SOUTHTRUST BANK, N.A.
One East Broward Boulevard
Second Floor
Fort Lauderdale, Florida 33301
July 13, 2000
Dr. Marc Puleo
Chief Executive Officer
PetMed Express, Inc.
1441 SW 29th Avenue
Pompano Beach, FL 33069
Re: SouthTrust Bank Loan #5232160-40813 and Loan #5232160-50483
Dear Dr. Puleo:
We refer to the Promissory Note and Security Agreement ("Loan Documents"), dated
April 29, 1999 and September 17, 1999 between SouthTrust Bank (the "Bank") and
PetMed Express, Inc. (the "Company"). We also refer to the letter, signed and
agreed to by Dr. Marc Puleo, Chief Executive Officer of PetMed Express, Inc.,
dated February 24, 2000 (hereafter referred to as the "Waiver Letter"),
outlining the waiver and amendment of certain financial covenants.
You have informed us that as of March 31, 2000, the Company is not in compliance
with the Minimum Working Capital covenant as originally set forth in the Loan
Documents described above and subsequently amended in the aforementioned Waiver
Letter. This deficiency constitutes an "event of default" as defined in the Loan
Documents.
In connection with the amended working capital covenant, which requires the
Company to maintain working capital of not less than $1,000,000 at all times for
the period from December 31, 1999 through January 1, 2001, the Bank hereby
agrees that although the Company is not currently in compliance with this
amended covenant, to waive this violation for the period ending March 31, 2000.
We further agree that the Company not be required to comply with this covenant
during the period from March 31, 2000 to April 1, 2001.
You have also informed us that as of March 31, 2000, the Company is not in
compliance with the Fixed Charge Coverage as defined in the Loan Documents
described above. In the Waiver Letter dated February 24, 2000, the Bank agreed
that the Company not be required to comply with this covenant during the period
from December 31, 1999 through January 1, 2001 and thereby this deficiency does
not constitute an "event of default" at this time. The Bank further agrees to
extend the period through which the Company not be required to comply with this
covenant, to April 1, 2001.
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Page 2 of 2 July 13, 2000
Additionally, you have informed us that as of March 31, 2000, the Company is not
in compliance with the Bank Debt to Adjusted Net Worth covenant as originally
set forth in the Loan Documents described above. This deficiency constitutes an
"event of default" as defined in the Loan Documents. The Bank hereby agrees that
although the Company is not currently in compliance with this amended covenant,
to waive this violation for the period ending March 31, 2000. The Bank further
agrees that the Company not be required to comply with this covenant during the
period from March 31, 2000 to April 1, 2001.
The Bank will charge a one-time fee in the amount of $11,500.00 as compensation
for processing these transactions.
Please be advised that this waiver is limited to the instances set forth above
and is not a waiver or relinquishment for the future of such covenants, terms,
provisions or conditions of your loan documents and that any and all other
requirements, obligations and covenants under the aforementioned loan documents
and agreements shall remain in full force and effect.
The waivers and modifications set forth in this document will become effective
upon receipt of (i) a properly executed copy of this document (copy enclosed);
and (ii) receipt and processing of the $11,500 waiver fee.
Please indicate your acceptance and concurrence with the above provisions by
signing below.
Sincerely, Acknowledged and accepted on July 13, 2000
By: PetMed Express, Inc.
/s/ Antonio T. Coley By:/s Marc Puleo, M.D.
-------------------- -------------------
Antonio T. Coley Dr. Marc Puleo
Assistant Vice President Chief Executive Officer
