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Exhibit
10.32
Execution
Copy
CONTRIBUTION
AGREEMENT
This Contribution Agreement (the “
Agreement ”) is made as of February 7, 2008 by
and among OurPet’s Company (the “ Company
”), Capital One Partners LLC, Nottingham Ventures Ltd., Spirk
Ventures Ltd. and LJR Limited Partnership (each a “
Contributor ” and collectively, the “
Contributors ”).
Recitals
WHEREAS, the Company is
involved in litigation on certain of its SmartScoop ™ products and
will be incurring expenses with respect to such litigation (the
“ Litigation ”); and
WHEREAS, Contributors have agreed to
loan in the aggregate $500,000 to the Company (the “
Loan ”) to be used as follows: (i) Four Hundred
Thousand Dollars ($400,000) for expenses related to the Litigation
(“ Litigation Expenses ”) and (ii) One
Hundred Thousand Dollars ($100,000) for certain product development
as described below (the “ Project ”). In
connection with and as an inducement to make such Loan, the Company
will issue warrants to each Contributor.
NOW, THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Loan . Upon receipt
of the Loan from the Contributors, the Company shall issue a
promissory note to each Contributor in the principal amount of such
Contributor’s share of the Loan, upon the terms and
conditions set forth in the form of promissory note attached hereto
as Exhibit A and incorporated herein by reference (the
“ Note ”). Payment on each Note would be
twenty-four (24) months after the date such note was issued,
with the option to prepay without penalty. In the event the Company
desires to prepay a portion of the Loan, such prepayment shall be
made pari passu to all Contributors.
2. Warrants . In
connection with the Loan, the Company shall issue warrants (“
Warrants ”) to each Contributor as follows: for each
two dollars ($2.00) loaned, the Contributor would receive one
Warrant, exercisable at $0.825 per share for a period of five
(5) years. Other terms of the Warrants shall be substantially
similar to the warrants issued to Pet Zone Products in connection
with its $250,000 loan to the Company at the time of the
acquisition of its assets by the Company.
3. Project Funding .
Unless agreed otherwise in writing by a majority-in-interest of the
Contributors, the portion of the Loan earmarked for the Project
shall be exclusively applied to the preliminary development of a
new product utilizing services of the firm of Nottingham &
Spirk or such subcontractors or consultants working under their
direction or that of the Company, in either case with the specific
approval in advance by a majority-in-interest of the
Contributors.
4. Conversion of Loan
. The parties hereto recognize that the Company may seek additional
funding from outside sources to cover additional expenses related
to the Litigation and issue securities (whether in the form of
equity or debt) in connection with such funding (“
Additional Funding ”). In the event Additional Funding
is obtained and at such time that an additional Five Hundred
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