Exhibit 10.29
[***] — Certain information in this exhibit have been omitted and filed
separately with the Securities and Exchange Commission. Confidential treatment
has been requested with respect to the omitted portions.
SEVENTH AMENDMENT TO THIRD AMENDED AND RESTATED
CREDIT AND SECURITY AGREEMENT
This Amendment, dated as of November 30, 2009, is made by and between Heska
Corporation, a Delaware corporation (“Heska”), Diamond Animal Health, Inc., an
Iowa corporation (“Diamond”) (each of Heska and Diamond may be referred to
herein individually as a “Borrower” and collectively as the “Borrowers”), and
Wells Fargo Bank, National Association, operating through its Wells Fargo
Business Credit operating division (the “Lender”).
Recitals
The Borrowers and the Lender are parties to a Third Amended and Restated Credit
and Security Agreement dated as of December 30, 2005 (as amended to date and as
the same may be hereafter amended from time to time, the “Credit Agreement”).
The Borrowers have requested that certain amendments be made to the Credit
Agreement, which the Lender is willing to make pursuant to the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual covenants and
agreements herein contained, it is agreed as follows:
1. Defined Terms. Capitalized terms used in this Amendment which are defined in
the Credit Agreement shall have the same meanings as defined therein, unless
otherwise defined herein. In addition, Section 1.1 of the Credit Agreement is
amended by adding or amending, as the case may be, the following definitions:
“Daily Three Month LIBOR” means, for any day, the rate of interest equal to
LIBOR then in effect for delivery for a three (3) month period. When interest is
determined in relation to Daily Three Month LIBOR, each change in the interest
rate shall become effective each Banking Day that the Lender determines that
Daily Three Month LIBOR has changed.
“LIBOR” means the rate per annum (rounded upward, if necessary, to the nearest
whole 1/8th of one percent (1%)) determined pursuant to the following formula:

             
 
  LIBOR =   Base LIBOR
 
100% - LIBOR Reserve Percentage    

 

 

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(a) “Base LIBOR” means the rate per annum for United States dollar deposits
quoted by the Lender for the purpose of calculating the effective Revolving
Floating Rate or Term Floating Rate, as applicable, for loans that reference
Daily Three Month LIBOR as the Inter-Bank Market Offered Rate, in effect from
time to time for three (3) month delivery of funds in amounts approximately
equal to the principal amount of such loans. Borrowers understand and agree that
the Lender may base its quotation of the Inter-Bank Market Offered Rate upon
such offers or other market indicators of the Inter-Bank Market as the Lender in
its discretion deems appropriate, including but not limited to the rate offered
for U.S. dollar deposits on the London Inter-Bank Market.
(b) “LIBOR Reserve Percentage” means the reserve percentage prescribed by the
Board of Governors of the Federal Reserve System (or any successor) for
“Eurocurrency Liabilities” (as defined in Regulation D of the Federal Reserve
Board, as amended), adjusted by the Lender for expected changes in such reserve
percentage during the applicable term of the Notes.
“Maturity Date” means (i) with respect to the Term B Advances May 31, 2010, and
(ii) with respect to all other Advances, December 31, 2012.
“Prepayment Factor” means one percent (1.0%).
“Revolving Floating Rate” means an annual interest rate equal to the sum of the
Prime Rate plus two and one-half percent (2.50%) which annual rate shall change
when and as the Prime Rate Changes; provided, however, effective as of the first
day of the month following the month in which the Borrowers deliver to the
Lender their audited financial statements for the fiscal year ending
December 31, 2009 “Revolving Floating Rate” shall mean Daily Three Month LIBOR
plus the Spread which annual rate shall change when and as Daily Three Month
LIBOR changes.
“Term Floating Rate” means an annual interest rate equal to the sum of the Prime
Rate plus two and one-half percent (2.50%) which annual rate shall change when
and as the Prime Rate Changes; provided, however, effective as of the first day
of the month following the month in which the Borrowers deliver to the Lender
their audited financial statements for the fiscal year ending December 31, 2009
“Term Floating Rate” shall mean Daily Three Month LIBOR plus the Spread which
annual rate shall change when and as Daily Three Month LIBOR changes.

 

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[***] — Certain information on this page have been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
2. Spread. Section 2.7 of the Credit Agreement is hereby amended to read it its
entirety as follows:
“Section 2.7 Spread. The spread (the “Spread”) means the percentage set forth in
the table below opposite the applicable prior-fiscal-year Net Income of the
Borrowers, which percentage shall change annually effective as of the first day
of the month following the month in which the Borrowers deliver to the Lender
their audited financial statements for the prior fiscal year; provided, however,
that in no case shall any decrease in the Spread occur during a Default Period:

          Prior Fiscal Year Net Income   Spread  
 
       
Less than $0
    6.00 %
Greater than or equal to $0 but less than $2,500,000
    5.00 %
Greater than or equal to $2,500,000 but less than $5,000,000
    4.00 %
Greater than or equal to $5,000,000
    3.00 %”

3. Financial Covenants. Sections 6.12 and 6.13 of the Credit Agreement are
hereby amended to read in their entireties as follows:
“Section 6.12 Minimum Capital. Heska will maintain, on a consolidated basis, as
of each date listed below, its Capital at an amount not less than the amount set
forth opposite such date:

      Date   Minimum Capital
October 31, 2009
  [***]
November 30, 2009
  [***]
December 31, 2009
  [***]
January 31, 2010
  [***]
February 28, 2010
  [***]
March 31, 2010
  [***]
April 30, 2010
  [***]
May 31, 2010
  [***]
June 30, 2010
  [***]
July 31, 2010
  [***]
August 31, 2010
  [***]
September 30, 2010
  [***]
October 31, 2010
  [***]
November 30, 2010
  [***]
December 31, 2010
  [***]

 

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[***] — Certain information on this page have been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
The covenant levels for January 31, 2010 through and including December 31, 2010
shall be adjusted upwards or downwards, respectively on a dollar-for-dollar
basis, by an amount equal to the amount by which Heska’s Capital, as evidenced
by Heska’s audited balance sheet as of December 31, 2009, is greater than or
less than [***]; provided, however, that any such downward adjustment shall not
exceed $500,000.
Section 6.13 Minimum Net Income. Heska will achieve, on a consolidated basis,
during each period described below, Net Income in an amount not less than the
amount set forth opposite such period (amounts in parentheses denote negative
numbers):

          Minimum Net Period   Income
Twelve months ending December 31, 2009
  [***]
Three months ending March 31, 2010
  [***]
Six months ending June 30, 2010
  [***]
Nine months ending September 30, 2010
  [***]
Twelve months ending December 31, 2010
  [***]

 

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[***] — Certain information on this page have been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
4. Capital Expenditures. Section 7.10 of the Credit Agreement is hereby amended
to read in its entirety as follows:
“Section 7.10 Capital Expenditures. The Borrowers, together with any Affiliates,
will not incur or contract to incur, in the aggregate, Capital Expenditures in
the aggregate during the fiscal year-to-date period ending on any date described
below in excess of the amount set forth opposite such date:

          Maximum Capital Period   Expenditures
October 31, 2009
  [***]
November 30, 2009
  [***]
December 31, 2009
  [***]
January 31, 2010
  [***]
February 28, 2010
  [***]
March 31, 2010
  [***]
April 30, 2010
  [***]
May 31, 2010
  [***]
June 30, 2010
  [***]
July 31, 2010
  [***]
August 31, 2010
  [***]
September 30, 2010
  [***]
October 31, 2010
  [***]
November 30, 2010
  [***]
December 31, 2010
  [***]

In addition to the foregoing, the amounts set forth above shall be adjusted
upward on a dollar-for-dollar basis by the amount allocated for such purpose in
accordance with Section 2.22, from the date of such increase through the end of
the fiscal year in which such increase occurs.”
5. Compliance Certificate. Exhibit B to the Credit Agreement is replaced in its
entirety by Exhibit A to this Amendment.
6. No Other Changes. Except as explicitly amended by this Amendment, all of the
terms and conditions of the Credit Agreement shall remain in full force and
effect and shall apply to any advance or letter of credit thereunder.
7. Conditions Precedent. This Amendment shall be effective when the Lender shall
have received an executed original hereof, together with the following, each in
form and substance acceptable to the Lender in its sole discretion:
(a) A Certificate of Authority of the Borrowers certifying as to the resolutions
of the boards of directors of the Borrowers approving the execution and delivery
of this Amendment.
(b) Such other matters as the Lender may require.

 

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8. Representations and Warranties. The Borrowers hereby represent and warrant to
the Lender as follows:
(a) The Borrowers have all requisite power and authority to execute this
Amendment and the Replacement Notes and to perform all of its obligations
hereunder, and this Amendment and the Replacement Notes have been duly executed
and delivered by the Borrowers and constitute the legal, valid and binding
obligation of the Borrowers, enforceable in accordance with their terms.
(b) The execution, delivery and performance by the Borrowers of this Amendment
and the Replacement Notes have been duly authorized by all necessary corporate
action and do not (i) require any authorization, consent or approval by any
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, (ii) violate any provision of any law, rule or regulation
or of any order, writ, injunction or decree presently in effect, having
applicability to the Borrowers, or the articles of incorporation or by-laws of
the Borrowers, or (iii) result in a breach of or constitute a default under any
indenture or loan or credit agreement or any other agreement, lease or
instrument to which any Borrower is a party or by which it or its properties may
be bound or affected.
(c) All of the representations and warranties contained in Article V of the
Credit Agreement are correct on and as of the date hereof as though made on and
as of such date, except to the extent that such representations and warranties
relate solely to an earlier date.
9. No Waiver. The execution of this Amendment and acceptance of the Replacement
Notes and any documents related hereto shall not be deemed to be a waiver of any
Default or Event of Default under the Credit Agreement or breach, default or
event of default under any Security Document or other document held by the
Lender, whether or not known to the Lender and whether or not existing on the
date of this Amendment.
10. Release. The Borrowers hereby absolutely and unconditionally release and
forever discharge the Lender, and any and all participants, parent corporations,
subsidiary corporations, affiliated corporations, insurers, indemnitors,
successors and assigns thereof, together with all of the present and former
directors, officers, agents and employees of any of the foregoing, from any and
all claims, demands or causes of action of any kind, nature or description,
whether arising in law or equity or upon contract or tort or under any state or
federal law or otherwise, which any Borrower has had, now has or has made claim
to have against any such person for or by reason of any act, omission, matter,
cause or thing whatsoever arising from the beginning of time to and including
the date of this Amendment, whether such claims, demands and causes of action
are matured or unmatured or known or unknown.

 

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[***] — Certain information on this page have been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
11. Costs and Expenses. The Borrowers hereby reaffirm their agreement under the
Credit Agreement to pay or reimburse the Lender on demand for all costs and
expenses incurred by the Lender in connection with the Loan Documents, including
without limitation all reasonable fees and disbursements of legal counsel.
Without limiting the generality of the foregoing, the Borrowers specifically
agree to pay all fees and disbursements of counsel to the Lender for the
services performed by such counsel in connection with the preparation of this
Amendment and the documents and instruments incidental hereto. The Borrowers
hereby agree that the Lender may, at any time or from time to time in its sole
discretion and without further authorization by the Borrowers, make a loan to
the Borrowers under the Credit Agreement, or apply the proceeds of any loan, for
the purpose of paying any such fees, disbursements, costs and expenses.
12. Miscellaneous. This Amendment may be executed in any number of counterparts,
each of which when so executed and delivered shall be deemed an original and all
of which counterparts, taken together, shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed as of the date first written above.

                  HESKA CORPORATION       DIAMOND ANIMAL HEALTH, INC.
 
               
By
  /s/ Jason Napolitano       By   /s/ Jason Napolitano
 
               
 
  Its Chief Financial Officer           Its Chief Financial Officer
 
                WELLS FARGO BANK, NATIONAL ASSOCIATION            
 
               
By
  [***]            
 
               
 
  [***], Vice President            

 

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Exhibit A to First Amendment
Compliance Certificate

         
To:
       
 
 
 
Wells Fargo Business Credit    
 
       
Date:
                                          , 20___    

     
Subject:
  Heska Corporation
 
  Financial Statements

In accordance with our Third Amended and Restated Credit and Security Agreement
dated as of December 30, 2005 (the “Credit Agreement”), attached are the
financial statements of Heska Corporation (“Heska”) as of and for
                    , 20___ (the “Reporting Date”) and the year-to-date period
then ended (the “Current Financials”). All terms used in this certificate have
the meanings given in the Credit Agreement.
I certify that, to the best of my knowledge, the Current Financials have been
prepared in accordance with GAAP, subject to year-end audit adjustments, and
fairly present the Borrowers’ financial condition and the results of its
operations as of the date thereof.
Events of Default. (Check one):

  o  
The undersigned does not have knowledge of the occurrence of a Default or Event
of Default under the Credit Agreement.

  o  
The undersigned has knowledge of the occurrence of a Default or Event of Default
under the Credit Agreement and attached hereto is a statement of the facts with
respect to thereto.

     
I hereby certify to the Lender as follows:

  o  
The Reporting Date does not mark the end of one of the Borrowers’ fiscal
quarters, hence I am completing all paragraphs below except paragraph 4.

  o  
The Reporting Date marks the end of one of the Borrowers’ fiscal quarters, hence
I am completing all paragraphs below.

Financial Covenants. I further hereby certify as follows:
1. Accounts Payable. Pursuant to Section 6.5 of the Credit Agreement, as of the
Reporting Date, Past Due Payables on a consolidated basis was
$                    , which o satisfies o does not satisfy the requirement that
the Borrowers have no Past Due Payables.

 

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[***] — Certain information on this page have been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
2. Minimum Capital. Pursuant to Section 6.12 of the Credit Agreement, as of the
Reporting Date, Heska’s Capital was, on a consolidated basis, $_____, which o
satisfies o does not satisfy the requirement that such amount be not less than
$_____ on the Reporting Date, as set forth in the table below and adjusted, if
applicable, in accordance with Section 6.12:

      Date   Minimum Capital
October 31, 2009
  [***]
November 30, 2009
  [***]
December 31, 2009
  [***]
January 31, 2010
  [***]
February 28, 2010
  [***]
March 31, 2010
  [***]
April 30, 2010
  [***]
May 31, 2010
  [***]
June 30, 2010
  [***]
July 31, 2010
  [***]
August 31, 2010
  [***]
September 30, 2010
  [***]
October 31, 2010
  [***]
November 30, 2010
  [***]
December 31, 2010
  [***]

The covenant levels for January 31, 2010 through and including December 31, 2010
shall be adjusted upwards or downwards, respectively on a dollar-for-dollar
basis, by an amount equal to the amount by which Heska’s Capital, as evidenced
by Heska’s audited balance sheet as of December 31, 2009, is greater than or
less than [***]; provided, however, that any such downward adjustment shall not
exceed $500,000.

 

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[***] — Certain information on this page have been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
3. Minimum Net Income. Pursuant to Section 6.13 of the Credit Agreement, as of
the Reporting Date, Heska’s Net Income was, on a consolidated basis,
$                    , which o satisfies o does not satisfy the requirement that
such amount be no less than $                     on the Reporting Date, as set
forth in the table below:

          Minimum Net Period   Income
Twelve months ending December 31, 2009
  [***]
Three months ending March 31, 2010
  [***]
Six months ending June 30, 2010
  [***]
Nine months ending September 30, 2010
  [***]
Twelve months ending December 31, 2010
  [***]

4. Minimum Liquidity. Pursuant to Section 6.14 of the Credit Agreement, as of
the Reporting Date, Heska’s Liquidity was, on a consolidated basis,
$                    , which o satisfies o does not satisfy the requirement that
such amount be no less than $1,500,000 on the Reporting Date.
5. Minimum Individual Book Net Worth. Pursuant to Section 6.15 of the Credit
Agreement, as of the Reporting Date, Heska’s Book Net Worth was
$                     and Diamond’s Book Net Worth was $                    ,
which o satisfies o does not satisfy the requirement that such amounts be no
less than zero on the Reporting Date.
6. Maximum Contributions. Pursuant to Section 7.4(a)(v) of the Credit Agreement,
as of the Reporting Date, Heska’s fiscal year-to-date aggregate contributions to
non-Borrower Subsidiaries was $                    , which o satisfies o does
not satisfy the requirement that such amounts be no more than $700,000 during
any fiscal year.

 

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[***] — Certain information on this page have been omitted and filed separately
with the Securities and Exchange Commission. Confidential treatment has been
requested with respect to the omitted portions.
7. Capital Expenditures. Pursuant to Section 7.10 of the Credit Agreement, for
the fiscal year-to-date period ending on the Reporting Date, Heska’s Capital
Expenditures were, in the aggregate and on a consolidated basis,
$                     which o satisfies o does not satisfy the requirement that
such amount be not more than $                     during the period ending on
the Reporting Date, as set forth in the table below and adjusted, if applicable,
in accordance with Section 7.10:

          Maximum Capital Period   Expenditures
October 31, 2009
  [***]
November 30, 2009
  [***]
December 31, 2009
  [***]
January 31, 2010
  [***]
February 28, 2010
  [***]
March 31, 2010
  [***]
April 30, 2010
  [***]
May 31, 2010
  [***]
June 30, 2010
  [***]
July 31, 2010
  [***]
August 31, 2010
  [***]
September 30, 2010
  [***]
October 31, 2010
  [***]
November 30, 2010
  [***]
December 31, 2010
  [***]

Attached hereto are all relevant facts in reasonable detail to evidence the
computations of the financial covenants referred to above. These computations
were made in accordance with GAAP.

            HESKA CORPORATION
      By           Its             

 

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