Document:

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                                                                   EXHIBIT 10.41
                            SUBORDINATION AGREEMENT

                                                                January 31, 2000

Greyrock Capital, a division of Banc of America
 Commercial Finance Corporation
10880 Wilshire Boulevard, Suite 1850
Los Angeles, California 90024

     Re:   PETOPIA.COM, INC. (the "Debtor")

Ladies and Gentlemen:

     The above-captioned Debtor is now indebted to Clifcor Capital, LLC and the
other Holders (as defined in the Agreement and Plan of Merger, dated December
29, 1999, as amended (the "Merger Agreement") (collectively, "Junior Creditor")
in the amount of $2,000,000.00 (the "Present Indebtedness"). Said indebtedness
has not heretofore been assigned or subordinated.

     To induce Greyrock Capital, a division of Banc of America Commercial
Finance Corporation (the "Senior Creditor) to enter into or to refrain from
terminating a financial agreement with the Debtor and in consideration of any
loans, advances, payments, extensions of credit (including the extension or
renewal, in whole or in part, of any antecedent or other debt), benefits or
financial accommodations heretofore or hereafter made, granted or extended by
the Senior Creditor to or for the account of the Debtor, whether under said
arrangements or otherwise, the Junior Creditor hereby makes subject and
subordinate the payment of the Present Indebtedness as well as all other present
and/or future indebtedness of Debtor to the undersigned together with any and
all interest accrued or to accrue thereon (hereinafter referred to as the
"Junior Debt ") to the payment of principal and interest (including interest
accruing after the date on which the Debtor becomes subject to the jurisdiction
of any federal or state debtor relief statute, whether or not recoverable
against the Debtor) of any and all present and future debts and obligations of
Debtor to the Senior Creditor, whether absolute or contingent, due or to become
due, and whether direct or acquired by the Senior Creditor by transfer,
assignment or otherwise whether or not such debts are contemplated by the
                        -------------------------------------------------
Debtor, the Senior Creditor, or the Junior Creditor (all hereinafter referred to
---------------------------------------------------
as "Senior Debt")  and the Junior Creditor agrees not to ask, demand, sue for,
take or receive payment of, discharge the Debtor from, or take capital stock of
the Debtor in exchange for all or any part of the Junior Debt unless and until
the Senior Debt shall have been fully paid and discharged, and all commitments
by the Senior Creditor to extend credit to the Debtor shall have been
terminated; provided, however, that the Junior Creditor may receive, and the
Debtor may make, required payments in respect of the Present Indebtedness and
any interest thereon.
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     Notwithstanding the terms or provisions of any agreement or arrangement
which the Senior Creditor or Junior Creditor may now or hereafter have with the
Debtor or any rule of law and irrespective of the time, order or method of
perfection of any security interest or the recordation or other filing in any
public record of any financing statement, any security interest in the assets of
Debtor described in Exhibit A hereto (the "Senior Creditor Collateral') granted
to the Senior Creditor by the Debtor, whether or not perfected, are and shall
remain senior to any security interest therein now or hereafter granted by the
Debtor to the Junior Creditor.

     The Junior Creditor shall have no right to take any action with respect to
the Senior Creditor Collateral, whether by judicial or non-judicial foreclosure,
notification to the Debtor's account debtors, or otherwise, unless and until all
Senior Debt has been fully and indefeasibly paid, and the Senior Creditor shall
have no commitment to extend any further credit to Debtor.

     This agreement is solely for the benefit of the parties and shall bind each
of the parties and its respective successors and assigns, and no entity shall
have any right, benefit, priority, or interest hereunder. This agreement shall
be subject to modification only in writing, signed by Senior Creditor and Junior
Creditor. This agreement shall remain in effect so long as Junior Creditor has a
lien or security interest in any property of the Debtor, or until all of
Debtor's Obligations to Senior Creditor have been paid in full.

     Any proceeds of the Senior Creditor Collateral, or proceeds thereof
(whether or not identifiable), received by the Junior Creditor shall be paid to
the Senior Creditor on demand.

     This Agreement shall remain in full force and effect notwithstanding the
filing of a petition for relief by or against the Debtor under the Bankruptcy
Code and shall apply with full force and effect with respect to all Senior
Creditor Collateral acquired by the Debtor, or obligations incurred by the
Debtor to the Subordinating Creditor, subsequent to the date of said petition.

     The Junior Creditor irrevocably waives any right to compel the Senior
Creditor to marshal assets of the Debtor, whether such rights arise under
California Civil Code section 3433 or otherwise.

     Upon the distribution of any assets of Debtor (whether by reason of sale,
reorganization, liquidation, dissolution, arrangement, bankruptcy, receivership,
assignment for the benefit of creditors, foreclosure or otherwise) the Senior
Creditor shall be entitled to receive payment in full of the Senior Debt
(including without limitation interest arising subsequent to the date of the
filing by or against Debtor of any petition for relief under the Federal
Bankruptcy Code or the making of any assignment for the benefit of creditors,
whether or not such interest is recoverable from or provable against Debtor)
<PAGE>

prior to the payment of all or any part of the Junior Debt, other than Permitted
Payments; and you are hereby irrevocably appointed attorney-in-fact for the
Junior Creditor with full power to act in the place and stead of the Junior
Creditor in all matters relating to or affecting the Junior Debt, including the
right to make, present, file and vote such proofs of claim against Debtor on
account of all or any part of the Junior Debt as you may deem advisable and to
receive and collect any and all dividends or other payments ("Dividends") made
thereon and to apply the same on account of the Senior Debt. The Junior Creditor
will execute and deliver to you such instruments as may be required by you to
enforce any and all Junior Debt, to effectuate the aforesaid power of attorney
and to effect collection of any and all Dividends which may be made at any time
on account thereof.

     The Junior Creditor will not, without your prior written consent, assign to
or subordinate in favor of any other entity any right, claim or interest in any
part of the Junior Debt (except to any person or entity which shall have come an
express party to this Agreement by executing a counterpart to this Agreement
agreeing to be a Junior Creditor for the purposes of hereof), or commence or
join with any other creditor in commencing any bankruptcy, reorganization or
insolvency proceeding against Debtor.

     The Senior Creditor may at any time, in its discretion, renew or extend the
time of payment of any portion of the Senior Debt, or waive or release any
collateral which may be held therefor, and the Senior Creditor may enter into
such agreements with Debtor as it may deem desirable without notice to or
further assent from the Junior Creditor and without in any way affecting the
rights of the Senior Creditor hereunder.

     This instrument is and shall be deemed to be a continuing subordination and
shall be irrevocable. The Debtor acknowledges that attempted or purported
termination of this Agreement by the Junior Creditor shall constitute a default
in the terms and conditions of the Senior Debt.

     THE JUNIOR CREDITOR HEREBY WAIVES TRIAL BY JURY AND CONSENTS TO THE
JURISDICTION OF THE COURTS OF THE STATE OF CALIFORNIA, AND THE UNITED STATES
DISTRICT COURT, CENTRAL DISTRICT OF CALIFORNIA, IN ANY ACTION OR PROCEEDING
COMMENCED IN ENFORCEMENT HEREOF. IN THE EVENT THAT THE SENIOR CREDITOR COMMENCES
ANY ACTION OR SUIT IN THE FOREGOING COURTS TO ENFORCE THIS SUBORDINATION
AGREEMENT, SERVICE OF PROCESS MAY BE MADE ON THE JUNIOR CREDITOR BY MAILING A
COPY THEREOF TO THE JUNIOR CREDITOR AT THE ADDRESS SET FORTH BELOW, OR AT SUCH
OTHER ADDRESS AS THE SENIOR CREDITOR SHALL HAVE BEEN ADVISED IN WRITING.

     In the event that either party deems it necessary to retain counsel to
enforce any provision herein, the prevailing party shall recover all its
attorneys fees and expenses from the unsuccessful party.
<PAGE>

     The Senior Creditor is authorized to demand specific performance of this
agreement, whether or not Debtor or Junior Creditor has complied with any of the
provisions hereof. Debtor and Junior Creditor waive any defense based on the
adequacy of a remedy at law which might be asserted as a bar to such remedy of
specific performance.

     Scott Vertrees hereby represents and warrants to the Senior Creditor that
he is authorized to act as agent on behalf of Clifcor Capital LLC and as
attorney-in-fact for the other Holders of the Junior Debt in the negotiation,
execution and delivery of this Agreement, and that Junior Creditor's
undertakings hereunder shall bind each and every Holder of the Junior Debt.

     The Debtor acknowledges notice of this Agreement and agrees to be bound by
all of its terms and conditions. The Debtor hereby acknowledges that the Junior
Debt is due and owing as of the date hereof without setoff, defense or
counterclaim.

CLIFCOR CAPITAL LLC

By:    -------------------------
Name:  Scott Vertrees
Title: President

By:    -------------------------
       Scott Vertrees, as attorney in
       fact on behalf of:

       Ann Counts
       William Rauhauser
       John E. Flatley
       W.W. McGlothlin
       James O'Malley
       Helen Counts
       Bascom B. Matney
       Ronelle L. Rotterman-Matney
       Robert N. Beck, as Trustee under the
          Robert N. Beck Living Trust UTD    10/31/94
       Georgena M. Beck, as Trustee under the
          Georgena M. Beck Living Trust UTD    10/31/94
       Pete Baltaxe
       Doug Bertozzi
<PAGE>

       Ian Chaplin
       Jamie Cheng
       Michael Dunn
       Scott Galloway
       Geoffrey Hale
       Connie Hallquist
       Clifford Lindsay
       Lee Lodes
       Jawad Mohammed
       Jarom Smith
       Jason Stavers
       Pete Baltaxe
       Doug Bertozzi
       Ian Chaplin
       Jamie Cheng
       Michael Dunn
       Scott Galloway
       Geoffrey Hale
       Connie Hallquist
       Clifford Lindsay
       Lee Lodes
       Jawad Mohammed
       Jarom Smith
       Jason Stavers

ACCEPTED AND AGREED
this _____ of January, 2000

GREYROCK CAPITAL
a division of Banc of America Commercial Finance Corporation

By:    _______________________
Name:  _______________________
Title: _______________________

PETOPIA.COM, INC.

By: /s/ GREGORY SMITH
    -----------------
Name: Gregory Smith
      -------------
Title: Vice President of Finance
       -------------------------<PAGE>
                                                                 Exhibit 10.42

                             Continuing Guarantee

Borrower:       PETOPIA.COM, INC.
Guarantor(s):   In The Company of Dogs, Inc. (formerly ICOD Acquisition Corp.)
Date:           January 31, 2000

This Continuing Guarantee is executed by the above-named guarantor (the
Guarantor), as of the above date, in favor of Greyrock Capital, a division of
Banc of America Commercial Finance Corporation (Greyrock), whose address is
10880 Wilshire Blvd. Suite 1850, Los Angeles, CA 90024, with respect to the
Indebtedness of the above-named borrower (Borrower).

1.  Continuing Guarantee.  Guarantor hereby unconditionally guarantees and
promises to pay on demand to Greyrock, at the address indicated above, or at
such other address as Greyrock may direct, in lawful money of the United States,
and to perform for the benefit of Greyrock, all Indebtedness of Borrower now or
hereafter owing to or held by Greyrock. As used herein, the term Indebtedness is
used in its most comprehensive sense and shall mean and include without
limitation: (a) any and all debts, duties, obligations, liabilities,
representations, warranties and guaranties of Borrower or any one or more of
them, heretofore, now, or hereafter made, incurred, or created, whether directly
to Greyrock or acquired by Greyrock by assignment or otherwise, or held by
Greyrock on behalf of others, however arising, whether voluntary or involuntary,
due or not due, absolute or contingent, liquidated or unliquidated, certain or
uncertain, determined or undetermined, monetary or nonmonetary, written or oral,
and whether Borrower may be liable individually or jointly with others, and
regardless of whether recovery thereon may be or hereafter become barred by any
statute of limitations, discharged or uncollectible in any bankruptcy,
insolvency or other proceeding, or otherwise unenforceable; and (b) any and all
amendments, modifications, renewals and extensions of any or all of the
foregoing, including without limitation amendments, modifications, renewals and
extensions which are evidenced by any new or additional instrument, document or
agreement; and (c) any and all attorneys' fees, court costs, and collection
charges incurred in endeavoring to collect or enforce any of the foregoing
against Borrower, Guarantor, or any other person liable thereon (whether or not
suit be brought) and any other expenses of, for or incidental to collection
thereof. As used herein, the term Borrower shall include any successor to the
business and assets of Borrower, and shall also include Borrower in its capacity
as a debtor or debtor in possession under the federal Bankruptcy Code, and any
trustee, custodian or receiver for Borrower or any of its assets, should
Borrower hereafter become the subject of any bankruptcy or insolvency
proceeding, voluntary or involuntary; and all indebtedness, liabilities and
obligations incurred by any such person shall be included in the Indebtedness
guaranteed hereby. This Guarantee is given in consideration for credit and other
financial accommodations which may, from time to time, be given by Greyrock to
Borrower in Greyrock's sole discretion, but Guarantor acknowledges and agrees
that acceptance by Greyrock of this Guarantee shall not constitute a commitment
of any kind by Greyrock to extend such credit or other financial accommodation
to Borrower or to permit Borrower to incur Indebtedness to Greyrock. All sums
due under this Guarantee shall bear interest from the date due until the date
paid at the highest rate charged with respect to any of the Indebtedness.

2.  Waivers.  Guarantor hereby waives: (a) presentment for payment, notice of
dishonor, demand, protest, and notice thereof as to any instrument, and all
other notices and demands to which Guarantor might be entitled, including
without limitation notice of all of the following: the acceptance hereof; the
creation, existence, or acquisition of any Indebtedness; the amount of the
Indebtedness from time to time outstanding; any foreclosure sale or other
disposition of any property which secures any or all of the Indebtedness or
which secures the obligations of any other guarantor of any or all of the
Indebtedness; any adverse change in Borrower's financial position; any other
fact which might increase Guarantor's risk; any default, partial payment or non-
payment of all or any part of the Indebtedness; the occurrence of any other
Event of Default (as hereinafter defined); any and all agreements and
arrangements between Greyrock and Borrower and any changes, modifications, or
extensions thereof, and any revocation, modification or release of any guaranty
of any or all of the Indebtedness by any person (including without limitation
any other person signing this Guarantee); (b) any right to require Greyrock to
institute suit against, or to exhaust its rights and remedies against, Borrower
or any other person, or to proceed against

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any property of any kind which secures all or any part of the Indebtedness, or
to exercise any right of offset or other right with respect to any reserves,
credits or deposit accounts held by or maintained with Greyrock or any
indebtedness of Greyrock to Borrower, or to exercise any other right or power,
or pursue any other remedy Greyrock may have; (c) any defense arising by reason
of any disability or other defense of Borrower or any other guarantor or any
endorser, co-maker or other person, or by reason of the cessation from any cause
whatsoever of any liability of Borrower or any other guarantor or any endorser,
co-maker or other person, with respect to all or any part of the Indebtedness,
or by reason of any act or omission of Greyrock or others which directly or
indirectly results in the discharge or release of Borrower or any other
guarantor or any other person or any Indebtedness or any security therefor,
whether by operation of law or otherwise; (d) any defense arising by reason of
any failure of Greyrock to obtain, perfect, maintain or keep in force any
security interest in, or lien or encumbrance upon, any property of Borrower or
any other person; (e) any defense based upon any failure of Greyrock to give
Guarantor notice of any sale or other disposition of any property securing any
or all of the Indebtedness, or any defects in any such notice that may be given,
or any failure of Greyrock to comply with any provision of applicable law in
enforcing any security interest in or lien upon any property securing any or all
of the Indebtedness including, but not limited to, any failure by Greyrock to
dispose of any property securing any or all of the Indebtedness in a
commercially reasonable manner; (f) any defense based upon or arising out of any
bankruptcy, insolvency, reorganization, arrangement, readjustment of debt,
liquidation or dissolution proceeding commenced by or against Borrower or any
other guarantor or any endorser, co-maker or other person, including without
limitation any discharge of, or bar against collecting, any of the Indebtedness
(including without limitation any interest thereon), in or as a result of any
such proceeding; and (g) the benefit of any and all statutes of limitation with
respect to any action based upon, arising out of or related to this Guarantee.
Until all of the Indebtedness has been paid, performed, and discharged in full,
nothing shall discharge or satisfy the liability of Guarantor hereunder except
the MI performance and payment of all of the Indebtedness. If any claim is ever
made upon Greyrock for repayment or recovery of any amount or amounts received
by Greyrock in payment of or on account of any of the Indebtedness, because of
any claim that any such payment constituted a preferential transfer or
fraudulent conveyance, or for any other reason whatsoever, and Greyrock repays
all or part of said amount by reason of any judgment, decree or order of any
court or administrative body having jurisdiction over Greyrock or any of its
property, or by reason of any settlement or compromise of any such claim
effected by Greyrock with any such claimant (including without limitation
Borrower), then and in any such event, Guarantor agrees that any such judgment,
decree, order, settlement and compromise shall be binding upon Guarantor,
notwithstanding any revocation or release of this Guarantee or the cancellation
of any note or other instrument evidencing any of the Indebtedness, or any
release of any of the Indebtedness, and the Guarantor shall be and remain liable
to Greyrock under this Guarantee for the amount so repaid or recovered, to the
same extent as if such amount had never originally been received by Greyrock,
and the provisions of this sentence shall survive, and continue in effect,
notwithstanding any revocation or release of this Guarantee. Until all of the
Indebtedness has been irrevocably paid and performed in full, Guarantor hereby
expressly and unconditionally waives all rights of subrogation, reimbursement
and indemnity of every kind against Borrower, and all rights of recourse to any
assets or property of Borrower, and all rights to any collateral or security
held for the payment and performance of any Indebtedness, including (but not
limited to) any of the foregoing rights which Guarantor may have under any
present or future document or agreement with any Borrower or other person, and
including (but not limited to) any of the foregoing rights which Guarantor may
have under any equitable doctrine of subrogation, implied contract, or unjust
enrichment, or any other equitable or legal doctrine. Neither Greyrock, nor any
of its directors, officers, employees, agents, attorneys or any other person
affiliated with or representing Greyrock shall be liable for any claims,
demands, losses or damages, of any kind whatsoever, made, claimed, incurred or
suffered by Guarantor or any other party through the ordinary negligence of
Greyrock, or any of its directors, officers, employees, agents, attorneys or any
other person affiliated with or representing Greyrock.

3.  Consents.  Guarantor hereby consents and agrees that, without notice to or
by Guarantor and without affecting or impairing in any way the obligations or
liability of Guarantor hereunder, Greyrock may, from time to time before or
after revocation of this Guarantee, do any one or more of the following in
Greyrock's sole and absolute discretion: (a) accelerate, accept partial payments
of, compromise or settle, renew, extend the time for the payment, discharge, or
performance of, refuse to enforce, and release all or any parties to, any or all
of the Indebtedness; (b) grant any other indulgence to Borrower or any other
person in respect of any or all of the Indebtedness or any other matter; (c)
accept, release, waive, surrender, enforce, exchange, modify, impair, or extend
the time for the performance, discharge, or payment of, any and all property of
any kind securing any or all of the Indebtedness or any guaranty of any or all
of the Indebtedness, or on which Greyrock at any time may have a lien, or refuse
to enforce its rights or make any compromise or settlement or agreement therefor
in respect of any or all of such property; (d) substitute or add, or take any
action or omit to take any action which results in the release of, any one or
more endorsers or guarantors of all or any part of the Indebtedness, including,
without limitation one or more parties to this Guarantee, regardless of any
destruction or impairment of any right of contribution or other right of
Guarantor; (e) amend, alter or change in any respect

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<PAGE>

whatsoever any term or provision relating to any or all of the Indebtedness,
including the rate of interest thereon; (f) apply any sums received from
Borrower, any other guarantor, endorser, or co-signer, or from the disposition
of any collateral or security, to any indebtedness whatsoever owing from such
person or secured by such collateral or security, in such manner and order as
Greyrock determines in its sole discretion, and regardless of whether such
indebtedness is part of the Indebtedness, is secured, or is due and payable; (g)
apply any sums received from Guarantor or from the disposition of any collateral
or security securing the obligations of Guarantor, to any of the Indebtedness in
such manner and order as Greyrock determines in its sole discretion, regardless
of whether or not such Indebtedness is secured or is due and payable. Guarantor
consents and agrees that Greyrock shall be under no obligation to marshal any
assets in favor of Guarantor, or against or in payment of any or all of the
Indebtedness. Guarantor further consents, and agrees that Greyrock shall have no
duties or responsibilities whatsoever with respect to any property securing any
or all of the Indebtedness. Without limiting the generality of the foregoing,
Greyrock shall have no obligation to monitor, verify, audit, examine, or obtain
or maintain any insurance with respect to, any property securing any or all of
the Indebtedness.

4.  Account Stated.  Greyrock's books and records showing the account between it
and Borrower shall be admissible in evidence in any action or proceeding as
prima facie proof of the items therein set forth. Greyrock's monthly statements
rendered to Borrower shall be binding upon the Guarantor (whether or not the
Guarantor receives copies thereof), and shall constitute an account stated
between Greyrock and Borrower, unless Greyrock receives a written statement of
Borrower's exceptions within 30 days after the statement was mailed to Borrower.
'Be Guarantor assumes full responsibility for obtaining copies of such monthly
statements from Borrower, if the Guarantor desires such copies.

5.  Exercise of Rights and Remedies; Foreclosure of Trust Deeds. Guarantor
hereby waives all rights of subrogation, reimbursement, indemnification, and
contribution and any other rights and defenses that are or may become available
to the Guarantor or other surety by reason of California Civil Code Sections
2787 to 2855 inclusive. The Guarantor waives all rights and defenses arising out
of an election of remedies by Greyrock, even though that election of remedies
has destroyed the Guarantor's rights of subrogation and reimbursement against
the principal.

6.  Acceleration.  Notwithstanding the terms of all or any part of the
Indebtedness, the obligations of the Guarantor hereunder to pay and perform all
of the Indebtedness shall immediately become due and payable, without notice,
upon the occurrence of an Event of Default under Section 7.1 of that certain
Loan and Security Agreement by and between Borrower and Greyrock, that is not
cured within the applicable cure period therefor (if any). All of the foregoing
are hereinafter referred to as Events of Default.

7.  Right to Attachment Remedy.  Guarantor agrees that, notwithstanding the
existence of any property securing any or all of the Indebtedness, Greyrock
shall have all of the rights of an unsecured creditor of Guarantor, including
without limitation the right to obtain a temporary protective order and writ of
attachment against Guarantor with respect to any sums due under this Guarantee.
Guarantor further agrees that in the event any property secures the obligations
of Guarantor under this Guarantee, to the extent that Greyrock, in its sole and
absolute discretion, determines prior to the disposition of such property that
the amount to be realized by Greyrock therefrom may be less than the
indebtedness of the Guarantor under this Guarantee, Greyrock shall have all the
rights of an unsecured creditor against Guarantor, including without limitation
the right of Greyrock, prior to the disposition of said property, to obtain a
temporary protective order and writ of attachment against Guarantor. Guarantor
waives the benefit of Section 483.010(b) of the California Code of Civil
Procedure and of any and all other statutes and rules of law now or hereafter in
effect requiring Greyrock to first resort to or exhaust all such collateral
before seeking or obtaining any attachment remedy against Guarantor. Greyrock
shall have no liability to Guarantor as a result thereof, whether or not the
actual deficiency realized by Greyrock is less than the anticipated deficiency
on the basis of which Greyrock obtains a temporary protective order or writ of
attachment.

8.  Indemnity.  Guarantor hereby agrees to indemnify Greyrock and hold Greyrock
harmless from and against any and all claims, debts, liabilities, demands,
obligations, actions, causes of action, penalties, costs and expenses (including
without limitation attorneys' fees), of every nature, character and description,
which Greyrock may sustain or incur based upon or arising out of any of the
Indebtedness, any actual or alleged failure to collect and pay over any
withholding or other tax relating to Borrower or its employees, any relationship
or agreement between Greyrock and Borrower, any actual or alleged failure of
Greyrock to comply with any writ of attachment or other legal process relating
to Borrower or any of its property, or any other matter, cause or thing
whatsoever occurred, done, omitted or suffered to be done by Greyrock relating
in any way to Borrower or the Indebtedness (except any such amounts sustained or
incurred as the result of the gross negligence or willful misconduct of Greyrock
or any of its directors, officers, employees, agents, attorneys, or any other
person affiliated with or representing Greyrock). Notwithstanding any provision
in this Guarantee to the contrary, the indemnity agreement set forth in this
Section shall survive any termination or revocation of this Guarantee and shall
for all purposes continue in full force and effect.

9.  Subordination.  Any and all rights of Guarantor under any and all debts,
liabilities and obligations owing from Borrower to Guarantor, including any
security for and

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<PAGE>

guaranties of any such obligations, whether now existing or hereafter arising,
are hereby subordinated in right of payment to the prior payment in full of all
of the Indebtedness. No payment in respect of any such subordinated obligations
shall at any time be made to or accepted by Guarantor if at the time of such
payment any Indebtedness is outstanding. If any Event of Default has occurred,
Borrower and any assignee, trustee in bankruptcy, receiver, or any other person
having custody or control over any or all of Borrower's property are hereby
authorized and directed to pay to Greyrock the entire unpaid balance of the
Indebtedness before making any payments whatsoever to Guarantor, whether as a
creditor, shareholder, or otherwise; and insofar as may be necessary for that
purpose, Guarantor hereby assigns and transfers to Greyrock all rights to any
and all debts, liabilities and obligations owing from Borrower to Guarantor,
including any security for and guaranties of any such obligations, whether now
existing or hereafter arising, including without limitation any payments,
dividends or distributions out of the business or assets of Borrower. Any
amounts received by Guarantor in violation of the foregoing provisions shall be
received and held as trustee for the benefit of Greyrock and shall forthwith be
paid over to Greyrock to be applied to the Indebtedness in such order and
sequence as Greyrock shall in its sole discretion determine, without limiting or
affecting any other right or remedy which Greyrock may have hereunder or
otherwise and without otherwise affecting the liability of Guarantor hereunder.
Guarantor hereby expressly waives any right to set-off or assert any
counterclaim against Borrower.

10.  Revocation.  This is a Continuing Guarantee relating to all of the
Indebtedness, including Indebtedness arising under successive transactions which
from time to time continue the Indebtedness or renew it after it has been
satisfied. Guarantor waives all benefits of California Civil Code Section 2815,
and agrees that the obligations of Guarantor hereunder may not be terminated or
revoked in any manner except by giving 90 days' advance written notice of
revocation to Greyrock at its address above by registered first-class U.S. mail,
postage prepaid, return receipt requested, and only as to new loans made by
Greyrock to Borrower more than 90 days after actual receipt of such written
notice by Greyrock. No termination or revocation of this Guarantee shall be
effective until 90 days following the date of actual receipt of said written
notice of revocation by Greyrock. Notwithstanding such written notice of
revocation or any other act of Guarantor or any other event or circumstance,
Guarantor agrees that this Guarantee and all consents, waivers and other
provisions hereof shall continue in full force and effect as to any and all
Indebtedness which is outstanding on or before the 90th day following actual
receipt of said written notice of revocation by Greyrock, and all extensions,
renewals and modifications of said Indebtedness (including without limitation
amendments, extensions, renewals and modifications which are evidenced by new or
additional instruments, documents or agreements executed before or after
expiration of said 90-day period), and all interest thereon, accruing before or
after expiration of said 90-day period, and all attorneys' fees, court costs and
collection charges, incurred before or after expiration of said 90-day period,
in endeavoring to collect or enforce any of the foregoing against Borrower,
Guarantor or any other person liable thereon (whether or not suit be brought)
and any other expenses of, for or incidental to collection thereof.

11.  Independent Liability.  Guarantor hereby agrees that one or more successive
or concurrent actions may be brought hereon against Guarantor, in the same
action in which Borrower may be sued or in separate actions, as often as deemed
advisable by Greyrock. The liability of Guarantor hereunder is exclusive and
independent of any other guaranty of any or all of the Indebtedness whether
executed by Guarantor or by any other guarantor (including without limitation
any other persons signing this Guarantee). The liability of Guarantor hereunder
shall not be affected, revoked, impaired, or reduced by any one or more of the
following: (a) the fact that the Indebtedness exceeds the maximum amount of
Guarantor's liability, if any, specified herein or elsewhere (and no agreement
specifying a maximum amount of Guarantor's liability shall be enforceable unless
set forth in a writing signed by Greyrock or set forth in this Guarantee); or
(b) any direction as to the application of payment by Borrower or by any other
party; or (c) any other continuing or restrictive guaranty or under-taking or
any limitation on the liability of any other guarantor (whether under this
Guarantee or under any other agreement); or (d) any payment on or reduction of
any such other guaranty or undertaking; or (e) any revocation, amendment
modification or release of any such other guaranty or under-taking; or (f) any
dissolution or termination of, or increase, decrease, or change in membership
of any Guarantor which is a partnership. Guarantor hereby expressly represents
that he was not induced to give this Guarantee by the fact that there are or may
be other guarantors either under this Guarantee or otherwise, and Guarantor
agrees that any release of any one or more of such other guarantors shall not
release Guarantor from his obligations hereunder either in full or to any lesser
extent. If Guarantor is a married person, Guarantor hereby expressly agrees that
recourse may be had against his or her separate property for all of his or her
obligations hereunder.

12.  Financial Condition of Borrower.  Guarantor is fully aware of the financial
condition of Borrower and is executing and delivering this Guarantee at
Borrower's request and based solely upon his own independent investigation of
all matters pertinent hereto, and Guarantor is not relying in any manner upon
any representation or statement of Greyrock with respect thereto. Guarantor
represents and warrants that it is in a position to obtain, and Guarantor hereby
assumes full responsibility for obtaining, any additional information concerning
Borrower's financial condition and any other matter pertinent hereto as
Guarantor may desire, and Guarantor is not relying upon or expecting Greyrock to
furnish to him any information now or hereafter

                                       4
<PAGE>

in Greyrock's possession concerning the same or any other matter. By executing
this Guarantee, Guarantor knowingly accepts the full range of risks encompassed
within a contract of continuing guaranty, which risks Guarantor acknowledges
include without limitation the possibility that Borrower will incur additional
Indebtedness for which Guarantor will be liable hereunder after Borrower's
financial condition or ability to pay such Indebtedness has deteriorated and/or
after bankruptcy or insolvency proceedings have been commenced by or against
Borrower. Guarantor shall have no right to require Greyrock to obtain or
disclose any information with respect to the Indebtedness, the financial
condition or character of Borrower, the existence of any collateral or security
for any or all of the Indebtedness, the filing by or against Borrower of any
bankruptcy or insolvency proceeding, the existence of any other guaranties of
all or any part of the Indebtedness, any action or non-action on the part of
Greyrock, Borrower, or any other person, or any other matter, fact, or
occurrence.

14.  Representations and Warranties.  Guarantor hereby represents and warrants
that (i) it is in Guarantor's direct interest to assist Borrower in procuring
credit because Borrower is an affiliate of Guarantor, furnishes goods or
services to Guarantor, purchases or acquires goods or services from Guarantor,
and/or otherwise has a direct or indirect corporate or business relationship
with Guarantor, (ii) this Guarantee has been duly and validly authorized,
executed and delivered and constitutes the valid and binding obligation of
Guarantor, enforceable in accordance with its terms, and (iii) the execution and
delivery of this Guarantee does not violate or constitute a default under (with
or without the giving of notice, the passage of time, or both) any order,
judgment, decree, instrument or agreement to which Guarantor is a party or by
which it or its assets are affected or bound.

15.  Costs.  Whether or not suit be instituted, Guarantor agrees to reimburse
Greyrock on demand for all reasonable attorneys' fees and all other reasonable
costs and expenses incurred by Greyrock in enforcing this Guarantee, or arising
out of or relating in any way to this Guarantee, or in enforcing any of the
Indebtedness against Borrower, Guarantor, or any other person, or in connection
with any property of any kind securing all or any part of the Indebtedness.
Without limiting the generality of the foregoing, and in addition thereto,
Guarantor shall reimburse Greyrock on demand for all reasonable attorneys' fees
and costs Greyrock incurs in any way relating to Guarantor, Borrower or the
Indebtedness, in order to: obtain legal advice; enforce or seek to enforce any
of its rights; commence, intervene in, respond to, or defend any action or
proceeding; file, prosecute or defend any claim or cause of action in any action
or proceeding (including without limitation any probate claim, bankruptcy claim,
third-party claim, secured creditor claim, reclamation complaint, and complaint
for relief from any stay under the Bankruptcy Code or otherwise); protect,
obtain possession of, sell, lease, dispose of or otherwise enforce any security
interest in or lien on any property of any kind securing any or all of the
Indebtedness; or represent Greyrock in any litigation with respect to Borrower's
or Guarantor's affairs. In the event either Greyrock or Guarantor files any
lawsuit against the other predicated on a breach of this Guarantee, the
prevailing party in such action shall be entitled to recover its attorneys' fees
and costs of suit from the non-prevailing party.

16.  Notices.  Any notice which a party shall be required or shall desire to
give to the other hereunder (except for notice of revocation, which shall be
governed by Section 10 of this Guarantee) shall be given by personal delivery or
by telecopier or by depositing the same in the United States mail, first class
postage pre-paid, addressed to Greyrock at its address set forth in the heading
of this Guarantee and to Guarantor at his address set forth under his signature
hereon, and such notices shall be deemed duly given on the date of personal
delivery or one day after the date telecopied or 3 business days after the date
of mailing as aforesaid. Greyrock and Guarantor may change their address for
purposes of receiving notices hereunder by giving written notice thereof to the
other party in accordance herewith. Guarantor shall give Greyrock immediate
written notice of any change in his address.

17.  Claims.  Guarantor agrees that any claim or cause of action by Guarantor
against Greyrock, or any of Greyrock's directors, officers, employees, agents,
accountants or attorneys, based upon, arising from, or relating to this
Guarantee, or any other present or future agreement between Greyrock and
Guarantor or between Greyrock and Borrower, or any other transaction
contemplated hereby or thereby or relating hereto or thereto, or any other
matter, cause or thing whatsoever, whether or not relating hereto or thereto,
occurred, done, omitted or suffered to be done by Greyrock, or by Greyrock's
directors, officers, employees, agents, accountants or attorneys, whether
sounding in contract or in tort or otherwise, shall be barred unless asserted by
Guarantor by the commencement of an action or proceeding in a court of competent
jurisdiction within Los Angeles County, California, by the filing of a complaint
within one year after the first act, occurrence or omission upon which such
claim or cause of action, or any part thereof, is based and service of a summons
and complaint on an officer of Greyrock or any other person authorized to accept
service of process on behalf of Greyrock, within 30 days thereafter. Guarantor
agrees that such one year period is a reasonable and sufficient time for
Guarantor to investigate and act upon any such claim or cause of action. The one
year period provided herein shall not be waived, tolled, or extended except by a
specific written agreement of Greyrock. This provision shall survive any
termination of this Guarantee or any other agreement.

18.  Construction; Severability.  As used in this Guarantee, the term property
is used in its most comprehensive sense and shall mean all property of every
kind and nature whatsoever, including without limitation

                                       5
<PAGE>

real property, personal property, mixed property, tangible property and
intangible property. Words used herein in the masculine gender shall include the
neuter and feminine gender, words used herein in the neuter gender shall include
the masculine and feminine, words used herein in the singular shall include the
plural and words used in the plural shall include the singular, wherever the
context so reasonably requires. If any provision of this Guarantee or the
application thereof to any party or circumstance is held invalid, void,
inoperative or unenforceable, the remainder of this Guarantee and the
application of such provision to other parties or circumstances shall not be
affected thereby, the provisions of this Guarantee being severable in any such
instance.

19.  General Provisions.  Greyrock shall have the right to seek recourse against
Guarantor to the full extent provided for herein and in any other instrument or
agreement evidencing obligations of Guarantor to Greyrock, and against Borrower
to the full extent of the Indebtedness. No election in one form of action or
proceeding, or against any party, or on any obligation, shall constitute a
waiver of Greyrock's right to proceed in any other form of action or proceeding
or against any other party. The failure of Greyrock to enforce any of the
provisions of this Guarantee at any time or for any period of time shall not be
construed to be a waiver of any such provision or the right thereafter to
enforce the same. All remedies hereunder shall be cumulative and shall be in
addition to all rights, powers and remedies given to Greyrock by law or under
any other instrument or agreement. Time is of the essence in the performance by
Guarantor of each and every obligation under this Guarantee. Guarantor hereby
agrees that Greyrock shall have no obligation to inquire into the power or
authority of Borrower or any of its officers, directors, partners, or agents
acting or purporting to act on its behalf, and any Indebtedness made or created-
in reliance upon the professed exercise of any such power or authority shall be
included in the Indebtedness guaranteed hereby. This Guarantee is the entire and
only agreement between Guarantor and Greyrock with respect to the guaranty of
the Indebtedness of Borrower by Guarantor, and all representations, warranties,
agreements, or undertakings heretofore or contemporaneously made, which are not
set forth herein, are superseded hereby. No course of dealings between the
parties, no usage of the trade, and no parol or extrinsic evidence of any nature
shall be used or be relevant to supplement or explain or modify any term or
provision of this Guarantee. There are no conditions to the full effectiveness
of this Guarantee. The terms and provisions hereof may not be waived, altered,
modified, or amended except in a writing executed by Guarantor and a duly
authorized officer of Greyrock. All rights, benefits and privileges hereunder
shall inure to the benefit of and be enforceable by Greyrock and its successors
and assigns and shall be binding upon Guarantor and its successors and assigns.
Section headings are used herein for convenience only. Guarantor acknowledges
that the same may not describe completely the subject matter of the applicable
Section, and the same shall not be used in any manner to construe, limit, define
or interpret any term or provision hereof 20. Governing Law; Venue and
Jurisdiction. This instrument and all acts and transactions pursuant or relating
hereto and all rights and obligations of the parties hereto shall be governed,
construed, and interpreted in accordance with the internal laws of the State of
California. In order to induce Greyrock to accept this Guarantee, and as a
material part of the consideration therefor, Guarantor (i) agrees that all
actions or proceedings relating directly or indirectly hereto shall, at the
option of Greyrock, be litigated in courts located within Los Angeles County,
California, (ii) consents to the jurisdiction of any such court and consents to
the service of process in any such action or proceeding by personal delivery or
any other method permitted by law; and (iii) waives any and all rights Guarantor
may have to transfer or change the venue of any such action or proceeding.

20. Governing Law; Venue and Jurisdiction. This instrument and all acts and
transactions pursuant or relating hereto and all rights and obligations of the
parties hereto shall be governed, construed, and interpreted in accordance with
the internal laws of the State of California.  In order to induce Greyrock to
accept this Guarantee, and as a material part of the consideration therefor,
Guarantor (i) agrees that all actions or proceedings relating directly or
indirectly hereto shall, at the option of Greyrock, be litigated in courts
located within Los Angeles County, California, (ii) consents to the jurisdiction
of any such court and consents to the service of process in any such action or
proceeding by personal delivery or any other method permitted by law; and (iii)
waives any and all rights Guarantor may have to transfer or change the venue of
any such action or proceeding.

21. Mutual Waiver of Right to Jury Trial.

GREYROCK AND GUARANTOR HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN ANY ACTION,
CLAIM, LAWSUIT OR PROCEEDING BASED UPON, ARISING OUT OF, OR IN ANY WAY RELATING
TO: (i) THIS GUARANTEE OR ANY SUPPLEMENT OR AMENDMENT THERETO; OR (ii) ANY OTHER
PRESENT OR FUTURE INSTRUMENT OR AGREEMENT BETWEEN GREYROCK AND GUARANTOR; OR
(iii) ANY BREACH, CONDUCT, ACTS OR OMISSIONS OF GREYROCK OR GUARANTOR OR ANY OF
THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS OR ANY OTHER
PERSON AFFILIATED WITH OR REPRESENTING GREYROCK OR GUARANTOR; IN EACH OF THE
FOREGOING CASES, WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.

22. Receipt of Copy. Guarantor acknowledges receipt of a copy of this Guarantee.

Guarantor Signature:

   In the Company of Dogs, Inc.

   By:   /s/  Greg Smith
      ------------------------------
   Title:  Vice President of Finance
         ---------------------------

Address:

   c/o Petopia.com, Inc.
   1200 Folsom Street
   San Francisco, CA 94103

                                       6

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