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Exhibit 10.1
 
 
FIRST AMENDMENT TO CREDIT AGREEMENT AND LOAN DOCUMENTS
 
This First Amendment to Credit Agreement and Loan Documents (this “Amendment”)
is dated as of February 19, 2008 by and among FIFTH STREET MEZZANINE PARTNERS
II, L.P., a Delaware limited partnership (“Lender”) and (i) XLNT VETERINARY
CARE, INC., a Delaware corporation (“Lead Borrower”); (ii) ADLER VETERINARY
GROUP, INC., a California corporation, ANIMAL CLINIC OF YUCCA VALLEY, INC., a
California corporation, ANIMAL EMERGENCY CLINIC OF THE DESERT, INC., a
California corporation, ANIMAL MEDICAL HOSPITAL, INC., a California corporation,
BONITA PET HOSPITAL, INC., a California corporation, BRENTWOOD PET CLINIC, INC.,
a California corporation, ELDORADO ANIMAL HOSPITAL, INC., a California
corporation, JERAULD L. WOODRING, INC., a California corporation, LAWRENCE PET
HOSPITAL, INC., a California corporation, MCCONNELL & FENTON CORPORATION, a
California corporation, RAINBOW HAWK, INC., a California corporation, SAN CARLOS
VETERINARY HOSPITAL, INC., a California corporation, SOUTH BAY VETERINARY
SPECIALISTS, INC., a California corporation, SOUTH COUNTY EMERGENCY ANIMAL
CLINIC, INC., a California corporation, STANFORD PET CLINIC, INC., a California
corporation, TARVIN & LENEHAN, INC., a California corporation, VETS & PETS,
INCORPORATED, a California corporation, YUBA-SUTTER VETERINARY HOSPITAL, INC., a
California corporation, CALIFORNIA ANIMAL HOSPITAL VETERINARY SPECIALTY GROUP,
INC., a California corporation, and VETSURG, INC., a California corporation
(collectively, “Non-Lead Borrowers”); and (iii) BAY AREA VETERINARY SPECIALISTS,
INC., a California corporation and BRADSHAW VETERINARY CLINIC, INC., a
California corporation (collectively, “New Borrowers”) (Lead Borrower, Non-Lead
Borrowers and New Borrowers are jointly and severally, individually and
collectively, “Borrower”).
 
RECITALS
 
A.           Pursuant to that certain Credit Agreement dated as of March 29,
2007 by and between Lender and Borrower (the “Credit Agreement”), Borrower has
received a loan from Lender in the maximum principal amount of Twelve Million
Dollars ($12,000,000.00) (the “Loan”), as evidenced by that certain Note dated
as of March 29, 2007 executed by Borrower in favor Lender (the “Note”).
 
B.           The Credit Agreement, the Note, the Security Agreement dated as of
March 29, 2007 and all other agreements, documents, and instruments evidencing,
securing, or otherwise relating to the Loan, as may be amended, modified,
extended or restated from time to time, are sometimes referred to individually
and collectively as the “Loan Documents.”
 
C.           Borrower and Lender have agreed to modify the Credit Agreement and
the other Loan Documents subject to the terms and conditions set forth
below.  All capitalized terms used herein and not otherwise defined shall have
the meanings given to such terms in the Credit Agreement or the other Loan
Documents.
 

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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
and the other Loan Documents as follows:
 
1.             New Borrowers.  BAY AREA VETERINARY SPECIALISTS, INC., a
California corporation and BRADSHAW VETERINARY CLINIC, INC., a California
corporation shall, jointly and severally, individually and collectively, be the
“Borrower” along with Lead Borrower and Non-Lead Borrowers under the Credit
Agreement and the other Loan Documents.  New Borrowers agree to and do hereby
join in and assume, as of the original closing date of the Loan, all of the
obligations of Borrower now or hereafter incurred under the Credit Agreement and
the other Loan Documents, including, without limitation, payment of all sums due
and payable as and when due under the Credit Agreement and the other Loan
Documents.  New Borrowers agree that New Borrowers are and shall be bound by,
and hereby assumes, all representations, warranties, covenants, terms,
conditions, duties and waivers applicable to a Borrower under the Credit
Agreement and the other Loan Documents.  New Borrowers, Lead Borrower and
Non-Lead Borrowers hereby acknowledge and agree that New Borrowers, Lead
Borrower and Non-Lead Borrowers are and shall be at all times jointly and
severally liable for all of the obligations of Borrower as though each of the
Loan Documents had been made, executed and delivered by New Borrowers as of the
original Closing Date of the Loan.  New Borrowers acknowledge and agree that any
reference to Borrower in the Loan Documents shall be deemed to also refer to New
Borrowers.
 
2.             Interest Rate.  Notwithstanding anything to the contrary stated
in Section 1.2(a) of the Credit Agreement from and after February 1, 2008,
interest shall accrue on the outstanding balance of the Loan at a fixed rate of
fifteen percent (15%) per annum which shall be paid or added to the principal
balance of the Loan as follows:  (a) accrued interest in the amount of twelve
percent (12.0%) per annum shall be payable monthly in arrears on the first day
of each month (the “Payment Date”), and (b) accrued interest in the amount of
three percent (3%) per annum shall be added to the principal balance of the Loan
on each Payment Date of each month beginning on March 1, 2008 and during the
remaining term of the Loan.
 
3.             Restructuring Fee.  Concurrently with the execution of this
Amendment, Borrower shall pay to Fifth Street Capital LLC a restructuring fee in
the amount of One Hundred Twenty Thousand Dollars ($120,000.00) (the
“Restructuring Fee”) 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 Thousand Two Hundred Fifty Dollars
($2,250.00) to Fifth Street Capital LLC in addition to the regular monthly
Servicing Fee.  Beginning on March 1, 2008 and during the remaining term of the
Loan, the Servicing Fee shall be increased from Two Thousand Two Hundred Fifty
Dollars ($2,250.00) to Four Thousand Five Hundred Dollars ($4,500.00) per month.
 
-2-

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5.             Financial Covenants and Ratios.
 
a.      Borrower acknowledges that it is in default of the financial covenants
and ratios required under Section 4.3 and Exhibit 4.3 of the Credit Agreement
(collectively, the “Financial Covenants”) for the Fiscal Quarter ending on
December 31, 2007.  Notwithstanding the foregoing, Lender hereby waives (a)
Borrower’s default of the Financial Covenants for the Fiscal Quarter ending
December 31, 2007 and (b) the Financial Covenants for the Fiscal Quarter ending
March 31, 2008.  Except as otherwise provided herein, no other waiver of the
Financial Covenants under any Fiscal Quarter is hereby made or intended, and the
Financial Covenants remain in full force and effect.
 
b.      Exhibit 4.3 to the Credit Agreement is hereby deleted in its entirety
and replaced with Exhibit 4.3 attached to this Amendment.
 
c.      Notwithstanding anything to the contrary stated herein, Borrower shall
deliver to Lender the quarterly financial statement for the Fiscal Quarter
ending on December 31, 2007 at the same time Borrower provides such financial
statement to the SEC.
 
6.             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 Credit
Agreement or the other 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 Credit Agreement and the other 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.
 
7.             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 Credit Agreement, the Loan Documents, or the actions or
omissions of Lender in respect of the Loan, the Credit Agreement or the other
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.
 
-3-

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c.           Currently with the execution of this Amendment, Borrower shall
execute and deliver to Lender the post-closing letter attached hereto and
incorporated herein as Exhibit “A” (the “Post-Closing Letter”) and perform the
Post-Closing Obligations (as defined in the Post-Closing Letter) to the
satisfaction of Lender within the time frame set forth in the Post-Closing
Letter.
 
8.             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 Credit Agreement and the other 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 Credit Agreement and the other
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 Credit Agreement and the other 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 Credit Agreement and the
other 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 Credit Agreement and the other 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.
 
9.             Conditions Precedent.  Lender shall not be bound by this
Amendment unless and until Lender has received a fully executed original of this
Amendment and all other Loan Documents required by Lender in connection with
this Amendment.
 
10.           Ratification of Loan Documents and Collateral.  Borrower hereby
ratifies and affirms the Credit Agreement and each of the Loan Documents, as
amended hereby, and agrees to perform each obligation set forth in the Credit
Agreement and 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 interests in property
granted as security in the Credit Agreement and the other Loan Documents,
including the Collateral, shall remain as security for the Loan and the
obligations of Borrower under the Credit Agreement and the other Loan Documents.
 
-4-

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11.           Miscellaneous.
 
a.           The Credit Agreement and the other 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 Credit
Agreement or the other 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 and the other Loan Documents (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]
 

 

-5-

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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: /s/ George
Villasana                                                            
                                                                                                                       
Name: George Villasana                                                       
                                        Title: Secretary
 

 
                                        ADLER VETERINARY GROUP, INC.,
                                        a California corporation

 
 
                                                                                                                       
By: /s/ George
Villasana                                                            
                                                                                                                       
Name: George Villasana                                                       
                                        Title: Secretary
 

 
                                        ANIMAL CLINIC OF YUCCA VALLEY, INC.,
                                        a California corporation
 
 
                                                                                                                       
By: /s/ George
Villasana                                                            
                                                                                                                       
Name: George Villasana                                                       
                                        Title: Secretary
 

 
                                        ANIMAL EMERGENCY CLINIC OF THE DESERT,
INC.,
                                        a California corporation
 
 
                                                                                                                       
By: /s/ George
Villasana                                                            
                                                                                                                       
Name: George Villasana                                                       
                                        Title: Secretary
 

 
                                        [Signature Page Follows]
 

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                                        [Signature Page Continued]
 
                                        ANIMAL MEDICAL HOSPITAL, INC.,
                                        a California corporation
 
 
                                                                                                                       
By: /s/ George
Villasana                                                            
                                                                                                                       
Name: George Villasana                                                       
                                        Title: Secretary
 
 
                                        BONITA PET HOSPITAL, INC.,
                                        a California corporation
 
 
                                                                                                                       
By: /s/ George
Villasana                                                            
                                                                                                                       
Name: George Villasana                                                       
                                        Title: Secretary

 
                                        BRENTWOOD PET CLINIC, INC.,
                                        a California corporation
 
 
                                                                                                                       
By: /s/ George
Villasana                                                            
                                                                                                                       
Name: George Villasana                                                       
                                        Title: Secretary
 
 
                                        ELDORADO ANIMAL HOSPITAL, INC.,
                                        a California corporation
 
 
                                                                                                                       
By: /s/ George
Villasana                                                            
                                                                                                                       
Name: George Villasana                                                       
                                        Title: Secretary
 
 
                                        JERAULD L. WOODRING, INC.,
                                        a California corporation
 
 
                                                                                                                       
By: /s/ George
Villasana                                                            
                                                                                                                       
Name: George Villasana                                                       
                                        Title: Secretary
 
 

                                        [Signature Page Follows]
 
Signature Page to First Amendment Credit
Agreement

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                                        [Signature Page Continued]
 
                                        LAWRENCE PET HOSPITAL, INC.,
                                        a California corporation
 
 
                                                                                                                       
By: /s/ George
Villasana                                                            
                                                                                                                       
Name: George Villasana                                                       
                                        Title: Secretary
 
 
 
                                        MCCONNELL & FENTON CORPORATION,
                                        a California corporation
 
 
                                                                                                                       
By: /s/ George
Villasana                                                            
                                                                                                                       
Name: George Villasana                                                       
                                        Title: Secretary
 

 
                                        RAINBOW HAWK, INC.,
                                        a California corporation
 
 
                                                                                                                       
By: /s/ George
Villasana                                                            
                                                                                                                       
Name: George Villasana                                                       
                                        Title: Secretary
 
 
 
                                        SOUTH BAY VETERINARY SPECIALISTS, INC.,
                                        a California corporation
 
 
                                                                                                                       
By: /s/ George
Villasana                                                            
                                                                                                                       
Name: George Villasana                                                       
                                        Title: Secretary
 
 

                                        SAN CARLOS VETERINARY HOSPITAL, INC.,
                                        a California corporation
 
 
                                                                                                                       
By: /s/ George
Villasana                                                            
                                                                                                                       
Name: George Villasana                                                       
                                        Title: Secretary

 
 
                                        [Signature Page Follows]
 
Signature Page to First Amendment Credit
Agreement

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                                        [Signature Page Continued]
 
                                        SOUTH COUNTY EMERGENCY ANIMAL CLINIC,
INC.,
                                        a California corporation
 
 
                                                                                                                       
By: /s/ George
Villasana                                                            
                                                                                                                       
Name: George Villasana                                                       
                                        Title: Secretary
 
 
 
                                        STANFORD PET CLINIC, INC.,
                                        a California corporation
 
 
                                                                                                                       
By: /s/ George
Villasana                                                            
                                                                                                                       
Name: George Villasana                                                       
                                        Title: Secretary
 

 
                                        TARVIN & LENEHAN, INC.,
                                        a California corporation
 
 
                                                                                                                       
By: /s/ George
Villasana                                                            
                                                                                                                       
Name: George Villasana                                                       
                                        Title: Secretary
 
 
 
                                        VETS & PETS, INCORPORATED,
                                        a California corporation
 
 
                                                                                                                       
By: /s/ George
Villasana                                                            
                                                                                                                       
Name: George Villasana                                                       
                                        Title: Secretary
 
 
 
                                        YUBA-SUTTER VETERINARY HOSPITAL, INC.,
                                        a California corporation
 
 
                                                                                                                       
By: /s/ George
Villasana                                                            
                                                                                                                       
Name: George Villasana                                                       
                                        Title: Secretary
 

 
                                        [Signature Page Follows]
 
Signature Page to First Amendment Credit
Agreement

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                                        [Signature Page Continued]
 
 
 
                                        CALIFORNIA ANIMAL HOSPITAL VETERINARY
                                        SPECIALTY GROUP, INC., a California
corporation
 
 
                                                                                                                       
By: /s/ George
Villasana                                                            
                                                                                                                       
Name: George Villasana                                                       
                                        Title: Secretary
 

 
                                        VETSURG, INC., a California corporation
 
 
                                                                                                                       
By: /s/ George
Villasana                                                            
                                                                                                                       
Name: George Villasana                                                       
                                        Title: Secretary
 
 
                                        BAY AREA VETERINARY SPECIALISTS, INC.,
                                        a California corporation
 
 
                                                                                                                       
By: /s/ George
Villasana                                                            
                                                                                                                       
Name: George Villasana                                                       
                                        Title: Secretary
 
 
                                        BRADSHAW VETERINARY CLINIC, INC.,
                                        a California corporation
 
 
                                                                                                                       
By: /s/ George
Villasana                                                            
                                                                                                                       
Name: George Villasana                                                       
                                        Title: Secretary
 

 
 
 
 
 
                                        [Signature Page Follows]
 
Signature Page to First Amendment Credit
Agreement

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                                        [Signature Page Continued]
 
                                        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: /s/ Bernard D. Berman                                        
                                                                                                                                       
Name: Bernard D. Berman
                                                        Title:   Executive Vice
President and
                                                                    Secretary
 
 
Signature Page to First Amendment Credit
Agreement

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EXHIBIT 4.3
 
FINANCIAL COVENANTS AND RATIOS
 
Borrower shall continuously maintain the following:
 
1.           Free Cash Flow.  Borrower shall have Free Cash Flow to be tested as
of the end of each Fiscal Quarter commencing with the Fiscal Quarter ending on
June 30, 2008 on a trailing twelve-month basis of greater than $500,000.00;
provided, however, for the Fiscal Quarters ending on June 30, 2008 and September
30, 2008, Borrower’s results shall be annualized by Lender for the period
commencing on January 1, 2008 through such testing date.
 
2.           Fixed Charge Coverage Ratio.  Borrower shall have a Fixed Charge
Coverage Ratio to be tested as of the end of each Fiscal Quarter commencing with
the Fiscal Quarter ending on June 30, 2008 on a trailing twelve-month basis, of
not less than 1.2 to 1.0; provided, however, for the Fiscal Quarters ending on
June 30, 2008 and September 30, 2008, Borrower’s results shall be annualized by
Lender for the period commencing on January 1, 2008 through such testing date.
 
3.           Leverage Ratio.  Borrower shall have a Leverage Ratio to be tested
as of the end of each Fiscal Quarter commencing with the Fiscal Quarter ending
on June 30, 2008 on a trailing twelve-month basis of not greater than 5.0 to
1.0; provided, however, for the Fiscal Quarters ending on June 30, 2008 and
September 30, 2008, Borrower’s results shall be annualized by Lender for the
period commencing on January 1, 2008 through such testing date.

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EXHIBIT “A”

POST-CLOSING LETTER

[See Attached]

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February 19, 2008

FIFTH STREET MEZZANINE PARTNERS II, L.P.
White Plains Plaza
445 Hamilton Ave., Suite 1206
White Plains, NY  10601

 
Re:           $12,000,000 Loan by FIFTH STREET MEZZANINE PARTNERS II, L.P.
(“Lender”) to XLNT VETERINARY CARE, INC., a Delaware corporation and all other
borrowers named in the Credit Agreement (jointly and severally, individually and
collectively, “Borrower”)

Ladies and Gentlemen:

This letter shall memorialize the understanding with respect to the performance
of certain post-closing obligations as more particularly set forth in Schedule
A, attached hereto (collectively and individually, “Post-Closing Obligations”)
in consideration for the making of the above-referenced loan (the “Loan”)
pursuant to the terms of a Credit Agreement dated as of March 29, 2007, as
amended by that certain First Amendment to Credit Agreement and Loan Documents
dated as of the even date hereof by and between Borrower and Lender
(collectively, the “Credit Agreement”).  This post-closing letter shall be
considered a Loan Document under the Credit Agreement and a default under this
letter shall constitute a default under the Credit Agreement, the Loan Documents
and the Loan.

Any failure of Borrower to deliver any items or perform any Post-Closing
Obligations as set forth on Schedule A within the time frame set forth in
Schedule A shall be an immediate Event of Default under the Credit Agreement for
which there shall be no notice, grace or cure period.  

All conditions precedent, representations, covenants and Events of Default
contained in the Credit Agreement and the other Loan Documents shall be deemed
modified only to the extent necessary to effect the rights and obligations set
forth in this post-closing letter (and to permit the taking of the actions
described herein within the time periods required above, rather than as
elsewhere provided in the Loan Documents), provided that to the extent any
representation and warranty would not be true because the foregoing actions were
not taken on the Closing Date, the respective representation and warranty shall
be required to be true and correct in all material respects at the time the
respective action is taken (or was required to be taken) in accordance with
this post-closing letter.

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Any capitalized term not defined herein shall have the meaning ascribed to such
term in the Credit Agreement.
 
                                        Very truly yours,
 
 
                                        XLNT VETERINARY CARE, INC.,
                                        a Delaware corporation
 
 
 
                                                                                                                       
By: /s/ George
Villasana                                                            
                                                                                                                       
Name: George Villasana                                                       
                                        Title: Secretary
 
 
                                        ADLER VETERINARY GROUP, INC.,
                                        a California corporation
 
 
 
                                                                                                                       
By: /s/ George
Villasana                                                            
                                                                                                                       
Name: George Villasana                                                       
                                        Title: Secretary
 

 
                                        ANIMAL CLINIC OF YUCCA VALLEY, INC.,
                                        a California corporation
 
 
 
                                                                                                                       
By: /s/ George
Villasana                                                            
                                                                                                                       
Name: George Villasana                                                       
                                        Title: Secretary
 
 
 
 
                                        ANIMAL EMERGENCY CLINIC OF THE DESERT,
INC.,
                                        a California corporation
 
 
 
                                                                                                                       
By: /s/ George
Villasana                                                            
                                                                                                                       
Name: George Villasana                                                       
                                        Title: Secretary
 
 
 
                                        [Signature Page Follows]
 
Signature Page to
Post Closing Letter

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                                        [Signature Page Continued]
 
                                        ANIMAL MEDICAL HOSPITAL, INC.,
                                        a California corporation
 
 
                                                                                                                       
By: /s/ George
Villasana                                                            
                                                                                                                       
Name: George Villasana                                                       
                                        Title: Secretary
 
 
 
                                        BONITA PET HOSPITAL, INC.,
                                        a California corporation
 
 
                                                                                                                       
By: /s/ George
Villasana                                                            
                                                                                                                       
Name: George Villasana                                                       
                                        Title: Secretary
 
 
                                        BRENTWOOD PET CLINIC, INC.,
                                        a California corporation
 
 
                                                                                                                       
By: /s/ George
Villasana                                                            
                                                                                                                       
Name: George Villasana                                                       
                                        Title: Secretary
 
 
                                        ELDORADO ANIMAL HOSPITAL, INC.,
                                        a California corporation
 
 
                                                                                                                       
By: /s/ George
Villasana                                                            
                                                                                                                       
Name: George Villasana                                                       
                                        Title: Secretary
 
 
 
                                        JERAULD L. WOODRING, INC.,
                                        a California corporation
 
 
                                                                                                                       
By: /s/ George
Villasana                                                            
                                                                                                                       
Name: George Villasana                                                       
                                        Title: Secretary
 
 
                                        [Signature Page Follows]
 
Signature Page to
Post Closing Letter

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                                        LAWRENCE PET HOSPITAL, INC.,
                                        a California corporation
 
 
                                                                                                                       
By: /s/ George
Villasana                                                            
                                                                                                                       
Name: George Villasana                                                       
                                        Title: Secretary
 

 
                                        MCCONNELL & FENTON CORPORATION,
                                        a California corporation
 
 
                                                                                                                       
By: /s/ George
Villasana                                                            
                                                                                                                       
Name: George Villasana                                                       
                                        Title: Secretary
 

 
                                        RAINBOW HAWK, INC.,
                                        a California corporation
 
 
                                                                                                                       
By: /s/ George
Villasana                                                            
                                                                                                                       
Name: George Villasana                                                       
                                        Title: Secretary
 
 
                                        SOUTH BAY VETERINARY SPECIALISTS, INC.,
                                        a California corporation
 
 
                                                                                                                       
By: /s/ George
Villasana                                                            
                                                                                                                       
Name: George Villasana                                                       
                                        Title: Secretary
 

 
                                        SAN CARLOS VETERINARY HOSPITAL, INC.,
                                        a California corporation
 
 
                                                                                                                       
By: /s/ George
Villasana                                                            
                                                                                                                       
Name: George Villasana                                                       
                                        Title: Secretary
 
 
 
 
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Post Closing Letter

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                                        SOUTH COUNTY EMERGENCY ANIMAL CLINIC,
INC.,
                                        a California corporation
 
 
                                                                                                                       
By: /s/ George
Villasana                                                            
                                                                                                                       
Name: George Villasana                                                       
                                        Title: Secretary

 
 
                                        STANFORD PET CLINIC, INC.,
                                        a California corporation
 
 
                                                                                                                       
By: /s/ George
Villasana                                                            
                                                                                                                       
Name: George Villasana                                                       
                                        Title: Secretary
 
                                        
                                        TARVIN & LENEHAN, INC.,
                                        a California corporation
 
 
                                                                                                                       
By: /s/ George
Villasana                                                            
                                                                                                                       
Name: George Villasana                                                       
                                        Title: Secretary
 
                                        
                                        VETS & PETS, INCORPORATED,
                                        a California corporation
 
 
                                                                                                                       
By: /s/ George
Villasana                                                            
                                                                                                                       
Name: George Villasana                                                       
                                        Title: Secretary
 
 
 
                                        YUBA-SUTTER VETERINARY HOSPITAL, INC.,
                                        a California corporation
 
 
                                                                                                                       
By: /s/ George
Villasana                                                            
                                                                                                                       
Name: George Villasana                                                       
                                        Title: Secretary

 
 
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                                        CALIFORNIA ANIMAL HOSPITAL
                                        VETERINARY SPECIALTY GROUP, INC.,
                                        a California corporation
 
 
                                                                                                                       
By: /s/ George
Villasana                                                            
                                                                                                                       
Name: George Villasana                                                       
                                        Title: Secretary
 
                                        
                                        VETSURG, INC., a California corporation

 
                                                                                                                       
By: /s/ George
Villasana                                                            
                                                                                                                       
Name: George Villasana                                                       
                                        Title: Secretary
 
 
 
                                        BAY AREA VETERINARY SPECIALISTS, INC.,
                                        a California corporation
 
 
                                                                                                                       
By: /s/ George
Villasana                                                            
                                                                                                                       
Name: George Villasana                                                       
                                        Title: Secretary
 
 
 
                                        BRADSHAW VETERINARY CLINIC, INC.,
                                        a California corporation
 
 
                                                                                                                       
By: /s/ George
Villasana                                                            
                                                                                                                       
Name: George Villasana                                                       
                                        Title: Secretary
 

 
 
 
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                                        AGREED AND ACKNOWLEDGED:
 
                                        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: /s/ Bernard D. Berman                                        
                                                                                                                                       
Name: Bernard D. Berman
                                                        Title:   Executive Vice
President and
                                                                    Secretary
 

 
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Post Closing Letter

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Schedule A
 
The Post-Closing Obligations are as follows:
 
1.           On or before March 5, 2008, Borrower shall pay all outstanding
amounts and file all applicable returns with the Franchise Tax Board in
connection with Rainbow Hawk, Inc., which was suspended on November 1, 2007 by
the Franchise Tax Board.  On or before April 30, 2008, Borrower shall provide
evidence to Lender, acceptable to Lender in its reasonable discretion, that
Rainbow Hawk, Inc. has been restored to good standing.
 
2.           On or before March 5, 2008, Borrower shall pay all outstanding
amounts and file all applicable returns with the Franchise Tax Board in
connection with Vetsurg, Inc. in order to remove that certain Federal Tax Lien
Los Angeles County, CA Doc # 2007-1769089 dated July 26, 2007 (the “Federal Tax
Lien”).  On or before April 30, 2008, Borrower shall provide evidence to Lender,
acceptable to Lender in its reasonable discretion, that the Federal Tax Lien has
been released and terminated and Vetsurg, Inc. has been restored to good
standing.
 
3.           On or before March 5, 2008, Borrower shall provide Lender with a
Secretary’s Certificate of incumbency and authority, attaching organizational
documents (Articles and Bylaws) and resolutions of Lead Borrower, New Borrowers
and Pet DRx Corporation, a Delaware corporation.
 
4.           On or before March 5, 2008, Borrower shall provide Lender with the
Perfection Certificates of New Borrowers.
 
5.           On or before March 5, 2008, Borrower shall provide Lender with an
updated Litigation Disclosure Exhibit to the Credit Agreement.
 
6.           On or before March 5, 2008, Borrower shall provide Lender with an
updated Lien Disclosure Exhibit to the Credit Agreement.