtedness, in any form whatsoever, including any modification made after revocation hereof to any Indebtedness incurred prior to such revocation, and including without limitation the renewal, extension, acceleration or other change in time for payment of, or other change in the terms of, the Indebtedness or any portion thereof, including increase or decrease of the rate of interest thereon; or (viii) any requirement that Bank give any notice of acceptance of this Guaranty.  Until all Indebtedness shall have been paid in full, Guarantor shall have no right of subrogation, and Guarantor waives any right to enforce any remedy which Bank now has or may hereafter have against Borrower or any other person, and waives any benefit of, or any right to participate in, any security now or hereafter held by Bank.  Guarantor further waives all rights and defenses Guarantor may have arising out of (A) any election of remedies by Bank, even though that election of remedies, such as a non-judicial foreclosure with respect to any security for any portion of the Indebtedness, destroys Guarantor’s rights of subrogation or Guarantor’s rights to proceed against Borrower for reimbursement, or (B) any loss of rights Guarantor may suffer by reason of any rights, powers or remedies of Borrower in connection with any anti-deficiency laws or any other laws limiting, qualifying or discharging  Borrower’s Indebtedness, whether by operation of any applicable law, including without limitation, Idaho Code §45-1512 as from time to time amended, or otherwise, including any rights Guarantor may have to a fair market value hearing to determine the size of a deficiency following any foreclosure sale or other disposition of any real property security for any portion of the Indebtedness.

 

(c) To the extent Guarantor or any assets of Guarantor enjoy any right of immunity from suit, legal proceedings, set-off, counterclaim, attachment or execution under any law or in any jurisdiction, in aid of a judgment in respect of Guarantor’s obligations under this Guaranty, and if Guarantor or any assets of Guarantor should become entitled to any such right of immunity, then Guarantor hereby waives such right or rights and immunity.

 

9. BANK’S RIGHTS WITH RESPECT TO GUARANTOR’S PROPERTY IN BANK’S POSSESSION.  In addition to all liens upon and rights of setoff against the monies, securities or other property of Guarantor given to Bank by law, Bank shall have a right of setoff with respect to Guarantor’s obligations hereunder against all monies, securities and other property of Guarantor now or hereafter in the possession of or on deposit with Bank, whether held in a general or special account or deposit or for safekeeping or otherwise, and every such lien and right of setoff may be exercised without notice to Guarantor.  No lien or right of setoff shall be deemed to have been waived by any act or conduct on the part of Bank, or by any neglect to exercise such right of setoff or to enforce such lien, or by any delay in so doing, and every right of setoff and lien shall continue in full force and effect until such right of setoff or lien is specifically waived or released by Bank in writing.

 

10. SUBORDINATION.  Any Indebtedness of Borrower now or hereafter held by Guarantor is hereby subordinated to the Indebtedness of Borrower to Bank.

 

11. REMEDIES; NO WAIVER.  All rights, powers and remedies of Bank hereunder are cumulative.  No delay, failure or discontinuance of Bank in exercising any right, power or remedy hereunder shall affect or operate as a waiver of such right, power or remedy; nor shall any single or partial exercise of any such right, power or remedy preclude, waive or otherwise affect any other or further exercise thereof or the exercise of any other right, power or remedy.  Any waiver, permit, consent or approval of any kind by Bank of any breach of this Guaranty, or any such waiver of any provisions or conditions hereof, must be in writing and shall be effective only to the extent set forth in writing.

 

12. COSTS, EXPENSES AND ATTORNEYS’ FEES.  Guarantor shall pay to Bank immediately upon demand the full amount of all payments, advances, charges, costs and expenses, including reasonable attorneys’ fees (to include outside counsel fees and all allocated costs of Bank’s in-house counsel), expended or incurred by Bank in connection with the enforcement of any of Bank’s rights, powers or remedies and/or the collection of any amounts which become due to Bank under this Guaranty, and the prosecution or defense of any action in any way related to this Guaranty, whether incurred at the trial or appellate level, in an arbitration proceeding or otherwise, and including any of the foregoing incurred in connection with any bankruptcy proceeding (including without limitation, any adversary proceeding, contested matter or motion brought by Bank or any other person) relating to Guarantor or any other person or entity.  All of the foregoing shall be paid by Guarantor with interest from the date of demand until paid in full at a rate per annum equal to the greater of ten percent (10%) or Bank’s Prime Rate in effect from time to time.

 

13. PAYMENTS; TAXES.

 

(a) Any and all payments by Guarantor hereunder to Bank shall be made free and clear of and without deduction or withholding for any and all present or future taxes, levies, imposts, deductions, charges or withholdings of whatever nature imposed by any government, political subdivision, bank or taxing authority, and liabilities with respect thereto excluding (i) taxes imposed on or measured by Bank’s income or receipts or minimum tax in lieu thereof, branch profit taxes and franchise taxes, taxes imposed on or measured by Bank’s capital, large federal corporation tax levied or assessed against Bank or other taxes of general application imposed on Bank by the jurisdiction (or any political subdivision thereof) under the laws of which Bank is organized or maintains a lending office or any other jurisdiction in which Bank transacts business, (ii) any tax that is imposed on amounts payable to the Bank pursuant to any law that is in effect at the time the Bank enters into this Agreement (or on amounts payable to any assignee, transferee, or participant in any Indebtedness or obligations under this Agreement (such person, a “Transferee”) pursuant to any law that is in the effect at the time that such Transferee acquires any interest in the Indebtedness or obligations under this Agreement, except to the extent that the transferor of such interest also was subject to such tax), (iii) any such tax attributable to the Bank or any Transferee failing to provide applicable Forms W-8 or any other documents legally required to establish an exemption from such taxes, and (iv) any U.S. federal tax imposed pursuant to Sections 1471-1474 of the Internal Revenue Code, as amended, or any amended or successor version that is substantially comparable (all such excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as “Excluded Taxes” and all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as “Taxes”), unless such Taxes are required by law or the administration thereof to be deducted or withheld.  If Guarantor shall be required by law or the administration thereof to deduct or withhold any such Taxes, from or in respect of any amount payable hereunder, or Bank, including any of its assignees or transferees (each such entity, a “Party”) shall be required to deduct, withhold or remit any Taxes from or out of amounts received by it hereunder, then:

 

	
(i)  

	
the amount payable shall be increased as may be necessary so that after making all required deductions, withholdings or remissions (including deductions, withholdings or remissions applicable to additional amounts paid under this paragraph), each Party shall receive an amount equal to the sum it would have received if no such deduction, withholding or remission were required to be made, and

 

	
(ii)  

	
Guarantor forthwith shall pay the full amount deducted or withheld to the relevant taxation or other authority in accordance with applicable law.

 

(b) Guarantor agrees to pay forthwith any present or future stamp or documentary taxes or any other excise, goods and services, sales or property taxes, charges or similar levies (all such taxes, charges and levies being herein referred to as “Other Taxes”) which arise from any payment made by Guarantor hereunder or from the execution, delivery or registration of, or otherwise with respect to, this Guaranty.

 

(c) Without limiting Bank’s rights hereunder, in the event any taxes, levies, imposts, duties or other charges of whatever nature, other than Excluded Taxes, are assessed against Bank in connection with payments to Bank by Guarantor hereunder or otherwise in connection with this Guaranty, Guarantor shall pay when due and indemnify and hold Bank harmless from such charges, without reducing the net amount of such payments to be made to Bank below that amount which Bank would have received had such taxes or charges had not been assessed.

 

(d) Guarantor further agrees to indemnify each Party for the full amount of Taxes or Other Taxes not deducted or withheld or paid by Guarantor in accordance with any applicable law to the relevant taxation or other authority and any Taxes or Other Taxes imposed by any jurisdiction on the amounts payable by Guarantor under this Guaranty and paid by any Party, and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, whether or not any such Taxes or Other Taxes were correctly or legally asserted.  Payment under this indemnification shall be made within 15 days from the date Bank makes written demand therefor.  A certificate as to the amount of such Taxes or Other Taxes and evidence of payment thereof submitted to Guarantor by Bank shall be prima facie evidence of the amount due from Guarantor to a Party.

 

(e) Guarantor shall furnish to Bank the original or a certified copy of a receipt evidencing any payment of Taxes or Other Taxes made by Guarantor as soon as such receipt becomes available, together with copies of the tax return or other report filed with respect to any such Taxes and/or Other Taxes promptly after such filing, and in any event within 15 days from date of receipt of Bank’s request therefor, accompanied by a certificate of the chief financial officer of Guarantor, which certificate shall indicate the amount of Taxes or Other Taxes, as the case may be, deducted or withheld by Guarantor in respect of payments made hereunder.

 

(f) If requested by Bank at any time, Guarantor shall cause this Guaranty to be registered, notarized or otherwise formalized to the extent at any time required by the applicable laws of England, the applicable laws of any province or other political subdivision of England or the applicable laws of any other country or other jurisdiction in which Guarantor now or in the future maintains any property or assets, and Guarantor shall pay, and indemnify and hold Bank harmless from, any liability for any stamp taxes or any registration, documentation or other types of fees, charges, taxes or fines in connection with any such registration, notarization or formalization.  Guarantor shall provide Bank with evidence of such registration within 45 days after Bank’s request for such evidence, which evidence shall be in form and substance satisfactory to Bank.

 

(g) Without prejudice to the survival of any other agreement or obligation of Guarantor hereunder, the obligations of Guarantor under this Section 13 shall survive the termination of this Guaranty and the payment of the Indebtedness.

 

14. JUDGMENT CURRENCY.  Guarantor acknowledges that the Indebtedness owing by Borrower to Bank and guaranteed by Guarantor hereunder may include amounts owing in currencies other than U.S. Dollars (Alternate Currencies”).  Regardless of whether any Indebtedness is with respect to advances made or is otherwise owing in any Alternate Currency, Guarantor shall make all payments due under this Guaranty in lawful money of the United States of America and in immediately available funds.  Guarantor acknowledges that availability (subject to all applicable conditions) of advances in Alternate Currencies is for the benefit of Borrower and Guarantor, and that all risks of currency fluctuations and other exchange exposure shall be for the account of the Borrower and Guarantor and not Bank.  Notwithstanding any judgment rendered in a currency other than United States Dollars and/or in the event that Bank obtains any judgment in Alternate Currencies, including without limitation, British Pounds, or other Alternative Currencies, in respect of any liability of Guarantor in U.S. dollars, Bank and Guarantor agree that the rate of exchange to be used to determine the amount of the judgment shall be the rate of exchange quoted by Bank as the rate at which Bank could purchase U.S. dollars with such Alternate Currencies Currency (after taking into account any premium and cost of exchange), on the banking day immediately prior to the day on which each payment on account of the judgment is received.  The liability of Guarantor in respect of any amount due in U.S. dollars shall, despite any judgment in the Alternate Currency, be discharged only to the extent that on the banking day following receipt of the payment or satisfaction of the judgment, Bank, through its bankers, is able to purchase U.S. dollars with such Alternate Currency.  If the amount of U.S. dollars purchased by Bank is less than the amount of U.S. dollars originally due to it, Guarantor agrees, as a separate and independent obligation of Guarantor, to indemnify Bank against such loss, the enforcement of which such obligation may not be impeded by Guarantor, and if the amount so purchased exceeds the sum originally due to Bank, Bank agrees to remit such excess to Guarantor.

 

15. SUCCESSORS; ASSIGNMENT.  This Guaranty shall be binding upon and inure to the benefit of the heirs, executors, administrators, legal representatives, successors and assigns of the parties; provided however, that Guarantor may not assign or transfer any of its interests or rights hereunder without Bank’s prior written consent.  Guarantor acknowledges that Bank has the right to sell, assign, transfer, negotiate or grant participations in all or any part of, or any interest in, any Indebtedness of Borrower to Bank and any obligations with respect thereto, including this Guaranty.  In connection therewith, Bank may disclose all documents and information which Bank now has or hereafter acquires relating to Guarantor and/or this Guaranty, whether furnished by Borrower, Guarantor or otherwise.  Guarantor further agrees that Bank may disclose such documents and information to Borrower.

 

16. AMENDMENT.  This Guaranty may be amended or modified only in writing signed by Bank and Guarantor.

 

17. APPLICATION OF SINGULAR AND PLURAL.  In all cases where there is but a single Borrower, then all words used herein in the plural shall be deemed to have been used in the singular where the context and construction so require; and when there is more than one Borrower named herein, or when this Guaranty is executed by more than one Guarantor, the word “Borrowers” and the word “Guarantor” respectively shall mean all or any one or more of them as the context requires.

 

18. UNDERSTANDING WITH RESPECT TO WAIVERS; SEVERABILITY OF PROVISIONS.  Guarantor warrants and agrees that each of the waivers set forth herein is made with Guarantor’s full knowledge of its significance and consequences, and that under the circumstances, the waivers are reasonable and not contrary to public policy or law.  If any waiver or other provision of this Guaranty shall be held to be prohibited by or invalid under applicable public policy or law, such waiver or other provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such waiver or other provision or any remaining provisions of this Guaranty.

 

19. GOVERNING LAW.  This Guaranty shall be governed by and construed in accordance with the laws of the State of Idaho.  Without prejudice to Bank’s ability to enforce this Guaranty in any other proper jurisdiction, Guarantor irrevocably submits and attorns to the non-exclusive jurisdiction of the courts of such jurisdiction.  GUARANTOR WAIVES, TO THE EXTENT PERMITTED UNDER APPLICABLE LAWS, ANY RIGHT GUARANTOR MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING BROUGHT IN ACCORDANCE WITH THE TERMS OF THIS GUARANTY.

 

20. ARBITRATION.

 

(a) Arbitration.  The parties hereto agree, upon demand by any party, to submit to binding arbitration all claims, disputes and controversies between or among them (and their respective employees, officers, directors, attorneys, and other agents), whether in tort, contract or otherwise, in any way arising out of or relating to this Guaranty and its negotiation, execution, collateralization, administration, repayment, modification, extension, substitution, formation, inducement, enforcement, default or termination.

 

(b) Governing Rules.  Any arbitration proceeding will (i) proceed in a location in Idaho selected by the American Arbitration Association (“AAA”); (ii) be governed by the Federal Arbitration Act (Title 9 of the United States Code), notwithstanding any conflicting choice of law provision in any of the documents between the parties; and (iii) be conducted by the AAA, or such other administrator as the parties shall mutually agree upon, in accordance with the AAA’s commercial dispute resolution procedures, unless the claim or counterclaim is at least $1,000,000.00 exclusive of claimed interest, arbitration fees and costs in which case the arbitration shall be conducted in accordance with the AAA’s optional procedures for large, complex commercial disputes (the commercial dispute resolution procedures or the optional procedures for large, complex commercial disputes to be referred to herein, as applicable, as the “Rules”).  If there is any inconsistency between the terms hereof and the Rules, the terms and procedures set forth herein shall control.  Any party who fails or refuses to submit to arbitration following a demand by any other party shall bear all costs and expenses incurred by such other party in compelling arbitration of any dispute.  Nothing contained herein shall be deemed to be a waiver by any party that is a bank of the protections afforded to it under 12 U.S.C. §91 or any similar applicable state law.

 

(c) No Waiver of Provisional Remedies, Self-Help and Foreclosure.  The arbitration requirement does not limit the right of any party to (i) foreclose against real or personal property collateral; (ii) exercise self-help remedies relating to collateral or proceeds of collateral such as setoff or repossession; or (iii) obtain provisional or ancillary remedies such as replevin, injunctive relief, attachment or the appointment of a receiver, before during or after the pendency of any arbitration proceeding.  This exclusion does not constitute a waiver of the right or obligation of any party to submit any dispute to arbitration or reference hereunder, including those arising from the exercise of the actions detailed in sections (i), (ii) and (iii) of this paragraph.

 

(d) Arbitrator Qualifications and Powers.  Any arbitration proceeding in which the amount in controversy is $5,000,000.00 or less will be decided by a single arbitrator selected according to the Rules, and who shall not render an award of greater than $5,000,000.00.  Any dispute in which the amount in controversy exceeds $5,000,000.00 shall be decided by majority vote of a panel of three arbitrators; provided however, that all three arbitrators must actively participate in all hearings and deliberations.  The arbitrator will be a neutral attorney licensed in the State of Idaho or a neutral retired judge of the state or federal judiciary of Idaho, in either case with a minimum of ten years experience in the substantive law applicable to the subject matter of the dispute to be arbitrated.  The arbitrator will determine whether or not an issue is arbitratable and will give effect to the statutes of limitation in determining any claim.  In any arbitration proceeding the arbitrator will decide (by documents only or with a hearing at the arbitrator’s discretion) any pre-hearing motions which are similar to motions to dismiss for failure to state a claim or motions for summary adjudication.  The arbitrator shall resolve all disputes in accordance with the substantive law of Idaho and may grant any remedy or relief that a court of such state could order or grant within the scope hereof and such ancillary relief as is necessary to make effective any award.  The arbitrator shall also have the power to award recovery of all costs and fees, to impose sanctions and to take such other action as the arbitrator deems necessary to the same extent a judge could pursuant to the Federal Rules of Civil Procedure, the Idaho Rules of Civil Procedure or other applicable law.  Judgment upon the award rendered by the arbitrator may be entered in any court having jurisdiction.  The institution and maintenance of an action for judicial relief or pursuit of a provisional or ancillary remedy shall not constitute a waiver of the right of any party, including the plaintiff, to submit the controversy or claim to arbitration if any other party contests such action for judicial relief.

 

(e) Discovery.  In any arbitration proceeding, discovery will be permitted in accordance with the Rules.  All discovery shall be expressly limited to matters directly relevant to the dispute being arbitrated and must be completed no later than 20 days before the hearing date.  Any requests for an extension of the discovery periods, or any discovery disputes, will be subject to final determination by the arbitrator upon a showing that the request for discovery is essential for the party’s presentation and that no alternative means for obtaining information is available.

 

(f) Class Proceedings and Consolidations.  No party hereto shall be entitled to join or consolidate disputes by or against others in any arbitration, except parties who have executed this Guaranty or any other contract, instrument or document relating to any Indebtedness, or to include in any arbitration any dispute as a representative or member of a class, or to act in any arbitration in the interest of the general public or in a private attorney general capacity.

 

(g) Payment Of Arbitration Costs And Fees.  The arbitrator shall award all costs and expenses of the arbitration proceeding.

 

(h) Real Property Collateral.  Notwithstanding anything herein to the contrary, no dispute shall be submitted to arbitration if the dispute concerns indebtedness secured directly or indirectly, in whole or in part, by any real property unless (i) the holder of the mortgage, lien or security interest specifically elects in writing to proceed with the arbitration, or (ii) all parties to the arbitration waive any rights or benefits that might accrue to them by virtue of the single action rule statute of Idaho, thereby agreeing that all indebtedness and obligations of the parties, and all mortgages, liens and security interests securing such indebtedness and obligations, shall remain fully valid and enforceable.

 

(i) Miscellaneous.  To the maximum extent practicable, the AAA, the arbitrators and the parties shall take all action required to conclude any arbitration proceeding within 180 days of the filing of the dispute with the AAA.  No arbitrator or other party to an arbitration proceeding may disclose the existence, content or results thereof, except for disclosures of information by a party required in the ordinary course of its business or by applicable law or regulation.  If more than one agreement for arbitration by or between the parties potentially applies to a dispute, the arbitration provision most directly related to the documents between the parties or the subject matter of the dispute shall control.  This arbitration provision shall survive termination, amendment or expiration of any of the documents or any relationship between the parties.

 

21. JURISDICTION; SERVICE OF PROCESS.  Without limiting anything contained herein, Guarantor irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the Courts of the State of Idaho sitting in Ada County, and of the United States District Court of the District of Idaho, and any appellate court from any thereof (together, the “Court”), in any action or proceeding arising out of this Continuing Guaranty, or for recognition or enforcement of any judgment, and each of the parties hereto irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such Idaho State Court or, to the fullest extent permitted by applicable law, in such federal court.  Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit or on the judgment or in any other manner provided by law.  Nothing in this Continuing Guaranty shall affect any right that Bank may otherwise have to bring any action or proceeding relating to this Continuing Guaranty against Guarantor or its properties in the courts of any jurisdiction.  Guarantor hereby agrees that service of all writs, processes and summonses in any suit, action or proceeding brought in such Court may be made upon James F. Cleary, Jr., President and Chief Executive Officer, MWI Veterinary Supply Co., presently located at 651 S. Stratford Drive, Suite 100, Meridian, Idaho 83642 who is the duly appointed agent for Guarantor to accept service of all legal process issued in connection with the Indebtedness (the “Process Agent”).  Guarantor hereby irrevocably appoints the Process Agent its agent and true and lawful attorney-in-fact while any of the Guarantor’s obligations under this Guaranty remain unsatisfied, in its name, place and stead only to accept such service of any and all such writs, processes and summonses, and agrees that the failure of the Process Agent to give any notice of any such service of process to the Guarantor shall not impair or affect the validity of such service or of any judgment based thereon.  The Guarantor hereby further irrevocably consents to the service of process in any suit, action or proceeding in the above specified courts by the mailing thereof by Bank by registered or certified mail, postage prepaid, to the Guarantor at the address specified below the Guarantor’s signature on the signature page of this Guaranty.  Nothing herein shall in any way be deemed to limit the ability of Bank to serve any writs, processes or summonses in any other manner, as may be permitted by applicable law.  Guarantor irrevocably waives any objection which it may now or hereafter have to the laying of the venue of any suit, action or proceeding arising out of or relating to this Guaranty brought in the Court, and also irrevocably waives any claim that any such suit, action or proceeding brought in such Court has been bought in an inconvenient form.

 

22. FURTHER ASSURANCE.  Guarantor hereby undertakes to execute such further deeds and documents as the Bank may from time to time require to perfect the Bank’s rights under this Guarantee and to give effect and validity to the security hereby constituted which deeds and documents shall be prepared by or on behalf of the Bank at the cost of the Guarantor and shall contain such terms for the Bank’s benefit as it may reasonably require.

 

23. INDEMNITY.  Guarantor hereby undertakes to indemnify and keep indemnified the Bank in respect of all liabilities and losses of any nature and costs, charges and expenses properly incurred or suffered by it in the execution or the purported execution of any powers, authorities or discretions vested in it pursuant to this Guarantee and against all actions, proceedings, claims and demands in respect of any matter or thing done or omitted or in any way relating to the provisions of this Guarantee or occasioned by any breach by the Guarantor of any of its representations, warranties and covenants or other obligations to the Bank hereunder.

 

IN WITNESS WHEREOF, the undersigned Guarantor has executed this Guaranty as of November 5, 2010.

 

MWI VETERINARY SUPPLY CO., an Idaho corporation

 

By:  /s/ Mary Pat Thompson                                                              

 

Name:  Mary Pat Thompson                                                              

 

Title:  SVP and CFO

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