Exhibit 10.1



 


Exhibit 10.1


 


SECURITIES EXCHANGE AGREEMENT


 


THIS SECURITIES EXCHANGE AGREEMENT
(the “Agreement”), is made effective as of this 9th day of March 2013, by and among THE PAWS PET
COMPANY, INC., an Illinois corporation (“PAWS”), having its principal place of business at 455 NE 5th Avenue,
#D264, Delray Beach, 33483, ADVANCED ACCESS PHARMACY SERVICES, LLC, a Nevada limited liability company (“AAPS”),
having its principal place of business at 9530 Happy Canyon Drive, Reno, NV 89521 and the members of AAPS set forth on Exhibit
A hereto (individually, a “Member” and collectively, the “Members”).


 


RECITALS


 


WHEREAS, the Members collectively own one hundred
percent (100%) of the issued and outstanding membership interests of AAPS (the “AAPS Units”) in the amounts
set forth beside their respective names on Exhibit A hereto; and


 


WHEREAS, the Members wish to exchange their AAPS
Units for an aggregate of 80,000 shares of PAWS’ Series B Convertible Preferred Stock having the rights, preferences, privileges
and restrictions which are set forth in the Certificate of Designation attached as Exhibit B hereto (the “PAWS
Shares”) and PAWS wishes to issue and exchange the PAWS Shares for the AAPS Units, whereupon AAPS will become a wholly-owned
subsidiary of PAWS, all on the terms and conditions set forth herein.


 


AGREEMENT


 


NOW, THEREFORE, in consideration of the mutual
covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy are hereby acknowledged,
PAWS, AAPS and the Members agree as follows:


 


ARTICLE I


EXCHANGE OF SECURITIES


 


1.1Exchange of Securities.
Subject to the terms and conditions set forth in this Agreement, at Closing (as hereinafter defined), the Members shall assign,
transfer, convey and deliver their respective AAPS Units to PAWS in exchange for which PAWS shall issue and deliver the PAWS Shares
to the Members in the amounts set forth beside their respective names on Exhibit A hereto.


 


1.2Closing Date.
The closing of the transactions contemplated by this Agreement (“Closing”) shall occur, by exchange of executed
documents delivered via facsimile or .pdf transmission contemporaneously with the execution of this Agreement (the “Closing
Date”).


 


1.3Deliveries by AAPS and
the Members. At Closing, AAPS and the Members shall deliver to PAWS:


 


	(a)		Certificates evidencing the AAPS Units, duly endorsed for transfer; and



 


	(b)		such other documents as may be necessary to effect the consummation of the transactions
contemplated by this Agreement.



 



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1.4Deliveries by PAWS.
At the Closing, PAWS shall deliver to Members:


 


	(a)		Certificates evidencing the PAWS Shares registered in the respective names of the
Members; and



 


	(b)		such other documents as may be necessary to effect the consummation of the transactions
contemplated by this Agreement.



 


ARTICLE II


REPRESENTATIONS AND WARRANTIES
OF THE PARTIES


 


2.1Representations and
Warranties of PAWS. PAWS hereby represents and warrants to the Members as follows:


 


(a)Organization
and Qualification. PAWS is a corporation, duly incorporated, validly existing and in good standing under the laws of the
State of Illinois, with the requisite corporate power and authority to own and use its properties and assets and to carry on its
business as currently conducted. PAWS is duly qualified to do business as a foreign corporation in each jurisdiction which the
character of its business requires such qualification, except where the failure to be so qualified could not, individually or in
the aggregate reasonably be expected to have or result in a material adverse effect on the business, prospects, operations or condition
(financial or otherwise) of PAWS (a “PAWS Material Adverse Effect”).


 


(b)Authorization;
Enforcement. PAWS has the requisite corporate power and authority to enter into and to consummate the transactions
contemplated by this Agreement and otherwise to carry out its obligations hereunder. The execution and delivery of this
Agreement by PAWS and the consummation by it of the transactions contemplated hereby have been duly authorized by all
necessary action on the part of PAWS and no further action is required by PAWS or its shareholders. This Agreement has been
duly executed by PAWS and, when delivered in accordance with the terms hereof, will constitute the valid and binding
obligation of PAWS enforceable against PAWS in accordance with its terms. PAWS is not in violation of any of the provisions
of its certificate of incorporation or bylaws.


 


(c)Capitalization.
The number of authorized, issued and outstanding shares of capital stock of PAWS is set forth on Schedule 2.1(c). No shares
of capital stock of PAWS are entitled to preemptive or similar rights, nor is any holder of capital stock of PAWS entitled to statutory
preemptive or similar rights arising out of any agreement or understanding with PAWS. Except as set forth in any document filed
by PAWS under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (the “SEC Documents”)
or on Schedule 2.1(c) hereto, there are no outstanding options, warrants, rights to subscribe to, calls or commitments of
any character whatsoever relating to securities, rights or obligations convertible into or exchangeable for, or giving any Person
(as hereinafter defined) any right to subscribe for or acquire any shares of capital stock of PAWS, or contracts, commitments,
understandings, or arrangements by which PAWS is or may become bound to issue additional shares of capital stock of PAWS, or securities
or rights convertible or exchangeable into shares of capital stock of PAWS.


 


(d)Issuance
of the PAWS Shares. The PAWS Shares are duly authorized, and, when issued and paid for in accordance with the terms hereof,
shall be duly and validly issued, fully paid and non-assessable, free and clear of all liens, encumbrances and rights of first
refusal of any kind (collectively, “Liens”).


 


(e)No Conflicts.
The execution, delivery and performance of this Agreement by PAWS and the consummation by PAWS of the transactions contemplated
hereby do not and will not (i) conflict with or violate any provision of PAWS’ certificate of incorporation or bylaws (each
as amended through the date hereof); (ii) conflict with, or constitute a default (or an event which with notice or lapse of time,
or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with
or without notice, lapse of time, or both) of, any agreement, credit facility, indenture or instrument (evidencing a PAWS’
debt or otherwise) to which PAWS is a party or by which any property or asset of PAWS is bound or affected; or (iii) result in
a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental
authority to which PAWS is subject (including federal and state securities laws and regulations), or by which any property or asset
of PAWS is bound or affected, except in the case of each of clauses (ii) and (iii), as could not, individually or in the aggregate,
reasonably be expected to have or result in a PAWS Material Adverse Effect. The business of PAWS is not being conducted in violation
of any law, ordinance or regulation of any governmental authority, except for violations which, individually or in the aggregate,
could reasonably be expected to not have or result in a PAWS Material Adverse Effect.


 



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(f)Filings,
Consents and Approvals. PAWS is not required to obtain any consent, waiver, authorization or order of, give any notice
to, or make any filing or registration with, any court or other U.S. or foreign federal, state, local or other governmental authority
or other person in connection with the execution, delivery and performance by PAWS of this Agreement other than filings which may
be required under federal and state securities laws.


 


(g)Litigation;
Proceedings. There is no action, suit, notice of violation, proceeding or investigation pending or, to the knowledge of
PAWS, threatened against or affecting PAWS or any of its properties before or by any court, governmental or administrative agency,
or regulatory authority (U.S. federal, state, county, local or foreign) that (i) adversely affects or challenges the legality,
validity or enforceability of this Agreement or (ii) could, individually or in the aggregate, reasonably be expected to have or
result in a PAWS Material Adverse Effect.


 


(h)No Default
or Violation. Except as set forth in the SEC Documents or on Schedule 2.1(h) hereto, PAWS (i) is not in default
under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would
result in a default by PAWS), nor has PAWS received written notice of a claim that it is in default under or is in violation of
any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its
properties is bound, (ii) is not in violation of any order of any court, arbitrator or governmental body, or (iii) is not in violation
of any statute, rule or regulation of any governmental authority, except as could not, individually or in the aggregate, reasonably
be expected to have or result in a PAWS Material Adverse Effect.


 


(i)Private Offering.
Assuming the accuracy of the representations and warranties of the Members set forth in Section 2.3 of this Agreement, the
offer, issuance and sale of the PAWS Shares to the Members as contemplated hereby is exempt from the registration requirements
of the Securities Act of 1933, as amended (the “Securities Act”). Neither PAWS nor any person acting on PAWS’
behalf has taken any action that could subject the issuance of the PAWS Shares to the registration requirements of the Securities
Act.


 


(j)Brokers Fees.
No fees or commissions will be payable by PAWS to any broker, financial advisor or consultant, finder, placement agent,
investment banker, or bank with respect to the transactions contemplated by this Agreement.


 


(k)Solicitation
Materials. Neither PAWS nor any person acting on PAWS’ behalf has solicited the Members to acquire the PAWS Shares
by means of any form of general solicitation or advertising.


 


(l)Patents and
Trademarks. PAWS owns, or has rights to use, all patents, patent applications, trademarks, trademark applications, service
marks, trade names, copyrights, licenses and rights (collectively, the “PAWS Intellectual Property Rights”)
that are necessary or material for use in connection with its business, except where the failure to own or have the right to use
a PAWS Intellectual Property Right could not reasonably be expected to have or result in a PAWS Material Adverse Effect. To the
best knowledge of PAWS, all such Intellectual Property Rights are enforceable and there is no existing infringement by another
person of any of the PAWS Intellectual Property Rights.


 


(m)Registration
Rights; Rights of Participation. Except as set forth in the SEC Documents, PAWS has not granted or agreed to grant to
any person any rights (including “piggy-back” registration rights) to have any securities of PAWS registered with
the Securities and Exchange Commission (the “SEC”) or any other governmental authority and no person has
any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions
contemplated by this Agreement.


 



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(n)Regulatory
Permits. PAWS possesses all certificates, authorizations and permits issued by the appropriate U.S. federal, state or foreign
regulatory authorities necessary to conduct its business, except where the failure to possess such permits, individually or in
the aggregate, could reasonably be expected to have or result in a PAWS Material Adverse Effect (“Material PAWS Permits”),
and PAWS has not received any notice of proceedings relating to the revocation or modification of any Material PAWS Permit.


 


(o)Title. PAWS
does not own any real property. PAWS has good and marketable title to all personal property owned by them that is material to
the business of PAWS, in each case free and clear of all Liens, except for Liens that do not materially affect the value of
such property and do not interfere with the use made and proposed to be made of such property by PAWS. Any real property and
facilities held under lease by PAWS is held under valid, subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made of such property and buildings by PAWS.


 


2.2Representations and
Warranties of AAPS and the Members. AAPS and the Members, jointly and severally, represent and warrant to PAWS as follows:


 


(a)Organization
and Qualification. AAPS is a limited liability company duly organized, validly existing and in good standing under the
laws of the State of Nevada with the requisite corporate power and authority to own and use its properties and assets and to carry
on its business as currently conducted. AAPS is not qualified to do business as a foreign limited liability company in any jurisdiction,
there being no jurisdiction where the character of its business requires such qualification. AAPS has no subsidiaries.


 


(b)Authorization;
Enforcement. AAPS and the Members each have the requisite power and authority to enter into and to consummate the transactions
contemplated by this Agreement and otherwise to carry out their respective obligations hereunder. The execution and delivery of
the Agreement by AAPS and the Members as the case may be and the consummation by them of the transactions contemplated hereby have
been duly authorized by all necessary action on the part of AAPS and no further action is required by AAPS and the Members. The
Agreement has been duly executed by AAPS and the Members and, when delivered in accordance with the terms thereof, will constitute
the valid and binding obligations of AAPS and the Members enforceable against AAPS and the Members in accordance with its terms.
AAPS is not in violation of any of the provisions of its certificate of incorporation or bylaws.


 


(c)Capitalization.
AAPS has 100,000 AAPS Units authorized, all of which are issued and outstanding and owed by the Members in the amounts
set forth beside their respective names on Exhibit A hereto. AAPS Units are not entitled to preemptive or similar rights,
nor is any holder of AAPS Units entitled to statutory preemptive or similar rights arising out of any agreement or understanding
with AAPS. There are no outstanding options, warrants, rights to subscribe to, calls, or commitments of any character whatsoever
relating to securities, rights or obligations convertible into or exchangeable for, or giving any person any right to subscribe
for or acquire AAPS Units or other membership interests in AAPS or contracts, commitments, understandings, or arrangements by which
AAPS is or may become bound to issue additional AAPS Units or other membership interests in AAPS, or securities or rights convertible
or exchangeable into AAPS Units or other membership interests in AAPS.


 


(d)Title to
Interests. AAPS Units are duly authorized, validly issued, fully paid and non-assessable and are owned of record and beneficially
by the Members, free and clear of all Liens.


 



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(e)No Conflicts.
The execution, delivery and performance of this Agreement by AAPS and the Members and the consummation by AAPS and the Members
of the transactions contemplated thereby do not and will not (i) conflict with or violate any provision of AAPS’ formation
or limited liability company operating agreement; (ii) conflict with, or constitute a default (or an event which with notice or
lapse of time, or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation
(with or without notice, lapse of time, or both) of, any agreement, credit facility, indenture or instrument (evidencing a debt
or otherwise) to which AAPS and the Members are a party or by which any property or asset of AAPS and the Members are bound or
affected; or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction
of any court or governmental authority to which AAPS and the Members are subject (including federal and state securities laws and
regulations), or by which any property or asset of AAPS and the Members are bound or affected, except in the case of each of clauses
(ii) and (iii), as could not, individually or in the aggregate, reasonably be expected to have or result in a material adverse
effect on the business, prospects, operations or condition (financial or otherwise) of AAPS (an “AAPS Material Adverse
Effect”). The business of AAPS is not being conducted in violation of any law, ordinance or regulation of any governmental
authority, except for violations which, individually or in the aggregate, could not reasonably be expected to have or result in
an AAPS Material Adverse Effect.


 


(f)Filings,
Consents and Approvals. Neither AAPS nor the Members is required to obtain any consent, waiver, authorization or order
of, give any notice to, or make any filing or registration with, any court or other or foreign federal, state, local or other governmental
authority or other person in connection with the execution, delivery and performance by AAPS or the Members of this Agreement.


 


(g)Litigation;
Proceedings. There is no action, suit, notice of violation, proceeding or investigation pending or, to the knowledge of
AAPS or the Members, threatened against or affecting AAPS or the Members or any of their respective properties before or by any
court, governmental or administrative agency, or regulatory authority (U.S. federal, state, county, local or foreign) that (i)
adversely affects or challenges the legality, validity or enforceability of the Agreement or the AAPS Units or (ii) could, individually
or in the aggregate, reasonably be expected to have or result in an AAPS Material Adverse Effect.


 


(h)No Default
or Violation. Neither AAPS nor the Members (i) is in default under or in violation of (and no event has occurred that has
not been waived that, with notice or lapse of time or both, would result in a default by AAPS or the Members), nor has AAPS or
the Members received notice of a claim that it or he is in default under or is in violation of any indenture, loan or credit agreement
or any other agreement or instrument to which it, he or she is a party or by which it, he or she or any of its, his or her properties
is bound, (ii) is in violation of any order of any court, arbitrator or governmental body, or (iii) is in violation of any statute,
rule or regulation of any governmental authority, except as could not, individually or in the aggregate, reasonably be expected
to have or result in an AAPS Material Adverse Effect.


 


(i)Financial
Statements; Books and Records; Accounts Receivable.


 


(i)AAPS has delivered
the financial statements of AAPS attached as Schedule2.2(i) hereto (the “AAPS Financial Statements”).
The AAPS Financial Statements have been prepared in accordance with GAAP during the periods involved, except as may be otherwise
specified in such financial statements or the notes thereto, and fairly present in all material respects the financial position
of AAPS as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the
case of unaudited statements, to normal, immaterial, year-end audit adjustments. The AAPS Financial Statements comply in all material
respects with the applicable accounting requirements of the SEC.


 


(ii)The books and records
of AAPS are complete and correct in all material respects and have been maintained in accordance with sound business practices
consistent with industry standards.


 



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(j)Absence of
Certain Changes. Since the date of the latest balance sheet included in the AAPS Financial Statements, AAPS has been operated,
in the ordinary course and consistent with past practice and, in any event, there has not been: (i) any material adverse change
in the business, condition (financial or otherwise), operations, results of operations or prospects of AAPS; (ii) any loss or,
to the knowledge of AAPS and the Members, threatened or contemplated loss, of business of any customers or suppliers of AAPS which,
individually or in the aggregate, could reasonably be expected to have an AAPS Material Adverse Effect; (iii) any loss, damage,
condemnation or destruction to any of the properties of AAPS (whether or not covered by insurance); (iv) any borrowings by AAPS
other than trade payables arising in the ordinary course of the business and consistent with past practice; or (v) any sale, transfer
or other disposition of any of the assets other than in the ordinary course of the business and consistent with past practice.


 


(k)Contracts.
Schedule 2.2(k) hereto sets forth a list of all contracts, agreements, leases, licenses, permits, commitments and
arrangements of AAPS (the “Contracts”). AAPS is not alleged to be in default, nor to the knowledge of AAPS
or the Members is there any basis for AAPS or any other party, under any of the Contracts and no event has occurred and no
condition or state of facts exists which, with the passage of time or the giving of notice or both, would constitute such a
default or breach by AAPS or the Members, or any other party thereto. All of the Contracts are in full force and effect, will
continue in full force and effect after the Closing without breaching the terms thereof or resulting in the forfeiture or
impairment of any rights thereunder and without the consent, approval or act of, or making of any filing with, any third
party. The Contracts are valid and enforceable against AAPS and to the knowledge of AAPS and the Members, the other parties
thereto. Neither AAPS nor the Members has received any notice of the intention of any party to terminate, or substantially
reduce the volume of its purchases, sales, products or advertisements under, any Contract. AAPS is not currently in
discussions regarding any amendment, modification, extension or termination of, and is not currently re-negotiating
Contracts.


 


(l)Employees.
Schedule 2.2(1) hereto sets forth the name of each employee of AAPS and a description of their compensation. AAPS does
not maintain any employee benefit plans.


 


(m)Taxes. AAPS has filed all tax returns of any kind required to be filed and has paid all taxes and other charges due or claimed
to be due with respect to its taxing authorities. There are no Liens for taxes upon any of AAPS’s assets and there are no
claims asserted for taxes against AAPS or the Members with respect to any of AAPS’s assets, except for taxes due but not
yet payable.


 


(n)Brokers’
Fees. No fees or commissions will be payable by AAPS or the Members to any broker, financial advisor or consultant, finder,
placement agent, investment banker, or bank with respect to the transactions contemplated by this Agreement.


 


(o)Patents and
Trademarks. AAPS owns, or has rights to use, all patents, patent applications, trademarks, trademark applications, service
marks, trade names, copyrights, licenses and rights (collectively, the “AAPS Intellectual Property Rights”)
that are necessary or material for use in connection with its business, and the failure to own or have the right to use and any
AAPS Intellectual Property Right, so could not reasonably be expected to have an AAPS Material Adverse Effect. To the best knowledge
of AAPS and the Members, all such AAPS Intellectual Property Rights are enforceable and there is no existing infringement by another
person of any of the AAPS Intellectual Property Rights.


 


(p)Regulatory
Permits. AAPS possesses all certificates, authorizations and permits issued by the appropriate U.S. federal, state or foreign
regulatory authorities necessary to conduct its business except where the failure to possess such permits, individually or in the
aggregate, could reasonably be expected to have or result in an AAPS Material Adverse Effect (“AAPS Material Permits”),
and neither AAPS nor the Members has received any notice of proceedings relating to the revocation or modification of any AAPS
Material Permit.


 


(q)Title.
AAPS does not own any real property and is not a party to any leases. AAPS has good and marketable title to all real personal property
owned by it in each case free and clear of all Liens, except for Liens that do not materially affect the value of such property
and do not interfere with the use made and proposed to be made of such property by AAPS.


 



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(r)Disclosure.
No representation or warranty of AAPS or the Members contained in this Agreement and no statement contained in any certificate,
exhibit, schedule or other document furnished to PAWS in connection with this Agreement contains any untrue statement of a material
fact, or omits to state a material fact necessary to make the statements herein or therein not misleading.


 


2.3Investment Representations
and Warranties of the Members. Each Member, severally and not jointly, represents and warrants to PAWS as follows:


 


(a)Investment
Intent. The Member is acquiring PAWS Shares for their own account. The Member is acquiring PAWS Shares for investment purposes
only and not with a view to or for distributing or reselling the PAWS Shares or any part thereof or interest therein, without prejudice,
however, to a Member’s right at all times to sell or otherwise dispose of all or any part of the PAWS Shares pursuant to
an effective registration statement under the Securities Act and in compliance with applicable state securities laws or under an
exemption from such registration.


 


(b)Status.
The Member is an “accredited investor” as defined in Rule 501(a) of Regulation D under the Securities Act.


 


(c)Experience
of the Member. The Member has such knowledge, sophistication and experience in business and financial matters so as to
be capable of evaluating the merits and risks of the prospective investment in the PAWS Shares, and has so evaluated the merits
and risks of such investment.


 


(d)Ability of
Shareholder to Bear Risk of Investment. The Member is able to bear the economic risk of an investment in the PAWS Shares
and, at the present time, is able to afford a complete loss of such investment.


 


(e)Access to
Information. The Member acknowledges that the Member has been afforded (i) the opportunity to ask such questions as he
has deemed necessary of, and to receive answers from, representatives of PAWS concerning the terms and conditions of the issuance
of the PAWS Shares and the merits and risks of investing in the PAWS Shares; (ii) access to public information about PAWS and PAWS’
financial condition, results of operations, business, properties, management and prospects sufficient to enable the Member to evaluate
his investment; and (iii) the opportunity to obtain such additional information that PAWS possesses or can acquire without unreasonable
effort or expense that is necessary to make an informed investment decision with respect to the investment and to verify the accuracy
and completeness of the public information contained herein.


 


(f)General Solicitation.
The Member is not acquiring the PAWS Shares as a result of or subsequent to any advertisement, article, notice or other communication
regarding the PAWS Shares published in any newspaper, magazine or similar media, published or broadcast over television or radio
or presented at any seminar.


 


(g)Reliance.
The Member understands and acknowledges that (i) the PAWS Shares are being offered and sold to the Member without registration
under the Securities Act and applicable state securities laws in a private placement that is exempt from the registration provisions
of the Securities Act and applicable state securities laws and (ii) the availability of such exemption depends in part on, and
PAWS will rely upon the accuracy and truthfulness of, the foregoing representations and the Member hereby consents to such reliance.


 






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ARTICLE
III 


 OTHER
AGREEMENTS OF THE PARTIES


 


3.1
Transfer Restrictions.


 


(a)
The PAWS Shares may only be disposed of pursuant to an effective registration statement under the Securities Act, or pursuant
to an available exemption from or in a transaction not subject to the registration requirements of the Securities Act. In connection
with any transfer of the PAWS Shares other than pursuant to an effective registration statement, PAWS may require the transferor
thereof to provide to PAWS an opinion of counsel selected by the transferor, the form and substance of which opinion shall be
reasonably satisfactory to PAWS, to the effect that such transfer does not require registration of such transferred securities
under the Securities Act and applicable state securities laws.


 


(b)
The Members agree to the imprinting, so long as is required under the Securities Act and the rules and regulations thereunder,
of an appropriate restrictive legend on the certificates evidencing their respective Shares.


 


3.2
SEC Reporting Obligations.


 


(a)
Within fifteen (15) days after Closing, PAWS shall file with the SEC, all delinquent reports pursuant to its reporting obligations
under Sections 13 and 15(d) of the Exchange Act (the “Delinquent Reports”).


 


(b)
PAWS shall file its Annual Report on Form 10-K for the year ended December 31, 2012 (the “Form 10-K”) on or
before its due date, as extended as of April 16, 2013. PAWS shall bear all audit and other expenses with respect to filing of
the Form 10-K.


 


3.3
Changes to Board of Directors.


 


(a)
Upon the filing of all the Delinquent Reports pursuant to Section 3.2(a), the two existing members (the “Existing
Members”) of PAWS’ board of directors (the “Board”) shall appoint two additional individuals
designated by the Members (the “Outside Director”), as members of the Board.


 


(b)
Within the nine (9) month period following the filing of PAWS’ Annual Report for the fiscal year ended December 31, 2012
on Form 10-K (the “2012 10-K”) and prior to, if and when, PAWS records a minimum of $450,000 in “Revenues,”
one Existing Member shall resign from the Board.


 


(c)
In the event that PAWS does not have at least $900,000 in “Revenues” for the nine (9) month period following
the filing of the 2012 10-K, as shown on the reports filed by PAWS under Sections 13 or 15(d) of the Exchange Act, then the Existing
Member who resigned from the Board pursuant to Section 3.3(b) shall be reappointed to the Board and the Outside Director
shall resign from the Board, unless the remaining Existing Member on the Board waives such right in writing within thirty (30)
days of such right becoming exercisable.


 


(d)
In the event the Existing Member who resigned from the Board pursuant to Section 3.3(b) shall be unavailable or unwilling
to stand for reappointment pursuant to Section 3.3(c) and the remaining Existing Member on the Board does not waive the
reappointment right pursuant to Section 3.3(c), the Board shall appoint a mutually agreed replacement within thirty (30)
days thereafter.


 


(e)
For the purposes of this Agreement, the term “Revenue” will have the meaning ascribed to it under the Fair
Accounting Standards Board (“FASB”) Statement of Financial Accounting Concepts No. 6 (“CON6”).
FASB CON6 defines revenues as, “inflows or other enhancements of assets of an entity or settlements of its liabilities (or
a combination of both) from delivering or producing goods, rendering services, or other activities that constitute the entity’s
ongoing major or central operations.”


 


3.4
Convertible Debentures. The parties hereto will utilize commercially reasonable efforts to obtain the consent and agreement
of the holders of all of the outstanding debt of PAWS to exchange their debt for PAWS Series C Convertible Preferred Stock (the
“Series C Shares”), having the rights, preferences, privileges and restrictions set forth in the Certificate
of Designation, the form of which is attached hereto as Exhibit C hereto.


 






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3.5
Warrants. The parties hereto will utilize commercially reasonable efforts to obtain the consent and agreement of the
holders of all of the outstanding warrants of PAWS to exchange their warrants for Series C Shares or common stock of PAWS.


 


ARTICLE
IV 


 INDEMNIFICATION


 


4.1
Survival. All of the provisions of this Agreement shall survive the Closing indefinitely, except that the representations
and warranties of AAPS and the Members, on the one hand, and the representations and warranties of PAWS on the other hand, shall
survive until the first anniversary of the Closing Date.


 


4.2 Indemnity
by AAPS and the Members. AAPS and the Members, jointly and severally, shall indemnify PAWS and hold PAWS
and PAWS’ directors, officers and employees harmless against and in respect of any and all damages, losses, claims,
penalties, liabilities, costs and expenses (including, without limitation, all fines, interest, reasonable and actual legal
fees and expenses and amounts paid in settlement), that arise from or relate or are attributable to (and without giving
effect to any tax benefit to the indemnified party) (a) any misrepresentation by AAPS or the Members or breach of any
warranty by AAPS or the Members in the Agreement or (b) any breach of any covenant or agreement on the part of AAPS or the
Members in the Agreement.


 


4.3
Indemnity by PAWS. PAWS shall indemnify AAPS and the Members and hold AAPS and the Members harmless against and in
respect of any and all damages, losses, claims, penalties, liabilities, costs and expenses (including, without limitation, all
fines, interest, reasonable and actual legal fees and expenses and amounts paid in settlement), that arise from or relate or are
attributable to (and without giving effect to any tax benefit to the indemnified party) (a) any misrepresentation by PAWS or breach
of any warranty by PAWS in the Agreements or (b) any breach of any covenant or agreement on the part of PAWS in the Agreement.


 


4.4
Notice to Indemnitor; Right of Parties to Defend. Promptly after the assertion of any claim by a third party or occurrence
of any event which may give rise to a claim for indemnification from an indemnifying party (“Indemnitor”) under
this Article IV, an indemnified party (“Indemnitee”) shall notify the Indemnitor in writing of such
claim. The Indemnitor shall have the right to assume the control and defense of any such action (including, but without limitation,
tax audits), provided that the Indemnitee may participate in the defense of such action subject to the Indemnitor’s reasonable
direction and at Indemnitee’s sole cost and expense. The party contesting any such claim shall be furnished all reasonable
assistance in connection therewith by the other party and be given full access to all information relevant thereto. In no event
shall any such claim be settled without the Indemnitor’s consent.


 


ARTICLE
V 


 MISCELLANEOUS


 


5.1
Fees and Expenses. Each party to this Agreement shall pay the fees and expenses of its or its advisers, counsel, accountants
and other experts, if any, and all other expenses incurred by such party incident to the negotiations, preparation, execution,
delivery and performance of this Agreement.


 


5.2
Entire Agreement; Amendments. This Agreement, together with the exhibits and schedules hereto, contains the entire
understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings,
oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and
schedules.


 




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5.3
Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall
be in writing and shall be delivered (a) by hand; (b) by recognized overnight courier; or (c) by certified mail, return receipt
requested, postage-prepaid. All of the foregoing shall be deemed given and effective on (x) receipt, if delivered by hand; (y)
the next business day after deposit, if sent by nationally recognized overnight courier; or (c) the third (3rd) business day after
deposit, if mailed. The address for such notices and communications shall be as follows:


 


 


	 	If
    to PAWS: 	455
    N.E. 5th Avenue, #D464
	 	 	 
	 	 	Delray
Beach, Florida 33483
	 	 	 
	 	 	Attn:
CEO
	 	 	 
	 	If
    to AAPS: 	9530
    Happy Canyon Drive
	 	 	 
	 	 	Reno,
    Nevada 89521
	 	 	 
	 	 	Attn:
Managing Member
	 	 	 
	 	If
    to the Members: 	9530
    Happy Canyon Drive
	 	 	 
	 	 	Reno,
Nevada 89521


 


or
such other address as maybe designated by party in writing hereafter, by notice (given in the same manner).


 


5.4
Amendments; Waivers. No provision of this Agreement may be waived or amended except in a written instrument signed,
in the case of an amendment, by all the parties; or, in the case of a waiver, by the party against whom enforcement of any such
waiver is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any other provision, condition or requirement hereof, nor shall
any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right accruing
to it thereafter.


 


5.5
Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be
deemed to limit or affect ay of the provisions hereof.


 


5.6
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors
and permitted assigns. Neither party may assign this Agreement or any of the rights or obligations hereunder without the written
consent of the other party, which consent shall not unreasonably be withheld.


 


5.7
No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective
successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other person.


 




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5.8
Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the internal laws
of Florida without regard to the principles of conflicts of law thereof. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in Palm Beach County, Florida, for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the interpretation
or enforcement of this Agreement), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper.
Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action
or proceeding by mailing a copy thereof to such party at the address in effect for notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be
deemed to limit in any way any right to serve process in any manner permitted by law.


 


5.9
Attorneys’ Fees. In any suit, action or proceeding brought with respect to interpretation or enforcement of this
Agreement, the prevailing party shall be entitled to recover attorneys’ fees and costs from the non-prevailing party at
both the trial and appellate levels.


 


5.10
Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered
one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other
party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered
by facsimile or .pdf transmission, such signature shall create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) the same with the same force and effect as if such facsimile signature page were an original
thereof.


 


5.11
Severability. In case any one or more of the provisions of this Agreement shall be invalid or unenforceable in any
respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affecting
or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision that shall be a reasonable substitute
therefore, and upon so agreeing, shall incorporate such substitute provision in this Agreement.


 


IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized signatories
as of the date first indicated above.


 


	 	THE
    PAWS PET COMPANY, INC.
	 	 
	 	By:
    	/s/
    Daniel Wiesel
	 	Name:
    	Daniel
    Wiesel
	 	Title:
    	Chairman
    & CEO
	 	 	 
	 	ADVANCED
    ACCESS PHARMACY SYSTEMS, LLC
	 	 
	 	By:
    	/s/
    Kevin E. Twaddell
	 	Name:	Kevin
E. Twaddell
	 	Title:
    	Managing
    Member
	 	 	 
	 	THE
    MEMBERS:
	 	 
	 	RUBICON
    PEAK CAPITAL LLC 
	 	 
	 	By:	/s/
    Kevin E. Twaddell
	 	Name:	Kevin E. Twaddell
	 	Title:	Manager


  






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