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Exhibit
10.37
CONTRIBUTION
AGREEMENT
This Contribution Agreement (the “
Agreement ”) is made as of June 20, 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 ”);
WHEREAS, Contributors have previously
loaned in the aggregate $500,000 to the Company (“
Previous Loans ”); and
WHEREAS, Contributors have agreed to
initially loan in the aggregate an additional $250,000 and may loan
in the aggregate up to an additional $500,000 (inclusive with the
$250,000) to the Company (the “ Loan ”) to be
used for expenses related to the Litigation (“ Litigation
Expenses ”). In connection with and as an inducement to
make such Loan, the Company will issue warrants to each Contributor
and further will replace warrants issued to each Contributor in
connection with the Previous Loans with new warrants at a revised
exercise price (“ Replacement Warrants
”).
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
thirty-six (36) 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. Furthermore, in the
event the Company raises additional capital through equity or
convertible financing equal to or greater than One Million Five
Hundred Thousand Dollars ($1,500,000), then, subject to
Section 3 below, the Company shall repay the interest and
principal outstanding under the Notes in accordance with the terms
set forth in the Notes.
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 $0.50 per share (“ Exercise
Price ”) for a period of five (5) years. The Company
shall also issue the Replacement Warrants to each Contributor
exercisable at the Exercise Price, for a period of five
(5) years, and the earlier warrants issued in connection with
the Previous Loan shall be extinguished.
3. 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 Hu
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