10-K405

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2001

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 1-16783

VCA ANTECH, INC.

(Exact name of registrant as specified in its charter)

Delaware	95-4097995
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

12401 West Olympic Boulevard
Los Angeles, California 90064-1022
(Address of principal executive offices and zip code)

(310) 571-6500
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to Section 12(g) of the Act:

Common stock, $0.001 par value

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X]      No [   ].

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any Amendment to this Form 10-K. [X]

At March 25, 2001, there were outstanding 36,736,081 shares of the Common Stock of the registrant and the aggregate market value of the shares held on that date by non-affiliates of the registrant, based on the closing price ($13.45 per share) of the Registrant’s Common Stock on the Nasdaq Stock Market’s National Market, was $245.1 million. For purposes of this computation, it has been assumed that the shares beneficially held by directors and officers of registrant were “held by affiliates”; this assumption is not to be deemed to be an admission by these persons that they are affiliates of registrant.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of Registrant’s proxy statement relating to its 2002 annual meeting of stockholders are incorporated by reference in Part III of this annual report.

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TABLE OF CONTENTS

PART I
	ITEM 1. BUSINESS
	ITEM 2. PROPERTIES
	ITEM 3. LEGAL PROCEEDINGS
	ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDINGS
PART II
	ITEM 5. MARKET FOR REGISTRANT’S EQUITY AND RELATED STOCKHOLDER MATTERS
	ITEM 6. SELECTED FINANCIAL DATA
	ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
	ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
	ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
	ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
PART III
	ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
	ITEM 11. EXECUTIVE COMPENSATION
	ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
	ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
PART IV
	ITEM 14. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES AND REPORTS ON FORM 8-K
SIGNATURES
List of Exhibits
EXHIBIT 3.1
EXHIBIT 3.2
EXHIBIT 4.5
EXHIBIT 4.7
EXHIBIT 4.8
EXHIBIT 4.10
EXHIBIT 4.11
EXHIBIT 23.1
EXHIBIT 99.1

PART I

ITEM 1. BUSINESS

General

     We are VCA Antech, Inc. (VCA), a leading animal health care services company and operate the largest networks of veterinary diagnostic laboratories and free-standing, full-service animal hospitals in the United States. Our network of veterinary diagnostic laboratories provides sophisticated testing and consulting services to the veterinarian comparable to that provided by the human diagnostic laboratory to the physician. Veterinarians use these services in the detection, diagnosis, evaluation, monitoring, treatment and prevention of diseases and other conditions affecting animals. With a nationwide veterinary laboratory network serving all 50 states, we provide diagnostic testing for an estimated 13,000 animal hospitals, a customer base over twice the size of our next largest competitor. Our network of animal hospitals offers a full range of general medical and surgical services for companion animals, as well as specialized treatments including advanced diagnostic services, internal medicine, oncology, ophthalmology, dermatology and cardiology. In addition, we provide pharmaceutical products and perform a variety of pet wellness programs including routine vaccinations, health examinations, diagnostic testing, spaying, neutering and dental care. The more than 750 veterinarians supporting our 214 animal hospitals had over 3 million patient visits in 2001.

Industry Overview

     The U.S. population of companion animals has reached approximately 188 million, including about 141 million dogs and cats. The most recent industry data show that over $11 billion was spent on animal health care services in 1996, with an annual growth rate of over 9.5% from 1991 through 1996 for spending on dogs and cats. The ownership of pets is widespread, with over 62% of U.S. households owning at least one pet, including companion and other animals. Pet ownership is highest among households with children under 18 and empty-nesters whose pets have become their new “children.” We believe the pet population and the number of pet-owning households should continue to grow.

     Among this expanding number of pet owners is a growing awareness of pet health and wellness, including the benefits of preventive care and specialized services. As technology continues to migrate from the human healthcare sector into the practice of veterinary medicine, more sophisticated treatments and diagnostic tests are becoming available to treat companion animals. These new and increasingly complex procedures, diagnostic tests and pharmaceuticals are gaining wider acceptance as pet owners are exposed to these previously unconsidered treatment programs through literature and marketing programs sponsored by large pharmaceutical and pet nutrition companies. We believe this is evidenced by an industry survey revealing that 70% of pet owners view their animals as important members of the family and are willing to pay for more veterinary services to promote the good health and extend the life of their pet.

     Even as treatments available in veterinary medicine become more complex, prices for veterinary services typically remain a low percentage of a pet-owner’s income, facilitating payment at the time of service. Unlike the human health care industry, providers of veterinary services are not dependent on third-party payors in order to collect fees. As a consequence, providers of veterinary services do not have the problems of extended payment collection cycles or pricing pressures from third party-payors faced by human health care providers. Outsourced laboratory testing is a wholesale business that collects payments directly from animal hospitals, generally on terms requiring payment within 30 days of the date the charge is invoiced. Fees for animal hospital services are due at the time of the service. For example, over 95% of our animal hospital services are paid for in cash or by credit card at that time. In addition, over the past three fiscal years, our bad debt expense has averaged only 1% of total revenue.

     The practice of veterinary medicine is subject to seasonal fluctuation. In particular, demand for veterinary services is significantly higher during the warmer months because pets spend a greater amount of time outdoors, where they are more likely to be injured and are more susceptible to disease and parasites. In addition, use of veterinary services may be affected by levels of infestation of fleas, heartworms and ticks and the number of daylight hours.

     Diagnostic Laboratories. Laboratory tests are used by veterinarians to diagnose, monitor and treat illnesses and conditions in animals through the detection of substances in urine, tissue, fecal and blood samples and other specimens. As is the case with the physician treating a human patient, laboratory diagnostic testing is becoming a routine diagnostic tool used by the veterinarian.

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     Veterinary laboratory tests are performed primarily at free-standing veterinary diagnostic laboratories, universities or animal hospitals using on-site diagnostic equipment. For particular types of tests, on-site diagnostic equipment can provide more timely results than outside laboratories, but this in-house testing requires the animal hospital or veterinarian to purchase the equipment, maintain and calibrate the equipment periodically to avoid testing errors, and employ trained personnel to operate it. Conversely, veterinary diagnostic laboratories can provide a wider range of tests than generally are available on-site at most animal hospitals and do not require any up-front investment on the part of the animal hospital or veterinarian. Also, leading veterinary diagnostic laboratories employ highly trained individuals who specialize in the detection and diagnosis of diseases and thus are a valuable resource for the veterinarian.

     Within the outsourcing market, our laboratories specialize in the veterinary market and offer a broad spectrum of standard and customized tests, convenient sample pick-up times, rapid test reporting and access to professional consulting services provided by trained specialists. Providing the customer with this level of service at competitive prices requires high throughput volumes due to the operating leverage associated with the laboratory business. As a result, larger laboratories likely maintain a competitive advantage relative to smaller laboratories.

     We believe that the outsourced laboratory testing market is one of the fastest growing segments of the animal health care services industry, and expect continued growth as a result of:

• the increased focus on wellness and monitoring programs in veterinary medicine, which is increasing the overall number of tests being performed;

• the emphasis in veterinary education on diagnostic tests and the trend toward specialization in veterinary medicine, which are causing veterinarians to increasingly rely on tests for more accurate diagnoses;

• the continued technological developments in veterinary medicine, which are increasing the breadth of tests offered; and

• the trend toward outsourcing tests because of the relative low cost, the high accuracy rates and the diagnostic support provided by specialists employed by the laboratory.

     Animal Hospitals. Animal health care services are provided predominately by the veterinarian practicing as a sole practitioner, or as part of a larger animal medical group or hospital. Veterinarians diagnose and treat animal illnesses and injuries, perform surgeries, provide routine medical exams and prescribe medication. Some veterinarians specialize by type of medicine, such as orthopedics, dentistry, ophthalmology or dermatology. Others focus on a particular type of animal. The principal factors in a pet owner’s decision as to which veterinarian to use include convenient location, recommendation of friends, reasonable fees, convenient hours and quality of care.

     The U.S. market for veterinary services is highly fragmented, with more than 35,000 veterinarians practicing at over 18,000 companion animal hospitals. Although most animal hospitals are single site, sole practitioner facilities, we believe veterinarians are increasingly gravitating toward animal hospitals that provide state-of-the-art facilities, treatments, methods and pharmaceuticals to enhance the services they can provide their clients.

     Well-capitalized animal hospital operators have the opportunity to supplement their internal growth with selective acquisitions. We believe the extremely fragmented animal hospital industry is consolidating due to:

• the purchasing, marketing and administrative cost advantages that can be realized by a large, multiple location, multi-practitioner veterinary provider;

• the cost of financing equipment purchases and upgrading technology necessary for a successful practice;

• the desire of veterinarians to focus on practicing veterinary medicine, rather than spending large portions of their time at work performing the administrative tasks necessary to operate an animal hospital;

• the choice of some owners of animal hospitals to diversify their investment portfolio by selling all or a portion of their investment in the animal hospital; and

• the appeal to many veterinarians of the benefits and work scheduling flexibility that are not typically available to a sole practitioner or single-site provider.

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Business Strategy

     Our business strategy is to continue to expand our market leadership in animal health care services through our diagnostic laboratories and animal hospitals. Key elements of our strategy include:

• Capitalizing on our Leading Market Position to Generate Revenue Growth. Our leading market position in each of our business segments positions us to capitalize on favorable growth trends in the animal health care services industry. In our laboratories, we seek to generate revenue growth by taking advantage of the growing number of outsourced diagnostic tests and by increasing our market share. We continually educate veterinarians on new and existing technologies and test offerings available to diagnose medical conditions. Further, we leverage the knowledge of our specialists by providing veterinarians with extensive customer support in promoting and understanding these diagnostic tests. In our animal hospitals, we seek to generate revenue growth by capitalizing on the growing emphasis on pet health and wellness. For example, in 2000, we implemented a senior wellness program. This program bundles tests and animal hospital services, seeking to promote recurring visits and to increase the average amount spent per visit.

• Leveraging Established Infrastructure to Improve Margins. We intend to leverage our established laboratory and animal hospital infrastructure to continue to increase our operating margins. Due to our established networks and the fixed cost nature of our business model, we are able to realize high margins on incremental revenues from both laboratory and animal hospital customers. For example, given that our nationwide transportation network servicing our laboratory customers is a relatively fixed cost, we are able to achieve significantly higher margins on most incremental tests ordered by the same customer when picked up by our couriers at the same time. We estimate that in most cases, we realize an operating and EBITDA margin between 60% and 75% on these incremental tests.

• Utilizing Enterprise-Wide Systems to Improve Operating Efficiencies. We recently completed the migration of all animal hospital operations to an enterprise-wide management information system. We believe that this common system will enable us to more effectively manage the key operating metrics that drive our business. With the aid of this system, we seek to standardize pricing, expand the services our veterinarians provide, capture unbilled service, increase volume and implement targeted marketing programs.

• Pursue Selected Acquisitions. Although we have substantially completed our laboratory infrastructure, we may make selective, strategic laboratory acquisitions. Additionally, the fragmentation of the animal hospital industry provides us with significant expansion opportunities in our animal hospital segment. Depending on the attractiveness of the candidates and the strategic fit with our existing operations, we intend to acquire approximately 15 to 25 animals hospitals per year primarily using internally generated cash.

Diagnostic Laboratories

     We operate the only full-service, veterinary diagnostic laboratory network serving all 50 states. We have a client base over two times that of our largest competitor. In 2001, we performed approximately 18.3 million tests and handled roughly 6.9 million requisitions in our state-of-the-art, automated diagnostic laboratories. Our laboratory network services a diverse customer base of over 13,000 animal hospitals, and non-affiliated animal hospitals generated approximately 95% of our laboratory revenue in 2001.

     Services. Our diagnostic spectrum includes over 300 different tests in the areas of chemistry, pathology, serotology, endocrinology, hematology, and microbiology, as well as tests specific to particular diseases. We do not conduct experiments on animals and are not engaged in animal research.

     Although modified to address the particular requirements of the species tested, the tests performed in our veterinary laboratories are similar to those performed in human clinical laboratories and utilize similar laboratory equipment and technologies. The growing concern for animal health, combined with the movement of veterinary medicine toward increasing specialization, should spur the migration of additional areas of human testing into the veterinary field. For example, we now provide cancer testing for household pets whereas several years ago, these tests were not available.

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     Given the recent advancements in veterinary medical technology and the increased breadth and depth of knowledge required for the practice of veterinary medicine, many veterinarians solicit the knowledge and experience of our 91 specialists to interpret test results, consult on the diagnosis of illnesses and suggest treatment programs. This resource includes veterinarians, chemists, and other scientists with expertise in pathology, internal medicine, oncology, cardiology, dermatology, neurology and endocrinology. This depth of experience and expertise enables our specialists to suggest additional testing or provide diagnostic advice that assists the veterinarian in developing an appropriate treatment plan.

     Together with our specialist support, we believe the quality of our service further distinguishes our laboratory services. We maintain quality assurance programs to ensure that specimens are collected and transported properly, that tests are performed accurately and that client, patient and test information is reported and billed correctly. Our quality assurance programs include quality control testing of specimens of known concentration or reactivity to ensure accuracy and precision, routine checks and preventive maintenance of laboratory testing equipment, and personnel standards ensuring that only qualified personnel perform testing. As a result, we believe that our accuracy rate is over 99%.

     We operate 16 full-service laboratories. Our laboratory network includes:

• primary hubs that are open 24 hours per day and offer a full testing menu;

• secondary laboratories, that service large metropolitan areas, are open 24 hours per day and offer a wide testing menu; and

• ten STAT laboratories that service other locations with demand sufficient to warrant nearby laboratory facilities and are open primarily during daytime hours.

     We connect our laboratories to our customers with what we believe is the industry’s largest transportation network, which picks up an average of 20,000 to 25,000 requisitions daily through an extensive network of drivers and independent couriers. In 2001, we derived approximately 69% of our laboratory revenue from major metropolitan areas, where we offer twice-a-day pick-up service and same-day results. In addition, in these areas, we generally offer to report results within three hours of pick-up. Outside of these areas, we typically provide test results to veterinarians before 8:00 a.m. the following day.

     Veterinarian customers located outside the areas covered by our transportation network are serviced using our Test Express service. Users of the Test Express service send patient specimens by Federal Express to our laboratory just outside of Memphis, the proximity of which to the Federal Express primary sorting facility permits speedy and cost-efficient testing.

     Sales, Marketing and Customer Service. We employ over 40 full-time sales and field service representatives who market laboratory services and maintain relationships with existing customers. The sales force is commissioned-based and organized along geographic regions. We support our sales efforts by strengthening our industry-leading team of specialists, developing marketing literature, attending trade shows, participating in trade associations and providing educational services to veterinarians. In addition, we employ over 80 customer service representatives who respond to customer inquiries, provide test results and, when appropriate, introduce the customer to other services offered by the laboratory.

     Given the high margins we enjoy on many of our incremental tests, our sales force is compensated primarily on its success in maximizing the amount of business from existing customers as well as adding new customers.

     Personnel. We employ a staff of approximately 1,000 full-time-equivalent employees in our laboratory network. We employ on average 306 employees at each of our primary laboratories. At a typical secondary laboratory, we employ on average 89 employees and at our typical STAT laboratory we employ on average 18 employees. We employ some of our specialists and enter into consulting arrangements with others. Our laboratory network consists of an eastern and western division and we employ a vice president to manage each region. We employ a manager at each of our laboratories and supervisors for each department within the laboratories.

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Animal Hospitals

     At December 31, 2001, we operated 214 animal hospitals in 33 states that were supported by over 750 veterinarians. Our nationwide network of free-standing, full-service animal hospitals has facilities located in the following states:

California	44
New York*	21
Florida	17
Illinois	16
Michigan	12
Pennsylvania	11
New Jersey*	9
Texas*	9
Maryland	8
Indiana	7
Massachusetts	7
Virginia	6
Nevada	5
Ohio*	5
Alaska	4
Colorado	4
Delaware	4
Connecticut	3
New Mexico	3
Arizona	2
Minnesota*	2
Nebraska*	2
North Carolina*	2
Utah	2
Alabama*	1
Georgia	1
Hawaii	1
Louisiana*	1
Missouri	1
South Carolina	1
Washington*	1
West Virginia*	1
Wisconsin	1

* States where we manage animal hospitals owned by veterinary medical groups.

     We seek to provide quality medical care in clean, attractive facilities that are open on average between 10 and 15 hours per day, six to seven days per week. Our typical animal hospital:

• is located in a 4,000 to 6,000 square foot, free-standing facility in an attractive location;

• has annual revenue between $1.0 million and $2.0 million;

• is supported by three to five veterinarians; and

• has an operating history of over ten years.

     In addition to general medical and surgical services, we offer specialized treatments for companion animals, including advanced diagnostic services, internal medicine, oncology, ophthalmology, dermatology and cardiology. We also provide pharmaceutical products for use in the delivery of treatments by our veterinarians and pet owners. Many of our animal hospitals offer additional services, including grooming, bathing and boarding. We also sell specialty pet products at our hospitals, including pet food, vitamins, therapeutic shampoos and conditioners, flea collars and sprays, and other accessory products.

     As part of the growth strategy of our hospital business, we intend to continue our disciplined acquisition strategy by identifying high quality practices that may have value to be unlocked through the services and scale we can provide. We contemplate the acquisition of 15 to 25 animal hospitals per year. Our typical candidate mirrors the profile of our existing hospital base. Acquisitions will be used to both expand in existing markets and enter new geographical areas. We intend primarily to use cash in our acquisitions, but we may use debt or stock to the extent we deem appropriate. By undertaking prudent acquisitions, we are able to grow our hospital business without diluting the local market for veterinary services.

     Personnel. Our animal hospitals generally employ a staff of between 10 to 30 full-time equivalent employees, depending upon the facility’s size and customer base. The staff includes administrative and technical support personnel, three to five veterinarians, an office manager who supervises the day-to-day activities of the facility, and a small office staff. We employ a relatively small corporate staff to provide centralized administrative services to all of our animal hospitals.

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     We actively recruit highly qualified veterinarians and technicians and are committed to supporting continuing education for our professional staff. We operate post-graduate teaching programs for veterinarians at eight of our facilities, which train approximately 40 veterinarians each year. We believe that these programs enhance our reputation in the veterinary profession and further our ability to continue to recruit the most talented veterinarians.

     We seek to establish an environment that supports the veterinarian in the delivery of quality medicine and fosters professional growth through increased patient flow and a diverse case mix, continuing education, state-of-the-art equipment and access to specialists. We believe our hospitals offer attractive employment opportunities to veterinarians because of this professional environment, competitive compensation programs, management opportunities, employee benefits not generally available to a sole practitioner, scheduling flexibility to accommodate personal lifestyles and the ability to relocate to different regions of the country. Further, we permit some of our veterinarians to participate with us in the ownership and operation of selected animal hospitals. In these circumstances, the veterinarian purchases an equity position in our animal hospital and is our partner in its operation. As of December 31, 2001, we operated 23 hospitals under a partnership structure. Typically, the salary of the veterinarian partner is based on a percentage of the revenue of the animal hospital that is generated by the veterinarian. The operating income of the partnership that is distributed to the veterinarian partner is based on the veterinarian partner’s percentage interest in the partnership, which is typically between 10% and 25%.

     We have established a Medical Advisory Board to support our operations. The Medical Advisory Board’s function, under the direction of our Chief Medical Officer, is to recommend medical standards for our network of animal hospitals. The committee is comprised of leading veterinarians representing both the different geographic regions in which we operate and the medical specialties practiced by our veterinarians. Currently, four members of the Medical Advisory Board are faculty members at leading veterinary colleges in the United States. These members serve as medical consultants to us.

     Marketing. Our marketing efforts are primarily directed towards our existing clients through customer education efforts. We inform and educate our clients about pet wellness and quality care through mailings of the Healthy Pet Magazine, a magazine focused on pet care and wellness published by an affiliate of ours, targeted demographic mailings regarding specific pet health issues and collateral health material available at each animal hospital. With these internal marketing programs, we seek to leverage our existing customer base by increasing the number of visits of existing clients and intensity of the services used during each visit. Further, reminder notices are used to increase awareness of the advantages of regular, comprehensive veterinary medical care, including preventive care such as vaccinations, dental screening and geriatric care.

     We also enter into referral arrangements with local pet shops and humane societies to increase our client base. In addition, we seek to obtain referrals from veterinarians by promoting our specialized diagnostic and treatment capabilities to veterinarians and veterinary practices that cannot offer their clients these services.

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     Ownership Limitations. Some states have laws that prohibit business corporations from providing veterinary services through the direct employment of veterinarians. At December 31, 2001, we operated 54 animal hospitals in 11 states with these types of ownership restrictions. In these states, instead of owning an animal hospital, we provide management services to veterinary medical groups. We do not consolidate the operating results of these hospitals for financial statement purposes. We provide our management services pursuant to long-term management agreements with the veterinary medical groups, ranging from 10 to 40 years, with non-binding renewal options where allowable. Pursuant to the management agreements, the veterinary medical groups are each solely responsible for all aspects of the practice of veterinary medicine, as defined by their respective state. We are responsible for providing the following services:

• availability of all facilities and equipment;

• day-to-day financial and administrative supervision and management;

• maintenance of patient records;

• recruitment of veterinarians and animal hospital staff;

• marketing; and

• malpractice and general insurance.

     As compensation for these services, we receive management fees, which are included in animal hospital revenue.

Systems

     We maintain a nationwide management information system to support our veterinary laboratories. In 2000, we completed the migration of our animal hospital operations onto an enterprise-wide management information network. All of our financial and customer records and laboratory results are stored in computer databases, most of which may be accessed by our management. Substantially all of our animal hospitals utilize consistent patient accounting/point-of-sale software, and we are able to track the performance of hospitals on a per service, per veterinarian basis. Laboratory technicians and specialists are able to electronically access test results from remote testing sites, enabling our specialists from varying fields of veterinary medicine to assist in the interpretation of test results and help structure potential treatment programs. We expect that this operational visibility will lead to increases in laboratory, veterinarian and hospital productivity.

     We are continuing to upgrade and integrate our management information systems. The upgrade of the laboratory system will enable us to communicate diagnostic test results to veterinarian customers online and via electronic mail, a service that we believe will provide additional tools for veterinarians in their practice and will help to solidify our relationship with these clients. The upgrade of the animal hospital system will allow us to track performance data on a per customer basis. We expect this upgrade and integration to be substantially complete in early 2002.

Competition

     The companion animal health care services industry is highly competitive and subject to continual change in the manner in which services are delivered and providers are selected. We believe that the primary factors influencing a customer’s selection of an animal hospital are convenient location, recommendation of friends, reasonable fees, quality of care and convenient hours. Our primary competitors for our animal hospitals in most markets are individual practitioners or small, regional multi-clinic practices. In addition, some national companies in the pet care industry, including the operators of super-stores, are developing multi-regional networks of animal hospitals in markets that include our animal hospitals. Among veterinary diagnostic laboratories, we believe that quality, price, specialist support and the time required to report results are the major competitive factors. Although there are many individual clinical laboratories that provide a broad range of diagnostic testing services in the same markets serviced by us, few outsourced laboratory companies compete on a national level. Our client base is twice that of our primary competitor in the laboratory business. In addition to competing with dedicated veterinary laboratories, we face competition from several providers of on-site diagnostic equipment that allow veterinarians to perform their own laboratory tests.

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Government Regulation

     The laws of many states prohibit business corporations from providing, or holding themselves out as providers of, veterinary medical care. These laws vary from state to state and are enforced by the courts and by regulatory authorities with broad discretion. We operate 54 hospitals in 11 states with these laws. Although we seek to structure our operations to comply with veterinary medicine laws of each state in which we operate, given the varying and uncertain interpretations of these laws, we may not be in compliance with restrictions on the corporate practice of veterinary medicine in all states. A determination that we are in violation of applicable restrictions on the practice of veterinary medicine in any state in which we operate could have a material adverse effect on us, particularly if we were unable to restructure our operations to comply with the requirements of that state.

     In addition, all of the states in which we operate impose various registration requirements. To fulfill these requirements, we have registered each of our facilities with appropriate governmental agencies and, where required, have appointed a licensed veterinarian to act on behalf of each facility. All veterinary doctors practicing in our clinics are required to maintain valid state licenses to practice.

     Acquisitions may be subject to pre-merger or post-merger review by governmental authorities for antitrust and other legal compliance. Adverse regulatory action could negatively affect our operations through the assessment of fines or penalties against us or the possible requirement of divestiture of one or more of our operations.

Employees

     At December 31, 2001, we had approximately 3,480 full-time-equivalent employees, including approximately 623 licensed veterinarians. None of our employees are a party to a collective bargaining agreement with the exception of our courier drivers in the State of New York. These employees are subject to a collective bargaining agreement expiring on July 10, 2003 with the Teamsters Local Union 813. We believe our employee relations to be good.

ITEM 2. PROPERTIES

     Our corporate headquarters and principal executive offices are located in West Los Angeles, California, in approximately 30,000 square feet of leased space. As of March 15, 2002, we maintain leased and owned facilities at 231 other locations that house our animal hospitals and laboratories. We own 63 facilities and the remainder are leased. We believe that our real property facilities are adequate for our current needs.

ITEM 3. LEGAL PROCEEDINGS

     The Ohio Attorney General’s office filed a lawsuit on December 14, 1998, in the Franklin County Court of Common Pleas in the State of Ohio in which the state alleged that our management of a veterinary medical group licensed to practice veterinary medicine in that state violates the Ohio statute prohibiting business corporations from providing, or holding themselves out as providers of, veterinary medical care. On March 20, 2001, the trial court in the case entered summary judgment in favor of the State of Ohio and issued an order enjoining us from operating in the State of Ohio in a manner that is in violation of the state statute. In response, we have restructured our operations in the State of Ohio in a manner that we believe conforms to the state law and the court’s order. The Attorney General of the State of Ohio informed us that it disagrees with our position that we are in compliance with the court’s order. In June 2001, we appeared at a status conference before the trial court at which time the court directed the parties to meet together to attempt to settle this matter. Consistent with the trial court’s directive, we engaged in discussions with the Attorney General’s office in the State of Ohio. The parties appeared at an additional status conference in February 2002. The parties were not able to reach a settlement prior to the February status conference. At that status conference, the court ordered the parties to participate in a court-supervised settlement conference that was scheduled for March 19, 2002. The court postponed the settlement conference and has not yet scheduled a new date. Our five animal hospitals in the State of Ohio have a book value of $6.1 million as of December 31, 2001. If we were required to discontinue our operations in the State of Ohio, we may not be able to dispose of the hospital assets for their book value. The animal hospitals located in the State of Ohio generated revenue and operating income of $2.1 million and $409,000, respectively, in the year ended December 31, 2001 and $2.2 million and $513,000, respectively, in the year ended December 31, 2000.

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     On November 30, 2001, two majority stockholders of a company that merged with Zoasis.com, Inc. in June 2000 filed a civil complaint against us, Zoasis.com, Inc. and Robert Antin. In the merger, the two stockholders received a less than 10% interest in Zoasis.com, Inc. At the same time, we acquired a less than 20% interest in Zoasis.com, Inc. for an investment of $5.0 million. Robert Antin, our Chief Executive Officer, President and Chairman of the Board, is the majority stockholder of Zoasis.com, Inc. and serves on its board of directors. The complaint alleges securities fraud under California law, common law fraud, negligent misrepresentation, and declaratory judgment arising from the plaintiffs’ investment in Zoasis. On December 31, 2001, we filed a demurrer to the Complaint. On February 25, 2002, the plaintiffs filed an opposition to our demurrer and on March 1, 2002, we filed our Reply to plaintiff’s opposition. On March 7, 2002, our demurrer was denied. On March 22, 2002, we filed an answer to plaintiff’s complaint denying all allegations in the complaint, and we filed a counter claim alleging breach of contract and claim and delivery. We have responded to plaintiff’s initial discovery request and the preparation of our initial discovery request is in process.

     We are a party to various other legal proceedings that arise in the ordinary course of our business. Although we cannot determine the ultimate disposition of these proceedings, we do not believe that adverse determinations in any or all of these proceedings would have a material adverse effect upon our financial condition, liquidity or results of operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDINGS

     On November 19, 2001, stockholders holding a majority of the outstanding shares of our common stock, series A redeemable preferred stock and series B redeemable preferred stock, voting separately, voted by written consent to adopt and approve our Amended and Restated Certificate of Incorporation.

PART II

ITEM 5. MARKET FOR REGISTRANT’S EQUITY AND RELATED STOCKHOLDER MATTERS

     Since November 27, 2001, our common stock has traded on the Nasdaq Stock Market’s National Market under the symbol “WOOF.” From September 20, 2000 through November 26, 2001, our common stock was not publicly traded. From March 19, 1993 through September 20, 2000, our common stock was traded on the Nasdaq Stock Market’s National Market under the symbol “VCAI.” The following table sets forth the range of high and low bid information per share for our common stock as quoted on the Nasdaq Stock Market’s National Market for the periods indicated. All stock prices have been restated to reflect a fifteen-for-one stock split.

		High		Low
Fiscal 2000 by Quarter
	First	$	0.96	$	0.68
	Second		0.93		0.83
	Third (through September 19, 2000)		0.99		0.90
Fiscal 2001 by Quarter
	Fourth (commencing November 21, 2001)		12.45		8.83

     At March 25, 2001, the closing price of the common stock on the Nasdaq Stock Market was $13.45.

     At March 25, 2001, there were approximately 107 holders of record of the Company’s common stock.

Dividends

     We have not paid cash dividends on our common stock, and we do not anticipate paying cash dividends in the foreseeable future. In addition, our credit facility and the indentures governing our outstanding senior and senior subordinated notes place limitations on our ability to pay dividends or make other distributions in respect of our common stock. Any future determination as to the payment of dividends on our common stock will be restricted by these limitations, will be at the discretion of our board of directors and will depend on our results of operations, financial

10

condition, capital requirements and other factors deemed relevant by the board of directors, including the General Corporation Law of the State of Delaware, which provides that dividends are only payable out of surplus or current net profits.

Use of Proceeds from IPO

     As a result of the initial public offering and the underwriters’ exercise of its over-allotment, we issued 17,370,000 shares of common stock and received net proceeds of approximately $161.5 million. Concurrent with our initial public offering, we issued $170.0 million of 9.875% senior subordinated notes due 2009. We applied the net proceeds from our initial public offering and the sale of the notes, plus $6.3 million of cash on hand, as follows:

• redeemed all of the outstanding series A and series B redeemable preferred stock for $173.8 million;

• repaid $100.0 million of bank debt;

• repaid $59.1 million in principal of the 15.5% senior notes due 2010, at a redemption price of 110%, plus accrued and unpaid interest; and

• repaid $5.0 million in principal of the 13.5% senior subordinated notes due 2010, at a redemption price of 110%, plus accrued and unpaid interest.

Equity Compensation Plan

     The following table summarizes information about the securities and exercise price of securities available and outstanding as of December 31, 2001. For a description of these plans, please see “Note 10 — Stock-Based Compensation Plans” in our consolidated financial statements.

					Number of Shares
					Remaining
	Shares Acquired Upon				Available for
	Exercise of		Weighted Average		Future Issuance
Plan Category	Outstanding Options		Exercise Price		of Options
2001 Stock Incentive Plan, not approved by our stockholders		—		—		2,000,000
1996 Stock Incentive Plan, approved by our stockholders		633,795	$	1.00		—

Lock-Up Agreements

     In connection with our initial public offering, our directors, officers and other security holders executed lock-up agreements covering an aggregate of 21,366,081 shares of our common stock. The lock-up agreements prohibit the holders of these shares to sell, dispose of, loan, pledge or grant any rights to any of these shares without the prior written consent of Credit Suisse First Boston Corporation. These lock-up agreements expire May 20, 2002.

Recent Sales of Unregistered Securities

     In February 1999, we granted to Robert Antin, Arthur Antin, Neil Tauber, Tomas Fuller, Dawn Olsen and other employees restricted stock bonus awards to purchase an aggregate of 1,428,435 shares of common stock. These stock bonus awards have all been exercised. These shares were issued in reliance on the exemption from registration provided by Section 4(2) of the Securities Act.

     In January 2000, we granted to Robert Antin, Arthur Antin, Neil Tauber, Tomas Fuller, Dawn Olsen and other employees restricted stock bonus awards to purchase an aggregate of 4,785,645 shares of common stock. These stock bonus awards have all been exercised. These shares were issued in reliance on the exemption from registration provided by Section 4(2) of the Securities Act.

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     As part of our recapitalization, on September 20, 2000 we made the following sales of unregistered securities:

• Issued and sold 17,524,335 shares of our common stock at a per share purchase price of $1.00 for an aggregate purchase price of $17,524,335 to the following: Robert Antin, 1,906,380 shares; Arthur Antin, 400,005 shares; Neil Tauber, 49,995 shares; Tomas Fuller, 200,010 shares; certain entities controlled by Leonard Green & Partners, 14,336,112 shares; and certain of our employees, some of whom are accredited and some of whom are unaccredited, 631,833 shares. These securities were issued in reliance on the exemption from registration provided by Regulation D, Rule 506, of the Securities Act.

• Issued and sold 2,998,408 shares of 14% series A senior redeemable exchangeable cumulative preferred stock at a per share purchase price of $25.00 for an aggregate purchase price of approximately $75,000,000 to the following: Green Equity Investors III, L.P. and affiliated investment funds, 2,826,000 shares; GS Mezzanine Partners II, L.P. and affiliated investment funds, 122,123 shares; TCW Leveraged Income Trust, L.P. and affiliated investment funds, 35,918 shares; and The Northwestern Mutual Life Insurance Company, 14,367 shares. These securities were issued in reliance on the exemption from registration provided by Regulation D, Rule 506, of the Securities Act.

• Issued and sold 2,970,822 shares of 12% series B junior redeemable cumulative preferred stock at a per share purchase price of $25.00 for an aggregate purchase price of approximately $74,300,000 to the following: Green Equity Investors III, L.P. and affiliated investment funds, 2,800,000 shares; GS Mezzanine Partners II, L.P. and affiliated investment funds, 121,000 shares; TCW Leveraged Income Trust, L.P. and affiliated investment funds, 35,588 shares; and The Northwestern Mutual Life Insurance Company, 14,234 shares. These securities were issued in reliance on the exemption from registration provided by Regulation D, Rule 506, of the Securities Act.

• Sold $100.0 million in senior notes due 2010 pursuant to an indenture of the same date with Chase Manhattan Bank and Trust Company, National Association, as trustee, to the following: GS Mezzanine Partners II, L.P. and affiliated investment funds, $70,834,000; TCW Leveraged Income Trust, L.P. and affiliated funds, $20,833,000; and The Northwestern Mutual Life Insurance Company, $8,333,000. In connection with the sale of the senior notes, VCA Antech issued warrants to purchase up to 1,149,990 shares of common stock to the following investors: GS Mezzanine Partners II, L.P. and affiliated investment funds, 814,575 warrants; TCW Leveraged Income Trust, L.P. and affiliated funds, 239,580 warrants; and The Northwestern Mutual Life Insurance Company, 95,835 warrants. The warrants allow the holders to purchase the common shares at a price of $0.0007 on or before the closing of an initial public offering of our common stock. These securities were issued in reliance on the exemption from registration provided by Regulation D, Rule 506, of the Securities Act.

• Sold $20.0 million in senior subordinated notes due 2010 pursuant to an indenture of the same date with Chase Manhattan Bank and Trust Company, National Association, as trustee, to the following: GS Mezzanine Partners II, L.P. and affiliated investment funds, $14,166,000; TCW Leveraged Income Trust, L.P. and affiliated funds, $4,167,000; and The Northwestern Mutual Life Insurance Company, $1,667,000. These securities were issued in reliance on the exemption from registration provided by Section 4(2) of the Securities Act.

     On November 27, 2001, and concurrent with our initial public offering, we sold $170.0 million in senior subordinated notes due 2009 pursuant to an indenture of the same date with Chase Manhattan Bank and Trust Company, National Association, as trustee, to the Goldman, Sachs & Co. These securities were issued in reliance on the exemption from registration provided by Regulation D, Rule 506, of the Securities Act.

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ITEM 6. SELECTED FINANCIAL DATA

     The selected historical consolidated financial data as of and for the years ended December 31, 2001, 2000, 1999, 1998, and 1997 have been derived from our audited financial statements. You should read the selected financial data presented below together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes. Our audited consolidated financial statements as of December 31, 2001 and 2000 and for each of the three years in the period ended December 31, 2001 are included in this Annual Report on Form 10-K.

		Year Ended December 31,
		2001			2000			1999			1998			1997
		(in thousands, except per share amounts)
Statements of Operations Data:
Laboratory revenue		$	134,711		$	119,300		$	103,282		$	89,896		$	68,997
Animal hospital revenue			272,113			240,624			217,988			191,888			165,848
Other revenue (1)			2,000			925			5,100			5,100			5,764
Intercompany			(7,462	)		(6,162	)		(5,810	)		(5,845	)		(4,696	)
	Total revenue		401,362			354,687			320,560			281,039			235,913
Direct costs			283,226			254,890			232,493			209,380			178,630
Selling, general and administrative			38,633			27,446			23,622			19,693			17,676
Depreciation and amortization			25,166			18,878			16,463			13,132			11,199
Agreement termination costs			17,552			—			—			—			—
Recapitalization costs			—			34,268			—			—			—
Year 2000 remediation expense			—			—			2,839			—			—
Other non-cash operating items			9,079			—			(1,873	)		—			—
	Operating income		27,706			19,205			47,016			38,834			28,408
Net interest expense			42,918			19,892			9,449			8,832			7,411
Other expense, net			168			1,800			—			—			—
	Income (loss) before minority interest, provision for income taxes and extraordinary item		(15,380	)		(2,487	)		37,567			30,002			20,997
Minority interest in income of subsidiaries			1,439			1,066			850			780			424
Provision for income taxes			445			2,199			14,360			12,954			9,347
Extraordinary loss on early extinguishment of debt (net of taxes)			10,159			2,659			—			—			—
Increase in carrying amount of redeemable preferred stock			19,151			5,391			—			—			—
	Net income (loss) available to common stockholders	$	(46,574	)	$	(13,802	)	$	22,357		$	16,268		$	11,226
Basic earnings (loss) per share		$	(2.39	)	$	(0.06	)	$	0.07		$	0.05		$	0.04
Diluted earnings (loss) per share		$	(2.39	)	$	(0.06	)	$	0.07		$	0.05		$	0.04
Shares used for computing basic earnings (loss) per share			19,509			234,055			315,945			305,250			294,390
Shares used for computing diluted earnings (loss) per share			19,509			234,055			329,775			329,100			315,195

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	Year Ended December 31,
	2001			2000			1999			1998			1997
	(dollars in thousands)
Other Financial Data:
Adjusted EBITDA (2)(3)	$	89,387		$	73,526		$	64,445		$	51,966		$	39,607
Adjusted EBITDA margin (4)		22.3	%		20.7	%		20.1	%		18.5	%		16.8	%
Laboratory EBITDA (5)	$	45,561		$	38,827		$	32,273		$	24,215		$	20,142
Laboratory EBITDA margin (4)		33.8	%		32.5	%		31.2	%		26.9	%		29.2	%
Animal hospital EBITDA (6)	$	53,658		$	42,985		$	37,237		$	31,975		$	23,243
Animal hospital EBITDA margin (4)		19.7	%		17.9	%		17.1	%		16.7	%		14.0	%
Net cash provided by operating activities	$	57,104		$	60,054		$	38,467		$	27,123		$	22,674
Net cash used in investing activities		(36,202	)		(47,679	)		(13,676	)		(19,474	)		(16,368	)
Net cash used in financing activities		(24,318	)		(12,476	)		(23,148	)		(18,554	)		(16,045	)
Capital expenditures		13,481			22,555			21,803			11,678			7,241
Balance Sheet Data (at period end):
Cash and cash equivalents	$	7,103		$	10,519		$	10,620		$	8,977		$	19,882
Net working capital		(2,574	)		5,289			9,605			6,694			(4,454	)
Total assets		468,521			483,070			426,500			393,960			386,089
Total debt		384,332			362,749			161,535			159,787			173,875
Total redeemable preferred stock		—			154,622			—			—			—
Total stockholders’ equity (deficit)		39,764			(81,310	)		231,229			202,685			180,851

(1)

Other revenue includes consulting fees of $2.0 million, $925,000, $5.1 million, $5.1 million and $4.7 million for the years ended December 31, 2001, 2000, 1999, 1998 and 1997, respectively. For the year ended December 31, 1997 other revenue also includes revenue from our pet product joint venture; we transferred the control of the joint venture to our joint venture partner in February 1997.

(2)

EBITDA is operating income (loss) before depreciation and amortization. Adjusted EBITDA represents EBITDA adjusted to exclude management fees, recapitalization costs, Year 2000 remediation expense, agreement termination costs and other non-cash operating items. EBITDA and Adjusted EBITDA are not measures of financial performance under generally accepted accounting principles, or GAAP. Although EBITDA and Adjusted EBITDA should not be considered in isolation or as substitutes for net income, cash flows from operating activities and other income or cash flow statement data prepared in accordance with GAAP, or as a measure of profitability or liquidity, we understand that EBITDA and Adjusted EBITDA are widely used by financial analysts as a measure of financial performance. Our calculation of EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.

     The calculation of EBITDA and Adjusted EBITDA is shown below (in thousands):

		Year Ended December 31,
		2001		2000		1999			1998		1997
Operating income		$	27,706	$	19,205	$	47,016		$	38,834	$	28,408
Depreciation and amortization			25,166		18,878		16,463			13,132		11,199
	EBITDA		52,872		38,083		63,479			51,966		39,607
Management fees (a)			2,273		620		—			—		—
Agreement termination costs			17,552		—		—			—		—
Recapitalization costs			—		34,268		—			—		—
Year 2000 remediation expense			—		—		2,839			—		—
Other non-cash operating items (b)			16,690		555		(1,873	)		—		—
	Adjusted EBITDA	$	89,387	$	73,526	$	64,445		$	51,966	$	39,607

(a)

Management fees were paid pursuant to our management services agreement and are included in selling, general and administrative expense in our statements of operations. Effective December 1, 2001, the parties terminated the management services agreement.

(b)

Other non-cash operating items include a write-down and loss on sale of assets of $9.1 million and non-cash compensation of $1.4 million included in direct costs and $6.2 million included in selling, general and administrative expense for the year ended December 31, 2001; non-cash compensation of $103,000 included in direct costs and $452,000 included in selling, general and administrative expense for the year ended December 31, 2000; reversal of restructuring charges of $1.9 million for the year ended December 31, 1999; reversal of restructuring charges of $2.1 million and restructuring charges of $2.1 million for the year ended December 31, 1997. Numbers may not add due to rounding.

(3) Adjusted EBITDA is the sum of laboratory EBITDA, animal hospital EBITDA and other revenue, less corporate selling, general and administrative expense, excluding non-cash compensation and management fees. For the year ended December 31, 1997, Adjusted EBITDA also includes EBITDA of our pet products joint venture of $168,000.

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     The calculation of Adjusted EBITDA is shown below (in thousands):

		Year Ended December 31,
		2001			2000			1999			1998			1997
Laboratory EBITDA (5)		$	45,561		$	38,827		$	32,273		$	24,215		$	20,142
Animal hospital EBITDA (6)			53,658			42,985			37,237			31,975			23,243
Other revenue			2,000			925			5,100			5,100			4,700
Corporate selling, general and administrative expense (7)			(11,832	)		(9,211	)		(10,165	)		(9,324	)		(8,646	)
Pet products joint venture EBITDA			—			—			—			—			168
	Adjusted EBITDA	$	89,387		$	73,526		$	64,445		$	51,966		$	39,607

(4)	Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by total revenue. Laboratory EBITDA margin is calculated by dividing laboratory EBITDA by laboratory revenue. Animal hospital EBITDA margin is calculated by dividing animal hospital EBITDA by animal hospital revenue.
(5)	Laboratory EBITDA excludes non-cash compensation of $4.3 million and $311,000 for the years ended December 31, 2001 and 2000, respectively.
(6)	Animal hospital EBITDA excludes non-cash compensation of $2.6 million and $188,000 for the years ended December 31, 2001 and 2000, respectively.
(7)	Corporate selling, general and administrative expense excludes non-cash compensation of $771,000 and management fees of $2.3 million for the year ended December 31, 2001; and non-cash compensation of $55,000 and management fees of $620,000 for the year ended December 31, 2000. Management fees were paid pursuant to our management services agreement. Effective December 1, 2001, the parties terminated the management services agreement.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     The following discussion should be read in conjunction with our consolidated financial statements provided under Part II, Item 8 of this annual report on Form 10-K. Certain statements contained herein may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially, as discussed more fully herein.

     The forward-looking information set forth in this annual report on Form 10-K is as of March 25, 2002, and we undertake no duty to update this information. Should events occur subsequent to March 25, 2002 that make it necessary to update the forward-looking information contained in this Form 10-K, the updated forward-looking information will be filed with the Securities and Exchange Commission in a quarterly report on Form 10-Q or as an earnings release included as an exhibit to a Form 8-K, each of which will be available at the Securities and Exchange Commission’s website at www.sec.gov. More information about potential factors that could affect our business and financial results is included in the section entitled “Risk Factors.”

Overview

     We operate a leading animal health care services company and operate the largest networks of veterinary diagnostic laboratories and free-standing, full-service animal hospitals in the United States. Our network of veterinary diagnostic laboratories provides sophisticated testing and consulting services used by veterinarians in the detection, diagnosis, evaluation, monitoring, treatment and prevention of diseases and other conditions affecting animals. Our animal hospitals offer a full range of general medical and surgical services for companion animals. We treat diseases and injuries, offer pharmaceutical products and perform a variety of pet wellness programs, including routine vaccinations, health examinations, diagnostic testing, spaying, neutering and dental care.

     Our company was formed in 1986 by Robert Antin, Arthur Antin and Neil Tauber, who have served since our inception as our Chief Executive Officer, Chief Operating Officer and Senior Vice President of Development, respectively. During the 1990s, we established a premier position in the veterinary diagnostic laboratory and animal hospital markets through both internal growth and acquisitions. By 1997, we achieved a critical mass, building a laboratory network of 12 laboratories servicing animal hospitals in all 50 states and completing acquisitions for a total of 160 animal hospitals. At December 31, 2001, our laboratory network consisted of 16 laboratories serving all 50 states and our animal hospital network consisted of 214 animal hospitals in 33 states. We are focusing primarily on generating internal growth to increase revenue and profitability. In order to augment internal growth, we may selectively acquire laboratories and intend to acquire approximately 15 to 25 animal hospitals per year, depending upon the attractiveness of candidates and the strategic fit with our existing operations.

15

     The following table summarizes our growth in facilities for the periods presented:

		Year Ended December 31,
		2001			2000			1999
Laboratories:
	Beginning of period		15			13			12
	Acquisitions and new facilities		1			3			3
	Relocated into other labs operated by us		—			(1	)		(2	)
	End of period		16			15			13
Animal hospitals:
	Beginning of period		209			194			168
	Acquisitions		21			24			39
	Relocated into hospitals operated by us		(13	)		(8	)		(11	)
	Sold or closed		(3	)		(1	)		(2	)
	End of period		214			209			194
	Owned at end of period		160			157			149
	Managed at end of period		54			52			45

     We were a publicly traded company from 1991 until September 2000, when we completed a recapitalization with an entity controlled by Leonard Green & Partners. The recapitalization was completed in a financial market which we believed did not adequately value companies of our size and type because the market’s focus and attention was largely on technology and internet-based companies. The recapitalization was financed by:

• the contribution of $155.0 million by a group of investors led by Leonard Green & Partners;

• borrowings of $250.0 million under a $300.0 million senior credit facility;

• the issuance of an aggregate of $100.0 million of senior notes; and

• the issuance of an aggregate of $20.0 million of senior subordinated notes.

     Our subsequent performance and the changing market dynamics supported the determination by our board of directors to re-enter the public sector. On November 27, 2001 we consummated our initial public offering. As a result of this offering and the underwriters’ exercise of its over-allotment, we issued 17,370,000 shares of common stock and received net proceeds of $161.5 million. Concurrent with the consummation of the initial public offering, our wholly-owned subsidiary, Vicar, issued $170.0 million of 9.875% senior subordinated notes. We applied the net proceeds from the offering and the sale of the original notes, plus cash on hand, as follows:

• redeemed all of our outstanding series A and series B redeemable preferred stock;

• repaid $100.0 million of senior term A and B notes;

• repaid $59.1 million of the 15.5% senior notes due 2010, at a redemption price of 110% plus accrued and unpaid interest; and

• repaid $5.0 million in principal of the 13.5% senior subordinated notes due 2010, at redemption price of 110%, plus accrued and unpaid interest.

     Upon consummation of our initial public offering and the sale of the notes, the parties terminated non-competition agreements with four members of our senior management and the management agreement with Leonard Green & Partners. In connection with the termination of these agreements, we took a non-cash charge of approximately $9.6 million and a cash charge of $8.0 million. For a description of these agreements, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources.”

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Basis of Reporting

General

     Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. We report our operations in three segments: laboratory, animal hospital and corporate. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expense, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Revenue Recognition

     Revenue is recognized only after the following criteria are met:

• there exists adequate evidence of the transaction;

• delivery of goods has occurred or services have been rendered; and

• the price is not contingent on future activity and collectibility is reasonably assured.

Laboratory Revenue

     A portion of laboratory revenue is intercompany revenue that was generated by providing laboratory services to our animal hospitals. Laboratory internal revenue growth is calculated using laboratory revenue as reported, adjusted to exclude, for those laboratories that we did not own for the entire period presented, an estimate of revenue generated by these newly acquired laboratories subsequent to the date of our purchase. We calculate this estimate of revenue for each newly acquired laboratory using an historical twelve-month revenue figure (in some cases on an annualized basis) provided to us by the seller of the acquired laboratory, which amount is increased by our laboratory revenue growth rate for the prior year. In calculating the laboratory revenue growth rate for the year in which the acquisition occurred, we exclude from our reported laboratory revenue the estimated annual revenue attributable to newly acquired laboratories multiplied by a fraction representing the portion of the year that we owned the related facility. In calculating the laboratory revenue growth rate for the year following the acquisition, we exclude from our reported laboratory revenue the estimated annual revenue attributable to newly acquired laboratories multiplied by a fraction representing the portion of the year that we did not own the facility. To determine our laboratory internal revenue growth rate for the applicable period, we compare our laboratory revenue net of estimated laboratory revenue of newly acquired laboratories, to our laboratory revenue as reported for the prior comparable period. We believe this fairly presents our laboratory internal revenue growth for the periods presented. Our calculation may not be comparable to similarly titled measures by other companies, however, any differences in calculations or errors in estimates used would not have a material effect on our laboratory internal growth rates presented in this annual report.

     Laboratory revenue is presented net of discounts. Some discounts, such as those given to clients for prompt payment, are applied to clients’ accounts in periods subsequent to the period the revenue was recognized. Such discounts not yet applied to clients’ accounts are estimated and deducted from revenue in the month the related revenue was recognized. Such estimates are based upon historical experience. Errors in estimates would not have a material effect on our financial statements.

Animal Hospital Revenue

     Animal hospital revenue is comprised of revenue of the animal hospitals that we own and the management fees of animal hospitals that we manage. Certain states prohibit business corporations from providing or holding themselves out as providers of veterinary medical care. In these states, we enter into arrangements with a veterinary medical group that provides all veterinary medical care, although we manage the administrative functions associated with the operation of the animal hospitals. In return for our services, the veterinary medical group pays us a management fee. We do not consolidate the operations of animal hospitals that we manage. However, for purposes of calculating same-facility

17

revenue growth in our animal hospitals, we use the combined revenue of animal hospitals owned and managed for the entire periods presented. Same-facility revenue growth includes revenue generated by customers referred from our relocated animal hospitals.

Other Revenue

     Other revenue is comprised of consulting fees from Heinz Pet Products relating to the marketing of its proprietary pet food.

Direct Costs

     Laboratory direct costs are comprised of all costs of laboratory services, including salaries of veterinarians, technicians and other non-administrative, laboratory-based personnel, facilities rent, occupancy costs and supply costs. Animal hospital direct costs are comprised of all costs of services and products at the hospitals, including salaries of veterinarians, technicians and all other hospital-based personnel employed by the hospitals we own, facilities rent, occupancy costs, supply costs and costs of goods sold associated with the retail sales of pet food and pet supplies.

Selling, General and Administrative

     Our selling, general and administrative expense is divided between our laboratory, animal hospital and corporate segments. Laboratory selling, general and administrative expense consists primarily of sales and administrative personnel and selling, marketing and promotional expense. Animal hospital selling, general and administrative expense consists primarily of field management and administrative personnel, recruiting and marketing expense. Corporate selling, general and administrative expense consists of administrative expense at our headquarters, including the salaries of corporate officers, professional expense, rent and occupancy costs.

EBITDA and Adjusted EBITDA

     EBITDA is operating income (loss) before depreciation and amortization. Adjusted EBITDA represents EBITDA adjusted to exclude management fees paid pursuant to our management services agreement, recapitalization costs, Year 2000 remediation expense, agreement termination costs and other non-cash operating items. Corporate EBITDA is comprised of other revenue less corporate selling, general and administrative expense, adjusted to exclude non-cash compensation.

     EBITDA and Adjusted EBITDA are not measures of financial performance under generally accepted accounting principles, or GAAP. Although EBITDA and Adjusted EBITDA should not be considered in isolation or as a substitute for net income, cash flows from operating activities and other income or cash flow statement data prepared in accordance with GAAP, or as a measure of profitability or liquidity, we understand that EBITDA and Adjusted EBITDA are widely used by financial analysts as a measure of financial performance. Our calculation of EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies.

Non-Cash Compensation

     In connection with our recapitalization in September 2000, some of our employees elected to exchange their stock options for newly issued stock options. The number of stock options issued to each employee was equal to the intrinsic value of their old stock options divided by the $0.20 strike price of the new stock options. These stock options were accounted for as variable awards, and related non-cash compensation of $555,000 was recorded in the year ended December 31, 2000. An additional charge for non-cash compensation of $7.6 million was recorded in the year ended December 31, 2001, as a result of the increase in the estimated market value of the common stock. In August 2001, all of these options were exercised or cancelled. Non-cash compensation is included in direct costs of the laboratory and selling, general and administrative expense.

Critical Accounting Policies and Estimates

     We believe the following critical accounting policies affect our more significant judgments and estimates used in preparation of our consolidated financial statements.

Worker’s Compensation Expense

     On October 8, 2001, we entered into a one-year workers’ compensation insurance policy with a $250,000 per-occurrence deductible and a stop-loss aggregate deductible of $4.7 million. We have determined that $3.0 million is a reasonable estimate of expected claims losses under this policy and we are accruing for these losses ratably over the twelve-month period ending September 30, 2002. In determining this estimate, in conjunction with the insurance carrier, we reviewed our five-year history of total claims losses, ratio of losses to premiums paid, payroll growth and the current risk control environment. We are pre-funding estimated claims losses to the insurance carrier of approximately $2.9 million. If we were accruing the maximum possible claims losses for the three months the policy was effective in 2001, we would have recorded an additional $430,000 of expense for the year ended December 31, 2001.

18

Goodwill and Long-lived Assets Impairment

     Goodwill relating to acquisitions represents the purchase price paid and liabilities assumed in excess of the fair market value of net assets acquired. Long-lived assets represent other tangible and intangible assets including, but not limited to, covenants not to compete, property and equipment.

     We continually evaluate whether events, circumstances or net losses on the entity level have occurred that indicate the remaining estimated useful life of long-lived assets and goodwill may warrant revision or that the remaining balance of these assets may not be recoverable. When factors indicate that these assets should be evaluated for possible impairment, we use an estimate of the related facilities undiscounted, tax adjusted net income over the remaining life of the assets to measure whether the assets are recoverable. If it is determined that the assets on a given entity are partially or totally unrecoverable, losses will be recognized to the extent that projected aggregate tax adjusted net income over the life of the assets does not cover the assets balances at the date of the impairment. As a result of evaluation in 2001, we recorded a write-down of goodwill from one hospital of approximately $800,000.

     Throughout 2001, strategic opportunities arose to merge our existing hospitals into other existing hospitals with excess capacity and to acquire a hospital with excess capacity and merge one of our existing hospitals into it. When we merge one of our hospitals, we write-off all of the goodwill on the books of the merging or moving hospital. During 2001, we merged five of our existing hospitals into other existing hospitals and purchased one hospital that we merged one of our existing hospitals into. This activity resulted in a corresponding write-down of goodwill of approximately $6.3 million.

     Lastly, during 2001, we performed an analysis of the fair market value of certain vacant properties held for sale and determined that five of these properties had book values in excess of estimate market value. As a result of this analysis, we recorded an impairment charge of approximately $1.4 million.

Legal Settlements

     We are a party to various legal proceedings that arise in the ordinary course of business. Although we cannot determine the ultimate disposition of these proceedings, we can use judgment to reasonably estimate our liability for legal settlement costs that may arise as a result of these proceedings. Based on our prior experience, the nature of the current proceedings, and our insurance policy coverage for such matters, we have accrued a minimal amount for legal settlements as part of other accrued liabilities.

19

Results of Operations

     The following table sets forth components of our statements of operations data expressed as a percentage of revenue for the indicated periods:

			Year Ended December 31,
			2001			2000			1999
Revenue:
	Laboratory			33.6	%		33.6	%		32.2	%
	Animal hospital			67.8			67.8			68.0
	Other			0.5			0.3			1.6
	Intercompany			(1.9	)		(1.7	)		(1.8	)
		Total revenue		100.0			100.0			100.0
Direct costs				70.6			71.9			72.5
Selling, general and administrative				9.6			7.6			7.4
Depreciation and amortization				6.3			5.4			5.1
Agreement termination costs				4.4			—			—
Recapitalization costs				—			9.7			—
Year 2000 remediation expense				—			—			0.9
Other non-cash operating items				2.2			—			(0.6	)
		Operating income		6.9			5.4			14.7
Net interest expense				10.7			5.6			2.9
Other expense, net				—			0.5			—
Minority interest				0.4			0.3			0.3
Provision for income taxes				0.1			0.6			4.5
Extraordinary loss on early extinguishment of debt				2.5			0.8			—
		Net income (loss)		(6.8	)%		(2.4	)%		7.0	%

20

     The following table is a summary of the components of operating income by segment:

										Inter-
										Company
					Animal					Sales
			Laboratory		Hospital		Corporate			Elimination			Total
2001
	Revenue		$	134,711	$	272,113	$	2,000		$	(7,462	)	$	401,362
	Direct costs			81,996		208,692		—			(7,462	)		283,226
	Selling, general and administrative			11,434		12,323		14,876			—			38,633
	Depreciation and amortization			4,657		14,491		6,018			—			25,166
	Agreement termination costs			—		—		17,552			—			17,552
	Write-down and loss on sale of assets			—		—		9,079			—			9,079
		Operating Income	$	36,624	$	36,607	$	(45,525	)	$	—		$	27,706
2000
	Revenue		$	119,300	$	240,624	$	925		$	(6,162	)	$	354,687
	Direct costs			72,662		188,390		—			(6,162	)		254,890
	Selling, general and administrative			8,122		9,437		9,887			—			27,446
	Depreciation and amortization			4,472		12,167		2,239			—			18,878
	Recapitalization costs			—		—		34,268			—			34,268
		Operating Income	$	34,044	$	30,630	$	(45,469	)	$	—		$	19,205
1999
	Revenue		$	103,282	$	217,988	$	5,100		$	(5,810	)	$	320,560
	Direct costs			64,234		174,069		—			(5,810	)		232,493
	Selling, general and administrative			6,775		6,682		10,165			—			23,622
	Depreciation and amortization			4,234		10,472		1,757			—			16,463
	Year 2000 remediation expense			—		—		2,839			—			2,839
	Reversal of restructuring charges			—		—		(1,873	)		—			(1,873	)
		Operating Income	$	28,039	$	26,765	$	(7,788	)	$	—		$	47,016

Revenue

     The following table summarizes our revenue for the years ended December 31, 2001, 2000 and 1999 (dollars in thousands):

											% Change
		2001			2000			1999			2001			2000
Laboratory		$	134,711		$	119,300		$	103,282			12.9	%		15.5	%
Animal hospital			272,113			240,624			217,988			13.1	%		10.4	%
Other			2,000			925			5,100
Intercompany			(7,462	)		(6,162	)		(5,810	)
	Total revenue	$	401,362		$	354,687		$	320,560			13.2	%		10.6	%

  Laboratory Revenue

     Laboratory revenue increased $15.4 million, or 12.9%, for the year ended December 31, 2001 compared to the year ended December 31, 2000, which increased $16.0 million, or 15.5%, compared to the year ended December 31, 1999. The increase in laboratory revenue for the year ended December 31, 2001 compared to the comparable prior period primarily was due to internal growth of 12.5%. This internal laboratory revenue growth resulted from the increase in the overall number of tests and requisitions and an increase in the average revenue per requisition. These increases were primarily the result of the continued emphasis on selling our pet health and wellness programs and the implementation of a price increase for most tests in February 2001. The increase in laboratory revenue for the year ended December 31, 2000 compared to the comparable prior period primarily was due to internal growth of 12.6%. This internal laboratory revenue growth also resulted from an increase in the overall number of tests and requisitions and an increase in the average revenue per requisition. These increases primarily were due to the development and sale of new programs, the implementation of a price increase for most tests in February 2000 and the continued growth of our Test Express business.

21

  Animal Hospital Revenue

     The following table summarizes our animal hospital revenue as reported and the combined revenue of animal hospitals that we owned and managed had we consolidated the operating results of the animal hospitals we manage into our operating results for the years ended December 31, 2001, 2000, and 1999 (dollars in thousands):

											% Change
		2001			2000			1999			2001			2000
Animal hospital revenue as reported		$	272,113		$	240,624		$	217,988			13.1	%		10.4	%
Less: Management fees paid to us by veterinary medical groups			(37,770	)		(31,133	)		(30,202	)
Add: Revenue of animal hospitals managed			71,591			60,380			42,829
	Combined revenue of animal hospitals owned and managed	$	305,934		$	269,871		$	230,615			13.4	%		17.0	%

     Animal hospital revenue increased $31.5 million, or 13.1%, for the year ended December 31, 2001 compared to the year ended December 31, 2000, which increased $22.6 million, or 10.4%, compared to the year ended December 31, 1999. The increase in animal hospital revenue for the year ended December 31, 2001 as compared to the comparable prior period resulted primarily from the acquisition of 21 animal hospitals that we owned, managed or relocated into other hospitals owned by us subsequent to December 31, 2000. Similarly, the increase for the year ended December 31, 2000 as compared to the comparable prior period resulted primarily from the acquisition of 24 animal hospitals that we owned, managed or relocated into other hospitals owned by us subsequent to December 31, 1999. The increase in animal hospital revenue for the year ended December 31, 2001 also was due to same-facility revenue growth of 5.0%, and the increase in animal hospital revenue for the year ended December 31, 2000 also was due to same-facility revenue growth of 7.0%. Same-facility revenue growth in both years primarily was due to increases in the average amount spent per visit and revenue generated by customers referred from our relocated animal hospitals.

  Other Revenue

     Other revenue increased $1.1 million for the year ended December 31, 2001 compared to the year ended December 31, 2000, which decreased $4.2 million compared to the year ended December 31, 1999. Our consulting agreement with Heinz Pet Products expired February 1, 2000. Under this agreement we had received monthly consulting fees of $425,000 from February 1997 through January 2000. We entered into a new agreement with Heinz Pet Products effective October 1, 2000 which provides for monthly consulting fees of approximately $167,000 over a term of 24 months ending September 2002. Consequently, for the year ended December 31, 2001, other revenue includes consulting fees for the entire year as compared to an aggregate of four months for the year ended December 31, 2000 and for the year ended December 31, 1999.

Direct Costs

     The following table summarizes our direct costs and our direct costs as a percentage of applicable revenue for the years ended December 31, 2001, 2000 and 1999 (dollars in thousands):

		2001						2000						1999						% Change
					% of						% of						% of
		$			Revenue			$			Revenue			$			Revenue			2001			2000
Laboratory		$	81,996			60.9	%	$	72,662			60.9	%	$	64,234			62.2	%		12.8	%		13.1	%
Animal hospital			208,692			76.7	%		188,390			78.3	%		174,069			79.9	%		10.8	%		8.2	%
Other			—						—						—
Intercompany			(7,462	)					(6,162	)					(5,810	)					21.1	%		6.1	%
	Total direct costs	$	283,226			70.6	%	$	254,890			71.9	%	$	232,493			72.5	%		11.1	%		9.6	%

22

  Laboratory Direct Costs

     Laboratory direct costs increased $9.3 million, or 12.8%, for the year ended December 31, 2001 compared to the year ended December 31, 2000, which increased $8.4 million, or 13.1%, compared to the year ended December 31, 1999. Laboratory direct costs as a percentage of laboratory revenue was 60.9% for each of the years ended December 31, 2001 and 2000, which decreased from 62.2% for the year ended December 31, 1999. Laboratory direct costs include non-cash compensation of $1.4 million and $103,000 for the years ended December 31, 2001 and 2000. Laboratory direct costs excluding non-cash compensation as a percentage of laboratory revenue decreased to 59.8% for the year ended December 31, 2001 and from 60.8% for the year ended December 31, 2000. The decreases in laboratory direct costs as a percentage of laboratory revenue during these periods primarily were attributable to increases in laboratory revenue combined with operating leverage associated with our laboratory business.

  Animal Hospital Direct Costs

     The following table summarizes our animal hospital direct costs as reported and the combined direct costs of animal hospitals owned and managed had we consolidated the operating results of the animal hospitals we manage into our operating results for the years ended December 31, 2001, 2000, and 1999 (dollars in thousands):

	2001						2000						1999						% Change
				% of						% of						% of
				Combined						Combined						Combined
	$			Revenue			$			Revenue			$			Revenue			2001			2000
Animal hospital direct costs as reported	$	208,692			76.7	%	$	188,390			78.3	%	$	174,069			79.9	%		10.8	%		8.2	%
Add: Direct costs of animal hospitals managed		71,591						60,380						42,829
Less: Management fees charged by us to veterinary medical groups		(37,770	)					(31,133	)					(30,202	)
Combined direct costs of animal hospitals owned and managed	$	242,513			79.3	%	$	217,637			80.6	%	$	186,696			81.0	%		11.4	%		16.6	%

     Animal hospital direct costs increased $20.3 million, or 10.8%, for the year ended December 31, 2001 compared to the year ended December 31, 2000, which increased $14.3 million, or 8.2%, compared to the year ended December 31, 1999. Animal hospital direct costs as a percentage of animal hospital revenue decreased to 76.7% for the year ended December 31, 2001 from 78.3% for the year ended December 31, 2000, which decreased from 79.9% for the year ended December 31, 1999. The decreases in animal hospital direct costs as a percentage of animal hospital revenue during these periods primarily were attributable to the increase in revenue combined with the operating leverage associated with the animal hospital business, as most of the costs associated with this business do not increase proportionately with increases in the volume of services rendered. The decrease in animal hospital direct costs as a percentage of animal hospital revenue for the year ended December 31, 2000 as compared to 1999 was also attributable to a reduction in some of our obligations to the animal hospitals we manage which reduced our costs, together with a corresponding reduction in our management fees.

Selling, General and Administrative

     The following table summarizes our selling, general and administrative expense and expense as a percentage of applicable revenue for the years ended December 31, 2001, 2000, and 1999 (dollars in thousands):

		2001					2000					1999					% Change
				% of					% of					% of
		$		Revenue			$		Revenue			$		Revenue			2001			2000
Laboratory		$	11,434		8.5	%	$	8,122		6.8	%	$	6,775		6.6	%		40.8	%		19.9	%
Animal hospital			12,323		4.5	%		9,437		3.9	%		6,682		3.1	%		30.6	%		41.2	%
Corporate			14,876		3.7	%		9,887		2.8	%		10,165		3.2	%		50.5	%		(2.7	)%
	Total selling, general and administrative	$	38,633		9.6	%	$	27,446		7.7	%	$	23,622		7.4	%		40.8	%		16.2	%

23

  Laboratory Selling, General and Administrative

     Laboratory selling, general and administrative expense for the year ended December 31, 2001 increased $3.3 million, or 40.8%, compared to the year ended December 31, 2000, which increased $1.3 million, or 19.9%, compared to the year ended December 31, 1999. The increase in laboratory selling, general and administrative expense for the year ended December 31, 2001 compared to the comparable prior period primarily was due to $2.9 million of non-cash compensation, as well as an increase in commission payments to sales representatives, which was caused by an increase in sales. Excluding the non-cash compensation, laboratory selling, general and administrative expense as a percentage of laboratory revenue was 6.4% and 6.6% in 2001 and 2000. The increase in laboratory selling, general and administrative expense for the year ended December 31, 2000 compared to the comparable prior period primarily was due to an increase in commission payments to sales representatives, which was caused by an increase in sales, and salaries attributable to new sales representatives.

  Animal Hospital Selling, General and Administrative

     Animal hospital selling, general and administrative expense for the year ended December 31, 2001 increased $2.9 million, or 30.6% compared to the year ended December 31, 2000, which increased $2.8 million, or 41.2%, compared to the year ended December 31, 1999. The increase in animal hospital selling, general and administrative expense for the year ended December 31, 2001 compared to the comparable prior period primarily was due to $2.6 million of non-cash compensation. Excluding the non-cash compensation, animal hospital selling, general and administrative expense as a percentage of revenue was 3.6% and 3.8% in 2001 and 2000. The increase in animal hospital selling, general and administrative expense for the year ended December 31, 2000 primarily was attributable to salaries associated with new personnel hired in connection with the expansion of our management and administrative infrastructure to support the additional number of animal hospitals we owned and managed.

  Corporate Selling, General and Administrative

     Corporate selling, general and administrative expense for the year ended December 31, 2001 increased $5.0 million, or 50.5%, compared to the year ended December 31, 2000. The increase was primarily due to a $1.7 million increase in management fees paid, a $1.3 million increase in corporate bonuses, an $845,000 increase in legal expense, a $716,000 increase in non-cash compensation and approximately $400,000 of salary increases at corporate.

     Corporate selling, general and administrative expense for the year ended December 31, 2000 decreased $278,000, or 2.7% compared to the year ended December 31, 1999. This decrease was due to efficiencies realized in our information systems, accounting and finance departments that resulted from our systems upgrade.

     Excluding the non-cash compensation and management fees, corporate selling, general and administrative expense as a percentage of revenue was 2.9% and 2.6% in 2001 and 2000.

Adjusted EBITDA

     The following table summarizes our Adjusted EBITDA and our Adjusted EBITDA as a percentage of applicable revenue for the years ended December 31, 2001, 2000 and 1999 (dollars in thousands):

		2001						2000						1999						% Change
					% of						% of						% of
		$			Revenue			$			Revenue			$			Revenue			2001			2000
Laboratory EBITDA (1)		$	45,561			33.8	%	$	38,827			32.5	%	$	32,273			31.2	%		17.3	%		20.3	%
Animal hospital EBITDA (2)			53,658			19.7	%		42,985			17.9	%		37,237			17.1	%		24.8	%		15.4	%
Other revenue			2,000						925						5,100
Corporate selling, general and administrative (3)			(11,832	)					(9,211	)					(10,165	)
	Total Adjusted EBITDA	$	89,387			22.3	%	$	73,526			20.7	%	$	64,445			20.1	%		21.6	%		14.1	%

(1)	Laboratory EBITDA excludes non-cash compensation of $4.3 million and $311,000 for the years ended December 31, 2001 and 2000, respectively.
(2)	Animal hospital EBITDA excludes non-cash compensation of $2.6 million and $188,000 for the years ended December 31, 2001 and 2000, respectively
(3)	Corporate selling, general and administrative expense excludes non-cash compensation of $771,000 and management fees of $2.3 million for the year ended December 31, 2001; and non-cash compensation of $55,000 and management fees of $620,000 for the year ended December 31, 2000.

24

Depreciation and Amortization

     Depreciation and amortization expense increased $6.3 million, or 33.3%, for the year ended December 31, 2001 compared to the year ended December 31, 2000, which increased $2.4 million, or 14.7%, compared to the year ended December 31, 1999. The increases in depreciation and amortization expense primarily were due to the amortization over a three-year period of $15.6 million paid to our executives pursuant to non-competition agreements entered into in September 2000, the purchase of property and equipment and the acquisition of animal hospitals.

     As a result of the implementation of SFAS No. 142, we will no longer amortize goodwill in 2002. For a detailed discussion of SFAS No. 142, see “New Accounting Pronouncements.” This change, in conjunction with the termination of our non-competition agreements with members of senior management, will have the impact of lowering amortization expense in 2002 by approximately $14.4 million.

Recapitalization Costs

     We incurred $34.3 million of recapitalization costs for the year ended December 31, 2000 pertaining to our recapitalization in September 2000. These costs consisted of $24.1 million associated with the buy-out of stock options held by employees, $1.2 million paid to our employees for services rendered in connection with our recapitalization, $7.6 million of professional fees and $1.4 million of other expense. We do not expect any similar charges in 2002 or subsequent years.

Agreement Termination Costs

     During the year ended December 31, 2001, we terminated non-competition agreements with four members of senior management and recorded a non-cash charge of $9.6 million. In addition, we paid $8.0 million to terminate our management services agreement with Leonard Green & Partners. We do not expect any similar charges in 2002 or subsequent years.

Other Non-Cash Operating Items

     Other non-cash operating items consisted of $9.1 million write-down and loss on sale of assets for the year ended December 31, 2001. The write-down of assets primarily was attributable to the relocation of five of our animal hospitals into existing animal hospitals we operated, the determination that goodwill was impaired at one of our existing animal hospitals and the write-down of real property available for sale to fair market value. Other non-cash operating items consisted of $1.9 million reversal of restructuring charges pertaining to our 1996 and 1997 restructuring plans for the year ended December 31, 1999.

Net Interest Expense

     Net interest expense increased $23.0 million, or 115.8% to $42.9 million for the year ended December 31, 2001 from $19.9 million for the year ended December 31, 2000, which represented an increase of $10.5 million, or 110.5%, from $9.4 million for the year ended December 31, 1999. The increase in net interest expense in 2001 and 2000 primarily was due to debt we incurred in connection with the recapitalization in September 2000.

Other Expense, Net

     Other expense was $168,000 for the year ended December 31, 2001, consisting of a non-cash loss on a hedging instrument pertaining to the changes in the time value of our collar agreement. Other expense was $1.8 million for the year ended December 31, 2000, consisting of a $3.2 million gain on sale of our investment in Veterinary Pet Insurance, Inc. and a $5.0 million loss resulting from the write-down of our investment in Zoasis.com, Inc.

Provision for Income Taxes

     Provision for income taxes was $445,000, $2.2 million and $14.4 million for the years ended December 31, 2001, 2000 and 1999. Our effective income tax rate for each year varies from the statutory rate primarily due to the non-deductibility for income tax purposes of the amortization of a portion of goodwill. In 2001, our effective income tax rate also was impacted by the write-down of zero tax basis assets and non-cash compensation.

25

Minority Interest

     Minority interest in income of the consolidated subsidiaries was $1.4 million, $1.1 million and $850,000 for the years ended December 31, 2001, 2000 and 1999, respectively. Minority interest in income represents our partners’ proportionate share of net income generated by our subsidiaries that we do not wholly own.

Increase in Carrying Amount of Redeemable Preferred Stock

     The holders of our series A redeemable preferred stock and our series B redeemable preferred stock were entitled to receive dividends at a rate of 14% and 12%, respectively. The dividends not paid in cash compounded quarterly. The dividends earned during 2001 and 2000 were added to the liquidation preference of the preferred stock. In November 2001, the Company redeemed all of the outstanding series A and series B redeemable preferred stock.

Related Party Transactions

     We believe, based on our reasonable judgment, but without further investigation, that the terms of each of the following transactions or arrangements between us and our affiliates, officers, directors or stockholders which were parties to the transactions were, on an overall basis, at least as favorable to us as could then have been obtained from unrelated parties.

Acquisitions

     As part of an often-used acquisition strategy, the Company hires the selling doctor upon purchase of their practice. The Company may lease facilities from the selling doctor; the related lease agreements are negotiated at prevailing market rates as part of the acquisition before the doctor is hired. These arrangements are not contingent upon the current or future employment of the doctors.

Recapitalization Transaction

     On September 20, 2000, we completed a recapitalization with an entity controlled by Leonard Green & Partners. In the recapitalization, each outstanding share of our common stock, other than shares retained by management and employees, was canceled and converted into the right to receive $1.00. The recapitalization was financed by:

• the contribution of $155.0 million by a group of investors led by Leonard Green & Partners;

• our issuance of an aggregate of $20.0 million of senior subordinated notes;

• borrowings of $250.0 million under our $300.0 million senior credit facility; and

• our issuance of an aggregate of $100.0 million of senior notes.

     Upon the completion of the recapitalization, Robert Antin, Arthur Antin, Neil Tauber, Tom Fuller, other stockholders and a group of investors led by Leonard Green & Partners acquired 17,524,335 shares of common stock at a purchase price of $1.00 per share. Goldman Sachs Credit Partners L.P. is a lender under our senior credit facility. GS Mezzanine Partners II, L.P. and GS Mezzanine Partners II Offshore, L.P., affiliates of Goldman, Sachs & Co., purchased portions of our securities for an aggregate purchase price of $85.0 million. Melina Higgins, one of our directors, is the Chief Financial Officer of GS Mezzanine Partners II, L.P. and GS Mezzanine Partners II Offshore, L.P. The following partners of Leonard Green & Partners also serve on our board of directors: John Baumer, John Danhakl and Peter Nolan.

26

Stockholders Agreement

     On September 20, 2000, we entered into a stockholders agreement, as amended, with each of our stockholders. Under the stockholders agreement, each party to the stockholders agreement has call rights with respect to shares of common stock and stock options held by members of management in the event of termination of employment for any reason. The call rights permit us to repurchase callable shares at $1.00 per share. In connection with our initial public offering, the stockholders’ agreement was amended such that effective October 1, 2001:

• Call rights expired on one-half of Robert Antin’s shares that initially were subject to the stockholders agreement. Of the remaining shares, call rights will expire ratably over a six-month period commencing October 1, 2001;

• Call rights expired on one-half of Arthur Antin’s, Neil Tauber’s and Tomas Fuller’s shares that initially were subject to the stockholders agreement. Of the amount remaining, call rights will expire on one-half of those shares on April 1, 2002, and on the remaining one-half on October 1, 2002; and

• Call rights expired on one-half of the other employees’ shares that initially were subject to the stockholders agreement. Of the remaining shares, call rights will expire ratably over a 12-month period commencing May 1, 2002.

     The stockholders agreement also provided for the discharge of $580,000 and $108,000 of indebtedness owing to us from Robert Antin and Arthur Antin, respectively, including interest accrued thereon. This indebtedness was forgiven as part of the recapitalization transaction.

Notes Receivable from Stockholders

     In 2001, certain employees exercised their options to purchase shares of our common stock. As consideration for the exercises of their options, we received notes with an aggregate value of approximately $100,000. Each note earns interest at the rate of 10.125% per annum and is due and payable on August 1, 2004. These notes are collateralized by our common stock that was purchased by the stockholders and are an unconditional obligation of the employee. The total outstanding principal and interest of these notes at December 31, 2001 was approximately $104,000.

     Concurrent with the recapitalization, we sold 518,000 common shares to certain of our non-executive employees. As consideration for the issuance of common stock, we received notes with an aggregate value approximating $518,000. Each note earns interest at the rate of 6.2% per annum, is compounded annually and is due and payable on September 16, 2007. The notes are collateralized by our common stock that was purchased by the stockholders. The total outstanding principal and interest of these notes at December 31, 2001 and 2000 was $560,000 and $518,000, respectively.

Management Services Agreement

     On September 20, 2000, we entered into a 10-year management services agreement with Leonard Green & Partners. The agreement provides that Leonard Green & Partners would provide general investment-banking services, management, consulting and financial planning services and transaction-related financial advisory and investment banking services to us and our subsidiaries. We paid a one-time structuring fee of $7.5 million to Leonard Green & Partners in September 2000 under the agreement. Leonard Green & Partners received an annual fee of $2.5 million as compensation for the general services and normal and customary fees for transaction-related services. During the years ended December 31, 2001 and December 31, 2000, we paid management fees in an aggregate amount of $2.3 million and $620,000, respectively. The management services agreement was terminated upon the consummation of our initial public offering on November 27, 2001. In connection with the termination we paid Leonard Green & Partners $8.0 million.

Non-Competition Agreements

     On September 20, 2000, Robert Antin, Arthur Antin, Neil Tauber and Tomas Fuller each entered into non competition agreements with us for a term of three years.

     In consideration for the execution of the non-competition agreements, we paid approximately $6.2 million, $4.0 million, $2.7 million and $2.5 million to Robert Antin, Arthur Antin, Neil Tauber and Tomas Fuller, or their affiliates,

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respectively. The non-competition agreements were terminated upon the consummation of our initial public offering on November 27, 2001.

Investment in and Transactions with Zoasis

     During the year ended December 31, 2000, we made a $5.0 million investment in Zoasis.com, Inc., an internet start-up company, majority owned by Robert Antin, our Chief Executive Officer and Chairman of the Board. In December 2000, we determined that the value of this investment was impaired and, as a result, recognized a loss of $5.0 million on the write-down of our investment in Zoasis.

     We incurred marketing expense for vaccine reminder services provided by Zoasis of $709,000 and $81,000 for the years ended December 31, 2001 and 2000. The pricing of these services is comparable to what we have paid third parties for the same services.

     In 2001, we began development of software that can gather data in order to be able to automatically fax diagnostic laboratory results to the laboratory clients. We initially used an independent outside contractor to begin programming this software but now intend to use our own in-house programmer working in conjunction with Zoasis. Zoasis will not be paid for this programming effort but will be able to use and amend the software to market it to other veterinary hospitals. In relation to this project, Zoasis is also working with us to facilitate the collection and delivery of laboratory results to our clients.

Related Party Vendors

     Patricia Antin, wife of our Chief Operating Officer Arthur Antin, is an independent sales representative for Citi Print and Westpro Graphics, both local printing companies. We use these companies’ services to print forms and marketing materials for our hospitals nationwide. Transactions are based on arms-length market prices and we have no, nor have we ever had, any contractual obligation binding us to their services. We paid Citi Print $345,000, $321,000 and $339,000 for the years ended December 31, 2001, 2000 and 1999, respectively. We paid Westpro Graphics $7,000, $17,000 and $106,000 for the years ended December 31, 2001, 2000 and 1999, respectively.

Investment in Vet’s Choice and the Wisdom Group, L.P.

     In September 2000, we sold our entire equity interest in Vet’s Choice, which had zero-cost basis, to Heinz Pet Products. We received $500,000 in proceeds from the sale. At the time of the sale, one of our directors, John A. Heil, served as president of an affiliate of Heinz Pet Products. In connection with the sale, Heinz Pet Products also paid us $1.0 million which was transferred to the Wisdom Group, L.P. and used to redeem the limited partnership interests in the Wisdom Group, L.P. Members of our executive management had a 30.5% ownership interest in the Wisdom Group, L.P. as limited partners and a subsidiary of ours owned a 1% ownership interest as the general partner. The Wisdom Group, L.P. was dissolved in November 2000 upon redemption of all the partnership interests. The nature of the business of the Wisdom Group, L.P. was to provide consulting services to Vet’s Choice with respect to the development, marketing and sale of premium pet food products.

Receipt of Proceeds from Initial Public Offering and Debt Issuance

     Prior to our initial public offering on November 27, 2001, affiliates of Leonard Green & Partners owned 2,826,000 shares of our 14% series A redeemable preferred stock and 2,800,000 shares of our 12% series B redeemable preferred stock. Affiliates of Goldman, Sachs & Co. owned 122,123 shares of our 14% series A redeemable preferred stock and 121,000 shares of our 12% series B redeemable preferred stock and held approximately $82.5 million aggregate principal amount of our senior notes and approximately $14.2 million aggregate principal amount of our senior subordinated notes, and warrants to purchase 814,575 shares of our common stock at an exercise price of $0.0007 per share. An affiliate of Goldman, Sachs & Co. was the syndication agent and a lender under our senior credit facility. The proceeds from our initial public offering and debt issuance were used to repay $100.0 million of borrowings under our senior credit facility, $59.1 million aggregate principal amount of the senior notes, $5.0 million aggregate principal amount of the senior subordinated notes and the redemption value of all of the shares of our preferred stock.

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Purchases of Common Stock

     Affiliates of Leonard Green & Partners purchased 2,000,000 shares of our common stock at the initial public offering price of $10.00 per share. These shares are subject to lock-up agreements under which these affiliates of Leonard Green & Partners agree not to offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly any share of common stock or any securities convertible into or exchangeable or exercisable for any shares of common stock without the prior written consent of Credit Suisse First Boston until May 20, 2002.

     Robert Antin purchased 40,000 of the 725,000 shares of our common stock reserved by the underwriters for sale to employees and other persons associated with us. These shares are subject to lock-up agreements under which Mr. Antin agrees not to offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly any share of common stock or any securities convertible into or exchangeable or exercisable for any shares of common stock without the prior written consent of Credit Suisse First Boston until May 20, 2002.

Liquidity and Capital Resources

Discussion of 2001

     Cash and cash equivalents decreased to $7.1 million at December 31, 2001 from $10.5 million at December 31, 2000. The decrease resulted primarily from $57.1 million provided by operating activities offset by $36.2 million used in investing activities and $24.3 million used in financing activities.

     Net cash of $57.1 million provided by operating activities consisted primarily of $61.9 million from net income from operations adjusted for non-cash items of $89.3 million, offset in part by $4.8 million used in working capital activities.

     Net cash of $36.2 million used in investing activities resulted primarily from the following items: We used $13.5 million for property and equipment additions, $24.3 million to acquire 21 animal hospitals, $675,000 to purchase real estate in connection with our acquisitions, offset partially by proceeds of $1.7 million from the sale of assets.

     Net cash of $24.3 million used in financing activities was primarily related to our initial public offering on November 27, 2001. As a result of this offering and the underwriters’ exercise of its over-allotment, we issued 17,370,000 shares of common stock and received net proceeds of approximately $161.5 million. Concurrent with our initial public offering, we issued $170.0 million of 9.875% senior subordinated notes due 2009 for net proceeds of $165.6 million. We applied the net proceeds from our initial public offering and the sale of the notes, plus $6.3 million of cash on hand, as follows:

• redeemed all of the outstanding series A and series B redeemable preferred stock for $173.8 million;

• repaid $100.0 million of senior term A and B notes;

• repaid $59.1 million in principal of the 15.5% senior notes due 2010, at a redemption price of 110%, plus accrued and unpaid interest; and

• repaid $5.0 million in principal of the 13.5% senior subordinated notes due 2010, at a redemption price of 110%, plus accrued and unpaid interest.

Future Cash Requirements

     We expect to fund our liquidity needs primarily from operating cash flows, cash on hand and, if needed, borrowings under our $50.0 million revolving credit facility, which we have not utilized as of December 31, 2001. We believe these sources of funds will be sufficient to continue our operations and planned capital expenditures and satisfy our scheduled principal and interest payments under debt and capital lease obligations for at least the next 12 months. However, a significant portion of our cash requirements will be determined by the pace and size of our acquisitions.

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     Estimated future uses of cash in 2002 include capital expenditures for land, buildings and equipment of approximately $15.0 million. In addition, we intend to use available liquidity to continue our growth through the selective acquisition of animal hospitals, primarily for cash. We continue to examine acquisition opportunities in the laboratory field, which may impose additional cash requirements. Our acquisition program contemplates the acquisition of 15 to 25 animal hospitals per year and a planned cash commitment of up to $30.0 million. However, we may purchase either fewer or greater number of facilities depending upon opportunities that present themselves and our cash requirements may change accordingly. In addition, although we intend to primarily use cash in our acquisitions, we may use debt or stock to the extent we deem it appropriate.

     In addition to the foregoing, we will use approximately $5.2 million of cash in 2002 to pay the mandatory principal payments due on our outstanding indebtedness.

Description of Indebtedness

     In September 2000, we entered into a credit and guaranty agreement for $300.0 million of senior secured credit facilities. The credit and guaranty agreement includes a $50.0 million revolving credit facility as well as the senior term A and B notes. The revolving credit facility and senior term A notes mature in September 2006. The senior term B notes mature in September 2008. Borrowings under the credit and guaranty agreement bear interest, at our option, on either the base rate, which is the higher of the administrative agent’s prime rate or the Federal funds rate plus 0.5%, or the adjusted eurodollar rate, which is the rate per annum obtained by dividing (1) the rate of interest offered to the administrative agent on the London interbank market by (2) a percentage equal to 100% minus the stated maximum rate of all reserve requirements applicable to any member bank of the Federal Reserve System in respect of “eurocurrency liabilities.” The base rate margins for the senior term A notes and the revolving credit facility range from 1.00% to 2.25% per annum and the margin for the senior term B notes is 2.75%. The eurodollar rate margins for the senior term A notes and the revolving credit facility range from 2.00% to 3.25% per annum and the margin for the senior term B notes is 3.75%. As of December 31, 2001, we have not utilized the revolving credit facility. As of December 31, 2001, we have $24.1 million principal amount oustanding under the senior term A notes and $121.1 million principal amount outstanding under the senior term B notes.

     In September 2000, we issued $20.0 million principal amount of senior subordinated notes due on September 20, 2010. Interest on these senior subordinated notes is 13.5% per annum, payable in cash, semi-annually in arrears. As of December 31, 2001, the outstanding principal balance of our senior subordinated notes was $15.0 million.

     In September 2000, we issued $100.0 million principal amount of senior notes due September 20, 2010. Interest on our senior notes is 15.5% per annum payable semi-annually in arrears in cash or by issuance of additional senior notes. We have issued $16.6 million in additional senior notes to pay interest since the issue date. As of December 31, 2001, the outstanding principal balance of our senior notes was $57.5 million and $2.2 million of interest paid through the issuance of additional notes.

     In November 2001, we issued $170.0 million principal amount of senior subordinated notes due December 1, 2009 for net proceeds of $165.6 million. We have filed a registration statement with the Securities and Exchange Commission for an exchange offer in which these notes will be exchanged for substantially similar securities that are registered under the Securities Act. Interest on these senior subordinated notes is 9.875% per annum, payable semi-annually in arrears. As of December 31, 2001, the outstanding principal balance of these senior subordinated notes was $170.0 million. We and each existing and future domestic wholly-owned restricted subsidiary of our subsidiary, Vicar have, jointly and severally, fully and unconditionally guaranteed these notes. These guarantees are unsecured and subordinated in right of payment to all existing and future indebtedness outstanding under the credit and guaranty agreement and any other indebtedness permitted to be incurred by Vicar under the terms of the indenture agreement for these notes.

     The credit and guaranty agreement contains certain financial covenants pertaining to interest coverage, fixed charge coverage and leverage ratios. In addition, the credit and guaranty agreement has restrictions pertaining to capital expenditures, acquisitions and the payment of dividends on all classes of stock. We believe the most restrictive covenant is the fixed charge coverage ratio. During 2001, we had a fixed charge coverage ratio of 1.64 to 1.00. The credit and guaranty agreement required a fixed charge coverage ratio of no less than 1.10 to 1.00 during 2001 and requires a fixed charge coverage ratio of no less than 1.10 to 1.00 in future years.

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     The following table indicates our current contractual cash obligations:

	Total		2002		2003		2004		2005		2006		Thereafter
Long term debt	$	391,431	$	5,159	$	5,456	$	6,160	$	22,089	$	21,971	$	330,596
Fixed interest		197,318		20,880		19,270		19,245		26,720		26,196		85,007
Variable interest		78,744		10,020		12,160		13,378		12,914		12,079		18,193
Collar agreement		2,080		2,080		—		—		—		—		—
PIK interest		37,104		—		—		—		37,104		—		—
Capital lease obligations		79		79		—		—		—		—		—
Operating leases		192,612		12,247		12,530		12,575		12,285		12,165		130,810
Other long-term obligations		2,424		2,424		—		—		—		—		—
	$	901,792	$	52,889	$	49,416	$	51,358	$	111,112	$	72,411	$	564,606

     We have both fixed rate and variable rate debt. Our variable rate debt is based on a variable rate component plus a fixed margin. We projected the variable rate component to be 3.35%, 5.13%, 6.38%, 6.50% and 6.65% for years 2002 through 2006, respectively. Our Consolidated Financial Statements discuss these variable rate notes in more detail.

     PIK interest is considered interest on our senior notes prior to September 20, 2005, which we pay by issuing additional senior notes in a principal amount equal to the interest. From January 1, 2002 through March 31, 2005, we plan to pay the interest on our senior notes by issuing additional senior notes in the amount of approximately $37.1 million, which will be paid in cash on September 20, 2005. Subsequent to September 20, 2005, we will be required to make semi-annual cash interest payments on our senior notes.

Our Collar Agreement

     On November 13, 2000, we entered into a no-fee interest rate collar agreement with Wells Fargo Bank, N.A. effective November 15, 2000 and expiring November 15, 2002. Our collar agreement is considered a cash flow hedge based on the London interbank offer rate (“LIBOR”), pays out monthly, resets monthly and has a cap and floor notional amount of $62.5 million, with a cap rate of 7.5% and floor rate of 5.9%.

     Under SFAS 133, the actual cash paid by us as a result of LIBOR rates being below the floor of our collar agreement are recorded as a component of earnings. For the year ending December 31, 2001, we have made payments of $1.2 million that are included in interest expense.

     At December 31, 2001, the fair market value of our collar agreement was a net liability to us of $2.0 million. We have recorded that liability in our balance sheet as part of other accrued liabilities.

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New Accounting Pronouncements

Goodwill and Other Intangible Assets

     In July 2001, the Financial Accounting Standards Board, or FASB, issued SFAS No. 142, Goodwill and Other Intangible Assets, which changes the way companies account for intangible assets and goodwill associated with business combinations. The principal changes of SFAS No. 142 are as follows:

• All goodwill amortization will cease effective January 1, 2002. For the year ended December 31, 2001, we recorded $9.2 million of goodwill amortization.

• All goodwill acquired in acquisitions after June 30, 2001 was not subject to amortization in 2001.

• All goodwill will be reviewed annually, or as circumstances warrant, using the fair-value-based goodwill impairment tests discussed in SFAS No. 142. As of December 31, 2001, our net goodwill balance was $317.3 million. Any impairment recognized associated with the adoption of SFAS No. 142 will be accounted for as a cumulative effect of change in accounting principle.

     We will test goodwill for impairment using the two-step process described in SFAS No. 142. The first step is a screen for potential impairment, while the second step measures the amount of the impairment, if any. We expect to complete the process by June 30, 2002. We have not yet determined the amount of the potential impairment loss, if any. Any impairment recognized in association with the adoption of SFAS No. 142 will be accounted for as a cumulative adjustment for a change in accounting principle.

     All other intangible assets typically included in goodwill will be valued independently and amortized over their useful lives. These intangibles may include the value of names and addresses associated with customer lists, non-competition agreements with sellers, and the value of established business names.

     In July 2001, the FASB issued SFAS No. 141, Business Combinations, which requires all business combinations initiated after June 30, 2001 to be accounted for using the purchase method of accounting. We do not expect the adoption of SFAS No. 141 to have a material impact on our financial statements or our operations.

Assets Retirement Obligations

     In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement Obligations. SFAS No. 143 addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. We will adopt SFAS No. 143 in the first quarter of fiscal year 2003. We are evaluating the impact of the adoption of SFAS No. 143 on our financial statements.

Impairment of Long-Lived Assets

     In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, which establishes one accounting model to be used for long-lived assets to be disposed of by sale and broadens the presentation for discontinued operations to include more disposal transactions. SFAS No. 144 supercedes SFAS No. 121, Accounting for the Impairment of Long-Lived Assets to be Disposed of by Sale, and the accounting and reporting provisions of Accounting Principles Board Opinion No. 30, Reporting the Results of Operations — Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions. We will adopt SFAS No. 144 as of January 1, 2002 and have not determined yet what impact SFAS No. 144 will have on our financial statements.

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Quarterly Results

     The following tables set forth selected unaudited quarterly results for the twelve quarters commencing January 1, 1999 and ending December 31, 2001.

     In dollars (in thousands, except per share amounts):

		2001 Quarter Ended,												2000 Quarter Ended,
		Dec. 31			Sept. 30			Jun. 30			Mar. 31			Dec. 31			Sept. 30			Jun. 30			Mar. 31
Revenue:
	Laboratory	$	32,856		$	33,471		$	35,707		$	32,677		$	28,469		$	30,105		$	31,921		$	28,805
	Animal hospital		64,448			70,531			72,780			64,354			57,908			63,449			63,472			55,795
	Other		500			500			500			500			500			—			—			425
	Intercompany		(1,807	)		(1,866	)		(1,938	)		(1,851	)		(1,471	)		(1,558	)		(1,459	)		(1,674	)
Total revenue			95,997			102,636			107,049			95,680			85,406			91,996			93,934			83,351
Adjusted EBITDA			18,370			24,507			27,186			19,324			15,986			20,334			21,980			15,226
Operating income (loss)			(5,974	)		16,024			8,393			9,263			9,681			(19,075	)		17,524			11,075
Net income (loss)			(20,638	)		2,024			(5,820	)		(2,989	)		(6,526	)		(16,713	)		8,436			6,392
Diluted EPS		$	(0.97	)	$	(0.19	)	$	(0.63	)	$	(0.46	)	$	(0.65	)	$	(0.06	)	$	0.02		$	0.02

In percentages of revenue:

		2001 Quarter Ended,												2000 Quarter Ended,
		Dec. 31			Sept. 30			Dec. 31			Mar. 31			Dec. 31			Sept. 30			Jun. 30			Mar. 31
Revenue:
	Laboratory		34.2	%		32.6	%		33.3	%		34.1	%		33.3	%		32.7	%		34.0	%		34.6	%
	Animal hospital		67.1	%		68.7	%		68.0	%		67.3	%		67.8	%		69.0	%		67.6	%		66.9	%
	Other		0.5	%		0.5	%		0.5	%		0.5	%		0.6	%		—			—			0.5	%
	Intercompany		(1.8	)%		(1.8	)%		(1.8	)%		(1.9	)%		(1.7	)%		(1.7	)%		(1.6	)%		(2.0	)%
Total revenue			100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%
Adjusted EBITDA			19.1	%		23.9	%		25.4	%		20.2	%		18.7	%		22.1	%		23.4	%		18.3	%
Operating income (loss)			(6.2	)%		15.6	%		7.8	%		9.7	%		11.3	%		(20.7	)%		18.7	%		13.3	%
Net income (loss)			(21.5	)%		2.0	%		(5.4	)%		(3.1	)%		(7.6	)%		(18.2	)%		9.0	%		7.7	%

     Although not readily detectable because of the impact of acquisitions, our operations are subject to seasonal fluctuation. In particular, our revenue historically has been greater in the second and third quarters than in the first and fourth quarters.

     The demand for our veterinary services are significantly higher during warmer months because pets spend a greater amount of time outdoors, where they are more likely to be injured and are more susceptible to disease and parasites. In addition, use of veterinary services may be affected by levels of infestation of fleas, heartworms and ticks and the number of daylight hours. A substantial portion of our costs are fixed and do not vary with the level of demand. Consequently, our EBITDA, Adjusted EBITDA and operating income, as well as our EBITDA, Adjusted EBITDA and operating margins, generally have been higher for the second and third quarters than that experienced in the first and fourth quarters.

Inflation

     Historically, our operations have not been materially affected by inflation. We cannot assure you that our operations will not be affected by inflation in the future.

Outlook

     As we look ahead to 2002, we expect our annual revenue to be between $434.0 million and $444.0 million. Laboratory internal revenue growth is expected to be 7% to 9%. Our goal for our animal hospital same-facility revenue growth is 3% to 5%. Growth from acquired revenue is targeted to be $24.0 million to $25.0 million, resulting from our acquisition program, which contemplates the acquisition of 15 to 25 animal hospitals in 2002.

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     Our goal for 2002 EBITDA (operating income, before depreciation and amortization expense) is $98 million to $101 million. Our 2002 plan estimates net income to be $24 million to $25 million. Based upon 37.3 million shares expected to be outstanding, on a diluted basis, diluted earnings per share is expected to be the following:

For the quarter ending March 31, 2002:	$	0.12
For the quarter ending June 30, 2002:		0.25
For the quarter ending September 30, 2002:		0.20
For the quarter ending December 31, 2002:		0.07
For the year ending December 31, 2002:	$	0.64

     Our future results of operations in this outlook involve a number of risks and uncertainties. We believe that we have the product offerings, facilities, personnel, and competitive and financial resources for continued business success, but future revenue, costs, margins and profits are all influenced by a number of factors, all of which are inherently difficult to forecast.

Risk Factors

If we are unable to effectively execute our growth strategy, we may not achieve our desired economies of scale and our margins and profitability may decline.

     Our success depends in part on our ability to build on our position as a leading animal health care services company through a balanced program of internal growth initiatives and selective acquisitions of established animal hospitals and laboratories. If we cannot implement or effectively execute these initiatives and acquisitions, our results of operations will be adversely affected. Even if we effectively implement our growth strategy, we may not achieve the economies of scale that we have experienced in the past or that we anticipate. Our internal growth rate may decline and could become negative. Our laboratory internal revenue growth has fluctuated between 9.1% and 12.6% for each fiscal year from 1998 through 2001. Similarly, our animal hospital internal growth rate has fluctuated between 2.6% and 7.0% over the same periods. Our internal growth may continue to fluctuate and may be below our historical rates. Any reductions in the rate of our internal growth may cause our revenues and margins to decrease. Our historical growth rates and margins are not necessarily indicative of future results.

Our business and results of operations may be adversely affected if we are unable to manage our growth effectively.

     Since January 1, 1996, we have experienced rapid growth and expansion. Our failure to manage our growth effectively may increase our costs of operations and hinder our ability to execute our business strategy. Our rapid growth has placed, and will continue to place, a significant strain on our management and operational systems and resources. At January 1, 1996, we operated 59 hospitals and operated laboratories servicing approximately 9,000 customers in 27 states. At December 31, 2001, we operated 214 hospitals and operated laboratories servicing approximately 13,000 customers in all 50 states. The number of employees at our laboratories and the hospitals we operate increased from approximately 1,150 to 3,480 during this period. If our business continues to grow, we will need to improve and enhance our overall financial and managerial controls, reporting systems and procedures, and expand, train and manage our workforce in order to maintain expenses and achieve desirable economies of scale. We also will need to increase the capacity of our current systems to meet additional demands.

Difficulties integrating new acquisitions may impose substantial costs and cause other problems for us.

     Our success depends on our ability to timely and cost-effectively acquire, and integrate into our business, additional animal hospitals and laboratories. Any difficulties in the integration process may result in increased expenses, loss of customers and a decline in profitability. We expect to acquire 15 to 25 animal hospitals per year, however, based on the opportunity, the number could be higher. Historically we have experienced delays and increased costs in integrating some hospitals primarily where we acquire a large number of hospitals in a single region at or about the same time. In these cases, our field management may spend a predominant amount of time integrating these new hospitals and less time managing our existing hospitals in those regions. During these periods, there may be less attention directed to marketing efforts or staffing issues. In these circumstances, we also have experienced delays in converting the systems of

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acquired hospitals into our systems, which results in increased payroll expenses to collect our results and delays in reporting our results, both for a particular region and on a consolidated basis. These factors have resulted in decreased revenue, increased costs and lower margins. We continue to face risks in connection with our acquisitions including:

• negative effects on our operating results;

• impairments of goodwill and other intangible assets;

• dependence on retention, hiring and training of key personnel, including specialists;

• amortization of intangible assets; and

• contingent and latent risks associated with the past operations of, and other unanticipated problems arising in, an acquired business.

     The process of integration may require a disproportionate amount of the time and attention of our management, which may distract management’s attention from its day-to-day responsibilities. In addition, any interruption or deterioration in service resulting from an acquisition may result in a customer’s decision to stop using us. For these reasons, we may not realize the anticipated benefits of an acquisition, either at all or in a timely manner. If that happens and we incur significant costs, it could have a material adverse impact on our business.

We require a significant amount of cash to service our debt and expand our business as planned.

     We have, and will continue to have, a substantial amount of debt. Our substantial amount of debt requires us to dedicate a significant portion of our cash flow from operations to pay down our indebtedness and related interest, thereby reducing the funds available to use for working capital, capital expenditures, acquisitions and general corporate purposes.

     At December 31, 2001, our debt, excluding unamortized discount, consisted primarily of:

• $145.3 million of outstanding borrowings under our senior credit facility;

• $244.7 million of outstanding senior notes and senior subordinated notes; and

• $1.4 million of other debt.

     The following table sets forth the principle and interest due by us on our debt for the next five years:

		2002		2003		2004		2005		2006
Long term debt		$	5,159	$	5,456	$	6,160	$	22,089	$	21,971
Fixed interest payments			20,880		19,270		19,245		26,720		26,196
Variable interest payments			10,020		12,160		13,378		12,914		12,079
Collar agreement			2,080		—		—		—		—
PIK interest			—		—		—		37,104		—
	Total	$	38,139	$	36,886	$	38,783	$	98,827	$	60,246

     We have both fixed rate and variable rate debt. Our variable rate debt is based on a variable rate component plus a fixed margin. We projected the variable rate component to be 3.35%, 5.13%, 6.38%, 6.50% and 6.65% for years 2002 through 2006, respectively. Our Consolidated Financial Statements discuss these variable rate notes in more detail.

35

     PIK interest is considered interest on our senior notes prior to September 20, 2005, which we pay by issuing additional senior notes in a principal amount equal to the interest. From January 1, 2002 through March 31, 2005, we plan to pay the interest on our senior notes by issuing additional senior notes in the amount of approximately $37.1 million, which will be paid in cash on September 20, 2005. Subsequent to September 20, 2005, we will be required to make semi-annual cash interest payments on our senior notes.

     Our ability to make payments on our debt, and to fund acquisitions, will depend on our ability to generate cash in the future. Insufficient cash flow could place us at risk of default under our debt agreements or could prevent us from expanding our business as planned. Our ability to generate cash is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. Our business may not generate sufficient cash flow from operations, our strategy to increase operating efficiencies may not be realized and future borrowings may not be available to us under our senior credit facility in an amount sufficient to enable us to service our debt or to fund our other liquidity needs. In order to meet our debt obligations, we may need to refinance all or a portion of our debt. We may not be able to refinance any of our debt on commercially reasonable terms or at all.

Our debt instruments adversely affect our ability to run our business.

     Our substantial amount of debt, as well as the guarantees of our subsidiaries and the security interests in our assets and those of our subsidiaries, could impair our ability to operate our business effectively and may limit our ability to take advantage of business opportunities. For example, our indentures and senior credit facility:

• limit our funds available to repay the senior notes and senior subordinated notes;

• limit our ability to borrow additional funds or to obtain other financing in the future for working capital, capital expenditures, acquisitions, investments and general corporate purposes;

• limit our ability to dispose of our assets, create liens on our assets or to extend credit;

• make us more vulnerable to economic downturns and reduce our flexibility in responding to changing business and economic conditions;

• limit our flexibility in planning for, or reacting to, changes in our business or industry;

• place us at a competitive disadvantage to our competitors with less debt; and

• restrict our ability to pay dividends, repurchase or redeem our capital stock or debt, or merge or consolidate with another entity.

     The terms of our indentures and senior credit facility allow us, under specified conditions, to incur further indebtedness, which would heighten the foregoing risks. If compliance with our debt obligations materially hinders our ability to operate our business and adapt to changing industry conditions, we may lose market share, our revenue may decline and our operating results may suffer.

Our failure to satisfy covenants in our debt instruments will cause a default under those instruments.

     In addition to imposing restrictions on our business and operations, our debt instruments include a number of covenants relating to financial ratios and tests. Our ability to comply with these covenants may be affected by events beyond our control, including prevailing economic, financial and industry conditions. The breach of any of these covenants would result in a default under these instruments. An event of default would permit our lenders and other debtholders to declare all amounts borrowed from them to be due and payable, together with accrued and unpaid interest. Moreover, these lenders and other debtholders would have the option to terminate any obligation to make further extensions of credit under these instruments. If we are unable to repay debt to our senior lenders, these lenders and other debtholders could proceed against our assets.

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Due to the fixed cost nature of our business, fluctuations in our revenue could adversely affect our operating income.

     Approximately 57.0% of our expense, particularly rent and personnel costs, are fixed costs and are based in part on expectations of revenue. We may be unable to reduce spending in a timely manner to compensate for any significant fluctuations in our revenue. Accordingly, shortfalls in revenues may adversely affect our operating income.

The significant competition in the animal health care services industry could cause us to reduce prices or lose market share.

     The animal health care services industry is highly competitive with few barriers to entry. To compete successfully, we may be required to reduce prices, increase our operating costs or take other measures that could have an adverse effect on our financial condition, results of operations, margins and cash flow. If we are unable to compete successfully, we may lose market share.

     There are many clinical laboratory companies that provide a broad range of laboratory testing services in the same markets we service. Our largest competitor for outsourced laboratory testing services is Idexx Laboratories, Inc. Also, Idexx and several other national companies provide on-site diagnostic equipment that allows veterinarians to perform their own laboratory tests.

     Our primary competitors for our animal hospitals in most markets are individual practitioners or small, regional, multi-clinic practices. Also, regional pet care companies and some national companies, including operators of super-stores, are developing multi-regional networks of animal hospitals in markets in which we operate. Historically, when a competing animal hospital opens in close proximity to one of our hospitals, we have reduced prices, expanded our facility, retained additional qualified personnel, increased our marketing efforts or taken other actions designed to retain and expand our client base. As a result, our revenue may decline and our costs increase.

     We may experience difficulties hiring skilled veterinarians due to shortages which could disrupt our business.

     As the pet population continues to grow, the need for skilled veterinarians continues to increase. If we are unable to retain an adequate number of skilled veterinarians, we may lose customers, our revenue may decline and we may need to sell or close animal hospitals. As of December 31, 2001, there were 28 veterinary schools in the country accredited by the American Veterinary Medical Association. These schools graduate approximately 2,100 veterinarians per year. There is a shortage of skilled veterinarians across the country, particularly in some regional markets in which we operate animal hospitals including Northern California. Attracting veterinarians to these regions may be difficult, due to the rural environment, an unwillingness to relocate and lower compensation. During these shortages in these regions, we may be unable to hire enough qualified veterinarians to adequately staff our animal hospitals, in which event we may lose market share and our revenues and profitability may decline.

If we fail to comply with governmental regulations applicable to our business, various governmental agencies may impose fines, institute litigation or preclude us from operating in certain states.

     The laws of many states prohibit business corporations from providing, or holding themselves out as providers of, veterinary medical care. These laws vary from state to state and are enforced by the courts and by regulatory authorities with broad discretion. As of December 31, 2001 we operated 54 animal hospitals in 11 states with these laws, including 21 in New York We may experience difficulty in expanding our operations into other states with similar laws. Given varying and uncertain interpretations of the veterinary laws of each state, we may not be in compliance with restrictions on the corporate practice of veterinary medicine in all states. A determination that we are in violation of applicable restrictions on the practice of veterinary medicine in any state in which we operate could have a material adverse effect on us, particularly if we were unable to restructure our operations to comply with the requirements of that state.

     For example, we currently are a party to a lawsuit in the State of Ohio in which that State has alleged that our management of a veterinary medical group licensed to practice veterinary medicine in that state violates the Ohio statute prohibiting business corporations from providing or holding themselves out as providers of veterinary medical care. On March 20, 2001, the trial court in the case entered summary judgment in favor of the State of Ohio and issued an order enjoining us from operating in the State of Ohio in a manner that is in violation of the State of Ohio statute. In response,

37

we have restructured our operations in the State of Ohio in a manner that we believe conforms to the State of Ohio law and the court’s order. The Attorney General of the State of Ohio has informed us that it disagrees with our position that we are in compliance with the court’s order. In June 2001 we appeared at a status conference before the trial court, at which time the court directed the parties to meet together to attempt to settle this matter. Consistent with the trial court’s directive, we engaged in discussions with the Attorney General’s office in the State of Ohio. The parties appeared at an additional status conference in February 2002. The parties were not able to reach a settlement prior to the February status conference. At that status conference, the court ordered the parties to participate in a court-supervised settlement conference that was scheduled for March 19, 2002. The court postponed the settlement conference and has not yet scheduled a new date. We may not be able to reach a settlement, in which case we may be required to discontinue our operations in the state. Our five animal hospitals in the State of Ohio have a book value of $6.1 million as of September 30, 2001. If we were required to discontinue our operations in the State of Ohio, we may not be able to dispose of the hospital assets for their book value. The animal hospitals located in the State of Ohio generated revenue and operating income of $2.1 million and $409,000, respectively, in the year ended December 31, 2001 and $2.2 million and $513,000, respectively, in the year ended December 31, 2000.

     All of the states in which we operate impose various registration requirements. To fulfill these requirements, we have registered each of our facilities with appropriate governmental agencies and, where required, have appointed a licensed veterinarian to act on behalf of each facility. All veterinarians practicing in our clinics are required to maintain valid state licenses to practice.

Any failure in our information technology systems or disruption in our transportation network could significantly increase testing turn-around time, reduce our production capacity and otherwise disrupt our operations.

     Our laboratory operations depend, in part, on the continued and uninterrupted performance of our information technology systems and transportation network. Our growth has necessitated continued expansion and upgrade of our information technology infrastructure and transportation network. Sustained system failures or interruption in our transportation network or in one or more of our laboratory operations could disrupt our ability to process laboratory requisitions, perform testing, provide test results in a timely manner and/or bill the appropriate party. We could lose customers and revenue as a result of a system or transportation network failure.

     Our computer systems are vulnerable to damage or interruption from a variety of sources, including telecommunications failures, electricity brownouts or blackouts, malicious human acts and natural disasters. Moreover, despite network security measures, some of our servers are potentially vulnerable to physical or electronic break-ins, computer viruses and similar disruptive problems. Despite the precautions we have taken, unanticipated problems affecting our systems could cause interruptions in our information technology systems. Our insurance policies may not adequately compensate us for any losses that may occur due to any failures in our systems.

     Any substantial reduction in the number of available flights or delays in the departure of flights will disrupt our transportation network and our ability to provide test results in a timely manner. In addition, our Test Express service, which services customers outside of major metropolitan areas, is dependent on flight services in and out of Memphis and the transportation network of Federal Express. Any sustained interruption in either flight services in Memphis or the transportation network of Federal Express would result in increased turn-around time for the reporting of test results to customers serviced by our Test Express Service.

The loss of Mr. Robert Antin, our Chairman, President and Chief Executive Officer, could materially and adversely affect our business.

     We are dependent upon the management and leadership of our Chairman, President and Chief Executive Officer, Robert Antin. We have an employment contract with Mr. Antin which may be terminated at the option of Mr. Antin. We do not maintain any key man life insurance coverage for Mr. Antin. The loss of Mr. Antin could materially adversely affect our business.

Concentration of ownership among our existing executive officers, directors and principal stockholders.

     Our executive officers, directors and principal stockholders beneficially own, in the aggregate, approximately 51.4% of our outstanding common stock. As a result, these stockholders are able to exercise control over all matters

38

requiring stockholder approval and will have significant control over our management and policies. The directors elected by these stockholders will be able to make decisions affecting our capital structure, including decisions to issue additional capital stock, implement stock repurchase programs and incur indebtedness. This control may have the effect of deterring hostile takeovers, delaying or preventing changes in control or changes in management, or limiting the ability of our other stockholders to approve transactions that they may deem to be in their best interests.

39

Terrorism and the uncertainty of war may have a material adverse effect on our operating results.

     Terrorist attacks, such as the attacks that occurred in New York and Washington, D.C. on September 11, 2001, the response initiated by the United States on October 7, 2001, and other acts of violence or war may affect the markets in which we operate, our operations and profitability and your investment. Further terrorist attacks against the United States or United States businesses may occur. The potential near-term and long-term effect these attacks may have for our customers, the markets for our services and the U.S. economy are uncertain. The consequences of any terrorist attacks, or any armed conflicts which may result, are unpredictable, and we may not be able to foresee events that could have an adverse effect on our markets, our business or your investment.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     We have certain debt obligations as well as a collar agreement that are exposed to market risk associated with variable interest rates. As of December 31, 2001, we had borrowings of $145.4 million under $300.0 million of Senior Secured Credit Facilities with fluctuating interest rates based on market benchmarks such as LIBOR. (See notes to consolidated financial statements.) To reduce the risk of increasing interest rates, we entered into a no-fee collar agreement with a cap and floor notional amount of $62.5 million, a cap rate of 7.5% and a floor rate of 5.9%, both based on LIBOR. The collar agreement expires November 15, 2002. (See notes to consolidated financial statements.)

Accordingly, for the year ending December 31, 2002,

• If the benchmark rate is below 5.9% and a change in the rate does not cause the benchmark to exceed 5.9%, every one-half percent increase in the benchmark rate will cause interest expense to increase by $445,000, while a one-half percent decrease will cause interest expense to decrease by $445,000.

• If the bench rate is equal to or between 5.9% and 7.5% and a change in the rate does not cause the benchmark to exceed 7.5% or drop below 5.9%, every one-half percent increase in the benchmark rate will cause interest expense to increase by $718,000, while a one-half percent decrease will cause interest expense to decrease by $718,000.

• If the benchmark rate is above 7.9% and a change in the rate does not cause the benchmark to drop below 7.9%, every one-half percent increase in the benchmark rate would cause interest expense to increase by $445,000, while a one-half percent decrease would cause interest expense to decrease by $445,000.

At December 31, 2001 LIBOR was approximately 2.1%.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

VCA ANTECH, INC. AND SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Report of Independent Public Accountants		43
Consolidated Balance Sheets as of December 31, 2001 and 2000		44
Consolidated Statements of Operations for the Years Ended December 31, 2001, 2000, and 1999		45
Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2001, 2000 and 1999		46
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2001, 2000 and 1999		47
Consolidated Statements of Cash Flows for the Years Ended December 31, 2001, 2000 and 1999		48
Notes to Consolidated Financial Statements		50

42

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders of VCA Antech, Inc.:

     We have audited the accompanying consolidated balance sheets of VCA Antech, Inc. (formerly Veterinary Centers of America, Inc.) (a Delaware corporation) and subsidiaries as of December 31, 2001 and 2000, and the related consolidated statements of operations, stockholders’ equity, comprehensive income, and cash flows for each of the three years in the period ended December 31, 2001. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

     We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of VCA Antech, Inc. and subsidiaries as of December 31, 2001 and 2000, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2001, in conformity with accounting principles generally accepted in the United States.

/s/ ARTHUR ANDERSEN LLP

ARTHUR ANDERSEN LLP

Los Angeles, California
February 21, 2002

43

VCA ANTECH, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

As of December 31, 2001 and 2000
(In thousands, except par value)

				2001			2000
ASSETS
Current assets:
		Cash and cash equivalents		$	7,103		$	10,519
		Trade accounts receivable, less allowance for uncollectible accounts of $5,241 and $4,110 at December 31, 2001 and 2000, respectively			18,036			15,450
		Inventory			4,501			5,773
		Prepaid expense and other			2,378			3,424
		Deferred income taxes			7,364			4,655
		Prepaid income taxes			2,782			9,402
			Total current assets		42,164			49,223
Property and equipment, net					89,244			86,972
Other assets:
		Goodwill, net			317,262			310,185
		Covenants not to compete, net			4,827			19,549
		Notes receivable, net			2,672			2,178
		Deferred financing costs, net			11,380			13,373
		Other			972			1,590
			Total assets	$	468,521		$	483,070
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
		Current portion of long-term obligations		$	5,159		$	5,756
		Accounts payable			7,313			8,393
		Accrued payroll and related liabilities			11,717			8,335
		Accrued interest			2,254			1,622
		Accrued recapitalization costs			1,322			3,459
		Other accrued liabilities			15,029			11,606
			Total current liabilities		42,794			39,171
Long-term obligations, less current portion					379,173			356,993
Deferred income taxes					1,684			8,484
Other liabilities					—			1,500
Minority interest					5,106			3,610
Series A Redeemable Preferred Stock, at redemption value					—			77,875
Series B Redeemable Preferred Stock, at redemption value					—			76,747
Stockholders’ equity (deficit):
	Common stock, par value $0.001 and $0.01, 75,000 and 24,000 shares authorized, 36,736 and 17,524 shares outstanding as of December 31, 2001 and 2000, respectively				37			175
	Additional paid-in capital				188,840			19,053
	Accumulated deficit				(146,594	)		(100,020	)
	Accumulated comprehensive loss-unrealized loss on investment				(1,855	)		—
	Notes receivable from stockholders				(664	)		(518	)
			Total stockholders’ equity (deficit)		39,764			(81,310	)
			Total liabilities and stockholders’ equity	$	468,521		$	483,070

The accompanying notes are an integral part of these consolidated balance sheets.

44

VCA ANTECH, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

For the Years Ended December 31, 2001, 2000 and 1999
(In thousands, except per share amounts)

		2001			2000			1999
Revenue		$	401,362		$	354,687		$	320,560
Direct costs (includes non-cash compensation of $1,412 and $103 for the years ended December 31, 2001 and 2000, respectively; excludes operating depreciation of $8,345, $6,872 and $6,853 for the years ended December 31, 2001, 2000 and 1999, respectively)			283,226			254,890			232,493
			118,136			99,797			88,067
Selling, general and administrative (includes non-cash compensation of $6,199 and $452, for the years ended December 31, 2001 and 2000, respectively)			38,633			27,446			23,622
Depreciation and amortization			25,166			18,878			16,463
Agreement termination costs			17,552			—			—
Write-down and loss on sale of assets			9,079			—			—
Recapitalization costs			—			34,268			—
Year 2000 remediation expense			—			—			2,839
Reversal of restructuring charges			—			—			(1,873	)
	Operating income		27,706			19,205			47,016
Interest income			669			850			1,194
Interest expense			43,587			20,742			10,643
Other expense, net			168			1,800			—
	Income (loss) before minority interest, provision for income taxes and extraordinary item		(15,380	)		(2,487	)		37,567
Minority interest in income of subsidiaries			1,439			1,066			850
	Income (loss) before provision for income taxes and extraordinary item		(16,819	)		(3,553	)		36,717
Provision for income taxes			445			2,199			16,462
Income tax adjustment			—			—			(2,102	)
	Income (loss) before extraordinary item		(17,264	)		(5,752	)		22,357
Extraordinary loss on early extinguishment of debt (net of income tax benefit of $7,059 and $1,845 for the years ended December 31, 2001 and 2000, respectively)			10,159			2,659			—
	Net income (loss)		(27,423	)		(8,411	)		22,357
Increase in carrying amount of Redeemable Preferred Stock			19,151			5,391			—
	Net income (loss) available to common stockholders	$	(46,574	)	$	(13,802	)	$	22,357
Basic earnings (loss) per common share:
	Income (loss) before extraordinary item	$	(1.87	)	$	(0.05	)	$	0.07
	Extraordinary loss on early extinguishment of debt		(0.52	)		(0.01	)		—
	Earnings (loss) per common share	$	(2.39	)	$	(0.06	)	$	0.07
Diluted earnings (loss) per common share:
	Income (loss) before extraordinary item	$	(1.87	)	$	(0.05	)	$	0.07
	Extraordinary loss on early extinguishment of debt		(0.52	)		(0.01	)		—
	Earnings (loss) per common share	$	(2.39	)	$	(0.06	)	$	0.07
Shares used for computing basic earnings (loss) per share			19,509			234,055			315,945
Shares used for computing diluted earnings (loss) per share			19,509			234,055			329,775

The accompanying notes are an integral part of these consolidated financial statements.

45

VCA ANTECH, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the Years Ended December 31, 2001, 2000 and 1999
(In thousands)

		Common Stock						Additional			Treasury Shares
								Paid-In
		Shares			Amount			Capital			Shares			Amount
Balances, December 31, 1998			312,240		$	3,122		$	199,748			(3,405	)	$	(2,480	)
	Net income		—			—			—			—			—
	Unrealized loss on investments		—			—			—			—			—
	Recognized loss on investments		—			—			—			—			—
	Exercise of stock options		750			8			527			—			—
	Exercise of warrants		45			—			—			—			—
	Interest on notes		—			—			—			—			—
	Business acquisitions		8,820			88			8,740			—			—
	Conversion of convertible debt		150			2			72			—			—
	Restricted stock bonus		3,615			36			1,405			—			—
	Purchase of treasury shares		—			—			—			(5,895	)		(4,761	)
Balances, December 31, 1999			325,620			3,256			210,492			(9,300	)		(7,241	)
	Net loss		—			—			—			—			—
	Unrealized loss on investments		—			—			—			—			—
	Recognized loss on investments		—			—			—			—			—
	Exercise of stock options		1,830			18			905			—			—
	Restricted stock bonus		3,060			31			1,071			—			—
	Interest on notes		—			—			—			—			—
	Purchase of treasury shares		—			—			—			(7,715	)		(3,323	)
	Retirement of treasury shares		(17,015	)		—			—			17,015			10,564
	Issuance of common stock		14,865			149			14,716			—			—
	Issuance of warrants		—			—			1,149			—			—
	Write-off of notes receivable from stockholders		—			—			—			—			—
	Increase in carrying amount of Redeemable Preferred Stock		—			—			—			—			—
	Repurchase and retirement of common stock		(310,836	)		(3,279	)		(209,835	)		—			—
	Non-cash compensation		—			—			555			—			—
Balances, December 31, 2000			17,524			175			19,053			—			—
	Net loss		—			—			—			—			—
	Cumulative effect of change to a new accounting principle		—			—			—			—			—
	Unrealized loss on investments		—			—			—			—			—
	Recognized loss on investments		—			—			—			—			—
	Non-cash compensation		—			—			7,611			—			—
	Interest on notes		—			—			—			—			—
	Exercise of stock options		692			7			543			—			—
	Increase in carrying amount of Redeemable Preferred Stock		—			—			—			—			—
	Change in par value of common stock		—			(163	)		163			—			—
	Issuance of common stock		17,370			17			161,471			—			—
	Exercise of stock warrants		1,150			1			(1	)		—			—
Balances, December 31, 2001			36,736		$	37		$	188,840			—		$	—

[Additional columns below]

[Continued from above table, first column(s) repeated]

		Notes
		Receivable			Retained			Accumulated
		From			Earnings			Comprehensive
		Stockholders			(Deficit)			Loss			Total
Balances, December 31, 1998		$	(617	)	$	3,380		$	(468	)	$	202,685
	Net income		—			22,357			—			22,357
	Unrealized loss on investments		—			—			(218	)		(218	)
	Recognized loss on investments		—			—			325			325
	Exercise of stock options		—			—			—			535
	Exercise of warrants		—			—			—			—
	Interest on notes		(37	)		—			—			(37	)
	Business acquisitions		—			—			—			8,828
	Conversion of convertible debt		—			—			—			74
	Restricted stock bonus		—			—			—			1,441
	Purchase of treasury shares		—			—			—			(4,761	)
Balances, December 31, 1999			(654	)		25,737			(361	)		231,229
	Net loss		—			(8,411	)		—			(8,411	)
	Unrealized loss on investments		—			—			(219	)		(219	)
	Recognized loss on investments		—			—			580			580
	Exercise of stock options		—			—			—			923
	Restricted stock bonus		—			—			—			1,102
	Interest on notes		(34	)		—			—			(34	)
	Purchase of treasury shares		—			—			—			(3,323	)
	Retirement of treasury shares		—			—			—			10,564
	Issuance of common stock		(518	)		—			—			14,347
	Issuance of warrants		—			—			—			1,149
	Write-off of notes receivable from stockholders		688			—			—			688
	Increase in carrying amount of Redeemable Preferred Stock		—			(5,391	)		—			(5,391	)
	Repurchase and retirement of common stock		—			(111,955	)		—			(325,069	)
	Non-cash compensation		—			—			—			555
Balances, December 31, 2000			(518	)		(100,020	)		—			(81,310	)
	Net loss		—			(27,423	)		—			(27,423	)
	Cumulative effect of change to a new accounting principle		—			—			(525	)		(525	)
	Unrealized loss on investments		—			—			(1,498	)		(1,498	)
	Recognized loss on investments		—			—			168			168
	Non-cash compensation		—			—			—			7,611
	Interest on notes		(46	)		—			—			(46	)
	Exercise of stock options		(100	)		—			—			450
	Increase in carrying amount of Redeemable Preferred Stock		—			(19,151	)		—			(19,151	)
	Change in par value of common stock		—			—			—			—
	Issuance of common stock		—			—			—			161,488
	Exercise of stock warrants		—			—			—			—
Balances, December 31, 2001		$	(664	)	$	(146,594	)	$	(1,855	)	$	39,764

The accompanying notes are an integral part of these consolidated financial statements.

46

VCA ANTECH, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

For the Years Ended December 31, 2001, 2000 and 1999
(In thousands)

		2001			2000			1999
Net income (loss)		$	(27,423	)	$	(8,411	)	$	22,357
Other comprehensive income:
	Cumulative effect of change to new accounting principle		(525	)		—			—
	Unrealized loss on investments and hedging instruments		(1,498	)		(219	)		(218	)
	Recognized loss on investments and hedging instruments		168			580			325
Other comprehensive income (loss)			(1,855	)		361			107
Net comprehensive income (loss)		$	(29,278	)	$	(8,050	)	$	22,464
Accumulated comprehensive loss at beginning of year		$	—		$	(361	)	$	(468	)
Other comprehensive income (loss)			(1,855	)		361			107
Accumulated comprehensive loss at end of year		$	(1,855	)	$	—		$	(361	)

The accompanying notes are an integral part of these consolidated financial statements.

47

VCA ANTECH, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Years Ended December 31, 2001, 2000 and 1999
(In thousands)

			2001			2000			1999
Cash flows from operating activities:
	Net income (loss)		$	(27,423	)	$	(8,411	)	$	22,357
	Adjustments to reconcile net income (loss) to net cash provided by operating activities:
		Depreciation and amortization		25,166			18,878			16,463
		Amortization of deferred financing costs and debt discount		2,153			836			241
		Provision for uncollectible accounts		3,973			3,105			2,515
		Extraordinary loss on early extinguishment of debt		17,218			4,504			—
		Recapitalization costs		—			34,268			—
		Non-cash compensation		7,611			555			—
		Interest paid in kind on senior subordinated notes		14,528			4,306			—
		Gain on sale of investment in VPI		—			(3,200	)		—
		Loss recognized on investment in Zoasis		—			5,000			—
		Agreement termination costs		9,552			—			—
		Write down of assets		8,531			—			—
		Loss on sale of assets		548			—			—
		Minority interest in income of subsidiaries		1,439			1,066			850
		Distributions to minority interest partners		(1,635	)		(1,400	)		(926	)
		Increase in accounts receivable		(6,386	)		(3,362	)		(5,535	)
		Decrease (increase) in inventory, prepaid expenses and other assets		2,348			2,006			(761	)
		Increase (decrease) in accounts payable and accrued liabilities		1,959			5,932			(1,383	)
		Decrease (increase) in prepaid income taxes		7,031			(5,416	)		1,054
		Increase in deferred income tax asset		(2,709	)		(442	)		(102	)
		Increase (decrease) in deferred income tax liability		(6,800	)		1,829			3,694
	Net cash provided by operating activities			57,104			60,054			38,467
Cash flows from investing activities:
		Business acquisitions, net of cash acquired		(24,306	)		(18,183	)		(16,079	)
		Real estate acquired in connection with business acquisitions		(675	)		(1,800	)		(4,241	)
		Property and equipment additions, net		(13,481	)		(22,555	)		(21,803	)
		Investments in marketable securities		—			(129,992	)		(58,258	)
		Proceeds from sales or maturities of marketable securities		—			135,666			86,410
		Proceeds from sale of assets		1,705			—			—
		Payment for covenants not to compete		—			(15,630	)		—
		Net proceeds from sale of investment in VPI		—			8,200			—
		Investment in Zoasis		—			(5,000	)		—
		Other		555			1,615			295
	Net cash used in investing activities			(36,202	)		(47,679	)		(13,676	)
Cash flows from financing activities:
		Repayment of long-term obligations including prepayment penalty		(175,530	)		(172,854	)		(18,922	)
		Proceeds from the issuance of long-term debt		170,000			356,670			—
		Payment of deferred financing costs and recapitalization		(6,503	)		(44,114	)		—
		Proceeds from issuance of common stock under stock option plans		—			923			535
		Proceeds from issuance (repayment) of preferred stock		(173,773	)		149,231			—
		Proceeds from issuance of common stock		161,488			14,350			—
		Proceeds from issuance of stock warrants		—			1,149			—
		Repurchase of common stock		—			(314,508	)		—
		Purchase of treasury stock		—			(3,323	)		(4,761	)
	Net cash used in financing activities			(24,318	)		(12,476	)		(23,148	)
Increase (decrease) in cash and cash equivalents				(3,416	)		(101	)		1,643
Cash and cash equivalents at beginning of year				10,519			10,620			8,977
Cash and cash equivalents at end of year			$	7,103		$	10,519		$	10,620

The accompanying notes are an integral part of these consolidated financial statements.

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VCA ANTECH, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS—(Continued)

For the Years Ended December 31, 2001, 2000 and 1999
(In thousands)

			2001			2000			1999
Supplemental disclosures of cash flow information:
	Interest paid		$	26,274		$	15,237		$	10,517
	Income taxes paid			2,782			4,337			9,603
Supplemental schedule of non-cash investing and financing activities:
	In connection with acquisitions, assets acquired and liabilities assumed were as follows:
	Fair value of assets acquired		$	24,424		$	27,816		$	48,968
	Less compensation given:
		Cash paid and acquisition costs		(20,899	)		(16,430	)		(15,256	)
		Cash paid in settlement of assumed liabilities and notes payable		(749	)		(1,262	)		(517	)
		Common stock issued		—			—			(8,828	)
	Notes payable and assumed liabilities		$	2,776		$	10,124		$	24,367

The accompanying notes are an integral part of these consolidated financial statements.

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VCA ANTECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2001

1. The Company

     Based in Los Angeles, California, VCA Antech, Inc. (“VCA”), a Delaware corporation, is an animal health care service company with positions in two core businesses, veterinary diagnostic laboratories (“Laboratory”) and animal hospitals (“Animal Hospital”). In 2000, the Company established a new legal structure comprised of a holding company and an operating company. VCA is the holding company. Vicar Operating, Inc. (“Vicar”) is wholly-owned by VCA and owns the capital stock of all of the Company’s subsidiaries. Collectively, VCA and Vicar are referred to as the Company. Prior to September 24, 2001, VCA was known as Veterinary Centers of America, Inc.

     The Company operates a full-service, veterinary diagnostic laboratory network serving all 50 states. The laboratory network provides sophisticated testing and consulting services used by veterinarians in the detection, diagnosis, evaluation, monitoring, treatment and prevention of diseases and other conditions affecting animals.

     As of December 31, 2001, the Company operated 16 full-service laboratories. The laboratory network includes primary hubs that are open 24 hours per day and offer a full testing menu, secondary laboratories, that service large metropolitan areas, are open 24 hours per day and offer a wide testing menu and ten STAT laboratories that service other locations with demand sufficient to warrant nearby laboratory facilities and are open primarily during daytime hours.

     Animal Hospitals offer a full range of general medical and surgical services for companion animals. Animal Hospitals treat diseases and injuries, provide pharmaceutical products and perform a variety of pet wellness programs, including routine vaccinations, health examinations, spaying, neutering and dental care.

     At December 31, 2001, the Company owned or operated 214 animal hospitals throughout 33 states, as follows:

California	44
New York (a)	21
Florida	17
Illinois	16
Michigan	12
Pennsylvania	11
Texas (a)	9
New Jersey (a)	9
Maryland	8
Indiana	7
Massachusetts	7
Virginia	6
Nevada	5
Ohio (a)	5
Alaska	4
Colorado	4
Delaware	4
Connecticut	3
New Mexico	3
Arizona	2
Minnesota (a)	2
Nebraska (a)	2
North Carolina (a)	2
Utah	2
Alabama (a)	1
Georgia	1
Hawaii	1
Louisiana (a)	1
Missouri	1
South Carolina	1
Washington (a)	1
West Virginia (a)	1
Wisconsin	1

          (a) states where the Company manages animal hospitals under long-term management agreements.

     The Company was formed in 1986 and during the 1990s, established a position in the veterinary diagnostic laboratory and animal hospital markets through both internal growth and acquisitions. By 1997, the Company had built a laboratory network of 12 laboratories servicing animal hospitals in all 50 states and operated a total of 160 animal hospitals.

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     On September 20, 2000, the Company completed a recapitalization transaction (the “Recapitalization”) with certain investors who are affiliated with Leonard Green & Partners. The Company purchased 99% of its outstanding shares of common stock for $1.00 per share for a total consideration of $314.5 million, and such shares were subsequently retired. The Company then issued 14,350,005 new common shares to certain investors in exchange for an 80% controlling interest in the Company. An additional 517,995 shares of common stock were issued to certain members of management. In connection with the Recapitalization, the Company also authorized and issued preferred stock for which it received approximately $149.2 million and entered into various debt agreements through which it received approximately $356.7 million in cash.

     The Recapitalization did not result in a change in the historical cost basis of the Company’s assets and liabilities because certain management shareholders retained their ownership of the Company common stock, which amounted to approximately 20% of the Company’s outstanding common stock following the Recapitalization. The Company incurred $34.3 million of Recapitalization costs for the year ended December 31, 2000, which consisted of $24.1 million associated with the buy-out of stock options held by employees, $1.2 million paid to employees for services rendered in connection with the Recapitalization, $7.6 million in professional fees and $1.4 million of other expenses. Additionally, the Company paid $15.6 million out of the Recapitalization proceeds for covenants not to compete to the following executive officers: Robert Antin, Chief Executive Officer; Arthur Antin, Chief Operating Officer; Tomas Fuller, Chief Financial Officer; and Neil Tauber, Senior Vice President of Development. The payments made for the covenants not to compete were being amortized over a three-year period commencing on September 20, 2000. Following the closing of the Company’s initial public offering of its common stock in November 2001 (described below), the Company terminated the non-competition agreements with certain members of management and recorded a non-cash charge of $9.6 million.

     On November 27, 2001, the Company completed an initial public offering of its common stock (the “IPO”). As a result of this offering and the underwriters’ exercise of its over-allotment, the Company issued 17,370,000 shares of common stock and received net proceeds of $161.5 million. Concurrent with the IPO, the Company issued $170.0 million of 9.875% senior subordinated notes due 2009. The Company applied the net proceeds from the IPO and the sale of the notes, plus cash on hand, as follows:

• redeemed all of the outstanding series A and series B redeemable preferred stock;

• repaid $100.0 million under the senior subordinated credit facilities;

• repaid $59.1 million in principal of the Company’s 15.5% senior notes due 2010, at a redemption price of 110%, plus accrued and unpaid interest; and

• repaid $5.0 million in principal of the Company’s 13.5% senior subordinated notes due 2010, at a redemption price of 110%, plus accrued and unpaid interest.

     Affiliates of Leonard Green & Partners and Robert Antin, CEO, President and Chairman of the Board of the Company, purchased 2,000,000 and 40,000 additional shares of common stock, respectively, in the IPO.

2. Summary of Significant Accounting Policies

     a. Principles of Consolidation

     The consolidated financial statements include the accounts of the Company and all those majority-owned subsidiaries where the Company has control. Significant intercompany transactions and balances have been eliminated.

     The Company provides management services to certain veterinary medical groups in states with laws that prohibit business corporations from providing veterinary services through the direct employment of veterinarians. As of December 31, 2001, the Company operated in eleven of these states. In these states, instead of owning an animal hospital, the Company provides management services to veterinary medical groups. The Company provides management services pursuant to long-term management agreements (the “Management Agreements”) with the veterinary medical groups,

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ranging from 10 to 40 years with non-binding renewal options, where allowable. Pursuant to the Management Agreements, the veterinary medical groups are each solely responsible for all aspects of the practice of veterinary medicine, as defined by their respective state. The Company is responsible for providing the following services:

• availability of all facilities and equipment

• day-to-day financial and administrative supervision and management

• maintenance of patient records

• recruitment of veterinary and hospital staff

• marketing

• malpractice and general insurance

     The Company does not consolidate the operations of the veterinary medical groups since it has no control over the practice of veterinary medicine at these hospitals. As compensation for the Company’s services, it receives management fees which are included in revenue and were $37.8 million, $31.1 million and $30.2 million for the years ended December 31, 2001, 2000 and 1999, respectively.

     b. Cash and Cash Equivalents

     For purposes of the balance sheets and statements of cash flows, the Company considers only highly liquid investments to be cash equivalents.

     Cash and cash equivalents at December 31 consisted of (in thousands):

	2001		2000
Cash	$	7,103	$	3,443
Money market funds		—		7,076
	$	7,103	$	10,519

     c. Marketable Securities

     During the year ending December 31, 2000, the Company realized a loss on the sale of an investment of $1.3 million and had previously recorded unrealized losses of $727,000 on this investment in years prior to 2000.

     d. Property and Equipment

     Property and equipment is recorded at cost. Equipment held under capital leases is recorded at the lower of the present value of the minimum lease payments or the fair value of the equipment at the beginning of the lease term.

     Depreciation and amortization are provided for on the straight-line method over the following estimated useful lives:

Buildings and improvements	5 to 40 years
Leasehold improvements	Lesser of lease term or 15 years
Furniture and equipment	5 to 7 years
Property held under capital leases	5 to 30 years

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     Property and equipment at December 31, consisted of (in thousands):

	2001			2000
Land	$	20,008		$	19,788
Building and improvements		33,668			33,920
Leasehold improvements		19,000			17,565
Furniture and equipment		49,565			43,771
Equipment held under capital leases		1,533			1,533
Construction in progress		5,292			1,293
Total fixed assets		129,066			117,870
Less—Accumulated depreciation and amortization		(39,822	)		(30,898	)
	$	89,244		$	86,972

     Accumulated depreciation on equipment held under capital leases amounted to $1.5 million and $1.3 million at December 31, 2001 and 2000, respectively.

     During 2001, the Company performed an analysis of the fair market value of certain properties and determined that five properties’ value had been impaired and recorded an impairment charge of approximately $1.4 million. In addition, the Company sold four properties during 2001 with a carrying value of approximately $1.2 million.

     During 2001, the Company sold two animal hospitals with a fixed asset carrying value of approximately $52,000. In addition, the Company closed one animal hospital and relocated thirteen animal hospitals operated by the Company during 2001. As a result, the Company disposed of certain fixed assets with a carrying value of approximately $230,000.

     e. Goodwill

     Goodwill relating to acquisitions represents the purchase price paid and liabilities assumed in excess of the fair market value of net assets acquired.

     The Company continually evaluates whether events, circumstances or net losses on the entity level have occurred that indicate the remaining estimated useful life of goodwill may warrant revision or that the remaining balance of goodwill may not be recoverable. When factors indicate that goodwill should be evaluated for possible impairment, the Company uses an estimate of the related facility’s undiscounted, tax adjusted net income over the remaining life of the goodwill to measure whether the goodwill is recoverable. If it is determined that goodwill on a given entity is partially or totally unrecoverable, losses will be recognized to the extent that projected aggregate tax adjusted net income over the life of the goodwill does not cover the goodwill balance at the date of impairment. Accumulated amortization of goodwill was $43.3 million and $35.0 million at December 31, 2001 and 2000, respectively.

     As a result of evaluation in 2001, the Company recorded a write-down of goodwill from one hospital of approximately $800,000 and recorded an additional write-down of goodwill of approximately $6.3 million in 2001 from the closure of six animal hospitals.

     In accordance with SFAS No. 142 “Goodwill and Other Intangibles”, goodwill relating to acquisitions effective June 30, 2001 is not amortized and will be evaluated in the future on a periodic basis for impairment. Goodwill acquired prior to June 30, 2001 was amortized through December 31, 2001 on a straight-line basis over the expected period to be benefited, not to exceed 40 years; however, this goodwill will no longer be amortized beginning January 1, 2002, in accordance with SFAS No. 123. See Note 2, section n., Recent Accounting Pronouncements, for additional information.

     f. Covenants Not to Compete

     Covenants not to compete are amortized on a straight-line basis over the term of the agreements, usually three to ten years. Accumulated amortization of covenants not to compete was $6.5 million and $6.6 million at December 31, 2001 and 2000, respectively.

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     g. Notes Receivable

     Notes receivable are not market traded financial instruments. The amounts recorded approximate fair value and are shown net of valuation allowances of $63,000 as of December 31, 2001 and 2000. The notes bear interest at rates varying from 7% to 10% per annum.

     h. Deferred Revenue

     As part of a partnership with Heinz Pet Products (“HPP”), the Company agreed to provide certain consulting and management services for a three-year period that commenced on February 1, 1997 and ended on February 1, 2000. The agreement was for an aggregate fee of $15.3 million payable in semi-annual installments over a five-year period.

     In October of 2000, after the expiration of the above-mentioned consulting and management services agreement, HPP bought out the Company’s interest in the partnership and entered into a two-year consulting agreement with the Company. The agreement called for an aggregate fee of $5.0 million, $4.0 million of which will be recognized as revenue ratably over the life of the agreement and $1.0 million will be used for certain marketing obligations under the agreement.

     Fees earned under these agreements are included in revenue and amounted to $2.0 million, $925,000 and $5.1 million for the years ended December 31, 2001, 2000 and 1999, respectively. The Company had liabilities related to two-year consulting agreement of $1.5 million and $3.5 million at December 31, 2001 and 2000, respectively.

     i. Deferred Financing Costs

     In connection with the issuance of long-term debt in 2001 and 2000, the Company incurred $4.4 million and $14.0 million of deferred financing costs, respectively. These deferred costs are shown net of accumulated amortization of $1.6 million and $586,000 in the Consolidated Balance Sheet at December 31, 2001 and 2000, respectively. The deferred financing costs are amortized using the effective interest method over the life of the related debt.

     j. Investment in VPI and Zoasis

     During portions of 2000 and 1999, the Company had investments in Veterinary Pet Insurance, Inc. (“VPI”) and Zoasis.com, Inc. (“Zoasis”), both of which were accounted for on the cost basis. See Footnote 4, Joint Ventures and Investments, for a description of these investments.

     k. Fair Value of Financial Instruments and Concentration of Credit Risk

     The carrying amount reported in the balance sheets for cash, accounts receivable, accounts payable and accrued liabilities approximates fair value because of the immediate or short-term maturity of these financial instruments. Concentration of credit risk with respect to accounts receivable are limited due to the diversity of the Company’s customer base.

     l. Use of Estimates in Preparation of Financial Statements

     The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and contingent liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates.

     m. Cash Flow Hedge

     In June 1998, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 133 “Accounting for Derivative Instruments and Hedging Activities.” SFAS No. 133, which as amended is for fiscal years which began after June 15, 2000, establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities, (collectively referred to as “derivatives”). It requires that an entity recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value.

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     Under the provisions of the Credit and Guaranty Agreement, dated September 20, 2000, the Company was required to enter into an arrangement to hedge interest rate exposure for a minimum notional amount of $62.0 million and a minimum term of two years. On November 13, 2000, the Company entered into a no fee interest rate collar agreement with Wells Fargo Bank effective November 15, 2000 and expiring November 15, 2002, (the “Collar Agreement”). The Collar Agreement is based on the London interbank offer rate (“LIBOR”), which resets monthly, and has a cap and floor notional amount of $62.5 million, with a cap and floor interest rate of 7.5% and 5.9%, respectively. During 2001, the Company has made payments under this agreement amounting to $1.2 million resulting from LIBOR rates being below the floor interest rate of 5.9%. These payments have been reported as part of interest expense for 2001. The Company made no such payments during 2000.

     The Collar Agreement is accounted for as a cash flow hedge that requires the Company report the market value of the Collar Agreement in the balance sheet.

     The Company adopted SFAS No. 133 effective January 1, 2001. At December 31, 2001, the Company reported a liability from interest rate hedging activities of $2.0 million, $1.8 million of which has been recognized in comprehensive income and $168,000 of which has been recognized in other expense, net. The valuation is determined by Wells Fargo Bank. As the result of adopting SFAS No. 133 in 2001, the Company recorded a cumulative adjustment to other comprehensive income of approximately $525,000 in 2001.

     With the exception of the Collar Agreement, management does not intend to enter into derivative contracts in the future.

     n. Recent Accounting Pronouncements

     In June, 2001, the FASB issued SFAS No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No. 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001. SFAS No. 141 also includes guidance on the initial recognition and measurement of goodwill and other intangible assets arising from business combinations completed after June 30, 2001. SFAS No. 142 prohibits the amortization of goodwill and intangible assets with indefinite useful lives. SFAS No. 142 requires that these assets be reviewed for impairment at least annually. Intangible assets with finite lives will continue to be amortized over their estimated useful lives.

     The Company will adopt SFAS No. 142 beginning in the first quarter of 2002. As of December 31, 2001 the Company’s goodwill balance was $317.3 million and for the year ended December 31, 2001 the Company reported $9.2 million in goodwill amortization. The Company will test goodwill for impairment using the two-step process described in SFAS No. 142. The first step is a screen for potential impairment, while the second step measures the amount of the impairment, if any. The Company expects to complete the process by June 30, 2002. The Company has not yet determined the amount of the potential impairment loss, if any. Any impairment recognized in association with the adoption of SFAS No. 142 will be accounted for as a cumulative adjustment for a change in accounting principle.

     All other intangible assets typically included in goodwill will be valued independently and amortized over their useful lives. These intangibles may include the value of names and addresses associated with customer lists, non-competition agreements with sellers, and the value of established business names.

     In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement Obligations. SFAS No. 143 addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. The Company will adopt SFAS No. 143 in the first quarter of fiscal year 2003. The Company is evaluating the impact of the adoption of SFAS No. 143 on the consolidated financial statements.

     In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, which establishes one accounting model to be used for long-lived assets to be disposed of by sale and broadens the presentation for discontinued operations to include more disposal transactions. SFAS No. 144 supercedes SFAS No. 121, Accounting for the Impairment of Long-Lived Assets to be Disposed of by Sale, and the accounting and reporting provisions of Accounting Principles Board Opinion No. 30, Reporting the Results of Operations — Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and

55

Transactions. The Company will adopt SFAS No. 144 as of January 1, 2002 and has not determined yet what the impact of SFAS 144 will have on its consolidated financial statements.

     o. Reclassifications

     Certain prior year balances have been reclassified to conform with the 2001 financial statement presentation.

     p. Revenue Recognition

     Revenue is recognized only after the following criteria are met: (i) there exists adequate evidence of the transactions; (ii) delivery of goods has occurred or services have been rendered; and (iii), the price is not contingent on future activity and collectibility is reasonably assured.

     q. Marketing and Advertising

     Marketing and advertising production costs are expensed as incurred or the first time the advertisement is run. Media (primarily print) placement costs are expensed in the month the advertising appears. Total marketing and advertising expense is included in direct costs and amounted to $5.0 million, $5.6 million, $4.3 million for the years ended December 31, 2001, 2000 and 1999, respectively.

     r. Workers’ Compensation Liability

     On October 8, 2001, the Company entered into a one-year workers’ compensation insurance policy with a $250,000 per-occurrence deductible and a stop-loss aggregate deductible of $4.7 million. Management has determined that $3.0 million is a reasonable estimate of expected claims losses under this policy and is accruing for these losses ratably over the twelve month period ending September 30, 2002. In determining this estimate, in conjunction with the insurance carrier, management reviewed the Company’s five-year history of claims losses, ratio of losses to premiums paid, payroll growth and the current risk control environment. The Company is pre-funding estimated claims losses to the insurance carrier of approximately $2.9 million. If the Company were accruing the maximum possible claims losses for the three months the policy was effective in 2001, it would have recorded an additional $430,000 of expense for the year ended December 31, 2001. The policies in place for 2000 and 1999 did not have large deductibles and the company has accrued for the maximum possible expense under these policies.

3. Related Party Transactions

     Management believes, based on reasonable judgment, but without further investigation, that the terms of each of the following transactions or arrangements between the Company and its affiliates, officers, directors or stockholders which were parties to the transactions were, on an overall basis, at least as favorable to the Company as could then have been obtained from unrelated parties.

     a. Acquisitions

     As part of an often-used acquisition strategy, the Company hires the selling doctor upon purchase of their practice. The Company may lease facilities from the selling doctor; the related lease agreements are negotiated at prevailing market rates as part of the acquisition before the doctor is hired. These lease arrangements are not contingent upon the current or future employment of the doctors.

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     b. Recapitalization

     On September 20, 2000, the Company completed the Recapitalization with an entity controlled by Leonard Green & Partners. In the Recapitalization, each outstanding share of our common stock, other than shares retained by management and employees, was canceled and converted into the right to receive $1.00. The Recapitalization was financed by:

• the contribution of $155.0 million by a group of investors led by Leonard Green & Partners;

• the issuance of an aggregate of $20.0 million of senior subordinated notes;

• the borrowing of $250.0 million under our $300.0 million senior credit facility; and

• the issuance of an aggregate of $100.0 million of senior notes.

     Upon the completion of the Recapitalization, Robert Antin, Arthur Antin, Neil Tauber, Tom Fuller, other stockholders and a group of investors led by Leonard Green & Partners acquired 17,524,335 shares of common stock at a purchase price of $1.00 per share. Goldman Sachs Credit Partners L.P. is a lender under the Company’s senior credit facility. GS Mezzanine Partners II, L.P. and GS Mezzanine II Offshore, L.P., affiliates of Goldman, Sachs & Co., purchased portions of the Company’s securities for an aggregate purchase price of $85.0 million. Melina Higgins, one of the Company’s directors, is the Chief Financial Officer of GS Mezzanine Partners II, L.P. and GS Mezzanine Partners II Offshore, L.P. The following partners of Leonard Green & Partners also serve on the Company’s board of directors: John Baumer, John Danhakl and Peter Nolan.

     c. Stockholders Agreement

     On September 20, 2000, the Company entered into a stockholders agreement with each of its stockholders. Under the stockholders agreement, each party to the stockholders agreement has call rights with respect to shares of common stock and stock options held by members of management in the event of termination of employment for any reason. The call rights permit the Company to repurchase callable shares at $1.00 per share. In connection with the IPO, the stockholders’ agreement was amended such that effective October 1, 2001:

• Call rights expired on one-half of Robert Antin’s shares that initially were subject to the stockholders agreement. Of the remaining shares, call rights will expire ratably over a six-month period commencing on October 1, 2001;

• Call rights expired on one-half of Arthur Antin’s, Neil Tauber’s and Tomas Fuller’s shares that initially were subject to the stockholders agreement. Of the amount remaining, call rights will expire on one-half of those shares on April 1, 2002, and on the remaining one-half on October 1, 2002; and

• Call rights expired on one-half of the other employees’ shares that initially were subject to the stockholders agreement. Of the remaining shares, call rights will expire ratably over a 12-month period commencing May 1, 2002.

     The stockholders agreement also provided for the discharge of $580,000 and $108,000 of indebtedness owed to the Company by Robert Antin and Arthur Antin, respectively, including interest accrued thereon. This indebtedness was forgiven as part of the Recapitalization.

     d. Notes Receivable from Stockholders

     In 2001, certain employees exercised their options to purchase shares of the Company’s common stock. As consideration for the exercise of their options, the Company received notes with an aggregate value of approximately $100,000. Each note earns interest at the rate of 10.125% per annum and is due and payable on August 1, 2004. These notes are collateralized by the Company’s common stock that was purchased by the stockholders and are an unconditional obligation of the employee. The total outstanding principal and interest of these notes at December 31, 2001 was approximately $104,000.

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     Concurrent with the Recapitalization, the Company sold 518,000 common shares to certain non-executive employees of the Company. As consideration for the issuance of common stock, the Company received notes with an aggregate value approximating $518,000. Each note earns interest at the rate of 6.2% per annum, is compounded annually and is due and payable on September 16, 2007. The notes are collateralized by the Company’s common stock that was purchased by the stockholders. The total outstanding principal and interest of these notes at December 31, 2001 and 2000 was $560,000 and $518,000, respectively.

     e. Management Services Agreement

     On September 20, 2000, the Company entered into a 10-year management services agreement with Leonard Green & Partners. The agreement provides that Leonard Green & Partners would provide general investment-banking services, management, consulting and financial planning services and transaction-related financial advisory and investment banking services to the Company. The Company paid a one-time structuring fee of $7.5 million to Leonard Green & Partners in September 2000 under the agreement. Leonard Green & Partners received an annual fee of $2.5 million as compensation for the general services and normal and customary fees for transaction-related services. In the years ended December 31, 2001 and 2000, the Company paid management fees in an aggregate amount of $2.3 million and $620,000, respectively. Upon the consummation of the IPO, the parties agreed to terminate the management services agreement. In connection with the termination the Company paid Leonard Green & Partners $8.0 million.

     f. Non-Competition Agreements

     On September 20, 2000, Robert Antin, Arthur Antin, Neil Tauber and Tomas Fuller each entered into non-competition agreements with the Company for a term of three years.

     In consideration for the execution of the non-competition agreements, the Company paid approximately $6.2 million, $4.0 million, $2.7 million and $2.5 million to Robert Antin, Arthur Antin, Neil Tauber and Tomas Fuller, or their affiliates, respectively. Upon the consummation of the IPO, these non-competition agreements were terminated.

     g. Investment in and Transactions with Zoasis

     During the year ended December 31, 2000, the Company made a $5.0 million investment in Zoasis, an internet start-up company, majority owned by Robert Antin, the Company’s Chief Executive Officer and Chairman of the Board. In December 2000, the Company determined that the value of this investment was impaired and, as a result, recognized a loss of $5.0 million on the write-down of its investment in Zoasis.

     The Company incurred marketing expense for vaccine reminder services provided by Zoasis of $709,000 and $81,000 for the years ended December 31, 2001 and 2000. The pricing of these services is comparable to prices paid by the Company to independent third parties.

     In 2001, the Company began development of software that can gather data in order to be able to automatically fax diagnostic laboratory results to the laboratory clients. The Company initially used an independent outside contractor to begin programming this software but now intends to use an in-house programmer working in conjunction with Zoasis. Zoasis will not be paid for this programming effort but will be able to use and amend the software to market it to other veterinary hospitals and laboratories. In relation to this project, Zoasis is also working with the Company to facilitate the collection and delivery of laboratory results to its clients.

     h. Related Party Vendors

     Patricia Antin, wife of the Company’s Chief Operating Officer Arthur Antin, is an independent sales representative for Citi Print and Westpro Graphics, both local printing companies. The Company used these companies’ services to print forms and marketing materials for the Company’s hospitals nationwide. Transactions are based on arms-length market prices and the Company has no, nor has the Company ever had, any contractual obligation binding the Company to their services. The Company paid Citi Print $345,000, $321,000 and $339,000 for the years ended December 31, 2001, 2000 and 1999, respectively. The Company paid The Westpro Graphics $7,000, $17,000 and $106,000 for the years ended December 31, 2001, 2000 and 1999, respectively.

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     i. Investment in Vet’s Choice and the Wisdom Group, L.P.

     In September 2000, the Company sold its entire equity interest in Vet’s Choice, which had zero-cost basis, to HPP. VCA received $500,000 in proceeds from the sale. At the time of the sale, one of the Company’s directors, Mr. John Heil, served as president of an affiliate of HPP. In connection with the sale, HPP also paid VCA $1.0 million which was transferred to the Wisdom Group, L.P. and used to redeem the limited partnership interests in the Wisdom Group, L.P. Members of the Company’s executive management had a 30.5% ownership interest in the Wisdom Group, L.P. as limited partners and one of the Company’s subsidiaries owned a 1% ownership interest as the general partner. The Wisdom Group, L.P. was dissolved in November 2000 upon redemption of all the partnership interests. The nature of the business of the Wisdom Group, L.P. was to provide consulting services to Vet’s Choice with respect to the development, marketing and sale of premium pet food products.

     j. Receipt of Proceeds from the Initial Public Offering and Debt Issuance

     Prior to the IPO on November 27, 2001, affiliates of Leonard Green & Partners owned 2,826,000 shares of 14% series A redeemable preferred stock and 2,800,000 shares of 12% series B redeemable stock. Affiliates of Goldman, Sachs & Co. owned 122,123 shares of 14% series A redeemable preferred stock and 121,000 shares of 12% series B redeemable preferred stock and held approximately $82.5 million aggregate principal amount of senior notes and approximately $14.2 million aggregate principal amount of the senior subordinated notes, and warrants to purchase 814,575 shares of common stock at an exercise price of $0.0007 per share. An affiliate of Goldman, Sachs & Co. was the syndication agent and a lender under the senior credit facility. The proceeds from the IPO and debt issuance were used to repay $100.0 million of borrowings under the senior credit facility, $59.1 million aggregate principal amount of the senior notes, $5.0 million aggregate principal amount of the senior subordinated notes and the redemption value of all of the shares of preferred stock.

     k. Purchase of Common Stock

     Affiliates of Leonard Green & Partners purchased 2,000,000 shares of the Company’s common stock at the IPO price of $10.00 per share. These shares are subject to lock-up agreements under which these affiliates of Leonard Green & Partners agree not to offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly any share of common stock or any securities convertible into or exchangeable or exercisable for any shares of common stock without the prior written consent of Credit Suisse First Boston until May 20, 2002.

     Robert Antin purchased 40,000 of the 725,000 shares of the Company’s common stock reserved by the underwriters for sale to employees and other persons associated with the Company. These shares are subject to lock-up agreements under which Mr. Antin agrees not to offer, sell, contract to sell, pledge or otherwise dispose of, directly or indirectly any share of common stock or any securities convertible into or exchangeable or exercisable for any shares of common stock without the prior written consent of Credit Suisse First Boston until May 20, 2002.

4. Acquisitions

     During 2001, the Company purchased 21 animal hospitals, all of which were accounted for as purchases. Six of the acquired animal hospitals were merged into existing VCA facilities upon acquisition. Including acquisition costs, VCA paid an aggregate consideration of $24.4 million, consisting of $20.9 million cash, $1.0 million in debt, and the assumption of liabilities of $2.5 million. The aggregate purchase price was allocated as follows: $747,000 to tangible assets, $22.5 million to goodwill and $1.2 million to other intangibles.

     During 2000, the Company purchased 24 animal hospitals and one veterinary diagnostic laboratory, all of which were accounted for as purchases. Three of the acquired animal hospitals and the laboratory were merged into existing VCA facilities upon acquisition. Including acquisition costs, VCA paid an aggregate consideration of $27.8 million, consisting of $16.5 million in cash, $11.1 million in debt, and the assumption of liabilities totaling $315,000. The aggregated purchase price was allocated as follows: $914,000 to tangible assets, $21.6 million to goodwill and $5.3 million to other intangibles.

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     During 1999, the Company purchased 24 animal hospitals and two veterinary diagnostic laboratories all of which were accounted for as purchases. Five of the acquired animal hospitals and both laboratories were merged into existing VCA facilities upon acquisition. Including acquisition costs, VCA paid an aggregate consideration of $23.7 million, consisting of $9.8 million in cash, $12.4 million in debt, 70,712 shares of common stock of the Company with a value of $1.1 million, and the assumption of liabilities totaling $369,000. The aggregated purchase price was allocated as follows: $1.4 million to tangible assets, $18.6 million to goodwill and $3.8 million to other intangibles.

     In addition, on April 1, 1999, the Company completed the acquisition of AAH Management Corp. (“AAH”) for a total consideration (including acquisition costs) of $25.3 million, consisting of 517,585 shares of VCA common stock, with a value at the date of acquisition of $7.8 million, $5.4 million in cash, $1.2 million in notes payable and the assumption of $10.9 million in liabilities. AAH operated 15 animal hospitals located in New York and New Jersey. The acquisition of AAH was accounted for as a purchase. The purchase price has been allocated as follows: $2.7 million to tangible assets, $21.9 million to goodwill, and $725,000 to other intangible assets.

     The pro forma results listed below are unaudited and reflect purchase price accounting adjustments assuming 2001 and 2000 acquisitions occurred at January 1, 2000. The pro forma results are not necessarily indicative of what actually would have occurred if the acquisitions had been in effect for the entire periods presented. In addition, they are not intended to be a projection of future results and do not reflect any efficiencies that might be achieved from the combined operation.

For the Years Ended December 31,
(In thousands, except per share amounts)
(Unaudited)

	2001			2000
Revenue	$	412,161		$	395,505
Net income (loss) available to common stockholders	$	(46,119	)	$	(10,666	)
Diluted earnings per share	$	(2.36	)	$	(0.05	)
Shares used for computing diluted earnings per share		19,509			234,055

     In connection with certain acquisitions, the Company assumed certain contractual arrangements whereby cash may be issued to former owners of acquired hospitals upon attainment of specified financial criteria over periods of three to five years (“Earn-Out Payments”), as set forth in the respective agreements (the “Earn-Out Arrangements”). The Earn-Out Arrangements provide for contingent Earn-Out Payments if the acquired entity achieves or exceeds contractually defined revenue targets during the defined earn-out period. The payments are either fixed in amount or are based on a multiple of revenue. When the contingency is resolved and the additional consideration is distributed, the Company records the consideration issued as an additional cost of the acquired entity. The additional consideration of affected assets, usually goodwill, is amortized over the remaining life of the asset. Earn-Out Payments in 2001, 2000 and 1999 consisted entirely of cash approximating $496,000, $486,000 and $326,000, respectively.

5. Joint Ventures and Investments

     During fiscal year 2000, the Company invested $5.0 million for convertible preferred stock of Zoasis, an internet start-up business, majority-owned by Robert Antin, the Company’s Chief Executive Officer and a director of the Company. Zoasis was to develop and provide services to the veterinary industry such as consumer e-commerce, e-commerce of veterinary supplies for hospitals, internet diagnostic laboratory results, on-line continuing education for veterinarians, hosted web sites for veterinarian clients, and a marketing reminder service. Due to the decline in the market value of many internet companies, Zoasis was not able to raise additional capital to continue its development. Zoasis scaled back its operations significantly. In December 2000, the Company determined that the value of this investment was impaired and, as a result, recognized a loss of $5.0 million on the write-down of its investment in Zoasis.

     In September 2000, the Company sold its 50.5% equity interest in Vet’s Choice, which had a zero cost basis, to HPP. The Company received $500,000 in the sale. In connection with the sale, the Company also received $1.0 million, which was transferred to the Wisdom Group, L.P. in January 2001.

     In December 1997 and January 1998, the Company made a combined $5.0 million investment in Veterinary Pet Insurance, the largest provider of pet health insurance in the United States. The Company sold its investment in VPI and received $8.2 million in cash in February 2000, resulting in a one-time gain of approximately $3.2 million.

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6. Long-Term Obligations

     Long-term obligations consisted of the following at December 31 (in thousands):

		2001		2000
Senior Term A	Notes payable, maturing in 2006, secured by assets, variable interest rates (weighted average interest rate of 7.4% and 9.9% during 2001 and 2000, respectively)	$	24,112	$	50,000
Senior Term B	Notes payable, maturing in 2008, secured by assets, variable interest rates (weighted average interest rate of 7.9% and 10.4% during 2001 and 2000, respectively)		121,242		200,000
13.5% Senior Subordinated Notes	Notes payable, maturing in 2010, unsecured, fixed interest rate of 13.5%		15,000		20,000
9.875% Senior Subordinated Notes	Notes payable, maturing in 2010, unsecured, fixed interest rate of 9.875%		170,000		—
Senior Notes	Notes payable, maturing in 2010, unsecured, fixed interest rate of 15.5%		59,670		104,306
Secured seller notes	Notes payable and other obligations, various maturities through 2010, secured by assets and stock of certain subsidiaries, various interest rates ranging from 5.3 to 10.0%		1,182		1,328
Unsecured debt	Notes payable, various maturities through 2008, various interest rates ranging from 7.0% to 9.7%		225		350
	Total debt obligations		391,431		375,984
	Capital lease obligations		79		110
	Less-unamortized discount		(7,178)		(13,345	)
			384,332		362,749
	Less—current portion		(5,159)		(5,756	)
			$379,173	$	356,993

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     The annual aggregate scheduled maturities of debt obligations for the five years subsequent to December 31, 2001 are presented below (in thousands):

2002	$	5,159
2003		5,456
2004		6,160
2005		22,089
2006		21,971
Thereafter		330,596
	$	391,431

     Interest expense consisted of the following for the year ended December 31, 2001 (in thousands):

					Subordinated
					Senior Notes								Amortization		Secured
													of Deferred		Seller
	Senior		Senior						Senior				Financing		Notes &
	Term A		Term B		13.5%		9.875%		Notes		Collar		Costs		Other		Total
Interest	$	3,645	$	15,760	$	2,654	$	1,585	$	16,044	$	1,176	$	2,072	$	651	$	43,587

     The Company has had two major shifts in its capital structure during the last two years. The first shift occurred in 2000 with the Recapitalization. The second shift occurred in 2001 with the Company’s IPO and debt offering. The following table summarizes the activity in the Company’s long term obligations for the two years ended December 31, 2001 (in thousands):

																	Secured
									Subordinated Senior								Seller
							Revolving		Notes								Notes
	Senior			Senior			Credit							Senior			and
	Term A			Term B			Facility		13.5%			9.875%		Notes			Other			Total
Balance at December 31, 1999	$	—		$	—		$	—	$	—		$	—	$	—		$	161,595		$	161,595
Recapitalization		50,000			200,000			—		20,000			—		100,000			(172,854	)		197,146
PIK interest		—			—			—		—			—		4,306			—			4,306
New debt, net of principal payments		—			—			—		—			—		—			12,937			12,937
Balance at December 31, 2000		50,000			200,000			—		20,000			—		104,306			1,678			375,984
IPO and debt offering		(24,126	)		(75,874	)		—		(5,000	)		170,000		(59,164	)		—			5,836
PIK interest		—			—			—		—			—		14,528			—			14,528
Principal payments		(1,762	)		(2,884	)		—		—			—		—			(271	)		(4,917	)
Balance at December 31, 2001	$	24,112		$	121,242		$	—	$	15,000		$	170,000	$	59,670		$	1,407		$	391,431

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     The Company had extraordinary losses related to the debt repaid with net proceeds from the Recapitalization and the IPO and debt offering as follows (in thousands):

	13.5% Senior
	Subordinated
	Notes			Senior Notes			Debentures			Total
Extraordinary losses
Recapitalization	$	—		$	—		$	4,504		$	4,504
Tax benefit		—			—			(1,845	)		(1,845	)
Net extraordinary loss for the year ended December 31, 2000	$	—		$	—		$	2,659		$	2,659
IPO and debt offering	$	5,028		$	12,190		$	—		$	17,218
Tax benefit		(2,061	)		(4,998	)		—			(7,059	)
Net extraordinary loss for the year ended December 31, 2001	$	2,967		$	7,192		$	—		$	10,159

Senior Term A, Senior Term B and Revolving Credit Facility

     As part of the Recapitalization, Vicar entered into a Credit and Guaranty Agreement with various lenders for $300.0 million of Senior Secured Credit Facilities (the “Credit Agreement”), with Goldman Sachs Credit Partners, L.P. as the syndication agent, and Wells Fargo Bank, N.A. as the administrative agent. The Credit Agreement includes a Revolving Credit Facility as well as the Senior Term A and B Notes. The Revolving Credit Facility allows the Company to borrow up to an aggregate principal amount of $50.0 million and may be used to borrow, on a same-day notice under a “swing line,” the lesser of (1) $5.0 million or (2) the aggregate unused amount of the Revolving Credit Facility then in effect. As of December 31, 2001, the Company has not utilized the Revolving Credit Facility.

     Interest Rate. In general, borrowings under the Credit Agreement bear interest, at the Company’s option, on either:

• The base rate (as defined below) plus a margin, as defined in the Credit Agreement based on the Company’s leverage ratio, ranging from 1.00% to 2.25% per annum for the Senior Term A Notes and the Revolving Credit Facility and a margin of 2.75% per annum for the Senior Term B Notes; or

• The adjusted eurodollar rate (as defined below) plus a margin, as defined in the Credit Agreement based on the Company’s leverage ratio, ranging from 2.00% to 3.25% per annum for the Senior Term A Notes and the Revolving Credit Facility and a margin of 3.75% per annum for the Senior Term B Notes.

     The base rate is the higher of Wells Fargo’s prime rate or the Federal funds rate plus 0.5%. The adjusted eurodollar rate is defined as the rate per annum obtained by dividing (1) the rate of interest offered to Wells Fargo on the London interbank market by (2) a percentage equal to 100% minus the stated maximum rate of all reserve requirements applicable to any member bank of the Federal Reserve System in respect of “eurocurrency liabilities.”

     Swing line borrowings bear interest at the base rate, plus a margin ranging from 1.00% to 2.25%, as defined in the Credit Agreement.

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     Maturity and Principal Payments. The Senior Term A Notes and Revolving Credit Facility mature on September 20, 2006. The Senior Term B Notes matures on September 20, 2008. Principal payments on the Revolving Credit Notes are at made at the Company’s discretion with the entire unpaid amount due at maturity. From the proceeds of the IPO and debt offering, the Company repaid $100.0 million of the Senior Term A and B Notes. The remaining principal payments on the Senior Term A and B Notes are paid quarterly with the annual aggregate scheduled maturities as follows (in thousands):

	2002		2003		2004		2005		2006		2007		2008		Total
Senior Term A	$	3,173	$	3,680	$	4,442	$	6,345	$	6,472	$	—	$	—	$	24,112
Senior Term B	$	1,540	$	1,540	$	1,540	$	1,540	$	15,396	$	56,963	$	42,723	$	121,242

     Starting December 31, 2002, as defined in the Credit Agreement, mandatory prepayments are due on the Senior Term A and B Notes if the Company’s cash and cash equivalents exceed a defined amount. These payments are applied on a pro rata basis. All outstanding indebtedness under the Credit Agreement may be voluntarily prepaid in whole or in part without premium or penalty.

     Guarantees and Security. VCA and each of its wholly-owned subsidiaries guarantee the outstanding debt under the Credit Agreement. These borrowings, along with the guarantees of the subsidiaries, are further secured by substantially all of the Company’s consolidated assets. In addition, these borrowings are secured by a pledge of substantially all of the capital stock, or similar equity interests, of the Company’s wholly-owned subsidiaries.

     Debt Covenants. The Credit Agreement contains certain financial covenants pertaining to interest coverage, fixed charge coverage and leverage ratios. In addition, the Credit Agreement has restrictions pertaining to capital expenditures, acquisitions and the payment of dividends on all classes of stock. Management of the Company believes the most restrictive covenant is the fixed charge coverage ratio. During 2001, the Company had a fixed charge coverage ratio of 1.64 to 1.00. The Credit Agreement required a fixed charge coverage ratio of no less than 1.10 to 1.00 during 2001 and requires a fixed charge coverage ratio of no less than 1.10 to 1.00 in future years.

13.5% Senior Subordinated Notes

     As part of the Recapitalization, Vicar issued $20.0 million principal amount of senior subordinated notes due 2010 pursuant to an indenture dated September 20, 2000 with Chase Manhattan Bank and Trust Company, N.A., as trustee.

     Interest Rate and Discounts. Interest on the senior subordinated notes is payable in cash, semi-annually in arrears at the rate of 13.5% per annum; provided, however, that if the Company fails to meet specified obligations to holders of the senior subordinated notes, as set forth in an exchange and registration rights agreement dated as of September 20, 2000, interest on the senior subordinated notes may increase by up to 1% per annum.

     The notes have an effective interest rate of 16.2% and are reported net of a discount of $1.8 million as of December 31, 2001.

     Guarantee. The senior subordinated notes are general, unsecured and subordinated obligations, and are guaranteed by the Company’s wholly-owned subsidiaries.

     Maturity and Principal Payments. The senior subordinated notes are due September 20, 2010. As part of the IPO and debt offering, the Company repaid $5.0 million of the senior subordinated notes leaving an outstanding principal balance of $15.0 million at December 31, 2001.

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9.875% Senior Subordinated Notes

     Concurrent with the consummation of the IPO Vicar issued $170.0 million of senior subordinated notes due 2009 with Chase Manhattan Bank and Trust Company, N.A., as trustee. The Company has filed a registration statement with the Securities and Exchange Commission for an exchange offer in which these notes will be exchanged for substantially similar securities that are registered under the Securities Act.

     Interest Rate. Interest is payable semi-annually in arrears on June 1 and December 1, commencing on June 1, 2002. Interest is computed on the basis of a 360-day year comprised of twelve 30-day months at the rate of 9.875% per annum.

     Guarantee. The notes are general, unsecured obligations of the Company. They are subordinated in right of payment to all existing and future debt incurred under the Credit Agreement and are equal in right of payment to Vicar’s other senior subordinated notes. They are unconditionally guaranteed on a senior subordinated basis by VCA, Vicar and its wholly-owned subsidiaries.

     Maturity. The notes will mature on December 1, 2009.

Senior Notes

     As part of the Recapitalization, VCA issued $100.0 million principal amount of senior notes due 2010 pursuant to an indenture dated September 20, 2000 with Chase Manhattan Bank and Trust Company, N.A., as trustee.

     Interest Rate and Discounts. Interest on the senior notes is payable semi-annually in arrears, at the rate of 15.5% per annum; provided that on any semi-annual interest payment date prior to September 20, 2005, the Company has the option to pay all or any portion of the interest payable on said date by issuing additional senior notes in a principal amount equal to the interest; and further provided, however, that if the Company fails to meet specified obligations to holders of the senior notes as set forth in a registration rights agreement dated as of September 20, 2000, interest on the senior notes may increase by up to 1% per annum. The Company has issued an aggregate of $16.6 million in additional senior notes to pay interest since the issue date.

     The notes have an effective interest rate of 16.8% and are reported net of a discount of $5.4 million.

     Guarantee. The senior notes are general, unsecured and unsubordinated obligations that are not guaranteed by Vicar and its wholly-owned subsidiaries, nor is Vicar and its wholly-owned subsidiaries an obligor of these notes.

     Maturity and Principal Payments. As part of the IPO and debt offering, the Company repaid $59.1 million of the senior notes. As discussed above, the Company is issuing additional notes to pay interest. This first principal payment on the aggregate balance is a balloon payment due September 20, 2005 of approximately $51.2 million and the remaining principal is due September 20, 2010.

Fair Value of the Company’s Debt

     The following disclosure of the estimated fair value of the Company’s debt at December 31, 2001 is made in accordance with the requirements of Statement of Financial Accounting Standards No. 107 “Disclosures about Fair Value of Financial Instruments.” The Company used available market information and appropriate valuation methodologies to determine the estimated fair value amounts. Considerable judgment is required to develop the estimates of fair value, and the estimates provided herein are not necessarily indicative of the amounts that could be realized in a current market exchange.

	(in thousands)
	Carrying
	Amount		Fair Value
Fixed-rate long-term debt	$	246,077	$	250,510
Variable-rate long-term debt		145,354		145,354

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     The estimated fair value of the Company’s fixed-rate long-term debt is based on market value or LIBOR plus an estimated spread at December 31, 2001 for similar securities with similar remaining maturities. The carrying value of variable-rate long-term debt is a reasonable estimate of its fair value.

7. Redeemable Preferred Stocks

     In 2000, the Company adopted an Amended and Restated Certificate of Incorporation, which authorized the issuance of up to 6,000,000 shares of preferred stock. In connection with the Recapitalization, the Company issued 2,998,408 shares of Series A Senior Redeemable Exchangeable Cumulative Preferred Stock (“Series A Preferred Stock”), par value $.01 per share, and 2,970,822 shares of Series B Junior Redeemable Cumulative Preferred Stock (“Series B Preferred Stock”), par value $.01 per share. In exchange for the issuance of the Series A Preferred Stock and Series B Preferred Stock, the Company received $75.0 million and $74.2 million, respectively. The Series A and Series B Preferred Stock earned dividends at the rate of 14% and 12% per annum of the liquidation preference, respectively. The liquidation preference and redemption value for both the Series A and Series B Preferred Stock was the sum of $25.00 per share plus accrued and unpaid dividends less any special dividend paid. Holders of Series A and Series B Preferred Stock were entitled to receive dividends, whether or not declared by the Board of Directors, out of funds legally available. Dividends were payable in cash on a quarterly basis. If dividends were not paid when due, the amount payable was added to the liquidation preference and redemption value. For the years ended December 31, 2001 and 2000, dividends earned but not paid were $19.2 million and $5.4 million, respectively. These dividends were recorded as an increase to preferred stock and a corresponding decrease to retained earnings.

     On November 27, 2001, the Company completed an initial public offering and in connection therewith redeemed all its outstanding Series A and Series B Preferred Stock.

8. Common Stock

     In November 2001, the Company sold 16,000,000 shares of common stock at $10.00 per share in connection with the IPO, which generated net proceeds of approximately $148.7 million. In addition, during December 2001, the Company’s underwriters exercised their overallotment option to purchase an additional 1,370,000 shares of common stock at $10.00 per share, which generated net proceeds of approximately $12.8 million.

     In connection with the Recapitalization, the Company issued warrants to certain investors to purchase 1,149,990 shares of the Company’s common stock. The warrants allowed the holders to purchase common shares at a price equal to $0.0007 per share. The Company valued these warrants at their fair market value on the date of issuance at $1.1 million, which was recorded as part of stockholders’ equity. In November 2001, the investors exercised their warrants to purchase 1,149,871 shares of common stock. In lieu of paying cash to exercise the warrants, the investors opted to cancel 119 of the previously outstanding 1,149,990 warrants.

     In August 2001, certain employees exercised 691,875 of their options to purchase shares of common stock granted in connection with the Recapitalization.

     In 2000, the Company adopted an Amended and Restated Certificate of Incorporation, which authorized the issuance of up to 24,000,000 common shares with a par value of $0.01 per common share. The Company amended and restated the Certificate of Incorporation in 2001 to authorize the issuance of up to 75,000,000 common shares and changed the par value to $0.001 per common share. The Company had 36,736,081 and 17,524,335 common shares outstanding at December 31, 2001 and 2000, respectively.

     In 2000, the Company’s Board of Directors declared a fifteen-for-one stock split. The stock split has been retroactively reflected in the accompanying financial statements and footnotes.

     During 2000 and prior to the Recapitalization, the Company repurchased 7,715,000 shares of its common stock for $3.3 million. These shares, along with all other treasury shares held prior to 2000, were retired.

     On September 20, 2000, in connection with the Recapitalization, the Company repurchased and retired a majority of the outstanding common stock of the Company. Certain members of senior management who held 2,656,335 shares before the Recapitalization continued to hold those shares.

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9. Stock-Based Compensation Plans

     The Company has granted stock options to various employees. The Company accounts for these plans under APB Opinion 25.

     In November 1995, the FASB issued SFAS No. 123 “Accounting for Stock-Based Compensation.” SFAS No. 123 recommends changes in accounting for employee stock-based compensation plans and requires certain disclosures with respect to these plans. SFAS No. 123 disclosures were adopted by the Company effective January 1, 1996.

     The 1996 Stock Incentive Plan (the “1996 Plan”) was amended August 6, 2001. Under the amended plan, no additional incentive or nonqualified stock options may be granted to directors, officers, key employees or consultants. In September 2000, the Company issued 633,795 stock options under the 1996 Plan. These options vest ratably over four years from the date of grant with an exercise price of $1.00 and expire in 2010.

     In August 2001, the Company’s board of directors approved the 2001 Stock Incentive Plan (the “2001 Plan”) that provides for the granting of incentive or nonqualified stock options to directors, officers, key employees or consultants of the Company. The number of shares reserved and authorized for issuance under the 2001 Plan is 2,000,000 shares. The terms of the stock options will be established by the compensation committee of the Company’s board of directors.

     Had compensation cost for these plans been determined consistent with SFAS 123, the Company’s net income (loss) and earnings (loss) per share would have been reduced to the following pro forma amounts (in thousands, except per share amounts):

		2001			2000			1999
Net income (loss) available to common stockholders:
	As reported	$	(46,574	)	$	(13,802	)	$	22,357
	Pro forma		(46,606	)		(14,178	)		19,214
Diluted earnings (loss) per share:
	As reported	$	(2.39	)	$	(0.06	)	$	0.07
	Pro forma		(2.39	)		(0.06	)		0.06

     The fair value of each option grant is estimated on the date of grant using the minimum value option pricing model with the following weighted-average assumptions:

	2001			2000			1999
Risk free interest rate		6.0	%		6.0	%		5.8	%
Dividend yield		0.0	%		0.0	%		0.0	%
Expected volatility		0.0	%		0.0	%		54.2	%
Weighted average fair value	$	0.25		$	0.78		$	7.97
Expected option life (years)		5			5			7

     In connection with the Recapitalization, certain of the Company’s employees elected to exchange their stock options for newly issued stock options. The number of stock options issued to each employee was equal to the intrinsic value of their old stock options divided by the strike price of the new stock options ($0.20). These stock options were accounted for as variable awards, and related non-cash compensation of $555,000 was recorded in the year ended December 31, 2000. An additional charge for non-cash compensation of $7,611,000 was recorded in the year ended December 31, 2001, as a result of the increase in the estimated market value of the common stock. In August 2001, 691,875 of the new options were exercised and 1,995 were cancelled, leaving none outstanding as of December 31, 2001.

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     The table below summarizes the transactions in the Company’s stock option plans (in thousands, except per share amounts):

	2001			2000			1999
Options outstanding at beginning of year		1,328			57,300			57,315
Exchanged in connection with Recapitalization		—			694			—
Granted		—			634			2,490
Exercised		(692	)		(1,815	)		(750	)
Purchased		—			(54,585	)		—
Canceled		(2	)		(900	)		(1,755	)
Options outstanding at end of year (exercise price of $1.00 as of December 31, 2001)		634			1,328			57,300
Exercisable at end of year		41			694			30,465

     The following table summarizes information about the options in the 2001 Plan outstanding as of December 31, 2001 in accordance with SFAS No. 123 (in thousands, except per share amounts):

Options Outstanding							Options Exercisable
			Weighted Avg.
			Remaining
	Number		Contractual		Weighted Avg.		Number		Weighted Avg.
Exercise Price	Outstanding		Life		Exercise Price		Exercisable		Exercise Price
$1.00		634		8.73	$	1.00		41	$	1.00

10. Commitments and Contingencies

     a. Leases

     The Company operates many of its animal hospitals from premises that are leased from the hospitals’ previous owners under operating leases with terms, including renewal options, ranging from one to 35 years. Certain leases include purchase options which can be exercised at the Company’s discretion at various times within the lease terms.

     The annual lease payments under the lease agreements have provisions for annual increases based on the Consumer Price Index or other amounts specified within the lease contracts.

     The future minimum lease payments on operating leases at December 31, 2001, including renewal option periods, are as follows (in thousands):

2002	$	12,247
2003		12,530
2004		12,575
2005		12,285
2006		12,165
Thereafter		130,810

     Rent expense totaled $12.6 million, $11.7 million and $10.4 million for the years ended December 31, 2001, 2000 and 1999, respectively. Rental income totaled $176,000, $259,000 and $310,000 for the years ended December 31, 2001, 2000 and 1999, respectively.

     b. Earn-out Payments

     In connection with certain acquisitions, the Company assumed certain contractual arrangements whereby additional cash may be paid to former owners of acquired hospitals upon attainment of specified financial criteria over periods of one to two years, as set forth in the respective agreements. The amount to be paid cannot be determined until the earn-out periods expire and the attainment of criteria is established. If the specified financial criteria is attained in the next twelve months, the Company will be obligated to make cash payments of approximately $802,000.

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     c. Holdbacks

     In connection with certain acquisitions, the Company withheld a portion of the purchase price (the “holdback”). The holdback is used to offset any cost the Company may pay on behalf of the former owner for any liabilities the Company did not assume at the time of acquisition. The amounts held accrue interest not to exceed 7% per annum and are payable within a twelve-month period. The total outstanding holdbacks at December 31, 2001 were approximately $1.6 million.

     d. Officers’ Compensation

     Effective upon the closing of the Company’s IPO, three members of the Company’s executive management amended and restated their employment agreements with the Company. These members include the Chief Executive Officer, Chief Operating Officer and Chief Financial Officer. The Senior Vice President retained his existing employment agreement. These agreements aggregate to $1.4 million in salary per year. The agreements allow for upward adjustments to annual salary based on the Consumer Price Index for Los Angeles County. The agreements also call for a maximum of $1.1 million to be paid as annual bonuses based on annual performance goals to be set by the compensation committee of the board of directors. The agreements also call for aggregate severance payments under different scenarios with the maximum amount approximating $8.5 million.

     e. State Laws

     The laws of many states prohibit business corporations from providing, or holding themselves out as providers of, veterinary medical care. These laws vary from state to state and are enforced by the courts and by regulatory authorities with broad discretion. The Company operates 54 animal hospitals in 11 states with these laws. The Company may experience difficulty in expanding operations into other states with similar laws. Given varying and uncertain interpretations of the veterinary laws of each state, the Company may not be in compliance with restrictions on the corporate practice of veterinary medicine in all states. A determination that the Company is in violation of applicable restrictions on the practice of veterinary medicine in any state in which it operates could have a material adverse effect, particularly if the Company were unable to restructure its operations to comply with the requirements of that state.

     For example, the Company currently is a party to a lawsuit in the State of Ohio in which that State has alleged that the management of a veterinary medical group licensed to practice veterinary medicine in that state violates the Ohio statute prohibiting business corporations from providing or holding themselves out as providers of veterinary medical care. On March 20, 2001, the trial court in the case entered summary judgment in favor of the State of Ohio and issued an order enjoining the Company from operating in the State of Ohio in a manner that is in violation of the state statute. In response, the Company has restructured its operations in the State of Ohio in a manner believed to conform to the state law and the court’s order. The Attorney General of the State of Ohio informed the Company that it disagrees with its position that the Company is in compliance with the court’s order. In June 2001, the Company appeared at a status conference before the trial court at which time the court directed the parties to meet together to attempt to settle this matter. Consistent with the trial court’s directive, the Company engaged in discussions with the Attorney General’s office in the State of Ohio. The parties appeared at an additional status conference in February 2002. The parties were not able to reach a settlement prior to the February status conference. At that status conference, the court ordered the parties to participate in a court-supervised settlement conference that was scheduled for March 19, 2002. The court postponed the settlement conference and has not yet scheduled a new date. If a settlement cannot be reached, the Company would be required to discontinue operations in the state. The five animal hospitals in the State of Ohio have a book value of $6.1 million as of December 31, 2001. If the Company was required to discontinue operations in the State of Ohio, it might not be able to dispose of the hospital assets for their book value. The animal hospitals located in the State of Ohio generated revenue and operating income of $2.1 million and $409,000, respectively, in the year ended December 31, 2001 and $2.2 million and $513,000, respectively, in the year ended December 31, 2000.

     All of the states in which the Company operates impose various registration requirements. To fulfill these requirements, each facility has been registered with appropriate governmental agencies and, where required, have appointed a licensed veterinarian to act on behalf of each facility. All veterinary doctors practicing in the Company’s clinics are required to maintain valid state licenses to practice.

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     f. Other Contingencies

     The Company has certain contingent liabilities resulting from litigation and claims incident to the ordinary course of its business. Management believes that the probable resolution of such contingencies will not affect the Company’s financial position or results of operations.

11. Calculation of Per Share Amounts

     A reconciliation of the income and shares used in the computations of the basic and diluted earnings (loss) per share (“EPS”) for the years ended December 31, 2001, 2000 and 1999 follows (amounts shown in thousands, except per share amounts):

			2001			2000			1999
Income (loss) before extraordinary item			$	(17,264	)	$	(5,752	)	$	22,357
	Increase in carrying amount of Redeemable Preferred Stock			(19,151	)		(5,391	)		—
Income (loss) before extraordinary item available to common stockholders (basic and diluted)			$	(36,415	)	$	(11,143	)	$	22,357
Weighted average common share outstanding:
	Basic			19,509			234,055			315,945
		Effect of dilutive common share stock options		—			—			13,830
	Diluted			19,509			234,055			329,775
Earnings per share (before extraordinary items)
	Basic		$	(1.87	)	$	(0.05	)	$	0.07
	Diluted		$	(1.87	)	$	(0.05	)	$	0.07

     On September 20, 2000, the Company paid $1.00 per share, for a total payment of $314.5 million, to repurchase 310,836,000 shares of its outstanding common stock in connection with the Recapitalization, of which approximately $3.7 million was attributable to costs incurred in connection with the repurchase of the Company’s common stock. These per share and share amounts have been adjusted to reflect a 15-for-1 stock split which took place after the Recapitalization. Immediately after this repurchase, the Company issued 517,995 and 14,350,005 shares of common stock to its management and certain investors, respectively, for $1.00 per share.

     As of December 31, 2001, 633,795 stock options within an exercise price of $1.00 were outstanding and at December 31, 2000, 1,327,670 stock options and warrants to purchase an aggregate 1,149,990 common shares were outstanding. These stock options and warrants were not included in the computation of Diluted EPS because conversion would have had an antidilutive effect on Diluted EPS.

     The $84.4 million of 5.25% convertible debentures which were convertible into 36,849,345 shares of common stock were outstanding at December 31, 1999, but were not included in the computation of Diluted EPS, because conversion would have had an antidilutive effect on Diluted EPS. These convertible debentures were retired in 2000.

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12. Income Taxes

     The provision (benefit) for income taxes is comprised of the following for the three years ended December 31, (in thousands):

		2001			2000			1999
Federal:
	Current	$	803		$	(889	)	$	10,161
	Deferred		(8,366	)		1,219			515
			(7,563	)		330			10,676
State:
	Current		2,090			(142	)		2,850
	Deferred		(1,141	)		166			834
			949			24			3,684
		$	(6,614	)	$	354		$	14,360

     The consolidated statement of operations for the year ended December 31, 2001 and 2000 includes a provision for income taxes of $445,000 and $2.2 million and a benefit for income taxes of $7.1 million and $1.8 million, respectively, associated with the early extinguishment of debt. The net benefit of approximately $6.6 million and $354,000, respectively, is reflected in the table above.

     The Company accounts for income taxes under the provisions of SFAS No. 109, “Accounting for Income Taxes.” SFAS No. 109 requires recognition of deferred tax liabilities and assets for the expected future consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates for the year in which the differences are expected to reverse.

     The net deferred tax asset (liability) at December 31 is comprised of (in thousands):

			2001			2000
Current deferred tax assets (liabilities):
	Accounts receivable		$	2,048		$	1,273
	State taxes			(710	)		(903	)
	Other liabilities and reserves			5,438			3,696
	Start-up costs			66			66
	Other assets			(295	)		(294	)
	Inventory			817			817
		Total current deferred tax asset, net	$	7,364		$	4,655

			2001			2000
Non-current deferred tax (liabilities) assets:
	Net operating loss carryforwards		$	12,233		$	6,460
	Write-down of assets			2,012			1,377
	Start-up costs			302			302
	Other assets			6,429			3,537
	Intangible assets			(15,735	)		(11,934	)
	Property and equipment			(1,642	)		(1,720	)
	Unrealized loss on investments			2,588			2,555
	Valuation allowance			(7,871	)		(9,061	)
		Total non-current deferred tax liability, net	$	(1,684	)	$	(8,484	)

     Under the Tax Reform Act of 1986, the utilization of Federal net operating loss (“NOL”) carryforwards to reduce taxable income will be restricted under certain circumstances. Events that cause such a limitation include, but are not limited to, a cumulative ownership change of more than 50% over a three-year period. Management believes that past

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mergers caused such a change of ownership and, accordingly, utilization of the NOL carryforwards may be limited in future years. Accordingly, the valuation allowance is principally related to subsidiaries’ NOL carryforwards as well as certain acquisition related expenditures where the realization of this deduction is uncertain at this time.

     At December 31, 2001, the Company had NOL carryforwards of approximately $29.2 million, comprised of NOL carryforwards acquired in the past. Also included in this amount is approximately $13.6 million of losses generated in the current year which can be utilized with no cumulative ownership change limitations. These NOL’s expire at various dates through 2015.

     On October 25, 1999, the FASB’s Emerging Issues Task Force (“EITF”) reached consensus in Issue 99-15, “Accounting for Decreases in Deferred Tax Asset Valuation Allowances Established in a Purchase Business Combination as a Result of a Change in Tax Regulation” (“Issue No. 99-15”). Issue No. 99-15 is the EITF’s response to the Internal Revenue Services’s June 25, 1999 ruling, as stated in Treasury Regulation 1.1502-21, reducing the requirements for using certain net operating loss carryovers and carrybacks (“NOLs”). As a result, the Company recorded a deferred tax benefit during the year ended December 31, 1999 equal to $2.1 million.

     A reconciliation of the provision (benefit) for income taxes to the amount computed at the Federal statutory rate for the three years ended December 31, is as follows:

	2001			2000			1999
Federal income tax at statutory rate		(35	)%		(35	)%		35	%
Effect of amortization of goodwill		4			18			4
State taxes, net of Federal benefit		(3	)		(2	)		7
Tax exempt income					(1	)		(1	)
Write-down of zero tax basis assets		7			—			—
Non-cash compensation charges		8			—			—
Valuation allowance		(2	)		24			(6	)
		(21	)%		4	%		39	%

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13. 401(k) Plan

     During 1992, the Company established a voluntary retirement plan under Section 401(k) of the Internal Revenue Code. The plan covers all employees with at least six months of employment with the Company and provides for annual matching contributions by the Company at the discretion of the Company’s board of directors. In 2001, 2000 and 1999, the Company provided a total matching contribution approximating $1.1 million, $715,000 and $353,000, respectively.

14. Lines of Business

     During the three years ending December 31, 2001, the Company had three reportable segments: Laboratory, Animal Hospital and Corporate. These segments are strategic business units that have different products, services and functions. The segments are managed separately because each is a distinct and different business venture with unique challenges, rewards and risks. The Animal Hospital segment provides veterinary services for companion animals and sells related retail products. The Laboratory segment provides testing services for veterinarians both associated with the Company and independent of the Company. Corporate provides selling, general and administrative support for the other segments and recognizes revenue associated with consulting agreements.

     The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The Company evaluates performance of segments based on profit or loss before income taxes, interest income, interest expense and minority interest, which are evaluated on a consolidated level. For purposes of reviewing the operating performance of the segments, all intercompany sales and purchases are accounted for as if they were transactions with independent third parties at current market prices.

     The following is a summary of certain financial data for each of the three segments (in thousands):

								Intercompany
			Animal					Sales
	Laboratory		Hospital		Corporate			Eliminations			Total
2001
Revenue	$	134,711	$	272,113	$	2,000		$	(7,462	)	$	401,362
Operating income (loss)		36,624		36,607		(45,525	)		—			27,706
Depreciation/amortization expense		4,657		14,491		6,018			—			25,166
Identifiable assets		110,466		322,657		35,398			—			468,521
Capital expenditures		1,944		9,075		2,462			—			13,481
2000
Revenue	$	119,300	$	240,624	$	925		$	(6,162	)	$	354,687
Operating income (loss)		34,044		30,630		(45,469	)		—			19,205
Recapitalization costs		—		—		34,268			—			34,268
Depreciation/amortization expense		4,472		12,167		2,239			—			18,878
Identifiable assets		109,453		312,473		61,144			—			483,070
Capital expenditures		2,194		18,751		1,610			—			22,555
1999
Revenue	$	103,282	$	217,988	$	5,100		$	(5,810	)	$	320,560
Operating income (loss)		28,039		26,765		(7,788	)		—			47,016
Year 2000 remediation costs		—		—		2,839			—			2,839
Reversal of restructuring charges		—		—		1,873			—			1,873
Depreciation/amortization expense		4,234		10,472		1,757			—			16,463
Identifiable assets		105,224		280,742		40,534			—			426,500
Capital expenditures		1,997		15,970		3,836			—			21,803

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     Corporate operating loss includes salaries, general and administrative expense for the executive, finance, accounting, human resources, marketing, purchasing and regional operational management functions that support the Laboratory and Animal Hospital segments.

     The following is a reconciliation between total segment operating income after eliminations and consolidated income (loss) before provision for income taxes and extraordinary items as reported on the consolidated statements of operations (in thousands):

	2001			2000			1999
Total segment operating income after eliminations	$	27,706		$	19,205		$	47,016
Interest income		669			850			1,194
Interest expense		(43,587	)		(20,742	)		(10,643	)
Minority interest in income of subsidiaries		(1,439	)		(1,066	)		(850	)
Gain on sale of VPI		—			3,200			—
Loss on investment in Zoasis		—			(5,000	)		—
Other		(168	)		—			—
Income (loss) before provision for income taxes and extraordinary items	$	(16,819	)	$	(3,553	)	$	36,717

15. Condensed Consolidating Information

     In connection with Vicar’s issuance in November 2001 of $170.0 million of 9.875% senior subordinated notes. VCA and each existing and future domestic wholly owned restricted subsidiary of Vicar (the “Guarantor”) have, jointly and severally, fully and unconditionally guaranteed the 9.875% senior subordinated notes. These guarantees are unsecured and subordinated in right of payment to all existing and future indebtedness outstanding under the Credit Agreement and any other indebtedness permitted to be incurred by Vicar under the terms of the indenture agreement for the 9.875% senior subordinated notes.

     Vicar’s subsidiaries are composed of wholly-owned restricted subsidiaries and partnerships. The partnerships may elect to serve as guarantors of Vicar’s obligations, however, none of the partnerships have elected to do so. Vicar conducts all of its business through and derives virtually all of its income from its subsidiaries. Therefore, Vicar’s ability to make required payments with respect to its indebtedness (including the 9.875% senior subordinated notes) and other obligations depends on the financial results and condition of its subsidiaries and its ability to receive funds from its subsidiaries.

     Pursuant to Rule 3-10 of Regulation S-X, the following condensed consolidating information is for VCA, Vicar, the wholly owned Guarantors and the non-Guarantor subsidiaries with respect to the 9.875% senior subordinated notes. This condensed financial information has been prepared from the books and records maintained by VCA, Vicar, the Guarantors and the non-Guarantor subsidiaries. The condensed financial information may not necessarily be indicative of results of operations or financial position had the Guarantors and non-Guarantor subsidiaries operated as independent entities. The separate financial statements of the Guarantors are not presented because management has determined they would not be material to investors.

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VCA ANTECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
CONDENSED CONSOLIDATING BALANCE SHEETS

As of December 31, 2001
(in thousands)

											Non-
									Guarantor		Guarantor
			VCA			Vicar			Subsidiaries		Subsidiaries			Elimination			Consolidated
Current assets:
	Cash and equivalents		$	—		$	3,467		$	3,260	$	376		$	—		$	7,103
	Trade accounts receivable, net			—			—			17,702		334			—			18,036
	Inventory			—			—			4,111		390			—			4,501
	Prepaid expenses and other			—			1,165			1,049		164			—			2,378
	Deferred income taxes			—			7,364			—		—			—			7,364
	Prepaid income taxes			—			2,782			—		—			—			2,782
		Total current assets		—			14,778			26,122		1,264			—			42,164
Property and equipment, net				—			8,421			78,225		2,598			—			89,244
Other assets:
	Goodwill, net			—			—			298,198		19,064			—			317,262
	Covenants not to compete, net			—			—			4,211		616			—			4,827
	Notes receivable, net			320			498			1,017		837			—			2,672
	Deferred financing costs, net			780			10,600			—		—			—			11,380
	Other			—			—			969		3			—			972
Investment in subsidiaries				123,842			179,391			19,920		—			(323,153	)		—
	Total assets		$	124,942		$	213,688		$	428,662	$	24,382		$	(323,153	)	$	468,521
Current liabilities:
	Current portion of long-term obligations		$	—		$	4,766		$	389	$	4		$	—		$	5,159
	Accounts payable			—			5,223			2,074		16			—			7,313
	Accrued payroll and related liabilities			—			5,019			6,440		258			—			11,717
	Other accrued liabilities			—			15,627			2,968		10			—			18,605
		Total current liabilities		—			30,635			11,871		288			—			42,794
Long-term obligations, less current portion				54,345			324,152			672		4			—			379,173
Deferred income taxes				—			1,684			—		—			—			1,684
Minority interest				—			—			—		—			5,106			5,106
Intercompany payable (receivable)				30,833			(266,625	)		236,728		(936	)		—			—
Stockholders’ equity:
	Common stock			37			—			—		—			—			37
	Additional paid-in capital			188,840			—			—		—			—			188,840
	Retained earnings (accumulated deficit)			(146,594	)		125,697			179,391		25,026			(330,114	)		(146,594	)
	Accumulated comprehensive loss			(1,855	)		(1,855	)		—		—			1,855			(1,855	)
	Notes receivable from stockholders			(664	)		—			—		—			—			(664	)
		Total stockholders’ equity		39,764			123,842			179,391		25,026			(328,259	)		39,764
		Total liabilities and stockholders’ equity	$	124,942		$	213,688		$	428,662	$	24,382		$	(323,153	)	$	468,521

75

VCA ANTECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
CONDENSED CONSOLIDATING BALANCE SHEETS

As of December 31, 2000
(in thousands)

											Non-
									Guarantor		Guarantor
			VCA			Vicar			Subsidiaries		Subsidiaries			Elimination			Consolidated
Current assets:
	Cash and equivalents		$	—		$	8,165		$	2,073	$	281		$	—		$	10,519
	Trade accounts receivable, net			—			—			15,095		355			—			15,450
	Inventory			—			—			5,333		440			—			5,773
	Prepaid expenses and other			9			1,896			1,396		123			—			3,424
	Deferred income taxes			—			4,655			—		—			—			4,655
	Prepaid income taxes			—			9,402			—		—			—			9,402
		Total current assets		9			24,118			23,897		1,199			—			49,223
Property and equipment, net				—			8,678			74,801		3,493			—			86,972
Other assets:
	Goodwill, net			—			—			296,585		13,600						310,185
	Covenants not to compete, net			—			14,348			4,780		421			—			19,549
	Notes receivable, net			—			605			828		745			—			2,178
	Deferred financing costs, net			1,722			11,651			—		—			—			13,373
	Other			—			13			1,577		—			—			1,590
Investment in subsidiaries				135,719			140,672			16,272		—			(292,663	)		—
	Total assets		$	137,450		$	200,085		$	418,740	$	19,458		$	(292,663	)	$	483,070
Current liabilities:
	Current portion of long-term obligations		$	—		$	5,674		$	68	$	14		$	—		$	5,756
	Accounts payable			—			6,634			1,759		—			—			8,393
	Accrued payroll and related liabilities			—			3,032			5,098		205			—			8,335
	Other accrued liabilities			—			14,229			2,451		7			—			16,687
		Total current liabilities		—			29,569			9,376		226			—			39,171
Long-term obligations, less current portion				93,549			262,232			1,212		—			—			356,993
Deferred income taxes				—			8,484			—		—			—			8,484
Other liabilities				—			1,500			—		—			—			1,500
Minority interest				—			—			—		—			3,610			3,610
Intercompany payable (receivable)				(29,411	)		(237,419	)		267,480		(650	)		—			—
Series A Redeemable Preferred Stock, at redemption value				77,875			—			—		—			—			77,875
Series B Redeemable Preferred Stock, at redemption value				76,747			—			—		—			—			76,747
Stockholders’ equity (deficit):
	Common stock			175			—			—		—			—			175
	Additional paid-in capital			19,053			—			—		—			—			19,053
	Retained earnings (accumulated deficit)			(100,020	)		135,719			140,672		19,882			(296,273	)		(100,020	)
	Notes receivable from stockholders			(518	)		—			—		—			—			(518	)
		Total stockholders’ equity (deficit)		(81,310	)		135,719			140,672		19,882			(296,273	)		(81,310	)
		Total liabilities and stockholders’ equity (deficit)	$	137,450		$	200,085		$	418,740	$	19,458		$	(292,663	)	$	483,070

76

VCA ANTECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

For the Year Ended December 31, 2001
(in thousands)

											Non-
								Guarantor			Guarantor
		VCA			Vicar			Subsidiaries			Subsidiaries		Elimination			Consolidated
Revenue		$	—		$	2,000		$	370,549		$	29,464	$	(651	)	$	401,362
Direct costs			—			—			262,386			21,491		(651	)		283,226
			—			2,000			108,163			7,973		—			118,136
Selling, general and administrative			—			14,876			22,648			1,109		—			38,633
Depreciation and amortization			—			6,018			18,100			1,048		—			25,166
Agreement termination costs			—			17,552			—			—		—			17,552
Write-down and loss on sale of assets			—			9,079			—			—		—			9,079
	Operating income (loss)		—			(45,525	)		67,415			5,816		—			27,706
Net interest expense			16,142			26,687			(3	)		92		—			42,918
Other expense, net			—			168			—			—		—			168
Equity interest in income of subsidiaries			(10,022	)		38,719			4,285			—		(32,982	)		—
	Income (loss) before minority interest, provision for income taxes and extraordinary item		(26,164	)		(33,661	)		71,703			5,724		(32,982	)		(15,380	)
Minority interest in income of subsidiaries			—			—			—			—		1,439			1,439
	Income (loss) before provision for income taxes and extraordinary item		(26,164	)		(33,661	)		71,703			5,724		(34,421	)		(16,819	)
Provision (benefit) for income taxes			(5,933	)		(26,606	)		32,984			—		—			445
	Income (loss) before extraordinary item		(20,231	)		(7,055	)		38,719			5,724		(34,421	)		(17,264	)
Extraordinary loss on extinguishment of debt, net of tax			7,192			2,967			—			—		—			10,159
	Net income (loss)	$	(27,423	)	$	(10,022	)	$	38,719		$	5,724	$	(34,421	)	$	(27,423	)

77

VCA ANTECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

For the Year Ended December 31, 2000
(in thousands)

											Non-
									Guarantor		Guarantor
			VCA			Vicar			Subsidiaries		Subsidiaries			Elimination			Consolidated
Revenue			$	425		$	500		$	333,233	$	20,980		$	(451	)	$	354,687
Direct costs				—			—			239,642		15,699			(451	)		254,890
				425			500			93,591		5,281			—			99,797
Selling, general and administrative				7,660			2,227			16,814		745			—			27,446
Depreciation and amortization				697			1,542			15,833		806			—			18,878
Recapitalization costs				34,268			—			—		—			—			34,268
		Operating income (loss)		(42,200	)		(3,269	)		60,944		3,730			—			19,205
Net interest expense				9,438			6,728			3,836		(110	)		—			19,892
Other expense, net				(3,200	)		5,000			—		—			—			1,800
Equity interest in income of subsidiaries				20,641			6,742			2,774		—			(30,157	)		—
	Income (loss) before minority interest, provision for income taxes and extraordinary item			(27,797	)		(8,255	)		59,882		3,840			(30,157	)		(2,487	)
Minority interest in income of subsidiaries				—			—			—		—			1,066			1,066
	Income (loss) before provision for income taxes and extraordinary item			(27,797	)		(8,255	)		59,882		3,840			(31,223	)		(3,553	)
Provision for income taxes				(22,045	)		(3,302	)		27,546		—			—			2,199
	Income (loss) before extraordinary item			(5,752	)		(4,953	)		32,336		3,840			(31,223	)		(5,752	)
Extraordinary loss on extinguishment of debt, net of tax				2,659			—			—		—			—			2,659
		Net income (loss)	$	(8,411	)	$	(4,953	)	$	32,336	$	3,840		$	(31,223	)	$	(8,411	)

78

VCA ANTECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

For the Year Ended December 31, 1999
(in thousands)

								Non-
						Guarantor		Guarantor
			VCA			Subsidiaries		Subsidiaries			Elimination			Consolidated
Revenue			$	5,100		$	298,394	$	17,489		$	(423	)	$	320,560
Direct costs				—			219,584		13,332			(423	)		232,493
				5,100			78,810		4,157			—			88,067
Selling, general and administrative				10,165			12,843		614			—			23,622
Depreciation and amortization				1,757			14,069		637			—			16,463
Year 2000 remediation expense				2,839			—		—			—			2,839
Reversal of restructuring charges				(1,873	)		—		—			—			(1,873	)
		Operating income (loss)		(7,788	)		51,898		2,906			—			47,016
Net interest expense				4,983			4,566		(100	)		—			9,449
Equity interest in income of subsidiaries				26,724			2,156		—			(28,880	)		—
		Income before minority interest and provision for income taxes		13,953			49,488		3,006			(28,880	)		37,567
Minority interest in income of Subsidiaries				—			—		—			850			850
		Income before provision for income taxes		13,953			49,488		3,006			(29,730	)		36,717
Provision for income taxes				(6,302	)		22,764		—			—			16,462
Income tax adjustment				(2,102	)		—		—			—			(2,102	)
	Net income		$	22,357		$	26,724	$	3,006		$	(29,730	)	$	22,357

79

VCA ANTECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the Year Ended December 31, 2001
(in thousands)

													Non-
										Guarantor			Guarantor
				VCA			Vicar			Subsidiaries			Subsidiaries			Elimination			Consolidated
Cash from operating activities:
	Net income (loss)			$	(27,423	)	$	(10,022	)	$	38,719		$	5,724		$	(34,421	)	$	(27,423	)
	Adjustments to reconcile net income (loss) to
	net cash provided by operating activities:
		Equity interest in earnings of subsidiaries			10,022			(38,719	)		(4,285	)		—			32,982			—
		Depreciation and amortization			—			6,018			18,100			1,048			—			25,166
		Amortization of debt discount and deferred financing costs			1,598			555			—			—			—			2,153
		Provision for uncollectible accounts			—			—			3,649			324			—			3,973
		Extraordinary loss on early extinguishment of debt			12,190			5,028			—			—			—			17,218
		Non-cash compensation			—			771			6,840			—			—			7,611
		Interest paid in kind on senior subordinated notes			14,528			—			—			—			—			14,528
		Agreement termination costs			—			9,552			—			—			—			9,552
		Write-down and loss on sale of assets			—			8,531			—			—			—			8,531
		Loss on sale of assets			—			548			—			—			—			548
		Minority interest in income of subsidiaries			—			—			—			—			1,439			1,439
		Distributions to minority interest partners			—			(1,635	)		—			—			—			(1,635	)
		Increase in accounts receivable, net			—			—			(6,083	)		(303	)		—			(6,386	)
		Decrease in inventory, prepaid expenses and other assets			9			744			1,586			9			—			2,348
		Increase (decrease) in accounts payable and accrued liabilities			—			6,707			(4,817	)		69			—			1,959
		Decrease in prepaid income taxes			—			7,031			—			—			—			7,031
		Increase (decrease) in intercompany payable (receivable)			(10,924	)		68,402			(50,702	)		(6,776	)		—			—
		Increase in deferred taxes, net			—			(9,509	)		—			—			—			(9,509	)
Net cash provided by operating activities					—			54,002			3,007			95			—			57,104
Cash flows from investing activities:
		Business acquisitions, net of cash acquired			—			(24,306	)		—			—			—			(24,306	)
		Property and equipment additions, net			—			(12,212	)		(1,944	)		—			—			(14,156	)
		Proceeds from sale of assets			—			1,705			—			—			—			1,705
		Other			—			430			125			—			—			555
			Net cash used in investing activities		—			(34,383	)		(1,819	)		—			—			(36,202	)
Cash flows from financing activities:
		Repayment of long-term obligations including prepayment of penalties			(66,578	)		(108,952	)		—			—			—			(175,530	)
		Proceeds from issuance of long-term debt			—			170,000			—			—			—			170,000
		Intercompany transfer of debt proceeds			78,863			(78,863	)		—			—			—			—
		Payment of deferred financing costs			—			(4,366	)		—			—			—			(4,366	)
		Repayment of preferred stock			(173,773	)		—			—			—			—			(173,773	)
		Proceeds from issuance of common stock			161,488			—			—			—			—			161,488
		Net payments related to recapitalization			—			(2,137	)		—			—			—			(2,137	)
			Net cash used in financing activities		—			(24,318	)		—			—			—			(24,318	)
Increase (decrease) in cash and equivalents					—			(4,699	)		1,188			95			—			(3,416	)
Cash and equivalents at beginning of year					—			8,165			2,073			281			—			10,519
Cash and equivalents at end of year				$	—		$	3,466		$	3,261		$	376		$	—		$	7,103

80

VCA ANTECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

For the Year Ended December 31, 2000
(in thousands)

													Non-
										Guarantor			Guarantor
				VCA			Vicar			Subsidiaries			Subsidiaries			Elimination			Consolidated
Cash from operating activities:
	Net income (loss)			$	(8,411	)	$	(4,953	)	$	32,336		$	3,840		$	(31,223	)	$	(8,411	)
		Adjustments to reconcile net income (loss) to net cash provided by operating activities:
			Equity interest in earnings of subsidiaries		(20,641	)		(6,742	)		(2,774	)		—			30,157			—
			Depreciation and amortization		697			1,542			15,833			806			—			18,878
			Provision for uncollectable accounts		—			—			2,838			267			—			3,105
			Amortization of debt discount and deferred financing costs		315			521			—			—			—			836
			Extraordinary loss on early extinguishment of debt		4,504			—			—			—			—			4,504
			Recapitalization costs		34,268			—			—			—			—			34,268
			Non-cash compensation		—			56			499			—			—			555
			Interest paid in kind on senior subordinated notes		4,306			—			—			—			—			4,306
			Gain on sale of investments in VPI		(3,200	)		—			—			—			—			(3,200	)
			Loss recognized on investment in Zoasis		—			5,000			—			—			—			5,000
			Minority interest in income of subsidiaries		—			—			—			—			1,066			1,066
			Distributions to minority interest partners		(1,031	)		(369	)		—			—			—			(1,400	)
			Increase in accounts receivable		—			—			(3,088	)		(274	)		—			(3,362	)
			Decrease (increase) in inventory, prepaid expense and other		(2,409	)		2,688			1,837			(110	)		—			2,006
			Increase (decrease) in accounts payable and accrued liabilities		6,396			2,892			(3,431	)		75			—			5,932
			Increase in prepaid income taxes		(2,662	)		(2,754	)		—			—			—			(5,416	)
			Increase (decrease) in intercompany payable (receivable)		18,156			28,649			(42,354	)		(4,451	)		—			—
			Increase in deferred taxes, net		—			1,387			—			—			—			1,387
	Net cash provided by operating activities				30,288			27,917			1,696			153			—			60,054
Cash flows from investing activities:
			Business acquisitions, net of cash acquired		(12,478	)		(5,705	)		—			—			—			(18,183	)
			Property and equipment additions, net		(8,988	)		(13,173	)		(2,194	)		—			—			(24,355	)
			Investments in marketable securities		(129,992	)		—			—			—			—			(129,992	)
			Proceeds from sales or maturities of marketable securities		135,666			—			—			—			—			135,666
			Payment for covenants not to compete		(15,630	)		—			—			—			—			(15,630	)
			Net proceeds from sale of investment in VPI		8,200			—			—			—			—			8,200
			Investment in Zoasis		(5,000	)		—			—			—			—			(5,000	)
			Other		44			151			1,420			—			—			1,615
	Net cash used in investing activities				(28,178	)		(18,727	)		(774	)		—			—			(47,679	)
Cash flows from financing activities:
			Repayment of long-term obligations		(172,342	)		(512	)		—			—			—			(172,854	)
			Proceeds from the issuance of long-term debt		356,670			—			—			—			—			356,670
			Payment of deferred financing costs		(13,958	)		—			—			—			—			(13,958	)
			Proceeds from issuance of common stock under stock option plans		923			—			—			—			—			923
			Proceeds from issuance of preferred stock		149,231			—			—			—			—			149,231
			Proceeds from issuance of common stock		14,350			—			—			—			—			14,350
			Proceeds from issuance of warrants		1,149			—			—			—			—			1,149
			Repurchase of common stock		(314,508	)		—			—			—			—			(314,508	)
			Purchase of treasury stock		(3,323	)		—			—			—			—			(3,323	)
			Payments for recapitalization expense		(29,643	)		(513	)		—			—			—			(30,156	)
	Net cash used in financing activities				(11,451	)		(1,025	)		—			—			—			(12,476	)
Increase (decrease) in cash and equivalents					(9,341	)		8,165			922			153			—			(101	)
Cash and equivalents at beginning of year					9,341			—			1,151			128			—			10,620
Cash and equivalents at end of year				$	—		$	8,165		$	2,073		$	281		$	—		$	10,519

81

VCA ANTECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

For the Year Ended December 31, 1999
(in thousands)

										Non-
							Guarantor			Guarantor
				VCA			Subsidiaries			Subsidiaries			Elimination			Consolidated
Cash from operating activities:
		Net income		$	22,357		$	26,724		$	3,006		$	(29,730	)	$	22,357
		Adjustments to reconcile net income to net cash provided by operating activities:
			Equity interest in earnings of subsidiaries		(26,724	)		(2,156	)		—			28,880			—
			Depreciation and amortization		1,757			14,069			637			—			16,463
			Amortization of debt discount and deferred financing costs		241			—			—			—			241
			Provision for uncollectible accounts		—			2,357			158			—			2,515
			Minority interest in income of subsidiaries		—			—			—			850			850
			Distributions to minority interest partners		(926	)		—			—			—			(926	)
			Increase in accounts receivable		—			(5,215	)		(320	)		—			(5,535	)
			Increase in inventory, prepaid expense and other		(502	)		(238	)		(21	)		—			(761	)
			Increase (decrease) in accounts payable and accrued liabilities		2,383			(3,752	)		(14	)		—			(1,383	)
			Decrease in prepaid income taxes		1,054			—			—			—			1,054
			Increase (decrease) in intercompany payable (receivable)		33,933			(30,522	)		(3,411	)		—			—
			Increase in deferred taxes, net		3,592			—			—			—			3,592
	Net cash provided by operating activities				37,165			1,267			35			—			38,467
Cash flows from investing activities:
			Business acquisitions, net of cash acquired		(16,079	)		—			—			—			(16,079	)
			Real estate acquired in connection with business acquisitions		(4,241	)		—			—			—			(4,241	)
			Property and equipment additions, net		(19,806	)		(1,997	)		—			—			(21,803	)
			Investments in marketable securities		(58,258	)		—			—			—			(58,258	)
			Proceeds from sales or maturities of marketable securities		86,410			—			—			—			86,410
			Other		104			191			—			—			295
	Net cash used in investing activities				(11,870	)		(1,806	)		—			—			(13,676	)
Cash flows from financing activities:
			Repayment of long-term obligations		(18,922	)		—			—			—			(18,922	)
			Proceeds from issuance of common stock under stock option plans		535			—			—			—			535
			Purchase of treasury shares		(4,761	)		—			—			—			(4,761	)
	Net cash used in financing activities				(23,148	)		—			—			—			(23,148	)
Increase (decrease) in cash and equivalents					2,147			(539	)		35			—			1,643
Cash and equivalents at beginning of year					7,194			1,690			93			—			8,977
Cash and equivalents at end of year				$	9,341		$	1,151		$	128		$	—		$	10,620

82

17. Subsequent Events

     From January 1, 2002 through March 25, 2002, the Company has acquired two animal hospitals for an aggregate consideration (including acquisition costs) of $2.4 million, consisting of $2.1 million in cash, and the assumption of liabilities of $320,000.

83

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders of VCA Antech, Inc.:

     We have audited in accordance with auditing standards generally accepted in the United States, the consolidated financial statements of VCA Antech, Inc. and subsidiaries included on this annual report on Form 10-K and have issued our report thereon dated February 21, 2002. Our audits were made for the purpose of forming an opinion on the basic financial statements taken as a whole. Schedule II—Valuation and Qualifying Accounts is the responsibility of the company’s management and is presented for purposes of complying with the Securities and Exchange Commission’s rules and is not part of the basic financial statements. This schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, fairly states in all material respects the financial data required to be set forth therein in relation to the basic financial statements taken as a whole.

/s/ ARTHUR ANDERSEN LLP

ARTHUR ANDERSEN LLP

Los Angeles, California
February 21, 2002

84

VCA ANTECH, INC. AND SUBSIDIARIES

SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS

For the Year Ended December 31, 2001, 2000 and 1999
(in thousands)

		Balance at		Charged to
		Beginning of		Costs and							Balance at End
		Period		Expenses		Write-offs			Other (1)		of Period
Year ended December 31, 2001
	Allowance for uncollectible accounts (2)	$	4,173	$	3,973	$	(3,016	)	$	174	$	5,304
Year ended December 31, 2000
	Allowance for uncollectible accounts (2)	$	7,432	$	3,105	$	(6,771	)	$	407	$	4,173
Year ended December 31, 1999
	Allowance for uncollectible accounts (2)	$	6,532	$	2,515	$	(2,252	)	$	637	$	7,432

(1)	“Other” changes in the allowance for uncollectible accounts include allowances acquired with animal hospitals and laboratory acquisitions.
(2)	Balance includes allowance for trade accounts receivable and notes receivable.

85

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

     None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     Information regarding directors and executive officers of the Company will appear in the proxy statement for the 2002 annual meeting of stockholders and is incorporated herein by this reference. The proxy statement will be filed with the SEC within 120 days following December 31, 2001.

ITEM 11. EXECUTIVE COMPENSATION

     Information regarding executive compensation will appear in the proxy statement for the 2002 annual meeting of stockholders and is incorporated herein by this reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     Information regarding security ownership of certain beneficial owners and management will appear in the proxy statement for the 2002 annual meeting of stockholders and is incorporated herein by this reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Information regarding certain relationships and related transactions will appear in the proxy statement for the 2002 annual meeting of stockholders and is incorporated herein by this reference.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES AND REPORTS ON FORM 8-K

(a)	(1)	FINANCIAL STATEMENTS — See Item 8 of this Form 10K annual report.
	(2)	REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS — See Item 8 of this form 10K annual report.
	(3)	SCHEDULE II: VALUATION AND QUALIFYING ACCOUNTS — See Item 8 of this form 10K annual report.
	(4)	EXHIBITS — See Exhibit Index attached to this form 10K annual report.
(b)		REPORT ON FORM 8-K, filed February 22, 2002, reporting under Item 5, financial information for the fourth quarter and fiscal year ended December 31, 2001 and financial guidance for the quarter ending March 31, 2002.
(c)		EXHIBITS — See Exhibit Index attached to this form 10K annual report.

86

SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Los Angeles, State of California, on today’s date, March 25, 2002.

By:	/s/
Its:	Tomas W. Fuller Chief Financial Officer, Principal Accounting Officer, Vice President and Assistant Secretary

     KNOWN BY ALL MEN THESE PRESENTS, that each person whose signature appears below constitutes and appoints Robert L. Antin and Tomas W. Fuller, or any one of them, his attorney-in-fact and agents with full power of substitution and re-substitution, for him and his name, place and stead, in any and all capacities, to sign any or all amendments to this Form 10-K and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the foregoing, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or either of them, or their substitutes, may lawfully do or cause to be done by virtue hereof.

     Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Robert L. Antin	Chairman of the Board, President and Chief Executive Officer	March 25, 2002
/s/ Arthur J. Antin	Director, Chief Operating Officer, Senior Vice President and Secretary	March 25, 2002
/s/ Tomas W. Fuller	Chief Financial Officer, Principal Accounting Officer, Vice President and Assistant Secretary	March 25, 2002
/s/ John. M. Baumer	Director	March 25, 2002
/s/ John G. Danhakl	Director	March 25, 2002
/s/ John Heil	Director	March 25, 2002
/s/ Melina Higgins	Director	March 25, 2002
/s/ Peter J. Nolan	Director	March 25, 2002
/s/ Frank Reddick	Director	March 25, 2002
*By: Attorney-in-Fact	Director

87

List of Exhibits

Number	Exhibit Description
3.1	Amended and Restated Certificate of Incorporation of Registrant.
3.2	Amended and Restated Bylaws of Registrant.
4.1	Stockholders Agreement, dated as of September 20, 2000, by and among Registrant, Green Equity Investors III, L.P., Co-Investment Funds and Stockholders. Incorporated by reference to Exhibit 4.1 to the Registrant’s registration statement on Form S-1 filed August 9, 2001.
4.2	Amendment No. 1 to Stockholders Agreement, dated as of November 27, 2001, by and among Registrant, Green Equity Investors III, L.P., GS Mezzanine Partners II, L.P. and Robert Antin. Incorporated by reference to Exhibit 4.2 to Amendment No. 2 to the Registrant’s registration statement on Form S-1 filed October 31, 2001.
4.3	Indenture, dated as of November 27, 2001, by and between Vicar Operating, Inc., the Guarantors (as defined therein), and Chase Manhattan Bank and Trust Company, National Association. Incorporated by reference to Exhibit 4.1 to the Registrant’s registration statement on Form S-4 filed February 1, 2002.
4.4	Indenture Agreement, dated as of September 20, 2000, by and between Registrant, Chase Manhattan Bank and Trust Company, National Association. Incorporated by reference to Exhibit 4.3 to the Registrant’s registration statement on Form S-1 filed August 9, 2001.
4.5	First Amendment to Indenture Agreement, dated as of November 20, 2001, by and between Registrant, Chase Manhattan Bank and Trust Company, National Association.
4.6	Indenture Agreement, dated as of September 20, 2000, by and among Vicar Operating, Inc.,Chase Manhattan Bank and Trust Company, National Association, with VCA Antech, Inc. and its subsidiaries as Guarantors. Incorporated by reference to Exhibit 4.4 to the Registrant’s registration statement on Form S-1 filed August 9, 2001.
4.7	First Amendment to Indenture Agreement, dated as of November 20, 2001, by and among Vicar Operating, Inc., Chase Manhattan Bank and Trust Company, National Association, with VCA Antech, Inc. and its subsidiaries as Guarantors.
4.8	Consent & Waiver, dated as of November 20, 2001, by and among the Registrant, Vicar Operating, Inc. and its subsidiaries as Guarantors, Chase Manhattan Bank and Trust Company, National Association.
4.9	Credit and Guaranty Agreement, dated as of September 20, 2000, by and among Registrant, Vicar Operating, Inc., certain subsidiaries of Registrant as Guarantors, Goldman Sachs Credit Partners L.P., and Wells Fargo Bank, National Association as Administrative and Collateral Agent. Incorporated by reference to Exhibit 4.5 to the Registrant’s registration statement on Form S-1 filed August 9, 2001.
4.10	First Amendment to Credit and Guaranty Agreement, dated as of October 23, 2000, by and among Registrant, Vicar Operating, Inc., certain subsidiaries of Registrant as Guarantors, Goldman Sachs Credit Partners L.P., and Wells Fargo Bank, National Association as Administrative and Collateral Agent.
4.11	Second Amendment to Credit and Guaranty Agreement, dated as of November 16, 2001, by and among Registrant, Vicar Operating, Inc., certain subsidiaries of Registrant as Guarantors, Goldman Sachs Credit Partners L.P., and Wells Fargo Bank, National Association as Administrative and Collateral Agent.

88

Number	Exhibit Description
4.12	Exchange and Registration Rights Agreement, dated as of November 27, 2001, by and among Registrant, the Guarantors listed on Schedule 1 thereto, and Goldman, Sachs & Co. Incorporated by reference to Exhibit 4.3 to the Registrant’s registration statement on Form S-4 filed February 1, 2002.
4.13	Specimen Certificate for shares of common stock of Registrant. Incorporated by reference to Exhibit 4.9 to Amendment No. 3 to the Registrant’s registration statement on Form S-1 filed November 16, 2001.
10.1	Employment Agreement by and between VCA Antech, Inc. and Robert Antin. Incorporated by reference to Exhibit 10.5 to the Registrant’s registration statement on Form S-4 filed February 1, 2002.
10.2	Employment Agreement by and between VCA Antech, Inc. and Arthur J. Antin. Incorporated by reference to Exhibit 10.6 to the Registrant’s registration statement on Form S-4 filed February 1, 2002.
10.3	Employment Agreement by and between VCA Antech, Inc. and Tomas W. Fuller. Incorporated by reference to Exhibit 10.7 to the Registrant’s registration statement on Form S-4 filed February 1, 2002.
10.4	Employment Agreement by and between VCA Antech, Inc. and Neil Tauber. Incorporated by reference to Exhibit 10.4 to Amendment No. 2 to the Registrant’s registration statement on Form S-1 filed October 31, 2001.
10.5	Non-Compete Agreement, dated as of September 20, 2000, by and between Registrant and Robert Antin. Incorporated by reference to Exhibit 10.5 to the Registrant’s registration statement on Form S-1 filed August 9, 2001.
10.6	Non-Compete Agreement, dated as of September 20, 2000, by and between Registrant and Arthur J. Antin. Incorporated by reference to Exhibit 10.6 to the Registrant’s registration statement on Form S-1 filed August 9, 2001.
10.7	Non-Compete Agreement, dated as of September 20, 2000, by and between Registrant and Tomas W. Fuller. Incorporated by reference to Exhibit 10.7 to the Registrant’s registration statement on Form S-1 filed August 9, 2001.
10.8	Non-Compete Agreement, dated as of September 20, 2000, by and between Registrant and Neil Tauber. Incorporated by reference to Exhibit 10.8 to the Registrant’s registration statement on Form S-1 filed August 9, 2001.
10.9	Amended and Restated 1996 Stock Incentive Plan of VCA Antech, Inc. Incorporated by reference to Exhibit 10.9 to Amendment No. 2 to the Registrant’s registration statement on Form S-1 filed October 31, 2001.
10.10	2001 Stock Incentive Plan of VCA Antech, Inc. Incorporated by reference to Exhibit 10.10 to Amendment No. 2 to the Registrant’s registration statement on Form S-1 filed October 31, 2001.
10.11	Corporate Headquarters Lease, dated as of January 1, 1999, by and between VCA Antech, Inc. and Werner Wolfen, Michael Duritz, Nancy Bruch, Dorothy A. Duritz, Harvey Rosenberg and Judy Rosenberg (Landlords). Incorporated by reference to Exhibit 10.11 to Amendment No. 1 to the Registrant’s registration statement on Form S-1 filed October 15, 2001.
10.12	Form of Indemnification Agreement. Incorporated by reference to Exhibit 10.13 to the Registrant’s registration statement on Form S-1 filed August 9, 2001.
10.13	Purchase Agreement, dated as of November 20, 2001, by and between Registrant, VCA Antech, Inc., and certain of its subsidiaries listed on Schedule 1 attached thereto as guarantors, on the one hand, and Goldman, Sachs & Co., on the other hand. Incorporated by reference to Exhibit 1.1 to the Registrant’s registration statement on Form S-4 filed February 1, 2002.

89

Number	Exhibit Description
10.14	Management Services Agreement, dated as of September 20, 2000, by and among Registrant, Vicar Operating, Inc. and Leonard Green and Partners, L.P. . Incorporated by reference to Exhibit 10.12 to the Registrant’s registration statement on Form S-1 filed August 9, 2001.
10.15	Amended and Restated Agreement and Plan of Merger, dated as of August 11, 2000, by and among Registrant, VCA Antech, Inc. and Vicar Recap, Inc. . Incorporated by reference to Exhibit 10.14 to the Registrant’s registration statement on Form S-1 filed August 9, 2001.
21.1	Subsidiaries of Registrant. Incorporated by reference to Exhibit 21.1 to the Registrant’s registration statement on Form S-4 filed February 1, 2002.
23.1	Consent of Arthur Andersen LLP.
24.1	Power of Attorney (included in signature page).
99.1	Confirm of Receipt of Assurances from Arthur Andersen LLP.

90 EX-3.1 3 v80091ex3-1.txt EXHIBIT 3.1 EXHIBIT 3.1 AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF VCA ANTECH, INC. VCA Antech, Inc., a corporation organized and existing under the General Corporation Law of the State of Delaware, does hereby certify: 1. The name of the corporation is VCA Antech, Inc. (the "Corporation"). The Corporation was originally incorporated under the name Veterinary Centers of America, Inc., and the original Certificate of Incorporation of the Corporation was filed with the Secretary of State of the State of Delaware on May 4, 1987. 2. In accordance with Sections 141(f), 228(a), 242 and 245 of the General Corporation Law of the State of Delaware, the Board of Directors and the Stockholders of the Corporation by written consent dated November 16, 2001, duly adopted and approved resolutions amending and restating the Corporation's Certificate of Incorporation, declaring such amendment and restatement advisable. 3. This Amended and Restated Certificate of Incorporation of the Corporation restates and integrates and further amends the provisions of the Certificate of Incorporation of the Corporation. The text of the Certificate of Incorporation as heretofore amended or supplemented is hereby amended and restated to read in its entirety as follows: FIRST: The name of this corporation is VCA Antech, Inc. (the "Corporation"). SECOND: The address of the registered office of the Corporation in the State of Delaware is 1209 Orange Street, City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company. THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which a corporation may now or hereafter be organized under the General Corporation Law of the State of Delaware as set forth in Title 8 to the Delaware Code (the "GCL"). FOURTH: The Corporation is authorized to issue two classes of shares, designated "Preferred Stock" and "Common Stock." The total number of shares which the Corporation shall have authority to issue is 86,000,000 of which 75,000,000 shares shall be Common Stock, par value $0.00l per share, and 11,000,000 shares shall be Preferred Stock, par value $0.001 per share. 1 I. Common Stock Each holder of Common Stock, as such, shall be entitled to one vote for each share of Common Stock held of record by such holder on all matters on which stockholders generally are entitled to vote; provided, however, that, except as otherwise required by law, holders of Common Stock, as such, shall not be entitled to vote on any amendment to this Amended and Restated Certificate of Incorporation (including any Certificate of Designation relating to any series of Preferred Stock) that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to this Amended and Restated Certificate of Incorporation (including any Certificate of Designation relating to any series of Preferred Stock) or pursuant to the GCL. In the event of any voluntary or involuntary liquidation, dissolution, or winding up of the affairs of the Corporation, after payment or provision for payment of the debts and other liabilities of the Corporation and of the preferential amounts, if any, to which the holders of Preferred Stock shall be entitled, the holders of all outstanding shares of Common Stock shall be entitled to share ratably in the remaining net assets of the Corporation. Subject to the preferential rights, if any, of the Preferred Stock, the holders of shares of Common Stock shall be entitled to receive, when and if declared by the Board of Directors of the Corporation, out of the assets of the Corporation which are by law available therefore, dividends payable either in cash, in property, or in shares of Common Stock. II. Preferred Stock Shares of Preferred Stock authorized by this Amended and Restated Certificate of Incorporation may be issued from time to time in one or more series. For any wholly unissued series of Preferred Stock, the Board of Directors of the Corporation (the "Board of Directors") is authorized to fix or alter the rights, preferences, powers, privileges and qualifications, limitations or restrictions granted to or imposed upon wholly unissued series of Preferred Stock, and the number of shares constituting any such series and the designation thereof, or any of them. For any series of Preferred Stock having issued and outstanding shares, the Board of Directors is also authorized to increase (but not above the total number of authorized shares of the class) or decrease (but not below the number of shares thereof then outstanding) the number of shares of any series of Preferred Stock prior or subsequent to the issuance of that series. In case the number of shares of any series shall be decreased in accordance with the foregoing sentence, the shares constituting such decrease shall resume the status of undesignated Preferred Stock. A. Series A Senior Preferred Stock The 14% Series A Senior Redeemable Exchangeable Cumulative Preferred Stock (the "Senior Preferred Stock"), par value $0.001 per share, consists of 3,000,000 authorized shares 2 and has the powers, designations and preferences, the relative, participating, optional and other special rights and the qualifications, limitations and restrictions thereof as follows: 1. Definitions and Interpretation. (a) Definitions. As used in this Section II.A of Article Four of this Amended and Restated Certificate of Incorporation, the following terms shall have the following meanings, unless the context otherwise requires: "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. "Amended and Restated Certificate of Incorporation" means the Corporation's Amended and Restated Certificate of Incorporation. "Bank Facility" means the one or more credit agreements (including, without limitation, the Credit Agreement, dated as of September 20, 2000, by and among Operating Company, as borrower, the Corporation, certain subsidiaries of the Operating Company, as guarantors, the financial institutions parties thereto, Goldman Sachs Credit Partners L.P., as sole lead arranger and sole syndication agent, and Wells Fargo Bank, N.A., as administrative agent and collateral agent) entered into by and among Operating Company, certain of its subsidiaries (if any) and certain financial institutions, which provide for in the aggregate one or more term loans and/or revolving credit and letter of credit facilities, including any related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith, as such credit agreement and/or related documents may be amended, restated, supplemented, renewed, replaced or otherwise modified from time to time whether or not with the same agent, trustee, representative lenders or holders, and, subject to the proviso to the next succeeding sentence irrespective of any changes in the terms and conditions thereof. Without limiting the generality of the foregoing, the term "Bank Facility" shall include any amendment, amendment and restatement, renewal, extension, restructuring, supplement or modification to any such credit agreement and all refundings, refinancings and replacements of any such credit agreement, including any agreement (i) extending the maturity of any Indebtedness incurred thereunder or contemplated thereby, (ii) adding or deleting borrowers or guarantors thereunder; provided, however, that the borrowers and issuers include one or more of the Corporation and its Subsidiaries and their respective successors and assigns, (iii) increasing the amount of Indebtedness incurred thereunder or available to be borrowed thereunder, or (iv) otherwise altering the terms and conditions thereof in a manner not prohibited by the terms hereof. "Beneficial Owner" or "beneficial owner" for purposes of the definition of Change of Control and Affiliate has the meaning attributed to it in Rules 13d-3 and 13d-5 under the Exchange Act (as in effect on the Preferred Stock Issue Date), whether or not applicable. "Board of Directors" means the Board of Directors of the Corporation. "Business Day" means any day that is not a Saturday, a Sunday or a day on which banking institutions in the Corporation's principal place of business, the City of New York or at a place of payment are not required to be open. 3 "Capital Stock" means, with respect to any corporation, any and all shares, interests, rights to purchase (other than convertible or exchangeable Indebtedness that is not itself otherwise capital stock), warrants, options, participations or other equivalents of or interests (however designated) in stock issued by that corporation. "Capitalized Lease Obligation" means, as to any Person, the obligations of such Person under a lease that are required to be classified and accounted for as capital lease obligations under GAAP and, for purposes of this definition, the amount of such obligations at any date shall be the capitalized amount of such obligations at such date, determined in accordance with GAAP. "Cash Equivalent" means, as at any date of determination, (i) marketable securities (a) issued or directly and unconditionally guaranteed as to interest and principal by the United States Government or (b) issued by any agency of the United States the obligations of which are backed by the full faith and credit of the United States, in each case maturing within one year after such date; (ii) marketable direct obligations issued by any state of the United States or any political subdivision of any such state or any public instrumentality thereof, in each case maturing within one year after such date and having, at the time of the acquisition thereof, the highest rating obtainable from either Standard & Poor's Ratings Group ("S&P") or Moody's Investors Service, Inc. ("Moody's"); (iii) commercial paper maturing no more than one year from the date of creation thereof and having, at the time of the acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from Moody's; (iv) certificates of deposit or bankers' acceptances maturing within one year after such date and issued or accepted by any commercial bank organized under the laws of the United States or any state thereof or the District of Columbia that (a) is at least "adequately capitalized" (as defined in the regulations of its primary Federal banking regulator) and (b) has Tier 1 capital (as defined in such regulations) of not less than $100,000,000; and (v) shares of any money market mutual fund that (a) has at least 95% of its assets invested continuously in the types of investments referred to in clauses (i) and (ii) above, (b) has net assets of not less than $500,000,000, and (c) has the highest rating obtainable from either S&P or Moody's. "Certificate of Designation " means the Corporation's Certificate of Designation dated as of September 20, 2000. "Change of Control" means the occurrence of any of the following: (i) the sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or more related transactions, of all or substantially all of the properties and assets of the Corporation and its Subsidiaries taken as a whole to any "person" (as such term is used in Section 13(d)(3) of the Exchange Act), other than an Excluded Person or Excluded Persons, (ii) the adoption of a plan relating to the liquidation or dissolution of the Corporation, (iii) the consummation of any transaction or other event (including, without limitation, any merger or consolidation) the result of which is that any "person" (as defined above), other than an Excluded Person or Excluded Persons, becomes the "beneficial owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the voting stock of the Corporation, or (iv) the first day on which a majority of the members of the Board of Directors are not Continuing Directors. Notwithstanding the foregoing, under no circumstances shall transfers among Green Equity Investors III, L.P. and the Co-Investors and 4 their respective Affiliates or distributions to limited partners of Green Equity Investors III, L.P. or to the members of the Co-Investors be deemed a Change of Control. "Co-Investors" means VCA Co-Investment Fund I, LLC, VCA Co-Investment Fund II, LLC, VCA Co-Investment Fund III, LLC, VCA Co-Investment Fund IV, LLC, VCA Co-Investment Fund V, LLC, VCA Co-Investment Fund VI, LLC, VCA Co-Investment Fund VII, LLC and VCA Co-Investment Fund VIII. "Company Purchase Agreement" means that certain Purchase Agreement, dated as of September 20, 2000, by and among the Corporation, GS Mezzanine Partners II, L.P and Permitted Investors relating to the Company Senior Notes. "Company Senior Notes" means the senior notes due 2010, any Exchange Notes (as defined in the Company Purchase Agreement) and any PIK Notes (as defined in the Company Senior Notes Indenture), including any such notes issued in exchange or replacement therefor, issued pursuant to the Company Senior Notes Indenture. "Company Senior Notes Indenture" means that certain Indenture, dated as of September 20, 2000, by and between the Corporation and Chase Manhattan Bank and Trust Company, National Association, as trustee, pursuant to which the Company Senior Notes are issued. "Consolidated" means, with respect to the Corporation, the consolidated accounts of its Subsidiaries with those of the Corporation, all in accordance with GAAP; provided, however, that "consolidated" will not include consolidation of the accounts of any Unrestricted Subsidiary with the accounts of the Corporation. "Consolidated EBITDA" means, with respect to any Person, for any period, the Consolidated Net Income of such Person and its Consolidated Subsidiaries for such period adjusted to add thereto (to the extent deducted from net revenues in determining Consolidated Net Income), without duplication, the sum of (i) an amount equal to any extraordinary or non-recurring loss plus any net loss realized in connection with the sale or other disposition of assets outside the ordinary course of business, the disposition of any securities by such Person or any of its Subsidiaries or the extinguishment of any Indebtedness by such Person or its Subsidiaries, (ii) consolidated income taxes, (iii) consolidated depreciation and amortization (including amortization of debt issuance costs in connection with any Indebtedness of such Person and its Subsidiaries), (iv) Consolidated Fixed Charges; (v) payments pursuant to the Management Services Agreement (or the corresponding provisions of any agreement amending, extending or replacing the Management Services Agreement); and (vi) all other non-cash charges. "Consolidated Fixed Charges" of any Person means, for any period, the aggregate amount (without duplication and determined in each case in accordance with GAAP) of (a) interest expensed or capitalized, paid, accrued, or scheduled to be paid or accrued (including, in accordance with the following sentence, interest attributable to Capitalized Lease Obligations) of such Person and its Consolidated Subsidiaries during such period, excluding amortization of debt issuance costs incurred in connection with the Senior Notes or the Bank Facility but including (i) original issue discount and non-cash interest payments or accruals on any Indebtedness, (ii) the interest portion of all deferred payment obligations, and (iii) all commissions, discounts and 5 other fees and charges owed with respect to bankers' acceptances and letters of credit financings and currency and Interest Swap and Hedging Obligations (and minus net amounts received under Hedging Obligations), in each case to the extent attributable to such period, and (b) the amount of cash dividends paid by such Person or any of its Consolidated Subsidiaries in respect of preferred stock (other than by Subsidiaries of such Person to such Person or such Person's wholly owned Subsidiaries). For purposes of this definition, (x) interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by the Corporation to be the rate of interest implicit in such Capitalized Lease Obligation in accordance with GAAP and (y) to the extent such expense would result in a liability upon the consolidated balance sheet of such Person in accordance with GAAP, interest expense attributable to any Indebtedness represented by the guaranty by such Person or a Subsidiary of such Person of an obligation of another Person shall be deemed to be the interest expense attributable to the Indebtedness guaranteed. Notwithstanding the foregoing, Consolidated Fixed Charges shall not include costs, fees and expenses incurred in connection with the Merger, and any non-cash charge or expense associated with the write-off of deferred debt issuance costs associated with the Bank Facility or the Senior Notes. "Consolidated Net Income" means, with respect to any specified Person for any period, the aggregate of the Net Income of such Person and its Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided, however, that (a) the Net Income (but not loss) of any Person that is not a Subsidiary or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of dividends or distributions paid in cash to the specified Person or one of its wholly owned Subsidiaries, (b) the Net Income of any Subsidiary shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree or order, or any non-U.S. statute, rule or governmental regulation applicable to that Subsidiary or its stockholders, (c) the Net Income of any Person acquired in a pooling of interests transaction for any period prior to the date of such acquisition shall be excluded, (d) the cumulative effect of a change in accounting principles shall be excluded, and (e) the costs, fees and expenses incurred in connection with the transactions contemplated by the Merger Agreement shall be excluded, including (i) any charge incurred by any Person or its Subsidiaries arising out of the repurchase at $15 per share on the closing date of the Merger of restricted capital stock of such Person or its Subsidiaries held by certain employees of such Person or its Subsidiaries, (ii) any financing, legal, accounting, investment banking or other professional fees and expenses incurred in connection with the Merger, (iii) any other costs and expenses incurred by any Person and its Subsidiaries in connection with the Merger arising pursuant to certain noncompetition agreements executed with members of senior management of such Person, in connection with the termination of certain employment contracts of such Person and its Subsidiaries and in connection with stay bonuses provided to certain employees of such Person and its Subsidiaries, and (iv) premium payments payable to certain note holders of such Person. "Continuing Directors" means, as of any date of determination, any member of the Board of Directors who (i) was a member of the Board of Directors immediately after consummation of the Merger or (ii) was nominated for election or elected to the Board of Directors with the 6 approval, recommendation or endorsement of a majority of the Continuing Directors who were members of the Board of Directors at the time of such nomination or election. "Control" means (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as used with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, directly or through one or more intermediaries, whether through the ownership of voting securities, by contract, or otherwise; provided, however, that, with respect to any ownership interest in the Corporation and its Subsidiaries, a Beneficial Owner of 10% or more of the total voting power normally entitled to vote in the election of directors, managers or trustees, as applicable, shall for such purposes be deemed to constitute control. "Default Event" means any of the following events: (i) any time when the Corporation fails to make a mandatory redemption of the Senior Preferred Stock when required (whether or not any contractual or other restrictions apply to such redemption) pursuant to Section 5(b) hereof; or (ii) any time when the Corporation fails to make an offer to repurchase all of the outstanding shares of Senior Preferred Stock following a Change of Control, if such offer to repurchase is required to be made pursuant to Section 8(a) hereof (whether or not any contractual or other restrictions apply to such redemption). "Disqualified Capital Stock" means (a) except as set forth in (b), with respect to any Person, any Equity Interest of such Person that, by its terms or by the terms of any security into which it is convertible, exercisable or exchangeable, is, or upon the happening of an event or the passage of time or both would be, required to be redeemed or repurchased (including at the option of the holder thereof) by such Person or any of its Subsidiaries, in whole or in part, on or prior to September 20, 2012 and (b) with respect to any Subsidiary of such Person (including with respect to any Subsidiary of the Corporation), any Equity Interests other than any common equity with no preference, privileges, or redemption or repayment provisions and preferred equity owned by the Corporation or one of its Subsidiaries. "Dividend Payment Date" means January 1, April 1, July 1 and October 1 of each year. "Dividend Period" means the Initial Dividend Period and, thereafter, each Quarterly Dividend Period. "Equity Interest" of any Person means any shares, interests, participations or other equivalents (however designated) in such Person's equity, and shall in any event include any Capital Stock issued by, or partnership or membership interests in, such Person. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder. "Exchange Date" means a date on which shares of Senior Preferred Stock are exchanged by the Corporation for Exchange Debentures. "Exchange Debentures" means the 14% Subordinated Debentures due 2012 of the Corporation to be issued at the option of the Corporation in exchange for the Senior Preferred Stock. 7 "Exchange Indenture" means the Indenture pursuant to which the Exchange Debentures will be issued. "Excluded Persons" means (i) Green Equity Investors III, L.P., (ii) the Co-Investors, and (iii) their Related Parties. "GAAP" means United States generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as approved by a significant segment of the accounting profession in the United States as in effect on the Preferred Stock Issue Date. "Holder" means a Person in whose name a share of Senior Preferred Stock is registered. "Indebtedness" of any Person means, without duplication, (a) all liabilities and obligations, contingent or otherwise, of any such Person, to the extent such liabilities and obligations would appear as a liability upon the consolidated balance sheet of such Person in accordance with GAAP, (i) in respect of borrowed money (whether or not the recourse of the lender is to the whole of the assets of such Person or only to a portion thereof), (ii) evidenced by bonds, notes, debentures or similar instruments, (iii) representing the balance deferred and unpaid of the purchase price of any property or services, except those incurred in the ordinary course of its business that would constitute ordinarily a trade payable to trade creditors; (b) all liabilities and obligations, contingent or otherwise, of such Person (i) evidenced by bankers' acceptances or similar instruments issued or accepted by banks, (ii) relating to any Capitalized Lease Obligation, or (iii) evidenced by a letter of credit or a reimbursement obligation of such Person with respect to any letter of credit; (c) all net obligations of such Person under Interest Swap and Hedging Obligations; (d) all liabilities and obligations of others of the kind described in the preceding clauses (a), (b) or (c) that such Person has guaranteed or that is otherwise its legal liability or that are secured by one or more Liens on any assets or property of such Person; provided, however, that if the liabilities or obligations that are secured by a Lien have not been assumed in full by such Person or are not such Person's legal liability in full, the amount of such Indebtedness for the purposes of this definition shall be limited to the lesser of the amount of such Indebtedness secured by such Lien or the fair market value of the assets or property securing such Lien; (e) any and all deferrals, renewals, extensions, refinancing and refundings (whether direct or indirect) of, or amendments, modifications or supplements to, any liability of the kind described in any of the preceding clauses (a), (b), (c) or (d), or this clause (e), whether or not between or among the same parties; and (f) all Disqualified Capital Stock of such Person (measured at the greater of its voluntary or involuntary maximum fixed repurchase price plus accrued and unpaid dividends). For purposes hereof, the "maximum fixed repurchase price" of any Disqualified Capital Stock that does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Capital Stock. "Indentures" means the Company Senior Notes Indenture and the Senior Subordinated Notes Indenture. 8 "Initial Dividend Period" means the dividend period commencing on the Preferred Stock Issue Date and ending on the day before the first Dividend Payment Date to occur thereafter. "Interest Swap and Hedging Obligation" means any obligation of any Person pursuant to any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate exchange agreement, currency exchange agreement or any other agreement or arrangement designed to protect against fluctuations in interest rates or currency values, including, without limitation, any arrangement whereby, directly or indirectly, such Person is entitled to receive from time to time periodic payments calculated by applying either a fixed or floating rate of interest on a stated notional amount in exchange for periodic payments made by such Person calculated by applying a fixed or floating rate of interest on the same notional amount. "Investment" by any Person in any other Person means (without duplication) (a) the acquisition (whether by purchase, merger, consolidation or otherwise) by such Person (whether for cash, property, services, securities or otherwise) of capital stock, bonds, notes, debentures, partnership or other ownership interests or other securities, including any options or warrants, of such other Person or any agreement to make any such acquisition; (b) the making by such Person of any deposit with, or advance, loan or other extension of credit to, such other Person (including the purchase of property from another Person subject to an understanding or agreement, contingent or otherwise, to resell such property to such other Person) or any commitment to make any such advance, loan or extension (but excluding accounts receivable, endorsements for collection or deposits arising in the ordinary course of business) other than guarantees of Indebtedness of the Corporation or any Subsidiary; (c) the making of any capital contribution by such Person to such other Person; and (d) the designation by the Board of Directors of the Corporation of any Person to be an Unrestricted Subsidiary. The Corporation shall be deemed to make an Investment in an amount equal to the fair market value of the net assets of any subsidiary (or, if neither the Corporation nor any of its Subsidiaries has theretofore made an Investment in such subsidiary, in an amount equal to the Investments being made), at the time that such subsidiary is designated an Unrestricted Subsidiary, and any property transferred to an Unrestricted Subsidiary from the Corporation or a Subsidiary of the Corporation shall be deemed an Investment valued at its fair market value at the time of such transfer. The amount of any such Investment shall be reduced by any liabilities or obligations of the Corporation or any of its Subsidiaries to be assumed or discharged in connection with such Investment by an entity other than the Corporation or any of its Subsidiaries. For purposes of clarification and greater certainty, the designation of a newly formed subsidiary as an Unrestricted Subsidiary shall not constitute an Investment. "Junior Preferred Stock" means the Corporation's 12% Series B Junior Redeemable Cumulative Preferred Stock, par value $0.001 per share, consisting of 3,000,000 authorized shares. "Lien" means any mortgage, charge, pledge, lien (statutory or otherwise), privilege, security interest, hypothecation or other encumbrance upon or with respect to any property of any kind, real or personal, movable or immovable, now owned or hereafter acquired. 9 "Liquidation Preference" means, as of any date, the sum of (a) $25.00 per share of Senior Preferred Stock, plus (b) accrued and unpaid dividends added to the Liquidation Preference in accordance with Section 3(a), minus (c) the Base Amount of any special dividend paid pursuant to Section 3(f). "Management Services Agreement" means that certain Management Services Agreement, dated as of the September 20, 2000, by and between Leonard Green & Partners, L.P., Operating Company and the Corporation, providing for certain fees, expenses and reimbursements to be paid to Leonard Green & Partners, L.P., as such Management Services Agreement may be amended from time to time. "Merger" means the merger of Recap with and into the Corporation in accordance with the provisions of the Merger Agreement. "Merger Agreement" means that certain Amended and Restated Agreement and Plan of Merger, dated as of August 11, 2000, between the Corporation, Operating Company and Recap, as the same may be further amended from time to time. "Net Cash Proceeds" means the aggregate amount of cash or Cash Equivalents received by the Corporation in the case of a sale of Qualified Capital Stock plus, in the case of an issuance of Qualified Capital Stock upon any exercise, exchange or conversion of securities (including options, warrants, rights and convertible or exchangeable debt) of the Corporation that were issued for cash on or after the Preferred Stock Issue Date, the amount of cash originally received by the Corporation upon the issuance of such securities (including options, warrants, rights and convertible or exchangeable debt) less the sum of all payments, fees, commissions and expenses (including, without limitation, the fees and expenses of legal counsel and investment banking fees and expenses) incurred in connection with such sale or issuance of Qualified Capital Stock. "Net Income" means, with respect to any Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends, excluding, however, (i) any gain (but not loss), together with any related provision for taxes on such gain (but not loss), realized in connection with the (A) sale or other disposition of assets outside the ordinary course of business, or (B) disposition of any securities by such Person or any of its Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Subsidiaries, (ii) any extraordinary or nonrecurring gain (but not loss), together with any related provision for taxes on such extraordinary or nonrecurring gain (but not loss), and (iii) any non-cash compensation expense of such Person attributable to the exercise of options to acquire Capital Stock of the Corporation by any officers, directors or employees of the Corporation or any of its Subsidiaries in each case prior to, or in connection with, the consummation of the Merger. "Obligations" means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness. "Operating Company" means Vicar Operating, Inc., a Delaware corporation. 10 "Other Permitted Payments" means, without duplication, (i) compensation, indemnification and other benefits paid or made available (A) pursuant to the employment agreements between the Corporation and members of its senior management, (B) for or in connection with services actually rendered to the Corporation and comparable to those generally paid or made available by entities engaged in the same or similar businesses (including reimbursement or advancement of reasonable out-of-pocket expenses) and loans to officers, directors and employees, (x) in the ordinary course of business or (y) to purchase common stock of the Corporation in an amount not to exceed $10 million; (ii) payments pursuant to the Management Services Agreement (or the corresponding provisions of any agreement amending, extending or replacing the Management Services Agreement); (iii) the repurchase of common stock, stock options and stock equivalents of the Corporation held by current or former directors, officers, employees of or consultants and advisors to the Corporation or any of its Subsidiaries ("Management Stock Repurchases") in an amount of $5 million at the end of fiscal year 2000, and such amount shall be increased by $1 million a year for each fiscal year thereafter, plus the amount of any net cash proceeds to the Corporation from: (A) sales of Capital Stock of the Corporation to directors, officers and employees of or consultants and advisors to the Corporation subsequent to the Preferred Stock Issue Date; and (B) proceeds from any key-person life insurance policies, in either case, to the extent utilized for Management Stock Repurchases; provided, however, that any amount received from such life insurance not so paid in any fiscal year may be paid in future fiscal years; (iv) Restricted Payments in an aggregate amount not to exceed $10 million; and (v) expenses and payments in connection with the Merger. "Permitted Investment" means (a) Investments in any of the Senior Notes; (b) Investments in Cash Equivalents; (c) Investments in intercompany notes; provided, however, that Indebtedness under any such notes of a Subsidiary shall be deemed to be a Restricted Investment if such Person ceases to be a Subsidiary; (d) Investments in the form of promissory notes of members of the Corporation's management not to exceed $5 million in principal amount at any time outstanding solely in consideration of the purchase by such persons of Qualified Capital Stock of the Corporation; (e) Investments by the Corporation or any Subsidiary in any Person that is or immediately after such Investment becomes a Subsidiary, or immediately after such Investment merges or consolidates into the Corporation or any Subsidiary; provided, however, that such Person is engaged in all material respects in a Related Business; (f) Investments in the Corporation by any Subsidiary; provided, however, that in the case of Indebtedness constituting any such Investment, such Indebtedness shall be unsecured and subordinated in all respects to the Corporation's obligations under the Senior Notes; (g) Investments in securities of trade creditors or customers received in settlement of obligations that arose in the ordinary course of business or pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such trade creditors or customers; (h) Investments by the Corporation outstanding on the Preferred Stock Issue Date; (i) transactions or arrangements with officers or directors of the Corporation or any Subsidiary entered into in the ordinary course of business; (j) any other contract, agreement, arrangement or transaction between the Corporation or any of its Subsidiaries with any Affiliate; (k) other Investments in any Person (other than a Subsidiary of the Corporation) having an aggregate fair market value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (k) that are at the time outstanding, not to exceed $10 million; (l) Investments in Subsidiaries of the Corporation formed or acquired after the Closing Date that (i) are incorporated outside the United States, (ii) are not 11 guarantors under the Senior Subordinated Notes Indenture, and (iii) if they were guarantors, would give rise to an investment in United States property within the meaning of Section 956 of the Internal Revenue Code of 1986, as amended from time to time, which Investments shall not exceed in the aggregate more than $10 million outstanding at any time (treating any such Investment that is not Indebtedness at the value thereof on the date it is made); and (m) Investments in Equity Interests of a Person engaged in a Related Business, other than a Person described in clause (e), through the issuance of common stock of the Corporation. "Permitted Investors" means any of the affiliated investment funds of GS Mezzanine Partners II, L.P., GS Mezzanine Partners II Offshore, L.P., TCW Leveraged Income Trust, L.P., TCW Leveraged Income Trust II, L.P., TCW Leveraged Income Trust IV, L.P., TCW/Crescent Mezzanine Partners II, L.P., TCW/Crescent Mezzanine Trust II and The Northwestern Mutual Life Insurance Company. "Person" means any individual, corporation, partnership, joint venture, association, limited liability company, joint-stock company, trust, unincorporated organization or government or agency or political subdivision thereof (including any subdivision or ongoing business of any such entity or substantially all of the assets of any such entity, subdivision or business). "Preferred Stock Issue Date" means the date on which the Senior Preferred Stock is originally issued by the Corporation under the Certificate of Designation. "Qualified Capital Stock" means any Equity Interest that is not Disqualified Capital Stock. "Qualified Exchange" means any legal defeasance, redemption, retirement, repurchase or other acquisition of Capital Stock or Indebtedness of the Corporation issued on or after the Preferred Stock Issue Date with the Net Cash Proceeds received by the Corporation from the substantially concurrent sale of its Qualified Capital Stock or any exchange of Qualified Capital Stock of the Corporation for any Capital Stock or Indebtedness of the Corporation issued on or after the Issue Date. "Quarterly Dividend Period" means the quarterly period commencing on each January 1, April 1, July 1 and October 1 and ending on the day before the following Dividend Payment Date. "Recap" means Vicar Recap, Inc., a Delaware corporation. "Redemption Date," with respect to any shares of Senior Preferred Stock, means the date on which such shares of Senior Preferred Stock are redeemed by the Corporation. "Related Business" means the business conducted or proposed to be conducted by the Corporation as of the Preferred Stock Issue Date and any and all businesses that in the good faith judgment of the Board of Directors of the Corporation are reasonably related businesses, including reasonably related extensions thereof. "Related Party" means with respect to any Excluded Person, (A) any Affiliate, controlling stockholder, 80% or more owned Subsidiary, or spouse or immediate family member 12 (in the case of an individual) of such Excluded Person or (B) any trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners, owners or persons holding an 80% or more controlling interest of which consist of such Excluded Person and/or such other persons referred to in the immediately preceding clause (A). "Restricted Investment" means, in one or a series of related transactions, any Investment, other than investments in Cash Equivalents and other Permitted Investments; provided, however, that a merger of another Person with or into the Corporation or a Subsidiary shall not be deemed to be a Restricted Investment so long as the surviving entity is the Corporation or a Subsidiary. "Restricted Payment" means, (a) the declaration or payment of any dividend or other distribution in respect of Junior Securities or Equity Interests of the Corporation or any of the Corporation's Subsidiaries, (b) any payment on account of the purchase, redemption or other acquisition or retirement for value of Junior Securities or Equity Interests of the Corporation or any of the Corporation's Subsidiaries, and (c) any Restricted Investment by such Person; provided, however, that the term "Restricted Payment" shall not include (i) any dividend, distribution or other payment on or with respect to Equity Interests of the Corporation to the extent payable solely in shares of Qualified Capital Stock of the Corporation; (ii) any dividend, distribution or other payment to the Corporation, or to any of its Subsidiaries, by the Corporation or any of its Subsidiaries; (iii) payments made in connection with the Merger; (iv) Permitted Investments; or (v) pro rata dividends and other distributions on Equity Interests of any Subsidiary by such Subsidiary. "SEC" means the Securities and Exchange Commission. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations thereunder. "Senior Notes" means the Company Senior Notes and the Senior Subordinated Notes. "Senior Preferred Stock" means the Corporation's 14% Series A Senior Redeemable Exchangeable Cumulative Preferred Stock, par value $0.001 per share, consisting of 3,000,000 authorized shares. "Senior Subordinated Notes" means the senior subordinated notes due 2010, including any such notes issued in exchange or replacement therefor, issued by Operating Company pursuant to the Senior Subordinated Notes Indenture. "Senior Subordinated Notes Indenture" means that certain Indenture, dated as of September 20, 2000, by and among Operating Company, the Subsidiaries of Operating Company parties thereto, and Chase Manhattan Bank and Trust Company, National Association, as trustee, pursuant to which the Senior Subordinated Notes are issued. "Senior Subordinated Notes Purchase Agreement" means that certain Purchase Agreement, dated as of September 20, 2000, by and among Operating Company and Permitted Investors relating to the Senior Subordinated Notes. 13 "Stockholders Agreement" means that certain Stockholders Agreement, dated as of September 20, 2000, by and among the Corporation, Green Equity Investors III, L.P, Permitted Investors and the other signatories thereto, as the same may be amended from time to time. "Subsidiary" means, with respect to any Person, (i) any corporation, association or other business entity of which more than 50.0% of the total voting power of the Equity Interests entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person (or a combination thereof) and (ii) any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are such Person or of one or more Subsidiaries of such Person (or any combination thereof). "Unrestricted Subsidiary" means any Subsidiary of the Corporation that does not own any Capital Stock of, or own or hold any Lien on any property of the Corporation or any other Subsidiary of the Corporation and that, at the time of determination, shall be an Unrestricted Subsidiary (as designated by the Board of Directors of the Corporation); provided, however, that (i) such Subsidiary shall not engage, to any substantial extent, in any line or lines of business activity other than a Related Business and (ii) neither immediately prior thereto nor after giving pro forma effect to such designation would there exist a Default Event. The Board of Directors may designate any Unrestricted Subsidiary to be a Subsidiary, provided that no Default Event is existing or will occur as a consequence thereof. Each such designation shall be evidenced by delivering to the Holders a certified copy of the resolution giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing conditions. "Wholly owned Subsidiary" of any Person means a Subsidiary of such Person all of the outstanding Capital Stock, Equity Interests or other ownership interests of which (other than directors' qualifying shares and shares in non-U.S. companies required by local law to be owned by local residents) shall at the time be owned (i) by such Person, (ii) by one or more wholly owned Subsidiaries of such Person or (iii) by such Person and one or more wholly owned Subsidiaries of such Person. (b) Interpretation. For the purposes of this Section II.A of Article Four of this Amended and Restated Certificate of Incorporation: (x) words in the singular shall be deemed to include the plural and vice versa and words of one gender shall be deemed to include the other gender as the context requires and (y) the word "including" and words of similar import shall mean "including, without limitation," unless the context otherwise requires or unless otherwise specified. 2. Rank. The Senior Preferred Stock shall, with respect to dividend distributions and distributions upon the liquidation, winding up or dissolution of the Corporation, rank senior to all classes of common stock of the Corporation, to the Junior Preferred Stock and to each other class of capital stock or series of preferred stock hereafter created by the Board of Directors the terms of which do not expressly provide that it ranks senior to or on a parity with the Senior Preferred Stock as to dividend distributions and distributions upon the liquidation, winding up or dissolution of the 14 Corporation (collectively referred to with the common stock and Junior Preferred Stock of the Corporation as "Junior Securities"). The Senior Preferred Stock shall, with respect to dividend distributions and distributions upon the liquidation, winding up or dissolution of the Corporation, rank on parity with any class of capital stock or series of preferred stock hereafter created that expressly provides that it ranks on a parity with the Senior Preferred Stock as to dividend distributions and distributions upon the liquidation, winding up or dissolution of the Corporation ("Parity Securities"); provided, however, that any such Parity Securities that were not approved by the Holders of Senior Preferred Stock in accordance with Section 6(b)(i) hereof shall be deemed to be Junior Securities and not Parity Securities. The Senior Preferred Stock shall, with respect to dividend distributions and distributions upon the liquidation, winding up or dissolution of the Corporation, rank junior to each class of capital stock or series of preferred stock hereafter created that has been approved by the Holders of Senior Preferred Stock in accordance with Section 6(b)(i) hereof and that expressly provides that it ranks senior to the Senior Preferred Stock as to dividend distributions or distributions upon the liquidation, winding up or dissolution of the Corporation ("Senior Securities"). 3. Dividends. (a) Beginning on the Preferred Stock Issue Date, the Holders of the outstanding shares of Senior Preferred Stock shall be entitled to receive, whether or not declared by the Board of Directors, out of funds legally available therefor, distributions in the form of cash dividends on each share of Senior Preferred Stock, at a rate per annum equal to 14% of the Liquidation Preference (with such Liquidation Preference being determined as of the first day of such Dividend Period) payable quarterly. All dividends shall be cumulative, whether or not earned or declared, on a daily basis from the Preferred Stock Issue Date and shall be payable quarterly in arrears on each Dividend Payment Date, commencing on January 1, 2001; provided, however, that if any dividend payable on any Dividend Payment Date is not declared and paid in full in cash on such Dividend Payment Date, the amount payable as dividends on such Dividend Payment Date that is not paid in cash on such Dividend Payment Date shall be added to the Liquidation Preference on the relevant Dividend Payment Date and may no longer be declared or paid as dividends in cash except for special dividends paid pursuant to Section 3(f). The addition of such amount to the Liquidation Preference shall constitute full payment of such dividend. Dividends payable on shares of the Senior Preferred Stock for any period less than a year shall be computed on the basis of a 360-day year of twelve 30-day months and the actual number of days elapsed in the period for which such Dividends are payable. Each distribution in the form of a dividend shall be payable to the Holders of Senior Preferred Stock of record as they appear on the stock books of the Corporation on such record dates, not less than 10 nor more than 45 days preceding the related Dividend Payment Date, as shall be fixed by the Board of Directors. Dividends shall cease to accumulate in respect of shares of the Senior Preferred Stock on the Exchange Date or on the date of their earlier redemption unless the Corporation shall have failed to issue the appropriate aggregate principal amount of Exchange Debentures (as defined in Section 7(a)(i) hereof) in respect of the Senior Preferred Stock on the Exchange Date or shall have failed to pay the relevant redemption price on the date fixed for redemption. (b) All dividends paid in cash with respect to shares of the Senior Preferred Stock pursuant to Section 3(a) shall be paid pro rata to the Holders thereof entitled thereto. 15 (c) Nothing herein contained shall in any way or under any circumstances be construed or deemed to require the Board of Directors to declare, or the Corporation to pay or set apart for payment, any dividends on shares of the Senior Preferred Stock at any time; provided, however, for the avoidance of doubt, this Section 3(c) shall not be construed or deemed to prevent any Holder of shares of Senior Preferred Stock from receiving any dividends to which such Holder is entitled pursuant to Section 5 or 8 hereof. (d) No dividends shall be declared by the Board of Directors or paid or funds set apart for payment of dividends by the Corporation on any Parity Securities for any period unless cumulative dividends shall have been or contemporaneously are declared and paid in full, or declared and (in the case of dividends payable in cash) a sum in cash set apart sufficient for such payment, on the Senior Preferred Stock for all Dividend Periods terminating on or prior to the date of payment of such dividends on such Parity Securities. If any dividends are not paid in full, as aforesaid, upon the shares of the Senior Preferred Stock and any other Parity Securities, all dividends declared upon shares of the Senior Preferred Stock and any other Parity Securities shall be declared pro rata based on the relative liquidation preference of the Senior Preferred Stock and such Parity Securities. So long as any shares of the Senior Preferred Stock are outstanding, the Corporation shall not make any payment on account of, or set apart for payment money for a sinking or other similar fund for, the purchase, redemption or other retirement of, any of the Parity Securities or any warrants, rights, calls or options exercisable for or convertible into any of the Parity Securities, and shall not permit any corporation or other entity directly or indirectly controlled by the Corporation to purchase, redeem or retire any of the Parity Securities or any such warrants, rights, calls or options unless dividends determined in accordance herewith on the Senior Preferred Stock shall have been paid or contemporaneously are declared and paid in full. (e) (i) Holders of shares of the Senior Preferred Stock shall be entitled to receive the dividends provided for in Section 3(a) hereof in preference to and in priority over any dividends upon any of the Junior Securities. (ii) So long as any shares of Senior Preferred Stock are outstanding, the Corporation shall not (1) declare, pay or set apart for payment any dividend on any of the Junior Securities or make any payment on account of, or set apart for payment money for a sinking or other similar fund for, the purchase, redemption or other retirement of, any of the Junior Securities or any warrants, rights, calls or options exercisable for or convertible into any of the Junior Securities (other than the repurchase, redemption or other acquisition or retirement for value of Junior Securities (and any warrants, rights, calls or options exercisable for or convertible into such Junior Securities) held by current or former directors, officers, employees of or consultants or advisors to the Corporation or any of its Subsidiaries, which repurchase, redemption or other acquisition or retirement shall have been approved by the Board of Directors or shall have been made pursuant to certain call options provided in the Stockholders Agreement, provided, however, that such Junior Securities may only be repurchased, redeemed or otherwise acquired or retired either in exchange for Junior Securities or upon the cessation of service to the Corporation or its Subsidiaries (by termination, resignation, retirement, death or disability or otherwise) of such director, officer, employee, consultant or advisor), or (2) make any distribution in respect of Junior Securities, either directly or indirectly, and whether in cash, obligations or shares of the Corporation or other property (other than distributions or dividends 16 in Junior Securities to the holders of Junior Securities), or (3) permit any corporation or other entity directly or indirectly controlled by the Corporation to purchase or redeem any of the Junior Securities or any such warrants, rights, calls or options, unless in any such case cumulative dividends determined in accordance herewith have been paid in full in cash on the Senior Preferred Stock and all other redemption or repayment obligations in respect of the Senior Preferred Stock have been paid in full in cash. 17 (f) At any time and from time to time when the Liquidation Preference per share of Senior Preferred Stock exceeds $25.00, the Corporation may declare and pay, to the holders of record of the Senior Preferred Stock on the record date chosen by the Corporation for such dividend, a special dividend equal to the positive difference between the Liquidation Preference per share of Senior Preferred Stock and $25.00 per share of Senior Preferred Stock (such difference, the "Base Amount"), plus accrued and unpaid dividends on the Base Amount to the date of payment. Upon payment of such a dividend, the Liquidation Preference shall be reduced to $25.00 per share of Senior Preferred Stock. 4. Liquidation Preference. (a) Upon any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, the Holders of shares of Senior Preferred Stock then outstanding shall be entitled to be paid, out of the assets of the Corporation available for distribution to its stockholders, the Liquidation Preference per share of Senior Preferred Stock in cash (plus an amount in cash equal to a prorated dividend for the period from the last Dividend Payment Date to the date fixed for liquidation, dissolution or winding up) before any payment shall be made or any assets distributed to the holders of any of the Junior Securities, including, without limitation, common stock of the Corporation. Except as provided in the preceding sentence, Holders of shares of Senior Preferred Stock shall not be entitled to any distribution in the event of liquidation, dissolution or winding up of the affairs of the Corporation. If the assets of the Corporation are not sufficient to pay in full the liquidation payments payable to the Holders of outstanding shares of the Senior Preferred Stock and all Parity Securities, then the holders of all such shares shall share equally and ratably in such distribution of assets of the Corporation in accordance with the amounts that would be payable on such distribution if the amount to which the Holders of outstanding shares of Senior Preferred Stock and the holders of outstanding shares of all Parity Securities are entitled were paid in full. (b) For the purposes of this Section 4, neither the sale, conveyance, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or substantially all of the property or assets of the Corporation nor the consolidation or merger of the Corporation with or into one or more corporations or other entities shall be deemed to be a liquidation, dissolution or winding up of the affairs of the Corporation (unless such sale, conveyance, exchange or transfer is in connection with a liquidation, dissolution or winding up of the business of the Corporation). 5. Redemption. (a) Optional Redemption. (i) The Corporation may (subject to the legal availability of funds therefor), at the option of the Corporation, redeem in cash at any time or from time to time on or after September 20, 2002, from any source of funds legally available therefor, in whole or in part, in the manner provided in Section 5(c) hereof, any or all of the shares of the Senior Preferred Stock, at a redemption price equal to the following percentages of the Liquidation Preference per share (plus an amount in cash equal to a prorated dividend for the period from the 18 Dividend Payment Date immediately prior to the Redemption Date to the Redemption Date) (the "Optional Redemption Price"), in each case beginning on September 20 of the year indicated: 2002 109% 2003 106% 2004 103% 2005 and thereafter 100% provided, however, that no optional redemption pursuant to this Section 5(a)(i) shall be authorized or made at any time when the Corporation is making or required to make within the next 30 days, or purchasing shares of Senior Preferred Stock under, a Change of Control Offer in accordance with the provisions of Section 8 hereof. (ii) In the event of a redemption pursuant to Section 5(a)(i) hereof of only a portion of the then outstanding shares of the Senior Preferred Stock, the Corporation shall effect such redemption as it determines, pro rata, according to the number of shares held by each Holder of Senior Preferred Stock. (iii) In the event of a firm commitment underwritten initial public offering of common stock of the Corporation pursuant to a registration statement under the Securities Act with aggregate gross proceeds to the Corporation of at least $30,000,000 (the "Public Offering"), the Corporation may (subject to the legal availability of funds therefor), at the option of the Corporation, redeem in cash at any time or from time to time following the consummation of the Public Offering, from any source of funds legally available therefor, in whole or in part, in the manner provided in Section 5(c) hereof, any or all of the shares of the Senior Preferred Stock, at a redemption price equal to 100% percent of the Liquidation Preference per share (plus an amount in cash equal to a prorated dividend for the period from the Dividend Payment Date immediately prior to the Redemption Date to the Redemption Date) (the "Public Offering Optional Redemption Price"). For the purposes of this Section 5, the defined term "Optional Redemption Price" shall have the meaning set forth in Section 5(a)(i) hereof or shall mean the Public Offering Optional Redemption Price, as the case may be. In the event of a redemption pursuant to this Section 5(a)(iii) of only a portion of the then outstanding shares of the Senior Preferred Stock, the Corporation shall effect such redemption as it determines, pro rata, according to the number of shares held by each Holder of Senior Preferred Stock. (b) Mandatory Redemption. On September 20, 2012, the Corporation shall redeem in cash, subject to contractual and other restrictions with respect thereto, from any source of funds legally available therefor, in the manner provided in Section 5(c) hereof all but not less than all of the shares of the Senior Preferred Stock then outstanding at a redemption price equal to 100% of the Liquidation Preference per share (plus an amount in cash equal to a prorated dividend for the period from the Dividend Payment Date immediately prior to the Redemption Date to the Redemption Date) (the "Mandatory Redemption Price"). (c) Procedures for Redemption. (i) Written notice (the "Redemption Notice") shall be given by first-class mail, postage prepaid, to each Holder of Senior Preferred Stock of record on the record date 19 fixed for such redemption of the Senior Preferred Stock at such Holder's address as the same appears on the stock register of the Corporation; provided, however, that no failure to give such notice nor any deficiency therein shall affect the validity of the procedure for the redemption of any shares of Senior Preferred Stock to be redeemed except as to the Holder or Holders to whom the Corporation has failed to give said notice or except as to the Holder or Holders whose notice was defective. The Redemption Notice shall state: (1) whether the redemption is pursuant to Section 5(a) or 5(b) hereof; (2) the Optional Redemption Price or the Mandatory Redemption Price, as the case may be; (3) whether all or less than all the outstanding shares of the Senior Preferred Stock are to be redeemed and the total number of shares of the Senior Preferred Stock being redeemed; (4) the number of shares of Senior Preferred Stock held, as of the appropriate record date, by the Holder that the Corporation intends to redeem; (5) the date fixed for redemption; (6) that the Holder is to surrender to the Corporation, at the place or places where certificates for shares of Senior Preferred Stock are to be surrendered for redemption, in the manner and at the price designated, his certificate or certificates representing the shares of Senior Preferred Stock to be redeemed; and (7) that dividends on the shares of the Senior Preferred Stock to be redeemed shall cease to accrue on such Redemption Date unless the Corporation defaults in the payment of the Optional Redemption Price or the Mandatory Redemption Price, as the case may be. (ii) Each Holder of Senior Preferred Stock shall surrender the certificate or certificates representing such shares of Senior Preferred Stock to be redeemed to the Corporation, duly endorsed, in the manner and at the place designated in the Redemption Notice, and on the Redemption Date the full Optional Redemption Price or Mandatory Redemption Price, as the case may be, for such shares shall be payable in cash to the Person whose name appears on such certificate or certificates as the owner thereof, and each surrendered certificate shall be canceled and retired. In the event that less than all of the shares represented by any such certificate are redeemed, a new certificate shall be issued representing the unredeemed shares. (iii) Unless the Corporation defaults in the payment in full of the applicable redemption price, dividends on the Senior Preferred Stock called for redemption shall cease to accumulate on the Redemption Date, and the Holders of such redemption shares shall cease to have any further rights with respect thereto on the Redemption Date, other than the right to receive the Optional Redemption Price or the Mandatory Redemption Price, as the case may be, without interest. 6. Voting Rights. (a) The Holders of shares of Senior Preferred Stock, except as otherwise required under Delaware law or as set forth in Section 6(b) below, shall not be entitled or permitted to vote on any matter required or permitted to be voted upon by the stockholders of the Corporation. (b) (i) So long as any shares of the Senior Preferred Stock are outstanding, the Corporation shall not authorize or issue any class or series of Parity Securities without the affirmative vote or consent of Holders of a majority of the outstanding shares of Senior Preferred Stock, voting or consenting, as the case may be, separately as one class, given 20 in person or by proxy, either in writing or by resolution adopted at an annual or special meeting, except that without the approval of Holders of Senior Preferred Stock, the Corporation may authorize and issue shares of Parity Securities in exchange for, or the proceeds of which concurrently are used to redeem or repurchase, any or all shares of Senior Preferred Stock then outstanding; provided, however, that, in the case of Parity Securities issued in exchange for, or the proceeds of which are used to redeem or repurchase, less than all shares of Senior Preferred Stock then outstanding, (1) the aggregate liquidation preference of such Parity Securities shall not exceed the aggregate liquidation preference of, premium and accrued and unpaid dividends on, and expenses in connection with the refinancing of, the Senior Preferred Stock so exchanged, redeemed or repurchased, (2) such Parity Securities shall not be Disqualified Capital Stock and (3) the Corporation may pay dividends on such Parity Securities in the form of cash or such Parity Securities. (ii) So long as any shares of the Senior Preferred Stock are outstanding, the Corporation shall not authorize or issue any class or series of Senior Securities without the affirmative vote or consent of Holders of a majority of the outstanding shares of Senior Preferred Stock, voting or consenting, as the case may be, separately as one class, given in person or by proxy, either in writing or by resolution adopted at an annual or special meeting. (iii) So long as any shares of the Senior Preferred Stock are outstanding, the Corporation shall not amend this Amended and Restated Certificate of Incorporation, so as to affect adversely the specified rights, preferences, privileges or voting rights of Holders of shares of Senior Preferred Stock or to authorize the issuance of any additional shares of Senior Preferred Stock without the affirmative vote or consent of Holders of a majority of the outstanding shares of Senior Preferred Stock, voting or consenting, as the case may be, separately as one class, given in person or by proxy, either in writing or by resolution adopted at an annual or special meeting. (iv) The affirmative vote or consent of Holders of a majority of the outstanding shares of Senior Preferred Stock, voting or consenting, as the case may be, separately as one class, whether voting in person or by proxy, either in writing or by resolution adopted at an annual or special meeting, may waive compliance with any provision of Section II.A or II.B of Article Four of this Amended and Restated Certificate of Incorporation. (c) In any case in which the Holders of shares of the Senior Preferred Stock shall be entitled to vote pursuant to this Section 6 or pursuant to Delaware law, each Holder of shares of the Senior Preferred Stock shall be entitled to one vote for each share of Senior Preferred Stock held. 7. Optional Exchange. (a) Conditions. (i) Subject to contractual and other restrictions with respect thereto, the Corporation may, at its option on any Dividend Payment Date (the "Exchange Date"), exchange all, but not less than all, of the then outstanding shares of Senior Preferred Stock into the Corporation's 14% Senior Subordinated Debentures due 2012 (the "Exchange Debentures"). 21 The Exchange Debentures shall be subordinated to the Senior Notes to the same extent as the Senior Notes are subordinated to Senior Indebtedness (as defined in the Indentures), and shall contain no covenant or agreements that are more restrictive to the Corporation than those contained in the Indentures. To exchange Senior Preferred Stock into Exchange Debentures, the Corporation shall send a written notice of exchange (the "Exchange Notice") by first class mail to each Holder of Senior Preferred Stock, which notice shall state: (A) that the Corporation has elected to exchange the Senior Preferred Stock into Exchange Debentures pursuant to this Section 7; (B) the Exchange Date, which shall be the next succeeding Dividend Payment Date and shall not be less than 20 days following the date on which the Exchange Notice is mailed; (C) that the Holder is to surrender to the Corporation, at the place or places where certificates for shares of Senior Preferred Stock are to be surrendered for exchange, in the manner designated in the Exchange Notice, such Holder's certificate or certificates representing the shares of Senior Preferred Stock to be exchanged (properly endorsed or assigned for transfer); (D) that dividends on the shares of Senior Preferred Stock to be exchanged shall cease to accrue, and the Holders of such shares shall cease to have any further rights with respect to such shares (other than the right to receive Exchange Debentures), on the Exchange Date whether or not certificates for shares of Senior Preferred Stock are surrendered for exchange on the Exchange Date unless the Corporation shall default in the delivery of Exchange Debentures; and (E) that interest on the Exchange Debentures shall accrue from and after the Exchange Date whether or not certificates for shares of Senior Preferred Stock are surrendered for exchange on the Exchange Date. On the Exchange Date, if the conditions set forth in clauses (I) through (IV) below are satisfied, the Corporation shall issue Exchange Debentures in exchange for the Senior Preferred Stock as provided in the next paragraph; provided, however, that on the Exchange Date: (I) there shall be legally available funds sufficient therefor (including, without limitation, legally available funds sufficient therefor under Sections 160 and 170 (or any successor provisions) of the GCL); (II) either (A) a registration statement relating to the Exchange Debentures shall have been declared effective under the Securities Act prior to such exchange and shall continue to be in effect on the Exchange Date or (B)(i) the Corporation shall have obtained a written opinion of counsel that an exemption from the registration requirements of the Securities Act is available for such exchange and that, upon receipt of such Exchange Debentures pursuant to such exchange made in accordance with such exemption, the holders (assuming such holder is not an Affiliate of the Corporation) thereof will not be subject to any restrictions imposed by the Securities Act upon the resale thereof other than restrictions that such holders were subject to immediately prior to such exchange and (ii) such exemption is relied upon by the Corporation for such exchange; (III) the Exchange Indenture and the trustee thereunder (the "Trustee") shall have been qualified under the Trust Indenture Act of 1939, as amended, if such qualification is required; and (IV) immediately after giving effect to such exchange, no default or event of default would exist under the Exchange Indenture. In the event that the issuance of the Exchange Debentures is not permitted on the Exchange Date set forth in the Exchange Notice, or any of the conditions set forth in clauses (I) through (IV) of the preceding sentence are not satisfied on the Exchange Date set forth in the Exchange Notice, the Exchange Date shall be deemed to be the first business day thereafter, if any, upon which all of such conditions are satisfied. (ii) Upon any exchange pursuant to Section 7(a)(i), each Holder of outstanding shares of Senior Preferred Stock shall be entitled to receive Exchange Debentures in 22 a principal amount equal to the sum of (x) the Liquidation Preference of such Holder's shares of Senior Preferred Stock and (y) the amount of accumulated and unpaid dividends thereon, if any, to the Exchange Date; provided, however, that the Corporation may pay cash in lieu of issuing an Exchange Note in a principal amount of less than $25.00. (b) Procedure for Exchange. (i) On or before the Exchange Date, each Holder of Senior Preferred Stock shall surrender the certificate or certificates representing such shares of Senior Preferred Stock, in the manner and at the place designated in the Exchange Notice. The Corporation shall cause the Exchange Debentures to be executed on the Exchange Date and, upon surrender in accordance with the Exchange Notice of the certificates for any shares of Senior Preferred Stock so exchanged (properly endorsed or assigned for transfer), such shares shall be exchanged by the Corporation into Exchange Debentures. The Corporation shall pay interest on the Exchange Debentures at the rate and on the dates specified therein from the Exchange Date. (ii) Subject to the conditions set forth in Section 7(a), if notice has been mailed as aforesaid, and if before the Exchange Date (A) the Exchange Indenture shall have been duly executed and delivered by the Corporation and the Trustee and (B) all Exchange Debentures necessary for such exchange shall have been duly executed by the Corporation and delivered to the Trustee with irrevocable instructions to authenticate the Exchange Debentures necessary for such exchange, then the rights of the Holders of shares of the Senior Preferred Stock as stockholders of the Corporation shall cease (except the right to receive Exchange Debentures), and the Person or Persons entitled to receive the Exchange Debentures issuable upon exchange shall be treated for all purposes as the registered Holder or Holders of such Exchange Debentures as of the date of exchange without any further action of the Holders of Senior Preferred Stock. 8. Change of Control Offer. Subject to contractual and other restrictions with respect thereto, upon the occurrence of a Change of Control, the Corporation shall make an offer (a "Change of Control Offer") to each Holder of Senior Preferred Stock to repurchase any or all of such Holder's shares of Senior Preferred Stock at a purchase price in cash equal to 101.0% of the aggregate liquidation preference thereof plus accumulated and unpaid dividends thereon, if any, to the date of repurchase (the "Change of Control Payment"). (a) Within 30 days following any Change of Control, the Corporation shall mail a notice to each Holder of Senior Preferred Stock stating: (i) that the Change of Control Offer is being made pursuant to this Section 8 and that all shares of Senior Preferred Stock tendered will be accepted for payment; (ii) the purchase price and the purchase date, which shall be no sooner than 30 nor later than 60 days from the date such notice is mailed (the "Change of Control Payment Date"); (iii) that any shares not tendered will continue to accumulate dividends; (iv) that, unless the Corporation defaults in the payment of the Change of Control Payment, all shares of Senior Preferred Stock accepted for payment pursuant to the Change of Control Offer shall cease to accumulate dividends after the Change of Control Payment Date; (v) that Holders electing to have any shares of Senior Preferred Stock repurchased pursuant to a Change of 23 Control Offer will be required to surrender such shares to the Corporation or its paying agent at the address specified in the notice prior to the close of business on the third Business Day preceding the Change of Control Payment Date; (vi) that Holders will be entitled to withdraw their election if the Corporation or the paying agent, as the case may be, receives, not later than the close of business on the third Business Day preceding the Change of Control Payment Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the number of shares of Senior Preferred Stock delivered for repurchase, and a statement that such Holder is withdrawing his election to have such shares repurchased; and (vii) that Holders whose shares of Senior Preferred Stock are being repurchased only in part will be issued new shares of Senior Preferred Stock equal in Liquidation Preference to the unpurchased portion of the shares of Senior Preferred Stock surrendered. (b) On the Change of Control Payment Date, the Corporation shall, to the extent lawful, (i) accept for payment all shares of Senior Preferred Stock or portions thereof properly tendered pursuant to the Change of Control Offer and (ii) deposit with the Corporation's paying agent an amount equal to the Change of Control Payment in respect of all shares of Senior Preferred Stock or portions thereof so tendered. The Corporation or its paying agent, as the case may be, shall promptly mail to each Holder of shares of Senior Preferred Stock so tendered the Change of Control Payment for such shares or portions thereof. The Corporation shall promptly issue a certificate representing shares of Senior Preferred Stock and mail to each Holder a new certificate representing shares of Senior Preferred Stock equal in Liquidation Preference to any unpurchased portion of such shares surrendered by such Holder, if any. The Corporation shall notify the remaining holders of Senior Preferred Stock of the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. (c) The Corporation shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of shares of Senior Preferred Stock in connection with a Change of Control. (d) The Corporation's obligations with respect to a Change of Control Offer shall be satisfied to the extent actually performed by a third party in accordance with the terms of this Section 8. 9. Conversion or Exchange. The Holders of shares of Senior Preferred Stock shall not have any rights hereunder to convert such shares into or exchange such shares for shares of any other class or classes or of any other series of any class or classes of Capital Stock of the Corporation. 10. Preemptive Rights. No shares of Senior Preferred Stock shall have any rights of preemption whatsoever as to any securities of the Corporation, or any warrants, rights or options issued or granted with respect thereto, regardless of how such securities or such warrants, rights or options may be designated, issued or granted. 24 11. Reissuance of Senior Preferred Stock. Shares of Senior Preferred Stock that have been issued and reacquired in any manner, including shares purchased or redeemed or exchanged, shall (upon compliance with any applicable provisions of the laws of Delaware) have the status of authorized but unissued shares of preferred stock of the Corporation undesignated as to series and may be designated or redesignated and issued or reissued, as the case may be, as part of any series of preferred stock of the Corporation; provided, however, that such shares may not in any event be reissued as Senior Preferred Stock. 12. Business Day. If any payment, redemption or exchange shall be required by the terms hereof to be made on a day that is not a Business Day, such payment, redemption or exchange shall be made on the immediately succeeding Business Day, and no interest shall accrue for the intervening period. 13. Certain Additional Provisions. (a) Restricted Payments. The Corporation shall not, and shall not permit any of its Subsidiaries to, directly or indirectly make any Restricted Payment, unless, at the time of such Restricted Payment: (1) no Default Event shall have occurred and be continuing or would occur as a consequence thereof; and (2) such Restricted Payment, together with the aggregate of all other Restricted Payments made by the Corporation and its Subsidiaries after the Preferred Stock Issue Date, does not exceed the sum (the "Basket") of (a) (i) Consolidated EBITDA of the Corporation for the period (taken as one accounting period), commencing on the first day of the first fiscal quarter commencing on or prior to the Preferred Stock Issue Date, to and including the last day of the fiscal quarter ended immediately prior to the date of each such calculation (or, in the event Consolidated EBITDA for such period is a deficit, then minus such deficit) less (ii) 150% of Consolidated Fixed Charges for such period, plus (b) the aggregate Net Cash Proceeds received by the Corporation from the sale of the Corporation's Qualified Capital Stock (other than in each case (i) to a Subsidiary of the Corporation, (ii) to the extent applied in connection with a Qualified Exchange and (iii) to the extent applied to repurchase Capital Stock pursuant to clause (iii) of the definition of Other Permitted Payments after the Preferred Stock Issue Date). The foregoing provisions of this Section 13(a) shall not prohibit the following Restricted Payments: (A) a Qualified Exchange; (B) the payment of any dividend within 60 days after the date of declaration thereof, if at said date of declaration such payment would have complied with the provisions of Section II.A or II. B of Article Four of this Amended and Restated Certificate of Incorporation; and (C) Other Permitted Payments. The full amount of any Restricted Payment made pursuant to clause (B) of the immediately preceding sentence (but not pursuant to clauses (A) or (C) of the immediately preceding sentence), however, will be deducted in the calculation of the aggregate amount of Restricted Payments available to be made pursuant to the Basket. The amount of any Restricted Payment, if other than in cash, shall be the fair market value thereof, as determined in the good faith reasonable judgment of the Board of Directors. (b) Reports. So long as any shares of Senior Preferred Stock are outstanding, the Corporation shall furnish to each Holder of Senior Preferred Stock (at such Holder's address listed in the register of Holders maintained by the transfer agent and registrar of the Senior 25 Preferred Stock): (i) beginning at the end of the Corporation's first fiscal year ending after the Preferred Stock Issue Date, all quarterly and annual financial information that would be required to be contained in a filing with the SEC on Forms 10-Q and 10-K if the Corporation were required to file such forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" and, with respect to the annual information only, a report thereon by the Corporation's certified independent accountants, and (ii) all current reports that would be required to be filed with the SEC on Form 8-K if the Corporation were required to file such reports. 14. Transfer Restrictions. The certificates evidencing shares of Senior Preferred Stock shall, until the second anniversary of the date of original issuance of such shares, unless otherwise agreed by the Corporation and the holders of any such certificates, bear a legend substantially to the following effect: "The Senior Preferred Stock evidenced hereby was originally issued in a transaction exempt from registration under Section 5 of the United States Securities Act of 1933, as amended (the "Securities Act"), and the Senior Preferred Stock evidenced hereby may not be offered, sold or otherwise transferred in the absence of such registration or an applicable exemption therefrom. Each purchaser of the Senior Preferred Stock evidenced hereby is hereby notified that the seller may be relying on the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A thereunder. The Holder of the Senior Preferred Stock evidenced hereby agrees for the benefit of the Corporation that (A) such Senior Preferred Stock may be offered, resold, pledged or otherwise transferred, only (a) inside the United States to a Person whom the seller reasonably believes is a qualified institutional buyer (as defined in Rule 144A) in a transaction meeting the requirements of Rule 144A, (b) outside the United States to a foreign Person in a transaction meeting the requirements of Rule 903 or Rule 904 of Regulation S under the Securities Act, (c) in a transaction meeting the requirements of Rule 144 under the Securities Act, (d) to the Corporation, (e) pursuant to an effective registration statement or (f) in accordance with another exemption from the registration requirements of the Securities Act (and based upon an opinion of counsel if the Corporation so requests), and, in each case, in accordance with any applicable securities laws of any state of the United States or any other applicable jurisdiction and (B) the holder will, and each subsequent holder is required to, notify any purchaser from it of the Senior Preferred Stock evidenced hereby of the resale restrictions set forth in (A) above." The shares of Senior Preferred Stock not otherwise registered pursuant to an effective registration statement under the Securities Act shall be subject to the restrictions on transfer set forth in the legend referred to above until the second anniversary of the date of original issuance of such shares of Senior Preferred Stock. B. Series B Junior Preferred Stock The 12% Series B Junior Redeemable Cumulative Preferred Stock (the "Junior Preferred Stock"), par value $0.001 per share, consists of 3,000,000 authorized shares and has the powers, 26 designations and preferences, the relative, participating, optional and other special rights and the qualifications, limitations and restrictions thereof as follows: 1. Definitions and Interpretation. (a) Definitions. As used in this Section II. B of Article Four of this Amended and Restated Certificate of Incorporation, the following terms shall have the following meanings, unless the context otherwise requires: "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. "Amended and Restated Certificate of Incorporation" means the Corporation's Amended and Restated Certificate of Incorporation. "Bank Facility" means the one or more credit agreements (including, without limitation, the Credit Agreement, dated as of September 20, 2000, by and among Operating Company, as borrower, the Corporation, certain subsidiaries of Operating Company, as guarantors, the financial institutions parties thereto, Goldman Sachs Credit Partners L.P., as sole lead arranger and sole syndication agent, and Wells Fargo Bank, N.A., as administrative agent and collateral agent) entered into by and among Operating Company, certain of its subsidiaries (if any) and certain financial institutions, which provide for in the aggregate one or more term loans and/or revolving credit and letter of credit facilities, including any related notes, guarantees, collateral documents, instruments and agreements executed in connection therewith, as such credit agreement and/or related documents may be amended, restated, supplemented, renewed, replaced or otherwise modified from time to time whether or not with the same agent, trustee, representative lenders or holders, and, subject to the proviso to the next succeeding sentence irrespective of any changes in the terms and conditions thereof. Without limiting the generality of the foregoing, the term "Bank Facility" shall include any amendment, amendment and restatement, renewal, extension, restructuring, supplement or modification to any such credit agreement and all refundings, refinancings and replacements of any such credit agreement, including any agreement (i) extending the maturity of any Indebtedness incurred thereunder or contemplated thereby, (ii) adding or deleting borrowers or guarantors thereunder; provided, however, that the borrowers and issuers include one or more of the Corporation and its Subsidiaries and their respective successors and assigns, (iii) increasing the amount of Indebtedness incurred thereunder or available to be borrowed thereunder, or (iv) otherwise altering the terms and conditions thereof in a manner not prohibited by the terms hereof. "Beneficial Owner" or "beneficial owner" for purposes of the definition of Change of Control and Affiliate has the meaning attributed to it in Rules 13d-3 and 13d-5 under the Exchange Act (as in effect on the Preferred Stock Issue Date), whether or not applicable. "Board of Directors" means the Board of Directors of the Corporation. 27 "Business Day" means any day that is not a Saturday, a Sunday or a day on which banking institutions in the Corporation's principal place of business, the City of New York or at a place of payment are not required to be open. "Capital Stock" means, with respect to any corporation, any and all shares, interests, rights to purchase (other than convertible or exchangeable Indebtedness that is not itself otherwise capital stock), warrants, options, participations or other equivalents of or interests (however designated) in stock issued by that corporation. "Capitalized Lease Obligation" means, as to any Person, the obligations of such Person under a lease that are required to be classified and accounted for as capital lease obligations under GAAP and, for purposes of this definition, the amount of such obligations at any date shall be the capitalized amount of such obligations at such date, determined in accordance with GAAP. "Cash Equivalent" means, as at any date of determination, (i) marketable securities (a) issued or directly and unconditionally guaranteed as to interest and principal by the United States Government or (b) issued by any agency of the United States the obligations of which are backed by the full faith and credit of the United States, in each case maturing within one year after such date; (ii) marketable direct obligations issued by any state of the United States or any political subdivision of any such state or any public instrumentality thereof, in each case maturing within one year after such date and having, at the time of the acquisition thereof, the highest rating obtainable from either Standard & Poor's Ratings Group ("S&P") or Moody's Investors Service, Inc. ("Moody's"); (iii) commercial paper maturing no more than one year from the date of creation thereof and having, at the time of the acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from Moody's; (iv) certificates of deposit or bankers' acceptances maturing within one year after such date and issued or accepted by any commercial bank organized under the laws of the United States or any state thereof or the District of Columbia that (a) is at least "adequately capitalized" (as defined in the regulations of its primary Federal banking regulator) and (b) has Tier 1 capital (as defined in such regulations) of not less than $100,000,000; and (v) shares of any money market mutual fund that (a) has at least 95% of its assets invested continuously in the types of investments referred to in clauses (i) and (ii) above, (b) has net assets of not less than $500,000,000, and (c) has the highest rating obtainable from either S&P or Moody's. "Certificate of Designation " means the Corporation's Certificate of Designation dated as of September 20, 2000. "Change of Control" means the occurrence of any of the following: (i) the sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or more related transactions, of all or substantially all of the properties and assets of the Corporation and its Subsidiaries taken as a whole to any "person" (as such term is used in Section 13(d)(3) of the Exchange Act), other than an Excluded Person or Excluded Persons, (ii) the adoption of a plan relating to the liquidation or dissolution of the Corporation, (iii) the consummation of any transaction or other event (including, without limitation, any merger or consolidation) the result of which is that any "person" (as defined above), other than an Excluded Person or Excluded Persons, becomes the "beneficial owner" (as such term is defined in Rule 28 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, of more than 50% of the voting stock of the Corporation, or (iv) the first day on which a majority of the members of the Board of Directors are not Continuing Directors. Notwithstanding the foregoing, under no circumstances shall transfers among Green Equity Investors III, L.P. and the Co-Investors and their respective Affiliates or distributions to limited partners of Green Equity Investors III, L.P. or to the members of the Co-Investors be deemed a Change of Control. "Co-Investors" means VCA Co-Investment Fund I, LLC, VCA Co-Investment Fund II, LLC, VCA Co-Investment Fund III, LLC, VCA Co-Investment Fund IV, LLC, VCA Co-Investment Fund V, LLC, VCA Co-Investment Fund VI, LLC, VCA Co-Investment Fund VII, LLC and VCA Co-Investment Fund VIII, LLC. "Company Purchase Agreement" means that certain Purchase Agreement, dated as of September 20, 2000, by and among the Corporation, GS Mezzanine Partners II, L.P and Permitted Investors relating to the Company Senior Notes. "Company Senior Notes" means the senior notes due 2010, any Exchange Notes (as defined in the Company Purchase Agreement) and any PIK Notes (as defined in the Company Senior Notes Indenture), including any such notes issued in exchange or replacement therefor, issued pursuant to the Company Senior Notes Indenture. "Company Senior Notes Indenture" means that certain Indenture, dated as of September 20, 2000, by and between the Corporation and Chase Manhattan Bank and Trust Company, National Association, as trustee, pursuant to which the Company Senior Notes are issued. "Consolidated" means, with respect to the Corporation, the consolidated accounts of its Subsidiaries with those of the Corporation, all in accordance with GAAP; provided, however, that "consolidated" will not include consolidation of the accounts of any Unrestricted Subsidiary with the accounts of the Corporation. "Consolidated EBITDA" means, with respect to any Person, for any period, the Consolidated Net Income of such Person and its Consolidated Subsidiaries for such period adjusted to add thereto (to the extent deducted from net revenues in determining Consolidated Net Income), without duplication, the sum of (i) an amount equal to any extraordinary or non-recurring loss plus any net loss realized in connection with the sale or other disposition of assets outside the ordinary course of business, the disposition of any securities by such Person or any of its Subsidiaries or the extinguishment of any Indebtedness by such Person or its Subsidiaries, (ii) consolidated income taxes, (iii) consolidated depreciation and amortization (including amortization of debt issuance costs in connection with any Indebtedness of such Person and its Subsidiaries), (iv) Consolidated Fixed Charges; (v) payments pursuant to the Management Services Agreement (or the corresponding provisions of any agreement amending, extending or replacing the Management Services Agreement); and (vi) all other non-cash charges. "Consolidated Fixed Charges" of any Person means, for any period, the aggregate amount (without duplication and determined in each case in accordance with GAAP) of (a) interest expensed or capitalized, paid, accrued, or scheduled to be paid or accrued (including, in accordance with the following sentence, interest attributable to Capitalized Lease Obligations) of 29 such Person and its Consolidated Subsidiaries during such period, excluding amortization of debt issuance costs incurred in connection with the Senior Notes or the Bank Facility but including (i) original issue discount and non-cash interest payments or accruals on any Indebtedness, (ii) the interest portion of all deferred payment obligations, and (iii) all commissions, discounts and other fees and charges owed with respect to bankers' acceptances and letters of credit financings and currency and Interest Swap and Hedging Obligations (and minus net amounts received under Hedging Obligations), in each case to the extent attributable to such period, and (b) the amount of cash dividends paid by such Person or any of its Consolidated Subsidiaries in respect of preferred stock (other than by Subsidiaries of such Person to such Person or such Person's wholly owned Subsidiaries). For purposes of this definition, (x) interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by the Corporation to be the rate of interest implicit in such Capitalized Lease Obligation in accordance with GAAP and (y) to the extent such expense would result in a liability upon the consolidated balance sheet of such Person in accordance with GAAP, interest expense attributable to any Indebtedness represented by the guaranty by such Person or a Subsidiary of such Person of an obligation of another Person shall be deemed to be the interest expense attributable to the Indebtedness guaranteed. Notwithstanding the foregoing, Consolidated Fixed Charges shall not include costs, fees and expenses incurred in connection with the Merger, and any non-cash charge or expense associated with the write-off of deferred debt issuance costs associated with the Bank Facility or the Senior Notes. "Consolidated Net Income" means, with respect to any specified Person for any period, the aggregate of the Net Income of such Person and its Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided, however, that (a) the Net Income (but not loss) of any Person that is not a Subsidiary or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of dividends or distributions paid in cash to the specified Person or one of its wholly owned Subsidiaries, (b) the Net Income of any Subsidiary shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree or order, or any non-U.S. statute, rule or governmental regulation applicable to that Subsidiary or its stockholders, (c) the Net Income of any Person acquired in a pooling of interests transaction for any period prior to the date of such acquisition shall be excluded, (d) the cumulative effect of a change in accounting principles shall be excluded, and (e) the costs, fees and expenses, including payments of management bonuses, incurred in connection with the transactions contemplated by the Merger Agreement shall be excluded, including (i) any charge incurred by any Person or its Subsidiaries arising out of the repurchase at $15 per share on the closing date of the Merger of restricted capital stock of such Person or its Subsidiaries held by certain employees of such Person or its Subsidiaries, (ii) any financing, legal, accounting, investment banking or other professional fees and expenses incurred in connection with the Merger, (iii) any other costs and expenses incurred by any Person and its Subsidiaries in connection with the Merger arising pursuant to certain noncompetition agreements executed with members of senior management of such Person, in connection with the termination of certain employment contracts of such Person and its Subsidiaries and in connection with stay bonuses provided to certain employees of such Person and its Subsidiaries, and (iv) premium payments payable to certain note holders of such Person. 30 "Continuing Directors" means, as of any date of determination, any member of the Board of Directors who (i) was a member of the Board of Directors immediately after consummation of the Merger or (ii) was nominated for election or elected to the Board of Directors with the approval, recommendation or endorsement of a majority of the Continuing Directors who were members of the Board of Directors at the time of such nomination or election. "Control" means (including, with correlative meanings, the terms "controlling," "controlled by" and "under common control with"), as used with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, directly or through one or more intermediaries, whether through the ownership of voting securities, by contract, or otherwise; provided, however, that, with respect to any ownership interest in the Corporation and its Subsidiaries, a Beneficial Owner of 10% or more of the total voting power normally entitled to vote in the election of directors, managers or trustees, as applicable, shall for such purposes be deemed to constitute control. "Default Event" means any of the following events: (i) any time when the Corporation fails to make a mandatory redemption of the Junior Preferred Stock when required (whether or not any contractual or other restrictions apply to such redemption) pursuant to Section 5(b) hereof; or (ii) any time when the Corporation fails to make an offer to repurchase all of the outstanding shares of Junior Preferred Stock following a Change of Control, if such offer to repurchase is required to be made pursuant to Section 7(a) hereof (whether or not any contractual or other restrictions apply to such redemption). "Disqualified Capital Stock" means (a) except as set forth in (b), with respect to any Person, any Equity Interest of such Person that, by its terms or by the terms of any security into which it is convertible, exercisable or exchangeable, is, or upon the happening of an event or the passage of time or both would be, required to be redeemed or repurchased (including at the option of the holder thereof) by such Person or any of its Subsidiaries, in whole or in part, on or prior to September 20, 2012 and (b) with respect to any Subsidiary of such Person (including with respect to any Subsidiary of the Corporation), any Equity Interests other than any common equity with no preference, privileges, or redemption or repayment provisions and preferred equity owned by the Corporation or one of its Subsidiaries. "Dividend Payment Date" means January 1, April 1, July 1 and October 1 of each year. "Dividend Period" means the Initial Dividend Period and, thereafter, each Quarterly Dividend Period. "Equity Interest" of any Person means any shares, interests, participations or other equivalents (however designated) in such Person's equity, and shall in any event include any Capital Stock issued by, or partnership or membership interests in, such Person. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder. "Excluded Persons" means (i) Green Equity Investors III, L.P., (ii) the Co-Investors, and (iii) their Related Parties. 31 "GAAP" means United States generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as approved by a significant segment of the accounting profession in the United States as in effect on the Preferred Stock Issue Date. "Holder" means a Person in whose name a share of Junior Preferred Stock is registered. "Indebtedness" of any Person means, without duplication, (a) all liabilities and obligations, contingent or otherwise, of any such Person, to the extent such liabilities and obligations would appear as a liability upon the consolidated balance sheet of such Person in accordance with GAAP, (i) in respect of borrowed money (whether or not the recourse of the lender is to the whole of the assets of such Person or only to a portion thereof), (ii) evidenced by bonds, notes, debentures or similar instruments, (iii) representing the balance deferred and unpaid of the purchase price of any property or services, except those incurred in the ordinary course of its business that would constitute ordinarily a trade payable to trade creditors; (b) all liabilities and obligations, contingent or otherwise, of such Person (i) evidenced by bankers' acceptances or similar instruments issued or accepted by banks, (ii) relating to any Capitalized Lease Obligation, or (iii) evidenced by a letter of credit or a reimbursement obligation of such Person with respect to any letter of credit; (c) all net obligations of such Person under Interest Swap and Hedging Obligations; (d) all liabilities and obligations of others of the kind described in the preceding clauses (a), (b) or (c) that such Person has guaranteed or that is otherwise its legal liability or that are secured by one or more Liens on any assets or property of such Person; provided, however, that if the liabilities or obligations that are secured by a Lien have not been assumed in full by such Person or are not such Person's legal liability in full, the amount of such Indebtedness for the purposes of this definition shall be limited to the lesser of the amount of such Indebtedness secured by such Lien or the fair market value of the assets or property securing such Lien; (e) any and all deferrals, renewals, extensions, refinancing and refundings (whether direct or indirect) of, or amendments, modifications or supplements to, any liability of the kind described in any of the preceding clauses (a), (b), (c) or (d), or this clause (e), whether or not between or among the same parties; and (f) all Disqualified Capital Stock of such Person (measured at the greater of its voluntary or involuntary maximum fixed repurchase price plus accrued and unpaid dividends). For purposes hereof, the "maximum fixed repurchase price" of any Disqualified Capital Stock that does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Capital Stock. "Indentures" means the Company Senior Note Indenture and the Senior Subordinated Notes Indenture. "Initial Dividend Period" means the dividend period commencing on the Preferred Stock Issue Date and ending on the day before the first Dividend Payment Date to occur thereafter. "Interest Swap and Hedging Obligation" means any obligation of any Person pursuant to any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate exchange agreement, currency exchange agreement or any other agreement or arrangement designed to protect against fluctuations in interest rates or currency values, 32 including, without limitation, any arrangement whereby, directly or indirectly, such Person is entitled to receive from time to time periodic payments calculated by applying either a fixed or floating rate of interest on a stated notional amount in exchange for periodic payments made by such Person calculated by applying a fixed or floating rate of interest on the same notional amount. "Investment" by any Person in any other Person means (without duplication) (a) the acquisition (whether by purchase, merger, consolidation or otherwise) by such Person (whether for cash, property, services, securities or otherwise) of capital stock, bonds, notes, debentures, partnership or other ownership interests or other securities, including any options or warrants, of such other Person or any agreement to make any such acquisition; (b) the making by such Person of any deposit with, or advance, loan or other extension of credit to, such other Person (including the purchase of property from another Person subject to an understanding or agreement, contingent or otherwise, to resell such property to such other Person) or any commitment to make any such advance, loan or extension (but excluding accounts receivable, endorsements for collection or deposits arising in the ordinary course of business) other than guarantees of Indebtedness of the Corporation or any Subsidiary; (c) the making of any capital contribution by such Person to such other Person; and (d) the designation by the Board of Directors of the Corporation of any Person to be an Unrestricted Subsidiary. The Corporation shall be deemed to make an Investment in an amount equal to the fair market value of the net assets of any subsidiary (or, if neither the Corporation nor any of its Subsidiaries has theretofore made an Investment in such subsidiary, in an amount equal to the Investments being made), at the time that such subsidiary is designated an Unrestricted Subsidiary, and any property transferred to an Unrestricted Subsidiary from the Corporation or a Subsidiary of the Corporation shall be deemed an Investment valued at its fair market value at the time of such transfer. The amount of any such Investment shall be reduced by any liabilities or obligations of the Corporation or any of its Subsidiaries to be assumed or discharged in connection with such Investment by an entity other than the Corporation or any of its Subsidiaries. For purposes of clarification and greater certainty, the designation of a newly formed subsidiary as an Unrestricted Subsidiary shall not constitute an Investment. "Junior Preferred Stock" means the Corporation's 12% Series B Junior Redeemable Cumulative Preferred Stock, par value $0.001 per share, consisting of 3,000,000 authorized shares. "Lien" means any mortgage, charge, pledge, lien (statutory or otherwise), privilege, security interest, hypothecation or other encumbrance upon or with respect to any property of any kind, real or personal, movable or immovable, now owned or hereafter acquired. "Liquidation Preference" means, as of any date, the sum of (a) $25.00 per share of Junior Preferred Stock, plus (b) accrued and unpaid dividends added to the Liquidation Preference in accordance with Section 3(a), minus (c) the Base Amount of any special dividend paid pursuant to Section 3(f). "Management Services Agreement" means that certain Management Services Agreement, dated as of the September 20, 2000, by and between Leonard Green & Partners, L.P., Operating Company and the Corporation, providing for certain fees, expenses and reimbursements to be 33 paid to Leonard Green & Partners, L.P., as such Management Services Agreement may be amended from time to time. "Merger" means the merger of Recap with and into the Corporation in accordance with the provisions of the Merger Agreement. "Merger Agreement" means that certain Amended and Restated Agreement and Plan of Merger, dated as of August 11, 2000, between the Corporation, Operating Company and Recap, as the same may be further amended from time to time. "Net Cash Proceeds" means the aggregate amount of cash or Cash Equivalents received by the Corporation in the case of a sale of Qualified Capital Stock plus, in the case of an issuance of Qualified Capital Stock upon any exercise, exchange or conversion of securities (including options, warrants, rights and convertible or exchangeable debt) of the Corporation that were issued for cash on or after the Preferred Stock Issue Date, the amount of cash originally received by the Corporation upon the issuance of such securities (including options, warrants, rights and convertible or exchangeable debt) less the sum of all payments, fees, commissions and expenses (including, without limitation, the fees and expenses of legal counsel and investment banking fees and expenses) incurred in connection with such sale or issuance of Qualified Capital Stock. "Net Income" means, with respect to any Person, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends, excluding, however, (i) any gain (but not loss), together with any related provision for taxes on such gain (but not loss), realized in connection with the (A) sale or other disposition of assets outside the ordinary course of business, or (B) disposition of any securities by such Person or any of its Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Subsidiaries, (ii) any extraordinary or nonrecurring gain (but not loss), together with any related provision for taxes on such extraordinary or nonrecurring gain (but not loss), and (iii) any non-cash compensation expense of such Person attributable to the exercise of options to acquire Capital Stock of the Corporation by any officers, directors or employees of the Corporation or any of its Subsidiaries in each case prior to, or in connection with, the consummation of the Merger. "Obligations" means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness. "Operating Company" means Vicar Operating, Inc., a Delaware corporation. "Other Permitted Payments" means, without duplication, (i) compensation, indemnification and other benefits paid or made available (A) pursuant to the employment agreements between the Corporation and members of its senior management, (B) for or in connection with services actually rendered to the Corporation and comparable to those generally paid or made available by entities engaged in the same or similar businesses (including reimbursement or advancement of reasonable out-of-pocket expenses) and loans to officers, directors and employees, (x) in the ordinary course of business or (y) to purchase common stock of the Corporation in an amount not to exceed $10 million; (ii) payments pursuant to the 34 Management Services Agreement (or the corresponding provisions of any agreement amending, extending or replacing the Management Services Agreement); (iii) the repurchase of common stock, stock options and stock equivalents of the Corporation held by current or former directors, officers, employees of or consultants and advisors to the Corporation or any of its Subsidiaries ("Management Stock Repurchases") in an amount of $5 million at the end of fiscal year 2000, and such amount shall be increased by $1 million a year for each fiscal year thereafter, plus the amount of any net cash proceeds to the Corporation from: (A) sales of Capital Stock of the Corporation to directors, officers and employees of or consultants and advisors to the Corporation subsequent to the Preferred Stock Issue Date; and (B) proceeds from any key-person life insurance policies, in either case, to the extent utilized for Management Stock Repurchases; provided, however, that any amount received from such life insurance not so paid in any fiscal year may be paid in future fiscal years; (vi) Restricted Payments in an aggregate amount not to exceed $10 million; and (vii) expenses and payments in connection with the Merger. "Permitted Investment" means (a) Investments in any of the Senior Notes; (b) Investments in Cash Equivalents; (c) Investments in intercompany notes; provided, however, that Indebtedness under any such notes of a Subsidiary shall be deemed to be a Restricted Investment if such Person ceases to be a Subsidiary; (d) Investments in the form of promissory notes of members of the Corporation's management not to exceed $5 million in principal amount at any time outstanding solely in consideration of the purchase by such persons of Qualified Capital Stock of the Corporation; (e) Investments by the Corporation or any Subsidiary in any Person that is or immediately after such Investment becomes a Subsidiary, or immediately after such Investment merges or consolidates into the Corporation or any Subsidiary; provided, however, that such Person is engaged in all material respects in a Related Business; (f) Investments in the Corporation by any Subsidiary; provided, however, that in the case of Indebtedness constituting any such Investment, such Indebtedness shall be unsecured and subordinated in all respects to the Corporation's obligations under the Senior Notes; (g) Investments in securities of trade creditors or customers received in settlement of obligations that arose in the ordinary course of business or pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of such trade creditors or customers; (h) Investments by the Corporation outstanding on the Preferred Stock Issue Date; (i) transactions or arrangements with officers or directors of the Corporation or any Subsidiary entered into in the ordinary course of business; (j) any other contract, agreement, arrangement or transaction between the Corporation or any of its Subsidiaries with any Affiliate; (k) other Investments in any Person (other than a Subsidiary of the Corporation) having an aggregate fair market value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (k) that are at the time outstanding, not to exceed $10 million; (l) Investments in Subsidiaries of the Corporation formed or acquired after the Closing Date that (i) are incorporated outside the United States, (ii) are not guarantors under the Senior Subordinated Notes Indenture, and (iii) if they were guarantors, would give rise to an investment in United States property within the meaning of Section 956 of the Internal Revenue Code of 1986, as amended from time to time, which Investments shall not exceed in the aggregate more than $10 million outstanding at any time (treating any such Investment that is not Indebtedness at the value thereof on the date it is made); and (m) Investments in Equity Interests of a Person engaged in a Related Business, other than a Person described in clause (e), through the issuance of common stock of the Corporation. 35 "Permitted Investors" means any of the affiliated investment funds of GS Mezzanine Partners II, L.P., GS Mezzanine Partners II Offshore, L.P., TCW Leveraged Income Trust, L.P., TCW Leveraged Income Trust II, L.P., TCW Leveraged Income Trust IV, L.P., TCW/Crescent Mezzanine Partners II, L.P., TCW/Crescent Mezzanine Trust II and The Northwestern Mutual Life Insurance Company. "Person" means any individual, corporation, partnership, joint venture, association, limited liability company, joint-stock company, trust, unincorporated organization or government or agency or political subdivision thereof (including any subdivision or ongoing business of any such entity or substantially all of the assets of any such entity, subdivision or business). "Preferred Stock Issue Date" means the date on which the Junior Preferred Stock is originally issued by the Corporation under the Certificate of Designation. "Qualified Capital Stock" means any Equity Interest that is not Disqualified Capital Stock. "Qualified Exchange" means any legal defeasance, redemption, retirement, repurchase or other acquisition of Capital Stock or Indebtedness of the Corporation issued on or after the Preferred Stock Issue Date with the Net Cash Proceeds received by the Corporation from the substantially concurrent sale of its Qualified Capital Stock or any exchange of Qualified Capital Stock of the Corporation for any Capital Stock or Indebtedness of the Corporation issued on or after the Issue Date. "Quarterly Dividend Period" means the quarterly period commencing on each January 1, April 1, July 1 and October 1 and ending on the day before the following Dividend Payment Date. "Recap" means Vicar Recap, Inc., a Delaware corporation. "Redemption Date," with respect to any shares of Junior Preferred Stock, means the date on which such shares of Junior Preferred Stock are redeemed by the Corporation. "Related Business" means the business conducted or proposed to be conducted by the Corporation as of the Preferred Stock Issue Date and any and all businesses that in the good faith judgment of the Board of Directors of the Corporation are reasonably related businesses, including reasonably related extensions thereof. "Related Party" means with respect to any Excluded Person, (A) any Affiliate, controlling stockholder, 80% or more owned Subsidiary, or spouse or immediate family member (in the case of an individual) of such Excluded Person or (B) any trust, corporation, partnership or other entity, the beneficiaries, stockholders, partners, owners or persons holding an 80% or more controlling interest of which consist of such Excluded Person and/or such other persons referred to in the immediately preceding clause (A). "Restricted Investment" means, in one or a series of related transactions, any Investment, other than investments in Cash Equivalents and other Permitted Investments; provided, however, 36 that a merger of another Person with or into the Corporation or a Subsidiary shall not be deemed to be a Restricted Investment so long as the surviving entity is the Corporation or a Subsidiary. "Restricted Payment" means, (a) the declaration or payment of any dividend or other distribution in respect of Junior Securities or Equity Interests of the Corporation or any of the Corporation's Subsidiaries, (b) any payment on account of the purchase, redemption or other acquisition or retirement for value of Junior Securities or Equity Interests of the Corporation or any of the Corporation's Subsidiaries, and (c) any Restricted Investment by such Person; provided, however, that the term "Restricted Payment" shall not include (i) any dividend, distribution or other payment on or with respect to Equity Interests of the Corporation to the extent payable solely in shares of Qualified Capital Stock of the Corporation; (ii) any dividend, distribution or other payment to the Corporation, or to any of its Subsidiaries, by the Corporation or any of its Subsidiaries; (iii) payments made in connection with the Merger; (iv) Permitted Investments; or (v) pro rata dividends and other distributions on Equity Interests of any Subsidiary by such Subsidiary. "SEC" means the Securities and Exchange Commission. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations thereunder. "Senior Notes" means the Company Senior Notes and the Senior Subordinated Notes. "Senior Preferred Stock" means the Corporation's 14% Series A Senior Redeemable Exchangeable Cumulative Preferred Stock, par value $0.001 per share, consisting of 3,000,000 authorized shares. "Senior Subordinated Notes" means the senior subordinated notes due 2010, including any such notes issued in exchange or replacement therefor, issued by Operating Company pursuant to the Senior Subordinated Notes Indenture. "Senior Subordinated Notes Indenture" means that certain Indenture, dated as of September 20, 2000, by and among Operating Company, the Subsidiaries of Operating Company parties thereto, and Chase Manhattan Bank and Trust Company, National Association, as trustee, pursuant to which the Senior Subordinated Notes are issued. "Senior Subordinated Notes Purchase Agreement" means that certain Purchase Agreement, dated as of September 20, 2000, by and among Operating Company and Permitted Investors relating to the Senior Subordinated Notes. "Stockholders Agreement" means that certain Stockholders Agreement, dated as of September 20, 2000, by and among the Corporation, Green Equity Investors III, L.P, Permitted Investors and the other signatories thereto, as the same may be amended from time to time. "Subsidiary" means, with respect to any Person, (i) any corporation, association or other business entity of which more than 50.0% of the total voting power of the Equity Interests entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such 37 Person or one or more of the other Subsidiaries of that Person (or a combination thereof) and (ii) any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are such Person or of one or more Subsidiaries of such Person (or any combination thereof). "Unrestricted Subsidiary" means any Subsidiary of the Corporation that does not own any Capital Stock of, or own or hold any Lien on any property of the Corporation or any other Subsidiary of the Corporation and that, at the time of determination, shall be an Unrestricted Subsidiary (as designated by the Board of Directors of the Corporation); provided, however, that (i) such Subsidiary shall not engage, to any substantial extent, in any line or lines of business activity other than a Related Business and (ii) neither immediately prior thereto nor after giving pro forma effect to such designation would there exist a Default Event. The Board of Directors may designate any Unrestricted Subsidiary to be a Subsidiary, provided that no Default Event is existing or will occur as a consequence thereof. Each such designation shall be evidenced by delivering to the Holders a certified copy of the resolution giving effect to such designation and an Officers' Certificate certifying that such designation complied with the foregoing conditions. "Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person all of the outstanding Capital Stock, Equity Interests or other ownership interests of which (other than directors' qualifying shares and shares in non-U.S. companies required by local law to be owned by local residents) shall at the time be owned (i) by such Person, (ii) by one or more wholly owned Subsidiaries of such Person or (iii) by such Person and one or more wholly owned Subsidiaries of such Person. (b) Interpretation. For the purposes of this Section II. B of Article Four of this Amended and Restated Certificate of Incorporation: (x) words in the singular shall be deemed to include the plural and vice versa and words of one gender shall be deemed to include the other gender as the context requires and (y) the word "including" and words of similar import shall mean "including, without limitation," unless the context otherwise requires or unless otherwise specified. 2. Rank. The Junior Preferred Stock shall, with respect to dividend distributions and distributions upon the liquidation, winding up or dissolution of the Corporation, rank senior to all classes of common stock of the Corporation and to each other class of capital stock or series of preferred stock hereafter created by the Board of Directors the terms of which do not expressly provide that it ranks senior to or on a parity with the Junior Preferred Stock as to dividend distributions and distributions upon the liquidation, winding up or dissolution of the Corporation (collectively referred to with the common stock of the Corporation as "Junior Securities"). The Junior Preferred Stock shall, with respect to dividend distributions and distributions upon the liquidation, winding up or dissolution of the Corporation, rank on parity with any class of capital stock or series of preferred stock hereafter created that expressly provides that it ranks on a parity with the Junior Preferred Stock as to dividend distributions and distributions upon the liquidation, winding up or dissolution of the Corporation ("Parity Securities"); provided, however, that any such Parity Securities that were not approved by the Holders of Junior Preferred Stock in accordance with Section 6(b)(i) hereof shall be deemed to be Junior Securities 38 and not Parity Securities. The Junior Preferred Stock shall, with respect to dividend distributions and distributions upon the liquidation, winding up or dissolution of the Corporation, rank junior to the Senior Preferred Stock and to each class of capital stock or series of preferred stock hereafter created that has been approved by the Holders of Junior Preferred Stock in accordance with Section 6(b)(ii) hereof and that expressly provides that it ranks senior to the Junior Preferred Stock as to dividend distributions or distributions upon the liquidation, winding up or dissolution of the Corporation ("Senior Securities"). 3. Dividends. (a) Beginning on the Preferred Stock Issue Date, the Holders of the outstanding shares of Junior Preferred Stock shall be entitled to receive, whether or not declared by the Board of Directors, out of funds legally available therefor, distributions in the form of cash dividends on each share of Junior Preferred Stock, at a rate per annum equal to 12% of the Liquidation Preference (with such Liquidation Preference being determined as of the first day of such Dividend Period) payable quarterly. All dividends shall be cumulative, whether or not earned or declared, on a daily basis from the Preferred Stock Issue Date and shall be payable quarterly in arrears on each Dividend Payment Date, commencing on January 1, 2001; provided, however, that if any dividend payable on any Dividend Payment Date is not declared and paid in full in cash on such Dividend Payment Date, the amount payable as dividends on such Dividend Payment Date that is not paid in cash on such Dividend Payment Date shall be added to the Liquidation Preference on the relevant Dividend Payment Date and may no longer be declared or paid as dividends in cash except for special dividends paid pursuant to Section 3(f). The addition of such amount to the Liquidation Preference shall constitute full payment of such dividend. Dividends payable on shares of the Junior Preferred Stock for any period less than a year shall be computed on the basis of a 360-day year of twelve 30-day months and the actual number of days elapsed in the period for which such Dividends are payable. Each distribution in the form of a dividend shall be payable to the Holders of Junior Preferred Stock of record as they appear on the stock books of the Corporation on such record dates, not less than 10 nor more than 45 days preceding the related Dividend Payment Date, as shall be fixed by the Board of Directors. Dividends shall cease to accumulate in respect of shares of the Junior Preferred Stock on the date of their redemption unless the Corporation shall have failed to pay the relevant redemption price on the date fixed for redemption. (b) All dividends paid in cash with respect to shares of the Junior Preferred Stock pursuant to Section 3(a) shall be paid pro rata to the Holders thereof entitled thereto. (c) Nothing herein contained shall in any way or under any circumstances be construed or deemed to require the Board of Directors to declare, or the Corporation to pay or set apart for payment, any dividends on shares of the Junior Preferred Stock at any time; provided, however, for the avoidance of doubt, this Section 3(c) shall not be construed or deemed to prevent any Holder of shares of Senior Preferred Stock from receiving any dividends to which such Holder is entitled pursuant to Section 5 or 7 hereof. (d) No dividends shall be declared by the Board of Directors or paid or funds set apart for payment of dividends by the Corporation on any Parity Securities for any period unless cumulative dividends shall have been or contemporaneously are declared and paid in full, 39 or declared and (in the case of dividends payable in cash) a sum in cash set apart sufficient for such payment, on the Junior Preferred Stock for all Dividend Periods terminating on or prior to the date of payment of such dividends on such Parity Securities. If any dividends are not paid in full, as aforesaid, upon the shares of the Junior Preferred Stock and any other Parity Securities, all dividends declared upon shares of the Junior Preferred Stock and any other Parity Securities shall be declared pro rata based on the relative liquidation preference of the Junior Preferred Stock and such Parity Securities. So long as any shares of the Junior Preferred Stock are outstanding, the Corporation shall not make any payment on account of, or set apart for payment money for a sinking or other similar fund for, the purchase, redemption or other retirement of, any of the Parity Securities or any warrants, rights, calls or options exercisable for or convertible into any of the Parity Securities, and shall not permit any corporation or other entity directly or indirectly controlled by the Corporation to purchase, redeem or retire any of the Parity Securities or any such warrants, rights, calls or options unless dividends determined in accordance herewith on the Junior Preferred Stock shall have been paid or contemporaneously are declared and paid in full. (e) (i) Holders of shares of the Junior Preferred Stock shall be entitled to receive the dividends provided for in Section 3(a) hereof in preference to and in priority over any dividends upon any of the Junior Securities. (ii) So long as any shares of Junior Preferred Stock are outstanding, the Corporation shall not (1) declare, pay or set apart for payment any dividend on any of the Junior Securities or make any payment on account of, or set apart for payment money for a sinking or other similar fund for, the purchase, redemption or other retirement of, any of the Junior Securities or any warrants, rights, calls or options exercisable for or convertible into any of the Junior Securities (other than the repurchase, redemption or other acquisition or retirement for value of Junior Securities (and any warrants, rights, calls or options exercisable for or convertible into such Junior Securities) held by current or former directors, officers, employees of or consultants or advisors to the Corporation or any of its Subsidiaries, which repurchase, redemption or other acquisition or retirement shall have been approved by the Board of Directors or shall have been made pursuant to certain call options provided in the Stockholders Agreement, provided, however, that such Junior Securities may only be repurchased, redeemed or otherwise acquired or retired either in exchange for Junior Securities or upon the cessation of service to the Corporation or its Subsidiaries (by termination, resignation, retirement, death or disability or otherwise) of such director, officer, employee, consultant or advisor), or (2) make any distribution in respect of Junior Securities, either directly or indirectly, and whether in cash, obligations or shares of the Corporation or other property (other than distributions or dividends in Junior Securities to the holders of Junior Securities), or (3) permit any corporation or other entity directly or indirectly controlled by the Corporation to purchase or redeem any of the Junior Securities or any such warrants, rights, calls or options, unless in any such case cumulative dividends determined in accordance herewith have been paid in full in cash on the Junior Preferred Stock and all other redemption or repayment obligations in respect of the Junior Preferred Stock have been paid in full in cash. (f) At any time and from time to time when the Liquidation Preference per share of Junior Preferred Stock exceeds $25.00, the Corporation may declare and pay, to the holders of record of the Junior Preferred Stock on the record date chosen by the Corporation for such 40 dividend, a special dividend equal to the positive difference between the Liquidation Preference per share of Junior Preferred Stock and $25.00 per share of Junior Preferred Stock (such difference, the "Base Amount"), plus accrued and unpaid dividends on the Base Amount to the date of payment. Upon payment of such a dividend, the Liquidation Preference shall be reduced to $25.00 per share of Junior Preferred Stock. 4. Liquidation Preference. (a) Upon any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, the Holders of shares of Junior Preferred Stock then outstanding shall be entitled to be paid, out of the assets of the Corporation available for distribution to its stockholders, the Liquidation Preference per share of Junior Preferred Stock in cash (plus an amount in cash equal to a prorated dividend for the period from the last Dividend Payment Date to the date fixed for liquidation, dissolution or winding up) before any payment shall be made or any assets distributed to the holders of any of the Junior Securities, including, without limitation, common stock of the Corporation. Except as provided in the preceding sentence, Holders of shares of Junior Preferred Stock shall not be entitled to any distribution in the event of liquidation, dissolution or winding up of the affairs of the Corporation. If the assets of the Corporation are not sufficient to pay in full the liquidation payments payable to the Holders of outstanding shares of the Junior Preferred Stock and all Parity Securities, then the holders of all such shares shall share equally and ratably in such distribution of assets of the Corporation in accordance with the amounts that would be payable on such distribution if the amount to which the Holders of outstanding shares of Junior Preferred Stock and the holders of outstanding shares of all Parity Securities are entitled were paid in full. (b) For the purposes of this Section 4, neither the sale, conveyance, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or substantially all of the property or assets of the Corporation nor the consolidation or merger of the Corporation with or into one or more corporations or other entities shall be deemed to be a liquidation, dissolution or winding up of the affairs of the Corporation (unless such sale, conveyance, exchange or transfer is in connection with a liquidation, dissolution or winding up of the business of the Corporation). 5. Redemption. (a) Optional Redemption. (i) The Corporation may (subject to the legal availability of funds therefor), at the option of the Corporation, redeem in cash at any time or from time to time on or after September 20, 2002, from any source of funds legally available therefor, in whole or in part, in the manner provided in Section 5(c) hereof, any or all of the shares of the Junior Preferred Stock, at a redemption price equal to the following percentages of the liquidation preference per share (plus an amount in cash equal to a prorated dividend for the period from the Dividend Payment Date immediately prior to the Redemption Date to the Redemption Date) (the "Optional Redemption Price"), in each case beginning on September 20 of the year indicated: 2002 109% 41 2003 106% 2004 103% 2005 and thereafter 100% provided, however, that no optional redemption pursuant to this Section 5(a)(i) shall be authorized or made at any time when the Corporation is making or required to make within the next 30 days, or purchasing shares of Junior Preferred Stock under, a Change of Control Offer in accordance with the provisions of Section 7 hereof. (ii) In the event of a redemption pursuant to Section 5(a)(i) hereof of only a portion of the then outstanding shares of the Junior Preferred Stock, the Corporation shall effect such redemption as it determines, pro rata, according to the number of shares held by each Holder of Junior Preferred Stock. (iii) In the event of a firm commitment underwritten initial public offering of common stock of the Corporation pursuant to a registration statement under the Securities Act with aggregate gross proceeds to the Corporation of at least $30,000,000 (the "Public Offering"), the Corporation may (subject to the legal availability of funds therefor), at the option of the Corporation, redeem in cash at any time or from time to time following the consummation of the Public Offering, from any source of funds legally available therefor, in whole or in part, in the manner provided in Section 5(c) hereof, any or all of the shares of the Junior Preferred Stock, at a redemption price equal to 100% percent of the Liquidation Preference per share (plus an amount in cash equal to a prorated dividend for the period from the Dividend Payment Date immediately prior to the Redemption Date to the Redemption Date) (the "Public Offering Optional Redemption Price"). For the purposes of this Section 5, the defined term "Optional Redemption Price" shall have the meaning set forth in Section 5(a)(i) hereof or shall mean the Public Offering Optional Redemption Price, as the case may be. In the event of a redemption pursuant to this Section 5(a)(iii) of only a portion of the then outstanding shares of the Junior Preferred Stock, the Corporation shall effect such redemption as it determines, pro rata, according to the number of shares held by each Holder of Junior Preferred Stock. (b) Mandatory Redemption. On September 20, 2012, the Corporation shall redeem in cash, subject to contractual and other restrictions with respect thereto, from any source of funds legally available therefor, in the manner provided in Section 5(c) hereof all but not less than all of the shares of the Junior Preferred Stock then outstanding at a redemption price equal to 100% of the Liquidation Preference per share (plus an amount in cash equal to a prorated dividend for the period from the Dividend Payment Date immediately prior to the Redemption Date to the Redemption Date) (the "Mandatory Redemption Price"). (c) Procedures for Redemption. (i) Written notice (the "Redemption Notice") shall be given by first-class mail, postage prepaid, to each Holder of Junior Preferred Stock of record on the record date fixed for such redemption of the Junior Preferred Stock at such Holder's address as the same appears on the stock register of the Corporation; provided, however, that no failure to give such notice nor any deficiency therein shall affect the validity of the procedure for the redemption of any shares of Junior Preferred Stock to be redeemed except as to the Holder or Holders to whom 42 the Corporation has failed to give said notice or except as to the Holder or Holders whose notice was defective. The Redemption Notice shall state: (1) whether the redemption is pursuant to Section 5(a) or 5(b) hereof; (2) the Optional Redemption Price or the Mandatory Redemption Price, as the case may be; (3) whether all or less than all the outstanding shares of the Junior Preferred Stock are to be redeemed and the total number of shares of the Junior Preferred Stock being redeemed; (4) the number of shares of Junior Preferred Stock held, as of the appropriate record date, by the Holder that the Corporation intends to redeem; (5) the date fixed for redemption; (6) that the Holder is to surrender to the Corporation, at the place or places where certificates for shares of Junior Preferred Stock are to be surrendered for redemption, in the manner and at the price designated, his certificate or certificates representing the shares of Junior Preferred Stock to be redeemed; and (7) that dividends on the shares of the Junior Preferred Stock to be redeemed shall cease to accrue on such Redemption Date unless the Corporation defaults in the payment of the Optional Redemption Price or the Mandatory Redemption Price, as the case may be. (ii) Each Holder of Junior Preferred Stock shall surrender the certificate or certificates representing such shares of Junior Preferred Stock to be redeemed to the Corporation, duly endorsed, in the manner and at the place designated in the Redemption Notice, and on the Redemption Date the full Optional Redemption Price or Mandatory Redemption Price, as the case may be, for such shares shall be payable in cash to the Person whose name appears on such certificate or certificates as the owner thereof, and each surrendered certificate shall be canceled and retired. In the event that less than all of the shares represented by any such certificate are redeemed, a new certificate shall be issued representing the unredeemed shares. (iii) Unless the Corporation defaults in the payment in full of the applicable redemption price, dividends on the Junior Preferred Stock called for redemption shall cease to accumulate on the Redemption Date, and the Holders of such redemption shares shall cease to have any further rights with respect thereto on the Redemption Date, other than the right to receive the Optional Redemption Price or the Mandatory Redemption Price, as the case may be, without interest. 6. Voting Rights. (a) The Holders of shares of Junior Preferred Stock, except as otherwise required under Delaware law or as set forth in Section 6(b) below, shall not be entitled or permitted to vote on any matter required or permitted to be voted upon by the stockholders of the Corporation. (b) (i) So long as any shares of the Junior Preferred Stock are outstanding, the Corporation shall not authorize or issue any class or series of Parity Securities without the affirmative vote or consent of Holders of a majority of the outstanding shares of Junior Preferred Stock, voting or consenting, as the case may be, separately as one class, given in person or by proxy, either in writing or by resolution adopted at an annual or special meeting, except that without the approval of Holders of Junior Preferred Stock, the Corporation may authorize and issue shares of Parity Securities in exchange for, or the proceeds of which concurrently are used to redeem or repurchase, any or all shares of Junior Preferred Stock then outstanding; provided, however, that, in the case of Parity Securities issued in exchange for, or 43 the proceeds of which are used to redeem or repurchase, less than all shares of Junior Preferred Stock then outstanding, (1) the aggregate liquidation preference of such Parity Securities shall not exceed the aggregate liquidation preference of, premium and accrued and unpaid dividends on, and expenses in connection with the refinancing of, the Junior Preferred Stock so exchanged, redeemed or repurchased, (2) such Parity Securities shall not be Disqualified Capital Stock and (3) the Corporation may pay dividends on such Parity Securities in the form of cash or such Parity Securities. (ii) So long as any shares of the Junior Preferred Stock are outstanding, the Corporation shall not authorize or issue any class or series of Senior Securities without the affirmative vote or consent of Holders of a majority of the outstanding shares of Junior Preferred Stock, voting or consenting, as the case may be, separately as one class, given in person or by proxy, either in writing or by resolution adopted at an annual or special meeting. (iii) So long as any shares of the Junior Preferred Stock are outstanding, the Corporation shall not amend this Amended and Restated Certificate of Incorporation, so as to affect adversely the specified rights, preferences, privileges or voting rights of Holders of shares of Junior Preferred Stock or to authorize the issuance of any additional shares of Junior Preferred Stock without the affirmative vote or consent of Holders of a majority of the outstanding shares of Junior Preferred Stock, voting or consenting, as the case may be, separately as one class, given in person or by proxy, either in writing or by resolution adopted at an annual or special meeting. (iv) The affirmative vote or consent of Holders of a majority of the outstanding shares of Junior Preferred Stock, voting or consenting, as the case may be, separately as one class, whether voting in person or by proxy, either in writing or by resolution adopted at an annual or special meeting, may waive compliance with any provision of Section II.A or II. B of Article Four of this Amended and Restated Certificate of Incorporation. (c) In any case in which the Holders of shares of the Junior Preferred Stock shall be entitled to vote pursuant to this Section 6 or pursuant to Delaware law, each Holder of shares of the Junior Preferred Stock shall be entitled to one vote for each share of Junior Preferred Stock held. 7. Change of Control Offer. Subject to contractual and other restrictions with respect thereto, upon the occurrence of a Change of Control, the Corporation shall make an offer (a "Change of Control Offer") to each Holder of Junior Preferred Stock to repurchase any or all of such Holder's shares of Junior Preferred Stock at a purchase price in cash equal to 101.0% of the aggregate liquidation preference thereof plus accumulated and unpaid dividends thereon, if any, to the date of repurchase (the "Change of Control Payment"). (a) Within 30 days following any Change of Control, the Corporation shall mail a notice to each Holder of Junior Preferred Stock stating: (i) that the Change of Control Offer is being made pursuant to this Section 7 and that all shares of Junior Preferred Stock tendered will be accepted for payment; (ii) the purchase price and the purchase date, which shall 44 be no sooner than 30 nor later than 60 days from the date such notice is mailed (the "Change of Control Payment Date"); (iii) that any shares not tendered will continue to accumulate dividends; (iv) that, unless the Corporation defaults in the payment of the Change of Control Payment, all shares of Junior Preferred Stock accepted for payment pursuant to the Change of Control Offer shall cease to accumulate dividends after the Change of Control Payment Date; (v) that Holders electing to have any shares of Junior Preferred Stock repurchased pursuant to a Change of Control Offer will be required to surrender such shares to the Corporation or its paying agent at the address specified in the notice prior to the close of business on the third Business Day preceding the Change of Control Payment Date; (vi) that Holders will be entitled to withdraw their election if the Corporation or the paying agent, as the case may be, receives, not later than the close of business on the third Business Day preceding the Change of Control Payment Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder, the number of shares of Junior Preferred Stock delivered for repurchase, and a statement that such Holder is withdrawing his election to have such shares repurchased; and (vii) that Holders whose shares of Junior Preferred Stock are being repurchased only in part will be issued new shares of Junior Preferred Stock equal in Liquidation Preference to the unpurchased portion of the shares of Junior Preferred Stock surrendered. (b) On the Change of Control Payment Date, the Corporation shall, to the extent lawful, (i) accept for payment all shares of Junior Preferred Stock or portions thereof properly tendered pursuant to the Change of Control Offer and (ii) deposit with the Corporation's paying agent an amount equal to the Change of Control Payment in respect of all shares of Junior Preferred Stock or portions thereof so tendered. The Corporation or its paying agent, as the case may be, shall promptly mail to each Holder of shares of Junior Preferred Stock so tendered the Change of Control Payment for such shares or portions thereof. The Corporation shall promptly issue a certificate representing shares of Junior Preferred Stock and mail to each Holder a new certificate representing shares of Junior Preferred Stock equal in Liquidation Preference to any unpurchased portion of such shares surrendered by such Holder, if any. The Corporation shall notify the remaining holders of Junior Preferred Stock of the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. (c) The Corporation shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of shares of Junior Preferred Stock in connection with a Change of Control. (d) The Corporation's obligations with respect to a Change of Control Offer shall be satisfied to the extent actually performed by a third party in accordance with the terms of this Section 7. 8. Conversion or Exchange. The Holders of shares of Junior Preferred Stock shall not have any rights hereunder to convert such shares into or exchange such shares for shares of any other class or classes or of any other series of any class or classes of Capital Stock of the Corporation. 45 9. Preemptive Rights. No shares of Junior Preferred Stock shall have any rights of preemption whatsoever as to any securities of the Corporation, or any warrants, rights or options issued or granted with respect thereto, regardless of how such securities or such warrants, rights or options may be designated, issued or granted. 10. Reissuance of Junior Preferred Stock. Shares of Junior Preferred Stock that have been issued and reacquired in any manner, including shares purchased or redeemed or exchanged, shall (upon compliance with any applicable provisions of the laws of Delaware) have the status of authorized but unissued shares of preferred stock of the Corporation undesignated as to series and may be designated or redesignated and issued or reissued, as the case may be, as part of any series of preferred stock of the Corporation; provided, however, that such shares may not in any event be reissued as Junior Preferred Stock. 11. Business Day. If any payment, redemption or exchange shall be required by the terms hereof to be made on a day that is not a Business Day, such payment, redemption or exchange shall be made on the immediately succeeding Business Day, and no interest shall accrue for the intervening period. 12. Certain Additional Provisions. (a) Restricted Payments. The Corporation shall not, and shall not permit any of its Subsidiaries to, directly or indirectly make any Restricted Payment, unless, at the time of such Restricted Payment: (1) no Default Event shall have occurred and be continuing or would occur as a consequence thereof; and (2) such Restricted Payment, together with the aggregate of all other Restricted Payments made by the Corporation and its Subsidiaries after the Preferred Stock Issue Date, does not exceed the sum (the "Basket") of (a) (i) Consolidated EBITDA of the Corporation for the period (taken as one accounting period), commencing on the first day of the first fiscal quarter commencing on or prior to the Preferred Stock Issue Date, to and including the last day of the fiscal quarter ended immediately prior to the date of each such calculation (or, in the event Consolidated EBITDA for such period is a deficit, then minus such deficit) less (ii) 150% of Consolidated Fixed Charges for such period, plus (b) the aggregate Net Cash Proceeds received by the Corporation from the sale of the Corporation's Qualified Capital Stock (other than in each case (i) to a Subsidiary of the Corporation, (ii) to the extent applied in connection with a Qualified Exchange and (iii) to the extent applied to repurchase Capital Stock pursuant to clause (iii) of the definition of Other Permitted Payments after the Preferred Stock Issue Date). The foregoing provisions of this Section 12(a) shall not prohibit the following Restricted Payments: (A) a Qualified Exchange; (B) the payment of any dividend within 60 days after the date of declaration thereof, if at said date of declaration such payment would have complied with the provisions of Section II.A or II. B of Article Four of this Amended and Restated Certificate of Incorporation; and (C) Other Permitted Payments. The full amount of any Restricted Payment made pursuant to clause (B) of the immediately preceding sentence (but not pursuant to clauses 46 (A) or (C) of the immediately preceding sentence), however, will be deducted in the calculation of the aggregate amount of Restricted Payments available to be made pursuant to the Basket. The amount of any Restricted Payment, if other than in cash, shall be the fair market value thereof, as determined in the good faith reasonable judgment of the Board of Directors. (b) Reports. So long as any shares of Junior Preferred Stock are outstanding, the Corporation shall furnish to each Holder of Junior Preferred Stock (at such Holder's address listed in the register of Holders maintained by the transfer agent and registrar of the Junior Preferred Stock): (i) beginning at the end of the Corporation's first fiscal year ending after the Preferred Stock Issue Date, all quarterly and annual financial information that would be required to be contained in a filing with the SEC on Forms 10-Q and 10-K if the Corporation were required to file such forms, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" and, with respect to the annual information only, a report thereon by the Corporation's certified independent accountants, and (ii) all current reports that would be required to be filed with the SEC on Form 8-K if the Corporation were required to file such reports. 13. Transfer Restrictions. The certificates evidencing shares of Junior Preferred Stock shall, until the second anniversary of the date of original issuance of such shares, unless otherwise agreed by the Corporation and the holders of any such certificates, bear a legend substantially to the following effect: "The Junior Preferred Stock evidenced hereby was originally issued in a transaction exempt from registration under Section 5 of the United States Securities Act of 1933, as amended (the "Securities Act"), and the Junior Preferred Stock evidenced hereby may not be offered, sold or otherwise transferred in the absence of such registration or an applicable exemption therefrom. Each purchaser of the Junior Preferred Stock evidenced hereby is hereby notified that the seller may be relying on the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A thereunder. The Holder of the Junior Preferred Stock evidenced hereby agrees for the benefit of the Corporation that (A) such Junior Preferred Stock may be offered, resold, pledged or otherwise transferred, only (a) inside the United States to a Person whom the seller reasonably believes is a qualified institutional buyer (as defined in Rule 144A) in a transaction meeting the requirements of Rule 144A, (b) outside the United States to a foreign Person in a transaction meeting the requirements of Rule 903 or Rule 904 of Regulation S under the Securities Act, (c) in a transaction meeting the requirements of Rule 144 under the Securities Act, (d) to the Corporation, (e) pursuant to an effective registration statement or (f) in accordance with another exemption from the registration requirements of the Securities Act (and based upon an opinion of counsel if the Corporation so requests), and, in each case, in accordance with any applicable securities laws of any state of the United States or any other applicable jurisdiction and (B) the holder will, and each subsequent holder is required to, notify any purchaser from it of the Junior Preferred Stock evidenced hereby of the resale restrictions set forth in (A) above." The shares of Junior Preferred Stock not otherwise registered pursuant to an effective registration statement under the Securities Act shall be subject to the restrictions on 47 transfer set forth in the legend referred to above until the second anniversary of the date of original issuance of such shares of Junior Preferred Stock. C. Undesignated Preferred Stock 5,000,000 shares of Preferred Stock authorized by this Amended and Restated Certificate of Incorporation may be issued from time to time in one or more series. FIFTH: The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. In addition to the powers and authority expressly conferred upon them by statute or by this Amended and Restated Certificate of Incorporation or the bylaws of the Corporation, the Board of Directors is hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation. Election of directors need not be by written ballot unless the bylaws so provide. SIXTH: The Board of Directors is authorized to make, adopt, amend, alter or repeal the bylaws of the Corporation. The stockholders shall also have power to make, adopt, amend, alter or repeal the bylaws of the Corporation. SEVENTH: To the fullest extent permitted by the GCL as the same exists or may hereafter be amended, a director of the Corporation shall not be liable to the Corporation or its stockholders for monetary damage for breach of fiduciary duty as a director. If the GCL is amended after the date of the filing of this Amended and Restated Certificate of Incorporation to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the GCL, as so amended from time to time. No amendment or repeal of this Article shall adversely affect any right or protection of a director of the Corporation provided hereunder with respect to any act or omission occurring prior to such amendment or repeal. The Corporation shall indemnify to the fullest extent permitted by the GCL as the same exists or may hereafter be amended, any person made, or threatened to be made, a defendant or witness to any action, suit or proceeding (whether civil or criminal or otherwise) by reason of the fact that such person, or his or her testator or intestate, is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or enterprise. Nothing contained herein shall affect any rights to indemnification to which any person may be entitled by law. No amendment or repeal of this Article shall adversely affect any right to indemnification provided hereunder with respect to any act or omission occurring prior to such amendment or repeal. In furtherance and not in limitation of the powers conferred by statute: (i) this Corporation may purchase and maintain insurance on behalf of any person who is or was a director or officer, employee or agent of the Corporation, or is serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his 48 or her status as such, whether or not the Corporation would have the power to indemnify against such liability under the provisions of law; and (ii) this Corporation may create a trust fund, grant a security interest and/or use other means (including, without limitation, letters of credit, surety bonds and/or other similar arrangements), as well as enter into contracts providing indemnification to the full extent authorized or permitted by law and including as part thereof provisions with respect to any or all of the foregoing to ensure the payment of such amounts as may become necessary to effect indemnification as provided therein, or elsewhere. Any repeal or modification of the foregoing provisions of this Article by the stockholders of the Corporation shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification. EIGHTH: The stockholders of the Corporation may not take action by written consent in lieu of a meeting but must take any such action at a duly called annual or special meeting. Special meetings of the stockholders of the Corporation for any purpose or purposes may be called only by the Board of Directors, the Chairman of the Board, the Chief Executive Officer or the President of the Corporation. NINTH: The number of directors which constitute the entire Board of Directors shall be as specified in the bylaws of the Corporation. At each annual meeting of stockholders, directors of the Corporation shall be elected to hold office until the expiration of the term of which they are elected and until their successors have been duly elected and qualified; except that if any such election shall not be so held, such election shall take place at a stockholders' meeting called and held in accordance with the GCL. Effective as of the date of the first regularly scheduled annual meeting of the stockholders following the date (the "Effective Date") on which the Corporation first becomes subject to the periodic and other reporting requirements of Section 13 of the Securities Exchange Act of 1934, as amended, the directors of the Corporation shall be divided into three classes as nearly equal in size as is practicable, hereby designated Class I, Class II and Class III. The term of office of the initial Class I directors shall expire at the second annual meeting of the stockholders following the Effective Date, the term of office of the initial Class II directors shall expire at the third annual meeting of the stockholders following the Effective Date and the term of office of the initial Class III directors shall expire at the fourth annual meeting of the stockholders following the Effective Date. At each annual meeting of stockholders, commencing with the second regularly-scheduled annual meeting of stockholders following the Effective Date, each of the successors elected to replace the directors of a Class whose term shall have expired at such annual meeting shall be elected to hold office until the third annual meeting next succeeding his or her election and until his or her respective successor shall have been duly elected and qualified. If the number of directors is hereafter changed, any newly created directorships or decrease in directorships shall be so apportioned among the classes as to make all classes as nearly equal in number as is practicable, provided that no decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director. 49 Any director may be removed from office by the stockholders of the Corporation only for cause. Vacancies occurring on the Board of Directors for any reason and newly created directorships resulting from an increase in the authorized number of directors may be filled only by vote of a majority of the remaining members of the Board of Directors, although less than a quorum, at any meeting of the Board of Directors. A person so elected by the Board of Directors to fill a vacancy or newly created directorship shall hold office until the next election of the Class for which such director shall have been chosen and until his or her successor shall have been duly elected and qualified. TENTH: The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Amended and Restated Certificate of Incorporation, in the manner now or hereafter prescribed by statute and all rights conferred upon stockholders herein are granted subject to this reservation. Notwithstanding any other provision of this Amended and Restated Certificate of Incorporation or any provision of law which might otherwise permit a lesser vote, but in addition to any vote of the holders of any class or series thereof of the stock of this Corporation required by law or this Amended and Restated Certificate of Incorporation, the affirmative vote of the holders of at least two-thirds (2/3) of the combined voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to amend, repeal or adopt any provision contained in this Amended and Restated Certificate of Incorporation which is inconsistent with (i) Article SIXTH, (ii) Article EIGHTH, (iii) Article NINTH, and (iv) this Article TENTH. IN WITNESS WHEREOF, the undersigned has duly executed this Amended and Restated Certificate of Incorporation in the name and on behalf of the Corporation on the 19th day of November 2001, and the statements contained herein are affirmed as true under penalty of perjury. /s/ Tomas W. Fuller ---------------------------------- Tomas W. Fuller Chief Financial Officer and Assistant Secretary 50 EX-3.2 4 v80091ex3-2.txt EXHIBIT 3.2 Exhibit 3.2 AMENDED AND RESTATED BYLAWS OF VCA ANTECH, INC. A DELAWARE CORPORATION (THE "CORPORATION") AS OF NOVEMBER 20, 2001 ARTICLE I CORPORATE OFFICES Section 1 Registered Office. The registered office of the Corporation in the State of Delaware is located at 1209 Orange Street, in the City of Wilmington, County of Newcastle. Section 2 Principal Office. The principal office of the Corporation is located at 12401 West Olympic Boulevard, Los Angeles, California 90064-1022. The Board of Directors (herein referred to as the "Board") is hereby granted the full power and authority, by a resolution of a majority of the directors, to change the principal office from one location to another. Section 3 Other Offices. The Corporation may establish any additional offices, at any place or places, as the Board may designate, or as the business of the Corporation shall require. ARTICLE II STOCKHOLDERS MEETINGS Section 1 Place of Meeting. Meetings of the Stockholders shall be held at the principal offices of the Corporation or at such place, within or without the State of Delaware, as may from time to time be designated for that purpose, by the Board. Section 2 Annual Meetings. Annual meetings of stockholders shall be held at a place and time on any weekday which is not a holiday and which is not more than 120 days after the end of the fiscal year of the Company as shall be designated by the Board and stated in the notice of the meeting, at which the stockholders shall elect the directors of the Company and transact such other business as may properly be brought before the meeting. Section 3 Special Meetings. Special meetings of the Stockholders, for any purpose or purposes prescribed in the notice of the meeting, may be called only (i) by the Board pursuant to a resolution adopted by a majority of the total number of authorized directors (whether or not there exist any vacancies in previously authorized directorships at the time any such resolution is presented to the Board for adoption) or (ii) by the Chairman of the Board, the President, or the Chief Executive Officer if made by a written request to the Board and shall be held at such place, on such date, and at such time as the Board shall fix. Business transacted at special meetings shall be confined to the purpose or purposes stated in the notice. Section 4 Notice of Meetings. Except as otherwise provided by the DGCL, as that term is defined in Section 9 of Article VI, written notice of each meeting of the Stockholders, whether annual or special, shall be given not less than 10 nor more than 60 days prior to the date upon which the meeting is to be held to each Stockholder entitled to vote at such meeting. Such notice shall be deemed delivered when deposited in the United States mail, postage prepaid, addressed to the Stockholder at such person's address as it appears on the stock records of the Corporation, or otherwise actually delivered to such address or such person. Such notice shall state the place, date and hour of the meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called. If a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place thereof are announced at the meeting at which the adjournment is taken. If the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each Stockholder of record entitled to vote at the meeting. Section 5 Quorum. Except as otherwise provided by law, the Certificate of Incorporation or these Bylaws, at each meeting of Stockholders the presence in person or by proxy of the holders of shares of stock having a majority of the votes which could be cast by the holders of all outstanding shares of stock entitled to vote at the meeting shall be necessary and sufficient to constitute a quorum. In the absence of a quorum, any meeting of the Stockholders may be adjourned from time to time by the chairman of the meeting or a majority of the votes represented either in person or by proxy, and no other business may be transacted at a meeting except that the Stockholders 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 Stockholders to leave less than a quorum, if any action taken (other than adjournment) is approved by at least a majority of the shares required to constitute a quorum. Section 6 Adjourned Meeting. Any Stockholders' meeting, annual or special, whether or not a quorum is present, may be adjourned by the chairman of the meeting or by a vote of a majority of the shares present, either in person or by proxy. At any adjourned meeting, the Corporation may transact any business which might have been transacted at the original meeting. Section 7 Chairman of Meeting; Opening of Polls. Meetings of Stockholders shall be presided over by the person designated by the Board, or in the absence of such designation, by the Chairman of the Board, if any, or in his absence by the Vice Chairman of the Board, if any, or in his absence by the Chief Executive Officer, or in their absence by a chairman chosen at the meeting by the Stockholders. The Secretary shall act as secretary of the meeting, but in his absence, the chairman of the meeting may appoint any person to act as secretary of the meeting. The chairman of the meeting shall announce at each meeting of Stockholders the date and time of the opening of the polls for each matter upon which the Stockholders will vote. Section 8 Proxies. Each 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 another person or persons to act for such person by proxy. Section 9 Stockholder List. The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least ten days before every meeting of Stockholders, a complete list of the Stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each Stockholder and the number of shares registered in the name of each Stockholder. Such list shall be open to the examination of any Stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, 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, if not so specified, at the place where the meeting is to be 2 held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any Stockholder who is present. Section 10 No Consent of Stockholders in Lieu of Meeting. The Stockholders of the Corporation may not take action by written consent in lieu of a meeting but must take action at a duly called annual or special meeting, as described in this Article II. Section 11 Inspectors of Election. In advance of any meeting of the Stockholders, the Board shall appoint at least one person, other than nominees for office, as inspectors of election, to act at such meeting or any adjournment thereof. The number of such inspectors of election shall be one or three. In case any person appointed as inspector fails to appear or refuses to act, the vacancy shall be filled by appointment by the Board in advance of the meeting, or at the meeting by the chairman of the meeting. The duties of each such inspector shall include: determining the number of shares outstanding and voting power of each; determining the shares represented at the meeting; determining the existence of a quorum; determining the authenticity, validity and effect of proxies; receiving votes, ballots or consents; hearing and determining all challenges and questions in any way arising in connection with the right to vote; retaining for a reasonable period the disposition of any challenges made to the inspector's determinations; counting and tabulating all votes; determining when the polls shall close; determining the result of any election; certifying the determination of the number of shares represented at the meeting, and the count of all votes and ballots; certifying any information considered in determining the validity and counting of proxies and ballots if that information is used for the purpose of reconciling proxies and ballots submitted by or on behalf of banks, brokers, their nominees or similar persons which represent more votes than the Stockholder holds of record; and performing such acts as may be proper to conduct the election or vote with fairness to all Stockholders. An announcement shall be made at each meeting of the Stockholders by the chairman of the meeting of the date and time of the opening and closing of polls for each matter upon which the Stockholders will vote at the meeting. No ballot, proxies or votes, nor any revocations thereof or changes thereto, shall be accepted by the inspectors after the closing of the polls unless the Delaware Court of Chancery upon application by a Stockholder shall determine otherwise. Unless otherwise provided in the Certificate of Incorporation or these Bylaws, this Section 11 shall not apply to the Corporation if the Corporation does not have a class of voting stock that is: (a) listed on a national securities exchange; (b) authorized for quotation on an interdealer quotation system of a registered national securities association; or (c) held of record by more than 2,000 Stockholders. Section 12 Record Date. In order that the Corporation may determine the Stockholders entitled to notice of or to vote at any meeting of Stockholders or any adjournment thereof, or 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 stock or for the purpose of any other lawful 3 action, the Board may fix, in advance, a record date, which shall not be more than 60 nor less than 10 days before the date of such meeting, nor more than 60 days prior to any other action. If no record date is fixed: (a) The record date for determining Stockholders entitled to notice of or to vote at a meeting of Stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held; (b) The record date for determining Stockholders entitled to express consent to corporate action in writing without a meeting, when no prior action by the Board is necessary, shall be the day on which the first written consent is expressed; (c) The record date for determining Stockholders for any other purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto. A determination of Stockholders of record entitled to notice of or to vote at a meeting of Stockholders shall apply to any adjournment of the meeting; provided, however, that the Board may fix a new record date for the adjourned meeting. Section 13 Conduct of Meetings. The Board may adopt such rules and regulations for the conduct of meetings of Stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board, the chairman of any meeting shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of the chairman, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board or prescribed by the chairman of the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present; (iii) limitations on attendance at or participation in the meeting to Stockholders of record, their duly authorized and constituted proxies or such other persons as the chairman of the meeting shall determine; (iv) restrictions on entry to meeting after the time fixed for commencement thereof; (v) limitations on the time allotted to questions or comments by participants. Unless and to the extent determined by the Board or the chairman of meeting, meetings of Stockholders shall not be required to be held in accordance with the rules of parliamentary procedure. Section 14 Exception to Requirements of Notice. No notice is required to be given to any Stockholder under the Certificate of Incorporation or these Bylaws if under Section 230 of the DGCL no such notice is required to be given. Section 15 Matters Considered at Annual Meeting. At an annual meeting of the Stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting business must be (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board, (b) otherwise properly brought before the meeting by or at the direction of the Board, or (c) otherwise properly brought before the meeting by a Stockholder. For business to be properly brought before an annual meeting by a Stockholder, the Stockholder must have given timely notice thereof in 4 writing to the Secretary of the Corporation. To be timely, a Stockholder's notice must be delivered to or mailed and received at the principal executive offices of the Corporation, not less than 60 days nor more than 90 days prior to the meeting; provided, however, that in the event that less than 70 days' notice or prior public disclosure of the date of the meeting is given or made to the Stockholders, notice by the Stockholder to be timely must be so received not later than the close of business on the 10th day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure was made. A Stockholder's notice to the Secretary shall set forth as to each matter the Stockholder proposes to bring before the annual meeting (a) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (b) the name and address, as they appear on the Corporation's books, of the Stockholder proposing such business, (c) the class and number of shares of the Corporation which are beneficially owned by the Stockholder, and (d) any material interest of the Stockholder in such business. Notwithstanding anything in the By-laws to the contrary, no business shall be conducted at any annual meeting except in accordance with the procedures set forth in this Section. The chairman of the annual meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting and in accordance with the provisions of this section and if he should so determine, he shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted. Section 16 Nominations for Director . Only persons who are nominated in accordance with the procedures set forth in this Section shall be eligible for election as Directors. Nominations of persons for election to the Board may be made at a meeting of Stockholders by or at the direction of the Board or by any Stockholder entitled to vote for the election of Directors at the meeting who complies with the notice procedures set forth in this Section. Such nominations, other than those made by or at the direction of the Board shall be made pursuant to timely notice in writing to the Secretary of the Corporation. To be timely, a Stockholder's notice shall be delivered to or mailed and received at the principal executive offices of the Corporation not less than 60 days nor more than 90 days prior to the meeting provided, however, that in the event that less than 70 days' notice or prior public disclosure of the date of the meeting is given or made to the Stockholders, notice by the Stockholder to be timely must be so received not later than the close of business on the 10th day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made. Such Stockholder's notice shall set forth (a) as to each person whom the Stockholder proposes to nominate for election or re-election as a Director, (i) the name, age, business address and residence address of such person, (ii) the principal occupation or employment of such person, (iii) the class and number of shares of the Corporation which are beneficially owned by such person, and (iv) any other information relating to such person that is required to be disclosed in solicitations of proxies for election of Directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (including without limitation such persons' written consent to being named in the proxy statement as a nominee and to serving as a Director if elected); and (b) as to the Stockholder giving the notice (i) the name and address, as they appear on the Corporation's books, of such Stockholder and (ii) the class and number of shares of the Corporation which are beneficially owned by such Stockholder. At the request of the Board any person nominated by the Board for election as a Director shall furnish to the Secretary of the Corporation that information required to be set forth in a Stockholder's notice of nomination which pertains to the nominee. No person shall be eligible for election as a Director of the Corporation unless nominated in accordance with the procedures set forth in this Section. The chairman of the meeting shall, if the facts warrant, determine and declare 5 to the meeting that a nomination was not made in accordance with the procedures prescribed by the Bylaws, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded. ARTICLE III BOARD OF DIRECTORS Section 1 Powers. The business and affairs of the Corporation shall be managed by, or under the direction of the Board, except as may be otherwise provided by the DGCL or in the Certificate of Incorporation or these Bylaws. Section 2 Number. The Board shall consist of one or more members, the number thereof to be determined from time to time by resolution of the Board. Section 3 Place of Meeting. Unless otherwise provided in the Certificate of Incorporation, meetings, both regular and special, of the Board shall be held at the Corporation's principal executive offices, or at such other place or places as the Board or the Chairman of the Board may from time to time determine. Section 4 Regular Meetings. Immediately following each annual meeting of the Stockholders the Board shall hold a regular meeting at the same place at which such Stockholders' meeting is held, or any other place as may be fixed from time to by the Board or the Chairman of the Board. Notice of such meeting need not be given. Other regular meetings of the Board shall be held without call at such time as the Board may from time to time determine. If any day fixed for a regular meeting shall be a legal holiday at the place where the meeting is to be held, then the meeting which would otherwise be held on that day shall be held at the same hour on the next succeeding business day not a legal holiday. Notice of a regular meeting need not be given. Section 5 Special Meetings. Except as otherwise provided in the Certificate of Incorporation, special meetings of the Board for any purpose or purposes may be called at any time by the Chairman of the Board, the Chief Executive Officer, the Chief Financial Officer or by any two directors. Written notice of the time and place of special meetings shall be delivered personally to each director or communicated to each director by telephone or telegraph or telex or cable or mail or electronic mail or other form of recorded communication, charges prepaid, addressed to each director at that director's address as it is shown on the records of the Corporation or, if it is not so shown on such records or is not readily ascertainable, at that director's residence or usual place of business. In case such notice is mailed, it shall be deposited in the United States mail at least three days prior to the time of the holding of the meeting. In case such notice is delivered personally, by telephone or by other form of written communication, it shall be delivered at least 24 hours before the time of the holding of the meeting. The notice shall state the time of the meeting, but need not specify the place of the meeting if the meeting is to be held at the principal executive office of the Corporation. The notice need not state the purpose of the meeting unless expressly provided otherwise by statute. 6 Section 6 Meetings by Communication Equipment. Members of the Board, or any committee designated by the Board, may participate in a meeting of the Board or committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other. Participation in a meeting pursuant to this Section shall constitute presence in person at such meeting. Section 7 Quorum and Manner of Acting. The presence of a majority of the total number of directors shall constitute a quorum for the transaction of business, and the act of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board. In the absence of a quorum, a majority of the directors present may adjourn any meeting from time to time until a quorum is present. Notice of an adjourned meeting need not be given. Section 8 Action Without Meeting. Any action required or permitted to be taken at any meeting of the Board, or of 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. Section 9 Compensation of Directors. The Board may fix the compensation of directors. Section 10 Committees. The Board may, by resolution passed by a majority of the whole Board, designate one or more committees, each committee to consist of one 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. In the absence or disqualification of a member of the committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members 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. Any such committee, to the extent permitted by law and to the extent authorized by the Board, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it. The Board may remove any director from a committee with or without cause at any time. ARTICLE IV OFFICERS Section 1 Officers. The Board may elect such officers with such titles as the Board deems advisable. Each officer shall have the powers and duties set forth in these Bylaws and any resolution of the Board appointing such officer (to the extent such resolution is not inconsistent with these Bylaws), and to the extent not so provided, as generally pertain to their respective offices, subject to the control of the Board. The Board may designate two or more persons as Chairman of the Board, in which case each shall be a Co-Chairman of the Board. Each such officer shall hold office until his or her successor is elected and qualified or until his or her earlier resignation or removal. Subject to contractual obligations to the Company, any officer may resign at any time upon written notice to the Corporation. The Board may remove any officer with or without cause at any time, but such removal shall be without prejudice to the contractual rights of such officer, if any, with the Corporation. One person may hold any number of offices. 7 Section 2 Chairman of the Board. The Chairman of the Board, if such an officer be elected, shall, if present, preside at all meetings of the Board and exercise and perform such other powers and duties as may be from time to time assigned to such person by the Board. Section 3 Chief Executive Officer. Subject to such supervisory powers, if any, as may be given by the Board to the Chairman of the Board, the Chief Executive Officer, if such an officer be elected, shall, subject to the control of the Board, have general supervision, direction and control of the business and the officers of the Corporation. The Chief Executive Officer shall exercise and perform such other powers and duties as may be from time to time assigned to such person by the Board, consistent with such person's position as Chief Executive Officer. The Board may designate two or more persons as Chief Executive Officer, in which case each shall have the title Chief Executive Officer or Co-Chief Executive Officer, as specified by the Board. Section 4 President. Subject to such supervisory powers, if any, as may be given by the Board to the Chairman of the Board and the Chief Executive Officer, if there be such officers, the President shall be the chief operating officer of the Corporation and shall, subject to the control of the Board, have general supervision, direction, and control of the business and the officers of the Corporation (other than the Chairman and Chief Executive Officer). The President shall have the general powers and duties of management usually vested in the office of president and general manager of a Corporation, and shall have such other powers and duties as may be prescribed by the Board and the Chief Executive Officer. Section 5 Vice Presidents. In the absence or disability of the Chairman, the Chief Executive Officer and the President, the Vice Presidents, if any, in order of their rank as fixed by the Board, or, if not ranked, the Vice President designated by the Board shall perform all the duties of such officer, and when so acting shall have all the powers of, and be subject to all the restrictions upon, such offices. 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, the Chief Executive Officer or the President. Section 6 Secretary. The Secretary shall keep, or cause to be kept, at the principal executive office or such other place as the Board may direct, a book of minutes of all meetings and actions of directors, committees of directors, and Stockholders, with the time and place of holding, whether regular or special, and, if special, how authorized, the notice given, the names of those present at directors' meetings or committee meetings, the number of shares present or represented at Stockholders' meetings, and the proceedings. The Secretary shall give, or cause to be given, notice of all meetings of the Stockholders and of the Board required by the Bylaws or by law to be given, and he shall keep the seal of the Corporation, if one be adopted, in safe custody, and shall have such other powers and perform such other duties as may be prescribed by the Board. Section 7 Chief Financial Officer. The Chief Financial Officer shall keep and maintain, or cause to be kept and maintained, adequate and correct books and records of accounts of the properties and business transactions of the Corporation, including accounts of its assets, liabilities, receipts, disbursements, gains, losses, capital, retained earnings and shares, and shall send or cause to be sent to the Stockholders of the Corporation such financial statements and reports as are by law or these Bylaws required to be sent to them. 8 The Chief Financial Officer shall deposit all monies and other valuables in the name or to the credit of the Corporation with such depositories as may be designated by the Board or by an officer, if such authority is delegated by the Board. The Chief Financial Officer shall disburse the funds of the Corporation as may be ordered by the Board, shall render to the President and directors, whenever they request it, an account of all transactions undertaken as Chief Financial Officer 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. ARTICLE V INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND OTHER AGENTS Section 1 Agents, Proceedings and Expenses. For the purposes of this Article V, "agent" means any person who is or was a director, officer, employee or other agent of the Corporation, or is or was a director, officer, employee or other agent of the Corporation as a director, officer, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust or other enterprise, or was a director, officer, employee or agent of a foreign or domestic corporation which was a predecessor corporation of the Corporation or of another enterprise at the request of such predecessor corporation; "proceeding" means any threatened, pending or complete action or proceeding, whether civil, criminal, administrative, or investigative; and "expenses" includes, without limitation, attorneys' fees and any expenses of establishing a right to indemnification under Section 2 or Section 3 of this Article V. Section 2 Actions Other Than By The Corporation. The Corporation shall have power to 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 Corporation) by reason of the fact that such person is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation 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 such person in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person's conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contender or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that such person's conduct was unlawful. Section 3 Actions by the Corporation. The Corporation shall have power to 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 Corporation to procure a judgment in its favor by reason of the fact that such person is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation 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 such person in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably 9 believed to be in or not opposed to the best interests of the Corporation 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 for negligence or misconduct in the performance of such person's duty to the Corporation unless and only to the extent that the Delaware Court of Chancery or 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 the Delaware Court of Chancery or such other court shall deem proper. Section 4 Successful Defense by Agent. To the extent that a present or former director or officer of the Corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Sections 2 and 3 of this Article V, 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. Section 5 Required Approval. Any indemnification under Sections 1 and 2 (unless ordered by a court) shall be made by the Corporation 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 such person has met the applicable standard of conduct set forth in Sections 2 and 3 of this Article V. 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, or (b) by a committee of such disinterested directors designated by majority vote of such disinterested directors, even though less than a quorum, or (c) if there are no such disinterested directors, or if such disinterested directors so direct, by independent legal counsel in a written opinion, or (d) by the affirmative vote of a majority of Stockholders. Section 6 Advance of Expenses. The Corporation may, in its discretion, pay the expenses (including attorneys' fees) incurred by an officer or director in defending any civil, criminal, administrative or investigative action, suit or proceeding, in advance of the final disposition of such action, suit or proceeding, provided, however, that the payment of expenses incurred by a director or officer in advance of the final disposition of the proceeding shall be made only upon receipt of an undertaking by or on behalf of such director or officer to repay all amounts advanced if it should ultimately be determined that the director or officer is not entitled to be indemnified by the Corporation as authorized in this Article V or otherwise. 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 Corporation deems appropriate. Section 7 Contractual Rights. The indemnification and advancement of expenses provided by, or granted pursuant to, the other sections of this Article V shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any bylaw, 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 and shall, unless otherwise provided when authorized or ratified, 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 a person. 10 Section 8 Limitations. No indemnification or advance shall be made under this Article V, except as provided in Section 4, in any circumstances where it appears: (a) That it would be inconsistent with a provision of the Certificate of Incorporation, a resolution of the Stockholders or an agreement in effect at the time of accrual of the alleged cause of action asserted in the proceeding in which the expenses were incurred or other amounts were paid, which prohibits or otherwise limits indemnification; or (b) That it would be inconsistent with any condition expressly imposed by a court in approving a settlement. Section 9 Insurance. The Corporation 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 Corporation, or is or was serving at the request of the Corporation 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, or arising out of such person's status as such, whether or not the Corporation would have the power to indemnify such person against such liability under the provisions of this Article V.. Section 10 Effect of Amendment. Any amendment, repeal or modification of any provision of this Article V by the Stockholders or the directors of the Corporation shall not adversely affect any right or protection of a director or officer of the Corporation existing at the time of such amendment, repeal or modification. Section 11 Constituent Corporations. For purposes of this Article V, references to "the Corporation" shall include, in addition to the Corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Article V with respect to the resulting or surviving corporation as such person would have with respect to such constituent corporation if its separate existence had continued. Section 12 Definitions. For purposes of this Article V, references to "other enterprises" shall include employee benefit plans; references to "fines" shall include any excise taxes assessed on a person with respect to any employee benefit plan; and references to "serving at the request of the Corporation" shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves services by, such director, officer, employee, or agent with respect to an employee benefit plan, its participants, or beneficiaries; and a person who acted in good faith and in a manner such person reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the Corporation" as referred to in this Article V. 11 ARTICLE VI MISCELLANEOUS Section 1 Inspection of Books and Records by Stockholders. Any Stockholder of record, 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 Corporation's stock ledger, a list of its Stockholders, and its other books and records, and to make copies or 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 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 Corporation at its registered office in the State of Delaware or at its principal place of business. Section 2 Inspection of Books and Records by Directors. Any director shall have the right to examine the Corporation's stock ledger, a list of its Stockholders and its other books and records for a purpose reasonably related to such person's position as a director. Such right to examine the records and books of the Corporation shall include the right to make copies and extract therefrom. Section 3 Checks, Drafts, Evidences of Indebtedness. 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 the Board. In the absence of such determination, the Chief Executive Officer, the President, the Chief Operating Officer and the Chief Financial Officer shall have the authority to sign or endorse such instruments and documents. Section 4 Corporate Contracts and Instruments; How Executed. The Board, except as otherwise provided in these Bylaws, 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 person's authority may be general or confined to specific instances; and, unless so authorized or ratified by the Board or within the agency power of an officer, no officer, agent or employee shall have any power or authority to bind the Corporation by any contract or agreement or to pledge its credit or to render it liable for any purpose or for any amount. In the absence of specific resolution of the Board relating to the authority of officers to execute contracts generally, the Chief Executive Officer, the President, the Chief Operating Officer and the Chief Financial shall have the authority to execute contracts of the Corporation. Section 5 Certificates for Shares. Every holder of stock in the Corporation shall be entitled to have a certificate signed by, or in the name of the Corporation by the Chairman or the President or a Vice-President, and by the Chief Financial Officer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Corporation representing the number of shares owned by such person in the Corporation. Any or all of the signatures on the certificate may be a facsimile. 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 Corporation with the same effect as if he were such officer, transfer agent, or registrar at the date of issue. 12 Section 6 Transfer of Shares. Transfers of shares of the capital stock of the Corporation shall be made only on the books of the Corporation by the holder thereof, or by such person's attorney thereunto authorized by a power of attorney duly executed and filed with the Secretary of the Corporation or a transfer agent of the Corporation, if any, and on surrender of the certificate or certificates for such shares properly endorsed. A person in whose name appears on shares of stock and on the books of the Corporation shall be deemed the owner thereof as regards the Corporation, and upon any transfer of shares of stock the person or persons into whose name or names such shares shall have been transferred, shall enjoy and bear all rights, privileges and obligations of holders of stock of the Corporation and as against the Corporation or any other person or persons. The term "person" or "persons" wherever used herein shall be deemed to include any partnership, corporation, association or other entity. Whenever any transfer of shares shall be made for collateral security, and not absolutely, such fact, if known to the Secretary or to such transfer agent, shall be so expressed in the entry of transfer. Section 7 Lost, Stolen or Destroyed Certificates. The Corporation 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 Corporation may require the owner of the lost, stolen or destroyed certificate, or such person's legal representative, to give the Corporation a bond sufficient to indemnify it 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. Section 8 Representation of Shares of Other Corporations. The Chairman of the Board, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer or any person designated by any of such officers is authorized, in the absence of authorization by the Board, to vote on behalf of the Corporation any and all shares of any other corporation or corporations, foreign or domestic, for which the Corporation has the right to vote. The authority granted to these officers to vote or represent on behalf of the Corporation any and all shares held by the Corporation in any other corporation or corporations may be exercised by any of these officers in person or by any person authorized to do so by proxy duly executed by these officers. Section 9 Construction and Definitions. Unless the context requires otherwise, the general provisions, rules of construction, and definitions in the DGCL shall govern the construction of these Bylaws. Without limiting the generality of this provision, the singular number includes the plural, the plural number includes the singular. In addition, as used in these Bylaws, the following terms have the meanings set forth below: "Board" means the Board of the Corporation. "DGCL" means the Delaware General Corporation Law, as the same may from time to time be amended. "Stockholders" means the Stockholders of the Corporation. Section 10 Amendments to Bylaws. The Board is expressly empowered to adopt, amend or repeal Bylaws of the Corporation. Any adoption, amendment or repeal of Bylaws of the Corporation by the Board shall require the approval of a majority of the total number of authorized directors (whether or not there exist any vacancies in previously authorized directorships at the time any resolution providing for adoption, amendment or repeal is presented to the Board). The 13 Stockholders shall also have power to adopt, amend or repeal the Bylaws of the Corporation. Any adoption, amendment or repeal of Bylaws of the Corporation by the Stockholders shall require, in addition to any vote of the holders of any class or series of stock of the Corporation required by law or by the Certificate of Incorporation, the affirmative vote of the holders of at least sixty-six and two-thirds percent (66-2/3%) of the voting power of all of the then outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class. Section 11 Conformance to the Law. In the event that it is determined that these Bylaws, as now written or as amended, conflict with the DGCL, or any other applicable law, as now enforced or as amended, these Bylaws shall be deemed amended, without action of the Board or the Stockholders, to conform with such law. Such amendment to be so interpreted as to bring these Bylaws within minimum compliance. For purposes of this section, "amendment" shall include a repeal of, or a change in interpretation of, the relevant compendium. Section 12 Fiscal Year. The fiscal year of the Corporation shall be determined by the Board. Section 13 Dividends; Surplus. Subject to the provisions of the Certificate of Incorporation and any restrictions imposed by statute, the Board may declare dividends out of the net assets of the Corporation in excess of its capital or, in case there shall be no such excess, out of the net profits of the Corporation for the fiscal year then current and/or the preceding fiscal year, or out of any funds at the time legally available for the declaration of dividends (hereinafter referred to as "surplus or net profits") whenever, and in such amounts as, in its sole discretion, the conditions and affairs of the Corporation shall render advisable. The Board in its sole discretion may, in accordance with law, from time to time set aside from surplus or net profits such sum or sums as it may think proper as a reserve fund to meet contingencies, or for equalizing dividends, or for the purpose of maintaining or increasing the property or business of the Corporation, or for any other purpose as it may think conducive to the best interests of the Corporation. Section 14 Waiver of Notice. Whenever notice is required to be given under these Bylaws or the Certificate of Incorporation or the DGCL, a written waiver, signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except where the person attends a meeting for the express 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 regular or special meeting of the Stockholders, Board or any committee of the Board need be specified in any written waiver of notice unless so required by the Certificate of Incorporation or these Bylaws. 14 CERTIFICATE OF SECRETARY I, the undersigned, do hereby certify: (1) That I am the duly elected and acting Secretary of VCA Antech, Inc., a Delaware corporation (the "Corporation"); and (2) That the foregoing Bylaws comprising 16 pages, constitute the Bylaws of the Corporation as of November 20, 2001, as duly adopted by the Board. IN WITNESS WHEREOF, I have hereunto subscribed my name as of this 20th day of November, 2001. /s/ Tomas W. Fuller ----------------------------------- Tomas W. Fuller, Assistant Secretary 15 AMENDED AND RESTATED BYLAWS OF VCA ANTECH, INC. A DELAWARE CORPORATION AS OF NOVEMBER 20, 2001

PAGE ---- ARTICLE I CORPORATE OFFICES...............................................1 Section 1 Registered Office...............................................1 Section 2 Principal Office................................................1 Section 3 Other Offices...................................................1 ARTICLE II STOCKHOLDERS MEETINGS...........................................1 Section 1 Place of Meeting................................................1 Section 2 Annual Meetings.................................................1 Section 3 Special Meetings................................................1 Section 4 Notice of Meetings..............................................1 Section 5 Quorum..........................................................2 Section 6 Adjourned Meeting...............................................2 Section 7 Chairman of Meeting; Opening of Polls...........................2 Section 8 Proxies.........................................................2 Section 9 Stockholder List................................................2 Section 10 No Consent of Stockholders in Lieu of Meeting...................3 Section 11 Inspectors of Election..........................................3 Section 12 Record Date.....................................................3 Section 13 Conduct of Meetings.............................................4 Section 14 Exception to Requirements of Notice.............................4 Section 15 Matters Considered at Annual Meeting............................4 Section 16 Nominations for Director........................................5 ARTICLE III BOARD OF DIRECTORS..............................................6 Section 1 Powers..........................................................6 Section 2 Number..........................................................6 Section 3 Place of Meeting................................................6 Section 4 Regular Meetings................................................6

Section 5 Special Meetings................................................6 Section 6 Meetings by Communication Equipment.............................7 Section 7 Quorum and Manner of Acting.....................................7 Section 8 Action Without Meeting..........................................7 Section 9 Compensation of Directors.......................................7 Section 10 Committees......................................................7 ARTICLE IV OFFICERS........................................................7 Section 1 Officers........................................................7 Section 2 Chairman of the Board...........................................8 Section 3 Chief Executive Officer.........................................8 Section 4 President.......................................................8 Section 5 Vice Presidents.................................................8 Section 6 Secretary.......................................................8 Section 7 Chief Financial Officer.........................................8 ARTICLE V INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND OTHER AGENTS ...................................................9 Section 1 Agents, Proceedings and Expenses................................9 Section 2 Actions Other Than By The Corporation...........................9 Section 3 Actions by the Corporation......................................9 Section 4 Successful Defense by Agent....................................10 Section 5 Required Approval..............................................10 Section 6 Advance of Expenses............................................10 Section 7 Contractual Rights.............................................10 Section 8 Limitations....................................................11 Section 9 Insurance......................................................11 Section 10 Effect of Amendment............................................11 Section 11 Constituent Corporations.......................................11 Section 12 Definitions....................................................11 ARTICLE VI MISCELLANEOUS..................................................12 Section 1 Inspection of Books and Records by Stockholders................12 Section 2 Inspection of Books and Records by Directors...................12 Section 3 Checks, Drafts, Evidences of Indebtedness......................12 ii Section 4 Corporate Contracts and Instruments; How Executed..............12 Section 5 Certificates for Shares........................................12 Section 6 Transfer of Shares.............................................13 Section 7 Lost, Stolen or Destroyed Certificates.........................13 Section 8 Representation of Shares of Other Corporations.................13 Section 9 Construction and Definitions...................................13 Section 10 Amendments to Bylaws...........................................13 Section 11 Conformance to the Law.........................................14 Section 12 Fiscal Year....................................................14 Section 13 Dividends; Surplus.............................................14 Section 14 Waiver of Notice...............................................14 iii EX-4.5 5 v80091ex4-5.txt EXHIBIT 4.5 EXHIBIT 4.5 FIRST AMENDMENT (this "Amendment"), dated as of November 20, 2001, to the Vicar Operating, Inc. Senior Subordinated Notes Indenture (the "Company Indenture"), dated as of September 20, 2000, by and among Vicar Operating, Inc., a Delaware corporation (the "Company"), the guarantors named therein and Chase Manhattan Bank and Trust Company, National Association, a national banking association organized under the federal laws of the United States, as trustee. Capitalized terms used herein and not defined herein shall have the respective meanings ascribed to such terms in the Company Indenture. RECITALS WHEREAS, the parties have agreed to amend the Company Indenture, but only upon the terms and subject to the conditions set forth below, NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereto agree as follows: 1. Section 1.01 (Definitions). Section 1.01 of the Company Indenture shall be amended by inserting the following terms with the following definitions thereof: "Company 144A Notes" shall mean the 9 7/8% Senior Subordinated Notes due 2009 to be issued by the Company pursuant to the Company 144A Notes Indenture in an original aggregate principal amount of up to $175,000,000. "Company 144A Notes Indenture" shall mean the Indenture to be entered into among the Company, the Guarantors (as defined therein) and the trustee named therein, pursuant to which the Company 144A Notes shall be issued.. 2. Section 1.01 (Definitions). a. Clause (iii) of the definition of "Change of Control" in Section 1.01 of the Company Indenture shall be amended to read in its entirety as follows: "(iii) the consummation of any transaction (including, without limitation, any merger or consolidation), as a result of which, (x) prior to a Note Registration, (1) the Principals, Management Investors and their Related Parties beneficially own and control, directly or indirectly, less than 40% of the aggregate voting interest attributable to all outstanding Capital Stock of Holdings, or (2) GEI and its Affiliates beneficially own, directly or indirectly, less than 20% of the aggregate voting interest attributable to all outstanding Capital Stock of Holdings, or (y) Holdings ceases to own directly 100% of the outstanding Equity Interests of the Company or (z) any Person or "group" (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act), other than the Principals, Management Investors or their Related Parties, shall have acquired, directly or indirectly, beneficial ownership of 35% or more on a fully diluted basis of the aggregate voting interest attributable to all outstanding Capital Stock of Holdings or the Company and the Principals, Management Investors or their Related Parties have less voting power than such Person or "group" or" b. The definition of "Consolidated Interest Expense" in Section 1.01 of the Company Indenture shall be amended to read in its entirety as follows: "Consolidated Interest Expense" means for the applicable period of measurement of the Company and its Subsidiaries on a consolidated basis, the aggregate interest expense (whether or not payable in cash) for such period (including all commissions, discounts, fees and other charges in connection with standby letters of credit and similar instruments) for the Company and its Subsidiaries on a consolidated basis, but excluding all amortization of financing fees and other charges incurred by the Company and its Subsidiaries in connection with the issuance of the Notes, the Company 144A Notes and the borrowings under the Credit Agreement, minus interest income of the Company and its Subsidiaries for such period, on a consolidated basis. c. The definition of "Consolidated EBITDA" in Section 1.01 of the Company Indenture shall be amended to read in its entirety as follows: "Consolidated EBITDA" means for the applicable period of measurement, the Consolidated Net Income of the Company and its Subsidiaries on a consolidated basis, plus, without duplication, the following to the extent deducted in calculating such Consolidated Net Income: (i) Consolidated Interest Expense for such period, plus (ii) provisions for taxes based on income, plus (iii) total depreciation expense, plus (iv) total amortization expenses, plus (v) other non-cash items reducing Consolidated Net Income (excluding any such non-cash item to the extent that it represents an accrual or reserve for potential cash items in any future period or amortization of a prepaid cash item but, notwithstanding anything to the contrary herein, including without limitation, reserves for lease expenses and charges and expenses related to the closure of hospitals to the extent not paid in cash), plus (vi) non-recurring costs incurred by Holdings and its Subsidiaries in 1999 relating to year 2000 computer matters, plus (vii) other one-time non-recurring charges incurred by Holdings, the Company or any of its Subsidiaries associated with the consummation of Holdings' initial public offering and the issuance of the Company 144A Notes,, including, without limitation (A) any non-cash charges incurred by Holdings and/or the Company; provided that such non-cash charges shall not exceed $10,400,000 in the aggregate; (B) a one-time payment to GEI; provided that such one-time payment to GEI shall not exceed $8,000,000; and (C) underwriting discounts and commissions and other reasonable costs and expenses associated therewith, including reasonable legal fees and expenses, less other non-cash items increasing Consolidated Net Income (excluding any such non-cash item to the extent it represents the reversal of an accrual or reserve for potential cash item in any prior period). d. The definition of "Holdings" in Section 1.01 of the Company Indenture shall be amended to read in its entirety as follows: "Holdings" means VCA Antech, Inc., a Delaware corporation (formerly known as Veterinary Centers of America, Inc.). e. Clause (i) of the definition of "Permitted Partially Owned Subsidiary" in Section 1.01 of the Company Indenture shall be amended to read in its entirety as follows: 2 "(i) with respect to each Permitted Partially Owned Subsidiary other than the Exempt Subsidiaries, Capital Stock representing 51% or more of the aggregate voting and economic interests in such Subsidiary is directly or indirectly owned, beneficially and of record, by the Company," f. Clause (iv) of the definition of "Permitted Partially Owned Subsidiary" in Section 1.01 of the Company Indenture shall be amended to read in its entirety as follows: "(iv) at the time of designation of any Permitted Partially Owned Subsidiary as such, that portion of Consolidated EBITDA attributable to all Permitted Partially Owned Subsidiaries (including the Subsidiary proposed to be designated as such) does not represent more than 15% of the Consolidated EBITDA for the four-Fiscal Quarter period most recently ended." g. The definition of "Seller Notes" in Section 1.01 of the Company Indenture shall be amended to read in its entirety as follows: "Seller Notes" means, collectively, any unsecured promissory notes issued by Holdings to any seller or sellers in connection with a Permitted Acquisition which are permitted to be incurred under Section 5.04(b)(xi) of the Holdings Indenture. 3. Section 5.04 (Incurrence of Indebtedness and Issuances of Disqualified Capital Stock or Preferred Stock). The final proviso of the final sentence of Section 5.04(a) shall be amended to read in its entirety as follows: "provided, however, such calculations of Adjusted EBITDA with respect to Permitted Acquisitions, the consideration for which constitutes $3,000,000 or less, shall be based on reasonable estimations of such pre-acquisition Adjusted EBITDA based on actual pre-acquisition revenues." 4. Company Indenture Remains in Effect. Except as expressly amended herein, the Company Indenture shall continue to be, and shall remain, in full force and effect. This Amendment shall not be deemed to be a waiver of, or consent to, or a modification or amendment of, any other term or condition of the Company Indenture or the Notes or to prejudice any other right or rights which the holders of the Notes may now have or may have in the future under or in connection with the Company Indenture or any of the instruments or agreements referred to therein, as the same may be amended from time to time. 5. Counterparts. This Amendment may be executed by one or more of the parties hereto in any number of separate counterparts (which may include counterparts delivered by facsimile transmission) and all of said counterparts taken together shall be deemed to constitute one and the same instrument. 3 6. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. 7. Effectiveness. The effectiveness of this Amendment shall be contingent on the execution of the Company 144A Notes Indenture, the sale of the Company 144A Notes and the consummation of Holdings' initial public offering. 4 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed, as of the day and year first above written. VICAR OPERATING, INC. By: /s/ Robert L. Antin Name: Robert L. Antin Title: Chief Executive Officer and President CHASE MANHATTAN BANK AND TRUST COMPANY, NATIONAL ASSOCIATION By: /s/ Rose T. Maravilla Name: Rose T. Maravilla Title: Assistant Vice President GUARANTORS: AAH MERGER CORPORATION ACADEMY ANIMAL, INC. ANDERSON ANIMAL HOSPITAL, INC. ANIMAL CLINIC OF SANTA CRUZ, INC. ANIMAL EMERGENCY CLINIC, P.C. BEAUMONT VETERINARY ASSOCIATES, P.C. BERLA, INC. CACOOSING ANIMAL HOSPITAL, LTD. CACOOSING PET CARE & NUTRITION CENTER, INC. CLARMAR ANIMAL HOSPITAL, INC. DETWILER VETERINARY CLINIC, INC. DIAGNOSTIC VETERINARY SERVICE, INC. EAGLE PARK ANIMAL CLINIC, INC. EAGLE RIVER VETERINARY HOSPITAL, INC. EDGEBROOK, INC. FLORIDA VETERINARY LABORATORIES, INC. FOX CHAPEL ANIMAL HOSPITAL, INC. FREEHOLD, INC. GLEN ANIMAL HOSPITAL, INC. GOLDEN MERGER CORPORATION H.B. ANIMAL CLINICS, INC. HIGHLANDS ANIMAL HOSPITAL, , INC. HOWELL BRANCH ANIMAL HOSPITAL, P.A. LAKE JACKSON VETERINARY HOSPITAL, INC. LAKEWOOD ANIMAL HOSPITAL, INC. LAMMERS VETERINARY HOSPITAL, INC. LEWELLING VETERINARY CLINIC, INC. MILLER ANIMAL HOSPITAL M.S. ANIMAL HOSPITALS, INC. NEWARK ANIMAL HOSPITAL, INC. NORTHERN ANIMAL HOSPITAL, INC. NORTH ROCKVILLE VETERINARY HOSPITAL, INC. NORTHSIDE ANIMAL HOSPITAL, P.C. NOYES ANIMAL HOSPITAL, INC. OAK HILL VETERINARY HOSPITAL, INC. OLD TOWN VETERINARY ANIMAL HOSPITAL, INC. PET PRACTICE (MASSACHUSETTS), INC. PETS' RX, INC. PETS' RX NEVADA, INC. PPI OF PENNSYLVANIA, INC. PRINCETON ANIMAL HOSPITAL, INC. PROFESSIONAL VETERINARY SERVICES, INC. RIVIERA ANIMAL HOSPITAL, INC. ROBERTSON BLVD. ANIMAL HOSPITAL, INC. ROSSMOOR CENTER ANIMAL CLINIC, INC. ROSSMOOR - EL DORADO ANIMAL HOSPITAL, INC. SAN VICENTE ANIMAL CLINIC SILVER SPUR ANIMAL HOSPITAL, INC. SOUTH COUNTY VETERINARY CLINIC, INC. SPANISH RIVER ANIMAL HOSPITAL, INC. TAMPA ANIMAL MEDICAL CENTER, INC. THE PET PRACTICE (FLORIDA), INC. THE PET PRACTICE (ILLINOIS), INC. THE PET PRACTICE (MASSACHUSETTS), INC. THE PET PRACTICE OF MICHIGAN, INC. VCA ALABAMA, INC. VCA ALBANY ANIMAL HOSPITAL, INC. VCA ALBUQUERQUE, INC. VCA ALL PETS ANIMAL COMPLEX, INC. VCA ALPINE ANIMAL HOSPITAL, INC. VCA ANDERSON OF CALIFORNIA ANIMAL HOSPITAL, INC. VCA ANIMAL HOSPITALS, INC. VCA ANIMAL HOSPITAL WEST, INC. VCA APAC ANIMAL HOSPITAL, INC. VCA - ASHER, INC. VCA BAY AREA ANIMAL HOSPITAL, INC. VCA CACOOSING ANIMAL HOSPITAL, INC. VCA CASTLE SHANNON VETERINARY HOSPITAL, INC. VCA CENTERS-TEXAS, INC. VCA CENVET, INC. VCA CLARMAR ANIMAL HOSPITAL, INC. VCA CLINICAL VETERINARY LABS, INC. VCA CLINIPATH LABS, INC. VCA CLOSTER, INC. VCA DETWILER ANIMAL HOSPITAL, INC. VCA DOVER ANIMAL HOSPITAL, INC. VCA EAGLE RIVER ANIMAL HOSPITAL, INC. VCA EAST ANCHORAGE ANIMAL HOSPITAL, INC. VCA GOLDEN COVE ANIMAL HOSPITAL, INC. VCA GREATER SAVANNAH ANIMAL HOSPITAL, INC. VCA HOWELL BRANCH ANIMAL HOSPITAL, INC. VCA INFORMATION SYSTEMS, INC. VCA KANEOHE ANIMAL HOSPITAL, INC. VCA LAKESIDE ANIMAL HOSPITAL, INC. VCA LAMB AND STEWART ANIMAL HOSPITAL, INC. VCA LAMMERS ANIMAL HOSPITAL, INC. VCA LEWIS ANIMAL HOSPITAL, INC. VCA MARINA ANIMAL HOSPITAL, INC. VCA MILLER ANIMAL HOSPITAL, INC. VCA - MISSION, INC. VCA NORTHBORO ANIMAL HOSPITAL, INC. VCA NORTHWEST VETERINARY DIAGNOSTICS, INC. VCA OF COLORADO-ANDERSON, INC. VCA OF NEW YORK, INC. VCA OF SAN JOSE, INC. VCA OF TERESITA, INC. VCA PROFESSIONAL ANIMAL LABORATORY, INC. VCA REAL PROPERTY ACQUISITION CORPORATION VCA REFERRAL ASSOCIATES ANIMAL HOSPITAL, INC. VCA ROHRIG ANIMAL HOSPITAL, INC. VCA - ROSSMOOR, INC. VCA ST. PETERSBURG ANIMAL HOSPITAL, INC. VCA SILVER SPUR ANIMAL HOSPITAL, INC. VCA SOUTH SHORE ANIMAL HOSPITAL, INC. VCA SPECIALTY PET PRODUCTS, INC. VCA SQUIRE ANIMAL HOSPITAL, INC. VCA TEXAS MANAGEMENT, INC. VCA WYOMING ANIMAL HOSPITAL, INC. VETERINARY HOSPITALS, INC. WEST LOS ANGELES VETERINARY MEDICAL GROUP, INC. WESTWOOD DOG & CAT HOSPITAL W.E. ZUSCHLAG, D.V.M., WORTH ANIMAL HOSPITAL, CHARTERED WILLIAM C. FOUTS, D.V.M., LTD. WINGATE, INC. By: /s/ Robert L. Antin Name: Robert L. Antin Title: Chief Executive Officer and President By: /s/ Tomas W. Fuller Name: Tomas W. Fuller Title: Chief Financial Officer and Assistant Secretary VCA VILLA ANIMAL HOSPITAL, L.P. By: VCA Animal Hospitals, Inc., General Partner By: /s/ Robert L. Antin Name: Robert L. Antin Title: Chief Executive Officer and President By: /s/ Tomas W. Fuller Name: Tomas W. Fuller Title: Chief Financial Officer and Assistant Secretary VETERINARY CENTERS OF AMERICA - TEXAS, L.P. By: VCA Centers-Texas, Inc., General Partner By: /s/ Robert L. Antin Name: Robert L. Antin Title: Chief Executive Officer and President By: /s/ Tomas W. Fuller Name: Tomas W. Fuller Title: Chief Financial Officer and Assistant Secretary ANIMAL CENTER, INC. By: /s/ Robert L. Antin Name: Title: ASSOCIATES IN PET CARE, S.C. By: /s/ Robert L. Antin Name: Title: KIRKWOOD ANIMAL HOSPITAL - LEA M.E. TAMMI, V.M.D., P.A. By: /s/ Robert L. Antin Name: Title: MAIN STREET SMALL ANIMAL HOSPITAL, INC. By: /s/ Robert L. Antin Name: Title: SOUTHEAST AREA VETERINARY MEDICAL CENTER, P.C. By: /s/ Robert L. Antin Name: Title: VCA ASSOCIATE ANIMAL HOSPITAL, L.P. By: /s/ Robert L. Antin Name: Title: VCA HERITAGE ANIMAL HOSPITAL, L.P. By: /s/ Robert L. Antin Name: Title: TOMS RIVER VETERINARY HOSPITAL, P.A. By: /s/ Robert L. Antin Name: Title: Agreed to and accepted by: GS MEZZANINE PARTNERS II, L.P. By: GS Mezzanine Advisors II, L.L.C., its general partner By: /s/ Katherine L. Nissenbaum Name: Katherine L. Nissenbaum Title: Vice President GS MEZZANINE PARTNERS II OFFSHORE, L.P. By: GS Mezzanine Advisors II, L.L.C. its general partner By: /s/ Katherine L. Nissenbaum Name: Katherine L. Nissenbaum Title: Vice President TCW LEVERAGED INCOME TRUST, L.P. By: TCW Advisers (Bermuda), Ltd. as its General Partner By: /s/ Mark D. Senkpiel Name: Mark D. Senkpiel Title: Managing Director By: TCW Investment Management Company as Investment Adviser By: /s/ Jean-Marc Chapus Name: Jean-Marc Chapus Title: Managing Director TCW LEVERAGED INCOME TRUST II, L.P. By: TCW (LINC II), L.P. as its General Partner By: TCW Advisers (Bermuda), Ltd. its General Partner By: /s/ Mark D. Senkpiel Name: Mark D. Senkpiel Title: Managing Director By: TCW Investment Management Company as Investment Adviser By: /s/ Jean-Marc Chapus Name: Jean-Marc Chapus Title: Managing Director TCW LEVERAGED INCOME TRUST IV, L.P. By: TCW Asset Management Company As its Investment Adviser By: /s/ Mark D. Senkpiel Name: Mark D. Senkpiel Title: Managing Director By: /s/ Jean-Marc Chapus Name: Jean-Marc Chapus Title: Managing Director By: TCW (LINC IV), L.L.C. As General Partner By: TCW Asset Management Company As its Managing Member By: /s/ Mark D. Senkpiel Name: Mark D. Senkpiel Title: Managing Director By: /s/ Jean-Marc Chapus Name: Jean-Marc Chapus Title: Managing Director TCW/CRESCENT MEZZANINE PARTNERS II, L.P. By: TCW/Crescent Mezzanine II, L.P. its general partner or managing owner By: TCW/Crescent Mezzanine, L.L.C. its general partner By: /s/ Jean-Marc Chapus Name: Jean-Marc Chapus Title: Managing Director TCW/CRESCENT MEZZANINE TRUST II By: TCW/Crescent Mezzanine II, L.P. its general partner or managing owner By: TCW/Crescent Mezzanine, L.L.C. its general partner By: /s/ Jean-Marc Chapus Name: Jean-Marc Chapus Title: Managing Director THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY By: /s/ Richard A. Strait Name: Richard A. Strait Title: Its Authorized Representative EX-4.7 6 v80091ex4-7.txt EXHIBIT 4.7 EXHIBIT 4.7 FIRST AMENDMENT (this "Amendment"), dated as of November 20, 2001, to the VCA Antech, Inc. Senior Notes Indenture (the "Holdings Indenture"), dated as of September 20, 2000, by and between VCA Antech, Inc., a Delaware corporation (formerly known as Veterinary Centers of America, Inc.) ("Holdings"), and Chase Manhattan Bank and Trust Company, National Association, a national banking association organized under the federal laws of the United States, as trustee. Capitalized terms used herein and not defined herein shall have the respective meanings ascribed to such terms in the Holdings Indenture. RECITALS WHEREAS, the parties have agreed to amend the Holdings Indenture, but only upon the terms and subject to the conditions set forth below, NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereto agree as follows: 1. Section 1.01 (Definitions). Section 1.01 of the Holdings Indenture shall be amended by inserting the following terms with the following definitions thereof: "Company 144A Notes" means the 9 7/8% Senior Subordinated Notes due 2009 to be issued by the Company pursuant to the Company 144A Notes Indenture in an original aggregate principal amount of up to $175,000,000. "Company 144A Notes Indenture" means the Indenture to be entered into among the Company, the Guarantors (as defined therein) and the trustee named therein, pursuant to which the Company 144A Notes shall be issued. "Company Purchase Agreement" means the Purchase Agreement, dated as of the Closing Date, by and among the Company, the Guarantors and the Purchasers. 2. Section 1.01 (Definitions). a. Clause (iii) of the definition of "Change of Control" in Section 1.01 of the Company Indenture shall be amended to read in its entirety as follows: "(iii) the consummation of any transaction (including, without limitation, any merger or consolidation), as a result of which, (x) prior to a Note Registration, (1) the Principals, Management Investors and their Related Parties beneficially own and control, directly or indirectly, less than 40% of the aggregate voting interest attributable to all outstanding Capital Stock of Holdings, or (2) GEI and its Affiliates beneficially own, directly or indirectly, less than 20% of the aggregate voting interest attributable to all outstanding Capital Stock of Holdings, or (y) Holdings ceases to own directly 100% of the outstanding Equity Interests of the Company or (z) any Person or "group" (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act), other than the Principals, Management Investors or their Related Parties, shall have acquired, directly or indirectly, beneficial ownership of 35% or more on a fully diluted basis of the aggregate voting interest attributable to all outstanding Capital Stock of Holdings and the Principals, Management Investors or their Related Parties have less voting power than such Person or "group" or" b. The definition of "Consolidated EBITDA" in Section 1.01 of the Company Indenture shall be amended to read in its entirety as follows: "Consolidated EBITDA" means for the applicable period of measurement, the Consolidated Net Income of Holdings and its Subsidiaries on a consolidated basis, plus, without duplication, the following to the extent deducted in calculating such Consolidated Net Income: (i) Consolidated Interest Expense for such period, plus (ii) provisions for taxes based on income, plus (iii) total depreciation expense, plus (iv) total amortization expense, plus (v) other non-cash items reducing Consolidated Net Income (excluding any such non-cash item to the extent that it represents an accrual or reserve for potential cash items in any future period or amortization of a prepaid cash item but, notwithstanding anything to the contrary herein, including, without limitation, reserves for lease expenses and charges and expenses related to the closure of hospitals to the extent not paid in cash), all fees and expenses incurred in connection with the Merger and the financing thereof, including all non-compete payments, employment contract termination payments, deferred payments for restricted Capital Stock of Holdings and stay bonuses made in connection with the Merger and identified on Schedule 1(q) to the Purchase Agreement; plus (vi) non-recurring costs incurred by Holdings and its Subsidiaries in 1999 relating to year 2000 computer matters; plus (vii) other one-time non-recurring charges incurred by Holdings, the Company or any of its Subsidiaries associated with the consummation of Holdings' initial public offering and the issuance of the Company 144A Notes, including, without limitation (A) any non-cash charges incurred by Holdings and/or the Company; provided that such non-cash charges shall not exceed $10,400,000 in the aggregate; (B) a one-time payment to GEI; provided that such one-time payment to GEI shall not exceed $8,000,000; and (C) underwriting discounts and commissions and other reasonable costs and expenses associated therewith, including reasonable legal fees and expenses, less other non-cash items increasing Consolidated Net Income (excluding any such non-cash item to the extent it represents the reversal of an accrual or reserve for potential cash item in any prior period). c. The definition of "Consolidated Interest Expense" in Section 1.01 of the Holdings Indenture shall be amended to read in its entirety as follows: "Consolidated Interest Expense" means for the applicable period of measurement of Holdings and its Subsidiaries on a consolidated basis, the aggregate interest expense (whether or not payable in cash) for such period (including all commissions, discounts, fees and other charges in connection with standby letters of credit and similar instruments) for Holdings and its Subsidiaries on a consolidated basis, but excluding all amortization of financing fees and other charges incurred by Holdings and its Subsidiaries in connection with the issuance of the Notes, the issuance of the Company Notes, the issuance of the Company 144A Notes and the borrowings under the Credit Agreement, minus interest income of Holdings and its Subsidiaries for such period, on a consolidated basis. d. Clause (i) of the definition of "Permitted Partially Owned Subsidiary" in Section 1.01 of the Holdings Indenture shall be amended to read in its entirety as follows: 2 "(i) with respect to each Permitted Partially Owned Subsidiary other than the Exempt Subsidiaries, Capital Stock representing 51% or more of the aggregate voting and economic interests in such Subsidiary is directly or indirectly owned, beneficially and of record, by the Company," e. Clause (iv) of the definition of "Permitted Partially Owned Subsidiary" in Section 1.01 of the Holdings Indenture shall be amended to read in its entirety as follows: "(iv) at the time of designation of any Permitted Partially Owned Subsidiary as such, that portion of Consolidated EBITDA attributable to all Permitted Partially Owned Subsidiaries (including the Subsidiary proposed to be designated as such) does not represent more than 15% of the Consolidated EBITDA for the four-Fiscal Quarter period most recently ended." 3. Section 5.02 (Restricted Payments). Section 5.02(a) of the Holdings Indenture shall be amended to read in its entirety as follows: "(a) Holdings shall not, and shall not permit any of its Subsidiaries to, (i) declare or make any dividend payment or other distribution of assets, properties, cash, rights, obligations or securities on account of any shares of any class of Capital Stock or other Equity Interests of, including any payment in connection with a merger or consolidation involving Holdings or any of its Subsidiaries, (ii) purchase, redeem or otherwise acquire for value any shares of Capital Stock or other Equity Interests of Holdings or any of its Subsidiaries now or hereafter outstanding, (iii) make any payment or prepayment of principal of, premium, if any, interest, redemption, exchange, purchase, retirement, defeasance, sinking fund or other payment with respect to, any Subordinated Indebtedness or (iv) make any Restricted Investments (the items described in clauses (i), (ii), (iii), and (iv) are referred to as "Restricted Payments"); except that Holdings, the Company or any Subsidiary of the Company may make a Restricted Payment if at the time of and after giving effect to such Restricted Payment; (A) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof; and (B) Holdings or the Company, as the case may be, would, at the time such Restricted Payment was made and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-Fiscal Quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Coverage Ratio Test set forth in Section 5.04(a) hereof; (C) if being made by the Company or any of its Subsidiaries, such Restricted Payment, together with the aggregate of all other Restricted Payments made by the Company and its Subsidiaries after the date of this Indenture (excluding Restricted Payments permitted by the next succeeding paragraph (b)), is less than the sum of (1) 50% of the Consolidated Net Income of 3 the Company for the period (taken as one accounting period) from the beginning of the first Fiscal Quarter commencing after the date of this Indenture to the end of the Company's most recently ended Fiscal Quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit), plus (2) 100% of the aggregate net cash proceeds received by the Company from contributions of capital from Holdings to the Company since the date of this Indenture or the issue or sale since the date of this Indenture of Equity Interests of the Company or of debt securities of the Company that have been converted into such Equity Interests (other than Equity Interests (or convertible debt securities) sold to a Subsidiary of the Company and other than Disqualified Capital Stock or debt securities that have been converted into Disqualified Capital Stock), plus (3) to the extent that any Restricted Investment that was made after the date of this Indenture is sold for cash or otherwise liquidated or repaid for cash, the lesser of (x) the cash return of capital with respect to such Restricted Investment (less the cost of disposition, if any) and (y) the initial amount of such Restricted Investment; and (D) if being made by Holdings, such Restricted Payment, together with the aggregate of all other Restricted Payments made by Holdings, the Company and its Subsidiaries after the date of this Amendment (excluding Restricted Payments permitted by the next succeeding paragraph (b) and excluding Restricted Payments made to Holdings as permitted in Clause (C) above), is less than the sum of (1) 50% of the Consolidated Net Income of Holdings for the period (taken as one accounting period) from the beginning of the first Fiscal Quarter commencing after the date of this Amendment to the end of the Company's most recently ended Fiscal Quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit), plus (2) 100% of the aggregate net cash proceeds received by Holdings from the issue or sale since the date of this Amendment of Equity Interests of Holdings or of debt securities of Holdings that have been converted into such Equity Interests (other than Equity Interests (or convertible debt securities) sold to a Subsidiary of Holdings and other than Disqualified Capital Stock or debt securities that have been converted into Disqualified Capital Stock), plus (3) to the extent that any Restricted Investment that was made after the date of this Indenture is sold for cash or otherwise liquidated or repaid for cash, the lesser of (x) the cash return of capital with respect to such Restricted Investment (less the cost of disposition, if any) and (y) the initial amount of such Restricted Investment." 4. Section 5.04 (Incurrence of Indebtedness and Issuances of Disqualified Capital Stock or Preferred Stock). a. The final proviso of the final sentence of Section 5.04(a) shall be amended to read in its entirety as follows: 4 "provided, however, such calculations of Adjusted EBITDA with respect to Permitted Acquisitions, the consideration for which constitutes $3,000,000 or less, shall be based on reasonable estimations of such pre-acquisition Adjusted EBITDA based on actual pre-acquisition revenues." b. A new Section 5.04(b)(xxi) shall be added to the Holdings Indenture to read in its entirety as follows: "(xxi) the Guarantee by Holdings of Indebtedness under the Company 144A Notes and the Company 144A Notes Indenture, provided that such Guarantee shall be subordinated to the Notes and the Guarantee by Holdings of Indebtedness under the Credit Documents to the same extent the Company 144A Notes are subordinated in right of payment to "Senior Indebtedness" (as such term is defined in the Company 144A Notes Indenture)." 5. Section 7.01 (Events of Default). A new Section 7.01(h) shall be added to the Holdings Indenture to read in its entirety as follows: "(h) an Event of Default (as defined in the Company 144A Notes Indenture) occurs under the Company 144A Notes Indenture." 6. Holdings Indenture Remains in Effect. Except as expressly amended herein, the Holdings Indenture shall continue to be, and shall remain, in full force and effect. This Amendment shall not be deemed to be a waiver of, or consent to, or a modification or amendment of, any other term or condition of the Holdings Indenture or the Notes or to prejudice any other right or rights which the holders of the Notes may now have or may have in the future under or in connection with the Holdings Indenture or any of the instruments or agreements referred to therein, as the same may be amended from time to time. 7. Counterparts. This Amendment may be executed by one or more of the parties hereto in any number of separate counterparts (which may include counterparts delivered by facsimile transmission) and all of said counterparts taken together shall be deemed to constitute one and the same instrument. 8. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. 9. Effectiveness. The effectiveness of this Amendment shall be contingent on the execution of the Company 144A Notes Indenture, the sale of the Company 144A Notes and the consummation of Holdings' initial public offering. 5 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed, as of the day and year first above written. VCA ANTECH, INC. By: /s/ Robert L. Antin Name: Robert L. Antin Title: Chief Executive Officer and President CHASE MANHATTAN BANK AND TRUST COMPANY, NATIONAL ASSOCIATION By: /s/ Rose T. Maravilla Name: Rose T. Maravilla Title: Assistant Vice President Agreed to and accepted by: GS MEZZANINE PARTNERS II, L.P. By: GS Mezzanine Advisors II, L.L.C., its general partner By: /s/ Katherine L. Nissenbaum Name: Katherine L. Nissenbaum Title: Vice President GS MEZZANINE PARTNERS II OFFSHORE, L.P. By: GS Mezzanine Advisors II, L.L.C. its general partner By: /s/ Katherine L. Nissenbaum Name: Katherine L. Nissenbaum Title: Vice President TCW LEVERAGED INCOME TRUST, L.P. By: TCW Advisers (Bermuda), Ltd. as its General Partner By: /s/ Darryl L. Schall Name: Darryl L. Schall Title: Managing Director By: TCW Investment Management Company as Investment Adviser By: /s/ Darryl L. Schall Name: Darryl L. Schall Title: Managing Director TCW LEVERAGED INCOME TRUST II, L.P. By: TCW (LINC II), L.P. as its General Partner By: TCW Advisers (Bermuda), Ltd. its General Partner By: /s/ Mark D. Senkpiel Name: Mark D. Senkpiel Title: Managing Director By: TCW Investment Management Company as Investment Adviser By: /s/ Darryl L. Schall Name: Darryl L. Schall Title: Managing Director TCW LEVERAGED INCOME TRUST IV, L.P. By: TCW Asset Management Company As its Investment Adviser By: /s/ Mark D. Senkpiel Name: Mark D. Senkpiel Title: Managing Director By: /s/ Darryl L. Schall Name: Darryl L. Schall Title: Managing Director By: TCW (LINC IV), L.L.C. As General Partner By: TCW Asset Management Company As its Managing Member By: /s/ Mark D. Senkpiel Name: Mark D. Senkpiel Title: Managing Director By: /s/ Darryl L. Schall Name: Darryl L. Schall Title: Managing Director TCW/CRESCENT MEZZANINE PARTNERS II, L.P. By: TCW/Crescent Mezzanine II, L.P. its general partner or managing owner By: TCW/Crescent Mezzanine, L.L.C. its general partner By: /s/ Darryl L. Schall Name: Darryl L. Schall Title: Managing Director TCW/CRESCENT MEZZANINE TRUST II By: TCW/Crescent Mezzanine II, L.P. its general partner or managing owner By: TCW/Crescent Mezzanine, L.L.C. its general partner By: /s/ Darryl L. Schall Name: Darryl L. Schall Title: Managing Director THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY By: /s/ Richard A. Strait Name: Richard A. Strait Title: Its Authorized Representative EX-4.8 7 v80091ex4-8.txt EXHIBIT 4.8 EXHIBIT 4.8 Vicar Operating, Inc. Senior Subordinated Notes due 2010 VCA Antech, Inc. Senior Notes due 2010 Consent and Waiver This Consent and Waiver ("Consent and Waiver") is dated as of November 20, 2001. Reference is hereby made to (i) the Vicar Operating, Inc. Senior Subordinated Notes due 2010 (the "Company Notes"), issued pursuant to the Indenture (the "Company Indenture"), dated as of September 20, 2000, by and among Vicar Operating, Inc., a Delaware corporation (the "Company"), the Guarantors (as defined therein) and Chase Manhattan Bank and Trust Company National Association, a national banking association organized under the federal laws of the United States, as trustee (the "Trustee"), (ii) the VCA Antech, Inc. Senior Notes due 2010 (the "Holdings Notes"), issued pursuant to the Indenture (the "Holdings Indenture"), dated as of September 20, 2000, by and between VCA Antech, Inc., a Delaware corporation (formerly known as Veterinary Centers of America, Inc.) ("Holdings") and the Trustee, as trustee. Capitalized terms used herein and not defined herein shall have the respective meanings ascribed to such terms in the Holdings Indenture. The undersigned, being all of the holders of the Company Notes and the Holdings Notes, hereby consent to: (i) the issuance of up to $175 million of the 9 7/8% Senior Subordinated Notes due 2009 (the "Company 144A Notes") to be issued pursuant to the Indenture to be entered into among the Company, the guarantors and the trustee named therein, provided that the net proceeds of the issuance of the Company 144A Notes and the net proceeds of Holdings' initial public offering (the "Holdings I.P.O.") are used as described in the preliminary Offering Circular dated October 31, 2001 with any additional net proceeds used in accordance with clause (iv) below or to pay other currently outstanding Indebtedness of Holdings or the Company; (ii) the payment by the Company of a dividend to Holdings of a portion of the proceeds of the issuance of the Company 144A Notes solely for the purpose of allowing the transactions contemplated in clause (iii) and (iv) of this paragraph; (iii) the redemption by Holdings of all of the outstanding Preferred Stock of Holdings; and (iv) Holdings' optional redemption of (i) 35% of the aggregate principal amount of the outstanding Holdings Notes at a price of 110% of the aggregate principal amount thereof plus accrued and unpaid interest as of the date of the redemption on a pro rata basis from each of the Holders of the Holdings Notes, (ii) up to an additional $7.0 million in principal amount of the Holdings Notes at a price of 110% of the aggregate principal amount thereof plus accrued and unpaid interest as of the date of the redemption to be split amongst the following entities as they shall determine: (a) TCW Leveraged Income Trust, L.P., a Delaware limited partnership, (b) TCW Leveraged Income Trust II, L.P., a Delaware limited partnership, (c) TCW Leveraged Income Trust IV, L.P., a Delaware limited partnership, (d) TCW/Crescent Mezzanine Partners II, L.P., a Delaware limited partnership, and (e) TCW/Crescent Mezzanine Trust II, a closed-end Delaware statutory business trust (each of the entities described in subsection (a) through (e) of this section collectively referred to as the "TCW Entities") and (iii) if the gross proceeds of the Holdings I.P.O. are greater than $182 million or the gross proceeds from the issuance of the Company 144A Notes are greater than $150 million, as Holdings or the Company may elect, up to the remaining aggregate principal amount of the outstanding Holdings Notes held by the TCW Entities and The Northwestern Mutual Life Insurance Company, a Wisconsin corporation ("Northwestern") (after the redemptions contemplated by clause (i) of this paragraph), at a price of 110% of the aggregate principal amount thereof plus accrued and unpaid interest as of the date of the redemption and/or up to approximately $5.8 million in principal amount of the outstanding Company Notes at a price of 110% of the aggregate principal amount thereof plus accrued and unpaid interest as of the date of the redemption on a pro rata basis from Northwestern and the TCW Entities. The undersigned also irrevocably waive any breach of the following provisions, solely to the extent resulting from the consummation of the optional redemptions and other transactions consented to above: (i) paragraph 5 of the Holdings Notes; (ii) paragraph 5 of the Company Notes; (iii) the notice requirements of paragraph 7 of the Holdings Notes; (iv) the notice requirements of paragraph 7 of the Company Notes; 2 (v) the pro rata redemption provisions of Section 3.02 of the Holdings Indenture; (vi) the pro rata redemption provisions of Section 3.02 of the Company Indenture; (vii) Section 3.03(a) of the Holdings Indenture; (viii) Section 3.03(a) of the Company Indenture; (ix) Section 5.02 of the Holdings Indenture; (x) Section 5.02 of the Company Indenture; (xi) Section 5.04 of the Holdings Indenture; (xii) Section 5.04 of the Company Indenture; (xiii) Section 5.06 of the Holdings Indenture; and (xiv) Section 5.06 of the Company Indenture. The optional redemptions and other transactions consented to herein shall take place using the proceeds of the the Company 144A Notes and the Holdings I.P.O. and shall take place immediately upon the closing of the sale of the Company 144A Notes; provided, however, that any portion of the optional redemptions consented to under subclause (iii) of clause (iv) above being financed with the proceeds of any "green shoe" under the Holdings I.P.O. may take place immediately upon the closing of such green shoe. Pursuant to Section 13 of the Purchase Agreement and the Company Purchase Agreement, Holdings, the Company and the Guarantors shall pay all expenses incurred by the Purchasers (including, without limitation, the reasonable and documented fees and disbursements of Fried, Frank, Harris, Shriver & Jacobson, counsel to the Purchasers) in connection with this Consent and Waiver, the proposed amendments to the Holdings Indenture and the Company Indenture and any other agreements, instruments or documents executed pursuant to the transactions consented to herein, whether or not the same shall become effective. The effectiveness of this Consent and Waiver shall be contingent on the execution of the Company 144A Notes Indenture, the sale of the Company 144A Notes and the consummation of the Holdings I.P.O. 3 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed, as of the day and year first above written. GS MEZZANINE PARTNERS II, L.P. By: GS Mezzanine Advisors II, L.L.C., its general partner By: /s/ Katherine L. Nissenbaum Name: Katherine L. Nissenbaum Title: Vice President GS MEZZANINE PARTNERS II OFFSHORE, L.P. By: GS Mezzanine Advisors II, L.L.C. its general partner By: /s/ Katherine L. Nissenbaum Name: Katherine L. Nissenbaum Title: Vice President TCW LEVERAGED INCOME TRUST, L.P. By: TCW Advisers (Bermuda), Ltd. as its General Partner By: /s/ Nicholas W. Tell, Jr. Name: Nicholas W. Tell, Jr. Title: Managing Director By: TCW Investment Management Company as Investment Adviser By: /s/ Jean-Marc Chapus Name: Jean-Marc Chapus Title: Managing Director TCW LEVERAGED INCOME TRUST II, L.P. By: TCW (LINC II), L.P. as its General Partner By: TCW Advisers (Bermuda), Ltd. its General Partner By: /s/ Nicholas W. Tell, Jr. Name: Nicholas W. Tell, Jr. Title: Managing Director By: TCW Investment Management Company as Investment Adviser By: /s/ Jean-Marc Chapus Name: Jean-Marc Chapus Title: Managing Director TCW LEVERAGED INCOME TRUST IV, L.P. By: TCW Asset Management Company As its Investment Adviser By: /s/ Nicholas W. Tell, Jr. Name: Nicholas W. Tell, Jr. Title: Managing Director By: /s/ Jean-Marc Chapus Name: Jean-Marc Chapus Title: Managing Director By: TCW (LINC IV), L.L.C. As General Partner By: TCW Asset Management Company As its Managing Member By: /s/ Nicholas W. Tell, Jr. Name: Nicholas W. Tell, Jr. Title: Managing Director By: /s/ Jean-Marc Chapus Name: Jean-Marc Chapus Title: Managing Director TCW/CRESCENT MEZZANINE PARTNERS II, L.P. By: TCW/Crescent Mezzanine II, L.P. its general partner or managing owner By: TCW/Crescent Mezzanine, L.L.C. its general partner By: /s/ Jean-Marc Chapus Name: Jean-Marc Chapus Title: Managing Director TCW/CRESCENT MEZZANINE TRUST II By: TCW/Crescent Mezzanine II, L.P. its general partner or managing owner By: TCW/Crescent Mezzanine, L.L.C. its general partner By: /s/ Jean-Marc Chapus Name: Jean-Marc Chapus Title: Managing Director THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY By: /s/ J. Leech Name: Title: Agreed to and accepted by: VCA ANTECH, INC. By: /s/ Robert L. Antin Name: Robert L. Antin Title: Chief Executive Officer and President VICAR OPERATING, INC. By: /s/ Robert L. Antin Name: Robert L. Antin Title: Chief Executive Officer and President CHASE MANHATTAN BANK AND TRUST COMPANY, NATIONAL ASSOCIATION By: /s/ Rose T. Maravilla Name: Rose T. Maravilla Title: Assistant Vice President GUARANTORS: AAH MERGER CORPORATION ACADEMY ANIMAL, INC. ANDERSON ANIMAL HOSPITAL, INC. ANIMAL CLINIC OF SANTA CRUZ, INC. ANIMAL EMERGENCY CLINIC, P.C. BEAUMONT VETERINARY ASSOCIATES, P.C. BERLA, INC. CACOOSING ANIMAL HOSPITAL, LTD. CACOOSING PET CARE & NUTRITION CENTER, INC. CLARMAR ANIMAL HOSPITAL, INC. DETWILER VETERINARY CLINIC, INC. DIAGNOSTIC VETERINARY SERVICE, INC. EAGLE PARK ANIMAL CLINIC, INC. EAGLE RIVER VETERINARY HOSPITAL, INC. EDGEBROOK, INC. FLORIDA VETERINARY LABORATORIES, INC. FOX CHAPEL ANIMAL HOSPITAL, INC. FREEHOLD, INC. GLEN ANIMAL HOSPITAL, INC. GOLDEN MERGER CORPORATION H.B. ANIMAL CLINICS, INC. HIGHLANDS ANIMAL HOSPITAL, INC. HOWELL BRANCH ANIMAL HOSPITAL, P.A. LAKE JACKSON VETERINARY HOSPITAL, INC. LAKEWOOD ANIMAL HOSPITAL, INC. LAMMERS VETERINARY HOSPITAL, INC. LEWELLING VETERINARY CLINIC, INC. MILLER ANIMAL HOSPITAL M.S. ANIMAL HOSPITALS, INC. NEWARK ANIMAL HOSPITAL, INC. NORTHERN ANIMAL HOSPITAL, INC. NORTH ROCKVILLE VETERINARY HOSPITAL, INC. NORTHSIDE ANIMAL HOSPITAL, P.C. NOYES ANIMAL HOSPITAL, INC. OAK HILL VETERINARY HOSPITAL, INC. OLD TOWN VETERINARY ANIMAL HOSPITAL, INC. PET PRACTICE (MASSACHUSETTS), INC. PETS' RX, INC. PETS' RX NEVADA, INC. PPI OF PENNSYLVANIA, INC. PRINCETON ANIMAL HOSPITAL, INC. PROFESSIONAL VETERINARY SERVICES, INC. RIVIERA ANIMAL HOSPITAL, INC. ROBERTSON BLVD. ANIMAL HOSPITAL, INC. ROSSMOOR CENTER ANIMAL CLINIC, INC. ROSSMOOR - EL DORADO ANIMAL HOSPITAL, INC. SAN VICENTE ANIMAL CLINIC SILVER SPUR ANIMAL HOSPITAL, INC. SOUTH COUNTY VETERINARY CLINIC, INC. SPANISH RIVER ANIMAL HOSPITAL, INC. TAMPA ANIMAL MEDICAL CENTER, INC. THE PET PRACTICE (FLORIDA), INC. THE PET PRACTICE (ILLINOIS), INC. THE PET PRACTICE (MASSACHUSETTS), INC. THE PET PRACTICE OF MICHIGAN, INC. VCA ALABAMA, INC. VCA ALBANY ANIMAL HOSPITAL, INC. VCA ALBUQUERQUE, INC. VCA ALL PETS ANIMAL COMPLEX, INC. VCA ALPINE ANIMAL HOSPITAL, INC. VCA ANDERSON OF CALIFORNIA ANIMAL HOSPITAL, INC. VCA ANIMAL HOSPITALS, INC. VCA ANIMAL HOSPITAL WEST, INC. VCA APAC ANIMAL HOSPITAL, INC. VCA - ASHER, INC. VCA BAY AREA ANIMAL HOSPITAL, INC. VCA CACOOSING ANIMAL HOSPITAL, INC. VCA CASTLE SHANNON VETERINARY HOSPITAL, INC. VCA CENTERS-TEXAS, INC. VCA CENVET, INC. VCA CLARMAR ANIMAL HOSPITAL, INC. VCA CLINICAL VETERINARY LABS, INC. VCA CLINIPATH LABS, INC. VCA CLOSTER, INC. VCA DETWILER ANIMAL HOSPITAL, INC. VCA DOVER ANIMAL HOSPITAL, INC. VCA EAGLE RIVER ANIMAL HOSPITAL, INC. VCA EAST ANCHORAGE ANIMAL HOSPITAL, INC. VCA GOLDEN COVE ANIMAL HOSPITAL, INC. VCA GREATER SAVANNAH ANIMAL HOSPITAL, INC. VCA HOWELL BRANCH ANIMAL HOSPITAL, INC. VCA INFORMATION SYSTEMS, INC. VCA KANEOHE ANIMAL HOSPITAL, INC. VCA LAKESIDE ANIMAL HOSPITAL, INC. VCA LAMB AND STEWART ANIMAL HOSPITAL, INC. VCA LAMMERS ANIMAL HOSPITAL, INC. VCA LEWIS ANIMAL HOSPITAL, INC. VCA MARINA ANIMAL HOSPITAL, INC. VCA MILLER ANIMAL HOSPITAL, INC. VCA - MISSION, INC. VCA NORTHBORO ANIMAL HOSPITAL, INC. VCA NORTHWEST VETERINARY DIAGNOSTICS, INC. VCA OF COLORADO-ANDERSON, INC. VCA OF NEW YORK, INC. VCA OF SAN JOSE, INC. VCA OF TERESITA, INC. VCA PROFESSIONAL ANIMAL LABORATORY, INC. VCA REAL PROPERTY ACQUISITION CORPORATION VCA REFERRAL ASSOCIATES ANIMAL HOSPITAL, INC. VCA ROHRIG ANIMAL HOSPITAL, INC. VCA - ROSSMOOR, INC. VCA ST. PETERSBURG ANIMAL HOSPITAL, INC. VCA SILVER SPUR ANIMAL HOSPITAL, INC. VCA SOUTH SHORE ANIMAL HOSPITAL, INC. VCA SPECIALTY PET PRODUCTS, INC. VCA SQUIRE ANIMAL HOSPITAL, INC. VCA TEXAS MANAGEMENT, INC. VCA WYOMING ANIMAL HOSPITAL, INC. VETERINARY HOSPITALS, INC. WEST LOS ANGELES VETERINARY MEDICAL GROUP, INC. WESTWOOD DOG & CAT HOSPITAL W.E. ZUSCHLAG, D.V.M., WORTH ANIMAL HOSPITAL, CHARTERED WILLIAM C. FOUTS, D.V.M., LTD. WINGATE, INC. By: /s/ Robert L. Antin Name: Robert L. Antin Title: Chief Executive Officer and President By: /s/ Tomas W. Fuller Name: Tomas W. Fuller Title: Chief Financial Officer and Assistant Secretary VCA VILLA ANIMAL HOSPITAL, L.P. By: VCA Animal Hospitals, Inc., General Partner By: /s/ Robert L. Antin Name: Robert L. Antin Title: Chief Executive Officer and President By: /s/ Tomas W. Fuller Name: Tomas W. Fuller Title: Chief Financial Officer and Assistant Secretary VETERINARY CENTERS OF AMERICA - TEXAS, L.P. By: VCA Centers-Texas, Inc., General Partner By: /s/ Robert L. Antin Name: Robert L. Antin Title: Chief Executive Officer and President By: /s/ Tomas W. Fuller Name: Tomas W. Fuller Title: Chief Financial Officer and Assistant Secretary ANIMAL CENTER, INC. By: /s/ Robert L. Antin Name: Title: ASSOCIATES IN PET CARE, S.C. By: /s/ Robert L. Antin Name: Title: KIRKWOOD ANIMAL HOSPITAL - LEA M.E. TAMMI, V.M.D., P.A. By: /s/ Robert L. Antin Name: Title: MAIN STREET SMALL ANIMAL HOSPITAL, INC. By: /s/ Robert L. Antin Name: Title: SOUTHEAST AREA VETERINARY MEDICAL CENTER, P.C. By: /s/ Robert L. Antin Name: Title: VCA ASSOCIATE ANIMAL HOSPITAL, L.P. By: /s/ Robert L. Antin Name: Title: VCA HERITAGE ANIMAL HOSPITAL, L.P. By: /s/ Robert L. Antin Name: Title: TOMS RIVER VETERINARY HOSPITAL, P.A. By: /s/ Robert L. Antin Name: Title: EX-4.10 8 v80091ex4-10.txt EXHIBIT 4.10 EXHIBIT 4.10 VETERINARY CENTERS OF AMERICA, INC. FIRST AMENDMENT TO CREDIT AND GUARANTY AGREEMENT The FIRST AMENDMENT, dated as of October 23, 2000 (this "AMENDMENT"), to the Credit and Guaranty Agreement, dated as of September 20, 2000 (as amended through the date hereof, the "CREDIT AGREEMENT"), by and among VICAR OPERATING, INC., a Delaware corporation ("COMPANY"), VETERINARY CENTERS OF AMERICA, INC., a Delaware corporation ("HOLDINGS"), CERTAIN SUBSIDIARIES OF COMPANY, as Guarantors, the Lenders party thereto from time to time, GOLDMAN SACHS CREDIT PARTNERS L.P. ("GSCP"), as Sole Lead Arranger (in such capacity, "LEAD ARRANGER"), and as Sole Syndication Agent (in such capacity, "SYNDICATION AGENT"), and WELLS FARGO BANK, N.A. ("WELLS FARGO"), as Administrative Agent (together with its permitted successors in such capacity, "ADMINISTRATIVE AGENT") and as Collateral Agent (together with its permitted successor capacity, "ADMINISTRATIVE AGENT") and as Collateral Agent (together with its permitted successor in such capacity, "COLLATERAL AGENT"). Capitalized terms used herein not otherwise defined herein or otherwise amended hereby shall have the meanings ascribed thereto in the Credit Agreement. RECITALS: WHEREAS, Company has requested that Holdings and the Lenders agree to make amendments to certain definitions to the Credit Agreement. NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the parties hereto agree as follows: SECTION 1. AMENDMENTS TO CREDIT AGREEMENT 1.1 AMENDMENTS TO SECTION 1: DEFINITIONS. ------------------------------------ A. Section 1.1 of the Credit Agreement is hereby amended by adding thereto the following definitions in proper alphabetical order: "FIRST AMENDMENT" means the First Amendment dated October 23, 2000 to this Agreement by and among Company, Holdings, Lenders as of the date of such amendment and the Agents. "FIRST AMENDMENT CLOSING DATE" has the meaning assigned to that term in the First Amendment. B. Section 1.1 of the Credit Agreement is hereby amended by deleting each of the definitions of "CONSOLIDATED CAPITAL EXPENDITURES" and "REQUISITE LENDERS" in their entirety and substituting therefor the following: "CONSOLIDATED CAPITAL EXPENDITURES" means, for any period, the aggregate of the expenditures of Company and its Subsidiaries during such period determined on a consolidated basis that, in accordance with GAAP, are or should be included in "purchase of property and equipment" or similar items reflected in the consolidated statement of cash flows of Company and its Subsidiaries excluding, (i) any acquisition of assets that constitutes a Permitted Acquisition and (ii) any expenditures made by Company pursuant to Sections 2.13(a) and 2.13(b) hereof; provided, however, that notwithstanding any of the foregoing to the contrary, Consolidated Capital Expenditures shall include expenditures of Company and its Subsidiaries with respect to assets constituting a fee interest in real property acquired by Company in connection with a Permitted Acquisition. "REQUISITE LENDERS" means three or more Lenders having or holding Tranche A Term Loan Exposure, Tranche B Term Loan Exposure and/or Revolving Exposure and representing more than 50% of the sum of (i) the aggregate Tranche A Term Loan Exposure of all lenders, (ii) the aggregate Tranche B Term Loan Exposure of all Lenders and (iii) the aggregate Revolving Exposure of all Lenders. C. Section 1.1 of the Credit Agreement is hereby further amended by adding the following paragraph at the conclusion of the definition of "PERMITTED ACQUISITION": "Notwithstanding any of the foregoing to the contrary, "Permitted Acquisition" shall not include any acquisition of any assets constituting a fee interest in real property to the extent such acquisition of assets is included in the calculation of Consolidated Capital Expenditures." SECTION 2. CONDITIONS PRECEDENT TO EFFECTIVENESS 2.1 The effectiveness of the amendments set forth at Section 1 hereof are subject to the satisfaction, or waiver, of the following conditions on or before the date hereof (the "FIRST AMENDMENT CLOSING DATE"): (A) The Company, Holdings and the Lenders shall have indicated their consent by the execution and delivery of the signature pages hereof to the Agent. 2 (b) As of the First Amendment Closing Date, the representations and warranties contained herein and in the other Credit Documents shall be true, correct and complete in all respects on and as of the First Amendment Closing Date to the same extent as though made on and as of that date, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been true, correct and complete in all respects on and as of such earlier date. (c) As of the First Amendment Closing Date, no event shall have occurred and be continuing that would constitute an Event of Default or a Default. (d) The Administrative Agent and Lenders shall have received such other documents and information regarding Credit Parties and the Amended Agreement as the Arrangers or Lenders may reasonably request. SECTION 3. REPRESENTATIONS AND WARRANTIES 3.1 In order to induce Lenders to enter into this Amendment, each applicable Credit Party represents and warrants to each Lender, as of the date hereof and upon giving effect to this Amendment, that the representations and warranties contained in each of the Credit Documents is true, correct and complete in all respects on and as of the date hereof to the same extent as though made on and as of that date, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall have been true, correct and complete in all respects on and as of such earlier date. SECTION 4. MISCELLANEOUS 4.1 This Amendment shall be binding upon the parties hereto and their respective successors and assigns and shall inure to the benefit of the parties hereto and the successors and assigns of Lenders. No Credit Party's rights or obligations hereunder or any interest therein may be assigned or delegated by any Credit Party without the prior written consent of all Lenders. 4.2 In case any provision in or obligation hereunder shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. 4.3 On and after the First Amendment Closing Date, each reference in the Credit Agreement to "this Agreement", "hereunder", "hereof", "herein" or words of like import referring to the Credit Agreement, and each reference in the other Credit Documents to the "Credit 3 Agreement","Thereunder","thereof" or words of like import referring to the Credit Agreement shall mean and be a reference to the Credit Agreement as amended by this Amendment. 4.4 Except as specifically amended by this Amendment, the Credit Agreement and other Credit Documents shall remain in full force and effect and are hereby ratified and confirmed. 4.5 The execution, delivery and performance of this Amendment shall not, except as expressly provided herein, constitute a waiver of any provision of, or operate as a waiver of any right, power or remedy of any Agent or Lender under, the Credit Agreement or any of the other Credit Documents. 4.6 Section headings herein are included herein for convenience of reference only and shall not constitute a par hereof for any other purpose or be given any substantive effect. 4.7 THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. 4.8 This Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument. As set forth herein, this Amendment shall become effective upon the execution of a counterpart hereof by each of the parties hereto and receipt by Company, Holdings and Administrative Agent and Syndication Agent of written or telephonic notification of such execution and authorization of delivery thereof. [The remainder of this page is intentionally left blank] 4 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first written above. COMPANY: VICAR OPERATING, INC. By: /s/ Tomas Fuller ------------------------------- Name: Tomas Fuller Title: VP HOLDINGS: VETERINARY CENTERS OF AMERICA, By: /s/ Tomas Fuller ------------------------------- Name: Tomas Fuller Title: VP S-1 SOLE SYNDICATION AGENT, SOLE LEAD ARRANGER, AND A LENDER: GOLDMANSACHS CREDIT PARTNERS L.P., By: /s/ R T WAGNER ------------------------------ Authorized Signatory S-2 ADMINISTRATIVE AGENT, COLLATERAL AGENT AND A LENDER: WELLS FARGO BANK, N.A. /S/ S. MICHAEL ST. GEME By -------------------------- Name: S. MICHAEL ST. GEME Title: VICE PRESIDENT S-3 LENDERS NATEXIS BANQUES POPULAIRES (f/k/a/ Natexis Banque) New York Branch /s/ Gary Kania By:--------------------------- Name: GARY KANIA Title: Vice President /s/ JORDAN SADLER JORDAN SADLER ASSISTANT VICE PRESIDENT S4 SIERRA CLO I, LTD By: /s/ John M. Casparian ------------------------------- Name: John M. Casparian Title: Senior Managing Director S-5 THE PRUDENTIAL INSURANCE COMPANY OF AMERICA By: /s/ B. Ross Smead --------------------- Name: B. Ross Smead Title: Vice President S-6 OFFICER'S CERTIFICATE This OFFICERS CERTIFICATE is delivered pursuant to Section 2 of that certain First Amendment to Credit and Guaranty Agreement dated as of October 23, 2000 (the "Amendment") which amends that certain Credit and Guaranty Agreement dated as of September 20, 2002 (as amended, the Credit Agreement", capitalized terms used herein without definition having the meanings given such terms in the Credit Agreement). The undersigned hereby certifies that 1. As of the First Amendment Closing Date, the representations and warranties contained contained therein and in the other Credit Documents are true, correct and complete in all respects on and as of the First Amendment Closing Date to the same extent as though made on and as of that date, except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties are true, correct and complete in all res[respects on and as of such earlier date. 2. As of the First Amendment Closing Date, no event has occurred and is continuing that would constitute an Event of Default or a Default. IN WITNESS WHEREOF, the undersigned has executed this Secretary's Certificate as of the 6 day of December, 2000. VETERINARY CENTERS OF AMERICA, INC. /s/ ROBERT L. ANTIN BY:--------------------- Robert L. Antin President EX-4.11 9 v80091ex4-11.txt EXHIBIT 4.11 EXHIBIT 4.11 VCA ANTECH, INC. SECOND AMENDMENT TO CREDIT AND GUARANTY AGREEMENT This SECOND AMENDMENT, dated as of November 16, 2001 (this "AMENDMENT"), to the Credit and Guaranty Agreement, dated as of September 20, 2000 (as amended through the date hereof, the "CREDIT AGREEMENT"), by and among VICAR OPERATING, INC., a Delaware corporation ("COMPANY"), VCA ANTECH, INC. a Delaware corporation (formerly known as Veterinary Centers of America, Inc., "HOLDINGS"), CERTAIN SUBSIDIARIES OF COMPANY, as Guarantors, the Lenders party thereto from time to time, GOLDMAN SACHS CREDIT PARTNERS L.P. ("GSCP"), as Sole Lead Arranger (in such capacity, "LEAD ARRANGER"), and as Sole Syndication Agent (in such capacity, "SYNDICATION AGENT"), and WELLS FARGO BANK, N.A. ("WELLS FARGO"), as Administrative Agent (together with its permitted successors in such capacity, "ADMINISTRATIVE AGENT") and as Collateral Agent (together with its permitted successor in such capacity, "COLLATERAL AGENT"). Capitalized terms used herein not otherwise defined herein or otherwise amended hereby shall have the meanings ascribed thereto in the Credit Agreement. RECITALS: WHEREAS, Company proposes issuing subordinated indebtedness in an aggregate principal amount of not less than $150,000,000 and consummating an initial public offering of common stock of Holdings providing aggregate gross proceeds of not less than $140,000,000; and WHEREAS, Holdings and Company have requested that Requisite Lenders agree to make amendments to certain provisions to the Credit Agreement in order to effectuate the above transactions. NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the parties hereto agree as follows: SECTION I. AMENDMENTS TO CREDIT AGREEMENT A. AMENDMENTS TO SECTION 1: DEFINITIONS. (a) Section 1.1 of the Credit Agreement is hereby amended by adding thereto the following definitions in proper alphabetical order: "NEW COMPANY SUBORDINATED NOTE INDENTURE" means an Indenture to be entered into between Company and JP Morgan Chase, pursuant to which the New Company Subordinated Notes are to be issued in form and substance reasonably acceptable to the Agents, as such Indenture may hereafter be amended, restated, supplemented or otherwise modified from time to time to the extent permitted under Section 6.16. "NEW COMPANY SUBORDINATED NOTES" means the subordinated notes due no earlier than 2010 in an aggregate principal amount of not less than $150,000,000 in form and substance reasonably acceptable to the Agents, as such notes may hereafter be amended, restated, supplemented or otherwise modified from time to time to the extent permitted under Section 6.16. "HOLDINGS IPO" means an initial public offering of common stock of Holdings consummated no later than November 30, 2001 and providing gross proceeds to Holdings of not less than $140,000,000. "IMMATERIAL SUBSIDIARY" for purposes of Section 8.1(f) and Section 8.1(g), shall mean one or more Subsidiaries of Holdings that, on a consolidated basis did not (i) for the most recently concluded Fiscal Year account for more than 3.0% of consolidated revenues of Holdings and its Subsidiaries and (ii) as of the last day of such Fiscal Year own more than 3.0% of the consolidated assets of Holdings and its Subsidiaries. "SECOND AMENDMENT" means the Second Amendment dated November 16, 2001 to this Agreement by and among Company, Holdings, Requisite Lenders as of the date of such amendment and the Agents. "SECOND AMENDMENT CLOSING DATE" has the meaning assigned to that term in the Second Amendment. (b) Section 1.1 of the Credit Agreement is hereby amended by deleting each of the definitions of "CHANGE OF CONTROL", "CONSOLIDATED ADJUSTED EBITDA", "MATERIAL REAL ESTATE ASSET", "PERMITTED ACQUISITION", "PERMITTED PARTIALLY-OWNED SUBSIDIARY", "PERMITTED SELLER NOTES" and "SENIOR SUBORDINATED NOTE DOCUMENTS" in their entirety and substituting therefor the following: "CHANGE OF CONTROL" means, at any time, (i) (A) prior to the consummation of the Holdings IPO, Sponsor, Co-Investors and Management Investors shall cease to beneficially own and control at least 51% on a fully diluted basis of the voting interests of the Capital Stock of Holdings and (B) concurrently with or at any time after the consummation of the Holdings IPO, Sponsor, Co-Investors and Management Investors shall collectively cease to beneficially own and control at least 35% on a fully diluted basis of the voting interests in the Capital Stock of Holdings; (ii) any Person or "group" (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act) other than Sponsor (a) (I) at any time prior to the consummation of the Holdings IPO, shall have acquired beneficial ownership of 35% or more on a fully diluted basis of the voting interests in the Capital Stock of Holdings and (II) concurrently with or at any time after the consummation of the Holdings IPO shall have acquired beneficial ownership of a percentage greater than that owned by the Sponsor, Co-Investors and Management 2 Investors collectively, on a fully diluted basis of the voting interests in the Capital Stock of Holdings or (b) at all times, shall have obtained the power (whether or not exercised) to elect a majority of the members of the board of directors (or similar governing body) of Holdings; (iii) Sponsor and Co-Investors shall collectively cease to beneficially own and control on a fully diluted basis a percentage of the voting interests in the Capital Stock of Holdings greater than any other Person or group (within the meaning of Rules 13d-3 and 13d-5 of the Exchange Act); (iv) Holdings shall cease to beneficially own and control 100% on a fully diluted basis of the Capital Stock of Company; or (v) the majority of the seats (other than vacant seats) on the board of directors (or similar governing body) of Company cease to be occupied by Persons who either (a) were members of the board of directors of Company on the Closing Date or (b) were nominated for election by the board of directors of Company, a majority of whom were directors on the Closing Date or whose election or nomination for election was previously approved by a majority of such directors; or (vi) any "change of control" or similar event under the Holdings Senior Note Documents or the Senior Subordinated Note Documents shall occur. "CONSOLIDATED ADJUSTED EBITDA" means, for any period, an amount determined for Company and its Subsidiaries on a consolidated basis equal to (i) the sum, without duplication, of the amounts for such period of (a) Consolidated Net Income, (b) Consolidated Interest Expense, (c) provisions for taxes based on income, (d) total depreciation expense, (e) total amortization expense, (f) other non-Cash items reducing Consolidated Net Income (excluding any such non-Cash item to the extent that it represents an accrual or reserve for potential Cash items in any future period or amortization of a prepaid Cash item that was paid in a prior period but, notwithstanding anything to the contrary herein, including without limitation, reserves for lease expense and other charges and expenses related to the closure of hospitals to the extent not paid in cash), (g) to the extent deducted in calculating Consolidated Net Income, Transaction Costs, (h) payments made under the Management Services Agreement in accordance with the provisions of Section 6.5(l) and (i) to the extent deducted in calculating Consolidated Net Income, other one-time non-recurring charges incurred by Holdings, Company or any of Company's Subsidiaries associated with the Holdings IPO and the New Company Subordinated Notes, including, without limitation (A) any non-cash charges incurred by Holdings and/or Company; provided, that such non-cash charges shall not exceed $10,400,000 in the aggregate; (B) a one-time payment to Sponsor; provided, that such one-time payment to Sponsor shall not exceed $8,000,000; and (C) underwriting discounts and commissions and other reasonable costs and expenses associated therewith, including reasonable legal fees and expenses, minus (ii) non-Cash items increasing Consolidated Net Income for such period (excluding any such non-Cash item to the extent it represents the reversal of an accrual or reserve for potential Cash item in any prior period); provided that the foregoing shall be subject to the adjustments described in Schedule 1.1. "MATERIAL REAL ESTATE ASSET" means (i) (a) any fee-owned Real Estate Asset having a fair market value in excess of $150,000 as of the date of the acquisition thereof and (b) all Leasehold Properties other than those with respect to which the aggregate 3 payments under the term of the lease are less than $500,000 per annum or (ii) any Real Estate Asset that the Requisite Lenders have determined is material to the business, operations, properties, assets, condition (financial or otherwise) or prospects of Holdings or any Subsidiary thereof, including Company. "PERMITTED ACQUISITION" means any acquisition by Company or any of its Subsidiaries, whether by purchase, merger or otherwise, of all or substantially all of the assets of, 51% or more of the Capital Stock of, or a business line or unit or a division of, any Person; provided, (i) immediately prior to, and after giving effect thereto, no Default or Event of Default shall have occurred and be continuing or would result therefrom; (ii) all transactions in connection therewith shall be consummated, in all material respects, in accordance with all applicable laws and in conformity with all applicable Governmental Authorizations; (iii) in the case of the acquisition of Capital Stock, (i) at least 51% of the Capital Stock (except for any such Securities in the nature of directors' qualifying shares required pursuant to applicable law) acquired or otherwise issued by such Person or any newly formed Subsidiary of Company in connection with such acquisition shall be owned by Company or a Guarantor Subsidiary thereof, (ii) in the case of acquisitions where Company owns more than 51% but less than 100% of such Subsidiary, Company shall designate such Subsidiary as a Permitted Partially-Owned Subsidiary, and (iii) except in the case of a Permitted Partially-Owned Subsidiary, Company shall have taken, or caused to be taken, as of the date such Person becomes a Subsidiary of Company, each of the actions set forth in Sections 5.10 and/or 5.11, as applicable; (iv) Any Person or assets so acquired shall be located exclusively in the United States; (v) Holdings and its Subsidiaries shall be in compliance with the financial covenants set forth in Section 6.8 on a pro forma basis after giving effect to such acquisition as of the last day of the Fiscal Quarter most recently ended (as determined in accordance with Section 6.8(f)); (vi) Company shall have delivered to Administrative Agent (A) at least five Business Days prior to such proposed acquisition, a Compliance Certificate evidencing compliance with Section 6.8 as required under clause (v) above, together with all relevant financial information with respect to such acquired assets, including, without limitation, the aggregate consideration for such acquisition and any other information required to demonstrate compliance with Section 6.8; provided, however, that Company shall not be required to comply with the provisions of this clause (vi) with respect to acquisitions unless the consideration of such acquisition is greater than $3,000,000; and 4 (vii) any Person or assets or division as acquired in accordance herewith shall be in a business or lines of business the same as, related, complementary or ancillary to, the business or lines of business in which Company and/or its Subsidiaries are engaged as of the Closing Date. "PERMITTED PARTIALLY-OWNED SUBSIDIARY" means (a) those Subsidiaries of Company listed on Schedule 1.2 existing on the Closing Date, and (b) those Subsidiaries of Company acquired or created after the Closing Date and designated by Company as a Permitted Partially-Owned Subsidiary by written notice to the Administrative Agent, provided, that, with respect to Permitted Partially-Owned Subsidiaries acquired or created after the Closing Date, (i) Company owns at least 51% of the outstanding Capital Stock of such Subsidiary, (ii) the remaining Capital Stock of such Subsidiary is owned directly or indirectly, by one or more licensed veterinarians who are actively involved in the business of such Subsidiary, (iii) Company shall use its commercially reasonable efforts to cause such Subsidiary to become a Guarantor Subsidiary, (iv) if Company fails to obtain a Guaranty from such Subsidiary, then such Subsidiary shall not own and lease any Material Real Estate Assets, and (v) Company shall use commercially reasonable efforts to cause such veterinarian to pledge his or her Capital Stock in such Permitted Partially-Owned Subsidiary in favor of the Collateral Agent for the benefit of the Secured Parties; provided, further, that (i) at no time shall the total portion of Consolidated Adjusted EBITDA contributed by all Subsidiaries constituting Permitted Partially-Owned Subsidiaries exceed 15% of Consolidated Adjusted EBITDA and (ii) at no time shall the portion of Consolidated Adjusted EBITDA contributed by all Permitted Partially-Owned Subsidiaries acquired or created after the Closing Date which are not Guarantor Subsidiaries exceed 10% of Consolidated Adjusted EBITDA. "PERMITTED SELLER NOTES" means promissory notes containing subordination provisions in substantially the form of, or no less favorable to Lenders (in the reasonable judgment of Administrative Agent) than the subordination provisions contained in, Exhibit K annexed hereto, representing any Indebtedness of Holdings or Company incurred in connection with any Permitted Acquisition payable to the seller in connection therewith, as such note may be amended, supplemented or otherwise modified from time to time to the extent permitted under subsection 6.16; provided that, no Permitted Seller Note shall (i) be guarantied by any Subsidiary of Holdings or secured by any property of Holdings, Company or any of its Subsidiaries, (ii) bear cash interest at a rate greater than 8.5% per annum; or, (iii) except in accordance with subsection 6.5, provide for any prepayment or repayment of all or any portion of the principal thereof prior to the date of the final scheduled installment of principal of the Loans; provided, further, that in no event shall the aggregate scheduled cash payments of principal and interest on all outstanding Permitted Seller Notes exceed $4,000,000 in any Fiscal Year. "SENIOR SUBORDINATED NOTE DOCUMENTS" means the Senior Subordinated Notes, the Senior Subordinated Note Indenture, the New Company Subordinated Notes, the New Company Subordinated Note Indenture, the Company Purchase Agreement, the Senior Subordinated Note Registration Rights Agreement, and each other document executed in connection with the Senior Subordinated Notes, as such document may be amended, 5 restated, supplemented or otherwise modified from time to time to the extent permitted under Section 6.16. B. AMENDMENTS TO SECTION 2: MANDATORY PREPAYMENTS. (a) Section 2.13(c) of the Credit Agreement is hereby amended by adding the following paragraph at the conclusion thereof as follows: "Notwithstanding any of the foregoing to the contrary, on the date of receipt by Holdings of any Cash proceeds from the Holdings IPO, such Cash proceeds (together with additional Cash on hand as of the Second Amendment Effective Date) shall be applied, net of underwriting discounts and commissions and other reasonable costs and expenses associated therewith, including reasonable legal fees and expenses to (i) redeem the Preferred Stock (which, together with the redemption set forth in Section 2.13(d) shall redeem the Preferred Stock in full) and (ii) prepay a portion of the Holdings Senior Notes; provided, that in the event that Holdings or any of its Subsidiaries receives gross proceeds from the issuance of the Holdings IPO in excess of $140,000,000 (such excess above $140,000,000, the "EXCESS IPO PROCEEDS"), Holdings and/or Company, as applicable, shall apply such Excess IPO Proceeds to prepay the Holdings Senior Notes, prepay the Loans as set forth in Section 2.14(b) and/or prepay the Senior Subordinated Notes at Holdings' and/or Company's discretion." (b) Section 2.13(d) of the Credit Agreement is hereby amended by adding the following paragraph at the conclusion thereof as follows: "Notwithstanding any of the foregoing to the contrary, on the date of receipt by Holdings and any of its Subsidiaries of any Cash proceeds from the incurrence by Company of the New Company Subordinated Notes, such Cash proceeds shall be applied, net of underwriting discounts and commissions and other reasonable costs and expenses associated therewith, including reasonable legal fees and expenses to (i) redeem Preferred Stock (which, together with the redemption set forth in Section 2.13(c) shall redeem the Preferred Stock in full) and (ii) prepay the Loans as set forth in Section 2.14(b); provided that in any event, the Loans shall be prepaid with the proceeds of the New Company Subordinated Notes in an aggregate principal amount of not less than $100,000,000; provided, further, that in the event that Company receives gross proceeds from the issuance of the New Company Subordinated Notes in excess of $150,000,000 (such excess above $150,000,000, the "EXCESS NOTE PROCEEDS"), Holdings and/or Company, as applicable, shall apply such Excess Note Proceeds to prepay the Holdings Senior Notes, prepay the Loans as set forth in Section 2.14(b) and/or prepay the Senior Subordinated Notes at Holdings' and/or Company's discretion." (b) Section 2.14(b) of the Credit Agreement is hereby amended by adding the following paragraph at the conclusion thereof as follows: "Notwithstanding any of the foregoing to the contrary, any Loans required to be prepaid pursuant to the receipt by Holdings or any of its Subsidiaries of the proceeds 6 from the Holdings IPO and/or the New Company Subordinated Notes pursuant to Sections 2.13(c) and 2.13(d) shall be applied to prepay Term Loans on a pro rata basis (in accordance with the respective outstanding principal amounts thereof) and shall be further applied on a pro rata basis to the remaining scheduled Installments of principal of the Tranche A Term Loans and Tranche B Term Loans." C. AMENDMENTS TO SECTION 6: NEGATIVE COVENANTS. (a) Section 6.1 of the Credit Agreement is hereby amended by deleting Section 6.1(c) in its entirety and replacing it with the following: "(c) (x) (i) Indebtedness incurred by Company with respect to the Senior Subordinated Notes and (ii) other Indebtedness incurred to refinance, in whole or in part, Indebtedness under the Senior Subordinated Notes if the terms and conditions thereof are not less favorable, taken as a whole, to the obligor thereon or to the Lenders than the Indebtedness being refinanced and the average life to maturity thereof is greater than or equal to that of the Indebtedness being refinanced; provided, such Indebtedness permitted under the immediately preceding clause (ii) above shall (A) not include Indebtedness of an obligor that was not an obligor with respect to the Indebtedness being refinanced, (B) not exceed in principal amount (or accreted value, in the case of any such refinancing Indebtedness issued with a discount) of the Indebtedness (including the amount of interest and principal (and premium, if any)) being refinanced plus the amount of customary underwriting discounts, financing fees and commissions and other reasonable costs and expenses associated with the issuance thereof, (C) be subordinated to the Obligations on terms which are not less favorable, taken as a whole, to the Lenders than the corresponding terms of the Indebtedness being refinanced, and (D) not be incurred, created or assumed if any Default or Event of Default has occurred and is continuing or would result therefrom; (y) (i) Indebtedness incurred by Holdings with respect to the Holdings Senior Notes and (ii) other Indebtedness incurred to refinance, in whole or in part, Indebtedness under the Holdings Senior Notes if the terms and conditions thereof are not less favorable, taken as a whole, to the obligor thereon or to the Lenders than the Indebtedness being refinanced and the average life to maturity thereof is greater than or equal to that of the Indebtedness being refinanced; provided, such Indebtedness permitted under the immediately preceding clause (ii) above shall (A) not include Indebtedness of an obligor that was not an obligor with respect to the Indebtedness being refinanced, (B) not exceed in principal amount (or accreted value, in the case of any such refinancing Indebtedness issued with a discount) of the Indebtedness (including the amount of interest and principal (and premium, if any)) being refinanced plus the amount of customary underwriting discounts, financing fees and commissions and other reasonable costs and expenses associated with the issuance thereof, and (C) not be incurred, created or assumed if any Default or Event of Default has occurred and is continuing or would result therefrom; and (z) (i) Indebtedness incurred by Company with respect to the New Company Subordinated Notes and (ii) other Indebtedness incurred to refinance, in whole or in part, Indebtedness under the New Company Subordinated Notes if the terms and conditions thereof are not less favorable, taken as a whole, to the obligor thereon or to the Lenders than the Indebtedness being refinanced and the average life to maturity thereof is 7 greater than or equal to that of the Indebtedness being refinanced; provided, such Indebtedness permitted under the immediately preceding clause (ii) above shall (A) not include Indebtedness of an obligor that was not an obligor with respect to the Indebtedness being refinanced, (B) not exceed in principal amount (or accreted value, in the case of any such refinancing Indebtedness issued with a discount) of the Indebtedness (including the amount of interest and principal (and premium, if any)) being refinanced plus the amount of customary underwriting discounts, financing fees and commissions and other reasonable costs and expenses associated with the issuance thereof, (C) be subordinated to the Obligations on terms which are not less favorable, taken as a whole, to the Lenders than the corresponding terms of the Indebtedness being refinanced and (D) not be incurred, created or assumed if any Default or Event of Default has occurred and is continuing or would result therefrom;" (b) Section 6.1 of the Credit Agreement is hereby further amended by deleting Section 6.1(m) in its entirety and replacing it with the following: "(m) Permitted Seller Notes (i) issued by Holdings as consideration in Permitted Acquisitions; provided, that the aggregate principal amount of such Permitted Seller Notes issued by Holdings shall not exceed $17,500,000; and (ii) issued by Company as consideration in Permitted Acquisitions; provided, that the aggregate principal amount of such Permitted Seller Notes issued by Company shall not exceed $7,500,000;" (c) Section 6.1 of the Credit Agreement is hereby further amended by deleting the word "and" at the conclusion of Section 6.1(r), deleting "." at the conclusion of Section 6.1(s) and replacing it with "; and", and by adding the following Section 6.1(t): "(t) the guaranty by Holdings of Indebtedness of Company pursuant to the New Company Subordinated Notes; provided, that such guaranty is unsecured and subordinated to the Obligations." (d) Section 6.5 of the Credit Agreement is hereby amended by deleting the word "and" at the conclusion of Section 6.5(l), deleting "." at the conclusion of Section 6.5(m) and replacing it with "; and", and by adding the following Section 6.5(n): "(n) Holdings and Company may make the Restricted Junior Payments contemplated in connection with the Holdings IPO and the New Company Subordinated Notes, as set forth in Section 2.13(c) and 2.13(d)." (e) Section 6.7 of the Credit Agreement is hereby amended by deleting Section 6.7(m) in its entirety and replacing it with the following: "(m) other Investments in an aggregate amount not to exceed at any time $6,000,000." 8 (f) Section 6.8 of the Credit Agreement is hereby amended by deleting Sections 6.8(a) through and including Section 6.8(e) in their entirety and replacing them with the following: "(a) Interest Coverage Ratio. Company shall not permit the Interest Coverage Ratio as of the last day of any Fiscal Quarter, beginning with the Fiscal Quarter ending December 31, 2001 to be less than the correlative ratio indicated:

INTEREST FISCAL QUARTER COVERAGE RATIO -------------- -------------- December 31, 2001 2.00:1.00 March 31, 2002 2.00:1.00 June 30, 2002 2.00:1.00 September 30, 2002 2.00:1.00 December 31, 2002 2.25:1.00 March 31, 2003 2.25:1.00 June 30, 2003 2.25:1.00 September 30, 2003 2.25:1.00 December 31, 2003 2.50:1.00 March 31, 2004 2.50:1.00 June 30, 2004 2.75:1.00 September 30, 2004 2.75:1.00 December 31, 2004 3.00:1.00 and thereafter

(b) Fixed Charge Coverage Ratio. Company shall not permit the Fixed Charge Coverage Ratio as of the last day of any Fiscal Quarter, beginning with the Fiscal Quarter ending December 31, 2001, to be less than the correlative ratio indicated: 9

FIXED CHARGE FISCAL QUARTER COVERAGE RATIO -------------- -------------- December 31, 2001 1.10:1.00 and thereafter

10 (c) Leverage Ratio. Company shall not permit the Leverage Ratio as of the last day of any Fiscal Quarter, beginning with the Fiscal Quarter ending December 31, 2001, to exceed the correlative ratio indicated:

FISCAL LEVERAGE QUARTER RATIO ------- -------- December 31, 2001 4.50:1.00 March 31, 2002 4.50:1.00 June 30, 2002 4.25:1.00 September 30, 2002 4.00:1.00 December 31, 2002 4.00:1.00 March 31, 2003 3.75:1.00 June 30, 2003 3.75:1.00 September 30, 2003 3.50:1.00 December 31, 2003 3.50:1.00 March 31, 2004 3.25:1.00 June 30, 2004 3.25:1.00 September 30, 2004 3.00:1.00 December 31, 2004 2.75:1.00 March 31, 2005 2.75:1.00 June 30, 2005 2.50:1.00 September 30, 2005 2.25:1.00 and thereafter

11 (d) Senior Leverage Ratio. Company shall not permit the Senior Leverage Ratio as of the last day of any Fiscal Quarter, beginning with the Fiscal Quarter ending December 31, 2001, to exceed the correlative ratio indicated:

SENIOR FISCAL QUARTER LEVERAGE RATIO -------------- -------------- December 31, 2001 2.50:1.00 March 31, 2002 2.25:1.00 June 30, 2002 2.00:1.00 September 30, 2002 2.00:1.00 December 31, 2002 2.00:1.00 March 31, 2003 2.00:1.00 June 30, 2003 1.75:1.00 September 30, 2003 1.75:1.00 December 31, 2003 1.50:1.00 March 31, 2004 1.50:1.00 June 30, 2004 1.50:1.00 September 30, 2004 1.50:1.00 December 31, 2004 1.25:1.00 March 31, 2005 1.25:1.00 June 30, 2005 1.25:1.00 September 30, 2005 1.25:1.00 December 31, 2005 1.00:1.00 and thereafter

(e) Maximum Consolidated Capital Expenditures. Holdings shall not, and shall not permit its Subsidiaries to, make or incur Consolidated Capital Expenditures, in any Fiscal Year beginning with the Fiscal Year 2001, in an aggregate amount for Holdings and its Subsidiaries in excess of the following: 12

Maximum Consolidated Fiscal Year Capital Expenditures ----------- -------------------- Fiscal Year 2001 and in any $20,000,000 Fiscal Year prior to the consummation of the Holdings IPO In any Fiscal Year (other $22,000,000 than Fiscal Year 2001) after the consummation of the Holdings IPO

; provided, that 50% of any unutilized amount for any Fiscal Year may be utilized in the next succeeding Fiscal Year, but in no event shall any amount from any Fiscal Year prior to the immediately preceding Fiscal Year be utilized in the calculations of the foregoing." (g) Section 6.9 of the Credit Agreement is hereby amended by deleting Section 6.9(h) in its entirety and replacing it with the following: "(h) Permitted Acquisitions, the consideration for which constitutes (i) $10,000,000 or less in the aggregate from the Closing Date through the end of the fourth Fiscal Quarter of Fiscal Year 2000, (ii) $25,000,000 or less in the aggregate in Fiscal Year 2001, and (iii) $30,000,000 or less in the aggregate in any Fiscal Year thereafter; provided, that $5,000,000 of any unutilized amount for any Fiscal Year may be utilized in the next immediately succeeding Fiscal Year (but not in any Fiscal Years thereafter); provided, further, however, that with respect to any acquisition the consideration of which is (i) prior to the consummation of the Holdings IPO, greater than $7,500,000 and (ii) after the consummation of the Holdings IPO, greater than $12,500,000, Company shall not make such acquisition without the prior consent of Administrative Agent and Syndication Agent, such consent not to be unreasonably withheld;" D. AMENDMENTS TO SECTION 8: EVENTS OF DEFAULT. Section 8.1 of the Credit Agreement is hereby amended by deleting Section 8.1(f) and 8.1(g) in their entirety and replacing them with the following: "(f) Involuntary Bankruptcy; Appointment of Receiver, etc. (i) A court of competent jurisdiction shall enter a decree or order for relief in respect of Holdings or any of its Subsidiaries (other than Immaterial Subsidiaries) in an involuntary case under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect, which decree or order is not stayed; or any other similar relief shall be granted under any applicable federal or state law; or (ii) an involuntary case shall be commenced against Holdings or any of its Subsidiaries (other than Immaterial Subsidiaries) under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect; or a decree or order of a court having 13 jurisdiction in the premises for the appointment of a receiver, liquidator, sequestrator, trustee, custodian or other officer having similar powers over Holdings or any of its Subsidiaries (other than Immaterial Subsidiaries), or over all or a substantial part of its property, shall have been entered; or there shall have occurred the involuntary appointment of an interim receiver, trustee or other custodian of Holdings or any of its Subsidiaries (other than Immaterial Subsidiaries) for all or a substantial part of its property; or a warrant of attachment, execution or similar process shall have been issued against any substantial part of the property of Holdings or any of its Subsidiaries (other than Immaterial Subsidiaries), and any such event described in this clause (ii) shall continue for sixty (60) days without having been dismissed, bonded or discharged; or (g) Voluntary Bankruptcy; Appointment of Receiver, etc. (i) Holdings or any of its Subsidiaries (other than Immaterial Subsidiaries) shall have an order for relief entered with respect to it or shall commence a voluntary case under the Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or hereafter in effect, or shall consent to the entry of an order for relief in an involuntary case, or to the conversion of an involuntary case to a voluntary case, under any such law, or shall consent to the appointment of or taking possession by a receiver, trustee or other custodian for all or a substantial part of its property; or Holdings or any of its Subsidiaries (other than Immaterial Subsidiaries) shall make any assignment for the benefit of creditors; or (ii) Holdings or any of its Subsidiaries (other than Immaterial Subsidiaries) shall be unable, or shall fail generally, or shall admit in writing its inability, to pay its debts as such debts become due; or the board of directors (or similar governing body) of Holdings or any of its Subsidiaries (other than Immaterial Subsidiaries) (or any committee thereof) shall adopt any resolution or otherwise authorize any action to approve any of the actions referred to herein or in Section 8.1(f); or" SECTION II. CONDITIONS PRECEDENT TO EFFECTIVENESS The effectiveness of the amendments set forth at Section I hereof are subject to the satisfaction, or waiver, of the following conditions on or before the date hereof (the "SECOND AMENDMENT CLOSING DATE"): (a) The Company, Holdings and Requisite Lenders shall have indicated their consent by the execution and delivery of the signature pages hereof to the Agent. (b) Company shall have received net proceeds from the New Company Subordinated Notes of not less than $147,000,000 and such proceeds shall have been applied as contemplated by this Second Amendment. (c) The Agent shall have received a certificate from an officer of the Company stating that as of the Second Amendment Closing Date, the representations and warranties contained in Section III herein and in the other Credit Documents are true, correct and complete in all respects on and as of the Second Amendment Closing Date to the same extent as though made on and as of that date, except to the extent such representations and warranties 14 specifically relate to an earlier date, in which case such representations and warranties are true, correct and complete in all respects on and as of such earlier date. (d) The Agent shall have received a certificate from an officer of the Company stating that as of the Second Amendment Closing Date, no event has occurred and is continuing that would constitute an Event of Default or a Default. (e) The Agent shall have received a certificate from an officer of the Company demonstrating that as of the Second Amendment Closing Date, the ratio of total net debt of the Company (defined as Consolidated Total Debt less Company's Cash on hand as of the Second Amendment Closing Date) to pro forma Consolidated Adjusted EBITDA of the Company for the twelve month period ending September 30, 2001 (which for purposes of this ratio shall be $89,000,000) shall not exceed 3.75:1.00. (f) Company shall have paid all fees and other amounts due and payable on or prior to the Second Amendment Closing Date, including, to the extent invoiced, reimbursement or other payment of all out-of-pocket expenses required to be reimbursed or paid by the Company hereunder or under any other Credit Document. (g) The Agent and Lenders shall have received such other documents and information regarding Credit Parties and the Credit Agreement as the Agents or Lenders may reasonably request. SECTION III. REPRESENTATIONS AND WARRANTIES A. CORPORATE POWER AND AUTHORITY. Each Credit Party has all requisite corporate power and authority to enter into this Second Amendment and to carry out the transactions contemplated by, and perform its obligations under the Credit Agreement and the other Credit Documents. B. AUTHORIZATION OF AGREEMENTS. The execution and delivery of this Second Amendment and the performance of the Credit Agreement and the other Credit Documents have been duly authorized by all necessary corporate or partnership (as applicable) action on the part of each Credit Party. C. NO CONFLICT. The execution and delivery by each Credit Party of this Second Amendment and the performance by each Credit Party of the Credit Agreement and the other Credit Documents do not (i) violate (A) any provision of any law, statute, rule or regulation, or of the certificate or articles of incorporation or partnership agreement, other constitutive documents or by-laws of each Credit Party or any of its Subsidiaries except to the extent such violation could not reasonably be expected to have a Material Adverse Effect, (B) any applicable order of any court or any rule, regulation or order of any Governmental Authority except to the extent such violation could not reasonably be expected to have a Material Adverse Effect or (C) any provision of any indenture, certificate of designation for preferred stock, agreement or other instrument to which each Credit Party or any of its Subsidiaries is a party or by which any 15 of them or any of their property is or may be bound except to the extent such violation could not reasonably be expected to have a Material Adverse Effect, (ii) be in conflict with, result in a breach of or constitute (alone or with notice or lapse of time or both) a default under any such indenture, certificate of designation for preferred stock, agreement or other instrument, where any such conflict, violation, breach or default referred to in clause (i) or (ii) of this Section III.C., individually or in the aggregate could reasonably be expected to have a Material Adverse Effect, (iii) result in or require the creation or imposition of any Lien upon any of the properties or assets of each Credit Party (other than any Liens created under any of the Credit Documents in favor of Collateral Agent on behalf of Lenders), or (iv) require any approval of stockholders or partners or any approval or consent of any Person under any contractual obligation of each Credit Party, except for such approvals or consents which will be obtained on or before the Second Amendment Closing Date. D. GOVERNMENTAL CONSENTS. No action, consent or approval of, registration or filing with or any other action by any Governmental Authority is required in connection with the execution and delivery by each Credit Party of this Second Amendment and the performance by each Credit Party of the Credit Agreement and the other Credit Documents, except for such actions, consents and approvals the failure to obtain or make which could not reasonably be expected to result in a Material Adverse Effect or which have been obtained and are in full force and effect. E. BINDING OBLIGATION. This Second Amendment and the Credit Agreement have been duly executed and delivered by each Credit Party and each constitutes a legal, valid and binding obligation of each Credit Party enforceable against each Credit Party in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, moratorium, reorganization or other similar laws affecting creditors' rights generally and except as enforceability may be limited by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). F. INCORPORATION OF REPRESENTATIONS AND WARRANTIES FROM CREDIT AGREEMENT. The representations and warranties contained in Section 4 of the Credit Agreement are and will be true, correct and complete in all material respects on and as of the Second Amendment Closing Date to the same extent as though made on and as of that date, except to the extent such representations and warranties specifically relate to an earlier date, in which case they were true, correct and complete in all material respects on and as of such earlier date. G. ABSENCE OF DEFAULT. No event has occurred and is continuing or will result from the consummation of the transactions contemplated by this Second Amendment that would constitute an Event of Default or a Default. SECTION IV. ACKNOWLEDGMENT AND CONSENT Each of Holdings and each Domestic Subsidiary of Holdings (other than Company and certain Permitted Partially-Owned Subsidiaries) has (i) guaranteed the Obligations and (ii) created Liens in favor of Lenders on certain Collateral to secure its obligations under the Credit 16 Agreement and the Collateral Documents subject to the terms and provisions of the Credit Agreement. Each of Holdings and each Domestic Subsidiary of Holdings who has guaranteed the Obligations are collectively referred to herein as the "CREDIT SUPPORT PARTIES", and the Credit Agreement and the Collateral Documents are collectively referred to herein as the "CREDIT SUPPORT DOCUMENTS". Each Credit Support Party hereby acknowledges that it has reviewed the terms and provisions of the Credit Agreement and this Second Amendment and consents to the amendment of the Credit Agreement effected pursuant to this Second Amendment. Each Credit Support Party hereby confirms that each Credit Support Document to which it is a party or otherwise bound and all Collateral encumbered thereby will continue to guarantee or secure, as the case may be, to the fullest extent possible in accordance with the Credit Support Documents the payment and performance of all "Obligations" under each of the Credit Support Documents, as the case may be (in each case as such terms are defined in the applicable Credit Support Document), including without limitation the payment and performance of all such "Obligations" under each of the Credit Support Documents, as the case may be, in respect of the Obligations of the Company now or hereafter existing under or in respect of the Credit Agreement and hereby pledges and assigns to the Collateral Agent, and grants to the Collateral Agent a continuing lien on and security interest in and to all Collateral as collateral security for the prompt payment and performance in full when due of the "Obligations" under each of the Credit Support Documents to which it is a party (whether at stated maturity, by acceleration or otherwise). Each Credit Support Party acknowledges and agrees that any of the Credit Support Documents to which it is a party or otherwise bound shall continue in full force and effect and that all of its obligations thereunder shall be valid and enforceable and shall not be impaired or limited by the execution or effectiveness of this Second Amendment. Each Credit Support Party represents and warrants that all representations and warranties contained in the Credit Agreement, this Second Amendment and the Credit Support Documents to which it is a party or otherwise bound are true, correct and complete in all material respects on and as of the Second Amendment Closing Date to the same extent as though made on and as of that date, except to the extent such representations and warranties specifically relate to an earlier date, in which case they were true, correct and complete in all material respects on and as of such earlier date. Each Credit Support Party acknowledges and agrees that (i) notwithstanding the conditions to effectiveness set forth in this Second Amendment, such Credit Support Party is not required by the terms of the Credit Agreement or any other Credit Document to consent to the amendments to the Credit Agreement effected pursuant to this Second Amendment and (ii) nothing in the Credit Agreement, this Second Amendment or any other Credit Document shall be deemed to require the consent of such Credit Support Party to any future amendments to the Credit Agreement. SECTION V. MISCELLANEOUS A. BINDING EFFECT. This Amendment shall be binding upon the parties hereto and their respective successors and assigns and shall inure to the benefit of the parties hereto and 17 the successors and assigns of Lenders. No Credit Party's rights or obligations hereunder or any interest therein may be assigned or delegated by any Credit Party without the prior written consent of all Lenders. B. SEVERABILITY. In case any provision in or obligation hereunder shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby. C. REFERENCE TO CREDIT AGREEMENT. On and after the Second Amendment Closing Date, each reference in the Credit Agreement to "this Agreement", "hereunder", "hereof", "herein" or words of like import referring to the Credit Agreement, and each reference in the other Credit Documents to the "Credit Agreement", "thereunder", "thereof" or words of like import referring to the Credit Agreement shall mean and be a reference to the Credit Agreement as amended by this Amendment. D. EFFECT ON CREDIT AGREEMENT. Except as specifically amended by this Amendment, the Credit Agreement and the other Credit Documents shall remain in full force and effect and are hereby ratified and confirmed. E. EXECUTION. The execution, delivery and performance of this Amendment shall not, except as expressly provided herein, constitute a waiver of any provision of, or operate as a waiver of any right, power or remedy of any Agent or Lender under, the Credit Agreement or any of the other Credit Documents. F. HEADINGS. Section headings herein are included herein for convenience of reference only and shall not constitute a part hereof for any other purpose or be given any substantive effect. G. APPLICABLE LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. H. COUNTERPARTS. This Amendment may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument. As set forth herein, this Amendment shall become effective upon the execution of a counterpart hereof by each of the parties hereto and receipt by Company, Holdings and Administrative Agent and Syndication Agent of written or telephonic notification of such execution and authorization of delivery thereof. [The remainder of this page is intentionally left blank.] 18 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first written above. COMPANY: VICAR OPERATING, INC. By: /s/ Robert L. Antin Name: Robert L. Antin Title: Chief Executive Officer and President By: /s/ Tomas W. Fuller Name: Tomas W. Fuller Title: Chief Financial Officer and Assistant Secretary HOLDINGS: VCA ANTECH, INC. By: /s/ Robert L. Antin Name: Robert L. Antin Title: Chief Executive Officer and President By: /s/ Tomas W. Fuller Name: Tomas W. Fuller Title: Chief Financial Officer and Assistant Secretary GUARANTORS: AAH MERGER CORPORATION ACADEMY ANIMAL, INC. ANDERSON ANIMAL HOSPITAL, INC. ANIMAL EMERGENCY CLINIC, P.C. ANIMAL CLINIC OF SANTA CRUZ, INC. BEAUMONT VETERINARY ASSOCIATES, P.C. BERLA, INC. S-1 CACOOSING ANIMAL HOSPITAL, LTD. CACOOSING PET CARE & NUTRITION CENTER, INC. CLARMAR ANIMAL HOSPITAL, INC. DETWILER VETERINARY CLINIC, INC. DIAGNOSTIC VETERINARY SERVICE, INC. EAGLE PARK ANIMAL CLINIC, INC. EAGLE RIVER VETERINARY HOSPITAL, INC. EDGEBROOK, INC. FLORIDA VETERINARY LABORATORIES, INC. FOX CHAPEL ANIMAL HOSPITAL, INC. FREEHOLD, INC. GLEN ANIMAL HOSPITAL, INC. GOLDEN MERGER CORPORATION H.B. ANIMAL CLINICS, INC. HOWELL BRANCH ANIMAL HOSPITAL, P.A. HIGHLANDS ANIMAL HOSPITAL, , INC. LAKE JACKSON VETERINARY CLINIC, INC. LAKEWOOD ANIMAL HOSPITAL, INC. LAMMERS VETERINARY HOSPITAL, INC. LEWELLING VETERINARY CLINIC, INC. MILLER ANIMAL HOSPITAL M.S. ANIMAL HOSPITALS, INC. NEWARK ANIMAL HOSPITAL, INC. NORTHERN ANIMAL HOSPITAL, INC. NORTH ROCKVILLE VETERINARY HOSPITAL, INC. NORTHSIDE ANIMAL HOSPITAL, P.C. NOYES ANIMAL HOSPITAL, INC. OAK HILL VETERINARY HOSPITAL, INC. OLD TOWN VETERINARY HOSPITAL, INC. PET PRACTICE (MASSACHUSETTS), INC. PETS' RX, INC. PETS' RX NEVADA, INC. PPI OF PENNSYLVANIA, INC. PRINCETON ANIMAL HOSPITAL, INC. PROFESSIONAL VETERINARY SERVICES, INC. RIVIERA ANIMAL HOSPITAL, INC. ROBERTSON BLVD. ANIMAL HOSPITAL, INC. S-2 ROSSMOOR - EL DORADO ANIMAL HOSPITAL, INC. ROSSMOOR CENTER ANIMAL CLINIC, INC. SAN VICENTE ANIMAL CLINIC SILVER SPUR ANIMAL HOSPITAL, INC. SOUTH COUNTY VETERINARY CLINIC, INC. SPANISH RIVER ANIMAL HOSPITAL, INC. TAMPA ANIMAL MEDICAL CENTER, INC. THE PET PRACTICE (FLORIDA), INC. THE PET PRACTICE (ILLINOIS), INC. THE PET PRACTICE (MASSACHUSETTS), INC. THE PET PRACTICE OF MICHIGAN, INC. VCA ALABAMA, INC. VCA ALBANY ANIMAL HOSPITAL, INC. VCA ALBUQUERQUE, INC. VCA ALL PETS ANIMAL COMPLEX, INC. VCA ALPINE ANIMAL HOSPITAL, INC. VCA ANDERSON OF CALIFORNIA ANIMAL HOSPITAL, INC. VCA ANIMAL HOSPITALS, INC. VCA ANIMAL HOSPITAL WEST, INC. VCA APAC ANIMAL HOSPITAL, INC. VCA - ASHER, INC. VCA BAY AREA ANIMAL HOSPITAL, INC. VCA CACOOSING ANIMAL HOSPITAL, INC. VCA CASTLE SHANNON VETERINARY HOSPITAL, INC. VCA CENTERS-TEXAS, INC. VCA CENVET, INC. VCA CLARMAR ANIMAL HOSPITAL, INC. VCA CLINICAL VETERINARY LABS, INC. VCA CLINIPATH LABS, INC. VCA CLOSTER, INC. VCA DETWILER ANIMAL HOSPITAL, INC. VCA DOVER ANIMAL HOSPITAL, INC. VCA EAGLE RIVER ANIMAL HOSPITAL, INC. VCA EAST ANCHORAGE ANIMAL HOSPITAL, INC. VCA GOLDEN COVE ANIMAL HOSPITAL, INC. S-3 VCA GREATER SAVANNAH ANIMAL HOSPITAL, INC. VCA HOWELL BRANCH ANIMAL HOSPITAL, NC. VCA INFORMATION SYSTEMS, INC. VCA KANEOHE ANIMAL HOSPITAL, INC. VCA LAKESIDE ANIMAL HOSPITAL, INC. VCA LAMB AND STEWART ANIMAL HOSPITAL, INC. VCA LAMMERS ANIMAL HOSPITAL, INC. VCA LEWIS ANIMAL HOSPITAL, NC. VCA MARINA ANIMAL HOSPITAL, NC. VCA MILLER ANIMAL HOSPITAL, INC. VCA MISSION, INC. VCA NORTHBORO ANIMAL HOSPITAL, INC. VCA NORTHWEST VETERINARY DIAGNOSTICS, INC. VCA OF COLORADO-ANDERSON, INC. VCA OF NEW YORK, INC. VCA OF SAN JOSE, INC. VCA OF TERESITA, INC. CA PROFESSIONAL ANIMAL LABORATORY, INC. VCA REAL PROPERTY ACQUISITION CORPORATION VCA REFERRAL ASSOCIATES ANIMAL HOSPITAL, INC. VCA ROHRIG ANIMAL HOSPITAL, INC. VCA - ROSSMOOR, INC. VCA SILVER SPUR ANIMAL HOSPITAL, INC. VCA SOUTH SHORE ANIMAL HOSPITAL, INC. SPECIALTY PET PRODUCTS, INC. VCA SQUIRE ANIMAL HOSPITAL, INC. VCA ST. PETERSBURG ANIMAL HOSPITAL, INC. VCA TEXAS MANAGEMENT, INC. VCA WYOMING ANIMAL HOSPITAL, INC. VETERINARY HOSPITALS, INC. WEST LOS ANGELES VETERINARY MEDICAL GROUP, INC. WESTWOOD DOG & CAT HOSPITAL W.E. ZUSCHLAG, D.V.M., WORTH ANIMAL HOSPITAL, CHARTERED S-4 WILLIAM C. FOUTS, D.V.M., LTD. WINGATE, INC. By: /s/ Robert L. Antin Name: Robert L. Antin Title: Chief Executive Officer and President By: /s/ Tomas W. Fuller Name: Tomas W. Fuller Title: Chief Financial Officer and Assistant Secretary VCA VILLA ANIMAL HOSPITAL, L.P. By: VCA Animal Hospitals, Inc., General Partner By: /s/ Robert L. Antin Name: Robert L. Antin Title: Chief Executive Officer and President By: /s/ Tomas W. Fuller Name: Tomas W. Fuller Title: Chief Financial Officer and Assistant Secretary VETERINARY CENTERS OF AMERICA-TEXAS, L.P. By: VCA Centers-Texas, Inc., General Partner By: /s/ Robert L. Antin Name: Robert L. Antin Title: Chief Executive Officer and President By: /s/ Tomas W. Fuller Name: Tomas W. Fuller Title: Chief Financial Officer and Assistant Secretary S-5 ANIMAL CENTER, INC. By: /s/ Robert L. Antin Name: Title: ASSOCIATES IN PET CARE, S.C. By: /s/ Robert L. Antin Name: Title: KIRKWOOD ANIMAL HOSPITAL - LEA M.E. TAMMI, V.M.D., P.A. By: /s/ Robert L. Antin Name: Title: MAIN STREET SMALL ANIMAL HOSPITAL, INC. By: /s/ Robert L. Antin Name: Title: SOUTHEAST AREA VETERINARY MEDICAL CENTER, P.C. By: /s/ Robert L. Antin Name: Title: S-6 VCA ASSOCIATE ANIMAL HOSPITAL, L.P. By: /s/ Robert L. Antin Name: Title: VCA HERITAGE ANIMAL HOSPITAL, L.P. By: /s/ Robert L. Antin Name: Title: TOMS RIVER VETERINARY HOSPITAL, P.A. By: /s/ Robert L. Antin Name: Title: S-7 SOLE SYNDICATION AGENT, SOLE LEAD ARRANGER, AND A LENDER: GOLDMAN SACHS CREDIT PARTNERS L.P., By: /s/ Authorized Signatory S-8 ADMINISTRATIVE AGENT, COLLATERAL AGENT AND A LENDER: WELLS FARGO BANK, N.A. By: /s/ Michael St. Geme Name: Michael St. Geme Title: Vice President S-9 EX-23.1 10 v80091ex23-1.txt EXHIBIT 23.1 EXHIBIT 23 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to incorporation of our report included in this Form 10-K, into the Company's previously filed Registration Statement on Form S-8 (File No. 333-81614). Arthur Andersen LLP Los Angeles, California March ___, 2002 EX-99.1 11 v80091ex99-1.txt EXHIBIT 99.1 Exhibit 99.1 VCA Antech, Inc. 12401 West Olympic Boulevard Los Angeles, CA 90064 March 26, 2002 Jonathan G. Katz Secretary U.S. Securities and Exchange Commission Judiciary Plaza 450 5th Street, N.W. Washington, D.C. 20549 Re: Confirmation of Receipt of Assurances from Arthur Andersen LLP Dear Mr. Katz: Arthur Andersen LLP has audited the consolidated financial statements of VCA Antech, Inc. (the Company) as of December 31, 2001 and for the year then ended and has issued its report thereon dated February 21, 2002. Please be advised that Arthur Andersen LLP has represented to the Company that the audit was subject to its quality control system for the U.S. accounting and auditing practice to provide reasonable assurance that the engagement was conducted in compliance with professional standards and that there was appropriate continuity of Arthur Andersen LLP personnel working on the audit and availability of national office consultation. The availability of personnel at foreign affiliates of Arthur Andersen LLP to conduct relevant portions of the audit was not applicable to this audit. Please do not hesitate to contact me if you have questions regarding this matter. Respectfully submitted, /s/ TOMAS W. FULLER - --------------------- Tomas W. Fuller Vice President and Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----

EX-3.1

                                                                     EXHIBIT 3.1


                              AMENDED AND RESTATED
                          CERTIFICATE OF INCORPORATION
                                       OF
                                VCA ANTECH, INC.

        VCA Antech, Inc., a corporation organized and existing under the General
Corporation Law of the State of Delaware, does hereby certify:

1. The name of the corporation is VCA Antech, Inc. (the "Corporation"). The
Corporation was originally incorporated under the name Veterinary Centers of
America, Inc., and the original Certificate of Incorporation of the Corporation
was filed with the Secretary of State of the State of Delaware on May 4, 1987.

2. In accordance with Sections 141(f), 228(a), 242 and 245 of the General
Corporation Law of the State of Delaware, the Board of Directors and the
Stockholders of the Corporation by written consent dated November 16, 2001, duly
adopted and approved resolutions amending and restating the Corporation's
Certificate of Incorporation, declaring such amendment and restatement
advisable.

3. This Amended and Restated Certificate of Incorporation of the Corporation
restates and integrates and further amends the provisions of the Certificate of
Incorporation of the Corporation. The text of the Certificate of Incorporation
as heretofore amended or supplemented is hereby amended and restated to read in
its entirety as follows:

FIRST: The name of this corporation is VCA Antech, Inc. (the "Corporation").

SECOND: The address of the registered office of the Corporation in the State of
Delaware is 1209 Orange Street, City of Wilmington, County of New Castle. The
name of its registered agent at such address is The Corporation Trust Company.

THIRD: The purpose of the Corporation is to engage in any lawful act or activity
for which a corporation may now or hereafter be organized under the General
Corporation Law of the State of Delaware as set forth in Title 8 to the Delaware
Code (the "GCL").

FOURTH: The Corporation is authorized to issue two classes of shares, designated
"Preferred Stock" and "Common Stock." The total number of shares which the
Corporation shall have authority to issue is 86,000,000 of which 75,000,000
shares shall be Common Stock, par value $0.00l per share, and 11,000,000 shares
shall be Preferred Stock, par value $0.001 per share.



                                       1



                                 I. Common Stock

        Each holder of Common Stock, as such, shall be entitled to one vote for
each share of Common Stock held of record by such holder on all matters on which
stockholders generally are entitled to vote; provided, however, that, except as
otherwise required by law, holders of Common Stock, as such, shall not be
entitled to vote on any amendment to this Amended and Restated Certificate of
Incorporation (including any Certificate of Designation relating to any series
of Preferred Stock) that relates solely to the terms of one or more outstanding
series of Preferred Stock if the holders of such affected series are entitled,
either separately or together with the holders of one or more other such series,
to vote thereon pursuant to this Amended and Restated Certificate of
Incorporation (including any Certificate of Designation relating to any series
of Preferred Stock) or pursuant to the GCL.

        In the event of any voluntary or involuntary liquidation, dissolution,
or winding up of the affairs of the Corporation, after payment or provision for
payment of the debts and other liabilities of the Corporation and of the
preferential amounts, if any, to which the holders of Preferred Stock shall be
entitled, the holders of all outstanding shares of Common Stock shall be
entitled to share ratably in the remaining net assets of the Corporation.

        Subject to the preferential rights, if any, of the Preferred Stock, the
holders of shares of Common Stock shall be entitled to receive, when and if
declared by the Board of Directors of the Corporation, out of the assets of the
Corporation which are by law available therefore, dividends payable either in
cash, in property, or in shares of Common Stock.

                               II. Preferred Stock

        Shares of Preferred Stock authorized by this Amended and Restated
Certificate of Incorporation may be issued from time to time in one or more
series. For any wholly unissued series of Preferred Stock, the Board of
Directors of the Corporation (the "Board of Directors") is authorized to fix or
alter the rights, preferences, powers, privileges and qualifications,
limitations or restrictions granted to or imposed upon wholly unissued series of
Preferred Stock, and the number of shares constituting any such series and the
designation thereof, or any of them.

        For any series of Preferred Stock having issued and outstanding shares,
the Board of Directors is also authorized to increase (but not above the total
number of authorized shares of the class) or decrease (but not below the number
of shares thereof then outstanding) the number of shares of any series of
Preferred Stock prior or subsequent to the issuance of that series. In case the
number of shares of any series shall be decreased in accordance with the
foregoing sentence, the shares constituting such decrease shall resume the
status of undesignated Preferred Stock.

A.  Series A Senior Preferred Stock

        The 14% Series A Senior Redeemable Exchangeable Cumulative Preferred
Stock (the "Senior Preferred Stock"), par value $0.001 per share, consists of
3,000,000 authorized shares



                                       2


and has the powers, designations and preferences, the relative, participating,
optional and other special rights and the qualifications, limitations and
restrictions thereof as follows:

1. Definitions and Interpretation.

               (a) Definitions. As used in this Section II.A of Article Four of
this Amended and Restated Certificate of Incorporation, the following terms
shall have the following meanings, unless the context otherwise requires:

        "Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person.

        "Amended and Restated Certificate of Incorporation" means the
Corporation's Amended and Restated Certificate of Incorporation.

        "Bank Facility" means the one or more credit agreements (including,
without limitation, the Credit Agreement, dated as of September 20, 2000, by and
among Operating Company, as borrower, the Corporation, certain subsidiaries of
the Operating Company, as guarantors, the financial institutions parties
thereto, Goldman Sachs Credit Partners L.P., as sole lead arranger and sole
syndication agent, and Wells Fargo Bank, N.A., as administrative agent and
collateral agent) entered into by and among Operating Company, certain of its
subsidiaries (if any) and certain financial institutions, which provide for in
the aggregate one or more term loans and/or revolving credit and letter of
credit facilities, including any related notes, guarantees, collateral
documents, instruments and agreements executed in connection therewith, as such
credit agreement and/or related documents may be amended, restated,
supplemented, renewed, replaced or otherwise modified from time to time whether
or not with the same agent, trustee, representative lenders or holders, and,
subject to the proviso to the next succeeding sentence irrespective of any
changes in the terms and conditions thereof. Without limiting the generality of
the foregoing, the term "Bank Facility" shall include any amendment, amendment
and restatement, renewal, extension, restructuring, supplement or modification
to any such credit agreement and all refundings, refinancings and replacements
of any such credit agreement, including any agreement (i) extending the maturity
of any Indebtedness incurred thereunder or contemplated thereby, (ii) adding or
deleting borrowers or guarantors thereunder; provided, however, that the
borrowers and issuers include one or more of the Corporation and its
Subsidiaries and their respective successors and assigns, (iii) increasing the
amount of Indebtedness incurred thereunder or available to be borrowed
thereunder, or (iv) otherwise altering the terms and conditions thereof in a
manner not prohibited by the terms hereof.

        "Beneficial Owner" or "beneficial owner" for purposes of the definition
of Change of Control and Affiliate has the meaning attributed to it in Rules
13d-3 and 13d-5 under the Exchange Act (as in effect on the Preferred Stock
Issue Date), whether or not applicable.

        "Board of Directors" means the Board of Directors of the Corporation.

        "Business Day" means any day that is not a Saturday, a Sunday or a day
on which banking institutions in the Corporation's principal place of business,
the City of New York or at a place of payment are not required to be open.


                                       3


        "Capital Stock" means, with respect to any corporation, any and all
shares, interests, rights to purchase (other than convertible or exchangeable
Indebtedness that is not itself otherwise capital stock), warrants, options,
participations or other equivalents of or interests (however designated) in
stock issued by that corporation.

        "Capitalized Lease Obligation" means, as to any Person, the obligations
of such Person under a lease that are required to be classified and accounted
for as capital lease obligations under GAAP and, for purposes of this
definition, the amount of such obligations at any date shall be the capitalized
amount of such obligations at such date, determined in accordance with GAAP.

        "Cash Equivalent" means, as at any date of determination, (i) marketable
securities (a) issued or directly and unconditionally guaranteed as to interest
and principal by the United States Government or (b) issued by any agency of the
United States the obligations of which are backed by the full faith and credit
of the United States, in each case maturing within one year after such date;
(ii) marketable direct obligations issued by any state of the United States or
any political subdivision of any such state or any public instrumentality
thereof, in each case maturing within one year after such date and having, at
the time of the acquisition thereof, the highest rating obtainable from either
Standard & Poor's Ratings Group ("S&P") or Moody's Investors Service, Inc.
("Moody's"); (iii) commercial paper maturing no more than one year from the date
of creation thereof and having, at the time of the acquisition thereof, a rating
of at least A-1 from S&P or at least P-1 from Moody's; (iv) certificates of
deposit or bankers' acceptances maturing within one year after such date and
issued or accepted by any commercial bank organized under the laws of the United
States or any state thereof or the District of Columbia that (a) is at least
"adequately capitalized" (as defined in the regulations of its primary Federal
banking regulator) and (b) has Tier 1 capital (as defined in such regulations)
of not less than $100,000,000; and (v) shares of any money market mutual fund
that (a) has at least 95% of its assets invested continuously in the types of
investments referred to in clauses (i) and (ii) above, (b) has net assets of not
less than $500,000,000, and (c) has the highest rating obtainable from either
S&P or Moody's.

        "Certificate of Designation " means the Corporation's Certificate of
Designation dated as of September 20, 2000.

        "Change of Control" means the occurrence of any of the following: (i)
the sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or more related transactions, of all or
substantially all of the properties and assets of the Corporation and its
Subsidiaries taken as a whole to any "person" (as such term is used in Section
13(d)(3) of the Exchange Act), other than an Excluded Person or Excluded
Persons, (ii) the adoption of a plan relating to the liquidation or dissolution
of the Corporation, (iii) the consummation of any transaction or other event
(including, without limitation, any merger or consolidation) the result of which
is that any "person" (as defined above), other than an Excluded Person or
Excluded Persons, becomes the "beneficial owner" (as such term is defined in
Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, of
more than 50% of the voting stock of the Corporation, or (iv) the first day on
which a majority of the members of the Board of Directors are not Continuing
Directors. Notwithstanding the foregoing, under no circumstances shall transfers
among Green Equity Investors III, L.P. and the Co-Investors and




                                       4


their respective Affiliates or distributions to limited partners of Green Equity
Investors III, L.P. or to the members of the Co-Investors be deemed a Change of
Control.

        "Co-Investors" means VCA Co-Investment Fund I, LLC, VCA Co-Investment
Fund II, LLC, VCA Co-Investment Fund III, LLC, VCA Co-Investment Fund IV, LLC,
VCA Co-Investment Fund V, LLC, VCA Co-Investment Fund VI, LLC, VCA Co-Investment
Fund VII, LLC and VCA Co-Investment Fund VIII.

        "Company Purchase Agreement" means that certain Purchase Agreement,
dated as of September 20, 2000, by and among the Corporation, GS Mezzanine
Partners II, L.P and Permitted Investors relating to the Company Senior Notes.

        "Company Senior Notes" means the senior notes due 2010, any Exchange
Notes (as defined in the Company Purchase Agreement) and any PIK Notes (as
defined in the Company Senior Notes Indenture), including any such notes issued
in exchange or replacement therefor, issued pursuant to the Company Senior Notes
Indenture.

        "Company Senior Notes Indenture" means that certain Indenture, dated as
of September 20, 2000, by and between the Corporation and Chase Manhattan Bank
and Trust Company, National Association, as trustee, pursuant to which the
Company Senior Notes are issued.

        "Consolidated" means, with respect to the Corporation, the consolidated
accounts of its Subsidiaries with those of the Corporation, all in accordance
with GAAP; provided, however, that "consolidated" will not include consolidation
of the accounts of any Unrestricted Subsidiary with the accounts of the
Corporation.

        "Consolidated EBITDA" means, with respect to any Person, for any period,
the Consolidated Net Income of such Person and its Consolidated Subsidiaries for
such period adjusted to add thereto (to the extent deducted from net revenues in
determining Consolidated Net Income), without duplication, the sum of (i) an
amount equal to any extraordinary or non-recurring loss plus any net loss
realized in connection with the sale or other disposition of assets outside the
ordinary course of business, the disposition of any securities by such Person or
any of its Subsidiaries or the extinguishment of any Indebtedness by such Person
or its Subsidiaries, (ii) consolidated income taxes, (iii) consolidated
depreciation and amortization (including amortization of debt issuance costs in
connection with any Indebtedness of such Person and its Subsidiaries), (iv)
Consolidated Fixed Charges; (v) payments pursuant to the Management Services
Agreement (or the corresponding provisions of any agreement amending, extending
or replacing the Management Services Agreement); and (vi) all other non-cash
charges.

        "Consolidated Fixed Charges" of any Person means, for any period, the
aggregate amount (without duplication and determined in each case in accordance
with GAAP) of (a) interest expensed or capitalized, paid, accrued, or scheduled
to be paid or accrued (including, in accordance with the following sentence,
interest attributable to Capitalized Lease Obligations) of such Person and its
Consolidated Subsidiaries during such period, excluding amortization of debt
issuance costs incurred in connection with the Senior Notes or the Bank Facility
but including (i) original issue discount and non-cash interest payments or
accruals on any Indebtedness, (ii) the interest portion of all deferred payment
obligations, and (iii) all commissions, discounts and



                                       5


other fees and charges owed with respect to bankers' acceptances and letters of
credit financings and currency and Interest Swap and Hedging Obligations (and
minus net amounts received under Hedging Obligations), in each case to the
extent attributable to such period, and (b) the amount of cash dividends paid by
such Person or any of its Consolidated Subsidiaries in respect of preferred
stock (other than by Subsidiaries of such Person to such Person or such Person's
wholly owned Subsidiaries). For purposes of this definition, (x) interest on a
Capitalized Lease Obligation shall be deemed to accrue at an interest rate
reasonably determined by the Corporation to be the rate of interest implicit in
such Capitalized Lease Obligation in accordance with GAAP and (y) to the extent
such expense would result in a liability upon the consolidated balance sheet of
such Person in accordance with GAAP, interest expense attributable to any
Indebtedness represented by the guaranty by such Person or a Subsidiary of such
Person of an obligation of another Person shall be deemed to be the interest
expense attributable to the Indebtedness guaranteed. Notwithstanding the
foregoing, Consolidated Fixed Charges shall not include costs, fees and expenses
incurred in connection with the Merger, and any non-cash charge or expense
associated with the write-off of deferred debt issuance costs associated with
the Bank Facility or the Senior Notes.

        "Consolidated Net Income" means, with respect to any specified Person
for any period, the aggregate of the Net Income of such Person and its
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided, however, that (a) the Net Income (but not loss) of any
Person that is not a Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the specified Person or one of its wholly owned
Subsidiaries, (b) the Net Income of any Subsidiary shall be excluded to the
extent that the declaration or payment of dividends or similar distributions by
that Subsidiary of that Net Income is not at the date of determination permitted
without any prior governmental approval (that has not been obtained) or,
directly or indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree or order, or any non-U.S. statute, rule
or governmental regulation applicable to that Subsidiary or its stockholders,
(c) the Net Income of any Person acquired in a pooling of interests transaction
for any period prior to the date of such acquisition shall be excluded, (d) the
cumulative effect of a change in accounting principles shall be excluded, and
(e) the costs, fees and expenses incurred in connection with the transactions
contemplated by the Merger Agreement shall be excluded, including (i) any charge
incurred by any Person or its Subsidiaries arising out of the repurchase at $15
per share on the closing date of the Merger of restricted capital stock of such
Person or its Subsidiaries held by certain employees of such Person or its
Subsidiaries, (ii) any financing, legal, accounting, investment banking or other
professional fees and expenses incurred in connection with the Merger, (iii) any
other costs and expenses incurred by any Person and its Subsidiaries in
connection with the Merger arising pursuant to certain noncompetition agreements
executed with members of senior management of such Person, in connection with
the termination of certain employment contracts of such Person and its
Subsidiaries and in connection with stay bonuses provided to certain employees
of such Person and its Subsidiaries, and (iv) premium payments payable to
certain note holders of such Person.

        "Continuing Directors" means, as of any date of determination, any
member of the Board of Directors who (i) was a member of the Board of Directors
immediately after consummation of the Merger or (ii) was nominated for election
or elected to the Board of Directors with the



                                       6


approval, recommendation or endorsement of a majority of the Continuing
Directors who were members of the Board of Directors at the time of such
nomination or election.

        "Control" means (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with"), as used with
respect to any Person, the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
directly or through one or more intermediaries, whether through the ownership of
voting securities, by contract, or otherwise; provided, however, that, with
respect to any ownership interest in the Corporation and its Subsidiaries, a
Beneficial Owner of 10% or more of the total voting power normally entitled to
vote in the election of directors, managers or trustees, as applicable, shall
for such purposes be deemed to constitute control.

        "Default Event" means any of the following events: (i) any time when the
Corporation fails to make a mandatory redemption of the Senior Preferred Stock
when required (whether or not any contractual or other restrictions apply to
such redemption) pursuant to Section 5(b) hereof; or (ii) any time when the
Corporation fails to make an offer to repurchase all of the outstanding shares
of Senior Preferred Stock following a Change of Control, if such offer to
repurchase is required to be made pursuant to Section 8(a) hereof (whether or
not any contractual or other restrictions apply to such redemption).

        "Disqualified Capital Stock" means (a) except as set forth in (b), with
respect to any Person, any Equity Interest of such Person that, by its terms or
by the terms of any security into which it is convertible, exercisable or
exchangeable, is, or upon the happening of an event or the passage of time or
both would be, required to be redeemed or repurchased (including at the option
of the holder thereof) by such Person or any of its Subsidiaries, in whole or in
part, on or prior to September 20, 2012 and (b) with respect to any Subsidiary
of such Person (including with respect to any Subsidiary of the Corporation),
any Equity Interests other than any common equity with no preference,
privileges, or redemption or repayment provisions and preferred equity owned by
the Corporation or one of its Subsidiaries.

        "Dividend Payment Date" means January 1, April 1, July 1 and October 1
of each year.

        "Dividend Period" means the Initial Dividend Period and, thereafter,
each Quarterly Dividend Period.

        "Equity Interest" of any Person means any shares, interests,
participations or other equivalents (however designated) in such Person's
equity, and shall in any event include any Capital Stock issued by, or
partnership or membership interests in, such Person.

        "Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.

        "Exchange Date" means a date on which shares of Senior Preferred Stock
are exchanged by the Corporation for Exchange Debentures.

        "Exchange Debentures" means the 14% Subordinated Debentures due 2012 of
the Corporation to be issued at the option of the Corporation in exchange for
the Senior Preferred Stock.


                                       7


        "Exchange Indenture" means the Indenture pursuant to which the Exchange
Debentures will be issued.

        "Excluded Persons" means (i) Green Equity Investors III, L.P., (ii) the
Co-Investors, and (iii) their Related Parties.

        "GAAP" means United States generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession in the United States as in effect on the Preferred Stock
Issue Date.

        "Holder" means a Person in whose name a share of Senior Preferred Stock
is registered.

        "Indebtedness" of any Person means, without duplication, (a) all
liabilities and obligations, contingent or otherwise, of any such Person, to the
extent such liabilities and obligations would appear as a liability upon the
consolidated balance sheet of such Person in accordance with GAAP, (i) in
respect of borrowed money (whether or not the recourse of the lender is to the
whole of the assets of such Person or only to a portion thereof), (ii) evidenced
by bonds, notes, debentures or similar instruments, (iii) representing the
balance deferred and unpaid of the purchase price of any property or services,
except those incurred in the ordinary course of its business that would
constitute ordinarily a trade payable to trade creditors; (b) all liabilities
and obligations, contingent or otherwise, of such Person (i) evidenced by
bankers' acceptances or similar instruments issued or accepted by banks, (ii)
relating to any Capitalized Lease Obligation, or (iii) evidenced by a letter of
credit or a reimbursement obligation of such Person with respect to any letter
of credit; (c) all net obligations of such Person under Interest Swap and
Hedging Obligations; (d) all liabilities and obligations of others of the kind
described in the preceding clauses (a), (b) or (c) that such Person has
guaranteed or that is otherwise its legal liability or that are secured by one
or more Liens on any assets or property of such Person; provided, however, that
if the liabilities or obligations that are secured by a Lien have not been
assumed in full by such Person or are not such Person's legal liability in full,
the amount of such Indebtedness for the purposes of this definition shall be
limited to the lesser of the amount of such Indebtedness secured by such Lien or
the fair market value of the assets or property securing such Lien; (e) any and
all deferrals, renewals, extensions, refinancing and refundings (whether direct
or indirect) of, or amendments, modifications or supplements to, any liability
of the kind described in any of the preceding clauses (a), (b), (c) or (d), or
this clause (e), whether or not between or among the same parties; and (f) all
Disqualified Capital Stock of such Person (measured at the greater of its
voluntary or involuntary maximum fixed repurchase price plus accrued and unpaid
dividends). For purposes hereof, the "maximum fixed repurchase price" of any
Disqualified Capital Stock that does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Disqualified Capital Stock.

        "Indentures" means the Company Senior Notes Indenture and the Senior
Subordinated Notes Indenture.


                                       8


        "Initial Dividend Period" means the dividend period commencing on the
Preferred Stock Issue Date and ending on the day before the first Dividend
Payment Date to occur thereafter.

        "Interest Swap and Hedging Obligation" means any obligation of any
Person pursuant to any interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate exchange agreement,
currency exchange agreement or any other agreement or arrangement designed to
protect against fluctuations in interest rates or currency values, including,
without limitation, any arrangement whereby, directly or indirectly, such Person
is entitled to receive from time to time periodic payments calculated by
applying either a fixed or floating rate of interest on a stated notional amount
in exchange for periodic payments made by such Person calculated by applying a
fixed or floating rate of interest on the same notional amount.

        "Investment" by any Person in any other Person means (without
duplication) (a) the acquisition (whether by purchase, merger, consolidation or
otherwise) by such Person (whether for cash, property, services, securities or
otherwise) of capital stock, bonds, notes, debentures, partnership or other
ownership interests or other securities, including any options or warrants, of
such other Person or any agreement to make any such acquisition; (b) the making
by such Person of any deposit with, or advance, loan or other extension of
credit to, such other Person (including the purchase of property from another
Person subject to an understanding or agreement, contingent or otherwise, to
resell such property to such other Person) or any commitment to make any such
advance, loan or extension (but excluding accounts receivable, endorsements for
collection or deposits arising in the ordinary course of business) other than
guarantees of Indebtedness of the Corporation or any Subsidiary; (c) the making
of any capital contribution by such Person to such other Person; and (d) the
designation by the Board of Directors of the Corporation of any Person to be an
Unrestricted Subsidiary. The Corporation shall be deemed to make an Investment
in an amount equal to the fair market value of the net assets of any subsidiary
(or, if neither the Corporation nor any of its Subsidiaries has theretofore made
an Investment in such subsidiary, in an amount equal to the Investments being
made), at the time that such subsidiary is designated an Unrestricted
Subsidiary, and any property transferred to an Unrestricted Subsidiary from the
Corporation or a Subsidiary of the Corporation shall be deemed an Investment
valued at its fair market value at the time of such transfer. The amount of any
such Investment shall be reduced by any liabilities or obligations of the
Corporation or any of its Subsidiaries to be assumed or discharged in connection
with such Investment by an entity other than the Corporation or any of its
Subsidiaries. For purposes of clarification and greater certainty, the
designation of a newly formed subsidiary as an Unrestricted Subsidiary shall not
constitute an Investment.

        "Junior Preferred Stock" means the Corporation's 12% Series B Junior
Redeemable Cumulative Preferred Stock, par value $0.001 per share, consisting of
3,000,000 authorized shares.

        "Lien" means any mortgage, charge, pledge, lien (statutory or
otherwise), privilege, security interest, hypothecation or other encumbrance
upon or with respect to any property of any kind, real or personal, movable or
immovable, now owned or hereafter acquired.




                                       9


        "Liquidation Preference" means, as of any date, the sum of (a) $25.00
per share of Senior Preferred Stock, plus (b) accrued and unpaid dividends added
to the Liquidation Preference in accordance with Section 3(a), minus (c) the
Base Amount of any special dividend paid pursuant to Section 3(f).

        "Management Services Agreement" means that certain Management Services
Agreement, dated as of the September 20, 2000, by and between Leonard Green &
Partners, L.P., Operating Company and the Corporation, providing for certain
fees, expenses and reimbursements to be paid to Leonard Green & Partners, L.P.,
as such Management Services Agreement may be amended from time to time.

        "Merger" means the merger of Recap with and into the Corporation in
accordance with the provisions of the Merger Agreement.

        "Merger Agreement" means that certain Amended and Restated Agreement and
Plan of Merger, dated as of August 11, 2000, between the Corporation, Operating
Company and Recap, as the same may be further amended from time to time.

        "Net Cash Proceeds" means the aggregate amount of cash or Cash
Equivalents received by the Corporation in the case of a sale of Qualified
Capital Stock plus, in the case of an issuance of Qualified Capital Stock upon
any exercise, exchange or conversion of securities (including options, warrants,
rights and convertible or exchangeable debt) of the Corporation that were issued
for cash on or after the Preferred Stock Issue Date, the amount of cash
originally received by the Corporation upon the issuance of such securities
(including options, warrants, rights and convertible or exchangeable debt) less
the sum of all payments, fees, commissions and expenses (including, without
limitation, the fees and expenses of legal counsel and investment banking fees
and expenses) incurred in connection with such sale or issuance of Qualified
Capital Stock.

        "Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with the (A) sale or other disposition of assets
outside the ordinary course of business, or (B) disposition of any securities by
such Person or any of its Subsidiaries or the extinguishment of any Indebtedness
of such Person or any of its Subsidiaries, (ii) any extraordinary or
nonrecurring gain (but not loss), together with any related provision for taxes
on such extraordinary or nonrecurring gain (but not loss), and (iii) any
non-cash compensation expense of such Person attributable to the exercise of
options to acquire Capital Stock of the Corporation by any officers, directors
or employees of the Corporation or any of its Subsidiaries in each case prior
to, or in connection with, the consummation of the Merger.

        "Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.

        "Operating Company" means Vicar Operating, Inc., a Delaware corporation.


                                       10


        "Other Permitted Payments" means, without duplication, (i) compensation,
indemnification and other benefits paid or made available (A) pursuant to the
employment agreements between the Corporation and members of its senior
management, (B) for or in connection with services actually rendered to the
Corporation and comparable to those generally paid or made available by entities
engaged in the same or similar businesses (including reimbursement or
advancement of reasonable out-of-pocket expenses) and loans to officers,
directors and employees, (x) in the ordinary course of business or (y) to
purchase common stock of the Corporation in an amount not to exceed $10 million;
(ii) payments pursuant to the Management Services Agreement (or the
corresponding provisions of any agreement amending, extending or replacing the
Management Services Agreement); (iii) the repurchase of common stock, stock
options and stock equivalents of the Corporation held by current or former
directors, officers, employees of or consultants and advisors to the Corporation
or any of its Subsidiaries ("Management Stock Repurchases") in an amount of $5
million at the end of fiscal year 2000, and such amount shall be increased by $1
million a year for each fiscal year thereafter, plus the amount of any net cash
proceeds to the Corporation from: (A) sales of Capital Stock of the Corporation
to directors, officers and employees of or consultants and advisors to the
Corporation subsequent to the Preferred Stock Issue Date; and (B) proceeds from
any key-person life insurance policies, in either case, to the extent utilized
for Management Stock Repurchases; provided, however, that any amount received
from such life insurance not so paid in any fiscal year may be paid in future
fiscal years; (iv) Restricted Payments in an aggregate amount not to exceed $10
million; and (v) expenses and payments in connection with the Merger.

        "Permitted Investment" means (a) Investments in any of the Senior Notes;
(b) Investments in Cash Equivalents; (c) Investments in intercompany notes;
provided, however, that Indebtedness under any such notes of a Subsidiary shall
be deemed to be a Restricted Investment if such Person ceases to be a
Subsidiary; (d) Investments in the form of promissory notes of members of the
Corporation's management not to exceed $5 million in principal amount at any
time outstanding solely in consideration of the purchase by such persons of
Qualified Capital Stock of the Corporation; (e) Investments by the Corporation
or any Subsidiary in any Person that is or immediately after such Investment
becomes a Subsidiary, or immediately after such Investment merges or
consolidates into the Corporation or any Subsidiary; provided, however, that
such Person is engaged in all material respects in a Related Business; (f)
Investments in the Corporation by any Subsidiary; provided, however, that in the
case of Indebtedness constituting any such Investment, such Indebtedness shall
be unsecured and subordinated in all respects to the Corporation's obligations
under the Senior Notes; (g) Investments in securities of trade creditors or
customers received in settlement of obligations that arose in the ordinary
course of business or pursuant to any plan of reorganization or similar
arrangement upon the bankruptcy or insolvency of such trade creditors or
customers; (h) Investments by the Corporation outstanding on the Preferred Stock
Issue Date; (i) transactions or arrangements with officers or directors of the
Corporation or any Subsidiary entered into in the ordinary course of business;
(j) any other contract, agreement, arrangement or transaction between the
Corporation or any of its Subsidiaries with any Affiliate; (k) other Investments
in any Person (other than a Subsidiary of the Corporation) having an aggregate
fair market value (measured on the date each such Investment was made and
without giving effect to subsequent changes in value), when taken together with
all other Investments made pursuant to this clause (k) that are at the time
outstanding, not to exceed $10 million; (l) Investments in Subsidiaries of the
Corporation formed or acquired after the Closing Date that (i) are incorporated
outside the United States, (ii) are not



                                       11


guarantors under the Senior Subordinated Notes Indenture, and (iii) if they were
guarantors, would give rise to an investment in United States property within
the meaning of Section 956 of the Internal Revenue Code of 1986, as amended from
time to time, which Investments shall not exceed in the aggregate more than $10
million outstanding at any time (treating any such Investment that is not
Indebtedness at the value thereof on the date it is made); and (m) Investments
in Equity Interests of a Person engaged in a Related Business, other than a
Person described in clause (e), through the issuance of common stock of the
Corporation.

        "Permitted Investors" means any of the affiliated investment funds of GS
Mezzanine Partners II, L.P., GS Mezzanine Partners II Offshore, L.P., TCW
Leveraged Income Trust, L.P., TCW Leveraged Income Trust II, L.P., TCW Leveraged
Income Trust IV, L.P., TCW/Crescent Mezzanine Partners II, L.P., TCW/Crescent
Mezzanine Trust II and The Northwestern Mutual Life Insurance Company.

        "Person" means any individual, corporation, partnership, joint venture,
association, limited liability company, joint-stock company, trust,
unincorporated organization or government or agency or political subdivision
thereof (including any subdivision or ongoing business of any such entity or
substantially all of the assets of any such entity, subdivision or business).

        "Preferred Stock Issue Date" means the date on which the Senior
Preferred Stock is originally issued by the Corporation under the Certificate of
Designation.

        "Qualified Capital Stock" means any Equity Interest that is not
Disqualified Capital Stock.

        "Qualified Exchange" means any legal defeasance, redemption, retirement,
repurchase or other acquisition of Capital Stock or Indebtedness of the
Corporation issued on or after the Preferred Stock Issue Date with the Net Cash
Proceeds received by the Corporation from the substantially concurrent sale of
its Qualified Capital Stock or any exchange of Qualified Capital Stock of the
Corporation for any Capital Stock or Indebtedness of the Corporation issued on
or after the Issue Date.

        "Quarterly Dividend Period" means the quarterly period commencing on
each January 1, April 1, July 1 and October 1 and ending on the day before the
following Dividend Payment Date.

        "Recap" means Vicar Recap, Inc., a Delaware corporation.

        "Redemption Date," with respect to any shares of Senior Preferred Stock,
means the date on which such shares of Senior Preferred Stock are redeemed by
the Corporation.

        "Related Business" means the business conducted or proposed to be
conducted by the Corporation as of the Preferred Stock Issue Date and any and
all businesses that in the good faith judgment of the Board of Directors of the
Corporation are reasonably related businesses, including reasonably related
extensions thereof.

        "Related Party" means with respect to any Excluded Person, (A) any
Affiliate, controlling stockholder, 80% or more owned Subsidiary, or spouse or
immediate family member



                                       12


(in the case of an individual) of such Excluded Person or (B) any trust,
corporation, partnership or other entity, the beneficiaries, stockholders,
partners, owners or persons holding an 80% or more controlling interest of which
consist of such Excluded Person and/or such other persons referred to in the
immediately preceding clause (A).

        "Restricted Investment" means, in one or a series of related
transactions, any Investment, other than investments in Cash Equivalents and
other Permitted Investments; provided, however, that a merger of another Person
with or into the Corporation or a Subsidiary shall not be deemed to be a
Restricted Investment so long as the surviving entity is the Corporation or a
Subsidiary.

        "Restricted Payment" means, (a) the declaration or payment of any
dividend or other distribution in respect of Junior Securities or Equity
Interests of the Corporation or any of the Corporation's Subsidiaries, (b) any
payment on account of the purchase, redemption or other acquisition or
retirement for value of Junior Securities or Equity Interests of the Corporation
or any of the Corporation's Subsidiaries, and (c) any Restricted Investment by
such Person; provided, however, that the term "Restricted Payment" shall not
include (i) any dividend, distribution or other payment on or with respect to
Equity Interests of the Corporation to the extent payable solely in shares of
Qualified Capital Stock of the Corporation; (ii) any dividend, distribution or
other payment to the Corporation, or to any of its Subsidiaries, by the
Corporation or any of its Subsidiaries; (iii) payments made in connection with
the Merger; (iv) Permitted Investments; or (v) pro rata dividends and other
distributions on Equity Interests of any Subsidiary by such Subsidiary.

        "SEC" means the Securities and Exchange Commission.

        "Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.

        "Senior Notes" means the Company Senior Notes and the Senior
Subordinated Notes.

        "Senior Preferred Stock" means the Corporation's 14% Series A Senior
Redeemable Exchangeable Cumulative Preferred Stock, par value $0.001 per share,
consisting of 3,000,000 authorized shares.

        "Senior Subordinated Notes" means the senior subordinated notes due
2010, including any such notes issued in exchange or replacement therefor,
issued by Operating Company pursuant to the Senior Subordinated Notes Indenture.

        "Senior Subordinated Notes Indenture" means that certain Indenture,
dated as of September 20, 2000, by and among Operating Company, the Subsidiaries
of Operating Company parties thereto, and Chase Manhattan Bank and Trust
Company, National Association, as trustee, pursuant to which the Senior
Subordinated Notes are issued.

        "Senior Subordinated Notes Purchase Agreement" means that certain
Purchase Agreement, dated as of September 20, 2000, by and among Operating
Company and Permitted Investors relating to the Senior Subordinated Notes.




                                       13


        "Stockholders Agreement" means that certain Stockholders Agreement,
dated as of September 20, 2000, by and among the Corporation, Green Equity
Investors III, L.P, Permitted Investors and the other signatories thereto, as
the same may be amended from time to time.

        "Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50.0% of the total
voting power of the Equity Interests entitled (without regard to the occurrence
of any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).

        "Unrestricted Subsidiary" means any Subsidiary of the Corporation that
does not own any Capital Stock of, or own or hold any Lien on any property of
the Corporation or any other Subsidiary of the Corporation and that, at the time
of determination, shall be an Unrestricted Subsidiary (as designated by the
Board of Directors of the Corporation); provided, however, that (i) such
Subsidiary shall not engage, to any substantial extent, in any line or lines of
business activity other than a Related Business and (ii) neither immediately
prior thereto nor after giving pro forma effect to such designation would there
exist a Default Event. The Board of Directors may designate any Unrestricted
Subsidiary to be a Subsidiary, provided that no Default Event is existing or
will occur as a consequence thereof. Each such designation shall be evidenced by
delivering to the Holders a certified copy of the resolution giving effect to
such designation and an Officers' Certificate certifying that such designation
complied with the foregoing conditions.

        "Wholly owned Subsidiary" of any Person means a Subsidiary of such
Person all of the outstanding Capital Stock, Equity Interests or other ownership
interests of which (other than directors' qualifying shares and shares in
non-U.S. companies required by local law to be owned by local residents) shall
at the time be owned (i) by such Person, (ii) by one or more wholly owned
Subsidiaries of such Person or (iii) by such Person and one or more wholly owned
Subsidiaries of such Person.

               (b) Interpretation. For the purposes of this Section II.A of
Article Four of this Amended and Restated Certificate of Incorporation: (x)
words in the singular shall be deemed to include the plural and vice versa and
words of one gender shall be deemed to include the other gender as the context
requires and (y) the word "including" and words of similar import shall mean
"including, without limitation," unless the context otherwise requires or unless
otherwise specified.

2.      Rank.

        The Senior Preferred Stock shall, with respect to dividend distributions
and distributions upon the liquidation, winding up or dissolution of the
Corporation, rank senior to all classes of common stock of the Corporation, to
the Junior Preferred Stock and to each other class of capital stock or series of
preferred stock hereafter created by the Board of Directors the terms of which
do not expressly provide that it ranks senior to or on a parity with the Senior
Preferred Stock as to dividend distributions and distributions upon the
liquidation, winding up or dissolution of the



                                       14


Corporation (collectively referred to with the common stock and Junior Preferred
Stock of the Corporation as "Junior Securities"). The Senior Preferred Stock
shall, with respect to dividend distributions and distributions upon the
liquidation, winding up or dissolution of the Corporation, rank on parity with
any class of capital stock or series of preferred stock hereafter created that
expressly provides that it ranks on a parity with the Senior Preferred Stock as
to dividend distributions and distributions upon the liquidation, winding up or
dissolution of the Corporation ("Parity Securities"); provided, however, that
any such Parity Securities that were not approved by the Holders of Senior
Preferred Stock in accordance with Section 6(b)(i) hereof shall be deemed to be
Junior Securities and not Parity Securities. The Senior Preferred Stock shall,
with respect to dividend distributions and distributions upon the liquidation,
winding up or dissolution of the Corporation, rank junior to each class of
capital stock or series of preferred stock hereafter created that has been
approved by the Holders of Senior Preferred Stock in accordance with Section
6(b)(i) hereof and that expressly provides that it ranks senior to the Senior
Preferred Stock as to dividend distributions or distributions upon the
liquidation, winding up or dissolution of the Corporation ("Senior Securities").

3.      Dividends.

               (a) Beginning on the Preferred Stock Issue Date, the Holders of
the outstanding shares of Senior Preferred Stock shall be entitled to receive,
whether or not declared by the Board of Directors, out of funds legally
available therefor, distributions in the form of cash dividends on each share of
Senior Preferred Stock, at a rate per annum equal to 14% of the Liquidation
Preference (with such Liquidation Preference being determined as of the first
day of such Dividend Period) payable quarterly. All dividends shall be
cumulative, whether or not earned or declared, on a daily basis from the
Preferred Stock Issue Date and shall be payable quarterly in arrears on each
Dividend Payment Date, commencing on January 1, 2001; provided, however, that if
any dividend payable on any Dividend Payment Date is not declared and paid in
full in cash on such Dividend Payment Date, the amount payable as dividends on
such Dividend Payment Date that is not paid in cash on such Dividend Payment
Date shall be added to the Liquidation Preference on the relevant Dividend
Payment Date and may no longer be declared or paid as dividends in cash except
for special dividends paid pursuant to Section 3(f). The addition of such amount
to the Liquidation Preference shall constitute full payment of such dividend.
Dividends payable on shares of the Senior Preferred Stock for any period less
than a year shall be computed on the basis of a 360-day year of twelve 30-day
months and the actual number of days elapsed in the period for which such
Dividends are payable. Each distribution in the form of a dividend shall be
payable to the Holders of Senior Preferred Stock of record as they appear on the
stock books of the Corporation on such record dates, not less than 10 nor more
than 45 days preceding the related Dividend Payment Date, as shall be fixed by
the Board of Directors. Dividends shall cease to accumulate in respect of shares
of the Senior Preferred Stock on the Exchange Date or on the date of their
earlier redemption unless the Corporation shall have failed to issue the
appropriate aggregate principal amount of Exchange Debentures (as defined in
Section 7(a)(i) hereof) in respect of the Senior Preferred Stock on the Exchange
Date or shall have failed to pay the relevant redemption price on the date fixed
for redemption.

               (b) All dividends paid in cash with respect to shares of the
Senior Preferred Stock pursuant to Section 3(a) shall be paid pro rata to the
Holders thereof entitled thereto.


                                       15


               (c) Nothing herein contained shall in any way or under any
circumstances be construed or deemed to require the Board of Directors to
declare, or the Corporation to pay or set apart for payment, any dividends on
shares of the Senior Preferred Stock at any time; provided, however, for the
avoidance of doubt, this Section 3(c) shall not be construed or deemed to
prevent any Holder of shares of Senior Preferred Stock from receiving any
dividends to which such Holder is entitled pursuant to Section 5 or 8 hereof.

               (d) No dividends shall be declared by the Board of Directors or
paid or funds set apart for payment of dividends by the Corporation on any
Parity Securities for any period unless cumulative dividends shall have been or
contemporaneously are declared and paid in full, or declared and (in the case of
dividends payable in cash) a sum in cash set apart sufficient for such payment,
on the Senior Preferred Stock for all Dividend Periods terminating on or prior
to the date of payment of such dividends on such Parity Securities. If any
dividends are not paid in full, as aforesaid, upon the shares of the Senior
Preferred Stock and any other Parity Securities, all dividends declared upon
shares of the Senior Preferred Stock and any other Parity Securities shall be
declared pro rata based on the relative liquidation preference of the Senior
Preferred Stock and such Parity Securities. So long as any shares of the Senior
Preferred Stock are outstanding, the Corporation shall not make any payment on
account of, or set apart for payment money for a sinking or other similar fund
for, the purchase, redemption or other retirement of, any of the Parity
Securities or any warrants, rights, calls or options exercisable for or
convertible into any of the Parity Securities, and shall not permit any
corporation or other entity directly or indirectly controlled by the Corporation
to purchase, redeem or retire any of the Parity Securities or any such warrants,
rights, calls or options unless dividends determined in accordance herewith on
the Senior Preferred Stock shall have been paid or contemporaneously are
declared and paid in full.

               (e)  (i)  Holders of shares of the Senior Preferred Stock shall
be entitled to receive the dividends provided for in Section 3(a) hereof in
preference to and in priority over any dividends upon any of the Junior
Securities.

                    (ii) So long as any shares of Senior Preferred Stock are
outstanding, the Corporation shall not (1) declare, pay or set apart for payment
any dividend on any of the Junior Securities or make any payment on account of,
or set apart for payment money for a sinking or other similar fund for, the
purchase, redemption or other retirement of, any of the Junior Securities or any
warrants, rights, calls or options exercisable for or convertible into any of
the Junior Securities (other than the repurchase, redemption or other
acquisition or retirement for value of Junior Securities (and any warrants,
rights, calls or options exercisable for or convertible into such Junior
Securities) held by current or former directors, officers, employees of or
consultants or advisors to the Corporation or any of its Subsidiaries, which
repurchase, redemption or other acquisition or retirement shall have been
approved by the Board of Directors or shall have been made pursuant to certain
call options provided in the Stockholders Agreement, provided, however, that
such Junior Securities may only be repurchased, redeemed or otherwise acquired
or retired either in exchange for Junior Securities or upon the cessation of
service to the Corporation or its Subsidiaries (by termination, resignation,
retirement, death or disability or otherwise) of such director, officer,
employee, consultant or advisor), or (2) make any distribution in respect of
Junior Securities, either directly or indirectly, and whether in cash,
obligations or shares of the Corporation or other property (other than
distributions or dividends



                                       16


in Junior Securities to the holders of Junior Securities), or (3) permit any
corporation or other entity directly or indirectly controlled by the Corporation
to purchase or redeem any of the Junior Securities or any such warrants, rights,
calls or options, unless in any such case cumulative dividends determined in
accordance herewith have been paid in full in cash on the Senior Preferred Stock
and all other redemption or repayment obligations in respect of the Senior
Preferred Stock have been paid in full in cash.


                                       17


               (f) At any time and from time to time when the Liquidation
Preference per share of Senior Preferred Stock exceeds $25.00, the Corporation
may declare and pay, to the holders of record of the Senior Preferred Stock on
the record date chosen by the Corporation for such dividend, a special dividend
equal to the positive difference between the Liquidation Preference per share of
Senior Preferred Stock and $25.00 per share of Senior Preferred Stock (such
difference, the "Base Amount"), plus accrued and unpaid dividends on the Base
Amount to the date of payment. Upon payment of such a dividend, the Liquidation
Preference shall be reduced to $25.00 per share of Senior Preferred Stock.

4.      Liquidation Preference.

               (a) Upon any voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Corporation, the Holders of shares of Senior
Preferred Stock then outstanding shall be entitled to be paid, out of the assets
of the Corporation available for distribution to its stockholders, the
Liquidation Preference per share of Senior Preferred Stock in cash (plus an
amount in cash equal to a prorated dividend for the period from the last
Dividend Payment Date to the date fixed for liquidation, dissolution or winding
up) before any payment shall be made or any assets distributed to the holders of
any of the Junior Securities, including, without limitation, common stock of the
Corporation. Except as provided in the preceding sentence, Holders of shares of
Senior Preferred Stock shall not be entitled to any distribution in the event of
liquidation, dissolution or winding up of the affairs of the Corporation. If the
assets of the Corporation are not sufficient to pay in full the liquidation
payments payable to the Holders of outstanding shares of the Senior Preferred
Stock and all Parity Securities, then the holders of all such shares shall share
equally and ratably in such distribution of assets of the Corporation in
accordance with the amounts that would be payable on such distribution if the
amount to which the Holders of outstanding shares of Senior Preferred Stock and
the holders of outstanding shares of all Parity Securities are entitled were
paid in full.

               (b) For the purposes of this Section 4, neither the sale,
conveyance, exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the property or assets of the
Corporation nor the consolidation or merger of the Corporation with or into one
or more corporations or other entities shall be deemed to be a liquidation,
dissolution or winding up of the affairs of the Corporation (unless such sale,
conveyance, exchange or transfer is in connection with a liquidation,
dissolution or winding up of the business of the Corporation).

5.      Redemption.

               (a) Optional Redemption.

                      (i) The Corporation may (subject to the legal availability
of funds therefor), at the option of the Corporation, redeem in cash at any time
or from time to time on or after September 20, 2002, from any source of funds
legally available therefor, in whole or in part, in the manner provided in
Section 5(c) hereof, any or all of the shares of the Senior Preferred Stock, at
a redemption price equal to the following percentages of the Liquidation
Preference per share (plus an amount in cash equal to a prorated dividend for
the period from the



                                       18


Dividend Payment Date immediately prior to the Redemption Date to the Redemption
Date) (the "Optional Redemption Price"), in each case beginning on September 20
of the year indicated:

               2002                         109%
               2003                         106%
               2004                         103%
               2005 and thereafter          100%

               provided, however, that no optional redemption pursuant to this
Section 5(a)(i) shall be authorized or made at any time when the Corporation is
making or required to make within the next 30 days, or purchasing shares of
Senior Preferred Stock under, a Change of Control Offer in accordance with the
provisions of Section 8 hereof.

                      (ii) In the event of a redemption pursuant to Section
5(a)(i) hereof of only a portion of the then outstanding shares of the Senior
Preferred Stock, the Corporation shall effect such redemption as it determines,
pro rata, according to the number of shares held by each Holder of Senior
Preferred Stock.

                      (iii) In the event of a firm commitment underwritten
initial public offering of common stock of the Corporation pursuant to a
registration statement under the Securities Act with aggregate gross proceeds to
the Corporation of at least $30,000,000 (the "Public Offering"), the Corporation
may (subject to the legal availability of funds therefor), at the option of the
Corporation, redeem in cash at any time or from time to time following the
consummation of the Public Offering, from any source of funds legally available
therefor, in whole or in part, in the manner provided in Section 5(c) hereof,
any or all of the shares of the Senior Preferred Stock, at a redemption price
equal to 100% percent of the Liquidation Preference per share (plus an amount in
cash equal to a prorated dividend for the period from the Dividend Payment Date
immediately prior to the Redemption Date to the Redemption Date) (the "Public
Offering Optional Redemption Price"). For the purposes of this Section 5, the
defined term "Optional Redemption Price" shall have the meaning set forth in
Section 5(a)(i) hereof or shall mean the Public Offering Optional Redemption
Price, as the case may be. In the event of a redemption pursuant to this Section
5(a)(iii) of only a portion of the then outstanding shares of the Senior
Preferred Stock, the Corporation shall effect such redemption as it determines,
pro rata, according to the number of shares held by each Holder of Senior
Preferred Stock.

               (b) Mandatory Redemption. On September 20, 2012, the Corporation
shall redeem in cash, subject to contractual and other restrictions with respect
thereto, from any source of funds legally available therefor, in the manner
provided in Section 5(c) hereof all but not less than all of the shares of the
Senior Preferred Stock then outstanding at a redemption price equal to 100% of
the Liquidation Preference per share (plus an amount in cash equal to a prorated
dividend for the period from the Dividend Payment Date immediately prior to the
Redemption Date to the Redemption Date) (the "Mandatory Redemption Price").

               (c) Procedures for Redemption.

                      (i) Written notice (the "Redemption Notice") shall be
given by first-class mail, postage prepaid, to each Holder of Senior Preferred
Stock of record on the record date



                                       19


fixed for such redemption of the Senior Preferred Stock at such Holder's address
as the same appears on the stock register of the Corporation; provided, however,
that no failure to give such notice nor any deficiency therein shall affect the
validity of the procedure for the redemption of any shares of Senior Preferred
Stock to be redeemed except as to the Holder or Holders to whom the Corporation
has failed to give said notice or except as to the Holder or Holders whose
notice was defective. The Redemption Notice shall state: (1) whether the
redemption is pursuant to Section 5(a) or 5(b) hereof; (2) the Optional
Redemption Price or the Mandatory Redemption Price, as the case may be; (3)
whether all or less than all the outstanding shares of the Senior Preferred
Stock are to be redeemed and the total number of shares of the Senior Preferred
Stock being redeemed; (4) the number of shares of Senior Preferred Stock held,
as of the appropriate record date, by the Holder that the Corporation intends to
redeem; (5) the date fixed for redemption; (6) that the Holder is to surrender
to the Corporation, at the place or places where certificates for shares of
Senior Preferred Stock are to be surrendered for redemption, in the manner and
at the price designated, his certificate or certificates representing the shares
of Senior Preferred Stock to be redeemed; and (7) that dividends on the shares
of the Senior Preferred Stock to be redeemed shall cease to accrue on such
Redemption Date unless the Corporation defaults in the payment of the Optional
Redemption Price or the Mandatory Redemption Price, as the case may be.

                      (ii) Each Holder of Senior Preferred Stock shall surrender
the certificate or certificates representing such shares of Senior Preferred
Stock to be redeemed to the Corporation, duly endorsed, in the manner and at the
place designated in the Redemption Notice, and on the Redemption Date the full
Optional Redemption Price or Mandatory Redemption Price, as the case may be, for
such shares shall be payable in cash to the Person whose name appears on such
certificate or certificates as the owner thereof, and each surrendered
certificate shall be canceled and retired. In the event that less than all of
the shares represented by any such certificate are redeemed, a new certificate
shall be issued representing the unredeemed shares.

                      (iii) Unless the Corporation defaults in the payment in
full of the applicable redemption price, dividends on the Senior Preferred Stock
called for redemption shall cease to accumulate on the Redemption Date, and the
Holders of such redemption shares shall cease to have any further rights with
respect thereto on the Redemption Date, other than the right to receive the
Optional Redemption Price or the Mandatory Redemption Price, as the case may be,
without interest.

6.      Voting Rights.

               (a) The Holders of shares of Senior Preferred Stock, except as
otherwise required under Delaware law or as set forth in Section 6(b) below,
shall not be entitled or permitted to vote on any matter required or permitted
to be voted upon by the stockholders of the Corporation.

               (b) (i) So long as any shares of the Senior Preferred Stock are
outstanding, the Corporation shall not authorize or issue any class or series of
Parity Securities without the affirmative vote or consent of Holders of a
majority of the outstanding shares of Senior Preferred Stock, voting or
consenting, as the case may be, separately as one class, given



                                       20


in person or by proxy, either in writing or by resolution adopted at an annual
or special meeting, except that without the approval of Holders of Senior
Preferred Stock, the Corporation may authorize and issue shares of Parity
Securities in exchange for, or the proceeds of which concurrently are used to
redeem or repurchase, any or all shares of Senior Preferred Stock then
outstanding; provided, however, that, in the case of Parity Securities issued in
exchange for, or the proceeds of which are used to redeem or repurchase, less
than all shares of Senior Preferred Stock then outstanding, (1) the aggregate
liquidation preference of such Parity Securities shall not exceed the aggregate
liquidation preference of, premium and accrued and unpaid dividends on, and
expenses in connection with the refinancing of, the Senior Preferred Stock so
exchanged, redeemed or repurchased, (2) such Parity Securities shall not be
Disqualified Capital Stock and (3) the Corporation may pay dividends on such
Parity Securities in the form of cash or such Parity Securities.

                      (ii) So long as any shares of the Senior Preferred Stock
are outstanding, the Corporation shall not authorize or issue any class or
series of Senior Securities without the affirmative vote or consent of Holders
of a majority of the outstanding shares of Senior Preferred Stock, voting or
consenting, as the case may be, separately as one class, given in person or by
proxy, either in writing or by resolution adopted at an annual or special
meeting.

                      (iii) So long as any shares of the Senior Preferred Stock
are outstanding, the Corporation shall not amend this Amended and Restated
Certificate of Incorporation, so as to affect adversely the specified rights,
preferences, privileges or voting rights of Holders of shares of Senior
Preferred Stock or to authorize the issuance of any additional shares of Senior
Preferred Stock without the affirmative vote or consent of Holders of a majority
of the outstanding shares of Senior Preferred Stock, voting or consenting, as
the case may be, separately as one class, given in person or by proxy, either in
writing or by resolution adopted at an annual or special meeting.

                      (iv) The affirmative vote or consent of Holders of a
majority of the outstanding shares of Senior Preferred Stock, voting or
consenting, as the case may be, separately as one class, whether voting in
person or by proxy, either in writing or by resolution adopted at an annual or
special meeting, may waive compliance with any provision of Section II.A or II.B
of Article Four of this Amended and Restated Certificate of Incorporation.

               (c) In any case in which the Holders of shares of the Senior
Preferred Stock shall be entitled to vote pursuant to this Section 6 or pursuant
to Delaware law, each Holder of shares of the Senior Preferred Stock shall be
entitled to one vote for each share of Senior Preferred Stock held.

7.      Optional Exchange.

               (a) Conditions.

                      (i) Subject to contractual and other restrictions with
respect thereto, the Corporation may, at its option on any Dividend Payment Date
(the "Exchange Date"), exchange all, but not less than all, of the then
outstanding shares of Senior Preferred Stock into the Corporation's 14% Senior
Subordinated Debentures due 2012 (the "Exchange Debentures").



                                       21


The Exchange Debentures shall be subordinated to the Senior Notes to the same
extent as the Senior Notes are subordinated to Senior Indebtedness (as defined
in the Indentures), and shall contain no covenant or agreements that are more
restrictive to the Corporation than those contained in the Indentures. To
exchange Senior Preferred Stock into Exchange Debentures, the Corporation shall
send a written notice of exchange (the "Exchange Notice") by first class mail to
each Holder of Senior Preferred Stock, which notice shall state: (A) that the
Corporation has elected to exchange the Senior Preferred Stock into Exchange
Debentures pursuant to this Section 7; (B) the Exchange Date, which shall be the
next succeeding Dividend Payment Date and shall not be less than 20 days
following the date on which the Exchange Notice is mailed; (C) that the Holder
is to surrender to the Corporation, at the place or places where certificates
for shares of Senior Preferred Stock are to be surrendered for exchange, in the
manner designated in the Exchange Notice, such Holder's certificate or
certificates representing the shares of Senior Preferred Stock to be exchanged
(properly endorsed or assigned for transfer); (D) that dividends on the shares
of Senior Preferred Stock to be exchanged shall cease to accrue, and the Holders
of such shares shall cease to have any further rights with respect to such
shares (other than the right to receive Exchange Debentures), on the Exchange
Date whether or not certificates for shares of Senior Preferred Stock are
surrendered for exchange on the Exchange Date unless the Corporation shall
default in the delivery of Exchange Debentures; and (E) that interest on the
Exchange Debentures shall accrue from and after the Exchange Date whether or not
certificates for shares of Senior Preferred Stock are surrendered for exchange
on the Exchange Date. On the Exchange Date, if the conditions set forth in
clauses (I) through (IV) below are satisfied, the Corporation shall issue
Exchange Debentures in exchange for the Senior Preferred Stock as provided in
the next paragraph; provided, however, that on the Exchange Date: (I) there
shall be legally available funds sufficient therefor (including, without
limitation, legally available funds sufficient therefor under Sections 160 and
170 (or any successor provisions) of the GCL); (II) either (A) a registration
statement relating to the Exchange Debentures shall have been declared effective
under the Securities Act prior to such exchange and shall continue to be in
effect on the Exchange Date or (B)(i) the Corporation shall have obtained a
written opinion of counsel that an exemption from the registration requirements
of the Securities Act is available for such exchange and that, upon receipt of
such Exchange Debentures pursuant to such exchange made in accordance with such
exemption, the holders (assuming such holder is not an Affiliate of the
Corporation) thereof will not be subject to any restrictions imposed by the
Securities Act upon the resale thereof other than restrictions that such holders
were subject to immediately prior to such exchange and (ii) such exemption is
relied upon by the Corporation for such exchange; (III) the Exchange Indenture
and the trustee thereunder (the "Trustee") shall have been qualified under the
Trust Indenture Act of 1939, as amended, if such qualification is required; and
(IV) immediately after giving effect to such exchange, no default or event of
default would exist under the Exchange Indenture.

               In the event that the issuance of the Exchange Debentures is not
permitted on the Exchange Date set forth in the Exchange Notice, or any of the
conditions set forth in clauses (I) through (IV) of the preceding sentence are
not satisfied on the Exchange Date set forth in the Exchange Notice, the
Exchange Date shall be deemed to be the first business day thereafter, if any,
upon which all of such conditions are satisfied.

                      (ii) Upon any exchange pursuant to Section 7(a)(i), each
Holder of outstanding shares of Senior Preferred Stock shall be entitled to
receive Exchange Debentures in



                                       22


a principal amount equal to the sum of (x) the Liquidation Preference of such
Holder's shares of Senior Preferred Stock and (y) the amount of accumulated and
unpaid dividends thereon, if any, to the Exchange Date; provided, however, that
the Corporation may pay cash in lieu of issuing an Exchange Note in a principal
amount of less than $25.00.

               (b) Procedure for Exchange.

                      (i) On or before the Exchange Date, each Holder of Senior
Preferred Stock shall surrender the certificate or certificates representing
such shares of Senior Preferred Stock, in the manner and at the place designated
in the Exchange Notice. The Corporation shall cause the Exchange Debentures to
be executed on the Exchange Date and, upon surrender in accordance with the
Exchange Notice of the certificates for any shares of Senior Preferred Stock so
exchanged (properly endorsed or assigned for transfer), such shares shall be
exchanged by the Corporation into Exchange Debentures. The Corporation shall pay
interest on the Exchange Debentures at the rate and on the dates specified
therein from the Exchange Date.

                      (ii) Subject to the conditions set forth in Section 7(a),
if notice has been mailed as aforesaid, and if before the Exchange Date (A) the
Exchange Indenture shall have been duly executed and delivered by the
Corporation and the Trustee and (B) all Exchange Debentures necessary for such
exchange shall have been duly executed by the Corporation and delivered to the
Trustee with irrevocable instructions to authenticate the Exchange Debentures
necessary for such exchange, then the rights of the Holders of shares of the
Senior Preferred Stock as stockholders of the Corporation shall cease (except
the right to receive Exchange Debentures), and the Person or Persons entitled to
receive the Exchange Debentures issuable upon exchange shall be treated for all
purposes as the registered Holder or Holders of such Exchange Debentures as of
the date of exchange without any further action of the Holders of Senior
Preferred Stock.

8.      Change of Control Offer.

        Subject to contractual and other restrictions with respect thereto, upon
the occurrence of a Change of Control, the Corporation shall make an offer (a
"Change of Control Offer") to each Holder of Senior Preferred Stock to
repurchase any or all of such Holder's shares of Senior Preferred Stock at a
purchase price in cash equal to 101.0% of the aggregate liquidation preference
thereof plus accumulated and unpaid dividends thereon, if any, to the date of
repurchase (the "Change of Control Payment").

        (a) Within 30 days following any Change of Control, the Corporation
shall mail a notice to each Holder of Senior Preferred Stock stating: (i) that
the Change of Control Offer is being made pursuant to this Section 8 and that
all shares of Senior Preferred Stock tendered will be accepted for payment; (ii)
the purchase price and the purchase date, which shall be no sooner than 30 nor
later than 60 days from the date such notice is mailed (the "Change of Control
Payment Date"); (iii) that any shares not tendered will continue to accumulate
dividends; (iv) that, unless the Corporation defaults in the payment of the
Change of Control Payment, all shares of Senior Preferred Stock accepted for
payment pursuant to the Change of Control Offer shall cease to accumulate
dividends after the Change of Control Payment Date; (v) that Holders electing to
have any shares of Senior Preferred Stock repurchased pursuant to a Change of



                                       23


Control Offer will be required to surrender such shares to the Corporation or
its paying agent at the address specified in the notice prior to the close of
business on the third Business Day preceding the Change of Control Payment Date;
(vi) that Holders will be entitled to withdraw their election if the Corporation
or the paying agent, as the case may be, receives, not later than the close of
business on the third Business Day preceding the Change of Control Payment Date,
a telegram, telex, facsimile transmission or letter setting forth the name of
the Holder, the number of shares of Senior Preferred Stock delivered for
repurchase, and a statement that such Holder is withdrawing his election to have
such shares repurchased; and (vii) that Holders whose shares of Senior Preferred
Stock are being repurchased only in part will be issued new shares of Senior
Preferred Stock equal in Liquidation Preference to the unpurchased portion of
the shares of Senior Preferred Stock surrendered.

        (b) On the Change of Control Payment Date, the Corporation shall, to the
extent lawful, (i) accept for payment all shares of Senior Preferred Stock or
portions thereof properly tendered pursuant to the Change of Control Offer and
(ii) deposit with the Corporation's paying agent an amount equal to the Change
of Control Payment in respect of all shares of Senior Preferred Stock or
portions thereof so tendered. The Corporation or its paying agent, as the case
may be, shall promptly mail to each Holder of shares of Senior Preferred Stock
so tendered the Change of Control Payment for such shares or portions thereof.
The Corporation shall promptly issue a certificate representing shares of Senior
Preferred Stock and mail to each Holder a new certificate representing shares of
Senior Preferred Stock equal in Liquidation Preference to any unpurchased
portion of such shares surrendered by such Holder, if any. The Corporation shall
notify the remaining holders of Senior Preferred Stock of the results of the
Change of Control Offer on or as soon as practicable after the Change of Control
Payment Date.

        (c) The Corporation shall comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
repurchase of shares of Senior Preferred Stock in connection with a Change of
Control.

        (d) The Corporation's obligations with respect to a Change of Control
Offer shall be satisfied to the extent actually performed by a third party in
accordance with the terms of this Section 8.

9.      Conversion or Exchange.

        The Holders of shares of Senior Preferred Stock shall not have any
rights hereunder to convert such shares into or exchange such shares for shares
of any other class or classes or of any other series of any class or classes of
Capital Stock of the Corporation.

10.     Preemptive Rights.

        No shares of Senior Preferred Stock shall have any rights of preemption
whatsoever as to any securities of the Corporation, or any warrants, rights or
options issued or granted with respect thereto, regardless of how such
securities or such warrants, rights or options may be designated, issued or
granted.




                                       24


11.     Reissuance of Senior Preferred Stock.

        Shares of Senior Preferred Stock that have been issued and reacquired in
any manner, including shares purchased or redeemed or exchanged, shall (upon
compliance with any applicable provisions of the laws of Delaware) have the
status of authorized but unissued shares of preferred stock of the Corporation
undesignated as to series and may be designated or redesignated and issued or
reissued, as the case may be, as part of any series of preferred stock of the
Corporation; provided, however, that such shares may not in any event be
reissued as Senior Preferred Stock.

12.     Business Day.

        If any payment, redemption or exchange shall be required by the terms
hereof to be made on a day that is not a Business Day, such payment, redemption
or exchange shall be made on the immediately succeeding Business Day, and no
interest shall accrue for the intervening period.

13.     Certain Additional Provisions.

               (a) Restricted Payments. The Corporation shall not, and shall not
permit any of its Subsidiaries to, directly or indirectly make any Restricted
Payment, unless, at the time of such Restricted Payment: (1) no Default Event
shall have occurred and be continuing or would occur as a consequence thereof;
and (2) such Restricted Payment, together with the aggregate of all other
Restricted Payments made by the Corporation and its Subsidiaries after the
Preferred Stock Issue Date, does not exceed the sum (the "Basket") of (a) (i)
Consolidated EBITDA of the Corporation for the period (taken as one accounting
period), commencing on the first day of the first fiscal quarter commencing on
or prior to the Preferred Stock Issue Date, to and including the last day of the
fiscal quarter ended immediately prior to the date of each such calculation (or,
in the event Consolidated EBITDA for such period is a deficit, then minus such
deficit) less (ii) 150% of Consolidated Fixed Charges for such period, plus (b)
the aggregate Net Cash Proceeds received by the Corporation from the sale of the
Corporation's Qualified Capital Stock (other than in each case (i) to a
Subsidiary of the Corporation, (ii) to the extent applied in connection with a
Qualified Exchange and (iii) to the extent applied to repurchase Capital Stock
pursuant to clause (iii) of the definition of Other Permitted Payments after the
Preferred Stock Issue Date). The foregoing provisions of this Section 13(a)
shall not prohibit the following Restricted Payments: (A) a Qualified Exchange;
(B) the payment of any dividend within 60 days after the date of declaration
thereof, if at said date of declaration such payment would have complied with
the provisions of Section II.A or II. B of Article Four of this Amended and
Restated Certificate of Incorporation; and (C) Other Permitted Payments. The
full amount of any Restricted Payment made pursuant to clause (B) of the
immediately preceding sentence (but not pursuant to clauses (A) or (C) of the
immediately preceding sentence), however, will be deducted in the calculation of
the aggregate amount of Restricted Payments available to be made pursuant to the
Basket. The amount of any Restricted Payment, if other than in cash, shall be
the fair market value thereof, as determined in the good faith reasonable
judgment of the Board of Directors.

               (b) Reports. So long as any shares of Senior Preferred Stock are
outstanding, the Corporation shall furnish to each Holder of Senior Preferred
Stock (at such Holder's address listed in the register of Holders maintained by
the transfer agent and registrar of the Senior



                                       25


Preferred Stock): (i) beginning at the end of the Corporation's first fiscal
year ending after the Preferred Stock Issue Date, all quarterly and annual
financial information that would be required to be contained in a filing with
the SEC on Forms 10-Q and 10-K if the Corporation were required to file such
forms, including a "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and, with respect to the annual information only, a
report thereon by the Corporation's certified independent accountants, and (ii)
all current reports that would be required to be filed with the SEC on Form 8-K
if the Corporation were required to file such reports.

14.     Transfer Restrictions.

        The certificates evidencing shares of Senior Preferred Stock shall,
until the second anniversary of the date of original issuance of such shares,
unless otherwise agreed by the Corporation and the holders of any such
certificates, bear a legend substantially to the following effect:

        "The Senior Preferred Stock evidenced hereby was originally issued in a
transaction exempt from registration under Section 5 of the United States
Securities Act of 1933, as amended (the "Securities Act"), and the Senior
Preferred Stock evidenced hereby may not be offered, sold or otherwise
transferred in the absence of such registration or an applicable exemption
therefrom. Each purchaser of the Senior Preferred Stock evidenced hereby is
hereby notified that the seller may be relying on the exemption from the
provisions of Section 5 of the Securities Act provided by Rule 144A thereunder.
The Holder of the Senior Preferred Stock evidenced hereby agrees for the benefit
of the Corporation that (A) such Senior Preferred Stock may be offered, resold,
pledged or otherwise transferred, only (a) inside the United States to a Person
whom the seller reasonably believes is a qualified institutional buyer (as
defined in Rule 144A) in a transaction meeting the requirements of Rule 144A,
(b) outside the United States to a foreign Person in a transaction meeting the
requirements of Rule 903 or Rule 904 of Regulation S under the Securities Act,
(c) in a transaction meeting the requirements of Rule 144 under the Securities
Act, (d) to the Corporation, (e) pursuant to an effective registration statement
or (f) in accordance with another exemption from the registration requirements
of the Securities Act (and based upon an opinion of counsel if the Corporation
so requests), and, in each case, in accordance with any applicable securities
laws of any state of the United States or any other applicable jurisdiction and
(B) the holder will, and each subsequent holder is required to, notify any
purchaser from it of the Senior Preferred Stock evidenced hereby of the resale
restrictions set forth in (A) above."

The shares of Senior Preferred Stock not otherwise registered pursuant to an
effective registration statement under the Securities Act shall be subject to
the restrictions on transfer set forth in the legend referred to above until the
second anniversary of the date of original issuance of such shares of Senior
Preferred Stock.

B.  Series B Junior Preferred Stock

        The 12% Series B Junior Redeemable Cumulative Preferred Stock (the
"Junior Preferred Stock"), par value $0.001 per share, consists of 3,000,000
authorized shares and has the powers,



                                       26


designations and preferences, the relative, participating, optional and other
special rights and the qualifications, limitations and restrictions thereof as
follows:

1.     Definitions and Interpretation.

               (a) Definitions. As used in this Section II. B of Article Four of
this Amended and Restated Certificate of Incorporation, the following terms
shall have the following meanings, unless the context otherwise requires:

        "Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person.

        "Amended and Restated Certificate of Incorporation" means the
Corporation's Amended and Restated Certificate of Incorporation.

        "Bank Facility" means the one or more credit agreements (including,
without limitation, the Credit Agreement, dated as of September 20, 2000, by and
among Operating Company, as borrower, the Corporation, certain subsidiaries of
Operating Company, as guarantors, the financial institutions parties thereto,
Goldman Sachs Credit Partners L.P., as sole lead arranger and sole syndication
agent, and Wells Fargo Bank, N.A., as administrative agent and collateral agent)
entered into by and among Operating Company, certain of its subsidiaries (if
any) and certain financial institutions, which provide for in the aggregate one
or more term loans and/or revolving credit and letter of credit facilities,
including any related notes, guarantees, collateral documents, instruments and
agreements executed in connection therewith, as such credit agreement and/or
related documents may be amended, restated, supplemented, renewed, replaced or
otherwise modified from time to time whether or not with the same agent,
trustee, representative lenders or holders, and, subject to the proviso to the
next succeeding sentence irrespective of any changes in the terms and conditions
thereof. Without limiting the generality of the foregoing, the term "Bank
Facility" shall include any amendment, amendment and restatement, renewal,
extension, restructuring, supplement or modification to any such credit
agreement and all refundings, refinancings and replacements of any such credit
agreement, including any agreement (i) extending the maturity of any
Indebtedness incurred thereunder or contemplated thereby, (ii) adding or
deleting borrowers or guarantors thereunder; provided, however, that the
borrowers and issuers include one or more of the Corporation and its
Subsidiaries and their respective successors and assigns, (iii) increasing the
amount of Indebtedness incurred thereunder or available to be borrowed
thereunder, or (iv) otherwise altering the terms and conditions thereof in a
manner not prohibited by the terms hereof.

        "Beneficial Owner" or "beneficial owner" for purposes of the definition
of Change of Control and Affiliate has the meaning attributed to it in Rules
13d-3 and 13d-5 under the Exchange Act (as in effect on the Preferred Stock
Issue Date), whether or not applicable.

        "Board of Directors" means the Board of Directors of the Corporation.



                                       27


        "Business Day" means any day that is not a Saturday, a Sunday or a day
on which banking institutions in the Corporation's principal place of business,
the City of New York or at a place of payment are not required to be open.

        "Capital Stock" means, with respect to any corporation, any and all
shares, interests, rights to purchase (other than convertible or exchangeable
Indebtedness that is not itself otherwise capital stock), warrants, options,
participations or other equivalents of or interests (however designated) in
stock issued by that corporation.

        "Capitalized Lease Obligation" means, as to any Person, the obligations
of such Person under a lease that are required to be classified and accounted
for as capital lease obligations under GAAP and, for purposes of this
definition, the amount of such obligations at any date shall be the capitalized
amount of such obligations at such date, determined in accordance with GAAP.

        "Cash Equivalent" means, as at any date of determination, (i) marketable
securities (a) issued or directly and unconditionally guaranteed as to interest
and principal by the United States Government or (b) issued by any agency of the
United States the obligations of which are backed by the full faith and credit
of the United States, in each case maturing within one year after such date;
(ii) marketable direct obligations issued by any state of the United States or
any political subdivision of any such state or any public instrumentality
thereof, in each case maturing within one year after such date and having, at
the time of the acquisition thereof, the highest rating obtainable from either
Standard & Poor's Ratings Group ("S&P") or Moody's Investors Service, Inc.
("Moody's"); (iii) commercial paper maturing no more than one year from the date
of creation thereof and having, at the time of the acquisition thereof, a rating
of at least A-1 from S&P or at least P-1 from Moody's; (iv) certificates of
deposit or bankers' acceptances maturing within one year after such date and
issued or accepted by any commercial bank organized under the laws of the United
States or any state thereof or the District of Columbia that (a) is at least
"adequately capitalized" (as defined in the regulations of its primary Federal
banking regulator) and (b) has Tier 1 capital (as defined in such regulations)
of not less than $100,000,000; and (v) shares of any money market mutual fund
that (a) has at least 95% of its assets invested continuously in the types of
investments referred to in clauses (i) and (ii) above, (b) has net assets of not
less than $500,000,000, and (c) has the highest rating obtainable from either
S&P or Moody's.

        "Certificate of Designation " means the Corporation's Certificate of
Designation dated as of September 20, 2000.

        "Change of Control" means the occurrence of any of the following: (i)
the sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or more related transactions, of all or
substantially all of the properties and assets of the Corporation and its
Subsidiaries taken as a whole to any "person" (as such term is used in Section
13(d)(3) of the Exchange Act), other than an Excluded Person or Excluded
Persons, (ii) the adoption of a plan relating to the liquidation or dissolution
of the Corporation, (iii) the consummation of any transaction or other event
(including, without limitation, any merger or consolidation) the result of which
is that any "person" (as defined above), other than an Excluded Person or
Excluded Persons, becomes the "beneficial owner" (as such term is defined in
Rule



                                       28


13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, of more
than 50% of the voting stock of the Corporation, or (iv) the first day on which
a majority of the members of the Board of Directors are not Continuing
Directors. Notwithstanding the foregoing, under no circumstances shall transfers
among Green Equity Investors III, L.P. and the Co-Investors and their respective
Affiliates or distributions to limited partners of Green Equity Investors III,
L.P. or to the members of the Co-Investors be deemed a Change of Control.

        "Co-Investors" means VCA Co-Investment Fund I, LLC, VCA Co-Investment
Fund II, LLC, VCA Co-Investment Fund III, LLC, VCA Co-Investment Fund IV, LLC,
VCA Co-Investment Fund V, LLC, VCA Co-Investment Fund VI, LLC, VCA Co-Investment
Fund VII, LLC and VCA Co-Investment Fund VIII, LLC.

        "Company Purchase Agreement" means that certain Purchase Agreement,
dated as of September 20, 2000, by and among the Corporation, GS Mezzanine
Partners II, L.P and Permitted Investors relating to the Company Senior Notes.

        "Company Senior Notes" means the senior notes due 2010, any Exchange
Notes (as defined in the Company Purchase Agreement) and any PIK Notes (as
defined in the Company Senior Notes Indenture), including any such notes issued
in exchange or replacement therefor, issued pursuant to the Company Senior Notes
Indenture.

        "Company Senior Notes Indenture" means that certain Indenture, dated as
of September 20, 2000, by and between the Corporation and Chase Manhattan Bank
and Trust Company, National Association, as trustee, pursuant to which the
Company Senior Notes are issued.

        "Consolidated" means, with respect to the Corporation, the consolidated
accounts of its Subsidiaries with those of the Corporation, all in accordance
with GAAP; provided, however, that "consolidated" will not include consolidation
of the accounts of any Unrestricted Subsidiary with the accounts of the
Corporation.

        "Consolidated EBITDA" means, with respect to any Person, for any period,
the Consolidated Net Income of such Person and its Consolidated Subsidiaries for
such period adjusted to add thereto (to the extent deducted from net revenues in
determining Consolidated Net Income), without duplication, the sum of (i) an
amount equal to any extraordinary or non-recurring loss plus any net loss
realized in connection with the sale or other disposition of assets outside the
ordinary course of business, the disposition of any securities by such Person or
any of its Subsidiaries or the extinguishment of any Indebtedness by such Person
or its Subsidiaries, (ii) consolidated income taxes, (iii) consolidated
depreciation and amortization (including amortization of debt issuance costs in
connection with any Indebtedness of such Person and its Subsidiaries), (iv)
Consolidated Fixed Charges; (v) payments pursuant to the Management Services
Agreement (or the corresponding provisions of any agreement amending, extending
or replacing the Management Services Agreement); and (vi) all other non-cash
charges.

        "Consolidated Fixed Charges" of any Person means, for any period, the
aggregate amount (without duplication and determined in each case in accordance
with GAAP) of (a) interest expensed or capitalized, paid, accrued, or scheduled
to be paid or accrued (including, in accordance with the following sentence,
interest attributable to Capitalized Lease Obligations) of



                                       29


such Person and its Consolidated Subsidiaries during such period, excluding
amortization of debt issuance costs incurred in connection with the Senior Notes
or the Bank Facility but including (i) original issue discount and non-cash
interest payments or accruals on any Indebtedness, (ii) the interest portion of
all deferred payment obligations, and (iii) all commissions, discounts and other
fees and charges owed with respect to bankers' acceptances and letters of credit
financings and currency and Interest Swap and Hedging Obligations (and minus net
amounts received under Hedging Obligations), in each case to the extent
attributable to such period, and (b) the amount of cash dividends paid by such
Person or any of its Consolidated Subsidiaries in respect of preferred stock
(other than by Subsidiaries of such Person to such Person or such Person's
wholly owned Subsidiaries). For purposes of this definition, (x) interest on a
Capitalized Lease Obligation shall be deemed to accrue at an interest rate
reasonably determined by the Corporation to be the rate of interest implicit in
such Capitalized Lease Obligation in accordance with GAAP and (y) to the extent
such expense would result in a liability upon the consolidated balance sheet of
such Person in accordance with GAAP, interest expense attributable to any
Indebtedness represented by the guaranty by such Person or a Subsidiary of such
Person of an obligation of another Person shall be deemed to be the interest
expense attributable to the Indebtedness guaranteed. Notwithstanding the
foregoing, Consolidated Fixed Charges shall not include costs, fees and expenses
incurred in connection with the Merger, and any non-cash charge or expense
associated with the write-off of deferred debt issuance costs associated with
the Bank Facility or the Senior Notes.

        "Consolidated Net Income" means, with respect to any specified Person
for any period, the aggregate of the Net Income of such Person and its
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided, however, that (a) the Net Income (but not loss) of any
Person that is not a Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends or
distributions paid in cash to the specified Person or one of its wholly owned
Subsidiaries, (b) the Net Income of any Subsidiary shall be excluded to the
extent that the declaration or payment of dividends or similar distributions by
that Subsidiary of that Net Income is not at the date of determination permitted
without any prior governmental approval (that has not been obtained) or,
directly or indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree or order, or any non-U.S. statute, rule
or governmental regulation applicable to that Subsidiary or its stockholders,
(c) the Net Income of any Person acquired in a pooling of interests transaction
for any period prior to the date of such acquisition shall be excluded, (d) the
cumulative effect of a change in accounting principles shall be excluded, and
(e) the costs, fees and expenses, including payments of management bonuses,
incurred in connection with the transactions contemplated by the Merger
Agreement shall be excluded, including (i) any charge incurred by any Person or
its Subsidiaries arising out of the repurchase at $15 per share on the closing
date of the Merger of restricted capital stock of such Person or its
Subsidiaries held by certain employees of such Person or its Subsidiaries, (ii)
any financing, legal, accounting, investment banking or other professional fees
and expenses incurred in connection with the Merger, (iii) any other costs and
expenses incurred by any Person and its Subsidiaries in connection with the
Merger arising pursuant to certain noncompetition agreements executed with
members of senior management of such Person, in connection with the termination
of certain employment contracts of such Person and its Subsidiaries and in
connection with stay bonuses provided to certain employees of such Person and
its Subsidiaries, and (iv) premium payments payable to certain note holders of
such Person.




                                       30


        "Continuing Directors" means, as of any date of determination, any
member of the Board of Directors who (i) was a member of the Board of Directors
immediately after consummation of the Merger or (ii) was nominated for election
or elected to the Board of Directors with the approval, recommendation or
endorsement of a majority of the Continuing Directors who were members of the
Board of Directors at the time of such nomination or election.

        "Control" means (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with"), as used with
respect to any Person, the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
directly or through one or more intermediaries, whether through the ownership of
voting securities, by contract, or otherwise; provided, however, that, with
respect to any ownership interest in the Corporation and its Subsidiaries, a
Beneficial Owner of 10% or more of the total voting power normally entitled to
vote in the election of directors, managers or trustees, as applicable, shall
for such purposes be deemed to constitute control.

        "Default Event" means any of the following events: (i) any time when the
Corporation fails to make a mandatory redemption of the Junior Preferred Stock
when required (whether or not any contractual or other restrictions apply to
such redemption) pursuant to Section 5(b) hereof; or (ii) any time when the
Corporation fails to make an offer to repurchase all of the outstanding shares
of Junior Preferred Stock following a Change of Control, if such offer to
repurchase is required to be made pursuant to Section 7(a) hereof (whether or
not any contractual or other restrictions apply to such redemption).

        "Disqualified Capital Stock" means (a) except as set forth in (b), with
respect to any Person, any Equity Interest of such Person that, by its terms or
by the terms of any security into which it is convertible, exercisable or
exchangeable, is, or upon the happening of an event or the passage of time or
both would be, required to be redeemed or repurchased (including at the option
of the holder thereof) by such Person or any of its Subsidiaries, in whole or in
part, on or prior to September 20, 2012 and (b) with respect to any Subsidiary
of such Person (including with respect to any Subsidiary of the Corporation),
any Equity Interests other than any common equity with no preference,
privileges, or redemption or repayment provisions and preferred equity owned by
the Corporation or one of its Subsidiaries.

        "Dividend Payment Date" means January 1, April 1, July 1 and October 1
of each year.

        "Dividend Period" means the Initial Dividend Period and, thereafter,
each Quarterly Dividend Period.

        "Equity Interest" of any Person means any shares, interests,
participations or other equivalents (however designated) in such Person's
equity, and shall in any event include any Capital Stock issued by, or
partnership or membership interests in, such Person.

        "Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.

        "Excluded Persons" means (i) Green Equity Investors III, L.P., (ii) the
Co-Investors, and (iii) their Related Parties.



                                       31


        "GAAP" means United States generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession in the United States as in effect on the Preferred Stock
Issue Date.

        "Holder" means a Person in whose name a share of Junior Preferred Stock
is registered.

        "Indebtedness" of any Person means, without duplication, (a) all
liabilities and obligations, contingent or otherwise, of any such Person, to the
extent such liabilities and obligations would appear as a liability upon the
consolidated balance sheet of such Person in accordance with GAAP, (i) in
respect of borrowed money (whether or not the recourse of the lender is to the
whole of the assets of such Person or only to a portion thereof), (ii) evidenced
by bonds, notes, debentures or similar instruments, (iii) representing the
balance deferred and unpaid of the purchase price of any property or services,
except those incurred in the ordinary course of its business that would
constitute ordinarily a trade payable to trade creditors; (b) all liabilities
and obligations, contingent or otherwise, of such Person (i) evidenced by
bankers' acceptances or similar instruments issued or accepted by banks, (ii)
relating to any Capitalized Lease Obligation, or (iii) evidenced by a letter of
credit or a reimbursement obligation of such Person with respect to any letter
of credit; (c) all net obligations of such Person under Interest Swap and
Hedging Obligations; (d) all liabilities and obligations of others of the kind
described in the preceding clauses (a), (b) or (c) that such Person has
guaranteed or that is otherwise its legal liability or that are secured by one
or more Liens on any assets or property of such Person; provided, however, that
if the liabilities or obligations that are secured by a Lien have not been
assumed in full by such Person or are not such Person's legal liability in full,
the amount of such Indebtedness for the purposes of this definition shall be
limited to the lesser of the amount of such Indebtedness secured by such Lien or
the fair market value of the assets or property securing such Lien; (e) any and
all deferrals, renewals, extensions, refinancing and refundings (whether direct
or indirect) of, or amendments, modifications or supplements to, any liability
of the kind described in any of the preceding clauses (a), (b), (c) or (d), or
this clause (e), whether or not between or among the same parties; and (f) all
Disqualified Capital Stock of such Person (measured at the greater of its
voluntary or involuntary maximum fixed repurchase price plus accrued and unpaid
dividends). For purposes hereof, the "maximum fixed repurchase price" of any
Disqualified Capital Stock that does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Disqualified Capital Stock.

        "Indentures" means the Company Senior Note Indenture and the Senior
Subordinated Notes Indenture.

        "Initial Dividend Period" means the dividend period commencing on the
Preferred Stock Issue Date and ending on the day before the first Dividend
Payment Date to occur thereafter.

        "Interest Swap and Hedging Obligation" means any obligation of any
Person pursuant to any interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate exchange agreement,
currency exchange agreement or any other agreement or arrangement designed to
protect against fluctuations in interest rates or currency values,



                                       32


including, without limitation, any arrangement whereby, directly or indirectly,
such Person is entitled to receive from time to time periodic payments
calculated by applying either a fixed or floating rate of interest on a stated
notional amount in exchange for periodic payments made by such Person calculated
by applying a fixed or floating rate of interest on the same notional amount.

        "Investment" by any Person in any other Person means (without
duplication) (a) the acquisition (whether by purchase, merger, consolidation or
otherwise) by such Person (whether for cash, property, services, securities or
otherwise) of capital stock, bonds, notes, debentures, partnership or other
ownership interests or other securities, including any options or warrants, of
such other Person or any agreement to make any such acquisition; (b) the making
by such Person of any deposit with, or advance, loan or other extension of
credit to, such other Person (including the purchase of property from another
Person subject to an understanding or agreement, contingent or otherwise, to
resell such property to such other Person) or any commitment to make any such
advance, loan or extension (but excluding accounts receivable, endorsements for
collection or deposits arising in the ordinary course of business) other than
guarantees of Indebtedness of the Corporation or any Subsidiary; (c) the making
of any capital contribution by such Person to such other Person; and (d) the
designation by the Board of Directors of the Corporation of any Person to be an
Unrestricted Subsidiary. The Corporation shall be deemed to make an Investment
in an amount equal to the fair market value of the net assets of any subsidiary
(or, if neither the Corporation nor any of its Subsidiaries has theretofore made
an Investment in such subsidiary, in an amount equal to the Investments being
made), at the time that such subsidiary is designated an Unrestricted
Subsidiary, and any property transferred to an Unrestricted Subsidiary from the
Corporation or a Subsidiary of the Corporation shall be deemed an Investment
valued at its fair market value at the time of such transfer. The amount of any
such Investment shall be reduced by any liabilities or obligations of the
Corporation or any of its Subsidiaries to be assumed or discharged in connection
with such Investment by an entity other than the Corporation or any of its
Subsidiaries. For purposes of clarification and greater certainty, the
designation of a newly formed subsidiary as an Unrestricted Subsidiary shall not
constitute an Investment.

        "Junior Preferred Stock" means the Corporation's 12% Series B Junior
Redeemable Cumulative Preferred Stock, par value $0.001 per share, consisting of
3,000,000 authorized shares.

        "Lien" means any mortgage, charge, pledge, lien (statutory or
otherwise), privilege, security interest, hypothecation or other encumbrance
upon or with respect to any property of any kind, real or personal, movable or
immovable, now owned or hereafter acquired.

        "Liquidation Preference" means, as of any date, the sum of (a) $25.00
per share of Junior Preferred Stock, plus (b) accrued and unpaid dividends added
to the Liquidation Preference in accordance with Section 3(a), minus (c) the
Base Amount of any special dividend paid pursuant to Section 3(f).

        "Management Services Agreement" means that certain Management Services
Agreement, dated as of the September 20, 2000, by and between Leonard Green &
Partners, L.P., Operating Company and the Corporation, providing for certain
fees, expenses and reimbursements to be



                                       33


paid to Leonard Green & Partners, L.P., as such Management Services Agreement
may be amended from time to time.

        "Merger" means the merger of Recap with and into the Corporation in
accordance with the provisions of the Merger Agreement.

        "Merger Agreement" means that certain Amended and Restated Agreement and
Plan of Merger, dated as of August 11, 2000, between the Corporation, Operating
Company and Recap, as the same may be further amended from time to time.

        "Net Cash Proceeds" means the aggregate amount of cash or Cash
Equivalents received by the Corporation in the case of a sale of Qualified
Capital Stock plus, in the case of an issuance of Qualified Capital Stock upon
any exercise, exchange or conversion of securities (including options, warrants,
rights and convertible or exchangeable debt) of the Corporation that were issued
for cash on or after the Preferred Stock Issue Date, the amount of cash
originally received by the Corporation upon the issuance of such securities
(including options, warrants, rights and convertible or exchangeable debt) less
the sum of all payments, fees, commissions and expenses (including, without
limitation, the fees and expenses of legal counsel and investment banking fees
and expenses) incurred in connection with such sale or issuance of Qualified
Capital Stock.

        "Net Income" means, with respect to any Person, the net income (loss) of
such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with the (A) sale or other disposition of assets
outside the ordinary course of business, or (B) disposition of any securities by
such Person or any of its Subsidiaries or the extinguishment of any Indebtedness
of such Person or any of its Subsidiaries, (ii) any extraordinary or
nonrecurring gain (but not loss), together with any related provision for taxes
on such extraordinary or nonrecurring gain (but not loss), and (iii) any
non-cash compensation expense of such Person attributable to the exercise of
options to acquire Capital Stock of the Corporation by any officers, directors
or employees of the Corporation or any of its Subsidiaries in each case prior
to, or in connection with, the consummation of the Merger.

        "Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.

        "Operating Company" means Vicar Operating, Inc., a Delaware corporation.

        "Other Permitted Payments" means, without duplication, (i) compensation,
indemnification and other benefits paid or made available (A) pursuant to the
employment agreements between the Corporation and members of its senior
management, (B) for or in connection with services actually rendered to the
Corporation and comparable to those generally paid or made available by entities
engaged in the same or similar businesses (including reimbursement or
advancement of reasonable out-of-pocket expenses) and loans to officers,
directors and employees, (x) in the ordinary course of business or (y) to
purchase common stock of the Corporation in an amount not to exceed $10 million;
(ii) payments pursuant to the



                                       34


Management Services Agreement (or the corresponding provisions of any agreement
amending, extending or replacing the Management Services Agreement); (iii) the
repurchase of common stock, stock options and stock equivalents of the
Corporation held by current or former directors, officers, employees of or
consultants and advisors to the Corporation or any of its Subsidiaries
("Management Stock Repurchases") in an amount of $5 million at the end of fiscal
year 2000, and such amount shall be increased by $1 million a year for each
fiscal year thereafter, plus the amount of any net cash proceeds to the
Corporation from: (A) sales of Capital Stock of the Corporation to directors,
officers and employees of or consultants and advisors to the Corporation
subsequent to the Preferred Stock Issue Date; and (B) proceeds from any
key-person life insurance policies, in either case, to the extent utilized for
Management Stock Repurchases; provided, however, that any amount received from
such life insurance not so paid in any fiscal year may be paid in future fiscal
years; (vi) Restricted Payments in an aggregate amount not to exceed $10
million; and (vii) expenses and payments in connection with the Merger.

        "Permitted Investment" means (a) Investments in any of the Senior Notes;
(b) Investments in Cash Equivalents; (c) Investments in intercompany notes;
provided, however, that Indebtedness under any such notes of a Subsidiary shall
be deemed to be a Restricted Investment if such Person ceases to be a
Subsidiary; (d) Investments in the form of promissory notes of members of the
Corporation's management not to exceed $5 million in principal amount at any
time outstanding solely in consideration of the purchase by such persons of
Qualified Capital Stock of the Corporation; (e) Investments by the Corporation
or any Subsidiary in any Person that is or immediately after such Investment
becomes a Subsidiary, or immediately after such Investment merges or
consolidates into the Corporation or any Subsidiary; provided, however, that
such Person is engaged in all material respects in a Related Business; (f)
Investments in the Corporation by any Subsidiary; provided, however, that in the
case of Indebtedness constituting any such Investment, such Indebtedness shall
be unsecured and subordinated in all respects to the Corporation's obligations
under the Senior Notes; (g) Investments in securities of trade creditors or
customers received in settlement of obligations that arose in the ordinary
course of business or pursuant to any plan of reorganization or similar
arrangement upon the bankruptcy or insolvency of such trade creditors or
customers; (h) Investments by the Corporation outstanding on the Preferred Stock
Issue Date; (i) transactions or arrangements with officers or directors of the
Corporation or any Subsidiary entered into in the ordinary course of business;
(j) any other contract, agreement, arrangement or transaction between the
Corporation or any of its Subsidiaries with any Affiliate; (k) other Investments
in any Person (other than a Subsidiary of the Corporation) having an aggregate
fair market value (measured on the date each such Investment was made and
without giving effect to subsequent changes in value), when taken together with
all other Investments made pursuant to this clause (k) that are at the time
outstanding, not to exceed $10 million; (l) Investments in Subsidiaries of the
Corporation formed or acquired after the Closing Date that (i) are incorporated
outside the United States, (ii) are not guarantors under the Senior Subordinated
Notes Indenture, and (iii) if they were guarantors, would give rise to an
investment in United States property within the meaning of Section 956 of the
Internal Revenue Code of 1986, as amended from time to time, which Investments
shall not exceed in the aggregate more than $10 million outstanding at any time
(treating any such Investment that is not Indebtedness at the value thereof on
the date it is made); and (m) Investments in Equity Interests of a Person
engaged in a Related Business, other than a Person described in clause (e),
through the issuance of common stock of the Corporation.




                                       35


        "Permitted Investors" means any of the affiliated investment funds of GS
Mezzanine Partners II, L.P., GS Mezzanine Partners II Offshore, L.P., TCW
Leveraged Income Trust, L.P., TCW Leveraged Income Trust II, L.P., TCW Leveraged
Income Trust IV, L.P., TCW/Crescent Mezzanine Partners II, L.P., TCW/Crescent
Mezzanine Trust II and The Northwestern Mutual Life Insurance Company.

        "Person" means any individual, corporation, partnership, joint venture,
association, limited liability company, joint-stock company, trust,
unincorporated organization or government or agency or political subdivision
thereof (including any subdivision or ongoing business of any such entity or
substantially all of the assets of any such entity, subdivision or business).

        "Preferred Stock Issue Date" means the date on which the Junior
Preferred Stock is originally issued by the Corporation under the Certificate of
Designation.

        "Qualified Capital Stock" means any Equity Interest that is not
Disqualified Capital Stock.

        "Qualified Exchange" means any legal defeasance, redemption, retirement,
repurchase or other acquisition of Capital Stock or Indebtedness of the
Corporation issued on or after the Preferred Stock Issue Date with the Net Cash
Proceeds received by the Corporation from the substantially concurrent sale of
its Qualified Capital Stock or any exchange of Qualified Capital Stock of the
Corporation for any Capital Stock or Indebtedness of the Corporation issued on
or after the Issue Date.

        "Quarterly Dividend Period" means the quarterly period commencing on
each January 1, April 1, July 1 and October 1 and ending on the day before the
following Dividend Payment Date.

        "Recap" means Vicar Recap, Inc., a Delaware corporation.

        "Redemption Date," with respect to any shares of Junior Preferred Stock,
means the date on which such shares of Junior Preferred Stock are redeemed by
the Corporation.

        "Related Business" means the business conducted or proposed to be
conducted by the Corporation as of the Preferred Stock Issue Date and any and
all businesses that in the good faith judgment of the Board of Directors of the
Corporation are reasonably related businesses, including reasonably related
extensions thereof.

        "Related Party" means with respect to any Excluded Person, (A) any
Affiliate, controlling stockholder, 80% or more owned Subsidiary, or spouse or
immediate family member (in the case of an individual) of such Excluded Person
or (B) any trust, corporation, partnership or other entity, the beneficiaries,
stockholders, partners, owners or persons holding an 80% or more controlling
interest of which consist of such Excluded Person and/or such other persons
referred to in the immediately preceding clause (A).

        "Restricted Investment" means, in one or a series of related
transactions, any Investment, other than investments in Cash Equivalents and
other Permitted Investments; provided, however,



                                       36


that a merger of another Person with or into the Corporation or a Subsidiary
shall not be deemed to be a Restricted Investment so long as the surviving
entity is the Corporation or a Subsidiary.

        "Restricted Payment" means, (a) the declaration or payment of any
dividend or other distribution in respect of Junior Securities or Equity
Interests of the Corporation or any of the Corporation's Subsidiaries, (b) any
payment on account of the purchase, redemption or other acquisition or
retirement for value of Junior Securities or Equity Interests of the Corporation
or any of the Corporation's Subsidiaries, and (c) any Restricted Investment by
such Person; provided, however, that the term "Restricted Payment" shall not
include (i) any dividend, distribution or other payment on or with respect to
Equity Interests of the Corporation to the extent payable solely in shares of
Qualified Capital Stock of the Corporation; (ii) any dividend, distribution or
other payment to the Corporation, or to any of its Subsidiaries, by the
Corporation or any of its Subsidiaries; (iii) payments made in connection with
the Merger; (iv) Permitted Investments; or (v) pro rata dividends and other
distributions on Equity Interests of any Subsidiary by such Subsidiary.

        "SEC" means the Securities and Exchange Commission.

        "Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations thereunder.

        "Senior Notes" means the Company Senior Notes and the Senior
Subordinated Notes.

        "Senior Preferred Stock" means the Corporation's 14% Series A Senior
Redeemable Exchangeable Cumulative Preferred Stock, par value $0.001 per share,
consisting of 3,000,000 authorized shares.

        "Senior Subordinated Notes" means the senior subordinated notes due
2010, including any such notes issued in exchange or replacement therefor,
issued by Operating Company pursuant to the Senior Subordinated Notes Indenture.

        "Senior Subordinated Notes Indenture" means that certain Indenture,
dated as of September 20, 2000, by and among Operating Company, the Subsidiaries
of Operating Company parties thereto, and Chase Manhattan Bank and Trust
Company, National Association, as trustee, pursuant to which the Senior
Subordinated Notes are issued.

        "Senior Subordinated Notes Purchase Agreement" means that certain
Purchase Agreement, dated as of September 20, 2000, by and among Operating
Company and Permitted Investors relating to the Senior Subordinated Notes.

        "Stockholders Agreement" means that certain Stockholders Agreement,
dated as of September 20, 2000, by and among the Corporation, Green Equity
Investors III, L.P, Permitted Investors and the other signatories thereto, as
the same may be amended from time to time.

        "Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50.0% of the total
voting power of the Equity Interests entitled (without regard to the occurrence
of any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such




                                       37


Person or one or more of the other Subsidiaries of that Person (or a combination
thereof) and (ii) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or (b)
the only general partners of which are such Person or of one or more
Subsidiaries of such Person (or any combination thereof).

        "Unrestricted Subsidiary" means any Subsidiary of the Corporation that
does not own any Capital Stock of, or own or hold any Lien on any property of
the Corporation or any other Subsidiary of the Corporation and that, at the time
of determination, shall be an Unrestricted Subsidiary (as designated by the
Board of Directors of the Corporation); provided, however, that (i) such
Subsidiary shall not engage, to any substantial extent, in any line or lines of
business activity other than a Related Business and (ii) neither immediately
prior thereto nor after giving pro forma effect to such designation would there
exist a Default Event. The Board of Directors may designate any Unrestricted
Subsidiary to be a Subsidiary, provided that no Default Event is existing or
will occur as a consequence thereof. Each such designation shall be evidenced by
delivering to the Holders a certified copy of the resolution giving effect to
such designation and an Officers' Certificate certifying that such designation
complied with the foregoing conditions.

        "Wholly Owned Subsidiary" of any Person means a Subsidiary of such
Person all of the outstanding Capital Stock, Equity Interests or other ownership
interests of which (other than directors' qualifying shares and shares in
non-U.S. companies required by local law to be owned by local residents) shall
at the time be owned (i) by such Person, (ii) by one or more wholly owned
Subsidiaries of such Person or (iii) by such Person and one or more wholly owned
Subsidiaries of such Person.

               (b) Interpretation. For the purposes of this Section II. B of
Article Four of this Amended and Restated Certificate of Incorporation: (x)
words in the singular shall be deemed to include the plural and vice versa and
words of one gender shall be deemed to include the other gender as the context
requires and (y) the word "including" and words of similar import shall mean
"including, without limitation," unless the context otherwise requires or unless
otherwise specified.

2.      Rank.

        The Junior Preferred Stock shall, with respect to dividend distributions
and distributions upon the liquidation, winding up or dissolution of the
Corporation, rank senior to all classes of common stock of the Corporation and
to each other class of capital stock or series of preferred stock hereafter
created by the Board of Directors the terms of which do not expressly provide
that it ranks senior to or on a parity with the Junior Preferred Stock as to
dividend distributions and distributions upon the liquidation, winding up or
dissolution of the Corporation (collectively referred to with the common stock
of the Corporation as "Junior Securities"). The Junior Preferred Stock shall,
with respect to dividend distributions and distributions upon the liquidation,
winding up or dissolution of the Corporation, rank on parity with any class of
capital stock or series of preferred stock hereafter created that expressly
provides that it ranks on a parity with the Junior Preferred Stock as to
dividend distributions and distributions upon the liquidation, winding up or
dissolution of the Corporation ("Parity Securities"); provided, however, that
any such Parity Securities that were not approved by the Holders of Junior
Preferred Stock in accordance with Section 6(b)(i) hereof shall be deemed to be
Junior Securities



                                       38


and not Parity Securities. The Junior Preferred Stock shall, with respect to
dividend distributions and distributions upon the liquidation, winding up or
dissolution of the Corporation, rank junior to the Senior Preferred Stock and to
each class of capital stock or series of preferred stock hereafter created that
has been approved by the Holders of Junior Preferred Stock in accordance with
Section 6(b)(ii) hereof and that expressly provides that it ranks senior to the
Junior Preferred Stock as to dividend distributions or distributions upon the
liquidation, winding up or dissolution of the Corporation ("Senior Securities").

3.      Dividends.

               (a) Beginning on the Preferred Stock Issue Date, the Holders of
the outstanding shares of Junior Preferred Stock shall be entitled to receive,
whether or not declared by the Board of Directors, out of funds legally
available therefor, distributions in the form of cash dividends on each share of
Junior Preferred Stock, at a rate per annum equal to 12% of the Liquidation
Preference (with such Liquidation Preference being determined as of the first
day of such Dividend Period) payable quarterly. All dividends shall be
cumulative, whether or not earned or declared, on a daily basis from the
Preferred Stock Issue Date and shall be payable quarterly in arrears on each
Dividend Payment Date, commencing on January 1, 2001; provided, however, that if
any dividend payable on any Dividend Payment Date is not declared and paid in
full in cash on such Dividend Payment Date, the amount payable as dividends on
such Dividend Payment Date that is not paid in cash on such Dividend Payment
Date shall be added to the Liquidation Preference on the relevant Dividend
Payment Date and may no longer be declared or paid as dividends in cash except
for special dividends paid pursuant to Section 3(f). The addition of such amount
to the Liquidation Preference shall constitute full payment of such dividend.
Dividends payable on shares of the Junior Preferred Stock for any period less
than a year shall be computed on the basis of a 360-day year of twelve 30-day
months and the actual number of days elapsed in the period for which such
Dividends are payable. Each distribution in the form of a dividend shall be
payable to the Holders of Junior Preferred Stock of record as they appear on the
stock books of the Corporation on such record dates, not less than 10 nor more
than 45 days preceding the related Dividend Payment Date, as shall be fixed by
the Board of Directors. Dividends shall cease to accumulate in respect of shares
of the Junior Preferred Stock on the date of their redemption unless the
Corporation shall have failed to pay the relevant redemption price on the date
fixed for redemption.

               (b) All dividends paid in cash with respect to shares of the
Junior Preferred Stock pursuant to Section 3(a) shall be paid pro rata to the
Holders thereof entitled thereto.

               (c) Nothing herein contained shall in any way or under any
circumstances be construed or deemed to require the Board of Directors to
declare, or the Corporation to pay or set apart for payment, any dividends on
shares of the Junior Preferred Stock at any time; provided, however, for the
avoidance of doubt, this Section 3(c) shall not be construed or deemed to
prevent any Holder of shares of Senior Preferred Stock from receiving any
dividends to which such Holder is entitled pursuant to Section 5 or 7 hereof.

               (d) No dividends shall be declared by the Board of Directors or
paid or funds set apart for payment of dividends by the Corporation on any
Parity Securities for any period unless cumulative dividends shall have been or
contemporaneously are declared and paid in full,



                                       39


or declared and (in the case of dividends payable in cash) a sum in cash set
apart sufficient for such payment, on the Junior Preferred Stock for all
Dividend Periods terminating on or prior to the date of payment of such
dividends on such Parity Securities. If any dividends are not paid in full, as
aforesaid, upon the shares of the Junior Preferred Stock and any other Parity
Securities, all dividends declared upon shares of the Junior Preferred Stock and
any other Parity Securities shall be declared pro rata based on the relative
liquidation preference of the Junior Preferred Stock and such Parity Securities.
So long as any shares of the Junior Preferred Stock are outstanding, the
Corporation shall not make any payment on account of, or set apart for payment
money for a sinking or other similar fund for, the purchase, redemption or other
retirement of, any of the Parity Securities or any warrants, rights, calls or
options exercisable for or convertible into any of the Parity Securities, and
shall not permit any corporation or other entity directly or indirectly
controlled by the Corporation to purchase, redeem or retire any of the Parity
Securities or any such warrants, rights, calls or options unless dividends
determined in accordance herewith on the Junior Preferred Stock shall have been
paid or contemporaneously are declared and paid in full.

               (e)     (i) Holders of shares of the Junior Preferred Stock shall
be entitled to receive the dividends provided for in Section 3(a) hereof in
preference to and in priority over any dividends upon any of the Junior
Securities.

                       (ii) So long as any shares of Junior Preferred Stock are
outstanding, the Corporation shall not (1) declare, pay or set apart for payment
any dividend on any of the Junior Securities or make any payment on account of,
or set apart for payment money for a sinking or other similar fund for, the
purchase, redemption or other retirement of, any of the Junior Securities or any
warrants, rights, calls or options exercisable for or convertible into any of
the Junior Securities (other than the repurchase, redemption or other
acquisition or retirement for value of Junior Securities (and any warrants,
rights, calls or options exercisable for or convertible into such Junior
Securities) held by current or former directors, officers, employees of or
consultants or advisors to the Corporation or any of its Subsidiaries, which
repurchase, redemption or other acquisition or retirement shall have been
approved by the Board of Directors or shall have been made pursuant to certain
call options provided in the Stockholders Agreement, provided, however, that
such Junior Securities may only be repurchased, redeemed or otherwise acquired
or retired either in exchange for Junior Securities or upon the cessation of
service to the Corporation or its Subsidiaries (by termination, resignation,
retirement, death or disability or otherwise) of such director, officer,
employee, consultant or advisor), or (2) make any distribution in respect of
Junior Securities, either directly or indirectly, and whether in cash,
obligations or shares of the Corporation or other property (other than
distributions or dividends in Junior Securities to the holders of Junior
Securities), or (3) permit any corporation or other entity directly or
indirectly controlled by the Corporation to purchase or redeem any of the Junior
Securities or any such warrants, rights, calls or options, unless in any such
case cumulative dividends determined in accordance herewith have been paid in
full in cash on the Junior Preferred Stock and all other redemption or repayment
obligations in respect of the Junior Preferred Stock have been paid in full in
cash.

               (f) At any time and from time to time when the Liquidation
Preference per share of Junior Preferred Stock exceeds $25.00, the Corporation
may declare and pay, to the holders of record of the Junior Preferred Stock on
the record date chosen by the Corporation for such



                                       40


dividend, a special dividend equal to the positive difference between the
Liquidation Preference per share of Junior Preferred Stock and $25.00 per share
of Junior Preferred Stock (such difference, the "Base Amount"), plus accrued and
unpaid dividends on the Base Amount to the date of payment. Upon payment of such
a dividend, the Liquidation Preference shall be reduced to $25.00 per share of
Junior Preferred Stock.

4.      Liquidation Preference.

        (a) Upon any voluntary or involuntary liquidation, dissolution or
winding up of the affairs of the Corporation, the Holders of shares of Junior
Preferred Stock then outstanding shall be entitled to be paid, out of the assets
of the Corporation available for distribution to its stockholders, the
Liquidation Preference per share of Junior Preferred Stock in cash (plus an
amount in cash equal to a prorated dividend for the period from the last
Dividend Payment Date to the date fixed for liquidation, dissolution or winding
up) before any payment shall be made or any assets distributed to the holders of
any of the Junior Securities, including, without limitation, common stock of the
Corporation. Except as provided in the preceding sentence, Holders of shares of
Junior Preferred Stock shall not be entitled to any distribution in the event of
liquidation, dissolution or winding up of the affairs of the Corporation. If the
assets of the Corporation are not sufficient to pay in full the liquidation
payments payable to the Holders of outstanding shares of the Junior Preferred
Stock and all Parity Securities, then the holders of all such shares shall share
equally and ratably in such distribution of assets of the Corporation in
accordance with the amounts that would be payable on such distribution if the
amount to which the Holders of outstanding shares of Junior Preferred Stock and
the holders of outstanding shares of all Parity Securities are entitled were
paid in full.

        (b) For the purposes of this Section 4, neither the sale, conveyance,
exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the property or assets of the
Corporation nor the consolidation or merger of the Corporation with or into one
or more corporations or other entities shall be deemed to be a liquidation,
dissolution or winding up of the affairs of the Corporation (unless such sale,
conveyance, exchange or transfer is in connection with a liquidation,
dissolution or winding up of the business of the Corporation).

5.      Redemption.

               (a) Optional Redemption.

                      (i) The Corporation may (subject to the legal availability
of funds therefor), at the option of the Corporation, redeem in cash at any time
or from time to time on or after September 20, 2002, from any source of funds
legally available therefor, in whole or in part, in the manner provided in
Section 5(c) hereof, any or all of the shares of the Junior Preferred Stock, at
a redemption price equal to the following percentages of the liquidation
preference per share (plus an amount in cash equal to a prorated dividend for
the period from the Dividend Payment Date immediately prior to the Redemption
Date to the Redemption Date) (the "Optional Redemption Price"), in each case
beginning on September 20 of the year indicated:

               2002                         109%




                                       41


               2003                         106%
               2004                         103%
               2005 and thereafter          100%

               provided, however, that no optional redemption pursuant to this
Section 5(a)(i) shall be authorized or made at any time when the Corporation is
making or required to make within the next 30 days, or purchasing shares of
Junior Preferred Stock under, a Change of Control Offer in accordance with the
provisions of Section 7 hereof.

                      (ii) In the event of a redemption pursuant to Section
5(a)(i) hereof of only a portion of the then outstanding shares of the Junior
Preferred Stock, the Corporation shall effect such redemption as it determines,
pro rata, according to the number of shares held by each Holder of Junior
Preferred Stock.

                      (iii) In the event of a firm commitment underwritten
initial public offering of common stock of the Corporation pursuant to a
registration statement under the Securities Act with aggregate gross proceeds to
the Corporation of at least $30,000,000 (the "Public Offering"), the Corporation
may (subject to the legal availability of funds therefor), at the option of the
Corporation, redeem in cash at any time or from time to time following the
consummation of the Public Offering, from any source of funds legally available
therefor, in whole or in part, in the manner provided in Section 5(c) hereof,
any or all of the shares of the Junior Preferred Stock, at a redemption price
equal to 100% percent of the Liquidation Preference per share (plus an amount in
cash equal to a prorated dividend for the period from the Dividend Payment Date
immediately prior to the Redemption Date to the Redemption Date) (the "Public
Offering Optional Redemption Price"). For the purposes of this Section 5, the
defined term "Optional Redemption Price" shall have the meaning set forth in
Section 5(a)(i) hereof or shall mean the Public Offering Optional Redemption
Price, as the case may be. In the event of a redemption pursuant to this Section
5(a)(iii) of only a portion of the then outstanding shares of the Junior
Preferred Stock, the Corporation shall effect such redemption as it determines,
pro rata, according to the number of shares held by each Holder of Junior
Preferred Stock.

               (b) Mandatory Redemption. On September 20, 2012, the Corporation
shall redeem in cash, subject to contractual and other restrictions with respect
thereto, from any source of funds legally available therefor, in the manner
provided in Section 5(c) hereof all but not less than all of the shares of the
Junior Preferred Stock then outstanding at a redemption price equal to 100% of
the Liquidation Preference per share (plus an amount in cash equal to a prorated
dividend for the period from the Dividend Payment Date immediately prior to the
Redemption Date to the Redemption Date) (the "Mandatory Redemption Price").

               (c) Procedures for Redemption.

                      (i) Written notice (the "Redemption Notice") shall be
given by first-class mail, postage prepaid, to each Holder of Junior Preferred
Stock of record on the record date fixed for such redemption of the Junior
Preferred Stock at such Holder's address as the same appears on the stock
register of the Corporation; provided, however, that no failure to give such
notice nor any deficiency therein shall affect the validity of the procedure for
the redemption of any shares of Junior Preferred Stock to be redeemed except as
to the Holder or Holders to whom



                                       42


the Corporation has failed to give said notice or except as to the Holder or
Holders whose notice was defective. The Redemption Notice shall state: (1)
whether the redemption is pursuant to Section 5(a) or 5(b) hereof; (2) the
Optional Redemption Price or the Mandatory Redemption Price, as the case may be;
(3) whether all or less than all the outstanding shares of the Junior Preferred
Stock are to be redeemed and the total number of shares of the Junior Preferred
Stock being redeemed; (4) the number of shares of Junior Preferred Stock held,
as of the appropriate record date, by the Holder that the Corporation intends to
redeem; (5) the date fixed for redemption; (6) that the Holder is to surrender
to the Corporation, at the place or places where certificates for shares of
Junior Preferred Stock are to be surrendered for redemption, in the manner and
at the price designated, his certificate or certificates representing the shares
of Junior Preferred Stock to be redeemed; and (7) that dividends on the shares
of the Junior Preferred Stock to be redeemed shall cease to accrue on such
Redemption Date unless the Corporation defaults in the payment of the Optional
Redemption Price or the Mandatory Redemption Price, as the case may be.

                      (ii) Each Holder of Junior Preferred Stock shall surrender
the certificate or certificates representing such shares of Junior Preferred
Stock to be redeemed to the Corporation, duly endorsed, in the manner and at the
place designated in the Redemption Notice, and on the Redemption Date the full
Optional Redemption Price or Mandatory Redemption Price, as the case may be, for
such shares shall be payable in cash to the Person whose name appears on such
certificate or certificates as the owner thereof, and each surrendered
certificate shall be canceled and retired. In the event that less than all of
the shares represented by any such certificate are redeemed, a new certificate
shall be issued representing the unredeemed shares.

                      (iii) Unless the Corporation defaults in the payment in
full of the applicable redemption price, dividends on the Junior Preferred Stock
called for redemption shall cease to accumulate on the Redemption Date, and the
Holders of such redemption shares shall cease to have any further rights with
respect thereto on the Redemption Date, other than the right to receive the
Optional Redemption Price or the Mandatory Redemption Price, as the case may be,
without interest.

               6. Voting Rights.

               (a) The Holders of shares of Junior Preferred Stock, except as
otherwise required under Delaware law or as set forth in Section 6(b) below,
shall not be entitled or permitted to vote on any matter required or permitted
to be voted upon by the stockholders of the Corporation.

               (b)    (i) So long as any shares of the Junior Preferred Stock
are outstanding, the Corporation shall not authorize or issue any class or
series of Parity Securities without the affirmative vote or consent of Holders
of a majority of the outstanding shares of Junior Preferred Stock, voting or
consenting, as the case may be, separately as one class, given in person or by
proxy, either in writing or by resolution adopted at an annual or special
meeting, except that without the approval of Holders of Junior Preferred Stock,
the Corporation may authorize and issue shares of Parity Securities in exchange
for, or the proceeds of which concurrently are used to redeem or repurchase, any
or all shares of Junior Preferred Stock then outstanding; provided, however,
that, in the case of Parity Securities issued in exchange for, or



                                       43


the proceeds of which are used to redeem or repurchase, less than all shares of
Junior Preferred Stock then outstanding, (1) the aggregate liquidation
preference of such Parity Securities shall not exceed the aggregate liquidation
preference of, premium and accrued and unpaid dividends on, and expenses in
connection with the refinancing of, the Junior Preferred Stock so exchanged,
redeemed or repurchased, (2) such Parity Securities shall not be Disqualified
Capital Stock and (3) the Corporation may pay dividends on such Parity
Securities in the form of cash or such Parity Securities.

                      (ii) So long as any shares of the Junior Preferred Stock
are outstanding, the Corporation shall not authorize or issue any class or
series of Senior Securities without the affirmative vote or consent of Holders
of a majority of the outstanding shares of Junior Preferred Stock, voting or
consenting, as the case may be, separately as one class, given in person or by
proxy, either in writing or by resolution adopted at an annual or special
meeting.

                      (iii) So long as any shares of the Junior Preferred Stock
are outstanding, the Corporation shall not amend this Amended and Restated
Certificate of Incorporation, so as to affect adversely the specified rights,
preferences, privileges or voting rights of Holders of shares of Junior
Preferred Stock or to authorize the issuance of any additional shares of Junior
Preferred Stock without the affirmative vote or consent of Holders of a majority
of the outstanding shares of Junior Preferred Stock, voting or consenting, as
the case may be, separately as one class, given in person or by proxy, either in
writing or by resolution adopted at an annual or special meeting.

                      (iv) The affirmative vote or consent of Holders of a
majority of the outstanding shares of Junior Preferred Stock, voting or
consenting, as the case may be, separately as one class, whether voting in
person or by proxy, either in writing or by resolution adopted at an annual or
special meeting, may waive compliance with any provision of Section II.A or II.
B of Article Four of this Amended and Restated Certificate of Incorporation.

               (c) In any case in which the Holders of shares of the Junior
Preferred Stock shall be entitled to vote pursuant to this Section 6 or pursuant
to Delaware law, each Holder of shares of the Junior Preferred Stock shall be
entitled to one vote for each share of Junior Preferred Stock held.

       7. Change of Control Offer.

               Subject to contractual and other restrictions with respect
thereto, upon the occurrence of a Change of Control, the Corporation shall make
an offer (a "Change of Control Offer") to each Holder of Junior Preferred Stock
to repurchase any or all of such Holder's shares of Junior Preferred Stock at a
purchase price in cash equal to 101.0% of the aggregate liquidation preference
thereof plus accumulated and unpaid dividends thereon, if any, to the date of
repurchase (the "Change of Control Payment").

               (a) Within 30 days following any Change of Control, the
Corporation shall mail a notice to each Holder of Junior Preferred Stock
stating: (i) that the Change of Control Offer is being made pursuant to this
Section 7 and that all shares of Junior Preferred Stock tendered will be
accepted for payment; (ii) the purchase price and the purchase date, which shall




                                       44


be no sooner than 30 nor later than 60 days from the date such notice is mailed
(the "Change of Control Payment Date"); (iii) that any shares not tendered will
continue to accumulate dividends; (iv) that, unless the Corporation defaults in
the payment of the Change of Control Payment, all shares of Junior Preferred
Stock accepted for payment pursuant to the Change of Control Offer shall cease
to accumulate dividends after the Change of Control Payment Date; (v) that
Holders electing to have any shares of Junior Preferred Stock repurchased
pursuant to a Change of Control Offer will be required to surrender such shares
to the Corporation or its paying agent at the address specified in the notice
prior to the close of business on the third Business Day preceding the Change of
Control Payment Date; (vi) that Holders will be entitled to withdraw their
election if the Corporation or the paying agent, as the case may be, receives,
not later than the close of business on the third Business Day preceding the
Change of Control Payment Date, a telegram, telex, facsimile transmission or
letter setting forth the name of the Holder, the number of shares of Junior
Preferred Stock delivered for repurchase, and a statement that such Holder is
withdrawing his election to have such shares repurchased; and (vii) that Holders
whose shares of Junior Preferred Stock are being repurchased only in part will
be issued new shares of Junior Preferred Stock equal in Liquidation Preference
to the unpurchased portion of the shares of Junior Preferred Stock surrendered.

               (b) On the Change of Control Payment Date, the Corporation shall,
to the extent lawful, (i) accept for payment all shares of Junior Preferred
Stock or portions thereof properly tendered pursuant to the Change of Control
Offer and (ii) deposit with the Corporation's paying agent an amount equal to
the Change of Control Payment in respect of all shares of Junior Preferred Stock
or portions thereof so tendered. The Corporation or its paying agent, as the
case may be, shall promptly mail to each Holder of shares of Junior Preferred
Stock so tendered the Change of Control Payment for such shares or portions
thereof. The Corporation shall promptly issue a certificate representing shares
of Junior Preferred Stock and mail to each Holder a new certificate representing
shares of Junior Preferred Stock equal in Liquidation Preference to any
unpurchased portion of such shares surrendered by such Holder, if any. The
Corporation shall notify the remaining holders of Junior Preferred Stock of the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Payment Date.

               (c) The Corporation shall comply with the requirements of Rule
14e-1 under the Exchange Act and any other securities laws and regulations
thereunder to the extent such laws and regulations are applicable in connection
with the repurchase of shares of Junior Preferred Stock in connection with a
Change of Control.

               (d) The Corporation's obligations with respect to a Change of
Control Offer shall be satisfied to the extent actually performed by a third
party in accordance with the terms of this Section 7.

       8. Conversion or Exchange.

               The Holders of shares of Junior Preferred Stock shall not have
any rights hereunder to convert such shares into or exchange such shares for
shares of any other class or classes or of any other series of any class or
classes of Capital Stock of the Corporation.


                                       45


               9. Preemptive Rights.

               No shares of Junior Preferred Stock shall have any rights of
preemption whatsoever as to any securities of the Corporation, or any warrants,
rights or options issued or granted with respect thereto, regardless of how such
securities or such warrants, rights or options may be designated, issued or
granted.

               10. Reissuance of Junior Preferred Stock.

               Shares of Junior Preferred Stock that have been issued and
reacquired in any manner, including shares purchased or redeemed or exchanged,
shall (upon compliance with any applicable provisions of the laws of Delaware)
have the status of authorized but unissued shares of preferred stock of the
Corporation undesignated as to series and may be designated or redesignated and
issued or reissued, as the case may be, as part of any series of preferred stock
of the Corporation; provided, however, that such shares may not in any event be
reissued as Junior Preferred Stock.

               11. Business Day.

               If any payment, redemption or exchange shall be required by the
terms hereof to be made on a day that is not a Business Day, such payment,
redemption or exchange shall be made on the immediately succeeding Business Day,
and no interest shall accrue for the intervening period.

               12. Certain Additional Provisions.

                               (a) Restricted Payments. The Corporation shall
not, and shall not permit any of its Subsidiaries to, directly or indirectly
make any Restricted Payment, unless, at the time of such Restricted Payment: (1)
no Default Event shall have occurred and be continuing or would occur as a
consequence thereof; and (2) such Restricted Payment, together with the
aggregate of all other Restricted Payments made by the Corporation and its
Subsidiaries after the Preferred Stock Issue Date, does not exceed the sum (the
"Basket") of (a) (i) Consolidated EBITDA of the Corporation for the period
(taken as one accounting period), commencing on the first day of the first
fiscal quarter commencing on or prior to the Preferred Stock Issue Date, to and
including the last day of the fiscal quarter ended immediately prior to the date
of each such calculation (or, in the event Consolidated EBITDA for such period
is a deficit, then minus such deficit) less (ii) 150% of Consolidated Fixed
Charges for such period, plus (b) the aggregate Net Cash Proceeds received by
the Corporation from the sale of the Corporation's Qualified Capital Stock
(other than in each case (i) to a Subsidiary of the Corporation, (ii) to the
extent applied in connection with a Qualified Exchange and (iii) to the extent
applied to repurchase Capital Stock pursuant to clause (iii) of the definition
of Other Permitted Payments after the Preferred Stock Issue Date). The foregoing
provisions of this Section 12(a) shall not prohibit the following Restricted
Payments: (A) a Qualified Exchange; (B) the payment of any dividend within 60
days after the date of declaration thereof, if at said date of declaration such
payment would have complied with the provisions of Section II.A or II. B of
Article Four of this Amended and Restated Certificate of Incorporation; and (C)
Other Permitted Payments. The full amount of any Restricted Payment made
pursuant to clause (B) of the immediately preceding sentence (but not pursuant
to clauses



                                       46


(A) or (C) of the immediately preceding sentence), however, will be deducted in
the calculation of the aggregate amount of Restricted Payments available to be
made pursuant to the Basket. The amount of any Restricted Payment, if other than
in cash, shall be the fair market value thereof, as determined in the good faith
reasonable judgment of the Board of Directors.

               (b) Reports. So long as any shares of Junior Preferred Stock are
outstanding, the Corporation shall furnish to each Holder of Junior Preferred
Stock (at such Holder's address listed in the register of Holders maintained by
the transfer agent and registrar of the Junior Preferred Stock): (i) beginning
at the end of the Corporation's first fiscal year ending after the Preferred
Stock Issue Date, all quarterly and annual financial information that would be
required to be contained in a filing with the SEC on Forms 10-Q and 10-K if the
Corporation were required to file such forms, including a "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and,
with respect to the annual information only, a report thereon by the
Corporation's certified independent accountants, and (ii) all current reports
that would be required to be filed with the SEC on Form 8-K if the Corporation
were required to file such reports.

               13. Transfer Restrictions.

               The certificates evidencing shares of Junior Preferred Stock
shall, until the second anniversary of the date of original issuance of such
shares, unless otherwise agreed by the Corporation and the holders of any such
certificates, bear a legend substantially to the following effect:

               "The Junior Preferred Stock evidenced hereby was originally
issued in a transaction exempt from registration under Section 5 of the United
States Securities Act of 1933, as amended (the "Securities Act"), and the Junior
Preferred Stock evidenced hereby may not be offered, sold or otherwise
transferred in the absence of such registration or an applicable exemption
therefrom. Each purchaser of the Junior Preferred Stock evidenced hereby is
hereby notified that the seller may be relying on the exemption from the
provisions of Section 5 of the Securities Act provided by Rule 144A thereunder.
The Holder of the Junior Preferred Stock evidenced hereby agrees for the benefit
of the Corporation that (A) such Junior Preferred Stock may be offered, resold,
pledged or otherwise transferred, only (a) inside the United States to a Person
whom the seller reasonably believes is a qualified institutional buyer (as
defined in Rule 144A) in a transaction meeting the requirements of Rule 144A,
(b) outside the United States to a foreign Person in a transaction meeting the
requirements of Rule 903 or Rule 904 of Regulation S under the Securities Act,
(c) in a transaction meeting the requirements of Rule 144 under the Securities
Act, (d) to the Corporation, (e) pursuant to an effective registration statement
or (f) in accordance with another exemption from the registration requirements
of the Securities Act (and based upon an opinion of counsel if the Corporation
so requests), and, in each case, in accordance with any applicable securities
laws of any state of the United States or any other applicable jurisdiction and
(B) the holder will, and each subsequent holder is required to, notify any
purchaser from it of the Junior Preferred Stock evidenced hereby of the resale
restrictions set forth in (A) above."

               The shares of Junior Preferred Stock not otherwise registered
pursuant to an effective registration statement under the Securities Act shall
be subject to the restrictions on



                                       47


transfer set forth in the legend referred to above until the second anniversary
of the date of original issuance of such shares of Junior Preferred Stock.

C.  Undesignated Preferred Stock

        5,000,000 shares of Preferred Stock authorized by this Amended and
Restated Certificate of Incorporation may be issued from time to time in one or
more series.

FIFTH: The business and affairs of the Corporation shall be managed by or under
the direction of the Board of Directors. In addition to the powers and authority
expressly conferred upon them by statute or by this Amended and Restated
Certificate of Incorporation or the bylaws of the Corporation, the Board of
Directors is hereby empowered to exercise all such powers and do all such acts
and things as may be exercised or done by the Corporation. Election of directors
need not be by written ballot unless the bylaws so provide.

SIXTH: The Board of Directors is authorized to make, adopt, amend, alter or
repeal the bylaws of the Corporation. The stockholders shall also have power to
make, adopt, amend, alter or repeal the bylaws of the Corporation.

SEVENTH: To the fullest extent permitted by the GCL as the same exists or may
hereafter be amended, a director of the Corporation shall not be liable to the
Corporation or its stockholders for monetary damage for breach of fiduciary duty
as a director. If the GCL is amended after the date of the filing of this
Amended and Restated Certificate of Incorporation to authorize corporate action
further eliminating or limiting the personal liability of directors, then the
liability of a director of the Corporation shall be eliminated or limited to the
fullest extent permitted by the GCL, as so amended from time to time. No
amendment or repeal of this Article shall adversely affect any right or
protection of a director of the Corporation provided hereunder with respect to
any act or omission occurring prior to such amendment or repeal.

        The Corporation shall indemnify to the fullest extent permitted by the
GCL as the same exists or may hereafter be amended, any person made, or
threatened to be made, a defendant or witness to any action, suit or proceeding
(whether civil or criminal or otherwise) by reason of the fact that such person,
or his or her testator or intestate, is or was a director, officer, employee or
agent of the Corporation or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust, employee benefit plan or enterprise. Nothing contained
herein shall affect any rights to indemnification to which any person may be
entitled by law. No amendment or repeal of this Article shall adversely affect
any right to indemnification provided hereunder with respect to any act or
omission occurring prior to such amendment or repeal.

        In furtherance and not in limitation of the powers conferred by statute:

               (i) this Corporation may purchase and maintain insurance on
behalf of any person who is or was a director or officer, employee or agent of
the Corporation, or is serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise against any liability asserted
against him or her and incurred by him or her in any such capacity, or arising
out of his



                                       48


or her status as such, whether or not the Corporation would have the
power to indemnify against such liability under the provisions of law; and

               (ii) this Corporation may create a trust fund, grant a security
interest and/or use other means (including, without limitation, letters of
credit, surety bonds and/or other similar arrangements), as well as enter into
contracts providing indemnification to the full extent authorized or permitted
by law and including as part thereof provisions with respect to any or all of
the foregoing to ensure the payment of such amounts as may become necessary to
effect indemnification as provided therein, or elsewhere.

        Any repeal or modification of the foregoing provisions of this Article
by the stockholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such repeal
or modification.

EIGHTH: The stockholders of the Corporation may not take action by written
consent in lieu of a meeting but must take any such action at a duly called
annual or special meeting. Special meetings of the stockholders of the
Corporation for any purpose or purposes may be called only by the Board of
Directors, the Chairman of the Board, the Chief Executive Officer or the
President of the Corporation.

NINTH: The number of directors which constitute the entire Board of Directors
shall be as specified in the bylaws of the Corporation. At each annual meeting
of stockholders, directors of the Corporation shall be elected to hold office
until the expiration of the term of which they are elected and until their
successors have been duly elected and qualified; except that if any such
election shall not be so held, such election shall take place at a stockholders'
meeting called and held in accordance with the GCL.

        Effective as of the date of the first regularly scheduled annual meeting
of the stockholders following the date (the "Effective Date") on which the
Corporation first becomes subject to the periodic and other reporting
requirements of Section 13 of the Securities Exchange Act of 1934, as amended,
the directors of the Corporation shall be divided into three classes as nearly
equal in size as is practicable, hereby designated Class I, Class II and Class
III. The term of office of the initial Class I directors shall expire at the
second annual meeting of the stockholders following the Effective Date, the term
of office of the initial Class II directors shall expire at the third annual
meeting of the stockholders following the Effective Date and the term of office
of the initial Class III directors shall expire at the fourth annual meeting of
the stockholders following the Effective Date. At each annual meeting of
stockholders, commencing with the second regularly-scheduled annual meeting of
stockholders following the Effective Date, each of the successors elected to
replace the directors of a Class whose term shall have expired at such annual
meeting shall be elected to hold office until the third annual meeting next
succeeding his or her election and until his or her respective successor shall
have been duly elected and qualified.

        If the number of directors is hereafter changed, any newly created
directorships or decrease in directorships shall be so apportioned among the
classes as to make all classes as nearly equal in number as is practicable,
provided that no decrease in the number of directors constituting the Board of
Directors shall shorten the term of any incumbent director.

                                       49


        Any director may be removed from office by the stockholders of the
Corporation only for cause.

        Vacancies occurring on the Board of Directors for any reason and newly
created directorships resulting from an increase in the authorized number of
directors may be filled only by vote of a majority of the remaining members of
the Board of Directors, although less than a quorum, at any meeting of the Board
of Directors. A person so elected by the Board of Directors to fill a vacancy or
newly created directorship shall hold office until the next election of the
Class for which such director shall have been chosen and until his or her
successor shall have been duly elected and qualified.

TENTH: The Corporation reserves the right to amend, alter, change or repeal any
provision contained in this Amended and Restated Certificate of Incorporation,
in the manner now or hereafter prescribed by statute and all rights conferred
upon stockholders herein are granted subject to this reservation.
Notwithstanding any other provision of this Amended and Restated Certificate of
Incorporation or any provision of law which might otherwise permit a lesser
vote, but in addition to any vote of the holders of any class or series thereof
of the stock of this Corporation required by law or this Amended and Restated
Certificate of Incorporation, the affirmative vote of the holders of at least
two-thirds (2/3) of the combined voting power of all of the then-outstanding
shares of the capital stock of the Corporation entitled to vote generally in the
election of directors, voting together as a single class, shall be required to
amend, repeal or adopt any provision contained in this Amended and Restated
Certificate of Incorporation which is inconsistent with (i) Article SIXTH, (ii)
Article EIGHTH, (iii) Article NINTH, and (iv) this Article TENTH.

        IN WITNESS WHEREOF, the undersigned has duly executed this Amended and
Restated Certificate of Incorporation in the name and on behalf of the
Corporation on the 19th day of November 2001, and the statements contained
herein are affirmed as true under penalty of perjury.

                                          /s/ Tomas W. Fuller
                                          ----------------------------------
                                          Tomas W. Fuller
                                          Chief Financial Officer and Assistant
                                          Secretary


                                       50

EX-3.2

                                                                     Exhibit 3.2


                          AMENDED AND RESTATED BYLAWS
                                       OF

                                VCA ANTECH, INC.
                             A DELAWARE CORPORATION
                              (THE "CORPORATION")
                            AS OF NOVEMBER 20, 2001

                                    ARTICLE I
                                CORPORATE OFFICES

        Section 1 Registered Office. The registered office of the Corporation in
the State of Delaware is located at 1209 Orange Street, in the City of
Wilmington, County of Newcastle.

        Section 2 Principal Office. The principal office of the Corporation is
located at 12401 West Olympic Boulevard, Los Angeles, California 90064-1022.

        The Board of Directors (herein referred to as the "Board") is hereby
granted the full power and authority, by a resolution of a majority of the
directors, to change the principal office from one location to another.

        Section 3 Other Offices. The Corporation may establish any additional
offices, at any place or places, as the Board may designate, or as the business
of the Corporation shall require.

                                   ARTICLE II
                              STOCKHOLDERS MEETINGS

        Section 1 Place of Meeting. Meetings of the Stockholders shall be held
at the principal offices of the Corporation or at such place, within or without
the State of Delaware, as may from time to time be designated for that purpose,
by the Board.

        Section 2 Annual Meetings. Annual meetings of stockholders shall be held
at a place and time on any weekday which is not a holiday and which is not more
than 120 days after the end of the fiscal year of the Company as shall be
designated by the Board and stated in the notice of the meeting, at which the
stockholders shall elect the directors of the Company and transact such other
business as may properly be brought before the meeting.

        Section 3 Special Meetings. Special meetings of the Stockholders, for
any purpose or purposes prescribed in the notice of the meeting, may be called
only (i) by the Board pursuant to a resolution adopted by a majority of the
total number of authorized directors (whether or not there exist any vacancies
in previously authorized directorships at the time any such resolution is
presented to the Board for adoption) or (ii) by the Chairman of the Board, the
President, or the Chief Executive Officer if made by a written request to the
Board and shall be held at such place, on such date, and at such time as the
Board shall fix. Business transacted at special meetings shall be confined to
the purpose or purposes stated in the notice.

        Section 4 Notice of Meetings. Except as otherwise provided by the DGCL,
as that term is defined in Section 9 of Article VI, written notice of each
meeting of the Stockholders, whether annual or special, shall be given not less
than 10 nor more than 60 days prior to the date upon which the meeting is to be
held to each Stockholder entitled to vote at such meeting. Such notice shall be



deemed delivered when deposited in the United States mail, postage prepaid,
addressed to the Stockholder at such person's address as it appears on the stock
records of the Corporation, or otherwise actually delivered to such address or
such person. Such notice shall state the place, date and hour of the meeting,
and, in the case of a special meeting, the purpose or purposes for which the
meeting is called. If a meeting is adjourned to another time or place, notice
need not be given of the adjourned meeting if the time and place thereof are
announced at the meeting at which the adjournment is taken. If the adjournment
is for more than 30 days, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each Stockholder of record entitled to vote at the meeting.

        Section 5 Quorum. Except as otherwise provided by law, the Certificate
of Incorporation or these Bylaws, at each meeting of Stockholders the presence
in person or by proxy of the holders of shares of stock having a majority of the
votes which could be cast by the holders of all outstanding shares of stock
entitled to vote at the meeting shall be necessary and sufficient to constitute
a quorum. In the absence of a quorum, any meeting of the Stockholders may be
adjourned from time to time by the chairman of the meeting or a majority of the
votes represented either in person or by proxy, and no other business may be
transacted at a meeting except that the Stockholders 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 Stockholders to leave less
than a quorum, if any action taken (other than adjournment) is approved by at
least a majority of the shares required to constitute a quorum.

        Section 6 Adjourned Meeting. Any Stockholders' meeting, annual or
special, whether or not a quorum is present, may be adjourned by the chairman of
the meeting or by a vote of a majority of the shares present, either in person
or by proxy. At any adjourned meeting, the Corporation may transact any business
which might have been transacted at the original meeting.

        Section 7 Chairman of Meeting; Opening of Polls. Meetings of
Stockholders shall be presided over by the person designated by the Board, or in
the absence of such designation, by the Chairman of the Board, if any, or in his
absence by the Vice Chairman of the Board, if any, or in his absence by the
Chief Executive Officer, or in their absence by a chairman chosen at the meeting
by the Stockholders. The Secretary shall act as secretary of the meeting, but in
his absence, the chairman of the meeting may appoint any person to act as
secretary of the meeting. The chairman of the meeting shall announce at each
meeting of Stockholders the date and time of the opening of the polls for each
matter upon which the Stockholders will vote.

        Section 8 Proxies. Each 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 another person or persons to act for such person
by proxy.

        Section 9 Stockholder List. The officer who has charge of the stock
ledger of the Corporation shall prepare and make, at least ten days before every
meeting of Stockholders, a complete list of the Stockholders entitled to vote at
the meeting, arranged in alphabetical order, and showing the address of each
Stockholder and the number of shares registered in the name of each Stockholder.
Such list shall be open to the examination of any Stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, 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, if not so specified, at the place where the meeting is to be


                                       2


held. The list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any Stockholder
who is present.

        Section 10 No Consent of Stockholders in Lieu of Meeting. The
Stockholders of the Corporation may not take action by written consent in lieu
of a meeting but must take action at a duly called annual or special meeting, as
described in this Article II.

        Section 11 Inspectors of Election. In advance of any meeting of the
Stockholders, the Board shall appoint at least one person, other than nominees
for office, as inspectors of election, to act at such meeting or any adjournment
thereof. The number of such inspectors of election shall be one or three. In
case any person appointed as inspector fails to appear or refuses to act, the
vacancy shall be filled by appointment by the Board in advance of the meeting,
or at the meeting by the chairman of the meeting.

        The duties of each such inspector shall include: determining the number
of shares outstanding and voting power of each; determining the shares
represented at the meeting; determining the existence of a quorum; determining
the authenticity, validity and effect of proxies; receiving votes, ballots or
consents; hearing and determining all challenges and questions in any way
arising in connection with the right to vote; retaining for a reasonable period
the disposition of any challenges made to the inspector's determinations;
counting and tabulating all votes; determining when the polls shall close;
determining the result of any election; certifying the determination of the
number of shares represented at the meeting, and the count of all votes and
ballots; certifying any information considered in determining the validity and
counting of proxies and ballots if that information is used for the purpose of
reconciling proxies and ballots submitted by or on behalf of banks, brokers,
their nominees or similar persons which represent more votes than the
Stockholder holds of record; and performing such acts as may be proper to
conduct the election or vote with fairness to all Stockholders.

        An announcement shall be made at each meeting of the Stockholders by the
chairman of the meeting of the date and time of the opening and closing of polls
for each matter upon which the Stockholders will vote at the meeting. No ballot,
proxies or votes, nor any revocations thereof or changes thereto, shall be
accepted by the inspectors after the closing of the polls unless the Delaware
Court of Chancery upon application by a Stockholder shall determine otherwise.

        Unless otherwise provided in the Certificate of Incorporation or these
Bylaws, this Section 11 shall not apply to the Corporation if the Corporation
does not have a class of voting stock that is:

        (a) listed on a national securities exchange;

        (b) authorized for quotation on an interdealer quotation system of a
registered national securities association; or

        (c) held of record by more than 2,000 Stockholders.

        Section 12 Record Date. In order that the Corporation may determine the
Stockholders entitled to notice of or to vote at any meeting of Stockholders or
any adjournment thereof, or 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 stock or for the purpose of any
other lawful


                                       3


action, the Board may fix, in advance, a record date, which shall not be more
than 60 nor less than 10 days before the date of such meeting, nor more than 60
days prior to any other action.

        If no record date is fixed:

        (a) The record date for determining Stockholders entitled to notice of
or to vote at a meeting of Stockholders shall be at the close of business on the
day next preceding the day on which notice is given, or, if notice is waived, at
the close of business on the day next preceding the day on which the meeting is
held;

        (b) The record date for determining Stockholders entitled to express
consent to corporate action in writing without a meeting, when no prior action
by the Board is necessary, shall be the day on which the first written consent
is expressed;

        (c) The record date for determining Stockholders for any other purpose
shall be at the close of business on the day on which the Board adopts the
resolution relating thereto.

        A determination of Stockholders of record entitled to notice of or to
vote at a meeting of Stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board may fix a new record date for the adjourned
meeting.

        Section 13 Conduct of Meetings. The Board may adopt such rules and
regulations for the conduct of meetings of Stockholders as it shall deem
appropriate. Except to the extent inconsistent with such rules and regulations
as adopted by the Board, the chairman of any meeting shall have the right and
authority to prescribe such rules, regulations and procedures and to do all such
acts as, in the judgment of the chairman, are appropriate for the proper conduct
of the meeting. Such rules, regulations or procedures, whether adopted by the
Board or prescribed by the chairman of the meeting, may include, without
limitation, the following: (i) the establishment of an agenda or order of
business for the meeting; (ii) rules and procedures for maintaining order at the
meeting and the safety of those present; (iii) limitations on attendance at or
participation in the meeting to Stockholders of record, their duly authorized
and constituted proxies or such other persons as the chairman of the meeting
shall determine; (iv) restrictions on entry to meeting after the time fixed for
commencement thereof; (v) limitations on the time allotted to questions or
comments by participants. Unless and to the extent determined by the Board or
the chairman of meeting, meetings of Stockholders shall not be required to be
held in accordance with the rules of parliamentary procedure.

        Section 14 Exception to Requirements of Notice. No notice is required to
be given to any Stockholder under the Certificate of Incorporation or these
Bylaws if under Section 230 of the DGCL no such notice is required to be given.

        Section 15 Matters Considered at Annual Meeting. At an annual meeting of
the Stockholders, only such business shall be conducted as shall have been
properly brought before the meeting. To be properly brought before an annual
meeting business must be (a) specified in the notice of meeting (or any
supplement thereto) given by or at the direction of the Board, (b) otherwise
properly brought before the meeting by or at the direction of the Board, or (c)
otherwise properly brought before the meeting by a Stockholder. For business to
be properly brought before an annual meeting by a Stockholder, the Stockholder
must have given timely notice thereof in


                                       4


writing to the Secretary of the Corporation. To be timely, a Stockholder's
notice must be delivered to or mailed and received at the principal executive
offices of the Corporation, not less than 60 days nor more than 90 days prior to
the meeting; provided, however, that in the event that less than 70 days' notice
or prior public disclosure of the date of the meeting is given or made to the
Stockholders, notice by the Stockholder to be timely must be so received not
later than the close of business on the 10th day following the day on which such
notice of the date of the annual meeting was mailed or such public disclosure
was made. A Stockholder's notice to the Secretary shall set forth as to each
matter the Stockholder proposes to bring before the annual meeting (a) a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting, (b) the name and
address, as they appear on the Corporation's books, of the Stockholder proposing
such business, (c) the class and number of shares of the Corporation which are
beneficially owned by the Stockholder, and (d) any material interest of the
Stockholder in such business. Notwithstanding anything in the By-laws to the
contrary, no business shall be conducted at any annual meeting except in
accordance with the procedures set forth in this Section. The chairman of the
annual meeting shall, if the facts warrant, determine and declare to the meeting
that business was not properly brought before the meeting and in accordance with
the provisions of this section and if he should so determine, he shall so
declare to the meeting and any such business not properly brought before the
meeting shall not be transacted.

        Section 16 Nominations for Director . Only persons who are nominated in
accordance with the procedures set forth in this Section shall be eligible for
election as Directors. Nominations of persons for election to the Board may be
made at a meeting of Stockholders by or at the direction of the Board or by any
Stockholder entitled to vote for the election of Directors at the meeting who
complies with the notice procedures set forth in this Section. Such nominations,
other than those made by or at the direction of the Board shall be made pursuant
to timely notice in writing to the Secretary of the Corporation. To be timely, a
Stockholder's notice shall be delivered to or mailed and received at the
principal executive offices of the Corporation not less than 60 days nor more
than 90 days prior to the meeting provided, however, that in the event that less
than 70 days' notice or prior public disclosure of the date of the meeting is
given or made to the Stockholders, notice by the Stockholder to be timely must
be so received not later than the close of business on the 10th day following
the day on which such notice of the date of the meeting was mailed or such
public disclosure was made. Such Stockholder's notice shall set forth (a) as to
each person whom the Stockholder proposes to nominate for election or
re-election as a Director, (i) the name, age, business address and residence
address of such person, (ii) the principal occupation or employment of such
person, (iii) the class and number of shares of the Corporation which are
beneficially owned by such person, and (iv) any other information relating to
such person that is required to be disclosed in solicitations of proxies for
election of Directors, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended (including
without limitation such persons' written consent to being named in the proxy
statement as a nominee and to serving as a Director if elected); and (b) as to
the Stockholder giving the notice (i) the name and address, as they appear on
the Corporation's books, of such Stockholder and (ii) the class and number of
shares of the Corporation which are beneficially owned by such Stockholder. At
the request of the Board any person nominated by the Board for election as a
Director shall furnish to the Secretary of the Corporation that information
required to be set forth in a Stockholder's notice of nomination which pertains
to the nominee. No person shall be eligible for election as a Director of the
Corporation unless nominated in accordance with the procedures set forth in this
Section. The chairman of the meeting shall, if the facts warrant, determine and
declare


                                       5


to the meeting that a nomination was not made in accordance with the procedures
prescribed by the Bylaws, and if he should so determine, he shall so declare to
the meeting and the defective nomination shall be disregarded.

                                   ARTICLE III
                               BOARD OF DIRECTORS

Section 1 Powers. The business and affairs of the Corporation shall be managed
by, or under the direction of the Board, except as may be otherwise provided by
the DGCL or in the Certificate of Incorporation or these Bylaws.

        Section 2 Number. The Board shall consist of one or more members, the
number thereof to be determined from time to time by resolution of the Board.

        Section 3 Place of Meeting. Unless otherwise provided in the Certificate
of Incorporation, meetings, both regular and special, of the Board shall be held
at the Corporation's principal executive offices, or at such other place or
places as the Board or the Chairman of the Board may from time to time
determine.

        Section 4 Regular Meetings. Immediately following each annual meeting of
the Stockholders the Board shall hold a regular meeting at the same place at
which such Stockholders' meeting is held, or any other place as may be fixed
from time to by the Board or the Chairman of the Board. Notice of such meeting
need not be given.

        Other regular meetings of the Board shall be held without call at such
time as the Board may from time to time determine. If any day fixed for a
regular meeting shall be a legal holiday at the place where the meeting is to be
held, then the meeting which would otherwise be held on that day shall be held
at the same hour on the next succeeding business day not a legal holiday. Notice
of a regular meeting need not be given.

        Section 5 Special Meetings. Except as otherwise provided in the
Certificate of Incorporation, special meetings of the Board for any purpose or
purposes may be called at any time by the Chairman of the Board, the Chief
Executive Officer, the Chief Financial Officer or by any two directors.

        Written notice of the time and place of special meetings shall be
delivered personally to each director or communicated to each director by
telephone or telegraph or telex or cable or mail or electronic mail or other
form of recorded communication, charges prepaid, addressed to each director at
that director's address as it is shown on the records of the Corporation or, if
it is not so shown on such records or is not readily ascertainable, at that
director's residence or usual place of business. In case such notice is mailed,
it shall be deposited in the United States mail at least three days prior to the
time of the holding of the meeting. In case such notice is delivered personally,
by telephone or by other form of written communication, it shall be delivered at
least 24 hours before the time of the holding of the meeting. The notice shall
state the time of the meeting, but need not specify the place of the meeting if
the meeting is to be held at the principal executive office of the Corporation.
The notice need not state the purpose of the meeting unless expressly provided
otherwise by statute.


                                       6


        Section 6 Meetings by Communication Equipment. Members of the Board, or
any committee designated by the Board, may participate in a meeting of the Board
or committee by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other. Participation in a meeting pursuant to this Section shall constitute
presence in person at such meeting.

        Section 7 Quorum and Manner of Acting. The presence of a majority of the
total number of directors shall constitute a quorum for the transaction of
business, and the act of a majority of the directors present at a meeting at
which a quorum is present shall be the act of the Board. In the absence of a
quorum, a majority of the directors present may adjourn any meeting from time to
time until a quorum is present. Notice of an adjourned meeting need not be
given.

        Section 8 Action Without Meeting. Any action required or permitted to be
taken at any meeting of the Board, or of 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.

        Section 9 Compensation of Directors. The Board may fix the compensation
of directors.

        Section 10 Committees. The Board may, by resolution passed by a majority
of the whole Board, designate one or more committees, each committee to consist
of one 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. In the absence or
disqualification of a member of the committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not such
member or members 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. Any such committee, to the extent permitted by law and to the extent
authorized by the Board, shall have and may exercise all the powers and
authority of the Board in the management of the business and affairs of the
Corporation, and may authorize the seal of the Corporation to be affixed to all
papers which may require it. The Board may remove any director from a committee
with or without cause at any time.

                                   ARTICLE IV
                                    OFFICERS

        Section 1 Officers. The Board may elect such officers with such titles
as the Board deems advisable. Each officer shall have the powers and duties set
forth in these Bylaws and any resolution of the Board appointing such officer
(to the extent such resolution is not inconsistent with these Bylaws), and to
the extent not so provided, as generally pertain to their respective offices,
subject to the control of the Board. The Board may designate two or more persons
as Chairman of the Board, in which case each shall be a Co-Chairman of the
Board. Each such officer shall hold office until his or her successor is elected
and qualified or until his or her earlier resignation or removal. Subject to
contractual obligations to the Company, any officer may resign at any time upon
written notice to the Corporation. The Board may remove any officer with or
without cause at any time, but such removal shall be without prejudice to the
contractual rights of such officer, if any, with the Corporation. One person may
hold any number of offices.


                                       7


        Section 2 Chairman of the Board. The Chairman of the Board, if such an
officer be elected, shall, if present, preside at all meetings of the Board and
exercise and perform such other powers and duties as may be from time to time
assigned to such person by the Board.

        Section 3 Chief Executive Officer. Subject to such supervisory powers,
if any, as may be given by the Board to the Chairman of the Board, the Chief
Executive Officer, if such an officer be elected, shall, subject to the control
of the Board, have general supervision, direction and control of the business
and the officers of the Corporation. The Chief Executive Officer shall exercise
and perform such other powers and duties as may be from time to time assigned to
such person by the Board, consistent with such person's position as Chief
Executive Officer. The Board may designate two or more persons as Chief
Executive Officer, in which case each shall have the title Chief Executive
Officer or Co-Chief Executive Officer, as specified by the Board.

        Section 4 President. Subject to such supervisory powers, if any, as may
be given by the Board to the Chairman of the Board and the Chief Executive
Officer, if there be such officers, the President shall be the chief operating
officer of the Corporation and shall, subject to the control of the Board, have
general supervision, direction, and control of the business and the officers of
the Corporation (other than the Chairman and Chief Executive Officer). The
President shall have the general powers and duties of management usually vested
in the office of president and general manager of a Corporation, and shall have
such other powers and duties as may be prescribed by the Board and the Chief
Executive Officer.

        Section 5 Vice Presidents. In the absence or disability of the Chairman,
the Chief Executive Officer and the President, the Vice Presidents, if any, in
order of their rank as fixed by the Board, or, if not ranked, the Vice President
designated by the Board shall perform all the duties of such officer, and when
so acting shall have all the powers of, and be subject to all the restrictions
upon, such offices. 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, the Chief Executive Officer or the President.

        Section 6 Secretary. The Secretary shall keep, or cause to be kept, at
the principal executive office or such other place as the Board may direct, a
book of minutes of all meetings and actions of directors, committees of
directors, and Stockholders, with the time and place of holding, whether regular
or special, and, if special, how authorized, the notice given, the names of
those present at directors' meetings or committee meetings, the number of shares
present or represented at Stockholders' meetings, and the proceedings.

        The Secretary shall give, or cause to be given, notice of all meetings
of the Stockholders and of the Board required by the Bylaws or by law to be
given, and he shall keep the seal of the Corporation, if one be adopted, in safe
custody, and shall have such other powers and perform such other duties as may
be prescribed by the Board.

        Section 7 Chief Financial Officer. The Chief Financial Officer shall
keep and maintain, or cause to be kept and maintained, adequate and correct
books and records of accounts of the properties and business transactions of the
Corporation, including accounts of its assets, liabilities, receipts,
disbursements, gains, losses, capital, retained earnings and shares, and shall
send or cause to be sent to the Stockholders of the Corporation such financial
statements and reports as are by law or these Bylaws required to be sent to
them.


                                       8


        The Chief Financial Officer shall deposit all monies and other valuables
in the name or to the credit of the Corporation with such depositories as may be
designated by the Board or by an officer, if such authority is delegated by the
Board. The Chief Financial Officer shall disburse the funds of the Corporation
as may be ordered by the Board, shall render to the President and directors,
whenever they request it, an account of all transactions undertaken as Chief
Financial Officer 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.

                                    ARTICLE V
                          INDEMNIFICATION OF DIRECTORS,
                      OFFICERS, EMPLOYEES AND OTHER AGENTS

        Section 1 Agents, Proceedings and Expenses. For the purposes of this
Article V, "agent" means any person who is or was a director, officer, employee
or other agent of the Corporation, or is or was a director, officer, employee or
other agent of the Corporation as a director, officer, employee or agent of
another foreign or domestic corporation, partnership, joint venture, trust or
other enterprise, or was a director, officer, employee or agent of a foreign or
domestic corporation which was a predecessor corporation of the Corporation or
of another enterprise at the request of such predecessor corporation;
"proceeding" means any threatened, pending or complete action or proceeding,
whether civil, criminal, administrative, or investigative; and "expenses"
includes, without limitation, attorneys' fees and any expenses of establishing a
right to indemnification under Section 2 or Section 3 of this Article V.

        Section 2 Actions Other Than By The Corporation. The Corporation shall
have power to 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 Corporation) by reason of the fact that such person is
or was a director, officer, employee or agent of the Corporation, or is or was
serving at the request of the Corporation 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 such person in
connection with such action, suit or proceeding if he acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best interests of
the Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe such person's conduct was unlawful. The termination
of any action, suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contender or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that such person's conduct was unlawful.

        Section 3 Actions by the Corporation. The Corporation shall have power
to 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 Corporation to procure a judgment in its favor by reason of the fact that
such person is or was a director, officer, employee or agent of the Corporation,
or is or was serving at the request of the Corporation 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 such person in connection with the defense or settlement
of such action or suit if he acted in good faith and in a manner he reasonably


                                       9


believed to be in or not opposed to the best interests of the Corporation 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 for
negligence or misconduct in the performance of such person's duty to the
Corporation unless and only to the extent that the Delaware Court of Chancery or
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 the Delaware Court of Chancery or such other
court shall deem proper.

        Section 4 Successful Defense by Agent. To the extent that a present or
former director or officer of the Corporation has been successful on the merits
or otherwise in defense of any action, suit or proceeding referred to in
Sections 2 and 3 of this Article V, 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.

        Section 5 Required Approval. Any indemnification under Sections 1 and 2
(unless ordered by a court) shall be made by the Corporation 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 such person has met the applicable standard of conduct set forth in
Sections 2 and 3 of this Article V. 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, or
(b) by a committee of such disinterested directors designated by majority vote
of such disinterested directors, even though less than a quorum, or (c) if there
are no such disinterested directors, or if such disinterested directors so
direct, by independent legal counsel in a written opinion, or (d) by the
affirmative vote of a majority of Stockholders.

        Section 6 Advance of Expenses. The Corporation may, in its discretion,
pay the expenses (including attorneys' fees) incurred by an officer or director
in defending any civil, criminal, administrative or investigative action, suit
or proceeding, in advance of the final disposition of such action, suit or
proceeding, provided, however, that the payment of expenses incurred by a
director or officer in advance of the final disposition of the proceeding shall
be made only upon receipt of an undertaking by or on behalf of such director or
officer to repay all amounts advanced if it should ultimately be determined that
the director or officer is not entitled to be indemnified by the Corporation as
authorized in this Article V or otherwise. 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 Corporation deems
appropriate.

        Section 7 Contractual Rights. The indemnification and advancement of
expenses provided by, or granted pursuant to, the other sections of this Article
V shall not be deemed exclusive of any other rights to which those seeking
indemnification or advancement of expenses may be entitled under any bylaw,
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 and shall, unless otherwise provided when
authorized or ratified, 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 a person.


                                       10


        Section 8 Limitations. No indemnification or advance shall be made under
this Article V, except as provided in Section 4, in any circumstances where it
appears:

        (a) That it would be inconsistent with a provision of the Certificate of
Incorporation, a resolution of the Stockholders or an agreement in effect at the
time of accrual of the alleged cause of action asserted in the proceeding in
which the expenses were incurred or other amounts were paid, which prohibits or
otherwise limits indemnification; or

        (b) That it would be inconsistent with any condition expressly imposed
by a court in approving a settlement.

        Section 9 Insurance. The Corporation 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 Corporation, or is or was serving at the
request of the Corporation 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, or arising out of such person's status as such, whether or not the
Corporation would have the power to indemnify such person against such liability
under the provisions of this Article V..

        Section 10 Effect of Amendment. Any amendment, repeal or modification of
any provision of this Article V by the Stockholders or the directors of the
Corporation shall not adversely affect any right or protection of a director or
officer of the Corporation existing at the time of such amendment, repeal or
modification.

        Section 11 Constituent Corporations. For purposes of this Article V,
references to "the Corporation" shall include, in addition to the Corporation,
any constituent corporation (including any constituent of a constituent)
absorbed in a consolidation or merger which, if its separate existence had
continued, would have had power and authority to indemnify its directors,
officers, employees or agents, so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or is or was serving
at the request of such constituent corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, shall stand in the same position under the provisions of this
Article V with respect to the resulting or surviving corporation as such person
would have with respect to such constituent corporation if its separate
existence had continued.

        Section 12 Definitions. For purposes of this Article V, references to
"other enterprises" shall include employee benefit plans; references to "fines"
shall include any excise taxes assessed on a person with respect to any employee
benefit plan; and references to "serving at the request of the Corporation"
shall include any service as a director, officer, employee or agent of the
Corporation which imposes duties on, or involves services by, such director,
officer, employee, or agent with respect to an employee benefit plan, its
participants, or beneficiaries; and a person who acted in good faith and in a
manner such person reasonably believed to be in the interest of the participants
and beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the Corporation" as referred to in
this Article V.


                                       11


                                   ARTICLE VI
                                  MISCELLANEOUS

        Section 1 Inspection of Books and Records by Stockholders. Any
Stockholder of record, 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 Corporation's
stock ledger, a list of its Stockholders, and its other books and records, and
to make copies or 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 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
Corporation at its registered office in the State of Delaware or at its
principal place of business.

        Section 2 Inspection of Books and Records by Directors. Any director
shall have the right to examine the Corporation's stock ledger, a list of its
Stockholders and its other books and records for a purpose reasonably related to
such person's position as a director. Such right to examine the records and
books of the Corporation shall include the right to make copies and extract
therefrom.

        Section 3 Checks, Drafts, Evidences of Indebtedness. 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 the Board. In the absence of such determination, the Chief
Executive Officer, the President, the Chief Operating Officer and the Chief
Financial Officer shall have the authority to sign or endorse such instruments
and documents.

        Section 4 Corporate Contracts and Instruments; How Executed. The Board,
except as otherwise provided in these Bylaws, 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 person's authority may
be general or confined to specific instances; and, unless so authorized or
ratified by the Board or within the agency power of an officer, no officer,
agent or employee shall have any power or authority to bind the Corporation by
any contract or agreement or to pledge its credit or to render it liable for any
purpose or for any amount. In the absence of specific resolution of the Board
relating to the authority of officers to execute contracts generally, the Chief
Executive Officer, the President, the Chief Operating Officer and the Chief
Financial shall have the authority to execute contracts of the Corporation.

        Section 5 Certificates for Shares. Every holder of stock in the
Corporation shall be entitled to have a certificate signed by, or in the name of
the Corporation by the Chairman or the President or a Vice-President, and by the
Chief Financial Officer or an Assistant Treasurer, or the Secretary or an
Assistant Secretary of the Corporation representing the number of shares owned
by such person in the Corporation. Any or all of the signatures on the
certificate may be a facsimile. 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 Corporation with the
same effect as if he were such officer, transfer agent, or registrar at the date
of issue.


                                       12


        Section 6 Transfer of Shares. Transfers of shares of the capital stock
of the Corporation shall be made only on the books of the Corporation by the
holder thereof, or by such person's attorney thereunto authorized by a power of
attorney duly executed and filed with the Secretary of the Corporation or a
transfer agent of the Corporation, if any, and on surrender of the certificate
or certificates for such shares properly endorsed. A person in whose name
appears on shares of stock and on the books of the Corporation shall be deemed
the owner thereof as regards the Corporation, and upon any transfer of shares of
stock the person or persons into whose name or names such shares shall have been
transferred, shall enjoy and bear all rights, privileges and obligations of
holders of stock of the Corporation and as against the Corporation or any other
person or persons. The term "person" or "persons" wherever used herein shall be
deemed to include any partnership, corporation, association or other entity.
Whenever any transfer of shares shall be made for collateral security, and not
absolutely, such fact, if known to the Secretary or to such transfer agent,
shall be so expressed in the entry of transfer.

        Section 7 Lost, Stolen or Destroyed Certificates. The Corporation 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
Corporation may require the owner of the lost, stolen or destroyed certificate,
or such person's legal representative, to give the Corporation a bond sufficient
to indemnify it 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.

        Section 8 Representation of Shares of Other Corporations. The Chairman
of the Board, the Chief Executive Officer, the President, the Chief Operating
Officer, the Chief Financial Officer or any person designated by any of such
officers is authorized, in the absence of authorization by the Board, to vote on
behalf of the Corporation any and all shares of any other corporation or
corporations, foreign or domestic, for which the Corporation has the right to
vote. The authority granted to these officers to vote or represent on behalf of
the Corporation any and all shares held by the Corporation in any other
corporation or corporations may be exercised by any of these officers in person
or by any person authorized to do so by proxy duly executed by these officers.

        Section 9 Construction and Definitions. Unless the context requires
otherwise, the general provisions, rules of construction, and definitions in the
DGCL shall govern the construction of these Bylaws. Without limiting the
generality of this provision, the singular number includes the plural, the
plural number includes the singular. In addition, as used in these Bylaws, the
following terms have the meanings set forth below:

        "Board" means the Board of the Corporation.

        "DGCL" means the Delaware General Corporation Law, as the same may from
time to time be amended.

        "Stockholders" means the Stockholders of the Corporation.

        Section 10 Amendments to Bylaws. The Board is expressly empowered to
adopt, amend or repeal Bylaws of the Corporation. Any adoption, amendment or
repeal of Bylaws of the Corporation by the Board shall require the approval of a
majority of the total number of authorized directors (whether or not there exist
any vacancies in previously authorized directorships at the time any resolution
providing for adoption, amendment or repeal is presented to the Board). The


                                       13


Stockholders shall also have power to adopt, amend or repeal the Bylaws of the
Corporation. Any adoption, amendment or repeal of Bylaws of the Corporation by
the Stockholders shall require, in addition to any vote of the holders of any
class or series of stock of the Corporation required by law or by the
Certificate of Incorporation, the affirmative vote of the holders of at least
sixty-six and two-thirds percent (66-2/3%) of the voting power of all of the
then outstanding shares of the capital stock of the Corporation entitled to vote
generally in the election of directors, voting together as a single class.

        Section 11 Conformance to the Law. In the event that it is determined
that these Bylaws, as now written or as amended, conflict with the DGCL, or any
other applicable law, as now enforced or as amended, these Bylaws shall be
deemed amended, without action of the Board or the Stockholders, to conform with
such law. Such amendment to be so interpreted as to bring these Bylaws within
minimum compliance. For purposes of this section, "amendment" shall include a
repeal of, or a change in interpretation of, the relevant compendium.

        Section 12 Fiscal Year. The fiscal year of the Corporation shall be
determined by the Board.

        Section 13 Dividends; Surplus. Subject to the provisions of the
Certificate of Incorporation and any restrictions imposed by statute, the Board
may declare dividends out of the net assets of the Corporation in excess of its
capital or, in case there shall be no such excess, out of the net profits of the
Corporation for the fiscal year then current and/or the preceding fiscal year,
or out of any funds at the time legally available for the declaration of
dividends (hereinafter referred to as "surplus or net profits") whenever, and in
such amounts as, in its sole discretion, the conditions and affairs of the
Corporation shall render advisable. The Board in its sole discretion may, in
accordance with law, from time to time set aside from surplus or net profits
such sum or sums as it may think proper as a reserve fund to meet contingencies,
or for equalizing dividends, or for the purpose of maintaining or increasing the
property or business of the Corporation, or for any other purpose as it may
think conducive to the best interests of the Corporation.

        Section 14 Waiver of Notice. Whenever notice is required to be given
under these Bylaws or the Certificate of Incorporation or the DGCL, a written
waiver, signed by the person entitled to notice, whether before or after the
time stated therein, shall be deemed equivalent to notice. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
where the person attends a meeting for the express 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 regular or special meeting of the Stockholders, Board or
any committee of the Board need be specified in any written waiver of notice
unless so required by the Certificate of Incorporation or these Bylaws.


                                       14


                            CERTIFICATE OF SECRETARY

        I, the undersigned, do hereby certify:

        (1) That I am the duly elected and acting Secretary of VCA Antech, Inc.,
a Delaware corporation (the "Corporation"); and

        (2) That the foregoing Bylaws comprising 16 pages, constitute the Bylaws
of the Corporation as of November 20, 2001, as duly adopted by the Board.

        IN WITNESS WHEREOF, I have hereunto subscribed my name as of this 20th
day of November, 2001.

                                            /s/ Tomas W. Fuller
                                            -----------------------------------
                                            Tomas W. Fuller, Assistant Secretary


                                       15


                           AMENDED AND RESTATED BYLAWS
                                       OF
                                VCA ANTECH, INC.
                             A DELAWARE CORPORATION
                             AS OF NOVEMBER 20, 2001



                                                                              PAGE
                                                                              ----
                                                                          
ARTICLE I      CORPORATE OFFICES...............................................1

   Section 1   Registered Office...............................................1

   Section 2   Principal Office................................................1

   Section 3   Other Offices...................................................1


ARTICLE II     STOCKHOLDERS MEETINGS...........................................1

   Section 1   Place of Meeting................................................1

   Section 2   Annual Meetings.................................................1

   Section 3   Special Meetings................................................1

   Section 4   Notice of Meetings..............................................1

   Section 5   Quorum..........................................................2

   Section 6   Adjourned Meeting...............................................2

   Section 7   Chairman of Meeting; Opening of Polls...........................2

   Section 8   Proxies.........................................................2

   Section 9   Stockholder List................................................2

   Section 10  No Consent of Stockholders in Lieu of Meeting...................3

   Section 11  Inspectors of Election..........................................3

   Section 12  Record Date.....................................................3

   Section 13  Conduct of Meetings.............................................4

   Section 14  Exception to Requirements of Notice.............................4

   Section 15  Matters Considered at Annual Meeting............................4

   Section 16  Nominations for Director........................................5


ARTICLE III    BOARD OF DIRECTORS..............................................6

   Section 1   Powers..........................................................6

   Section 2   Number..........................................................6

   Section 3   Place of Meeting................................................6

   Section 4   Regular Meetings................................................6






                                                                           
   Section 5   Special Meetings................................................6

   Section 6   Meetings by Communication Equipment.............................7

   Section 7   Quorum and Manner of Acting.....................................7

   Section 8   Action Without Meeting..........................................7

   Section 9   Compensation of Directors.......................................7

   Section 10  Committees......................................................7


ARTICLE IV     OFFICERS........................................................7

   Section 1   Officers........................................................7

   Section 2   Chairman of the Board...........................................8

   Section 3   Chief Executive Officer.........................................8

   Section 4   President.......................................................8

   Section 5   Vice Presidents.................................................8

   Section 6   Secretary.......................................................8

   Section 7   Chief Financial Officer.........................................8


ARTICLE V      INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND
               OTHER AGENTS ...................................................9

   Section 1   Agents, Proceedings and Expenses................................9

   Section 2   Actions Other Than By The Corporation...........................9

   Section 3   Actions by the Corporation......................................9

   Section 4   Successful Defense by Agent....................................10

   Section 5   Required Approval..............................................10

   Section 6   Advance of Expenses............................................10

   Section 7   Contractual Rights.............................................10

   Section 8   Limitations....................................................11

   Section 9   Insurance......................................................11

   Section 10  Effect of Amendment............................................11

   Section 11  Constituent Corporations.......................................11

   Section 12  Definitions....................................................11


ARTICLE VI     MISCELLANEOUS..................................................12

   Section 1   Inspection of Books and Records by Stockholders................12

   Section 2   Inspection of Books and Records by Directors...................12

   Section 3   Checks, Drafts, Evidences of Indebtedness......................12





                                       ii




                                                                           
   Section 4   Corporate Contracts and Instruments; How Executed..............12

   Section 5   Certificates for Shares........................................12

   Section 6   Transfer of Shares.............................................13

   Section 7   Lost, Stolen or Destroyed Certificates.........................13

   Section 8   Representation of Shares of Other Corporations.................13

   Section 9   Construction and Definitions...................................13

   Section 10  Amendments to Bylaws...........................................13

   Section 11  Conformance to the Law.........................................14

   Section 12  Fiscal Year....................................................14

   Section 13  Dividends; Surplus.............................................14

   Section 14  Waiver of Notice...............................................14




                                      iii

EX-4.5

                                                                     EXHIBIT 4.5


        FIRST AMENDMENT (this "Amendment"), dated as of November 20, 2001, to
the Vicar Operating, Inc. Senior Subordinated Notes Indenture (the "Company
Indenture"), dated as of September 20, 2000, by and among Vicar Operating, Inc.,
a Delaware corporation (the "Company"), the guarantors named therein and Chase
Manhattan Bank and Trust Company, National Association, a national banking
association organized under the federal laws of the United States, as trustee.
Capitalized terms used herein and not defined herein shall have the respective
meanings ascribed to such terms in the Company Indenture.

                                    RECITALS

        WHEREAS, the parties have agreed to amend the Company Indenture, but
only upon the terms and subject to the conditions set forth below,

        NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:

1. Section 1.01 (Definitions). Section 1.01 of the Company Indenture shall be
amended by inserting the following terms with the following definitions thereof:

        "Company 144A Notes" shall mean the 9 7/8% Senior Subordinated Notes due
2009 to be issued by the Company pursuant to the Company 144A Notes Indenture in
an original aggregate principal amount of up to $175,000,000.

        "Company 144A Notes Indenture" shall mean the Indenture to be entered
into among the Company, the Guarantors (as defined therein) and the trustee
named therein, pursuant to which the Company 144A Notes shall be issued..

2.      Section 1.01 (Definitions).

        a. Clause (iii) of the definition of "Change of Control" in Section 1.01
of the Company Indenture shall be amended to read in its entirety as follows:

"(iii) the consummation of any transaction (including, without limitation, any
merger or consolidation), as a result of which, (x) prior to a Note
Registration, (1) the Principals, Management Investors and their Related Parties
beneficially own and control, directly or indirectly, less than 40% of the
aggregate voting interest attributable to all outstanding Capital Stock of
Holdings, or (2) GEI and its Affiliates beneficially own, directly or
indirectly, less than 20% of the aggregate voting interest attributable to all
outstanding Capital Stock of Holdings, or (y) Holdings ceases to own directly
100% of the outstanding Equity Interests of the Company or (z) any Person or
"group" (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act),
other than the Principals, Management Investors or their Related Parties, shall
have acquired, directly or indirectly, beneficial ownership of 35% or more on a
fully diluted basis of the aggregate voting interest attributable to all
outstanding Capital Stock of Holdings or the Company and the Principals,
Management Investors or their Related Parties have less voting power than such
Person or "group" or"






        b. The definition of "Consolidated Interest Expense" in Section 1.01 of
the Company Indenture shall be amended to read in its entirety as follows:

        "Consolidated Interest Expense" means for the applicable period of
measurement of the Company and its Subsidiaries on a consolidated basis, the
aggregate interest expense (whether or not payable in cash) for such period
(including all commissions, discounts, fees and other charges in connection with
standby letters of credit and similar instruments) for the Company and its
Subsidiaries on a consolidated basis, but excluding all amortization of
financing fees and other charges incurred by the Company and its Subsidiaries in
connection with the issuance of the Notes, the Company 144A Notes and the
borrowings under the Credit Agreement, minus interest income of the Company and
its Subsidiaries for such period, on a consolidated basis.

        c. The definition of "Consolidated EBITDA" in Section 1.01 of the
Company Indenture shall be amended to read in its entirety as follows:

        "Consolidated EBITDA" means for the applicable period of measurement,
the Consolidated Net Income of the Company and its Subsidiaries on a
consolidated basis, plus, without duplication, the following to the extent
deducted in calculating such Consolidated Net Income: (i) Consolidated Interest
Expense for such period, plus (ii) provisions for taxes based on income, plus
(iii) total depreciation expense, plus (iv) total amortization expenses, plus
(v) other non-cash items reducing Consolidated Net Income (excluding any such
non-cash item to the extent that it represents an accrual or reserve for
potential cash items in any future period or amortization of a prepaid cash item
but, notwithstanding anything to the contrary herein, including without
limitation, reserves for lease expenses and charges and expenses related to the
closure of hospitals to the extent not paid in cash), plus (vi) non-recurring
costs incurred by Holdings and its Subsidiaries in 1999 relating to year 2000
computer matters, plus (vii) other one-time non-recurring charges incurred by
Holdings, the Company or any of its Subsidiaries associated with the
consummation of Holdings' initial public offering and the issuance of the
Company 144A Notes,, including, without limitation (A) any non-cash charges
incurred by Holdings and/or the Company; provided that such non-cash charges
shall not exceed $10,400,000 in the aggregate; (B) a one-time payment to GEI;
provided that such one-time payment to GEI shall not exceed $8,000,000; and (C)
underwriting discounts and commissions and other reasonable costs and expenses
associated therewith, including reasonable legal fees and expenses, less other
non-cash items increasing Consolidated Net Income (excluding any such non-cash
item to the extent it represents the reversal of an accrual or reserve for
potential cash item in any prior period).

        d. The definition of "Holdings" in Section 1.01 of the Company Indenture
shall be amended to read in its entirety as follows:

        "Holdings" means VCA Antech, Inc., a Delaware corporation (formerly
known as Veterinary Centers of America, Inc.).

        e. Clause (i) of the definition of "Permitted Partially Owned
Subsidiary" in Section 1.01 of the Company Indenture shall be amended to read in
its entirety as follows:


                                       2


"(i) with respect to each Permitted Partially Owned Subsidiary other than the
Exempt Subsidiaries, Capital Stock representing 51% or more of the aggregate
voting and economic interests in such Subsidiary is directly or indirectly
owned, beneficially and of record, by the Company,"

        f. Clause (iv) of the definition of "Permitted Partially Owned
Subsidiary" in Section 1.01 of the Company Indenture shall be amended to read in
its entirety as follows:

"(iv) at the time of designation of any Permitted Partially Owned Subsidiary as
such, that portion of Consolidated EBITDA attributable to all Permitted
Partially Owned Subsidiaries (including the Subsidiary proposed to be designated
as such) does not represent more than 15% of the Consolidated EBITDA for the
four-Fiscal Quarter period most recently ended."

        g. The definition of "Seller Notes" in Section 1.01 of the Company
Indenture shall be amended to read in its entirety as follows:

        "Seller Notes" means, collectively, any unsecured promissory notes
issued by Holdings to any seller or sellers in connection with a Permitted
Acquisition which are permitted to be incurred under Section 5.04(b)(xi) of the
Holdings Indenture.

3. Section 5.04 (Incurrence of Indebtedness and Issuances of Disqualified
Capital Stock or Preferred Stock).

        The final proviso of the final sentence of Section 5.04(a) shall be
amended to read in its entirety as follows:

"provided, however, such calculations of Adjusted EBITDA with respect to
Permitted Acquisitions, the consideration for which constitutes $3,000,000 or
less, shall be based on reasonable estimations of such pre-acquisition Adjusted
EBITDA based on actual pre-acquisition revenues."

4. Company Indenture Remains in Effect. Except as expressly amended herein, the
Company Indenture shall continue to be, and shall remain, in full force and
effect. This Amendment shall not be deemed to be a waiver of, or consent to, or
a modification or amendment of, any other term or condition of the Company
Indenture or the Notes or to prejudice any other right or rights which the
holders of the Notes may now have or may have in the future under or in
connection with the Company Indenture or any of the instruments or agreements
referred to therein, as the same may be amended from time to time.

5. Counterparts. This Amendment may be executed by one or more of the parties
hereto in any number of separate counterparts (which may include counterparts
delivered by facsimile transmission) and all of said counterparts taken together
shall be deemed to constitute one and the same instrument.




                                       3


6. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

7. Effectiveness. The effectiveness of this Amendment shall be contingent on the
execution of the Company 144A Notes Indenture, the sale of the Company 144A
Notes and the consummation of Holdings' initial public offering.



                                       4



        IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed, as of the day and year first above written.

VICAR OPERATING, INC.


By:     /s/ Robert L. Antin
        Name:  Robert L. Antin
        Title: Chief Executive Officer and President

CHASE MANHATTAN BANK AND TRUST
COMPANY, NATIONAL ASSOCIATION


By:     /s/ Rose T. Maravilla
        Name:  Rose T. Maravilla
        Title:  Assistant Vice President




GUARANTORS:

                      AAH MERGER CORPORATION
                      ACADEMY ANIMAL, INC.
                      ANDERSON ANIMAL HOSPITAL, INC.
                      ANIMAL CLINIC OF SANTA CRUZ, INC.
                      ANIMAL EMERGENCY CLINIC, P.C.
                      BEAUMONT VETERINARY ASSOCIATES, P.C.
                      BERLA, INC.
                      CACOOSING ANIMAL HOSPITAL, LTD.
                      CACOOSING PET CARE & NUTRITION CENTER, INC.
                      CLARMAR ANIMAL HOSPITAL, INC.
                      DETWILER VETERINARY CLINIC, INC.
                      DIAGNOSTIC VETERINARY SERVICE, INC.
                      EAGLE PARK ANIMAL CLINIC, INC.
                      EAGLE RIVER VETERINARY HOSPITAL, INC.
                      EDGEBROOK, INC.
                      FLORIDA VETERINARY LABORATORIES, INC.
                      FOX CHAPEL ANIMAL HOSPITAL, INC.
                      FREEHOLD, INC.
                      GLEN ANIMAL HOSPITAL, INC.
                      GOLDEN MERGER CORPORATION
                      H.B. ANIMAL CLINICS, INC.
                      HIGHLANDS ANIMAL HOSPITAL, , INC.
                      HOWELL BRANCH ANIMAL HOSPITAL, P.A.
                      LAKE JACKSON VETERINARY HOSPITAL, INC.
                      LAKEWOOD ANIMAL HOSPITAL, INC.
                      LAMMERS VETERINARY HOSPITAL, INC.
                      LEWELLING VETERINARY CLINIC, INC.
                      MILLER ANIMAL HOSPITAL
                      M.S. ANIMAL HOSPITALS, INC.
                      NEWARK ANIMAL HOSPITAL, INC.
                      NORTHERN ANIMAL HOSPITAL, INC.
                      NORTH ROCKVILLE VETERINARY HOSPITAL, INC.
                      NORTHSIDE ANIMAL HOSPITAL, P.C.
                      NOYES ANIMAL HOSPITAL, INC.
                      OAK HILL VETERINARY HOSPITAL, INC.
                      OLD TOWN VETERINARY ANIMAL HOSPITAL, INC.
                      PET PRACTICE (MASSACHUSETTS), INC.
                      PETS' RX, INC.
                      PETS' RX NEVADA, INC.
                      PPI OF PENNSYLVANIA, INC.
                      PRINCETON ANIMAL HOSPITAL, INC.
                      PROFESSIONAL VETERINARY SERVICES,  INC.
                      RIVIERA ANIMAL HOSPITAL, INC.





                      ROBERTSON BLVD. ANIMAL HOSPITAL, INC.
                      ROSSMOOR CENTER ANIMAL CLINIC, INC.
                      ROSSMOOR - EL DORADO ANIMAL HOSPITAL, INC.
                      SAN VICENTE ANIMAL CLINIC
                      SILVER SPUR ANIMAL HOSPITAL, INC.
                      SOUTH COUNTY VETERINARY CLINIC, INC.
                      SPANISH RIVER ANIMAL HOSPITAL, INC.
                      TAMPA ANIMAL MEDICAL CENTER, INC.
                      THE PET PRACTICE (FLORIDA), INC.
                      THE PET PRACTICE (ILLINOIS), INC.
                      THE PET PRACTICE (MASSACHUSETTS), INC.
                      THE PET PRACTICE OF MICHIGAN, INC.
                      VCA ALABAMA, INC.
                      VCA ALBANY ANIMAL HOSPITAL, INC.
                      VCA ALBUQUERQUE, INC.
                      VCA ALL PETS ANIMAL COMPLEX, INC.
                      VCA ALPINE ANIMAL HOSPITAL, INC.
                      VCA ANDERSON OF CALIFORNIA ANIMAL HOSPITAL, INC.
                      VCA ANIMAL HOSPITALS, INC.
                      VCA ANIMAL HOSPITAL WEST, INC.
                      VCA APAC ANIMAL HOSPITAL, INC.
                      VCA - ASHER, INC.
                      VCA BAY AREA ANIMAL HOSPITAL, INC.
                      VCA CACOOSING ANIMAL HOSPITAL, INC.
                      VCA CASTLE SHANNON VETERINARY HOSPITAL, INC.
                      VCA CENTERS-TEXAS, INC.
                      VCA CENVET, INC.
                      VCA CLARMAR ANIMAL HOSPITAL, INC.
                      VCA CLINICAL VETERINARY LABS, INC.
                      VCA CLINIPATH LABS, INC.
                      VCA CLOSTER, INC.
                      VCA DETWILER ANIMAL HOSPITAL, INC.
                      VCA DOVER ANIMAL HOSPITAL, INC.
                      VCA EAGLE RIVER ANIMAL HOSPITAL, INC.
                      VCA EAST ANCHORAGE ANIMAL HOSPITAL, INC.
                      VCA GOLDEN COVE ANIMAL HOSPITAL, INC.
                      VCA GREATER SAVANNAH ANIMAL HOSPITAL, INC.
                      VCA HOWELL BRANCH ANIMAL HOSPITAL, INC.
                      VCA INFORMATION SYSTEMS, INC.
                      VCA KANEOHE ANIMAL HOSPITAL, INC.
                      VCA LAKESIDE ANIMAL HOSPITAL, INC.
                      VCA LAMB AND STEWART ANIMAL HOSPITAL, INC.
                      VCA LAMMERS ANIMAL HOSPITAL, INC.
                      VCA LEWIS ANIMAL HOSPITAL, INC.
                      VCA MARINA ANIMAL HOSPITAL, INC.




                      VCA MILLER ANIMAL HOSPITAL, INC.
                      VCA - MISSION, INC.
                      VCA NORTHBORO ANIMAL HOSPITAL, INC.
                      VCA NORTHWEST VETERINARY  DIAGNOSTICS, INC.
                      VCA OF COLORADO-ANDERSON, INC.
                      VCA OF NEW YORK, INC.
                      VCA OF SAN JOSE, INC.
                      VCA OF TERESITA, INC.
                      VCA PROFESSIONAL ANIMAL LABORATORY, INC.
                      VCA REAL PROPERTY ACQUISITION CORPORATION
                      VCA REFERRAL ASSOCIATES ANIMAL HOSPITAL, INC.
                      VCA ROHRIG ANIMAL HOSPITAL, INC.
                      VCA - ROSSMOOR, INC.
                      VCA ST. PETERSBURG ANIMAL HOSPITAL, INC.
                      VCA SILVER SPUR ANIMAL HOSPITAL, INC.
                      VCA SOUTH SHORE ANIMAL HOSPITAL, INC.
                      VCA SPECIALTY PET PRODUCTS, INC.
                      VCA SQUIRE ANIMAL HOSPITAL, INC.
                      VCA TEXAS MANAGEMENT, INC.
                      VCA WYOMING ANIMAL HOSPITAL, INC.
                      VETERINARY HOSPITALS, INC.
                      WEST LOS ANGELES VETERINARY MEDICAL GROUP, INC.
                      WESTWOOD DOG & CAT HOSPITAL
                      W.E. ZUSCHLAG, D.V.M., WORTH ANIMAL HOSPITAL, CHARTERED
                      WILLIAM C. FOUTS, D.V.M., LTD.
                      WINGATE, INC.




                               By:  /s/ Robert L. Antin
                                    Name:  Robert L. Antin
                                    Title: Chief Executive Officer and President

                               By:  /s/ Tomas W. Fuller
                                    Name:  Tomas W. Fuller
                                    Title: Chief Financial Officer and Assistant
                                           Secretary




VCA VILLA ANIMAL HOSPITAL, L.P.

By:     VCA Animal Hospitals, Inc.,
        General Partner


By:     /s/ Robert L. Antin
        Name:  Robert L. Antin
        Title: Chief Executive Officer and President

By:     /s/ Tomas W. Fuller
        Name:  Tomas W. Fuller
        Title: Chief Financial Officer and Assistant
               Secretary

VETERINARY CENTERS OF AMERICA - TEXAS, L.P.

By:  VCA Centers-Texas, Inc., General Partner

By:     /s/ Robert L. Antin
        Name:  Robert L. Antin
        Title: Chief Executive Officer and President

By:     /s/ Tomas W. Fuller
        Name:  Tomas W. Fuller
        Title: Chief Financial Officer and Assistant
               Secretary




ANIMAL CENTER, INC.

By:     /s/ Robert L. Antin
        Name:
        Title:


ASSOCIATES IN PET CARE, S.C.

By:     /s/ Robert L. Antin
        Name:
        Title:


KIRKWOOD ANIMAL HOSPITAL - LEA
M.E. TAMMI, V.M.D., P.A.

By:     /s/ Robert L. Antin
        Name:
        Title:


MAIN STREET SMALL ANIMAL HOSPITAL, INC.

By:     /s/ Robert L. Antin
        Name:
        Title:


SOUTHEAST AREA VETERINARY MEDICAL
CENTER, P.C.

By:     /s/ Robert L. Antin
        Name:
        Title:






VCA ASSOCIATE ANIMAL HOSPITAL, L.P.

By:     /s/ Robert L. Antin
        Name:
        Title:


VCA HERITAGE ANIMAL HOSPITAL, L.P.

By:     /s/ Robert L. Antin
        Name:
        Title:

TOMS RIVER VETERINARY HOSPITAL, P.A.

By:     /s/ Robert L. Antin
        Name:
        Title:




Agreed to and accepted by:

GS MEZZANINE PARTNERS II, L.P.

By:     GS Mezzanine Advisors II, L.L.C.,
        its general partner

By:     /s/ Katherine L. Nissenbaum
        Name:  Katherine L. Nissenbaum
        Title:  Vice President


GS MEZZANINE PARTNERS II OFFSHORE, L.P.

By:     GS Mezzanine Advisors II, L.L.C.
        its general partner

By:     /s/ Katherine L. Nissenbaum
        Name:  Katherine L. Nissenbaum
        Title: Vice President


TCW LEVERAGED INCOME TRUST, L.P.

By:     TCW Advisers (Bermuda), Ltd.
        as its General Partner

By:     /s/ Mark D. Senkpiel
        Name:  Mark D. Senkpiel
        Title:  Managing Director

By:     TCW Investment Management Company
        as Investment Adviser

By:     /s/ Jean-Marc Chapus
        Name:  Jean-Marc Chapus
        Title:  Managing Director




TCW LEVERAGED INCOME TRUST II, L.P.

By:     TCW (LINC II), L.P.
        as its General Partner

By:     TCW Advisers (Bermuda), Ltd.
        its General Partner

By:     /s/ Mark D. Senkpiel
        Name:  Mark D. Senkpiel
        Title:  Managing Director

By:     TCW Investment Management Company
        as Investment Adviser

By:     /s/ Jean-Marc Chapus
        Name:  Jean-Marc Chapus
        Title:  Managing Director





TCW LEVERAGED INCOME TRUST IV, L.P.

By:     TCW Asset Management Company
        As its Investment Adviser

By:     /s/ Mark D. Senkpiel
        Name:  Mark D. Senkpiel
        Title:  Managing Director

By:     /s/ Jean-Marc Chapus
        Name:  Jean-Marc Chapus
        Title:  Managing Director


By:     TCW (LINC IV), L.L.C.
        As General Partner

By:     TCW Asset Management Company
        As its Managing Member

By:     /s/ Mark D. Senkpiel
        Name:  Mark D. Senkpiel
        Title:  Managing Director

By:     /s/ Jean-Marc Chapus
        Name:  Jean-Marc Chapus
        Title:  Managing Director


TCW/CRESCENT MEZZANINE PARTNERS II, L.P.

By:     TCW/Crescent Mezzanine II, L.P.
        its general partner or managing owner

By:     TCW/Crescent Mezzanine, L.L.C.
        its general partner

By:     /s/ Jean-Marc Chapus
        Name:  Jean-Marc Chapus
        Title:  Managing Director




TCW/CRESCENT MEZZANINE TRUST II

By:     TCW/Crescent Mezzanine II, L.P.
        its general partner or managing owner

By:     TCW/Crescent Mezzanine, L.L.C.
        its general partner

By:     /s/ Jean-Marc Chapus
        Name:  Jean-Marc Chapus
        Title:  Managing Director


THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY

By:     /s/ Richard A. Strait
        Name: Richard A. Strait
        Title: Its Authorized Representative

EX-4.7

                                                                    EXHIBIT 4.7


        FIRST AMENDMENT (this "Amendment"), dated as of November 20, 2001, to
the VCA Antech, Inc. Senior Notes Indenture (the "Holdings Indenture"), dated as
of September 20, 2000, by and between VCA Antech, Inc., a Delaware corporation
(formerly known as Veterinary Centers of America, Inc.) ("Holdings"), and Chase
Manhattan Bank and Trust Company, National Association, a national banking
association organized under the federal laws of the United States, as trustee.
Capitalized terms used herein and not defined herein shall have the respective
meanings ascribed to such terms in the Holdings Indenture.

                                    RECITALS

        WHEREAS, the parties have agreed to amend the Holdings Indenture, but
only upon the terms and subject to the conditions set forth below,

        NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:

1.      Section 1.01 (Definitions). Section 1.01 of the Holdings Indenture shall
be amended by inserting the following terms with the following definitions
thereof:

        "Company 144A Notes" means the 9 7/8% Senior Subordinated Notes due 2009
to be issued by the Company pursuant to the Company 144A Notes Indenture in an
original aggregate principal amount of up to $175,000,000.

        "Company 144A Notes Indenture" means the Indenture to be entered into
among the Company, the Guarantors (as defined therein) and the trustee named
therein, pursuant to which the Company 144A Notes shall be issued.

        "Company Purchase Agreement" means the Purchase Agreement, dated as of
the Closing Date, by and among the Company, the Guarantors and the Purchasers.

2.      Section 1.01 (Definitions).

        a. Clause (iii) of the definition of "Change of Control" in Section 1.01
of the Company Indenture shall be amended to read in its entirety as follows:

"(iii) the consummation of any transaction (including, without limitation, any
merger or consolidation), as a result of which, (x) prior to a Note
Registration, (1) the Principals, Management Investors and their Related Parties
beneficially own and control, directly or indirectly, less than 40% of the
aggregate voting interest attributable to all outstanding Capital Stock of
Holdings, or (2) GEI and its Affiliates beneficially own, directly or
indirectly, less than 20% of the aggregate voting interest attributable to all
outstanding Capital Stock of Holdings, or (y) Holdings ceases to own directly
100% of the outstanding Equity Interests of the Company or (z) any Person or
"group" (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act),
other than the Principals, Management Investors or their Related Parties, shall
have acquired, directly or indirectly, beneficial ownership of 35% or more on a
fully diluted basis of the aggregate voting interest attributable to all
outstanding Capital Stock of Holdings and the



Principals, Management Investors or their Related Parties have less voting power
than such Person or "group" or"

        b. The definition of "Consolidated EBITDA" in Section 1.01 of the
Company Indenture shall be amended to read in its entirety as follows:

        "Consolidated EBITDA" means for the applicable period of measurement,
the Consolidated Net Income of Holdings and its Subsidiaries on a consolidated
basis, plus, without duplication, the following to the extent deducted in
calculating such Consolidated Net Income: (i) Consolidated Interest Expense for
such period, plus (ii) provisions for taxes based on income, plus (iii) total
depreciation expense, plus (iv) total amortization expense, plus (v) other
non-cash items reducing Consolidated Net Income (excluding any such non-cash
item to the extent that it represents an accrual or reserve for potential cash
items in any future period or amortization of a prepaid cash item but,
notwithstanding anything to the contrary herein, including, without limitation,
reserves for lease expenses and charges and expenses related to the closure of
hospitals to the extent not paid in cash), all fees and expenses incurred in
connection with the Merger and the financing thereof, including all non-compete
payments, employment contract termination payments, deferred payments for
restricted Capital Stock of Holdings and stay bonuses made in connection with
the Merger and identified on Schedule 1(q) to the Purchase Agreement; plus (vi)
non-recurring costs incurred by Holdings and its Subsidiaries in 1999 relating
to year 2000 computer matters; plus (vii) other one-time non-recurring charges
incurred by Holdings, the Company or any of its Subsidiaries associated with the
consummation of Holdings' initial public offering and the issuance of the
Company 144A Notes, including, without limitation (A) any non-cash charges
incurred by Holdings and/or the Company; provided that such non-cash charges
shall not exceed $10,400,000 in the aggregate; (B) a one-time payment to GEI;
provided that such one-time payment to GEI shall not exceed $8,000,000; and (C)
underwriting discounts and commissions and other reasonable costs and expenses
associated therewith, including reasonable legal fees and expenses, less other
non-cash items increasing Consolidated Net Income (excluding any such non-cash
item to the extent it represents the reversal of an accrual or reserve for
potential cash item in any prior period).

        c. The definition of "Consolidated Interest Expense" in Section 1.01 of
the Holdings Indenture shall be amended to read in its entirety as follows:

        "Consolidated Interest Expense" means for the applicable period of
measurement of Holdings and its Subsidiaries on a consolidated basis, the
aggregate interest expense (whether or not payable in cash) for such period
(including all commissions, discounts, fees and other charges in connection with
standby letters of credit and similar instruments) for Holdings and its
Subsidiaries on a consolidated basis, but excluding all amortization of
financing fees and other charges incurred by Holdings and its Subsidiaries in
connection with the issuance of the Notes, the issuance of the Company Notes,
the issuance of the Company 144A Notes and the borrowings under the Credit
Agreement, minus interest income of Holdings and its Subsidiaries for such
period, on a consolidated basis.

        d. Clause (i) of the definition of "Permitted Partially Owned
Subsidiary" in Section 1.01 of the Holdings Indenture shall be amended to read
in its entirety as follows:


                                       2


"(i) with respect to each Permitted Partially Owned Subsidiary other than the
Exempt Subsidiaries, Capital Stock representing 51% or more of the aggregate
voting and economic interests in such Subsidiary is directly or indirectly
owned, beneficially and of record, by the Company,"

        e. Clause (iv) of the definition of "Permitted Partially Owned
Subsidiary" in Section 1.01 of the Holdings Indenture shall be amended to read
in its entirety as follows:

"(iv) at the time of designation of any Permitted Partially Owned Subsidiary as
such, that portion of Consolidated EBITDA attributable to all Permitted
Partially Owned Subsidiaries (including the Subsidiary proposed to be designated
as such) does not represent more than 15% of the Consolidated EBITDA for the
four-Fiscal Quarter period most recently ended."

3.      Section 5.02 (Restricted Payments).

        Section 5.02(a) of the Holdings Indenture shall be amended to read in
its entirety as follows:

        "(a) Holdings shall not, and shall not permit any of its Subsidiaries
to, (i) declare or make any dividend payment or other distribution of assets,
properties, cash, rights, obligations or securities on account of any shares of
any class of Capital Stock or other Equity Interests of, including any payment
in connection with a merger or consolidation involving Holdings or any of its
Subsidiaries, (ii) purchase, redeem or otherwise acquire for value any shares of
Capital Stock or other Equity Interests of Holdings or any of its Subsidiaries
now or hereafter outstanding, (iii) make any payment or prepayment of principal
of, premium, if any, interest, redemption, exchange, purchase, retirement,
defeasance, sinking fund or other payment with respect to, any Subordinated
Indebtedness or (iv) make any Restricted Investments (the items described in
clauses (i), (ii), (iii), and (iv) are referred to as "Restricted Payments");
except that Holdings, the Company or any Subsidiary of the Company may make a
Restricted Payment if at the time of and after giving effect to such Restricted
Payment;

                        (A) no Default or Event of Default shall have occurred
                and be continuing or would occur as a consequence thereof; and

                        (B) Holdings or the Company, as the case may be, would,
                at the time such Restricted Payment was made and after giving
                pro forma effect thereto as if such Restricted Payment had been
                made at the beginning of the applicable four-Fiscal Quarter
                period, have been permitted to incur at least $1.00 of
                additional Indebtedness pursuant to the Coverage Ratio Test set
                forth in Section 5.04(a) hereof;

                        (C) if being made by the Company or any of its
                Subsidiaries, such Restricted Payment, together with the
                aggregate of all other Restricted Payments made by the Company
                and its Subsidiaries after the date of this Indenture (excluding
                Restricted Payments permitted by the next succeeding paragraph
                (b)), is less than the sum of (1) 50% of the Consolidated Net
                Income of


                                       3


                the Company for the period (taken as one accounting period) from
                the beginning of the first Fiscal Quarter commencing after the
                date of this Indenture to the end of the Company's most recently
                ended Fiscal Quarter for which internal financial statements are
                available at the time of such Restricted Payment (or, if such
                Consolidated Net Income for such period is a deficit, less 100%
                of such deficit), plus (2) 100% of the aggregate net cash
                proceeds received by the Company from contributions of capital
                from Holdings to the Company since the date of this Indenture or
                the issue or sale since the date of this Indenture of Equity
                Interests of the Company or of debt securities of the Company
                that have been converted into such Equity Interests (other than
                Equity Interests (or convertible debt securities) sold to a
                Subsidiary of the Company and other than Disqualified Capital
                Stock or debt securities that have been converted into
                Disqualified Capital Stock), plus (3) to the extent that any
                Restricted Investment that was made after the date of this
                Indenture is sold for cash or otherwise liquidated or repaid for
                cash, the lesser of (x) the cash return of capital with respect
                to such Restricted Investment (less the cost of disposition, if
                any) and (y) the initial amount of such Restricted Investment;
                and

                        (D) if being made by Holdings, such Restricted Payment,
                together with the aggregate of all other Restricted Payments
                made by Holdings, the Company and its Subsidiaries after the
                date of this Amendment (excluding Restricted Payments permitted
                by the next succeeding paragraph (b) and excluding Restricted
                Payments made to Holdings as permitted in Clause (C) above), is
                less than the sum of (1) 50% of the Consolidated Net Income of
                Holdings for the period (taken as one accounting period) from
                the beginning of the first Fiscal Quarter commencing after the
                date of this Amendment to the end of the Company's most recently
                ended Fiscal Quarter for which internal financial statements are
                available at the time of such Restricted Payment (or, if such
                Consolidated Net Income for such period is a deficit, less 100%
                of such deficit), plus (2) 100% of the aggregate net cash
                proceeds received by Holdings from the issue or sale since the
                date of this Amendment of Equity Interests of Holdings or of
                debt securities of Holdings that have been converted into such
                Equity Interests (other than Equity Interests (or convertible
                debt securities) sold to a Subsidiary of Holdings and other than
                Disqualified Capital Stock or debt securities that have been
                converted into Disqualified Capital Stock), plus (3) to the
                extent that any Restricted Investment that was made after the
                date of this Indenture is sold for cash or otherwise liquidated
                or repaid for cash, the lesser of (x) the cash return of capital
                with respect to such Restricted Investment (less the cost of
                disposition, if any) and (y) the initial amount of such
                Restricted Investment."

4.      Section 5.04 (Incurrence of Indebtedness and Issuances of Disqualified
Capital Stock or Preferred Stock).

        a. The final proviso of the final sentence of Section 5.04(a) shall be
amended to read in its entirety as follows:


                                       4


"provided, however, such calculations of Adjusted EBITDA with respect to
Permitted Acquisitions, the consideration for which constitutes $3,000,000 or
less, shall be based on reasonable estimations of such pre-acquisition Adjusted
EBITDA based on actual pre-acquisition revenues."

        b. A new Section 5.04(b)(xxi) shall be added to the Holdings Indenture
to read in its entirety as follows:

        "(xxi) the Guarantee by Holdings of Indebtedness under the Company 144A
Notes and the Company 144A Notes Indenture, provided that such Guarantee shall
be subordinated to the Notes and the Guarantee by Holdings of Indebtedness under
the Credit Documents to the same extent the Company 144A Notes are subordinated
in right of payment to "Senior Indebtedness" (as such term is defined in the
Company 144A Notes Indenture)."

5.      Section 7.01 (Events of Default).

        A new Section 7.01(h) shall be added to the Holdings Indenture to read
in its entirety as follows:

        "(h) an Event of Default (as defined in the Company 144A Notes
Indenture) occurs under the Company 144A Notes Indenture."

6.      Holdings Indenture Remains in Effect. Except as expressly amended
herein, the Holdings Indenture shall continue to be, and shall remain, in full
force and effect. This Amendment shall not be deemed to be a waiver of, or
consent to, or a modification or amendment of, any other term or condition of
the Holdings Indenture or the Notes or to prejudice any other right or rights
which the holders of the Notes may now have or may have in the future under or
in connection with the Holdings Indenture or any of the instruments or
agreements referred to therein, as the same may be amended from time to time.

7.      Counterparts. This Amendment may be executed by one or more of the
parties hereto in any number of separate counterparts (which may include
counterparts delivered by facsimile transmission) and all of said counterparts
taken together shall be deemed to constitute one and the same instrument.

8.      GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO
APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF
THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

9.      Effectiveness. The effectiveness of this Amendment shall be contingent
on the execution of the Company 144A Notes Indenture, the sale of the Company
144A Notes and the consummation of Holdings' initial public offering.


                                       5


        IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed, as of the day and year first above written.

VCA ANTECH, INC.


By:     /s/ Robert L. Antin
        Name:  Robert L. Antin
        Title: Chief Executive Officer and President

CHASE MANHATTAN BANK AND TRUST
COMPANY, NATIONAL ASSOCIATION


By:     /s/ Rose T. Maravilla
        Name:  Rose T. Maravilla
        Title: Assistant Vice President




Agreed to and accepted by:

GS MEZZANINE PARTNERS II, L.P.

By:     GS Mezzanine Advisors II, L.L.C.,
        its general partner


By:     /s/ Katherine L. Nissenbaum
        Name:  Katherine L. Nissenbaum
        Title: Vice President

GS MEZZANINE PARTNERS II OFFSHORE, L.P.

By:     GS Mezzanine Advisors II, L.L.C.
        its general partner


By:     /s/ Katherine L. Nissenbaum
        Name:  Katherine L. Nissenbaum
        Title: Vice President

TCW LEVERAGED INCOME TRUST, L.P.

By:     TCW Advisers (Bermuda), Ltd.
        as its General Partner


By:     /s/ Darryl L. Schall
        Name:  Darryl L. Schall
        Title: Managing Director

By:     TCW Investment Management Company
        as Investment Adviser


By:     /s/ Darryl L. Schall
        Name:  Darryl L. Schall
        Title: Managing Director



TCW LEVERAGED INCOME TRUST II, L.P.

By:     TCW (LINC II), L.P.
        as its General Partner

By:     TCW Advisers (Bermuda), Ltd.
        its General Partner


By:     /s/ Mark D. Senkpiel
        Name:  Mark D. Senkpiel
        Title: Managing Director

By:     TCW Investment Management Company
        as Investment Adviser

By:     /s/ Darryl L. Schall
        Name:  Darryl L. Schall
        Title: Managing Director



TCW LEVERAGED INCOME TRUST IV, L.P.

By:     TCW Asset Management Company
        As its Investment Adviser


By:     /s/ Mark D. Senkpiel
        Name:  Mark D. Senkpiel
        Title: Managing Director


By:     /s/ Darryl L. Schall
        Name:  Darryl L. Schall
        Title: Managing Director



By:     TCW (LINC IV), L.L.C.
        As General Partner

By:     TCW Asset Management Company
        As its Managing Member


By:     /s/ Mark D. Senkpiel
        Name:  Mark D. Senkpiel
        Title: Managing Director


By:     /s/ Darryl L. Schall
        Name:  Darryl L. Schall
        Title: Managing Director



TCW/CRESCENT MEZZANINE PARTNERS II, L.P.

By:     TCW/Crescent Mezzanine II, L.P.
        its general partner or managing owner

By:     TCW/Crescent Mezzanine, L.L.C.
        its general partner


By:     /s/ Darryl L. Schall
        Name:  Darryl L. Schall
        Title: Managing Director



TCW/CRESCENT MEZZANINE TRUST II

By:     TCW/Crescent Mezzanine II, L.P.
        its general partner or managing owner

By:     TCW/Crescent Mezzanine, L.L.C.
        its general partner


By:     /s/ Darryl L. Schall
        Name:  Darryl L. Schall
        Title: Managing Director

THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY


By:     /s/ Richard A. Strait
        Name:  Richard A. Strait
        Title: Its Authorized Representative

EX-4.8

                                                                    EXHIBIT 4.8


                              Vicar Operating, Inc.
                       Senior Subordinated Notes due 2010

                                VCA Antech, Inc.
                              Senior Notes due 2010

                               Consent and Waiver

This Consent and Waiver ("Consent and Waiver") is dated as of November 20, 2001.

Reference is hereby made to (i) the Vicar Operating, Inc. Senior Subordinated
Notes due 2010 (the "Company Notes"), issued pursuant to the Indenture (the
"Company Indenture"), dated as of September 20, 2000, by and among Vicar
Operating, Inc., a Delaware corporation (the "Company"), the Guarantors (as
defined therein) and Chase Manhattan Bank and Trust Company National
Association, a national banking association organized under the federal laws of
the United States, as trustee (the "Trustee"), (ii) the VCA Antech, Inc. Senior
Notes due 2010 (the "Holdings Notes"), issued pursuant to the Indenture (the
"Holdings Indenture"), dated as of September 20, 2000, by and between VCA
Antech, Inc., a Delaware corporation (formerly known as Veterinary Centers of
America, Inc.) ("Holdings") and the Trustee, as trustee. Capitalized terms used
herein and not defined herein shall have the respective meanings ascribed to
such terms in the Holdings Indenture.

The undersigned, being all of the holders of the Company Notes and the Holdings
Notes, hereby consent to:

                (i)     the issuance of up to $175 million of the 9 7/8% Senior
                        Subordinated Notes due 2009 (the "Company 144A Notes")
                        to be issued pursuant to the Indenture to be entered
                        into among the Company, the guarantors and the trustee
                        named therein, provided that the net proceeds of the
                        issuance of the Company 144A Notes and the net proceeds
                        of Holdings' initial public offering (the "Holdings
                        I.P.O.") are used as described in the preliminary
                        Offering Circular dated October 31, 2001 with any
                        additional net proceeds used in accordance with clause
                        (iv) below or to pay other currently outstanding
                        Indebtedness of Holdings or the Company;

                (ii)    the payment by the Company of a dividend to Holdings of
                        a portion of the proceeds of the issuance of the Company
                        144A Notes solely for the purpose of allowing the
                        transactions contemplated in clause (iii) and (iv) of
                        this paragraph;

                (iii)   the redemption by Holdings of all of the outstanding
                        Preferred Stock of Holdings; and



                (iv)    Holdings' optional redemption of (i) 35% of the
                        aggregate principal amount of the outstanding Holdings
                        Notes at a price of 110% of the aggregate principal
                        amount thereof plus accrued and unpaid interest as of
                        the date of the redemption on a pro rata basis from each
                        of the Holders of the Holdings Notes, (ii) up to an
                        additional $7.0 million in principal amount of the
                        Holdings Notes at a price of 110% of the aggregate
                        principal amount thereof plus accrued and unpaid
                        interest as of the date of the redemption to be split
                        amongst the following entities as they shall determine:
                        (a) TCW Leveraged Income Trust, L.P., a Delaware limited
                        partnership, (b) TCW Leveraged Income Trust II, L.P., a
                        Delaware limited partnership, (c) TCW Leveraged Income
                        Trust IV, L.P., a Delaware limited partnership, (d)
                        TCW/Crescent Mezzanine Partners II, L.P., a Delaware
                        limited partnership, and (e) TCW/Crescent Mezzanine
                        Trust II, a closed-end Delaware statutory business trust
                        (each of the entities described in subsection (a)
                        through (e) of this section collectively referred to as
                        the "TCW Entities") and (iii) if the gross proceeds of
                        the Holdings I.P.O. are greater than $182 million or the
                        gross proceeds from the issuance of the Company 144A
                        Notes are greater than $150 million, as Holdings or the
                        Company may elect, up to the remaining aggregate
                        principal amount of the outstanding Holdings Notes held
                        by the TCW Entities and The Northwestern Mutual Life
                        Insurance Company, a Wisconsin corporation
                        ("Northwestern") (after the redemptions contemplated by
                        clause (i) of this paragraph), at a price of 110% of the
                        aggregate principal amount thereof plus accrued and
                        unpaid interest as of the date of the redemption and/or
                        up to approximately $5.8 million in principal amount of
                        the outstanding Company Notes at a price of 110% of the
                        aggregate principal amount thereof plus accrued and
                        unpaid interest as of the date of the redemption on a
                        pro rata basis from Northwestern and the TCW Entities.

The undersigned also irrevocably waive any breach of the following provisions,
solely to the extent resulting from the consummation of the optional redemptions
and other transactions consented to above:

                (i)     paragraph 5 of the Holdings Notes;

                (ii)    paragraph 5 of the Company Notes;

                (iii)   the notice requirements of paragraph 7 of the Holdings
                        Notes;

                (iv)    the notice requirements of paragraph 7 of the Company
                        Notes;


                                       2


                (v)     the pro rata redemption provisions of Section 3.02 of
                        the Holdings Indenture;

                (vi)    the pro rata redemption provisions of Section 3.02 of
                        the Company Indenture;

                (vii)   Section 3.03(a) of the Holdings Indenture;

                (viii)  Section 3.03(a) of the Company Indenture;

                (ix)    Section 5.02 of the Holdings Indenture;

                (x)     Section 5.02 of the Company Indenture;

                (xi)    Section 5.04 of the Holdings Indenture;

                (xii)   Section 5.04 of the Company Indenture;

                (xiii)  Section 5.06 of the Holdings Indenture; and

                (xiv)   Section 5.06 of the Company Indenture.

        The optional redemptions and other transactions consented to herein
shall take place using the proceeds of the the Company 144A Notes and the
Holdings I.P.O. and shall take place immediately upon the closing of the sale of
the Company 144A Notes; provided, however, that any portion of the optional
redemptions consented to under subclause (iii) of clause (iv) above being
financed with the proceeds of any "green shoe" under the Holdings I.P.O. may
take place immediately upon the closing of such green shoe.

        Pursuant to Section 13 of the Purchase Agreement and the Company
Purchase Agreement, Holdings, the Company and the Guarantors shall pay all
expenses incurred by the Purchasers (including, without limitation, the
reasonable and documented fees and disbursements of Fried, Frank, Harris,
Shriver & Jacobson, counsel to the Purchasers) in connection with this Consent
and Waiver, the proposed amendments to the Holdings Indenture and the Company
Indenture and any other agreements, instruments or documents executed pursuant
to the transactions consented to herein, whether or not the same shall become
effective.

        The effectiveness of this Consent and Waiver shall be contingent on the
execution of the Company 144A Notes Indenture, the sale of the Company 144A
Notes and the consummation of the Holdings I.P.O.


                                       3


               IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed, as of the day and year first above written.

GS MEZZANINE PARTNERS II, L.P.

By:     GS Mezzanine Advisors II, L.L.C.,
        its general partner


By:     /s/ Katherine L. Nissenbaum
        Name:  Katherine L. Nissenbaum
        Title: Vice President



GS MEZZANINE PARTNERS II OFFSHORE, L.P.

By:     GS Mezzanine Advisors II, L.L.C.
        its general partner


By:     /s/ Katherine L. Nissenbaum
        Name:  Katherine L. Nissenbaum
        Title: Vice President



TCW LEVERAGED INCOME TRUST, L.P.

By:     TCW Advisers (Bermuda), Ltd.
        as its General Partner


By:     /s/ Nicholas W. Tell, Jr.
        Name:  Nicholas W. Tell, Jr.
        Title: Managing Director

By:     TCW Investment Management Company
        as Investment Adviser


By:     /s/ Jean-Marc Chapus
        Name:  Jean-Marc Chapus
        Title: Managing Director



TCW LEVERAGED INCOME TRUST II, L.P.

By:     TCW (LINC II), L.P.
        as its General Partner

By:     TCW Advisers (Bermuda), Ltd.
        its General Partner


By:     /s/ Nicholas W. Tell, Jr.
        Name:  Nicholas W. Tell, Jr.
        Title: Managing Director


By:     TCW Investment Management Company
        as Investment Adviser


By:     /s/ Jean-Marc Chapus
        Name:  Jean-Marc Chapus
        Title: Managing Director



TCW LEVERAGED INCOME TRUST IV, L.P.

By:     TCW Asset Management Company
        As its Investment Adviser


By:     /s/ Nicholas W. Tell, Jr.
        Name:  Nicholas W. Tell, Jr.
        Title: Managing Director


By:     /s/ Jean-Marc Chapus
        Name:  Jean-Marc Chapus
        Title: Managing Director

By:     TCW (LINC IV), L.L.C.
        As General Partner

By:     TCW Asset Management Company
        As its Managing Member


By:     /s/ Nicholas W. Tell, Jr.
        Name:  Nicholas W. Tell, Jr.
        Title: Managing Director


By:     /s/ Jean-Marc Chapus
        Name:  Jean-Marc Chapus
        Title: Managing Director



TCW/CRESCENT MEZZANINE PARTNERS II, L.P.

By:     TCW/Crescent Mezzanine II, L.P.
        its general partner or managing owner

By:     TCW/Crescent Mezzanine, L.L.C.
        its general partner


By:     /s/ Jean-Marc Chapus
        Name:  Jean-Marc Chapus
        Title: Managing Director



TCW/CRESCENT MEZZANINE TRUST II

By:     TCW/Crescent Mezzanine II, L.P.
        its general partner or managing owner

By:     TCW/Crescent Mezzanine, L.L.C.
        its general partner


By:     /s/ Jean-Marc Chapus
        Name:  Jean-Marc Chapus
        Title: Managing Director



THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY


By:     /s/ J. Leech
        Name:
        Title:



Agreed to and accepted by:


VCA ANTECH, INC.


By:     /s/ Robert L. Antin
        Name:  Robert L. Antin
        Title: Chief Executive Officer and President



VICAR OPERATING, INC.


By:     /s/ Robert L. Antin
        Name:  Robert L. Antin
        Title: Chief Executive Officer and President



CHASE MANHATTAN BANK AND TRUST
COMPANY, NATIONAL ASSOCIATION


By:     /s/ Rose T. Maravilla
        Name:  Rose T. Maravilla
        Title: Assistant Vice President



GUARANTORS:

                      AAH MERGER CORPORATION
                      ACADEMY ANIMAL, INC.
                      ANDERSON ANIMAL HOSPITAL, INC.
                      ANIMAL CLINIC OF SANTA CRUZ, INC.
                      ANIMAL EMERGENCY CLINIC, P.C.
                      BEAUMONT VETERINARY ASSOCIATES, P.C.
                      BERLA, INC.
                      CACOOSING ANIMAL HOSPITAL, LTD.
                      CACOOSING PET CARE & NUTRITION CENTER, INC.
                      CLARMAR ANIMAL HOSPITAL, INC.
                      DETWILER VETERINARY CLINIC, INC.
                      DIAGNOSTIC VETERINARY SERVICE, INC.
                      EAGLE PARK ANIMAL CLINIC, INC.
                      EAGLE RIVER VETERINARY HOSPITAL, INC.
                      EDGEBROOK, INC.
                      FLORIDA VETERINARY LABORATORIES, INC.
                      FOX CHAPEL ANIMAL HOSPITAL, INC.
                      FREEHOLD, INC.
                      GLEN ANIMAL HOSPITAL, INC.
                      GOLDEN MERGER CORPORATION
                      H.B. ANIMAL CLINICS, INC.
                      HIGHLANDS ANIMAL HOSPITAL, INC.
                      HOWELL BRANCH ANIMAL HOSPITAL, P.A.
                      LAKE JACKSON VETERINARY HOSPITAL, INC.
                      LAKEWOOD ANIMAL HOSPITAL, INC.
                      LAMMERS VETERINARY HOSPITAL, INC.
                      LEWELLING VETERINARY CLINIC, INC.
                      MILLER ANIMAL HOSPITAL
                      M.S. ANIMAL HOSPITALS, INC.
                      NEWARK ANIMAL HOSPITAL, INC.
                      NORTHERN ANIMAL HOSPITAL, INC.
                      NORTH ROCKVILLE VETERINARY HOSPITAL, INC.
                      NORTHSIDE ANIMAL HOSPITAL, P.C.
                      NOYES ANIMAL HOSPITAL, INC.
                      OAK HILL VETERINARY HOSPITAL, INC.
                      OLD TOWN VETERINARY ANIMAL HOSPITAL, INC.
                      PET PRACTICE (MASSACHUSETTS), INC.
                      PETS' RX, INC.
                      PETS' RX NEVADA, INC.
                      PPI OF PENNSYLVANIA, INC.
                      PRINCETON ANIMAL HOSPITAL, INC.
                      PROFESSIONAL VETERINARY SERVICES, INC.
                      RIVIERA ANIMAL HOSPITAL, INC.



                      ROBERTSON BLVD. ANIMAL HOSPITAL, INC.
                      ROSSMOOR CENTER ANIMAL CLINIC, INC.
                      ROSSMOOR - EL DORADO ANIMAL HOSPITAL, INC.
                      SAN VICENTE ANIMAL CLINIC
                      SILVER SPUR ANIMAL HOSPITAL, INC.
                      SOUTH COUNTY VETERINARY CLINIC, INC.
                      SPANISH RIVER ANIMAL HOSPITAL, INC.
                      TAMPA ANIMAL MEDICAL CENTER, INC.
                      THE PET PRACTICE (FLORIDA), INC.
                      THE PET PRACTICE (ILLINOIS), INC.
                      THE PET PRACTICE (MASSACHUSETTS), INC.
                      THE PET PRACTICE OF MICHIGAN, INC.
                      VCA ALABAMA, INC.
                      VCA ALBANY ANIMAL HOSPITAL, INC.
                      VCA ALBUQUERQUE, INC.
                      VCA ALL PETS ANIMAL COMPLEX, INC.
                      VCA ALPINE ANIMAL HOSPITAL, INC.
                      VCA ANDERSON OF CALIFORNIA ANIMAL HOSPITAL, INC.
                      VCA ANIMAL HOSPITALS, INC.
                      VCA ANIMAL HOSPITAL WEST, INC.
                      VCA APAC ANIMAL HOSPITAL, INC.
                      VCA - ASHER, INC.
                      VCA BAY AREA ANIMAL HOSPITAL, INC.
                      VCA CACOOSING ANIMAL HOSPITAL, INC.
                      VCA CASTLE SHANNON VETERINARY HOSPITAL, INC.
                      VCA CENTERS-TEXAS, INC.
                      VCA CENVET, INC.
                      VCA CLARMAR ANIMAL HOSPITAL, INC.
                      VCA CLINICAL VETERINARY LABS, INC.
                      VCA CLINIPATH LABS, INC.
                      VCA CLOSTER, INC.
                      VCA DETWILER ANIMAL HOSPITAL, INC.
                      VCA DOVER ANIMAL HOSPITAL, INC.
                      VCA EAGLE RIVER ANIMAL HOSPITAL, INC.
                      VCA EAST ANCHORAGE ANIMAL HOSPITAL, INC.
                      VCA GOLDEN COVE ANIMAL HOSPITAL, INC.
                      VCA GREATER SAVANNAH ANIMAL HOSPITAL, INC.
                      VCA HOWELL BRANCH ANIMAL HOSPITAL, INC.
                      VCA INFORMATION SYSTEMS, INC.
                      VCA KANEOHE ANIMAL HOSPITAL, INC.
                      VCA LAKESIDE ANIMAL HOSPITAL, INC.
                      VCA LAMB AND STEWART ANIMAL HOSPITAL, INC.
                      VCA LAMMERS ANIMAL HOSPITAL, INC.
                      VCA LEWIS ANIMAL HOSPITAL, INC.
                      VCA MARINA ANIMAL HOSPITAL,  INC.



                      VCA MILLER ANIMAL HOSPITAL, INC.
                      VCA - MISSION, INC.
                      VCA NORTHBORO ANIMAL HOSPITAL, INC.
                      VCA NORTHWEST VETERINARY DIAGNOSTICS, INC.
                      VCA OF COLORADO-ANDERSON, INC.
                      VCA OF NEW YORK, INC.
                      VCA OF SAN JOSE, INC.
                      VCA OF TERESITA, INC.
                      VCA PROFESSIONAL ANIMAL LABORATORY, INC.
                      VCA REAL PROPERTY ACQUISITION CORPORATION
                      VCA REFERRAL ASSOCIATES ANIMAL HOSPITAL, INC.
                      VCA ROHRIG ANIMAL HOSPITAL, INC.
                      VCA - ROSSMOOR, INC.
                      VCA ST. PETERSBURG ANIMAL HOSPITAL, INC.
                      VCA SILVER SPUR ANIMAL HOSPITAL, INC.
                      VCA SOUTH SHORE ANIMAL HOSPITAL, INC.
                      VCA SPECIALTY PET PRODUCTS, INC.
                      VCA SQUIRE ANIMAL HOSPITAL, INC.
                      VCA TEXAS MANAGEMENT, INC.
                      VCA WYOMING ANIMAL HOSPITAL, INC.
                      VETERINARY HOSPITALS, INC.
                      WEST LOS ANGELES VETERINARY MEDICAL GROUP, INC.
                      WESTWOOD DOG & CAT HOSPITAL
                      W.E. ZUSCHLAG, D.V.M., WORTH ANIMAL HOSPITAL, CHARTERED
                      WILLIAM C. FOUTS, D.V.M., LTD.
                      WINGATE, INC.


                             By: /s/ Robert L. Antin
                                 Name:  Robert L. Antin
                                 Title: Chief Executive Officer and President

                             By: /s/ Tomas W. Fuller
                                 Name:  Tomas W. Fuller
                                 Title: Chief Financial Officer and Assistant
                                        Secretary



VCA VILLA ANIMAL HOSPITAL, L.P.

By:     VCA Animal Hospitals, Inc.,
        General Partner


By:     /s/ Robert L. Antin
        Name:  Robert L. Antin
        Title: Chief Executive Officer and President

By:     /s/ Tomas W. Fuller
        Name:  Tomas W. Fuller
        Title: Chief Financial Officer and Assistant
               Secretary



VETERINARY CENTERS OF AMERICA - TEXAS, L.P.

By:     VCA Centers-Texas, Inc., General Partner


By:     /s/ Robert L. Antin
        Name:  Robert L. Antin
        Title: Chief Executive Officer and President


By:     /s/ Tomas W. Fuller
        Name:  Tomas W. Fuller
        Title: Chief Financial Officer and Assistant
               Secretary



ANIMAL CENTER, INC.


By:     /s/ Robert L. Antin
        Name:
        Title:



ASSOCIATES IN PET CARE, S.C.


By:     /s/ Robert L. Antin
        Name:
        Title:



KIRKWOOD ANIMAL HOSPITAL - LEA
M.E. TAMMI, V.M.D., P.A.


By:     /s/ Robert L. Antin
        Name:
        Title:



MAIN STREET SMALL ANIMAL HOSPITAL, INC.


By:     /s/ Robert L. Antin
        Name:
        Title:



SOUTHEAST AREA VETERINARY MEDICAL
CENTER, P.C.


By:     /s/ Robert L. Antin
        Name:
        Title:



VCA ASSOCIATE ANIMAL HOSPITAL, L.P.


By:     /s/ Robert L. Antin
        Name:
        Title:



VCA HERITAGE ANIMAL HOSPITAL, L.P.


By:     /s/ Robert L. Antin
        Name:
        Title:



TOMS RIVER VETERINARY HOSPITAL, P.A.


By:     /s/ Robert L. Antin
        Name:
        Title:

EX-4.10

                                                                    EXHIBIT 4.10


                      VETERINARY CENTERS OF AMERICA, INC.

                               FIRST AMENDMENT TO
                         CREDIT AND GUARANTY AGREEMENT

       The FIRST AMENDMENT, dated as of October 23, 2000 (this "AMENDMENT"), to
the Credit and Guaranty Agreement, dated as of September 20, 2000 (as amended
through the date hereof, the "CREDIT AGREEMENT"), by and among VICAR OPERATING,
INC., a Delaware corporation ("COMPANY"), VETERINARY CENTERS OF AMERICA, INC., a
Delaware corporation ("HOLDINGS"), CERTAIN SUBSIDIARIES OF COMPANY, as
Guarantors, the Lenders party thereto from time to time, GOLDMAN SACHS CREDIT
PARTNERS L.P. ("GSCP"), as Sole Lead Arranger (in such capacity, "LEAD
ARRANGER"), and as Sole Syndication Agent (in such capacity, "SYNDICATION
AGENT"), and WELLS FARGO BANK, N.A. ("WELLS FARGO"), as Administrative Agent
(together with its permitted successors in such capacity, "ADMINISTRATIVE
AGENT") and as Collateral Agent (together with its permitted successor capacity,
"ADMINISTRATIVE AGENT") and as Collateral Agent (together with its permitted
successor in such capacity, "COLLATERAL AGENT"). Capitalized terms used herein
not otherwise defined herein or otherwise amended hereby shall have the meanings
ascribed thereto in the Credit Agreement.


                                   RECITALS:

       WHEREAS, Company has requested that Holdings and the Lenders agree to
make amendments to certain definitions to the Credit Agreement.

       NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:


SECTION 1.  AMENDMENTS TO CREDIT AGREEMENT

          1.1   AMENDMENTS TO SECTION 1: DEFINITIONS.
                ------------------------------------

                A.  Section 1.1 of the Credit Agreement is hereby amended by
adding thereto the following definitions in proper alphabetical order:

                "FIRST AMENDMENT" means the First Amendment dated October 23,
          2000 to this Agreement by and among Company, Holdings, Lenders as of
          the date of such amendment and the Agents.

                "FIRST AMENDMENT CLOSING DATE" has the meaning assigned to that
          term in the First Amendment.




                B.  Section 1.1 of the Credit Agreement is hereby amended by
deleting each of the definitions of "CONSOLIDATED CAPITAL EXPENDITURES" and
"REQUISITE LENDERS" in their entirety and substituting therefor the following:

                "CONSOLIDATED CAPITAL EXPENDITURES" means, for any period, the
          aggregate of the expenditures of Company and its Subsidiaries during
          such period determined on a consolidated basis that, in accordance
          with GAAP, are or should be included in "purchase of property and
          equipment" or similar items reflected in the consolidated statement of
          cash flows of Company and its Subsidiaries excluding, (i) any
          acquisition of assets that constitutes a Permitted Acquisition and
          (ii) any expenditures made by Company pursuant to Sections 2.13(a) and
          2.13(b) hereof; provided, however, that notwithstanding any of the
          foregoing to the contrary, Consolidated Capital Expenditures shall
          include expenditures of Company and its Subsidiaries with respect to
          assets constituting a fee interest in real property acquired by
          Company in connection with a Permitted Acquisition.

                "REQUISITE LENDERS" means three or more Lenders having or
          holding Tranche A Term Loan Exposure, Tranche B Term Loan Exposure
          and/or Revolving Exposure and representing more than 50% of the sum of
          (i) the aggregate Tranche A Term Loan Exposure of all lenders, (ii)
          the aggregate Tranche B Term Loan Exposure of all Lenders and (iii)
          the aggregate Revolving Exposure of all Lenders.

                C.  Section 1.1 of the Credit Agreement is hereby further
          amended by adding the following paragraph at the conclusion of the
          definition of "PERMITTED ACQUISITION":

          "Notwithstanding any of the foregoing to the contrary, "Permitted
          Acquisition" shall not include any acquisition of any assets
          constituting a fee interest in real property to the extent such
          acquisition of assets is included in the calculation of Consolidated
          Capital Expenditures."


SECTION 2. CONDITIONS PRECEDENT TO EFFECTIVENESS

          2.1   The effectiveness of the amendments set forth at Section 1
hereof are subject to the satisfaction, or waiver, of the following conditions
on or before the date hereof (the "FIRST AMENDMENT CLOSING DATE"):

          (A)   The Company, Holdings and the Lenders shall have indicated
their consent by the execution and delivery of the signature pages hereof to
the Agent.


                                       2

          (b)   As of the First Amendment Closing Date, the representations and
warranties contained herein and in the other Credit Documents shall be true,
correct and complete in all respects on and as of the First Amendment Closing
Date to the same extent as though made on and as of that date, except to the
extent such representations and warranties specifically relate to an earlier
date, in which case such representations and warranties shall have been true,
correct and complete in all respects on and as of such earlier date.

          (c)   As of the First Amendment Closing Date, no event shall have
occurred and be continuing that would constitute an Event of Default or a
Default.

          (d)   The Administrative Agent and Lenders shall have received such
other documents and information regarding Credit Parties and the Amended
Agreement as the Arrangers or Lenders may reasonably request.


SECTION 3.  REPRESENTATIONS AND WARRANTIES

          3.1   In order to induce Lenders to enter into this Amendment, each
applicable Credit Party represents and warrants to each Lender, as of the date
hereof and upon giving effect to this Amendment, that the representations and
warranties contained in each of the Credit Documents is true, correct and
complete in all respects on and as of the date hereof to the same extent as
though made on and as of that date, except to the extent such representations
and warranties specifically relate to an earlier date, in which case such
representations and warranties shall have been true, correct and complete in
all respects on and as of such earlier date.


SECTION 4.  MISCELLANEOUS

          4.1   This Amendment shall be binding upon the parties hereto and
their respective successors and assigns and shall inure to the benefit of the
parties hereto and the successors and assigns of Lenders. No Credit Party's
rights or obligations hereunder or any interest therein may be assigned or
delegated by any Credit Party without the prior written consent of all Lenders.

          4.2   In case any provision in or obligation hereunder shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.

          4.3   On and after the First Amendment Closing Date, each reference
in the Credit Agreement to "this Agreement", "hereunder", "hereof", "herein" or
words of like import referring to the Credit Agreement, and each reference in
the other Credit Documents to the "Credit


                                       3

Agreement","Thereunder","thereof" or words of like import referring to the
Credit Agreement shall mean and be a reference to the Credit Agreement as
amended by this Amendment.
          4.4  Except as specifically amended by this Amendment, the Credit
Agreement and other Credit Documents shall remain in full force and effect and
are hereby ratified and confirmed.

          4.5  The execution, delivery and performance of this Amendment shall
not, except as expressly provided herein, constitute a waiver of any provision
of, or operate as a waiver of any right, power or remedy of any Agent or Lender
under, the Credit Agreement or any of the other Credit Documents.

          4.6  Section headings herein are included herein for convenience of
reference only and shall not constitute a par hereof for any other purpose or
be given any substantive effect.

          4.7  THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

          4.8  This Amendment may be executed in any number of counterparts,
each of which when so executed and delivered shall be deemed an original, but
all such counterparts together shall constitute but one and the same
instrument. As set forth herein, this Amendment shall become effective upon the
execution of a counterpart hereof by each of the parties hereto and receipt by
Company, Holdings and Administrative Agent and Syndication Agent of written or
telephonic notification of such execution and authorization of delivery thereof.


            [The remainder of this page is intentionally left blank]

                                       4

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



COMPANY:                                     VICAR OPERATING, INC.


                                             By:  /s/  Tomas Fuller
                                                 -------------------------------
                                                  Name:  Tomas Fuller
                                                  Title: VP



HOLDINGS:                                    VETERINARY CENTERS OF AMERICA,


                                             By:  /s/  Tomas Fuller
                                                 -------------------------------
                                                  Name:  Tomas Fuller
                                                  Title: VP



                                       S-1

SOLE SYNDICATION AGENT,
SOLE LEAD ARRANGER,
AND A LENDER:                                GOLDMANSACHS CREDIT PARTNERS L.P.,


                                             By:    /s/  R T WAGNER
                                                  ------------------------------
                                                       Authorized Signatory



                                      S-2



        ADMINISTRATIVE AGENT,
        COLLATERAL AGENT
        AND A LENDER:                          WELLS FARGO BANK, N.A.

                                                  /S/ S. MICHAEL ST. GEME
                                               By --------------------------
                                                  Name:  S. MICHAEL ST. GEME
                                                  Title: VICE PRESIDENT




                                      S-3



        LENDERS                           NATEXIS BANQUES POPULAIRES
                                         (f/k/a/ Natexis Banque) New York Branch

                                            /s/ Gary Kania
                                         By:---------------------------
                                            Name:   GARY KANIA
                                            Title:  Vice President


                                             /s/ JORDAN SADLER
                                                 JORDAN SADLER
                                            ASSISTANT VICE PRESIDENT



                                       S4

                                             SIERRA CLO I, LTD


                                             By: /s/ John M. Casparian
                                                 -------------------------------
                                                 Name: John M. Casparian
                                                 Title: Senior Managing Director


                                      S-5

                                             THE PRUDENTIAL INSURANCE
                                             COMPANY OF AMERICA


                                             By: /s/ B. Ross Smead
                                                 ---------------------
                                                 Name:  B. Ross Smead
                                                 Title: Vice President


                                      S-6

                             OFFICER'S CERTIFICATE


        This OFFICERS CERTIFICATE is delivered pursuant to Section 2 of that
certain First Amendment to Credit and Guaranty Agreement dated as of October
23, 2000 (the "Amendment") which amends that certain Credit and Guaranty
Agreement dated as of September 20, 2002 (as amended, the Credit Agreement",
capitalized terms used herein without definition having the meanings given such
terms in the Credit Agreement). The undersigned hereby certifies that

        1.  As of the First Amendment Closing Date, the representations and
warranties contained contained therein and in the other Credit Documents are
true, correct and complete in all respects on and as of the First Amendment
Closing Date to the same extent as though made on and as of that date, except
to the extent such representations and warranties specifically relate to an
earlier date, in which case such representations and warranties are true,
correct and complete in all res[respects on and as of such earlier date.

        2.  As of the First Amendment Closing Date, no event has occurred and
is continuing that would constitute an Event of Default or a Default.

        IN WITNESS WHEREOF, the undersigned has executed this Secretary's
Certificate as of the 6 day of December, 2000.


                                      VETERINARY CENTERS OF AMERICA, INC.

                                         /s/ ROBERT L. ANTIN
                                      BY:---------------------
                                         Robert L. Antin
                                         President

EX-4.11

                                                                    EXHIBIT 4.11


                                VCA ANTECH, INC.

                               SECOND AMENDMENT TO

                          CREDIT AND GUARANTY AGREEMENT

        This SECOND AMENDMENT, dated as of November 16, 2001 (this "AMENDMENT"),
to the Credit and Guaranty Agreement, dated as of September 20, 2000 (as amended
through the date hereof, the "CREDIT AGREEMENT"), by and among VICAR OPERATING,
INC., a Delaware corporation ("COMPANY"), VCA ANTECH, INC. a Delaware
corporation (formerly known as Veterinary Centers of America, Inc., "HOLDINGS"),
CERTAIN SUBSIDIARIES OF COMPANY, as Guarantors, the Lenders party thereto from
time to time, GOLDMAN SACHS CREDIT PARTNERS L.P. ("GSCP"), as Sole Lead Arranger
(in such capacity, "LEAD ARRANGER"), and as Sole Syndication Agent (in such
capacity, "SYNDICATION AGENT"), and WELLS FARGO BANK, N.A. ("WELLS FARGO"), as
Administrative Agent (together with its permitted successors in such capacity,
"ADMINISTRATIVE AGENT") and as Collateral Agent (together with its permitted
successor in such capacity, "COLLATERAL AGENT"). Capitalized terms used herein
not otherwise defined herein or otherwise amended hereby shall have the meanings
ascribed thereto in the Credit Agreement.

                                    RECITALS:

        WHEREAS, Company proposes issuing subordinated indebtedness in an
aggregate principal amount of not less than $150,000,000 and consummating an
initial public offering of common stock of Holdings providing aggregate gross
proceeds of not less than $140,000,000; and

        WHEREAS, Holdings and Company have requested that Requisite Lenders
agree to make amendments to certain provisions to the Credit Agreement in order
to effectuate the above transactions.

        NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:

SECTION I. AMENDMENTS TO CREDIT AGREEMENT

          A. AMENDMENTS TO SECTION 1: DEFINITIONS.

          (a) Section 1.1 of the Credit Agreement is hereby amended by adding
thereto the following definitions in proper alphabetical order:

          "NEW COMPANY SUBORDINATED NOTE INDENTURE" means an Indenture to be
     entered into between Company and JP Morgan Chase, pursuant to which the New
     Company Subordinated Notes are to be issued in form and substance
     reasonably



     acceptable to the Agents, as such Indenture may hereafter be amended,
     restated, supplemented or otherwise modified from time to time to the
     extent permitted under Section 6.16.

          "NEW COMPANY SUBORDINATED NOTES" means the subordinated notes due no
     earlier than 2010 in an aggregate principal amount of not less than
     $150,000,000 in form and substance reasonably acceptable to the Agents, as
     such notes may hereafter be amended, restated, supplemented or otherwise
     modified from time to time to the extent permitted under Section 6.16.

          "HOLDINGS IPO" means an initial public offering of common stock of
     Holdings consummated no later than November 30, 2001 and providing gross
     proceeds to Holdings of not less than $140,000,000.

          "IMMATERIAL SUBSIDIARY" for purposes of Section 8.1(f) and Section
     8.1(g), shall mean one or more Subsidiaries of Holdings that, on a
     consolidated basis did not (i) for the most recently concluded Fiscal Year
     account for more than 3.0% of consolidated revenues of Holdings and its
     Subsidiaries and (ii) as of the last day of such Fiscal Year own more than
     3.0% of the consolidated assets of Holdings and its Subsidiaries.

          "SECOND AMENDMENT" means the Second Amendment dated November 16, 2001
     to this Agreement by and among Company, Holdings, Requisite Lenders as of
     the date of such amendment and the Agents.

          "SECOND AMENDMENT CLOSING DATE" has the meaning assigned to that term
     in the Second Amendment.

          (b) Section 1.1 of the Credit Agreement is hereby amended by deleting
each of the definitions of "CHANGE OF CONTROL", "CONSOLIDATED ADJUSTED EBITDA",
"MATERIAL REAL ESTATE ASSET", "PERMITTED ACQUISITION", "PERMITTED
PARTIALLY-OWNED SUBSIDIARY", "PERMITTED SELLER NOTES" and "SENIOR SUBORDINATED
NOTE DOCUMENTS" in their entirety and substituting therefor the following:

          "CHANGE OF CONTROL" means, at any time, (i) (A) prior to the
     consummation of the Holdings IPO, Sponsor, Co-Investors and Management
     Investors shall cease to beneficially own and control at least 51% on a
     fully diluted basis of the voting interests of the Capital Stock of
     Holdings and (B) concurrently with or at any time after the consummation of
     the Holdings IPO, Sponsor, Co-Investors and Management Investors shall
     collectively cease to beneficially own and control at least 35% on a fully
     diluted basis of the voting interests in the Capital Stock of Holdings;
     (ii) any Person or "group" (within the meaning of Rules 13d-3 and 13d-5
     under the Exchange Act) other than Sponsor (a) (I) at any time prior to the
     consummation of the Holdings IPO, shall have acquired beneficial ownership
     of 35% or more on a fully diluted basis of the voting interests in the
     Capital Stock of Holdings and (II) concurrently with or at any time after
     the consummation of the Holdings IPO shall have acquired beneficial
     ownership of a percentage greater than that owned by the Sponsor,
     Co-Investors and Management


                                       2


     Investors collectively, on a fully diluted basis of the voting interests in
     the Capital Stock of Holdings or (b) at all times, shall have obtained the
     power (whether or not exercised) to elect a majority of the members of the
     board of directors (or similar governing body) of Holdings; (iii) Sponsor
     and Co-Investors shall collectively cease to beneficially own and control
     on a fully diluted basis a percentage of the voting interests in the
     Capital Stock of Holdings greater than any other Person or group (within
     the meaning of Rules 13d-3 and 13d-5 of the Exchange Act); (iv) Holdings
     shall cease to beneficially own and control 100% on a fully diluted basis
     of the Capital Stock of Company; or (v) the majority of the seats (other
     than vacant seats) on the board of directors (or similar governing body) of
     Company cease to be occupied by Persons who either (a) were members of the
     board of directors of Company on the Closing Date or (b) were nominated for
     election by the board of directors of Company, a majority of whom were
     directors on the Closing Date or whose election or nomination for election
     was previously approved by a majority of such directors; or (vi) any
     "change of control" or similar event under the Holdings Senior Note
     Documents or the Senior Subordinated Note Documents shall occur.

          "CONSOLIDATED ADJUSTED EBITDA" means, for any period, an amount
     determined for Company and its Subsidiaries on a consolidated basis equal
     to (i) the sum, without duplication, of the amounts for such period of (a)
     Consolidated Net Income, (b) Consolidated Interest Expense, (c) provisions
     for taxes based on income, (d) total depreciation expense, (e) total
     amortization expense, (f) other non-Cash items reducing Consolidated Net
     Income (excluding any such non-Cash item to the extent that it represents
     an accrual or reserve for potential Cash items in any future period or
     amortization of a prepaid Cash item that was paid in a prior period but,
     notwithstanding anything to the contrary herein, including without
     limitation, reserves for lease expense and other charges and expenses
     related to the closure of hospitals to the extent not paid in cash), (g) to
     the extent deducted in calculating Consolidated Net Income, Transaction
     Costs, (h) payments made under the Management Services Agreement in
     accordance with the provisions of Section 6.5(l) and (i) to the extent
     deducted in calculating Consolidated Net Income, other one-time
     non-recurring charges incurred by Holdings, Company or any of Company's
     Subsidiaries associated with the Holdings IPO and the New Company
     Subordinated Notes, including, without limitation (A) any non-cash charges
     incurred by Holdings and/or Company; provided, that such non-cash charges
     shall not exceed $10,400,000 in the aggregate; (B) a one-time payment to
     Sponsor; provided, that such one-time payment to Sponsor shall not exceed
     $8,000,000; and (C) underwriting discounts and commissions and other
     reasonable costs and expenses associated therewith, including reasonable
     legal fees and expenses, minus (ii) non-Cash items increasing Consolidated
     Net Income for such period (excluding any such non-Cash item to the extent
     it represents the reversal of an accrual or reserve for potential Cash item
     in any prior period); provided that the foregoing shall be subject to the
     adjustments described in Schedule 1.1.

          "MATERIAL REAL ESTATE ASSET" means (i) (a) any fee-owned Real Estate
     Asset having a fair market value in excess of $150,000 as of the date of
     the acquisition thereof and (b) all Leasehold Properties other than those
     with respect to which the aggregate


                                       3


     payments under the term of the lease are less than $500,000 per annum or
     (ii) any Real Estate Asset that the Requisite Lenders have determined is
     material to the business, operations, properties, assets, condition
     (financial or otherwise) or prospects of Holdings or any Subsidiary
     thereof, including Company.

          "PERMITTED ACQUISITION" means any acquisition by Company or any of its
     Subsidiaries, whether by purchase, merger or otherwise, of all or
     substantially all of the assets of, 51% or more of the Capital Stock of, or
     a business line or unit or a division of, any Person; provided,

               (i) immediately prior to, and after giving effect thereto, no
     Default or Event of Default shall have occurred and be continuing or would
     result therefrom;

               (ii) all transactions in connection therewith shall be
     consummated, in all material respects, in accordance with all applicable
     laws and in conformity with all applicable Governmental Authorizations;

               (iii) in the case of the acquisition of Capital Stock, (i) at
     least 51% of the Capital Stock (except for any such Securities in the
     nature of directors' qualifying shares required pursuant to applicable law)
     acquired or otherwise issued by such Person or any newly formed Subsidiary
     of Company in connection with such acquisition shall be owned by Company or
     a Guarantor Subsidiary thereof, (ii) in the case of acquisitions where
     Company owns more than 51% but less than 100% of such Subsidiary, Company
     shall designate such Subsidiary as a Permitted Partially-Owned Subsidiary,
     and (iii) except in the case of a Permitted Partially-Owned Subsidiary,
     Company shall have taken, or caused to be taken, as of the date such Person
     becomes a Subsidiary of Company, each of the actions set forth in Sections
     5.10 and/or 5.11, as applicable;

               (iv) Any Person or assets so acquired shall be located
     exclusively in the United States;

               (v) Holdings and its Subsidiaries shall be in compliance with the
     financial covenants set forth in Section 6.8 on a pro forma basis after
     giving effect to such acquisition as of the last day of the Fiscal Quarter
     most recently ended (as determined in accordance with Section 6.8(f));

               (vi) Company shall have delivered to Administrative Agent (A) at
     least five Business Days prior to such proposed acquisition, a Compliance
     Certificate evidencing compliance with Section 6.8 as required under clause
     (v) above, together with all relevant financial information with respect to
     such acquired assets, including, without limitation, the aggregate
     consideration for such acquisition and any other information required to
     demonstrate compliance with Section 6.8; provided, however, that Company
     shall not be required to comply with the provisions of this clause (vi)
     with respect to acquisitions unless the consideration of such acquisition
     is greater than $3,000,000; and


                                       4


               (vii) any Person or assets or division as acquired in accordance
     herewith shall be in a business or lines of business the same as, related,
     complementary or ancillary to, the business or lines of business in which
     Company and/or its Subsidiaries are engaged as of the Closing Date.

          "PERMITTED PARTIALLY-OWNED SUBSIDIARY" means (a) those Subsidiaries of
     Company listed on Schedule 1.2 existing on the Closing Date, and (b) those
     Subsidiaries of Company acquired or created after the Closing Date and
     designated by Company as a Permitted Partially-Owned Subsidiary by written
     notice to the Administrative Agent, provided, that, with respect to
     Permitted Partially-Owned Subsidiaries acquired or created after the
     Closing Date, (i) Company owns at least 51% of the outstanding Capital
     Stock of such Subsidiary, (ii) the remaining Capital Stock of such
     Subsidiary is owned directly or indirectly, by one or more licensed
     veterinarians who are actively involved in the business of such Subsidiary,
     (iii) Company shall use its commercially reasonable efforts to cause such
     Subsidiary to become a Guarantor Subsidiary, (iv) if Company fails to
     obtain a Guaranty from such Subsidiary, then such Subsidiary shall not own
     and lease any Material Real Estate Assets, and (v) Company shall use
     commercially reasonable efforts to cause such veterinarian to pledge his or
     her Capital Stock in such Permitted Partially-Owned Subsidiary in favor of
     the Collateral Agent for the benefit of the Secured Parties; provided,
     further, that (i) at no time shall the total portion of Consolidated
     Adjusted EBITDA contributed by all Subsidiaries constituting Permitted
     Partially-Owned Subsidiaries exceed 15% of Consolidated Adjusted EBITDA and
     (ii) at no time shall the portion of Consolidated Adjusted EBITDA
     contributed by all Permitted Partially-Owned Subsidiaries acquired or
     created after the Closing Date which are not Guarantor Subsidiaries exceed
     10% of Consolidated Adjusted EBITDA.

          "PERMITTED SELLER NOTES" means promissory notes containing
     subordination provisions in substantially the form of, or no less favorable
     to Lenders (in the reasonable judgment of Administrative Agent) than the
     subordination provisions contained in, Exhibit K annexed hereto,
     representing any Indebtedness of Holdings or Company incurred in connection
     with any Permitted Acquisition payable to the seller in connection
     therewith, as such note may be amended, supplemented or otherwise modified
     from time to time to the extent permitted under subsection 6.16; provided
     that, no Permitted Seller Note shall (i) be guarantied by any Subsidiary of
     Holdings or secured by any property of Holdings, Company or any of its
     Subsidiaries, (ii) bear cash interest at a rate greater than 8.5% per
     annum; or, (iii) except in accordance with subsection 6.5, provide for any
     prepayment or repayment of all or any portion of the principal thereof
     prior to the date of the final scheduled installment of principal of the
     Loans; provided, further, that in no event shall the aggregate scheduled
     cash payments of principal and interest on all outstanding Permitted Seller
     Notes exceed $4,000,000 in any Fiscal Year.

          "SENIOR SUBORDINATED NOTE DOCUMENTS" means the Senior Subordinated
     Notes, the Senior Subordinated Note Indenture, the New Company Subordinated
     Notes, the New Company Subordinated Note Indenture, the Company Purchase
     Agreement, the Senior Subordinated Note Registration Rights Agreement, and
     each other document executed in connection with the Senior Subordinated
     Notes, as such document may be amended,


                                       5


     restated, supplemented or otherwise modified from time to time to the
     extent permitted under Section 6.16.

          B. AMENDMENTS TO SECTION 2: MANDATORY PREPAYMENTS.

          (a) Section 2.13(c) of the Credit Agreement is hereby amended by
adding the following paragraph at the conclusion thereof as follows:

          "Notwithstanding any of the foregoing to the contrary, on the date of
     receipt by Holdings of any Cash proceeds from the Holdings IPO, such Cash
     proceeds (together with additional Cash on hand as of the Second Amendment
     Effective Date) shall be applied, net of underwriting discounts and
     commissions and other reasonable costs and expenses associated therewith,
     including reasonable legal fees and expenses to (i) redeem the Preferred
     Stock (which, together with the redemption set forth in Section 2.13(d)
     shall redeem the Preferred Stock in full) and (ii) prepay a portion of the
     Holdings Senior Notes; provided, that in the event that Holdings or any of
     its Subsidiaries receives gross proceeds from the issuance of the Holdings
     IPO in excess of $140,000,000 (such excess above $140,000,000, the "EXCESS
     IPO PROCEEDS"), Holdings and/or Company, as applicable, shall apply such
     Excess IPO Proceeds to prepay the Holdings Senior Notes, prepay the Loans
     as set forth in Section 2.14(b) and/or prepay the Senior Subordinated Notes
     at Holdings' and/or Company's discretion."

          (b) Section 2.13(d) of the Credit Agreement is hereby amended by
adding the following paragraph at the conclusion thereof as follows:

          "Notwithstanding any of the foregoing to the contrary, on the date of
     receipt by Holdings and any of its Subsidiaries of any Cash proceeds from
     the incurrence by Company of the New Company Subordinated Notes, such Cash
     proceeds shall be applied, net of underwriting discounts and commissions
     and other reasonable costs and expenses associated therewith, including
     reasonable legal fees and expenses to (i) redeem Preferred Stock (which,
     together with the redemption set forth in Section 2.13(c) shall redeem the
     Preferred Stock in full) and (ii) prepay the Loans as set forth in Section
     2.14(b); provided that in any event, the Loans shall be prepaid with the
     proceeds of the New Company Subordinated Notes in an aggregate principal
     amount of not less than $100,000,000; provided, further, that in the event
     that Company receives gross proceeds from the issuance of the New Company
     Subordinated Notes in excess of $150,000,000 (such excess above
     $150,000,000, the "EXCESS NOTE PROCEEDS"), Holdings and/or Company, as
     applicable, shall apply such Excess Note Proceeds to prepay the Holdings
     Senior Notes, prepay the Loans as set forth in Section 2.14(b) and/or
     prepay the Senior Subordinated Notes at Holdings' and/or Company's
     discretion."

          (b) Section 2.14(b) of the Credit Agreement is hereby amended by
adding the following paragraph at the conclusion thereof as follows:

          "Notwithstanding any of the foregoing to the contrary, any Loans
     required to be prepaid pursuant to the receipt by Holdings or any of its
     Subsidiaries of the proceeds


                                       6


     from the Holdings IPO and/or the New Company Subordinated Notes pursuant to
     Sections 2.13(c) and 2.13(d) shall be applied to prepay Term Loans on a pro
     rata basis (in accordance with the respective outstanding principal amounts
     thereof) and shall be further applied on a pro rata basis to the remaining
     scheduled Installments of principal of the Tranche A Term Loans and Tranche
     B Term Loans."

          C. AMENDMENTS TO SECTION 6: NEGATIVE COVENANTS.

          (a) Section 6.1 of the Credit Agreement is hereby amended by deleting
Section 6.1(c) in its entirety and replacing it with the following:

          "(c) (x) (i) Indebtedness incurred by Company with respect to the
     Senior Subordinated Notes and (ii) other Indebtedness incurred to
     refinance, in whole or in part, Indebtedness under the Senior Subordinated
     Notes if the terms and conditions thereof are not less favorable, taken as
     a whole, to the obligor thereon or to the Lenders than the Indebtedness
     being refinanced and the average life to maturity thereof is greater than
     or equal to that of the Indebtedness being refinanced; provided, such
     Indebtedness permitted under the immediately preceding clause (ii) above
     shall (A) not include Indebtedness of an obligor that was not an obligor
     with respect to the Indebtedness being refinanced, (B) not exceed in
     principal amount (or accreted value, in the case of any such refinancing
     Indebtedness issued with a discount) of the Indebtedness (including the
     amount of interest and principal (and premium, if any)) being refinanced
     plus the amount of customary underwriting discounts, financing fees and
     commissions and other reasonable costs and expenses associated with the
     issuance thereof, (C) be subordinated to the Obligations on terms which are
     not less favorable, taken as a whole, to the Lenders than the corresponding
     terms of the Indebtedness being refinanced, and (D) not be incurred,
     created or assumed if any Default or Event of Default has occurred and is
     continuing or would result therefrom; (y) (i) Indebtedness incurred by
     Holdings with respect to the Holdings Senior Notes and (ii) other
     Indebtedness incurred to refinance, in whole or in part, Indebtedness under
     the Holdings Senior Notes if the terms and conditions thereof are not less
     favorable, taken as a whole, to the obligor thereon or to the Lenders than
     the Indebtedness being refinanced and the average life to maturity thereof
     is greater than or equal to that of the Indebtedness being refinanced;
     provided, such Indebtedness permitted under the immediately preceding
     clause (ii) above shall (A) not include Indebtedness of an obligor that was
     not an obligor with respect to the Indebtedness being refinanced, (B) not
     exceed in principal amount (or accreted value, in the case of any such
     refinancing Indebtedness issued with a discount) of the Indebtedness
     (including the amount of interest and principal (and premium, if any))
     being refinanced plus the amount of customary underwriting discounts,
     financing fees and commissions and other reasonable costs and expenses
     associated with the issuance thereof, and (C) not be incurred, created or
     assumed if any Default or Event of Default has occurred and is continuing
     or would result therefrom; and (z) (i) Indebtedness incurred by Company
     with respect to the New Company Subordinated Notes and (ii) other
     Indebtedness incurred to refinance, in whole or in part, Indebtedness under
     the New Company Subordinated Notes if the terms and conditions thereof are
     not less favorable, taken as a whole, to the obligor thereon or to the
     Lenders than the Indebtedness being refinanced and the average life to
     maturity thereof is


                                       7


     greater than or equal to that of the Indebtedness being refinanced;
     provided, such Indebtedness permitted under the immediately preceding
     clause (ii) above shall (A) not include Indebtedness of an obligor that was
     not an obligor with respect to the Indebtedness being refinanced, (B) not
     exceed in principal amount (or accreted value, in the case of any such
     refinancing Indebtedness issued with a discount) of the Indebtedness
     (including the amount of interest and principal (and premium, if any))
     being refinanced plus the amount of customary underwriting discounts,
     financing fees and commissions and other reasonable costs and expenses
     associated with the issuance thereof, (C) be subordinated to the
     Obligations on terms which are not less favorable, taken as a whole, to the
     Lenders than the corresponding terms of the Indebtedness being refinanced
     and (D) not be incurred, created or assumed if any Default or Event of
     Default has occurred and is continuing or would result therefrom;"

          (b) Section 6.1 of the Credit Agreement is hereby further amended by
deleting Section 6.1(m) in its entirety and replacing it with the following:

          "(m) Permitted Seller Notes (i) issued by Holdings as consideration in
     Permitted Acquisitions; provided, that the aggregate principal amount of
     such Permitted Seller Notes issued by Holdings shall not exceed
     $17,500,000; and (ii) issued by Company as consideration in Permitted
     Acquisitions; provided, that the aggregate principal amount of such
     Permitted Seller Notes issued by Company shall not exceed $7,500,000;"

          (c) Section 6.1 of the Credit Agreement is hereby further amended by
deleting the word "and" at the conclusion of Section 6.1(r), deleting "." at the
conclusion of Section 6.1(s) and replacing it with "; and", and by adding the
following Section 6.1(t):

          "(t) the guaranty by Holdings of Indebtedness of Company pursuant to
     the New Company Subordinated Notes; provided, that such guaranty is
     unsecured and subordinated to the Obligations."

          (d) Section 6.5 of the Credit Agreement is hereby amended by deleting
the word "and" at the conclusion of Section 6.5(l), deleting "." at the
conclusion of Section 6.5(m) and replacing it with "; and", and by adding the
following Section 6.5(n):

          "(n) Holdings and Company may make the Restricted Junior Payments
     contemplated in connection with the Holdings IPO and the New Company
     Subordinated Notes, as set forth in Section 2.13(c) and 2.13(d)."

          (e) Section 6.7 of the Credit Agreement is hereby amended by deleting
Section 6.7(m) in its entirety and replacing it with the following:

          "(m) other Investments in an aggregate amount not to exceed at any
     time $6,000,000."


                                       8


          (f) Section 6.8 of the Credit Agreement is hereby amended by deleting
Sections 6.8(a) through and including Section 6.8(e) in their entirety and
replacing them with the following:

          "(a) Interest Coverage Ratio. Company shall not permit the Interest
     Coverage Ratio as of the last day of any Fiscal Quarter, beginning with the
     Fiscal Quarter ending December 31, 2001 to be less than the correlative
     ratio indicated:



                                                 INTEREST
                      FISCAL QUARTER          COVERAGE RATIO
                      --------------          --------------
                                           
                    December 31, 2001           2.00:1.00

                    March 31, 2002              2.00:1.00

                    June 30, 2002               2.00:1.00

                    September 30, 2002          2.00:1.00

                    December 31, 2002           2.25:1.00

                    March 31, 2003              2.25:1.00

                    June 30, 2003               2.25:1.00

                    September 30, 2003          2.25:1.00

                    December 31, 2003           2.50:1.00

                    March 31, 2004              2.50:1.00

                    June 30, 2004               2.75:1.00

                    September 30, 2004          2.75:1.00

                    December 31, 2004           3.00:1.00
                    and thereafter


          (b) Fixed Charge Coverage Ratio. Company shall not permit the Fixed
     Charge Coverage Ratio as of the last day of any Fiscal Quarter, beginning
     with the Fiscal Quarter ending December 31, 2001, to be less than the
     correlative ratio indicated:



                                       9




                                               FIXED CHARGE
                      FISCAL QUARTER          COVERAGE RATIO
                      --------------          --------------
                                           
                    December 31, 2001           1.10:1.00
                    and thereafter



                                       10


          (c) Leverage Ratio. Company shall not permit the Leverage Ratio as of
     the last day of any Fiscal Quarter, beginning with the Fiscal Quarter
     ending December 31, 2001, to exceed the correlative ratio indicated:



                        FISCAL                   LEVERAGE
                        QUARTER                    RATIO
                        -------                  --------
                                              
                    December 31, 2001            4.50:1.00
                    March 31, 2002               4.50:1.00
                    June 30, 2002                4.25:1.00
                    September 30, 2002           4.00:1.00
                    December 31, 2002            4.00:1.00
                    March 31, 2003               3.75:1.00
                    June 30, 2003                3.75:1.00
                    September 30, 2003           3.50:1.00
                    December 31, 2003            3.50:1.00
                    March 31, 2004               3.25:1.00
                    June 30, 2004                3.25:1.00
                    September 30, 2004           3.00:1.00
                    December 31, 2004            2.75:1.00
                    March 31, 2005               2.75:1.00
                    June 30, 2005                2.50:1.00
                    September 30, 2005           2.25:1.00
                    and thereafter



                                       11


          (d) Senior Leverage Ratio. Company shall not permit the Senior
     Leverage Ratio as of the last day of any Fiscal Quarter, beginning with the
     Fiscal Quarter ending December 31, 2001, to exceed the correlative ratio
     indicated:



                                                      SENIOR
                         FISCAL QUARTER           LEVERAGE RATIO
                         --------------           --------------
                                                 
                        December 31, 2001           2.50:1.00
                        March 31, 2002              2.25:1.00
                        June 30, 2002               2.00:1.00
                        September 30, 2002          2.00:1.00
                        December 31, 2002           2.00:1.00
                        March 31, 2003              2.00:1.00
                        June 30, 2003               1.75:1.00
                        September 30, 2003          1.75:1.00
                        December 31, 2003           1.50:1.00
                        March 31, 2004              1.50:1.00
                        June 30, 2004               1.50:1.00
                        September 30, 2004          1.50:1.00
                        December 31, 2004           1.25:1.00
                        March 31, 2005              1.25:1.00
                        June 30, 2005               1.25:1.00
                        September 30, 2005          1.25:1.00
                        December 31, 2005           1.00:1.00
                        and thereafter


          (e) Maximum Consolidated Capital Expenditures. Holdings shall not, and
     shall not permit its Subsidiaries to, make or incur Consolidated Capital
     Expenditures, in any Fiscal Year beginning with the Fiscal Year 2001, in an
     aggregate amount for Holdings and its Subsidiaries in excess of the
     following:


                                       12




                                                     Maximum Consolidated
                           Fiscal Year               Capital Expenditures
                           -----------               --------------------
                                                  

                   Fiscal Year 2001 and in any            $20,000,000
                    Fiscal Year prior to the
                       consummation of the
                          Holdings IPO

                    In any Fiscal Year (other             $22,000,000
                  than Fiscal Year 2001) after
                     the consummation of the
                          Holdings IPO


     ; provided, that 50% of any unutilized amount for any Fiscal Year may be
     utilized in the next succeeding Fiscal Year, but in no event shall any
     amount from any Fiscal Year prior to the immediately preceding Fiscal Year
     be utilized in the calculations of the foregoing."

          (g) Section 6.9 of the Credit Agreement is hereby amended by deleting
Section 6.9(h) in its entirety and replacing it with the following:

          "(h) Permitted Acquisitions, the consideration for which constitutes
     (i) $10,000,000 or less in the aggregate from the Closing Date through the
     end of the fourth Fiscal Quarter of Fiscal Year 2000, (ii) $25,000,000 or
     less in the aggregate in Fiscal Year 2001, and (iii) $30,000,000 or less in
     the aggregate in any Fiscal Year thereafter; provided, that $5,000,000 of
     any unutilized amount for any Fiscal Year may be utilized in the next
     immediately succeeding Fiscal Year (but not in any Fiscal Years
     thereafter); provided, further, however, that with respect to any
     acquisition the consideration of which is (i) prior to the consummation of
     the Holdings IPO, greater than $7,500,000 and (ii) after the consummation
     of the Holdings IPO, greater than $12,500,000, Company shall not make such
     acquisition without the prior consent of Administrative Agent and
     Syndication Agent, such consent not to be unreasonably withheld;"

          D. AMENDMENTS TO SECTION 8: EVENTS OF DEFAULT.

          Section 8.1 of the Credit Agreement is hereby amended by deleting
Section 8.1(f) and 8.1(g) in their entirety and replacing them with the
following:

          "(f) Involuntary Bankruptcy; Appointment of Receiver, etc. (i) A court
     of competent jurisdiction shall enter a decree or order for relief in
     respect of Holdings or any of its Subsidiaries (other than Immaterial
     Subsidiaries) in an involuntary case under the Bankruptcy Code or under any
     other applicable bankruptcy, insolvency or similar law now or hereafter in
     effect, which decree or order is not stayed; or any other similar relief
     shall be granted under any applicable federal or state law; or (ii) an
     involuntary case shall be commenced against Holdings or any of its
     Subsidiaries (other than Immaterial Subsidiaries) under the Bankruptcy Code
     or under any other applicable bankruptcy, insolvency or similar law now or
     hereafter in effect; or a decree or order of a court having


                                       13


     jurisdiction in the premises for the appointment of a receiver, liquidator,
     sequestrator, trustee, custodian or other officer having similar powers
     over Holdings or any of its Subsidiaries (other than Immaterial
     Subsidiaries), or over all or a substantial part of its property, shall
     have been entered; or there shall have occurred the involuntary appointment
     of an interim receiver, trustee or other custodian of Holdings or any of
     its Subsidiaries (other than Immaterial Subsidiaries) for all or a
     substantial part of its property; or a warrant of attachment, execution or
     similar process shall have been issued against any substantial part of the
     property of Holdings or any of its Subsidiaries (other than Immaterial
     Subsidiaries), and any such event described in this clause (ii) shall
     continue for sixty (60) days without having been dismissed, bonded or
     discharged; or

          (g) Voluntary Bankruptcy; Appointment of Receiver, etc. (i) Holdings
     or any of its Subsidiaries (other than Immaterial Subsidiaries) shall have
     an order for relief entered with respect to it or shall commence a
     voluntary case under the Bankruptcy Code or under any other applicable
     bankruptcy, insolvency or similar law now or hereafter in effect, or shall
     consent to the entry of an order for relief in an involuntary case, or to
     the conversion of an involuntary case to a voluntary case, under any such
     law, or shall consent to the appointment of or taking possession by a
     receiver, trustee or other custodian for all or a substantial part of its
     property; or Holdings or any of its Subsidiaries (other than Immaterial
     Subsidiaries) shall make any assignment for the benefit of creditors; or
     (ii) Holdings or any of its Subsidiaries (other than Immaterial
     Subsidiaries) shall be unable, or shall fail generally, or shall admit in
     writing its inability, to pay its debts as such debts become due; or the
     board of directors (or similar governing body) of Holdings or any of its
     Subsidiaries (other than Immaterial Subsidiaries) (or any committee
     thereof) shall adopt any resolution or otherwise authorize any action to
     approve any of the actions referred to herein or in Section 8.1(f); or"

SECTION II. CONDITIONS PRECEDENT TO EFFECTIVENESS

          The effectiveness of the amendments set forth at Section I hereof are
subject to the satisfaction, or waiver, of the following conditions on or before
the date hereof (the "SECOND AMENDMENT CLOSING DATE"):

          (a) The Company, Holdings and Requisite Lenders shall have indicated
their consent by the execution and delivery of the signature pages hereof to the
Agent.

          (b) Company shall have received net proceeds from the New Company
Subordinated Notes of not less than $147,000,000 and such proceeds shall have
been applied as contemplated by this Second Amendment.

          (c) The Agent shall have received a certificate from an officer of the
Company stating that as of the Second Amendment Closing Date, the
representations and warranties contained in Section III herein and in the other
Credit Documents are true, correct and complete in all respects on and as of the
Second Amendment Closing Date to the same extent as though made on and as of
that date, except to the extent such representations and warranties


                                       14


specifically relate to an earlier date, in which case such representations and
warranties are true, correct and complete in all respects on and as of such
earlier date.

          (d) The Agent shall have received a certificate from an officer of the
Company stating that as of the Second Amendment Closing Date, no event has
occurred and is continuing that would constitute an Event of Default or a
Default.

          (e) The Agent shall have received a certificate from an officer of the
Company demonstrating that as of the Second Amendment Closing Date, the ratio of
total net debt of the Company (defined as Consolidated Total Debt less Company's
Cash on hand as of the Second Amendment Closing Date) to pro forma Consolidated
Adjusted EBITDA of the Company for the twelve month period ending September 30,
2001 (which for purposes of this ratio shall be $89,000,000) shall not exceed
3.75:1.00.

          (f) Company shall have paid all fees and other amounts due and payable
on or prior to the Second Amendment Closing Date, including, to the extent
invoiced, reimbursement or other payment of all out-of-pocket expenses required
to be reimbursed or paid by the Company hereunder or under any other Credit
Document.

          (g) The Agent and Lenders shall have received such other documents and
information regarding Credit Parties and the Credit Agreement as the Agents or
Lenders may reasonably request.

SECTION III. REPRESENTATIONS AND WARRANTIES

          A. CORPORATE POWER AND AUTHORITY. Each Credit Party has all requisite
corporate power and authority to enter into this Second Amendment and to carry
out the transactions contemplated by, and perform its obligations under the
Credit Agreement and the other Credit Documents.

          B. AUTHORIZATION OF AGREEMENTS. The execution and delivery of this
Second Amendment and the performance of the Credit Agreement and the other
Credit Documents have been duly authorized by all necessary corporate or
partnership (as applicable) action on the part of each Credit Party.

          C. NO CONFLICT. The execution and delivery by each Credit Party of
this Second Amendment and the performance by each Credit Party of the Credit
Agreement and the other Credit Documents do not (i) violate (A) any provision of
any law, statute, rule or regulation, or of the certificate or articles of
incorporation or partnership agreement, other constitutive documents or by-laws
of each Credit Party or any of its Subsidiaries except to the extent such
violation could not reasonably be expected to have a Material Adverse Effect,
(B) any applicable order of any court or any rule, regulation or order of any
Governmental Authority except to the extent such violation could not reasonably
be expected to have a Material Adverse Effect or (C) any provision of any
indenture, certificate of designation for preferred stock, agreement or other
instrument to which each Credit Party or any of its Subsidiaries is a party or
by which any


                                       15


of them or any of their property is or may be bound except to the extent such
violation could not reasonably be expected to have a Material Adverse Effect,
(ii) be in conflict with, result in a breach of or constitute (alone or with
notice or lapse of time or both) a default under any such indenture, certificate
of designation for preferred stock, agreement or other instrument, where any
such conflict, violation, breach or default referred to in clause (i) or (ii) of
this Section III.C., individually or in the aggregate could reasonably be
expected to have a Material Adverse Effect, (iii) result in or require the
creation or imposition of any Lien upon any of the properties or assets of each
Credit Party (other than any Liens created under any of the Credit Documents in
favor of Collateral Agent on behalf of Lenders), or (iv) require any approval of
stockholders or partners or any approval or consent of any Person under any
contractual obligation of each Credit Party, except for such approvals or
consents which will be obtained on or before the Second Amendment Closing Date.

          D. GOVERNMENTAL CONSENTS. No action, consent or approval of,
registration or filing with or any other action by any Governmental Authority is
required in connection with the execution and delivery by each Credit Party of
this Second Amendment and the performance by each Credit Party of the Credit
Agreement and the other Credit Documents, except for such actions, consents and
approvals the failure to obtain or make which could not reasonably be expected
to result in a Material Adverse Effect or which have been obtained and are in
full force and effect.

          E. BINDING OBLIGATION. This Second Amendment and the Credit Agreement
have been duly executed and delivered by each Credit Party and each constitutes
a legal, valid and binding obligation of each Credit Party enforceable against
each Credit Party in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, moratorium, reorganization or other similar
laws affecting creditors' rights generally and except as enforceability may be
limited by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).

          F. INCORPORATION OF REPRESENTATIONS AND WARRANTIES FROM CREDIT
AGREEMENT. The representations and warranties contained in Section 4 of the
Credit Agreement are and will be true, correct and complete in all material
respects on and as of the Second Amendment Closing Date to the same extent as
though made on and as of that date, except to the extent such representations
and warranties specifically relate to an earlier date, in which case they were
true, correct and complete in all material respects on and as of such earlier
date.

          G. ABSENCE OF DEFAULT. No event has occurred and is continuing or will
result from the consummation of the transactions contemplated by this Second
Amendment that would constitute an Event of Default or a Default.

SECTION IV. ACKNOWLEDGMENT AND CONSENT

     Each of Holdings and each Domestic Subsidiary of Holdings (other than
Company and certain Permitted Partially-Owned Subsidiaries) has (i) guaranteed
the Obligations and (ii) created Liens in favor of Lenders on certain Collateral
to secure its obligations under the Credit


                                       16


Agreement and the Collateral Documents subject to the terms and provisions of
the Credit Agreement. Each of Holdings and each Domestic Subsidiary of Holdings
who has guaranteed the Obligations are collectively referred to herein as the
"CREDIT SUPPORT PARTIES", and the Credit Agreement and the Collateral Documents
are collectively referred to herein as the "CREDIT SUPPORT DOCUMENTS".

     Each Credit Support Party hereby acknowledges that it has reviewed the
terms and provisions of the Credit Agreement and this Second Amendment and
consents to the amendment of the Credit Agreement effected pursuant to this
Second Amendment. Each Credit Support Party hereby confirms that each Credit
Support Document to which it is a party or otherwise bound and all Collateral
encumbered thereby will continue to guarantee or secure, as the case may be, to
the fullest extent possible in accordance with the Credit Support Documents the
payment and performance of all "Obligations" under each of the Credit Support
Documents, as the case may be (in each case as such terms are defined in the
applicable Credit Support Document), including without limitation the payment
and performance of all such "Obligations" under each of the Credit Support
Documents, as the case may be, in respect of the Obligations of the Company now
or hereafter existing under or in respect of the Credit Agreement and hereby
pledges and assigns to the Collateral Agent, and grants to the Collateral Agent
a continuing lien on and security interest in and to all Collateral as
collateral security for the prompt payment and performance in full when due of
the "Obligations" under each of the Credit Support Documents to which it is a
party (whether at stated maturity, by acceleration or otherwise).

     Each Credit Support Party acknowledges and agrees that any of the Credit
Support Documents to which it is a party or otherwise bound shall continue in
full force and effect and that all of its obligations thereunder shall be valid
and enforceable and shall not be impaired or limited by the execution or
effectiveness of this Second Amendment. Each Credit Support Party represents and
warrants that all representations and warranties contained in the Credit
Agreement, this Second Amendment and the Credit Support Documents to which it is
a party or otherwise bound are true, correct and complete in all material
respects on and as of the Second Amendment Closing Date to the same extent as
though made on and as of that date, except to the extent such representations
and warranties specifically relate to an earlier date, in which case they were
true, correct and complete in all material respects on and as of such earlier
date.

     Each Credit Support Party acknowledges and agrees that (i) notwithstanding
the conditions to effectiveness set forth in this Second Amendment, such Credit
Support Party is not required by the terms of the Credit Agreement or any other
Credit Document to consent to the amendments to the Credit Agreement effected
pursuant to this Second Amendment and (ii) nothing in the Credit Agreement, this
Second Amendment or any other Credit Document shall be deemed to require the
consent of such Credit Support Party to any future amendments to the Credit
Agreement.

SECTION V. MISCELLANEOUS

          A. BINDING EFFECT. This Amendment shall be binding upon the parties
hereto and their respective successors and assigns and shall inure to the
benefit of the parties hereto and


                                       17


the successors and assigns of Lenders. No Credit Party's rights or obligations
hereunder or any interest therein may be assigned or delegated by any Credit
Party without the prior written consent of all Lenders.

          B. SEVERABILITY. In case any provision in or obligation hereunder
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations, or of
such provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.

          C. REFERENCE TO CREDIT AGREEMENT. On and after the Second Amendment
Closing Date, each reference in the Credit Agreement to "this Agreement",
"hereunder", "hereof", "herein" or words of like import referring to the Credit
Agreement, and each reference in the other Credit Documents to the "Credit
Agreement", "thereunder", "thereof" or words of like import referring to the
Credit Agreement shall mean and be a reference to the Credit Agreement as
amended by this Amendment.

          D. EFFECT ON CREDIT AGREEMENT. Except as specifically amended by this
Amendment, the Credit Agreement and the other Credit Documents shall remain in
full force and effect and are hereby ratified and confirmed.

          E. EXECUTION. The execution, delivery and performance of this
Amendment shall not, except as expressly provided herein, constitute a waiver of
any provision of, or operate as a waiver of any right, power or remedy of any
Agent or Lender under, the Credit Agreement or any of the other Credit
Documents.

          F. HEADINGS. Section headings herein are included herein for
convenience of reference only and shall not constitute a part hereof for any
other purpose or be given any substantive effect.

          G. APPLICABLE LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

          H. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument. As set forth herein, this Amendment shall become effective upon
the execution of a counterpart hereof by each of the parties hereto and receipt
by Company, Holdings and Administrative Agent and Syndication Agent of written
or telephonic notification of such execution and authorization of delivery
thereof.

            [The remainder of this page is intentionally left blank.]


                                       18


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

COMPANY:                     VICAR OPERATING, INC.


                             By: /s/ Robert L. Antin
                                 Name:  Robert L. Antin
                                 Title: Chief Executive Officer and President


                             By: /s/ Tomas W. Fuller
                                 Name:  Tomas W. Fuller
                                 Title: Chief Financial Officer and
                                        Assistant Secretary



HOLDINGS:                    VCA ANTECH, INC.


                             By: /s/ Robert L. Antin
                                 Name:  Robert L. Antin
                                 Title: Chief Executive Officer and President

                             By: /s/ Tomas W. Fuller
                                 Name:  Tomas W. Fuller
                                 Title: Chief Financial Officer and
                                        Assistant Secretary



GUARANTORS:                  AAH MERGER CORPORATION
                             ACADEMY ANIMAL, INC.
                             ANDERSON ANIMAL HOSPITAL, INC.
                             ANIMAL EMERGENCY CLINIC, P.C.
                             ANIMAL CLINIC OF SANTA CRUZ, INC.
                             BEAUMONT VETERINARY ASSOCIATES, P.C.
                             BERLA, INC.


                                      S-1


                             CACOOSING ANIMAL HOSPITAL, LTD.
                             CACOOSING PET CARE & NUTRITION CENTER, INC.
                             CLARMAR ANIMAL HOSPITAL, INC.
                             DETWILER VETERINARY CLINIC, INC.
                             DIAGNOSTIC VETERINARY SERVICE, INC.
                             EAGLE PARK ANIMAL CLINIC, INC.
                             EAGLE RIVER VETERINARY HOSPITAL, INC.
                             EDGEBROOK, INC.
                             FLORIDA VETERINARY LABORATORIES, INC.
                             FOX CHAPEL ANIMAL HOSPITAL, INC.
                             FREEHOLD, INC.
                             GLEN ANIMAL HOSPITAL, INC.
                             GOLDEN MERGER CORPORATION
                             H.B. ANIMAL CLINICS, INC.
                             HOWELL BRANCH ANIMAL HOSPITAL, P.A.
                             HIGHLANDS ANIMAL HOSPITAL, , INC.
                             LAKE JACKSON VETERINARY CLINIC, INC.
                             LAKEWOOD ANIMAL HOSPITAL, INC.
                             LAMMERS VETERINARY HOSPITAL, INC.
                             LEWELLING VETERINARY CLINIC, INC.
                             MILLER ANIMAL HOSPITAL
                             M.S. ANIMAL HOSPITALS, INC.
                             NEWARK ANIMAL HOSPITAL, INC.
                             NORTHERN ANIMAL HOSPITAL, INC.
                             NORTH ROCKVILLE VETERINARY HOSPITAL, INC.
                             NORTHSIDE ANIMAL HOSPITAL, P.C.
                             NOYES ANIMAL HOSPITAL, INC.
                             OAK HILL VETERINARY HOSPITAL, INC.
                             OLD TOWN VETERINARY HOSPITAL, INC.
                             PET PRACTICE (MASSACHUSETTS), INC.
                             PETS' RX, INC.
                             PETS' RX NEVADA, INC.
                             PPI OF PENNSYLVANIA, INC.
                             PRINCETON ANIMAL HOSPITAL, INC.
                             PROFESSIONAL VETERINARY SERVICES, INC.
                             RIVIERA ANIMAL HOSPITAL, INC.
                             ROBERTSON BLVD. ANIMAL HOSPITAL, INC.


                                      S-2


                             ROSSMOOR - EL DORADO ANIMAL HOSPITAL, INC.
                             ROSSMOOR CENTER ANIMAL CLINIC, INC.
                             SAN VICENTE ANIMAL CLINIC
                             SILVER SPUR ANIMAL HOSPITAL, INC.
                             SOUTH COUNTY VETERINARY CLINIC, INC.
                             SPANISH RIVER ANIMAL HOSPITAL, INC.
                             TAMPA ANIMAL MEDICAL CENTER, INC.
                             THE PET PRACTICE (FLORIDA), INC.
                             THE PET PRACTICE (ILLINOIS), INC.
                             THE PET PRACTICE (MASSACHUSETTS), INC.
                             THE PET PRACTICE OF MICHIGAN, INC.
                             VCA ALABAMA, INC.
                             VCA ALBANY ANIMAL HOSPITAL, INC.
                             VCA ALBUQUERQUE, INC.
                             VCA ALL PETS ANIMAL COMPLEX, INC.
                             VCA ALPINE ANIMAL HOSPITAL, INC.
                             VCA ANDERSON OF CALIFORNIA ANIMAL
                             HOSPITAL, INC.
                             VCA ANIMAL HOSPITALS, INC.
                             VCA ANIMAL HOSPITAL WEST, INC.
                             VCA APAC ANIMAL HOSPITAL, INC.
                             VCA - ASHER, INC.
                             VCA BAY AREA ANIMAL HOSPITAL, INC.
                             VCA CACOOSING ANIMAL HOSPITAL, INC.
                             VCA CASTLE SHANNON VETERINARY HOSPITAL, INC.
                             VCA CENTERS-TEXAS, INC.
                             VCA CENVET, INC.
                             VCA CLARMAR ANIMAL HOSPITAL, INC.
                             VCA CLINICAL VETERINARY LABS, INC.
                             VCA CLINIPATH LABS, INC.
                             VCA CLOSTER, INC.
                             VCA DETWILER ANIMAL HOSPITAL, INC.
                             VCA DOVER ANIMAL HOSPITAL, INC.
                             VCA EAGLE RIVER ANIMAL HOSPITAL, INC.
                             VCA EAST ANCHORAGE ANIMAL HOSPITAL, INC.
                             VCA GOLDEN COVE ANIMAL HOSPITAL, INC.


                                      S-3


                             VCA GREATER SAVANNAH ANIMAL HOSPITAL, INC.
                             VCA HOWELL BRANCH ANIMAL HOSPITAL, NC.
                             VCA INFORMATION SYSTEMS, INC.
                             VCA KANEOHE ANIMAL HOSPITAL, INC.
                             VCA LAKESIDE ANIMAL HOSPITAL, INC.
                             VCA LAMB AND STEWART ANIMAL HOSPITAL, INC.
                             VCA LAMMERS ANIMAL HOSPITAL, INC.
                             VCA LEWIS ANIMAL HOSPITAL, NC.
                             VCA MARINA ANIMAL HOSPITAL, NC.
                             VCA MILLER ANIMAL HOSPITAL, INC.
                             VCA MISSION, INC.
                             VCA NORTHBORO ANIMAL HOSPITAL, INC.
                             VCA NORTHWEST VETERINARY DIAGNOSTICS, INC.
                             VCA OF COLORADO-ANDERSON, INC.
                             VCA OF NEW YORK, INC.
                             VCA OF SAN JOSE, INC.
                             VCA OF TERESITA, INC.
                             CA PROFESSIONAL ANIMAL LABORATORY, INC.
                             VCA REAL PROPERTY ACQUISITION CORPORATION
                             VCA REFERRAL ASSOCIATES ANIMAL
                             HOSPITAL, INC.
                             VCA ROHRIG ANIMAL HOSPITAL, INC.
                             VCA - ROSSMOOR, INC.
                             VCA SILVER SPUR ANIMAL HOSPITAL, INC.
                             VCA SOUTH SHORE ANIMAL HOSPITAL, INC.
                             SPECIALTY PET PRODUCTS, INC.
                             VCA SQUIRE ANIMAL HOSPITAL, INC.
                             VCA ST. PETERSBURG ANIMAL HOSPITAL, INC.
                             VCA TEXAS MANAGEMENT, INC.
                             VCA WYOMING ANIMAL HOSPITAL, INC.
                             VETERINARY HOSPITALS, INC.
                             WEST LOS ANGELES VETERINARY MEDICAL GROUP, INC.
                             WESTWOOD DOG & CAT HOSPITAL
                             W.E. ZUSCHLAG, D.V.M., WORTH ANIMAL
                             HOSPITAL, CHARTERED


                                      S-4


                             WILLIAM C. FOUTS, D.V.M., LTD.
                             WINGATE, INC.


                             By: /s/ Robert L. Antin
                                 Name:  Robert L. Antin
                                 Title: Chief Executive Officer and
                                        President


                             By: /s/ Tomas W. Fuller
                                 Name:  Tomas W. Fuller
                                 Title: Chief Financial Officer and
                                        Assistant Secretary



                             VCA VILLA ANIMAL HOSPITAL, L.P.
                             By: VCA Animal Hospitals, Inc.,
                             General Partner


                             By: /s/ Robert L. Antin
                                 Name:  Robert L. Antin
                                 Title: Chief Executive Officer and
                                        President


                             By: /s/ Tomas W. Fuller
                                 Name:  Tomas W. Fuller
                                 Title: Chief Financial Officer and
                                        Assistant Secretary



                             VETERINARY CENTERS OF AMERICA-TEXAS, L.P.
                             By: VCA Centers-Texas, Inc.,
                             General Partner

                             By: /s/ Robert L. Antin
                                 Name:  Robert L. Antin
                                 Title: Chief Executive Officer and
                                        President


                             By: /s/ Tomas W. Fuller
                                 Name:  Tomas W. Fuller
                                 Title: Chief Financial Officer and
                                        Assistant Secretary


                                      S-5


                             ANIMAL CENTER, INC.

                             By: /s/ Robert L. Antin
                                 Name:
                                 Title:



                             ASSOCIATES IN PET CARE, S.C.


                             By: /s/ Robert L. Antin
                                 Name:
                                 Title:



                             KIRKWOOD ANIMAL HOSPITAL - LEA M.E. TAMMI,
                             V.M.D., P.A.


                             By: /s/ Robert L. Antin
                                 Name:
                                 Title:



                             MAIN STREET SMALL ANIMAL HOSPITAL, INC.


                             By: /s/ Robert L. Antin
                                 Name:
                                 Title:



                             SOUTHEAST AREA VETERINARY MEDICAL CENTER, P.C.


                             By: /s/ Robert L. Antin
                                 Name:
                                 Title:


                                      S-6


                             VCA ASSOCIATE ANIMAL HOSPITAL, L.P.


                             By: /s/ Robert L. Antin
                                 Name:
                                 Title:



                             VCA HERITAGE ANIMAL HOSPITAL, L.P.


                             By: /s/ Robert L. Antin
                                 Name:
                                 Title:



                             TOMS RIVER VETERINARY HOSPITAL, P.A.


                             By: /s/ Robert L. Antin
                                 Name:
                                 Title:


                                      S-7


SOLE SYNDICATION AGENT,
SOLE LEAD ARRANGER,
AND A LENDER:                GOLDMAN SACHS CREDIT PARTNERS L.P.,

                             By: /s/
                                 Authorized Signatory


                                      S-8


ADMINISTRATIVE AGENT,
COLLATERAL AGENT
AND A LENDER:                WELLS FARGO BANK, N.A.


                             By: /s/ Michael St. Geme
                                 Name:  Michael St. Geme
                                 Title: Vice President


                                      S-9

EX-23.1

                                                                      EXHIBIT 23

                    CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS


As independent public accountants, we hereby consent to incorporation of our
report included in this Form 10-K, into the Company's previously filed
Registration Statement on Form S-8 (File No. 333-81614).


Arthur Andersen LLP


Los Angeles, California
March ___, 2002

EX-99.1

                                                                    Exhibit 99.1

                                VCA Antech, Inc.
                          12401 West Olympic Boulevard
                              Los Angeles, CA 90064


                                 March 26, 2002

Jonathan G. Katz
Secretary
U.S. Securities and Exchange Commission
Judiciary Plaza
450 5th Street, N.W.
Washington, D.C. 20549

        Re:    Confirmation of Receipt of Assurances from Arthur Andersen LLP

Dear Mr. Katz:

Arthur Andersen LLP has audited the consolidated financial statements of VCA
Antech, Inc. (the Company) as of December 31, 2001 and for the year then ended
and has issued its report thereon dated February 21, 2002.

Please be advised that Arthur Andersen LLP has represented to the Company that
the audit was subject to its quality control system for the U.S. accounting and
auditing practice to provide reasonable assurance that the engagement was
conducted in compliance with professional standards and that there was
appropriate continuity of Arthur Andersen LLP personnel working on the audit and
availability of national office consultation. The availability of personnel at
foreign affiliates of Arthur Andersen LLP to conduct relevant portions of the
audit was not applicable to this audit.

Please do not hesitate to contact me if you have questions regarding this
matter.

Respectfully submitted,


/s/ TOMAS W. FULLER
- ---------------------
Tomas W. Fuller
Vice President and Chief Financial Officer