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LOAN AGREEMENT




BY AND AMONG




VIRBAC CORPORATION,




PM RESOURCES, INC.,




ST. JON LABORATORIES, INC.,




FRANCODEX LABORATORIES, INC.,




VIRBAC AH, INC.,




DELMARVA LABORATORIES, INC.,




THE LENDERS PARTY HERETO




AND




FIRST BANK,




AS AGENT FOR LENDERS




June 29, 2006




 









 





TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	SECTION 1. TERM
	 	 	4	 
	SECTION 2. DEFINITIONS
	 	 	4	 
	SECTION 3. THE REVOLVING CREDIT LOANS
	 	 	18	 
	3.1 Revolving Credit Commitment of Lenders; Swing Line Commitment of First Bank
	 	 	18	 
	3.2 Procedure for Borrowing
	 	 	21	 
	(a) Revolving Credit Loan Advances
	 	 	21	 
	(b) Swing Line Loans
	 	 	22	 
	3.3 Letters of Credit
	 	 	22	 
	3.4 Interest Rates and Payments
	 	 	25	 
	3.5 Place and Manner of Payment
	 	 	26	 
	3.6 Termination or Reduction of Revolving Credit Commitments
	 	 	26	 
	3.7 Fees
	 	 	26	 
	3.8 Method of Making Interest and Other Payments
	 	 	27	 
	3.9 Maturity
	 	 	27	 
	3.10 Voluntary Prepayments
	 	 	27	 
	3.11 Swing Line Loan Settlement After Default
	 	 	27	 
	3.12 Sharing of Payments
	 	 	28	 
	SECTION 4. PRECONDITIONS TO LOANS
	 	 	28	 
	4.1 Initial Revolving Credit Loan or Letter of Credit
	 	 	28	 
	4.2 All Loans and Letters of Credit
	 	 	31	 
	SECTION 5. REPRESENTATIONS AND WARRANTIES
	 	 	32	 
	5.1 Existence and Power
	 	 	32	 
	5.2 Authorization
	 	 	32	 
	5.3 Binding Effect
	 	 	32	 
	5.4 Financial Statements
	 	 	32	 
	5.5 Litigation
	 	 	32	 
	5.6 Pension and Welfare Plans
	 	 	33	 
	5.7 Tax Returns and Payment
	 	 	33	 
	5.8 Subsidiaries
	 	 	33	 
	5.9 Compliance With Other Instruments; None Burdensome
	 	 	33	 
	5.10 Other Loans and Guarantees
	 	 	34	 
	5.11 Title to Property
	 	 	34	 
	5.12 Multi-Employer Pension Plan Amendments Act of 1980
	 	 	34	 
	5.13 Patents, Licenses, Trademarks, Etc.
	 	 	34	 
	5.14 Environmental and Safety and Health Matters
	 	 	34	 
	5.15 Investments
	 	 	35	 
	5.16 Labor Matters
	 	 	35	 
	5.17 Regulation U
	 	 	35	 
	5.18 Investment Company Act of 1940; Public Utility Holding Company Act of 1935
	 	 	35	 
	SECTION 6. COVENANTS
	 	 	36	 
	6.1 Affirmative Covenants of the Borrowers
	 	 	36	 
	(a) Information
	 	 	36	 
	(b) Payment of Indebtedness
	 	 	38	 






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	 	 	Page	 
	(c) Consultations and Inspections
	 	 	38	 
	(d) Payment of Taxes
	 	 	38	 
	(e) Payment of Claims
	 	 	39	 
	(f) Existence
	 	 	39	 
	(g) Maintenance of Property
	 	 	39	 
	(h) Compliance with Laws, Regulations, Etc.
	 	 	39	 
	(i) Accountant
	 	 	39	 
	(j) ERISA Compliance
	 	 	39	 
	(k) Maintenance of Books and Records
	 	 	40	 
	(l) Further Assurances
	 	 	40	 
	(m) Environmental Matters
	 	 	40	 
	(n) Insurance
	 	 	41	 
	(o) Financial Covenants
	 	 	41	 
	(p) Notices
	 	 	42	 
	(q) Borrowers’ Bank Accounts
	 	 	43	 
	6.2 Negative Covenants of the Borrowers
	 	 	43	 
	(a) Limitation on Indebtedness
	 	 	43	 
	(b) Limitations on Liens
	 	 	44	 
	(c) Consolidation, Merger, Sale of Property, Etc.
	 	 	44	 
	(d) Sale or Discount of Accounts
	 	 	44	 
	(e) Acquisitions; Subsidiaries
	 	 	44	 
	(f) Fiscal Year
	 	 	45	 
	(g) Stock Redemptions and Distributions
	 	 	45	 
	(h) Transactions with Related Parties
	 	 	45	 
	(i) Advancing or Guaranteeing Credit
	 	 	45	 
	(j) Limitations on Restrictive Agreements
	 	 	45	 
	(k) Dissolution or Liquidation
	 	 	46	 
	(l) Change in Nature of Business
	 	 	46	 
	(m) Pension Plans
	 	 	46	 
	(n) Management Fees
	 	 	46	 
	(o) Subordinated Debt Payments
	 	 	46	 
	6.3 Use of Proceeds
	 	 	46	 
	SECTION 7. EVENTS OF DEFAULT
	 	 	47	 
	SECTION 8. THE AGENT
	 	 	51	 
	8.1 Appointment and Authorization
	 	 	51	 
	8.2 Agent and Affiliates
	 	 	51	 
	8.3 Action by Agent
	 	 	51	 
	8.4 Consultation with Experts
	 	 	51	 
	8.5 Liability of Agent
	 	 	51	 
	8.6 Indemnification
	 	 	51	 
	8.7 Credit Decision
	 	 	52	 
	8.8 Resignation of Agent
	 	 	52	 
	8.9 Removal of Agent
	 	 	52	 
	SECTION 9. GENERAL
	 	 	53	 
	9.1 No Waiver
	 	 	53	 
	9.2 Right of Setoff
	 	 	53	 






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	 	 	Page	 
	9.3 Cost and Expenses
	 	 	53	 
	9.4 Environmental Indemnity
	 	 	53	 
	9.5 General Indemnity
	 	 	54	 
	9.6 Authority to Act
	 	 	54	 
	9.7 Notices
	 	 	55	 
	9.8 Consent to Jurisdiction; Jury Trial Waver
	 	 	55	 
	9.9 Agent’s and Lenders’ Books and Records
	 	 	55	 
	9.10 Governing Law; Amendments and Waivers
	 	 	55	 
	9.11 Successors and Assigns; Participations
	 	 	56	 
	9.12 Assignment Agreements
	 	 	56	 
	9.13 Confidential Information
	 	 	57	 
	9.14 References; Headings for Convenience
	 	 	57	 
	9.15 Subsidiary Reference
	 	 	58	 
	9.16 Binding Agreement
	 	 	58	 
	9.17 No Oral Agreements; Entire Agreement
	 	 	58	 
	9.18 Severability
	 	 	58	 
	9.19 Counterparts
	 	 	58	 
	9.20 Resurrection of the Borrowers’ Obligations
	 	 	58	 
	9.21 U. S. Dollars
	 	 	59	 
	9.22 Miscellaneous
	 	 	59	 






	 	 	 
	SCHEDULES	 	 
	5.5

	 	Litigation
	5.6

	 	Pension Plan Matters
	5.8

	 	List of Borrowers’ Subsidiaries and Predecessor and Fictitious Names
	5.10

	 	Other Loans and Guaranties
	5.11

	 	Permitted Liens
	5.12

	 	Multiemployer Plans
	5.13

	 	Patents and Trademarks
	5.14

	 	Environmental and Health and Safety Matters
	5.15

	 	Existing Investments
	6.2(h)

	 	Transactions with Affiliates






	 	 	 
	EXHIBITS	 	 
	A

	 	Borrowing Base Certificate
	B

	 	Revolving Credit Note
	C

	 	Swing Line Note
	D

	 	Compliance Certificate
	E

	 	Standby Letter of Credit Application and Agreement
	F

	 	Application and Agreement for Irrevocable Commercial Letter of Credit
	G

	 	Assignment Agreement






- iii -









 





LOAN AGREEMENT




     THIS LOAN AGREEMENT (this “Agreement”) is made and entered into as of this 29th day of June,
2006, by and among VIRBAC CORPORATION, a Delaware corporation (“Virbac”), PM RESOURCES, INC., a
Missouri corporation (“PM Resources”), ST. JON LABORATORIES, INC., a California corporation (“St.
JON”), FRANCODEX LABORATORIES, INC., a Kansas corporation (“Francodex”), and VIRBAC AH, INC., a
Delaware corporation (“Virbac AH,”), and DELMARVA LABORATORIES, INC., a Virginia corporation
(“Delmarva,” and collectively with Virbac, PM Resources, St. JON, Francodex and Virbac AH referred
to herein as the “Borrowers”), the undersigned lenders and any other lenders hereafter becoming a
party to this Agreement (collectively, the “Lenders”), and FIRST BANK, a Missouri state bank, as
agent on behalf of Lenders (in such capacity, the “Agent”).



WITNESSETH:




     WHEREAS, Borrowers and First Bank are parties to that certain Credit Agreement dated as of
September 7, 1999, as previously amended prior to the date hereof (as so amended, the “Original
Loan Agreement”); and



     WHEREAS, Borrowers, Agent and the Lenders, including First Bank, desire to amend and restate
the Original Loan Agreement in the manner hereinafter set forth, and subject to the terms,
provisions and conditions hereinafter set forth;



     NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, Borrowers, Agent and
the Lenders hereby amend and restate the Original Loan Agreement so that as so amended and restated
it reads in its entirety as follows:



SECTION 1. TERM.




     The “Term” of this Agreement shall commence on the date hereof and shall end on March 31,
2007, unless earlier terminated pursuant to Section 3.6 or by acceleration or otherwise upon the
occurrence of an Event of Default under this Agreement, in which case the Term hereof shall end on
such earlier date.



SECTION 2. DEFINITIONS.




     In addition to the terms defined elsewhere in this Agreement or in any Exhibit or Schedule
hereto, when used in this Agreement, the following terms shall have the following meanings (such
meanings shall be equally applicable to the singular and plural forms of the terms used, as the
context requires):



     Account Debtor shall mean any Person who is and/or may become obligated to any of the
Borrowers under or on account of Accounts.



     Accounts shall mean all trade accounts receivable of any of the Borrowers which have
been invoiced by such Borrower.



     Acquisition shall mean any transaction or series of related transactions, consummated
on or after the date of this Agreement, by which any of the Borrowers or any of their respective
Subsidiaries, either separately or together (a) acquires any going business or all or substantially
all of the assets of any corporation, partnership or other organization or entity, whether through
purchase of assets, merger or



 









 







otherwise or (b) directly or indirectly acquires (in one transaction or as of the most recent
transaction in a series of transactions) at least (i) a majority (in number of votes) of the stock
and/or other securities of a corporation having ordinary voting power for the election of
directors (other than stock and/or other securities having such power only by reason of
the happening of a contingency), (ii) a majority (by percentage of voting power) of the outstanding
partnership interests of a partnership or (iii) a majority of the ownership interests in any
organization or entity other than a corporation or partnership.



     Affiliate shall mean any Person (a) which directly or indirectly through one or more
intermediaries controls, is controlled by or is under common control with one or more of the
Borrowers or any Subsidiary of the Borrowers, (b) which directly or indirectly through one or more
intermediaries beneficially owns or holds or has the power to direct the voting power of Ten
Percent (10%) or more of any class of capital stock or other equity interests of any one or more of
the Borrowers or any Subsidiary of the Borrowers, (c) which has Ten Percent (10%) or more of any
class of its capital stock or other equity interests beneficially owned or held, directly or
indirectly, by any one or more of the Borrowers or any Subsidiary of the Borrowers, or (d) who is a
director, officer, manager or employee of one or more of the Borrowers or any Subsidiary of the
Borrowers. For purposes of this definition, “control” shall mean the power to direct the
management and policies of a Person, directly or indirectly, whether through the ownership of
voting securities, by contract or otherwise.



     Agent shall mean First Bank, or its successors and assigns.



     Amendment to Deed of Trust shall mean each of: (i) that certain Thirteenth Amendment
to Deed of Trust and Security Agreement dated of even date herewith made by and between PM
Resources and the Agent, and (ii) that certain Amendment to Deed of Trust and Security Agreement
dated of even date herewith made by and between Virbac and the Agent, and Amendments to Deeds
of Trust shall refer to each of the foregoing.



     Amendment to Patent, Trademark and License Security Agreement shall mean each of: (i)
that certain Amendment to Patent, Trademark and License Security Agreement dated of even date
herewith made by and between Virbac and the Agent, for the ratable benefit of the Lenders, and (ii)
that certain Amendment to Patent, Trademark and License Security Agreement dated of even date
herewith made by and between Virbac AH and the Agent, for the ratable benefit of the Lenders, and
Amendments to Patent, Trademark and License Security Agreements shall refer to each of the
foregoing.



     Applicable Commitment Fee Rate shall mean One-Fourth of One Percent (0.25%) per annum.



     Applicable Letter of Credit Commitment Fee Rate shall mean One and One-Fourth Percent
(1.25%) per annum for all Letters of Credit.



     Applicable Margin shall mean One-Half of One Percent (0.50%) per annum.



     Attorneys’ Fees shall mean the reasonable value of the services (and costs, and
out-of-pocket charges and expenses related thereto) of the attorneys (and all paralegals,
secretaries, accountants and other staff employed by such attorneys) employed by Agent or any of
the Lenders (including, without limitation, attorneys and paralegals who are employees of Agent or
any of the Lenders or any affiliate of Agent or any of the Lenders) from time to time (i) in
connection with the documentation, negotiation, execution, delivery, administration and enforcement
of this Agreement and/or any of the other Transaction Documents (provided that no such fees
incurred on the part of any Lender other than First Bank shall be payable by Borrowers with respect
to the documentation, negotiation, execution, delivery and administration of this Agreement and/or
any of the other Transaction Documents or any such other



- 5 -









 







Lender’s review thereof for purposes of
any assignment of any portion thereof to any such other Lender),
(ii) to represent Agent or any of the Lenders in any litigation, contest, dispute, suit or
proceeding, or to commence, defend or intervene in any litigation, contest, dispute, suit or
proceeding, or to file any petition, complaint, answer, motion or other pleading or to take any
other action in or with respect to any litigation, contest, dispute, suit or proceeding (whether
instituted by Agent, any of the Lenders, any of the Borrowers or any other Person and whether in
bankruptcy or otherwise) in any way or respect relating to any of the Collateral, any Third Party
Collateral, this Agreement or any of the other Transaction Documents, any of the Borrowers, any
Subsidiary of the Borrowers or any other Obligor, (iii) to protect, collect, lease, sell, take
possession of or liquidate any of the Collateral or any Third Party Collateral, (iv) to attempt to
enforce any security interest in or other Lien upon any of the Collateral or any Third Party
Collateral or to give any advice with respect to such enforcement and (v) to enforce any of Agent’s
or any Lender’s rights to collect any of the Borrowers’ Obligations.



     Authorized Officer shall mean each of the President or the chief financial officer of
each Borrower.



     Borrower Representative shall mean Virbac. Each Borrower hereby designates Virbac as
its representative and agent on its behalf for the purposes of issuing Borrowing Notices, giving
instructions with respect to the disbursement of the proceeds of the Loans, requesting Letters of
Credit, giving and receiving all other notices and consents hereunder or under any of the other
Transaction Documents and taking all other actions (including in respect of compliance with
covenants) on behalf of any Borrower or Borrowers under the Transaction Documents. The Borrower
Representative hereby accepts such appointment. The Agent and each Lender may regard any notice or
other communication pursuant to any Transaction Document from the Borrower Representative as a
notice or communication from all of the Borrowers, and may give any notice or communication
required or permitted to be given to any Borrower or Borrowers hereunder to the Borrower
Representative on behalf of such Borrower or Borrowers. Each Borrower agrees that each notice,
election, representation and warranty, covenant, agreement and undertaking made on its behalf by
the Borrower Representative shall be deemed for all purposes to have been made by such Borrower and
shall be binding upon and enforceable against such Borrower to the same extent as if the same had
been made directly by such Borrower.



     Borrowers shall have the meaning ascribed to such term in the first paragraph on the
first page of this Agreement, and Borrower shall refer to any of them.



     Borrowers’ Obligations shall mean any and all indebtedness (principal, interest, fees
and other amounts), liabilities and obligations of the Borrowers, or any of them, to Agent or any
of the Lenders evidenced by or arising under the Notes, this Agreement, the Security Agreements,
the Deed of Trusts, the Patent, Trademark and License Security Agreements, the Pledge Agreements,
any agreement with Agent or any Lender for any interest rate cap, interest rate swap or other form
of interest rate hedge, including any agreement of Agent or any of the Lenders to finance any such
interest rate hedge agreement, any of the other Transaction Documents or any other agreement,
document or instrument heretofore, now or hereafter executed and delivered by any of the Borrowers
to Agent or any of the Lenders in connection with this Agreement or any of the Loans made or
Letters of Credit issued hereunder, in each case whether now existing or hereafter arising,
absolute or contingent, joint and/or several, secured or unsecured, direct or indirect, expressed
or implied in law, contractual or tortious, liquidated or unliquidated, at law or in equity, or
otherwise, and whether created directly or acquired by Agent or any of the Lenders by assignment or
otherwise, and any and all costs of collection and/or Attorneys’ Fees incurred or to be incurred in
connection therewith.



     Borrowing Base shall mean the sum of:



- 6 -









 






          (i) Eighty Percent (80%) of the face amount of Eligible Accounts of each of the
Borrowers, plus




          (ii) the lesser of (A) Fifty Percent (50%) of the Eligible Inventory of each of
the Borrowers, or (B) $3,500,000.00; plus




          (iii) an amount determined by Agent as the loan value of Borrowers’ fixed
assets, which amount shall be deemed to be equal to: (A) $8,500,000.00,
minus (B) an amount equal to $250,000.00 multiplied by the number of
quarters occurring since March 31, 2006, commencing with the first such subtraction
of $250,000.00 for the quarter ending June 30, 2006 in connection with the
calculation of the Borrowing Base for June, 2006.


Subject to Section 9.10 herein, the Required Lenders shall have the right to establish, modify or
eliminate Reserves against Eligible Accounts and Eligible Inventory from time to time in its
reasonable credit judgment.




     Borrowing Base Certificate shall have the meaning ascribed thereto in Section 3.1(b).



     Borrowing Notice shall have the meaning ascribed thereto in Section 3.2(a).



     Business Day shall mean any day except a Saturday, Sunday or legal holiday observed by
any of the Lenders or by commercial banks in St. Louis, Missouri.



     Capital Expenditure shall mean any expenditure which, in accordance with GAAP, is or
should be capitalized on the balance sheet of the Person making the same.



     Capitalized Lease shall mean any lease which, in accordance with GAAP, is or should be
classified and accounted for as a capital lease on the balance sheet of the lessee.



     Change of Control Event shall mean, at any time, the occurrence of any of the
following: (a) the failure of Virbac S. A. to own and control, directly or indirectly, beneficially
and of record, 51% of the capital stock (including 51% of the Voting Stock) of Virbac outstanding
at such time; (b) the failure of Virbac to own and control, directly or indirectly, beneficially
and of record, 100% of the capital stock (including 100% of the Voting Stock) at such time of each
of PM Resources, St. JON, Delmarva and Virbac AH; or (c) the failure of Virbac AH to own and
control, directly or indirectly, beneficially and of record, 100% of the capital stock (including
100% of the Voting Stock) at such time of Francodex.



     Code shall mean the Internal Revenue Code of 1986, as amended, and any successor
statute of similar import, together with the regulations thereunder, in each case as in effect from
time to time. References to sections of the Code shall be construed to also refer to any successor
sections.



     Collateral shall mean any Property or assets of any of the Borrowers which now or at
any time hereafter secure the payment or performance of any of the Borrowers’ Obligations.



     Commitment Fee shall have the meaning ascribed thereto in Section 3.7.



     Consolidated Debt shall mean, as of the date of any determination thereof, all Debt of
Borrowers and their Subsidiaries as of such date, determined on a consolidated basis and in
accordance with GAAP.



- 7 -









 





     Consolidated Debt Service shall mean the sum of all of Borrowers’ and their
Consolidated Subsidiaries’ payments of principal scheduled on all Consolidated Debt (including,
without limitation, any scheduled or unscheduled Subordinated Debt payments) within the twelve
month period preceding the date of any such calculation, plus Consolidated Interest Expense during
the twelve month period preceding the date of any such calculation, all determined on a
consolidated basis and in accordance with GAAP.



     Consolidated EBITDA shall mean, for the period in question, the sum of (a)
Consolidated Net Income of Borrowers and their Consolidated Subsidiaries during such period
plus (b) to the extent deducted in determining such Consolidated Net Income, the sum of (i)
Consolidated Interest Expense of Borrowers and their Consolidated Subsidiaries during such period,
plus (ii) Consolidated Tax Expense made by Borrowers and their Consolidated Subsidiaries
during such period (whether paid or deferred), plus (iii) all depreciation and amortization
expenses of Borrowers and their Consolidated Subsidiaries during such period, plus (vi) any
non-cash charge required to be made by Borrowers and their Consolidated Subsidiaries during such
period for impairment of goodwill and other intangible assets under U.S. Financial Accounting
Standard Number 142 entitled “Goodwill and Other Intangible Assets,” all determined in accordance
with GAAP for the period in question ending as of the date of any such calculation.



     Consolidated Interest Expense shall mean, for the period in question, without
duplication, all gross interest expense of Borrowers and their Consolidated Subsidiaries
(including, without limitation, all capitalized interest expense, the interest portion of any
Borrower’s or any Subsidiary’s obligations under any Capitalized Leases and the interest portion of
any deferred payment obligation) during such period, all determined on a consolidated basis and in
accordance with GAAP.



     Consolidated Net Income shall mean the net income (or loss) of the Borrowers and their
Consolidated Subsidiaries for the period in question determined on a consolidated basis, after
deducting all operating expenses, provisions for all taxes and reserves (including reserves for
deferred income taxes) and all other proper deductions, all determined in accordance with GAAP,
after eliminating all intercompany items, but excluding from the definition of Consolidated Net
Income any extraordinary gains and/or losses and any gains and/or losses from the sale or other
disposition of assets other than in the ordinary course of business, all determined in accordance
with GAAP.



     Consolidated Net Worth shall mean, at any date, the sum of the consolidated
stockholders’ equities of Borrowers and their Consolidated Subsidiaries plus all Subordinated Debt
then outstanding, all determined on a consolidated basis and in accordance with GAAP.



     Consolidated Subsidiary shall mean with respect to any Person at any date, any
Subsidiary or other entity the assets and liabilities of which are or should be consolidated with
those of such Person in its consolidated financial statements as of such date in accordance with
GAAP.



     Consolidated Tax Expense shall mean Borrowers’ and their Consolidated Subsidiaries’
expenses for federal, state, local and foreign income taxes, determined based upon the actual
amount of tax expense incurred by Borrowers and their Consolidated Subsidiaries during the period
in question for any such calculation, as determined in accordance with GAAP.



     Deeds of Trust shall mean: (i) that certain Deed of Trust and Security Agreement
dated September 9, 1993 made by PM Resources in favor of Katherine D. Knocke as trustee for First
Bank, as amended by a First Amendment to Deed of Trust and Security Agreement dated as of December
21, 1994, by a Second Amendment to Deed of Trust and Security Agreement dated as of July 14, 1995,
by a Third Amendment to Deed of Trust and Security Agreement dated as of June 18, 1997, by a Fourth



- 8 -









 







Amendment to Deed of Trust and Security Agreement dated as of September 25, 1997, by a Fifth
Amendment to Deed of Trust and Security Agreement dated as of May 14, 1998, by a Sixth Amendment
to Deed of Trust and Security Agreement dated as of August 6, 1998, by a Seventh Amendment to Deed
of Trust and Security Agreement dated as of September 7, 1999, by an Eighth Amendment to Deed of
Trust and Security Agreement dated as of December 30, 1999, by a Ninth Amendment to Deed of Trust
and Security Agreement dated as of April 4, 2001, by a Tenth Amendment to Deed of Trust and
Security Agreement dated as of August 7, 2002, by a Eleventh Amendment to Deed of Trust and
Security Agreement dated as of August 11, 2003, by a Twelfth Amendment to Deed of Trust and
Security Agreement dated as of September 3, 2003, and by an Amendment to Deed of Trust dated of
even date herewith, and as the same may from time to time be further amended, and (ii) that certain
Deed of Trust and Security Agreement dated September 3, 2003 made by Virbac in favor of David F.
Weaver as trustee for First Bank, as amended by an Amendment to Deed of Trust dated of even date
herewith, and as the same may from time to time be further amended, and Deed of Trust shall
refer to any of the foregoing.



     Debt of any Person shall mean, as of the date of determination thereof, the sum of,
without duplication, (a) all Indebtedness of such Person for borrowed money (including, without
limitation, the principal amount of all Revolving Credit Loans hereunder and any Subordinated
Debt), plus (b) all Indebtedness of such Person which has been incurred in connection with
the purchase or other acquisition of Property (other than unsecured trade accounts payable incurred
in the ordinary course of business), plus (c) all Capitalized Lease Obligations of such
Person, plus (d) the aggregate undrawn face amount of all letters of credit issued for the
account and/or upon the application of such Person together with all unreimbursed drawings with
respect thereto, plus (e) all Guarantees by such Person of Debt of others, all determined
on a consolidated basis and in accordance with GAAP.



     Default shall mean any event or condition the occurrence of which would, with the
lapse of time or the giving of notice or both, become an Event of Default as defined in Section 7
hereof.



     Distribution in respect of any corporation, limited liability company or other entity
shall mean: (a) dividends or other distributions on or in respect of any of the capital stock,
membership interests or other equity interests of such corporation, limited liability company or
other entity; and (b) the redemption, repurchase or other acquisition of any capital stock,
membership interests or other equity interests of such corporation, limited liability company or
other entity or of any warrants, rights or other options to purchase any such capital stock,
membership interests or other equity interests.



     Eligible Accounts shall mean all Accounts other than: (a) Accounts which remain
unpaid for more than ninety (90) days after their invoice dates and Accounts which are not due and
payable within ninety (90) days after their invoice dates; (b) Accounts owing by a single Account
Debtor, including a currently scheduled Account, if ten percent (10%) or more of the balance owing
by said Account Debtor upon said Accounts is ineligible pursuant to clause (a) above; (c) Accounts
owing by a single Account Debtor, including a currently scheduled Account, to the extent the
balance owing by said Account Debtor upon its Accounts exceeds Thirty Percent (30%) of the then
outstanding amount of Borrowers’ total Accounts); (d) Accounts with respect to which the Account
Debtor is a shareholder, partner, officer, director or employee of any of the Borrowers or an
Affiliate of any of the Borrowers; (e) Accounts with respect to which payment by the Account Debtor
is or may be conditional and Accounts commonly known as “bill and hold” Accounts or Accounts of
similar or like arrangement; (f) Accounts with respect to which the Account Debtor is not a
resident or citizen of or otherwise located in the continental United States of America; (g)
Accounts with respect to which the Account Debtor is the United States of America or any
department, agency or instrumentality thereof unless such Accounts are duly assigned to the Agent
in accordance with all applicable governmental and regulatory rules and regulations (including,
without limitation, the Federal Assignment of Claims Act of 1940, as amended, if applicable) so
that the



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Agent is recognized by the Account Debtor to have all of the rights of an assignee of such
Accounts; (h) Accounts with respect to which any of the Borrowers is or may become liable to the
Account Debtor for goods sold or services rendered by such Account Debtor to any such Borrower; (i)
Accounts with respect
to which the goods giving rise thereto have not been shipped and delivered to and accepted as
satisfactory by the Account Debtor thereof or with respect to which the services performed giving
rise thereto have not been completed and accepted as satisfactory by the Account Debtor thereof;
(j) Accounts which are not invoiced (and dated as of such date) and sent to the Account Debtor
thereof concurrently with or not later than five (5) days after the shipment and delivery to and
acceptance by said Account Debtor of the goods giving rise thereto or the performance of the
services giving rise thereto; (k) Accounts arising from a “sale on approval” or a “sale or
return;” (l) Accounts as to which the Required Lenders, at any time or times hereafter, determine,
in good faith, that the prospects of payment or performance by the Account Debtor is or will be
impaired; (m) Accounts of an Account Debtor to the extent, but only to the extent, that the same
exceed a credit limit determined by the Required Lenders in their discretion, at any time or times
hereafter; (n) Accounts with respect to which the Account Debtor is located in the State of New
Jersey or the State of Minnesota; provided, however, that such restriction shall not apply if such
Borrower (i) has filed and has effective (A) in respect of Account Debtors located in the State of
New Jersey, a Notice of Business Activities Report with the New Jersey Division of Taxation for the
then current year or (B) in respect of Account Debtors located in the State of Minnesota, a
Minnesota Business Activity Report with the Minnesota Department of Revenue for the then current
year, as applicable, or (ii) is otherwise exempt from such reporting requirements under the laws of
such State(s); (o) Accounts which are not subject to a first priority perfected security interest
in favor of the Agent for the ratable benefit of the Lenders; and (p) Accounts which have been
factored by any of the Borrowers.



     Eligible Inventory shall mean all Inventory of any of the Borrowers, valued at the
lower of cost or current market value, which consists of unprocessed raw materials and finished
goods with respect to which no further processing is necessary for the sale thereof, other than (a)
any such Inventory which is obsolete, (b) Inventory which is not in good condition or does not
comply with all standards imposed by any governmental authority having regulatory authority over
such goods or their manufacture, use or sale, or Inventory which the Required Lenders have in good
faith determined, in accordance with their respective customary business practices, is otherwise
unacceptable due to age, type, category and/or quantity, (c) Inventory which is held on
consignment, consigned to third parties, or consists of experimental products or products not yet
proven commercially viable by reason of a significant number of purchase orders, or Inventory held
for promotional purposes and as samples, or Inventory returned due to defects or product warranty
problems, (d) Inventory which consists of goods which have been returned by a buyer; (e) Inventory
which breaches any of the representations or warranties pertaining to Inventory set forth in any of
the Transaction Documents; (f) Inventory which is not maintained at one of the places of business
and/or locations provided in the Security Agreements executed by Borrowers, (g) Inventory not
either usable or saleable, at prices not less than the standard cost, in the ordinary course of
Borrowers’ businesses, or (h) Inventory which is not subject to a first priority perfected security
interest in favor of Agent for the ratable benefit of the Lenders.



     Environmental Claim shall mean any administrative, regulatory or judicial action,
judgment, order, consent decree, suit, demand, demand letter, claim, Lien, notice of noncompliance
or violation, investigation or other proceeding arising (a) pursuant to any Environmental Law or
governmental or regulatory approval issued under any such Environmental Law, (b) from the presence,
use, generation, storage, treatment, release, threatened release, disposal, remediation or other
existence of any Hazardous Material, (c) from any removal, remedial, corrective or other response
action pursuant to an Environmental Law or the order of any governmental or regulatory authority or
agency, (d) from any third party seeking damages, contribution, indemnification, cost recovery,
compensation, injunctive or other relief in connection with a Hazardous Material or arising from
alleged injury or threat of injury to health, safety, natural resources or the



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environment or (e)
from any Lien against any Property owned, leased or operated by any Borrower or any Subsidiary in
favor of any governmental or regulatory authority or agency in connection with a release,
threatened release or disposal of a Hazardous Material.



     Environmental Laws shall mean the Resource Conservation and Recovery Act of 1987, the
Comprehensive Environmental Response, Compensation and Liability Act, any so-called “Superfund” or
“Superlien” law, the Toxic Substances Control Act and any other federal, state or local statute,
law, ordinance, code, rule, regulation, order or decree regulating, relating to or imposing
liability or standards of conduct concerning any Hazardous Materials, as now or at any time
hereafter in effect.



     ERISA shall mean the Employee Retirement Income Security Act of 1974, as amended, and
any successor statute of similar import, together with the regulations thereunder, in each case as
in effect from time to time. References to sections of ERISA shall be construed to also refer to
any successor sections.



     ERISA Affiliate shall mean any corporation, trade or business that is, along with the
Borrowers, a member of a controlled group of corporations or a controlled group of trades or
businesses, as described in Sections 414(b) and 414(c), respectively, of the Code.



     Event of Default shall have the meaning ascribed thereto in Section 7.



     First Bank shall mean First Bank, a Missouri state bank, in its individual corporate
capacity as a Lender hereunder and not as Agent hereunder.



     GAAP shall mean, at any time, generally accepted accounting principles at such time in
the United States, applied in a manner consistent with such principles used in preparing the
financial statements referred to in Section 5.4 herein.



     Guarantee by any Person shall mean any obligation, contingent or otherwise, of such
Person guaranteeing any Indebtedness of any other Person or in any manner providing for the payment
of any Indebtedness of any other Person or otherwise protecting the holder of such Indebtedness
against loss (whether by agreement to keep-well, to purchase assets, goods, securities or services,
or to take-or-pay or otherwise); provided that the term Guarantee shall not include endorsements
for collection or deposit in the ordinary course of business. The term “Guarantee” used as a verb
shall have a correlative meaning.



     Hazardous Materials shall mean any hazardous or toxic material, substance or waste,
pollutant or contaminant which is regulated under any Environmental Law or any other statute, law,
ordinance, rule or regulation of any Federal, state, local, foreign or other body, instrumentality,
agency, authority or official having jurisdiction over any of the Property owned, leased or
operated by any Borrower or any Subsidiary or its use, including, without limitation, any material,
substance or waste which is: (a) defined as a hazardous substance under Section 311 of the Federal
Water Pollution Control Act (33 U.S.C. §§1317), as amended; (b) regulated as a hazardous waste
under Section 1004 or Section 3001 of the Federal Solid Waste Disposal Act, as amended by the
Resource Conservation and Recovery Act (42 U.S.C. §§6901 et seq.), as amended; (c)
defined as a hazardous substance under Section 101 of the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. §§9601 et seq.), as amended; or (d)
defined or regulated as a hazardous substance or hazardous waste under any rules or regulations
promulgated under any of the foregoing statutes.



     Indebtedness of any Person shall mean and include, without duplication, any and all
indebtedness (principal, interest, fees and other amounts), liabilities and obligations of such
Person which in accordance with GAAP are or should be classified upon a balance sheet of such
Person as liabilities of



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such Person, and in any event shall include all (i) obligations of such
Person for borrowed money or which have been incurred in connection with the acquisition of
Property, (ii) obligations secured by any Lien or other charge upon any Property owned by such
Person, provided that if such Person has not assumed or become liable for the payment of such
obligations, such obligations shall still be included in Indebtedness but the determination of the
amount of Indebtedness evidenced by such obligations shall be
limited to the book value of such Property, (iii) obligations created or arising under any
conditional sale or other title retention agreement with respect to any Property acquired by such
Person, provided that if the rights and remedies of the seller, lender or lessor in the event of
default under such agreement are limited solely to repossession or sale of such Property, such
obligations shall still be included in Indebtedness but the determination of the amount of
Indebtedness evidenced by such obligations shall be limited to the book value of such Property,
(iv) all Guarantees and other contingent indebtedness, liabilities and obligations of such Person
of Indebtedness of any other Person whether or not reflected on the balance sheet of such Person
and (v) all obligations of such Person as lessee under any Capitalized Lease.



     Inventory shall mean all inventory of any of the Borrowers.



     Investment shall mean any investment (including, without limitation, any loan or
advance) by any Borrower or any Subsidiary in or to any Person, whether payment therefor is made in
cash or capital stock, membership interests or other equity interests of any Borrower or any
Subsidiary, and whether such investment is by acquisition of stock, membership interests or other
equity interests or Indebtedness, or by loan, advance, transfer of Property out of the ordinary
course of business, capital contribution, equity or profit sharing interest, extension of credit on
terms other than those normal in the ordinary course of business or otherwise.



     Lenders shall have the meaning ascribed to such term in the first paragraph on the
first page of this Agreement, and Lender shall refer to any of them.



     Letter of Credit and Letters of Credit shall have the meanings ascribed
thereto in Section 3.3(a).



     Letter of Credit Application shall mean a standby letter of credit application and
agreement in the form of Exhibit E attached hereto and incorporated herein by reference or
an application and agreement for irrevocable commercial letter of credit in the form of Exhibit
F attached hereto and incorporated herein by reference, and in either case executed by any of
the Borrowers, as account party, and delivered to First Bank, as letter of credit issuer, pursuant
to Section 3.3(a) as the same may from time to time be amended, modified, extended or renewed.



     Letter of Credit Commitment Fee shall have the meaning ascribed thereto in Section
3.3(c)(ii).



     Lien shall mean any interest in Property securing an obligation owed to, or a claim
by, a Person other than the owner of the Property, whether such interest is based on common law,
statute or contract, including, without limitation, any security interest, mortgage, deed of trust,
pledge, hypothecation, judgment lien or other lien or encumbrance of any kind or nature whatsoever,
any conditional sale or trust receipt and any lease, consignment or bailment for security purposes.
The term “Lien” shall include reservations, exceptions, encroachments, easements, rights-of-way,
covenants, conditions, restrictions, leases and other title exceptions and encumbrances affecting
Property.



     Loan shall mean each Revolving Credit Loan and each Swing Line Loan, and Loans
shall mean any or all of the foregoing.



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     Material Adverse Effect shall mean (a) a material adverse effect on the Properties,
assets, liabilities, business, operations, prospects, income or condition (financial or otherwise)
of the Borrowers and their respective Subsidiaries considered as a whole, (b) material impairment
of the ability of any Borrower and/or any other Obligor to perform any of its obligations under
this Agreement, the Revolving Credit Notes, the Swing Line Note and/or any other Transaction
Document or (c) material impairment of the
enforceability of the rights of, or benefits available to, the Agent or any Lender under this
Agreement, the Revolving Credit Notes, the Swing Line Note and/or any other Transaction Document.



     Multiemployer Plan shall mean a “multi-employer plan” as defined in Section 4001(a)
(3) of ERISA which is maintained for employees of any of the Borrowers, any ERISA Affiliate or any
Subsidiary of any of the Borrowers.



     Notes shall mean the Revolving Credit Notes and the Swing Line Note, as any of them
may be amended, restated or replaced from time to time.



     Obligor shall mean each of the Borrowers and each other Person who is or shall at any
time hereafter become primarily or secondarily liable on any of the Borrowers’ Obligations or who
grants Agent or any of the Lenders a Lien upon any of the Property or assets of such Person as
security for any of the Borrowers’ Obligations.



     Occupational Safety and Health Laws shall mean the Occupational Safety and Health Act
of 1970, as amended, and any other federal, state or local statute, law, ordinance, code, rule,
regulation, order or decree regulating, relating to or imposing liability or standards of conduct
concerning employee health and/or safety, as now or at any time hereafter in effect.



     Patent, Trademark and License Security Agreement shall mean any of: (i) that certain
Patent, Trademark and License Security Agreement dated as of September 3, 2003 made by and between
Virbac and the Agent, as the same may be modified, amended or restated from time to time, (ii) that
certain Patent, Trademark and License Security Agreement dated as of September 3, 2003 made by and
between Virbac AH and the Agent, as the same may be modified, amended or restated from time to
time, (iii) that certain Patent, Trademark and License Security Agreement dated as of the date
hereof made by and between St. JON and the Agent, as the same may be modified, amended or restated
from time to time, and (iv) that certain Patent, Trademark and License Security Agreement dated as
of September 3, 2003 made by and between Delmarva and the Agent, as the same may be modified,
amended or restated from time to time, and Patent, Trademark and License Security
Agreements shall mean all of them.



     PBGC shall mean the Pension Benefit Guaranty Corporation and any entity succeeding to
any or all of its functions under ERISA.



     Pension Plan shall mean a “pension plan,” as such term is defined in Section 3(2) of
ERISA, which is established or maintained by any of the Borrowers, any ERISA Affiliate or any
Subsidiary of any of the Borrowers, other than a Multiemployer Plan.



     Permitted Liens shall mean any of the following:



          (a) Liens in favor of Agent for the ratable benefit of the Lenders;




          (b) Liens on Property of a Subsidiary to secure obligations of such Subsidiary to any of the
Borrowers;




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          (c) Liens for property taxes and assessments or governmental charges or levies and Liens
securing claims or demands of mechanics and materialmen, provided payment thereof is not at the
time required by Sections 6.1(d) and 6.1(e), provided such taxes, assessments, other governmental
charges or any such claims or demands of mechanics and materialmen are being contested in good
faith and by appropriate proceedings diligently conducted and for which adequate reserves in form
and amount satisfactory to the Required Lenders in their reasonable discretion are maintained, and
provided further
that the Borrowers or any Subsidiary shall pay or cause to be paid all such taxes, assessments,
other governmental charges or mechanics’ or materialmen’s Liens forthwith upon the commencement of
proceedings to foreclose any Lien which is attached as security therefor, unless such foreclosure
is stayed by the filing of an appropriate bond in a manner satisfactory to the Required Lenders;




          (d) Liens (other than any Liens imposed by ERISA) incidental to the conduct of business or the
ownership of Properties (including Liens in connection with worker’s compensation, unemployment
insurance and other like laws, warehousemen’s and attorneys’ liens and statutory landlords’ liens)
and Liens to secure the performance of bids, tenders or trade contracts, or to secure statutory
obligations, surety or appeal bonds or other Liens of like general nature incurred in the ordinary
course of business and not in connection with the borrowing of money or the purchase or other
acquisition of Property; provided in each case the obligation secured is not overdue or, if
overdue, is being contested in good faith by appropriate actions or proceedings being diligently
conducted and for which adequate reserves in accordance with GAAP have been set aside;




          (e) survey exceptions, easements, reservations, rights of others for rights-of-way, utilities
and other similar purposes and/or zoning or other restrictions as to the use of real properties,
which are necessary or desirable for the conduct of the activities of Borrowers and their
Subsidiaries or which customarily exist on properties of Persons engaged in similar activities and
similarly situated and which do not in any event materially impair the use of such real properties
in the operation of the business of the Borrowers and their Subsidiaries;




          (f) Liens existing as of the date of this Agreement and listed on Schedule 5.11
attached hereto (without giving effect to any changes to Schedule 5.11 made after the date
of this Agreement);




          (g) purchase money Liens granted to a Person financing a Capital Expenditure permitted by this
Agreement so long as (i) the Lien granted is limited to the specific fixed assets acquired and the
proceeds thereof, (ii) the aggregate principal amount of Debt secured by the Lien is not more than
the acquisition cost of the specific fixed assets on which the Lien is granted and (iii) the
transaction does not violate any other provision of this Agreement; and




          (h) Capitalized Leases permitted by this Agreement.




     Person shall mean any individual, sole proprietorship, partnership, joint venture,
trust, unincorporated organization, cooperative, association, corporation, limited liability
company, institution, entity or government (whether national, federal, state, county, city,
municipal or otherwise, including, without limitation, any instrumentality, division, agency, body
or department thereof).



     Pledge Agreements shall mean (i) that certain Third Amended and Restated Agreement of
Pledge executed by Virbac pursuant to which Virbac has pledged to Agent, for the ratable benefit of
the Lenders, all of the issued and outstanding shares of capital stock in PM Resources, St. JON,
Virbac AH and Delmarva, as the same may from time to time be amended, modified or restated, and
(ii) that certain Second Amended and Restated Agreement of Pledge executed by Virbac AH pursuant to
which Virbac



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AH has pledged to Agent, for the ratable benefit of the Lenders, all of the issued and
outstanding shares of capital stock in Francodex, as the same may from time to time be amended,
modified or restated.



     Prime Rate shall mean the interest rate announced from time to time by First Bank as
its “prime rate” on commercial loans (which rate shall fluctuate as and when said prime rate shall
change).



     Pro Rata Share shall mean for the item at issue, with respect to each Lender, a
percentage, the numerator of which is the portion of such item owned or held by such Lender and the
denominator of which is the total amount of such item owned or held by all of the Lenders. For
example, (a) if the amount of the Revolving Credit Commitment of a Lender is $200,000.00 and the
total amount of the Revolving Credit Commitments of all of the Lenders is $1,000,000.00, such
Lender’s Pro Rata Share of the Revolving Credit Commitments would be Twenty Percent (20%) and (b)
if the original principal amount of a Loan is $5,000,000.00 and the portion of such Loan made by
one Lender is $500,000.00, such Lender’s Pro Rata Share of such Loan would be Ten Percent (10%).
As of the date of this Agreement, the Pro Rata Shares of the Lenders with respect to the Revolving
Credit Commitments and the Revolving Credit Loans are as follows: (a) First Bank – Sixty-Six and
6,666,667/10,000,000ths of One Percent (66.6666667%); and (b) JPMorgan Chase Bank, N.A. –
Thirty-Three and 3,333,333/10,000,000ths of One Percent (33.3333333%).



     Property shall mean any interest in any kind of property or asset, whether real,
personal or mixed, or tangible or intangible. Properties shall mean the plural of Property.
For purposes of this Agreement, each Borrower and each Subsidiary of the Borrowers shall be deemed
to be the owner of any Property which it has acquired or holds subject to a conditional sale
agreement, financing lease or other arrangement pursuant to which title to the Property has been
retained by or vested in some other Person for security purposes.



     Reportable Event shall have the meaning given to such term in Section 4043(c) of
ERISA, excluding any such event with respect to which notice to the PBGC has been waived by
regulation.



     Required Lenders shall mean at any time Lenders having 51% or more of the aggregate
amount of Total Revolving Credit Outstandings (other than Swing Line Loans) then outstanding or, if
no Loans or Letters of Credit are then outstanding, 51% or more of the Total Revolving Credit
Commitment of all of the Lenders; provided, however, that if there are two or fewer Lenders,
Required Lenders shall mean all of the Lenders.



     Reserves means, with respect to the Borrowing Base of any Borrower, reserves
established by Agent or the Required Lenders in their reasonable credit judgment from time to time
against Eligible Accounts or Eligible Inventory pursuant to the definitions thereof.



     Restricted Investment shall mean any Investment, or any expenditure or any incurrence
of any liability to make any expenditure for an Investment, other than:



          (a) loans and/or advances by any Borrower to any other Borrower or to any Subsidiary
Guarantor;




          (b) loans and/or advances by any Subsidiary to any Borrower which are subordinated in writing
to the payment of the Borrower’s Obligations in form and substance satisfactory to the Required
Lenders;





- 15 -









 








          (c) direct obligations of the United States of America or any instrumentality or agency
thereof, the payment of which is unconditionally guaranteed by the United States of America or any
instrumentality or agency thereof (all of which Investments must mature within twelve (12) months
from the time of acquisition thereof);




          (d) Investments in readily marketable commercial paper which, at the time of acquisition
thereof by Borrower or any Subsidiary, is rated A-1 or better by S&P and P-1 or better by Moody’s
and which matures within 270 days from the date of acquisition thereof, provided that the issuer of
such commercial paper shall, at the time of acquisition of such commercial paper, have a senior
long-term debt rating of at least A by S&P and Moody’s;




          (e) negotiable certificates of deposit or negotiable bankers acceptances issued by a Lender or
any other bank or trust company organized under the laws of the United States of America or any
state thereof, which bank or trust company (other than any Lender to which such restrictions shall
not apply) is a member of both the Federal Deposit Insurance Corporation and the Federal Reserve
System and has a Thomson BankWatch Global Issuer Rating of “B” or better (all of which Investments
must mature within twelve (12) months from the time of acquisition thereof);




          (f) repurchase agreements, which shall be collateralized for at least 102% of face value,
issued by a Lender or any other bank or trust company organized under the laws of the United States
or any state thereof, which bank or trust company (other than any Lender to which such restrictions
shall not apply) is a member of both the Federal Deposit Insurance Corporation and the Federal
Reserve System and has a Thomson BankWatch Global Issuer Rating of “B” or better (all of which
Investments must mature within twelve (12) months from the time of acquisition thereof);




          (g) Investments existing as of the date of this Agreement and listed on Schedule 5.15
attached hereto (without giving effect to any changes to Schedule 5.15 made after the date
of this Agreement), and any future retained earnings in respect thereof; and




          (h) loans or advances in the usual and ordinary course of business to officers and/or
employees of a Borrower or a Subsidiary for business expenses in the aggregate principal amount of
up to $25,000.00 at any one time outstanding.




     Revolving Credit Commitment shall mean, subject to termination or reduction as set
forth in Section 3.6, for each Lender the amount set forth as the Revolving Credit Commitment of
such Lender next to its name on the signature pages hereof or on the signature pages of any
subsequent Assignment Agreement to which such Lender is a party.



     Revolving Credit Loan and Revolving Credit Loans shall have the meanings
ascribed thereto in Section 3.1(a).



     Revolving Credit Notes shall mean each of the Revolving Credit Notes of the Borrowers
to be executed and delivered to each of the Lenders pursuant to Section 3.1(a), as the same may
from time to time be amended, modified, extended or renewed.



     Security Agreement shall mean each Security Agreement dated of even date herewith to
be executed, respectively, by each of the Borrowers and delivered to Agent for the benefit of each
of the Lenders, as the same may from time to time be amended, modified or restated, and
Security Agreements shall mean more than one of them.



- 16 -









 





     Stated Amount means, with respect to any Letter of Credit at any date of
determination, (i) the maximum aggregate amount available for drawing thereunder under any and all
circumstances, plus (ii) the aggregate amount of all unreimbursed payments and disbursements under
such Letter of Credit.



     Subordinated Debt shall mean, as of the date of any determination thereof, the
aggregate principal amount of all Indebtedness of Borrowers and all Subsidiaries of any of the
Borrowers outstanding as of such date which is subordinated in writing to the payment and priority
of all of the Borrower’s Obligations pursuant to a subordination agreement in form and substance
satisfactory to Agent and the Required Lenders.



     Subordination Agreement shall mean that certain Subordination Agreement dated of even
date herewith to be executed by Virbac S. A. in favor of the Agent and the Lenders, as the same may
from time to time be amended, modified or restated.



     Subsidiary shall mean, with respect to any Person, any corporation or other entity of
which fifty percent (50%) or more of the issued and outstanding capital stock or other equity
interests entitled to vote for the election of directors or persons performing similar functions
(other than by reason of default in the payment of dividends or other distributions) is at the time
owned directly or indirectly by such Person.



     Subsidiary Guarantor shall mean as of any date each Subsidiary of any Borrower which
as of such date has executed and delivered to Agent for the ratable benefit of each of the Lenders
its unlimited continuing Subsidiary Guaranty and its Subsidiary Security Agreement in form and
substance acceptable to Agent and the Lenders.



     Subsidiary Guaranties shall mean the guaranties of any Subsidiaries of any of the
Borrowers executed and delivered to Agent hereafter whether pursuant to Section 6.2(e) or
otherwise, which guaranties must be in form and substance acceptable to Agent and the Lenders, all
as the same may from time to time be amended, and Subsidiary Guaranty shall mean any of
them.



     Subsidiary Security Agreements shall mean the security agreements executed subsequent
to the date of this Agreement by any of the Subsidiaries of any of the Borrowers and delivered to
Agent hereafter, whether pursuant to Section 6.2(e) or otherwise, which subsequently delivered
security agreements must be in form and substance acceptable to Agent and the Lenders, all as the
same may from time to time be amended, and Subsidiary Security Agreement shall mean any of
them.



     Swing Line Borrowing Notice shall have the meaning ascribed thereto in Section 3.2(b).



     Swing Line Commitment shall mean $3,000,000.00.



     Swing Line Loan and Swing Line Loans shall have the meanings ascribed thereto
in Section 3.1(e).



     Swing Line Note shall have the meaning ascribed thereto in Section 3.1(e).



     Term shall have the meaning ascribed thereto in Section 1.



     Third Party Collateral shall mean any Property or assets of any Obligor other than one
of the Borrowers which now or at any time hereafter secure the payment or performance of any of the
Borrowers’ Obligations.



- 17 -









 





     Total Revolving Credit Commitment shall have the meaning ascribed thereto in Section
3.1(a).



     Total Revolving Credit Outstandings shall mean, as of any date, the sum of (a) the
aggregate principal amount of all Revolving Credit Loans outstanding as of such date, plus
(b) the aggregate principal amount of all Swing Line Loans outstanding as of such date plus
(c) the Stated Amount of all Letters of Credit outstanding for the account of any of the Borrowers
as of such date.



     Transaction Documents shall mean this Agreement, the Notes, the Security Agreements,
the Deeds of Trust, the Patent, Trademark and License Security Agreements, the Pledge Agreements,
any Letter of Credit Application, the Subsidiary Guaranties, the Subsidiary Security Agreements and
all other
agreements, documents and instruments heretofore, now or hereafter delivered to Agent or any of the
Lenders with respect to or in connection with or pursuant to this Agreement, any Loans made or
Letters of Credit issued hereunder or any other of the Borrowers’ Obligations, and executed by or
on behalf of the Borrowers or any of their respective Subsidiaries, all as the same may from time
to time be amended, modified, extended or renewed.



     Voting Stock shall mean, with respect to any corporation, limited liability company or
other entity, any shares of stock, membership interests or other equity interests of such
corporation, limited liability company or other entity whose holders are entitled under ordinary
circumstances to vote for the election of directors (or Persons performing similar functions) of
such corporation or other entity (irrespective of whether at the time stock, membership interests
or other equity interests of any other class or classes shall have or might have voting power by
reason of the happening of any contingency).



SECTION 3. THE REVOLVING CREDIT LOANS.




     3.1 Revolving Credit Commitment of Lenders; Swing Line Commitment of First Bank.



          (a) Subject to the terms and conditions hereof and so long as no Default or Event of Default
has occurred and is continuing (provided, however, that Agent shall have no liability to any other
Lender for making a Revolving Credit Loan to Borrowers after the occurrence or during the
continuance of any Default or Event of Default unless Agent has previously received notice in
writing from a Borrower or any other Lender of the occurrence of such Default or Event of Default),
during the Term of this Agreement, each Lender hereby severally agrees to make such loans
(individually, a “Revolving Credit Loan” and collectively, the “Revolving Credit Loans”), to each
Borrower as such Borrower may from time to time request pursuant to Section 3.2(a). The Total
Revolving Credit Outstandings shall not exceed the lesser of (i) the Borrowing Base; or (ii)
Fifteen Million Dollars ($15,000,000.00) (the “Total Revolving Credit Commitment”), and the amount
each Lender shall be required to have outstanding hereunder as Revolving Credit Loans plus their
Pro Rata Share of any then outstanding Swing Line Loans made by First Bank under Section 3.1(e)
plus their undivided Pro Rata Share participation interest in the Stated Amount of each Letter of
Credit issued by First Bank under Section 3.3 shall not exceed, in the aggregate at any one time
outstanding, the lesser of (x) the amount of such Lender’s Revolving Credit Commitment or (y) such
Lender’s Pro Rata Share of the then current Borrowing Base. Each Revolving Credit Loan under this
Section 3.1(a) shall be made from the several Lenders rateably in proportion to their respective
Revolving Credit Commitments. The Revolving Credit Loans from Lenders to the Borrowers shall be
evidenced by the joint and several Revolving Credit Notes of the Borrowers dated the date hereof
and payable to the order of each of the Lenders in the respective original principal amounts of
each such Lender’s Revolving Credit Commitment and in the form attached hereto as Exhibit B
and incorporated herein by reference (as the same may from time to time be amended, modified,
extended or renewed, the “Revolving Credit Notes”). Subject to the terms and conditions hereof,
the Borrowers may borrow, repay and reborrow such sums from Lenders.




- 18 -









 








          (b) Borrowers shall have delivered to the Agent and each of the Lenders on or before the date
of execution hereof (with respect to the fiscal month ended April 30, 2006), and on or before the
last day of each month thereafter (with respect to the immediately preceding fiscal month-end) (or
more often if requested by the Agent or the Required Lenders) the Borrowers shall deliver to each
of the Lenders, a borrowing base certificate in the form of Exhibit A attached hereto and
incorporated herein by reference (a “Borrowing Base Certificate”) setting forth:





     (i) the Borrowing Base and its components as of the end of the immediately
preceding fiscal month;




     (ii) the aggregate principal amount of all Revolving Credit Loans outstanding,
the aggregate principal amount of all Swing Line Loans outstanding, and the Stated
Amount of all Letters of Credit issued for the account of any of the Borrowers which
are then outstanding; and




     (iii) the difference, if any, between the Borrowing Base and the Total
Revolving Credit Outstandings.


The Borrowing Base shown in each such Borrowing Base Certificate shall be and remain the Borrowing
Base under this Agreement until the next Borrowing Base Certificate is delivered to each of the
Lenders, at which time the Borrowing Base shall be the amount shown in such subsequent Borrowing
Base Certificate. Each Borrowing Base Certificate shall be certified as to truth and accuracy by
the President or principal financial officer of each of the Borrowers.




          (c) If the Total Revolving Credit Outstandings are at any time greater than the Borrowing Base
at such time, the Borrowers shall (without demand or notice of any kind by Agent or any of the
Lenders, all of which are hereby expressly waived by each Borrower) immediately repay the Revolving
Credit Loans and/or the Swing Line Loans and/or to cash collateralize the outstanding Letters of
Credit in the manner set forth in Section 3.3(e) herein, in any such case in an aggregate amount
sufficient to reduce the amount of the Total Revolving Credit Outstandings to the amount of the
Borrowing Base. If the Total Revolving Credit Outstandings are at any time greater than the amount
of the Total Revolving Credit Commitment at such time (whether as a result of a scheduled reduction
in the amount of the Total Revolving Credit Commitment or otherwise), the Borrowers shall (without
demand or notice of any kind by Agent or any of the Lenders, all of which are hereby expressly
waived by each Borrower) immediately repay the Revolving Credit Loans and/or the Swing Line Loans
and/or cash collateralize the outstanding Letters of Credit in the manner set forth in Section
3.3(e) herein, in any such case in an aggregate amount sufficient to reduce the amount of the Total
Revolving Credit Outstandings to the amount of the Total Revolving Credit Commitment. 




          (d) Each Lender shall record in its books and records, and prior to any transfer of its
Revolving Credit Note shall endorse on the schedules forming a part thereof, appropriate notations
to evidence the date and amount of each Revolving Credit Loan made by it during the Term hereof,
and the date and amount of each payment of principal made by Borrowers with respect thereto. Each
Lender is hereby irrevocably authorized by Borrowers so to endorse its Revolving Credit Note and to
attach to and make a part of any such Revolving Credit Note a continuation of any such schedule as
and when required; provided, however that the obligation of Borrowers to repay each Revolving
Credit Loan made hereunder shall be absolute and unconditional, notwithstanding any failure of any
Lender to endorse or any mistake by any Lender in connection with endorsement on the schedules
attached to their respective Revolving Credit Notes. The books and records of each Lender
(including, without limitation, the schedules





- 19 -











 






attached to the Revolving Credit Notes) showing the
account between such Lender and Borrowers shall be admissible in evidence in any action or
proceeding and shall constitute prima facie proof of the items therein set forth.




          (e) First Bank’s Swing Line Commitment. Subject to the terms and conditions hereof,
and so long as no Default or Event of Default has occurred and is continuing (provided, however,
that First Bank shall have no liability to any other Lender for making a Swing Line Loan to any
Borrower after the occurrence or during the continuance of any Default or Event of Default unless
First Bank has previously received notice in writing from a Borrower or any other Lender of the
occurrence of such Default or Event of Default), during the Term of this Agreement, First Bank
agrees to make such loans (individually, a “Swing Line Loan” and collectively, the “Swing Line
Loans”), to each Borrower as the Borrower Representative may from time to time request pursuant to
Section 3.2(b) or as the same may
from time to time be deemed requested by the Borrower Representative pursuant to Section 3.2(b).
The aggregate principal amount of Swing Line Loans which First Bank shall be required to have
outstanding under this Agreement as of any date shall not exceed the amount of the Swing Line
Commitment; provided, however, that in no event shall the Total Revolving Credit Outstandings on
any given day exceed the lesser of (a) the Total Revolving Credit Commitments of all of the
Lender(s) on such day or (b) the amount of the Borrowing Base on such day. Within the foregoing
limits, Borrowers may borrow under this Section 3.1(e), prepay under Section 3.10 and reborrow at
any time during the Term hereof under this Section 3.1(e). All Swing Line Loans not paid prior to
the last day of the Term hereof, together with all accrued and unpaid interest thereon and all fees
and other amounts owing by Borrowers to First Bank with respect thereto, shall be due and payable
on the last day of the Term hereof. The Swing Line Loans from First Bank to the Borrowers shall be
evidenced by the joint and several Swing Line Note of the Borrowers dated the date hereof and
payable to the order of First Bank in the original principal amount of Three Million Dollars
($3,000,000.00) and in the form attached hereto as Exhibit C and incorporated herein by
reference (as the same may from time to time be amended, modified, extended or renewed, the “Swing
Line Note”). On Tuesday of each week (or if any such Tuesday is not a Business Day, then on the
next succeeding Business Day) (each a “Settlement Date”), the Agent shall promptly notify the
Lenders in writing of the aggregate principal amount of all Swing Line Loans then outstanding from
First Bank, and each of the Lenders hereby irrevocably agrees on each such Settlement Date to make
a Revolving Credit Loan to Borrowers on such date in the amount of such Lender’s ratable share of
the amount of all such then outstanding Swing Line Loans (based on such Lender’s Pro Rata Share of
the Revolving Credit Commitments). Each Lender shall pay such amount to the Agent in immediately
available funds on such Settlement Date, and Agent shall pay such amounts to First Bank in
immediately available funds on such Settlement Date. If such amount is not in fact made available
to the Agent by any such Lender on a Settlement Date, the Agent shall be entitled to receive such
amount from such Lender forthwith upon its demand, together with interest thereon in respect of
each day during the period commencing on the Settlement Date such amount was due and ending on but
excluding the date the Agent recovers such amount from the Lender at a rate per annum equal to the
effective rate charged to the Agent for overnight federal funds transactions with member banks of
the Federal Reserve System for each day as determined by the Agent (or in the case of a day which
is not a Business Day, then for the preceding day). Following such advance by each Lender of its
Pro Rata Share of any such Swing Line Loans as a Revolving Credit Loan pursuant to this Section,
each such Lender shall thereafter receive its Pro Rata Share of all principal payments, interest
payments, fees and other amounts due with respect to such Revolving Credit Loans as and when paid
by Borrowers to Agent hereunder. Such Revolving Credit Loans shall thereafter be evidenced by the
Revolving Credit Notes of each of the Lenders.




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     3.2 Procedure for Borrowing.



          (a) Revolving Credit Loan Advances. Subject to the terms and conditions hereof,
Lenders shall cause the Revolving Credit Loans to be made to the Borrowers at any time and from
time to time during the Term hereof upon timely notice (a “Borrowing Notice”) to Agent, in writing
signed by the Borrower Representative (which notice may be given by facsimile transmission) or such
Borrowing Notice may be oral provided it is promptly confirmed in writing signed by the Borrower
Representative to Agent, specifying: (1) the desired amount of the new Revolving Credit Loan(s),
and (2) the date on which the Loan proceeds are to be made available to the applicable Borrower(s),
which shall be a Business Day. Each Borrowing Notice must be received by Agent not later than
10:00 a.m. (St. Louis time) on the Business Day on which a Revolving Credit Loan being borrowed is
to be made. The Agent shall notify each Lender by 11:00 a.m. (St. Louis time) on the date of its
receipt of a Borrowing Notice of the contents thereof and of such Lender’s Pro Rata Share of such
new Revolving Credit Loan. A Borrowing Notice, once issued, shall not be revocable by the
Borrowers. Not later than 2:00 p.m. (St. Louis time) on the date of each new Revolving Credit
Loan, each Lender shall make available its Pro Rata Share of such Revolving Credit Loan, in federal
or other funds immediately available in St. Louis, Missouri, to the Agent at its address
specified in or pursuant to Section 9.7. Agent shall not be required to make any amount available
to Borrowers hereunder except to the extent it shall have received such amounts from the Lenders as
set forth herein, provided, however, that unless the Agent shall have been notified by a Lender
prior to the date a Revolving Credit Loan is to be made hereunder that such Lender does not intend
to make its Pro Rata Share of such Revolving Credit Loan available to the Agent, the Agent may
assume that such Lender has made such Pro Rata Share available to the Agent on such date, and the
Agent may in reliance upon such assumption make available to the applicable Borrower(s) a
corresponding amount. If such corresponding amount is not in fact made available to the Agent by
such Lender and the Agent has made such amount available to the Borrower(s), the Agent shall be
entitled to receive such amount from such Lender forthwith upon its demand, together with interest
thereon in respect of each day during the period commencing on the date such amount was made
available to the Borrower(s) and ending on but excluding the date the Agent recovers such amount
from the Lender at a rate per annum equal to the effective rate charged to the Agent for overnight
federal funds transactions with member banks of the Federal Reserve System for each day as
determined by the Agent (or in the case of a day which is not a Business Day, then for the
preceding day). Subject to the terms and conditions hereof, provided that Agent has received a
timely Borrowing Notice, Agent shall (unless Agent determines that any applicable condition
specified in Section 4 has not been satisfied) make the funds so received from the Lenders
available to the applicable Borrower(s) by wiring or otherwise transferring the proceeds of such
Loan not later than 3:00 p.m. (St. Louis time) on the Business Day specified in said Borrowing
Notice in accordance with any instructions for such disbursement received from such Borrower(s).
Each of the Borrowers hereby authorizes Agent and Lenders to rely on telephonic, facsimile or
written instructions of any Person identifying himself or herself as a Person authorized to request
a Revolving Credit Loan or to make a repayment hereunder, and on any signature which Agent or any
of the Lenders believes to be genuine, and the Borrowers shall be bound thereby in the same manner
as if such Person were actually authorized or such signature were genuine. Each of the Borrowers
also hereby agrees to indemnify Agent and Lenders and hold Agent and Lenders harmless from and
against any and all claims, demands, damages, liabilities, losses, costs and expenses (including,
without limitation, attorneys’ fees and expenses) relating to or arising out of or in connection
with the acceptance of instructions for making Revolving Credit Loans or making repayments
hereunder unless such acceptance results from the gross negligence or willful misconduct of the
Agent or a Lender, as determined by a court of competent jurisdiction. A Borrowing Notice shall
not be required in connection with a Revolving Credit Loan pursuant to Section 3.3(c).




- 21 -









 








          (b) Swing Line Loans. Subject to the terms and conditions hereof, First Bank shall
cause the Swing Line Loans to be made to the Borrowers at any time and from time to time during the
Term hereof upon timely notice (a “Swing Line Borrowing Notice”) to First Bank, either in writing
signed by the Borrower Representative (including any such notice by facsimile transmission) or
orally, provided it is promptly confirmed in writing signed by the Borrower Representative to First
Bank, specifying: (1) the desired principal amount of the Swing Line Loan(s), (2) the Borrower(s)
to whom such Swing Line Loan(s) are to be made, and (3) the date on which the Loan proceeds are to
be made available to the applicable Borrower(s), which shall be a Business Day. Each Swing Line
Borrowing Notice must be received by First Bank not later than 10:00 a.m. (St. Louis time) on the
Business Day on which a Swing Line Loan is to be made. A Borrowing Notice shall not be required in
connection with a Loan made to cover any overdraft in Virbac’s operating account on a day-to-day
basis as set forth herein. A Borrowing Notice shall not be revocable by Borrowers. Subject to the
terms and conditions hereof, provided that First Bank has received the Borrowing Notice, First Bank
shall (unless First Bank determines that any applicable condition specified in Section 4 has not
been satisfied) pay to Borrowers, or any of them, the Loan proceeds of any new Swing Line Loan in
immediately available funds not later than 2:00 p.m. (St. Louis time) on the Business Day specified
in said Borrowing Notice. Each of the Borrowers hereby authorizes First Bank to reasonably rely on
telephonic, telegraphic, telecopy, telex or written instructions of any person identifying himself
as a person authorized to request a Swing Line Loan or make a repayment hereunder, and on any
signature which First Bank believes to be genuine, and Borrowers shall be bound thereby in the same
manner as if such person were actually
authorized or such signature were genuine. Borrowers further request and authorize First Bank, in
its sole and absolute discretion, to make a Swing Line Loan to Borrowers hereunder at the end of
each day in which Borrowers shall have an overdraft (negative ledger balance) in Virbac’s operating
account (Account No. 9800801785) with First Bank after crediting all deposits received in
immediately available funds and debiting all withdrawals made and checks presented against such
account and honored by First Bank as of such date and after funding any advances to or receiving
any collected balances on such day from the “zero balance” operating accounts of PM Resources
(Account No. 9800802535), and Virbac AH (Account No. 9821908926) with First Bank to cover
withdrawals made and checks presented on such date and after crediting all deposits received in
immediately available funds on such date, which Swing Line Loan shall be in the amount of such
overdraft without any other request or authorization therefor from Borrowers and without notice to
Borrowers. Similarly, Borrowers request that First Bank apply any collected balances (after
funding advances to or receiving collections from the “zero balance” accounts of PM Resources and
Virbac AH) in excess of a mutually predetermined amount remaining at the end of any day in Virbac’s
operating account to the repayment of the principal balance of Borrowers’ Obligations outstanding,
first as Swing Line Loans, and second, as Revolving Credit Loans, under the Notes. Borrowers also
hereby agree jointly and severally to indemnify First Bank and hold First Bank harmless from and
against any and all claims, demands, damages, liabilities, losses, costs and expenses (including,
without limitation, Attorneys’ Fees) relating to or arising out of or in connection with the
acceptance of instructions for making Swing Line Loans or repayments hereunder.




     3.3 Letters of Credit.



          (a) Subject to the terms and conditions of this Agreement, during the Term of this Agreement,
and so long as no Default or Event of Default under this Agreement has occurred and is continuing
(provided, however, that First Bank shall have no liability to any of the Lenders for issuing a
Letter of Credit after the occurrence of any Default or Event of Default under this Agreement
unless First Bank has previously received notice in writing to First Bank by Borrowers or any of
the other Lenders of the occurrence of such Default or Event of Default), First Bank hereby agrees
to issue irrevocable standby and commercial letters of credit for the account of any of the
Borrowers (individually, a “Letter of Credit” and collectively, the “Letters of Credit”) in an
amount and for the term specifically requested by any such




- 22 -









 







Borrower by application in writing to
First Bank in the form of Exhibit E in the case of a standby Letter of Credit or in the
form of Exhibit F in the case of a commercial Letter of Credit, each as attached hereto and
incorporated herein by reference (a “Letter of Credit Application”) at least three (3) Business
Days prior to the requested issuance thereof; provided, however, that:





     (i) the applicable Borrower shall have executed and delivered to First Bank a
Letter of Credit Application with respect to such Letter of Credit, which Letter of
Credit Application shall be countersigned by each of the other Borrowers as
guarantors;




     (ii) the term of any such Letter of Credit shall not extend beyond the earlier
of (A) the last day of the Term hereof, or (B) three hundred sixty-five (365) days
from the issuance thereof, provided, however, that any such Letter of Credit may be
renewable on terms satisfactory to First Bank and the Required Lenders; and




     (iii) the Stated Amount of all outstanding Letters of Credit shall not at any
one time exceed Two Million Dollars ($2,000,000.00) and the Total Revolving Credit
Outstandings shall not at any one time exceed the lesser of (a) the Borrowing Base
or (b) Fifteen Million Dollars ($15,000,000.00); and




     (iv) the text of any such Letter of Credit is provided to First Bank no less
than three (3) Business Days prior to the requested issuance date, which text must
be acceptable to First Bank and the Required Lenders in their sole and absolute
discretions.



          (b) The payment of drafts under each Letter of Credit shall be made in accordance with the
terms thereof and, in that connection, First Bank shall be entitled to honor any drafts and accept
any documents presented to it by the beneficiary of such Letter of Credit in accordance with the
terms of such Letter of Credit and believed by First Bank to be genuine. First Bank shall not have
any duty to inquire as to the accuracy or authenticity of any draft or other drawing document that
may be presented to it other than the duties contemplated by the applicable Letter of Credit
Application. If First Bank shall have received documents that in its judgment constitute all of
the documents that are required to be presented before payment or acceptance of a draft under a
Letter of Credit, it shall be entitled to pay such draft provided such documents conform on their
face to the requirements of such Letter of Credit.




          (c) In the event of any payment by First Bank of a draft presented or accepted under a Letter
of Credit, Borrowers agree to pay to Agent for the account of First Bank in immediately available
funds at the time of such drawing an amount equal to the sum of such drawing plus First
Bank’s negotiation, processing and other fees related thereto. Borrowers hereby authorize First
Bank to charge or cause to be charged to any of the Borrowers’ bank accounts at First Bank to the
extent there are balances of immediately available funds therein, in an amount equal to the sum of
such drawing plus First Bank’s negotiation, processing and other fees related thereto, and
Borrowers agree to pay the amount of any such drawing (and/or First Bank’s negotiation, processing
and other fees related thereto) not so charged prior to the close of business of First Bank on the
day of such drawing. In the event any payment under a Letter of Credit is made by First Bank prior
to receipt of payment from Borrowers, such payment by First Bank shall constitute a request by the
applicable Borrower for a Revolving Credit Loan under Section 3.1(a) above.





     (i) Borrowers shall also pay to Agent, for First Bank’s account, with respect
to each a Letter of Credit, First Bank’s standard issuance fees (unless a different
issuance fee is agreed to between Borrowers and First Bank with respect to any such
Letter of Credit), confirmation fees, wire transfer fees, processing fees and other
fees as First Bank



- 23 -









 






may from time to time customarily charge, which fees shall be due and payable on
demand by First Bank; and




     (ii) Borrowers shall pay to Agent for the ratable account of the Lenders with
respect to each Letter of Credit for the period during which such Letter of Credit
is outstanding, a nonrefundable Letter of Credit Commitment Fee in an amount equal
to the Applicable Letter of Credit Commitment Fee Rate (calculated on an actual day,
360-day year basis) on the face amount of each such Letter of Credit issued
hereunder (“Letter of Credit Commitment Fee”), which Letter of Credit Commitment Fee
shall be due and payable annually in advance on the date of issuance of each such
Letter of Credit and on each anniversary date of such Letter of Credit during the
Term hereof.



          (d) Upon the issuance of a Letter of Credit by First Bank, an undivided participation interest
therein (including, without limitation, an undivided participation interest in the reimbursement
risk relating to such Letter of Credit and in all payments and Revolving Credit Loans made in
connection with such Letter of Credit) shall automatically be granted by First Bank to and accepted
by each of the other Lenders in an amount based on each such other Lender’s Pro Rata Share of the
face amount of such Letter of Credit. Agent agrees to provide each Lender with a copy of each
Letter of Credit issued hereunder. If First Bank shall make payment on any draft presented or
accepted under a Letter of Credit, Agent shall give notice of such payment to the other Lenders,
and each of the other Lenders hereby authorizes and requests Agent to advance for their respective
accounts, pursuant to the terms hereof, their respective shares of any such payment based upon
their respective Pro Rata Shares. If a Default has occurred hereunder and if such drawing is not
paid by the Borrowers in immediately available funds prior to the close of business of First Bank
on the date of such drawing, Agent shall promptly so notify the
other Lenders and each of the other Lenders agrees to immediately reimburse First Bank and/or Agent
in immediately available funds for its Pro Rata Share of the amount of such drawing, plus interest
calculated on its Pro Rata Share of such amount at a rate per annum equal to the effective rate
charged to the Agent for overnight federal funds transactions with member banks of the Federal
Reserve System calculated from the date of such payment by First Bank to but excluding the date of
reimbursement by such other Lender and on an actual-day, 360-day year basis. Each of the other
Lenders will be entitled to its Pro Rata Share of any Letter of Credit Commitment Fees paid by any
of the Borrowers, but such other Lenders shall have no right to share in any issuance fees or any
other fees paid by any of the Borrowers to Agent in connection with any of the Letters of Credit.




          (e) Notwithstanding any provision contained in this Agreement or any of the Letter of Credit
Applications to the contrary, upon the occurrence and during the continuation of any Event of
Default under this Agreement (or upon any of the circumstances set forth in Section 3.1(c) above to
the extent required therein), at the election of the Required Lenders, Borrowers shall, upon the
Required Lenders’ demand, deliver to Agent cash, or other collateral acceptable to the Required
Lenders in their sole and absolute discretion, having a value, as determined by the Required
Lenders, at least equal to aggregate undrawn face amount of all outstanding Letters of Credit. Any
such collateral and/or any amounts received by Agent for such Letters of Credit shall be held by
Agent in a separate account at Agent appropriately designated as a cash collateral account in
relation to this Agreement and the Letters of Credit and retained by Agent as collateral security
for the payment of Borrowers’ Obligations hereunder. Cash amounts delivered to Agent pursuant to
the foregoing requirements of this Section shall be invested, at the request and for the account of
Borrowers, in investments of a type and nature and with a term acceptable to the Required Lenders.
Such amounts, including, in the case of cash, amounts invested in the manner set forth above, any
interest realized thereon, may be applied to reimburse Agent, First Bank and/or any of the other
Lenders for drawings or payments under or pursuant to the Letters of Credit which First Bank or
Agent has paid, or if no such reimbursement is required to the payment of




- 24 -









 







such other of Borrowers’ Obligations as the Required Lenders shall determine. Any amounts
remaining in any cash collateral account established pursuant to this Section after the payment in
full of all of Borrowers’ Obligations and the expiration or cancellation of all of the Letters of
Credit, or upon the waiver of such Event of Default by the Agent and the Lenders, shall be returned
to the applicable Borrower (after deduction of First Bank’s and Agent’s expenses, if any).




     3.4 Interest Rates and Payments.



          (a) So long as no Event of Default has occurred and is continuing, each Revolving Credit Loan
shall bear interest prior to maturity at a rate per annum equal to the Prime Rate plus Applicable
Margin, which rate shall fluctuate as and when said Prime Rate or said Applicable Margin shall
change. Accrued interest on all Revolving Credit Loans shall be payable monthly in arrears on the
tenth (10th) day of each calendar month, commencing on the first such date after such Loan is made.
In addition, all accrued interest on all Loans shall be payable on the last day of the Term
hereof, whether by reason of acceleration or otherwise.




          (b) So long as no Event of Default has occurred and is continuing, each Swing Line Loan shall
bear interest on the outstanding principal amount thereof, for each day from the date such Swing
Line Loan is made until it becomes due, at a rate per annum equal to the Prime Rate plus Applicable
Margin, which rate shall fluctuate as and when said Prime Rate or said Applicable Margin shall
change. Accrued interest on all Swing Line Loans shall be payable monthly in arrears on the tenth
(10th) day of each calendar month, commencing on the first such date after such Swing Line Loan is
made. In addition, all accrued interest on all Swing Line Loans shall be payable on the last day
of the Term hereof, whether by reason of acceleration or otherwise.




          (c) At the option of the Required Lenders, after the occurrence and during the continuance of
an Event of Default, the principal balance of and, to the extent permitted by law, any overdue
interest on any Revolving Credit Loan shall bear interest, payable on demand, for each day until
paid, at a rate per annum equal to Three and Three-Fourths Percent (3.75%) over and above the Prime
Rate, fluctuating as and when said Prime Rate shall change, and (ii) any Swing Line Loan shall bear
interest, payable on demand, for each day until paid, at a rate per annum equal to Three and
Three-Fourths Percent (3.75%) over and above the Prime Rate, fluctuating as and when said Prime
Rate shall change. From and after the maturity of the Notes, whether by reason of acceleration or
otherwise, the unpaid principal balance of each Loan shall bear interest until paid, payable on
demand, at a rate per annum equal to Three and Three-Fourths Percent (3.75%) over and above the
Prime Rate, fluctuating as aforesaid.




          (d) Interest with respect to all Loans shall be computed on the basis of a year of 360 days
and paid for the actual number of days elapsed (including the first day but excluding the last
day).




          (e) The Agent shall determine each interest rate applicable to the Loans hereunder as selected
by Borrowers pursuant to Section 3.2. The Agent shall give prompt notice to Borrowers and the
Lenders by telephone, telecopy, telex or cable of each rate of interest so determined, and its
determination thereof shall be conclusive in the absence of manifest error.




          (f) Regardless of any provision contained in any Transaction Document, neither Agent nor any
Lender shall ever be entitled to contract for, charge, take, reserve, receive, or apply, as
interest on all or any part of the Borrowers’ Obligations, any amount in excess of the Maximum
Rate, and, if Agent or Lenders ever do so, then such excess shall be deemed a partial prepayment of
principal and treated hereunder as such and any remaining excess shall be refunded to Borrowers.
In determining if




- 25 -









 







the interest paid or payable exceeds the Maximum Rate, Borrowers, Agent and Lenders shall, to the
maximum extent permitted under applicable law, (a) treat all Loans as but a single extension of
credit (and Agent, Lenders and Borrowers agree that such is the case), (b) characterize any
nonprincipal payment as an expense, fee, or premium rather than as interest, (c) exclude voluntary
prepayments and the effects thereof and any funding loss, make-whole amount, prepayment premium or
fee payable as a result thereof, and (d) amortize, prorate, allocate, and spread the total amount
of interest throughout the entire contemplated term of the Borrowers’ Obligations. However, if the
Borrowers’ Obligations are paid and performed in full prior to the end of the full contemplated
term thereof, and if the interest received for the actual period of existence thereof exceeds the
amount of interest payable at the Maximum Rate, Lenders shall refund such excess in accordance with
their respective Pro Rata Shares thereof, and, in such event, Lenders shall not, to the extent
permitted by applicable law, be subject to any penalties provided by any applicable usury or other
laws for contracting for, charging, taking, reserving, or receiving interest in excess of the
Maximum Rate. For purposes of this Section 3.4(f) “Maximum Rate” shall mean, for each Lender, the
maximum non-usurious rate of interest which, under applicable law, such Lender is permitted to
contract for, charge, take, reserve, or receive on the Borrower’s Obligations.




     3.5 Place and Manner of Payment. Both principal and interest on the Loans and all
fees due hereunder and under any of the other Transaction Documents payable to any Lender shall be
paid in lawful currency of the United States, in federal or other immediately available funds, at
Agent’s banking office at 560 Anglum Road, Hazelwood, Missouri 63042. The Agent will promptly
distribute to each Lender in immediately available funds its ratable share of each such payment
received by the Agent pursuant to the terms of this Agreement for the account of such Lenders.
Whenever any payment of principal of, or interest on, the Loans or of fees shall be due on a day
which is not a Business Day, the date for payment thereof shall be extended to the next succeeding
Business Day. If the date for any payment of principal is extended by operation of law or
otherwise, interest thereon, at the then applicable rate, shall be payable for such extended time.



     3.6 Termination or Reduction of Revolving Credit Commitments. The Borrowers may, upon
one (1) Business Day’s prior written notice to Agent, terminate entirely at any time, or
proportionately reduce from time to time on a pro rata basis among the Lenders based on their
respective Revolving Credit Commitments, by an aggregate amount of $2,500,000.00 or any larger
multiple of $500,000.00, the unused portions of the Revolving Credit Commitments as specified by
Borrowers in such notice to Agent; provided, however, that (i) at no time shall the Revolving
Credit Commitments be reduced to a figure less than the total of the outstanding principal amount
of all Revolving Credit Loans plus the Stated Amount of all outstanding Letters of Credit, (ii) at
no time shall the Revolving Credit Commitments be reduced to a figure greater than zero but less
than $10,000,000.00, and (iii) any such termination or reduction shall be permanent and the
Borrowers shall have no right to thereafter reinstate or increase, as the case may be, the
Revolving Credit Commitment of any Lender.



     3.7 Unused Fees. From the date hereof to but excluding the last day of the Term
hereof, the Borrowers shall jointly and severally pay to the Agent, for distribution to the
Lenders, a quarterly nonrefundable commitment fee (the “Commitment Fee”) on the unused portion of
the Revolving Credit Commitment of each such Lender (determined by subtracting (A) such Lender’s
Pro Rata Share of the Total Revolving Credit Outstandings (excluding the Swing Line Loans, except
that the outstanding Swing Line Loans shall be included in the Total Revolving Credit Outstandings
in calculating the fee due First Bank hereunder) determined for each day during such fiscal quarter
or portion there of, from (B) such Lender’s Revolving Credit Commitment, and dividing the sum of
such amounts by 90, or by such lesser number of days in any partial fiscal quarter) at the
Applicable Commitment Fee Rate. Said Commitment Fee shall be (i) calculated on a daily basis, (ii)
payable
quarterly in arrears on each July 15, October 15, January 15 and April 15 following any such fiscal
quarter-end during the Term hereof, commencing July



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15, 2006, and on the last day of the Term
hereof and (iii) calculated on an actual day, 360-day year basis. Payment of the Commitment Fee is
a condition precedent to the Lenders’ obligations to make any new Loans hereunder.




     3.8 Method of Making Interest and Other Payments. Each of the Borrowers hereby
authorizes Agent, without prior demand upon Borrowers, to charge or cause to be charged any
Borrower’s and their respective Subsidiaries’ bank accounts at First Bank to the extent there are
balances of immediately available funds therein, in an amount equal to the amount of accrued
interest, fees and other amounts then due and payable by Borrowers under this Agreement (other than
the principal balance of the Revolving Credit Loans and the Swing Line Loans), or the Agent may, at
its option, deem interest and other amounts payable by Borrowers under this Agreement (other than
the principal balance of the Revolving Credit Loans and the Swing Line Loans) to be paid by causing
the Lenders to make a Loan to Borrowers in such amount(s) under Section 3.1(a) or (e), provided
that in the event Borrowers’ account balances of immediately available funds and any amounts then
available to be advanced to Borrowers pursuant to the terms of Section 3.1 are insufficient to pay
all accrued interest, fees and other amounts then due and payable by Borrowers shall not relieve
Borrowers of their joint and several obligations to pay such amount on the dates when due. The
Agent agrees to give Borrowers prompt written notice of any amount so charged to any bank account
of any Borrower or any such Subsidiary with First Bank or any Revolving Credit Loans made by the
Lenders or Swing Line Loans made by First Bank under this Section 3.8.



     3.9 Maturity. All principal, interest and other amounts outstanding with respect to
the Revolving Credit Loans and the Swing Line Loans which are not paid prior thereto shall be due
and payable on the last day of the Term hereof, whether by reason of the expiration thereof,
acceleration or otherwise.



     3.10 Voluntary Prepayments.



          (a) Borrowers may, upon notice to First Bank specifying that they are paying a portion of
their Swing Line Loans, pay without penalty or premium such Swing Line Loans in whole at any time
or in part from time to time, by paying the principal amount to be paid.




          (b) Borrowers may, upon notice to Agent specifying that they are paying a portion of their
Revolving Credit Loans, pay such Revolving Credit Loans in whole at any time, or from time to time
in part, by paying the principal amount to be paid.




          (c) Upon receipt of a notice of payment pursuant to this Section, the Agent shall promptly
notify each Lender of the contents thereof and of such Lender’s Pro Rata Share of such payment and
such notice shall not thereafter be revocable by Borrowers.




     3.11 Swing Line Loan Settlement After Default. Upon the occurrence of any Event of
Default, unless otherwise requested by First Bank, the Agent shall promptly notify the other
Lender(s) in writing of the aggregate principal amount of all Swing Line Loans from First Bank then
outstanding, and each of the other Lender(s) hereby irrevocably agrees to immediately purchase from
First Bank with immediately available funds its ratable share of the amount of all such Swing Line
Loans (based on such Lender’s Pro Rata Share of the Revolving Credit Commitments), plus accrued and
unpaid interest calculated on such Pro Rata Share of such principal amount at a rate per annum
equal to the Prime Rate plus Applicable Margin. Following such advance by each Lender to First
Bank of its Pro Rata Share of any such Swing Line Loans pursuant to the preceding sentence, each
such Lender shall thereafter receive its Pro Rata Share of all principal payments, interest
payments, fees and other amounts due with respect to such Swing Line Loans as and when paid by
Borrowers to First Bank hereunder. Such Swing Line Loans shall thereafter be evidenced



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by the
Revolving Credit Notes of each of the Lender(s). First Bank agrees that, during the continuance of
any Default, it will not make any Swing Line Loan to any of the Borrowers (provided First Bank has
received notice in writing of such Event of Default from any Borrower, any other Lender or
otherwise) without the prior written consent of the Required Lenders.




     3.12 Sharing of Payments. The Lenders agree among themselves that, in the event that
any Lender shall directly or indirectly obtain any payment (whether voluntary, involuntary, through
the exercise of any right of setoff, banker’s lien or counterclaim, through the realization,
collection, sale or liquidation of any collateral or otherwise) on account of or in respect of any
of the Loans or any of the other Borrowers’ Obligations in excess of its Pro Rata Share of all such
payments, such Lenders shall immediately purchase from the other Lenders participations in the
Loans or other Borrowers’ Obligations owed to such other Lenders in such amounts, and make such
other adjustments from time to time, as shall be equitable to the end that the Lenders share such
payment rateably in accordance with their respective Pro Rata Shares of the outstanding Loans and
other Borrowers’ Obligations. The Lenders further agree among themselves that if any such excess
payment to a Lender shall be rescinded or must otherwise be restored, the other Lenders which shall
have shared the benefit of such payment shall, by repurchase of participation theretofore sold, or
otherwise, return its share of that benefit to the Lender whose payment shall have been rescinded
or otherwise restored. Borrowers agree that any Lenders so purchasing a participation in the Loans
or other Borrowers’ Obligations to the other Lenders may exercise all rights of setoff, banker’s
lien and/or counterclaim as fully as if such Lenders were a holder of such Loan or other Borrowers’
Obligations in the amount of such participation. If under any applicable bankruptcy, insolvency or
other similar law any Lender receives a secured claim in lieu of a setoff to which this Section
3.12 would apply, such Lenders shall, to the extent practicable, exercise their rights in respect
of such secured claim in a manner consistent with the rights of the Lenders entitled under this
Section 3.12 to share in the benefits of any recovery of such secured claim.



SECTION 4. PRECONDITIONS TO LOANS AND LETTERS OF CREDIT.




     4.1 Initial Revolving Credit Loan or Letter of Credit. Notwithstanding any provision
contained herein to the contrary, Lenders shall have no obligation to make any Loan hereunder, and
First Bank shall have no obligation to issue any Letter of Credit, unless Agent shall have received
no later than June 29, 2006 the following:



          (a) This Agreement and the Notes, each executed by a duly authorized officer of each of the
Borrowers;




          (b) The Security Agreements, financing statements and such other documents as Agent or the
Lenders may reasonably require, each executed by a duly authorized officer of the applicable
Borrowers;




          (c) The Amendment to Deed of Trust (which must be in form and substance satisfactory to Agent
and the Lenders) and such other documents as Agent or the Lenders may reasonably require in
connection with the existing Deed of Trust on Virbac’s Fort Worth, Texas real property and
improvements, all executed and delivered by a duly authorized officer of Virbac;




          (d) The Amendment to Deed of Trust (which must be in form and substance satisfactory to Agent
and the Lenders) and such other documents as Agent or the Lenders may reasonably require in
connection with the existing Deed of Trust on PM Resources’ St. Louis County, Missouri real
property and improvements, all executed and delivered by a duly authorized officer of PM Resources;





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          (e) The Amendment to Patent, Trademark and License Security Agreement (which must be in form
and substance satisfactory to Agent and the Lenders) and such other documents as Agent or the
Lenders may reasonably require in connection therewith, all executed and delivered by a duly
authorized officer of Virbac;




          (f) The Amendment to Patent, Trademark and License Security Agreement (which must be in form
and substance satisfactory to Agent and the Lenders) and such other documents as Agent or the
Lenders may reasonably require in connection therewith, all executed and delivered by a duly
authorized officer of Virbac AH;




          (g) The Patent, Trademark and License Security Agreement (which must be in form and substance
satisfactory to Agent and the Lenders) and such other documents as Agent or the Lenders may
reasonably require in connection therewith, all executed and delivered by a duly authorized officer
of St. JON;




          (h) The Pledge Agreements of Borrowers, respectively executed and delivered by a duly
authorized officer of each of Virbac and Virbac AH;




          (i) A Subordination Agreement (in form and substance satisfactory to Agent and each of the
Lenders) executed and delivered by a duly authorized officer of each of Virbac S. A.;




          (j) The policies or certificates of insurance required by Section 6.1(n) herein;




          (k) The financial statements required by Section 5.4 herein, together with such other
information that Agent and the Lenders may reasonably request to confirm the tax, legal and
business assumptions made in such pro forma financial statements;




          (l) A compliance certificate of an Authorized Officer of each of the Borrowers in
substantially the form attached hereto as Exhibit D, evidencing that Borrowers, as of the
date hereof, have a Consolidated Net Worth of not less than $24,000,000.00, and a ratio of
Consolidated EBITDA for the four quarter period ending as of the fiscal quarter ended March 31,
2006 to Consolidated Debt Service determined as of the date hereof, of at least 1.15 to 1.0;




          (m) A copy of resolutions of the Boards of Directors of each of the respective Borrowers, duly
adopted, which authorize the execution, delivery and performance of this Agreement, the Notes and
the other Transaction Documents to be executed by each such Borrower, certified by the President
and Secretary of each such Borrower;




          (n) Copies of the Certificate of Incorporation of Virbac, including any amendments thereto,
certified by the Secretary of State of the State of Delaware;




          (o) Copies of the Articles of Incorporation of PM Resources, including any amendments thereto,
certified by the Secretary of State of the State of Missouri;




          (p) Copies of the Articles of Incorporation of St. JON, including any amendments thereto,
certified by the Secretary of State of the State of California;




          (q) Copies of the Certificate of Incorporation of Virbac AH, including any amendments thereto,
certified by the Secretary of State of the State of Delaware;





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          (r) Copies of the Articles of Incorporation of Francodex, including any amendments thereto,
certified by the Secretary of State of the State of Kansas;




          (s) Copies of the Articles of Incorporation of Delmarva, including any amendments thereto,
certified by the Secretary of State of the State of Virginia;




          (t) A copy of the Bylaws of each of the Borrowers, including amendments thereto, certified by
the President and Secretary of each such Borrower;




          (u) Incumbency certificates, executed by the President and Secretary of each of the Borrowers,
which shall identify by name and title and bear the signatures of all of the officers of each such
Borrower executing any of the Transaction Documents;




          (v) A certificate of good standing of Virbac issued by the Secretary of State of the State of
Delaware;




          (w) A certificate of good standing of PM Resources issued by the Secretary of State of the
State of Missouri;




          (x) A certificate of good standing of St. JON issued by the Secretary of State of the State of
California;




          (y) A certificate of good standing of Virbac AH issued by the Secretary of State of the State
of Delaware;




          (z) A certificate of good standing of Francodex issued by the Secretary of State of the State
of Kansas;




          (aa) A certificate of good standing of Delmarva issued by the Secretary of State of the State
of Virginia;




          (bb) A copy of resolutions of the Board of Directors of Virbac S. A., duly adopted, which
authorize the execution, delivery and performance of the Subordination Agreement and any other
Transaction Documents to be executed by Virbac S. A., certified by the Secretary or President of
Virbac S. A.;




          (cc) Copies of the Registration in the Registre du Commerce et Des Sociétés (Articles of
Incorporation) of Virbac S. A., including any amendments thereto, certified by the Register of
Commerce and Corporations;




          (dd) A copy of Virbac S. A.’s Statuts (Bylaws), including amendments thereto, certified by the
Secretary or President of Virbac S. A.;




          (ee) An incumbency certificate, executed by the President and Secretary or Assistant Secretary
of Virbac S. A., which shall identify by name and title and bear the signatures of all of the
officers of Virbac S. A. executing the Subordination Agreement or any of the other Transaction
Documents;




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          (ff) Such UCC search results and other lien search results as Agent or any of the Lenders may
require in order to determine to its satisfaction that when perfected, its liens and security
interests in the Collateral shall be first and prior liens in all such Collateral;




          (gg) Payment of Agent’s costs and expenses incurred herewith as required under Section 9.3
herein;




          (hh) The initial Borrowing Base Certificate required by Section 3.1(b);




          (ii) The Borrowing Notice required by Section 3.2(a); and




          (jj) if such Loan is a Swing Line Loan, the Swing Line Borrowing Notice required by Section
3.2(b);




          (kk) Such other agreements, documents, instruments and certificates as Agent or Lenders may
reasonably request.




     4.2 All Loans and Letters of Credit. Notwithstanding any provision contained herein
to the contrary, Lenders shall have no obligation to make any Revolving Credit Loan hereunder, and
First Bank shall have no obligation to make any Swing Line Loan hereunder or to issue any Letter of
Credit under any Letter of Credit Application, unless:



          (a) Agent and each of the Lenders shall have received a current Borrowing Base Certificate as
required by Section 3.1(b);




          (b) Agent shall have received a Borrowing Notice or a Swing Line Borrowing Notice for such
Loan as required by Section 3.2, or the Letter of Credit Application as required by Section 3.3;




          (c) On the date of and immediately after such Loan or Letter of Credit issuance, no Default or
Event of Default under this Agreement shall have occurred and be continuing; and




          (d) On the date of and immediately after such Loan or Letter of Credit issuance, no Material
Adverse Effect shall have occurred since the date of this Agreement and be continuing; and




          (e) All of the representations and warranties of the Borrowers contained in this Agreement
shall be true and correct on and as of the date of such Loan or Letter of Credit issuance as if
made on the date of such Loan or the issuance date of such Letter of Credit, as the case may be,
except to the extent any such representation or warranty is stated to relate solely to an earlier
date, in which case such representation or warranty shall have been true and correct on and as of
such earlier date, and provided that for purposes of this Section 4.2(e), the representations and
warranties made by Borrowers in Section 5.4 shall be deemed to refer to the most recent annual and
interim financial statements of Borrowers delivered to the Agent and Lenders pursuant to Section
6.1(a).




     Each request for a Loan or application for a Letter of Credit by the Borrowers hereunder shall
be deemed to be a representation and warranty by the Borrowers on the date of such Loan or Letter
of Credit issuance as to the facts specified in clauses (c), (d) and (e) of this Section 4.2.



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SECTION 5. REPRESENTATIONS AND WARRANTIES.




     Borrowers represent and warrant to Agent and Lenders that:



     5.1 Existence and Power. Each of the Borrowers: (a) is a corporation duly organized,
validly existing and in good standing under the laws of its state of incorporation; (b) has all
requisite corporate power and all governmental and regulatory licenses, authorizations, consents
and approvals required to carry on its business as now conducted except such licenses,
authorizations, consents and approvals the failure to have would not have a Material Adverse
Effect; and (c) is duly qualified to do business in all jurisdictions in which the nature of the
business conducted by such Borrower makes such qualification necessary and where failure to so
qualify would have a Material Adverse Effect.



     5.2 Authorization. The execution, delivery and performance by the Borrowers of this
Agreement, the Notes and the other Transaction Documents to which they are parties are within the
corporate powers of each of the Borrowers, and have been duly authorized by all necessary action of
the shareholders and/or boards of directors of said Borrowers.



     5.3 Binding Effect. This Agreement, the Notes and the other Transaction Documents to
which they are parties have been duly executed and delivered by the Borrowers and constitute the
legal, valid and binding obligations of the Borrowers enforceable in accordance with their
respective terms, except as such enforceability may be limited by bankruptcy, insolvency or other
similar laws affecting creditors’ rights in general, and by general principles of equity
(regardless of whether such enforceability is considered in a proceeding at law or in equity).



     5.4 Financial Statements. The Borrowers have furnished Agent and the Lenders with the
following financial statements, certified by an Authorized Officer of each of the Borrowers: (1)
the audited consolidated balance sheets and corresponding consolidated statements of income,
retained earnings and cash flows of the Borrowers for Borrowers’ fiscal year ended December 31,
2005 and for each of the three preceding fiscal years, all audited by the independent certified
public accountants of Borrowers, which financial statements have been prepared in accordance with
GAAP; and (2) an unaudited consolidated balance sheet and consolidated statements of income,
retained earnings and cash flows of the Borrowers as of April 30, 2006, certified by an Authorized
Officer of each of the Borrowers as being true, correct and complete in all material respects and
as being prepared in accordance with GAAP (subject to normal year-end audit adjustments and the
absence of footnotes). The Borrowers further represent and warrant to Agent and each of the
Lenders that: (a) said balance sheets and their accompanying notes fairly present the condition of
the Borrowers as of the dates thereof; (b) there has been no Material Adverse Effect since December
31, 2005; and (c) none of the Borrowers has any material direct or contingent liabilities which are
not disclosed on said financial statements (to the extent such disclosure is required by GAAP).



     5.5 Litigation. Except as disclosed on Schedule 5.5 attached hereto, there is
no action or proceeding pending or, to the knowledge of Borrowers, threatened against any of the
Borrowers or any Subsidiary of any of the Borrowers before any court, arbitrator or any
governmental, regulatory or administrative body, agency or official as to which there exists a
reasonable
possibility of an adverse determination and which determination could reasonably be expected to
result in a Material Adverse Effect, and none of the Borrowers nor any Subsidiary of any of the
Borrowers is in default with respect to any order, writ, injunction, decision or decree of any
court, arbitrator or any governmental, regulatory or administrative body, agency or official, a
default under which could reasonably be expected to have a Material Adverse Effect.



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     5.6 Pension and Welfare Plans. Each Pension Plan complies in all material respects
with all applicable statutes and governmental rules and regulations; no Reportable Event has
occurred and is continuing with respect to any Pension Plan; none of the Borrowers nor any ERISA
Affiliate nor any Subsidiary of any of the Borrowers has withdrawn from any Multiemployer Plan in a
“complete withdrawal” or a “partial withdrawal” as defined in Sections 4203 or 4205 of ERISA,
respectively; no steps have been instituted by any of the Borrowers, any ERISA Affiliate or any
Subsidiary of any of the Borrowers to terminate any Pension Plan; no condition exists or event or
transaction has occurred in connection with any Pension Plan or Multiemployer Plan which could
reasonably be expected to result in the incurrence by any of the Borrowers, any ERISA Affiliate or
any Subsidiary of any of the Borrowers of any material liability, fine or penalty; and none of the
Borrowers nor any ERISA Affiliate nor any Subsidiary of Borrowers is a “contributing sponsor” as
defined in Section 4001(a)(13) of ERISA of a “single-employer plan” as defined in Section
4001(a)(15) of ERISA which has two or more contributing sponsors at least two of whom are not under
common control. Except as disclosed on Schedule 5.6 attached hereto, none of the Borrowers
nor any Subsidiary of any of the Borrowers has any contingent liability with respect to any
“employee welfare benefit plan”, as such term is defined in Section 3(a) of ERISA, which covers
retired employees and their beneficiaries, other than as required by the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended.



     5.7 Tax Returns and Payment. The Borrowers and each Subsidiary of the Borrowers has
filed all federal, state and local income tax returns and all other tax returns which are required
to be filed and has paid all taxes due pursuant to such returns or pursuant to any assessment
received by the Borrowers or any Subsidiary of the Borrowers, except for the filing of such
returns, if any, in respect of which an extension of time for filing is in effect and except for
such taxes, if any, as are being contested in good faith by appropriate proceedings being
diligently conducted and as to which adequate reserves in accordance with GAAP have been provided.
The charges, accruals and reserves on the books of the Borrowers and each Subsidiary of the
Borrowers in respect of any taxes or other governmental charges are, in the opinion of the
Borrowers, adequate.



     5.8 Subsidiaries. None of the Borrowers has any Subsidiaries other than as identified
on Schedule 5.8 attached hereto, as the same may from time to time be amended, modified or
supplemented as provided herein. Schedule 5.8 attached hereto correctly sets forth, for
each Subsidiary, the number of shares of each class of capital stock, membership interests or other
equity interests authorized for such Subsidiary, the number of outstanding and the percentage of
the outstanding shares of each such class owned, directly or indirectly, by one or more of the
Borrowers or one or more of their other Subsidiaries. All of the issued and outstanding capital
stock, membership interests or other equity interests of each Subsidiary is duly authorized,
validly issued and fully paid and nonassessable.
Except as disclosed on Schedule 5.8 attached hereto, none of the Borrowers nor any
Subsidiary, individually or collectively, owns or holds, directly or indirectly, any capital stock
of or membership interest or other equity interest in any corporation, partnership, limited
liability company or other entity other than Borrowers’ Subsidiaries. Borrowers may at any time
amend, modify or supplement Schedule 5.8 by notifying Agent and the Lenders in writing of
any changes thereto, including any formation, acquisition, merger or liquidation of any Subsidiary
or any change in the capitalization of any Subsidiary, in each case, in accordance with the terms
of this Agreement, and thereby the representations and warranties contained in this Section 5.8
shall be amended accordingly so long as such amendment, modification or supplement is
made within thirty (30) days after the occurrence of any such changes in the facts stated therein
and that such changes reflect transactions that are permitted under this Agreement.



     5.9 Compliance With Other Instruments; None Burdensome. As of the date of this
Agreement, none of the Borrowers nor any Subsidiary of any of the Borrowers is a party to any
contract or agreement or subject to any charter or other organizational restriction which could
reasonably be



- 33 -









 




expected to have a Material Adverse Effect and which is not disclosed on Borrowers’
financial statements heretofore submitted to Agent and the Lenders. None of the execution and
delivery by Borrowers of the Transaction Documents, the consummation of the transactions therein
contemplated or the compliance with the provisions thereof will violate any law, rule, regulation,
order, writ, judgment, injunction, decree or award binding on any of the Borrowers, or any of the
provisions of Virbac’s Certificate of Incorporation or Bylaws, of St. JON’s Articles of
Incorporation or Bylaws, PM Resources’ Articles of Incorporation or Bylaws, Virbac AH’s Certificate
of Incorporation or Bylaws, of Francodex’s Articles of Incorporation or Bylaws or Delmarva’s
Articles of Incorporation or Bylaws, or any of the provisions of any indenture, agreement,
document, instrument or undertaking to which any of the Borrowers is a party or subject, or by
which it or its Property is bound, or conflict with or constitute a default thereunder or result in
the creation or imposition of any Lien pursuant to the terms of any such indenture, agreement,
document, instrument or undertaking (other than in favor of Agent for the benefit of the Lenders
pursuant to the Transaction Documents). No order, consent, approval, license, authorization or
validation of, or filing, recording or registration with, or exemption by, any governmental,
regulatory, administrative or public body or authority, or any subdivision thereof, is required to
authorize, or is required in connection with, the execution, delivery or performance of, or the
legality, validity, binding effect or enforceability of, any of the Transaction Documents, except
for those which have been obtained prior to the date hereof.




     5.10 Other Loans and Guarantees. Except as disclosed on Schedule 5.10
attached hereto, neither the Borrowers nor any Subsidiary of the Borrowers is a party to any loan
transaction or Guarantee. Borrowers may at any time amend, modify or supplement Schedule
5.10 by notifying Agent and the Lenders in writing of any changes thereto, and thereby the
representations and warranties contained in this Section 5.10 shall be amended accordingly so long
as such amendment, modification or supplement is made within thirty (30) days after the occurrence
of any such changes in the facts stated therein and that such changes reflect transactions that are
permitted under this Agreement.



     5.11 Title to Property. The Borrowers, and each Subsidiary of the Borrowers, is the
sole and absolute owner of, or has the legal right to use and occupy, all Property it claims to own
or which is necessary for the Borrowers or such Subsidiary of the Borrowers to conduct its
business. Neither the Borrowers nor any Subsidiary of the Borrowers has granted or permitted any
Liens with respect to any of its Property or has any knowledge of any Liens with respect to any of
its Property, except in favor of Agent for the benefit of Lenders or as otherwise disclosed on
Schedule 5.11 attached hereto and except for Permitted Liens.



     5.12 Multi-Employer Pension Plan Amendments Act of 1980. Except as disclosed on
Schedule 5.12 attached hereto, neither the Borrowers nor any Subsidiary of the Borrowers is
a party to any Multiemployer Plan.



     5.13 Patents, Licenses, Trademarks, Etc. Each of the Borrowers, and each Subsidiary
of the Borrowers, possesses (or are licensed or otherwise have the right to use) all necessary
patents, licenses, trademarks, trademark rights, trade names, trade name rights and copyrights to
conduct its business as presently being conducted without any known
conflict with any patent, license, trademark, trade name or copyright of any other Person. All
such federally registered patents, trademarks, and copyrights and any licenses of any such items
owned or held by Borrowers are set forth on Schedule 5.13 attached hereto.



     5.14 Environmental and Safety and Health Matters. Except as disclosed on Schedule
5.14 attached hereto, and except as could not, individually or in the aggregate, reasonably be
expected to have a material negative impact on the environmental condition of the Property(s) or
the operations of the Borrowers or any Subsidiary of the Borrowers : (i) the operations of the
Borrowers and each Subsidiary of the Borrowers comply with (A) all applicable Environmental Laws
and (B) all applicable



- 34 -









 




Occupational Safety and Health Laws; (ii) none of the operations of the
Borrowers or any Subsidiary of the Borrowers is subject to any pending or, to the knowledge of the
Borrowers or any Subsidiary of the Borrowers, any threatened judicial, governmental, regulatory or
administrative proceeding alleging the violation of any Environmental Law or Occupational Safety
and Health Law; (iii) to the knowledge of the Borrowers and each Subsidiary, none of the operations
of the Borrowers or any Subsidiary of the Borrowers is the subject of any federal or state
investigation evaluating whether any remedial action is needed to respond to (A) any spillage,
disposal or release into the environment of any Hazardous Material, or (B) any violation of
applicable Environmental Laws or applicable Occupational Safety and Health Laws at any premises of
the Borrowers or such Subsidiary of the Borrowers; (iv) neither the Borrowers nor any Subsidiary of
the Borrowers has filed any notice under any Environmental Law or Occupational Safety and Health
Law indicating or reporting (A) any past or present spillage or release into the environment of any
Hazardous Material or (B) any violation of applicable Environmental Laws or applicable Occupational
Safety and Health Laws at any premises of the Borrowers or such Subsidiary of the Borrowers; and
(v) neither the Borrowers nor any Subsidiary of the Borrowers has any known contingent liability in
connection with (A) any spillage, disposal or release into the environment of any Hazardous
Material or (B) any violation of applicable Environmental Laws or applicable Occupational Safety
and Health Laws at any premises of the Borrowers or such Subsidiary of the Borrowers.




     5.15 Investments. None of the Borrowers nor any Subsidiary has any Restricted
Investments.



     5.16 Labor Matters. None of the Borrowers nor any Subsidiary is a party to any labor
dispute which could reasonably be expected to have a Material Adverse Effect. There are no strikes
or walkouts relating to any labor contract to which any Borrower or any Subsidiary is subject.
Hours worked and payments made to the employees of Borrowers and their Subsidiaries have not been
in violation of (a) the Fair Labor Standards Act or (b) any other applicable law dealing with such
matters, the violation of which could reasonably be expected to have a Material Adverse Effect.
All payments due from any Borrower or any Subsidiary, or for which any claim may be made against
any of them, in respect of wages, employee health and welfare insurance and/or other benefits have
been paid or accrued as a liability on their respective books.



     5.17 Regulation U. None of the Borrowers is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulation U of The Board of
Governors of the Federal Reserve System, as amended) and no part of the proceeds of any Loan will
be used, whether directly or indirectly, and whether immediately, incidentally or ultimately (i) to
purchase or carry margin stock or to extend credit to others for the purpose of purchasing or
carrying margin stock, or to refund or repay indebtedness originally incurred for such purpose or
(ii) for any purpose which entails a violation of, or which is inconsistent with, the provisions of
any of the Regulations of The Board of Governors of the Federal Reserve System, including, without
limitation, Regulations U, T or X thereof, as
amended. If requested by Agent, Borrowers shall furnish to Agent a statement or statements in
conformity with the requirements of Federal Reserve Form U-1 referred to in Regulation U.



     5.18 Investment Company Act of 1940; Public Utility Holding Company Act of 1935. None
of the Borrowers is an “investment company” as that term is defined in, or is otherwise subject to
regulation under, the Investment Company Act of 1940, as amended. None of the Borrowers is a
“holding company” as that term is defined in, or is otherwise subject to regulation under, the
Public Utility Holding Company Act of 1935, as amended.



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SECTION 6. COVENANTS.




     6.1 Affirmative Covenants of the Borrowers. The Borrowers covenant and agree that, so
long as Lenders have any obligation to make any Loan hereunder or any of the Borrowers’ Obligations
remain unpaid or any Letter of Credit remains outstanding:




     (a) Information. The Borrowers will deliver to Agent and each of the Lenders:




     (i) As soon as available and in any event within one hundred five (105) days
after the end of each fiscal year of Borrowers, the consolidated balance sheets of
Borrowers and their Consolidated Subsidiaries as of the end of such fiscal year and
the related consolidated statements of income, retained earnings and cash flows for
such fiscal year, and setting forth in each case, in comparative form, the figures
for the previous fiscal year, all such financial statements to be prepared in
accordance with GAAP and audited by and accompanied by the unqualified opinion of
independent certified public accountants of nationally recognized standing selected
by Borrowers and reasonably acceptable to the Required Lenders, together with (i) a
certificate from such accountants to the effect that, in making the examination
necessary for the signing of such annual audit report, such accountants have not
become aware of any Default or Event of Default that has occurred and is continuing,
or, if such accountants have become aware of any such event, describing it and the
steps, if any, being taken to cure it and (ii) the computations of such accountants
evidencing Borrowers’ compliance with the financial covenants contained in this
Agreement;




     (ii) As soon as available and in any event on or before the last day of each
month, the consolidated balance sheet of the Borrowers and their respective
Consolidated Subsidiaries as of the end of the immediately preceding month and the
related consolidated statements of income, retained earnings and cash flows for such
immediately preceding month and for the portion of each such Borrower’s fiscal year
ended at the end of such immediately preceding month, and setting forth in each case
in comparative form, the figures for the corresponding fiscal month and the
corresponding portion of each such Borrower’s previous fiscal year, all certified as
to fairness of presentation, GAAP (subject to normal year-end adjustments),
consistency, completeness and correctness by the principal financial officer of each
such Borrower;




     (iii) Simultaneously with the delivery of each set of financial statements
referred to in Section 6.1(a)(i) above and simultaneously with the delivery of each
set of financial statements referred to in Sections 6.1(a)(ii) above for the last
fiscal month of a
fiscal quarter of Borrowers, a certificate of the principal financial officers of
Borrowers in the form attached hereto as Exhibit D and incorporated herein
by reference, accompanied by supporting financial work sheets where appropriate, (A)
evidencing Borrowers’ compliance with the financial covenants contained in Section
6.1(o) of this Agreement, (B) stating whether there exists on the date of such
certificate any Default or Event of Default and, if any Default or Event of Default
then exists, setting forth the details thereof and the action which Borrowers are
taking or proposes to take with respect thereto and (C) certifying that all of the
representations and warranties of Borrowers and/or any other Obligor contained in
this Agreement and/or in any of the other Transaction Documents are true and correct
in all material respects on and as of the date of such certificate as if made on and
as of the date of such certificate;



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     (iv) On or before the last day of each month, the Borrowing Base Certificate
dated as of the last day of the immediately preceding month, as required pursuant to
Section 3.1(b) hereof, together with: (A) an Accounts trial balance of Borrowers and
their Consolidated Subsidiaries as of such immediately preceding month-end
indicating which Accounts are up to 30, 31 to 60, 61 to 90 and 91 days or more past
the invoice date and including, if requested by the Agent, a listing of the names
and addresses of all applicable Account Debtors, (B) a summary of accounts payable
of Borrowers and their Consolidated Subsidiaries showing which accounts payable are
current, up to 30, 31 to 60, 61 to 90 and 91 days or more past due, with contra
accounts identified therein, and including, if requested by the Agent, a listing of
the names and addresses of applicable creditors, (C) an Inventory listing, with
obsolete, packaging and offsite inventory noted thereon, (D) a listing of all
foreign account debtors, (E) a listing of all Accounts for which the Account Debtor
is an Affiliate of one or more of the Borrowers, (F) any other additional schedules
necessary to compute the Borrowing Base which may be required by the Agent or the
Required Lenders, (G) if requested by Agent or the Required Lenders, a schedule of
the current outstanding orders of the ten largest customers of the Borrowers as of
the preceding month-end, and (H) a schedule of the preceding month’s gross sales and
net sales (after discounts and other incentives) to each customer of the Borrowers,
all in form and detail reasonably satisfactory to Agent and the Required Lenders and
certified as being true, correct and complete by the President or the chief
financial officer of the Borrowers;




     (v) by email to the email address of Agent and each Lender specified on the
signature pages hereof, on or before the last day of each month, commencing with the
next such delivery on June 30, 2006 for the month of July, 2006, a cash budget for
Borrowers for the following fiscal month, setting forth Borrowers’ projections based
upon the best estimates available to Borrowers as to the anticipated cash receipts
and cash disbursements of Borrowers as well as the anticipated repayments of the
outstanding loans under this Agreement and the Notes, certified to Agent and the
Lenders by the President or Chief Financial Officer of the Borrowers as to fairness
of assumptions made and form of presentation;




     (vi) Promptly upon receipt thereof, any reports submitted to any of the
Borrowers or any Consolidated Subsidiary of any of the Borrowers (other than reports
previously delivered pursuant to Sections 6.1(a)(i) and (ii) above) by independent
accountants in connection with any annual, interim or special audit made by them of
the books of any of the Borrowers or any Consolidated Subsidiary of any of the
Borrowers;




     (vii) Promptly upon any filing thereof, and in any event within ten (10) days
after the filing thereof, notification of all registration statements (other than
the exhibits thereto and any registration statements on Form S-8 or its equivalent)
and annual, quarterly or interim reports which Virbac or any of the other Borrowers
shall file with the Securities and Exchange Commission;




     (viii) Promptly upon the mailing thereof to the shareholders of any of the
Borrowers generally, and in any event within ten (10) days after such mailing,
copies of all financial statements, reports, proxy statements and other material
information so mailed;




     (ix) As soon as available and in any event as of the day prior to the beginning
of each fiscal year of Borrowers, the consolidated balance sheet, income statement
and



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cash flow projections for Borrowers and their Subsidiaries for such fiscal year
on a month-by-month basis, all in form and detail reasonably acceptable to the
Required Lenders; and




     (x) With reasonable promptness, such further information regarding the
business, affairs and financial condition of any of the Borrowers or any Subsidiary
of any of the Borrowers as Agent or any of the Lenders may from time to time
reasonably request.



     Agent and each of the Lenders are hereby authorized to deliver a copy of any financial
statement or other information made available by the Borrowers to any regulatory authority having
jurisdiction over Agent or any such Lender, pursuant to any request therefor.



          (b) Payment of Indebtedness. Each of the Borrowers and each Subsidiary of any of the
Borrowers will (i) pay any and all Indebtedness payable or guaranteed by such Borrower or such
Subsidiary of such Borrower, as the case may be, and any interest or premium thereon, when due
(whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) in
accordance with the agreement, document or instrument relating to such Indebtedness or Guarantee
and (ii) faithfully perform, observe and discharge all covenants, conditions and obligations which
are imposed upon such Borrower or such Subsidiary of such Borrower, as the case may be, by any and
all agreements, documents and instruments evidencing, securing or otherwise relating to such
Indebtedness or Guarantee.




          (c) Consultations and Inspections. Each of the Borrowers will permit, and will cause
each Subsidiary of any such Borrower to permit, Agent or any of the Lenders (and any of Agent’s
officers, employees or other Persons appointed by Agent or any of the Lenders to whom Borrowers do
not reasonably object) to discuss the affairs, finances and accounts of Borrowers and each
Subsidiary of any of the Borrowers with the officers of each such Borrower and each Subsidiary of
any of the Borrowers and their independent public accountants, all at such reasonable times and as
often as Agent or any Lender may reasonably request. Each of the Borrowers will also permit, and
will cause each Subsidiary of any such Borrower to permit, inspection of its Properties, books and
records by Agent or any of the Lenders during normal business hours or at other reasonable times,
including, without limitation, the performance of a field audit of the Borrowers and their
Subsidiaries and all Collateral and Third Party Collateral not less often than twice each year upon
reasonable prior notice to Borrowers, which field audits shall be performed by an auditing firm
selected by the Agent. Borrowers jointly and severally agree to pay Agent, on demand, audit fees
in connection with any field audits or inspections conducted by or on behalf of the Agent and the
Lenders of any Collateral or the Borrowers’ operations or business at the rates established from
time to time by the Agent
as its audit fees, together with all actual out-of-pocket costs and expenses incurred in conducting
any such
audit or inspection. Borrower will reimburse Agent and each of the Lenders upon demand for all
other reasonable costs and expenses incurred by Agent or any such Lender in connection with any
inspection conducted by Agent or any such Lender while any Default or Event of Default under this
Agreement has occurred and is continuing. The Borrower irrevocably authorizes Agent and each of
the Lenders to communicate directly with its independent public accountants and irrevocably
authorizes and directs such accountants to disclose to Agent or any such Lender any and all
information with respect to the business and financial condition of the Borrower and each
Subsidiary as Agent or any such Lender may from time to time reasonably request in writing.




          (d) Payment of Taxes. Each of the Borrowers will, and they will cause each Subsidiary
of any such Borrower to, duly file all Federal, state and local income tax returns and all other
tax returns and reports of such Borrower or such Subsidiary, as the case may be, which are required
to be filed and duly pay and discharge promptly all taxes, assessments and other governmental
charges imposed upon them or any of their Property; provided, however, that none of the Borrowers
nor any Subsidiary shall be




- 38 -









 







required to pay any such tax, assessment or other governmental charge
the payment of which is being contested in good faith and by appropriate proceedings being
diligently conducted and for which adequate reserves in accordance with GAAP have been provided,
except that Borrowers or such Subsidiaries, as the case may be, shall pay or cause to be paid all
such taxes, assessments and governmental charges forthwith upon the commencement of proceedings to
foreclose any Lien which is attached as security therefor, unless such foreclosure is stayed by the
filing of an appropriate bond in a manner reasonably satisfactory to Agent and the Required
Lenders.




          (e) Payment of Claims. Each of the Borrowers will, and they will cause each
Subsidiary of any such Borrower to, promptly pay and discharge (i) all trade accounts payable and
normal accruals in accordance with its usual and customary business practices as in effect on the
date of this Agreement (but in no event later than thirty (30) days after the due date thereof) and
(ii) all claims for work, labor or materials which if unpaid could become a Lien upon any of their
Property; provided, however, that none of the Borrowers nor any such Subsidiary shall be required
to pay any such trade account payable, accrual or claim the payment of which is being contested in
good faith and by appropriate proceedings being diligently conducted and for which adequate
reserves in accordance with GAAP have been provided, except that Borrowers or such Subsidiaries, as
the case may be, shall pay or cause to be paid all such trade accounts payable, accruals and claims
forthwith upon the commencement of proceedings to foreclose any Lien which is attached as security
therefor, unless such foreclosure is stayed by the filing of an appropriate bond in a manner
reasonably satisfactory to Agent and the Required Lenders.




          (f) Existence. Each of the Borrowers will, and they will cause each Subsidiary of any
such Borrower to, do all things necessary to (i) preserve and keep in full force and effect at all
times its corporate, limited liability company or other existence and all permits, licenses,
franchises and other rights material to its business and (ii) be duly qualified to do business and
be in good standing in all jurisdictions where the nature of its business or its ownership of
Property requires such qualification except for those jurisdictions in which the failure to qualify
or be in good standing could not reasonably be expected to have a Material Adverse Effect.




          (g) Maintenance of Property. Each of the Borrowers will, and they will cause each
Subsidiary of any such Borrower to, at all times, preserve and maintain all of the Property used or
useful in the conduct of its business in good condition, working order and repair, ordinary wear
and tear excepted.




          (h) Compliance with Laws, Regulations, Etc. Each of the Borrowers will, and they will
cause each Subsidiary of any such Borrower to, comply with any and all laws, ordinances and
governmental and regulatory rules and
regulations to which such Borrower or such Subsidiary, as the case may be, is subject (including,
without limitation, all Occupational Safety and Health Laws and all Environmental Laws) and obtain
any and all licenses, permits, franchises and other governmental and regulatory authorizations
necessary to the ownership of its Properties or to the conduct of its business, which violation or
failure to obtain could reasonably be expected to have a Material Adverse Effect.




          (i) Accountant. Borrowers will give Agent and the Lenders prompt notice of any change
of Borrowers’ independent certified public accountants and a statement of the reasons for such
change. Borrowers shall at all times utilize independent certified public accountants reasonably
acceptable to Agent and the Required Lenders.




          (j) ERISA Compliance. If any Borrower, any Subsidiary or any ERISA Affiliate shall
have any Pension Plan, such Borrower, such Subsidiary or such ERISA Affiliate, as the case may be,
shall comply with all requirements of ERISA relating to such Pension Plan. Without limiting the
generality of





- 39 -










 






the foregoing, Borrowers will not, and they will not cause or permit any Subsidiary
or any ERISA Affiliate to:





     (i) permit any Pension Plan maintained by any Borrower, any Subsidiary or any ERISA
Affiliate to engage in any nonexempt “prohibited transaction,” as such term is defined in
Section 4975 of the Code;




     (ii) permit any Pension Plan maintained by any Borrower, any Subsidiary or any ERISA
Affiliate to incur any “accumulated funding deficiency”, as such term is defined in Section
302 of ERISA, 29 U.S.C. § 1082, whether or not waived;




     (iii) terminate any Pension Plan in a manner which could result in the imposition of a
Lien on any Property of any Borrower, any Subsidiary or any ERISA Affiliate pursuant to
Section 4068 of ERISA, 29 U.S.C. § 1368; or




     (iv) take any action which would constitute a complete or partial withdrawal from a
Multi-Employer Plan within the meaning of Sections 4203 or 4205 of Title IV of ERISA.



     Notwithstanding any provision contained in this Section 6.1(j) to the contrary, an act by any
Borrower or any Subsidiary shall not be deemed to constitute a violation of this Section 6.1(j)
unless the Required Lenders determine in good faith that said action, individually or cumulatively
with other acts of Borrowers and their Subsidiaries, has or could reasonably be expected to have a
Material Adverse Effect.



     Borrowers shall have the affirmative obligation hereunder to report to Agent any of those acts
identified in subparagraphs (i) through (iv) hereof, regardless of whether said act does or is
likely to cause a significant adverse financial effect upon any of the Borrowers or any Subsidiary
of any of the Borrowers, and failure by Borrowers to report such act promptly upon any such
Borrower’s becoming aware of the existence thereof shall constitute an Event of Default hereunder.



          (k) Maintenance of Books and Records. The Borrowers and each Subsidiary of the
Borrowers will maintain its books and records in accordance with GAAP and in which true, correct
and complete entries will be made of all of its dealings and transactions.




          (l) Further Assurances. Borrowers will execute and deliver to Agent, at any time and
from time to time, any and all further agreements, documents and instruments, and take any and all
further actions which may be required under applicable law, or which Agent or the Required Lenders
may from time to time reasonably request, in order to effectuate the transactions contemplated by
this Agreement and the other Transaction Documents.




          (m) Environmental Matters. Borrowers shall give Agent and the Lenders prompt written
notice of (i) any Environmental Claim or any other action or investigation with respect to the
existence or potential existence of any Hazardous Substances instituted or threatened with respect
to any Borrower or any Subsidiary or any of the Properties or facilities owned, leased or operated
by any Borrower or any Subsidiary which, if determined adversely to any Borrower or any Subsidiary,
could reasonably be expected to have a Material Adverse Effect and (ii) any condition or occurrence
on any of the Properties or facilities owned, leased or operated by any Borrower or any Subsidiary
which constitutes a violation of any Environmental Laws or which gives rise to a reporting
obligation or requires removal or remediation under any Environmental Laws. Within ninety (90)
days after the giving of any such notice, Borrowers shall deliver to Agent and each of the Lenders
Borrowers’ plan with respect to removal or remediation and Borrowers jointly and severally agree to
take all action which is reasonably necessary in connection with





- 40 -









 







such action, investigation,
condition or occurrence in accordance with such plan with due diligence and to complete such
removal or remediation as promptly as possible and in all events within the time required by any
Environmental Laws or any other applicable law, rule or regulation. Borrowers shall promptly
provide Agent and the Lenders with copies of all documentation relating thereto, and such other
information with respect to environmental matters as Agent or the Required Lenders may request from
time to time.




          (n) Insurance. Each of the Borrowers will, and they will cause each Subsidiary of any
such Borrower to, insure all of its Property of the character usually insured by Persons engaged in
the same or similar businesses similarly situated, against loss or damage of the kind customarily
insured against by such Persons, unless higher limits or coverage are reasonably required in
writing by the Required Lenders, and carry adequate liability insurance and other insurance of a
kind and in an amount generally carried by Persons engaged in the same or similar businesses
similarly situated, unless higher limits or coverage are reasonably required in writing by the
Required Lenders. All insurance required by this Section 6.1(n) shall be with insurers rated A-XI
or better by A.M. Best Company (or accorded a similar rating by another nationally or
internationally recognized insurance rating agency of similar standing if A.M. Best Company is not
then in the business of rating insurers or rating foreign insurers) or such other insurers as may
from time to time be reasonably acceptable to the Required Lenders. All such insurance may be subject to reasonable deductible amounts. UNLESS BORROWERS PROVIDE
EVIDENCE OF THE INSURANCE COVERAGE REQUIRED UNDER THIS AGREEMENT AND THE OTHER TRANSACTION
DOCUMENTS, LENDER MAY PURCHASE INSURANCE AT BORROWERS’ EXPENSE TO PROTECT LENDER’S INTEREST IN THE
COLLATERAL. THIS INSURANCE MAY, BUT NEED NOT, PROTECT BORROWERS’ INTERESTS. THE COVERAGE THAT
LENDER PURCHASES MAY NOT PAY ANY CLAIM THAT BORROWERS MAY MAKE OR ANY CLAIM THAT IS MADE AGAINST
BORROWERS IN CONNECTION WITH THE COLLATERAL. BORROWERS MAY LATER CANCEL ANY INSURANCE PURCHASED BY
LENDER, BUT ONLY AFTER PROVIDING EVIDENCE THAT BORROWERS HAVE OBTAINED INSURANCE AS REQUIRED BY
THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS. IF LENDER PURCHASES INSURANCE FOR THE
COLLATERAL, BORROWERS WILL BE RESPONSIBLE FOR THE COSTS OF THAT INSURANCE, INCLUDING THE INSURANCE
PREMIUM, INTEREST AND ANY OTHER CHARGES LENDER MAY IMPOSE IN CONNECTION WITH THE PLACEMENT OF
INSURANCE, UNTIL THE EFFECTIVE DATE OF THE CANCELLATION OR EXPIRATION OF THE INSURANCE. THE COSTS
OF THE INSURANCE MAY BE ADDED TO THE BORROWERS’ OBLIGATIONS. THE COSTS OF THE INSURANCE MAY BE
MORE THAN THE COST OF INSURANCE BORROWERS MAY BE ABLE TO OBTAIN ON THEIR OWN.




          (o) Financial Covenants. The Borrowers will:





     (i) Minimum Consolidated Net Worth. Maintain a minimum Consolidated
Net Worth at all times during the Term hereof of not less than $24,000,000.00;




     (ii) Minimum Consolidated Debt Service Coverage Ratio. Maintain a
ratio of Consolidated EBITDA for the four quarter period ending at each quarter-end
and fiscal year end during the Term hereof, to Consolidated Debt Service determined
as of such fiscal quarter-end and fiscal year-end, of at least 1.15 to 1.0;




     (iii) Deliver a certificate of an Authorized Officer of the Borrowers
containing the financial ratio calculations required in clauses (i) and (ii) above
simultaneously with the financial statements referred to in Sections 6.1(a)(i) and
(ii).



- 41 -









 





          (p) Notices. Borrowers will notify Agent and the Lenders in writing of any of the
following immediately, but not later than three (3) days after any officer of any Borrower
obtaining actual knowledge thereof, describing the same and, if applicable, the steps being taken
by the Person(s) affected with respect thereto:





     (i) the occurrence of any Default or Event of Default;




     (ii) the occurrence of any default or event of default by any Borrower, any other
Obligor or any Subsidiary under any note, indenture, loan agreement, mortgage, deed of
trust, security agreement, lease or other similar agreement, document or instrument to which
any Borrower, any other Obligor or any Subsidiary, as the case may be, is a party or by
which it is bound or to which it is subject;




     (iii) the institution of any litigation, arbitration proceeding or governmental or
regulatory proceeding affecting any Borrower, any other Obligor, any Subsidiary, any
Collateral or any Third Party Collateral, whether or not considered to be covered by
insurance, in which the prayer or claim for relief seeks recovery of an amount in excess of
$100,000.00 (or, if no dollar
amount is specified in the prayer or claim for relief, in which there is a reasonable
likelihood of recovery of an amount in excess of $100,000.00) or any form of equitable
relief;




     (iv) the entry of any judgment or decree against any Borrower, any other Obligor or any
Subsidiary;




     (v) the occurrence of a Reportable Event with respect to any Pension Plan; the filing
of a notice of intent to terminate a Pension Plan by any Borrower, any ERISA Affiliate or
any Subsidiary; the institution of proceedings to terminate a Pension Plan by the PBGC or
any other Person; the withdrawal in a “complete withdrawal” or a “partial withdrawal” as
defined in Sections 4203 and 4205, respectively, of ERISA by any Borrower, any ERISA
Affiliate or any Subsidiary from any Multi-Employer Plan; or the incurrence of any material
increase in the contingent liability of any Borrower or any Subsidiary with respect to any
“employee welfare benefit plan” as defined in Section 3(1) of ERISA which covers retired
employees and their beneficiaries;




     (vi) the occurrence of any material adverse change in the Properties, assets,
liabilities, business, operations, prospects, income or condition (financial or otherwise)
of any Borrower, any other Obligor or any Subsidiary;




     (vii) any change in the name of any Borrower, any other Obligor or any Subsidiary;




     (viii) any proposed opening, closing or other change of any place of business of any
Borrower, any other Obligor or any Subsidiary;




     (ix) any material change in any Borrower’s or any Subsidiary’s line(s) of business;




     (x) receipt of any notice that the operations of any of the Borrowers, any other
Obligor or any Subsidiary of any of the Borrowers are not in full compliance with any of the
requirements of any applicable Environmental Law or Occupational Safety and Health Law;
receipt of notice that any of the Borrowers, any other Obligor or any Subsidiary of any of
the Borrowers is subject to any Federal, state or local investigation evaluating whether any
remedial action is needed to respond to the release of any Hazardous Materials or any other
hazardous or toxic waste, substance or constituent or other substance into the environment;
or receipt of notice



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that any of the Properties or assets of any of the Borrowers, any other
Obligor or any Subsidiary of any of the Borrowers are subject to an “Environmental Lien.”
For purposes of this Section 6.1(p)(x), “Environmental Lien” shall mean a Lien in favor of
any governmental or regulatory agency, entity, authority or official for (1) any liability
under Environmental Laws or (2) damages arising from or costs incurred by any such
governmental or regulatory agency, entity, authority or official in response to a release of
any Hazardous Materials or any other hazardous or toxic waste, substance or constituent or
other substance into the environment;




     (xi) any material change in the senior management of any of the Borrowers or any
Subsidiary of any of the Borrowers;




     (xii) the occurrence of any Change of Control Event; and




     (xiii) any notices required to be provided pursuant to other provisions of this
Agreement and notice of the occurrence of such other events as Agent or the Required Lenders
may from time to time reasonably specify.



          (q) Borrowers’ Bank Accounts. Each Borrower will, and will cause each Subsidiary of
any of the Borrowers to, maintain its primary checking, lockbox and operating accounts with First
Bank and to use First Bank’s lockbox services for purposes of facilitating the collection of each
Borrower’s or any such Subsidiary’s accounts receivable from its customers.




     6.2 Negative Covenants of the Borrowers. The Borrowers covenant and agree that, so
long as Lenders have any obligation to make any Loan hereunder or any of the Borrowers’ Obligations
remain unpaid or any Letter of Credit remains outstanding, unless the prior written consent of the
Required Lenders is obtained:



          (a) Limitation on Indebtedness. None of the Borrowers nor any Subsidiary of any of
the Borrowers will incur or be obligated on any Indebtedness, either directly or indirectly, by way
of Guarantee, suretyship or otherwise, other than:





     (i) Indebtedness for Borrowers’ Obligations;




     (ii) Unsecured trade accounts payable and normal accruals incurred in the
ordinary course of business which are not more than thirty (30) days past due;




     (iii) Indebtedness existing as of the date hereof and listed on Schedule
5.10 attached hereto;




     (iv) Indebtedness for Capital Expenditures and Capitalized Leases permitted
under this Agreement in an amount not to exceed $200,000.00 in the aggregate (for
Borrowers and all Subsidiaries of any of the Borrowers) at any one time outstanding;




     (v) Subordinated Debt; and




     (vi) Indebtedness not otherwise permitted by this Section 6.2(a) in an amount
not to exceed $50,000.00 in the aggregate at any one time outstanding for Borrowers
and all Subsidiaries of any of the Borrowers.



- 43 -









 





          (b) Limitations on Liens. The Borrowers will not create, incur, assume or suffer to
exist, and will not cause or permit any Subsidiary of the Borrowers to create, incur, assume or
suffer to exist, any Lien on any of its Property, assets or revenues other than Permitted Liens.




          (c) Consolidation, Merger, Sale of Property, Etc..





     (i) Borrower will not, and it will not cause or permit any Subsidiary to, directly or
indirectly merge or consolidate with or into any other Person or permit any other Person to
merge into or with or consolidate with it, except that Subsidiary Guarantors may merge with
each other or into any of the Borrowers, and except that any of the Borrowers or any
Subsidiary of any of the Borrowers may merge with or consolidate with any other Person
provided that such Borrower or such Subsidiary shall be the surviving entity and no Default
or Event of Default shall exist hereunder either prior to or immediately following any such
merger or consolidation, and provided further that Borrowers shall have given Agent prompt
written notice, but in no event less than twenty (20) days’ prior written notice, of any
such merger or consolidation and such Borrower or such Subsidiary shall execute UCC-1
financing statements or other documents
reasonably deemed necessary by Agent to perfect and continue Agent’s security interests in
the Collateral acquired through any such merger or consolidation.




     (ii) Borrower will not, and will not cause or permit any Subsidiary to, (A) sell,
assign, lease, transfer, abandon or otherwise dispose of any of its Property (including,
without limitation, any shares of capital stock, membership interests or other equity
interests of a Subsidiary owned by Borrower or another Subsidiary) or (B) issue, sell or
otherwise dispose of any shares of capital stock, membership interests or other equity
interests of any Subsidiary, except for (1) sales of Inventory in the ordinary course of
business (which does not include a transfer of Inventory in partial or total satisfaction of
any Indebtedness), (2) sales of fixed assets which are obsolete, worn-out or otherwise not
used or useable in the ordinary course of its business, so long as the net proceeds thereof
are used within ninety (90) days after the date of the sale solely to purchase replacement
fixed assets or assets of comparable quality or to pay or prepay (y) in the case of asset
sales by Borrower, Debt secured by any Permitted Lien encumbering the assets being sold or
the Borrower’s Obligations and (z) in the case of asset sales by a Subsidiary, Debt of such
Subsidiary, and (3) PM Resources may sell any portion of the undeveloped St. Louis, Missouri
real property owned by PM Resources provided that the greater of (A) seventy-five percent
(75%) of the net sales proceeds therefrom or (B) $500,000.00, shall be paid to Agent
application against the outstanding Revolving Credit Loans of the Lenders and a
corresponding reduction of the Total Revolving Credit Commitment.



          (d) Sale or Discount of Accounts. Borrower will not, and it will not cause or permit
any Subsidiary to, sell or discount (other than prompt payment discounts granted in the ordinary
course of business) any of its notes or accounts receivable or chattel paper.




          (e) Acquisitions; Subsidiaries. The Borrowers will not, and will not cause or permit
any Subsidiary to, make or suffer to exist any Acquisition of any Person if any Default or Event of
Default then exists hereunder or any of the other Transaction Documents or if any such Default or
Event of Default would result from the completion of any such contemplated Acquisition. If at any
time after the date hereof any of the Borrowers shall create or acquire any new Subsidiary,
Borrowers shall give Agent and the Lenders fifteen (15) Business Days’ prior written notice
thereof, and Borrowers shall cause such Subsidiary to execute promptly a Subsidiary Guaranty of
Borrowers’ Obligations in favor of the Agent and the Lenders in form and substance satisfactory to
Agent and the Required Lenders and shall cause such new Subsidiary promptly to secure said
Subsidiary Guaranty with a first priority perfected




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security interest in and lien on all of the
accounts, inventory, equipment, documents, instruments, chattel paper, patents, trademarks and
other tangible and intangible personal property of such Subsidiary and the proceeds thereof, all
pursuant to a Subsidiary Security Agreement and other documentation (including, without limitation,
an amendment to this Agreement if requested by the Agent or any Lender) in form and substance
reasonably satisfactory to the Required Lenders. Any Borrower owning stock of any such new
Subsidiary shall pledge such stock to Agent for the ratable benefit of the Lenders pursuant to a
Pledge Agreement in form and substance acceptable to Agent and the Required Lenders. Borrowers
further agree to execute or cause any such Subsidiary to execute such amendments to this Agreement
and to the other Transaction Documents or such additional agreements as may be required by Agent
and the Lenders to satisfy such obligations.




          (f) Fiscal Year. None of the Borrowers nor any Subsidiary of any of the Borrowers
will change its fiscal year without the prior written consent of the Required Lenders, which
consent will not be unreasonably withheld or delayed.




          (g) Stock Redemptions and Distributions. None of the Borrowers will make or declare or
incur any liability to make any Distribution in respect of the capital stock of such Borrower
without the prior written consent of the Required Lenders, provided that each wholly-owned
Subsidiary shall be permitted to declare and pay cash dividends or distributions on their
respective capital stock, membership interests or other equity interests to a Borrower.




          (h) Transactions with Related Parties. Except as set forth on Schedule
6.2(h), none of the Borrowers nor any Subsidiary of any of the Borrowers will, directly or
indirectly, engage in any material transaction, in the ordinary course of business or otherwise,
with any Affiliate unless such transaction is upon fair market terms, is not disadvantageous in any
material respect to any of the Lenders and has been approved by a majority of the disinterested
directors of such Borrower or such Subsidiary of any of the Borrowers, as the case may be (or, if
none of such directors are disinterested, by a majority of the directors), as being in the best
interests of such Borrower or such Subsidiary of any such Borrower, as the case may be. In
addition, none of the Borrowers nor any Subsidiary of any of the Borrowers shall (i) transfer any
Property or assets to any Affiliate for other than its fair market value or (ii) purchase or sign
any agreement to purchase any stock or other securities of any Affiliate (whether debt, equity or
otherwise), underwrite or Guarantee the same, or otherwise become obligated with respect thereto.
Nothing in this Section 6.2(h) shall prohibit any Borrower or any Subsidiary from granting
nonassignable, nonexclusive licenses of its patents and trademarks at less than market value to any
of the other Borrowers or other Subsidiaries of any of the Borrowers hereunder.




          (i) Restricted Investments; Advancing or Guaranteeing Credit. None of the Borrowers
nor any Subsidiary of any of the Borrowers will, directly or indirectly, make any Restricted
Investments. None of the Borrowers nor any Subsidiary of any of the Borrowers will become or be a
guarantor or surety of, or otherwise become or be responsible in any manner with respect to, any
undertaking of another Person except for (i) endorsements of instruments or items of payment for
deposit to the bank account of such Borrower or such Subsidiary, (ii) loans or guaranties of
Indebtedness incurred for the benefit of any Borrower or any Subsidiary Guarantor if the primary
obligation of such Borrower or such Subsidiary Guarantor is permitted under the definition of
Restricted Investment and under Section 6.2(a).




          (j) Limitations on Restrictive Agreements. None of the Borrowers will, and they will
not cause or permit any Subsidiary to, enter into, or permit to exist, any agreement with any
Person which prohibits or limits the ability of such Borrower or such Subsidiary, as the case may
be, to (a) pay dividends or make other distributions or prepay any Indebtedness owed to any
Borrower and/or any





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Subsidiary, (b) make loans or advances to any Borrower and/or any Subsidiary,
(c) transfer any of its Properties to any Borrower and/or any Subsidiary (other than with respect
to Property subject to Liens permitted by clauses (g) or (h) of the definition of Permitted Liens)
or (d) create, incur, assume or suffer to exist any Lien upon any of its Property or revenues,
whether now owned or hereafter acquired (other than with respect to Property subject to Liens
permitted by clauses (g) or (h) of the definition of Permitted Liens).




          (k) Dissolution or Liquidation. Borrowers will not seek or permit the dissolution or
liquidation of any of the Borrowers in whole or in part.




          (l) Change in Nature of Business. None of the Borrowers nor any Subsidiary of any of
the Borrowers will make any material change in the general nature of its business and other
business reasonably related thereto.




          (m) Pension Plans. None of the Borrowers nor any Subsidiary of any of the Borrowers
shall (a) permit any condition to exist in connection with any Pension Plan which might constitute
grounds for the PBGC to institute proceedings to have such Pension Plan terminated or a trustee
appointed to administer such Pension Plan or (b) engage in, or permit to exist or occur, any other
condition, event or transaction with respect to any Pension Plan which could result in the
incurrence by any of the Borrowers or any Subsidiary of any of the Borrowers of any liability, fine
or penalty which could reasonably be expected to have a Material Adverse Effect.




          (n) Management Fees. None of the Borrowers nor any Subsidiary of any of the Borrowers
will pay any management fees or similar fees or payments to any Person other than management fees
payable by any such Borrower or any such Subsidiary to any Borrower.




          (o) Subordinated Debt Payments. None of the Borrowers nor any Subsidiary of any of
the Borrowers will pay any principal, interest or other amount on or with respect to any
Subordinated Debt, except as expressly permitted by the terms of the applicable subordination
agreement for such Subordinated Debt.




     6.3 Use of Proceeds.



          (a) Each of the Borrowers agrees that the proceeds of the Loans hereunder will be used solely
for such Borrower’s working capital and general company needs and purposes and to refinance
Borrowers’ existing Indebtedness;




          (b) None of such proceeds will be used in violation of any applicable law or regulation; and




          (c) no part of the proceeds of any Loan will be used, whether directly or indirectly, and
whether immediately, incidentally or ultimately (i) to purchase or carry margin stock or to extend
credit to others for the purpose of purchasing or carrying margin stock, or to refund or repay
indebtedness originally incurred for such purpose or (ii) in violation of the provisions of any of
the Regulations of The Board of Governors of the Federal Reserve System, including, without
limitation, Regulations U, T or X thereof, as amended.





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SECTION 7. EVENTS OF DEFAULT.




     If any of the following (each of the following herein sometimes called an “Event of Default”)
shall occur and be continuing:



     7.1 Borrowers shall fail to pay any of the Borrowers’ Obligations as and when the same shall
become due and payable, whether by reason of demand, acceleration, mandatory prepayment or
otherwise;



     7.2 Any representation or warranty of any of the Borrowers made in this Agreement, in any
other Transaction Document or in any certificate, agreement, instrument or statement furnished or
made or delivered pursuant hereto or thereto or in connection herewith or therewith, shall prove to
have been untrue or incorrect in any material respect when made or deemed made;



     7.3 Borrowers shall fail to perform or observe any term, covenant or provision contained in
Section 3.1(b), Section 6.1(a), Section 6.1(c), Section 6.1(o), Section 6.1(p), Section 6.2 or
Section 6.3;



     7.4 Borrowers shall fail to perform or observe any other term, covenant or provision contained
in this Agreement (other than those otherwise specified in this Section 7) and any such failure
shall remain unremedied for fifteen (15) days after the earlier of (i) written notice of default is
given to the Borrower Representative by the Agent or any of the Lenders or (ii) any officer of any
of the Borrowers obtaining actual knowledge of such default;



     7.5 This Agreement or any of the other Transaction Documents shall at any time for any reason
cease to be in full force and effect or shall be declared to be null and void by a court of
competent jurisdiction, or if the validity or enforceability thereof shall be contested or denied
by the Borrowers, or if the transactions completed hereunder or thereunder shall be contested by
the Borrowers or if the Borrowers shall deny that it has any or further liability or obligation
hereunder or thereunder;



     7.6 Borrowers, any Subsidiary of the Borrowers or any other Obligor shall (i) voluntarily
commence any proceeding or file any petition seeking relief under Title 11 of the United States
Code or any other federal, state or foreign bankruptcy, insolvency, receivership, liquidation or
similar law, (ii) consent to the institution of, or fail to contravene in a timely and appropriate
manner, any such proceeding or the filing of any such petition, (iii) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator or similar official of itself, himself
or herself or of a substantial part of its, his or her Property or assets, (iv) file an answer
admitting the material allegations of a petition filed against itself, himself or herself in any
such proceeding, (v) make a general assignment for the benefit of creditors, (vi) become unable,
admit in writing its, his or her inability or fail generally to pay its, his or her debts as they
become due or (vii) take any corporate or other action for the purpose of effecting any of the
foregoing;



     7.7 An involuntary proceeding shall be commenced or an involuntary petition shall be filed in
a court of competent jurisdiction seeking (i) relief in respect of the Borrowers, any Subsidiary of
the Borrowers or any other Obligor, or of a substantial part of the Property or assets of the
Borrowers, any Subsidiary of the Borrowers or any other Obligor, under Title 11 of the United
States Code or any other federal, state or foreign bankruptcy, insolvency, receivership,
liquidation or similar law, (ii) the appointment of a receiver, trustee, custodian, sequestrator or
similar official of the Borrowers, any Subsidiary of the Borrowers or any other Obligor or of a
substantial part of the Property or assets of the Borrowers, any Subsidiary of the Borrowers or any
other Obligor or (iii) the winding-up or liquidation of the Borrowers, any Subsidiary of the
Borrowers or any other Obligor; and such proceeding or petition



- 47 -









 







shall continue undismissed for
thirty (30) consecutive days or an order or decree approving or ordering any of the foregoing shall
continue unstayed and in effect for thirty (30) consecutive days;



     7.8 Any “Event of Default” (as defined therein) shall occur under or within the meaning of any
of the Security Agreements;



     7.9 Any “Event of Default” (as defined therein) shall occur under or within the meaning of any
of the Deeds of Trust;



     7.10 Any default or event of default (after expiration of any applicable notice or cure
period, if any) shall occur under or within the meaning of the terms of any of the Patent,
Trademark and License Security Agreements, or if any of the Patent, Trademark and License Security
Agreements shall at any time for any reason cease to be in full force and effect or shall be
declared to be null and void by a court of competent jurisdiction, or if the validity or
enforceability thereof shall be contested by or denied by any
Borrower executing the same, or if any Borrower shall deny that it has any further liability or
obligation thereunder;



     7.11 Any event of default (after expiration of any applicable notice or cure period, if any)
shall occur under the terms of any Letter of Credit Application;



     7.12 Any default or event of default (after expiration of any applicable notice or cure
period, if any) shall occur under or within the meaning of the terms of any of the Pledge
Agreements, or if any of the Pledge Agreements shall at any time for any reason cease to be in full
force and effect or shall be declared to be null and void by a court of competent jurisdiction, or
if the validity or enforceability thereof shall be contested by or denied by any Borrower executing
the same, or if any Borrower shall deny that it has any further liability or obligation thereunder;



     7.13 Any of the Subsidiary Guaranties shall at any time for any reason cease to be in full
force and effect or shall be declared to be null and void by a court of competent jurisdiction, or
if the validity or enforceability thereof shall be contested by or denied by any Subsidiary
Guarantor executing the same, or if any Subsidiary Guarantor shall deny that it has any further
liability or obligation thereunder;



     7.14 Any “Event of Default” (as defined therein) shall occur under or within the meaning of
any Subsidiary Security Agreement;



     7.15 that certain Subordination Agreement dated of even date herewith made by Virbac S. A. in
favor of the Agent and the Lenders and acknowledged by the Borrowers (as amended or restated from
time to time, the “Subordination Agreement”) shall at any time for any reason cease to be in full
force and effect or shall be declared to be null and void by a court of competent jurisdiction, or
if the validity or enforceability of the Subordination Agreement shall be contested or denied by
Virbac S. A., or if Virbac S. A. shall deny that it has any further liability or obligation under
the Subordination Agreement or if any repayment of any of the Subordinated Debt (as defined in such
Subordination Agreement) shall occur except to the extent any such repayments constitute “Permitted
Payments” (as defined in such Subordination Agreement);



     7.16 Any of the Borrowers, any Subsidiary of any of the Borrowers or any other Obligor shall
be declared by Agent or any Lender to be in default on, or pursuant to the terms of, (1) any other
present or future obligation to Agent or such Lender, including, without limitation, any other
loan, line of credit, revolving credit, guaranty or letter of credit reimbursement obligation, or
(2) any other present or future



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agreement purporting to convey to Agent a Lien upon any Property or
assets of any of the Borrowers, such Subsidiary of any of the Borrowers or such other Obligor, as
the case may be;



     7.17 Any of the Borrowers, any Subsidiary of any of the Borrowers or any other Obligor shall
fail (and such failure shall not have been cured or waived) to perform or observe any term,
provision or condition of, or any other default or event of default shall occur under, any
agreement, document or instrument evidencing, securing or otherwise relating to any outstanding
Debt of any of the Borrowers, such Subsidiary of any of the Borrowers or such other Obligor, as the
case may be (other than Borrowers’ Obligations) in a principal amount in excess of Five Hundred
Thousand Dollars ($500,000.00), if the effect of such failure or default is to cause or permit such
Debt to be declared to be due and payable or otherwise accelerated, or to be required to be prepaid
(other than by a regularly scheduled required prepayment) prior to the stated maturity thereof;



     7.18 Any of the Borrowers, any Subsidiary of any of the Borrowers or any other Obligor shall
have one or more final judgments entered against it by a court having jurisdiction in the premises,
and such judgment(s) shall not be appealed in good faith (and execution of such judgment(s) stayed
during such appeal) or satisfied by such Borrower, such Subsidiary of any such Borrowers or such other
Obligor, as the case may be, within the time period permitted by applicable law for the filing of
an appeal of such judgment(s);



     7.19 The occurrence of a Reportable Event with respect to any Pension Plan; the filing of a
notice of intent to terminate a Pension Plan by any Borrower, any ERISA Affiliate or any
Subsidiary; the institution of proceedings to terminate a Pension Plan by the PBGC or any other
Person; the withdrawal in a “complete withdrawal” or a “partial withdrawal” as defined in Sections
4203 and 4205, respectively, of ERISA by any Borrower, any ERISA Affiliate or any Subsidiary from
any Multi-Employer Plan; or the incurrence of any increase in excess of $100,000.00 in the
contingent liability of any Borrower or any Subsidiary with respect to any “employee welfare
benefit plan” as defined in Section 3(1) of ERISA which covers retired employees and their
beneficiaries;



     7.20 The institution by any Borrower, any ERISA Affiliate or any Subsidiary of steps to
terminate any Pension Plan if, in order to effectuate such termination, such Borrower, such ERISA
Affiliate or such Subsidiary, as the case may be, would be required to make a contribution to such
Pension Plan, or would incur a liability or obligation to such Pension Plan, in excess of One
Hundred Thousand Dollars ($100,000.00); or the institution by the PBGC of steps to terminate any
Pension Plan; or



     7.21 The occurrence of any Change of Control Event;



     THEN, and in each such event (other than an event described in Sections 7.6 or 7.7), Agent
may, or if requested in writing by the Required Lenders shall, declare that the obligations of the
Lenders to make Loans and of First Bank to issue Letters of Credit under this Agreement have
terminated, whereupon such obligations of First Bank and Lenders shall be immediately and forthwith
terminated, and Agent may further, or if requested in writing by the Required Lenders shall
further, declare on behalf of each of the Lenders that the entire outstanding principal balance of
and all accrued and unpaid interest on the Notes and all of the other Borrowers’ Obligations are
forthwith due and payable, whereupon all of the unpaid principal balance of and all accrued and
unpaid interest on the Notes and all such other Borrowers’ Obligations shall become and be
immediately due and payable, without presentment, demand, protest or further notice of any kind,
all of which are hereby expressly waived by the Borrowers, and Agent and the Lenders may exercise
any and all other rights and remedies which any of them may have under any of the other Transaction
Documents or under applicable law; provided, however, that upon the



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occurrence of any event
described in Sections 7.6 or 7.7, Lenders’ obligations to make Loans and First Bank’s obligation to
issue Letters of Credit under this Agreement shall automatically terminate and the entire
outstanding principal balance of and all accrued and unpaid interest on the Notes issued under this
Agreement and all other Borrowers’ Obligations shall automatically become immediately due and
payable, without presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by the Borrowers, and Agent and the Lenders may exercise any and all other
rights and remedies which any of them may have under any of the other Transaction Documents or
under applicable law. Following acceleration of Borrowers’ Obligations hereunder as set forth
above, Agent may, or if requested in writing by the Required Lenders and provided with the
indemnity required under Section 8.6 shall, proceed to enforce any remedy then available to Agent
or any of the Lenders under any applicable law, including, without limitation, all rights granted
to Agent hereunder, under the Pledge Agreements, the Security Agreements, the Deeds of Trust, the
Patent, Trademark and License Security Agreements, any other guaranty of Borrowers’ Obligations or
any Letter of Credit Application, and the rights and remedies available to a secured party under
the Uniform Commercial Code as in effect in the State of Missouri.



     Upon the occurrence and during the continuance of any Event of Default, Agent on behalf of the
Lenders will have the right, in addition to all other rights and remedies available to Agent and
the Lenders under this Agreement or under the other Transaction Documents, after oral or written
notice is sent to the Borrowers, to take possession of, preserve and care for the Collateral, to
execute and/or endorse as the Borrowers’ agent any bills of sale or documents, instruments or
chattel paper in or pertaining to the Collateral, to notify Account Debtors and obligors on
documents, Accounts and instruments included in the Collateral to make payment directly to Agent,
to take control of all of the Borrowers’ cash, to collect and receive funds generated by the
Collateral, including proceeds or refunds from insurance, or as a result of claims for the damage,
loss, or destruction of the Collateral, and use the same to reduce any part of the obligations.
Upon the occurrence and during the continuance of any Event of Default, in addition to all of
Agent’s and the Lenders’ other rights and remedies under this Agreement and the other Transaction
Documents and whether at law or in equity, the Required Lenders shall have the right, in their sole
and absolute discretion, to (a) reduce the amount of the Total Revolving Credit Commitment, (b)
create reserves and/or allowances against the unused Total Revolving Credit Commitments, Eligible
Accounts and/or Eligible Inventory, and/or (c) reduce the advance rates against Eligible Accounts
and/or Eligible Inventory set forth in the definition of the Borrowing Base, and First Bank shall
have the right, in its sole and absolute discretion, to reduce the amount of the Swing Line
Commitment.



     The Agent shall give notice of a Default to Borrowers promptly upon being requested to do so
by any Lender and shall thereupon notify all of the Lenders thereof.



     Following any Default or Event of Default, all payments and other amounts received by Agent
and/or any of the Lenders, whether voluntary or involuntary, including but not limited to any
proceeds of any collateral, any right of offset or otherwise, shall be shared among the Lenders.
Such application shall be made (i) first, to any costs or expenses of Agent or any of the Lenders
incurred in connection with the collection of such proceeds, (ii) second, to any accrued and unpaid
fees due hereunder or under any of the other Transaction Documents, (iii) third, to any and all
accrued and unpaid interest on any of the Loans, (iv) fourth, to collateralize any outstanding
Letters of Credit pursuant to Section 3.3(e) herein, and (v) fifth, to the unpaid principal amounts
of any of the Loans outstanding hereunder and under the other Transaction Documents, in each case
in accordance with the Lenders’ respective Pro Rata Shares of the outstanding amounts thereof.



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SECTION 8. THE AGENT




     8.1 Appointment and Authorization. Each Lender irrevocably appoints and authorizes
the Agent to take such action as agent on its behalf and to exercise such powers under this
Agreement, the Notes and the other Transaction Documents as are delegated to the Agent by the terms
hereof or thereof, together with all such powers as may be reasonably incidental thereto.



     8.2 Agent and Affiliates. The Agent shall have the same rights and powers under this
Agreement as any other Lender and may exercise or refrain from exercising the same as though it
were not the Agent, and the Agent and its affiliates may accept deposits from, lend money to and
generally engage in any kind of business with any of the Borrowers or any of their respective
Subsidiaries or Affiliates as if it were not the Agent hereunder.



     8.3 Action by Agent. The obligations of the Agent hereunder are only those expressly
set forth herein. Without limiting the generality of the foregoing, the Agent shall not be
required to take any action with respect to any Default or Event of Default, except as expressly
provided in Section 7. Agent agrees to promptly notify each of the Lenders with respect to any
notices received by Agent from Borrowers pursuant to the terms of this Agreement.



     8.4 Consultation with Experts. The Agent may consult with legal counsel, independent
certified public accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the advice of such
counsel, accountants or other experts.



     8.5 Liability of Agent. Neither the Agent nor any of its directors, officers,
employees, agents or advisors shall be liable for any action taken or not taken by it in connection
herewith (i) with the consent or at the request of the requisite percentage in interest of the
Lenders set forth herein or (ii) in the absence of its own gross negligence or willful misconduct
as determined by a court of competent jurisdiction. Neither the Agent nor any of its directors,
officers, employees, agents or advisors shall be responsible for or have any duty to ascertain,
inquire into or verify (a) any statement, warranty or representation made in connection with this
Agreement or any Loan hereunder; (b) the performance or observance of any of the covenants or
agreements of any of the Borrowers; (c) the satisfaction of any condition specified in Section 4,
except receipt of items required to be delivered to the Agent; or (d) the validity, effectiveness
or genuineness of this Agreement, the Notes or any of the other Transaction Documents. The Agent
shall not incur any liability by acting in reliance upon any notice, consent, certificate,
statement or other writing (which may be a bank wire, telex, telecopy or similar writing) believed
by it to be genuine or to be signed by the proper party or parties.



     8.6 Indemnification. Notwithstanding any other provision contained in this Agreement
to the contrary, to the extent Borrowers fail to reimburse the Agent pursuant to Section 9.3,
Section 9.4 or Section 9.5, or if any Default or Event of Default shall occur under this Agreement,
the Lenders shall, rateably in accordance with their respective pro rata portion of all of the then
outstanding Loans (other than the Swing Line Loans), indemnify the Agent and hold it harmless from
and against any and all liabilities, losses, costs and/or expenses, including, without limitation,
any liabilities, losses, costs and/or expenses arising from the failure of any Lender to perform
its obligations hereunder or in respect of this Agreement, and also including, without limitation,
reasonable attorneys’ fees and expenses, which the Agent may incur, directly or indirectly, in
connection with this Agreement, the Notes or any of the other Transaction Documents, or any action
or transaction related hereto or thereto; provided only that the Agent shall not be entitled to
such indemnification for any losses, liabilities, costs and/or expenses directly and solely
resulting from its own gross negligence or willful misconduct as determined by a court



- 51 -









 







of competent
jurisdiction. This indemnity shall be a continuing indemnity, contemplates all liabilities,
losses, costs and expenses related to the execution, delivery and performance of this Agreement,
the Notes and the other Transaction Documents, and shall survive the satisfaction and payment of
the Loans and the termination of this Agreement.



     8.7 Credit Decision. Each Lender acknowledges that it has, independently and without
reliance upon the Agent or any other Lender, and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each
Lender also acknowledges that it will, independently and without reliance upon the Agent or any
other Lender, and based on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking any action under this Agreement.



     8.8 Resignation of Agent. The Agent may resign at any time by giving written notice
thereof to the Lenders and Borrowers. Upon any such resignation, Lenders shall have the right to
appoint a successor Agent (which appointment shall be with the prior consent of Borrowers provided
no Default or Event of Default then exists hereunder, and which consent shall not be unreasonably
withheld), and any such successor Agent shall be a commercial bank organized under the laws of the
United States of America or of any State thereof and having a combined
capital and surplus of at least $100,000,000.00. If no successor Agent shall have been so
appointed by Lenders, and shall have accepted such appointment, within thirty (30) days after the
retiring Agent’s giving of notice of resignation, then the Agent shall, on behalf of all of the
Lenders, appoint a successor Agent (which appointment shall be with the prior consent of Borrowers
provided no Default or Event of Default then exists hereunder, and which consent shall not be
unreasonably withheld), and any such successor Agent shall be a commercial bank organized under the
laws of the United States of America or of any State thereof and having a combined capital and
surplus of at least $100,000,000.00. Upon the acceptance of any appointment as Agent hereunder by
a successor Agent, such successor Agent shall thereupon succeed to and become vested with all of
the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from all of its duties and obligations under this Agreement. After any retiring Agent’s
resignation as Agent, the provisions of this Section 9 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement.



     8.9 Removal of Agent. The Agent may be removed at any time, for or without cause, by
an instrument or instruments in writing executed by the Required Lenders and delivered to the Agent
with a copy to Borrowers, specifying the removal and the date when it shall take effect. Upon any
such removal, Lenders shall have the right to appoint a successor Agent with the prior consent of
Borrowers, which consent shall not be unreasonably withheld, and which successor Agent shall be a
commercial bank organized under the laws of the United States of America or of any State thereof
and having a combined capital and surplus of at least $100,000,000.00. If no successor Agent shall
have been so appointed by Lenders, and shall have accepted such appointment, within thirty (30)
days after the date of removal of the Agent, then the Required Lenders shall, on behalf of all of
the Lenders, appoint a successor Agent with the prior consent of Borrowers, which consent shall not
be unreasonably withheld, and which successor Agent shall be a commercial bank organized under the
laws of the United States of America or of any state thereof and having a combined capital and
surplus of at least $100,000,000.00. Upon the acceptance of any appointment as Agent hereunder by
a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the removed Agent, and the removed Agent shall be
discharged from all of its duties and obligations under this Agreement. After any such removal,
the provisions of this Section 9 shall inure to such former Agent’s benefit as to any actions taken
or omitted to be taken by it while it was Agent under this Agreement.



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SECTION 9. GENERAL.




     9.1 No Waiver. No failure or delay by Agent or any of the Lenders in exercising any
right, remedy, power or privilege hereunder or under any other Transaction Document shall operate
as a waiver thereof; nor shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege. The remedies
provided herein and in the other Transaction Documents are cumulative and not exclusive of any
remedies provided by law. Nothing herein contained shall in any way affect the right of Agent or
any of the Lenders to exercise any statutory or common law right of banker’s lien or setoff.



     9.2 Right of Setoff. Upon the occurrence and during the continuance of any Event of
Default, each of the Lenders is hereby authorized at any time and from time to time, without notice
to the Borrowers (any such notice being expressly waived by the Borrowers) and to the fullest
extent permitted by law, to setoff and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held by any such Lender and any and all other
indebtedness at any time owing by any such Lender to or for the credit or account of any of the
Borrowers against any and all of the Borrowers’ Obligations irrespective of whether or not Agent or
any such Lender shall have made any demand hereunder or under any of the other Transaction
Documents and although such obligations may be contingent or unmatured. Such Lender agrees to
promptly notify Borrowers after
any such setoff and application made by such Lender, provided, however, that the failure to give
such notice shall not affect the validity of such setoff and application. The rights of Lenders
under this Section 9.2 are in addition to any other rights and remedies (including, without
limitation, other rights of setoff) which Lenders may have. Nothing contained in this Agreement or
any other Transaction Document shall impair the right of each of the Lenders to exercise any right
of setoff or counterclaim they may have against any of the Borrowers and to apply the amount
subject to such exercise to the payment of indebtedness of any of the Borrowers unrelated to this
Agreement or the other Transaction Documents.



     9.3 Cost and Expenses. Borrowers jointly and severally agree, whether or not any Loan
is made hereunder, to pay Agent upon demand (i) all reasonable out-of-pocket costs and expenses and
Attorneys’ Fees of Agent in connection with the preparation, documentation, negotiation and
execution of this Agreement, the Notes and the other Transaction Documents, (ii) all reasonable
recording, filing, search, title insurance, surveying and appraisal fees incurred in connection
with this Agreement and the other Transaction Documents, (iii) all reasonable out-of-pocket costs
and expenses and all Attorneys’ Fees of Agent and the Lenders in connection with the preparation of
any waiver or consent hereunder or any amendment hereof or any Event of Default or alleged Event of
Default hereunder, (iv) if an Event of Default occurs, all out-of-pocket costs and expenses and all
Attorneys’ Fees incurred by Agent and each of the Lenders in connection with such Event of Default
and collection and other enforcement proceedings resulting therefrom and (v) all other Attorneys’
Fees incurred by Agent relating to or arising out of or in connection with this Agreement or any of
the other Transaction Documents subsequent to the date hereof. The Borrowers further jointly and
severally agree to pay or reimburse Agent and each of the Lenders for any stamp or other taxes
which may be payable with respect to the execution, delivery, recording and/or filing of this
Agreement, the Notes, the Security Agreements, the Deeds of Trust, the Patent, Trademark and
License Security Agreements, the Pledge Agreements or any of the other Transaction Documents. All
of the obligations of the Borrowers under this Section 9.3 shall survive the satisfaction and
payment of the Borrowers’ Obligations and the termination of this Agreement. In the event Agent or
any Lender claims any amounts pursuant to this Section 9.3, Agent or such Lender, as the case may
be, shall provide to Borrowers an itemized statement of amounts claimed.



     9.4 Environmental Indemnity. The Borrowers hereby jointly and severally agree to
indemnify Agent and each of the Lenders and hold Agent and each of the Lenders harmless from and



- 53 -









 







against any and all losses, liabilities, damages, injuries, costs, expenses and claims of any and
every kind whatsoever (including, without limitation, court costs and Attorneys’ Fees and expenses)
which at any time or from time to time may be paid, incurred or suffered by, or asserted against,
Agent or any of the Lenders for, with respect to or as a direct or indirect result of the violation
by any of the Borrowers or any Subsidiary of the Borrowers of any Environmental Laws; or with
respect to, or as a direct or indirect result of the presence on or under, or the escape, seepage,
leakage, spillage, discharge, emission or release from, properties utilized by any of the Borrowers
and/or any Subsidiary of the Borrowers in the conduct of its businesses into or upon any land, the
atmosphere or any watercourse, body of water or wetland, of any Hazardous Materials (including,
without limitation, any losses, liabilities, damages, injuries, costs, expenses or claims asserted
or arising under the Environmental Laws), except, in each case, for losses, liabilities, damages,
injuries, costs, expenses and claims of Agent or any Lender caused by Agent’s or such Lender’s (as
the case may be) gross negligence or willful misconduct as determined by a court of competent
jurisdiction; and the provisions of and undertakings and indemnification set out in this Section
9.4 shall survive the satisfaction and payment of the Borrowers’ Obligations and the termination of
this Agreement.



     9.5 General Indemnity. In addition to the payment of expenses pursuant to Section
9.3, whether or not the transactions contemplated hereby shall be consummated, the Borrowers hereby
jointly and severally agree to indemnify, pay and hold Agent,
each of the Lenders and any other holder(s) of the Notes, and the officers, directors, employees,
agents and affiliates of any of them (collectively, the “Indemnitees”) harmless from and against
any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, expenses and disbursements of any kind or nature whatsoever (including, without
limitation, the reasonable fees and disbursements of counsel for such Indemnitees in connection
with any investigative, administrative or judicial proceeding commenced or threatened, whether or
not such Indemnitees shall be designated a party thereto), that may be imposed on, incurred by or
asserted against the Indemnitees, in any manner relating to or arising out of this Agreement, any
of the other Transaction Documents or any other agreement, document or instrument executed and
delivered by any of the Borrowers or any other Obligor in connection herewith or therewith, the
statements contained in any commitment letters delivered by Agent or any of the Lenders, the
Lenders’ agreements to make the Loans hereunder or the use or intended use of the proceeds of any
Loan hereunder (collectively, the “indemnified liabilities”); provided that the Borrowers
shall have no obligation to an Indemnitee hereunder with respect to indemnified liabilities, or for
expenses under Section 9.3 relating to any such indemnified liabilities, arising from the gross
negligence or willful misconduct of that Indemnitee as determined by a court of competent
jurisdiction. To the extent that the undertaking to indemnify, pay and hold harmless set forth in
the preceding sentence may be unenforceable because it is violative of any law or public policy,
the Borrowers shall contribute the maximum portion that they are permitted to pay and satisfy under
applicable law to the payment and satisfaction of all indemnified liabilities incurred by the
Indemnitees or any of them. The provisions of the undertakings and indemnification set out in this
Section 9.5 shall survive satisfaction and payment of the Borrowers’ Obligations and the
termination of this Agreement.



     9.6 Authority to Act. Agent and the Lenders shall be entitled to act on any notices
and instructions (telephonic or written) believed by Agent or any such Lender to be genuine and to
have been delivered by any Person authorized to act on behalf of the Borrowers pursuant hereto,
regardless of whether such notice or instruction was in fact delivered by a Person authorized to
act on behalf of the Borrowers, and the Borrowers hereby jointly and severally agree to indemnify
Agent and each of the Lenders and hold Agent and each of the Lenders harmless from and against any
and all losses and expenses, if any, ensuing from any such action, other than for such losses or
expenses directly caused by the gross negligence or willful misconduct of the Agent or such Lender,
as determined by a court of competent jurisdiction.



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     9.7 Notices. Any notice, request, demand, consent, confirmation or other communication
hereunder shall be in writing and delivered in person or sent by facsimile, recognized overnight
courier or registered or certified mail, return receipt requested and postage prepaid, if to the
Borrowers, in care of Virbac, as each Borrower’s representative, at 3200 Meacham Boulevard, Fort
Worth, Texas 76137, Attention: Jean M. Nelson, Telecopy No. (817) 831-8362, or if to Agent, at 135
North Meramec, St. Louis, Missouri 63105, Attention: Traci Dodson, Telecopy No. (314) 854-5454,
and in the case of cash budgets deliverable pursuant to Section 6.1(a)(v), to Agent by email
transmission to Traci.Dodson@FBOL.com, or if to Lenders, at their respective addresses or telecopy
numbers, or in the case of cash budgets deliverable pursuant to Section 6.1(a)(v) at their
respective email addresses, each as set forth on the signature pages of this Agreement, or any
subsequent Assignment Agreement executed pursuant to Section 9.12 herein or any subsequent
amendment hereto or thereto, or at such other address, telecopy number or email address, as the
case may be, as any party may designate as its address, telecopy number and/or email address for
communications hereunder by notice so given. Such notices shall be deemed effective (i) if given
by facsimile transmission, when transmitted to the telecopy number specified in this Section and
answerback confirmation of receipt is received, (ii) if sent by registered or certified mail, on
the third (3rd) Business Day after the day on which such communication was deposited in the mail
with first class postage prepaid, addressed as aforesaid, (iii) if sent by overnight courier, on
the Business Day following the date of mailing with such recognized
overnight courier service, addressed as aforesaid, or (iv) if given by any other means, when
delivered (or in the case of electronic transmission, received) at the addresses specified in this
Section.



     9.8 CONSENT TO JURISDICTION; JURY TRIAL WAIVER. EACH BORROWER IRREVOCABLY SUBMITS TO
THE NONEXCLUSIVE JURISDICTION OF ANY MISSOURI STATE COURT OR ANY UNITED STATES OF AMERICA COURT
SITTING IN THE EASTERN DISTRICT OF MISSOURI, AS AGENT MAY ELECT, IN ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT TO THE EXTENT
SUBJECT MATTER JURISDICTION EXISTS. THE BORROWERS HEREBY IRREVOCABLY AGREE THAT ALL CLAIMS IN
RESPECT TO SUCH SUIT, ACTION OR PROCEEDING MAY BE HELD AND DETERMINED IN ANY OF SUCH COURTS. EACH
OF THE BORROWERS IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
EACH SUCH BORROWER MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT, AND THE BORROWERS FURTHER IRREVOCABLY WAIVE ANY CLAIM THAT
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. EACH OF THE BORROWERS HEREBY EXPRESSLY WAIVES ALL RIGHTS OF ANY OTHER JURISDICTION WHICH
EACH SUCH BORROWER MAY NOW OR HEREAFTER HAVE BY REASON OF ITS PRESENT OR SUBSEQUENT DOMICILE. EACH
OF THE BORROWERS AUTHORIZES THE SERVICE OF PROCESS UPON IT BY REGISTERED MAIL SENT TO SUCH BORROWER
AT THE ADDRESS SET FORTH IN SECTION 9.7. EACH OF THE BORROWERS HEREBY WAIVES ANY RIGHT TO TRIAL BY
JURY OF ANY LITIGATION BROUGHT IN ACCORDANCE WITH THIS SECTION.



     9.9 Agent’s and Lenders’ Books and Records. Agent’s and Lenders’ books and records
showing the account between the Borrowers and Agent or any of the Lenders shall be admissible in
evidence in any action or proceeding and shall constitute prima facie proof thereof.



     9.10 Governing Law; Amendments and Waivers. This Agreement, the Notes, the Security
Agreements, the Deed of Trust executed by PM Resources, the Patent, Trademark and License Security



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Agreements, the Pledge Agreements and all of the other Transaction Documents shall be governed by
and construed in accordance with the internal laws of the State of Missouri. Any provision of this
Agreement, the Notes, the Security Agreements, the Deeds of Trust, the Patent, Trademark and
License Security Agreements, the Pledge Agreements or any of the other Transaction Documents may be
amended or waived if, but only if, such amendment or waiver is in writing and is signed by
Borrowers and the Required Lenders (and, if the rights or duties of the Agent in its capacity as
Agent are affected thereby, by the Agent); provided that no such amendment or waiver shall, unless
signed by all of the Lenders, (i) increase the Revolving Credit Commitment of any Lender, (ii)
increase the Swing Line Commitment of First Bank, (iii) reduce the principal amount of or rate of
interest on any Loan or any fees hereunder, (iv) postpone the date fixed for any payment of
principal of or interest on any Loan or any fees hereunder, (v) release all or substantially all of
the collateral security or any guaranty for any Loan hereunder, (vi) change the definition of
Required Lenders, (vii) amend this Section 9.10, or (viii) reduce the minimum amount of an
assignment permitted under Section 9.12.



     9.11 Successors and Assigns; Participations.



          (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, except that Borrowers may not assign or
otherwise transfer any of their respective rights or delegate any of their respective obligations
under this Agreement. Any of the Lenders may sell participations in its Notes and its rights under
this Agreement, the other Transaction Documents and in the Collateral in whole or in part to any
commercial bank organized under the laws of the United States or any state thereof without the
prior consent of Borrowers so long as each agreement pursuant to which any such participation is
granted provides that no such participant shall have any rights under this Agreement or any other
Transaction Document (the participants’ rights against the Lender granting its participation to be
those set forth in the Participation Agreement between the participant and such Lender), and such
selling Lender shall retain the sole right to approve or disapprove any amendment, modification or
waiver of any provision of this Agreement or any of the other Transaction Documents. Each such
participant shall be entitled to the benefits of the yield protection provisions hereof to the
extent any Lender would have been so entitled had not such participation been sold, but only to the
extent that the cost of such benefits to Borrowers does not exceed the cost which Borrowers would
have incurred in respect of the applicable Lender absent such participation.




          (b) Any Lender which, in accordance with Section 9.11(a), grants a participation in any of its
rights under this Agreement or its Notes shall give prompt notice describing the details thereof to
the Agent, the Lenders and the Borrowers.




          (c) Unless otherwise agreed to by Borrowers in writing, no Lender shall, as between Borrowers
and that Lender, be relieved of any of its obligations under this Agreement as a result of such
Lender’s granting of a participation in all or any part of such Lender’s Notes or all or any part
of such Lender’s rights under this Agreement.




     9.12 Assignment Agreements. Any Lender may at any time assign to one or more Lenders
or other financial institutions (each an “Assignee”) all, or a proportionate part of all, of its
rights and obligations under this Agreement and its Notes in a minimum amount of at least
$5,000,000.00, and such Assignee shall assume such rights and obligations, pursuant to an
Assignment Agreement in substantially the form of Exhibit G attached hereto (an “Assignment
Agreement”) executed by such Assignee and such transferor Lender, with (and subject to) the
subscribed consent of Borrowers and the Agent; provided, however, that (i) if any Assignee is an
affiliate of such transferor Lender or, immediately prior to such assignment, a Lender, no consent
shall be required and (ii) if any Event of Default under this Agreement



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has occurred and is
continuing no consent of the Borrowers to such assignment shall be required, which Assignment
Agreement shall specify in each instance the portion of the indebtedness evidenced by the Notes
which is to be assigned to such Assignee and the portion of the Revolving Credit Commitment of the
assignor Lender and the credit risk incidental to the Letters of Credit (which portions shall be
equivalent) to be assumed by the Assignee, provided that nothing herein contained shall restrict,
or be deemed to require any consent as a condition to, or require payment of any fee in connection
with, any sale, discount or pledge by any Lender of any Note or other obligation hereunder to a
federal reserve bank. Upon the execution of each Assignment Agreement by the assignor Lender, the
Assignee and the Borrowers and consent thereto by the Agent (i) such Assignee shall thereupon
become a “Lender” for all purposes of this Agreement with a Revolving Credit Commitment in the
amount set forth in such Assignment Agreement and with all the rights, powers and obligations
afforded a Lender hereunder, (ii) the assignor Lender shall have no further liability for funding
the portion of its Revolving Credit Commitment assumed by such Assignee and (iii) the address for
notices to such Assignee shall be as specified in the Assignment Agreement, and the Borrowers
shall, in exchange for the cancellation of the Notes held by the assignor Lender, execute and deliver
Notes to the Assignee in the amount of its Revolving Credit Commitment and new Notes to the
assignor Lender in the amount of its Revolving Credit Commitment after giving effect to the
reduction occasioned by such assignment, all such Notes to constitute “Notes” for all purposes of
this Agreement, and there shall be paid to the Agent, as a condition to such assignment, an
administration fee of $3,000.00 plus any out-of-pocket costs and expenses incurred by it in
effecting such assignment, such fee to be paid by the assignor Lender or the Assignee as they may
mutually agree, but under no circumstances shall any portion of such fee be payable by or charged
to the Borrowers.



     9.13 Confidential Information. Each Lender agrees to use reasonable precautions to
keep confidential, in accordance with its customary procedures for handling confidential
information of this nature and in accordance with safe and sound banking practices, any nonpublic
information supplied to such Lender by Borrowers or any Subsidiary pursuant to this Agreement or
any other Transaction Document; provided, however, that nothing contained in this Section 9.13
shall prohibit or limit the disclosure by such Lender of any such information (a) to the extent
required by any statute, rule, regulation, subpoena or judicial process, (b) to any governmental or
regulatory agency having jurisdiction over such Lender as required by law, regulation or legal
process, (c) to any professional advisors, including counsel and accountants, for such Lender in
connection with the provision of advice or other services to such Lender with respect to any of the
Borrowers’ Obligations, this Agreement or any of the other Transaction Documents, (d) to any bank
examiners or auditors, (e) in connection with any litigation to which such Lender is a party, (f)
in connection with the enforcement of such Lender’s rights and remedies under this Agreement, any
of the Notes or any of the other Transaction Documents or (g) to any assignee or participant (or
prospective assignee or participant) provided that such assignee or participant agrees in writing
to be bound by the terms hereof; and provided further, that in no event shall any Lender be
obligated or required to return any materials furnished to such Lender by Borrowers or any
Subsidiary under this Agreement or any other Transaction Document. Notwithstanding the foregoing,
no Lender shall have any liability to any Borrower, any Subsidiary or any shareholder, partner,
joint venturer, manager, member, director, officer, employee or agent of any Borrower or any
Subsidiary by reason of, or in any way claimed to be related to, any disclosure by such Lender of
any information with respect to any Borrower or any Subsidiary except as the same results from the
gross negligence or willful misconduct of such Lender as determined by a court of competent
jurisdiction in a final, nonappealable order.



     9.14 References; Headings for Convenience. Unless otherwise specified herein, all
references herein to Section numbers refer to Section numbers of this Agreement, all references
herein to Exhibits A, B, C, D, E, F and G refer to annexed Exhibits A, B, C, D, E, F
and G which are hereby incorporated



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herein by reference and all references herein to
Schedules 5.5, 5.6, 5.8, 5.10, 5.11, 5.12, 5.13, 5.14, 5.15 and 6.2(h) refer to annexed
Schedules 5.5, 5.6, 5.8, 5.10, 5.11, 5.12, 5.13, 5.14, 5.15 and 6.2(h) which are hereby
incorporated herein by reference. The Section headings are furnished for the convenience of the
parties and are not to be considered in the construction or interpretation of this Agreement.



     9.15 Subsidiary Reference. Any reference herein to a Subsidiary or Consolidated
Subsidiary of the Borrowers, and any financial definition, ratio, restriction or other provision of
this Agreement which is stated to be applicable to the Borrowers and their Subsidiaries or
Consolidated Subsidiaries or which is to be determined on a “consolidated” or “consolidating”
basis, shall apply only to the extent the Borrowers have any Subsidiaries or Consolidated
Subsidiaries and, where applicable, to the extent any such Subsidiaries are consolidated with the
Borrowers for financial reporting purposes.



     9.16 Binding Agreement. This Agreement shall be binding upon and inure to the benefit
of each of the Borrowers and their respective successors and Agent and each of the Lenders and
their respective successors and assigns. The Borrowers may not assign or delegate any of their
rights or obligations under this Agreement.



     9.17 NO ORAL AGREEMENTS; ENTIRE AGREEMENT. This notice is provided pursuant to
Section 432.047, R.S.Mo. As used herein, “creditor” means Agent and each of the Lenders, the
“credit agreement” means this Agreement, and “this writing” means this Agreement, all guaranties
executed by any other Obligor, and any other agreement executed in connection herewith or
therewith. ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM
ENFORCING REPAYMENT OF A DEBT INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT ENFORCEABLE,
REGARDLESS OF THE LEGAL THEORY UPON WHICH IT IS BASED THAT IS IN ANY WAY RELATED TO THE CREDIT
AGREEMENT. TO PROTECT YOU (BORROWER(S)) AND US (CREDITOR) FROM MISUNDERSTANDING OR DISAPPOINTMENT,
ANY AGREEMENTS WE REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS WRITING, WHICH IS THE COMPLETE
AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN WRITING TO
MODIFY IT. This Agreement, as amended in writing from time to time, embodies the entire agreement
and understanding between the parties hereto and supersedes all prior agreements and understandings
(oral or written) relating to the subject matter hereof.



     9.18 Severability. In case any one or more of the provisions contained in this
Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein that may be given effect without the
invalid, illegal or unenforceable provision shall not in any way be affected or impaired thereby.



     9.19 Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original, but all of which together shall constitute one and the same
instrument.



     9.20 Resurrection of the Borrowers’ Obligations. To the extent that Agent or any of
the Lenders receives any payment on account of any of the Borrowers’ Obligations, and any such
payment(s) or any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside, subordinated and/or required to be repaid to a trustee, receiver or any
other Person under any bankruptcy act, state or federal law, common law or equitable cause, then,
to the extent of such payment(s) received, the Borrowers’ Obligations or part thereof intended to
be satisfied and any and all Liens upon or pertaining to any Property or assets of any of the
Borrowers and theretofore created and/or existing in favor of Agent for the benefit of the Lenders
as security for the payment of the Borrowers’ Obligations



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shall be revived and continue in full
force and effect, as if such payment(s) had not been received by Agent or any such Lender and
applied on account of the Borrowers’ Obligations.



     9.21 U. S. Dollars. All currency references set forth herein, in any other
Transaction Documents and in any transactions referenced herein or therein shall be denominated in
Dollars of the United States of America.



     9.22 Miscellaneous. All references in the Transaction Documents to the Loan Agreement
and any other references of similar import shall henceforth mean this Agreement, as the same may
from time to time be amended, modified, extended,
renewed or restated. This Agreement is an amendment, restatement and continuation of, and not a
novation of, the Original Loan Agreement.



     IN WITNESS WHEREOF, the parties have executed this Loan Agreement this 29th day of June, 2006.



	 	 	 	 	 
	 	VIRBAC CORPORATION

 	 
	 	By:  	/s/ Jean M. Nelson
 	 
	 	Name:   Jean M. Nelson   
	 	Title:   Exec. Vice-President and Chief Financial Officer 	 
	 



	 	 	 	 	 
	 	PM RESOURCES, INC.

 	 
	 	By:  	/s/ Jean M. Nelson
 	 
	 	Name:   Jean M. Nelson   
	 	Title:   Exec. Vice-President and Chief Financial Officer 
	 



	 	 	 	 	 
	 	ST. JON LABORATORIES, INC.

 	 
	 	By:  	/s/ Jean M. Nelson
 	 
	 	Name:   Jean M. Nelson   
	 	Title:   Exec. Vice-President and Chief Financial Officer 
	 



	 	 	 	 	 
	 	FRANCODEX LABORATORIES, INC.

 	 
	 	By:  	/s/ Jean M. Nelson
 	 
	 	Name:   Jean M. Nelson   	 
	 	Title:   Exec. Vice-President and Chief Financial Officer 	 
	 




- 59 -









 







	 	 	 	 	 	 	 
	 	 	VIRBAC AH, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Jean M. Nelson	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Jean M. Nelson	 	 
	 

	 	Title:
	 	Exec. Vice-President and Chief Financial Officer	 	 
	 
	 	 	 	 	 	 
	 	 	DELMARVA LABORATORIES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Jean M. Nelson	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Jean M. Nelson	 	 
	 

	 	Title:
	 	Exec. Vice-President and Chief Financial Officer	 	 
	 
	 	 	 	 	 	 
	Revolving Credit Commitment:	 	FIRST BANK	 	 
	$10,000,000.00
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Traci L. Dodson	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Traci L. Dodson	 	 
	 

	 	Title:
	 	Vice President	 	 
	 

	 	Address:
	 	          135 North Meramec	 	 
	 

	 	 	 	          St. Louis, Missouri 63105	 	 
	 

	 	 	 	          Attention: Traci Dodson	 	 
	 	 	Telecopy No: 314-854-5454	 	 
	 	 	Email Address: Traci.Dodson@FBOL.com	 	 
	 
	 	 	 	 	 	 
	Revolving Credit Commitment:	 	JPMORGAN CHASE BANK, N.A.	 	 
	$5,000,000.00
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Jennifer C. Baggs	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Jennifer C. Baggs	 	 
	 

	 	Title:
	 	Vice President	 	 
	 

	 	Address:
	 	          Mail Code TX1-1236	 	 
	 

	 	 	 	          P.O. Box 2050	 	 
	 

	 	 	 	          Fort Worth, Texas 76113-2050	 	 
	 

	 	 	 	          Attention: Jennifer Baggs	 	 
	 	 	Telecopy No: 817-884-5697	 	 
	 	 	Email Address: Jennifer.C.Baggs@Chase.com	 	 






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	 	 	FIRST BANK, as Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Traci L. Dodson	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Traci L. Dodson	 	 
	 

	 	Title:
	 	Vice President	 	 
	 

	 	Address:
	 	          135 North Meramec	 	 
	 

	 	 	 	          St. Louis, Missouri 63105	 	 
	 

	 	 	 	          Attention: Traci Dodson	 	 
	 	 	Telecopy No: 314-854-5454	 	 
	 	 	Email Address: Traci.Dodson@FBOL.com	 	 






- 61 -









 





SCHEDULE 5.5




Litigation



1. A class action lawsuit filed in Delaware on Jan. 18, 2006 by Richard Abrons, Myron Cohn & Martin
Cohn on behalf of the public shareholders of Virbac Corporation. The defendants are Virbac S.A.
and its wholly owned subsidiary Interlab S.A.S, as well as Virbac Corporation and its entire board
of individually named directors (Eric Maree, Pierre Pages, Michel Garaudet, Alec L. Poitevint, II,
Jean N. Willk and Richard W. Pickert).



2. A lawsuit has been threatened for which Virbac has accrued $130M. No lawsuit has been filed yet
but a customer that Virbac has not done business with for 1.5 years, Pennfield, sent a letter to
say they were considering a lawsuit. It stems from PM Resources supplying the same product to two
different customers. Pennfield claims that they lost part of their market share due to PM
Resources not adequately supplying the product. PM Resources states the reason for the delay was
due to Pennfield’s slow payment history.



3. On February 19, 2004, Richard Hreniuk and Peter Lindell, both Virbac shareholders, filed
separate similar lawsuits in the Court, derivatively on behalf of Virbac against Thomas L. Bell,
Pascal Boissy, Eric Maree, Pierre A. Pages, Alec L. Poitevint, II, and Jean Noel Willk, all current
or former members of Virbac’s Board of Directors, and Joseph A. Rougraff, a former officer of
Virbac (collectively, the “Derivative Individual Defendants”) and Virbac, as a nominal defendant.
These two lawsuits have been consolidated (the “Shareholder Derivative Action”). On March 1, 2005,
the plaintiffs filed a consolidated amended shareholder derivative complaint (the “Amended
Derivative Complaint”), asserting claims against: defendants Bell and Rougraff for improper
financial reporting under the Sarbanes-Oxley Act of 2002 (“SOX”); all Derivative Individual
Defendants for gross mismanagement, breach of fiduciary duty, waste of corporate assets, and unjust
enrichment; and defendant Boissy for breach of fiduciary duties due to alleged insider selling and
misappropriation of information. Virbac named as a nominal defendant in the Amended Derivative
Complaint.




     On July 25, 2005, the Court’s previously entered stay expired without the parties reaching a
settlement. The nominal defendant Virbac and the Derivative Individual Defendants filed a motions
to dismiss the Amended Derivative Complaint on August 15, 2005. The plaintiffs’ opposition brief
was filed on September 29, 2005, and defendants’ reply briefs were filed on October 24, 2005.



     On November 7, 2005, the parties reached a settlement in principle with respect to plaintiffs’
substantive claims and filed a notice advising the Court of the settlement in principle and
requesting that the Court hold in abeyance any rulings on the pending motions to dismiss. The
settlement in principle was subject to the execution of a written settlement and court approval.
After further negotiations and an additional mediation session, the parties were unable to agree on
the definitive terms of the settlement. On December 8, 2005, the Court was notified that a
definitive settlement could not be reached and was requested to reinstate the Derivative Individual
Defendants’ motions to dismiss. On December 15, 2005, the Court issued an order reinstating the
defendants’ motion to dismiss.



     On December 20, 2005, the plaintiffs filed a Motion for Leave to File a Second Amended
Complaint (the “Second Amended Derivative Complaint”). The plaintiffs proposed Second Amended
Derivative Complaint includes the derivative claims described above and seeks to add a cause of
action on behalf of the plaintiffs and a putative class of Virbac shareholders against Virbac’s
current board of directors (including Richard W. Pickert and Michel Garaudet, who were not named
defendants in the Amended Derivative Complaint) and VBSA for breach of fiduciary duties relating to
VBSA’s proposal to



- 62 -









 







acquire Virbac’s remaining outstanding shares for $4.15 per share. The proposed Second Amended
Derivative Complaint seeks various forms of relief, including preliminarily and permanently
enjoining the proposed sale of Virbac shares to VBSA unless and until Virbac adopts and implements
a procedure to obtain the highest possible price for Virbac shareholders, including the formation
of an independent special committee to evaluate the proposal, money damages, including rescissory
damages to the extent that the sale has taken place, and the awarding of the plaintiffs’ attorneys’
fees and costs.



     On January 12, 2006, the Court granted the plaintiffs’ Motion for Leave to File a Second
Amended Compliant. On March 20, 2006, in light of the plaintiffs’ filing of the Second Amended
Derivative Complaint, the Court denied the defendants ‘ previously filed motions to dismiss as
moot. However, these motions to dismiss can be refiled as to the Second Amended Derivative
Complaint. On March 20, 2006, the Court also entered a scheduling order (the “Scheduling Order”)
under which the Court set forth various deadlines, including a deadline for the completion of
discovery by September 29, 2006. In the Scheduling Order, the Court noted that if the parties
believe that the case should not proceed at this time in light of the possibility of a tender
offer, it would entertain a motion for stay and administrators closure of the action, or similar
motion.



     While Virbac intends to vigorously defend itself, Virbac cannot predict the final outcome of the
Shareholder Derivative Action at this time. An unfavorable outcome could have a material adverse
effect on Virbac’s financial condition and liquidity in the event that final settlement amounts
and/or judgment exceeds the limits of Virbac’s insurance policies or the Insurers decline to fund
such final settlement/judgment. To date, Virbac’s Insurers have provided coverage for the
submitted expenses incurred in defending the Shareholder Derivative Action as a claim under the
relevant policies.


4. On December 13, 2005, Virbac S. A. made a proposal to acquire the 39.7% outstanding Common Stock
not already owned by Virbac S. A. or its subsidiaries for $.15 per share in cash, representing an
aggregate all-cash purchase price of approximately $37.0 million (the {“Tender Offer Proposal”).




     On January 18, 2006, Richard Abrons, Myron Cohn and Martin Cohn filed a lawsuit in the
Delaware Court of Chancery in New Castle County (the “Delaware Court”) in their individual
capacities and as a purported class action on behalf of Virbac’s public shareholders against Eric
Maree, Pierre A. Pages, Michael Garaudet, Alec L. Poitevint, II, Jean Noel Wilik, Richard W.
Pickett and Virbac Corporation, Virbac S. A. and Interlab. The lawsuit asserts claims against
defendants Virbac S. A., Interlab, Maree, Pages and Garaudet for breach of fiduciary duty of
loyalty and unfair dealing, and defendants Wilik, Poitevint, II and Pickert for breach of fiduciary
duties of care and good faith. The plaintiffs, seek certification of the purported class, a
preliminary and permanent injunction against the consummation of the Tender Offer Proposal, an
order declaring the Tender Offer Proposal void and rescinding the Tender Offer Proposal, if it is
consummated, disgorgement of any profits or property received by the defendants as a result of
their alleged wrongful conduct, unspecified money damages plus interest thereon against all
defendants (jointly and severally), attorneys’ fees and expenses incurred in connection with the
lawsuit, and such other and further relief that the Delaware Court may deem just and proper. The
defendants believe that this lawsuit is without merit and intend to vigorously defend this matter.



- 63 -









 





SCHEDULE 5.6




Pension Plan Matters



Borrower has two 401(k) plans as follows:





	1.	 	Virbac Corporation Retirement Savings Plan
	 
	2.	 	Virbac Corporation Retirement Savings Plan for Certain Union Members




- 64 -









 











SCHEDULE 5.8




Borrower’s Subsidiaries




	 	 	 	 	 
	Borrower	 	Subsidiaries	 	Ownership
	Virbac Corporation

	 	PM Resources, Inc.

St. JON Laboratories, Inc.

Francodex Laboratories, Inc.

Virbac AH, Inc.

Delmarva Laboratories, Inc. 

	 	All of the capital
stock of each of
these subsidiaries
is 100% owned by
Virbac.
	 
	 	 	 	 
	St. JON Laboratories, Inc.
	 	 	 	 






Predecessor or Fictitious Names




Virbac Corporation




PM Resources, Inc.




St. JON Laboratories, Inc.




Francodex Laboratories, Inc.




Virbac AH, Inc.




Delmarva Laboratories, Inc.




- 65 -









 





SCHEDULE 5.10




Other Loans and Guaranties




     1. On an annual basis, Borrowers enter into certain agreements to finance their annual
insurance premiums. Such agreements have a term of less than one year. At January 1, 2006,
approximately $218,000 was due under such agreements.



     2. During 2003, Virbac purchased 100% of the outstanding shares of the common stock of
Delmarva Laboratories, Inc. (“Delmarva”) for a base purchase price of $2.5 million in cash and an
additional contingent purchase consideration of up to $2.5 million. In accordance with SFAS No.
141, Virbac accounted for this transaction under the purchase method and recorded a liability of
approximately $2.2 million which represents the excess of the estimated fair value of the acquired
net assets over the initial cash payment. The purchase agreement provides that the contingent
consideration will be paid in increments based upon the achievement of several performance
thresholds of the products purchased. The various stated performance thresholds include the
registration and revenue goals for one of the product rights purchased, and gross profit milestones
within a specified time period for the other product rights purchased.



     3. Borrowers lease certain machinery under non-cancelable operating leases that expire at
various dates through September 2011. Future minimum lease payments under non-cancelable leases as
of December 31, 2005 are as follows: 2006 $59M; 2007 $53M; 2008 $42M; 2009 $34M; 2010 $32M;
thereafter $25M.



- 66 -









 





SCHEDULE 5.11




Permitted Liens




     UCC-1 financing statement filed in favor of CIT Communications Finance Corporation on Virbac
Corporation’s leased telephone equipment.



          UCC-1 financing statement filed in favor of SBP Leasing on PM Resources’ Konica copiers.




          UCC-1 financing statement filed in favor of Maruka USA Inc. on PM Resources’ Maruka owned
machinery.




- 67 -









 








SCHEDULE 5.12




Multiemployer Plans



None.




- 68 -









 








SCHEDULE 5.13




Patents and Trademarks




Virbac



Patents:



U.S. Trademarks Issued:




	 	 	 	 	 
	Trademark No.	 	Date Issued	 	Description
	2987323
	 	8/23/05	 	American Horseman & Design
	1500368
	 	8/16/88	 	Aqualab
	2489840
	 	9/18/01	 	Assault
	2947661
	 	5/10/05	 	Biospheres
	2654482
	 	11/26/02	 	Bovimec
	2850988
	 	6/8/04	 	Breath-eze
	2079502
	 	7/15/97	 	Breath-Eze
	1362760
	 	10/1/85	 	Brite N’Clear
	1427979
	 	2/3/87	 	Brite N’ Shine
	2196460
	 	10/13/98	 	Bromethalin One Meal is All it Takes & Design
	1608688
	 	8/7/90	 	Buffer-Up
	1429809
	 	2/24/87	 	C.E.T.
	3029810
	 	12/13/05	 	C.E.T. DENTAL REWARD
	1441004
	 	6/2/87	 	Caseguard
	1685960
	 	5/12/92	 	CHX (Stylized)
	1453782
	 	8/25/87	 	Coppersafe
	1984230
	 	7/2/96	 	Corium-20
	1909686
	 	8/8/95	 	Critter Fresh
	1889584
	 	4/18/95	 	Critter Vites & Design
	1013936
	 	6/24/75	 	Doggydent
	1467935
	 	12/8/87	 	Dritail
	2464964
	 	7/3/01	 	Earth City Resources & Design
	1388785
	 	4/8/86	 	Furabase
	1392090
	 	5/6/86	 	Furazite
	1848959
	 	8/9/94	 	Glossy Coat
	2068027
	 	6/3/97	 	Herpcare
	2898393
	 	10/26/04	 	Herpcare
	2522911
	 	12/25/01	 	Iverhart
	2730166
	 	6/24/03	 	Iverhart Plus
	2235291
	 	3/23/99	 	Kittydent






- 69 -









 






	 	 	 	 	 
	Trademark No.	 	Date Issued	 	Description
	1485919
	 	4/26/88	 	M (word only) (Logo)
	1932877
	 	11/7/95	 	Mar Chlor
	1466915
	 	12/1/87	 	Maracide
	921839
	 	10/12/71	 	Maracyn
	2791436
	 	12/9/03	 	Maracyn Plus
	1451743
	 	8/11/87	 	Maracyn-Two
	2852211
	 	6/8/04	 	Mardel
	2871475
	 	8/10/04	 	Mardel
	2888918
	 	9/28/04	 	Mardel
	1435277
	 	4/7/87	 	Maroxy
	1601718
	 	6/19/90	 	Marplex
	1464227
	 	11/10/87	 	Multipet
	2794967
	 	12/16/03	 	Nutrimalt
	2353133
	 	5/30/00	 	Odor Disposers
	1304345
	 	11/6/84	 	Odor Disposers
	1284948
	 	7/10/84	 	Ornabac
	1441005
	 	6/2/87	 	Ornacycline
	1464226
	 	11/10/87	 	Ornacyn
	1284949
	 	7/10/84	 	Ornacyn-Plus
	1394614
	 	5/27/86	 	Ornalyte
	1689496
	 	5/26/92	 	Ornascale
	2441833
	 	4/10/01	 	Panaflex [Palaflex?]
	1608002
	 	7/31/90	 	Petrelief
	1753554
	 	2/23/93	 	Petrodex
	2856069
	 	6/22/04	 	Petrodex
	2856068
	 	6/22/04	 	Petromalt
	1284937
	 	7/10/84	 	Petromalt
	1609503
	 	8/14/90	 	PH-Guard
	2120205
	 	12/9/97	 	Prime Treats
	1526464
	 	2/28/89	 	Pro-Zema
	2674560
	 	1/14/03	 	Pulvex
	2860103
	 	7/6/04	 	Pura-Lyte
	2860104
	 	7/6/04	 	Puridine
	2421288
	 	1/16/01	 	Rat & Mouse-A-Rest II
	1849751
	 	8/16/94	 	Seabond
	2355497
	 	6/6/00	 	Sportsman’s Friend
	1817660
	 	1/25/94	 	Spot Not
	1754756
	 	3/2/93	 	St. JON (stylized)
	2860102
	 	7/6/04	 	St. JON Naturals
	1441742
	 	6/9/87	 	Stay
	2053530
	 	4/15/97	 	Tank Hard+






- 70 -









 






	 	 	 	 	 
	Trademark No.	 	Date Issued	 	Description
	2049908
	 	4/1/97	 	Tank Soft
	1453783
	 	8/25/87	 	Tanksafe
	2586825
	 	6/25/02	 	Tick Detach
	2927730
	 	2/22/05	 	Trisulfa
	1712972
	 	9/8/92	 	Trounce
	1748074
	 	1/26/93	 	V (Prescription Symbol)
	1313051
	 	1/8/85	 	Vitaflight
	1325091
	 	3/12/85	 	When You Care For Your Pets
	2684994
	 	2/4/03	 	Worm-Kill
	2583536
	 	6/18/02	 	Wormx
	883989
	 	1/13/70	 	Zema (stylized)
	1435257
	 	4/7/87	 	Zema Kil-A Mite
	2045029
	 	3/11/97	 	Zincchlorhexidate





State & Foreign Trademarks Issued:




	 	 	 	 	 	 	 
	Trademark	 	State/Country	 	Registration No.	 	Date
	Iverhart
	 	Taiwan	 	1060489 	 	October 16, 2003
	Iverhart Plus
	 	Taiwan	 	1065248 	 	November 16, 2003





U.S. Trademarks Applied For:




	 	 	 	 	 
	Application or Serial No.	 	Date Filed	 	Trademark
	78747544
	 	11/4/05	 	A.C.T.
	78792846
	 	1/17/06	 	ANTI-ADHESIVE TECHNOLOGY & Design
	78720617
	 	9/26/05	 	BREATH-EZE BREATH STRIPS
	78312007
	 	10/10/03	 	C.E.T. AQUADENT
	78792920
	 	1/17/06	 	FLURAFOM Stylized
	78686005
	 	8/4/05	 	HEXTRA
	78759741
	 	11/22/05	 	IVERHART MAX
	78715813
	 	9/19/05	 	PETROMALT HAIRBALL TREATS
	78720549
	 	9/26/05	 	PETS HAVE TEETH TOO!
	78715877
	 	9/19/05	 	PICK YOUR PASSION
	78650525
	 	6/14/05	 	SIRIUS 3 (STYLIZED)
	78747588
	 	11/4/05	 	ULTRA SHIELD
	78341960
	 	12/17/03	 	VIRBACEF





Foreign Trademarks Applied For:




	 	 	 	 	 
	Application or Serial No.	 	Date Filed	 	Trademark
	1282233 (Canada)
	 	12/7/05	 	C.E.T. AQUADENT






- 71 -









 





Copyrights: None.



Licenses: None.




PM Resources



Patents: None.



U.S. Trademarks Issued: None.



U.S. Trademarks Applied For: None.



Other Trademarks Issued: None.



Copyrights: None.



Licenses: None.




St. JON



Patents:




	 	 	 	 	 
	Patent No.	 	Date Issued	 	Description
	D362,118
	 	 	 	 





U.S. Trademarks Issued:




	 	 	 	 	 
	Trademark No.	 	Date Issued	 	Description
	2331336
	 	March 21, 2000	 	Maracare





U.S. Trademarks Applied For: None.



Other Trademarks Issued:




	 	 	 	 	 	 	 	 	 
	Trademark	 	State/Country	 	Registration No.	 	Date	 
	C.E.T.
	 	Japan	 	4256160 	 	March 26, 1999
	C.E.T.
	 	United Kingdom	 	1566692 	 	November 15, 1996





Copyrights: None.



Licenses: None.




Francodex




- 72 -









 




Patents: None.



U.S. Trademarks Issued: None.



U.S. Trademarks Applied For: None.



Other Trademarks Issued: None.



Copyrights: None.



Licenses: None.




Virbac AH




Patents:



	 	 	 	 	 
	Patent No.	 	Date Issued	 	Description
	5,632,999
	 	 	 	 
	5,747,057
	 	 	 	 
	5,728,719
	 	 	 	 
	5,439,924
	 	 	 	 





U.S. Trademarks Issued:




	 	 	 	 	 
	Trademark No.	 	Date Issued	 	Description
	1209484
	 	September 21, 1982	 	Allerderm
	1976942
	 	May 28, 1996	 	Allerderm & Design
	2139508
	 	February 24, 1998	 	Allerderm Efa-Caps
	2485615
	 	September 4, 2001	 	Allerderm Omegaderm
	1223071
	 	January 11, 1983	 	Allergroom
	1256531
	 	November 8, 1983	 	Allerseb T & Design
	1306764
	 	November 27, 1984	 	Ammonil
	2076992
	 	July 8, 1997	 	Bur-Otic
	2997158
	 	September 20, 2005	 	Clinsol
	2663538
	 	December 17, 2002	 	Clinsol
	2911217
	 	December 14, 2004	 	Clintabs
	1935973
	 	November 14, 1995	 	Cortisoothe
	2121113
	 	December 16, 1997	 	Dermacool
	2386221
	 	September 12, 2000	 	Derm-Renu
	2153421
	 	April 28, 1998	 	Ear Clear
	2071809
	 	June 17, 1997	 	Ecto-Soothe
	1410090
	 	September 23, 1986	 	Efa-Z Plus
	1410089
	 	September 23, 1986	 	Epi-Otic
	1697304
	 	June 30, 1992	 	Epi-Soothe






- 73 -









 






	 	 	 	 	 
	Trademark No.	 	Date Issued	 	Description
	1932204
	 	October 31, 1995	 	Etiderm
	1719313
	 	September 22, 1992	 	Euthasol
	2096028
	 	September 9, 1997	 	Flea Science
	2393997
	 	October 10, 2000	 	Flex-Ease
	2122433
	 	December 16, 1997	 	Flypel
	2396287
	 	October 17, 2000	 	Gas-Aid
	2607890
	 	August 13, 2002	 	Gastro-Lax
	2960114
	 	June 7, 2005	 	Genesis
	2025448
	 	December 24, 1996	 	Hexadene
	2747365
	 	August 5, 2003	 	Hexadene
	1793380
	 	September 21, 1993	 	Histacalm
	1254284
	 	October 18, 1983	 	Humilac
	2970432
	 	July 19, 2005	 	Keratolux
	2579932
	 	June 11, 2002	 	Ketochlor
	2069825
	 	June 10, 1997	 	Otomite Plus
	1420783
	 	December 16, 1986	 	Pancrezyme
	2441494
	 	April 3, 2001	 	Pentasol
	2079166
	 	July 15, 1997	 	Preventef
	1412937
	 	October 14, 1986	 	Pyoben
	2050001
	 	April 1, 1997	 	Resichlor
	2050000
	 	April 1, 1997	 	Resicort
	2049999
	 	April 1, 1997	 	Resihist
	2185065
	 	August 25, 1998	 	Resiprox
	2045137
	 	March 11, 1997	 	Resisoothe
	2118491
	 	December 2, 1997	 	Resizole
	1591636
	 	April 17, 1990	 	Sebolux
	1307619
	 	December 4, 1984	 	Soloxine
	2107765
	 	October 21, 1997	 	Tick Arrest
	1700109
	 	July 14, 1992	 	T-Lux Shampoo
	1538885
	 	May 16, 1989	 	Tumil-K
	2273100
	 	August 24, 1999	 	Ultragroom
	1385720
	 	March 11, 1986	 	Uroeze
	2081170
	 	July 22, 1997	 	Veterinary Specialties for Dermatology







- 74 -









 





U.S. Trademarks Applied For: None.



Other Trademarks Issued:





	 	 	 	 	 	 	 
	Trademark	 	State/Country	 	Registration No.	 	Date
	Allerderm
	 	Canada	 	339141 	 	April 15, 1988
	Allerderm
	 	France	 	1379729 	 	November 14, 1986
	Allerderm
	 	Germany	 	1141234 	 	June 14, 1989
	Allerderm Efa-Caps
	 	Canada	 	542926 	 	March 22, 2001
	Allerderm Efa-Z Plus
	 	Canada	 	542655 	 	March 19, 2001
	Allergroom
	 	Canada	 	513439 	 	July 28, 1999
	Allerseb T & Design
	 	Canada	 	523831 	 	February 25, 2000
	Cortisoothe
	 	Canada	 	542440 	 	March 15, 2001
	Dermacool
	 	Canada	 	507282 	 	January 28, 1999
	Dermazole
	 	Canada	 	520348 	 	December 7, 1999
	Ear Clear
	 	Canada	 	516312 	 	September 15, 1999
	Ecto-Foam
	 	Canada	 	493565 	 	April 22, 1998
	Ecto-Soothe
	 	Canada	 	493564 	 	April 22, 1998
	Encore
	 	Canada	 	442089 	 	April 21, 1995
	Epi-Otic
	 	Canada	 	332256 	 	September 25, 1987
	Epi-Soothe
	 	Canada	 	513240 	 	July 26, 1999
	Flypel
	 	Canada	 	508064 	 	February 15, 1999
	Hexadene
	 	Canada	 	523144 	 	February 15, 2000
	Hexarinse
	 	Canada	 	530951 	 	August 9, 2000
	Histacalm
	 	France	 	93/475050 	 	December 17, 1993
	Humilac
	 	Canada	 	513447 	 	July 28, 1999
	Natura
	 	Canada	 	472298 	 	March 11, 1997
	Palavite
	 	Canada	 	433689 	 	September 23, 1994
	Palavite
	 	France	 	93/475051	 	December 17, 1993
	Physio Shampoo
	 	Canada	 	641366 	 	June 3, 2005
	Pyoben
	 	Canada	 	513674 	 	July 29, 1999
	Resichlor
	 	Canada	 	502470 	 	October 20, 1998
	Resicort
	 	Canada	 	520349 	 	December 7, 1999
	Resisoothe
	 	Canada	 	542439 	 	March 15, 2001
	Resizole
	 	Canada	 	520350 	 	December 7, 1999
	Sebolux
	 	Canada	 	518489 	 	October 22, 1999
	Soloxine
	 	Canada	 	443756	 	June 9, 1995
	Soloxine
	 	European Community	 	515809 	 	January 26, 1999
	Soloxine
	 	United Kingdom	 	1487983 	 	April 30, 1993
	Tumil-K
	 	Canada	 	TMA649994	 	October 7, 2005
	Tumil-K
	 	United Kingdom	 	1507932 	 	August 13, 1993
	Veterinary
Specialties for
Dermatology
	 	Canada	 	513348 	 	July 27, 1999







- 75 -









 





Foreign Trademarks Applied For:





	 	 	 	 	 	 	 
	Application No.	 	Date Filed	 	Trademark	 	State/County
	1210966
	 	3/25/04	 	BIOMOX	 	Canada
	1247858
	 	2/18/05	 	C.E.T.	 	Canada
	1247720
	 	2/18/05	 	C.E.T. Dental Reward	 	Canada
	1204886
	 	2/2/04	 	Clinsol	 	Canada
	1204883
	 	2/2/04	 	Clintabs	 	Canada
	1208151
	 	3/2/04	 	Dermaspheres	 	Canada
	1208147
	 	3/2/04	 	Euthasol	 	Canada
	1202902
	 	1/7/04	 	Genesis	 	Canada
	3607561
	 	1/12/04	 	Genesis	 	European Community
	1208148
	 	3/2/04	 	Virbac Euthasol	 	Canada
	1202903
	 	3/2/04	 	Virbacef	 	Canada





Copyrights: None.



Licenses: None.




Delmarva



Patents: None.



U.S. Trademarks Issued: None.



U.S. Trademarks Applied For: None.



Other Trademarks Issued: None.



Copyrights: None.



Licenses: None.




- 76 -









 








SCHEDULE 5.14




Environmental and Health and Safety Matters




     PM Resources, Inc. is the subject of a Consent Order dated November 22, 1999, issued by the
Circuit Court of St. Louis County, Missouri (“Consent Order”), requiring investigation and
remediation of historical contamination at its Bridgeton, Missouri property. As of December 31,
2005, approximately $635,000 of investigative and remediation costs have been incurred for which
Borrowers have been or will be reimbursed pursuant to a third party indemnity obligation.
Borrowers estimate that future investigative and remediation costs are approximately $279,000
through December 31, 2007, which is when remediation is expected to be complete. Borrowers expect
substantially all of the remaining investigative and remediation costs will be reimbursed under the
terms of the indemnity agreement, which is a formal and legally enforceable agreement, except for
$22,000, which represents Borrowers’ estimated remaining portion of the liability and is included
in the Borrowers’ Consolidated Balance Sheet as of December 31, 2005. Management believes that PM
Resources, Inc. is currently in substantial compliance with all applicable local, state and federal
environmental laws and regulations and resolution of the environmental issues contained in the
Consent Order will have no material effect on the Borrowers’ financial position, cash flows, or
results of operations.



- 77 -









 





SCHEDULE 5.15




Existing Investments




- 78 -









 





SCHEDULE 6.2(h)




Transactions with Affiliates





- 79 -










 







EXHIBIT A




Borrowing Base Certificate




as of                                         




     Pursuant to the Loan Agreement dated June 29, 2006 and thereafter amended among Virbac Corporation and Subsidiaries
(collectively the “Borrower”), the Lenders from time to time a party thereto, and First Bank, as agent for the Lenders (in such
capacity, the “Agent”), Borrower hereby warrants to Agent and the Lenders that as of the date indicated above, the information
in this report is true and correct and that the total eligible accounts and eligible inventory referred to herein qualify per
terms of the Loan Agreement. Borrower further represents and warrants to Agent and the Lenders that as of this date Borrower
is in full compliance with all of its obligations under the Loan Agreement and all other Transaction Documents and is not in
default of any term or provision hereof or thereof.



	 	 	 	 	 	 	 
	1. Eligible Accounts Receivable	 	 	 	 
	 

	 	Total Accounts Receivable per attached aging of same date as this
report hereof
	 	                    	 	 
	 
	 	 	 	 	 	 
	 

	 	less: Accounts more than 90 days from date of invoice
	 	                    	 	 
	 

	 	less: Credits aged greater than 90 days from date of invoice and
included above
	 	                    	 	 
	 
	 	 	 	 	 	 
	 

	 	less: Accounts ineligible due to 10% taint
	 	                    	 	 
	 

	 	less: That portion of Accounts due from any Account Debtor that
exceed 30% of Total Accounts Receivable
	 	                    	 	 
	 

	 	less: Accounts due from any Account Debtor that is a shareholder,
partner or related party of Borrower
	 	                    	 	 
	 
	 	 	 	 	 	 
	 

	 	less: Rebate Accruals and Credit/Return Reserves
	 	                    	 	 
	 

	 	less: Accounts due from any Account Debtor located outside the
continental United States of America
	 	                    	 	 
	 

	 	less: Accounts for which Borrower is liable to Account Debtor for
goods sold or services provided by Account Debtor
	 	                    	 	 
	 
	 	 	 	 	 	 
	 

	 	less: Other ineligible accounts per Loan Agreement
	 	                    	 	 
	 
	 	 	 	 	 	 
	TOTAL ELIGIBLE ACCOUNTS RECEIVABLE:	 	 	 	$                    
	 
	 	 	 	 	 	 
	2. Eligible Inventory	 	 	 	 
	 

	 	Total Inventory per attached inventory listing of same date as
this report hereof
	 	                    	 	 
	 
	 	 	 	 	 	 
	 

	 	less: Work in process
	 	                    	 	 
	 
	 	 	 	 	 	 
	 

	 	less: Obsolete inventory
	 	                    	 	 
	 
	 	 	 	 	 	 
	 

	 	less: Consignment inventory
	 	                    	 	 






- 80 -









 






	 	 	 	 	 	 	 
	 

	 	less: Inventory not maintained at one of the locations provided
in the Security Agreements
	 	                    	 	 
	 

	 	less: Inventory not usable or saleable, at prices not less than
standard cost, to include packaging supplies
	 	                    	 	 
	 
	 	 	 	 	 	 
	 

	 	less: Other ineligible inventory per Loan Agreement
	 	                    	 	 
	 
	 	 	 	 	 	 
	 

	 	TOTAL ELIGIBLE INVENTORY:
	 	 	 	$                    
	 
	 	 	 	 	 	 
	3. Borrowing Base	 	 	 	 
	 

	 	Total Eligible Accounts Receivable * 80%
	 	                    	 	 
	 
	 	 	 	 	 	 
	 

	 	Total Eligible Inventory * 50% (not to exceed $3,500,000.00)
	 	                    	 	 
	 

	 	Loan Value of Fixed Assets (not to exceed $8,500,000 less
$250,000 times ___(# of quarters since March 31, 2006))
	 	                    	 	 
	 
	 	 	 	 	 	 
	 

	 	TOTAL BORROWING
BASE:        
	 	 	 	$                    
	 
	 	 	 	 	 	 
	4. Loan Amount	 	 	 	 
	 

	 	Lesser of Borrowing Base or Total Revolving Credit Commitments
($15,000,000)
	 	                    	 	 
	 
	 	 	 	 	 	 
	 

	 	less: Outstanding Loan Balance
	 	                    	 	 
	 
	 	 	 	 	 	 
	 

	 	less: Issued and Outstanding Letters of Credit
	 	                    	 	 
	 
	 	 	 	 	 	 
	 

	 	TOTAL ADVANCES AVAILABLE:
	 	 	 	$                    






Virbac Corporation




	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

	 	 
	Title:
	 	 	 	 
	 

	 	 

	 	 
	Date:
	 	 	 	 
	 

	 	 

	 	 






- 81 -









 






EXHIBIT B




REVOLVING CREDIT NOTE




			
	$                    
	 	St. Louis, Missouri

June 29, 2006






     FOR VALUE RECEIVED, on March 31, 2007, the undersigned, VIRBAC CORPORATION, a Delaware
corporation, PM RESOURCES, INC., a Missouri corporation, ST. JON LABORATORIES, INC., a California
corporation, FRANCODEX LABORATORIES, INC., a Kansas corporation, VIRBAC AH, INC., a Delaware
corporation, and DELMARVA LABORATORIES, INC., a Virginia corporation (collectively, the
“Borrowers”), hereby jointly and severally promise to pay to the order of                                         
(“Lender”), the principal sum of                                          Dollars ($                    ), or such lesser
sum as may then be outstanding hereunder. The aggregate principal amount which Lender shall be
committed to have outstanding hereunder at any one time shall not exceed                     Dollars
($                    ) subject to the limitations of the “Borrowing Base” (as defined in the Loan
Agreement), which amount may be borrowed, paid, borrowed and repaid, in whole or in part, subject
to the terms and conditions hereof and of the Loan Agreement hereinafter identified.



     Borrowers further jointly and severally promise to pay to the order of Lender interest on the
principal amount from time to time outstanding hereunder on the dates and at the rate or rates
provided for in the Loan Agreement. All payments hereunder (other than prepayments) shall be
applied first to the payment of all accrued and unpaid interest, with the balance, if any, to be
applied to the payment of principal. All prepayments hereunder shall be applied solely to the
payment of principal.



     All payments of principal and interest hereunder shall be made in lawful currency of the
United States in federal or other immediately available funds at the banking office of First Bank
(the “Agent”) situated at 560 Anglum Road, Hazelwood, Missouri 63042, or at such other place as the
Agent shall designate in writing. Interest shall be computed on an actual day, 360-day year basis.
Consistent with the terms of the Loan Agreement, the Agent shall determine each interest rate
applicable to the advances hereunder, which determination shall be conclusive in the absence of
manifest error.



     Lender may record the date and amount of all loans and all payments of principal and interest
hereunder in the records it maintains with respect thereto. Lender’s books and records showing the
account between Lender and the Borrowers shall be admissible in evidence in any action or
proceeding and shall constitute prima facie proof of the items therein set forth.



     This Note is referred to in that certain Loan Agreement dated the date hereof by and between
the Borrowers, Agent, Lender and other lenders named therein (as the same may from time to time be
amended, the “Loan Agreement”), to which Loan Agreement reference is hereby made for a statement of
the terms and conditions upon which the maturity of this Note may be accelerated, and for other
terms and conditions, including prepayment, which may affect this Note.



     This Note is secured by those six (6) certain Security Agreements, each dated as of the date
hereof executed respectively by each of the Borrowers in favor of Agent for the benefit of Lender
and others (as the same may from time to time be amended, the “Security Agreements”), to which
Security Agreements reference is hereby made for a description of the security and a statement of
the terms and conditions upon which this Note is secured.



- 82 -









 





     This Note is secured by that certain Third Amended and Restated Agreement of Pledge dated as
of the date hereof executed by Virbac Corporation in favor of Agent for the benefit of Lender and
others,
as the same may from time to time be amended, modified or restated, and by that certain Second
Amended and Restated Agreement of Pledge dated as of the date hereof executed by Virbac AH, Inc. in
favor of Agent for the benefit of Lender and others, as the same may from time to time be amended,
modified or restated (as so amended, modified or restated, the “Pledge Agreements”), to which
Pledge Agreements reference is hereby made for a description of the security and a statement of the
terms and conditions upon which this Note is secured.



     This Note is also secured by that certain Deed of Trust and Security Agreement dated as of
September 3, 2003 and executed by Virbac Corporation in favor of the Agent for the benefit of
Lender and others, as the same has been amended from time to time, and by that certain Deed of
Trust and Security Agreement dated as of September 9, 1993 and executed by PM Resources, Inc. in
favor of the Agent for the benefit of Lender and others, as the same has been amended from time to
time (collectively, as the same have been and may from time to time hereafter be further amended,
modified, restated or replaced, the “Deeds of Trust”), to which Deeds of Trust reference is also
hereby made for a description of the security and a statement of the terms and conditions upon
which this Note is secured.



     This Note is also secured by that certain Patent, Trademark and License Security Agreement
dated as of September 3, 2003 and executed by Virbac Corporation in favor of the Agent for the
benefit of Lender and others, as the same has been amended from time to time, by that certain
Patent, Trademark and License Security Agreement dated as of September 3, 2003 and executed by
Virbac AH, Inc. in favor of the Agent for the benefit of Lender and others, as the same has been
amended from time to time, by that certain Patent, Trademark and License Security Agreement dated
as of June 29, 2006 and executed by St. JON Laboratories, Inc. in favor of the Agent for the
benefit of Lender and others, as the same has been amended from time to time, and by that certain
Patent, Trademark and License Security Agreement dated as of September 3, 2003 and executed by
Delmarva Laboratories, Inc. in favor of the Agent for the benefit of Lender and others, as the same
has been amended from time to time (collectively, as the same have been and may from time to time
hereafter be further amended, modified, restated or replaced, the "Patent, Trademark and License
Security Agreements”), to which Patent, Trademark and License Security Agreements reference is also
hereby made for a description of the security and a statement of the terms and conditions upon
which this Note is secured.



     This Note is guarantied by the Subsidiary Guaranties (as defined in the Loan Agreement) and is
further secured by the Subsidiary Security Agreements (as defined in the Loan Agreement), to which
Subsidiary Guaranties and Subsidiary Security Agreements reference is hereby made for a description
of the security and a statement of the terms and conditions upon which this Note is further
secured.



     If the Borrowers shall fail to make any payment of any principal of or interest on this Note
as and when the same shall become due and payable, or if any “Event of Default” (as defined
therein) shall occur under or within the meaning of the Loan Agreement or any of the Security
Agreements, any of the Deeds of Trust, any of Patent, Trademark and License Security Agreements,
any of the Pledge Agreements or any of the Subsidiary Security Agreements, Lender’s obligation to
make any additional loans under this Note may be terminated as set forth in the Loan Agreement, and
Agent, on behalf of Lender, may further declare the entire outstanding principal balance of this
Note and all accrued and unpaid interest thereon to be immediately due and payable.



     In the event that any payment of any principal of or interest on this Note shall not be paid
when due, whether by reason of acceleration or otherwise, and this Note shall be placed in the
hands of an attorney or attorneys for collection or for foreclosure of the Security Agreements, the
Deeds of Trust, the



- 83 -









 




Patent, Trademark and License Security Agreements, the Pledge Agreements, the
Subsidiary Guaranties and/or the Subsidiary Security Agreements securing payment hereof, or for
representation of Lender in connection with bankruptcy or insolvency proceedings relating hereto,
the Borrowers jointly and severally promise to pay, in addition to all other amounts otherwise due
hereon, the reasonable costs and
expenses of such collection, foreclosure and representation, including, without limitation,
reasonable attorneys’ fees and expenses (whether or not litigation shall be commenced in aid
thereof). All parties hereto severally waive presentment for payment, demand, protest, notice of
protest and notice of dishonor.




     This Note shall be governed by and construed in accordance with the internal laws of the State
of Missouri.



	 	 	 	 	 	 	 
	 	 	VIRBAC CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 
	 	 	PM RESOURCES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 
	 	 	ST. JON LABORATORIES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 
	 	 	FRANCODEX LABORATORIES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 






- 84 -









 






	 	 	 	 	 	 	 
	 	 	VIRBAC AH, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 
	 	 	DELMARVA LABORATORIES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 






- 85 -









 






Revolving Credit Note (cont’d)




LOANS AND PAYMENTS OF PRINCIPAL




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Amount of	 	 	Unpaid	 	 	 	 	 	 	 
	 	 	of	 	 	Principal	 	 	Principal	 	 	Notation	 
	Date	 	Loan	 	 	Repaid	 	 	Balance	 	 	Made By	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 





- 86 -









 






EXHIBIT C




SWING LINE NOTE




			
	$3,000,000.00
	 	St. Louis, Missouri

June 29, 2006






     FOR VALUE RECEIVED, on March 31, 2007, the undersigned, VIRBAC CORPORATION, a Delaware
corporation, PM RESOURCES, INC., a Missouri corporation, ST. JON LABORATORIES, INC., a California
corporation, FRANCODEX LABORATORIES, INC., a Kansas corporation, VIRBAC AH, INC., a Delaware
corporation, and DELMARVA LABORATORIES, INC., a Virginia corporation (collectively, the
“Borrowers”), hereby jointly and severally promise to pay to the order of FIRST BANK, a Missouri
state bank (“Swing Line Lender”), the principal sum of Three Million Dollars ($3,000,000.00), or
such lesser sum as may then constitute the aggregate unpaid principal amount of all Swing Line
Loans made by Swing Line Lender to Borrowers pursuant to the Loan Agreement (as hereinafter
defined). The aggregate principal amount of Swing Line Loans which Swing Line Lender shall be
committed to have outstanding under this Note at any one time shall not exceed Three Million
Dollars ($3,000,000.00), subject to the limitations of the “Borrowing Base” (as defined in the Loan
Agreement), which amount may be borrowed, paid, reborrowed and repaid, in whole or in part, subject
to the terms and conditions of this Note and of the Loan Agreement.



     Borrowers further jointly and severally promise to pay to the order of Swing Line Lender
interest on the principal amount from time to time outstanding hereunder on the dates and at the
rate or rates provided for in the Loan Agreement. All payments hereunder (other than prepayments)
shall be applied first to the payment of all accrued and unpaid interest, with the balance, if any,
to be applied to the payment of principal. All prepayments hereunder shall be applied solely to
the payment of principal.



     All payments of principal and interest hereunder shall be made in lawful currency of the
United States in federal or other immediately available funds at the banking office of First Bank
(the “Agent”) situated at 560 Anglum Road, Hazelwood, Missouri 63042, or at such other place as the
Agent shall designate in writing. Interest shall be computed on an actual day, 360-day year basis.
Consistent with the terms of the Loan Agreement, the Agent shall determine each interest rate
applicable to the advances hereunder, which determination shall be conclusive in the absence of
manifest error.



     Swing Line Lender may record the date and amount of all Swing Line Loans and all payments of
principal and interest hereunder in the records it maintains with respect thereto. Swing Line
Lender’s books and records showing the account between Swing Line Lender and the Borrowers shall be
admissible in evidence in any action or proceeding and shall constitute prima facie proof of the
items therein set forth.



     This Note is referred to in that certain Loan Agreement dated the date hereof by and between
the Borrowers, Agent and other lenders named therein (as the same may from time to time be amended,
the “Loan Agreement”), to which Loan Agreement reference is hereby made for a statement of the
terms and conditions upon which the maturity of this Note may be accelerated, and for other terms
and conditions, including prepayment, which may affect this Note.



     This Note is secured by those six (6) certain Security Agreements, each dated as of the date
hereof executed respectively by each of the Borrowers in favor of Agent for the benefit of Swing
Line Lender and others (as the same may from time to time be amended, the “Security Agreements”),
to which



- 87 -









 




Security Agreements reference is hereby made for a description of the security and a
statement of the terms and conditions upon which this Note is secured.




     This Note is secured by that certain Third Amended and Restated Agreement of Pledge dated as
of the date hereof executed by Virbac Corporation in favor of Agent for the benefit of Lender and
others, as the same may from time to time be amended, modified or restated, and by that certain
Second Amended and Restated Agreement of Pledge dated as of the date hereof executed by Virbac AH,
Inc. in favor of Agent for the benefit of Lender and others, as the same may from time to time be
amended, modified or restated (as so amended, modified or restated, the “Pledge Agreements”), to
which Pledge Agreements reference is hereby made for a description of the security and a statement
of the terms and conditions upon which this Note is secured.



     This Note is also secured by that certain Deed of Trust and Security Agreement dated as of
September 3, 2003 and executed by Virbac Corporation in favor of the Agent for the benefit of
Lender and others, as the same has been amended from time to time, and by that certain Deed of
Trust and Security Agreement dated as of September 9, 1993 and executed by PM Resources, Inc. in
favor of the Agent for the benefit of Lender and others, as the same has been amended from time to
time (collectively, as the same have been and may from time to time hereafter be further amended,
modified, restated or replaced, the “Deeds of Trust”), to which Deeds of Trust reference is also
hereby made for a description of the security and a statement of the terms and conditions upon
which this Note is secured.



     This Note is also secured by that certain Patent, Trademark and License Security Agreement
dated as of September 3, 2003 and executed by Virbac Corporation in favor of the Agent for the
benefit of Lender and others, as the same has been amended from time to time, by that certain
Patent, Trademark and License Security Agreement dated as of September 3, 2003 and executed by
Virbac AH, Inc. in favor of the Agent for the benefit of Lender and others, as the same has been
amended from time to time, by that certain Patent, Trademark and License Security Agreement dated
as of June 29, 2006 and executed by St. JON Laboratories, Inc. in favor of the Agent for the
benefit of Lender and others, as the same has been amended from time to time, and by that certain
Patent, Trademark and License Security Agreement dated as of September 3, 2003 and executed by
Delmarva Laboratories, Inc. in favor of the Agent for the benefit of Lender and others, as the same
has been amended from time to time (collectively, as the same have been and may from time to time
hereafter be further amended, modified, restated or replaced, the "Patent, Trademark and License
Security Agreements”), to which Patent, Trademark and License Security Agreements reference is also
hereby made for a description of the security and a statement of the terms and conditions upon
which this Note is secured.



     This Note is guarantied by the Subsidiary Guaranties (as defined in the Loan Agreement) and is
further secured by the Subsidiary Security Agreements (as defined in the Loan Agreement), to which
Subsidiary Guaranties and Subsidiary Security Agreements reference is hereby made for a description
of the security and a statement of the terms and conditions upon which this Note is further
secured.



     If the Borrowers shall fail to make any payment of any principal of or interest on this Note
as and when the same shall become due and payable, or if any “Event of Default” (as defined
therein) shall occur under or within the meaning of the Loan Agreement or any of the Security
Agreements, any of the Deeds of Trust, any of the Patent, Trademark and License Security
Agreements, any of the Pledge Agreements or any of the Subsidiary Security Agreements, Swing Line
Lender’s obligation to make any additional loans under this Note may be terminated as set forth in
the Loan Agreement, and Agent, on behalf of Swing Line Lender, may further declare the entire
outstanding principal balance of this Note and all accrued and unpaid interest thereon to be
immediately due and payable.



- 88 -









 





     In the event that any payment of any principal of or interest on this Note shall not be paid
when due, whether by reason of acceleration or otherwise, and this Note shall be placed in the
hands of an attorney or attorneys for collection or for foreclosure of the Security Agreements, the
Deeds of Trust, the Patent, Trademark and License Security Agreements, the Pledge Agreements, the
Subsidiary Guaranties
and/or the Subsidiary Security Agreements securing payment hereof, or for representation of Swing
Line Lender in connection with bankruptcy or insolvency proceedings relating hereto, the Borrowers
jointly and severally promise to pay, in addition to all other amounts otherwise due hereon, the
reasonable costs and expenses of such collection, foreclosure and representation, including,
without limitation, reasonable attorneys’ fees and expenses (whether or not litigation shall be
commenced in aid thereof). All parties hereto severally waive presentment for payment, demand,
protest, notice of protest and notice of dishonor.



     This Note shall be governed by and construed in accordance with the internal laws of the State
of Missouri.



	 	 	 	 	 	 	 
	 	 	VIRBAC CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 
	 	 	PM RESOURCES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 
	 	 	ST. JON LABORATORIES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 
	 	 	FRANCODEX LABORATORIES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 






- 89 -









 






	 	 	 	 	 	 	 
	 	 	VIRBAC AH, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 
	 	 	DELMARVA LABORATORIES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 





- 90 -









 






EXHIBIT D




COMPLIANCE CERTIFICATE




                                        , 20___




First Bank, as Agent

135 North Meramec

St. Louis, Missouri 63105

Attention: Traci Dodson




Each of the Lenders a party to

the Loan Agreement as defined below



Gentlemen:




     Reference is hereby made to that certain Loan Agreement dated June 29, 2006, by and between
you, as agent for the Lenders named therein, and the undersigned (as from time to time amended, the
“Agreement”). All capitalized terms used and not otherwise defined herein shall have the
respective meanings ascribed to them in the Agreement.



     The undersigned hereby certify to you that as of the date hereof:



     (a) All of the representations and warranties set forth in Section 5 of the Agreement are true
and correct as if made on the date hereof, except to the extent any such representation or warranty
is stated to relate solely to an earlier date, and provided that all of the representations and
warranties made by Borrowers in Section 5.4 with respect to their annual audited and monthly,
internally-prepared financial statements delivered to Agent and Lenders are hereby reiterated by
the undersigned with respect to the most recent annual audited and monthly financial statements of
the undersigned delivered to the Agent and Lenders pursuant to Section 6.1(a) of the Agreement;



     (b) No violation or breach of any of the affirmative covenants set forth in Section 6.1 of the
Agreement has occurred and is continuing;



     (c) No violation or breach of any of the negative covenants set forth in Section 6.2 of the
Agreement has occurred and is continuing;



     (d) No Default or Event of Default under or within the meaning of the Agreement has occurred
and is continuing;



     (e) The financial statements of Borrowers and its Consolidated Subsidiaries delivered to you
with this letter are true, correct and complete and have been prepared in accordance with GAAP; and



- 91 -









 





     (f) The financial covenant information set forth in Schedule 1 to this letter is true
and correct.



	 	 	 	 	 	 	 
	 	 	Very truly yours,	 	 
	 
	 	 	 	 	 	 
	 	 	VIRBAC CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 
	 	 	PM RESOURCES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 
	 	 	ST. JON LABORATORIES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 
	 	 	FRANCODEX LABORATORIES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 
	 	 	VIRBAC AH, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 
	 	 	DELMARVA LABORATORIES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 





- 92 -









 






Schedule 1

To Compliance Certificate

(The Certificate attached hereto is as of                     )




     Capitalized terms used herein shall have the meanings set forth in the Loan Agreement dated as
of June 29, 2006 among Virbac Corporation, PM Resources, Inc., St. JON Laboratories, Inc.,
Francodex Laboratories, Inc., Virbac AH, Inc., and Delmarva Laboratories, Inc., as Borrowers, First
Bank, as agent, and the lenders named therein (as amended, restated, supplemented or otherwise
modified from time to time, the “Agreement”). Subsection references herein relate to the
subsections of the Agreement.



	 	 	 	 	 	 	 
	A.

	 	CONSOLIDATED EBITDA	 	 	 	 
	 	 	(for Virbac and its Consolidated Subsidiaries for the four fiscal quarters ending
                    ,           )
	 
	 	 	 	 	 	 
	1.

	 	Consolidated Net Income
	 	$                                        

	2.

	 	Consolidated Interest Expense
	 	$                                        

	3.

	 	Consolidated Tax Expense
	 	$                                        

	4.

	 	Depreciation and amortization expenses
	 	$                                        

	5.

	 	Goodwill and Other Intangible Assets Impairment
	 	$                                        

	 
	 	 	 	 	 	 
	6.

	 	Consolidated EBITDA (Sum of A.1 through A.5)
	 	$                                        

	 
	 	 	 	 	 	 
	B.

	 	MINIMUM CONSOLIDATED NET WORTH	 	 	 	 
	 	 	(for Virbac and its Consolidated Subsidiaries as of the month ended                     ,           )
	 
	 	 	 	 	 	 
	1.

	 	Current Consolidated Net Worth
	 	$                                        

	 
	 	 	 	 	 	 
	2.

	 	Minimum Consolidated Net Worth required by Section 6.1(o)(i)
	 	$      24,000,000.00
	 
	 	 	 	 	 	 
	C.

	 	MINIMUM CONSOLIDATED DEBT SERVICE COVERAGE RATIO	 	 	 	 
	 	 	(for Virbac and its Consolidated Subsidiaries for the four fiscal quarters ending
                    ,           )
	 
	 	 	 	 	 	 
	1.

	 	Consolidated EBITDA (from A.6 above)
	 	$                                        

	2.

	 	Scheduled Principal Payments on Senior Consolidated Debt
	 	$                                         

	3.

	 	Principal Payments on Subordinated Debt
	 	$                                        

	4.

	 	Consolidated Interest Expense
	 	$                                        

	 
	 	 	 	 	 	 
	5.

	 	Consolidated Debt Service (Sum of C.2+C.3+C.4)
	 	$                                        

	 
	 	 	 	 	 	 
	6.

	 	Consolidated Debt Service Coverage Ratio (C.1 divided by C.5)
	 	                      to 1.00

	7.

	 	Minimum Required Consolidated Debt Service Coverage	 	 	 	 
	 

	 	Ratio per Section 6.1(o)(ii)
	 	1.15 to 1.00







- 93 -









 






EXHIBIT E




STANDBY LETTER OF CREDIT APPLICATION

AND AGREEMENT





	 	 	 	 	 	 	 
	
	 	International Operations 

135 N. Meramec

St. Louis, MO 63105

	 	Telephone:

Fax:

SWIFT:

Telex:

	 	314-854-4655

314-854-5454

FBOLUS6L

271362 FBOLA UR







	 	 	 	 	 	 	 	 	 
	APPLICATION FOR IRREVOCABLE STANDBY LETTER OF CREDIT 

	FOR ON-LINE INPUT, USE TAB KEY. DO NOT USE ENTER KEY 

	Date:
	 	 	 	USE SPACE BAR TO FILL IN CHECK BOXES
	 	LC No.	 	 
	 	 	 	 	 	 	 	 
	   Please issue an irrevocable standby letter of credit (a “Credit’’) substantially
conforming with this Application and forward same to Beneficiary or to your correspondent by the
means indicated below. In issuing the Credit, First Bank (“Bank”) is expressly authorized to make
such changes in the terms herein below set forth as Bank, in its sole discretion, may deem
advisable, provided that such changes shall not vary the principal terms hereof. This Application
is subject to the terms and conditions set forth in this Application, Bank’s standard terms for
letters of credit, as well as the terms and conditions of all documents executed in connection with
the Credit, INCLUDING THE STANDBY LETTER OF CREDIT AGREEMENT EXECUTED BY APPLICANT IN FAVOR OF BANK
(THE “AGREEMENT”). *********






	 	 	 	 	 	 
	 	Please forward
      by  o  Overnight Courier
         o Full cable (operative)	 	 	 	 
	 	 	 	 	 	 
	 	ADVISING BANK

	 	 	FOR ACCOUNT OF (Account Party or Applicant)	 
	 	 
	 	 	 	 
	 	(if Beneficiary’s bank is not Bank’s correspondent, Bank will use its correspondent)
	 	 	 	 
	 	 	 	 	 	 
	 	BENEFICIARY

	 	 	AMOUNT(Currency Code and Amount)	 
	 	 
	 	 	 	 
	 	 	 	 	 	 
	 	 

	 	 	Drafts to be presented on or before (Expiration Date)	 
	 	 
	 	 	 	 
	 	 

	 	 	At the counters of First Bank [& Trust] address above	 
	 	 	 	 	 	 
	 	 

	 	 	If Autorenewable, Final Expiration Date	 
	 	 
	 	 	 	 
	 	 	 	 	 	 
	 	Available by drafts at sight on you, or your correspondent at your option or you may waive draft requirement, and accompanied by the following document(s). Documents required:






1. o       Use the following default statement (should reflect beneficiary’s right or reason for drawing):




 





 





 





 





2. o      Use attached text. The attachment must be signed and contain the following clause: “This
attachment is an integral part of the Application
dated                     .”                    




	 	 	 	 	 
	SPECIAL CONDITIONS: (Check if applicable)
	o	 	Partial drawings are not permitted
	o	 	This credit is transferable
	 	 	 	 	 
	o	 	Other:
	 	 	 	 	 
	 
	 	 	 	 
	Special Instructions:
	 	 	 	 	 
	 
	 	 	 	 
	 
	 
	 	 	 	 
	 
	 
	 	 	 	 
	 
	 
	 	 	 	 
	 
	 
	 	 	 	 
	 
	 
	 	 	 	 
	 





APPLICANT(S):




	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 
	Name and Title:	 	 	 	 	*******THIS STANDBY APPLICATION CANNOT BE	 	 
	 

	 	 	 	 	 	 	 	 	 
	Address:
	 	 
	 	 	 	 	PROCESSED UNLESS THERE IS A SIGNED STAND BY  	 	 
	 

	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	LETTER OF CREDIT AGREEMENT ON FILE AT FIRST BANK.	 	 
	 

	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 
	Date:
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 





     In case of questions, please contact                                                      
       
Telephone:                                         
 




- 94 -









 







AGREEMENT
OF GUARANTOR(S)




The
undersigned unconditionally, absolutely, continuingly and irrevocably guaranties to Bank all of







Insert Applicant name and address







obligations under this Application and join in this Application and agree to be bound thereunder
as an Applicant.




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	GUARANTOR:	 	 	 	 	 	GUARANTOR:	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	 	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	Name and Title:	 	 	 	 	 	Name and Title:	 	 	 	 
	Address:

	 	 	 	 

	 	 
	 	Address:	 	 

	 	 
	 

	 	 	 	 

	 	 
	 	 	 	 	 	 

	 	 
	 

	 	 	 	 

	 	 
	 	 	 	 	 	 

	 	 
	Date:

	 	 	 	 

	 	 
	 	Date:	 	 

	 	 
	 

	 	 	 	 

	 	 
	 	 	 	 	 	 

	 	 






CORRESPONDENT BANK AGREEMENT



The undersigned hereby appoints Bank to establish and issue the Credit in Bank’s name in accordance
with the terms of this Application and the Agreement. The undersigned acknowledges that it is
primarily liable hereunder and agrees to reimburse Bank for any and all amounts paid by Bank in
connection with the Credit and any all costs, expenses and charges of every kind and nature
incurred by Bank with respect to the Credit and the transaction(s) to
which it/they relate(s). The
undersigned further agrees to pay to Bank all charges, commissions and interest due and owing to
Bank pursuant to the terms of this Application and the Agreement. The undersigned expressly
authorizes Bank to immediately charge any account of ours with Bank for any amounts described
herein which are owed to Bank.



The undersigned also confirms that the signatures of those persons executing this Application and
the Agreement as Applicant(s) and/or Guarantor(s) conform to the signatures on file with us and
that such signers are fully authorized to sign and enter into this type of obligation as, or on
behalf of, Applicant(s) or Guarantor(s) as follows:




	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 
	 	Applicant(s):

	 	 	 	 	Guarantor(s):	 	 	 
	 	 
	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 
	 	 

	 	Insert Applicant(s) name and address
	 	 	 	 	Insert Guarantor(s) name and address	 
	 	 	 	 	 	 





	 	 	 	 	 	 	 
	Correspondent Bank:

	 		 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 
	Name and Title:	 	 	 	 
	Address:

	 	 	 	 

	 	 
	 

	 	 	 	 

	 	 
	 

	 	 	 	 

	 	 
	Date:

	 	 	 	 

	 	 
	 

	 	 	 	 

	 	 






- 95 -









 





EXHIBIT F






APPLICATION AND AGREEMENT FOR IRREVOCABLE


COMMERCIAL LETTER OF CREDIT



	 	 	 	 	 	 	 	 	 
	

	 	 	 	International Operations

4325 Del Amo Blvd.

Lakewood, CA 90712

	 	Telephone:

Fax:

SWIFT:

Telex:
	 	1-888-480-0300

562-663-6528

FBOLUS6L

271362 FBOLA UR






APPLICATION FOR IRREVOCABLE COMMERCIAL LETTER OF CREDIT

FOR ON-LINE INPUT, USE TAB KEY. DO NOT USE ENTER KEY






					
	         Date:
	 	USE SPACE BAR TO FILL IN BOXES
	      LC No.	 





Please issue an irrevocable commercial letter of credit (a “Credit”) substantially conforming
with this Application and forward same to Beneficiary or to your correspondent by the means
indicated below. In issuing the Credit, First Bank (“Bank”) is expressly authorized to make such
changes in the terms herein below set forth as Bank, in its sole discretion, may deem advisable,
provided that such changes shall not vary the principal terms hereof. This Application is subject
to the terms and conditions set forth in this Application, Bank’s standard terms for letters of
credit, as well as the terms and conditions of all documents executed in connection with the
Credit, INCLUDING THE COMMERCIAL LETTER OF CREDIT AGREEMENT EXECUTED BY APPLICANT IN FAVOR OF BANK
(THE “AGREEMENT”). ******



Please forward by            o Full Cable (Operative)            o Overnight Courier




	 	 	 	 	 	 
	 	 	 	 	 	 
	 	Please
Issue this LC the same as LC #
                            with
the following exceptions:
	 	 	 	 	 	 
	 	ADVISING
BANK

	 	 	FOR ACCOUNT OF	 
	 	 
	 	 	 	 
	 	 
	 	 	 	 
	 	(if Beneficiary’s bank is not Bank’s correspondent, Bank will use its correspondent)

	 	 	(Account Party or Applicant)	 
	 	 	 	 	 	 
	 	BENEFICIARY

	 	 	Amount (currency code and amount)	 
	 	 
	 	 	 	 
	 	 

	 	 	 	 
	 	 

	 	 	Drafts to be presented on or
before (Expiration Date)	 
	 	 
	 	 	 	 
	 	 

	 	 	In the country of the Beneficiary unless otherwise indicated	 
	 	 	 	 	 	 




Available by drafts at o sight       o                      days sight       o        
             days                                          date drawn on you or your correspondent



For                      % of invoice value, ACCOMPANIED BY THE FOLLOWING DOCUMENTS, AS CHECKED:




	 	 	 	 	 
	o Signed Commercial Invoice                      originals                      copies

	 	 	 	o Packing List                      originals                     copies
	o U.S. Special Customs Invoice                     originals                     copies

	 	 	 	o Certificate of Origin
	o Marine/Air insurance policy or certificate for at least 110% invoice value covering “All Risks” including:






	 	 	 
	 
	o Other Documents/Special Instructions:
	 	 
	 

	 	 




 

o Use attached text. The
attachment must be signed and contain the following clause:
“This attachment is an integral part of the Application
dated                     ”




	 	 	 	 	 
	o ON BOARD Original Ocean Bill Of Lading (If more than one original has been issued, all are required)	 	o Original plus one copy Air Waybill
	oOther:

	 	 	 	o Forwarders Cargo Receipt
	 

	 	 	 	 





	 	 	 	 	 	 	 
	Consigned o to            o to order of:	 	 	 	 
	 

	 	 	 	 


	Notify:
	 	 	 	 	 	  Marked: Freight o Collect o Prepaid
	 	 	 	 




Covering: Merchandise described in the invoice as: (mention commodity in general terms)



 




 





	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Shipping
Terms:

	 	o FAS
	 	o FOB
	 	o CFR
	 	o CIF
	 	o C&l
	 	o
	Shipment From:                                          Shipment to:                                          Latest Shipment Date:                                        





Partial
shipment: o Allowed o Prohibited



Transhipment:     o Allowed o Prohibited




Documents to be presented for negotiation no later than                     days after shipping date or other shipping
document issuance date. (21 days if blank)


o Insurance effected by ourselves. We agree to keep insurance coverage in
force until this transaction is completed.



Credit to be: oTRANSFERABLE      o NON-TRANSFERABLE




	 	 	 	 	 
	All banking charges other than issuing bank’s are for:

	 	o Beneficiary
	 	o Our Account
	Acceptance charges, if any, are for

	 	o Beneficiary
	 	o Our Account
	Other Instructions:
	 	 	 	 
	 




 




UNLESS OTHERWISE INSTRUCTED, DOCUMENTS SHALL BE FORWARDED TO YOU VIA COURIER BY NEGOTIATING BANK.




	 	 	 
	APPLICANT(S):
	 	 
	 
	 


	 	 





















	 	 	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 
	Name and Title:	 	 	 	 	  “***“THIS
COMMERCIAL STANDBY APPLICATION CANNOT BE PROCESSED 	 	 
	 

	 	 	 	 	 	 	 	 	 
	Address:

	 	 
	 	 	 	 	   UNLESS THERE IS A SIGNED COMMERCIAL LETTER OF CREDIT	 	 
	 

	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	  AGREEMENT ON FILE AT FIRST BANK.	 	 
	 

	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 
	Date:
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 


































     In case of questions, please contact                                                                                  Telephone:                                                             



- 96 -









 









AGREEMENT
OF GUARANTOR(S)




The
undersigned unconditionally, absolutely, continuingly and irrevocably guaranties to Bank all of







Insert Applicant name and address







obligations under this Application and join in this Application and agree to be bound thereunder
as an Applicant.




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	GUARANTOR:	 	 	 	 	 	GUARANTOR:	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	 	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	Name and Title:	 	 	 	 	 	Name and Title:	 	 	 	 
	Address:

	 	 	 	 

	 	 
	 	Address:	 	 

	 	 
	 

	 	 	 	 

	 	 
	 	 	 	 	 	 

	 	 
	 

	 	 	 	 

	 	 
	 	 	 	 	 	 

	 	 
	Date:

	 	 	 	 

	 	 
	 	Date:	 	 

	 	 
	 

	 	 	 	 

	 	 
	 	 	 	 	 	 

	 	 






CORRESPONDENT BANK AGREEMENT



The undersigned hereby appoints Bank to establish and issue the Credit in Bank’s name in accordance
with the terms of this Application and the Agreement. The undersigned acknowledges that it is
primarily liable hereunder and agrees to reimburse Bank for any and all amounts paid by Bank in
connection with the Credit and any all costs, expenses and charges of every kind and nature
incurred by Bank with respect to the Credit and the transaction(s) to
which it/they relate(s). The
undersigned further agrees to pay to Bank all charges, commissions and interest due and owing to
Bank pursuant to the terms of this Application and the Agreement. The undersigned expressly
authorizes Bank to immediately charge any account of ours with Bank for any amounts described
herein which are owed to Bank.



The undersigned also confirms that the signatures of those persons executing this Application and
the Agreement as Applicant(s) and/or Guarantor(s) conform to the signatures on file with us and
that such signers are fully authorized to sign and enter into this type of obligation as, or on
behalf of, Applicant(s) or Guarantor(s) as follows:




	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 
	 	Applicant(s):

	 	 	 	 	Guarantor(s):	 	 	 
	 	 
	 	 	 	 	 	 	 	 
	 	 
	 	 	 	 	 	 	 	 
	 	 

	 	Insert Applicant(s) name and address
	 	 	 	 	Insert Guarantor(s) name and address	 
	 	 	 	 	 	 





	 	 	 	 	 	 	 
	Correspondent Bank:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 
	Name and Title:	 	 	 	 
	 

	 	 	 	 

	 	 
	Address:	 	 	 	 
	 

	 	 	 	 

	 	 
	Date:	 	 	 	 
	 

	 	 	 	 

	 	 






97









 







 




EXHIBIT G




ASSIGNMENT AGREEMENT




     AGREEMENT dated as of                     ,                      among [ASSIGNOR] (the “Assignor”), [ASSIGNEE] (the
“Assignee”), VIRBAC CORPORATION, PM RESOURCES, INC., ST. JON LABORATORIES, INC., FRANCODEX
LABORATORIES, INC., VIRBAC AH, INC., and DELMARVA LABORATORIES, INC. (collectively, the
“Borrowers”), and FIRST BANK, as Agent (the “Agent”).



WITNESSETH:




     WHEREAS, this Assignment Agreement (this “Agreement”) relates to the Loan Agreement dated as
of June 29, 2006 among the Borrowers, the Assignor and the other Lenders party thereto, as Lenders,
and the Agent (the “Loan Agreement”);



     WHEREAS, as provided under the Loan Agreement, the Assignor has a Revolving Credit Commitment
to make Revolving Credit Loans to the Borrowers, in an aggregate principal amount at any time
outstanding not to exceed $                     (the “Revolving Credit Commitment”);



     WHEREAS, Revolving Credit Loans made to the Borrowers by the Assignor under the Loan Agreement
in the aggregate principal amount of $                     are outstanding as of the date hereof; and



     WHEREAS, the Assignor proposes to assign to the Assignee all of the rights of the Assignor
under the Loan Agreement in respect of a                      percent (                    %) portion of its Revolving
Credit Commitment in the amount of $                     (the “Assigned Commitment”), together with a
corresponding portion of its outstanding Revolving Credit Loans and Letter of Credit risk
participations, and its interest in all Collateral and Guarantees therefor, and the Assignee
proposes to accept assignment of such rights and assume the corresponding obligations from the
Assignor on such terms;



     NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein,
the parties hereto agree as follows:



     SECTION 1. Definitions. All capitalized terms not otherwise defined herein shall
have the respective meanings set forth in the Loan Agreement.



     SECTION 2. Assignment. The Assignor hereby assigns and sells to the Assignee all of
the rights of the Assignor under the Loan Agreement to the extent of the Assigned Commitment, and
the Assignee hereby accepts such assignment from the Assignor and assumes all of the obligations of
the Assignor under the Loan Agreement to the extent of the Assigned Commitment, including the
purchase from the Assignor of the corresponding portion of the principal amount of the Revolving
Credit Loans and risk participations in any Letters of Credit outstanding at the date hereof. Upon
the execution and delivery hereof by the Assignor, the Assignee, the Borrowers and the Agent and
the payment of the amounts specified in Section 3 required to be paid on the date hereof (i) the
Assignee shall, as of the date hereof, succeed to the rights and be obligated to perform the
obligations of a Lender under the Loan Agreement with a Revolving Credit Commitment of
$                    , and (ii) the Revolving Credit Commitment of the Assignor shall, as of the date
hereof, each be reduced by a like amount and the Assignor released from



- 98 -









 





 



its obligations under the
Loan Agreement to the extent such obligations have been assumed by the Assignee. The assignment
provided for herein shall be without recourse to the Assignor.




     SECTION 3. Payments. As consideration for the assignment and sale contemplated in
Section 2 hereof, the Assignee shall pay to the Assignor on the date hereof in federal funds the
amount heretofore agreed between them.1 It is understood that commitment and/or facility
fees accrued to the date hereof with respect to the Assigned Commitment, are for the account of the
Assignor and such fees accruing from and including the date hereof are for the account of the
Assignee. Each of the Assignor and the Assignee hereby agrees that if it receives any amount under
the Loan Agreement which is for the account of the other party hereto, it shall receive the same
for the account of such other party to the extent of such other party’s interest therein and shall
promptly pay the same to such other party.



     SECTION 4. Consent of the Borrowers and the Agent. This Agreement is conditioned
upon the consent of the Borrowers and the Agent pursuant to Section 9.12 of the Loan Agreement.
The execution of this Agreement by the Borrowers and the Agent is evidence of this consent.
Pursuant to, and subject to the requirements of, Section 9.12 the Borrowers agrees to execute and
deliver a Note payable to the order of the Assignee to evidence the assignment and assumption
provided for herein.



     SECTION 5. Nonreliance on Assignor. The Assignor makes no representation or warranty
in connection with, and shall have no responsibility with respect to, the solvency, financial
condition, or statements of the Borrowers, or the validity and enforceability of the obligations of
the Borrowers in respect of the Loan Agreement or any Note. The Assignee acknowledges that it has,
independently and without reliance on the Assignor, and based on such documents and information as
it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement
and will continue to be responsible for making its own independent appraisal of the business,
affairs and financial condition of the Borrowers.



     SECTION 6. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Missouri.



     SECTION 7. Counterparts. This Agreement may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the signatures thereto and hereto
were upon the same instrument.



     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered by
their duly authorized officers or other representatives or agents as of the date first above
written.



	 	 	 	 	 
	Revolving Credit Commitment:	 	[ASSIGNOR]
	$                    
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 







 




			
	1	 	Amount should combine principal together
with accrued interest and breakage compensation, if any, to be paid by the
assignee, net of any portion of any up front fee to be paid by the Assignor to
the Assignee. It may be preferable in an appropriate case to specify these
amounts generically or by formula rather than as a fixed sum.




- 99 -









 










 




	 	 	 	 	 
	Revolving Credit Commitment:	 	[ASSIGNEE]
	$       
             
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	VIRBAC CORPORATION
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	PM RESOURCES, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	ST. JON LABORATORIES, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	FRANCODEX LABORATORIES, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	VIRBAC AH, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	DELMARVA LABORATORIES, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 





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	 	 	FIRST BANK, as Agent
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 





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CERTIFICATE OF THE PRESIDENT AND SECRETARY

OF VIRBAC CORPORATION




     The undersigned, Dr. Erik R. Martinez, the duly elected and acting President of Virbac
Corporation, a corporation organized under the laws of Delaware (the “Corporation”), and Jean M.
Nelson, the duly elected and acting Secretary of the Corporation each certifies as follows:



     1. Dr. Erik R. Martinez is the duly elected and acting President of the Corporation and as
such is authorized to execute and deliver this Certificate.



     2. Jean M. Nelson is the duly elected and acting Secretary of the Corporation, and as such is
authorized to execute and deliver this Certificate.



     3. That attached hereto as Exhibit A is a copy of the Certificate of Incorporation of
the Corporation, including all amendments thereto, certified by the Secretary of State of the State
of Delaware.



     4. That attached hereto as Exhibit B is a true and complete copy of the Bylaws of the
Corporation, as amended, and as in effect as of the date hereof.



     5. Attached hereto and made a part hereof as Exhibit C is a true, correct and complete
copy of certain resolutions duly adopted by the Board of Directors of the Corporation as of July
25, 2006, said resolutions have not been amended, superseded or rescinded and are, at the date
hereof, in full force and effect.



     6. The following individuals have been duly elected and have at all times since June 29, 2006
been, and this day are officers of the Corporation, each such officer holds the title set forth
opposite his/her name below; each such officer is authorized pursuant to the resolutions attached
hereto as Exhibit C to execute and deliver documents on behalf of the Corporation as set
forth in such resolutions; and the true and genuine signature of each officer is set forth opposite
his/her name below:



	 	 	 	 	 
	Name	 	Office	 	Signature
	 
	 	 	 	 
	Dr. Erik R. Martinez

	 	President
	 	/s/ Erik R. Martinez
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Secretary	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Jean M. Nelson

	 	EVP and Chief Financial Officer
	 	/s/ Jean M. Nelson
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 
	 	 





     7. The undersigned have reviewed all of the representations and warranties being made by the
Corporation in the Loan Agreement (as defined in the resolutions attached hereto as Exhibit
C) and



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the undersigned certify that all of said representations and warranties are true and
accurate as of the date hereof to the best of the undersigned’s’ knowledge.




     IN WITNESS WHEREOF, the undersigned have caused this Certificate to be executed as this 25th
day of July, 2006.



(SEAL)




	 	 	 
	 

	 	/s/ Erik R. Martinez
	 

	 	 
	 

	 	Dr. Erik R. Martinez, President
of Virbac Corporation
	 
	 	 
	 

	 	/s/ Jean M. Nelson
	 

	 	 
	 

	 	Jean M. Nelson, Secretary
of Virbac Corporation






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EXHIBIT A




(Certificate of Incorporation)







	 	 	 
	 	State
of Delaware 
	page 1






Office of the Secretary of State




     I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY
THE CERTIFICATE OF MERGER, WHICH MERGES:



     “VIRBAC,
INC”, A DELAWARE CORPORATION,




     WITH
AND -INTO “AGRI-NUTRITION GROUP LIMITED” UNDER THE NAME OF “VIRBAC CORPORATION”, A
CORPORATION ORGANIZED AND EXISTING UNDER THE LAWS OF THE STATE OF DELAWARE, WAS RECEIVED AND FILED
IN THIS OFFICE THE FIFTH DAY OF MARCH, A.D. 1999 AT 1:31 O’CLOCK P.M.



     AND I DO HEREBY FURTHER CERTIFY THAT THE AFORESAID CORPORATION SHALL BE GOVERNED BY THE
LAWS OF THE STATE OF DELAWARE.



	 	 	 	 	 	 	 
	2344484 8330

991468981

	 	
	 	/s/ Edward J. Freel
 

Edward J. Freel, Secretary of State




AUTHENTICATION:
	0063795	 
	 

	 	 	 	                         DATE: 	 11-04-99	 















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EXHIBIT B




(Bylaws)






BYLAWS




OF




VIRBAC CORPORATION




(Amended and Restated as of January 27, 2004)




ARTICLE
I — OFFICES




     Section 1. Business Offices. Virbac Corporation (the “Company”), may have such
offices and branch offices, either within or without the State of Delaware, as the Board of
Directors (the “Board”) may designate from time to time.



     Section 2. Registered Office. The Company shall maintain a registered office in the
State of Delaware, which may be changed from time to time by the Board.



ARTICLE
II — STOCKHOLDERS




     Section 1. Annual Meeting. The Annual Meeting of Stockholders of the Company (the
“Annual Meeting”) shall be held subsequent to the end of each fiscal year of the Company, on such
date and at such hour as the Board shall annually determine. At each Annual Meeting, the
stockholders entitled to vote shall elect a Board of Directors, or class thereof, and they may
transact any such other corporate business as shall be stated in the notice of the Annual Meeting.



     Section 2. Special Meetings. Special Meetings of the Stockholders of the Company
(each, a “Special Meeting”) may be called by the Board or the President of the Company or by the
holders of not less than one-half of all the outstanding shares entitled to vote at such meeting.
No business shall be transacted at any Special Meeting unless such business is stated in the
notice of the meeting as one of the purposes of that Special Meeting.



     Section 3. Place and Time of Meeting. The Board shall designate the place and time of
any Annual Meeting or Special Meeting. The place so designated may be either within or without the
State of Delaware, as the Board may choose.



     Section 4. Notice of Meeting. Notice of a meeting, stating the place, day, and hour of
such meeting and, in the case of a Special Meeting, the purpose or purposes for which such meeting
is called, shall be delivered not less than ten (10) calendar days nor more than sixty (60)
calendar days before the date of such meeting, by written, telegraphic, or any other means of
communication, by or at the direction of the President, the Secretary, or the other person(s)
calling the meeting, to each stockholder of record entitled to vote at such meeting. If mailed,
such notice shall be deemed to be delivered when deposited in the United States mail, addressed to
the stockholder at his address as it appears on the stock transfer books of the Company, with
postage thereon prepaid.




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when deposited in the United States mail, addressed to the stockholder at his address as it
appears on the stock transfer books of the Company, with postage thereon prepaid.




     Section 5. Notice of Adjourned Meeting. When a meeting is adjourned to another time
or place, it shall not be necessary to give any notice of the adjourned meeting if the time and
place to which the meeting is adjourned are announced at the meeting at which the adjournment is
taken. If the adjournment is for more than thirty (30) days, or if after the adjournment, a new
record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall then be
given to each stockholder of record entitled to vote at the adjourned meeting. At an adjourned
meeting, any business may be transacted that might have been transacted on the original date of
the meeting.



     Section 6. Waiver of Notice of Meeting of Stockholders. Whenever any notice is
required to be given to any stockholder of the Company under the provisions of any statute, or
under the provisions of the By-Laws, a waiver thereof signed by the person(s) entitled to such
notice, whether before or after the time stated therein, shall be equivalent to the giving of such
notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting,
except when the person attends the meeting for the expressed purpose of objecting, at the
beginning of the meeting, to the transactions of any business because the meeting is not lawfully
called or convened. Neither the business to be transacted at, nor the purpose of, any Annual
Meeting or Special Meeting need be specified in any written waiver of notice.



     Section 7. Fixing the Record Date. For the purpose of determining stockholders
entitled to notice of, or to vote at, any meeting of stockholders or any adjournment thereof, or
stockholders entitled to receive payment of any dividend, or in order to make a determination of
stockholders for any other proper purpose, the Board shall fix in advance a date as the record
date for any such determination of stockholders such date in any case to be not more than sixty
(60) days prior to the date on which the particular action requiring such determination of
stockholders is to be taken and, in the case of a meeting of stockholders, not less than ten (10)
days prior to the date on which the particular action requiring such determination of stockholders
is to be taken.



     When a determination of stockholders entitled to vote at any meeting of stockholders has been
made as provided in this Section, such determination shall apply to any adjournment thereof,
unless the Board fixed a new record date for the adjourned meeting.



     All notice and record periods established herein shall be adjusted where required to conform
to any prescribed periods now or hereafter provided by the General Corporation Law of the State of
Delaware.



     Section 8. Stockholder Quorum and Action. A majority of the shares entitled to vote,
represented in person or by proxy, shall constitute a quorum at a meeting of stockholders, except
where these By-Laws require action to be taken by the holders of more than a majority of the shares
then entitled to vote. The stockholders present at a



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duly organized meeting may continue to transact business until adjournment, notwithstanding the
withdrawal of enough stockholders to leave less than a quorum.




     If a quorum is present, the affirmative vote of the majority of the shares represented at the
meeting and entitled to vote on the subject matter shall be the act of the stockholders, unless
otherwise provided by law or these By-Laws.



     Section 9. List of Stockholders. The Secretary of the Company shall prepare and make
available at least ten (10) days before every meeting of the stockholders a complete list of the
stockholders entitled to vote at the meeting, as required by statute.



     Section 10. Voting. Each outstanding share of Common Stock entitled to vote shall be
entitled to one vote upon each manner submitted to a vote at a meeting of stockholders. Each
outstanding share of Preferred Stock entitled to vote shall be entitled to the number of votes as
provided in the Company’s Certificate of Incorporation or in any Designation of Rights and
Preferences applicable to the class or series of preferred stock and the matter to be voted upon.



     Section 11. Proxies. Every stockholder entitled to vote at a meeting of stockholders,
or to express consent or dissent to corporate action in writing without a meeting, may authorize
any other person(s) to act for him by proxy. However, no such proxy shall be voted or acted upon
after three (3) years from its date, unless the proxy provides for a longer period.



     A duly executed proxy shall be irrevocable if it states that it is irrevocable and if, and
only as long as, it is coupled with an interest sufficient in law to support an irrevocable power.
A proxy may be made irrevocable regardless of whether the interest with which it is coupled is an
interest in the stock itself or an interest in the Company generally.



     Section 12. Organization. Meetings of the stockholders shall be presided over by the
Chairman of the Board, if any, the Vice Chairman of the Board, if any, the President, any Vice
President, or in their absence, by a chairman chosen by a majority of the stockholders entitled to
vote at the meeting who are present in person or by proxy. The secretary, an Assistant Secretary,
or in their absence, any person appointed by the chairman of the meeting, shall act as secretary of
the meeting.



     Section 13. Action by Stockholders Without a Meeting. Except as may otherwise be
limited by the Company’s Certificate of Incorporation, any action required or permitted to be taken
at a meeting of the stockholders may be taken without a meeting if a consent in writing, setting
forth the action so taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such action at a meeting
at which all shares entitled to vote thereon were present and voted. Prompt written notice shall be
given to those stockholders who have not consented in writing. The notice shall fully summarize the
material features of the authorized action and, if the action be a merger, consolidation, or



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sale or exchange of assets for which dissenters’ rights are provided by law, the notice
shall contain a clear statement of the rights of stockholders dissenting therefrom.




ARTICLE III — DIRECTORS




     Section 1. Powers. Except as otherwise provided by law or by the
Company’s Certificate of Incorporation, all corporate powers shall be exercised by or under the
authority of, and the property, business, and affairs of the Company shall be managed under the
direction of, the Board of Directors.



     Section 2. Number, Tenure, and Obligation. The number of directors of the Company
shall be not less than five (5) nor more than thirteen (13). From time to time, the number of
directors may be increased by stockholder action or by resolution of a majority of the directors
then in office.



     Section 3. Election of Directors. Except as may otherwise be provided in the
Company’s Certificate of Incorporation or in any Designation of Rights and Preferences of any
class or series of Preferred Stock, directors shall be elected at the Annual Meeting by the
affirmative vote of the majority of the shares represented at the meeting and entitled to vote for
the election of directors. If the annual election of directors is not held on the day designated
by the Board for any Annual Meeting, or at any adjournment thereof, the Board may cause the
election to be held at a Special Meeting specifically called for that purpose.



     Section 4. Regular Meetings. A regular meeting of the Board shall be held without
other notice than this By-Law immediately after, and at the same place as, the annual election of
directors. The Board may, from time to time, by resolution appoint the time and place, either
within or without the State of Delaware, for holding other regular meetings of the Board, if by it
deemed advisable. Such regular meetings shall thereupon be held at the time and place so
appointed, without the giving of any notice with regard thereto.



     Section 5. Special Meetings. Special meetings of the Board shall be held whenever
called by the Chairman, the President, or any two directors. The person(s) authorized to call
special meetings of the Board may fix any place, either within or without the State of Delaware,
and any tune, as the place and time for holding any special meeting of the Board, called by him,
her, or them.



     Section 6. Notice of Special Meeting. Notice to a director of any special meeting may
be given in writing by U.S. mail or facsimile transmission to the residence or place of business of
the director, as shown on the books of the Company, not less than five (5) calendar days before the
day on which the meeting is to be held. Alternatively, notice to a director of any special meeting
may be given by delivering the same to such director personally or by conveying the same
information to such director by way of telephone not later than two (2) days before the day of such
meeting. If mailed, such



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notice shall be deemed to be delivered when deposited in the United States mail addressed to
the director at such director’s residence or place of business with postage thereon prepaid.
Except as otherwise provided in the By-Laws, or as may be indicated in the notice thereof, any and
all business may be conducted at any special meeting.




     When a special meeting of the Board is adjourned to another time and place, no notice of the
adjourned meeting need to be given if the time and place to which the meeting is adjourned are
announced at the meeting at which the adjournment is taken.



     Section 7. Waiver of Notice. A director may waive the requirement of notice of a
special meeting of the Board by signing a waiver of notice whether before or after the meeting.
The attendance of a director at a meeting shall constitute a waiver of notice of such meeting and
a waiver of any and all objections to the place or time of such meeting or the manner in which it
has been called or convened, except when the director states, at the beginning of the meeting, any
objection to the transaction of business because the meeting is not lawfully called or convened.
Neither the business to be transacted at, nor the purpose of, any regular or special meeting of
the Board need be specified in the notice or waiver of notice of such meeting.



     Section 8. Quorum and Action. Except as otherwise provided by these By-Laws or the
Company’s Certificate of Incorporation, a majority of the total number of directors then in office
shall constitute a quorum for the transaction of business at any meeting of the Board, but if less
than such majority is present at the meeting, a majority of the directors present may adjourn the
meeting from time to time until a quorum shall have been obtained.



     Directors shall be deemed present at a meeting of the Board if a conference telephone, or
similar communications equipment by means of which all persons participating in the meeting can
hear each other, is used.



     The affirmative vote of the majority of the directors present at a meeting at which a quorum
is present shall be the act of the Board, except as otherwise provided by these By-Laws or the
Company’s Certificate of Incorporation.



     Section 9. Presumption of Assent. A director of the Company who is present at a
meeting of its Board at which action on any corporate matter is taken shall be presumed to have
asserted to the action taken unless he votes against such action, or abstains from voting in
respect thereto because of an asserted conflict of interest.



     Section 10. Action Without a Meeting. Any action required or permitted to be taken by
the Board at a meeting may be taken without a meeting if a consent in writing, setting forth the
action so taken, shall be signed by all of the directors then in office, and filed in the minutes
of the proceedings of the Board. Any action required or permitted to be taken by any Committee of
the Board at a meeting may be taken without a meeting if such a consent in writing, setting forth
the action so taken, shall be signed by



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all of the members of such Committee then in office, and filed in the minutes of the proceedings
of such Committee and the Board.




     Section 11. Interested Transactions. No contract or other transaction between the
Company and one or more of its directors or officers, or between the Company and any other
corporation, partnership, association, or other organization in which one or more of its directors
or officers are directors or officers or have a financial interest, shall be void or voidable
solely for this reason, or solely because such director or officer is present at or participates
in the meeting of the Board or a committee thereof, which authorizes, approves, or ratifies such
contract or transaction or solely because his or their votes are counted for such purpose, if:




	 	(a)	 	The material facts as to such relationship or interest and as to the contract
or transaction are disclosed or known to the Board or committee, and the
Board or committee in good faith authorizes the contract or transaction by
the affirmative votes of a majority of the disinterested directors, even
though the disinterested directors be less than a quorum; or
	 
	 	(b)	 	The material facts as to his relationship or interest and as to the contract or
transaction are disclosed or known to the stockholders entitled to vote
thereon, and the contract or transaction is specifically approved in good
faith by vote of the stockholders; or
	 
	 	(c)	 	The contract or transaction is fair to the Company as of the time it is
authorized, approved, or ratified, by the Board, a committee, or the
stockholders.





     Common or interested directors may be counted in determining the presence of a quorum at a
meeting of the Board or a committee thereof which authorizes, approves, or ratifies such contract
or transaction.



     Notwithstanding the foregoing, any transaction required to be publicly disclosed by the
Company pursuant to Item 404 of Regulation S-K shall be void unless the audit committee of the
Board (or another independent body of the Board) reviews such transaction for potential conflict
of interest situations and expressly approves such transaction.



     Section 12. Compensation of Directors. The Board may pay each director a stated salary
as such, or a fixed sum for attendance at meetings of the Board or any committee thereof, or both,
and may reimburse each director for his expenses of attendance at each such meeting. The Board may
also pay to each director rendering services to the Company not ordinarily rendered by directors,
as such, special compensation appropriate to the value of such services, as determined by the Board
from time to time. None of these payments shall preclude any director from serving the Company in
any other capacity and receiving compensation therefore. The Board shall



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determine the compensation of a director who is also an officer, for service as an officer, as
well as for service as a director.




     Section 13. Resignations. Any director of the Company may resign at any time upon
written notice to the Company. Such resignation shall take effect at the time specified therefore,
and unless otherwise specified with respect thereto, the acceptance of such resignation shall not
be necessary to make it effective.



     Section 14. Removal. Subject to the rights of the holders of any class or series of
Preferred Stock, any director may be removed from office at any time, but only for cause and only
by the affirmative vote of the holders of eighty percent of the shares then entitled to vote at an
election of directors.



     Section 15. Vacancies. Any vacancy on the Board resulting from death, resignation,
retirement, disqualification, removal, or other cause, including any vacancy created by reason of
an increase in the number of directors or as a result of Board action, shall be filed exclusively
by the affirmative vote of a majority of the remaining directors then in office and not by
stockholders, even if such remaining directors constitute less than a quorum of the board of
directors, or by a sole remaining director. Any director so elected shall hold office for the
remainder of the term of the class of directors in which the new directorship was created or the
vacancy occurred and until the next Annual Meeting relating to the election of directors of such
class and until such director’s successor is duly elected and qualified. No decrease in the number
of directors shall have the effect of shortening the term of any incumbent director.



     Section 16. Board Committees. The Board shall designate from among its members an
audit committee, a compensation committee and a nominating committee, which committees shall be
formed in accordance with the rules promulgated by the exchange on which the Company’s shares are
listed. The Board may designate from among its members one or more other committees as the Board
deems appropriate. The Board shall have power at any time to fill vacancies in, change the
membership of, designate one or more directors as alternate members of, or discharge any such
committee. In the absence or disqualification of a member of a committee, the member or members
thereof present at any meeting who are not disqualified from voting, whether or not he, she, or
they constitute a quorum, may unanimously appoint another member of the Board to act at the meeting
in place of any such absent or disqualified member.



     Section 17. Powers and Duties of Committees. Any committee shall have and may exercise
all of the powers and authority of the Board in the management of the business and affairs of the
Company to the extent provided for in the resolution of the Board designating such committee and as
limited by these By-Laws, and may authorize the seal of the Company to be affixed to all papers
which may require it, provided however, no such committee shall have power or authority to amend
the Certificate of Incorporation, adopt an agreement of merger or consolidation, recommend to the
stockholders the sale, lease, or exchange of all or substantially all of the Company’s property and
assets, recommend to the stockholders a dissolution of the Company or a



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revocation of dissolution, or amend these By-Laws. Without limiting the foregoing, unless the
resolution or these By-Laws expressly so provide, no such committee shall have the power or
authority to declare a dividend or to authorize the issuance of stock.




     Section 18. Chairman of the Board. The Chairman of the Board shall be elected by the
directors at the regular meeting of the Board following the annual election of directors. The
Chairman shall hold office until the regular meeting of the Board following the annual election of
directors in the next subsequent year and until his successor shall have been duly elected and
shall have qualified, or until his earlier resignation, removal from office, or both. The Chairman
shall preside, when available, at all meetings of the stockholders and the Board. He shall have
the specific powers conferred by these By-Laws, and he shall also have and may exercise such
further powers and duties as from time to time may be conferred upon or assigned to him by the
Board. The Chairman of the Board shall not be an officer of the Company ex officio unless also
serving as the President or Chief Executive Officer of the Company pursuant to Article IV below.



ARTICLE IV — OFFICERS




     Section 1. Officers. The officers of the Company shall include a President, a
Secretary, and a Treasurer, each whom shall be elected by the Board. Such other officers,
assistant officers, and agents as may be deemed necessary may be elected or appointed by the Board
from time to time. Any two or more offices may be held by the same person.



     Section 2. Election and Term of Office. The officers of the Company shall be elected
at the regular meeting of the Board following the annual election of directors. Each officer shall
thereafter hold office at the pleasure of the Board until the regular meeting of the Board
following the annual election of directors in the next subsequent year and until his successor
shall have been duly elected and shall have qualified, or until his earlier resignation, removal
from office, or both.



     Section 3. Removal. Any officer may be removed by the Board at any time, with or
without cause. In the case of the offices of President, Secretary, Chief Executive Officer and
Treasurer or Chief Financial Officer of the Company, the election or designation by the Board of a
successor to any such office shall be deemed to constitute the removal, without cause, of the
previous incumbent in such office without the need for separate action by the Board to effect such
removal.



     Section 4. Vacancies. A vacancy in any office arising from any cause may be filled by
the Board for the unexpired portion of the term.



     Section 5. President. The President, under the direction of the Board, shall have
general responsibility for the management and direction of the business, properties, and affairs
of the Company. He shall have general executive powers, including all



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powers required by law to be exercised by a president of a corporation as such, as well as the
specific powers conferred by these By-Laws and by the Board or delegated to such person by the
Chief Executive Officer of the Company during any period in which the President is not also
designated by the Board as the Chief Executive Officer.




     Section 6. Vice President. In the absence of the President, or in the event of his
death, inability, or refusal to act, the Vice President, if one has been appointed or elected by
the Board (or in the event there be more than one Vice President, the Vice Presidents in the order
designated at the time of their appointment or election, or in the absence of any designation,
then in the order of their appointment or election), shall perform the duties of the President
and, when so acting, shall have all of the powers of, and be subject to all of the restrictions
upon, the President, Each Vice President shall have general executive powers to act on behalf of
the Company and such further duties and responsibilities as may be assigned or conferred by the
Board or as may be delegated by the Chief Executive Officer of the Company.



     Section 7. Secretary. The Secretary shall (a) keep the minutes of the proceedings of
the Board and the stockholders in one or more books provided for that purpose, (b) see that all
notices are duly given in accordance with the provisions of these By-Laws or as required by law,
(c) as custodian of the corporate records and of the seal of the Company and see that the seal of
the Company is affixed to all documents the execution of which on behalf of the Company under its
seal is duly authorized, (d) be the registrar of the Company and keep a register of the addresses
of all stockholders which shall be furnished to the Secretary by the stockholders or by the
Company’s transfer agent, (e) have general charge of the stock transfer books and records of the
Company, and (f) in general, perform all duties incident to the office of Secretary and such other
duties as from time to time may be assigned to him or her by the Board.



     Section 8. Treasurer. Except as hereinafter provided, the Treasurer shall (a) have
charge and custody of, and be responsible for, all funds and securities of the Company, (b)
receive and give receipts for monies due and payable to the Company from any source whatsoever,
and deposit all such monies in the name of the Company in such banks, trust companies or other
depositories as the Board may direct or authorize, and (c) in general, perform all of the duties
as from time to time may be assigned to him or her by the President or the Board. If required by
the Board, the Treasurer shall give a bond for the faithful discharge of his or her duties in such
sum and with such surety or sureties as the Board shall determine.



     During any period in which the Board has designated a Vice President or Officer other than the
Treasurer to serve as Chief Financial Officer, the Treasurer of the Company shall, in lieu of the
duties enumerated above, (a) report to and act as an advisor and consultant to the Chief Financial
Officer with respect to cash management issues and the supervision of short-term investment of
excess funds and (b) perform such other duties and have such other authority as may be delegated to
the Treasurer by the Chief Financial Officer.



- 113 -









 





     Section 9. Chief Executive Officer. The Board may designate the Chairman of the Board
or the President of the Company to serve as Chief Executive Officer of the Company and in any such
event the person so designated shall, in addition to the other duties, powers and responsibilities
conferred by law and under these By-Laws, have and exercise plenary executive authority over the
affairs of the Company including the right to assign duties and grant responsibility to other
officers of the Company, the right to designate without Board action individuals to serve as
assistant officers without general executive authority, and the right to act on behalf of the
Company with respect to the voting of stock or taking of action with respect to investments in any
subsidiary, affiliate or joint venture involving the Company or any subsidiary; provided
however, that the ability of the Chief Executive Officer to act or grant proxies in respect of
the foregoing shall not include the power to acquire or dispose of any such investment except as
expressly authorized by the Board.



     In the event that the Board shall designate the President as Chief Executive Officer, the
Board may designate a Vice President to serve as Deputy Chief Executive Officer to have and
exercise the powers of the Chief Executive Officer in his absence or in the event of his death,
inability or refusal to act. In the event that the President is not also designated as the Chief
Executive Officer of the Company, the President shall serve as Deputy Chief Executive Officer.



     Section 10. Chief Financial Officer. The Board may designate an officer of the
Company to serve as Chief Financial Officer and in the event of such designation, the duties,
rights, and responsibilities otherwise assigned to the Treasurer of the Company in the first
paragraph of Section 8 of this Article IV shall be assigned to the Chief Financial Officer. In
addition, the Chief Financial Officer shall have an exercise plenary authority over internal
accounting, auditing and control functions on behalf of the Company and any controller or
accounting officer of the Company shall report to and be subject to supervision by the delegation
of authority from such Chief Financial Officer. The Chief Financial Officer shall report regularly
upon the financial affairs of the Company to the Chief Executive Officer, the audit committee and
the Board.



     Section 11. Salaries. No officer shall be prevented from receiving a salary by reason
of the fact that he is also a director of the Company.



ARTICLE V — CERTIFICATES FOR SHARES AND THEIR TRANSFER




     Section 1. Certificates for Shares. Certificates representing shares of the Company
shall be in such form as shall be determined by the Board. Every holder of stock in the Company
shall be entitled to have a certificate bearing the signatures of the President and the Secretary
or an Assistant Secretary or facsimiles thereof if authorized by the Board, and sealed with the
corporate seal or a facsimile thereof, certifying the number of shares owned by him, her, or it in
the Company. Each certificate shall be consecutively numbered or otherwise identified. The name and
address of the person to whom the shares represented thereby are issued, with the number of shares
and date of



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issue, shall be entered on the stock transfer books of the Company. No certificate shall be
issued for any share until such share is fully paid. In case any officer, transfer agent, or
registrar who has signed, or whose facsimile signature has been placed upon, a certificate shall
have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it
may be issued by the Company with the same effect as if the Company were such officer, transfer
agent, or registrar at the date of issue.




     Section 2. Transfer of Shares. The Company or its duly authorized agent shall
register a certificate for shares presented to it for transfer if (a) the certificate is endorsed
by the appropriate person(s), (b) reasonable assurance is given that those endorsements are
genuine and effective, (c) the Company or its duly authorized agent has no duty to inquire into
adverse claims, or has discharged any such duty, (d) any applicable law relating to the collection
of taxes has been complied with, and (e) the transfer is in fact rightful, or is to a purchaser
for value in good faith, and without notice of any adverse claim. The new certificate(s) shall be
issued only upon surrender of the old certificate, which shall be canceled upon the issuance of
the new certificate(s). The person in whose name shares stand on the books of the Company to be
deemed by the Company to be the owner thereof for all purposes, and the Company shall not be bound
to recognize an equitable or other claim to, or interest in, such share on the part of any other
person whether or not it shall have express or other notice thereof, except as expressly provided
by the laws of the State of Delaware.



     Section 3.
Lost, Stolen, or Destroyed Stock Certificates; Issuance of New Certificates. The Company may issue a new certificate of stock in the place of any certificate
theretofore issued by it, alleged to have been lost, stolen, or destroyed, and the Company may
require the owner of the lost, stolen, or destroyed certificate, or his legal representative, to
give the Company a bond sufficient to indemnify the Company against any claim that may be made
against it on account of the alleged loss, theft, or destruction of any such certificate, or the
issuance of such new certificate.



ARTICLE VI — BOOKS AND RECORDS




     Section 1. Books and Records. The Company shall keep correct and complete
books and records of account, and shall keep minutes of the proceeding of its Board and
stockholders. The Company shall also keep, at its principal place of business or with its duly
authorized agent, a record of its stockholders, giving names and addresses of all stockholders and
the number of shares held by each.



     Section 2. Stockholders’ Inspection Rights. Any stockholder, in person or by attorney
or other agent, shall, upon written demand under oath stating the purpose thereof, have the right
during the usual hours for business to inspect for any proper purpose the Company’s stock ledger, a
list of its stockholders, and its other books and records and to make copies of extracts therefrom.
A proper purpose shall mean a purpose reasonably related to such person’s interest as a
stockholder. In every instance where an attorney or other agent shall be the person who seeks the
right to inspection, the demand



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under oath shall be accompanied by a power of attorney or such other writing which authorizes
the attorney or other agent to so act on behalf of the stockholder. The demand under oath shall be
directed to the Company at its registered office in the State of Delaware, or at its principal
place of business, if different.




ARTICLE VII — INDEMNIFICATION AND LIMITATION OF LIABILITY




     Section 1. Indemnification.



          1.1 The Company shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or
in the right of the Company) by reason of the fact that the person is or was a director, officer,
employee or agent of the Company, or is or was serving at the request of the Company as a
director, officer, employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorneys’ fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by the person in connection with such action, suit
or proceeding if the person acted in good faith and in a manner the person reasonably believed to
be in or not opposed to the best interests of the Company, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe the person’s conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon
a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the
person did not act in good faith and in a manner which the person reasonably believed to be in or
not opposed to the best interest of the Company, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that the person’s conduct was unlawful.




          1.2 The Company shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action or suit by
or in the right of the Company to procure a judgment in its favor by reason of the fact that
the person is or was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the Company as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against expenses
(including attorneys’ fees) actually and reasonably incurred by the person in connection
with the defense or settlement of such action or suit if the person acted in good faith and
in a manner the person reasonably believed to be in or not opposed to the best interests of
the Company and except that no indemnification shall be made in respect of any claim,
issue or matter as to which such person shall have been adjudged to be liable to the
Company unless, and only to the extent that, the court in which such action or suit was
brought shall determine, upon application, that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which such court shall deem proper.




          1.3 To the extent a present or former director or officer of the
Company has been successful on the merits or otherwise in defense of any action, suit or




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proceeding referred to in paragraphs 1.1 and 1.2 above, or in defense of any claim, issue or
matter therein, such person shall be indemnified against expenses (including attorneys’ fees)
actually and reasonably incurred by such person in connection therewith.




          1.4 Any indemnification under paragraphs 1.1 and 1.2 above (unless
ordered by a court) shall be made by the Company only as authorized in the specific case
upon a determination that indemnification of the present or former director, officer,
employee or agent is proper in the circumstances because the person has met the
applicable standard of conduct set forth in paragraphs 1.1 and 1.2 above. Such
determination shall be made, with respect to a person who is a director or officer at the
time of such determination (a) by a majority vote of the members of the Board who are
not parties to such action, suit or proceeding, even though less than a quorum, (b) by a
committee of such directors designated by majority vote of such directors, even though
less than a quorum, (c) if there are no such directors, or if such directors so direct, by
independent legal counsel in a written opinion, or (d) by the stockholders.




          1.5 Expenses (including attorneys’ fees) incurred by an officer or
director in defending any civil, criminal, administrative, or investigative action, suit or
proceeding shall be paid by the Company in advance of the final disposition of such
action, suit or proceeding upon receipt of an undertaking by or on behalf of such director
or officer to repay such amount if it shall ultimately be determined that such person is not
entitled to be indemnified by the Company. Such expenses (including attorneys’ fees)
incurred by former directors and officers or other employees and agents may be so paid
upon such terms and conditions, if any, as the Company deems appropriate.




          1.6 The indemnification and advancement of expenses provided by, or
granted pursuant to, the other sections of this Article VII shall not be deemed exclusive of
any other rights to which those seeking indemnification or advancement of expenses may
be entitled under any By-Law, agreement, vote of stockholders or disinterested directors
or otherwise, both as to action in such person’s official capacity and as to action in
another capacity while holding such office.




          1.7 The Company shall have the power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or agent of
the Company, or is or was serving at the request of the Company as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or other
enterprise, against any liability asserted against such person and incurred by such person
in any such capacity, arising out of such person’s status as such, whether or not the
Company would have the power to indemnify such person against such liability under the
provisions of this Article VII.




          1.8 The indemnification and advancement of expenses provided by, or
granted pursuant to, this Article VII shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director, officer, employee or




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agent and shall inure to the benefit of the heirs, executors and administrators of such a person.




     Section 2. Limitation of Liability. No director of the Company shall be liable to the
Company or the stockholders for monetary damages for breach of fiduciary duty as a director,
except to the extent such exemption from liability is not permitted by Section 102 of the Delaware
General Corporation Law, as amended.



     Section 3. Repeal. No amendment to, or repeal of, any of the provisions of this
By-Law shall adversely affect any right or protection of a director of the Company existing
hereunder with respect to any acts or omissions of such director occurring prior to such amendment
or repeal of these provisions. Each right or protection arising or accruing hereunder with respect
to an act or omission of a director shall be deemed to arise or accrue as of the date that such
act or omission occurred.



ARTICLE VIII — MISCELLANEOUS




     Section 1. Fiscal Year. The fiscal year of the Company shall be the period
commencing January 1 each year and concluding the following December 31.



     Section 2. Dividends. The Board may from time to time declare, and the Company may
pay, dividends on its outstanding shares in the manner, and upon the terms and conditions,
provided by law.



     Section 3. Corporate Seal. The Board shall provide a corporate seal which shall be
circular in form and shall have inscribed thereon the Company name, “Virbac Corporation”, and the
state of incorporation, “Delaware”.



     Section 4. Execution of Instruments. All bills, notes, checks, other instruments for
the payment of money, agreements, indenture, mortgages, deeds, conveyances, transfers,
certificates, declarations, receipts, discharges, releases, satisfactions, settlements, petitions,
schedules, accounts, affidavits, bonds, undertakings, proxies, and other instruments or documents
may be signed, executed, acknowledged, verified, delivered, or accepted on behalf of the Company by
the Chief Executive Officer, by the President, by any Vice President, by the Secretary, or by the
Chief Financial Officer or (if there is no Chief Financial Officer) the Treasurer. Accept as
otherwise required by law, any such instruments may also be signed, executed, acknowledged,
verified, delivered, or accepted on behalf of the Company in such other manner, and by such other
officer, employees, or agents of the Company as the Board or the Chief Executive Officer may from
time to time direct.



ARTICLE IX- AMENDMENTS




     These By-Laws may be amended, altered, or repealed, and By-Laws may be made, by a majority
vote of the whole Board; provided, however, that no By-Law fixing



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or altering the quorum or voting required in respect of action taken by stockholders shall be
effective unless approved by the stockholders.




     Stockholders may amend, alter or repeal any By-Laws, whether or not adopted by them, and may
adopt any additional By-Laws. Stockholder action to adopt, amend, or repeal any By-Law requiring
action by more than a majority of the shares entitled to vote thereon may be adopted, amended,
altered or repealed only by the affirmative vote of such higher number of stockholders.



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EXHIBIT C




     The following action is hereby taken and the following business transacted by the
unanimous vote at a meeting duly called and held [or by the unanimous written consent of the Board
of Directors] of Virbac Corporation, a corporation organized under the laws of Delaware (the
“Corporation”) as of the 25th day of July, 2006, pursuant to the provisions of the general
corporation laws of Delaware in accordance with the Certificate of Incorporation and Bylaws of this
Corporation:



     WHEREAS, PM Resources, Inc. (“PM Resources”), Virbac AH, Inc. (“Virbac AH”), St. JON
Laboratories, Inc. (“St. JON”) and Delmarva Laboratories, Inc. (“Delmarva”) are all wholly owned
subsidiaries of the Corporation; Francodex Laboratories, Inc. (“Francodex”) is a wholly owned
subsidiary of Virbac AH; and PM Resources, Virbac AH, St. JON, Delmarva, Francodex (collectively,
the “Affiliates”) and the Corporation are each integral parts of an affiliated corporate group; and



     WHEREAS, it is in the best interest of the Corporation and its Affiliates that they should
continue to jointly and severally borrow funds for working capital and other corporate needs and
purposes; and



     WHEREAS, First Bank, JPMorgan Chase Bank, N.A. and other banks (collectively, the “Lenders”)
have agreed to extend a revolving credit facility for this Corporation and the Affiliates in the
amount of up to Fifteen Million Dollars ($15,000,000.00) as more fully described in and evidenced
by that certain Loan Agreement dated as of June 29, 2006 to be executed by and among this
Corporation and the Affiliates, as co-borrowers, First Bank, as agent for the Lenders (in such
capacity, the “Agent”) and the Lenders (the “Loan Agreement”), and as evidenced by certain
Revolving Credit Notes to be executed by the Corporation and the Affiliates payable to the
respective orders of each of the Lenders in the aggregate original principal amount of Fifteen
Million Dollars ($15,000,000.00) and dated as of the date of such execution (collectively, the
“Revolving Credit Note”) and by a certain Swing Line Note to be executed by the Corporation and the
Affiliates payable to the order of the Agent in the aggregate original principal amount of Three
Million Dollars ($3,000,000.00) and dated as of the date of such execution (the “Swing Line Note,”
and collectively with the Revolving Credit Note, the “Notes”);



     NOW, THEREFORE, BE IT RESOLVED, that for its lawful corporate needs and purposes, the
Corporation, together with its Affiliates, obtain a revolving credit facility from Agent and the
Lenders in the amount of Fifteen Million Dollars ($15,000,000.00), with a swing line available
thereunder from the Agent in the amount of Three Million Dollars ($3,000,000.00) upon the terms and
conditions to be set forth in the Notes and the Loan Agreement; and be it further



     RESOLVED, that said loans shall be secured by substantially all of the assets of the
Corporation, which liens and security interests shall be granted pursuant to deeds of trust,
security agreements, pledge agreements and other transaction documents as more fully described in
the Loan Agreement (collectively, the “Security Documents”); and be it further



     RESOLVED, that the form of the Loan Agreement, the forms of the Notes and the forms of the
Security Documents to be executed and delivered for and in behalf of the Corporation, each of which
has been submitted to the Board of Directors of the Corporation, be and the same are hereby ordered
to be filed with the Secretary of the Corporation and by reference made a part of these
Resolutions; and be it further



     RESOLVED, that the Loan Agreement, the Notes and the Security Documents above referred to,
and all terms, agreements, warranties, covenants and conditions therein contained, be and the same
hereby are accepted, adopted and approved as to form and substance; and be it further



     RESOLVED, that the President, Chief Financial Officer and/or the Secretary of the Corporation
be, and each of them hereby is authorized and directed for and in behalf of the Corporation to
negotiate, enter into, execute and deliver to the Agent and the Lenders the Loan Agreement, the
Notes and the



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Security Documents with such changes in form and substance and containing such other
terms, agreements, warranties, covenants and conditions as the person executing the same shall
approve, such approval to be conclusively evidenced by the execution thereof; and be it further


     RESOLVED, that the President, Chief Financial Officer and/or the Secretary is also authorized
and empowered from time to time to amend, modify, restructure, restate, supplement, extend or renew
the arrangements or agreements made with Agent and the Lenders pursuant to the Loan Agreement, the
Notes and the Security Documents upon such terms and conditions as the President, Chief Financial
Officer and/or the Secretary of the Corporation may deem desirable, and to negotiate, enter into,
execute, perform and deliver to the Agent and the Lenders such other agreements, documents,
instruments and certificates as the Agent or any of the Lenders may from time to time require in
connection therewith; and be it further




     RESOLVED, that the President, Chief Financial Officer and/or the Secretary of the Corporation
be, and each of them hereby is, authorized to take all such actions and to execute all such other
agreements and instruments as they or any of them shall deem necessary or desirable to carry out
the transactions contemplated by these Resolutions, in such form as the President, Chief Financial
Officer or Secretary executing the same shall deem proper. Any and all acts which said President,
Chief Financial Officer and/or Secretary may do or perform in conformity with the powers conferred
upon them by these resolutions are hereby expressly authorized, approved, verified and confirmed.



     FURTHER RESOLVED, that all acts and deeds heretofore done by the President, Chief Financial
Officer, the Secretary and/or any other officer(s) of the Corporation for and on behalf of the
Corporation in entering into, executing, acknowledging or attesting the Loan Agreement, the Notes,
the Security Documents or any guaranties, security agreements, or other agreements, instruments or
documents with Agent and the Lenders in connection with the transactions therein described prior to
the date of these resolutions, and in carrying out the terms and intentions of these resolutions,
are hereby ratified, approved and confirmed.



     FURTHER RESOLVED, that the President and the Secretary of the Corporation be, and hereby are,
authorized and empowered to certify to Agent and the Lenders the names of the present officer(s) of
the Corporation executing any of: (i) the Loan Agreement, the Notes or any of the Security
Documents or (ii) any other documents executed on behalf of the Corporation and the titles
respectively, held by each of them, together with specimens of their signatures; and be it



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     FURTHER RESOLVED, that the Agent and each of the Lenders shall be indemnified and held
harmless by the Corporation from and against any and all damages, losses, liabilities, costs and
expenses, including, without limitation, reasonable attorneys’ fees and expenses, incurred by the
Agent or any of the Lenders in acting pursuant to these resolutions.




     The undersigned, being all of the Directors of Virbac Corporation, hereby evidence their
unanimous vote and consent to and adopt the foregoing resolutions on and as of the day and year
first written above.



	 	 	 	 	 
	 

	 	/s/ Alec L. Poitevint, II
 

	 	 
	 
	 	 	 	 
	 

	 	/s/ Pierre Pagès
 

	 	 
	 
	 	 	 	 
	 

	 	/s/ Eric Marée
 

	 	 
	 
	 	 	 	 
	 

	 	/s/ Jean N. Willk
 

	 	 
	 
	 	 	 	 
	 

	 	/s/ Richard W. Pickert
 

	 	 
	 
	 	 	 	 
	 

	 	/s/ Michel Garaudet
 

	 	 
	 
	 	 	 	 
	 

	 	Constituting the entire Board of Directors	 	 
	 

	 	of Virbac Corporation	 	 






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CERTIFICATE OF THE PRESIDENT AND SECRETARY

OF PM RESOURCES, INC.




     The undersigned, Dr. Erik R. Martinez, the duly elected and acting President of PM Resources,
Inc., a corporation organized under the laws of Missouri (the “Corporation”), and Jean M. Nelson,
the duly elected and acting Secretary of the Corporation each certifies as follows:



     1. Dr. Erik R. Martinez is the duly elected and acting President of the Corporation and as
such is authorized to execute and deliver this Certificate.



     2. Jean M. Nelson is the duly elected and acting Secretary of the Corporation, and as such is
authorized to execute and deliver this Certificate.



     3. That attached hereto as Exhibit A is a copy of the Articles of Incorporation of the
Corporation, including all amendments thereto, certified by the Secretary of State of the State of
Missouri.



     4. That attached hereto as Exhibit B is a true and complete copy of the Bylaws of the
Corporation, as amended, and as in effect as of the date hereof.



     5. Attached hereto and made a part hereof as Exhibit C is a true, correct and complete
copy of certain resolutions duly adopted by the Board of Directors of the Corporation as of July
25, 2006, said resolutions have not been amended, superseded or rescinded and are, at the date
hereof, in full force and effect.



     6. The following individuals have been duly elected and have at all times since June 29, 2006
been, and this day are officers of the Corporation, each such officer holds the title set forth
opposite his/her name below; each such officer is authorized pursuant to the resolutions attached
hereto as Exhibit C to execute and deliver documents on behalf of the Corporation as set
forth in such resolutions; and the true and genuine signature of each officer is set forth opposite
his/her name below:



	 	 	 	 	 
	 Name	 	Office	 	Signature
	 
	Dr. Erik R. Martinez

	 	President
	 	/s/ Erik R. Martinez
	 

	 	 
	 	 
	 
	 	 	 	 
	 

	 	Secretary	 	 
	 

	 	 
	 	 
	 
	 	 	 	 
	Jean M. Nelson

	 	EVP and Chief Financial Officer
	 	/s/ Jean M. Nelson
	 

	 	 
	 	 
	 
	 	 	 	 
	 

	 	 
	 	 





     7. The undersigned have reviewed all of the representations and warranties being made by the
Corporation in the Loan Agreement (as defined in the resolutions attached hereto as Exhibit
C) and the undersigned certify that all of said representations and warranties are true and
accurate as of the date hereof to the best of the undersigned’s’ knowledge.



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     IN WITNESS WHEREOF, the undersigned have caused this Certificate to be executed as this 25th
day of July, 2006.



(SEAL)




	 	 	 	 	 
	 

	 	/s/ Erik R. Martinez
 

Dr. Erik R. Martinez, President
	 	 
	 

	 	of Virbac Corporation	 	 
	 
	 	 	 	 
	 

	 	/s/ Jean M. Nelson
 

Jean M. Nelson, Secretary
	 	 
	 

	 	of Virbac Corporation	 	 






- 124 -









 






 EXHIBIT A




(Articles of Incorporation)







- 125 -









 





EXHIBIT B




(Bylaws)




BY-LAWS




OF 




PM RESOURCES, INC.




INCORPORATED UNDER THE LAWS OF MISSOURI 




JULY 22, 1993




	 	 	 	 	 
	Date Amended

	 	 	 	 
	or Restated
	 	 	 	 
	(if applicable):
	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 






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BY-LAWS




OF




PM RESOURCES, INC.




ARTICLE I




     The principal office of this corporation shall be at its registered office or at such place as
the Board of Directors shall designate, which location may at any time be changed by such Board.
The corporation may establish offices and branch offices at such other places as the corporation
may decide and as the business of the corporation may require.



ARTICLE II 




Shareholders’ Meetings




     1. Place. All meetings of shareholders will be held at the principal office of the
corporation in the State of Missouri or at such other places either within or without the State of
Missouri as may be designated from time to time by the Board of Directors of the corporation.



     2. Annual Meetings. The annual meeting shall be held on the third (3rd) Monday of
July each year, if not a legal holiday, and if a legal holiday, on the next business day
thereafter, for the purpose of electing directors and for the transaction of such other business as
may be brought before the meeting.



     3. Special Meetings. Special meetings may be called by the President or by the Board
of Directors or by the holders of not less than one-fifth of all the outstanding shares entitled to
vote at such meeting.



     4. Notice of Meetings. Notice of any meeting shall be given in the manner required by
the laws of the State of Missouri, or notice of any meeting may be waived as permitted by said
laws.



     5. Organization of Meetings. Every meeting, for whatever object, shall be convened
and presided over by the President, Secretary or other person calling the meeting.



ARTICLE III 




Directors




     1. Number, Election and Term of Office. The business and property of the corporation
shall be managed and controlled by the Board of Directors (Board). The number of directors to
constitute



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the Board of Directors is Three (3); provided, however, that the number of Directors may be fixed,
from time to time, by amendment of these Bylaws. Any such change shall be reported to the Secretary
of State of Missouri within thirty (30) calendar days after the change. A Director need not be a
shareholder or a resident of the State of Missouri.




     If a member of the Board should for any reason fail to serve out his term, his successor may
be elected at a special meeting of shareholders to serve until the next annual meeting of
shareholders. If a vacancy on the Board results from action taken at a special meeting of
shareholders, the election to fill such vacancy may take place at that same special meeting of
shareholders.



     2. Quorum. At all meetings of the Board a majority of the full Board as prescribed in
the Articles of Incorporation shall constitute a quorum for the transaction of business, and the
act of a majority of the directors present at any meeting at which there is a quorum shall be the
act of the Board.



     3. Regular Meetings. The regular meetings of the Board shall be held at such dates as
the Board may from time to time designate. No notice to the directors of regular meetings shall be
required.



     The first meeting of each newly elected Board, which shall be considered a regular meeting of
the Board, may be held immediately following the annual meeting of shareholders.



     At the first meeting of each newly elected Board, the Board may elect a Chairman of the Board
to preside at all shareholder meetings and Board meetings.



     4. Special Meetings. Special meetings of the Board may be held at any time upon a
call or notice in writing, signed by the President, or by the Vice-President, sent by mail to the
last known address of each director three days before the date of the meeting. Such notice need not
state the business to be transacted at or the purpose of such special meeting. Except where a
director attends a meeting for the express purpose of objecting to the transaction of any business
because the meeting is not lawfully called or convened, attendance of a director at any meeting
shall constitute a waiver of notice of such meeting.



     5. Dividends. The Board may declare dividends in cash, property, or the
corporation’s own shares. Whether or not a dividend shall be declared, and, if declared, in what
amount and at what time it shall be payable, shall all be matters lying within the discretion of
the Board, subject to the limitations and provisions of the laws of the State of Missouri.



     6. Salary. Directors shall not receive any stated salary for their services as
directors, but by resolution of the Board a fixed



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reasonable fee and expenses of attendance may be allowed for attendance at each meeting. Nothing
herein contained shall be construed to preclude any director serving the corporation in any other
capacity as an officer, agent or otherwise and receiving compensation therefor.




ARTICLE IV




Consents




     1. Shareholders and Directors. Where all of the shareholders and directors entitled
to vote on any action, execute a written “consent” or written “consents” to the taking of such
action, such “consent” or “consents” shall have the same force and effect as a unanimous vote by
all of the shareholders or directors lawfully entitled to vote at a duly called meeting thereof.



ARTICLE V




Officers




     1. Designation and Tenure. The officers of the corporation shall consist of a
President and a Secretary, and may, if the board so elects, include one or more Vice-presidents, a
Treasurer, one or more Assistant Secretaries and such other officers as may be determined by the
Board. All officers shall be elected by the Board and shall be subject to removal by the Board at
any time. Each officer shall serve until his successor be appointed, or until his death or
resignation or until his removal by the Board. Any one individual may hold any two or more of the
above-named offices, unless prohibited by law.



     2. Duties and Authority of Officers.



          (a) President. The President shall be the chief executive officer of the corporation
and shall act as general manager of its business affairs, subject to the control of the Board. He
shall have authority to sign all deeds, contracts, certificates of stock and obligations of the
corporation, including checks and drafts, except as the Board shall otherwise provide. He may not
effect loans except by authority of a resolution of the Board.




          (b) Vice-President. In the absence of the President or in the case of his inability
or refusal to act, and upon a written delegation of authority from the Board, the Vice-President
shall perform all the duties and possess all the powers of the President. In the event there be
more than one Vice-President they shall act in the order in which they were elected, or named, in
the minutes reflecting their election.




          (c) Treasurer. The Treasurer shall perform generally all duties incident to his
office or that may be required of him by the Board.





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          (d) Secretary. The Secretary shall perform generally all duties incident to his
office or that may be required of him by the Board.




          (e) Assistant Secretaries. In the absence of the Secretary, or in case of his
inability or refusal to act, an Assistant Secretary shall perform all the duties of the Secretary.




ARTICLE VI




Stock and Transfers




     1. Stock. The capital stock of the corporation shall be represented by certificates signed
by the President or a Vice-President and the Secretary or an Assistant Secretary or the Treasurer
under seal of the corporation.



     2. Transfers. Transfers of stock shall only be made on the books of the corporation
by the Secretary of the corporation, upon the surrender of the certificates of stock properly
endorsed.



     Transfers of stock may be limited by agreements entered into among any or all of the holders
of stock of the corporation or among the corporation and any or all of the holders of stock of the
corporation and, when so limited, a reference to said agreement shall be entered on the face of
each certificate of stock issued.



     The Board of Directors may make any and all such rules and regulations and take any and all
such actions as it may deem expedient concerning the issuance, transfer and registration of
certificates representing the stock of the corporation.



ARTICLE VII




Amendments




     The Board of Directors may, by a majority vote of the whole Board, alter, amend or repeal
these By-Laws in whole or in part, and make new By-Laws, at any regular or special meeting.



ARTICLE VIII




Indemnification of Directors and Officers




     The Corporation shall indemnify, to the full extent permitted by The General and Business
Corporation Law of Missouri, as amended from time to time, all persons whom a Corporation may
indemnify pursuant to the General and Business Corporation Law of Missouri.



* * * * * * * * * *






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EXHIBIT C




     The following action is hereby taken and the following business transacted by the unanimous
vote at a meeting duly called and held [or by the unanimous written consent of the Board of
Directors] of PM Resources, Inc., a corporation organized under the laws of Missouri (the
“Corporation”) as of the 25th day of July, 2006, pursuant to the provisions of the general
corporation laws of Missouri in accordance with the Articles of Incorporation and Bylaws of this
Corporation:



     WHEREAS, the Corporation, Virbac AH, Inc. (“Virbac AH”), St. JON Laboratories, Inc. (“St.
JON”) and Delmarva Laboratories, Inc. (“Delmarva”) are all wholly owned subsidiaries of Virbac
Corporation (“Virbac”); Francodex Laboratories, Inc. (“Francodex”) is a wholly owned subsidiary of
Virbac AH; and Virbac, Virbac AH, St. JON, Delmarva, Francodex (collectively, the “Affiliates”) and
the Corporation are each integral parts of an affiliated corporate group; and



     WHEREAS, it is in the best interest of the Corporation and its Affiliates that they should
continue to jointly and severally borrow funds for working capital and other corporate needs and
purposes; and



     WHEREAS, First Bank, JPMorgan Chase Bank, N.A. and other banks (collectively, the “Lenders”)
have agreed to extend a revolving credit facility for this Corporation and the Affiliates in the
amount of up to Fifteen Million Dollars ($15,000,000.00) as more fully described in and evidenced
by that certain Loan Agreement dated as of June 29, 2006 to be executed by and among this
Corporation and the Affiliates, as co-borrowers, First Bank, as agent for the Lenders (in such
capacity, the “Agent”) and the Lenders (the “Loan Agreement”), and as evidenced by certain
Revolving Credit Notes to be executed by the Corporation and the Affiliates payable to the
respective orders of each of the Lenders in the aggregate original principal amount of Fifteen
Million Dollars ($15,000,000.00) and dated as of the date of such execution (collectively, the
“Revolving Credit Note”) and by a certain Swing Line Note to be executed by the Corporation and the
Affiliates payable to the order of the Agent in the aggregate original principal amount of Three
Million Dollars ($3,000,000.00) and dated as of the date of such execution (the “Swing Line Note,”
and collectively with the Revolving Credit Note, the “Notes”);



     NOW, THEREFORE, BE IT RESOLVED, that for its lawful corporate needs and purposes, the
Corporation, together with its Affiliates, obtain a revolving credit facility from Agent and the
Lenders in the amount of Fifteen Million Dollars ($15,000,000.00), with a swing line available
thereunder from the Agent in the amount of Three Million Dollars ($3,000,000.00) upon the terms and
conditions to be set forth in the Notes and the Loan Agreement; and be it further



     RESOLVED, that said loans shall be secured by substantially all of the assets of the
Corporation, which liens and security interests shall be granted pursuant to deeds of trust,
security agreements, pledge agreements and other transaction documents as more fully described in
the Loan Agreement (collectively, the “Security Documents”); and be it further



     RESOLVED, that the form of the Loan Agreement, the forms of the Notes and the forms of the
Security Documents to be executed and delivered for and in behalf of the Corporation, each of which
has been submitted to the Board of Directors of the Corporation, be and the same are hereby ordered
to be filed with the Secretary of the Corporation and by reference made a part of these
Resolutions; and be it further



     RESOLVED, that the Loan Agreement, the Notes and the Security Documents above referred to,
and all terms, agreements, warranties, covenants and conditions therein contained, be and the same
hereby are accepted, adopted and approved as to form and substance; and be it further



     RESOLVED, that the President, Chief Financial Officer and/or the Secretary of the Corporation
be, and each of them hereby is authorized and directed for and in behalf of the Corporation to
negotiate, enter into, execute and deliver to the Agent and the Lenders the Loan Agreement, the
Notes and the



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Security Documents with such changes in form and substance and containing such other
terms,
agreements, warranties, covenants and conditions as the person executing the same shall approve,
such approval to be conclusively evidenced by the execution thereof; and be it further




     RESOLVED, that the President, Chief Financial Officer and/or the Secretary is also authorized
and empowered from time to time to amend, modify, restructure, restate, supplement, extend or renew
the arrangements or agreements made with Agent and the Lenders pursuant to the Loan Agreement, the
Notes and the Security Documents upon such terms and conditions as the President, Chief Financial
Officer and/or the Secretary of the Corporation may deem desirable, and to negotiate, enter into,
execute, perform and deliver to the Agent and the Lenders such other agreements, documents,
instruments and certificates as the Agent or any of the Lenders may from time to time require in
connection therewith; and be it further



     RESOLVED, that the President, Chief Financial Officer and/or the Secretary of the Corporation
be, and each of them hereby is, authorized to take all such actions and to execute all such other
agreements and instruments as they or any of them shall deem necessary or desirable to carry out
the transactions contemplated by these Resolutions, in such form as the President, Chief Financial
Officer or Secretary executing the same shall deem proper. Any and all acts which said President,
Chief Financial Officer and/or Secretary may do or perform in conformity with the powers conferred
upon them by these resolutions are hereby expressly authorized, approved, verified and confirmed.



     FURTHER RESOLVED, that all acts and deeds heretofore done by the President, Chief Financial
Officer, the Secretary and/or any other officer(s) of the Corporation for and on behalf of the
Corporation in entering into, executing, acknowledging or attesting the Loan Agreement, the Notes,
the Security Documents or any guaranties, security agreements, or other agreements, instruments or
documents with Agent and the Lenders in connection with the transactions therein described prior to
the date of these resolutions, and in carrying out the terms and intentions of these resolutions,
are hereby ratified, approved and confirmed.



     FURTHER RESOLVED, that the President and the Secretary of the Corporation be, and hereby are,
authorized and empowered to certify to Agent and the Lenders the names of the present officer(s) of
the Corporation executing any of: (i) the Loan Agreement, the Notes or any of the Security
Documents or (ii) any other documents executed on behalf of the Corporation and the titles
respectively, held by each of them, together with specimens of their signatures; and be it



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     FURTHER RESOLVED, that the Agent and each of the Lenders shall be indemnified and held
harmless by the Corporation from and against any and all damages, losses, liabilities, costs and
expenses, including, without limitation, reasonable attorneys’ fees and expenses, incurred by the
Agent or any of the Lenders in acting pursuant to these resolutions.




     The undersigned, being all of the Directors of PM Resources, Inc., hereby evidence their
unanimous vote and consent to and adopt the foregoing resolutions on and as of the day and year
first written above.



	 	 	 	 	 
	 

	 	/s/ Alec L. Poitevint, II
 

	 	 
	 
	 	 	 	 
	 

	 	/s/ Pierre Pagès
 

	 	 
	 
	 	 	 	 
	 

	 	/s/ Eric Marée
 

	 	 
	 
	 	 	 	 
	 

	 	/s/ Jean N. Willk
 

	 	 
	 
	 	 	 	 
	 

	 	/s/ Richard W. Pickert
 

	 	 
	 
	 	 	 	 
	 

	 	/s/ Michel Garaudet
 

	 	 
	 
	 	 	 	 
	 

	 	Constituting the entire Board of Directors	 	 
	 

	 	of PM Resources, Inc.	 	 







- 133 -










 







CERTIFICATE OF THE PRESIDENT AND SECRETARY

OF ST. JON LABORATORIES, INC.




     The undersigned, Dr. Erik R. Martinez, the duly elected and acting President of St. JON
Laboratories, Inc., a corporation organized under the laws of California (the “Corporation”), and
Jean M. Nelson, the duly elected and acting Secretary of the Corporation each certifies as follows:



     1. Dr. Erik R. Martinez is the duly elected and acting President of the Corporation and as
such is authorized to execute and deliver this Certificate.



     2. Jean M. Nelson is the duly elected and acting Secretary of the Corporation, and as such is
authorized to execute and deliver this Certificate.



     3. That attached hereto as Exhibit A is a copy of the Articles of Incorporation of the
Corporation, including all amendments thereto, certified by the Secretary of State of the State of
California.



     4. That attached hereto as Exhibit B is a true and complete copy of the Bylaws of the
Corporation, as amended, and as in effect as of the date hereof.



     5. Attached hereto and made a part hereof as Exhibit C is a true, correct and complete
copy of certain resolutions duly adopted by the Board of Directors of the Corporation as of July
25, 2006, said resolutions have not been amended, superseded or rescinded and are, at the date
hereof, in full force and effect.



     6. The following individuals have been duly elected and have at all times since June 29, 2006
been, and this day are officers of the Corporation, each such officer holds the title set forth
opposite his/her name below; each such officer is authorized pursuant to the resolutions attached
hereto as Exhibit C to execute and deliver documents on behalf of the Corporation as set
forth in such resolutions; and the true and genuine signature of each officer is set forth opposite
his/her name below:


 
	 	 	 	 	 
	Name	 	Office	 	Signature
	Dr. Erik R. Martinez

	 	President
	 	/s/ Erik R. Martinez
	 

	 	 
	 	 
	 
	 	 	 	 
	 

	 	Secretary	 	 
	 

	 	 
	 	 
	 
	 	 	 	 
	Jean M. Nelson

	 	EVP and Chief Financial Officer
	 	/s/ Jean M. Nelson
	 

	 	 
	 	 
	 
	 	 	 	 
	 

	 	 
	 	 






     7. The undersigned have reviewed all of the representations and warranties being made by the
Corporation in the Loan Agreement (as defined in the resolutions attached hereto as Exhibit
C) and



- 134 -









 




the undersigned certify that all of said representations and warranties are true and accurate as of
the date hereof to the best of the undersigned’s knowledge.




     IN WITNESS WHEREOF, the undersigned have caused this Certificate to be executed as this 25th
day of July, 2006.



(SEAL)




	 	 	 	 	 
	 

	 	/s/ Erik R. Martinez
 

Dr. Erik R. Martinez, President
	 	 
	 

	 	of Virbac Corporation	 	 
	 
	 	 	 	 
	 

	 	/s/ Jean M. Nelson
 

Jean M. Nelson, Secretary
	 	 
	 

	 	of Virbac Corporation	 	 






- 135 -









 






EXHIBIT A




(Articles of Incorporation)






PAGE 1




State of Delaware




Office of the Secretary of State




 






     I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE
ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF MERGER, WHICH MERGES:



     “MARDEL LABORATORIES, INC.”, A DELAWARE CORPORATION,



     “ZEMA CORPORATION”, A DELAWARE CORPORATION,



     WITH AND INTO “ST. JON LABORATORIES, INC.” UNDER THE NAME OF “ST. JON LABORATORIES, INC.”, A
CORPORATION ORGANIZED AND EXISTING UNDER THE LAWS OF THE STATE OF CALIFORNIA, AS RECEIVED AND FILED
IN THIS OFFICE THE FOURTEENTH DAY OF MAY, A.D. 1998, AT 4:30 O’CLOCK P.M.



     A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE COUNTY RECORDER OF
DEEDS.



	 	 	 	 	 	 	 	 	 
	 	 		 	/s/ Edward J. Freel,
	 	 	 	 	 
	 	 	 	 	Edward J. Freel,
Secretary of State
	 
	 	 	 	 	 	 	 	 
	2896943          8100M

	 	 	 	AUTHENTICATION:
	 	 	9083194	 
	 
	 	 	 	 	 	 	 	 
	981186955
	 	 	 	DATE:

	 	 	05-15-98	 







- 136 -









 






CERTIFICATE OF MERGER

OF

MARDEL LABORATORIES, INC. AND ZEMA CORPORATION

INTO

ST. JON LABORATORIES, INC.

(UNDER SECTION 252 OF THE GENERAL

CORPORATION LAW OF THE STATE OF DELAWARE)




ST. JON LABORATORIES, INC. hereby certifies that:




     1. That the name and state of incorporation of each of the constituent corporations of the
merger are as follows;



	 	 	 
	Name	 	State of Incorporation
	Mardel Laboratories, Inc.

Zema Corporation

St. JON Laboratories, Inc.
	 	Delaware

Delaware

California






     2. That an Agreement and Plan of Reorganization among the constituent corporations and
Agri-Nutrition Group Limited, a Delaware corporation and the holder of all of the outstanding
shares of common stock of each of the constituent corporations, has been approved, adopted,
certified, executed and acknowledged by each of the constituent corporations in accordance with the
requirements of Section 252 of the General Corporation Law of the State of Delaware.



     3. That the name of the surviving corporation of the merger is St. JON Laboratories, Inc.


     4. That the articles of incorporation of St. JON Laboratories, Inc. shall be the articles of
incorporation of the surviving corporation.



     5. The surviving corporation is a corporation organized under the laws of the State of
California.



     6. That the executed Agreement and Plan of Reorganization is on file at the principal place of
business of the surviving corporation. The address of the principal place of business of the
surviving corporation is 1656 West 240th Street, Harbor City, California 90710.



     7. That a copy of the Agreement and Plan of Reorganization will be furnished by the surviving
corporation, on request and without cost, to the stockholder of any of the constituent
corporations.



     8. St. JON Laboratories, Inc. hereby agrees to that it may be served with process in Delaware
in any proceeding for enforcement of any obligation of Mardel Laboratories, Inc. and Zema
Corporation, as well as enforcement of any obligation of St. JON Laboratories, Inc. arising from
the



- 137 -









 




merger, including any suit or other proceeding to enforce the right of any stockholder as
determined in appraisal proceedings pursuant to Section 262 of the Delaware General Corporation
Law, and St. JON Laboratories, Inc. hereby irrevocably appoints the Delaware Secretary of State as
its agent to accept service of process in any such suit or proceeding and a copy of such process
shall be mailed by the Secretary of State to St. JON Laboratories, Inc. at the following address:




1656 West 240th Street

Harbor City, California 90710

Tel: 310-326-2720

Fax: 310-326-8026




     IN
WITNESS WHEREOF, St. JON Laboratories, Inc. has caused the Certificate to be signed by John
J. Nelson, its authorized officer, this
14th day of May, 1998.



	 	 	 	 	 
	 	ST. JON LABORATORIES, INC.

 	 
	 	BY:  	/s/ John J. Nelson
 	 
	 	 	John J. Nelson 	 
	 	 	President 	 



138









 






EXHIBIT B




(Bylaws)





	 	 	 	 	 



BYLAWS




 OF




ST.
JON LABORATORIES, INC.




(as of December 29, 1995)




ARTICLE I




OFFICES





     1.1 Registered Office. The Corporation shall maintain a registered office and
registered agent in the State of California.



     1.2 Other Offices. In addition to its registered office, the Corporation may have such
other offices as the Board of Directors may from time to time choose to establish. Such other
offices may be located at any place within or without the State of California.



ARTICLE II 




SHAREHOLDER MEETINGS




     2.1 Annual Meetings. The annual meeting of Shareholders shall be held at the
principal office of the Corporation on the first Tuesday of April in each year for the purpose of
electing Directors for the ensuing year and for the transaction of such other business as may
properly come before the meeting. If the date of the annual meeting shall fall upon a legal
holiday, the meeting shall be held on the next succeeding business day. The date, time and/or
place of the annual meeting may be changed by resolution of the Board of Directors, provided that
such new date, time and/or place shall be specified in the notice of the meeting provided in
accordance with these Bylaws.



     2.2 Special Meetings. Special meetings of Shareholders for any purpose(s) may be
called at any time upon written request to the Secretary by the President, the Chairman of the
Board, if any, a majority of the Board of Directors, or by not less than ten percent (10 %) of the
shares outstanding and entitled to vote at the special meeting. Upon receipt of such written
request, the Secretary shall, at the expense of the Corporation, call a special meeting of Shareholders by giving notice in the manner prescribed in these Bylaws. The special meeting shall



- 139 -









 




be held at such place, either within or without the State of California, and at such date and time,
as shall be specified in the notice of the meeting. No business shall be transacted at any special
meeting of Shareholders except that specifically designated in the notice of the meeting.




     2.3 Notice of Meetings. Not less than ten (10) nor more than sixty (60) days before
the date of every Shareholders’ meeting, the Secretary shall give to each Shareholder of record on
the record date as determined in accordance with these Bylaws, written notice stating the time and
place of the meeting and, in the case of a special meeting or as otherwise required by statute, the
purpose(s) for which the meeting is called. Notice shall be deemed given when personally
delivered to the Shareholder or when deposited in the United States mail, first-class postage
prepaid, addressed to the Shareholder at his or her last known business or residence address as it
appears on the records of the Corporation.



     2.4 Record Date. So that the Corporation may determine the Shareholders entitled to
notice of and/or to vote at any meeting of Shareholders, or entitled to express consent to
corporate action in writing without a meeting, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of share, or for any other lawful purpose, the Board of Directors
may fix in advance a record date, which date shall not be more than sixty (60) nor less than ten
(10) days prior to the date of such meeting or the taking of such action. A determination of
Shareholders of record entitled to notice of or to vote at a meeting of Shareholders shall apply to
any adjournment of the meeting, unless the Board of Directors shall fix a new record date for the
adjourned meeting.



     2.5 List of Shareholders of Record. Prior to each Shareholders’ meeting, the
Secretary or an Assistant Secretary shall prepare an accurate and complete list in alphabetical
order of the Shareholders of record entitled to vote at the meeting, indicating the address of each
and the number of shares held by each. The list of Shareholders of record shall be open to
examination by any Shareholder during regular business hours upon prior written demand on the
Corporation on or before five (5) business days after the demand is received either at a place
within the city where the meeting is to be held, which place shall be specified in the notice of
the meeting, or at the place where the meeting is to be held. The list shall also be produced and
kept open at the meeting for inspection by any Shareholder present.



     2.6 Quorum. Except as otherwise required by law, the Articles of Incorporation or
these Bylaws, the presence in person or by proxy of the holders of record of shares entitled to
cast a majority of the votes entitled to be cast at the meeting, shall constitute a quorum at such
meeting. In case a quorum shall not be present at any meeting, a majority in interest of
Shareholders entitled to vote thereat, present in person or by proxy, shall have the power to
adjourn the meeting from time to time without notice, other than announcement at the meeting, until
the requisite amount of shares entitled to vote shall be present. At any adjourned meeting



- 140 -









 




at which the requisite amount of shares entitled to vote shall be represented, any business may be
transacted which might have been transacted at the meeting as originally noticed.




     2.7 Voting. Each outstanding share of common stock (unless restricted) shall be
entitled to one (1) vote upon each matter submitted to a vote at a meeting of the Shareholders. A
majority of the votes cast at a meeting of Shareholders duly-called and at which a quorum is
present shall be sufficient to take or authorize action upon any matter which has properly come
before the meeting, unless more or less than a majority of votes cast is required by statute, the
Articles of Incorporation or these Bylaws. Upon the demand of any Shareholder, the vote for
Directors and the vote upon any question before the meeting shall be by ballot.



     2.8 Proxies. At all meetings of Shareholders, a Shareholder may vote by written
proxy, dated and executed by the Shareholder or by his or her duly-authorized attorney-in-fact. No
proxy shall be valid for more than eleven (11) months from the date of its execution unless
otherwise specifically stated in the proxy.



     2.9 Voting of Shares by Certain Holders. Shares standing in the name of another
corporation, if entitled to vote, may be voted by such Officer, agent or proxy as the bylaws of the
corporate Shareholder shall prescribe or, in the absence of a controlling bylaw, as the board of
directors of the corporate Shareholder shall determine, provided that a certified copy of the bylaw
or board resolution is presented to the Secretary prior to the meeting. Any fiduciary may vote
shares standing in his name as a fiduciary, either in person or by proxy. Shares of its own stock
belonging to the Corporation shall not be voted, directly or indirectly, at any meeting and shall
not be counted in determining the total number of outstanding shares at any given time, but shares
of its own stock held by the Corporation in a fiduciary capacity may be voted and shall be counted
in determining the total number of outstanding shares at any given time.



     2.10 Action Without a Meeting. Unless otherwise provided by the Articles of
Incorporation, any action required or permitted to be taken at an annual or special meeting of
Shareholders may be taken without a meeting, without prior notice and without a vote if a consent
in writing setting forth the action so taken shall be signed by the holders of outstanding shares
having not less than the minimum number of votes that would be necessary to authorize or take such
action at a meeting of Shareholders at which all shares entitled to vote thereon were present and
voted. Prompt notice of the taking of corporate action without a meeting by less than unanimous
written consent shall be given to those Shareholders who have not consented in writing.



- 141 -









 





ARTICLE III 




BOARD OF DIRECTORS




     3.1 General Powers. The business and affairs of the Corporation shall be managed by
its Board of Directors and, except as expressly provided by statute, the Articles of Incorporation
or these Bylaws, all the powers of the Corporation shall be vested in the Board of Directors. The
phrase “entire board” refers to the total number of Directors which the Corporation would have if
there were no vacancies.



     3.2
Number, Election and Tenure. The number of directors of the Corporation shall be
not less than three (3) persons. Subject to the foregoing, the number of Directors constituting the
entire board may be increased or decreased from time to time by action of the Shareholders.
Directors shall be elected at the annual meeting of Shareholders to succeed the Directors whose
terms have expired and to fill any vacancies then existing. The term of office of each Director
shall be from the time of his or her election and qualification until the annual meeting of
Shareholders next succeeding his or her election and until his or her successor shall have been
duly elected and shall have qualified. A Director need not be a Shareholder or a resident of the
State of California. The Board of Directors shall keep minutes of their meetings and a full
account of their transactions.



     3.3 Annual Meetings. The annual meeting of the Board of Directors shall be held
without notice immediately following the adjournment of the annual meeting of Shareholders, for the
purpose of appointing Officers for the ensuing year, and for the transaction of such other business
as may come before the meeting. Any lawful business may be transacted at the annual meeting of the
Board of Directors whether or not specifically designated in the notice of the meeting.



     3.4 Special Meetings. Special meetings of the Board of Directors may be called at
any time upon written request to the Secretary by the President, the Chairman of the Board, if any,
or by a majority of the Board of Directors. Upon receipt of such written request, the Secretary
shall, at the expense of the Corporation, call a special meeting of the Board of Directors by
giving notice to each Director in the manner prescribed by these Bylaws. The special meeting
shall be held at such place, date and time as shall be stated in the notice of the meeting. No
business shall be transacted at any special meeting of the Board of Directors except that
specifically designated in the notice of the meeting.



     3.5 Notice of Special Meetings. Special meetings of the Board of Directors shall be
held upon four (4) days’ notice by mail, or forty-eight (48) hours’ notice delivered personally



- 142 -









 




or by telephone or telegram. Notice shall be deemed given when personally delivered to the Director
or when deposited in the United States mail, first-class postage prepaid, addressed to the Director
at his or her last known business or residence address as it appears on the records of the
Corporation. A notice or waiver of notice need not specify the purpose of any special meeting.




     3.6
Participation by Telephone,
 Etc. Members of the Board of Directors and any
committee created thereby may participate in any meeting of the Board of Directors or such
committee by conference telephone or by any other means of communication by which all persons
participating in the meeting are able to hear one another, and such participation shall constitute
presence in person at the meeting.



     3.7 Quorum. A majority of the Board of Directors shall constitute a quorum for the
transaction of business at any meeting of the Board of Directors. If at any meeting of the Board of
Directors there shall be less than a quorum present, a majority of those present may adjourn the
meeting from time to time until a quorum is obtained, and no further notice thereof need be given
other than by announcement at the meeting so adjourned.



     3.8 Voting. Each Director shall be entitled to one (1) vote upon each matter
submitted to a vote at a meeting of the Board of Directors. A majority of the votes cast at a
meeting of the Board of Directors, duly called and at which a quorum is present, shall be
sufficient to take or authorize action upon any matter which properly comes before the meeting.



     3.9 Removal. Except as otherwise provided by statute or the Articles of Incorporation, at any special meeting of Shareholders, duly called and at which a quorum is present, any
Director may be removed from office, with or without cause, by the vote of a majority of all the
shares then outstanding and entitled to vote, and at such meeting another Director may be elected
to serve during the unexpired term of the removed Director by majority vote of the shares present
at the meeting in person or by proxy.



     3.10 Vacancies. Any vacancy occurring in the Board of Directors by reason of the
death, disability or resignation of any Director, or by the removal of any Director without the
election of another to take his or her place, may be filled by the Board of Directors. The new
Director so elected shall serve for the unexpired term of his or her predecessor or until his or
her successor is duly elected.



     3.11 Resignations. Any Director, member of a committee or Officer may resign at any
time. Such resignation shall be made in writing and shall take effect at the time specified therein



- 143 -









 




or, if no time is specified, when the notice is received by the President or Secretary. The
acceptance of a resignation shall not be necessary to make it effective.




     3.12 Committees. The Board of Directors may, by resolution passed by a majority of the
Board, designate one or more committees, each committee to consist of two or more of the Directors
of the Corporation. The Board may designate one or more Directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of the committee. To
the extent provided in the resolution, any such committee shall have and may exercise all the
powers and authority of the Board of Directors in the management of the business and affairs of the
Corporation, including the power to authorize the corporate seal to be affixed to all papers that
may require it.



     3.13 Compensation. Directors shall not receive any stated salary for their services
as Directors or as members of committees, but by resolution of the Board, a fixed fee and expenses
of attendance may be allowed for attendance at each meeting. Nothing herein contained shall be
construed to preclude any Director from serving the Corporation in any other capacity as an
Officer, agent or otherwise, and from receiving compensation therefor.



     3.14 Action Without a Meeting. Any action required or permitted to be taken at any
meeting of the Board of Directors or any committee thereof may be taken without a meeting if all
members of the Board or committee, as the case may be, consent thereto in writing and the writing
or writings are filed with the minutes of proceedings of the Board or committee.



ARTICLE IV 




OFFICERS




     4.1
Title, Appointment and Tenure. The Officers of the Corporation shall be a
President, a Treasurer and a Secretary, all of whom shall be appointed by the Board of Directors
and all of whom shall hold office until their successors are duly appointed and qualified. In
addition, the Board of Directors may elect a Chairman of the Board, one or more Vice Presidents and
such Assistant Secretaries and Assistant Treasurers as they may deem necessary or appropriate for
the proper conduct of the business of the Corporation.



     4.2 Other Officers and Agents. The Board of Directors may appoint such other
Officers and agents as they deem advisable. Such other Officers and agents shall serve for such
terms and exercise such powers and perform such duties as may be determined from time to time by
the Board of Directors.



- 144 -









 





     4.3 Chairman of the Board. The Chairman of the Board of Directors, if any, shall be
a member of the Board, shall preside at all meetings of the Board of Directors, and shall perform
such other duties as from time to time may be assigned to him by the Board of Directors.



     4.4 President. The President shall be the chief executive officer of the Corporation
and shall be primarily responsible for the implementation of the policies of the Board of
Directors. He shall have authority over the general management and direction of the business and
operations of the Corporation, subject only to the ultimate authority of the Board of Directors.
He shall preside at all meetings of Shareholders. He may sign and execute, on behalf of the
Corporation, share certificates, deeds, mortgages, bonds, contracts and other instruments, except
in cases where the signing and execution thereof has been expressly delegated by the Board of
Directors to some other Officer or agent of the Corporation, or is required by law to be otherwise
signed or executed. If the Corporation shall not have a Chairman of the Board, the President
shall preside at meetings of the Board of Directors.



     4.5 Vice President. The Board of Directors may appoint one or more Vice Presidents
with the authority to perform such duties as may be assigned to them by the President or the Board
of Directors. In the absence of the President, the Vice President shall perform all the duties of
the President, and when so acting shall have the powers of the President.



     4.6 Treasurer and Assistant Treasurers. The Treasurer shall serve as the chief
financial officer and shall have custody of corporate funds and securities and shall keep full and
accurate account of receipts and disbursements in books belonging to the Corporation. He shall
deposit all moneys and other valuables in the name and to the credit of the Corporation in such
depositories as may be designated by the Board of Directors. The Treasurer shall disburse funds of
the Corporation as ordered by the Board of Directors or the President, taking proper vouchers for
such disbursements. He shall render to the President and the Board of Directors on demand, an
account of all his or her transactions as Treasurer and of the financial condition of the
Corporation. The Treasurer shall, in general, perform all duties incident to the office of
Treasurer, and such other duties as shall be assigned to him by the Board of Directors or the
President. If required by the Board of Directors, he shall give the Corporation a bond for the
faithful discharge of his or her duties in such amount and with surety as the Board shall
prescribe.



     Any Assistant Treasurers appointed by the Board of Directors, in the order of their
seniority, shall in the absence or disability of the Treasurer perform the duties and exercise the
powers of the Treasurer, and shall perform such other duties as the Board of Directors, the
President or the Treasurer shall prescribe.



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     4.7 Secretary and Assistant Secretaries. The Secretary shall give, or cause to be
given, notice of all meetings of Shareholders and Directors, and all other notices required by law
or by these Bylaws. In his or her absence, refusal or neglect to do so, such notices may be given
by any person so directed by the President, the Board of Directors, or the Shareholders upon whose
requisition the meeting was called as provided in these Bylaws. The Secretary shall keep minutes of
the meetings of Shareholders and Directors of the Corporation in one or more books provided for
that purpose, and shall, in general, perform all duties incident to the office of Secretary, and
such other duties as may be assigned to him by the Board of Directors or the President. He shall
have custody of the corporate seal, affix it to all instruments requiring it when authorized by the
Board of Directors or the President, and attest the same.



     Any Assistant Secretaries elected by the Board of Directors, in order of their seniority,
shall in the absence or disability of the Secretary, perform the duties and exercise the powers of
the Secretary, and shall perform such other duties as the Board of Directors, the President or the
Secretary shall prescribe.



     4.8 Compensation. The Board of Directors shall have authority to fix the
compensation of all Officers of the Corporation. No Officer shall be prevented from receiving such
compensation by reason of the fact that he is also a Director of the Corporation.



     4.9 Holding More Than One Office. One person may be appointed to two or more offices,
but no one shall be both President and Vice President, nor may anyone execute, acknowledge or
verify any instrument in more than one capacity.



     4.10 Removal. Any Officer may be removed by the Board of Directors whenever in its
judgment the best interests of the Corporation would be served thereby, but such removal shall be
without prejudice to the contract rights, if any, of the person so removed.



ARTICLE V 




SHARE CERTIFICATES




     5.1 Share Certificates. Each Shareholder shall be entitled to a certificate or
certificates representing the number, kind, class and par value of shares of the capital share of
the Corporation owned by him or her. Each certificate shall be signed by the Chairman of the
Board, the President or a Vice President and counter-signed by the Secretary or an Assistant
Secretary, or the Treasurer or an Assistant Treasurer, and shall be sealed with the corporate
seal. The signatures may be either manual or facsimile. Any certificate representing shares that
are restricted or limited as to their transferability or voting rights, that are preferred or
limited



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as to dividends or as to their share of the assets upon liquidation, or that are redeemable at the
option of the Corporation, shall state upon its face that such shares are restricted, preferred,
limited or redeemable and on the face or back thereof shall have either a full statement of such
restriction, preference, limitation or redemption right or a summary thereof and a statement that
the Corporation will furnish to any Shareholder a full statement upon request and without charge.




     5.2 Transfer of Shares. Upon surrender to the Secretary or to a duly-appointed
transfer agent of a certificate representing the ownership of shares in the Corporation, endorsed
or accompanied by proper evidence of assignment or authority to transfer, it shall be the duty of
the Secretary or such transfer agent to issue a new certificate to the person entitled thereto, to
cancel the old certificate, and to record the transfer upon the shares transfer records of the
Corporation. The Corporation shall be entitled to treat the holder of record of any shares of
shares as the holder in fact and shall not be bound to recognize any equitable or other claim to or
interest in such shares on the part of any other person, whether or not it shall have express or
other notice thereof, except as otherwise provided by the laws of the State of California.



     5.3 Lost Certificate. The Board of Directors may authorize the issuance of a new
certificate to replace any certificate that is alleged to have been stolen, lost or destroyed. When
authorizing the issuance of any replacement certificate, the Board of Directors may, as a condition
precedent to the issuance thereof, require the owner of such stolen, lost or destroyed certificate
to deliver an affidavit of that fact, and to deposit with the Corporation a bond in such form and
amount and with such surety as the Board of Directors may deem appropriate, to indemnify the
Corporation against any loss or claim which may arise as a result of the issuance of the
replacement certificate.



     5.4 Dividends. Subject to the provisions of the Articles of Incorporation or these
Bylaws, the Board of Directors may, out of funds legally available therefor, at any regular or
special meeting, declare dividends upon the capital shares of the Corporation. Dividends may be
paid in cash, property or shares of the capital shares of the Corporation. Before declaring any
dividend there may be set apart out of any funds of the Corporation available for dividends, such
sums as the Board of Directors shall in its discretion deem proper for working capital, a reserve
to meet contingencies or such other purposes as the Board of Directors shall deem to be in the best
interests of the Corporation.





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ARTICLE VI 




MISCELLANEOUS




     6.1 Corporate Seal. The corporate seal shall be circular in form and shall contain the
name of the Corporation, the year of its creation and the words “CORPORATE SEAL CALIFORNIA”. The
seal may be used by causing it or a facsimile to be impressed, affixed or reproduced.



     6.2 Fiscal Year. The fiscal year of the Corporation shall close on such date as the
Board of Directors may from time to time determine and specify by resolution, provided that in the
absence of any contrary determination by the Board of Directors the fiscal year shall close on
October 31st.



     6.3 Checks. All checks, drafts or other orders for the payment of money, notes or
other evidences of indebtedness issued in the name of the Corporation shall be signed by such
Officer or Officers, agent or agents of the Corporation, and in such manner as shall be determined
from time to time by resolution of the Board of Directors.



     6.4 Waiver of Notice. Whenever any notice is required by statute, the Articles of
Incorporation or these Bylaws, a waiver thereof in writing, signed by the person or persons
entitled to such notice, whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice. The attendance by any person at any meeting shall
constitute a waiver of notice of such meeting, except when such person attends for the express
purpose of objecting to the transaction of any business on the grounds that the meeting was not
lawfully called or convened.



     6.5 Amendments. The Board of Directors may, by a majority vote of the whole Board,
alter, amend or repeal these Bylaws in whole or in part, and adopt new Bylaws, other than an
amendment changing the authorized number of Directors, at any regular or special meeting; provided
that this provision shall not divest or limit the power of the shareholders to adopt, amend or
repeal the Bylaws.



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EXHIBIT C




     The following action is hereby taken and the following business transacted by the unanimous
vote at a meeting duly called and held [or by the unanimous written consent of the Board of
Directors] of St. JON Laboratories, Inc., a corporation organized under the laws of California (the
“Corporation”) as of the 25th day of July, 2006, pursuant to the provisions of the general
corporation laws of California in accordance with the Articles of Incorporation and Bylaws of this
Corporation:



     WHEREAS, the Corporation, Virbac AH, Inc. (“Virbac AH”), PM Resources, Inc. (“PM Resources”)
and Delmarva Laboratories, Inc. (“Delmarva”) are all wholly owned subsidiaries of Virbac
Corporation (“Virbac”); Francodex Laboratories, Inc. (“Francodex”) is a wholly owned subsidiary of
Virbac AH; and Virbac, Virbac AH, PM Resources, Delmarva, Francodex (collectively, the
“Affiliates”) and the Corporation are each integral parts of an affiliated corporate group; and



     WHEREAS, it is in the best interest of the Corporation and its Affiliates that they should
continue to jointly and severally borrow funds for working capital and other corporate needs and
purposes; and



     WHEREAS, First Bank, JPMorgan Chase Bank, N.A. and other banks (collectively, the “Lenders”)
have agreed to extend a revolving credit facility for this Corporation and the Affiliates in the
amount of up to Fifteen Million Dollars ($15,000,000.00) as more fully described in and evidenced
by that certain Loan Agreement dated as of June 29, 2006 to be executed by and among this
Corporation and the Affiliates, as co-borrowers, First Bank, as agent for the Lenders (in such
capacity, the “Agent”) and the Lenders (the “Loan Agreement”), and as evidenced by certain
Revolving Credit Notes to be executed by the Corporation and the Affiliates payable to the
respective orders of each of the Lenders in the aggregate original principal amount of Fifteen
Million Dollars ($15,000,000.00) and dated as of the date of such execution (collectively, the
“Revolving Credit Note”) and by a certain Swing Line Note to be executed by the Corporation and the
Affiliates payable to the order of the Agent in the aggregate original principal amount of Three
Million Dollars ($3,000,000.00) and dated as of the date of such execution (the “Swing Line Note,”
and collectively with the Revolving Credit Note, the “Notes”);



     NOW, THEREFORE, BE IT RESOLVED, that for its lawful corporate needs and purposes, the
Corporation, together with its Affiliates, obtain a revolving credit facility from Agent and the
Lenders in the amount of Fifteen Million Dollars ($15,000,000.00), with a swing line available
thereunder from the Agent in the amount of Three Million Dollars ($3,000,000.00) upon the terms and
conditions to be set forth in the Notes and the Loan Agreement; and be it further



     RESOLVED, that said loans shall be secured by substantially all of the assets of the
Corporation, which liens and security interests shall be granted pursuant to deeds of trust,
security agreements, pledge agreements and other transaction documents as more fully described in
the Loan Agreement (collectively, the “Security Documents”); and be it further



     RESOLVED, that the form of the Loan Agreement, the forms of the Notes and the forms of the
Security Documents to be executed and delivered for and in behalf of the Corporation, each of which
has been submitted to the Board of Directors of the Corporation, be and the same are hereby ordered
to be filed with the Secretary of the Corporation and by reference made a part of these
Resolutions; and be it further



     RESOLVED, that the Loan Agreement, the Notes and the Security Documents above referred to,
and all terms, agreements, warranties, covenants and conditions therein contained, be and the same
hereby are accepted, adopted and approved as to form and substance; and be it further



     RESOLVED, that the President, Chief Financial Officer and/or the Secretary of the Corporation
be, and each of them hereby is authorized and directed for and in behalf of the Corporation to
negotiate, enter into, execute and deliver to the Agent and the Lenders the Loan Agreement, the
Notes and the



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Security Documents with such changes in form and substance and containing such other terms,
agreements, warranties, covenants and conditions as the person executing the same shall approve,
such approval to be conclusively evidenced by the execution thereof; and be it further




     RESOLVED, that the President, Chief Financial Officer and/or the Secretary is also authorized
and empowered from time to time to amend, modify, restructure, restate, supplement, extend or renew
the arrangements or agreements made with Agent and the Lenders pursuant to the Loan Agreement, the
Notes and the Security Documents upon such terms and conditions as the President, Chief Financial
Officer and/or the Secretary of the Corporation may deem desirable, and to negotiate, enter into,
execute, perform and deliver to the Agent and the Lenders such other agreements, documents,
instruments and certificates as the Agent or any of the Lenders may from time to time require in
connection therewith; and be it further



     RESOLVED, that the President, Chief Financial Officer and/or the Secretary of the Corporation
be, and each of them hereby is, authorized to take all such actions and to execute all such other
agreements and instruments as they or any of them shall deem necessary or desirable to carry out
the transactions contemplated by these Resolutions, in such form as the President, Chief Financial
Officer or Secretary executing the same shall deem proper. Any and all acts which said President,
Chief Financial Officer and/or Secretary may do or perform in conformity with the powers conferred
upon them by these resolutions are hereby expressly authorized, approved, verified and confirmed.



     FURTHER RESOLVED, that all acts and deeds heretofore done by the President, Chief Financial
Officer, the Secretary and/or any other officer(s) of the Corporation for and on behalf of the
Corporation in entering into, executing, acknowledging or attesting the Loan Agreement, the Notes,
the Security Documents or any guaranties, security agreements, or other agreements, instruments or
documents with Agent and the Lenders in connection with the transactions therein described prior to
the date of these resolutions, and in carrying out the terms and intentions of these resolutions,
are hereby ratified, approved and confirmed.



     FURTHER RESOLVED, that the President and the Secretary of the Corporation be, and hereby are,
authorized and empowered to certify to Agent and the Lenders the names of the present officer(s) of
the Corporation executing any of: (i) the Loan Agreement, the Notes or any of the Security
Documents or (ii) any other documents executed on behalf of the Corporation and the titles
respectively, held by each of them, together with specimens of their signatures; and be it



- 150 -









 




     FURTHER RESOLVED, that the Agent and each of the Lenders shall be indemnified and held
harmless by the Corporation from and against any and all damages, losses, liabilities, costs and
expenses, including, without limitation, reasonable attorneys’ fees and expenses, incurred by the
Agent or any of the Lenders in acting pursuant to these resolutions.




     The undersigned, being all of the Directors of St. JON Laboratories, Inc., hereby evidence
their unanimous vote and consent to and adopt the foregoing resolutions on and as of the day and
year first written above.



	 	 	 	 	 
	 

	 	/s/ Alec L. Poitevint, II
 

	 	 
	 
	 	 	 	 
	 

	 	/s/ Pierre Pagès
 

	 	 
	 
	 	 	 	 
	 

	 	/s/ Eric Marée
 

	 	 
	 
	 	 	 	 
	 

	 	/s/ Jean N. Willk
 

	 	 
	 
	 	 	 	 
	 

	 	/s/ Richard W. Pickert
 

	 	 
	 
	 	 	 	 
	 

	 	/s/ Michel Garaudet
 

	 	 
	 
	 	 	 	 
	 

	 	Constituting the entire Board of Directors
of St. Jon Laboratories, Inc.	 	 






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CERTIFICATE OF THE PRESIDENT AND SECRETARY

OF FRANCODEX LABORATORIES, INC.




     The undersigned, Dr. Erik R. Martinez, the duly elected and acting President of Francodex
Laboratories, Inc., a corporation organized under the laws of Kansas (the “Corporation”), and Jean
M. Nelson, the duly elected and acting Secretary of the Corporation each certifies as follows:



     1. Dr. Erik R. Martinez is the duly elected and acting President of the Corporation and as
such is authorized to execute and deliver this Certificate.



     2. Jean M. Nelson is the duly elected and acting Secretary of the Corporation, and as such is
authorized to execute and deliver this Certificate.



     3. That attached hereto as Exhibit A is a copy of the Articles of Incorporation of the
Corporation, including all amendments thereto, certified by the Secretary of State of the State of
Kansas.



     4. That attached hereto as Exhibit B is a true and complete copy of the Bylaws of the
Corporation, as amended, and as in effect as of the date hereof.



     5. Attached hereto and made a part hereof as Exhibit C is a true, correct and complete
copy of certain resolutions duly adopted by the Board of Directors of the Corporation as of July
25, 2006, said resolutions have not been amended, superseded or rescinded and are, at the date
hereof, in full force and effect.



     6. The following individuals have been duly elected and have at all times since June 29, 2006
been, and this day are officers of the Corporation, each such officer holds the title set forth
opposite his/her name below; each such officer is authorized pursuant to the resolutions attached
hereto as Exhibit C to execute and deliver documents on behalf of the Corporation as set
forth in such resolutions; and the true and genuine signature of each officer is set forth opposite
his/her name below:


 
	 	 	 	 	 
	Name	 	Office	 	Signature
	Dr. Erik R. Martinez

	 	President
	 	/s/ Erik R. Martinez
	 

	 	 
	 	 
	 
	 	 	 	 
	 

	 	Secretary	 	 
	 

	 	 
	 	 
	 
	 	 	 	 
	Jean M. Nelson

	 	EVP and Chief Financial Officer
	 	/s/ Jean M. Nelson
	 

	 	 
	 	 
	 
	 	 	 	 
	 

	 	 
	 	 






     7. The undersigned have reviewed all of the representations and warranties being made by the
Corporation in the Loan Agreement (as defined in the resolutions attached hereto as Exhibit
C) and the undersigned certify that all of said representations and warranties are true and
accurate as of the date hereof to the best of the undersigned’s’ knowledge.



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     IN WITNESS WHEREOF, the undersigned have caused this Certificate to be executed as this 25th
day of July, 2006.


(SEAL)




	 	 	 	 	 
	 	 	 
	 	/s/ Erik R. Martinez
 	 
	 	Dr. Erik R. Martinez, President 	 
	 	of Virbac Corporation 	 
	 



	 	 	 	 	 
	 	/s/ Jean M. Nelson
 	 
	 	Jean M. Nelson, Secretary 	 
	 	of Virbac Corporation 	 



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EXHIBIT A




(Articles of Incorporation)









The
State of Texas




Secretary of State




CERTIFICATE OF INCORPORATION




OF




FRANKODEX LABORATORIES, INC.

CHARTER NUMBER 01417819




     THE UNDERSIGNED, AS SECRETARY OF STATE OF THE STATE OF TEXAS,
HEREBY CERTIFIES THAT THE ATTACHED ARTICLES OF INCORPORATION FOR THE ABOVE NAMED CORPORATION
HAVE BEEN RECEIVED IN THIS OFFICE AND ARE FOUND TO CONFORM TO LAW.



     ACCORDINGLY, THE UNDERSIGNED, AS SECRETARY OF STATE, AND BY VIRTUE OF THE AUTHORITY VESTED IN
THE SECRETARY BY LAW, HEREBY ISSUES THIS CERTIFICATE OF INCORPORATION.



     ISSUANCE
OF THIS CERTIFICATE OF INCORPORATION DOES NOT AUTHORIZE THE USE OF A
CORPORATE NAME
IN THIS STATE IN VIOLATION OF THE RIGHTS OF ANOTHER UNDER THE FEDERAL TRADEMARK ACT OF 1946, THE
TEXAS TRADEMARK LAW, THE ASSUMED BUSINESS OR PROFESSIONAL NAME ACT OR THE COMMON LAW.



DATED OCT. 7, 1996




EFFECTIVE OCT. 7, 1996




	 	 	 
	

	 	/s/ [ILLEGIBLE]
	 	 	 
	 

	 	Antonio O. Garza, Jr., Secretary of State








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  FILED              

In the Office of the      

Secretary of State of Texas    



OCT 7, 1996           




Corporations Section     



ARTICLES OF INCORPORATION




OF

FRANKODEX LABORATORIES, INC.




ARTICLE ONE



The name of the corporation is Frankodex Laboratories, Inc.




ARTICLE TWO



The period of duration is perpetual.




ARTICLE THREE



The purpose for which the corporation is organized is the transaction of any or all lawful
business for which corporations may be incorporated under the Texas Business Corporation Act.




ARTICLE FOUR



The aggregate number of shares which the corporation shall have authority to issue is
THIRTY THOUSAND (30,000) shares of common stock at $1.00 par value.




ARTICLE FIVE



The corporation will not commence business until it has received for the issuance of
shares consideration of the value of One Thousand Dollars ($1,000.00) consisting of money,
labor done or property actual received.




ARTICLE SIX



The street address of its initial registered office is 3200 Meacham Blvd., Fort Worth, Texas
76137. The registered agent for the corporation is Brian K. Davis, Attorney at Law, 6207
Airport Freeway, Haltom City, Texas 76117.





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ARTICLE SEVEN



The number of directors constituting the initial board of directors is three (3), and the names and
address of the persons or persons who are to serve as directors until the first annual meeting the
shareholders or until their successors are elected and qualified are:



Rodger D. Brandt

3200 Meacham Blvd

 Fort Worth, Texas 76137



Anton Schweitzer

3200 Meacham Blvd

Fort Worth, Texas 76137



Brian A. Crook

3200 Meacham
Blvd
 Fort Worth, Texas 76137




ARTICLE EIGHT



The name and address of the incorporator is :




	 	 	 	 	 
	/s/
Brian K. Davis

	 	 
	 	 
	 

     Brian K. Davis

	 	 	 	 
	     Attorney at Law
	 	 	 	 
	     6207 Airport Freeway
	 	 	 	 
	     Haltom City, Texas 76117
	 	 	 	 






	 	 	 
	STATE OF TEXAS

	 	§
	COUNTY OF TARRANT

	 	§





BEFORE me, a notary public, on this day personally appeared Brian K. Davis, known to me to be the
person whose name is subscribed to the foregoing document and, being by me first duly sworn,
declared that the statements therein are true and correct.




Given under my hand and seal of office this 3rd  day of October, 1996.




	 	 	 	 	 
	 

	 	/s/ S. Rehill
	 	 
	 

	 	 	 	 
	 

	 	Notary Public, State of Texas	 	 
	 
	 	 	 	 
	 

	 	My commission expires:	 	 
	 

	 	7/3/99	 	 
	 
	 	 	 	 
	
	 	 	 	 







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EXHIBIT B




(Bylaws)





FRANCODEX, INC.




BYLAWS




Article I



 Offices




     Section 1. Principal Office. The principal office for the transaction of the
business of the corporation is hereby located at 9825 Widmer, Lenexa, Kansas 66215.



     Section 2. Registered Office. The corporation, by resolution of its Board of
Directors, may change the location of its registered office as designated in the Articles of
Incorporation to any other place in Kansas. By like resolution the resident agent at such
registered office may be changed to any other person or corporation, including itself. Upon
adoption of such a resolution, a certificate certifying the change shall be executed, acknowledged
and filed with the Secretary of State, and a certified copy thereof shall be recorded in the office
of the Register of Deeds for the county in which the new registered office is located (and in the
old county, if such registered office is moved from one county to another).



     Section 3. Other Offices. Branch or subordinate offices may at any time be
established by the Board of Directors at any place or places where the corporation is qualified to
do business .



Article II




Shareholders




     Section 1. Place of Meetings. All annual meetings of shareholders and all other
meetings of shareholders shall be held at the principal office of the corporation unless another
place within or without the State of Kansas is designated either by the Board of Directors
pursuant to authority hereinafter granted to said Board, or by the written consent of all
shareholders entitled to vote thereat, given either before or after the meeting and filed with the
secretary of the corporation .



     Section 2. Annual Meetings. The annual meetings of the shareholders shall be held on
the last Friday of each fiscal year at 9:00 o’clock, a.m. of said day; provided, however, that
should said day fall upon a Holiday, then such annual meeting




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of shareholders shall be held at the same time and place on the Friday preceding such designated
meeting date. At such meeting, directors shall be elected, reports of the affairs of the
corporation shall be considered, and any other business may be transacted which is within the power
of the shareholders.




     Written notice of each annual meeting shall be given to each shareholder entitled to vote,
either personally or by mail or other means of written communication, charges prepaid, addressed to
such shareholder at his address appearing on the books of the corporation or given by him to the
corporation for the purpose of notice. If a shareholder gives no address, notice shall be deemed
to have been given if sent by mail or other means of written communication addressed to the place
where the principal office of the corporation is situated, or if published at least once in some
newspaper of general circulation in the county in which said office is located. All such notices
shall be sent to each shareholder entitled thereto not less than ten (10) days nor more than fifty
(50) days before each annual meeting, and shall specify the place, the day and the hour of such
meeting, and shall state such other matters, if any, as may be expressly required by statute. If
this bylaw as to the time and place of election of directors is changed, such notice shall be given
to shareholders at least twenty (20) days prior to such meeting.



     Section 3. Special Meetings. Special meetings of the shareholders, for any purpose
or purposes whatsoever, may be called at any time by the president or by the Board of Directors, or
by one or more shareholders holding not less than one-fifth of the voting power of the corporation.
Except in special cases where other express provision is made by statute, notice of such special
meetings shall be given in the same manner as for annual meetings of shareholders. Notices of any
special meeting shall specify in addition to the place, day and hour of such meeting, the general
nature of the business to be transacted.



     Section 4. Adjourned Meetings and Notice Thereof. Any shareholders’ meeting, annual
or special, whether or not a quorum is present, may be adjourned from time to time by the vote of a
majority of the shares, the holders of which are either present in person or represented by proxy
thereat, but in the absence of a quorum, no other business may be transacted at such meeting.



     When any shareholders’ meeting, either annual or special, is adjourned for thirty (30) days or
more, notice of the adjourned meeting shall be given as in the case of an original meeting. Except
as aforesaid, it shall not be necessary to give any notice of an adjournment or of the business to
be



FRANCODEX, INC.

Corporate Bylaws




- 158 -









 







transacted at an adjourned meeting, if the time and place thereof are announced at the
meeting at which such adjournment is taken.




     Section 5. Voting. Unless the Board of Directors has fixed in advance (pursuant to
Article V, Section 1) a record date for purposes of determining entitlement to vote at the meeting,
the record date shall be as of the close of business on the day next preceding the date on which
the meeting shall be held. Such vote may be viva voce or by ballot; provided,
however, that all elections for directors must be by ballot upon demand made by a shareholder at
any election and before the voting begins. Every shareholder entitled to vote at any election for
directors shall have the right to cumulate his votes and give one candidate a number of votes equal
to the number of directors to be elected multiplied by the number of votes to which his shares are
entitled, or to distribute his votes on the same principle among as many candidates as he shall
think fit. The candidates receiving the highest number of votes up to the number of directors to
be elected shall be elected.



     Section 6. Quorum. The presence in person or by proxy of persons entitled to vote a
majority of the voting shares at any meeting shall constitute a quorum for the transaction of
business. The shareholders present at a duly called or held meeting at which a quorum is present
may continue to do business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.



     Section 7. Consent of Absentees. The transactions of any meeting of shareholders,
either annual or special, however called and noticed, shall be as valid as though had at a meeting
duly held after regular call and notice, if a quorum be present either in person or by proxy, and
if, either before or after the meeting, each of the shareholders entitled to vote, not present in
person or by proxy, signs a written waiver of notice, or a consent to the holding of such meeting,
or an approval of the minutes thereof. All such waivers, consents or approvals shall be filed with
the corporate records or made a part of the minutes of the meeting.



     Section 8. Action Without Meeting. Any action which under any provision of the
Kansas Corporation Code, may be taken at a meeting of the shareholders, except approval of an
agreement for merger or consolidation of the corporation with other corporations, or a sale of all
or substantially all of the corporate property, may be taken without a meeting if authorized by a
writing signed by all of the persons who would be entitled to vote upon such action at a meeting,
and filed with the secretary of the corporation, or such other procedure followed as may be
prescribed by statute.



FRANCODEX, INC.

Corporate Bylaws





- 159 -









 








     Section 9. Proxies. Every person entitled to vote or execute consents shall have the
right to do so either in person or by one or more agents authorized by a written proxy executed by
such person or his duly authorized agent and filed with the secretary of the corporation; provided
that no such proxy shall be valid after the expiration of three (3) years from the date of its
execution, unless the person executing it specified therein the length of time for which such proxy
is to continue in force.



     Section 10. Inspection of Corporate Records. The stock ledger or duplicate stock
ledger, the books of account, and minutes of proceedings of the shareholders, the Board of
Directors and of executive committees of directors shall be open to inspection upon the written
demand of any shareholder or the holder of a voting trust certificate within five (5) days of such
demand during ordinary business hours if for a purpose reasonably related to his interests as a
shareholder, or as the holder of such voting trust certificate. A list of shareholders entitled to
vote shall be exhibited at any reasonable time and at meetings of the shareholders when required by
the demand of any shareholder at least twenty (20) days prior to the meeting. Such inspection may
be made in person or by an agent or attorney authorized in writing by a shareholder, and shall
include the right to make abstracts. Demand of inspection other than at a shareholders’ meeting
shall be made in writing upon the president, secretary, assistant secretary or general manager of
the corporation.



     Section 11. Inspection of Bylaws. The corporation shall keep in its principal office
for the transaction of business the original or a copy of these bylaws as amended or otherwise
altered to date, certified by the secretary, which shall be open to inspection by the shareholders
at all reasonable times during ordinary business hours.



Article III




Directors




     Section 1. Powers. Subject to limitations of the Articles of Incorporation, of the
bylaws, and of the Kansas Corporation Code as to action which shall be authorized or approved by
the shareholders, and subject to the duties of directors as prescribed by the bylaws; all corporate
powers shall be exercised by or under the authority of, and the business and affairs of the
corporation shall be controlled by, the Board of Directors. Without prejudice to such general
powers, but subject to the same limitations, it is hereby expressly declared that the directors
shall have the following powers, to-wit:



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     First—To alter, amend or repeal the bylaws of the corporation.



     Second—To select and remove all the other officers, agents and employees of the corporation,
prescribe such powers and duties for them as may not be inconsistent with law, or with the Articles
of Incorporation or the bylaws, fix their compensation, and require from them security for faithful
service.



     Third—To conduct, manage, and control the affairs and business of the corporation, and to make
such rules and regulations therefor not inconsistent with the law, or with the Articles of
Incorporation or the bylaws, as they may deem best.



     Fourth—To change the principal office and registered office for the transaction of the
business of the corporation from one location to another as provided in Article I hereof; to fix
and locate from time to time one or more subsidiary offices of the corporation within or without
the State of Kansas, as provided in Article I, Section 3 hereof; to designate any place within or
without the State of Kansas for the holding of any shareholders’ meeting or meetings except annual
meetings; to adopt, make and use a corporate seal, to prescribe the forms of certificates of stock,
and to alter the forms of such seal and of such certificates from time to time, as in their
judgment they may deem best, provided such seal and such certificate shall at all times comply with
the provisions of law.



     Fifth—To authorize the issue of shares of stock of the corporation from time to time, upon
such terms as may be lawful, in consideration of money paid, labor done or services actually
rendered, debts or securities cancelled, or tangible or intangible property actually received, or
in the case of shares issued as a dividend, against amounts transferred from surplus to stated
capital.



     Sixth—To borrow money and incur indebtedness for purposes of the corporation, and to cause to
be executed and delivered therefor, in the corporate name, promissory notes, bonds, debentures,
deeds of trust, mortgages, pledges, hypothecations or other evidences of debt and securities
therefor.



     Seventh—To appoint an executive committee and other committees, and to delegate to such
committees any of the powers and authority of the Board in the management of the business and
affairs of the corporation, except the power to declare dividends and to adopt, amend or repeal
bylaws. Any such committee shall be composed of two or more directors.



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     Section 2.
Number and Qualification of Directors. The authorized number of
directors of the corporation shall be not less than one (1) or more than ten (10) until changed by
amendment to this bylaw. Directors need not be shareholders.



     Section 3.
Election and Term of Office. The directors shall be elected at each
annual meeting of shareholders, but if any such annual meeting is not held, or the directors are
not elected thereat, the directors may be elected at a special meeting of shareholders held for
that purpose as soon thereafter as conveniently may be. All directors shall hold office until
their respective successors are elected. A director can be removed from office at any time for
good cause, however, by a majority vote of the shareholders, and he may be removed without cause by
a majority vote of the shareholders, unless he shall have sufficient shareholder support that by
use of cumulative voting he would otherwise be able to maintain his position on the Board in a
regular election of Board members.



     Section 4.
Vacancies. Vacancies on the Board of Directors may be filled by a
majority of the remaining directors, although less than a quorum, or by a sole remaining director.
If at any time, by reason of death, resignation, or other cause, the corporation should have no
directors in office, then any officer or any stockholder or any executor, administrator, trustee or
guardian of a stockholder or other fiduciary entrusted with like responsibility for the person or
estate of a stockholder may call a special meeting of the stockholders in accordance with the
provisions of these bylaws, or may apply to the District Court for a decree summarily ordering
election as provided for by the Kansas Corporation Code. Each director so elected shall hold
office until his successor is elected at an annual or a special meeting of the shareholders.



     A vacancy or vacancies on the Board of Directors shall be deemed to exist in case of the
death, resignation or removal of any director, or if the authorized number of directors be
increased, or if the shareholders fail at any annual or special meeting of shareholders at which
any director or directors are elected to elect the full authorized number of directors to be voted
for at the meeting, or if any director or directors elected shall refuse to serve.



     The shareholders holding at least ten percent (10%) of the outstanding voting stock may call a
meeting at any time to fill any vacancy or vacancies not filled by the directors, or if the Board
of Directors filling a vacancy constitutes less than a majority of the whole Board, as constituted
immediately prior to any increase in the number of directors. If the Board of Directors accepts
the resignation of a director rendered to



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take effect at a future time, the Board or the shareholders shall have power to elect a successor
to take office when the resignation is to become effective.




     No reduction of the authorized number of directors shall have the effect of removing any
director prior to the expiration of his term of office.



     Section 5.
Place of Meeting. Regular and special meetings of the Board of Directors
shall be held at any place within or without the State of Kansas which has been designated from
time to time by resolution of the Board or by written consent of all members of the Board. In the
absence of such designation, all meetings shall be held at the principal office of the corporation.



     Section 6.
Organizational Meeting. Immediately following each annual meeting of
shareholders, the Board of Directors shall hold a regular meeting for the purpose of organization,
election of officers, and the transaction of other business. Notice of such meeting is hereby
dispensed with.



     Section 7.
Other Regular Meetings. Other regular meetings of the Board of Directors
shall be held without call at such time as the Board of Directors may from time to time designate
in advance of such meetings; provided, however, should said day fall upon a legal holiday, then
said meeting shall be held at the same time on the next day thereafter ensuing which is not a legal
holiday. Notice of all such regular meetings of the Board of Directors is hereby dispensed with.



     Section 8.
Special Meetings. Special meetings of the Board of Directors for any
purpose or purposes shall be called at any time by the president or, if he is absent or unable or
refuses to act, by the secretary or by any other director. Notice of such special meetings, unless
waived by attendance thereat or by written consent to the holding of the meeting, shall be given by
written notice mailed at least three (3) days before the date of such meeting or be hand delivered
or notified by telegram at least two (2) days before the date such meeting is to be held. If
mailed, such notice shall be deemed to be delivered when deposited in the United States mail with
postage thereon addressed to the director at his residence or usual place of business. If notice
be given by telegraph, such notice shall be deemed to be delivered when the same is delivered to
the telegraph company.



     Section 9.
Notice of Adjournment. Notice of the time and place of holding an
adjourned meeting need not be given to absent directors if the time and place be fixed at the
meeting adjourned.



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     Section 10.
Waiver of Notice. The transactions of any meeting of the Board of Directors,
however called and noticed or wherever held, shall be as valid as though had at a meeting duly held
after regular call and notice, if a quorum be present, and if, either before or after the meeting,
each of the directors not present signs a written waiver of notice, or a consent to holding such
meeting, or an approval of the minutes thereof. All such waivers, consents or approvals shall be
filed with the corporate records or made a part of the minutes of the meeting.



     Section 11. Quorum. A majority of the total number of directors shall be necessary to
constitute a quorum for the transaction of business, except to adjourn as hereinafter provided.
Every act or decision done or made by a majority of the directors present at a meeting duly held at
which a quorum is present shall be regarded as the act of the Board of Directors, unless a greater
number be required by law or by the Articles of Incorporation. The directors present at a duly
called or held meeting at which a quorum is present may continue to do business until adjournment,
notwithstanding the withdrawal of enough directors to leave less than a quorum.



     Section 12. Meetings by Telephone. Members of the Board of Directors of the
corporation, or any committee designated by such Board, may participate in a meeting of the Board
of Directors by means of conference telephone or similar communications equipment, by means of
which all persons participating in the meeting can hear one another, and such participation in a
meeting shall constitute presence in person at the meeting.



     Section 13. Adjournment. A majority of the directors present may adjourn any
directors’ meeting to meet again at a stated day and hour or until the time fixed for the next
regular meeting of the Board.



     Section 14. Fees and Compensation. Directors shall not receive any stated salary for
their services as directors, but, by resolution of the Board, adopted in advance of, or after the
meeting for which payment is to be made, a fixed fee, with or without expenses of attendance, may
be allowed one or more of the directors for attendance at each meeting. Nothing herein contained
shall be construed to preclude any director from serving the corporation in any other capacity as
an officer, agent, employee, or otherwise, and receiving compensation therefor.



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Article IV




Officers




     Section 1. Officers. The officers of the corporation shall be a president, a
secretary, and a treasurer. The corporation may also have, at the discretion of the Board of
Directors, a chairman of the Board, one or more vice-presidents, one or more assistant secretaries
and one or more assistant treasurers, and such other officers as may be appointed in accordance
with the provisions of Section 3 of this Article IV. Any number of offices may be held by the same
person.



     Section 2. Election. The officers of the corporation, except such officers as may be
appointed in accordance with the provisions of Section 3 or Section 5 of this Article IV shall be
chosen annually by the Board of Directors, and each shall hold his office until he shall resign or
shall be removed or otherwise disqualified to serve, or his successor shall be elected and
qualified.



     Section 3.
Subordinate Officers, Etc. The Board of Directors may appoint such other
officers as the business of the corporation may require, each of whom shall have authority and
perform such duties as are provided in these bylaws or as the Board of Directors may from time to
time specify, and shall hold office until he shall resign or shall be removed or otherwise
disqualified to serve.



     Section 4. Compensation of Officers. Officers and other employees of the corporation
shall receive such salaries or other compensation as shall be determined by resolution of the Board
of Directors, adopted in advance or after the rendering of the services, or by employment contracts
entered into by the Board of Directors. The power to establish salaries of officers, other than
the President or Chairman of the Board, may be delegated to the President, Chairman of the Board,
or a committee.



     Section 5. Vacancies. A vacancy in any office because of death, resignation,
removal, disqualification or any other cause shall be filled in the manner prescribed in these
bylaws for regular appointments to such office.



     Section 6.
Removal and Resignation. Any officer may be removed, either with or
without cause, by a majority of the directors at the time in office, at any regular or special
meeting of the Board, or, except in case of an officer chosen by the Board of Directors, by any
officer upon whom such power of removal may be conferred by the Board of Directors.



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     Section 7. Chairman of the Board. The chairman of the Board, if there be such an
officer, shall, if present, preside at all meetings of the Board of Directors, and exercise and
perform such other powers and duties as may be from time to time assigned to him by the Board of
Directors or prescribed by these bylaws.



     Section 8. President. Subject to such supervisory powers, if any, as may be given by
the Board of Directors to the chairman of the Board, if there be such an officer, the president
shall be the chief executive officer of the corporation and shall, subject to the control of the
Board of Directors, have general supervision, direction and control of the business and officers of
the corporation. He shall preside at all meetings of the shareholders
and, in the absence of the chairman of the Board, at all meetings of the Board of Directors. He shall be ex officio a
member of all the standing committees, including the executive committee, if any, and shall have
the general powers and duties of management usually vested in the office of president of a
corporation, and shall have such other powers and duties as may be prescribed by the Board of
Directors or these bylaws.



     Section 9. Vice-President. In the absence or disability of the president, the
vice-president or vice-presidents, if there be such an officer or officers, in order of their rank
as fixed by the Board of Directors, or if not ranked, the vice-president designated by the Board of
Directors, shall perform all the duties of the president, and when so acting shall have all the
powers of, and be subject to all the restrictions upon, the president. The vice-presidents shall
have such other powers and perform such other duties as from time to time may be prescribed for
them respectively by the Board of Directors or these bylaws.



     Section 10. Secretary. The secretary shall keep, or cause to be kept, a book of
minutes at the principal office or such other place as the Board of Directors may order, of all
meetings of directors and shareholders, with the time and place of holding, whether regular or
special, and if special, how authorized, the notice thereof given, the names of those present at
directors’ meetings, the number of shares present or represented at shareholders’ meetings and the
proceedings thereof.



     The secretary shall keep, or cause to be kept, at the principal office or at the office of the
corporation’s transfer agent, a stock ledger, or a duplicate stock ledger, showing the names of the
shareholders and their addresses, the number and classes of shares held by each, the number and
date of certificates issued for the same; and the number and date of cancellation of every
certificate surrendered for cancellation.



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     The secretary shall give, or cause to be given, notice of all the meetings of the shareholders
and of the Board of Directors required by these bylaws or by law to be given, and he shall keep the
seal of the corporation in safe custody, and shall have such other powers and perform such other
duties as may be prescribed by the Board of Directors or these bylaws.



     Section 11. Treasurer. The treasurer shall keep and maintain or cause to be kept and
maintained, adequate and correct accounts of the properties and business transactions of the
corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses,
capital, surplus and shares. Any surplus, including earned surplus, paid-in surplus and surplus
arising from a reduction of stated capital, shall be classified according to source and shown in a
separate account. The books of account shall at all reasonable times be open to inspection by any
director.



     The treasurer shall deposit all monies and other valuables in the name and to the credit of
the corporation with such depositories as may be designated by the Board of Directors. He shall
disburse the funds of the corporation as may be ordered by the Board of Directors, shall render to
the president and directors, whenever they request it, an account of all of his transactions as
treasurer and of the financial condition of the corporation, and shall have such other powers and
perform such other duties as may be prescribed by the Board of Directors or these bylaws. He shall
be bonded, if required by the Board of Directors.



Article V




Miscellaneous




     Section 1. Record Pate and Closing Stock Books. The Board of Directors may fix a
time in the future as a record date for the determination of the shareholders entitled to notice of
and to vote at any meeting of shareholders or entitled to receive any dividend or distribution, or
any allotment of rights, or to exercise rights in respect to any change, conversion or exchange of
shares. The record date so fixed shall be not more than sixty (60) days prior to the date of the
meeting or event for purposes of which it is fixed. When a record date is so fixed, only
shareholders who are such of record on that date are entitled to notice of and to vote at the
meeting or to receive the dividend, distribution, or allotment of rights, or to exercise the
rights, as the case may be, notwithstanding any transfer of any shares on the books of the
corporation after the record date.



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     The Board of Directors may close the books of the corporation against transfers of shares
during the whole or any part of a period not more than sixty (60) days prior to the date of a
shareholders’ meeting, the date when the right to any dividend, distribution, or allotment of
rights vest, or the effective date of any change, conversion or exchange of share.



     Section 2.
Indemnification of Directors and Officers. When a person is sued, either
alone or with others, because he is or was a director or officer of the corporation, or of another
corporation serving at the request of this corporation, in any proceeding arising out of his
alleged misfeasance or nonfeasance in the performance of his duties or out of any alleged wrongful
act against the corporation or by the corporation, he shall be indemnified for his reasonable
expenses, including attorneys’ fees incurred in the defense of the proceeding, if both of the
following conditions exist:




	(a)	 	The person sued is successful in whole or in part, or the
proceeding against him is settled with the approval of the
court.
	 
	(b)	 	The court finds that his conduct fairly and equitably merits such indemnity.




The amount of such indemnity which may be assessed against the corporation, its receiver, or its
trustee, by the court in the same or in a separate proceeding shall be so much of the expenses,
including attorneys’ fees incurred in the defense of the proceeding, as the court determines and
finds to be reasonable. Application for such indemnity may be made either by the person sued or by
the attorney or other person rendering services to him in connection with the defense, and the
court may order the fees and expenses to be paid directly to the attorney or other person, although
he is not a party to the proceeding. Notice of the application for such indemnity shall be served
upon the corporation, its receiver, or its trustee, and upon the plaintiff and other parties to the
proceeding. The court may order notice to be given also to the shareholders in the manner provided
in Article II, Section 2, for giving notice of shareholders’ meetings, in such form as the court
directs.




     Section 3.
Checks, Drafts, Etc. All checks, drafts or other orders for payment of
money, notes or other evidences of indebtedness, issued in the name of or payable to the
corporation, shall be signed or endorsed by such person or persons and in such manner as, from time
to time, shall be determined by resolution of the Board of Directors.



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     Section 4. Annual Report. No annual report to shareholders shall be required, but
the Board of Directors may cause to be sent to the shareholders reports in such form and at such
times as may be deemed appropriate by the Board of Directors.



     Section 5.
Contracts, Deeds, Etc., How Executed. The Board of Directors, except as
in these bylaws otherwise provided, may authorize any officer or officers, agent or agents, to
enter into any contract or execute any instrument in the name of and on behalf of the corporation,
and such authority may be general or confined to specific instances; and unless so authorized by
the Board of Directors, no officer, agent or employee shall have any power or authority to bind the
corporation by any contract or engagement or to pledge its credit or to render it liable for any
purpose in any amount, provided, however, that any deeds or other instruments conveying lands or
any interest therein shall be executed on behalf of the corporation by the president or
vice-president, if there be one, or by any agent or attorney so authorized under letter of attorney
or other written power which was executed on behalf of the corporation by the president or
vice-president.



     Section 6. Certificates of Stock. A certificate or certificates for shares of the
capital stock of the corporation shall be issued to each shareholder when any such shares are fully
paid up. All such certificates shall be signed by the president or vice-president, if there be any,
and the secretary, or an assistant secretary, or be authenticated by facsimiles of the signatures
of the president and secretary, or by a facsimile of the signature of the president and the written
signature of the secretary or an assistant secretary. Every certificate authenticated by a
facsimile of a signature must be countersigned by a transfer agent or transfer clerk, and be
registered by an incorporated bank or trust company, either domestic or foreign, as registrar of
transfers, before issuance.



     Certificates for shares may be issued prior to full payment under such restrictions and for
such purposes as the Board of Directors or these bylaws may provide; provided, however, that any
such certificate so issued prior to full payment shall state on its face or back the total amount
of the consideration to be paid, the amount paid thereon and the terms by which the amount
remaining unpaid is to be paid.



     Section 7. Representation of Securities of Other Corporations or Entities. The
president or any vice-president and the secretary or assistant secretary of this corporation are
authorized to vote, represent and exercise on behalf of this corporation all rights incident to any
and all securities of any other corporation or entity standing in the name of this



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corporation. The authority herein granted to said officers to vote or represent on behalf of this
corporation any and all securities held by the corporation in any other corporation or entity may
be exercised either by such officers in person or by any person authorized to do so by proxy or
power of attorney duly executed by said officers.




     Section 8.
Fiscal Year. The Board of Directors shall have the power to fix and from
time to time change the fiscal year of the corporation. In the absence of action by the Board of
Directors, however, the fiscal year of the corporation shall end each year on the date which the
corporation treated as the close of its first fiscal year, until such time, if any, as the fiscal
year shall be changed by the Board of Directors.



Article VI




Dividends




     Subject to the limitations prescribed by law, the Board of Directors may declare a dividend on
the shares of the corporation of so much of the profits as shall appear advisable to the board,
making the same payable at a time in its discretion.



Article VII




Amendments




     Section 1. Power of Directors. New bylaws may be adopted or these bylaws may be
amended or repealed by a majority vote of the Board of Directors at any regular or special meeting
thereof; provided, however that the time and place fixed by the bylaws for the annual election of
directors shall not be changed within sixty (60) days next preceding the date on which such
elections are to be held. Notice of any amendment of the bylaws by the Board of Directors shall be
given to each stockholder having voting rights within ten (10) days after the date of such
amendments by the Board.



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C E
R T I F I C A T E    O F    S E C R E T A R Y 




     I, the undersigned, do hereby certify:




	 	(1)	 	That I am the duly elected and acting secretary
of FRANCODEX, INC., a Kansas corporation; and
	 
	 	(2)	 	That the foregoing bylaws constitute the original
bylaws of said corporation, as duly adopted at
the first meeting of the Board of Directors
thereof duly held on the 29th day of June, 1988.





     IN TESTIMONY WHEREOF, I have hereunto subscribed my name and affixed the seal of the said
corporation this 29th day of June, 1988.



	 	 	 	 	 
	 

	 	/s/ A. L. Paul
	 	 
	 

	 	 	 	 
	 

	 	A. L. Paul	 	 
	 

	 	Secretary	 	 






(SEAL)




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EXHIBIT C




     The following action is hereby taken and the following business transacted by the unanimous
vote at a meeting duly called and held [or by the unanimous written consent of the Board of
Directors] of Francodex Laboratories, Inc., a corporation organized under the laws of Kansas (the
“Corporation”) as of the 25th day of July, 2006, pursuant to the provisions of the general
corporation laws of Kansas in accordance with the Articles of Incorporation and Bylaws of this
Corporation:



     WHEREAS, PM Resources, Inc. (“PM Resources”), Virbac AH, Inc. (“Virbac AH”), St. JON
Laboratories, Inc. (“St. JON”) and Delmarva Laboratories, Inc. (“Delmarva”) are all wholly owned
subsidiaries of Virbac Corporation (“Virbac”); this Corporation is a wholly owned subsidiary of
Virbac AH; and Virbac, Virbac AH, St. JON, Delmarva, PM Resources (collectively, the “Affiliates”)
and the Corporation are each integral parts of an affiliated corporate group; and



     WHEREAS, it is in the best interest of the Corporation and its Affiliates that they should
continue to jointly and severally borrow funds for working capital and other corporate needs and
purposes; and



     WHEREAS, First Bank, JPMorgan Chase Bank, N.A. and other banks (collectively, the “Lenders”)
have agreed to extend a revolving credit facility for this Corporation and the Affiliates in the
amount of up to Fifteen Million Dollars ($15,000,000.00) as more fully described in and evidenced
by that certain Loan Agreement dated as of June 29, 2006 to be executed by and among this
Corporation and the Affiliates, as co-borrowers, First Bank, as agent for the Lenders (in such
capacity, the “Agent”) and the Lenders (the “Loan Agreement”), and as evidenced by certain
Revolving Credit Notes to be executed by the Corporation and the Affiliates payable to the
respective orders of each of the Lenders in the aggregate original principal amount of Fifteen
Million Dollars ($15,000,000.00) and dated as of the date of such execution (collectively, the
“Revolving Credit Note”) and by a certain Swing Line Note to be executed by the Corporation and the
Affiliates payable to the order of the Agent in the aggregate original principal amount of Three
Million Dollars ($3,000,000.00) and dated as of the date of such execution (the “Swing Line Note,”
and collectively with the Revolving Credit Note, the “Notes”);



     NOW, THEREFORE, BE IT RESOLVED, that for its lawful corporate needs and purposes, the
Corporation, together with its Affiliates, obtain a revolving credit facility from Agent and the
Lenders in the amount of Fifteen Million Dollars ($15,000,000.00), with a swing line available
thereunder from the Agent in the amount of Three Million Dollars ($3,000,000.00) upon the terms and
conditions to be set forth in the Notes and the Loan Agreement; and be it further



     RESOLVED, that said loans shall be secured by substantially all of the assets of the
Corporation, which liens and security interests shall be granted pursuant to deeds of trust,
security agreements, pledge agreements and other transaction documents as more fully described in
the Loan Agreement (collectively, the “Security Documents”); and be it further



     RESOLVED, that the form of the Loan Agreement, the forms of the Notes and the forms of the
Security Documents to be executed and delivered for and in behalf of the Corporation, each of which
has been submitted to the Board of Directors of the Corporation, be and the same are hereby ordered
to be filed with the Secretary of the Corporation and by reference made a part of these
Resolutions; and be it further



     RESOLVED, that the Loan Agreement, the Notes and the Security Documents above referred to,
and all terms, agreements, warranties, covenants and conditions therein contained, be and the same
hereby are accepted, adopted and approved as to form and substance; and be it further



     RESOLVED, that the President, Chief Financial Officer and/or the Secretary of the Corporation
be, and each of them hereby is authorized and directed for and in behalf of the Corporation to
negotiate, enter into, execute and deliver to the Agent and the Lenders the Loan Agreement, the
Notes and the



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Security Documents with such changes in form and substance and containing such other
terms, agreements, warranties, covenants and conditions as the person executing the same shall approve,
such approval to be conclusively evidenced by the execution thereof; and be it further



     RESOLVED, that the President, Chief Financial Officer and/or the Secretary is also authorized
and empowered from time to time to amend, modify, restructure, restate, supplement, extend or renew
the arrangements or agreements made with Agent and the Lenders pursuant to the Loan Agreement, the
Notes and the Security Documents upon such terms and conditions as the President, Chief Financial
Officer and/or the Secretary of the Corporation may deem desirable, and to negotiate, enter into,
execute, perform and deliver to the Agent and the Lenders such other agreements, documents,
instruments and certificates as the Agent or any of the Lenders may from time to time require in
connection therewith; and be it further



     RESOLVED, that the President, Chief Financial Officer and/or the Secretary of the Corporation
be, and each of them hereby is, authorized to take all such actions and to execute all such other
agreements and instruments as they or any of them shall deem necessary or desirable to carry out
the transactions contemplated by these Resolutions, in such form as the President, Chief Financial
Officer or Secretary executing the same shall deem proper. Any and all acts which said President,
Chief Financial Officer and/or Secretary may do or perform in conformity with the powers conferred
upon them by these resolutions are hereby expressly authorized, approved, verified and confirmed.



     FURTHER RESOLVED, that all acts and deeds heretofore done by the President, Chief Financial
Officer, the Secretary and/or any other officer(s) of the Corporation for and on behalf of the
Corporation in entering into, executing, acknowledging or attesting the Loan Agreement, the Notes,
the Security Documents or any guaranties, security agreements, or other agreements, instruments or
documents with Agent and the Lenders in connection with the transactions therein described prior to
the date of these resolutions, and in carrying out the terms and intentions of these resolutions,
are hereby ratified, approved and confirmed.



     FURTHER RESOLVED, that the President and the Secretary of the Corporation be, and hereby are,
authorized and empowered to certify to Agent and the Lenders the names of the present officer(s) of
the Corporation executing any of: (i) the Loan Agreement, the Notes or any of the Security
Documents or (ii) any other documents executed on behalf of the Corporation and the titles
respectively, held by each of them, together with specimens of their signatures; and be it



- 173 -









 





     FURTHER RESOLVED, that the Agent and each of the Lenders shall be indemnified and held
harmless by the Corporation from and against any and all damages, losses, liabilities, costs and
expenses, including, without limitation, reasonable attorneys’ fees and expenses, incurred by the
Agent or any of the Lenders in acting pursuant to these resolutions.



     The undersigned, being all of the Directors of Francodex Laboratories, Inc., hereby evidence
their unanimous vote and consent to and adopt the foregoing resolutions on and as of the day and
year first written above.



	 	 	 
	 

	 	/s/ Alec L. Poitevint, II
	 

	 	 
	 
	 	 
	 

	 	/s/ Pierre Pagès
	 

	 	 
	 
	 	 
	 

	 	/s/ Eric Marée
	 

	 	 
	 
	 	 
	 

	 	/s/ Jean N. Willk
	 

	 	 
	 
	 	 
	 

	 	/s/ Richard W. Pickert
	 

	 	 
	 
	 	 
	 

	 	/s/ Michel Garaudet
	 

	 	 
	 
	 	 
	 

	 	Constituting the entire Board of Directors of Francodex Laboratories, Inc.






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CERTIFICATE OF THE PRESIDENT AND SECRETARY

OF VIRBAC AH, INC.




     The undersigned, Dr. Erik R. Martinez, the duly elected and acting President of Virbac AH,
Inc., a corporation organized under the laws of Delaware (the “Corporation”), and Jean M. Nelson,
the duly elected and acting Secretary of the Corporation each certifies as follows:



     1. Dr. Erik R. Martinez is the duly elected and acting President of the Corporation and as
such is authorized to execute and deliver this Certificate.



     2. Jean M. Nelson is the duly elected and acting Secretary of the Corporation, and as such is
authorized to execute and deliver this Certificate.



     3. That attached hereto as Exhibit A is a copy of the Certificate of Incorporation of
the Corporation, including all amendments thereto, certified by the Secretary of State of the State
of Delaware.



     4. That attached hereto as Exhibit B is a true and complete copy of the Bylaws of the
Corporation, as amended, and as in effect as of the date hereof.



     5. Attached hereto and made a part hereof as Exhibit C is a true, correct and complete
copy of certain resolutions duly adopted by the Board of Directors of the Corporation as of July
25, 2006, said resolutions have not been amended, superseded or rescinded and are, at the date
hereof, in full force and effect.



     6. The following individuals have been duly elected and have at all times since June 29, 2006
been, and this day are officers of the Corporation, each such officer holds the title set forth
opposite his/her name below; each such officer is authorized pursuant to the resolutions attached
hereto as Exhibit C to execute and deliver documents on behalf of the Corporation as set
forth in such resolutions; and the true and genuine signature of each officer is set forth opposite
his/her name below:



	 	 	 	 	 
	Name 	 	Office	 	Signature
	 
	 	 	 	 
	Dr. Erik R. Martinez

	 	President
	 	/s/ Erik R. Martinez
	 

	 	 
	 	 
	 
	 	 	 	 
	 

	 	Secretary	 	 
	 

	 	 
	 	 
	 
	 	 	 	 
	Jean M. Nelson

	 	EVP and Chief Financial Officer
	 	/s/ Jean M. Nelson
	 

	 	 
	 	 
	 
	 	 	 	 
	 

	 	 
	 	 
	 

	 	 
	 	 





     7. The undersigned have reviewed all of the representations and warranties being made by the
Corporation in the Loan Agreement (as defined in the resolutions attached hereto as Exhibit
C) and the undersigned certify that all of said representations and warranties are true and
accurate as of the date hereof to the best of the undersigned’s knowledge.



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     IN WITNESS WHEREOF, the undersigned have caused this Certificate to be executed as this 25th
day of July, 2006.



(SEAL)




	 	 	 	 	 
	 	 	 
	 	                       /s/ Erik R. Martinez
 	 
	 	Dr. Erik R. Martinez, President 	 
	 	of Virbac Corporation 	 
	 
	 	 	 
	 	                          /s/ Jean M. Nelson
 	 
	 	Jean M. Nelson, Secretary 	 
	 	of Virbac Corporation 	 



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EXHIBIT A




(Certificate of Incorporation)



PAGE 1



State of Delaware




Office of the Secretary of State




     I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE
ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF INCORPORATION OF “VIRBAC AH, INC.”, FILED
IN THIS OFFICE ON THE TWENTY-THIRD DAY OF FEBRUARY, A.D. 1999, AT 3 O’CLOCK P.M.



     A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE COUNTY RECORDER OF
DEEDS.



	 	 	 	 	 	 	 
	3008337 8100

	 	
	 	/s/ Edward J. Freel
	 	 
	 

	 	 	 	 	 	 
	991070155
	 	 	 	Edward J. Freel, Secretary of State	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	AUTHENTICATION:
     9593930	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	                         DATE:      02-24-99	 	 







- 177 -









 






CERTIFICATE OF INCORPORATION



OF




VIRBAC AH, INC.




     THE
UNDERSIGNED, for the purpose of organizing a corporation for conducting the business and
promoting the purposes hereinafter stated, under the provisions and subject to the requirements of
the Delaware General Corporation Law (the “DGCL”), hereby certifies that:



     FIRST: The name of the corporation is Virbac AH, Inc. (the “Corporation”).



     SECOND:
The registered office of the Corporation is located at Corporation Trust Center, 1209
Orange Street, Wilmington, County of New Castle, Delaware 19801. The name of its registered agent
at that address is The Corporation Trust Company.



     THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which
corporations may be organized under the DGCL.



     FOURTH:
The Corporation shall have perpetual existence.



     FIFTH: The name and mailing address of the incorporator are as follows:


Joseph S. Carlin

Dyer Ellis & Joseph

600 New Hampshire Avenue, Suite 1100

Washington, D.C. 20037




     SIXTH: The total number of shares of stock that the Corporation has authority to issue is One
Thousand (1,000) shares of Common Stock with a par value of $.01 per share.



     SEVENTH: The power to adopt, amend or repeal the Bylaws of the Corporation may be exercised
by the Board of Directors of the Corporation.



     EIGHTH: The personal liability of the directors of the Corporation is hereby eliminated to the
fullest extent permitted by paragraph (7) of subsection (b) of Section 102 of the DGCL, as the same
may hereafter be amended or supplemented.



     NINTH: The Corporation shall, to the fullest extent permitted by Section 145 of the DGCL, as
the same may hereafter be amended or supplemented, indemnify any and all persons whom it shall
have power to indemnify under said section from and against any and all of the expenses,
liabilities or other matters referred to in or covered by said section, and the indemnification
provided for herein shall not be deemed exclusive of any other rights to which those indemnified
may be entitled under any Bylaw, agreement, vote of stockholders



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or disinterested directors or otherwise, both as to action in his official capacity and as to
action in another capacity while holding suck office, and shall continue as to a person who has
ceased to be a director, officer, employee, or agent, and shall inure to the benefit of the heirs,
executors and administrators of such person.




     TENTH: From time to time, any of the provisions of this Certificate of Incorporation may be
amended, altered or repealed, and other provisions authorized by the laws of the State of Delaware
at the time in force may be added or Inserted, in the manner and at the time prescribed by said
laws, and all rights at any time conferred upon the stockholders of the Corporation by this
Certificate of Incorporation are granted subject to the provisions of this Article TENTH.



     IN WITNESS WHEREOF, the undersigned does hereby execute this Certificate of Incorporation, and
does hereby acknowledge that this instrument constitutes his act and deed and that the facts stated
herein are true.



Dated: February 23, 1999




	 	 	 	 	 
	 	 	 
	 	  /s/ Joseph S. Carlin
 	 
	 	Joseph  S. Carlin	 
	 	Incorporator 	 
	 




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EXHIBIT B




(Bylaws)







BYLAWS




OF




VIRBACAH, INC.




(as of February 23,1999)




ARTICLE I – OFFICES




     Section 1. Business Offices. Virbac AH, Inc. (herein the “Company”), may have such
offices and branch offices, either within or without the State of Delaware, as the Board of
Directors (herein the “Board”) may designate from time to time.



     Section 2. Registered Office. The Company shall maintain a registered office in the State
of Delaware, which may be changed from time to time by the Board.



ARTICLE II – STOCKHOLDERS




     Section 1. Annual Meeting. The Annual Meeting of Stockholders of the Company shall
be held subsequent to the end of each fiscal year of the Company, on such date and at such hour as
the Board annually determines.



     Section 2. Special Meeting. Special meetings of the stockholders may be called by the Board
or the President of the Company or by the holders of not less than one-half of all the outstanding
shares entitled to vote at such meeting. No business will be transacted at any special meeting
unless such business is stated in the notice of the meeting as one of the purposes of that special
meeting.



     Section 3. Place and Time of Meeting. The Board shall designate the place and time of any
annual meeting or special meeting of the stockholders. The place so designated may be either within
or without the State of Delaware, as the Board may choose.



     Section 4. Notice of Meeting. Notice of the meeting, stating the place, day and hour of the
meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is
called, shall be delivered not less than ten (10) calendar days nor more than sixty (60) calendar
days before the date of the meeting, by written, telegraphic or any other means of communication,
by or at the direction of the President, the Secretary or the other person(s) calling the meeting,
to each stockholder of record entitled to vote at such meeting. If mailed, such notice shall be
deemed to be delivered when deposited in the United States mail, addressed to the stockholder at
his address as it appears on the stock transfer books of the Company, with postage thereon prepaid.




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     Section 5. Notice of Adjourned Meeting. When a meeting is adjourned to another time or
place, it will not be necessary to give any notice of the adjourned meeting if the time and place
to which the meeting is adjourned are announced at the meeting at which the adjournment is taken.
If the adjournment is for more than thirty (30) days, or if after the adjournment, a new record
date is fixed for the adjourned meeting, a notice of the adjourned meeting shall then be given to
each stockholder of record entitled to vote at the adjourned meeting. At an adjourned meeting, any
business may be transacted that might have been transacted on the original date of the meeting.



     Section 6. Waiver of Notice of Meeting of Stockholders. Whenever any notice is required to
be given to any stockholder of the Company under the provisions of any statute or, under the
provisions of the Bylaws, a waiver thereof signed by the person(s) entitled to such notice, whether
before or after the time stated therein, shall be equivalent to the giving of such notice.
Attendance of a person at a meeting constitutes a waiver of notice of such meeting, except when the
person attends the meeting for the expressed purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called or convened. Neither
the business to be transacted at, nor the purpose of, any annual or special meeting of the
stockholders need be specified in any written waiver of notice.



     Section 7.
Fixing of Record Date. For the purpose of determining stockholders entitled to notice
of, or to vote at, any meeting of stockholders or any adjournment thereof, or stockholders entitled
to receive payment of any dividend, or in order to make a determination of stockholders for any
other proper purpose, the Board shall fix in advance a date as the record date for any such
determination of stockholders such date in any case to be not more than sixty (60) days prior to
the date on which the particular action requiring such determination of stockholders is to be taken
and, in the case of a meeting of stockholders, not less than ten (10) days prior to the date on
which the particular action requiring such determination of stockholders is to be taken.



     When a determination of stockholders entitled to vote at any meeting of stockholders has been made
as provided in this Section, such determination shall apply to any adjournment thereof, unless the
Board fixes a new record date of the adjourned meeting.



     All notice and record periods established herein will be adjusted where required to conform to any
prescribed periods now or hereafter provided by the General Corporation Law of the State of
Delaware.



     Section 8. Stockholder Quorum and Action. A majority of the shares entitled to vote,
represented in person or by proxy, shall constitute a quorum at a meeting of stockholders, except
where these Bylaws require action to be taken by the holders of more than a majority of the shares
then entitled to vote. The stockholders present at a duly organized meeting may continue to
transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave
less than a quorum.



- 181 -









 





     If a quorum is present, the affirmative vote of the majority of the shares represented at the
meeting and entitled to vote on the subject matter will be the act of the stockholders, unless
otherwise provided by the law or these Bylaws.



     Section 9. List of Stockholders. The Secretary of the Company shall prepare and make
available at least ten (10) days before every meeting of the stockholders a complete list of the
stockholders entitled to vote at the meeting, as required by the General Corporation Laws of the
State of Delaware.



     Section 10. Voting. Each outstanding share of Common Stock entitled to vote will be
entitled to one vote upon each manner submitted to a vote at a meeting of stockholders.



     Section 11. Proxies. Every stockholder entitled to vote at a meeting of stockholders or to
express consent or dissent to corporate action in writing without a meeting may authorize any other
person(s) to act for him by proxy. However, no such proxy will be voted or acted upon after three
(3) years from its date, unless the proxy provides for a longer period.



     A duly executed proxy will be irrevocable if it states that it is irrevocable and if and only as
long as it is coupled with an interest sufficient in law to support an irrevocable power. A proxy
may be made irrevocable regardless of whether the interest with which it is coupled is an interest
in the stock itself or an interest in the Company generally.



     Section 12. Organization. Meetings of the stockholders shall be presided over by the
Chairman of the Board, if any, the Vice Chairman of the Board, if any, the President, any Vice
President or, in their absence, by a chairman chosen by a majority of the stockholders entitled to
vote at the meeting who are present in person or by proxy. The Secretary, an Assistant Secretary
or, in their absence, any person appointed by the chairman of the meeting, will act as secretary of
the meeting.



     Section 13. Action by Stockholders Without A Meeting. Except as may otherwise be limited by
the Company’s Certificate of Incorporation, any action required or permitted to be taken at a
meeting of the stockholders may be taken without a meeting if a consent in writing, setting forth
the action so taken, is signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a meeting at which all
shares entitled to vote thereon were present and voted. Within ten (10) days after obtaining such
authorization by written consent, written notice shall be given to those stockholders who have not
consented in writing. The notice shall fully summarize the material features of the authorized
action and, if the action is a merger, consolidation or sale or exchange of assets for which
dissenters rights are provided by law, the notice shall contain a clear statement of the rights of
stockholders dissenting therefrom.



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ARTICLE III – DIRECTORS




     Section 1. Powers. Except as otherwise provided by law or by the Company’s Certificate of
Incorporation, all corporate powers shall be exercised by or under the authority of, and the
property, business, and affairs of the Company shall be managed under the direction of, the Board
of Directors.



     Section 2. Number, Tenure, and Qualification. The number of directors of the Company will
not be less than two (2) nor more than thirteen (13). From time to time, the number of directors
may be increased by stockholder action or by resolution of a majority of the directors then in
office.



     Section 3. Election of Directors. Except as may otherwise by provided in the Company’s
Certificate of Incorporation, directors shall be elected at the Annual Meeting of Stockholders by
the affirmative vote of the majority of the shares represented at the meeting and entitled to vote
for the election of directors. If the annual election of directors is not held on the day designed
by the Board for any Annual Meeting of Stockholders, or at any adjournment thereof, the Board may
cause the election to be held at a special meeting of stockholders specifically called for that
purpose.



     Section 4. Regular Meetings. A regular meeting of the Board shall be held without other
notice than this Bylaw immediately after, and at the same place as, the annual election of
directors. The Board may, from time to time, by resolution appoint the time and place, either
within or without the State of Delaware, for holding other regular meetings of the Board, if it
deems advisable. Such regular meetings will thereupon be held at the time and place so appointed,
without the giving of any notice with regard thereto.



     Section 5. Special Meetings. Special meetings of the Board shall be held whenever called by
the Chairman, the President or any two directors. The person(s) authorized to call special meetings
of the Board may fix any place, either within or without the State of Delaware, and any time as the
place and time for holding any special meeting of the Board called by him, her or them.



     Section 6. Notice of Special Meeting. Notice to a director of any special meeting may be
given in writing by mailing the same to the residence or place of business of the director, as
shown on the books of the Company, not less than two (2) calendar days before the day on which the
meeting is to be held. Alternatively, notice to a director of any special meeting may be given by
(a) sending the same to him at his residence or place of business by telegraph, (b) transmitting
the same to him at such place by facsimile transmission, (c) delivering the same to him personally,
(d) leaving the same to him at his residence or place of business, or (e) giving the same to him by
telephone, any of these not later than the day before such day of meeting. If mailed, such notice
will be deemed to be delivered when deposited in the United States mail addressed to the director
at his residence or his place of business with postage thereon prepaid. If notice is given by
telegram or cablegram, such notice will be deemed to be delivered when the telegram or cablegram is
delivered to the telegraph company. Except as otherwise provided in
the Bylaws or as may be indicated in the notice thereof, any and all business may be transacted at
any special meeting.



- 183 -









 





     When a special meeting of the Board is adjourned to another time and place, no notice of the
adjourned meeting need be given if the time and place to which the meeting is adjourned are
announced at the meeting at which the adjournment is taken.



     Section 7. Waiver of Notice. A director may waive the requirement of notice of a special
meeting of the Board by signing a waiver of notice whether before or after the meeting. The
attendance of a director at a meeting constitutes a waiver of notice of such meeting and a waiver
of any and all objections to the place or time of such meeting or the manner in which it has been
called or convened, except when the director states, at the beginning of the meeting, any objection
to the transaction of business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting of the Board need
to be specified in the notice or waiver of notice of such meeting.



     Section 8. Quorum and Action. Except as otherwise provided by these Bylaws or the Company’s
Certificate of Incorporation, a majority of the total number of directors then in office will
constitute a quorum for the transaction of business at any meeting of the Board, but if less than
such majority is present at the meeting, a majority of the directors present may adjourn the
meeting from time to time until a quorum is obtained.



     Directors shall be deemed present at a meeting of the Board if a conference telephone, or similar
communications equipment by means of which all persons participating in the meeting can hear each
other, is used.



     The affirmative vote of the majority of the directors present at a meeting at which a quorum is
present shall be the act of the Board, except as otherwise provided by these Bylaws or the
Company’s Certificate of Incorporation.



     Section 9. Presumption of Assent. A director of the Company who is present at a meeting of
its Board at which action on any corporate matter is taken shall be presumed to have assented to
the action taken unless he votes against such action, or abstains from voting in respect thereto
because of an asserted conflict of interest.



     Section 10. Action Without A Meeting. Any action required or permitted to be taken by the
Board at a meeting may be taken without a meeting if a consent in writing, setting forth the action
so taken, shall be signed by all of the directors then in office, and filed in the minutes of the
proceedings of the Board. Any action required or permitted to be taken by any Committee of the
Board at a meeting may be taken without a meeting if such a consent in writing, setting forth the
action so taken, shall be signed by all of the members of such Committee then in office, and filed
in the minutes of the proceedings of such Committee and the Board.



     Section 11. Interested Directors. No contract or other transaction between the Company and
one or more of its directors or officers, or between the Company and any other corporation,
partnership, association, or other organization in which
one or more of its directors or officers are directors or officers or have a financial interest,
shall be void or voidable solely for the reason, or



- 184 -









 




solely because such director or officer is present at or participates in the meeting of the Board
or a committee thereof, which authorizes, approves, or ratifies such contract or transaction or
solely because his or their votes are counted for such purpose, if:





	 	(a)	 	The material facts as to such relationship or interest and as to the contract or
transaction are disclosed or known to the Board or committee, and the Board or committee
in good faith authorizes the contract or transaction by the affirmative votes of a
majority of the disinterested directors, even though the disinterested directors be less
than a quorum; or
	 
	 	(b)	 	The material facts as to his relationship or interest and as to the contract or
transaction are disclosed or known to the stockholders entitled to vote thereon, and the
contract or transaction is specifically approved in good faith by vote of the
stockholders; or
	 
	 	(c)	 	The contract or transaction is fair to the Company as of the time it is authorized,
approved, or ratified, by the Board, a committee, or the stockholders.





     Common or interested directors may be counted in determining the presence of a quorum at a meeting
of the Board or a committee thereof which authorizes, approves, or ratifies such contract or
transaction.



     Section 12. Compensation of Directors. The Board may pay each director a stated salary as
such, or a fixed sum for attendance at meetings of the Board or any committee thereof, or both, and
may reimburse each director for his expenses of attendance at each such meeting. The Board may also
pay to each director rendering services to the Company not ordinarily rendered by directors, as
such, special compensation appropriate to the value of such services, as determined by the Board
from time to time. None of these payments shall preclude any director from serving the Company in
any other capacity and receiving compensation therefor. The Board shall determine the compensation
of a director who is also an officer, for service as an officer, as well as for service as a
director.



     Section 13. Resignations. Any director of the Company may resign at any time upon written
notice to the Company. Such resignation shall take effect at the time specified therefor, and
unless otherwise specified with respect thereto, the acceptance of such resignation shall not be
necessary to make it effective.



     Section 14. Removal. Any director may be removed from office at any time, but only for
cause and only by the affirmative vote of the holders of eighty percent of the shares then entitled
to vote at an election of directors.



     Section 15. Vacancies. Any vacancy on the Board resulting from death, resignation,
retirement, disqualification, removal, or other cause, including any vacancy created by reason of
an increase in the number of directors or as a result of Board action, shall be filled exclusively
by the



- 185 -









 




affirmative vote of a majority of the remaining directors then in office and not by stockholders,
even if such remaining directors constitute less than a quorum of the board of directors, or by a
sole remaining director. Any director so elected will hold office for the remainder of the term of
the class of directors in which the new directorship was created or the vacancy occurred and until
the next annual meeting of stockholders relating to the election of directors of such class and
until such director’s successor is duly elected and qualified. No decrease in the number of
directors will have the effect of shortening the term of any incumbent director.




     Section 16. Committees. The Board, by resolution adopted by a majority of the full Board,
may designate from among its members one or more committees, each of which shall be comprised of
one or more members, and may designate one or more of its members as alternate members of any
committee, who may, subject to any limitations imposed by the Board, replace absent or disqualified
members, at any meeting of that committee. Any such committee, to the extent provided in such
resolution or in the Certificate of Incorporation or these Bylaws, shall have and may exercise all
of the authority of the Board, except as otherwise provided by statute. The designation of such
committee and the delegation thereto of authority shall not operate to relieve the Board, or any
member thereof, of any responsibility imposed by law. Such committee or committees shall have such
name or names as may be determined from time to time by resolution adopted by the Board.



     Section 17. Powers and Duties of Committees. Any committee has and may exercise all of the
powers and authority of the Board in the management of the business and affairs of the Company to
the extent provided for in the resolution of the Board authorizing such committee and as limited by
these Bylaws, and may authorize the seal of the Company to be affixed to all papers which may
require it; but such committee will not have the power or authority to amend the Certificate of
Incorporation, adopt an agreement of merger or consolidation, recommend to the stockholders the
sale, lease, or exchange of all or substantially all of the Company’s property and assets,
recommend to the stockholders a dissolution of the Company or a revocation of dissolution, or amend
these Bylaws; and, unless the resolution or these Bylaws expressly so provide, no such committee
will have the power or authority to declare a dividend or to authorize the issuance of stock.



     Section 18. Chairman of the Board. The Chairman of the Board shall be elected by the
directors at the regular meeting of the Board following the annual election of directors. The
Chairman will hold office until the regular meeting of the Board following the annual election of
directors in the next subsequent year and until his successors are duly elected and qualified, or
until his earlier resignation, removal from office, or both. The Chairman will preside, when
available, at all meetings of the stockholders and the Board. He will have the specific powers
conferred by these Bylaws and will also have and may exercise such further powers and duties as
from time to time may be conferred upon or assigned to him by the Board. The Chairman of the Board
will not be an officer of the Company unless he also serves as the President or Chief Executive
Officer of the Company pursuant to Article IV below.



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ARTICLE IV – OFFICERS




     Section 1. Officers. The officers of the Company shall include a President, a
Secretary and a Treasurer, each whom shall be elected by the Board. Such other officers, assistant
officers and agents as may be deemed necessary may be elected or appointed by the Board from time
to time. Any two or more offices may be held by the same person, except that the offices of the
President and Secretary may not be held by the same person.



     Section 2. Election and Term of Office. The officers of the Company shall be elected at the
regular meeting of the Board following the annual election of directors. Each officer will
thereafter hold office at the pleasure of the Board until the regular meeting of the Board
following the annual election of directors in the next subsequent year and until his successor is
duly elected and qualified, or until his earlier resignation, removal from office, or both.



     Section 3. Removal. Any officer may be removed by the Board at any time, with or without
cause. In the case of the offices of President, Secretary, Chief Executive Officer and Treasurer or
Chief Financial Officer of the Company, the election or designation by the Board of a successor to
any such office will be deemed to constitute the removal, without cause, of the previous incumbent
in such office without the need for separate action by the Board to effect such removal.



     Section 4. Vacancies. A vacancy in any office arising from any cause, may be filled by the
Board for the unexpired portion of the term.



     Section 5. President. The President, under the direction of the Board, will have general
responsibility for the management, and direction of the business, properties, and affairs of the
Company. He will have general executive powers, including all powers required by law to be
exercised by a president of a corporation as such, as well as the specific powers conferred by
these Bylaws and by the Board or delegated to such person by the Chief Executive Officer of the
Company during any period in which the President is not also designated by the Board as the Chief
Executive Officer.



     Section 6. Vice President. In the absence of the President, or in the event of his death,
inability or refusal to act, the Vice President, if one has been appointed or elected by the Board
(or in the event there be more than one Vice President, the Vice Presidents in the order designated
at the time of their appointment or election, or in the absence of any designation, then in the
order of their appointment or election), will perform the duties of the President and, when so
acting, will have all of the powers of, and be subject to all of the restrictions upon, the
President. Each Vice President will have general executive powers to act on behalf of the Company
and such further duties and responsibilities as may be assigned or conferred by the Board or as may
be delegated by the Chief Executive Officer of the Company.



     Section 7. Secretary. The Secretary will (a) keep the minutes of the proceedings of the
Board and the stockholders in one or more books provided for that purpose, (b) see that all notices
are duly given in accordance with the provisions of these
Bylaws or as required by law, (c) be



- 187 -









 




custodian of the corporate records and of the seal of the Company and see that the seal of the
Company is affixed to all documents the execution of which on behalf of the Company under its seal
is duly authorized, (d) be the registrar of the Company and keep a register of the addresses of all
stockholders which will be furnished to the Secretary by the stockholders or by the Company’s
transfer agent, (e) have general charge of the stock transfer books and records of the Company, and
(f) in general, perform all duties incident to the office of the Secretary and such other duties as
from time to time may be assigned to him or her by the Board.




     Section 8. Treasurer. Except as hereinafter provided, the Treasurer will (a) have charge
and custody of, and be responsible for, all funds and securities of the Company, (b) receive and
give receipts for monies due and payable to the Company from any source whatsoever, and deposit all
such monies in the name of the Company in such banks, trust companies or other depositories as the
Board may direct or authorize, and (c) in general, perform all of the duties as from time to time
may be assigned to him or her by the President or the Board. If required by the Board, the
Treasurer will give a bond for the faithful discharge of his or her duties in such sum, and with
such surety or sureties as the Board determines.



     During any period in which the Board has designated a Vice President or Officer other than the
Treasurer to serve as Chief Financial Officer, the Treasurer of the Company will, in lieu of the
duties enumerated above, (a) report to and act as an advisor and consultant to the Chief Financial
Officer with respect to cash management issues and the supervision of short-term investment of
excess funds and (b) perform such other duties and have such other authority as may be delegated to
the Treasurer by the Chief Financial Officer.



     Section 9. Chief Executive Officer. The Board may designate the Chairman of the Board or
the President of the Company to serve as Chief Executive Officer of the Company and in any such
event the person so designated will, in addition to the other duties, powers and responsibilities
conferred by law and under these Bylaws, have and exercise plenary executive authority over the
affairs of the Company including the right to assign duties and grant responsibility to other
officers of the Company, the right to designate without Board action individuals to serve as
assistant officers without general executive authority, and the right to act on behalf of the
Company with respect to the voting of stock or taking of action with respect to investments in any
subsidiary, affiliate or joint venture involving the Company or any subsidiary, provided
however, that the ability of the Chief Executive Officer to act or grant proxies in respect of
the foregoing does not include the power to acquire or dispose of any such investment except as
expressly authorized by the Board.



     In the event that the Board designates the President as Chief Executive Officer, the Board may
designate a Vice President to serve as Deputy Chief Executive Officer to have and exercise the
powers of the Chief Executive Officer in his absence or in the event of his death, inability or
refusal to act. In the event that the President is not also designated as the Chief Executive
Officer of the Company, the President will serve as Deputy Chief Executive Officer.



     Section 10.
Chief Financial Officer. The Board may designate an officer of the Company to serve as Chief Financial Officer and in the event of such designation, the duties, rights and



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responsibilities otherwise assigned to the Treasurer of the Company in the first paragraph of
Section 8 of this Article IV will be assigned to the Chief Financial Officer, In addition, the
Chief Financial Officer will have and exercise plenary authority over internal accounting, auditing
and control functions on behalf of the Company, and any controller or accounting officer of the
Company will report to and be subject to a supervision by and delegation of authority from such
Chief Financial Officer. The Chief Financial Officer will report regularly upon the financial
affairs of the Company to the Chief Executive Officer and the Board.




     Section 11. Salaries. No officer will be prevented from receiving a salary by reason of the
fact that he is also a director of the Company.



ARTICLE V. – CERTIFICATES FOR SHARES AND THEIR TRANSFER




     Section 1. Certifications for Shares. Certificates representing shares of the Company will
be in such form as is determined by the Board. Every holder of stock in the Company will be
entitled to have a certificate bearing the signatures of the President and the Secretary or an
Assistant Secretary or facsimiles thereof if authorized by the Board, and sealed with the corporate
seal or a facsimile thereof, certifying the number of shares owned by him, her, or it in the
Company. Each certificate shall be consecutively numbered or otherwise identified. The name and
address of the person to whom the shares represented thereby are issued, with the number of shares
and date of issue, shall be entered on the stock transfer books of the Company. No certificate will
be issued for any share until such share is fully paid. In case any officer, transfer agent, or
registrar who has signed, or whose facsimile signature has been placed upon, a certificate ceases
to be such officer, transfer agent or registrar before such certificate is issued, it may be issued
by the Company with the same effect as if the Company were such officer, transfer agent or
registrar at the date of issue.



     Section 2. Transfer of Shares. The Company or its duly authorized agent will register a
certificate for shares presented to it for transfer if (a) the certificate is endorsed by the
appropriate person(s), (b) reasonable assurance is given that those endorsements are genuine and
effective, (c) the Company or its duly authorized agent has no duty to inquire into adverse claims,
or has discharged any such duty, (d) any applicable law relating to the collection of taxes has
been complied with, and (e) the transfer is in fact rightful, or is to a purchaser for value in
good faith, and without notice of any adverse claim. The new certificate(s) will be issued only
upon surrender of the old certificate, which will be canceled upon the issuance of the new
certificate(s). The person in whose name shares stand on the books of the Company will be deemed by
the Company to be the owner thereof for all purposes and the Company will not be bound to recognize
an equitable or other claim to, or interest in, such shares on the part of any other person whether
or not it has express written notice or another form of notice thereof, except as expressly
provided by the laws of the State of Delaware.



     Section 3. Lost Stolen, or Destroyed Stock Certificates; Issuance of New Certificates.
The Company may issue a new certificate of stock in the place of any certificate theretofore issued
by it, alleged to have been lost, stolen, or destroyed, and the Company may require the owner of
the



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lost, stolen, or destroyed certificate, or his legal representative, to give the Company a bond
sufficient to indemnify the Company against any claim that may be made against it on account of the
alleged loss, theft, or destruction of any such certificate, or the issuance of such new
certificate.




ARTICLE VI – BOOKS AND RECORDS




     Section 1. Books and Records. The Company shall keep correct and complete books and records
of account and shall keep minutes of the proceedings of its Board and stockholders. The Company
shall also keep, as its principal place of business or with its duly authorized agent, a record of
its stockholders, giving names and addresses of all stockholders and then number of shares held by
each.



     Section 2. Stockholders’ Inspection Rights. Any stockholder, in person or by attorney or
other agent, will, upon written demand under oath stating the purpose thereof, have the right
during the usual hours for business to inspect for any proper purpose the Company’s stock ledger, a
list of its stockholders, and its other books and records and to make copies or extracts therefrom.
A “proper purpose” means a purpose reasonably related to such person’s interest as a stockholder,
In every instance where an attorney or other agent is the person who seeks the right to inspection,
the demand under oath will be accompanied by a power of attorney or such other writing which
authorizes the attorney or other agent to so act on behalf of the stockholder. The demand under
oath will be directed to the Company at its registered office in the State of Delaware or at its
principal place of business, if different.



ARTICLE VII – INDEMNIFICATION




     Section 1. Liabilities and Expenses in Actions. The Company shall indemnify, to the
full extent permitted by Section 145 of The General Corporation Law of the State of Delaware, as
amended from time to time, all persons whom a corporation may indemnify pursuant to said Section
145 of the General Corporation Law of the State of Delaware.



     Section 2. Breach of Fiduciary Duty. No director of the Company will be liable to the
Company or the stockholders for monetary damages for breach of fiduciary duty as a director, except
to the extent such exemption from liability is not permitted by Section 102 of the General
Corporation Law of the State of Delaware, as amended from time to time.



     Section 3. Repeal. No amendment to, or repeal of, any of the provisions of this Bylaw will
adversely affect any right or protection of a director of the Company existing hereunder with
respect to any acts or omissions of such director occurring prior to such amendment or repeal of
these provisions.



     Section 4. Determination of Indemnification. Any indemnification under Section 1 or 2 of
this Article (unless ordered by a court), shall be made by the Company only as authorized in the




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specific case upon a determination that indemnification of the director, officer, employee of agent
is proper under the circumstances. Such determination shall be made (a) by the Board by a majority
vote of a quorum consisting of Directors who were not party to such action, suit, or proceeding, or
(b) if such a quorum is not obtainable or, even if obtainable, a quorum of disinterested Directors
so directs, by independent legal counsel in a written opinion, or (c) by the stockholders.




     Section 5. Advancement of Expenses. Expenses incurred by an officer or director in
defending a civil or criminal action, suit, or proceeding may be paid by the Company in advance of
the final disposition of such action, suit, or proceeding upon receipt of an undertaking by, or on
behalf of, such director or officer to repay such amount if it ultimately is determined that he or
she is not entitled to be indemnified by the Company. Such expenses incurred by other employees and
agents may be paid upon such terms and conditions, if any, as the Board deems appropriate.



     Section 6. Non-Exclusivity. The indemnification and advancement of expenses provided by or
granted pursuant to the foregoing sections are not exclusively of any other rights to which those
seeking indemnification or advancement of expenses may be entitled under Bylaw, agreement, vote of
stockholders or disinterested directors, or otherwise, both as to action in their official
capacity, and as to action in any other capacity while holding such office.



     Section 7. Continuation. Indemnification and advancement of expenses as provided by, or
granted pursuant to, this Article shall continue, unless otherwise provided when authorized or
ratified, as to a person who has ceased to be a director, officer, employee, or agent, and shall
inure to the benefit of the heirs executors, and administrators of such a person.



     Section 8. Directors’ and Officers’ Liability Insurance. The Company has the power to
purchase and maintain insurance on behalf of any person who is or was a director, officer, employee
or agent of the Company, or is or was serving at the request of the Company as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust, or other enterprise,
against any liability asserted against him and incurred by him in any such capacity, or arising out
of his status as such, whether or not the Company would have the power to indemnify him against
such liability under the provisions of this Article.



ARTICLE VIII – MISCELLANEOUS




     Section 1. Fiscal Year. The fiscal year of the Company will be the period commencing
January 1 each year and concluding the following December 31.



     Section 2. Dividends. The Board may from time to time declare, and the Company may pay,
dividends on its outstanding shares in the manner, and upon the terms and conditions provided by
law.



     Section 3. Corporate Seal. The Board shall provide a corporate seal which will be circular
in form and will have inscribed thereon the name of the Company and the state of the incorporation.




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     Section 4. Execution of Instruments. All bills, notes, checks, other instruments for the
payment of money, agreements, indentures, mortgages, deeds, conveyances, transfers, certificates,
declarations, receipts, discharges, releases, satisfactions, settlements, petitions, schedules,
accounts, affidavits, bonds, undertakings, proxies, and other instruments or documents may be
signed, executed, acknowledged, verified, delivered, or accepted on behalf of the Company by the
Chief Executive Officer, by the President, by any Vice President, by the Secretary, or by the Chief
Financial Officer or (if there is no Chief Financial Officer) the Treasurer. Any such events may
also be signed, executed, acknowledged, verified, delivered, or accepted on behalf of the Company
in such other manner, and by such other officers, employees, or agents of the Company as the Board
or the Chief Executive Officer may from time to time direct.



ARTICLE IX – AMENDMENTS




     These Bylaws may be amended, altered, or repealed, and new Bylaws made, by a majority vote of the
whole Board; provided, however, that no Bylaw fixing or altering the quorum or voting required in
respect of action taken by stockholders will be effective unless approved by the stockholders.



     Stockholders may make additional Bylaws, and may alter or repeal any Bylaws, whether or not adopted
by them. Stockholder action to adopt, amend, or repeal any Bylaw requiring action by more than a
majority of the shares entitled to vote thereon will be approved only by the affirmative vote of
such number of all stockholders then entitled to vote which equals or exceeds such greater-
than-majority requirement.




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EXHIBIT C




     The following action is hereby taken and the following business transacted by the unanimous
vote at a meeting duly called and held [or by the unanimous written consent of the Board of
Directors] of Virbac AH, Inc., a corporation organized under the laws of Delaware (the
“Corporation”) as of the 25th day of July, 2006, pursuant to the provisions of the general
corporation laws of Delaware in accordance with the Certificate of Incorporation and Bylaws of this
Corporation:



     WHEREAS, the Corporation, PM Resources, Inc. (“PM Resources”), St. JON Laboratories, Inc.
(“St. JON”) and Delmarva Laboratories, Inc. (“Delmarva”) are all wholly owned subsidiaries of
Virbac Corporation (“Virbac”); Francodex Laboratories, Inc. (“Francodex”) is a wholly owned
subsidiary of the Corporation; and Virbac, PM Resources, St. JON, Delmarva, Francodex
(collectively, the “Affiliates”) and the Corporation are each integral parts of an affiliated
corporate group; and



     WHEREAS, it is in the best interest of the Corporation and its Affiliates that they should
continue to jointly and severally borrow funds for working capital and other corporate needs and
purposes; and



     WHEREAS, First Bank, JPMorgan Chase Bank, N.A. and other banks (collectively, the “Lenders”)
have agreed to extend a revolving credit facility for this Corporation and the Affiliates in the
amount of up to Fifteen Million Dollars ($15,000,000.00) as more fully described in and evidenced
by that certain Loan Agreement dated as of June 29, 2006 to be executed by and among this
Corporation and the Affiliates, as co-borrowers, First Bank, as agent for the Lenders (in such
capacity, the “Agent”) and the Lenders (the “Loan Agreement”), and as evidenced by certain
Revolving Credit Notes to be executed by the Corporation and the Affiliates payable to the
respective orders of each of the Lenders in the aggregate original principal amount of Fifteen
Million Dollars ($15,000,000.00) and dated as of the date of such execution (collectively, the
“Revolving Credit Note”) and by a certain Swing Line Note to be executed by the Corporation and the
Affiliates payable to the order of the Agent in the aggregate original principal amount of Three
Million Dollars ($3,000,000.00) and dated as of the date of such execution (the “Swing Line Note,”
and collectively with the Revolving Credit Note, the “Notes”);



     NOW, THEREFORE, BE IT RESOLVED, that for its lawful corporate needs and purposes, the
Corporation, together with its Affiliates, obtain a revolving credit facility from Agent and the
Lenders in the amount of Fifteen Million Dollars ($15,000,000.00), with a swing line available
thereunder from the Agent in the amount of Three Million Dollars ($3,000,000.00) upon the terms and
conditions to be set forth in the Notes and the Loan Agreement; and be it further



     RESOLVED, that said loans shall be secured by substantially all of the assets of the
Corporation, which liens and security interests shall be granted pursuant to deeds of trust,
security agreements, pledge agreements and other transaction documents as more fully described in
the Loan Agreement (collectively, the “Security Documents”); and be it further



     RESOLVED, that the form of the Loan Agreement, the forms of the Notes and the forms of the
Security Documents to be executed and delivered for and in behalf of the Corporation, each of which
has been submitted to the Board of Directors of the Corporation, be and the same are hereby ordered
to be filed with the Secretary of the Corporation and by reference made a part of these
Resolutions; and be it further



     RESOLVED, that the Loan Agreement, the Notes and the Security Documents above referred to,
and all terms, agreements, warranties, covenants and conditions therein contained, be and the same
hereby are accepted, adopted and approved as to form and substance; and be it further



     RESOLVED, that the President, Chief Financial Officer and/or the Secretary of the Corporation
be, and each of them hereby is authorized and directed for and in behalf of the Corporation to
negotiate, enter into, execute and deliver to the Agent and the Lenders the Loan Agreement, the
Notes and the



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Security Documents with such changes in form and substance and containing such other
terms, agreements, warranties, covenants and conditions as the person executing the same shall approve,
such approval to be conclusively evidenced by the execution thereof; and be it further



     RESOLVED, that the President, Chief Financial Officer and/or the Secretary is also authorized
and empowered from time to time to amend, modify, restructure, restate, supplement, extend or renew
the arrangements or agreements made with Agent and the Lenders pursuant to the Loan Agreement, the
Notes and the Security Documents upon such terms and conditions as the President, Chief Financial
Officer and/or the Secretary of the Corporation may deem desirable, and to negotiate, enter into,
execute, perform and deliver to the Agent and the Lenders such other agreements, documents,
instruments and certificates as the Agent or any of the Lenders may from time to time require in
connection therewith; and be it further



     RESOLVED, that the President, Chief Financial Officer and/or the Secretary of the Corporation
be, and each of them hereby is, authorized to take all such actions and to execute all such other
agreements and instruments as they or any of them shall deem necessary or desirable to carry out
the transactions contemplated by these Resolutions, in such form as the President, Chief Financial
Officer or Secretary executing the same shall deem proper. Any and all acts which said President,
Chief Financial Officer and/or Secretary may do or perform in conformity with the powers conferred
upon them by these resolutions are hereby expressly authorized, approved, verified and confirmed.



     FURTHER RESOLVED, that all acts and deeds heretofore done by the President, Chief Financial
Officer, the Secretary and/or any other officer(s) of the Corporation for and on behalf of the
Corporation in entering into, executing, acknowledging or attesting the Loan Agreement, the Notes,
the Security Documents or any guaranties, security agreements, or other agreements, instruments or
documents with Agent and the Lenders in connection with the transactions therein described prior to
the date of these resolutions, and in carrying out the terms and intentions of these resolutions,
are hereby ratified, approved and confirmed.



     FURTHER RESOLVED, that the President and the Secretary of the Corporation be, and hereby are,
authorized and empowered to certify to Agent and the Lenders the names of the present officer(s) of
the Corporation executing any of: (i) the Loan Agreement, the Notes or any of the Security
Documents or (ii) any other documents executed on behalf of the Corporation and the titles
respectively, held by each of them, together with specimens of their signatures; and be it



- 194 -









 





     FURTHER RESOLVED, that the Agent and each of the Lenders shall be indemnified and held
harmless by the Corporation from and against any and all damages, losses, liabilities, costs and
expenses, including, without limitation, reasonable attorneys’ fees and expenses, incurred by the
Agent or any of the Lenders in acting pursuant to these resolutions.



     The undersigned, being all of the Directors of Virbac AH, Inc., hereby evidence their
unanimous vote and consent to and adopt the foregoing resolutions on and as of the day and year
first written above.



	 	 	 
	 

	 	/s/ Alec L. Poitevint, II
	 

	 	 
	 
	 	 
	 

	 	/s/ Pierre Pagès
	 

	 	 
	 
	 	 
	 

	 	/s/ Eric Marée
	 

	 	 
	 
	 	 
	 

	 	/s/ Jean N. Willk
	 

	 	 
	 
	 	 
	 

	 	/s/ Richard W. Pickert
	 

	 	 
	 
	 	 
	 

	 	/s/ Michel Garaudet
	 

	 	 
	 
	 	 
	 

	 	Constituting the entire Board of Directors
	 

	 	of Virbac AH, Inc.






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CERTIFICATE OF THE PRESIDENT AND SECRETARY

OF DELMARVA LABORATORIES, INC.




     The undersigned, Dr. Erik R. Martinez, the duly elected and acting President of Delmarva
Laboratories, Inc., a corporation organized under the laws of Virginia (the “Corporation”), and
Jean M. Nelson, the duly elected and acting Secretary of the Corporation each certifies as follows:



     1. Dr. Erik R. Martinez is the duly elected and acting President of the Corporation and as
such is authorized to execute and deliver this Certificate.



     2. Jean M. Nelson is the duly elected and acting Secretary of the Corporation, and as such is
authorized to execute and deliver this Certificate.



     3. That attached hereto as Exhibit A is a copy of the Articles of Incorporation of the
Corporation, including all amendments thereto, certified by the Secretary of State of the State of
Virginia.



     4. That attached hereto as Exhibit B is a true and complete copy of the Bylaws of the
Corporation, as amended, and as in effect as of the date hereof.



     5. Attached hereto and made a part hereof as Exhibit C is a true, correct and complete
copy of certain resolutions duly adopted by the Board of Directors of the Corporation as of July
25, 2006, said resolutions have not been amended, superseded or rescinded and are, at the date
hereof, in full force and effect.



     6. The following individuals have been duly elected and have at all times since June 29, 2006
been, and this day are officers of the Corporation, each such officer holds the title set forth
opposite his/her name below; each such officer is authorized pursuant to the resolutions attached
hereto as Exhibit C to execute and deliver documents on behalf of the Corporation as set
forth in such resolutions; and the true and genuine signature of each officer is set forth opposite
his/her name below:



	 	 	 	 	 
	Name	 	Office	 	Signature
	Dr. Erik R. Martinez

	 	President
	 	/s/ Erik R. Martinez
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Secretary	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Jean M. Nelson

	 	EVP and Chief Financial Officer
	 	/s/ Jean M. Nelson
	 

	 	 	 	 
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	 
	 	 





     7. The undersigned have reviewed all of the representations and warranties being made by the
Corporation in the Loan Agreement (as defined in the resolutions attached hereto as Exhibit
C) and the undersigned certify that all of said representations and warranties are true and
accurate as of the date hereof to the best of the undersigned’s’ knowledge.



- 196 -









 





     IN WITNESS WHEREOF, the undersigned have caused this Certificate to be executed as this 25th
day of July, 2006.



	 	 	 	 	 
	(SEAL)
	 	 	 	 
	 
	 	 	 	 
	 

	 	/s/ Erik R. Martinez	 	 
	 

	 	 

Dr. Erik R. Martinez, President

of Virbac Corporation
	 	 
	 
	 	 	 	 
	 

	 	/s/ Jean M. Nelson	 	 
	 

	 	 	 	 
	 

	 	Jean M. Nelson, Secretary


of Virbac Corporation	 	 






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EXHIBIT A




(Articles of Incorporation)






	 	 	 	 	 
	CLINTON MILLER

CHAIRMAN



MARK C. CHRISTIE

COMMISSIONER



	 	
	 	JOEL H. PECK 
CLERK
OF THE COMMISSION

P.O. BOX 1197

RICHMOND, VIRGINIA 23218-1197
	THEODORE V. MORRISON, JR.

COMMISSIONER
	 	 	 	 






	 	 	 	 	 
	 
	 	STATE CORPORATION COMMISSION	 	 
	 
	 	Office of the Clerk
	 	October 24, 2005





DEBBIE GILES

VIRBAC CORPORATION
 3200

MEACHAM BLVD 
FORT
WORTH, TX 76137




	 	 	 	 	 
	 

	 	 RE:
	 	DELMARVA LABORATORIES, INC.
	 

	 	 ID:
	 	0353275-1
	 

	 	 DCN:
	 	05-10-24-1507







This is your receipt for $100.00 to cover the fees for filing an application for
reinstatement with this office.




The effective date of reinstatement is October 24, 2005.




If you have any questions, please call (804) 371-9733 or toll-free in Virginia,
1-866-722-2551.



	 	 	 
	 

	 	Sincerely,
	 

	 	
	 

	 	Joel H. Peck
	 

	 	Clerk of the Commission





RECEIPT

REIN

CIS0368




Tyler Building, 1300 East Main Street, Richmond, VA 23219-3630

Clerk’s Office (804) 371-9733 or (866) 722-2551 (toll-free in Virginia) www.scc.virginia.gov/division/clk

Telecommunications Device for the Deaf-TDD/Voice: (804) 371-9206






- 198 -









 








0353275 - 1




COMMONWEALTH OF VIRGINIA

STATE CORPORATION COMMISSION




AT RICHMOND, OCTOBER 24, 2005




ORDER OF REINSTATEMENT



The corporate existence of DELMARVA LABORATORIES, INC., a domestic corporation, was automatically
terminated on June 30, 2005. The corporation has filed an application for reinstatement and has
otherwise complied with the applicable requirements of law. Therefore, it is ORDERED that



the existence of the aforementioned corporation is reinstated.



The reinstatement is effective on October 24, 2005.




	 	 	 
	 

	 	STATE CORPORATION COMMISSION
	 
	 	 
	 

	 	By 
	 

	 	                    Commissioner






	 	 	 
	CC:

	 	DEBBIE GILES
	 

	 	VIRBAC CORPORATION 
	 

	 	3200 MEACHAM BLVD
 FORT WORTH, TX 76137






REINACPT

CIS0368

05-10-24-1507





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EXHIBIT B




(Bylaws)






BY-LAWS




OF




DELMARVA LABORATORIES, INC.




ARTICLE I





Shareholders’ Meeting




     Section 1. Annual Meeting: The annual meeting of the shareholders of the Corporation
shall be held on February 1. If that day is a legal holiday, the annual meeting shall be held on
the next succeeding day not a legal holiday.



     Section 2. Other Meetings: All meetings of the shareholders shall be held at the
time or places fixed by the Board of Directors. The time and place shall be stated in the notice
or waiver of notice of each meeting. Meetings of the shareholders shall be held whenever called by
the President of the Secretary, by a majority of the Directors, or by shareholders holding at least
one-tenth of the number of shares of Common Stock entitled to vote then outstanding.



     Section 3. Quorum and Voting: The holders of a majority of the outstanding shares of
Common Stock entitled to vote shall constitute a quorum at a meeting of the shareholders. Less than
a quorum may adjourn the meeting to a fixed time and place, no further notice of any adjourned
meeting being required. Each shareholder shall be entitled to one vote in person or by proxy for
each share entitled to vote standing in his name on the books of the Corporation.





- 200 -










 








     Section 4. Closing Transfer Books and Record Date: The transfer books for shares of
Common Stock of the Corporation may be closed by order of the Board of Directors for not exceeding
fifty days next preceding any shareholders’ meeting for the purpose of determining shareholders
entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or
entitled to receive payment of any dividend or in order to make a determination of shareholders for
any other proper purpose. In lieu of closing the stock transfer books, the Board of Directors may
fix, in advance, a date as the record date for any such determination of shareholders, such date to
be not more than fifty days preceding the date on which the particular action requiring such
determination of the shareholders is to be taken.



     Section 5. Conduct of Meeting: The President shall preside over all meetings of the
shareholders. If he is not present, any Vice President shall preside. If none of such officers
are present, a Chairman shall be elected by the meeting. The Secretary of the Corporation shall
act as Secretary of all meetings if he is present. If he is not present, the Chairman shall
appoint a Secretary of the meeting. The Chairman of the meeting may appoint one or more inspectors
of the election to determine the qualifications of voters, the validity of proxies, and the results
of ballots.



     Section 6. Action Without a Meeting: Any action required or permitted by law to be
taken at a meeting of the shareholders may be taken without a meeting if a consent in writing,
setting forth the action so taken, shall be signed by all of the




- 201 -









 








shareholders entitled to vote with respect to the subject matter thereof.




ARTICLE II




Board of Directors




     Section 1. Number, Election and Terms: The Board of Directors shall be elected at
the annual meeting of the shareholders or any special meeting held in lieu thereof. The number of
Directors shall be Four (4). This number may be increased or decreased at any time by amendment of
these By-Laws. Directors need not be shareholders. Directors shall hold office until removed or
until the next annual meeting of the shareholders or until their
successors are elected. A majority of
the Directors actually elected and serving at the time of a given meeting shall constitute a
quorum. Less than a quorum may adjourn the meeting to a fixed time and place, no further notice of
any adjourned meeting being required.



     Section 2. Removal and Vacancies: The shareholders at any meeting, by a vote of the
holders of a majority of all the shares of Common Stock at the time outstanding and having voting
power, may remove any Director and fill the vacancy. Any vacancy arising among the Directors may
be filled by the remaining Directors unless sooner filled by the shareholders in meeting.



     Section 3. Meetings and Notices: Meetings of the Board of Directors shall be held at
times fixed by resolution of the Board, or upon the call of the President or the Secretary, or




- 202 -









 








upon the call of a majority of the members of the Board of Directors. Notice of any meeting
not held at a time fixed by a resolution of the board shall be given to each Director at least 24
hours before the meeting at his resident or business address or by delivering such notice to him or
by telephoning or telegraphing it to him at least 24 hours before the meeting. Any such notice
shall contain the time and place of the meeting, but need not contain the purpose of any meeting.
Meetings may be held without notice if all of the Directors are present or those not present waive
notice before or after the meeting.




     Section 4. Action Without a Meeting: Any action required by law to be taken at a
meeting of the Directors or Executive Committee of the Directors of the Corporation may be taken
without a meeting or by telephone if a consent in writing, setting forth the action so taken, shall
be signed by all of the Directors or members of the Executive Committee.



ARTICLE III




Committees




     Section 1. Executive Committee: The Board of Directors may designate, by
resolution adopted by majority of all the Directors, two or more of the Directors to constitute an
Executive Committee. The Executive Committee, when the Board of Directors is not in session, may
exercise all of the powers of the Directors except to approve an amendment of the Articles of
Incorporation or a plan of merger of consolidation, and may authorize




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the seal
of the Corporation to be affixed as required. The Executive Committee may make rules
for the holding and conduct of its meetings, the notice thereof required, and the keeping of its
records; and the Executive Committee may act without formal meeting as provided in Article II,
Section 4.




ARTICLE IV




Officers




     Section 1. Election, Removal and Duties: The Board of Directors, promptly
after its election in each year, shall elect a President (who shall be a Director) and also elect a
Secretary and a Treasurer, and may elect or appoint one or more Vice Presidents or such other
officers as it may deem proper. Any officer may hold more than one office except that the same
person shall not be a President and Secretary. All officers shall serve for a term of one year and
until their respective successors are elected, but any officer may be removed summarily with or
without cause at any time by the vote of a majority of all of the Directors. Vacancies among the
officers shall be filled by the Directors. The officers of the Corporation shall have such duties as
generally pertain to their respective offices as well as such powers and duties as from time to
time may be delegated to them by the Board of Directors.




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ARTICLE V




Certificates of Stock




     Section 1. Form and Signatures: Each shareholder shall be entitled to a certificate
or certificates of stock in such form as may be approved by the Board of Directors and which are
signed by the President or a Vice President and by the Secretary or an Assistant Secretary or the
Treasurer or an Assistant Treasurer and with the corporate seal impressed thereon.



     Section 2. Transfers: All transfers of stock of the Corporation shall be made upon
its books by surrender of the certificate for the shares transferred accompanied by an assignment
in writing by the holder and may be accomplished either by the holder in person or by a duly
authorized attorney in fact.



     Section 3.
Replacements: In case of the loss, mutilation, or destruction
of a certificate of stock, a duplicate certificate may be issued upon
such terms not in conflict with law as the Board of Directors may prescribe.



     Section 4. Transfer Agent and Registrar: The Board of Directors may also appoint one
or more Transfer Agent and Registrar for its stock and may require stock certificates to be both
countersigned by a Transfer Agent and Registrar, the signature thereon of the officers of the
Corporation and the seal of the Corporation thereon may be facsimiles, engraved or printed. In case
any officer or officers who shall have signed, or whose facsimile or signature or signatures shall
have been used on, any such certificate or certificates shall .cease to be such officer




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or officers of the Corporation, whether because of death, resignation, or otherwise, before such
certificate or certificates shall have been delivered by the Corporation, such certificate or
certificates may nevertheless be issued as though the person or persons who signed such certificate
or certificates or whose facsimile signature or signatures shall have been used thereon had not
ceased to be such officer or officers of the Corporation.




ARTICLE VI




Seal




     Section 1. Seal: The seal of the Corporation shall be a flatfaced circular die
(of which there may be any number of counterparts) with the word “SEAL” and the name of the
Corporation engraved thereon.



ARTICLE VII



Voting of Stock Held




     Section 1. Voting: Unless otherwise provided by a vote of the Board of Directors, the
President may either appoint attorneys to vote any stock of other corporations owned by this
corporation or may attend any meeting of the holders of stock of such other corporation and vote
such shares in person.




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ARTICLE VIII




Checks, Notes and Drafts




     Signatures: Checks, note and drafts and other orders for the payment of money
shall be signed by such persons as the Board of Directors from time to time may authorize. The
signature of any such person may be a facsimile when by the Board of Directors.




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EXHIBIT C




     The following action is hereby taken and the following business transacted by the unanimous
vote at a meeting duly called and held [or by the unanimous written consent of the Board of
Directors] of Delmarva Laboratories, Inc., a corporation organized under the laws of Virginia (the
“Corporation”) as of the 25th day of July, 2006, pursuant to the provisions of the general
corporation laws of Virginia in accordance with the Articles of Incorporation and Bylaws of this
Corporation:



     WHEREAS, the Corporation, PM Resources, Inc. (“PM Resources”), St. JON Laboratories, Inc.
(“St. JON”) and Virbac AH, Inc. (“Virbac AH”) are all wholly owned subsidiaries of Virbac
Corporation (“Virbac”); Francodex Laboratories, Inc. (“Francodex”) is a wholly owned subsidiary of
Virbac AH; and Virbac, Virbac AH, St. JON, PM Resources, Francodex (collectively, the “Affiliates”)
and the Corporation are each integral parts of an affiliated corporate group; and



     WHEREAS, it is in the best interest of the Corporation and its Affiliates that they should
continue to jointly and severally borrow funds for working capital and other corporate needs and
purposes; and



     WHEREAS, First Bank, JPMorgan Chase Bank, N.A. and other banks (collectively, the “Lenders”)
have agreed to extend a revolving credit facility for this Corporation and the Affiliates in the
amount of up to Fifteen Million Dollars ($15,000,000.00) as more fully described in and evidenced
by that certain Loan Agreement dated as of June 29, 2006 to be executed by and among this
Corporation and the Affiliates, as co-borrowers, First Bank, as agent for the Lenders (in such
capacity, the “Agent”) and the Lenders (the “Loan Agreement”), and as evidenced by certain
Revolving Credit Notes to be executed by the Corporation and the Affiliates payable to the
respective orders of each of the Lenders in the aggregate original principal amount of Fifteen
Million Dollars ($15,000,000.00) and dated as of the date of such execution (collectively, the
“Revolving Credit Note”) and by a certain Swing Line Note to be executed by the Corporation and the
Affiliates payable to the order of the Agent in the aggregate original principal amount of Three
Million Dollars ($3,000,000.00) and dated as of the date of such execution (the “Swing Line Note,”
and collectively with the Revolving Credit Note, the “Notes”);



     NOW, THEREFORE, BE IT RESOLVED, that for its lawful corporate needs and purposes, the
Corporation, together with its Affiliates, obtain a revolving credit facility from Agent and the
Lenders in the amount of Fifteen Million Dollars ($15,000,000.00), with a swing line available
thereunder from the Agent in the amount of Three Million Dollars ($3,000,000.00) upon the terms and
conditions to be set forth in the Notes and the Loan Agreement; and be it further



     RESOLVED, that said loans shall be secured by substantially all of the assets of the
Corporation, which liens and security interests shall be granted pursuant to deeds of trust,
security agreements, pledge agreements and other transaction documents as more fully described in
the Loan Agreement (collectively, the “Security Documents”); and be it further



     RESOLVED, that the form of the Loan Agreement, the forms of the Notes and the forms of the
Security Documents to be executed and delivered for and in behalf of the Corporation, each of which
has been submitted to the Board of Directors of the Corporation, be and the same are hereby ordered
to be filed with the Secretary of the Corporation and by reference made a part of these
Resolutions; and be it further



     RESOLVED, that the Loan Agreement, the Notes and the Security Documents above referred to,
and all terms, agreements, warranties, covenants and conditions therein contained, be and the same
hereby are accepted, adopted and approved as to form and substance; and be it further



     RESOLVED, that the President, Chief Financial Officer and/or the Secretary of the Corporation
be, and each of them hereby is authorized and directed for and in behalf of the Corporation to
negotiate, enter into, execute and deliver to the Agent and the Lenders the Loan Agreement, the
Notes and the



- 208 -









 




Security Documents with such changes in form and substance and containing such other
terms,
agreements, warranties, covenants and conditions as the person executing the same shall approve,
such approval to be conclusively evidenced by the execution thereof; and be it further




     RESOLVED, that the President, Chief Financial Officer and/or the Secretary is also authorized
and empowered from time to time to amend, modify, restructure, restate, supplement, extend or renew
the arrangements or agreements made with Agent and the Lenders pursuant to the Loan Agreement, the
Notes and the Security Documents upon such terms and conditions as the President, Chief Financial
Officer and/or the Secretary of the Corporation may deem desirable, and to negotiate, enter into,
execute, perform and deliver to the Agent and the Lenders such other agreements, documents,
instruments and certificates as the Agent or any of the Lenders may from time to time require in
connection therewith; and be it further



     RESOLVED, that the President, Chief Financial Officer and/or the Secretary of the Corporation
be, and each of them hereby is, authorized to take all such actions and to execute all such other
agreements and instruments as they or any of them shall deem necessary or desirable to carry out
the transactions contemplated by these Resolutions, in such form as the President, Chief Financial
Officer or Secretary executing the same shall deem proper. Any and all acts which said President,
Chief Financial Officer and/or Secretary may do or perform in conformity with the powers conferred
upon them by these resolutions are hereby expressly authorized, approved, verified and confirmed.



     FURTHER RESOLVED, that all acts and deeds heretofore done by the President, Chief Financial
Officer, the Secretary and/or any other officer(s) of the Corporation for and on behalf of the
Corporation in entering into, executing, acknowledging or attesting the Loan Agreement, the Notes,
the Security Documents or any guaranties, security agreements, or other agreements, instruments or
documents with Agent and the Lenders in connection with the transactions therein described prior to
the date of these resolutions, and in carrying out the terms and intentions of these resolutions,
are hereby ratified, approved and confirmed.



     FURTHER RESOLVED, that the President and the Secretary of the Corporation be, and hereby are,
authorized and empowered to certify to Agent and the Lenders the names of the present officer(s) of
the Corporation executing any of: (i) the Loan Agreement, the Notes or any of the Security
Documents or (ii) any other documents executed on behalf of the Corporation and the titles
respectively, held by each of them, together with specimens of their signatures; and be it



- 209 -









 





     FURTHER RESOLVED, that the Agent and each of the Lenders shall be indemnified and held
harmless by the Corporation from and against any and all damages, losses, liabilities, costs and
expenses, including, without limitation, reasonable attorneys’ fees and expenses, incurred by the
Agent or any of the Lenders in acting pursuant to these resolutions.



     The undersigned, being all of the Directors of Delmarva Laboratories, Inc., hereby evidence
their unanimous vote and consent to and adopt the foregoing resolutions on and as of the day and
year first written above.



	 	 	 
	 

	 	/s/ Alec L. Poitevint, II
	 

	 	 
	 
	 	 
	 

	 	/s/ Pierre Pagès
	 

	 	 
	 
	 	 
	 

	 	/s/ Eric Marée
	 

	 	 
	 
	 	 
	 

	 	/s/ Jean N. Willk
	 

	 	 
	 
	 	 
	 

	 	/s/ Richard W. Pickert
	 

	 	 
	 
	 	 
	 

	 	/s/ Michel Garaudet
	 

	 	 
	 
	 	 
	 

	 	Constituting the entire Board of Directors
	 

	 	of Delmarva Laboratories, Inc.






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REVOLVING CREDIT NOTE




			
	 	 	 
	$10,000,000.00
	 	St. Louis, Missouri

June 29, 2006






     FOR VALUE RECEIVED, on March 31, 2007, the undersigned, VIRBAC CORPORATION, a Delaware
corporation, PM RESOURCES, INC., a Missouri corporation, ST. JON LABORATORIES, INC., a California
corporation, FRANCODEX LABORATORIES, INC., a Kansas corporation, VIRBAC AH, INC., a Delaware
corporation, and DELMARVA LABORATORIES, INC., a Virginia corporation (collectively, the
“Borrowers”), hereby jointly and severally promise to pay to the order of FIRST BANK (“Lender”),
the principal sum of Ten Million Dollars ($10,000,000.00), or such lesser sum as may then be
outstanding hereunder. The aggregate principal amount which Lender shall be committed to have
outstanding hereunder at any one time shall not exceed Ten Million Dollars ($10,000,000.00) subject
to the limitations of the “Borrowing Base” (as defined in the Loan Agreement), which amount may be
borrowed, paid, borrowed and repaid, in whole or in part, subject to the terms and conditions
hereof and of the Loan Agreement hereinafter identified.



     Borrowers further jointly and severally promise to pay to the order of Lender interest on the
principal amount from time to time outstanding hereunder on the dates and at the rate or rates
provided for in the Loan Agreement. All payments hereunder (other than prepayments) shall be
applied first to the payment of all accrued and unpaid interest, with the balance, if any, to be
applied to the payment of principal. All prepayments hereunder shall be applied solely to the
payment of principal.



     All payments of principal and interest hereunder shall be made in lawful currency of the
United States in federal or other immediately available funds at the banking office of First Bank
(the “Agent”) situated at 560 Anglum Road, Hazelwood, Missouri 63042, or at such other place as the
Agent shall designate in writing. Interest shall be computed on an actual day, 360-day year basis.
Consistent with the terms of the Loan Agreement, the Agent shall determine each interest rate
applicable to the advances hereunder, which determination shall be conclusive in the absence of
manifest error.



     Lender may record the date and amount of all loans and all payments of principal and interest
hereunder in the records it maintains with respect thereto. Lender’s books and records showing the
account between Lender and the Borrowers shall be admissible in evidence in any action or
proceeding and shall constitute prima facie proof of the items therein set forth.



     This Note is referred to in that certain Loan Agreement dated the date hereof by and between
the Borrowers, Agent, Lender and other lenders named therein (as the same may from time to time be
amended, the “Loan Agreement”), to which Loan Agreement reference is hereby made for a statement of
the terms and conditions upon which the maturity of this Note may be accelerated, and for other
terms and conditions, including prepayment, which may affect this Note.



     This Note is secured by those six (6) certain Security Agreements, each dated as of the date
hereof executed respectively by each of the Borrowers in favor of Agent for the benefit of Lender
and others (as the same may from time to time be amended, the “Security Agreements”), to which
Security Agreements reference is hereby made for a description of the security and a statement of
the terms and conditions upon which this Note is secured.



     This Note is secured by that certain Third Amended and Restated Agreement of Pledge dated as
of the date hereof executed by Virbac Corporation in favor of Agent for the benefit of Lender and
others, as the same may from time to time be amended, modified or restated, and by that certain
Second



- 211 -









 




Amended and Restated Agreement of Pledge dated as of the date hereof executed by Virbac AH,
Inc. in favor of Agent for the benefit of Lender and others, as the same may from time to time be
amended,
modified or restated (as so amended, modified or restated, the “Pledge Agreements”), to which
Pledge Agreements reference is hereby made for a description of the security and a statement of the
terms and conditions upon which this Note is secured.




     This Note is also secured by that certain Deed of Trust and Security Agreement dated as of
September 3, 2003 and executed by Virbac Corporation in favor of the Agent for the benefit of
Lender and others, as the same has been amended from time to time, and by that certain Deed of
Trust and Security Agreement dated as of September 9, 1993 and executed by PM Resources, Inc. in
favor of the Agent for the benefit of Lender and others, as the same has been amended from time to
time (collectively, as the same have been and may from time to time hereafter be further amended,
modified, restated or replaced, the “Deeds of Trust”), to which Deeds of Trust reference is also
hereby made for a description of the security and a statement of the terms and conditions upon
which this Note is secured.



     This Note is also secured by that certain Patent, Trademark and License Security Agreement
dated as of September 3, 2003 and executed by Virbac Corporation in favor of the Agent for the
benefit of Lender and others, as the same has been amended from time to time, by that certain
Patent, Trademark and License Security Agreement dated as of September 3, 2003 and executed by
Virbac AH, Inc. in favor of the Agent for the benefit of Lender and others, as the same has been
amended from time to time, by that certain Patent, Trademark and License Security Agreement dated
as of June 29, 2006 and executed by St. JON Laboratories, Inc. in favor of the Agent for the
benefit of Lender and others, as the same has been amended from time to time, and by that certain
Patent, Trademark and License Security Agreement dated as of September 3, 2003 and executed by
Delmarva Laboratories, Inc. in favor of the Agent for the benefit of Lender and others, as the same
has been amended from time to time (collectively, as the same have been and may from time to time
hereafter be further amended, modified, restated or replaced, the "Patent, Trademark and License
Security Agreements”), to which Patent, Trademark and License Security Agreements reference is also
hereby made for a description of the security and a statement of the terms and conditions upon
which this Note is secured.



     This Note is guarantied by the Subsidiary Guaranties (as defined in the Loan Agreement) and is
further secured by the Subsidiary Security Agreements (as defined in the Loan Agreement), to which
Subsidiary Guaranties and Subsidiary Security Agreements reference is hereby made for a description
of the security and a statement of the terms and conditions upon which this Note is further
secured.



     If the Borrowers shall fail to make any payment of any principal of or interest on this Note
as and when the same shall become due and payable, or if any “Event of Default” (as defined
therein) shall occur under or within the meaning of the Loan Agreement or any of the Security
Agreements, any of the Deeds of Trust, any of Patent, Trademark and License Security Agreements,
any of the Pledge Agreements or any of the Subsidiary Security Agreements, Lender’s obligation to
make any additional loans under this Note may be terminated as set forth in the Loan Agreement, and
Agent, on behalf of Lender, may further declare the entire outstanding principal balance of this
Note and all accrued and unpaid interest thereon to be immediately due and payable.



     In the event that any payment of any principal of or interest on this Note shall not be paid
when due, whether by reason of acceleration or otherwise, and this Note shall be placed in the
hands of an attorney or attorneys for collection or for foreclosure of the Security Agreements, the
Deeds of Trust, the Patent, Trademark and License Security Agreements, the Pledge Agreements, the
Subsidiary Guaranties and/or the Subsidiary Security Agreements securing payment hereof, or for
representation of Lender in connection with bankruptcy or insolvency proceedings relating hereto,
the Borrowers jointly and



- 212 -









 




severally promise to pay, in addition to all other amounts otherwise due
hereon, the reasonable costs and expenses of such collection, foreclosure and representation,
including, without limitation, reasonable attorneys’ fees and expenses (whether or not litigation
shall be commenced in aid thereof). All parties
hereto severally waive presentment for payment, demand, protest, notice of protest and notice of
dishonor.




     This Note shall be governed by and construed in accordance with the internal laws of the State
of Missouri.



	 	 	 	 	 
	 	 	VIRBAC CORPORATION
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Jean M. Nelson
	 

	 	 	 	 
	 	 	Name: Jean M. Nelson
	 	 	Title: Exec. Vice-President and Chief Financial Officer
	 
	 	 	 	 
	 	 	PM RESOURCES, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Jean M. Nelson
	 

	 	 	 	 
	 	 	Name: Jean M. Nelson
	 	 	Title: Exec. Vice-President and Chief Financial Officer
	 
	 	 	 	 
	 	 	ST. JON LABORATORIES, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Jean M. Nelson
	 

	 	 	 	 
	 	 	Name: Jean M. Nelson
	 	 	Title: Exec. Vice-President and Chief Financial Officer
	 
	 	 	 	 
	 	 	FRANCODEX LABORATORIES, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Jean M. Nelson
	 

	 	 	 	 
	 	 	Name: Jean M. Nelson
	 	 	Title: Exec. Vice-President and Chief Financial Officer






- 213 -









 






	 	 	 	 	 
	 	 	VIRBAC AH, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Jean M. Nelson
	 

	 	 	 	 
	 	 	Name: Jean M. Nelson
	 	 	Title: Exec. Vice-President and Chief Financial Officer
	 	 	DELMARVA LABORATORIES, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Jean M. Nelson
	 

	 	 	 	 
	 	 	Name: Jean M. Nelson
	 	 	Title: Exec. Vice-President and Chief Financial Officer






- 214 -









 






Revolving Credit Note (cont’d)




LOANS AND PAYMENTS OF PRINCIPAL




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Amount of	 	 	Unpaid	 	 	 	 	 	 	 
	 	 	of	 	 	Principal	 	 	Principal	 	 	Notation	 
	Date	 	Loan	 	 	Repaid	 	 	Balance	 	 	Made By	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 





- 215 -









 






REVOLVING CREDIT NOTE




			
	 	 	 
	$5,000,000.00
	 	St. Louis, Missouri

June 29, 2006






     FOR VALUE RECEIVED, on March 31, 2007, the undersigned, VIRBAC CORPORATION, a Delaware
corporation, PM RESOURCES, INC., a Missouri corporation, ST. JON LABORATORIES, INC., a California
corporation, FRANCODEX LABORATORIES, INC., a Kansas corporation, VIRBAC AH, INC., a Delaware
corporation, and DELMARVA LABORATORIES, INC., a Virginia corporation (collectively, the
“Borrowers”), hereby jointly and severally promise to pay to the order of JPMORGAN CHASE BANK, N.A.
(“Lender”), the principal sum of Five Million Dollars ($5,000,000.00), or such lesser sum as may
then be outstanding hereunder. The aggregate principal amount which Lender shall be committed to
have outstanding hereunder at any one time shall not exceed Five Million Dollars ($5,000,000.00)
subject to the limitations of the “Borrowing Base” (as defined in the Loan Agreement), which amount
may be borrowed, paid, borrowed and repaid, in whole or in part, subject to the terms and
conditions hereof and of the Loan Agreement hereinafter identified.



     Borrowers further jointly and severally promise to pay to the order of Lender interest on the
principal amount from time to time outstanding hereunder on the dates and at the rate or rates
provided for in the Loan Agreement. All payments hereunder (other than prepayments) shall be
applied first to the payment of all accrued and unpaid interest, with the balance, if any, to be
applied to the payment of principal. All prepayments hereunder shall be applied solely to the
payment of principal.



     All payments of principal and interest hereunder shall be made in lawful currency of the
United States in federal or other immediately available funds at the banking office of First Bank
(the “Agent”) situated at 560 Anglum Road, Hazelwood, Missouri 63042, or at such other place as the
Agent shall designate in writing. Interest shall be computed on an actual day, 360-day year basis.
Consistent with the terms of the Loan Agreement, the Agent shall determine each interest rate
applicable to the advances hereunder, which determination shall be conclusive in the absence of
manifest error.



     Lender may record the date and amount of all loans and all payments of principal and interest
hereunder in the records it maintains with respect thereto. Lender’s books and records showing the
account between Lender and the Borrowers shall be admissible in evidence in any action or
proceeding and shall constitute prima facie proof of the items therein set forth.



     This Note is referred to in that certain Loan Agreement dated the date hereof by and between
the Borrowers, Agent, Lender and other lenders named therein (as the same may from time to time be
amended, the “Loan Agreement”), to which Loan Agreement reference is hereby made for a statement of
the terms and conditions upon which the maturity of this Note may be accelerated, and for other
terms and conditions, including prepayment, which may affect this Note.



     This Note is secured by those six (6) certain Security Agreements, each dated as of the date
hereof executed respectively by each of the Borrowers in favor of Agent for the benefit of Lender
and others (as the same may from time to time be amended, the “Security Agreements”), to which
Security Agreements reference is hereby made for a description of the security and a statement of
the terms and conditions upon which this Note is secured.



     This Note is secured by that certain Third Amended and Restated Agreement of Pledge dated as
of the date hereof executed by Virbac Corporation in favor of Agent for the benefit of Lender and
others, as the same may from time to time be amended, modified or restated, and by that certain
Second



- 216 -









 




Amended and Restated Agreement of Pledge dated as of the date hereof executed by Virbac AH,
Inc. in favor of Agent for the benefit of Lender and others, as the same may from time to time be
amended,
modified or restated (as so amended, modified or restated, the “Pledge Agreements”), to which
Pledge Agreements reference is hereby made for a description of the security and a statement of the
terms and conditions upon which this Note is secured.




     This Note is also secured by that certain Deed of Trust and Security Agreement dated as of
September 3, 2003 and executed by Virbac Corporation in favor of the Agent for the benefit of
Lender and others, as the same has been amended from time to time, and by that certain Deed of
Trust and Security Agreement dated as of September 9, 1993 and executed by PM Resources, Inc. in
favor of the Agent for the benefit of Lender and others, as the same has been amended from time to
time (collectively, as the same have been and may from time to time hereafter be further amended,
modified, restated or replaced, the “Deeds of Trust”), to which Deeds of Trust reference is also
hereby made for a description of the security and a statement of the terms and conditions upon
which this Note is secured.



     This Note is also secured by that certain Patent, Trademark and License Security Agreement
dated as of September 3, 2003 and executed by Virbac Corporation in favor of the Agent for the
benefit of Lender and others, as the same has been amended from time to time, by that certain
Patent, Trademark and License Security Agreement dated as of September 3, 2003 and executed by
Virbac AH, Inc. in favor of the Agent for the benefit of Lender and others, as the same has been
amended from time to time, by that certain Patent, Trademark and License Security Agreement dated
as of June 29, 2006 and executed by St. JON Laboratories, Inc. in favor of the Agent for the
benefit of Lender and others, as the same has been amended from time to time, and by that certain
Patent, Trademark and License Security Agreement dated as of September 3, 2003 and executed by
Delmarva Laboratories, Inc. in favor of the Agent for the benefit of Lender and others, as the same
has been amended from time to time (collectively, as the same have been and may from time to time
hereafter be further amended, modified, restated or replaced, the "Patent, Trademark and License
Security Agreements”), to which Patent, Trademark and License Security Agreements reference is also
hereby made for a description of the security and a statement of the terms and conditions upon
which this Note is secured.



     This Note is guarantied by the Subsidiary Guaranties (as defined in the Loan Agreement) and is
further secured by the Subsidiary Security Agreements (as defined in the Loan Agreement), to which
Subsidiary Guaranties and Subsidiary Security Agreements reference is hereby made for a description
of the security and a statement of the terms and conditions upon which this Note is further
secured.



     If the Borrowers shall fail to make any payment of any principal of or interest on this Note
as and when the same shall become due and payable, or if any “Event of Default” (as defined
therein) shall occur under or within the meaning of the Loan Agreement or any of the Security
Agreements, any of the Deeds of Trust, any of Patent, Trademark and License Security Agreements,
any of the Pledge Agreements or any of the Subsidiary Security Agreements, Lender’s obligation to
make any additional loans under this Note may be terminated as set forth in the Loan Agreement, and
Agent, on behalf of Lender, may further declare the entire outstanding principal balance of this
Note and all accrued and unpaid interest thereon to be immediately due and payable.



     In the event that any payment of any principal of or interest on this Note shall not be paid
when due, whether by reason of acceleration or otherwise, and this Note shall be placed in the
hands of an attorney or attorneys for collection or for foreclosure of the Security Agreements, the
Deeds of Trust, the Patent, Trademark and License Security Agreements, the Pledge Agreements, the
Subsidiary Guaranties and/or the Subsidiary Security Agreements securing payment hereof, or for
representation of Lender in connection with bankruptcy or insolvency proceedings relating hereto,
the Borrowers jointly and



- 217 -









 




severally promise to pay, in addition to all other amounts otherwise due
hereon, the reasonable costs and expenses of such collection, foreclosure and representation,
including, without limitation, reasonable attorneys’ fees and expenses (whether or not litigation
shall be commenced in aid thereof). All parties
hereto severally waive presentment for payment, demand, protest, notice of protest and notice of
dishonor.




     This Note shall be governed by and construed in accordance with the internal laws of the State
of Missouri.



	 	 	 	 	 
	 	 	VIRBAC CORPORATION
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Jean M. Nelson
	 

	 	 	 	 
	 	 	Name: Jean M. Nelson
	 	 	Title: Exec. Vice-President and Chief Financial Officer
	 
	 	 	 	 
	 	 	PM RESOURCES, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Jean M. Nelson
	 

	 	 	 	 
	 	 	Name: Jean M. Nelson
	 	 	Title: Exec. Vice-President and Chief Financial Officer
	 
	 	 	 	 
	 	 	ST. JON LABORATORIES, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Jean M. Nelson
	 

	 	 	 	 
	 	 	Name: Jean M. Nelson
	 	 	Title: Exec. Vice-President and Chief Financial Officer
	 
	 	 	 	 
	 	 	FRANCODEX LABORATORIES, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Jean M. Nelson
	 

	 	 	 	 
	 	 	Name: Jean M. Nelson
	 	 	Title: Exec. Vice-President and Chief Financial Officer






- 218 -








 






	 	 	 	 	 
	 	 	VIRBAC AH, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Jean M. Nelson
	 

	 	 	 	 
	 	 	Name: Jean M. Nelson
	 	 	Title: Exec. Vice-President and Chief Financial Officer
	 
	 	 	 	 
	 	 	DELMARVA LABORATORIES, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Jean M. Nelson
	 

	 	 	 	 
	 	 	Name: Jean M. Nelson
	 	 	Title: Exec. Vice-President and Chief Financial Officer







- 219 -









 






Revolving Credit Note (cont’d)




LOANS AND PAYMENTS OF PRINCIPAL




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Amount of	 	 	Unpaid	 	 	 	 	 	 	 
	 	 	of	 	 	Principal	 	 	Principal	 	 	Notation	 
	Date	 	Loan	 	 	Repaid	 	 	Balance	 	 	Made By	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 





- 220 -









 






SWING LINE NOTE




			
	 	 	 
	$3,000,000.00
	 	St. Louis, Missouri

June 29, 2006






     FOR VALUE RECEIVED, on March 31, 2007, the undersigned, VIRBAC CORPORATION, a Delaware
corporation, PM RESOURCES, INC., a Missouri corporation, ST. JON LABORATORIES, INC., a California
corporation, FRANCODEX LABORATORIES, INC., a Kansas corporation, VIRBAC AH, INC., a Delaware
corporation, and DELMARVA LABORATORIES, INC., a Virginia corporation (collectively, the
“Borrowers”), hereby jointly and severally promise to pay to the order of FIRST BANK, a Missouri
state bank (“Swing Line Lender”), the principal sum of Three Million Dollars ($3,000,000.00), or
such lesser sum as may then constitute the aggregate unpaid principal amount of all Swing Line
Loans made by Swing Line Lender to Borrowers pursuant to the Loan Agreement (as hereinafter
defined). The aggregate principal amount of Swing Line Loans which Swing Line Lender shall be
committed to have outstanding under this Note at any one time shall not exceed Three Million
Dollars ($3,000,000.00), subject to the limitations of the “Borrowing Base” (as defined in the Loan
Agreement), which amount may be borrowed, paid, reborrowed and repaid, in whole or in part, subject
to the terms and conditions of this Note and of the Loan Agreement.



     Borrowers further jointly and severally promise to pay to the order of Swing Line Lender
interest on the principal amount from time to time outstanding hereunder on the dates and at the
rate or rates provided for in the Loan Agreement. All payments hereunder (other than prepayments)
shall be applied first to the payment of all accrued and unpaid interest, with the balance, if any,
to be applied to the payment of principal. All prepayments hereunder shall be applied solely to
the payment of principal.



     All payments of principal and interest hereunder shall be made in lawful currency of the
United States in federal or other immediately available funds at the banking office of First Bank
(the “Agent”) situated at 560 Anglum Road, Hazelwood, Missouri 63042, or at such other place as the
Agent shall designate in writing. Interest shall be computed on an actual day, 360-day year basis.
Consistent with the terms of the Loan Agreement, the Agent shall determine each interest rate
applicable to the advances hereunder, which determination shall be conclusive in the absence of
manifest error.



     Swing Line Lender may record the date and amount of all Swing Line Loans and all payments of
principal and interest hereunder in the records it maintains with respect thereto. Swing Line
Lender’s books and records showing the account between Swing Line Lender and the Borrowers shall be
admissible in evidence in any action or proceeding and shall constitute prima facie proof of the
items therein set forth.



     This Note is referred to in that certain Loan Agreement dated the date hereof by and between
the Borrowers, Agent and other lenders named therein (as the same may from time to time be amended,
the “Loan Agreement”), to which Loan Agreement reference is hereby made for a statement of the
terms and conditions upon which the maturity of this Note may be accelerated, and for other terms
and conditions, including prepayment, which may affect this Note.



     This Note is secured by those six (6) certain Security Agreements, each dated as of the date
hereof executed respectively by each of the Borrowers in favor of Agent for the benefit of Swing
Line Lender and others (as the same may from time to time be amended, the “Security Agreements”),
to which Security Agreements reference is hereby made for a description of the security and a
statement of the terms and conditions upon which this Note is secured.



- 221 -









 





     This Note is secured by that certain Third Amended and Restated Agreement of Pledge dated as
of the date hereof executed by Virbac Corporation in favor of Agent for the benefit of Lender and
others, as the same may from time to time be amended, modified or restated, and by that certain
Second Amended and Restated Agreement of Pledge dated as of the date hereof executed by Virbac AH,
Inc. in favor of Agent for the benefit of Lender and others, as the same may from time to time be
amended, modified or restated (as so amended, modified or restated, the “Pledge Agreements”), to
which Pledge Agreements reference is hereby made for a description of the security and a statement
of the terms and conditions upon which this Note is secured.



     This Note is also secured by that certain Deed of Trust and Security Agreement dated as of
September 3, 2003 and executed by Virbac Corporation in favor of the Agent for the benefit of
Lender and others, as the same has been amended from time to time, and by that certain Deed of
Trust and Security Agreement dated as of September 9, 1993 and executed by PM Resources, Inc. in
favor of the Agent for the benefit of Lender and others, as the same has been amended from time to
time (collectively, as the same have been and may from time to time hereafter be further amended,
modified, restated or replaced, the “Deeds of Trust”), to which Deeds of Trust reference is also
hereby made for a description of the security and a statement of the terms and conditions upon
which this Note is secured.



     This Note is also secured by that certain Patent, Trademark and License Security Agreement
dated as of September 3, 2003 and executed by Virbac Corporation in favor of the Agent for the
benefit of Lender and others, as the same has been amended from time to time, by that certain
Patent, Trademark and License Security Agreement dated as of September 3, 2003 and executed by
Virbac AH, Inc. in favor of the Agent for the benefit of Lender and others, as the same has been
amended from time to time, by that certain Patent, Trademark and License Security Agreement dated
as of June 29, 2006 and executed by St. JON Laboratories, Inc. in favor of the Agent for the
benefit of Lender and others, as the same has been amended from time to time, and by that certain
Patent, Trademark and License Security Agreement dated as of September 3, 2003 and executed by
Delmarva Laboratories, Inc. in favor of the Agent for the benefit of Lender and others, as the same
has been amended from time to time (collectively, as the same have been and may from time to time
hereafter be further amended, modified, restated or replaced, the "Patent, Trademark and License
Security Agreements”), to which Patent, Trademark and License Security Agreements reference is also
hereby made for a description of the security and a statement of the terms and conditions upon
which this Note is secured.



     This Note is guarantied by the Subsidiary Guaranties (as defined in the Loan Agreement) and is
further secured by the Subsidiary Security Agreements (as defined in the Loan Agreement), to which
Subsidiary Guaranties and Subsidiary Security Agreements reference is hereby made for a description
of the security and a statement of the terms and conditions upon which this Note is further
secured.



     If the Borrowers shall fail to make any payment of any principal of or interest on this Note
as and when the same shall become due and payable, or if any “Event of Default” (as defined
therein) shall occur under or within the meaning of the Loan Agreement or any of the Security
Agreements, any of the Deeds of Trust, any of the Patent, Trademark and License Security
Agreements, any of the Pledge Agreements or any of the Subsidiary Security Agreements, Swing Line
Lender’s obligation to make any additional loans under this Note may be terminated as set forth in
the Loan Agreement, and Agent, on behalf of Swing Line Lender, may further declare the entire
outstanding principal balance of this Note and all accrued and unpaid interest thereon to be
immediately due and payable.



     In the event that any payment of any principal of or interest on this Note shall not be paid
when due, whether by reason of acceleration or otherwise, and this Note shall be placed in the
hands of an



- 222 -









 




attorney or attorneys for collection or for foreclosure of the Security Agreements, the
Deeds of Trust, the Patent, Trademark and License Security Agreements, the Pledge Agreements, the
Subsidiary Guaranties and/or the Subsidiary Security Agreements securing payment hereof, or for
representation of Swing Line
Lender in connection with bankruptcy or insolvency proceedings relating hereto, the Borrowers
jointly and severally promise to pay, in addition to all other amounts otherwise due hereon, the
reasonable costs and expenses of such collection, foreclosure and representation, including,
without limitation, reasonable attorneys’ fees and expenses (whether or not litigation shall be
commenced in aid thereof). All parties hereto severally waive presentment for payment, demand,
protest, notice of protest and notice of dishonor.




     This Note shall be governed by and construed in accordance with the internal laws of the State
of Missouri.


     VIRBAC CORPORATION




	 	 	 	 	 
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Jean M. Nelson
	 

	 	 	 	 
	 	 	Name: Jean M. Nelson
	 	 	Title: Exec. Vice-President and Chief Financial Officer
	 
	 	 	 	 
	 	 	PM RESOURCES, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Jean M. Nelson
	 

	 	 	 	 
	 	 	Name: Jean M. Nelson
	 	 	Title: Exec. Vice-President and Chief Financial Officer
	 
	 	 	 	 
	 	 	ST. JON LABORATORIES, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Jean M. Nelson
	 

	 	 	 	 
	 	 	Name: Jean M. Nelson
	 	 	Title: Exec. Vice-President and Chief Financial Officer
	 
	 	 	 	 
	 	 	FRANCODEX LABORATORIES, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Jean M. Nelson
	 

	 	 	 	 
	 	 	Name: Jean M. Nelson
	 	 	Title: Exec. Vice-President and Chief Financial Officer






- 223 -









 






	 	 	 	 	 
	 	 	VIRBAC AH, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Jean M. Nelson
	 

	 	 	 	 
	 	 	Name: Jean M. Nelson
	 	 	Title: Exec. Vice-President and Chief Financial Officer
	 
	 	 	 	 
	 	 	DELMARVA LABORATORIES, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Jean M. Nelson
	 

	 	 	 	 
	 	 	Name: Jean M. Nelson
	 	 	Title: Exec. Vice-President and Chief Financial Officer






- 224 -









 






SECURITY AGREEMENT




     THIS SECURITY AGREEMENT (this “Agreement”) is made as of the 29th day of June, 2006, by VIRBAC
CORPORATION, a Delaware corporation (“Debtor”), in favor of FIRST BANK, as agent (in such capacity,
the “Agent”) for the Lenders from time to time party to that certain Loan Agreement dated as of the
date hereof by and among PM Resources, Inc., a Missouri corporation, St. JON Laboratories, Inc., a
California corporation, Virbac AH, Inc., a Delaware corporation, Francodex Laboratories, Inc., a
Kansas corporation, Delmarva Laboratories, Inc., a Virginia corporation, the Debtor, the Lenders
from time to time party thereto and First Bank, as agent for the Lenders, as the same may from time
to time be amended, modified, extended, renewed or restated (the “Loan Agreement”; all capitalized
terms used and not otherwise defined in this Agreement shall have the respective meanings ascribed
to them in the Loan Agreement).



WITNESSETH:




     WHEREAS, as a condition precedent to the Agent and the Lenders entering into the Loan
Agreement, the Agent and the Lenders have required that Debtor execute and deliver this Agreement
to the Agent for the ratable benefit of the Lenders; and



     WHEREAS, in order to induce the Agent and the Lenders to enter into the Loan Agreement, Debtor
has agreed to execute and deliver this Agreement to the Agent for the ratable benefit of the
Lenders;



     NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, Debtor hereby
covenants and agrees with the Agent as follows:



     1. Grant of Security Interest. For value received, Debtor hereby grants to the Agent
for the ratable benefit of the Lenders a security interest in and lien on all personal property and
fixtures of Debtor, wherever located and whether now or hereafter existing or now owned or
hereafter created, acquired or arising (collectively, the “Collateral”), including, without
limitation:



          (a) all accounts, accounts receivable, payment intangibles, lease payments, rental payments,
license payments, lease rights, contract rights and other rights to the payment of money, and all
goods whose sale, lease, rental, license or other disposition by Debtor have given rise to accounts
and have been returned to or repossessed or stopped in transit by Debtor;




          (b) all inventory of Debtor, wherever located, including, without limitation, (i) all
inventory under lease, in transit, held by others for Debtor’s account, covered by warehouse
receipts, purchase orders and/or contracts, or in the possession of any lessees, renters, carriers,
forwarding agents, truckers, warehousemen, vendors or other persons or entities and (ii) all
inventory consisting of raw materials, work in process, finished goods, supplies, goods,
incidentals, office supplies and/or packaging and shipping materials;




          (c) all documents, including, without limitation, all warehouse receipts, bills of lading and
similar documents of title relating to goods in which Debtor at any time has an interest, whether
now or at any time or times hereafter issued to Debtor or the Agent by any person or entity, and
whether covering any portion of Debtor’s inventory or otherwise;





- 225 -










 







          (d) all instruments (including, without limitation, promissory notes) of any kind or
nature whatsoever, whether negotiable or non-negotiable;




          (e) all chattel paper of any kind or nature whatsoever, including, without limitation, all
leases, rental agreements, installment sale agreements, conditional sale agreements and other
chattel paper relating to or arising out of the sale, rental, lease or other disposition of any of
the Collateral;




          (f) all general intangibles of any kind or nature whatsoever, including, without limitation,
all payment intangibles, all patents, trademarks, copyrights and other intellectual property, and
all applications for, registrations of and licenses of the foregoing and all computer software,
product specifications, trade secrets, licenses, trade names, service marks, goodwill, tax refunds,
rights to tax refunds, franchises, rights related to prepaid expenses, rights under executory
contracts, choses in action, causes of action and rights under partnership, joint venture,
co-ownership, management and/or similar agreements and/or arrangements;




          (g) all goods, machinery, equipment, motor vehicles, trucks, tractors, trailers, appliances,
furniture, furnishings, tools, dies, jigs and other tangible personal property and all accessories
and parts relating thereto;




          (h) all fixtures;




          (i) all monies, reserves, deposits, cash, cash equivalents and other property now or at any
time or times hereafter in the possession or under the control of the Agent or any Lender or any
bailee of the Agent or any Lender;




          (j) all deposit accounts and certificates of deposit and all interest or dividends thereon;




          (k) all investment property and financial assets of any kind or type, whether certificated or
uncertificated, including, without limitation, all securities, securities accounts, securities
entitlements, stocks, bonds, options, warrants, commodity contracts, futures contracts, commodity
accounts, commodity options, commercial paper, money market funds and/or accounts, Treasury bills,
notes and bonds, instruments, certificates of deposit, mutual fund shares, cash and money, together
with all rights, income, revenues, proceeds and profits therefrom, including, without limitation,
all dividends, distributions (cash or stock, extraordinary as well as ordinary), interest and other
payments, all additions thereto, substitutions or replacements thereof, any goods or other property
to be delivered thereunder, and any exchanges for or changes in any of the foregoing;




          (l) all commercial tort claims;




          (m) all supporting obligations;




          (n) all letter of credit rights;




          (o) all books, records, computer records, computer disks, ledger cards, programs and other
computer materials, customer and supplier lists, invoices, orders and other property and general
intangibles at any time evidencing or relating to any of the Collateral;




          (p) all accessions to any of the property described above and all substitutions, renewals,
improvements and replacements of and additions thereto; and




- 226 -









 








          (q) all proceeds, including, without limitation, proceeds which constitute property of the
types described in (a), (b), (c), (d), (e), (f), (g), (h), (i), (j), (k), (l), (m), (n), (o) and/or
(p) above and any rents and profits of any of the foregoing items, whether cash or noncash,
immediate or remote, including, without limitation, all income, accounts, contract rights, general
intangibles, payment intangibles, chattel paper, notes, drafts, acceptances, instruments and other
rights to the payment of money arising out of the sale, rental, lease, license, exchange or other
disposition of any of the foregoing items (provided, however, that nothing contained herein shall
be deemed to permit or assent to any such disposition other than (i) the sale of inventory by
Debtor in the ordinary course of its business (which does not include any sale or other transfer of
inventory in partial or total satisfaction of any Indebtedness) and (ii) other sales and other
dispositions expressly permitted by the Loan Agreement), and insurance proceeds, and all products,
of (a), (b), (c), (d), (e), (f), (g), (h), (i), (j), (k), (l), (m), (n), (o) and/or (p) above, and
any indemnities, warranties and guaranties payable by reason of loss or damage to or otherwise with
respect to any of the foregoing items;



to secure the payment of (i) any and all of the present and future Borrowers’ Obligations, (ii) any
and all present and future indebtedness (principal, interest, fees, collection costs and expenses
and other amounts), liabilities and obligations (including, without limitation, guaranty
obligations, letter of credit reimbursement obligations and indemnity obligations) of Debtor to the
Agent and/or any Lender evidenced by or arising under or in respect of the Loan Agreement, this
Agreement and/or any other Transaction Document, and (iii) any and all costs of collection,
including, without limitation, reasonable attorneys’ fees and expenses, incurred by the Agent
and/or any Lender upon the occurrence of an Event of Default under this Agreement, in collecting or
enforcing payment of any such indebtedness, liabilities or obligations or in preserving, protecting
or realizing on the Collateral under this Agreement or in representing the Agent and/or any Lender
in connection with any bankruptcy or insolvency proceedings (hereinafter collectively referred to
as the “Secured Obligations”).




     2. Representations and Covenants of Debtor. Debtor hereby represents and warrants to
the Agent and each Lender, and covenants and agrees with the Agent and each Lender, that:



          (a) Debtor is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Debtor’s exact legal name is “Virbac Corporation.” Debtor has not
during the past five (5) years conducted business under any name other than the name “Virbac
Corporation.” Debtor does not now and will not at any time during the term of this Agreement
conduct business under any name other than the name “Virbac Corporation.” Debtor’s organizational
identification number in the State of Delaware is #2344484. Debtor will not change its name, its
type of organization, its jurisdiction of organization or its organizational identification number
unless (i) Debtor gives the Agent and Lenders at least thirty (30) days prior written notice of the
same, (ii) if such change is with respect to Debtor’s jurisdiction of organization, such new
jurisdiction of organization is one of the states of the United States of America, (iii) such
change is permitted pursuant to the terms of the Loan Agreement and the other Transaction
Documents, and (iv) prior to making any such change, Debtor executes (if necessary) and/or obtains
and delivers to the Agent and Lenders any and all additional financing statements and/or amendments
thereto and/or other agreements, documents or notices as may be required by the Agent and/or any
Lender;




          (b) Debtor has full corporate right, power and authority to execute, deliver and perform its
obligations under this Agreement and to grant to the Agent for the ratable benefit of the Lenders
the security interest in and lien on the Collateral hereby stated to be granted;




- 227 -









 








          (c) the officer of Debtor executing this Agreement has been duly elected and qualified and has
been duly authorized and empowered to execute, deliver and perform the terms of this Agreement on
behalf of Debtor;




          (d) the execution, delivery and performance of this Agreement by Debtor do not and will not
violate any of the terms or provisions of the Certificate of Incorporation or Bylaws of Debtor;




          (e) the execution, delivery and performance of this Agreement by Debtor do not and will not
violate any law, rule, regulation, order, writ, judgment, injunction, decree, determination or
award presently in effect having applicability to Debtor or the terms of any indenture, agreement,
document, instrument or undertaking to which Debtor is a party or by which it or any of its
Property is bound;




          (f) Debtor’s chief executive office and the location of the only office where it keeps its
books and records respecting the Collateral is that given on the signature page(s) of this
Agreement and all other places of business of Debtor and locations of any of the Collateral are
listed on Exhibit A attached hereto and incorporated herein by reference;




          (g) except to the extent permitted by Section 2(h) below, unless otherwise consented to in
writing by Agent, all of the Collateral (A) is and will be kept solely at Debtor’s chief executive
office or at one of the other locations listed on Exhibit A attached hereto and
incorporated herein by reference (if mobile equipment or equipment of a type normally used in more
than one location, remaining there when not in use), (B) will not be attached or affixed in any
manner to or become a part of any real estate or other personal property apart from other items of
the Collateral and (C) is in the exclusive possession and control of Debtor;




          (h) Debtor will not (i) change the location of its chief executive office, (ii) change the
location of any of its other places of business, (iii) change the location of any of the Collateral
from Debtor’s chief executive office or one of the other locations listed on Exhibit A
attached hereto and incorporated herein by reference or (iv) establish any additional places of
business or additional locations at which any of the Collateral is stored, kept or processed,
unless (A) such office or Collateral location is located within the continental United States of
America, (B) Debtor gives the Agent and Lenders thirty (30) days prior written notice of the same,
and (C) prior to making any such change or establishing any such new location, Debtor executes (if
necessary) and/or obtains and delivers to the Agent and Lenders any and all additional financing
statements and/or amendments thereto, mortgagee waivers and acknowledgments, bailee waivers and
acknowledgments, landlord waivers and acknowledgments, warehousemen waivers and acknowledgments and
other agreements, documents or notices as may be reasonably required by the Agent or any Lender;




          (i) Debtor is, or, as to Collateral acquired after the date hereof, will be, the sole and
absolute owner of all of the Collateral, free and clear of any and all Liens and claims of any kind
or nature whatsoever other than Permitted Liens, and Debtor will defend the Collateral against all
claims and demands of all Persons at any time claiming the same or any interest therein;




          (j) no financing statement (other than any filed with respect to Permitted Liens) covering any
of the Collateral is or will be on file in any public office at any time during the term of this
Agreement;




          (k) Debtor will not, without the prior written consent of the Required Lenders, sell,
transfer, lease, license or otherwise dispose of or offer to dispose of any of the Collateral or
any interest therein (other than (i) sales of inventory by Debtor in the ordinary course of its
business (which does not




- 228 -









 







include any sale or other transfer of inventory in partial or total
satisfaction of any Indebtedness) and (ii) other sales and other dispositions expressly permitted
by the Loan Agreement (which other sales and other dispositions shall be made expressly subject to
the security interest and lien in favor of the Agent created by this Agreement unless otherwise
agreed to in writing by the Required Lenders));




          (l) Debtor will at all times keep all of the Collateral consisting of inventory, goods,
machinery, equipment and/or other tangible personal property used or useful in the conduct of its
business in good condition, working order and repair (ordinary wear and tear excepted), excepting
any loss, damage or destruction which is fully covered by proceeds of insurance, and will not use
any of the Collateral or permit any of the Collateral to be used in violation of any law, rule,
regulation, ordinance or insurance policy;




          (m) Debtor will pay promptly when due all taxes and assessments on the Collateral or for its
use or operation or upon this Agreement or any of the Secured Obligations or with respect to the
perfection of any security interest or lien under this Agreement; provided, however, that Debtor
shall not be required to pay any such tax or assessment the payment of which is being contested in
good faith and by appropriate proceedings being diligently conducted and for which adequate
reserves in accordance with GAAP have been provided, except that Debtor shall pay or cause to be
paid all such taxes and assessments forthwith upon the commencement of proceedings to foreclose any
Lien which is attached as security therefor, unless such foreclosure is stayed by the filing of an
appropriate bond in a manner reasonably satisfactory to the Required Lenders;




          (n) Debtor will at all times keep all of the Collateral of an insurable nature insured against
loss, damage, theft and other risks, in such amounts, with such companies and under policies in
such form, all as shall be reasonably satisfactory to the Required Lenders. All insurance required
by this Section 2(n) shall be with insurers rated A-XI or better by A.M. Best Company (or accorded
a similar rating by another nationally or internationally recognized insurance rating agency of
similar standing if A.M. Best Company is not then in the business of rating insurers or rating
foreign insurers) or such other insurers as may from time to time be reasonably acceptable to the
Required Lenders. Such policies of insurance shall contain an endorsement reasonably acceptable to
the Agent naming the Agent as loss payee as its interests may appear. Such endorsement, or an
independent instrument furnished to the Agent, shall provide that the insurance companies will give
the Agent at least thirty (30) days written notice before any such policy or policies of insurance
shall be amended or cancelled and that no act or default of Debtor or any other Person shall affect
the right of the Agent to recover under such policy or policies of insurance in the event of any
loss of or damage to any of the Collateral. Debtor hereby directs all insurers under such policies
of insurance to pay all proceeds payable thereunder directly to the Agent as its interests may
appear and Debtor hereby agrees to promptly forward to the Agent all such insurance proceeds
received directly by Debtor. All insurance proceeds received by the Agent on account of any loss of
or damage to any of the Collateral, after deducting therefrom the reasonable charges and expenses
paid or incurred in connection with the collection and disbursement of said proceeds, shall, unless
otherwise agreed to in writing by the Required Lenders, be applied to the payment or prepayment of
the Secured Obligations in such order and manner as the Required Lenders, in their discretion,
shall elect. Debtor hereby irrevocably makes, constitutes and appoints the Agent (and all officers,
employees or agents designated by the Agent) as Debtor’s true and lawful attorney (and
agent-in-fact) to, if Debtor fails to do upon the demand of the Agent or if any Event of Default
under this Agreement or any event which with the passage of time or the giving of notice or both
would constitute an Event of Default under this Agreement has occurred and is continuing, (i) make,
adjust, compromise and settle claims under such policies of insurance, (ii) endorse the name of
Debtor on any check, draft, instrument or other item of payment of the proceeds of such policies of
insurance and (iii) make all determinations and decisions with respect to such policies of
insurance. In the event Debtor at any time or times hereafter shall fail to obtain




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or maintain any
of the policies of insurance required above or to pay any premium in whole or in part relating
thereto, then the Agent, without waiving or releasing any obligation or default by Debtor
hereunder, may at any time or times thereafter (but shall be under no obligation to do so) obtain
and maintain such policies of insurance and pay such premium and take any other action with respect
thereto which the Agent deems advisable. All sums so disbursed by the Agent, including, without
limitation, reasonable attorneys’ fees, court costs, expenses and other charges relating thereto,
shall be part of the Secured Obligations, payable by Debtor to the Agent on demand. UNLESS DEBTOR
PROVIDES
EVIDENCE OF THE INSURANCE COVERAGE REQUIRED UNDER THIS AGREEMENT, THE AGENT MAY PURCHASE INSURANCE
AT DEBTOR’S EXPENSE TO PROTECT THE AGENT’S INTEREST IN THE COLLATERAL. THIS INSURANCE MAY, BUT NEED
NOT, PROTECT DEBTOR’S INTERESTS. THE COVERAGE THAT THE AGENT PURCHASES MAY NOT PAY ANY CLAIM THAT
DEBTOR MAY MAKE OR ANY CLAIM THAT IS MADE AGAINST DEBTOR IN CONNECTION WITH THE COLLATERAL. DEBTOR
MAY LATER CANCEL ANY INSURANCE PURCHASED BY THE AGENT, BUT ONLY AFTER PROVIDING EVIDENCE THAT
DEBTOR HAS OBTAINED INSURANCE AS REQUIRED BY THIS AGREEMENT. IF THE AGENT PURCHASES INSURANCE FOR
THE COLLATERAL, DEBTOR WILL BE RESPONSIBLE FOR THE COSTS OF THAT INSURANCE, INCLUDING THE INSURANCE
PREMIUM, INTEREST AND ANY OTHER CHARGES THE AGENT MAY IMPOSE IN CONNECTION WITH THE PLACEMENT OF
INSURANCE, UNTIL THE EFFECTIVE DATE OF THE CANCELLATION OR EXPIRATION OF THE INSURANCE. THE COSTS
OF THE INSURANCE MAY BE ADDED TO THE SECURED OBLIGATIONS. THE COSTS OF THE INSURANCE MAY BE MORE
THAN THE COST OF INSURANCE DEBTOR MAY BE ABLE TO OBTAIN ON ITS OWN. All insurance proceeds shall be
subject to the security interest and lien of the Agent under this Agreement;




          (o) Debtor will permit the Agent and each Lender (and any Person appointed by the Agent or any
Lender to whom Debtor does not reasonably object) to (i) examine and inspect any of all of the
Collateral, wherever located, during normal business hours and at other reasonable times and (ii)
enter upon its Properties for purposes of making such examinations and/or inspections. Debtor will
permit the Agent (and any Person appointed by the Agent or any Lender to whom Debtor does not
reasonably object) to conduct field audits of the Collateral, following reasonable prior notice, at
least twice each year and shall reimburse Agent and Lenders for the costs of such field audits as
set forth in Section 6.1(c) of the Loan Agreement. Debtor will reimburse the Agent and each Lender
upon demand for all costs and expenses incurred by the Agent or such Lender in connection with any
such examination or inspection conducted by the Agent or such Lender while any Event of Default or
any event which with the passage of time or the giving of notice or both would constitute an Event
of Default under this Agreement has occurred and is continuing;




          (p) Debtor hereby irrevocably authorizes the Agent at any time and from time to time to file
in any Uniform Commercial Code jurisdiction initial financing statements and/or any amendments
thereto which (i) indicate the Collateral (A) as “all assets”, “all personal property” or “all
personal property and fixtures” of Debtor or words of similar effect, regardless of whether any
particular asset comprised in the Collateral falls within the scope of Article 9 of the Uniform
Commercial Code of the State of Missouri (the “Missouri UCC”) or such other jurisdiction or (B) as
being of an equal or lesser scope or with greater detail and (ii) contain any other information
required by part 5 of Article 9 of the Uniform Commercial Code of the applicable jurisdiction for
the sufficiency or filing office acceptance of any financing statement or amendment, including (A)
whether Debtor is an organization, the type of organization and any organization identification
number issued to Debtor and (B) in the case of a financing statement filed as a fixture filing or
indicating Collateral as as-extracted collateral or timber to be cut, a sufficient description of
real property to which the Collateral relates. Debtor agrees to furnish




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any such information to
the Agent promptly upon request. Debtor also ratifies its authorization for the Agent to have
filed in any Uniform Commercial Code jurisdiction any like initial financing statements or
amendments thereto if filed prior to the date of this Agreement;




          (q) Debtor hereby agrees, in each case at Debtor’s own expense, to take the following actions
with respect to the following Collateral:




          (i) if Debtor shall at any time hold or acquire any promissory notes or other
instruments or tangible chattel paper, Debtor will promptly notify the Agent and
Lenders
thereof in writing and, at the request of the Required Lenders, Debtor will
forthwith endorse, assign and deliver the same to the Agent, accompanied by such
instruments of transfer or assignment duly executed in blank as the Agent may from
time to time specify;




          (ii) if Debtor shall at any time open or maintain a deposit account, Debtor
will promptly notify the Agent and Lenders thereof in writing and, at the request of
the Required Lenders, Debtor will, pursuant to an agreement in form and substance
reasonably satisfactory to the Required Lenders, either (at the Required Lenders’
option) (A) cause the depository bank to agree to comply at any time with
instructions from the Agent to such depository bank directing the disposition of
funds from time to time credited to such deposit account, without further consent of
Debtor or (B) arrange for the Agent to become the customer of the depository bank
with respect to the deposit account, with Debtor being permitted, only with the
consent of the Agent, to exercise rights to withdraw funds from such deposit
account. Agent agrees with Debtor that Agent will not give any such instructions or
withhold any withdrawal rights from Debtor unless an Event of Default or an event
which with the passage of time or the giving of notice or both would constitute an
Event of Default under this Agreement has occurred and is continuing. The
provisions of this paragraph shall not apply to (A) any deposit account for which
Debtor, the depository bank and the Agent have entered into a cash collateral
agreement specially negotiated among Debtor, the depository bank and the Agent for
the specific purpose set forth therein, (B) deposit accounts for which the Agent is
the depository and (C) deposit accounts specially and exclusively used for payroll,
payroll taxes and other employee wage and benefit payments to or for the benefit of
Debtor’s employees;




          (iii) if Debtor shall at any time hold or acquire any certificated securities,
Debtor will promptly notify the Agent and Lenders thereof in writing and, at the
request of the Required Lenders, Debtor will forthwith endorse, assign and deliver
the same to the Agent, accompanied by such instruments of transfer or assignment
duly executed in blank as the Agent may from time to time specify. If any securities
now or hereafter acquired by Debtor are uncertificated and are issued to Debtor or
its nominee directly by the issuer thereof, Debtor will promptly notify the Agent
and Lenders thereof in writing and, at the request of the Required Lenders, Debtor
will, pursuant to an agreement in form and substance reasonably satisfactory to the
Required Lenders, either (at the Required Lenders’ option) (A) cause the issuer to
agree to comply with instructions from the Agent as to such securities, without
further consent of Debtor or such nominee or (B) arrange for the Agent to become the
registered owner of the securities. If any securities, whether certificated or
uncertificated, or other investment property now or hereafter acquired by Debtor are
held by Debtor or its nominee through a securities intermediary or commodity
intermediary, Debtor will promptly notify the Agent and



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Lenders thereof in writing
and, at the request of the Required Lenders, Debtor will, pursuant to an agreement
in form and substance reasonably satisfactory to the Required Lenders, either (at
the Required Lenders’ option) (A) cause such securities intermediary or commodity
intermediary, as the case may be, to agree to comply with entitlement orders or
other instructions from the Agent to such securities intermediary as to such
securities or other investment property, or to apply any value distributed on
account of any commodity contract as directed by the Agent to such commodity
intermediary, as the case may be, in each case without further consent of Debtor or
such nominee or (B) in the case of financial assets or other investment property
held through a securities intermediary, arrange for the Agent to become the
entitlement holder with respect to such investment property, with Debtor being
permitted, only with the consent of the Agent, to
exercise rights to withdraw or otherwise deal with such investment property. Agent
agrees with Debtor that Agent will not give any such entitlement orders or
instructions or directions to any such issuer, securities intermediary or commodity
intermediary, and will not withhold its consent to the exercise of any withdrawal or
dealing rights by Debtor, unless an Event of Default or an event which with the
passage of time or the giving of notice or both would constitute an Event of Default
under this Agreement has occurred and is continuing. The provisions of this
paragraph shall not apply to any financial assets credited to a securities account
for which the Agent is the securities intermediary;




     (iv) if any goods are at any time in the possession of a bailee, Debtor will
promptly notify the Agent and Lenders thereof in writing and, at the request of the
Required Lenders, Debtor will promptly obtain an acknowledgment from the bailee, in
form and substance reasonably satisfactory to the Required Lenders, that the bailee
holds such Collateral for the benefit of the Agent and shall act upon the
instructions of the Agent, without the further consent of Debtor. Agent agrees with
Debtor that Agent will not give any such instructions unless an Event of Default or
an event which with the passage of time or the giving of notice or both would
constitute an Event of Default under this Agreement has occurred and is continuing;




     (v) if any of the Collateral is located on any premises not owned by Debtor,
Debtor will promptly notify the Agent and Lenders thereof in writing and, at the
request of the Required Lenders, Debtor will promptly cause each Person having any
right, title or interest in, or Lien on, such premises to enter into an agreement in
form and substance reasonably satisfactory to the Required Lenders whereby such
Person disclaims any right, title or interest in, and/or Lien on, the Collateral and
allows entry upon such premises and the removal of the Collateral from such premises
by the Agent or its agents or representatives;




     (vi) if Debtor at any time holds or acquires an interest in any electronic
chattel paper or any “transferable record,” as that term is defined in Section 201
of the federal Electronic Signatures in Global and National Commerce Act, or in
Section 16 of the Uniform Electronic Transactions Act as in effect in any relevant
jurisdiction, Debtor will promptly notify the Agent and Lenders thereof and, at the
request of the Required Lenders, Debtor will take such action as the Required
Lenders may reasonably request to vest in the Agent control, under Section 9-105 of
the Missouri UCC, of such electronic chattel paper and control under Section 201 of
the federal Electronic Signatures in Global and National Commerce Act or Section 16
of the Uniform Electronic Transactions Act, as the case may be, as so in effect in
such jurisdiction, of such transferable record;



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     (vii) if Debtor is at any time a beneficiary under a letter of credit now or
hereafter issued in favor of Debtor, Debtor will promptly notify the Agent and
Lenders thereof in writing and, at the request of the Required Lenders, Debtor will,
pursuant to an agreement in form and substance reasonably satisfactory to the
Required Lenders, either (at the Required Lenders’ option) (A) arrange for the
issuer and any confirmer of such letter of credit to consent to an assignment to the
Agent of the proceeds of any drawing under the letter of credit or (B) arrange for
the Agent to become the transferee beneficiary of the letter of credit, with the
proceeds of any drawing under the letter of credit to be applied to the payment of
the Secured Obligations in such order and manner as the Required Lenders, in their
discretion, shall elect;




     (viii) if Debtor shall at any time hold or acquire a commercial tort claim,
Debtor will promptly notify the Agent and Lenders in a writing signed by Debtor of
the
brief details thereof and grant to the Agent in such writing a security interest
therein and in the proceeds thereof, all upon the terms of this Agreement, with such
writing to be in form and substance reasonably satisfactory to the Required Lenders;




     (ix) Debtor further agrees to take any other action reasonably requested by the
Required Lenders to insure the attachment, perfection and first priority of, and the
ability of the Agent to enforce, the Agent’s security interest in and lien on any
and all of the Collateral including, without limitation, (a) executing, delivering
and, where appropriate, filing financing statements and amendments relating thereto
under the Uniform Commercial Code, to the extent, if any, that Debtor’s signature
thereon is required therefor, (b) causing the Agent’s name to be noted as secured
party on any certificate of title for a titled good if such notation is a condition
to attachment, perfection or priority of, or ability of the Agent to enforce, the
Agent’s security interest in and lien on such Collateral and delivering the original
of such certificate of title (with the Agent’s security interest and lien so noted)
to the Agent, (c) complying with any provision of any statute, regulation or treaty
of any governmental body, entity, authority, agency or instrumentality as to any
Collateral if compliance with such provision is a condition to attachment,
perfection or priority of, or ability of the Agent to enforce, the Agent’s security
interest in and lien on such Collateral, (d) obtaining governmental, regulatory and
other third party consents and approvals, including without limitation any consent
of any licensor, lessor or other person obligated on Collateral, (e) obtaining
waivers from mortgagees and landlords in form and substance reasonably satisfactory
to the Required Lenders and (f) taking all actions required by any earlier versions
of the Uniform Commercial Code or by other law, as applicable in any relevant
Uniform Commercial Code jurisdiction, or by other law as applicable in any foreign
jurisdiction; and




     (x) with respect to accounts with respect to which the account debtor is the
United States of America, any state of the United States of America or any other
governmental body or any department, agency or instrumentality of any of the
foregoing, if requested by the Required Lenders, Debtor will take such action and
execute, deliver and file such agreements, documents and instruments as may be
necessary or as the Required Lenders may reasonably request to insure that such
accounts are duly assigned to the Agent for the ratable benefit of the Lenders in
compliance with all applicable governmental and regulatory requirements (including,
without limitation, to the extent applicable, the Federal Assignment of Claims Act
of 1940, as amended, so that the Agent is recognized by the account debtor to have
all of the rights of an assignee of such accounts;



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          (r) Debtor will reimburse the Agent and each Lender upon demand for (i) all costs and expenses
incident to perfecting, maintaining or terminating the security interest granted by this Agreement,
including search fees, filing and recording fees, fees for obtaining and transferring certificates
of title and all taxes and legal and other out-of-pocket fees and expenses paid or incurred by the
Agent and/or any Lender in connection with any of the foregoing and (ii) all costs and expenses,
including, without limitation, reasonable attorneys’ fees and expenses, incurred by the Agent
and/or any Lender in seeking to collect or enforce any rights under this Agreement or incurred by
the Agent and/or any Lender in seeking to collect or enforce any of the Secured Obligations, all of
which costs and expenses shall constitute a part of the Secured Obligations and be payable by
Debtor to the Agent and the Lenders on demand; and




          (s) Exhibit B attached hereto and incorporated herein by reference sets forth a
complete list of all of the filing office(s) where financing statement(s) must be filed in order to
perfect the Agent’s security interest in the Collateral to the extent such security interest can be
perfected by the filing
of financing statements under the Uniform Commercial Code or other applicable laws of any
jurisdiction where Debtor or any of the Collateral is or may be “located” (as “located” is defined
in the applicable Uniform Commercial Code or other applicable law).




     3. Representations and Covenants of Debtor re: Accounts, Inventory and Other
Collateral. Debtor hereby represents and warrants to the Agent and each Lender, and covenants
and agrees with the Agent and each Lender, that:



          (a) Debtor will provide the Agent and Lenders with a written Borrowing Base Certificate on or
before the last day of each month as required under Section 3.1(b) of the Loan Agreement (or at
such other intervals as the Required Lenders shall require from time to time), reflecting activity
of Debtor up to and including the last day of the preceding month (each, a “Borrowing Base
Certificate”) describing, in a form and with such specificity as is satisfactory to the Required
Lenders, all Accounts created or acquired by Debtor subsequent to the immediately preceding
Borrowing Base Certificate. In addition, Debtor, immediately upon demand by the Required Lenders,
now and from time to time hereafter, shall execute and deliver to the Agent and Lenders schedules
of Inventory specifying Debtor’s cost of Inventory and of Eligible Inventory and such other matters
and information relating to Inventory and Eligible Inventory as the Required Lenders may from time
to time request. Debtor shall also furnish copies of any other reports or information, in a form
and with such specificity as is satisfactory to the Required Lenders, concerning accounts,
inventory and any other Collateral requested by the Required Lenders, including, without
limitation, but only if specifically requested by the Required Lenders, (i) schedules identifying
each account, (ii) copies of all invoices prepared in connection with such accounts and (iii) such
additional schedules, certificates, test verifications, and reports respecting the Collateral and
the proceeds thereof as the Required Lenders may from time to time reasonably request. The
Borrowing Base Certificate shall include, in a form and with such specificity as is satisfactory to
the Required Lenders, information on all amounts collected by Debtor on accounts subsequent to the
immediately preceding Borrowing Base Certificate. The Borrowing Base Certificate shall contain such
additional information as the Required Lenders may require;




          (b) With respect to accounts scheduled, listed or referred to on any Borrowing Base
Certificate or other report submitted by Debtor or any other Obligor to the Lenders, Debtor
represents and warrants to the Agent and Lenders that, except as otherwise disclosed on the
applicable Borrowing Base Certificate or other report (i) they are genuine, in all respects what
they purport to be and are not evidenced by a judgment; (ii) they represent undisputed, bona fide
transactions completed in accordance with the terms and provisions contained in the invoices and
other documents related thereto; (iii) the




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amounts thereof shown on the applicable Borrowing Base
Certificate or other report are actually and absolutely owing to Debtor and are not contingent for
any reason; (iv) no payments have been or shall be made thereon except payments immediately
delivered to the Agent pursuant to Section 4 of this Agreement; (v) there are no setoffs,
counterclaims or disputes existing or asserted with respect thereto and Debtor has not made any
agreement with any account debtor thereof for any deduction therefrom except a discount or
allowance allowed by Debtor in the ordinary course of its business for prompt payment; (vi) to the
best of Debtor’s knowledge, there are no facts, events or occurrences which could reasonably be
expected to impair in any material respect the validity or enforcement thereof or tend to reduce
the amount payable thereunder from the amount thereof as shown on the applicable Borrowing Base
Certificate or other report; (vii) to the best of Debtor’s knowledge, all account debtors thereof
have the capacity to contract and are solvent; (viii) the goods sold and/or services furnished
giving rise thereto are not subject to any Lien or claim except that of the Agent; (ix) Debtor has
no knowledge of any fact or circumstance which could reasonably be expected to impair in any
material respect the validity or collectibility thereof; (x) to the best of Debtor’s knowledge,
there are no bankruptcy, insolvency or other proceedings or actions which are threatened or pending
against any account debtor thereof which could reasonably be expected to result in any material
adverse change in such account debtor’s financial
condition; and (xi) all of such accounts are subject to a first priority perfected security
interest in favor of the Agent;




          (c) Any officers, employees or agents of the Lenders shall have the right, at any time or
times hereafter, in the name of such Lender and/or Debtor or in the name of a nominee of such
Lender, to verify the validity, amount or any other matter relating to any accounts by mail,
telephone, telegraph or otherwise. All costs, fees and expenses relating thereto incurred by any
Lender (or for which any Lender becomes obligated) during the continuation of any Event of Default
or any event which with the passage of time or the giving of notice or both would become an Event
of Default under this Agreement shall become part of the Secured Obligations and be payable by
Debtor to such Lender on demand;




          (d) Debtor will at all times maintain a record of accounts at its chief executive office,
keeping correct and accurate records itemizing and describing the names and addresses of account
debtors, relevant invoice numbers, shipping dates and due dates, collection histories and account
agings, all of which records shall be available during such Debtor’s usual business hours at the
request of the Agent or any Lender or any of their respective officers, employees or agents.
Debtor will cooperate fully with the Agent and each Lender and their respective officers, employees
and agents who shall have the right at any time or times to inspect the accounts and the records
with respect thereto. Debtor will conduct a review (or cause its independent certified public
accountants to conduct a review) of its bad debt reserves and collection histories at least once
each year and promptly following such review shall supply the Agent and each Lender with a report
in a form and with such specificity as may be reasonably satisfactory to the Required Lenders
concerning such review of the accounts (which report may consist of a management letter from
Debtor’s independent certified public accountants if such accountants conducted such bad debt
reserve review);




          (e) Unless otherwise agreed by the Required Lenders in writing, Debtor will: (i) promptly upon
Debtor’s learning thereof, inform the Agent and Lenders, in writing, of any material delay in
Debtor’s performance of any of its obligations to any account debtor with respect to any Eligible
Account in an amount in excess of $100,000.00 and of any assertion of any claims, offsets or
counterclaims in an amount in excess of $100,000.00 by any account debtor with respect to any
Eligible Account and of any allowances, credits and/or other monies in an amount in excess of
$10,000.00 granted by Debtor to any account debtor with respect to any Eligible Account; (ii) not
permit or agree to any extension, compromise or settlement or make any change or modification of
any kind or nature with respect to any Eligible Account, including any of the terms relating
thereto; (iii) promptly upon Debtor’s




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receipt or learning thereof, furnish to and inform the
Lenders of all material adverse information relating to the financial condition of any account
debtor who in the aggregate owes Debtor more than $20,000.00; and (iv) promptly upon Debtor’s
learning thereof, notify the Lenders in writing which of its then existing accounts involving an
amount in excess of $20,000.00 are no longer Eligible Accounts;




          (f) The Agent shall have the right, in its sole and absolute discretion, without notice
thereof to Debtor: (i) to notify any or all account debtors that the accounts have been assigned to
the Agent and that the Agent has a security interest therein; (ii) to direct such account debtors
to make all payments due from them to Debtor upon the accounts directly to the Agent; and (iii) to
enforce payment of and collect, by legal proceedings or otherwise, the accounts in the name of the
Agent and/or Debtor;




          (g) Debtor will, at its own expense, use commercially reasonable efforts to collect, as and
when due, all amounts due with respect to accounts;




          (h) With respect to inventory scheduled, listed or referred to in any Borrowing Base
Certificate or other report submitted by Debtor or any other Obligor to the Lenders, Debtor
represents and warrants to the Agent and Lenders that, except as otherwise disclosed in such
Borrowing Base Certificate or other report: (i) such inventory is located at Debtor’s chief
executive office, one of the other locations
listed on Exhibit A attached hereto and incorporated herein by reference or another
location with respect to which Debtor has complied with all of the requirements of Section 2(h) of
this Agreement; (ii) Debtor has good, indefeasible and merchantable title to such inventory and
such inventory is not subject to any Lien or claim whatsoever except for Permitted Liens; (iii)
such inventory is of good and merchantable quality, free from any material defects; (iv) such
inventory is not subject to any licensing, patent, royalty, trademark, trade name or copyright
agreements with any third parties; (v) the completion of manufacture and sale or other disposition
of such inventory by the Agent following an Event of Default will not require the consent of any
Person and will not constitute a breach or default under any contract or agreement to which Debtor
is a party or to which any of the inventory is subject; (vi) such inventory has not been produced
in violation of the Fair Labor Standards Act and is not subject to the so-called “hot goods”
provision contained in Title 29 U.S.C. §215(a)(1); (vii) such inventory is not on consignment with
Debtor and (viii) such inventory is subject to a first priority perfected security interest in
favor of the Agent;




          (i) Debtor will at all times maintain a perpetual inventory system keeping correct and
accurate records itemizing and describing the kind, type, quality and quantity of inventory and of
Eligible Inventory, Debtor’s cost therefor and daily withdrawals therefrom and additions thereto,
all of which records shall be available during Debtor’s usual business hours at the request of the
Agent or any Lender or any of their respective officers, employees or agents. Debtor will
cooperate fully with the Agent and each Lender and their respective officers, employees and agents
who shall have the right during normal business hours and/or at other reasonable time or times to
inspect Debtor’s inventory and the records with respect thereto. Debtor will conduct such physical
counts of all or any portion of its inventory as any Lender may from time to time reasonably
request and will supply Agent and each Lender with a report in a form and with such specificity as
may be reasonably satisfactory to the Required Lenders concerning any physical count of any or all
of the inventory of Debtor (whether such count was requested by the Required Lenders or not); and




          (j) Neither the Agent nor any Lender shall be responsible for: (i) the safekeeping of any of
the inventory; (ii) any loss or damage to any of the inventory; (iii) any diminution in the value
of any of the inventory; or (iv) any act or default of any carrier, warehouseman, bailee,
forwarding agency or any other Person. As between Debtor, on the one hand, and the Agent and the
Lenders, on the other hand, all risk of loss, damage, destruction or diminution in value of the
inventory shall be borne by Debtor.




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Debtor will not sell any inventory to any customer on
consignment or on approval or on any other basis which entitles the customer to return, or which
may obligate Debtor to repurchase, such inventory. From and after the occurrence of any Event of
Default under this Agreement and so long as any such Event of Default is continuing, the Required
Lenders, in their sole and absolute discretion, may require that inventory be stored with a bailee,
warehouseman or similar party and warehouse receipts therefor be issued in the Agent’s name and be
delivered to the Agent. Debtor agrees to do whatever acts are required to effectuate the
foregoing.




     4. Lockbox and Blocked Account. Debtor hereby agrees to establish and maintain
throughout the term of this Agreement a lock box (the “Lock Box”) in Debtor’s name with a bank (the
“Collecting Bank”) which is acceptable to the Required Lenders (subject to irrevocable instructions
acceptable to the Required Lenders as hereinafter set forth) to which all account debtors shall
directly remit all payments on accounts and in which Debtor shall immediately deposit all cash
payments made for inventory and other cash payments constituting proceeds of Collateral in the
identical form in which such payment was made, whether by cash, check or otherwise. In addition,
Debtor hereby agrees to establish and maintain throughout the term of this Agreement a depository
account at the Collecting Bank (the “Blocked Account”). The Collecting Bank shall acknowledge and
agree, in a manner satisfactory to the Required Lenders, that all payments made to the Lock Box and
the Blocked Account are the sole and exclusive property of the Agent and that the Collecting Bank
has no right of setoff against the Lock Box or the Blocked Account and that all such payments,
whether by cash, check, wire transfer or any other
instrument, made to such Lock Box or Blocked Account or otherwise received by Debtor and whether on
the accounts or as proceeds of any other Collateral or otherwise are and will be the sole and
exclusive property of the Agent. Debtor shall irrevocably instruct the Collecting Bank to on a
daily basis on each Business Day (a) transfer all payments or deposits to Debtor’s Lock Box into
Debtor’s Blocked Account and (b) transfer all funds in Debtor’s Blocked Account (by way of debit,
ACH debit, wire transfer or other means, as directed by Agent) to an account of the Agent at First
Bank or such other bank as the Agent may from time to time specify in writing to be applied by the
Agent to the payment of the Secured Obligations in such order and manner as the Required Lenders,
in their discretion, shall elect. Debtor shall have no right to withdraw any funds out of the Lock
Box and/or the Blocked Account. Debtor, and each of its Affiliates, employees, agents and/or other
Persons acting for or in concert with Debtor, shall, acting as trustee for the Agent, receive, as
the sole and exclusive property of the Agent, any monies, checks, notes, drafts and any other
payments relating to and/or proceeds of accounts and/or other Collateral which come into the
possession or under the control of Debtor or any Affiliates, employees, agents or other Persons
acting for or in concert with Debtor, and immediately upon receipt thereof, Debtor or such Persons
shall cause the same to be deposited into Debtor’s Lock Box.



     5. Additional Actions by the Agent. The Agent, at its option, may from time to time
perform any agreement of Debtor hereunder which Debtor shall fail to perform and take any other
action which the Agent in good faith deems necessary for the maintenance or preservation of any of
the Collateral or its interest therein (including, without limitation, the discharge of taxes or
Liens of any kind against the Collateral or the procurement of insurance or the payment of
warehousing charges, landlord’s bills or other charges), and Debtor agrees to forthwith reimburse
the Agent for all costs and expenses incurred by the Agent in connection with the foregoing,
together with interest thereon at a rate per annum equal to the lesser of (a) Four and One-Fourth
Percent (4.25%) over and above the Prime Rate (fluctuating as and when the Prime Rate changes) and
(b) the highest rate of interest allowed by applicable law, from the date incurred until reimbursed
by Debtor. The Agent may for the foregoing purposes act in its own name or that of Debtor and may
also so act for the purposes of adjusting, settling or cancelling any policy of insurance on the
Collateral or endorsing any draft received in connection therewith, in payment of a loss or
otherwise, for all of which purposes Debtor hereby grants to the Agent its power of attorney,
irrevocable during the term of this Agreement.



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     6. Defaults. The occurrence of any of the following events or conditions shall
constitute an “Event of Default” under this Agreement: (a) Debtor shall fail to pay any of the
Secured Obligations as and when the same shall become due and payable, whether by reason of demand,
maturity, acceleration or otherwise; (b) Debtor shall fail to perform or observe any of the terms,
provisions, covenants or agreements contained in Sections 2(a), 2(g), 2(h), 2(i), 2(j), 2(k), 2(n),
2(o), 2(q), 3(a), 3(d), 3(e), 3(i) or 4 of this Agreement; (c) Debtor shall fail to perform or
observe of any of the other terms, provisions, covenants or agreements contained in this Agreement
and any such failure shall remain unremedied for five (5) days after the earlier of (i) written
notice of default is given to Debtor by the Agent or any Lender or (ii) any officer of Debtor
obtains knowledge of such default; (d) any representation or warranty made by Debtor in this
Agreement shall prove to be untrue or incorrect in any material respect; (e) any “Event of Default”
(as defined therein) shall occur under or within the meaning of the Loan Agreement; or (f) any
default or event of default shall occur under or within the meaning of any other agreement,
document or instrument heretofore, now or hereafter executed by Debtor with or in favor of the
Agent which is not cured or waived within any applicable cure or grace period (if any).



     7. Remedies. Upon the occurrence and during the continuation of any Event of Default
under this Agreement: (a) whether or not any or all of the Secured Obligations are declared to be
forthwith due and payable, the Agent shall have the right to take immediate possession of the
Collateral covered hereby, and, for that purpose may pursue the same wherever said Collateral may
be found, and may enter upon any of the premises of Debtor with or without process of law and
without breach of the peace, wherever said Collateral may be or may be supposed to be, and search
for the same, and, if found,
take possession of and remove and sell and dispose of said Collateral, or any part thereof; (b) the
Agent shall have the right to notify any account debtor with respect to any account to make all
payments under the accounts directly to the Agent and demand, collect, receipt for, settle,
compromise, adjust, sue for, foreclose and realize on the accounts and all amounts due under the
accounts as the Agent may determine; (c) the Agent shall have the right to exercise such of the
other rights and remedies accruing to a secured party under the Uniform Commercial Code of the
relevant jurisdiction or jurisdictions and any other applicable law upon default by a debtor as the
Agent may elect; (d) the Agent shall have the right to enter, with or without process of law and
without breach of the peace, any premises where the books and records of Debtor pertaining to the
accounts or any of the other Collateral are or may be located, and without charge or liability on
the part of the Agent therefor seize and remove said books and records from said premises or remain
upon said premises and use the same for the purpose of collecting, preparing and disposing of the
Collateral and/or for the purpose of identifying and locating any of the Collateral; and (e) the
Required Lenders shall have the right to appoint, remove and reappoint any Person or Persons,
including, without limitation, any employee or agent of the Agent or any Lender to be a receiver
(each, a “Receiver”), which term shall include a receiver and manager of, or agent for, all or any
part of the Collateral. Any such Receiver shall, as far as concerns responsibility for its acts,
be deemed to be the agent of Debtor and not of the Agent or any Lender, and neither the Agent nor
any Lender shall in any way be responsible for any misconduct, negligence or non-feasance of any
such Receiver, its employees or agents. Except as otherwise directed by all of the Lenders, all
monies received by any Receiver shall be received in trust for and paid to the Agent for the
ratable benefit of the Lenders. Debtor shall pay all costs, charges and expenses incurred by the
Agent or any Receiver, whether directly or for services rendered (including, without limitation,
reasonable attorneys’ fees and expenses, auditor’s costs, other legal expenses and Receiver
remuneration) in enforcing this Agreement, realizing on all or any part of the Collateral and/or in
enforcing or collecting the Secured Obligations, and all such expenses shall be part of the Secured
Obligations and be payable on the demand of the Agent. Debtor shall, upon the Agent’s request,
assemble the Collateral and make the Collateral available to the Agent at any place designated by
the Agent which is reasonably convenient to Debtor.



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     8. Standards for Exercising Remedies. To the extent that applicable law imposes duties
on the Agent to exercise remedies in a commercially reasonable manner, Debtor acknowledges and
agrees that it is not commercially unreasonable for the Agent (a) to fail to incur expenses
reasonably deemed significant by the Agent to prepare Collateral for disposition or otherwise to
complete raw material or work in process into finished goods or other finished products for
disposition, (b) to fail to obtain third party consents for access to Collateral to be disposed of,
or to obtain or, if not required by other law, to fail to obtain governmental, regulatory or third
party consents for the collection or disposition of Collateral to be collected or disposed of, (c)
to fail to exercise collection remedies against account debtors or other Persons obligated on
Collateral or to remove Liens or encumbrances on or any adverse claims against Collateral, (d) to
exercise collection remedies against account debtors and other Persons obligated on Collateral
directly or through the use of collection agencies and other collection specialists, (e) to
advertise dispositions of Collateral through publications or media of general circulation, whether
or not the Collateral is of a specialized nature, (f) to contact other Persons, whether or not in
the same business as Debtor, for expressions of interest in acquiring all or any portion of the
Collateral, (g) to hire one or more professional auctioneers to assist in the disposition of
Collateral, whether or not the collateral is of a specialized nature, (h) to dispose of Collateral
by utilizing Internet sites that provide for the auction of assets of the types included in the
Collateral or that have the reasonable capability of doing so, or that match buyers and sellers of
assets, (i) to dispose of assets in wholesale rather than retail markets, (j) to disclaim
disposition warranties, (k) to purchase insurance or credit enhancements to insure the Agent
against risks of loss, collection or disposition of Collateral or to provide to the Agent a
guaranteed return from the collection or disposition of Collateral or (l) to the extent deemed
appropriate by the Agent, to obtain the services of other brokers, investment bankers, consultants
and other professionals to assist the Agent in the collection or disposition of any of the
Collateral. Debtor acknowledges that the purpose of this Section 8 is to provide non-exhaustive
indications of what actions or omissions by the Agent would
not be commercially unreasonable in the Agent’s exercise of remedies against the Collateral and
that other actions or omissions by the Agent shall not be deemed commercially unreasonable solely
on account of not being indicated in this Section 8. Without limitation upon the foregoing,
nothing contained in this Section 8 shall be construed to grant any rights to Debtor or to impose
any duties on the Agent that would not have been granted or imposed by this Agreement or by
applicable law in the absence of this Section 8.



     9. Foreclosure. Foreclosure on the Collateral covered hereby may be had at public or
private sale or sales, disposing of such portion or portions of the Collateral at each such sale,
for cash or on credit, on such terms, at such place or places, and with or without the Collateral
being present at such sale, all as the Agent in its sole and absolute discretion shall determine
from time to time. In the case of public sale, notice thereof shall be deemed and held to be
adequate and reasonable if such notice shall appear three (3) times in a newspaper published in the
City or County wherein the sale is to be held, the first such publication being at least ten (10)
days before such sale and the last such publication being not more than three (3) days before such
sale. In the case of a private sale, notice thereof shall be deemed and held to be adequate and
reasonable if such notice shall be mailed to Debtor at its last known address at least ten (10)
days before such sale. The enumeration of these methods of notice shall not be deemed or construed
to render unreasonable any other method of notice which would otherwise be reasonable under the
circumstances. Debtor agrees that the Agent may, in connection with any such sale, specifically
disclaim any warranties of title or the like with respect to all or any portion of the Collateral
being sold.



     10. Application of Proceeds and Deficiency. The Agent may apply the net proceeds of
any sale, lease, license or other disposition of any of the Collateral or of any other collection
of any of the Collateral or any proceeds of any of the Collateral, after deducting all costs and
expenses of every kind incurred therein or incidental to the retaking, holding, preparing for sale,
selling, leasing, licensing or the like of the Collateral on Debtor’s premises, or elsewhere, or in
any way related to the Agent’s rights under



- 239 -









 




this Agreement (including, without limitation,
reasonable attorneys’ fees and expenses, court costs, bonds and other legal expenses, insurance,
security guard and alarm expenses incurred in connection with the holding of the Collateral,
advertisements of sale of the Collateral, and rental and utilities expense on the premises or
elsewhere in connection with storage and sale of the Collateral) to the payment, in whole or in
part, of the Secured Obligations, whether due or not due, absolute or contingent, and only after
payment by the Agent of any other amounts required by any existing or future provision of law
(including Section 9-615 of the Uniform Commercial Code or any comparable statutory provision of
any jurisdiction where Debtor or any of the Collateral may at the time be located) need the Agent
account to Debtor for the surplus, if any. If the Agent sells any of the Collateral on credit,
unless otherwise agreed by the Required Lenders in writing, the Secured Obligations will be
credited only with payments actually received by the Agent from the purchaser with respect to such
credit obligation; and in the event the purchaser fails to pay for the Collateral, the Agent may
resell the Collateral and the Secured Obligations will be credited with the proceeds received from
such resale. The proceeds of any sale(s), lease(s), license(s) or other disposition(s) of any of
the Collateral and/or of any collection(s) of any of the Collateral shall be applied by the Agent
in the following order: (a) first, to the payment of all costs, expenses, liabilities and advances
made or incurred by the Agent and/or any Lender in connection with the collection and enforcement
of the Secured Obligations and the sale or other realization upon the Collateral; provided,
however, that nothing herein is intended to relieve Debtor of its obligation to pay such costs,
expenses, liabilities and advances; (b) second, to the payment of the Secured Obligations in such
order and manner as the Required Lenders, in their discretion, shall elect; and (c) third, to the
payment of any surplus remaining after the payment of the amounts mentioned, to Debtor or to
whomsoever may be lawfully entitled thereto. Debtor shall remain liable to the Agent and the
Lenders for the payment of any deficiency, with interest.




     11. The Agent’s Obligations and Duties. Notwithstanding any provision contained in
this Agreement to the contrary, Debtor shall remain liable under each contract or agreement
comprised in the
Collateral to be observed or performed by Debtor thereunder. The Agent shall not have any
obligation or liability under any such contract or agreement by reason of or arising out of this
Agreement or the receipt by the Agent of any payment relating to any of the Collateral, nor shall
the Agent be obligated in any manner to perform any of the obligations of Debtor under or pursuant
to any such contract or agreement, to make inquiry as to the nature or sufficiency of any payment
received by the Agent in respect of the Collateral or as to the sufficiency of any performance by
any party under any such contract or agreement, to present or file any claim, to take any action to
enforce any performance or to collect the payment of any amounts which may have been assigned to
the Agent or to which the Agent may be entitled at any time or times. The Agent’s sole duty with
respect to the custody, safe keeping and physical preservation of the Collateral in its possession,
under Section 9-207 of the Missouri UCC, shall be to deal with such Collateral in the same manner
as the Agent deals with similar property for its own account. Debtor hereby acknowledges and agrees
that the Agent shall have no duty as to the collection or protection of the Collateral or any
income thereon, nor as to the preservation of rights against prior parties, nor as to the
preservation of any rights pertaining thereto.



     12. Amendments; Waivers; Remedies Cumulative. No delay on the part of the Agent
and/or any Lender in the exercise of any right or remedy under this Agreement shall operate as a
waiver thereof and no single or partial exercise by the Agent and/or any Lender of any right or
remedy shall preclude other or further exercise thereof or the exercise of any other right or
remedy. Each and every right and remedy granted to the Agent and/or any Lender under this
Agreement, under the Loan Agreement and under the other Transaction Documents, or at law or in
equity, shall be deemed cumulative and may be exercised from time to time. Neither the Agent nor
any Lender shall by any act, delay, omission or otherwise be deemed to have waived any of its
rights or remedies under this Agreement and no waiver whatsoever shall be valid unless in writing
and signed by the Agent or the applicable Lender, as the case



- 240 -









 




may be, and then only to the extent
therein set forth. A waiver by the Agent and/or any Lender of any right or remedy under this
Agreement on any one occasion shall not be construed as a bar to any right or remedy which the
Agent and/or any Lender would otherwise have on any future occasion. This Agreement may not be
amended except by a writing duly signed by Debtor and the Agent and consented to by the Required
Lenders. The headings of the paragraphs hereof shall not be considered in the construction or
interpretation of this Agreement.




     13. Irrevocable Power of Attorney. Debtor hereby irrevocably makes, constitutes and
appoints the Agent (and all Persons designated by the Agent) as the true and lawful agent and
attorney-in-fact of Debtor with full power of substitution to: (a) if any Event of Default under
this Agreement has occurred and is continuing, (i) demand payment of accounts, (ii) enforce payment
of accounts by legal proceedings or otherwise, (iii) exercise all of Debtor’s rights and remedies
with respect to proceedings brought to collect accounts, (iv) sell or assign accounts upon such
terms, for such amounts and at such time or times as the Agent deems advisable, (v) settle, adjust,
compromise, extend or renew accounts, (vi) discharge and release accounts, (vii) prepare, file and
sign Debtor’s name on any proof of claim in bankruptcy or other similar document against an account
debtor, (viii) notify the postal authorities of any change of the address for delivery of Debtor’s
mail to an address designated by the Agent, and open all mail addressed to Debtor for the purpose
of collecting accounts and the proceeds of any other Collateral (with all other mail to be promptly
returned to Debtor), and (ix) do all acts and things which are necessary, in the Agent’s good faith
discretion, to fulfill the Debtor’s obligations under this Agreement; and (b) at any time, (i) take
control in any manner of any item of payment or proceeds of any account or any other Collateral,
(ii) have access to any lockbox or postal box into which Debtor’s mail is deposited, (iii) endorse
Debtor’s name upon any items of payment or proceeds thereof and deposit the same in the Agent’s
account on account of the Secured Obligations, (iv) endorse Debtor’s name upon any chattel paper,
document, instrument, invoice or similar document or agreement relating to any account or any goods
pertaining thereto, (v) execute in Debtor’s name and on Debtor’s behalf any financing statements
and/or continuations thereof and/or amendments thereto under the Uniform Commercial Code or other
applicable law in any jurisdiction where Debtor or any of the Collateral may be located, (vi)
endorse
Debtor’s name on any verification of accounts and notices thereof to account debtors and (vii) do
any and all things necessary and take such actions in the name and on behalf of Debtor to carry out
the intent of this Agreement, including, without limitation, the grant of the security interest
granted under this Agreement and to perfect and protect the security interest granted to the Agent
in respect to the Collateral and the Agent’s rights created under this Agreement. Debtor agrees
that neither the Agent nor any of its agents, designees or attorneys-in-fact will be liable for any
acts of commission or omission (other than for acts of commission or omission which constitute
gross negligence or willful misconduct as determined by a court of competent jurisdiction in a
final, nonappealable order), or for any error of judgment or mistake of fact or law in respect to
the exercise of the power of attorney granted under this Section. The power of attorney granted
under this Section shall be irrevocable during the term of this Agreement.



     14. Marshalling. Neither the Agent nor any Lender shall be required to marshal any
present or future collateral security (including, without limitation, this Agreement and the
Collateral) for, or other assurances of payment of, any or all of the Secured Obligations or to
resort to such collateral security or other assurances of payment in any particular order, and all
of their respective rights and remedies under this Agreement and in respect of such collateral
security and other assurances of payment shall be cumulative and in addition to all other rights
and remedies, however existing or arising. To the extent not prohibited by applicable law, Debtor
hereby agrees that it will not invoke any law relating to the marshalling of collateral which might
cause delay in or impede the enforcement of any of the rights and/or remedies of the Agent and/or
any Lender under this Agreement or under any other agreement, document or instrument creating or
evidencing any of the Secured Obligations or under which any of the Secured Obligations is
outstanding or by which any of the Secured Obligations is secured or payment



- 241 -









 




thereof is otherwise
assured, and, to the extent not prohibited by applicable law, Debtor hereby irrevocably waives the
benefits of all such laws.




     15. Notices. Except as otherwise specified in this Agreement, any notice, request,
demand, consent or other communication under this Agreement shall be in writing and delivered in
person or sent by facsimile, recognized overnight courier or registered or certified mail, return
receipt requested and postage prepaid, if to Debtor to the address or facsimile number of Debtor
listed on the signature page(s) of this Agreement, or if to Agent or any Lender, in care of the
Agent at 135 North Meramec, St. Louis, Missouri 63105, Attention: Traci Dodson, Telecopy No. (314)
854-5454, or at such other address or facsimile number as either party may from time to time
designate as its address or facsimile number for communications under this Agreement by notice so
given. Such notices shall be deemed effective on the day on which delivered or sent if delivered
in person or sent by facsimile (with answerback confirmation received), on the first (1st) Business
Day after the day on which sent, if sent by recognized overnight courier or on the third (3rd)
Business Day after the day on which mailed, if sent by registered or certified mail.



     16. Applicable Law and Severability. It is the intention of the parties hereto that
this Agreement is entered into pursuant to the provisions of the Missouri UCC. Any applicable
provisions of the Missouri UCC, not specifically included herein, shall be deemed a part of this
Agreement in the same manner as if set forth herein at length; and any provisions of this Agreement
that might in any manner be in conflict with any provision of the Missouri UCC shall be deemed to
be modified so as not to be inconsistent with the Missouri UCC. In all respects this Agreement and
all transactions hereunder, and all the rights of the parties, shall be governed as to validity,
construction, enforcement and in all other respects by the substantive laws of the State of
Missouri (without reference to conflict of law principles); provided, however, that the perfection,
the effect of the perfection or non-perfection and the priority of the security interests and liens
created by this Agreement shall in all respects be governed, construed, applied and enforced in
accordance with the substantive laws of the applicable jurisdiction. To the extent any provision
of this Agreement is not enforceable under applicable law, such provision shall be deemed null and
void and shall have no effect on the remaining portions of this Agreement.



     17. Successors and Assigns; Other Secured Obligations; Duration of Security Interest.
This Agreement shall be binding upon Debtor and its successors and shall inure to the benefit of
the Agent, the Lenders and their respective successors and assigns. Debtor may not assign any of
its rights or delegate any of its obligations under this Agreement. This Agreement shall continue
in full force and effect and the security interest and lien granted by this Agreement and all of
the representations, warranties, covenants and agreements of Debtor under this Agreement and all of
the terms, conditions and provisions of this Agreement relating thereto shall continue to be fully
operative until such time as (a) all of the Secured Obligations shall have been fully, finally and
indefeasibly paid in cash, (b) there shall be no remaining commitment or obligation of the Agent
and/or any Lender to advance funds, make loans or extend credit to, and/or issue letters of credit
for the account of, any Obligor under the Loan Agreement, any other Transaction Document or
otherwise, (c) no Letters of Credit shall remain outstanding and (d) the Loan Agreement shall have
expired or been terminated in accordance with its terms. If claim is ever made on the Agent and/or
any Lender for repayment or recovery of any amount or amounts received by the Agent and/or any
Lender in payment or on account of any of the Secured Obligations (including payment under a
guaranty or from application of collateral) and the Agent and/or any Lender repays all or part of
said amount by reason of (a) any judgment, decree or order of any court or administrative body
having jurisdiction over the Agent and/or any Lender or any Property of the Agent and/or any Lender
or (b) any settlement or compromise of any such claim effected by the Agent and/or any Lender with
any such claimant (including, without limitation, Debtor), then and in each such event Debtor
agrees that any such judgment, decree, order, settlement or compromise shall be binding on Debtor,
notwithstanding any



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]


cancellation of any note or other instrument or agreement evidencing such
Secured Obligations or of this Agreement, and this Agreement shall continue to be effective or be
reinstated, as the case may be, and shall secure the payment of the amount so repaid or recovered
to the same extent as if such amount had never originally been received by the Agent and/or any
Lender. This Agreement shall continue to be effective or be reinstated, as the case may be, if (a)
at any time any payment of any of the Secured Obligations is rescinded or must otherwise be
returned by the Agent and/or any Lender upon the insolvency, bankruptcy or reorganization of Debtor
or otherwise, all as though such payment had not been made or (b) this Agreement is released in
consideration of a payment of money or transfer of Property or assets or grant of a Lien by Debtor
or any other Person and such payment, transfer or grant is rescinded or must otherwise be returned
by the Agent and/or any Lender upon the insolvency, bankruptcy or reorganization of such Person or
otherwise, all as though such payment, transfer or grant had not been made.




     18. Consent to Jurisdiction; Waiver of Jury Trial. DEBTOR HEREBY IRREVOCABLY (A)
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY MISSOURI STATE COURT SITTING IN THE COUNTY OF ST.
LOUIS, MISSOURI OR ANY UNITED STATES OF AMERICA COURT SITTING IN THE EASTERN DISTRICT OF MISSOURI,
EASTERN DIVISION, AS AGENT MAY ELECT, IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT, (B) AGREES THAT ALL CLAIMS IN RESPECT TO SUCH SUIT, ACTION OR PROCEEDING MAY BE
HELD AND DETERMINED IN ANY OF SUCH COURTS, (C) WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH DEBTOR MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT, (D) WAIVES ANY CLAIM THAT SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND (E) WAIVES ALL RIGHTS OF
ANY OTHER JURISDICTION WHICH DEBTOR MAY NOW OR HEREAFTER HAVE BY REASON OF ITS PRESENT OR
SUBSEQUENT DOMICILES. DEBTOR AUTHORIZES THE SERVICE OF PROCESS UPON DEBTOR BY REGISTERED MAIL SENT
TO DEBTOR AT ITS ADDRESS REFERENCED IN SECTION 15. DEBTOR AND THE AGENT IRREVOCABLY WAIVE THE
RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY ACTION IN WHICH DEBTOR AND THE AGENT ARE PARTIES
RELATING TO OR ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT.



     19. UCC Defined Terms. All terms defined in the Missouri UCC and used in this
Agreement shall have the same definitions herein as specified therein. However, if a term is
defined in Article 9 of the Missouri UCC differently than in another Article of the Missouri UCC,
then the term shall have the meaning specified in Article 9 of the Missouri UCC.



- 243 -









 





     IN WITNESS WHEREOF, Debtor has executed this Security Agreement as of the 29th day of June,
2006.


IN THE EVENT ANY OF THE SECURED OBLIGATIONS ARE PAYABLE ON DEMAND, NEITHER THIS AGREEMENT NOR
ANYTHING CONTAINED HEREIN SHALL BE DEEMED TO ALTER OR IMPINGE UPON THE DEMAND CHARACTER OF SUCH
OBLIGATION.




	 	 	 	 	 
	VIRBAC CORPORATION (Debtor)	 	 
	 
	 	 	 	 
	By:

	 	/s/ Jean M. Nelson	 	 
	 

	 	 	 	 
	 

	 	Jean M. Nelson, Executive Vice President and	 	 
	 

	 	Chief Financial Officer	 	 
	 
	 	 	 	 
	Address and Facsimile Number of	 	 
	Chief Executive Office of Debtor:	 	 
	 
	 	 	 	 
	3200 Meacham Boulevard	 	 
	Fort Worth, Texas 76137	 	 
	Attention: Jean M. Nelson, Chief Financial Officer	 	 
	 
	 	 	 	 
	Facsimile Number: (817) 831-8362	 	 






- 244 -









 






EXHIBIT A



Additional Locations of Places of Business of Debtor

and/or Additional Locations of Collateral




None.




- 245 -









 








EXHIBIT B



UCC Filing Office(s)



Delaware Secretary of State





- 246 -










 







SECURITY AGREEMENT




     THIS
SECURITY AGREEMENT (this “Agreement”) is made as of the
29th day of June, 2006, by PM Resources, Inc., a Missouri corporation (“Debtor”), in favor of FIRST BANK, as agent (in
such capacity, the “Agent”) for the Lenders from time to time party to that certain Loan Agreement
dated as of the date hereof by and among Virbac Corporation, a Delaware corporation, PM Resources,
Inc., a Missouri corporation, Virbac AH, Inc., a Delaware corporation, Francodex Laboratories,
Inc., a Kansas corporation, Delmarva Laboratories, Inc., a Virginia corporation, the Debtor, the
Lenders from time to time party thereto and First Bank, as agent for the Lenders, as the same may
from time to time be amended, modified, extended, renewed or restated (the “Loan Agreement”; all
capitalized terms used and not otherwise defined in this Agreement shall have the respective
meanings ascribed to them in the Loan Agreement).



WITNESSETH:




     WHEREAS, as a condition precedent to the Agent and the Lenders entering into the Loan
Agreement, the Agent and the Lenders have required that Debtor execute and deliver this Agreement
to the Agent for the ratable benefit of the Lenders; and



     WHEREAS, in order to induce the Agent and the Lenders to enter into the Loan Agreement, Debtor
has agreed to execute and deliver this Agreement to the Agent for the ratable benefit of the
Lenders;



     NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, Debtor hereby
covenants and agrees with the Agent as follows:



     1. Grant of Security Interest. For value received, Debtor hereby grants to the Agent
for the ratable benefit of the Lenders a security interest in and lien on all personal property and
fixtures of Debtor, wherever located and whether now or hereafter existing or now owned or
hereafter created, acquired or arising (collectively, the “Collateral”), including, without
limitation:




     (a) all accounts, accounts receivable, payment intangibles, lease payments, rental payments,
license payments, lease rights, contract rights and other rights to the payment of money, and all
goods whose sale, lease, rental, license or other disposition by Debtor have given rise to accounts
and have been returned to or repossessed or stopped in transit by Debtor;




     (b) all inventory of Debtor, wherever located, including, without limitation, (i) all
inventory under lease, in transit, held by others for Debtor’s account, covered by warehouse
receipts, purchase orders and/or contracts, or in the possession of any lessees, renters, carriers,
forwarding agents, truckers, warehousemen, vendors or other persons or entities and (ii) all
inventory consisting of raw materials, work in process, finished goods, supplies, goods,
incidentals, office supplies and/or packaging and shipping materials;




     (c) all documents, including, without limitation, all warehouse receipts, bills of lading and
similar documents of title relating to goods in which Debtor at any time has an interest, whether
now or at any time or times hereafter issued to Debtor or the Agent by any person or entity, and
whether covering any portion of Debtor’s inventory or otherwise;



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     (d) all instruments (including, without limitation, promissory notes) of any kind or nature
whatsoever, whether negotiable or non-negotiable;




     (e) all chattel paper of any kind or nature whatsoever, including, without limitation, all
leases, rental agreements, installment sale agreements, conditional sale agreements and other
chattel paper relating to or arising out of the sale, rental, lease or other disposition of any of
the Collateral;




     (f) all general intangibles of any kind or nature whatsoever, including, without limitation,
all payment intangibles, all patents, trademarks, copyrights and other intellectual property, and
all applications for, registrations of and licenses of the foregoing and all computer software,
product specifications, trade secrets, licenses, trade names, service marks, goodwill, tax refunds,
rights to tax refunds, franchises, rights related to prepaid expenses, rights under executory
contracts, choses in action, causes of action and rights under partnership, joint venture,
co-ownership, management and/or similar agreements and/or arrangements;




     (g) all goods, machinery, equipment, motor vehicles, trucks, tractors, trailers, appliances,
furniture, furnishings, tools, dies, jigs and other tangible personal property and all accessories
and parts relating thereto;




     (h) all fixtures;




     (i) all monies, reserves, deposits, cash, cash equivalents and other property now or at any
time or times hereafter in the possession or under the control of the Agent or any Lender or any
bailee of the Agent or any Lender;




     (j) all deposit accounts and certificates of deposit and all interest or dividends thereon;




     (k) all investment property and financial assets of any kind or type, whether certificated or
uncertificated, including, without limitation, all securities, securities accounts, securities
entitlements, stocks, bonds, options, warrants, commodity contracts, futures contracts, commodity
accounts, commodity options, commercial paper, money market funds and/or accounts, Treasury bills,
notes and bonds, instruments, certificates of deposit, mutual fund shares, cash and money, together
with all rights, income, revenues, proceeds and profits therefrom, including, without limitation,
all dividends, distributions (cash or stock, extraordinary as well as ordinary), interest and other
payments, all additions thereto, substitutions or replacements thereof, any goods or other property
to be delivered thereunder, and any exchanges for or changes in any of the foregoing;




     (l) all commercial tort claims;




     (m) all supporting obligations;




     (n) all letter of credit rights;




     (o) all books, records, computer records, computer disks, ledger cards, programs and other
computer materials, customer and supplier lists, invoices, orders and other property and general
intangibles at any time evidencing or relating to any of the Collateral;



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     (p) all accessions to any of the property described above and all substitutions, renewals,
improvements and replacements of and additions thereto; and




     (q) all proceeds, including, without limitation, proceeds which constitute property of the
types described in (a), (b), (c), (d), (e), (f), (g), (h), (i), (j), (k), (l), (m), (n), (o) and/or
(p) above and any rents and profits of any of the foregoing items, whether cash or noncash,
immediate or remote, including, without limitation, all income, accounts, contract rights, general
intangibles, payment intangibles, chattel paper, notes, drafts, acceptances, instruments and other
rights to the payment of money arising out of the sale, rental, lease, license, exchange or other
disposition of any of the foregoing items (provided, however, that nothing contained herein shall
be deemed to permit or assent to any such disposition other than (i) the sale of inventory by
Debtor in the ordinary course of its business (which does not include any sale or other transfer of
inventory in partial or total satisfaction of any Indebtedness) and (ii) other sales and other
dispositions expressly permitted by the Loan Agreement), and insurance proceeds, and all products,
of (a), (b), (c), (d), (e), (f), (g), (h), (i), (j), (k), (l), (m), (n), (o) and/or (p) above, and
any indemnities, warranties and guaranties payable by reason of loss or damage to or otherwise with
respect to any of the foregoing items;


to secure the payment of (i) any and all of the present and future Borrowers’ Obligations, (ii) any
and all present and future indebtedness (principal, interest, fees, collection costs and expenses
and other amounts), liabilities and obligations (including, without limitation, guaranty
obligations, letter of credit reimbursement obligations and indemnity obligations) of Debtor to the
Agent and/or any Lender evidenced by or arising under or in respect of the Loan Agreement, this
Agreement and/or any other Transaction Document, and (iii) any and all costs of collection,
including, without limitation, reasonable attorneys’ fees and expenses, incurred by the Agent
and/or any Lender upon the occurrence of an Event of Default under this Agreement, in collecting or
enforcing payment of any such indebtedness, liabilities or obligations or in preserving, protecting
or realizing on the Collateral under this Agreement or in representing the Agent and/or any Lender
in connection with any bankruptcy or insolvency proceedings (hereinafter collectively referred to
as the “Secured Obligations”).




     2. Representations and Covenants of Debtor. Debtor hereby represents and warrants to
the Agent and each Lender, and covenants and agrees with the Agent and each Lender, that:




     (a) Debtor is a corporation duly organized, validly existing and in good standing under the
laws of the State of Missouri. Debtor’s exact legal name is “PM Resources Inc.” Debtor
has not during the past five (5) years conducted business under any name other than the name “PM Resources Inc.” Debtor does not now and will not at any time during the term of this
Agreement conduct business under any name other than the name “PM Resources Inc.” Debtor’s
organizational identification number in the State of California is #1946996. Debtor will not
change its name, its type of organization, its jurisdiction of organization or its organizational
identification number unless (i) Debtor gives the Agent and Lenders at least thirty (30) days prior
written notice of the same, (ii) if such change is with respect to Debtor’s jurisdiction of
organization, such new jurisdiction of organization is one of the states of the United States of
America, (iii) such change is permitted pursuant to the terms of the Loan Agreement and the other
Transaction Documents, and (iv) prior to making any such change, Debtor executes (if necessary)
and/or obtains and delivers to the Agent and Lenders any and all additional financing statements
and/or amendments thereto and/or other agreements, documents or notices as may be required by the
Agent and/or any Lender;



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     (b) Debtor has full corporate right, power and authority to execute, deliver and perform its
obligations under this Agreement and to grant to
the Agent for the ratable benefit of the Lenders the security interest in and lien on the
Collateral hereby stated to be granted;




     (c) the officer of Debtor executing this Agreement has been duly elected and qualified and has
been duly authorized and empowered to execute, deliver and perform the terms of this Agreement on
behalf of Debtor;




     (d) the execution, delivery and performance of this Agreement by Debtor do not and will not
violate any of the terms or provisions of the Articles of Incorporation or Bylaws of Debtor;




     (e) the execution, delivery and performance of this Agreement by Debtor do not and will not
violate any law, rule, regulation, order, writ, judgment, injunction, decree, determination or
award presently in effect having applicability to Debtor or the terms of any indenture, agreement,
document, instrument or undertaking to which Debtor is a party or by which it or any of its
Property is bound;




     (f) Debtor’s chief executive office and the location of the only office where it keeps its
books and records respecting the Collateral is that given on the signature page(s) of this
Agreement and all other places of business of Debtor and locations of any of the Collateral are
listed on Exhibit A attached hereto and incorporated herein by reference;




     (g) except to the extent permitted by Section 2(h) below, unless otherwise consented to in
writing by Agent, all of the Collateral (A) is and will be kept solely at Debtor’s chief executive
office or at one of the other locations listed on Exhibit A attached hereto and
incorporated herein by reference (if mobile equipment or equipment of a type normally used in more
than one location, remaining there when not in use), (B) will not be attached or affixed in any
manner to or become a part of any real estate or other personal property apart from other items of
the Collateral and (C) is in the exclusive possession and control of Debtor;




     (h) Debtor will not (i) change the location of its chief executive office, (ii) change the
location of any of its other places of business, (iii) change the location of any of the Collateral
from Debtor’s chief executive office or one of the other locations listed on Exhibit A
attached hereto and incorporated herein by reference or (iv) establish any additional places of
business or additional locations at which any of the Collateral is stored, kept or processed,
unless (A) such office or Collateral location is located within the continental United States of
America, (B) Debtor gives the Agent and Lenders thirty (30) days prior written notice of the same,
and (C) prior to making any such change or establishing any such new location, Debtor executes (if
necessary) and/or obtains and delivers to the Agent and Lenders any and all additional financing
statements and/or amendments thereto, mortgagee waivers and acknowledgments, bailee waivers and
acknowledgments, landlord waivers and acknowledgments, warehousemen waivers and acknowledgments and
other agreements, documents or notices as may be reasonably required by the Agent or any Lender;




     (i) Debtor is, or, as to Collateral acquired after the date hereof, will be, the sole and
absolute owner of all of the Collateral, free and clear of any and all Liens and claims of any kind
or nature whatsoever other than Permitted Liens, and Debtor will defend the Collateral against all
claims and demands of all Persons at any time claiming the same or any interest therein;



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     (j) no financing statement (other than any filed with respect to Permitted Liens) covering any
of the Collateral is or will be on file in any public office at any time during the term of this
Agreement;




     (k) Debtor will not, without the prior written consent of the Required Lenders, sell,
transfer, lease, license or otherwise dispose of or offer to dispose of any of the Collateral or
any interest therein (other than (i) sales of inventory by Debtor in the ordinary course of its
business (which does not include any sale or other transfer of inventory in partial or total
satisfaction of any Indebtedness) and (ii) other sales and other dispositions expressly permitted
by the Loan Agreement (which other sales and other dispositions shall be made expressly subject to
the security interest and lien in favor of the Agent created by this Agreement unless otherwise
agreed to in writing by the Required Lenders));




     (l) Debtor will at all times keep all of the Collateral consisting of inventory, goods,
machinery, equipment and/or other tangible personal property used or useful in the conduct of its
business in good condition, working order and repair (ordinary wear and tear excepted), excepting
any loss, damage or destruction which is fully covered by proceeds of insurance, and will not use
any of the Collateral or permit any of the Collateral to be used in violation of any law, rule,
regulation, ordinance or insurance policy;




     (m) Debtor will pay promptly when due all taxes and assessments on the Collateral or for its
use or operation or upon this Agreement or any of the Secured Obligations or with respect to the
perfection of any security interest or lien under this Agreement; provided, however, that Debtor
shall not be required to pay any such tax or assessment the payment of which is being contested in
good faith and by appropriate proceedings being diligently conducted and for which adequate
reserves in accordance with GAAP have been provided, except that Debtor shall pay or cause to be
paid all such taxes and assessments forthwith upon the commencement of proceedings to foreclose any
Lien which is attached as security therefor, unless such foreclosure is stayed by the filing of an
appropriate bond in a manner reasonably satisfactory to the Required Lenders;




     (n) Debtor will at all times keep all of the Collateral of an insurable nature insured against
loss, damage, theft and other risks, in such amounts, with such companies and under policies in
such form, all as shall be reasonably satisfactory to the Required Lenders. All insurance required
by this Section 2(n) shall be with insurers rated A-XI or better by A.M. Best Company (or accorded
a similar rating by another nationally or internationally recognized insurance rating agency of
similar standing if A.M. Best Company is not then in the business of rating insurers or rating
foreign insurers) or such other insurers as may from time to time be reasonably acceptable to the
Required Lenders. Such policies of insurance shall contain an endorsement reasonably acceptable to
the Agent naming the Agent as loss payee as its interests may appear. Such endorsement, or an
independent instrument furnished to the Agent, shall provide that the insurance companies will give
the Agent at least thirty (30) days written notice before any such policy or policies of insurance
shall be amended or cancelled and that no act or default of Debtor or any other Person shall affect
the right of the Agent to recover under such policy or policies of insurance in the event of any
loss of or damage to any of the Collateral. Debtor hereby directs all insurers under such policies
of insurance to pay all proceeds payable thereunder directly to the Agent as its interests may
appear and Debtor hereby agrees to promptly forward to the Agent all such insurance proceeds
received directly by Debtor. All insurance proceeds received by the Agent on account of any loss of
or damage to any of the Collateral, after deducting therefrom the reasonable charges and expenses
paid or incurred in connection with the collection and disbursement of said proceeds, shall, unless
otherwise agreed to in writing by the



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Required Lenders, be applied to the payment or prepayment of
the Secured Obligations in such order and manner as the Required Lenders, in their discretion,
shall elect. Debtor hereby irrevocably makes, constitutes and
appoints the Agent (and all officers, employees or agents designated by the Agent) as Debtor’s true
and lawful attorney (and agent-in-fact) to, if Debtor fails to do upon the demand of the Agent or
if any Event of Default under this Agreement or any event which with the passage of time or the
giving of notice or both would constitute an Event of Default under this Agreement has occurred and
is continuing, (i) make, adjust, compromise and settle claims under such policies of insurance,
(ii) endorse the name of Debtor on any check, draft, instrument or other item of payment of the
proceeds of such policies of insurance and (iii) make all determinations and decisions with respect
to such policies of insurance. In the event Debtor at any time or times hereafter shall fail to
obtain or maintain any of the policies of insurance required above or to pay any premium in whole
or in part relating thereto, then the Agent, without waiving or releasing any obligation or default
by Debtor hereunder, may at any time or times thereafter (but shall be under no obligation to do
so) obtain and maintain such policies of insurance and pay such premium and take any other action
with respect thereto which the Agent deems advisable. All sums so disbursed by the Agent,
including, without limitation, reasonable attorneys’ fees, court costs, expenses and other charges
relating thereto, shall be part of the Secured Obligations, payable by Debtor to the Agent on
demand. UNLESS DEBTOR PROVIDES EVIDENCE OF THE INSURANCE COVERAGE REQUIRED UNDER THIS AGREEMENT,
THE AGENT MAY PURCHASE INSURANCE AT DEBTOR’S EXPENSE TO PROTECT THE AGENT’S INTEREST IN THE
COLLATERAL. THIS INSURANCE MAY, BUT NEED NOT, PROTECT DEBTOR’S INTERESTS. THE COVERAGE THAT THE
AGENT PURCHASES MAY NOT PAY ANY CLAIM THAT DEBTOR MAY MAKE OR ANY CLAIM THAT IS MADE AGAINST DEBTOR
IN CONNECTION WITH THE COLLATERAL. DEBTOR MAY LATER CANCEL ANY INSURANCE PURCHASED BY THE AGENT,
BUT ONLY AFTER PROVIDING EVIDENCE THAT DEBTOR HAS OBTAINED INSURANCE AS REQUIRED BY THIS AGREEMENT.
IF THE AGENT PURCHASES INSURANCE FOR THE COLLATERAL, DEBTOR WILL BE RESPONSIBLE FOR THE COSTS OF
THAT INSURANCE, INCLUDING THE INSURANCE PREMIUM, INTEREST AND ANY OTHER CHARGES THE AGENT MAY
IMPOSE IN CONNECTION WITH THE PLACEMENT OF INSURANCE, UNTIL THE EFFECTIVE DATE OF THE CANCELLATION
OR EXPIRATION OF THE INSURANCE. THE COSTS OF THE INSURANCE MAY BE ADDED TO THE SECURED
OBLIGATIONS. THE COSTS OF THE INSURANCE MAY BE MORE THAN THE COST OF INSURANCE DEBTOR MAY BE ABLE
TO OBTAIN ON ITS OWN. All insurance proceeds shall be subject to the security interest and lien of
the Agent under this Agreement;




     (o) Debtor will permit the Agent and each Lender (and any Person appointed by the Agent or any
Lender to whom Debtor does not reasonably object) to (i) examine and inspect any of all of the
Collateral, wherever located, during normal business hours and at other reasonable times and (ii)
enter upon its Properties for purposes of making such examinations and/or inspections. Debtor will
permit the Agent (and any Person appointed by the Agent or any Lender to whom Debtor does not
reasonably object) to conduct field audits of the Collateral, following reasonable prior notice, at
least twice each year and shall reimburse Agent and Lenders for the costs of such field audits as
set forth in Section 6.1(c) of the Loan Agreement. Debtor will reimburse the Agent and each Lender
upon demand for all costs and expenses incurred by the Agent or such Lender in connection with any
such examination or inspection conducted by the Agent or such Lender while any Event of Default or
any event which with the passage of time or the giving of notice or both would constitute an Event
of Default under this Agreement has occurred and is continuing;



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     (p) Debtor hereby irrevocably authorizes the Agent at any time and from time to time to file
in any Uniform Commercial Code jurisdiction initial financing statements and/or any amendments
thereto which (i) indicate the Collateral (A) as “all assets”, “all personal property” or “all
personal property and fixtures” of Debtor or words of similar effect, regardless of whether any
particular asset comprised in the Collateral falls within the scope
of Article 9 of the Uniform Commercial Code of the State of Missouri (the “Missouri UCC”) or such
other jurisdiction or (B) as being of an equal or lesser scope or with greater detail and (ii)
contain any other information required by part 5 of Article 9 of the Uniform Commercial Code of the
applicable jurisdiction for the sufficiency or filing office acceptance of any financing statement
or amendment, including (A) whether Debtor is an organization, the type of organization and any
organization identification number issued to Debtor and (B) in the case of a financing statement
filed as a fixture filing or indicating Collateral as as-extracted collateral or timber to be cut,
a sufficient description of real property to which the Collateral relates. Debtor agrees to
furnish any such information to the Agent promptly upon request. Debtor also ratifies its
authorization for the Agent to have filed in any Uniform Commercial Code jurisdiction any like
initial financing statements or amendments thereto if filed prior to the date of this Agreement;




     (q) Debtor hereby agrees, in each case at Debtor’s own expense, to take the following actions
with respect to the following Collateral:




     (i) if Debtor shall at any time hold or acquire any promissory notes or other
instruments or tangible chattel paper, Debtor will promptly notify the Agent and
Lenders thereof in writing and, at the request of the Required Lenders, Debtor will
forthwith endorse, assign and deliver the same to the Agent, accompanied by such
instruments of transfer or assignment duly executed in blank as the Agent may from
time to time specify;




     (ii) if Debtor shall at any time open or maintain a deposit account, Debtor
will promptly notify the Agent and Lenders thereof in writing and, at the request of
the Required Lenders, Debtor will, pursuant to an agreement in form and substance
reasonably satisfactory to the Required Lenders, either (at the Required Lenders’
option) (A) cause the depository bank to agree to comply at any time with
instructions from the Agent to such depository bank directing the disposition of
funds from time to time credited to such deposit account, without further consent of
Debtor or (B) arrange for the Agent to become the customer of the depository bank
with respect to the deposit account, with Debtor being permitted, only with the
consent of the Agent, to exercise rights to withdraw funds from such deposit
account. Agent agrees with Debtor that Agent will not give any such instructions or
withhold any withdrawal rights from Debtor unless an Event of Default or an event
which with the passage of time or the giving of notice or both would constitute an
Event of Default under this Agreement has occurred and is continuing. The
provisions of this paragraph shall not apply to (A) any deposit account for which
Debtor, the depository bank and the Agent have entered into a cash collateral
agreement specially negotiated among Debtor, the depository bank and the Agent for
the specific purpose set forth therein, (B) deposit accounts for which the Agent is
the depository and (C) deposit accounts specially and exclusively used for payroll,
payroll taxes and other employee wage and benefit payments to or for the benefit of
Debtor’s employees;



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     (iii) if Debtor shall at any time hold or acquire any certificated securities,
Debtor will promptly notify the Agent and Lenders thereof in writing and, at the
request of the Required Lenders, Debtor will forthwith endorse, assign and deliver
the same to the Agent, accompanied by such instruments of transfer or assignment
duly executed in blank as the Agent may from time to time specify. If any securities
now or hereafter acquired by Debtor are uncertificated and are issued to Debtor or
its nominee directly by the issuer thereof, Debtor will promptly notify the Agent
and Lenders thereof in writing and, at the request of the Required Lenders, Debtor
will, pursuant to an agreement in form and substance reasonably satisfactory to the
Required Lenders, either (at the
Required Lenders’ option) (A) cause the issuer to agree to comply with instructions
from the Agent as to such securities, without further consent of Debtor or such
nominee or (B) arrange for the Agent to become the registered owner of the
securities. If any securities, whether certificated or uncertificated, or other
investment property now or hereafter acquired by Debtor are held by Debtor or its
nominee through a securities intermediary or commodity intermediary, Debtor will
promptly notify the Agent and Lenders thereof in writing and, at the request of the
Required Lenders, Debtor will, pursuant to an agreement in form and substance
reasonably satisfactory to the Required Lenders, either (at the Required Lenders’
option) (A) cause such securities intermediary or commodity intermediary, as the
case may be, to agree to comply with entitlement orders or other instructions from
the Agent to such securities intermediary as to such securities or other investment
property, or to apply any value distributed on account of any commodity contract as
directed by the Agent to such commodity intermediary, as the case may be, in each
case without further consent of Debtor or such nominee or (B) in the case of
financial assets or other investment property held through a securities
intermediary, arrange for the Agent to become the entitlement holder with respect to
such investment property, with Debtor being permitted, only with the consent of the
Agent, to exercise rights to withdraw or otherwise deal with such investment
property. Agent agrees with Debtor that Agent will not give any such entitlement
orders or instructions or directions to any such issuer, securities intermediary or
commodity intermediary, and will not withhold its consent to the exercise of any
withdrawal or dealing rights by Debtor, unless an Event of Default or an event which
with the passage of time or the giving of notice or both would constitute an Event
of Default under this Agreement has occurred and is continuing. The provisions of
this paragraph shall not apply to any financial assets credited to a securities
account for which the Agent is the securities intermediary;




     (iv) if any goods are at any time in the possession of a bailee, Debtor will
promptly notify the Agent and Lenders thereof in writing and, at the request of the
Required Lenders, Debtor will promptly obtain an acknowledgment from the bailee, in
form and substance reasonably satisfactory to the Required Lenders, that the bailee
holds such Collateral for the benefit of the Agent and shall act upon the
instructions of the Agent, without the further consent of Debtor. Agent agrees with
Debtor that Agent will not give any such instructions unless an Event of Default or
an event which with the passage of time or the giving of notice or both would
constitute an Event of Default under this Agreement has occurred and is continuing;




     (v) if any of the Collateral is located on any premises not owned by Debtor,
Debtor will promptly notify the Agent and Lenders thereof in writing and, at the
request of the Required Lenders, Debtor will promptly cause each Person having any
right, title or interest in, or Lien on, such premises to enter into an agreement in
form and substance reasonably satisfactory to the Required Lenders whereby such
Person disclaims any right,



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title or interest in, and/or Lien on, the Collateral and
allows entry upon such premises and the removal of the Collateral from such premises
by the Agent or its agents or representatives;




     (vi) if Debtor at any time holds or acquires an interest in any electronic
chattel paper or any “transferable record,” as that term is defined in Section 201
of the federal Electronic Signatures in Global and National Commerce Act, or in
Section 16 of the Uniform Electronic Transactions Act as in effect in any relevant
jurisdiction, Debtor will promptly notify the Agent and Lenders thereof and, at the
request of the Required Lenders, Debtor will take such action as the Required
Lenders may reasonably request to vest in the Agent control, under Section 9-105 of
the Missouri UCC, of such electronic chattel paper and control under Section 201 of the federal Electronic Signatures in
Global and National Commerce Act or Section 16 of the Uniform Electronic
Transactions Act, as the case may be, as so in effect in such jurisdiction, of such
transferable record;




     (vii) if Debtor is at any time a beneficiary under a letter of credit now or
hereafter issued in favor of Debtor, Debtor will promptly notify the Agent and
Lenders thereof in writing and, at the request of the Required Lenders, Debtor will,
pursuant to an agreement in form and substance reasonably satisfactory to the
Required Lenders, either (at the Required Lenders’ option) (A) arrange for the
issuer and any confirmer of such letter of credit to consent to an assignment to the
Agent of the proceeds of any drawing under the letter of credit or (B) arrange for
the Agent to become the transferee beneficiary of the letter of credit, with the
proceeds of any drawing under the letter of credit to be applied to the payment of
the Secured Obligations in such order and manner as the Required Lenders, in their
discretion, shall elect;




     (viii) if Debtor shall at any time hold or acquire a commercial tort claim,
Debtor will promptly notify the Agent and Lenders in a writing signed by Debtor of
the brief details thereof and grant to the Agent in such writing a security interest
therein and in the proceeds thereof, all upon the terms of this Agreement, with such
writing to be in form and substance reasonably satisfactory to the Required Lenders;




     (ix) Debtor further agrees to take any other action reasonably requested by the
Required Lenders to insure the attachment, perfection and first priority of, and the
ability of the Agent to enforce, the Agent’s security interest in and lien on any
and all of the Collateral including, without limitation, (a) executing, delivering
and, where appropriate, filing financing statements and amendments relating thereto
under the Uniform Commercial Code, to the extent, if any, that Debtor’s signature
thereon is required therefor, (b) causing the Agent’s name to be noted as secured
party on any certificate of title for a titled good if such notation is a condition
to attachment, perfection or priority of, or ability of the Agent to enforce, the
Agent’s security interest in and lien on such Collateral and delivering the original
of such certificate of title (with the Agent’s security interest and lien so noted)
to the Agent, (c) complying with any provision of any statute, regulation or treaty
of any governmental body, entity, authority, agency or instrumentality as to any
Collateral if compliance with such provision is a condition to attachment,
perfection or priority of, or ability of the Agent to enforce, the Agent’s security
interest in and lien on such Collateral, (d) obtaining governmental, regulatory and
other third party consents and approvals, including without limitation any consent
of any licensor, lessor or other person obligated on Collateral, (e) obtaining
waivers from mortgagees and landlords in form and substance reasonably satisfactory
to the Required



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Lenders and (f) taking all actions required by any earlier versions
of the Uniform Commercial Code or by other law, as applicable in any relevant
Uniform Commercial Code jurisdiction, or by other law as applicable in any foreign
jurisdiction; and




     (x) with respect to accounts with respect to which the account debtor is the
United States of America, any state of the United States of America or any other
governmental body or any department, agency or instrumentality of any of the
foregoing, if requested by the Required Lenders, Debtor will take such action and
execute, deliver and file such agreements, documents and instruments as may be
necessary or as the Required Lenders may reasonably request to insure that such
accounts are duly assigned to the Agent for the ratable benefit of the Lenders in
compliance with all applicable governmental and regulatory requirements (including,
without limitation, to the extent applicable, the Federal Assignment of Claims Act
of 1940, as amended, so that the Agent
is recognized by the account debtor to have all of the rights of an assignee of such
accounts;




     (r) Debtor will reimburse the Agent and each Lender upon demand for (i) all costs and expenses
incident to perfecting, maintaining or terminating the security interest granted by this Agreement,
including search fees, filing and recording fees, fees for obtaining and transferring certificates
of title and all taxes and legal and other out-of-pocket fees and expenses paid or incurred by the
Agent and/or any Lender in connection with any of the foregoing and (ii) all costs and expenses,
including, without limitation, reasonable attorneys’ fees and expenses, incurred by the Agent
and/or any Lender in seeking to collect or enforce any rights under this Agreement or incurred by
the Agent and/or any Lender in seeking to collect or enforce any of the Secured Obligations, all of
which costs and expenses shall constitute a part of the Secured Obligations and be payable by
Debtor to the Agent and the Lenders on demand; and




     (s) Exhibit B attached hereto and incorporated herein by reference sets forth a
complete list of all of the filing office(s) where financing statement(s) must be filed in order to
perfect the Agent’s security interest in the Collateral to the extent such security interest can be
perfected by the filing of financing statements under the Uniform Commercial Code or other
applicable laws of any jurisdiction where Debtor or any of the Collateral is or may be “located”
(as “located” is defined in the applicable Uniform Commercial Code or other applicable law).



     3. Representations and Covenants of Debtor re: Accounts, Inventory and Other
Collateral. Debtor hereby represents and warrants to the Agent and each Lender, and covenants
and agrees with the Agent and each Lender, that:




     (a) Debtor will provide the Agent and Lenders with a written Borrowing Base Certificate on or
before the last day of each month as required under Section 3.1(b) of the Loan Agreement (or at
such other intervals as the Required Lenders shall require from time to time), reflecting activity
of Debtor up to and including the last day of the preceding month (each, a “Borrowing Base
Certificate”) describing, in a form and with such specificity as is satisfactory to the Required
Lenders, all Accounts created or acquired by Debtor subsequent to the immediately preceding
Borrowing Base Certificate. In addition, Debtor, immediately upon demand by the Required Lenders,
now and from time to time hereafter, shall execute and deliver to the Agent and Lenders schedules
of Inventory specifying Debtor’s cost of Inventory and of Eligible Inventory and such other matters
and information relating to Inventory and Eligible Inventory as the Required Lenders may from time
to time request. Debtor shall also furnish copies of any other reports or information, in a form
and with such specificity as is satisfactory to the Required



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Lenders, concerning accounts,
inventory and any other Collateral requested by the Required Lenders, including, without
limitation, but only if specifically requested by the Required Lenders, (i) schedules identifying
each account, (ii) copies of all invoices prepared in connection with such accounts and (iii) such
additional schedules, certificates, test verifications, and reports respecting the Collateral and
the proceeds thereof as the Required Lenders may from time to time reasonably request. The
Borrowing Base Certificate shall include, in a form and with such specificity as is satisfactory to
the Required Lenders, information on all amounts collected by Debtor on accounts subsequent to the
immediately preceding Borrowing Base Certificate. The Borrowing Base Certificate shall contain such
additional information as the Required Lenders may require;




     (b) With respect to accounts scheduled, listed or referred to on any Borrowing Base
Certificate or other report submitted by Debtor or any other Obligor to the Lenders, Debtor
represents and warrants to the Agent and Lenders that, except as otherwise disclosed on the
applicable Borrowing Base Certificate or other report (i) they are genuine, in all respects what
they purport to be and are not evidenced by a judgment; (ii) they represent undisputed, bona fide
transactions completed in accordance with the terms and provisions contained in the invoices and
other documents related thereto; (iii) the amounts thereof shown on the applicable Borrowing Base
Certificate or other report are actually and absolutely owing to Debtor and are not contingent for
any reason; (iv) no payments have been or shall be made thereon except payments immediately
delivered to the Agent pursuant to Section 4 of this Agreement; (v) there are no setoffs,
counterclaims or disputes existing or asserted with respect thereto and Debtor has not made any
agreement with any account debtor thereof for any deduction therefrom except a discount or
allowance allowed by Debtor in the ordinary course of its business for prompt payment; (vi) to the
best of Debtor’s knowledge, there are no facts, events or occurrences which could reasonably be
expected to impair in any material respect the validity or enforcement thereof or tend to reduce
the amount payable thereunder from the amount thereof as shown on the applicable Borrowing Base
Certificate or other report; (vii) to the best of Debtor’s knowledge, all account debtors thereof
have the capacity to contract and are solvent; (viii) the goods sold and/or services furnished
giving rise thereto are not subject to any Lien or claim except that of the Agent; (ix) Debtor has
no knowledge of any fact or circumstance which could reasonably be expected to impair in any
material respect the validity or collectibility thereof; (x) to the best of Debtor’s knowledge,
there are no bankruptcy, insolvency or other proceedings or actions which are threatened or pending
against any account debtor thereof which could reasonably be expected to result in any material
adverse change in such account debtor’s financial condition; and (xi) all of such accounts are
subject to a first priority perfected security interest in favor of the Agent;




     (c) Any officers, employees or agents of the Lenders shall have the right, at any time or
times hereafter, in the name of such Lender and/or Debtor or in the name of a nominee of such
Lender, to verify the validity, amount or any other matter relating to any accounts by mail,
telephone, telegraph or otherwise. All costs, fees and expenses relating thereto incurred by any
Lender (or for which any Lender becomes obligated) during the continuation of any Event of Default
or any event which with the passage of time or the giving of notice or both would become an Event
of Default under this Agreement shall become part of the Secured Obligations and be payable by
Debtor to such Lender on demand;




     (d) Debtor will at all times maintain a record of accounts at its chief executive office,
keeping correct and accurate records itemizing and describing the names and addresses of account
debtors, relevant invoice numbers, shipping dates and due dates, collection histories and account
agings, all of which records shall be available during such Debtor’s usual business hours at the
request of the Agent or any Lender or any of their respective officers, employees or agents.



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Debtor will cooperate fully with the Agent and each Lender and their respective officers, employees
and agents who shall have the right at any time or times to inspect the accounts and the records
with respect thereto. Debtor will conduct a review (or cause its independent certified public
accountants to conduct a review) of its bad debt reserves and collection histories at least once
each year and promptly following such review shall supply the Agent and each Lender with a report
in a form and with such specificity as may be reasonably satisfactory to the Required Lenders
concerning such review of the accounts (which report may consist of a management letter from
Debtor’s independent certified public accountants if such accountants conducted such bad debt
reserve review);




     (e) Unless otherwise agreed by the Required Lenders in writing, Debtor will: (i) promptly upon
Debtor’s learning thereof, inform the Agent and Lenders, in writing, of any material delay in
Debtor’s performance of any of its obligations to any account debtor with respect to any Eligible
Account in an amount in excess of $100,000.00 and of any assertion of any claims, offsets or
counterclaims in an amount in excess of $100,000.00 by any account debtor with respect to any
Eligible Account and of any allowances, credits and/or other monies in an amount in excess of
$10,000.00 granted by Debtor to any account debtor with respect to any Eligible Account; (ii) not
permit or agree to any extension, compromise or settlement or make any change or modification of
any kind or nature with respect to any Eligible Account, including any of the terms relating
thereto; (iii) promptly upon Debtor’s receipt or learning thereof, furnish to and inform the
Lenders of all material adverse information relating to the financial condition of any account
debtor who in the aggregate owes Debtor more than $20,000.00; and (iv) promptly upon Debtor’s
learning thereof, notify the Lenders in writing which of its then existing accounts involving an
amount in excess of $20,000.00 are no longer Eligible Accounts;




     (f) The Agent shall have the right, in its sole and absolute discretion, without notice
thereof to Debtor: (i) to notify any or all account debtors that the accounts have been assigned to
the Agent and that the Agent has a security interest therein; (ii) to direct such account debtors
to make all payments due from them to Debtor upon the accounts directly to the Agent; and (iii) to
enforce payment of and collect, by legal proceedings or otherwise, the accounts in the name of the
Agent and/or Debtor;




     (g) Debtor will, at its own expense, use commercially reasonable efforts to collect, as and
when due, all amounts due with respect to accounts;




     (h) With respect to inventory scheduled, listed or referred to in any Borrowing Base
Certificate or other report submitted by Debtor or any other Obligor to the Lenders, Debtor
represents and warrants to the Agent and Lenders that, except as otherwise disclosed in such
Borrowing Base Certificate or other report: (i) such inventory is located at Debtor’s chief
executive office, one of the other locations listed on Exhibit A attached hereto and
incorporated herein by reference or another location with respect to which Debtor has complied with
all of the requirements of Section 2(h) of this Agreement; (ii) Debtor has good, indefeasible and
merchantable title to such inventory and such inventory is not subject to any Lien or claim
whatsoever except for Permitted Liens; (iii) such inventory is of good and merchantable quality,
free from any material defects; (iv) such inventory is not subject to any licensing, patent,
royalty, trademark, trade name or copyright agreements with any third parties; (v) the completion
of manufacture and sale or other disposition of such inventory by the Agent following an Event of
Default will not require the consent of any Person and will not constitute a breach or default
under any contract or agreement to which Debtor is a party or to which any of the inventory is
subject; (vi) such inventory has not been produced in violation of the Fair Labor Standards Act



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and is not subject to the so-called “hot goods” provision contained in Title 29 U.S.C. §215(a)(1);
(vii) such inventory is not on consignment with Debtor and (viii) such inventory is subject to a
first priority perfected security interest in favor of the Agent;




     (i) Debtor will at all times maintain a perpetual inventory system keeping correct and
accurate records itemizing and describing the kind, type, quality and quantity of inventory and of
Eligible Inventory, Debtor’s cost therefor and daily withdrawals therefrom and additions thereto,
all of which records shall be available during Debtor’s usual business hours at the request of the
Agent or any Lender or any of their respective officers, employees or agents. Debtor will
cooperate fully with the Agent and each Lender and their respective officers, employees and
agents who shall have the right during normal business hours and/or at other reasonable time or
times to inspect Debtor’s inventory and the records with respect thereto. Debtor will conduct such
physical counts of all or any portion of its inventory as any Lender may from time to time
reasonably request and will supply Agent and each Lender with a report in a form and with such
specificity as may be reasonably satisfactory to the Required Lenders concerning any physical count
of any or all of the inventory of Debtor (whether such count was requested by the Required Lenders
or not); and




     (j) Neither the Agent nor any Lender shall be responsible for: (i) the safekeeping of any of
the inventory; (ii) any loss or damage to any of the inventory; (iii) any diminution in the value
of any of the inventory; or (iv) any act or default of any carrier, warehouseman, bailee,
forwarding agency or any other Person. As between Debtor, on the one hand, and the Agent and the
Lenders, on the other hand, all risk of loss, damage, destruction or diminution in value of the
inventory shall be borne by Debtor. Debtor will not sell any inventory to any customer on
consignment or on approval or on any other basis which entitles the customer to return, or which
may obligate Debtor to repurchase, such inventory. From and after the occurrence of any Event of
Default under this Agreement and so long as any such Event of Default is continuing, the Required
Lenders, in their sole and absolute discretion, may require that inventory be stored with a bailee,
warehouseman or similar party and warehouse receipts therefor be issued in the Agent’s name and be
delivered to the Agent. Debtor agrees to do whatever acts are required to effectuate the
foregoing.



     4. Lockbox and Blocked Account. Debtor hereby agrees to establish and maintain
throughout the term of this Agreement a lock box (the “Lock Box”) in Debtor’s name with a bank (the
“Collecting Bank”) which is acceptable to the Required Lenders (subject to irrevocable instructions
acceptable to the Required Lenders as hereinafter set forth) to which all account debtors shall
directly remit all payments on accounts and in which Debtor shall immediately deposit all cash
payments made for inventory and other cash payments constituting proceeds of Collateral in the
identical form in which such payment was made, whether by cash, check or otherwise. In addition,
Debtor hereby agrees to establish and maintain throughout the term of this Agreement a depository
account at the Collecting Bank (the “Blocked Account”). The Collecting Bank shall acknowledge and
agree, in a manner satisfactory to the Required Lenders, that all payments made to the Lock Box and
the Blocked Account are the sole and exclusive property of the Agent and that the Collecting Bank
has no right of setoff against the Lock Box or the Blocked Account and that all such payments,
whether by cash, check, wire transfer or any other instrument, made to such Lock Box or Blocked
Account or otherwise received by Debtor and whether on the accounts or as proceeds of any other
Collateral or otherwise are and will be the sole and exclusive property of the Agent. Debtor shall
irrevocably instruct the Collecting Bank to on a daily basis on each Business Day (a) transfer all
payments or deposits to Debtor’s Lock Box into Debtor’s Blocked Account and (b) transfer all funds
in Debtor’s Blocked Account (by way of debit, ACH debit, wire transfer or other means, as directed
by Agent) to an account of the Agent at First Bank or such other bank as the Agent



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may from time to
time specify in writing to be applied by the Agent to the payment of the Secured Obligations in
such order and manner as the Required Lenders, in their discretion, shall elect. Debtor shall have
no right to withdraw any funds out of the Lock Box and/or the Blocked Account. Debtor, and each of
its Affiliates, employees, agents and/or other Persons acting for or in concert with Debtor, shall,
acting as trustee for the Agent, receive, as the sole and exclusive property of the Agent, any
monies, checks, notes, drafts and any other payments relating to and/or proceeds of accounts and/or
other Collateral which come into the possession or under the control of Debtor or any Affiliates,
employees, agents or other Persons acting for or in concert with Debtor, and immediately upon
receipt thereof, Debtor or such Persons shall cause the same to be deposited into Debtor’s Lock
Box.




     5. Additional Actions by the Agent. The Agent, at its option, may from time to time
perform any agreement of Debtor hereunder which Debtor shall fail to
perform and take any other action which the Agent in good faith deems necessary for the maintenance
or preservation of any of the Collateral or its interest therein (including, without limitation,
the discharge of taxes or Liens of any kind against the Collateral or the procurement of insurance
or the payment of warehousing charges, landlord’s bills or other charges), and Debtor agrees to
forthwith reimburse the Agent for all costs and expenses incurred by the Agent in connection with
the foregoing, together with interest thereon at a rate per annum equal to the lesser of (a) Four
and One-Fourth Percent (4.25%) over and above the Prime Rate (fluctuating as and when the Prime
Rate changes) and (b) the highest rate of interest allowed by applicable law, from the date
incurred until reimbursed by Debtor. The Agent may for the foregoing purposes act in its own name
or that of Debtor and may also so act for the purposes of adjusting, settling or cancelling any
policy of insurance on the Collateral or endorsing any draft received in connection therewith, in
payment of a loss or otherwise, for all of which purposes Debtor hereby grants to the Agent its
power of attorney, irrevocable during the term of this Agreement.



     6. Defaults. The occurrence of any of the following events or conditions shall
constitute an “Event of Default” under this Agreement: (a) Debtor shall fail to pay any of the
Secured Obligations as and when the same shall become due and payable, whether by reason of demand,
maturity, acceleration or otherwise; (b) Debtor shall fail to perform or observe any of the terms,
provisions, covenants or agreements contained in Sections 2(a), 2(g), 2(h), 2(i), 2(j), 2(k), 2(n),
2(o), 2(q), 3(a), 3(d), 3(e), 3(i) or 4 of this Agreement; (c) Debtor shall fail to perform or
observe of any of the other terms, provisions, covenants or agreements contained in this Agreement
and any such failure shall remain unremedied for five (5) days after the earlier of (i) written
notice of default is given to Debtor by the Agent or any Lender or (ii) any officer of Debtor
obtains knowledge of such default; (d) any representation or warranty made by Debtor in this
Agreement shall prove to be untrue or incorrect in any material respect; (e) any “Event of Default”
(as defined therein) shall occur under or within the meaning of the Loan Agreement; or (f) any
default or event of default shall occur under or within the meaning of any other agreement,
document or instrument heretofore, now or hereafter executed by Debtor with or in favor of the
Agent which is not cured or waived within any applicable cure or grace period (if any).



     7. Remedies. Upon the occurrence and during the continuation of any Event of Default
under this Agreement: (a) whether or not any or all of the Secured Obligations are declared to be
forthwith due and payable, the Agent shall have the right to take immediate possession of the
Collateral covered hereby, and, for that purpose may pursue the same wherever said Collateral may
be found, and may enter upon any of the premises of Debtor with or without process of law and
without breach of the peace, wherever said Collateral may be or may be supposed to be, and search
for the same, and, if found, take possession of and remove and sell and dispose of said Collateral,
or any part thereof; (b) the Agent shall have the right to notify any account debtor with respect
to any account to make all payments under the accounts directly to the Agent and demand, collect,
receipt for, settle, compromise, adjust, sue for, foreclose and realize on the accounts and all
amounts due under the accounts as the Agent may determine;



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(c) the Agent shall have the right to
exercise such of the other rights and remedies accruing to a secured party under the Uniform
Commercial Code of the relevant jurisdiction or jurisdictions and any other applicable law upon
default by a debtor as the Agent may elect; (d) the Agent shall have the right to enter, with or
without process of law and without breach of the peace, any premises where the books and records of
Debtor pertaining to the accounts or any of the other Collateral are or may be located, and without
charge or liability on the part of the Agent therefor seize and remove said books and records from
said premises or remain upon said premises and
use the same for the purpose of collecting, preparing and disposing of the Collateral and/or for
the purpose of identifying and locating any of the Collateral; and (e) the Required Lenders shall
have the right to appoint, remove and reappoint any Person or Persons, including, without
limitation, any employee or agent of the Agent or any Lender to be a receiver (each, a “Receiver”),
which term shall include a receiver and manager of, or agent for, all or any part of the
Collateral. Any such Receiver shall, as far as concerns responsibility for its acts, be deemed to
be the agent of Debtor and not of the Agent or any Lender, and neither the Agent nor any Lender
shall in any way be responsible for any misconduct, negligence or non-feasance of any such
Receiver, its employees or agents. Except as otherwise directed by all of the Lenders, all monies
received by any Receiver shall be received in trust for and paid to the Agent for the ratable
benefit of the Lenders. Debtor shall pay all costs, charges and expenses incurred by the Agent or
any Receiver, whether directly or for services rendered (including, without limitation, reasonable
attorneys’ fees and expenses, auditor’s costs, other legal expenses and Receiver remuneration) in
enforcing this Agreement, realizing on all or any part of the Collateral and/or in enforcing or
collecting the Secured Obligations, and all such expenses shall be part of the Secured Obligations
and be payable on the demand of the Agent. Debtor shall, upon the Agent’s request, assemble the
Collateral and make the Collateral available to the Agent at any place designated by the Agent
which is reasonably convenient to Debtor.




     8. Standards for Exercising Remedies. To the extent that applicable law imposes duties
on the Agent to exercise remedies in a commercially reasonable manner, Debtor acknowledges and
agrees that it is not commercially unreasonable for the Agent (a) to fail to incur expenses
reasonably deemed significant by the Agent to prepare Collateral for disposition or otherwise to
complete raw material or work in process into finished goods or other finished products for
disposition, (b) to fail to obtain third party consents for access to Collateral to be disposed of,
or to obtain or, if not required by other law, to fail to obtain governmental, regulatory or third
party consents for the collection or disposition of Collateral to be collected or disposed of, (c)
to fail to exercise collection remedies against account debtors or other Persons obligated on
Collateral or to remove Liens or encumbrances on or any adverse claims against Collateral, (d) to
exercise collection remedies against account debtors and other Persons obligated on Collateral
directly or through the use of collection agencies and other collection specialists, (e) to
advertise dispositions of Collateral through publications or media of general circulation, whether
or not the Collateral is of a specialized nature, (f) to contact other Persons, whether or not in
the same business as Debtor, for expressions of interest in acquiring all or any portion of the
Collateral, (g) to hire one or more professional auctioneers to assist in the disposition of
Collateral, whether or not the collateral is of a specialized nature, (h) to dispose of Collateral
by utilizing Internet sites that provide for the auction of assets of the types included in the
Collateral or that have the reasonable capability of doing so, or that match buyers and sellers of
assets, (i) to dispose of assets in wholesale rather than retail markets, (j) to disclaim
disposition warranties, (k) to purchase insurance or credit enhancements to insure the Agent
against risks of loss, collection or disposition of Collateral or to provide to the Agent a
guaranteed return from the collection or disposition of Collateral or (l) to the extent deemed
appropriate by the Agent, to obtain the services of other brokers, investment bankers, consultants
and other professionals to assist the Agent in the collection or disposition of any of the
Collateral. Debtor acknowledges that the purpose of this Section 8 is to provide non-exhaustive
indications of what actions or omissions by the Agent would not be commercially unreasonable in the
Agent’s exercise of remedies against the Collateral and that other actions or omissions by the
Agent shall not be deemed commercially unreasonable solely on



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account of not being indicated in
this Section 8. Without limitation upon the foregoing, nothing contained in this Section 8 shall
be construed to grant any rights to Debtor or to impose any duties on the Agent that would not have
been granted or imposed by this Agreement or by applicable law in the absence of this Section 8.




     9. Foreclosure. Foreclosure on the Collateral covered hereby may be had at public or
private sale or sales, disposing of such portion or portions of the Collateral at each such sale,
for cash or on credit, on such terms, at such place or places, and with or
without the Collateral being present at such sale, all as the Agent in its sole and absolute
discretion shall determine from time to time. In the case of public sale, notice thereof shall be
deemed and held to be adequate and reasonable if such notice shall appear three (3) times in a
newspaper published in the City or County wherein the sale is to be held, the first such
publication being at least ten (10) days before such sale and the last such publication being not
more than three (3) days before such sale. In the case of a private sale, notice thereof shall be
deemed and held to be adequate and reasonable if such notice shall be mailed to Debtor at its last
known address at least ten (10) days before such sale. The enumeration of these methods of notice
shall not be deemed or construed to render unreasonable any other method of notice which would
otherwise be reasonable under the circumstances. Debtor agrees that the Agent may, in connection
with any such sale, specifically disclaim any warranties of title or the like with respect to all
or any portion of the Collateral being sold.



     10. Application of Proceeds and Deficiency. The Agent may apply the net proceeds of
any sale, lease, license or other disposition of any of the Collateral or of any other collection
of any of the Collateral or any proceeds of any of the Collateral, after deducting all costs and
expenses of every kind incurred therein or incidental to the retaking, holding, preparing for sale,
selling, leasing, licensing or the like of the Collateral on Debtor’s premises, or elsewhere, or in
any way related to the Agent’s rights under this Agreement (including, without limitation,
reasonable attorneys’ fees and expenses, court costs, bonds and other legal expenses, insurance,
security guard and alarm expenses incurred in connection with the holding of the Collateral,
advertisements of sale of the Collateral, and rental and utilities expense on the premises or
elsewhere in connection with storage and sale of the Collateral) to the payment, in whole or in
part, of the Secured Obligations, whether due or not due, absolute or contingent, and only after
payment by the Agent of any other amounts required by any existing or future provision of law
(including Section 9-615 of the Uniform Commercial Code or any comparable statutory provision of
any jurisdiction where Debtor or any of the Collateral may at the time be located) need the Agent
account to Debtor for the surplus, if any. If the Agent sells any of the Collateral on credit,
unless otherwise agreed by the Required Lenders in writing, the Secured Obligations will be
credited only with payments actually received by the Agent from the purchaser with respect to such
credit obligation; and in the event the purchaser fails to pay for the Collateral, the Agent may
resell the Collateral and the Secured Obligations will be credited with the proceeds received from
such resale. The proceeds of any sale(s), lease(s), license(s) or other disposition(s) of any of
the Collateral and/or of any collection(s) of any of the Collateral shall be applied by the Agent
in the following order: (a) first, to the payment of all costs, expenses, liabilities and advances
made or incurred by the Agent and/or any Lender in connection with the collection and enforcement
of the Secured Obligations and the sale or other realization upon the Collateral; provided,
however, that nothing herein is intended to relieve Debtor of its obligation to pay such costs,
expenses, liabilities and advances; (b) second, to the payment of the Secured Obligations in such
order and manner as the Required Lenders, in their discretion, shall elect; and (c) third, to the
payment of any surplus remaining after the payment of the amounts mentioned, to Debtor or to
whomsoever may be lawfully entitled thereto. Debtor shall remain liable to the Agent and the
Lenders for the payment of any deficiency, with interest.



     11. The Agent’s Obligations and Duties. Notwithstanding any provision contained in
this Agreement to the contrary, Debtor shall remain liable under each contract or agreement
comprised in the



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Collateral to be observed or performed by Debtor thereunder. The Agent shall not
have any obligation or liability under any such contract or agreement by reason of or arising out
of this Agreement or the receipt by the Agent of any payment relating to any of the Collateral, nor
shall the Agent be obligated in any manner to perform any of the obligations of Debtor under or
pursuant to any such contract or agreement, to make inquiry as to the nature or sufficiency of any
payment received by the Agent in respect of the Collateral or as to the sufficiency of any
performance by any party under any such contract or agreement, to present or file any claim, to
take any action to enforce any performance or to collect the payment of any amounts which may have
been assigned to the Agent or to which the Agent may be entitled at any time or times. The Agent’s
sole duty with respect to the
custody, safe keeping and physical preservation of the Collateral in its possession, under Section
9-207 of the Missouri UCC, shall be to deal with such Collateral in the same manner as the Agent
deals with similar property for its own account. Debtor hereby acknowledges and agrees that the
Agent shall have no duty as to the collection or protection of the Collateral or any income
thereon, nor as to the preservation of rights against prior parties, nor as to the preservation of
any rights pertaining thereto.




     12. Amendments; Waivers; Remedies Cumulative. No delay on the part of the Agent
and/or any Lender in the exercise of any right or remedy under this Agreement shall operate as a
waiver thereof and no single or partial exercise by the Agent and/or any Lender of any right or
remedy shall preclude other or further exercise thereof or the exercise of any other right or
remedy. Each and every right and remedy granted to the Agent and/or any Lender under this
Agreement, under the Loan Agreement and under the other Transaction Documents, or at law or in
equity, shall be deemed cumulative and may be exercised from time to time. Neither the Agent nor
any Lender shall by any act, delay, omission or otherwise be deemed to have waived any of its
rights or remedies under this Agreement and no waiver whatsoever shall be valid unless in writing
and signed by the Agent or the applicable Lender, as the case may be, and then only to the extent
therein set forth. A waiver by the Agent and/or any Lender of any right or remedy under this
Agreement on any one occasion shall not be construed as a bar to any right or remedy which the
Agent and/or any Lender would otherwise have on any future occasion. This Agreement may not be
amended except by a writing duly signed by Debtor and the Agent and consented to by the Required
Lenders. The headings of the paragraphs hereof shall not be considered in the construction or
interpretation of this Agreement.



     13. Irrevocable Power of Attorney. Debtor hereby irrevocably makes, constitutes and
appoints the Agent (and all Persons designated by the Agent) as the true and lawful agent and
attorney-in-fact of Debtor with full power of substitution to: (a) if any Event of Default under
this Agreement has occurred and is continuing, (i) demand payment of accounts, (ii) enforce payment
of accounts by legal proceedings or otherwise, (iii) exercise all of Debtor’s rights and remedies
with respect to proceedings brought to collect accounts, (iv) sell or assign accounts upon such
terms, for such amounts and at such time or times as the Agent deems advisable, (v) settle, adjust,
compromise, extend or renew accounts, (vi) discharge and release accounts, (vii) prepare, file and
sign Debtor’s name on any proof of claim in bankruptcy or other similar document against an account
debtor, (viii) notify the postal authorities of any change of the address for delivery of Debtor’s
mail to an address designated by the Agent, and open all mail addressed to Debtor for the purpose
of collecting accounts and the proceeds of any other Collateral (with all other mail to be promptly
returned to Debtor), and (ix) do all acts and things which are necessary, in the Agent’s good faith
discretion, to fulfill the Debtor’s obligations under this Agreement; and (b) at any time, (i) take
control in any manner of any item of payment or proceeds of any account or any other Collateral,
(ii) have access to any lockbox or postal box into which Debtor’s mail is deposited, (iii) endorse
Debtor’s name upon any items of payment or proceeds thereof and deposit the same in the Agent’s
account on account of the Secured Obligations, (iv) endorse Debtor’s name upon any chattel paper,
document, instrument, invoice or similar document or agreement relating to any account or any goods
pertaining thereto, (v) execute in Debtor’s name and on Debtor’s behalf any financing statements



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and/or continuations thereof and/or amendments thereto under the Uniform Commercial Code or other
applicable law in any jurisdiction where Debtor or any of the Collateral may be located, (vi)
endorse Debtor’s name on any verification of accounts and notices thereof to account debtors and
(vii) do any and all things necessary and take such actions in the name and on behalf of Debtor to
carry out the intent of this Agreement, including, without limitation, the grant of the security
interest granted under this Agreement and to perfect and protect the security interest granted to
the Agent in respect to the Collateral and the Agent’s rights created under this Agreement. Debtor
agrees that neither the Agent nor any of its agents, designees or attorneys-in-fact will be liable
for any acts of commission or omission (other than for acts of commission or omission which
constitute gross negligence or willful misconduct as determined by a court of competent
jurisdiction in a final, nonappealable order), or for any error of judgment or mistake of fact or
law in respect to the exercise of the power of attorney granted under this Section. The power of
attorney granted under this Section shall be irrevocable during the term of this Agreement.




     14. Marshalling. Neither the Agent nor any Lender shall be required to marshal any
present or future collateral security (including, without limitation, this Agreement and the
Collateral) for, or other assurances of payment of, any or all of the Secured Obligations or to
resort to such collateral security or other assurances of payment in any particular order, and all
of their respective rights and remedies under this Agreement and in respect of such collateral
security and other assurances of payment shall be cumulative and in addition to all other rights
and remedies, however existing or arising. To the extent not prohibited by applicable law, Debtor
hereby agrees that it will not invoke any law relating to the marshalling of collateral which might
cause delay in or impede the enforcement of any of the rights and/or remedies of the Agent and/or
any Lender under this Agreement or under any other agreement, document or instrument creating or
evidencing any of the Secured Obligations or under which any of the Secured Obligations is
outstanding or by which any of the Secured Obligations is secured or payment thereof is otherwise
assured, and, to the extent not prohibited by applicable law, Debtor hereby irrevocably waives the
benefits of all such laws.



     15. Notices. Except as otherwise specified in this Agreement, any notice, request,
demand, consent or other communication under this Agreement shall be in writing and delivered in
person or sent by facsimile, recognized overnight courier or registered or certified mail, return
receipt requested and postage prepaid, if to Debtor to the address or facsimile number of Debtor
listed on the signature page(s) of this Agreement, or if to Agent or any Lender, in care of the
Agent at 135 North Meramec, St. Louis, Missouri 63105, Attention: Traci Dodson, Telecopy No. (314)
854-5454, or at such other address or facsimile number as either party may from time to time
designate as its address or facsimile number for communications under this Agreement by notice so
given. Such notices shall be deemed effective on the day on which delivered or sent if delivered
in person or sent by facsimile (with answerback confirmation received), on the first (1st) Business
Day after the day on which sent, if sent by recognized overnight courier or on the third (3rd)
Business Day after the day on which mailed, if sent by registered or certified mail.



     16. Applicable Law and Severability. It is the intention of the parties hereto that
this Agreement is entered into pursuant to the provisions of the Missouri UCC. Any applicable
provisions of the Missouri UCC, not specifically included herein, shall be deemed a part of this
Agreement in the same manner as if set forth herein at length; and any provisions of this Agreement
that might in any manner be in conflict with any provision of the Missouri UCC shall be deemed to
be modified so as not to be inconsistent with the Missouri UCC. In all respects this Agreement and
all transactions hereunder, and all the rights of the parties, shall be governed as to validity,
construction, enforcement and in all other respects by the substantive laws of the State of
Missouri (without reference to conflict of law principles); provided, however, that the perfection,
the effect of the perfection or non-perfection and the priority of the security interests and liens
created by this Agreement shall in all respects be governed, construed,



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applied and enforced in
accordance with the substantive laws of the applicable jurisdiction. To the extent any provision
of this Agreement is not enforceable under applicable law, such provision shall be deemed null and
void and shall have no effect on the remaining portions of this Agreement.




     17. Successors and Assigns; Other Secured Obligations; Duration of Security Interest.
This Agreement shall be binding upon Debtor and its successors and shall inure to the benefit of
the Agent, the Lenders and their respective successors and assigns. Debtor may not assign any of
its rights or delegate any of its obligations under this Agreement. This Agreement shall continue
in full force and effect and the security interest and lien granted by this Agreement and all of
the representations, warranties, covenants and agreements of Debtor under this Agreement and all of
the terms, conditions and provisions of this Agreement relating thereto shall continue to be fully
operative until such time as (a) all of the Secured Obligations shall have been fully, finally and
indefeasibly paid in cash, (b) there shall be no remaining commitment or obligation of the Agent
and/or any Lender to advance funds, make loans or extend credit to, and/or issue letters of credit
for the account of, any Obligor under the Loan Agreement, any other Transaction Document or
otherwise, (c) no Letters of Credit shall remain outstanding and (d) the Loan Agreement shall have
expired or been terminated in accordance with its terms. If claim is ever made on the Agent and/or
any Lender for repayment or recovery of any amount or amounts received by the Agent and/or any
Lender in payment or on account of any of the Secured Obligations (including payment under a
guaranty or from application of collateral) and the Agent and/or any Lender repays all or part of
said amount by reason of (a) any judgment, decree or order of any court or administrative body
having jurisdiction over the Agent and/or any Lender or any Property of the Agent and/or any Lender
or (b) any settlement or compromise of any such claim effected by the Agent and/or any Lender with
any such claimant (including, without limitation, Debtor), then and in each such event Debtor
agrees that any such judgment, decree, order, settlement or compromise shall be binding on Debtor,
notwithstanding any cancellation of any note or other instrument or agreement evidencing such
Secured Obligations or of this Agreement, and this Agreement shall continue to be effective or be
reinstated, as the case may be, and shall secure the payment of the amount so repaid or recovered
to the same extent as if such amount had never originally been received by the Agent and/or any
Lender. This Agreement shall continue to be effective or be reinstated, as the case may be, if (a)
at any time any payment of any of the Secured Obligations is rescinded or must otherwise be
returned by the Agent and/or any Lender upon the insolvency, bankruptcy or reorganization of Debtor
or otherwise, all as though such payment had not been made or (b) this Agreement is released in
consideration of a payment of money or transfer of Property or assets or grant of a Lien by Debtor
or any other Person and such payment, transfer or grant is rescinded or must otherwise be returned
by the Agent and/or any Lender upon the insolvency, bankruptcy or reorganization of such Person or
otherwise, all as though such payment, transfer or grant had not been made.



     18. Consent to Jurisdiction; Waiver of Jury Trial. DEBTOR HEREBY IRREVOCABLY (A)
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY MISSOURI STATE COURT SITTING IN THE COUNTY OF ST.
LOUIS, MISSOURI OR ANY UNITED STATES OF AMERICA COURT SITTING IN THE EASTERN DISTRICT OF MISSOURI,
EASTERN DIVISION, AS AGENT MAY ELECT, IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT, (B) AGREES THAT ALL CLAIMS IN RESPECT TO SUCH SUIT, ACTION OR PROCEEDING MAY BE
HELD AND DETERMINED IN ANY OF SUCH COURTS, (C) WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH DEBTOR MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT, (D) WAIVES ANY CLAIM THAT SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND (E) WAIVES ALL RIGHTS OF
ANY OTHER JURISDICTION WHICH DEBTOR MAY NOW OR HEREAFTER HAVE BY REASON OF ITS PRESENT OR




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SUBSEQUENT DOMICILES. DEBTOR AUTHORIZES THE SERVICE OF PROCESS UPON DEBTOR BY REGISTERED MAIL
SENT TO DEBTOR AT ITS ADDRESS REFERENCED IN SECTION 15. DEBTOR AND THE AGENT IRREVOCABLY WAIVE THE
RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY ACTION IN WHICH DEBTOR AND THE AGENT ARE PARTIES
RELATING TO OR ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT.




     19. UCC Defined Terms. All terms defined in the Missouri UCC and used in this
Agreement shall have the same definitions herein as specified therein. However, if a term is
defined in Article 9 of the Missouri UCC differently than in another Article of the Missouri UCC,
then the term shall have the meaning specified in Article 9 of the Missouri UCC.



     IN WITNESS WHEREOF, Debtor has executed this Security Agreement as of the 29th day of June,
2006.


IN THE EVENT ANY OF THE SECURED OBLIGATIONS ARE PAYABLE ON DEMAND, NEITHER THIS AGREEMENT NOR
ANYTHING CONTAINED HEREIN SHALL BE DEEMED TO ALTER OR IMPINGE UPON THE DEMAND CHARACTER OF SUCH
OBLIGATION.




	 	 	 	 	 
	 	 	PM RESOURCES, INC. (Debtor)
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Jean M. Nelson
	 

	 	 	 	 
	 

	 	 	 	Jean M. Nelson, Executive Vice
President and


Chief Financial Officer
	 
	 	 	 	 
	 	 	Address and Facsimile Number of Chief Executive Office of Debtor:
	 
	 	 	 	 
	 	 	3200 Meacham Boulevard
	 	 	Fort Worth, Texas 76137
	 	 	Attention: Jean M. Nelson, Chief Financial Officer
	 
	 	 	 	 
	 	 	Facsimile Number: (817) 831-8362






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EXHIBIT A




Additional Locations of Places of Business of Debtor

and/or Additional Locations of Collateral




13001 St. Charles Rock Road

Bridgeton, Missouri 63044




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EXHIBIT B




UCC Filing Office(s)




Missouri Secretary of State




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SECURITY AGREEMENT




     THIS SECURITY AGREEMENT (this “Agreement”) is made as of the 29th day of June, 2006, by ST.
JON LABORATORIES, INC., a California corporation (“Debtor”), in favor of FIRST BANK, as agent (in
such capacity, the “Agent”) for the Lenders from time to time party to that certain Loan Agreement
dated as of the date hereof by and among Virbac Corporation, a Delaware corporation, PM Resources,
Inc., a Missouri corporation, Virbac AH, Inc., a Delaware corporation, Francodex Laboratories,
Inc., a Kansas corporation, Delmarva Laboratories, Inc., a Virginia corporation, the Debtor, the
Lenders from time to time party thereto and First Bank, as agent for the Lenders, as the same may
from time to time be amended, modified, extended, renewed or restated (the “Loan Agreement”; all
capitalized terms used and not otherwise defined in this Agreement shall have the respective
meanings ascribed to them in the Loan Agreement).



WITNESSETH:




     WHEREAS, as a condition precedent to the Agent and the Lenders entering into the Loan
Agreement, the Agent and the Lenders have required that Debtor execute and deliver this Agreement
to the Agent for the ratable benefit of the Lenders; and



     WHEREAS, in order to induce the Agent and the Lenders to enter into the Loan Agreement, Debtor
has agreed to execute and deliver this Agreement to the Agent for the ratable benefit of the
Lenders;



     NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, Debtor hereby
covenants and agrees with the Agent as follows:



     1. Grant of Security Interest. For value received, Debtor hereby grants to the Agent
for the ratable benefit of the Lenders a security interest in and lien on all personal property and
fixtures of Debtor, wherever located and whether now or hereafter existing or now owned or
hereafter created, acquired or arising (collectively, the “Collateral”), including, without
limitation:



          (a) all accounts, accounts receivable, payment intangibles, lease payments, rental payments,
license payments, lease rights, contract rights and other rights to the payment of money, and all
goods whose sale, lease, rental, license or other disposition by Debtor have given rise to accounts
and have been returned to or repossessed or stopped in transit by Debtor;




          (b) all inventory of Debtor, wherever located, including, without limitation, (i) all
inventory under lease, in transit, held by others for Debtor’s account, covered by warehouse
receipts, purchase orders and/or contracts, or in the possession of any lessees, renters, carriers,
forwarding agents, truckers, warehousemen, vendors or other persons or entities and (ii) all
inventory consisting of raw materials, work in process, finished goods, supplies, goods,
incidentals, office supplies and/or packaging and shipping materials;




          (c) all documents, including, without limitation, all warehouse receipts, bills of lading and
similar documents of title relating to goods in which Debtor at any time has an interest, whether
now or at any time or times hereafter issued to Debtor or the Agent by any person or entity, and
whether covering any portion of Debtor’s inventory or otherwise;




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          (d) all instruments (including, without limitation, promissory notes) of any kind or nature
whatsoever, whether negotiable or non-negotiable;




          (e) all chattel paper of any kind or nature whatsoever, including, without limitation, all
leases, rental agreements, installment sale agreements, conditional sale agreements and other
chattel paper relating to or arising out of the sale, rental, lease or other disposition of any of
the Collateral;




          (f) all general intangibles of any kind or nature whatsoever, including, without limitation,
all payment intangibles, all patents, trademarks, copyrights and other intellectual property, and
all applications for, registrations of and licenses of the foregoing and all computer software,
product specifications, trade secrets, licenses, trade names, service marks, goodwill, tax refunds,
rights to tax refunds, franchises, rights related to prepaid expenses, rights under executory
contracts, choses in action, causes of action and rights under partnership, joint venture,
co-ownership, management and/or similar agreements and/or arrangements;




          (g) all goods, machinery, equipment, motor vehicles, trucks, tractors, trailers, appliances,
furniture, furnishings, tools, dies, jigs and other tangible personal property and all accessories
and parts relating thereto;




          (h) all fixtures;




          (i) all monies, reserves, deposits, cash, cash equivalents and other property now or at any
time or times hereafter in the possession or under the control of the Agent or any Lender or any
bailee of the Agent or any Lender;




          (j) all deposit accounts and certificates of deposit and all interest or dividends thereon;




          (k) all investment property and financial assets of any kind or type, whether certificated or
uncertificated, including, without limitation, all securities, securities accounts, securities
entitlements, stocks, bonds, options, warrants, commodity contracts, futures contracts, commodity
accounts, commodity options, commercial paper, money market funds and/or accounts, Treasury bills,
notes and bonds, instruments, certificates of deposit, mutual fund shares, cash and money, together
with all rights, income, revenues, proceeds and profits therefrom, including, without limitation,
all dividends, distributions (cash or stock, extraordinary as well as ordinary), interest and other
payments, all additions thereto, substitutions or replacements thereof, any goods or other property
to be delivered thereunder, and any exchanges for or changes in any of the foregoing;




          (l) all commercial tort claims;




          (m) all supporting obligations;




          (n) all letter of credit rights;




          (o) all books, records, computer records, computer disks, ledger cards, programs and other
computer materials, customer and supplier lists, invoices, orders and other property and general
intangibles at any time evidencing or relating to any of the Collateral;




          (p) all accessions to any of the property described above and all substitutions, renewals,
improvements and replacements of and additions thereto; and




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          (q) all proceeds, including, without limitation, proceeds which constitute property of the
types described in (a), (b), (c), (d), (e), (f), (g), (h), (i), (j), (k), (l), (m), (n), (o) and/or
(p) above and any rents and profits of any of the foregoing items, whether cash or noncash,
immediate or remote, including, without limitation, all income, accounts, contract rights, general
intangibles, payment
intangibles, chattel paper, notes, drafts, acceptances, instruments and other rights to the payment
of money arising out of the sale, rental, lease, license, exchange or other disposition of any of
the foregoing items (provided, however, that nothing contained herein shall be deemed to permit or
assent to any such disposition other than (i) the sale of inventory by Debtor in the ordinary
course of its business (which does not include any sale or other transfer of inventory in partial
or total satisfaction of any Indebtedness) and (ii) other sales and other dispositions expressly
permitted by the Loan Agreement), and insurance proceeds, and all products, of (a), (b), (c), (d),
(e), (f), (g), (h), (i), (j), (k), (l), (m), (n), (o) and/or (p) above, and any indemnities,
warranties and guaranties payable by reason of loss or damage to or otherwise with respect to any
of the foregoing items;



to secure the payment of (i) any and all of the present and future Borrowers’ Obligations, (ii) any
and all present and future indebtedness (principal, interest, fees, collection costs and expenses
and other amounts), liabilities and obligations (including, without limitation, guaranty
obligations, letter of credit reimbursement obligations and indemnity obligations) of Debtor to the
Agent and/or any Lender evidenced by or arising under or in respect of the Loan Agreement, this
Agreement and/or any other Transaction Document, and (iii) any and all costs of collection,
including, without limitation, reasonable attorneys’ fees and expenses, incurred by the Agent
and/or any Lender upon the occurrence of an Event of Default under this Agreement, in collecting or
enforcing payment of any such indebtedness, liabilities or obligations or in preserving, protecting
or realizing on the Collateral under this Agreement or in representing the Agent and/or any Lender
in connection with any bankruptcy or insolvency proceedings (hereinafter collectively referred to
as the “Secured Obligations”).




     2. Representations and Covenants of Debtor. Debtor hereby represents and warrants to
the Agent and each Lender, and covenants and agrees with the Agent and each Lender, that:



          (a) Debtor is a corporation duly organized, validly existing and in good standing under the
laws of the State of California. Debtor’s exact legal name is “St. JON Laboratories, Inc.” Debtor
has not during the past five (5) years conducted business under any name other than the name “St.
JON Laboratories, Inc.” Debtor does not now and will not at any time during the term of this
Agreement conduct business under any name other than the name “St. JON Laboratories, Inc.” Debtor’s
organizational identification number in the State of California is #1946996. Debtor will not
change its name, its type of organization, its jurisdiction of organization or its organizational
identification number unless (i) Debtor gives the Agent and Lenders at least thirty (30) days prior
written notice of the same, (ii) if such change is with respect to Debtor’s jurisdiction of
organization, such new jurisdiction of organization is one of the states of the United States of
America, (iii) such change is permitted pursuant to the terms of the Loan Agreement and the other
Transaction Documents, and (iv) prior to making any such change, Debtor executes (if necessary)
and/or obtains and delivers to the Agent and Lenders any and all additional financing statements
and/or amendments thereto and/or other agreements, documents or notices as may be required by the
Agent and/or any Lender;




          (b) Debtor has full corporate right, power and authority to execute, deliver and perform its
obligations under this Agreement and to grant to the Agent for the ratable benefit of the Lenders
the security interest in and lien on the Collateral hereby stated to be granted;




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          (c) the officer of Debtor executing this Agreement has been duly elected and qualified and has
been duly authorized and empowered to execute, deliver and perform the terms of this Agreement on
behalf of Debtor;




          (d) the execution, delivery and performance of this Agreement by Debtor do not and will not
violate any of the terms or provisions of the Articles of Incorporation or Bylaws of Debtor;




          (e) the execution, delivery and performance of this Agreement by Debtor do not and will not
violate any law, rule, regulation, order, writ, judgment, injunction, decree, determination or
award presently in effect having applicability to Debtor or the terms of any indenture, agreement,
document, instrument or undertaking to which Debtor is a party or by which it or any of its
Property is bound;




          (f) Debtor’s chief executive office and the location of the only office where it keeps its
books and records respecting the Collateral is that given on the signature page(s) of this
Agreement and all other places of business of Debtor and locations of any of the Collateral are
listed on Exhibit A attached hereto and incorporated herein by reference;




          (g) except to the extent permitted by Section 2(h) below, unless otherwise consented to in
writing by Agent, all of the Collateral (A) is and will be kept solely at Debtor’s chief executive
office or at one of the other locations listed on Exhibit A attached hereto and
incorporated herein by reference (if mobile equipment or equipment of a type normally used in more
than one location, remaining there when not in use), (B) will not be attached or affixed in any
manner to or become a part of any real estate or other personal property apart from other items of
the Collateral and (C) is in the exclusive possession and control of Debtor;




          (h) Debtor will not (i) change the location of its chief executive office, (ii) change the
location of any of its other places of business, (iii) change the location of any of the Collateral
from Debtor’s chief executive office or one of the other locations listed on Exhibit A
attached hereto and incorporated herein by reference or (iv) establish any additional places of
business or additional locations at which any of the Collateral is stored, kept or processed,
unless (A) such office or Collateral location is located within the continental United States of
America, (B) Debtor gives the Agent and Lenders thirty (30) days prior written notice of the same,
and (C) prior to making any such change or establishing any such new location, Debtor executes (if
necessary) and/or obtains and delivers to the Agent and Lenders any and all additional financing
statements and/or amendments thereto, mortgagee waivers and acknowledgments, bailee waivers and
acknowledgments, landlord waivers and acknowledgments, warehousemen waivers and acknowledgments and
other agreements, documents or notices as may be reasonably required by the Agent or any Lender;




          (i) Debtor is, or, as to Collateral acquired after the date hereof, will be, the sole and
absolute owner of all of the Collateral, free and clear of any and all Liens and claims of any kind
or nature whatsoever other than Permitted Liens, and Debtor will defend the Collateral against all
claims and demands of all Persons at any time claiming the same or any interest therein;




          (j) no financing statement (other than any filed with respect to Permitted Liens) covering any
of the Collateral is or will be on file in any public office at any time during the term of this
Agreement;




          (k) Debtor will not, without the prior written consent of the Required Lenders, sell,
transfer, lease, license or otherwise dispose of or offer to dispose of any of the Collateral or
any interest therein (other than (i) sales of inventory by Debtor in the ordinary course of its
business (which does not




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include any sale or other transfer of inventory in partial or total
satisfaction of any Indebtedness) and (ii) other sales and other dispositions expressly permitted
by the Loan Agreement (which other sales and other dispositions shall be made expressly subject to
the security interest and lien in favor of the Agent created by this Agreement unless otherwise
agreed to in writing by the Required Lenders));




          (l) Debtor will at all times keep all of the Collateral consisting of inventory, goods,
machinery, equipment and/or other tangible personal property used or useful in the conduct of its
business in good condition, working order and repair (ordinary wear and tear excepted), excepting
any loss, damage or destruction which is fully covered by proceeds of insurance, and will not use
any of the
Collateral or permit any of the Collateral to be used in violation of any law, rule, regulation,
ordinance or insurance policy;




          (m) Debtor will pay promptly when due all taxes and assessments on the Collateral or for its
use or operation or upon this Agreement or any of the Secured Obligations or with respect to the
perfection of any security interest or lien under this Agreement; provided, however, that Debtor
shall not be required to pay any such tax or assessment the payment of which is being contested in
good faith and by appropriate proceedings being diligently conducted and for which adequate
reserves in accordance with GAAP have been provided, except that Debtor shall pay or cause to be
paid all such taxes and assessments forthwith upon the commencement of proceedings to foreclose any
Lien which is attached as security therefor, unless such foreclosure is stayed by the filing of an
appropriate bond in a manner reasonably satisfactory to the Required Lenders;




          (n) Debtor will at all times keep all of the Collateral of an insurable nature insured against
loss, damage, theft and other risks, in such amounts, with such companies and under policies in
such form, all as shall be reasonably satisfactory to the Required Lenders. All insurance required
by this Section 2(n) shall be with insurers rated A-XI or better by A.M. Best Company (or accorded
a similar rating by another nationally or internationally recognized insurance rating agency of
similar standing if A.M. Best Company is not then in the business of rating insurers or rating
foreign insurers) or such other insurers as may from time to time be reasonably acceptable to the
Required Lenders. Such policies of insurance shall contain an endorsement reasonably acceptable to
the Agent naming the Agent as loss payee as its interests may appear. Such endorsement, or an
independent instrument furnished to the Agent, shall provide that the insurance companies will give
the Agent at least thirty (30) days written notice before any such policy or policies of insurance
shall be amended or cancelled and that no act or default of Debtor or any other Person shall affect
the right of the Agent to recover under such policy or policies of insurance in the event of any
loss of or damage to any of the Collateral. Debtor hereby directs all insurers under such policies
of insurance to pay all proceeds payable thereunder directly to the Agent as its interests may
appear and Debtor hereby agrees to promptly forward to the Agent all such insurance proceeds
received directly by Debtor. All insurance proceeds received by the Agent on account of any loss of
or damage to any of the Collateral, after deducting therefrom the reasonable charges and expenses
paid or incurred in connection with the collection and disbursement of said proceeds, shall, unless
otherwise agreed to in writing by the Required Lenders, be applied to the payment or prepayment of
the Secured Obligations in such order and manner as the Required Lenders, in their discretion,
shall elect. Debtor hereby irrevocably makes, constitutes and appoints the Agent (and all officers,
employees or agents designated by the Agent) as Debtor’s true and lawful attorney (and
agent-in-fact) to, if Debtor fails to do upon the demand of the Agent or if any Event of Default
under this Agreement or any event which with the passage of time or the giving of notice or both
would constitute an Event of Default under this Agreement has occurred and is continuing, (i) make,
adjust, compromise and settle claims under such policies of insurance, (ii) endorse the name of
Debtor on any check, draft, instrument or other item of payment of the proceeds of such policies of
insurance and (iii) make all determinations and decisions with respect to such policies of
insurance. In the event Debtor at any time or times hereafter shall fail to obtain





- 273 -









 







or maintain any
of the policies of insurance required above or to pay any premium in whole or in part relating
thereto, then the Agent, without waiving or releasing any obligation or default by Debtor
hereunder, may at any time or times thereafter (but shall be under no obligation to do so) obtain
and maintain such policies of insurance and pay such premium and take any other action with respect
thereto which the Agent deems advisable. All sums so disbursed by the Agent, including, without
limitation, reasonable attorneys’ fees, court costs, expenses and other charges relating thereto,
shall be part of the Secured Obligations, payable by Debtor to the Agent on demand. UNLESS DEBTOR
PROVIDES EVIDENCE OF THE INSURANCE COVERAGE REQUIRED UNDER THIS AGREEMENT, THE AGENT MAY PURCHASE
INSURANCE AT DEBTOR’S EXPENSE TO PROTECT THE AGENT’S INTEREST IN THE COLLATERAL. THIS INSURANCE
MAY, BUT NEED NOT, PROTECT DEBTOR’S INTERESTS. THE COVERAGE THAT THE AGENT PURCHASES MAY
NOT PAY ANY CLAIM THAT DEBTOR MAY MAKE OR ANY CLAIM THAT IS MADE AGAINST DEBTOR IN CONNECTION WITH
THE COLLATERAL. DEBTOR MAY LATER CANCEL ANY INSURANCE PURCHASED BY THE AGENT, BUT ONLY AFTER
PROVIDING EVIDENCE THAT DEBTOR HAS OBTAINED INSURANCE AS REQUIRED BY THIS AGREEMENT. IF THE AGENT
PURCHASES INSURANCE FOR THE COLLATERAL, DEBTOR WILL BE RESPONSIBLE FOR THE COSTS OF THAT INSURANCE,
INCLUDING THE INSURANCE PREMIUM, INTEREST AND ANY OTHER CHARGES THE AGENT MAY IMPOSE IN CONNECTION
WITH THE PLACEMENT OF INSURANCE, UNTIL THE EFFECTIVE DATE OF THE CANCELLATION OR EXPIRATION OF THE
INSURANCE. THE COSTS OF THE INSURANCE MAY BE ADDED TO THE SECURED OBLIGATIONS. THE COSTS OF THE
INSURANCE MAY BE MORE THAN THE COST OF INSURANCE DEBTOR MAY BE ABLE TO OBTAIN ON ITS OWN. All
insurance proceeds shall be subject to the security interest and lien of the Agent under this
Agreement;




          (o) Debtor will permit the Agent and each Lender (and any Person appointed by the Agent or any
Lender to whom Debtor does not reasonably object) to (i) examine and inspect any of all of the
Collateral, wherever located, during normal business hours and at other reasonable times and (ii)
enter upon its Properties for purposes of making such examinations and/or inspections. Debtor will
permit the Agent (and any Person appointed by the Agent or any Lender to whom Debtor does not
reasonably object) to conduct field audits of the Collateral, following reasonable prior notice, at
least twice each year and shall reimburse Agent and Lenders for the costs of such field audits as
set forth in Section 6.1(c) of the Loan Agreement. Debtor will reimburse the Agent and each Lender
upon demand for all costs and expenses incurred by the Agent or such Lender in connection with any
such examination or inspection conducted by the Agent or such Lender while any Event of Default or
any event which with the passage of time or the giving of notice or both would constitute an Event
of Default under this Agreement has occurred and is continuing;




          (p) Debtor hereby irrevocably authorizes the Agent at any time and from time to time to file
in any Uniform Commercial Code jurisdiction initial financing statements and/or any amendments
thereto which (i) indicate the Collateral (A) as “all assets”, “all personal property” or “all
personal property and fixtures” of Debtor or words of similar effect, regardless of whether any
particular asset comprised in the Collateral falls within the scope of Article 9 of the Uniform
Commercial Code of the State of Missouri (the “Missouri UCC”) or such other jurisdiction or (B) as
being of an equal or lesser scope or with greater detail and (ii) contain any other information
required by part 5 of Article 9 of the Uniform Commercial Code of the applicable jurisdiction for
the sufficiency or filing office acceptance of any financing statement or amendment, including (A)
whether Debtor is an organization, the type of organization and any organization identification
number issued to Debtor and (B) in the case of a financing statement filed as a fixture filing or
indicating Collateral as as-extracted collateral or timber to be cut, a sufficient description of
real property to which the Collateral relates. Debtor agrees to furnish




- 274 -









 







any such information to
the Agent promptly upon request. Debtor also ratifies its authorization for the Agent to have
filed in any Uniform Commercial Code jurisdiction any like initial financing statements or
amendments thereto if filed prior to the date of this Agreement;




          (q) Debtor hereby agrees, in each case at Debtor’s own expense, to take the following actions
with respect to the following Collateral:





     (i) if Debtor shall at any time hold or acquire any promissory notes or other
instruments or tangible chattel paper, Debtor will promptly notify the Agent and
Lenders thereof in writing and, at the request of the Required Lenders, Debtor will
forthwith endorse, assign and deliver the same to the Agent, accompanied by such
instruments of transfer or assignment duly executed in blank as the Agent may from
time to time specify;




     (ii) if Debtor shall at any time open or maintain a deposit account, Debtor
will promptly notify the Agent and Lenders thereof in writing and, at the request of
the Required Lenders, Debtor will, pursuant to an agreement in form and substance
reasonably satisfactory to the Required Lenders, either (at the Required Lenders’
option) (A) cause the depository bank to agree to comply at any time with
instructions from the Agent to such depository bank directing the disposition of
funds from time to time credited to such deposit account, without further consent of
Debtor or (B) arrange for the Agent to become the customer of the depository bank
with respect to the deposit account, with Debtor being permitted, only with the
consent of the Agent, to exercise rights to withdraw funds from such deposit
account. Agent agrees with Debtor that Agent will not give any such instructions or
withhold any withdrawal rights from Debtor unless an Event of Default or an event
which with the passage of time or the giving of notice or both would constitute an
Event of Default under this Agreement has occurred and is continuing. The
provisions of this paragraph shall not apply to (A) any deposit account for which
Debtor, the depository bank and the Agent have entered into a cash collateral
agreement specially negotiated among Debtor, the depository bank and the Agent for
the specific purpose set forth therein, (B) deposit accounts for which the Agent is
the depository and (C) deposit accounts specially and exclusively used for payroll,
payroll taxes and other employee wage and benefit payments to or for the benefit of
Debtor’s employees;




     (iii) if Debtor shall at any time hold or acquire any certificated securities,
Debtor will promptly notify the Agent and Lenders thereof in writing and, at the
request of the Required Lenders, Debtor will forthwith endorse, assign and deliver
the same to the Agent, accompanied by such instruments of transfer or assignment
duly executed in blank as the Agent may from time to time specify. If any securities
now or hereafter acquired by Debtor are uncertificated and are issued to Debtor or
its nominee directly by the issuer thereof, Debtor will promptly notify the Agent
and Lenders thereof in writing and, at the request of the Required Lenders, Debtor
will, pursuant to an agreement in form and substance reasonably satisfactory to the
Required Lenders, either (at the Required Lenders’ option) (A) cause the issuer to
agree to comply with instructions from the Agent as to such securities, without
further consent of Debtor or such nominee or (B) arrange for the Agent to become the
registered owner of the securities. If any securities, whether certificated or
uncertificated, or other investment property now or hereafter acquired by Debtor are
held by Debtor or its nominee through a securities intermediary or commodity
intermediary, Debtor will promptly notify the Agent and



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Lenders thereof in writing
and, at the request of the Required Lenders, Debtor will, pursuant to an agreement
in form and substance reasonably satisfactory to the Required Lenders, either (at
the Required Lenders’ option) (A) cause such securities intermediary or commodity
intermediary, as the case may be, to agree to comply with entitlement orders or
other instructions from the Agent to such securities intermediary as to such
securities or other investment property, or to apply any value distributed on
account of any commodity contract as directed by the Agent to such commodity
intermediary, as the case may be, in each case without further consent of Debtor or
such nominee or (B) in the case of financial assets or other investment property
held through a securities intermediary, arrange for the Agent to become the
entitlement holder with respect to such investment property, with Debtor being
permitted, only with the consent of the Agent, to exercise rights to withdraw or
otherwise deal with such investment property. Agent agrees with Debtor that Agent
will not give any such entitlement orders or instructions or directions to any such
issuer, securities intermediary or commodity intermediary, and will not withhold its
consent to the exercise of any withdrawal or dealing rights by Debtor,
unless an Event of Default or an event which with the passage of time or the giving
of notice or both would constitute an Event of Default under this Agreement has
occurred and is continuing. The provisions of this paragraph shall not apply to any
financial assets credited to a securities account for which the Agent is the
securities intermediary;




     (iv) if any goods are at any time in the possession of a bailee, Debtor will
promptly notify the Agent and Lenders thereof in writing and, at the request of the
Required Lenders, Debtor will promptly obtain an acknowledgment from the bailee, in
form and substance reasonably satisfactory to the Required Lenders, that the bailee
holds such Collateral for the benefit of the Agent and shall act upon the
instructions of the Agent, without the further consent of Debtor. Agent agrees with
Debtor that Agent will not give any such instructions unless an Event of Default or
an event which with the passage of time or the giving of notice or both would
constitute an Event of Default under this Agreement has occurred and is continuing;




     (v) if any of the Collateral is located on any premises not owned by Debtor,
Debtor will promptly notify the Agent and Lenders thereof in writing and, at the
request of the Required Lenders, Debtor will promptly cause each Person having any
right, title or interest in, or Lien on, such premises to enter into an agreement in
form and substance reasonably satisfactory to the Required Lenders whereby such
Person disclaims any right, title or interest in, and/or Lien on, the Collateral and
allows entry upon such premises and the removal of the Collateral from such premises
by the Agent or its agents or representatives;




     (vi) if Debtor at any time holds or acquires an interest in any electronic
chattel paper or any “transferable record,” as that term is defined in Section 201
of the federal Electronic Signatures in Global and National Commerce Act, or in
Section 16 of the Uniform Electronic Transactions Act as in effect in any relevant
jurisdiction, Debtor will promptly notify the Agent and Lenders thereof and, at the
request of the Required Lenders, Debtor will take such action as the Required
Lenders may reasonably request to vest in the Agent control, under Section 9-105 of
the Missouri UCC, of such electronic chattel paper and control under Section 201 of
the federal Electronic Signatures in Global and National Commerce Act or Section 16
of the Uniform Electronic Transactions Act, as the case may be, as so in effect in
such jurisdiction, of such transferable record;



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     (vii) if Debtor is at any time a beneficiary under a letter of credit now or
hereafter issued in favor of Debtor, Debtor will promptly notify the Agent and
Lenders thereof in writing and, at the request of the Required Lenders, Debtor will,
pursuant to an agreement in form and substance reasonably satisfactory to the
Required Lenders, either (at the Required Lenders’ option) (A) arrange for the
issuer and any confirmer of such letter of credit to consent to an assignment to the
Agent of the proceeds of any drawing under the letter of credit or (B) arrange for
the Agent to become the transferee beneficiary of the letter of credit, with the
proceeds of any drawing under the letter of credit to be applied to the payment of
the Secured Obligations in such order and manner as the Required Lenders, in their
discretion, shall elect;




     (viii) if Debtor shall at any time hold or acquire a commercial tort claim,
Debtor will promptly notify the Agent and Lenders in a writing signed by Debtor of
the brief details thereof and grant to the Agent in such writing a security interest
therein and in the proceeds thereof, all upon the terms of this Agreement, with such
writing to be in form and substance reasonably satisfactory to the Required Lenders;




     (ix) Debtor further agrees to take any other action reasonably requested by the
Required Lenders to insure the attachment, perfection and first priority of, and the
ability of the Agent to enforce, the Agent’s security interest in and lien on any
and all of the Collateral including, without limitation, (a) executing, delivering
and, where appropriate, filing financing statements and amendments relating thereto
under the Uniform Commercial Code, to the extent, if any, that Debtor’s signature
thereon is required therefor, (b) causing the Agent’s name to be noted as secured
party on any certificate of title for a titled good if such notation is a condition
to attachment, perfection or priority of, or ability of the Agent to enforce, the
Agent’s security interest in and lien on such Collateral and delivering the original
of such certificate of title (with the Agent’s security interest and lien so noted)
to the Agent, (c) complying with any provision of any statute, regulation or treaty
of any governmental body, entity, authority, agency or instrumentality as to any
Collateral if compliance with such provision is a condition to attachment,
perfection or priority of, or ability of the Agent to enforce, the Agent’s security
interest in and lien on such Collateral, (d) obtaining governmental, regulatory and
other third party consents and approvals, including without limitation any consent
of any licensor, lessor or other person obligated on Collateral, (e) obtaining
waivers from mortgagees and landlords in form and substance reasonably satisfactory
to the Required Lenders and (f) taking all actions required by any earlier versions
of the Uniform Commercial Code or by other law, as applicable in any relevant
Uniform Commercial Code jurisdiction, or by other law as applicable in any foreign
jurisdiction; and




     (x) with respect to accounts with respect to which the account debtor is the
United States of America, any state of the United States of America or any other
governmental body or any department, agency or instrumentality of any of the
foregoing, if requested by the Required Lenders, Debtor will take such action and
execute, deliver and file such agreements, documents and instruments as may be
necessary or as the Required Lenders may reasonably request to insure that such
accounts are duly assigned to the Agent for the ratable benefit of the Lenders in
compliance with all applicable governmental and regulatory requirements (including,
without limitation, to the extent applicable, the Federal Assignment of Claims Act
of 1940, as amended, so that the Agent is recognized by the account debtor to have
all of the rights of an assignee of such accounts;



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          (r) Debtor will reimburse the Agent and each Lender upon demand for (i) all costs and expenses
incident to perfecting, maintaining or terminating the security interest granted by this Agreement,
including search fees, filing and recording fees, fees for obtaining and transferring certificates
of title and all taxes and legal and other out-of-pocket fees and expenses paid or incurred by the
Agent and/or any Lender in connection with any of the foregoing and (ii) all costs and expenses,
including, without limitation, reasonable attorneys’ fees and expenses, incurred by the Agent
and/or any Lender in seeking to collect or enforce any rights under this Agreement or incurred by
the Agent and/or any Lender in seeking to collect or enforce any of the Secured Obligations, all of
which costs and expenses shall constitute a part of the Secured Obligations and be payable by
Debtor to the Agent and the Lenders on demand; and




          (s) Exhibit B attached hereto and incorporated herein by reference sets forth a
complete list of all of the filing office(s) where financing statement(s) must be filed in order to
perfect the Agent’s security interest in the Collateral to the extent such security interest can be
perfected by the filing of financing statements under the Uniform Commercial Code or other
applicable laws of any jurisdiction where Debtor or any of the Collateral is or may be “located”
(as “located” is defined in the applicable Uniform Commercial Code or other applicable law).




     3. Representations and Covenants of Debtor re: Accounts, Inventory and Other
Collateral. Debtor hereby represents and warrants to the Agent and each Lender, and covenants
and agrees with the Agent and each Lender, that:



          (a) Debtor will provide the Agent and Lenders with a written Borrowing Base Certificate on or
before the last day of each month as required under Section 3.1(b) of the Loan Agreement (or at
such other intervals as the Required Lenders shall require from time to time), reflecting activity
of Debtor up to and including the last day of the preceding month (each, a “Borrowing Base
Certificate”) describing, in a form and with such specificity as is satisfactory to the Required
Lenders, all Accounts created or acquired by Debtor subsequent to the immediately preceding
Borrowing Base Certificate. In addition, Debtor, immediately upon demand by the Required Lenders,
now and from time to time hereafter, shall execute and deliver to the Agent and Lenders schedules
of Inventory specifying Debtor’s cost of Inventory and of Eligible Inventory and such other matters
and information relating to Inventory and Eligible Inventory as the Required Lenders may from time
to time request. Debtor shall also furnish copies of any other reports or information, in a form
and with such specificity as is satisfactory to the Required Lenders, concerning accounts,
inventory and any other Collateral requested by the Required Lenders, including, without
limitation, but only if specifically requested by the Required Lenders, (i) schedules identifying
each account, (ii) copies of all invoices prepared in connection with such accounts and (iii) such
additional schedules, certificates, test verifications, and reports respecting the Collateral and
the proceeds thereof as the Required Lenders may from time to time reasonably request. The
Borrowing Base Certificate shall include, in a form and with such specificity as is satisfactory to
the Required Lenders, information on all amounts collected by Debtor on accounts subsequent to the
immediately preceding Borrowing Base Certificate. The Borrowing Base Certificate shall contain such
additional information as the Required Lenders may require;




          (b) With respect to accounts scheduled, listed or referred to on any Borrowing Base
Certificate or other report submitted by Debtor or any other Obligor to the Lenders, Debtor
represents and warrants to the Agent and Lenders that, except as otherwise disclosed on the
applicable Borrowing Base Certificate or other report (i) they are genuine, in all respects what
they purport to be and are not evidenced by a judgment; (ii) they represent undisputed, bona fide
transactions completed in accordance with the terms and provisions contained in the invoices and
other documents related thereto; (iii) the




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amounts thereof shown on the applicable Borrowing Base
Certificate or other report are actually and absolutely owing to Debtor and are not contingent for
any reason; (iv) no payments have been or shall be made thereon except payments immediately
delivered to the Agent pursuant to Section 4 of this Agreement; (v) there are no setoffs,
counterclaims or disputes existing or asserted with respect thereto and Debtor has not made any
agreement with any account debtor thereof for any deduction therefrom except a discount or
allowance allowed by Debtor in the ordinary course of its business for prompt payment; (vi) to the
best of Debtor’s knowledge, there are no facts, events or occurrences which could reasonably be
expected to impair in any material respect the validity or enforcement thereof or tend to reduce
the amount payable thereunder from the amount thereof as shown on the applicable Borrowing Base
Certificate or other report; (vii) to the best of Debtor’s knowledge, all account debtors thereof
have the capacity to contract and are solvent; (viii) the goods sold and/or services furnished
giving rise thereto are not subject to any Lien or claim except that of the Agent; (ix) Debtor has
no knowledge of any fact or circumstance which could reasonably be expected to impair in any
material respect the validity or collectibility thereof; (x) to the best of Debtor’s knowledge,
there are no bankruptcy, insolvency or other proceedings or actions which are threatened or pending
against any account debtor thereof which could reasonably be expected to result in any material
adverse change in such account debtor’s financial condition; and (xi) all of such accounts are
subject to a first priority perfected security interest in favor of the Agent;




          (c) Any officers, employees or agents of the Lenders shall have the right, at any time or
times hereafter, in the name of such Lender and/or Debtor or in the name of a nominee of such
Lender,
to verify the validity, amount or any other matter relating to any accounts by mail, telephone,
telegraph or otherwise. All costs, fees and expenses relating thereto incurred by any Lender (or
for which any Lender becomes obligated) during the continuation of any Event of Default or any
event which with the passage of time or the giving of notice or both would become an Event of
Default under this Agreement shall become part of the Secured Obligations and be payable by Debtor
to such Lender on demand;




          (d) Debtor will at all times maintain a record of accounts at its chief executive office,
keeping correct and accurate records itemizing and describing the names and addresses of account
debtors, relevant invoice numbers, shipping dates and due dates, collection histories and account
agings, all of which records shall be available during such Debtor’s usual business hours at the
request of the Agent or any Lender or any of their respective officers, employees or agents.
Debtor will cooperate fully with the Agent and each Lender and their respective officers, employees
and agents who shall have the right at any time or times to inspect the accounts and the records
with respect thereto. Debtor will conduct a review (or cause its independent certified public
accountants to conduct a review) of its bad debt reserves and collection histories at least once
each year and promptly following such review shall supply the Agent and each Lender with a report
in a form and with such specificity as may be reasonably satisfactory to the Required Lenders
concerning such review of the accounts (which report may consist of a management letter from
Debtor’s independent certified public accountants if such accountants conducted such bad debt
reserve review);




          (e) Unless otherwise agreed by the Required Lenders in writing, Debtor will: (i) promptly upon
Debtor’s learning thereof, inform the Agent and Lenders, in writing, of any material delay in
Debtor’s performance of any of its obligations to any account debtor with respect to any Eligible
Account in an amount in excess of $100,000.00 and of any assertion of any claims, offsets or
counterclaims in an amount in excess of $100,000.00 by any account debtor with respect to any
Eligible Account and of any allowances, credits and/or other monies in an amount in excess of
$10,000.00 granted by Debtor to any account debtor with respect to any Eligible Account; (ii) not
permit or agree to any extension, compromise or settlement or make any change or modification of
any kind or nature with respect to any Eligible Account, including any of the terms relating
thereto; (iii) promptly upon Debtor’s




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receipt or learning thereof, furnish to and inform the
Lenders of all material adverse information relating to the financial condition of any account
debtor who in the aggregate owes Debtor more than $20,000.00; and (iv) promptly upon Debtor’s
learning thereof, notify the Lenders in writing which of its then existing accounts involving an
amount in excess of $20,000.00 are no longer Eligible Accounts;




          (f) The Agent shall have the right, in its sole and absolute discretion, without notice
thereof to Debtor: (i) to notify any or all account debtors that the accounts have been assigned to
the Agent and that the Agent has a security interest therein; (ii) to direct such account debtors
to make all payments due from them to Debtor upon the accounts directly to the Agent; and (iii) to
enforce payment of and collect, by legal proceedings or otherwise, the accounts in the name of the
Agent and/or Debtor;




          (g) Debtor will, at its own expense, use commercially reasonable efforts to collect, as and
when due, all amounts due with respect to accounts;




          (h) With respect to inventory scheduled, listed or referred to in any Borrowing Base
Certificate or other report submitted by Debtor or any other Obligor to the Lenders, Debtor
represents and warrants to the Agent and Lenders that, except as otherwise disclosed in such
Borrowing Base Certificate or other report: (i) such inventory is located at Debtor’s chief
executive office, one of the other locations listed on Exhibit A attached hereto and
incorporated herein by reference or another location with respect to which Debtor has complied with
all of the requirements of Section 2(h) of this Agreement; (ii) Debtor has good, indefeasible and
merchantable title to such inventory and such inventory is not subject to any Lien or claim
whatsoever except for Permitted Liens; (iii) such inventory is of good and merchantable quality,
free from any material defects; (iv) such inventory is not subject to any licensing, patent,
royalty,
trademark, trade name or copyright agreements with any third parties; (v) the completion of
manufacture and sale or other disposition of such inventory by the Agent following an Event of
Default will not require the consent of any Person and will not constitute a breach or default
under any contract or agreement to which Debtor is a party or to which any of the inventory is
subject; (vi) such inventory has not been produced in violation of the Fair Labor Standards Act and
is not subject to the so-called “hot goods” provision contained in Title 29 U.S.C. §215(a)(1);
(vii) such inventory is not on consignment with Debtor and (viii) such inventory is subject to a
first priority perfected security interest in favor of the Agent;




          (i) Debtor will at all times maintain a perpetual inventory system keeping correct and
accurate records itemizing and describing the kind, type, quality and quantity of inventory and of
Eligible Inventory, Debtor’s cost therefor and daily withdrawals therefrom and additions thereto,
all of which records shall be available during Debtor’s usual business hours at the request of the
Agent or any Lender or any of their respective officers, employees or agents. Debtor will
cooperate fully with the Agent and each Lender and their respective officers, employees and agents
who shall have the right during normal business hours and/or at other reasonable time or times to
inspect Debtor’s inventory and the records with respect thereto. Debtor will conduct such physical
counts of all or any portion of its inventory as any Lender may from time to time reasonably
request and will supply Agent and each Lender with a report in a form and with such specificity as
may be reasonably satisfactory to the Required Lenders concerning any physical count of any or all
of the inventory of Debtor (whether such count was requested by the Required Lenders or not); and




          (j) Neither the Agent nor any Lender shall be responsible for: (i) the safekeeping of any of
the inventory; (ii) any loss or damage to any of the inventory; (iii) any diminution in the value
of any of the inventory; or (iv) any act or default of any carrier, warehouseman, bailee,
forwarding agency or any other Person. As between Debtor, on the one hand, and the Agent and the
Lenders, on the other hand, all risk of loss, damage, destruction or diminution in value of the
inventory shall be borne by Debtor.




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Debtor will not sell any inventory to any customer on
consignment or on approval or on any other basis which entitles the customer to return, or which
may obligate Debtor to repurchase, such inventory. From and after the occurrence of any Event of
Default under this Agreement and so long as any such Event of Default is continuing, the Required
Lenders, in their sole and absolute discretion, may require that inventory be stored with a bailee,
warehouseman or similar party and warehouse receipts therefor be issued in the Agent’s name and be
delivered to the Agent. Debtor agrees to do whatever acts are required to effectuate the
foregoing.




     4. Lockbox and Blocked Account. Debtor hereby agrees to establish and maintain
throughout the term of this Agreement a lock box (the “Lock Box”) in Debtor’s name with a bank (the
“Collecting Bank”) which is acceptable to the Required Lenders (subject to irrevocable instructions
acceptable to the Required Lenders as hereinafter set forth) to which all account debtors shall
directly remit all payments on accounts and in which Debtor shall immediately deposit all cash
payments made for inventory and other cash payments constituting proceeds of Collateral in the
identical form in which such payment was made, whether by cash, check or otherwise. In addition,
Debtor hereby agrees to establish and maintain throughout the term of this Agreement a depository
account at the Collecting Bank (the “Blocked Account”). The Collecting Bank shall acknowledge and
agree, in a manner satisfactory to the Required Lenders, that all payments made to the Lock Box and
the Blocked Account are the sole and exclusive property of the Agent and that the Collecting Bank
has no right of setoff against the Lock Box or the Blocked Account and that all such payments,
whether by cash, check, wire transfer or any other instrument, made to such Lock Box or Blocked
Account or otherwise received by Debtor and whether on the accounts or as proceeds of any other
Collateral or otherwise are and will be the sole and exclusive property of the Agent. Debtor shall
irrevocably instruct the Collecting Bank to on a daily basis on each Business Day (a) transfer all
payments or deposits to Debtor’s Lock Box into Debtor’s Blocked Account and (b) transfer all funds
in Debtor’s Blocked Account (by way of debit, ACH debit, wire transfer or other
means, as directed by Agent) to an account of the Agent at First Bank or such other bank as the
Agent may from time to time specify in writing to be applied by the Agent to the payment of the
Secured Obligations in such order and manner as the Required Lenders, in their discretion, shall
elect. Debtor shall have no right to withdraw any funds out of the Lock Box and/or the Blocked
Account. Debtor, and each of its Affiliates, employees, agents and/or other Persons acting for or
in concert with Debtor, shall, acting as trustee for the Agent, receive, as the sole and exclusive
property of the Agent, any monies, checks, notes, drafts and any other payments relating to and/or
proceeds of accounts and/or other Collateral which come into the possession or under the control of
Debtor or any Affiliates, employees, agents or other Persons acting for or in concert with Debtor,
and immediately upon receipt thereof, Debtor or such Persons shall cause the same to be deposited
into Debtor’s Lock Box.



     5. Additional Actions by the Agent. The Agent, at its option, may from time to time
perform any agreement of Debtor hereunder which Debtor shall fail to perform and take any other
action which the Agent in good faith deems necessary for the maintenance or preservation of any of
the Collateral or its interest therein (including, without limitation, the discharge of taxes or
Liens of any kind against the Collateral or the procurement of insurance or the payment of
warehousing charges, landlord’s bills or other charges), and Debtor agrees to forthwith reimburse
the Agent for all costs and expenses incurred by the Agent in connection with the foregoing,
together with interest thereon at a rate per annum equal to the lesser of (a) Four and One-Fourth
Percent (4.25%) over and above the Prime Rate (fluctuating as and when the Prime Rate changes) and
(b) the highest rate of interest allowed by applicable law, from the date incurred until reimbursed
by Debtor. The Agent may for the foregoing purposes act in its own name or that of Debtor and may
also so act for the purposes of adjusting, settling or cancelling any policy of insurance on the
Collateral or endorsing any draft received in connection therewith, in payment of a loss or
otherwise, for all of which purposes Debtor hereby grants to the Agent its power of attorney,
irrevocable during the term of this Agreement.



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     6. Defaults. The occurrence of any of the following events or conditions shall
constitute an “Event of Default” under this Agreement: (a) Debtor shall fail to pay any of the
Secured Obligations as and when the same shall become due and payable, whether by reason of demand,
maturity, acceleration or otherwise; (b) Debtor shall fail to perform or observe any of the terms,
provisions, covenants or agreements contained in Sections 2(a), 2(g), 2(h), 2(i), 2(j), 2(k), 2(n),
2(o), 2(q), 3(a), 3(d), 3(e), 3(i) or 4 of this Agreement; (c) Debtor shall fail to perform or
observe of any of the other terms, provisions, covenants or agreements contained in this Agreement
and any such failure shall remain unremedied for five (5) days after the earlier of (i) written
notice of default is given to Debtor by the Agent or any Lender or (ii) any officer of Debtor
obtains knowledge of such default; (d) any representation or warranty made by Debtor in this
Agreement shall prove to be untrue or incorrect in any material respect; (e) any “Event of Default”
(as defined therein) shall occur under or within the meaning of the Loan Agreement; or (f) any
default or event of default shall occur under or within the meaning of any other agreement,
document or instrument heretofore, now or hereafter executed by Debtor with or in favor of the
Agent which is not cured or waived within any applicable cure or grace period (if any).



     7. Remedies. Upon the occurrence and during the continuation of any Event of Default
under this Agreement: (a) whether or not any or all of the Secured Obligations are declared to be
forthwith due and payable, the Agent shall have the right to take immediate possession of the
Collateral covered hereby, and, for that purpose may pursue the same wherever said Collateral may
be found, and may enter upon any of the premises of Debtor with or without process of law and
without breach of the peace, wherever said Collateral may be or may be supposed to be, and search
for the same, and, if found, take possession of and remove and sell and dispose of said Collateral,
or any part thereof; (b) the Agent shall have the right to notify any account debtor with respect
to any account to make all payments under the accounts directly to the Agent and demand, collect,
receipt for, settle, compromise, adjust, sue for, foreclose and realize on the accounts and all
amounts due under the accounts as the Agent may determine; (c) the Agent shall have the right to
exercise such of the other rights and remedies accruing to a secured
party under the Uniform Commercial Code of the relevant jurisdiction or jurisdictions and any other
applicable law upon default by a debtor as the Agent may elect; (d) the Agent shall have the right
to enter, with or without process of law and without breach of the peace, any premises where the
books and records of Debtor pertaining to the accounts or any of the other Collateral are or may be
located, and without charge or liability on the part of the Agent therefor seize and remove said
books and records from said premises or remain upon said premises and use the same for the purpose
of collecting, preparing and disposing of the Collateral and/or for the purpose of identifying and
locating any of the Collateral; and (e) the Required Lenders shall have the right to appoint,
remove and reappoint any Person or Persons, including, without limitation, any employee or agent of
the Agent or any Lender to be a receiver (each, a “Receiver”), which term shall include a receiver
and manager of, or agent for, all or any part of the Collateral. Any such Receiver shall, as far
as concerns responsibility for its acts, be deemed to be the agent of Debtor and not of the Agent
or any Lender, and neither the Agent nor any Lender shall in any way be responsible for any
misconduct, negligence or non-feasance of any such Receiver, its employees or agents. Except as
otherwise directed by all of the Lenders, all monies received by any Receiver shall be received in
trust for and paid to the Agent for the ratable benefit of the Lenders. Debtor shall pay all
costs, charges and expenses incurred by the Agent or any Receiver, whether directly or for services
rendered (including, without limitation, reasonable attorneys’ fees and expenses, auditor’s costs,
other legal expenses and Receiver remuneration) in enforcing this Agreement, realizing on all or
any part of the Collateral and/or in enforcing or collecting the Secured Obligations, and all such
expenses shall be part of the Secured Obligations and be payable on the demand of the Agent. Debtor
shall, upon the Agent’s request, assemble the Collateral and make the Collateral available to the
Agent at any place designated by the Agent which is reasonably convenient to Debtor.



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     8. Standards for Exercising Remedies. To the extent that applicable law imposes duties
on the Agent to exercise remedies in a commercially reasonable manner, Debtor acknowledges and
agrees that it is not commercially unreasonable for the Agent (a) to fail to incur expenses
reasonably deemed significant by the Agent to prepare Collateral for disposition or otherwise to
complete raw material or work in process into finished goods or other finished products for
disposition, (b) to fail to obtain third party consents for access to Collateral to be disposed of,
or to obtain or, if not required by other law, to fail to obtain governmental, regulatory or third
party consents for the collection or disposition of Collateral to be collected or disposed of, (c)
to fail to exercise collection remedies against account debtors or other Persons obligated on
Collateral or to remove Liens or encumbrances on or any adverse claims against Collateral, (d) to
exercise collection remedies against account debtors and other Persons obligated on Collateral
directly or through the use of collection agencies and other collection specialists, (e) to
advertise dispositions of Collateral through publications or media of general circulation, whether
or not the Collateral is of a specialized nature, (f) to contact other Persons, whether or not in
the same business as Debtor, for expressions of interest in acquiring all or any portion of the
Collateral, (g) to hire one or more professional auctioneers to assist in the disposition of
Collateral, whether or not the collateral is of a specialized nature, (h) to dispose of Collateral
by utilizing Internet sites that provide for the auction of assets of the types included in the
Collateral or that have the reasonable capability of doing so, or that match buyers and sellers of
assets, (i) to dispose of assets in wholesale rather than retail markets, (j) to disclaim
disposition warranties, (k) to purchase insurance or credit enhancements to insure the Agent
against risks of loss, collection or disposition of Collateral or to provide to the Agent a
guaranteed return from the collection or disposition of Collateral or (l) to the extent deemed
appropriate by the Agent, to obtain the services of other brokers, investment bankers, consultants
and other professionals to assist the Agent in the collection or disposition of any of the
Collateral. Debtor acknowledges that the purpose of this Section 8 is to provide non-exhaustive
indications of what actions or omissions by the Agent would not be commercially unreasonable in the
Agent’s exercise of remedies against the Collateral and that other actions or omissions by the
Agent shall not be deemed commercially unreasonable solely on account of not being indicated in
this Section 8. Without limitation upon the foregoing, nothing contained in this Section 8 shall
be construed to grant any rights to Debtor or to impose any duties on the
Agent that would not have been granted or imposed by this Agreement or by applicable law in the
absence of this Section 8.



     9. Foreclosure. Foreclosure on the Collateral covered hereby may be had at public or
private sale or sales, disposing of such portion or portions of the Collateral at each such sale,
for cash or on credit, on such terms, at such place or places, and with or without the Collateral
being present at such sale, all as the Agent in its sole and absolute discretion shall determine
from time to time. In the case of public sale, notice thereof shall be deemed and held to be
adequate and reasonable if such notice shall appear three (3) times in a newspaper published in the
City or County wherein the sale is to be held, the first such publication being at least ten (10)
days before such sale and the last such publication being not more than three (3) days before such
sale. In the case of a private sale, notice thereof shall be deemed and held to be adequate and
reasonable if such notice shall be mailed to Debtor at its last known address at least ten (10)
days before such sale. The enumeration of these methods of notice shall not be deemed or construed
to render unreasonable any other method of notice which would otherwise be reasonable under the
circumstances. Debtor agrees that the Agent may, in connection with any such sale, specifically
disclaim any warranties of title or the like with respect to all or any portion of the Collateral
being sold.



     10. Application of Proceeds and Deficiency. The Agent may apply the net proceeds of
any sale, lease, license or other disposition of any of the Collateral or of any other collection
of any of the Collateral or any proceeds of any of the Collateral, after deducting all costs and
expenses of every kind incurred therein or incidental to the retaking, holding, preparing for sale,
selling, leasing, licensing or the like of the Collateral on Debtor’s premises, or elsewhere, or in
any way related to the Agent’s rights under



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this Agreement (including, without limitation,
reasonable attorneys’ fees and expenses, court costs, bonds and other legal expenses, insurance,
security guard and alarm expenses incurred in connection with the holding of the Collateral,
advertisements of sale of the Collateral, and rental and utilities expense on the premises or
elsewhere in connection with storage and sale of the Collateral) to the payment, in whole or in
part, of the Secured Obligations, whether due or not due, absolute or contingent, and only after
payment by the Agent of any other amounts required by any existing or future provision of law
(including Section 9-615 of the Uniform Commercial Code or any comparable statutory provision of
any jurisdiction where Debtor or any of the Collateral may at the time be located) need the Agent
account to Debtor for the surplus, if any. If the Agent sells any of the Collateral on credit,
unless otherwise agreed by the Required Lenders in writing, the Secured Obligations will be
credited only with payments actually received by the Agent from the purchaser with respect to such
credit obligation; and in the event the purchaser fails to pay for the Collateral, the Agent may
resell the Collateral and the Secured Obligations will be credited with the proceeds received from
such resale. The proceeds of any sale(s), lease(s), license(s) or other disposition(s) of any of
the Collateral and/or of any collection(s) of any of the Collateral shall be applied by the Agent
in the following order: (a) first, to the payment of all costs, expenses, liabilities and advances
made or incurred by the Agent and/or any Lender in connection with the collection and enforcement
of the Secured Obligations and the sale or other realization upon the Collateral; provided,
however, that nothing herein is intended to relieve Debtor of its obligation to pay such costs,
expenses, liabilities and advances; (b) second, to the payment of the Secured Obligations in such
order and manner as the Required Lenders, in their discretion, shall elect; and (c) third, to the
payment of any surplus remaining after the payment of the amounts mentioned, to Debtor or to
whomsoever may be lawfully entitled thereto. Debtor shall remain liable to the Agent and the
Lenders for the payment of any deficiency, with interest.



     11. The Agent’s Obligations and Duties. Notwithstanding any provision contained in
this Agreement to the contrary, Debtor shall remain liable under each contract or agreement
comprised in the Collateral to be observed or performed by Debtor thereunder. The Agent shall not
have any obligation or liability under any such contract or agreement by reason of or arising out
of this Agreement or the receipt by the Agent of any payment relating to any of the Collateral, nor
shall the Agent be obligated in any manner to perform any of the obligations of Debtor under or
pursuant to any such contract or agreement,
to make inquiry as to the nature or sufficiency of any payment received by the Agent in respect of
the Collateral or as to the sufficiency of any performance by any party under any such contract or
agreement, to present or file any claim, to take any action to enforce any performance or to
collect the payment of any amounts which may have been assigned to the Agent or to which the Agent
may be entitled at any time or times. The Agent’s sole duty with respect to the custody, safe
keeping and physical preservation of the Collateral in its possession, under Section 9-207 of the
Missouri UCC, shall be to deal with such Collateral in the same manner as the Agent deals with
similar property for its own account. Debtor hereby acknowledges and agrees that the Agent shall
have no duty as to the collection or protection of the Collateral or any income thereon, nor as to
the preservation of rights against prior parties, nor as to the preservation of any rights
pertaining thereto.



     12. Amendments; Waivers; Remedies Cumulative. No delay on the part of the Agent
and/or any Lender in the exercise of any right or remedy under this Agreement shall operate as a
waiver thereof and no single or partial exercise by the Agent and/or any Lender of any right or
remedy shall preclude other or further exercise thereof or the exercise of any other right or
remedy. Each and every right and remedy granted to the Agent and/or any Lender under this
Agreement, under the Loan Agreement and under the other Transaction Documents, or at law or in
equity, shall be deemed cumulative and may be exercised from time to time. Neither the Agent nor
any Lender shall by any act, delay, omission or otherwise be deemed to have waived any of its
rights or remedies under this Agreement and no waiver whatsoever shall be valid unless in writing
and signed by the Agent or the applicable Lender, as the case



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may be, and then only to the extent
therein set forth. A waiver by the Agent and/or any Lender of any right or remedy under this
Agreement on any one occasion shall not be construed as a bar to any right or remedy which the
Agent and/or any Lender would otherwise have on any future occasion. This Agreement may not be
amended except by a writing duly signed by Debtor and the Agent and consented to by the Required
Lenders. The headings of the paragraphs hereof shall not be considered in the construction or
interpretation of this Agreement.



     13. Irrevocable Power of Attorney. Debtor hereby irrevocably makes, constitutes and
appoints the Agent (and all Persons designated by the Agent) as the true and lawful agent and
attorney-in-fact of Debtor with full power of substitution to: (a) if any Event of Default under
this Agreement has occurred and is continuing, (i) demand payment of accounts, (ii) enforce payment
of accounts by legal proceedings or otherwise, (iii) exercise all of Debtor’s rights and remedies
with respect to proceedings brought to collect accounts, (iv) sell or assign accounts upon such
terms, for such amounts and at such time or times as the Agent deems advisable, (v) settle, adjust,
compromise, extend or renew accounts, (vi) discharge and release accounts, (vii) prepare, file and
sign Debtor’s name on any proof of claim in bankruptcy or other similar document against an account
debtor, (viii) notify the postal authorities of any change of the address for delivery of Debtor’s
mail to an address designated by the Agent, and open all mail addressed to Debtor for the purpose
of collecting accounts and the proceeds of any other Collateral (with all other mail to be promptly
returned to Debtor), and (ix) do all acts and things which are necessary, in the Agent’s good faith
discretion, to fulfill the Debtor’s obligations under this Agreement; and (b) at any time, (i) take
control in any manner of any item of payment or proceeds of any account or any other Collateral,
(ii) have access to any lockbox or postal box into which Debtor’s mail is deposited, (iii) endorse
Debtor’s name upon any items of payment or proceeds thereof and deposit the same in the Agent’s
account on account of the Secured Obligations, (iv) endorse Debtor’s name upon any chattel paper,
document, instrument, invoice or similar document or agreement relating to any account or any goods
pertaining thereto, (v) execute in Debtor’s name and on Debtor’s behalf any financing statements
and/or continuations thereof and/or amendments thereto under the Uniform Commercial Code or other
applicable law in any jurisdiction where Debtor or any of the Collateral may be located, (vi)
endorse Debtor’s name on any verification of accounts and notices thereof to account debtors and
(vii) do any and all things necessary and take such actions in the name and on behalf of Debtor to
carry out the intent of this Agreement, including, without limitation, the grant of the security
interest granted under this Agreement and to perfect and protect the security interest granted to
the Agent in respect to the Collateral
and the Agent’s rights created under this Agreement. Debtor agrees that neither the Agent nor any
of its agents, designees or attorneys-in-fact will be liable for any acts of commission or omission
(other than for acts of commission or omission which constitute gross negligence or willful
misconduct as determined by a court of competent jurisdiction in a final, nonappealable order), or
for any error of judgment or mistake of fact or law in respect to the exercise of the power of
attorney granted under this Section. The power of attorney granted under this Section shall be
irrevocable during the term of this Agreement.



     14. Marshalling. Neither the Agent nor any Lender shall be required to marshal any
present or future collateral security (including, without limitation, this Agreement and the
Collateral) for, or other assurances of payment of, any or all of the Secured Obligations or to
resort to such collateral security or other assurances of payment in any particular order, and all
of their respective rights and remedies under this Agreement and in respect of such collateral
security and other assurances of payment shall be cumulative and in addition to all other rights
and remedies, however existing or arising. To the extent not prohibited by applicable law, Debtor
hereby agrees that it will not invoke any law relating to the marshalling of collateral which might
cause delay in or impede the enforcement of any of the rights and/or remedies of the Agent and/or
any Lender under this Agreement or under any other agreement, document or instrument creating or
evidencing any of the Secured Obligations or under which any of the Secured Obligations is
outstanding or by which any of the Secured Obligations is secured or payment



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thereof is otherwise
assured, and, to the extent not prohibited by applicable law, Debtor hereby irrevocably waives the
benefits of all such laws.



     15. Notices. Except as otherwise specified in this Agreement, any notice, request,
demand, consent or other communication under this Agreement shall be in writing and delivered in
person or sent by facsimile, recognized overnight courier or registered or certified mail, return
receipt requested and postage prepaid, if to Debtor to the address or facsimile number of Debtor
listed on the signature page(s) of this Agreement, or if to Agent or any Lender, in care of the
Agent at 135 North Meramec, St. Louis, Missouri 63105, Attention: Traci Dodson, Telecopy No. (314)
854-5454, or at such other address or facsimile number as either party may from time to time
designate as its address or facsimile number for communications under this Agreement by notice so
given. Such notices shall be deemed effective on the day on which delivered or sent if delivered
in person or sent by facsimile (with answerback confirmation received), on the first (1st) Business
Day after the day on which sent, if sent by recognized overnight courier or on the third (3rd)
Business Day after the day on which mailed, if sent by registered or certified mail.



     16. Applicable Law and Severability. It is the intention of the parties hereto that
this Agreement is entered into pursuant to the provisions of the Missouri UCC. Any applicable
provisions of the Missouri UCC, not specifically included herein, shall be deemed a part of this
Agreement in the same manner as if set forth herein at length; and any provisions of this Agreement
that might in any manner be in conflict with any provision of the Missouri UCC shall be deemed to
be modified so as not to be inconsistent with the Missouri UCC. In all respects this Agreement and
all transactions hereunder, and all the rights of the parties, shall be governed as to validity,
construction, enforcement and in all other respects by the substantive laws of the State of
Missouri (without reference to conflict of law principles); provided, however, that the perfection,
the effect of the perfection or non-perfection and the priority of the security interests and liens
created by this Agreement shall in all respects be governed, construed, applied and enforced in
accordance with the substantive laws of the applicable jurisdiction. To the extent any provision
of this Agreement is not enforceable under applicable law, such provision shall be deemed null and
void and shall have no effect on the remaining portions of this Agreement.



     17. Successors and Assigns; Other Secured Obligations; Duration of Security Interest.
This Agreement shall be binding upon Debtor and its successors and shall inure to the benefit of
the Agent, the Lenders and their respective successors and assigns. Debtor may not assign any of
its rights or delegate any of its obligations under this Agreement. This Agreement shall continue
in full force and effect and
the security interest and lien granted by this Agreement and all of the representations,
warranties, covenants and agreements of Debtor under this Agreement and all of the terms,
conditions and provisions of this Agreement relating thereto shall continue to be fully operative
until such time as (a) all of the Secured Obligations shall have been fully, finally and
indefeasibly paid in cash, (b) there shall be no remaining commitment or obligation of the Agent
and/or any Lender to advance funds, make loans or extend credit to, and/or issue letters of credit
for the account of, any Obligor under the Loan Agreement, any other Transaction Document or
otherwise, (c) no Letters of Credit shall remain outstanding and (d) the Loan Agreement shall have
expired or been terminated in accordance with its terms. If claim is ever made on the Agent and/or
any Lender for repayment or recovery of any amount or amounts received by the Agent and/or any
Lender in payment or on account of any of the Secured Obligations (including payment under a
guaranty or from application of collateral) and the Agent and/or any Lender repays all or part of
said amount by reason of (a) any judgment, decree or order of any court or administrative body
having jurisdiction over the Agent and/or any Lender or any Property of the Agent and/or any Lender
or (b) any settlement or compromise of any such claim effected by the Agent and/or any Lender with
any such claimant (including, without limitation, Debtor), then and in each such event Debtor
agrees that any such judgment, decree, order, settlement or compromise shall be binding on Debtor,
notwithstanding any



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cancellation of any note or other instrument or agreement evidencing such
Secured Obligations or of this Agreement, and this Agreement shall continue to be effective or be
reinstated, as the case may be, and shall secure the payment of the amount so repaid or recovered
to the same extent as if such amount had never originally been received by the Agent and/or any
Lender. This Agreement shall continue to be effective or be reinstated, as the case may be, if (a)
at any time any payment of any of the Secured Obligations is rescinded or must otherwise be
returned by the Agent and/or any Lender upon the insolvency, bankruptcy or reorganization of Debtor
or otherwise, all as though such payment had not been made or (b) this Agreement is released in
consideration of a payment of money or transfer of Property or assets or grant of a Lien by Debtor
or any other Person and such payment, transfer or grant is rescinded or must otherwise be returned
by the Agent and/or any Lender upon the insolvency, bankruptcy or reorganization of such Person or
otherwise, all as though such payment, transfer or grant had not been made.



     18. Consent to Jurisdiction; Waiver of Jury Trial. DEBTOR HEREBY IRREVOCABLY (A)
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY MISSOURI STATE COURT SITTING IN THE COUNTY OF ST.
LOUIS, MISSOURI OR ANY UNITED STATES OF AMERICA COURT SITTING IN THE EASTERN DISTRICT OF MISSOURI,
EASTERN DIVISION, AS AGENT MAY ELECT, IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT, (B) AGREES THAT ALL CLAIMS IN RESPECT TO SUCH SUIT, ACTION OR PROCEEDING MAY BE
HELD AND DETERMINED IN ANY OF SUCH COURTS, (C) WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH DEBTOR MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT, (D) WAIVES ANY CLAIM THAT SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND (E) WAIVES ALL RIGHTS OF
ANY OTHER JURISDICTION WHICH DEBTOR MAY NOW OR HEREAFTER HAVE BY REASON OF ITS PRESENT OR
SUBSEQUENT DOMICILES. DEBTOR AUTHORIZES THE SERVICE OF PROCESS UPON DEBTOR BY REGISTERED MAIL SENT
TO DEBTOR AT ITS ADDRESS REFERENCED IN SECTION 15. DEBTOR AND THE AGENT IRREVOCABLY WAIVE THE
RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY ACTION IN WHICH DEBTOR AND THE AGENT ARE PARTIES
RELATING TO OR ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT.



     19. UCC Defined Terms. All terms defined in the Missouri UCC and used in this
Agreement shall have the same definitions herein as specified therein. However, if a term is
defined in Article 9 of
the Missouri UCC differently than in another Article of the Missouri UCC, then the term shall have
the meaning specified in Article 9 of the Missouri UCC.



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     IN WITNESS WHEREOF, Debtor has executed this Security Agreement as of the 29th day of June,
2006.


IN THE EVENT ANY OF THE SECURED OBLIGATIONS ARE PAYABLE ON DEMAND, NEITHER THIS AGREEMENT NOR
ANYTHING CONTAINED HEREIN SHALL BE DEEMED TO ALTER OR IMPINGE UPON THE DEMAND CHARACTER OF SUCH
OBLIGATION.




	 	 	 	 	 
	 	 	ST. JON LABORATORIES, INC. (Debtor)
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Jean M. Nelson
	 

	 	 	 	 
	 

	 	 	 	Jean M. Nelson, Executive Vice
President and


Chief Financial Officer
	 
	 	 	 	 
	 	 	Address and Facsimile Number of
	 	 	Chief Executive Office of Debtor:
	 
	 	 	 	 
	 	 	3200 Meacham Boulevard
	 	 	Fort Worth, Texas 76137
	 	 	Attention: Jean M. Nelson, Chief Financial Officer
	 
	 	 	 	 
	 	 	Facsimile Number: (817) 831-8362






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EXHIBIT A




Additional Locations of Places of Business of Debtor

and/or Additional Locations of Collateral




None.




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EXHIBIT B




UCC Filing Office(s)




California Secretary of State




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SECURITY AGREEMENT




     THIS SECURITY AGREEMENT (this “Agreement”) is made as of the 29th day of June, 2006, by
FRANCODEX LABORATORIES, INC., a Kansas corporation (“Debtor”), in favor of FIRST BANK, as agent (in
such capacity, the “Agent”) for the Lenders from time to time party to that certain Loan Agreement
dated as of the date hereof by and among Virbac Corporation, a Delaware corporation, PM Resources,
Inc., a Missouri corporation, St. JON Laboratories, Inc., a California corporation, Virbac AH,
Inc., a Delaware corporation, Delmarva Laboratories, Inc., a Virginia corporation, the Debtor, the
Lenders from time to time party thereto and First Bank, as agent for the Lenders, as the same may
from time to time be amended, modified, extended, renewed or restated (the “Loan Agreement”; all
capitalized terms used and not otherwise defined in this Agreement shall have the respective
meanings ascribed to them in the Loan Agreement).



WITNESSETH:




     WHEREAS, as a condition precedent to the Agent and the Lenders entering into the Loan
Agreement, the Agent and the Lenders have required that Debtor execute and deliver this Agreement
to the Agent for the ratable benefit of the Lenders; and



     WHEREAS, in order to induce the Agent and the Lenders to enter into the Loan Agreement, Debtor
has agreed to execute and deliver this Agreement to the Agent for the ratable benefit of the
Lenders;



     NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, Debtor hereby
covenants and agrees with the Agent as follows:



     1. Grant of Security Interest. For value received, Debtor hereby grants to the Agent
for the ratable benefit of the Lenders a security interest in and lien on all personal property and
fixtures of Debtor, wherever located and whether now or hereafter existing or now owned or
hereafter created, acquired or arising (collectively, the “Collateral”), including, without
limitation:



          (a) all accounts, accounts receivable, payment intangibles, lease payments, rental payments,
license payments, lease rights, contract rights and other rights to the payment of money, and all
goods whose sale, lease, rental, license or other disposition by Debtor have given rise to accounts
and have been returned to or repossessed or stopped in transit by Debtor;




          (b) all inventory of Debtor, wherever located, including, without limitation, (i) all
inventory under lease, in transit, held by others for Debtor’s account, covered by warehouse
receipts, purchase orders and/or contracts, or in the possession of any lessees, renters, carriers,
forwarding agents, truckers, warehousemen, vendors or other persons or entities and (ii) all
inventory consisting of raw materials, work in process, finished goods, supplies, goods,
incidentals, office supplies and/or packaging and shipping materials;




          (c) all documents, including, without limitation, all warehouse receipts, bills of lading and
similar documents of title relating to goods in which Debtor at any time has an interest, whether
now or at any time or times hereafter issued to Debtor or the Agent by any person or entity, and
whether covering any portion of Debtor’s inventory or otherwise;




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          (d) all instruments (including, without limitation, promissory notes) of any kind or nature
whatsoever, whether negotiable or non-negotiable;




          (e) all chattel paper of any kind or nature whatsoever, including, without limitation, all
leases, rental agreements, installment sale agreements, conditional sale agreements and other
chattel paper relating to or arising out of the sale, rental, lease or other disposition of any of
the Collateral;




          (f) all general intangibles of any kind or nature whatsoever, including, without limitation,
all payment intangibles, all patents, trademarks, copyrights and other intellectual property, and
all applications for, registrations of and licenses of the foregoing and all computer software,
product specifications, trade secrets, licenses, trade names, service marks, goodwill, tax refunds,
rights to tax refunds, franchises, rights related to prepaid expenses, rights under executory
contracts, choses in action, causes of action and rights under partnership, joint venture,
co-ownership, management and/or similar agreements and/or arrangements;




          (g) all goods, machinery, equipment, motor vehicles, trucks, tractors, trailers, appliances,
furniture, furnishings, tools, dies, jigs and other tangible personal property and all accessories
and parts relating thereto;




          (h) all fixtures;




          (i) all monies, reserves, deposits, cash, cash equivalents and other property now or at any
time or times hereafter in the possession or under the control of the Agent or any Lender or any
bailee of the Agent or any Lender;




          (j) all deposit accounts and certificates of deposit and all interest or dividends thereon;




          (k) all investment property and financial assets of any kind or type, whether certificated or
uncertificated, including, without limitation, all securities, securities accounts, securities
entitlements, stocks, bonds, options, warrants, commodity contracts, futures contracts, commodity
accounts, commodity options, commercial paper, money market funds and/or accounts, Treasury bills,
notes and bonds, instruments, certificates of deposit, mutual fund shares, cash and money, together
with all rights, income, revenues, proceeds and profits therefrom, including, without limitation,
all dividends, distributions (cash or stock, extraordinary as well as ordinary), interest and other
payments, all additions thereto, substitutions or replacements thereof, any goods or other property
to be delivered thereunder, and any exchanges for or changes in any of the foregoing;




          (l) all commercial tort claims;




          (m) all supporting obligations;




          (n) all letter of credit rights;




          (o) all books, records, computer records, computer disks, ledger cards, programs and other
computer materials, customer and supplier lists, invoices, orders and other property and general
intangibles at any time evidencing or relating to any of the Collateral;




          (p) all accessions to any of the property described above and all substitutions, renewals,
improvements and replacements of and additions thereto; and




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          (q) all proceeds, including, without limitation, proceeds which constitute property of the
types described in (a), (b), (c), (d), (e), (f), (g), (h), (i), (j), (k), (l), (m), (n), (o) and/or
(p) above and any rents and profits of any of the foregoing items, whether cash or noncash,
immediate or remote, including, without limitation, all income, accounts, contract rights, general
intangibles, payment
intangibles, chattel paper, notes, drafts, acceptances, instruments and other rights to the payment
of money arising out of the sale, rental, lease, license, exchange or other disposition of any of
the foregoing items (provided, however, that nothing contained herein shall be deemed to permit or
assent to any such disposition other than (i) the sale of inventory by Debtor in the ordinary
course of its business (which does not include any sale or other transfer of inventory in partial
or total satisfaction of any Indebtedness) and (ii) other sales and other dispositions expressly
permitted by the Loan Agreement), and insurance proceeds, and all products, of (a), (b), (c), (d),
(e), (f), (g), (h), (i), (j), (k), (l), (m), (n), (o) and/or (p) above, and any indemnities,
warranties and guaranties payable by reason of loss or damage to or otherwise with respect to any
of the foregoing items;



to secure the payment of (i) any and all of the present and future Borrowers’ Obligations, (ii) any
and all present and future indebtedness (principal, interest, fees, collection costs and expenses
and other amounts), liabilities and obligations (including, without limitation, guaranty
obligations, letter of credit reimbursement obligations and indemnity obligations) of Debtor to the
Agent and/or any Lender evidenced by or arising under or in respect of the Loan Agreement, this
Agreement and/or any other Transaction Document, and (iii) any and all costs of collection,
including, without limitation, reasonable attorneys’ fees and expenses, incurred by the Agent
and/or any Lender upon the occurrence of an Event of Default under this Agreement, in collecting or
enforcing payment of any such indebtedness, liabilities or obligations or in preserving, protecting
or realizing on the Collateral under this Agreement or in representing the Agent and/or any Lender
in connection with any bankruptcy or insolvency proceedings (hereinafter collectively referred to
as the “Secured Obligations”).




     2. Representations and Covenants of Debtor. Debtor hereby represents and warrants to
the Agent and each Lender, and covenants and agrees with the Agent and each Lender, that:



          (a) Debtor is a corporation duly organized, validly existing and in good standing under the
laws of the State of Kansas. Debtor’s exact legal name is “Francodex Laboratories, Inc.” Debtor has
not during the past five (5) years conducted business under any name other than the name “Francodex
Laboratories, Inc.” Debtor does not now and will not at any time during the term of this Agreement
conduct business under any name other than the name “Francodex Laboratories, Inc.” Debtor’s
organizational identification number in the State of Kansas is #1641422. Debtor will not change
its name, its type of organization, its jurisdiction of organization or its organizational
identification number unless (i) Debtor gives the Agent and Lenders at least thirty (30) days prior
written notice of the same, (ii) if such change is with respect to Debtor’s jurisdiction of
organization, such new jurisdiction of organization is one of the states of the United States of
America, (iii) such change is permitted pursuant to the terms of the Loan Agreement and the other
Transaction Documents, and (iv) prior to making any such change, Debtor executes (if necessary)
and/or obtains and delivers to the Agent and Lenders any and all additional financing statements
and/or amendments thereto and/or other agreements, documents or notices as may be required by the
Agent and/or any Lender;




          (b) Debtor has full corporate right, power and authority to execute, deliver and perform its
obligations under this Agreement and to grant to the Agent for the ratable benefit of the Lenders
the security interest in and lien on the Collateral hereby stated to be granted;




- 293 -









 








          (c) the officer of Debtor executing this Agreement has been duly elected and qualified and has
been duly authorized and empowered to execute, deliver and perform the terms of this Agreement on
behalf of Debtor;




          (d) the execution, delivery and performance of this Agreement by Debtor do not and will not
violate any of the terms or provisions of the Articles of Incorporation or Bylaws of Debtor;




          (e) the execution, delivery and performance of this Agreement by Debtor do not and will not
violate any law, rule, regulation, order, writ, judgment, injunction, decree, determination or
award presently in effect having applicability to Debtor or the terms of any indenture, agreement,
document, instrument or undertaking to which Debtor is a party or by which it or any of its
Property is bound;




          (f) Debtor’s chief executive office and the location of the only office where it keeps its
books and records respecting the Collateral is that given on the signature page(s) of this
Agreement and all other places of business of Debtor and locations of any of the Collateral are
listed on Exhibit A attached hereto and incorporated herein by reference;




          (g) except to the extent permitted by Section 2(h) below, unless otherwise consented to in
writing by Agent, all of the Collateral (A) is and will be kept solely at Debtor’s chief executive
office or at one of the other locations listed on Exhibit A attached hereto and
incorporated herein by reference (if mobile equipment or equipment of a type normally used in more
than one location, remaining there when not in use), (B) will not be attached or affixed in any
manner to or become a part of any real estate or other personal property apart from other items of
the Collateral and (C) is in the exclusive possession and control of Debtor;




          (h) Debtor will not (i) change the location of its chief executive office, (ii) change the
location of any of its other places of business, (iii) change the location of any of the Collateral
from Debtor’s chief executive office or one of the other locations listed on Exhibit A
attached hereto and incorporated herein by reference or (iv) establish any additional places of
business or additional locations at which any of the Collateral is stored, kept or processed,
unless (A) such office or Collateral location is located within the continental United States of
America, (B) Debtor gives the Agent and Lenders thirty (30) days prior written notice of the same,
and (C) prior to making any such change or establishing any such new location, Debtor executes (if
necessary) and/or obtains and delivers to the Agent and Lenders any and all additional financing
statements and/or amendments thereto, mortgagee waivers and acknowledgments, bailee waivers and
acknowledgments, landlord waivers and acknowledgments, warehousemen waivers and acknowledgments and
other agreements, documents or notices as may be reasonably required by the Agent or any Lender;




          (i) Debtor is, or, as to Collateral acquired after the date hereof, will be, the sole and
absolute owner of all of the Collateral, free and clear of any and all Liens and claims of any kind
or nature whatsoever other than Permitted Liens, and Debtor will defend the Collateral against all
claims and demands of all Persons at any time claiming the same or any interest therein;




          (j) no financing statement (other than any filed with respect to Permitted Liens) covering any
of the Collateral is or will be on file in any public office at any time during the term of this
Agreement;




          (k) Debtor will not, without the prior written consent of the Required Lenders, sell,
transfer, lease, license or otherwise dispose of or offer to dispose of any of the Collateral or
any interest therein (other than (i) sales of inventory by Debtor in the ordinary course of its
business (which does not




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include any sale or other transfer of inventory in partial or total
satisfaction of any Indebtedness) and (ii) other sales and other dispositions expressly permitted
by the Loan Agreement (which other sales and other dispositions shall be made expressly subject to
the security interest and lien in favor of the Agent created by this Agreement unless otherwise
agreed to in writing by the Required Lenders));




          (l) Debtor will at all times keep all of the Collateral consisting of inventory, goods,
machinery, equipment and/or other tangible personal property used or useful in the conduct of its
business in good condition, working order and repair (ordinary wear and tear excepted), excepting
any loss, damage or destruction which is fully covered by proceeds of insurance, and will not use
any of the
Collateral or permit any of the Collateral to be used in violation of any law, rule, regulation,
ordinance or insurance policy;




          (m) Debtor will pay promptly when due all taxes and assessments on the Collateral or for its
use or operation or upon this Agreement or any of the Secured Obligations or with respect to the
perfection of any security interest or lien under this Agreement; provided, however, that Debtor
shall not be required to pay any such tax or assessment the payment of which is being contested in
good faith and by appropriate proceedings being diligently conducted and for which adequate
reserves in accordance with GAAP have been provided, except that Debtor shall pay or cause to be
paid all such taxes and assessments forthwith upon the commencement of proceedings to foreclose any
Lien which is attached as security therefor, unless such foreclosure is stayed by the filing of an
appropriate bond in a manner reasonably satisfactory to the Required Lenders;




          (n) Debtor will at all times keep all of the Collateral of an insurable nature insured against
loss, damage, theft and other risks, in such amounts, with such companies and under policies in
such form, all as shall be reasonably satisfactory to the Required Lenders. All insurance required
by this Section 2(n) shall be with insurers rated A-XI or better by A.M. Best Company (or accorded
a similar rating by another nationally or internationally recognized insurance rating agency of
similar standing if A.M. Best Company is not then in the business of rating insurers or rating
foreign insurers) or such other insurers as may from time to time be reasonably acceptable to the
Required Lenders. Such policies of insurance shall contain an endorsement reasonably acceptable to
the Agent naming the Agent as loss payee as its interests may appear. Such endorsement, or an
independent instrument furnished to the Agent, shall provide that the insurance companies will give
the Agent at least thirty (30) days written notice before any such policy or policies of insurance
shall be amended or cancelled and that no act or default of Debtor or any other Person shall affect
the right of the Agent to recover under such policy or policies of insurance in the event of any
loss of or damage to any of the Collateral. Debtor hereby directs all insurers under such policies
of insurance to pay all proceeds payable thereunder directly to the Agent as its interests may
appear and Debtor hereby agrees to promptly forward to the Agent all such insurance proceeds
received directly by Debtor. All insurance proceeds received by the Agent on account of any loss of
or damage to any of the Collateral, after deducting therefrom the reasonable charges and expenses
paid or incurred in connection with the collection and disbursement of said proceeds, shall, unless
otherwise agreed to in writing by the Required Lenders, be applied to the payment or prepayment of
the Secured Obligations in such order and manner as the Required Lenders, in their discretion,
shall elect. Debtor hereby irrevocably makes, constitutes and appoints the Agent (and all officers,
employees or agents designated by the Agent) as Debtor’s true and lawful attorney (and
agent-in-fact) to, if Debtor fails to do upon the demand of the Agent or if any Event of Default
under this Agreement or any event which with the passage of time or the giving of notice or both
would constitute an Event of Default under this Agreement has occurred and is continuing, (i) make,
adjust, compromise and settle claims under such policies of insurance, (ii) endorse the name of
Debtor on any check, draft, instrument or other item of payment of the proceeds of such policies of
insurance and (iii) make all determinations and decisions with respect to such policies of
insurance. In the event Debtor at any time or times hereafter shall fail to obtain




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or maintain any
of the policies of insurance required above or to pay any premium in whole or in part relating
thereto, then the Agent, without waiving or releasing any obligation or default by Debtor
hereunder, may at any time or times thereafter (but shall be under no obligation to do so) obtain
and maintain such policies of insurance and pay such premium and take any other action with respect
thereto which the Agent deems advisable. All sums so disbursed by the Agent, including, without
limitation, reasonable attorneys’ fees, court costs, expenses and other charges relating thereto,
shall be part of the Secured Obligations, payable by Debtor to the Agent on demand. UNLESS DEBTOR
PROVIDES EVIDENCE OF THE INSURANCE COVERAGE REQUIRED UNDER THIS AGREEMENT, THE AGENT MAY PURCHASE
INSURANCE AT DEBTOR’S EXPENSE TO PROTECT THE AGENT’S INTEREST IN THE COLLATERAL. THIS INSURANCE
MAY, BUT NEED NOT, PROTECT DEBTOR’S INTERESTS. THE COVERAGE THAT THE AGENT PURCHASES MAY
NOT PAY ANY CLAIM THAT DEBTOR MAY MAKE OR ANY CLAIM THAT IS MADE AGAINST DEBTOR IN CONNECTION WITH
THE COLLATERAL. DEBTOR MAY LATER CANCEL ANY INSURANCE PURCHASED BY THE AGENT, BUT ONLY AFTER
PROVIDING EVIDENCE THAT DEBTOR HAS OBTAINED INSURANCE AS REQUIRED BY THIS AGREEMENT. IF THE AGENT
PURCHASES INSURANCE FOR THE COLLATERAL, DEBTOR WILL BE RESPONSIBLE FOR THE COSTS OF THAT INSURANCE,
INCLUDING THE INSURANCE PREMIUM, INTEREST AND ANY OTHER CHARGES THE AGENT MAY IMPOSE IN CONNECTION
WITH THE PLACEMENT OF INSURANCE, UNTIL THE EFFECTIVE DATE OF THE CANCELLATION OR EXPIRATION OF THE
INSURANCE. THE COSTS OF THE INSURANCE MAY BE ADDED TO THE SECURED OBLIGATIONS. THE COSTS OF THE
INSURANCE MAY BE MORE THAN THE COST OF INSURANCE DEBTOR MAY BE ABLE TO OBTAIN ON ITS OWN. All
insurance proceeds shall be subject to the security interest and lien of the Agent under this
Agreement;




          (o) Debtor will permit the Agent and each Lender (and any Person appointed by the Agent or any
Lender to whom Debtor does not reasonably object) to (i) examine and inspect any of all of the
Collateral, wherever located, during normal business hours and at other reasonable times and (ii)
enter upon its Properties for purposes of making such examinations and/or inspections. Debtor will
permit the Agent (and any Person appointed by the Agent or any Lender to whom Debtor does not
reasonably object) to conduct field audits of the Collateral, following reasonable prior notice, at
least twice each year and shall reimburse Agent and Lenders for the costs of such field audits as
set forth in Section 6.1(c) of the Loan Agreement. Debtor will reimburse the Agent and each Lender
upon demand for all costs and expenses incurred by the Agent or such Lender in connection with any
such examination or inspection conducted by the Agent or such Lender while any Event of Default or
any event which with the passage of time or the giving of notice or both would constitute an Event
of Default under this Agreement has occurred and is continuing;




          (p) Debtor hereby irrevocably authorizes the Agent at any time and from time to time to file
in any Uniform Commercial Code jurisdiction initial financing statements and/or any amendments
thereto which (i) indicate the Collateral (A) as “all assets”, “all personal property” or “all
personal property and fixtures” of Debtor or words of similar effect, regardless of whether any
particular asset comprised in the Collateral falls within the scope of Article 9 of the Uniform
Commercial Code of the State of Missouri (the “Missouri UCC”) or such other jurisdiction or (B) as
being of an equal or lesser scope or with greater detail and (ii) contain any other information
required by part 5 of Article 9 of the Uniform Commercial Code of the applicable jurisdiction for
the sufficiency or filing office acceptance of any financing statement or amendment, including (A)
whether Debtor is an organization, the type of organization and any organization identification
number issued to Debtor and (B) in the case of a financing statement filed as a fixture filing or
indicating Collateral as as-extracted collateral or timber to be cut, a sufficient description of
real property to which the Collateral relates. Debtor agrees to furnish




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any such information to
the Agent promptly upon request. Debtor also ratifies its authorization for the Agent to have
filed in any Uniform Commercial Code jurisdiction any like initial financing statements or
amendments thereto if filed prior to the date of this Agreement;




          (q) Debtor hereby agrees, in each case at Debtor’s own expense, to take the following actions
with respect to the following Collateral:





     (i) if Debtor shall at any time hold or acquire any promissory notes or other
instruments or tangible chattel paper, Debtor will promptly notify the Agent and
Lenders thereof in writing and, at the request of the Required Lenders, Debtor will
forthwith endorse, assign and deliver the same to the Agent, accompanied by such
instruments of transfer or assignment duly executed in blank as the Agent may from
time to time specify;




     (ii) if Debtor shall at any time open or maintain a deposit account, Debtor
will promptly notify the Agent and Lenders thereof in writing and, at the request of
the Required Lenders, Debtor will, pursuant to an agreement in form and substance
reasonably satisfactory to the Required Lenders, either (at the Required Lenders’
option) (A) cause the depository bank to agree to comply at any time with
instructions from the Agent to such depository bank directing the disposition of
funds from time to time credited to such deposit account, without further consent of
Debtor or (B) arrange for the Agent to become the customer of the depository bank
with respect to the deposit account, with Debtor being permitted, only with the
consent of the Agent, to exercise rights to withdraw funds from such deposit
account. Agent agrees with Debtor that Agent will not give any such instructions or
withhold any withdrawal rights from Debtor unless an Event of Default or an event
which with the passage of time or the giving of notice or both would constitute an
Event of Default under this Agreement has occurred and is continuing. The
provisions of this paragraph shall not apply to (A) any deposit account for which
Debtor, the depository bank and the Agent have entered into a cash collateral
agreement specially negotiated among Debtor, the depository bank and the Agent for
the specific purpose set forth therein, (B) deposit accounts for which the Agent is
the depository and (C) deposit accounts specially and exclusively used for payroll,
payroll taxes and other employee wage and benefit payments to or for the benefit of
Debtor’s employees;




     (iii) if Debtor shall at any time hold or acquire any certificated securities,
Debtor will promptly notify the Agent and Lenders thereof in writing and, at the
request of the Required Lenders, Debtor will forthwith endorse, assign and deliver
the same to the Agent, accompanied by such instruments of transfer or assignment
duly executed in blank as the Agent may from time to time specify. If any securities
now or hereafter acquired by Debtor are uncertificated and are issued to Debtor or
its nominee directly by the issuer thereof, Debtor will promptly notify the Agent
and Lenders thereof in writing and, at the request of the Required Lenders, Debtor
will, pursuant to an agreement in form and substance reasonably satisfactory to the
Required Lenders, either (at the Required Lenders’ option) (A) cause the issuer to
agree to comply with instructions from the Agent as to such securities, without
further consent of Debtor or such nominee or (B) arrange for the Agent to become the
registered owner of the securities. If any securities, whether certificated or
uncertificated, or other investment property now or hereafter acquired by Debtor are
held by Debtor or its nominee through a securities intermediary or commodity
intermediary, Debtor will promptly notify the Agent and



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Lenders thereof in writing
and, at the request of the Required Lenders, Debtor will, pursuant to an agreement
in form and substance reasonably satisfactory to the Required Lenders, either (at
the Required Lenders’ option) (A) cause such securities intermediary or commodity
intermediary, as the case may be, to agree to comply with entitlement orders or
other instructions from the Agent to such securities intermediary as to such
securities or other investment property, or to apply any value distributed on
account of any commodity contract as directed by the Agent to such commodity
intermediary, as the case may be, in each case without further consent of Debtor or
such nominee or (B) in the case of financial assets or other investment property
held through a securities intermediary, arrange for the Agent to become the
entitlement holder with respect to such investment property, with Debtor being
permitted, only with the consent of the Agent, to exercise rights to withdraw or
otherwise deal with such investment property. Agent agrees with Debtor that Agent
will not give any such entitlement orders or instructions or directions to any such
issuer, securities intermediary or commodity intermediary, and will not withhold its
consent to the exercise of any withdrawal or dealing rights by Debtor,
unless an Event of Default or an event which with the passage of time or the giving
of notice or both would constitute an Event of Default under this Agreement has
occurred and is continuing. The provisions of this paragraph shall not apply to any
financial assets credited to a securities account for which the Agent is the
securities intermediary;




     (iv) if any goods are at any time in the possession of a bailee, Debtor will
promptly notify the Agent and Lenders thereof in writing and, at the request of the
Required Lenders, Debtor will promptly obtain an acknowledgment from the bailee, in
form and substance reasonably satisfactory to the Required Lenders, that the bailee
holds such Collateral for the benefit of the Agent and shall act upon the
instructions of the Agent, without the further consent of Debtor. Agent agrees with
Debtor that Agent will not give any such instructions unless an Event of Default or
an event which with the passage of time or the giving of notice or both would
constitute an Event of Default under this Agreement has occurred and is continuing;




     (v) if any of the Collateral is located on any premises not owned by Debtor,
Debtor will promptly notify the Agent and Lenders thereof in writing and, at the
request of the Required Lenders, Debtor will promptly cause each Person having any
right, title or interest in, or Lien on, such premises to enter into an agreement in
form and substance reasonably satisfactory to the Required Lenders whereby such
Person disclaims any right, title or interest in, and/or Lien on, the Collateral and
allows entry upon such premises and the removal of the Collateral from such premises
by the Agent or its agents or representatives;




     (vi) if Debtor at any time holds or acquires an interest in any electronic
chattel paper or any “transferable record,” as that term is defined in Section 201
of the federal Electronic Signatures in Global and National Commerce Act, or in
Section 16 of the Uniform Electronic Transactions Act as in effect in any relevant
jurisdiction, Debtor will promptly notify the Agent and Lenders thereof and, at the
request of the Required Lenders, Debtor will take such action as the Required
Lenders may reasonably request to vest in the Agent control, under Section 9-105 of
the Missouri UCC, of such electronic chattel paper and control under Section 201 of
the federal Electronic Signatures in Global and National Commerce Act or Section 16
of the Uniform Electronic Transactions Act, as the case may be, as so in effect in
such jurisdiction, of such transferable record;



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     (vii) if Debtor is at any time a beneficiary under a letter of credit now or
hereafter issued in favor of Debtor, Debtor will promptly notify the Agent and
Lenders thereof in writing and, at the request of the Required Lenders, Debtor will,
pursuant to an agreement in form and substance reasonably satisfactory to the
Required Lenders, either (at the Required Lenders’ option) (A) arrange for the
issuer and any confirmer of such letter of credit to consent to an assignment to the
Agent of the proceeds of any drawing under the letter of credit or (B) arrange for
the Agent to become the transferee beneficiary of the letter of credit, with the
proceeds of any drawing under the letter of credit to be applied to the payment of
the Secured Obligations in such order and manner as the Required Lenders, in their
discretion, shall elect;




     (viii) if Debtor shall at any time hold or acquire a commercial tort claim,
Debtor will promptly notify the Agent and Lenders in a writing signed by Debtor of
the brief details thereof and grant to the Agent in such writing a security interest
therein and in the proceeds thereof, all upon the terms of this Agreement, with such
writing to be in form and substance reasonably satisfactory to the Required Lenders;




     (ix) Debtor further agrees to take any other action reasonably requested by the
Required Lenders to insure the attachment, perfection and first priority of, and the
ability of the Agent to enforce, the Agent’s security interest in and lien on any
and all of the Collateral including, without limitation, (a) executing, delivering
and, where appropriate, filing financing statements and amendments relating thereto
under the Uniform Commercial Code, to the extent, if any, that Debtor’s signature
thereon is required therefor, (b) causing the Agent’s name to be noted as secured
party on any certificate of title for a titled good if such notation is a condition
to attachment, perfection or priority of, or ability of the Agent to enforce, the
Agent’s security interest in and lien on such Collateral and delivering the original
of such certificate of title (with the Agent’s security interest and lien so noted)
to the Agent, (c) complying with any provision of any statute, regulation or treaty
of any governmental body, entity, authority, agency or instrumentality as to any
Collateral if compliance with such provision is a condition to attachment,
perfection or priority of, or ability of the Agent to enforce, the Agent’s security
interest in and lien on such Collateral, (d) obtaining governmental, regulatory and
other third party consents and approvals, including without limitation any consent
of any licensor, lessor or other person obligated on Collateral, (e) obtaining
waivers from mortgagees and landlords in form and substance reasonably satisfactory
to the Required Lenders and (f) taking all actions required by any earlier versions
of the Uniform Commercial Code or by other law, as applicable in any relevant
Uniform Commercial Code jurisdiction, or by other law as applicable in any foreign
jurisdiction; and




     (x) with respect to accounts with respect to which the account debtor is the
United States of America, any state of the United States of America or any other
governmental body or any department, agency or instrumentality of any of the
foregoing, if requested by the Required Lenders, Debtor will take such action and
execute, deliver and file such agreements, documents and instruments as may be
necessary or as the Required Lenders may reasonably request to insure that such
accounts are duly assigned to the Agent for the ratable benefit of the Lenders in
compliance with all applicable governmental and regulatory requirements (including,
without limitation, to the extent applicable, the Federal Assignment of Claims Act
of 1940, as amended, so that the Agent is recognized by the account debtor to have
all of the rights of an assignee of such accounts;



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          (r) Debtor will reimburse the Agent and each Lender upon demand for (i) all costs and expenses
incident to perfecting, maintaining or terminating the security interest granted by this Agreement,
including search fees, filing and recording fees, fees for obtaining and transferring certificates
of title and all taxes and legal and other out-of-pocket fees and expenses paid or incurred by the
Agent and/or any Lender in connection with any of the foregoing and (ii) all costs and expenses,
including, without limitation, reasonable attorneys’ fees and expenses, incurred by the Agent
and/or any Lender in seeking to collect or enforce any rights under this Agreement or incurred by
the Agent and/or any Lender in seeking to collect or enforce any of the Secured Obligations, all of
which costs and expenses shall constitute a part of the Secured Obligations and be payable by
Debtor to the Agent and the Lenders on demand; and




          (s) Exhibit B attached hereto and incorporated herein by reference sets forth a
complete list of all of the filing office(s) where financing statement(s) must be filed in order to
perfect the Agent’s security interest in the Collateral to the extent such security interest can be
perfected by the filing of financing statements under the Uniform Commercial Code or other
applicable laws of any jurisdiction where Debtor or any of the Collateral is or may be “located”
(as “located” is defined in the applicable Uniform Commercial Code or other applicable law).




     3. Representations and Covenants of Debtor re: Accounts, Inventory and Other
Collateral. Debtor hereby represents and warrants to the Agent and each Lender, and covenants
and agrees with the Agent and each Lender, that:



          (a) Debtor will provide the Agent and Lenders with a written Borrowing Base Certificate on or
before the last day of each month as required under Section 3.1(b) of the Loan Agreement (or at
such other intervals as the Required Lenders shall require from time to time), reflecting activity
of Debtor up to and including the last day of the preceding month (each, a “Borrowing Base
Certificate”) describing, in a form and with such specificity as is satisfactory to the Required
Lenders, all Accounts created or acquired by Debtor subsequent to the immediately preceding
Borrowing Base Certificate. In addition, Debtor, immediately upon demand by the Required Lenders,
now and from time to time hereafter, shall execute and deliver to the Agent and Lenders schedules
of Inventory specifying Debtor’s cost of Inventory and of Eligible Inventory and such other matters
and information relating to Inventory and Eligible Inventory as the Required Lenders may from time
to time request. Debtor shall also furnish copies of any other reports or information, in a form
and with such specificity as is satisfactory to the Required Lenders, concerning accounts,
inventory and any other Collateral requested by the Required Lenders, including, without
limitation, but only if specifically requested by the Required Lenders, (i) schedules identifying
each account, (ii) copies of all invoices prepared in connection with such accounts and (iii) such
additional schedules, certificates, test verifications, and reports respecting the Collateral and
the proceeds thereof as the Required Lenders may from time to time reasonably request. The
Borrowing Base Certificate shall include, in a form and with such specificity as is satisfactory to
the Required Lenders, information on all amounts collected by Debtor on accounts subsequent to the
immediately preceding Borrowing Base Certificate. The Borrowing Base Certificate shall contain such
additional information as the Required Lenders may require;




          (b) With respect to accounts scheduled, listed or referred to on any Borrowing Base
Certificate or other report submitted by Debtor or any other Obligor to the Lenders, Debtor
represents and warrants to the Agent and Lenders that, except as otherwise disclosed on the
applicable Borrowing Base Certificate or other report (i) they are genuine, in all respects what
they purport to be and are not evidenced by a judgment; (ii) they represent undisputed, bona fide
transactions completed in accordance with the terms and provisions contained in the invoices and
other documents related thereto; (iii) the




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amounts thereof shown on the applicable Borrowing Base
Certificate or other report are actually and absolutely owing to Debtor and are not contingent for
any reason; (iv) no payments have been or shall be made thereon except payments immediately
delivered to the Agent pursuant to Section 4 of this Agreement; (v) there are no setoffs,
counterclaims or disputes existing or asserted with respect thereto and Debtor has not made any
agreement with any account debtor thereof for any deduction therefrom except a discount or
allowance allowed by Debtor in the ordinary course of its business for prompt payment; (vi) to the
best of Debtor’s knowledge, there are no facts, events or occurrences which could reasonably be
expected to impair in any material respect the validity or enforcement thereof or tend to reduce
the amount payable thereunder from the amount thereof as shown on the applicable Borrowing Base
Certificate or other report; (vii) to the best of Debtor’s knowledge, all account debtors thereof
have the capacity to contract and are solvent; (viii) the goods sold and/or services furnished
giving rise thereto are not subject to any Lien or claim except that of the Agent; (ix) Debtor has
no knowledge of any fact or circumstance which could reasonably be expected to impair in any
material respect the validity or collectibility thereof; (x) to the best of Debtor’s knowledge,
there are no bankruptcy, insolvency or other proceedings or actions which are threatened or pending
against any account debtor thereof which could reasonably be expected to result in any material
adverse change in such account debtor’s financial condition; and (xi) all of such accounts are
subject to a first priority perfected security interest in favor of the Agent;




          (c) Any officers, employees or agents of the Lenders shall have the right, at any time or
times hereafter, in the name of such Lender and/or Debtor or in the name of a nominee of such
Lender,
to verify the validity, amount or any other matter relating to any accounts by mail, telephone,
telegraph or otherwise. All costs, fees and expenses relating thereto incurred by any Lender (or
for which any Lender becomes obligated) during the continuation of any Event of Default or any
event which with the passage of time or the giving of notice or both would become an Event of
Default under this Agreement shall become part of the Secured Obligations and be payable by Debtor
to such Lender on demand;




          (d) Debtor will at all times maintain a record of accounts at its chief executive office,
keeping correct and accurate records itemizing and describing the names and addresses of account
debtors, relevant invoice numbers, shipping dates and due dates, collection histories and account
agings, all of which records shall be available during such Debtor’s usual business hours at the
request of the Agent or any Lender or any of their respective officers, employees or agents.
Debtor will cooperate fully with the Agent and each Lender and their respective officers, employees
and agents who shall have the right at any time or times to inspect the accounts and the records
with respect thereto. Debtor will conduct a review (or cause its independent certified public
accountants to conduct a review) of its bad debt reserves and collection histories at least once
each year and promptly following such review shall supply the Agent and each Lender with a report
in a form and with such specificity as may be reasonably satisfactory to the Required Lenders
concerning such review of the accounts (which report may consist of a management letter from
Debtor’s independent certified public accountants if such accountants conducted such bad debt
reserve review);




          (e) Unless otherwise agreed by the Required Lenders in writing, Debtor will: (i) promptly upon
Debtor’s learning thereof, inform the Agent and Lenders, in writing, of any material delay in
Debtor’s performance of any of its obligations to any account debtor with respect to any Eligible
Account in an amount in excess of $100,000.00 and of any assertion of any claims, offsets or
counterclaims in an amount in excess of $100,000.00 by any account debtor with respect to any
Eligible Account and of any allowances, credits and/or other monies in an amount in excess of
$10,000.00 granted by Debtor to any account debtor with respect to any Eligible Account; (ii) not
permit or agree to any extension, compromise or settlement or make any change or modification of
any kind or nature with respect to any Eligible Account, including any of the terms relating
thereto; (iii) promptly upon Debtor’s




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receipt or learning thereof, furnish to and inform the
Lenders of all material adverse information relating to the financial condition of any account
debtor who in the aggregate owes Debtor more than $20,000.00; and (iv) promptly upon Debtor’s
learning thereof, notify the Lenders in writing which of its then existing accounts involving an
amount in excess of $20,000.00 are no longer Eligible Accounts;




          (f) The Agent shall have the right, in its sole and absolute discretion, without notice
thereof to Debtor: (i) to notify any or all account debtors that the accounts have been assigned to
the Agent and that the Agent has a security interest therein; (ii) to direct such account debtors
to make all payments due from them to Debtor upon the accounts directly to the Agent; and (iii) to
enforce payment of and collect, by legal proceedings or otherwise, the accounts in the name of the
Agent and/or Debtor;




          (g) Debtor will, at its own expense, use commercially reasonable efforts to collect, as and
when due, all amounts due with respect to accounts;




          (h) With respect to inventory scheduled, listed or referred to in any Borrowing Base
Certificate or other report submitted by Debtor or any other Obligor to the Lenders, Debtor
represents and warrants to the Agent and Lenders that, except as otherwise disclosed in such
Borrowing Base Certificate or other report: (i) such inventory is located at Debtor’s chief
executive office, one of the other locations listed on Exhibit A attached hereto and
incorporated herein by reference or another location with respect to which Debtor has complied with
all of the requirements of Section 2(h) of this Agreement; (ii) Debtor has good, indefeasible and
merchantable title to such inventory and such inventory is not subject to any Lien or claim
whatsoever except for Permitted Liens; (iii) such inventory is of good and merchantable quality,
free from any material defects; (iv) such inventory is not subject to any licensing, patent,
royalty,
trademark, trade name or copyright agreements with any third parties; (v) the completion of
manufacture and sale or other disposition of such inventory by the Agent following an Event of
Default will not require the consent of any Person and will not constitute a breach or default
under any contract or agreement to which Debtor is a party or to which any of the inventory is
subject; (vi) such inventory has not been produced in violation of the Fair Labor Standards Act and
is not subject to the so-called “hot goods” provision contained in Title 29 U.S.C. §215(a)(1);
(vii) such inventory is not on consignment with Debtor and (viii) such inventory is subject to a
first priority perfected security interest in favor of the Agent;




          (i) Debtor will at all times maintain a perpetual inventory system keeping correct and
accurate records itemizing and describing the kind, type, quality and quantity of inventory and of
Eligible Inventory, Debtor’s cost therefor and daily withdrawals therefrom and additions thereto,
all of which records shall be available during Debtor’s usual business hours at the request of the
Agent or any Lender or any of their respective officers, employees or agents. Debtor will
cooperate fully with the Agent and each Lender and their respective officers, employees and agents
who shall have the right during normal business hours and/or at other reasonable time or times to
inspect Debtor’s inventory and the records with respect thereto. Debtor will conduct such physical
counts of all or any portion of its inventory as any Lender may from time to time reasonably
request and will supply Agent and each Lender with a report in a form and with such specificity as
may be reasonably satisfactory to the Required Lenders concerning any physical count of any or all
of the inventory of Debtor (whether such count was requested by the Required Lenders or not); and




          (j) Neither the Agent nor any Lender shall be responsible for: (i) the safekeeping of any of
the inventory; (ii) any loss or damage to any of the inventory; (iii) any diminution in the value
of any of the inventory; or (iv) any act or default of any carrier, warehouseman, bailee,
forwarding agency or any other Person. As between Debtor, on the one hand, and the Agent and the
Lenders, on the other hand, all risk of loss, damage, destruction or diminution in value of the
inventory shall be borne by Debtor.




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Debtor will not sell any inventory to any customer on
consignment or on approval or on any other basis which entitles the customer to return, or which
may obligate Debtor to repurchase, such inventory. From and after the occurrence of any Event of
Default under this Agreement and so long as any such Event of Default is continuing, the Required
Lenders, in their sole and absolute discretion, may require that inventory be stored with a bailee,
warehouseman or similar party and warehouse receipts therefor be issued in the Agent’s name and be
delivered to the Agent. Debtor agrees to do whatever acts are required to effectuate the
foregoing.




     4. Lockbox and Blocked Account. Debtor hereby agrees to establish and maintain
throughout the term of this Agreement a lock box (the “Lock Box”) in Debtor’s name with a bank (the
“Collecting Bank”) which is acceptable to the Required Lenders (subject to irrevocable instructions
acceptable to the Required Lenders as hereinafter set forth) to which all account debtors shall
directly remit all payments on accounts and in which Debtor shall immediately deposit all cash
payments made for inventory and other cash payments constituting proceeds of Collateral in the
identical form in which such payment was made, whether by cash, check or otherwise. In addition,
Debtor hereby agrees to establish and maintain throughout the term of this Agreement a depository
account at the Collecting Bank (the “Blocked Account”). The Collecting Bank shall acknowledge and
agree, in a manner satisfactory to the Required Lenders, that all payments made to the Lock Box and
the Blocked Account are the sole and exclusive property of the Agent and that the Collecting Bank
has no right of setoff against the Lock Box or the Blocked Account and that all such payments,
whether by cash, check, wire transfer or any other instrument, made to such Lock Box or Blocked
Account or otherwise received by Debtor and whether on the accounts or as proceeds of any other
Collateral or otherwise are and will be the sole and exclusive property of the Agent. Debtor shall
irrevocably instruct the Collecting Bank to on a daily basis on each Business Day (a) transfer all
payments or deposits to Debtor’s Lock Box into Debtor’s Blocked Account and (b) transfer all funds
in Debtor’s Blocked Account (by way of debit, ACH debit, wire transfer or other
means, as directed by Agent) to an account of the Agent at First Bank or such other bank as the
Agent may from time to time specify in writing to be applied by the Agent to the payment of the
Secured Obligations in such order and manner as the Required Lenders, in their discretion, shall
elect. Debtor shall have no right to withdraw any funds out of the Lock Box and/or the Blocked
Account. Debtor, and each of its Affiliates, employees, agents and/or other Persons acting for or
in concert with Debtor, shall, acting as trustee for the Agent, receive, as the sole and exclusive
property of the Agent, any monies, checks, notes, drafts and any other payments relating to and/or
proceeds of accounts and/or other Collateral which come into the possession or under the control of
Debtor or any Affiliates, employees, agents or other Persons acting for or in concert with Debtor,
and immediately upon receipt thereof, Debtor or such Persons shall cause the same to be deposited
into Debtor’s Lock Box.



     5. Additional Actions by the Agent. The Agent, at its option, may from time to time
perform any agreement of Debtor hereunder which Debtor shall fail to perform and take any other
action which the Agent in good faith deems necessary for the maintenance or preservation of any of
the Collateral or its interest therein (including, without limitation, the discharge of taxes or
Liens of any kind against the Collateral or the procurement of insurance or the payment of
warehousing charges, landlord’s bills or other charges), and Debtor agrees to forthwith reimburse
the Agent for all costs and expenses incurred by the Agent in connection with the foregoing,
together with interest thereon at a rate per annum equal to the lesser of (a) Four and One-Fourth
Percent (4.25%) over and above the Prime Rate (fluctuating as and when the Prime Rate changes) and
(b) the highest rate of interest allowed by applicable law, from the date incurred until reimbursed
by Debtor. The Agent may for the foregoing purposes act in its own name or that of Debtor and may
also so act for the purposes of adjusting, settling or cancelling any policy of insurance on the
Collateral or endorsing any draft received in connection therewith, in payment of a loss or
otherwise, for all of which purposes Debtor hereby grants to the Agent its power of attorney,
irrevocable during the term of this Agreement.



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     6. Defaults. The occurrence of any of the following events or conditions shall
constitute an “Event of Default” under this Agreement: (a) Debtor shall fail to pay any of the
Secured Obligations as and when the same shall become due and payable, whether by reason of demand,
maturity, acceleration or otherwise; (b) Debtor shall fail to perform or observe any of the terms,
provisions, covenants or agreements contained in Sections 2(a), 2(g), 2(h), 2(i), 2(j), 2(k), 2(n),
2(o), 2(q), 3(a), 3(d), 3(e), 3(i) or 4 of this Agreement; (c) Debtor shall fail to perform or
observe of any of the other terms, provisions, covenants or agreements contained in this Agreement
and any such failure shall remain unremedied for five (5) days after the earlier of (i) written
notice of default is given to Debtor by the Agent or any Lender or (ii) any officer of Debtor
obtains knowledge of such default; (d) any representation or warranty made by Debtor in this
Agreement shall prove to be untrue or incorrect in any material respect; (e) any “Event of Default”
(as defined therein) shall occur under or within the meaning of the Loan Agreement; or (f) any
default or event of default shall occur under or within the meaning of any other agreement,
document or instrument heretofore, now or hereafter executed by Debtor with or in favor of the
Agent which is not cured or waived within any applicable cure or grace period (if any).



     7. Remedies. Upon the occurrence and during the continuation of any Event of Default
under this Agreement: (a) whether or not any or all of the Secured Obligations are declared to be
forthwith due and payable, the Agent shall have the right to take immediate possession of the
Collateral covered hereby, and, for that purpose may pursue the same wherever said Collateral may
be found, and may enter upon any of the premises of Debtor with or without process of law and
without breach of the peace, wherever said Collateral may be or may be supposed to be, and search
for the same, and, if found, take possession of and remove and sell and dispose of said Collateral,
or any part thereof; (b) the Agent shall have the right to notify any account debtor with respect
to any account to make all payments under the accounts directly to the Agent and demand, collect,
receipt for, settle, compromise, adjust, sue for, foreclose and realize on the accounts and all
amounts due under the accounts as the Agent may determine; (c) the Agent shall have the right to
exercise such of the other rights and remedies accruing to a secured
party under the Uniform Commercial Code of the relevant jurisdiction or jurisdictions and any other
applicable law upon default by a debtor as the Agent may elect; (d) the Agent shall have the right
to enter, with or without process of law and without breach of the peace, any premises where the
books and records of Debtor pertaining to the accounts or any of the other Collateral are or may be
located, and without charge or liability on the part of the Agent therefor seize and remove said
books and records from said premises or remain upon said premises and use the same for the purpose
of collecting, preparing and disposing of the Collateral and/or for the purpose of identifying and
locating any of the Collateral; and (e) the Required Lenders shall have the right to appoint,
remove and reappoint any Person or Persons, including, without limitation, any employee or agent of
the Agent or any Lender to be a receiver (each, a “Receiver”), which term shall include a receiver
and manager of, or agent for, all or any part of the Collateral. Any such Receiver shall, as far
as concerns responsibility for its acts, be deemed to be the agent of Debtor and not of the Agent
or any Lender, and neither the Agent nor any Lender shall in any way be responsible for any
misconduct, negligence or non-feasance of any such Receiver, its employees or agents. Except as
otherwise directed by all of the Lenders, all monies received by any Receiver shall be received in
trust for and paid to the Agent for the ratable benefit of the Lenders. Debtor shall pay all
costs, charges and expenses incurred by the Agent or any Receiver, whether directly or for services
rendered (including, without limitation, reasonable attorneys’ fees and expenses, auditor’s costs,
other legal expenses and Receiver remuneration) in enforcing this Agreement, realizing on all or
any part of the Collateral and/or in enforcing or collecting the Secured Obligations, and all such
expenses shall be part of the Secured Obligations and be payable on the demand of the Agent. Debtor
shall, upon the Agent’s request, assemble the Collateral and make the Collateral available to the
Agent at any place designated by the Agent which is reasonably convenient to Debtor.



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     8. Standards for Exercising Remedies. To the extent that applicable law imposes duties
on the Agent to exercise remedies in a commercially reasonable manner, Debtor acknowledges and
agrees that it is not commercially unreasonable for the Agent (a) to fail to incur expenses
reasonably deemed significant by the Agent to prepare Collateral for disposition or otherwise to
complete raw material or work in process into finished goods or other finished products for
disposition, (b) to fail to obtain third party consents for access to Collateral to be disposed of,
or to obtain or, if not required by other law, to fail to obtain governmental, regulatory or third
party consents for the collection or disposition of Collateral to be collected or disposed of, (c)
to fail to exercise collection remedies against account debtors or other Persons obligated on
Collateral or to remove Liens or encumbrances on or any adverse claims against Collateral, (d) to
exercise collection remedies against account debtors and other Persons obligated on Collateral
directly or through the use of collection agencies and other collection specialists, (e) to
advertise dispositions of Collateral through publications or media of general circulation, whether
or not the Collateral is of a specialized nature, (f) to contact other Persons, whether or not in
the same business as Debtor, for expressions of interest in acquiring all or any portion of the
Collateral, (g) to hire one or more professional auctioneers to assist in the disposition of
Collateral, whether or not the collateral is of a specialized nature, (h) to dispose of Collateral
by utilizing Internet sites that provide for the auction of assets of the types included in the
Collateral or that have the reasonable capability of doing so, or that match buyers and sellers of
assets, (i) to dispose of assets in wholesale rather than retail markets, (j) to disclaim
disposition warranties, (k) to purchase insurance or credit enhancements to insure the Agent
against risks of loss, collection or disposition of Collateral or to provide to the Agent a
guaranteed return from the collection or disposition of Collateral or (l) to the extent deemed
appropriate by the Agent, to obtain the services of other brokers, investment bankers, consultants
and other professionals to assist the Agent in the collection or disposition of any of the
Collateral. Debtor acknowledges that the purpose of this Section 8 is to provide non-exhaustive
indications of what actions or omissions by the Agent would not be commercially unreasonable in the
Agent’s exercise of remedies against the Collateral and that other actions or omissions by the
Agent shall not be deemed commercially unreasonable solely on account of not being indicated in
this Section 8. Without limitation upon the foregoing, nothing contained in this Section 8 shall
be construed to grant any rights to Debtor or to impose any duties on the
Agent that would not have been granted or imposed by this Agreement or by applicable law in the
absence of this Section 8.



     9. Foreclosure. Foreclosure on the Collateral covered hereby may be had at public or
private sale or sales, disposing of such portion or portions of the Collateral at each such sale,
for cash or on credit, on such terms, at such place or places, and with or without the Collateral
being present at such sale, all as the Agent in its sole and absolute discretion shall determine
from time to time. In the case of public sale, notice thereof shall be deemed and held to be
adequate and reasonable if such notice shall appear three (3) times in a newspaper published in the
City or County wherein the sale is to be held, the first such publication being at least ten (10)
days before such sale and the last such publication being not more than three (3) days before such
sale. In the case of a private sale, notice thereof shall be deemed and held to be adequate and
reasonable if such notice shall be mailed to Debtor at its last known address at least ten (10)
days before such sale. The enumeration of these methods of notice shall not be deemed or construed
to render unreasonable any other method of notice which would otherwise be reasonable under the
circumstances. Debtor agrees that the Agent may, in connection with any such sale, specifically
disclaim any warranties of title or the like with respect to all or any portion of the Collateral
being sold.



     10. Application of Proceeds and Deficiency. The Agent may apply the net proceeds of
any sale, lease, license or other disposition of any of the Collateral or of any other collection
of any of the Collateral or any proceeds of any of the Collateral, after deducting all costs and
expenses of every kind incurred therein or incidental to the retaking, holding, preparing for sale,
selling, leasing, licensing or the like of the Collateral on Debtor’s premises, or elsewhere, or in
any way related to the Agent’s rights under



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this Agreement (including, without limitation,
reasonable attorneys’ fees and expenses, court costs, bonds and other legal expenses, insurance,
security guard and alarm expenses incurred in connection with the holding of the Collateral,
advertisements of sale of the Collateral, and rental and utilities expense on the premises or
elsewhere in connection with storage and sale of the Collateral) to the payment, in whole or in
part, of the Secured Obligations, whether due or not due, absolute or contingent, and only after
payment by the Agent of any other amounts required by any existing or future provision of law
(including Section 9-615 of the Uniform Commercial Code or any comparable statutory provision of
any jurisdiction where Debtor or any of the Collateral may at the time be located) need the Agent
account to Debtor for the surplus, if any. If the Agent sells any of the Collateral on credit,
unless otherwise agreed by the Required Lenders in writing, the Secured Obligations will be
credited only with payments actually received by the Agent from the purchaser with respect to such
credit obligation; and in the event the purchaser fails to pay for the Collateral, the Agent may
resell the Collateral and the Secured Obligations will be credited with the proceeds received from
such resale. The proceeds of any sale(s), lease(s), license(s) or other disposition(s) of any of
the Collateral and/or of any collection(s) of any of the Collateral shall be applied by the Agent
in the following order: (a) first, to the payment of all costs, expenses, liabilities and advances
made or incurred by the Agent and/or any Lender in connection with the collection and enforcement
of the Secured Obligations and the sale or other realization upon the Collateral; provided,
however, that nothing herein is intended to relieve Debtor of its obligation to pay such costs,
expenses, liabilities and advances; (b) second, to the payment of the Secured Obligations in such
order and manner as the Required Lenders, in their discretion, shall elect; and (c) third, to the
payment of any surplus remaining after the payment of the amounts mentioned, to Debtor or to
whomsoever may be lawfully entitled thereto. Debtor shall remain liable to the Agent and the
Lenders for the payment of any deficiency, with interest.



     11. The Agent’s Obligations and Duties. Notwithstanding any provision contained in
this Agreement to the contrary, Debtor shall remain liable under each contract or agreement
comprised in the Collateral to be observed or performed by Debtor thereunder. The Agent shall not
have any obligation or liability under any such contract or agreement by reason of or arising out
of this Agreement or the receipt by the Agent of any payment relating to any of the Collateral, nor
shall the Agent be obligated in any manner to perform any of the obligations of Debtor under or
pursuant to any such contract or agreement,
to make inquiry as to the nature or sufficiency of any payment received by the Agent in respect of
the Collateral or as to the sufficiency of any performance by any party under any such contract or
agreement, to present or file any claim, to take any action to enforce any performance or to
collect the payment of any amounts which may have been assigned to the Agent or to which the Agent
may be entitled at any time or times. The Agent’s sole duty with respect to the custody, safe
keeping and physical preservation of the Collateral in its possession, under Section 9-207 of the
Missouri UCC, shall be to deal with such Collateral in the same manner as the Agent deals with
similar property for its own account. Debtor hereby acknowledges and agrees that the Agent shall
have no duty as to the collection or protection of the Collateral or any income thereon, nor as to
the preservation of rights against prior parties, nor as to the preservation of any rights
pertaining thereto.



     12. Amendments; Waivers; Remedies Cumulative. No delay on the part of the Agent
and/or any Lender in the exercise of any right or remedy under this Agreement shall operate as a
waiver thereof and no single or partial exercise by the Agent and/or any Lender of any right or
remedy shall preclude other or further exercise thereof or the exercise of any other right or
remedy. Each and every right and remedy granted to the Agent and/or any Lender under this
Agreement, under the Loan Agreement and under the other Transaction Documents, or at law or in
equity, shall be deemed cumulative and may be exercised from time to time. Neither the Agent nor
any Lender shall by any act, delay, omission or otherwise be deemed to have waived any of its
rights or remedies under this Agreement and no waiver whatsoever shall be valid unless in writing
and signed by the Agent or the applicable Lender, as the case



- 306 -









 







may be, and then only to the extent
therein set forth. A waiver by the Agent and/or any Lender of any right or remedy under this
Agreement on any one occasion shall not be construed as a bar to any right or remedy which the
Agent and/or any Lender would otherwise have on any future occasion. This Agreement may not be
amended except by a writing duly signed by Debtor and the Agent and consented to by the Required
Lenders. The headings of the paragraphs hereof shall not be considered in the construction or
interpretation of this Agreement.



     13. Irrevocable Power of Attorney. Debtor hereby irrevocably makes, constitutes and
appoints the Agent (and all Persons designated by the Agent) as the true and lawful agent and
attorney-in-fact of Debtor with full power of substitution to: (a) if any Event of Default under
this Agreement has occurred and is continuing, (i) demand payment of accounts, (ii) enforce payment
of accounts by legal proceedings or otherwise, (iii) exercise all of Debtor’s rights and remedies
with respect to proceedings brought to collect accounts, (iv) sell or assign accounts upon such
terms, for such amounts and at such time or times as the Agent deems advisable, (v) settle, adjust,
compromise, extend or renew accounts, (vi) discharge and release accounts, (vii) prepare, file and
sign Debtor’s name on any proof of claim in bankruptcy or other similar document against an account
debtor, (viii) notify the postal authorities of any change of the address for delivery of Debtor’s
mail to an address designated by the Agent, and open all mail addressed to Debtor for the purpose
of collecting accounts and the proceeds of any other Collateral (with all other mail to be promptly
returned to Debtor), and (ix) do all acts and things which are necessary, in the Agent’s good faith
discretion, to fulfill the Debtor’s obligations under this Agreement; and (b) at any time, (i) take
control in any manner of any item of payment or proceeds of any account or any other Collateral,
(ii) have access to any lockbox or postal box into which Debtor’s mail is deposited, (iii) endorse
Debtor’s name upon any items of payment or proceeds thereof and deposit the same in the Agent’s
account on account of the Secured Obligations, (iv) endorse Debtor’s name upon any chattel paper,
document, instrument, invoice or similar document or agreement relating to any account or any goods
pertaining thereto, (v) execute in Debtor’s name and on Debtor’s behalf any financing statements
and/or continuations thereof and/or amendments thereto under the Uniform Commercial Code or other
applicable law in any jurisdiction where Debtor or any of the Collateral may be located, (vi)
endorse Debtor’s name on any verification of accounts and notices thereof to account debtors and
(vii) do any and all things necessary and take such actions in the name and on behalf of Debtor to
carry out the intent of this Agreement, including, without limitation, the grant of the security
interest granted under this Agreement and to perfect and protect the security interest granted to
the Agent in respect to the Collateral
and the Agent’s rights created under this Agreement. Debtor agrees that neither the Agent nor any
of its agents, designees or attorneys-in-fact will be liable for any acts of commission or omission
(other than for acts of commission or omission which constitute gross negligence or willful
misconduct as determined by a court of competent jurisdiction in a final, nonappealable order), or
for any error of judgment or mistake of fact or law in respect to the exercise of the power of
attorney granted under this Section. The power of attorney granted under this Section shall be
irrevocable during the term of this Agreement.



     14. Marshalling. Neither the Agent nor any Lender shall be required to marshal any
present or future collateral security (including, without limitation, this Agreement and the
Collateral) for, or other assurances of payment of, any or all of the Secured Obligations or to
resort to such collateral security or other assurances of payment in any particular order, and all
of their respective rights and remedies under this Agreement and in respect of such collateral
security and other assurances of payment shall be cumulative and in addition to all other rights
and remedies, however existing or arising. To the extent not prohibited by applicable law, Debtor
hereby agrees that it will not invoke any law relating to the marshalling of collateral which might
cause delay in or impede the enforcement of any of the rights and/or remedies of the Agent and/or
any Lender under this Agreement or under any other agreement, document or instrument creating or
evidencing any of the Secured Obligations or under which any of the Secured Obligations is
outstanding or by which any of the Secured Obligations is secured or payment



- 307 -









 







thereof is otherwise
assured, and, to the extent not prohibited by applicable law, Debtor hereby irrevocably waives the
benefits of all such laws.



     15. Notices. Except as otherwise specified in this Agreement, any notice, request,
demand, consent or other communication under this Agreement shall be in writing and delivered in
person or sent by facsimile, recognized overnight courier or registered or certified mail, return
receipt requested and postage prepaid, if to Debtor to the address or facsimile number of Debtor
listed on the signature page(s) of this Agreement, or if to Agent or any Lender, in care of the
Agent at 135 North Meramec, St. Louis, Missouri 63105, Attention: Traci Dodson, Telecopy No. (314)
854-5454, or at such other address or facsimile number as either party may from time to time
designate as its address or facsimile number for communications under this Agreement by notice so
given. Such notices shall be deemed effective on the day on which delivered or sent if delivered
in person or sent by facsimile (with answerback confirmation received), on the first (1st) Business
Day after the day on which sent, if sent by recognized overnight courier or on the third (3rd)
Business Day after the day on which mailed, if sent by registered or certified mail.



     16. Applicable Law and Severability. It is the intention of the parties hereto that
this Agreement is entered into pursuant to the provisions of the Missouri UCC. Any applicable
provisions of the Missouri UCC, not specifically included herein, shall be deemed a part of this
Agreement in the same manner as if set forth herein at length; and any provisions of this Agreement
that might in any manner be in conflict with any provision of the Missouri UCC shall be deemed to
be modified so as not to be inconsistent with the Missouri UCC. In all respects this Agreement and
all transactions hereunder, and all the rights of the parties, shall be governed as to validity,
construction, enforcement and in all other respects by the substantive laws of the State of
Missouri (without reference to conflict of law principles); provided, however, that the perfection,
the effect of the perfection or non-perfection and the priority of the security interests and liens
created by this Agreement shall in all respects be governed, construed, applied and enforced in
accordance with the substantive laws of the applicable jurisdiction. To the extent any provision
of this Agreement is not enforceable under applicable law, such provision shall be deemed null and
void and shall have no effect on the remaining portions of this Agreement.



     17. Successors and Assigns; Other Secured Obligations; Duration of Security Interest.
This Agreement shall be binding upon Debtor and its successors and shall inure to the benefit of
the Agent, the Lenders and their respective successors and assigns. Debtor may not assign any of
its rights or delegate any of its obligations under this Agreement. This Agreement shall continue
in full force and effect and
the security interest and lien granted by this Agreement and all of the representations,
warranties, covenants and agreements of Debtor under this Agreement and all of the terms,
conditions and provisions of this Agreement relating thereto shall continue to be fully operative
until such time as (a) all of the Secured Obligations shall have been fully, finally and
indefeasibly paid in cash, (b) there shall be no remaining commitment or obligation of the Agent
and/or any Lender to advance funds, make loans or extend credit to, and/or issue letters of credit
for the account of, any Obligor under the Loan Agreement, any other Transaction Document or
otherwise, (c) no Letters of Credit shall remain outstanding and (d) the Loan Agreement shall have
expired or been terminated in accordance with its terms. If claim is ever made on the Agent and/or
any Lender for repayment or recovery of any amount or amounts received by the Agent and/or any
Lender in payment or on account of any of the Secured Obligations (including payment under a
guaranty or from application of collateral) and the Agent and/or any Lender repays all or part of
said amount by reason of (a) any judgment, decree or order of any court or administrative body
having jurisdiction over the Agent and/or any Lender or any Property of the Agent and/or any Lender
or (b) any settlement or compromise of any such claim effected by the Agent and/or any Lender with
any such claimant (including, without limitation, Debtor), then and in each such event Debtor
agrees that any such judgment, decree, order, settlement or compromise shall be binding on Debtor,
notwithstanding any



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cancellation of any note or other instrument or agreement evidencing such
Secured Obligations or of this Agreement, and this Agreement shall continue to be effective or be
reinstated, as the case may be, and shall secure the payment of the amount so repaid or recovered
to the same extent as if such amount had never originally been received by the Agent and/or any
Lender. This Agreement shall continue to be effective or be reinstated, as the case may be, if (a)
at any time any payment of any of the Secured Obligations is rescinded or must otherwise be
returned by the Agent and/or any Lender upon the insolvency, bankruptcy or reorganization of Debtor
or otherwise, all as though such payment had not been made or (b) this Agreement is released in
consideration of a payment of money or transfer of Property or assets or grant of a Lien by Debtor
or any other Person and such payment, transfer or grant is rescinded or must otherwise be returned
by the Agent and/or any Lender upon the insolvency, bankruptcy or reorganization of such Person or
otherwise, all as though such payment, transfer or grant had not been made.



     18. Consent to Jurisdiction; Waiver of Jury Trial. DEBTOR HEREBY IRREVOCABLY (A)
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY MISSOURI STATE COURT SITTING IN THE COUNTY OF ST.
LOUIS, MISSOURI OR ANY UNITED STATES OF AMERICA COURT SITTING IN THE EASTERN DISTRICT OF MISSOURI,
EASTERN DIVISION, AS AGENT MAY ELECT, IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT, (B) AGREES THAT ALL CLAIMS IN RESPECT TO SUCH SUIT, ACTION OR PROCEEDING MAY BE
HELD AND DETERMINED IN ANY OF SUCH COURTS, (C) WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH DEBTOR MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT, (D) WAIVES ANY CLAIM THAT SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND (E) WAIVES ALL RIGHTS OF
ANY OTHER JURISDICTION WHICH DEBTOR MAY NOW OR HEREAFTER HAVE BY REASON OF ITS PRESENT OR
SUBSEQUENT DOMICILES. DEBTOR AUTHORIZES THE SERVICE OF PROCESS UPON DEBTOR BY REGISTERED MAIL SENT
TO DEBTOR AT ITS ADDRESS REFERENCED IN SECTION 15. DEBTOR AND THE AGENT IRREVOCABLY WAIVE THE
RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY ACTION IN WHICH DEBTOR AND THE AGENT ARE PARTIES
RELATING TO OR ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT.



     19. UCC Defined Terms. All terms defined in the Missouri UCC and used in this
Agreement shall have the same definitions herein as specified therein. However, if a term is
defined in Article 9 of
the Missouri UCC differently than in another Article of the Missouri UCC, then the term shall have
the meaning specified in Article 9 of the Missouri UCC.



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     IN WITNESS WHEREOF, Debtor has executed this Security Agreement as of the 29th day of June,
2006.


IN THE EVENT ANY OF THE SECURED OBLIGATIONS ARE PAYABLE ON DEMAND, NEITHER THIS AGREEMENT NOR
ANYTHING CONTAINED HEREIN SHALL BE DEEMED TO ALTER OR IMPINGE UPON THE DEMAND CHARACTER OF SUCH
OBLIGATION.




	 	 	 	 	 
	 	 	FRANCODEX LABORATORIES, INC. (Debtor)
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Jean M. Nelson
	 

	 	 	 	 
	 

	 	 	 	Jean M. Nelson, Executive Vice
President and


Chief Financial Officer
	 
	 	 	 	 
	 	 	Address and Facsimile Number of
	 	 	Chief Executive Office of Debtor:
	 
	 	 	 	 
	 	 	3200 Meacham Boulevard
	 	 	Fort Worth, Texas 76137
	 	 	Attention: Jean M. Nelson, Chief Financial Officer
	 
	 	 	 	 
	 	 	Facsimile Number: (817) 831-8362






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EXHIBIT A




Additional Locations of Places of Business of Debtor

and/or Additional Locations of Collateral




None.




- 311 -









 








EXHIBIT B




UCC Filing Office(s)




Kansas Secretary of State




- 312 -









 





SECURITY AGREEMENT




     THIS SECURITY AGREEMENT (this “Agreement”) is made as of the 29th day of June, 2006, by Virbac
AH, Inc., a Delaware corporation (“Debtor”), in favor of FIRST BANK, as agent (in such capacity,
the “Agent”) for the Lenders from time to time party to that certain Loan Agreement dated as of the
date hereof by and among Virbac Corporation, a Delaware corporation, PM Resources, Inc., a Missouri
corporation, St. JON Laboratories, Inc., a California corporation, Francodex Laboratories, Inc., a
Kansas corporation, Delmarva Laboratories, Inc., a Virginia corporation, the Debtor, the Lenders
from time to time party thereto and First Bank, as agent for the Lenders, as the same may from time
to time be amended, modified, extended, renewed or restated (the “Loan Agreement”; all capitalized
terms used and not otherwise defined in this Agreement shall have the respective meanings ascribed
to them in the Loan Agreement).



WITNESSETH:




     WHEREAS, as a condition precedent to the Agent and the Lenders entering into the Loan
Agreement, the Agent and the Lenders have required that Debtor execute and deliver this Agreement
to the Agent for the ratable benefit of the Lenders; and



     WHEREAS, in order to induce the Agent and the Lenders to enter into the Loan Agreement, Debtor
has agreed to execute and deliver this Agreement to the Agent for the ratable benefit of the
Lenders;



     NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, Debtor hereby
covenants and agrees with the Agent as follows:



     1. Grant of Security Interest. For value received, Debtor hereby grants to the Agent
for the ratable benefit of the Lenders a security interest in and lien on all personal property and
fixtures of Debtor, wherever located and whether now or hereafter existing or now owned or
hereafter created, acquired or arising (collectively, the “Collateral”), including, without
limitation:



          (a) all accounts, accounts receivable, payment intangibles, lease payments, rental payments,
license payments, lease rights, contract rights and other rights to the payment of money, and all
goods whose sale, lease, rental, license or other disposition by Debtor have given rise to accounts
and have been returned to or repossessed or stopped in transit by Debtor;




          (b) all inventory of Debtor, wherever located, including, without limitation, (i) all
inventory under lease, in transit, held by others for Debtor’s account, covered by warehouse
receipts, purchase orders and/or contracts, or in the possession of any lessees, renters, carriers,
forwarding agents, truckers, warehousemen, vendors or other persons or entities and (ii) all
inventory consisting of raw materials, work in process, finished goods, supplies, goods,
incidentals, office supplies and/or packaging and shipping materials;




          (c) all documents, including, without limitation, all warehouse receipts, bills of lading and
similar documents of title relating to goods in which Debtor at any time has an interest, whether
now or at any time or times hereafter issued to Debtor or the Agent by any person or entity, and
whether covering any portion of Debtor’s inventory or otherwise;




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          (d) all instruments (including, without limitation, promissory notes) of any kind or nature
whatsoever, whether negotiable or non-negotiable;




          (e) all chattel paper of any kind or nature whatsoever, including, without limitation, all
leases, rental agreements, installment sale agreements, conditional sale agreements and other
chattel paper relating to or arising out of the sale, rental, lease or other disposition of any of
the Collateral;




          (f) all general intangibles of any kind or nature whatsoever, including, without limitation,
all payment intangibles, all patents, trademarks, copyrights and other intellectual property, and
all applications for, registrations of and licenses of the foregoing and all computer software,
product specifications, trade secrets, licenses, trade names, service marks, goodwill, tax refunds,
rights to tax refunds, franchises, rights related to prepaid expenses, rights under executory
contracts, choses in action, causes of action and rights under partnership, joint venture,
co-ownership, management and/or similar agreements and/or arrangements;




          (g) all goods, machinery, equipment, motor vehicles, trucks, tractors, trailers, appliances,
furniture, furnishings, tools, dies, jigs and other tangible personal property and all accessories
and parts relating thereto;




          (h) all fixtures;




          (i) all monies, reserves, deposits, cash, cash equivalents and other property now or at any
time or times hereafter in the possession or under the control of the Agent or any Lender or any
bailee of the Agent or any Lender;




          (j) all deposit accounts and certificates of deposit and all interest or dividends thereon;




          (k) all investment property and financial assets of any kind or type, whether certificated or
uncertificated, including, without limitation, all securities, securities accounts, securities
entitlements, stocks, bonds, options, warrants, commodity contracts, futures contracts, commodity
accounts, commodity options, commercial paper, money market funds and/or accounts, Treasury bills,
notes and bonds, instruments, certificates of deposit, mutual fund shares, cash and money, together
with all rights, income, revenues, proceeds and profits therefrom, including, without limitation,
all dividends, distributions (cash or stock, extraordinary as well as ordinary), interest and other
payments, all additions thereto, substitutions or replacements thereof, any goods or other property
to be delivered thereunder, and any exchanges for or changes in any of the foregoing;




          (l) all commercial tort claims;




          (m) all supporting obligations;




          (n) all letter of credit rights;




          (o) all books, records, computer records, computer disks, ledger cards, programs and other
computer materials, customer and supplier lists, invoices, orders and other property and general
intangibles at any time evidencing or relating to any of the Collateral;




          (p) all accessions to any of the property described above and all substitutions, renewals,
improvements and replacements of and additions thereto; and




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          (q) all proceeds, including, without limitation, proceeds which constitute property of the
types described in (a), (b), (c), (d), (e), (f), (g), (h), (i), (j), (k), (l), (m), (n), (o) and/or
(p) above and any rents and profits of any of the foregoing items, whether cash or noncash,
immediate or remote, including, without limitation, all income, accounts, contract rights, general
intangibles, payment
intangibles, chattel paper, notes, drafts, acceptances, instruments and other rights to the payment
of money arising out of the sale, rental, lease, license, exchange or other disposition of any of
the foregoing items (provided, however, that nothing contained herein shall be deemed to permit or
assent to any such disposition other than (i) the sale of inventory by Debtor in the ordinary
course of its business (which does not include any sale or other transfer of inventory in partial
or total satisfaction of any Indebtedness) and (ii) other sales and other dispositions expressly
permitted by the Loan Agreement), and insurance proceeds, and all products, of (a), (b), (c), (d),
(e), (f), (g), (h), (i), (j), (k), (l), (m), (n), (o) and/or (p) above, and any indemnities,
warranties and guaranties payable by reason of loss or damage to or otherwise with respect to any
of the foregoing items;



to secure the payment of (i) any and all of the present and future Borrowers’ Obligations, (ii) any
and all present and future indebtedness (principal, interest, fees, collection costs and expenses
and other amounts), liabilities and obligations (including, without limitation, guaranty
obligations, letter of credit reimbursement obligations and indemnity obligations) of Debtor to the
Agent and/or any Lender evidenced by or arising under or in respect of the Loan Agreement, this
Agreement and/or any other Transaction Document, and (iii) any and all costs of collection,
including, without limitation, reasonable attorneys’ fees and expenses, incurred by the Agent
and/or any Lender upon the occurrence of an Event of Default under this Agreement, in collecting or
enforcing payment of any such indebtedness, liabilities or obligations or in preserving, protecting
or realizing on the Collateral under this Agreement or in representing the Agent and/or any Lender
in connection with any bankruptcy or insolvency proceedings (hereinafter collectively referred to
as the “Secured Obligations”).




     2. Representations and Covenants of Debtor. Debtor hereby represents and warrants to
the Agent and each Lender, and covenants and agrees with the Agent and each Lender, that:



          (a) Debtor is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Debtor’s exact legal name is “Virbac AH, Inc.” Debtor has not
during the past five (5) years conducted business under any name other than the name “Virbac AH,
Inc.” Debtor does not now and will not at any time during the term of this Agreement conduct
business under any name other than the name “Virbac AH, Inc.” Debtor’s organizational
identification number in the State of Delaware is #3008337. Debtor will not change its name, its
type of organization, its jurisdiction of organization or its organizational identification number
unless (i) Debtor gives the Agent and Lenders at least thirty (30) days prior written notice of the
same, (ii) if such change is with respect to Debtor’s jurisdiction of organization, such new
jurisdiction of organization is one of the states of the United States of America, (iii) such
change is permitted pursuant to the terms of the Loan Agreement and the other Transaction
Documents, and (iv) prior to making any such change, Debtor executes (if necessary) and/or obtains
and delivers to the Agent and Lenders any and all additional financing statements and/or amendments
thereto and/or other agreements, documents or notices as may be required by the Agent and/or any
Lender;




          (b) Debtor has full corporate right, power and authority to execute, deliver and perform its
obligations under this Agreement and to grant to the Agent for the ratable benefit of the Lenders
the security interest in and lien on the Collateral hereby stated to be granted;




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          (c) the officer of Debtor executing this Agreement has been duly elected and qualified and has
been duly authorized and empowered to execute, deliver and perform the terms of this Agreement on
behalf of Debtor;




          (d) the execution, delivery and performance of this Agreement by Debtor do not and will not
violate any of the terms or provisions of the Certificate of Incorporation or Bylaws of Debtor;




          (e) the execution, delivery and performance of this Agreement by Debtor do not and will not
violate any law, rule, regulation, order, writ, judgment, injunction, decree, determination or
award presently in effect having applicability to Debtor or the terms of any indenture, agreement,
document, instrument or undertaking to which Debtor is a party or by which it or any of its
Property is bound;




          (f) Debtor’s chief executive office and the location of the only office where it keeps its
books and records respecting the Collateral is that given on the signature page(s) of this
Agreement and all other places of business of Debtor and locations of any of the Collateral are
listed on Exhibit A attached hereto and incorporated herein by reference;




          (g) except to the extent permitted by Section 2(h) below, unless otherwise consented to in
writing by Agent, all of the Collateral (A) is and will be kept solely at Debtor’s chief executive
office or at one of the other locations listed on Exhibit A attached hereto and
incorporated herein by reference (if mobile equipment or equipment of a type normally used in more
than one location, remaining there when not in use), (B) will not be attached or affixed in any
manner to or become a part of any real estate or other personal property apart from other items of
the Collateral and (C) is in the exclusive possession and control of Debtor;




          (h) Debtor will not (i) change the location of its chief executive office, (ii) change the
location of any of its other places of business, (iii) change the location of any of the Collateral
from Debtor’s chief executive office or one of the other locations listed on Exhibit A
attached hereto and incorporated herein by reference or (iv) establish any additional places of
business or additional locations at which any of the Collateral is stored, kept or processed,
unless (A) such office or Collateral location is located within the continental United States of
America, (B) Debtor gives the Agent and Lenders thirty (30) days prior written notice of the same,
and (C) prior to making any such change or establishing any such new location, Debtor executes (if
necessary) and/or obtains and delivers to the Agent and Lenders any and all additional financing
statements and/or amendments thereto, mortgagee waivers and acknowledgments, bailee waivers and
acknowledgments, landlord waivers and acknowledgments, warehousemen waivers and acknowledgments and
other agreements, documents or notices as may be reasonably required by the Agent or any Lender;




          (i) Debtor is, or, as to Collateral acquired after the date hereof, will be, the sole and
absolute owner of all of the Collateral, free and clear of any and all Liens and claims of any kind
or nature whatsoever other than Permitted Liens, and Debtor will defend the Collateral against all
claims and demands of all Persons at any time claiming the same or any interest therein;




          (j) no financing statement (other than any filed with respect to Permitted Liens) covering any
of the Collateral is or will be on file in any public office at any time during the term of this
Agreement;




          (k) Debtor will not, without the prior written consent of the Required Lenders, sell,
transfer, lease, license or otherwise dispose of or offer to dispose of any of the Collateral or
any interest therein (other than (i) sales of inventory by Debtor in the ordinary course of its
business (which does not




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include any sale or other transfer of inventory in partial or total
satisfaction of any Indebtedness) and (ii) other sales and other dispositions expressly permitted
by the Loan Agreement (which other sales and other dispositions shall be made expressly subject to
the security interest and lien in favor of the Agent created by this Agreement unless otherwise
agreed to in writing by the Required Lenders));




          (l) Debtor will at all times keep all of the Collateral consisting of inventory, goods,
machinery, equipment and/or other tangible personal property used or useful in the conduct of its
business in good condition, working order and repair (ordinary wear and tear excepted), excepting
any loss, damage or destruction which is fully covered by proceeds of insurance, and will not use
any of the
Collateral or permit any of the Collateral to be used in violation of any law, rule, regulation,
ordinance or insurance policy;




          (m) Debtor will pay promptly when due all taxes and assessments on the Collateral or for its
use or operation or upon this Agreement or any of the Secured Obligations or with respect to the
perfection of any security interest or lien under this Agreement; provided, however, that Debtor
shall not be required to pay any such tax or assessment the payment of which is being contested in
good faith and by appropriate proceedings being diligently conducted and for which adequate
reserves in accordance with GAAP have been provided, except that Debtor shall pay or cause to be
paid all such taxes and assessments forthwith upon the commencement of proceedings to foreclose any
Lien which is attached as security therefor, unless such foreclosure is stayed by the filing of an
appropriate bond in a manner reasonably satisfactory to the Required Lenders;




          (n) Debtor will at all times keep all of the Collateral of an insurable nature insured against
loss, damage, theft and other risks, in such amounts, with such companies and under policies in
such form, all as shall be reasonably satisfactory to the Required Lenders. All insurance required
by this Section 2(n) shall be with insurers rated A-XI or better by A.M. Best Company (or accorded
a similar rating by another nationally or internationally recognized insurance rating agency of
similar standing if A.M. Best Company is not then in the business of rating insurers or rating
foreign insurers) or such other insurers as may from time to time be reasonably acceptable to the
Required Lenders. Such policies of insurance shall contain an endorsement reasonably acceptable to
the Agent naming the Agent as loss payee as its interests may appear. Such endorsement, or an
independent instrument furnished to the Agent, shall provide that the insurance companies will give
the Agent at least thirty (30) days written notice before any such policy or policies of insurance
shall be amended or cancelled and that no act or default of Debtor or any other Person shall affect
the right of the Agent to recover under such policy or policies of insurance in the event of any
loss of or damage to any of the Collateral. Debtor hereby directs all insurers under such policies
of insurance to pay all proceeds payable thereunder directly to the Agent as its interests may
appear and Debtor hereby agrees to promptly forward to the Agent all such insurance proceeds
received directly by Debtor. All insurance proceeds received by the Agent on account of any loss of
or damage to any of the Collateral, after deducting therefrom the reasonable charges and expenses
paid or incurred in connection with the collection and disbursement of said proceeds, shall, unless
otherwise agreed to in writing by the Required Lenders, be applied to the payment or prepayment of
the Secured Obligations in such order and manner as the Required Lenders, in their discretion,
shall elect. Debtor hereby irrevocably makes, constitutes and appoints the Agent (and all officers,
employees or agents designated by the Agent) as Debtor’s true and lawful attorney (and
agent-in-fact) to, if Debtor fails to do upon the demand of the Agent or if any Event of Default
under this Agreement or any event which with the passage of time or the giving of notice or both
would constitute an Event of Default under this Agreement has occurred and is continuing, (i) make,
adjust, compromise and settle claims under such policies of insurance, (ii) endorse the name of
Debtor on any check, draft, instrument or other item of payment of the proceeds of such policies of
insurance and (iii) make all determinations and decisions with respect to such policies of
insurance. In the event Debtor at any time or times hereafter shall fail to obtain




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or maintain any
of the policies of insurance required above or to pay any premium in whole or in part relating
thereto, then the Agent, without waiving or releasing any obligation or default by Debtor
hereunder, may at any time or times thereafter (but shall be under no obligation to do so) obtain
and maintain such policies of insurance and pay such premium and take any other action with respect
thereto which the Agent deems advisable. All sums so disbursed by the Agent, including, without
limitation, reasonable attorneys’ fees, court costs, expenses and other charges relating thereto,
shall be part of the Secured Obligations, payable by Debtor to the Agent on demand. UNLESS DEBTOR
PROVIDES EVIDENCE OF THE INSURANCE COVERAGE REQUIRED UNDER THIS AGREEMENT, THE AGENT MAY PURCHASE
INSURANCE AT DEBTOR’S EXPENSE TO PROTECT THE AGENT’S INTEREST IN THE COLLATERAL. THIS INSURANCE
MAY, BUT NEED NOT, PROTECT DEBTOR’S INTERESTS. THE COVERAGE THAT THE AGENT PURCHASES MAY
NOT PAY ANY CLAIM THAT DEBTOR MAY MAKE OR ANY CLAIM THAT IS MADE AGAINST DEBTOR IN CONNECTION WITH
THE COLLATERAL. DEBTOR MAY LATER CANCEL ANY INSURANCE PURCHASED BY THE AGENT, BUT ONLY AFTER
PROVIDING EVIDENCE THAT DEBTOR HAS OBTAINED INSURANCE AS REQUIRED BY THIS AGREEMENT. IF THE AGENT
PURCHASES INSURANCE FOR THE COLLATERAL, DEBTOR WILL BE RESPONSIBLE FOR THE COSTS OF THAT INSURANCE,
INCLUDING THE INSURANCE PREMIUM, INTEREST AND ANY OTHER CHARGES THE AGENT MAY IMPOSE IN CONNECTION
WITH THE PLACEMENT OF INSURANCE, UNTIL THE EFFECTIVE DATE OF THE CANCELLATION OR EXPIRATION OF THE
INSURANCE. THE COSTS OF THE INSURANCE MAY BE ADDED TO THE SECURED OBLIGATIONS. THE COSTS OF THE
INSURANCE MAY BE MORE THAN THE COST OF INSURANCE DEBTOR MAY BE ABLE TO OBTAIN ON ITS OWN. All
insurance proceeds shall be subject to the security interest and lien of the Agent under this
Agreement;




          (o) Debtor will permit the Agent and each Lender (and any Person appointed by the Agent or any
Lender to whom Debtor does not reasonably object) to (i) examine and inspect any of all of the
Collateral, wherever located, during normal business hours and at other reasonable times and (ii)
enter upon its Properties for purposes of making such examinations and/or inspections. Debtor will
permit the Agent (and any Person appointed by the Agent or any Lender to whom Debtor does not
reasonably object) to conduct field audits of the Collateral, following reasonable prior notice, at
least twice each year and shall reimburse Agent and Lenders for the costs of such field audits as
set forth in Section 6.1(c) of the Loan Agreement. Debtor will reimburse the Agent and each Lender
upon demand for all costs and expenses incurred by the Agent or such Lender in connection with any
such examination or inspection conducted by the Agent or such Lender while any Event of Default or
any event which with the passage of time or the giving of notice or both would constitute an Event
of Default under this Agreement has occurred and is continuing;




          (p) Debtor hereby irrevocably authorizes the Agent at any time and from time to time to file
in any Uniform Commercial Code jurisdiction initial financing statements and/or any amendments
thereto which (i) indicate the Collateral (A) as “all assets”, “all personal property” or “all
personal property and fixtures” of Debtor or words of similar effect, regardless of whether any
particular asset comprised in the Collateral falls within the scope of Article 9 of the Uniform
Commercial Code of the State of Missouri (the “Missouri UCC”) or such other jurisdiction or (B) as
being of an equal or lesser scope or with greater detail and (ii) contain any other information
required by part 5 of Article 9 of the Uniform Commercial Code of the applicable jurisdiction for
the sufficiency or filing office acceptance of any financing statement or amendment, including (A)
whether Debtor is an organization, the type of organization and any organization identification
number issued to Debtor and (B) in the case of a financing statement filed as a fixture filing or
indicating Collateral as as-extracted collateral or timber to be cut, a sufficient description of
real property to which the Collateral relates. Debtor agrees to furnish




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any such information to
the Agent promptly upon request. Debtor also ratifies its authorization for the Agent to have
filed in any Uniform Commercial Code jurisdiction any like initial financing statements or
amendments thereto if filed prior to the date of this Agreement;




          (q) Debtor hereby agrees, in each case at Debtor’s own expense, to take the following actions
with respect to the following Collateral:





     (i) if Debtor shall at any time hold or acquire any promissory notes or other
instruments or tangible chattel paper, Debtor will promptly notify the Agent and
Lenders thereof in writing and, at the request of the Required Lenders, Debtor will
forthwith endorse, assign and deliver the same to the Agent, accompanied by such
instruments of transfer or assignment duly executed in blank as the Agent may from
time to time specify;




     (ii) if Debtor shall at any time open or maintain a deposit account, Debtor
will promptly notify the Agent and Lenders thereof in writing and, at the request of
the Required Lenders, Debtor will, pursuant to an agreement in form and substance
reasonably satisfactory to the Required Lenders, either (at the Required Lenders’
option) (A) cause the depository bank to agree to comply at any time with
instructions from the Agent to such depository bank directing the disposition of
funds from time to time credited to such deposit account, without further consent of
Debtor or (B) arrange for the Agent to become the customer of the depository bank
with respect to the deposit account, with Debtor being permitted, only with the
consent of the Agent, to exercise rights to withdraw funds from such deposit
account. Agent agrees with Debtor that Agent will not give any such instructions or
withhold any withdrawal rights from Debtor unless an Event of Default or an event
which with the passage of time or the giving of notice or both would constitute an
Event of Default under this Agreement has occurred and is continuing. The
provisions of this paragraph shall not apply to (A) any deposit account for which
Debtor, the depository bank and the Agent have entered into a cash collateral
agreement specially negotiated among Debtor, the depository bank and the Agent for
the specific purpose set forth therein, (B) deposit accounts for which the Agent is
the depository and (C) deposit accounts specially and exclusively used for payroll,
payroll taxes and other employee wage and benefit payments to or for the benefit of
Debtor’s employees;




     (iii) if Debtor shall at any time hold or acquire any certificated securities,
Debtor will promptly notify the Agent and Lenders thereof in writing and, at the
request of the Required Lenders, Debtor will forthwith endorse, assign and deliver
the same to the Agent, accompanied by such instruments of transfer or assignment
duly executed in blank as the Agent may from time to time specify. If any securities
now or hereafter acquired by Debtor are uncertificated and are issued to Debtor or
its nominee directly by the issuer thereof, Debtor will promptly notify the Agent
and Lenders thereof in writing and, at the request of the Required Lenders, Debtor
will, pursuant to an agreement in form and substance reasonably satisfactory to the
Required Lenders, either (at the Required Lenders’ option) (A) cause the issuer to
agree to comply with instructions from the Agent as to such securities, without
further consent of Debtor or such nominee or (B) arrange for the Agent to become the
registered owner of the securities. If any securities, whether certificated or
uncertificated, or other investment property now or hereafter acquired by Debtor are
held by Debtor or its nominee through a securities intermediary or commodity
intermediary, Debtor will promptly notify the Agent and



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Lenders thereof in writing
and, at the request of the Required Lenders, Debtor will, pursuant to an agreement
in form and substance reasonably satisfactory to the Required Lenders, either (at
the Required Lenders’ option) (A) cause such securities intermediary or commodity
intermediary, as the case may be, to agree to comply with entitlement orders or
other instructions from the Agent to such securities intermediary as to such
securities or other investment property, or to apply any value distributed on
account of any commodity contract as directed by the Agent to such commodity
intermediary, as the case may be, in each case without further consent of Debtor or
such nominee or (B) in the case of financial assets or other investment property
held through a securities intermediary, arrange for the Agent to become the
entitlement holder with respect to such investment property, with Debtor being
permitted, only with the consent of the Agent, to exercise rights to withdraw or
otherwise deal with such investment property. Agent agrees with Debtor that Agent
will not give any such entitlement orders or instructions or directions to any such
issuer, securities intermediary or commodity intermediary, and will not withhold its
consent to the exercise of any withdrawal or dealing rights by Debtor,
unless an Event of Default or an event which with the passage of time or the giving
of notice or both would constitute an Event of Default under this Agreement has
occurred and is continuing. The provisions of this paragraph shall not apply to any
financial assets credited to a securities account for which the Agent is the
securities intermediary;




     (iv) if any goods are at any time in the possession of a bailee, Debtor will
promptly notify the Agent and Lenders thereof in writing and, at the request of the
Required Lenders, Debtor will promptly obtain an acknowledgment from the bailee, in
form and substance reasonably satisfactory to the Required Lenders, that the bailee
holds such Collateral for the benefit of the Agent and shall act upon the
instructions of the Agent, without the further consent of Debtor. Agent agrees with
Debtor that Agent will not give any such instructions unless an Event of Default or
an event which with the passage of time or the giving of notice or both would
constitute an Event of Default under this Agreement has occurred and is continuing;




     (v) if any of the Collateral is located on any premises not owned by Debtor,
Debtor will promptly notify the Agent and Lenders thereof in writing and, at the
request of the Required Lenders, Debtor will promptly cause each Person having any
right, title or interest in, or Lien on, such premises to enter into an agreement in
form and substance reasonably satisfactory to the Required Lenders whereby such
Person disclaims any right, title or interest in, and/or Lien on, the Collateral and
allows entry upon such premises and the removal of the Collateral from such premises
by the Agent or its agents or representatives;




     (vi) if Debtor at any time holds or acquires an interest in any electronic
chattel paper or any “transferable record,” as that term is defined in Section 201
of the federal Electronic Signatures in Global and National Commerce Act, or in
Section 16 of the Uniform Electronic Transactions Act as in effect in any relevant
jurisdiction, Debtor will promptly notify the Agent and Lenders thereof and, at the
request of the Required Lenders, Debtor will take such action as the Required
Lenders may reasonably request to vest in the Agent control, under Section 9-105 of
the Missouri UCC, of such electronic chattel paper and control under Section 201 of
the federal Electronic Signatures in Global and National Commerce Act or Section 16
of the Uniform Electronic Transactions Act, as the case may be, as so in effect in
such jurisdiction, of such transferable record;



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     (vii) if Debtor is at any time a beneficiary under a letter of credit now or
hereafter issued in favor of Debtor, Debtor will promptly notify the Agent and
Lenders thereof in writing and, at the request of the Required Lenders, Debtor will,
pursuant to an agreement in form and substance reasonably satisfactory to the
Required Lenders, either (at the Required Lenders’ option) (A) arrange for the
issuer and any confirmer of such letter of credit to consent to an assignment to the
Agent of the proceeds of any drawing under the letter of credit or (B) arrange for
the Agent to become the transferee beneficiary of the letter of credit, with the
proceeds of any drawing under the letter of credit to be applied to the payment of
the Secured Obligations in such order and manner as the Required Lenders, in their
discretion, shall elect;




     (viii) if Debtor shall at any time hold or acquire a commercial tort claim,
Debtor will promptly notify the Agent and Lenders in a writing signed by Debtor of
the brief details thereof and grant to the Agent in such writing a security interest
therein and in the proceeds thereof, all upon the terms of this Agreement, with such
writing to be in form and substance reasonably satisfactory to the Required Lenders;




     (ix) Debtor further agrees to take any other action reasonably requested by the
Required Lenders to insure the attachment, perfection and first priority of, and the
ability of the Agent to enforce, the Agent’s security interest in and lien on any
and all of the Collateral including, without limitation, (a) executing, delivering
and, where appropriate, filing financing statements and amendments relating thereto
under the Uniform Commercial Code, to the extent, if any, that Debtor’s signature
thereon is required therefor, (b) causing the Agent’s name to be noted as secured
party on any certificate of title for a titled good if such notation is a condition
to attachment, perfection or priority of, or ability of the Agent to enforce, the
Agent’s security interest in and lien on such Collateral and delivering the original
of such certificate of title (with the Agent’s security interest and lien so noted)
to the Agent, (c) complying with any provision of any statute, regulation or treaty
of any governmental body, entity, authority, agency or instrumentality as to any
Collateral if compliance with such provision is a condition to attachment,
perfection or priority of, or ability of the Agent to enforce, the Agent’s security
interest in and lien on such Collateral, (d) obtaining governmental, regulatory and
other third party consents and approvals, including without limitation any consent
of any licensor, lessor or other person obligated on Collateral, (e) obtaining
waivers from mortgagees and landlords in form and substance reasonably satisfactory
to the Required Lenders and (f) taking all actions required by any earlier versions
of the Uniform Commercial Code or by other law, as applicable in any relevant
Uniform Commercial Code jurisdiction, or by other law as applicable in any foreign
jurisdiction; and




     (x) with respect to accounts with respect to which the account debtor is the
United States of America, any state of the United States of America or any other
governmental body or any department, agency or instrumentality of any of the
foregoing, if requested by the Required Lenders, Debtor will take such action and
execute, deliver and file such agreements, documents and instruments as may be
necessary or as the Required Lenders may reasonably request to insure that such
accounts are duly assigned to the Agent for the ratable benefit of the Lenders in
compliance with all applicable governmental and regulatory requirements (including,
without limitation, to the extent applicable, the Federal Assignment of Claims Act
of 1940, as amended, so that the Agent is recognized by the account debtor to have
all of the rights of an assignee of such accounts;



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          (r) Debtor will reimburse the Agent and each Lender upon demand for (i) all costs and expenses
incident to perfecting, maintaining or terminating the security interest granted by this Agreement,
including search fees, filing and recording fees, fees for obtaining and transferring certificates
of title and all taxes and legal and other out-of-pocket fees and expenses paid or incurred by the
Agent and/or any Lender in connection with any of the foregoing and (ii) all costs and expenses,
including, without limitation, reasonable attorneys’ fees and expenses, incurred by the Agent
and/or any Lender in seeking to collect or enforce any rights under this Agreement or incurred by
the Agent and/or any Lender in seeking to collect or enforce any of the Secured Obligations, all of
which costs and expenses shall constitute a part of the Secured Obligations and be payable by
Debtor to the Agent and the Lenders on demand; and




          (s) Exhibit B attached hereto and incorporated herein by reference sets forth a
complete list of all of the filing office(s) where financing statement(s) must be filed in order to
perfect the Agent’s security interest in the Collateral to the extent such security interest can be
perfected by the filing of financing statements under the Uniform Commercial Code or other
applicable laws of any jurisdiction where Debtor or any of the Collateral is or may be “located”
(as “located” is defined in the applicable Uniform Commercial Code or other applicable law).




     3. Representations and Covenants of Debtor re: Accounts, Inventory and Other
Collateral. Debtor hereby represents and warrants to the Agent and each Lender, and covenants
and agrees with the Agent and each Lender, that:



          (a) Debtor will provide the Agent and Lenders with a written Borrowing Base Certificate on or
before the last day of each month as required under Section 3.1(b) of the Loan Agreement (or at
such other intervals as the Required Lenders shall require from time to time), reflecting activity
of Debtor up to and including the last day of the preceding month (each, a “Borrowing Base
Certificate”) describing, in a form and with such specificity as is satisfactory to the Required
Lenders, all Accounts created or acquired by Debtor subsequent to the immediately preceding
Borrowing Base Certificate. In addition, Debtor, immediately upon demand by the Required Lenders,
now and from time to time hereafter, shall execute and deliver to the Agent and Lenders schedules
of Inventory specifying Debtor’s cost of Inventory and of Eligible Inventory and such other matters
and information relating to Inventory and Eligible Inventory as the Required Lenders may from time
to time request. Debtor shall also furnish copies of any other reports or information, in a form
and with such specificity as is satisfactory to the Required Lenders, concerning accounts,
inventory and any other Collateral requested by the Required Lenders, including, without
limitation, but only if specifically requested by the Required Lenders, (i) schedules identifying
each account, (ii) copies of all invoices prepared in connection with such accounts and (iii) such
additional schedules, certificates, test verifications, and reports respecting the Collateral and
the proceeds thereof as the Required Lenders may from time to time reasonably request. The
Borrowing Base Certificate shall include, in a form and with such specificity as is satisfactory to
the Required Lenders, information on all amounts collected by Debtor on accounts subsequent to the
immediately preceding Borrowing Base Certificate. The Borrowing Base Certificate shall contain such
additional information as the Required Lenders may require;




          (b) With respect to accounts scheduled, listed or referred to on any Borrowing Base
Certificate or other report submitted by Debtor or any other Obligor to the Lenders, Debtor
represents and warrants to the Agent and Lenders that, except as otherwise disclosed on the
applicable Borrowing Base Certificate or other report (i) they are genuine, in all respects what
they purport to be and are not evidenced by a judgment; (ii) they represent undisputed, bona fide
transactions completed in accordance with the terms and provisions contained in the invoices and
other documents related thereto; (iii) the




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amounts thereof shown on the applicable Borrowing Base
Certificate or other report are actually and absolutely owing to Debtor and are not contingent for
any reason; (iv) no payments have been or shall be made thereon except payments immediately
delivered to the Agent pursuant to Section 4 of this Agreement; (v) there are no setoffs,
counterclaims or disputes existing or asserted with respect thereto and Debtor has not made any
agreement with any account debtor thereof for any deduction therefrom except a discount or
allowance allowed by Debtor in the ordinary course of its business for prompt payment; (vi) to the
best of Debtor’s knowledge, there are no facts, events or occurrences which could reasonably be
expected to impair in any material respect the validity or enforcement thereof or tend to reduce
the amount payable thereunder from the amount thereof as shown on the applicable Borrowing Base
Certificate or other report; (vii) to the best of Debtor’s knowledge, all account debtors thereof
have the capacity to contract and are solvent; (viii) the goods sold and/or services furnished
giving rise thereto are not subject to any Lien or claim except that of the Agent; (ix) Debtor has
no knowledge of any fact or circumstance which could reasonably be expected to impair in any
material respect the validity or collectibility thereof; (x) to the best of Debtor’s knowledge,
there are no bankruptcy, insolvency or other proceedings or actions which are threatened or pending
against any account debtor thereof which could reasonably be expected to result in any material
adverse change in such account debtor’s financial condition; and (xi) all of such accounts are
subject to a first priority perfected security interest in favor of the Agent;




          (c) Any officers, employees or agents of the Lenders shall have the right, at any time or
times hereafter, in the name of such Lender and/or Debtor or in the name of a nominee of such
Lender,
to verify the validity, amount or any other matter relating to any accounts by mail, telephone,
telegraph or otherwise. All costs, fees and expenses relating thereto incurred by any Lender (or
for which any Lender becomes obligated) during the continuation of any Event of Default or any
event which with the passage of time or the giving of notice or both would become an Event of
Default under this Agreement shall become part of the Secured Obligations and be payable by Debtor
to such Lender on demand;




          (d) Debtor will at all times maintain a record of accounts at its chief executive office,
keeping correct and accurate records itemizing and describing the names and addresses of account
debtors, relevant invoice numbers, shipping dates and due dates, collection histories and account
agings, all of which records shall be available during such Debtor’s usual business hours at the
request of the Agent or any Lender or any of their respective officers, employees or agents.
Debtor will cooperate fully with the Agent and each Lender and their respective officers, employees
and agents who shall have the right at any time or times to inspect the accounts and the records
with respect thereto. Debtor will conduct a review (or cause its independent certified public
accountants to conduct a review) of its bad debt reserves and collection histories at least once
each year and promptly following such review shall supply the Agent and each Lender with a report
in a form and with such specificity as may be reasonably satisfactory to the Required Lenders
concerning such review of the accounts (which report may consist of a management letter from
Debtor’s independent certified public accountants if such accountants conducted such bad debt
reserve review);




          (e) Unless otherwise agreed by the Required Lenders in writing, Debtor will: (i) promptly upon
Debtor’s learning thereof, inform the Agent and Lenders, in writing, of any material delay in
Debtor’s performance of any of its obligations to any account debtor with respect to any Eligible
Account in an amount in excess of $100,000.00 and of any assertion of any claims, offsets or
counterclaims in an amount in excess of $100,000.00 by any account debtor with respect to any
Eligible Account and of any allowances, credits and/or other monies in an amount in excess of
$10,000.00 granted by Debtor to any account debtor with respect to any Eligible Account; (ii) not
permit or agree to any extension, compromise or settlement or make any change or modification of
any kind or nature with respect to any Eligible Account, including any of the terms relating
thereto; (iii) promptly upon Debtor’s




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receipt or learning thereof, furnish to and inform the
Lenders of all material adverse information relating to the financial condition of any account
debtor who in the aggregate owes Debtor more than $20,000.00; and (iv) promptly upon Debtor’s
learning thereof, notify the Lenders in writing which of its then existing accounts involving an
amount in excess of $20,000.00 are no longer Eligible Accounts;




          (f) The Agent shall have the right, in its sole and absolute discretion, without notice
thereof to Debtor: (i) to notify any or all account debtors that the accounts have been assigned to
the Agent and that the Agent has a security interest therein; (ii) to direct such account debtors
to make all payments due from them to Debtor upon the accounts directly to the Agent; and (iii) to
enforce payment of and collect, by legal proceedings or otherwise, the accounts in the name of the
Agent and/or Debtor;




          (g) Debtor will, at its own expense, use commercially reasonable efforts to collect, as and
when due, all amounts due with respect to accounts;




          (h) With respect to inventory scheduled, listed or referred to in any Borrowing Base
Certificate or other report submitted by Debtor or any other Obligor to the Lenders, Debtor
represents and warrants to the Agent and Lenders that, except as otherwise disclosed in such
Borrowing Base Certificate or other report: (i) such inventory is located at Debtor’s chief
executive office, one of the other locations listed on Exhibit A attached hereto and
incorporated herein by reference or another location with respect to which Debtor has complied with
all of the requirements of Section 2(h) of this Agreement; (ii) Debtor has good, indefeasible and
merchantable title to such inventory and such inventory is not subject to any Lien or claim
whatsoever except for Permitted Liens; (iii) such inventory is of good and merchantable quality,
free from any material defects; (iv) such inventory is not subject to any licensing, patent,
royalty,
trademark, trade name or copyright agreements with any third parties; (v) the completion of
manufacture and sale or other disposition of such inventory by the Agent following an Event of
Default will not require the consent of any Person and will not constitute a breach or default
under any contract or agreement to which Debtor is a party or to which any of the inventory is
subject; (vi) such inventory has not been produced in violation of the Fair Labor Standards Act and
is not subject to the so-called “hot goods” provision contained in Title 29 U.S.C. §215(a)(1);
(vii) such inventory is not on consignment with Debtor and (viii) such inventory is subject to a
first priority perfected security interest in favor of the Agent;




          (i) Debtor will at all times maintain a perpetual inventory system keeping correct and
accurate records itemizing and describing the kind, type, quality and quantity of inventory and of
Eligible Inventory, Debtor’s cost therefor and daily withdrawals therefrom and additions thereto,
all of which records shall be available during Debtor’s usual business hours at the request of the
Agent or any Lender or any of their respective officers, employees or agents. Debtor will
cooperate fully with the Agent and each Lender and their respective officers, employees and agents
who shall have the right during normal business hours and/or at other reasonable time or times to
inspect Debtor’s inventory and the records with respect thereto. Debtor will conduct such physical
counts of all or any portion of its inventory as any Lender may from time to time reasonably
request and will supply Agent and each Lender with a report in a form and with such specificity as
may be reasonably satisfactory to the Required Lenders concerning any physical count of any or all
of the inventory of Debtor (whether such count was requested by the Required Lenders or not); and




          (j) Neither the Agent nor any Lender shall be responsible for: (i) the safekeeping of any of
the inventory; (ii) any loss or damage to any of the inventory; (iii) any diminution in the value
of any of the inventory; or (iv) any act or default of any carrier, warehouseman, bailee,
forwarding agency or any other Person. As between Debtor, on the one hand, and the Agent and the
Lenders, on the other hand, all risk of loss, damage, destruction or diminution in value of the
inventory shall be borne by Debtor.




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Debtor will not sell any inventory to any customer on
consignment or on approval or on any other basis which entitles the customer to return, or which
may obligate Debtor to repurchase, such inventory. From and after the occurrence of any Event of
Default under this Agreement and so long as any such Event of Default is continuing, the Required
Lenders, in their sole and absolute discretion, may require that inventory be stored with a bailee,
warehouseman or similar party and warehouse receipts therefor be issued in the Agent’s name and be
delivered to the Agent. Debtor agrees to do whatever acts are required to effectuate the
foregoing.




     4. Lockbox and Blocked Account. Debtor hereby agrees to establish and maintain
throughout the term of this Agreement a lock box (the “Lock Box”) in Debtor’s name with a bank (the
“Collecting Bank”) which is acceptable to the Required Lenders (subject to irrevocable instructions
acceptable to the Required Lenders as hereinafter set forth) to which all account debtors shall
directly remit all payments on accounts and in which Debtor shall immediately deposit all cash
payments made for inventory and other cash payments constituting proceeds of Collateral in the
identical form in which such payment was made, whether by cash, check or otherwise. In addition,
Debtor hereby agrees to establish and maintain throughout the term of this Agreement a depository
account at the Collecting Bank (the “Blocked Account”). The Collecting Bank shall acknowledge and
agree, in a manner satisfactory to the Required Lenders, that all payments made to the Lock Box and
the Blocked Account are the sole and exclusive property of the Agent and that the Collecting Bank
has no right of setoff against the Lock Box or the Blocked Account and that all such payments,
whether by cash, check, wire transfer or any other instrument, made to such Lock Box or Blocked
Account or otherwise received by Debtor and whether on the accounts or as proceeds of any other
Collateral or otherwise are and will be the sole and exclusive property of the Agent. Debtor shall
irrevocably instruct the Collecting Bank to on a daily basis on each Business Day (a) transfer all
payments or deposits to Debtor’s Lock Box into Debtor’s Blocked Account and (b) transfer all funds
in Debtor’s Blocked Account (by way of debit, ACH debit, wire transfer or other
means, as directed by Agent) to an account of the Agent at First Bank or such other bank as the
Agent may from time to time specify in writing to be applied by the Agent to the payment of the
Secured Obligations in such order and manner as the Required Lenders, in their discretion, shall
elect. Debtor shall have no right to withdraw any funds out of the Lock Box and/or the Blocked
Account. Debtor, and each of its Affiliates, employees, agents and/or other Persons acting for or
in concert with Debtor, shall, acting as trustee for the Agent, receive, as the sole and exclusive
property of the Agent, any monies, checks, notes, drafts and any other payments relating to and/or
proceeds of accounts and/or other Collateral which come into the possession or under the control of
Debtor or any Affiliates, employees, agents or other Persons acting for or in concert with Debtor,
and immediately upon receipt thereof, Debtor or such Persons shall cause the same to be deposited
into Debtor’s Lock Box.



     5. Additional Actions by the Agent. The Agent, at its option, may from time to time
perform any agreement of Debtor hereunder which Debtor shall fail to perform and take any other
action which the Agent in good faith deems necessary for the maintenance or preservation of any of
the Collateral or its interest therein (including, without limitation, the discharge of taxes or
Liens of any kind against the Collateral or the procurement of insurance or the payment of
warehousing charges, landlord’s bills or other charges), and Debtor agrees to forthwith reimburse
the Agent for all costs and expenses incurred by the Agent in connection with the foregoing,
together with interest thereon at a rate per annum equal to the lesser of (a) Four and One-Fourth
Percent (4.25%) over and above the Prime Rate (fluctuating as and when the Prime Rate changes) and
(b) the highest rate of interest allowed by applicable law, from the date incurred until reimbursed
by Debtor. The Agent may for the foregoing purposes act in its own name or that of Debtor and may
also so act for the purposes of adjusting, settling or cancelling any policy of insurance on the
Collateral or endorsing any draft received in connection therewith, in payment of a loss or
otherwise, for all of which purposes Debtor hereby grants to the Agent its power of attorney,
irrevocable during the term of this Agreement.



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     6. Defaults. The occurrence of any of the following events or conditions shall
constitute an “Event of Default” under this Agreement: (a) Debtor shall fail to pay any of the
Secured Obligations as and when the same shall become due and payable, whether by reason of demand,
maturity, acceleration or otherwise; (b) Debtor shall fail to perform or observe any of the terms,
provisions, covenants or agreements contained in Sections 2(a), 2(g), 2(h), 2(i), 2(j), 2(k), 2(n),
2(o), 2(q), 3(a), 3(d), 3(e), 3(i) or 4 of this Agreement; (c) Debtor shall fail to perform or
observe of any of the other terms, provisions, covenants or agreements contained in this Agreement
and any such failure shall remain unremedied for five (5) days after the earlier of (i) written
notice of default is given to Debtor by the Agent or any Lender or (ii) any officer of Debtor
obtains knowledge of such default; (d) any representation or warranty made by Debtor in this
Agreement shall prove to be untrue or incorrect in any material respect; (e) any “Event of Default”
(as defined therein) shall occur under or within the meaning of the Loan Agreement; or (f) any
default or event of default shall occur under or within the meaning of any other agreement,
document or instrument heretofore, now or hereafter executed by Debtor with or in favor of the
Agent which is not cured or waived within any applicable cure or grace period (if any).



     7. Remedies. Upon the occurrence and during the continuation of any Event of Default
under this Agreement: (a) whether or not any or all of the Secured Obligations are declared to be
forthwith due and payable, the Agent shall have the right to take immediate possession of the
Collateral covered hereby, and, for that purpose may pursue the same wherever said Collateral may
be found, and may enter upon any of the premises of Debtor with or without process of law and
without breach of the peace, wherever said Collateral may be or may be supposed to be, and search
for the same, and, if found, take possession of and remove and sell and dispose of said Collateral,
or any part thereof; (b) the Agent shall have the right to notify any account debtor with respect
to any account to make all payments under the accounts directly to the Agent and demand, collect,
receipt for, settle, compromise, adjust, sue for, foreclose and realize on the accounts and all
amounts due under the accounts as the Agent may determine; (c) the Agent shall have the right to
exercise such of the other rights and remedies accruing to a secured
party under the Uniform Commercial Code of the relevant jurisdiction or jurisdictions and any other
applicable law upon default by a debtor as the Agent may elect; (d) the Agent shall have the right
to enter, with or without process of law and without breach of the peace, any premises where the
books and records of Debtor pertaining to the accounts or any of the other Collateral are or may be
located, and without charge or liability on the part of the Agent therefor seize and remove said
books and records from said premises or remain upon said premises and use the same for the purpose
of collecting, preparing and disposing of the Collateral and/or for the purpose of identifying and
locating any of the Collateral; and (e) the Required Lenders shall have the right to appoint,
remove and reappoint any Person or Persons, including, without limitation, any employee or agent of
the Agent or any Lender to be a receiver (each, a “Receiver”), which term shall include a receiver
and manager of, or agent for, all or any part of the Collateral. Any such Receiver shall, as far
as concerns responsibility for its acts, be deemed to be the agent of Debtor and not of the Agent
or any Lender, and neither the Agent nor any Lender shall in any way be responsible for any
misconduct, negligence or non-feasance of any such Receiver, its employees or agents. Except as
otherwise directed by all of the Lenders, all monies received by any Receiver shall be received in
trust for and paid to the Agent for the ratable benefit of the Lenders. Debtor shall pay all
costs, charges and expenses incurred by the Agent or any Receiver, whether directly or for services
rendered (including, without limitation, reasonable attorneys’ fees and expenses, auditor’s costs,
other legal expenses and Receiver remuneration) in enforcing this Agreement, realizing on all or
any part of the Collateral and/or in enforcing or collecting the Secured Obligations, and all such
expenses shall be part of the Secured Obligations and be payable on the demand of the Agent. Debtor
shall, upon the Agent’s request, assemble the Collateral and make the Collateral available to the
Agent at any place designated by the Agent which is reasonably convenient to Debtor.



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     8. Standards for Exercising Remedies. To the extent that applicable law imposes duties
on the Agent to exercise remedies in a commercially reasonable manner, Debtor acknowledges and
agrees that it is not commercially unreasonable for the Agent (a) to fail to incur expenses
reasonably deemed significant by the Agent to prepare Collateral for disposition or otherwise to
complete raw material or work in process into finished goods or other finished products for
disposition, (b) to fail to obtain third party consents for access to Collateral to be disposed of,
or to obtain or, if not required by other law, to fail to obtain governmental, regulatory or third
party consents for the collection or disposition of Collateral to be collected or disposed of, (c)
to fail to exercise collection remedies against account debtors or other Persons obligated on
Collateral or to remove Liens or encumbrances on or any adverse claims against Collateral, (d) to
exercise collection remedies against account debtors and other Persons obligated on Collateral
directly or through the use of collection agencies and other collection specialists, (e) to
advertise dispositions of Collateral through publications or media of general circulation, whether
or not the Collateral is of a specialized nature, (f) to contact other Persons, whether or not in
the same business as Debtor, for expressions of interest in acquiring all or any portion of the
Collateral, (g) to hire one or more professional auctioneers to assist in the disposition of
Collateral, whether or not the collateral is of a specialized nature, (h) to dispose of Collateral
by utilizing Internet sites that provide for the auction of assets of the types included in the
Collateral or that have the reasonable capability of doing so, or that match buyers and sellers of
assets, (i) to dispose of assets in wholesale rather than retail markets, (j) to disclaim
disposition warranties, (k) to purchase insurance or credit enhancements to insure the Agent
against risks of loss, collection or disposition of Collateral or to provide to the Agent a
guaranteed return from the collection or disposition of Collateral or (l) to the extent deemed
appropriate by the Agent, to obtain the services of other brokers, investment bankers, consultants
and other professionals to assist the Agent in the collection or disposition of any of the
Collateral. Debtor acknowledges that the purpose of this Section 8 is to provide non-exhaustive
indications of what actions or omissions by the Agent would not be commercially unreasonable in the
Agent’s exercise of remedies against the Collateral and that other actions or omissions by the
Agent shall not be deemed commercially unreasonable solely on account of not being indicated in
this Section 8. Without limitation upon the foregoing, nothing contained in this Section 8 shall
be construed to grant any rights to Debtor or to impose any duties on the
Agent that would not have been granted or imposed by this Agreement or by applicable law in the
absence of this Section 8.



     9. Foreclosure. Foreclosure on the Collateral covered hereby may be had at public or
private sale or sales, disposing of such portion or portions of the Collateral at each such sale,
for cash or on credit, on such terms, at such place or places, and with or without the Collateral
being present at such sale, all as the Agent in its sole and absolute discretion shall determine
from time to time. In the case of public sale, notice thereof shall be deemed and held to be
adequate and reasonable if such notice shall appear three (3) times in a newspaper published in the
City or County wherein the sale is to be held, the first such publication being at least ten (10)
days before such sale and the last such publication being not more than three (3) days before such
sale. In the case of a private sale, notice thereof shall be deemed and held to be adequate and
reasonable if such notice shall be mailed to Debtor at its last known address at least ten (10)
days before such sale. The enumeration of these methods of notice shall not be deemed or construed
to render unreasonable any other method of notice which would otherwise be reasonable under the
circumstances. Debtor agrees that the Agent may, in connection with any such sale, specifically
disclaim any warranties of title or the like with respect to all or any portion of the Collateral
being sold.



     10. Application of Proceeds and Deficiency. The Agent may apply the net proceeds of
any sale, lease, license or other disposition of any of the Collateral or of any other collection
of any of the Collateral or any proceeds of any of the Collateral, after deducting all costs and
expenses of every kind incurred therein or incidental to the retaking, holding, preparing for sale,
selling, leasing, licensing or the like of the Collateral on Debtor’s premises, or elsewhere, or in
any way related to the Agent’s rights under



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this Agreement (including, without limitation,
reasonable attorneys’ fees and expenses, court costs, bonds and other legal expenses, insurance,
security guard and alarm expenses incurred in connection with the holding of the Collateral,
advertisements of sale of the Collateral, and rental and utilities expense on the premises or
elsewhere in connection with storage and sale of the Collateral) to the payment, in whole or in
part, of the Secured Obligations, whether due or not due, absolute or contingent, and only after
payment by the Agent of any other amounts required by any existing or future provision of law
(including Section 9-615 of the Uniform Commercial Code or any comparable statutory provision of
any jurisdiction where Debtor or any of the Collateral may at the time be located) need the Agent
account to Debtor for the surplus, if any. If the Agent sells any of the Collateral on credit,
unless otherwise agreed by the Required Lenders in writing, the Secured Obligations will be
credited only with payments actually received by the Agent from the purchaser with respect to such
credit obligation; and in the event the purchaser fails to pay for the Collateral, the Agent may
resell the Collateral and the Secured Obligations will be credited with the proceeds received from
such resale. The proceeds of any sale(s), lease(s), license(s) or other disposition(s) of any of
the Collateral and/or of any collection(s) of any of the Collateral shall be applied by the Agent
in the following order: (a) first, to the payment of all costs, expenses, liabilities and advances
made or incurred by the Agent and/or any Lender in connection with the collection and enforcement
of the Secured Obligations and the sale or other realization upon the Collateral; provided,
however, that nothing herein is intended to relieve Debtor of its obligation to pay such costs,
expenses, liabilities and advances; (b) second, to the payment of the Secured Obligations in such
order and manner as the Required Lenders, in their discretion, shall elect; and (c) third, to the
payment of any surplus remaining after the payment of the amounts mentioned, to Debtor or to
whomsoever may be lawfully entitled thereto. Debtor shall remain liable to the Agent and the
Lenders for the payment of any deficiency, with interest.




     11. The Agent’s Obligations and Duties. Notwithstanding any provision contained in
this Agreement to the contrary, Debtor shall remain liable under each contract or agreement
comprised in the Collateral to be observed or performed by Debtor thereunder. The Agent shall not
have any obligation or liability under any such contract or agreement by reason of or arising out
of this Agreement or the receipt by the Agent of any payment relating to any of the Collateral, nor
shall the Agent be obligated in any manner to perform any of the obligations of Debtor under or
pursuant to any such contract or agreement,
to make inquiry as to the nature or sufficiency of any payment received by the Agent in respect of
the Collateral or as to the sufficiency of any performance by any party under any such contract or
agreement, to present or file any claim, to take any action to enforce any performance or to
collect the payment of any amounts which may have been assigned to the Agent or to which the Agent
may be entitled at any time or times. The Agent’s sole duty with respect to the custody, safe
keeping and physical preservation of the Collateral in its possession, under Section 9-207 of the
Missouri UCC, shall be to deal with such Collateral in the same manner as the Agent deals with
similar property for its own account. Debtor hereby acknowledges and agrees that the Agent shall
have no duty as to the collection or protection of the Collateral or any income thereon, nor as to
the preservation of rights against prior parties, nor as to the preservation of any rights
pertaining thereto.



     12. Amendments; Waivers; Remedies Cumulative. No delay on the part of the Agent
and/or any Lender in the exercise of any right or remedy under this Agreement shall operate as a
waiver thereof and no single or partial exercise by the Agent and/or any Lender of any right or
remedy shall preclude other or further exercise thereof or the exercise of any other right or
remedy. Each and every right and remedy granted to the Agent and/or any Lender under this
Agreement, under the Loan Agreement and under the other Transaction Documents, or at law or in
equity, shall be deemed cumulative and may be exercised from time to time. Neither the Agent nor
any Lender shall by any act, delay, omission or otherwise be deemed to have waived any of its
rights or remedies under this Agreement and no waiver whatsoever shall be valid unless in writing
and signed by the Agent or the applicable Lender, as the case



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may be, and then only to the extent
therein set forth. A waiver by the Agent and/or any Lender of any right or remedy under this
Agreement on any one occasion shall not be construed as a bar to any right or remedy which the
Agent and/or any Lender would otherwise have on any future occasion. This Agreement may not be
amended except by a writing duly signed by Debtor and the Agent and consented to by the Required
Lenders. The headings of the paragraphs hereof shall not be considered in the construction or
interpretation of this Agreement.



     13. Irrevocable Power of Attorney. Debtor hereby irrevocably makes, constitutes and
appoints the Agent (and all Persons designated by the Agent) as the true and lawful agent and
attorney-in-fact of Debtor with full power of substitution to: (a) if any Event of Default under
this Agreement has occurred and is continuing, (i) demand payment of accounts, (ii) enforce payment
of accounts by legal proceedings or otherwise, (iii) exercise all of Debtor’s rights and remedies
with respect to proceedings brought to collect accounts, (iv) sell or assign accounts upon such
terms, for such amounts and at such time or times as the Agent deems advisable, (v) settle, adjust,
compromise, extend or renew accounts, (vi) discharge and release accounts, (vii) prepare, file and
sign Debtor’s name on any proof of claim in bankruptcy or other similar document against an account
debtor, (viii) notify the postal authorities of any change of the address for delivery of Debtor’s
mail to an address designated by the Agent, and open all mail addressed to Debtor for the purpose
of collecting accounts and the proceeds of any other Collateral (with all other mail to be promptly
returned to Debtor), and (ix) do all acts and things which are necessary, in the Agent’s good faith
discretion, to fulfill the Debtor’s obligations under this Agreement; and (b) at any time, (i) take
control in any manner of any item of payment or proceeds of any account or any other Collateral,
(ii) have access to any lockbox or postal box into which Debtor’s mail is deposited, (iii) endorse
Debtor’s name upon any items of payment or proceeds thereof and deposit the same in the Agent’s
account on account of the Secured Obligations, (iv) endorse Debtor’s name upon any chattel paper,
document, instrument, invoice or similar document or agreement relating to any account or any goods
pertaining thereto, (v) execute in Debtor’s name and on Debtor’s behalf any financing statements
and/or continuations thereof and/or amendments thereto under the Uniform Commercial Code or other
applicable law in any jurisdiction where Debtor or any of the Collateral may be located, (vi)
endorse Debtor’s name on any verification of accounts and notices thereof to account debtors and
(vii) do any and all things necessary and take such actions in the name and on behalf of Debtor to
carry out the intent of this Agreement, including, without limitation, the grant of the security
interest granted under this Agreement and to perfect and protect the security interest granted to
the Agent in respect to the Collateral
and the Agent’s rights created under this Agreement. Debtor agrees that neither the Agent nor any
of its agents, designees or attorneys-in-fact will be liable for any acts of commission or omission
(other than for acts of commission or omission which constitute gross negligence or willful
misconduct as determined by a court of competent jurisdiction in a final, nonappealable order), or
for any error of judgment or mistake of fact or law in respect to the exercise of the power of
attorney granted under this Section. The power of attorney granted under this Section shall be
irrevocable during the term of this Agreement.



     14. Marshalling. Neither the Agent nor any Lender shall be required to marshal any
present or future collateral security (including, without limitation, this Agreement and the
Collateral) for, or other assurances of payment of, any or all of the Secured Obligations or to
resort to such collateral security or other assurances of payment in any particular order, and all
of their respective rights and remedies under this Agreement and in respect of such collateral
security and other assurances of payment shall be cumulative and in addition to all other rights
and remedies, however existing or arising. To the extent not prohibited by applicable law, Debtor
hereby agrees that it will not invoke any law relating to the marshalling of collateral which might
cause delay in or impede the enforcement of any of the rights and/or remedies of the Agent and/or
any Lender under this Agreement or under any other agreement, document or instrument creating or
evidencing any of the Secured Obligations or under which any of the Secured Obligations is
outstanding or by which any of the Secured Obligations is secured or payment



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thereof is otherwise
assured, and, to the extent not prohibited by applicable law, Debtor hereby irrevocably waives the
benefits of all such laws.



     15. Notices. Except as otherwise specified in this Agreement, any notice, request,
demand, consent or other communication under this Agreement shall be in writing and delivered in
person or sent by facsimile, recognized overnight courier or registered or certified mail, return
receipt requested and postage prepaid, if to Debtor to the address or facsimile number of Debtor
listed on the signature page(s) of this Agreement, or if to Agent or any Lender, in care of the
Agent at 135 North Meramec, St. Louis, Missouri 63105, Attention: Traci Dodson, Telecopy No. (314)
854-5454, or at such other address or facsimile number as either party may from time to time
designate as its address or facsimile number for communications under this Agreement by notice so
given. Such notices shall be deemed effective on the day on which delivered or sent if delivered
in person or sent by facsimile (with answerback confirmation received), on the first (1st) Business
Day after the day on which sent, if sent by recognized overnight courier or on the third (3rd)
Business Day after the day on which mailed, if sent by registered or certified mail.



     16. Applicable Law and Severability. It is the intention of the parties hereto that
this Agreement is entered into pursuant to the provisions of the Missouri UCC. Any applicable
provisions of the Missouri UCC, not specifically included herein, shall be deemed a part of this
Agreement in the same manner as if set forth herein at length; and any provisions of this Agreement
that might in any manner be in conflict with any provision of the Missouri UCC shall be deemed to
be modified so as not to be inconsistent with the Missouri UCC. In all respects this Agreement and
all transactions hereunder, and all the rights of the parties, shall be governed as to validity,
construction, enforcement and in all other respects by the substantive laws of the State of
Missouri (without reference to conflict of law principles); provided, however, that the perfection,
the effect of the perfection or non-perfection and the priority of the security interests and liens
created by this Agreement shall in all respects be governed, construed, applied and enforced in
accordance with the substantive laws of the applicable jurisdiction. To the extent any provision
of this Agreement is not enforceable under applicable law, such provision shall be deemed null and
void and shall have no effect on the remaining portions of this Agreement.



     17. Successors and Assigns; Other Secured Obligations; Duration of Security Interest.
This Agreement shall be binding upon Debtor and its successors and shall inure to the benefit of
the Agent, the Lenders and their respective successors and assigns. Debtor may not assign any of
its rights or delegate any of its obligations under this Agreement. This Agreement shall continue
in full force and effect and
the security interest and lien granted by this Agreement and all of the representations,
warranties, covenants and agreements of Debtor under this Agreement and all of the terms,
conditions and provisions of this Agreement relating thereto shall continue to be fully operative
until such time as (a) all of the Secured Obligations shall have been fully, finally and
indefeasibly paid in cash, (b) there shall be no remaining commitment or obligation of the Agent
and/or any Lender to advance funds, make loans or extend credit to, and/or issue letters of credit
for the account of, any Obligor under the Loan Agreement, any other Transaction Document or
otherwise, (c) no Letters of Credit shall remain outstanding and (d) the Loan Agreement shall have
expired or been terminated in accordance with its terms. If claim is ever made on the Agent and/or
any Lender for repayment or recovery of any amount or amounts received by the Agent and/or any
Lender in payment or on account of any of the Secured Obligations (including payment under a
guaranty or from application of collateral) and the Agent and/or any Lender repays all or part of
said amount by reason of (a) any judgment, decree or order of any court or administrative body
having jurisdiction over the Agent and/or any Lender or any Property of the Agent and/or any Lender
or (b) any settlement or compromise of any such claim effected by the Agent and/or any Lender with
any such claimant (including, without limitation, Debtor), then and in each such event Debtor
agrees that any such judgment, decree, order, settlement or compromise shall be binding on Debtor,
notwithstanding any



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cancellation of any note or other instrument or agreement evidencing such
Secured Obligations or of this Agreement, and this Agreement shall continue to be effective or be
reinstated, as the case may be, and shall secure the payment of the amount so repaid or recovered
to the same extent as if such amount had never originally been received by the Agent and/or any
Lender. This Agreement shall continue to be effective or be reinstated, as the case may be, if (a)
at any time any payment of any of the Secured Obligations is rescinded or must otherwise be
returned by the Agent and/or any Lender upon the insolvency, bankruptcy or reorganization of Debtor
or otherwise, all as though such payment had not been made or (b) this Agreement is released in
consideration of a payment of money or transfer of Property or assets or grant of a Lien by Debtor
or any other Person and such payment, transfer or grant is rescinded or must otherwise be returned
by the Agent and/or any Lender upon the insolvency, bankruptcy or reorganization of such Person or
otherwise, all as though such payment, transfer or grant had not been made.



     18. Consent to Jurisdiction; Waiver of Jury Trial. DEBTOR HEREBY IRREVOCABLY (A)
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY MISSOURI STATE COURT SITTING IN THE COUNTY OF ST.
LOUIS, MISSOURI OR ANY UNITED STATES OF AMERICA COURT SITTING IN THE EASTERN DISTRICT OF MISSOURI,
EASTERN DIVISION, AS AGENT MAY ELECT, IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT, (B) AGREES THAT ALL CLAIMS IN RESPECT TO SUCH SUIT, ACTION OR PROCEEDING MAY BE
HELD AND DETERMINED IN ANY OF SUCH COURTS, (C) WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH DEBTOR MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT, (D) WAIVES ANY CLAIM THAT SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND (E) WAIVES ALL RIGHTS OF
ANY OTHER JURISDICTION WHICH DEBTOR MAY NOW OR HEREAFTER HAVE BY REASON OF ITS PRESENT OR
SUBSEQUENT DOMICILES. DEBTOR AUTHORIZES THE SERVICE OF PROCESS UPON DEBTOR BY REGISTERED MAIL SENT
TO DEBTOR AT ITS ADDRESS REFERENCED IN SECTION 15. DEBTOR AND THE AGENT IRREVOCABLY WAIVE THE
RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY ACTION IN WHICH DEBTOR AND THE AGENT ARE PARTIES
RELATING TO OR ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT.



     19. UCC Defined Terms. All terms defined in the Missouri UCC and used in this
Agreement shall have the same definitions herein as specified therein. However, if a term is
defined in Article 9 of
the Missouri UCC differently than in another Article of the Missouri UCC, then the term shall have
the meaning specified in Article 9 of the Missouri UCC.



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     IN WITNESS WHEREOF, Debtor has executed this Security Agreement as of the 29th day of June,
2006.


IN THE EVENT ANY OF THE SECURED OBLIGATIONS ARE PAYABLE ON DEMAND, NEITHER THIS AGREEMENT NOR
ANYTHING CONTAINED HEREIN SHALL BE DEEMED TO ALTER OR IMPINGE UPON THE DEMAND CHARACTER OF SUCH
OBLIGATION.




	 	 	 	 	 
	 	 	VIRBAC AH, INC. (Debtor)
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Jean M. Nelson
	 

	 	 	 	 
	 

	 	 	 	Jean M. Nelson, Executive Vice
President and

Chief Financial Officer
	 
	 	 	 	 
	 	 	Address and Facsimile Number of
	 	 	Chief Executive Office of Debtor:
	 
	 	 	 	 
	 	 	3200 Meacham Boulevard
	 	 	Fort Worth, Texas 76137
	 	 	Attention: Jean M. Nelson, Chief Financial Officer
	 
	 	 	 	 
	 	 	Facsimile Number: (817) 831-8362






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EXHIBIT A




Additional Locations of Places of Business of Debtor

and/or Additional Locations of Collateral




None.




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EXHIBIT B




UCC Filing Office(s)




Delaware Secretary of State




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SECURITY AGREEMENT




     THIS SECURITY AGREEMENT (this “Agreement”) is made as of the 29th day of June, 2006, by
DELMARVA LABORATORIES, INC., a Virginia corporation (“Debtor”), in favor of FIRST BANK, as agent
(in such capacity, the “Agent”) for the Lenders from time to time party to that certain Loan
Agreement dated as of the date hereof by and among Virbac Corporation, a Delaware corporation, PM
Resources, Inc., a Missouri corporation, St. JON Laboratories, Inc., a California corporation,
Virbac AH, Inc., a Delaware corporation, Francodex Laboratories, Inc., a Kansas corporation, the
Debtor, the Lenders from time to time party thereto and First Bank, as agent for the Lenders, as
the same may from time to time be amended, modified, extended, renewed or restated (the “Loan
Agreement”; all capitalized terms used and not otherwise defined in this Agreement shall have the
respective meanings ascribed to them in the Loan Agreement).



WITNESSETH:




     WHEREAS, as a condition precedent to the Agent and the Lenders entering into the Loan
Agreement, the Agent and the Lenders have required that Debtor execute and deliver this Agreement
to the Agent for the ratable benefit of the Lenders; and



     WHEREAS, in order to induce the Agent and the Lenders to enter into the Loan Agreement, Debtor
has agreed to execute and deliver this Agreement to the Agent for the ratable benefit of the
Lenders;



     NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, Debtor hereby
covenants and agrees with the Agent as follows:



     1. Grant of Security Interest. For value received, Debtor hereby grants to the Agent
for the ratable benefit of the Lenders a security interest in and lien on all personal property and
fixtures of Debtor, wherever located and whether now or hereafter existing or now owned or
hereafter created, acquired or arising (collectively, the “Collateral”), including, without
limitation:



          (a) all accounts, accounts receivable, payment intangibles, lease payments, rental payments,
license payments, lease rights, contract rights and other rights to the payment of money, and all
goods whose sale, lease, rental, license or other disposition by Debtor have given rise to accounts
and have been returned to or repossessed or stopped in transit by Debtor;




          (b) all inventory of Debtor, wherever located, including, without limitation, (i) all
inventory under lease, in transit, held by others for Debtor’s account, covered by warehouse
receipts, purchase orders and/or contracts, or in the possession of any lessees, renters, carriers,
forwarding agents, truckers, warehousemen, vendors or other persons or entities and (ii) all
inventory consisting of raw materials, work in process, finished goods, supplies, goods,
incidentals, office supplies and/or packaging and shipping materials;




          (c) all documents, including, without limitation, all warehouse receipts, bills of lading and
similar documents of title relating to goods in which Debtor at any time has an interest, whether
now or at any time or times hereafter issued to Debtor or the Agent by any person or entity, and
whether covering any portion of Debtor’s inventory or otherwise;




- 335 -








 








          (d) all instruments (including, without limitation, promissory notes) of any kind or nature
whatsoever, whether negotiable or non-negotiable;




          (e) all chattel paper of any kind or nature whatsoever, including, without limitation, all
leases, rental agreements, installment sale agreements, conditional sale agreements and other
chattel paper relating to or arising out of the sale, rental, lease or other disposition of any of
the Collateral;




          (f) all general intangibles of any kind or nature whatsoever, including, without limitation,
all payment intangibles, all patents, trademarks, copyrights and other intellectual property, and
all applications for, registrations of and licenses of the foregoing and all computer software,
product specifications, trade secrets, licenses, trade names, service marks, goodwill, tax refunds,
rights to tax refunds, franchises, rights related to prepaid expenses, rights under executory
contracts, choses in action, causes of action and rights under partnership, joint venture,
co-ownership, management and/or similar agreements and/or arrangements;




          (g) all goods, machinery, equipment, motor vehicles, trucks, tractors, trailers, appliances,
furniture, furnishings, tools, dies, jigs and other tangible personal property and all accessories
and parts relating thereto;




          (h) all fixtures;




          (i) all monies, reserves, deposits, cash, cash equivalents and other property now or at any
time or times hereafter in the possession or under the control of the Agent or any Lender or any
bailee of the Agent or any Lender;




          (j) all deposit accounts and certificates of deposit and all interest or dividends thereon;




          (k) all investment property and financial assets of any kind or type, whether certificated or
uncertificated, including, without limitation, all securities, securities accounts, securities
entitlements, stocks, bonds, options, warrants, commodity contracts, futures contracts, commodity
accounts, commodity options, commercial paper, money market funds and/or accounts, Treasury bills,
notes and bonds, instruments, certificates of deposit, mutual fund shares, cash and money, together
with all rights, income, revenues, proceeds and profits therefrom, including, without limitation,
all dividends, distributions (cash or stock, extraordinary as well as ordinary), interest and other
payments, all additions thereto, substitutions or replacements thereof, any goods or other property
to be delivered thereunder, and any exchanges for or changes in any of the foregoing;




          (l) all commercial tort claims;




          (m) all supporting obligations;




          (n) all letter of credit rights;




          (o) all books, records, computer records, computer disks, ledger cards, programs and other
computer materials, customer and supplier lists, invoices, orders and other property and general
intangibles at any time evidencing or relating to any of the Collateral;




          (p) all accessions to any of the property described above and all substitutions, renewals,
improvements and replacements of and additions thereto; and




- 336 -









 








          (q) all proceeds, including, without limitation, proceeds which constitute property of the
types described in (a), (b), (c), (d), (e), (f), (g), (h), (i), (j), (k), (l), (m), (n), (o) and/or
(p) above and any rents and profits of any of the foregoing items, whether cash or noncash,
immediate or remote, including, without limitation, all income, accounts, contract rights, general
intangibles, payment
intangibles, chattel paper, notes, drafts, acceptances, instruments and other rights to the payment
of money arising out of the sale, rental, lease, license, exchange or other disposition of any of
the foregoing items (provided, however, that nothing contained herein shall be deemed to permit or
assent to any such disposition other than (i) the sale of inventory by Debtor in the ordinary
course of its business (which does not include any sale or other transfer of inventory in partial
or total satisfaction of any Indebtedness) and (ii) other sales and other dispositions expressly
permitted by the Loan Agreement), and insurance proceeds, and all products, of (a), (b), (c), (d),
(e), (f), (g), (h), (i), (j), (k), (l), (m), (n), (o) and/or (p) above, and any indemnities,
warranties and guaranties payable by reason of loss or damage to or otherwise with respect to any
of the foregoing items;



to secure the payment of (i) any and all of the present and future Borrowers’ Obligations, (ii) any
and all present and future indebtedness (principal, interest, fees, collection costs and expenses
and other amounts), liabilities and obligations (including, without limitation, guaranty
obligations, letter of credit reimbursement obligations and indemnity obligations) of Debtor to the
Agent and/or any Lender evidenced by or arising under or in respect of the Loan Agreement, this
Agreement and/or any other Transaction Document, and (iii) any and all costs of collection,
including, without limitation, reasonable attorneys’ fees and expenses, incurred by the Agent
and/or any Lender upon the occurrence of an Event of Default under this Agreement, in collecting or
enforcing payment of any such indebtedness, liabilities or obligations or in preserving, protecting
or realizing on the Collateral under this Agreement or in representing the Agent and/or any Lender
in connection with any bankruptcy or insolvency proceedings (hereinafter collectively referred to
as the “Secured Obligations”).




     2. Representations and Covenants of Debtor. Debtor hereby represents and warrants to
the Agent and each Lender, and covenants and agrees with the Agent and each Lender, that:



          (a) Debtor is a corporation duly organized, validly existing and in good standing under the
laws of the State of Virginia. Debtor’s exact legal name is “Delmarva Laboratories, Inc.” Debtor
has not during the past five (5) years conducted business under any name other than the name
“Delmarva Laboratories, Inc.” Debtor does not now and will not at any time during the term of this
Agreement conduct business under any name other than the name “Delmarva Laboratories, Inc.”
Debtor’s organizational identification number in the State of Virginia is #0353275-1. Debtor will
not change its name, its type of organization, its jurisdiction of organization or its
organizational identification number unless (i) Debtor gives the Agent and Lenders at least thirty
(30) days prior written notice of the same, (ii) if such change is with respect to Debtor’s
jurisdiction of organization, such new jurisdiction of organization is one of the states of the
United States of America, (iii) such change is permitted pursuant to the terms of the Loan
Agreement and the other Transaction Documents, and (iv) prior to making any such change, Debtor
executes (if necessary) and/or obtains and delivers to the Agent and Lenders any and all additional
financing statements and/or amendments thereto and/or other agreements, documents or notices as may
be required by the Agent and/or any Lender;




          (b) Debtor has full corporate right, power and authority to execute, deliver and perform its
obligations under this Agreement and to grant to the Agent for the ratable benefit of the Lenders
the security interest in and lien on the Collateral hereby stated to be granted;




- 337 -









 










          (c) the officer of Debtor executing this Agreement has been duly elected and qualified and has
been duly authorized and empowered to execute, deliver and perform the terms of this Agreement on
behalf of Debtor;




          (d) the execution, delivery and performance of this Agreement by Debtor do not and will not
violate any of the terms or provisions of the Articles of Incorporation or Bylaws of Debtor;




          (e) the execution, delivery and performance of this Agreement by Debtor do not and will not
violate any law, rule, regulation, order, writ, judgment, injunction, decree, determination or
award presently in effect having applicability to Debtor or the terms of any indenture, agreement,
document, instrument or undertaking to which Debtor is a party or by which it or any of its
Property is bound;




          (f) Debtor’s chief executive office and the location of the only office where it keeps its
books and records respecting the Collateral is that given on the signature page(s) of this
Agreement and all other places of business of Debtor and locations of any of the Collateral are
listed on Exhibit A attached hereto and incorporated herein by reference;




          (g) except to the extent permitted by Section 2(h) below, unless otherwise consented to in
writing by Agent, all of the Collateral (A) is and will be kept solely at Debtor’s chief executive
office or at one of the other locations listed on Exhibit A attached hereto and
incorporated herein by reference (if mobile equipment or equipment of a type normally used in more
than one location, remaining there when not in use), (B) will not be attached or affixed in any
manner to or become a part of any real estate or other personal property apart from other items of
the Collateral and (C) is in the exclusive possession and control of Debtor;




          (h) Debtor will not (i) change the location of its chief executive office, (ii) change the
location of any of its other places of business, (iii) change the location of any of the Collateral
from Debtor’s chief executive office or one of the other locations listed on Exhibit A
attached hereto and incorporated herein by reference or (iv) establish any additional places of
business or additional locations at which any of the Collateral is stored, kept or processed,
unless (A) such office or Collateral location is located within the continental United States of
America, (B) Debtor gives the Agent and Lenders thirty (30) days prior written notice of the same,
and (C) prior to making any such change or establishing any such new location, Debtor executes (if
necessary) and/or obtains and delivers to the Agent and Lenders any and all additional financing
statements and/or amendments thereto, mortgagee waivers and acknowledgments, bailee waivers and
acknowledgments, landlord waivers and acknowledgments, warehousemen waivers and acknowledgments and
other agreements, documents or notices as may be reasonably required by the Agent or any Lender;




          (i) Debtor is, or, as to Collateral acquired after the date hereof, will be, the sole and
absolute owner of all of the Collateral, free and clear of any and all Liens and claims of any kind
or nature whatsoever other than Permitted Liens, and Debtor will defend the Collateral against all
claims and demands of all Persons at any time claiming the same or any interest therein;




          (j) no financing statement (other than any filed with respect to Permitted Liens) covering any
of the Collateral is or will be on file in any public office at any time during the term of this
Agreement;




          (k) Debtor will not, without the prior written consent of the Required Lenders, sell,
transfer, lease, license or otherwise dispose of or offer to dispose of any of the Collateral or
any interest therein (other than (i) sales of inventory by Debtor in the ordinary course of its
business (which does not




- 338 -









 







include any sale or other transfer of inventory in partial or total
satisfaction of any Indebtedness) and (ii) other sales and other dispositions expressly permitted
by the Loan Agreement (which other sales and other dispositions shall be made expressly subject to
the security interest and lien in favor of the Agent created by this Agreement unless otherwise
agreed to in writing by the Required Lenders));




          (l) Debtor will at all times keep all of the Collateral consisting of inventory, goods,
machinery, equipment and/or other tangible personal property used or useful in the conduct of its
business in good condition, working order and repair (ordinary wear and tear excepted), excepting
any loss, damage or destruction which is fully covered by proceeds of insurance, and will not use
any of the
Collateral or permit any of the Collateral to be used in violation of any law, rule, regulation,
ordinance or insurance policy;




          (m) Debtor will pay promptly when due all taxes and assessments on the Collateral or for its
use or operation or upon this Agreement or any of the Secured Obligations or with respect to the
perfection of any security interest or lien under this Agreement; provided, however, that Debtor
shall not be required to pay any such tax or assessment the payment of which is being contested in
good faith and by appropriate proceedings being diligently conducted and for which adequate
reserves in accordance with GAAP have been provided, except that Debtor shall pay or cause to be
paid all such taxes and assessments forthwith upon the commencement of proceedings to foreclose any
Lien which is attached as security therefor, unless such foreclosure is stayed by the filing of an
appropriate bond in a manner reasonably satisfactory to the Required Lenders;




          (n) Debtor will at all times keep all of the Collateral of an insurable nature insured against
loss, damage, theft and other risks, in such amounts, with such companies and under policies in
such form, all as shall be reasonably satisfactory to the Required Lenders. All insurance required
by this Section 2(n) shall be with insurers rated A-XI or better by A.M. Best Company (or accorded
a similar rating by another nationally or internationally recognized insurance rating agency of
similar standing if A.M. Best Company is not then in the business of rating insurers or rating
foreign insurers) or such other insurers as may from time to time be reasonably acceptable to the
Required Lenders. Such policies of insurance shall contain an endorsement reasonably acceptable to
the Agent naming the Agent as loss payee as its interests may appear. Such endorsement, or an
independent instrument furnished to the Agent, shall provide that the insurance companies will give
the Agent at least thirty (30) days written notice before any such policy or policies of insurance
shall be amended or cancelled and that no act or default of Debtor or any other Person shall affect
the right of the Agent to recover under such policy or policies of insurance in the event of any
loss of or damage to any of the Collateral. Debtor hereby directs all insurers under such policies
of insurance to pay all proceeds payable thereunder directly to the Agent as its interests may
appear and Debtor hereby agrees to promptly forward to the Agent all such insurance proceeds
received directly by Debtor. All insurance proceeds received by the Agent on account of any loss of
or damage to any of the Collateral, after deducting therefrom the reasonable charges and expenses
paid or incurred in connection with the collection and disbursement of said proceeds, shall, unless
otherwise agreed to in writing by the Required Lenders, be applied to the payment or prepayment of
the Secured Obligations in such order and manner as the Required Lenders, in their discretion,
shall elect. Debtor hereby irrevocably makes, constitutes and appoints the Agent (and all officers,
employees or agents designated by the Agent) as Debtor’s true and lawful attorney (and
agent-in-fact) to, if Debtor fails to do upon the demand of the Agent or if any Event of Default
under this Agreement or any event which with the passage of time or the giving of notice or both
would constitute an Event of Default under this Agreement has occurred and is continuing, (i) make,
adjust, compromise and settle claims under such policies of insurance, (ii) endorse the name of
Debtor on any check, draft, instrument or other item of payment of the proceeds of such policies of
insurance and (iii) make all determinations and decisions with respect to such policies of
insurance. In the event Debtor at any time or times hereafter shall fail to obtain




- 339 -









 







or maintain any
of the policies of insurance required above or to pay any premium in whole or in part relating
thereto, then the Agent, without waiving or releasing any obligation or default by Debtor
hereunder, may at any time or times thereafter (but shall be under no obligation to do so) obtain
and maintain such policies of insurance and pay such premium and take any other action with respect
thereto which the Agent deems advisable. All sums so disbursed by the Agent, including, without
limitation, reasonable attorneys’ fees, court costs, expenses and other charges relating thereto,
shall be part of the Secured Obligations, payable by Debtor to the Agent on demand. UNLESS DEBTOR
PROVIDES EVIDENCE OF THE INSURANCE COVERAGE REQUIRED UNDER THIS AGREEMENT, THE AGENT MAY PURCHASE
INSURANCE AT DEBTOR’S EXPENSE TO PROTECT THE AGENT’S INTEREST IN THE COLLATERAL. THIS INSURANCE
MAY, BUT NEED NOT, PROTECT DEBTOR’S INTERESTS. THE COVERAGE THAT THE AGENT PURCHASES MAY
NOT PAY ANY CLAIM THAT DEBTOR MAY MAKE OR ANY CLAIM THAT IS MADE AGAINST DEBTOR IN CONNECTION WITH
THE COLLATERAL. DEBTOR MAY LATER CANCEL ANY INSURANCE PURCHASED BY THE AGENT, BUT ONLY AFTER
PROVIDING EVIDENCE THAT DEBTOR HAS OBTAINED INSURANCE AS REQUIRED BY THIS AGREEMENT. IF THE AGENT
PURCHASES INSURANCE FOR THE COLLATERAL, DEBTOR WILL BE RESPONSIBLE FOR THE COSTS OF THAT INSURANCE,
INCLUDING THE INSURANCE PREMIUM, INTEREST AND ANY OTHER CHARGES THE AGENT MAY IMPOSE IN CONNECTION
WITH THE PLACEMENT OF INSURANCE, UNTIL THE EFFECTIVE DATE OF THE CANCELLATION OR EXPIRATION OF THE
INSURANCE. THE COSTS OF THE INSURANCE MAY BE ADDED TO THE SECURED OBLIGATIONS. THE COSTS OF THE
INSURANCE MAY BE MORE THAN THE COST OF INSURANCE DEBTOR MAY BE ABLE TO OBTAIN ON ITS OWN. All
insurance proceeds shall be subject to the security interest and lien of the Agent under this
Agreement;




          (o) Debtor will permit the Agent and each Lender (and any Person appointed by the Agent or any
Lender to whom Debtor does not reasonably object) to (i) examine and inspect any of all of the
Collateral, wherever located, during normal business hours and at other reasonable times and (ii)
enter upon its Properties for purposes of making such examinations and/or inspections. Debtor will
permit the Agent (and any Person appointed by the Agent or any Lender to whom Debtor does not
reasonably object) to conduct field audits of the Collateral, following reasonable prior notice, at
least twice each year and shall reimburse Agent and Lenders for the costs of such field audits as
set forth in Section 6.1(c) of the Loan Agreement. Debtor will reimburse the Agent and each Lender
upon demand for all costs and expenses incurred by the Agent or such Lender in connection with any
such examination or inspection conducted by the Agent or such Lender while any Event of Default or
any event which with the passage of time or the giving of notice or both would constitute an Event
of Default under this Agreement has occurred and is continuing;




          (p) Debtor hereby irrevocably authorizes the Agent at any time and from time to time to file
in any Uniform Commercial Code jurisdiction initial financing statements and/or any amendments
thereto which (i) indicate the Collateral (A) as “all assets”, “all personal property” or “all
personal property and fixtures” of Debtor or words of similar effect, regardless of whether any
particular asset comprised in the Collateral falls within the scope of Article 9 of the Uniform
Commercial Code of the State of Missouri (the “Missouri UCC”) or such other jurisdiction or (B) as
being of an equal or lesser scope or with greater detail and (ii) contain any other information
required by part 5 of Article 9 of the Uniform Commercial Code of the applicable jurisdiction for
the sufficiency or filing office acceptance of any financing statement or amendment, including (A)
whether Debtor is an organization, the type of organization and any organization identification
number issued to Debtor and (B) in the case of a financing statement filed as a fixture filing or
indicating Collateral as as-extracted collateral or timber to be cut, a sufficient description of
real property to which the Collateral relates. Debtor agrees to furnish




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any such information to
the Agent promptly upon request. Debtor also ratifies its authorization for the Agent to have
filed in any Uniform Commercial Code jurisdiction any like initial financing statements or
amendments thereto if filed prior to the date of this Agreement;




          (q) Debtor hereby agrees, in each case at Debtor’s own expense, to take the following actions
with respect to the following Collateral:





     (i) if Debtor shall at any time hold or acquire any promissory notes or other
instruments or tangible chattel paper, Debtor will promptly notify the Agent and
Lenders thereof in writing and, at the request of the Required Lenders, Debtor will
forthwith endorse, assign and deliver the same to the Agent, accompanied by such
instruments of transfer or assignment duly executed in blank as the Agent may from
time to time specify;




     (ii) if Debtor shall at any time open or maintain a deposit account, Debtor
will promptly notify the Agent and Lenders thereof in writing and, at the request of
the Required Lenders, Debtor will, pursuant to an agreement in form and substance
reasonably satisfactory to the Required Lenders, either (at the Required Lenders’
option) (A) cause the depository bank to agree to comply at any time with
instructions from the Agent to such depository bank directing the disposition of
funds from time to time credited to such deposit account, without further consent of
Debtor or (B) arrange for the Agent to become the customer of the depository bank
with respect to the deposit account, with Debtor being permitted, only with the
consent of the Agent, to exercise rights to withdraw funds from such deposit
account. Agent agrees with Debtor that Agent will not give any such instructions or
withhold any withdrawal rights from Debtor unless an Event of Default or an event
which with the passage of time or the giving of notice or both would constitute an
Event of Default under this Agreement has occurred and is continuing. The
provisions of this paragraph shall not apply to (A) any deposit account for which
Debtor, the depository bank and the Agent have entered into a cash collateral
agreement specially negotiated among Debtor, the depository bank and the Agent for
the specific purpose set forth therein, (B) deposit accounts for which the Agent is
the depository and (C) deposit accounts specially and exclusively used for payroll,
payroll taxes and other employee wage and benefit payments to or for the benefit of
Debtor’s employees;




     (iii) if Debtor shall at any time hold or acquire any certificated securities,
Debtor will promptly notify the Agent and Lenders thereof in writing and, at the
request of the Required Lenders, Debtor will forthwith endorse, assign and deliver
the same to the Agent, accompanied by such instruments of transfer or assignment
duly executed in blank as the Agent may from time to time specify. If any securities
now or hereafter acquired by Debtor are uncertificated and are issued to Debtor or
its nominee directly by the issuer thereof, Debtor will promptly notify the Agent
and Lenders thereof in writing and, at the request of the Required Lenders, Debtor
will, pursuant to an agreement in form and substance reasonably satisfactory to the
Required Lenders, either (at the Required Lenders’ option) (A) cause the issuer to
agree to comply with instructions from the Agent as to such securities, without
further consent of Debtor or such nominee or (B) arrange for the Agent to become the
registered owner of the securities. If any securities, whether certificated or
uncertificated, or other investment property now or hereafter acquired by Debtor are
held by Debtor or its nominee through a securities intermediary or commodity
intermediary, Debtor will promptly notify the Agent and



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Lenders thereof in writing
and, at the request of the Required Lenders, Debtor will, pursuant to an agreement
in form and substance reasonably satisfactory to the Required Lenders, either (at
the Required Lenders’ option) (A) cause such securities intermediary or commodity
intermediary, as the case may be, to agree to comply with entitlement orders or
other instructions from the Agent to such securities intermediary as to such
securities or other investment property, or to apply any value distributed on
account of any commodity contract as directed by the Agent to such commodity
intermediary, as the case may be, in each case without further consent of Debtor or
such nominee or (B) in the case of financial assets or other investment property
held through a securities intermediary, arrange for the Agent to become the
entitlement holder with respect to such investment property, with Debtor being
permitted, only with the consent of the Agent, to exercise rights to withdraw or
otherwise deal with such investment property. Agent agrees with Debtor that Agent
will not give any such entitlement orders or instructions or directions to any such
issuer, securities intermediary or commodity intermediary, and will not withhold its
consent to the exercise of any withdrawal or dealing rights by Debtor,
unless an Event of Default or an event which with the passage of time or the giving
of notice or both would constitute an Event of Default under this Agreement has
occurred and is continuing. The provisions of this paragraph shall not apply to any
financial assets credited to a securities account for which the Agent is the
securities intermediary;




     (iv) if any goods are at any time in the possession of a bailee, Debtor will
promptly notify the Agent and Lenders thereof in writing and, at the request of the
Required Lenders, Debtor will promptly obtain an acknowledgment from the bailee, in
form and substance reasonably satisfactory to the Required Lenders, that the bailee
holds such Collateral for the benefit of the Agent and shall act upon the
instructions of the Agent, without the further consent of Debtor. Agent agrees with
Debtor that Agent will not give any such instructions unless an Event of Default or
an event which with the passage of time or the giving of notice or both would
constitute an Event of Default under this Agreement has occurred and is continuing;




     (v) if any of the Collateral is located on any premises not owned by Debtor,
Debtor will promptly notify the Agent and Lenders thereof in writing and, at the
request of the Required Lenders, Debtor will promptly cause each Person having any
right, title or interest in, or Lien on, such premises to enter into an agreement in
form and substance reasonably satisfactory to the Required Lenders whereby such
Person disclaims any right, title or interest in, and/or Lien on, the Collateral and
allows entry upon such premises and the removal of the Collateral from such premises
by the Agent or its agents or representatives;




     (vi) if Debtor at any time holds or acquires an interest in any electronic
chattel paper or any “transferable record,” as that term is defined in Section 201
of the federal Electronic Signatures in Global and National Commerce Act, or in
Section 16 of the Uniform Electronic Transactions Act as in effect in any relevant
jurisdiction, Debtor will promptly notify the Agent and Lenders thereof and, at the
request of the Required Lenders, Debtor will take such action as the Required
Lenders may reasonably request to vest in the Agent control, under Section 9-105 of
the Missouri UCC, of such electronic chattel paper and control under Section 201 of
the federal Electronic Signatures in Global and National Commerce Act or Section 16
of the Uniform Electronic Transactions Act, as the case may be, as so in effect in
such jurisdiction, of such transferable record;



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     (vii) if Debtor is at any time a beneficiary under a letter of credit now or
hereafter issued in favor of Debtor, Debtor will promptly notify the Agent and
Lenders thereof in writing and, at the request of the Required Lenders, Debtor will,
pursuant to an agreement in form and substance reasonably satisfactory to the
Required Lenders, either (at the Required Lenders’ option) (A) arrange for the
issuer and any confirmer of such letter of credit to consent to an assignment to the
Agent of the proceeds of any drawing under the letter of credit or (B) arrange for
the Agent to become the transferee beneficiary of the letter of credit, with the
proceeds of any drawing under the letter of credit to be applied to the payment of
the Secured Obligations in such order and manner as the Required Lenders, in their
discretion, shall elect;




     (viii) if Debtor shall at any time hold or acquire a commercial tort claim,
Debtor will promptly notify the Agent and Lenders in a writing signed by Debtor of
the brief details thereof and grant to the Agent in such writing a security interest
therein and in the proceeds thereof, all upon the terms of this Agreement, with such
writing to be in form and substance reasonably satisfactory to the Required Lenders;




     (ix) Debtor further agrees to take any other action reasonably requested by the
Required Lenders to insure the attachment, perfection and first priority of, and the
ability of the Agent to enforce, the Agent’s security interest in and lien on any
and all of the Collateral including, without limitation, (a) executing, delivering
and, where appropriate, filing financing statements and amendments relating thereto
under the Uniform Commercial Code, to the extent, if any, that Debtor’s signature
thereon is required therefor, (b) causing the Agent’s name to be noted as secured
party on any certificate of title for a titled good if such notation is a condition
to attachment, perfection or priority of, or ability of the Agent to enforce, the
Agent’s security interest in and lien on such Collateral and delivering the original
of such certificate of title (with the Agent’s security interest and lien so noted)
to the Agent, (c) complying with any provision of any statute, regulation or treaty
of any governmental body, entity, authority, agency or instrumentality as to any
Collateral if compliance with such provision is a condition to attachment,
perfection or priority of, or ability of the Agent to enforce, the Agent’s security
interest in and lien on such Collateral, (d) obtaining governmental, regulatory and
other third party consents and approvals, including without limitation any consent
of any licensor, lessor or other person obligated on Collateral, (e) obtaining
waivers from mortgagees and landlords in form and substance reasonably satisfactory
to the Required Lenders and (f) taking all actions required by any earlier versions
of the Uniform Commercial Code or by other law, as applicable in any relevant
Uniform Commercial Code jurisdiction, or by other law as applicable in any foreign
jurisdiction; and




     (x) with respect to accounts with respect to which the account debtor is the
United States of America, any state of the United States of America or any other
governmental body or any department, agency or instrumentality of any of the
foregoing, if requested by the Required Lenders, Debtor will take such action and
execute, deliver and file such agreements, documents and instruments as may be
necessary or as the Required Lenders may reasonably request to insure that such
accounts are duly assigned to the Agent for the ratable benefit of the Lenders in
compliance with all applicable governmental and regulatory requirements (including,
without limitation, to the extent applicable, the Federal Assignment of Claims Act
of 1940, as amended, so that the Agent is recognized by the account debtor to have
all of the rights of an assignee of such accounts;



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          (r) Debtor will reimburse the Agent and each Lender upon demand for (i) all costs and expenses
incident to perfecting, maintaining or terminating the security interest granted by this Agreement,
including search fees, filing and recording fees, fees for obtaining and transferring certificates
of title and all taxes and legal and other out-of-pocket fees and expenses paid or incurred by the
Agent and/or any Lender in connection with any of the foregoing and (ii) all costs and expenses,
including, without limitation, reasonable attorneys’ fees and expenses, incurred by the Agent
and/or any Lender in seeking to collect or enforce any rights under this Agreement or incurred by
the Agent and/or any Lender in seeking to collect or enforce any of the Secured Obligations, all of
which costs and expenses shall constitute a part of the Secured Obligations and be payable by
Debtor to the Agent and the Lenders on demand; and




          (s) Exhibit B attached hereto and incorporated herein by reference sets forth a
complete list of all of the filing office(s) where financing statement(s) must be filed in order to
perfect the Agent’s security interest in the Collateral to the extent such security interest can be
perfected by the filing of financing statements under the Uniform Commercial Code or other
applicable laws of any jurisdiction where Debtor or any of the Collateral is or may be “located”
(as “located” is defined in the applicable Uniform Commercial Code or other applicable law).




     3. Representations and Covenants of Debtor re: Accounts, Inventory and Other
Collateral. Debtor hereby represents and warrants to the Agent and each Lender, and covenants
and agrees with the Agent and each Lender, that:



          (a) Debtor will provide the Agent and Lenders with a written Borrowing Base Certificate on or
before the last day of each month as required under Section 3.1(b) of the Loan Agreement (or at
such other intervals as the Required Lenders shall require from time to time), reflecting activity
of Debtor up to and including the last day of the preceding month (each, a “Borrowing Base
Certificate”) describing, in a form and with such specificity as is satisfactory to the Required
Lenders, all Accounts created or acquired by Debtor subsequent to the immediately preceding
Borrowing Base Certificate. In addition, Debtor, immediately upon demand by the Required Lenders,
now and from time to time hereafter, shall execute and deliver to the Agent and Lenders schedules
of Inventory specifying Debtor’s cost of Inventory and of Eligible Inventory and such other matters
and information relating to Inventory and Eligible Inventory as the Required Lenders may from time
to time request. Debtor shall also furnish copies of any other reports or information, in a form
and with such specificity as is satisfactory to the Required Lenders, concerning accounts,
inventory and any other Collateral requested by the Required Lenders, including, without
limitation, but only if specifically requested by the Required Lenders, (i) schedules identifying
each account, (ii) copies of all invoices prepared in connection with such accounts and (iii) such
additional schedules, certificates, test verifications, and reports respecting the Collateral and
the proceeds thereof as the Required Lenders may from time to time reasonably request. The
Borrowing Base Certificate shall include, in a form and with such specificity as is satisfactory to
the Required Lenders, information on all amounts collected by Debtor on accounts subsequent to the
immediately preceding Borrowing Base Certificate. The Borrowing Base Certificate shall contain such
additional information as the Required Lenders may require;




          (b) With respect to accounts scheduled, listed or referred to on any Borrowing Base
Certificate or other report submitted by Debtor or any other Obligor to the Lenders, Debtor
represents and warrants to the Agent and Lenders that, except as otherwise disclosed on the
applicable Borrowing Base Certificate or other report (i) they are genuine, in all respects what
they purport to be and are not evidenced by a judgment; (ii) they represent undisputed, bona fide
transactions completed in accordance with the terms and provisions contained in the invoices and
other documents related thereto; (iii) the




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amounts thereof shown on the applicable Borrowing Base
Certificate or other report are actually and absolutely owing to Debtor and are not contingent for
any reason; (iv) no payments have been or shall be made thereon except payments immediately
delivered to the Agent pursuant to Section 4 of this Agreement; (v) there are no setoffs,
counterclaims or disputes existing or asserted with respect thereto and Debtor has not made any
agreement with any account debtor thereof for any deduction therefrom except a discount or
allowance allowed by Debtor in the ordinary course of its business for prompt payment; (vi) to the
best of Debtor’s knowledge, there are no facts, events or occurrences which could reasonably be
expected to impair in any material respect the validity or enforcement thereof or tend to reduce
the amount payable thereunder from the amount thereof as shown on the applicable Borrowing Base
Certificate or other report; (vii) to the best of Debtor’s knowledge, all account debtors thereof
have the capacity to contract and are solvent; (viii) the goods sold and/or services furnished
giving rise thereto are not subject to any Lien or claim except that of the Agent; (ix) Debtor has
no knowledge of any fact or circumstance which could reasonably be expected to impair in any
material respect the validity or collectibility thereof; (x) to the best of Debtor’s knowledge,
there are no bankruptcy, insolvency or other proceedings or actions which are threatened or pending
against any account debtor thereof which could reasonably be expected to result in any material
adverse change in such account debtor’s financial condition; and (xi) all of such accounts are
subject to a first priority perfected security interest in favor of the Agent;




          (c) Any officers, employees or agents of the Lenders shall have the right, at any time or
times hereafter, in the name of such Lender and/or Debtor or in the name of a nominee of such
Lender,
to verify the validity, amount or any other matter relating to any accounts by mail, telephone,
telegraph or otherwise. All costs, fees and expenses relating thereto incurred by any Lender (or
for which any Lender becomes obligated) during the continuation of any Event of Default or any
event which with the passage of time or the giving of notice or both would become an Event of
Default under this Agreement shall become part of the Secured Obligations and be payable by Debtor
to such Lender on demand;




          (d) Debtor will at all times maintain a record of accounts at its chief executive office,
keeping correct and accurate records itemizing and describing the names and addresses of account
debtors, relevant invoice numbers, shipping dates and due dates, collection histories and account
agings, all of which records shall be available during such Debtor’s usual business hours at the
request of the Agent or any Lender or any of their respective officers, employees or agents.
Debtor will cooperate fully with the Agent and each Lender and their respective officers, employees
and agents who shall have the right at any time or times to inspect the accounts and the records
with respect thereto. Debtor will conduct a review (or cause its independent certified public
accountants to conduct a review) of its bad debt reserves and collection histories at least once
each year and promptly following such review shall supply the Agent and each Lender with a report
in a form and with such specificity as may be reasonably satisfactory to the Required Lenders
concerning such review of the accounts (which report may consist of a management letter from
Debtor’s independent certified public accountants if such accountants conducted such bad debt
reserve review);




          (e) Unless otherwise agreed by the Required Lenders in writing, Debtor will: (i) promptly upon
Debtor’s learning thereof, inform the Agent and Lenders, in writing, of any material delay in
Debtor’s performance of any of its obligations to any account debtor with respect to any Eligible
Account in an amount in excess of $100,000.00 and of any assertion of any claims, offsets or
counterclaims in an amount in excess of $100,000.00 by any account debtor with respect to any
Eligible Account and of any allowances, credits and/or other monies in an amount in excess of
$10,000.00 granted by Debtor to any account debtor with respect to any Eligible Account; (ii) not
permit or agree to any extension, compromise or settlement or make any change or modification of
any kind or nature with respect to any Eligible Account, including any of the terms relating
thereto; (iii) promptly upon Debtor’s




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receipt or learning thereof, furnish to and inform the
Lenders of all material adverse information relating to the financial condition of any account
debtor who in the aggregate owes Debtor more than $20,000.00; and (iv) promptly upon Debtor’s
learning thereof, notify the Lenders in writing which of its then existing accounts involving an
amount in excess of $20,000.00 are no longer Eligible Accounts;




          (f) The Agent shall have the right, in its sole and absolute discretion, without notice
thereof to Debtor: (i) to notify any or all account debtors that the accounts have been assigned to
the Agent and that the Agent has a security interest therein; (ii) to direct such account debtors
to make all payments due from them to Debtor upon the accounts directly to the Agent; and (iii) to
enforce payment of and collect, by legal proceedings or otherwise, the accounts in the name of the
Agent and/or Debtor;




          (g) Debtor will, at its own expense, use commercially reasonable efforts to collect, as and
when due, all amounts due with respect to accounts;




          (h) With respect to inventory scheduled, listed or referred to in any Borrowing Base
Certificate or other report submitted by Debtor or any other Obligor to the Lenders, Debtor
represents and warrants to the Agent and Lenders that, except as otherwise disclosed in such
Borrowing Base Certificate or other report: (i) such inventory is located at Debtor’s chief
executive office, one of the other locations listed on Exhibit A attached hereto and
incorporated herein by reference or another location with respect to which Debtor has complied with
all of the requirements of Section 2(h) of this Agreement; (ii) Debtor has good, indefeasible and
merchantable title to such inventory and such inventory is not subject to any Lien or claim
whatsoever except for Permitted Liens; (iii) such inventory is of good and merchantable quality,
free from any material defects; (iv) such inventory is not subject to any licensing, patent,
royalty,
trademark, trade name or copyright agreements with any third parties; (v) the completion of
manufacture and sale or other disposition of such inventory by the Agent following an Event of
Default will not require the consent of any Person and will not constitute a breach or default
under any contract or agreement to which Debtor is a party or to which any of the inventory is
subject; (vi) such inventory has not been produced in violation of the Fair Labor Standards Act and
is not subject to the so-called “hot goods” provision contained in Title 29 U.S.C. §215(a)(1);
(vii) such inventory is not on consignment with Debtor and (viii) such inventory is subject to a
first priority perfected security interest in favor of the Agent;




          (i) Debtor will at all times maintain a perpetual inventory system keeping correct and
accurate records itemizing and describing the kind, type, quality and quantity of inventory and of
Eligible Inventory, Debtor’s cost therefor and daily withdrawals therefrom and additions thereto,
all of which records shall be available during Debtor’s usual business hours at the request of the
Agent or any Lender or any of their respective officers, employees or agents. Debtor will
cooperate fully with the Agent and each Lender and their respective officers, employees and agents
who shall have the right during normal business hours and/or at other reasonable time or times to
inspect Debtor’s inventory and the records with respect thereto. Debtor will conduct such physical
counts of all or any portion of its inventory as any Lender may from time to time reasonably
request and will supply Agent and each Lender with a report in a form and with such specificity as
may be reasonably satisfactory to the Required Lenders concerning any physical count of any or all
of the inventory of Debtor (whether such count was requested by the Required Lenders or not); and




          (j) Neither the Agent nor any Lender shall be responsible for: (i) the safekeeping of any of
the inventory; (ii) any loss or damage to any of the inventory; (iii) any diminution in the value
of any of the inventory; or (iv) any act or default of any carrier, warehouseman, bailee,
forwarding agency or any other Person. As between Debtor, on the one hand, and the Agent and the
Lenders, on the other hand, all risk of loss, damage, destruction or diminution in value of the
inventory shall be borne by Debtor.




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Debtor will not sell any inventory to any customer on
consignment or on approval or on any other basis which entitles the customer to return, or which
may obligate Debtor to repurchase, such inventory. From and after the occurrence of any Event of
Default under this Agreement and so long as any such Event of Default is continuing, the Required
Lenders, in their sole and absolute discretion, may require that inventory be stored with a bailee,
warehouseman or similar party and warehouse receipts therefor be issued in the Agent’s name and be
delivered to the Agent. Debtor agrees to do whatever acts are required to effectuate the
foregoing.




     4. Lockbox and Blocked Account. Debtor hereby agrees to establish and maintain
throughout the term of this Agreement a lock box (the “Lock Box”) in Debtor’s name with a bank (the
“Collecting Bank”) which is acceptable to the Required Lenders (subject to irrevocable instructions
acceptable to the Required Lenders as hereinafter set forth) to which all account debtors shall
directly remit all payments on accounts and in which Debtor shall immediately deposit all cash
payments made for inventory and other cash payments constituting proceeds of Collateral in the
identical form in which such payment was made, whether by cash, check or otherwise. In addition,
Debtor hereby agrees to establish and maintain throughout the term of this Agreement a depository
account at the Collecting Bank (the “Blocked Account”). The Collecting Bank shall acknowledge and
agree, in a manner satisfactory to the Required Lenders, that all payments made to the Lock Box and
the Blocked Account are the sole and exclusive property of the Agent and that the Collecting Bank
has no right of setoff against the Lock Box or the Blocked Account and that all such payments,
whether by cash, check, wire transfer or any other instrument, made to such Lock Box or Blocked
Account or otherwise received by Debtor and whether on the accounts or as proceeds of any other
Collateral or otherwise are and will be the sole and exclusive property of the Agent. Debtor shall
irrevocably instruct the Collecting Bank to on a daily basis on each Business Day (a) transfer all
payments or deposits to Debtor’s Lock Box into Debtor’s Blocked Account and (b) transfer all funds
in Debtor’s Blocked Account (by way of debit, ACH debit, wire transfer or other
means, as directed by Agent) to an account of the Agent at First Bank or such other bank as the
Agent may from time to time specify in writing to be applied by the Agent to the payment of the
Secured Obligations in such order and manner as the Required Lenders, in their discretion, shall
elect. Debtor shall have no right to withdraw any funds out of the Lock Box and/or the Blocked
Account. Debtor, and each of its Affiliates, employees, agents and/or other Persons acting for or
in concert with Debtor, shall, acting as trustee for the Agent, receive, as the sole and exclusive
property of the Agent, any monies, checks, notes, drafts and any other payments relating to and/or
proceeds of accounts and/or other Collateral which come into the possession or under the control of
Debtor or any Affiliates, employees, agents or other Persons acting for or in concert with Debtor,
and immediately upon receipt thereof, Debtor or such Persons shall cause the same to be deposited
into Debtor’s Lock Box.



     5. Additional Actions by the Agent. The Agent, at its option, may from time to time
perform any agreement of Debtor hereunder which Debtor shall fail to perform and take any other
action which the Agent in good faith deems necessary for the maintenance or preservation of any of
the Collateral or its interest therein (including, without limitation, the discharge of taxes or
Liens of any kind against the Collateral or the procurement of insurance or the payment of
warehousing charges, landlord’s bills or other charges), and Debtor agrees to forthwith reimburse
the Agent for all costs and expenses incurred by the Agent in connection with the foregoing,
together with interest thereon at a rate per annum equal to the lesser of (a) Four and One-Fourth
Percent (4.25%) over and above the Prime Rate (fluctuating as and when the Prime Rate changes) and
(b) the highest rate of interest allowed by applicable law, from the date incurred until reimbursed
by Debtor. The Agent may for the foregoing purposes act in its own name or that of Debtor and may
also so act for the purposes of adjusting, settling or cancelling any policy of insurance on the
Collateral or endorsing any draft received in connection therewith, in payment of a loss or
otherwise, for all of which purposes Debtor hereby grants to the Agent its power of attorney,
irrevocable during the term of this Agreement.



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     6. Defaults. The occurrence of any of the following events or conditions shall
constitute an “Event of Default” under this Agreement: (a) Debtor shall fail to pay any of the
Secured Obligations as and when the same shall become due and payable, whether by reason of demand,
maturity, acceleration or otherwise; (b) Debtor shall fail to perform or observe any of the terms,
provisions, covenants or agreements contained in Sections 2(a), 2(g), 2(h), 2(i), 2(j), 2(k), 2(n),
2(o), 2(q), 3(a), 3(d), 3(e), 3(i) or 4 of this Agreement; (c) Debtor shall fail to perform or
observe of any of the other terms, provisions, covenants or agreements contained in this Agreement
and any such failure shall remain unremedied for five (5) days after the earlier of (i) written
notice of default is given to Debtor by the Agent or any Lender or (ii) any officer of Debtor
obtains knowledge of such default; (d) any representation or warranty made by Debtor in this
Agreement shall prove to be untrue or incorrect in any material respect; (e) any “Event of Default”
(as defined therein) shall occur under or within the meaning of the Loan Agreement; or (f) any
default or event of default shall occur under or within the meaning of any other agreement,
document or instrument heretofore, now or hereafter executed by Debtor with or in favor of the
Agent which is not cured or waived within any applicable cure or grace period (if any).



     7. Remedies. Upon the occurrence and during the continuation of any Event of Default
under this Agreement: (a) whether or not any or all of the Secured Obligations are declared to be
forthwith due and payable, the Agent shall have the right to take immediate possession of the
Collateral covered hereby, and, for that purpose may pursue the same wherever said Collateral may
be found, and may enter upon any of the premises of Debtor with or without process of law and
without breach of the peace, wherever said Collateral may be or may be supposed to be, and search
for the same, and, if found, take possession of and remove and sell and dispose of said Collateral,
or any part thereof; (b) the Agent shall have the right to notify any account debtor with respect
to any account to make all payments under the accounts directly to the Agent and demand, collect,
receipt for, settle, compromise, adjust, sue for, foreclose and realize on the accounts and all
amounts due under the accounts as the Agent may determine; (c) the Agent shall have the right to
exercise such of the other rights and remedies accruing to a secured
party under the Uniform Commercial Code of the relevant jurisdiction or jurisdictions and any other
applicable law upon default by a debtor as the Agent may elect; (d) the Agent shall have the right
to enter, with or without process of law and without breach of the peace, any premises where the
books and records of Debtor pertaining to the accounts or any of the other Collateral are or may be
located, and without charge or liability on the part of the Agent therefor seize and remove said
books and records from said premises or remain upon said premises and use the same for the purpose
of collecting, preparing and disposing of the Collateral and/or for the purpose of identifying and
locating any of the Collateral; and (e) the Required Lenders shall have the right to appoint,
remove and reappoint any Person or Persons, including, without limitation, any employee or agent of
the Agent or any Lender to be a receiver (each, a “Receiver”), which term shall include a receiver
and manager of, or agent for, all or any part of the Collateral. Any such Receiver shall, as far
as concerns responsibility for its acts, be deemed to be the agent of Debtor and not of the Agent
or any Lender, and neither the Agent nor any Lender shall in any way be responsible for any
misconduct, negligence or non-feasance of any such Receiver, its employees or agents. Except as
otherwise directed by all of the Lenders, all monies received by any Receiver shall be received in
trust for and paid to the Agent for the ratable benefit of the Lenders. Debtor shall pay all
costs, charges and expenses incurred by the Agent or any Receiver, whether directly or for services
rendered (including, without limitation, reasonable attorneys’ fees and expenses, auditor’s costs,
other legal expenses and Receiver remuneration) in enforcing this Agreement, realizing on all or
any part of the Collateral and/or in enforcing or collecting the Secured Obligations, and all such
expenses shall be part of the Secured Obligations and be payable on the demand of the Agent. Debtor
shall, upon the Agent’s request, assemble the Collateral and make the Collateral available to the
Agent at any place designated by the Agent which is reasonably convenient to Debtor.



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     8. Standards for Exercising Remedies. To the extent that applicable law imposes duties
on the Agent to exercise remedies in a commercially reasonable manner, Debtor acknowledges and
agrees that it is not commercially unreasonable for the Agent (a) to fail to incur expenses
reasonably deemed significant by the Agent to prepare Collateral for disposition or otherwise to
complete raw material or work in process into finished goods or other finished products for
disposition, (b) to fail to obtain third party consents for access to Collateral to be disposed of,
or to obtain or, if not required by other law, to fail to obtain governmental, regulatory or third
party consents for the collection or disposition of Collateral to be collected or disposed of, (c)
to fail to exercise collection remedies against account debtors or other Persons obligated on
Collateral or to remove Liens or encumbrances on or any adverse claims against Collateral, (d) to
exercise collection remedies against account debtors and other Persons obligated on Collateral
directly or through the use of collection agencies and other collection specialists, (e) to
advertise dispositions of Collateral through publications or media of general circulation, whether
or not the Collateral is of a specialized nature, (f) to contact other Persons, whether or not in
the same business as Debtor, for expressions of interest in acquiring all or any portion of the
Collateral, (g) to hire one or more professional auctioneers to assist in the disposition of
Collateral, whether or not the collateral is of a specialized nature, (h) to dispose of Collateral
by utilizing Internet sites that provide for the auction of assets of the types included in the
Collateral or that have the reasonable capability of doing so, or that match buyers and sellers of
assets, (i) to dispose of assets in wholesale rather than retail markets, (j) to disclaim
disposition warranties, (k) to purchase insurance or credit enhancements to insure the Agent
against risks of loss, collection or disposition of Collateral or to provide to the Agent a
guaranteed return from the collection or disposition of Collateral or (l) to the extent deemed
appropriate by the Agent, to obtain the services of other brokers, investment bankers, consultants
and other professionals to assist the Agent in the collection or disposition of any of the
Collateral. Debtor acknowledges that the purpose of this Section 8 is to provide non-exhaustive
indications of what actions or omissions by the Agent would not be commercially unreasonable in the
Agent’s exercise of remedies against the Collateral and that other actions or omissions by the
Agent shall not be deemed commercially unreasonable solely on account of not being indicated in
this Section 8. Without limitation upon the foregoing, nothing contained in this Section 8 shall
be construed to grant any rights to Debtor or to impose any duties on the
Agent that would not have been granted or imposed by this Agreement or by applicable law in the
absence of this Section 8.



     9. Foreclosure. Foreclosure on the Collateral covered hereby may be had at public or
private sale or sales, disposing of such portion or portions of the Collateral at each such sale,
for cash or on credit, on such terms, at such place or places, and with or without the Collateral
being present at such sale, all as the Agent in its sole and absolute discretion shall determine
from time to time. In the case of public sale, notice thereof shall be deemed and held to be
adequate and reasonable if such notice shall appear three (3) times in a newspaper published in the
City or County wherein the sale is to be held, the first such publication being at least ten (10)
days before such sale and the last such publication being not more than three (3) days before such
sale. In the case of a private sale, notice thereof shall be deemed and held to be adequate and
reasonable if such notice shall be mailed to Debtor at its last known address at least ten (10)
days before such sale. The enumeration of these methods of notice shall not be deemed or construed
to render unreasonable any other method of notice which would otherwise be reasonable under the
circumstances. Debtor agrees that the Agent may, in connection with any such sale, specifically
disclaim any warranties of title or the like with respect to all or any portion of the Collateral
being sold.



     10. Application of Proceeds and Deficiency. The Agent may apply the net proceeds of
any sale, lease, license or other disposition of any of the Collateral or of any other collection
of any of the Collateral or any proceeds of any of the Collateral, after deducting all costs and
expenses of every kind incurred therein or incidental to the retaking, holding, preparing for sale,
selling, leasing, licensing or the like of the Collateral on Debtor’s premises, or elsewhere, or in
any way related to the Agent’s rights under



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this Agreement (including, without limitation,
reasonable attorneys’ fees and expenses, court costs, bonds and other legal expenses, insurance,
security guard and alarm expenses incurred in connection with the holding of the Collateral,
advertisements of sale of the Collateral, and rental and utilities expense on the premises or
elsewhere in connection with storage and sale of the Collateral) to the payment, in whole or in
part, of the Secured Obligations, whether due or not due, absolute or contingent, and only after
payment by the Agent of any other amounts required by any existing or future provision of law
(including Section 9-615 of the Uniform Commercial Code or any comparable statutory provision of
any jurisdiction where Debtor or any of the Collateral may at the time be located) need the Agent
account to Debtor for the surplus, if any. If the Agent sells any of the Collateral on credit,
unless otherwise agreed by the Required Lenders in writing, the Secured Obligations will be
credited only with payments actually received by the Agent from the purchaser with respect to such
credit obligation; and in the event the purchaser fails to pay for the Collateral, the Agent may
resell the Collateral and the Secured Obligations will be credited with the proceeds received from
such resale. The proceeds of any sale(s), lease(s), license(s) or other disposition(s) of any of
the Collateral and/or of any collection(s) of any of the Collateral shall be applied by the Agent
in the following order: (a) first, to the payment of all costs, expenses, liabilities and advances
made or incurred by the Agent and/or any Lender in connection with the collection and enforcement
of the Secured Obligations and the sale or other realization upon the Collateral; provided,
however, that nothing herein is intended to relieve Debtor of its obligation to pay such costs,
expenses, liabilities and advances; (b) second, to the payment of the Secured Obligations in such
order and manner as the Required Lenders, in their discretion, shall elect; and (c) third, to the
payment of any surplus remaining after the payment of the amounts mentioned, to Debtor or to
whomsoever may be lawfully entitled thereto. Debtor shall remain liable to the Agent and the
Lenders for the payment of any deficiency, with interest.



     11. The Agent’s Obligations and Duties. Notwithstanding any provision contained in
this Agreement to the contrary, Debtor shall remain liable under each contract or agreement
comprised in the Collateral to be observed or performed by Debtor thereunder. The Agent shall not
have any obligation or liability under any such contract or agreement by reason of or arising out
of this Agreement or the receipt by the Agent of any payment relating to any of the Collateral, nor
shall the Agent be obligated in any manner to perform any of the obligations of Debtor under or
pursuant to any such contract or agreement,
to make inquiry as to the nature or sufficiency of any payment received by the Agent in respect of
the Collateral or as to the sufficiency of any performance by any party under any such contract or
agreement, to present or file any claim, to take any action to enforce any performance or to
collect the payment of any amounts which may have been assigned to the Agent or to which the Agent
may be entitled at any time or times. The Agent’s sole duty with respect to the custody, safe
keeping and physical preservation of the Collateral in its possession, under Section 9-207 of the
Missouri UCC, shall be to deal with such Collateral in the same manner as the Agent deals with
similar property for its own account. Debtor hereby acknowledges and agrees that the Agent shall
have no duty as to the collection or protection of the Collateral or any income thereon, nor as to
the preservation of rights against prior parties, nor as to the preservation of any rights
pertaining thereto.



     12. Amendments; Waivers; Remedies Cumulative. No delay on the part of the Agent
and/or any Lender in the exercise of any right or remedy under this Agreement shall operate as a
waiver thereof and no single or partial exercise by the Agent and/or any Lender of any right or
remedy shall preclude other or further exercise thereof or the exercise of any other right or
remedy. Each and every right and remedy granted to the Agent and/or any Lender under this
Agreement, under the Loan Agreement and under the other Transaction Documents, or at law or in
equity, shall be deemed cumulative and may be exercised from time to time. Neither the Agent nor
any Lender shall by any act, delay, omission or otherwise be deemed to have waived any of its
rights or remedies under this Agreement and no waiver whatsoever shall be valid unless in writing
and signed by the Agent or the applicable Lender, as the case



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may be, and then only to the extent
therein set forth. A waiver by the Agent and/or any Lender of any right or remedy under this
Agreement on any one occasion shall not be construed as a bar to any right or remedy which the
Agent and/or any Lender would otherwise have on any future occasion. This Agreement may not be
amended except by a writing duly signed by Debtor and the Agent and consented to by the Required
Lenders. The headings of the paragraphs hereof shall not be considered in the construction or
interpretation of this Agreement.



     13. Irrevocable Power of Attorney. Debtor hereby irrevocably makes, constitutes and
appoints the Agent (and all Persons designated by the Agent) as the true and lawful agent and
attorney-in-fact of Debtor with full power of substitution to: (a) if any Event of Default under
this Agreement has occurred and is continuing, (i) demand payment of accounts, (ii) enforce payment
of accounts by legal proceedings or otherwise, (iii) exercise all of Debtor’s rights and remedies
with respect to proceedings brought to collect accounts, (iv) sell or assign accounts upon such
terms, for such amounts and at such time or times as the Agent deems advisable, (v) settle, adjust,
compromise, extend or renew accounts, (vi) discharge and release accounts, (vii) prepare, file and
sign Debtor’s name on any proof of claim in bankruptcy or other similar document against an account
debtor, (viii) notify the postal authorities of any change of the address for delivery of Debtor’s
mail to an address designated by the Agent, and open all mail addressed to Debtor for the purpose
of collecting accounts and the proceeds of any other Collateral (with all other mail to be promptly
returned to Debtor), and (ix) do all acts and things which are necessary, in the Agent’s good faith
discretion, to fulfill the Debtor’s obligations under this Agreement; and (b) at any time, (i) take
control in any manner of any item of payment or proceeds of any account or any other Collateral,
(ii) have access to any lockbox or postal box into which Debtor’s mail is deposited, (iii) endorse
Debtor’s name upon any items of payment or proceeds thereof and deposit the same in the Agent’s
account on account of the Secured Obligations, (iv) endorse Debtor’s name upon any chattel paper,
document, instrument, invoice or similar document or agreement relating to any account or any goods
pertaining thereto, (v) execute in Debtor’s name and on Debtor’s behalf any financing statements
and/or continuations thereof and/or amendments thereto under the Uniform Commercial Code or other
applicable law in any jurisdiction where Debtor or any of the Collateral may be located, (vi)
endorse Debtor’s name on any verification of accounts and notices thereof to account debtors and
(vii) do any and all things necessary and take such actions in the name and on behalf of Debtor to
carry out the intent of this Agreement, including, without limitation, the grant of the security
interest granted under this Agreement and to perfect and protect the security interest granted to
the Agent in respect to the Collateral
and the Agent’s rights created under this Agreement. Debtor agrees that neither the Agent nor any
of its agents, designees or attorneys-in-fact will be liable for any acts of commission or omission
(other than for acts of commission or omission which constitute gross negligence or willful
misconduct as determined by a court of competent jurisdiction in a final, nonappealable order), or
for any error of judgment or mistake of fact or law in respect to the exercise of the power of
attorney granted under this Section. The power of attorney granted under this Section shall be
irrevocable during the term of this Agreement.



     14. Marshalling. Neither the Agent nor any Lender shall be required to marshal any
present or future collateral security (including, without limitation, this Agreement and the
Collateral) for, or other assurances of payment of, any or all of the Secured Obligations or to
resort to such collateral security or other assurances of payment in any particular order, and all
of their respective rights and remedies under this Agreement and in respect of such collateral
security and other assurances of payment shall be cumulative and in addition to all other rights
and remedies, however existing or arising. To the extent not prohibited by applicable law, Debtor
hereby agrees that it will not invoke any law relating to the marshalling of collateral which might
cause delay in or impede the enforcement of any of the rights and/or remedies of the Agent and/or
any Lender under this Agreement or under any other agreement, document or instrument creating or
evidencing any of the Secured Obligations or under which any of the Secured Obligations is
outstanding or by which any of the Secured Obligations is secured or payment



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thereof is otherwise
assured, and, to the extent not prohibited by applicable law, Debtor hereby irrevocably waives the
benefits of all such laws.



     15. Notices. Except as otherwise specified in this Agreement, any notice, request,
demand, consent or other communication under this Agreement shall be in writing and delivered in
person or sent by facsimile, recognized overnight courier or registered or certified mail, return
receipt requested and postage prepaid, if to Debtor to the address or facsimile number of Debtor
listed on the signature page(s) of this Agreement, or if to Agent or any Lender, in care of the
Agent at 135 North Meramec, St. Louis, Missouri 63105, Attention: Traci Dodson, Telecopy No. (314)
854-5454, or at such other address or facsimile number as either party may from time to time
designate as its address or facsimile number for communications under this Agreement by notice so
given. Such notices shall be deemed effective on the day on which delivered or sent if delivered
in person or sent by facsimile (with answerback confirmation received), on the first (1st) Business
Day after the day on which sent, if sent by recognized overnight courier or on the third (3rd)
Business Day after the day on which mailed, if sent by registered or certified mail.



     16. Applicable Law and Severability. It is the intention of the parties hereto that
this Agreement is entered into pursuant to the provisions of the Missouri UCC. Any applicable
provisions of the Missouri UCC, not specifically included herein, shall be deemed a part of this
Agreement in the same manner as if set forth herein at length; and any provisions of this Agreement
that might in any manner be in conflict with any provision of the Missouri UCC shall be deemed to
be modified so as not to be inconsistent with the Missouri UCC. In all respects this Agreement and
all transactions hereunder, and all the rights of the parties, shall be governed as to validity,
construction, enforcement and in all other respects by the substantive laws of the State of
Missouri (without reference to conflict of law principles); provided, however, that the perfection,
the effect of the perfection or non-perfection and the priority of the security interests and liens
created by this Agreement shall in all respects be governed, construed, applied and enforced in
accordance with the substantive laws of the applicable jurisdiction. To the extent any provision
of this Agreement is not enforceable under applicable law, such provision shall be deemed null and
void and shall have no effect on the remaining portions of this Agreement.



     17. Successors and Assigns; Other Secured Obligations; Duration of Security Interest.
This Agreement shall be binding upon Debtor and its successors and shall inure to the benefit of
the Agent, the Lenders and their respective successors and assigns. Debtor may not assign any of
its rights or delegate any of its obligations under this Agreement. This Agreement shall continue
in full force and effect and
the security interest and lien granted by this Agreement and all of the representations,
warranties, covenants and agreements of Debtor under this Agreement and all of the terms,
conditions and provisions of this Agreement relating thereto shall continue to be fully operative
until such time as (a) all of the Secured Obligations shall have been fully, finally and
indefeasibly paid in cash, (b) there shall be no remaining commitment or obligation of the Agent
and/or any Lender to advance funds, make loans or extend credit to, and/or issue letters of credit
for the account of, any Obligor under the Loan Agreement, any other Transaction Document or
otherwise, (c) no Letters of Credit shall remain outstanding and (d) the Loan Agreement shall have
expired or been terminated in accordance with its terms. If claim is ever made on the Agent and/or
any Lender for repayment or recovery of any amount or amounts received by the Agent and/or any
Lender in payment or on account of any of the Secured Obligations (including payment under a
guaranty or from application of collateral) and the Agent and/or any Lender repays all or part of
said amount by reason of (a) any judgment, decree or order of any court or administrative body
having jurisdiction over the Agent and/or any Lender or any Property of the Agent and/or any Lender
or (b) any settlement or compromise of any such claim effected by the Agent and/or any Lender with
any such claimant (including, without limitation, Debtor), then and in each such event Debtor
agrees that any such judgment, decree, order, settlement or compromise shall be binding on Debtor,
notwithstanding any



-352-









 







cancellation of any note or other instrument or agreement evidencing such
Secured Obligations or of this Agreement, and this Agreement shall continue to be effective or be
reinstated, as the case may be, and shall secure the payment of the amount so repaid or recovered
to the same extent as if such amount had never originally been received by the Agent and/or any
Lender. This Agreement shall continue to be effective or be reinstated, as the case may be, if (a)
at any time any payment of any of the Secured Obligations is rescinded or must otherwise be
returned by the Agent and/or any Lender upon the insolvency, bankruptcy or reorganization of Debtor
or otherwise, all as though such payment had not been made or (b) this Agreement is released in
consideration of a payment of money or transfer of Property or assets or grant of a Lien by Debtor
or any other Person and such payment, transfer or grant is rescinded or must otherwise be returned
by the Agent and/or any Lender upon the insolvency, bankruptcy or reorganization of such Person or
otherwise, all as though such payment, transfer or grant had not been made.



     18. Consent to Jurisdiction; Waiver of Jury Trial. DEBTOR HEREBY IRREVOCABLY (A)
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY MISSOURI STATE COURT SITTING IN THE COUNTY OF ST.
LOUIS, MISSOURI OR ANY UNITED STATES OF AMERICA COURT SITTING IN THE EASTERN DISTRICT OF MISSOURI,
EASTERN DIVISION, AS AGENT MAY ELECT, IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT, (B) AGREES THAT ALL CLAIMS IN RESPECT TO SUCH SUIT, ACTION OR PROCEEDING MAY BE
HELD AND DETERMINED IN ANY OF SUCH COURTS, (C) WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH DEBTOR MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT, (D) WAIVES ANY CLAIM THAT SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND (E) WAIVES ALL RIGHTS OF
ANY OTHER JURISDICTION WHICH DEBTOR MAY NOW OR HEREAFTER HAVE BY REASON OF ITS PRESENT OR
SUBSEQUENT DOMICILES. DEBTOR AUTHORIZES THE SERVICE OF PROCESS UPON DEBTOR BY REGISTERED MAIL SENT
TO DEBTOR AT ITS ADDRESS REFERENCED IN SECTION 15. DEBTOR AND THE AGENT IRREVOCABLY WAIVE THE
RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY ACTION IN WHICH DEBTOR AND THE AGENT ARE PARTIES
RELATING TO OR ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT.



     19. UCC Defined Terms. All terms defined in the Missouri UCC and used in this
Agreement shall have the same definitions herein as specified therein. However, if a term is
defined in Article 9 of
the Missouri UCC differently than in another Article of the Missouri UCC, then the term shall have
the meaning specified in Article 9 of the Missouri UCC.



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     IN WITNESS WHEREOF, Debtor has executed this Security Agreement as of the 29th day of June,
2006.


IN THE EVENT ANY OF THE SECURED OBLIGATIONS ARE PAYABLE ON DEMAND, NEITHER THIS AGREEMENT NOR
ANYTHING CONTAINED HEREIN SHALL BE DEEMED TO ALTER OR IMPINGE UPON THE DEMAND CHARACTER OF SUCH
OBLIGATION.




	 	 	 	 	 
	 	 	DELMARVA LABORATORIES, INC. (Debtor)
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Jean M. Nelson
	 

	 	 	 	 
	 

	 	 	 	Jean M. Nelson, Executive Vice
President and

Chief Financial Officer
	 
	 	 	 	 
	 	 	Address and Facsimile Number of
	 	 	Chief Executive Office of Debtor:
	 
	 	 	 	 
	 	 	3200 Meacham Boulevard
	 	 	Fort Worth, Texas 76137
	 	 	Attention: Jean M. Nelson, Chief Financial Officer
	 
	 	 	 	 
	 	 	Facsimile Number: (817) 831-8362






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EXHIBIT A




Additional Locations of Places of Business of Debtor

and/or Additional Locations of Collateral




None.




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EXHIBIT B




UCC Filing Office(s)




Virginia Secretary of State




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SECOND AMENDED AND RESTATED AGREEMENT OF PLEDGE




     The undersigned, VIRBAC AH, INC., a Delaware corporation, (the “Pledgor”) hereby pledges and
delivers and grants a security interest in and general lien upon and right of setoff to First Bank,
as agent (in such capacity, the “Agent”) for itself and the other Lenders (as defined therein) from
time to time a party to that certain Loan Agreement dated as of the date hereof made by and among
the Pledgor, Virbac Corporation, a Delaware corporation, PM Resources, Inc., a Missouri
corporation, St. JON Laboratories, Inc., a California corporation, Francodex Laboratories, Inc., a
Kansas corporation, Delmarva Laboratories, Inc., a Virginia corporation (collectively, with the
Pledgor, the “Borrowers”), the Lenders from time to time party thereto and the Agent, as the same
may from time to time be amended, modified, extended, renewed or restated (the “Loan Agreement”;
all capitalized terms used and not otherwise defined in this Second Amended and Restated Agreement
of Pledge (this “Agreement of Pledge”) shall have the respective meanings ascribed to them in the
Loan Agreement), as collateral security for the payment of all of the Borrowers’ Obligations to
Agent and/or any of the Lenders, now existing or hereafter arising, absolute or contingent, joint
or several or joint and several, otherwise secured or unsecured, due or not due, direct or
indirect, expressed or implied in law, contractual or tortious, liquidated or unliquidated, at law
or in equity, or otherwise, and whether heretofore or hereafter incurred by the Borrowers, or any
of them, and whether as principal, surety, endorser, guarantor or otherwise (collectively, the
“Secured Obligations”), the following stocks, bonds, notes, money, commercial paper, documents,
instruments, securities and other property belonging to the Pledgor:




One Thousand (1,000) shares of Francodex Laboratories, Inc. common stock
evidenced by certificate number 2, which constitutes all of the issued and
outstanding voting stock of Francodex Laboratories, Inc.


together with all rights, income, revenues and profits therefrom, including without limitation all
dividends, distributions (cash or stock, extraordinary as well as ordinary), interest and other
payments, also together with all money, instruments, commercial paper, documents, notes, stocks,
bonds, securities, credits, choses in action, claims, demands, and any interests therein, as well
as any other property, rights and interests, of the Pledgor which from time to time hereafter shall
be delivered to or come into the possession, custody or control of the Agent or any of the Lenders,
or any of their respective agents and for any purpose, including without limitation (i) items in
transit to or from or set apart for Agent, any such Lender or any of their respective agents or
correspondents, (ii) the balance of every deposit account of the Pledgor now or hereinafter
existing with the Agent or any of the Lenders, whether general, special or for any specific
purpose, which deposit accounts may be set off against any or all of said Secured Obligations at
any time, whether or not the same be then due, and (iii) any other property of the Pledgor from
whatever source derived, real and/or personal, in which the Pledgor hereafter grants to the Agent,
for the ratable benefit of the Lenders, a security interest, lien, claim or other encumbrance,
together with all additions to any of the foregoing, substitutions or replacements thereof, changes
in any of the foregoing, and all proceeds and products of any of the foregoing (collectively,
“collateral security”).




     The Agent shall have the right at any time after default of the Borrowers, or any of them,
with respect to the Secured Obligations, at the direction of the Required Lenders: (1) to transfer
or cause to be transferred to or registered in the name of the Agent, or its nominee or nominees,
all or any portion of the collateral security, and thereafter to exercise all rights with respect
thereto as the absolute owner thereof, all without notice to or liability to the Pledgor, except to
account for property actually received by Agent; provided, however, that Agent and the Lenders may
treat all cash proceeds as additional collateral security and such proceeds need not be applied to
the reduction of the Secured Obligations unless Agent and the Lenders so elect; (2) in Agent’s
name, or in the name of the Pledgor, demand, sue for, collect and receive money, securities and
other property which may at any time be payable or receivable on account



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of or in exchange for any
collateral security, or make any compromise or settlement that Agent considers desirable with
respect thereto or renew or extend the time of payment or otherwise modify the terms of
any obligation included in the collateral security; provided, however, it is expressly agreed that
neither Agent nor any of the Lenders shall be obligated to take any step to preserve rights against
prior parties on any of the collateral security, and that reasonable care of the collateral
security shall not include the taking of any such step; (3) foreclose the lien of any security
interest included in the collateral security and become the purchaser, or have any one or more of
the Lenders become the purchaser, of the property constituting any such collateral security without
thereby affecting the Secured Obligations or any liability of the Pledgor to Agent and/or the
Lenders; (4) transfer any of the Secured Obligations and any collateral security therefor, with
Agent and the Lenders being thereafter fully discharged from every claim and responsibility with
respect to any such Secured Obligations and collateral security so transferred; and (5) surrender
or deliver, without further liability on the part of Agent or any of the Lenders to account
therefor, all or any part of the collateral security to or upon the written order of the Pledgor,
permit substitutions therefor or additions thereto, and accept the receipt of the Pledgor for any
collateral security, which receipt shall be a full and complete discharge of Agent and each of the
Lenders as to the Pledgor with respect to the collateral security so delivered.



     The condition of this pledge is that if default be made by the Borrowers, or any of them, in
the payment of any of the Secured Obligations when due, whether by reason of demand, acceleration
or otherwise, Agent may: (1) appropriate and apply toward the payment and discharge of any such
Secured Obligations, moneys on deposit or otherwise held by Agent and/or any of the Lenders for the
account of, to the credit of, or belonging to the Pledgor; (2) sell or cause to be sold any
collateral security; and (3) exercise any or all the rights and remedies of a secured party under
the Uniform Commercial Code of Missouri (the “Code”).



     Any sale of collateral security may be made without demand of performance and any requirement
of the Code for reasonable notice to the Pledgor shall be met if such notice is mailed, postage
prepaid, to the Pledgor at its address as it appears herein or as last shown on the records of
Agent at least ten business days before the time of sale, disposition or other event giving rise to
the notice. The Pledgor agrees it shall be reasonable for the Agent to sell the collateral
security on credit for present or future delivery without any assumption of any credit risk. In
case of a public sale, notice published by Agent for ten days in a newspaper of general circulation
in the City of St. Louis shall be sufficient. The proceeds of any sale or sales of collateral
security shall be applied by Agent and the Lenders in the following order: (1) to expenses,
including without limitation legal fees and expenses, arising from any one or more of the
enforcement of any of the provisions hereof, the enforcement of any of the Secured Obligations, any
actual or attempted sale, or representation of Agent and the Lenders in connection with bankruptcy
or insolvency proceedings; (2) to the payment or the reduction of any one or combination of the
Secured Obligations to Agent and the Lenders with the right of the Agent to distribute or allocate
such proceeds as Agent and the Required Lenders shall elect, and their determination with respect
to such allocation shall be conclusive; (3) to the payment of any surplus remaining after payment
of the amounts mentioned, to the Pledgor or to whomsoever may be lawfully entitled thereto.



     The Pledgor hereby expressly waives: (a) any irregularity, invalidity or unenforceability of
any of the Secured Obligations hereby secured; (b) notice of the acceptance hereof by Agent or any
of the Lenders; (c) notice of the existence of or amendment or modification to or waiver or other
actions or inactions by Agent or any of the Lenders with respect to any of said Secured Obligations
of the Borrowers, or any of them, and any security or guaranties therefor; (d) notice of default by
the Borrowers, or any of them, in the payment of any of the Secured Obligations; (e) presentment,
demand for payment, protest, and notice of dishonor and of protest of any such Secured Obligations;
or (f) any other notice of any kind or character.



- 358 -









 





     The Pledgor hereby expressly waives any and all rights of subrogation, reimbursement,
contribution and indemnity whatsoever with respect to each of the Borrowers and shall have no right
of recourse to or with respect to any assets or property of any of the Borrowers or to any
collateral owned by
any of the Borrowers for the Secured Obligations secured hereby unless and until all of said
Secured Obligations shall have been paid in full, no Letters of Credit issued for the account of
any of the Borrowers remain outstanding and all commitments of Agent and the Lenders to make any
Loans or other advances to or for the benefit of any of the Borrowers under the Loan Agreement or
the other Transaction Documents have been terminated. The Pledgor shall have no right of
subrogation, reimbursement, contribution or indemnity whatsoever and no right of recourse to or
with respect to any assets or property of any guarantor or guarantors or to any collateral not
owned by the Borrowers for the Secured Obligations secured hereby unless and until all of said
Secured Obligations shall have been paid in full, no Letters of Credit issued for the account of
any of the Borrowers remain outstanding and all commitments of Agent and the Lenders to make any
Loans or other advances to or for the benefit of any of the Borrowers under the Loan Agreement or
the other Transaction Documents have been terminated.



     The Pledgor hereby expressly consents: (a) to the terms and conditions of any present and
future agreements executed by the Borrowers, or any of them, evidencing, amending or modifying in
any way, the Secured Obligations or in connection therewith regarding disposition of any security
or guaranties for any of the Secured Obligations; (b) to the terms and conditions of any present
and future amendments, modifications, waivers or other actions or inactions by Agent and the
Lenders with respect to the Secured Obligations or any security or guaranties therefor; (c) that
Agent and the Lenders may deal with the collateral security hereby pledged as the absolute property
of the Borrowers, and, when deemed desirable by Agent and the Required Lenders, Agent may, for and
in the name, place and stead of the Pledgor, execute endorsements, assignments or other instruments
of conveyance or transfer without notice to the Pledgor; and (d) that Agent may deliver all such
collateral security to any of the Borrowers or make such disposition thereof as any of the
Borrowers may instruct.



     The Pledgor hereby represents and warrants to Agent and the Lenders that the Pledgor is the
legal and equitable owner of the collateral security free and clear of any and all liens, security
interests, charges and encumbrances of every kind and nature, and that the Pledgor has full right,
power and authority to pledge, assign and deliver the collateral security hereunder.



     The Pledgor agrees to do such further acts and things and to execute and deliver such
additional assignments, agreements and instruments as Agent or any of the Lenders may at any time
reasonably request in order to better assure and confirm to Agent and the Lenders their respective
rights, powers and remedies hereunder. The Pledgor hereby makes, constitutes and appoints the
Agent the true and lawful agent and attorney-in-fact of the Pledgor with full power of substitution
to execute, endorse and deliver such agreements, documents and instruments and to take such other
action in the name and on behalf of the Pledgor as may be necessary or appropriate to carry out the
intent of this Agreement of Pledge, including, without limitation, the grant of the security
interest granted under this Agreement of Pledge, and to perfect and protect the security interest
granted to Agent for the ratable benefit of the Lenders in respect of the collateral security and
Agent’s rights created under this Agreement of Pledge, which power of attorney is irrevocable
during the term of this Agreement of Pledge. This power of attorney shall in all respects
constitute a durable power of attorney.



     The rights and power of Agent and the Lenders under this Agreement of Pledge (1) are
cumulative and do not exclude any other right which the Agent or any such Lender may have
independent of this Agreement of Pledge; and (2) may be exercised or not exercised at the
discretion of Agent and/or the Lenders (i) without regard to any rights of the Pledgor, (ii)
without forfeiture or waiver because of any



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delay in the exercise thereof, (iii) without imposing
any liability on Agent or any of the Lenders for so exercising or failing to exercise, and (iv) in
the event of a single or partial exercise thereof, without precluding further exercise thereof.



     No delay or omission on the part of Agent or any of the Lenders in exercising any right
hereunder shall operate as a waiver of such right or of any other right hereunder and no waiver
shall be construed as
a bar to or waiver of any right or remedy in the future. In case any one or more of the provisions
contained in this Agreement of Pledge should be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained herein shall not in
any way be affected or impaired thereby.



     This Agreement of Pledge shall inure to the benefit of Agent, the Lenders and their respective
successors and assigns (including without limitation any assignees of any of the Secured
Obligations secured hereby). This Agreement of Pledge is binding upon the Pledgor and the
shareholders, directors, officers, administrators, agents, successors and assigns of the Pledgor.
All pronoun references to the neuter gender herein shall include their masculine and feminine
counterparts. The terms of this Agreement of Pledge, the pledge of the collateral security
hereunder, and the lien created hereby are continuing and shall apply to all existing transactions
and to all future transactions, although such transactions may not be continuous. Revocation or
termination of this Agreement of Pledge, whether by operation of law or otherwise, shall be
effective only when written notice thereof shall have been received by Agent and the Lenders, but
no such revocation or termination shall affect or impair the pledge of collateral security or the
lien hereby created as to any Secured Obligations secured hereby or any commitment by Agent and/or
any of the Lenders to extend credit at the time of receipt by Agent and the Lenders of such notice.



     This Agreement of Pledge shall be governed by and construed in accordance with the laws of the
State of Missouri.



     If at any time or times hereafter Agent or any of the Lenders: (a) employs counsel (including
attorneys who are employees of Agent or such Lender and/or any of their respective affiliates) for
advice or other representation (i) with respect to the collateral security, this Agreement of
Pledge or the administration thereof, (ii) to represent Agent or such Lender in any litigation,
contest, dispute, suit or proceeding or to commence, defend or intervene or to take any other
action in or with respect to any litigation, contest, dispute, suit or proceeding (whether
instituted by Agent, any Lender, any of the Borrowers or any other person) in any way or respect
relating to the collateral security or this Agreement of Pledge, and/or (iii) to enforce any rights
of Agent or such Lender against the Borrowers, or any of them, the Pledgor or any other person
which may be obligated to Agent and the Lenders by virtue of this Agreement of Pledge; (b) takes
any action with respect to the collateral security, or to protect, collect, sell, liquidate or
otherwise dispose of the collateral security; and/or (c) attempts to or enforces Agent’s interest
for the ratable benefit of the Lenders in the collateral security, or any of Agent’s or such
Lender’s rights and remedies against the Pledgor, the reasonable costs, fees and expenses incurred
by Agent and/or any such Lender in any manner or way with respect to the foregoing shall be payable
by the Pledgor to Agent and/or such Lender on demand.



     THE PLEDGOR IRREVOCABLY AGREES THAT SUBJECT TO AGENT’S SOLE AND ABSOLUTE ELECTION, ALL ACTIONS
OR PROCEEDINGS IN ANY WAY, MANNER OR RESPECT ARISING OUT OF OR FROM OR RELATED TO THIS AGREEMENT OF
PLEDGE OR THE COLLATERAL SECURITY SHALL BE LITIGATED ONLY IN COURTS HAVING SITUS WITHIN THE COUNTY
OF ST. LOUIS, STATE OF MISSOURI. THE PLEDGOR HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF
ANY LOCAL, STATE OR FEDERAL



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COURT LOCATED WITHIN SAID COUNTY AND STATE. THE PLEDGOR HEREBY WAIVES
ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE OR ANY LITIGATION BROUGHT IN ACCORDANCE WITH
THIS SECTION. THE PLEDGOR, THE AGENT AND EACH OF THE LENDERS IRREVOCABLY WAIVE THE RIGHT TO TRIAL
BY JURY WITH RESPECT TO ANY ACTION IN WHICH THE PLEDGOR AND ANY ONE OR MORE OF THE AGENT AND/OR THE
LENDERS ARE PARTIES.



     IN THE EVENT ANY OF THE SECURED OBLIGATIONS SECURED HEREBY ARE PAYABLE UPON DEMAND, NEITHER
THIS AGREEMENT OF PLEDGE NOR ANYTHING CONTAINED HEREIN SHALL BE DEEMED TO ALTER OR IMPINGE UPON THE
DEMAND CHARACTER OF SUCH SECURED OBLIGATION.



Dated at St. Louis, Missouri, this 29th day of June, 2006.



	 	 	 	 	 	 	 
	 	 	VIRBAC AH, INC., Pledgor
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Jean M. Nelson
	 	 	 	 	 
	 	 	 	 	Jean M. Nelson, Chief Financial Officer
	 
	 	 	 	 	 	 
	 	 	Address: 	3200 Meacham Boulevard
	 

	 	 	 	Fort Worth, TX 76137






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THIRD AMENDED AND RESTATED AGREEMENT OF PLEDGE




     The undersigned, VIRBAC CORPORATION, a Delaware corporation, (the “Pledgor”) hereby pledges
and delivers and grants a security interest in and general lien upon and right of setoff to First
Bank, as agent (in such capacity, the “Agent”) for itself and the other Lenders (as defined
therein) from time to time a party to that certain Loan Agreement dated as of the date hereof made
by and among the Pledgor, PM Resources, Inc., a Missouri corporation, St. JON Laboratories, Inc., a
California corporation, Virbac AH, Inc., a Delaware corporation, Francodex Laboratories, Inc., a
Kansas corporation, Delmarva Laboratories, Inc., a Virginia corporation (collectively, with the
Pledgor, the “Borrowers”), the Lenders from time to time party thereto and the Agent, as the same
may from time to time be amended, modified, extended, renewed or restated (the “Loan Agreement”;
all capitalized terms used and not otherwise defined in this Third Amended and Restated Agreement
of Pledge (this “Agreement of Pledge”) shall have the respective meanings ascribed to them in the
Loan Agreement), as collateral security for the payment of all of the Borrowers’ Obligations to
Agent and/or any of the Lenders, now existing or hereafter arising, absolute or contingent, joint
or several or joint and several, otherwise secured or unsecured, due or not due, direct or
indirect, expressed or implied in law, contractual or tortious, liquidated or unliquidated, at law
or in equity, or otherwise, and whether heretofore or hereafter incurred by the Borrowers, or any
of them, and whether as principal, surety, endorser, guarantor or otherwise (collectively, the
“Secured Obligations”), the following stocks, bonds, notes, money, commercial paper, documents,
instruments, securities and other property belonging to the Pledgor:




One Thousand (1,000) shares of PM Resources, Inc. common stock evidenced
by certificate number 2, which constitutes all of the issued and outstanding
voting stock of PM Resources, Inc.




One Thousand (1,000) shares of St. JON Laboratories, Inc. common stock
evidenced by certificate number 1, which constitutes all of the issued and
outstanding voting stock of St. JON Laboratories, Inc.




One Thousand (1,000) shares of Virbac AH, Inc. common stock evidenced by
certificate number 3, which constitutes all of the issued and outstanding voting
stock of Virbac AH, Inc. 




One Thousand Five Hundred (1,500) shares of Delmarva Laboratories, Inc. common
stock evidenced by certificate numbers 1, 2 and 3, which constitutes all of the
issued and outstanding voting stock of Delmarva Laboratories, Inc. 


together with all rights, income, revenues and profits therefrom, including without limitation all
dividends, distributions (cash or stock, extraordinary as well as ordinary), interest and other
payments, also together with all money, instruments, commercial paper, documents, notes, stocks,
bonds, securities, credits, choses in action, claims, demands, and any interests therein, as well
as any other property, rights and interests, of the Pledgor which from time to time hereafter shall
be delivered to or come into the possession, custody or control of the Agent or any of the Lenders,
or any of their respective agents and for any purpose, including without limitation (i) items in
transit to or from or set apart for Agent, any such Lender or any of their respective agents or
correspondents, (ii) the balance of every deposit account of the Pledgor now or hereinafter
existing with the Agent or any of the Lenders, whether general, special or for any specific
purpose, which deposit accounts may be set off against any or all of said Secured Obligations at
any time, whether or not the same be then due, and (iii) any other property of the Pledgor from
whatever source derived, real and/or personal, in which the Pledgor hereafter grants to the Agent,
for the ratable benefit of the Lenders, a security interest, lien, claim or other encumbrance,
together with all


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additions to any of the foregoing, substitutions or replacements thereof, changes
in any of the foregoing, and all proceeds and products of any of the foregoing (collectively,
“collateral security”).




     The Agent shall have the right at any time after default of the Borrowers, or any of them,
with respect to the Secured Obligations, at the direction of the Required Lenders: (1) to transfer
or cause to be transferred to or registered in the name of the Agent, or its nominee or nominees,
all or any portion of the collateral security, and thereafter to exercise all rights with respect
thereto as the absolute owner thereof, all without notice to or liability to the Pledgor, except to
account for property actually received by Agent; provided, however, that Agent and the Lenders may
treat all cash proceeds as additional collateral security and such proceeds need not be applied to
the reduction of the Secured Obligations unless Agent and the Lenders so elect; (2) in Agent’s
name, or in the name of the Pledgor, demand, sue for, collect and receive money, securities and
other property which may at any time be payable or receivable on account of or in exchange for any
collateral security, or make any compromise or settlement that Agent considers desirable with
respect thereto or renew or extend the time of payment or otherwise modify the terms of any
obligation included in the collateral security; provided, however, it is expressly agreed that
neither Agent nor any of the Lenders shall be obligated to take any step to preserve rights against
prior parties on any of the collateral security, and that reasonable care of the collateral
security shall not include the taking of any such step; (3) foreclose the lien of any security
interest included in the collateral security and become the purchaser, or have any one or more of
the Lenders become the purchaser, of the property constituting any such collateral security without
thereby affecting the Secured Obligations or any liability of the Pledgor to Agent and/or the
Lenders; (4) transfer any of the Secured Obligations and any collateral security therefor, with
Agent and the Lenders being thereafter fully discharged from every claim and responsibility with
respect to any such Secured Obligations and collateral security so transferred; and (5) surrender
or deliver, without further liability on the part of Agent or any of the Lenders to account
therefor, all or any part of the collateral security to or upon the written order of the Pledgor,
permit substitutions therefor or additions thereto, and accept the receipt of the Pledgor for any
collateral security, which receipt shall be a full and complete discharge of Agent and each of the
Lenders as to the Pledgor with respect to the collateral security so delivered.



     The condition of this pledge is that if default be made by the Borrowers, or any of them, in
the payment of any of the Secured Obligations when due, whether by reason of demand, acceleration
or otherwise, Agent may: (1) appropriate and apply toward the payment and discharge of any such
Secured Obligations, moneys on deposit or otherwise held by Agent and/or any of the Lenders for the
account of, to the credit of, or belonging
to the Pledgor; (2) sell or cause to be sold any collateral security; and (3) exercise any or all
the rights and remedies of a secured party under the Uniform Commercial Code of Missouri (the
“Code”).



     Any sale of collateral security may be made without demand of performance and any requirement
of the Code for reasonable notice to the Pledgor shall be met if such notice is mailed, postage
prepaid, to the Pledgor at its address as it appears herein or as last shown on the records of
Agent at least ten business days before the time of sale, disposition or other event giving rise to
the notice. The Pledgor agrees it shall be reasonable for the Agent to sell the collateral
security on credit for present or future delivery without any assumption of any credit risk. In
case of a public sale, notice published by Agent for ten days in a newspaper of general circulation
in the City of St. Louis shall be sufficient. The proceeds of any sale or sales of collateral
security shall be applied by Agent and the Lenders in the following order: (1) to expenses,
including without limitation legal fees and expenses, arising from any one or more of the
enforcement of any of the provisions hereof, the enforcement of any of the Secured Obligations, any
actual or attempted sale, or representation of Agent and the Lenders in connection with bankruptcy
or insolvency proceedings; (2) to the payment or the reduction of any one or combination of the
Secured Obligations to Agent and the Lenders with the right of the Agent to distribute or allocate
such proceeds as



- 363 -









 







Agent and the Required Lenders shall elect, and their determination with respect
to such allocation shall be conclusive; (3) to the payment of any surplus remaining after payment
of the amounts mentioned, to the Pledgor or to whomsoever may be lawfully entitled thereto.



     The Pledgor hereby expressly waives: (a) any irregularity, invalidity or unenforceability of
any of the Secured Obligations hereby secured; (b) notice of the acceptance hereof by Agent or any
of the Lenders; (c) notice of the existence of or amendment or modification to or waiver or other
actions or inactions by Agent or any of the Lenders with respect to any of said Secured Obligations
of the Borrowers, or any of them, and any security or guaranties therefor; (d) notice of default by
the Borrowers, or any of them, in the payment of any of the Secured Obligations; (e) presentment,
demand for payment, protest, and notice of dishonor and of protest of any such Secured Obligations;
or (f) any other notice of any kind or character.



     The Pledgor hereby expressly waives any and all rights of subrogation, reimbursement,
contribution and indemnity whatsoever with respect to each of the Borrowers and shall have no right
of recourse to or with respect to any assets or property of any of the Borrowers or to any
collateral owned by any of the Borrowers for the Secured Obligations secured hereby unless and
until all of said Secured Obligations shall have been paid in full, no Letters of Credit issued for
the account of any of the Borrowers remain outstanding and all commitments of Agent and the Lenders
to make any Loans or other advances to or for the benefit of any of the Borrowers under the Loan
Agreement or the other Transaction Documents have been terminated. The Pledgor shall have no right
of subrogation, reimbursement, contribution or indemnity whatsoever and no right of recourse to or
with respect to any assets or property of any guarantor or guarantors or to any collateral not
owned by the Borrowers for the Secured Obligations secured hereby
unless and until all of said Secured Obligations shall have been paid in full, no Letters of Credit
issued for the account of any of the Borrowers remain outstanding and all commitments of Agent and
the Lenders to make any Loans or other advances to or for the benefit of any of the Borrowers under
the Loan Agreement or the other Transaction Documents have been terminated.



     The Pledgor hereby expressly consents: (a) to the terms and conditions of any present and
future agreements executed by the Borrowers, or any of them, evidencing, amending or modifying in
any way, the Secured Obligations or in connection therewith regarding disposition of any security
or guaranties for any of the Secured Obligations; (b) to the terms and conditions of any present
and future amendments, modifications, waivers or other actions or inactions by Agent and the
Lenders with respect to the Secured Obligations or any security or guaranties therefor; (c) that
Agent and the Lenders may deal with the collateral security hereby pledged as the absolute property
of the Borrowers, and, when deemed desirable by Agent and the Required Lenders, Agent may, for and
in the name, place and stead of the Pledgor, execute endorsements, assignments or other instruments
of conveyance or transfer without notice to the Pledgor; and (d) that Agent may deliver all such
collateral security to any of the Borrowers or make such disposition thereof as any of the
Borrowers may instruct.



     The Pledgor hereby represents and warrants to Agent and the Lenders that the Pledgor is the
legal and equitable owner of the collateral security free and clear of any and all liens, security
interests, charges and encumbrances of every kind and nature, and that the Pledgor has full right,
power and authority to pledge, assign and deliver the collateral security hereunder.



     The Pledgor agrees to do such further acts and things and to execute and deliver such
additional assignments, agreements and instruments as Agent or any of the Lenders may at any time
reasonably request in order to better assure and confirm to Agent and the Lenders their respective
rights, powers and remedies hereunder. The Pledgor hereby makes, constitutes and appoints the
Agent the true and lawful agent and attorney-in-fact of the Pledgor with full power of substitution
to execute, endorse and deliver



- 364 -









 







such agreements, documents and instruments and to take such other
action in the name and on behalf of the Pledgor as may be necessary or appropriate to carry out the
intent of this Agreement of Pledge, including, without limitation, the grant of the security
interest granted under this Agreement of Pledge, and to perfect and protect the security interest
granted to Agent for the ratable benefit of the Lenders in respect of the collateral security and
Agent’s rights created under this Agreement of Pledge, which power of attorney is irrevocable
during the term of this Agreement of Pledge. This power of attorney shall in all respects
constitute a durable power of attorney.



     The rights and power of Agent and the Lenders under this Agreement of Pledge (1) are
cumulative and do not exclude any other right which the Agent or any such Lender may have
independent of this Agreement of Pledge; and (2) may be exercised or not exercised at the
discretion of Agent and/or the Lenders (i) without regard to any rights of the Pledgor, (ii)
without forfeiture or waiver because of any delay in the exercise
thereof, (iii) without imposing any liability on Agent or any of the Lenders for so exercising or
failing to exercise, and (iv) in the event of a single or partial exercise thereof, without
precluding further exercise thereof.



     No delay or omission on the part of Agent or any of the Lenders in exercising any right
hereunder shall operate as a waiver of such right or of any other right hereunder and no waiver
shall be construed as a bar to or waiver of any right or remedy in the future. In case any one or
more of the provisions contained in this Agreement of Pledge should be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby.



     This Agreement of Pledge shall inure to the benefit of Agent, the Lenders and their respective
successors and assigns (including without limitation any assignees of any of the Secured
Obligations secured hereby). This Agreement of Pledge is binding upon the Pledgor and the
shareholders, directors, officers, administrators, agents, successors and assigns of the Pledgor.
All pronoun references to the neuter gender herein shall include their masculine and feminine
counterparts. The terms of this Agreement of Pledge, the pledge of the collateral security
hereunder, and the lien created hereby are continuing and shall apply to all existing transactions
and to all future transactions, although such transactions may not be continuous. Revocation or
termination of this Agreement of Pledge, whether by operation of law or otherwise, shall be
effective only when written notice thereof shall have been received by Agent and the Lenders, but
no such revocation or termination shall affect or impair the pledge of collateral security or the
lien hereby created as to any Secured Obligations secured hereby or any commitment by Agent and/or
any of the Lenders to extend credit at the time of receipt by Agent and the Lenders of such notice.



     This Agreement of Pledge shall be governed by and construed in accordance with the laws of the
State of Missouri.



     If at any time or times hereafter Agent or any of the Lenders: (a) employs counsel (including
attorneys who are employees of Agent or such Lender and/or any of their respective affiliates) for
advice or other representation (i) with respect to the collateral security, this Agreement of
Pledge or the administration thereof, (ii) to represent Agent or such Lender in any litigation,
contest, dispute, suit or proceeding or to commence, defend or intervene or to take any other
action in or with respect to any litigation, contest, dispute, suit or proceeding (whether
instituted by Agent, any Lender, any of the Borrowers or any other person) in any way or respect
relating to the collateral security or this Agreement of Pledge, and/or (iii) to enforce any rights
of Agent or such Lender against the Borrowers, or any of them, the Pledgor or any other person
which may be obligated to Agent and the Lenders by virtue of this Agreement of Pledge; (b) takes
any action with respect to the collateral security, or to protect, collect,




- 365 -









 






sell, liquidate or
otherwise dispose of the collateral security; and/or (c) attempts to or enforces Agent’s interest
for the ratable benefit of the Lenders in the collateral security, or any of Agent’s or such
Lender’s rights and remedies against the Pledgor, the reasonable costs, fees and expenses incurred
by Agent and/or
any such Lender in any manner or way with respect to the foregoing shall be payable by the Pledgor
to Agent and/or such Lender on demand.




     THE PLEDGOR IRREVOCABLY AGREES THAT SUBJECT TO AGENT’S SOLE AND ABSOLUTE ELECTION, ALL ACTIONS
OR PROCEEDINGS IN ANY WAY, MANNER OR RESPECT ARISING OUT OF OR FROM OR RELATED TO THIS AGREEMENT OF
PLEDGE OR THE COLLATERAL SECURITY SHALL BE LITIGATED ONLY IN COURTS HAVING SITUS WITHIN THE COUNTY
OF ST. LOUIS, STATE OF MISSOURI. THE PLEDGOR HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF
ANY LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN SAID COUNTY AND STATE. THE PLEDGOR HEREBY WAIVES
ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE OR ANY LITIGATION BROUGHT IN ACCORDANCE WITH
THIS SECTION. THE PLEDGOR, THE AGENT AND EACH OF THE LENDERS IRREVOCABLY WAIVE THE RIGHT TO TRIAL
BY JURY WITH RESPECT TO ANY ACTION IN WHICH THE PLEDGOR AND ANY ONE OR MORE OF THE AGENT AND/OR THE
LENDERS ARE PARTIES.



     IN THE EVENT ANY OF THE SECURED OBLIGATIONS SECURED HEREBY ARE PAYABLE UPON DEMAND, NEITHER
THIS AGREEMENT OF PLEDGE NOR ANYTHING CONTAINED HEREIN SHALL BE DEEMED TO ALTER OR IMPINGE UPON THE
DEMAND CHARACTER OF SUCH SECURED OBLIGATION.



          Dated at St. Louis, Missouri, this 29th day of June, 2006.




	 	 	 	 	 	 	 	 	 
	 	 	VIRBAC CORPORATION, Pledgor	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	/s/ Jean M. Nelson	 	 
	 	 	 	 	 	 	 
	 	 	 	 	Jean M. Nelson, Chief Financial Officer	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	Address:	 	3200 Meacham Boulevard	 	 
	 

	 	 	 	 	 	Fort Worth, TX 76137	 	 






- 366 -









 






PATENT, TRADEMARK AND LICENSE SECURITY AGREEMENT




     THIS PATENT, TRADEMARK AND LICENSE SECURITY AGREEMENT (this “Agreement”) is made and entered
into as of the 29th day of June, 2006 by ST. JON LABORATORIES, INC., a California corporation
(“Debtor”), in favor of FIRST BANK (“Agent”), as agent for itself and other Lenders from time to
time a party to the Loan Agreement (hereinafter defined).



WITNESSETH:




     WHEREAS, Debtor, PM Resources, Inc., Virbac AH, Inc., Francodex Laboratories, Inc., Virbac
Corporation, Delmarva Laboratories, Inc. (collectively, the “Borrowers”), Agent and the Lenders are
entering into an amended and restated Loan Agreement dated as of the date hereof (as amended from
time to time, the “Loan Agreement,” all capitalized terms used and not otherwise defined herein
shall have the respective meanings ascribed to them in the Loan Agreement); and



     WHEREAS, as a condition precedent to Agent and the Lenders entering into the Loan Agreement,
Agent and the Lenders have required that Debtor execute and deliver this Agreement to Agent for the
ratable benefit of the Lenders; and



     WHEREAS, in order to induce Agent and the Lenders to enter into the Loan Agreement, Debtor has
agreed to execute and deliver this Agreement to Agent for the ratable benefit of the Lenders; and



     WHEREAS, this Agreement is being executed in connection with and in addition to the Security
Agreement dated as of the date hereof, and executed by Debtor in favor of Agent pursuant to which
Debtor has granted to Agent for the ratable benefit of the Lenders a security interest in and lien
on, among other things, all accounts, inventory, general intangibles, goods, machinery, equipment,
books, records, goodwill, patents, patent applications, trademarks and trademark applications now
owned or hereafter acquired by Debtor and all proceeds thereof;



     NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, Debtor hereby
covenants and agrees with Agent and the Lenders as follows:



     1. Grant of Security Interest. For value received, Debtor hereby grants Agent for the
ratable benefit of the Lenders a security interest in and lien on all of Debtor’s right, title and
interest in, to and under the following described property, whether now owned and existing or
hereafter created, acquired or arising (collectively, the “Collateral”):




     (a) all patents and patent applications, and the inventions and improvements described
and claimed therein, including, without limitation, each patent and patent application
listed on Schedules A and B, respectively, attached hereto and
incorporated herein by reference (as the same may be amended pursuant hereto from time to
time) and (i) the reissues, divisions, continuations, renewals, extensions and
continuations-in-part thereof, (ii) all income, damages and payments now and/or hereafter
due or payable under or with respect thereto, including, without limitation, license
royalties, damages and payments for past or future infringements thereof, (iii) the right to
sue for past, present and future infringements thereof and (iv) all rights corresponding
thereto throughout the world (all of the foregoing patents and patent applications together
with the items described in clauses (i) through (iv) of this subsection (a) are hereinafter
collectively referred to herein as the “Patents”);



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     (b) all trademarks, service marks, trademark or service mark registrations, trade
names, trade styles, trademark or service mark applications and brand names, including,
without limitation, common law rights and each mark and application listed on
Schedules C and D, respectively, attached hereto and incorporated
herein by reference; and (i) renewals or extensions thereof, (ii) all income, damages and
payments now and/or hereafter due or payable with respect thereto, including, without
limitation, license royalties, damages and payments for past or future infringements
thereof, (iii) the right to sue for past, present and future infringements thereof and (iv)
all rights corresponding thereto throughout the world (all of the foregoing trademarks,
trade names, service marks and applications and registrations thereof together with the
items described in clauses (i) through (iv) of this subsection (b) are hereinafter
collectively referred to herein as the “Trademarks”);




     (c) the license(s) listed on Schedule E attached hereto and incorporated herein
by reference and all other license agreements (to the extent such license agreements may be
assigned without violating the terms of any such license agreement) with respect to any of
the Patents or the Trademarks or any other patent, trademark, service mark or any
application or registration thereof or any other trade name or trade style between Debtor
and any other Person, whether Debtor is licensor or licensee (all of the forgoing license
agreements and Debtor’s rights thereunder are hereinafter collectively referred to as the
“Licenses”);




     (d) the goodwill of Debtor’s business connected with and symbolized by the Trademarks;
and




     (e) all proceeds, including, without limitation, proceeds which constitute property of
the types described in (a), (b), (c) and (d) above and any rents and profits of any of the
foregoing items, whether cash or noncash, immediate or remote, and insurance proceeds, and
all products of (a), (b), (c) and (d) above, and any indemnities, warranties and guaranties
payable by reason of loss or damage to or otherwise with respect to any of the foregoing
items;


to secure the payment of (i) any and all of the present and future Borrowers’ Obligations, (ii) any
and all present and future indebtedness (principal, interest, fees, collection costs and expenses
and other amounts), liabilities and obligations (including, without limitation, guaranty
obligations and indemnity obligations) of Debtor under this Agreement, (iii) any and all other
indebtedness (principal, interest, fees, collection costs and expenses and other amounts),
liabilities and obligations (including, without limitation, guaranty obligations, letter of credit
reimbursement obligations and indemnity obligations) of Borrowers to Agent and/or any of the
Lenders of every kind and character, now existing or hereafter arising, absolute or contingent,
joint or several or joint and several, otherwise secured or unsecured, due or not due, direct or
indirect, expressed or implied in law, contractual or tortious, liquidated or unliquidated, at law
or in equity, or otherwise, and whether heretofore, now or hereafter incurred or given by Borrowers
as principal, surety, endorser, guarantor or otherwise, and whether created directly or acquired by
Agent or any such Lender by assignment or otherwise and (iv) any and all costs of collection, legal
expenses and attorneys’ fees and expenses incurred by Agent or any of the Lenders upon the
occurrence of any default or event of default under this Agreement, in collecting or enforcing
payment of any such indebtedness, liabilities or obligations or in preserving, protecting or
realizing on the Collateral hereunder or in representing Agent and/or any of the Lenders in
connection with bankruptcy or insolvency proceedings (hereinafter collectively referred to as the
“Secured Obligations”).




     2. Representations, Warranties and Covenants of Debtor. Debtor hereby represents and
warrants to Agent and the Lenders, and covenants and agrees with Agent and the Lenders, that:



- 368 -









 






     (a) all of the Patents, Trademarks and Licenses are subsisting and have not been
adjudged invalid or unenforceable, in whole or in part, and are not at this time the subject
of any challenge to their validity or enforceability;




     (b) to the best of Debtor’s knowledge, each of the Patents, Trademarks and Licenses is
valid and enforceable;




     (c) (i) no claim has been made that the use of any of the Patents, Trademarks or
Licenses does or may violate the rights of any third person, (ii) no claims for patent
infringement have been commenced in connection with any of the Patents and (iii) no claims
for trademark infringement have been commenced in connection with any of the Trademarks;




     (d) Debtor is the sole and exclusive owner of the entire and unencumbered right, title
and interest in and to each of the Patents, Trademarks and Licenses, free and clear of any
and all liens, charges and encumbrances, including, without limitation, any and all pledges,
assignments, licenses, registered user agreements, shop rights and covenants by Debtor not
to sue third persons;




     (e) Debtor has the unqualified right, power and authority to enter into this Agreement
and perform its terms;




     (f) Debtor has used, and will continue to use for the duration of this Agreement,
proper statutory notice in connection with its use of the registered Patents and Trademarks;




     (g) Debtor has the exclusive, royalty-free right and license to use the Patents,
Trademarks and Licenses and agrees not to transfer any rights or interest in any of the
Patents, Trademarks and/or Licenses during the term of this Agreement; and




     (h) Debtor has no notice of any suits or actions commenced or threatened with reference
to any of the Patents, Trademarks and/or Licenses.



     3. Inspection Rights; Product Quality. Debtor will permit inspection of Debtor’s
facilities which manufacture, inspect or store products sold under any of the Patents, Trademarks
and/or Licenses and inspection of the products and records relating thereto by Agent or any of the
Lenders during normal business hours and at other reasonable times. Debtor will reimburse Agent
and the Lenders upon demand for all costs and expenses incurred by Agent or any of the Lenders in
connection with any such inspection conducted by Agent or any of the Lenders while any Default or
Event of Default under the Loan Agreement has occurred and is continuing. A representative of
Debtor may be present during any such inspection, provided that a particular representative’s
availability or unavailability shall not inhibit or delay such inspection. Debtor agrees (a) to
maintain the quality of any and all products in connection with which the Trademarks are used,
consistent with commercially reasonable practices and (b) to provide Agent and the Lenders, upon
Agent’s or any Lender’s reasonable request from time to time, with a certificate of any officer of
Debtor certifying Debtor’s compliance with the forgoing.



     4. Further Assurances. Debtor hereby agrees that, until (a) all of the Secured
Obligations shall have been paid in full, (b) no Letters of Credit shall remain outstanding, (c)
Agent and the Lenders have no further commitment or obligation to make any loans or advances or
other extensions of credit to Borrowers under the Loan Agreement or otherwise and (d) the Loan
Agreement has expired or been terminated in accordance with its terms, it will not, without the
prior written consent of Required Lenders,



- 369 -









 




enter into any agreement (for example, a license or
sublicense agreement) which is inconsistent with Debtor’s obligations under this Agreement or the
Loan Agreement, and Debtor agrees that it will not take
any action or permit any action to be taken by others subject to its control, including licensees,
or fail to take any action which would affect the validity or enforcement of the rights transferred
to Agent for the ratable benefit of the Lenders under this Agreement. Debtor further agrees that
at any time and from time to time, at the expense of Debtor, Debtor will promptly execute and
deliver to Agent for the ratable benefit of the Lenders any and all further instruments and
documents and take any and all further action that Agent or the Required Lenders may request in
good faith in order to perfect and protect the security interest granted hereby with respect to the
Patents, Trademarks and Licenses or to enable Agent to exercise its rights and remedies under this
Agreement with respect to the same.




     5. Additional Patents, Trademarks and Licenses. If Debtor (a) becomes aware of any
existing Patents, Trademarks or Licenses of which Debtor has not previously informed Agent and the
Lenders, (b) obtains rights to any new patentable inventions, Patents, Trademarks and/or Licenses
or (c) becomes entitled to the benefit of any Patents, Trademarks and/or Licenses which benefit is
not in existence on the date of this Agreement, the provisions of this Agreement shall
automatically apply thereto and Debtor shall give Agent prompt written notice thereof.



     6. Modification by Lender. Debtor authorizes Agent and the Required Lenders to modify
this Agreement by amending Schedules A, B, C, D and/or
E to include any future patents and patent applications, any future trademarks, service
marks, trademark or service mark registrations, trade names, and trademark or service applications,
and any future licenses, covered by Paragraphs 1 and 5 hereof, without the signature of Debtor if
permitted by applicable law.



     7. Use of Patents, Trademarks and Licenses. So long as no Event of Default under the
Loan Agreement has occurred and is continuing, Debtor may use the Patents and Trademarks and
exercise its rights under the Licenses in any lawful manner not inconsistent with this Agreement on
and in connection with products sold by Debtor, for Debtor’s own benefit and account and for none
other.



     8. Default. If any Event of Default under the Loan Agreement shall have occurred and
be continuing, Agent shall have, in addition to all other rights and remedies given it by this
Agreement, those allowed by law and the rights and remedies of a secured party under the Uniform
Commercial Code as enacted in any jurisdiction in which any of the Patents, Trademarks and/or
Licenses may be located and, without limiting the generality of the foregoing, Agent may
immediately, without demand of performance and without other notice (except as set forth next
below) or demand whatsoever to Debtor, all of which are hereby expressly waived, and without
advertisement, sell at public or private sale or otherwise realize upon, all or from time to time
any of the Patents, Trademarks (together with the goodwill of Debtor associated therewith) and/or
Licenses, or any interest which Debtor may have therein, and after deducting from the proceeds of
sale or other disposition of the Patents, Trademarks or Licenses all expenses (including, without
limitation, all expenses for brokers’ fees and legal services), shall apply the residue of such
proceeds toward the payment of the Secured Obligations in the order and manner as Agent or the
Required Lenders may elect. Notice of any sale or other disposition of any of the Patents,
Trademarks and/or Licenses shall be given to Debtor at least five (5) Domestic Business Days before
the time of any intended public or private sale or other disposition of such Patents, Trademarks
and/or Licenses is to be made, which Debtor hereby agrees shall be reasonable notice of such sale
or other disposition. At any such sale or other disposition, Agent, any Lender or Lenders or any
holder of any of the Secured Obligations may, to the extent permissible under applicable law,
purchase the whole or any part of the Patents, Trademarks and/or Licenses sold, free from any right
of redemption on the part of Debtor, which right is hereby waived and released. Debtor agrees that
upon the occurrence and continuance of any Event of Default, the use by Agent and/or any of the
Lenders of the Patents, Trademarks and Licenses



- 370 -









 




shall be worldwide, and without any liability for
royalties or other related charges from Agent or the Lenders to Debtor. If an Event of Default
shall occur and be continuing, Agent shall have the right, but shall in no way be obligated, to
bring suit in its own name (for the benefit of itself and the Lenders) to
enforce any and all of the Patents, Trademarks and Licenses, and, if Agent shall commence any such
suit, Debtor shall, at the request of Agent or the Required Lenders, do any and all lawful acts and
execute any and all proper documents required by Agent or the Required Lenders in aid of such
enforcement and the Debtor shall promptly, upon demand, reimburse and indemnify Agent and the
Lenders for all costs and expenses incurred by Agent or any of the Lenders in the exercise of its
rights under this Agreement. All of Agent’s and the Lenders’ rights and remedies with respect to
the Patents, Trademarks and Licenses, whether established hereby, by the Security Agreement or by
any other agreement or by law shall be cumulative and may be exercised singularly or concurrently.




     9. Termination of Agreement. At such time as (a) Borrowers shall pay all of the
Secured Obligations in full, (b) no Letters of Credit shall remain outstanding, (c) Agent and the
Lenders shall have no further commitment or obligation to make any loans or advances or other
extensions of credit to Borrowers under the Loan Agreement or otherwise and (d) the Loan Agreement
shall have expired or been terminated in accordance with its terms, this Agreement shall terminate
and Agent shall execute and deliver to Debtor all instruments as may be necessary or proper to
extinguish Agent’s security interest therein, subject to any disposition thereof which may have
been made by Agent pursuant to this Agreement.



     10. Expenses. Any and all fees, costs and expenses of whatever kind or nature,
including, without limitation, the reasonable attorneys’ fees and expenses incurred by Agent in
connection with the preparation of this Agreement and all other documents relating hereto and the
consummation of this transaction, the filing or recording of any documents (including all taxes in
connection therewith) in public offices, the payment or discharge of any taxes, counsel fees,
maintenance fees, encumbrances or other amounts in connection with protecting, maintaining or
preserving the Patents, Trademarks and/or Licenses, or in defending or prosecuting any actions or
proceedings arising out of or related to the Patents, Trademarks and/or Licenses, shall be borne
and paid by Debtor on demand by Agent and until so paid shall be added to the principal amount of
the Secured Obligations and shall bear interest at a rate per annum equal to the lesser of Three
and Three-Fourths Percent (3.75%) over and above the Prime Rate (which interest rate shall
fluctuate as and when the Prime Rate shall change) or the highest rate of interest allowed by law
from the date incurred until reimbursed by Debtor.



     11. Preservation of Patents, Trademarks and Licenses. Debtor shall have the duty (a)
to file and prosecute diligently any patent, trademark or service mark applications pending as of
the date hereof or hereafter, (b) to make application on unpatented but patentable inventions and
on trademarks and service marks, as commercially reasonable and (c) to preserve and maintain all
rights in the Patents, Trademarks and Licenses, as commercially reasonable. Any expenses incurred
in connection with Debtor’s obligations under this Section 11 shall be borne by Debtor.



     12. Agent Appointed Attorney-In-Fact. If any Event of Default under the Loan
Agreement shall have occurred and be continuing, Debtor hereby authorizes and empowers Agent to
make, constitute and appoint any officer or agent of Agent as Agent or the Required Lenders may
select, in its or their sole discretion, as Debtor’s true and lawful attorney-in-fact, with the
power to endorse Debtor’s name on all applications, documents, papers and instruments necessary for
Agent and/ or any of the Lenders to use the Patents, Trademarks and Licenses, or to grant or issue
any exclusive or non-exclusive license under the Patents, Trademarks and Licenses to anyone else,
or necessary for Agent to assign, pledge, convey or otherwise transfer title to or dispose of the
Patents, Trademarks and Licenses to anyone else. Debtor



- 371 -









 




hereby ratifies all that such attorney
shall lawfully do or cause to be done by virtue hereof. This power of attorney is coupled with an
interest and shall be irrevocable for the duration of this Agreement.




     13. No Waiver. No course of dealing between Debtor, Agent and the Lenders, nor any
failure to exercise, nor any delay in exercising, on the part of Agent or any of the Lenders, any
right,
power or privilege under this Agreement shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, power or privilege under this Agreement preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.



     14. Severability. The provisions of this Agreement are severable, and if any clause
or provision shall be held invalid and unenforceable in whole or in part in any jurisdiction, then
such invalidity or unenforceability shall affect only such clause or provision, or part thereof, in
such jurisdiction, and shall not in any manner affect such clause or provision in any other
jurisdiction, or any other clause or provision of this Agreement in any jurisdiction.



     15. Amendments. This Agreement is subject to amendment or modification only by a
writing signed by Debtor, Agent and the Required Lenders, except as provided in Paragraph 6 above.



     16. Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted assigns, except that
Debtor may not assign, transfer or delegate any of its rights, obligations or duties under this
Agreement.



     17. Governing Law. The validity and interpretation of this Agreement and the rights
and obligations of the parties hereto shall be governed by and construed in accordance with the
substantive laws of the State of Missouri (without reference to conflict of law principles).



     IN WITNESS WHEREOF, Debtor and Agent have executed this Patent, Trademark and License Security
Agreement as of the date first written above.



	 	 	 	 	 	 	 
	 	 	ST. JON LABORATORIES, INC. (“Debtor”)	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Jean M. Nelson	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Jean M. Nelson, Executive Vice President	 	 
	 

	 	 	 	and Chief Financial Officer	 	 
	 
	 	 	 	 	 	 
	 	 	FIRST BANK (Lender”)	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Traci Dodson	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Traci Dodson, Vice President	 	 






- 372 -









 






CERTIFICATE OF ACKNOWLEDGMENT




	 	 	 	 	 	 	 
	STATE OF Texas

	 	 	)	 	 	 
	 

	 	 	 	 	 	) SS.
	COUNTY OF Tarrant

	 	 	)	 	 	 






     On this 29th day of June, 2006, before me personally appeared Jean M. Nelson, to me personally
known, who, being by me duly sworn, did say that she is the Executive Vice President and Chief
Financial Officer of St. JON Laboratories, Inc., a California corporation, and that the foregoing
instrument was signed on behalf of said corporation by authority of its Board of Directors; and
said Jean M. Nelson acknowledged said instrument to be the free act and deed of said corporation.



     IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal in the County
and State aforesaid, the day and year first above written.



	 	 	 	 	 
	(Seal)

	 	/s/ Karen M. Murr
	 	 
	 

	 	 	 	 
	 

	 	Notary Public	 	 
	 
	 	 	 	 
	My Commission Expires: June 3, 2008.
	 	 	 	 






	 	 	 
	STATE OF MISSOURI
	 	)
	 
	 	) SS.
	COUNTY OF ST. LOUIS
	 	)






     On this 5th day of July, 2006, before me appeared Traci Dodson, to me personally
known, who, being by me duly sworn, did say that she is the Vice President of First Bank, a
Missouri state banking corporation, and that said instrument was signed in behalf of said
corporation, by authority of its Board of Directors; and said Traci Dodson acknowledged said
instrument to be the free act and deed of said corporation.



     IN TESTIMONY WHEREOF, I have hereunto set my hand, and affixed my official seal in the County
and State aforesaid, the day and year first above written.



	 	 	 	 	 
	(Seal)

	 	/s/ Bradley J. Gross
	 	 
	 

	 	 	 	 
	 

	 	Notary Public	 	 
	 
	 	 	 	 
	My Commission Expires:
	 	 	 	 
	August 8, 2009
	 	 	 	 






- 373 -









 






SCHEDULE A




United States Patents




	 	 	 	 	 	 	 	 	 
	Patent No.	 	Date Issued	 	 	Description	 
	D362,118
	 	 	 	 	 	 	 	 






- 374 -









 






SCHEDULE B




United States Patent Applications




	 	 	 	 	 
	Application or Serial No.	 	Patents in Process	 
	None
	 	 	 	 






- 375 -









 





SCHEDULE C




United States Trademarks




	 	 	 	 	 
	Trademark No.	 	Date Issued	 	Description
	2331336
	 	March 21, 2000	 	Maracare






State & Foreign Trademark




	 	 	 	 	 	 	 
	Trademark	 	State/Country	 	Registration No.	 	Date
	C.E.T.
	 	Japan	 	4256160	 	March 26, 1999
	C.E.T.
	 	United Kingdom	 	1566692	 	November 15, 1996






- 376 -









 





SCHEDULE D




United States Trademark Applications




	 	 	 	 	 
	Application No.	 	Date Filed	 	Trademark
	None.
	 	 	 	 






- 377 -









 






SCHEDULE E




Licenses




None




- 378 -









 





AMENDMENT TO

PATENT, TRADEMARK AND LICENSE SECURITY AGREEMENT




     This Amendment to Patent, Trademark and License Security Agreement made as of this 29th day of
June, 2006, by and between VIRBAC CORPORATION, a Delaware corporation (“Debtor”), and FIRST BANK, a
Missouri state banking corporation, as agent (in such capacity, the “Agent”) for First Bank, a
Missouri state banking corporation, JPMorgan Chase Bank, N.A., a New York state banking
corporation, and any other entity which now or at any time hereafter shall execute the Amended Loan
Agreement (as herein defined) as a “Lender” (collectively, the “Lenders”).



WITNESSETH:




     WHEREAS, Debtor heretofore executed and delivered to First Bank, a certain Patent, Trademark
and License Security Agreement dated September 3, 2003 (as amended, the “Security Agreement”)
encumbering Debtor’s Patents, Trademarks, Licenses, and other Collateral (each as defined and more
fully described in such Security Agreement), which Security Agreement was recorded on October 13,
2003, in the Assignment Division of the U. S. Patent and Trademark Office at Reel/Frame
002731/0969, to secure the Secured Obligations (as defined in the Security Agreement) evidenced by,
inter alia, the Loan Agreement (as defined in the Security Agreement); and



     WHEREAS, Debtor has requested an amendment and restatement of the Loan Agreement (and of the
Notes described in the Loan Agreement) to make certain amendments thereto as more fully described
in that certain amended and restated Loan Agreement dated of even date herewith executed by and
among Debtor, Debtor’s subsidiaries, PM Resources, Inc., a Missouri corporation, St. JON
Laboratories, Inc., a California corporation, Virbac AH, Inc., a Delaware corporation, Francodex
Laboratories, Inc., a Kansas corporation, and Delmarva Laboratories, Inc., a Virginia corporation
(collectively, with Debtor, referred to herein as the “Borrowers”), Agent and Lenders (as the same
may from time to time be further amended, modified, extended, renewed or replaced, the “Amended
Loan Agreement”), and in those certain Revolving Credit Notes and Swing Line Note, as defined in
the Amended Loan Agreement (collectively, as the same may from time to time be further amended,
modified, extended, renewed, restated or replaced, the “Amended Notes”); and



     WHEREAS, as one of the preconditions to the execution of the Amended Loan Agreement and
acceptance of the Amended Notes, Debtor has agreed to amend the Security Agreement as set forth
herein;



     NOW, THEREFORE, in consideration of the above premises and for other valuable considerations,
the receipt and sufficiency of which are hereby acknowledged, Debtor and Agent do hereby agree as
follows:



     1. All references in the Security Agreement to the “Lender” are hereby amended and deemed to
refer to the Agent, in its capacity as Agent for each of the Lenders (as defined herein above),
except to the extent any such references are otherwise specifically amended herein below.



     2. All references in the Security Agreement to the “Loan Agreement” and other references of
similar import are hereby amended and deemed to refer to the Amended Loan Agreement as described
hereinabove, and any amendments, modifications, extensions, renewals, restatements or replacements
thereof. Capitalized terms used in the Security Agreement and not otherwise defined therein shall
have the meanings ascribed to such terms in the Amended Loan Agreement. All references in the
Security Agreement to the “Note” and other references of similar import are hereby amended and
deemed to refer



- 379 -









 




to the Amended Notes as described hereinabove, and any amendments, modifications,
extensions,
renewals, restatements or replacements thereof. Upon the occurrence of an Event of Default under
the Amended Loan Agreement, any of the Amended Notes or the Security Agreement, as hereby amended,
Agent, as agent on behalf of the Lenders, shall be entitled to and may exercise all rights and
remedies under the Amended Loan Agreement, the Amended Notes and the Security Agreement, as hereby
amended.




     3. The five recital paragraphs each beginning with the word “WHEREAS” on the first page of the
Security Agreement shall be amended and restated by the following four paragraphs to read as
follows:




     WHEREAS, Debtor, PM Resources, Inc., St. JON Laboratories, Inc., Francodex
Laboratories, Inc., Delmarva Laboratories, Inc. and Virbac AH, Inc. (collectively,
the “Borrowers”), the Lenders from time to time a party thereto (collectively, the
“Lenders”) and First Bank, as agent for the Lenders (in such capacity, the “Agent”)
have entered into that certain Loan Agreement dated as of June 29, 2006, as the same
may from time to time be amended, modified or restated (as so amended, modified or
restated, the “Loan Agreement,” all capitalized terms used and not otherwise defined
herein shall have the respective meanings ascribed to them in the Loan Agreement);
and




     WHEREAS, as a condition precedent to Agent and the Lenders entering into the
Loan Agreement, Agent and the Lenders have required that Debtor execute and deliver
this Agreement to the Agent for the ratable benefit of each of the Lenders; and




     WHEREAS, in order to induce Agent and the Lenders to enter into the Loan
Agreement and the other Transaction Documents, Debtor has agreed to execute and
deliver this Agreement to the Agent for the ratable benefit of each of the Lenders;
and




     WHEREAS, this Agreement is being executed in connection with and in addition to
the Security Agreement dated as of June 29, 2006 and executed by Debtor in favor of
the Agent for the ratable benefit of each of the Lenders pursuant to which Debtor
has granted to the Agent a security interest in and lien on, among other things, all
accounts, inventory, general intangibles, goods, machinery, equipment, books,
records, goodwill, patents, patent applications, trademarks and trademark
applications now owned or hereafter acquired by Debtor and all proceeds thereof;



     4. Section 1 of the Security Agreement shall be amended and restated to read as follows:




     1. Grant of Security Interest. For value received, Debtor hereby
grants to Agent, for the ratable benefit of the Lenders, a security interest in and
lien on all of Debtor’s right, title and interest in, to and under the following
described property, whether now owned and existing or hereafter created, acquired or
arising (collectively, the “Collateral”):




     (a) all patents and patent applications, and the inventions and improvements
described and claimed therein, including, without limitation, each patent and patent
application listed on Schedules A and B, respectively,
attached hereto and incorporated herein by reference (as the same may be amended
pursuant hereto from time to time) and (i) the reissues, divisions, continuations,
renewals, extensions and continuations-in-part thereof, (ii) all income, damages and
payments now and/or hereafter due or payable



- 380 -









 






under or with respect thereto,
including, without limitation, license royalties, damages and payments for past or
future infringements thereof, (iii) the right to sue for past,
present and future infringements thereof and (iv) all rights corresponding thereto
throughout the world (all of the foregoing patents and patent applications together
with the items described in clauses (i) through (iv) of this subsection (a) are
hereinafter collectively referred to herein as the “Patents”);




     (b) all trademarks, service marks, trademark or service mark registrations,
trade names, trade styles, trademark or service mark applications and brand names,
including, without limitation, common law rights and each mark and application
listed on Schedules C and D, respectively, attached hereto
and incorporated herein by reference; and (i) renewals or extensions thereof, (ii)
all income, damages and payments now and/or hereafter due or payable with respect
thereto, including, without limitation, license royalties, damages and payments for
past or future infringements thereof, (iii) the right to sue for past, present and
future infringements thereof and (iv) all rights corresponding thereto throughout
the world (all of the foregoing trademarks, trade names, service marks and
applications and registrations thereof together with the items described in clauses
(i) through (iv) of this subsection (b) are hereinafter collectively referred to
herein as the “Trademarks”);




     (c) the license(s) listed on Schedule E attached hereto and
incorporated herein by reference and all other license agreements (to the extent
such license agreements may be assigned without violating the terms of any such
license agreement) with respect to any of the Patents or the Trademarks or any other
patent, trademark, service mark or any application or registration thereof or any
other trade name or trade style between Debtor and any other Person, whether Debtor
is licensor or licensee (all of the forgoing license agreements and Debtor’s rights
thereunder are hereinafter collectively referred to as the “Licenses”);




     (d) the goodwill of Debtor’s business connected with and symbolized by the
Trademarks; and




     (e) all proceeds, including, without limitation, proceeds which constitute
property of the types described in (a), (b), (c) and (d) above and any rents and
profits of any of the foregoing items, whether cash or noncash, immediate or remote,
and insurance proceeds, and all products of (a), (b), (c) and (d) above, and any
indemnities, warranties and guaranties payable by reason of loss or damage to or
otherwise with respect to any of the foregoing items;


to secure the payment of (i) any and all of the present and future Borrowers’
Obligations, (ii) any and all present and future indebtedness (principal, interest,
fees, collection costs and expenses and other amounts), liabilities and obligations
(including, without limitation, guaranty obligations and indemnity obligations) of
Debtor under this Agreement, (iii) any and all present and future indebtedness
(principal, interest, fees, collection costs and expenses and other amounts),
liabilities and obligations (including, without limitation, guaranty obligations,
letter of credit reimbursement obligations and indemnity obligations) of Debtor or
any of the other Borrowers to the Agent and/or any Lender evidenced by or arising
under or in respect of the Loan Agreement, this Agreement and/or any other
Transaction Document, and (iv) any and all costs of collection, legal expenses and
attorneys’ fees and expenses incurred by Agent or any of






- 381 -







 









the Lenders upon the
occurrence of any default or event of default under this Agreement, in collecting or
enforcing payment of any such indebtedness, liabilities or obligations or in
preserving, protecting or realizing on the Collateral hereunder or in representing
Agent
and/or any of the Lenders in connection with bankruptcy or insolvency proceedings
(hereinafter collectively referred to as the “Secured Obligations”).



     5. The first two lines of Section 2 of the Security Agreement shall be amended and restated to
read as follows:




     2. Representations, Warranties and Covenants of Debtor. Debtor hereby
represents and warrants to Agent and each of the Lenders, and covenants and agrees
with Agent and each of the Lenders, that:



     6. Clause (c) of the first sentence in Section 4 of the Security Agreement shall be amended
and restated to read as follows:




(c) neither Agent nor any of the Lenders has any further commitment or obligation to
make any loans or advances or other extensions of credit to Borrowers under the Loan
Agreement or otherwise,



     7. Section 8 of the Security Agreement shall be amended and restated to read as follows:




     8. Default. If any Event of Default under the Loan Agreement shall
have occurred and be continuing, Agent shall have, in addition to all other rights
and remedies given it by this Agreement, those allowed by law and the rights and
remedies of a secured party under the Uniform Commercial Code as enacted in any
jurisdiction in which any of the Patents, Trademarks and/or Licenses may be located
and, without limiting the generality of the foregoing, Agent may immediately,
without demand of performance and without other notice (except as set forth next
below) or demand whatsoever to Debtor, all of which are hereby expressly waived, and
without advertisement, sell at public or private sale or otherwise realize upon, all
or from time to time any of the Patents, Trademarks (together with the goodwill of
Debtor associated therewith) and/or Licenses, or any interest which Debtor may have
therein, and after deducting from the proceeds of sale or other disposition of the
Patents, Trademarks or Licenses all expenses (including, without limitation, all
expenses for brokers’ fees and legal services), shall apply the residue of such
proceeds toward the payment of the Secured Obligations in the order and manner as
the Required Lenders may elect. Notice of any sale or other disposition of any of
the Patents, Trademarks and/or Licenses shall be given to Debtor at least five (5)
Domestic Business Days before the time of any intended public or private sale or
other disposition of such Patents, Trademarks and/or Licenses is to be made, which
Debtor hereby agrees shall be reasonable notice of such sale or other disposition.
At any such sale or other disposition, Agent, Lenders or any other holders of any of
the Secured Obligations may, to the extent permissible under applicable law,
purchase the whole or any part of the Patents, Trademarks and/or Licenses sold, free
from any right of redemption on the part of Debtor, which right is hereby waived and
released. Debtor agrees that upon the occurrence and continuance of any Event of
Default, the use by Agent or any of the Lenders of the Patents, Trademarks and
Licenses shall be worldwide, and without any liability for royalties or other
related charges from Agent or any such Lender to Debtor. If an Event of Default
shall occur and be continuing, Agent shall have the right, but shall in no way be
obligated, to bring suit in its own name (for the benefit of itself and the



- 382 -









 






Lenders)
to enforce any and all of the Patents, Trademarks and Licenses, and, if Agent shall
commence any such suit, Debtor shall, at the request of Agent, do any and all lawful
acts and execute any and all proper documents required by Agent in aid of such
enforcement and the Debtor shall promptly, upon demand, reimburse and indemnify
Agent and the Lenders for all costs and expenses incurred by Agent and each of the
Lenders in the exercise of their respective rights under this Agreement. All of
Lender’s rights and remedies with respect to the Patents, Trademarks and Licenses,
whether established hereby, by the Security Agreement or by any other agreement or
by law shall be cumulative and may be exercised singularly or concurrently.



     8. Clause (c) of the first sentence in Section 9 of the Security Agreement shall be amended
and restated to read as follows:




(c) neither Agent nor any of the Lenders shall have any further commitment or
obligation to make any loans or advances or other extensions of credit to Borrowers
under the Loan Agreement or otherwise,



     9. Section 12 of the Security Agreement shall be amended and restated to read as follows:




     12. Agent Appointed Attorney-In-Fact. If any Event of Default under
the Loan Agreement shall have occurred and be continuing, Debtor hereby authorizes
and empowers Agent to make, constitute and appoint any officer or agent of Agent as
Agent may select, in its sole discretion, as Debtor’s true and lawful
attorney-in-fact, with the power to endorse Debtor’s name on all applications,
documents, papers and instruments necessary for Agent or any of the Lenders to use
the Patents, Trademarks and Licenses, or to grant or issue any exclusive or
non-exclusive license under the Patents, Trademarks and Licenses to anyone else, or
necessary for Agent to assign, pledge, convey or otherwise transfer title to or
dispose of the Patents, Trademarks and Licenses to anyone else. Debtor hereby
ratifies all that such attorney shall lawfully do or cause to be done by virtue
hereof. This power of attorney is coupled with an interest and shall be irrevocable
for the duration of this Agreement.



     10. Section 13 of the Security Agreement shall be amended and restated to read as follows:




     13. No Waiver. No course of dealing between Debtor, Agent and/or any
of the Lenders, nor any failure to exercise, nor any delay in exercising, on the
part of Agent or any of the Lenders, any right, power or privilege under this
Agreement shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege under this Agreement preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.



     11. In addition to securing the other indebtedness, liabilities and obligations of Debtor and
the other Borrowers to Lenders and Agent therein described, the Security Agreement shall henceforth
also secure the payment of any and all present and future indebtedness (principal, interest, fees,
collection costs and expenses and other amounts) of Debtor and the other Borrowers to Lenders and
Agent evidenced by or arising under the Amended Notes and the Amended Loan Agreement, or any
amendments, modifications, extensions, renewals or replacements thereof, and the performance and
observance by Debtor of every covenant and condition therein contained.



- 383 -









 





     12. The Amended Notes, the Amended Loan Agreement and the Security Agreement are and shall
remain the binding obligations of Debtor and each of the other Borrowers, and all of the
provisions, terms, stipulations, conditions, covenants and powers contained therein shall stand and
remain in full force and effect, except only as the same are herein and hereby specifically varied
or amended, and the same are hereby ratified and confirmed.



     13. Debtor hereby represents and warrants to Agent and Lenders that:



          (a) The execution, delivery and performance by Debtor of this Amendment are within the
corporate powers of Debtor, have been duly authorized by all necessary corporate action and require
no action by or in respect of, or filing with, any governmental or regulatory body, agency or
official. The execution, delivery and performance by Debtor of this Amendment do not conflict
with, or result in a breach of the terms, conditions or provisions of, or constitute a default
under or result in any violation of, and Debtor is not now in default under or in violation of, the
terms of the Articles or Certificate of Incorporation or Bylaws of Debtor, any applicable law, any
rule, regulation, order, writ, judgment or decree of any court or governmental or regulatory agency
or instrumentality, or any agreement or instrument to which Debtor is a party or by which it is
bound or to which it is subject;




          (b) This Amendment has been duly executed and delivered and constitutes the legal, valid and
binding obligation of Debtor enforceable in accordance with its terms; and




          (c) As of the date hereof, all of the covenants, representations and warranties of Debtor set
forth in the Security Agreement are true and correct and no “Event of Default” (as defined therein)
under or within the meaning of the Security Agreement has occurred and is continuing.




     14. All references in the Security Agreement to “this Security Agreement” and any other
references of similar import shall henceforth mean the Security Agreement as amended by this
Amendment.



     15. This Amendment shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns, except that Debtor may not assign, transfer or delegate
any of its rights or obligations hereunder.



     16. This Amendment shall be governed by and construed in accordance with the internal laws of
the State of Missouri, except to the extent pre-empted by federal law and excluding Missouri’s laws
relating to conflicts of laws.



     17. In the event of any inconsistency or conflict between this Amendment and the Security
Agreement, the terms, provisions and conditions of this Amendment shall govern and control.



- 384 -









 





     IN WITNESS WHEREOF, the parties hereto have executed this instrument and the trustee has
accepted such execution as of the date first written above.



	 	 	 	 	 	 	 
	 	 	VIRBAC CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Jean M. Nelson	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Jean M. Nelson, Executive Vice President and	 	 
	 

	 	 	 	Chief Financial Officer	 	 
	 
	 	 	 	 	 	 
	 	 	FIRST BANK, as Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Traci Dodson	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Traci Dodson, Vice President	 	 






	 	 	 
	STATE OF Texas
	 	)
	 
	 	)  SS.
	COUNTY OF Tarrant
	 	)






     On this 29th day of June, 2006, before me personally appeared Jean M. Nelson, to me personally
known, who, being by me duly sworn, did say that she is the Executive Vice President and Chief
Financial Officer of Virbac Corporation, a Delaware corporation, and that the foregoing instrument
was signed on behalf of said corporation by authority of its Board of Directors; and said Jean M.
Nelson acknowledged said instrument to be the free act and deed of said corporation.



          IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal in the County
and State aforesaid, the day and year first above written.




	 	 	 	 	 
	(Seal)

	 	 	 	 
	 
	 	 	 	 
	 

	 	/s/ Karen M. Murr	 	 
	 

	 	 	 	 
	 

	 	Notary Public	 	 
	 
	 	 	 	 
	My Commission Expires:
	 	 	 	 
	 
	 	 	 	 
	June 3, 2008
	 	 	 	 






	 	 	 
	STATE OF MISSOURI
	 	)
	 
	 	)  SS.
	COUNTY OF ST. LOUIS
	 	)






          On this 5th day of July, 2006, before me appeared Traci Dodson, to me personally known, who,
being by me duly sworn, did say that she is the Vice President of First Bank, a Missouri state
banking corporation, and that said instrument was signed in behalf of said corporation, by
authority




- 385 -









 







of its Board of Directors; and said Traci Dodson acknowledged said instrument to be the
free act and deed of said corporation.




          IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal in the County
and State aforesaid, the day and year first above written.




	 	 	 	 	 
	(Seal)

	 	 	 	 
	 
	 	 	 	 
	 

	 	/s/ Bradley J. Gross	 	 
	 

	 	 	 	 
	 

	 	Notary Public	 	 
	 
	 	 	 	 
	My Commission Expires:
	 	 	 	 
	 
	 	 	 	 
	August 8, 2009
	 	 	 	 






- 386 -









 






SCHEDULE A 




United States Patents




	 	 	 	 	 
	Patent No.	 	Date Issued	 	Description
	None
	 	 	 	 






- 387 -









 






SCHEDULE B




United States Patent Applications




	 	 	 
	Application or Serial No.	 	Patents in Process
	None
	 	 






- 388 -









 






SCHEDULE C




United States Trademarks




	 	 	 	 	 
	Trademark No.	 	Date Issued	 	Description
	2987323
	 	8/23/05	 	American Horseman & Design
	1500368
	 	8/16/88	 	Aqualab
	2489840
	 	9/18/01	 	Assault
	2947661
	 	5/10/05	 	Biospheres
	2654482
	 	11/26/02	 	Bovimec
	2850988
	 	6/8/04	 	Breath-eze
	2079502
	 	7/15/97	 	Breath-Eze
	1362760
	 	10/1/85	 	Brite N’Clear
	1427979
	 	2/3/87	 	Brite N’ Shine
	2196460
	 	10/13/98	 	Bromethalin One Meal is All it Takes & Design
	1608688
	 	8/7/90	 	Buffer-Up
	1429809
	 	2/24/87	 	C.E.T.
	3029810
	 	12/13/05	 	C.E.T. DENTAL REWARD
	1441004
	 	6/2/87	 	Caseguard
	1685960
	 	5/12/92	 	CHX (Stylized)
	1453782
	 	8/25/87	 	Coppersafe
	1984230
	 	7/2/96	 	Corium-20
	1909686
	 	8/8/95	 	Critter Fresh
	1889584
	 	4/18/95	 	Critter Vites & Design
	1013936
	 	6/24/75	 	Doggydent
	1467935
	 	12/8/87	 	Dritail
	2464964
	 	7/3/01	 	Earth City Resources & Design
	1388785
	 	4/8/86	 	Furabase
	1392090
	 	5/6/86	 	Furazite
	1848959
	 	8/9/94	 	Glossy Coat
	2068027
	 	6/3/97	 	Herpcare
	2898393
	 	10/26/04	 	Herpcare
	2522911
	 	12/25/01	 	Iverhart
	2730166
	 	6/24/03	 	Iverhart Plus
	2235291
	 	3/23/99	 	Kittydent
	1485919
	 	4/26/88	 	M (word only) (Logo)
	1932877
	 	11/7/95	 	Mar Chlor
	1466915
	 	12/1/87	 	Maracide
	921839
	 	10/12/71	 	Maracyn
	2791436
	 	12/9/03	 	Maracyn Plus






- 389 -









 






	 	 	 	 	 
	Trademark No.	 	Date Issued	 	Description
	1451743
	 	8/11/87	 	Maracyn-Two
	2852211
	 	6/8/04	 	Mardel
	2871475
	 	8/10/04	 	Mardel
	2888918
	 	9/28/04	 	Mardel
	1435277
	 	4/7/87	 	Maroxy
	1601718
	 	6/19/90	 	Marplex
	1464227
	 	11/10/87	 	Multipet
	2794967
	 	12/16/03	 	Nutrimalt
	2353133
	 	5/30/00	 	Odor Disposers
	1304345
	 	11/6/84	 	Odor Disposers
	1284948
	 	7/10/84	 	Ornabac
	1441005
	 	6/2/87	 	Ornacycline
	1464226
	 	11/10/87	 	Ornacyn
	1284949
	 	7/10/84	 	Ornacyn-Plus
	1394614
	 	5/27/86	 	Ornalyte
	1689496
	 	5/26/92	 	Ornascale
	2441833
	 	4/10/01	 	Panaflex [Palaflex?]
	1608002
	 	7/31/90	 	Petrelief
	1753554
	 	2/23/93	 	Petrodex
	2856069
	 	6/22/04	 	Petrodex
	2856068
	 	6/22/04	 	Petromalt
	1284937
	 	7/10/84	 	Petromalt
	1609503
	 	8/14/90	 	PH-Guard
	2120205
	 	12/9/97	 	Prime Treats
	1526464
	 	2/28/89	 	Pro-Zema
	2674560
	 	1/14/03	 	Pulvex
	2860103
	 	7/6/04	 	Pura-Lyte
	2860104
	 	7/6/04	 	Puridine
	2421288
	 	1/16/01	 	Rat & Mouse-A-Rest II
	1849751
	 	8/16/94	 	Seabond
	2355497
	 	6/6/00	 	Sportsman’s Friend
	1817660
	 	1/25/94	 	Spot Not
	1754756
	 	3/2/93	 	St. JON (stylized)
	2860102
	 	7/6/04	 	St. JON Naturals
	1441742
	 	6/9/87	 	Stay
	2053530
	 	4/15/97	 	Tank Hard+
	2049908
	 	4/1/97	 	Tank Soft
	1453783
	 	8/25/87	 	Tanksafe
	2586825
	 	6/25/02	 	Tick Detach
	2927730
	 	2/22/05	 	Trisulfa
	1712972
	 	9/8/92	 	Trounce






- 390 -









 






	 	 	 	 	 
	Trademark No.	 	Date Issued	 	Description
	1748074
	 	1/26/93	 	V (Prescription Symbol)
	1313051
	 	1/8/85	 	Vitaflight
	1325091
	 	3/12/85	 	When You Care For Your Pets
	2684994
	 	2/4/03	 	Worm-Kill
	2583536
	 	6/18/02	 	Wormx
	883989
	 	1/13/70	 	Zema (stylized)
	1435257
	 	4/7/87	 	Zema Kil-A Mite
	2045029
	 	3/11/97	 	Zincchlorhexidate






State & Foreign Trademark




	 	 	 	 	 	 	 
	Trademark	 	State/Country	 	Registration No.	 	Date
	Iverhart
	 	Taiwan	 	1060489	 	October 16, 2003
	Iverhart Plus
	 	Taiwan	 	1065248	 	November 16, 2003






- 391
-









 






SCHEDULE D




United States Trademark Applications




	 	 	 	 	 
	Application or Serial No.	 	Date Filed	 	Trademark
	78747544
	 	11/4/05	 	A.C.T.
	78792846
	 	1/17/06	 	ANTI-ADHESIVE TECHNOLOGY & Design
	78720617
	 	9/26/05	 	BREATH-EZE BREATH STRIPS
	78312007
	 	10/10/03	 	C.E.T. AQUADENT
	78792920
	 	1/17/06	 	FLURAFOM Stylized
	78686005
	 	8/4/05	 	HEXTRA
	78759741
	 	11/22/05	 	IVERHART MAX
	78715813
	 	9/19/05	 	PETROMALT HAIRBALL TREATS
	78720549
	 	9/26/05	 	PETS HAVE TEETH TOO!
	78715877
	 	9/19/05	 	PICK YOUR PASSION
	78650525
	 	6/14/05	 	SIRIUS 3 (STYLIZED)
	78747588
	 	11/4/05	 	ULTRA SHIELD
	78341960
	 	12/17/03	 	VIRBACEF







- 392 -






 






SCHEDULE E




Licenses




None




- 393 -









 





	 	 	 	 	 	 	 	 	 
	DOCUMENT NAME:	 	Amendment to Patent, Trademark and License
Security Agreement (Virbac)	 	 
	 
	AUTHOR/OWNER:
	 	MKaltenrieder	 	 	 	 	 	 
	 
	CLIENT NUMBER:
	 	13069	 	CLIENT NAME:	 	First Bank
	 
	MATTER NUMBER:
	 	69425	 	MATTER NAME:	 	Virbac Corporation
	 
	PC DOCS #:
	 	3194979	 	VERSION:	 	8
	 
	TYPIST/USER’S NAME:
	 	NParsons	 	APPLICATION:	 	                 MS Word
	 
	TODAY’S DATE:
	 	July 25, 2006	 	 	 	 	 	 
	 
	DOCUMENT HISTORY:
	 	 	 	 	 	 	 	 
	 
	COMMENTS:
	 	Amends 2171173	 	 	 	 	 	 






DO NOT DISCARD THIS PAGE





- 394 -







 








AMENDMENT TO

PATENT, TRADEMARK AND LICENSE SECURITY AGREEMENT




     This Amendment to Patent, Trademark and License Security Agreement made as of this 29th day of
June, 2006, by and between VIRBAC AH, INC., a Delaware corporation (“Debtor”), and FIRST BANK, a
Missouri state banking corporation, as agent (in such capacity, the “Agent”) for First Bank, a
Missouri state banking corporation, JPMorgan Chase Bank, N.A., a New York state banking
corporation, and any other entity which now or at any time hereafter shall execute the Amended Loan
Agreement (as herein defined) as a “Lender” (collectively, the “Lenders”).



WITNESSETH:




     WHEREAS, Debtor heretofore executed and delivered to First Bank, a certain Patent, Trademark
and License Security Agreement dated September 3, 2003 (as amended, the “Security Agreement”)
encumbering Debtor’s Patents, Trademarks, Licenses, and other Collateral (each as defined and more
fully described in such Security Agreement), which Security Agreement was recorded on October 13,
2003, in the Assignment Division of the U. S. Patent and Trademark Office at Reel/Frame
002732/0812, to secure the Secured Obligations (as defined in the Security Agreement) evidenced by,
inter alia, the Loan Agreement (as defined in the Security Agreement); and



     WHEREAS, Debtor has requested an amendment and restatement of the Loan Agreement (and of the
Notes described in the Loan Agreement) to make certain amendments thereto as more fully described
in that certain amended and restated Loan Agreement dated of even date herewith executed by and
among Debtor, Debtor’s affiliates, Virbac Corporation, a Delaware corporation, PM Resources, Inc.,
a Missouri corporation, St. JON Laboratories, Inc., a California corporation, Francodex
Laboratories, Inc., a Kansas corporation, and Delmarva Laboratories, Inc., a Virginia corporation
(collectively, with Debtor, referred to herein as the “Borrowers”), Agent and Lenders (as the same
may from time to time be further amended, modified, extended, renewed or replaced, the “Amended
Loan Agreement”), and in those certain Revolving Credit Notes and Swing Line Note, as defined in
the Amended Loan Agreement (collectively, as the same may from time to time be further amended,
modified, extended, renewed, restated or replaced, the “Amended Notes”); and



     WHEREAS, as one of the preconditions to the execution of the Amended Loan Agreement and
acceptance of the Amended Notes, Debtor has agreed to amend the Security Agreement as set forth
herein;



     NOW, THEREFORE, in consideration of the above premises and for other valuable considerations,
the receipt and sufficiency of which are hereby acknowledged, Debtor and Agent do hereby agree as
follows:



     1. All references in the Security Agreement to the “Lender” are hereby amended and deemed to
refer to the Agent, in its capacity as Agent for each of the Lenders (as defined herein above),
except to the extent any such references are otherwise specifically amended herein below.



     2. All references in the Security Agreement to the “Loan Agreement” and other references of
similar import are hereby amended and deemed to refer to the Amended Loan Agreement as described
hereinabove, and any amendments, modifications, extensions, renewals, restatements or replacements
thereof. Capitalized terms used in the Security Agreement and not otherwise defined therein shall
have the meanings ascribed to such terms in the Amended Loan Agreement. All references in the
Security Agreement to the “Note” and other references of similar import are hereby amended and
deemed to refer



- 395 -









 




to the Amended Notes as described hereinabove, and any amendments, modifications,
extensions,
renewals, restatements or replacements thereof. Upon the occurrence of an Event of Default under
the Amended Loan Agreement, any of the Amended Notes or the Security Agreement, as hereby amended,
Agent, as agent on behalf of the Lenders, shall be entitled to and may exercise all rights and
remedies under the Amended Loan Agreement, the Amended Notes and the Security Agreement, as hereby
amended.




     3. The five recital paragraphs each beginning with the word “WHEREAS” on the first page of the
Security Agreement shall be amended and restated by the following four paragraphs to read as
follows:




     WHEREAS, Virbac Corporation, PM Resources, Inc., St. JON Laboratories, Inc.,
Francodex Laboratories, Inc., Delmarva Laboratories, Inc. and the Debtor
(collectively, the “Borrowers”), the Lenders from time to time a party thereto
(collectively, the “Lenders”) and First Bank, as agent for the Lenders (in such
capacity, the “Agent”) have entered into that certain Loan Agreement dated as of
June 29, 2006, as the same may from time to time be amended, modified or restated
(as so amended, modified or restated, the “Loan Agreement,” all capitalized terms
used and not otherwise defined herein shall have the respective meanings ascribed to
them in the Loan Agreement); and




     WHEREAS, as a condition precedent to Agent and the Lenders entering into the
Loan Agreement, Agent and the Lenders have required that Debtor execute and deliver
this Agreement to the Agent for the ratable benefit of each of the Lenders; and




     WHEREAS, in order to induce Agent and the Lenders to enter into the Loan
Agreement and the other Transaction Documents, Debtor has agreed to execute and
deliver this Agreement to the Agent for the ratable benefit of each of the Lenders;
and




     WHEREAS, this Agreement is being executed in connection with and in addition to
the Security Agreement dated as of June 29, 2006 and executed by Debtor in favor of
the Agent for the ratable benefit of each of the Lenders pursuant to which Debtor
has granted to the Agent a security interest in and lien on, among other things, all
accounts, inventory, general intangibles, goods, machinery, equipment, books,
records, goodwill, patents, patent applications, trademarks and trademark
applications now owned or hereafter acquired by Debtor and all proceeds thereof;



     4. Section 1 of the Security Agreement shall be amended and restated to read as follows:




     1. Grant of Security Interest. For value received, Debtor hereby
grants to Agent, for the ratable benefit of the Lenders, a security interest in and
lien on all of Debtor’s right, title and interest in, to and under the following
described property, whether now owned and existing or hereafter created, acquired or
arising (collectively, the “Collateral”):




     (a) all patents and patent applications, and the inventions and improvements
described and claimed therein, including, without limitation, each patent and patent
application listed on Schedules A and B, respectively,
attached hereto and incorporated herein by reference (as the same may be amended
pursuant hereto from time to time) and (i) the reissues, divisions, continuations,
renewals, extensions and continuations-in-part thereof, (ii) all income, damages and
payments now and/or hereafter due or payable



- 396 -









 







under or with respect thereto, including, without limitation, license royalties, damages and payments for past or
future infringements thereof, (iii) the right to sue for past,
present and future infringements thereof and (iv) all rights corresponding thereto
throughout the world (all of the foregoing patents and patent applications together
with the items described in clauses (i) through (iv) of this subsection (a) are
hereinafter collectively referred to herein as the “Patents”);




     (b) all trademarks, service marks, trademark or service mark registrations,
trade names, trade styles, trademark or service mark applications and brand names,
including, without limitation, common law rights and each mark and application
listed on Schedules C and D, respectively, attached hereto
and incorporated herein by reference; and (i) renewals or extensions thereof, (ii)
all income, damages and payments now and/or hereafter due or payable with respect
thereto, including, without limitation, license royalties, damages and payments for
past or future infringements thereof, (iii) the right to sue for past, present and
future infringements thereof and (iv) all rights corresponding thereto throughout
the world (all of the foregoing trademarks, trade names, service marks and
applications and registrations thereof together with the items described in clauses
(i) through (iv) of this subsection (b) are hereinafter collectively referred to
herein as the “Trademarks”);




     (c) the license(s) listed on Schedule E attached hereto and
incorporated herein by reference and all other license agreements (to the extent
such license agreements may be assigned without violating the terms of any such
license agreement) with respect to any of the Patents or the Trademarks or any other
patent, trademark, service mark or any application or registration thereof or any
other trade name or trade style between Debtor and any other Person, whether Debtor
is licensor or licensee (all of the forgoing license agreements and Debtor’s rights
thereunder are hereinafter collectively referred to as the “Licenses”);




     (d) the goodwill of Debtor’s business connected with and symbolized by the
Trademarks; and




     (e) all proceeds, including, without limitation, proceeds which constitute
property of the types described in (a), (b), (c) and (d) above and any rents and
profits of any of the foregoing items, whether cash or noncash, immediate or remote,
and insurance proceeds, and all products of (a), (b), (c) and (d) above, and any
indemnities, warranties and guaranties payable by reason of loss or damage to or
otherwise with respect to any of the foregoing items;




to secure the payment of (i) any and all of the present and future Borrowers’
Obligations, (ii) any and all present and future indebtedness (principal, interest,
fees, collection costs and expenses and other amounts), liabilities and obligations
(including, without limitation, guaranty obligations and indemnity obligations) of
Debtor under this Agreement, (iii) any and all present and future indebtedness
(principal, interest, fees, collection costs and expenses and other amounts),
liabilities and obligations (including, without limitation, guaranty obligations,
letter of credit reimbursement obligations and indemnity obligations) of Debtor or
any of the other Borrowers to the Agent and/or any Lender evidenced by or arising
under or in respect of the Loan Agreement, this Agreement and/or any other
Transaction Document, and (iv) any and all costs of collection, legal expenses and
attorneys’ fees and expenses incurred by Agent or any of



- 397 -









 






the Lenders upon the
occurrence of any default or event of default under this Agreement, in collecting or
enforcing payment of any such indebtedness, liabilities or obligations or in
preserving, protecting or realizing on the Collateral hereunder or in representing
Agent
and/or any of the Lenders in connection with bankruptcy or insolvency proceedings
(hereinafter collectively referred to as the “Secured Obligations”).



     5. The first two lines of Section 2 of the Security Agreement shall be amended and restated to
read as follows:




     2. Representations, Warranties and Covenants of Debtor. Debtor hereby
represents and warrants to Agent and each of the Lenders, and covenants and agrees
with Agent and each of the Lenders, that:




     6. Clause (c) of the first sentence in Section 4 of the Security Agreement shall be amended
and restated to read as follows:




     (c) neither Agent nor any of the Lenders has any further commitment or obligation to
make any loans or advances or other extensions of credit to Borrowers under the Loan
Agreement or otherwise,



     7. Section 8 of the Security Agreement shall be amended and restated to read as follows:




     8. Default. If any Event of Default under the Loan Agreement shall
have occurred and be continuing, Agent shall have, in addition to all other rights
and remedies given it by this Agreement, those allowed by law and the rights and
remedies of a secured party under the Uniform Commercial Code as enacted in any
jurisdiction in which any of the Patents, Trademarks and/or Licenses may be located
and, without limiting the generality of the foregoing, Agent may immediately,
without demand of performance and without other notice (except as set forth next
below) or demand whatsoever to Debtor, all of which are hereby expressly waived, and
without advertisement, sell at public or private sale or otherwise realize upon, all
or from time to time any of the Patents, Trademarks (together with the goodwill of
Debtor associated therewith) and/or Licenses, or any interest which Debtor may have
therein, and after deducting from the proceeds of sale or other disposition of the
Patents, Trademarks or Licenses all expenses (including, without limitation, all
expenses for brokers’ fees and legal services), shall apply the residue of such
proceeds toward the payment of the Secured Obligations in the order and manner as
the Required Lenders may elect. Notice of any sale or other disposition of any of
the Patents, Trademarks and/or Licenses shall be given to Debtor at least five (5)
Domestic Business Days before the time of any intended public or private sale or
other disposition of such Patents, Trademarks and/or Licenses is to be made, which
Debtor hereby agrees shall be reasonable notice of such sale or other disposition.
At any such sale or other disposition, Agent, Lenders or any other holders of any of
the Secured Obligations may, to the extent permissible under applicable law,
purchase the whole or any part of the Patents, Trademarks and/or Licenses sold, free
from any right of redemption on the part of Debtor, which right is hereby waived and
released. Debtor agrees that upon the occurrence and continuance of any Event of
Default, the use by Agent or any of the Lenders of the Patents, Trademarks and
Licenses shall be worldwide, and without any liability for royalties or other
related charges from Agent or any such Lender to Debtor. If an Event of Default
shall occur and be continuing, Agent shall have the right, but shall in no way be
obligated, to bring suit in its own name (for the benefit of itself and the




- 398 -







 






Lenders)
to enforce any and all of the Patents, Trademarks and Licenses, and, if Agent shall
commence any such suit, Debtor shall, at the request of Agent, do any and all lawful
acts and execute any and all proper documents required by Agent in aid of such
enforcement and the Debtor shall promptly, upon demand, reimburse and indemnify
Agent and the Lenders for all costs and expenses incurred by Agent and each of the
Lenders in the exercise of their respective rights under this Agreement. All of
Lender’s rights and remedies with respect to the Patents, Trademarks and Licenses,
whether established hereby, by the Security Agreement or by any other agreement or
by law shall be cumulative and may be exercised singularly or concurrently.



     8. Clause (c) of the first sentence in Section 9 of the Security Agreement shall be amended
and restated to read as follows:




(c) neither Agent nor any of the Lenders shall have any further commitment or
obligation to make any loans or advances or other extensions of credit to Borrowers
under the Loan Agreement or otherwise,



     9. Section 12 of the Security Agreement shall be amended and restated to read as follows:




     12. Agent Appointed Attorney-In-Fact. If any Event of Default under
the Loan Agreement shall have occurred and be continuing, Debtor hereby authorizes
and empowers Agent to make, constitute and appoint any officer or agent of Agent as
Agent may select, in its sole discretion, as Debtor’s true and lawful
attorney-in-fact, with the power to endorse Debtor’s name on all applications,
documents, papers and instruments necessary for Agent or any of the Lenders to use
the Patents, Trademarks and Licenses, or to grant or issue any exclusive or
non-exclusive license under the Patents, Trademarks and Licenses to anyone else, or
necessary for Agent to assign, pledge, convey or otherwise transfer title to or
dispose of the Patents, Trademarks and Licenses to anyone else. Debtor hereby
ratifies all that such attorney shall lawfully do or cause to be done by virtue
hereof. This power of attorney is coupled with an interest and shall be irrevocable
for the duration of this Agreement.



     10. Section 13 of the Security Agreement shall be amended and restated to read as follows:




     13. No Waiver. No course of dealing between Debtor, Agent and/or any
of the Lenders, nor any failure to exercise, nor any delay in exercising, on the
part of Agent or any of the Lenders, any right, power or privilege under this
Agreement shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, power or privilege under this Agreement preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.



     11. In addition to securing the other indebtedness, liabilities and obligations of Debtor and
the other Borrowers to Lenders and Agent therein described, the Security Agreement shall henceforth
also secure the payment of any and all present and future indebtedness (principal, interest, fees,
collection costs and expenses and other amounts) of Debtor and the other Borrowers to Lenders and
Agent evidenced by or arising under the Amended Notes and the Amended Loan Agreement, or any
amendments, modifications, extensions, renewals or replacements thereof, and the performance and
observance by Debtor of every covenant and condition therein contained.



- 399 -









 





     12. The Amended Notes, the Amended Loan Agreement and the Security Agreement are and shall
remain the binding obligations of Debtor and each of the other Borrowers, and all of the
provisions, terms, stipulations, conditions, covenants and powers contained therein shall stand and
remain in full force and effect, except only as the same are herein and hereby specifically varied
or amended, and the same are hereby ratified and confirmed.



     13. Debtor hereby represents and warrants to Agent and Lenders that:



          (a) The execution, delivery and performance by Debtor of this Amendment are within the
corporate powers of Debtor, have been duly authorized by all necessary corporate action and require
no action by or in respect of, or filing with, any governmental or regulatory body, agency or
official. The execution, delivery and performance by Debtor of this Amendment do not conflict
with, or result in a breach of the terms, conditions or provisions of, or constitute a default
under or result in any violation of, and Debtor is not now in default under or in violation of, the
terms of the Articles or Certificate of Incorporation or Bylaws of Debtor, any applicable law, any
rule, regulation, order, writ, judgment or decree of any court or governmental or regulatory agency
or instrumentality, or any agreement or instrument to which Debtor is a party or by which it is
bound or to which it is subject;




          (b) This Amendment has been duly executed and delivered and constitutes the legal, valid and
binding obligation of Debtor enforceable in accordance with its terms; and




          (c) As of the date hereof, all of the covenants, representations and warranties of Debtor set
forth in the Security Agreement are true and correct and no “Event of Default” (as defined therein)
under or within the meaning of the Security Agreement has occurred and is continuing.




     14. All references in the Security Agreement to “this Security Agreement” and any other
references of similar import shall henceforth mean the Security Agreement as amended by this
Amendment.



     15. This Amendment shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns, except that Debtor may not assign, transfer or delegate
any of its rights or obligations hereunder.



     16. This Amendment shall be governed by and construed in accordance with the internal laws of
the State of Missouri, except to the extent pre-empted by federal law and excluding Missouri’s laws
relating to conflicts of laws.



     17. In the event of any inconsistency or conflict between this Amendment and the Security
Agreement, the terms, provisions and conditions of this Amendment shall govern and control.




- 400 -









 







     IN WITNESS WHEREOF, the parties hereto have executed this instrument and the trustee has
accepted such execution as of the date first written above.



	 	 	 	 	 
	 	VIRBAC AH, INC.

 	 
	 	By:  	/s/ Jean M. Nelson
 	 
	 	 	Jean M. Nelson, Executive Vice President and 	 
	 	 	Chief Financial Officer 	 
	 



	 	 	 	 	 
	 	FIRST BANK, as Agent

 	 
	 	By:  	/s/ Traci Dodson
 	 
	 	 	Traci Dodson, Vice President 	 
	 	 	 	 
	 



	 	 	 	 	 	 	 
	STATE OF Texas

	 	 	)	 	 	 
	 

	 	 	)	 	 	SS.
	COUNTY OF Tarrant

	 	 	)	 	 	 






     On this 29th day of June, 2006, before me personally appeared Jean M. Nelson, to me personally
known, who, being by me duly sworn, did say that she is the Executive Vice President and Chief
Financial Officer of Virbac AH, Inc., a Delaware corporation, and that the foregoing instrument was
signed on behalf of said corporation by authority of its Board of Directors; and said Jean M.
Nelson acknowledged said instrument to be the free act and deed of said corporation.



     IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal in the County
and State aforesaid, the day and year first above written.



(Seal)




	 	 	 	 	 
	 

	 	Karen M. Murr
	 	 
	 	 	 	 	 
	 

	 	Notary Public	 	 






My Commission Expires:




June 3, 2008





- 401 -







 





	 	 	 	 	 	 	 
	STATE OF MISSOURI

	 	 	)	 	 	 
	 

	 	 	)	 	 	SS.
	COUNTY OF ST. LOUIS

	 	 	)	 	 	 






     On this 5th day of July, 2006, before me appeared Traci Dodson, to me personally known, who,
being by me duly sworn, did say that she is the Vice President of First Bank, a Missouri state
banking corporation, and that said instrument was signed in behalf of said corporation, by
authority of its Board of Directors; and said Traci Dodson acknowledged said instrument to be the
free act and deed of said corporation.



     IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal in the County
and State aforesaid, the day and year first above written.



(Seal)




	 	 	 	 	 
	 

	 	Bradley J. Gross
	 	 
	 	 	 	 	 
	 

	 	Notary Public	 	 






My Commission Expires:




August 8, 2009





- 402 -







 





SCHEDULE A 




United States Patents




	 	 	 	 	 
	Patent No.	 	Date Issued	 	Title
	5,824,653

	 	10-20-1998
	 	ANTHELMINTIC COMPOSITIONS FOR EQUIDAE
	 
	 	 	 	 
	5,632,999

	 	05-27-1997
	 	SUSTAINED RELEASE PYRIPROXIFEN COMPOSITIONS FOR PARASITE CONTROL
	 
	 	 	 	 
	5,747,057

	 	05-05-1998
	 	SUSTAINED RELEASE PYRIPROXIFEN COMPOSITIONS FOR PARASITE CONTROL
	 
	 	 	 	 
	5,728,719

	 	03-17-1998
	 	SYSTEMIC CONTROL OF PARASITES
	 
	 	 	 	 
	5,439,924

	 	08-08-1995
	 	SYSTEMIC CONTROL OF PARASITES
	 
	 	 	 	 
	D362,118

	 	09-12-1995
	 	PET TOOTHBRUSH






- 403 -









 






SCHEDULE B




United States Patent Applications




	 	 	 	 	 
	Application or Serial No.	 	Filing Date	 	Title
	None
	 	 	 	 






SCHEDULE C




United States Trademarks




	 	 	 	 	 
	Trademark No.	 	Date Issued	 	Description
	1926200
	 	October 10, 1995	 	A.C.T. & Design
	1209484
	 	September 21, 1982	 	Allerderm
	1976942
	 	May 28, 1996	 	Allerderm & Design
	2139508
	 	February 24, 1998	 	Allerderm Efa-Caps
	2485615
	 	September 4, 2001	 	Allerderm Omegaderm
	1223071
	 	January 11, 1983	 	Allergroom
	1256531
	 	November 8, 1983	 	Allerseb T & Design
	2987323
	 	August 23, 2005	 	American Horseman & Design
	1306764
	 	November 27, 1984	 	Ammonil
	1500368
	 	August 16, 1988	 	Aqualab
	2947661
	 	May 10, 2005	 	Biospheres
	2654482
	 	November 26, 2002	 	Bovimec
	2850988
	 	June 8, 2004	 	Breath-Eze
	2079502
	 	July 15, 1997	 	Breath-Eze
	1362760
	 	October 1, 1985	 	Brite N’ Clear
	2196460
	 	October 13, 1998	 	Bromethalin One Meal Is All It Takes & Design
	1608688
	 	August 7, 1990	 	Buffer-Up
	2076992
	 	July 8, 1997	 	Bur-Otic
	1441004
	 	June 2, 1987	 	Cageguard
	1429809
	 	February 24, 1987	 	C.E.T.
	3029810
	 	December 13, 2005	 	C.E.T. Dental Reward
	1685960
	 	May 12, 1992	 	CHX
	2997158
	 	September 20, 2005	 	Clinsol
	2663538
	 	December 17, 2002	 	Clinsol
	2911217
	 	December 14, 2004	 	Clintabs
	1453782
	 	August 25, 1987	 	Coppersafe
	1984230
	 	July 2, 1996	 	Corium-20
	1935973
	 	November 14, 1995	 	Cortisoothe






- 404 -









 






	 	 	 	 	 
	Trademark No.	 	Date Issued	 	Description
	1909686
	 	August 8, 1995	 	Critter Fresh
	1889584
	 	April 18, 1995	 	Critter Vites and Design
	2121113
	 	December 16, 1997	 	Dermacool
	1342589
	 	June 18, 1985	 	Derma-Logic
	2386221
	 	September 12, 2000	 	Derm-Renu
	1277491
	 	May 8, 1984	 	Dog Breath
	1013936
	 	June 24, 1975	 	Doggydent
	1467935
	 	December 8, 1987	 	Dritail
	2153421
	 	April 28, 1998	 	Ear Clear
	2071809
	 	June 17, 1997	 	Ecto-Soothe
	1410090
	 	September 23, 1986	 	Efa-Z Plus
	1410089
	 	September 23, 1986	 	Epi-Otic
	1697304
	 	June 30, 1992	 	Epi-Soothe
	1932204
	 	October 31, 1995	 	Etiderm
	1719313
	 	September 22, 1992	 	Euthasol
	2096028
	 	September 9, 1997	 	Flea Science
	2393997
	 	October 10, 2000	 	Flex-Ease
	2134506
	 	February 3, 1998	 	Flying High
	2122433
	 	December 16, 1997	 	Flypel
	1388785
	 	April 8, 1986	 	Furabase
	1392090
	 	May 6, 1986	 	Furazite
	2396287
	 	October 17, 2000	 	Gas-Aid
	2607890
	 	August 13, 2002	 	Gastro-Lax
	2960114
	 	June 7, 2005	 	Genesis
	1848959
	 	August 9, 1994	 	Glossy Coat
	2068027
	 	June 3, 1997	 	Herpcare
	2898393
	 	October 26, 2004	 	Herpcare
	2025448
	 	December 24, 1996	 	Hexadene
	2747365
	 	August 5, 2003	 	Hexadene
	1793380
	 	September 21, 1993	 	Histacalm
	1254284
	 	October 18, 1983	 	Humilac
	2522911
	 	December 25, 2001	 	Iverhart
	2730166
	 	June 24, 2003	 	Iverhart Plus
	2970432
	 	July 19, 2005	 	Keratolux
	2579932
	 	June 11, 2002	 	Ketochlor
	2235291
	 	March 23, 1999	 	Kittydent
	2888918
	 	September 28, 2004	 	Mardel
	1485919
	 	April 26, 1988	 	M (Stylized)
	1932877
	 	November 7, 1995	 	Mar Chlor






- 405 -









 






	 	 	 	 	 
	Trademark No.	 	Date Issued	 	Description
	1466915
	 	December 1, 1987	 	Maracide
	0921839
	 	October 12, 1971	 	Marcyn
	2791436
	 	December 9, 2003	 	Maracyn Plus
	1451743
	 	August 11, 1987	 	Maracyn-Two
	2852211
	 	June 8, 2004	 	Mardel
	2871475
	 	August 10, 2004	 	Mardel
	2888918
	 	September 28, 2004	 	Mardel
	1435277
	 	April 7, 1987	 	Maroxy
	1601718
	 	June 19, 1990	 	Marplex
	1464227
	 	November 10, 1987	 	Multipet
	1898505
	 	June 13, 1995	 	Natura
	2794967
	 	December 16, 2003	 	Nutrimalt
	1304345
	 	November 6, 1984	 	Odor Disposers
	2353133
	 	May 30, 2000	 	Odor Disposers
	1284948
	 	July 10, 1984	 	Ornabac
	1441005
	 	June 2, 1987	 	Ornacycline
	1464226
	 	November 10, 1987	 	Ornacyn
	1284949
	 	July 10, 1984	 	Ornacyn-Plus
	1394614
	 	May 27, 1986	 	Ornalyte
	1689496
	 	May 26, 1992	 	Ornascale
	2069825
	 	June 10, 1997	 	Otomite Plus
	2441833
	 	April 10, 2001	 	Palaflex
	1420783
	 	December 16, 1986	 	Pancrezyme
	2441494
	 	April 3, 2001	 	Pentasol
	1608002
	 	July 31, 1990	 	Petrelief
	1753554
	 	February 23, 1993	 	Petrodex
	2856069
	 	June 22, 2004	 	Petrodex
	1284937
	 	July 10, 1984	 	Petromalt
	2856068
	 	June 22, 2004	 	Petromalt
	1609503
	 	August 14, 1990	 	Ph-Guard
	2079166
	 	July 15, 1997	 	Preventef
	2120205
	 	December 9, 1997	 	Prime Treats
	1526464
	 	February 28, 1989	 	Pro-Zema
	2674560
	 	January 14, 2003	 	Pulvex
	2860103
	 	July 6, 2004	 	Pura-Lyte
	2860104
	 	July 6, 2004	 	Puridine
	1412937
	 	October 14, 1986	 	Pyoben
	2050001
	 	April 1, 1997	 	Resichlor
	2050000
	 	April 1, 1997	 	Resicort






- 406 -









 






	 	 	 	 	 
	Trademark No.	 	Date Issued	 	Description
	2049999
	 	April 1, 1997	 	Resihist
	2185065
	 	August 25, 1998	 	Resiprox
	2045137
	 	March 11, 1997	 	Resisoothe
	2118491
	 	December 2, 1997	 	Resizole
	1849751
	 	August 16, 1994	 	Seabond
	1591636
	 	April 17, 1990	 	Sebolux
	1307619
	 	December 4, 1984	 	Soloxine
	1754756
	 	March 2, 1993	 	St. Jon (Stylized)
	2860102
	 	July 6, 2004	 	St. Jon Naturals
	1441742
	 	June 9, 1987	 	Stay
	2053530
	 	April 15, 1997	 	Tank Hard
	2049908
	 	April 1, 1997	 	Tank Soft
	1453783
	 	August 25, 1987	 	Tanksafe
	2107765
	 	October 21, 1997	 	Tick Arrest
	2586825
	 	June 25, 2002	 	Tick Detach
	1700109
	 	July 14, 1992	 	T-Lux Shampoo
	2927730
	 	February 22, 2005	 	Trisulfa
	1538885
	 	May 16, 1989	 	Tumil-K
	2273100
	 	August 24, 1999	 	Ultragroom
	1385720
	 	March 11, 1986	 	Uroeze
	1748074
	 	January 26, 1993	 	VRX (Stylized)
	2081170
	 	July 22, 1997	 	Veterinary Specialties for Dermatology
	1313051
	 	January 8, 1985	 	Vitaflight
	1325091
	 	March 12, 1985	 	When You Care For Pets
	2583536
	 	June 18, 2002	 	Wormx
	1435257
	 	April 7, 1987	 	Zema Kil-A-Mite
	0883989
	 	January 13, 1970	 	Zema (Stylized)
	2045029
	 	March 11, 1997	 	Zincchlorhexidate






State & Foreign Trademark




	 	 	 	 	 	 	 
	Trademark	 	State/Country	 	Registration No.	 	Date
	Allerderm
	 	Canada	 	339141	 	April 15, 1988
	Allerderm
	 	France	 	1379729	 	November 14, 1986
	Allerderm
	 	Germany	 	1141234	 	June 14, 1989
	Allerderm Efa-Caps
	 	Canada	 	542926	 	March 22, 2001
	Allerderm Efa-Z Plus
	 	Canada	 	542655	 	March 19, 2001
	Allergroom
	 	Canada	 	513439	 	July 28, 1999
	Allerseb T & Design
	 	Canada	 	523831	 	February 25, 2000
	Cortisoothe
	 	Canada	 	542440	 	March 15, 2001






- 407 -









 






	 	 	 	 	 	 	 
	Trademark	 	State/Country	 	Registration No.	 	Date
	Dermacool
	 	Canada	 	507282	 	January 28, 1999
	Dermazole
	 	Canada	 	520348	 	December 7, 1999
	Ear Clear
	 	Canada	 	516312	 	September 15, 1999
	Ecto-Foam
	 	Canada	 	493565	 	April 22, 1998
	Ecto-Soothe
	 	Canada	 	493564	 	April 22, 1998
	Encore
	 	Canada	 	442089	 	April 21, 1995
	Epi-Otic
	 	Canada	 	332256	 	September 25, 1987
	Epi-Soothe
	 	Canada	 	513240	 	July 26, 1999
	Flypel
	 	Canada	 	508064	 	February 15, 1999
	Hexadene
	 	Canada	 	523144	 	February 15, 2000
	Hexarinse
	 	Canada	 	530951	 	August 9, 2000
	Histacalm
	 	France	 	93/475050	 	December 17, 1993
	Humilac
	 	Canada	 	513447	 	July 28, 1999
	Natura
	 	Canada	 	472298	 	March 11, 1997
	Palavite
	 	Canada	 	433689	 	September 23, 1994
	Palavite
	 	France	 	93/475051	 	December 17, 1993
	Physio Shampoo
	 	Canada	 	641366	 	June 3, 2005
	Pyoben
	 	Canada	 	513674	 	July 29, 1999
	Resichlor
	 	Canada	 	502470	 	October 20, 1998
	Resicort
	 	Canada	 	520349	 	December 7, 1999
	Resisoothe
	 	Canada	 	542439	 	March 15, 2001
	Resizole
	 	Canada	 	520350	 	December 7, 1999
	Sebolux
	 	Canada	 	518489	 	October 22, 1999
	Soloxine
	 	Canada	 	443756	 	June 9, 1995
	Soloxine
	 	European Community	 	515809	 	January 26, 1999
	Soloxine
	 	United Kingdom	 	1487983	 	April 30, 1993
	Tumil-K
	 	Canada	 	TMA649994	 	October 7, 2005
	Tumil-K
	 	United Kingdom	 	1507932	 	August 13, 1993
	Veterinary
Specialties for
Dermatology
	 	Canada	 	513348	 	July 27, 1999






- 408 -









 






SCHEDULE D




United States Trademark Applications




	 	 	 	 	 
	Application No.	 	Date Filed	 	Trademark
	78747544
	 	11/4/2005	 	A.C.T.
	78792846
	 	1/17/2006	 	Anti-Adhesive Technology (Stylized)
	78720617
	 	9/26/2005	 	Breath-eze Breath Strips
	78312007
	 	10/10/2003	 	C.E.T. Aquadent
	78818072
	 	2/17/2006	 	Cerulytic
	78817526
	 	2/17/2006	 	Flex-Ease
	78792920
	 	1/17/2006	 	Flurafom
	78686005
	 	8/4/2005	 	Hextra
	78759741
	 	11/22/2005	 	Iverhart Max
	78715813
	 	9/19/2005	 	Petromalt Hairball Treats
	78720549
	 	9/26/2005	 	Pets Have Teeth Too!
	78715877
	 	9/19/2005	 	Pick Your Passion
	78747588
	 	11/4/2005	 	Ultrashield
	78341960
	 	12/17/2003	 	Virbacef






State and Foreign Trademark Applications




	 	 	 	 	 	 	 
	Application No.	 	Date Filed	 	Trademark	 	State/County
	1210966
	 	3/25/04	 	Biomox	 	Canada
	1247858
	 	2/18/05	 	C.E.T.	 	Canada
	1247720
	 	2/18/05	 	C.E.T. Dental Reward	 	Canada
	1204886
	 	2/2/04	 	Clinsol	 	Canada
	1204883
	 	2/2/04	 	Clintabs	 	Canada
	1208151
	 	3/2/04	 	Dermaspheres	 	Canada
	1208147
	 	3/2/04	 	Euthasol	 	Canada
	1202902
	 	1/7/04	 	Genesis	 	Canada
	3607561
	 	1/12/04	 	Genesis	 	European Community
	1208148
	 	3/2/04	 	Virbac Euthasol	 	Canada
	1202903
	 	3/2/04	 	Virbacef	 	Canada






- 409 -









 






SCHEDULE E




Licenses




None




- 410 -









 





	 	 	 	 	 	 	 	 	 	 	 
	DOCUMENT NAME:	 	Amendment to Patent, Trademark and License Security Agreement (Virbac AH)
	 
	 	 	 	 	 	 	 	 	 	 
	AUTHOR/OWNER:

	 	MKaltenrieder
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	CLIENT NUMBER:

	 	13069	 	 	CLIENT NAME:
	 	First Bank

	 
	 	 	 	 	 	 	 	 	 	 
	MATTER NUMBER:

	 	69425	 	 	MATTER NAME:
	 	Virbac Corporation

	 
	 	 	 	 	 	 	 	 	 	 
	PC DOCS #:

	 	3194963	 	 	VERSION:
	 	9	 
	 
	 	 	 	 	 	 	 	 	 	 
	TYPIST/USER’S NAME:

	 	NParsons
	 	APPLICATION:
	 	MS Word

	 
	 	 	 	 	 	 	 	 	 	 
	TODAY’S DATE:

	 	July 25, 2006
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	DOCUMENT HISTORY:
	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	COMMENTS:

	 	Amends 2173098
	 	 	 	 	 	 






DO NOT DISCARD THIS PAGE




- 411 -









 





Space Above Line Reserved For Recorder’s Use




	 	 	 	 	 
	1.

	 	Title of Document:
	 	THIRTEENTH AMENDMENT TO DEED OF TRUST AND SECURITY

AGREEMENT INCLUDING APPOINTMENT OF SUCCESSOR TRUSTEE
	 
	 	 	 	 
	2.

	 	Date of Document:
	 	June 29, 2006
	 
	 	 	 	 
	3.

	 	Grantor/Trustor:
	 	PM RESOURCES, INC., a Missouri corporation
	 
	 	 	 	 
	4.

	 	Grantee/Beneficiary:
	 	FIRST BANK, a Missouri state banking corporation, as Agent for itself,
JPMorgan Chase Bank, N.A. and any others who hereafter become Lenders
under the Loan Agreement, formerly FIRST BANK, a
Missouri state banking corporation






	 	 	 	 	 
	5.

	 	Statutory Mailing Addresses:
	 	Grantor/Trustor:
	 

	 	 	 	13001 St. Charles Rock Road
	 

	 	 	 	Bridgeton, Missouri 63044
	 
	 	 	 	 
	 

	 	 	 	Grantee/Beneficiary:
	 

	 	 	 	135 North Meramec
	 

	 	 	 	Clayton, Missouri 63105






	 	 	 	 	 
	6.

	 	Legal description:
	 	See Exhibit A annexed to the document.






	 	 	 	 	 
	7.

	 	References to Book(s) and Page(s):
	 	Book 09873, Page 1384






	 	 	 
	8. 
	 	Prepared by and following recording return to:
	 
	 	 	 
	 

	 	Mark L. Kaltenrieder, Esq.
	 

	 	Thompson Coburn LLP
	 

	 	One U.S. Bank Plaza, Suite 3400
	 

	 	St. Louis, MO 63101






- 412 -









 






THIRTEENTH AMENDMENT TO

DEED OF TRUST AND SECURITY AGREEMENT

INCLUDING APPOINTMENT OF SUCCESSOR TRUSTEE




     This Thirteenth Amendment to Deed of Trust and Security Agreement Including Appointment of
Successor Trustee (this “Amendment” or “Agreement”) is made and entered into as of this 29th day of
June, 2006, by and among PM RESOURCES, INC., a Missouri corporation (“Trustor” or “Grantor”); FIRST
BANK, a Missouri state banking corporation, as agent under the Amended Loan Agreement described
below (“Beneficiary” or “Grantee”) for First Bank, a Missouri state banking corporation, JPMorgan
Chase Bank, N.A., a New York state banking corporation, and any other entity which now or at any
time hereafter shall execute the Amended Loan Agreement as a “Lender” (collectively, the
“Lenders”); and FIRST BANK, a Missouri state banking corporation, acting for and on behalf of
itself.



WITNESSETH:




     WHEREAS, Trustor, Katherine D. Knocke, as trustee and Beneficiary are parties to that certain
Deed of Trust and Security Agreement dated September 9, 1993, covering certain real property and
improvements thereon located in St. Louis County, Missouri and more particularly described in
Exhibit A attached hereto and incorporated herein by reference, and other property as
described therein, which Deed of Trust and Security Agreement has been recorded in the office of
the Recorder of Deeds of St. Louis County, Missouri on September 10, 1993, in Book 09873, Page
1384, and which Deed of Trust and Security Agreement was previously amended by a First Amendment to
Deed of Trust and Security Agreement dated December 21, 1994 made by and between Trustor and
Beneficiary, by a Second Amendment to Deed of Trust and Security Agreement dated July 14, 1995 made
by and between Trustor and Beneficiary, by a Third Amendment to Deed of Trust and Security
Agreement dated June 18, 1997 made by and between Trustor and Beneficiary, by a Fourth Amendment to
Deed of Trust and Security Agreement dated September 25, 1997 made by and between Trustor and
Beneficiary, by a Fifth Amendment to Deed of Trust and Security Agreement dated as of May 14, 1998
made by and between Trustor and Beneficiary, by a Sixth Amendment to Deed of Trust and Security
Agreement dated as of September 6, 1998 made by and between Trustor and Beneficiary, by a Seventh
Amendment to Deed of Trust and Security Agreement dated as of September 7, 1999 made by and between
Trustor and Beneficiary, by an Eighth Amendment to Deed of Trust and Security Agreement dated as of
December 30, 1999 made by and between Trustor and Beneficiary, by a Ninth Amendment to Deed of
Trust and Security Agreement dated as of April 4, 2001 made by and between Trustor and Beneficiary,
by a Tenth Amendment to Deed of Trust and Security Agreement dated as of August 7, 2002 made by and
between Trustor and Beneficiary, by an Eleventh Amendment to Deed of Trust and Security Agreement
dated as of August 11, 2003 made by and between Trustor and Beneficiary, and as further amended by
a Twelfth Amendment to Deed of Trust and Security Agreement dated as of September 3, 2003 made by
and between Trustor and Beneficiary (as amended, the “Deed of Trust”); and



     WHEREAS, the Deed of Trust secures indebtedness of Trustor, its parent corporation, Virbac
Corporation, a Delaware corporation, formerly known as and successor by merger to Agri-Nutrition
Group Limited (herein “Virbac”), St. JON Laboratories, Inc., a California corporation (another
wholly owned subsidiary of Virbac and herein referred to as “St. JON”), Virbac AH, Inc. (another
wholly owned subsidiary of Virbac and herein referred to as “Virbac AH”), Francodex Laboratories,
Inc., a Kansas corporation (“Francodex,” a wholly owned subsidiary of Virbac AH) and Delmarva
Laboratories, Inc., a Virginia corporation (another wholly owned subsidiary of Virbac and herein
referred to as “Delmarva”) to Beneficiary under that certain Credit Agreement dated September 7,
1999, as amended (as amended, the “Prior Loan Agreement”), and as evidenced in part by that certain
Revolving Credit Note of Trustor, Virbac, St. JON, Virbac AH, Francodex and Delmarva (hereafter
collectively, the “Borrowers”) dated August 11, 2003 and payable to the order of Beneficiary in the
original principal amount of Fourteen



- 413 -









 




Million Five Hundred Thousand and 00/100 Dollars ($14,500,000.00), as most recently amended and
restated by that certain Revolving Credit Note of Trustor, Virbac, St. JON, Virbac AH, Francodex
and Delmarva dated March 24, 2006 and payable to the order of Beneficiary in the original principal
amount of Fifteen Million and 00/100 Dollars ($15,000,000.00) (the “Prior Note”); and




     WHEREAS, at the request of Trustor, the Prior Loan Agreement is being amended and restated by
a certain Loan Agreement dated as of June 29, 2006 executed by and among Trustor and the other
Borrowers, the lenders from time to time a party thereto (collectively, the “Lenders”), and
Beneficiary, as Agent for the Lenders (as the same may from time to time be further amended,
modified, extended, renewed or replaced, the “Amended Loan Agreement”), and the Prior Note is being
amended, restated and modified by those certain Revolving Credit Notes and Swing Line Note, each as
defined in the Amended Loan Agreement (collectively, as the same may from time to time be further
amended, modified, extended, renewed, restated or replaced, the “Amended Notes”); and



     WHEREAS, as one of the preconditions to the execution of the Amended Loan Agreement and
acceptance of the Amended Notes, the parties hereto desire to amend the Deed of Trust to secure the
payment of any and all present and future indebtedness (principal, interest, fees, collection costs
and expenses and other amounts) of Trustor and the other Borrowers to Beneficiary or any of the
other Lenders evidenced by or arising under the Amended Loan Agreement, as so amended and restated,
and the Amended Notes;



     NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:



     1. The future advances caption required under Section 443.055 R. S. Mo. appearing as the last
Paragraph on the bottom of the first page of the Deed of Trust is hereby replaced by the following:




     THIS DEED OF TRUST AND SECURITY AGREEMENT SECURES ALL CONTRACTUAL ADVANCES,
WHETHER CONTAINED HEREIN OR OTHERWISE, THAT MAY BE MADE BY FIRST BANK TO THE TRUSTOR
HEREIN OR ANY FUTURE CONTRACTUAL OBLIGATIONS, WHETHER CONTAINED HEREIN OR OTHERWISE
OF TRUSTOR TO FIRST BANK UP TO A TOTAL AMOUNT OF $15,000,000.00 PLUS INTEREST. THIS
DEED OF TRUST AND SECURITY AGREEMENT SHALL BE GOVERNED BY THE PROVISIONS OF SECTION
443.055 OF THE REVISED STATUTES OF MISSOURI, AS AMENDED.



     2. The future advances caption required under Section 443.055 R. S. Mo. appearing at the top
of page 3 of the Deed of Trust is hereby replaced by the following:




     THIS DEED OF TRUST AND SECURITY AGREEMENT SECURES ALL CONTRACTUAL ADVANCES,
WHETHER CONTAINED HEREIN OR OTHERWISE, THAT MAY BE MADE BY FIRST BANK TO THE TRUSTOR
HEREIN OR ANY FUTURE CONTRACTUAL OBLIGATIONS, WHETHER CONTAINED HEREIN OR OTHERWISE
OF TRUSTOR TO FIRST BANK UP TO A TOTAL AMOUNT OF $15,000,000.00 PLUS INTEREST. THIS
DEED OF TRUST AND SECURITY AGREEMENT SHALL BE GOVERNED BY THE PROVISIONS OF SECTION
443.055 OF THE REVISED STATUTES OF MISSOURI, AS AMENDED.



     3. The last Paragraph on page 3 of the Deed of Trust and continuing over on to page 4 of the
Deed of Trust is hereby replaced by the following:



- 414 -









 






     That for good and valuable consideration, and to secure the obligations of
Trustor, Virbac Corporation, St. JON Laboratories, Inc., Virbac AH, Inc., Francodex
Laboratories, Inc., and Delmarva Laboratories, Inc. (and of any future subsidiary of
any of them which hereafter becomes a party thereto) under: (i) that certain Loan
Agreement dated as of June 29, 2006 made by and among Trustor, Virbac Corporation,
St. JON Laboratories, Inc., Virbac AH, Inc., Francodex Laboratories, Inc., and
Delmarva Laboratories, Inc., as Borrowers, the Lenders from time to time a party
thereto (collectively, the “Lenders”), and Beneficiary, as Agent for the Lenders, as
amended or restated from time to time (as amended, the “Loan Agreement”); (ii) those
certain revolving credit notes dated as of June 29, 2006 in the aggregate original
principal amount of up to Fifteen Million Dollars ($15,000,000.00) made by such
Borrowers payable to the order of the respective Lenders, final payment of which is
due on or before March 31, 2007, as such revolving credit notes may be renewed,
extended, restated or amended from time to time (the “Revolving Credit Notes”);
(iii) that certain swing line note dated as of June 29, 2006 in the original
principal amount of up to Three Million Dollars ($3,000,000.00) made by such
Borrowers payable to the order of Beneficiary, final payment of which is due on or
before March 31, 2007, as such swing line note may be renewed, extended, restated or
amended from time to time (the “Swing Line Note,” and collectively with the
Revolving Credit Notes referred to hereinafter as the “Notes”); and to secure any
additional loans, advances, debts, liabilities, obligations, covenants and duties
owing to Beneficiary and/or to any of the Lenders from Trustor and/or Virbac
Corporation, St. JON Laboratories, Inc., Virbac AH, Inc., Francodex Laboratories,
Inc. and Delmarva Laboratories, Inc. (and of any future subsidiary of any of them
which hereafter becomes a party to the Loan Agreement) of any kind or nature,
present or future, incurred pursuant to or in connection with any of the Transaction
Documents, whether or not evidenced by any note, guaranty or other instrument,
arising under this Deed of Trust or under any other Transaction Document, whether or
not for the payment of money, whether arising by reason of an extension of credit,
opening of a letter of credit, loan, guaranty, indemnification or in any other
manner, whether direct or indirect (including by assignment), absolute or
contingent, due or to become due, now existing or arising and however acquired (the
Loan Agreement, the Revolving Credit Notes, the Swing Line Note and all other such
indebtedness and/or liabilities being herein collectively referred to as the
“Indebtedness”), Trustor does irrevocably grant, bargain, sell, remise, release,
convey and confirm unto Trustee, its successors and assigns, in trust, with power of
sale and right-of-entry and possession, the real estate described in Exhibit
A attached hereto and made a part hereof, which, together with the property
hereinafter described, is referred to herein as the “Premises;”



       4. In addition to securing the other indebtedness, liabilities and obligations of Trustor and
the other Borrowers to Lenders and Beneficiary therein described, the Deed of Trust shall
henceforth also secure the payment of any and all present and future indebtedness (principal,
interest, fees, collection costs and expenses and other amounts) of Trustor and the other Borrowers
to Lenders and Beneficiary evidenced by or arising under the Amended Notes and the Amended Loan
Agreement, or any amendments, modifications, extensions, renewals or replacements thereof, and the
performance and observance by Trustor of every covenant and condition therein contained; provided,
in no event shall the principal amount of Borrower’s Obligations secured by the Deed of Trust
exceed $15,000,000.00. All references in the Deed of Trust to the “Indebtedness” secured thereby
and other references of similar import are hereby amended and deemed to refer to the Trustor’s and
the other Borrowers’ present and future obligations, liabilities and indebtedness (including, but
not limited to, principal, interest, fees, collection costs and expenses and other amounts) due
under the Deed of Trust, as hereby amended, the



- 415 -









 




Amended Loan Agreement, the Amended Notes as described hereinabove, and any of the other
Transaction Documents (as defined in the Amended Loan Agreement), including, without limitation,
the “Borrowers’ Obligations” as defined in the Amended Loan Agreement, all of which are and shall
continue to be secured by the Deed of Trust; provided, in no event shall the principal amount of
Indebtedness secured by the Deed of Trust exceed $15,000,000.00.




     5. The “Beneficiary” and “Third Party” under the Deed of Trust shall henceforth mean First
Bank, as Agent under the Amended Loan Agreement, and its successors and assigns, and shall include
the holder(s) and owner(s) of the Indebtedness, whether or not named as Beneficiary under the Deed
of Trust as set forth in paragraph (or section) 3.9 of the Deed of Trust (at page 21 thereof).
First Bank, for and on behalf of itself, hereby consents to First Bank, as Agent under the Amended
Loan Agreement, and its successors and assigns being hereby designated as the Beneficiary and Third
Party under the Deed of Trust, and to the extent required, for and in consideration of the sum of
Ten and 00/100 Dollars ($10.00) and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, First Bank, a Missouri state banking corporation,
hereby transfers, assigns and sets over unto First Bank, as Agent under the Amended Loan Agreement
(without any recourse, warranty or representation whatsoever), and its successors and assigns, all
of its right, title, benefit and interest in and to the Deed of Trust, and First Bank, as Agent
under the Amended Loan Agreement accepts such assignment and transfer. All references in the Deed
of Trust to the “Term Note,” the “Line of Credit Note,” the “Revolving Credit Note,” the “Notes”
and other references of similar import are hereby amended and deemed to refer to the Amended Notes
as described hereinabove, and any amendments, modifications, extensions, renewals, restatements or
replacements thereof. All references in the Deed of Trust to the “Loan Agreement” and other
references of similar import are hereby amended and deemed to refer to the Amended Loan Agreement
as described hereinabove, and any amendments, modifications, extensions, renewals, restatements or
replacements thereof. All references in the Deed of Trust to any other loan document or any other
instrument now or hereafter evidencing or constituting additional security for the Indebtedness and
other references of similar import are hereby amended and deemed to refer to the Transaction
Documents as defined in the Amended Loan Agreement, as amended, modified, extended, renewed,
restated or replaced from time to time. The “Beneficiary” and “Third Party” under the Deed of
Trust shall henceforth mean First Bank, as Agent under the Amended Loan Agreement and its
successors and assigns and shall include the holder(s) and owner(s) of the Indebtedness, whether or
not named as Beneficiary under the Deed of Trust as set forth in paragraph (or section) 3.9 of the
Deed of Trust (at page 21 thereof). Capitalized terms used in the Deed of Trust and not otherwise
defined therein or herein shall have the meanings ascribed to such terms in the Amended Loan
Agreement. Upon the occurrence of an Event of Default under the Amended Loan Agreement, any of the
Amended Notes, the Deed of Trust, as hereby amended or any of the other Transaction Documents,
First Bank, as Agent on behalf of the Lenders under the Loan Agreement, and its successors and
assigns as such Agent, shall be entitled to and may exercise all rights and remedies under the
Amended Loan Agreement, the Amended Notes, the Deed of Trust, as hereby amended, and any of the
other Transaction Documents.



     6. Pursuant to paragraph (or section) 3.10 of the Deed of Trust (at page 21 thereof), the
Beneficiary is authorized to remove the trustee named thereunder and to appoint a successor trustee
to act under the Deed of Trust. Beneficiary, on behalf of itself and each and all of the holder(s)
of the obligations secured by the Deed of Trust, does hereby remove Katherine D. Knocke as trustee
under the Deed of Trust and appoints First Land Trustee Corp., Missouri corporation, to act as
successor trustee under the Deed of Trust.



     7. The Amended Notes, the Amended Loan Agreement and the Deed of Trust are and shall remain
the binding obligations of Trustor and each of the other Borrowers, and all of the provisions,
terms, stipulations, conditions, covenants and powers contained therein shall stand and remain in
full



- 416 -









 




force and effect, except only as the same are herein and hereby specifically varied or amended, and
the same are hereby ratified and confirmed.




     8. Trustor hereby represents and warrants to Beneficiary and Lenders that:



          (a) The execution, delivery and performance by Trustor of this Amendment are within the
corporate powers of Trustor, have been duly authorized by all necessary corporate action and
require no action by or in respect of, or filing with, any governmental or regulatory body, agency
or official. The execution, delivery and performance by Trustor of this Amendment do not conflict
with, or result in a breach of the terms, conditions or provisions of, or constitute a default
under or result in any violation of, and Trustor is not now in default under or in violation of,
the terms of the Articles or Certificate of Incorporation or Bylaws of Trustor, any applicable law,
any rule, regulation, order, writ, judgment or decree of any court or governmental or regulatory
agency or instrumentality, or any agreement or instrument to which Trustor is a party or by which
it is bound or to which it is subject;




          (b) This Amendment has been duly executed and delivered and constitutes the legal, valid and
binding obligation of Trustor enforceable in accordance with its terms; and




          (c) As of the date hereof, all of the covenants, representations and warranties of Trustor set
forth in the Deed of Trust are true and correct and no “Event of Default” (as defined therein)
under or within the meaning of the Deed of Trust has occurred and is continuing.




     9. Except to the extent amended by this Amendment, all of the terms, provisions, conditions,
agreements, covenants, representations, warranties and powers contained in the Deed of Trust shall
be and remain in full force and effect and the same are hereby ratified and confirmed.



     10. All references in the Deed of Trust to “this Deed of Trust” and any other references of
similar import shall henceforth mean the Deed of Trust as amended by this Amendment.



     11. This Amendment shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns, except that Trustor may not assign, transfer or delegate
any of its rights or obligations hereunder.



     12. This Amendment shall be governed by and construed in accordance with the internal laws of
the State of Missouri.



     13. In the event of any inconsistency or conflict between this Amendment and the Deed of
Trust, the terms, provisions and conditions of this Amendment shall govern and control.



- 417 -









 





     IN WITNESS WHEREOF, the parties hereto have executed this instrument as of the date first
written above.



	 	 	 	 	 
	 	PM RESOURCES, INC.

 	 
	 	By:  	/s/ Jean M. Nelson
 	 
	 	 	Jean M. Nelson, Executive Vice President and 	 
	 	 	Chief Financial Officer 	 
	 



	 	 	 	 	 
	 	FIRST BANK, as Agent under the Amended

Loan Agreement, and for and on behalf of itself

 	 
	 	By:  	/s/ Traci Dodson
 	 
	 	 	Traci Dodson, Vice President 	 
	 	 	 	 



							
	STATE OF Texas

	 	 	)	 	 	 
	 

	 	 	)	 	SS.	 
	COUNTY OF Tarrant

	 	 	)	 	 	 






     On this 29th day of June, 2006, before me personally appeared Jean M. Nelson, to me
personally known, who, being by me duly sworn, did say that she is the Executive Vice President and
Chief Financial Officer of PM Resources, Inc., a Missouri corporation, and that the foregoing
instrument was signed on behalf of said corporation by authority of its Board of Directors; and
said Jean M. Nelson acknowledged said instrument to be the free act and deed of said corporation.



          IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal in the County
and State aforesaid, the day and year first above written.




(Seal)




	 	 	 	 	 
	 	 	 
	 	     /s/ Karen M. Murr
 	 
	 	Notary Public 	 
	 	 	 
	 



My Commission Expires:




June 3, 2008




- 418 -









 





	 	 	 	 	 	 	 
	STATE OF MISSOURI

	 	 	)	 	 	 
	 

	 	 	)	 	SS.	 
	COUNTY OF ST. LOUIS

	 	 	)	 	 	 






          On this 5th day of July, 2006, before me appeared Traci Dodson, to me personally known, who,
being by me duly sworn, did say that she is the Vice President of First Bank, a Missouri state
banking corporation, and that the foregoing instrument was signed in behalf of said corporation,
acting as Agent under the Amended Loan Agreement above described and on behalf of itself, by
authority of its Board of Directors; and said Traci Dodson acknowledged said instrument to be the
free act and deed of said corporation, acting as Agent and on behalf of itself.




          IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal in the County
and State aforesaid, the day and year first above written.




(Seal)




					
	 	     /s/ Bradley J. Gross
 	 
	 	Notary Public 	 
	 	 	 
	 



My Commission Expires:




August 8, 2009




- 419 -









 





EXHIBIT A




LEGAL DESCRIPTION OF PROPERTY




PARCEL 1:





     A tract of land in U.S. Survey 130 and 47, Township 47 North, Range 5 East, St. Louis County,
Missouri, more particularly described as follows: Beginning at a stone being the most Northerly
corner of U.S. Survey 130; thence Southeastwardly along the Northeast line of said U.S. Survey 130,
South 37 degrees 02 minutes 34 seconds East a distance of 930.50 feet to a point being the
Northeast corner of property conveyed to Union Electric Company by deed recorded in Book 4753 page
295 of the St. Louis County Records; thence Southwestwardly along the Northwest line of said Union
Electric property, South 53 degrees 46 minutes 37 seconds West, a distance of 100.00 feet to a
point being the Northwest corner of said Union Electric property; thence along the Southwest line
of Union Electric Company property, South 37 degrees 02 minutes 34 seconds East, 232.80 feet to a
point in the center line of Taussig Road, 30 feet wide; thence along the center line of Taussig
Road, 30 feet wide, South 53 degrees 46 minutes 37 seconds West, a distance of 869.95 feet to a
point thence North 36 degrees 13 minutes 23 seconds West, a distance of 30.00 feet to a point being
a corner of property conveyed to the State of Missouri by deed recorded in Book 1540 page 56 of the
St. Louis County Records; thence Southwestwardly along the Northwest line of said State of Missouri
property, South 53 degrees 46 minutes 37 seconds West 225.00 feet to a point; thence North 36
degrees 13 minutes 23 seconds West, a distance of 10.00 feet to a point; thence Southwestwardly
along the Northwest line of property to the State of Missouri by deed recorded in Book 1481 Page
102 of the St. Louis County Records, South 53 degrees 46 minutes 37 seconds West, a distance of
44.62 feet to a point in the Northeast line of property formerly of Missouri Electric Rail Road
Company; thence along said line, North 37 degrees 55 minutes 30 seconds West, a distance of
1,275.81 feet to a point in the Southeast line of property now or formerly of Earl A. Moore and
Marlene A. Moore, his wife, and Henry E. Moore and Edna C. Moore, his wife, per deed recorded in
Book 5155 Page 282, St. Louis County Records; thence in a Northeasterly direction along the
Southeast line of said property, North 52 degrees 03 minutes 31 seconds East, a distance of 800.84
feet to a concrete monument on the South line of the Old Wabash Railroad right-of-way; thence in an
Easterly direction along a curve to the left having a radius of 3014.8 feet a distance of 377.86
feet to an iron pipe on the Northwest line of U.S. Survey 130; thence along said Northwest line of
U.S. Survey 130, North 53 degrees 42 minutes 51 seconds East, a distance of 126.37 feet to the
point of beginning, according to a survey executed by Thatcher & Patient, Inc. during the month of
March, 1968 and revised on June 20, 1968.



PARCEL 2:




     A tract of land in U.S. Surveys 130 and 47, Township 47 North, Range 5 East, St. Louis County,
Missouri more particularly described as follows: Beginning at the Southeast corner of property now
or formerly of Earl A. Moore and Marlene A. Moore, his wife and Henry E. Moore and Edna C. Moore,
his wife, per deed recorded in Book 5155 page 282 of the St. Louis County Records; thence along the
Southeast line of said property North 52 degrees 03 minutes 31 seconds East, a distance of 46.13
feet to a point in the Northeastern line of property formerly of Missouri Electric Rail Road
Company; thence Southeasterly along said property, South 37 degrees 55 minutes 30 seconds East a
distance of 56.57 feet to a point being the Northwest line of property conveyed to the State of
Missouri by deed recorded in Book 1481 page 102 of the St. Louis County Records; thence South 52
degrees 05 minutes 30 seconds West a distance of 46.15 feet to a point; thence along the Northeast
line of said State of Missouri property North 37 degrees 54 minutes 30 seconds West, a distance of
56.54 feet to the point of beginning, according to a survey executed by Thatcher & Patient, Inc.
during the month of March, 1968 and revised on June 20, 1968.



- 420 -









 





PARCEL 3:




     Beginning at the Southeast corner of property now or formerly of Earl A. Moore and Marlene A.
Moore, his wife and Henry E. Moore and Edna C. Moore, his wife, per deed recorded in Book 5155 Page
282 of the St. Louis County Records; thence along the Southeast line of said property North 52
degrees 03 minutes 31 seconds East a distance of 46.13 feet to a point in the Northeastern line of
property formerly of the Missouri Electric Rail Road Company; thence Southeastwardly along said
property, South 37 degrees 55 minutes 30 seconds East, a distance of 316.57 feet to the actual
point of Beginning; thence along the Northeast line of said property, South 37 degrees 55 minutes
30 second East, a distance of 959.24 feet to a point in the Northwest line of property conveyed to
the State of Missouri by deed recorded in Book 1481 page 102 of the St. Louis County Records;
thence along said line, South 53 degrees 46 minutes 37 seconds West, a distance of 51.52 feet to a
point said point being a perpendicular distance of 80.00 feet from the centerline of State Highway
61 as now established; thence Northwestwardly along a line 80 feet perpendicular distant and
parallel to the centerline of State Highway 61, North 37 degrees 54 minutes 30 seconds West, a
distance of 957.73 feet to a point; thence North 52 degrees 05 minutes 30 seconds East, a distance
of 51.22 feet to the Northeast line of property formerly of Missouri Electric Rail Road Company to
the point of beginning according to a survey executed by Thatcher & Patient, Inc. during the month
of March, 1968 and revised on June 20, 1968.



PARCEL 4:




     All easements, rights, privileges and interests created and established for the benefit of and
appurtenant to the foregoing PARCELS 1, 2 and 3 under a certain Agreement executed by and between
I.E. Goldstein and Mary Goldstein and Ralston Purina Company recorded December 30, 1969 in Book
6438 Page 1588.



     Together with all improvements thereon, commonly known and numbered as 13001 St. Charles Rock
Road, Bridgeton, Missouri 63044.



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AMENDMENT TO

DEED OF TRUST AND SECURITY AGREEMENT




     This Amendment to Deed of Trust and Security Agreement made as of this 29th day of June, 2006,
by and between VIRBAC CORPORATION, a Delaware corporation (“Grantor”); FIRST BANK, a Missouri state
banking corporation, as Agent under the Amended Loan Agreement described below (“Beneficiary”), for
First Bank, a Missouri state banking corporation, JPMorgan Chase Bank, N.A., a New York state
banking corporation, and any other entity which now or at any time hereafter shall execute the
Amended Loan Agreement (as herein defined) as a “Lender” (collectively, the “Lenders”); and FIRST
BANK, a Missouri state banking corporation, acting for and on behalf of itself.



WITNESSETH:




     WHEREAS, Grantor heretofore executed and delivered to Trustee, as trustee for Beneficiary, a
certain Deed of Trust and Security Agreement dated September 3, 2003 encumbering Grantor’s real
property located in the County of Tarrant, Texas more fully described in Exhibit A attached hereto
(the “Deed of Trust”), which Deed of Trust was recorded on September 19, 2003, as Instrument No.
D203350994 in the official records of the County of Tarrant, State of Texas, and which Deed of
Trust was rerecorded on November 24, 2003, as Instrument No. D203436588 in the official records of
the County of Tarrant, State of Texas, to secure the Borrower’s Obligations (as originally defined
in the Deed of Trust) evidenced by, inter alia, the Note and Loan Agreement (each as originally
defined in the Deed of Trust); and



     WHEREAS, Grantor has requested an amendment and restatement of the Loan Agreement and the Note
to make certain amendments thereto as more fully described in that certain Loan Agreement dated of
even date herewith executed by and among Grantor, Grantor’s subsidiaries, PM Resources, Inc., a
Missouri corporation, St. JON Laboratories, Inc., a California corporation, Francodex Laboratories,
Inc., a Kansas corporation, Virbac AH, Inc., a Delaware corporation, and Delmarva Laboratories,
Inc., a Virginia corporation (collectively, with Grantor, referred to herein as the “Borrowers”),
Beneficiary and Lenders (as the same may from time to time be further amended, modified, extended,
renewed or replaced, the “Amended Loan Agreement”), and in those certain Revolving Credit Notes and
Swing Line Note, as defined in the Amended Loan Agreement (collectively, as the same may from time
to time be further amended, modified, extended, renewed, restated or replaced, the “Amended
Notes”); and



     WHEREAS, as one of the preconditions to the execution of the Amended Loan Agreement and
acceptance of the Amended Notes, Grantor has agreed to amend the Deed of Trust as set forth herein;



     NOW, THEREFORE, in consideration of the above premises and for other valuable considerations,
the receipt and sufficiency of which are hereby acknowledged, Grantor and Beneficiary do hereby
agree as follows:



     1. The Recital paragraphs A through D on the first page of the Deed of Trust shall be amended
to read as follows:




     A. Grantor, PM RESOURCES, INC., a Missouri corporation, ST. JON LABORATORIES,
INC., a California corporation, FRANCODEX LABORATORIES, INC., a Kansas corporation,
VIRBAC AH, INC., a Delaware corporation, and DELMARVA CORPORATION, a Virginia
corporation (collectively referred to herein as “Borrowers”), the Lenders
from time to time a party thereto (collectively referred to herein as
“Lenders”) and Beneficiary, as Agent for the Lenders, entered into a Loan
Agreement dated as of June



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29, 2006 (as the same may be modified, extended, renewed or restated from time to
time, the “Loan Agreement”).




     B. Borrowers jointly and severally executed and delivered to each of the
Lenders a Revolving Credit Note dated June 29, 2006, which Revolving Credit Notes
are collectively in an aggregate principal amount of up to Fifteen Million Dollars
($15,000,000.00), are payable respectively to each of the Lenders as therein set
forth, and have a stated final maturity date of March 31, 2007 (as amended and
restated, the “Revolving Credit Note”), and Borrowers have further jointly
and severally executed and delivered to Beneficiary a Swing Line Note dated June 29,
2006, which Swing Line Note is in the original principal amount of up to Three
Million Dollars ($3,000,000.00), is payable to Beneficiary as therein set forth, and
has a stated final maturity date of March 31, 2007 (the “Swing Line Note,”
and collectively with the Revolving Credit Notes referred to herein as the
“Notes”).



     C. Grantor is now or hereafter may become otherwise obligated or indebted to
Beneficiary and/or any of the Lenders, and Beneficiary and/or the Lenders may make
future advances to Grantor pursuant to the terms of the Loan Agreement, and Grantor
may incur future obligations to Beneficiary and/or the Lenders whether pursuant to
the Notes or the Loan Agreement.



     D. The parties intend that this Deed of Trust shall secure the payment of such
Indebtedness and Grantor and the other Borrowers obligations hereunder, and any and
all other present and future indebtedness (principal, lawful interest, fees and
other amounts), liabilities and obligations of Grantor and the other Borrowers to
Beneficiary and to any of the Lenders arising under the Notes, the Loan Agreement
and any other Transaction Documents, including any and all supplements,
replacements, amendments, modifications, rearrangements, increases, expansions,
extensions or renewals thereof, whether now existing or made or incurred after the
date of execution of this Deed of Trust, in the maximum principal amount (exclusive
of sums spent for the reasonable protection of the security of this Deed of Trust ),
of Fifteen Million Dollars ($15,000,000.00) (collectively, the “Borrowers’
Obligations”).



     2. In addition to securing the other indebtedness, liabilities and obligations of Grantor and
the other Borrowers to Lenders and Beneficiary therein described, the Deed of Trust shall
henceforth also secure the payment of any and all present and future indebtedness (principal,
interest, fees, collection costs and expenses and other amounts) of Grantor and the other Borrowers
to Lenders and Beneficiary evidenced by or arising under the Amended Notes and the Amended Loan
Agreement, or any amendments, modifications, extensions, renewals or replacements thereof, and the
performance and observance by Grantor of every covenant and condition therein contained; provided,
in no event shall the principal amount of Borrowers’ Obligations secured by the Deed of Trust
exceed $15,000,000.00. All references in the Deed of Trust to the “Borrower’s Obligations” and
other references of similar import are hereby amended and deemed to refer to the Grantor’s and the
other Borrowers’ present and future obligations, liabilities and indebtedness (including, but not
limited to, principal, interest, fees, collection costs and expenses and other amounts) due under
the Deed of Trust, as hereby amended, the Amended Loan Agreement and the Amended Notes as described
hereinabove, all of which are and shall continue to be secured by the Deed of Trust, including,
without limitation, the “Borrowers’ Obligations” as described in the Amended Loan Agreement;
provided, in no event shall the principal amount of Borrowers’ Obligations secured by the Deed of
Trust exceed $15,000,000.00.



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     3. The “Beneficiary” under the Deed of Trust shall henceforth mean First Bank, as Agent under
the Amended Loan Agreement, and its successors and assigns, and shall be deemed to include the
endorsee(s), holder(s) and owner(s) of the Loan Documents and any of the Borrowers’ Obligations, as
set forth in paragraph (or section) 3.4 of the Deed of Trust (at page 21 thereof). First Bank, for
and on behalf of itself, hereby consents to First Bank, as Agent under the Amended Loan Agreement,
and its successors and assigns, being hereby designated as the Beneficiary under the Deed of Trust,
and to the extent required, for and in consideration of the sum of Ten and 00/100 Dollars ($10.00)
and other good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, First Bank, a Missouri state banking corporation, hereby transfers, assigns and sets
over unto First Bank, as Agent under the Amended Loan Agreement (without any recourse, warranty or
representation whatsoever), and its successors and assigns, all of its right, title, benefit and
interest in and to the Deed of Trust, and First Bank, as Agent under the Amended Loan Agreement
accepts such assignment and transfer. All references in the Deed of Trust to the “Note” and other
references of similar import are hereby amended and deemed to refer to the Amended Notes as
described hereinabove, and any amendments, modifications, extensions, renewals, restatements or
replacements thereof. All references in the Deed of Trust to the “Loan Agreement” and other
references of similar import are hereby amended and deemed to refer to the Amended Loan Agreement
as described hereinabove, and any amendments, modifications, extensions, renewals, restatements or
replacements thereof. All references in the Deed of Trust to the “Loan Documents” and other
references of similar import are hereby amended and deemed to refer to the Transaction Documents as
defined in the Amended Loan Agreement, as amended, modified, extended, renewed, restated or
replaced from time to time. “Borrower’s Obligations” as used in the Deed of Trust shall include
the “Borrowers’ Obligations” as defined in the Amended Loan Agreement. Capitalized terms used in
the Deed of Trust and not otherwise defined therein shall have the meanings ascribed to such terms
in the Amended Loan Agreement. Upon the occurrence of an Event of Default under the Amended Loan
Agreement, any of the Amended Notes, the Deed of Trust, as hereby amended or any of the other
Transaction Documents, First Bank, as Agent on behalf of the Lenders under the Loan Agreement, and
its successors and assigns as such Agent, shall be entitled to and may exercise all rights and
remedies under the Amended Loan Agreement, the Amended Notes, the Deed of Trust, as hereby amended,
and any of the other Transaction Documents.



     4. The Amended Notes, the Amended Loan Agreement and the Deed of Trust are and shall remain
the binding obligations of Grantor and each of the other Borrowers, and all of the provisions,
terms, stipulations, conditions, covenants and powers contained therein shall stand and remain in
full force and effect, except only as the same are herein and hereby specifically varied or
amended, and the same are hereby ratified and confirmed.



     5. Grantor hereby represents and warrants to Beneficiary and Lenders that:



          (a) The execution, delivery and performance by Grantor of this Amendment are within the
corporate powers of Grantor, have been duly authorized by all necessary corporate action and
require no action by or in respect of, or filing with, any governmental or regulatory body, agency
or official. The execution, delivery and performance by Grantor of this Amendment do not conflict
with, or result in a breach of the terms, conditions or provisions of, or constitute a default
under or result in any violation of, and Grantor is not now in default under or in violation of,
the terms of the Articles or Certificate of Incorporation or Bylaws of Grantor, any applicable law,
any rule, regulation, order, writ, judgment or decree of any court or governmental or regulatory
agency or instrumentality, or any agreement or instrument to which Grantor is a party or by which
it is bound or to which it is subject;




          (b) This Amendment has been duly executed and delivered and constitutes the legal, valid and
binding obligation of Grantor enforceable in accordance with its terms; and




- 424 -









 








          (c) As of the date hereof, all of the covenants, representations and warranties of Grantor set
forth in the Deed of Trust are true and correct and no “Event of Default” (as defined therein)
under or within the meaning of the Deed of Trust has occurred and is continuing.




     6. All references in the Deed of Trust to “this Deed of Trust” and any other references of
similar import shall henceforth mean the Deed of Trust as amended by this Amendment.



     7. This Amendment shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns, except that Grantor may not assign, transfer or delegate
any of its rights or obligations hereunder.



     8. This Amendment shall be governed by and construed in accordance with the internal laws of
the State of Missouri, except to the extent preempted by federal law and excluding Missouri’s laws
relating to conflicts of laws, provided, however, that the creation, perfection, priority and
enforcement of the lien of the Deed of Trust on real property located in the State of Texas, shall
be governed by and construed in accordance with the internal laws of the State of Texas, except to
the extent preempted by federal law and excluding Texas’s laws relating to conflicts of laws.



     9. In the event of any inconsistency or conflict between this Amendment and the Deed of Trust,
the terms, provisions and conditions of this Amendment shall govern and control.


FINAL AGREEMENT. TO THE EXTENT THAT TEXAS LAW APPLIES TO THE CREATION AND ENFORCEMENT OF THIS
TRANSACTION, THIS AMENDMENT, THE DEED OF TRUST, THE AMENDED LOAN AGREEMENT, AND THE OTHER DEBT
INSTRUMENTS EXECUTED PREVIOUSLY OR SUBSTANTIALLY CONCURRENTLY HEREWITH TOGETHER CONSTITUTE A “LOAN
AGREEMENT” AS DEFINED IN SECTION 26.02(a) OF THE TEXAS BUSINESS & COMMERCE CODE, 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.




     IN WITNESS WHEREOF, the parties hereto have executed this instrument as of the date first
written above.



	 	 	 	 	 
	 	VIRBAC CORPORATION

 	 
	 	By:  	/s/ Jean M. Nelson
 	 
	 	 	Jean M. Nelson, Executive Vice President and 	 
	 	 	Chief Financial Officer 	 
	 



	 	 	 	 	 
	 	FIRST BANK, as Agent under the Amended

Loan Agreement, and for and on behalf of itself

 	 
	 	By:  	/s/ Traci Dodson
 	 
	 	 	Traci Dodson, Vice President 	 
	 	 	 	 



- 425 -









 






	 	 	 	 	 	 	 
	STATE OF Texas

	 	 	)	 	 	 
	 

	 	 	)	 	SS.	 
	COUNTY OF Tarrant

	 	 	)	 	 	 




     On this 29th day of June, 2006, before me personally appeared Jean M. Nelson, to me personally
known, who, being by me duly sworn, did say that she is the Executive Vice President and Chief
Financial Officer of Virbac Corporation, a Delaware corporation, and that the foregoing instrument
was signed on behalf of said corporation by authority of its Board of Directors; and said Jean M.
Nelson acknowledged said instrument to be the free act and deed of said corporation.



     IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal in the County
and State aforesaid, the day and year first above written.



(Seal)




					
	 	      Karen M. Murr
 	 
	 	Notary Public 	 
	 	 	 
	 



My Commission Expires:



June 3, 2008                    




	 	 	 	 	 	 	 
	STATE OF MISSOURI

	 	 	)	 	 	 
	 

	 	 	)	 	SS.	 
	COUNTY OF ST. LOUIS

	 	 	)	 	 	 






     On this 5th day of July, 2006, before me appeared Traci Dodson, to me personally
known, who, being by me duly sworn, did say that she is the Vice President of First Bank, a
Missouri state banking corporation, and that the foregoing instrument was signed in behalf of said
corporation, acting as Agent under the Amended Loan Agreement above described and on behalf of
itself, by authority of its Board of Directors; and said Traci Dodson acknowledged said instrument
to be the free act and deed of said corporation, acting as Agent and on behalf of itself.



     IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my official seal in the County
and State aforesaid, the day and year first above written.



(Seal)




					
	 	     /s/ Bradley J. Gross
 	 
	 	Notary Public 	 
	 	 	 
	 



My Commission Expires:



August 8, 2009



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EXHIBIT A




(Legal Description)



Lot 2-R, Block 6, MERCANTILE CENTER, an addition to the City of Fort Worth, Tarrant County, Texas,
according to the map thereof, recorded in Cabinet B, Slide 1142 of the Plat Records of Tarrant
County.




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SUBORDINATION AGREEMENT





     1. To induce FIRST BANK (herein, in such capacity, the “Agent”), each of the financial
institutions which now or hereafter becomes a party as a “Lender” (collectively, the “Lenders”) to
that certain Senior Loan Agreement (as hereinafter defined), to now or hereafter lend or advance
monies, issue letters of credit and/or otherwise extend credit to or for the benefit or account of
VIRBAC CORPORATION, a Delaware corporation (“Virbac”), PM RESOURCES, INC., a Missouri corporation
(“PM Resources”), ST. JON LABORATORIES, INC., a California corporation (“St. JON”), FRANCODEX
LABORATORIES, INC., a Kansas corporation (“Francodex”), VIRBAC AH, INC., a Delaware corporation
(“Virbac AH,”), and DELMARVA LABORATORIES, INC., a Virginia corporation (“Delmarva,” and
collectively with Virbac, PM Resources, St. JON, Francodex and Virbac AH referred to herein as the
“Borrowers”), and to better secure Agent and the Lenders in respect thereof, the undersigned,
VIRBAC S. A., a business organized under the laws of the Republic of France (the “Subordinating
Creditor”), agrees to and hereby subordinates the payment and performance of any and all
indebtedness (principal, interest (including, without limitation, interest accruing after the
commencement of a bankruptcy or insolvency proceeding by or against Borrowers, or any of them,
whether or not allowed in such proceeding), fees, collection costs and expenses and other amounts),
liabilities and obligations (including, without limitation, guaranty obligations and indemnity
obligations) which Borrowers, or any of them, may now or at any time or times hereafter owe to the
Subordinating Creditor, including, without limitation, the present and future indebtedness
(principal, interest (including, without limitation, interest accruing after the commencement of a
bankruptcy or insolvency proceeding by or against Borrowers, or any of them, whether or not allowed
in such proceeding), fees, collection costs and expenses and other amounts), liabilities and
obligations of Borrowers, or any of them, to the Subordinating Creditor evidenced by or arising
under or in respect of: (i) that certain Secured Subordinated Promissory Note of Borrowers dated
April 9, 2004 and payable to the order of the Subordinating Creditor in the original principal
amount of $3,000,000.00 (the “$3,000,000.00 Subordinated Note”), and (ii) that certain Secured
Subordinated Promissory Note of Borrowers dated April 29, 2004 and payable to the order of the
Subordinating Creditor in the original principal amount of $4,000,000.00 (the “$4,000,000.00
Subordinated Note,” and collectively with the $3,000,000.00 Subordinated Note and any other
promissory notes now or hereafter issued by any or all of the Borrowers payable to the
Subordinating Creditor are referred to herein as the “Subordinated Notes”), as the same may from
time to time be amended, modified, extended, renewed or restated (hereinafter collectively referred
to as the “Subordinated Indebtedness”) together with any and all guaranties, collateral and other
security, if any, for the payment of any of the Subordinated Indebtedness, to any and all
indebtedness (principal, interest (including, without limitation, interest accruing after the
commencement of a bankruptcy or insolvency proceeding by or against Borrowers, or any of them,
whether or not allowed in such proceeding), fees, collection costs and expenses and other amounts),
liabilities and obligations (including, without limitation, guaranty obligations, letter of credit
reimbursement obligations and indemnity obligations) which Borrowers, or any of them, may now or at
any time or times hereafter owe to the Agent and/or any of the Lenders, including, without
limitation, the present and future indebtedness (principal, interest (including, without
limitation, interest accruing after the commencement of a bankruptcy or insolvency proceeding by or
against Borrowers, or any of them, whether or not allowed in such proceeding), fees, collection
costs and expenses and other amounts), liabilities and obligations (including, without limitation,
guaranty obligations, letter of credit reimbursement obligations and indemnity obligations) of
Borrowers to Agent and the Lenders evidenced by or arising under or in respect of (a) that certain
Loan Agreement dated as of June 29, 2006 made by and among Borrowers, Agent and the Lenders, as the
same may from time to time be amended, modified, extended, renewed or restated (the “Senior Loan
Agreement”; all capitalized terms used and not otherwise defined in this Agreement shall have the
respective meanings ascribed to them in the Senior Loan Agreement), (b) those certain Revolving
Credit Notes of Borrowers dated as of June 29, 2006 or their respective dates of execution and
payable to the respective orders of each of the Lenders in the aggregate principal amount of up to
Fifteen Million Dollars ($15,000,000.00), as the same may from time



- 428 -









 





to time be amended, modified, extended, renewed or restated (the “Revolving Credit Notes”), (c)
that certain Swing Line Note of Borrowers dated as of June 29, 2006 and payable to the order of the
Agent in the principal amount of up to Three Million Dollars ($3,000,000.00), as the same may from
time to time be amended, modified, extended, renewed or restated (the “Swing Line Note,” and
collectively with the Revolving Credit Notes referred to herein as the “Senior Notes”), and/or (d)
any of the other Transaction Documents (hereinafter collectively referred to as the “Senior
Indebtedness”).




     2. The Subordinating Creditor hereby covenants and agrees with Agent and the Lenders that,
except for the payment of the Permitted Payments to the extent permitted by Paragraph 3 of this
Agreement, Borrowers will not pay, and the Subordinating Creditor will not demand or accept
payment of or assert or seek to enforce against any of the Borrowers, any of the Subordinated
Indebtedness (principal, interest, fees, collection costs and expenses and/or other amounts) or any
guaranties, collateral or other security thereto appertaining unless and until (a) all of the
Senior Indebtedness has been fully, finally and indefeasibly paid in cash, (b) all financing
arrangements and commitments between Agent and the Lenders, on the one hand, and the Borrowers, on
the other hand, relating to the creation and/or incurrence of any of the Senior Indebtedness have
been terminated, (c) no letters of credit issued by Agent for the account of and/or upon the
application of any of the Borrowers remain outstanding and (d) the Senior Loan Agreement has
expired or been terminated in accordance with its terms.



     3. So long as no Default or Event of Default under or within the meaning of the Senior Loan
Agreement has occurred and is continuing or would be created by or result from such payment,
Borrowers may pay to the Subordinating Creditor, and the Subordinating Creditor may accept from
Borrowers:




     (i) regularly scheduled payments of interest only, when due, on the
Subordinated Notes and past due payments of interest on the Subordinated Notes
(which shall not include any payments due or past due as a result of any
acceleration of any of the Subordinated Notes), and




     (ii) in the event an equity offering is made by Virbac Corporation, the net
proceeds received by Virbac from such equity offering by Virbac may be used to repay
the principal of the Subordinated Indebtedness,



(collectively (i) and (ii) are referred to herein as the “Permitted Payments”). Any payment made
by Borrowers which is not a Permitted Payment shall constitute an Event of Default under the Senior
Loan Agreement. The Subordinating Creditor hereby acknowledges and agrees that (a) the
Subordinated Notes may not be modified or amended without the prior written consent of Agent and
the Required Lenders, (b) payments of principal on the Subordinated Notes shall not be Permitted
Payments except upon the conditions set forth in clause (ii) above, (c) prepayments of the
Subordinated Notes shall not be Permitted Payments except upon the conditions set forth in clause
(ii) above, and (d) payments pursuant to any acceleration of the Subordinated Notes shall not be
Permitted Payments. Notwithstanding the foregoing, the Subordinating Creditor shall have no right
to enforce payment of any of the Permitted Payments against any of the Borrowers, or to otherwise
take any action against any of the Borrowers or any property or assets of any of the Borrowers
(including, without limitation, any property or assets of any Borrower pledged as collateral to
secure any of the Senior Indebtedness), unless and until (a) all of the Senior Indebtedness has
been fully, finally and indefeasibly paid in cash, (b) all financing arrangements and commitments
between Agent and the Lenders, on the one hand, and the Borrowers, on the other hand, relating to
the creation and/or incurrence of any of the Senior Indebtedness have been terminated, (c) no
letters of credit issued by Agent for the account of and/or upon the application of any of the
Borrowers remain outstanding and (d) the Senior Loan Agreement has expired or been terminated in
accordance with its terms.




- 429 -









 








     4. In the event any of the Borrowers makes any assignment or other arrangement for the benefit
of its creditors or any bankruptcy, receivership, reorganization, dissolution, insolvency or other
similar proceeding is filed or otherwise initiated by, against or involving any Borrower (each, a
“Proceeding”), (a) all of the Senior Indebtedness shall first be paid in full in cash before any
payment shall be made on or with respect to any of the Subordinated Indebtedness, (b) any payment
which, but for the terms of this Agreement, would be payable or deliverable on or in respect of any
of the Subordinated Indebtedness shall be paid or delivered directly to the Agent to be applied as
a payment on (or, at the Required Lenders’ option, as additional collateral for) the Senior
Indebtedness until (i) all of the Senior Indebtedness has been fully, finally and indefeasibly paid
in cash, (ii) all financing arrangements and commitments between Agent and the Lenders, on the one
hand, and the Borrowers, on the other hand, relating to the creation and/or incurrence of any of
the Senior Indebtedness have been terminated, (iii) no letters of credit issued by Agent for the
account of and/or upon the application of any of the Borrowers remain outstanding and (iv) the
Senior Loan Agreement has expired or been terminated in accordance with its terms, and the
Subordinating Creditor hereby irrevocably authorizes, empowers and directs all receivers, trustees,
liquidators, custodians, conservators and other having authority in the premises to effect all such
payments and deliveries and further irrevocably authorizes and empowers Agent to demand, sue for,
collect and receive each and every such payment or distribution, (c) the Subordinating Creditor
hereby agrees to execute and deliver to Agent or its representatives all such further agreements,
documents and instruments as may from time to time be requested by the Agent or the Required
Lenders confirming the authorizations referred to in the foregoing clause (b), (d) the
Subordinating Creditor hereby expressly consents to the granting by the Borrowers to Agent (for the
ratable benefit of each of the Lenders) of security interests in and/or liens on any or all of each
such Borrower’s now owned and/or hereafter acquired property and assets in connection with any
financing provided to Borrowers by Agent and the Lenders after the commencement of such Proceeding
and (e) the Subordinating Creditor hereby irrevocably authorizes, empowers and appoints the Agent
as its agent and attorney-in-fact (i) to execute, verify, deliver and file such proofs of claim in
respect of the Subordinated Indebtedness in connection with such Proceeding if the Subordinating
Creditor fails to do so at least five (5) Business Days prior to the bar date for filing such
proofs of claim and (ii) to vote such proofs of claim in such Proceeding if the Subordinating
Creditor fails to do so at least five (5) Business Days prior to the bar date for voting such
proofs of claim.



     The Senior Indebtedness shall continue to be treated as Senior Indebtedness and the provisions
of this Agreement shall continue to govern the relative rights and priorities of Agent and the
Lenders, on the one hand, and the Subordinating Creditor, on the other hand, even if (a) all or
part of the security interests and/or liens of Agent or any of the Lenders in or on any or all of
the Senior Collateral are subordinated, set aside, avoided or disallowed in connection with any
Proceeding, (b) all or any part of the Senior Indebtedness is subordinated, set aside, avoided or
disallowed in connection with any Proceeding as a result of the fraudulent conveyance or fraudulent
transfer provisions under the United States Bankruptcy Code or under any state, local or foreign
fraudulent conveyance or fraudulent transfer statute and/or (c) any interest on any or all of the
Senior Indebtedness following the commencement of such Proceeding is otherwise disallowed.



     5. The Subordinating Creditor hereby agrees that if any payment or payments are made to or
accepted by the Subordinating Creditor in violation of this Agreement, such payment or payments (a)
shall not be commingled with any other property or assets of the Subordinating Creditor, (b) shall
be held in trust by the Subordinating Creditor for the benefit of the Agent and the Lenders and (c)
shall be paid over to the Agent for the ratable benefit of the Lenders in precisely the form
received, with any necessary endorsement of the Subordinating Creditor, as a payment on the Senior
Indebtedness (or, at the Required Lender’s option, as collateral for any outstanding Senior
Indebtedness). Any payments or other amounts received by the Subordinating Creditor which are
required to be turned over or otherwise remitted by the



- 430 -









 





Subordinating Creditor to the Agent pursuant to the terms of this Agreement shall not be deemed to
be payments on the Subordinated Indebtedness.




     6. The Subordinating Creditor hereby acknowledges and agrees that irrespective of (a) the
time, order, manner or method of creation, attachment or perfection of the respective security
interests and/or liens granted to the Subordinating Creditor, on the one hand, or to Agent or any
of the Lenders, on the other hand, in or on any or all of the property or assets of any of the
Borrowers, (b) the time or manner of the recording or filing of their respective deeds of trust,
mortgages, financing statements and/or other security documents, (c) the possession of any
collateral, (d) the dating, execution or delivery of any agreement granting to the Subordinating
Creditor, on the one hand, or to Agent or any of the Lenders, on the other hand, security interests
in and/or liens upon any property or assets of any of the Borrowers and/or (e) any provision of the
Uniform Commercial Code(s) of the applicable jurisdictions or other applicable law to the contrary,
any and all security interests, liens, rights and interests of the Subordinating Creditor, whether
now existing or hereafter arising, in or on any or all of the property and/or assets of any of the
Borrowers shall be and hereby are subordinated to any and all security interests, liens, rights and
interests of Agent or any of the Lenders in or on any or all of the property and/or assets of any
of the Borrowers, whether now existing and/or hereafter arising.



     The Subordinating Creditor hereby agrees that any collection, sale or other disposition of any
or all of the property or assets of any of the Borrowers which secure the payment of any or all of
the Senior Indebtedness (collectively, the “Senior Collateral”) by Agent or any of the Lenders
(whether pursuant to the Uniform Commercial Code or otherwise) shall be free and clear of any and
all security interests, liens, claims and/or rights of the Subordinating Creditor in such Senior
Collateral. At the request of the Agent or any Lender, the Subordinating Creditor shall promptly
provide the Agent with any necessary or appropriate releases to permit the collection, sale or
other disposition of any or all of the Senior Collateral by Agent or any of the Lenders free and
clear of the Subordinating Creditor’s security interests and liens. In addition, at the request of
the Agent or any Lender, the Subordinating Creditor shall promptly release any and all security
interests, liens, claims and/or rights which it may have on or in the applicable Senior Collateral
to facilitate the collection, sale or other disposition of such Senior Collateral by Borrowers so
long as the proceeds of such sale or other distribution are applied first to the payment of the
Senior Indebtedness and any excess is then applied to the payment of the Subordinated Indebtedness
to the extent the same is secured by such Senior Collateral.



     In the event of the occurrence of any casualty with respect to any of the Senior Collateral,
the Subordinating Creditor agrees that the Agent shall have the sole and exclusive right to adjust,
compromise or settle any such loss with the insurer thereof, and to collect and receive the
proceeds from such insurer. Any insurer shall be fully protected if it acts in reliance on the
provisions of this paragraph.



     7. The Subordinating Creditor hereby represents and warrants to, and covenants and agrees
with, Agent and each of the Lenders that (a) the Subordinating Creditor has not assigned or
transferred any of the Subordinated Indebtedness or any interest therein or any guaranties,
collateral or other security therefor to any other person or entity, (b) the Subordinating Creditor
will not make any assignment or transfer of any of the Subordinated Indebtedness unless (i) the
Subordinating Creditor gives the Agent at least ten (10) days prior written notice of the proposed
assignment or transfer, (ii) such assignment or transfer is made expressly subject to the terms,
provisions and conditions of this Agreement and (iii) the assignee or transferee of such
Subordinated Indebtedness agrees in writing to be bound by the terms, provisions and conditions of
this Agreement and (c) any notes, agreements or other documents now or hereafter taken to evidence
any of the Subordinated Indebtedness (including, without limitation, the Subordinated Notes) will
be endorsed with the following legend “THIS INSTRUMENT IS SUBJECT TO A SUBORDINATION AGREEMENT IN
FAVOR OF FIRST BANK AND OTHER LENDERS DATED AS OF JUNE 29, 2006.” Agent and the Lenders agree that
the Subordinated Indebtedness may be



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refinanced by Borrowers with another lender (other than Subordinating Creditor) provided such other
lender executes a subordination agreement in favor of the Agent and the Lenders in the same form as
this Agreement or another subordination or intercreditor agreement with terms deemed satisfactory
to the Agent and each of the Lenders in their sole discretion. Provided the Borrowers and the
lender providing any such replacement financing of the Subordinated Indebtedness shall have
complied with the requirements of the preceding sentence, Agent and the Lenders agree that the
proceeds of such refinancing may be used to repay the Subordinated Indebtedness notwithstanding any
of the other terms of this Agreement.




     8. The Subordinating Creditor hereby agrees that it will not, without the prior written
consent of Agent and the Required Lenders, agree to any amendment or modification of, or supplement
to, any of the agreements, documents or instruments evidencing, securing, guaranteeing the payment
of or otherwise relating to any of the Subordinated Indebtedness.



     9. The Subordinating Creditor hereby waives notice of acceptance hereof, notice of the
creation of any of the Senior Indebtedness, the giving or extension of credit by Agent or any of
the Lenders to Borrowers or the taking or releasing of guaranties, collateral or other security for
the payment thereof, and hereby waives presentment, demand, protest, notice of protest or default
and all other notices to which the Subordinating Creditor might otherwise be entitled.



     10. The Subordinating Creditor hereby represents and warrants to, and covenants and agrees
with, Agent and each of the Lenders that (a) to the knowledge of the Subordinating Creditor no
default or event of default under or within the meaning of any agreement, document or instrument
evidencing, securing, guaranteeing the payment of or otherwise relating to any of the Subordinated
Indebtedness has occurred and is continuing, (b) as of the date of this Agreement, (i) the
outstanding principal balance of the $3,000,000.00 Subordinated Note is $3,000,000.00, (ii) the
outstanding principal balance of the $4,000,000.00 Subordinated Note is $4,000,000.00 and (iii) all
interest has been paid on the Subordinated Notes through April 30, 2006, (c) the Subordinating
Creditor will give Agent prompt written notice of (i) the declaration by the Subordinating Creditor
of any default or event of default under any agreement, document or instrument evidencing,
securing, guaranteeing the payment of or otherwise relating to any of the Subordinated Indebtedness
and (ii) the cure or waiver of any such default or event of default and (d) the Subordinating
Creditor will not to oppose, interfere with or otherwise attempt to prevent Agent or any of the
Lenders from enforcing their respective security interests in and/or liens on any of the Senior
Collateral or otherwise realizing upon any of the Senior Collateral.



     11. The Subordinating Creditor hereby waives any and all rights to (a) require Agent or any of
the Lenders to marshal any property or assets of any of the Borrowers or to resort to any of the
property or assets of any of the Borrowers in any particular order or manner, (b) require Agent or
any of the Lenders to enforce any guaranty or any security interest or lien given by any person or
entity other than any Borrower to secure the payment of any or all of the Senior Indebtedness as a
condition precedent or concurrent to taking any action against or with respect to any of the
Borrowers and/or any of the Senior Collateral and/or (c) bring any action to contest the validity,
legality, enforceability, perfection, priority or avoidability of any of the Senior Indebtedness,
any agreements, documents or instruments evidencing, securing, guaranteeing the payment of and/or
otherwise relating to any of the Senior Indebtedness and/or any of the security interests and/or
liens of Agent or any of the Lenders in or on any of the Senior Collateral.



     12. The Subordinating Creditor hereby represents and warrants to Agent and each of the Lenders
that: (a) the Subordinating Creditor is a company duly organized, validly existing and in good
standing under the laws of the Republic of France; (b) the execution, delivery and performance by
the Subordinating Creditor of this Agreement are within the powers of the Subordinating Creditor,
have been duly authorized by all necessary action and require no action by or in respect of,
consent of or filing or



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recording with, any governmental or regulatory body, instrumentality, authority, agency or official
or any other person or entity; (c) the execution, delivery and performance by the Subordinating
Creditor of this Agreement do not conflict with, or result in a breach of the terms, conditions or
provisions of, or constitute a default under or result in any violation of, the terms of the
Certificate or Articles of Incorporation, Bylaws or other charter or organizational documents of
the Subordinating Creditor, any applicable law, rule, regulation, order, writ, judgment or decree
of any court or governmental or regulatory body, instrumentality authority, agency or official or
any agreement, document or instrument to which the Subordinating Creditor is a party or by which
the Subordinating Creditor or any of its property or assets is bound or to which the Subordinating
Creditor or any of its property or assets is subject; and (d) this Agreement has been duly executed
and delivered by the Subordinating Creditor and constitutes the legal, valid and binding obligation
of the Subordinating Creditor enforceable against the Subordinating Creditor in accordance with its
terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency or
similar laws affecting the enforcement of creditors’ rights generally and (ii) general principles
of equity (regardless of whether such enforceability is considered in a proceeding in equity or at
law).




     13. In the event of any inconsistency or conflict between any term, provision, condition or
covenant contained in this Agreement and any term, provision, condition or covenant contained in
any agreement, document or instrument evidencing, securing, guaranteeing the payment of or
otherwise relating to any of the Subordinated Indebtedness, the terms, provisions, conditions and
covenants contained in this Agreement shall govern and control.



     14. This Agreement shall remain in full force and effect notwithstanding the filing of a
petition for relief by or against any of the Borrowers under the United States Bankruptcy Code and
shall apply with full force and effect with respect to all of the Senior Collateral acquired by any
of the Borrowers, and to all additional Senior Indebtedness incurred by any of the Borrowers,
subsequent to the date of said petition.



     15. Agent and each of the Lenders may at any time and from time to time (a) enter into such
agreements with Borrowers, or any of them, as Agent or any such Lender may deem proper (i)
increasing or decreasing the principal amount of, extending the time of payment of and/or renewing
or otherwise amending or altering the terms (including, without limitation, the payment terms
and/or the interest rates) of any or all of the Senior Indebtedness and/or (ii) amending,
modifying, extending, renewing, restating or otherwise altering the terms of the Senior Loan
Agreement, any of the other Transaction Documents and/or any other present or future agreement,
document or instrument evidencing, securing, guaranteeing the payment of or otherwise relating to
any of the Senior Indebtedness, (b) exchange, sell, release, surrender or otherwise deal with any
or all of the Senior Collateral and/or (c) release or otherwise deal with any guarantor(s) of any
or all of the Senior Indebtedness, all without notice to or consent of the Subordinating Creditor
and without in any way compromising or affecting this Agreement.



     16. All of the Senior Indebtedness shall be deemed to have been made or incurred in reliance
upon this Agreement. The Subordinating Creditor hereby expressly waives notice of the acceptance by
Agent or any of the Lenders of the provisions of this Agreement and all other notices not
specifically required pursuant to the terms of this Agreement. The Subordinating Creditor hereby
agrees that neither Agent nor any of the Lenders has made any representation or warranty with
respect to (a) the due execution, legality, validity, completeness or enforceability of the Senior
Loan Agreement, any of the other Transaction Documents and/or any other present or future
agreement, document or instrument evidencing, securing, guaranteeing the payment of or otherwise
relating to any of the Senior Indebtedness, (b) the creation, attachment, perfection or priority of
any security interests or liens purporting to secure any or all of the Senior Indebtedness or (c)
the collectibility of any of the Senior Indebtedness. Agent and the Lenders shall be entitled to
manage and supervise their credit facilities with Borrowers in accordance with applicable law and
its usual business practices, modified from time to time



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as it deems appropriate under the circumstances, without regard to the existence of any rights that
the Subordinating Creditor may have now or hereafter in or to any of the property or assets of any
of the Borrowers.




     17. The Subordinating Creditor hereby assumes responsibility for keeping itself informed of
the financial condition of each of the Borrowers and any guarantors of the Subordinated
Indebtedness and of all other circumstances bearing upon the risk of nonpayment of the Subordinated
Indebtedness that diligent inquiry would reveal and the Subordinating Creditor hereby agrees that
neither Agent nor any of the Lenders shall have any duty to advise the Subordinating Creditor of
any information regarding such condition or any such circumstances.



     18. This Agreement shall remain in full force and effect until (a) all of the Senior
Indebtedness has been fully, finally and indefeasibly paid in cash, (b) all financing arrangements
and commitments between Agent and the Lenders, on the one hand, and the Borrowers, on the other
hand, relating to the creation and/or incurrence of any of the Senior Indebtedness have been
terminated, (c) no letters of credit issued by Agent for the account of and/or upon the application
of any of the Borrowers remain outstanding and (d) the Senior Loan Agreement has expired or been
terminated in accordance with its terms. This is a continuing agreement of subordination, and Agent
and the Lenders may continue to extend credit or other financial accommodations and loan monies to
or for the benefit of Borrowers, or any of them, on the faith hereof, without notice to or the
consent of the Subordinating Creditor. To the extent that any Borrower, any guarantor of or
provider of collateral for any of the Senior Indebtedness or any other person or entity makes any
payment on or in respect of any of the Senior Indebtedness that is subsequently invalidated,
declared to be fraudulent or preferential or set aside or is required to be repaid to a trustee,
receiver or any other person or entity under any bankruptcy, insolvency or reorganization act,
state or federal law, common law, equitable cause or otherwise (such payment being hereinafter
referred to as a “Voided Payment”), then to the extent of such Voided Payment, that portion of the
Senior Indebtedness that had been previously satisfied by such Voided Payment shall be revived and
continue in full force and effect as if such Voided Payment had never been made. In the event that
a Voided Payment is recovered from the Agent and/or any of the Lenders, an Event of Default under
the Senior Loan Agreement shall be deemed to have occurred on the date of the initial receipt of
such Voided Payment by the Agent or such Lender, as applicable, and to have continued until the
full amount of such Voided Payment is restored to the Agent and/or such Lender, as applicable.
During any continuance of any such Event of Default, this Agreement shall be in full force and
effect with respect to the Subordinated Indebtedness. To the extent that the Subordinating
Creditor has received any payments on or with respect to any the Subordinated Indebtedness
subsequent to the date of the initial receipt of such Voided Payment by Agent and/or any of the
Lenders and such payments have not been invalidated, declared to be fraudulent or preferential or
set aside or are required to be repaid to a trustee, receiver or any other party under any
bankruptcy act, state or federal law, common law, equitable cause or otherwise, the Subordinating
Creditor hereby agrees that any such payment so made or received shall be deemed to have been
received in trust for the benefit of Agent and the Lenders, and the Subordinating Creditor hereby
agrees to pay to Agent for the ratable benefit of the Lenders, upon demand, the full amount so
received by the Subordinating Creditor during such period of time to the extent necessary fully to
restore to Agent and the Lenders the amount of such Voided Payment.



     19. No amendment, modification, supplement, termination, consent or waiver of or to any
provision of this Agreement nor any consent to any departure therefrom shall in any event be
effective unless the same shall be in writing and signed by or on behalf of the Subordinating
Creditor, the Agent and the Required Lenders. Any waiver of any provision of this Agreement, and
any consent to any departure from the terms of any provision of this Agreement, shall be effective
only in the specific instance and for the specific purpose for which given.



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     20. No failure or delay on the part of Agent or any of the Lenders in the exercise of any
power, right, remedy or privilege under this Agreement shall impair such power, right, remedy or
privilege or shall operate as a waiver thereof; nor shall any single or partial exercise of any
such power, right, remedy or privilege preclude any other or further exercise of any other power,
right, remedy or privilege. The waiver of any such right, power, remedy or privilege with respect
to particular facts and circumstances shall not be deemed to be a waiver with respect to other
facts and circumstances.



     21. Any notice, request, demand, consent, confirmation or other communication under this
Agreement shall be in writing and delivered in person or sent by telecopy, recognized overnight
courier or registered or certified mail, return receipt requested and postage prepaid, if to the
Subordinating Creditor, to its address or telecopy number set forth on the signature page(s) of
this Agreement and if to Agent or any of the Lenders, to the Agent at 135 North Meramec, St. Louis,
Missouri 63105, Attention: Traci Dodson, Vice President, Telecopy No. (314) 854-5454, or to such
other address or telecopy number as any such party may designate as its address or telecopy number
for communications under this Agreement by notice so given. Such notices shall be deemed effective
on the day on which delivered if delivered in person or sent by telecopy, on the first (1st)
Business Day after the day on which sent, if sent by recognized overnight courier or on the third
(3rd) Business Day after the day on which mailed, if sent by registered or certified mail.



     22. The Subordinating Creditor hereby agrees to do such further acts and things and to execute
and deliver such additional agreements, documents, instruments and consents as may be necessary or
as Agent or the Required Lenders may from time to time reasonably request to effect the
subordinations contemplated by this Agreement.



     23. This Agreement shall be binding upon and inure to the benefit of the Subordinating
Creditor, the Agent and the Lenders and their respective successors and assigns.



     24. In the event any one or more of the provisions contained in this Agreement should be
invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or impaired thereby.



     25. This Agreement shall be governed by and construed in accordance with the substantive laws
of the State of Missouri (without reference to conflict of law principles). THE SUBORDINATING
CREDITOR HEREBY IRREVOCABLY (A) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY MISSOURI STATE
COURT SITTING IN THE COUNTY OF ST. LOUIS, MISSOURI OR ANY UNITED STATES OF AMERICA COURT SITTING IN
THE EASTERN DISTRICT OF MISSOURI, EASTERN DIVISION, AS AGENT MAY ELECT, IN ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, (B) AGREES THAT ALL CLAIMS IN RESPECT TO
ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE HELD AND DETERMINED IN ANY OF SUCH COURTS, (C) WAIVES,
TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH THE SUBORDINATING CREDITOR MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT, (D) WAIVES ANY CLAIM THAT SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM AND (E) WAIVES ALL RIGHTS OF ANY OTHER JURISDICTION WHICH THE
SUBORDINATING CREDITOR MAY NOW OR HEREAFTER HAVE BY REASON OF ITS PRESENT OR SUBSEQUENT DOMICILES.
THE SUBORDINATING CREDITOR (AND BY THE AGENT’S ACCEPTANCE HEREOF, THE AGENT AND EACH OF THE
LENDERS) HEREBY IRREVOCABLY WAIVE THE RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY ACTION IN WHICH
THE SUBORDINATING CREDITOR, ON THE ONE HAND, AND



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AGENT AND/OR ANY OF THE LENDERS, ON THE OTHER HAND, ARE PARTIES RELATING TO OR ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT.




     26. Each party to this Agreement acknowledges that the breach by it of any of the provisions
of this Agreement is likely to cause irreparable damage to the other parties. Therefore, the
relief to which any party shall be entitled in the event of any such breach or threatened breach
shall include, but not be limited to, a mandatory injunction for specific performance, injunctive
or other judicial relief to prevent a violation of any of the provisions of this Agreement, damages
and any other relief to which it may be entitled at law or in equity.



     27. This Agreement may be executed in any number of counterparts (including telecopy
counterparts) and by different parties on separate counterparts, each of which counterparts, when
so executed and delivered, shall be deemed to be an original and all of which counterparts, taken
together, shall constitute but one and the same Agreement.



     IN WITNESS WHEREOF, the Subordinating Creditor has executed this Subordination Agreement as of
the 29th day of June, 2006.



	 	 	 	 	 
	 	VIRBAC S. A.

 	 
	 	By:  	/s/ Eric Marée
 	 
	 	 	Name:  	Eric Marée 	 
	 	 	Title:  	President of the Management Board 	 
	 



	 	 	 	 	 
	 

	 	Address:	 	 
	 
	 

	 	 	 	13 eme rue LID-BP 27
	 

	 	 	 	06511 Carros cedex
	 

	 	 	 	France
	 

	 	 	 	Attention: Gerard Sicsic, General Counsel
	 
	 	 	Telecopy No.: 011 33 492 087 132






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     The undersigned hereby consent to the foregoing Subordination Agreement and agree in all
respects to be bound thereby and to keep, observe and perform the several matters and things
therein intended of them to be done, and particularly each of the undersigned agrees not to make
any payment contrary to the foregoing Subordination Agreement. Any breach by the undersigned of
any of the terms, provisions or conditions contained herein or in the foregoing Subordination
Agreement shall constitute an “Event of Default” (as defined therein) under and within the meaning
of the Senior Loan Agreement (as defined in the foregoing Subordination Agreement). The undersigned
hereby acknowledge and agree that any payments or other amounts received by the Subordinating
Creditor which are required to be turned over or otherwise remitted by the Subordinating Creditor
to Agent for the benefit of the Lenders pursuant to the terms of the foregoing Subordination
Agreement shall not be deemed to be payments on the Subordinated Indebtedness.



     Executed as of the 29th day of June, 2006.



	 	 	 	 	 
	 	VIRBAC CORPORATION

PM RESOURCES, INC.

ST. JON LABORATORIES, INC.

VIRBAC AH, INC.

FRANCODEX LABORATORIES, INC.

DELMARVA LABORATORIES, INC.

 	 
	 	By:  	/s/ Jean M. Nelson
 	 
	 	 	Jean M. Nelson, Executive Vice President and 	 
	 	 	Chief Financial Officer 	 
	 




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