Document:

Exhibit 10.3

Exhibit 10.3

AMENDED AND RESTATED
CHANGE IN CONTROL SEVERANCE AGREEMENT
THIS AMENDED AND RESTATED AGREEMENT (“Agreement”), is made and entered as of the ___ day of _________________  (the “Execution Date”) by and between ALLEGHENY TECHNOLOGIES INCORPORATED, a Delaware corporation (hereinafter referred to as the “Company”), and [NAME] (the “Executive”).
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company (the “Board”) has approved the Company’s entering into this agreement providing for certain severance protection for the Executive following a Change in Control (as hereinafter defined);
WHEREAS, the Board believes that, should the possibility of a Change in Control arise, it is imperative that the Company be able to receive and rely upon the Executive’s advice, if requested, as to the best interests of the Company and its stockholders without concern that the Executive might be distracted by the personal uncertainties and risks created by the possibility of a Change in Control; and
WHEREAS, the purpose of this Amended and Restated Change in Control Agreement is to amend and restate the Change in Control Agreement in its entirety to implement the policy of the Company not to pay gross up payments under agreements executed during or after 2013.
NOW, THEREFORE, to assure the Company that it will have the continued dedication of the Executive and the availability of Executive’s advice and counsel notwithstanding the possibility, threat, or occurrence of a Change in Control, and to induce the Executive to remain in the employ of the Company, and for good and valuable consideration and the mutual covenants set forth herein, the Company and the Executive, intending to be legally bound, agree as follows:
Article I
Definitions
1.1       Definitions.  Whenever used in this Agreement, the following terms shall have the meanings set forth below when the initial letter of the word or abbreviation is capitalized:

(a)“Accrued Obligations” means, as of the Effective Date of Termination, the sum of (i) the Executive’s Base Compensation through and including the Effective Date of Termination, (ii) the amount of any bonus, incentive compensation, deferred compensation and other cash compensation accrued by the Executive as of the Effective Date of Termination under the terms of any such arrangement and not then paid, including, but not limited to, AIP accrued but not paid for a year ending prior to the year in which occurs the Effective Date of Termination, (iii) unused vacation time monetized at the then rate of Base Compensation, (iv) expense reimbursements or other cash entitlements and (v) amounts accrued, including but not limited to, amounts accrued as a result of the application of Section 2.2(i), under any qualified, non-qualified or supplemental employee benefit plan, payroll practice, policy or perquisite.

(b)“AIP” means the Company’s Annual Incentive Plan as it exists on the date hereof and as it may be amended, supplemented or modified from time to time or any successor annual bonus plan.

(c)“Base Compensation” shall mean the sum of (i) the highest annual rate of base salary of the Executive as in effect within two years prior to (A) the Effective Date of the Termination or (B) the date of the Change in Control and (ii) the greater of (A) the amount that would be paid under the AIP for target performance in the calendar year that a Change in Control occurs or (B) the actual AIP payment for the year immediately preceding the Change in Control.

(d)“Beneficiary” shall mean the persons or entities designated or deemed designated by the Executive pursuant to Section 7.2 herein.

(e)“Board” shall mean the Board of Directors of the Company.

(f)For purposes hereof, the term “Cause” shall mean the Executive’s conviction of a felony, breach of a fiduciary duty involving personal profit to the Executive or intentional failure to perform stated duties reasonably associated with the Executive’s position; provided, however, an intentional failure to perform stated duties shall not constitute Cause unless and until the Board provides the Executive with written notice setting forth the specific duties that, in the Board’s view, the Executive has failed to perform and the Executive is provided a period of thirty (30) days to cure such specific failure(s) to the reasonable satisfaction of the Board.

(g)For the purposes of this Agreement, “Change in Control” shall mean, and shall be deemed to have occurred upon the occurrence of, any of the following events:

(1)The Company acquires actual knowledge that (x) any Person, other than the Company, a subsidiary, any employee benefit plan(s) sponsored by the Company or a subsidiary, has acquired the Beneficial Ownership, directly or indirectly, of securities of the Company entitling such Person to 20% or more of the Voting Power of the Company, or (y) any Person or Persons agree to act together for the purpose of acquiring, holding, voting or disposing of securities of the Company or to act in concert or otherwise with the purpose or effect of changing or influencing control of the Company, or in connection with or as Beneficial Ownership, directly or indirectly, of securities of the Company entitling such Person(s) to 20% or more of the Voting Power of the Company; or

(2)The completion of a Tender Offer is made to acquire securities of the Company entitling the holders thereof to 20% or more of the Voting Power of the Company; or

(3)The occurrence of a successful solicitation subject to Rule 14a-11 under the Securities Exchange Act of 1934, as amended (or any successor Rule) (the “1934 Act”), relating to the election or removal of 50% or more of the members of the Board or any class of the Board shall be made by any Person other than the Company or less than 51% of the members of the Board (excluding vacant seats) shall be Continuing Directors; or

(4)The occurrence of a merger, consolidation, share exchange, division or sale or other disposition of assets of the Company as a result of which the stockholders of the Company immediately prior to such transaction shall not hold, directly or indirectly, 

immediately following such transaction a majority of the Voting Power of (i) in the case of a merger or consolidation, the surviving or resulting corporation, (ii) in the case of a share exchange, the acquiring corporation or (iii) in the case of a division or a sale or other disposition of assets, each surviving, resulting or acquiring corporation which, immediately following the transaction, holds more than 20% of the consolidated assets of the Company immediately prior to the transaction;

provided, however that (A) if securities beneficially owned by Executive are included in determining the Beneficial Ownership of a Person referred to in Section (i), (B) if Executive is named pursuant to Item 2 of the Schedule 14D-1 (or any similar successor filing requirement) required to be filed by the bidder making a Tender Offer referred to in Section (ii) or (C) if Executive is a “participant” as defined in Instruction 3 to Item 4 of Schedule 14A under the 1934 Act in a solicitation referred to in Section (iii) then no Change of Control with respect to Executive shall be deemed to have occurred by reason of any such event.
For the purposes of Section 1.1(g), the following terms shall have the following meanings:
(i)    The term “Person” shall be used as that term is used in Section 13(d) and 14(d) of the 1934 Act as in effect on the Execution Date hereof.
(ii)    “Affiliate” and “Associate” shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Exchange Act, as in effect on the date of this Rights Agreement.
(iii)    A Person shall be deemed the “Beneficial Owner” of, and shall be deemed to “Beneficially Own,” and shall be deemed to have “Beneficial Ownership” of, any Securities:
(1) that such Person or any of such Person’s Affiliates or Associates is deemed to “Beneficially Own” within the meaning of Rule 13d-3 of the General Rules and Regulations under the Exchange Act, as in effect on the date of this Rights Agreement;

(2) that such Person or any of such Person’s Affiliates or Associates has, directly or indirectly:  (A) the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding (written or oral), upon the exercise of conversion rights, exchange rights, rights (other than these Rights), warrants or options, or otherwise; provided, however, that a Person shall not be deemed the Beneficial Owner of, or to Beneficially Own, or have Beneficial Ownership of, Securities tendered pursuant to a tender or exchange offer made by or on behalf of such Person or any of such Person’s Affiliates or Associates until such tendered Securities are accepted for purchase or exchange thereunder or cease to be subject to withdrawal by the tendering Security holder; or (B) the right to vote or dispose of, including pursuant to any agreement, arrangement or understanding (written or oral); provided, however, that a Person shall not be deemed the Beneficial Owner of, or to Beneficially Own, or to have Beneficial Ownership of, any Security if the agreement, arrangement or understanding (written or oral) to vote such Security (1) arises solely from a revocable proxy or consent given to such Person in response to a public proxy or consent solicitation made generally to all holders of Common 

Shares of the Company pursuant to, and in accordance with, the applicable rules and regulations promulgated under the Exchange Act and (2) is not also then reportable on Schedule 13D or 13G under the Exchange Act (or any comparable or successor report); 

(3) that are Beneficially Owned, directly or indirectly, by any other Person with which such Person or any of such Person’s Affiliates or Associates has (A) any agreement, arrangement or understanding (written or oral) for the purpose of holding, acquiring, voting (except to the extent contemplated by the provisos to Section l.1(g)(ii) of this Agreement) or disposing of any Securities of the Company or (B) any agreement, arrangement or understanding (written or oral) to cooperate in obtaining, changing or influencing the control of the Company; or

(4) that are the subject of, or the reference Securities for, or that underlie, any Derivative Interest of such Person or any of such Person’s Affiliates or Associates, with the number of Common Shares deemed Beneficially Owned being the notional or other number of Common Shares specified in the documentation evidencing the Derivative Interest as being subject to be acquired upon the exercise or settlement of the Derivative Interest or as the basis upon which the value or settlement amount of such Derivative Interest is to be calculated in whole or in part or, if no such number of Common Shares is specified in such documentation, as determined by the Board of Directors of the Company in its sole discretion to be the number of Common Shares to which the Derivative Interest relates.

Notwithstanding anything in this definition of Beneficial Ownership to the contrary, (x) the phrase “then outstanding,” when used with reference to a Person’s Beneficial Ownership of Securities of the Company, shall mean the number of such Securities then issued and outstanding together with the number of such Securities not then actually issued and outstanding which such Person would be deemed to Beneficially Own hereunder and (y) nothing contained in this definition shall cause a Person to be deemed the “Beneficial Owner” of, or to “Beneficially Own,” or to have “Beneficial Ownership” of, Securities (1) if such Person is ordinarily engaged in business as an underwriter of Securities and has acquired such Securities in a bona fide firm commitment underwriting pursuant to an underwriting agreement with the Company or (2) if such Person is a “clearing agency” (as defined in Section 3(a)(23) of the Exchange Act) and has acquired such Securities solely as a result of such status.
(iv) "Derivative Interest" shall mean any derivative Securities (as defined under Rule 16a-1 of the General Rules and Regulations under the Exchange Act) that increase in value as the value of the underlying equity increases, including a long convertible Security, a long call option and a short put option position, in each case, regardless of whether (a) such interest conveys any voting rights in such Security, (b) such interest is required to be, or is capable of being, settled through delivery of such Security or (c) transactions hedge the economic effect of such interest.

(v) A specified percentage of “Voting Power” of a company shall mean such number of the Voting Shares as shall enable the holders thereof to cast such percentage of all the votes which could be cast in an annual election of directors 

(without consideration of the rights of any class of stock, other than the common stock of the Company, to elect directors by a separate class vote); and “Voting Shares” shall mean all securities of a company entitling the holders thereof to vote in an annual election of directors (without consideration of the rights of any class of stock, other than the common stock of the Company, to elect directors by a separate class vote).

(vi) “Tender Offer” shall mean a tender offer or exchange offer to acquire securities of the Company (other than such an offer made by the Company or any subsidiary), whether or not such offer is approved or opposed by the Board.

(vii) “Continuing Directors” shall mean a director of the Company who either (x) was a director of the Company on the date hereof or (y) is an individual whose election, or nomination for election, as a director of the Company was approved by a vote of at least two-thirds of the directors then still in office who were Continuing Directors (other than an individual whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of directors of the Company which would be subject to Rule 14a-11 under the 1934 Act, or any successor Rule).

(h)“Code” shall mean the Internal Revenue Code of 1986, as amended.

(i)“Disability” means (A) the Executive is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months; or (B) the Executive is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and health plan covering employees of the Company.

(j)“409A Payment Date” shall mean for purposes of the commencement of payments described in Subsection 2.2(g) and (i), if the Executive is not a Specified Employee on the Effective Date of Termination, a date within thirty (30) days of the Effective Date of Termination or (b) if the Executive is a Specified Employee on the Effective Date of Termination, the date which is six months and one day after the Effective Date of Termination.  For continuation of benefits and coverages under Subsection 2.2(g) for the period between the Effective Date of Termination and the 409A Payment Date, the Company shall deduct the value of all such coverages (including the portion otherwise payable by the Executive) for that six month period from amounts otherwise payable under Section 2.2, and, on the 409A Payment Date, pay the Executive in a single lump sum the amount equal to the amount deducted under the foregoing clause less the amount that would have been payable by the Executive as the employee contribution for such benefits and coverages for that six month period.  For the payment of non-qualified benefits under Subsection 2.2(i), the initial payment of each such amount made on the 409A Payment date shall equal seven times the regular monthly payment due under the applicable non-qualified benefit program and, thereafter, each monthly installment shall be paid in the amount of the regular monthly investment.  Payments made pursuant to this Agreement resulting from Separation From Service due to Disability shall commence as soon as administratively feasible following such Separation From Service, but in no event shall distribution be made, or commence to be made, after the later of (i) the next following December 31 or (ii) 2 1⁄2 months after the date of such Separation From Service due to Disability.

(k)“Effective Date of Termination” shall mean the date on which the Executive’s employment terminates in a circumstance in which Section 2.1 provides for Severance Benefits (as defined in Section 2.1).

(l)“Good Reason” shall mean, without the Executive’s express written consent, the occurrence of any one or more of the following:

(1)A material diminution of the Executive’s authorities, duties, responsibilities, or status (including offices, titles, or reporting relationships) as an employee of the Company from those in effect as of one hundred eighty (180) days prior to the Change in Control or as of the date of execution of this Agreement if a Change in Control occurs within one hundred eighty (180) days of the execution of this Agreement (the “Reference Date”) or the assignment to the Executive of duties or responsibilities inconsistent with his position as of the Reference Date, other than an insubstantial and inadvertent act that is remedied by the Company promptly after receipt of notice thereof given by the Executive, and other than any such alteration which is consented to by the Executive in writing;

(2)The Company’s requiring the Executive to be based at a location in excess of thirty-five (35) miles from the location of the Executive’s principal job location or office immediately prior to the Change in Control, except for required travel on the Company’s business to an extent substantially consistent with the Executive’s present business obligations;

(3)A reduction in the Executive’s annual salary or any material reduction by the Company of the Executive’s other compensation or benefits from that in effect on the Reference Date or on the date of the Change in Control, whichever is greater;

(4)The failure of the Company to obtain an unqualified agreement from any successor to the Company to assume and agree to perform the Company’s obligations under this Agreement, as contemplated in Article 5 herein; and

(5)Any purported termination by the Company of the Executive’s employment that is not effected pursuant to a Notice of Termination satisfying the requirements of Section 2.5 below, and for purposes of this Agreement, no such purported termination shall be effective.

The Executive’s right to terminate employment for Good Reason shall not be affected by the Executive’s (A) incapacity due to physical or mental illness or (B) continued employment following the occurrence of any event constituting Good Reason herein.
(m)"KEPP" means the Company's Key Executive Performance Plan as it exists on the date hereof and as it may be amended, supplemented or modified from time to time or any successor plan.

(n)“Performance/Restricted Stock Program” or “PRSP” means the Company’s Performance/Restricted Stock Program as it exists on the date hereof and as it may be amended, supplemented or modified from time to time or any successor plan.

(o)“Separation from Service” means the cessation of Employment of the Executive or the cessation of an independent contractor relationship between the Company and the Executive (in each 

case at the level of interaction then permitted under regulations issued pursuant to Section 409A of the Code) or the Executive’s death, or Disability.

(p)“Severance Compensation” means two (2) times Base Compensation (as defined in Section 1.1(c) above).

(q)“Specified Employee” means a key employee as defined in Section 416 of the Code (without regard to paragraph (5) thereof) if the Company has publicly traded securities.

(r)“TSRP” means the Total Shareholder Return Program as it exists on the date of the amendment and restatement of this Agreement and as it may be amended, supplemented or modified from time to time or a successor plan.

Article II
Severance Benefits

2.1  Right to Severance Benefits.  The Executive shall be entitled to receive from the Company severance benefits described in Section 2.2 below (collectively, the “Severance Benefits”) if a Change in Control shall occur and within twenty-four (24) months after the Change in Control either of the following shall occur:
(a) an involuntary Separation from Service of the Executive’s employment with the Company by action taken by the Company without Cause; or

(b) a voluntary Separation from Service of the Executive’s employment with the Company by an action taken by the Executive for Good Reason.  For purposes of this Subsection 2.1(b), the voluntary Separation from Service by the Executive for Good Reason is intended to be treated as described in Treas. Reg. 1.409A-1(n)(2).  

2.2  Severance Benefits.  In the event that the Executive becomes entitled to receive Severance Benefits, as provided in Section 2.1, the Company shall provide the Executive with total Severance Benefits as follows (but subject to Sections 2.6 and 2.7):

(a) The Executive shall receive single lump sum cash Severance Compensation payment within thirty (30) days of the Effective Date of Termination.

(b) The Executive shall receive the Accrued Obligations in a lump sum cash payment within thirty (30) days of the Effective Date of Termination.

(c) Within thirty (30) days of the Effective Date of Termination, the Executive shall receive as AIP for the year in which the termination occurs a lump sum cash payment equal to the greater of (i) target AIP for that annual period or (ii) the amount that would have been earned for the annual period if actual performance for the calendar year up to and including the date of the Change in Control were annualized and measured against the applicable Executive’s AIP goals for the calendar year, multiplied by a fraction, the numerator of which is the number of days elapsed in the current fiscal period to the Effective Date of Termination, and the denominator of which is 365.

(d) Within thirty (30) days of the Effective Date of Termination, the Executive shall receive a lump sum payment (i) of any earned but unpaid TSRP Awards (as defined in the TSRP) and (ii) with 

respect to any TSRP Awards for then uncompleted TSRP Performance Periods (as defined in the TSRP), the value for each then uncompleted TSRP Performance Period equal to the greater of (A) the aggregate value of the TSRP Awards that would have been earned if the rate of dividends paid for the calendar year immediately prior to the Change in Control continued for the remainder of each then uncompleted TSRP Performance Period and the rank of the Company stock among the peer group as achieved as of the date of the Change in Control was the rank of the Company stock as at the end of the TSRP Performance Period and (B) the aggregate value of the TSRP Awards at Target for each then uncompleted TSRP Performance Period; provided that portion of any TSRP Award that would be paid in stock under the terms of the TSRP shall be paid in cash using the highest value of Company Stock during the period of time between the Change in Control and the Executive’s termination of employment.

(e) Within thirty (30) days of the Effective Date of Termination, the Executive shall receive a lump sum payment in cash based on the market value of the stock as of the date of the Change in Control of any awards for then uncompleted measurement periods under the Performance/Restricted Stock Program as if all then applicable performance and service restrictions had been satisfied. 

(f) On the 409A Payment Date, the Executive shall receive a lump sum cash payment equal to the sum of (i) any earned but unpaid KEPP amounts and (ii) with respect to any KEPP opportunities for any then uncompleted KEPP Performance Periods an amount determined as the greater of (A) 1 X Performance or (B) the level of performance that would have been achieved if the rate of the Company's financial performance for the then completed period as of the Effective Date of Termination had continued for the remainder of the Performance Period.

(g) Commencing on the 409A Payment Date, all perquisites and welfare benefits, including medical, dental, vision, life and disability benefits pursuant to plans under which the Executive and/or the Executive’s family is eligible to receive benefits and/or coverage shall be continued for a period of thirty-six (36) months after the Effective Date of Termination.  Such benefits shall be provided to the Executive at no less than the same coverage level as in effect as of the date of the Change in Control.  The Company shall pay the full cost of such continued benefits, except that the Executive shall bear any portion of such cost as was required to be borne by key executives of the Company generally at the date of the Change in Control.  Notwithstanding the foregoing, the benefits described in this Section 2.2(g) may be discontinued prior to the end of the periods provided in this Section to the extent, but only to the extent, that the Executive receives substantially similar benefits from a subsequent employer.  In the event any insurance carrier shall refuse to provide coverage to a former employee, the Company shall secure comparable coverage or may self-insure the benefits if it pays such benefits together with a payment to the Executive equal to the federal income tax consequences of payments to a former highly compensated employee from a discriminatory self-insured plan.

(h) On or after the 409A Payment Date, the Executive shall be entitled to reimbursement for actual payments made for professional outplacement services or job search not to exceed Fifteen Thousand Dollars ($15,000) in the aggregate.

(i) In determining the Executive’s pension benefit following entitlement to a Severance Benefit, (i) the Executive shall be deemed to have satisfied the age and service requirements for full vesting under the Company’s qualified (within applicable legal parameters), non-qualified and supplemental pension plans as of the Effective Date of Termination in which the Executive participates on the date of the Change in Control such that the Executive shall be entitled to receive the full accrued benefit (based on actual service rendered through the Effective Date of Termination plus the service under this Section 2.2(i)) under all such plans in effect as of the date of the Change in Control, without any 

actuarial reduction for early payment and (ii) the Executive shall be credited with years of service for all purposes under each such plan equal to the number used to multiply Base Compensation in Section 1.1(l) (not to exceed a maximum total of ten credited years of service under the Company’s Supplemental Pension Plan, if applicable).  To the extent the amounts determined after giving effect to this Section 2.2(i) cannot be paid from or under a qualified plan, as determined by the administrator of the qualified plan(s), the amount that cannot be paid under the qualified plan shall be paid in a single cash payment on the 409A Payment Date, it being understood that the Executive will receive all amounts that can be paid from or under a qualified plan from such plan when such amounts otherwise become due.

(j) If the Company is providing the Executive with the use of an automobile on the date of the Change in Control, the Company shall acquire title to such automobile if it does not then have title, satisfy any lease obligation, lien or encumbrance related to such automobile and transfer to the Executive, free and clear of all encumbrances, title to the automobile.  Such transfer shall be completed as soon as feasible after the Effective Date of Termination but in no event later than the later of (i) 2 1⁄2 months after the Effective Date of Termination or (ii) the last day of the calendar year in which the Effective Date of Termination occurs.

2.3  Stock Options.  All Company stock options previously granted to the Executive shall be fully vested and exercisable immediately upon a Change in Control, provided, however for purposes of this Section 2.3, the thresholds for measuring a Change in Control under the regulations published under Section 409A shall be substituted for the thresholds under Section 1.1(g).  Such options shall be exercisable for the remainder of the term established by the Company’s stock option plan as if the options had vested in accordance with the normal vesting schedule and the Executive had remained an employee of the Company.  Company stock acquired pursuant to any such exercise may be sold by the Executive free of any Company restrictions, whatsoever (other than those imposed by federal and state securities laws).

2.4  Termination for any Other Reason.  If the Executive’s employment with the Company is terminated under any circumstances other than those set forth in Section 2.1, including without limitation by reason of retirement, death, disability, discharge for Cause or resignation without Good Reason, or any termination, for any reason, that occurs prior to a Change in Control (other than as provided below) or after twenty-four (24) months following a Change in Control, the Executive shall have no right to receive the Severance Benefits under this Agreement or to receive any payments in respect of this Agreement.  In such event Executive’s benefits, if any, in respect of such termination shall be determined in accordance with the Company’s retirement, survivor’s benefits, insurance, and other applicable plans, programs, policies and practices then in effect.  Notwithstanding anything in this Agreement to the contrary, if the Executive’s employment with the Company is terminated at any time from three (3) to eight (8) months prior to the date on which a Change in Control occurs either (i) by the Company other than for Cause or (ii) by the Executive for Good Reason, and it is reasonably demonstrated that termination of employment (a) was at the request of an unrelated third party who has taken steps reasonably calculated to effect a Change in Control, or (b) otherwise arose in connection with or in anticipation of the Change in Control, then for all purposes of this Agreement the termination shall be deemed to have occurred as if immediately following a Change in Control under circumstances that would constitute Good Reason and the Executive shall be entitled to Severance Benefits as provided in Section 2.2 hereof.  Notwithstanding anything in this Agreement to the contrary, if the Executive’s employment with the Company is terminated at any time within three (3) months prior to the date on which a Change in Control occurs either (i) by the Company other than for Cause or (ii) by the Executive under circumstances that would constitute Good Reason, such termination shall conclusively be deemed to have occurred as if 

immediately following a Change in Control for Good Reason and the Executive shall be entitled to Severance Benefits as provided in Section 2.2. hereof.

2.5  Notice of Termination.  Any termination by the Company for Cause or by the Executive for Good Reason shall be communicated by Notice of Termination to the other party.  For purposes of this Agreement, a “Notice of Termination” shall mean a written notice which shall indicate the specific termination provision in this Agreement relied upon, and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated.

2.6  Withholding of Taxes.  The Company shall withhold from any amounts payable under this Agreement all Federal, state, local, or other taxes that are legally required to be withheld.

2.7  Certain Additional Payments by the Company.

(a) No Gross Up Payment.  In no event shall the Company pay to, advance on behalf of or reimburse the Executive for the amount of any excise tax imposed under Section 4999 of the Code (the “Excise Tax”) or penalties or interest on any Excise Tax with respect to payments made under this Agreement or, to the extent required to be aggregated under Section 280G of the Code, the aggregate of all economic benefits, payments and distributions required to be aggregated as continent upon a Change in Control.  

(b) Executive’s Right to Surrender Payments.  Notwithstanding anything in this Agreement or any other compensation program or arrangement sponsored by the Company to the contrary, in the event it shall be determined that the aggregate of the economic benefits, payments or distributions by the Company to or for the benefit of the Executive required to be aggregated under Section 280G of the Code as contingent upon a Change in Control would cause some portion of the aggregate of such economic benefits, payments or distributions to be subject to the Excise Tax, the Executive, in the Executive’s sole discretion, shall have the right to surrender some or all of any economic benefit, payment and/or distribution, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise so that the aggregate of economic benefits, payments and distributions required to be aggregated under Section 280G of the Code actually received by or for the benefit of the Executive is not subject to the Excise Tax.  Such surrender or surrenders of the right to receive economic benefits, payments or distributions shall be delivered to the Company in a written notice setting forth the economic benefit(s), payment(s) or distribution(s) surrendered and the respective amounts so surrendered.  Such written notice shall be delivered to the Company no less than fifteen (15) days prior to the 409A Payment Date.  Within ten (10) days after the Effective Date of Termination, the Company and the Executive shall consult with each other and their respective tax and legal experts in order to satisfy each party as to the amounts, if any, subject to the Excise Tax.  In such consultation, each party shall bear the cost of their respective experts.  

Article III
The Company’s Payment Obligation

3.1  Payment Obligations Absolute.  Except as otherwise provided in the second last sentence of Section 2.2(g) and subject to Section 2.7(b), the Company’s obligation to make the payments and the arrangements provided for in this Agreement shall be absolute and unconditional, and shall not be affected by any circumstances, including, without limitation, any offset, counterclaim, recoupment, defense, or other right that the Company may have against the Executive or any other party.  All amounts payable by the Company under this Agreement shall be paid without notice or demand.  Each and every payment made hereunder by the Company shall be final, and the Company shall not seek to recover all or any part of such payment from the Executive or from whomsoever may be entitled thereto, for any reasons whatsoever.  Notwithstanding any other provisions of this Agreement to the contrary, the Company shall have no obligation to make any payment to the Executive hereunder to the extent, but only to the extent, that such payment is prohibited by the terms of any final order of a Federal or state court or regulatory agency of competent jurisdiction; provided, however, that such an order shall not affect, impair, or invalidate any provision of this Agreement not expressly subject to such order.

3.2  Contractual Rights to Payments and Benefits.  This Agreement establishes and vests in the Executive a contractual right to the payments and benefits to which the Executive is entitled hereunder.  Nothing herein contained shall require or be deemed to require, or prohibit or be deemed to prohibit, the Company to segregate, earmark, or otherwise set aside any funds or other assets, in trust or otherwise, to provide for any payments to be made or required hereunder.  The Executive shall not be obligated to seek other employment in mitigation of the amounts payable or arrangements made under any provision of this Agreement, and the obtaining of any such other employment shall in no event effect any reduction of the Company’s obligations to make the payments and arrangements required to be made under this Agreement, except to the extent provided in the second last sentence of Section 2.2(g).

Article IV
Enforcement and Legal Remedies

4.1  Consent to Jurisdiction.  Each of the parties hereto irrevocably consents to personal jurisdiction in any action brought in connection with this Agreement in the United States District Court for the Western District of Pennsylvania or any Pennsylvania state court of competent jurisdiction.  The parties also consent to venue in the above forums and to the convenience of the above forums.  Any suit brought to enforce the provisions of this Agreement must be brought in the aforementioned forums.

4.2  Cost of Enforcement.  In the event that it shall be necessary or desirable for the Executive to retain legal counsel in connection with the enforcement of any or all of Executive’s rights to Severance Benefits under Section 2.2 of this Agreement, and provided that the Executive substantially prevails in the enforcement of such rights, the Company, as applicable, shall pay (or the Executive shall be entitled to recover from the Company, as the case may be) the Executive’s reasonable attorneys’ fees, costs and expenses in connection with the enforcement of Executive’s rights.

Article V
Binding Effect; Successors

The rights of the parties hereunder shall inure to the benefit of their respective successors, assigns, nominees, or other legal representatives.  The Company shall require any successor (whether direct or indirect, by purchase, merger, reorganization, consolidation, acquisition of property or stock, liquidation, or otherwise) to all or a significant portion of the assets of the Company, as the case may be, by agreement in form and substance reasonably satisfactory to the Executive, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company, as the case may be, would be required to perform if no such succession had taken place.  Regardless of whether such agreement is executed, this Agreement shall be binding upon any successor in accordance with the operation of law and such successor shall be deemed the “Company”, as the case may be, for purposes of this Agreement.

Article VI
Term of Agreement

The term of this Agreement shall commence on the Execution Date and shall continue in effect for three (3) full years (the “Term”) unless further extended as provided in this Article.  The Term of this Agreement shall be automatically and without action by either party extended for one additional calendar month on the last business day of each calendar month so that at any given time there are no fewer than 35 nor more than 36 months remaining unless one party gives written notice to the other that it no longer wishes to extend the Term of this Agreement, after which written notice, the Term shall not be further extended except as may be provided in the following sentence.  However, in the event a Change in Control occurs during the Term, this Agreement will remain in effect for the longer of:  (i) thirty-six (36) months beyond the month in which such Change in Control occurred; or (ii) until all obligations of the Company hereunder have been fulfilled and all benefits required hereunder have been paid to the Executive or other party entitled thereto.

Article VII
Miscellaneous

7.1  Employment Status.  Neither this Agreement nor any provision hereof shall be deemed to create or confer upon the Executive any right to be retained in the employ of the Company or any subsidiary or other affiliate thereof.

7.2  Beneficiaries.  The Executive may designate one or more persons or entities as the primary and/or contingent Beneficiaries of any Severance Benefits owing to the Executive under this Agreement.  Such designation must be in the form of a signed writing acceptable to the Board of Directors of the Company.  The Executive may make or change such designation at any time.

7.3  Entire Agreement.  This Agreement contains the entire understanding of the Company and the Executive with respect to the subject matter hereof.  Any payments actually made under this Agreement in the event of the Executive’s termination of employment shall be in lieu of any severance benefits payable under any severance plan, program, or policy of the Company to which the Executive might otherwise be entitled.

7.4  Gender and Number.  Except where otherwise indicated by the context, any masculine term used herein also shall include the feminine; the plural shall include the singular, and the singular shall include the plural.

7.5 Notices.  All notices, requests, demands, and other communications hereunder must be in writing and shall be deemed to have been duly given if delivered by hand or mailed within the continental United States by first-class certified mail, return receipt requested, postage prepaid, to the other party, addressed as follows:

(a) If to the Company:
Allegheny Technologies Incorporated
1000 Six PPG Place
Pittsburgh, PA 15222-5479
Attn:  Senior Vice President, General Counsel, Chief Compliance Officer and Corporate Secretary

(b) If to Executive, to the Executive’s address set forth at the end of this Agreement.  Addresses may be changed by written notice sent to the other party at the last recorded address of that party.

7.6  Execution in Counterparts.  The parties hereto in counterparts may execute this Agreement, each of which shall be deemed to be original, but all such counterparts shall constitute one and the same instrument, and all signatures need not appear on any one counterpart.

7.7  Severability.  In the event any provision of this Agreement shall be held illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the Agreement, and the Agreement shall be construed and enforced as if the illegal or invalid provision had not been included.  Further, the captions of this Agreement are for convenience of reference and not part of the provisions hereof and shall have no force and effect.

7.8  Modification.  No provision of this Agreement may be modified, waived, or discharged unless such modification, waiver, or discharge is agreed to in writing and signed by the Executive and on behalf of the Company.

7.9  Applicable Law.  To the extent not preempted by the laws of the United States, the laws of the Commonwealth of Pennsylvania, other than the conflict of law provisions thereof, shall be the controlling laws in all matters relating to this Agreement.

7.10  Section 409A.  This Agreement shall be construed and interpreted in a manner so as not to trigger adverse tax consequences to the Executive under Section 409A of the Code and the rulings and regulations issued thereunder.  The Company may amend this Agreement in any manner necessary to comply with Code Section 409A or any successor law, without the consent of the Executive.  Furthermore, to the extent necessary to comply with Section 409A of the Code, the payment terms for any of the payments or benefits payable hereunder may be delayed without the Executive’s consent to comply with Section 409A of the Code.  

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.
	
			
	 
	ALLEGHENY TECHNOLOGIES INCORPORATED

	 
	 
	 

	 
	By:
	 

	 
	Title:
	Senior Vice President, General Counsel, Chief Compliance Officer and Corporate Secretary

	 
	 
	 

	 
	EXECUTIVE:

	 
	 
	 

	 
	[NAME]EXHIBIT 10.1

 

Exhibit
10.1

 

SECURITIES
EXCHANGE AGREEMENT

 

This
SECURITIES EXCHANGE AGREEMENT (the “Agreement”), is made effective as of this 28th day of October
2013, by and among THE PAWS PET COMPANY, INC., an Illinois corporation (“PAWS”), having its principal place
of business at 855 El Camino Real, Suite 13A-184, Palo Alto, California 94301 and PHARMACY DEVELOPMENT CORP., a California
corporation (“PDC”), having its principal place of business at 18013 Sky Park Circle, Suite D, Irvine, CA 92614 (collectively
referred to hereinafter as the “Parties”).

 

RECITALS

 

WHEREAS,
PDC owns one hundred percent (100%) of the issued and outstanding equity interests of Mesa Pharmacy, Inc. (“MESA”)
(the “MESA Shares”); and

 

WHEREAS,
PDC wishes to exchange the MESA Shares for PAWS’ Series D Convertible Preferred Stock having the rights, preferences,
privileges and restrictions which are set forth in the Certificate of Designation attached as Exhibit A hereto (the “PAWS
Shares”) and PAWS wishes to issue and exchange the PAWS Shares for the MESA Shares, whereupon MESA will become a wholly-owned
subsidiary of PAWS, all on the terms and conditions set forth herein; and

 

WHEREAS,
PDC is obligated to pay monthly interest on multiple notes (the “PDC Notes”) as detailed in Exhibit B hereto
any Agreement must include provision for the payment of interest owed on the PDC Notes unless and until PAWS is able to pay off
the PDC Notes or exchange the PDC Notes for other debt or equity of PAWS.

 

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 and PDC agree as follows:

 

ARTICLE
I

EXCHANGE
OF SECURITIES

 

1.1 Exchange
of Securities. Subject to the terms and conditions set forth
in this Agreement, at Closing (as hereinafter defined), PDC shall assign, transfer, convey and deliver the MESA Shares to PAWS
in exchange for which PAWS shall issue and deliver five hundred thousand (500,000) PAWS Series D Shares to PDC. The voting privilege
attached to the Series D Shares shall not be effective until and unless the requirements of Section 3.2 below are fulfilled.

 

1.2 Closing
Date. Subject to the prior approval of the respective boards
of directors of both PAWS and PDC, the closing of the transactions contemplated by this Agreement (the “Closing”) shall
occur, automatically, on the earlier of the issuance, by the California State Board of Pharmacy, of a permanent Community Pharmacy
Site Permit (“Site Permit”) regarding PAWS as the new owner of MESA or earlier by mutual agreement of the Parties.
In the event that PAWS is unable to obtain a Site Permit, for any reason, this transaction will automatically cancel and the consideration
exchanged in this Section 1.1 will be returned to the respective parties.

 

1.3 Deliveries
by PDC. At the Closing, or as soon as is practicable thereafter,
but in no event later than thirty (30) days following the Closing, PDC shall deliver to PAWS:

 

	 	(a)	Certificates evidencing the
MESA Shares, duly endorsed for transfer; and

 

		(b)	A fully executed Royalty
Agreement, a sample of which is attached hereto as Exhibit C.

 

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

 

1.4 Deliveries
by PAWS. At the Closing, or as soon as is practicable thereafter, but in no event later than thirty (30) days following
the Closing, PAWS shall deliver to PDC:

 

		(a)	Certificates evidencing the PAWS Shares registered in the name of PDC; and

 

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

 

    	Page 1 of 10

    	 

    

 

ARTICLE II

REPRESENTATIONS
AND WARRANTIES OF THE PARTIES

 

2.1
Representations and Warranties of PAWS. PAWS hereby represents and warrants to PDC 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 that, individually or in the aggregate, could reasonably
be expected to not have or result in a PAWS Material Adverse Effect.

 

    	Page 2 of 10

    	 

    

 

		(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. Except as set forth in the SEC Documents, 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 PDC set forth in Section 2.3 of this Agreement, the offer, issuance and sale of the PAWS Shares to PDC 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 PDC 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.

 

		(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.

 

    	Page 3 of 10

    	 

    

 

		(p)	Warrant Liability. PAWS represents and warrants that under the terms of its
June 3, 2011 warrant (the “Socious Warrant”), held of record by Socious CG II, LTD. (“Socious”) that PAWS
has no liability to issue any number of new warrants pursuant to the terms of the Socious Warrant (or any additional warrants
that have been previously issued or are currently issuable thereunder) exercisable into a number of shares of Common Stock greater
than ten million (10,000,000) shares (the “Maximum Warrant Liability”).

 

		(i)	In the event that PAWS has a liability to issue new warrants pursuant to Section 2
of the Socious Warrant exercisable into a number of shares of Common Stock greater than the Maximum Warrant Liability, the Parties
hereby agree that they will use their best efforts to obtain a settlement with Socious, whereby any such warrant liability will
be reduced to a number of shares equal to or less than the Maximum Warrant Liability.

 

		(ii)	In the event that PAWS has a liability to issue new warrants pursuant to Section 2
of the Socious Warrant exercisable into a number of shares of Common Stock greater than the Maximum Warrant Liability and the
Parties are unable to obtain a settlement as described in Section 2.1(p)(i) above, within one hundred and eighty (180) days of
the Closing, PDC, in its sole discretion, may terminate this Agreement. In the event that PDC elects to terminate this Agreement
pursuant to this Section 2.1(p)(ii), the consideration exchanged pursuant to Section 1.1 above shall be returned to their respective
owners and any monies advanced to PDC and or MESA shall be returned to PAWS within one hundred eighty (180) days of the termination.

 

2.2 Representations and Warranties
of PDC. PDC represents and warrants to PAWS as follows:

 

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

 

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

 

		(c)	Capitalization. MESA
has only the following classes of stock authorized:

 

		(i)	Common Stock: Ten Thousand (10,000) authorized, Ten Thousand (10,000) of which are
issued and outstanding and owned by PDC. MESA Common Stock shares are not entitled to preemptive or similar rights, nor is any
holder of MESA Common Stock shares entitled to statutory preemptive or similar rights arising out of any agreement or understanding
with MESA. Any and all 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 Common Stock shares or other membership interests in MESA or contracts, commitments, understandings, or arrangements
by which MESA is or may become bound to issue additional Common Stock shares or other membership interests in MESA, or securities
or rights convertible or exchangeable into MESA Shares or other membership interests in PDC are listed in Schedule 2.2(c) hereto.

 

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

 

    	Page 4 of 10

    	 

    

 

		(e)	No Conflicts. The execution, delivery
and performance of this Agreement by PDC and the consummation by PDC of the transactions contemplated thereby do not and will not
(i) conflict with or violate any provision of MESA’s formation or by-laws; (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 PDC is a party or by which any property or asset of PDC 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 PDC is subject (including federal and state securities laws and regulations), or by which any
property or asset of PDC 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 material adverse effect on the business, prospects, operations
or condition (financial or otherwise) of MESA (an “MESA Material Adverse Effect”). The business of MESA is not being
conducted in violation of any law, ordinance or regulation of any governmental authority, except for violations that, individually
or in the aggregate, could not reasonably be expected to have or result in an MESA Material Adverse Effect.

 

		(f)	Filings, Consents
and Approvals. PDC 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 or foreign federal, state, local or other governmental authority or other person
in connection with the execution, delivery and performance by PDC of this Agreement other than as relates to the Site License defined
in Section 1.2 above.

 

		(g)	Litigation;
Proceedings. Except as listed in listed in Schedule 2.2(g), there is no action, suit, notice of violation, proceeding
or investigation pending or, to the knowledge of PDC, threatened against or affecting PDC 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 MESA Shares or (ii) could,
individually or in the aggregate, reasonably be expected to have or result in an PDC Material Adverse Effect.

 

		(h)	No Default or Violation. Except as listed in listed in Schedule 2.2(h),
PDC is not (i) are 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), nor has PDC 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 MESA Material Adverse Effect.

 

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

 

		(i)	Within thirty (30) days of the Closing, PDC will deliver financial statements of MESA
that have been prepared and audited in accordance with GAAP for the periods listed in Schedule 2.2(i) (the “MESA
Financial Statements”). The MESA Financial Statements shall comply in all material respects with the applicable accounting
requirements of the SEC.

 

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

 

		(j)	Absence of Certain Changes. Since the date of the latest balance sheet included
in the PDC Financial Statements, PDC 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 MESA; (ii) any loss or, to the knowledge of PDC, threatened or contemplated loss, of business of any
customers or suppliers of MESA which, individually or in the aggregate, could reasonably be expected to have an MESA Material
Adverse Effect; (iii) any loss, damage, condemnation or destruction to any of the properties of MESA (whether or not covered by
insurance); (iv) any borrowings by MESA 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.

 

    	Page 5 of 10

    	 

    

 

		(k)	Contracts. Schedule 2.2(k) hereto sets forth a list of all contracts, agreements,
leases, licenses, permits, commitments and arrangements of MESA (the “Contracts”). MESA is not alleged to be in default,
nor to the knowledge of PDC is there any basis for MESA 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 PDC, 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 MESA and to the knowledge of PDC, the other parties thereto. PDC has not 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.
PDC 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 MESA
and a description of their compensation. PDC does not maintain any employee benefit plans.

 

		(m)	Taxes. MESA 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 MESA’s assets and there are no claims asserted for taxes against MESA or PDC with respect to any of MESA’s
assets, except for taxes due but not yet payable.

 

		(n)	Brokers’ Fees. No fees or commissions will be payable by PDC 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. MESA owns, or has rights to use, all patents, patent
applications, trademarks, trademark applications, service marks, trade names, copyrights, licenses and rights (collectively, the
“MESA 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 MESA Intellectual Property Right, so could not reasonably be expected to have
an MESA Material Adverse Effect. To the best knowledge of PDC, all such MESA Intellectual Property Rights are enforceable and
there is no existing infringement by another person of any of the MESA Intellectual Property Rights.

 

		(p)	Regulatory Permits. MESA 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 PDC
Material Adverse Effect (“MESA Material Permits”), and PDC has not received any notice of proceedings relating to
the revocation or modification of any MESA Material Permit.

 

		(q)	Title. MESA does not own any real property and is not a party to any leases
other than those listed in Schedule 2.2(q). PDC has good and marketable title to all real or 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 PDC.

 

		(r)	Disclosure. No representation or warranty of PDC or the Holders 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.

 

2.3 Investment Representations
and Warranties of the PDC. PDC represents and warrants to PAWS as follows:

 

		(a)	Investment Intent. PDC is acquiring PAWS Shares for its own account. PDC 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 PDC’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.

 

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		(b)	Status. PDC meets the definition
of an “accredited investor” as defined in Rule 501(a) of Regulation D under the Securities Act; or, in the event that
PDC is not an accredited investor, PDC represents and warrants that it has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of the prospective investment, or PDC reasonably believes that it
comes within this description.

 

		(c)	Experience of
PDC. PDC and/or its management 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 PDC
to Bear Risk of Investment. PDC 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.
PDC acknowledges that the it 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 PDC to evaluate its 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.
PDC 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. PDC
understands and acknowledges that (i) the PAWS Shares are being offered and sold to the Holders 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 Holders hereby consents to such reliance.

 

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)	PDC agrees 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 PDC
hereby agrees to not distribute the PAWS Shares to its respective holders until such time as a permanent Site Permit has
been issued by the California State Board of Pharmacy listing PAWS as the owner of MESA.SEC Reporting Obligations. Pursuant
to Regulation S-K promulgated pursuant to the Securities Exchange Act of 1934, PAWS must file audited consolidated pro forma
financial statements within seventy-five (75) days of the Closing (the “PDC Audit”). In the event that the
audited consolidated pro forma financial statements cannot be completed within the time frame specified in Regulation S-K,
this agreement shall automatically terminate, the consideration exchanged pursuant to Section 1.1 above shall be returned to
their respective owners and any monies advanced to PDC shall be returned to PAWS within one hundred eighty (180) days of the
termination.

 

    	Page 7 of 10

    	 

    

 

3.3 Conversion
of Debentures. If, within ninety (90) days of the Closing,
PAWS is unable to obtain an agreement to convert all of its convertible debentures into any of, Common, Preferred Stock and/or
cash settlement(s), PDC, in its sole discretion, may terminate this Agreement. In the event that PDC elects to terminate this Agreement
the consideration exchanged pursuant to Section 1.1 above shall be returned to their respective owners and any monies advanced
to PDC and or MESA shall be returned to PAWS within one hundred eighty (180) days of the termination.

 

3.4 Changes
to Board of Directors. Upon completion of the PDC Audit and
the issuance of permanent Site Permit by the California State Board of Pharmacy, listing PAWS as the owner of MESA the existing
members of PAWS’ board of directors (the “Board”) shall appoint three (3) individuals designated by the PDC to
the Board.

 

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 PDC, 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 PDC. PDC shall indemnify 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 or breach of any warranty by PDC in the Agreement or (b) any breach of any covenant or agreement
on the part of PDC pursuant to its obligations under the Agreement.

 

4.3 Indemnity
by PAWS. PAWS shall indemnify and hold PDC and PDC’s
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 or breach of any warranty by PAWS in the Agreements or (b) any breach of any covenant or agreement
on the part of PAWS pursuant to its obligations under 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.

 

    	Page 8 of 10

    	 

    

 

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:	855 El Camino Real, Suite 13A-184
	 	 	Palo Alto, California 94301

Attn: CEO
	 	 	 
	 	If to PDC:	18013 Sky Park Circle, Suite D
	 	 	Irvine, California 92614

 Attn: CEO

 

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.

 

5.8 Governing
Law. This Agreement shall be governed by and construed and
enforced in accordance with the internal laws of Nevada 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 Washoe County, Nevada, 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 Construction.
In the construction of this Royalty Agreement, the rule of
construction that a document is to be construed most strictly against a party who prepared the same shall not be applied, it being
agreed that all parties have participated in the preparation of the final form of this Royalty Agreement.

 

5.11 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.

 

    	Page 9 of 10

    	 

    

 

5.12
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/
    Dan Wiesel
	 	Name:	Daniel Wiesel
	 	Title:	Chief Executive Officer
	 	 	 
	 	PHARMACY DEVELOPMENT CORP.
	 	 	 
	 	By:	/s/
    Andrew Do
	 	Name:	Andrew Do
	 	Title:	Chief Executive Officer

 

    	Page 10 of 10

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