Document:

ex10-5.htm

Exhibit 10.5

 

ROADSHIPS HOLDINGS, INC.

INCENTIVE STOCK OPTION AGREEMENT

This INCENTIVE STOCK OPTION AGREEMENT (the “Option Agreement”), dated as of the 2nd day of July, 2012 (the “Grant Date”), is between Roadships Holdings, Inc., a Delaware corporation (the “Company”), and Michael Nugent (the “Optionee”), a key employee of the Company or of a Subsidiary of the Company (a “Related Corporation”), pursuant to his employment agreement (the “Employment Agreement”).

WHEREAS, the Company desires to give the Optionee the opportunity to purchase shares of common stock of the Company, par value $0.001 (“Common Shares”) in accordance with the provisions of the Employment Agreement, a copy of which is attached hereto;

NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the parties hereto, intending to be legally bound hereby, agree as follows:

1.

Grant of Option.  The Company hereby grants to the Optionee the right and option (the “Option”) to purchase all or any part of an aggregate of ten million (10,000,000) Common Shares.  The Option is in all respects limited and conditioned as hereinafter provided, and is subject in all respects to the terms and conditions of the Employment Agreement now in effect and as it may be amended from time to time (but only to the extent that such amendments apply to outstanding options).  Such terms and conditions are incorporated herein by reference, made a part hereof, and shall control in the event of any conflict with any other terms of this Option Agreement.  The Option granted hereunder is intended to be an incentive stock option (“ISO”) meeting the requirements of the Employment Agreement and section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), and not a nonqualified stock option (“NQSO”).

2.

Exercise Price.  The exercise price of the Common Shares covered by this Option shall be $0.001 per share.  It is the determination of the committee administering the Employment Agreement (the “Committee”) that on the Grant Date the exercise price was not less than the greater of (i) 100% (110% for an Optionee who owns more than 10% of the total combined voting power of all shares of stock of the Company or of a Related Corporation – a “More-Than-10% Owner”) of the “Fair Market Value” of a Common Share, or (ii) the par value of a Common Share.

3.

Term.  Unless earlier terminated pursuant to any provision of the Employment Agreement or of this Option Agreement, 5,000,000 shares shall expire on or before July 2, 2013 and the remaining 5,000,000 shares shall expire on July 2, 2014 (collectively the “Expiration Date”), which date is not more than 10 years (five years in the case of a More-Than-10% Owner) from the Grant Date. This Option shall not be exercisable on or after the Expiration Date.

  

  

  

4.

Exercise of Option.  The Option shall vest according to the following schedule, provided that Optionee remains continuously employed as a key employee of the Company or a Related Corporation from the date hereof through the applicable vesting date:

	
Date Installment Becomes Exercisable

	
Number of Shares

	
 Immediately

	
5,000,000 Shares

	
 July 2, 2013

	
an additional 5,000,000 Shares

The Committee may accelerate any vesting date of the Option, in its discretion, if it deems such acceleration to be desirable.  Once the Option becomes exercisable, it will remain exercisable until it is exercised or until it terminates.

5.

Method of Exercising Option.  Subject to the terms and conditions of this Option Agreement and the Employment Agreement, the Option may be exercised by written notice to the Company at its principal office.  The form of such notice is attached hereto and shall state the election to exercise the Option and the number of whole shares with respect to which it is being exercised; shall be signed by the person or persons so exercising the Option; and shall be accompanied by payment of the full exercise price of such shares.  Only full shares will be issued.  

The exercise price shall be paid to the Company:

(a)

in cash, or by certified check, bank draft, or postal or express money order;

(b)

through the delivery of Common Shares previously acquired by the Optionee;

(c)

by delivering a properly executed notice of exercise of the Option to the Company and a broker, with irrevocable instructions to the broker promptly to deliver to the Company the amount necessary to pay the exercise price of the Option;

(d)

in Common Shares newly acquired by the Optionee upon exercise of the Option (which shall constitute a disqualifying disposition with respect to this ISO); or

(e)

in any combination of (a), (b), (c) or (d) above.

In the event the exercise price is paid, in whole or in part, with Common Shares, the portion of the exercise price so paid shall be equal to the Fair Market Value of the Common Shares surrendered on the date of exercise.

Upon receipt of notice of exercise and payment, the Company shall deliver a certificate or certificates representing the Common Shares with respect to which the Option is so exercised. The Optionee shall obtain the rights of a shareholder upon receipt of a certificate(s) representing such Common Shares.

Such certificate(s) shall be registered in the name of the person so exercising the Option (or, if the Option is exercised by the Optionee and if the Optionee so requests in the notice exercising the Option, shall be registered in the name of the Optionee and the Optionee's spouse, jointly, with right of survivorship), and shall be delivered as provided above to, or upon the written order of, the person exercising the Option.  All Common Shares that are purchased upon exercise of the Option as provided herein shall be fully paid and non-assessable.

  

  

  

Upon exercise of the Option, Optionee shall be responsible for all employment and income taxes then or thereafter due (whether Federal, State or local), and if the Optionee does not remit to the Company sufficient cash (or, with the consent of the Committee, Common Shares) to satisfy all applicable withholding requirements, the Company shall be entitled to satisfy any withholding requirements for any such tax by disposing of Common Shares at exercise, withholding cash from Optionee's salary or other compensation or such other means as the Committee considers appropriate to the fullest extent permitted by applicable law.  Nothing in the preceding sentence shall impair or limit the Company's rights with respect to satisfying withholding obligations under Employment Agreement.

6.

Non-Transferability of Option.  This Option is not assignable or transferable, in whole or in part, by the Optionee other than by will or by the laws of descent and distribution.  During the lifetime of the Optionee, the Option shall be exercisable only by the Optionee or, in the event of his or her disability, by his or her guardian or legal representative.

7.

Termination of Employment.   Any part of the Option that was not exercisable immediately before the termination of Optionee's employment shall terminate at that time.

8.

Disability.  If the Optionee becomes disabled (as determined in accordance with section 22(e)(3) of the Code) during his or her employment and, prior to the Expiration Date, the Optionee's employment is terminated as a consequence of such disability, then this Option may be exercised by the Optionee or by the Optionee's legal representative, to the extent of the number of Common Shares with respect to which the Optionee could have exercised it on the date of such termination of employment.  Any part of the Option that was not exercisable immediately before the Optionee's termination of employment shall terminate at that time.  

9.

Death.   Any part of the Option that was not exercisable immediately before the Optionee's death shall terminate at that time.  

 10.

Disqualifying Disposition of Option Shares.  The Optionee agrees to give written notice to the Company, at its principal office, if a “disposition” of the Common Shares acquired through exercise of the Option granted hereunder occurs at any time within two years after the Grant Date or within one year after the transfer to the Optionee of such shares.  Optionee acknowledges that if such disposition occurs, the Optionee generally will recognize ordinary income as of the date the Option was exercised in an amount equal to the lesser of (i) the Fair Market Value of the Common Shares on the date of exercise minus the exercise price, or (ii) the amount realized on disposition of such shares minus the exercise price.  If requested by the Company at the time of and in the case of any such disposition, Optionee shall pay to the Company an amount sufficient to satisfy the Company's federal, state and local withholding tax obligations with respect to such disposition.  The provisions of this Section 10 shall apply, whether or not the Optionee is in the employ of the Company at the time of the relevant disposition.  For purposes of this Paragraph, the term “disposition” shall have the meaning assigned to such term by section 424(c) of the Code.

  

  

  

11.

Securities Matters.  (a)  If, at any time, counsel to the Company shall determine that the listing, registration or qualification of the Common Shares subject to the Option upon any securities exchange or under any state or federal law, or the consent or approval of any governmental or regulatory body, or that the disclosure of non-public information or the satisfaction of any other condition is necessary as a condition of, or in connection with, the issuance or purchase of Common Shares hereunder, such Option may not be exercised, in whole or in part, unless such listing, registration, qualification, consent or approval, or satisfaction of such condition shall have been effected or obtained on conditions acceptable to the Board of Directors.  The Company shall be under no obligation to apply for or to obtain such listing, registration or qualification, or to satisfy such condition.  The Committee shall inform the Optionee in writing of any decision to defer or prohibit the exercise of an Option.  During the period that the effectiveness of the exercise of an Option has been deferred or prohibited, the Optionee may, by written notice, withdraw the Optionee's decision to exercise and obtain a refund of any amount paid with respect thereto.

(b)

The Company may require: (i) the Optionee as a condition of exercising the Option, to give written assurances, in substance and form satisfactory to the Company, to the effect that such person is acquiring the Common Shares subject to the Option for his or her own account for investment and not with any present intention of selling or otherwise distributing the same, and to make such other representations or covenants; and (ii) that any certificates for Common Shares delivered in connection with the exercise of the Option bear such legends, in each case as the Company deems necessary or appropriate, in order to comply with federal and applicable state securities laws, to comply with covenants or representations made by the Company in connection with any public offering of its Common Shares or otherwise.  The Optionee specifically understands and agrees that the Common Shares, if and when issued upon exercise of the Option, may be “restricted securities,” as that term is defined in Rule 144 under the Securities Act of 1933 and, accordingly, the Optionee may be required to hold the shares indefinitely unless they are registered under such Securities Act of 1933, as amended, or an exemption from such registration is available.

(c)

The Optionee shall have no rights as a shareholder with respect to any Common Shares covered by the Option (including, without limitation, any rights to receive dividends or non-cash distributions with respect to such shares) until the date of issue of a stock certificate to the Optionee for such Common Shares.  No adjustment shall be made for dividends or other rights for which the record date is prior to the date such stock certificate is issued.

12.

Governing Law.  This Option Agreement shall be governed by the applicable Code provisions to the maximum extent possible.  Otherwise, the laws of the State of Delaware (without reference to the principles of conflict of laws) shall govern the operation of, and the rights of the Optionee under, the Employment Agreement and Options granted thereunder subject to the arbitration provision of the Employment Agreement.

[SIGNATURE PAGE FOLLOWS]

  

  

  

 

IN WITNESS WHEREOF, the Company has caused this Incentive Stock Option Agreement to be duly executed by its duly authorized officer, and the Optionee has hereunto set his or her hand and seal, all as of the 2nd day of July, 2012.

	 	
ROADSHIPS HOLDINGS, INC.

	 	  
	 	
By: /s/ Michael Norton-Smith

	 	
Name:  Michael Norton-Smith

	 	
Title:  Director

	 	  
	 	
/s/  Michael Nugent

	 	
Optionee

	 	 
Michael Nugent

 

 

 

  

  

  

ROADSHIPS HOLDINGS, INC.

Notice of Exercise of Incentive Stock Option

I hereby exercise the incentive stock option granted to me pursuant to the Incentive Stock Option Agreement dated as of  July 2, 2012, by Roadships Holdings, Inc. (the “Company”), with respect to the following number of shares of the Company's common stock (“Shares”), par value $0.001 per Share, covered by said option:

Number of Shares to be purchased:

  _______

Purchase price per Share:

$_______

Total purchase price:

$_______

	
     

	
A.

Enclosed is cash or my certified check, bank draft, or postal or express money order in the amount of $________ in full/partial [circle one] payment for such Shares;

and/or

	
     

	
B.

Enclosed is/are           Share(s) with a total fair market value of $              on the date hereof in full/partial [circle one] payment for such Shares;

and/or

	
     

	
C.

I have provided notice to                         [insert name of broker], a broker, who will render full/partial [circle one] payment for such Shares.  [Optionee should attach to the notice of exercise provided to such broker a copy of this Notice of Exercise and irrevocable instructions to pay to the Company the full/partial (as elected above) exercise price.]

and/or

  

  

  

	
     

	
D.

I elect to satisfy the payment for Shares purchased hereunder by having the Company withhold newly acquired Shares pursuant to the exercise of the Option.  I understand that this will result in a “disqualifying disposition,” as described in Section 10 of my Incentive Stock Option Agreement.

Please have the certificate or certificates representing the purchased Shares registered in the following name or names*:                                                                   ; and sent to                                                 .

DATED:                       ___, 20__

______________________ Optionee's Signature

 

 

________________Exhibit 4.1

 

THE PAWS PET
COMPANY, INC. 

Common stock
SUBSCRIPTION AGREEMENT

 

Background

 

The PAWS Pet Company and ______________ entered
into an Agreement dated June ___, 2012, whereby in exchange for an Investment in The PAWS Pet Company agreed to issue ___________
restricted common shares to the Investor in exchange for an investment of $___________ or $0.01 per share.

 

1.1        Subscription.
The undersigned (the “Subscriber”), intending to be legally bound, hereby irrevocably subscribes for ________________
shares of the Common Stock the Company in a transaction exempt from the registration requirements of the Securities Act of 1933,
as amended (the "Securities Act").

 

1.2        Purchase
of Shares. The Company shall deliver the Shares to the Subscriber promptly after the acceptance of this Subscription Agreement
by the Company.

 

1.3        Acceptance
or Rejection.

 

(a)        The
Subscriber understands and agrees that the Company reserves the right to reject this subscription for the Shares if, in its reasonable
judgment, it deems such action in the best interest of the Company, at any time prior to the Closing.

 

(b)
        The Subscriber understands and agrees that its subscription for the Shares
is irrevocable.

 

(c)        In
the event the sale of the Shares subscribed for by the Subscriber is not consummated by the Company for any reason (in which event
this Subscription Agreement shall be deemed to be rejected), this Subscription Agreement and any other agreement entered into between
the Subscriber and the Company relating to this subscription shall thereafter have no force or effect and the Company shall promptly
return or cause to be returned to the Subscriber the Subscription Amount remitted to the Company by the Subscriber, without interest
thereon or deduction therefrom, in exchange for the Shares.

 

SECTION
2.

 

2.1        Closing.
The closing (the "Closing") of the purchase and sale of the Shares, shall occur simultaneously with (i) the acceptance
by the Company of the Subscriber's subscription, as evidenced by the Company's execution of this Subscription Agreement; and (ii)
the release by the Company of the certificate representing the Shares.

 

SECTION
3.

 

3.1        Investor
Representations and Warranties. The Subscriber hereby acknowledges, represents and warrants to, and agrees with, the Company
and its affiliates as follows:

 

(a)        Investment
Purposes. The Subscriber is acquiring the Shares for its own account as principal, not as a nominee or agent, for investment
purposes only, and not with a view to, or for, resale, distribution or fractionalization thereof in whole or in part and no other
person has a direct or indirect beneficial interest in such Shares or any portion thereof. Further, the Subscriber does not have
any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or
to any third person, with respect to the Shares for which the Subscriber is subscribing or any part of the Shares.

 

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(b)        Authority.
The Subscriber has full power and authority to enter into this Agreement, the execution and delivery of this Agreement has been
duly authorized, if applicable, and this Agreement constitutes a valid and legally binding obligation of the Subscriber.

 

(c)        No
General Solicitation. The Subscriber is not subscribing for the Shares as a result of or subsequent to any advertisement, article,
notice or other communication published in any newspaper, magazine or similar media or broadcast over television or radio, or presented
at any seminar or meeting, or any solicitation of a subscription by person previously not known to the Subscriber in connection
with investment securities generally.

 

(d)        Investment
Experience. The Subscriber is (i) experienced in making investments of the kind described in this Agreement, (ii) able, by
reason of the business and financial experience of its officers (if an entity) and professional advisors (who are not affiliated
with or compensated in any way by the Company or any of its affiliates or selling agents), to protect its own interests in connection
with the transactions described in this Agreement, and (iii) able to afford the entire loss of its investment in the Shares.

 

(e)        Exemption
from Registration. The Subscriber acknowledges its understanding that the offering and sale of the Shares is intended to be
exempt from registration under the Securities Act. In furtherance thereof, in addition to the other representations and warranties
of the Subscriber made herein, the Subscriber further represents and warrants to and agrees with the Company and its affiliates
as follows:

 

(1)        The
Subscriber realizes that the basis for the exemption may not be present if notwithstanding such representations, the Subscriber
has in mind merely acquiring the Shares for a fixed or determinable period in the future, or for a market rise, or for sale if
the market does not rise. The Subscriber does not have any such intention;

 

(2)        The
Subscriber has the financial ability to bear the economic risk of its investment, has adequate means for providing for its current
needs and personal contingencies and has no need for liquidity with respect to its investment in the Company; and

 

(3)        The
Subscriber has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks
of the prospective investment in the Shares. The Subscriber also represents it has not been organized for the purpose of acquiring
the Shares; and

 

(4)        The
Subscriber acknowledges that it has had access to and has reviewed all documents and records relating to the Company, including,
but not limited to, the Company’s Form 8-K filed with the United States Securities and Exchange Commission on August 16,
2010, including the risk factors described therein (as such documents have been amended since the date of their filing, collectively,
the “Company SEC Documents”), that it has deemed necessary in order to make an informed investment decision
with respect to an investment in the Shares; that it has had the opportunity to ask representatives of the Company certain questions
and request certain additional information regarding the terms and conditions of such investment and the finances, operations,
business and prospects of the Company and has had any and all such questions and requests answered to its satisfaction; and that
it understands the risks and other considerations relating to such investment.

 

(f)        No
Other Company Representations. No representations or warranties have been made to the Subscriber by the Company, or any officer,
employee, agent, affiliate or subsidiary of the Company, other than the representations of the Company contained herein, and in
subscribing for Shares the Subscriber is not relying upon any representations other than those contained herein.

 

(g)        Compliance
with Laws. Any resale of the Shares shall only be made in compliance with exemptions from registration afforded by, or pursuant
to an effective registration statement under, the Securities Act and in compliance with applicable state law.

 

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(h)        Legends.
Each certificate representing the Shares shall be endorsed with the following legends, in addition to any other legend required
to be placed thereon by applicable federal or state securities laws:

 

THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF
ANY STATE. THE SECURITIES REPRESENTED HEREBY HAVE BEEN TAKEN BY THE REGISTERED OWNER FOR INVESTMENT, AND WITHOUT A VIEW TO RESALE
OR DISTRIBUTION THEREOF, AND MAY NOT BE SOLD, TRANSFERRED OR DISPOSED OF WITHOUT AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER
THAT SUCH TRANSFER OR DISPOSITION DOES NOT VIOLATE THE SECURITIES ACT OF 1933, AS AMENDED, THE RULES AND REGULATIONS THEREUNDER
OR OTHER APPLICABLE SECURITIES LAWS.

 

(i)        Accredited
Investor. The Subscriber is an "accredited investor" as that term is defined in Rule 501 of the General Rules and
Regulations under the Securities Act by reason of Rule 501(a)(3).

 

(j)        Potential
Loss of Investment. The Subscriber understands that an investment in the Shares is a speculative investment which involves
a high degree of risk and the potential loss of its entire investment. The Company is an early stage company with only a brief
operating history for the Subscriber to evaluate its business. The Company, previously known as American Antiquities, Inc., completed
the acquisition of Panther Air Cargo, LLC, a Florida limited partnership doing business as Pet Airways, through a share exchange
agreement. The Company’s common stock previously traded on the OTC Bulletin Board under the symbol "AAQS" and now
trades on the OTC Bulletin Board under the symbol "PAWS."

 

(k)        Investment
Commitment. The Subscriber's overall commitment to investments which are not readily marketable is not disproportionate to
the Subscriber's net worth, and an investment in the Shares will not cause such overall commitment to become excessive.

 

(l)        Receipt
of Information. The Subscriber has received all documents, records, books and other information pertaining to the Subscriber's
investment in the Company that has been requested by the Subscriber.

 

(m)        Investor
Questionnaire. The Subscriber represents and warrants to the Company that all information that the Subscriber has provided
to the Company, including, without limitation, the information in the Investor Questionnaire attached hereto as Exhibit A
or previously provided to the Company (the "Investor Questionnaire"), is correct and complete as of the date hereof.

 

(n)        No
Reliance. Other than as set forth herein, the Subscriber is not relying upon any other information, representation or warranty
by the Company or any officer, director, stockholder, agent or representative of the Company in determining to invest in the Shares.
The Subscriber has consulted, to the extent deemed appropriate by the Subscriber, with the Subscriber's own advisers as to the
financial, tax, legal and related matters concerning an investment in the Shares and on that basis believes that its investment
in the Shares is suitable and appropriate for the Subscriber.

 

(o)        No
Governmental Review. The Subscriber is aware that no federal or state agency has (i) made any finding or determination as to
the fairness of this investment, (ii) made any recommendation or endorsement of the Shares or the Company, or (iii) guaranteed
or insured any investment in the Shares or any investment made by the Company.

 

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(p)        Price
of Shares. The Subscriber understands that the price of the Shares offered hereby bear no relation to the assets, book value
or net worth of the Company and were determined arbitrarily by the Company.

 

(q)        Financing
Risk. The Company currently does not have enough working capital to satisfy its capital needs. The Company is dependent upon
investors to fund its ongoing operations, and cannot be certain that future financing will be available to it on acceptable terms
when it needs it. The Company can give no assurances that it will be able to raise adequate funding to reach cash flow break even.
If the Company is unable to obtain financing to meet its needs, the Subscriber may lose of its investment.

 

(r)        Dilution.
In order to capitalize the Company, execute its business plan, and for other corporate purposes, the Company has issued, and expects
to issue additional shares of Common Stock, securities exercisable or convertible into shares of Common Stock, or debt. Such securities
have been and may be issued for a purchase price consisting of cash, services or other consideration that may be materially different
than the purchase price of the Shares. The issuance of any such securities may result in substantial dilution to the relative ownership
interests of the Company’s existing shareholders and substantial reduction in net book value per share. Additional equity
securities may have rights, preferences and privileges senior to those of the holders of Common Stock, and any debt financing may
involve restrictive covenants that may limit the Company’s operating flexibility.

 

(s)        Former
Shell Company. Subscriber acknowledges and agrees that the Company was, at one time, a "shell company" as defined
in Rule 12b-2 under the Exchange Act. Pursuant to Rule 144(i) under the Securities Act, securities issued by a current or former
shell company (such as the Shares) that otherwise meet the holding period and other requirements of Rule 144 nevertheless cannot
be sold in reliance on Rule 144 until one year after the date on which such company filed current "Form 10 information"
(as defined in Rule 144(i)) with the SEC reflecting that it ceased being a shell company, and provided that at the time of a proposed
sale pursuant to Rule 144, the issuer is subject to the reporting requirements of section 13 or 15(d) of the Exchange Act and has
filed all reports and other materials required to be filed by section 13 or 15(d) of the Exchange Act, as applicable, during the
preceding 12 months (or for such shorter period that the issuer was required to file such reports and materials), other than Form
8-K reports. As a result, the restrictive legends on certificates for the Shares cannot be removed except in connection with an
actual sale meeting the foregoing requirements.

 

3.2        Restrictions
on Disposition. The Subscriber further acknowledges and understands that, without in anyway limiting the acknowledgements and
understandings as set forth hereinabove, the Subscriber agrees that the Subscriber shall in no event make any disposition of all
or any portion of the Shares which the Subscriber is acquiring hereunder unless and until:

 

(1)        there
is then in effect a registration statement under the Securities Act covering such proposed disposition and such disposition is
made in accordance with said registration statement; or

 

(2)        (i)
the Subscriber shall have notified the Company of the proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, (ii) the Subscriber shall have furnished the Company with
an opinion of the Subscriber's own counsel to the effect that such disposition will not require registration of any such Shares
under the Securities Act and (iii) such opinion of the Subscriber's counsel shall have been concurred in by counsel for the Company
and the Company shall have advised the Subscriber of such concurrence. 

 

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SECTION
4.

 

4.1        Company's
Representations and Warranties. The Company represents and warrants to the Subscriber as follows:

  

(a)        Organization
of the Company. The Company is a corporation duly organized and validly existing and in good standing under the laws of the
State of Illinois.

 

(b)        Authority.
(a) The Company has the requisite corporate power and authority to enter into and perform its obligations under this Agreement
and to issue the Shares; (b) the execution and delivery of this Agreement by the Company and the consummation by it of the transactions
contemplated hereby and thereby have been duly authorized by all necessary corporate action and no further consent or authorization
of the Company or its Board of Directors or stockholders is required; and (c) this Agreement has been duly executed and delivered
by the Company and constitutes a valid and binding obligation of the Company enforceable against the Company in accordance with
its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, or similar laws relating to, or affecting
generally the enforcement of creditors' rights and remedies or by other equitable principles of general application.

 

(c)        Exemption
from Registration; Valid Issuances. The sale and issuance of the Shares, in accordance with the terms and on the bases of the
representations and warranties of the Subscriber set forth herein, may and shall be properly issued by the Company to the Subscriber
pursuant to any applicable federal or state law. When issued and paid for as herein provided, the Shares shall be duly and validly
issued, fully paid, and nonassessable. Neither the sales of the Shares pursuant to, nor the Company's performance of its obligations
under, this Agreement shall (a) result in the creation or imposition of any liens, charges, claims or other encumbrances upon the
Shares or any of the assets of the Company, or (b) entitle the other holders of the Common Stock of the Company to preemptive or
other rights to subscribe to or acquire the Common Stock or other securities of the Company. The Shares shall not subject the Subscriber
to personal liability by reason of the ownership thereof.

 

(d)        No
General Solicitation or Advertising in Regard to this Transaction. Neither the Company nor any of its affiliates nor any person
acting on its or their behalf (a) has conducted or will conduct any general solicitation (as that term is used in Rule 502(c) of
Regulation D) or general advertising with respect to any of the Shares, or (b) made any offers or sales of any security or solicited
any offers to buy any security under any circumstances that would require registration of the Common Stock or other securities
of the Company under the Securities Act.

 

SECTION
5.

 

5.1        Commissions
and Fees. No commissions or finders fees will be paid in connection with the sale of Common Stock under this Agreement.

 

5.2        Indemnity.
The Subscriber agrees to indemnify and hold harmless the Company, its officers and directors, employees and its affiliates and
their respective successors and assigns and each other person, if any, who controls any thereof, against any loss, liability, claim,
damage and expense whatsoever (including, but not limited to, any and all expenses whatsoever reasonably incurred in investigating,
preparing or defending against any litigation commenced or threatened or any claim whatsoever) arising out of or based upon any
false representation or warranty or breach or failure by the Subscriber to comply with any covenant or agreement made by the Subscriber
herein or in any other document furnished by the Subscriber to any of the foregoing in connection with this transaction.

 

5.3        Modification.
Neither this Agreement nor any provisions hereof shall be modified, discharged or terminated except by an instrument in writing
signed by the party against whom any waiver, change, discharge or termination is sought.

 

5.4        Notices.
Any notice, demand or other communication which any party hereto may be required, or may elect, to give to anyone interested hereunder
shall be sufficiently given if (a) deposited, postage prepaid, in a United States mail letter box, registered or certified mail,
return receipt requested, addressed to such address as may be given herein, or (b) delivered personally at such address.

 

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5.5        Counterparts.
This Agreement may be executed through the use of separate signature pages or in any number of counterparts and by facsimile, and
each of such counterparts shall, for all purposes, constitute one agreement binding on all parties, notwithstanding that all parties
are not signatories to the same counterpart. Signatures may be facsimiles.

 

5.6        Binding
Effect. Except as otherwise provided herein, this Agreement shall be binding upon and inure to the benefit of the parties and
their heirs, executors, administrators, successors, legal representatives and assigns. If the Subscriber is more than one person,
the obligation of the Subscriber shall be joint and several and the agreements, representations, warranties and acknowledgments
herein contained shall be deemed to be made by and be binding upon each such person and its heirs, executors, beneficiaries, administrators
and successors.

 

5.7        Entire
Agreement. This Agreement and the documents referenced herein contain the entire agreement of the parties and there are no
representations, covenants or other agreements except as stated or referred to herein and therein.

 

5.8        Assignability.
This Agreement is not transferable or assignable by the Subscriber.

 

5.9        Governing
Law, Arbitration. All questions concerning the construction, validity, enforcement and interpretation of this Debenture shall
be governed by and construed and enforced in accordance with the internal laws of the State of California, without regard to the
principles of conflict of laws thereof. Each party agrees that all legal proceedings in equity or at law concerning the interpretation,
enforcement and defense of the transactions contemplated by any of the Transaction Documents (whether brought against a party hereto
or its respective Affiliates, directors, officers, shareholders, employees or agents) shall be held in the City of San Francisco,
California, United States of America in arbitration before the International Chamber of Commerce and shall be determined by three
arbitrators, and otherwise held in accordance with its rules. Each party shall choose one arbitrator and the two arbitrators shall
choose the third. The third arbitrator so chosen shall have a background in either corporate finance, banking or law. The arbitration
shall be conducted in the English language and the arbitration award shall include the allocation of costs and expenses among the
parties. The arbitration ruling shall be final and binding.

 

5.10        Pronouns.
The use herein of the masculine pronouns "him" or "his" or similar terms shall be deemed to include the feminine
and neuter genders as well and the use herein of the singular pronoun shall be deemed to include the plural as well.

 

5.11        Further
Assurances. Upon request from time to time, the Subscriber shall execute and deliver all documents, take all rightful oaths
and do all other acts that may be necessary or desirable, in the reasonable opinion of the Company or its counsel, to effect the
subscription for the Shares in accordance herewith.

 

    	6

    	 

    

 

	IN WITNESS WHEREOF, the Subscriber has executed this Subscription Agreement on the __ day of June, 2012.
	 
	INDIVIDUAL INVESTOR:
	 
	________________________________
	 
	PARTNERSHIP, CORPORATION, TRUST, CUSTODIAL ACCOUNT, OTHER INVESTOR
	 
	________________________________
	(Name of Entity)
	 
	By: _____________________________
	Name: ___________________________
	Title: ____________________________
	Address: _________________________
	 
	Taxpayer Identification Number: ________________________

 

ACCEPTANCE OF SUBSCRIPTION

 

(to be filled out only by the Company)

 

The Company hereby accepts the above application
for subscription for Shares on behalf of the Company.

 

	Dated:  __ day of ________2012
	 
	THE PAWS PET COMPANY, INC.
	 
	By: _____________________________
	Name: ___________________________
	Title: ____________________________

 

    	7

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