exhibit10_2.htm


     

    EXHIBIT
10.2


    FIRST AMENDMENT TO SECOND
AMENDED

    AND RESTATED CREDIT
AGREEMENT

     

    THIS
FIRST AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT ("Amendment"), dated
effective as of May 5, 2009, is made and entered into by and among WALCO
INTERNATIONAL, INC., a Delaware corporation (the "US Borrower"), KANE
VETERINARY SUPPLIES LTD. (the "Canadian Borrower"),
an Alberta corporation, THE UNDERSIGNED GUARANTORS WHICH ARE PARTIES TO THE
CREDIT AGREEMENT (as hereinafter defined), as amended by this Amendment (each a
"Guarantor" and
collectively, the "Guarantors"), THE
UNDERSIGNED GRANTOR WHICH IS A PARTY TO THE CREDIT AGREEMENT (the "Grantor"), THE
UNDERSIGNED FINANCIAL INSTITUTIONS WHICH ARE PARTIES TO THE CREDIT AGREEMENT
(each, together with its successors and assigns, a "Lender" and
collectively, the "Lenders"), JPMORGAN
CHASE BANK, N.A., a national banking association, as the administrative agent
for the US Lenders (in such capacity, the "US Administrative
Agent"), JPMORGAN CHASE BANK, N.A., TORONTO BRANCH, as the administrative
agent for the Canadian Lenders (in such capacity, the "Canadian Administrative
Agent"), and U.S. BANK NATIONAL ASSOCIATION, as Documentation Agent for
the Lenders.  The US Borrower and the Canadian Borrower shall
sometimes hereinafter be collectively referred to as the "Borrowers"), and the
US Administrative Agent and the Canadian Administrative Agent shall sometimes
hereinafter be collectively referred to as the "Administrative
Agents".

    


    RECITALS:

    


    WHEREAS,
the US Borrower, KVSL Acquisition, Ltd. (predecessor in interest to the Canadian
Borrower), the Guarantors, the Grantor, the Administrative Agents and the
Lenders are parties to a Second Amended and Restated Credit Agreement dated as
of October 15, 2007 (the "Credit Agreement");
and

    


    WHEREAS,
the Borrowers, the Guarantors, the Grantor, the Administrative Agents and the
Lenders have agreed, on the terms and conditions herein set forth, that the
Credit Agreement be amended in certain respects.

    


    AGREEMENTS:

    


    NOW,
THEREFORE, in consideration of the premises and the mutual agreements,
representations and warranties herein set forth, and for other good and valuable
consideration, the receipt and sufficiency which are hereby acknowledged and
confessed, the Borrowers, the Guarantors, the Grantor, the Administrative Agents
and the Lenders do hereby agree as follows:

    


    Section
1.                          General
Definitions.  Capitalized terms used herein which are defined
in the Credit Agreement shall have the same meanings when used
herein.


    
      
         


      

      
         


        
          

        

      

      
         


      

    

     

    Section
2.                          Modification of Interest
Rate Provisions.

    


    (a)           Modification of Applicable
Rate Definition.  The term “Applicable Margin” contained in
Section 1.1 of
the Credit Agreement is hereby amended and restated in its entirety to hereafter
be and read as follows:

    


    Applicable Margin
shall mean, a rate per annum of 3.50% for LIBOR Borrowings and CDOR Rate
Borrowings and a rate per annum of 1.00% for CB Floating Rate Borrowings,
Canadian Prime Rate Borrowings and US Base Rate (Canada) Borrowings; provided,
however, that as of the end of each fiscal quarter of the US Borrower
(commencing with the period ending June 30, 2009), the Applicable Margin shall
be adjusted upward or downward, as applicable, to the respective amounts shown
in the schedule below based on the Leverage Ratio for the Credit Parties and
their Subsidiaries, on a Consolidated basis, tested as of the end of the
applicable fiscal quarter of the Credit Parties.  For purposes hereof,
any such adjustment in the respective amounts of the Applicable Margin, whether
upward or downward, shall be effective ten (10) Business Days after the
applicable Annual Audited Financial Statements of the Credit Parties or the
Monthly Unaudited Financial Statements of the Credit Parties for the applicable
fiscal quarter, as the case may be, have been delivered to and received by the
Administrative Agent in accordance with the terms of Sections 6.3(a) and 6.3(b)
hereof; provided, however, if any such financial statements are not delivered in
a timely manner as required under the terms of Sections 6.3(a) and 6.3(b)
hereof, the Applicable Margin from the date such financial statements were due
until ten (10) Business Days after the Administrative Agent and Lenders receive
the same will be the highest level set forth below for the Applicable
Margin.

     

    
      	
               

              Leverage Ratio

            	
               

              Per Annum Percentage for LIBOR Borrowings &
      CDOR Rate Borrowings

            	
               

              Per Annum Percentage for  CB Floating
      Rate Borrowings, Canadian Prime Rate Borrowings & US Base Rate
      (Canada) Borrowings

            
	
               

              Greater
      than or equal to 4.50x

            	
               

              3.75%

            	
              1.25%

            
	
               

              Less
      than 4.50x, but greater than or equal to 3.75x

            	
               

              3.50%

            	
              1.00%

            
	
               

              Less
      than 3.75x, but greater than or equal to 3.25x

            	
               

              3.25%

            	
              0.75%

            
	
               

              Less
      than 3.25x

            	
               

              3.00%

            	
              0.50%

            


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Notwithstanding
the foregoing or any other provision to the contrary contained in this Agreement
or in any other Loan Document, the Applicable Margin for that portion of the US
Revolving Loans deemed funded on a “first drawn” basis under the Additional US
Availability Credit (i.e., the amount of US Revolving Loans then outstanding up
to the then applicable amount of the Additional US Availability Credit) will be
equal to the sum of (i) the amount of the Applicable Margin as determined above
plus (ii) an additional 0.75%.

    


    (b)           Addition of New Interest
Rate Related Definitions.  New definitions for “Adjusted CB
Floating Rate,” “Adjusted One Month LIBOR Rate” and “CB Floating Rate”
are  hereby added to Section 1.01 of the
Credit Agreement to hereafter read as follows:

    


    Adjusted CB Floating
Rate shall mean, for any day, a rate per annum equal to the sum of (a)
the CB Floating Rate for such day and (b) the Applicable Margin.

     

    Adjusted One Month LIBOR
Rate means, for any day, an interest rate per annum equal to the sum of
(a) 2.50% per annum plus (b) (i) the interest rate per annum determined by
Lender by reference to the Reuters Screen LIBOR01 Page (or on any successor or
substitute page) to the rate at approximately 11:00 a.m. London time on such day
(or if such day is not a Business Day, on the immediately preceding Business
Day), for US Dollar deposits with a maturity equal to one (1) month, multiplied
by (ii) Statutory Reserves.

    


    CB Floating Rate
means the Prime Rate; provided that the CB
Floating Rate shall, on any day, never be less than the Adjusted One Month LIBOR
Rate on such day (or if such day is not a Business Day, on the immediately
preceding Business Day).   Any change in the CB Floating Rate due
to a change in the Prime Rate or the Adjusted One Month LIBOR Rate shall be
effective from and including the effective date of such change in the Prime Rate
or the Adjusted One Month LIBOR Rate, respectively.

    


    (c)           Deletion of “Alternate Base
Rate” Definition in Credit Agreement and Replacement of “Alternate Base Rate”
and “Alternate Base Rate Borrowing” Definition Usage in Credit Agreement with
“Adjusted CB Floating Rate” and “CB Floating Rate Borrowing”
Definitions.   The definition for “Alternate Base Rate” in
Section 1.01 of
the Credit Agreement is hereby deleted from the Credit Agreement in its
entirety.   Each and every reference to the term “Alternate Base
Rate” in any other provision of the Credit Agreement is hereby deemed replaced
by a reference to the “Adjusted CB Floating Rate,” and each and every reference
to the term “Alternate Base Rate Borrowing” in any provision of the Credit
Agreement is hereby deemed replaced by a reference to the “CB Floating Rate
Borrowing.”

    


    Section
3.                          Modification of US Borrowing
Base Definition.  The “US Borrowing Base” definition contained
in Section 1.1
of the Credit Agreement is hereby amended and restated in its entirety to
hereafter be and read as follows:

    


    US Borrowing Base
shall mean, as of any date, the amount of the then most recent computation of
the US Borrowing Base, determined by calculating the amount equal to the
following:

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	
               
      

            	
              (a)

            	
              85%
      of Eligible Accounts of the US Borrower and the Domestic Subsidiaries;
      plus

            


    

    


    
      	
               
      

            	
              (b)

            	
              the
      lesser of (i) 65% of Eligible Inventory of the US Borrower and the
      Domestic Subsidiaries (valued, in each case, at the lower of cost or fair
      market value on a first-in, first-out basis), and (ii) 85% of the Net
      Recovery Rate of Eligible Inventory of the US Borrower and the Domestic
      Subsidiaries; provided, however, that
      during the period commencing on April 1 and ending on September 30 of each
      calendar year, the 65% advance rate for Eligible Inventory of the US
      Borrower and the Domestic Subsidiaries contained in clause (i) above
      shall, at the election of the Administrative Agent, but only with the
      approval of all but one of the US Lenders (or if only two (2) US Lenders
      are then parties to this Agreement, only with the approval of both of such
      US Lenders), be increased to up to 75% and the 85% advance rate for the
      Net Recovery Rate of Eligible Inventory of the US Borrower and the
      Domestic Subsidiaries contained in clause (ii) above shall, at the
      election of the Administrative Agent, but only with the approval of all
      but one of the US Lenders (or if only two (2) US Lenders are then parties
      to this Agreement, only with the approval of both of such US Lenders), be
      increased to up to 100%; provided
      further, however, that
      notwithstanding the foregoing, the Eligible Inventory component shall be
      determined solely by use of the foregoing Eligible Inventory advance rate
      without consideration or use of the foregoing Net Recovery Rate of
      Eligible Inventory advance rate at all times during the period from and
      after May 5, 2009 until the earlier of (A) receipt by the Administrative
      Agent of updated and then current FIRREA-compliant appraisals of all of
      the Eligible Real Estate by one or more appraisal firms satisfactory to
      the Administrative Agent or (B) receipt by the Administrative Agent of the
      Borrowing Base Compliance Certificate for the US Borrowing Base and the
      Borrowing Base Compliance Certificate for the Canadian Borrowing Base to
      be delivered pursuant to the terms of Section 6.3(h)
      of this Agreement for the calendar month ending June 30, 2009;
      plus

            


    

    


    
      	
               
      

            	
              (c)

            	
              the
      lesser of (i) $10,000,000 or (ii) the sum of (A) the lesser of (1)
      $1,043,000 or (2) up to 75% of the Net Recovery Rate of the Eligible
      Equipment of the US Borrower and the Domestic Subsidiaries, and (B) up to
      75% of the fair market value of the Eligible Real Estate of the US
      Borrower and the Domestic Subsidiaries; provided, however, that
      the 75% advance rate for the Net Recovery Rate of Eligible Equipment of
      the US Borrower and the Domestic Subsidiaries and the 75% advance rate for
      Eligible Real Estate of the US Borrower and the Domestic Subsidiaries
      contained in clause (ii) above shall be subject to the Equipment and Real
      Estate Annual Adjustments; provided
      further, however, that
      notwithstanding the foregoing, no Eligible Real Estate component shall be
      included within the US Borrowing Base on or after May 5, 2009 unless and
      until the Administrative Agent shall have received updated and then
      current FIRREA-compliant appraisals of all of the Eligible Real Estate by
      one or more appraisal firms satisfactory to the Administrative Agent;
      less

            


    

    


    
      	
               
      

            	
              (d)

            	
              all
      Reserves against the US Borrowing Base established by the Administrative
      Agent from time to time in its Permitted
  Discretion.

            


    

    


    Notwithstanding
anything to the contrary set forth in the immediately preceding sentence, the
Administrative Agent reserves the right to adjust downward, to a level
acceptable to the Administrative Agent in its Permitted Discretion, the advance
rates set forth above for Eligible Accounts of the US Borrower and the Domestic
Subsidiaries if the average dilution percentage for all Accounts of the US
Borrower and the Domestic Subsidiaries ever exceeds five percent
(5%).  For purposes hereof, “average dilution percentage” shall mean
for each dollar of gross sales by the US Borrower and the Domestic Subsidiaries,
the average percentage of such dollar of gross sales that is not collected by
the US Borrower and the Domestic Subsidiaries for any reason, including without
limitation, any credits, rebates, refunds, returns, discounts or any other
reason.  The US Borrowing Base may be computed by the Administrative
Agent on as frequent as a daily basis (based on all information reasonably
available to the Administrative Agent, including without limitation, the
periodic reports and listings delivered to the Administrative Agent in
accordance with Sections 6.3(e),
(f) and (g)
hereof).

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Section
4.                          Modification of Change of
Control Definition.  Subparagraph (a) of the “Change of
Control” definition contained in Section 1.1 of the
Credit Agreement is hereby amended and restated in its entirety to hereafter be
and read as follows:

    


    (a)           at
any time any Person and/or its respective Affiliates (other than Charlesbank and
its Affiliates) shall either (i) beneficially own in the aggregate, directly or
indirectly, 35% or more of the aggregate voting power of all issued and
outstanding classes of Equity Interests in the Parent having the right to elect
Board of Directors of the Parent, or (ii) have the right to cause enough of
their nominees in the aggregate to be elected or appointed, and remain serving
at all times as, Board of Directors of the Parent so as to constitute a majority
of such Board of Directors.

     

    
      Section
5.                          Modification of Eligible
Accounts Definition.  Subparagraph (b) of the “Eligible
Accounts” definition contained in Section 1.1 of the
Credit Agreement is hereby amended and restated in its entirety to hereafter be
and read as follows:

       

    

           
(b)     the Account has
payment terms of 30 days or less, or if the Account has payment terms of 31 to
120 days, such Accounts having payment terms of 31 to 120 days shall not
constitute more than fifteen percent (15%) of the total Eligible Accounts or
$12,000,000 in the aggregate, whichever is less.

    


    Section
6.                          Modification of Issuing Bank
Definition.  The term “Issuing Bank” contained in Section 1.1 of the
Credit Agreement is hereby amended and restated in its entirety to hereafter be
and read as follows:

    


    Issuing Bank shall
mean (a) with respect to Letters of Credit issued for the account of the US
Borrower, either JPMorgan or U.S. Bank National Association, in its respective
capacity as an issuer of US Letters of Credit hereunder, (b) with respect to
Letters of Credit issued for the account of the Canadian Borrower, either
JPMorgan Canada or U.S. Bank National Association, Canadian Branch, in its
respective capacity as an issuer of Canadian Letters of Credit hereunder, and
(c) any other lender, if any, designated in writing by the applicable Borrower
and the Administrative Agent as an Issuing Bank hereunder.  An Issuing
Bank may, in its discretion, arrange for one or more Letters of Credit to be
issued by Affiliates of the Issuing Bank, in which case the term “Issuing Bank”
shall include any such Affiliate with respect to Letters of Credit issued by
such Affiliate.

    


    Section
7.                           Extension of Revolving
Credit Termination Date.  The term “Revolving Credit
Termination Date” contained in Section 1.1 of the
Credit Agreement is hereby amended and restated in its entirety to hereafter be
and read as follows:

    


    Revolving Credit Termination
Date shall mean the earlier of (a) March 31, 2011, provided that such
March 31, 2011 date shall be automatically extended to the date that is sixty
(60) days prior to the final extended maturity date of the Term Loan Debt (if
the Term Loan Debt is renewed, extended, refinanced or replaced) or June 30,
2012, whichever is earlier, if and when the Administrative Agent is furnished
with evidence by the US Borrower, in Proper Form, on or prior to March 31, 2011
that the final maturity date of the Term Loan Debt has been validly extended
beyond the current May 31, 2011 final maturity date thereof at then current
market pricing (as determined and approved by the Administrative Agent) and
otherwise upon terms not less favorable than the terms that are currently
applicable to the Term Loan Debt (with the Administrative Agent agreeing to
promptly notify the Lenders of such extension and provide the Lenders with
copies of the evidence received by the Administrative Agent confirming that the
final maturity date of the Term Loan Debt has been so extended), (b) any date
that the Commitments are terminated in full pursuant to Section 2.4 hereof,
and (c) any date the Revolving Credit Termination Date is accelerated by the
Administrative Agent pursuant to Section 8.1
hereof.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Section
8.                           Reduction in US Total
Revolving Credit Commitment.  The term “US Total Revolving
Credit Commitment” contained in Section 1.1 of the
Credit Agreement is hereby amended and restated in its entirety to hereafter be
and read as follows:

    


    US Total Revolving Credit
Commitment shall mean, on any day, the aggregate of all of the US
Lenders’ US Revolving Credit Commitments on such day; provided, however, that so
long as any Canadian Obligations are outstanding hereunder, the aggregate amount
of the US Total Revolving Credit Commitment will be reduced by the Dollar
Equivalent of the Canadian Revolving Credit Exposure at any time (and the US
Revolving Credit Commitment of each US Revolving Lender will reduce
proportionately in accordance with its US Revolving Credit Commitment
Percentage).  As of the Closing Date, the US Total Revolving Credit
Commitment is $130,000,000, subject to reduction as provided in the preceding
sentence based upon the applicable Dollar Equivalent of the Canadian Revolving
Credit Exposure from time to time.

    


    Section
9.                           Modification of Permitted
Overadvances Provision.  Subparagraph (h) of Section 2.2 of the
Credit Agreement is hereby amended and restated in its entirety to hereafter be
and read as follows:

    


    (h)           Notwithstanding
anything to the contrary set forth in this Section 2.2 or in any
other provision of this Agreement, the Administrative Agent may cause the
Applicable Agent, on the Administrative Agent’s own initiative and in its sole
discretion, but for the ratable benefit of the applicable Class of Lenders, to
extend the applicable Class of Revolving Loans or issue the applicable Class of
Letters of Credit in excess of the applicable Class of Availability (all Classes
of the same being collectively "Permitted Overadvances") in an aggregate amount
at any one time for all Classes of Availability not exceeding $5,000,000, upon
and subject to the following terms:  (i) no Permitted Overadvances
shall cause the aggregate amount of any Lender’s US Revolving Credit Exposure or
Canadian Revolving Credit Exposure, as applicable, to exceed such Lender's US
Revolving Credit Commitment or Canadian Revolving Credit Commitment, as
applicable; (ii) no Permitted Overadvances shall be outstanding for more than
thirty (30) consecutive days; (iii) either (A) the Administrative Agent in good
faith believed that no Permitted Overadvance existed or would result at the time
of such Permitted Overadvance or (B) the applicable Permitted Overadvance
results from (1) a change in the standards of eligibility for any component of
the applicable Borrowing Base and/or an increase in Reserves as determined by
the Administrative Agent in accordance with the other terms of this Agreement,
(2) a determination by Administrative Agent that certain components previously
included in the applicable Borrowing Base should be excluded from eligibility
under such Borrowing Base, or (3) the payment by the Applicable Agent of any
amounts reasonably required to maintain, protect or realize upon the Collateral
or to prevent a cessation of business by the applicable Borrower or any of its
Subsidiaries; (iv) no more than two (2) Permitted Overadvances can be extended
by any and all Agents during any 180 consecutive day period; and (v) upon the
written direction of the Required Lenders, the Administrative Agent and the
Applicable Agent shall immediately demand that the applicable Borrower(s) cause
any Permitted Overadvances then outstanding to be immediately reduced to
zero.

    


    Section
10.                                     Modification of Unused
Commitment Fee.  Section 2.3 of the
Credit Agreement is hereby amended and restated in its entirety to hereafter be
and read as follows:

    


    2.3           Commitment
Fees.                    In
consideration of each Lender's US Revolving Credit Commitment, the US Borrower
agrees to pay to the US Administrative Agent for the account of each US Lender a
commitment fee (each a “Commitment Fee”)
(computed on the basis of the actual number of days elapsed in a year composed
of 360 days, subject to the terms of Section 10.6 hereof)
in an amount equal to the product of (A) 0.50% times (B) such US
Lender's average Unused US Revolving Credit Commitment for the applicable
calculation period; provided, however, that such US
Lender’s pro rata share of the Swingline Exposure shall be disregarded for
purposes of calculating such US Lender's Unused Revolving Credit Commitment for
Commitment Fee purposes, except in respect of the Swingline Lender, whose Unused
Revolving Credit Commitment for Commitment Fee purposes shall be reduced by the
Swingline Exposure. The Commitment Fee shall be due and payable in arrears (i)
on the last Business Day of each September, December, March and June prior to
the Revolving Credit Termination Date, commencing June 30, 2009, and (ii) on the
Revolving Credit Termination Date, with each Commitment Fee to commence to
accrue as of the date hereof and to be effective as to any reduction in the
Total US Revolving Credit Commitment pursuant to Section 2.4(a) below
as of the date of any such decrease, and each Commitment Fee shall cease to
accrue (except with respect to interest at the Default Rate on any unpaid
portion thereof) on the Revolving Credit Termination Date.  All past
due Commitment Fees shall bear interest at the Default Rate and shall be payable
upon demand by the Administrative Agent.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Section
11.             Modification of Borrowing
Base Compliance Certificate Delivery Covenant.  Subparagraph
(h) of Section
6.3 of the Credit Agreement is hereby amended and restated in its
entirety to hereafter be and read as follows:

    


    (h) as soon as available and in any
event within twenty (20) days after the end of each calendar month, (1) a
Borrowing Base Compliance Certificate for the US Borrowing Base, signed by a
Responsible Officer of the US Borrower in the form attached hereto as Exhibit F, and (2) a
Borrowing Base Compliance Certificate for the Canadian Borrowing Base, signed by
a Responsible Officer of the Canadian Borrower in the form attached hereto as
Exhibit F;
provided, however, that when
Aggregate Availability is less than $15,000,000 for ten (10) consecutive
Business Days, such Borrowing Base Compliance Certificate for the US Borrowing
Base and such Borrowing Base Compliance Certificate for the Canadian Borrowing
Base shall both be furnished weekly within three (3) Business Days after the end
of each week (but utilizing for such weekly reporting purposes the calculations
of ineligible Accounts and ineligible Inventory as of the end of immediately
preceding calendar month), and such weekly reporting shall remain in effect
thereafter until Aggregate Availability is $15,000,000 or greater for thirty
(30) consecutive days.

     

    Section
12.                Addition of Permitted
Treasury Stock Purchases.  The proviso paragraph at the end
of Section 7.11
of the Credit Agreement is hereby amended and restated in its entirety to
hereafter be and read as follows:

    


    provided, however that
notwithstanding the foregoing, any payments, dividends or distributions on and
any redemptions, purchases, retirements or other acquisitions of Equity
Interests otherwise prohibited under Sections 7.11(a),
(b) or (e) shall be
permitted to be made by the applicable Credit Party, so long as (1) immediately
after giving effect to the applicable payment, dividend or distribution on or
redemption, purchase, retirement or other acquisition of Equity Interests, no
Default or Event of Default exists (including without limitation, the Credit
Parties are in compliance with the Fixed Charge Coverage Ratio requirements of
Section 7.12,
tested on a pro forma basis assuming that payment, dividend, or distribution on
or redemption, purchase, retirement or other acquisition of Equity Interests had
occurred at the beginning of the twelve (12) most recent consecutive calendar
months ending on or immediately prior to the date of such payment, dividend,
distribution, redemption, purchase, retirement or acquisition of Equity
Interests), (2) average Aggregate Availability at all times for the ninety
(90)-day period prior to such payment, dividend or distribution on or
redemption, purchase, retirement or other acquisition of Equity Interests, as
well as Aggregate Availability immediately after giving effect to the applicable
payment, dividend, distribution, redemption, purchase, retirement or acquisition
of Equity Interests, is equal to or greater than the sum of (A) $20,000,000 and
(B) the amount that would be payable as a mandatory prepayment under the Term
Loan Debt based upon Excess Cash Flow (as defined in the Term Loan Debt
Agreement) for the then applicable fiscal year assuming such mandatory
prepayment were calculated and payable under the Term Loan Debt Agreement as of
the date of payment of such applicable payment, dividend, distribution,
redemption, purchase, retirement or acquisition of Equity Interests, and (3) (i)
the aggregate amount of all such payments, dividends or distributions on Equity
Interests for the Borrowers actually made from the Closing Date through the
Revolving Credit Termination Date (excluding “payments-in-kind” of accrued and
unpaid interest) does not exceed $55,000,000, and (ii) the aggregate amount of
all such redemptions, purchases, retirements or other acquisitions of Equity
Interests of the Parent actually made from the Closing Date through the
Revolving Credit Termination Date does not exceed
$5,000,000.  Notwithstanding the foregoing, however, in no event shall
any payment, dividend, distribution, redemption, purchase, retirement or
acquisition of Equity Interests otherwise permitted under the terms of the
preceding sentence be made to the extent the same is prohibited under the terms
of the Term Loan Debt Documents.

    


    Section
13.                 Replacement of Schedule
1.1(b).  Schedule 1.1(b)
attached to the Credit Agreement is hereby deleted in its entirety, and such
Schedule 1.1(b)
is hereby replaced by the form of Schedule 1.1(b)
attached hereto and hereby made a part hereof for all purposes.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Section
14.                Representations and
Warranties.  The Borrowers, the Grantor and the Guarantors
represent and warrant to the Administrative Agents and the Lenders that the
representations and warranties contained in Article V of the
Credit Agreement and in all of the other Loan Documents are true and correct in
all material respects on and as of the effective date hereof as though made on
and as of such effective date, except to the extent any such representation or
warranty is stated to relate solely to an earlier date. The Borrowers, the
Grantor and the Guarantors hereby certify that no event has occurred and is
continuing which constitutes a Default or an Event of Default under the Credit
Agreement.  Additionally, the Borrowers, the Grantor and the
Guarantors hereby represent and warrant to the Administrative Agents and the
Lenders that the resolutions or authorizations of the Board of Directors of the
Borrowers, the Grantor and each of the Guarantors previously delivered to the
Administrative Agents by the Borrowers, the Grantor and the Guarantors in
connection with the execution and delivery of the Credit Agreement by the
Borrowers, the Grantor and the Guarantors remain in full force and effect as of
the effective date hereof and have not been modified, amended, superseded or
revoked.

    


    Section
15.                 Limitations.  The
amendments set forth herein are limited precisely as written and shall not be
deemed to (a) be a consent to, or waiver or modification of, any other term
or condition of the Credit Agreement or any of the other Loan Documents, or
(b) except as expressly set forth herein, prejudice any right or rights
which the Lenders may now have or may have in the future under or in connection
with the Credit Agreement, the Loan Documents or any of the other documents
referred to therein.  Except as expressly modified hereby or by
express written amendments thereof, the terms and provisions of the Credit
Agreement, the Notes and any other Loan Documents or any other documents or
instruments executed in connection with any of the foregoing are and shall
remain in full force and effect.  In the event of a conflict between
this Amendment and any of the foregoing documents, the terms of this Amendment
shall be controlling.

    


    Section
16.                 Payment of
Expenses.  The Borrowers and the Guarantors agree, whether or
not the transactions hereby contemplated shall be consummated, to jointly and
severally reimburse and save the Administrative Agents and each of the Lenders
harmless from and against liability for the payment of all reasonable
substantiated out-of-pocket costs and expenses arising in connection with the
preparation, execution, delivery, amendment, modification, waiver and
enforcement of, or the preservation of any rights under this Amendment,
including, without limitation, the reasonable substantiated fees and expenses of
counsel for the Administrative Agents.  The provisions of this Section
shall survive the termination of the Credit Agreement and the repayment of the
Obligations.

    


    Section
17.                 Descriptive Headings,
etc.  The descriptive headings of the several Sections of this
Amendment are inserted for convenience only and shall not be deemed to affect
the meaning or construction of any of the provisions hereof.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Section
18.                 Entire
Agreement.  This Amendment and the documents referred to herein
represent the entire understanding of the parties hereto regarding the subject
matter hereof and supersede all prior and contemporaneous oral and written
agreements of the parties hereto with respect to the subject matter hereof,
including, without limitation, any commitment letters regarding the transactions
contemplated by this Amendment.

    


    Section
19.                 Counterparts.  This
Amendment may be executed in any number of counterparts and by different parties
on separate counterparts and all of such counterparts shall together constitute
one and the same instrument.  Complete sets of counterparts shall be
lodged with the Borrowers and the Administrative Agents.

    


    Section
20.                 References to Credit
Agreement.  As used in the Credit Agreement (including all
Exhibits thereto) and all other Loan Documents, on and subsequent to the
effective date hereof, the term "Agreement" shall mean the Credit Agreement, as
amended by this Amendment.

    


    Section
21.                 Consent to Dissolution of
Rogz, Inc. and Distribution of Rogz, Inc.’s Assets to Canadian
Borrower.   The Borrowers have informed the Administrative
Agents that (a) the provisions of Sections 6.18(i)
through 6.18(l)
of the Credit Agreement were not fully complied with by the Borrowers, (b) all
of the assets of Rogz, Inc. have been distributed to the Canadian Borrower,
which is the parent of Rogz, Inc., and (c) it is the intention of the Canadian
Borrower to dissolve Rogz, Inc.  The Borrowers have requested that the
Administrative Agents and the Lenders waive the above-described noncompliance
with Sections
6.18(i) through 6.18(l) of the Credit
Agreement and consent to the above-described dissolution and transfer of the
assets of Rogz, Inc.  Accordingly, the Administrative Agents and the
Lenders hereby waive the above-described noncompliance with Sections 6.18(i)
through 6.18(l)
of the Credit Agreement and consent to the above-described dissolution and
transfer of the assets of Rogz, Inc.  In no event, however, shall the
Administrative Agents and the Lenders be deemed to have waived any other
provisions of the Credit Agreement or consented to the transfer of assets and/or
the dissolution of any other Subsidiary of any Borrower not described above and
otherwise prohibited under the terms of the Credit Agreement, and the Borrower
and its Subsidiaries are hereby required to strictly comply with all applicable
provisions of the Credit Agreement governing the transfer of any assets and/or
the dissolution of any other Subsidiaries of any Borrower.

    


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    IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered by their respective duly authorized officers as of the
date first above written.

    


    NOTICE
PURSUANT TO TEX. BUS. & COMM. CODE §26.02

    


    THIS
AMENDMENT AND ALL OTHER LOAN DOCUMENTS EXECUTED BY ANY OF THE PARTIES BEFORE OR
SUBSTANTIALLY CONTEMPORANEOUSLY WITH THE EXECUTION HEREOF TOGETHER CONSTITUTE A
WRITTEN CREDIT AGREEMENT AND REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES
AND MAY NOT BE CONTRA­DICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREE­MENTS OF THE PARTIES.  THERE ARE NO
UNWRITTEN ORAL AGREE­MENTS BETWEEN THE PARTIES.

    


    


    


    WALCO
INTERNATIONAL, INC.,

    a
Delaware corporation, as US Borrower

    


    By:         
/s/ William F.
Lacey                                                                     

    Name:    
William F.
Lacey                                                                           

    Title:   Sr. Vice President
and Chief Financial Officer

     

    


    KANE
VETERINARY SUPPLIES LTD.,

    an
Alberta corporation, as Canadian Borrower

    


    By:        
/s/ Jeffrey R.
Hyde                                                                   

    Name:   
Jeffrey R.
Hyde                                                                          

    Title: 
Treasurer                                                                     

    


     

    JPMORGAN
CHASE BANK, N.A.,

    a
national banking association, as a US Lender, as Administrative Agent, as US
Administrative Agent, as US Collateral Agent, as an Issuing Bank and as
Swingline Lender

    


    By:        /s/
Kevin D.
Padgett                                                                   

    Name:  
Kevin D. Padgett

    Title:    
Vice President


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    JPMORGAN
CHASE BANK, N.A.,

    TORONTO
BRANCH,

    a
national banking association, as a Canadian Lender, as Canadian Administrative
Agent, as Canadian Collateral Agent, and as an Issuing Bank

    


    By:         /s/
Dan
Howat                                                                  

    Name:    Dan
Howat

    Title:     
Senior Vice President

    


    


    WELLS
FARGO FOOTHILL, LLC,

    a
Delaware corporation, as a US Lender

    


    By:           /s/
Dennis
King                                                                

    Name:      Dennis
King                                                                     

    Title:        Vice
President                                                                   

    


    


    WELLS
FARGO FOOTHILL CANADA ULC,

    an
Alberta corporation, as a Canadian Lender

    


    By:            /s/
Sanat
Amladi                                                               

    Name:       Sanat
Amladi                                                                    

    Title:         Vice
President                                                                  

    


    


    SUNTRUST
BANK,

    a Georgia
banking corporation, as a US Lender

    


    By:            /s/
William L. Otott,
Jr.                                                               

    Name:       William
L. Otott,
Jr.                                                                    

    Title:          Director                                                                 

    


    


    U.S. BANK NATIONAL
ASSOCIATION,

    a
national banking association, as a US Lender, as Documentation Agent, and as an
Issuing Bank

    


    By:             /s/
Daryl
Hagstrom                                                             

    Name:        Daryl
Hagstrom                                                                   

    Title:         Sr.
Vice
President                                                                  


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


    U.S. BANK
NATIONAL ASSOCIATION, CANADA BRANCH, a national banking association, as a
Canadian Lender and as an Issuing Bank

    


    By:           /s/
Susan
Atherton                                                                

    Name:      Susan
Atherton                                                                     

    Title:        Principal
Officer                                                                

    


     

    ANIMAL
HEALTH INTERNATIONAL, INC.,

    a
Delaware corporation, as Grantor

    
       

      By:       
/s/ William F.
Lacey                                                                     

      Name:  
William F.
Lacey                                                                           

      Title:    
Sr. Vice President and Chief Financial Officer

       

    

    


    AMERICAN
LIVESTOCK AND PET SUPPLY, INC., a Delaware corporation, as a
Guarantor

    


    By:         /s/
Henry H. Moomaw
III                                                                  

    Name:    Henry
H. Moomaw III

    Title:      Treasurer                                                                               

    


     

    HAWAII
MEGA-COR., INC.,

    a Hawaii
corporation, as a Guarantor

    


    By:          /s/
William F.
Lacey                                                                 


    Name:    
William F. Lacey

    Title:      
Treasurer                                                                               

     

    


    VETERINARIAN’S
OUTLET, INCORPORATED, a California corporation, as a Guarantor

    
      


      By:          /s/
William F.
Lacey                                                                 


      Name:    
William F. Lacey

    

    Title:       President                                                                             

    


    


    WALCO
TEXAS ANIMAL HEALTH, LLC,

    a Texas limited liability company, as
a Guarantor

     

    By:          /s/
William F.
Lacey                                                                 

    Name:    
William F. Lacey

    Title:       President                                                                              

    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    SCHEDULE
1.1(b)

    


    LENDER
COMMITMENTS

    


    


     

    
      	 US REVOLVING
      CREDIT COMMITMENTS	 	 	 
	 JPMorgan Chase
      Bank, N.A.	 	$	50,000,000.00	 
	 U.S. Bank
      National Association	 	$	30,000,000.00	 
	 Wells Fargo
      Foothill, LLC 	 	$	30,000,000.00	 
	 SunTrust
      Bank 	 	$	20,000,000.00	 
	 US TOTAL REVOLVING
      CREDIT
      COMMITMENT                 	 	$	130,000,000.00	 
	 	 	 	 	 
	 CANADIAN
      REVOLVING CREDIT COMMITMENTS	 	 	 	 
	 JPMorgan Chase
      Bank, N.A., Toronto Branch 	 	$	8,076,923.08	 
	 U.S. Bank
      National Association, Canadian Branch	 	$	3,461,538.46	 
	 Wells Fargo
      Foothill Canada ULC	 	$	3,461,538.46	 
	 CANADIAN
      TOTAL REVOLVING CREDIT COMMITMENT	 	$	15,000,000.00