FIRST AMENDMENT TO CREDIT AGREEMENT

          This First Amendment to Credit Agreement (this “Amendment”) is dated
as of November 27, 2007, by and between (i) FIFTH STREET MEZZANINE PARTNERS II,
L.P., a Delaware limited partnership (“Lender”) and (ii) XLNT VETERINARY CARE,
INC., a Delaware corporation (“Borrower”).

RECITALS

          A. Pursuant to that certain Credit Agreement dated as of June 29, 2007
by and between Lender and Borrower (the “Credit Agreement”), Borrower has
received a loan from Lender in the maximum principal amount of Three Million
Dollars ($3,000,000.00) (the “Original Loan”), as evidenced by that certain Note
dated as of June 29, 2007 executed by Borrower in favor Lender (the “Original
Note”).

          B. Borrower and Lender have agreed to modify the Credit Agreement
subject to the terms and conditions set forth herein below. All capitalized
terms used herein and not otherwise defined shall have the meanings given to
such terms in the Credit Agreement.

AGREEMENT

          NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree to amend the
Credit Agreement as follows:

          1. Loan Amount. The amount of the Loan is hereby increased from Three
Million Dollars ($3,000,000.00) to Four Million Dollars ($4,000,000.00).

          2. Note. Borrower’s obligation to repay the Loan, together with
interest thereon, shall be evidenced by that certain Amended and Restated Note
of even date herewith, executed by Borrower and made payable to Lender, in the
maximum principal amount of Four Million Dollars ($4,000,000.00) (the “Amended
and Restated Note”). All references in the Loan Agreement, the Deeds of Trust
and the other Loan Documents to the term “Note” shall mean and be deemed to
refer to the Amended and Restated Note.

          3. Funding Fee. On or before the date hereof, Borrower shall pay to
Fifth Street Capital LLC a funding fee in the amount of Twenty Thousand Dollars
($20,000.00) in immediately available funds, which fee shall be deemed fully
earned on the date due, and shall not be credited to any other payment required
hereunder.

          4. Servicing Fee. Concurrently with the execution of this Amendment,
notwithstanding anything to the contrary stated in Section 1.3(b)of the Credit
Agreement, Borrower shall pay Two Hundred Dollars ($200.00) to Fifth Street
Capital LLC in addition to the regular monthly Servicing Fee. Starting on
December 1, 2007 and during the remaining term of the Loan, the Servicing Fee
and shall be increased from Five Hundred Sixty-Two Dollars and 50/100 ($562.50)
to Seven Hundred Sixty-Two Dollars and 50/100 ($762.50) per month.

          5. Warrant. Borrower shall issue to Lender, as additional
consideration for the Loan and a condition precedent to closing, an additional
warrant exercisable for up to 300 shares of

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Series B preferred stock (the “Warrant”), which Warrant will provide (i) an
immediately issued warrant right to purchase up to 150 shares of Series B
preferred stock and (ii) a warrant right to purchase up to 150 shares of Series
B preferred in the event Borrower does not consummate the contemplated SPAC
Merger on or before December 31, 2007.

          6. Title Policy. Borrower shall cause Lender to receive such assurance
as Lender may require that the validity and lien priority of the Deeds of Trust
have not been and will not be impaired by this Amendment or the transactions
contemplated by it, including CLTA Endorsement No. 108.8 to be attached to the
policies of title insurance delivered to Lender in connection with this
Amendment.

          7. Closing Date. The closing under this Amendment shall be effective
when the Modification Agreements to the Deeds of Trust (collectively, the
“Modification Agreements”) have recorded in the applicable County and all
conditions and obligations set forth herein have been satisfied by Borrower.

          8. Costs and Expenses. In accordance with Section 1.3(d) of the Credit
Agreement, Borrower agrees to promptly pay all fees, charges, costs and expenses
(including reasonable attorneys’ fees and expenses incurred by Lender in
connection with any matters contemplated by or arising out of the Loan
Documents), in connection with the examination, review, due diligence
investigation, documentation, negotiation, closing and syndication of the
transactions contemplated herein and in connection with the continued
administration of the Loan Documents including any amendments (including this
Amendment), modifications, subordination or intercreditor agreements, consents
and waivers. Borrower agrees to promptly pay reasonable documentation charges
assessed by Lender for amendments (including this Amendment), modifications,
subordination or intercreditor agreements, waivers, consents and any of the
documentation prepared by Lender’s attorneys. All fees, charges, costs and
expenses for which Borrower is responsible pursuant hereto shall be deemed part
of the Obligations when incurred, payable upon demand and secured by the
Collateral.

          9. Covenants of Borrower. Borrower covenants to Lender as follows:

                    a. Borrower shall cause to be executed, delivered, and
performed such additional agreements, documents, and instruments as reasonably
required by Lender to effectuate the intent of this Amendment.

                    b. Borrower fully, finally, and forever releases and
discharges Lender, together with their respective successors, assigns,
directors, officers, employees, agents, and representatives from any and all
actions, causes of action, claims, debts, demands, liabilities, obligations, and
suits, of whatever kind or nature, in law or equity (collectively, the “Claim”),
that Borrower has or in the future may have, whether known or unknown, but only
with respect to those Claims for which both of the following are true: (i) the
Claim is in respect of the Loan, the Loan Documents, or the actions or omissions
of Lender in respect of the Loan or the Loan Documents, and (ii) the Claim
arises from events occurring prior to the date of this Amendment. It is the
intention of Borrower that the above release shall be effective as a full and
final release of each and every matter specifically and generally referred to
above.

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          10. Borrower Representations and Warranties. Borrower represents and
warrants to Lender as of the date hereof that:

                    a. The representations, warranties, certifications and
agreements contained in the Loan Documents are true, complete and accurate in
all material respects as of the date hereof.

                    b. Both Borrower and, to Borrower’s knowledge, Lender have
performed all of their respective obligations under the Loan Documents and
Borrower has no knowledge of any event which with the giving of notice, the
passage of time or both would constitute a default by Borrower or Lender under
the Loan Documents.

                    c. Borrower has no claim against Lender and no offset or
defense to the payment or performance of the Obligations or any counterclaim or
right to rescission to enforcement of any of the terms of the Loan Documents.

                    d. No voluntary actions or, to Borrower’s knowledge,
involuntary actions are pending against Borrower, any member of Borrower of the
Loan under the bankruptcy or insolvency laws of the United States or any state
thereof.

                    e. The Loan Documents, as any of the same have been
modified, amended and restated, are the valid, legal and binding obligations of
Borrower (as applicable), enforceable in accordance with their terms.

          11. Conditions Precedent. Lender shall not be bound by this Amendment
unless and until Lender has received a fully executed original of this
Amendment, the Amended and Restated Note, the Modification Agreements and all
other Loan Documents required by Lender in connection with this Amendment.

          12. Notices. Borrower’s address for notices in Section 8.3 of the
Credit Agreement is hereby amended as follows:

 

 

 

 

 

If to Borrower: 

XLNT Veterinary Care, Inc.

 

 

560 South Winchester Boulevard, Suite 500

 

 

San Jose, CA 95128

 

 

Attn: 

Robert Wallace, Chairman & CEO

 

 

Fax:

(408) 236-7421

 

 

With a copy to:

XLNT Veterinary Care, Inc.

 

 

560 South Winchester Boulevard, Suite 500

 

 

San Jose, CA 95128

 

 

Attn:

Gregory J. Eisenhauer, CFO

 

 

Fax:

(408) 521-0428

          13. Ratification of Loan Documents and Collateral. Borrower hereby
ratifies and affirms each of the Loan Documents, as amended hereby, and agrees
to perform each obligation set forth in each of the Loan Documents, as amended
hereby. Except as specifically modified and amended herein, all terms,
conditions and covenants contained in the Credit Agreement and the other Loan
Documents shall remain in full force and effect. Any property or rights to or

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interests in property granted as security in the Loan Documents, including the
Collateral, shall remain as security for the Loan and the obligations of
Borrower under the Loan Documents.

          14. Miscellaneous.

                    a. The Loan Documents as modified herein contain the entire
understanding and agreement of Borrower and Lender with respect to the Loan and
supersede all prior representations, warranties, agreements, arrangements, and
understandings. No provision of the Loan Documents as modified may be changed,
discharged, supplemented, terminated, or waived except in a writing signed by
Lender and Borrower.

                    b. All references in the Loan Documents to the Credit
Agreement shall mean the Credit Agreement as hereby modified and amended. This
Amendment shall also constitute a Loan Document and all terms and conditions of
the Credit Agreement (as modified herein) including, without limitation, events
of default, maturity dates and the miscellaneous provisions set forth therein,
including without limitation, consent to jurisdiction, applicable law, and
waiver of jury are incorporated herein as though set forth in full and Lender
shall be entitled to the benefits thereof with respect to this Amendment.

                    c. This Amendment may be executed in any number of
counterparts with the same effect as if all parties hereto had signed the same
document. All such counterparts shall be construed together and shall constitute
one instrument, but in making proof hereof it shall only be necessary to produce
one such counterpart.

[Signature Page Follows]

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          IN WITNESS WHEREOF, the undersigned have entered into this Amendment
as of the date first above written.

 

 

 

 

BORROWER:

 

 

 

 

XLNT VETERINARY CARE, INC.,
a Delaware corporation

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

 

LENDER:

 

 

 

FIFTH STREET MEZZANINE PARTNERS II,
L.P., a Delaware limited partnership

 

 

 

By:

Fifth Street Mezzanine Partners II GP, LLC,
a Delaware limited liability company,
its general partner

 

 

 

 

By:

 

 

 

Name: 

Bernard D. Berman

 

Title:

Executive Vice President and Secretary

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