Congratulations!
Off the top of my head (and this is coming from someone who has never dealt with a magazine) I say anything you send should be watermarked, at the very least. I wouldn't bring up money until they do. Since this is your first sale, in general I wouldn't expect you to have a lot of leverage in negotiating, and they probably have guidelines they can't vary much from anyway. If they want to use them for free... well.... That's your call. I believe in people getting paid for their labor, but this might be a case of getting your foot in the door (plus general pride) is good enough.
Now that someone (me) who knows nothing has spoken, go to your library or bookstore and look in a copy of this years
"Photographer's Market". They should have your magazine listed, and you can get a feel on the format's and quantity they want, as well as a their policies and pricing. Even if the specific magazine isn't listed, you can compare it to a similar sized one. Plus, if you have photos good enough that they're asking -you-, maybe you should be sending samples to other pet magazines...