Unassociated Document


    THE
      WARRANT REPRESENTED HEREBY AND THE SHARES OF STOCK ISSUABLE UPON EXERCISE HEREOF
      HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
      “ACT”), AND CANNOT BE SOLD, TRANSFERRED OR
      OTHERWISE DISPOSED OF UNTIL A REGISTRATION STATEMENT WITH RESPECT THERETO IS
      DECLARED EFFECTIVE UNDER SUCH ACT, OR PET EXPRESS SUPPLY, INC. RECEIVES AN
      OPINION OF COUNSEL FOR THE HOLDER REASONABLY SATISFACTORY TO COUNSEL FOR PET
      EXPRESS SUPPLY, INC. THAT AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
      THE
      ACT IS AVAILABLE.

     

    PET
      EXPRESS SUPPLY, INC.

WARRANT
      TO PURCHASE [         ]
      SHARES
      OF COMMON STOCK

     

    
      	
              July
                __, 2008         

            	
              Warrant
                No.   

            


    

     

    For
      value
      received, PET
      EXPRESS SUPPLY, INC.,
      a
      Nevada corporation (PXPS.OB)
      (the
“Corporation”),
      hereby certifies that [INSERT
      NAME OF INVESTOR],
      or his,
      her or its registered transferees, successors or assigns (each person or entity
      holding all or part of this Warrant being referred to as a “Holder”),
      is
      the registered holder of warrants to subscribe for and purchase [___________
      (________)] shares (as adjusted pursuant to Section 3
      hereof,
      the “Warrant
      Shares”)
      of the
      fully paid and Common Stock, $0.001
      par value per share (the
      “Common
      Stock”),
      of
      the Corporation, at a purchase price per share initially equal to Four and
      Fifty
      Hundredths Dollars ($4.50) (the “Exercise
      Price”)
      on or
      before, 5:00 P.M., Eastern Time, on July 31, 2013 (the “Expiration
      Date”),
      subject to the provisions and upon the terms and conditions hereinafter set
      forth. As used herein, the term “Business
      Day”
means
      any day other than a Saturday or Sunday on which commercial banks located in
      New
      York, New York are open for the general transaction of business. 

     

    This
      Warrant is issued pursuant to that certain Loan and Security Agreement dated
      as
      of July 25, 2008, by and among the Corporation and the lenders named therein
      (the “Loan
      Agreement”),
      a
      copy of which is on file at the principal office of the Corporation. This
      Warrant is one of several warrants representing the right to purchase Common
      Stock issuable pursuant to and contemplated by the Loan Agreement.

     

    Section
      1.  Exercise.

     

    (a)  Method
      of Exercise; Payment; Issuance of New Warrant.

     

    (i)  Subject
      to the provisions hereof, the Holder may exercise this Warrant, in whole or
      in
      part and from time to time, by the surrender of this Warrant (with the Notice
      of
      Exercise attached hereto as Appendix
      A
      duly
      executed) at the principal office of the Corporation, or such other office
      or
      agency of the Corporation as it may reasonably designate by written notice
      to
      the Holder, during normal business hours on any Business Day, and the payment
      by
      the Holder by cash, certified check payable to the Corporation or wire transfer
      of immediately available funds to an account designated to the exercising Holder
      by the Corporation of an amount equal to the then applicable Exercise Price
      multiplied by the number of Warrant Shares then being purchased, or in the
      event
      of a cashless exercise pursuant to Section
      1(b)
      below,
      with the Net Issue Election Notice attached hereto as Appendix
      B
      duly
      executed and completed. On the date on which the Holder shall have satisfied
      in
      full the Holder’s obligations set forth herein regarding an exercise of this
      Warrant (provided such date is prior to the Expiration Date), the Holder (or
      such other person or persons as directed by the Holder) shall be treated for
      all
      purposes as the holder of record of such Warrant Shares as of the close of
      business on such date.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (ii)  In
      the
      event of any exercise of the rights represented by this Warrant, certificates
      for the whole number of shares of Common Stock so purchased shall be delivered
      to the Holder (or such other person or persons as directed by the Holder) as
      promptly as is reasonably practicable (but not later than three (3) Business
      Days) after such exercise at the Corporation’s expense, and, unless this Warrant
      has been fully exercised, a new Warrant representing the number of whole Warrant
      Shares, if any, with respect to which this Warrant shall not then have been
      exercised shall also be issued to the Holder as soon as reasonably practicable
      thereafter (but not later than three (3) Business Days) after such
      exercise.

     

    (b)  Cashless
      Right to Convert Warrant into Common Stock.
      In
      addition to and without limiting the rights of the Holder hereof under the
      terms
      of this Warrant, at any time after the date six months following the
issuance
      date hereof,
      if the
      Common Stock is then listed on a national stock exchange or is included in
      The
      Nasdaq Stock Market, Inc. (“Nasdaq”),
      the
      Over-the-Counter Bulletin Board or the “pink sheets”, and if the shares of
      Common Stock covered by this Warrant are not registered under an effective
      registration statement, the Holder may elect to receive, without the payment
      by
      the Holder of the Exercise Price, Warrant Shares equal to the value of this
      Warrant or any portion hereof by the surrender of this Warrant (or such portion
      of this Warrant being so exercised) together with the Net Issue Election Notice
      annexed hereto as Appendix B duly executed and completed, at the office of
      the
      Corporation, or such other office or agency of the Corporation as it may
      reasonably designate by written notice to the Holder, during normal business
      hours on any Business Day. Thereupon, the Corporation shall issue to the Holder
      such number of fully paid, validly issued and nonassessable Warrant Shares,
      as
      is computed using the following formula: 

     

     

    X=
      Y(A-B)

    A

     

    where

     

     

    X
      = the
      number of shares of Common Stock to be issued to the Holder (or such other
      person or persons as directed by the Holder) upon such exercise of the rights
      under this Section
      1(b)

     

    Y
      = the
      total
      number of shares of Common Stock covered by this Warrant which the Holder has
      surrendered for cashless exercise

     

    A
      = the
“Fair
      Market Value” of one share of Common Stock on the date that the Holder delivers
      the Net Issue Election Notice to the Corporation as provided herein

     

    B
      = the
      Exercise Price in effect under this Warrant on the date that the Holder delivers
      the Net Issue Election Notice to the Corporation as provided herein

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    For
      purposes of this Section
      1(b),
      the
“Fair
      Market Value”
of
      a
      share of Common Stock as of a particular date (the “Valuation
      Date”)
      shall
      mean the following: (w) if the Common Stock is then listed on a national stock
      exchange, the closing sale price of one share of Common Stock on such exchange
      on the last trading day prior to the Valuation Date, provided that if such
      stock
      has not traded in the prior ten (10) trading sessions, the Fair Market Value
      shall be the average closing price of one share of Common Stock in the most
      recent ten (10) trading sessions during which the Common Stock has traded;
      (x)
      if the Common Stock is then included in Nasdaq, the closing sale price of one
      share of Common Stock on Nasdaq on the last trading day prior to the Valuation
      Date or, if no such closing sale price is available, the average of the high
      bid
      and the low ask price quoted on Nasdaq as of the end of the last trading day
      prior to the Valuation Date, provided that if such stock has not traded in
      the
      prior ten (10) trading sessions, the Fair Market Value shall be the average
      closing price of one share of Common Stock in the most recent ten (10) trading
      sessions during which the Common Stock has traded; (y) if the Common Stock
      is
      then included in the Over-the-Counter Bulletin Board, the closing sale price
      of
      one share of Common Stock on the Over-the-Counter Bulletin Board on the last
      trading day prior to the Valuation Date or, if no such closing sale price is
      available, the average of the high bid and the low ask price quoted on the
      Over-the-Counter Bulletin Board as of the end of the last trading day prior
      to
      the Valuation Date, provided that if such stock has not traded in the prior
      ten
      (10) trading sessions, the Fair Market Value shall be the average closing price
      of one share of Common Stock in the most recent ten (10) trading sessions during
      which the Common Stock has traded, or
      (z) if
      the Common Stock is then included in the “pink sheets”, the closing sale price
      of one share of Common Stock on the “pink sheets” on the last trading day prior
      to the Valuation Date or, if no such closing sale price is available, the
      average of the high bid and the low ask price quoted on the “pink sheets” as of
      the end of the last trading day prior to the Valuation Date, provided that
      if
      such stock has not traded in the prior ten (10) trading sessions, the Fair
      Market Value shall be the average closing price of one share of Common Stock
      in
      the most recent ten (10) trading sessions during which the Common Stock has
      traded.

     

    (c)
      Exercise
      Limitations.
      The
      Corporation shall not effect any exercise of this Warrant, and a Holder shall
      not have the right to exercise any portion of this Warrant, pursuant to Section
      1 or otherwise, to the extent that after giving effect to the issuance of Common
      Stock after exercise as set forth on the applicable Notice of Exercise, the
      Holder (together with the Holder’s Affiliates, and any other person or entity
      acting as a group together with the Holder or any of the Holder’s Affiliates),
      would beneficially own in excess of the Beneficial Ownership Limitation (as
      defined below). For purposes of the foregoing sentence, the number of shares
      of
      Common Stock beneficially owned by the Holder and its Affiliates shall include
      the number of shares of Common Stock issuable upon exercise of this Warrant
      with
      respect to which such determination is being made, but shall exclude the number
      of shares of Common Stock which would be issuable upon (A) exercise of the
      remaining, nonexercised portion of this Warrant beneficially owned by the Holder
      or any of its Affiliates and (B) exercise or conversion of the unexercised
      or
      nonconverted portion of any other securities of the Corporation (including,
      without limitation, any other Common Stock Equivalents) subject to a limitation
      on conversion or exercise analogous to the limitation contained herein
      beneficially owned by the Holder or any of its affiliates. Except as set forth
      in the preceding sentence, for purposes of this Section 2(d), beneficial
      ownership shall be calculated in accordance with Section 13(d) of the Securities
      Exchange Act of 1934, as amended (the “Exchange
      Act”)
      and
      the rules and regulations promulgated thereunder, it being acknowledged by
      the
      Holder that the Corporation is not representing to the Holder that such
      calculation is in compliance with Section 13(d) of the Exchange Act and the
      Holder is solely responsible for any schedules required to be filed in
      accordance therewith. To the extent that the limitation contained in this
      Section 1(c) applies, the determination of whether this Warrant is exercisable
      (in relation to other securities owned by the Holder together with any
      Affiliates) and of which portion of this Warrant is exercisable shall be in
      the
      sole discretion of the Holder, and the submission of a Notice of Exercise shall
      be deemed to be the Holder’s determination of whether this Warrant is
      exercisable (in relation to other securities owned by the Holder together with
      any Affiliates) and of which portion of this Warrant is exercisable, in each
      case subject to the Beneficial Ownership Limitation, and the Corporation shall
      have no obligation to verify or confirm the accuracy of such determination.
      In
      addition, a determination as to any group status as contemplated above shall
      be
      determined in accordance with Section 13(d) of the Exchange Act and the rules
      and regulations promulgated thereunder. For purposes of this Section 1(c),
      in
      determining the number of outstanding shares of Common Stock, a Holder may
      rely
      on the number of outstanding shares of Common Stock as reflected in (A) the
      Corporation’s most recent periodic or annual report, as the case may be, (B) a
      more recent public announcement by the Corporation or (C) any other notice
      by
      the Corporation or the Corporation’s Transfer Agent setting forth the number of
      shares of Common Stock outstanding. Upon the written or oral request of a
      Holder, the Corporation shall within two Trading Days confirm orally and in
      writing to the Holder the number of shares of Common Stock then outstanding.
      In
      any case, the number of outstanding shares of Common Stock shall be determined
      after giving effect to the conversion or exercise of securities of the
      Corporation, including this Warrant, by the Holder or its Affiliates since
      the
      date as of which such number of outstanding shares of Common Stock was reported.
      The “Beneficial
      Ownership Limitation”
shall
      be 4.99% of the number of shares of the Common Stock outstanding immediately
      after giving effect to the issuance of shares of Common Stock issuable upon
      exercise of this Warrant. The Holder, upon not less than 61 days’ prior notice
      to the Corporation, may increase or decrease the Beneficial Ownership Limitation
      provisions of this Section 1(c), provided that the Beneficial Ownership
      Limitation in no event exceeds 9.99% of the number of shares of the Common
      Stock
      outstanding immediately after giving effect to the issuance of shares of Common
      Stock upon exercise of this Warrant held by the Holder and the provisions of
      this Section 1(c) shall continue to apply. Any such increase or decrease will
      not be effective until the 61st day after such notice is delivered to the
      Corporation. The provisions of this paragraph shall be construed and implemented
      in a manner otherwise than in strict conformity with the terms of this Section
      1(c) to correct this paragraph (or any portion hereof) which may be defective
      or
      inconsistent with the intended Beneficial Ownership Limitation herein contained
      or to make changes or supplements necessary or desirable to properly give effect
      to such limitation. The limitations contained in this paragraph shall apply
      to a
      successor holder of this Warrant.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Section
      2.  Reservation
      of Shares; Stock Fully Paid.
      The
      Corporation shall keep reserved a sufficient number of shares of the authorized
      and unissued shares of Common Stock to provide for the exercise of the rights
      of
      purchase represented by this Warrant in compliance with its terms. All Warrant
      Shares issued upon exercise of this Warrant shall be, at the time of delivery
      of
      the certificates for such Warrant Shares upon payment in full of the Exercise
      Price therefor in accordance with the terms of this Warrant (or proper exercise
      of the cashless exercise rights contained in Section
      1(b)
      hereof),
      duly authorized, validly issued, fully paid and nonassessable shares of Common
      Stock. The Corporation shall, during all times prior to the Expiration Date
      when
      the shares of Common Stock issuable upon the exercise of this Warrant are
      authorized for listing or quotation on any national securities exchange (or
      Nasdaq, the Over-the-Counter Bulletin Board or the “pink sheets”, as the case
      may be), keep the shares of Common Stock issuable upon the exercise of this
      Warrant authorized for listing or quotation on such national securities exchange
      (or Nasdaq, the Over-the-Counter Bulletin Board or the “pink sheets”, as the
      case may be).

     

    Section
      3.  Adjustments
      and Distributions.
      The
      number and kind of securities purchasable upon the exercise of this Warrant
      and
      the Exercise Price shall each, in certain instances, be subject to adjustment
      from time to time upon the occurrence of certain events, as
      follows:

     

    (a)  If
      the
      Corporation shall, at any time or from time to time while this Warrant is
      outstanding, pay a dividend or make a distribution on its Common Stock in shares
      of Common Stock, subdivide its outstanding shares of Common Stock into a greater
      number of shares or combine its outstanding shares of Common Stock into a
      smaller number of shares, then the number of Warrant Shares purchasable upon
      exercise of this Warrant and the Exercise Price in effect immediately prior
      to
      the date upon which such change shall become effective shall be proportionally
      adjusted by the Corporation so that the Holder thereafter exercising this
      Warrant shall be entitled to receive the number of shares of Common Stock which
      the Holder would have received if this Warrant had been exercised immediately
      prior to such event upon payment of an Exercise Price that has been
      proportionally adjusted to reflect such event. Such adjustments shall be made
      successively whenever any event listed above shall occur.

     

    (b)  If
      any
      recapitalization, reclassification or reorganization of the capital stock of
      the
      Corporation (other than a change in par value or a subdivision or combination
      as
      provided for in Section
      3(a)
      above)
      shall be effected in such a manner (including, without limitation, in connection
      with any consolidation or merger), that holders of Common Stock shall be
      entitled to receive stock, securities, or other assets or property (a
“Reorganization”),
      then,
      as a result of such Reorganization, the Holder hereof shall thereafter have
      the
      right to purchase and receive (in lieu of the shares of the Common Stock of
      the
      Corporation immediately theretofore purchasable and receivable upon the exercise
      of the rights represented hereby) upon the proper exercise of this Warrant,
      such
      shares of stock, securities or other assets or property as may be issued or
      payable with respect to or in exchange for a number of outstanding shares of
      such Common Stock equal to the number of shares of such Common Stock immediately
      theretofore purchasable and receivable upon the exercise of the rights
      represented hereby. In the event of any Reorganization, appropriate provision
      shall be made by the Corporation with respect to the rights and interests of
      the
      Holder of this Warrant to the end that the provisions hereof (including, without
      limitation, provisions for adjustments of the Exercise Price and of the number
      of Warrant Shares) shall thereafter be applicable, in relation to any shares
      of
      stock, securities or assets thereafter deliverable upon the exercise hereof.
      The
      provisions of this Section 3(b)
      shall
      similarly apply to successive Reorganizations.

     

    (c)  If
      any
      sale, transfer or other disposition (other than the granting of liens and/or
      security interests) of all or substantially all of the Corporation’s assets to
      another entity shall be effected, then, the Holder shall thereafter have the
      right to purchase and receive (in lieu of the shares of the Common Stock of
      the
      Corporation immediately theretofore purchasable and receivable upon the exercise
      of the rights represented hereby) upon the proper exercise of this Warrant,
      such
      shares of stock, securities or assets as would have been issuable or payable
      with respect to or in exchange for a number of Warrant Shares equal to the
      number of Warrant Shares immediately theretofore issuable upon exercise of
      this
      Warrant, had such sale, transfer or other disposition not taken place, and
      in
      any such case appropriate provision shall be made by the Corporation with
      respect to the rights and interests of the Holder to the end that the provisions
      hereof (including, without limitation, provision for adjustment of the Exercise
      Price and of the number of Warrant Shares) shall thereafter be applicable,
      as
      nearly equivalent as may be practicable, in relation to any shares of stock,
      securities or properties thereafter deliverable upon the exercise
      hereof.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (d)  In
      case
      the Corporation shall fix a payment date for the making of a distribution to
      all
      holders of Common Stock of evidences of indebtedness or assets (other than
      dividends or distributions referred to in Section 3(a)
      hereof),
      or subscription rights or warrants, the Exercise Price to be in effect after
      such payment date shall be determined by multiplying the Exercise Price in
      effect immediately prior to such payment date by a fraction, the numerator
      of
      which shall be the total number of shares of Common Stock outstanding multiplied
      by the fair market value per share of Common Stock immediately prior to such
      payment date, less the fair market value of said assets or evidences of
      indebtedness so distributed, or of such subscription rights or warrants (in
      each
      case, as such fair market value is determined in good faith by the Board of
      Directors of the Corporation (the “Board”)),
      and
      the denominator of which shall be the total number of shares of Common Stock
      outstanding multiplied by such fair market value per share of Common Stock
      immediately prior to such payment date. Such adjustment shall be made
      successively whenever such a payment date is fixed. In the event that any
      dividend or distribution for which this Section
      3(d)
      would
      require an adjustment is not so paid or made, the Exercise Price shall be
      adjusted to be the Exercise Price which would then be in effect if such dividend
      or distribution had not been declared.

     

    (e)  In
      the
      event that, as a result of an adjustment made pursuant to this Section 3,
      the
      Holder shall become entitled to receive any shares of capital stock of the
      Corporation other than shares of Common Stock, the number of such other shares
      so receivable upon exercise of this Warrant shall be subject thereafter to
      adjustment from time to time in a manner and on terms as nearly equivalent
      as
      practicable to the provisions with respect to the Warrant Shares contained
      in
      this Warrant.

     

    (f)  Common
      Stock Issuances.  For
      a period commencing on the date of the Loan Agreement and continuing until
      the
      second anniversary thereof, if the Corporation or any of its subsidiaries (A)
      issues or sells any Common Stock or any convertible securities, warrants,
      options or other rights to subscribe for or to purchase or exchange for, shares
      of Common Stock (“Convertible
      Securities”),
      or
      (B) directly or indirectly effectively reduces the conversion, exercise or
      exchange price for any Convertible Securities which are currently outstanding
      (other than pursuant to terms existing on the date hereof), at or to an
      effective Per Share Selling Price (the “Lower Per Share Selling Price”) which is
      less than the then applicable Exercise price, then in each such case, the
      Exercise price in effect immediately prior to such issue or sale or record
      date
      shall be automatically reduced effective concurrently with such issue or sale
      to
the
      Lower
      Per
      Share Selling Price
      (which
      figure shall be appropriately and equitably adjusted as provided herein for
      stock splits, stock dividends, and similar events).
      The
      foregoing provisions of this subsection shall not apply to issuances or sales
      of
      (x)
      Common
      Stock upon conversion, exercise or exchange of Convertible Securities
      outstanding on the issuance date hereof in accordance with the terms in effect
      on such issuance date, (y) Common Stock or Convertible Securities under the
      Corporation’s duly adopted stock option and bonus plans for employees and
      directors, or (z) Common Stock or Convertible Securities
      issued
      in a merger/acquisition transaction to which the Corporation is a
      party.
      For the
      purposes of the foregoing adjustments, in the case of the issuance of any
      Convertible Securities, the maximum number of shares of Common Stock issuable
      upon exercise, exchange or conversion of such Convertible Securities shall
      be
      deemed to be outstanding, provided that no further adjustment shall be made
      upon
      the actual issuance of Common Stock upon exercise, exchange or conversion of
      such Convertible Securities. For purposes of this Section 3(c)(iv), if an event
      occurs that triggers more than one of the above adjustment provisions, then
      only
      one adjustment shall be made and the calculation method which yields the
      greatest downward adjustment in the affected Exercise price shall be
      used.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “Per
      Share Selling Price”
shall
      include the amount actually paid by any Person for each share of Common Stock
      in
      a sale or issuance by the Corporation. In the event a fee is paid by the
      Corporation in connection with such transaction directly or indirectly to such
      Person being sold or issued such securities or its affiliates (other than for
      transaction expenses up to $50,000), any such fee shall be deducted from the
      selling price pro rata to all shares sold in the transaction to arrive at the
      Per Share Selling Price. A sale of shares of Common Stock shall include the
      sale
      or issuance of rights, options, warrants or convertible, exchangeable or
      exercisable securities under which the Corporation is or may become obligated
      to
      issue shares of Common Stock, and in such circumstances the Per Share Selling
      Price of the Common Stock covered thereby shall also include the exercise,
      exchange or exercise price thereof (in addition to the consideration received
      by
      the Corporation upon such sale or issuance less the fee amount as provided
      above). In case of any such security issued in a Variable Rate Transaction
      or an
      MFN Transaction, the Per Share Selling Price shall be deemed to be the lowest
      conversion or exercise price at which such securities are converted or exercised
      or might have been converted or exercised in the case of a Variable Rate
      Transaction, or the lowest adjustment price in the case of an MFN Transaction,
      over the life of such securities. If shares are issued for a consideration
      other
      than cash, the Per Share Selling Price shall be the fair value of such
      consideration as determined in good faith by independent certified public
      accountants mutually acceptable to the Corporation and the
      Purchaser.

     

    (g)  Notice
      of Adjustments.
      With
      each adjustment pursuant to this Section 3,
      the
      Corporation shall deliver a certificate signed by its chief financial or
      executive officer setting forth, in reasonable detail, the event requiring
      the
      adjustment, the amount of the adjustment, the method by which such adjustment
      was calculated, and the Exercise Price and the number of Warrant Shares
      purchasable hereunder after giving effect to such adjustment, which shall be
      mailed by first class mail, postage prepaid to the Holder.

     

    Section
      4.  Transfer
      Taxes.
      The
      Corporation will pay any documentary stamp taxes attributable to the initial
      issuance of Warrant Shares issuable upon the exercise of this Warrant; provided,
      however, that the Corporation shall not be required to pay any tax or taxes
      which may be payable in respect of any transfer involved in the issuance or
      delivery of any certificates for Warrant Shares in a name other than that of
      the
      registered holder of this Warrant in respect of which such shares are issued,
      and in such case, the Corporation shall not be required to issue or deliver
      any
      certificate for Warrant Shares until the person requesting the same has paid
      to
      the Corporation the amount of such tax or has established to the Corporation’s
      reasonable satisfaction that such tax has been paid.

     

    Section
      5.  Mutilated
      or Missing Warrants.
      In case
      this Warrant shall be mutilated, lost, stolen, or destroyed, the Corporation
      shall issue in exchange and substitution, and upon cancellation, of the
      mutilated Warrant, a new Warrant of like tenor and for the purchase of a like
      number of Warrant Shares, but only upon receipt of evidence reasonably
      satisfactory to the Corporation of such loss, theft or destruction of this
      Warrant, and with respect to a lost, stolen or destroyed Warrant, reasonable
      indemnity or bond with respect thereto, if requested by the
      Corporation.

     

    Section
      6.  Fractional
      Shares.
      In lieu
      of any fractional shares of Common Stock that may be issuable in connection
      with
      any exercise or cashless exercise hereunder, the Corporation may elect to make
      a
      cash payment therefor to the Holder (or such other person or persons as directed
      by the Holder) based on the fair market value of a share of Common Stock (as
      determined in good faith by the Board) as of the date of exercise or cashless
      exercise of this Warrant.

     

    Section
      7.  Compliance
      with Securities Act and Legends.
      The
      Holder, by acceptance hereof, agrees that this Warrant and the shares of Common
      Stock to be issued upon exercise hereof, are being acquired for investment
      and
      that such Holder will not offer, sell or otherwise dispose of this Warrant,
      or
      any shares of Common Stock to be issued upon exercise hereof except under
      circumstances which will not result in a violation of the Securities Act of
      1933, as amended, or the rules and regulations promulgated thereunder, as
      amended, or any state’s securities laws. All shares of Common Stock issued upon
      exercise of this Warrant (unless registered under the Securities Act of 1933)
      shall be stamped or imprinted with a legend as follows:

     

    “THIS
      SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE SECURITIES LAWS OF ANY
      STATE (THE “LAWS”) AND CANNOT BE SOLD OR TRANSFERRED UNLESS AND UNTIL (I) THEY
      ARE SO REGISTERED UNDER THE ACT OR THE LAWS OR (II) THE HOLDER FURNISHES THE
      CORPORATION WITH AN OPINION OF COUNSEL, WHICH OPINION IS ACCEPTABLE TO THE
      CORPORATION, SUCH ACCEPTANCE NOT TO BE UNREASONABLY WITHHELD, DELAYED OR
      CONDITIONED, THAT REGISTRATION UNDER THE ACT OR THE LAWS IS NOT REQUIRED IN
      CONNECTION WITH SUCH PROPOSED SALE OR TRANSFER.”

     

     

    Section
      8.  Rights
      as a Stockholder.
      No
      Holder, as such, shall be entitled to vote or receive dividends or be deemed
      the
      holder of Common Stock or any other securities of the Corporation which may
      at
      any time be issuable on the exercise hereof for any purpose, nor shall anything
      contained herein be construed to confer upon the Holder, as such, any of the
      rights of a stockholder of the Corporation or any right to vote for the election
      of the directors or upon any matter submitted to stockholders at any meeting
      thereof, or to receive notice of meetings, or to receive dividends or
      subscription rights or otherwise, until this Warrant shall have been exercised
      and the Warrant Shares purchasable upon the exercise hereof shall have become
      deliverable, as provided herein. 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        
Section
        9.  Modification
        and Waiver.
        This
        Warrant and any provision hereof may be changed, waived, discharged or
        terminated only by an instrument in writing signed by the Corporation and
        the
        then current Holder, and such change, waiver, discharge or termination shall
        be
        binding on any future Holder.

    

     

    Section
      10.  Notices.
      Unless
      otherwise specifically provided herein, all communications under this Warrant
      shall be in writing and shall be deemed to have been duly given (a) on the
      date
      personally delivered to the party to whom notice is to be given, (b) on the
      day
      of transmission if sent by facsimile transmission to a number provided to a
      party specifically for such purposes and the sending party receives confirmation
      of the completion of such transmission, (c) on the Business Day after delivery
      to Federal Express or similar overnight courier which utilizes a written form
      of
      receipt, or (d) on the fifth day after mailing, if mailed to the party to whom
      notice is to be given, by first class mail, registered or certified, postage
      prepaid, and properly addressed, return receipt requested, to each such Holder
      at its address as shown on the books of the Corporation or to the Corporation
      at
      the address indicated therefor on the signature page of this Warrant. Any party
      hereto may change its address for purposes of this Section 10
      by
      giving the other party written notice of the new address in the manner set
      forth
      herein.

     

    Section
      11.  Descriptive
      Headings.
      The
      descriptive headings contained in this Warrant are inserted for convenience
      only
      and do not constitute a part of this Warrant.

     

    Section
      12.  Governing
      Law.
      The
      validity, interpretation and performance of this Warrant shall be governed
      by,
      and construed in accordance with, the laws of the State of New York applicable
      to contracts made and to be performed entirely within such State, regardless
      of
      the law that might be applied under principles of conflicts of law. The
      Corporation and, by accepting this Warrant, the Holder, each irrevocably submits
      to the exclusive jurisdiction of the state and federal courts located in New
      York for the purpose of any suit, action, proceeding or judgment relating to
      or
      arising out of this Warrant and the transactions contemplated hereby. Service
      of
      process in connection with any such suit, action or proceeding may be served
      on
      each party hereto anywhere in the world by the same methods as are specified
      for
      the giving of notices under this Warrant. The Corporation and, by accepting
      this
      Warrant, the Holder, each irrevocably consents to the jurisdiction of any such
      court in any such suit, action or proceeding and to the laying of venue in
      such
      court. The Corporation and, by accepting this Warrant, the Holder, each
      irrevocably waives any objection to the laying of venue of any such suit, action
      or proceeding brought in such courts and irrevocably waives any claim that
      any
      such suit, action or proceeding brought in any such court has been brought
      in an
      inconvenient forum.

     

    Section
      13.  Acceptance.
      Receipt
      of this Warrant by the Holder hereof shall constitute acceptance of and
      agreement to the foregoing terms and conditions.

     

    Section
      14.  No
      Impairment of Rights.
      The
      Corporation will not, by amendment of its Articles of Incorporation or through
      any other means, avoid or seek to avoid the observance or performance of any
      of
      the terms of this Warrant, but will at all times in good faith assist in the
      carrying out of all such terms and in the taking of all such action as may
      be
      necessary or appropriate in order to protect the rights of the holder of this
      Warrant against material impairment.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Section
      15.  Assignment.
      A Holder
      may transfer its rights hereunder, in whole or in part, to any other person
      provided that written notice is given to the Corporation of any such transfer
      and such transfer is in accordance with applicable law, including the securities
      laws, and such transfer is to an “accredited investor” as defined in the
      securities laws. Upon receipt by the Corporation of notice by a Holder of a
      permissible transfer of any portion of this Warrant in accordance with the
      terms
      hereof, the Corporation shall promptly deliver to such transferee a Warrant
      in
      the form hereof exercisable for the number of Warrant Shares the right of which
      to purchase has been transferred.

     

    IN
      WITNESS WHEREOF, the Corporation has caused this Warrant to be executed on
      its
      behalf by one of its officers thereunto duly authorized.

     

    
      	PET
              EXPRESS SUPPLY, INC. 	 	 	 
	
            	 	 	
            
	By: 	 	 	 
	
              
                

              

              Jonathan
                Bomser
Chief Executive Officer

            	 	 	
            
	 	 	 	 


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    APPENDIX
      A

     

    NOTICE
      OF EXERCISE

     

     

    To: PET
      EXPRESS SUPPLY, INC.

     

    1.  The
      undersigned hereby irrevocably elects to purchase [_____] shares of Common
      Stock
      of PET EXPRESS SUPPLY, INC. pursuant to the terms of the attached Warrant,
      and
      tenders herewith payment of the aggregate Exercise Price of such shares in
      full,
      by [cash, certified check/wire transfer, or surrender of the originally executed
      Warrant] [select
      the applicable method of payment].

     

    2.  Please
      issue a certificate or certificates representing said shares in the name of
      the
      undersigned or in such other name or names as are specified below:

     

    
      	 	 	 	 
	
            	 	 	
            
	
              
                

              

              (Name)

            	 	 	
            
	 	 	 	 


    

    
       

      
        	 	 	 	 
	
              	 	 	
              
	
                
                  

                

                (Address)

              	 	 	
              
	 	 	 	 
	 	 	 	 
	
                
                  

                

                                               (Signature)

              	 	 	 
	
                 

              	 	 	 
	
                
                  

                

                                              
                  (Date)  

              	 	 	 


      

       

    

    3.  Please
      issue a new Warrant of equivalent form and tenor for the unexercised portion
      of
      the attached Warrant in the name of the undersigned or in such other name as
      is
      specified below:

    
       

      
        	 	 	 	 
	
              	 	 	
              
	
                
                  

                

              	 	 	
              


      

      
         

        
          	 	 	 	 
	Date:	 	 	
                
	
                  
                    

                  

                	 	 	
                
	 	 	 	 
	(Warrantholder)	 	 	 
	
                  
                    

                  

                	 	 	 
	 	 	 	 
	
                  Name:
                    (Print)

                	 	 	 
	
                  
                    

                  

                	 	 	 
	 	 	 	 
	By: 	 	 	 
	
                  
                    
  

                	 	 	 


        

      

    


     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    APPENDIX
      B

     

     

    Net
      Issue Election Notice

     

     

     

     

    To: PET
      EXPRESS SUPPLY, INC.

     

     

    Date:
      [_________________________]

     

     

    The
      undersigned hereby elects under Section
      1(b)
      of this
      Warrant to surrender the right to purchase [____________] shares of Common
      Stock
      pursuant to this Warrant and hereby requests the issuance of [_____________]
      shares of Common Stock. The certificate(s) for the shares issuable upon such
      net
      issue election shall be issued in the name of the undersigned or as otherwise
      indicated below.

     

    
       

      
        	 	 	 	 
	
              	 	 	
              
	
                
                  

                

                Signature

              
	 	 	 	 


      

      
         

        
          	 	 	 	 
	
                  
                    

                  

                  Name
                    for Registration

                
	
                   

                	 	 	
                
	 	 	 	 
	 	 	 	 
	
                  
                    

                  

                  Mailing
                    Address

                
	
                   

                	 	 	 


        

      

    

     

    Please
      issue a new Warrant of equivalent form and tenor for the unexercised portion
      of
      the attached Warrant in the name of the undersigned or in such other name as
      is
      specified below:

    
      
        
          	 	 	 	 
	
                	 	 	
                
	
                  
                    
  

                


        

        
           

          
            	 	 	 	 
	
                    Date:

                  	 	 	
                  
	
                    
                      
  

                  
	 	 	 	 
	
                    (Warrantholder)

                  	 	 	 
	
                    
                      

                    

                  
	 	 	 	 
	
                     Name:
                      (Print)

                  	 	 	 
	
                    
                      

                    

                  
	 	 	 	 
	
                     
By: