Exhibit 10.1

FIRST AMENDMENT TO AMENDED AND RESTATED

CREDIT AGREEMENT AND JOINDER

THIS FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT AND JOINDER (this
“Amendment”), dated as of August 9, 2018, is entered into by and among PETIQ,
LLC, an Idaho limited liability company (“PetIQ”), the other Credit Parties
signatory hereto (collectively with PETIQ, the “Borrowers”), the LENDERS
signatory hereto (including KEYBANK NATIONAL ASSOCIATION, which will become a
Lender and the Syndication Agent pursuant to this Amendment), and EAST WEST
BANK, a California banking corporation, as Administrative Agent for the Lenders
(in such capacity, “Administrative Agent”),  with reference to the following
facts:

RECITALS

A.        The Borrowers, the Lenders, and Administrative Agent are parties to an
Amended and Restated Credit Agreement dated as of January 17, 2018 (the “Credit
Agreement”) and certain other related Loan Documents, pursuant to which the
Lenders provide the Borrowers a revolving credit facility with sub-facilities
for letters of credit and swing line loans).

B.         The parties hereto desire to amend the Credit Agreement: (i) to
increase the aggregate Revolving Credit Commitments from $50,000,000 to
$75,000,000; (ii) to add KeyBank National Association “KeyBank”), by joinder, as
a Lender under the Credit Agreement, with a Revolving Credit Commitment of
$25,000,000; (iii) to permit the Borrowers to grant a subordinate purchase-money
security interest to Merial LLC (“Merial”); and (iv) to make various technical
corrections and other modifications, all as set forth below.

NOW, THEREFORE, the parties hereby agree as follows:

1.         Defined Terms.  All initially capitalized terms used in this
Amendment (including in the recitals hereto) without definition shall have the
respective meanings set forth for such terms in the Credit Agreement.

2.         Addition of Definitions.  Section 1.01 of the Credit Agreement is
hereby amended and supplemented by adding therein new definitions of “First
Amendment Effective Date” and “Refinanced Debt” as follows:

“First Amendment Effective Date” means the effective date of the First Amendment
to Amended and Restated Credit Agreement by and among the Borrowers, the Lenders
(including KeyBank National Association as a new Lender and the Syndication
Agent, by joinder), Administrative Agent, L/C Issuer and Swingline Lender.

“Refinanced Debt” means Indebtedness that is the subject of a Permitted
Refinancing.

3.         Deletion of Cash Management Obligations Sublimit.  Section 1.01 of
the Credit Agreement is hereby further amended by amending and restating the
definition of “Cash Management Obligations” so that it reads in full as follows
(changes to the text are indicated with

1

--------------------------------------------------------------------------------

 

a  strikethrough or in bold, italicized and underscored type): 

“Cash Management Obligations” means, as of any date of determination, the
aggregate outstanding obligations of Borrowers to Cash Management Banks pursuant
to Cash Management Agreements, provided that Cash Management Obligations (i) may
not exceed $5,000,000 at any time and (ii) with respect to the obligations
pursuant to Cash Management Agreements described in clause (ii) of the
definition thereof, such Cash Management Obligations shall not exceed in the
aggregate $500,000 out of the $5,000,000 aggregate cap amount at any time; for
the avoidance of doubt, the $500,000 sublimit provided herein is a part of, and
not in addition to, the overall $5,000,000 aggregate limit.

4.         Amendment of Concentration Cap for Wal-Mart and Sam’s  Club.  Section
1.01 of the Credit Agreement is hereby further amended by amending and restating
subsection (c)(i) of the definition of “Eligible Receivables” so that such
subsection reads in full as follows: 

“(i)          40% measured on a combined basis for Wal-Mart and Sam’s Club,
notwithstanding their Affiliate relationship, provided, that in the event of new
product introductions, if approved by the Administrative Agent in writing in its
sole discretion and in any event for a period of not more than 60 days, such
allowable combined percentage shall be 70%; and”

5.         Amendment of Definition of Eurodollar Rate.  Section 1.01 of the
Credit Agreement is further amended by amending and restating the definition of
Eurodollar Rate so that it reads in full as follows (changes to the text are
indicated with a strikethrough or in bold, italicized and underscored type): 

“Eurodollar Rate” means, for any Interest Period with respect to any Eurodollar
Rate Loan, the rate per annum determined by the Administrative Agent to be the
rate for deposits in Dollars for a period approximately equal to such Interest
Period and in an amount approximately equal to the principal amount of such
Eurodollar Rate Loan which appears on the Bloomberg Screen TMM Page under the
heading “LIBOR Fix” as of 11:00 a.m. (London time) on the second Business Day
prior to the first day of such Interest Period (adjusted for any and all
assessments, surcharges and reserve requirements); provided, however, if the
Eurodollar Rate determined as provided above would be less than zero, then the
Eurodollar Rate shall be deemed to be zero for the purposes of this
Agreement.  If such interest rate shall cease to be available from the
above-described Bloomberg report, the Eurodollar Rate shall be determined from
such financial reporting service as the Administrative Agent shall reasonably
determine and use with respect to its other loan facilities for which interest
is determined based on the London interbank offered rate.

6.         Amendment of Definition of Required Lenders.  Section 1.01 of the
Credit Agreement is hereby further amended by amending and restating the
definition of “Required Lenders” so that it reads in full as follows (changes to
the text are indicated with a strikethrough  or in bold, italicized and
underscored type): 

“Required Lenders” means, as of any date of determination, Lenders holding more
than 50% of the sum of the aggregate Revolving Credit Commitments, collectively;
provided that: (a) if at any time there are only two (2) Lenders, Required
Lenders shall mean both Lenders; (b) if

2

--------------------------------------------------------------------------------

 

at any time there are more than two (2) Lenders, Required Lenders shall mean at
least two (2) unaffiliated Lenders; and (c) the Revolving Credit Commitment of
any Defaulting Lender shall be excluded for purposes of making a determination
of Required Lenders

7.         Increase in Revolving Credit Commitments. 

(a)        Amendment of Definition of Revolving Credit Facility.  Section 1.01
is hereby further amended by amending and restating the definition of Revolving
Credit Facility so that it reads in full as follows: 

“Revolving Credit Facility” means, at any time, the aggregate amount of the
Revolving Credit Commitments at such time.  As of the First Amendment Effective
Date, the Revolving Credit Facility is $75,000,000.

(b)        Amendment of Schedule of Commitments.  Schedule 2.01 to the Credit
Agreement is hereby amended and restated to read in full as set forth on
Schedule 2.01 to this Amendment.

8.         Consent to Incurrence of Purchase-Money Indebtedness to Merial. 
Section 7.02 of the Credit Agreement is hereby amended by (i) deleting the word
“and” from the end of subsection (n), (ii) re-lettering existing subsection (o)
to become a new subsection (p), and (iii) adding therein a replacement
subsection (o) as follows:

“(o)       Indebtedness of the Credit Parties to Merial LLC (‘Merial’) secured
by purchase-money security interests permitted by Section 7.03(a)xii, so long as
no Event of Default has occurred and is continuing at the time such Indebtedness
is incurred or after giving to the incurrence of such Indebtedness.”

9.         Consent to Grant of Purchase-Money Security Interest to Merial. 
Section 7.03(a) of the Credit Agreement is hereby amended and supplemented by
(i) deleting the word “and” from the end of clause x. thereof, (ii) adding a
semicolon followed by the word “and” after the word “Liens” in clause xi.
thereof; (iii) renumbering current clause xii. thereof to be new numbered clause
xiii.; and (iv) adding a replacement clause xii. therein as follows:

“xii.     Liens in favor of Merial granted on or after the First Amendment
Effective Date to secure permitted purchase-money Indebtedness of any Credit
Party to Merial,  provided that such Liens (a) attach only to the assets
acquired with such purchase-money Indebtedness and the proceeds thereof and (b)
are subordinated to the Lien of Administrative Agent pursuant to a written
subordination agreement between Administrative Agent and Merial in form and
substance satisfactory to Administrative Agent in its Permitted Discretion; and”

10.       Amendment of Fixed Charge Coverage Ratio Covenant.  Section 7.13 of
the Credit Agreement is hereby amended and restated to read in full as follows
(changes to the text are indicated with a strikethrough or in bold, italicized
and underscored type):

“7.13    Fixed Charge Coverage Ratio.  The Credit Parties shall not permit the

3

--------------------------------------------------------------------------------

 

Consolidated Fixed Charge Coverage Ratio, determined as of the last day of any
Fiscal Quarter, to be less than 1.10 1.15 to 1.00.”

11.       Amendment of Notices Provision.  Section 6.05 of the Credit Agreement
is hereby amended by amending and restating the last paragraph thereof so that
it reads in full as follows (changes to the text are indicated with a
strikethrough or in bold, italicized and underscored type):

“Delivery by the Credit Parties to the Administrative Agent of any and all
notices required to be delivered to the Lenders as herein required shall be
deemed made upon receipt of such notices by the Administrative Agent (and
Administrative Agent agrees to promptly forward the same to the Lenders).”

12.       Amendment of “Waterfall” Provision.  Section 8.03 of the Credit
Agreement is hereby amended and restated to read in full as follows (changes to
the text are indicated with a strikethrough or in bold, italicized and
underscored type):

“8.03    Application of Funds.   In the event that, following the occurrence and
during the continuance of any Event of Default, the Administrative Agent or any
Lender receives any monies in connection with the enforcement of any of the Loan
Documents, or otherwise with respect to the realization upon any of the
Collateral, the Administrative Agent may apply (and shall apply at (a) the
request of the Required Lenders or (b) following the exercise of remedies
pursuant to Section 8.02, including without limitation, pursuant to the proviso
thereof) such monies as follows (and each Lender shall comply with the
instructions of the Administrative Agent in the case of any such monies received
by such Lender):

i.          First, to payment of outstanding Pro Rata Protective Advances and
Out-of-Formula Advances ratably among the holders thereof in proportion to the
respective amounts described in this clause First and if the Revolving Credit
Lenders have declined to participate in Protective Advances pursuant to Section
2.17(a), to payment of outstanding Protective Advances not to exceed 10% of the
Borrowing Base as of the date of the making of such Protective Advances funded
by the Administrative Agent;  

ii.         Second, to payment of that portion of the Obligations owing to the
Administrative Agent constituting (a) indemnities and expenses due and payable
under this Agreement and the other Loan Documents (including reasonable and
documented fees, charges and disbursements of counsel to the Administrative
Agent), and (b) the fees due and payable under the Fee Letter;

iii.        Third, to (a) the payment of that portion of the Obligations
constituting (i) indemnities and expenses (including reasonable and documented
fees, charges and disbursements of counsel to the Lenders and amounts payable
under Article III) due and payable to the Lenders under this Agreement and the
other Loan Documents, (ii) accrued and unpaid interest and fees (including
Unused Facility Fees, Early Revolving Credit Facility Termination Fees and
Letter of Credit Fees) due and payable to the Lenders, (iii) unpaid principal of
the Revolving Credit Loans, the L/C Borrowings and the Swingline Loans, ratably
among the holders thereof, (iv) Secured Cash Management Obligations then owing
under

4

--------------------------------------------------------------------------------

 

Secured Cash Management Agreements, and (v) Secured Hedge Obligations then owing
under Secured Hedge Agreements, and (b) to the Administrative Agent for the
account of the L/C Issuer, to Cash Collateralize that portion of L/C Obligations
comprised of the aggregate undrawn amount of Letters of Credit to the extent not
otherwise Cash Collateralized by the Borrowers pursuant to Sections 2.03 and
2.21;

iv.        Fourth, if the Revolving Credit Lenders have declined to participate
in Protective Advances pursuant to Section 2.17, to payment of outstanding
Protective Advances funded by the Administrative Agent remaining outstanding
after the application of clause First above;

v.        Fifth, to the Administrative Agent for the account of the L/C Issuer,
to Cash Collateralize that portion of L/C Obligations comprised of the aggregate
undrawn amount of Letters of Credit to the extent not otherwise Cash
Collateralized by the Borrowers pursuant to Sections 2.03 and 2.21 the payment
in full of all other Obligations due and payable ratably among the holders
thereof; and;

vi.        SeventhSixth, the balance, if any, after all of the Obligations have
been indefeasible paid in full, to the Borrowers or as otherwise required by
Law.

vii.       Seventh, the balance, if any, after all of the Obligations have been
indefeasible paid in full, to the Borrowers or as otherwise required by Law.

All payments applied to the Loans pursuant to this Section 8.03 shall be applied
to the Loans owing to the Lenders in accordance with their respective Applicable
Percentages.”

13.       Amendment of Costs and Expenses Provision.  Section 10.04(a) of the
Credit Agreement is hereby amended and restated to read in full as follows
(changes to the text are indicated with a strikethrough or in bold, italicized
and underscored type):

“(a)      Costs and Expenses.   The Borrowers shall pay (i) all reasonable
documented out-of-pocket expenses incurred by the Administrative Agent and its
Affiliates (including the reasonable and documented fees, charges and
disbursements of one firm of outside counsel for such Persons, and one local or
special counsel to such Persons in any relevant jurisdiction), in connection
with the syndication of the credit facilities provided for herein, the
preparation, negotiation, execution, delivery and administration of this
Agreement and the other Loan Documents or any amendments, modifications or
waivers of the provisions hereof or thereof (whether or not the transactions
contemplated hereby or thereby shall be consummated), (ii) all reasonable
documented out-of-pocket expenses incurred by the L/C Issuer in connection with
the issuance, amendment, renewal or extension of any Letter of Credit or any
demand for payment thereunder and (iii) all reasonable and documented
out-of-pocket expenses incurred by the Administrative Agent or any Lender,
which, in the case of any Lender, other than the Administrative Agent and its
Affiliates, shall be limited to one firm of outside counsel for all such Lenders
(including the reasonable and documented fees, charges and disbursements of
counsel) (and, in the case of an actual unwaivable conflict of interest, one
additional counsel for all such similarly affected persons, one additional local
or special counsel for all such similarly affected persons in any relevant
jurisdiction, and one regulatory counsel for all such similarly affected

5

--------------------------------------------------------------------------------

 

persons), in connection with the enforcement or protection of its rights (A) in
connection with this Agreement and the other Loan Documents, including its
rights under this Section, or (B) in connection with the Loans (including
Swingline Loans) made or Letters of Credit issued hereunder, including all such
reasonable and documented out-of-pocket expenses incurred during any workout,
restructuring or negotiations in respect of such Loans or Letters of Credit.”

14.       Amendment of Indemnification by the Borrowers Provision.  Section
10.04(b) of the Credit Agreement is hereby amended and restated as follows
(changes to the text are indicated with a strikethrough or in bold, italicized
and underscored type):

“(b)      Indemnification by the Borrowers.   The Borrowers shall indemnify the
Administrative Agent (and any sub-agent thereof), each Lender and each Related
Party of any of the foregoing Persons (each such Person being called an
“Indemnitee”) against, and hold each Indemnitee harmless from, any and all
losses, claims, damages, liabilities and related expenses (including the
reasonable and documented fees, charges and disbursements of any outside counsel
for any Indemnitee which, in the case of the Lenders, other than the
Administrative Agent and its Affiliates, shall be limited to one firm of outside
counsel for all such Lenders (and, in the case of an actual unwaivable conflict
of interest, one additional counsel for all such similarly affected persons, one
additional local or special counsel for all such similarly affected persons in
any relevant jurisdiction, and one regulatory counsel for all such similarly
affected persons)), incurred by any Indemnitee or asserted against any
Indemnitee by any third party or by the Borrowers or any other Credit Party
arising out of, in connection with, or as a result of (i) the execution or
delivery of this Agreement, any other Loan Document or any agreement or
instrument contemplated hereby or thereby, the performance by the parties hereto
of their respective obligations hereunder or thereunder, the consummation of the
transactions contemplated hereby or thereby, or, in the case of the
Administrative Agent (and any sub-agent thereof) and each of its Related Parties
only, the administration of this Agreement and the other Loan Documents,
(ii) any Loan (including any Swingline Loan) or Letter of Credit or the use or
proposed use of the proceeds therefrom (including any refusal by the L/C Issuer
to honor a demand for payment under a Letter of Credit if the documents
presented in connection with such demand do not strictly comply with the terms
of such Letter of Credit), (iii) any actual or alleged presence or release of
Hazardous Materials on or from any property owned or operated by the Borrowers
or any other Credit Party, or any Environmental Liability related in any way to
the Borrowers or any other Credit Party, or (iv) any actual or prospective
claim, litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory, whether brought by a third
party or by the Borrowers or any other Credit Party, and regardless of whether
any such Indemnitee is a party thereto; provided that such indemnity shall not,
as to any Indemnitee, be available to the extent that such losses, claims,
damages, liabilities or related expenses (x) are determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted from
the gross negligence or willful misconduct of such Indemnitee or (y) result from
a claim brought by the Borrowers or any other Credit Parties against an
Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder or
under any other Loan Document, if the Borrowers or such other Credit Parties has
obtained a final and nonappealable judgment in its favor on such claim as
determined by a court of competent jurisdiction.  Without limiting the
provisions of Section 3.01(c), this Section 10.04(b) shall not apply with
respect to Taxes other than any Taxes that represent losses, claims, damages,
etc. arising from any non-Tax claim.”

6

--------------------------------------------------------------------------------

 

15.       Amendment of Form of Compliance Certificate.  Exhibit D to the Credit
Agreement is hereby amended and restated to read in full as set forth on Exhibit
D to this Amendment ((changes to the text of Exhibit D are indicated with a
strikethrough or in bold, italicized and underscored type).

16.       Release of Lien on “Lovibles” Trademark; Exclusion from Borrowing Base
of Inventory Bearing “Lovibles” Trademark.  Administrative Agent hereby releases
its Lien on any and all trademarks relating to the Borrowers’ so-called
“Lovibles” products, and Administrative Agent agrees to execute and deliver to
Borrower Representative all release forms necessary or reasonably desirable to
further the release of such Lien.  The Borrowers acknowledge and agree that
following the First Amendment Effective Date, no Inventory bearing, sold under a
license to use, or otherwise relating to the “Lovibles” trademark shall
constitute Eligible Inventory.

17.       Commitment of KeyBank.  Pursuant to the joinder provisions of Section
18 below, as of the First Amendment Effective Date, KeyBank shall be (a) a
Lender with a Commitment of $25,000,000 and (b) the Syndication
Agent.  KeyBank’s Applicable Percentage of the Revolving Credit Facility is set
forth on Schedule 2.01 to this Amendment.

18.       Joinder of KeyBank as a Lender and as Syndication Agent.  By its
execution of this Amendment, effective as of the First Amendment Effective Date,
KeyBank shall be a Lender for all purposes under the Credit Agreement and the
other Loan Documents and the Syndication Agent and shall be joined and shall
have bound itself to the Credit Agreement and to all other Loan Documents to
which Lenders are bound generally as of the effective date hereof.  KeyBank
hereby assumes all of the obligations of a Lender under the Credit Agreement and
the other Loan Documents and shall be entitled to all of the benefits of a
Lender under the Loan Documents.  In furtherance of this joinder agreement,
KeyBank hereby agrees to furnish the Administrative Agent a completed
Administrative Questionnaire, an Internal Revenue Service Form W-9, and any
other agreements, documents or instruments that Lenders are required or
reasonably requested by Administrative Agent or Borrower Representative to
deliver to Administrative Agent or to the Borrowers pursuant to the Credit
Agreement.

19.       Conditions Precedent.  The effectiveness of this Amendment shall be
subject to the satisfaction of each of the following conditions:

(a)        This Amendment.  Administrative Agent shall have received this
Amendment, duly executed by the Borrowers, the Lenders (including, without
limitation, KeyBank National Association), and Administrative Agent;

(b)        Officer’s Certificate.  Administrative Agent shall have received
certificates attaching resolutions of the respective boards of directors, boards
of managers or other applicable governing bodies of the Borrowers that authorize
the Borrowers’ incurrence of the additional indebtedness contemplated hereunder;
and

(c)        Fees.  Administrative Agent shall have received payment of the fees
set forth in a separate letter agreement between Administrative Agent and the
Borrowers dated as of the date hereof.

7

--------------------------------------------------------------------------------

 

20.       General Amendment Provisions.

A.        The Credit Agreement, as amended hereby, shall be and remain in full
force and effect in accordance with its terms, and Borrowers hereby ratify and
confirm the Credit Agreement in all respects.  Except as expressly set forth
herein, the execution, delivery, and performance of this Amendment shall not
operate as a waiver of, an amendment to, or a consent to a deviation from, any
right, power, or remedy of Administrative Agent or the Lender under the Credit
Agreement or any other Loan Document, as in effect prior to the date hereof.

B.         The Borrowers represent and warrant to Administrative Agent and the
Lenders that the representations and warranties contained in the Credit
Agreement are true and correct in all material respects as of the date of this
Amendment (except for representations and warranties that expressly relate to an
earlier date, which are true and correct in all material respects as of such
earlier date) and that no Event of Default has occurred and is continuing.

C.         This Amendment constitutes the entire agreement of the parties in
connection with the subject matter hereof and cannot be changed or terminated
orally.  All prior agreements, understandings, representations, warranties and
negotiations regarding the subject matter hereof, if any, are merged into this
Amendment.

D.        This Amendment may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one instrument. In the event that any signature is delivered by facsimile
transmission or by e-mail delivery of a “.pdf” format data file, such signature
shall create a valid and binding obligation of the party executing this
Amendment (or on whose behalf such signature is executed) with the same force
and effect as if such facsimile or “.pdf” signature page were an original
hereof.

E.         This Amendment shall be governed by, and construed and enforced in
accordance with, the internal laws (as opposed to the conflicts of law
principles) of the State of New York.

[Remainder of page intentionally left blank; signature pages follow]

 

 

 

8

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the undersigned have executed this Amendment by their
respective duly authorized officers as of the date first above written.

 

The Borrowers:

 

 

 

 

 

PETIQ, LLC,

 

an Idaho limited liability company

 

 

 

By

/s/ Cord Christensen

 

Name:

Cord Christensen

 

Title:

Chief Executive Officer

 

 

 

 

 

 

 

TRUE SCIENCE HOLDINGS, LLC,

 

a Florida limited liability company

 

 

 

By

/s/ Cord Christensen

 

Name:

Cord Christensen

 

Title:

Manager

 

 

 

 

 

 

 

TRURX LLC,

 

an Idaho limited liability company

 

 

 

By

/s/ Cord Christensen

 

Name:

Cord Christensen

 

Title:

Manager

 

 

 

 

 

 

 

TRU PRODIGY, LLC,

 

a Texas limited liability company

 

 

 

By

/s/ Cord Christensen

 

Name:

Cord Christensen

 

Title:

Manager

 

First Amendment to Amended and Restated Credit Agreement and Joinder

--------------------------------------------------------------------------------

 

 

COMMUNITY VETERINARY CLINICS LLC,

 

a Delaware limited liability company

 

 

 

 

By

/s/ Nathan Smith

 

Name:

Nathan Smith

 

Title:

Manager

 

 

 

 

 

 

 

PET SERVICES OPERATING, LLC,

 

a Delaware limited liability company

 

 

 

 

By

/s/ Nathan Smith

 

Name:

Nathan Smith

 

Title:

Manager

 

 

 

 

 

 

 

PAWPLUS MANAGEMENT, LLC,

 

a  Delaware limited liability company

 

 

 

 

By

/s/ Nathan Smith

 

Name:

Nathan Smith

 

Title:

Manager

 

 

 

 

 

 

 

VIP PETCARE, LLC,

 

a Delaware limited liability company

 

 

 

 

By

/s/ Nathan Smith

 

Name:

Nathan Smith

 

Title:

Manager

 

 

 

 

 

 

 

COMMUNITY CLINICS, INC.,

 

a California corporation

 

 

 

 

By

/s/ Nathan Smith

 

Name:

Nathan Smith

 

Title:

Director

 

First Amendment to Amended and Restated Credit Agreement and Joinder

--------------------------------------------------------------------------------

 

 

 

The Agent, L/C Issuer and Swingline Lender:

 

 

 

EAST WEST BANK,

 

as Administrative Agent, LC/Issuer and

 

Swingline Lender

 

 

 

 

 

 

By:

/s/ David A. Lehner

 

 

David A. Lehner

 

 

Senior Vice President

 

First Amendment to Amended and Restated Credit Agreement and Joinder

--------------------------------------------------------------------------------

 

 

The Syndication Agent:

 

 

 

KEYBANK NATIONAL ASSOCIATION,

 

as Syndication Agent

 

 

 

 

 

 

By:

/s/ Craig A. Hanselman

 

Name:

Craig A. Hanselman

 

Title:

Vice President

 

First Amendment to Amended and Restated Credit Agreement and Joinder

--------------------------------------------------------------------------------

 

 

 

The Lenders:

 

 

 

EAST WEST BANK,

 

as a Lender

 

 

 

 

By:

/s/ David A. Lehner

 

 

David A. Lehner

 

 

Senior Vice President

First Amendment to Amended and Restated Credit Agreement and Joinder

--------------------------------------------------------------------------------

 

 

 

COMERICA BANK,

 

as a Lender

 

 

 

 

By:

/s/ Brian Dobbs

 

Name:

Brian Dobbs

 

Title:

Vice President

First Amendment to Amended and Restated Credit Agreement and Joinder

--------------------------------------------------------------------------------

 

 

KEYBANK NATIONAL ASSOCIATION,

 

as a Lender

 

 

 

 

By:

/s/ Craig A. Hanselman

 

Name:

Craig A. Hanselman

 

Title:

Vice President

 

 

First Amendment to Amended and Restated Credit Agreement and Joinder

--------------------------------------------------------------------------------

 

Schedule 2.01

 

Commitments and Applicable Percentages

Lender

Revolving Credit
Commitment

Applicable
Percentage

East West Bank

$40,000,000.00

53.3333334%

Comerica Bank

$10,000,000.00

13.3333333%

KeyBank National Association

$25,000,000.00

33.3333333%

Total

$75,000,000.00

100.0000000%

 

 

 

 

--------------------------------------------------------------------------------

 

EXHIBIT D

FORM OF COMPLIANCE CERTIFICATE

Financial Statement Date:  __________, ___

To:       East West Bank, as Administrative Agent

Ladies and Gentlemen:

Reference is made to that certain Amended and Restated Credit Agreement, dated
as of January 17, 2018 (as amended, amended and restated, extended, supplemented
or otherwise modified in writing from time to time, the “Credit Agreement”; the
terms used herein but not defined herein having the meaning as therein defined),
among (a) PETIQ, LLC, an Idaho limited liability company (“PetIQ”) as a Borrower
(as defined below) and as the Borrower Representative (as defined in the Credit
Agreement) for the other Borrowers party thereto; (b) TRUE SCIENCE HOLDINGS,
LLC, a Florida limited liability company, TRURX LLC, an Idaho limited liability
company, TRU PRODIGY, LLC, a Texas limited liability company, COMMUNITY CLINICS,
INC., a California corporation, PAWSPLUS MANAGEMENT, LLC, a Delaware limited
liability company, PET SERVICES OPERATING, LLC, a Delaware limited liability
company, VIP PETCARE, LLC, a California limited liability company, COMMUNITY
VETERINARY CLINICS, LLC, a Delaware limited liability company (together with
PetIQ, each individually, a “Borrower” and collectively, the “Borrowers”);
(c) the other Credit Parties party thereto; (d) the Lenders from time to time
party thereto; and (e) EAST WEST BANK, as Administrative Agent.

The undersigned hereby certifies as of the date hereof that he/she is the
Financial Officer of PetIQ and that as such he/she is authorized to execute and
deliver this Certificate to the Administrative Agent, and, upon request, to the
Lenders, on behalf of the Credit Parties, and in such capacity that:

[Use following paragraph 1 for Fiscal Year-end financial statements]

1.            The Credit Parties are delivering attached hereto as Exhibit A and
as required by Section 6.04(a) of the Credit Agreement for the Fiscal Year ended
as of the above date, the consolidated and consolidating balance sheet of Parent
and its Subsidiaries, as at the end of such Fiscal Year, and the related
consolidated and consolidating statements of income or operations, cash flows
and shareholders’ equity for such Fiscal Year, each setting forth in comparative
form the figures for the previous Fiscal Year and all such consolidated and
consolidating financial statements to be in reasonable detail, prepared in
accordance with GAAP, consistently applied, and such consolidated and
consolidating financial statements to be audited and accompanied by a report and
opinion prepared in accordance with generally accepted auditing standards by an
independent certified public accountant and certified without qualification and
without expression of uncertainty as to the ability of Parent, the Borrowers and
their Restricted Subsidiaries to continue as going concerns (other than a “going
concern” qualification resulting from an upcoming maturity under the Credit
Agreement or the Term Credit Agreement occurring within one year from the time
such opinion is delivered or a breach of Section 7.13 of the Credit
Agreement).  The information contained in such financial statements fairly
presents in all material respects the financial condition of Parent, the
Borrowers and their Restricted Subsidiaries on the

Exhibit D

1

--------------------------------------------------------------------------------

 

dates indicated therein. Attached hereto as Schedule 1,  Schedule 2, and
Schedule 3, respectively, are: (i) computations evidencing the Fixed Charge
Coverage Ratio, the First Lien Net Leverage Ratio and Excess Cash Flow, in each
case, for the Reference Period ended as of the last day of the Fiscal Year ended
as of the above date and specifying whether the Credit Parties have complied
with Section 7.13 and Section 7.15 of the Credit Agreement; (ii) a copy of the
management discussion and analysis prepared in connection with such financial
statements; and (iii) a copy of the accountants’ management letter (if any) for
the Fiscal Year ended as of the above date.

[Use following paragraph 1 for Fiscal Quarter-end financial statements]

1.         The Credit Parties are delivering attached hereto as Exhibit A and as
required by Section 6.04(b) of the Credit Agreement for the Fiscal Quarter ended
as of the above date, the consolidated and consolidating balance sheet of the
Parent, the Borrowers and their Restricted Subsidiaries, as at the end of such
Fiscal Quarter, and the related consolidated and consolidating statements of
income or operations, cash flows and shareholders’ equity for such Fiscal
Quarter and the portion of the Fiscal Year through the end of such Fiscal
Quarter, each setting forth in comparative form the figures for the previous
Fiscal Quarter of the previous Fiscal Year and the corresponding portion of the
previous Fiscal Year and all such consolidated and consolidating financial
statements to be in reasonable detail, prepared in accordance with GAAP
consistently applied. The information contained in such financial statements
fairly presents in all material respects the financial condition of Parent, the
Borrowers and their Restricted Subsidiaries on the dates indicated therein.
Attached hereto as Schedule 1 and Schedule 2, respectively, are:
(i) computations evidencing the Fixed Charge Coverage Ratio and the First Lien
Net Leverage Ratio for the Reference Period ended as of the last day of the
Fiscal Quarter ended as of the date above and specifying whether the Credit
Parties have complied with Section 7.13 and Section 7.15 of the Credit
Agreement; and (ii) a copy of the management discussion and analysis prepared in
connection with such financial statements (which may be subject to year-end
adjustments and the absence of footnotes).

[Use following paragraph 1 for Fiscal Month-end financial statements]

1.         The Credit Parties are delivering attached hereto as Exhibit A and as
required by Section 6.04(c) of the Credit Agreement after the end of each of the
first two Fiscal Months of the Fiscal Quarter ended as of the above date, the
unaudited monthly consolidating financial statements of Parent, the Borrowers
and their Restricted Subsidiaries for such Fiscal Month, including the
consolidating balance sheet of Parent, the Borrowers and their Restricted
Subsidiaries, as at the end of such Fiscal Month, the related consolidating
statements of income or operations and cash flows for such Fiscal Month and for
the portion of the Fiscal Year then ended, each setting forth in comparative
form the figures for the corresponding Fiscal Month of the previous Fiscal Year
and the corresponding portion of the previous Fiscal Year, each, prepared in
accordance with GAAP consistently applied at such date and for such period.  The
information contained in such financial statements fairly presents in all
material respects the financial condition of Parent, the Borrower and their
Restricted Subsidiaries on the dates indicated therein (subject to year-end
adjustments and the absence of footnotes).  Attached hereto as Schedule 1 and
Schedule 2, respectively, are: (i) computations evidencing the Fixed Charge
Coverage Ratio for the Reference Period ended as of the last day of the Fiscal
Month ended as of the date above and specifying whether the Credit Parties have
complied with Section 7.13 of the Credit Agreement;

Exhibit D

2

--------------------------------------------------------------------------------

 

and (ii) a management discussion and analysis prepared in connection with the
financial statements for each Fiscal Month (subject to year-end adjustments and
the absence of footnotes).

2.         The undersigned has reviewed and is familiar with the terms of the
Credit Agreement and the Loan Documents and has made, or has caused to be made
under his/her supervision, a detailed review of the transactions and condition
(financial or otherwise) of the Credit Parties during the accounting period
covered by such financial statements.

3.         A review of the activities of the Credit Parties during such fiscal
period has been made under the supervision of the undersigned with a view to
determining whether during such fiscal period the Credit Parties performed and
observed all their obligations under the Loan Documents, and

[select one:]

[the undersigned has no knowledge of any Default or Event of Default during such
fiscal period by any of the Credit Parties.]

-or—

 

[the undersigned, has knowledge of the following list of Default(s) and /or
Event(s) of Default and the nature thereof:]

4.         The financial covenant analyses and information set forth on
Schedules 1, [and] 2, [and 3] attached hereto are true and accurate on and as of
the date of this Certificate. All the financial covenant calculations set forth
on Schedules 1, [and] 2, [and 3] attached hereto have been made in accordance
with the Credit Agreement and are subject to the applicable terms thereof.

 

Exhibit D

3

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
__________________ ___, 20___.

 

PETIQ, LLC

 

 

 

 

 

 

By:

 

 

Name:

 

 

Title:

 

 

 

 

Exhibit D

4

--------------------------------------------------------------------------------

 

EXHIBIT A

FINANCIAL STATEMENTS

 

 

Exhibit A

--------------------------------------------------------------------------------

 

Financial Test Date: __________________

SCHEDULE 1

 

I.    Section 7.13 – Consolidated Fixed Charge Coverage Ratio

A.   Consolidated EBITDA for the Parent and its Restricted Subsidiaries (other
than the Mark and Chappell Entities) for the Reference Period most recently
ended as of the date set forth above (“Subject Period):

1.         Consolidated Net Income for the Subject Period; PLUS:

 $____________

2.         provision for income taxes for the Subject Period; PLUS:  

 $____________

3.         Consolidated Interest Expense for the Subject Period; PLUS:

 $____________

4.         depreciation and amortization; PLUS:

 $____________

5.         other one-time, non-occurring and non-cash expenses or losses that
have been deducted in determining Consolidated Net Income disclosed in writing
to, and deemed acceptable by, the Administrative Agent; PLUS:

 $____________

6.         costs and expenses incurred in connection with the Amendment
Effective Date Transactions in an aggregate amount not in excess of $10,000,000
PLUS:

 $____________

7.         costs and expenses incurred in connection with the initial public
offering of PetIQ, Inc. in an amount not in excess of $2,700,000; PLUS:

 $____________

8.         Pre-Opening Expenses in an amount not to exceed 10% of Consolidated
EBITDA for the Subject Period prior to giving effect to this item 8; PLUS:

 $____________

9.         non-cash compensation expenses and other non-cash expenses or charges
arising from the granting of stock options, stock appreciation rights or similar
arrangements; PLUS:

 $____________

10.       non-recurring legal expenses for litigation matters in an amount not
to exceed $200,000 for any period of four consecutive Fiscal Quarters; PLUS:

 $____________

11.       fees and expenses paid to members of the board of directors of Parent
(or any direct or indirect parent company of Parent) in an amount not to exceed
$250,000 for any period of four consecutive Fiscal Quarters; MINUS:

 $____________

Schedule 1

1

--------------------------------------------------------------------------------

 

12.       the sum without duplication of (i) income tax credits and cash refunds
actually received and (ii) any non-cash gains that have been added in
determining Consolidated Net Income, in each case to the extent included in the
calculation of Consolidated Net Income for the Subject Period:

 $____________

13.       Consolidated EBITDA (total of lines I.A.1.  through I.A.12.):1

 $____________

B.          the aggregate amount of all Unfinanced Capital Expenditures during
the Subject Period:

 $____________

C.          the aggregate amount paid, or required to be paid (without
duplication), in cash in respect of the current portion of all federal, state,
local and foreign income taxes for the Subject Period:

 $____________

D.          the aggregate amount of Consolidated Interest Expense paid or
payable in cash during the Subject Period:

 $____________

E.          the aggregate amount of all regularly scheduled payments of
principal Indebtedness for borrowed money during the Subject Period paid or
required to be paid by the Credit Parties, but not including any principal
payments in respect of the Revolving Credit Loans under the Credit Agreement or
any other revolving credit facility unless such payment of the Revolving Credit
Loans or under such revolving credit facility, as applicable, results in a
permanent reduction thereunder:

 $____________

--------------------------------------------------------------------------------

1       Consolidated EBITDA for Community Veterinary Clinics, LLC and its
Restricted Subsidiaries for the fiscal quarters ended March 31, 2017, June 30,
2017 and September 30, 2017 shall be deemed to be $6,484,101, $7,518,374 and
$2,069,965, respectively.

Schedule 1

2

--------------------------------------------------------------------------------

 

 

F.          Consolidated Fixed Charge Coverage Ratio
(ratio of difference of I.A.13. – I.B. – I.C. to sum of lines I.D. + I.E.):

Compliance Required?

             :1.00

 

 Yes/No

Is ratio in line I.F. equal to or greater than 1.101.15:1.00?

 

Compliance?

 Yes/No

Financial Test Date: __________________

 

 

 

 

 

II.  Section 7.15 – First Lien Net Leverage Ratio

 

A.         Total Indebtedness as of the date set forth above secured by a
first-lien on property of Parent, the Borrowers or their Restricted Subsidiaries
(including, for the avoidance of doubt, the Term Loan Facility, any secured
letters of credit and Indebtedness under the Credit Agreement) minus
Unrestricted Cash in an amount not to exceed $5,000,000:

 $____________

B.         Consolidated EBITDA for the Reference Period ended as of the date set
forth above:

 $____________

C.         First Lien Net Leverage Ratio (ratio of line II.A. to line II.B.):

             :1.00

Compliance Required?

 Yes/No

Is ratio in line III.C. equal to or less than ______:1.00?2

 

Compliance?

 Yes/No

--------------------------------------------------------------------------------

2       Refer to Section 7.15 of the Credit Agreement.

 

 

Schedule 1

3

--------------------------------------------------------------------------------

 

Financial Test Date: __________________

EXCESS CASH FLOW

III. Excess Cash Flow

 

A.   Consolidated EBITDA for the Fiscal Year ended as of the date set forth
above (line I.A.13.); MINUS:

 $____________

B.   the sum, without duplication, of:  

 

1.         the cash portion of Consolidated Interest Expense paid during such
Fiscal Year; PLUS:

 $____________

2.         the cash portion of any fees pursuant to the Credit Agreement or the
Term Credit Agreement during such Fiscal Year; PLUS:

 $____________

3.         the cash portion of income taxes, including Permitted Tax
Distributions (excluding the principal amount of Indebtedness used to finance
such Permitted Tax Distributions and any such Permitted Tax Distributions
financed with the proceeds of an offering of Capital Stock); PLUS:

 $____________

4.         (a) all scheduled and voluntary principal payments made in respect of
the Term Loan Facilities during such Fiscal Year, (b) all permanent repayments
of advances made during such Fiscal Year under the Credit Agreement to the
extent accompanied by a permanent reduction of the Commitments thereunder and
(c) all principal payments made in respect of any other Indebtedness permitted
pursuant to Section 7.02 of the Credit Agreement made during such Fiscal Year to
the extent such payments cannot be reborrowed, in each case of clauses (a)
through (c), to the extent made with internally generated funds; PLUS:

 $____________

5.         (a) maintenance and growth Capital Expenditures funded with
internally generated cash in the applicable Fiscal Year and (b) to the extent
the Borrowers or any of their Restricted Subsidiaries have entered into a
binding contract with respect to the same, maintenance and growth Capital
Expenditures to be funded with internally

 

 

Excess Cash Flow

1

--------------------------------------------------------------------------------

 

 

generated cash in the immediately subsequent Fiscal Year; provided, to the
extent the actual amount of such Capital Expenditures in the subsequent Fiscal
Year is less than the amount deducted pursuant to this clause (b), such
difference shall be added to the Excess Cash Flow for the subsequent Fiscal
Year; PLUS:

 $____________

6.         Pre-Opening Expenses incurred in such Fiscal Year to the extent made
with internally generated funds; PLUS:

 $____________

7.         cash payments made during such Fiscal Year in respect of Permitted
Acquisitions to the extent made with internally generated funds, including cash
earnouts and royalty payments made to sellers that were not deducted as expenses
and working capital and purchase price adjustments made pursuant to the
acquisition documentation governing such Permitted Acquisition; PLUS:

 $____________

8.         the cash portion of costs, fees, charges, expenses or losses paid
during such Fiscal Year in accordance with lines I.A.6. and I.A.7.; PLUS:

 $____________

9.         the cash portion of amounts added back to the definition of
Consolidated EBITDA in accordance with lines I.A.10. and I.A.11.:

 $____________

10.       the excess, if any, of Consolidated Working Capital at the end of the
Subject Period over Consolidated Working Capital at the beginning of the Subject
Period (or if the difference results in an amount less than zero, minus the
excess, if any of the Consolidated Working Capital at the end of the Subject
Period over Consolidated Working Capital):

 $____________

C.   Excess Cash Flow (line III.A. minus the sum of lines III.B.1. through
III.B.10.)

 $____________

 

 

Excess Cash Flow

2

--------------------------------------------------------------------------------

 

SCHEDULE 2

 

ACCOUNTANTS’ MANAGEMENT LETTER

See attached.

 

 

Schedule 2

--------------------------------------------------------------------------------

 

SCHEDULE 3

 

MANAGEMENT DISCUSSION AND ANALYSIS

See attached.

 

Schedule 3

--------------------------------------------------------------------------------