RIGHT OF FIRST OFFER AND LAST LOOK


          THIS
RIGHT OF FIRST OFFER AND LAST LOOK (this “Agreement”) is entered into as of
June 29, 2007, by and between XLNT VETERINARY CARE, INC., a Delaware
corporation (“XLNT”) and FIFTH STREET MEZZANINE PARTNERS II, L.P., a Delaware
limited partnership, and its successors and assigns (“Fifth Street”). 


RECITALS


          A.
Concurrently herewith, XLNT and Fifth Street are entering into a certain loan
arrangement (the “Loan”) evidenced by, among other documents, instruments and
agreements, a certain Credit Agreement and Note. 


          B.
In consideration of the Loan and for other good and valuable consideration,
XLNT has agreed to grant to Fifth Street, its successors, transferees and
assigns (hereinafter, the “Holder”), a right of first offer and last look with
respect to certain real property to be acquired after the date hereof by XLNT
or its affiliates, subsidiaries, parent entities or their respective
successors, assigns and transferees (the “Owner”), all as further set forth
herein. 


          NOW,
THEREFORE, incorporating the foregoing recitals, the parties further agree as
follows: 


          1.
Defined Terms. As used herein, the following terms have the following
meanings: 


                    (a)
“Better Offer” shall mean such offer has one or more of the following as
compared to the First Offer (as hereinafter defined): (i) a decrease in the
purchase price by more than five percent (5%); (ii) an extension in the due
diligence period or closing date for more than sixty (60) days; (iii) an
increase in the monthly rent charged for the lease back of more than five
percent (5%). 


                    (b)
“Excluded Property” means any real property currently owned by XLNT, which real
property is listed on Exhibit A hereto. 


                    (c)
“Property” means any and all real property hereafter acquired by Owner,
directly or indirectly, in fee, as beneficial owner or contract holder, other
than the Excluded Property. 


                    (d)
“Transfer” shall mean any sale, transfer or disposition of any Property,
including, without limitation, any sale, assignment, lease with an option to
purchase or other transfer or disposition of all or any part of the Property. 


          2.
Right of First Offer. Owner hereby grants to Holder a right of first
offer and last look to purchase any and all Property for which Owner desires to
Transfer and then lease back from such buyer (a “Sale/Leaseback”). Owner shall
not Transfer any portion of any Property in connection with a Sale/Leaseback
without first offering to Holder a first offer to acquire the Property from
Owner in order to provide a Sale/Leaseback on the terms and conditions set
forth 


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herein.
Notwithstanding anything to the contrary contained herein, in the event Owner
desires to dispose of any Property without conducting a Sale/Leaseback (that
is, Owner desires to Transfer the Property and thereafter vacate the Property),
Owner may Transfer such Property without first offering such Property to Holder
(provided, however, nothing herein shall modify any restrictions on
dispositions set forth in any and all loan documents by and between Owner and
Holder, including, without limitation, the loan documents executed in
connection with the Loan). 


          3.
First Offer. Before Owner Transfers or agrees to Transfer any Property
or portion thereof in connection with a Sale/Leaseback (a “Sale Property”),
Owner shall offer in writing to sell the Sale Property for a Sale/Leaseback to
Holder on terms and conditions substantially identical to those proposed for
the sale of the Sale Property to a prospective purchaser (the “First Offer”).
The First Offer shall, at a minimum, include the following information: (i) the
purchase price proposed for the sale of the Sale Property; (ii) the method of
purchase price payment; (iii) the amount of any earnest money deposit; (iv) the
time and location for the close of escrow; (v) the rent, term, and other
material provisions for the leaseback of the Sale Property to Owner; and (vi)
the other material terms and conditions of the proposed sale of the Sale
Property. 


          4.
Acceptance or Rejection of First Offer. Holder shall have ten (10) days
from the date of the First Offer to accept the First Offer by delivering to
Owner such acceptance (the “Exercise Notice”) on or before 11:59 P.M. on the
last day of such 10-day period. If Holder delivers a timely Exercise Notice,
then Holder shall have not less than forty-five (45) days to consummate the
purchase of the Sale Property pursuant to the terms and conditions of the First
Offer. If Holder fails to deliver the Exercise Notice on or before the last day
of such 10-day period or otherwise delivers a rejection notice (in either case,
hereinafter, a “Rejection”), then the First Offer shall be deemed to be
rejected and Owner may thereafter attempt to sell such Sale Property to a
bona-fide, third party purchaser at arms length pursuant to the terms and
conditions set forth in the First Offer or on such other terms so long as such
other terms are not a Better Offer. In the event such Sale Property is not sold
to such a third party purchaser within one hundred twenty (120) days after the
Holder rejects such First Offer (or if Owner otherwise desires to change the
terms of the First Offer), Owner must offer such Sale Property again to Holder
prior to continuing to market the Sale Property and the terms of this Agreement
with respect to such Sale Property shall remain in full force and effect
notwithstanding Holder’s delivery of a Rejection. 


          5.
Last Look/Second Offer. If at any time after Holder delivers a Rejection
with respect to any Sale Property, Owner enters into negotiations with a third
party for the Transfer of such Property and the offer to sell the Sale Property
to such third party is a Better Offer, then Owner shall offer to sell such
Property to Holder on those same terms agreed to by and between Owner and such
third party by giving Holder written notice of the same (the “Second Offer”).
Holder shall have ten (10) days from the date of the Second Offer to accept the
Second Offer by delivering to Owner such acceptance (the “Second Exercise
Notice”) on or before 11:59 P.M. on the last day of such 10-day period. If
Holder fails to deliver the Second Exercise Notice within such 10-day period or
rejects the Second Offer in writing (in either case, hereinafter, a “Second
Rejection”), then Owner shall be free to consummate the transaction with such
identified third party. If Holder delivers a timely Second Exercise Notice,
then Holder shall consummate the transaction with Owner on or before the date
for the close of escrow specified in the Second Offer and pursuant to the terms
and conditions specified in the Second Offer. In the event that 


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Holder
delivers a Second Rejection with respect to such Sale Property and thereafter
Owner does not consummate the proposed Transfer on substantially the same terms
described in the Second Offer with such identified third party, then Holder’s
right of first offer and first look with respect to such Sale Property shall
continue in full force and effect as if no Rejection or Second Rejection was
given. 


          6.
Term; Intention to Enter into a Master Lease Arrangement. The term of
this Agreement shall commence on the date hereof and end on December 31, 2007.
The parties hereto acknowledge and agree that they shall negotiate in good
faith during the term of this Agreement toward the execution of a mutually
acceptable master sale/leaseback agreement. 


          7.
Ownership of Properties; Joinder. Owner hereby represents and warrants
to Holder that XLNT is the fee owner of each of the properties listed on Exhibit
A hereto. In the event that title to any Property acquired by Owner is not
taken in the name of XLNT, such other Owner shall join this Agreement and
execute a joinder agreement in form and substance reasonably satisfactory to
Holder. 


          8.
Notices. Notices given under this Agreement shall be in writing and
shall either be served personally or delivered by reputable overnight courier
(i.e., FedEx). Notices may also effectively be given by facsimile, and such
notices shall be deemed received upon sender’s receipt of a computer generated
confirmation of successful transmission, provided a complete copy of any notice
so transmitted shall also be sent by one of the other approved methods stated
above. Notices delivered by courier shall be deemed received at the earlier of
actual receipt or twenty-four (24) hours after deposit with a reputable
overnight courier service. Notices shall be directed to the parties and
addresses below, provided that a party hereto may change his address for notice
by giving written notice to the other party in accordance with this Section: 


	
 

	
 

	
 


	
 

	
If to any
 Owner:

	
XLNT
 Veterinary Care, Inc. 


	
 

	
 

	
560 South
 Winchester Boulevard, Suite 500 


	
 

	
 

	
San Jose, CA
 95128 


	
 

	
 

	
Attn: Robert
 Wallace, Chairman & CEO 


	
 

	
 

	
Fax: (408)
 236-7421


	
 

	
 

	
 


	
 

	
If to
 Holder:

	
c/o Fifth
 Street Capital, LLC 


	
 

	
 

	
White
 Plains Plaza 


	
 

	
 

	
445 Hamilton
 Avenue, Suite 1103 


	
 

	
 

	
White
 Plains, NY 10601 


	
 

	
 

	
Attn:
 General Counsel 


	
 

	
 

	
Fax: (914)
 328-4214





          9.
Enforcement. Any Transfer or attempted Transfer not in conformity with
the provisions of this Agreement shall be null and void as against Holder and
Holder shall also have all other remedies available to Holder in law or in
equity including, without limitation, at its option, injunctive relief against
such Transfer or attempted Transfer. 


          10.
Successors and Assigns. The rights and obligations of Owner and Holder
under this Agreement shall inure to the benefit of, and bind, their respective
successors and assigns. 


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          11.
Time of Essence. Time is of the essence of each and all of the
agreements, covenants and conditions of this Agreement. 


          12.
Attorneys’ Fees. In the event of any litigation between the parties
arising out of the subject matter of this Agreement, the prevailing party in
such litigation shall be entitled to recover from the other party its
reasonable attorneys’ fees and costs (including expert witness fees and costs of
appeal, if any). 


          13.
Entire Agreement; Modification. This Agreement constitutes the entire
agreement between Owner and Holder with respect to the subject matter hereof
and supersedes all prior offers and negotiations, oral and written. This Agreement
may not be amended or modified in any respect whatsoever except by an
instrument in writing signed by Owner and Holder. 


          14.
Counterparts. This Agreement may be executed in counterparts which, when
taken together, shall constitute a fully executed original. 


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          IN
WITNESS WHEREOF, Owner and Holder have executed this Agreement as of the date
first above written. 


	
 

	
 

	
 


	
 

	
OWNER:


	
 

	
 


	
 

	
XLNT
 VETERINARY CARE, INC.,


	
 

	
a Delaware
 corporation








	
 

	
 

	
 


	
 

	
   By: 

	
 


	
 

	
 

	 



	
 

	
 

	
 


	
 

	
Name: 

	
 


	
 

	
 

	 




	
 

	
 

	
 


	
 

	
Title: 

	
 


	
 

	
 

	 


	
 

	
 








	
 

	
 

	
 

	
 


	
 

	
HOLDER:


	
 

	
 

	
 


	
 

	
FIFTH STREET MEZZANINE
 PARTNERS II, L.P.,


	
 

	
a Delaware limited
 partnership


	
 

	
 

	
 


	
 

	
By: 

	
Fifth Street Mezzanine
 Partners II GP, LLC,


	
 

	
 

	
a Delaware limited
 liability company,


	
 

	
 

	
its general partner


	
 

	
 

	
 


	
 

	
 

	
By: 

	
 


	
 

	
 

	
 

	 



	
 

	
 

	
Name: Bernard D. Berman


	
 

	
 

	
Title:   Executive Vice
 President and Secretary





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EXHIBIT A


Currently Owned Properties/Excluded
Properties


	
 


	
Stanford Pet
 Clinic 


	
 


	
4111 El
 Camino Real


	
 


	
 Palo
 Alto, California 94306 


	
 


	
High Dessert
 Animal Hospital of 29 Palms


	
 


	
70513 29
 Palm Highway


	
 


	
29 Palms,
 California 92277 


	
 


	
High Dessert
 Animal Hospital of Yucca Valley


	
 


	
57185 29
 Palm Highway


	
 


	
Yucca
 Valley, California 92284


	
 


	
(2 adjacent
 parcels) 


	
 


	
Thousand
 Palms Hospital


	
 


	
30-695 Hill
 Street


	
 


	
Thousand
 Palms, California