LOAN AND SECURITY AGREEMENT

THIS LOAN AND SECURITY AGREEMENT dated July 25, 2008 by and among PET EXPRESS
SUPPLY, INC., a corporation organized and in good standing in the State of
Nevada (the “Corporation”), whose address is 59 West 19th Street, 6th Floor, New
York, NY 10011; MKM OPPORTUNITY MASTER FUND, LTD. (“MKM”); and those Persons who
have executed or shall subsequently execute this Agreement under the heading
“Additional Lenders”. MKM and the Additional Lenders are sometimes collectively
referred to herein as “Lender” or the “Lenders”.

WHEREAS, Lender wishes to lend to the Corporation, and the Corporation wishes to
borrow from Lender and repay Lender on the terms set forth herein.

Now, therefore, the parties agree as follows:

1. LOAN AND TERMS OF PAYMENT.
 
(a) The Corporation shall borrow from Lenders hereunder an aggregate principal
amount which does not exceed Five Million U.S. Dollars (U.S. $5,000,000). All
loans made by Lenders hereunder shall be evidenced by Notes (as hereinafter
defined), to be executed and delivered by the Corporation to the applicable
Lender on the closing date of such loan. Such loan shall be repaid in accordance
with the terms of the Note, and will be convertible as provided in the Note.

(b) The Corporation promises to pay Lender the unpaid principal amount of all
loans made by any of the Lenders hereunder and interest on the unpaid principal
amount thereof in accordance with the terms of the Notes.

(c)  Loans made hereunder accrue interest on the outstanding principal balance
thereof in accordance with the applicable Note at a per annum rate of six
percent (6%). Interest on the unpaid and unconverted principal balance of each
of the Notes shall accrue at the rate of 6% per annum from the date of original
issuance thereof (the “Issuance Date”) until the same becomes due and payable on
the Maturity Date, or such earlier date upon acceleration or by conversion,
redemption or repayment in accordance with the terms hereof or of the other
Agreements. Interest on each of the Notes shall accrue daily commencing on the
Issuance Date and shall be computed on the basis of a 360-day year, 30-day
months and actual days elapsed and shall be payable in accordance with the terms
of the applicable Note.

2. WARRANTS. The Corporation hereby grants to each of the Lenders warrants
pursuant to which each Lender may purchase Common Stock, $0.001 par value per
share, of PETX (“Shares”) up to a maximum amount of Shares equal to seventy-five
(75%) percent of the number of Shares into which such Lender’s Note may be
converted, at an exercise price of $4.50 per Share. The warrants will be in the
form attached hereto as Exhibit B.

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3. PREPAYMENT. The Corporation shall prepay (such payment a “Mandatory
Prepayment”) all or part of the Notes then outstanding in the event that
Corporation shall complete, subsequent to the consummation of the transactions
contemplated in this Agreement, an offering or offerings of new equity or an
instrument convertible into equity, and the proceeds of such financing(s) shall
exceed $4,000,000, in which case all of the proceeds of such financing(s) in
excess of $4,000,000 shall be used to prepay the Notes, with all holders of
Notes prepaid proportionately with respect to the Mandatory Prepayment pursuant
to this provision. The Corporation shall deliver to each of the Lenders a
written notice (a “Prepayment Notice”), specifying the principal amount of Notes
to be prepaid, and each of the holders of Notes shall have the right to
voluntarily convert. Such notice must be given no less than ten (10) Business
Days prior to the effective date of such Mandatory Prepayment (the “Prepayment
Date”), and each holder of a Note shall have the right to voluntarily convert
such Note prior to the Prepayment Date.

4. GRANT OF SECURITY INTEREST

4.1 GRANT OF SECURITY INTEREST. The Corporation grants Lender a continuing
security interest in all presently existing and later acquired Collateral to
secure all Obligations and performance of each of the Corporation’s duties under
the Loan Documents. Except for Permitted Liens, such security interest will be a
first priority security interest in the Collateral. If this Agreement is
terminated, Lender’s lien and Lender’s security interest in the Collateral will
continue until the Corporation fully satisfies its Obligations.

4.2 AUTHORIZATION TO FILE. The Corporation authorizes Lender to file financing
statements without notice to Corporation, with all appropriate jurisdictions
within the United States, as Lender deems appropriate, in order to perfect or
protect Lender’s interest in the Collateral. Lender agrees that it shall, upon
the request of the Corporation, following the termination of the Term Loan and
the payment in full of the Obligations (a) terminate all such financing
statements and (b) take such other action to evidence termination of the
Lender’s Security Interest as Corporation may reasonably request.

5.  REPRESENTATIONS AND WARRANTIES . The Corporation represents and warrants as
follows:

5.1  DUE ORGANIZATION AND AUTHORIZATION. The Corporation and each Subsidiary is
duly existing and in good standing in its state of incorporation and qualified
and licensed to do business in, and in good standing in, any state in which the
conduct of its business or its ownership of property requires that it be
qualified, except where the failure to do so would not reasonably be expected to
cause a Material Adverse Change. The Corporation and each Subsidiary’s exact
legal name are as set forth on the first page of this Agreement. The execution,
delivery and performance of the Loan Documents have been duly authorized, and do
not conflict with the Corporation’s formation documents, nor constitute an event
of default under any material agreement by which Corporation is bound. The
Corporation is not in default under any agreement to which, or by which it is
bound, in which the default would reasonably be expected to cause a Material
Adverse Change.

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5.2  COLLATERAL. The Corporation has good title to the Collateral, free of Liens
except Permitted Liens. The Accounts are bona fide, existing obligations, and
the service or property has been performed or delivered to the account debtor or
its agent for immediate shipment to and unconditional acceptance by the account
debtor. Corporation has no notice of any actual or imminent Insolvency
Proceeding of any account debtor. All Inventory is in all material respects of
good and marketable quality, free from material defects

5.3  LITIGATION. Except as shown in the Schedule, there are no actions or
proceedings pending or, to the knowledge of the Corporation’s Responsible
Officers, threatened by or against the Corporation or any Subsidiary in which a
likely adverse decision would reasonably be expected to cause a Material Adverse
Change.

5.4  FINANCIAL STATEMENTS. All consolidated financial statements for the
Corporation, and any Subsidiary, delivered to Lender fairly present in all
material respects the Corporation’s consolidated financial condition and
Corporation’s consolidated results of operations as of the date and for the
period then ended. There has not been any Material Adverse Change in the
Corporation’s consolidated financial condition since the date of the most recent
consolidated financial statements submitted to Lender.

5.5  REGULATORY COMPLIANCE. The Corporation is not an “investment company” or a
company “controlled” by an “investment company” under the Investment Company
Act. Corporation is not engaged as one of its important activities in extending
credit for margin stock (under Regulations T and U of the Federal Reserve Board
of Governors). To its knowledge, the Corporation has complied in all material
respects with the Federal Fair Labor Standards Act. The Corporation has not
violated any laws, ordinances or rules, the violation of which would reasonably
be expected to cause a Material Adverse Change. None of the Corporation’s or any
Subsidiary’s properties or assets has been used by Corporation or any
Subsidiary, in disposing, producing, storing, treating, or transporting any
hazardous substance other than legally. The Corporation and each Subsidiary has
timely filed all required tax returns and paid, or made adequate provision to
pay, all material taxes, except those being contested in good faith with
adequate reserves under GAAP. The Corporation and each Subsidiary has obtained
all consents, approvals and authorizations of, made all declarations or filings
with, and given all notices to, all government authorities that are necessary to
continue its business as currently conducted, except where the failure to do so
would not reasonably be expected to cause a Material Adverse Change.

5.6  SUBSIDIARIES. The Corporation does not own any stock, partnership interest
or other equity securities except for its investment in its sole subsidiary, C J
Vision Enterprises, Inc.

5.7  FULL DISCLOSURE. No written representation, warranty or other statement of
the Corporation in any certificate or written statement given to Lender (taken
together with all such written certificates and written statements to Lender)
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained in the certificates or
statements not misleading (it being recognized by Lender that the projections
and forecasts provided by the Corporation in good faith and based upon
reasonable assumptions are not viewed as facts and that actual results during
the period or periods covered by such projections and forecasts may differ from
the projected and forecasted results).

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6. CONDITION OF CLOSING; AFFIRMATIVE COVENANTS. The Corporation will do all of
the following for so long as Lender has an obligation to make any Advance, or
there are outstanding Obligations:

6.1 CONDITION OF CLOSING. The obligation of Lenders to enter into this Agreement
and to consummate the transactions contemplated herein shall be conditioned on
(i) the prior consummation of the Exchange Agreement dated July 25, 2008 by and
among the Corporation, C J Vision Enterprises, Inc., a Delaware corporation, and
the other parties thereto; and (ii) the loan of an aggregate principal amount of
no less than $800,000 by the Lenders hereunder.

6.2 LENDER’S RIGHT TO PARTICIPATE IN FUTURE FINANCING. For a period commencing
on the date hereof and continuing until the second anniversary of this
Agreement, each of the Lenders shall have the right to participate in any
financing transaction by the Corporation, to the extent required to maintain
such Lender’s proportionate stake on a fully diluted basis.

6.3 GOVERNMENT COMPLIANCE. The Corporation will maintain its and all
Subsidiaries legal existence and good standing as a Registered Organization in
their respective states of incorporation and maintain qualification in each
jurisdiction in which the failure to so qualify would reasonably be expected to
cause a material adverse effect on the Corporation’s business or operations. The
Corporation will comply, and have each Subsidiary comply, with all laws,
ordinances and regulations to which it is subject, noncompliance with which
would reasonably be expected to cause a Material Adverse Change.

6.4 TAXES. The Corporation will make, and cause each Subsidiary to make, timely
payment of all material federal, state, and local taxes or assessments (other
than taxes and assessments which the Corporation is contesting in good faith,
with adequate reserves maintained in accordance with GAAP).

6.5 INSURANCE. The Corporation will keep its business and the Collateral insured
for risks and in amounts as the Board of Directors shall reasonably determine in
good faith; provided, however, that the risks covered and the amount of coverage
shall not be less than in effect on the date hereof. Insurance policies will be
in a form and with companies as the Board of Directors of the Corporation shall
determine in good faith consistent with past practice.

6.6 FURTHER ASSURANCES. The Corporation will execute any further instruments and
take further action as Lender reasonably requests to perfect or continue
Lender’s security interest in the Collateral or to effect the purposes of this
Agreement.

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7. NEGATIVE COVENANTS. The Corporation will not do any of the following without
Lender’s prior written consent, for so long as there are any outstanding
Obligations:

7.1 DISPOSITIONS. Convey, sell, lease, transfer or otherwise dispose of
(collectively “Transfer”), or permit any of its Subsidiaries to Transfer, all or
any part of the Collateral, except for Transfers (a) of Inventory in the
ordinary course of business; (b) of licenses and similar arrangements for the
use of the property of the Corporation or its Subsidiaries in the ordinary
course of business; or (b) of worn-out, obsolete or fully depreciated Equipment.

7.2  SUBSEQUENT DEBT. So long as any Principal Amount of Notes is outstanding,
the Corporation and its subsidiaries shall not directly or indirectly, without
the affirmative vote of the holders of at least 75% of the outstanding Principal
Amount of the Notes then outstanding, incur or permit to exist additional
indebtedness which is senior to the Notes, or incur, assume or permit to exist
any lien, mortgage, security interest or encumbrance (other than statutory liens
imposed by law incurred in the ordinary course of business for sums not yet
delinquent or being contested in good faith, if such reserve or other
appropriate provision, if any, as shall be required by GAAP shall have been made
in respect thereof) on any of its assets, except for Permitted Liens.

8. EVENTS OF DEFAULT. Any one of the following is an Event of Default:

8.1 PAYMENT DEFAULT. If the Corporation fails to pay any of the Obligations
within five (5) days after their due date.

8.2 COVENANT DEFAULT. If the Corporation does not perform any obligation in
Section 6 or violates any covenant in Section 7 or if the Corporation does not
perform or observe any other material term, condition or covenant in this
Agreement, any Loan Documents, or in any agreement between the Corporation and
Lender and as to any failure to perform or observe, violation or default under a
term, condition or covenant that can be cured, has not cured the default within
ten (10) days after it comes to the attention of an officer of the Corporation,
or if the failure to perform or observe, violation or default under a term,
condition or covenant cannot be cured within ten (10) days or cannot be cured
after the Corporation’s attempts within such ten (10) day period, and the
default may be cured within a reasonable time, then the Corporation has an
additional period (of not more than thirty (30) days) to attempt to cure the
default. During the additional time, the failure to cure the default is not an
Event of Default.

8.3 MATERIAL ADVERSE CHANGE. If there (i) occurs a material adverse change in
the business, operations, or condition (financial or otherwise) of the
Corporation and its Subsidiaries taken as a whole, or (ii) is a material
impairment of Corporation’s ability to repay the outstanding Obligations in
their entirety or (iii) is a material impairment of the value or priority of
Lender’s security interests in the Collateral;

8.4 ATTACHMENT. If any material portion of the Corporation’s assets is attached,
seized, levied on, or comes into possession of a trustee or receiver and the
attachment, seizure or levy is not removed in thirty (30) days, or if the
Corporation is enjoined, restrained, or prevented by court order from conducting
a material part of its business or if a judgment or other claim becomes a Lien
on a material portion of the Corporation’s assets, or if a notice of lien, levy,
or assessment is filed against any of Corporation’s assets by any government
agency and not paid within thirty (30) days after the Corporation receives
notice. These are not Events of Default if stayed or if a bond is posted pending
contest by the Corporation;

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8.5 INSOLVENCY. If the Corporation becomes insolvent or if the Corporation
begins an Insolvency Proceeding or an Insolvency Proceeding is begun against the
Corporation and not dismissed or stayed within sixty (60) days;

8.6 OTHER AGREEMENTS. If there is a default in any agreement between the
Corporation and a third party that gives the third party the right to accelerate
any Indebtedness
exceeding $250,000 or that would cause a Material Adverse Change;

8.7 JUDGMENTS. If a money judgment(s) in the aggregate of at least $250,000 is
rendered against the Corporation and is unsatisfied and unstayed for thirty (30)
days;

8.8 MISREPRESENTATIONS. If the Corporation or a Responsible Officer makes any
material misrepresentation or material misstatement now or later in any warranty
or representation in this Agreement or in any writing delivered to Lender or to
induce Lender to enter this Agreement or any Loan Document;

8.9  SUBSIDIARIES. If any circumstance described in Sections 8.3, 8.4, 8.5 or
8.7 occurs to any Subsidiary of the Corporation which results in a Material
Adverse Change to the Corporation and its Subsidiaries taken as a whole;
 
9. LENDER’S RIGHTS AND REMEDIES

9.1 RIGHTS AND REMEDIES. When an Event of Default occurs and continues Lender
may, without notice or demand, do any or all of the following:

(a) Declare all Obligations immediately due and payable (but if an Event of
Default described in Section 8.5 occurs all Obligations are immediately due and
payable without any action by Lender);

(b) Settle or adjust disputes and claims directly with account debtors for
amounts, on terms and in any order that Lender considers advisable;

(c) Make any payments and do any acts it considers necessary or reasonable to
protect its security interest in the Collateral. The Corporation will assemble
the Collateral if Lender requires and make it available as Lender designates.
Lender may enter premises where the Collateral is located, take and maintain
possession of any part of the Collateral, and pay, purchase, contest, or
compromise any Lien which appears to be prior or superior to its security
interest and pay all expenses incurred. The Corporation grants Lender a license
to enter and occupy any of its premises, without charge, to exercise any of
Lender’s rights or remedies;

(d) Apply to the Obligations any amount held by Lender owing to or for the
credit or the account of the Corporation;

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(e) Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale,
advertise for sale, and sell the Collateral. Lender is granted a non-exclusive,
royalty-free license or other right to use, without charge, the Corporation’s
rights in its labels, patents, copyrights, rights of use of any name, trade
secrets, trade names, trademarks, service marks, and advertising matter, or any
similar property as it pertains to the Collateral, in completing production of,
advertising for sale, and selling any Collateral and, in connection with
Lender’s exercise of its rights under this Section, the Corporation’s rights
under all licenses and all franchise agreements inure to Lender’s benefit;
provided, however, that (i) Lender shall act in good faith to preserve the value
of any property it shall use pursuant to such license or right in the exercise
of its remedies hereunder, and (ii) upon the completion of the sale of all
collateral by Lender and the completion by Lender of its exercise of its
remedies hereunder, such license shall terminate);

(f) Dispose of the Collateral according to the Code.

9.2 ACCOUNTS COLLECTION. When an Event of Default occurs and continues, Lender
may notify any Person owing the Corporation money of Lender’s security interest
in the funds and verify the amount of the Account. Corporation must collect all
payments in trust for Lender and, if requested by Lender, immediately deliver
the payments to Lender in the form received from the account debtor, with proper
endorsements for deposit.

9.3 LENDER’S LIABILITY FOR COLLATERAL. If Lender complies with reasonable
lending practices and the Code, it is not liable for: (a) the safekeeping of the
Collateral; (b) any loss or damage to the Collateral; (c) any diminution in the
value of the Collateral; or (d) any act or default of any carrier, warehouseman,
bailee, or other person. The Corporation bears all risk of loss, damage or
destruction of the Collateral.

9.4 REMEDIES CUMULATIVE. Lender’s rights and remedies under this Agreement, the
Loan Documents, and all other agreements are cumulative. Lender has all rights
and remedies provided under the Code, by law, or in equity. Lender’s exercise of
one right or remedy is not an election, and Lender’s waiver of any Event of
Default is not a continuing waiver. Lender’s delay is not a waiver, election, or
acquiescence. No waiver is effective unless signed by Lender and then is only
effective for the specific instance and purpose for which it was given.

9.5 DEMAND WAIVER. The Corporation waives demand, notice of default or dishonor,
notice of payment and nonpayment, notice of any default, nonpayment at maturity,
release, compromise, settlement, extension, or renewal of accounts, documents,
instruments, chattel paper, and guarantees held by Lender on which the
Corporation is liable.

10. NOTICES. All notices or demands by any party about this Agreement or any
other related agreement must be in writing and be sent by personal delivery, by
a nationally recognized overnight delivery service, or by certified mail,
postage prepaid, return receipt requested, to the address, in the case of the
Corporation, set forth at the beginning of this Agreement, and in the case of
Lenders, to each Lender’s addresses on the books of the Corporation, and shall
be deemed to have been given: (a) if delivered in person, when delivered; (b) if
delivered by recognized national overnight delivery service, one Business Day
after delivery to such courier properly addressed; or (c) if by certified U.S.
Mail, four Business Days after depositing in the United States mail, with
postage prepaid and properly addressed. A party may change its notice address by
giving the other party written notice.

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11. CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER. New York law governs the Loan
Documents without regard to principles of conflicts of law. The Corporation and
each of the Lenders each submit to the exclusive jurisdiction of the State and
Federal courts in the State of New York provided, however, that if for any
reason the Lender can not avail itself of the courts of the State of New York,
Corporation and Lender each submit to the jurisdiction of the State and Federal
Courts in New York County, New York.
 
12. GENERAL PROVISIONS

12.1 SUCCESSORS AND ASSIGNS. This Agreement binds and is for the benefit of the
successors and permitted assigns of each party. The Corporation may not assign
this Agreement or any rights under it without Lender’s prior written consent
which may be granted or withheld in Lender’s discretion. Lender has the right,
without the consent of or notice to the Corporation, to sell, transfer,
negotiate, or grant participation in all or any part of, or any interest in,
Lender’s obligations, rights and benefits under this Agreement.

12.2 INDEMNIFICATION. The Corporation will indemnify, defend and hold harmless
Lender and its officers, employees, and agents against: (a) all obligations,
demands, claims, and liabilities asserted by any other party in connection with
the transactions contemplated by the Loan Documents; and (b) all losses or
Lender Expenses incurred, or paid by Lender from, following, or consequential to
transactions between Lender and the Corporation (including reasonable attorneys
fees and expenses), except for losses or Lender Expenses caused by Lender’s
gross negligence or willful misconduct.

12.3 SEVERABILITY OF PROVISION. Each provision of this Agreement is severable
from every other provision in determining the enforceability of any provision.

12.4 AMENDMENTS IN WRITING, INTEGRATION. All amendments to this Agreement must
be in writing and signed by the Corporation and Lender. This Agreement
represents the entire agreement about this subject matter, and supersedes prior
negotiations or agreements. All prior agreements, understandings,
representations, warranties, and negotiations between the parties about the
subject matter of this Agreement merge into this Agreement and the Loan
Documents.

12.5 COUNTERPARTS. This Agreement may be executed in any number of counterparts
and by different parties on separate counterparts, each of which, when executed
and delivered, are an original, and all taken together, constitute one
Agreement.

12.6 SURVIVAL. All covenants, representations and warranties made in this
Agreement continue in full force while any Obligations remain outstanding. The
obligations of the Corporation in Section 12.2 to indemnify Lender will survive
until all statutes of limitations for actions that may be brought against Lender
have run.

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12.7 CONFIDENTIALITY. In handling any confidential information, Lender will
exercise the same degree of care that it exercises for its own proprietary
information, but disclosure of information may be made (i) to Lender’s
subsidiaries or affiliates in connection with their business with the
Corporation, (ii) to prospective transferees or purchasers of any interest in
the loans (provided, however, Lender shall use commercially reasonable efforts
in obtaining such prospective transferee or purchasers agreement of the terms of
this provision), (iii) as required by law, regulation, subpoena, or other order
after notice to the Corporation and provided that such disclosure is subject to
a protective order, if one is available, (iv) as required in connection with
Lender’s examination or audit and (v) as Lender reasonably considers appropriate
exercising remedies under this Agreement. Confidential information does not
include information that either: (a) is publicly available or in Lender’s
possession when disclosed to Lender, or becomes part of the public domain after
disclosure to Lender; or (b) is disclosed to Lender by a third party, unless
that third party is permitted to disclose the information.

DEFINITIONS

In this Agreement:

“ACCOUNTS” has the meaning set forth in the Code and includes all existing and
later arising accounts, contract rights, and other obligations owed Corporation
in connection with its sale or lease of goods (including licensing intellectual
property or software and other technology) or provision of services, all credit
insurance, guaranties, other security and all merchandise returned or reclaimed
by the Corporation and the Corporation’s Books relating to any of the foregoing.

“AFFILIATE” of a Person is a Person that owns or controls directly or indirectly
the Person, any Person that controls or is controlled by or is under common
control with the Person, and each of that Person’s senior executive officers,
directors, partners and, for any Person that is a limited liability company,
that Person’s managers and members.

“LENDER EXPENSES” are all audit fees and expenses and reasonable costs and
expenses (including reasonable attorneys’ fees and expenses) for enforcing the
Loan Documents (including appeals or Insolvency Proceedings); for the avoidance
of doubt, attorneys’ fees and expenses incurred in connection with the
preparation and negotiation of the Loan Documents shall be deemed not to be
Lender Expenses.

“CORPORATION’S BOOKS” are all the Corporation’s books and records including
ledgers, records regarding the Corporation’s assets or liabilities, the
Collateral, business operations or financial condition and all computer programs
or discs or any equipment containing the information.

“BUSINESS DAY” is any day that is not a Saturday, Sunday or a day on which the
national banks are generally closed.

“CLOSING DATE” is the date of this Agreement.

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“CODE” is the Uniform Commercial Code, in effect in the State of New York as in
effect from time to time.

“COLLATERAL” is all of the Corporation’s assets, whether now owned or existing
or hereafter acquired or arising and wherever located.

“CONTINGENT OBLIGATION” is, for any Person, any direct or indirect liability,
contingent or not, of that Person for (i) any indebtedness, lease, dividend,
letter of credit or other obligation of another such as an obligation directly
or indirectly guaranteed, endorsed, co-made, discounted or sold with recourse by
that Person, or for which that Person is directly or indirectly liable; (ii) any
obligations for undrawn letters of credit for the account of that Person; and
(iii) all obligations from any interest rate, currency or commodity swap
agreement, interest rate cap or collar agreement, or other agreement or
arrangement designated to protect a Person against fluctuation in interest
rates, currency exchange rates or commodity prices; but “Contingent Obligation”
does not include endorsements in the ordinary course of business. The amount of
a Contingent Obligation is the stated or determined amount of the primary
obligation for which the Contingent Obligation is made or, if not determinable,
the maximum reasonably anticipated liability for it determined by the Person in
good faith; but the amount may not exceed the maximum of the obligations under
the guarantee or other support arrangement.

“COPYRIGHTS” are all copyright rights, applications or registrations and like
protections in each work or authorship or derivative work, whether published or
not (whether or not it is a trade secret) now or later existing, created,
acquired or held.

“CREDIT EXTENSION” is each Advance, the Term Loan, or any other extension of
credit by Lender for the Corporation’s benefit pursuant hereto.

“EQUIPMENT” has the meaning set forth in the Code and includes is all present
and future machinery, equipment, tenant improvements, furniture, fixtures,
vehicles, tools, parts and attachments in which the Corporation has any
interest.

“ERISA” is the Employment Retirement Income Security Act of 1974, and its
regulations.

“EVENT OF DEFAULT” has the meaning set forth in Section 7.

“GAAP” is United States generally accepted accounting principles.

“INDEBTEDNESS” is (a) indebtedness for borrowed money or the deferred price of
property or services, such as reimbursement and other obligations for surety
bonds and letters of credit, (b) obligations evidenced by notes, bonds,
debentures or similar instruments, (c) capital lease obligations and (d)
Contingent Obligations.

“INSOLVENCY PROCEEDING” are proceedings by or against any Person under the
United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions, extensions
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.

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“INVENTORY” has the meaning set forth in the Code and includes is present and
future inventory in which the Corporation has any interest, including
merchandise, raw materials, parts, supplies, packing and shipping materials,
work in process and finished products intended for sale or lease or to be
furnished under a contract of service, of every kind and description now or
later owned by or in the custody or possession, actual or constructive, of the
Corporation, including inventory temporarily out of its custody or possession or
in transit and including returns on any accounts or other Proceeds from the sale
or disposition of any of the foregoing and any documents of title.

“INVESTMENT” is any beneficial ownership of (including stock, partnership
interest or other securities) any Person, or any loan, advance or capital
contribution to any Person.

“LIEN” is a mortgage, lien, deed of trust, charge, pledge, security interest or
other encumbrance.

“LOAN DOCUMENTS” are, collectively, this Agreement, the Notes, any note, or
notes or guaranties executed by the Corporation, and any other present or future
agreement between the Corporation and/or for the benefit of Lender in connection
with this Agreement, all as amended, extended or restated.

“MATERIAL ADVERSE CHANGE” has the meaning set forth in Section 6.3.

“NOTE” means each of the 6% Convertible Notes executed by the Corporation in
favor of each of the Lenders hereunder, in the form attached hereto as Exhibit
A, together with all renewals, amendments, modifications and substitutions
therefor.

“OBLIGATIONS” are loans made hereunder, interest, Lender Expenses and other
amounts Corporation owes Lender, including cash management services, letters of
credit and foreign exchange contracts, if any and including interest accruing
after Insolvency Proceedings begin and debts, liabilities, or obligations of the
Corporation assigned to Lender.

 “PATENTS” are patents, patent applications and like protections, including
improvements, divisions, continuations, renewals, reissues, extensions and
continuations-in-part of the same.

“PERMITTED INDEBTEDNESS” is:
 
(a) The Corporation’s indebtedness to Lender under this Agreement or any other
Loan Document;
 
(b) Indebtedness existing on the Closing Date and shown on the Schedule 1;

(c) Subordinated Debt;
 
(d) Indebtedness to trade creditors incurred in the ordinary course of business;
and

(e) Indebtedness secured by Permitted Liens.

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“PERMITTED LIENS” are:

(a) The security interest granted to the holders of the notes listed on Schedule
1 attached to this Agreement, issued by the Corporation to the holders thereof;

(b) Indebtedness and liens currently outstanding pursuant to agreements as
currently in effect on the date of this Agreement;

(c) Indebtedness and liens pursuant to agreements for financing in which the
proceeds shall be principally used for acquisitions by the Corporation of other
businesses;

(d)  Capital leases, financing for equipment and purchase money security
interests;
 
(e) Liens for taxes, fees, assessments or other government charges or levies,
either not delinquent or being contested in good faith and for which the
Corporation maintains adequate reserves on its Books, if they have no priority
over any of Lender’s security interests;

(f) Liens incurred in the extension, renewal or refinancing of the indebtedness
secured by Permitted Liens described above, but any extension, renewal or
replacement Lien must be limited to the property encumbered by the existing Lien
and the principal amount of the indebtedness may not increase.

“PERSON” is any individual, sole proprietorship, partnership, limited liability
company, joint venture, company association, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, firm, joint
stock company, estate, entity or government agency.

“PROCEEDS” has the meaning described in the Code as in effect from time to time.

“REGISTERED ORGANIZATION” means an organization organized solely under the law
of a single state or the United States and as to which the state or the United
States must maintain a public record showing the organization to have been
organized.

“RESPONSIBLE OFFICER” is each of the Chief Executive Officer, the President, and
the Chief Financial Officer of the Corporation.

“SCHEDULE” is any attached schedule of exceptions.
 
“SUBORDINATED DEBT” is debt incurred by the Corporation that is subordinated to
the Corporation’s indebtedness owed to Lender and which is reflected in a
written agreement in a manner and form acceptable to Lender and approved by
Lender in writing.

“SUBSIDIARY” is for any Person, or any other business entity of which more than
50% of the voting stock or other equity interests is owned or controlled,
directly or indirectly, by the Person or one or more Affiliates of the Person.

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“SUPPORTING OBLIGATION” means a Letter-of-credit right, secondary obligation or
obligation of a secondary obligor or that supports the payment or performance of
an account, chattel paper, a document, a general intangible, an instrument or
investment property.

“TOTAL LIABILITIES” is on any day, obligations that should, under GAAP, be
classified as liabilities on the Corporation’s consolidated balance sheet,
including all Indebtedness, and current portion Subordinated Debt allowed to be
paid, but excluding all other Subordinated Debt.

“TRADEMARKS” are trademark and service mark rights, registered or not,
applications to register and registrations and like protections, and the entire
goodwill of the business of the Corporation connected with the trademarks.

[Signatures appear on the following page]
 
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IN WITNESS WHEREOF, the Parties have executed this Agreement on the date first
above written.
 

CORPORATION:                PET EXPRESS SUPPLY, INC.                        By: 
     

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Jonathan Bomser
Chief Executive Officer
                    LENDERS:                MKM OPPORTUNITY MASTER FUND, LTD.   
                    By:       

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Name:
Title:  
              ADDITIONAL LENDERS               

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                         By:       

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Name:
Title:
                     

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                 By:       

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Name:
Title:  
     

 
 
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Schedule 1

Attached to the LOAN AND SECURITY AGREEMENT dated July 25, 2008
by and among PET EXPRESS SUPPLY, INC.and the other parties thereto

Permitted Liens

The security interest granted by Corporation to the holders of each of the
following notes prior to the closing of this Agreement is a Permitted Lien.
 
Promissory Note in favor of Peter Newman, principal amount of $297,504.00. Not
convertible.

Convertible Promissory Note in favor of CORPORATE COMMUNICATIONS NETWORK, INC.,
principal amount of $75,000.00.

Convertible Promissory Note in favor of LYNN COLE CAPITAL CORP., principal
amount of $75,000.00.

Convertible Promissory Note in favor of CORPORATE COMMUNICATIONS NETWORK, INC.,
principal amount of $25,000.00.

Convertible Promissory Note in favor of LYNN COLE CAPITAL CORP., principal
amount of $25,000.00.

Convertible Promissory Note in favor of MKM OPPORTUNITY MASTER FUND, LTD.,
principal amount of $150,000.00
 
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